Edgar Filing: CH ENERGY GROUP INC

SCHEDULE 14A

(Rule 14a-101)

INFORMATION REQUIRED IN PROXY STATEMENT

SCHEDULE 14A INFORMATION

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

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|_| Preliminary Proxy Statement |_| Soliciting Material under Rule
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Commission Only (as permitted
by Rule 14a-6(e)(2))
|X| Definitive Proxy Statement
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CH ENERGY GROUP, INC
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(Name of Registrant as Specified In Its Charter)

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

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CH ENERGY GROUP, INC.
284 SOUTH AVENUE
POUGHKEEPSIE, NEW YORK 12601-4879

March 7, 2008

To the Holders of Shares of Common Stock:

I am pleased to invite you to the 2008 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 April 22, 2008, at 10:30 AM. A Notice of the
Annual Meeting of Shareholders and the Proxy Statement are attached.

We request that you mark, sign, date, and mail the enclosed proxy card
promptly. Prompt return of your voted proxy will reduce the cost of further
mailings. As an alternative to returning your proxy card by mail, you can also
vote your shares by proxy by calling the toll-free number on your proxy card or
by using the Internet at WWW.INVESTORVOTE.COM/CHG. For shareholders of record,
both methods of voting are available twenty-four hours a day, seven days a week,
and will be accessible until 12:01 AM (Central Time) on April 22, 2008. You may
revoke your voted proxy in the manner described in the accompanying Proxy
Statement at any time prior to its exercise at the meeting, or you may vote in
person if you attend the meeting.

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

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

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

CH ENERGY GROUP, INC.

284 SOUTH AVENUE
POUGHKEEPSIE, NEW YORK 12601-4879

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

To the Holders of Shares 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 AM on Tuesday, April 22, 2008

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

ITEMS OF BUSINESS .. (1) To elect three Directors, each to serve for a
three-year term expiring in 2011;
(2) To consider and vote upon a shareholder proposal,
if properly presented; and
(3) To act upon any other matters that may properly
come before the meeting.

RECORD DATE ........ Holders of Record of Shares of Common Stock on the close
of business on February 29, 2008, 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 card in the
postage-paid envelope furnished for that purpose. As an
alternative to returning your proxy card by mail, you can
also vote your shares by proxy by calling the toll-free
number on your proxy card or by using the Internet at
WWW.INVESTORVOTE.COM/CHG. For shareholders of record,
both methods of voting are available twenty-four hours a
day, seven days a week, and will be accessible until
12:01 AM (Central Time) on April 22, 2008. You may revoke
your voted proxy in the manner described in the
accompanying proxy statement at any time prior to its
exercise at the meeting, or you may vote in person if you
attend the meeting.

By Order of the Board of Directors,

John E. Gould
March 7, 2008 CORPORATE SECRETARY

TABLE OF CONTENTS

PAGE
----
PROXY STATEMENT ............................................................ 1
CURRENT DIRECTORS, CLASSES, AND TERMS OF OFFICE ............................ 4
PROPOSAL NO. 1 - ELECTION OF DIRECTORS ..................................... 5
GOVERNANCE OF THE CORPORATION .............................................. 8
REPORT OF THE AUDIT COMMITTEE .............................................. 14
BENEFICIAL OWNERSHIP ....................................................... 17
STOCK EQUIVALENTS OWNERSHIP OF DIRECTORS ................................... 18
INSURANCE .................................................................. 19
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE .................... 19
EXECUTIVE COMPENSATION ..................................................... 19
COMPENSATION COMMITTEE REPORT .............................................. 32
PROPOSAL NO. 2 - SHAREHOLDER PROPOSAL RELATING TO THE DECLASSIFICATION OF
THE BOARD OF DIRECTORS ................................................... 47
OTHER MATTERS .............................................................. 49

PROXY STATEMENT

The proxy of each shareholder of record is being solicited by CH Energy
Group, Inc. ("Energy Group" or the "Corporation"), on behalf of the
Corporation's Board of Directors, for use in connection with the Corporation's
Annual Meeting of Shareholders to be held on April 22, 2008 (the "Annual
Meeting"), at the offices of the Corporation, 284 South Avenue, Poughkeepsie,
New York 12601-4879.

This proxy statement and enclosed proxy card are being sent to the
Corporation's shareholders on or about March 7, 2008. 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.

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON APRIL 22, 2008:

THIS PROXY STATEMENT AND THE CORPORATION'S ANNUAL REPORT TO SHAREHOLDERS
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2007 ARE AVAILABLE AT
WWW.CHENERGYGROUP.COM BY SELECTING "INVESTOR RELATIONS" AND THEN SELECTING
"FINANCIAL REPORTS."

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 February 29, 2008. On that
date, there were 15,774,100 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
WWW.INVESTORVOTE.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 card, by telephone, or by using the Internet, please refer to
the specific instructions set forth on the enclosed proxy card. If shareholders
vote by telephone or by the Internet or wish to vote using a paper format and
return their signed proxy cards before the Annual Meeting, their shares will be
voted as directed.

Whether shareholders choose to vote by telephone, electronically using the
Internet, or by mail, each proxy will be voted in accordance with the
shareholder's instructions with respect to the election of Directors and the
shareholder proposal set forth in Proposal No. 2, if the proposal is properly
presented.

IF SHAREHOLDERS DO NOT SPECIFY ON THEIR PROXY CARD (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 CARD TO VOTE (1) "FOR" THE
ELECTION OF THE NOMINEES FOR DIRECTOR AS SET FORTH IN PROPOSAL NO. 1 AND (2)
"AGAINST" THE SHAREHOLDER PROPOSAL SET FORTH IN PROPOSAL NO. 2.

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 WWW.INVESTORVOTE.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 card, 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 the Corporation
in the solicitation of proxies. The fee to be paid by the Corporation to such
organization in connection therewith is estimated to be $7,500, plus reasonable
out-of-pocket expenses.

SHAREHOLDER AND INTERESTED PARTY COMMUNICATIONS

Highlights of the 2008 Annual Meeting of Shareholders and text of the
remarks of the Chairman of the Board, President and Chief Executive Officer at
the Annual Meeting will be published on the Corporation's Internet site at
WWW.CHENERGYGROUP.COM. As noted above, a copy of the Corporation's Annual Report
to Shareholders, as well as a copy of the 2007 Financial & Statistical Report
that supplements the Annual Report to Shareholders, will also be published on
the same Internet site.

Shareholders may obtain information relating to their own share ownership
by contacting the Corporation's Shareholder Relations Department at 845-486-5204
or by writing to the Corporation's Shareholder Relations Department 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 card
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, 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, are as follows:

The Audit Committee of the Board of Directors of CH Energy
Group, Inc. has established the following procedures for persons to
follow in order to communicate concerns or complaints to the Company
about the accuracy and integrity of the Company's accounting,
auditing and financial reporting. All persons are encouraged to
submit good faith concerns and complaints without fear of
retaliation of any kind. The Company will not discharge, demote,
suspend, threaten, harass or in any other manner discriminate
against any employee in the terms and condition of his or her
employment because the employee has raised good faith concerns or
complaints in accordance with these procedures. If an employee
wishes to do so, he or she may communicate concerns anonymously in
accordance with paragraph (ii) below.

(I) SUBMISSION OF CONCERNS AND COMPLAINTS

Any person may submit a concern or complaint about accounting,
internal accounting controls or auditing matters by bringing the matter
directly to the attention of:

Joseph B. Koczko, Esq.
Thompson Hine LLP
335 Madison Avenue, 12th Floor
New York, New York 10017-4611
Phone: 212-344-5680
Fax: 212-344-6101
Email: Joseph.Koczko@ThompsonHine.com

(II) ANONYMOUS SUBMISSIONS BY EMPLOYEES

If an employee wishes to submit a concern on an anonymous basis
regarding questionable accounting or auditing matters, he or she may do so
by communicating in writing with Mr. Koczko at the above address. This
writing should include sufficient information and specificity to allow the
Company to review the subject matter.

(III) TREATMENT OF CONCERNS AND COMPLAINTS

Upon receipt of a concern or complaint, Mr. Koczko will communicate
the concern or complaint to General Counsel, John E. Gould, Esq., and he
and Mr. Gould will consult with the Chairman of the Audit Committee
regarding the concern or complaint. Subject to the authority of the Audit
Committee, the Chairman of the Audit Committee, in consultation with Mr.
Koczko and Mr. Gould, will determine how the concern or complaint should
be evaluated and, if necessary, investigated by Mr. Koczko, by Mr. Gould
or by such other persons as may be appropriate. Prompt and corrective
action will be taken when and as warranted in the judgment of the Audit
Committee. The Company will make every effort to maintain, within the
limits allowed by law and consistent with the need to conduct an adequate
review, the confidentiality of anyone submitting a concern or complaint.

(IV) RETENTION OF INFORMATION

Mr. Koczko shall maintain a file at Thompson Hine LLP regarding each
submission of a concern or complaint. The file shall contain the original
document(s) with respect to the submission of the concern or complaint,
together with other documents and records regarding the evaluation,
investigation and resolution of the matter.

(V) QUARTERLY REPORTING TO THE AUDIT COMMITTEE

The Chairman of the Audit Committee shall report quarterly to the
Audit Committee with respect to the status of all pending submissions of
concerns or complaints concerning matters covered by these procedures.
Copies of each file will be maintained in accordance with the Company's
document retention policy. In addition, Mr. Koczko shall prepare and
maintain a written log listing each submission by date and setting forth a
brief written description regarding the substance of the matter. A copy of
this log shall be provided to the Chairman of the Audit Committee and the
General Counsel on a quarterly basis.

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 Lead Independent Director of the Board of Directors, E. Michel Kruse,
is an independent Director and has been designated by the Board to preside at
the executive sessions of the independent Directors. If interested parties wish
to make a concern known to the independent Directors, they may do so in a
writing addressed to the Lead Independent Director and 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, and are
also set forth above. Each such writing submitted in accordance with these
procedures will be communicated directly to Mr. Kruse.

SHAREHOLDER PROPOSALS

A shareholder who would like to have a proposal included in the
Corporation's 2009 Proxy Statement must submit the proposal so that the
Corporate Secretary receives it no later than November 7, 2008. The rules of the
Securities and Exchange Commission ("SEC") 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 2009
Annual Meeting of Shareholders to give the Corporation advance written notice
thereof no earlier than January 22, 2009, and no later than February 21, 2009.

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 and their respective
terms of office expire as of the Annual Meeting of Shareholders in the years
listed below:

CLASS I - 2010
Steven V. Lant
Jeffrey D. Tranen

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

CLASS III - 2009
Manuel J. Iraola
E. Michel Kruse
Ernest R. Verebelyi

On April 24, 2007, the Board of Directors voted unanimously to decrease
the number of Directors of the Corporation from nine to eight upon the
retirement of Class I Director Edward F. X. Gallagher from the Board. Mr.
Gallagher had reached the age at which he could not stand for reelection under
the Corporation's By-laws.

The nominees for Directorship positions are set forth below. Although the
Board of Directors does not anticipate 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. Each person nominated for election has agreed to serve if elected,
and the Board has no reason to believe that any nominee will be unable to serve.

PROPOSAL NO. 1 - ELECTION OF DIRECTORS

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

CLASS II -- 2011
Margarita K. Dilley
Steven M. Fetter
Stanley J. Grubel

VOTE REQUIRED FOR ELECTION OF DIRECTORS

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

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT
YOU VOTE "FOR" EACH OF THE NOMINEES.

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 PERIOD OF
BUSINESS EXPERIENCE DURING POSITIONS OR OFFICES WITH THE SERVICE AS
NAME AND AGE THE PAST FIVE YEARS (1) CORPORATION DIRECTOR BEGAN
------------------------ -------------------------------------------- --------------------------------- --------------

NOMINEES FOR ELECTION AS CLASS II DIRECTORS SERVING FOR A TERM EXPIRING IN 2008

Margarita K. Dilley .... Consultant; Vice President, Chief Financial Director; Chair of the Audit 2004
50 Officer, and Director of Astrolink Committee of the Board of
International LLC, 1998-2004; Director of Directors
[PHOTO OF MARGARITA K. Strategy & Corporate Development and
DILLEY] Treasurer of INTELSAT, 1992-1998;
Treasurer, Comsat Corporation, 1987-1992
Washington, DC

NOMINEES FOR ELECTION AS CLASS II DIRECTORS SERVING FOR A TERM EXPIRING IN 2008

Steven M. Fetter ....... President, Regulation UnFettered, a Director; Chair of the Governance 2002
55 consulting firm, 2002-present; Board and Nominating Committee of the
member and former Chairman of the Board of Directors
[PHOTO OF STEVEN M. National Regulatory Research Institute;
FETTER] Group Head and Managing Director, Global
Power Group, Fitch Ratings, 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
Henderson, NV

Stanley J. Grubel ...... Consultant; Director, Asyst Technologies, Director; Chair of the Compensation 1999
65 Inc.; Vice President and General Manager, Committee of the Board of
Philips Semiconductor Manufacturing, Directors
[PHOTO OF STANLEY J. Inc., 2000-2001; Chief Executive Officer,
GRUBEL] MiCRUS, 1995-2000
Irvington, NY

INCUMBENT CLASS III DIRECTORS SERVING FOR A TERM EXPIRING IN 2009

Manuel J. Iraola ....... Chairman, President and Chief Executive Director 2006
59 Officer, The Aloaris Group, a consulting
and investment firm, 2002-present;
[PHOTO OF MANUEL J. Chairman and Chief Executive Officer,
IRAOLA] Homexperts, Inc. (d/b/a Homekeys), a real
estate services company, 2005-present;
Director, Schweitzer-Mauduit
International, Inc., 2005-2007;
President, Phelps Dodge
Industries, 1995-2002
Coral Gables, FL

INCUMBENT CLASS III DIRECTORS SERVING FOR A TERM EXPIRING IN 2009

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

Ernest R. Verebelyi .... Retired; Non-executive Chairman, Director 2006
60 2005-present, and Director, 2003-present,
Columbus McKinnon Corporation, an
[PHOTO OF ERNEST R. industrial manufacturing company;
VEREBELYI] President-Americas, Terex Corporation,
2001-2002; President-Americas and Mining,
Terex Corporation, 2001
Ponte Vedra Beach, FL

INCUMBENT CLASS I DIRECTORS SERVING FOR A TERM EXPIRING IN 2010

Steven V. Lant ......... Present positions since 2004; President and Chairman of the Board, President 2002
50 Chief Executive Officer of the and Chief Executive Officer of
Corporation, 2003-2004; Chief Operating the Corporation; Chairman of
[PHOTO OF STEVEN V. Officer and Chief Financial Officer of the the Board and Chief Executive
LANT] Corporation, 2002-2003; Chief Financial Officer of Central Hudson;
Officer of the Corporation, of Central Chairman of the Board,
Hudson, and of Central Hudson Energy President and Chief Executive
Services, Inc., 2001-2002 Officer of CHEC; Director of
Poughkeepsie, NY the Corporation, of Central
Hudson, and of CHEC

INCUMBENT CLASS I DIRECTORS SERVING FOR A TERM EXPIRING IN 2010

Jeffrey D. Tranen ...... Senior Managing Director, Lexecon (an FTI Director 2004
61 Company), a consulting firm, 2000-present;
Director, Doble Engineering Company,
[PHOTO OF JEFFREY D. 1998-2007; Director, Oglethorpe Power
TRANEN] Corporation, 2000-2004; Director,
Earthfirst Technologies Incorporated,
2001-2002; President and Chief Operating
Officer, Sithe Northeast Inc., 1999-2000;
President and Chief Executive Officer,
California Independent System Operator,
1997-1999; President, New England Power
Company, 1993-1997
New York, NY

----------
(1) Based on information furnished to the Corporation as of December 31, 2007.

GOVERNANCE OF THE CORPORATION

The Board of Directors has eight members.

During 2007, the Board of Directors held eight meetings and the Committees
held a total of 29 meetings. No current Director attended fewer than 75% of all
of the Board meetings held in the last year, and no current Director attended
fewer than 75% of the total number of meetings held by all Committees of the
Board on which any Director served in 2007. Mr. Gallagher served on the Audit
Committee and the Strategy and Finance Committee until the completion of his
term as a Director at the 2007 Annual Meeting of Shareholders, and he attended
the Audit Committee meeting and one of the two Strategy and Finance Committee
meetings held during that period. Other than Mr. Gallagher, all Directors
serving on each of the Compensation Committee, the Governance and Nominating
Committee, and the Audit Committee attended all of their respective Committee
meetings in 2007.

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

DIRECTOR INDEPENDENCE

The Board of Directors makes determinations regarding whether individual
Directors are "independent" for purposes of applicable corporate governance
rules promulgated by the SEC and New York Stock Exchange listing standards based
on all relevant facts and circumstances. To be considered "independent" for
purposes of the Director qualification standards, the Board must affirmatively
determine that the Director has no material relationship with the Corporation,
directly or as

an officer, shareholder, or partner of an organization that has a relationship
with the Corporation. The Board broadly considers all relevant facts and
circumstances. In this connection, the Board applies the following standards:

o In no event will a Director be considered "independent" if:

(A) within the preceding three years:

(i) the Director was employed by the Corporation;

(ii) any member of the Director's immediate family was
employed by the Corporation as an executive officer;

(iii) the Director or any member of his or her immediate
family received more than $100,000 during a twelvemonth
period in direct compensation from the Corporation
(other than Director's fees and pension or other forms
of deferred compensation for prior service with the
Corporation); or

(iv) an executive officer of the Corporation was on the
Compensation Committee of the Board of Directors of an
entity that employed either the Director or any member
of his or her immediate family as an executive officer;
or

(B) (i) the Director or any member of his or her immediate
family is a current partner of a firm that is the
Corporation's internal or external auditor;

(ii) the Director is a current employee of such a firm;

(iii) any member of the immediate family of the Director is a
current employee of such a firm and participates in the
firm's audit, assurance, or tax compliance (but not tax
planning) practice; or

(iv) the Director or any member of his or her immediate
family was within the last three years (but is no
longer) a partner or employee of such a firm and
personally worked on the Corporation's audit within that
time; or

(C) the Director is a current employee, or an immediate family
member of the Director is a current executive officer, of an
entity that has made payments to, or received payments from,
the Corporation for property or services in an amount which,
in any of the last three fiscal years, exceeds the greater of
$1 million or 2% of such other entity's consolidated gross
revenues.

In addition, the following standards identify categories of relationships
that will not be considered as material relationships that would impair a
Director's independence:

o Transactions between the Corporation and another entity with which a
Director or a member of a Director's immediate family is
affiliated --

(i) if the transactions occurred more than three years prior
to the determination of independence, or

(ii) if the transactions occur in the ordinary course of
business and are consistent with other arm's length
transactions in which the Corporation has engaged with
third parties, unless

(a) the Director is a current employee, executive
officer, director, or owner of 5% or more of the
voting stock of the other entity, or a member of
the Director's immediate family is a current
employee, executive officer, director, or owner of
5% or more of the voting stock of the other
entity, and

(b) such transactions represent, in any of the last
three fiscal years, more than the greater of $1
million or 2% of the other entity's consolidated
gross revenues; and

o Discretionary charitable contributions by the Corporation to
non-profit entities with which a Director or a member of the
Director's immediate family is affiliated, if such contributions

(i) occurred more than three years prior to the
determination of independence, or

(ii) are consistent with the Corporation's philanthropic
practices, unless

(a) the Director or family member is a current
executive officer, director, or trustee of the
entity, and

(b) the Corporation's contributions represent, in any
of the last three fiscal years, more than the
greater of $1 million or 2% of such entity's
consolidated gross revenues.

Annually, the Board will review all relationships between the Corporation
and its Directors, including but not limited to commercial and charitable
relationships, to determine whether Directors are independent under the
standards described above. For relationships not qualifying as immaterial under
the categorical standards listed above, the determination of whether the
relationship is material, and therefore whether the Director is independent,
shall be made by the Directors who satisfy the above independence guidelines.
The Corporation will explain in its next proxy statement the basis for any Board
determination that a relationship was not material despite the fact that it did
not meet the categorical standards of immateriality set forth in the above
guidelines.

An Audit Committee member may not, other than in his or her capacity as a
member of the Audit Committee, the Board of Directors, or any other Board
Committee, (i) accept directly or indirectly any consulting, advisory, or other
compensatory fee from the Corporation or any subsidiary other than compensation
under a retirement plan (including deferred compensation) for prior service with
the Corporation or any subsidiary (provided that the compensation is not
contingent in any way on continued service), or (ii) be an affiliated person of
the Corporation or any subsidiary.

As a result of its annual review, the Board has determined that all of the
Directors are independent, with the exception of Steven V. Lant. Mr. Lant is not
independent because he is an executive officer of the Corporation.

Only independent Directors serve on the Corporation's Audit Committee,
Governance and Nominating Committee, and Compensation Committee.

COMMITTEES OF THE BOARD OF DIRECTORS

The Board of Directors of the Corporation has established four standing
Committees, including the Audit Committee, the Compensation Committee, the
Governance and Nominating Committee, and the Strategy and Finance Committee.
These Committees are described below. Although permitted by the By-laws, the
Board of Directors has not appointed an Executive Committee.

AUDIT COMMITTEE

The Corporation's Audit Committee is a separately-designated standing
committee established in accordance with Section 3(a)(58)(A) of the Securities
Exchange Act of 1934. The members of the Audit Committee are Margarita K.
Dilley, Steven M. Fetter, Manuel J. Iraola, and Ernest R. Verebelyi. Ms. Dilley
is the Chair of the Audit Committee. The Audit Committee met ten times in 2007.

The Board of Directors has determined that each of these Committee members
meets the New York Stock Exchange listing standards and the Corporation's
categorical standards for independence.

The Board of Directors has determined that Ms. Dilley meets the SEC
criteria for an "audit committee financial expert" and the New York Stock
Exchange standard of having accounting or related financial management
expertise. Ms. Dilley's extensive background and experience includes serving as
the Chief Financial Officer of Astrolink International LLC.

The functions of the Audit Committee are 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;
these functions are further discussed in the Report of the Audit Committee,
which is set forth beginning on page 14 of this proxy statement.

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

COMPENSATION COMMITTEE

The members of the Compensation Committee are Stanley J. Grubel, Margarita
K. Dilley, Manuel J. Iraola, and Ernest R. Verebelyi. Mr. Grubel is the Chair of
the Compensation Committee. The Compensation Committee met nine times in 2007.

The Board of Directors has determined that each of these Committee members
meets the New York Stock Exchange listing standards and the Corporation's
categorical standards for independence.

The functions and scope of authority of the Compensation Committee are to
(a) assist the Board of Directors in its oversight of (i) the executive
compensation and benefits program of the Corporation, (ii) the compensation
program for Directors of the Corporation, and (iii) succession planning for
officer positions of the Corporation; (b) review and approve goals and
objectives relevant to the Chief Executive Officer's compensation, and evaluate
the Chief Executive Officer's performance in light of those goals and
objectives; (c) administer the Long-Term Equity Incentive program of the
Corporation; and (d) provide, in accordance with the rules of the SEC, an annual
"Compensation Committee Report" for inclusion in the Corporation's annual proxy
statement.

For additional information about the role and activities of the
Compensation Committee, please refer to the "Executive Compensation" section of
this proxy statement at page 19.

The Compensation Committee operates under a written Charter which sets out
the functions and scope of authority of this Committee. The Charter provides
that the Committee may not delegate its authority. A copy of the Charter is
available on the Corporation's Internet site at WWW.CHENERGYGROUP.COM and may
also be obtained by writing to the Corporate Secretary, CH Energy Group, Inc.,
284 South Avenue, Poughkeepsie, New York 12601-4879.

GOVERNANCE AND NOMINATING COMMITTEE

The members of the Governance and Nominating Committee are Steven M.
Fetter, E. Michel Kruse, and Jeffrey D. Tranen. Mr. Fetter is the Chair of the
Governance and Nominating Committee. The Governance and Nominating Committee met
three times in 2007.

The Board of Directors has determined that each of these Committee members
meets the New York Stock Exchange listing standards and the Corporation's
categorical standards for independence.

The functions of the Governance and Nominating Committee are 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, responsibilities, and scope of authority of this
Committee. A copy of the Charter is available on the Corporation's Internet site
at WWW.CHENERGYGROUP.COM and may also be obtained by writing to the Corporate
Secretary, CH Energy Group, Inc., 284 South Avenue, Poughkeepsie, New York
12601-4879.

STRATEGY AND FINANCE COMMITTEE

The members of the Strategy and Finance Committee are E. Michel Kruse,
Stanley J. Grubel, Steven V. Lant, and Jeffrey D. Tranen. Mr. Kruse is the Chair
of the Strategy and Finance Committee. The Strategy and Finance Committee met
seven times in 2007.

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

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

DIRECTOR NOMINATION PROCESS

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

The Governance and Nominating Committee seeks to nominate persons for
election to the Board of Directors who have experience, backgrounds, and skills
appropriate for the current and anticipated future needs of the Corporation. In
carrying out the nomination process, the Governance and Nominating 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 Governance and Nominating Committee also may
retain a professional search firm to assist in identifying and evaluating
candidates; the Board did not do so in 2007.

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 Governance and Nominating 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 and may also be obtained by writing to the Corporate
Secretary, CH Energy Group, Inc., 284 South Avenue, Poughkeepsie, New York
12601-4879. All potential candidates, including persons recommended by security
holders, are evaluated in the same manner and according to the same standards.

The Governance and Nominating Committee believes that all Directors should
have the following qualifications. They should be competent persons of honesty
and integrity, and should have a reputation for high standards and values in
their professional and personal activities. They should have several years of
high-level executive responsibility in a significant for-profit business entity
during which they were responsible for strategic decisions that integrated
relevant technology, marketing, financial, human resources and organizational
development considerations. They also should possess communication and
interpersonal skills appropriate for constructive discussions at the Board
level. The Corporation seeks to have a Board comprised of individuals with
diverse experience, backgrounds and skill sets, who participate actively and
regularly in the Board's work, and who consistently demonstrate objective
analysis, practical wisdom and sound judgment.

The Governance and Nominating Committee also believes that a candidate for
election as a Director should have professional skills that complement the
skills of existing Board members. The Committee seeks Directors who add strength
in areas that are important to the Company's long-term success and who also
possess skills that are appropriate for the perceived current needs of the
Board. The Committee seeks individuals with demonstrated leadership abilities,
including the ability to work with people and build consensus, the ability to
learn and listen with an open mind, the ability to engage in constructive
discussion, the ability to disagree with others in a manner that adds substance,
the fortitude to make tough decisions, and the fortitude to endure private and
public criticism.

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

When a candidate is identified by the Governance and Nominating Committee
as a potential nominee for election as a new Director of the Corporation, at
least two members of the Governance and Nominating Committee meet with the
person in face-to-face interviews. Subsequently, the Governance and Nominating
Committee meets to discuss and consider each candidate's 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 Governance and Nominating Committee to confirm the
writer's status as a shareholder of the Corporation and (ii) allow the
Governance and Nominating 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
attended the 2007 Annual Meeting of Shareholders.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

Only independent Directors served on the Compensation Committee in 2007.
Mr. Grubel served as the Chair of the Compensation Committee in 2007, and
continues to serve as its Chair through the date of this proxy statement. Mr.
Grubel, Ms. Dilley, Mr. Iraola, and Mr. Verebelyi served as members of the
Compensation Committee in 2007, and they continue to serve as members of the
Compensation Committee through the date of this proxy statement. No inside
Directors serve on this Committee. None of the members of the Compensation
Committee is, or has been, an employee or officer of the Corporation. During
2007, no member of the Compensation Committee had any relationship with the
Corporation that would require disclosure under Item 404 of Regulation S-K, and
none of the Corporation's executive officers served on the compensation
committee (or an equivalent committee) or board of directors of another entity
whose executive officer(s) served on the Corporation's Compensation Committee or
Board of the Corporation or any of its subsidiaries.

CODE OF BUSINESS CONDUCT AND ETHICS

The Corporation has a Code of Business Conduct and Ethics that 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. A copy
of the Corporation's Code of Business Conduct and Ethics may also be obtained
free of charge by writing to the Corporate Secretary, CH Energy Group, Inc., 284
South Avenue, Poughkeepsie, New York 12601-4879.

If the Corporation's Board of Directors amends Section II of the Code of
Business Conduct and Ethics or grants any waiver to Section II of the Code of
Business Conduct and Ethics, which waiver relates to issues concerning actual or
apparent conflicts of interest, disclosures in the Corporation's SEC 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.

REVIEW, APPROVAL OR RATIFICATION OF TRANSACTIONS WITH RELATED PERSONS

The Board of Directors has adopted a written policy and written procedures
for the review, approval, or ratification of transactions involving the
Corporation and "related persons" (I.E., Directors and their immediate family
members, executive officers and their immediate family members, and shareholders
owning five percent or more of the Corporation's outstanding stock). The policy
and procedures cover any related person transaction that exceeds the minimum
threshold for

disclosure in our annual proxy statement under the relevant rules of the SEC
(generally, a transaction involving an amount in excess of $120,000, or a series
of transactions involving an aggregate amount in excess of $120,000 in any
calendar year, in which a related person has a direct or indirect material
interest, and which does not fall under an explicitly stated exception set forth
in the applicable disclosure rules of the SEC). Such a covered related person
transaction is hereinafter referred to as a "Related Person Transaction."

POLICY

The Governance and Nominating Committee, which consists solely of
independent Directors, must review all Related Person Transactions. The
Governance and Nominating Committee will approve a Related Person Transaction
only if it determines that the Related Person Transaction is consistent with the
business interests of the Corporation. In considering the Related Person
Transaction, the Committee will consider all relevant factors, including as
applicable: (i) the Corporation's business rationale for entering into the
Related Person Transaction; (ii) whether the Related Person Transaction is on
terms comparable to those available to third parties, or in the case of
employment relationships, to employees generally; (iii) the potential for the
Related Person Transaction to lead to an actual or apparent conflict of interest
and any safeguards imposed to prevent such actual or apparent conflicts; and
(iv) the overall fairness of the Related Person Transaction to the Corporation.

PROCEDURE

Directors and executive officers are responsible for bringing a potential
Related Person Transaction to the attention of the Chairman of the Board,
President and Chief Executive Officer or to the attention of the Chair of the
Governance and Nominating Committee.

The Chairman of the Board, President and Chief Executive Officer and the
Chair of the Governance and Nominating Committee shall jointly determine (or, if
either is involved in the Related Person Transaction, the other shall determine
in consultation with the Lead Independent Director) whether the matter is a
Related Person Transaction that should be considered by the Governance and
Nominating Committee. If a Director is involved in the Related Person
Transaction, he or she shall be recused from all discussions and decisions about
the Related Person Transaction. The Related Person Transaction should be
approved in advance whenever practicable, and if not practicable, must be
ratified as promptly as practicable.

REPORT OF THE AUDIT COMMITTEE

The Audit Committee of the Board of Directors is comprised of Directors
who have no material relationship with the Corporation (either directly or as a
partner, shareholder, or officer of an organization that has a relationship with
the Corporation) and meet the New York Stock Exchange listing standards and the
Corporation's categorical standards for independence.

The Audit Committee appointed PricewaterhouseCoopers LLP, an independent
registered public accounting firm, as the Corporation's independent public
accountants for 2007 (the "Independent Accountants").

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 Vice President--Accounting and
Controller; and (viii) reviews quarterly and annual financial statements and
earnings releases filed with the SEC.

In 2007, the Audit Committee met with management periodically during the
year to consider the adequacy of the Corporation's internal control over
financial reporting and the objectivity of its financial reporting. The Audit
Committee discussed these matters with the Corporation's Independent Accountants
and with appropriate Corporation financial personnel and internal auditors. The
Audit Committee also discussed with the Corporation's senior management and

Independent Accountants the process used for certifications by the Corporation's
Chief Executive Officer and the Chief Financial Officer, which certifications
are required for certain of the Corporation's filings with the SEC.

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 Vice President--Accounting and Controller.

For 2007, the Audit Committee has:

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

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

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

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

Based on the review and discussions referred to above and additional
matters deemed relevant and appropriate by the Audit Committee, the Audit
Committee recommended to the Corporation's Board of Directors that the audited
financial statements be included in the Corporation's Annual Report on Form 10-K
for the fiscal year ended December 31, 2007, for filing with the SEC.

The Audit Committee:

Margarita K. Dilley, Chair
Steven M. Fetter
Manuel J. Iraola
Ernest R. Verebelyi

The Audit Committee has appointed PricewaterhouseCoopers LLP as its
independent registered public accounting firm for 2008.

Representatives of PricewaterhouseCoopers LLP will be present at the
Annual Meeting. The representatives of PricewaterhouseCoopers LLP 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 to the
Corporation during 2007 and 2006 is provided below:

PRINCIPAL ACCOUNTANT FEES AND SERVICES

----------------------------------------------------------------------------------------------------
PRICEWATERHOUSECOOPERS LLP 2007 2006
----------------------------------------------------------------------------------------------------

Audit Fees $ 918,870 $ 853,607
----------------------------------------------------------------------------------------------------
Tax Fees
Includes review of consolidated federal and state income tax returns
and tax research $ 16,360 $ 15,600
----------------------------------------------------------------------------------------------------
All Other Fees
Includes software licensing fee for accounting research tool $ 1,500 $ 1,500
----------------------------------------------------------------------------------------------------
TOTAL $ 936,730 $ 870,707
----------------------------------------------------------------------------------------------------

The Audit Committee also concluded that the provision of services for
which fees were paid under the captions "Tax Fees," and "All Other Fees" were
compatible with the maintenance of the Independent Accountants' independence.

The Audit Committee has adopted guidelines regarding pre-approval of the
services to be provided by the 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
sthe 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 confirmed that the recommended
non-audit services were 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 Chair 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--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 2007, the Audit Committee approved all of the fees set forth in the
table above under the captions "Tax Fees," and "All Other Fees."

BENEFICIAL OWNERSHIP

The following table lists the number of shares of equity securities of the
Corporation beneficially owned by each of the Directors, by each Named Executive
Officer listed in the Summary Compensation Table included 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 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)(2) STOCK (3)
------------------------ ----------------------- --------------

Margarita K. Dilley ..................... 0 Less than 1%
Steven M. Fetter ........................ 2,432 Less than 1%
Stanley J. Grubel ....................... 5,912 Less than 1%
Manuel J. Iraola ........................ 3,850 Less than 1%
E. Michel Kruse ......................... 1,100 Less than 1%
Steven V. Lant (7) ...................... 13,825 Less than 1%
Jeffrey D. Tranen ....................... 0 Less than 1%
Ernest R. Verebelyi ..................... 0 Less than 1%
Christopher M. Capone (7) ............... 61 Less than 1%
Joseph J. DeVirgilio, Jr. (7) ........... 4,334 Less than 1%
W. Randolph Groft (7) ................... 1,061 Less than 1%
Carl E. Meyer (7) ....................... 7,431 Less than 1%
Barclays Global Investors, NA (4) ....... 1,137,460 7.21%
Gabelli Asset Management Inc. (5) ....... 1,444,907 9.16%
Manulife Financial Corporation (6) ...... 1,004,782 6.37%
All Directors and Executive Officers as a
Group (15 Persons) .................... 45,275 Less than 1%

----------
(1) In the case of Directors and executive officers, this table is based on
information furnished to the Corporation by such persons as of December
31, 2007. Unless otherwise noted, each individual or entity named in the
table has sole voting and dispositive power.

(2) Includes shares of Common Stock covered by options that are exercisable
within sixty days of December 31, 2007. The Directors and executive
officers named in the above table who have such options and the number of
shares which may be acquired are as follows: Mr. DeVirgilio (800); Mr.
Fetter (1,000); Mr. Groft (800); Mr. Grubel (4,000); Mr. Kruse (1,000);
Mr. Lant (7,000); and Mr. Meyer (1,440). The Directors and executive
officers as a group hold a total of 17,820 options that are currently
exercisable.

(3) The percentage ownership calculation for each beneficial owner, including
each percentage calculation set forth in footnotes 4, 5, and 6 below, has
been made on the basis of the amount of outstanding shares of Common Stock
as of the record date.

(4) Based upon a Schedule 13G filed with the SEC on February 5, 2008, by
Barclays Global Investors, NA on behalf of Barclays Global Investors, NA,
Barclays Global Fund Advisors, Barclays Global Investors, Ltd., Barclays
Global Investors Japan Trust and Banking Company Limited, Barclays Global
Investors Japan Limited, Barclays Global Investors Canada Limited,
Barclays Global Investors Australia Limited, and Barclays Global Investors
(Deutschland) AG. As reported in the Schedule 13G, as of December 31,
2007, Common Stock was beneficially owned as follows: Barclays Global
Investors, NA--678,746 shares (4.30%), of which Barclays Global Investors,
NA has voting power with respect to only 571,526 shares; Barclays Global
Fund Advisors--444,433 shares (2.82%), of which Barclays Global Fund
Advisors has voting power with respect to only 331,326 shares; Barclays
Global Investors, Ltd.--13,844 shares (less than 1%); and Barclays Global
Investors Australia Limited--437 shares (less than 1%). The principal
business address of Barclays Global Investors, NA is 45 Fremont Street,
San Francisco, California 94105. In addition, Barclays PLC filed a
Schedule 13G with the SEC on February 9, 2006, on behalf of Barclays Bank
PLC and other entities, reporting as of December 31, 2005, 23,154 shares
of Common Stock (less than 1%) beneficially owned by Barclays Bank PLC,
which are not included in the table above for Barclays Global Investors,
NA. The principal business address of Barclays Bank PLC is 54 Lombard
Street, London, England EC3P 3AH.

(5) Based upon a Schedule 13 D/A filed with the SEC on February 22, 2008, by
GAMCO Investors, Inc. on behalf of Gabelli Funds, LLC, GAMCO Asset
Management, Inc., Gabelli Foundation, Inc., GGCP, Inc., GAMCO Investors,
Inc., and Mario J. Gabelli. As reported in the Schedule 13 D/A, as of
February 22, 2008, the Corporation's Common Stock was beneficially owned
as follows: Gabelli Funds, LLC--596,600 (3.78%), GAMCO Investors,
Inc.--846,307 (5.37%), Gabelli Foundation, Inc.--1,500 (less than 1%),
Mario J. Gabelli--500 (less than 1%), MJG Associates--1,500 (less than
1%). GAMCO does not have the authority to vote

30,300 of the reported shares. As indicated in the February 22, 2008
Schedule 13 D/A, the principal business address for GAMCO Investors, Inc.
is One Corporate Center, Rye, New York 10580.

(6) Based upon a Schedule 13 G/A filed with the SEC on February 7, 2008, by
Manulife Financial Corporation on behalf of Manulife Financial
Corporation, MFC Global Investment Management (U.S.), LLC, and MFC Global
Investment Management (U.S.A.) Limited. As reported on the Schedule 13
G/A, as of December 31, 2007, Common Stock was beneficially owned as
follows: MFC Global Investment Management (U.S.), LLC--998,350 shares
(6.33%); and MFC Global Investment Management (U.S.A.) Limited--6,432
shares (less than 1%). As indicated in the February 7, 2008 Schedule 13
G/A, the principal business address for Manulife Financial Corporation is
200 Bloor Street, East, Toronto, Ontario, Canada M4W 1E5.

(7) The Named Executive Officers have deferred compensation accounts under the
Directors and Executives Deferred Compensation Plan that are credited with
phantom shares of Common Stock: Mr. Capone (1,658 phantom shares); Mr.
DeVirgilio (709 phantom shares); Mr. Groft (208 phantom shares); and Mr.
Meyer (1,155 phantom shares). The phantom shares credited to Mr. Lant's
account under the plan are shown in the table "Stock Equivalents Ownership
of Directors," immediately below. Such shares are not reflected on the
"Beneficial Ownership" table.

STOCK EQUIVALENTS OWNERSHIP OF DIRECTORS

The following table sets forth the number of phantom shares of Common
Stock, as of December 31, 2007, credited to the accounts of the Corporation's
participating Directors under the Directors and Executives Deferred Compensation
Plan, including reinvested dividends (rounded to the nearest whole number).

The phantom shares shown in the following table are the sum of (i) phantom
shares granted to the Corporation's current non-employee Directors (I.E., each
Director other than Mr. Lant) as a part of their compensation for service as a
Director of the Corporation and (ii) phantom shares resulting from the deferral,
if any, into phantom shares of an independent Director's fees which would have
otherwise been paid to the Director in cash. The phantom shares shown in the
following table for Mr. Lant are the sum of the phantom shares resulting from
Mr. Lant's deferral into phantom shares of compensation earned by Mr. Lant for
his services as an executive of the Corporation.

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 "Director
Compensation" at page 45 of this proxy statement.

NAME NUMBER OF PHANTOM SHARES (1)
---- ----------------------------
Steven V. Lant ........... 5,381
Margarita K. Dilley ...... 3,502
Steven M. Fetter ......... 5,408
Stanley J. Grubel ........ 5,959
Manuel J. Iraola ......... 2,220
E. Michel Kruse .......... 5,262
Jeffrey D. Tranen ........ 4,672
Ernest R. Verebelyi ...... 1,926
Total (2) ................ 34,330

----------
(1) The information in this table is as of December 31, 2007.

(2) 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 independent
Directors (7 persons) is 28,949, which is less than 1% of the outstanding
shares of Common Stock; both percentages are calculated as of the record
date.

INSURANCE

The Corporation provides liability insurance for its Directors and
officers. Federal Insurance Company (CHUBB), Associated Electric and Gas
Insurance Services, Ltd., Energy Insurance Mutual, and Houston Casualty Company
are the principal underwriters of the current coverage, which extends until June
1, 2008. The annual cost of this coverage is approximately $948,000.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Corporation's Directors and executive officers, 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 SEC. These Reporting Persons are
required by SEC regulations to furnish the Corporation with copies of all
Section 16(a) forms they file.

Based solely on the Corporation's review of the forms and written
representations from the Corporation's Directors and executive officers, the
Corporation believes that all Section 16(a) filing requirements were complied
with during the fiscal year ended December 31, 2007.

EXECUTIVE COMPENSATION

COMPENSATION DISCUSSION AND ANALYSIS

This Compensation Discussion and Analysis explains our compensation
program for the Chief Executive Officer, the Chief Financial Officer, and the
other three most highly compensated executive officers. These individuals are
referred to collectively in this proxy statement as our "Named Executive
Officers."

Our Named Executive Officers for 2007 were: (i) Steven V. Lant, Chairman
of the Board, President and Chief Executive Officer of the Corporation; (ii)
Christopher M. Capone, Executive Vice President and Chief Financial Officer of
the Corporation; (iii) Carl E. Meyer, Executive Vice President of the
Corporation; (iv) Joseph J. DeVirgilio, Jr., Executive Vice President--Corporate
Services and Administration of the Corporation; and (v) W. Randolph Groft,
President and Chief Operating Officer of Griffith Energy Services, Inc.
("Griffith").

OBJECTIVES

Our executive compensation program is designed to achieve the following
objectives:

o Attract and retain experienced, talented and performance-driven
executives by offering compensation opportunities that are
competitive with opportunities offered by comparable companies in
the markets in which we compete for executive talent; and

o Align the interests of our executive officers and shareholders by
motivating executive officers to increase our shareholders' return
on investment and by rewarding executive officers for performance
related to the creation of long-term value.

COMPENSATION ELEMENTS

The key elements of our executive compensation program for our Named
Executive Officers are base salary, annual incentives, long-term incentives,
consisting of performance shares, and retirement benefits. The chart below
illustrates how each element of compensation fulfills our compensation
objectives discussed above:

--------------------------------------------------------------------------------
FIXED OR
PROGRAM FORM VARIABLE BUSINESS OBJECTIVES
--------------------------------------------------------------------------------
Base Salary Cash Fixed Attract and retain
experienced,
talented and
performance-driven
executives
--------------------------------------------------------------------------------
Annual Short-term Cash Variable Attract and retain
Incentive ("STI") experienced,
talented and
performance-driven
executives

Reward the
achievement of
strong corporate and
personal performance

Emphasize variable
performance-based
compensation
--------------------------------------------------------------------------------
Long-term Incentive Equity Variable Attract and
(I.E., performance shares) retain experienced,
("LTI") talented and
performance-driven
executives

Reward the
achievement of
strong corporate
performance

Reward positive
stock price
performance and
enhancement of
long-term value

Promote stock
ownership to align
interests with
shareholders

Emphasize variable
performance-based
compensation
--------------------------------------------------------------------------------
Retirement Cash Fixed Retain experienced,
talented and
performance-driven
executives
--------------------------------------------------------------------------------

PAY FOR PERFORMANCE

The Corporation's long-term success is based on achieving key strategic,
financial and operational goals from year-to-year. As a result, our executive
compensation program emphasizes pay for performance, through variable or "at
risk" compensation. This means that a significant portion of our Named Executive
Officers' compensation is directly contingent

upon achieving specific results that are important to our long-term success and
growth in shareholder value. As described in the table above, the variable
components of our compensation program include annual incentives and performance
shares.

The Compensation Committee has not established a specific formula for the
allocation of fixed and variable compensation components and instead retains the
discretion to modify the allocation from year-to-year. As illustrated below, for
2007, approximately 43% of the total direct compensation opportunity for our
Named Executive Officers (other than Mr. Lant) was weighted (assuming payout at
target levels) towards variable components. The total direct compensation
opportunity for the Chief Executive Officer was roughly 56% variable to reflect
his greater job scope and responsibility.

2007 TOTAL DIRECT COMPENSATION OPPORTUNITY

CHIEF EXECUTIVE OFFICER

[PIE CHART]

BASE SALARY 44%
STI 26%
LTI 30%

AVERAGE OF THE OTHER NAMED EXECUTIVE OFFICERS

[PIE CHART]

BASE SALARY 57%
STI 23%
LTI 20%

The percentage of total direct compensation allocated towards variable
components (assuming payout at target levels) has been increasing each year,
which is consistent with the practices of the companies in our compensation peer
groups described below. For example, the percentage of variable compensation for
our Named Executive Officers (other than Mr. Lant) was roughly 37% in 2005 and
39% in 2006. The percentage of variable compensation for Mr. Lant was roughly
51% in 2005 and 53% in 2006.

PAY COMPETITIVELY WITHIN THE RELEVANT MARKET FOR EXECUTIVE TALENT

We believe that each element of our compensation program should remain
competitive in order to attract and retain key executive talent. To help
determine the competitive market, the Compensation Committee relies, in part, on
information about the compensation being paid to executives (i) who are working
at companies engaged in businesses comparable to the Corporation's businesses
and (ii) who have roles and responsibilities that are similar to the roles and
responsibilities of the Corporation's executives.

The Committee considers this market information when establishing base
salary, annual incentive and long-term equity opportunities, and generally
strives to structure each element close to the median of the market data.
However, the Compensation Committee retains the flexibility to make adjustments
in order to respond to market conditions, promotions, individual performance or
other circumstances. The Compensation Committee also monitors the
competitiveness of our retirement, severance and perquisite programs; however,
these benefit programs generally do not change from year-to-year.

The Compensation Committee has retained the Hay Group (the "Hay Group") to
advise it on the form and amounts of Director and executive compensation. The
Hay Group reports directly to the Compensation Committee and serves at the sole
pleasure of the Committee. As in prior years, the Compensation Committee asked
the Hay Group to provide information about whether the compensation packages of
our executive officers were competitive with the market in which we compete for
executive talent. The Hay Group was also asked to determine market levels for
the following components of our executives' compensation at the median and the
25th and 75th percentiles:

o Base salary

o Total cash compensation, which is base salary plus actual cash
incentive compensation

o Total direct compensation, which is total cash compensation plus
equity awards

In doing this work, the Hay Group compiled compensation information about
companies in three separate groups ("comparator groups").

The first comparator group consisted of 15 utility and energy companies
operating in the United States. The criteria for inclusion in this custom peer
group were developed by the Compensation Committee in consultation with the Hay
Group; the criteria were that a company have between 50% and 200% of Energy
Group's annual revenues and at least 5% of assets invested in non-regulated
businesses. The compensation information used by the Hay Group with respect to
this group was gathered from proxy statements filed by each company in the group
with the SEC. This group was used as a comparator group in determining the
compensation levels for Mr. Lant, Mr. Meyer, and Mr. Capone in 2007 because the
Hay Group and the Compensation Committee believe (i) the scope and complexity of
the respective positions of these three executives correspond with the
responsibilities of persons occupying similar positions at the companies in this
comparator group and (ii) this custom peer group of companies, based on size of
revenues and diversification of business activities, provides information that
reasonably corresponds to the market for executive talent that is relevant to
the compensation for these three executives. The 15 companies in this comparator
group (listed in alphabetical order) were:

Avista Corp Laclede Group Inc
Cleco Corp Semco Energy Inc
DPL Inc South Jersey Industries Inc
Duquesne Light Holdings Inc Southwest Gas Corp
El Paso Electric Co/TX UIL Holdings Corp
Energen Corp Unisource Energy Corp
Equitable Resources Inc/PA Vectren Corp
Idacorp Inc

This first comparator group was not used for Mr. DeVirgilio because the
Hay Group concluded that his job position involves numerous functions that are
not necessarily performed by persons with similar titles at the companies in
this group. Rather, in reviewing Mr. DeVirgilio's compensation level, the Hay
Group used a comparator group known as the "Hay Group's 2007 National Utility
Executive Compensation Database." This second comparator group was also used as
a resource by the Hay Group in connection with its analysis of the
competitiveness of Mr. Lant's, Mr. Capone's and Mr. Meyer's compensation.

For 2007, the Hay Group's National Utility Executive Compensation Database
consisted of 53 utilities in the United States, including the Corporation, that
participated in a national survey conducted by the Hay Group regarding
compensation structures and pay levels. Based on information supplied by the 53
participating utility companies, the Hay Group compiled a proprietary database
with respect to the roles, responsibilities, and compensation levels of the
officer positions at the 53 participating companies. This information was
gathered and analyzed in recognition of the practical reality that job
responsibilities of persons with similar titles may vary significantly from
company to company, and that a person's title is not necessarily descriptive of
a person's duties. Using its own proprietary evaluation methodology, the Hay
Group considered the scope and complexity of each officer's position within the
52 other participating companies, compared it with the scope and complexity of
the officer positions at the Corporation, and provided the Compensation
Committee with an assessment of the relative position of the compensation being
paid to the Corporation's officers in light of the compensation being paid to
persons carrying duties of similar scope and complexity at the companies
participating in the survey.

The Hay Group's proprietary evaluation methodology focuses on identifying
positions within the comparator group that have a scope and complexity of
responsibilities that are comparable to those duties exercised by particular
executives of the Corporation. While information about positions in each of the
52 other companies was considered, particular companies in the comparator group
may not have had any positions that were considered comparable to the complexity
and scope of the particular positions at the Corporation while other companies
may have had a number of positions that were considered comparable.

The 53 companies included in this comparator group for 2007 (listed in
alphabetical order) were:

A & N Electric Cooperative
AGL Resources
Alabama Electric Cooperative
Allegheny Energy
Aqua America
Atmos Energy
California Independent System Operator
CenterPoint Energy
CH Energy Group
City of Philadelphia--Philadelphia Gas Works
Des Moines Water Works
Dominion Resources
Dominion Resources--Dominion Delivery
Dominion Resources--Dominion Energy
Dominion Resources--Dominion Exploration & Production
Dominion Resources--Dominion Generation
Edison International--Edison Mission
ElectriCities of North Carolina
FPL Group--Florida Power & Light
Iroquois Pipeline
Kinder Morgan
Mid-Carolina Electric Cooperative
Midland Cogeneration Venture
Midwest Independent Transmission System Operator
Minnkota Power Cooperative
Mirant
Montana Dakota Utility
Nashville Electric Service
National Fuel Gas
New York Power Authority
Nuclear Management
PJM Interconnection
Progress Energy
Public Works Commission of Fayetteville, NC
RWE Thames Water--American Water Works
Sacramento Municipal Utilities District
Sierra Southwest Co-Op Services
South Jersey Industries
South Jersey Industries--South Jersey Gas
Southern Company
Southern Minnesota Municipal Power Agency
Southern Union
Southern Union--Missouri Gas Energy
Southern Union--Panhandle Energy
Southwest Gas
SUEZ Energy
Texas Gas Transmission
TXU
UGI
United Water
Unitil
Vectren
WPS Resources

Because Mr. Groft's responsibilities are in unregulated businesses, and
primarily in the fuel distribution business of Griffith, the Compensation
Committee and the Hay Group did not think it appropriate to use either of the
above-described comparator groups for analyzing Mr. Groft's compensation levels.
Rather, a third comparator group known as the "Hay Group's General Market
Executive Compensation Database" was used in considering Mr. Groft's
compensation for 2007. This Database consisted of 626 separate business units
that participated in a national survey conducted by the Hay Group regarding
compensation structures and pay levels. The participating business units operate
across a broad spectrum of industries in the United States. The Hay Group used
this Database for Mr. Groft because it believes the broad spectrum of
compensation information in the Database enables the Hay Group, using its
proprietary evaluation methodology, to assess the relative position of the
compensation being paid to Mr. Groft in light of the compensation being paid to
persons carrying duties of similar scope and complexity at the business units
participating in the national survey.

DESCRIPTION OF OUR EXECUTIVE COMPENSATION PROGRAM

A brief summary of the components of the compensation program for our Named
Executive Officers is set forth below.

BASE SALARY

We provide competitive base salaries to attract and retain key executive
talent and provide them with a degree of financial stability. Base salaries also
form the basis for calculating other compensation opportunities for our Named
Executive Officers, such as their annual and long-term incentive opportunities,
retirement benefits and change in control severance benefits.

Base salaries are designed to be competitive with base salaries paid by
the companies in the comparator groups to executives with responsibilities that
are similar to the responsibilities of our Named Executive Officers. The
Committee generally targets base salary at the median level of the salary
distribution levels in the comparator groups. The target numbers are then
adjusted to reflect the individual's scope of responsibilities, level of
experience and skill, and the quality of his or her performance over time.
Attention is also given to maintaining appropriate internal salary relationships
among the Corporation's executive officers, and to recognizing succession
planning goals. In this connection, Mr. Lant, as Chief Executive Officer,
provides the Compensation Committee with an annual evaluation of the performance
of each of the four other Named Executive Officers and with a recommendation
concerning salary adjustments for each of them. Mr. Lant's performance is
reviewed and evaluated by the Compensation Committee in executive session.

After considering the evaluations, the recommendations, and the data from
the comparator group analyses, and after making its own assessment of individual
performance, the Compensation Committee develops and submits recommendations to
the independent Directors on the Board for their review and approval with
respect to the salaries for each Named Executive Officer. For 2007, these
salaries were set at or close to the median level for each person (I.E., within
a 5% variance from median). Mr. Lant's base salary is higher than the other
Named Executive Officers to reflect the greater policy and decision making
responsibility of the Chief Executive Officer position and the higher level of
responsibility that he bears with respect to the Corporation's strategic
direction and financial and operating results.

For more information about the 2007 base salaries for each of our Named
Executive Officers, please refer to the "Salary" column of the Summary
Compensation Table.

ANNUAL INCENTIVES

Our Named Executive Officers are eligible to receive annual incentive cash
payments based on performance against established performance targets. The
annual incentive program is an important component of total cash compensation
because it rewards our executives for achieving targeted annual financial and
operating results and emphasizes variable or "at risk" compensation. Annual
incentives are also part of total cash compensation which forms the basis for
calculating other compensation opportunities for our Named Executive Officers,
such as their retirement benefits and change in control severance benefits.

The annual incentives are calculated as a percentage of base salary. They
are intended to be competitive with annual incentives offered by the companies
in the relevant comparator groups. The targets for the annual incentive program,
as percentages of base salary, have historically been below median market levels
for our Named Executive Officers. The Compensation Committee has been
implementing a plan to gradually increase the target levels to the median levels
of the comparator groups. For 2007, the annual incentive award opportunities
were as follows: (i) the target percentage of base salary for Mr. Lant was
increased from 50% in 2006 to 60% in 2007; (ii) the target percentages of base
salary for Mr. Meyer, Mr. Capone and Mr. DeVirgilio were increased from 35% in
2006 to 40% in 2007; and (iii) the target percentage of base salary for Mr.
Groft was increased from 30% in 2006 to 40% in 2007. These percentage levels for
2007 remained below median target levels among the comparator groups. The median
target levels in the markets relevant to Mr. Lant were in a range from 70% to
75% of base salary. The median target levels in the markets relevant to the
other four Named Executive Officers were in a range from 45% to 55% of base
salary.

The annual incentive opportunity will vary, from 0% to 150% of the
targeted percentage of base salary, according to the level of overall corporate
performance achieved for the year relative to the established performance
targets. As illustrated below, the payout schedule is a sliding scale, based on
straight line interpolation, that is designed to motivate and reward superior
performance, as the payout percentage directly corresponds to the percentage of
target performance that is achieved.

PERFORMANCE MATRIX

[GRAPHIC OMITTED]

For 2007, the corporate performance goals and weighting of each goal were as
follows:

------------------------------------------------------------------------------------------------------------------------------------
NAMED
EXECUTIVE PERFORMANCE
OFFICER GOAL WEIGHT THRESHOLD TARGET SUPERIOR BUSINESS OBJECTIVE
------------------------------------------------------------------------------------------------------------------------------------

Lant, Energy Group's earnings 75% $2.48 $2.68 $2.88 The goals focus on Energy Group performance, as
Capone, per share, normalized these executives have responsibility for
and for heating and cooling corporate-wide performance. The goals were
DeVirgilio degree days, both chosen because:
revenue and expense, and
major storms, and net of o The Compensation Committee and the Board
interest income believe that the primary driver of share price
growth is earnings per share; and

Investment of capital 25% $15 $20 $25 o The Compensation Committee and the Board
outside of Central million million million believe that accelerating investment beyond
Hudson Central Hudson's capital investment program
will accelerate earnings growth.

In calculating earnings per share for these
executives, we adjust for unusual weather (as we
also do for Mr. Meyer and Mr. Groft) and we
exclude interest from our short-term investment
program because these may distort the
Corporation's performance during a year. As a
result, the executives will neither benefit nor
be penalized as a result of certain matters over
which their individual performance has little
impact.
------------------------------------------------------------------------------------------------------------------------------------

Meyer Central Hudson's 60% $1.94 $2.04 $2.14 The goals focus on Central Hudson
earnings per share, performance, as Mr. Meyer has
normalized for heating responsibility for that business. The goals
and cooling degree days, were chosen because:
both revenue and
expense, and major storms o The Compensation Committee and the Board
believe that the primary driver of share
price growth is earnings per share;

Customer 20% 53rd Top Top o Customer satisfaction is a primary
Satisfaction percentile third quartile business objective for our regulated
utility business, and directly relates to
Reliability 20% 1.50 1.45 1.40 cost recovery and achievement of allowed
(SAIFI) rates of return on capital; and

o Reliability is a primary driver of
utility customer satisfaction and is
viewed as such by Central Hudson's
regulatory agency. SAIFI (System Average
Interruption Frequency Index) has been
selected as a valid measure of
reliability.
------------------------------------------------------------------------------------------------------------------------------------
Groft Griffith earnings per 60% $0.20 $0.24 $0.28 The goals focus on Griffith's performance,
share, normalized for as Mr. Groft has responsibility for that
heating and cooling business. The goals were chosen because:
degree days, both
revenue and expense o The Compensation Committee and the Board
believe that the primary driver of share
price growth is earnings per share; and
Acquisitions 20% $3 $5 $10
million million million o Acquisitions, adding residential
customers and improving delivery
Additional Residential 10% 0 600 1,200 efficiency are the three focus areas of
Customers--Automatic Griffith's strategy to increase its
Delivery profitability an earnings contribution
to the Corpor over time. Acquisitions
Delivery Efficiency 10% 11.2(cent) 11.0(cent) 10.6(cent) were weighted more heavily because the
Compensation Committee and the Board
believe that they can produce earnings
growth more quickly and to a greater
extent.
------------------------------------------------------------------------------------------------------------------------------------

The resulting annual incentive amount may be adjusted upwards or downwards
by up to 50% based upon the Compensation Committee's assessment of the
individual's performance. We refer to this possible increase or decrease as a
"contributor" adjustment. A person who meets the responsibilities of his or her
position by performing at expected levels of personal performance would normally
not receive a contributor adjustment. If a person fails to perform at expected
levels during the performance year, he or she would likely receive a reduction
in the calculated incentive payment; similarly, if a person performs above
expectations or performs exceptionally well on particular challenges during the
performance year, he or she would likely receive an increase in the calculated
incentive payment.

The Compensation Committee assessed Mr. Lant's performance, and determined
the amount of his contributor adjustment for 2007. The Committee increased Mr.
Lant's annual incentive amount by 15% because of (a) his strong leadership in
developing a comprehensive human resource development program for the
Corporation, (b) his strong leadership in guiding our businesses to a
performance-driven culture in which individual and business unit productivity is
emphasized, (c) his strategic planning and leadership in achieving the
investment of over $35 million in unregulated businesses during 2007, and (d)
his success in positioning the Corporation to be able to achieve further
significant expansion into the unregulated businesses in the years ahead.

With regard to the four other Named Executive Officers, Mr. Lant, as the
Chief Executive Officer, made recommendations to the Compensation Committee for
adjustments based on his evaluation of each individual's contribution to
achieving corporate opportunities and meeting corporate challenges, as well as
an evaluation of the quality of the individual's performance in exercising
responsibility described in his position description. After taking Mr. Lant's
recommendations into consideration, and after making its own assessment of each
person's performance, the Compensation Committee recommended, and the
independent Directors of the Board, approved the following contributor
adjustments for 2007:

(i) Mr. Capone's incentive amount was increased by 20% because of (a)
his leadership in seizing strategic opportunities to expand
investments in unregulated business at levels beyond our business
plan for 2007, and (b) his success in building, through both
internal and external recruiting, strong and effective executive
teams in our financial, regulatory and business development
departments;

(ii) Mr. Meyer's incentive amount was increased by 15% because of (a) his
leadership in guiding Central Hudson's achievement of excellent
reliability and safety performances in 2007, and (b) his leadership
in community activities in the Hudson Valley, thus enhancing the
economic vitality of the service territory in which Central Hudson
operates, and enhancing the Corporation's image as a good corporate
citizen;

(iii) Mr. DeVirgilio's incentive amount was increased by 25% because of
(a) his strategic leadership in guiding Griffith's success in making
acquisitions at levels well above plan in 2007, and in achieving
important improvements in the effectiveness of Griffith's marketing
programs and operating procedures, and (b) his effectiveness in
developing the capabilities of the executives who report to him; and

(iv) Mr. Groft's incentive amount was increased by 10% for his "hands-on"
leadership in successfully executing our strategic plans for
enhancing Griffith's performance through improved operating
procedures and improved marketing programs, and in building a more
effective management team.

In addition to participating in the short-term incentive program, Mr.
Groft also participates in an acquisition incentive program, which was developed
to motivate employees at Griffith to acquire and integrate new businesses that
will increase the Corporation's profitability. The incentive is structured so
that a "pool" is funded if a target return on equity attributable to an acquired
company is met or exceeded during the first 12 months of operation. If the
threshold return on equity is achieved, then a pool is funded with an amount
equal to 16% of the acquired company's net income after tax. Employees at
Griffith that were involved in the acquisition and integration of the acquired
company participate in the pool based on a pre-established acquisition incentive
opportunity percentage. For 2007, Mr. Groft's acquisition incentive opportunity
resulted in an aggregate acquisition incentive of $10,182.

For more information on the 2007 annual incentive opportunities for our
Named Executive Officers, please refer to the "Grants of Plan-Based Awards"
section of this proxy statement at page 34.

LONG-TERM INCENTIVES

In 2007 the Corporation granted performance shares to our Named Executive
Officers. The performance shares are granted under our Long-Term Equity
Incentive Plan and are intended to be fully deductible for federal income tax
purposes under the performance-based compensation exception to Section 162(m) of
the Internal Revenue Code.

The performance shares are designed to focus the attention of our Named
Executive Officers on strategic goals spanning more than the current year, and
to align the interest of executives with the Corporation's goal of creating
long-term shareholder value. For example, the shares are earned if certain
performance objectives are satisfied over a three-year period (I.E., a
performance cycle), the number of shares actually received at the end of a
performance cycle increases or decreases according to the level of performance
achieved during the performance cycle, and the value of the shares granted can
be expected to vary with the corporate performance achieved.

The Corporation's long-term equity incentive opportunities are calculated
as a percentage of base salary and they are intended to be competitive with
long-term incentive opportunities offered by companies in the comparator groups.
As with the Corporation's annual short-term incentive program, the targets for
the long-term incentive program, as percentages of base salary, have
historically been below median market levels for the Named Executive Officers,
and the Compensation Committee has been implementing a plan to increase the
target levels over a number of years to the median levels of the comparator
groups. For 2007, the long-term equity incentive opportunities are set forth in
the chart below. These percentage levels for 2007 remain below median target
levels among the comparator groups for each person other than Mr. Groft.

-----------------------------------------------------------------------------------------------------------------------------------
NAME LONG-TERM INCENTIVE OPPORTUNITY MEDIAN OF THE COMPARATOR GROUP
-----------------------------------------------------------------------------------------------------------------------------------

Mr. Lant The target percentage of base salary was increased The median target levels in the comparator groups
from 60% in 2006 to 70% in 2007. were in a range from 90% to 100% of base salary.
-----------------------------------------------------------------------------------------------------------------------------------
Mr. Capone, Mr. Meyer, The target percentages of base salary were The median target levels in the comparator groups
and Mr. DeVirgilio increased from 35% in 2006 to 40% in 2007. were in a range from 35% to 55% of base salary.
-----------------------------------------------------------------------------------------------------------------------------------
Mr. Groft The target percentage of base salary was increased The median target levels in the comparator group
from 20% in 2006 to 25% in 2007. were 20% to 25% of base salary.
-----------------------------------------------------------------------------------------------------------------------------------

The performance share award opportunity is generally determined in
November or December of the year preceding the year in which the award is
granted. The target number of performance shares is determined by dividing each
person's award opportunity (I.E., an amount equal to a percentage of his or her
base salary) by the closing price of a share of the Corporation's Common Stock
on the first Monday following the first Tuesday in January of the following
calendar year. The Committee does not grant performance shares in anticipation
of the release of material nonpublic information. Similarly, the Corporation
does not time the release of material nonpublic information based on performance
share grant dates.

Payment of the performance shares granted in 2007 will be based on the
extent to which the Corporation achieves certain performance metrics during a
three-year performance cycle starting January 1, 2007 and ending December 31,
2009. The performance metrics consist of two measurements of equal weight, as
described below:

-----------------------------------------------------------------------------------------------------------------------------------
PERFORMANCE METRIC WEIGHT BUSINESS OBJECTIVE
-----------------------------------------------------------------------------------------------------------------------------------

The percentage growth in the Corporation's
earnings per share over the three-year 50% The Compensation Committee and the Board believe that the
performance cycle as compared to the Corporation's shareholders desire a substantial dividend payment and
percentage growth in earnings per share of the consistent share price appreciation over time, which in combination
companies in the Edison Electric Institute provide an attractive total return on investment.
Index (the "EEI Index") over the same time
period Earnings per share growth is used as a performance metric because the
Compensation Committee and the Board believe that earnings per share
growth is the primary driver of share price appreciation.
-----------------------------------------------------------------------------------------------------------------------------------
The average of the Corporation's annual 50% The Compensation Committee and the Board believe that significant
dividend yield on book value over the macro-economic factors, such as interest rates, affect the entire
three-year performance cycle as compared to industry of which the Corporation is a member. The Board believes
the average of the annual dividend yield on that the relative performance of the Corporation within its industry
book value of the companies in the EEI Index peer group is the best measure of performance and therefore assesses
over the same time period earnings per share growth and dividend yield against the EEI Index.
-----------------------------------------------------------------------------------------------------------------------------------

The number of shares of the Corporation's Common Stock earned and paid
will range, according to the level of performance achieved, from 0% to 150% of
the performance shares granted. This payout schedule is a sliding scale that is
designed to motivate and reward achievement of targeted performance, as the
payout percentage decreases at a faster rate if targeted performance is not
achieved. The following graph illustrates this point:

PERFORMANCE MATRIX

[GRAPHIC OMITTED]

The Compensation Committee has the ability and authority to reduce, but
not increase, the amount of performance shares that become earned under the
payment schedule. For more information on the performance shares granted to our
Named Executive Officers in 2007, please refer to the "Grants of Plan-Based
Awards" section of this proxy statement at page 34.

The vesting of the performance shares for the 2005-2007 performance cycle
depends on the Corporation's performance relative to companies in the EEI Index
during the period commencing January 1, 2005 and ending December 31, 2007.

As of the date of this proxy statement, the financial information for all the
companies in the EEI Index was not yet available and, therefore, the Corporation
was not able to determine the payout level.

STOCK OWNERSHIP GUIDELINES

In November and December 2007, the Compensation Committee approved new
stock ownership guidelines for the Named Executive Officers to achieve within
five years from January 1, 2008, I.E., by December 31, 2012. For this purpose,
stock ownership includes shares of the Corporation's Common Stock owned
directly, in trust, or as phantom shares under the Directors and Executives
Deferred Compensation Plan.

The ownership guidelines were implemented to encourage our senior
executives to own a significant amount of the Corporation's Common Stock. We
recognize that our owners (I.E., our shareholders) want us to both preserve and
increase the value of our Corporation. We want our executives to focus on
long-term as well as short-term success, and we want them to think as owners
when they balance the risks and rewards involved with particular business
decisions. We believe the equity ownership interests that result from our stock
ownership guidelines will enhance the motivation of our executives to think as
owners.

--------------------------------------------
GUIDELINES FOR
OWNERSHIP OF
NAMED EXECUTIVE OFFICER COMMON STOCK
--------------------------------------------
Mr. Lant 23,000 shares
--------------------------------------------
Mr. Meyer 6,000 shares
Mr. Capone 6,000 shares
Mr. DeVirgilio 6,000 shares
--------------------------------------------
Mr. Groft 5,000 shares
--------------------------------------------

RETIREMENT BENEFITS

In order to attract and retain key executive talent at the Corporation and
its utility subsidiary, Central Hudson, the Compensation Committee believes that
it is important to provide the Named Executive Officers with retirement
benefits. These retirement benefits are provided primarily under the
Supplemental Executive Retirement Plan, which provides benefits in excess of
those provided under the Retirement Income Plan. The Supplemental Executive
Retirement Plan is designed to work in conjunction with the Retirement Income
Plan to provide each Named Executive Officer, other than Mr. Groft, with a
retirement benefit equal to 57% of his or her applicable final average pay at
age 61 with 30 years of service. Base salary and annual incentives are included
in a Named Executive Officer's final average pay. Therefore, adjustments to a
Named Executive Officer's base salary and annual incentives have an impact on
the amount of his retirement benefits.

A participant's Supplemental Executive Retirement Plan benefit generally
becomes vested if, while employed by the Corporation or its affiliates, he or
she attains the normal retirement age of 61, or attains his or her early
retirement date of age 55 with ten years or more of vesting service. The
Compensation Committee believes that this vesting schedule enhances our
retention program for our Named Executive Officers and rewards their long-term
commitment to the Corporation.

Based on information provided by the Hay Group, the Compensation Committee
believes that the retirement program is consistent with the retirement programs
and benefit levels offered by many of the companies in the comparator groups. In
this regard, the terms and benefit levels were established in 2005 after
consultation with the Hay Group and a review of benefit levels provided to
senior executives in the comparator groups. In setting the benefit levels, the
Compensation Committee did not consider compensation previously paid to our
Named Executive Officers, including any accumulated gains under prior
equity-based compensation awards, because they were relatively minor.

Mr. Groft does not participate in the Corporation's defined benefit
pension program because he is an employee at Griffith, which historically has
not provided defined benefit retirement plans to its executives. Even though Mr.
Groft does not participate in the defined benefit program, he is provided with
the following retirement benefits:

o He receives an enhanced profit sharing contribution to his 401(k)
plan, the amount of which is set forth in the "All Other
Compensation" column of the Summary Compensation Table; and

o The Corporation annually reimburses Mr. Groft for a portion of the
annual premiums due under a $664,000 whole life policy owned by him.
The annual amounts paid by the Corporation equal 3% of Mr. Groft's
then-current annual base compensation, "grossed-up" for applicable
taxes.

For more information on these retirement benefits and our retirement
program, please refer to the "Pension Benefits" section of this proxy statement
at page 36.

HEALTH, WELFARE AND OTHER PERSONAL BENEFITS

In addition to the principal compensation components described above, our
Named Executive Officers are entitled to participate in all health, welfare,
fringe benefit, and other arrangements generally available to other salaried
employees. We also may, as considered reasonable and appropriate on a
case-by-case basis, provide our officers, including our Named Executive
Officers, with limited additional other personal benefits. For example, on March
1, 2004, the Corporation established a financial planning program for its
executives, including its Named Executive Officers. After an executive completes
his initial financial planning program, the executive is eligible for up to one
thousand dollars of financial planning services on an annual basis. A full
financial plan update is available to each executive in the sixth year (or the
fourth year for those executives age 55 and over) following the completion of
his initial financial planning program.

The Compensation Committee believes that these health, welfare, and other
personal benefits are reasonable and consistent with the practices of the
companies in the relevant comparator groups. The Compensation Committee also
believes that these benefits assist the Corporation in attracting and retaining
key executives.

SEVERANCE ARRANGEMENTS

The Corporation does not have employment agreements with its executive
officers. The Compensation Committee believes that the absence of employment
agreements provides the Corporation with more flexibility in adjusting the
compensation levels of its executive officers.

However, the Corporation has entered into change in control agreements
with its executive officers, including its Named Executive Officers. Under these
agreements, each Named Executive Officer would be entitled to certain payments
and benefits if a change in control were to occur and the Corporation or its
affiliates terminated the executive's employment without "cause" or the
executive terminated his employment with the Corporation or its affiliates for
"good reason" within a three-year period (a two-year period for Mr. Groft)
following such change in control. The benefit levels generally include a
multiple of base salary and annual incentive, along with continued welfare
benefits, and are described in more detail under the "Potential Payments Upon
Termination or Change in Control" section of this proxy statement.

The agreements are designed to encourage the executive's full attention
and dedication to the Corporation currently and in the event of any threatened
or pending change in control. As described above, the agreements only provide
benefits on a "double trigger," meaning that the benefits are due only if our
executives incur a qualifying termination in connection with a change in
control. This approach strikes an appropriate balance between providing
incentives for our executives to build long-term shareholder value while
providing a potential acquirer the flexibility to retain executive talent after
a transaction.

The Compensation Committee believes that the protections afforded by the
change in control agreements are a valuable incentive for attracting and
retaining key executives and are competitive with those of other corporations.
Based on information provided by the Hay Group, change in control arrangements
are used by a vast majority of the companies in the comparator groups, and the
terms of our change in control agreements are intended to be consistent with
prevailing market practices. In this regard, the terms and benefit levels were
established in 2005 after consultation with the Hay Group and a review of
benefit levels provided to senior executives in the comparator groups.

As described in more detail under the "Potential Payments Upon Termination
or Change in Control" section of this proxy statement, base salary and annual
incentives are included in a Named Executive Officer's severance benefit
calculation under the change in control agreements. Therefore, adjustments to a
Named Executive Officer's base salary and annual incentives have an impact on
the amount of his severance benefits under the change in control agreements.
This fact did not affect decisions made with respect to base salary and annual
incentive adjustments in 2007, as these change in control agreements may never
come into effect.

All equity awards held by our Named Executive Officers would immediately
vest upon a change in control. Unlike the cash severance described above, the
vesting is not contingent upon a qualifying termination within a certain period
following a change in control. This "single trigger" is appropriate because the
Compensation Committee wants our Named Executive Officers to have the
opportunity to fully recognize the value of equity awards at the time of a
change in control to the same extent as our shareholders.

COMPENSATION COMMITTEE REPORT

The Compensation Committee reviewed and discussed the Compensation
Discussion and Analysis contained in this proxy statement with the management of
the Corporation and, based on such review and discussion, the Compensation
Committee recommended to the Board of Directors that the Compensation Discussion
and Analysis be included in this proxy statement and incorporated in the
Corporation's Annual Report on Form 10-K for the fiscal year ended December 31,
2007.

The Compensation Committee:

Stanley J. Grubel, Chair
Margarita K. Dilley
Manuel J. Iraola
Ernest R. Verebelyi

SUMMARY COMPENSATION TABLE

The following table sets forth information regarding the compensation of
the Named Executive Officers for 2006 and 2007. Mr. Groft was not a Named
Executive Officer in 2006.

-----------------------------------------------------------------------------------------------------------------------------------
CHANGE IN
PENSION
VALUE AND
NON-EQUITY NONQUALIFIED
INCENTIVE DEFERRED
STOCK OPTION PLAN COMPENSATION ALL OTHER
NAME AND BONUS AWARDS AWARDS COMPENSATION EARNINGS COMPENSATION
PRINCIPAL SALARY ($) ($) ($) ($) ($) ($) TOTAL
POSITION YEAR ($) (1) (2) (3) (4) (5) (6) ($)
-----------------------------------------------------------------------------------------------------------------------------------

Steven V. Lant, 2007 525,000 58,511 180,636 4,406 390,075 235,700 10,330 1,404,658
Chairman 2006 490,000 56,840 220,996 15,658 284,200 481,300 7,500 1,556,494
of the Board,
President,
and Chief
Executive
Officer
-----------------------------------------------------------------------------------------------------------------------------------
Christopher M. 2007 260,000 25,740 54,844 0 128,700 56,300 8,542 534,126
Capone, 2006 240,000 14,616 66,077 0 97,440 54,900 7,500 480,533
Executive
Vice President
and Chief
Financial
Officer
-----------------------------------------------------------------------------------------------------------------------------------
Carl E. Meyer, 2007 309,000 20,394 60,032 4,687 135,960 0 12,035 542,108
Executive 2006 291,000 16,456 72,076 14,730 109,707 6,900 7,500 518,369
Vice President
-----------------------------------------------------------------------------------------------------------------------------------
Joseph J. 2007 270,000 33,413 55,928 2,604 133,650 6,500 10,123 512,218
DeVirgilio, Jr., 2006 250,000 0 67,307 8,592 101,500 145,200 7,500 580,099
Executive
Vice President
--Corporate
Services and
Administration
-----------------------------------------------------------------------------------------------------------------------------------
W. Randolph 2007 240,000 12,624 32,865 2,604 136,422 0 33,074 457,589
Groft,
President and
Chief
Operating
Officer of
Griffith
-----------------------------------------------------------------------------------------------------------------------------------

----------
(1) Reflects the contributor adjustment, if any, in the short-term incentive
amounts for our Named Executive Officers. For additional information about
the 2007 short-term incentive opportunities, please refer to the "Grants
of Plan-Based Awards" section of this proxy statement at page 34.

(2) Reflects the aggregate dollar amount recognized for financial statement
reporting purposes with respect to performance share awards granted to
each Named Executive Officer in 2007 and in prior years. The aggregate
dollar amount was determined in accordance with Financial Accounting
Standards Board Statement of Financial Accounting Standards No. 123
(revised 2004), SHARE BASED

PAYMENT ("FAS 123R"); however, the calculations disregard the estimate of
forfeitures related to service-based vesting conditions. See Note 11 of
the Consolidated Financial Statements contained in the Corporation's
Annual Report on Form 10-K for the year ended December 31, 2007 ("Annual
Report") for an explanation of the assumptions made by the Corporation in
the valuation of these awards. For information about the performance
shares granted in 2007, please refer to the "Grants of Plan-Based Awards"
section of this proxy statement at page 34.

(3) Reflects the aggregate dollar amount recognized for financial statement
reporting purposes with respect to outstanding stock options granted to
our Named Executive Officers in 2003. The aggregate dollar amount was
determined in accordance with FAS 123R; however, the calculations
disregard the estimate of forfeitures related to service-based vesting
conditions. See Note 11 of the Consolidated Financial Statements contained
in the Annual Report for an explanation of the assumptions made by the
Corporation in the valuation of these awards.

(4) Reflects the short-term incentive opportunity earned by our Named
Executive Officers. Please refer to the "Bonus" column of the Summary
Compensation Table for the amount of the contributor adjustment, if any,
in the short-term incentive award earned by our Named Executive Officers.
For additional information about the 2007 short-term incentive
opportunities, please refer to the "Grants of Plan-Based Awards" section
of this proxy statement at page 34.

(5) Reflects the increase in the present value of the accumulated benefits
under the Retirement Income Plan, Supplemental Executive Retirement Plan
and Retirement Benefit Restoration Plan. The increase in the present value
of the accumulated benefits was based on a September 30 fiscal year-end
for the Retirement Income Plan and a calendar year-end for the
Supplemental Executive Retirement Plan and Retirement Benefit Restoration
Plan. For 2007, Mr. Meyer's accumulated benefits actually decreased by
$26,300. For information on these plans and benefits, please refer to the
"Pension Benefits" section of this proxy statement at page 36. Our Named
Executive Officers did not accrue any above-market earnings under the
Directors and Executives Deferred Compensation Plan, and therefore we have
not reported any earnings credited under that plan in this column.

(6) Reflects the contributions made on behalf of each Named Executive Officer
under the 401(k) Plan, which equaled $19,386 for Mr. Groft and $7,750 for
each other Named Executive Officer. This column also reflects the
reimbursement of Mr. Groft in the amount of $13,247 for premiums paid on a
life insurance policy. Finally, the column reflects premiums paid for
group term life insurance in excess of $50,000.

GRANTS OF PLAN-BASED AWARDS

The following table sets forth information for each Named Executive
Officer regarding estimated payouts of the (i) short-term incentive
opportunities established during 2007, and (ii) performance shares granted under
the Long-Term Equity Incentive Plan during 2007.

--------------------------------------------------------------------------------------------------------------------------------
GRANT DATE
ESTIMATED FUTURE PAYOUTS UNDER ESTIMATED FUTURE PAYOUTS UNDER FAIR VALUE
NON-EQUITY INCENTIVE PLAN AWARDS(1) EQUITY INCENTIVE PLAN AWARDS(2) OF STOCK
----------------------------------- -------------------------------- AND OPTION
GRANT THRESHOLD TARGET MAXIMUM THRESHOLD TARGET MAXIMUM AWARDS
NAME DATE ($) ($) ($) (#) (#) (#) ($)(3)
--------------------------------------------------------------------------------------------------------------------------------

Steven V. Lant 1/25/07 157,500 315,000 472,500 238 7,200 10,800 281,518
--------------------------------------------------------------------------------------------------------------------------------
Christopher M. Capone 1/25/07 52,000 104,000 156,000 67 2,040 3,060 79,763
--------------------------------------------------------------------------------------------------------------------------------
Carl E. Meyer 1/25/07 61,800 123,600 185,400 80 2,420 3,630 94,621
--------------------------------------------------------------------------------------------------------------------------------
Joseph J. DeVirgilio, Jr. 1/25/07 54,000 108,000 162,000 70 2,120 3,180 82,891
--------------------------------------------------------------------------------------------------------------------------------
W. Randolph Groft 1/25/07 48,000 96,000 144,000 39 1,180 1,770 46,138
10,182
--------------------------------------------------------------------------------------------------------------------------------

----------
(1) This column provides information about the short-term incentive
opportunities established during 2007 for our Named Executive Officers.
The information included in the "Threshold," "Target," and "Maximum"
columns reflects the range of potential payouts when the performance goals
were established by the Compensation Committee and the Board of Directors
in December 2006. The threshold equals 50% of the target award and the
maximum equals 150% of the target award. With respect to Mr. Groft, the
column also shows the target amount available under his acquisition
incentive program. There is no threshold or maximum payout available under
this program. Please refer to the "Non-Equity Incentive Plan Compensation"
column of the Summary Compensation Table for the amount of the short-term
incentive award earned by our Named Executive Officers for 2007 and the
"Bonus" column of the Summary Compensation Table for the amount of the
contributor adjustments, if any, in the short-term incentive award.

For a brief description of the short-term incentive program, please refer
to the "Compensation Discussion and Analysis" section of this proxy
statement at page 19.

(2) This column provides information about the performance shares granted
under the Long-Term Equity Incentive Plan during 2007 to our Named
Executive Officers. The information included in the "Threshold," "Target,"
and "Maximum" columns reflects the range of potential payouts under the
performance shares when the performance goals were established by the
Compensation Committee in January 2007. The threshold equals 3.3% of the
target award and the maximum equals 150% of the target award. The actual
payout will depend on the extent to which the Corporation achieves the
applicable performance goals during the performance period commencing
January 1, 2007 and ending December 31, 2009. For a brief description of
the performance shares, please refer to the "Compensation Discussion and
Analysis" section of this proxy statement at page 19 and the narrative
following this table.

(3) Reflects the grant date fair value, as determined in accordance with FAS
123R, of performance share awards. See Note 11 of the Consolidated
Financial Statements contained in the Annual Report for an explanation of
the assumptions made by the Corporation in the valuation of these awards.

VESTING OF PERFORMANCE SHARES

Payment of any performance shares listed in the "Estimated Future Payouts
Under Equity Incentive Plan Awards" column that become earned will be made in
the form of shares of the Corporation's Common Stock in 2010. An executive's
right to receive the performance shares will be forfeited if he or she
terminates employment with the Corporation and its affiliates for any reason
(other than his or her death or retirement) prior to payment of the performance
shares. If, however, an executive retires or dies during the performance period,
the Board of Directors (or appropriate committee thereof) would determine the
extent to which the applicable performance goals had been achieved during the
full fiscal quarters completed during the performance period, and the resulting
award would be pro-rated based on the number of days the executive had been
employed during the performance period. Upon a "change in control" of the
Corporation, the Board of Directors (or appropriate committee thereof) would
determine the extent to which the applicable performance goals have been
achieved through the full fiscal quarters completed prior to that date and the
resulting award would be paid without pro-ration. The Named Executive Officers
have no right to dividends and no right to vote the performance shares until
they are paid.

OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END

The following table sets forth information for each Named Executive
Officer with respect to (i) each option to purchase shares of the Corporation's
Common Stock that had not been exercised and remained outstanding as of December
31, 2007, and (ii) each award of performance shares that had not vested and
remained outstanding as of December 31, 2007.

---------------------------------------------------------------------------------------------------------------------------
OPTION AWARDS STOCK AWARDS
----------------------------------------------------------------------------------------------
EQUITY
INCENTIVE PLAN
AWARDS:
EQUITY INCENTIVE MARKET OR
PLAN AWARDS: PAYOUT VALUE
NUMBER OF NUMBER OF NUMBER OF OF UNEARNED
SECURITIES SECURITIES UNEARNED SHARES, UNITS OR
UNDERLYING UNDERLYING OPTION SHARES, UNITS OTHER RIGHTS
UNEXERCISED UNEXERCISED EXERCISE OR OTHER RIGHTS THAT HAVE
OPTIONS (#) OPTIONS (#) PRICE OPTION THAT HAVE NOT NOT VESTED
EXERCISABLE UNEXERCISABLE ($) EXPIRATION VESTED (#) ($)
NAME (1) (2) (3) DATE (4) (5)
---------------------------------------------------------------------------------------------------------------------------

Steven V. Lant 2,600 0 44.06 1/1/11
3,520 880 48.62 1/1/13 22,839 1,017,253
---------------------------------------------------------------------------------------------------------------------------
Christopher M. Capone 0 0 0 N/A 6,760 301,077
---------------------------------------------------------------------------------------------------------------------------
Carl E. Meyer 720 720 48.62 1/1/13 7,530 335,373
---------------------------------------------------------------------------------------------------------------------------
Joseph J. DeVirgilio, Jr. 400 400 48.62 1/1/13 6,920 308,203
---------------------------------------------------------------------------------------------------------------------------
W. Randolph Groft 400 400 48.62 1/1/13 4,120 183,497
---------------------------------------------------------------------------------------------------------------------------

----------
(1) Reflects the number of shares underlying outstanding stock options that
have vested as of December 31, 2007.

(2) Reflects the number of shares underlying outstanding stock options that
have not vested as of December 31, 2007. The remaining stock options
vested on the next day, or January 1, 2008.

(3) Reflects the exercise price for each stock option reported in the table,
which equaled the fair market value per share of the underlying option
shares on the date of grant.

(4) Reflects the aggregate number of performance shares outstanding as of
December 31, 2007, assuming performance at the "target" level, for the
2005-2007 performance cycle (including re-invested dividends), the
2006-2008 performance cycle and the 2007-2009 performance cycle. The
performance shares vest based on the extent to which the Corporation
achieves the applicable performance goals as of the end of the applicable
performance period. Please note that the performance shares for the
2005-2007 performance cycle are included in this column. The vesting of
the performance shares for that performance cycle depends on the
Corporation's performance relative to companies in the EEI Index during
the period commencing January 1, 2005 and ending December 31, 2007. As of
the date of this proxy statement, the financial information for all the
companies in the EEI Index was not yet available and, therefore, the
Corporation was not able to determine the payout level.

(5) Reflects the product of (i) the aggregate number of outstanding
performance shares, multiplied by (ii) $44.54, which is the closing price
of our shares on December 31, 2007.

OPTION EXERCISES AND STOCK VESTED AT FISCAL YEAR-END

The following table sets forth information for each Named Executive
Officer with respect to the exercise of options to purchase shares of the
Corporation's Common Stock during 2007.

----------------------------------------------------------------------
OPTION AWARDS STOCK AWARDS
----------------------------------------------------------------------
NUMBER OF VALUE REALIZED NUMBER OF
SHARES ON EXERCISE SHARES VALUE REALIZED
DATE OF ACQUIRED ON ($) ACQUIRED ON ON VESTING
NAME EXERCISE EXERCISE (#) (1) VESTING (#) ($)
------------------------------------------------------------------------------------------------------------------

Steven V. Lant 3/12/07 1,000 3,090 0 0
------------------------------------------------------------------------------------------------------------------
Christopher M. Capone 0 0 0 0
------------------------------------------------------------------------------------------------------------------
Carl E. Meyer 0 0 0 0
------------------------------------------------------------------------------------------------------------------
Joseph J. DeVirgilio, Jr. 0 0 0 0
------------------------------------------------------------------------------------------------------------------
W. Randolph Groft 0 0 0 0
------------------------------------------------------------------------------------------------------------------

----------
(1) Reflects the product of (i) the number of shares acquired upon the
exercise of the stock option, multiplied by (ii) the excess of (x) the
average of the high and low price per share of the Corporation's Common
Stock on the date of exercise, over (y) the per share exercise price of
the stock option.

PENSION BENEFITS

The following table sets forth information regarding the pension benefits
of our Named Executive Officers.

---------------------------------------------------------------------------------------------------------------------
PRESENT PAYMENTS
NUMBER OF VALUE OF DURING
YEARS CREDITED ACCUMULATED LAST FISCAL
SERVICE BENEFIT YEAR
NAME PLAN NAME (1) (#) ($)(2) ($)
---------------------------------------------------------------------------------------------------------------------

Steven V. Lant Retirement Income Plan 26 yrs. 11 mos. 961,800 0
Supplemental Executive Retirement Plan 27 yrs. 1 mo. 1,690,500 0
Retirement Benefit Restoration Plan 27 yrs. 1 mo. 325,800 0
---------------------------------------------------------------------------------------------------------------------
Christopher M. Capone Retirement Income Plan 6 yrs. 5 mos. 145,500 0
Supplemental Executive Retirement Plan 6 yrs. 8 mos. 78,400 0
Retirement Benefit Restoration Plan 6 yrs. 8 mos. 1,500 0
---------------------------------------------------------------------------------------------------------------------
Carl E. Meyer Retirement Income Plan 37 yrs. 2 mos. 1,588,100 0
Supplemental Executive Retirement Plan 37 yrs. 5 mos. 532,100 0
Retirement Benefit Restoration Plan 37 yrs. 5 mos. 481,100 0
---------------------------------------------------------------------------------------------------------------------
Joseph J. DeVirgilio, Jr. Retirement Income Plan 34 yrs. 3 mos. 1,550,700 0
Supplemental Executive Retirement Plan 34 yrs. 6 mos. 583,000 0
Retirement Benefit Restoration Plan 34 yrs. 6 mos. 24,700 0
---------------------------------------------------------------------------------------------------------------------
W. Randolph Groft Retirement Income Plan N/A N/A N/A
Supplemental Executive Retirement Plan N/A N/A N/A
Retirement Benefit Restoration Plan N/A N/A N/A
---------------------------------------------------------------------------------------------------------------------

----------
(1) The formal name of each plan is as follows:

o Retirement Income Plan of Central Hudson Gas & Electric Corporation
("Retirement Income Plan" or "RIP")

o CH Energy Group, Inc. Supplemental Executive Retirement Plan (the
"SERP")

o Central Hudson Retirement Benefit Restoration Plan ("RBRP")

(2) The number of years of credited service and the present value of
accumulated benefit are calculated based on a September 30 fiscal year-end
for the Retirement Income Plan and a calendar year-end for the
Supplemental Executive Retirement Plan and Retirement Benefit Restoration
Plan. The present value of accumulated benefits was prepared based on the
same assumptions used in the Consolidated Financial Statements contained
in the Annual Report, including (i) a 6.2% discount rate for the
Retirement Income Plan and a 6.4% discount rate for the Supplemental
Executive Retirement Plan and Retirement Benefit Restoration Plan, (ii)
the Retirement Plan 2000 Combined Table Projected to 2006, no collar
adjustment, and (iii) a retirement age of 61 under the Supplemental
Executive Retirement Plan and a retirement age of 55 under the Retirement
Income Plan and the Retirement Benefit Restoration Plan.

DESCRIPTION OF DEFINED BENEFIT RETIREMENT PLANS

The retirement program is designed to provide each Named Executive
Officer, other than Mr. Groft, with a retirement benefit equal to 57% of his or
her applicable final average pay (as defined below) at age 61 with 30 years of
service. The program consists primarily of the Retirement Income Plan ("RIP")
and the Supplemental Executive Retirement Plan ("SERP"). Benefit accruals under
prior non-qualified plans have been frozen. A more detailed description of each
of the defined benefit plans that comprise the Corporation's retirement program
follows.

RETIREMENT INCOME PLAN. The RIP is a tax-qualified defined benefit plan
and generally covers all employees of Central Hudson hired prior to January 1,
2008. Each Named Executive Officer, other than Mr. Groft, is a RIP participant
and eligible for a RIP benefit. The RIP benefit is based on a "service" formula
and an "account" formula.

SERVICE FORMULA. Each Named Executive Officer, other than Mr. Groft, is
entitled to receive benefits under the RIP based on a service formula, which is
equal to the sum of the following two benefits:

o The regular service benefit equals the sum of the benefit earned
each year after October 1, 2003, based on 2% of "annual
compensation" for each year of benefit service beginning before age
50 and 2.5% for each such year beginning after age 50. The term
"annual compensation" means base salary at October 1, plus, for
periods after 2004, short term incentives in the prior 12 months.

o The supplementary past service benefit equals a participant's years
of benefit service at October 1, 2003 multiplied by the sum of 1.45%
of "average earnings" up to $37,500 and 1.75% of average earnings in
excess of $37,500. If larger, a participant will receive the prior
regular service benefit at September 30, 2003. The term "average
earnings" means the average of 100% of base salary at October 1,
2001 and 2002 and 50% of base salary at October 1, 2000 and 2003.

In no event, however, may the sum of the two benefits described above
exceed the maximum service benefit. This benefit equals (i) 57% of a
participant's highest consecutive 3-year average of base salary and
short-term incentive during the ten-year period that precedes the
participant's termination of employment, multiplied by (ii) a fraction,
the numerator of which is the participant's years of benefit service (not
to exceed 30) and the denominator of which is 30. The benefit is reduced
by 0.333% for each full month the benefit begins before age 61.

The service formula benefit is payable as a monthly life annuity following
normal retirement at age 65. The monthly benefit (unreduced for early
commencement) is also payable following early retirement at or after age 55 with
at least ten years of service. Messrs. Meyer and DeVirgilio have currently
satisfied the eligibility requirements for early retirement. The service formula
benefit may also be paid in certain joint and survivor annuity forms, which
provide a reduced monthly amount for the participant's life and, following the
participant's death, payment for a named beneficiary's life. The RIP generally
provides pre-retirement death benefits to a participant's surviving spouse.

ACCOUNT FORMULA. Each Named Executive Officer, other than Messrs. Capone
and Groft, also has a hypothetical account balance under the RIP that is
credited with the aggregate of the following amounts:

o For participants on January 1, 1987, 10% of their base salary on
that date.

o For participants on September 30, 1991, 5% of their base salary on
that date.

o For participants on September 30, 1997, 5% of their base salary on
that date.

o For participants on September 30, 1999, 5% of their base salary on
that date.

o Annual interest, generally based on the yield for 30-year Treasury
Bonds.

Following termination of employment, a participant may receive the
hypothetical account balance as a lump sum. Certain annuity forms of payment,
which are the actuarial equivalent of the account balance, are also available.
If the participant dies before payment begins, the account balance is payable in
a lump sum to the participant's beneficiary (or, if the beneficiary is the
participant's spouse, as a lump sum or an annuity).

SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN. Each of our Named Executive
Officers, other than Mr. Groft, participate in the SERP. The SERP is an
unfunded, unsecured pension benefit plan for a select group of highly
compensated employees. A participant's SERP benefit becomes vested if, while
employed by the Corporation or its affiliates, he or she attains the normal
retirement age of 61, attains his or her early retirement date of age 55 with
ten years or more of vesting service, or a change in control occurs. A
participant will forfeit his or her SERP benefit (whether or not vested at the
time) if his or her employment with the Corporation is terminated for "cause."

The SERP retirement benefit of a participant equals the excess, if any, of
the (i) participant's normal retirement benefit or early retirement benefit
described below, over (ii) the actuarial equivalent of the participant's
cumulative benefits under the RIP (excluding the account benefit component) and
Central Hudson Retirement Benefit Restoration Plan (excluding the account
benefit component), each calculated as though paid in the form of a single life
annuity as the normal retirement benefit becomes payable under the SERP.

o NORMAL RETIREMENT BENEFIT. If a participant terminates employment on
or after the date he or she attains age 61, he or she will be
entitled to a normal retirement benefit. The annualized normal
retirement benefit is equal to the product of (i) 57% of the
participant's highest consecutive 3-year average of base salary and
short-term incentive during the ten-year period that precedes the
participant's termination of employment, and (ii) a fraction, the
numerator of which is the participant's years of benefit service
under the RIP (not to exceed 30) and the denominator of which is 30.

o EARLY RETIREMENT BENEFIT. Upon the participant's vested termination
of employment before the date he or she attains age 61, the
participant will be entitled to an early retirement benefit equal to
the normal retirement benefit (described above) reduced by 0.333%
for each full month by which his or her benefit commencement date
precedes the date the participant attains age 61. Messrs. Meyer and
DeVirgilio are entitled to the early retirement benefit.

The SERP retirement benefit commences on the first day of the seventh
month following the participant's vested termination of employment and is paid
monthly in the form of a life annuity elected by the participant, except that a
participant who is vested solely as a result of a change in control shall
commence to receive payment on the later of the first day of the seventh month
following his or her termination of employment or age 55. The normal form of
benefit under the SERP is a single life annuity for single participants and a
joint and 100% survivor annuity for married participants. However, participants
may select a single life annuity or a 30%, 40%, 50%, 75%, or 100% joint and
survivor annuity (or other annuity permitted by the Corporation). If elected by
the participant, upon the death of the participant's spouse the surviving
participant's monthly annuity may be converted to the single life annuity the
participant would have received, had he or she elected a single life annuity at
retirement.

A SERP benefit is also payable if a participant is vested in his or her
benefit at the time of his or her death or disability. A participant's
compensation and years of additional benefit service provided under a change in
control agreement between the Corporation and the participant will be used in
calculating the participant's SERP benefit if the participant's vested
termination occurs in connection with a change in control.

For more information on the death, disability and change in control
benefits under the SERP, please refer to the applicable description under the
heading "Potential Payments Upon Termination or Change in Control" on page 40 of
this proxy statement.

CENTRAL HUDSON RETIREMENT BENEFIT RESTORATION PLAN. Each of our Named
Executive Officers, other than Mr. Groft, participate in the RBRP. The RBRP is
an unfunded, unsecured pension benefit plan for a select group of highly
compensated employees. As of December 31, 2005, the RBRP was terminated with
respect to any participant who was not vested, closed to new participants, and
frozen with respect to additional benefit accruals of vested participants. The
RBRP provides a benefit in excess of the Internal Revenue Service ("IRS")
compensation and benefit limits imposed by Sections 401(a)(17) and 415 of the
Internal Revenue Code, respectively, with respect to the service benefit
component of the RIP and the account benefit component of the RIP. The pension
benefit under the RBRP is calculated as the excess, if any, of (x) the
participant's RIP benefit as of December 31, 2005, without regard to the Section
401(a)(17) compensation limit ($210,000 for 2005) and without regard to the
Section 415 benefit limitation ($170,000 for 2005) over (y) the participant's
actual RIP benefit as of December 31, 2005. Compensation and years of service
under the RBRP have the same meanings provided under the RIP. Benefits generally
become payable under the RBRP on the later of (i) the participant's 55th
birthday or (ii) the six-month anniversary of the participant's termination of
employment. Benefits are payable in the form of a life annuity or any other
actuarially equivalent annuity form available under the Supplemental Executive
Retirement Plan, as selected by the participant prior to the commencement date.

NONQUALIFIED DEFERRED COMPENSATION

The following table sets forth information regarding the nonqualified
deferred compensation of our Named Executive Officers as of December 31, 2007.

-----------------------------------------------------------------------------------------------------
AGGREGATE
EXECUTIVE REGISTRANT AGGREGATE AGGREGATE BALANCE
CONTRIBUTIONS CONTRIBUTIONS EARNINGS IN WITHDRAWALS/ AT LAST
IN LAST FY IN LAST FY LAST FY DISTRIBUTIONS FYE
NAME ($)(1) ($) ($) ($) ($)(2)
-----------------------------------------------------------------------------------------------------

Steven V. Lant 0 0 (20,912) 0 239,678
-----------------------------------------------------------------------------------------------------
Christopher M. Capone 0 0 9,735 0 134,848
-----------------------------------------------------------------------------------------------------
Carl E. Meyer 46,350 0 81,177 0 1,230,426
-----------------------------------------------------------------------------------------------------
Joseph J. DeVirgilio, Jr. 0 0 10,016 0 387,488
-----------------------------------------------------------------------------------------------------
W. Randolph Groft 19,171 0 171 0 19,342
-----------------------------------------------------------------------------------------------------

----------
(1) Each Named Executive Officer is eligible to defer base salary, short-term
incentive awards, and performance shares under the terms of the Directors
and Executives Deferred Compensation Plan, described below. The "Executive
Contributions in Last FY" column shows the aggregate deferrals for each
Named Executive Officer during 2007. The base salary deferrals are
included in the "Salary" column of the Summary Compensation Table.

(2) The aggregate balance as of December 31, 2007 for each Named Executive
Officer includes prior deferrals of base salary, short-term incentives,
and performance shares that were previously earned and reported as
compensation on the Summary Compensation Table for prior years. For
example, from 2000-2006, our Named Executive Officers deferred the
following amounts under the Directors and Executives Deferred Compensation
Plan that were previously reported as compensation in the Summary
Compensation Table: (i) Mr. Lant--$290,287; (ii) Mr. Capone--$90,060;
(iii) Mr. Meyer--$774,743; (iv) Mr. DeVirgilio--$291,885; and (v) Mr.
Groft--$0.00. These amounts have since been adjusted, pursuant to the
terms of the Directors and Executives Deferred Compensation Plan, for
investment performance (E.G., earnings and losses), deferrals credited
during 2007, and in-service distributions.

DESCRIPTION OF DIRECTORS AND EXECUTIVES DEFERRED COMPENSATION PLAN

The amounts reflected in the above table are maintained under the CH
Energy Group, Inc. Directors and Executives Deferred Compensation Plan, which is
an unfunded, unsecured deferred compensation plan for Directors and a select
group of highly compensated employees. Under the Directors and Executives
Deferred Compensation Plan, our Named Executive Officers may elect to defer up
to 50% of their base salary and up to 100% of their short-term incentive and
performance shares on a pre-tax basis. Payments are made under the Directors and
Executives Deferred Compensation Plan in cash at certain future dates specified
by participants or upon his or her earlier termination of employment, death, or
disability. If a participant terminates employment on or after age 55, as a
result of his or her long-term disability, or in certain circumstances in
connection with a "change in control" of the Corporation, then amounts credited
to his or her account generally will be paid in a lump sum or in equal quarterly
installments over a period of five, ten, or fifteen years as elected by the

participant. Otherwise, amounts are payable in a single lump sum. The
Corporation may accelerate payment in the event of a participant's "financial
hardship." Moreover, a participant may elect to receive an immediate
distribution of all or a portion of any amounts deferred prior to January 1,
2005 (and related earnings), provided, however, that he or she will forfeit 10%
of the amount of his or her account(s) that he or she has elected to receive.
The deferred compensation is credited with earnings, gains, and losses in
accordance with deemed investment elections made by participants from among
various crediting options established by the Corporation from time to time.
Participants are permitted to change their deemed investment elections daily.
For 2007, the investment options tracked returns on the Corporation's Common
Stock and returns under publicly available and externally managed investment
funds such as mutual funds.

POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL

The Corporation has entered into certain agreements and maintains certain
plans and arrangements that require the Corporation or its successors to pay or
provide certain compensation and benefits to its Named Executive Officers in the
event of certain terminations of employment or a change in control of the
Corporation. The estimated amount of compensation and benefits payable or
provided to each Named Executive Officer in each situation is summarized below.
These estimates are based on the assumption that the various triggering events
occur on December 31, 2007. We have noted below other material assumptions used
in calculating the estimated compensation and benefits under each triggering
event. The actual amounts that would be paid to a Named Executive Officer upon
certain terminations of employment or upon a change in control can only be
determined at the time the actual triggering event occurs.

The estimated amount of compensation and benefits described below does not
take into account compensation and benefits that a Named Executive Officer has
earned prior to the applicable triggering event, such as equity awards or other
incentives that have previously vested in accordance with their terms, or vested
benefits otherwise payable under the retirement plans and programs. As a result,
it does not provide information on the payout of the performance shares for the
2005-2007 performance cycle and the 2007 short-term incentive, as both of these
awards were earned as of December 31, 2007 in accordance with their terms,
regardless of whether the executive terminated employment or a change in control
occurred. In this regard, please refer to the Outstanding Equity Awards at
Fiscal Year-End table for a complete summary of each Named Executive Officer's
vested equity awards and the Pension Benefits table for a complete summary of
each Named Executive Officer's vested retirement benefit.

VOLUNTARY TERMINATION OR INVOLUNTARY TERMINATION FOR "CAUSE"

The Corporation does not maintain any plans or arrangements that would
provide benefits to our Named Executive Officers solely as a result of a
voluntary termination (other than upon "retirement" as described below) or an
involuntary termination for cause.

INVOLUNTARY TERMINATION WITHOUT "CAUSE"

Pursuant to its corporate policy, the Corporation would have provided each
Named Executive Officer with outplace-ment services from a recognized
outplacement provider, with a value not to exceed $30,000, in the event of the
executive's involuntary termination without "cause" (as defined under the
heading "Qualifying Termination Following Change in Control" below) on December
31, 2007.

RETIREMENT OR DEATH

As described below, a Named Executive Officer's termination of employment
with the Corporation due to "retirement" (as defined below) or death can result
in enhanced benefits under the outstanding performance shares and stock options.
For this purpose, the term "retirement" means termination of employment either
(i) on or after age 65 or (ii) on or after age 55 with ten years or more of
service pursuant to the early retirement provisions of the Retirement Income
Plan. Only Messrs. Meyer and DeVirgilio would have satisfied this definition of
"retirement" on December 31, 2007.

o PERFORMANCE SHARES. Except as otherwise provided below, a Named
Executive Officer would forfeit his right to all outstanding
performance shares for the 2006-2008 and the 2007-2009 performance
cycles if his employment terminated during the applicable
performance period. If, however, a Named Executive Officer had
retired or died during a performance period, then the Board of
Directors (or appropriate committee thereof) would have determined
the extent to which the applicable performance goals had been
achieved as of such time, and the resulting award

would have been prorated based on the executive's service during the
performance period. Such amounts would have been paid in a single
lump sum in the form of shares of the Corporation's Common Stock.

o STOCK OPTIONS. Except as otherwise provided below, a Named Executive
Officer would forfeit his unvested stock options upon termination of
employment. If, however, a Named Executive Officer had died on or
before December 31, 2007, then all unvested stock options held by
him would have become fully vested and remained exercisable for 3
years (or if shorter, the remaining term).

Based on the above, the Corporation would have provided each Named
Executive Officer or his beneficiary with the following estimated payments, in a
lump sum, if he had "retired" from the Corporation and its affiliates on
December 31, 2007, or if he had died while employed with the Corporation or its
affiliates on December 31, 2007.

PERFORMANCE SHARES
---------------------------------------------
2006-2008 2007-2009
EXECUTIVE PERFORMANCE PERIOD(1) PERFORMANCE PERIOD(2) TOTAL(3)
--------- --------------------- --------------------- -------------

Steven V. Lant $ 206,072 $ 106,896 $ 312,968
Christopher M. Capone 54,042 30,287 84,329
Carl E. Meyer 65,622 35,929 101,551
Joseph J. DeVirgilio, Jr. 56,417 31,475 87,892
W. Randolph Groft 35,632 17,519 53,151

----------
(1) The value of the performance shares for the 2006-2008 performance period
is calculated as follows (i) the number of performance shares earned
assuming a payout of 100% of target, pro-rated based on the performance of
services during 2/3 of the performance period, multiplied by (ii) the
closing price of the Corporation's Common Stock on December 31, 2007, of
$44.54 per share.

(2) The value of the performance shares for the 2007-2009 performance period
is calculated as follows (i) the number of performance shares earned
assuming a payout of 100% of target, prorated based on the performance of
services during 1/3 of the performance period, multiplied by (ii) the
closing price of the Corporation's Common Stock on December 31, 2007, of
$44.54 per share.

(3) All stock options had an exercise price in excess of the fair market value
of the underlying shares as of December 31, 2007, and are therefore not
included in these calculations.

DISABILITY

As described below, a Named Executive Officer's termination of employment
with the Corporation due to "disability" (as defined below) can result in
enhanced benefits under the Supplemental Executive Retirement Plan.
Specifically, if a Named Executive Officer who was vested under the SERP had
become disabled (within the meaning of the Corporation's long-term disability
plan) on December 31, 2007, then his benefit would have been calculated as if he
had received additional years of benefit service (up to five), consistent with
the disability crediting rules under the Retirement Income Plan. For additional
information about the SERP, please refer to the "Pension Benefits" section of
this proxy statement at page 36.

Based on the above, the Corporation would have provided each Named
Executive Officer, other than Mr. Groft, with the following estimated payments
or benefits if he had become "disabled" while employed with the Corporation and
its affiliates on December 31, 2007.

ADDITIONAL
SERVICE CREDIT
EXECUTIVE UNDER THE SERP(1)
--------- -----------------
Steven V. Lant ................ $ --
Christopher M. Capone ......... --
Carl E. Meyer ................. --
Joseph J. DeVirgilio, Jr. ..... 173,500
W. Randolph Groft ............. N/A

----------
(1) The value of the additional service credit under the SERP equals the
excess, if any, of (i) the present value of the individual's VESTED SERP
benefit as of December 31, 2007, calculated as if he remained employed for
an additional 5 years, over (ii) the present value of the individual's
VESTED SERP benefit as of December 31, 2007. The present value was
determined based on a 6.40% discount rate and the Retirement Plan 2000
Combined Table Projected to 2006, no collar adjustment, and assuming that
no additional service is credited past age 60. For additional information
about the SERP, please refer to the "Pension Benefits" section of this
proxy statement at page 36.

CHANGE IN CONTROL

As described below, each Named Executive Officer would be entitled to
accelerated vesting of outstanding performance shares and stock options, along
with accelerated vesting of his Supplemental Executive Retirement Plan benefit
in the event of a "change in control" (as defined under the heading "Qualifying
Termination Following Change in Control" immediately below).

o PERFORMANCE SHARES. Upon a change in control, the Board of Directors
(or appropriate committee thereof) is required to determine the
extent to which the applicable performance goals have been achieved
through the full fiscal quarters completed prior to that date, and
the resulting award is required to be paid to the executives without
pro-ration. Such amounts would have been paid in a single lump sum
in the form of either shares or cash.

o STOCK OPTIONS. Upon a change in control, all unvested stock options
held by the Named Executive Officers would have become fully vested
and exercisable.

o ENHANCED SERP BENEFIT. Upon a change in control, each Named
Executive Officer, other than Mr. Groft, would have fully vested in
his or her benefit under the SERP. The SERP benefit will commence to
be paid upon the later of his or her termination of employment or
attainment of age 55. For additional information about the SERP,
please refer to the "Pension Benefits" section of this proxy
statement at page 36.

Based on the above, each Named Executive Officer would have been entitled
to the following estimated payments and benefits from the Corporation or its
successor in the event that a "change in control" occurred on December 31, 2007.

PERFORMANCE SHARES
---------------------------------------------
2006-2008 2007-2009 ACCELERATED VESTING
EXECUTIVE PERFORMANCE PERIOD(1) PERFORMANCE PERIOD(2) OF SERP BENEFIT(3) TOTAL(4)
--------- --------------------- --------------------- ------------------- -----------

Steven V. Lant $309,108 $320,688 $1,780,500 $2,410,296
Christopher M. Capone 81,063 90,862 60,500 232,425
Carl E. Meyer 98,433 107,787 -- 206,220
Joseph J. DeVirgilio, Jr. 84,626 94,425 -- 179,051
W. Randolph Groft 53,448 52,557 N/A 106,005

----------
(1) The value of the performance shares for the 2006-2008 performance period
is calculated as follows (i) the number of performance shares earned
assuming a payout of 100% of target, without pro-ration, multiplied by
(ii) the closing price of the Corporation's Common Stock on December 31,
2007, of $44.54 per share.

(2) The value of the performance shares for the 2007-2009 performance period
is calculated as follows (i) the number of performance shares earned
assuming a payout of 100% of target, without pro-ration, multiplied by
(ii) the closing price of the Corporation's Common Stock on December 31,
2007, of $44.54 per share.

(3) The value of the accelerated vesting of the SERP benefit equals the
excess, if any, of (i) the present value of the individual's SERP benefit
as of December 31, 2007 (whether or not vested), over (ii) the present
value of the individual's vested SERP benefit as of December 31, 2007. The
present value was determined based on a 6.40% discount rate and the
Retirement Plan 2000 Combined Table Projected to 2006, with no collar
adjustment. Each of Messrs. Meyer and DeVirgilio was fully vested in his
SERP benefit as of December 31, 2007, and so would not have received any
additional benefit had a change in control occurred on that date. For
additional information about the SERP, please refer to the "Pension
Benefits" section of this proxy statement at page 36.

(4) All stock options had an exercise price in excess of the fair market value
of the underlying shares as of December 31, 2007, and are therefore not
included in these calculations.

QUALIFYING TERMINATION FOLLOWING CHANGE IN CONTROL

As described below, each Named Executive Officer would be entitled to
certain payments and benefits if a "change in control" (as defined below) occurs
and the Corporation or its affiliates terminates the executive's employment
without "cause" (as defined below) or the executive terminates his employment
with the Corporation or its affiliates for "good reason" (as defined below)
within certain time periods following such change in control.

CHANGE IN CONTROL AGREEMENTS. The Corporation has a change in control
agreement ("Change in Control Agreement") with certain of its executive
officers, including its Named Executive Officers. The Change in Control
Agreements generally become effective only upon a change in control of the
Corporation (as defined below) and provide certain benefits and

protections to the covered executives during the three-year period (the two-year
period for Mr. Groft) following a change in control. For example, the Change in
Control Agreements generally provide that an executive's terms and conditions of
employment (including position, location, base salary, short-term incentive, and
benefits) would not be adversely changed during the applicable two-year or
three-year period following a change in control. Moreover, the Change in Control
Agreements provide that the executive would be entitled to certain severance
benefits if, during the applicable two or three-year period following a change
in control, the Corporation or its affiliates terminate the executive's
employment without "cause" or the executive terminates his employment with the
Corporation or its affiliates for "good reason." In general, the executive would
be entitled to receive:

o A pro-rated short-term incentive based on the average of the
executive's last three pre-change in control short-term incentives
("Average Annual Incentive"), paid in a lump sum.

o An amount equal to three times (or two times for Mr. Groft) the sum
of the executive's base salary and Average Annual Incentive, payable
in 12 equal monthly installments.

o Outplacement services from a recognized outplacement provider, with
a value not to exceed $30,000.

o Continued welfare benefits (including health care benefits) for a
period of three years (two years for Mr. Groft) following
termination, subject to mitigation upon receiving similar benefits
from another employer.

o For Mr. Lant only, a "conditional gross-up" for excise and related
taxes in the event the severance compensation and other payments or
distributions to him, whether pursuant to the change in control
agreement, stock option, performance share or otherwise would
constitute "excess parachute payments," as defined in Section 280G
of the Internal Revenue Code. The tax gross-up will be provided if
the aggregate parachute value of all severance and other change in
control payments to Mr. Lant exceeds 110% of the maximum amount that
may be paid under Section 280G of the Internal Revenue Code without
imposition of an excise tax. If the parachute value of Mr. Lant's
payments does not exceed the 110% threshold, the executive's
payments will be reduced to the extent necessary to avoid imposition
of the excise tax on "excess parachute payments." In contrast, the
other Named Executive Officers would be responsible for paying the
applicable excise taxes under Section 280G imposed on any payments
under the Change in Control Agreement or otherwise, but any payments
subject to the excise tax would be reduced if such reduction
provides a larger after-tax benefit than if the excise tax applied.

o Reimbursement for all legal fees and expenses reasonably incurred in
asserting his rights under the Agreements, regardless of the outcome
of the dispute (unless a tribunal determines that the executive's
position was frivolous or maintained in bad faith). For purposes of
the above calculations, we have assumed that the executive will not
incur legal fees to enforce his rights under the Change in Control
Agreement.

DEFINITIONS. For purposes of the Change in Control Agreement, the
following words have the meanings set forth below.

o CHANGE IN CONTROL. A change in control generally means any of the
following: (i) an acquisition of 20% or more of the Corporation's
stock; (ii) a change in the membership of the Corporation's Board of
Directors, such that the current incumbents and their approved
successors no longer constitute a majority; (iii) a business
combination in which any one of the following is true: the
Corporation's old shareholders do not hold at least 60% of the
combined enterprise; there is a 20%-or-more shareholder of the
combined enterprise (other than as a result of conversion of the
shareholder's pre-combination interest in the Corporation); or the
members of the Corporation's Board of Directors (immediately before
the combination) do not make up a majority of the board of the
combined enterprise; or (iv) shareholder approval of a complete
liquidation of the Corporation.

o CAUSE. The term "cause" generally means: (i) the willful and
continued failure of the executive to perform his duties; (ii) the
willful engaging by the executive in illegal conduct or gross
misconduct; (iii) the repeated use of alcohol by the executive that
materially interferes with his duties, use of illegal drugs by the
executive, or a violation of our drug or alcohol policies; (iv) a
conviction, guilty plea, or plea of NOLO CONTENDERE of the executive
for any crime involving moral turpitude or for any felony; (v) a
breach by the executive of his fiduciary duties of loyalty or care
or a material violation of the Code of Business Conduct and Ethics,
or similar policies; or (vi) the breach by the executive of the
confidentiality provision of the Change in Control Agreement.

o GOOD REASON. The term "good reason" generally means: (i) any
material reduction in the executive's authority, duties, or
responsibilities; (ii) any failure by the Corporation to maintain
the executive's base salary, short-term incentive, and benefits
levels; (iii) any required relocation of the executive's office of
50 miles or more; (iv) any purported termination by the Corporation
or any of its affiliated companies of the executive's employment
otherwise than as expressly permitted by the Change in Control
Agreement; or (v) any failure by the Corporation or any of its
affiliated companies to require a successor to assume the Change in
Control Agreement.

ENHANCED SERP BENEFIT. If a Named Executive Officer is entitled to
benefits under his or her Change in Control Agreement following a change in
control, then his or her SERP benefit will be calculated as if he or she had
remained employed with the Corporation and its affiliates for a three-year
period following the change in control. Such benefit will commence to be paid
upon the later of the executive's termination of employment or attainment of age
55. For additional information about the SERP, please refer to the "Pension
Benefits" section of this proxy statement at page 36.

NON-SOLICITATION AND NON-COMPETITION PROVISIONS. As a condition to each
executive's entitlement to receive severance benefits under the Change in
Control Agreement, each Named Executive Officer must not solicit employees of
the Corporation and its successor for a one-year period following termination of
employment and must comply with a confidentiality restriction. Moreover, Mr.
Groft is prohibited from competing against Griffith Energy Services, Inc. in any
market in which it has at least 1,000 customers for a period of up to two years.
The acquiring or successor entity generally retains the right to suspend certain
payments and pursue judicial remedies in the event that an executive breaches
any of his confidentiality, non-solicitation, or similar obligations. Moreover,
a terminated executive is required to sign a release of all claims against the
Corporation, the acquiring or successor entity, and any of their officers,
directors, employees, or shareholders, prior to receiving severance benefits
under the Change in Control Agreements.

Based on the above, each Named Executive Officer would have been entitled
to the following estimated payments and benefits from the Corporation or its
successor if a "change in control" occurred on December 31, 2007, and the
Corporation or its affiliates terminated the executive's employment without
"cause" or the executive terminated his employment with the Corporation or its
affiliates for "good reason" immediately following such change in control. These
benefits would be in addition to the payments and benefits described in the
change in control table immediately above.

CONTINUED
WELFARE
CONTINUED BENEFITS ENHANCED
CASH OUTPLACEMENT HEALTHCARE (OTHER THAN SERP SECTION 280G
EXECUTIVE SEVERANCE SERVICES BENEFITS(1) HEALTHCARE)(2) BENEFIT(3) GROSS-UP(4) TOTAL
--------- ----------- ------------ ----------- -------------- ---------- ------------ ----------

Steven V. Lant $2,775,360 $30,000 $43,800 $6,196 $627,700 $2,418,501 $5,901,557
Christopher M.
Capone 1,116,608 30,000 36,400 3,224 141,600 N/A 1,327,832
Carl E. Meyer 1,327,868 30,000 58,200 3,829 255,700 N/A 1,675,597
Joseph J.
DeVirgilio, Jr. 1,155,984 30,000 51,200 3,345 173,500 N/A 1,414,029
W. Randolph Groft 669,430 30,000 16,200 3,408 N/A N/A 719,038

----------
(1) The present value of the continued healthcare benefits is calculated in
accordance with Financial Accounting Standards Board Statement of
Financial Accounting Standards No. 106, EMPLOYER'S ACCOUNTING FOR
POSTRETIREMENT BENEFITS OTHER THAN PENSIONS. The values assume continued
healthcare coverage for the individual and his spouse for the applicable
continuation period. See Note 10 of the Consolidated Financial Statements
contained in the Annual Report for an explanation of the assumptions made
by the Corporation in the valuation of the continued health care benefits.

(2) Represents the value of premiums for continued group life insurance during
the applicable two or three-year continuation period.

(3) The value of the enhanced SERP benefit equals the present value of the
increase in the individual's SERP benefit as of December 31, 2007,
calculated as if he had remained employed with the Corporation and its
affiliates for an additional three-year period following termination. The
present value was determined based on a 6.40% discount rate and the
Retirement Plan 2000 Combined Table Projected to 2006, with no collar
adjustment. For additional information about the SERP, please refer to the
"Pension Benefits" section of this proxy statement at page 36.

(4) Section 280G of the Internal Revenue Code applies if there is a change in
control of the Corporation, compensation is paid to a Named Executive
Officer as a result of the change in control ("parachute payments"), and
the present value of the parachute payments is 300% or more of the
executive's "base amount", which equals his average W-2 income for the
five-calendar-year period immediately preceding the change in control
(E.G., 2002-2006 if the change in control occurs in 2007). If Section 280G
applies, then the Named Executive Officer is subject to an excise tax
equal to 20% of the amount of the parachute payments in excess of his base
amount (the "excess parachute payments"), in addition to income and
employment taxes. Moreover, the Corporation is denied a federal income tax
deduction for the excess parachute payments. The amounts in the Section
280G Gross-Up column reflects a tax gross-up for the excise and related
taxes, as required under the terms of Mr. Lant's Change in Control
Agreement described above. The amounts are merely estimates based on the
following assumptions: (i) an excise tax rate of 20% and a combined
federal, state and local income and employment tax rate of 43.45%, (ii) a
discount rate of 4.61%, (iii) a stock price on December 31, 2007 of $44.54
per share, (iv) the stock options are cashed-out instead of assumed, and
(v) no amounts were allocated to the non-solicitation or non-competition
covenants contained in the employment agreements.

DIRECTOR COMPENSATION

The Corporation's Director compensation program is designed to enhance the
Corporation's ability to attract and retain highly qualified Directors and to
align their interests with the long-term interests of the Corporation's
shareholders. The program consists of both a cash component, designed to
compensate independent Directors for their service on the Board and its
Committees, and an equity component, designed to align the interests of
independent Directors and shareholders. Mr. Lant receives no compensation for
his service on the Board.

CASH COMPENSATION. During 2007, the basic annual cash retainer paid to
independent Directors was $55,000. The cash retainer is paid quarterly in
advance in four equal installments to each person serving as an independent
Director at the time when the particular quarterly payment is made. Independent
Directors who serve as a Committee Chair or as the Lead Independent Director of
the Board receive an additional annual retainer. The positions carrying the
payment of an additional retainer along with the annual amount of such
additional annual retainer during 2007 were as follows: Lead Independent
Director ($7,500); Chair of the Audit Committee ($10,000); Chair of the
Governance and Nominating Committee ($7,500); Chair of the Compensation
Committee ($7,500); and Chair of the Strategy and Finance Committee ($7,500).
Such additional retainers are generally paid quarterly, in advance, and are
prorated based on the period of service of a Director during the year in any of
those positions.

EQUITY COMPENSATION. During 2007, the equity component of annual
compensation for each independent Director was fixed at a number of phantom
shares of the Corporation's Common Stock having an aggregate value approximately
equal to $55,000. These shares were credited quarterly to each Director's
account under the Directors and Executives Deferred Compensation Plan. The
program requires this credit to remain invested in phantom shares until the
termination of the Director's service on the Board and to be paid only in cash
after termination of Board service. The number of phantom shares credited to
each Director's account was calculated on the basis of the closing price of the
Corporation's Common Stock on the first Monday following the first Tuesday of
January 2007, i.e., January 8, 2007. The phantom shares were credited in four
equal installments to the account of each person serving as an independent
Director at the time when the particular quarterly installment was credited.

DIRECTORS AND EXECUTIVES DEFERRED COMPENSATION PLAN. An independent
Director also may elect to defer payment of all or part of the cash compensation
received as a Director under the Corporation's Directors and Executives Deferred
Compensation Plan. If the Director so elects, any deferred cash compensation may
be credited to a bookkeeping account of phantom shares, whose value is tied to
the value of the Corporation's Common Stock, or to other investment options
provided under the Directors and Executives Deferred Compensation Plan from time
to time. Compensation deferred in accordance with the Directors and Executives
Deferred Compensation Plan is paid to Directors (adjusted to reflect investment
earnings and losses) at the time the Director ceases being a member of the Board
of Directors, either in a lump sum or over a period of time depending on the
circumstances of cessation and/or distribution elections.

CHANGES TO DIRECTOR COMPENSATION PROGRAM. On May 24, 2007, the Board of
Directors adopted new director stock ownership guidelines, effective as of July
1, 2007, which require each Director to accumulate within 5 years, and to hold
during his or her service on the Board, at least 6,000 shares of the
Corporation's Common Stock. In light of the new ownership guidelines, the
Corporation amended the Corporation's Directors and Executives Deferred
Compensation Plan, effective as of January 1, 2008. Prior to the amendment,
phantom shares were credited quarterly on behalf of each Director to the
director stock account under the Corporation's Directors and Executives Deferred
Compensation Plan, and they remained invested as phantom shares

during the Director's service on the Board. In light of the new stock ownership
guidelines, the amended plan provides that if a Director satisfies the
then-applicable stock ownership guidelines, he or she will no longer receive
future credits of phantom shares to the director stock account. Instead, the
value of any future credits of phantom shares will be paid to the director in
cash or deferred under the Directors and Executives Deferred Compensation Plan
at the election of the director. If deferred, the amounts may be invested by the
director in any investment option available under the plan. Phantom share
contributions to the director stock account made prior to the amendment will
continue to be invested as phantom shares; upon retirement, the Director may
diversify all or any portion of the existing phantom shares held in the director
stock account into other investment options available under the Directors and
Executives Deferred Compensation Plan. The amended plan also provides
participants with an opportunity to elect each year whether to receive that
year's deferrals in a lump sum or in quarterly installments over a period of
either five, ten or fifteen years if they retire or become disabled within 24
months after a change in control. Prior to the amendment, participants did not
have the opportunity to file a change in control payment election.

The following table sets forth information regarding compensation for the
year ended December 31, 2007 for the Directors other than Mr. Lant.

----------------------------------------------------------------------
FEES EARNED OR
PAID IN CASH STOCK AWARDS TOTAL
($) ($) ($)
NAME (1) (2) (3)
----------------------------------------------------------------------
Margarita K. Dilley 65,000 52,657 117,657
----------------------------------------------------------------------
Steven M. Fetter 62,500 52,657 115,157
----------------------------------------------------------------------
Edward F. X. Gallagher (4) 18,333 18,286 36,619
----------------------------------------------------------------------
Stanley J. Grubel 62,500 52,657 115,157
----------------------------------------------------------------------
Manuel J. Iraola 55,000 52,657 107,657
----------------------------------------------------------------------
E. Michel Kruse 70,000 52,657 122,657
----------------------------------------------------------------------
Jeffrey D. Tranen 55,000 52,657 107,657
----------------------------------------------------------------------
Ernest R. Verebelyi 55,000 52,657 107,657
----------------------------------------------------------------------

----------
(1) Reflects the cash annual retainer and committee chair fees paid to the
independent Directors for service on the Board. Independent Directors
receive no other cash compensation for service on the Board.

(2) The dollar amounts shown in this column are different from the $55,000
amount that was used to calculate the number of phantom shares to be
credited to the Directors, based on the closing price of the Corporation's
Common Stock on January 8, 2007. This difference occurs because this Stock
Awards column reflects the aggregate dollar amount recognized for
financial statement reporting purposes with respect to the phantom shares.
The phantom shares were credited in equal quarterly installments to the
account of each person serving as an independent Director at the time when
the particular quarterly installment was credited. The dollar amount
reported in this Stock Awards column was determined under FAS 123R using
the fair market value of the Corporation's Common Stock on the date each
credit was made. The amount reported in this column also equals the grant
date fair value of the phantom shares awards under FAS 123R. For more
information about these phantom shares credits, please refer to the
narrative description of the Director compensation program that precedes
this table.

The total number of phantom shares of the Corporation's Common Stock
credited to the account of each Director other than Mr. Lant under the
Corporation's Directors and Executives Deferred Compensation Plan as of
December 31, 2007, is listed below:

THE TOTAL NUMBER OF PHANTOM
SHARES CREDITED TO THE ACCOUNT
NAME OF EACH DIRECTOR AS OF 12/31/2007
---- ----------------------------------
Margarita K. Dilley ............. 3,502
Steven M. Fetter ................ 5,408
Edward F. X. Gallagher .......... 4,824
Stanley J. Grubel ............... 5,959
Manuel J. Iraola ................ 2,220
E. Michel Kruse ................. 5,262
Jeffrey D. Tranen ............... 4,672
Ernest R. Verebelyi ............. 1,926

(3) The Corporation did not recognize any amount of expense for financial
statement reporting purposes for the fiscal year ending December 31, 2007,
with respect to outstanding Director stock options. The outstanding stock
options held by our Directors are listed below. The stock options were
granted with an exercise price equal to the fair market value of the
underlying shares on the date of grant. The stock options were fully
vested on the date of grant.

# OF SHARES UNDERLYING STOCK # OF SHARES UNDERLYING STOCK
NAME OPTIONS GRANTED ON 1/1/2003 OPTIONS GRANTED ON 1/1/2001
---- ---------------------------- ----------------------------

Steven M. Fetter .................. 1,000 N/A
Edward F. X. Gallagher ............ 1,000 3,000
Stanley J. Grubel ................. 1,000 3,000
E. Michel Kruse ................... 1,000 N/A
Exercise Price per Share: ......... $48.62 $44.06

(4) Mr. Gallagher retired from the Board at the 2007 Annual Meeting.

PROPOSAL NO. 2 - SHAREHOLDER PROPOSAL RELATING TO
THE DECLASSIFICATION OF THE BOARD OF DIRECTORS

The Corporation has received a shareholder proposal from Mr. Gerald R.
Armstrong of 820 Sixteenth Street, No. 705, Denver, Colorado 80202-3227. On
November 1, 2007, the date on which Mr. Armstrong submitted the proposal to the
Corporation, he owned 80.191 shares of Common Stock. At his request, the
Corporation has included Mr. Armstrong's following proposal and supporting
statement in its Proxy Statement for the Annual Meeting. If properly presented,
this proposal will be voted on at the Annual Meeting.

The Board of Directors of the Corporation recommends a vote "AGAINST" this
proposal.

THE BOARD STRUCTURE

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 size as possible, with one class standing for election each year.
Currently, the Corporation's Board of Directors consists of eight (8) Directors
and is divided into three classes, each class having a three-year term of office
and one class being elected each year, including this year. This structure is
commonly known as a "classified" board.

SHAREHOLDER PROPOSAL

Mr. Armstrong's proposal is quoted verbatim in italics below. Pursuant to
Rule 14a-8(l)(2) under the Securities Exchange Act of 1934, the Corporation is
not responsible for the contents of the shareholder proposal or its supporting
statement.

RESOLUTION

THAT THE SHAREHOLDERS OF CH ENERGY GROUP, INC. REQUEST ITS BOARD OF DIRECTORS TO
TAKE THE STEPS NECESSARY TO ELIMINATE CLASSIFICATION OF TERMS OF ITS BOARD OF
DIRECTORS TO REQUIRE THAT ALL DIRECTORS STAND FOR ELECTION ANNUALLY. THE BOARD
DECLASSIFICATION SHALL BE COMPLETED IN A MANNER THAT DOES NOT AFFECT THE
UNEXPIRED TERMS OF THE PREVIOUSLY-ELECTED DIRECTORS.

STATEMENT

THE PROPONENT BELIEVES THE ELECTION OF DIRECTORS IS THE STRONGEST WAY THAT
SHAREHOLDERS INFLUENCE THE DIRECTORS OF ANY CORPORATION. CURRENTLY, OUR BOARD OF
DIRECTORS IS DIVIDED INTO THREE CLASSES WITH EACH CLASS SERVING THREE-YEAR
TERMS. BECAUSE OF THIS STRUCTURE, SHAREHOLDERS MAY ONLY VOTE FOR ONE-THIRD OF
THE DIRECTORS EACH YEAR. THIS IS NOT IN THE BEST INTEREST OF THE SHAREHOLDERS
BECAUSE IT REDUCES ACCOUNTABILITY.

U. S. BANCORP, ASSOCIATED BANC-CORP, PIPER-JAFFRAY COMPANIES, FIFTH-THIRD
BANCORP, PAN PACIFIC RETAIL PROPERTIES, QWEST COMMUNICATIONS INTERNATIONAL, XCEL
ENERGY, GREATER BAY BANCORP, NORTH VALLEY BANCORP, PACIFIC CONTINENTAL
CORPORATION, REGIONS FINANCIAL CORPORATION, COBIZ FINANCIAL INC., MARSHALL &
ILLSLEY CORPORATION, AND WINTRUST FINANCIAL, INC. ARE AMONG THE CORPORATIONS
ELECTING DIRECTORS ANNUALLY BECAUSE OF THE EFFORTS OF THE PROPONENT.

THE PERFORMANCE OF OUR MANAGEMENT AND OUR BOARD OF DIRECTORS IS NOW BEING MORE
STRONGLY TESTED DUE TO ECONOMIC CONDITIONS AND THE ACCOUNTABILITY FOR
PERFORMANCE MUST BE GIVEN TO THE SHAREHOLDERS WHOSE CAPITAL HAS BEEN ENTRUSTED
IN THE FORM OF SHARE INVESTMENTS.

A STUDY BY RESEARCHERS AT HARVARD BUSINESS SCHOOL AND THE UNIVERSITY OF
PENNSYLVANIA'S WHARTON SCHOOL TITLED "CORPORATE GOVERNANCE AND EQUITY PRICES"
(QUARTERLY JOURNAL OF ECONOMICS, FEBRUARY, 2003), LOOKED AT THE RELATIONSHIP
BETWEEN CORPORATE GOVERNANCE PRACTICES (INCLUDING CLASSIFIED BOARDS) AND FIRM
PERFORMANCE. THE STUDY FOUND A SIGNIFICANT POSITIVE LINK BETWEEN GOVERNANCE
PRACTICES FAVORING SHAREHOLDERS (SUCH AS ANNUAL DIRECTORS ELECTION) AND FIRM
VALUE.

WHILE MANAGEMENT MAY ARGUE THAT DIRECTORS NEED AND DESERVE CONTINUITY,
MANAGEMENT SHOULD BECOME AWARE THAT CONTINUITY AND TENURE MAY BE BEST ASSURED
WHEN THEIR PERFORMANCE AS DIRECTORS IS EXEMPLARY AND IS DEEMED BENEFICIAL TO THE
BEST INTERESTS OF THE CORPORATION AND ITS SHAREHOLDERS.

THE PROPONENT REGARDS AND [sic] UNFOUNDED THE CONCERN EXPRESSED BY SOME THAT
ANNUAL ELECTION OF ALL DIRECTORS COULD LEAVE COMPANIES WITHOUT EXPERIENCED
DIRECTORS IN THE EVENT THAT ALL INCUMBENTS ARE VOTED OUT BY SHAREHOLDERS. IN THE
UNLIKELY EVENT THAT SHAREHOLDERS DO VOTE TO REPLACE ALL DIRECTORS, SUCH A
DECISION WOULD EXPRESS DISSATISFACTION WITH THE INCUMBENT DIRECTORS AND REFLECT
A NEED FOR CHANGE.

IF YOU AGREE THAT SHAREHOLDERS MAY BENEFIT FROM GREATER ACCOUNTABILITY AFFORDED
BY ANNUAL ELECTION OF ALL DIRECTORS, PLEASE VOTE "FOR" THIS PROPOSAL.

THE BOARD OF DIRECTOR'S RESPONSE IN OPPOSITION TO MR. ARMSTRONG'S PROPOSAL

The Board of Directors believes that the current classified structure of
the Board is working well for the Corporation and its shareholders. We have
carefully considered Mr. Armstrong's proposal, and we have concluded that it
should not be adopted.

The current Board structure enables the Directors to focus on the
long-term success of the Corporation. This structure assures shareholders that
they have the ability to elect approximately one-third of their Directors each
year, while also assuring shareholders that approximately two-thirds of their
Directors will continue to serve for the remaining one or two years of their
terms. We believe this structure is in the long-term interests of the
Corporation and its shareholders because it results in the Board consistently
having a majority of Directors who have experience with the challenges and
opportunities facing the businesses of the Corporation. We believe it enhances
the knowledge-base, stability, and collegiality of the Board's deliberations,
and improves the Board's ability to understand and consider what is in the
long-term interests of the Corporation and its shareholders.

The Corporation's businesses include a utility and competitive business
subsidiaries. The utility is subject to significant ongoing government
regulation; the competitive business subsidiaries are not. The oversight of
these distinct and complex businesses requires both short-term and long-term
planning, as well as careful and on-going implementation of business policies
and strategies. The knowledge and experience among our Directors with regard to
the Corporation and its businesses are valuable resources as the Board strives
to make the business decisions that are best for the Corporation and its
shareholders.

We are a predominately independent Board. We are comprised of eight
directors, seven of whom are independent. We believe that our classified
structure gives CH Energy Group, Inc. an advantage in attracting and recruiting
talented director candidates who are willing to make at least a three year
commitment of their time, energy and skills. We also believe that our three year
terms enhance our independence and our commitment because we can reach decisions
in a context where we do not face the risk of pressures and uncertainties
involved with facing annual elections.

The classified Board structure is an important asset for shareholders
because it provides a level of protection against an unsolicited takeover effort
based on an inadequate offer, and it enhances the Board's ability to respond
effectively if such a situation were to arise. This Board structure would not
preclude a takeover. Instead, because the structure makes it impossible to elect
a majority of Directors at one meeting of shareholders, our classified structure
would strongly encourage a potential acquirer to negotiate directly with the
Board. This would give the Board time to evaluate the adequacy and fairness of
any takeover proposal and to weigh alternative methods of maximizing shareholder
value. Thus, our classified structure better positions the Board to negotiate
effectively to realize the greatest value for shareholders. The Corporation's
classified Board prevents a potential acquirer from unilaterally and rapidly
gaining control of our businesses without paying fair value.

Mr. Armstrong suggests that a classified board reduces accountability. We
do not agree. As directors, each of us has fiduciary duties of care and loyalty
to the Corporation and its shareholders. These duties require us to act in good
faith and in the best interests of the Corporation and its shareholders. These
duties exist regardless of how often a director stands for election. As current
Directors, and as stewards for the shareholders, we embrace these duties and we
strive to attain the highest quality of corporate governance.

After careful consideration of Mr. Armstrong's proposal, and after
reviewing the benefits of our current structure discussed in the preceding
paragraphs, the Board of Directors has unanimously determined that the retention
of CH Energy Group, Inc.'s classified Board structure remains in the best
interest of the Corporation and its shareholders. Accordingly, the Board of
Directors unanimously recommends voting against the proposal.

VOTE REQUIRED

The proposal will pass if it receives a majority of the votes cast by the
Corporation's shareholders at the Annual Meeting in person or by proxy.
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.

A vote in favor of this proposal is an advisory recommendation to the
Board of Directors. This proposal requests the Board to take those steps
necessary to cause the annual election of all Directors. One of those steps
would be to amend the Corporation's By-laws. The amendment, repeal or alteration
of the provisions of the By-laws providing for a classified Board must be made
by either (i) the affirmative vote of not less than 80% of the shares entitled
to vote thereon at an annual or special shareholders' meeting at which the
action is proposed, or (ii) the approval of not less than two-thirds of the
entire Board of Directors. If this proposal were to be approved by the
shareholders at this Annual Meeting, and the Board of Directors were to submit
the required amendments to the provisions in the Corporation's By-laws providing
for a classified Board to the shareholders for a vote at a future meeting,
approval of the amendments would require the affirmative vote of 80% of the
shares entitled to vote thereon.

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE "AGAINST"
THE SHAREHOLDER PROPOSAL RELATING TO THE DECLASSIFICATION OF THE BOARD
OF DIRECTORS.

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,

John E. Gould
March 7, 2008 CORPORATE SECRETARY

[This Page Intentionally Left Blank]

ROUTE TO CH ENERGY GROUP, INC.

[ROUTE MAP]

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

[LOGO OF CH ENERGY GROUP, INC.]

000004

MR A SAMPLE
DESIGNATION (IF ANY)
ADD 1
ADD 2
ADD 3
ADD 4
ADD 5
ADD 6

Using a BLACK INK pen, mark your votes with an X as shown in [X]
this example. Please do not write outside the designated areas.

===================
ADMISSION TICKET
======================== C123456789

000000000.000000 ext 000000000.000000 ext

ELECTRONIC VOTING INSTRUCTIONS

YOU CAN VOTE BY INTERNET OR TELEPHONE!
AVAILABLE 24 HOURS A DAY, 7 DAYS A WEEK!

Instead of mailing your proxy, you may choose one of the two voting
methods outlined below to vote your proxy.

VALIDATION DETAILS ARE LOCATED BELOW IN THE TITLE BAR.

PROXIES SUBMITTED BY SHAREHOLDERS OF RECORD BY THE INTERNET OR TELEPHONE
MUST BE RECEIVED BY 12:01 A.M., CENTRAL TIME, ON APRIL 22, 2008.

VOTE BY INTERNET

o Log on to the Internet and go to
www.investorvote.com/CHG

o Follow the steps outlined on the secured website.

VOTE BY TELEPHONE

o Call toll free 1-800-652-VOTE (8683) within the United States,
Canada & Puerto Rico any time on a touch tone telephone.
There is NO CHARGE to you for the call.

o Follow the instructions provided by the recorded message.

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

ANNUAL MEETING PROXY CARD 123456 C0123456789 12345

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

IF YOU HAVE NOT VOTED VIA THE INTERNET OR TELEPHONE, FOLD ALONG THE
PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

A PROPOSALS -- THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL THE NOMINEES
LISTED IN PROPOSAL NO. 1, AND A VOTE AGAINST PROPOSAL NO. 2.

Proposal No. 1. Election of Class II Directors:

FOR WITHHOLD FOR AGAINST ABSTAIN

01 - Margarita K. Dilley [ ] [ ] Proposal No. 2. Shareholder proposal requesting necessary [ ] [ ] [ ]
steps to declassify the Board of Directors.
02 - Steven M. Fetter [ ] [ ]

03 - Stanley J. Grubel [ ] [ ]

In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the annual meeting or any adjournment or
postponement thereof.

MEETING ATTENDANCE ANNUAL REPORT

Mark the box to the right if you plan to [ ] Mark the box to the right if you would [ ]
attend the Annual Meeting. like to stop receiving an Annual Report.

CHANGE OF ADDRESS -- Please print new address below. COMMENTS -- Please print your comments below.
--------------------------------------------------- ---------------------------------------------------

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

B AUTHORIZED SIGNATURES -- THIS SECTION MUST BE COMPLETED FOR YOUR VOTE TO
BE COUNTED. -- DATE AND SIGN BELOW

Please sign exactly as name(s) appears hereon. Joint owners should each sign.
When signing as attorney, executor, administrator, corporate officer, trustee,
guardian, or custodian, please give full title.

Date (mm/dd/yyyy) -- Please print Signature 1 -- Please keep Signature 2 -- Please keep
date below. signature within the box. signature within the box.
--------------------------------- -------------------------- ----------------------------
/ /
--------------------------------- -------------------------- ----------------------------

C 1234567890 J N T MR A SAMPLE (THIS AREA IS SET UP TO ACCOMMODATE
140 CHARACTERS) MR A SAMPLE AND MR A SAMPLE AND
MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND
1 U P X 0 1 6 5 3 0 1 MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND +

[STOCK#] 00UAAF

ADMISSION TICKET

ANNUAL MEETING OF SHAREHOLDERS
April 22, 2008, 10:30 a.m.

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

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

o Election of Directors
o To consider and vote upon a shareholder proposal, if properly presented
-------------------------------------------------------------------------------

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

[LOGO OF CH ENERGY GROUP, INC.]

-------------------------------------------------------------------------------
PROXY -- CH ENERGY GROUP, INC.
-------------------------------------------------------------------------------

PROXY OF COMMON SHAREHOLDERS
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

The undersigned hereby appoints MANUEL J. IRAOLA, E. MICHEL KRUSE, JEFFREY D.
TRANEN AND ERNEST R. VEREBELYI, 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 February 29, 2008, 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 22, 2008, or any adjournment or postponement thereof,
upon all such matters as may properly come before the meeting, including the
proposals described in the Proxy Statement, dated March 7, 2008, a copy of which
has been received by the undersigned.

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

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

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

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL
MEETING OF SHAREHOLDERS TO BE HELD ON APRIL 22, 2008:

THE CORPORATION'S PROXY STATEMENT AND THE CORPORATION'S ANNUAL REPORT TO
SHAREHOLDERS FOR THE FISCAL YEAR ENDED DECEMBER 31, 2007 ARE AVAILABLE AT
WWW.CHENERGYGROUP.COM BY SELECTING "INVESTOR RELATIONS" AND THEN SELECTING
"FINANCIAL REPORTS."