Item 1 - BUSINESS
Generally
Registrant ("Company") is a gas and electric corporation formed on December 31, 1926, as a consolidation of several operating utilities which had been accumulated under one management during the previous 26 years. The Company generates, purchases and distributes electricity and purchases and distributes gas. The Company, in the opinion of its general counsel, has, with minor exceptions, valid franchises, unlimited in duration, to serve a territory extending about 85 miles along the Hudson River and about 25 to 40 miles east and west from such River. The southern end of the territory is about 25 miles north of New York City, and the northern end is about 10 miles south of the City of Albany. The territory, comprising approximately 2,600 square miles, has a population estimated at 651,000. Electric service is available throughout the territory, and natural gas service is provided in and about the cities of Poughkeepsie, Beacon, Newburgh and Kingston and in certain outlying and intervening territory. The number of Company employees at December 31, 1994 was 1,327.
The Company's territory reflects a diversified economy, including manufacturing industries, research firms, farms, governmental agencies, public and private institutions, resorts, and wholesale and retail trade operations.
Total revenues and operating income before income taxes (expressed as percentages) derived from electric and gas operations for each of the last three years were as follows:
Percent of Percent of Operating Total Revenues Income before Income Taxes
Electric Gas Electric Gas
1994 80% 20% 89% 11% 1993 82% 18% 89% 11% 1992 82% 18% 87% 13%
Consumption of electricity in New York State has stabilized and, with an increase in supply, there is an excess of electric generating capacity in the State. And, as the utility industry moves toward competition, large customers may have increased opportunities to purchase electricity and natural gas from sources other than the local utility. In some instances,
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smaller customers may have the same options as larger customers. (See below subcaption "Other Matters - Competition").
Recent declines in the prices of electric utility common stock, including that of the Company, have been attributed to the increase in interest rates during 1994 and the financial community's concern about the effects of increasing competitive pressures on the electric utility industry. In addition, the common stock prices of electric utilities in New York State, including the Company's, have been affected by the financial community's concern about the regulatory environment in New York State due to the adverse testimony filed in 1994 by the Staff of the New York State Public Service Commission ("PSC") in a number of pending rate cases of other New York utilities.
Additional information concerning revenues and operating profits, and information concerning identifiable assets for the electric and gas segments, which are the significant industry segments of the Company, are set forth in Note 9 to the Company's Consolidated Financial Statements for the fiscal year ended December 31, 1994 (which Statements, including the Notes thereto, are hereinafter called "Company's 1994 Financial Statements"), appearing on pages 76 through 78 of the Company's 1994 Financial Statements (the Company's 1994 Financial Statements, together with Registrant's "Management's Discussion and Analysis of Financial Condition and Results of Operations" are included as Exhibit 13 hereto and hereinafter called "Exhibit 13"), which Note 9 is incorporated herein by reference.
Electric Sales to IBM: The Company's largest customer is International Business Machines Corporation ("IBM"), which accounted for approximately 12% of the Company's total electric revenues for the year ended December 31, 1994. The well- publicized downsizing of IBM has resulted in a reduction of IBM employment and the closing of certain IBM facilities in the Company's franchise territory. The total number employed by IBM in the Company's franchise territory at December 31, 1994 was approximately 10,500, as compared to the peak level of IBM employment in excess of 30,000 in 1985. Published reports in January 1995, however, indicate that IBM believes that the "bulk of layoffs is behind them." This downsizing of IBM resulted in a decline of electric sales to IBM by 20% in 1993 and a further 16% decline in 1994. The Company cannot assess at this time whether sales to IBM will continue to decline, or the effect of further IBM downsizing, if any, on the Company's future results of operations.
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Construction Program and Financing
The Company is engaged in a construction program which is presently estimated to involve total cash expenditures during the period 1995 through 1999 of approximately $296 million. The Company's principal construction projects consist of those designed to improve the reliability, efficiency and environmental compatibility of the Company's generating facilities and those required to expand, reinforce and replace the Company's transmission, substation, distribution and common facilities.
For estimates of construction expenditures, internal funds available, mandatory and optional redemption of long-term securities, and working capital requirements for the five-year period 1995-1999, see the subcaption "Construction Program" of "Management's Discussion and Analysis of Financial Condition and Results of Operations" appearing on pages 6 through 8 of Exhibit 13 hereto, which subcaption is incorporated herein by reference.
For a discussion of the Company's capital structure, financing program and short-term borrowing arrangements, see Notes 4 through 6 to the Company's 1994 Financial Statements, and the subcaptions "Capital Structure," "Financing Program" and "Short-term Debt," appearing in "Management's Discussion and Analysis of Financial Condition and Results of Operations," appearing, in the case of said Notes, on pages 55 through 61 of Exhibit 13 hereof and, in the case of said subcaptions, on pages 8 and 9 of Exhibit 13 hereof, which Notes and subcaptions are incorporated herein by reference.
The Company's Certificate of Incorporation and its various debt instruments do not contain any limitations upon the issuance of authorized, but unissued, Preferred Stock and Common Stock or of unsecured short-term debt.
The Company's various debt instruments include limitations as to the amount of additional funded indebtedness which the Company can issue. The Company believes such limitations will not impair its ability to issue any or all of the debt described under said subcaption "Financing Program" incorporated herein by reference.
The Company has authority from the PSC to issue, at any time through December 31, 1997, unsecured short-term debt for capital purposes in an aggregate principal amount not to exceed at any time $52 million.
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Rates
Generally: The electric and gas rates of the Company applicable to service supplied to retail customers within the State of New York are regulated by the PSC. Transmission rates and rates for electricity sold for resale in interstate commerce are regulated by the Federal Energy Regulatory Commission ("FERC").
During 1994, the average price of electricity was 8.46 cents per kWh which, despite an overall electric rate increase of 1.2% effective December 21, 1993, is unchanged from 1993's average price per kWh.
Rate Proceedings - Electric and Gas: For information with respect to the Company's increase in 1993 in its base rates for electric service, see subcaption "Rate Proceedings" in "Management's Discussion and Analysis of Financial Condition and Results of Operations," on pages 9 and 10 of Exhibit 13 hereto, which subcaption is incorporated herein by reference.
Cost Adjustment Clauses: The Company's tariff for retail electric service includes a fuel cost adjustment clause pursuant to which electric rates are adjusted to reflect changes in the costs of fuels used in electric generation and of certain purchased power from the level of such costs included in the Company's base rates for electricity. The Company's tariff for gas service includes a gas cost adjustment clause pursuant to which gas rates are adjusted to reflect changes in the price of natural gas purchased from pipeline and/or third party suppliers and certain costs of manufactured gas from the level of such costs included in base rates for gas. The PSC Staff in two pending electric rate cases of other New York utilities has proposed to eliminate their electric fuel cost adjustment clauses. While the Company can make no prediction as to whether the PSC would eventually eliminate the electric fuel cost adjustment clause of the Company or any other electric utility, elimination of such clause could adversely affect the Company by increasing the risk that fuel cost expenditures made to provide electric service would not be recovered in rates.
For more information with respect to such clauses, see the discussions under the subcaptions "Deferred Electric Fuel Costs" and "Deferred Gas Costs" in Note 1 to the Company's 1994 Financial Statements appearing on page 47 of Exhibit 13 hereto, which subcaptions are incorporated herein by reference.
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Take-or-Pay Gas Liability: For a discussion of the PSC proceeding commenced in 1988 to determine, among other things, whether recovery of some or all of take-or-pay costs should be denied New York gas distribution companies, see the subcaption "Take-or-Pay Gas Costs" in Note 8 to the Company's 1994 Financial Statements appearing on pages 70 and 71 of Exhibit 13 hereto, which subcaption is incorporated herein by reference.
Fuel Supply and Cost
The Company's two primary fossil fuel-fired electric generating stations are the Roseton Plant (described in Item 2
Item 2 - PROPERTIES
Electric
General: The net capability of the Company's electric generating plants as of December 31, 1994, the net output of each plant for the year ended December 31, 1994, and the year each plant was placed in service or rehabilitated are as set forth below:
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The Company entered into a contract with New York State Electric and Gas Corporation, with a term of May 24, 1993 through April 29, 1995, for the purchase of energy and capacity of up to 300 MW. The Company exercised an option to cancel the contract effective April 30, 1994. During 1994, the Company purchased 345,650 MWh of energy under this contract.
The Company has a contract with PASNY which entitles the Company to 49 MW net capability from the Blenheim-Gilboa Pumped Storage Hydroelectric Plant through 2002.
Since 1975, the Company has purchased capacity in relatively small amounts from the Fitzpatrick Nuclear Plant of PASNY, pursuant to a contract which may be terminated by either party on 12 months' notice. Under such contract, the maximum capacity which can be purchased during specific periods is 8 MW. The Company has elected to terminate this contract effective April 30, 1995.
See Item 1, subcaption "Regulation - Alternative Electric Power Generation," with respect to alternative electric power generation interconnected with the Company's system.
The Company owns 86 substations having an aggregate transformer capacity of 4.3 million KVA. The transmission system consists of 583 pole miles of line and the distribution system of 7,241 pole miles of overhead lines and 795 trench miles of underground lines.
Load and Capacity: The Company's maximum one-hour demand within its own territory, for the year ended December 31, 1994, occurred on July 7, 1994 and amounted to 892 MW. The Company's maximum one-hour demand within its own territory, for that part of the 1994-1995 winter capability period through February 7, 1995, occurred on February 6, 1995 and amounted to 800 MW.
Based on current projections of peak one-hour demands for the three-year period comprising the 1995 summer capability period through the winter capability period of 1997-1998, the Company estimates that it will have capacity available to satisfy its projected peak demands plus the estimated installed reserve generating capacity requirements which it is required to maintain as a member of the New York Power Pool ("NYPP"), described below. The following table sets forth the amounts of any excess capacity by summer and winter capability periods for such three-year period:
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The Company is a member of the NYPP consisting of the major investor-owned electric utility companies in the State and PASNY. The members of the NYPP, by agreement, provide for coordinated operation of their bulk power electric systems with a view to the use of the most economical source of electricity, for the maintenance of a reserve margin equal to at least 18% of each member's forecasted peak load and for the sale and interchange of electric generating capability and energy among such members. The members of the NYPP also provide for the cooperative development of long-range plans for the expansion on an integrated basis of the bulk power supply system for New York State, compatible with environmental standards, and appropriately related to interstate and international capacity and reliability considerations.
Roseton Plant: The Roseton Plant is located in the Company's franchise area at Roseton, New York, and is owned by the Company, Con Edison and Niagara Mohawk as tenants-in-common. The Roseton Plant, placed in commercial operation in 1974, has a generating capacity of 1,200 MW consisting of two 600 MW generating units, both of which are capable of being fired either by residual oil or natural gas (see subcaption below entitled "Gas - Sufficiency of Supply and Future Gas Supply"). The Company is acting as agent for the owners with respect to operation of the Roseton Plant. Generally, the owners share the costs and expenses of the operation of such Plant in accordance with their respective ownership interests.
For more information with respect to the Roseton Plant, see the subcaption "Roseton Plant" in Note 8 to the Company's 1994 Financial Statements appearing on pages 66 through 68 of Exhibit 13 hereto, which subcaption is incorporated herein by reference.
The 345 kV transmission lines and related facilities to connect the Roseton Plant with other points in the system of the Company and with the systems of Con Edison and Niagara Mohawk to the north and west of such Plant are 100%-owned by the Company. The share of each of the parties in the output of the Roseton Plant is transmitted over these lines pursuant to a certain transmission agreement relating to such Plant, which provides, among other things, for compensation to the Company for such use by the other parties. In addition, the Company has contract rights which entitle the Company to the lesser of 300 MW or one quarter of the capacity in a 345 kV transmission line owned by PASNY, which connects the Roseton Plant with a Con Edison substation to the east of such Plant in East Fishkill, New York.
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In exchange for these rights, the Company agreed to provide PASNY capacity in the 345 kV transmission lines the Company owns from the Roseton Plant, to the extent it can do so after satisfying its obligations to Con Edison and Niagara Mohawk.
Nine Mile 2 Plant:
General: Unit No. 2 of the Nine Mile Point Nuclear Station ("Nine Mile 2 Plant" or "Plant") is located in Oswego County, New York, and is operated by Niagara Mohawk. The Nine Mile 2 Plant is owned as tenants-in-common by the Company (9% interest), Niagara Mohawk (41% interest), New York State Electric & Gas Corporation (18% interest), Long Island Lighting Company (18% interest) and Rochester Gas and Electric Corporation (14% interest). The output of the Nine Mile 2 Plant, which has a nominally rated net capability of 1,080 MW, is shared, and the operating expenses of and capital additions to the Plant are allocated to the cotenants, in the same proportions as the cotenants' respective ownership interests.
An Operating Agreement for the operation of the Plant was entered into by the Nine Mile 2 Plant cotenants effective January 1, 1994, and the PSC approved said Operating Agreement on February 24, 1994. Under that Agreement, Niagara Mohawk operates the Nine Mile 2 Plant, but all five owners share certain policy, budget and managerial oversight functions. The fixed term of such Operating Agreement is 24 months from its effective date and, unless terminated on the expiration of such 24 month period, continues, subject to termination on six months' notice.
In August 1989, the non-operating cotenants of the Nine Mile 2 Plant entered into an agreement for consulting services with Management, Analytical & Technical Services, Inc. ("MATS") concerning the monitoring and assessment of the operation of the Plant, including the provision of technical advice, with the objective of improving the operation of the Plant. Pursuant to such agreement, MATS is acting as the on-site representative of the non-operating cotenants.
Operational Matters:
Nuclear Plant Decommissioning Costs: For a discussion of the costs to decommission the Nine Mile 2 Plant, see the caption "Nuclear Plant Decommissioning Costs" in Note 2 to the Company's 1994 Financial Statements appearing on pages 50 and 51 of Exhibit 13 hereto, which caption is incorporated herein by reference.
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Radioactive Waste: For a discussion of the low- level and high-level radioactive waste management programs at the Nine Mile 2 Plant, see the caption "Radioactive Waste" in Note 2 to the Company's 1994 Financial Statements appearing on page 49 of Exhibit 13 hereto, which caption is incorporated herein by reference.
Refueling Outage: A scheduled refueling outage for the Nine Mile 2 Plant was completed in November, 1993. The next refueling outage is scheduled to commence in April 1995, with a targeted 60-day duration.
Gas
General: The Company's gas system consists of 159 miles of transmission pipelines and 939 miles of distribution pipelines.
Current Gas Supply: During 1994, natural gas was available to firm gas customers at a price competitive with that of alternative fuels. As compared to 1993, in 1994, firm retail gas sales, normalized for weather, increased by 3.8% and the average number of firm gas customers increased by 0.4%. Sales to interruptible customers increased 33.1% in 1994 as compared to 1993.
For information on the Company's gas suppliers and gas storage capability, see the caption "Natural Gas Supply" in Note 8 to the Company's 1994 Financial Statements appearing on pages 69 and 70 of Exhibit 13, which caption is incorporated herein by reference.
For the year ended December 31, 1994, the total amount of gas purchased from all sources was 25,280,306 Mcf., which includes 6,473,745 Mcf. purchased directly for use as a boiler fuel at the Roseton Plant.
The Company owns two propane-air mixing facilities for emergency and peak shaving purposes located in Poughkeepsie and in Newburgh, New York. Each facility is capable of supplying 8,000 Mcf. per day with propane storage capability adequate to provide maximum facility sendout for up to three consecutive days.
Sufficiency of Supply and Future Gas Supply: The peak daily demand for natural gas by the Company's customers for the year ended December 31, 1994 occurred on January 26, 1994, and
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amounted to 113,366 Mcf. The Company's peak-day gas capability in 1994 was 116,865 Mcf. The peak daily demand for natural gas by the Company's customers for that part of the 1994-1995 heating season through February 27, 1995, occurred on February 6, 1995 and amounted to 107,803 Mcf.
Other: In late 1985, FERC instituted a rule which permits non-discriminatory access to the pipeline facilities of interstate gas pipeline transmission companies subject to the jurisdiction of FERC under the Natural Gas Act. This rule allows access to such pipelines by the pipeline transmission company's customers enabling them to transport gas purchased directly from third parties and spot sources through such pipelines. Such access, moreover, also permits industrial customers of gas distribution utilities to connect directly with the pipeline transmission company and to contract directly with the pipeline transmission companies to transport gas, thereby by-passing the distribution utility. In 1985, the PSC issued its Opinion and Order requiring New York State distribution gas utilities to transport customer-owned gas through its facilities upon request of a customer. Except in the Towns of Carmel, Pleasant Valley, New Baltimore, Coxsackie, Athens, Milan, Clinton, LaGrange and Unionvale, currently, no interstate pipeline transmission companies are located in areas where the Company provides retail gas service.
For a discussion of FERC Order 636, issued in 1992, and thereafter amended, which requires pipeline gas suppliers to unbundle natural gas sales service from transportation and storage service, see the caption "Natural Gas Supply" in Note 8 to the Company's 1994 Financial Statements appearing on pages 69 and 70 of Exhibit 13 hereto, which caption is incorporated herein by reference.
The Company is a member of the New York Gas Group ("NYGAS"), a voluntary association of utilities providing gas service in New York State. The purpose of NYGAS is to achieve, by cooperative action among gas distributors, greater efficiency in meeting present demands for gas service in New York State and to develop state-wide gas sufficiency to support future economic growth throughout the State.
Other Matters
The Danskammer Plant and the Roseton Plant and all of the other principal generating plants and important property units of the Company are held by it in fee simple, except (1)
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certain rights-of-way, and (2) a portion of the property used in connection with the hydroelectric plants of the Company consisting of flowage or other riparian rights. The Company's present interests in the Roseton Plant and the Nine Mile 2 Plant are owned as undivided interests as a tenant-in-common with the other utility owners thereof. Certain of the properties of the Company are subject to rights-of-way and easements which do not interfere with the Company's operations. In the case of certain distribution lines, the Company owns only a part interest in the poles upon which its wires are installed, the remaining interest being owned by telephone companies. Certain electric transmission facilities owned by others are used by the Company pursuant to long-term contractual arrangements.
All of the physical properties of the Company (other than property, such as material and supplies, excluded in the Company's Mortgage) and its franchises are subject to the lien of the Company's Mortgage under which all of its Mortgage Bonds are outstanding. Such properties are from time to time subject to liens for current taxes and assessments which it is the Company's practice to pay regularly as and when due.
The Company's properties have been well maintained and are in good operating condition.
During the three-year period ended December 31, 1994, the Company made gross property additions of $179.8 million (which includes $6 million in property additions related to the Roseton Plant restoration due to fire damage, which amount was reimbursed by insurance) and property retirements and adjustments of $35.1 million, resulting in a net increase (including Construction Work in Progress) in utility plant of $144.7 million, or 11.4%.
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Item 3
Item 3 - LEGAL PROCEEDINGS
Asbestos Litigation
Since 1987, the Company, along with many other parties, has been a defendant or third-party defendant in 607 asbestos lawsuits commenced in New York state and federal courts.
The plaintiffs in these lawsuits typically allege that they were injured by exposure to airborne asbestos fibers while working at a Company job site, either as an employee of an independent contractor or as an employee of the Company, when asbestos-containing products were being installed, maintained, renovated or removed. Typically, each plaintiff seeks $10,000,000 in compensatory damages, plus punitive damages, from all defendants.
Of the 607 cases that have been brought against the Company, only 351 remain pending against the Company, as of March 15, 1995, as a result of the following developments: (1) the Company negotiated voluntary dismissals in 26 cases and won summary judgment dismissals in 9 cases; (2) 116 third-party claims were extinguished with respect to the Company when the third-party plaintiff, Owens-Corning Fiberglas ("OCF") settled the cases with the plaintiffs; and (3) the Company settled 105 cases for an amount that in the aggregate is not material to the Company's financial condition.
Two of the pending cases were commenced against the Company and numerous other defendants in the United States District Court for the Southern District of New York by complaints dated June 13, 1991 and February 19, 1992. Both federal court plaintiffs allege to have been injured by exposure to asbestos fibers while working as an employee of an independent contractor at a Company facility. These two federal court plaintiffs each seek $10,500,000 in compensatory damages, plus punitive damages.
Three hundred and fifty-one (351) cases are pending against the Company in New York State Supreme Court, County of New York. These cases were commenced against the Company and numerous other defendants by complaints dated March 6, 1990, August 12, 1991, October 21, 1991, December 12, 1991, January 3, 1992, May 11, 1992, May 21, 1992, July 10, 1992, August 24, 1992, October 5, 1992, October 6, 1992, October 27, 1992, December 21, 1992, December 22, 1992, January 3, 1993, February 23, 1993, March 5, 1993, May 28, 1993, July 1, 1993, August 2, 1993, November 1, 1993, November 26, 1993, December 1, 1993, January 6,
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1994, January 12, 1994, January 24, 1994, January 25, 1994, February 7, 1994, February 28, 1994, April 20, 1994, April 21, 1994, April 24, 1994, May 26, 1994, May 31, 1994, June 7, 1994, July 14, 1994, August 31, 1994, October 17, 1994, November 21, 1994, December 27, 1994, January 30, 1995, February 14, 1995 and February 28, 1995. Three hundred and thirty-nine (339) of these plaintiffs seek $10,000,000 in compensatory damages, plus punitive damages. Seven (7) plaintiffs seek $10,500,000 in compensatory damages, plus punitive damages. One (1) plaintiff seeks $27,000,000 in compensatory damages, plus punitive damages. One (1) plaintiff seeks $70,000,000 in compensatory damages, plus punitive damages. In one (1) case, in which the Company was joined as a third-party defendant by OCF, the complaint alleges that the Company is responsible to OCF for the amount of any recovery obtained by plaintiff against OCF in the lawsuit.
In summary, as of March 15, 1995, the Company is a defendant or third-party defendant in 351 asbestos lawsuits. Although the Company is presently unable to assess the validity of these 351 lawsuits, based on information known to the Company at this time, including its experience in settling asbestos cases and in obtaining dismissals of asbestos cases, the Company believes that the costs to be incurred in connection with these lawsuits will not have a material adverse effect on the Company's financial position. However, if the Company were ultimately held liable under these lawsuits and insurance coverage were not available, the cost thereof could have a material adverse effect (a reasonable estimate of which cannot be made at this time) on the financial condition of the Company if the Company could not recover all or a substantial portion thereof in rates. The Company's insurance does not extend to punitive damages.
The Company is insured under successive comprehensive general liability policies issued by a number of insurers, and the Company has put such insurers on notice of the asbestos lawsuits. The Company has not been able to reach an agreement with such insurers, however, as to the proportionate share of the Company's defense and indemnity costs that each insurer should bear.
Environmental Litigation
In December 1980, several utilities, including the Company, three environmental groups and NYSDEC, among others, entered into an agreement ("Settlement Agreement") which relates to compliance with environmental matters concerning the
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operations of certain electric generating stations located along the Hudson River, including the Roseton Plant. The Settlement Agreement expired on May 9, 1991. Effective May 9, 1991, such utilities and NYSDEC entered into an interim agreement which relates to certain environmental aspects of the operation of such plants, pending future developments.
In September, 1991, Natural Resources Defense Council, Inc., the Hudson River Fisherman's Association and Scenic Hudson, Inc. commenced an action in the Supreme Court of the State of New York, County of Albany, against the NYSDEC, Con Edison, PASNY, Orange and Rockland Utilities, Inc. and the Company. This lawsuit challenged, as arbitrary and capricious, an abuse of discretion and a violation of lawful procedure, the determination of NYSDEC to enter into said interim agreement, alleging, among other things, that it would result in less stringent regulatory standards than those set forth in the SPDES permits applicable to, among others, the Roseton Plant, without regard to the applicable SPDES permit modification procedures. The lawsuit also sought a declaratory judgment that the existing SPDES permits (which expired October 1, 1992) include all covenants contained in the expired Settlement Agreement which restrict operations at said plants, including the Roseton Plant.
On March 23, 1992, the Court approved an agreed-upon Consent Order which resolved this action. Such Consent Order provides for certain operating restrictions at the Roseton Plant relating to the use of river water for plant cooling purposes, which have not imposed, and are not expected to impose, material additional costs on the Company. The Consent Order was twice extended by agreement of the parties until September 1, 1995 and will be submitted for Court approval. For a description of the pending NYSDEC proceeding involving renewal of the SPDES permit for the Roseton Plant (which expired on October 1, 1992), see Item 1 above under the subcaption "Environmental Quality - Water."
Environmental Claims - Newburgh Manufactured Gas Site
By letter, dated September 15, 1994, the City Manager of the City of Newburgh, New York ("City"), notified the Company that the City, while excavating in connection with improvements to its wastewater treatment plant, had encountered contamination (a tar-like substance) at its site. The City Manager stated that the contamination may have migrated from a nearby site owned by the Company and formerly used as a coal gas manufacturing plant.
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Preliminary tests reveal that samples of the substance taken from the City's site and from the Company's property are chemically similar.
By letter, dated September 23, 1994, the Company notified NYSDEC that there had been a potential release from the Company's site of a tar-like substance. The Company has since submitted a proposed plan to NYSDEC for further investigation of the site.
On November 28, 1994, the Company received a letter from counsel to the City, which letter purports to be a notice pursuant to the "Citizens' Suit" provisions of the federal Resource Conservation and Recovery Act ("RCRA"), 42 U.S.C. Section 6972, that the City intends to file a citizens' suit against the Company. On January 10, 1995, the Company received a second letter from counsel to the City, which letter purports to be a notice pursuant to said "Citizens' Suit" provisions of RCRA and the "Citizens' Suit" provisions of the Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA") (42 U.S.C. Section 9659) and the Emergency Planning and Community Right to Know Act ("EPCRA") (42 U.S.C. Section 11046) that the City intends to file a second Citizens' Suit against the Company.
The letter received November 28, 1994 asserts that an "imminent and substantial endangerment to health and the environment" exists by virtue of the claimed release of the tar- like substance from the Company's site. The letter received January 10, 1995 alleges that (i) the City's tests at the City's site revealed that such substances are known or believed to constitute a "hazardous waste," "hazardous substance," "extremely hazardous substance," "hazardous chemical" and/or "toxic chemical" as defined under RCRA, CERCLA and EPCRA, and (ii) the Company has used, stored, disposed of and/or released such substances, and operated underground storage tanks, in violation of permit, treatment, storage disposal, monitoring, reporting and notification requirements under RCRA, CERCLA and EPCRA. Any such action, if successful, could require the Company to take remedial action, potentially including removal of any solid or hazardous waste which is determined to present "imminent and substantial endangerment to health or the environment." RCRA, CERCLA and EPCRA authorize the award of the costs of litigation, including reasonable attorney and expert witness fees, if found to be appropriate by the Court.
Under RCRA, the City had a 90-day waiting period, which expired on or about February 27, 1995 for the letter received
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November 28, 1994, before which it could commence any action under RCRA. Under CERCLA and EPCRA, the City had a 60-day waiting period, which expired on or about March 11, 1995 for the letter received January 10, 1995, before it could commence any action under those statutes. With respect to the RCRA claim set forth in the letter received January 10, 1995, the City has a 90- day waiting period, which expires on or about April 10, 1995, before it can commence any action under RCRA. If, however, prior to the commencement of any such action by the City, certain governmental entities were to commence a civil action against the Company or engage in investigative or removal actions with respect to this matter, any "Citizens' Suit" action by the City would be precluded. At this time no such actions have been taken by any governmental entity with respect to this matter. The Company cannot predict whether any action commenced by the City would also include claims alleging damages, in addition to those under RCRA, CERCLA and EPCRA. The Company can make no reasonable estimate of the cost to it if it were held liable to the City in this matter.
The City has suspended construction of the wastewater treatment plant improvements until more information becomes available about the nature of the contamination of the site. The City has orally informed the Company that it is incurring damages as the result of the interruption of the work at its facility and that it intends to hold the Company responsible for such damages, together with the costs incurred in cleaning up the City's site. The Company has offered to work with the City to develop measures that can allow construction of such improvements to proceed. Based on the Company's experience, the Company believes that implementation of such measures would not have a material impact on the cost or schedule of such improvements.
The Company's study of this matter is continuing and the Company has not reached any conclusions as to whether it was the generator of the tar-like substance in question.
The Company has put its liability insurers on notice of this situation, and intends to seek reimbursement from its insurance carriers for the cost of any liability, but cannot predict the extent of such reimbursement at this time.
The Company is unable to predict the outcome of this matter and the ultimate financial impact, if any, on the Company.
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IBM Litigation
By complaint dated July 28, 1988, the International Business Machines Corporation ("IBM") commenced a lawsuit in the Supreme Court of the State of New York, County of Dutchess, against the Company and other unnamed defendants. IBM is the largest electric customer of the Company (see Item 1 above, subcaption entitled "Generally - Electric Sales to IBM"). In such complaint, IBM alleged that negligence, gross negligence and breach of contract on the part of the defendants resulted in a power outage and electrical loss on August 2, 1985, whereby IBM sustained damages in the amount of $470,740.
By agreement dated as of September 12, 1994, IBM and the Company agreed to discontinue such action, without admission by either party of liability or wrongdoing. The Company paid $150,000 to IBM under the terms of such agreement. A stipulation discontinuing such action was filed in the Dutchess County Clerk's Office on September 30, 1994.
Catskill Incident
In November 1992, an explosion in a dwelling in the Company's gas service territory in Catskill, New York resulted in personal injuries, the death of an occupant and property damage. The National Transportation Safety Board ("NTSB"), the Office of Pipeline Safety ("OPS," a part of the Research and Special Progam Administration of the U.S. Department of Transportation) and the PSC investigated this incident.
On January 27, 1993, the Staff of the PSC issued a report which attributed the cause of this incident to the Company's alleged violations of the PSC's gas safety regulations and the Company's operating procedures. Based upon such report, the PSC approved the commencement of a penalty proceeding against the Company. The PSC Staff, based on its interpretation of the New York Public Service Law, sought a penalty of up to approximately $8.25 million.
The Company and the staff of the PSC reached an Agreement in connection with the PSC's threatened penalty proceeding arising out of such explosion, which Agreement expires on December 31, 1998. The Agreement provides that the Company will not pay any penalties or fines in connection with the Catskill incident.
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Under the terms of such Agreement, which was approved by the PSC, by Order issued and effective January 7, 1994, the Company has established a Quality Control Program to assure the safe and efficient operation of the Company's Gas System.
The Company also will establish, under the Agreement, an expanded training program, create four training centers and implement an expanded program to evaluate and replace cast iron and steel pipeline facilities. Shareholders will contribute the following amounts under the Agreement: an aggregate of $500,000 in 1994 toward the cost of the pipeline replacement program and the cost of the creation of the training centers; in each of 1995 and 1996, $500,000 toward the cost of such pipeline replacement program; and in 1997 from $0 to $500,000 toward the cost of such pipeline replacement program, depending on the Company's completion of certain tasks by specified dates.
As a result of an investigation of the Catskill incident conducted by the OPS pursuant to the Natural Gas Pipeline Safety Act, the OPS issued a Notice of Proposed Violation and Proposed Civil Penalty in December 1992. By Final Order, issued December 2, 1993, the OPS found that the Company failed to submit a telephonic report of the Catskill incident to the DOT at the earliest practicable moment following discovery of such incident as required by applicable regulations. The Company did notify the DOT of the Catskill incident by telephone approximately nine hours and forty five minutes after such incident. The OPS assessed the Company a civil penalty of $5,000, which the Company elected not to appeal.
The NTSB in its investigation of the Catskill incident, by letter dated August 23, 1993, determined that the probable cause of such incident was the Company's failure to follow its procedures and the PSC's code for the immediate replacement of exposed cast iron pipe. The NTSB also recommended that the Company undertake a certain program to ensure continuity of supervisory responsibility for the timely and effective verification of the safety integrity of exposed cast iron pipe and to identify and replace in a timely manner cast iron piping systems that may threaten public safety. By letter, dated October 22, 1993, the Company responded that it would undertake such a program.
Two lawsuits have been commenced against the Company alleging personal injuries and wrongful death arising out of such incident as follows:
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By complaint, dated February 2, 1994, Carl Fatzinger, as executor of the estate of Mildred Fatzinger, and Virginia Fatzinger commenced an action in the Supreme Court of the State of New York, Greene County, against the Company and two other defendants. The complaint alleges that Mildred and Virginia Fatzinger were residents of the dwelling in which said explosion occurred and that, as a result of said explosion, Mildred Fatzinger was killed, Virginia Fatzinger received serious personal injuries, and the Fatzingers suffered extensive damage to their property. The complaint seeks an unspecified amount of compensatory and punitive damages against the Company based on theories of negligence, absolute liability and gross negligence.
By complaint, dated October 18, 1993 and filed in the Supreme Court of the State of New York, Greene County, Frank Reyes commenced an action against the Company for unspecified personal injuries and property damage alleged to have been caused by said explosion. The complaint alleges that Mr. Reyes was a nearby resident at the time of said explosion. The complaint seeks $2,000,000 in compensatory damages and $2,000,000 in punitive damages from the Company, based on theories of negligence and gross negligence.
The Company is investigating these claims and presently has insufficient information on which to predict their outcome. The Company believes that it has adequate insurance to cover any compensatory damages that might be awarded. The Company's insurance, however, does not extend to punitive damages. If punitive damages were ultimately awarded in either or both of these lawsuits, such award(s) could have a material adverse effect on the financial condition of the Company. At this time, the Company can make no prediction as to any other litigation which may arise out of this incident.
Wappingers Falls Incident
On February 12, 1994, a fire and an explosion destroyed a residence in the Village of Wappingers Falls, New York in the Company's service territory. A short time later, a second explosion and fire destroyed a nearby commercial facility. Subsequently, the Company discovered a cracked weld in a nearby eight-inch steel gas main. The Company interrupted natural gas service to approximately 1,800 customers in order to repair the cracked gas main.
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By Report, dated October 25, 1994, of the Energy and Water Division, Safety and Reliability, of the PSC ("PSC Staff"), the PSC Staff, among other things, concluded that the probable cause of the incident was an ignition of natural gas that accumulated in each of the structures after migrating through the ground from a leak in the Company's gas main in the immediate area of the two destroyed buildings.
The Company continues to investigate this incident, but disagrees that the facts known to date support the conclusions in the Report of the PSC Staff as to the probable cause of the incident. An investigation that the Company has undertaken has not yet determined what caused the first explosion, which destroyed a residence, but a reconstruction of the sequence of events indicates that the explosion in the residence was not caused by natural gas. The Company's investigation also indicates that the force of the initial explosion, in combination with deep frost conditions, caused a weld in a natural gas pipeline of the Company to crack. In this regard, the PSC Staff Report states as follows: "The metallurgists' report, to which staff does not take exception, has concluded that a defect in a weld, present in the pipe since its fabrication in 1929, failed suddenly as a result of increased stress due to the unusual depth of frost penetration last winter. A sudden impact stress could also have contributed to the failure, but can only be speculated upon."
Two lawsuits have been commenced against the Company alleging personal injuries and/or property damage arising out of such incident, as follows:
On August 31, 1994, the Company was served with a summons and complaint in an action brought by John DeLorenzo against the Company and the Village of Wappingers Falls in the Supreme Court of the State of New York, County of Dutchess. The plaintiff alleges that because of the negligence of defendants in causing and/or permitting natural gas to leak into plaintiff's home, an explosion resulted, which destroyed plaintiff's residence and its contents at 14 Franklin Street in the Village of Wappingers Falls, and which caused bodily injuries to the plaintiff. Plaintiff seeks damages for these losses and injuries, which damages are unspecified in the complaint.
On October 13, 1994, the Company was served with a summons and complaint in an action brought by Edward Baecher d/b/a NTC Auto Body against the Company, the Town of Wappingers Falls, the Village of Wappingers Falls, and the Wappingers Falls
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Fire Department in the Supreme Court of the State of New York, County of Dutchess. Four causes of action are recited in the complaint, one of which relates to the Company. This cause of action alleges that because of the Company's negligence in the construction, maintenance and improvements of its facilities near the plaintiff's commercial establishment at 33 Market Street in Wappingers Falls, an explosion resulted that destroyed the building and its contents. Plaintiff, who owns the business only, but not the building, at 33 Market Street, seeks recovery from the Company of compensatory and punitive damages in the sum of $1,000,000, plus interest, costs and disbursements.
On March 9, 1995, the Company was served with a summons and complaint in an action brought by Cengiz Ceng, individually and as executor under the last will and testament of Nizamettin Ceng, and Tarkan Thomas Ceng against the Company and the Village of Wappingers Falls in the Supreme Court of the State of New York, County of Dutchess. The complaint alleges that the plaintiff were the owners of premises at 33 Market Street in the Village of Wappingers Falls, and that as a result of the Company's alleged negligence, the plaintiffs' premises at 33 Market Street was destroyed. Plaintiffs seek recovery of $250,000 from the Company, plus costs and disbursements.
The Company is investigating these claims and presently has insufficient information on which to predict their outcome. The Company believes that it has adequate insurance to cover any compensatory damages that might be awarded. The Company's insurance, however, does not extend to punitive damages. If punitive damages were ultimately awarded, in any of these lawsuits, such award(s) could have a material adverse effect on the financial condition of the Company. At this time, the Company can make no prediction as to any other litigation which may arise out of this incident.
Income Tax Assessments
Reference is made to the subcaption "Tax Matters - Assessments" in Note 8 to the Company's 1994 Financial Statements, on pages 73 and 74 of Exhibit 13, for a discussion of the examination by the Internal Revenue Service ("IRS") of the Company's federal income tax returns for 1987 and 1988, which subcaption is incorporated herein by reference. On or about March 7, 1994, the Company received letters from the IRS, arising out of this examination, proposing net increases in the Company's federal tax liability of approximately $16 million, plus interest. Such letters do not represent a notice of deficiency
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from the IRS, and the Company has received no notice of deficiency from the IRS regarding these taxable years. According to such letters, the Company has the option of (i) responding within 30 days from the date of the letters to agree or disagree with the proposed adjustments and request a conference with the Regional Office of Appeals of the IRS, or (ii) seeking relief in the United States Tax Court. On May 3, 1994, the Company filed a protest with the IRS to said proposed adjustments. The Company can make no prediction at this time as to the ultimate resolution of these proposed adjustments. However, the Company believes that a significant portion of any final assessments would be recoverable in rates.
Item 4
Item 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matter was submitted to a vote of security holders during the fourth quarter of the Company's fiscal year covered by this Report.
PART II
Item 5
Item 5 - MARKET FOR THE COMPANY'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The information set forth under the subcaption "Common Stock Dividends and Price Ranges" in Management's Discussion and Analysis of Financial Condition and Results of Operations, on page 30 of Exhibit 13 hereto, is incorporated herein by reference.
Pursuant to applicable statutes and its Certificate of Incorporation, the Company may pay dividends on shares of Preferred and Common Stock only out of surplus.
The Company has an Automatic Dividend Reinvestment and Stock Purchase Plan which permits holders of the Company's Common Stock who elect to participate in such Plan to reinvest dividends and also permits participants to make additional cash investments in the Company's Common Stock. Shares can be acquired directly from the Company or on the open market at the election of the Company. For a complete description of said Plan, reference is made to the Prospectus, dated January 5, 1993, which is part of the Company's Registration Statement on Form S-3 (Registration No. 33-56760), relating to 3,550,000 shares of Common Stock registered under the Securities Act of 1933 ("1933 Act") for issuance under said Plan.
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The Company's Customer Stock Purchase Plan provides the Company's residential customers and members of their families residing with them who are residents of New York State with a method of purchasing shares of the Company's Common Stock directly from the Company. Shares can be acquired directly from the Company or on the open market at the election of the Company. For a complete description of said Plan, reference is made to the Prospectus, dated January 5, 1993, which is part of the Company's Registration Statement on Form S-3 (Registration No. 33-55764), relating to 780,000 shares of Common Stock registered under the 1933 Act for issuance under said Plan.
The Company also maintains for its employees an Employee Stock Purchase Plan, which provides for the purchase of the Company's Common Stock on the open market.
Item 6
Item 6 - SELECTED FINANCIAL DATA
The information required hereunder is incorporated herein by reference to the material on pages 4 and 5 of Exhibit 13 hereto.
Item 7
Item 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The information required hereunder is incorporated herein by reference to the material appearing on pages 6 through 28 of Exhibit 13 hereto.
Item 8
Item 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
(a) Financial Statements
The Company's 1994 Financial Statements, together with the report thereon of Price Waterhouse LLP, dated January 27, 1995, appearing on pages 31 through 80 of Exhibit 13 hereto, are incorporated by reference in this Annual Report on Form 10-K. The Financial Statement Schedules incorporated by reference as part of this Annual Report on Form 10-K should be read in conjunction with the Company's 1994 Financial Statements. Financial Statement Schedules not included with this Form 10-K Annual Report have been omitted because they are not applicable or the required information is shown in the Company's 1994 Financial Statements.
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The Company's 1994 Financial Statements include the accounts of the Company and its subsidiaries. All intercompany balances and transactions have been eliminated. The Company's subsidiaries are each wholly-owned and consist of landholding, cogeneration or energy management companies. The net income of the Company's subsidiaries is reflected in the Company's Consolidated Statement of Income as Other Income and Deductions - Other-net; such Consolidated Statement of Income is contained on pages 38 and 39 of Exhibit 13 hereto.
The following information is being furnished in accordance with Regulation S-X, Section 210.5-02:
Weighted average December 31, interest rate on 1994 1993 1992 the Company's short-term debt 6.60% - 4.23% outstanding
(b) Supplementary Financial Information
The supplementary financial information specified by Item 302 of Regulation S-K is found under the caption "Selected Quarterly Financial Data (Unaudited)," of the Company's 1994 Financial Statements on page 81 of Exhibit 13 hereto, which caption is incorporated herein by reference pursuant to Item 8 (a) above.
(c) Other Financial Statements and Schedule
Other financial statements and schedule required under Regulation S-X are filed pursuant to Item 14 of this Annual Report on Form 10-K.
Item 9
Item 9 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
PART III
Item 10
Item 10 - DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
The information with respect to the Directors of the Company required hereunder is incorporated by reference to the
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caption "Election of Directors" in the Company's definitive proxy statement, dated February 24, 1995, to be used in connection with its Annual Meeting of Shareholders to be held on April 4, 1995, which proxy statement has previously been submitted to the Securities and Exchange Commission pursuant to that Commission's Regulation S-T.
The information with respect to the executive officers of the Company required hereunder is incorporated by reference to Item 1 of this Annual Report on Form 10-K, under the caption "Executive Officers of the Company."
Item 11
Item 11 - EXECUTIVE COMPENSATION
The information required hereunder is incorporated by reference to the caption "Executive Compensation" in the Company's definitive proxy statement, dated February 24, 1995, to be used in connection with its Annual Meeting of Shareholders to be held on April 4, 1995.
Item 12
Item 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required hereunder is incorporated by reference to the caption "Security Ownership" in the Company's definitive proxy statement, dated February 24, 1995, to be used in connection with its Annual Meeting of Shareholders to be held on April 4, 1995.
Item 13
Item 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
There were no relationships or transactions of the type required to be described by this Item.
PART IV
Item 14
Item 14 - EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) Documents filed as part of this Report:
1. Financial Statements
See subpart 1 of Index to Financial Statements on page of this Report.
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2. Financial Statement Schedule
See subpart 2 of Index to Financial Statements on page of this Report.
3. Exhibits
Incorporated herein by reference to the Exhibit Index beginning on page E-1 of this Report. Such Exhibits include the following management contracts or compensatory plans or arrangements required to be filed as an Exhibit pursuant to Item 14(c) hereof:
Description in the Exhibit List and Exhibit Nos. for this Report
Directors' Deferred Compensation Plan, effective October 1, 1980. (Exhibit (10)(iii)1)
Trust Agreement between Registrant and Dutchess Bank & Trust Company, as trustee, dated as of January 1, 1984, pursuant to Registrant's Savings Incentive Plan. (Exhibit (10)(iii)2)
First Amendment, dated December 31, 1990, to Trust Agreement between Registrant and The Bank of New York, as successor trustee, dated as of January 1, 1984, pursuant to Registrant's Savings Incentive Plan. (Exhibit (10)(iii)3)
Agreement, made March 14, 1994 by and between Registrant and Mellon Bank, N.A., amending and restating, effective April 1, 1994, Registrant's Savings Incentive Plan and related Trust Agreement with The Bank of New York, together with amendments dated July 22, 1994 and December 16, 1994. (Exhibits (10)(iii)18, 19 and 20)
Executive Deferred Compensation Plan of the Company, effective March 1, 1992 together with Amendment thereto dated December 17, 1993. (Exhibits (10)(iii)8 and 15)
Retirement Benefit Restoration Plan of the Company, effective May 1, 1993, together with Amendment thereto dated July 23, 1993. (Exhibits (10)(iii)10 and 11)
Executive Incentive Compensation Plan of the Company, effective January 1, 1993. (Exhibit (10)(iii)17)
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(b) Reports on Form 8-K
During the period October 1, 1994, to the date hereof, the following Reports on Form 8-K were filed by the Company:
Report, dated November 23, 1994, reporting the issuance of a Report by PSC Staff regarding the probable cause of the gas service incident that occurred on February 12, 1994 in the Village of Wappingers Falls, in the Company's service territory.
Report, dated December 19, 1994, reporting (i) the receipt by the Company of a letter from counsel to the City of Newburgh, New York purporting to be a Notice of a Citizens' Suit to be brought by the City against the Company pursuant to the federal Resource Conservation and Recovery Act, arising out of an alleged release of hazardous coal-tar material from a former gas manu- facturing plant site owned by the Company, and (ii) the addition of ten (10) new asbestos litigation plain- tiffs, and a summary of pending asbestos litigation.
(c) Exhibits Required by Item 601 of Regulation S-K
Incorporated herein by reference to subpart (a)-3 of Item 14, above.
(d) Financial Statement Schedule required by Regulation S-X which is excluded from the Company's Annual Report to Shareholders for the fiscal year ended December 31, 1994
Incorporated herein by reference to subpart 2 of Index to Financial Statements on page of this Report.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Company has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.
CENTRAL HUDSON GAS & ELECTRIC CORPORATION
By (John E. Mack, III, Chairman of the Board and Chief Executive Officer)
Dated: March __, 1995
Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the following persons on behalf of the Company and in the capacities and on the date indicated.
Signature Title Date
(a) Principal Executive Officer or Officers:
(John E. Mack, III) Chairman of the Board and Chief Executive Officer March __, 1995
(b) Principal Financial Officer and Principal Accounting Officer:
(John F. Drain) Vice President - Finance and March __, 1995 Controller
(c) Directors:
(L. Wallace Cross) Director March __, 1995
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SIGNATURES - (Continued)
Signature Title Date
(Jack Effron) Director March __, 1995
(Richard H. Eyman) Director March __, 1995
(Frances D. Fergusson) Director March __, 1995
(Heinz K. Fridrich) Director March __, 1995
(Edward F. X. Gallagher) Director March __, 1995
(Paul J. Ganci) Director March __, 1995
(Charles LaForge) Director March __, 1995
(John E. Mack, III) Director March __, 1995
(Howard C. St. John) Director March __, 1995
(Edward P. Swyer) Director March __, 1995
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CENTRAL HUDSON GAS & ELECTRIC CORPORATION
Page(s) in Exhibit 13 of this Report* 1. Financial Statements
Report of Independent Accountants 31
Consolidated Balance Sheet at 34-37 December 31, 1994 and 1993
Consolidated Statement of Income for 38-39 the three years ended December 31, 1994
Consolidated Statement of Retained 40 Earnings for the three years ended December 31, 1994
Consolidated Statement of Cash Flows for 41-42 the three years ended December 31, 1994
Notes to Consolidated Financial Statements 43-80
Selected Quarterly Financial Data (Unaudited) 81
Page(s) in Form 10-K
Report of Independent Accountants on Financial Statement Schedule
Consent of Independent Accountants
2. The Financial Statement Schedule for the Years 1994, 1993 and 1992
Schedule II - Reserves -
*Incorporated by reference to the indicated pages of Exhibit 13 to this Report.
REPORT OF INDEPENDENT ACCOUNTANTS ON FINANCIAL STATEMENT SCHEDULES
To the Board of Directors of Central Hudson Gas & Electric Corporation
Our audits of the consolidated financial statements referred to in our report dated January 27, 1995 appearing on page 31 of Exhibit 13 of this Annual Report on Form 10-K, (which report and consolidated financial statements are incorporated by reference in this Annual Report on Form 10-K) also included an audit of the Financial Statement Schedule presented on pages through of this Annual Report on Form 10-K. In our opinion, this Financial Statement Schedule presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements.
PRICE WATERHOUSE LLP
New York, New York January 27, 1995
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in (i) the Prospectus constituting part of the Registration Statement, on Form S-3 (Registration No. 33-56760), relating to Central Hudson Gas & Electric Corporation's Automatic Dividend Reinvestment and Stock Purchase Plan and (ii) the Prospectus constituting part of the Registration Statement, on Form S-3 (Registration No. 33- 55764), relating to Central Hudson Gas & Electric Corporation's Customer Stock Purchase Plan, of our report dated January 27, 1995 appearing on page 31 of Exhibit 13 to this Annual Report on Form 10-K. We also consent to the incorporation by reference therein of our report on the Financial Statement Schedule, which appears above.
PRICE WATERHOUSE LLP
New York, New York March 28, 1995