CH Energy Group Announces Third-Quarter Results

October 26, 2009 8:30 AM EDT

POUGHKEEPSIE, N.Y.--(BUSINESS WIRE)-- CH Energy Group, Inc. (NYSE: CHG) posted earnings of 34 cents per share during the third quarter of 2009, 16 cents higher than those of the same period last year. Year-to-date earnings for 2009 totaled $1.71, 20 cents higher than the same nine months of 2008.

"After two years of declining profitability at Central Hudson Gas & Electric, our largest subsidiary, we have begun to see a welcome recovery of our earnings to a level that should allow us to attract the investment capital needed to meet the needs of our utility customers," said Chairman, President and Chief Executive Officer Steven V. Lant.

"New electric and natural gas delivery rates and the Revenue Decoupling Mechanisms (RDMs) that took effect July 1, 2009, were essential in helping us to better recover rising operating expenses and achieve a higher level of shareholder return," he said. Lant explained that the RDMs "allow us to more fully recover our costs and to actively promote conservation and energy efficiency without sacrificing financial stability.

"Customers who take advantage of opportunities to save energy will see the full benefit of their reduced consumption in both the delivery and supply portions of their bills. We're now offering a number of programs that actively promote energy efficiency, and additional opportunities are available through programs administered by the New York State Energy Research and Development Authority (NYSERDA)," he added.

Earnings by business unit were as follows:

Central Hudson Gas & Electric Corporation

Third-quarter earnings at Central Hudson were 55 cents per share, up 18 cents from the third quarter of 2008, when the utility was operating under a rate agreement based on a revenue forecast that did not allow adequate recovery of the increasing costs of providing service. Lant said the positive effect on year-to-date earnings of the rate orders that took effect July 1, 2009, and July 1, 2008, as well as lower storm restoration expenses, was largely offset by higher expenses and lower sales. Year-to-date, the utility has posted $1.39 in earnings per share, an improvement of 4 cents over the same period last year.

"There were several significant earnings pressures on the utility during the third quarter, including rising uncollectible accounts and increased taxes and depreciation," Lant said. "While the rates that took effect July 1 have helped to restore our revenues to more satisfactory levels, on-going and increasing cost pressures must be addressed through our current rate case request." That filing, made on July 31, 2009, and expected to take effect by July 1, 2010, would increase average residential bills by 3.7 percent for electric and 3.5 percent for natural gas customers, if approved as requested.

Griffith Energy Services

Griffith posted a loss of 22 cents for the quarter, results that were 6 cents better than the third quarter of 2008 and largely attributable to strong operational oversight and cost containment. "Due to the seasonal nature of Griffith's fuel delivery business, a loss in the third quarter is entirely expected. What is more important to focus on is the strong performance by this business unit year to date: 28 cents in earnings, as compared to a loss of 8 cents at this same time last year. Higher margins, colder winter weather and cost management all were important positive factors, which more than offset the effects of customer conservation. These earnings represent this unit's best performance yet and demonstrate its successful management under difficult business conditions," Lant said.

Other Businesses and Investments

Other business units posted 1 cent in earnings per share, down from 9 cents during the third quarter one year ago. Higher income taxes and interest expense contributed to the decline. Year to date, this segment has posted 4 cents in earnings, down 20 cents from the same period one year ago. "These results were largely driven by the impact of an extended maintenance outage at the Lyonsdale biomass plant, a reserve recorded in the first quarter related to a potential ethanol project and increased interest expense," explained Lant.

About CH Energy Group, Inc.

CH Energy Group, Inc. is a family of companies seizing new opportunities in the energy marketplace through two primary subsidiaries: Central Hudson Gas & Electric Corporation is a regulated transmission and distribution utility serving approximately 300,000 electric and about 74,000 natural gas customers in eight counties of New York State's Mid-Hudson River Valley, and delivering natural gas and electricity in a 2,600-square-mile service territory that extends north from the suburbs of metropolitan New York City to the Capital District at Albany. Central Hudson Enterprises Corporation, a non-regulated subsidiary, is the umbrella for a family of energy-related companies and investments focused primarily on fuel distribution and renewable energy. Griffith Energy Service's fuel distribution business supplies energy products and services to approximately 108,000 customers in 10 states, stretching from Rhode Island to the Washington, D.C. area. CHEC also has interests in a Lexington, Neb., ethanol plant and several renewable energy projects in the Northeast.

Earnings Results Conference Call

Mr. Lant will conduct a conference call with investors to review financial results today at 2:00 p.m. Eastern Time. The dial-in number for the call is 1-800-230-1074, and the conference name is "CH Energy Group." The call will also be Webcast live in listen-only mode, and can be accessed in the Investor Relations section of CH Energy Group's website at www.CHEnergyGroup.com. A digitized replay of the call will be available from 4:30 p.m. Eastern Time on October 26, 2009, until 11:59 p.m. on November 2, 2009, by dialing 1-800-475-6701 and entering access code number 118289. The Webcast will also be available for replay for approximately 30 days.

Forward-Looking Statements -

Statements included in this News Release and any documents incorporated by reference which are not historical in nature are intended to be, and are hereby identified as, "forward-looking statements" for purposes of the safe harbor provided by Section 21E of the Exchange Act. Forward-looking statements may be identified by words including "anticipates," "intends," "estimates," "believes," "projects," "expects," "plans," "assumes," "seeks," and similar expressions. Forward-looking statements including, without limitation, those relating to CH Energy Group and its subsidiaries' future business prospects, revenues, proceeds, working capital, liquidity, income, and margins, are subject to certain risks and uncertainties that could cause actual results to differ materially from those indicated in the forward-looking statements, due to several important factors, including those identified from time-to-time in the forward-looking statements. Those factors include, but are not limited to: weather; fuel prices; corn and ethanol prices; plant capacity factors; energy supply and demand; interest rates; potential future acquisitions; developments in the legislative, regulatory, and competitive environment; market risks; electric and natural gas industry restructuring and cost recovery; the ability to obtain adequate and timely rate relief; changes in fuel supply or costs including future market prices for energy, capacity, and ancillary services; the success of strategies to satisfy electricity, natural gas, fuel oil, and propane requirements; the outcome of pending litigation and certain environmental matters, particularly the status of inactive hazardous waste disposal sites and waste site remediation requirements; and certain presently unknown or unforeseen factors, including, but not limited to, acts of terrorism. CH Energy Group and its subsidiaries undertake no obligation to update publicly any forward-looking statements, whether as a result of new information, future events, or otherwise. Given these uncertainties, undue reliance should not be placed on the forward-looking statements.

CH ENERGY GROUP, INC.

CONSOLIDATED BALANCE SHEET

                                        September 30,  December 31,

                                        2009 (1)       2008 (2)

ASSETS                                  (Thousands of Dollars)

UTILITY PLANT

Utility plant                           $1,314,919     $1,262,071

Less: Accumulated depreciation          373,693        369,925

                                        941,226        892,146

Construction work in progress           62,957         53,778

Net Utility Plant                       1,004,183      945,924

OTHER PROPERTY AND PLANT - NET          38,138         32,426

CURRENT ASSETS

Cash and cash equivalents               52,217         19,825

Accounts receivable - net               85,145         131,727

Fuel, materials and supplies            31,233         36,585

Regulatory assets                       64,057         60,502

Special deposits and prepayments        20,815         21,344

Accumulated deferred income tax         7,486          7,498

Other                                   17,774         20,571

                                        278,727        298,052

DEFERRED CHARGES AND OTHER ASSETS       428,443        453,781

TOTAL                                   $1,749,491     $1,730,183

CAPITALIZATION and LIABILITIES

CAPITALIZATION

Common Equity (3)                       $525,395       $523,534

Non-controlling interest                1,520          1,448

Preferred Stock of subsidiary           21,027         21,027

Long-term debt                          463,897        413,894

                                        1,011,839      959,903

CURRENT LIABILITIES

Current maturities of long-term debt    24,000         20,000

Notes payable                           17,000         35,500

Accounts payable                        34,025         52,824

Dividends payable                       8,777          8,765

Customer advances and deposits          41,183         38,887

Regulatory liabilities                  24,064         4,275

Fair value of derivative instruments    12,887         15,759

Accrued income taxes                    9,070          441

Other                                   47,954         55,085

                                        218,960        231,536

DEFERRED CREDITS AND OTHER LIABILITIES  346,561        384,641

ACCUMULATED DEFERRED INCOME TAX         172,131        154,103

TOTAL                                   $1,749,491     $1,730,183

(1) Unaudited

(2) Subject to explanations contained in the Annual Report on Form 10-K of
the Company to the SEC for the Year ended December 31, 2008.

(3) Shares outstanding at September 30, 2009 = 15,790,431. Shares
outstanding at December 31, 2008 = 15,783,083.

CH ENERGY GROUP, INC

CONSOLIDATED STATEMENT OF INCOME

                 (Unaudited)                 (Unaudited)

                 For the Three Months Ended  For the Nine Months Ended September
                 September 30,               30,

                 2009       2008             2009        2008

                 (Thousands of Dollars)

Operating
Revenues

Electric         138,685    $179,001         $404,035    $468,659

Natural gas      16,243     21,773           137,422     142,267

Competitive
business
subsidiaries:

Petroleum        47,244     88,618           218,273     379,653
Products

Other            11,473     11,395           32,618      33,653

Total Operating  213,645    300,787          792,348     1,024,232
Revenues

Operating
Expenses

Operation:

Purchased
electricity and
fuel used in     61,379     116,900          205,014     291,675
electric
generation

Purchased        5,798      13,405           89,924      98,008
natural gas

Purchased        40,258     82,002           167,198     334,982
petroleum

Other expenses
of operation -   50,311     39,247           141,022     123,414
regulated
activities

Other expenses
of operation -   19,118     20,508           63,748      65,716
comp bus subs

Depreciation
and              10,277     9,713            30,561      28,722
amortization

Taxes, other     10,228     9,634            29,966      28,425
than income tax

Total Operating  197,369    291,409          727,433     970,942
Expenses

Operating        16,276     9,378            64,915      53,290
Income

Other Income
and Deductions

Income from
unconsolidated   (75     )  123              2           459
affiliates

Interest on
regulatory
assets and       1,218      1,339            4,684       4,404
investment
income

Reserve for      0          0                (1,299   )  0
note receivable

Other - net      (1,384  )  (41      )       (3,744   )  (159      )

Total Other
Income and       (241    )  1,421            (357     )  4,704
Deductions

Interest
Charges

Interest on      5,355      4,926            15,229      15,064
long term debt

Interest on
regulatory       1,758      1,658            4,677       4,558
liabilities and
other interest

Allowance for
borrowed funds   (47     )  (173     )       (102     )  (442      )
used during
construction

Total Interest   7,066      6,411            19,804      19,180
Charges

Income before
income taxes,
non-controlling
interest and     8,969      4,388            44,754      38,814
preferred
dividends of
subsidiary

Income taxes     3,327      1,193            17,152      14,102

Net (Loss)       5,642      3,195            27,602      24,712
Income

Net (loss)
Income
attributable to
noncontrolling
interest:

Non-controlling
interest in      48         68               (141     )  129
subsidiary

Dividends
declared on
cumulative       242        242              727         727
Preferred Stock
of Central
Hudson

Net (loss)
income           5,352      2,885            27,016      23,856
attributable to
CH Energy Group

Dividends
declared on      8,535      8,523            25,585      25,564
Common Stock

Change in
Retained         ($3,183 )  ($5,638  )       $1,431      ($1,708   )
Earnings

Average number
of common stock
shares
outstanding

Basic            15,776     15,771           15,774      15,767

Diluted          15,854     15,819           15,851      15,815

Amounts
attributable to
CH Energy
Group, Inc
common
shareholders

Earnings per     $0.34      $0.18            $1.71       $1.51
share -Basic:

Earnings per     $0.34      $0.18            $1.70       $1.51
share -Diluted:

Dividends
Declared Per     $0.54      $0.54            $1.62       $1.62
Share

CH ENERGY GROUP, INC.

EARNINGS PER SHARE BY SEGMENT

The chart below presents the change in earnings of CH Energy Group's
business units in terms of earnings for each share of CH Energy Group's
Common Stock. Management believes this presentation is useful because these
business units are each wholly owned by CH Energy Group.

Consolidated CH Energy Group      Three Months Ended    Nine Months Ended

                                  September 30,         September 30,

                                  2009 (1)   2008 (1)   2009 (1)  2008 (1)

Central Hudson - Electric         $ 0.62     $ 0.49     $ 1.12    $ 1.11

Central Hudson - Natural Gas      $ (0.07 )  $ (0.12 )  $ 0.27    $ 0.24

Griffith                          $ (0.22 )  $ (0.28 )  $ 0.28    $ (0.08 )

Other Businesses and Investments  $ 0.01     $ 0.09     $ 0.04    $ 0.24

Earnings per Share (basic)        $ 0.34     $ 0.18     $ 1.71    $ 1.51

Earnings per Share (diluted)      $ 0.34     $ 0.18     $ 1.70    $ 1.51

(1) Unaudited

The information above is considered a non-GAAP financial measure. This
information is not an alternative to earnings per share determined on a
consolidated basis, which is the most directly comparable GAAP measure. A
reconciliation of each business unit's earnings per share to CH Energy
Group's earnings per share, determined on a consolidated basis, is included
in the table above.

    Source: CH Energy Group, Inc.

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