CH Energy Group Posts 2008 Earnings Results

(Poughkeepsie, NY) Annual earnings for CH Energy Group, Inc. (NYSE:CHG) totaled $2.22 per share in 2008, versus the $2.70 per share posted during 2007. The Company had projected 2008 earnings of between $2.02 – $2.27 per share. Results for the fourth quarter of 2008 were 71 cents per share, as compared to 73 cents per share achieved in the final quarter of 2007.

"The year 2008 was the most difficult in many years for our Company," explained Steven V. Lant, Chairman of the Board, President and C.E.O. “But due to our outstanding financial position and excellent liquidity, we were able to access credit markets to weather the storm thanks to our utility’s solid A credit rating and committed credit facilities. Though it was a challenging year to say the least, I believe that we responded well to difficult circumstances and protected the best interests of shareholders and customers.”

Lant said that the worsening economy, which has reduced sales and increased arrears at Central Hudson Gas & Electric and Griffith Energy Services, has impacted the Poughkeepsie-based energy firm in several respects.

“Sales volumes within Central Hudson are well below those projected in the three-year rate settlement which began on July 1, 2006. We believe continued customer conservation and a deteriorating economy are the underlying causes behind the shortfall. Central Hudson’s efforts to address the sales deficit through interim rate relief were not successful, resulting in an approximately 50-cent per share drag to earnings in 2008,” he explained. Additionally, higher write-offs and reserves for uncollectible accounts reduced earnings by 17 cents per share in 2008.

“Recognizing that we have already taken significant steps to reduce our expenses and increase our productivity, a delivery rate increase is absolutely necessary to ensure we can fulfill our obligation to serve,” Lant added, noting that the decision in the utility’s current rate increase request is due in June, with new rates to take effect July 1, 2009.

“It’s important to note that we are particularly encouraged by an increase in the 2008 earnings contribution of our Griffith fuel oil subsidiary, which rose by 30 percent from that of 2007,” Lant said.

CH Energy Group released the follow earnings results by business unit:

Central Hudson Gas & Electric Corporation

Central Hudson's contribution to annual earnings was $1.67, which was 39 cents lower than that of 2007. “As a result of the shortfall in sales, the delivery rate increases that were approved in 2006 and took effect in 2008 did not generate sufficient revenue last year to meet the higher operating costs that those rates had been designed to cover. In particular, those expenditures included higher tree trimming (8 cents) and depreciation (9 cents),” Lant said. “In addition, Central Hudson experienced significantly higher costs associated with customers being unable to pay their bills as a result of the weak economy (17 cents), as well as higher costs associated with restoring electric service following storms (13 cents).” 

Central Hudson earned 32 cents during the fourth quarter, down from 54 cents in the same period of 2007 and reflective of the sales shortfall and the impacts of the weakening economy that reduced earnings for the full year.

Griffith Energy Services

The Griffith fuel distribution businesses contributed 26 cents to earnings per share in 2008, up from 20 cents in 2007, due largely to higher margins. “The favorable margins experienced in the latter part of the year were welcome in that they offset margin compression that had reduced profits during the first three quarters of 2008, as well as the weak economy,” said Lant. “High oil prices and the weakening economy led to price-induced conservation (16 cents), as well as significantly higher costs from uncollectible accounts (12 cents).”

Griffith posted 34 cents to the fourth-quarter results, up 25 cents from the 9 cents posted in the same period of last year due to the higher margins that drove the year’s results. “We are pleased that Griffith was able to end the year with a strong fourth quarter, contributing higher earnings per share than last year in a very challenging environment,” Lant explained.

Other Businesses and Investments

Holding company CH Energy Group, Inc. and Central Hudson Enterprises Corporation (CHEC) partnerships and other investments contributed 29 cents toward corporate earnings in 2008, down 15 cents from 2007 results. Lant noted the earnings from the Corporation's ethanol investment were lower due to reduced margins but stressed that the ethanol plant investment, two wind energy installations and an upstate New York biomass plant continued to add positively to earnings as part of a diversified portfolio of investments within the energy industry.

The business unit contributed 5 cents to quarterly earnings, down from 10 cents one year ago.

2009 Earnings Projections

            Lant said that the Company will consider if 2009 annual earnings projections will be released after a decision is received in its current rate filing, which is expected in June. He noted that the new rates from that filing will take effect July 1, 2009, and the impact of its outcome will therefore largely shape 2009 results.

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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 111,000 customers in 10 states, stretching from Rhode Island to the Washington, D.C. area.  CHEC also has interests in a Lexington, Neb., ethanol plant, two wind power projects, a biomass plant in upstate New York, and is currently developing a landfill-gas energy facility in Auburn, NY.

Conference Call:  Mr. Lant will conduct a conference call with investors to review financial results at 2:00 p.m. (ET) today, February 12, 2009. Dial-in: 1-800-398-9397; Conference Name “CH Energy Group.” Supplemental materials can be found here to assist participants in following the Conference Call presentation.  A digitized replay of the call will be available from 4:30 p.m. (ET) on February 12, 2009, until 11:59 p.m. (ET) on February 19, 2009, by dialing 1-800-475-6701 and entering access code 983292. In addition, the call will be webcast live in listen-only mode and available for replay for approximately 30 days within the Investor Relations section of the Company’s Web site at www.CHEnergyGroup.com

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.