2013-01-28 17:32:43 -
News Release
January 28, 2013
For Release: Immediately
Contact: CH Energy Group: Denise D. VanBuren, (845) 471-8323
Fortis: Donna Hynes,
(709) 737-2800
Fortis and Central Hudson File Settlement Agreement
Includes Substantive Customer Benefits and Protections
(ALBANY, NY) Nearly $50 million to fund customer and community benefits, plus a
one-year electric and natural gas customer delivery rate freeze, and customer
protections, including the continuation of Central Hudson Gas & Electric
Corporation ("Central Hudson") as a stand-alone utility company, are
cornerstones of a settlement of all issues among the signatories (the
"Settlement Agreement") filed with the New York State Public Service Commission
(the "Commission") regarding the acquisition of Central Hudson, the utility
subsidiary of CH Energy Group, Inc. ("CH Energy Group") (NYSE:CHG), by
Fortis
Inc. ("Fortis") (TSX:FTS). Other signatory parties to the Settlement Agreement
are the Staff of the New York State Department of Public Service, Multiple
Intervenors and the Utility Intervention Unit of the New York State Department
of State. The Settlement Agreement indicates that the acquisition is in the
public interest pursuant to New York State Public Service Law, Section 70, and
therefore the aforementioned parties recommend approval of the Settlement
Agreement by the Commission. Support was also received from several counties
for the portions of the Settlement Agreement of relevance to the respective
counties' interests. Closing of the acquisition is now expected to take place
during the second quarter of 2013, subject to receiving approval from the
Commission.
"This Settlement Agreement provides multiple and substantive benefits to our
customers and the communities we serve," said Steven V. Lant, Chairman of the
Board and President of CH Energy Group. "The proposed terms also retain
substantial autonomy for Central Hudson, allowing us to continue our mission of
serving our customers well, while providing opportunities to improve service
through a close association with the Fortis family of utility companies. We are
pleased and excited to have reached this step toward finalizing the transaction
with Fortis."
"Fortis worked closely with management of Central Hudson through this thorough
regulatory approval process and has gained increased knowledge about the
utility's operating philosophy and the regulatory oversight requirements in New
York State," said Stan Marshall, President and Chief Executive Officer, Fortis
Inc. "This Settlement Agreement will provide tangible benefits to Central
Hudson's customers and will strengthen the utility's ability to meet the energy
needs of its current and future customers."
The Settlement Agreement will moderate future customer rate increases by
providing $35 million to cover expenses that normally would be recovered in
customer rates, for example significant restoration expenses related to
Superstorm Sandy, the October 2011 snowstorm and Tropical Storm Irene, and other
similar expenses. Also, under the terms of the Settlement Agreement, Central
Hudson customers will save a guaranteed $9.25 million over five years resulting
from the elimination of costs the utility now incurs as a public company.
Additionally, the Settlement Agreement requires that customer delivery rates be
frozen until July 1, 2014 and requires the establishment of a $5 million
Customer Benefit Fund for economic development and low income assistance
programs for communities and residents of the Mid-Hudson Valley.
Becoming part of the Fortis family of utilities, which currently serve more than
two million customers, will bring benefits to Central Hudson, explained Lant.
"Central Hudson will be in the position to benefit from shared experiences and
knowledge from other Fortis utility companies, as all of us seek to continuously
improve our operations," he said. "In addition, Fortis has greater access to
capital that will enhance Central Hudson's ability to make significant
investments in the electric and gas system to improve customer service and
system reliability, including those recommended in the Governor's Energy Highway
initiative."
Central Hudson will continue to maintain its name and Poughkeepsie headquarters,
as well as all of its employees and the utility's substantial civic and
community presence in the Mid Hudson Valley. The Settlement Agreement also
provides financial protections for CH Energy Group, Central Hudson and its
customers as part of the larger Fortis organization, and Central Hudson will
continue to have annual independent financial audits. Within one year, the
Board of Directors of Central Hudson will transition to a majority of
independent directors, increase members from the Hudson Valley and New York
State, and include representatives from Fortis.
"Fortis remains focused on closing the acquisition and providing the benefits to
Central Hudson customers as quickly as possible," concluded Marshall.
The definitive merger agreement was announced between CH Energy Group and Fortis
in February 2012. CH Energy Group shareholders approved the transaction in June
2012, and several other required regulatory approvals by U.S. federal agencies
were subsequently received. For more information and to view the Settlement
Agreement, visit www.CentralHudson.com or www.FortisInc.com.
# # #
About CH Energy Group
CH Energy Group, Inc. is an energy delivery company headquartered in
Poughkeepsie, NY. Regulated transmission and distribution subsidiary Central
Hudson Gas & Electric Corporation serves approximately 300,000 electric and
about 75,000 natural gas customers in eight counties of New York State's Mid-
Hudson River Valley, 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. CH Energy Group also operates
Central Hudson Enterprises Corporation (CHEC), a non-regulated subsidiary
composed primarily of Griffith Energy Services, which supplies petroleum
products and related services to approximately 56,000 customers in the Mid
Atlantic Region.
About Fortis
Fortis Inc. is the largest investor-owned distribution utility in Canada,
serving more than 2 million gas and electricity customers. Its regulated
holdings include electric utilities in five Canadian provinces and two Caribbean
countries and a natural gas utility in British Columbia. It owns nonregulated
hydroelectric generation assets across Canada and in Belize & Upstate New York.
It also owns hotels and commercial real estate in Canada.
FORWARD-LOOKING STATEMENTS
Statements included in this news release and any document 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's and Central Hudson's future business prospects, revenues,
proceeds, working capital, investment valuations, liquidity, income, and
margins, as well as the acquisition by a subsidiary of Fortis Inc. and the
expected timing of the transaction, 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: the possibility that various
conditions precedent to the consummation of the proposed Fortis transaction will
not be satisfied or waived, including regulatory approvals of the proposed
Fortis transaction and the timing and terms thereof; the impact of delay or
failure to complete the proposed Fortis transaction on CH Energy Group's stock
price; the costs associated with the proposed Fortis transaction; deviations
from normal seasonal weather and storm activity; fuel prices; energy supply and
demand; potential future acquisitions; legislative, regulatory, and competitive
developments; interest rates; access to capital; 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
Central Hudson 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.
For additional information, contact:
CH Energy Group, Inc.
Investors: Media:
Mr. Stacey A. Renner Ms. Denise D. VanBuren
Treasurer Corporate Secretary & VP- Corporate
Telephone: (845) 486-5730 Communications
srenner@cenhud.com Telephone: (845) 471-8323
dvanburen@cenhud.com
Fortis Inc.
Investors Media:
Mr. Barry Perry Ms. Donna Hynes
Vice President Finance and Chief Manager, Investor and Public Relations
Financial Officer Fortis Inc
Fortis Inc. Telephone: (709) 737-2800
Telephone: (709) 737- 2822
This announcement is distributed by Thomson Reuters on behalf of
Thomson Reuters clients. The owner of this announcement warrants that:
(i) the releases contained herein are protected by copyright and
other applicable laws; and
(ii) they are solely responsible for the content, accuracy and
originality of the information contained therein.
Source: CH Energy Group, Inc. via Thomson Reuters ONE
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