Central Hudson and Fortis File Response to Recommended Decision
POUGHKEEPSIE, N.Y.--(BUSINESS WIRE)-- CH Energy Group, Inc. subsidiary Central Hudson Gas & Electric Corporation and Fortis Inc. today filed a response to the Recommended Decision issued by the Administrative Law Judges earlier this month regarding the proposed merger of CH Energy Group and Fortis.
"Fortis is providing substantial and lasting benefits for our customers by ensuring that Central Hudson continues to operate as a stand-alone company but with the strengthened financial resources that will enable us to maintain and likely enhance service levels," said CH Energy Group Chairman, President and CEO Steven V. Lant. "The merger provides customers with approximately $50 million in benefits. Also, customer rates will remain unchanged until July 2014 through a voluntary 'rate freeze' provision.
"Continued regulation by the New York State Public Service Commission, as well as decision making by the existing local management team and a new Board of Directors with increased representation from New York and the Hudson Valley, will ensure that Central Hudson remains focused on meeting the existing and future needs of our customers," Lant emphasized.
Lant commented that while the Recommended Decision did not find fault with most of the provisions of the proposed merger and corrected many of the erroneous assertions posed by the local groups and individuals opposing the transaction, the conclusions reached were inconsistent with the factual record. By way of example, he noted that the Recommended Decision failed to consider the analysis conducted by the Staff of the Public Service Commission and other parties, such as the Staff's due diligence and independent review of the Fortis stand-alone corporate governance model and the degree of local autonomy this model provides. Lant also noted that the Recommended Decision incorrectly equated the Fortis stand-alone model with the shared services model incorporated in other New York mergers.
"In our meetings with various organizations and community leaders, many individuals have expressed their support for the merger as they recognize how an association with Fortis will benefit the Mid-Hudson Valley area we serve," said Lant. Central Hudson and Fortis continue to reach out to customers, community and business leaders, elected officials and the media to discuss the facts of the transaction and to outline the benefits that an association with Fortis will bring.
Reply briefs to responses to the Recommended Decision are due to the Public Service Commission by May 24, 2013. Closing remains subject to the approval of the Public Service Commission. Central Hudson and Fortis expect the transaction to close by the end of the second quarter of 2013.
"Central Hudson will continue to operate as it does today, with the same group of dedicated employees who are committed to serving our customers and our communities," said Lant. "We will continue to advocate for this transaction, as it is truly in the best interest of our employees, customers and the communities of the Hudson Valley."
Summary of benefits:
The Joint Proposal provides nearly $50 million in customer benefits, including:
$35 million to offset costs associated with restoring electric service to customers following major storms and to mitigate other expenses that would normally be paid for by customers;
$9.25 million in guaranteed savings to customers over the course of the next five years alone as the expenses associated with being a publicly traded company end;
$5 million set aside in a Customer Benefit Fund to be used for economic development and low-income assistance programs for communities and residents of the Mid-Hudson Valley;
Customer delivery rates will be frozen until July 1, 2014;
Customers will continue to work with current employees, as all jobs at Central Hudson will be retained;
Financial protections for CH Energy Group and Central Hudson as part of the larger Fortis organization; and
A transition within the Board of Directors of Central Hudson to increase members from New York State and the Hudson Valley within one year.
About CH Energy Group, Inc.: CH Energy Group, Inc. is predominantly a regulated transmission and distribution utility, headquartered in Poughkeepsie, NY. 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 energy products and services to approximately 56,000 customers in the Mid-Atlantic Region, as well as several renewable energy investments.
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'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 on the timing and terms thereof; the impact of delay or failure to complete the proposed Fortis transaction on CH Energy Group stock price; 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.
Additional Information about the Fortis Transaction and Where to Find It
In connection with the proposed acquisition of CH Energy Group by Fortis, CH Energy Group filed a definitive proxy statement with the SEC on May 9, 2012, and has filed other relevant materials with the SEC as well. Investors and security holders of CH Energy Group are urged to read the proxy statement and other relevant materials filed with the SEC because they contain important information about the proposed acquisition and related matters. Investors and stock shareholders may obtain a free copy of the proxy statement and other documents filed by CH Energy Group, at the SEC's Web site,www.sec.gov. These documents can also be obtained by investors and stockholders free of charge from CH Energy Group at CH Energy Group's website atwww.chenergygroup.com, or by contacting CH Energy Group's Shareholder Relations Department at (845) 486-5204.
CH Energy Group, Inc.
Stacey Renner, 845-486-5730
Denise D. VanBuren, 845-471-8323
KEYWORDS: United States North America New York
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