01—Abstract
Summary
Summary of the 10-K filed February 21, 2013. Cited figures are marked; the original filing is the authoritative source.
Consolidated Edison, Inc. (Con Edison) and its wholly-owned subsidiary, Consolidated Edison Company of New York, Inc. (CECONY), reported solid financial performance for the fiscal year ended December 31, 2012.
The company's regulated utility businesses, CECONY and Orange and Rockland Utilities (O&R), continued to be the primary drivers of earnings, benefiting from approved rate plans designed to recover costs and provide a reasonable return on invested capital. These rate plans include mechanisms like revenue decoupling, which helps stabilize delivery revenues despite fluctuations in energy delivery volumes. Despite a challenging operating environment, including the significant impact of Superstorm Sandy which caused extensive damage and service interruptions, Con Edison demonstrated resilience.
The company incurred substantial costs related to storm response and restoration, a portion of which were deferred as regulatory assets for future recovery. Con Edison's competitive energy businesses also contributed to overall results, though their performance can be more volatile due to market dynamics. The company maintained a strong capital structure and liquidity, supporting its ongoing investments in infrastructure upgrades and reliability improvements.
02—Key points
Key Highlights
- CECONY's electric, gas, and steam delivery businesses, along with O&R's electric and gas delivery businesses, form the core of Con Edison's operations and are regulated by state utility commissions, providing a stable revenue base through approved rate plans.
- Superstorm Sandy caused significant damage and service interruptions in late 2012, leading to substantial response and restoration costs. These costs, where not capitalized, were deferred as regulatory assets for future recovery under rate plans.
- Con Edison's regulated utilities are subject to revenue decoupling mechanisms, which help to stabilize delivery revenues by reconciling actual delivery volumes to authorized levels.
- The company's competitive energy businesses include Con Edison Solutions, Con Edison Energy, and Con Edison Development, which engage in electricity sales, energy services, and infrastructure projects.
- Capital expenditures for utility infrastructure upgrades and storm resiliency were significant, with CECONY investing $1.909 billion and O&R investing $137 million in 2012.
- The company maintained a strong financial position, with a common equity ratio of 54.1% for Con Edison and 53.6% for CECONY at the end of 2012.
- Con Edison declared and paid quarterly dividends on its common shares, maintaining a consistent track record of shareholder returns.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2012filed February 21, 2013Financial Statements
FY2012 against FY2011
| Line item | FY2012FY2011 | Change |
|---|---|---|
| Revenue | $12.19B$12.89B | −5.4% |
| R&D Expenses | $21.00M$23.00M | −8.7% |
| Operating Expenses | $9.85B$10.65B | −7.5% |
| Operating Income | $2.34B$2.24B | +4.5% |
| Interest Expense | $586.00M$582.00M | +0.7% |
| Net Income | $1.14B$1.05B | +8.3% |
| EPS (Basic) | $3.88$3.59 | +8.1% |
| EPS (Diluted) | $3.86$3.57 | +8.1% |
| Shares Outstanding (Basic) | 292.90M292.60M | +0.1% |
| Shares Outstanding (Diluted) | 294.50M294.40M | 0.0% |
05—Questions
Frequently Asked Questions
What was Con Edison's financial performance in 2012?
In 2012, Con Edison reported net income of $1.138 billion, or $3.88 per diluted share. The regulated utility businesses (CECONY and O&R) were the primary contributors to earnings, supported by approved rate plans. The company also incurred significant costs due to Superstorm Sandy, which were largely deferred as regulatory assets.
How did Superstorm Sandy impact Con Edison's operations and financials?
Superstorm Sandy caused extensive damage to Con Edison's electric distribution system, interrupting service to approximately 1.4 million customers. The company incurred substantial response and restoration costs ($363 million for CECONY and $98 million for O&R). Most of these costs, not capitalized, were deferred as regulatory assets for future recovery through customer rates.
What is the role of regulated rate plans and revenue decoupling for Con Edison?
Con Edison's regulated utility businesses operate under rate plans approved by state commissions, which allow them to recover costs and earn a return on investment. Many of these plans include revenue decoupling mechanisms, which shield the utilities from the direct impact of volumetric changes on delivery revenues, providing greater earnings stability.
How is Con Edison managing its capital expenditures?
Con Edison continues to invest significantly in its utility infrastructure to ensure reliability and resiliency. In 2012, CECONY invested $1.909 billion and O&R invested $137 million in upgrades. The company plans to fund ongoing capital requirements through internally generated funds and debt issuances, maintaining a solid capital structure.
06—Continue