10-QPeriod: Q3 FY2000

CONSOLIDATED EDISON INC Quarterly Report for Q3 Ended Sep 30, 2000

Filed November 14, 2000For Securities:ED

Summary

Consolidated Edison, Inc. (Con Edison) has released its quarterly report for the period ending September 30, 2000. The company experienced a decrease in net income for common stock to $279.9 million from $336.0 million in the same quarter of the prior year. This decline was attributed to factors including unrecovered replacement power costs related to the Indian Point 2 outage, lower electric rates, and less favorable weather conditions compared to the previous year. Despite these challenges, Con Edison saw increased revenues, largely driven by higher purchased power costs being passed through to customers, and benefited from a significant reduction in federal income taxes and increased pension credits. For the nine-month period, net income for common stock also saw a decline, reaching $536.8 million compared to $579.1 million in the prior year. This decrease was influenced by similar factors as the quarterly decline, compounded by increased transmission and distribution expenses and higher interest charges. However, the company's diversified operations, including its gas and steam utilities, along with the recent acquisition of Orange and Rockland Utilities (O&R), continue to contribute to its overall revenue base. Con Edison also provided updates on its ongoing efforts to acquire Northeast Utilities and highlighted significant regulatory developments, including a revised electric rate plan and a settlement agreement for its gas business.

Key Highlights

  • 1Net income for common stock decreased by 16.7% to $279.9 million in Q3 2000 compared to Q3 1999.
  • 2Total operating revenues increased by 20.2% to $2.82 billion in Q3 2000, primarily due to higher purchased power costs passed through to customers.
  • 3The Indian Point 2 nuclear generating unit outage led to unrecovered replacement power costs of $28 million in Q3 2000.
  • 4Federal income tax expense decreased by 31.4% in Q3 2000, providing a significant boost to net income.
  • 5Consolidated net cash flows from operating activities for the nine months ended September 30, 2000 were $747.3 million, down from $1.02 billion in the prior year.
  • 6Construction expenditures increased by $197.7 million in the first nine months of 2000, primarily for electric distribution system upgrades and steam generator replacement at Indian Point 2.
  • 7An agreement was reached in October 2000 to revise and extend electric rate plan provisions through March 2005, including rate reductions and a shared earnings mechanism.

Frequently Asked Questions

The decrease in net income was primarily due to $28 million in unrecovered replacement power costs related to the Indian Point 2 outage, $31.1 million from electric rate reductions, and less favorable weather conditions compared to the prior year's warmer summer. These factors were partially offset by a $57.7 million increase in pension credits and a $59.8 million reduction in federal income taxes.

The outage at the Indian Point 2 nuclear generating unit resulted in unrecovered replacement power costs of approximately $28 million during the third quarter of 2000. The company is seeking regulatory approval to recover these costs and repair expenses. Additionally, significant capital expenditures are being made for steam generator replacement.

In October 2000, Con Edison and Northeast Utilities entered into a significant agreement with the New York State Public Service Commission (PSC) staff and other parties, which, if approved by the PSC, would pave the way for regulatory approval of the merger. However, the Connecticut Department of Public Utility Control issued conditional approval, leading Con Edison and Northeast Utilities to petition for reconsideration due to ongoing uncertainty about the merger proceeding under the imposed conditions. The Securities and Exchange Commission and antitrust regulators also require approvals.

Total capitalization increased to $11.01 billion as of September 30, 2000, from $10.19 billion at December 31, 1999, driven by an increase in long-term debt. The common equity ratio decreased slightly to 50.3% from 53.1% over the same period, indicating a greater reliance on debt financing.