10-QPeriod: Q3 FY2001

CONSOLIDATED EDISON INC Quarterly Report for Q3 Ended Sep 30, 2001

Filed November 14, 2001For Securities:ED

Summary

Consolidated Edison, Inc. (Con Edison) and its subsidiaries, Consolidated Edison Company of New York, Inc. (Con Edison of New York) and Orange and Rockland Utilities, Inc. (O&R), reported solid financial performance for the nine months ended September 30, 2001. Total operating revenues increased to approximately $7.7 billion, up from $7.2 billion in the prior year, primarily driven by higher electric, gas, and steam revenues. Net income for common stock also saw a modest increase, reaching approximately $557 million compared to $537 million in the same period last year. Key financial developments include the sale of Con Edison of New York's nuclear generating unit, which resulted in a deferred loss of $166.5 million recoverable from customers. The company also recorded significant costs related to the World Trade Center attack, estimated at $400 million, with a portion deferred as a regulatory asset. Despite these events and ongoing investments in utility plant, the company maintained a healthy financial position, with its earnings to fixed charges ratio improving and a stable common equity ratio.

Key Highlights

  • 1Total operating revenues for the nine months ended September 30, 2001, increased to $7.69 billion from $7.18 billion in the prior year.
  • 2Net income for common stock for the nine months ended September 30, 2001, was $557.1 million, an increase from $536.8 million in the same period of 2000.
  • 3Con Edison completed the sale of its nuclear generating unit in September 2001, recognizing a net after-tax loss of $166.5 million, which has been deferred as a regulatory asset.
  • 4The company incurred significant costs related to the World Trade Center attack, with an estimated $400 million in expenses for facility damage and restoration, of which $35.6 million was deferred as a regulatory asset.
  • 5Cash and temporary cash investments significantly increased to $432.1 million at September 30, 2001, from $94.8 million at December 31, 2000, largely due to proceeds from asset sales.
  • 6The ratio of earnings to fixed charges (SEC basis) improved to 3.25 for the twelve months ended September 30, 2001, from 3.10 for the twelve months ended December 31, 2000.
  • 7The common equity ratio remained strong at 49.6% as of September 30, 2001, compared to 49.1% as of December 31, 2000.

Frequently Asked Questions

Con Edison of New York estimates approximately $400 million in costs related to the September 11, 2001 attack on the World Trade Center for emergency response and facility restoration. Of this, $12 million was capitalized as utility plant and $35.6 million was deferred as a regulatory asset as of September 30, 2001. The company is seeking federal reimbursement for the remaining costs.

In September 2001, Con Edison of New York sold its nuclear generating unit. This resulted in a net after-tax loss of $166.5 million, which has been deferred as a regulatory asset, indicating that the company expects to recover these costs from customers through rates. This sale also impacted the balance sheet by removing nuclear assets and associated decommissioning trust funds.

Con Edison's liquidity has significantly improved. Cash and temporary cash investments increased substantially to $432.1 million at September 30, 2001, from $94.8 million at December 31, 2000. This increase is largely attributed to cash flows generated from the sale of the nuclear generating unit and other assets. Outstanding notes payable decreased to $202.1 million from $255.0 million over the same period.

The filing notes that Con Edison has adopted SFAS No. 133 for derivative instruments and hedging activities. Several new accounting standards issued in 2001 (SFAS 141, 142, 143, and 144) are mentioned, though the company has not yet determined their full impact. Additionally, changes in New York law impacting the tax liability from revenue-based to net income tax are reflected in the results.