10-QPeriod: Q2 FY2003

CONSOLIDATED EDISON INC Quarterly Report for Q2 Ended Jun 30, 2003

Filed August 12, 2003For Securities:ED

Summary

Consolidated Edison, Inc. (Con Edison) reported a decrease in net income for the second quarter of 2003 compared to the same period in 2002. This decline was primarily driven by a reduced net credit for pensions and other postretirement benefits, higher depreciation and property tax expenses, and the impact of cooler weather compared to the prior year's second quarter. Despite the lower net income, Con Edison's regulated utility subsidiaries, Con Edison of New York and Orange and Rockland Utilities (O&R), experienced an increase in operating revenues, largely due to higher fuel and purchased power costs which are generally recoverable from customers through approved rate structures. The company's balance sheet shows an increase in total assets and total capitalization, with utility plant, at original cost, seeing a notable increase, indicating ongoing investment in infrastructure. The company's financial condition remains stable, with a healthy earnings to fixed charges ratio.

Key Highlights

  • 1Net income for the second quarter of 2003 decreased by $32 million compared to the same period in 2002, primarily due to a reduced net credit for pensions and other postretirement benefits and higher depreciation and property tax expenses.
  • 2Operating revenues for the consolidated entity increased by $328 million (17.7%) in Q2 2003 compared to Q2 2002, driven largely by higher fuel and purchased power costs.
  • 3Con Edison of New York saw a decrease in electric delivery volumes of 3.0% in Q2 2003 compared to Q2 2002, mainly attributed to cooler weather, though weather-adjusted volumes showed a slight increase.
  • 4O&R's electric operating income decreased by $4 million in Q2 2003 due to lower net revenues, partly from disallowed deferred purchased power costs and cooler weather.
  • 5Total capital expenditures are reflected in the increase in Net Utility Plant on the balance sheet, indicating continued investment in infrastructure.
  • 6The company's common equity ratio remained strong, with Con Edison at 49.6% as of June 30, 2003.
  • 7The company's credit ratings remain investment grade, with Con Edison's unsecured debt rated A2 by Moody's.

Frequently Asked Questions

The decrease in net income for the second quarter of 2003 compared to the prior year was primarily driven by a reduced net credit for pensions and other postretirement benefits, higher depreciation expenses, and higher property taxes. The impact of cooler weather compared to the prior year's second quarter also contributed to the decline.

Operating revenues increased due to higher fuel and purchased power costs. Con Edison's regulated utility subsidiaries generally recover prudently incurred fuel and purchased power costs from customers through approved rate structures, which helps to mitigate the direct impact on net income. However, weather significantly impacted delivery volumes and net revenues.

The balance sheet shows an increase in Net Utility Plant, indicating continued investment in infrastructure. This is consistent with the company's role as a utility provider focused on maintaining and upgrading its delivery systems.

The filing mentions ongoing legal proceedings, including those related to Northeast Utilities and asbestos claims, with a recent significant jury award that is under review. Regulatory matters are also a key focus, with O&R entering into rate agreements with the PSC and NJBPU, which may impact future revenues and regulatory assets.