10-QPeriod: Q3 FY2003

CONSOLIDATED EDISON INC Quarterly Report for Q3 Ended Sep 30, 2003

Filed November 7, 2003For Securities:ED

Summary

Consolidated Edison, Inc. (Con Edison) reported its financial results for the nine months ended September 30, 2003. The company's net income for common stock was $478 million, or $2.18 per diluted share, a decrease from the prior year's $528 million, or $2.48 per diluted share (which included a cumulative effect of an accounting change). This decline was primarily driven by lower net income from Con Edison of New York, impacted by warmer weather in the third quarter of 2003 compared to a strong prior year, a power outage, and increased operating and maintenance expenses, partially offset by regulatory adjustments and lower pension-related costs. O&R also experienced a slight decrease in net income. Despite the year-over-year decline in earnings, the company's regulated utility operations (Con Edison of New York and O&R) generated substantial operating revenues, contributing $6.87 billion to the total consolidated revenue of $7.55 billion. The balance sheet shows a continued investment in utility plant, with net utility plant increasing to $13.235 billion for Con Edison. The company's financial position remains solid, with a common equity ratio of 49.4% for Con Edison at the end of the third quarter of 2003, indicating a stable capital structure.

Key Highlights

  • 1Consolidated net income for the nine months ended September 30, 2003, was $478 million ($2.18/share), down from $528 million ($2.48/share) in the prior year.
  • 2The decline in earnings was primarily attributed to Con Edison of New York, influenced by milder weather in Q3 2003 compared to Q3 2002, a power outage, and higher operating expenses, partially offset by regulatory adjustments.
  • 3Total operating revenues for the nine months increased to $7.55 billion, driven by higher energy prices and sales volumes, particularly from regulated utility operations.
  • 4Con Edison of New York's electric delivery volumes decreased by 3.2% in Q3 2003 compared to Q3 2002, influenced by weather and a power outage.
  • 5O&R's electric delivery volumes saw a 1.5% decrease in Q3 2003 compared to Q3 2002, also impacted by weather and the power outage.
  • 6The company continues to invest heavily in utility plant, with net utility plant increasing for both Con Edison and Con Edison of New York.
  • 7Con Edison's common equity ratio remained strong at 49.4% as of September 30, 2003, indicating a healthy capital structure.

Frequently Asked Questions

The decrease in net income for the nine months ended September 30, 2003, was primarily due to lower earnings from Con Edison of New York. This was influenced by a combination of factors including milder weather in the third quarter of 2003 compared to the same period in 2002, the impact of a power outage, and increased operating and maintenance expenses. These factors were partially offset by favorable regulatory accounting adjustments and a reduction in pension-related expenses.

The regulated utility operations, primarily Con Edison of New York and O&R, generated the majority of the company's revenue, totaling $6.87 billion for the nine months ended September 30, 2003. While Con Edison of New York saw a decrease in electric delivery volumes in the third quarter, its firm gas sales and transportation volumes increased significantly year-over-year. O&R also experienced a slight decrease in electric delivery volumes but saw an increase in firm gas sales and transportation volumes. These volumes are subject to weather variations and other factors, but the company continues to recover energy costs from customers.

The company continues to invest in its utility plant, with net utility plant increasing in the reported period, indicating ongoing capital investment. Con Edison maintains a strong balance sheet, with a common equity ratio of 49.4% as of September 30, 2003, demonstrating a healthy capital structure. The company's credit ratings from major agencies remain solid, suggesting good financial stability.

The filing mentions ongoing legal proceedings, including those related to Northeast Utilities, and regulatory matters such as proceedings related to the company's former nuclear generating unit. There are also environmental liabilities related to Superfund sites and asbestos claims. These are being managed within the framework of regulatory agreements, and the company believes they will not have a material adverse effect on its financial position, though estimates of potential liabilities exist for environmental matters.