10-QPeriod: Q2 FY2004

CONSOLIDATED EDISON INC Quarterly Report for Q2 Ended Jun 30, 2004

Filed August 6, 2004For Securities:ED

Summary

Consolidated Edison, Inc. (Con Edison) reported solid financial performance for the six months ended June 30, 2004. Net income for common stock increased to $241 million ($1.05 basic EPS) from $220 million ($1.01 basic EPS) in the prior year period. The company's regulated utility subsidiaries, Con Edison of New York and Orange and Rockland Utilities (O&R), continue to be the primary drivers of earnings, supported by stable demand for essential energy services. Con Edison also demonstrated effective management of its capital structure, with a common equity ratio of 49.3% at June 30, 2004, indicating a healthy balance between debt and equity financing. The report highlights a focus on infrastructure investment to meet growing customer demand and maintain reliability, evidenced by significant capital expenditure plans. Regulatory matters, including rate filings and proposed rate adjustments for electric, gas, and steam services, are actively managed, aiming to balance customer affordability with the company's need to recover costs and earn a fair return. Con Edison is also navigating environmental and legal matters, including ongoing Superfund site remediation and litigation related to a potential acquisition, with ongoing assessments of potential financial impacts.

Key Highlights

  • 1Net income for common stock increased to $241 million for the six months ended June 30, 2004, up from $220 million in the same period of 2003.
  • 2Basic Earnings Per Share (EPS) rose to $1.05 for the six months ended June 30, 2004, compared to $1.01 in the prior year.
  • 3The company's common equity ratio remained strong at 49.3% as of June 30, 2004, indicating a stable capital structure.
  • 4Con Edison of New York filed a request to increase electric rates by $550 million, effective April 2005, and entered into a Joint Proposal for gas and steam rate adjustments.
  • 5Total assets grew to $22.224 billion as of June 30, 2004, from $20.966 billion at December 31, 2003, primarily due to increased utility plant investment.
  • 6Capital expenditures for utility construction were $659 million for the six months ended June 30, 2004, reflecting ongoing investments in infrastructure.
  • 7The company is actively managing environmental matters, with accrued liabilities of $200 million for Superfund sites and an estimated potential liability for manufactured gas sites.

Frequently Asked Questions

The primary driver of Con Edison's earnings growth is the performance of its regulated utility subsidiaries, Con Edison of New York and Orange and Rockland Utilities (O&R). Their stable operations and revenue generation from essential energy services are key contributors.

Con Edison of New York has filed for an electric rate increase effective April 2005 and is in discussions for gas and steam rate adjustments. These filings aim to address increased infrastructure investment needs and operational costs. The outcome of these regulatory proceedings is crucial for future revenue and profitability.

Con Edison maintains a strong capital structure with a common equity ratio of 49.3% as of June 30, 2004. The company is making substantial capital investments in its utility plant, totaling $659 million for the six months ended June 30, 2004, to support growing demand and reliability, funded through a combination of operating cash flow and financing activities.

Significant risks include potential liabilities related to Superfund sites and environmental remediation, with accrued liabilities of $200 million. The company is also involved in litigation, notably the Northeast Utilities matter, and is assessing potential impacts from a collection agent's bankruptcy. Management believes its position is correct on its tax appeals and is actively managing these matters.