10-QPeriod: Q3 FY2004

CONSOLIDATED EDISON INC Quarterly Report for Q3 Ended Sep 30, 2004

Filed November 5, 2004For Securities:ED

Summary

Consolidated Edison, Inc. (Con Edison) and its subsidiaries, Con Edison of New York and Orange and Rockland Utilities (O&R), filed their quarterly report for the period ending September 30, 2004. The report indicates a slight decrease in earnings per share for the nine-month period compared to the previous year, attributed to factors like milder weather, increased pension costs, and higher depreciation and property taxes, partially offset by regulatory adjustments and lower interest expenses. Despite the slight earnings dip, the company demonstrated resilience in its core utility operations. Con Edison of New York saw increased electricity delivery volumes after accounting for weather and the previous year's power outage, while O&R also showed growth in electric delivery volumes. The company is actively managing its rate plans, with new gas and steam rate agreements in place for Con Edison of New York and ongoing discussions for electric rate increases. Significant capital investments are planned to support infrastructure and meet load growth, underscoring a commitment to reliability and future capacity. The company also provided updates on various ongoing legal and environmental matters, none of which are currently expected to have a material adverse effect on its financial condition.

Key Highlights

  • 1Earnings per share for the nine months ended September 30, 2004, were $2.08, a decrease from $2.18 in the prior year's period, primarily due to factors like weather, increased operating expenses, and regulatory charges.
  • 2Con Edison of New York's electric sales and delivery volumes increased by 1.7% for the nine-month period, demonstrating resilience in its core service area, even after accounting for weather normalization and the previous year's power outage.
  • 3New gas and steam rate plans were approved for Con Edison of New York, effective October 1, 2004, providing for base rate increases and a shared earnings mechanism.
  • 4The company continues to make significant capital investments, with Con Edison of New York increasing its estimated 2004 utility construction expenditures to $1.23 billion to support infrastructure and meet load growth.
  • 5Despite a slight decrease in overall earnings, Con Edison's regulated utility operations remain the primary drivers of its financial performance, supported by rate plans designed to recover costs and provide a return on equity.
  • 6The company provided updates on several ongoing legal proceedings, including the Northeast Utilities litigation, and environmental matters, stating that these are not expected to have a material adverse effect on its financial position.
  • 7Con Edison is considering the potential sale of its unregulated subsidiary, Con Edison Communications, which is subject to regulatory approvals.

Frequently Asked Questions

The decrease in earnings per share for the nine months ended September 30, 2004, compared to the prior year, was primarily due to lower net revenues in Con Edison of New York, increased pension and other post-retirement benefit costs, higher depreciation and property tax expenses, and charges related to new gas and steam rate plans. These factors were partially offset by regulatory accounting adjustments, lower interest expenses, and improved other income.

Milder weather conditions during the summer months of 2004 negatively impacted Con Edison's net revenues compared to the prior year. Specifically, fewer hot days affected electricity and gas sales volumes. However, the company utilizes weather normalization clauses for its gas business to mitigate some of this impact.

Con Edison anticipates continued substantial capital investment to meet growing customer demand and maintain its high level of reliability. Con Edison of New York increased its estimated 2004 utility construction expenditures to $1.23 billion, and forecasts an average annual growth rate of 1.5% for electric peak load over the next five years, requiring ongoing investment in its energy delivery infrastructure.

Yes, Con Edison of New York received approval for new gas and steam rate plans effective October 1, 2004, which include base rate increases. The company has also filed for an increase in electric rates effective April 2005, and regulatory proceedings are ongoing. Additionally, Orange and Rockland Utilities (O&R) saw rate adjustments for its New Jersey subsidiary, Rockland Electric Company.