10-QPeriod: Q2 FY2006

CONSOLIDATED EDISON INC Quarterly Report for Q2 Ended Jun 30, 2006

Filed August 3, 2006For Securities:ED

Summary

Consolidated Edison, Inc. (Con Edison) reported its second quarter 2006 financial results, highlighting increased net income driven by strong performance in its regulated utility segments and favorable rate adjustments. For the three months ended June 30, 2006, Con Edison's net income was $124 million, or $0.50 per diluted share, compared to $115 million, or $0.47 per diluted share, in the prior year period. For the six months ended June 30, 2006, net income was $305 million, or $1.24 per diluted share, up from $297 million, or $1.22 per diluted share, in the same period of 2005. The company continues to invest substantially in its infrastructure to support demand growth and maintain reliability. Regulatory matters played a significant role, with recent rate settlements for electric, gas, and steam services contributing positively to earnings. The competitive energy businesses experienced a mixed performance, impacted by mark-to-market losses, though underlying operational improvements were noted.

Key Highlights

  • 1Net income increased for both the three-month and six-month periods ended June 30, 2006, compared to the prior year, indicating improved profitability.
  • 2Con Edison of New York's electric operating revenues saw a notable increase due to higher recoverable fuel costs, the electric rate plan, and sales growth.
  • 3The company is making substantial capital investments in its utility infrastructure, with estimated peak electric demand growth projected for the coming years.
  • 4Recent rate plan settlements for Con Edison of New York's steam and O&R's gas services are expected to contribute to stable future earnings.
  • 5The competitive energy businesses reported higher revenues, driven by increased electric wholesale and retail sales, though net mark-to-market losses impacted overall profitability for these segments.
  • 6Con Edison's liquidity remains supported by a revolving credit facility totaling $2.25 billion, providing ample resources for its operational and capital needs.
  • 7The company continues to manage market risks, including interest rate and commodity price fluctuations, through established strategies and derivative instruments.

Frequently Asked Questions

The increase in net income was primarily driven by strong performance in the regulated utility segments, particularly Con Edison of New York, benefiting from favorable rate adjustments and improved sales. Favorable weather patterns compared to the prior year also contributed to improved results.

Con Edison is continuing its substantial capital investment program to enhance its energy delivery infrastructure. This investment is aimed at meeting projected demand growth, ensuring reliability, and upgrading systems, with significant investments expected over the next five years.

The competitive energy businesses face risks common to the industry, including fluctuations in commodity prices and market volatility. In the second quarter of 2006, these businesses were particularly impacted by mark-to-market losses on derivative instruments, though underlying operational performance showed improvement.

Con Edison maintains a strong liquidity position, supported by its operating cash flows and a significant revolving credit facility of $2.25 billion. This provides flexibility for ongoing operations and substantial capital investment plans.