10-QPeriod: Q3 FY2006

CONSOLIDATED EDISON INC Quarterly Report for Q3 Ended Sep 30, 2006

Filed November 2, 2006For Securities:ED

Summary

Consolidated Edison, Inc. (Con Edison) and its subsidiary, Consolidated Edison Company of New York, Inc. (Con Edison of New York), reported a decrease in net income for the three and nine months ended September 30, 2006, compared to the same periods in 2005. This decline was primarily driven by a combination of factors including milder weather conditions, increased operations and maintenance expenses, and higher interest charges. Specifically, Con Edison of New York experienced a significant impact from power outages in Queens, contributing to higher operational costs. Despite the year-over-year decline in profitability, Con Edison's regulated utility segments, particularly Con Edison of New York, continue to form the backbone of its earnings. The company is actively managing its capital investments to meet growing demand and maintain reliability, with significant capital expenditures planned for infrastructure upgrades. The competitive energy businesses also showed improved performance, although impacted by mark-to-market losses on derivative instruments.

Key Highlights

  • 1Net income decreased for both the three and nine months ended September 30, 2006, compared to the prior year, attributed to factors like milder weather and increased operational expenses.
  • 2Con Edison of New York reported higher operations and maintenance costs, partly due to expenses related to power outages and increased investments in infrastructure.
  • 3The company's regulated utility businesses, primarily Con Edison of New York and O&R, remain the core contributors to earnings.
  • 4Significant capital expenditures are planned for utility infrastructure to meet projected demand growth and maintain service reliability.
  • 5Competitive energy businesses saw improved earnings before mark-to-market losses, but were impacted by overall mark-to-market losses on derivative instruments.
  • 6The company is actively engaged in regulatory proceedings, with filings for new rate plans for gas services and settlements for steam and gas rate plans for O&R.

Frequently Asked Questions

The decrease in net income was primarily driven by a combination of factors including milder weather conditions in 2006 compared to 2005, increased operations and maintenance expenses, and higher interest charges. Specifically, Con Edison of New York's financial results were impacted by expenses related to power outages and ongoing investments in infrastructure.

Con Edison plans substantial capital investments in its energy delivery infrastructure to meet projected growth in customer demand and maintain a high level of service reliability. The company anticipates ongoing capital needs for upgrades and expansions.

The competitive energy businesses reported higher earnings before net mark-to-market losses. However, overall performance was impacted by significant net after-tax mark-to-market losses on derivative instruments, particularly in the third quarter of 2006.

The company is involved in various regulatory matters. Con Edison of New York has filed for new gas rates and settled rate plans for steam and gas services. O&R has also had its gas rate plan approved and its New Jersey subsidiary has filed for new electric rates.