10-QPeriod: Q1 FY2007

CONSOLIDATED EDISON INC Quarterly Report for Q1 Ended Mar 31, 2007

Filed May 10, 2007For Securities:ED

Summary

Consolidated Edison, Inc. (Con Edison) reported a significant increase in net income for the first quarter of 2007 compared to the same period in 2006, driven by improved performance across its segments. The regulated utility operations, primarily Con Edison of New York, saw benefits from colder weather, sales growth, and rate adjustments, contributing to higher operating income. The company's competitive energy businesses also showed improvement, largely due to reduced mark-to-market losses and increased gross margins. Despite a slight increase in net interest expense, the overall financial performance indicates a positive trend for the quarter, with earnings per share rising to $0.99 from $0.74 in the prior year. The company continues to invest in its utility infrastructure while managing market and regulatory risks.

Key Highlights

  • 1Net income increased significantly by 41.4% to $75 million (Con Edison total) compared to the prior year's quarter.
  • 2Earnings per share rose to $0.99 from $0.74 for the comparable periods, indicating improved profitability on a per-share basis.
  • 3Con Edison of New York's electric operating income increased by $36 million, driven by higher net revenues from the electric rate agreement and increased demand side management programs.
  • 4The competitive energy businesses reported improved earnings, largely due to lower mark-to-market losses and increased gross margins on wholesale electric sales.
  • 5Total utility construction expenditures increased year-over-year for both Con Edison ($458 million vs. $328 million) and Con Edison of New York ($432 million vs. $339 million), reflecting ongoing investment in infrastructure.
  • 6The company maintained a healthy common equity ratio, with Con Edison at 50.6% and Con Edison of New York at 51.0% as of March 31, 2007.
  • 7The company filed a request for a significant electric rate increase ($1.2 billion) in May 2007 with the New York State Public Service Commission, effective April 1, 2008.

Frequently Asked Questions

The increase in net income is primarily driven by improved performance across Con Edison's segments. The regulated utility operations, particularly Con Edison of New York, benefited from colder weather, sales growth, and rate adjustments. The competitive energy businesses also contributed positively due to reduced mark-to-market losses and increased gross margins.

Con Edison has increased its investment in utility infrastructure. Total utility construction expenditures for Con Edison rose to $458 million in the first quarter of 2007 from $328 million in the same period of 2006. Similarly, Con Edison of New York's expenditures increased to $432 million from $339 million, indicating continued capital investment in its operations.

Con Edison of New York has filed a request for a substantial electric rate increase of $1.2 billion, expected to be effective April 1, 2008. Additionally, the company is awaiting approval for a gas rate plan and has had its electric rates in New York temporarily made by the PSC, subject to refund.

Yes, the PSC has expanded its investigation into the July 2006 Queens power outage to examine the prudence of the company's conduct. The outcome of this investigation and other regulatory proceedings, such as those related to environmental matters and power outages, could potentially have a material impact on the company's financial position or results of operations, although the company is unable to predict the exact outcome at this time.