10-QPeriod: Q3 FY2007

CONSOLIDATED EDISON INC Quarterly Report for Q3 Ended Sep 30, 2007

Filed November 1, 2007For Securities:ED

Summary

Consolidated Edison Inc. (ED) reported a strong third quarter for 2007, with net income increasing significantly to $312 million ($1.15 per share) from $231 million ($0.93 per share) in the same period of 2006. This represents a substantial year-over-year improvement driven by increased sales across its utility segments, favorable rate agreement outcomes, and the positive contribution of its competitive energy businesses, partially offset by milder weather conditions compared to the prior year. For the nine months ended September 30, 2007, Con Edison's net income reached $722 million ($2.73 per share), up from $536 million ($2.17 per share) in the corresponding period of 2006. The company maintained a solid balance sheet with total assets growing to $27.9 billion and common shareholders' equity increasing to $9 billion. Capital expenditures remain robust, indicating ongoing investment in infrastructure to support future demand. Investors should note the company's continued focus on regulated utility operations, which form the core of its earnings, while strategically managing its competitive energy ventures.

Key Highlights

  • 1Net income for the third quarter of 2007 was $312 million, a significant increase from $231 million in the third quarter of 2006.
  • 2Earnings per share (diluted) for the third quarter of 2007 were $1.15, up from $0.92 in the third quarter of 2006.
  • 3Nine-month net income increased to $722 million in 2007 from $536 million in 2006.
  • 4Total operating revenues for the third quarter increased to $3,643 million from $3,441 million in the prior year.
  • 5The company's balance sheet shows growth, with total assets increasing to $27.9 billion from $26.7 billion at the end of 2006.
  • 6Common shareholders' equity increased to $8,990 million from $8,004 million at the end of 2006, indicating strengthened equity base.
  • 7Utility construction expenditures remained substantial, with $1,357 million for the nine months ended September 30, 2007, reflecting ongoing investment in infrastructure.

Frequently Asked Questions

The increase in net income was primarily driven by higher operating revenues, particularly from utility sales growth, favorable impacts from rate agreements, and contributions from the competitive energy businesses. Additionally, lower expenses related to the Queens power outage in 2006 and a decrease in net interest expense also contributed to the improved profitability.

Consolidated Edison's financial position strengthened, with total assets growing to $27.9 billion from $26.7 billion. Total capitalization and liabilities increased to $27.9 billion from $26.7 billion, largely due to an increase in common shareholders' equity to $9 billion from $8 billion, indicating a healthier equity base. Long-term debt slightly decreased, while current liabilities saw an increase.

The company faces risks related to regulatory matters, including potential disallowances in rate proceedings and the outcomes of power outage investigations. Other risks include environmental liabilities (Superfund sites, asbestos), legal proceedings (Manhattan steam main rupture, Lease In/Lease Out transactions), financial and commodity market fluctuations (interest rate risk, commodity price risk, credit risk), and operational challenges such as maintaining infrastructure reliability. The company also noted that there were no material changes to previously disclosed risk factors.

The competitive energy businesses contributed positively to overall results, although their performance can be volatile due to mark-to-market adjustments. For the third quarter of 2007, these businesses saw an increase in operating revenues due to higher electric retail and wholesale sales. However, net mark-to-market losses impacted earnings in this segment. The company is considering strategic alternatives for its electric generation facilities within these businesses.