10-QPeriod: Q1 FY2008

CONSOLIDATED EDISON INC Quarterly Report for Q1 Ended Mar 31, 2008

Filed May 2, 2008For Securities:ED

Summary

Consolidated Edison Inc. (ED) reported a net income of $303 million for the first quarter of 2008, a significant increase from $256 million in the same period of 2007. This growth was primarily driven by improved performance in the competitive energy businesses, notably due to positive mark-to-market adjustments, and a substantial one-time gain from the settlement of litigation with Northeast Utilities. The regulated utility operations, while facing higher operating expenses and capital expenditures, benefited from approved rate increases, particularly for Con Edison of New York's electric rates which were boosted by $425 million effective April 1, 2008. Key financial metrics show a healthy increase in earnings per share to $1.11 from $0.99 year-over-year. The company continued its strategy of significant capital investment in its utility infrastructure to support growth and reliability. Despite increased costs and some operational challenges like the ongoing review of the Queens power outage, Con Edison demonstrated resilience and improved profitability, largely attributable to strategic financial management and a favorable resolution of a major legal matter.

Key Highlights

  • 1Net income increased by 18.4% to $303 million in Q1 2008 compared to $256 million in Q1 2007.
  • 2Earnings per share (EPS) rose to $1.11 (diluted) in Q1 2008, up from $0.99 in Q1 2007.
  • 3A $425 million electric rate increase for Con Edison of New York became effective April 1, 2008.
  • 4The company resolved litigation with Northeast Utilities, resulting in a $30 million after-tax gain.
  • 5Competitive energy businesses saw improved results, significantly boosted by $33 million in net after-tax mark-to-market gains.
  • 6Total assets grew to $28.67 billion at March 31, 2008, up from $28.26 billion at December 31, 2007.
  • 7Con Edison of New York entered into a Joint Proposal for an electric rate increase of $15.6 million for the period July 2008 through June 2011, subject to PSC approval.

Frequently Asked Questions

The increase in net income was primarily driven by positive mark-to-market adjustments in the competitive energy businesses and a significant $30 million after-tax gain from the resolution of litigation with Northeast Utilities. Improved utility operations due to rate increases also contributed positively.

The $425 million electric rate increase for Con Edison of New York, effective April 1, 2008, is expected to positively impact revenues and operating income by allowing recovery of increased costs and investments, contributing to overall financial performance. However, a portion of this increase is subject to potential refund pending further regulatory review.

The competitive energy businesses are focusing on expanding their customer base and gross margins. The company is also in the process of selling significant power generating assets, which was expected to be completed in stages during the first half of 2008. These businesses contributed positively to earnings in the quarter, largely due to favorable mark-to-market adjustments.

Yes, Con Edison is involved in ongoing proceedings related to a 2006 power outage in Queens, New York, for which a Joint Proposal has been submitted to the PSC. There is also an ongoing investigation into a steam main rupture in Manhattan in July 2007. While a resolution was reached with Northeast Utilities, and new rate plans are being implemented, these matters continue to be monitored for their potential financial impact.