10-QPeriod: Q3 FY2008

CONSOLIDATED EDISON INC Quarterly Report for Q3 Ended Sep 30, 2008

Filed November 7, 2008For Securities:ED

Summary

Consolidated Edison, Inc. (Con Edison) and its subsidiary, Consolidated Edison Company of New York, Inc. (Con Edison of New York), filed their third-quarter 2008 Form 10-Q, reporting a decrease in net income for the three months ended September 30, 2008, compared to the same period in 2007, primarily due to lower earnings from competitive energy businesses, including significant mark-to-market losses. However, net income for the nine months ended September 30, 2008, increased substantially, driven by a large after-tax gain from the sale of generation projects by Con Edison Development and a significant increase in earnings from continuing operations, despite a decrease in net income from Con Edison of New York. The company's regulated utility operations, Con Edison of New York and Orange and Rockland Utilities, Inc. (O&R), remain the primary contributors to earnings. These segments showed stable performance with increases in operating revenues driven by rate adjustments and energy cost recoveries. Despite a cooler summer impacting electricity demand, the revenue decoupling mechanisms in place for the utilities helped mitigate the impact on earnings. The company continues to invest in its infrastructure to meet projected demand growth while managing operational costs.

Key Highlights

  • 1Net income for the three months ended September 30, 2008, was $182 million, a decrease from $312 million in the prior year, largely due to mark-to-market losses in competitive energy businesses.
  • 2Net income for the nine months ended September 30, 2008, significantly increased to $1,036 million from $722 million in the prior year, primarily due to a $270 million after-tax gain on the sale of generation projects by Con Edison Development.
  • 3Con Edison of New York's electric operating revenues increased by 17.5% to $2,670 million in Q3 2008 compared to Q3 2007, driven by higher fuel and purchased power costs, rate increases, and warmer weather.
  • 4The regulated utility segments (Con Edison of New York and O&R) continue to be the primary contributors to earnings, with stable operating income in their core businesses despite varying weather conditions.
  • 5The company is actively managing its capital resources amidst ongoing global financial turmoil, noting potential impacts on credit availability, capital costs, and customer demand.
  • 6Significant capital expenditures are planned for infrastructure upgrades and to meet projected demand growth, with the company anticipating ongoing needs for substantial investment.
  • 7The company reported a substantial increase in its common equity ratio to 51.8% for Con Edison and 52.0% for Con Edison of New York at September 30, 2008.

Frequently Asked Questions

The significant increase in net income for the nine months ended September 30, 2008, compared to the same period in 2007, was primarily driven by a substantial after-tax gain of $270 million from the sale of generation projects by Con Edison Development, along with a $30 million after-tax net income from the resolution of the company's legal proceeding with Northeast Utilities.

Con Edison of New York's electric operating revenues increased significantly in Q3 2008 due to higher energy costs, rate adjustments, and warmer weather. Despite cooler weather impacting overall demand, revenue decoupling mechanisms helped stabilize earnings from utility operations.

The company's primary risks include the ongoing global financial turmoil, which can affect credit availability, capital costs, and customer demand. They also face risks related to interest rate fluctuations, commodity price volatility, and credit exposure. The company manages these risks through various strategies including hedging, credit policies, and careful management of capital resources.

Con Edison anticipates a continuing need for substantial capital investment to meet projected growth in peak energy usage and maintain a high level of reliability. The company is in the process of finalizing its capital budgets for 2009, taking into account the current market conditions.