10-QPeriod: Q2 FY2009

CONSOLIDATED EDISON INC Quarterly Report for Q2 Ended Jun 30, 2009

Filed August 4, 2009For Securities:ED

Summary

Consolidated Edison, Inc. (Con Edison) reported its second-quarter 2009 financial results, highlighting a significant decrease in net income for common stock to $150 million ($0.55 per share) from $552 million ($2.02 per share) in the same period of 2008. This decline is largely attributable to a substantial gain on the sale of generation projects in the prior year and lower mark-to-market gains from competitive energy businesses. The utility's core regulated operations, particularly Con Edison of New York, showed resilience with improved operating income driven by rate plan adjustments and revenue decoupling mechanisms, despite a slight decrease in electric delivery volumes due to economic conditions. The company maintained a strong focus on capital investment, with ongoing expenditures in utility plant infrastructure. Liquidity remains adequate, supported by operating cash flows and access to financing, although the company noted a slight decrease in its common equity ratio. Regulatory developments are ongoing, with Con Edison of New York filing for a new electric rate plan and O&R seeking approval for its gas rate plan. Investors should monitor regulatory outcomes and the impact of economic conditions on demand and operating costs.

Financial Highlights

28 data points
Beta

Revenue

$2.85B

Net Income

$150.00M

5.3% Net Margin

EPS (Diluted)

$0.55

Cash & Equivalents

$311.00M

Free Cash Flow

$1.44B

Financial Statements
Beta
Revenue$2.85B
Operating Expenses$2.47B
Operating Income$372.00M
Interest Expense$151.00M
Net Income$150.00M
EPS (Basic)$0.55
EPS (Diluted)$0.55
Shares Outstanding (Basic)274.50M
Shares Outstanding (Diluted)275.30M

Key Highlights

  • 1Net income for common stock significantly decreased to $150 million ($0.55/share) in Q2 2009 from $552 million ($2.02/share) in Q2 2008, primarily due to a large gain on asset sales in the prior year.
  • 2Regulated utility operations, particularly Con Edison of New York, demonstrated stable performance with increased operating income, driven by rate adjustments and revenue decoupling mechanisms.
  • 3Electric delivery volumes for Con Edison of New York decreased by 2.5% and for O&R by 13.5% in Q2 2009 compared to Q2 2008, reflecting the impact of the economic downturn.
  • 4Capital expenditures remain a focus, with Con Edison continuing to invest in utility plant infrastructure, expecting $2.181 billion for Con Edison of New York and $142 million for O&R in 2009.
  • 5Liquidity is maintained through operating cash flows and access to financing, though the company's common equity ratio slightly decreased to 49.7% from 50.7%.
  • 6Regulatory developments are progressing, including Con Edison of New York's filing for a new electric rate plan and O&R's settlement for a gas rate plan.
  • 7The company's competitive energy businesses experienced a significant decline in earnings due to lower mark-to-market gains and the absence of asset sale gains seen in the prior year.

Frequently Asked Questions

The primary driver for the significant decrease in net income for common stock was the absence of a large gain on the sale of generation projects that was recognized in the second quarter of 2008. Additionally, lower mark-to-market gains from the competitive energy businesses in the current period also contributed to the decline.

The regulated utility operations, primarily Con Edison of New York and O&R, showed resilience. Con Edison of New York's electric operating income increased due to its new electric rate plan, revenue decoupling mechanisms, and surcharges, despite a slight decrease in delivery volumes. O&R's electric revenues and operating income saw declines, partly due to lower purchased power costs and reduced delivery volumes. Both utilities are benefiting from rate adjustments and mechanisms designed to stabilize revenues.

Con Edison plans substantial capital investments in its utility infrastructure for 2009, with significant amounts allocated to Con Edison of New York ($2.181 billion) and O&R ($142 million). The company expects to fund these investments through operating cash flows and financing activities, maintaining adequate liquidity. The common equity ratio saw a slight decrease but remains within management's targets.

Investors should monitor ongoing regulatory developments, including Con Edison of New York's request for a new electric rate plan and O&R's proposed gas rate plan. Key market risks include interest rate fluctuations, commodity price volatility, and credit risk associated with energy supply and hedging activities. While the company employs hedging strategies, adverse market movements or regulatory outcomes could impact future financial performance.