10-QPeriod: Q3 FY2009

CONSOLIDATED EDISON INC Quarterly Report for Q3 Ended Sep 30, 2009

Filed November 2, 2009For Securities:ED

Summary

Consolidated Edison, Inc. (ED) reported its third-quarter and year-to-date results for the period ending September 30, 2009. The company demonstrated a significant improvement in earnings for the third quarter of 2009 compared to the same period in 2008, driven by a recovery in operating income and favorable adjustments. For the nine-month period, net income was lower than the prior year, primarily due to the absence of a substantial gain on the sale of generation projects recorded in 2008, along with the impact of discontinued operations. Key financial trends indicate stable utility operations with adjusted revenues and expenses reflecting regulatory rate plans. While the company faces ongoing capital investment needs for infrastructure, it maintains a solid common equity ratio, indicating a strong financial foundation. Management highlights continued focus on operational efficiency and capital allocation, anticipating a potential decrease in construction expenditures in the near term. The company also notes ongoing efforts to manage environmental liabilities and pursue opportunities like smart grid projects funded by government grants.

Financial Highlights

5 data points
Beta

Net Income

$336.00M

EPS (Diluted)

$1.22

Financial Statements
Beta
Net Income$336.00M
EPS (Basic)$1.22
EPS (Diluted)$1.22
Shares Outstanding (Basic)275.10M
Shares Outstanding (Diluted)276.00M

Key Highlights

  • 1Consolidated Edison's net income for common stock for the third quarter of 2009 was $336 million ($1.22 per share), a significant increase from $182 million ($0.66 per share) in the same quarter of 2008.
  • 2For the first nine months of 2009, net income for common stock was $666 million ($2.43 per share), a decrease from $1,036 million ($3.80 per share) in the prior year, primarily due to the absence of a large gain from the sale of generation projects and discontinued operations in 2008.
  • 3Operating revenues for the third quarter decreased by 9.6% to $3,489 million compared to $3,858 million in Q3 2008, reflecting lower purchased power costs and a general economic downturn.
  • 4The company maintained a strong financial position with a common equity ratio of 50.9% at September 30, 2009, up slightly from 50.7% at year-end 2008.
  • 5Con Edison of New York received a Notice of Potential Liability from the EPA regarding the Gowanus Canal, indicating potential substantial costs for assessment and remediation.
  • 6The company was selected for federal grants under the American Recovery and Reinvestment Act of 2009 for smart electric grid projects, contingent on project completion and regulatory approvals for cost recovery.

Frequently Asked Questions

The increase in net income for the third quarter of 2009 was primarily driven by a recovery in operating income. This was supported by higher net revenues, favorable changes in regulatory mechanisms, and lower energy commodity costs, which more than offset increases in operating expenses and taxes. The prior year's third quarter was also impacted by certain one-time items that affected comparability.

The decrease in net income for the nine-month period ending September 30, 2009, compared to the same period in 2008, is largely due to the absence of a significant gain on the sale of generation projects and income from discontinued operations that were recorded in the first nine months of 2008. Excluding these items, operating performance for the utility segments remained relatively stable, with some positive contributions from competitive energy businesses.

Key risks and potential liabilities mentioned include environmental remediation costs associated with manufactured gas plant sites and other Superfund sites, such as the newly identified Gowanus Canal. There are also ongoing investigations related to contractor payments and permit non-compliance at steam generating facilities. Additionally, the company faces interest rate risk and commodity price risk, although these are managed through various strategies and regulatory recovery mechanisms.

Consolidated Edison continues to invest in utility infrastructure. The company anticipates a potential decrease in construction expenditures for 2010 and 2011 compared to previous estimates. It has also been selected for significant federal grants for smart electric grid projects under the American Recovery and Reinvestment Act of 2009, which will fund a portion of these investments, with cost recovery mechanisms being developed with regulators.