10-QPeriod: Q1 FY2011

CONSOLIDATED EDISON INC Quarterly Report for Q1 Ended Mar 31, 2011

Filed May 5, 2011For Securities:ED

Summary

Consolidated Edison, Inc. (Con Edison) and its subsidiary, Consolidated Edison Company of New York, Inc. (CECONY), reported solid financial performance for the first quarter of 2011. Net income for common stock rose significantly to $311 million ($1.07 per share basic, $1.06 diluted) from $226 million ($0.80 per share) in the same period last year. This improvement was driven by a combination of factors including rate plan adjustments, particularly for CECONY's electric and gas segments, which helped offset increased operational costs and taxes. The company's operating revenues saw a slight decline year-over-year, mainly due to lower purchased power and gas costs, but net revenues (operating revenues less fuel, purchased power, and gas costs) increased, demonstrating effective cost management and the benefits of regulatory mechanisms like revenue decoupling. Con Edison's competitive energy businesses also contributed positively, largely due to favorable mark-to-market adjustments, although their overall contribution to net income remained smaller compared to the regulated utilities.

Financial Highlights

43 data points
Beta

Revenue

$3.35B

Net Income

$311.00M

9.3% Net Margin

EPS (Diluted)

$1.06

Total Assets

$36.19B

Cash & Equivalents

$516.00M

Free Cash Flow

$339.00M

Financial Statements
Beta
Revenue$3.35B
Operating Expenses$2.72B
Operating Income$626.00M
Interest Expense$147.00M
Net Income$311.00M
EPS (Basic)$1.07
EPS (Diluted)$1.06
Shares Outstanding (Basic)292.00M
Shares Outstanding (Diluted)293.60M

Key Highlights

  • 1Net income for common stock increased by 37.6% to $311 million in Q1 2011 compared to $226 million in Q1 2010.
  • 2Earnings per share (EPS) saw a substantial increase, with basic EPS rising to $1.07 from $0.80 year-over-year.
  • 3CECONY's electric and gas rate plans, along with revenue decoupling mechanisms, positively impacted net revenues and operating income.
  • 4Purchased power and fuel costs decreased significantly for the consolidated entity, contributing to improved profitability.
  • 5Despite a slight overall decrease in operating revenues, net revenues increased due to effective management of energy costs.
  • 6The competitive energy businesses reported a significant turnaround, contributing positively to net income, largely driven by mark-to-market gains.
  • 7Cash flow from operating activities for Con Edison saw a substantial increase due to tax refunds and lower collateral payments.

Frequently Asked Questions

The primary driver for the substantial increase in net income was the implementation of rate plan adjustments for CECONY's electric and gas segments. These adjustments, combined with favorable movements in energy costs such as purchased power and fuel, as well as positive mark-to-market effects in the competitive energy businesses, significantly boosted profitability compared to the prior year.

While certain expenses like depreciation and taxes increased, Con Edison managed its overall operating expenses effectively. For instance, purchased power and fuel costs decreased significantly year-over-year. Additionally, operations and maintenance expenses for CECONY's electric segment decreased due to lower costs for injuries and damages, insurance, and pension expenses, demonstrating successful cost control measures.

Revenue decoupling mechanisms, particularly in CECONY's electric and gas rate plans, help stabilize revenues by decoupling them from actual customer delivery volumes. This means that changes in delivery volumes due to weather or other factors generally do not significantly impact revenues, providing more predictable cash flows and contributing to the positive performance seen in the net revenue figures.

The competitive energy businesses showed a significant improvement, turning a loss in the prior year's comparable quarter into a net income contribution. This turnaround was largely driven by favorable mark-to-market adjustments of $22 million (after-tax) recognized in the quarter. While their overall contribution is smaller than the regulated utilities, this positive performance was a key factor in the consolidated results.