10-QPeriod: Q3 FY2022

CONSOLIDATED EDISON INC Quarterly Report for Q3 Ended Sep 30, 2022

Filed November 3, 2022For Securities:ED

Summary

Consolidated Edison Inc. (ED) reported a solid third quarter and first nine months of 2022, driven by performance in its regulated utility segments (CECONY and O&R) and strong results from its Clean Energy Businesses, which are now slated for sale. The company announced a significant agreement to sell its Clean Energy Businesses to RWE for $6.8 billion, a strategic move intended to reduce debt, reinvest in regulated utilities, and potentially initiate a share repurchase program. This sale is expected to close in the first half of 2023, subject to regulatory approvals. While overall earnings have improved compared to the previous year, driven by rate increases and favorable operating conditions, the company faces ongoing challenges including inflationary pressures, rising interest rates, and the evolving regulatory landscape concerning clean energy goals and climate change. Management is focused on maintaining dividend growth and investing in reliable and resilient energy infrastructure for its customers.

Financial Highlights

43 data points
Beta

Revenue

$4.16B

Net Income

$613.00M

14.7% Net Margin

EPS (Diluted)

$1.72

Total Assets

$65.76B

Cash & Equivalents

$78.00M

Free Cash Flow

$661.00M

Financial Statements
Beta
Revenue$4.16B
Operating Expenses$3.28B
Operating Income$889.00M
Interest Expense$246.00M
Net Income$613.00M
EPS (Basic)$1.73
EPS (Diluted)$1.72
Shares Outstanding (Basic)354.60M
Shares Outstanding (Diluted)355.90M

Key Highlights

  • 1Announced sale of Clean Energy Businesses for $6.8 billion, expected to close in H1 2023, with proceeds intended for debt reduction and utility investment.
  • 2CECONY's electric operations saw a significant increase in operating revenues and operating income driven by higher rate base and increased purchased power expenses, despite higher operational costs.
  • 3O&R's electric operations also experienced revenue growth, supported by higher rate base and increased purchased power costs, with overall operating income slightly improving.
  • 4CECONY's gas operations showed revenue growth driven by higher gas purchased for resale and rate plan increases, with operating income improving due to lower costs.
  • 5Con Edison Transmission reported minimal financial activity, with ongoing focus on electric transmission projects, including participation in the NY Transco partnership.
  • 6The company is actively managing risks related to inflation and rising interest rates, with a strategy of issuing fixed-rate debt and using interest rate swaps for variable-rate debt.
  • 7Regulatory matters, including clean energy goals and climate change resiliency plans, are a significant focus, with ongoing proceedings and investments required to meet state mandates.

Frequently Asked Questions

The sale of the Clean Energy Businesses for $6.8 billion is a significant strategic move. Con Edison plans to use the proceeds to repay $1.05 billion in parent company debt in 2023, reinvest in its regulated utilities (CECONY and O&R), and potentially initiate a share repurchase program. This transaction is expected to strengthen the company's financial position and allow for greater focus on its core regulated utility operations.

Revenue and income growth in CECONY and O&R are primarily driven by approved rate increases, which expand the regulated rate base. Higher electric sales volumes, increased purchased power expenses (which are typically passed through to customers), and favorable adjustments related to earnings adjustment mechanisms and incentives also contribute to performance. The company is also benefiting from the resumption of billing late payment charges and other fees to allowed rate plan levels.

Con Edison is managing increased operational costs through various strategies. For its regulated utilities, rate adjustments allow for the recovery of certain costs. The company is also managing interest rate risk by issuing fixed-rate debt and using interest rate swaps. Furthermore, investments in energy efficiency programs and efforts to manage commodity price volatility aim to mitigate cost impacts on customers and the company's financial performance.

Con Edison is actively pursuing clean energy goals set by New York State, including investments in renewable energy projects, electric vehicle charging infrastructure, and climate resiliency plans. These initiatives require significant capital investment and may lead to increased utility rate increases for customers. The company is also navigating evolving environmental regulations, including those related to greenhouse gas emissions, which could have future cost implications.