8-KOther Events

CONSOLIDATED EDISON INC 8-K Report (Jul 1, 2003)

Filed July 1, 2003For Securities:ED

Summary

This 8-K filing by Consolidated Edison, Inc. (Con Edison) announces that its wholly-owned subsidiary, Orange and Rockland Utilities, Inc. (O&R), has entered into settlement agreements with the New York State Public Service Commission (PSC) staff and other parties regarding electric and gas rates for O&R's New York customers. These agreements, which are subject to PSC approval, outline rate changes and operational cost recovery mechanisms for O&R over a multi-year period. The key provisions include planned increases in O&R's gas base rates over three years, starting November 2003, with potential adjustments based on the common equity ratio of Con Edison's principal utility subsidiary. Notably, the electric agreement for O&R proposes no changes to base rates but includes provisions for the amortization of regulatory assets and liabilities, resulting in a pre-tax reduction to electric operating income. Both agreements ensure customer recovery of purchased power and gas costs and allow for deferrals of certain costs, such as pension, property taxes, and environmental remediation.

Key Highlights

  • 1Orange and Rockland Utilities (O&R), a Con Edison subsidiary, has reached settlement agreements for electric and gas rates with the NY PSC and other parties.
  • 2The O&R gas rate settlement proposes base rate increases of $9.3 million (5.8%) in Nov 2003, $9.3 million (4.8%) in Nov 2004, and $5.0 million (2.5%) in Nov 2005.
  • 3The O&R electric rate settlement involves no base rate changes but a net $11 million pre-tax reduction to operating income through amortization of regulatory assets/liabilities.
  • 4Both agreements allow for current recovery of purchased power and gas costs from customers.
  • 5Certain costs, including pension and post-employment benefits, property taxes, and manufactured gas plant remediation, will be deferred.
  • 6A weather normalization clause for gas operations is continued to moderate, but not eliminate, weather-related net income impacts.
  • 7Agreements include provisions for earnings sharing with customers if O&R's return on common equity exceeds certain thresholds (12.75% for electric, 11.0% for gas).

Frequently Asked Questions

The main purpose of this filing is to inform investors that Orange and Rockland Utilities (O&R), a subsidiary of Consolidated Edison, Inc. (Con Edison), has reached settlement agreements with the New York State Public Service Commission (PSC) staff and other parties concerning O&R's electric and gas rates.

For gas rates, there are planned increases totaling approximately $23.6 million over three years, starting in November 2003. For electric rates, there are no planned base rate increases; instead, there's an expected net pre-tax reduction of $11 million to operating income over the agreement period due to amortization of regulatory items.

Both the electric and gas agreements allow O&R to recover purchased power and gas costs from customers on a current basis. Additionally, certain costs, including changes in pension and post-employment benefit costs, property taxes, and manufactured gas plant investigation and remediation costs, can be deferred.

The agreements stipulate an earnings-sharing mechanism. If O&R's return on common equity exceeds 12.75% per annum for electric operations or 11.0% per annum for gas operations, a portion of those excess earnings will be shared with customers. This sharing level for gas operations can be slightly increased if O&R meets certain retail access program goals.