8-KOther Events

CONSOLIDATED EDISON INC 8-K Report (May 28, 2004)

Filed May 28, 2004For Securities:ED

Summary

This 8-K filing from Consolidated Edison, Inc. (ED) on May 28, 2004, announces a Joint Proposal by its subsidiary, Consolidated Edison Company of New York, Inc., with the New York State Public Service Commission (PSC) and other parties regarding proposed rate increases for gas and steam services. The proposal, subject to PSC approval, outlines specific rate adjustments for both services over the next several years and includes provisions for customer benefits, earnings sharing, and the recovery of certain costs. The key financial implications for investors revolve around the approved rate increases, which are expected to impact revenue and profitability for the utility's gas and steam segments. The proposal also details how excess earnings will be shared with customers, potentially capping upside for shareholders, and establishes mechanisms for deferring and recovering costs such as pension benefits and property taxes, which could affect future financial reporting and regulatory assets/liabilities.

Key Highlights

  • 1Consolidated Edison Company of New York, Inc. entered into a Joint Proposal with the PSC and other parties for gas and steam rate adjustments.
  • 2For gas services, the proposal outlines two PSC-selectable alternatives for base rate increases totaling approximately $28.7M, $18.4M, and $18.3M over three years, net of customer benefits.
  • 3For steam services, the proposal includes base rate increases of $49.6M effective Oct 1, 2004, and $27.4M effective Oct 1, 2005, net of customer benefits.
  • 4A significant provision allows for earnings above an 11.75% return on equity to be shared equally with customers.
  • 5The proposal includes mechanisms for the reconciliation and deferral of pension and post-employment benefit costs, as well as property taxes and interference costs, for future recovery or refund.
  • 6Shareholders may benefit from a percentage of non-firm gas revenues between $35M and $70M annually.
  • 7Provisions for current recovery of purchased gas, steam, fuel costs, and environmental remediation expenses continue.

Frequently Asked Questions

The main purpose of this filing is to announce that Consolidated Edison Company of New York, Inc. has entered into a Joint Proposal with the New York State Public Service Commission (PSC) and other parties concerning proposed increases to gas and steam service rates. This proposal is subject to the PSC's approval.

The proposal outlines specific base rate increases for gas and steam services. For gas, there are two PSC-selectable options for increases totaling approximately $28.7 million, $18.4 million, and $18.3 million over three years. For steam, rate increases are proposed at $49.6 million effective October 1, 2004, and $27.4 million effective October 1, 2005. These figures are net of amounts agreed for customer benefit.

Earnings exceeding an 11.75 percent return on equity (based on actual average equity ratio, capped at 50% of capitalization) will be shared equally between the company and its customers. This means a portion of higher-than-expected profits will be passed on to customers.

Yes, the proposal includes continuation of provisions for current recovery of purchased gas, steam, and fuel costs, as well as environmental remediation expenses. It also allows for the deferral of differences between actual pension and post-employment benefit costs and amounts reflected in rates, as well as property taxes and interference costs, for future recovery or refund.