8-KRegulation FDOther EventsExhibits & Filings

CONSOLIDATED EDISON INC 8-K Report, Regulation FD Disclosure (May 4, 2007)

Filed May 4, 2007For Securities:ED

Summary

Consolidated Edison, Inc. (ED) announced through its subsidiary, Consolidated Edison Company of New York, Inc. (Con Edison of New York), a significant filing with the New York State Public Service Commission (PSC) on May 4, 2007. The company is seeking an electric rate increase of $1.2 billion, effective April 1, 2008, with further increases proposed for the subsequent two years. This filing outlines the company's request for a return on common equity of 11.5 percent and a common equity ratio of 48.7 percent, along with a proposal for a three-year rate plan. The substantial rate increase is driven by several factors, including the recovery of deferred costs related to transmission and distribution plant investments and operating expenses, amortization of net regulatory liabilities, and increased operating costs such as environmental remediation and infrastructure investments. Notably, Con Edison of New York is also proposing a revenue decoupling mechanism, which would separate the company's profits from the volume of electricity delivered, aiming to mitigate the impact of fluctuating customer usage on financial results.

Key Highlights

  • 1Con Edison of New York filed a request for a $1.2 billion electric rate increase effective April 1, 2008.
  • 2The company is proposing a three-year rate plan with additional increases of $335 million (April 1, 2009) and $390 million (April 1, 2010).
  • 3The filing requests a return on common equity of 11.5% and a common equity ratio of 48.7%.
  • 4A significant portion of the first-year increase ($515 million) relates to provisions within the existing 2005 Electric Rate Agreement, including deferred costs and regulatory liabilities.
  • 5The requested increase also covers higher operating costs, environmental remediation ($280 million), and infrastructure investments ($235 million).
  • 6A key proposal is for a revenue decoupling mechanism to align delivery revenues with profits, regardless of customer usage volume.
  • 7The current electric rate plan is in effect until March 31, 2008.

Frequently Asked Questions

The primary purpose of this 8-K filing is to disclose that Consolidated Edison Company of New York, Inc. has filed a request with the New York State Public Service Commission for a significant electric rate increase and to detail the components of that request.

The company is requesting an initial electric rate increase of $1.2 billion effective April 1, 2008. They are also proposing subsequent increases of $335 million effective April 1, 2009, and $390 million effective April 1, 2010, as part of a three-year rate plan.

The proposed revenue decoupling mechanism aims to eliminate the direct link between the company's delivery revenues and its profits. Under this mechanism, actual delivery revenues (adjusted for weather) would be compared to forecasted revenues. Shortfalls would be recovered from customers, and over-collections would be deferred for customer benefit. This is proposed to provide more stable financial results for the company by reducing the impact of fluctuating customer energy consumption.

The company's current electric rate plan, the 2005 Electric Rate Agreement, is effective through March 31, 2008.