8-KOther Events

CONSOLIDATED EDISON INC 8-K Report, Corporate Update (Jun 11, 2007)

Filed June 11, 2007For Securities:ED

Summary

Consolidated Edison, Inc. (ED) filed an 8-K on June 11, 2007, reporting a Joint Proposal agreed upon by Consolidated Edison Company of New York, Inc., the staff of the New York State Public Service Commission (PSC), and other parties regarding natural gas rates. This proposal outlines the rate structure for the three-year period from October 1, 2007, to September 30, 2010. The Joint Proposal forecasts specific rate increases over the three years, totaling approximately $142.8 million in incremental revenue, along with an additional $17.1 million in the first rate year due to a change in cost recovery mechanisms. Key elements include earnings sharing with customers above certain return-on-equity thresholds, a revenue decoupling mechanism to stabilize revenues, and provisions for sharing non-firm gas net revenues with shareholders. The proposal also addresses the recovery of various costs, including purchased gas, pension and environmental expenses, and utility plant related matters, with provisions for regulatory asset/liability accounting for differences between actual and forecasted amounts.

Key Highlights

  • 1Joint Proposal filed for Consolidated Edison Company of New York's gas rates covering October 1, 2007 - September 30, 2010.
  • 2Total projected rate increases of $67.4 million (2007), $32.7 million (2008), and $42.7 million (2009).
  • 3Earnings above 10.9% ROE (Year 1) and 10.7% ROE (Years 2-3) will be shared equally with customers.
  • 4Implementation of a revenue decoupling mechanism for the first rate year to stabilize revenue based on customer count.
  • 5Shareholder participation in non-firm gas net revenues, with higher percentages retained for revenues exceeding $50 million.
  • 6Continuation of current recovery for purchased gas and supply-related costs.
  • 7Provisions for regulatory asset/liability accounting for various expense and plant balance differences.

Frequently Asked Questions

This 8-K filing announces a Joint Proposal between Consolidated Edison Company of New York, Inc. and other parties, including the New York State Public Service Commission staff, regarding the company's natural gas rates for a three-year period starting October 1, 2007.

The Joint Proposal outlines rate increases of $67.4 million effective October 1, 2007, $32.7 million in 2008, and $42.7 million in 2009. Additionally, revenues are expected to increase by $17.1 million in the first year due to changes in how certain costs are recovered.

If Consolidated Edison's return on equity exceeds 10.9% in the first rate year or 10.7% in the second and third rate years, any earnings above these thresholds will be shared equally with customers. A portion of this sharing is tied to achieving energy efficiency goals in the first year.

The revenue decoupling mechanism, applicable for the first rate year, adjusts customer revenues based on the actual number of customers compared to forecasts. If actual delivery revenues are lower than forecasted, a regulatory asset will be created for future recovery; if higher, a regulatory liability will be recorded for customer benefit.