8-KLeadership ChangesCorporate ChangesOther Events+1

CONSOLIDATED EDISON INC 8-K Report, Executive Changes (Apr 23, 2008)

Filed April 23, 2008For Securities:ED

Summary

This 8-K filing from Consolidated Edison, Inc. (Con Edison) on April 23, 2008, primarily details an important regulatory development for its subsidiary, Orange and Rockland Utilities, Inc. (O&R). O&R has entered into a Joint Proposal with the New York State Public Service Commission (PSC) staff and other parties regarding electric rate increases. This proposal, if approved by the PSC, outlines phased rate increases totaling approximately $36.9 million over three years and an additional $9.9 million in the subsequent year. Key aspects include a regulated return on equity of 9.4%, provisions for sharing earnings above a certain threshold, and mechanisms for deferring certain costs and capital expenditures as regulatory assets or liabilities. Additionally, the filing notes the retirement of Stephen R. Volk from Con Edison's Boards of Directors and Trustees, effective May 19, 2008, aligning with the company's retirement policy. Con Edison of New York also amended its by-laws to reduce the number of Trustees from thirteen to twelve, also effective May 19, 2008. These changes in governance and regulatory matters are the core information relevant to investors.

Key Highlights

  • 1Orange and Rockland Utilities (O&R), a Con Edison subsidiary, reached a Joint Proposal with the NY PSC for electric rate increases.
  • 2The Joint Proposal includes electric rate increases of $15.6M (July 2008), $15.6M (July 2009), and $5.7M (July 2010), with an additional $9.9M in recovery starting July 2010.
  • 3The proposal allows for an annual return on common equity of 9.4%.
  • 4A significant portion of earnings above a 10.2% return on equity will be used to reduce regulatory assets related to pension and post-retirement benefits.
  • 5The Joint Proposal incorporates a revenue decoupling mechanism, adjusting revenues based on actual energy delivery versus authorized amounts.
  • 6Stephen R. Volk is retiring from the Boards of Directors of Consolidated Edison, Inc. and Consolidated Edison Company of New York, Inc. effective May 19, 2008.
  • 7Con Edison of New York's Board of Trustees has been reduced in size from thirteen to twelve members, effective May 19, 2008.

Frequently Asked Questions

The Joint Proposal is an agreement between O&R, NY PSC staff, and other parties regarding electric rate increases for O&R's New York customers. It proposes phased increases totaling approximately $36.9 million over three years (FY2009-FY2011) and an additional $9.9 million recovery starting in the 12-month period beginning July 1, 2010. It also sets a 9.4% annual return on common equity and includes provisions for sharing excess earnings and deferring certain costs.

The revenue decoupling mechanism aims to reduce the link between O&R's revenue and the actual volume of electricity sold. It involves comparing actual energy delivery revenues to authorized delivery revenues and reconciling the difference with customers, potentially leading to refunds or recovery. This can provide more stable revenue streams for the company, independent of short-term fluctuations in customer usage.

Yes, Stephen R. Volk is retiring from the Boards of Directors of Consolidated Edison, Inc. and Consolidated Edison Company of New York, Inc. effective May 19, 2008. Additionally, the number of Trustees on the Board of Trustees for Con Edison of New York has been reduced from thirteen to twelve, also effective May 19, 2008.

The Joint Proposal outlines specific rate increases and a regulated return on equity of 9.4%. The mechanism for sharing earnings above a 10.2% return on equity means that profits exceeding this threshold, beyond a certain cap, will be used to offset regulatory assets, rather than flowing directly to shareholders. This structure suggests a balanced approach, providing O&R with a defined return while aligning some upside potential with regulatory asset reduction.