8-KOther Events

CONSOLIDATED EDISON INC 8-K Report, Corporate Update (Jun 16, 2008)

Filed June 16, 2008For Securities:ED

Summary

Consolidated Edison, Inc. (ED) announced a significant development regarding its steam utility operations through a Form 8-K filing on June 16, 2008. The company, through its subsidiary Consolidated Edison Company of New York, Inc. (Con Edison of New York), entered into a Joint Proposal with the New York State Public Service Commission (PSC) staff and other parties concerning steam rates. This proposal, which is subject to PSC approval, outlines rate adjustments and operational terms for the period of October 1, 2008, through September 30, 2010. The key takeaway for investors is that Con Edison of New York has agreed to steam rate increases totaling $43.7 million per year for the next two years. The Joint Proposal also details specific mechanisms for cost recovery, earnings sharing, and the deferral of certain expenses as regulatory assets or liabilities, aiming to provide greater certainty in revenue and expense management. The PSC is expected to review this proposal in September 2008.

Key Highlights

  • 1Con Edison of New York has entered into a Joint Proposal with the PSC staff and other parties regarding steam rates.
  • 2The Joint Proposal is subject to approval by the New York State Public Service Commission (PSC).
  • 3The agreement covers steam rates for the period October 1, 2008, through September 30, 2010.
  • 4Steam rate increases of $43.7 million are planned for each of the two years, effective October 1, 2008, and October 1, 2009.
  • 5The proposal sets an annual return on common equity at 9.3 percent.
  • 6A key feature is an earnings sharing mechanism: 50% of actual earnings above a 10.1% return on equity will be shared with customers.
  • 7The proposal includes provisions for deferring specific costs (e.g., pension, environmental, property taxes) as regulatory assets or liabilities, offering a degree of financial flexibility and cost recovery.

Frequently Asked Questions

This 8-K filing announces that Consolidated Edison Company of New York, Inc. has reached a Joint Proposal with the New York State Public Service Commission (PSC) staff and other parties regarding its steam service rates. This proposal outlines the agreed-upon rate increases and other financial and operational terms for a two-year period.

The Joint Proposal calls for steam rate increases of $43.7 million per year, effective October 1, 2008, and again on October 1, 2009. This is a reduction from the company's initial request for a $127 million increase.

The Joint Proposal establishes an annual return on common equity of 9.3 percent. If the company earns above a 10.1 percent return on equity, half of the excess earnings will be deferred for the benefit of customers, and the other half will be retained by the company, with a portion of the company's share subject to offset for under-collected property taxes.

Yes, the Joint Proposal allows for the deferral of differences between actual costs and amounts reflected in rates for various items, including pension and post-retirement benefits, environmental remediation, property taxes, and certain capital expenditures. This mechanism aims to manage the impact of fluctuating costs on earnings.