8-KOther Events

CONSOLIDATED EDISON INC 8-K Report, Corporate Update (May 18, 2010)

Filed May 18, 2010For Securities:ED

Summary

Consolidated Edison, Inc. (ED) and its subsidiary Consolidated Edison Company of New York, Inc. (CECONY) filed an 8-K report on May 18, 2010, detailing Joint Proposals with the New York State Public Service Commission (NYSPSC) staff and other parties concerning gas and steam delivery rates. These proposals cover a three-year period from October 2010 through September 2013 and outline planned rate increases for both services. The gas delivery service proposal includes base rate increases totaling $47.1 million, $47.9 million, and $46.7 million for the rate years ending September 2011, 2012, and 2013, respectively. Key elements include a weighted average cost of capital of 7.46%, a return on common equity of 9.6% (contingent on cost reductions), and a shared earnings mechanism with customers above certain return thresholds. The steam delivery service proposal includes rate increases of $49.5 million for the first two years and $17.8 million plus a surcharge for the third year, with similar capital cost assumptions and earnings sharing provisions.

Key Highlights

  • 1CECONY entered into Joint Proposals for gas and steam delivery rates covering October 2010 through September 2013.
  • 2The gas rate proposal includes base rate increases of $47.1M (2011), $47.9M (2012), and $46.7M (2013).
  • 3The steam rate proposal includes rate increases of $49.5M (2011), $49.5M (2012), and $17.8M plus a surcharge (2013).
  • 4Both proposals assume a weighted average cost of capital of 7.46% and a 9.6% return on common equity, with conditions for cost reductions.
  • 5A significant feature is an earnings sharing mechanism where CECONY shares profits with customers above specified return on equity thresholds.
  • 6The proposals include provisions for deferring certain expense and revenue differences as regulatory assets or liabilities, including effects of weather and non-firm customer transactions.
  • 7The plans allow for continued recovery of purchased gas costs and include provisions for potential penalties and customer refunds.

Frequently Asked Questions

This 8-K filing announces that Consolidated Edison Company of New York (CECONY) has entered into Joint Proposals with the New York State Public Service Commission (NYSPSC) staff and other parties regarding new rates for its gas and steam delivery services for the period October 2010 through September 2013.

For gas delivery service, base rate increases are expected to be $47.1 million in the rate year ending September 2011, $47.9 million in 2012, and $46.7 million in 2013. For steam delivery service, rate increases are set at $49.5 million for the rate years ending September 2011 and 2012, with an additional $17.8 million plus a surcharge in 2013.

Yes, both the gas and steam Joint Proposals include an earnings sharing mechanism. CECONY will share a portion of its earnings with customers if its return on equity exceeds certain thresholds, with the percentage of sharing increasing at higher return levels.

The Joint Proposals assume a weighted average cost of capital of 7.46%, which includes a 9.6% return on common equity. This return on equity is contingent upon the company achieving specified cost reduction measures.