8-KOther Events

CONSOLIDATED EDISON INC 8-K Report, Corporate Update (Apr 20, 2015)

Filed April 20, 2015For Securities:ED

Summary

This 8-K filing from Consolidated Edison, Inc. (ED) reports on a Joint Proposal agreed upon by Consolidated Edison Company of New York, Inc. (CECONY) and the staff of the New York State Public Service Commission (NYSPSC), along with other parties. The key development is the proposed extension of CECONY's current electric rate plan for an additional year, through 2016. Importantly, this extension does not include any base rate increases or decreases for electric customers in 2016. Instead, the financial impact for the year will be driven by the amortization of net regulatory liabilities, contributing an additional $123 million to income. Investors will note the continuation of several existing mechanisms within the proposed 2016 rate plan. These include the retention of $90 million in annual transmission congestion revenues, a revenue decoupling mechanism to reconcile actual and authorized delivery revenues, and the continued recovery of purchased power, fuel costs, and certain other expenses like pension, postretirement benefits, and property taxes through rate reconciliations. The plan also maintains the framework for earnings sharing, where a portion of earnings exceeding a 9.6% annual threshold will be applied to reduce regulatory assets, and it retains the potential for negative revenue adjustments (penalties) of up to $400 million annually if performance targets are not met.

Key Highlights

  • 1Consolidated Edison Company of New York (CECONY) entered a Joint Proposal to extend its electric rate plan through 2016.
  • 2The 2016 electric rate plan, subject to NYSPSC approval, proposes no base rate increase or decrease for customers.
  • 3The plan includes an additional $123 million in revenue from the amortization of net regulatory liabilities for 2016.
  • 4Continuation of the retention of $90 million in annual transmission congestion revenues is proposed.
  • 5The revenue decoupling mechanism, reconciling actual to authorized electric delivery revenues, will continue.
  • 6Current rate recovery for purchased power and fuel costs will be maintained.
  • 7Potential penalties up to $400 million annually for not meeting performance targets remain in place.

Frequently Asked Questions

The Joint Proposal, agreed upon by CECONY and the NYSPSC staff, aims to extend CECONY's current electric rate plan for an additional year through 2016. Crucially, it proposes no change in electric base rates for customers in 2016.

While there's no base rate increase, CECONY expects to recognize an additional $123 million in revenue through the amortization of net regulatory liabilities. Other revenue sources like transmission congestion revenues ($90 million) will continue to be retained, and revenue decoupling mechanisms will ensure reconciliation of actual to authorized revenues.

Yes, the plan continues to subject annual revenues of $249 million to potential refund following NYSPSC staff review of certain costs. Additionally, CECONY faces potential negative revenue adjustments (penalties) of up to $400 million annually if specific performance targets are not met.

For 2016, the average rate base is projected to be $18,282 million. The weighted average cost of capital (after-tax) is set at 6.91%, with an authorized return on common equity of 9.0%.