8-KOther Events

CONSOLIDATED EDISON INC 8-K Report, Corporate Update (Sep 20, 2016)

Filed September 20, 2016For Securities:ED

Summary

Consolidated Edison Company of New York, Inc. (CECONY), a subsidiary of Consolidated Edison Inc. (ED), has entered into a Joint Proposal with the New York State Public Service Commission (NYSPSC) staff and other parties regarding its electric and gas rate plans for the three-year period from January 2017 through December 2019. This proposal, which is subject to NYSPSC approval, outlines significant changes in base rates, regulatory asset amortization, and various incentive mechanisms for both electric and gas operations. For the electric segment, the proposal includes annual base rate increases totaling $195 million in Year 1, and $155 million in Years 2 and 3. The gas segment, conversely, anticipates a slight base rate decrease of $5 million in Year 1, followed by increases of $92 million and $90 million in Years 2 and 3, respectively. Key aspects across both segments involve mechanisms for revenue decoupling, recovery of energy costs, and extensive cost reconciliations for items such as pensions, property taxes, and environmental remediation. The proposal also details potential earnings adjustments for meeting performance targets, particularly for energy efficiency in electric operations and service/safety in gas operations, as well as significant penalties for failing to meet performance metrics.

Key Highlights

  • 1Joint Proposal filed for CECONY's electric and gas rate plans for 2017-2019, pending NYSPSC approval.
  • 2Electric segment expects net base rate increases of $195M (Yr 1), $155M (Yr 2), and $155M (Yr 3).
  • 3Gas segment expects net base rate changes of $(5)M (Yr 1), $92M (Yr 2), and $90M (Yr 3).
  • 4Both plans continue revenue decoupling mechanisms to reconcile actual vs. authorized delivery revenues.
  • 5Incentives for energy efficiency (electric) and performance targets (gas) are included, with potential earnings adjustments.
  • 6Significant potential penalties are outlined for failing to meet performance targets in service, reliability, safety, and other areas.
  • 7Rate base for electric is projected to grow from $18.9B (Yr 1) to $20.3B (Yr 3), and for gas from $4.8B (Yr 1) to $6.0B (Yr 3).

Frequently Asked Questions

This 8-K filing announces that Consolidated Edison Company of New York, Inc. (CECONY) has entered into a Joint Proposal with the NYSPSC staff and other parties for its electric and gas rate plans covering the period from January 2017 to December 2019. This proposal outlines the agreed-upon rate changes and operating conditions, subject to final approval by the NYSPSC.

For the electric business, the proposal indicates net base rate increases of $195 million in the first year, followed by $155 million in the second and third years. For the gas business, there's a projected net base rate decrease of $5 million in the first year, followed by increases of $92 million and $90 million in the second and third years, respectively. These figures are net of certain expiring credits.

Yes, the Joint Proposal includes provisions for performance-based incentives and penalties. For the electric segment, there are incentives for energy efficiency and other performance targets, potentially up to $28 million, $47 million, and $64 million in Years 1, 2, and 3, respectively. For the gas segment, incentives are tied to meeting targets for gas leak backlog and service terminations, valued at $7 million, $8 million, and $8 million for the three years. Conversely, significant penalties are also outlined for both segments if performance targets related to service, reliability, and safety are not met.

The proposal details the amortization of net regulatory assets and liabilities to income for both electric and gas operations over the three-year period. Additionally, cost reconciliations are continued for various expenses such as pension, property taxes, and environmental remediation, allowing for adjustments to rates based on actual costs versus amounts reflected in rates. There are also specific provisions for the recovery or refund of costs related to municipal infrastructure support and potential impacts from new laws and tax liabilities.