8-KOther Events

CONSOLIDATED EDISON INC 8-K Report, Corporate Update (Aug 24, 2020)

Filed August 24, 2020For Securities:ED

Summary

Consolidated Edison Inc. (ED) has filed an 8-K report detailing the aftermath of Tropical Storm Isaias. The company's utility subsidiaries, CECONY and Orange and Rockland Utilities, Inc. (O&R), have successfully restored electric service to all affected customers. Preliminary estimates indicate incremental response and restoration costs of up to $115 million for CECONY and $35 million for O&R, primarily operating costs. These operating costs are expected to be recovered as a regulatory asset under existing electric rate plans. However, the filing also highlights significant regulatory scrutiny. Both CECONY and O&R received Notices of Apparent Violations from the New York State Department of Public Service (NYDPS) related to their emergency response plans during the storm. The NYDPS asserts potential violations of New York State Public Service Law and may initiate administrative penalty proceedings. While the amount of any potential penalty is currently unknown, the NYDPS is also investigating whether these alleged violations warrant revocation of the Utilities' operating certificates, a serious concern given past assessments of their storm response. The Utilities are implementing required corrective actions.

Key Highlights

  • 1Electric service restored to all customers affected by Tropical Storm Isaias by CECONY and O&R.
  • 2Preliminary estimated incremental response and restoration costs: up to $115 million for CECONY and $35 million for O&R.
  • 3Majority of estimated costs are operating costs, expected to be deferred and recovered as a regulatory asset.
  • 4CECONY and O&R received Notices of Apparent Violations from NYDPS regarding their emergency response plans.
  • 5NYDPS may seek administrative penalties and is investigating potential revocation of operating certificates.
  • 6The Utilities are implementing immediate corrective actions as mandated by the NYDPS.
  • 7The potential financial impact of penalties or certificate issues is currently not estimable.

Frequently Asked Questions

Consolidated Edison's utility subsidiaries, CECONY and O&R, preliminarily estimate their incremental response and restoration costs for Tropical Storm Isaias to be up to $115 million for CECONY and $35 million for O&R. These are primarily operating costs.

The incremental operating costs related to the storm are expected to be deferred as a regulatory asset and recovered under the existing electric rate plans. Capital expenditures will be handled according to different provisions within the rate plans.

Both CECONY and O&R have received Notices of Apparent Violations from the New York State Department of Public Service (NYDPS) for allegedly failing to follow their emergency response plans during Tropical Storm Isaias. The NYDPS is considering administrative penalties and is investigating whether these alleged violations could lead to the revocation of the Utilities' operating certificates.

At this time, the company is unable to estimate the amount of any potential penalties that may be imposed by the NYSPSC. The possibility of certificate revocation also represents an unquantifiable, but potentially significant, risk.