8-KOther EventsExhibits & Filings

CONSOLIDATED EDISON INC 8-K Report, Corporate Update (Nov 22, 2021)

Filed November 22, 2021For Securities:ED

Summary

Consolidated Edison, Inc. (ED) announced via an 8-K filing dated November 22, 2021, a significant update regarding the recovery of unbilled late payment charges and fees for its New York utility. The New York State Public Service Commission (NYSPSC) has approved a surcharge mechanism allowing Con Edison of New York to collect approximately $50.365 million ($43.213 million for electric and $7.152 million for gas) that were not billed due to the COVID-19 pandemic suspension of these charges starting in March 2020. This recovery will commence on December 1, 2021, and continue through December 31, 2022. Notably, the company has committed to using $7 million of these recovered amounts to address customer arrearages, demonstrating a commitment to customer support. The NYSPSC order also establishes a framework for recovering or crediting future fee deferrals for 2021 and 2022, subject to related pandemic cost savings, which could impact future earnings. Additionally, the filing announced a leadership transition, with Timothy Cawley set to become Chairman of the Board effective January 1, 2022, while retaining his CEO roles. John McAvoy will retire as Chairman but remain on the Board.

Key Highlights

  • 1NYSPSC approves surcharge recovery for $50.365 million in unbilled late payment charges (electric: $43.213M, gas: $7.152M) for Con Edison of New York.
  • 2Recovery of these deferred charges will occur from December 1, 2021, through December 31, 2022.
  • 3Con Edison of New York will allocate $7 million of the recovered charges to address customer arrearages.
  • 4A mechanism for future fee deferrals (2021-2022) is established, allowing for surcharges or surcredits based on offsetting savings.
  • 5Timothy Cawley appointed Chairman of the Board for Con Edison and Con Edison of New York, effective January 1, 2022, while continuing as CEO.
  • 6Current Chairman John McAvoy to retire from his Chairman role but will remain on the respective Boards.

Frequently Asked Questions

The recovery of approximately $50.365 million in unbilled late payment charges will be recognized over the period from December 2021 to December 2022. This will provide a boost to revenue and earnings during that recovery period, though the net impact on profitability will depend on the offsetting costs and the timing of recognition. The company has also committed $7 million to customer arrearages, which will reduce the net recovery.

The establishment of a surcharge or surcredit mechanism for future fee deferrals (2021 and 2022) provides a framework for the utility to recover costs associated with potential future pandemic-related suspensions of fees. This mechanism, subject to offsetting cost savings, offers greater predictability and financial flexibility for the company in managing the financial impacts of unforeseen events.

The transition of Timothy Cawley to Chairman while retaining his CEO roles suggests a continuation of the current strategic direction. Mr. Cawley's dual leadership is common in utility companies and typically aims for seamless execution of existing plans and operational strategies. John McAvoy's continued board presence provides continuity and experienced guidance.

The primary risk relates to regulatory oversight and potential future adjustments by the NYSPSC. While the order approves the current recovery, future mechanisms are subject to offsetting savings, which could reduce the amount ultimately recovered. Additionally, the effectiveness of the recovery depends on the company's ability to manage its operations and customer relations effectively throughout the recovery period.