Consolidated Edison, Inc. (Con Edison) — Q1 2024 Form 10-Q
Reporting period: Three months ended March 31, 2024. This combined filing reports Con Edison and its wholly owned subsidiary Consolidated Edison Company of New York, Inc. (CECONY). Unless noted, amounts are in millions of dollars.
Business context and results
Con Edison is principally a regulated utility holding company, with electric, gas and steam operations at CECONY, regulated utility operations at Orange and Rockland (O&R), and transmission investments. The Clean Energy Businesses were sold in March 2023; the prior-year comparison therefore includes their results and a substantial sale gain that did not recur.
| Con Edison consolidated | Q1 2024 | Q1 2023 |
|---|---|---|
| Operating revenue | $4,280 | $4,403 |
| Operating income | $1,011 | $1,739 |
| Net income for common stock | $720 | $1,433 |
| Diluted EPS | $2.08 | $4.05 |
| Cash from operating activities | $573 | $92 |
Revenue declined about 3% and net income about 50% year over year. The principal comparison factor was the $855 million pretax gain on the Clean Energy Businesses sale in Q1 2023. Q1 2024 included a $30 million pretax downward sale-price adjustment, or $22 million after tax. Excluding the disposed business and sale-related effects, regulated utility results improved: CECONY net income rose to $694 million from $604 million, while O&R net income rose to $37 million from $31 million.
Cash, debt and liquidity
- Con Edison ended the quarter with $169 million of cash and temporary cash investments, down from $1,189 million at year-end 2023. Cash, temporary cash investments and restricted cash together were $175 million.
- Operating cash flow was $573 million, while utility construction expenditures were $1,237 million; investing cash flow was a $1,344 million outflow. The filing attributes the year-over-year improvement in operating cash flow principally to working-capital and regulatory-balance movements.
- Long-term debt, including the current portion, had a $22,179 million carrying amount. Commercial paper outstanding was $2,299 million, at a 5.5% weighted-average rate. CECONY accounted for $1,857 million of the commercial paper.
- Con Edison and its utilities had a $2.5 billion revolving credit agreement, extended to March 2029; CECONY also had a $500 million 364-day facility expiring in March 2025. No loans were outstanding under these facilities, and the companies reported compliance with significant debt covenants.
- Common equity ratios were 49.6% for Con Edison and 48.5% for CECONY, up from 49.1% and 47.9%, respectively, at December 31, 2023.
Management commentary, outlook and material developments
- Management says Con Edison seeks to support continued dividend growth through earnings growth in regulated utilities and contracted assets. The filing provides no new numerical earnings guidance for 2024.
- Management expects electricity use to increase and gas and steam use to decrease over time as climate policies and electrification progress. Reliability investment, climate impacts and the future role of gas are identified as factors that may affect future financial condition and results.
- CECONY and O&R received $100 million in total from a New York State bill-relief program in March for one-time customer credits.
- O&R updated pending New York rate requests in April 2024: electric increase of $10.7 million effective 2025 and gas increase of $17.5 million effective 2025. Illustrative 2026–2027 increases depend on regulatory decisions and proposed rate assumptions.
- CECONY’s customer billing-system costs were $509 million at quarter-end, $88 million above the $421 million rate-plan capitalization limit. Recovery or capitalization of the excess remains subject to NYSPSC approval.
- Customer receivables remain a liquidity concern. CECONY had $1,358 million of customer balances more than 60 days past due at March 31, 2024; the filing says slower cash recovery has affected, and may continue to affect, liquidity.
- Con Edison Transmission’s Mountain Valley Pipeline (MVP) investment had a $153 million carrying value and was 7.2% owned at quarter-end. The operator subsequently targeted completion around May 31, 2024, subject to FERC authorization; Con Edison disclosed potential future impairment risk.
Risks, contingencies and unusual items
- CECONY is investigating non-conforming gas and steam main welds and cooperating with a NYSDPS investigation. It does not anticipate significant operating impact but cannot estimate any possible loss.
- Con Edison reported $1,112 million of accrued Superfund liabilities, principally for manufactured gas plant sites, and estimated potential undiscounted manufactured-gas-plant investigation and remediation liabilities of up to $3,440 million. Additional costs may be material; recovery of prudent costs through rates is permitted.
- Thousands of asbestos suits remain pending. The companies believe claimed amounts are greatly exaggerated but acknowledge a reasonable possibility of loss above accrued amounts and cannot estimate the excess.
- Two April 2024 CECONY oil-release incidents occurred after quarter-end. Management does not expect associated costs to materially adversely affect financial condition, results or liquidity; possible government monetary sanctions may exceed $0.3 million.
- Con Edison’s exposure under a post-sale battery-project reimbursement and indemnity agreement could reach approximately $172 million; no material liability was recorded at March 31, 2024.
- The companies became subject to the 15% corporate alternative minimum tax in 2024; they reported no material Q1 effect and do not expect a material impact.
- The filing reports no material change in risk factors from the 2023 Form 10-K. Forward-looking statements remain subject to regulatory, rate, infrastructure, cyber, environmental, market, financing, supply-chain and climate risks.
Important facts for investors to verify
- Progress and cash-collection trends in aged customer receivables, including allowance adequacy and resulting short-term borrowing needs.
- Outcomes of pending O&R rate cases and the NYSPSC decision on CECONY billing-system costs above the rate-plan limit.
- Capital spending, financing costs, commercial-paper balances and access to credit as utility investment continues.
- Developments in the weld investigation, Superfund and asbestos matters, and the April 2024 environmental incidents.
- MVP’s completion, FERC authorization, final project cost and any resulting change in Con Edison’s investment valuation.
- Final purchase-price adjustments for the Clean Energy Businesses sale and whether the remaining Broken Bow II project transfers by February 28, 2025.