Consolidated Edison, Inc. — 2023 Form 10-K Summary
Period: Fiscal year ended December 31, 2023. This combined filing covers Con Edison, Inc. and its wholly owned utility subsidiary, Consolidated Edison Company of New York, Inc. (CECONY). Con Edison’s principal businesses are regulated electric, gas and steam utilities, plus electric transmission investments. The Clean Energy Businesses were sold on March 1, 2023; accordingly, 2023 includes their results only through February.
Financial performance and position
| Metric | 2023 | 2022 | Change or context |
|---|---|---|---|
| Operating revenue | $14.663 billion | $15.670 billion | Down 6.4%, mainly reflecting the Clean Energy Businesses sale and lower non-utility revenue. |
| Operating income | $3.196 billion | $2.624 billion | Includes an $865 million pre-tax gain on the sale; reported operating margin was approximately 21.8%, versus 16.7%. |
| Net income for common stock / basic EPS | $2.519 billion / $7.25 | $1.660 billion / $4.68 | 2023 includes the sale gain. The filing reports adjusted earnings, a non-GAAP measure, of $1.762 billion and $5.07 per share, versus $1.620 billion and $4.57. |
| Net cash from operating activities | $2.156 billion | $3.935 billion | Down $1.779 billion, primarily reflecting working-capital and regulatory balance changes. |
| Cash used in investing activities | $1.003 billion | $4.565 billion | Includes $3.927 billion of net sale proceeds; utility construction expenditures were $4.353 billion. |
| Cash used in financing activities | $1.488 billion | Cash provided of $1.014 billion | Includes $1.0 billion of share repurchases and $1.096 billion of dividends. |
| Cash and temporary cash investments | $1.189 billion | $1.282 billion | At December 31; Con Edison also reported $2.288 billion of commercial paper outstanding. |
| Long-term debt | $21.927 billion | $20.147 billion | At December 31; excludes commercial paper and debt classified as held for sale. |
Utilities accounted for 99% of 2023 operating revenue and 68% of net income for common stock. CECONY reported revenue of $13.476 billion and net income of $1.606 billion, compared with $13.268 billion and $1.390 billion in 2022. CECONY’s operating income increased to $2.177 billion from $2.135 billion. Its 2023 operating cash flow was $2.285 billion, while utility construction expenditures were $4.059 billion.
Con Edison’s common equity ratio was 49.1% at year-end, compared with 50.9% in 2022. Its senior unsecured debt ratings were Baa1 from Moody’s and BBB+ from S&P and Fitch. The company paid $3.24 per share in 2023 dividends and declared a quarterly dividend of $0.83 in January 2024.
Material changes versus 2022
- The sale of the Clean Energy Businesses produced $3.927 billion in net cash proceeds and a preliminary $865 million pre-tax gain ($767 million after tax). The final purchase price remains subject to customary adjustments. The sale materially changes year-over-year revenue and segment comparability.
- Adjusted earnings increased to $1.762 billion from $1.620 billion. CECONY’s earnings benefited from electric and gas rate increases; higher interest expense and operating costs partly offset the improvement.
- Operating cash flow fell substantially, while utility construction expenditures rose to $4.353 billion from $3.824 billion. Con Edison also repurchased $1.0 billion of shares.
- CECONY’s electric and gas rate plans for 2023–2025 took effect in January 2023; its new steam rate plan began in November 2023.
Outlook, risks and contingencies
- Capital and financing: Planned utility capital investment is approximately $4.8 billion in 2024, increasing to about $5.9 billion annually in 2026–2028. Management expects to fund 2024–2028 needs with internal cash, long-term debt and equity. It anticipates up to $3.25 billion of utility long-term debt issuance in 2024; planned common equity issuance is approximately $1.3 billion in 2025 and up to $2.8 billion in aggregate during 2026–2028. These estimates depend on regulatory approvals and other assumptions.
- Demand and energy transition: CECONY forecasts average annual electric peak-demand growth of about 0.7% over five years; O&R forecasts 2.0%. Gas and steam peak demand are forecast to decline. Clean-energy mandates, electrification, customer affordability and the future role of gas could affect investment needs and utility earnings.
- Reliability and resilience: New York City faces an identified electric reliability need beginning in summer 2025 amid demand growth and peaker-plant restrictions. The NYISO arranged temporary retention of 672 MW of affected generation through May 2027. Proposed climate-resilience investments for 2025–2029—$903 million for CECONY and $411 million for O&R—are subject to approval.
- Customer receivables and liquidity: At year-end, aged receivables over 60 days were $1.225 billion at CECONY and $21 million at O&R. Management says slower cash collection has affected liquidity, although rate-plan recovery mechanisms apply to specified balances.
- Regulatory and environmental exposure: A NYSPSC audit is investigating an inadvertent understatement of federal income tax expense for ratemaking purposes; the Utilities cannot estimate potential loss, if any, and have not accrued a liability. CECONY’s estimated undiscounted potential MGP and Astoria cleanup liability ranges are substantial, and exposure at the Gowanus Canal and Newtown Creek cannot currently be estimated. Asbestos claims also carry possible exposure above accrued amounts that management cannot quantify.
- Other uncertainties: Risks include severe weather and climate impacts, cyberattacks, inflation and supply-chain constraints, higher financing costs, regulatory penalties, and possible customer-billing-system implementation issues. The filing says no cybersecurity incident to date had a material impact. Con Edison also remains responsible for potential costs under an agreement related to a sold battery-storage project, with exposure of up to approximately $172 million; no material liability was recorded at year-end.
- Unusual accounting and audit matters: The sale gain is preliminary. The external auditor identified accounting for regulatory matters as a critical audit matter, citing judgment over recoverability. The auditor gave unqualified opinions on the financial statements and internal controls; management also reported effective internal control over financial reporting.
Most important facts for investors to verify
- Separate recurring utility earnings from the $865 million pre-tax sale gain; review the non-GAAP reconciliation and the sale’s final purchase-price adjustments.
- Track operating cash flow, aged receivables, utility capital spending, debt issuance and commercial-paper balances against the financing plan.
- Monitor the NYSPSC tax-accounting audit, the billing-system capitalization petition and approval of planned rate, reliability and resilience investments.
- Assess the size, timing and customer recoverability of environmental liabilities, including MGP, Astoria, Gowanus Creek, Newtown Creek and asbestos matters.
- Review execution and cost risks for major transmission and reliability projects, and the remaining transfer and guarantee obligations associated with disposed clean-energy assets.