Business Context and Reporting Period
This Form 8-K, dated November 5, 2025, is a combined report by Consolidated Edison, Inc. (Con Edison) and its wholly-owned subsidiary, Consolidated Edison Company of New York, Inc. (CECONY). The filing discloses a Joint Proposal entered into with the New York State Department of Public Service (NYSDPS) regarding electric and gas rate plans for the three-year period from January 2026 through December 2028. The proposal is subject to approval by the New York State Public Service Commission (NYSPSC).
Key Financial Metrics and Rate Plan Details
The filing outlines projected financial metrics for the proposed rate plan, including base rate changes, capital expenditures, and cost of capital assumptions.
Electric Service (2026-2028)
- Base Rate Changes: $222 million (Yr 1), $473 million (Yr 2), $329 million (Yr 3). Implemented as a shaped bill impact of 2.80% annually.
- Capital Expenditures: $4,550 million (Yr 1), $4,474 million (Yr 2), $4,712 million (Yr 3).
- Amortizations to Income: $88 million (Yr 1), $81 million (Yr 2), $78 million (Yr 3).
- Rate Base Targets: Average rate base targets range from $32,935 million (Yr 1) to $39,174 million (Yr 3).
- Cost of Capital: Weighted average cost of capital (after-tax) ranges from 6.98% to 7.10%. Authorized return on common equity is 9.40%.
Gas Service (2026-2028)
- Base Rate Changes: $(46) million (Yr 1), $170 million (Yr 2), $93 million (Yr 3). Implemented as a shaped bill impact of 2.01% annually.
- Capital Expenditures: $1,093 million (Yr 1), $1,057 million (Yr 2), $1,065 million (Yr 3).
- Amortizations to Income: $90 million (Yr 1), $88 million (Yr 2), $86 million (Yr 3).
- Rate Base Targets: Average rate base targets range from $11,485 million (Yr 1) to $12,615 million (Yr 3).
- Cost of Capital: Weighted average cost of capital (after-tax) ranges from 6.98% to 7.10%. Authorized return on common equity is 9.40%.
Performance and Risk Mechanisms
- Negative Revenue Adjustments: Potential charges for failing performance targets total up to $745 million (Electric Yr 3) and $149 million (Gas Yr 3).
- Earnings Sharing: Most earnings above a 9.90% threshold will be applied to reduce regulatory assets for environmental remediation.
- Common Equity Ratio: Set at 48% for both electric and gas.
Material Changes and Regulatory Reconciliations
The proposal includes mechanisms to reconcile actual expenses versus those reflected in rates for various items, including:
- Uncollectibles and Late Payments: Variances are deferred as regulatory assets or liabilities with specific thresholds for recovery or refund.
- Property Taxes: Full variation in actual expenses versus projected levels will be recovered or credited via surcharge/surcredit.
- Municipal Infrastructure Support: 80% of expenses above rate levels may be deferred for recovery, subject to a 15% cap.
- Income Tax Accounting: The NYSDPS is conducting a focused operations audit. Any NYSPSC-ordered adjustments will be refunded to or collected from customers.
Guidance, Outlook, and Risks
Outlook: The Joint Proposal aims to provide a consistent total bill impact over the three-year period while funding significant capital expenditures for infrastructure. New rates are effective January 1, 2026, pending NYSPSC approval.
Risks and Contingencies:
- Regulatory Approval: The proposal is not final and requires NYSPSC approval.
- Performance Penalties: Significant revenue reductions are possible if service, reliability, and safety targets are not met.
- Audit Outcomes: Ongoing audits of income tax accounting and gas main welds could result in adjustments to revenue requirements.
- Forward-Looking Statements: Actual results may differ materially due to factors identified in other SEC filings.
Investor Verification Checklist
- Confirm the final approval status of the Joint Proposal by the NYSPSC.
- Monitor the outcome of the NYSDPS focused operations audit regarding income tax accounting.
- Track CECONY's performance against service, reliability, and safety targets to assess exposure to negative revenue adjustments.
- Verify the actual capital expenditure deployment against the proposed $4.5B+ (Electric) and $1.0B+ (Gas) annual targets.
- Review future filings for updates on the gas main weld review and potential Offsetting Credit Adjustments (OCAs).