Business context and reporting period
Consolidated Edison, Inc. (Con Edison) filed this unaudited combined Form 10-Q with its wholly owned subsidiary, Consolidated Edison Company of New York, Inc. (CECONY), for the quarter and nine months ended September 30, 2023. Con Edison’s core operations are regulated electric, gas and steam utilities, plus electric transmission investments. It completed the sale of substantially all of its Clean Energy Businesses on March 1, 2023.
Financial performance and position
Amounts are in millions of dollars except per-share data.
| Metric | Q3 2023 | Q3 2022 | Nine months 2023 | Nine months 2022 |
|---|---|---|---|---|
| Operating revenues | $3,872 | $4,165 | $11,219 | $11,639 |
| Operating income | $722 | $889 | $2,745 | $2,074 |
| Net income for common stock | $526 | $613 | $2,185 | $1,470 |
| Diluted EPS | $1.52 | $1.72 | $6.24 | $4.13 |
| Operating cash flow | Not presented separately | Not presented separately | $1,181 | $2,618 |
- Q3 revenue fell about 7% and diluted EPS fell about 12%. Nine-month revenue declined about 4%, while reported diluted EPS rose about 51%, substantially reflecting the Clean Energy Businesses sale gain.
- Nine-month operating income includes a preliminary $866 million pretax sale gain. The after-tax gain was $784 million; the final purchase price remains subject to adjustment. Excluding the sale gain, nine-month operating income was lower than in 2022.
- Nine-month net cash from investing activities was $352 million, including $3,927 million of net sale proceeds. Utility construction expenditures were $3,097 million. Financing cash outflow was $2,517 million, including a $1,000 million share repurchase and $829 million of dividends.
- At September 30, cash and temporary cash investments were $539 million. Long-term debt, including amounts due within one year, was $21,300 million; commercial paper outstanding was $1,880 million at a 5.5% weighted-average rate. The $2,500 million revolving credit agreement and CECONY’s $500 million facility had no loans outstanding.
- Con Edison’s common equity ratio was 50.5%, versus 50.9% at year-end 2022. Capital expenditure and construction drove net utility plant to $48,521 million from $46,752 million.
Material changes versus the prior comparable period
- The sale of the Clean Energy Businesses materially changed the business mix and makes year-over-year comparisons less directly comparable. The prior-year quarter included $325 million of Clean Energy Businesses revenue and $97 million of net income for common stock; the 2023 quarter had none.
- Q3 operating income declined $167 million. For the nine months, Con Edison reported the $866 million sale gain, while its regulated utility results were mixed: CECONY net income rose to $1,308 million from $1,138 million, and O&R net income rose to $75 million from $72 million.
- Operating cash flow decreased $1,437 million year over year, which management attributed principally to lower accounts payable and regulatory-related balances, higher prepayments, and other working-capital movements.
- Con Edison repurchased $1,000 million of common shares in the first half of 2023. CECONY issued $500 million of 5.20% debentures due 2033.
Outlook, management commentary, risks and unusual items
- The filing provides capital plans rather than a clear companywide earnings or EPS guidance figure. Estimated capital requirements are $5,109 million for 2024 and $4,962 million for 2025. In October 2023, planned utility long-term debt issuance was increased to as much as $2,100 million, citing higher-than-anticipated receivables and the timing of rate-plan approval.
- CECONY’s electric and gas rate plans for 2023–2025 were approved in July 2023, with a 9.25% authorized return on common equity and a 48% common-equity ratio. A proposed three-year steam rate plan was filed jointly in September and remained subject to NYSPSC approval.
- Management cited aged customer receivables, inflation and higher interest rates as pressures on liquidity and funding costs. CECONY had $2,228 million of customer receivables, including $1,041 million outstanding more than 60 days. Rate-plan mechanisms allow some recovery or reconciliation, but can affect cash-flow timing.
- Major planned and proposed projects include the approved Brooklyn Clean Energy Hub, estimated at $810 million, and the proposed Reliable Clean City–Idlewild project, estimated at $1,200 million and subject to regulatory approval. Propel NY Energy is a selected transmission project with an estimated $2,200 million cost for New York Transco’s share, excluding certain other costs; Con Edison Transmission owns 41.7% of that share.
- Risks include extensive utility regulation, reliability and severe-weather exposure, cyber threats, climate-transition uncertainty, access to capital markets, commodity and interest-rate movements, and pension and postretirement obligations. The Mountain Valley Pipeline investment was carried at $111 million; further impairment is possible.
- Contingencies include $996 million accrued for Superfund and other environmental costs at Con Edison, with additional remediation exposure potentially material but not presently estimable; asbestos claims also carry possible exposure above accrued amounts that the companies cannot estimate. A regulatory audit concerns historical income-tax calculations; the related CECONY regulatory asset was $1,116 million and no liability had been accrued. The filing also reports up to approximately $172 million of potential exposure under a post-sale battery-project indemnity, with no liability recorded at quarter-end.
- Management concluded disclosure controls were effective and reported no material change in internal control over financial reporting during the quarter. The filing states there were no material changes to previously disclosed risk factors.
Important facts for investors to verify
- How the final sale-price adjustments and retained Clean Energy Businesses-related obligations affect proceeds, taxes and reported earnings.
- Whether receivable aging, collections and customer arrears improve, and how much recovery is ultimately available through regulatory mechanisms.
- Regulatory approval, cost recovery and execution timing for the steam plan, Idlewild and major reliability and transmission projects.
- Actual capital spending, planned debt issuance, commercial-paper costs and liquidity needs as investment and financing requirements evolve.
- Developments in the tax-accounting audit, environmental and asbestos claims, battery-project indemnity and Mountain Valley Pipeline investment.