Consolidated Edison, Inc. — FY2022 Form 10-K
Reporting period: Year ended December 31, 2022. This combined filing covers Con Edison and its wholly owned subsidiary Consolidated Edison Company of New York (CECONY); figures below refer to Con Edison unless noted. The business is led by regulated electric, gas and steam utilities, alongside renewable-energy businesses classified as held for sale and transmission investments.
Financial performance and condition
| Metric | FY2022 | FY2021 |
|---|---|---|
| Operating revenue | $15.670 billion | $13.676 billion |
| Operating income | $2.624 billion | $2.826 billion |
| Operating margin | 16.7% | 20.7% |
| Net income for common stock / basic EPS | $1.660 billion / $4.68 | $1.346 billion / $3.86 |
| Adjusted earnings / adjusted EPS (non-GAAP) | $1.620 billion / $4.57 | $1.528 billion / $4.39 |
| Cash flow from operations | $3.935 billion | $2.733 billion |
| Cash flow used in investing | $4.565 billion | $3.484 billion |
| Cash, excluding cash classified with businesses held for sale | $1.282 billion | $1.146 billion |
| Long-term debt, excluding debt classified as held for sale | $20.147 billion | $22.604 billion |
Revenue rose 14.6%; higher utility rates and energy costs contributed, while much of purchased electricity, gas and fuel cost is passed through to customers rather than earned as margin. Operating income declined 7.1%, and operating margin compressed. Net income for common stock increased 23.3%, reflecting, among other items, improved Clean Energy Businesses results and the absence of prior-year transmission-investment impairments. Adjusted earnings, which exclude specified items, increased 6.0%.
Operating cash flow increased by $1.202 billion, mainly reflecting higher accounts payable, lower pension and retiree-benefit contributions, and lower prepayments and other current assets. Utility construction expenditures were $3.824 billion; total reported investing cash outflow also included other investment and removal costs. Con Edison issued $700 million of CECONY debt and $100 million of O&R debt. Year-end commercial paper outstanding was $2.640 billion, including $2.300 billion at CECONY; Con Edison also had a $400 million term loan outstanding. The $2.2 billion revolving credit facility was undrawn at year-end. Con Edison’s common-equity ratio was 50.9%, versus 47.4% in 2021. Its reported current balances include assets and liabilities of the businesses held for sale, so headline current ratios are not directly comparable.
Material changes and business developments
- CECONY net income rose to $1.390 billion from $1.344 billion; O&R net income rose to $88 million from $75 million. CECONY’s steam segment moved from $12 million operating income to a $21 million operating loss, as higher fuel and purchased-power costs outpaced revenue growth.
- Clean Energy Businesses net income for common stock increased to $382 million from $266 million, including substantial mark-to-market and tax-equity accounting effects. Con Edison Transmission reported a $1 million loss, compared with a $316 million loss in 2021, when it recorded impairments related to Stagecoach, Mountain Valley Pipeline and Honeoye.
- Con Edison agreed to sell the Clean Energy Businesses to RWE Renewables Americas for $6.8 billion, subject to closing adjustments. The businesses were classified as held for sale at year-end; the sale was expected to close around the end of Q1 2023, subject to conditions. The transaction did not qualify for discontinued-operations accounting.
- The 2022 GAAP result includes unusual sale-related tax and transaction effects. Management’s adjusted-earnings reconciliation excludes the net impact of the anticipated sale, HLBV accounting and net mark-to-market effects, among other items.
Outlook, risks and contingencies
- Capital plans: Estimated utility capital investment is $4.675 billion in 2023, $4.840 billion in 2024 and $4.957 billion in 2025. Subject to closing the Clean Energy Businesses sale, Con Edison intends to repay $1.250 billion of parent debt in 2023, invest in the utilities and repurchase up to $1.000 billion of shares. It expects to avoid common-equity issuance in 2023–2024 and may issue up to $900 million in 2025. Planned utility debt issuance is up to $1.400 billion in 2023 and approximately $2.600 billion in aggregate during 2024–2025. These are plans, not assured outcomes.
- Rates: A February 2023 joint proposal for CECONY electric and gas rates for 2023–2025 is subject to NYSPSC approval. CECONY also requested a $141 million steam rate increase effective November 2023; that request remains subject to regulatory review.
- Regulatory and customer matters: A NYSPSC audit is investigating an inadvertent understatement in utility income-tax expense used for ratemaking. The potential adjustment may be material, but the companies could not estimate a loss range and had not accrued a liability. Customer arrears remain significant: CECONY’s net customer receivables increased to $2.099 billion, and balances more than 60 days past due were $1.308 billion. A January 2023 arrears-relief order identified eligible balances of about $389 million for CECONY and $3 million for O&R; recovery mechanisms extend over ten years for CECONY and one year for O&R.
- Environmental exposures: Recorded Superfund and environmental liabilities were $997 million for Con Edison. The company estimated undiscounted potential investigation and cleanup costs for manufactured-gas sites, including Astoria, could reach $3.140 billion; actual costs may differ materially. CECONY could not estimate its exposure for Gowanus Canal or Newtown Creek remediation.
- Other principal risks: Extensive regulation and rate-case outcomes; severe weather, climate adaptation and service reliability; cyber incidents; supply-chain disruption and inflation; higher interest rates and capital-market access; commodity-price-driven collection and liquidity pressures; pension assumptions; and legal and permitting uncertainty for Mountain Valley Pipeline. The pipeline investment’s carrying value was $111 million, with potential further impairment if project challenges worsen.
- Dividend: Con Edison paid $3.16 per share in 2022. It declared a quarterly dividend of $0.81 in January 2023; future dividends remain subject to board approval and subsidiary distributions.
Most important facts for investors to verify
- Whether and when the Clean Energy Businesses sale closed, final net proceeds after purchase-price adjustments, and subsequent use of proceeds.
- NYSPSC disposition of the CECONY electric and gas joint proposal, the steam rate request, and the income-tax accounting audit, including any customer refunds or recovery.
- Utility capital spending, financing needs, debt issuance and planned share repurchases against the stated 2023–2025 plans.
- Trends in customer arrears, uncollectible-account reserves and cash collections, including implementation and recovery of COVID-19 arrears credits.
- Updates to environmental remediation estimates and the permitting, schedule, costs and impairment risk for Mountain Valley Pipeline.
- Reported versus adjusted earnings: adjusted earnings are non-GAAP and exclude items management does not view as indicative of ongoing performance.