2004 REPORT TO THE FINANCIAL COMMUNITY AND 10Q | |
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Consolidated Edison, Inc., Reports 2004
Third Quarter Earnings
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| Eugene R. McGrath Chairman, President, and Chief Executive Officer |
“Con Edison's electric, gas and steam systems continue to perform well as New York's energy needs grow,” said Eugene R. McGrath, chairman and chief executive officer. “Continued regulatory support for the upgrade and expansion of critical infrastructure will foster new economic growth,” he said.
For the first nine months of 2004, the company's earnings from ongoing operations were $502 million or $2.15 a share compared with $478 million or $2.18 a share for the 2003 period. Including the one-time non-cash charges noted above, net income for common stock for the first nine months of 2004 was $487 million or $2.08 a share, compared with earnings of $478 million or $2.18 a share for the 2003 period.
The company's earnings for the third quarter of 2004 were negatively affected by the lower-than-normal number of hot days during the summer months, which, for the nine month period, offset the benefit of the unusually warm spring. The lower third quarter and nine month results also reflect a reduction in net credits for pensions and other post-retirement benefits. In addition, higher depreciation and property taxes in 2004 reflect large continuing investments in energy delivery infrastructure.
| Electric Rate Proceeding Update In October 2004, Con Edison of New York reduced its electric rate increase request from $550 million to $472 million, primarily to reflect lower projected property taxes and insurance costs and an increase in customer credits arising from transmission revenues resulting from auctions conducted by the New York Independent System Operator. On November 3, 2004, the administrative law judge (ALJ) overseeing the electric rate proceeding modified the rate case schedule in order to allow the parties the opportunity to continue to work toward an agreement. A joint proposal is expected to be filed with the ALJ on December 1. You can view updated information at our investor Web site (investor.conedison.com). |
The performance of the unregulated subsidiaries and parent for the first nine months of 2004 compared with the 2003 period reflects lower gross margins on electric sales and higher interest expense, offset in part by higher mark-to-market gains on forward transactions.
For the full year 2004, the company reaffirms its previous forecast of earnings in the range of $2.50 to $2.70 per share.
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Con Edison of New York Takes Electric Reliability Into the Future
Con Edison's Cable and Splice Center for Excellence is taking electric reliability into the future. The center, which opened in 2003, is providing Con Edison with tools and technologies that help maintain system reliability, reduce costs, improve safety, and assist others in the utility industry to do the same.
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| An engineer in the Cable and Splice Center prepares high-voltage cable terminations for electrical testing. |
Con Edison's electric distribution system, recognized as the most reliable in the United States, serves as a practical testing ground for the technologies and training programs developed at the center.
“When we established the Cable and Splice Center, the goal was to develop a comprehensive understanding of cable performance,” said Kevin Burke, Con Edison of New York's president and chief operating officer. “Since it opened in May 2003, Con Edison's technical expertise has broadened, leading to improved safety, reliability, and efficiency in the delivery of electricity to our customers.”
The Cable and Splice Center features high-voltage, diagnostic, and forensics laboratories that provide engineers with the tools to perform failure analysis and electrical testing on new and field-aged distribution cable. The center also maintains a failure analysis database that can provide information on nearly every primary feeder cable and splice failure within the past 25 years. This data, along with information collected on the 128,000 miles of cable and wire currently in service, form the core of a database that is the only one of its kind in the United States. An interdisciplinary team of engineers and technicians working at the Cable and Splice Center and in our Distribution Engineering department extract information from the database and analyze it for early evidence of system problems. These preemptive studies allow the company to take corrective action before problems develop.
Practical, Real-World Research
A real-world example of the center's work is the research it is now conducting related to paper-insulated lead-covered (PILC) cable. Since the early part of the 20th century, this type of cable has been used in many parts of the United States; some installed cable is approaching 100 years of service. When originally installed, PILC cable was the latest technology. Now other types of cable are available that provide the same reliability at lower cost and are more environmentally friendly.
Since PILC cable accounts for approximately 32 percent of Con Edison's primary distribution network, the Cable and Splice Center is now conducting two types of PILC cable-related research. The first type will help Con Edison, as well as others in the utility industry, to estimate accurately the remaining life of currently installed cable. The second focuses on the development of efficient and economical plans and schedules for replacing PILC cable.
This year the center also helped the company's overhead operations by evaluating several new battery-powered crimping tools. To be approved for use on the Con Edison system, this type of tool must meet or exceed the requirements of the American National Standards Institute for crimping electrical connectors. Scientists and technicians at the center developed a test that simulated the most severe operating conditions the connectors would have to withstand. As a result of this effort, several brands of new crimpers were certified that meet the exacting standards for safety and reliability that Con Edison requires.
Collaborations and Accomplishments
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| PILC cable insulation samples ready for moisture testing. Data from such tests will be used to predict the “life span” of similar cables. |
In June, representatives from 40 North American utilities attended an underground issues workshop sponsored by Con Edison that included a tour of the Cable and Splice Center. Following the workshop, a number of the companies, including several large, urban utilities, expressed an interest in joining the ECTN. The center has also established a collaborative research effort, including student internships, with the Massachusetts Institute of Technology, that is focused on materials analysis and the development of non-intrusive predictive diagnostic tools.
“We are now inviting other companies, academic institutions, and experts to become familiar with the center's important work and to avail themselves of its resources,” said William Fairechio, the center's director. “By promoting the relationship with EPRI and the collaborative nature of the ECTN we expect to expand the number of companies and institutions involved in the center.”
With the participation of other members of the ECTN, the center is also constructing an industry-wide cable and splice database for an effective failure prediction model. This database is an outgrowth of Con Edison's extensive database. Incorporating other utilities' experiences into the database will enable earlier and more precise analysis and action, within the company and among the participating utilities.
“The collaborative approach to research used at the Cable Center is important to us at Con Edison and to the whole electric utility industry,” said Burke. “The center is already working on achieving other critical goals, including development of laboratory expertise in cable system forensics testing and further enhancements of training for splicers, engineers, and scientists.”
“The programmatic analyses and developments at the Cable Center have enormous practical application for Con Edison today, and even greater potential for tomorrow. They will help our operations to be safer, more reliable, and more cost effective,” said Burke.
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Stock Information
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Financial Highlights
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Financial Quarterly Earnings History
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| Consolidated Edison,
Inc. 4 Irving Place New York, NY 10003 1-212-460-4600 http://www.conedison.com/ | ||||
| Eugene R. McGrath Chairman, President and Chief Executive Officer |
Joan S. Freilich Executive Vice President and Chief Financial Officer |
Robert N. Hoglund Senior Vice President Finance |
Edward J. Rasmussen Vice President, Controller and Chief Accounting Officer |
Joseph P. Oates Vice President and Treasurer |
| Hyman Schoenblum Vice President, Corporate Planning |
John E. Perkins Director, Financial Administration 1-212-460-3807 |
Jan C. Childress Director, Investor Relations 1-212-460-6611 childressj@coned.com |
Krista L. Price Manager, Investor Relations 1-212-460-6131 Toll-free: 1-888-811-4992 pricekr@coned.com | |
| Regulated Utilities | |
| Consolidated Edison Company of New York, Inc. 4 Irving Place New York, NY 10003 1-212-460-4600 http://www.coned.com/ |
Orange and Rockland Utilities, Inc. One Blue Hill Plaza Pearl River, NY 10965 1-845-352-6000 http://www.oru.com/ |
| Energy and Communications Group | |||
| Consolidated Edison Solutions, Inc. 701 Westchester Avenue, Suite 300 East White Plains, NY 10604 1-914-286-7000 http://www.conedsolutions.com/ |
Consolidated Edison Development, Inc. 111 Broadway, 16th Floor New York, NY 10006 1-212-393-9242 http://www.coneddev.com/ |
Consolidated Edison Energy, Inc. 701 Westchester Avenue, Suite 201 West White Plains, NY 10604 1-914-993-2189 http://www.conedenergy.com/ |
Con Edison Communications, LLC 55 Broad Street, 22nd floor New York, NY 10004 1-212-324-5000 http://www.conedcom.com/ |
Consolidated Edison, Inc. [NYSE: ED] is one of the nation's largest investor-owned energy companies, with $10 billion in annual revenues and $22 billion in assets. The company provides a wide range of energy-related products and services to its customers through its six subsidiaries: Consolidated Edison Company of New York, Inc., a regulated utility providing electric, gas, and steam service in New York City and Westchester County, New York; Orange and Rockland Utilities, Inc., a regulated utility serving customers in a 1,350 square mile area in southeastern New York state and adjacent sections of northern New Jersey and northeastern Pennsylvania; Con Edison Solutions, a retail energy services company; Con Edison Energy, a wholesale energy supply company; Con Edison Development, a company that owns and operates generating plants and participates in other infrastructure projects; and Con Edison Communications, a telecommunications infrastructure company and service provider. For additional financial, operations, and customer service information, visit Consolidated Edison, Inc.'s Web site at www.conEdison.com.
Con Edison and Orange and Rockland Service Areas
| Con Edison Company of New York |
Orange and Rockland Utilities |