UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 3, 2018
Consolidated Edison, Inc.
(Exact name of registrant as specified in its charter)
New York | 1-14514 | 13-3965100 | ||
(State or Other Jurisdiction of Incorporation) | (Commission File Number) | (IRS Employer Identification No.) | ||
4 Irving Place, New York, New York | 10003 | |
(Address of principal executive offices) | (Zip Code) | |
Registrant’s telephone number, including area code: (212) 460-4600
Consolidated Edison Company of New York, Inc.
(Exact name of registrant as specified in its charter)
New York | 1-1217 | 13-5009340 | ||
(State or Other Jurisdiction of Incorporation) | (Commission File Number) | (IRS Employer Identification No.) | ||
4 Irving Place, New York, New York | 10003 | |
(Address of principal executive offices) | (Zip Code) | |
Registrant’s telephone number, including area code: (212) 460-4600
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ¨
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
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Item 2.02 | Results of Operations and Financial Condition. |
On May 3, 2018, Consolidated Edison, Inc. is issuing a press release and an earnings release presentation regarding, among other things, its results of operations for the three months ended March 31, 2018. The press release and the presentation are “furnished” as exhibits to this report pursuant to Item 2.02 of Form 8-K.
Item 9.01 | Financial Statements and Exhibits. |
(d) Exhibits
Press release, dated May 3, 2018, furnished pursuant to Item 2.02 of Form 8-K. | ||
Earnings release presentation, dated May 3, 2018, furnished pursuant to Item 2.02 of Form 8-K. | ||
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, each registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
CONSOLIDATED EDISON, INC. | ||
CONSOLIDATED EDISON COMPANY OF NEW YORK, INC. | ||
By | /s/ Robert Muccilo | |
Robert Muccilo | ||
Vice President and Controller | ||
Date: May 3, 2018
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Exhibit 99.1
 | Media Relations | Consolidated Edison, Inc. |
212 460 4111 (24 hours) | 4 Irving Place | |
New York, NY 10003 | ||
www.conEdison.com | ||
FOR IMMEDIATE RELEASE | Contact: Robert McGee 212-460-4111 | ||||||
May 3, 2018 | |||||||
CON EDISON REPORTS 2018 FIRST QUARTER EARNINGS
NEW YORK - Consolidated Edison, Inc. (Con Edison) (NYSE: ED) today reported first quarter net income of $428 million or $1.38 a share compared with $388 million or $1.27 a share in 2017. Adjusted earnings, which exclude the net mark-to-market effects of Con Edison Clean Energy Businesses, Inc. (the Clean Energy Businesses), were $428 million or $1.38 a share in 2018 compared with $386 million or $1.27 a share in 2017.
“While we continue to face challenging weather events, we remain focused on our long-term strategy of providing customers with the technology and options they need to live and work today,” said John McAvoy, chairman and CEO of Con Edison. “We are expanding our smart meter installations across our service areas, giving customers more information about their energy usage, and giving us more tools to serve them better than ever before. We are making strategic investments in gas and electric transmission, and pursuing non-pipe alternatives that will help the environment and encourage energy efficiency.”
The following table is a reconciliation of Con Edison’s reported earnings per share to adjusted earnings per share and reported net income to adjusted earnings for the three months ended March 31, 2018 and 2017.
Earnings per Share | Net Income (Millions of Dollars) | ||||||
2018 | 2017 | 2018 | 2017 | ||||
Reported earnings per share (basic) and net income (GAAP basis) | $1.38 | $1.27 | $428 | $388 | |||
Net mark-to-market effects of the Clean Energy Businesses (a) | — | — | — | (2) | |||
Adjusted earnings per share and adjusted earnings (non-GAAP basis) | $1.38 | $1.27 | $428 | $386 | |||
(a) | After taxes of $(1) million for the three months ended March 31, 2017. |
For the year of 2018, the company confirms its previous forecast of adjusted earnings in the range of $4.15 to $4.35 per share. Adjusted earnings per share exclude the Clean Energy Businesses' net mark-to-market effects, the amount of which will not be determinable until year end.
The results of operations for the three months ended March 31, 2018, as compared with the 2017 period, reflect changes in the utilities' rate plans and the impact of weather on steam revenues. Con Edison's results of operations for the comparable periods also reflect lower income tax expense for the Clean Energy Businesses and Con Edison Transmission. The utilities' revenues for the 2018 period reflect the deferral for customers of estimated net benefits for the period of the federal Tax Cuts and Jobs Act of 2017 (TCJA). Operations and maintenance expenses for the utilities for the three months ended March 31, 2018 primarily reflect higher storm-related costs. In addition, the utilities' rate plans provide for revenues to cover expected changes in certain operating costs including depreciation, property taxes and other tax matters. See the Attachment to this press release for the estimated effect on earnings per share and net income for the 2018 period compared to the 2017 period resulting from these and other factors.
Refer to the company's First Quarter Form 10-Q, which is being filed with the Securities and Exchange Commission, for the consolidated balance sheets at March 31, 2018 and December 31, 2017 and the consolidated income statements for the three months ended March 31, 2018 and 2017. A first quarter 2018 earnings release presentation will be available at www.conedison.com (select "For Investors" and then select "Press Releases").
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CON EDISON REPORTS 2018 FIRST QUARTER EARNINGS | page 2 | |||
This press release contains forward-looking statements that are intended to qualify for the safe-harbor provisions of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are statements of future expectations and not facts. Words such as “forecasts,” “expects,” “estimates,” “anticipates,” “intends,” “believes,” “plans,” “will” and similar expressions identify forward-looking statements. The forward-looking statements reflect information available and assumptions at the time the statements are made, and speak only as of that time. Actual results or developments may differ materially from those included in the forward-looking statements because of various factors such as those identified in reports the company has filed with the Securities and Exchange Commission, including that the company’s subsidiaries are extensively regulated and are subject to penalties; its utility subsidiaries’ rate plans may not provide a reasonable return; it may be adversely affected by changes to the utility subsidiaries’ rate plans; the intentional misconduct of employees or contractors could adversely affect it; the failure of, or damage to, its subsidiaries’ facilities could adversely affect it; a cyber-attack could adversely affect it; it is exposed to risks from the environmental consequences of its subsidiaries’ operations; a disruption in the wholesale energy markets or failure by an energy supplier could adversely affect it; it has substantial unfunded pension and other postretirement benefit liabilities; its ability to pay dividends or interest depends on dividends from its subsidiaries; it requires access to capital markets to satisfy funding requirements; changes to tax laws could adversely affect it; its strategies may not be effective to address changes in the external business environment; and it also faces other risks that are beyond its control.
This press release also contains a financial measure, adjusted earnings, that is not determined in accordance with generally accepted accounting principles in the United States of America (GAAP). This non-GAAP financial measure should not be considered as an alternative to net income, which is an indicator of financial performance determined in accordance with GAAP. Adjusted earnings excludes from net income the net mark-to-market changes in the fair value of the derivative instruments the Clean Energy Businesses use to economically hedge market price fluctuations in related underlying physical transactions for the purchase or sale of electricity and gas. Adjusted earnings may also exclude from net income certain other items that the company does not consider indicative of its ongoing financial performance. Management uses this non-GAAP financial measure to facilitate the analysis of the company's financial performance as compared to its internal budgets and previous financial results. Management also uses this non-GAAP financial measure to communicate to investors and others the company’s expectations regarding its future earnings and dividends on its common stock. Management believes that this non-GAAP financial measure is also useful and meaningful to investors to facilitate their analysis of the company's financial performance.
Consolidated Edison, Inc. is one of the nation's largest investor-owned energy-delivery companies, with approximately $12 billion in annual revenues and $49 billion in assets. The company provides a wide range of energy-related products and services to its customers through the following 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 1,300-square-mile-area in southeastern New York State and northern New Jersey; Con Edison Clean Energy Businesses, Inc., which through its subsidiaries develops, owns and operates renewable and energy infrastructure projects and provides energy-related products and services to wholesale and retail customers; and Con Edison Transmission, Inc., which through its subsidiaries invests in electric and natural gas transmission projects.
# # #
Attachment | |||||
Variation for the Three Months Ended March 31, 2018 vs. 2017 | |||||
Earnings per Share | Net Income (Millions of Dollars) | ||||
CECONY (a) | |||||
Changes in rate plans | $0.22 | $67 | Reflects higher electric and gas net base revenues of $0.12 a share and $0.08 a share, respectively, and growth in the number of gas customers of $0.02 a share. Electric and gas base rates increased on January 1, 2018 in accordance with their respective rate plans. | ||
Weather impact on steam revenues | 0.05 | 14 | |||
Operations and maintenance expenses | (0.01) | (2) | Reflects primarily storm-related costs. | ||
Depreciation, property taxes and other tax matters | (0.09) | (29) | Reflects higher net property taxes of $(0.07) a share and depreciation and amortization expense of $(0.04) a share, offset by a New York State sales and use tax refund of $0.02 a share. | ||
Other | (0.02) | — | Includes the dilutive effect of Con Edison's stock issuances. | ||
Total CECONY | 0.15 | 50 | |||
Orange and Rockland Utilities, Inc. (O&R) (a) | |||||
Changes in rate plans | 0.02 | 7 | Reflects higher gas net base revenues. Gas base rates increased on November 1, 2017 in accordance with the rate plan. | ||
Operations and maintenance expenses | (0.02) | (7) | Reflects storm-related costs. | ||
Other | (0.01) | (3) | Includes the dilutive effect of Con Edison's stock issuances. | ||
Total O&R | (0.01) | (3) | |||
Clean Energy Businesses | |||||
Operating revenues less energy costs | 0.19 | 59 | Reflects revenues from engineering, procurement and construction services and higher revenues from renewable electric production projects. | ||
Operations and maintenance expenses | (0.20) | (62) | Reflects primarily engineering, procurement and construction costs. | ||
Other | 0.01 | 2 | Includes the dilutive effect of Con Edison's stock issuances. | ||
Total Clean Energy Businesses | — | (1) | |||
Con Edison Transmission, Inc. | — | 4 | Reflects income from equity investments and the dilutive effect of Con Edison's stock issuances. | ||
Other, including parent company expenses | (0.03) | (10) | Reflects lower state income tax benefits and the dilutive effect of Con Edison's stock issuances. | ||
Total Reported (GAAP basis) | $0.11 | $40 | |||
Net mark-to-market effects of the Clean Energy Businesses | — | 2 | |||
Total Adjusted (non-GAAP basis) | $0.11 | $42 | |||
a. Under the revenue decoupling mechanisms in the utilities’ New York electric and gas rate plans and the weather-normalization clause applicable to their gas businesses, revenues are generally not affected by changes in delivery volumes from levels assumed when rates were approved. In general, the utilities recover on a current basis the fuel, gas purchased for resale and purchased power costs they incur in supplying energy to their full-service customers. Accordingly, such costs do not generally affect Con Edison’s results of operations. | |||||
1st Quarter 2018 Earnings Release Presentation
May 3, 2018
2
Available Information
On May 3, 2018, Consolidated Edison, Inc. issued a press release reporting its first quarter 2018 earnings and filed with the Securities and
Exchange Commission the company’s first quarter 2018 Form 10-Q. This presentation should be read together with, and is qualified in its
entirety by reference to, the earnings press release and the Form 10-Q. Copies of the earnings press release and the Form 10-Q are available
at: www.conedison.com (select "For Investors" and then select "Press Releases“ and “SEC Filings”, respectively).
Forward-Looking Statements
This presentation contains forward-looking statements that are intended to qualify for the safe-harbor provisions of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are
statements of future expectations and not facts. Words such as "forecasts," "expects," "estimates," "anticipates," "intends," "believes," "plans,"
"will" and similar expressions identify forward-looking statements. The forward-looking statements reflect information available and
assumptions at the time the statements are made, and speak only as of that time. Actual results or developments may differ materially from
those included in the forward-looking statements because of various factors such as those identified in reports the company has filed with the
Securities and Exchange Commission, including that the company's subsidiaries are extensively regulated and are subject to penalties; its
utility subsidiaries' rate plans may not provide a reasonable return; it may be adversely affected by changes to the utility subsidiaries' rate
plans; the intentional misconduct of employees or contractors could adversely affect it; the failure of, or damage to, its subsidiaries' facilities
could adversely affect it; a cyber-attack could adversely affect it; it is exposed to risks from the environmental consequences of its subsidiaries'
operations; a disruption in the wholesale energy markets or failure by an energy supplier could adversely affect it; it has substantial unfunded
pension and other postretirement benefit liabilities; its ability to pay dividends or interest depends on dividends from its subsidiaries; it requires
access to capital markets to satisfy funding requirements; changes to tax laws could adversely affect it; its strategies may not be effective to
address changes in the external business environment; and it also faces other risks that are beyond its control.
Non-GAAP Financial Measure
This presentation also contains a financial measure, adjusted earnings, that is not determined in accordance with generally accepted
accounting principles in the United States of America (GAAP). This non-GAAP financial measure should not be considered as an alternative to
net income, which is an indicator of financial performance determined in accordance with GAAP. Adjusted earnings excludes from net income
the net mark-to-market changes in the fair value of the derivative instruments the subsidiaries of Con Edison Clean Energy Businesses, Inc.
use to economically hedge market price fluctuations in related underlying physical transactions for the purchase or sale of electricity and gas.
Adjusted earnings may also exclude from net income certain other items that the company does not consider indicative of its ongoing financial
performance. Management uses this non-GAAP financial measure to facilitate the analysis of the company's financial performance as
compared to its internal budgets and previous financial results. Management also uses this non-GAAP financial measure to communicate to
investors and others the company's expectations regarding its future earnings and dividends on its common stock. Management believes that
this non-GAAP financial measure is also useful and meaningful to investors to facilitate their analysis of the company's financial performance.
For more information, contact:
Jan Childress, Director, Investor Relations Olivia M. Webb, Manager, Investor Relations
Tel.: 212-460-6611, Email: childressj@coned.com Tel.: 212-460-3431, Email: webbo@coned.com www.conEdison.com
Table of Contents
3
Page
Organizational Structure and Plan 4-5
Dividend and Earnings Announcements 6
1Q 2018 Earnings 7-10
1Q 2018 Developments 11-12
Tax Cuts and Jobs Act of 2017 (TCJA) 13
Five-Year Reconciliation of Reported EPS (GAAP) to Adjusted EPS (Non-GAAP) 14
CECONY Operations and Maintenance Expenses 15
Composition of Regulatory Rate Base 16
Average Rate Base Balances 17
Regulated Utility Rates of Return and Equity Ratio 18
Earnings Adjustment Mechanisms and Positive Incentives 19
Capital Expenditures and Utility Capital Expenditures 20-21
2018 Financing Plan and Activity 22
Capital Structure and Liquidity Profile 23-24
Utility Sales and Revenues 25-28
List of Notes to 2018 Form 10-Q Financial Statements 29
Organizational Structure
4
a. As of 3/31/18.
b. Senior unsecured ratings and outlook shown
in order of Moody’s / S&P / Fitch. Ratings are
not a recommendation to buy, sell or hold
securities and may be subject to revision or
withdrawal at any time.
Con Edison
Clean Energy
Businesses,
Inc.
(Clean Energy
Businesses or
CEBs)
Consolidated
Edison
Energy, Inc.
(Con Edison
Energy or
CEE)
Consolidated
Edison
Development,
Inc.
(Con Edison
Development or
CED)
Utilities Clean Energy
Orange and
Rockland
Utilities, Inc.
(O&R)
Consolidated
Edison
Company of
New York, Inc.
(CECONY)
Transmission
Market Cap(a): $24.0 billion
Ratings(b): A3 / BBB+ / BBB+
Outlook(b): Negative / Stable / Stable
Consolidated Edison
Transmission, LLC
(CET Electric)
Con Edison Gas
Pipeline and
Storage, LLC
(CET Gas)
Mountain
Valley
Pipeline,
LLC
Stagecoach
Gas
Services,
LLC
New York
Transco LLC
50%12.5% 45.7%
Consolidated
Edison
Solutions, Inc.
(Con Edison
Solution or
CES)
Con Edison
Transmission,
Inc.
(Con Edison
Transmission or
CET)
Rockland
Electric
Company
(RECO)
5
Strengthen core
utility delivery
business
Grow existing
clean energy
businesses and
pursue additional
clean energy
growth
opportunities
consistent with our
risk appetite
Pursue additional
regulated growth
opportunities to add
value in the evolving
industry
Strategic
Provide steady,
predictable
earnings
Maintain
balance sheet
stability
Value Oriented
Pay attractive,
growing
dividends
Customer Focused
Provide safe and
reliable service
Enhance the
customer
experience
Achieve
operational
excellence and
cost optimization
The Con Edison Plan
Dividend and Earnings Announcements
6
• On April 19, 2018, the company issued a press release reporting that the company had declared a quarterly
dividend of 71.5 cents a share on its common stock.
• On May 3, 2018, the company issued a press release in which it confirmed its previous forecast of adjusted
earnings per share for the year 2018 in the range of $4.15 to $4.35 per share.
Reported EPS (GAAP) Adjusted EPS (Non-GAAP)
$1.38
$1.27
$1.38
$1.27
2018 2017 2018 2017
1Q 2018 vs. 1Q 2017
1Q 2018 Earnings
7
Net Income ($ in Millions) Earnings per Share
2018 2017 2018 2017
Reported Net Income and EPS – GAAP basis $428 $388 $1.38 $1.27
Net mark-to-market effects of the CEBs — (2) — —
Adjusted Earnings and Adjusted EPS – non-GAAP basis $428 $386 $1.38 $1.27
Walk from 1Q 2017 EPS to 1Q 2018 EPS
8
Variance in Reported EPS (GAAP) Variance in Adjusted EPS (Non-GAAP)
1Q 2017
Reported
EPS
CECONY O&R CEBs CET Other 1Q 2018
Reported
EPS
$1.27
$0.15
$(0.01) $0.00 $0.00 $(0.03)
$1.38
1Q 2017
Adjusted
EPS
CECONY O&R CEBs CET Other 1Q 2018
Adjusted
EPS
$1.27
$0.15
$(0.01) $(0.03)
$1.38
$0.00
(a) (a)
a. Includes parent company and consolidation adjustments.
$0.00
1Q 2018 vs. 1Q 2017 EPS Variances - Three Months Ended Variation
9
CECONY(a)
Changes in rate plans $0.22 Reflects higher electric and gas net base revenues of $0.12 a share and $0.08 a share,
respectively, and growth in the number of gas customers of $0.02 a share. Electric and gas
base rates increased on January 1, 2018 in accordance with their respective rate plans.
Weather impact on steam revenues 0.05
Operations and maintenance expenses (0.01) Reflects primarily storm-related costs.
Depreciation, property taxes and other tax matters (0.09) Reflects higher net property taxes of $(0.07) a share and depreciation and amortization
expense of $(0.04) a share, offset by a New York State sales and use tax refund of $0.02 a
share.
Other (0.02) Includes the dilutive effect of Con Edison's stock issuances.
Total CECONY $ 0.15
O&R(a)
Changes in rate plans 0.02 Reflects higher gas net base revenues. Gas base rates increased on November 1, 2017 in
accordance with the rate plan.
Operations and maintenance expenses (0.02) Reflects storm-related costs.
Other (0.01) Includes the dilutive effect of Con Edison's stock issuances.
Total O&R $(0.01)
Clean Energy Businesses
Operating revenues less energy costs 0.19 Reflects revenues from engineering, procurement and construction services and higher
revenues from renewable electric production projects.
Operations and maintenance expenses (0.20) Reflects primarily engineering, procurement and construction costs.
Other 0.01 Includes the dilutive effect of Con Edison's stock issuances.
Total CEBs $ —
Other
Parent company and consolidation $(0.03) Reflects lower state income tax benefits and the dilutive effect of Con Edison's stock
Reported EPS (GAAP) $ 0.11
Adjusted EPS (non-GAAP) $ 0.11
a. Under the revenue decoupling mechanisms in the utilities’ New York electric and gas rate plans and the weather-normalization clause applicable to their gas businesses, revenues are generally not
affected by changes in delivery volumes from levels assumed when rates were approved. In general, the utilities recover on a current basis the fuel, gas purchased for resale and purchased power
costs they incur in supplying energy to their full-service customers. Accordingly, such costs do not generally affect Con Edison’s results of operations.
1Q 2018 vs. 1Q 2017 EPS Reconciliation by Company
10
CECONY O&R CEBs CET Other(a) Total
Reported EPS – GAAP basis $1.26 $0.07 $0.02 $0.03 $— $1.38
Adjusted EPS – Non-GAAP basis $1.26 $0.07 $0.02 $0.03 $— $1.38
CECONY O&R CEBs CET Other(a) Total
Reported EPS – GAAP basis $1.11 $0.08 $0.02 $0.03 $0.03 $1.27
Adjusted EPS – Non-GAAP basis $1.11 $0.08 $0.02 $0.03 $0.03 $1.27
3 months ending March 31, 2018
3 months ending March 31, 2017
a. Includes parent company and consolidation adjustments.
1Q 2018 Developments(a)
11
CECONY & O&R
• In August and November 2017, the NYSPSC issued orders in its proceeding investigating a subway power outage. NYSPSC
Case 17-E-0428 – In The Matter of an Investigation into the April 21, 2017 Metropolitan Transportation Authority Subway
Power Outage and Consolidated Edison Company of New York, Inc.’s Restoration Efforts.
• The orders require CECONY to take certain actions relating to the electrical equipment that serves the subway
system. The company incurred costs related to this matter through March 31, 2018 of $149 million. Included in this
amount is $27 million in capital and operating and maintenance costs reflected in the company's electric rate plan and
$122 million deferred as a regulatory asset pursuant to the rate plan.
• The company, which plans to complete the required actions in 2018, expects to incur costs related to this matter during
the remainder of 2018 of $115 million. Included in this amount is $5 million in expected capital and operating and
maintenance costs reflected in the rate plan and $110 million expected to be deferred as a regulatory asset pursuant to
the rate plan. (page 22)
• In January 2018, the NYSPSC initiated an audit of the income tax accounting of certain utilities, including CECONY and
O&R. NYSPSC Case 18-M-0013 - In the Matter of a Focused Operations Audit to Investigate the Income Tax Accounting of
Certain New York State Utilities. (page 23)
• In March 2018, Winter Storms Riley and Quinn caused damage to the utilities’ electric distribution systems and interrupted
service to approximately 209,000 CECONY customers, 93,000 O&R customers and 44,000 RECO customers.
– Through March 31, 2018, CECONY's costs related to March 2018 storms, including Riley and Quinn, amounted to
$106 million, including operation and maintenance expenses reflected in its electric rate plan ($15 million), operation
and maintenance expenses charged against a storm reserve pursuant to its electric rate plan ($56 million), capital
expenditures ($29 million) and removal costs ($6 million). O&R and RECO had storm-related costs of $31 million and
$11 million, respectively, most of which were deferred as regulatory assets pursuant to their electric rate plans.
– Recovery of CECONY, O&R and RECO storm-related costs is subject to review by the NYSPSC and NJBPU, as
applicable. The NYSPSC is investigating the preparation and response to the storms by CECONY, O&R and other
New York electric utilities, including all aspects of their emergency response plans, and may penalize them. The
NJBPU is investigating RECO’s preparation and response to the storms. The Companies are unable to estimate the
amount or range of their possible loss in connection with the storms. (pages 23)
• In April 2018, O&R filed with the NYSPSC updates to the requests the company filed in January 2018 with the NYSPSC for
increases in the rates it charges for electric and gas service rendered in New York, effective January 1, 2019. O&R increased
its requested electric rate increase from $20.3 million to $22.5 million and decreased its requested gas rate increase from
$4.5 million to $2.7 million. (page 22)
a. Page references to 1Q 2018 Form 10-Q.
1Q 2018 Developments (cont'd)(a)
Clean Energy Businesses
• The 25-MW (AC) Big Timber wind energy project in Montana went into service. The Clean Energy Businesses have 1,561
MW (AC) of renewable energy production projects in service (1,383 MW) or under construction (178 MW). (page 54)
• 531 million of kWh of electricity was generated from solar projects and 234 million of kWh generated from wind projects
during 1Q 2018. (page 54)
Con Edison Transmission
• Preliminary work began on the Mountain Valley Pipeline, which is targeted to be in service by the end of 2018. Con Edison
Gas Pipeline and Storage, LLC (CET Gas) owns a 12.5% interest.
• Mountain Valley Pipeline LLC announced a proposed 70-mile Southgate project. CET Gas owns a 6.375% interest. (page 38)
a. Page references to 1Q 2018 Form 10-Q.
12
Tax Cuts and Jobs Act of 2017 (TCJA)(a)
CECONY & O&R
• TCJA expected to result in decreased cash flows from operating activities, and require increased cash flows from financing
activities, for the utilities as and when customers' rates are adjusted to reflect the reduction in tax rate
• Customer rates expected to be reduced to reflect the reduction in tax rate from 35% to 21%, elimination of bonus
depreciation and the amortization of excess deferred federal income taxes the utilities collected from their customers that will
not need to be paid to the Internal Revenue Service under the TCJA
• Upon enactment of the TCJA, CECONY, O&R and RECO re-measured their deferred tax assets and liabilities and accrued
net regulatory liabilities for future income taxes of $3,513 million, $161 million and $28 million, respectively.
– Under the rate normalization requirements continued by the TCJA, the portion of their net regulatory liabilities related
to certain accelerated tax depreciation benefits ($2,542 million, $126 million and $16 million, respectively) is to be
amortized over the remaining lives of the related assets.
– The remainder ($971 million, $35 million and $12 million, respectively) will be amortized as determined by the
NYSPSC or NJBPU, as applicable.
• For the three months ended March 31, 2018, the Utilities deferred as regulatory liabilities estimated net benefits of $112
million.
• NYSPSC Case 17-M-0815 - Proceeding on Motion of the Commission on Changes in Law that May Affect Rates
– On March 29, 2018, the NYSPSC staff recommended that the NYSPSC require most utilities to begin on October 1,
2018 to credit their customers’ bills with the net benefits of the TCJA as measured based on amounts reflected in their
rate plans prior to the enactment of the TCJA.
– A 90-day comment period follows the NYSPSC staff proposal
– NYSPSC decision is expected after the comment period
• NJBPU Docket No. AX1801001 - In the Matter of the Board’s Consideration of the 2017 Tax Cuts and Jobs Act
– In March 2018, the NJBPU approved a $2.9 million interim decrease in Rockland Electric Company's (RECO) electric
base rates, effective April 1, 2018, subject to the outcome of the NJBPU proceeding.
– NJBPU decision tentatively expected in June
• FERC Docket No. EL18-111-000
– In March 2018, the Federal Energy Regulatory Commission (FERC) issued an order directing RECO to propose
revisions to its transmission revenue requirement to reflect the TCJA.
a. See Note B - Regulatory Matters/Other Regulatory Matters on pages 22-23 and Note I - Income Taxes on pages 29-30 in the 1Q 2018 10-Q.
13
Five-Year Reconciliation of Reported EPS (GAAP) to Adjusted
EPS (Non-GAAP)
14
2014 2015 2016 2017 2018 (a)
Reported EPS – GAAP basis $3.73 $4.07 $4.15 $4.97 $5.08
Enactment of the TCJA(b) - - - (0.85) (0.86)
Gain on sale of the CEBs’ retail electric
supply business - - (0.19) - -
Goodwill impairment related to the CEBs’
energy service business - - 0.04 - -
Impairment of assets held for sale - 0.01 - - -
Gain on sale of the CEBs' solar electric
production projects (0.09) - - - -
Net mark-to-market effects of the CEBs 0.25 - (0.01) - 0.01
Adjusted EPS – Non-GAAP basis $3.89 $4.08 $3.99 $4.12 $4.23
12 Months Ending December 31,
a. Represents 12-month trailing EPS ending March 31, 2018.
b. Reflects $269 million (or $0.88 a share), $11 million (or $0.04 a share) and $(21) million (or $(0.07) a share) for CEBs, CET, and parent company, respectively
resulting from the enactment of TCJA.
2013 2014 2015 2016 2017 2018E
$485 $467
$364 $348
$58 $73
$133 $149
$159 $160
$170 $182
$517 $519
$550
$469
$476 $433
$287
$1,422 $354
$1,489
$344
$1,417
$352
$1,329
$294
$998
$281
$969
CECONY Operations and Maintenance Expenses
($ in millions)
15
a. Other Expenses generally are either reconciled through amounts reflected in rates, or represent surcharges that are recovered in revenues from customers.
b. Includes Demand Side Management, System Benefit Charges and Public Service Law 18A assessments which are collected in revenues.
c. Excludes non-service components of Pension/OPEBs pursuant to ASU 2017-07. See page 25 1Q 2018 Form 10-Q.
Other Expenses(a)
2013 2014 2015 2016 2017 2018E
$1,313
$1,384
$1,464 $1,477
$1,528 $1,544
Departmental
Pension/
OPEBs
Regulatory
Fees and
Assessments (b)
Health Care/
Other Employee
Benefits
Other
$393 YTD
$71 YTD
$109 YTD
$39 YTD
$18 YTD
(c) (c)
Composition of Regulatory Rate Base(a)
(as of March 31, 2018)
16
a. Average rate base for 12 months ended 3/31/2018.
CECONY ($ in millions)
Electric NY $18,766
Gas NY 4,877
Steam NY 1,388
Total CECONY $25,031
O&R ($ in millions)
O&R Electric NY $765
O&R Gas NY 402
RECO NJ 215
Total O&R $1,382
Total Rate Base $26,413
CECONY
Electric
CECONY Gas CECONY
Steam
O&R RECO
Average Rate Base Balances
($ in millions)
17
$21,138
$22,498 $23,165
$23,710
$24,638
$26,277
$27,582
$29,448
$1,173
$1,297 $1,357
$1,304
$1,376
$1,448
$1,511
$1,543
$24,522
$26,014
$27,725
O&R
CECONY
3-year CAGR 6.0
%
2013 2014 2015 2016 2017 2018E 2019E 2020E
CECONY
Electric $ 16,235 $ 17,403 $ 17,599 $ 17,971 $ 18,513 $ 19,530 $ 20,277 $ 21,569
Gas 3,395 3,593 4,023 4,267 4,723 5,395 6,005 6,629
Steam 1,508 1,502 1,543 1,472 1,402 1,352 1,300 1,250
O&R Electric 633 726 769 731 759 792 814 821
Gas 345 372 386 362 392 422 444 454
RECO Electric 195 199 202 211 225 234 253 268
$22,311
$29,093
$25,014
$23,795
Forecast(a)Actual
$30,991
(a) Changes to rate base resulting from the TCJA will affect the utilities’ net income as and when the changes are reflected in each of the utilities’ next rate plans
(assumed to be 2020 for CECONY; 2019 for O&R and RECO). Forecast for 2020 reflects, in addition to changes in net utility plant, estimated increase in
average rate base due to decreased deferred taxes resulting from TCJA end of bonus deprecation for utilities and application of TCJA reduced tax rate to 2018
and 2019 temporary book/tax differences for CECONY, O&R and RECO of $415 million, $21 million and $3.4 million, respectively. Forecast reflects no change
in rate base from amortization of $3,700 million regulatory liability for future income tax relating to excess deferred income taxes because amortization of entire
regulatory liability over the same period that would have applied prior to TCJA is assumed. Also, forecast assumes no change in rate base relating to any
regulatory liability for revenue requirement impact of reduced tax rate.
Regulated Utility Rates of Return and Equity Ratio
(12 Months ended March 31, 2018)
18
Regulated Basis
Allowed Actual
CECONY
Electric 9.0% 9.2%
Gas 9.0 10.1
Steam 9.3 11.5
Overall – CECONY 9.0(a) 9.5
CECONY Equity Ratio 48.0% 48.4%
O&R
Electric 9.0% 8.1%
Gas 9.0 10.1
RECO 9.6 7.5
Overall – O&R 9.1(a) 8.6
O&R Equity Ratio 48.0% 49.4%
a. Weighted by rate base.
Earnings Adjustment Mechanisms and Positive Incentives
Min Max Achieved / Projected
70
60
50
40
30
20
10
0
2017 2018 2019
$0 $0 $0
$18
$42
$59
$13 $9 $11
a. In 2017, CECONY achieved positive incentives of $12 million, one third of which, pursuant to the accounting rules for alternative revenue recognition of the
collection of such incentives under the rate plans (GAAP), will be recorded ratably from 2018 to 2020 and also reflected in the positive incentives projected,
minimum and maximum amounts for the related period.
b. Pursuant to GAAP, one third of the positive incentives achieved in 2018, if any, will be recorded ratably from 2018 to 2020 and also reflected in the positive
incentives projected and maximum amounts for the related period. Two thirds and one third of the positive incentives achieved in 2019, if any, will be recorded in
2019 and 2020, respectively, and also reflected in the positive incentives projected and maximum amounts for the related period.
c. Does not reflect negative earnings adjustment of $5 million that CECONY recorded in 2017.
Min Max Achieved / Projected
20
15
10
5
0
2017 2018 2019
$4
$4
$8
$17
$0
$6
$11
Earnings Adjustment Mechanisms
Positive Incentives(a) (b)
($ in millions
)
($ in millions
)
19
(c)
Capital Expenditures
($ in millions)
20
CECONY & O&R Clean Energy Businesses Con Edison Transmission
2013 2014 2015 2016 2017 2018E 2019E 2020E
$2,270 $2,274
$2,595
$2,922 $3,093
$3,209 $3,135 $3,186
$378
$2,648
$447
$2,721 $823
$3,418 $1,235
$447 $400 $400 $400
$3,586
$1,078
$5,235
$66
$3,606 $360
$3,969
$14
$3,549
(1)
a. 2016 includes Stagecoach JV investment of $974 million.
b. 2017 Form 10-K, page 31.
Actual Forecast(b)
(a)
Utility Capital Expenditures
($ in millions)
21
2013 2014 2015 2016 2017 2018E 2019E 2020E
$2,270 $2,274
$2,595
$2,922
$3,093 $3,209 $3,135 $3,186
Gas
Electric
Annual CECONY Capital Expenditures Annual O&R Capital Expenditures
Electric Gas Steam Depreciation Electric Gas Depreciation
2013 $1,471 $536 $128 $946 $98 $37 $56
2014 1,500 549 83 991 105 37 61
2015 1,658 671 106 1,040 114 46 68
2016 1,819 811 126 1,106 114 52 67
2017 1,905 909 90 1,195 128 61 71
2018E 1,933 970 105 1,254 139 62 78
2019E 1,868 970 95 1,339 146 56 84
2020E 1,894 1,015 87 1,441 137 53 88
a. 2017 Form 10-K, page 31.
Steam
Depreciation
Actual Forecast(a)
2018 Financing Plan and Activity
22
Debt and Equity Financing Plan
• Capital expenditures of $3,969 million (CECONY: $3,008 million, the CEBs: $400 million, O&R: $201
million, CET: $360 million)
• Issue between $1,300 million and $1,800 million of long-term debt at the utilities
• Issue additional debt secured by the CEBs’ renewable electric production projects
• Issue up to $450 million of common equity in 2018 in addition to equity issued through dividend
reinvestment, employee stock purchase and long-term incentives plans
• Financing plan does not reflect the provision to the utilities’ customers of any TCJA benefits that the
NYSPSC and the NJBPU may require to be provided
Debt Maturities
($ in millions) 2018 2019 2020 2021 2022
Con Edison, Inc. [parent company] $2 $3 $402 $503 $294
CECONY 1,200 475 350 — —
O&R 55 62 — — —
CEBs 41 38 39 41 41
Total $1,298 $578 $791 $544 $335
(a)
a. $600 million of 5.85 percent 10-year debentures matured on April 1, 2018.
Capital Structure – March 31, 2018
($ in millions)
23
Consolidated Edison, Inc.
A3 / BBB+ / BBB+
CECONY
A2 / A- / A-
O&R
A3 / A- / A-
Parent and Other
Debt $ 16,021 51%
Equity 15,661 49
Total $ 31,682 100%
Debt $ 13,266 51%
Equity 12,662 49
Total $ 25,928 100%
Debt $ 661 49%
Equity 681 51
Total $ 1,342 100%
Debt $2,094 47%
Equity 2,318 53
Total $ 4,412 100%
Amounts shown exclude notes payable and include the current portion of long-term debt. Senior unsecured
credit ratings shown in order of Moody’s / S&P / Fitch. Moody’s ratings have negative outlooks and S&P and
Fitch ratings have stable outlooks.
Liquidity Profile
($ in millions)
24
Utility Sales and Revenues – First Quarter
25
The changes in the energy delivered by the company’s utility
subsidiaries, both for actual amounts and as adjusted for variations in
weather and billing days, for the three months ended March 31, 2018
(expressed as a percentage of 2017 amounts):
First Quarter Variation
2018 vs. 2017
Actual Adjusted
CECONY
Electric 2.1 0.7
Firm – Gas 12.8 4.6
Steam 11.6 —
O&R
Electric 2.4 (2.1)
Firm – Gas 9.3 1.4
Utility Sales and Revenues – Electric First Quarter
($ in millions)
26
Electric – 1st Quarter
Millions of Kilowatt-hours Revenues in Millions
2018 2017 2018 2017
Con Edison of New York
Residential and Religious 2,410 2,278 $623 $574
Commercial and Industrial 2,415 2,305 453 430
Retail choice customers 6,276 6,304 557 632
Public Authorities 16 16 3 3
NYPA, Municipal Agency and other sales 2,569 2,496 128 127
Total Sales 13,686 13,399 $1,764 $1,766
Orange and Rockland
Residential and Religious 377 349 $74 $68
Commercial and Industrial 198 191 30 27
Retail choice customers 697 707 44 43
Public Authorities 29 24 3 2
Total Sales 1,301 1,271 $151 $140
Regulated Utility Sales & Revenues
Residential and Religious 2,787 2,627 $697 $642
Commercial and Industrial 2,613 2,496 483 457
Retail choice customers 6,973 7,011 601 675
Public Authorities 45 40 6 5
NYPA, Municipal Agency and other sales 2,569 2,496 128 127
Total Sales 14,987 14,670 $1,915 $1,906
Utility Sales and Revenues – Gas First Quarter
($ in millions)
27
Gas – 1st Quarter
Thousands of Dekatherms Revenues in Millions
2018 2017 2018 2017
Con Edison of New York
Residential 27,227 24,607 $390 $337
General 14,513 12,803 154 133
Firm Transportation 34,791 30,415 260 222
Total Firm Sales and Transportation 76,531 67,825 804 692
Interruptible Sales 1,492 2,308 12 13
Transportation of Customer Owned Gas 23,233 28,233 16 17
Total Sales 101,256 98,366 $832 $722
Off-system Sales 1 1 — —
Orange and Rockland
Residential 4,464 3,885 $58 $49
General 962 958 11 10
Firm Transportation 4,449 4,188 35 29
Total Firm Sales and Transportation 9,875 9,031 104 88
Interruptible Sales 1,143 1,188 2 3
Transportation of Customer Owned Gas 426 397 — —
Total Sales 11,444 10,616 $106 $91
Off-system Sales — — —
Regulated Utility Sales & Revenues
Residential 31,691 28,492 $448 $386
General 15,475 13,761 165 143
Firm Transportation 39,240 34,603 295 251
Total Firm Sales and Transportation 86,406 76,856 908 780
Interruptible Sales 2,635 3,496 14 16
Transportation of Customer Owned Gas 23,659 28,630 16 17
Total Sales 112,700 108,982 $938 $813
Off-system Sales 1 1 — —
28
Utility Sales and Revenues – Steam First Quarter
($ in millions)
Steam – 1st Quarter
Millions of Pounds Revenues in Millions
2018 2017 2018 2017
Con Edison of New York
General 338 293 $16 $14
Apartment House 2,712 2,469 84 77
Annual Power 5,947 5,298 216 197
Total Sales 8,997 8,060 $316 $288
List of Notes to 2018 Form 10Q Financial Statements
29
Page
A – Summary of Significant Accounting Policies 19 - 22
B – Regulatory Matters 22 - 24
C – Capitalization 25
D – Short-Term Borrowing 25
E – Pension Benefits 25 - 26
F – Other Postretirement Benefits 26
G – Environmental Matters 26 - 28
H – Other Material Contingencies 28 - 29
I – Income Tax 29 - 30
J – Financial Information by Business Segment 30
K – Derivative Instruments and Hedging Activities 31 - 33
L – Fair Value Measurements 33 - 35
M – Variable Interest Entities 35 - 36
N – New Financial Accounting Standards 36