QUOTE AND NEWS
SeekingAlpha  Apr 18  Comment 
ByAbba's Aces: The last time I wrote about Consolidated Edison Inc. (ED) I stated, "Due to the expensive valuation on next year's earnings growth potential, bearish technicals, and the recent explosion, I'm not going to be buying a position at...
DailyFinance  Apr 17  Comment 
NEW YORK, NY -- (Marketwired) -- 04/17/14 -- Consolidated Edison, Inc. (Con Edison) (NYSE: ED) declared a quarterly dividend of 63 cents a share on its common stock, payable June 15, 2014, to stockholders of record as of May 14,...
The Hindu Business Line  Apr 17  Comment 
A city court on Thursday granted five days custody of the wife and son of Saradha-scam accused Sudipta Sen to the Enforcement Directorate (ED). Piyali Sen and her son Subhojit were arres...
SeekingAlpha  Apr 17  Comment 
By Gemstone Equity Research: Consolidated Edison Inc. (ED) is one of the largest investor-owned energy companies in the U.S. Consolidated Edison is a holding company that owns the Consolidated Edison of New York, "CECONY," a regulated utility...
The Hindu Business Line  Apr 17  Comment 
Sarovar Hotels on expansion mode
DailyFinance  Apr 11  Comment 
NEW YORK, NY -- (Marketwired) -- 04/11/14 -- Con Edison is releasing gas safety videos in Spanish, Chinese and Korean to educate non-English speaking New Yorkers about what to do if they smell gas. The 30-second videos feature Con Edison...
DailyFinance  Apr 10  Comment 
NEW YORK, NY--(Marketwired - April 10, 2014) - Nikon announced a new all-in-one zoom lens, the AF-S DX NIKKOR 18-300mm f/3.5-6.3G ED VR. Designed for DX-format DSLR cameras, the Nikon AF-S DX 18-300mm lens provides a 35mm-equivalent focal length...
DailyFinance  Apr 9  Comment 
KINGSTON, NY -- (Marketwired) -- 04/09/14 -- Emergency Medical Associates (EMA), Parsippany, N.J., recently partnered with HealthAlliance of the Hudson Valley's Broadway Campus to develop a program to provide an "autism-friendly" experience...
Benzinga  Apr 8  Comment 
Analysts at CRT Capital initiated coverage on shares of Consolidated Edison (NYSE: ED) with a “fairly valued” rating. The target price for Consolidated Edison is set to $53. Consolidated Edison's shares closed at $54.75 yesterday. Goldman...
The Hindu Business Line  Apr 8  Comment 
Widening its probe into the multi-crore Saradha chitfund scam, the Enforcement Directorate has issued summons to numerous entities even as it has attached assets worth Rs 140 crore of individuals...




 

Consolidated Edison, Inc. (NYSE: ED) is an energy holding company whose two primary subsidiaries are the regulated utilities Consolidated Edison Company of New York and Orange & Rockland. Con Edison of New York provides electricity, gas, and steam to over 4 million customers in New York City and Westchester County and is by far the largest business entity, bringing in 80% of operating revenues. Orange & Rockland provides electricity and gas to over 400,000 customers in New Jersey and parts of Pennsylvania.

As regulated Electric Utilities, Con Edison and Orange & Rockland have very little competition and strong customer bases. Their businesses are stable and relatively low-risk because they can rely on consistent customers who pay rates determined by the states’ utilities commissions. Con Edison is embarking on a major infrastructure upgrade to improve reliability and cut costs of energy transmission. The costs for this initiative are thus far essentially borne by the customers—they are included in the rates set by the state—so the project is low-risk for Con Edison and potentially very rewarding.

Still, Con Edison’s future is inextricably tied to its relationship with its regulatory bodies, especially the New York Public Service Commission (NYPSC). The NYPSC is responsible for setting most of the regulations that govern Con Edison’s business—most importantly the rates it is able to charge customers.

Company Overview

Business Financials

In 2009, ED earned a total of $13.0 billion. This was a decline from its 2008 total revenues of $13.6 billion. This had an adverse impact on ED's net income. Between 2008 and 2009, ED's net income declined from $1.2 billion in 2008 to $879 million in 2009.[1]

Businesses and Products

Consolidated Edison Company of New York

Consolidated Edison of New York is by far the largest subsidiary of Consolidated Edison, Inc. and serves New York City and Westchester County. It serves 3.2 million electric customers, 1.05 million gas customers, and 1800 steam customers in Manhattan. Because CECONY primary operations are in New York City, most of its customers are commercial and residential. This makes them more sensitive to weather fluxuations (like last year’s heat wave and the ensuing blackout in Queens), but less effected by economic changes. ConEd is regulated by the New York Public Service Commission. CECONY has no generation capacity, so it has to buy all of the energy it supplies to it customers.

Orange & Rockland

Orange & Rockland is the other utility owned by Consolidated Edison, Inc. and serves the regions northeast of New York City and in northern New Jersey and Pennsylvania. It is significantly smaller than CECONY and serves 294,000 electric and 25,000 gas customers. Its customers are similar to CECONY’s and are mostly residential and commercial with only a few industrial clients. It was purchased by ConEd in 1998 for $790 million and is regulated by the NYPSC as well as the New Jersey Board of Public Utilities.

Unregulated Businesses

Consolidated Edison, Inc. has four unregulated businesses: ConED Solutions, ConEd Development, ConEd Energy, and ConEd Communications. Together, these segments make uup less than 3% of ConEd’s earnings.

  • ConEd Solutions is a retail provider of energy services that sells power, gas, and other energy services to a mix of residential, commercial, and industrial customers in competitive markets (small regions where customers can choose their providers). They also provide renewable energy options.
  • ConEd Development owns and operates energy generation plans and other infrastructure projects in the Northeast and Mid-Atlantic area. They also provide asset management and facility maintenance services to other generations.
  • ConEd Energy provides unregulated wholesale electricity to customers throughout the northeast. ConEd Energy’s customers include generations companies, distribution companies, traders, and municipal and cooperative customers—as well as its cousin ConEd Development. They provide energy sales, risk management, and some ancillary services.

Trends and Forces

Regulatory Environment

Consolidated Edison’s profits are fundamentally tied to its relationship with the regulatory bodies that supervise its utilities. Because the bulk of its operations are in New York, ConEd is primarily regulated by the New York Public Service Commission (NYPSC). Its operations in New Jersey are regulated by the New Jersey Board of Public Utilities. These bodies set the prices ConEd can charge for energy and mandate maximum rates of return on equity. Therefore, a good working relationships with these regulating bodies is critical for ED's earnings.

Population and Economic Shifts

As a monopolist, CECONY does not have to worry about competition, but does have to take into account population growth rates. Unlike most corporations, CECONY does not have to compete with other companies for competitors. Not only are they a monopoly, but prices are set by government regulators, so competition would be infeasible anyway. This means that key drivers of growth for ConEd are changes in the populations of the regions it serves. Recently, however, company growth has not come from population increases, but from load growth. This means that roughly the same number of customers have been consuming more energy per capita.

Furthermore, because of its mix of residential and commercial customers, CECONY is relatively protected against economic shocks (at least compared to utilities that serve more industrial clients). Still, ConEd is dependent on the health of New York’s economy and an economic downturn could seriously hurt earnings.

Energy Prices

Consolidated Edison is also subject to fluctuating energy prices. ConEd does not generate any meaningful amount of energy, so it is forced to buy energy on the open market. While this has not been a problem in the past, the potential exists for a crisis where market prices are set too high—and customer rates too low—for ConEd to generate a profit. This happened in California in 2000 and triggered the 2000-2001 energy crisis that left PG&E (a California utility) in bankruptcy. There are no signs of impending price shifts, but a significant price shock would have serious repercussions on ConEd’s utility businesses.

Competitors

Since its primary businesses are regulated utilities, Consolidated Edison does not face much competition in the markets it serves. While its competitive business units obviously must compete in the market place, their relatively small effect on the company as a whole makes competition a negligible force on the corporation. Nationwide, Consolidated Edison is one of the largest electric and gas providers and is the largest provider of steam. While not the only company to provide both gas and electricity, Consolidated Edison is in the minority as more utilities focus exclusively on electricity.


References

  1. ED 10-K 2009 Item 6 Pg. 44
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