QUOTE AND NEWS
TheStreet.com  Nov 19  Comment 
NEW YORK (TheStreet) -- Shares of Consolidated Edison are declining, lower by 0.84% to $62.50 in pre-market trading on Wednesday, after the electric utilities company was downgraded to "sell" from "neutral" by analysts at UBS this morning....
Market Intelligence Center  Nov 18  Comment 
MarketIntelligenceCenter.com's patented algorithms have selected a trade on Consolidated Edison Inc. (ED) that returns 13.64% in 60 days for an annualized return rate of 83%. This diagonal spread pairs a short position in the Jan. '15 $62.50 call,...
MedPage Today  Nov 14  Comment 
(MedPage Today) -- What is the evidence behind the use of parenteral hydralazine and desmopressin?
The Times of India  Nov 14  Comment 
Enforcement Directorate (ED) has issued a Rs 660 crore showcause notice to consumer electronics major Videocon Group on charges of violation of foreign exchange laws.
Dividend Growth Investor  Nov 14  Comment 
Consolidated Edison, Inc. (ED) is engaged in regulated electric, gas, and steam delivery businesses in the United States. The company, through its subsidiary, Consolidated Edison Company of New York, Inc., provides electric services to...
Market Intelligence Center  Nov 11  Comment 
The patented option-trade picking algorithms that power MarketIntelligenceCenter.com's Artifical Intelligence Center found a trading opportunity with Consolidated Edison Inc. (ED) that should provide a 2.26% return in just 101 days. Sell one Feb....
Benzinga  Nov 7  Comment 
Sempra U.S. Gas & Power and Consolidated Edison Development (ConEdison Development) today announced an agreement to partner on the 75-megawatt (MW) Broken Bow II wind project in Custer County, Neb. Jointly owned by Sempra U.S. Gas & Power and...
Market Intelligence Center  Nov 7  Comment 
Consolidated Edison Inc. (ED) closed Thursday at $63.25 and technical indicators recently have been bullish. Based in part on those numbers, MarketIntelligenceCenter.com's patented algorithms have identified a couple of attractive trading...
newratings.com  Nov 7  Comment 
WASHINGTON (dpa-AFX) - Consolidated Edison, Inc. (ED) reported third-quarter net income of $436 million or $1.48 a share compared to $464 million or $1.58 a share in 2013. Earnings from ongoing operations, which exclude the effects of the lease...




 

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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