FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_______________________
[x] Quarterly Report Pursuant To Section 13 or 15(d)
of the Securities Exchange Act of 1934
FOR THE QUARTERLY PERIOD ENDED March 31, 1995
OR
[ ] Transition Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
_________________________
Commission File No. 1-1217
CONSOLIDATED EDISON COMPANY OF NEW YORK, INC.
(Name of Registrant)
NEW YORK 13-5009340
(State of Incorporation) (IRS Employer Identification No.)
4 IRVING PLACE, NEW YORK, NEW YORK 10003 - (212) 460-4600
(Address and Telephone Number)
The Registrant has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months and has been subject to such filing
requirements for the past 90 days.
Yes ___X___ No _______
As of the close of business on April 30, 1995, the Registrant had
outstanding 234,915,687 shares of Common Stock ($2.50 par value).
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PART I. - FINANCIAL INFORMATION
CONTENTS PAGE NO.
ITEM 1. FINANCIAL STATEMENTS:
Consolidated Balance Sheet 3-4
Consolidated Income Statements 5-6
Consolidated Statements of Cash Flows 7-8
Notes to Financial Statements 9-11
ITEM 2. Management's Discussion and Analysis of 12-25
Financial Condition and Results of
Operations
_________________________
The following consolidated financial statements are unaudited
but, in the opinion of management, reflect all adjustments (which
include only normal recurring adjustments) necessary to a fair
statement of the results for the interim periods presented. These
condensed unaudited interim financial statements do not contain
the detail, or footnote disclosure concerning accounting policies
and other matters, which would be included in full-year financial
statements and, accordingly, should be read in conjunction with
the Company's audited financial statements (including the notes
thereto) included in the Company's Annual Report on Form 10-K for
the year ended December 31, 1994 (File No. 1-1217).
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CONSOLIDATED EDISON COMPANY OF NEW YORK, INC.
CONSOLIDATED BALANCE SHEET
AS AT MARCH 31, 1995, DECEMBER 31, 1994 AND MARCH 31, 1994
As At
March 31, 1995 Dec. 31, 1994 March 31, 1994
(Thousands of Dollars)
ASSETS
Utility plant, at original cost
Electric $ 11,047,944 $ 10,956,187 $ 10,578,908
Gas 1,453,102 1,437,071 1,358,110
Steam 436,679 430,848 406,885
General 1,037,752 1,083,705 1,034,353
Total 13,975,477 13,907,811 13,378,256
Less: Accumulated depreciation 3,826,672 3,828,646 3,664,208
Net 10,148,805 10,079,165 9,714,048
Construction work in progress 362,694 389,630 407,003
Nuclear fuel assemblies and components, less
accumulated amortization 92,945 92,413 67,217
Net utility plant 10,604,444 10,561,208 10,188,268
Current assets
Cash and temporary cash investments 111,385 245,221 205,105
Accounts receivable - customers, less allowance
for uncollectible accounts of $22,102,
$21,600 and $22,291 471,825 440,496 527,961
Other receivables 62,295 61,853 66,602
Regulatory accounts receivable 33,631 26,346 63,010
Fuel, at average cost 59,456 50,883 53,671
Gas in storage, at average cost 32,443 50,698 20,941
Materials and supplies, at average cost 229,681 229,744 244,581
Prepayments 173,265 56,283 166,479
Other current assets 13,922 13,262 11,709
Total current assets 1,187,903 1,174,786 1,360,059
Investments and nonutility property 118,206 111,523 102,854
Deferred charges
Enlightened Energy program costs 170,748 170,201 144,974
Unamortized debt expense 136,071 138,428 143,289
Power contract termination costs 170,361 180,506 121,740
Other deferred charges 324,678 285,721 343,586
Total deferred charges 801,858 774,856 753,589
Regulatory asset-future federal
income taxes 1,085,014 1,105,991 1,138,530(A)
Total $ 13,797,425 $ 13,728,364 $ 13,543,300
(A) Reclassified to conform with the current presentation
of the provision for future federal income tax.
The accompanying note is an integral part of these financial statements.
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CONSOLIDATED EDISON COMPANY OF NEW YORK, INC.
CONSOLIDATED BALANCE SHEET
AS AT MARCH 31, 1995, DECEMBER 31, 1994 AND MARCH 31, 1994
As At
March 31, 1995 Dec. 31, 1994 March 31, 1994
(Thousands of Dollars)
CAPITALIZATION AND LIABILITIES
Capitalization
Common stock, authorized 340,000,000 shares;
outstanding 234,914,842 shares, 234,905,235
shares and 234,875,621 shares $ 1,463,986 $ 1,463,913 $ 1,463,685
Capital stock expense (38,846) (38,926) (39,121)
Retained earnings 3,960,340 3,888,010 3,722,073
Total common equity 5,385,480 5,312,997 5,146,637
Preferred stock
Subject to mandatory redemption
7.20% Series I 50,000 50,000 50,000
6-1/8% Series J 50,000 50,000 50,000
Total subject to mandatory
redemption 100,000 100,000 100,000
Other preferred stock
$ 5 Cumulative Preferred 175,000 175,000 175,000
5-3/4% Series A 60,000 60,000 60,000
5-1/4% Series B 75,000 75,000 75,000
4.65% Series C 60,000 60,000 60,000
4.65% Series D 75,000 75,000 75,000
5-3/4% Series E 50,000 50,000 50,000
6.20% Series F 40,000 40,000 40,000
6% Convertible Series B 5,236 5,310 5,538
Total other preferred stock 540,236 540,310 540,538
Total preferred stock 640,236 640,310 640,538
Long-term debt 3,926,754 4,030,464 3,788,844
Total capitalization 9,952,470 9,983,771 9,576,019
Noncurrent liabilities
Obligations under capital leases 47,167 47,805 49,718
Other noncurrent liabilities 72,322 72,561 125,515
Total noncurrent liabilities 119,489 120,366 175,233
Current liabilities
Long-term debt due within one year 111,171 10,889 133,897
Accounts payable 328,061 374,469 322,968
Customer deposits 161,435 161,455 159,222
Accrued income taxes 34,841 3,022 122,684
Other accrued taxes 34,305 6,799 33,241
Accrued interest 71,370 84,544 69,303
Accrued wages 85,463 73,611 80,272
Other current liabilities 158,753 179,611 181,903
Total current liabilities 985,399 894,400 1,103,490
Provisions related to future federal income
taxes and other deferred credits
Accumulated deferred federal income tax 2,331,508 2,266,458 2,214,378(A)
Accumulated deferred investment tax credits 189,184 191,524 198,744
Other deferred credits 219,375 271,845 275,436
Total deferred credits 2,740,067 2,729,827 2,688,558
Total $ 13,797,425 $ 13,728,364 $ 13,543,300
(A) Reclassified to conform with the current presentation
of the provision for future federal income tax.
The accompanying note is an integral part of these financial statements.
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CONSOLIDATED EDISON COMPANY OF NEW YORK, INC.
CONSOLIDATED INCOME STATEMENT
FOR THE THREE MONTHS ENDED MARCH 31, 1995 AND 1994
1995 1994
(Thousands of Dollars)
Operating revenues
Electric $ 1,223,308 $ 1,147,791
Gas 318,956 394,063
Steam 126,521 155,906
Total operating revenues 1,668,785 1,697,760
Operating expenses
Fuel 113,846 154,064
Purchased power 247,684 188,047
Gas purchased for resale 111,038 178,547
Other operations 282,109 278,210
Maintenance 131,489 133,582
Depreciation and amortization 109,157 103,766
Taxes, other than federal income tax 275,766 290,968
Federal income tax 117,640 105,450
Total operating expenses 1,388,729 1,432,634
Operating income 280,056 265,126
Other income (deductions)
Investment income 1,355 408
Allowance for equity funds used during construction 1,513 2,072
Other income less miscellaneous deductions (402) (1,950)
Federal income tax (470) (880)
Total other income 1,996 (350)
Income before interest charges 282,052 264,776
Interest on long-term debt 74,556 70,472
Other interest 7,203 5,906
Allowance for borrowed funds used during construction (736) (912)
Net interest charges 81,023 75,466
Net income 201,029 189,310
Preferred stock dividend requirements 8,893 8,899
Net income for common stock $ 192,136 $ 180,411
Common shares outstanding - average (000) 234,910 234,445
Earnings per share $ .82 $ .77
Dividends declared per share of common stock $ .51 $ .50
Sales
Electric (Thousands of Kwhrs.)
Con Edison Customers 8,838,301 8,993,944
Deliveries for NYPA Customers 2,230,206 2,270,220
Service for Municipal Agencies 107,163 96,583
Total Sales in Service Territory 11,175,670 11,360,747
Off-system 852,449(A) 323,336
Gas - Firm Customers (Dekatherms) 38,820,824 45,161,129
Steam (Thousands of Lbs.) 10,310,693 13,114,033
(A) Off-system sales in the 1995 period included 423,376 thousand Kwhrs. subsequently
repurchased by the Company.
The accompanying note is an integral part of these financial statements.
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CONSOLIDATED EDISON COMPANY OF NEW YORK, INC.
CONSOLIDATED INCOME STATEMENT
FOR THE TWELVE MONTHS ENDED MARCH 31, 1995 AND 1994
1995 1994
(Thousands of Dollars)
Operating revenues
Electric $ 5,215,989 $ 5,144,073
Gas 815,000 884,455
Steam 313,122 348,541
Total operating revenues 6,344,111 6,377,069
Operating expenses
Fuel 527,547 600,484
Purchased power 847,092 811,927
Gas purchased for resale 273,695 348,609
Other operations 1,149,992 1,107,874
Maintenance 504,086 561,833
Depreciation and amortization 427,747 408,958
Taxes, other than federal income tax 1,112,489 1,151,597
Federal income tax 450,350 391,890
Total operating expenses 5,292,998 5,383,172
Operating income 1,051,113 993,897
Other income (deductions)
Investment income 11,548 4,675
Allowance for equity funds used during construction 7,795 6,257
Other income less miscellaneous deductions (13,653) (11,177)
Federal income tax (20) 940
Total other income 5,670 695
Income before interest charges 1,056,783 994,592
Interest on long-term debt 293,143 282,373
Other interest 21,151 21,171
Allowance for borrowed funds used during construction (3,500) (2,844)
Net interest charges 310,794 300,700
Net income 745,989 693,892
Preferred stock dividend requirements 35,581 35,608
Net income for common stock $ 710,408 $ 658,284
Common shares outstanding - average (000) 234,879 234,118
Earnings per share $ 3.02 $ 2.81
Dividends declared per share of common stock $ 2.01 $ 1.955
Sales
Electric (Thousands of Kwhrs.)
Con Edison Customers 36,618,521 36,420,731
Deliveries for NYPA Customers 8,733,141 8,513,077
Service for Municipal Agencies 424,473 370,246
Total Sales in Service Territory 45,776,135 45,304,054
Off-system 2,313,886(A) 889,244
Gas - Firm Customers (Dekatherms) 87,006,114 94,625,993
Steam (Thousands of Lbs.) 27,881,815 31,305,777
(A) Off-system sales in the 1995 period included 423,376 thousand Kwhrs. subsequently
repurchased by the Company.
The accompanying note is an integral part of these financial statements.
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CONSOLIDATED EDISON COMPANY OF NEW YORK, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1995 AND 1994
1995 1994
(Thousands of Dollars)
Operating activities
Net income $ 201,029 $ 189,310
Principal non-cash charges (credits) to income
Depreciation and amortization 109,157 103,766
Federal income tax deferred 86,410 (12,390)
Common equity component of allowance
for funds used during construction (1,426) (1,954)
Other non-cash charges (credits) (16,128) 25,920
Changes in assets and liabilities
Accounts receivable - customers, less
allowance for uncollectibles (31,329) (68,700)
Regulatory accounts receivable (7,285) 34,107
Materials and supplies, including fuel
and gas in storage 9,745 29,438
Prepayments, other receivables and
other current assets (118,084) (92,075)
Enlightened Energy program costs (547) (4,917)
Power contract termination costs (15,323) -
Federal income tax refund - 62,580
Accounts payable (46,408) (69,575)
Accrued income taxes 31,819 94,274
Other - net (55,588) (18,536)
Net cash flows from operating activities 146,042 271,248
Investing activities including construction
Construction expenditures (144,057) (129,163)
Nuclear fuel expenditures (2,573) (3,375)
Contributions to nuclear decommissioning trust (2,917) (5,834)
Common equity component of allowance
for funds used during construction 1,426 1,954
Net cash flows from investing activities
including construction (148,121) (136,418)
Financing activities including dividends
Issuance of common stock - 14,650
Issuance of long-term debt - 150,000
Retirement of long-term debt (2,924) (2,667)
Issuance and refunding costs (135) (2,342)
Common stock dividends (119,805) (117,225)
Preferred stock dividends (8,893) (8,897)
Net cash flows from financing activities
including dividends (131,757) 33,519
Net increase (decrease) in cash and temporary
cash investments (133,836) 168,349
Cash and temporary cash investments
at January 1 245,221 36,756
Cash and temporary cash investments
at March 31 $ 111,385 $ 205,105
Supplemental disclosure of cash flow information
Cash paid during the period for:
Interest $ 85,499 $ 76,657
Income taxes - 9,822
The accompanying note is an integral part of these financial statements.
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CONSOLIDATED EDISON COMPANY OF NEW YORK, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE TWELVE MONTHS ENDED MARCH 31, 1995 AND 1994
1995 1994
(Thousands of Dollars)
Operating activities
Net income $ 745,989 $ 693,892
Principal non-cash charges (credits) to income
Depreciation and amortization 427,747 408,958
Federal income tax deferred 162,890 46,680
Common equity component of allowance
for funds used during construction (7,348) (5,909)
Other non-cash charges 23,621 29,451
Changes in assets and liabilities
Accounts receivable - customers, less
allowance for uncollectibles 56,136 (61,344)
Regulatory accounts receivable 29,379 126,208
Materials and supplies, including fuel
and gas in storage (2,387) 10,034
Prepayments, other receivables and
other current assets (4,692) (19,517)
Enlightened Energy program costs (25,774) (44,779)
Power contract termination costs (77,699) (68,380)
Federal income tax refund (9,643) 62,580
Accounts payable 5,093 1,119
Accrued income taxes (87,843) 57,893
Other - net (110,776) (26,053)
Net cash flows from operating activities 1,124,693 1,210,833
Investing activities including construction
Construction expenditures (772,424) (753,801)
Nuclear fuel expenditures (46,269) (12,309)
Contributions to nuclear decommissioning trust (11,669) (17,310)
Common equity component of allowance
for funds used during construction 7,348 5,909
Net cash flows from investing activities
including construction (823,014) (777,511)
Financing activities including dividends
Issuance of common stock - 26,531
Issuance of long-term debt 250,000 1,128,475
Retirement of long-term debt and preferred stock (133,896) (178,132)
Advance refunding of long-term debt and
preferred stock - (689,732)
Issuance and refunding costs (3,781) (96,425)
Common stock dividends (472,141) (457,664)
Preferred stock dividends (35,581) (35,605)
Net cash flows from financing activities
including dividends (395,399) (302,552)
Net increase (decrease) in cash and
temporary cash investments (93,720) 130,770
Cash and temporary cash investments
at beginning of period 205,105 74,335
Cash and temporary cash investments
at March 31 $ 111,385 $ 205,105
Supplemental disclosure of cash flow information
Cash paid during the period for:
Interest $ 278,681 $ 260,911
Income taxes 375,533 271,928
The accompanying note is an integral part of these financial statements.
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Contingency Note
- -----------------------------------------------------------------
INDIAN POINT. Nuclear generating units similar in design to the
Company's Indian Point 2 unit have experienced problems of
varying severity in their steam generators, which in a number of
instances have required steam generator replacement. Inspections
of the Indian Point 2 steam generators since 1976 have revealed
various problems, some of which appear to have been arrested, but
the remaining service life of the steam generators is uncertain
and may be shorter than the unit's life. The projected service
life of the steam generators is reassessed periodically in the
light of the inspections made during scheduled outages of the
unit. The 1995 outage inspection has been completed. The
inspection results are still being evaluated; however, based on
the latest available data, the Company estimates that steam
generator replacement will not be required before 1997, and
possibly not until some years later. To avoid procurement delays
in the event replacement is necessary, the Company purchased
replacement steam generators, which are stored at the site. If
replacement of the steam generators is required, such replacement
is presently estimated (in 1994 dollars) to require additional
expenditures of approximately $102 million (exclusive of
replacement power costs) and an outage of approximately six
months. However, securing necessary permits and approvals or
other factors could require a substantially longer outage if
steam generator replacement is required on short notice.
NUCLEAR INSURANCE. The insurance policies covering the Company's
nuclear facilities for property damage, excess property damage,
and outage costs permit assessments under certain conditions to
cover insurers' losses. As of March 31, 1995, the highest amount
which could be assessed for losses during the current policy year
under all of the policies was $26.1 million. While assessments
may also be made for losses in certain prior years, the Company
is not aware of any losses in such years which it believes are
likely to result in an assessment.
Under certain circumstances, in the event of nuclear
incidents at facilities covered by the federal government's
third-party liability indemnification program, the Company could
be assessed up to $79.3 million per incident of which not more
than $10 million may be assessed in any one year. The
per-incident limit is to be adjusted for inflation not later than
1998 and not less than once every five years thereafter.
The Company participates in an insurance program covering
liabilities for injuries to certain workers in the nuclear power
industry. In the event of such injuries, the Company is subject
to assessment up to an estimated maximum of approximately $3.1
million.
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ENVIRONMENTAL MATTERS. The normal course of the Company's
operations necessarily involves activities and substances that
expose the Company to potential liabilities under federal, state
and local laws protecting the environment. Such liabilities can
be material and in some instances may be imposed without regard
to fault, or may be imposed for past acts, even though such past
acts may have been lawful at the time they occurred. Sources of
such potential liabilities include (but are not limited to) the
Federal Comprehensive Environmental Response, Compensation and
Liability Act of 1980 (Superfund), a recent settlement with the
New York State Department of Environmental Conservation (DEC),
asbestos, and electric and magnetic fields (EMF).
Superfund. By its terms, Superfund imposes joint and several
strict liability, regardless of fault, upon generators of
hazardous substances for resulting removal and remedial costs and
environmental damages. The Company has received process or notice
concerning possible claims under Superfund or similar state
statutes relating to a number of sites at which it is alleged
that hazardous substances generated by the Company (and, in most
instances, a large number of other potentially responsible
parties) were deposited. Estimates of the investigative, removal,
remedial and environmental damage costs (if any) the Company will
be obligated to pay with respect to each of these sites range
from extremely preliminary to highly refined. These estimates
currently aggregate approximately $11.2 million and the Company
has accrued a liability in this amount. However, it is possible
that material additional costs in amounts not presently
determinable may be incurred with respect to these and other
sites.
DEC Settlement. In November 1994 the Company agreed to a consent
order settling a civil administrative proceeding instituted by
the DEC in 1992, alleging environmental violations by the
Company. Under the consent order, in addition to required
payments which have been made, the Company must also conduct an
environmental compliance audit and an environmental management
review, develop and implement "best management practices" plans
for certain facilities and undertake a remediation program at
certain sites. At March 31, 1995, the Company accrued a liability
of $10.5 million for the expense of the site remediation program.
Expenditures for environmental projects in the five years 1995 -
1999 to comply with the consent order are estimated at $80.6
million, most of which had been planned prior to the consent
order. There may be additional costs which could be material, but
are not presently determinable.
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Asbestos Claims. Suits have been brought in New York State and
federal courts against the Company and many other defendants,
wherein several thousand plaintiffs sought large amounts of
compensatory and punitive damages for deaths and injuries
allegedly caused by exposure to asbestos at various premises of
the Company. Many of these suits have been disposed of without
any payment by the Company, or for immaterial amounts. The
amounts specified in all the remaining suits total billions of
dollars but the Company believes that these amounts are greatly
exaggerated, as were the claims already disposed of. Based on the
information and relevant circumstances known to the Company at
this time, it is the opinion of the Company that these suits will
not have a material adverse effect on the Company's financial
position.
EMF. Electric and magnetic fields are found wherever electricity
is used. Several scientific studies have raised concerns that EMF
surrounding electric equipment and wires, including power lines,
may present health risks. The Company is the defendant in several
suits claiming property damage or personal injury allegedly
resulting from EMF. In the event that a causal relationship
between EMF and adverse health effects is established, or
independently of any such causal determination, in the event of
adverse developments in related legal or public policy doctrines,
there could be a material adverse effect on the electric utility
industry, including the Company.
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MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion and analysis relates to the
interim financial statements appearing in this report and should
be read in conjunction with Management's Discussion and Analysis
appearing in Item 7 of the Company's Annual Report on Form 10-K
for the year ended December 31, 1994 (File No. 1-1217).
Reference is made to the note to the financial statements in Item
1 of this report, which note is incorporated herein by reference.
LIQUIDITY AND CAPITAL RESOURCES
Cash and temporary cash investments were $111.4 million
at March 31, 1995 compared with $245.2 million at December 31,
1994 and $205.1 million at March 31, 1994. The Company's cash
balances reflect the timing and amounts of external financing.
As discussed below, in March 1994, the Company received
approximately $60 million of net tax refunds and related
interest.
The Company expects to finance the balance of its
capital requirements for the remainder of 1995 and 1996,
including $191 million for securities maturing during this
period, from internally generated funds and external financings
of about $400 million, most, if not all, of which will be debt
issues.
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Customer accounts receivable, less allowance for
uncollectible accounts, amounted to $471.8 million at March 31,
1995 compared with $440.5 million at December 31, 1994 and
$528.0 million at March 31, 1994. In terms of equivalent days of
revenue outstanding, these amounts represented 27.2, 27.1 and
28.6 days, respectively.
Regulatory accounts receivable, amounting to
$33.6 million at March 31, 1995, $26.3 million at December 31,
1994 and $63.0 million at March 31, 1994, include accruals, under
the 1992 electric rate settlement agreement discussed below, for
differences in electric sales revenues from forecast levels (the
"ERAM" accrual), incentives and "lost revenues" related to the
Company's Enlightened Energy program, incentives related to
customer service activities, and savings achieved in fuel and
purchased power costs below target levels. Regulatory accounts
receivable were reduced during the last nine months of 1994 by
billings to customers in excess of new accruals.
Prepayments include the unamortized portion
(approximately $107 million at March 31, 1995) of the Company's
semi-annual New York City property tax payment.
Deferred charges include Enlightened Energy program
costs of $170.7 million at March 31, 1995, $170.2 million at
December 31, 1994 and $145.0 million at March 31, 1994. These
costs are generally recoverable over a five-year period.
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The deferred balances are expected to decline in future periods,
as recoveries outpace new expenditures.
In March 1994 the Company received net federal income
tax refunds and related interest for years 1980 through 1986
amounting to approximately $60 million, $53 million of which is
currently deferred in other deferred credits. The electric
portion of the refund ($49.5 million) is being returned to
customers in the first rate year of the 1995 electric rate
settlement agreement discussed below. The gas and steam portions
are deferred pending future rate treatment.
Interest coverage under the SEC formula for the twelve
months ended March 31, 1995 was 4.59 times compared with 4.58
times for the year 1994 and 4.36 times for the twelve months
ended March 31, 1994.
1992 Electric Rate Settlement Agreement
In March 1994 the PSC approved an electric rate
increase of $55.2 million (1.1 percent), to become effective
April 1, 1994, for the third and final year of the 1992 electric
rate settlement agreement, the twelve months ended March 31,
1995. For the final rate year the Company's rate of return on
electric common equity, calculated in accordance with the
provisions of the agreement, which excludes incentives earned
and labor productivity in excess of amounts reflected in rates,
was approximately 11.8 percent, which was below the 11.85 percent
threshold for sharing earnings with ratepayers.
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1995 Electric Rate Settlement Agreement
On April 6, 1995 the Public Service Commission ("PSC")
issued its opinion and order approving a three-year electric rate
settlement agreement effective April 1, 1995. The agreement
provides for no increase in base electric revenues in the first
rate year and only limited increases in years two and three. The
agreement also provides for generally more limited opportunities
for earning incentives. For details of the agreement see the
Management's Discussion and Analysis appearing in Item 7 of the
Company's Annual Report on Form 10-K for the year ended December
31, 1994, under the heading "1994 Electric Rate Increase Filing".
The PSC's opinion and order approved the settlement agreement as
submitted, subject to a reservation by the PSC of authority to
spread, over a two-year period, the recovery of any revenue
shortfall accrued under the modified ERAM, if in the PSC's
judgment such a spreading is necessary to avoid "significant"
bill increases.
Credit Ratings
In April 1995, Moody's Investors Service, Inc. lowered
the Company's senior debt securities (first mortgage bond) rating
to Aa3 from Aa2. Moody's stated that "the downgrade reflects
[Moody's] concern about the Company's high rates and generation
costs, given the uncertain implications of New York's transition
towards a more market-oriented energy sector."
In May 1995, Standard & Poor's ("S&P") lowered the
Company's senior debt securities (first mortgage bond) rating to
A+ from AA-. S&P stated that "despite many strong qualitative
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characteristics, Con Edison's financial measures were no longer
able to support the former senior secured rating when adjusted
for capacity payments under purchased power obligations." S&P
also pointed out, in this context, the lagging economic recovery
in the Company's service territory.
Duff and Phelps, Inc. continues to rate the Company's
senior debt securities AA-.
Competition - Wholesale Electric Market
In March 1995, the Federal Energy Regulatory Commission
("FERC") proposed new rules which would require utilities such as
the Company to file non-discriminatory open access transmission
tariffs, available to wholesale sellers and buyers of electric
energy, and to take service under these tariffs for their own
wholesale sales and purchases of electric energy. As proposed,
the new rules would allow utilities to recover legitimate and
verifiable wholesale stranded costs (i.e., those costs prudently
incurred by a utility to meet its service obligation which, as a
result of filing an open access tariff, the utility would
otherwise not be able to recover). It is impossible to predict in
what form final rules will be adopted.
The Company participates in the wholesale electric
market primarily as a buyer, and in this regard should benefit if
rules are adopted which result in lower wholesale prices for its
purchases of electricity for its retail customers.
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In the proposal, FERC articulated a policy that
utilities should be allowed to recover all prudently incurred
costs under the current regulatory regime before moving to a more
competitive one. FERC would follow this policy with regard to
costs subject to its jurisdiction and urged the states to follow
the same policy with regard to costs subject to their
jurisdiction.
Environmental Claims and Other Contingencies
Reference is made to the Note to the financial
statements included in this report for information concerning
potential liabilities of the Company arising from the Federal
Comprehensive Environmental Response, Compensation and Liability
Act of 1980 (Superfund), from claims relating to alleged exposure
to asbestos, and from certain other contingencies to which the
Company is subject.
- 18 -
RESULTS OF OPERATIONS
Net income for common stock for the first quarter
of 1995 was higher than the first quarter of 1994 by $11.7
million ($.05 a share). Net income for common stock for the
twelve months ended March 31, 1995 exceeded the corresponding
1994 period by $52.1 million ($.21 a share).
Increases (Decreases)
Three Months Ended Twelve Months Ended
March 31, 1995 March 31, 1995
Compared With Compared With
Three Months Ended Twelve Months Ended
March 31, 1994 March 31, 1994
Amount Percent Amount Percent
(Amounts in Millions)
Operating revenues $ (29.0) (1.7)% $ (32.9) (.5)%
Fuel (40.2) (26.1) (72.9) (12.1)
Purchased power 59.6 31.7 35.2 4.3
Gas purchased for resale (67.5) (37.8) (74.9) (21.5)
Operating revenues less
fuel and purchased power
and gas purchased for resale
(Net revenues) 19.1 1.6 79.7 1.7
Other operations and
maintenance 1.8 .4 (15.6) (.9)
Depreciation and amortization 5.4 5.2 18.8 4.6
Taxes, other than federal
income tax (15.2) (5.2) (39.1) (3.4)
Federal income tax 12.2 11.6 58.4 14.9
Operating income 14.9 5.6 57.2 5.8
Other income less deductions
and related federal income tax 2.3 Large 5.0 Large
Interest charges and preferred
stock dividend requirements 5.5 6.6 10.1 3.0
Net income for common stock $ 11.7 6.5 % $ 52.1 7.9 %
- 19 -
In reviewing period-to-period comparisons, it should
be noted that not all changes in sales volume affected operating
revenues. Under the ERAM, increases (or decreases) in electric
sales revenues compared with revenues forecast pursuant to the
electric rate agreement were deferred for subsequent credit (or
billing) to customers. Under the weather stabilization clause in
the Company's gas tariff, most weather-related variations in gas
sales did not affect gas revenues.
First Quarter 1995 Compared with
the First Quarter 1994
Net revenues (operating revenues less fuel, purchased
power and gas purchased for resale) increased $19.1 million in
the first quarter of 1995 compared with the 1994 period. Electric
net revenues increased $42.2 million and gas and steam net
revenues decreased $7.6 million and $15.5 million, respectively.
Electric revenues in the 1995 period were enhanced by
the rate increase in April 1994. Under the ERAM, electric net
revenues for the first quarter of 1995 include $7.1 million of
accrued revenues reflecting sales below the forecast, compared
with a credit due customers of $23.1 million reflecting sales
above the forecast in the 1994 period.
Electric net revenues for the first quarter of 1995
include $21.2 million, compared with $42.3 million for the 1994
period, for incentives earned under the provisions of the 1992
electric rate agreement.
- 20 -
In addition, electric net revenues for the first
quarter of 1995 and 1994 also include various reconciliations
under the 1992 electric rate settlement agreement for the
matching of revenues and expenses. Reconciliations related to
Indian Point Unit 2 refueling and maintenance outages and
electric property tax increased electric net revenues for the
first quarter of 1995 as compared with the first quarter of 1994
by approximately $39 million; related expenses increased in like
amounts.
Electric sales, excluding off-system sales, in the
first quarter of 1995 compared with the 1994 period were:
Millions of Kwhrs.
1st Quarter 1st Quarter Percent
Description 1995 1994 Variation Variation
Residential/Religious 2,570 2,629 (59) (2.2)%
Commercial/Industrial 6,119 6,218 (99) (1.6)%
Other 149 147 2 1.4 %
Total Con Edison Customers 8,838 8,994 (156) (1.7)%
NYPA & Municipal Agency
Sales 2,338 2,367 (29) (1.2)%
Total Service Area 11,176 11,361 185 (1.6)%
Gas and steam revenues in the 1995 period were enhanced
by rate increases in October 1994.
For the first quarter of 1995 firm gas sales volume
decreased 14.0 percent and steam sales volume decreased 21.4
- 21 -
percent compared with the 1994 period due to warmer than normal
1995 winter weather compared to colder than normal 1994 winter
weather.
After adjustment for comparability in both periods,
primarily for variations in weather, electric sales volume in the
Company's service territory increased 0.6 percent in the first
quarter of 1995. Similarly adjusted, firm gas sales volume
decreased 0.4 percent and steam sales volume decreased 1.7
percent.
Electric fuel cost decreased in the 1995 period largely
because the Company increased power purchases. During the 1995
period the Company purchased approximately 65% of the electric
energy it generated and purchased. The changes in fuel costs and
purchased power also reflect the reduced generation from the
Company's Indian Point Unit 2, which was out of service for
refueling and maintenance for a large part of the 1995 period.
Gas purchased for resale decreased $67.5 million reflecting a
lower unit cost of purchased gas and decreased sendout. Steam
fuel costs decreased $13.9 million due to decreased sendout.
Depreciation and amortization increased $5.4 million
due principally to higher plant balances.
Taxes other than federal income tax decreased $15.2
million in the first quarter of 1995 due principally to reduced
revenue taxes ($9.7 million), reflecting a decrease in the New
- 22 -
York State Business Tax Surcharge.
Federal income tax increased $12.2 million for the
quarter reflecting higher pre-tax income.
Other income less deductions, less related income
taxes, increased $2.3 million due principally to higher
investment income on temporary cash investments. Interest on
long-term debt increased $4.1 million principally as a result of
the issuance of new debt.
Twelve Months Ended March 31, 1995 Compared with
the Twelve Months Ended March 31, 1994
Net revenues (operating revenues less fuel,
purchased power and gas purchased for resale) increased $79.7
million in the twelve months ended March 31, 1995 compared with
the 1994 period. Electric and gas net revenues increased $88.3
million and $5.5 million, respectively, and steam net revenues
decreased $14.1 million.
Electric revenues in the 1995 period were enhanced by
the rate increase in April 1994. Under the ERAM, electric net
revenues for the twelve months ended March 31, 1995 have been
reduced for a credit due customers of $33.5 million, reflecting
higher sales revenues than forecast, compared with a credit due
customers of $30.4 million reflecting sales above the forecast in
the 1994 period.
- 23 -
Electric net revenues for the twelve months ended
March 31, 1995 include $95.3 million, compared with $100.2
million for the 1994 period, for incentives earned under the 1992
electric rate settlement agreement.
In addition, electric net revenues for the twelve
months ended March 31, 1995 and March 31, 1994 also include
various reconciliations under the 1992 electric rate settlement
agreement for the matching of revenues and expenses. The electric
property tax reconciliation increased electric net revenues for
the twelve months ended March 31, 1995 compared with the 1994
period by approximately $59 million; related expenses increased
in like amount.
Electric sales, excluding off-system sales, for the
twelve months ended March 31, 1995 compared with the twelve
months ended March 31, 1994 were:
Millions of Kwhrs.
Twelve Months Twelve Months
Ended Ended Percent
Description Mar. 31, 1995 Mar. 31, 1994 Variation Variation
Residential/Religious 10,601 10,577 24 0.2 %
Commercial/Industrial 25,413 25,237 176 0.7 %
Other 605 607 (2) (0.3)%
Total Con Edison Customers 36,619 36,421 198 0.5 %
NYPA and Municipal Agency
Sales 9,157 8,883 274 3.1 %
Total Service Area 45,776 45,304 472 1.0 %
- 24 -
Gas revenues in the 1995 period were enhanced by rate
increases in October 1993 and 1994 and steam revenues were
enhanced by a rate increase in October 1994.
For the twelve months ended March 31, 1995 firm gas
sales volume decreased 8.1 percent and steam sales volume
decreased 10.9 percent due to warmer than normal 1995 winter
weather compared to colder than normal 1994 winter weather.
After adjustment for comparability in both periods,
primarily for variations in weather, electric sales volume in the
Company's service territory in the twelve months ended March 31,
1995 increased 1.2 percent. Similarly adjusted, firm gas sales
volume increased 0.3 percent and steam sales volume decreased
0.3 percent.
Electric fuel costs decreased in the 1995 period
largely because of the Company's increased power purchases.
During the 1995 period the Company purchased 54% of the electric
energy it generated and purchased. In addition, lower unit cost
favorably affected fuel and purchased power costs. Gas purchased
for resale decreased $74.9 million reflecting principally a lower
unit cost of purchased gas and lower sendout. Steam fuel costs
decreased $21.3 million due to decreased sendout.
Other operations and maintenance expenses decreased
$15.6 million in the twelve months ended March 31, 1995 compared
- 25 -
with the 1994 period, due to decreased electric and gas
distribution expenses, and decreased production expenses, offset
in part by higher administrative and general expenses. The twelve
months ended March 31, 1994 reflect the full impact of the 1993
refueling outage at Indian Point 2, whereas only a portion of the
1995 outage costs are reflected in the 1995 period.
Depreciation and amortization increased $18.8 million
due principally to higher plant balances.
Taxes, other than federal income tax, decreased $39.1
million in the twelve months ended March 31, 1995 compared with
the 1994 period due primarily to reduced revenue taxes ($27.4
million) and property taxes ($19.8 million), offset in part by
increases in other taxes ($8.2 million).
Federal income tax increased $58.4 million for the
twelve months ended March 31, 1995 compared with the 1994 period
due principally to higher pre-tax income.
Other income less deductions, less related income
taxes, increased $5.0 million due principally to higher
investment income on temporary cash investments. Interest on
long-term debt increased $10.8 million principally as a result of
the issuance of new debt offset in part by the effect of debt
refundings in the twelve-month period ended March 31, 1994.
- 26 -
PART II. - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
GRAMERCY PARK
Reference is made to the information contained under the
caption "Gramercy Park" in Part I, Item 3, Legal Proceedings, in
the Company's Annual Report on Form 10-K for the year ended
December 31, 1994. In April 1995, the Company was sentenced to a
fine of $500,000 on each of four counts and to three years
probation, during which time the Company's compliance with
environmental laws will be monitored by a court-appointed
monitor.
- 27 -
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS
Exhibit 12 Statement of computation of ratio of earnings to
fixed charges for the twelve-month periods ended
March 31, 1995 and 1994.
Exhibit 27 Financial Data Schedule. (To the extent provided
in Rule 402 of Regulation S-T, this exhibit shall
not be deemed "filed", or otherwise subject to
liabilities, or be deemed part of a registration
statement.)
(b) REPORTS ON FORM 8-K
The Company filed a Current Report on Form 8-K, dated
February 13, 1995, reporting (under Item 5) the settlement
agreement discussed under the caption "Liquidity and Capital
Resources - 1994 Electric Rate Increase Filing" in Item 7 of the
Company's Annual Report on Form 10-K, for the year ended December
31, 1994. The approval of the settlement agreement by the New
York State Public Service Commission is discussed under the
caption "Liquidity and Capital Resources - 1995 Rate Settlement
Agreement "in Part 1, Item 2 of this report. The Company filed
no other Current Reports on Form 8-K during the quarter ended
March 31, 1995.
- 28 -
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned thereunto duly authorized.
CONSOLIDATED EDISON COMPANY
OF NEW YORK, INC.
DATE: May 10, 1995 Raymond J. McCann
Raymond J. McCann
Executive Vice President,
Chief Financial Officer and
Duly Authorized Officer
DATE: May 10, 1995 Joan S. Freilich
Joan S. Freilich
Vice President, Controller and
Chief Accounting Officer
INDEX TO EXHIBITS
SEQUENTIAL PAGE
EXHIBIT NUMBER AT WHICH
NO. DESCRIPTION EXHIBIT BEGINS
12 Statement of computation of ratio
of earnings to fixed charges for
the twelve-month periods ended
March 31, 1995 and 1994.
27 Financial Data Schedule. (To the extent
provided in Rule 402 of Regulation S-T,
this exhibit shall not be deemed "filed",
or otherwise subject to liabilities, or be
deemed part of a registration statement.)
CONSOLIDATED EDISON COMPANY OF NEW YORK, INC.
RATIO OF EARNINGS TO FIXED CHARGES
TWELVE MONTHS ENDED
(Thousands of Dollars)
MARCH MARCH
1995 1994
Earnings
Net Income $ 745,989 $ 693,892
Federal Income Tax 287,480 344,270
Federal Income Tax Deferred 172,450 58,130
Investment Tax Credits Deferred (9,560) (11,450)
Total Earnings Before
Federal Income Tax 1,196,359 1,084,842
Fixed Charges* 332,848 322,456
Total Earnings Before Federal
Income Tax and Fixed Charges $1,529,207 $1,407,298
*Fixed Charges
Interest on Long-Term Debt $ 281,656 $ 272,152
Amortization of Debt Discount,
Premium and Expenses 11,487 10,221
Interest Component of Rentals 18,554 18,912
Other Interest 21,151 21,171
Total Fixed Charges $ 332,848 $ 322,456
Ratio of Earnings to Fixed Charges 4.59 4.36
UT
