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 SEPTEMBER 30, 1994
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 October 31, 1994, the Registrant
had outstanding 234,898,683 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 5-7
Consolidated Statements of Cash Flows 8-9
Notes to Financial Statements 10-13
ITEM 2. Management's Discussion and Analysis of 14-27
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, 1993 (File No. 1-1217).
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CONSOLIDATED EDISON COMPANY OF NEW YORK, INC.
CONSOLIDATED BALANCE SHEET
AS AT SEPTEMBER 30, 1994, DECEMBER 31, 1993 AND SEPTEMBER 30, 1993
As At
Sept. 30, 1994 Dec. 31, 1993 Sept. 30, 1993
(Thousands of Dollars)
ASSETS
Utility plant, at original cost
Electric $ 10,819,169 $ 10,530,193 $ 10,500,636
Gas 1,398,780 1,341,704 1,307,205
Steam 416,878 403,411 389,956
General 1,075,428 1,015,947 986,303
Total 13,710,255 13,291,255 13,184,100
Less: Accumulated depreciation 3,790,758 3,594,784 3,639,179
Net 9,919,497 9,696,471 9,544,921
Construction work in progress 383,425 389,244 390,835
Nuclear fuel assemblies and components,
less accumulated amortization 90,666 70,441 72,217
Net utility plant 10,393,588 10,156,156 10,007,973
Current assets
Cash and temporary cash investments 360,737 36,756 203,963
Accounts receivable - customers, less
allowance for uncollectible accounts of
$21,509, $21,600 and $19,928 492,486 459,261 500,072
Other receivables 62,417 84,955 72,989
Regulatory accounts receivable 16,994 97,117 99,328
Fuel, at average cost 54,505 53,755 43,077
Gas in storage, at average cost 48,831 49,091 45,407
Materials and supplies, at average cost 238,930 245,785 260,235
Prepayments 169,929 56,274 163,532
Other current assets 14,289 11,486 11,131
Total current assets 1,459,118 1,094,480 1,399,734
Investments and nonutility property
Investments 109,183 92,108 89,142
Nonutility property 1,207 1,791 1,722
Total investments and nonutility property 110,390 93,899 90,864
Deferred charges
Recoverable fuel costs (15,722) 17,649 23,989
Enlightened Energy program costs 161,152 140,057 123,456
Unamortized debt expense 139,305 144,928 119,518
Power contract termination costs 148,751 121,740 121,740
Other deferred charges 316,444 337,826 333,314
Total deferred charges 749,930 762,200 722,017
Regulatory asset-future
federal income taxes 1,335,932 1,376,759 1,358,274
Total $ 14,048,958 $ 13,483,494 $ 13,578,862
The accompanying notes are an integral part of these financial statements.
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CONSOLIDATED EDISON COMPANY OF NEW YORK, INC.
CONSOLIDATED BALANCE SHEET
AS AT SEPTEMBER 30, 1994, DECEMBER 31, 1993 AND SEPTEMBER 30, 1993
As At
Sept. 30, 1994 Dec. 31, 1993 Sept. 30, 1993
(Thousands of Dollars)
CAPITALIZATION AND LIABILITIES
Capitalization
Common stock, authorized 340,000,000 shares;
outstanding 234,895,212 shares, 234,372,931
shares and 233,978,202 shares $ 1,463,835 $ 1,448,845 $ 1,436,799
Capital stock expense (39,005) (39,201) (39,205)
Retained earnings 3,896,475 3,658,886 3,663,980
Total common equity 5,321,305 5,068,530 5,061,574
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 preferred stock 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 5,387 5,728 5,893
Total other preferred stock 540,387 540,728 540,893
Total preferred stock 640,387 640,728 640,893
Long-term debt 3,932,799 3,643,891 3,785,624
Total capitalization 9,894,491 9,353,149 9,488,091
Noncurrent liabilities
Obligations under capital leases 48,443 50,355 50,992
Other noncurrent liabilities 82,897 125,369 162,360
Total noncurrent liabilities 131,340 175,724 213,352
Current liabilities
Long-term debt due within one year 135,743 133,639 13,505
Accounts payable 315,857 399,543 309,766
Customer deposits 160,964 157,380 156,963
Accrued income taxes 147,586 28,410 204,713
Other accrued taxes 23,415 30,896 43,130
Accrued interest 70,555 82,002 70,266
Accrued wages 83,480 81,174 79,405
Other current liabilities 146,690 172,876 176,440
Total current liabilities 1,084,290 1,085,920 1,054,188
Deferred credits
Accumulated deferred federal income tax 1,114,882 1,083,720 1,052,117
Accumulated deferred investment tax credits 193,944 201,144 204,124
Other deferred credits 294,079 207,078 208,716
Total deferred credits 1,602,905 1,491,942 1,464,957
Deferred tax liability-future
federal income taxes 1,335,932 1,376,759 1,358,274
Total $ 14,048,958 $ 13,483,494 $ 13,578,862
The accompanying notes are 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 SEPTEMBER 30, 1994 AND 1993
1994 1993
(Thousands of Dollars)
Operating revenues
Electric $ 1,642,823 $ 1,629,464
Gas 115,239 107,375
Steam 63,929 62,846
Total operating revenues 1,821,991 1,799,685
Operating expenses
Fuel and purchased power 375,679 389,893
Gas purchased for resale 30,940 28,781
Other operations 279,654 272,049
Maintenance 110,674 125,766
Depreciation and amortization 106,098 101,806
Taxes, other than federal income tax 303,631 304,929
Federal income tax 196,940 176,360
Total operating expenses 1,403,616 1,399,584
Operating income 418,375 400,101
Other income (deductions)
Investment income 2,930 830
Allowance for equity funds used during construction 1,781 1,160
Other income less miscellaneous deductions (6,328) (1,815)
Federal income tax 500 990
Total other income (1,117) 1,165
Income before interest charges 417,258 401,266
Interest on long-term debt 73,628 71,315
Other interest 4,545 5,649
Allowance for borrowed funds used during construction (784) (535)
Net interest charges 77,389 76,429
Net income 339,869 324,837
Preferred stock dividend requirements 8,896 8,904
Net income for common stock $ 330,973 $ 315,933
Common shares outstanding - average (000) 234,889 233,974
Earnings per share $ 1.41 $ 1.35
Dividends declared per share of common stock $ .50 $ .485
Sales
Electric (Thousands of Kwhrs.)
Con Edison Customers 10,867,000 10,778,674
Deliveries for NYPA Customers 2,286,314 2,217,908
Service for Municipal Agencies 112,704 95,729
Total Sales in Service Territory 13,266,018 13,092,311
Other Electric Utilities (a) 402,300 138,670
Gas - Firm Customers (Dekatherms) 10,056,613 9,660,688
Steam (Thousands of Lbs.) 6,768,672 6,854,430
(a) The 1993 period includes 192 thousands of kwhrs. which were sold to the New York
Power Authority ("NYPA") and are also included in the deliveries for NYPA.
There were no such sales in the 1994 period.
The accompanying notes are an integral part of these financial statements.
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CONSOLIDATED EDISON COMPANY OF NEW YORK, INC.
CONSOLIDATED INCOME STATEMENT
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1994 AND 1993
1994 1993
(Thousands of Dollars)
Operating revenues
Electric $ 3,936,365 $ 3,934,127
Gas 698,801 593,776
Steam 276,672 253,877
Total operating revenues 4,911,838 4,781,780
Operating expenses
Fuel and purchased power 1,038,234 1,101,035
Gas purchased for resale 283,070 209,414
Other operations 834,778 818,633
Maintenance 384,964 406,504
Depreciation and amortization 314,418 300,723
Taxes, other than federal income tax 857,733 888,422
Federal income tax 357,100 300,130
Total operating expenses 4,070,297 4,024,861
Operating income 841,541 756,919
Other income (deductions)
Investment income 5,615 2,843
Allowance for equity funds used during construction 6,432 5,897
Other income less miscellaneous deductions (9,544) (586)
Federal income tax (670) (150)
Total other income 1,833 8,004
Income before interest charges 843,374 764,923
Interest on long-term debt 215,954 211,839
Other interest 13,860 14,578
Allowance for borrowed funds used during construction (2,831) (2,722)
Net interest charges 226,983 223,695
Net income 616,391 541,228
Preferred stock dividend requirements 26,692 26,715
Net income for common stock $ 589,699 $ 514,513
Common shares outstanding - average (000) 234,710 233,959
Earnings per share $ 2.51 $ 2.20
Dividends declared per share of common stock $ 1.50 $ 1.455
Sales
Electric (Thousands of Kwhrs.)
Con Edison Customers 28,151,349 27,672,575
Deliveries for NYPA Customers 6,590,006 6,318,137
Service for Municipal Agencies 305,061 270,067
Total Sales in Service Territory 35,046,416 34,260,779
Other Electric Utilities (a) 1,129,809 465,381
Gas - Firm Customers (Dekatherms) 73,158,618 67,572,516
Steam (Thousands of Lbs.) 25,055,697 23,248,249
(a) The 1993 period includes 192 thousands of kwhrs. which were sold to the New York
Power Authority ("NYPA") and are also included in the deliveries for NYPA.
There were no such sales in the 1994 period.
The accompanying notes are 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 SEPTEMBER 30, 1994 AND 1993
1994 1993
(Thousands of Dollars)
Operating revenues
Electric $ 5,133,903 $ 5,134,720
Gas 913,414 790,986
Steam 348,135 334,884
Total operating revenues 6,395,452 6,260,590
Operating expenses
Fuel and purchased power 1,355,029 1,451,565
Gas purchased for resale 363,363 282,508
Other operations 1,123,111 1,104,796
Maintenance 549,254 565,320
Depreciation and amortization 417,424 397,832
Taxes, other than federal income tax 1,128,595 1,178,595
Federal income tax 422,990 351,810
Total operating expenses 5,359,766 5,332,426
Operating income 1,035,686 928,164
Other income (deductions)
Investment income 7,706 5,187
Allowance for equity funds used during construction 7,758 8,729
Other income less miscellaneous deductions (16,524) (3,335)
Federal income tax 490 (970)
Total other income (570) 9,611
Income before interest charges 1,035,116 937,775
Interest on long-term debt 285,870 279,091
Other interest 19,004 20,923
Allowance for borrowed funds used during construction (3,443) (4,100)
Net interest charges 301,431 295,914
Net income 733,685 641,861
Preferred stock dividend requirements 35,594 35,537
Net income for common stock $ 698,091 $ 606,324
Common shares outstanding - average (000) 234,543 233,950
Earnings per share $ 2.98 $ 2.59
Dividends declared per share of common stock $ 1.985 $ 1.93
Sales
Electric (Thousands of Kwhrs.)
Con Edison Customers 36,719,773 36,254,221
Deliveries for NYPA Customers 8,713,494 8,385,445
Service for Municipal Agencies 396,848 377,268
Total Sales in Service Territory 45,830,115 45,016,934
Other Electric Utilities (a) 1,269,273 523,968
Gas - Firm Customers (Dekatherms) 95,425,428 90,744,373
Steam (Thousands of Lbs.) 31,201,783 30,137,121
(a) The 1994 and 1993 periods include 1,950 and 192 thousands of Kwhrs. respectively,
which were sold to the New York Power Authority ("NYPA") and are also included in
the deliveries for NYPA.
The accompanying notes are 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 NINE MONTHS ENDED SEPTEMBER 30, 1994 AND 1993
1994 1993
(Thousands of Dollars)
Operating activities
Net income $ 616,391 $ 541,228
Principal non-cash charges (credits) to income
Depreciation and amortization 314,418 300,723
Deferred recoverable fuel costs 33,371 (2,468)
Federal income tax deferred 17,920 67,750
Common equity component of allowance
for funds used during construction (6,065) (5,548)
Other non-cash charges 41,388 (23,342)
Changes in assets and liabilities
Accounts receivable - customers, less
allowance for uncollectibles (33,225) (75,723)
Regulatory accounts receivable 80,123 68,603
Materials and supplies, including fuel
and gas in storage 6,365 60,466
Prepayments, other receivables and
other current assets (93,920) (127,173)
Enlightened Energy program costs (21,095) (42,696)
Federal income tax refund 52,937 -
Power contract termination costs (63,480) (60,870)
Accounts payable (83,686) (66,770)
Accrued income taxes 119,176 167,214
Other - net (39,020) (12,824)
Net cash flows from operating activities 941,598 788,570
Investing activities including construction
Construction expenditures (498,233) (552,323)
Nuclear fuel expenditures (39,191) (9,005)
Contributions to nuclear decommissioning trust (11,669) (16,330)
Common equity component of allowance
for funds used during construction 6,065 5,548
Net cash flows from investing activities
including construction (543,028) (572,110)
Financing activities including dividends
Issuance of common stock 14,650 -
Issuance of long-term debt 300,000 1,231,000
Retirement of long-term debt (7,015) (156,406)
Advance refunding of long-term debt - (922,257)
Issuance and refunding costs (3,423) (80,160)
Common stock dividends (352,111) (340,415)
Preferred stock dividends (26,690) (26,713)
Net cash flows from financing activities
including dividends (74,589) (294,951)
Net increase (decrease) in cash and temporary
cash investments 323,981 (78,491)
Cash and temporary cash investments
at January 1 36,756 282,454
Cash and temporary cash investments
at September 30 $ 360,737 $ 203,963
Supplemental disclosure of cash flow information
Cash paid during the period for:
Interest $ 215,586 $ 210,864
Income taxes 206,186 65,491
The accompanying notes are 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 SEPTEMBER 30, 1994 AND 1993
1994 1993
(Thousands of Dollars)
Operating activities
Net income $ 733,685 $ 641,861
Principal non-cash charges (credits) to income
Depreciation and amortization 417,424 397,832
Deferred recoverable fuel costs 39,711 (3,339)
Federal income tax deferred 44,380 64,850
Common equity component of allowance
for funds used during construction (7,312) (8,197)
Other non-cash charges 40,281 (25,930)
Changes in assets and liabilities
Accounts receivable - customers, less
allowance for uncollectibles 7,586 (81,786)
Regulatory accounts receivable 82,334 36,433
Materials and supplies, including fuel
and gas in storage 6,453 38,259
Prepayments, other receivables and
other current assets 1,017 (3,193)
Enlightened Energy program costs (37,696) (56,726)
Federal income tax refund 52,937 -
Power contract termination costs (70,990) (60,870)
Accounts payable 6,091 (22,393)
Accrued income taxes (57,127) 99,110
Other - net (80,481) 45,657
Net cash flows from operating activities 1,178,293 1,061,568
Investing activities including construction
Construction expenditures (734,978) (808,227)
Nuclear fuel expenditures (44,278) (13,045)
Contributions to nuclear decommissioning trust (14,586) (16,330)
Common equity component of allowance
for funds used during construction 7,312 8,197
Net cash flows from investing activities
including construction (786,530) (829,405)
Financing activities including dividends
Issuance of common stock 26,530 -
Issuance of long-term debt 447,475 1,431,000
Retirement of long-term debt (28,506) (307,273)
Advance refunding of long-term debt
and preferred stock (147,475) (1,072,257)
Funds held for redemption of mortgage bonds - 148,099
Issuance and refunding costs (31,824) (90,589)
Common stock dividends (465,598) (451,529)
Preferred stock dividends (35,591) (35,314)
Net cash flows from financing activities
including dividends (234,989) (377,863)
Net increase (decrease) in cash and
temporary cash investments 156,774 (145,700)
Cash and temporary cash investments
at beginning of period 203,963 349,663
Cash and temporary cash investments
at September 30 $ 360,737 $ 203,963
Supplemental disclosure of cash flow information
Cash paid during the period for:
Interest $ 270,197 $ 270,134
Income taxes 420,817 184,957
The accompanying notes are an integral part of these financial statements.
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NOTES TO FINANCIAL STATEMENTS
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
For purposes of these interim financial statements,
the information in this note supplements the information under
the same headings in Note A to the financial statements included
in the Company's Annual Report on Form 10-K for the year ended
December 31, 1993 (File No. 1-1217).
NUCLEAR DECOMMISSIONING. In the first quarter of 1994 a
site-specific study was prepared for both the Indian Point 2 and
the retired Indian Point 1 nuclear units. The estimated
decommissioning cost in 1993 dollars is $657 million, comprised
of $609 million for nuclear and $48 million for non-nuclear
portions of the units. Assuming the expenditures will be made in
2016, on a dollar-weighted average basis, and assuming an average
annual escalation rate of five percent, the estimated
decommissioning cost in future dollars is $2,019 million,
comprised of $1,870 million for nuclear and $149 million for
non-nuclear portions. Based on the study, the Company is seeking
in its electric rate filing submitted to the Public Service
Commission in April 1994 an increase of $27.6 million in the
annual decommissioning allowance for the nuclear portion of the
plant.
INVESTMENTS. In the first quarter of 1994 the Company adopted
Statement of Financial Accounting Standards No. 115, "Accounting
for Certain Investments in Debt and Equity Securities". Pursuant
to the Statement, the securities held in the Company's nuclear
decommissioning trust fund at September 30, 1994 are reported at
fair value. Pursuant to the accounting requirements of the
Federal Energy Regulatory Commission, gains or losses are
included in nuclear decommissioning trust assets and added to
accumulated decommissioning included within Accumulated
Depreciation. Accordingly, the $1.2 million net unrealized gain
resulting from reporting the securities at fair value at
September 30, 1994 has been included in the accumulated
depreciation reserve.
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NOTE B - CONTINGENCIES
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. Based on data from the latest inspection (1993) and other
sources, 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, and has stored
at the site, replacement steam generators. If replacement of the
steam generators is required, such replacement is presently
estimated (in 1993 dollars) to require additional expenditures of
approximately $135 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 polices 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 September 30, 1994, the highest
amount which could be assessed for losses during the current
policy year under all of the policies was $24.5 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 $3.2
million.
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SUPERFUND CLAIMS. The Federal Comprehensive Environmental
Response, Compensation and Liability Act of 1980 (Superfund) by
its terms imposes joint and several strict liability, regardless
of fault, upon generators of hazardous substances for resulting
removal and remedial costs and environmental damages. Complex
technical and factual determinations must be made prior to the
ultimate disposition of these claims. Accordingly, estimates of
removal, remedial and environmental damage costs for these sites
may not be accurate. Moreover, the Company at appropriate times
seeks recovery of its share of these costs under any applicable
insurance coverage and through inclusion of such costs in
allowable costs for rate-making purposes.
The Company has received process or notice concerning
possible claims under Superfund or similar state statutes
relating to 15 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. For most, but not all, of these sites, the Company
has developed estimates of investigative, removal, remedial and
environmental damage costs it will be obligated to pay. These
estimates aggregate approximately $12 million and the Company has
accrued a liability in this amount. It is possible that
substantial additional costs may be incurred with respect to the
15 sites and other sites.
The Company evaluates its potential Superfund liability on
an ongoing basis. Based on the information and relevant
circumstances known to the Company at this time, it is the
opinion of the Company that the amounts it will be obligated to
pay for the 15 sites will not have a material adverse effect on
the Company's financial position.
DEC PROCEEDING. In June 1992 the Staff of the New York State
Department of Environmental Conservation (DEC) instituted a civil
administrative proceeding against the Company before the DEC,
alleging environmental violations. The complaint sought
approximately $20 million in civil penalties, and injunctive
measures. The Company settled this complaint with the DEC under
a consent order signed in November 1994. Under the consent
order, the Company is assessed a $9 million penalty and will
contribute $5 million to a fund to support programs designed to
benefit the environment. The Company must also conduct an
environmental compliance audit and an environmental management
review, develop and implement a "best management practices plan"
for certain facilities and undertake a remediation program for
certain sites. The Company presently estimates the cost of the
remediation program to be approximately $13.8 million. A $1
million suspended penalty could be assessed in the event of
material or substantive violations of the consent order.
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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.
ELECTRIC AND MAGNETIC FIELDS. Electric and magnetic fields (EMF)
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. In the event that a causal relationship between EMF and
adverse health effects is established, 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, 1993 (File No. 1-1217). Reference
is made to the notes to the financial statements in Item 1 of
this report, which notes are incorporated herein by reference.
LIQUIDITY AND CAPITAL RESOURCES
Cash and temporary investments were $360.7 million at
September 30, 1994 compared with $36.8 million at December 31,
1993 and $204.0 million at September 30, 1993. 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 federal income tax refunds and related interest.
In February 1994 the Company issued $150 million of
35-year debentures. The debentures bear an interest rate of 7-1/8
percent. Pursuant to its amended dividend reinvestment plan, in
the first quarter of 1994 the Company issued new shares of common
stock for $14.6 million.
In July 1994 the Company issued $150 million of
five-year floating rate debentures due July 1, 1999 which were
offered to the public at 99.9452 percent. The initial interest
rate of 5-1/8 percent was based on a spread of 0.1875 percent
over the three-month LIBOR (London Interbank Offered Rate), and
will be reset quarterly. The rate for the fourth quarter of 1994
has been reset at 5-5/8 percent.
In October 1994 the Company redeemed at maturity the
$125 million 4.60 percent Series BB mortgage bonds.
The Company expects to finance the balance of its
capital requirements for the remainder of 1994 and 1995 from
internally generated funds and external financing of about $250
million. Most, if not all, of this financing will be debt issues.
- 15 -
Customer accounts receivable, less allowance for
uncollectible accounts, amounted to $492.5 million at September
30, 1994 compared with $459.3 million at December 31, 1993 and
$500.1 million at September 30, 1993. In terms of equivalent days
of revenue outstanding, these amounts represented 25.8, 27.6 and
24.6 days, respectively.
Regulatory accounts receivable, amounting to $17.0
million at September 30, 1994, $97.1 million at December 31, 1993
and $99.3 million at September 30, 1993, represents accruals
under the three-year electric rate settlement agreement effective
April 1, 1992. It includes the "ERAM" accrual (differences in
actual electric sales revenues from the levels forecast in the
agreement), incentives and "lost revenues" related to the
Company's Enlightened Energy program, incentives for customer
service, and savings achieved in fuel and purchased power costs
relative to target levels. Regulatory accounts receivable were
reduced in 1993 and the first nine months of 1994 by billings to
customers of prior period incentive accruals and by negative ERAM
accruals for the first nine months of the year (reflecting sales
in excess of estimated levels).
In July 1994 the Company made a semi-annual payment
of $207.3 million to New York City for property taxes.
Prepayments and other current assets at September 30, 1994
include the unamortized portion (approximately $108.7 million) of
this payment.
Deferred charges include Enlightened Energy program
costs of $161.2 million at September 30, 1994, $140.1 million at
December 31, 1993 and $123.5 at September 30, 1993. Under the
provisions of the 1992 electric rate settlement agreement, these
costs are generally recoverable over a five-year period.
In March 1994 the Company received federal income tax
refunds and related interest for years 1980 through 1986
amounting to approximately $60 million, $53 million of which is
currently deferred and included in other deferred credits pending
future rate treatment.
- 16 -
As a result of 1993 tax law changes, the Company will
generally be required, beginning in 1994, to pay a larger portion
of its current year federal income tax during the first three
quarters of each year, than had been required in prior years.
Largely because of this change (as well as higher pre-tax
income), income taxes paid during the first nine months of 1994
were $140.7 million higher than in the corresponding 1993 period,
while accrued income taxes at September 30, 1994 were $57.1
million lower than at September 30, 1993.
Interest coverage under the SEC formula for the
twelve months ended September 30, 1994 was 4.57 times compared
with 4.19 times for the year 1993 and 4.12 times for the twelve
months ended September 30, 1993.
Gas and Steam Rate Agreements
In October 1994 the Public Service Commission ("PSC")
approved three-year rate agreements for gas and steam services.
The agreements provide for gas and steam rate increases in the
first rate year of $7.7 million (0.9 percent) and $9.9 million
(3.0 percent), respectively, and a methodology for rate changes
in the second and third rate years. For both services, the
October 1994 increases reflect a 10.9 percent rate of return on
common equity and a 52.0 percent common equity ratio. The
agreements contain "excess earnings" provisions giving
stockholders the benefit of 100 percent retention of any earnings
between 10.90 percent and 11.65 percent, and 50 percent sharing
with customers above 11.65 percent. The gas agreement contains
incentive/penalty mechanisms (not subject to the "excess
earnings" provisions), equivalent to approximately 85 basis
points of return on common equity.
Under two-year gas and steam rate agreements approved
by the PSC in October 1992, earnings above 11.95 percent were to
be shared with customers. The Company's rate of return on steam
common equity for the second rate year was above the sharing
threshold and as a result the Company recorded in 1994 a
provision for refund to steam customers of 50 percent of the
excess, or $3.3 million. Gas equity earnings did not exceed the
threshold during the agreement period.
- 17 -
1992 Electric Rate Agreement
In March 1994 the PSC approved an electric rate
increase of $55.2 million (1.1 percent), which became effective
April 1, 1994 for the third and final year of the 1992 electric
rate agreement, the twelve months ended March 31, 1995. Effective
April 1, 1994, the Company's electric rates reflect the increase
in the federal income tax rate from 34 percent to 35 percent
which had previously been deferred.
For the second rate year, the twelve months ended
March 31, 1994, 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 11.2
percent, which was below the 11.85 percent threshold for sharing
earnings with ratepayers.
1994 Electric Rate Increase Filing
In April 1994 the Company filed for a $191.3 million
(3.6 percent) electric rate increase to become effective April 1,
1995. This consists of an increase of $168.7 million for Con
Edison customers and a $22.6 million increase for delivery
services to the New York Power Authority ("NYPA") and its
Economic Development customers. The rate increase request was
premised upon an allowed equity return of 11.75 percent and a
common equity ratio of 52.0 percent of total capitalization. The
major reasons for the requested increase are power purchases
required from independent power producers ("IPPs"), increased
taxes and infrastructure investment.
The filing includes measures to distribute more
equitably the Company's costs of providing service and better
position the Company in the increasingly competitive electric
utility industry. The Company has proposed tariff changes for
back-up and supplemental service to customers that install
on-site generation, so as to reflect more accurately the cost of
these services, and charges to reimburse the Company for the
costs incurred to serve present Company customers that currently
are eligible for, and in the future elect to take, service from
NYPA. The Company has also requested additional depreciation
allowances for retired generation facilities and acceleration of
recovery of other production plant.
- 18 -
The filing includes a proposal for a three-year rate
agreement, with estimated increases in the second and third years
averaging 1.5 percent a year. These estimated increases do not
reflect the possible effect of any incentives earned (or
penalties) or other reconciliations.
On September 9, 1994, the PSC trial staff and
intervenors filed their recommendations applicable to the
electric filing. PSC trial staff recommended a first-year rate
reduction of $199 million, reflecting the proposed disallowance
of certain costs of the Company's contract for energy from Sithe
Energies' Independence power plant, an equity return of 11.1%,
rejection of the Company's proposals for accelerated recovery of
retired generation facilities and other production plant, and
various other expense adjustments. PSC trial staff also proposed
to substantially reduce incentives, and limit future rate changes
so as to reduce the difference between the Company's rates and
national average electric rates by one-half over a ten-year
period. In addition, the staff proposed to eliminate the fuel
adjustment clause and to reconcile sales revenues annually to a
target that reflects the average forecasted revenue per customer
for each service classification.
If adopted, the trial staff's position could have
serious adverse effects on the Company's future financial
position and results of operations. In particular, elimination of
the fuel adjustment clause could expose the Company to
substantial risks of non-recovery of fuel price increases.
However, the trial staff's recommendations are but one interim
step in a year-long rate-setting process which will end with a
decision by the Commission itself, which may differ
significantly.
On September 23, 1994, the Company revised its total
rate increase request to $223 million, based on updated
projections, including a cost of equity of 12.25 percent. The
Administrative Law Judges are expected to issue a recommended
decision in January 1995 and a PSC decision is expected in March
1995. In the interim the Company, PSC staff and intervenors have
opened discussions on a possible multi-year settlement agreement.
- 19 -
Credit Ratings
The Company's senior debt securities (first mortgage
bonds) are rated Aa2 by Moody's Investors Service, Inc.
("Moody's"), AA- by Standard & Poor's Corporation ("S&P") and AA-
by Duff and Phelps, Inc. In September 1994, following the filing
by the PSC's trial staff of its recommendations with respect to
the Company's 1994 electric rate increase filing, Moody's placed
its rating of the Company under review for possible downgrade and
S&P placed its ratings of the Company on CreditWatch with
negative implications.
Possible Accounting Effects of Competition
Regulatory proceedings are pending in numerous
states, including New York, and before the Federal Energy
Regulatory Commission, relating to increasing competition in the
electric utility industry, and the regulatory response to such
competition. Among the issues being considered is the extent to
which, in a competitive environment, rate regulation should
provide for recovery of all costs prudently incurred. These
proceedings could affect the eligibility of electric utilities to
apply Statement of Financial Accounting Standards No. 71,
"Accounting for the Effects of Certain Types of Regulation"
("SFAS No. 71"). If the Company were to be rendered ineligible to
rely on SFAS No. 71, significant write-downs of assets could be
required.
Electric Generating Capacity
In May 1994 the Company terminated a power purchase
arrangement with NYPA under which it would have received
substantial amounts of electricity from Hydro-Quebec during a 20
year period beginning in 1999. This arrangement no longer
represented an economical power purchase for the Company's
electric customers. The Company is exploring with Hydro-Quebec an
extension of the existing summer diversity contract, set to
expire in 1998, for a period of up to five years. Under the
current contract, the Company purchases 780 MW of capacity and
associated energy from Hydro-Quebec during the summer months.
- 20 -
The Company has terminated IPP contracts involving
approximately 585 MW of capacity and related energy for $169
million (exclusive of interest) to be paid over a period of
several years. The Company's electric customers will save
substantially more than this amount, based on current estimates
of future market prices for power. Termination costs for
approximately 440 MW are being recovered in rates over a
three-year period beginning April 1, 1994; recovery of the rest
has been proposed in the Company's current electric rate case.
The Company continues to explore economic opportunities to
terminate additional IPP contracts.
Nuclear Decommissioning
Reference is made to Note A to the financial
statements in this report for information concerning new
estimates of decommissioning costs and proposed rate treatment of
such costs.
Nuclear Fuel Disposal
Reference is made to the heading, "Fuel Supply -
Nuclear Fuel" in Item 1 of the Company's Annual Report on Form
10-K for the year ended December 31, 1993. The Company has a
contract with the United States Department of Energy (DOE), under
the Federal Nuclear Waste Policy Act of 1982, which provides
that, in return for payments being made by the Company to the DOE
pursuant to the contract, the DOE starting in 1998 will take
title to the Company's spent nuclear fuel (SNF), transport it to
a Federal repository and store it permanently. Although the
contract has not been changed, the DOE has announced that it will
probably not take possession of SNF before 2010. Recently, the
DOE has also taken the position that it is not obligated to begin
accepting SNF until it has an appropriate facility for such
purpose. In June 1994 the Company and a number of other utilities
petitioned the United States Court of Appeals for the District of
Columbia for a declaratory judgment that the DOE is
unconditionally obligated to begin accepting SNF by 1998, an
order directing the DOE to implement a program enabling it to
begin acceptance of SNF by 1998, and, if warranted, appropriate
relief for the financial burden to the utilities resulting from
the DOE's delay. The Company estimates that it will incur
substantial additional costs for interim storage of SNF after
2005 if the DOE facility is not available by then. These
additional costs are included in the estimated decommissioning
costs for which the Company is seeking an allowance in its
pending electric rate increase filing.
- 21 -
Uranium Enrichment Decontamination and Decommissioning Fund
Under the Energy Policy Act of 1992, the DOE is to
collect a special annual assessment, for a period of 15 years,
from utilities that have purchased enriched uranium from the DOE.
The Company has paid $5.0 million for the 1993 and 1994
assessments attributable to Indian Point Units 1 and 2. The 1995
assessment, which is payable in October 1994, is approximately
$2.5 million, with similar amounts due annually thereafter.
Future amounts are subject to review and adjustment for
inflation. The Company's liability at September 30, 1994 for
future installments of this assessment is $32.7 million, of which
$30.2 million is classified as non-current. The Company is
recovering these costs through its electric fuel adjustment
clause.
Clean Air Act Amendments
Reference is made to the heading "Clean Air Act
Amendments" in Item 7 of the Company's Annual Report on Form 10-K
for the year ended December 31, 1993. New York and nine other
member states of the Ozone Transport Commission have entered into
a Memorandum of Understanding (MOU) concerning the establishment
of Phase II nitrogen oxide emissions limits set by the New York
State Department of Environmental Conservation under the
Reasonably Available Control Technology provisions of the Clean
Air Act. Based on the MOU, the Company's current estimate of the
cost of post-Phase I compliance is $180 million, substantially
less than previously estimated.
Superfund and Asbestos Claims and Other Contingencies
Reference is made to Note B 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.
- 22 -
RESULTS OF OPERATIONS
Net income for common stock for the third quarter of
1994 was $15.0 million ($.06 a share) higher than the third
quarter of 1993. Net income for common stock for the nine and
twelve months ended September 30, 1994 exceeded the corresponding
1993 periods by $75.2 million ($.31 a share) and $91.8 million
($.39 a share), respectively.
Increases (Decreases)
Three Months Ended Nine Months Ended Twelve Months Ended
Sept. 30, 1994 Sept. 30, 1994 Sept. 30, 1994
Compared With Compared With Compared with
Three Months Ended Nine Months Ended Twelve Months Ended
Sept. 30, 1993 Sept. 30, 1993 Sept. 30, 1993
Amount Percent Amount Percent Amount Percent
(Amounts in Millions)
Operating revenues $ 22.3 1.2 % $ 130.1 2.7 % $ 134.9 2.2 %
Fuel and purchased power (14.2) (3.6) (62.8) (5.7) (96.5) (6.7)
Gas purchased for resale 2.1 7.5 73.7 35.2 80.9 28.6
Operating revenues less
fuel and purchased power
and gas purchased for resale
(Net revenues) 34.4 2.5 119.2 3.4 150.5 3.3
Other operations and maintenance (7.5) (1.9) (5.4) (0.4) 2.2 0.1
Depreciation and amortization 4.3 4.2 13.7 4.6 19.6 4.9
Taxes, other than federal
income tax (1.3) (0.4) (30.7) (3.5) (50.0) (4.2)
Federal income tax 20.6 11.7 57.0 19.0 71.2 20.2
Operating income 18.3 4.6 84.6 11.2 107.5 11.6
Other income less deductions,
less related federal income tax (2.3) Large (6.2) (77.1) (10.2) Large
Interest charges and preferred
stock dividend requirements 1.0 1.1 3.2 1.3 5.5 1.7
Net income for common stock $ 15.0 4.8 % $ 75.2 14.6 % $ 91.8 15.1 %
In reviewing the following period-to-period
comparisons, it should be noted that not all changes in sales
volume affect operating revenues. Under the ERAM, increases (or
decreases) in electric sales revenues compared with revenues
forecast pursuant to the electric rate agreement are 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 do not affect gas
revenues.
- 23 -
Third Quarter of 1994 Compared with
the Third Quarter of 1993
Net revenues (operating revenues less fuel and
purchased power and gas purchased for resale) increased $34.4
million in the third quarter of 1994 compared with the 1993
period, primarily as a result of electric and gas rate increases,
higher electric and gas sales volume due to weather and economic
conditions and increased incentives accrued under the electric
rate agreement. Electric, gas and steam net revenues increased
$25.9 million, $5.7 million and $2.8 million, respectively.
Under the ERAM, net electric revenues for the third
quarter of 1994 have been reduced for a credit due customers of
$42.1 million, compared with a reduction in the 1993 period for a
credit due customers of $32.7 million.
Net electric revenues for the third quarter of 1994
include $26.3 million compared with $20.8 million for the 1993
period for incentives earned by achieving goals for the Company's
Enlightened Energy program, customer service and fuel costs.
Electric sales, excluding sales to other utilities,
in the third quarter of 1994 compared with the 1993 period were:
Millions of Kwhrs.
3rd Quarter 3rd Quarter Percent
Description 1994 1993 Variation Variation
Residential/Religious 3,368 3,352 16 0.5 %
Commercial/Industrial 7,328 7,252 76 1.0 %
Other 171 175 (4) (2.3)%
Total Con Edison Customers 10,867 10,779 88 0.8 %
NYPA & Municipal Agency
Sales 2,399 2,313 86 3.7 %
Total Service Area 13,266 13,092 174 1.3 %
For the third quarter of 1994 firm gas sales volume
increased 4.1 percent and steam sales volume decreased 1.3
percent compared with the 1993 period.
After adjustment for comparability in both periods,
primarily for variations in weather, electric sales volume in the
Company's service territory in the third quarter of 1994
increased 1.8 percent. Similarly adjusted, firm gas sales volume
increased 4.1 percent and steam sales volume increased 2.2
percent.
- 24 -
Electric fuel and purchased power costs for the third
quarter of 1994 decreased $12.6 million, primarily due to lower
unit purchased power cost. Gas purchased for resale increased
$2.1 million due to higher sendout for the period offset in part
by lower unit gas cost, and steam fuel cost decreased $1.6
million reflecting principally lower unit fuel costs.
Other operations and maintenance expenses decreased
$7.5 million in the third quarter of 1994 compared with the 1993
period due principally to lower production and distribution
expenses offset in part by higher administrative and general
expenses.
Depreciation and amortization increased $4.3 million
due principally to higher plant balances.
Federal income taxes increased $20.6 million for the
third quarter reflecting higher pre-tax income.
First Nine Months of 1994 Compared
with the First Nine Months of 1993
Net revenues (operating revenues less fuel and
purchased power and gas purchased for resale) increased $119.2
million in the first nine months of 1994 compared with the first
nine months of 1993 principally as a result of electric and gas
rate increases, higher electric, gas and steam sales volume,
lower electric fuel and purchased power costs and increased
incentives accrued under the electric rate agreement. Electric,
gas and steam net revenues increased $70.0 million, $31.4 million
and $17.8 million, respectively.
Under the ERAM, net electric revenues for the first
nine months of 1994 have been reduced for a credit due customers
of $71.3 million, compared with a reduction in the 1993 period
for a credit due customers of $9.1 million.
Net electric revenues for the first nine months of
1994 also include $91.5 million compared with $43.2 million for
the 1993 period for incentives earned under the provisions of the
electric rate agreement.
Electric sales, excluding sales to other utilities,
in the first nine months of 1994 compared with the 1993 period
were:
- 25 -
Millions of Kwhrs.
Nine Months Nine Months
Ended Ended Percent
Description Sept. 30, 1994 Sept. 30, 1993 Variation Variation
Residential/Religious 8,271 8,102 169 2.1 %
Commercial/Industrial 19,425 19,102 323 1.7 %
Other 455 469 (14) (3.0)%
Total Con Edison Customers 28,151 27,673 478 1.7 %
NYPA & Municipal Agency
Sales 6,895 6,588 307 4.7 %
Total Service Area 35,046 34,261 785 2.3 %
For the first nine months of 1994 firm gas sales
volume increased 8.3 percent and steam sales volume increased 7.8
percent over the 1993 period.
After adjustment for comparability in both periods,
primarily for variations in weather, electric sales volume in the
Company's service territory in the first nine months of 1994
increased 1.7 percent. Similarly adjusted, firm gas sales volume
increased 2.3 percent and steam sales volume increased 2.7
percent.
Electric fuel and purchased power costs decreased
$67.8 million primarily due to lower unit fuel and purchased
power cost, offset in part by increased sendout. Electric fuel
costs were also impacted by a lower level of nuclear generation
in the 1993 period due to the scheduled refueling and maintenance
outage in 1993 at the Indian Point 2 nuclear unit. Steam fuel
cost increased $5.0 million due to increased sendout. Gas
purchased for resale increased $73.7 million reflecting a higher
unit cost and higher sendout.
Other operations and maintenance expenses decreased
$5.4 million in the first nine months of 1994 compared with the
1993 period principally due to expenses related to the Indian
Point 2 refueling and maintenance outage in the 1993 period
(there was no such outage in the 1994 period) and cost
containment measures, offset in part by increases in labor and
labor related expenses, administrative and general expenses and
distribution expenses.
Depreciation and amortization increased $13.7
million due principally to higher plant balances.
Taxes, other than federal income tax, decreased $30.7
million in the first nine months of 1994 compared with the 1993
period due primarily to reduced property taxes.
- 26 -
Federal income tax increased $57.0 million in the first
nine months of 1994 compared with the 1993 period, principally
due to higher pre-tax income.
Twelve Months Ended September 30, 1994 Compared with
the Twelve Months Ended September 30, 1993
Net revenues (operating revenues less fuel and
purchased power and gas purchased for resale) increased $150.5
million principally as a result of electric and gas rate
increases, higher steam sales and increased incentives accrued
under the electric rate agreement. Electric, gas and steam net
revenues increased $97.6 million, $41.5 million and $11.4
million, respectively.
Under the ERAM, net electric revenues for the twelve
months ended September 30, 1994 have been reduced for a credit
due customers of $51.3 million, compared with an increase in the
1993 period for a charge to be billed to customers of $8.1
million.
Net electric revenues for the twelve months ended
September 30, 1994 also include $117.9 million for incentives
earned under the provisions of the electric rate agreement,
compared with $66.6 million for the 1993 period.
Electric sales, excluding sales to other utilities,
for the twelve months ended September 30, 1994 compared with the
twelve months ended September 30, 1993 were:
Millions of Kwhrs.
Twelve Months Twelve Months
Ended Ended Percent
Description Sept. 30, 1994 Sept. 30, 1993 Variation Variation
Residential/Religious 10,681 10,519 162 1.5 %
Commercial/Industrial 25,442 25,123 319 1.3 %
Other 597 612 (15) (2.5)%
Total Con Edison Customers 36,720 36,254 466 1.3 %
NYPA and Municipal Agency
Sales 9,110 8,763 347 4.0 %
Total Service Area 45,830 45,017 813 1.8 %
- 27 -
For the twelve months ended September 30, 1994 firm
gas sales volume increased 5.2 percent and steam sales volume
increased 3.5 percent over the 1993 period.
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 September
30, 1994 increased 1.7 percent. Similarly adjusted, firm gas
sales volume increased 3.0 percent and steam sales volume
increased 2.2 percent.
Electric fuel and purchased power costs decreased by
$98.4 million, gas purchased for resale increased by $80.9
million and steam fuel costs increased by $1.9 million. Electric
fuel and purchased power costs decreased as a result of lower
unit fuel and purchased power costs, offset in part by increased
sendout. Electric fuel cost was also impacted significantly by a
lower level of nuclear generation in the 1993 period due to the
scheduled refueling and maintenance outage at the Indian Point 2
nuclear unit. Gas purchased for resale reflects the higher unit
cost of purchased gas and higher sendout in the 1994 period.
Steam fuel cost increased as a result of increased steam sendout,
offset in part by lower unit fuel cost.
Other operations and maintenance expenses increased
$2.2 million in the twelve months ended September 30, 1994
compared with the 1993 period due to increased distribution
expenses, increased labor and labor related expenses, offset in
part by lower production cost principally due to the Indian Point
2 refueling and maintenance outage in the 1993 period and cost
containment measures.
Depreciation and amortization increased $19.6 million
due principally to higher plant balances.
Taxes, other than federal income tax, decreased $50.0
million in the twelve months ended September 30, 1994 compared
with the 1993 period due primarily to reduced property taxes
($55.0 million), offset in part by increased revenue taxes ($4.7
million).
Federal income taxes increased $71.2 million for the
twelve months ended September 30, 1994 compared with the 1993
period, principally due to higher pre-tax income.
- 28 -
PART II. - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
GRAMERCY PARK
The following information supersedes 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, 1993, and in Part II, Item 1,
Legal Proceedings, in the Company's Quarterly Reports on Form 10-
Q for the quarterly periods ended March 31, 1994 and June 30,
1994.
On August 19, 1989, a Company steam main exploded in the
Gramercy Park area of Manhattan, releasing debris containing
asbestos into that area. The Company took responsibility for the
asbestos cleanup and most of the cost of that cleanup was covered
by the Company's insurance.
A federal Grand Jury in the Southern District of New York
issued an indictment in December 1993, which was superseded by an
indictment issued in April 1994, charging the Company and two of
its retired employees with criminal acts relating to the
reporting of the release of asbestos from the steam main
explosion. The April 1994 indictment contained eight counts.
On October 31, 1994, the Company pled guilty to four counts
of the eight count indictment. Sentencing is expected in
January, 1995, at which time a fine of up to $500,000 on each of
the four counts, and up to five years probation, could be
imposed.
- 29 -
SUPERFUND- HUNTS POINT SITE
Reference is made to the information under the caption
"Superfund Claims" in Note B - Contingencies in the Notes to
Financial Statements in Part I, Item 1 of this report and under
the caption "Superfund", in Part I, Item 3, Legal Proceedings, in
the Company's Annual Report on Form 10-K, for the year ended
December 31, 1993.
In September 1994, the City of New York notified the Company
that it had discovered coal tar on the site of a former Company
manufactured gas plant in the Hunts Point section of the Bronx.
The Company had manufactured gas at that location prior to its
sale of the site to the City in the 1960s. The Company has
agreed to conduct a site study and to develop and implement a
remediation program. However, the Company has not agreed to pay
costs not associated with the Company's use of the site or to a
remediation program that includes soil removal. The Company is
unable at this time to estimate its exposure to liability with
respect to this site.
DEC PROCEEDING
Reference is made to the information under the caption "DEC
Proceedings" in Part I, Item 3, Legal Proceedings, in the
Company's Annual Report on Form 10-K for the year ended December
31, 1993 and under the caption "DEC Proceeding" in Note B to the
financial statements included herein in Part I, Item 1, Financial
Statements.
NUCLEAR FUEL DISPOSAL
Reference is made to the information under the caption,
"Liquidity and Capital Resources -- Nuclear Fuel Disposal" in
Item 2 of Part I of this report, for information concerning a
suit brought by the Company and a number of other utilities
against the United States Department of Energy. The suit is
entitled Northern States Power Co., et al. v. Department of
Energy, et al.
- 30 -
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS
Exhibit 3.1 Resolution adopted July 26, 1994 by the Board of
Trustees of the Company amending the Company's
By-Laws. (Incorporated by reference to Exhibit
3.1 to the Company's Quarterly Report on Form 10-Q
for the quarterly period ended June 30, 1994 in
Commission File No. 1-1217.)
Exhibit 3.2 By-laws of the Company, effective as of July 26,
1994. (Incorporated by reference to Exhibit
3.2 to the Company's Quarterly Report on Form 10-Q
for the quarterly period ended June 30, 1994 in
Commission File No. 1-1217.)
Exhibit 4 The form of the Company's Floating Rate
Debentures, Series 1994 B. (Incorporated by
reference to Exhibit 4 to the Company's Current
Report on Form 8-K, dated June 29, 1994, in
Commission File No. 1-1217.)
Exhibit 10.1 Amendment, dated August 24, 1994, to Employment
Contract, dated May 22, 1990, between the Company
and Eugene R. McGrath.
Exhibit 10.2 Amendment No. 18, dated October 31, 1994, to the
Consolidated Edison Retirement Plan for Management
Employees.
Exhibit 10.3 Amendment No. 1, dated October 31, 1994, to the
Consolidated Edison Retiree Health Program for
Management Employees.
Exhibit 12 Statement of computation of ratio of earnings to
fixed charges for the twelve-month periods ended
September 30, 1994 and 1993.
Exhibit 27 Financial Data Schedule.
(b) REPORTS ON FORM 8-K
During the quarter ended September 30, 1994, the Company
filed no Current Reports on Form 8-K.
- 31 -
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: November 10, 1994 Raymond J. McCann
Raymond J. McCann
Executive Vice President,
Chief Financial Officer and
Duly Authorized Officer
DATE: November 10, 1994 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
3.1 Resolution adopted July 26, 1994
by the Board of Trustees of the
Company amending the Company's
By-Laws. (Incorporated by reference
to Exhibit 3.1 to the Company's
Quarterly Report on Form 10-Q
for the quarterly period ended June 30,
1994 in Commission File No. 1-1217.)
3.2 By-laws of the Company, effective
as of July 26, 1994. (Incorporated by
reference to Exhibit 3.2 to the Company's
Quarterly Report on Form 10-Q
for the quarterly period ended June 30,
1994 in Commission File No. 1-1217.)
4 The form of the Company's Floating
Rate Debentures, Series 1994 B.
(Incorporated by reference to Exhibit
4 to the Current Report on Form 8-K,
dated June 29, 1994, in Commission
File No. 1-1217.)
10.1 Amendment, dated August 24, 1994, to
Employment Contract, dated May 22, 1990,
between the Company and Eugene R. McGrath.
10.2 Amendment No. 18, dated October 31, 1994,
to the Consolidated Edison Retirement
Plan for Management Employees.
10.3 Amendment No. 1, dated October 31, 1994,
to the Consolidated Edison Retiree Health
Program for Management Employees.
12 Statement of computation of ratio
of earnings to fixed charges for
the twelve-month periods ended
September 30, 1994 and 1993.
27 Financial Data Schedule
Amendment No. 5 to
Eugene R. McGrath Employment Agreement
WHEREAS, Eugene R. McGrath (the "Employee") and Consolidated
Edison Company of New York, Inc. (the "Company") entered into an
Employment Agreement effective September 1, l990 (the
"Agreement");
WHEREAS, the parties to the Agreement desire to amend the
Agreement to increase the basic salary payable to the Employee;
and
WHEREAS, paragraph 12 of the Agreement provides that the
Agreement may be amended from time to time by a written
instrument executed by the Company and the Employee;
NOW, THEREFORE, in consideration of the foregoing the
parties hereto agree as follows:
1. The Agreement is amended, effective September 1, l994,
to increase the Employee's basic salary set forth in clause (i)
of paragraph 3(a) of the Agreement from $560,000 per annum to
$615,000 per annum, subject to all the terms and conditions set
forth in the Agreement relating to the basic salary.
2. In all other respects, the Agreement remains in full
force and effect as amended hereby.
IN WITNESS WHEREOF, the Company has caused this Amendment to
be executed by its duly authorized officer and its Corporate seal
to be affixed hereto, and the Employee has hereto set his hand
the day and year set forth below.
CONSOLIDATED EDISON COMPANY OF NEW YORK, INC.
By: Thomas J. Galvin
Senior Vice President
Eugene R. McGrath
Eugene R. McGrath
Dated: August 24, 1994
Attest:
Approved by the Board of Trustees
the 23rd day of August, 1994.
Archie M. Bankston
Secretary
AMENDMENT NO. 18
TO
THE CONSOLIDATED EDISON RETIREMENT PLAN FOR
MANAGEMENT EMPLOYEES
______________________________
Dated: October 31, 1994
Pursuant to resolutions adopted on August 23, 1994 by
the Board of Trustees of Consolidated Edison Company of New York,
Inc., the undersigned hereby approves the amendments to the
Retiree Health Program (included in the Consolidated Edison
Retirement Plan for Management Employees), set forth below,
effective as of October 1, 1994:
Section Amendment
Appendix I, Part B All the material under the heading
"Retiree Monthly Contribution for
Medical/Hospital Benefits" is
deleted and replaced with the
following:
"Effective October 1, 1994 the
following amounts for each
participating eligible individual
shall be deducted from the monthly
Pension or Annuity payments to the
retiree or surviving spouse:
A. Where Employee Retired Before
June 1, 1988:
Not Eligible Eligible
for Medicare for Medicare
Retiree $ 48 $ 19
One or more
Dependents $ 72 $ 29
Surviving Spouse $ 48 $ 19
B. Where Employee Retired After May
31, 1988:
Not Eligible Eligible
for Medicare for Medicare
Retiree $ 72 $ 19
One or more
Dependents $ 108 $ 29
Surviving Spouse $ 72 $ 19."
IN WITNESS WHEREOF, the undersigned has executed this
instrument this 31st day of October, 1994.
Thomas J. Galvin
Senior Vice President-Central Services
Consolidated Edison Company
of New York, Inc.
AMENDMENT NO. 1
TO
THE CONSOLIDATED EDISON RETIREE HEALTH PROGRAM
FOR MANAGEMENT EMPLOYEES
___________________________
Dated: October 31, 1994
Effective as of October 1, 1994
Pursuant to resolutions adopted on August 23, 1994 by the
Board of Trustees of Consolidated Edison Company of New York,
Inc., the undersigned hereby approves the amendments to The
Consolidated Edison Retiree Health Program for Management
Employees set forth below, effective as of October 1, 1994:
A. Subdivisions 1 and 2 of Section 5.01 are hereby amended
to read as follows:
"1. Where Employee Retired Before June 1, 1988:
Eligible for Not Eligible
Medicare for Medicare
Retiree $ 48 $ 19
One or more
Dependents $ 72 $ 29
Surviving Spouse $ 48 $ 19
2. Where Employee Retired After May 31, 1988:
Eligible for Not Eligible
Medicare for Medicare
Retiree $ 72 $ 19
One or more
Dependents $ 108 $ 29
Surviving Spouse $ 72 $ 19."
IN WITNESS WHEREOF, the undersigned has executed this
instrument this 31st day of October, 1994.
Thomas J. Galvin
Senior Vice President-Central Services
Consolidated Edison Company of
New York, Inc.
CONSOLIDATED EDISON COMPANY OF NEW YORK, INC.
RATIO OF EARNINGS TO FIXED CHARGES
TWELVE MONTHS ENDED
(Thousands of Dollars)
SEPTEMBER SEPTEMBER
1994 1993
Earnings
Net Income $ 733,685 $ 641,861
Federal Income Tax 378,120 287,930
Federal Income Tax Deferred 54,560 77,580
Investment Tax Credits Deferred (10,180) (12,730)
Total Earnings Before
Federal Income Tax 1,156,185 994,641
Fixed Charges* 323,414 318,695
Total Earnings Before Federal
Income Tax and Fixed Charges $1,479,599 $1,313,336
*Fixed Charges
Interest on Long-Term Debt $ 274,462 $ 271,773
Amortization of Debt Discount,
Premium and Expenses 11,408 7,318
Interest Component of Rentals 18,540 18,681
Other Interest 19,004 20,923
Total Fixed Charges $ 323,414 $ 318,695
Ratio of Earnings to Fixed Charges 4.57 4.12
UT
