10-K: Con Edison Reports Mixed 2024 Results, Outlines Future Investment Plans

Con Edison reported lower net income for 2024 but higher adjusted earnings, while also detailing significant investments in utility infrastructure and clean energy initiatives.

Summary

• Consolidated Edison, Inc. (Con Edison) reported a net income for common stock of $1,820 million, or $5.26 per share, for 2024, compared to $2,519 million, or $7.25 per share, in 2023.
• Adjusted earnings (non-GAAP) were $1,868 million, or $5.40 per share, in 2024, compared to $1,762 million, or $5.07 per share, in 2023.
• In 2024, the Utilities invested $4,699 million to upgrade and reinforce their energy delivery systems, while Con Edison Transmission invested $29 million primarily in electric transmission.
• For 2025-2029, the Utilities expect to invest $5,079 million, $7,973 million, $8,161 million, $8,310 million, and $7,665 million, respectively, in their energy delivery systems.
• Con Edison Transmission expects to invest $43 million, $94 million, $107 million, $113 million, and $113 million, respectively, primarily in electric transmission.
• Con Edison plans to issue up to $1,750 million of long-term debt in 2025 and up to $3,800 million in 2026, including for maturing securities, at the Utilities.
• The company also plans to issue approximately $9,100 million in aggregate of long-term debt at the Utilities during 2027 through 2029.
• Con Edison plans to issue up to $1,350 million of common equity in 2025, including the physical settlement of the estimated $677 million available under its December 2024 equity forward transaction.
• The company also plans to issue common equity of approximately $1,850 million in 2026 and up to $4,300 million in aggregate during 2027 through 2029.
• CECONY forecasts average annual increases in peak demand in its service area at design conditions over the next five years for electricity and gas to be approximately 1 percent and 0.1 percent, respectively, and an average annual decrease in steam peak demand to be approximately 0.4 percent.
• O&R forecasts an average annual increase in electric peak demand in its service area at design conditions over the next five years to be approximately 3.6 percent and an average annual decrease in gas peak demand to be approximately 0.1 percent.
• In January 2025, CECONY filed requests with the NYSPSC for electric and gas rate increases of $1,612 million and $441 million, respectively, effective January 2026.

Sentiment

Score: 6

Explanation: The sentiment is neutral. While adjusted earnings increased, net income decreased. The company is making significant investments, but also facing regulatory challenges and potential liabilities.

Positives

• Adjusted earnings per share increased from $5.07 in 2023 to $5.40 in 2024.
• The Utilities are making significant investments to upgrade and reinforce their energy delivery systems.
• CECONY and O&R recorded $62 million and $4 million of revenues for the year ended December 31, 2024, respectively, of earnings adjustment mechanisms and positive incentives, primarily reflecting the achievement of certain energy efficiency measures.
• The NYISO may temporarily retain 672 MW of the remaining units impacted by the Peaker Rule until May 2027 to ensure the continued reliability of electric service in New York City.
• In November 2024, the FERC approved an August 2024 settlement agreement regarding CECONYs return on equity for transmission projects.
• In December 2024, the FERC approved a September 2024 settlement agreement regarding O&Rs return on equity for transmission projects.

Negatives

• Net income decreased from $2,519 million in 2023 to $1,820 million in 2024.
• In May 2024, the NYSPSC denied CECONY's petition to capitalize costs exceeding $421 million for its new customer billing system, resulting in a $51 million expense.
• The NYSPSC is auditing the Utilities' financial accounting for income taxes, investigating a potential understatement of federal income tax expense for ratemaking purposes.

Risks

• The Utilities are subject to extensive regulation and may face penalties for non-compliance.
• Rate plans may not provide a reasonable return, and changes to rate plans could adversely affect the Companies.
• Failure or damage to the Companies' facilities could disrupt service and result in substantial liabilities.
• A cyber attack could disrupt operations, damage systems, and lead to financial losses.
• Climate change could affect customer demand and cause physical damage to facilities.
• The Companies require access to capital markets to fund capital requirements.
• Disruptions in wholesale energy markets or failure by energy suppliers could affect the Companies' ability to meet customer needs.
• The Companies' strategies may not be effective in addressing changes in the external business environment.
• The Companies face risks related to supply chain disruptions, inflation, and the imposition of tariffs.

Future Outlook

Con Edison plans to meet its capital requirements for 2025 through 2029 through internally-generated funds and the issuance of long-term debt and common equity. The Utilities expect electric usage to increase and gas and steam usage to decrease in their service territories as federal, state and local laws and policies are enacted and implemented that aim to reduce the carbon intensity of the energy that is consumed in their respective jurisdictions.

Management Comments

• Con Edison seeks to provide shareholder value through continued dividend growth, supported by earnings growth in regulated utilities and electric transmission projects.
• The company invests to provide reliable, resilient, safe and clean energy critical for its New York and New Jersey customers.
• Con Edison is a responsible neighbor, helping the communities it serves become more sustainable.

Industry Context

The announcement reflects the ongoing shift in the utility industry towards renewable energy and grid modernization, driven by regulatory mandates and environmental concerns. The company's investments in transmission projects and clean energy initiatives align with broader industry trends.

Comparison to Industry Standards

• Con Edison's planned capital expenditures are significant, reflecting the high cost of infrastructure upgrades in a dense urban environment.
• Comparatively, NextEra Energy, another large US utility, has also announced substantial investments in renewable energy and grid modernization.
• The company's focus on regulated utilities and transmission projects is a relatively conservative strategy compared to some utilities that have diversified into unregulated businesses.
• The forecast for peak demand growth is consistent with industry expectations for increased electrification, particularly in transportation.

Corporate Governance

Legal Proceedings

• CECONY is a PRP at additional Superfund sites involving other PRPs and participates in PRP groups at those sites.
• In October 2024, a PRP filed a lawsuit against the other PRPs, including CECONY, with respect to the Gowanus Canal Superfund Site.
• In February 2025, a group of states brought a lawsuit in the U.S. District Court for the Northern District of New York, Albany Division, challenging the Climate Change Superfund Act as unconstitutional.

Related Party Transactions

• CECONY and O&R have joint gas supply arrangements in connection with which CECONY sold to O&R $77 million of natural gas for the year ended December 31, 2024.
• CECONY performs work and incurs expenses on behalf of New York Transco, a company in which Con Edison Transmission owns an interest.
• CECONY has a 20-year transportation contract with MVP, a company in which Con Edison Transmission owns an interest, for 200,000 Dts per day of capacity.
• In December 2024, Con Edison made an unconditional promise to give $12 million to the Consolidated Edison Foundation, Inc.

Stakeholder Impact

• Shareholders may be concerned about the decrease in net income, but reassured by the increase in adjusted earnings and the company's commitment to dividend growth.
• Customers may be affected by potential rate increases and changes in service reliability due to infrastructure upgrades and climate change.
• Employees may be impacted by changes in the company's workforce and the implementation of new technologies.
• The communities served by the Utilities will benefit from investments in clean energy and improved infrastructure.

Next Steps

• The NYSPSC will review CECONY's requests for electric and gas rate increases.
• The NYSPSC will review O&R's joint proposal for new electric and gas rate plans.
• The NYISO is expected to issue a solicitation for both market-based and regulated solutions to address a bulk power system electric reliability need in New York City beginning in the summer of 2033.
• CECONY and O&R will continue to implement their climate change resilience plans.
• The NYSDEC is required to promulgate regulations implementing the Climate Change Superfund Act by December 2025.

Key Dates

Keywords

Consolidated Edison, CECONY, O&R, Financial Results, Capital Expenditures, Rate Plans, Energy Delivery, Electric, Gas, Steam, Transmission, NYSPSC, FERC, Climate Change, Regulation