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 JUNE 30, 1996
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 July 31, 1996, the Registrant had
outstanding 234,981,363 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
Note to Financial Statements 10-12
ITEM 2. Management's Discussion and Analysis of 13-28
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, 1995 (File No. 1-1217).
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CONSOLIDATED EDISON COMPANY OF NEW YORK, INC.
CONSOLIDATED BALANCE SHEET
AS AT JUNE 30, 1996, DECEMBER 31, 1995 AND JUNE 30, 1995
As At
June 30, 1996 Dec. 31, 1995 June 30, 1995
(Thousands of Dollars)
ASSETS
Utility plant, at original cost
Electric $ 11,444,742 $ 11,319,622 $ 11,154,286
Gas 1,581,682 1,537,296 1,479,394
Steam 520,536 462,975 446,967
General 1,119,112 1,085,795 1,047,837
Total 14,666,072 14,405,688 14,128,484
Less: Accumulated depreciation 4,205,894 4,036,954 3,905,417
Net 10,460,178 10,368,734 10,223,067
Construction work in progress 356,915 360,457 339,773
Nuclear fuel assemblies and components,
less accumulated amortization 69,652 85,212 96,137
Net utility plant 10,886,745 10,814,403 10,658,977
Current assets
Cash and temporary cash investments 57,369 342,292 48,485
Accounts receivable - customers, less
allowance for uncollectible accounts
of $22,514, $21,600 and $20,258 499,516 497,215 420,209
Other receivables 46,102 45,558 64,340
Regulatory accounts receivable 4,938 (6,481) 36,475
Fuel, at average cost 41,415 40,506 41,377
Gas in storage, at average cost 23,373 26,452 35,284
Materials and supplies, at average cost 215,169 221,026 226,532
Prepayments 62,634 66,148 155,559
Other current assets 14,732 15,126 13,692
Total current assets 965,248 1,247,842 1,041,953
Investments and nonutility property 164,358 145,646 129,170
Deferred charges
Enlightened Energy program costs 129,739 144,282 146,420
Unamortized debt expense 135,934 133,812 133,572
Power contract termination costs 81,984 105,408 128,832
Other deferred charges 289,845 316,237 297,309
Total deferred charges 637,502 699,739 706,133
Regulatory asset-future federal
income taxes 1,016,829 1,042,260 1,065,325
Total $ 13,670,682 $ 13,949,890 $ 13,601,558
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 JUNE 30, 1996, DECEMBER 31, 1995 AND JUNE 30, 1995
As At
June 30, 1996 Dec. 31, 1995 June 30, 1995
(Thousands of Dollars)
CAPITALIZATION AND LIABILITIES
Capitalization
Common stock, authorized 340,000,000 shares;
outstanding 234,978,113 shares, 234,956,299
shares and 234,928,245 shares $ 1,478,416 $ 1,464,305 $ 1,464,089
Capital stock expense (35,052) (38,606) (38,766)
Retained earnings 4,089,399 4,097,035 3,908,038
Total common equity 5,532,763 5,522,734 5,333,361
Preferred stock
Subject to mandatory redemption
7.20% Series I 47,500 50,000 50,000
6-1/8% Series J 37,050 50,000 50,000
Total subject to mandatory
redemption 84,550 100,000 100,000
Other preferred stock
$ 5 Cumulative Preferred 175,000 175,000 175,000
5-3/4% Series A 7,061 60,000 60,000
5-1/4% Series B 13,844 75,000 75,000
4.65% Series C 15,329 60,000 60,000
4.65% Series D 22,233 75,000 75,000
5-3/4% Series E - 50,000 50,000
6.20% Series F - 40,000 40,000
6% Convertible Series B 4,750 4,917 5,133
Total other preferred stock 238,217 539,917 540,133
Total preferred stock 322,767 639,917 640,133
Long-term debt 4,190,366 3,917,244 3,924,474
Total capitalization 10,045,896 10,079,895 9,897,968
Noncurrent liabilities
Obligations under capital leases 43,969 45,250 46,528
Other noncurrent liabilities 80,701 75,907 71,581
Total noncurrent liabilities 124,670 121,157 118,109
Current liabilities
Long-term debt due within one year 82,095 183,524 111,324
Accounts payable 341,235 420,852 278,392
Customer deposits 158,312 158,366 161,228
Accrued taxes 38,163 24,374 86,984
Accrued interest 83,625 89,374 85,818
Accrued wages 75,815 76,459 86,103
Other current liabilities 148,073 168,477 157,932
Total current liabilities 927,318 1,121,426 967,781
Provisions related to future federal income
taxes and other deferred credits
Accumulated deferred federal income tax 2,270,151 2,296,284 2,303,884
Accumulated deferred investment tax credits 176,860 181,420 186,070
Other deferred credits 125,787 149,708 127,746
Total deferred credits 2,572,798 2,627,412 2,617,700
Total $ 13,670,682 $ 13,949,890 $ 13,601,558
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 JUNE 30, 1996 AND 1995
1996 1995
(Thousands of Dollars)
Operating revenues
Electric $ 1,244,306 $ 1,230,572
Gas 223,428 172,074
Steam 72,001 57,206
Total operating revenues 1,539,735 1,459,852
Operating expenses
Fuel 120,389 113,193
Purchased power 321,588 309,776
Gas purchased for resale 96,554 52,424
Other operations 286,676 300,833
Maintenance 123,915 123,958
Depreciation and amortization 119,981 114,012
Taxes, other than federal income tax 277,474 252,303
Federal income tax 40,880 37,370
Total operating expenses 1,387,457 1,303,869
Operating income 152,278 155,983
Other income (deductions)
Investment income 2,283 2,943
Allowance for equity funds used during construction 745 1,363
Other income less miscellaneous deductions (1,996) (3,028)
Federal income tax (510) 160
Total other income 522 1,438
Income before interest charges 152,800 157,421
Interest on long-term debt 78,106 74,484
Other interest 3,629 7,194
Allowance for borrowed funds used during construction (350) (658)
Net interest charges 81,385 81,020
Net income 71,415 76,401
Preferred stock dividend requirements 4,608 8,892
Net income for common stock $ 66,807 $ 67,509
Common shares outstanding - average (000) 234,974 234,921
Earnings per share $ 0.28 $ 0.29
Dividends declared per share of common stock $ 0.52 $ 0.51
Sales
Electric (Thousands of Kwhrs.)
Con Edison Customers 8,461,823 8,198,066
Deliveries for NYPA and Other Customers 2,072,831 2,040,339
Service for Municipal Agencies 176,772 102,214
Total Sales in Service Territory 10,711,426 10,340,619
Off-System Sales (A) 1,108,443 1,464,719
Gas (Dekatherms)
Firm 20,290,373 18,139,687
Off-Peak Firm/Interruptible 4,271,271 3,150,353
Total Sales to Con Edison Customers 24,561,644 21,290,040
Transportation of Customer-Owned Gas 1,437,248 9,571,890
Off-System Sales 3,287,507 232,349
Total Sales and Transportation 29,286,399 31,094,279
Steam (Thousands of Pounds) 5,458,166 5,158,131
(A) Includes 537,445 and 898,254 thousands of Kwhrs., respectively, subsequently
purchased by the Company for sale to its customers.
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 SIX MONTHS ENDED JUNE 30, 1996 AND 1995
1996 1995
(Thousands of Dollars)
Operating revenues
Electric $ 2,530,574 $ 2,453,880
Gas 630,292 491,030
Steam 246,234 183,727
Total operating revenues 3,407,100 3,128,637
Operating expenses
Fuel 304,277 227,039
Purchased power 625,587 557,460
Gas purchased for resale 277,394 163,462
Other operations 563,987 582,942
Maintenance 248,940 255,447
Depreciation and amortization (A) 252,546 223,169
Taxes, other than federal income tax 583,510 528,069
Federal income tax 145,920 155,010
Total operating expenses 3,002,161 2,692,598
Operating income 404,939 436,039
Other income (deductions)
Investment income 3,721 4,298
Allowance for equity funds used during construction 1,258 2,876
Other income less miscellaneous deductions (2,673) (3,430)
Federal income tax (930) (310)
Total other income 1,376 3,434
Income before interest charges 406,315 439,473
Interest on long-term debt 152,475 149,040
Other interest 8,481 14,397
Allowance for borrowed funds used during construction (591) (1,394)
Net interest charges 160,365 162,043
Net income 245,950 277,430
Preferred stock dividend requirements 10,643 17,785
Gain on redemption of preferred stock (A) 13,943 -
Net income for common stock $ 249,250 $ 259,645
Common shares outstanding - average (000) 234,968 234,916
Earnings per share $ 1.06 $ 1.11
Dividends declared per share of common stock $ 1.04 $ 1.02
Sales
Electric (Thousands of Kwhrs.)
Con Edison Customers 17,635,244 17,036,366
Deliveries for NYPA and Other Customers 4,392,665 4,296,804
Service for Municipal Agencies 284,227 209,377
Total Sales in Service Territory 22,312,136 21,542,547
Off-System Sales (B) 1,269,146 2,317,168
Gas (Dekatherms)
Firm 65,132,812 56,960,511
Off-Peak Firm/Interruptible 11,125,581 8,479,634
Total Sales to Con Edison Customers 76,258,393 65,440,145
Transportation of Customer-Owned Gas 2,076,238 15,218,502
Off-System Sales 7,136,458 321,836
Total Sales and Transportation 85,471,089 80,980,483
Steam (Thousands of Pounds) 17,322,853 15,468,824
(A) The gain resulting from the preferred stock refunding in the first quarter of 1996
was applied to reduce net utility plant by an additional provision for depreciation.
(B) Includes 537,445 and 1,321,630 thousands of Kwhrs., respectively, subsequently
purchased by the Company for sale to its customers.
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 JUNE 30, 1996 AND 1995
1996 1995
(Thousands of Dollars)
Operating revenues
Electric $ 5,466,102 $ 5,300,809
Gas 952,617 797,575
Steam 396,640 313,492
Total operating revenues 6,815,359 6,411,876
Operating expenses
Fuel 581,342 517,454
Purchased power 1,175,350 959,709
Gas purchased for resale 373,720 252,536
Other operations 1,120,777 1,182,933
Maintenance 505,595 478,314
Depreciation and amortization (A) 485,153 437,206
Taxes, other than federal income tax 1,175,673 1,101,658
Federal income tax 387,470 433,010
Total operating expenses 5,805,080 5,362,820
Operating income 1,010,279 1,049,056
Other income (deductions)
Investment income 16,389 12,214
Allowance for equity funds used during construction 2,145 6,579
Other income less miscellaneous deductions (7,392) (15,415)
Federal income tax (1,680) 430
Total other income 9,462 3,808
Income before interest charges 1,019,741 1,052,864
Interest on long-term debt 305,351 295,774
Other interest 23,039 24,935
Allowance for borrowed funds used during construction (1,019) (3,023)
Net interest charges 327,371 317,686
Net income 692,370 735,178
Preferred stock dividend requirements 28,422 35,577
Gain on refunding of preferred stock (A) 13,943 -
Net income for common stock $ 677,891 $ 699,601
Common shares outstanding - average (000) 234,956 234,905
Earnings per share $ 2.89 $ 2.98
Dividends declared per share of common stock $ 2.06 $ 2.02
Sales
Electric (Thousands of Kwhrs.)
Con Edison Customers 37,557,246 36,526,182
Deliveries for NYPA and Other Customers 8,951,651 8,766,265
Service for Municipal Agencies 531,578 430,913
Total Sales in Service Territory 47,040,475 45,723,360
Off-System Sales (B) 3,987,450 3,374,432
Gas (Dekatherms)
Firm 98,896,627 87,204,924
Off-Peak Firm/Interruptible 18,118,759 15,459,850
Total Sales to Con Edison Customers 117,015,386 102,664,774
Transportation of Customer-Owned Gas 17,218,924 28,982,219
Off-System Sales 10,190,997 321,836
Total Sales and Transportation 144,425,307 131,968,829
Steam (Thousands of Pounds) 31,279,809 27,866,954
(A) The gain resulting from the preferred stock refunding in the first quarter of 1996
was applied to reduce net utility plant by an additional provision for depreciation.
(B) Includes 1,882,652 and 1,321,630 thousands of Kwhrs., respectively, subsequently
purchased by the Company for sale to its customers.
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 SIX MONTHS ENDED JUNE 30, 1996 AND 1995
1996 1995
(Thousands of Dollars)
Operating activities
Net income $ 245,950 $ 277,430
Principal non-cash charges (credits) to income
Depreciation and amortization 252,546 223,169
Federal income tax deferred (5,840) 59,780
Common equity component of allowance
for funds used during construction (1,188) (2,710)
Other non-cash charges (credits) 27,053 (19,425)
Changes in assets and liabilities
Accounts receivable - customers, less
allowance for uncollectibles (2,301) 20,287
Regulatory accounts receivable (11,419) (10,129)
Materials and supplies, including fuel
and gas in storage 8,027 28,132
Prepayments, other receivables and
other current assets 3,364 (102,193)
Enlightened Energy program costs 14,543 23,781
Federal income tax refund - (49,510)
Power contract termination costs 7,311 31,963
Accounts payable (79,617) (96,077)
Accrued income taxes 22,658 36,485
Other - net (28,110) (40,532)
Net cash flows from operating activities 452,977 380,451
Investing activities including construction
Construction expenditures (313,280) (302,731)
Nuclear fuel expenditures 182 (6,769)
Contributions to nuclear decommissioning trust (17,047) (8,243)
Common equity component of allowance
for funds used during construction 1,188 2,710
Net cash flows from investing activities
including construction (328,957) (315,033)
Financing activities including dividends
Issuance of long-term debt 375,000 -
Retirement of long-term debt (105,055) (4,620)
Advance refunding of long-term debt (95,329) -
Advance refunding of preferred stock (316,982) -
Issuance and refunding costs (8,711) (129)
Common stock dividends (244,369) (239,617)
Preferred stock dividends (13,497) (17,788)
Net cash flows from financing activities
including dividends (408,943) (262,154)
Net decrease in cash and temporary
cash investments (284,923) (196,736)
Cash and temporary cash investments
at January 1 342,292 245,221
Cash and temporary cash investments
at June 30 $ 57,369 $ 48,485
Supplemental disclosure of cash flow information
Cash paid during the period for:
Interest $ 156,017 $ 149,098
Income taxes 131,000 65,847
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 JUNE 30, 1996 AND 1995
1996 1995
(Thousands of Dollars)
Operating activities
Net income $ 692,370 $ 735,178
Principal non-cash charges (credits) to income
Depreciation and amortization 485,153 437,206
Federal income tax deferred 3,400 110,590
Common equity component of allowance
for funds used during construction (2,024) (6,200)
Other non-cash charges (1,077) (20,258)
Changes in assets and liabilities
Accounts receivable - customers, less
allowance for uncollectibles (79,307) 41,585
Regulatory accounts receivable 31,537 18,639
Materials and supplies, including fuel
and gas in storage 23,236 22,961
Prepayments, other receivables and
other current assets 110,123 (103,301)
Enlightened Energy program costs 16,681 6,952
Power contract termination costs 30,735 22,923
Federal income tax refund (3,427) (49,530)
Accounts payable 62,843 (19,987)
Accrued income taxes (22,377) 31,973
Other - net 1,123 (58,759)
Net cash flows from operating activities 1,348,989 1,169,972
Investing activities including construction
Construction expenditures (703,352) (747,179)
Nuclear fuel expenditures (5,889) (49,189)
Contributions to nuclear decommissioning trust (27,697) (14,077)
Common equity component of allowance
for funds used during construction 2,024 6,200
Net cash flows from investing activities
including construction (734,914) (804,245)
Financing activities including dividends
Issuance of long-term debt 603,285 250,000
Retirement of long-term debt and preferred stock (111,324) (134,036)
Advance refunding of long-term debt (251,028) -
Advance refunding of preferred stock (316,982) -
Issuance and refunding costs (13,851) (3,755)
Common stock dividends (484,014) (474,512)
Preferred stock dividends (31,277) (35,588)
Net cash flows from financing activities
including dividends (605,191) (397,891)
Net increase (decrease) in cash and temporary
cash investments 8,884 (32,164)
Cash and temporary cash investments
at beginning of period 48,485 80,649
Cash and temporary cash investments
at June 30 $ 57,369 $ 48,485
Supplemental disclosure of cash flow information
Cash paid during the period for:
Interest $ 316,872 $ 288,031
Income taxes 409,907 296,821
The accompanying note is an integral part of these financial statements.
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Contingency Note
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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 the latest available data, the Company estimates
that steam generator replacement will not be required before
1999, 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 1995 dollars) to
require additional expenditures of approximately $107 million
(exclusive of replacement power costs) and an outage of
approximately four 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 June 30, 1996 the highest amount
which could be assessed for losses during the current policy year
under all of the policies was $32 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 1994 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. Based
on these estimates, the Company had accrued a liability at
June 30, 1996 of approximately $13.5 million. There will be
additional costs with respect to these and possibly other sites,
the materiality of which is not presently determinable.
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. Pursuant to the consent order, the Company has conducted
an environmental management systems evaluation and is conducting
an environmental compliance audit. The Company also must
implement "best management practices" plans for certain
facilities and undertake a remediation program at certain sites.
At June 30, 1996 the Company had an accrued liability of $18.5
million for these sites. Expenditures for environment-related
projects in the five years 1996-2000, including expenditures to
comply with the consent order, are currently estimated at $155
million. There will be additional costs, including costs arising
out of the compliance audit, the materiality of which is 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, 1995 (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 $57.4
million at June 30, 1996 compared with $342.3 million at December
31, 1995 and $48.5 million at June 30, 1995. The Company's cash
balances reflect the timing and amounts of external financing,
seasonal cash flows and property tax payments. In June 1995 the
Company made a prepayment of $100.6 million (approximately
one-quarter) of its New York City real estate taxes for the
City's 1995/1996 fiscal year, which correspondingly decreased
cash and increased prepayments at June 30, 1995.
In January 1996 the Company commenced a tender offer
for certain series of its preferred stock. Shareholders tendered
approximately $227 million of such preferred stock pursuant to
the offer, which expired on February 27, 1996. In addition, the
Company called $90 million of its preferred stock for redemption
on March 30, 1996. These retirements and related expenses were
funded with proceeds from $275 million of 7-3/4 percent
subordinated debentures issued on March 6, 1996 and due on March
31, 2031 and cash of $25 million. The present value revenue-
equivalent savings of these transactions was approximately $42
million. The net gain on these transactions of $13.9 million
(after write-off of capital stock expense on redeemed stock) did
not affect earnings per share due to an equivalent amount of
provision for depreciation of utility plant recorded in the first
quarter of 1996. (The increases in depreciation expense for the
six and twelve-month periods ending June 30, 1996 compared with
the corresponding 1995 periods reflect this additional
depreciation expense.)
On May 1, 1996 the Company issued $100 million of
7-3/4 percent Debentures Series 1996 A, due June 1, 2026, at a
price to the public of 98.002 percent and a yield of 7.924
percent. The proceeds were used to redeem, on June 1, 1996, the
$95.3 million outstanding balance of the Company's 9-3/8 percent
Debentures, Series 1991 A, due June 1, 2026. The other $79.7
million of the original $175 million Series 1991 A Debentures had
been retired through a tender offer in 1993.
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On July 1, 1996 the Company paid $213.2 million to
New York City for property taxes for the first half of the
1996-1997 fiscal year. In order to meet this cash requirement,
the Company borrowed $155 million through short-term bank
promissory notes. Approximately $65 million of short-term
borrowings were outstanding at July 31. The Company anticipates
that these borrowings will be repaid in August.
The Company expects to finance the balance of its
capital requirements for the remainder of 1996 and 1997,
including $185 million for securities maturing during this
period, from internally generated funds and external financing of
about $150 million, most, if not all, of which will be debt
issues.
Customer accounts receivable, less allowance for
uncollectible accounts, amounted to $499.5 million at June 30,
1996 compared with $497.2 million at December 31, 1995 and $420.2
million at June 30, 1995. In terms of equivalent days of revenue
outstanding (ENDRO), these amounts represented 27.7, 27.6 and
24.5 days, respectively. The increases in the customer accounts
receivable balance and ENDRO at June 30, 1996 compared with June
30, 1995 reflect primarily increases in sales revenues and timing
differences in billing and collection schedules.
The regulatory accounts receivable negative balance
of $6.5 million at December 31, 1995 represents amounts to be
refunded to customers. The regulatory accounts receivable of $4.9
million and $36.5 million at June 30, 1996 and 1995,
respectively, represent amounts to be recovered from customers.
These balances include amounts accrued under the electric revenue
adjustment mechanism (ERAM), modified ERAM and incentive
provisions of the Company's electric and gas rate agreements
referred to below.
The changes in regulatory accounts receivable during
the first six months of 1996 were as follows:
1996
Balance Recoveries Balance
Dec. 31, 1996 from June 30,
(Millions of Dollars) 1995* Accruals*Customers** 1996*
ERAM/Modified ERAM $(37.7) $ (6.6) $ 9.1 $(35.2)
Electric Incentives
Enlightened Energy program 19.7 12.2 (4.9) 27.0
Customer service 4.0 2.1 (1.5) 4.6
Fuel and purchased power 1.9 10.6 (5.8) 6.7
Gas Incentives
System improvement 4.6 - (3.1) 1.5
Customer service 1.0 - (.7) .3
Total $ (6.5) $ 18.3 $ (6.9) $ 4.9
* Negative amounts are refundable; positive amounts are recoverable.
**Negative amounts have been recovered; positive amounts have been refunded.
- 15 -
Enlightened Energy program costs are generally
recoverable over a five-year period. Program costs have declined
and are expected to continue to decline in future periods,
resulting in lower deferred balances as recoveries exceed new
expenditures.
Interest coverage under the SEC formula for the 12
months ended June 30, 1996 was 4.11 times, compared with 4.20
times for the year 1995 and 4.44 times for the 12 months ended
June 30, 1995. The decline in interest coverage reflects a lower
level of pre-tax earnings.
1995 Electric Rate Agreement
In April 1995 the New York Public Service Commission
(PSC) approved a three-year electric rate agreement effective
April 1, 1995. The agreement provided for no increase in base
electric revenues in the first rate year and possible, but
limited, increases in years two and three. 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, 1995, under the heading "Liquidity and
Capital Resources - 1995 Electric Rate Agreement."
The agreement provides that the Company will retain
50 percent of earnings (excluding incentive earnings) in excess
of 50 basis points above the allowed return on equity but not
more than 150 basis points above the allowed return, and will
defer the balance for customer benefit. For the first rate year
of the electric rate agreement, the 12 months ended March 31,
1996, the Company's actual rate of return on electric common
equity, excluding incentives, exceeded the sharing threshold of
11.6 percent, principally due to increased productivity. A
provision for excess earnings of $10.2 million has been set aside
for the future benefit of customers.
In March 1996 the PSC approved a $19 million
reduction to base electric rates for the second year of the rate
agreement, effective April 1, 1996. The decrease reflects a lower
allowed rate of return on common equity (10.31 percent excluding
incentives) and a refund to customers under the modified ERAM
mechanism, offset in part by increases in pension and retiree
health benefit expenses and IPP capacity costs.
- 16 -
Gas and Steam Rate Increases
Effective October 1, 1995 (the beginning of the
second year of the October 1994 three-year gas and steam rate
agreements) gas and steam rates were increased by $20.9 million
(2.5 percent) and $4.6 million (1.3 percent), respectively. The
primary reasons for the gas rate increase were escalation in
certain operation and maintenance expenses, return and
depreciation on higher plant balances, and recovery of earnings
under the incentive provisions of the settlement. The steam rate
increase was primarily to cover escalation in operation and
maintenance expenses, and return and depreciation on higher plant
balances.
On June 17, 1996 the Company filed requests for rate
increases for the third year of the current three-year gas and
steam rate agreements. The increases calculated pursuant to the
methodology provided in the rate agreements, which increases
would be effective October 1, 1996, are $35.6 million (4.2
percent) and $20.6 million (5.9 percent) for gas and steam,
respectively. However, under the provisions of the steam rate
agreement, the third-year steam increase is capped at $12.3
million or 3.5 percent. Under the agreement, the excess of the
calculated increase over this cap is to be deferred for recovery
in a future period. The requested return on equity for both
services remains at the current level of 10.9 percent.
For details of the October 1994 three-year gas and
steam rate agreements, see 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, 1995 under the heading "Liquidity
and Capital Resources - Gas and Steam Rate Agreements."
Credit Ratings
The Company's unsecured debentures and tax-exempt
debt are rated A1 by Moody's Investors Service, Inc. (Moody's)
and A+ by Standard & Poor's Rating Group (S&P). Duff & Phelps
Inc., whose rating service the Company has recently discontinued,
also had rated this debt at A+. The Company's subordinated
debentures are rated A2 by Moody's and A by S&P. The Company's
senior debt (first mortgage bonds) is rated Aa3 and A+ by Moody's
and S&P, respectively. The Company has not issued first mortgage
bonds since 1974. As of June 30, 1996, one $75 million issue of
first mortgage bonds, which will mature in December 1996, remains
outstanding.
- 17 -
Competition - New York State Initiative
By Order issued May 20, 1996 in its "competitive
opportunities" proceeding, the PSC endorsed a fundamental
restructuring of the electric utility industry in New York State,
based on competition in the generation and energy services
sectors of the industry. The PSC stated that it expected
wholesale competition to begin in early 1997, and retail
competition to begin in early 1998. The stated goals of the PSC
are (1) lowering rates for consumers; (2) increasing customer
choice as to both suppliers and types and levels of service; (3)
continuing reliability of service; (4) continuing public interest
programs such as energy efficiency and environmental protection;
(5) mitigating concentrations of market power; and (6) continuing
customer protections and the obligation to serve. To implement
this restructuring, the PSC envisions the establishment of (i) an
"Independent System Operator" (ISO) that would control and
operate the electric transmission facilities in the State as an
integrated system, and (ii) a Market Exchange that will establish
visible spot market prices.
To address market power concerns, the PSC indicates
the separation of (a) generation, (b) transmission and
distribution and (c) energy services activities, is "encouraged."
The PSC notes that such separation could be achieved
functionally, by maintaining separate books and records;
structurally, by placing each activity in a separate subsidiary
or affiliate; or by divestiture, through a sale or spinoff. The
Order states: "We strongly encourage divestiture, particularly of
generation assets, but do not require it immediately." Similarly,
the Order notes: "While divestiture of energy service company
operations is encouraged, for now we will allow utilities to
continue to provide energy services to their customers either
directly or through an affiliate."
The PSC recognizes in its Order that certain costs
incurred by utilities in the past under traditional regulation
could become unrecoverable in the transition from regulation to a
competitive market for electricity. The PSC rejected the argument
made by the investor-owned utilities, that they are legally
entitled to recover (and earn a return on) all prudent costs
incurred in the provision of services under past regulation. The
PSC indicated that utilities are entitled only to "just and
reasonable" rates, and that "while 'just and reasonable' rates
must reflect a reasonable balancing of ratepayer and shareholder
interests, they may or may not include stranded investment." As a
general policy, the PSC stated that "utilities should have a
reasonable opportunity to seek recovery of strandable costs
consistent with the goals of lowering rates, fostering economic
development, increasing customer choices, and maintaining
reliable service."
- 18 -
To begin the transition to a competitive electric
market, the PSC ordered the Company and each of the other major
investor-owned electric utilities in New York State (other than
Long Island Lighting Company and Niagara Mohawk Power
Corporation) to submit filings to the PSC by October 1, 1996
addressing numerous matters, including:
- The structure, activities, authority and procedures of
the ISO and the Market Exchange (including the
relationship of the Market Exchange to the ISO). The
PSC has expressed an "expectation" that the utilities
will make corresponding subsequent filings on this
subject with the FERC.
- The proposed resolution of market power problems as
related to areas of constricted transmission capacity,
such as occur in the downstate region, which includes
the area served by the Company.
- Recommendations regarding the role and operation of
energy service companies.
- The structure of the utility in both the short and
long term, the schedule and cost to attain that
structure, and a description of how that structure
complies with the PSC's objectives.
- A schedule for the introduction of retail access and a
set of "unbundled" tariffs consistent with the retail
access program.
- A rate plan to be effective for a significant portion
of the transition to a competitive market, including
mechanisms to reduce rates and address stranded
investment.
The Company is considering its response to the PSC
Order, including potential litigation challenging the Order in
whole or in part. It is not possible to predict the outcome of
this proceeding or its impact on the Company. However, the
outcome could potentially have a material adverse effect on the
Company, its financial condition and results of operations.
- 19 -
Competition - Federal Initiative
On April 24, 1996 the Federal Energy Regulatory
Commission (FERC) issued its final order (FERC Order 888)
requiring electric utilities to file non-discriminatory open
access transmission tariffs that would be available to wholesale
sellers and buyers of electric energy and to allow utilities to
recover related legitimate and verifiable stranded costs. The
Company has petitioned the FERC to make certain modifications to
Order 888. The Company participates in the wholesale electric
market primarily as a buyer, and in this regard should benefit if
Order 888 results in lower wholesale prices for its purchases of
electricity for its retail customers. (The preceding sentence is
a forward-looking statement; it is a statement of expectation as
to future economic performance and is not a statement of fact.
Actual results might differ materially from those projected in
this statement. Important factors that could cause actual results
to differ from those projected include adverse interpretations of
Order 888 by the FERC or the courts; additional rule-making or
legislation that could modify the impact of Order 888; and
presently unforeseen interaction between Order 888 and the PSC
"competitive opportunities" proceeding, including future
developments in such proceeding.)
For additional information concerning the New York
State and FERC initiatives towards competition, 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, 1995 under the heading "Liquidity and Capital Resources -
Competition."
1996 Stock Option Plan
In May 1996 the Company's shareholders adopted the
Consolidated Edison Company of New York, Inc. 1996 Stock Option
Plan covering 10,000,000 shares of the Company's common stock.
Also in May, ten-year options covering 704,200 shares were
granted (at an exercise price of $27-7/8 per share). As permitted
by Statement of Financial Accounting Standard No. 123 (SFAS 123),
"Accounting for Stock-Based Compensation," the Company will
account for the Stock Option Plan in accordance with Accounting
Principles Board No. 25 (APB 25), "Accounting for Stock Issued to
Employees," with year-end footnote disclosure of the impact on
net income and earnings per share as if the Company had adopted
the SFAS 123 fair value method for recognition purposes. Because
the exercise price of the stock options under the Plan equals the
market price of the underlying stock on the date of grant, under
APB 25 no compensation expense is recognized.
- 20 -
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.
Collective Bargaining Agreement
In June 1996, the Company concluded a new collective
bargaining agreement with the union representing approximately
two-thirds of the Company's employees. The four-year agreement
provides for general wage increases of 2.5 percent in each of the
first two years and 3.0 percent in each of years three and four,
with a potential 0.5 percent merit increase in each year. Under
the current electric rate agreement, such increases are not
recovered in rates.
- 21 -
RESULTS OF OPERATIONS
Net income for common stock for the quarter, six
months and 12 months ended June 30, 1996 was lower than in the
corresponding 1995 periods by $.7 million ($.01 a share), $10.4
million ($.05 a share) and $21.7 million ($.09 a share),
respectively. These results reflect the three-year electric rate
agreement effective April 1, 1995, which provides for a generally
lower level of incentive earnings opportunities and lower allowed
returns on common equity.
In reviewing period-to-period comparisons, it should
be noted that not all changes in sales volume affected operating
revenues. Under the ERAM and the modified ERAM, discussed below,
except for the variation attributed to a change in number of
customers under the modified ERAM, most 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
normalization clause in the Company's gas tariff, most weather-
related variations in gas sales do not affect gas revenues.
Increases (Decreases)
Three Months Ended Six Months Ended Twelve Months Ended
June 30, 1996 June 30, 1996 June 30, 1996
Compared With Compared With Compared with
Three Months Ended Six Months Ended Twelve Months Ended
June 30, 1995 June 30, 1995 June 30, 1995
Amount Percent Amount Percent Amount Percent
(Amounts in Millions)
Operating revenues $ 79.9 5.5 % $ 278.4 8.9 % $ 403.5 6.3 %
Fuel - electric and steam 7.2 6.4 77.2 34.0 63.9 12.3
Purchased power - electric 11.8 3.8 68.1 12.2 215.6 22.5
Gas purchased for resale 44.1 84.2 113.9 69.7 121.2 48.0
Operating revenues less
fuel and purchased power
and gas purchased for resale
(Net revenues) 16.8 1.7 19.2 0.9 2.8 0.1
Other operations and maintenance (14.2) (3.3) (25.5) (3.0) (34.9) (2.1)
Depreciation and amortization (A) 6.0 5.2 29.4 13.2 48.0 11.0
Taxes, other than federal
income tax 25.2 10.0 55.5 10.5 74.0 6.7
Federal income tax 3.5 9.4 (9.1) (5.9) (45.5) (10.5)
Operating income (3.7) (2.4) (31.1) (7.1) (38.8) (3.7)
Other income less deductions
and related federal income tax (0.9) (63.7) (2.1) (59.9) 5.7 Large
Interest charges 0.4 0.5 (1.7) (1.0) 9.7 3.0
Net income (5.0) (6.5) (31.5) (11.3) (42.8) (5.8)
Preferred stock dividend
requirements (4.3) (48.2) (7.2) (40.2) (7.2) (20.1)
Gain on refunding of preferred
stock (A) - - 13.9 - 13.9 -
Net income for common stock $ (0.7) (1.0)% $ (10.4) (4.0)% $ (21.7) (3.1)%
(A) See discussion above under Liquidity and Capital Resources.
- 22 -
Second Quarter 1996 Compared with
Second Quarter 1995
Net revenues (operating revenues less fuel, purchased
power and gas purchased for resale) increased $16.8 million in
the second quarter of 1996 compared with the 1995 period.
Electric, gas and steam net revenues increased $6.5 million, $7.3
million and $3.0 million, respectively.
Total electric revenues in the 1996 period were
higher than in the corresponding 1995 period, largely reflecting
recovery of higher purchased power costs. Net electric revenues
for the second quarter of 1996 have been reduced for a credit due
customers of $7.0 million under the modified ERAM, reflecting
higher net revenues than the forecast level, compared with an
accrual of $14.3 million reflecting lower net revenues than the
forecast level in the 1995 period. The 1995 electric rate
agreement added to the ERAM a revenue per customer (RPC)
mechanism (modified ERAM) which excludes from adjustment those
variances in the Company's electric revenues which result from
changes in the number of customers in each electric service
classification. Net electric revenues for the second quarter of
1996 include $13.4 million earned under the RPC mechanism.
Electric net revenues for the second quarter of 1996
include $14.6 million, compared with $13.7 million for the 1995
period, for incentives earned under the provisions of the
electric rate agreements.
The accounting provisions of the 1992 and 1995
electric rate agreements for Indian Point Unit 2 refueling and
maintenance outages decreased electric net revenues for the
second quarter of 1996 compared with the 1995 period by $6.9
million; related expenses decreased in like amount.
Electric sales, excluding off-system sales, in the
second quarter of 1996 compared with the 1995 period were:
Millions of Kwhrs.
2nd Quarter 2nd Quarter Percent
Description 1996 1995 Variation Variation
Residential/Religious 2,379 2,258 121 5.4%
Commercial/Industrial 5,941 5,802 139 2.4%
Other 142 138 4 2.9%
Total Con Edison Customers 8,462 8,198 264 3.2%
NYPA, Municipal Agency
and Other Delivery Service 2,249 2,143 106 4.9%
Total Service Area 10,711 10,341 370 3.6%
- 23 -
Gas and steam revenues in the 1996 period reflect
rate increases effective October 1995. Gas net revenues for the
second quarter of 1996 also reflect an increase in non-weather
related firm sales compared with the 1995 period.
For the second quarter of 1996 firm gas sales volume
increased 11.9 percent and steam sales volume increased 5.8
percent compared with the 1995 period due to colder than normal
weather in the 1996 period compared with milder than normal
weather in the 1995 period. Steam net revenues for the period
reflect the effect of this weather variation because there is no
weather normalization provision for steam revenues.
After adjustment for comparability in both periods,
primarily for variations in weather, electric sales volume in the
Company's service territory increased 1.0 percent in the second
quarter of 1996, firm gas sales volume increased 3.7 percent and
steam sales volume decreased 1.3 percent.
Electric fuel costs decreased $4.6 million in the
1996 period, largely because of the lower unit cost of fuel
offset by increased sendout. Purchased power costs increased in
the second quarter of 1996 by $11.8 million over the 1995 period
due to the relatively high cost that the Company is required to
pay under its IPP contracts and the increased cost of short-term
power purchases, partially offset by reduced unit purchases. The
variations in fuel and purchased power costs also reflect the
availability of the Company's Indian Point Unit 2 nuclear
generating unit, which was operating during the 1996 period but
was out of service for refueling and maintenance for a large part
of the 1995 period. Steam fuel costs increased $11.8 million due
to increased sendout and higher unit cost of fuel. Gas purchased
for resale increased $44.1 million, reflecting increased sendout
and higher unit cost of purchased gas.
Other operations and maintenance expenses decreased
$14.2 million for the second quarter of 1996 compared with the
1995 period, due primarily to a decrease in the amortization of
previously deferred Enlightened Energy program costs, reflecting
lower program cost deferrals, and lower production expenses
reflecting a refueling and maintenance outage of Indian Point
Unit 2 in the 1995 period. There was no such outage in 1996.
Depreciation and amortization increased $6.0 million
in the second quarter of 1996 due to higher plant balances.
Taxes, other than federal income tax, increased $25.2
million in the second quarter of 1996 compared with the 1995
period due principally to increased property taxes.
- 24 -
Federal income tax increased $3.5 million for the
quarter reflecting adjustments associated with the 1995 electric
rate agreement.
Six Months Ended June 30, 1996 Compared
with the Six Months Ended June 30, 1995
Net revenues (operating revenues less fuel and
purchased power and gas purchased for resale) increased $19.2
million in the first six months of 1996 compared with the first
six months of 1995. Electric net revenues decreased $28.6 million
and gas and steam net revenues increased $25.3 million and $22.5
million, respectively.
Total electric revenues in the 1996 period were
higher than in the corresponding 1995 period, largely reflecting
recovery of higher fuel and purchased power costs. Net electric
revenues for the first six months of 1996 have been reduced by a
credit due customers of $6.6 million, net of $20.3 million earned
under the RPC mechanism, reflecting higher net revenues than the
forecast, compared with an accrual of $21.4 million reflecting
lower net revenues than the forecast level in the 1995 period.
The accounting provisions of the 1992 and 1995
electric rate agreements for Indian Point Unit 2 refueling and
maintenance outages decreased electric net revenues for the six
months ended June 30, 1996 compared with the 1995 period by $26.8
million; related expenses decreased in like amount.
Electric net revenues for the first six months of
1996 also include $24.9 million compared with $34.9 million for
the 1995 period for incentives earned under the provisions of the
rate agreements.
Electric sales, excluding off-system sales, in the
first six months of 1996 compared with the 1995 period were:
Millions of Kwhrs.
Six Months Six Months
Ended Ended Percent
Description June 30, 1996 June 30, 1995 Variation Variation
Residential/Religious 5,088 4,828 260 5.4 %
Commercial/Industrial 12,252 11,921 331 2.8 %
Other 295 287 8 2.8 %
Total Con Edison Customers 17,635 17,036 599 3.5 %
NYPA, Municipal Agency
and Other Delivery Service 4,677 4,506 171 3.8 %
Total Service Area 22,312 21,542 770 3.6 %
- 25 -
Gas and steam revenues in the first six months of
1996 were increased by rate increases effective October 1995 and
by recovery of higher costs for gas purchased for resale and
steam fuel. In addition, gas net revenue for the 1995 period
included $4.7 million for incentives earned under the 1994 gas
rate agreement, related to achievement of gas system improvement
targets for gas leaks. Steam revenue increases also reflect
increased sales volume.
For the first six months of 1996 firm gas sales
volume increased 14.3 percent and steam sales volume increased
12.0 percent over the 1995 period. Under the weather
normalization clause in the Company's gas tariff, most
weather-related variations in gas sales do not affect gas
revenues.
After adjustment for comparability in both periods,
primarily for variations in weather, electric sales volume in the
Company's service territory in the first six months of 1996
increased 1.3 percent. Similarly adjusted, firm gas sales volume
increased 3.4 percent and steam sales volume increased 0.7
percent.
Electric fuel and purchased power costs increased in
the first six months of 1996 by $37.2 million and $68.1 million,
respectively, reflecting higher sendout and the higher costs of
the Company's IPP power purchase contracts. The changes in fuel
and purchased power costs also reflect increased generation from
the Company's Indian Point Unit 2 nuclear generating station,
which was operating during the 1996 period but was out of service
for refueling and maintenance for a large part of the 1995
period. Steam fuel costs increased $40.0 million due to increased
sendout and higher unit cost of fuel. Gas purchased for resale
increased $113.9 million reflecting higher sendout and higher
unit cost.
Other operations and maintenance expenses decreased
$25.5 million in the first six months of 1996 compared with the
1995 period due to decreases in the amortization of previously
deferred Enlightened Energy program costs, reflecting lower
program cost deferrals, and production expenses (principally due
to the Indian Point Unit 2 refueling and maintenance outage in
the 1995 period -- there was no such outage in the 1996 period),
offset in part by higher distribution and transmission expenses.
Depreciation and amortization increased $29.4
million due principally to higher plant balances and an
additional provision for depreciation expense of $13.9 million
corresponding to the amount of the gain on the refunding of
preferred stock discussed above.
- 26 -
Taxes, other than federal income tax, increased $55.5
million in the first six months of 1996 compared with the 1995
period due primarily to increased property taxes ($37.4 million)
and revenue taxes ($16.4 million).
Federal income tax decreased $9.1 million in the first
six months of 1996 compared with the 1995 period, principally due
to lower pre-tax income.
Twelve Months Ended June 30, 1996 Compared with
Twelve Months Ended June 30, 1995
Net revenues (operating revenues less fuel, purchased
power and gas purchased for resale) increased $2.8 million in the
12 months ended June 30, 1996 compared with the 1995 period.
Electric net revenues decreased $65.5 million and gas and steam
net revenues increased $33.9 million and $34.4 million,
respectively.
Total electric revenues in the 1996 period were
higher than in the corresponding 1995 period, largely reflecting
recovery of higher purchased power costs, partially offset by
revenue reductions under the 1995 electric rate agreement to
reflect a generally lower level of operation expenses.
Under the modified ERAM, net electric revenues for
the 12 months ended June 30, 1996 were reduced for a credit due
customers of $63.4 million, net of $33.5 million earned under the
RPC mechanism, reflecting higher net revenues than the forecast
level, compared with a credit due customers of $13.1 million in
the 1995 period.
Net electric revenues for the 12 months ended June
30, 1996 include $47.7 million, compared with $86.1 million for
the 1995 period, for incentives earned under the provisions of
the rate agreements.
Electric sales, excluding off-system sales, for the
12 months ended June 30, 1996 compared with the 12 months ended
June 30, 1995 were:
Millions of Kwhrs.
Twelve Months Twelve Months
Ended Ended Percent
Description June 30, 1996 June 30, 1995 Variation Variation
Residential/Religious 11,108 10,586 522 4.9%
Commercial/Industrial 25,824 25,335 489 1.9%
Other 625 605 20 3.3%
Total Con Edison Customers 37,557 36,526 1,031 2.8%
NYPA, Municipal Agency
and Other Delivery Service 9,483 9,197 286 3.1%
Total Service Area 47,040 45,723 1,317 2.9%
- 27 -
Off-system electricity sales increased to 3,987
millions of Kwhrs in the 1996 period compared with 3,374 millions
of Kwhrs in the 1995 period. The increase in such sales was due
largely to arrangements in which the Company produced electricity
for others using gas they provided as fuel. The Company purchased
a substantial portion of this electricity for sale to its own
customers.
Gas and steam revenues in the 1996 period reflect
rate increases in October 1995 and higher fuel-related revenues
due to increased sales volumes and higher gas and steam unit
costs of fuel.
For the 12 months ended June 30, 1996, firm gas sales
volume increased 13.4 percent and steam sales volume increased
12.2 percent due to colder than normal 1996 winter weather
compared to warmer than normal 1995 winter weather. Under the
weather normalization clause in the Company's gas tariff, most
weather-related variations in gas sales do not affect gas
revenues.
After adjustment for comparability in both periods,
primarily for variations in weather, electric sales volume in the
Company's service territory in the 12 months ended June 30, 1996
increased 1.6 percent. Similarly adjusted, firm gas sales volume
increased 2.9 percent and steam sales volume decreased 0.1
percent.
Electric fuel costs increased $15.2 million in the
1996 period due to higher sendout; steam fuel costs increased
$48.7 million due to higher sendout and higher unit cost of fuel.
Purchased power costs increased in the 1996 period by $215.6
million over the 1995 period reflecting increased purchases under
IPP contracts and the relatively high cost that the Company is
required to pay under its IPP contracts. Gas purchased for resale
increased $121.2 million, reflecting higher sendout and higher
unit cost of fuel.
Other operations and maintenance expenses decreased
$34.9 million in the 12 months ended June 30, 1996 compared with
the 1995 period, due to decreased electric production and
administrative and general expenses, offset in part by higher
distribution and transmission expenses.
Depreciation and amortization increased $48.0 million
in the 1996 period due principally to higher plant balances and
an additional provision for depreciation expense of $13.9 million
corresponding to the amount of the gain on the refunding of
preferred stock.
- 28 -
Taxes, other than federal income tax, increased $74.0
million in the 12 months ended June 30, 1996 compared with the
1995 period due primarily to increased property taxes ($54.1
million) and revenue taxes ($19.1 million).
Federal income tax decreased $45.5 million for the 12
months ended June 30, 1996 compared with the 1995 period due
principally to lower pre-tax income.
Other income less miscellaneous deductions increased
$5.7 million for the 12-month period due primarily to increases
in investment income.
Interest on long-term debt for the 12-month period
increased $9.6 million principally as a result of the issuance of
new debt.
- 29 -
PART II. - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
ASTORIA SITE
Reference is made to the information under the caption
"SUPERFUND - Astoria Site" in Part I, Item 3, Legal Proceedings
in the Company's Annual Report on Form 10-K for the year ended
December 31, 1995.
While the Company's site investigation is ongoing, a portion
has been completed and reports thereon submitted to the DEC and
the New York State Department of Health for determination of the
remediation action, if any, that may be required. Depending on
the remediation required, the costs could be material.
NUCLEAR FUEL DISPOSAL
Reference is made to the information under the caption
"NUCLEAR FUEL DISPOSAL" in Part I, Item 3, Legal Proceedings and
Part I, Item 7, Management's Discussion and Analysis in the
Company's Annual Report on Form 10-K for the year ended December
31, 1995.
On July 23, 1996, the United States Court of Appeals for the
District of Columbia held that the DOE has an obligation
"reciprocal to the utilities' obligation to pay, to start
disposing of the [spent nuclear fuel] no later than January 31,
1998." Noting that it was premature to determine the appropriate
remedy, the Court remanded for further proceedings consistent
with its opinion.
RATE PROCEEDINGS
Reference is made to the information under the captions
"REGULATION AND RATES" in Part I, Item 1, Business, "RATE
PROCEEDINGS" in Part I, Item 3, Legal Proceedings and "LIQUIDITY
AND CAPITAL RESOURCES - 1992 Electric Rate Agreement, 1995
Electric Rate Agreement, Gas and Steam Rate Agreements, and
Competition" in Part I, Item 7, Management's Discussion and
Analysis in the Company's Annual Report on Form 10-K for the year
ended December 31, 1995 and the information under the captions
"LIQUIDITY AND CAPITAL RESOURCES - 1995 Electric Rate Agreement,
Gas and Steam Rate Increases, and Competition - New York State
Initiative" in Part I, Item 2, Management's Discussion and
Analysis in this Quarterly Report on Form 10-Q for the quarterly
period ended June 30, 1996.
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ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(a) At the Annual Meeting of Stockholders of the Company
held on May 20, 1996, the stockholders of the Company voted to
elect management's nominees for the Board of Trustees, to ratify
and approve the appointment of the Company's independent
accountants, to ratify and approve the Consolidated Edison
Company of New York, Inc. 1996 Stock Option Plan, and not to
adopt two stockholder proposals.
(b) The name of each nominee for election and the number of
shares voted for or with respect to which authority to vote for
was withheld are as follows:
For Withheld
E. Virgil Conway 178,828,684 3,462,256
Gordon J. Davis 176,657,841 5,633,099
Ruth M. Davis 177,887,886 4,403,054
Ellen V. Futter 178,823,049 3,467,891
Arthur Hauspurg 177,036,065 5,254,875
Sally Hernandez-Pinero 178,562,104 3,728,836
Peter W. Likins 178,981,906 3,309,034
Raymond J. McCann 178,767,485 3,523,455
Eugene R. McGrath 178,720,904 3,570,036
Donald K. Ross 178,420,604 3,870,336
Robert G. Schwartz 178,784,747 3,506,193
Richard A. Voell 178,963,441 3,327,499
Myles V. Whalen, Jr. 178,634,603 3,656,337
(c) The results of the vote on the appointment of Price
Waterhouse as independent accountants for the Company for 1996
were as follows: 179,150,988 shares were voted for this proposal;
1,445,323 shares were voted against the proposal; and 1,694,629
shares were abstentions.
(d) The results of the vote on the Consolidated Edison
Company of New York, Inc. 1996 Stock Option Plan were as follows:
164,351,159 shares were voted for this proposal; 13,376,383
shares were voted against the proposal; and 4,563,398 shares were
abstentions.
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(e) The following stockholder-proposed resolution was voted
upon at the Annual Meeting:
"RESOLVED: That the stockholders of Consolidated
Edison Company of New York, Inc., assembled in
annual meeting in person and by proxy, hereby
request the Board of Directors to take the steps
necessary to provide for cumulative voting in the
election of directors, which means each stockholder
shall be entitled to as many votes as shall equal
the number of shares he or she owns multiplied by
the number of directors to be elected, and he or
she may cast all of such votes for a single
candidate, or any two or more of them as he or
she may see fit."
The results of the vote on this proposal were as follows:
34,951,375 shares were voted for this proposal; 113,046,256
shares were voted against the proposal; 5,925,274 shares were
abstentions; and 28,368,035 shares were broker nonvotes.
(f) The following stockholder-proposed resolution was voted
upon at the Annual Meeting:
"RESOLVED: That the shareholders recommend that
the Board take the necessary step that Con Edison
specifically identify by name and corporate title
in all future proxy statements those executive
officers, not otherwise so identified, who are
contractually entitled to receive in excess of
$100,000 annually as base salary, together with
whatever other additional compensation bonuses
and other cash payments were due them."
The results of the vote on this proposal were as follows:
18,294,485 shares were voted for this proposal; 129,324,360
shares were voted against the proposal; 6,303,058 shares were
abstentions; and 28,369,037 shares were broker nonvotes.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS
Exhibit 3.1 By-laws of the Company, effective as of May 20,
1996. (Incorporated by reference to Exhibit 3.2.3
to the Company's Annual Report on Form 10-K for
the year ended December 31, 1995, in Commission
File No. 1-1217.)
Exhibit 3.2 Resolution adopted June 25, 1996 by the Board of
Trustees of the Company amending the Company's
By-Laws.
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Exhibit 3.3 By-laws of the Company, effective as of September
1, 1996.
Exhibit 4.1 Form of the Company's 7 3/4% Quarterly Income
Capital Securities (Series A Subordinated
Deferrable Interest Debentures). (Incorporated
by reference to Exhibit 4 to the Company's
Current Report on Form 8-K, dated February 29,
1996, in Commission File No. 1-1217.)
Exhibit 4.2 Form of the Company's 7 3/4% Debentures,
Series 1996 A. (Incorporated by reference
to Exhibit 4 to the Company's Current
Report on Form 8-K, dated April 24, 1996, in
Commission File No. 1-1217.)
Exhibit 10.1 Consolidated Edison Company of New York, Inc. 1996
Stock Option Plan. (Incorporated by reference to
Exhibit 10.47 to the Company's Annual Report on
Form 10-K for the year ended December 31, 1995, in
Commission File No. 1-1217.)
Exhibit 10.2 Amendment, dated July 23, 1996, to Employment
Contract, dated May 22, 1990, between the
Company and Eugene R. McGrath.
Exhibit 12 Statement of computation of ratio of earnings to
fixed charges for the twelve-month periods ended
June 30, 1996 and 1995.
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 April
24, 1996, reporting (under Item 5) the sale of $100 million
aggregate principal amount of its 7 3/4% Debentures, Series 1996
A, and the expected use of the net proceeds of the sale thereof
to refund certain debentures of the Company. The Company filed
no other Current Reports on Form 8-K during the quarter ended
June 30, 1996.
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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: August 5, 1996 Joan S. Freilich
Joan S. Freilich
Senior Vice President,
Chief Financial Officer and
Duly Authorized Officer
DATE: August 5, 1996 John F. Cioffi
John F. Cioffi
Vice President, Controller and
Chief Accounting Officer
INDEX TO EXHIBITS
SEQUENTIAL PAGE
EXHIBIT NUMBER AT WHICH
NO. DESCRIPTION EXHIBIT BEGINS
3.1 By-laws of the Company, effective as of May 20,
1996. (Incorporated by reference to Exhibit 3.2.3
to the Company's Annual Report on Form 10-K for
the year ended December 31, 1995, in Commission
File No. 1-1217.)
3.2 Resolution adopted June 25, 1996 by the Board of
Trustees of the Company amending the Company's
By-Laws.
3.3 By-laws of the Company, effective as of September
1, 1996.
4.1 Form of the Company's 7 3/4% Quarterly Income
Capital Securities (Series A Subordinated
Deferrable Interest Debentures). (Incorporated
by reference to Exhibit 4 to the Company's
Current Report on Form 8-K, dated February 29,
1996, in Commission File No. 1-1217.)
4.2 Form of the Company's 7 3/4% Debentures,
Series 1996 A. (Incorporated by reference
to Exhibit 4 to the Company's Current
Report on Form 8-K, dated April 24, 1996, in
Commission File No. 1-1217.)
10.1 Consolidated Edison Company of New York, Inc. 1996
Stock Option Plan. (Incorporated by reference to
Exhibit 10.47 to the Company's Annual Report on
Form 10-K for the year ended December 31, 1995, in
Commission File No. 1-1217.)
10.2 Amendment, dated July 23, 1996, to Employment
Contract, dated May 22, 1990, between the
Company and Eugene R. McGrath.
12 Statement of computation of ratio of earnings to
fixed charges for the twelve-month periods ended
June 30, 1996 and 1995.
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.)