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, 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 October 31, 1996, the Registrant
had outstanding 234,989,605 shares of Common Stock ($2.50 par
value).
- 2 -
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 13-27
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, 1995 (File No. 1-1217).
- 3 -
CONSOLIDATED EDISON COMPANY OF NEW YORK, INC.
CONSOLIDATED BALANCE SHEET
AS AT SEPTEMBER 30, 1996, DECEMBER 31, 1995 AND SEPTEMBER 30, 1995
As At
Sept. 30, 1996 Dec. 31, 1995 Sept. 30, 1995
(Thousands of Dollars)
ASSETS
Utility plant, at original cost
Electric $ 11,541,568 $ 11,319,622 $ 11,242,271
Gas 1,609,520 1,537,296 1,502,490
Steam 530,761 462,975 452,526
General 1,138,055 1,085,795 1,066,767
Total 14,819,904 14,405,688 14,264,054
Less: Accumulated depreciation 4,286,812 4,036,954 3,987,919
Net 10,533,092 10,368,734 10,276,135
Construction work in progress 342,496 360,457 340,920
Nuclear fuel assemblies and components,
less accumulated amortization 62,725 85,212 89,226
Net utility plant 10,938,313 10,814,403 10,706,281
Current assets
Cash and temporary cash investments 117,279 342,292 429,887
Accounts receivable - customers, less
allowance for uncollectible accounts
of $21,500, $21,600 and $20,739 565,713 497,215 508,823
Other receivables 38,713 45,558 52,293
Regulatory accounts receivable 33,501 (6,481) (11,317)
Fuel, at average cost 42,193 40,506 37,623
Gas in storage, at average cost 42,874 26,452 33,059
Materials and supplies, at average cost 213,687 221,026 222,685
Prepayments 193,484 66,148 181,424
Other current assets 14,915 15,126 14,552
Total current assets 1,262,359 1,247,842 1,469,029
Investments and nonutility property 170,025 145,646 135,465
Deferred charges
Enlightened Energy program costs 127,307 144,282 137,868
Unamortized debt expense 133,348 133,812 136,389
Power contract termination costs 70,272 105,408 117,120
Other deferred charges 315,529 316,237 282,598
Total deferred charges 646,456 699,739 673,975
Regulatory asset-future federal
income taxes 1,003,774 1,042,260 1,045,442
Total $ 14,020,927 $ 13,949,890 $ 14,030,192
The accompanying note is an integral part of these financial statements.
- 4 -
CONSOLIDATED EDISON COMPANY OF NEW YORK, INC.
CONSOLIDATED BALANCE SHEET
AS AT SEPTEMBER 30, 1996, DECEMBER 31, 1995 AND SEPTEMBER 30, 1995
As At
Sept. 30, 1996 Dec. 31, 1995 Sept. 30, 1995
(Thousands of Dollars)
CAPITALIZATION AND LIABILITIES
Capitalization
Common stock, authorized 340,000,000 shares;
outstanding 234,981,753 shares, 234,956,299
shares and 234,948,707 shares $ 1,478,444 $ 1,464,305 $ 1,464,247
Capital stock expense (34,972) (38,606) (38,686)
Retained earnings 4,290,590 4,097,035 4,112,624
Total common equity 5,734,062 5,522,734 5,538,185
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 15,330 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 4,721 4,917 4,976
Total other preferred stock 238,189 539,917 539,976
Total preferred stock 322,739 639,917 639,976
Long-term debt 4,090,810 3,917,244 4,020,261
Total capitalization 10,147,611 10,079,895 10,198,422
Noncurrent liabilities
Obligations under capital leases 43,332 45,250 45,890
Other noncurrent liabilities 82,797 75,907 71,614
Total noncurrent liabilities 126,129 121,157 117,504
Current liabilities
Long-term debt due within one year 179,715 183,524 109,206
Accounts payable 353,918 420,852 304,748
Customer deposits 158,492 158,366 159,861
Accrued taxes 122,882 24,374 179,925
Accrued interest 70,560 89,374 74,829
Accrued wages 78,117 76,459 87,108
Other current liabilities 142,049 168,477 155,877
Total current liabilities 1,105,733 1,121,426 1,071,554
Provisions related to future federal income
taxes and other deferred credits
Accumulated deferred federal income tax 2,316,138 2,296,284 2,309,321
Accumulated deferred investment tax credits 174,580 181,420 183,750
Other deferred credits 150,736 149,708 149,641
Total deferred credits 2,641,454 2,627,412 2,642,712
Total $ 14,020,927 $ 13,949,890 $ 14,030,192
The accompanying note is an integral part of these financial statements.
- 5 -
CONSOLIDATED EDISON COMPANY OF NEW YORK, INC.
CONSOLIDATED INCOME STATEMENT
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
1996 1995
(Thousands of Dollars)
Operating revenues
Electric $ 1,708,146 $ 1,703,089
Gas 141,121 113,678
Steam 71,074 63,109
Total operating revenues 1,920,341 1,879,876
Operating expenses
Fuel 145,942 158,994
Purchased power 334,557 290,404
Gas purchased for resale 38,595 25,023
Other operations 284,916 274,273
Maintenance 100,369 111,045
Depreciation and amortization 121,273 115,654
Taxes, other than federal income tax 302,990 308,897
Federal income tax 182,280 182,810
Total operating expenses 1,510,922 1,467,100
Operating income 409,419 412,776
Other income (deductions)
Investment income 1,170 4,324
Allowance for equity funds used during construction 883 485
Other income less miscellaneous deductions (2,435) (1,693)
Federal income tax 2,070 750
Total other income 1,688 3,866
Income before interest charges 411,107 416,642
Interest on long-term debt 77,956 75,656
Other interest 5,578 7,922
Allowance for borrowed funds used during construction (415) (232)
Net interest charges 83,119 83,346
Net income 327,988 333,296
Preferred stock dividend requirements 4,606 8,891
Net income for common stock $ 323,382 $ 324,405
Common shares outstanding - average (000) 234,981 234,939
Earnings per share $ 1.38 $ 1.38
Dividends declared per share of common stock $ .52 $ .51
Sales
Electric (Thousands of Kwhrs.)
Con Edison Customers 10,633,845 11,044,985
Deliveries for NYPA and Other Customers 2,281,224 2,349,578
Service for Municipal Agencies 159,037 135,847
Total Sales in Service Territory 13,074,106 13,530,410
Off-System Sales (A) 1,778,475 2,075,281
Gas (Dekatherms)
Firm 10,416,368 10,451,202
Off-Peak Firm/Interruptible 3,793,915 2,860,885
Total Sales to Con Edison Customers 14,210,283 13,312,087
Transportation of Customer-Owned Gas 6,508,631 9,820,561
Off-System Sales 265,981 230,063
Total Sales and Transportation 20,984,895 23,362,711
Steam (Thousands of Pounds) 6,420,558 6,877,750
(A) Includes 926,426 and 960,631 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.
- 6 -
CONSOLIDATED EDISON COMPANY OF NEW YORK, INC.
CONSOLIDATED INCOME STATEMENT
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
1996 1995
(Thousands of Dollars)
Operating revenues
Electric $ 4,238,720 $ 4,156,969
Gas 771,413 604,708
Steam 317,308 246,836
Total operating revenues 5,327,441 5,008,513
Operating expenses
Fuel 450,219 386,032
Purchased power 960,144 847,864
Gas purchased for resale 315,989 188,486
Other operations 848,903 857,215
Maintenance 349,309 366,492
Depreciation and amortization (A) 373,819 338,823
Taxes, other than federal income tax 886,500 836,966
Federal income tax 328,200 337,820
Total operating expenses 4,513,083 4,159,698
Operating income 814,358 848,815
Other income (deductions)
Investment income 4,891 8,622
Allowance for equity funds used during construction 2,141 3,361
Other income less miscellaneous deductions (5,108) (5,123)
Federal income tax 1,140 440
Total other income 3,064 7,300
Income before interest charges 817,422 856,115
Interest on long-term debt 230,431 224,696
Other interest 14,059 22,319
Allowance for borrowed funds used during construction (1,006) (1,626)
Net interest charges 243,484 245,389
Net income 573,938 610,726
Preferred stock dividend requirements 15,249 26,676
Gain on refunding of preferred stock (A) 13,943 -
Net income for common stock $ 572,632 $ 584,050
Common shares outstanding - average (000) 234,972 234,924
Earnings per share $ 2.44 $ 2.49
Dividends declared per share of common stock $ 1.56 $ 1.53
Sales
Electric (Thousands of Kwhrs.)
Con Edison Customers 28,269,089 28,081,351
Deliveries for NYPA and Other Customers 6,673,889 6,646,381
Service for Municipal Agencies 443,264 345,224
Total Sales in Service Territory 35,386,242 35,072,956
Off-System Sales (B) 3,047,621 4,392,449
Gas (Dekatherms)
Firm 75,549,180 67,411,713
Off-Peak Firm/Interruptible 14,919,496 11,340,519
Total Sales to Con Edison Customers 90,468,676 78,752,232
Transportation of Customer-Owned Gas 8,584,869 25,039,063
Off-System Sales 7,402,439 551,899
Total Sales and Transportation 106,455,984 104,343,194
Steam (Thousands of Pounds) 23,743,411 22,346,574
(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 1,463,871 and 2,282,261 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.
- 7 -
CONSOLIDATED EDISON COMPANY OF NEW YORK, INC.
CONSOLIDATED INCOME STATEMENT
FOR THE TWELVE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
1996 1995
(Thousands of Dollars)
Operating revenues
Electric $ 5,471,159 $ 5,361,076
Gas 980,061 796,013
Steam 404,605 312,671
Total operating revenues 6,855,825 6,469,760
Operating expenses
Fuel 568,291 500,004
Purchased power 1,219,503 1,050,877
Gas purchased for resale 387,292 246,621
Other operations 1,131,420 1,168,531
Maintenance 494,919 487,706
Depreciation and amortization (A) 490,773 446,760
Taxes, other than federal income tax 1,169,765 1,106,924
Federal income tax 386,940 418,880
Total operating expenses 5,848,903 5,426,303
Operating income 1,006,922 1,043,457
Other income (deductions)
Investment income 13,235 13,608
Allowance for equity funds used during construction 2,544 5,282
Other income less miscellaneous deductions (8,134) (10,779)
Federal income tax (360) 680
Total other income 7,285 8,791
Income before interest charges 1,014,207 1,052,248
Interest on long-term debt 307,651 297,802
Other interest 20,694 28,313
Allowance for borrowed funds used during construction (1,200) (2,472)
Net interest charges 327,145 323,643
Net income 687,062 728,605
Preferred stock dividend requirements 24,138 35,571
Gain on refunding of preferred stock (A) 13,943 -
Net income for common stock $ 676,867 $ 693,034
Common shares outstanding - average (000) 234,967 234,918
Earnings per share $ 2.88 $ 2.95
Dividends declared per share of common stock $ 2.07 $ 2.03
Sales
Electric (Thousands of Kwhrs.)
Con Edison Customers 37,146,106 36,704,167
Deliveries for NYPA and Other Customers 8,883,298 8,829,530
Service for Municipal Agencies 554,768 454,056
Total Sales in Service Territory 46,584,172 45,987,753
Off-System Sales (B) 3,690,644 5,047,413
Gas (Dekatherms)
Firm 98,861,793 87,599,512
Off-Peak Firm/Interruptible 19,051,789 15,203,657
Total Sales to Con Edison Customers 117,913,582 102,803,169
Transportation of Customer-Owned Gas 13,906,995 31,579,370
Off-System Sales 10,226,915 551,899
Total Sales and Transportation 142,047,492 134,934,438
Steam (Thousands of Pounds) 30,822,617 27,976,032
(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 1,848,447 and 2,282,261 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.
- 8 -
CONSOLIDATED EDISON COMPANY OF NEW YORK, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
1996 1995
(Thousands of Dollars)
Operating activities
Net income $ 573,938 $ 610,726
Principal non-cash charges (credits) to income
Depreciation and amortization 373,819 338,822
Federal income tax deferred 50,760 82,780
Common equity component of allowance
for funds used during construction (2,021) (3,166)
Other non-cash charges 28,567 7,455
Changes in assets and liabilities
Accounts receivable - customers, less
allowance for uncollectibles (68,498) (68,327)
Regulatory accounts receivable (39,982) 37,663
Materials and supplies, including fuel
and gas in storage (10,770) 37,958
Prepayments, other receivables and
other current assets (120,280) (116,871)
Enlightened Energy program costs 16,975 32,333
Federal income tax refund - (49,510)
Power contract termination costs 19,023 43,675
Accounts payable (66,934) (69,721)
Accrued income taxes 107,997 140,856
Other - net (50,169) (58,473)
Net cash flows from operating activities 812,425 966,200
Investing activities including construction
Construction expenditures (478,847) (462,238)
Nuclear fuel expenditures (1,223) (8,601)
Contributions to nuclear decommissioning trust (19,174) (13,568)
Common equity component of allowance
for funds used during construction 2,021 3,166
Net cash flows from investing activities
including construction (497,223) (481,241)
Financing activities including dividends
Issuance of long-term debt 375,000 100,000
Retirement of long-term debt (107,435) (9,119)
Advance refunding of long-term debt (95,329) -
Advance refunding of preferred stock (316,982) -
Issuance and refunding costs (10,805) (5,058)
Common stock dividends (366,560) (359,437)
Preferred stock dividends (18,104) (26,679)
Net cash flows from financing activities
including dividends (540,215) (300,293)
Net increase (decrease) in cash and temporary
cash investments (225,013) 184,666
Cash and temporary cash investments
at January 1 342,292 245,221
Cash and temporary cash investments
at September 30 $ 117,279 $ 429,887
Supplemental disclosure of cash flow information
Cash paid during the period for:
Interest $ 253,697 $ 245,884
Income taxes 169,755 120,572
The accompanying note is an integral part of these financial statements.
- 9 -
CONSOLIDATED EDISON COMPANY OF NEW YORK, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE TWELVE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
1996 1995
(Thousands of Dollars)
Operating activities
Net income $ 687,062 $ 728,605
Principal non-cash charges (credits) to income
Depreciation and amortization 490,773 446,760
Federal income tax deferred 37,000 128,950
Common equity component of allowance
for funds used during construction (2,401) (4,977)
Other non-cash charges (credits) (26,443) (1,635)
Changes in assets and liabilities
Accounts receivable - customers, less
allowance for uncollectibles (56,890) (16,337)
Regulatory accounts receivable (44,818) 28,311
Materials and supplies, including fuel
and gas in storage (5,387) 48,899
Prepayments, other receivables and
other current assets 1,157 (1,634)
Enlightened Energy program costs 10,561 23,284
Federal income tax refund (3,427) (49,510)
Power contract termination costs 30,735 24,490
Accounts payable 49,170 (4,109)
Accrued income taxes (41,409) (3,708)
Other - net (2,996) (72,879)
Net cash flows from operating activities 1,122,687 1,274,510
Investing activities including construction
Construction expenditures (709,412) (721,535)
Nuclear fuel expenditures (5,462) (16,481)
Contributions to nuclear decommissioning trust (24,499) (16,485)
Common equity component of allowance
for funds used during construction 2,401 4,977
Net cash flows from investing activities
including construction (736,972) (749,524)
Financing activities including dividends
Issuance of long-term debt 503,285 328,285
Retirement of long-term debt (109,205) (135,743)
Advance refunding of long-term debt (251,028) (128,285)
Advance refunding of preferred stock (316,982) -
Issuance and refunding costs (11,016) (7,623)
Common stock dividends (486,385) (476,887)
Preferred stock dividends (26,992) (35,583)
Net cash flows from financing activities
including dividends (698,323) (455,836)
Net increase (decrease) in cash and temporary
cash investments (312,608) 69,150
Cash and temporary cash investments
at beginning of period 429,887 360,737
Cash and temporary cash investments
at September 30 $ 117,279 $ 429,887
Supplemental disclosure of cash flow information
Cash paid during the period for:
Interest $ 317,766 $ 300,137
Income taxes 393,937 299,741
The accompanying note is an integral part of these financial statements.
- 10 -
- ----------------------------------------------------------------
Contingency Note
- ----------------------------------------------------------------
Indian Point. Nuclear generating units similar in design to the
Company's Indian Point 2 unit have experienced problems of
varying severity in their steam generators, which in a number of
instances have required steam generator replacement. Inspections
of the Indian Point 2 steam generators since 1976 have revealed
various problems, some of which appear to have been arrested, but
the remaining service life of the steam generators is uncertain
and may be shorter than the unit's life. The projected service
life of the steam generators is reassessed periodically in 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 September 30, 1996 the highest
amount which could be assessed for losses during the current
policy year under all of the policies was $32.7 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.
- 11 -
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
September 30, 1996 of approximately $13.3 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 September 30, 1996 the Company had an accrued liability of
$17.3 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.
- 12 -
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.
- 13 -
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 $117.3 million at
September 30, 1996 compared with $342.3 million at December 31,
1995 and $429.9 million at September 30, 1995. The Company's cash
balances reflect the timing and amounts of external financing and
property tax payments.
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 nine and 12-month periods ending
September 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.
- 14 -
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.
These borrowings were repaid in August 1996.
The Company expects to finance the balance of its capital
requirements for the remainder of 1996 and 1997, including $182
million for securities maturing during this period, from
internally generated funds and external debt financing of about
$150 million.
Customer accounts receivable, less allowance for
uncollectible accounts, amounted to $565.7 million at September
30, 1996 compared with $497.2 million at December 31, 1995 and
$508.8 million at September 30, 1995. The increase in the
customer accounts receivable balance at September 30, 1996
compared with September 30, 1995 reflects primarily increases in
sales revenues. In terms of equivalent days of revenue
outstanding (ENDRO), these amounts represented 25.9, 27.6 and
25.0 days, respectively.
The regulatory accounts receivable of $33.5 million at
September 30, 1996 represent amounts to be recovered from
customers. The regulatory accounts receivable negative balance of
$6.5 million and $11.3 million at December 31, 1995 and September
30, 1995, respectively, represent amounts to be refunded to
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 nine months of 1996 were as follows:
1996
Balance Recoveries Balance
Dec. 31, 1996 from Sept.30,
(Millions of Dollars) 1995* Accruals* Customers** 1996*
ERAM/Modified ERAM $(37.7) $ 4.3 $ 18.5 $(14.9)
Electric Incentives
Enlightened Energy program 19.7 18.2 (9.8) 28.1
Customer service 4.0 3.4 (3.1) 4.3
Fuel and purchased power 1.9 20.0 (15.1) 6.8
Gas Incentives
System improvement 4.6 6.5 (4.6) 6.5
Customer service 1.0 2.7 (1.0) 2.7
Total $ (6.5) $ 55.1 $ (15.1) $ 33.5
* 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 September 30, 1996 was 4.09 times, compared with 4.20 times
for the year 1995 and 4.32 times for the 12 months ended
September 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 a portion of any earnings above
specified levels (excluding incentive earnings) be shared with
customers or applied to reduce rate base balances. 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 labor
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 electric 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.
For the second rate year of the electric rate agreement, the
12 months ended March 31, 1997, the Company estimates that the
actual rate of return on electric common equity, excluding
incentives, will exceed the sharing threshold of 10.81 percent,
principally due to labor productivity. Therefore, in the third
quarter of 1996, a provision for excess earnings of $4 million
was set aside for the future benefit of customers.
- 16 -
In October 1996, the Company filed for an increase to its
electric rates to become effective April 1, 1997 for the third
rate year of the electric rate agreement. Under the terms of the
agreement, the estimated increased revenue requirement, which
could vary based on data available by early 1997, is $87 million
(an increase of approximately 1.6%). The Company is reviewing
measures to mitigate this increase.
Gas and Steam Rate Agreements
In October 1994 the PSC approved three-year rate agreements
for the Company's gas and steam services. For details of the
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."
For the second rate year, the 12 months ended September 30,
1996, the Company's rates of return on common equity for gas and
steam were above the 11.65 percent threshold for earnings sharing
with customers. However, no provisions have been made for refund
to customers because the excess earnings for the second rate year
in each case were offset by earnings below the threshold for the
first rate year.
In September 1996 the PSC approved a $12.1 million (3.44
percent) increase to base steam rates for the third rate year
under the steam agreement. Pursuant to the agreement, the balance
of the calculated increase under the agreement, $10.8 million, is
being deferred for future recovery from customers.
In October 1996 the Company entered into a gas rate
settlement agreement with the PSC staff. The new agreement is
subject to PSC approval. Pursuant to the new agreement, the
Company will withdraw its request for an increase to base gas
rates for the third rate year under the 1994 gas agreement. The
new agreement contains the following major provisions: base rates
will, with limited exceptions, remain at September 30, 1996
levels through September 30, 2000; the Company will share in net
revenue from interruptible gas sales (previously used only to
reduce firm customer gas costs) by retaining in each rate year
the first $7 million of net revenue above 8.5 million dekatherms
and 50 percent of additional net revenues; 86 percent of any
increase in property taxes above levels implicit in rates will be
recovered by offsetting amounts, if any, that would otherwise be
returned to customers; the incentive (or penalty) mechanisms
under the 1994 gas agreement will be discontinued effective
October 1997, after which the Company will be subject
- 17 -
to a penalty (maximum, $1.7 million) if it fails to maintain
targeted levels of customer satisfaction; and the Company will
share with customers 50 percent of earnings above a 13 percent
rate of return on gas common equity.
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 discontinued in the second quarter of
1996, 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 September 30, 1996, one $75 million issue
of first mortgage bonds, which will mature in December 1996,
remains outstanding.
Competition - New York State Initiative
On October 1, 1996, the Company proposed its plan (the
"Company's Plan") in response to the PSC's May 20, 1996 order in
its "Competitive Opportunities" proceeding (the "Order"). The
Order 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
Company's Plan proposes a transition to a competitive electricity
market (with increased wholesale competition in 1997, a retail
pilot program beginning in 1998, and retail access for the
Company's customers by 2003, if feasible), a five-year "rate
freeze" to take effect April 1997 (beginning with the last year
of the Company's current electric rate agreement), full recovery
from customers of all prior utility investments and commitments,
including potential "strandable costs," a corporate
reorganization into a holding company structure, and tax and
regulatory reform. For additional information about the Order,
the legal proceeding challenging the Order instituted by the
Company and others, and the Company's Plan, see the Company's
Current Report on Form 8-K, dated October 1, 1996, and
Management's Discussion and Analysis appearing in Part I, Item 2
of the Company's Quarterly Report on Form 10-Q for the quarterly
period ended June 30, 1996 under the heading "Liquidity and
Capital Resources - Competition - New York State Initiative."
- 18 -
By order issued October 9, 1996 in the Competitive
Opportunities proceeding, the PSC established a 90-day period
ending on January 7, 1997 for settlement negotiations. The PSC
also provided, in the absence of a settlement, for the closing of
the record for the proceeding, including any evidentiary hearings
"determined to be needed," on or before March 8, 1997. The
Company, without prejudice to its rights to challenge the Order
or the PSC's October 9, 1996 Order, is engaged in collaborative
efforts to reach a negotiated settlement with the PSC staff and
other interested parties with respect to the Company's Plan.
The Company's Plan could change materially before it becomes
effective. It is not possible to predict the outcome of the
Competitive Opportunities 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.
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 allowing utilities to recover related
legitimate and verifiable stranded costs subject to FERC's
jurisdiction. The Company has petitioned the FERC to make certain
modifications to Order 888. The Company's open access tariff took
effect July 9, 1996, subject to refund pending the outcome of a
hearing on the tariff set by FERC for August 1997. The Company
participates in the wholesale electric market primarily as a
buyer, and in this regard could 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's
Competitive Opportunities proceeding, including future
developments in such proceeding.)
- 19 -
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 under the Plan (at an exercise price of $27-7/8 per
share). As permitted by Statement of Financial Accounting
Standards No. 123 (SFAS 123), "Accounting for Stock-Based
Compensation," the Company will account for the Stock Option Plan
in accordance with Accounting Principles Board Opinion 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.
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.
- 20 -
RESULTS OF OPERATIONS
Net income for common stock for the third quarter, the nine
months and the 12 months ended September 30, 1996 was lower than
in the corresponding 1995 periods by $1.0 million, $11.4 million
($.05 a share) and $16.2 million ($.07 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 Nine Months Ended Twelve Months Ended
September 30, 1996 September 30, 1996 September 30, 1996
Compared With Compared With Compared with
Three Months Ended Nine Months Ended Twelve Months Ended
September 30, 1995 September 30, 1995 September 30, 1995
Amount Percent Amount Percent Amount Percent
(Amounts in Millions)
Operating revenues $ 40.5 2.2 % $ 318.9 6.4 % $ 386.1 6.0 %
Fuel - electric and steam (13.1) (8.2) 64.2 16.6 68.3 13.7
Purchased power - electric 44.2 15.2 112.3 13.2 168.6 16.0
Gas purchased for resale 13.6 54.2 127.5 67.6 140.7 57.0
Operating revenues less fuel,
purchased power and gas purchased
for resale (Net revenues) (4.2) (0.3) 14.9 0.4 8.5 0.2
Other operations and maintenance - - (25.5) (2.1) (29.9) (1.8)
Depreciation and amortization 5.6 4.9 35.0 10.3 44.0 9.9
Taxes, other than federal income tax (5.9) (1.9) 49.5 5.9 62.8 5.7
Federal income tax (0.5) (0.3) (9.6) (2.8) (31.9) (7.6)
Operating income (3.4) (0.8) (34.5) (4.1) (36.5) (3.5)
Other income less deductions
and related federal income tax (2.1) (56.3) (4.2) (58.0) (1.5) (17.1)
Interest charges (0.2) (0.3) (1.9) (0.8) 3.5 1.1
Net income (5.3) (1.6) (36.8) (6.0) (41.5) (5.7)
Preferred stock dividend
requirements (4.3) (48.2) (11.5) (42.8) (11.4) (32.1)
Gain on refunding of preferred
stock - - 13.9 - 13.9 -
Net income for common stock $ (1.0) (0.3)% $ (11.4) (2.0)% $ (16.2) (2.3)%
- 21 -
Third Quarter 1996 Compared with
Third Quarter 1995
Net revenues (operating revenues less fuel, purchased power
and gas purchased for resale) decreased $4.2 million in the third
quarter of 1996 compared with the 1995 period. Electric and
steam net revenues decreased $16.2 million and $1.8 million,
respectively. Gas net revenues increased $13.8 million.
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 the rate
reduction, discussed above, for the second year of the current
electric rate agreement. 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.
Electric net revenues for the third quarter of 1996 have been
increased by an accrual of $10.9 million under the modified ERAM,
net of $22.4 million earned under the RPC mechanism, reflecting
lower net revenues than the forecast level. This compares with a
net revenue decrease in the 1995 period for credit due customers
of $59.1 million, net of $5.9 million earned under the RPC
mechanism, reflecting higher net revenues than the forecast level
in that period.
Electric net revenues for the third quarter of 1996 include
$16.7 million, compared with $12.6 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 third quarter of
1996 compared with the 1995 period by $7.0 million; related
expenses decreased in like amount.
Electric sales, excluding off-system sales, in the
third quarter of 1996 compared with the 1995 period were:
Millions of Kwhrs.
3rd Quarter 3rd Quarter Percent
Description 1996 1995 Variation Variation
Residential/Religious 3,212 3,511 (299) (8.5)%
Commercial/Industrial 7,249 7,352 (103) (1.4)%
Other 173 182 (9) (4.9)%
Total Con Edison Customers 10,634 11,045 (411) (3.7)%
NYPA, Municipal Agency
and Other Delivery Service 2,440 2,485 (45) (1.8)%
Total Service Area 13,074 13,530 (456) (3.4)%
- 22 -
Gas and steam revenues in the 1996 period reflect rate
increases effective October 1995. Gas net revenues for the third
quarter of 1996 and 1995 include $9.2 million and $2.7 million,
respectively, for incentives earned under the 1994 gas rate
agreement relating to system improvement targets for gas leaks
and to customer service performance.
For the third quarter of 1996 firm gas sales volume
decreased 0.3 percent and steam sales volume decreased 6.6
percent compared with the 1995 period.
The decreases in electric and steam sales volumes for the
period are due primarily to milder than normal 1996 summer
weather compared to warmer than normal 1995 summer weather. After
adjustment for comparability in both periods, primarily for
variations in weather, electric sales volume in the Company's
service territory increased 0.7 percent in the third quarter of
1996, firm gas sales volume decreased 0.4 percent and steam sales
volume decreased 1.4 percent.
Electric fuel costs decreased $22.9 million in the 1996
period due to lower sendout. Purchased power costs increased in
the third quarter of 1996 by $44.2 million over the 1995 period
due to the relatively high cost that the Company is required to
pay under its IPP contracts, the increased cost of short-term
power purchases, and increased unit purchases. Steam fuel costs
increased $9.8 million due to the higher unit cost of fuel. Gas
purchased for resale increased $13.6 million, reflecting the
higher unit cost of purchased gas.
Other operations and maintenance expenses were unchanged for
the third quarter of 1996 compared with the 1995 period. Higher
pension and other postretirement benefit expenses (due to changes
in actuarial assumptions) were offset by lower production and
distribution expenses.
Depreciation and amortization increased $5.6 million in the
third quarter of 1996 due to higher plant balances.
Taxes, other than federal income tax, decreased $5.9 million
in the third quarter of 1996 compared with the 1995 period due
principally to decreased revenue taxes (reflecting a lower New
York State Corporate Tax Surcharge rate).
- 23 -
Nine Months Ended September 30, 1996 Compared
with the Nine Months Ended September 30, 1995
Net revenues (operating revenues less fuel, purchased power
and gas purchased for resale) increased $14.9 million in the
first nine months of 1996 compared with the first nine months of
1995. Electric net revenues decreased $45.0 million and gas and
steam net revenues increased $39.2 million and $20.7 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, partially offset by the
rate reduction, discussed above, for the second rate year of the
current electric rate agreement. Electric net revenues for the
first nine months of 1996 have been increased by an accrual of
$4.3 million, net of $42.7 million earned under the RPC
mechanism, reflecting lower net revenues than the forecast level.
This compares with a net revenue decrease in the 1995 period for
credit due customers of $37.6 million, net of $6.0 million earned
under the RPC mechanism, reflecting higher net revenues than the
forecast level in that period.
Electric net revenues for the first nine months of 1996 also
include $41.6 million, compared with $47.4 million for the 1995
period, for incentives earned under the provisions of the 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 nine months ended
September 30, 1996 compared with the 1995 period by $33.8
million; related expenses decreased in like amount.
Electric sales, excluding off-system sales, in the first
nine months of 1996 compared with the 1995 period were:
Millions of Kwhrs.
Nine Months Nine Months
Ended Ended Percent
Description Sept.30, 1996 Sept.30, 1995 Variation Variation
Residential/Religious 8,300 8,340 (40) (0.5)%
Commercial/Industrial 19,501 19,272 229 1.2 %
Other 468 469 (1) (0.2)%
Total Con Edison Customers 28,269 28,081 188 0.7 %
NYPA, Municipal Agency
and Other Delivery Service 7,117 6,992 125 1.8 %
Total Service Area 35,386 35,073 313 0.9 %
- 24 -
Gas and steam revenues in the first nine months of
1996 were increased by rate increases effective October 1995 and
by recovery of higher costs for gas purchased for resale and for
steam fuel. Gas net revenues for the 1996 and 1995 periods
include $9.2 million and $7.4 million, respectively, for
incentives earned under the 1994 gas rate agreement, related to
achievement of gas system improvement targets for gas leaks and
to customer service performance.
For the first nine months of 1996 firm gas sales volume
increased 12.1 percent and steam sales volume increased 6.3
percent over the 1995 period, due primarily to colder than normal
1996 winter weather as 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 first nine months of 1996
increased 1.1 percent. Similarly adjusted, firm gas sales volume
increased 2.8 percent and steam sales volume increased 0.2
percent.
Electric fuel and purchased power costs increased in the
first nine months of 1996 by $14.4 and $112.3 million,
respectively, reflecting the higher unit cost of fuel and the
higher costs of the Company's IPP power purchase contracts,
offset by lower sendout. The increases in fuel and purchased
power costs were mitigated by 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 $49.8 million due to increased sendout
and higher unit cost of fuel. Gas purchased for resale increased
$127.5 million reflecting higher sendout and higher unit cost.
Other operations and maintenance expenses decreased $25.5
million in the first nine 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 decreases in 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 pension and other
postretirement benefit expenses (due to changes in actuarial
assumptions).
- 25 -
Depreciation and amortization increased $35.0 million in the
first nine months of 1996 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.
Taxes, other than federal income tax, increased $49.5
million in the first nine months of 1996 compared with the 1995
period due primarily to increased property taxes ($38.3 million)
and revenue taxes ($11.2 million).
Federal income tax decreased $9.6 million in the first nine
months of 1996 compared with the 1995 period, principally due to
lower pre-tax income.
Interest on long-term debt for the nine month period
increased $5.7 million, principally as a result of the issuance
of subordinated debentures to refund preferred stock, as
discussed above.
Twelve Months Ended September 30, 1996 Compared with
Twelve Months Ended September 30, 1995
Net revenues (operating revenues less fuel, purchased power
and gas purchased for resale) increased $8.5 million in the 12
months ended September 30, 1996 compared with the 1995 period.
Electric net revenues decreased $66.1 million and gas and steam
net revenues increased $43.4 million and $31.2 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 the rate
reduction, discussed above, for the second year of the current
electric rate agreement. Electric net revenues for the 12 months
ended September 30, 1996 were increased by an accrual of $6.6
million, net of $50.0 million earned under the RPC mechanism,
reflecting lower net revenues than the forecast level, compared
with a decrease in the 1995 period for credit due customers of
$30.1 million, net of $6.0 million earned under the RPC
mechanism, reflecting higher net revenues than the forecast level
in that period.
Electric net revenues for the 12 months ended September 30,
1996 include $51.8 million, compared with $72.3 million for the
1995 period, for incentives earned under the 1995 and 1992
electric rate agreements, respectively.
- 26 -
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 12 months ended
September 30, 1996 compared with the 1995 period by $27.9
million; related expenses decreased in like amount.
Electric sales, excluding off-system sales, for the
12 months ended September 30, 1996 compared with the 12 months
ended September 30, 1995 were:
Millions of Kwhrs.
Twelve Months Twelve Months
Ended Ended Percent
Description Sept.30, 1996 Sept.30, 1995 Variation Variation
Residential/Religious 10,809 10,729 80 0.7%
Commercial/Industrial 25,721 25,359 362 1.4%
Other 616 616 - - %
Total Con Edison Customers 37,146 36,704 442 1.2%
NYPA, Municipal Agency
and Other Delivery Service 9,438 9,284 154 1.7%
Total Service Area 46,584 45,988 596 1.3%
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. Gas net revenues for the 1996 and 1995 periods include $9.2
million and $7.4 million, respectively, for incentives earned
under the 1994 gas rate agreement, related to achievement of gas
system improvement targets for gas leaks and to customer service
performance.
For the 12 months ended September 30, 1996, firm gas sales
volume increased 12.9 percent and steam sales volume increased
10.2 percent, due primarily to colder than normal 1996 winter
weather as 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 September 30,
1996 increased 1.3 percent. Similarly adjusted, firm gas sales
volume increased 2.4 percent and steam sales volume decreased 0.1
percent.
- 27 -
Electric fuel costs increased $7.6 million in the 1996
period due to the higher unit cost of fuel. Purchased power costs
increased in the 1996 period by $168.6 million over the 1995
period reflecting the relatively high cost that the Company is
required to pay under its IPP contracts. Steam fuel costs
increased $60.7 million due to higher sendout and higher unit
cost of fuel. Gas purchased for resale increased $140.7 million,
reflecting higher sendout and higher unit cost of fuel.
Other operations and maintenance expenses decreased $29.9
million in the 12 months ended September 30, 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 in electric 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 pension and other
postretirement benefit expenses (due to changes in actuarial
assumptions).
Depreciation and amortization increased $44.0 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.
Taxes, other than federal income tax, increased $62.8
million in the 12 months ended September 30, 1996 compared with
the 1995 period due primarily to increased property taxes ($47.7
million) and revenue taxes ($14.7 million).
Federal income tax decreased $31.9 million for the 12 months
ended September 30, 1996 compared with the 1995 period due
principally to lower pre-tax income.
Interest on long-term debt for the 12-month period increased
$9.8 million principally as a result of the issuance of
subordinated debentures to refund preferred stock.
- 28 -
PART II. - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
SUPERFUND - PCB Treatment, Inc. Sites
Reference is made to the information under the caption
"SUPERFUND - PCB Treatment Sites" in Part I, Item 3, Legal
Proceedings in the Company's Annual Report on Form 10-K for the
year ended December 31, 1995.
The United States Environmental Protection Agency ("EPA")
has issued a preliminary waste-in list indicating that
approximately 16.9 million pounds of PCB-contaminated oil,
equipment and materials were shipped to the sites. The Company
has informed the EPA that it shipped approximately 2.8 million
pounds of waste to the sites. The EPA has identified over 700
parties that shipped waste to the sites, including federal
agencies which, based on responses to the EPA's information
request, appear to be responsible for approximately 7 million
pounds of the waste. Several site PRPs, including the Company,
have entered into an EPA consent order for additional site
studies.
SUPERFUND - 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 and to the information under the caption
"ASTORIA SITE" in Part II, Item 1, Legal Proceedings, in the
Company's Quarterly Report on Form 10-Q for the quarterly period
ended June 30, 1996.
SUPERFUND - Port Refinery Site
The EPA has notified the Company by letter, dated October
21, 1996, that it is a PRP for the Port Refinery Superfund Site
in Rye Brook, NY. According to the EPA, Port Refinery Company
used the site for the reprocessing and repackaging of mercury and
caused extensive contamination which the EPA has cleaned up at a
cost of approximately $4.5 million. In its letter, the EPA
demands reimbursement of its costs from the Company and the 58
other site PRPs that the EPA has identified. Based on the
documents provided by the EPA, it appears that the Company
shipped 660 pounds of mercury to Port Refinery. The Company is
currently investigating its dealings with Port Refinery in
response to an EPA informational request for the site.
- 29 -
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, and in Part II, Item 1, Legal Proceedings, in the
Company's Quarterly Report on Form 10-Q for the quarterly period
ended June 30, 1996.
RATE PROCEEDINGS
Reference is made to (i) 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; (ii) the information under the captions
"LIQUIDITY AND CAPITAL RESOURCES - 1995 Electric Rate Agreement,
Gas and Steam Rate Agreements, 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 September 30, 1996; and (iii) the Company's Current
Report on Form 8-K, dated October 1, 1996.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS
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 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.)
- 30 -
Exhibit 12 Statement of computation of ratio of earnings to
fixed charges for the twelve-month periods ended
September 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
October 1, 1996, reporting (under Item 5) the provision to the
New York State Public Service Commission of the Company's
response to the Commission's May 20, 1996 order in its
"Competitive Opportunities" proceeding, and the legal proceeding
instituted by the Company and others challenging the order. The
Company filed no other Current Reports on Form 8-K during the
quarter ended September 30, 1996.
- 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 12, 1996 Joan S. Freilich
Joan S. Freilich
Senior Vice President,
Chief Financial Officer and
Duly Authorized Officer
DATE: November 12, 1996 John F. Cioffi
John F. Cioffi
Vice President, Controller,
Acting Treasurer and
Chief Accounting Officer
INDEX TO EXHIBITS
SEQUENTIAL PAGE
EXHIBIT NUMBER AT WHICH
NO. DESCRIPTION EXHIBIT BEGINS
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 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.)
12 Statement of computation of ratio of earnings to
fixed charges for the twelve-month periods ended
September 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.)