Attached files
| file | filename |
|---|---|
| EX-99.1 - EXHIBIT 99.1 - CONSOLIDATED EDISON INC | ed-20171231xexx991.htm |
| 8-K - 8-K - CONSOLIDATED EDISON INC | ed-20171231xpr.htm |
2017 Earnings Release Presentation
February 15, 2018
Exhibit 99.2
2
Available Information
On February 15, 2018, Consolidated Edison, Inc. issued a press release reporting its 2017 earnings and filed with the Securities and
Exchange Commission the company’s 2017 Form 10-K. This presentation should be read together with, and is qualified in its entirety by
reference to, the earnings press release and the Form 10-K. Copies of the earnings press release and the Form 10-K are available at:
www.conedison.com (select "For Investors" and then select "Press Releases“ and “SEC Filings”, respectively).
Forward-Looking Statements
This presentation contains forward-looking statements that are intended to qualify for the safe-harbor provisions of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are
statements of future expectations and not facts. Words such as "forecasts," "expects," "estimates," "anticipates," "intends," "believes," "plans,"
"will" and similar expressions identify forward-looking statements. The forward-looking statements reflect information available and
assumptions at the time the statements are made, and speak only as of that time. Actual results or developments may differ materially from
those included in the forward-looking statements because of various factors such as those identified in reports the company has filed with the
Securities and Exchange Commission, including that the company's subsidiaries are extensively regulated and are subject to penalties; its
utility subsidiaries' rate plans may not provide a reasonable return; it may be adversely affected by changes to the utility subsidiaries' rate
plans; the intentional misconduct of employees or contractors could adversely affect it; the failure of, or damage to, its subsidiaries' facilities
could adversely affect it; a cyber-attack could adversely affect it; it is exposed to risks from the environmental consequences of its subsidiaries'
operations; a disruption in the wholesale energy markets or failure by an energy supplier could adversely affect it; it has substantial unfunded
pension and other postretirement benefit liabilities; its ability to pay dividends or interest depends on dividends from its subsidiaries; it requires
access to capital markets to satisfy funding requirements; changes to tax laws could adversely affect it; its strategies may not be effective to
address changes in the external business environment; and it also faces other risks that are beyond its control.
Non-GAAP Financial Measure
This presentation also contains a financial measure, adjusted earnings, that is not determined in accordance with generally accepted
accounting principles in the United States of America (GAAP). This non-GAAP financial measure should not be considered as an alternative to
net income, which is an indicator of financial performance determined in accordance with GAAP. Adjusted earnings excludes from net income
the net mark-to-market changes in the fair value of the derivative instruments the subsidiaries of Con Edison Clean Energy Businesses, Inc.
use to economically hedge market price fluctuations in related underlying physical transactions for the purchase or sale of electricity and gas.
Adjusted earnings may also exclude from net income certain other items that the company does not consider indicative of its ongoing financial
performance. Management uses this non-GAAP financial measure to facilitate the analysis of the company's financial performance as
compared to its internal budgets and previous financial results. Management also uses this non-GAAP financial measure to communicate to
investors and others the company's expectations regarding its future earnings and dividends on its common stock. Management believes that
this non-GAAP financial measure is also useful and meaningful to investors to facilitate their analysis of the company's financial performance.
For more information, contact:
Jan Childress, Director, Investor Relations
Tel.: 212-460-6611, Email: childressj@coned.com www.conEdison.com
Table of Contents
3
Page
Organizational Structure and Plan 4-5
Dividend and Earnings Announcements 6
4Q 2017 Earnings 7-10
4Q 2017 Developments 11-13
Tax Cuts and Jobs Act of 2017 (TCJA) 14-15
2017 Earnings 16-19
Five-Year Reconciliation of Reported EPS (GAAP) to Adjusted EPS (Non-GAAP) 20
Environmental, Social and Governance Highlights 21
CECONY Operations and Maintenance Expenses 22
Composition of Regulatory Rate Base 23
Average Rate Base Balances 24
Regulated Utility Rates of Return and Equity Ratio 25
Earnings Adjustment Mechanisms and Positive Incentives 26
Capital Expenditures and Utility Capital Expenditures 27-28
2017 Financing Activity 29
2018 Financing Plan 30
Capital Structure and Liquidity Profile 31-32
Utility Sales and Revenues 33-38
List of Notes to 2017 Form 10-K Financial Statements 39
Organizational Structure
4
a. As of 12/31/17.
b. Senior unsecured ratings and outlook shown
in order of Moody’s / S&P / Fitch. Ratings are
not a recommendation to buy, sell or hold
securities and may be subject to revision or
withdrawal at any time.
Con Edison
Clean Energy
Businesses,
Inc.
(Clean Energy
Businesses or
CEBs)
Consolidated
Edison
Energy, Inc.
(Con Edison
Energy or
CEE)
Consolidated
Edison
Development,
Inc.
(Con Edison
Development or
CED)
Utilities Clean Energy
Orange and
Rockland
Utilities, Inc.
(O&R)
Consolidated
Edison
Company of
New York, Inc.
(CECONY)
Transmission
Market Cap(a): $26.0 billion
Ratings(b): A3 / BBB+ / BBB+
Outlook(b): Negative / Stable / Stable
Consolidated Edison
Transmission, LLC
(CET Electric)
Con Edison Gas
Pipeline and
Storage, LLC
(CET Gas)
Mountain
Valley
Pipeline,
LLC
Stagecoach
Gas
Services,
LLC
New York
Transco LLC
50%12.5% 45.7%
Consolidated
Edison
Solutions, Inc.
(Con Edison
Solution or
CES)
Con Edison
Transmission,
Inc.
(Con Edison
Transmission or
CET)
Rockland
Electric
Company
(RECO)
5
Strengthen core
utility delivery
business
Grow existing
clean energy
businesses and
pursue additional
clean energy
growth
opportunities
consistent with our
risk appetite
Pursue additional
regulated growth
opportunities to add
value in the evolving
industry
Strategic
Provide steady,
predictable
earnings
Maintain
balance sheet
stability
Value Oriented
Pay attractive,
growing
dividends
Customer Focused
Provide safe and
reliable service
Enhance the
customer
experience
Achieve
operational
excellence
The Con Edison Plan
Dividend and Earnings Announcements
6
• On January 18, 2018, the company issued a press release reporting that the company had:
– declared a quarterly dividend of 71.5 cents a share on its common stock -- an annualized increase of 10
cents over the previous annualized dividend of $2.76 a share and its 44th consecutive annual increase;
– indicated that the company expects to continue to pay its stockholders between 60% and 70% of its
adjusted earnings.
• On February 15, 2018, the company issued a press release reporting its expected 2018 adjusted earnings per
share to be in the range of $4.15 to $4.35.
Reported EPS (GAAP) Adjusted EPS (Non-GAAP)
$1.63
$0.68
$0.80
$0.69
2017 2016 2017 2016
4Q 2017 vs. 4Q 2016
Reported EPS (GAAP) Adjusted EPS (Non-GAAP)
$4.97
$4.15 $4.12 $3.99
2017 2016 2017 2016
2017 vs. 2016
4Q 2017 Earnings
7
Net Income ($ in Millions) Earnings per Share
2017 2016 2017 2016
Reported Net Income and EPS – GAAP basis $505 $207 $1.63 $0.68
Gain on sale of the CEBs' retail electric supply business — (9) — (0.03)
Goodwill impairment related to the CEBs' energy service business — 12 — 0.04
Enactment of the TCJA(a) (259) — (0.84) —
Net mark-to-market effects of the CEBs 1 1 0.01 —
Adjusted Earnings and Adjusted EPS – non-GAAP basis $247 $211 $0.80 $0.69
a. Reflects $269 million (or $0.87 a share), $11 million (or $0.04 a share) and $(21) million (or $(0.07) a share) for the CEBs, CET, and the parent company,
respectively, resulting from the enactment of the federal Tax Cuts and Jobs Act of 2017 on December 22, 2017 (TCJA).
Walk from 4Q 2016 EPS to 4Q 2017 EPS
8
Variance in Reported EPS (GAAP) Variance in Adjusted EPS (Non-GAAP)
4Q 2016
Reported
EPS
CECONY O&R CEBs CET Other 4Q 2017
Reported
EPS
$0.68
$0.06 $0.02
$0.90 $0.03
$(0.06)
$1.63
4Q 2016
Adjusted
EPS
CECONY O&R CEBs CET Other 4Q 2017
Adjusted
EPS
$0.69
$0.06 $0.02 $0.01 $0.80
$0.03
(a) (a)
a. Includes parent company and consolidation adjustments.
$(0.01)
4Q 2017 vs. 4Q 2016 EPS Variances - Three Months Ended Variation
9
CECONY(a)
Changes in rate plans and regulatory charges
Timing of recognition of electric annual revenues $ 0.03 Reflects higher electric net base revenues resulting from the timing of recognition of annual revenues between
quarters under the company's new electric rate plan.
Other rate plan changes 0.17 Reflects higher electric net base revenues of $0.02 a share resulting from the increased base rates under the
company's new electric rate plan, higher gas net base revenues of $0.06 a share, growth in the number of gas
customers of $0.01 a share, incentives earned under the Earnings Adjustment Mechanisms of $0.01 a share
and the Energy Efficiency Portfolio Standard of $0.04 a share, a property tax refund incentive of $0.01 a
share, and lower retention of Transmission Congestion Contract (TCC) auction proceeds of $(0.01) a share.
Weather impact on steam revenues 0.01
Operations and maintenance expenses 0.06 Reflects lower pension and other postretirement benefits costs of $0.07 a share.
Depreciation, property taxes and other tax matters (0.21) Reflects higher depreciation and amortization expense of $(0.05) a share, property taxes of $(0.14) a share,
and income taxes of $(0.02) a share.
Other — Includes the dilutive effect of Con Edison's stock issuances.
Total CECONY $ 0.06
O&R(a)
Changes in rate plans and regulatory charges 0.02 Reflects higher electric and gas net base revenues of $0.01 a share.
Other — Includes the dilutive effect of Con Edison's stock issuances.
Total O&R $ 0.02
Clean Energy Businesses
Operating revenues less energy costs 0.22 Reflects revenues from the engineering, procurement and construction of Upton 2 and higher revenues from
renewable electric production projects. Includes $(0.01) a share of net after-tax mark-to-market losses in
2017.
Operations and maintenance expenses (0.20) Reflects Upton 2 engineering, procurement and construction costs and higher energy service costs.
Depreciation (0.02)
Other 0.90 Includes the effect of the TCJA of $0.87 a share and the dilutive effect of Con Edison's stock issuances. Also
includes $0.03 a share of net after-tax gain related to the sale of the retail electric supply business in 2016
and $(0.04) a share of impairment of the energy service business in December 2016.
Total CEBs $ 0.90
Con Edison Transmission
Total CET $ 0.03 Includes the effect of the TCJA of $0.04 a share. Reflects income from equity investments and the dilutive
effect of Con Edison's stock issuances.
Other
Parent company and consolidation adjustments $(0.06) Includes the effect of the TCJA of $(0.07) a share. Reflects higher state income tax benefits and the dilutive
effect of Con Edison's stock issuances.
Reported EPS (GAAP) $ 0.95
Gain on sale of the CEBs' retail electric supply business 0.03
Goodwill impairment related to the CEBs' energy
service business in 2016
(0.04)
Enactment of the TCJA (0.84)
Net mark-to-market effects of the CEBs 0.01
Adjusted EPS (non-GAAP) $ 0.11
a. Under the revenue decoupling mechanisms in the utilities’ New York electric and gas rate plans and the weather-normalization clause applicable to their gas businesses, revenues are generally not
affected by changes in delivery volumes from levels assumed when rates were approved. In general, the utilities recover on a current basis the fuel, gas purchased for resale and purchased power costs
they incur in supplying energy to their full-service customers. Accordingly, such costs do not generally affect Con Edison’s results of operations.
4Q 2017 vs. 4Q 2016 EPS Reconciliation by Company
10
CECONY O&R CEBs CET Other(a) Total
Reported EPS – GAAP basis $0.71 $0.03 $0.90 $0.06 ($0.07) $1.63
Enactment of the TCJA — — (0.87) (0.04) 0.07 (0.84)
Net mark-to-market losses — — 0.01 — — 0.01
Adjusted EPS – Non-GAAP basis $0.71 $0.03 $0.04 $0.02 $— $0.80
CECONY O&R CEBs CET Other(a) Total
Reported EPS – GAAP basis $0.65 $0.01 $— $0.03 $(0.01) $0.68
Gain on sale of the CEBs' retail electric supply
business
— — (0.03) — — (0.03)
Goodwill impairment related to the CEBs' energy
service business
— — 0.04 — — 0.04
Adjusted EPS – Non-GAAP basis $0.65 $0.01 $0.01 $0.03 $(0.01) $0.69
3 months ending December 31, 2017
3 months ending December 31, 2016
a. Includes parent company and consolidation adjustments.
4Q 2017 Developments(a)
11
Parent
• Net income reflects $269 million or $0.87 a share, $11 million or $0.04 a share, and $(21) million or $(0.07) a share
for the Clean Energy Businesses, Con Edison Transmission, and the parent company, respectively, regarding the
effect of the TCJA. See "Tax Cuts and Jobs Act of 2017," below. (pages 48, 140-141)
CECONY & O&R
• Upon enactment of the TCJA, the Utilities re-measured their deferred tax assets and liabilities based upon the 21%
tax rate under the TCJA. As a result, CECONY, O&R and RECO, decreased their net deferred tax liabilities by
$4,781 million, $216 million and $45 million, respectively, decreased their regulatory asset for future income tax by
$1,182 million, $51 million and $17 million, respectively, decreased their regulatory asset for revenue taxes by $86
million, $4 million and $0 million, respectively, and accrued regulatory liabilities for future income tax of $3,513
million, $161 million and $28 million, respectively. (page 121)
• In August and November 2017, the NYSPSC issued orders in its proceeding investigating a subway power outage.
NYSPSC Case 17-E-0428 – In The Matter of an Investigation into the April 21, 2017 Metropolitan Transportation
Authority Subway Power Outage and Consolidated Edison Company of New York, Inc.’s Restoration Efforts.
• The orders require CECONY to take certain actions relating to the electrical equipment that serves the
subway system.
• The company incurred costs related to this matter in 2017 of $65 million. Included in this amount is $15
million in capital and operating and maintenance costs reflected in the company's electric rate plan and $50
million deferred as a regulatory asset pursuant to the rate plan.
• The company, which plans to complete the required actions in 2018, expects to incur costs related to this
matter in 2018 of $137 million. Included in this amount is $10 million in expected capital and operating and
maintenance costs reflected in the rate plan and $127 million expected to be deferred as a regulatory asset
pursuant to the rate plan. (page 121)
• In January 2018, the NYSPSC initiated an audit of the income tax accounting of certain utilities, including
CECONY and O&R. NYSPSC Case 18-M-0013 – In the Matter of a Focused Operations Audit to Investigate the
Income Tax Accounting of Certain New York State Utilities. (page 121)
• In January 2018, O&R filed a request with the NYSPSC for electric and gas rate increases of $20.3 million and
$4.5 million, respectively, reflecting a 9.75% return on equity effective January 2019. NYSPSC Case 18-
E-0067/18-G-0068 – Proceeding on Motion of the Commission as to the Rates, Charges, Rules and Regulations
of Orange and Rockland Utilities, Inc. for Electric/Gas Service. (pages 119-120)
a. Page references to 2017 Form 10-K.
4Q 2017 Developments(a)
12
CECONY & O&R
• The Utilities’ current and most recent previous five-year forecasts of average annual growth of the peak demand in
their service areas at design conditions for 2018 – 2022 (pages 21, 24, 25, 26, 27)
• The aggregate capacities of the distributed generation projects connected to the CECONY and O&R distribution
systems at December 31, 2017 were 366 MW and 100 MW, respectively. The 2018 electric peak forecasts for
CECONY and O&R are 13,300 MW and 1,620 MW, respectively. (pages 19, 21, 26)
• In November 2017, FERC approved a September 2017 settlement agreement among RECO, the New Jersey
Division of Rate Counsel and the NJBPU that increases RECO's annual transmission revenue requirement from
$11.8 million to $17.7 million, effective April 2017 (FERC Docket Nos. ER17-856-000/001). The revenue
requirement reflects a return on common equity of 10.0 percent. (page 121)
• In November 2017, the NYISO completed its Deactivation Assessment of Indian Point. It concluded that over its
ten year planning period, through 2027, there is no anticipated reliability need if the following three expected units
finalize construction and enter service: Bayonne Energy Center II Uprate (Zone J, 120 MW); CPV Valley Energy
Center (Zone G, 678 MW); and Cricket Valley Energy Center (Zone G, 1,020 MW). (page 22)
a. Page references to 2017 Form 10-K.
Electric Gas Steam
CECONY 0.1 percent 1.2 percent (0.5) percent
O&R 0.0 percent 0.3 percent
4Q 2017 Developments (cont’d)(a)
Clean Energy Businesses
• In November 2017, Con Edison Development acquired a 25-MW wind project in Montana. (page 28)
• 1,561 MW (AC) of renewable energy production projects in service (1,358 MW) or under construction (203 MW).
(page 28)
• 2,158 million of kWh generated from solar projects and 988 million of kWh generated from wind projects during
2017. (page 29)
Con Edison Transmission
• In November 2017, FERC approved an August 2017 settlement agreement regarding the NY Transco proposed
transmission project that provides for a 10.65 percent return on common equity (subject to a cost containment
mechanism) and a maximum common equity ratio of 53 percent. The proposed project is one of several bids in a
competitive proceeding to select transmission projects that would relieve transmission congestion between upstate
and downstate New York. (page 30)
a. Page references to 2017 Form 10-K.
13
Tax Cuts and Jobs Act of 2017 (TCJA)(a)
CECONY & O&R
• TCJA expected to result in decreased cash flows from operating activities, and require increased cash flows from financing
activities, for the Utilities as and when customers' rates are adjusted to reflect the reduction in tax rate
• Customer rates expected to be reduced to reflect the reduction in tax rate from 35% to 21%
– The revenue requirement impact of the reduced tax rate for the period before customer rates are reduced
will be deferred as a regulatory liability on which interest will accrue
– This regulatory liability will be amortized as provided in each of the Utilities' next rate plans, unless prior to then the
NYSPSC or NJBPU, as applicable, determines otherwise
– Any regulatory liability remaining at the beginning of a next rate plan that is not used to offset a regulatory asset will
reduce rate base, after which time the amortization of the regulatory liability will increase rate base
• Excess deferred income taxes of approximately $3,700 million recorded as regulatory liability for benefit to customers
– No change to rate base for amortization of $2,700 million subject to the rate normalization requirements continued by
TCJA because this portion is to be amortized over the same period as applied to the excess deferred tax liability to
which it relates (i.e., remaining average lives of related assets)
– No change to rate base for amortization of the remaining $1,000 million unless NYSPSC or NJPBU, as applicable,
require a shorter amortization period than the period that applied to the excess deferred tax liability to which it relates
• End of bonus depreciation for the Utilities (which was to be 40% in 2018 and 30% in 2019) will reduce deferred taxes and
increase rate base
• Changes to rate base resulting from the TCJA will affect the Utilities' net income as and when the changes are reflected in
each of the Utilities' next rate plans
• NYSPSC Case 17-M-0815 - Proceeding on Motion of the Commission on Changes in Law that May Affect Rates
– NYSPSC staff recommendation due by March 27
– Followed by 90-day comment period
– Followed by NYSPSC decision
• NJBPU Docket No. AX1801001 - In the Matter of the Board’s Consideration of the 2017 Tax Cuts and Jobs Act
– Utility petitions due by March 2
– NJBPU decision in June
a. See Other Regulatory Matters on pages 121, Note L - Income Taxes on pages 139-143 in the 2017 10-K.
14
Clean Energy Businesses
• Net income for 2017 includes $269 million or $0.88 a share from reduction in deferred income tax liabilities
• Full expensing of plant additions
• Interest expense fully deductible through 2021, but deductions will be limited in 2022 and beyond
• Continue to expect accumulated tax credits to be used
Con Edison Transmission
• Net income for 2017 includes $11 million or $0.04 a share from reduction in deferred income tax liabilities
• MACRS for plant additions
• Interest expense fully deductible
Parent
• Net income for 2017 includes $(21) million or $(0.07) a share from reduction in deferred income tax asset
a. See Other Regulatory Matters on pages 121, Note L - Income Taxes on pages 139-143 in the 2017 10-K.
Tax Cuts and Jobs Act of 2017 (cont'd)(a)
15
2017 Earnings
16
Net Income ($ in Millions) Earnings per Share
2017 2016 2017 2016
Reported Net Income and EPS – GAAP basis $1,525 $1,245 $4.97 $4.15
Gain on sale of the CEBs' retail electric supply business — (56) — (0.19)
Goodwill impairment related to the CEBs' energy service
business — 12 — 0.04
Enactment of the TCJA(a) (259) — (0.85) —
Gain on sale of the CEBs' solar electric production project (1) — — —
Net mark-to-market effects of the CEBs (1) (3) — (0.01)
Adjusted Earnings and Adjusted EPS – non-GAAP basis $1,264 $1,198 $4.12 $3.99
a. Reflects $269 million (or $0.88 a share), $11 million (or $0.04 a share) and $(21) million (or $(0.07) a share) for the CEBs, CET, and the parent company, respectively,
resulting from the enactment of TCJA.
Walk from 2016 EPS to 2017 EPS
17
Variance in Reported EPS (GAAP) Variance in Adjusted EPS (Non-GAAP)
YTD 2016
Reported
EPS
CECONY O&R CEBs CET Other YTD 2017
Reported
EPS
$4.15 $0.07 $0.01
$0.69 $0.08
$(0.03)
$4.97
YTD 2016
Adjusted
EPS
CECONY O&R CEBs CET Other YTD 2017
Adjusted
EPS
$3.99 $0.07 $0.01
$(0.03)
$0.04 $0.04 $4.12
(a) (a)
a. Includes parent company and consolidation adjustments.
2017 vs. 2016 EPS Variances - Year Ended Variation
18
CECONY(a)
Changes in rate plans and regulatory charges $ 0.47 Reflects higher electric net base revenues of $0.10 a share resulting from the increased base rates under the
company's new electric rate plan, higher gas net base revenues of $0.21 a share, growth in the number of gas
customers of $0.05 a share, incentives earned under the Earnings Adjustment Mechanisms of $0.03 a share
and the Energy Efficiency Portfolio Standard of $0.04 a share, a property tax refund incentive of $0.01 a share,
lower retention of TCC auction proceeds of $(0.03) a share, and an increase to the regulatory reserve related
to certain gas proceedings in 2016 of $0.03 a share.
Weather impact on steam revenues 0.02
Operations and maintenance expenses 0.30 Reflects lower pension and other postretirement benefits costs of $0.29 a share.
Depreciation, property taxes and other tax matters (0.57) Reflects higher depreciation and amortization expense of $(0.18) a share, property taxes of $(0.27) a share,
and income taxes of $(0.12) a share.
Other (0.15) Includes the dilutive effect of Con Edison's stock issuances.
Total CECONY $ 0.07
O&R(a)
Changes in rate plans and regulatory charges 0.06 Reflects higher electric and gas net base revenues of $0.01 and $0.04 a share, respectively.
Operations and maintenance expenses (0.03) Reflects higher pension costs.
Depreciation, property taxes and other tax matters (0.03)
Other 0.01 Includes the dilutive effect of Con Edison's stock issuances.
Total O&R $ 0.01
Clean Energy Businesses
Operating revenues less energy costs 0.33 Reflects revenues from the engineering, procurement and construction of Upton 2 and higher revenues from
renewable electric production projects, lower revenues and energy costs resulting from the retail electric
supply business that was sold in September 2016. Includes $0.01 a share net after-tax mark-to market gains in
2016. Substantially all the mark-to-market effects in the 2016 periods were related to the retail electric
business sold in September 2016.
Operations and maintenance expenses (0.30) Reflects Upton 2 engineering, procurement and construction costs and higher energy service costs.
Depreciation (0.06)
Net interest expense (0.02)
Other 0.74 Includes the effect of the TCJA of $0.88 a share and the dilutive effect of Con Edison's stock issuances. Also
includes $0.19 a share of net after-tax gain related to the sale of the retail electric supply business in 2016 and
$(0.04) a share of impairment of the energy service business in December 2016.
Total CEBs $ 0.69
Con Edison Transmission
Total CET $ 0.08 Includes the effect of the TCJA of $0.04 a share. Reflects income from equity investments and the dilutive
effect of Con Edison's stock issuances.
Other
Parent company and consolidation adjustments $(0.03) Includes the effect of the TCJA of $(0.07) a share. Reflects higher state income tax benefits and the dilutive
effect of Con Edison's stock issuances.
Reported EPS (GAAP) $ 0.82
Gain on sale of the CEBs' retail electric supply business 0.19
Goodwill impairment related to the CEBs' energy
service business in 2016
(0.04)
Enactment of the TCJA (0.85)
Net mark-to-market effects of the CEBs 0.01
Adjusted EPS (non-GAAP) $ 0.13
a. Under the revenue decoupling mechanisms in the utilities’ New York electric and gas rate plans and the weather-normalization clause applicable to their gas businesses, revenues are generally not
affected by changes in delivery volumes from levels assumed when rates were approved. In general, the utilities recover on a current basis the fuel, gas purchased for resale and purchased power costs
they incur in supplying energy to their full-service customers. Accordingly, such costs do not generally affect Con Edison’s results of operations.
2017 vs. 2016 EPS Reconciliation by Company
19
CECONY O&R CEBs CET(a) Other(b) Total
Reported EPS – GAAP basis $3.59 $0.21 $1.08 $0.15 $(0.06) $4.97
Enactment of the TCJA — — (0.88) (0.04) 0.07 (0.85)
Net mark-to-market gains — — — — — —
Adjusted EPS – Non-GAAP basis $3.59 $0.21 $0.20 $0.11 $0.01 $4.12
CECONY O&R CEBs CET(a) Other(b) Total
Reported EPS – GAAP basis $3.52 $0.20 $0.39 $0.07 ($0.03) $4.15
Gain on sale of the CEBs' retail electric supply
business
— — (0.19) — — (0.19)
Goodwill impairment related to the CEBs'
energy service business
— — 0.04 — — 0.04
Net mark-to-market gains — — (0.01) — — (0.01)
Adjusted EPS – Non-GAAP basis $3.52 $0.20 $0.23 $0.07 ($0.03) $3.99
For the year ended December 31, 2017
For the year ended December 31, 2016
a. In 2016, Con Edison Transmission began investing, through CET Electric and CET Gas, in electric transmission and gas pipeline and storage assets.
b. Includes parent company and consolidation adjustments.
Five-Year Reconciliation of Reported EPS (GAAP) to Adjusted
EPS (Non-GAAP)
20
2013 2014 2015 2016 2017
Reported EPS – GAAP basis $3.62 $3.73 $4.07 $4.15 $4.97
Enactment of the TCJA(a) - - - - (0.85)
Gain on sale of the CEBs’ retail electric
supply business - - - (0.19) -
Goodwill impairment related to the CEBs’
energy service business - - - 0.04 -
Impairment of assets held for sale - - 0.01 - -
Gain on sale of the CEBs' solar electric
production projects - (0.09) - - -
Loss from LILO transactions 0.32 - - - -
Net mark-to-market effects of the CEBs (0.14) 0.25 - (0.01) -
Adjusted EPS – Non-GAAP basis $3.80 $3.89 $4.08 $3.99 $4.12
12 Months Ending December 31,
a. Reflects $269 million (or $0.88 a share), $11 million (or $0.04 a share) and $(21) million (or $(0.07) a share) for CEBs, CET, and parent company, respectively
resulting from the enactment of TCJA.
Environmental, Social and Governance Highlights
21
Con Edison’s most recent annual sustainability report is accessible at: https://www.conedison.com/ehs/2016-sustainability-report/
index.html. Additional information about the utilities' reduction of its methane emissions is accessible at: http://
investor.conedison.com/phoenix.zhtml?c=61493&p=irol-presentations
2013 2014 2015 2016 2017 2018E
$485 $467
$364 $348
$202 $221
$133 $149
$159 $160
$170 $182
$517 $519
$550
$469
$476 $433
$287
$1,422 $354
$1,489
$344
$1,417
$352
$1,329
$294
$1,142
$281
$1,117
CECONY Operations and Maintenance Expenses
($ in millions)
22
a. Other Expenses generally are either reconciled through amounts reflected in rates, or represent surcharges that are recovered in revenues from customers.
b. Includes Demand Side Management, System Benefit Charges and Public Service Law 18A assessments which are collected in revenues.
Other Expenses(a)
2013 2014 2015 2016 2017 2018E
$1,313
$1,384
$1,464 $1,477
$1,528 $1,544
Departmental
Pension/
OPEBs
Regulatory
Fees and
Assessments (b)
Health Care/
Other Employee
Benefits
Other
Composition of Regulatory Rate Base(a)
(as of December 31, 2017)
23
a. Average rate base for 12 months ended 12/31/2017.
CECONY ($ in millions)
Electric NY $18,513
Gas NY 4,723
Steam NY 1,402
Total CECONY $24,638
O&R ($ in millions)
O&R Electric NY $759
O&R Gas NY 392
RECO NJ 225
Total O&R $1,376
Total Rate Base $26,014
CECONY
Electric
CECONY Gas CECONY
Steam
O&R RECO
Average Rate Base Balances
($ in millions)
24
$21,138
$22,498 $23,165
$23,710
$24,638
$26,456
$27,820
$29,448
$1,173
$1,297 $1,357
$1,304
$1,376
$1,448
$1,511
$1,543
$24,522
$26,014
$27,904
O&R
CECONY
3-year CAGR 6.0
%
2013 2014 2015 2016 2017 2018E 2019E 2020E
CECONY
Electric $ 16,235 $ 17,403 $ 17,599 $ 17,971 $ 18,513 $ 19,530 $ 20,277 $ 21,569
Gas 3,395 3,593 4,023 4,267 4,723 5,395 6,005 6,629
Steam 1,508 1,502 1,543 1,472 1,402 1,531 1,538 1,250
O&R Electric 633 726 769 731 759 792 814 821
Gas 345 372 386 362 392 422 444 454
RECO Electric 195 199 202 211 225 234 253 268
$22,311
$29,331
$25,014
$23,795
Forecast(a)Actual
$30,991
(a) Changes to rate base resulting from the TCJA will affect the Utilities’ net income as and when the changes are reflected in each of the Utilities’ next rate plans
(assumed to be 2020 for CECONY; 2019 for O&R and RECO). Forecast for 2020 reflects, in addition to changes in net utility plant, estimated increase in
average rate base due to decreased deferred taxes resulting from TCJA end of bonus deprecation for utilities and application of TCJA reduced tax rate to 2018
and 2019 temporary book/tax differences for CECONY, O&R and RECO of $415 million, $21 million and $3.4 million, respectively. Forecast reflects no change
in rate base from amortization of $3,700 million regulatory liability for future income tax relating to excess deferred income taxes because amortization of entire
regulatory liability over the same period that would have applied prior to TCJA is assumed. Also, forecast assumes no change in rate base relating to any
regulatory liability for revenue requirement impact of reduced tax rate.
Regulated Utility Rates of Return and Equity Ratio
(12 Months ended December 31, 2017)
25
Regulated Basis
Allowed Actual
CECONY
Electric 9.0% 9.3%
Gas 9.0 9.2
Steam 9.3 9.5
Overall – CECONY 9.0(a) 9.3
CECONY Equity Ratio 48.0% 48.4%
O&R
Electric 9.0% 9.7%
Gas 9.0 9.7
RECO 9.6 8.2
Overall – O&R 9.1(a) 9.5
O&R Equity Ratio 48.0% 49.4%
a. Weighted by rate base.
Earnings Adjustment Mechanisms and Positive Incentives
Min Max Achieved / Projected
70
60
50
40
30
20
10
0
2017 2018 2019
$0 $0 $0
$18
$42
$59
$13 $9 $11
a. In 2017, CECONY achieved positive incentives of $12 million, one third of which, pursuant to the accounting rules for alternative revenue recognition of the
collection of such incentives under the rate plans (GAAP), will be recorded ratably from 2018 to 2020 and also reflected in the positive incentives projected,
minimum and maximum amounts for the related period.
b. Pursuant to GAAP, one third of the positive incentives achieved in 2018, if any, will be recorded ratably from 2018 to 2020 and also reflected in the positive
incentives projected and maximum amounts for the related period. Two thirds and one third of the positive incentives achieved in 2019, if any, will be recorded in
2019 and 2020, respectively, and also reflected in the positive incentives projected and maximum amounts for the related period.
c. Does not reflect negative earnings adjustment of $5 million that CECONY recorded in 2017.
Min Max Achieved / Projected
20
15
10
5
0
2017 2018 2019
$4
$4
$8
$17
$0
$6
$11
Earnings Adjustment Mechanisms
Positive Incentives(a) (b)
($ in millions
)
($ in millions
)
26
(c)
Capital Expenditures
($ in millions)
27
CECONY & O&R Clean Energy Businesses Con Edison Transmission
2013 2014 2015 2016 2017 2018E 2019E 2020E
$2,270 $2,274
$2,595
$2,922 $3,093
$3,209 $3,135 $3,186
$378
$2,648
$447
$2,721 $823
$3,418 $1,235
$447 $400 $400 $400
$3,586
$1,078
$5,235
$66
$3,606 $360
$3,969
$14
$3,549
(1)
a. 2016 includes Stagecoach JV investment of $974 million.
b. 2017 Form 10-K, page 31.
Actual Forecast(b)
(a)
Utility Capital Expenditures
($ in millions)
28
2013 2014 2015 2016 2017 2018E 2019E 2020E
$2,270 $2,274
$2,595
$2,922
$3,093 $3,209 $3,135 $3,186
Gas
Electric
Annual CECONY Capital Expenditures Annual O&R Capital Expenditures
Electric Gas Steam Depreciation Electric Gas Depreciation
2013 $1,471 $536 $128 $946 $98 $37 $56
2014 1,500 549 83 991 105 37 61
2015 1,658 671 106 1,040 114 46 68
2016 1,819 811 126 1,106 114 52 67
2017 1,905 909 90 1,195 128 61 71
2018E 1,933 970 105 1,254 139 62 78
2019E 1,868 970 95 1,339 146 56 84
2020E 1,894 1,015 87 1,441 137 53 88
a. 2017 Form 10-K, page 31.
Steam
Depreciation
Actual Forecast(a)
2017 Financing Activity
Equity financing activity:
• In August, CEI issued 4.1 million common shares resulting in net proceeds of $343 million(a)
Debt financing activity:
• In March, CEI issued $400 million 2.00% debentures due 2020 and prepaid the $400 million variable rate
term loan that was set to mature in June 2018
• In March, CED Upton County Solar, a subsidiary of CED, issued $97 million 4.45% senior secured notes
due 2042
• In June, CECONY issued $500 million 3.875% debentures due 2047
• In November, CECONY issued $350 million 3.125% debentures due 2027 and $350 million 4.00%
debentures due 2057
Debt Maturities:
• No maturities in 2017, aside from amortizing debt principal payments
29
a. This is in addition to the equity issued through dividend reinvestment, employee stock purchase and long-term incentive plans.
2018 Financing Plan
30
Debt and Equity Financing Plan
• Capital expenditures of $3,969 million (CECONY: $3,008 million, the CEBs: $400 million, O&R: $201
million, CET: $360 million)
• Issue between $1,300 million and $1,800 million of long-term debt at the Utilities
• Issue additional debt secured by the CEBs’ renewable electric production projects
• Issue up to $450 million of common equity in 2018 in addition to equity issued through dividend
reinvestment, employee stock purchase and long-term incentives plans
• Financing plan does not reflect the provision to the Utilities’ customers of any TCJA benefits that the
NYSPSC and the NJBPU may require to be provided
Debt Maturities
($ in millions) 2018 2019 2020 2021 2022
Con Edison, Inc. [parent company] $2 $3 $402 $503 $294
CECONY 1,200 475 350 — —
O&R 55 62 — — —
CEBs 41 38 39 41 41
Total $1,298 $578 $791 $544 $335
Capital Structure – December 31, 2017
($ in millions)
31
Consolidated Edison, Inc.
A3 / BBB+ / BBB+
CECONY
A2 / A- / A-
O&R
A3 / A- / A-
Parent and Other
Debt $ 16,029 51%
Equity 15,425 49
Total $ 31,454 100%
Debt $ 13,265 52%
Equity 12,439 48
Total $ 25,704 100%
Debt $ 662 50%
Equity 665 50
Total $ 1,327 100%
Debt $ 2,102 48%
Equity 2,322 52
Total $ 4,424 100%
Amounts shown exclude notes payable and include the current portion of long-term debt. Senior unsecured
credit ratings shown in order of Moody’s / S&P / Fitch. Moody’s ratings have negative outlooks and S&P and
Fitch ratings have stable outlooks.
Liquidity Profile
($ in millions)
32
Utility Sales and Revenues – Fourth Quarter and Full Year
33
The changes in the energy delivered by the company’s utility subsidiaries, both for actual amounts
and as adjusted for variations in weather and billing days, for the three months and year ended
December 31, 2017 (expressed as a percentage of 2016 amounts):
Fourth Quarter Variation Year-to-Date Variation
2017 vs. 2016 2017 vs. 2016
Actual Adjusted Actual Adjusted
CECONY
Electric 1.0 (1.7) (2.5) (1.1)
Firm – Gas 1.9 4.6 6.9 5.9
Steam (0.4) (4.9) (2.8) (3.8)
O&R
Electric (1.2) (2.3) (5.6) (2.2)
Firm – Gas 5.9 (3.6) 1.2 (0.8)
Utility Sales and Revenues – Electric Fourth Quarter
($ in millions)
34
Electric – 4th Quarter
Millions of Kilowatt-hours Revenues in Millions
2017 2016 2017 2016
Con Edison of New York
Residential and Religious 2,348 2,270 $590 $573
Commercial and Industrial 2,280 2,209 429 422
Retail choice customers 6,389 6,409 621 654
Public Authorities 12 13 2 2
NYPA, Municipal Agency and other sales 2,452 2,449 148 144
Total Sales 13,481 13,350 $1,790 $1,795
Orange and Rockland
Residential and Religious 359 347 $69 $64
Commercial and Industrial 189 195 25 25
Retail choice customers 721 746 46 47
Public Authorities 26 24 2 2
Total Sales 1,295 1,312 $142 $138
Regulated Utility Sales & Revenues
Residential and Religious 2,707 2,617 $659 $637
Commercial and Industrial 2,469 2,404 454 447
Retail choice customers 7,110 7,155 667 701
Public Authorities 38 37 4 4
NYPA, Municipal Agency and other sales 2,452 2,449 148 144
Total Sales 14,776 14,662 $1,932 $1,933
Utility Sales and Revenues – Electric Full Year
($ in millions)
35
Electric – Full Year
Millions of Kilowatt-hours Revenues in Millions
2017 2016 2017 2016
Con Edison of New York
Residential and Religious 9,924 10,400 $2,515 $2,591
Commercial and Industrial 9,246 9,429 1,823 1,803
Retail choice customers 26,136 26,813 2,712 2,768
Public Authorities 56 55 11 10
NYPA, Municipal Agency and other sales 9,956 10,048 622 610
Total Sales 55,318 56,745 $7,683 $7,782
Orange and Rockland
Residential and Religious 1,567 1,654 $311 $304
Commercial and Industrial 763 801 113 114
Retail choice customers 2,976 3,180 201 213
Public Authorities 105 100 9 8
Total Sales 5,411 5,735 $634 $639
Regulated Utility Sales & Revenues
Residential and Religious 11,491 12,054 $2,826 $2,895
Commercial and Industrial 10,009 10,230 1,936 1,917
Retail choice customers 29,112 29,993 2,913 2,981
Public Authorities 161 155 20 18
NYPA, Municipal Agency and other sales 9,956 10,048 622 610
Total Sales 60,729 62,480 $8,317 $8,421
Utility Sales and Revenues – Gas Fourth Quarter
($ in millions)
36
Gas – 4th Quarter
Thousands of Dekatherms Revenues in Millions
2017 2016 2017 2016
Con Edison of New York
Residential 12,356 12,138 $189 $161
General 7,408 7,227 79 65
Firm Transportation 17,401 17,109 134 95
Total Firm Sales and Transportation 37,165 36,474 402 321
Interruptible Sales 1,027 1,370 5 5
Transportation of Customer Owned Gas 24,172 32,795 14 14
Total Sales 62,364 70,639 $421 $340
Off-system Sales 8 — — —
Orange and Rockland
Residential 2,739 2,606 $36 $29
General 737 627 8 5
Firm Transportation 3,330 3,193 24 21
Total Firm Sales and Transportation 6,806 6,426 68 55
Interruptible Sales 805 833 2 —
Transportation of Customer Owned Gas 309 288 — —
Total Sales 7,920 7,547 $70 $55
Off-system Sales 1 — — —
Regulated Utility Sales & Revenues
Residential 15,095 14,744 $225 $190
General 8,145 7,854 87 70
Firm Transportation 20,731 20,302 158 116
Total Firm Sales and Transportation 43,971 42,900 470 376
Interruptible Sales 1,832 2,203 7 5
Transportation of Customer Owned Gas 24,481 33,083 14 14
Total Sales 70,284 78,186 $491 $395
Off-system Sales 9 — — —
Utility Sales and Revenues – Gas Full Year
($ in millions)
37
Gas – Full Year
Thousands of Dekatherms Revenues in Millions
2017 2016 2017 2016
Con Edison of New York
Residential 52,244 47,794 $802 $667
General 30,761 28,098 334 266
Firm Transportation 71,353 68,442 524 426
Total Firm Sales and Transportation 154,358 144,334 1,660 1,359
Interruptible Sales 7,553 8,957 35 34
Transportation of Customer Owned Gas 120,150 152,101 58 59
Total Sales 282,061 305,392 $1,753 $1,452
Off-system Sales 55 — — —
Orange and Rockland
Residential 8,296 7,872 $115 $84
General 2,184 1,851 24 15
Firm Transportation 9,873 10,381 74 70
Total Firm Sales and Transportation 20,353 20,104 213 169
Interruptible Sales 3,771 3,853 7 3
Transportation of Customer Owned Gas 905 885 1 —
Total Sales 25,029 24,842 $221 $172
Off-system Sales 6 — — —
Regulated Utility Sales & Revenues
Residential 60,540 55,666 $917 $751
General 32,945 29,949 358 281
Firm Transportation 81,226 78,823 598 496
Total Firm Sales and Transportation 174,711 164,438 1,873 1,528
Interruptible Sales 11,324 12,810 42 37
Transportation of Customer Owned Gas 121,055 152,986 59 59
Total Sales 307,090 330,234 $1,974 $1,624
Off-system Sales 61 — — —
38
Utility Sales and Revenues – Steam Fourth Quarter and Year-to-Date
($ in millions)
Steam – 4th Quarter
Millions of Pounds Revenues in Millions
2017 2016 2017 2016
Con Edison of New York
General 126 121 $6 $6
Apartment House 1,505 1,541 39 40
Annual Power 3,093 3,082 93 94
Total Sales 4,724 4,744 $138 $140
Steam – Year-to-Date
Millions of Pounds Revenues in Millions
2017 2016 2017 2016
Con Edison of New York
General 490 465 $26 $23
Apartment House 5,754 5,792 158 148
Annual Power 13,166 13,722 392 378
Total Sales 19,410 19,979 $576 $549
List of Notes to 2017 Form 10K Financial Statements
39
Page
A – Summary of Significant Accounting Policies 106 - 112
B – Regulatory Matters 112 - 123
C – Capitalization 123 - 124
D – Short-Term Borrowing 125
E – Pension Benefits 125 - 130
F – Other Postretirement Benefits 130 - 134
G – Environmental Matters 134 - 135
H – Other Material Contingencies 136 - 137
I – Electricity Purchase Agreements 137 - 138
J – Leases 138
K – Goodwill and Other Intangible Assets 138 - 139
L – Income Tax 139 - 143
M – Stock-Based Compensation 143 - 145
N – Financial Information by Business Segment 145 - 147
O – Derivative Instruments and Hedging Activities 147 - 150
P – Fair Value Measurements 150 - 152
Q – Variable Interest Entities 153 - 154
R – Asset Retirement Obligations 154 - 155
S – Related Party Transactions 155
T – New Financial Accounting Standards 155 - 157
U – Acquisitions, Investments and Dispositions 158 - 159