ML19321A736
| ML19321A736 | |
| Person / Time | |
|---|---|
| Site: | Indian Point  |
| Issue date: | 02/26/1980 |
| From: | CONSOLIDATED EDISON CO. OF NEW YORK, INC. |
| To: | |
| Shared Package | |
| ML093360292 | List: |
| References | |
| NUDOCS 8007240129 | |
| Download: ML19321A736 (43) | |
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Financi-l Highlights 1
Percent Year Ended December 31, 1979 1978 Change Operating revenues (millions)
$3,333
$3,011 10.7 Operating income (millions)
$ 473 S 454 4.1 Net income for common stock (millions)
$ 281 S 266 5.7 Earnings per common share
$ 4.51 S 4.29 5.1 Dividends per common share
$ 2.44 S 2.20 10.9 Average common shares outstanding (millions) 62.4 62.0 0.6 Book value per common share
$43.88 S41.89 4.8 Common stock price (closing price on NYSE)
$24.250
$23.125 4.9 Interest coverage S.E.C. basis 3.45 times 3.35 times 3.0 Mortgage indenture basis 3.78 times 3.64 times 3.8 Tcbbcf Contents To Our Stockholders 2
Energy Conservation 5
Oper tions 7
a Stomary of Operations 11 Management's Discussion and Analysis of Summary of Operations 12 Financial Statements.
16 Statistics 34 Directory 38 About the Cover
- The clock tower of the Company's head-
' quarters at 4 Irving Place in Manhattan has been illuminated with new high-intensity metal halide lamps,which use about half the elec-tricity of the previous incandescent lamps. In the background is the Empire State Building, aiso illuminated with metal halide lamps.
1
2 Con Edison bonds now have an A rating from both major bond rating agencies for the first I
time in seven years. Moody's upgraded its
+
j rating from Baa in August 1979; Standard &
Poor's previously had upgraded its rating from A minus in 1978.
j f
Y Two new programs went into effect during the
'Q dp year to improve the Company s communica-tions with security holders: a computerized information system through which we record promptly transfers in ownership of securities or other information regarding a security holder's account; and a new, toll-free tele- !
s phone number which allows security holders s
^
to speak directly to our Company's investor
- L.'
T Arthur Hauspurg Charles F. Luce Services people, who, by operating the com-puter system, can respond promptly to their l
needs. In New York State. the toll-free num is 800 522-5522. Outside of New York State, the number is 800 221-6664.
To Our Stockholders:
Load Growth and Forecasts We have seen little growth in the use of elec,
tricity since 1973 when the OPEC countries ;
quadrupled the price of oil, causing large in-creases in electricity prices. Electricity usage '
was down slightly in 1979 from 1978 af ter ad '
Throughout 1979 the most cntical problem justing both years to normal weather condi '
affecting Con Edison was the rising price and lion;. We estimate usage will be down slightly :
uncertain supply of oil. A barrel of residual again in 1980 and, looking ahead, anticipate l fuel oil which cost the Company $15 in Janu-only an average annual increase in electricity :
ary reached almost $30 by the end of the year, use of about 0.5 percent through 1990, with further increases already experienced in Natural gas sales are strong. Including inter :
1980. The impact of oil ls price rise and the uncertainties regarding its supply require the ruptible customers, sales were up 10.7 per ;
cent in 1979, ah a@N b Men Re!
Company to accelerate two campaigns: t persuade governmental agencies to permit us nerease was due in part to two related fac-:
to use coal and other alternate fuels; and to s me ps he adise W Wase -
by our Company after passage of gas deregu-encourage customers to conserve energy.
lation legislation in 1978: and in February, We have made important progress in both 1979, at our request, the New York State Pub-campaigns, as detailed in this report.
lic Service Commission relaxed its regula-tions limiting the sale of gas to retail customers.
Earnings and Dividends In 1979 net income available for common As a result of these regulatory changes and stock was $281,430,000 or S4.51 per share, increases in the price of oil, which still has the compared with the 1978 net of $266.191,000 major share of the home-heating market in or $4.29 per share. The increase was due pri-our service area, the Company expects that marily to an electric rate increase effective in by the end of the 1979-1980 heating season April 1979, and to careful cost contro!.
about 3,000 residential customers will ha converted from oil to gas heating. Strong in January 1979 the Board of Trustees in_
creased the quarterly dividend from 55 cents growth in gas sales is expected to continue )
a share to 61 cents a share. In January 1980 through the 1980-1981 heating season.
the Board increased the quarterly dividend to The Company's steam sales continue to de-)
67 cents.
cline, in part because of conservation, in part l because owners of some large buildings t.ve !
The Company's cash position continues to be installed their own boilers and discontinued.
good. We financed $316 million of construc_
our steam service.
tion in 1979 and retired $14 million in securi_
ties without external financing.
Reducing Dependence on Foreign Oil Short-term, we have been moderately suc cessful in our efforts to reduce oil depend-ence. In 1979 oil represented 44 percent of i
the fuels used to produce electricity distrib-N_ York's dependence on imported oil by 3
uted in our service area. In 1978 the oil por-about 15 million barrels a year.
tion was about 62 percent.
The Company has begun to repair and up-We accomplished this reduction through the grade the existing coal-burning and pollution following measures:
control equipment at those power plants as a
> We were the firs; utility to seek-and receive first step in the program to reconvert the units
-permission to burn natural gas in power to coal. All three units burned coal before they were converted to low-sulfur oil in the early plants fol'owing the U.S. Energy Secretary's announcement of a short-term surplus of this 1970s. Although we have not yet received domestic fuel. As a result, in 1979 gas repre-permission to bum coal, we believe that, in sented about 12 percent of the fuel used to the light of national energy policy and the threat of sudden,nterruptions of oil imports, i
produce electricity for our service area, com-pared with less than one percent in 1978. The it is prudent to proceed with this portion of the coal-conversion work prior to completion of gas wc burned in 1979 was equivalent to R5 million barrels of oil.
the lengthy licensing process.
? Nuclear power from Indian Point units 2 and Liquid Coal 3 continued to be the principal source of non-Many of our power plants cannot be con-oil generation. Indian Point was responsible verted to coal burning because of technical for 26 percent of the electricity distributed enWmnmental pm@gs. Rat is one ma-n
- n our service area. The two units displaced sol we are a leader in a joint industry-govern-3 bout 18 million barrels of oilin 1979.
nient demonstration program to convert coal into a low-sulfur, low-ash liquid called solvent Hydro-electric power imported from Cana-refined coal (SRC-II). The program seeks to
)
da contributed 11 percent, or the equivalent develop the product in quantity in the 1990s of 8 million i)arrels of oil, under arrangements for use in existing oil-burning plants.
.vhich we began negotiating in 1971.
In 1979, with the backing of other utilities on
" Economy purchases" of coal-generated the Atlantic Coast, we achieved commitments oower from utilities in upstate New York ac-for more than half the output of the first com-
- ounted for 3 percent of the electricity distrib-mercial-size plant to produce SRC-II. Presi-ated while other nuclear and hydro-electric dent Carter and many members of Congress
- ources contribuied another 4 percent.
have expressed support for the SRC-Il pro-
/!e estimate that in 1979 the use of all non-oil gram. Although all Congressional appropria-
- ources saved the nation about 40 million tions have notyet been authorized, the project aarrels of oil and saved consumers in New appears to be sufficiently funded to keep the fork City and Westchester about S500 million. plant on schedule for its 1984 completion date. Japanese and West German funding is In addition, substantial oil savings resulted anticipated for a substantial portion of the trom the Company's programs to encourage plant's cost.
- ustomers to conserve energy. These pro-Jrams are described in a special section of Westchester County Referendum his report which begins on page 5.
in a November 1979 referendum, voters in Westchester County rejected a proposal Cnl C:nversion which would have established a County utility 1.onger term, our proposals to reduce New agency with the power to acquire and operate York City's and Westchester's dependence the Company's electrical distribution system an imported oil continued to advance, but at in Westchester. The proposal was defeated in agonizingly slow pace.
by a vote of about 130,000 to 105,000, or 55 a 1979 we sought and won permission from percent to 45 percent.
New York City and State agencies to burn During the weeks preceding the election, a ligher-sulfur oil to demonstrate we could group of about 8,000 Westchester residents-Jurn one percent sulfur coal at three electric organized as Westchester Citizens Against lenerating units-Ravenswood 3 in Queens Government Takeover-vigorously opposed md Arthur Kill 2 and 3 on Staten Island-with-the takeover proposal. The Company contrib-
>ut violating federal air quality standards. We uted financial support to the Committee's ef-low await approval from the U.S. Environ-forts to bring the facts of the proposal to pub-nental Protection Agency.
lic attention. Thousands of Con Edison em-Joal burning at the three units would save our ployees and retirees also volunteered their
- ustomers at least $200 million a year in fuel spare time to help defeat the proposal.
- osts and related taxes, and would. reduce indian Point Since the first unit went on the line 18 years ago, the Indian Point nuclear units have had J
4 N:ti nalEnergy P;licy an excellent safety record. Following the ac-We are disappointed by the federal govern-cident at the Three Mile Island nuclear plant ment's continuing lack of a sense of urgency in Pconsylvania in March 1979, Con Edison regarding energy problems. In July 1979 appointed a panel of senior engineers and President Carter announced the government operations personnel to review the safety would move to cut U.S. oil imports in half by procedures and operations at our Indian Point 1990. In January 1980 the President warned 2 unit and to apply the lessons learned from the Congress that our nation must be pre-the accident. We also joined with other New pared to use military force to retain access 'o York State utilities in requesting a review of Persian Gulf crude oil. Yet there have been our safety studies by a panel of distinguished few positive steps regarding nuclear develop-scientists and engineers from educational ment, synthetic fuels, coal use or gasoline and research institutes in the state.
conservation which would move our country toward energy independence.
The reports of our internal panel and of the statewide panel of experts recommended in comments on the Kemeny Commission's additional design and operational changes report on the Three Mile Island accident, the to improve the safety and reliability of Indian President reaffirmed the need for nuclear Point. The reports noted that the design of power and proposed to speed up procedures Indian Point 2 and 3 is significantly different to license completed plants, consistent with from that of Three Mile Island and that the appropriate safety reviews. But the regulatory same events which initiated the accident process is more discouraging than ever.
there would not have led to serious difficulties Since Three Mile Island, there has not been a at Indian Point.
single new application to build a nuclear plant in the United States.
Some of the recommended changes have al.
ready been made. Others will be completed We will continue to urge-both at the legisla-as rapidly as practicable. The Nuclear Regu-tive and administrative levels-that the gov-latory Commission is also ordering certain ernment take those steps necessary if our plar.t and operational changes at Indian Point nation is ever to overcome its dangerous de-and all other nuclear plants as a result of the pendence on that " thin line of tankers" be-various investigations following the Three tween here and the Persian Gulf. The danger Mile Island accident. Notwithstanding these of nuclear disaster does not lic in the peaceful changes, certain individuals and groups con-development of nuclear generating stations tinue to c.gitate fc the shutdown of the Indian which reduce our nation's dependence on Point 2 and 3 units, an action which would be imported oil. Rather,it lies in the possibility very damaging to the economy of our service that our nation will be drawn into war to pro-territory and would ultimately require the con-tect the supply of foreign oil on whichit is now structionof additionalnewcoal-firedcapacity. so dangerously dependent.
On-Site Generation Management Team A few building owners have switched from our The photooraphs throughout this report showc systcm to their own on-site generating facili-some of tne younger members of the Com-ties and some others are considering such a pany's management team. They represent switch. The p Jential for loss of customers to only a few of the talented young men and on-site generation is considerable because women who have chosen a career at our on-site facilities can avoid many of the taxes Company, where they daily help guide and utility companies and their customers must operate one of the most complex energy-pay. A significant loss of customers to on-site delivery systems in the world. Their abilities generation would mean higher rates for those and enthusiasm for meeting the challenges who remain on our system.
ahead speak well for the future of our Com-We can report encouraging progress in ef, pany.
forts to convince governmental authorities, particularly the Department of Energy (DOE), Sincerely, that policies and incentives favoring on-site cogeneration should distinguish systems which will conserve scarce natural resources I
and protect the environment from those which
/
will increase our nation's use of oil and in-b l-qtW*
l crease pollution in our cities. DOE has stated that it supports only that cogeneration which Charles F. Luce Arthur Hauspurg "does not create a net addition for demand Chairmanof the Board President for petroleum and petroleum products in this country."
February 26,1980
l
' Energy 5
Conservation l
l l
- The gasoline lines of 1979 caught Americans m
~you w 1
Mg gp
.by surprise. But the doubts about supply and b
- the soaring prices of OPEC oil seem at last to b*
j ibe driving home the message Con Edison has 1
s....,-m.
'I j
57.E.
IE92263 M
ibeen stressing for years-the need to con-o
- serve energy and to develop alternate domes-
./ - llil['A 4-T._
' tic fuels.
m
{ Con Edison's newest energy conservation
{-
u;y
{ project-a Conservation Center in midtown A
=
O
- Manhattan ~was opened in November 197c j by U.S. Energy Secretary Charles Duncan.
g This Center, in the landmark Chrysler Build-
- ing, is the most complate energy information
! center in the nation for consumers. It contains a
, lively exhibits on energy-efficient ways to heat, cool and light homes and apartments, and it teaches consumers how to buy and use appliances wisely. Conservation experts at gg a
__k
.the Center answer visitors' questions about g
t
.u the most up-to-date energy-saving devices.
{
y '.
J Secretary Duncan described the Center as "a
' s c
0
\\
r
' good example of the role that private industry i
can play.. a marvelous example < f what utili-
' ties across the nation can do to ret ly commu-nicate the desirat'ility of conservt ion predi-h,e, -
cated on self interest, not sacrific or other
',g i
. reasons."
,4 p
'It is a sign of the times that the Chrysler Build-
~
~-
.ing space where we now promote conserva-tion was formerly used to encourage auto-mobile travel, and thus gasoline consumption, when it served as a " touring center" for a
, major oil company.
t
,The Conservation Center is our most compre-hensive educational effort on energy conser-
'vation. But it is only the latest in a series jof programs which began with our widely in November U.S. Energy Secretary Charles l imitated "Save-A-Watt" campaign. "Save-A-Duncan opened Con Edison's Conservation
' Watt" began in 1971, when we disbanded our Center in mid-Manhattan-the most com-
- sales force and started a wide-ranging con-plete consumer energy information center isumer education program ta encourage the in the nation.
wise use of energy.
More recently, our Company started two major programs to help residential customers Grace Richardson, director of residential who live in one,two, three-and four-family conservation services, assists a visitor at homes conserve energy. These programs not the Conservation Center. Conservation ex-only measure energy waste, they also offer perts at the Center give advice on the most financing for specific, cost-effective steps up-to-date energy-saving practices and
, hat help make homes energy-efficient.
1 devices.
6 p
3 Through our Home Energy Audit program, s-l trained Con Edison specialists thoroughly in--
hp spect homes. They check insulation in ceil--
I4 f h
ings, foundations and walls; storm windows j
n t
and doors; caulking and weatherstripping; y
I J
and the location and setting of thermostats.
These specialists prepare detailed written re-i r
b_ gd ports, recommending those measures which
%lQ r
will pay for themselves in eight years or less.'
j Through a series of mailings we have encour-aged 750,000 customers to ask for home energy audits. By the end of 1979, the Com-r pany had received more than 19,000 requests for audits, and had more than 10,000 com-j pleted or under way.
']
A second program, Operation ThermoScan,:
y uses an airplane with an infra-red camera to E -
photograph the rooftops of our customerst hoines. Roofs and other areas from which substantial heat is escaping show up light-1
..g y
colored in the photographs. Darker areas in-g'-
dicate a well-insulated building that is retain-ing heat. Customers whose homes have been s
~
photographed are invited to evening and f
weekend viewings in their neighborhoods.
i' More than 30,000 persons have attended ~
v ThermoScan briefings so far, and many of J
them report the results to their neighbors. As a result, many customers have taken conser-
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vation steps and others have requested full-scale home energy audits.
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During 1979 Con Edison load management.
specialists continued to encourage the use of load-limiting devices in commercial build-ings. A Icad-limiting device, which may be mechanical or computerized, makes il pos-sible for electrical demand to be held to a a.
previously set limit by shutting down or cy-
.M' cling equipment in a planned manner as the limit is approached. The purpose of load management is to lower electric peaks by reducing on-peak usage or shifting it to off-peak periods. Balancing of the load permits the most efficient use of generating plants and saves the customer money.
Home Energy Audits:
Energy conservation not only reduces de-Trained Con Edison specialists thoroughly pendence on imported oil, but it offers what inspect homes, discuss findings with resi-we believe is another plus for Con Edison. It dents and prepare detailed written reports postpones the day when new power plants recommending energy-saving measures.
are needed. This opportunity to limit capital spending comes at a time when construction Opsration ThermoScan:
costs are skyrocketing, borrowing is expen-Acrialinfra-red photos show heat loss from sive, and government and r>ublic attitudes roofs and other areas of homes.
make it extremely difficult to find an accept-able site for a new plant.
At community briefings, homeowners learn l
from a Con Edison representative about en-We intencf to continue to promote energy con-ergy-saving measures to reduce heat loss.
servation vigorously. We believe it is good More than 30,000 persons have attended for our customers, our Company, and our ThermoScan briefings.
country.
l Operations 7
l Con Edison's energy strategy for the 1980s proposes coal burning at three generating units. Coal pile at Arthur Kill dates from 1974 when the Company was allowed to burn coal for a short time during the Arab oil embargo.
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e Electric Tropical Storm David, which hit our area in j
Adjusted to normal weather conditions, elec-September 1979, was for Westchester County tric sales in our service area were down 0.1 the most destructive storm in 25 years. More percent in 1979. The peak load in our service than 5,000 Con Edison lines there were area was 7,789,000 kilowatts on August 1. The broken by falling trees and more than 100 all-time record was reached on July 21,1977 utility poles were felled. However, with our when the peak was 8,232,000 kilowatts.
crews in Westchester and reinforcements from New York City working 16-hour shifts The Company continues to maintain the best and longer, we were able to restore service service reliability reccrd in New York State. In within 24 hours2.777778e-4 days <br />0.00667 hours <br />3.968254e-5 weeks <br />9.132e-6 months <br /> to more than 90 percent of 1979 there were 166 interruptions per 1,000 the customers affected.
customers; thc average for the other New York utilities was 1,185 interruptions per Following David, we accelerated a program for 1,000 customers according to the 1978 fig-quick handling of a high volume of emer-ures-the latest available statistics.
gency telephone calls from customers. The plan provides for switching calls from one
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e The role of coal in Con Edison's future is L'
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a' discussed by Bertram Schwartz, senior vice A"'"
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president, planning, fuel supply and inter-Ph
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,f Joyce Hergonhan, senior vice president, mo (r o : u public affairs, talks to a reporter about the Construction Company's Energy Stra:egy.
. r :.o otWd Ttm L pus %
N. a too 1980s At Con Edison's nuclear plant training tem M: ;uo simulator at Indian Point, Eugene R.
Lx
- p a : mm, tr. n t~ P, wr Au No i D -. m.to o and McGrath,(conter) vice president, power gen-the o, o ' i v w m oration, and William A. Monti, (right) nu-r wo 1 1,
Ia hom < aner
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clear plant manager, confer with a train-
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. t"i i " " ' n ' 15 m e ing supervisor.
1 l
h 1979 we concentrated our construction 9
efforts on strengthening transmission and dis-tribution facilities.
Among our major construction projects are
- Th r u Iding of four transmission lines
.. lit g f',i between Millwood substation in northern g
{j.
Westchester and Pleasant Valley substation Mb 1 i b l in Dutchess County to increase their capacity f
, h'q j
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to import power from the north. Work is in
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progress to upgrade two of the lines from 138 IL T
j
L 4
'1 he kilovolts to 345 kilovolts by June 1980. Work 8
I 1
i on the remaining lines is scheduled to begin
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in 1980. The four-year, S9n mon project w
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was begun in 1978.
'[
e The installation of a $50 mil! ion System Operation Computer Control System (SOCCS) h4 at our Energy Control Center in Manhattan.
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The new equipment will help monitor and u
control the operatio1 of the Company's elec-1 i
tric generation and transmission system. It includes a master computer terminal at the l Control Center and remote terminal units in '
s generating stations and transmission substa-J Q a w h ; E,'
tions throughout our system. Operation of the g
g SOCCS system is scheduled to begin by 1982.
3g
-E e Conversion to coalof three electric generat-7 g
w'3 ing units totaling 1800 megawatts-Ravens-W 2,
f,3
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k
'V wood 3 in Queens and Arthur Kill 2 and 3 on Staten Island. Feasibility studies began in K.
March 1979 and about $1.5 million was spent U during that year for environmental and engi-b.-. -
i 4
neering stadies for presentation before state l *%^
+
and local authonties. We estimate that about
$21 million will be spent in 1980 to continue {
W the studies and to order equipment which M
j requires a long manufacturing period. If prompt governmental approvals are received.
L the coal conversion project can be completed
(
t at Ravenswood in 1981, at Arthur Kill 2 in 1982 and ArIhur Kill 3 in 1983.
e The installation of a 345 kilovolt intertie be-tween the Con Edison system and the Public Service Electric and Gas system in New Jer-sey. This project is scheduled for service in 1982.
Charles F. Soutar, vice president, central e New neighborhood business offices and services, test drives one of 40 electric vehi-cles Con Ed, son is purchasmg for use m, i
operations centers to help make our services to our customers more accessible. These new a demonstration proje.:t.
offices will be staffed largely with employees Raymond J. McCann, vice president, Man-transferred from Company central offices.
hattan division, checks electric distribu-Research and Development tion plan for a new hotelin Manhattan.
Con Edison is one of the leaders in a national research effort to produce liquid fuels from Stephen B. Bram, vice president, system operat,on and central substation, and Ray-i coal for use in utility boilers. The first com.
mond P. Pr, ore, vice president, systems i
mercial test of a coal-derived product called and information processing, refer to model solvent refined coal II (SRC-II) was made at f modernized Energy Control Center as one of our Manhattan power plants in Sep-they review construction progress.
tomber 1978. We are also supporting a pro,
10 gram to study a coal-oil mixture as a fuel for e Construction of a compact High Voltage l po'ver generation. Adelphi University is par-Direct Current demonstration project at our ticipating in the project. The goal is to develop Astoria facility in Queens. The 100 megawatt a coal-oil slurry that could be burned in exist-test facility has been completed, but test op-4 ing generating plants.
eration awaits the resolution of certain tech-j nical problems. The demonstration program '
Other research and developrnent projects in-is sponsored by the Electric Power Research I
clude the following.'
institute, the Empire State Electn,c Energy
- Construction in Manhattan of a 4.8 mega-Research Corporation and other industry or-watt fuel cell using naphtha as fuel. We will ganizations.
begin testing components in 1980. This com-
- A sow eng Md in WeMester pact power plant is a demonstration project where we are testing solar-assisted hot water funded by the U. S. Department of Energy, th systems in 19 homes and one public building.
Electric Power Research Institute, two New The project is also sponsored by the New York State research organizations, and sev-eral electnc utHities including Con Edison. W York State Energy Research and Develop-ment Authonty. Data are being analyzed by are also participating in a research project P@eh lee d Mw Yd sponsored by the Gas Research Institute and i
I the U.S. Department of Energy to test the op-
- An industry and government-sponsored eration of a small,40 kilowatt fuel cell power project to develop a new system for removing plant using natural gas as the fuel.
sulfur-dioxide pollutants from the stack gases of coal-fired plants.
Rate Proceedings In April 1979 the New York Public Service !
Commission (PSC) approved an electric rate :
p increase of $158.1 million or about 6.6 per-
'I cent. In July 1979 an additional increase of -
$12.4 million was approved to cover in-i.
creased property taxes. The Company has
-[
[
appealed the PSC's rate order on the ground that the rate of return set by the PSC is too low.
By virtue of an order in a previous electric s
case, time-of-day electric rates went into ef-fect on January 1,1980 for approximately 200 of our largest commercial and industrial
'~
customers.
a
^
N In April 1979 the Company filed for an in-r, crease in annual gas revenues of $46.1 i
I million.We later reduced our request to $38.8 '
{
million, or about 9.8 percent. principally as a
(
l result of increases in our forecast of gas l
A sales. In December 1979 the PSC's adminis-trative law judge recommended a rate in-J.
3
. (--
g crease of $31 million. The PSC's decision is )
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expected in March 1980.
The PSC is inquinng into the design of the Donald L. Miller, vice president, personnel, Company's steam rates. In recognition of our i plans recruitment program for nuclear exposure to loss of steam customers to on-site l plant engineers with members of staff.
generation, the Company has proposed a {
steam rate design which we believe will im ;
prove somewhat our competitive posture.
Both the Federal Energy Regulatory Commis-sion and the PSC have begun proceedings ml to on-sh generaNn. in both proceed-At fuel cell construction site in Manhattan' ings the Company has cautioned that prolif-Robert A. Bell, assistant vice president' eration of on-site aeneration in the New York research and development, outlines the
~
City area will increase oil dependence and air potential benefits of the demonstration pro-pol ution.
ject with representatives of an industry re-search group.
Summary cf 11 Operations Consolidated Edison Company of New York, Inc.
Year Ended December 31 (Millions of Dollars) 1979 1978 1977 1976 1975 sper ting revenues
$3,332.8 S3,011.0
$3,022.9 S2,880.3 S2,667.9 sper: ting expenses Fuel and purchased power 1,019.5 854.7 894.8 879.3 875.5 Gas purchased for resale 152.2 117.5 107.5 90.6 65.2 Other operations and maintenance 791.0 739.5 686.8 656.0 614.9 Depreciation 184..;
173.7 169.9 16 155.3 Taxes, other than federal income 591.4 556.3 547.8 525.
476.1 Federal income tax 55.2 64.5 110.4 6.9 Federal income tax deferred 45.6 22.7 8.1 30.5 49.5 Investment tax credits deferred 20.7 27.9 18.4 70.8 4.4 Total operating expenses 2,860.0 2,556.8 2,543.7 2,424.9 2,240.9
@pirtting income 472.8 454.2 479.2 455.4 427.0 sth:r income (deductions)
Interest on temporary investments 50.1 43.9 28.0 22.8 Allowance for funds used during construction:
Equity funds (af ter December 31,1976) 3.7 7.0 7.0 9.3 36.5 All funds (prior to January 1,1977)
Gain on reacquisition of long-term debt 1.2 12.2 Other ir,come less miscellaneous deductions (3.6)
(1.2)
(7.6)
(4.6) 7 Federal income tax (22.0)
(19.8)
(7.8)
(8.4)
Fecural income tax deferred (2.0)
(4.5)
Total other income 28.2 29.9 18.8 26.8 37.2 inc:m3 before interest charges rnd extraordinary item 501.0 484.1 498.0 482.2 464.2 Interest on long-term debt 171.7 173.0 173.6 176.9 178.0 Otherinterest 7.0 4.8 4.3 3.9 11.5 Allowance for borrowed funds used during construction (1.6)
(3.3)
(3.5)
Net interest charges 177.1 174.5 174.4 180.8 189.5 00ct incime before extraordinary item 323.9 309.6 323.6 301.4 274.7 Extraordinary item-sale of generating unit (23.3)
GS:t inc me 323.9 309.6 323.6 301.4 251.4 Preferred stock dividend requirements 42.5 43.4 44.1 44.3 44.3 Gtt inc:me for common stock
$ 281.4 S 266.2 S 279.5 S 257.1 S 207.1 Weighted average common shares outstanding (000) 62,412 62,024 61,658 61,548 61,548 Gcrnings per common share:
fncome applicable to common stock before extraordinary item 4.51 S
4.29 4.53 S
4.18 S
3.74
(.38)
Extraordinary item-sale of generating unit G0ct inc:me for common stock 4.51 S
4.29 S
4.53 S
4.18 S
3.36 livid:nds per common share 2.44 S
2.20 S
2.00 S
1.60 S
1.20
12 Management's Discussion Rate of return on average net property for 1979 was only 6.02 percent, well below the 8.76 and Analysis of the percent, 8.97 percent ane 9.09 percent tne.,
Summary of Operations oretically allowed by the New York Public Serv ce Commission (PSC) in decisions es-I tabli hing the electric, gas and steam rates l
that vere in effect during most of the year. We l
say " theoretically allowed" because in prac-tice adjustments made by the PSC in rate cases have prevented the Company from
(
Financial Performance in 1979-In G<meral actually earning the return granted by the i
The Company maintained in 1979 a reson-PSC. Interest coverage computed under the ably good financial condition by historic provisions of the Company s mortgage trust,
indenture for 1979 was 3.78 times ard under '
standards. Earnings per share of $4.51 were the Secunties and Exchange Commission for-5.1 percent higher than in 1978 and only mula was 3.45 times.
slightly below the record per share earnings of $4.53 in 1977. Net income for common The Company's cash position remained strong stock increased by $15.2 million over 1978. in 1979 despite increases in working capital However, when adjusted for inflation which requaements brought about largely by a sig-occurred during 1979, consistent with newly nificantly higher investment in f uel inventories.
issued rules of the Financial Accounting Our capital structure was further strength-Standards Board, the Company's 1979 per ened with common equity accounting for 44 share earnings actually fell below its 1978 percent of total capitalization at year-end earnings.
1979.
The Company has not issued additional bonds '
_m y
_ F__,,_
- y or stock since 1974. In 1979 we financed $316
j million of construction expenditures without.
] resort to external financing. Construction pro !
,.J."XL -
Ef.~9
' ] grams for 1980 and 1981 are budgeted at $411 J q million and $472 million, respectively, and we !
y expect to fund the 1980 expenditures without issuing any new securities. We presently an-t MP ticipate a return to the financial markets in ;
y Oj 1981, probably with an issue of pollution con '
~
trol bonds in connection with coal conversion l
- Y at the Arthur Kill and Ravenswood generating '
plants.
Inflation The acceleration of inflation in recent years has eroded the purchasing power of the dol-lar to less than hall what it was a decade ago.,
The information in Note I to the financial state-
/
ments shows in an approximate way the of fect of inflation on some aspects of the Company's g
finances.
Inflation has a severe oflect on the utility indus-Reviewing 1979 financial statements are try because it is highly capital intensive and (standing) Archie M. Bankston, left, secre-bccause its prices are re9ulated using a rate tary and assistant general counsel, and base that reflects only the original cost of its Carl W. Greene, controller, and from left plant. In New York State, regulatory proceed-(seated), Edward J. Carey, treasurer, Joy ings lasting almost a year are required before Tannian, vice president, rate proceedings, we can increase rates. In the past ten years and John V. Thornton, executive vice presi-the Company has had to petition the PSC for ;
d: ant, finance.
rate relief many times. On almost every occa-sion we received substantially less than neces >
sary to earn a reasonable rate of return.
Operating Revenues and Operating income <
Operating revenues increased by $321.8 mil :
lion or 10.7 percent compared to 1978. Fuel -
and purchased pow 1r costs and gas pur !
chased f 3r resale increased $199.5 million or mitted over the Company's facilities and by 13 20.5 percent. Increased labor and related additional charges to our femaining cus-costs and increased taxes resulted in total tomers.
' operating expenses in 1979 exceeding 1978 Fuel and Purchased Power by S303.2 million. Operating income, there-In 1979 fuel and purchased power costs for fore, increased S18.6 million over 1978.
electric and stearn operations increased The following are the principal items entering $164.8 million due primarily to significant in-into the increase in operating revenues.
creases in the cost of oil used for generation at electric and steam stations. The cost of a increase (Decreasa) barrel of residual fuel on increased from $15 (Millions of Dollars) from 1978 in January 1979 to almost $30 by the end of Fuel billings
$197.5 the year. The effect of these increases was somewhat mitigated by the increased use of Rate increases natural gas as a boiler fuel during 1979, result-Electric 103.6 ing from the short-term surplus of this fuel, and Steam 10.4 by the purchase of hydro-electric power im-Sales to other utilities 26.1 Sales-volume changes ported from Canada.
Elect.'ic-Con Edison customers in 1978 fuel and purchased power costs de-and delivery service to PASNY 17.5 creased S40.1 million from 1977. Electric and Gas 0.8 steam costs decreased $33.7 million and S6.4 Steam (16.5) million respectively, reflecting a decrease in Refund credit to customers-the unit cost of fuel and purchased power and, 1976 Indian Point No. 2 outage (18.1) in the case of steam, a decline in sendout of Other 0.5 4.1 percent.
S321.8 Gas Purchased for Resale Gas purchased for resale increased $34.7 The increased fuel billings reflect the signifi-cant increases in the cost of fuel experienced
- b.U" '.n 1979 as compared to 1978 and S10.0 milli n in 1978 as compared to 1977. The in-by the Company in 1979. In December 1978 creases in both years (30 percent in 1979 and and in April 1979 the Company's steam and 9 percent in 1978) reflect primarily an in-electric rates increased 5.1 percent arid 6.6 crease in the unit cost of purchased gas as percent respectively, and in July 1979 elec-the result of deregulation of wellhead prices.
tric rates were further increased to cover increased property taxes. Sales to other utili-Other Operations and Maintenance ties, which for the most part represent recoup-In 1979 other operations and maintenance ex-ment of fuel and certain incremental produc-penses increased $51.5 million over 1978.
tion costs, increased in 1979 due to increased Increased labor and labor related expenses sales to the Power Authority of the State of accour'ted for more than two-thirds of the in-New York (PASNY) as a result of a refueling creaFe even though there was a 2.7 percent outage at PASNY's Indian Point No. 3 Unit.
decrease in total manpower including over-time. Increased maintenance at electric gen-Actual electric sales volumes to Con Edison erating stations was also a major cause of in-customers and gas sales volumes increased creased expenses.
0.3 percent and 1.9 percent respectively while steam saies volumes declined 10.4 percent. In 1978 other operations and maintenance ex-The decline in steam sales was due to in-penses increased $52.7 million over 1977, creased conservation by customers and loss again primarily reflecting increased wages of customers to on-site generation.
and related expenses.
In 1978 oprating revenues declined from the Outstanding accounts receivable from elec-19// ' vel by $11.9 million due primarily to tric, gas and steam customers were S249.1 lower fL-I billings resulting from decreases in million at December 31,1979, up from S227.0 the unit costs of fuel and purchased power million at year-end 1978. However, measured and the transfer in 1977 and 1978 of certain in equivalent number of days of revenue out-of_ the Company's former governmental cus-standing (ENDRO), the receivables at year-tomers to PASNY. Operating income, how-end 1979 represented 26.5 days compared to ever, is not affected by the transfer since the 26.9 days at the close of 1978. This was the.
Company does not incur production ex-lowes year-end ENDRO level in 23 years. Our p:nses, including fuel costs, relating to the credit and collection efforts also reduced energy requirements of customers transferred losses due to unco!!ectible bills to the lowest and since any remaining revenue loss is off-level since 1972. As a result, the allowance for s;t by charges to PASNY for the energy trans-uncollectibles was reduced from S29.6 million
14 at December 31,1978 to $24.3 million at De-Total 1978 federal income taxes charged to cember 31,1979. The provision for uncollec-operations amounted to $115.1 million, a de-tibles charged to operating expenses in 1979 crease of $21.8 million from 1977. Federal in-amounted to $12.7 million, a decrease of $9.0 come tax payable decreased $45.9 million million compared to 1978 and a decrease of from 197 / due to lower pre-tax operating in-some S45 million when compared to the Com-come and increased investment tax credits.
pany's highest level in 1975.
Federal income tax deferred increased $14.6 Taxes, Other Than Federat income milli n from 1977 due largely to increased State and local laws continue to force the class life depreciation deductions and a de-Company to be a major tax collector. Partic_ crease in credits related to taxes previously utarly onerous to our customers are taxes deferred as compared to 1977. Investment tax credits deferred increased $9.5 m,illion from imposed directly on revenues and on sales by the state and local governments. When OPEC 1977 due to increased plant additions in 1978 oil prices increase and such increases are re-compared to 1977.
flected in our costs and in fuel billings to cus-Interest on Temporary investments tomers, state and local governments obtain a The Company held temporary investments to-windfall profit by taxing the increased fuel bill-talling $493.3 million at December 31, 1979 ings. In 1979 the Company incurred $183 and $528.9 million at December 31,1978 in million in revenue taxes or 5.5 percent of its the following categories:
93.3 billion operating revenues. This repre-sented an increase in revenue taxes of $17.9 (Millions of Dollars) 1979 1978 million or 10.8 percent over 1978. The dales Temporary chh investments $313.8 $354.1 taxes collected from customers, which are not Funds held for retirement of reflected in Company revenues or expenses' bonds due 1981-82 177.4 161.5 were S191.1 million in 1979, an increase of FMs W hhed
$7.8 million or 4.3 percent over 1978.
bonds and preferred The principal increases (decreases) in taxes stock due within one year 2.1 13.3 imposed on the Company in 1979 and 1978 S493.3 S528.9 compared to prior periods were:
1979 1978 Income from these investments increased $6.2 compared compared million in 1979 as compared to 1978 and $15.9 (Millions of Dollars) to 1978 to 1977 million in 1978 as compared to 1977 due prin-Local property taxes
$11.2 S 6.4 cipally to increased interest rates on short-State and local taxes (2.1) term investments.
on revenues 17.9 Payroll and other taxes 6.0 4.2 Other income Less Miscellaneous Totalincrease
$35.1 S 8.5 Deductions Due to:
Other income less miscellaneous deductions increase in tax rates S 2.7
$ 0.6 decreased $2.4 million in 1979 as compared Additions of property to 1978 and increased $6.4 million in 1978 as and increases in compared to 1977. The decrease in 1979 was other bases for taxes
$32.4 S 7.9 due principally to a contribution of $1.3 million in support of the Westchester Citizens Against Government Takeover. The increase in 1978 Federal lncome Taxes-Operations was due primarily to a non-recurring charge Total 1979 federal income taxes charged to of $5.0 million in 1977 related to the settle-operations amounted to $121.6 million. Fed-ment of a class action on behalf of certain eral income tax payable decreased S9.3 mil-purchasers of the Company's securities.
lion from 1978, primarily due to a decrease in the statutory corporate federal income tax Federallncome Tax-Other income rate from 48 percent in 1978 to 46 percent in Federal income tax charged to other income 1979 and a decrease in taxable income from increased $2.2 million in 1979 as compared to operations. These decreases were partially 1978 and $10.0 million in 1978 as compared offset by reduced investment tax credits.
to 1977. The increases in both years were due <
Federal income tax deferred increased $23 principally to increased income on temporary million from 1978 due primarily to an increase investments.
in recoverable fuel costs dnferred. Investment tax credits deferred decreased $7.2 million from 1978 due to lesser plant additions in 1979 compared to 1978.
L
15 Reportof Management The accompanying financial statements have been prepared by the management of Consolidated Edison Company _ of New York, Inc. In management's opinion such statements have been prepared in conformity with generally accepted accounting principles as applied in the case of regulated public utilities; they reflect judgments and estimates of management made in the application of such principles.
The integrity'of the Company's financial records, from which the financial state-ments were prepared, is large!y dependent upon the Company's system of internal accounting controls. Based upon a review and continuing monitoring of such con-trols, management believes they provide reasonable assurance that transactions
. are executed in accordance with management's authorization and are properly re-corded, and that assets are appropriately safeguarded against loss from unauthor-ized use, The Company'c Board of Trustees maintains an Audit Committee composed of Trustees who are not employees of the Company. The Audit Committee meets with the Company's management, its internal auditor and its independent accountants sev al times a year to discuss internal controls and accounting matters, th9 Com-pany's financial statements, and the scope and results of the auditing programs of the independent accountants and of the Company's internal auditing department.
The independent accountants have full access to the Audit Committee and period-ically meet with it without management representatives present.
The accompanying financial statements have been examined by Price Waterhouse
& Co., the Company's independent accountants, whose report appears below.
February 26,1980 Report of Independent Accountants bce.
1ss eest sare street.
/aternotise ov~w New York, New York 10022 212-371-2000 To the Board of Trustees and Stockholders of Consolidated Edison Company of New York, Inc.
In our opinion, the accompanying balance sheets and the related statements of income, retained earnings, changes in financial position and capitalization present fairly the financial position of Consolidated Edison Company of New York, Inc. at December 31,1979 and 1978, and the results of its operations and the changes in its financial position forthe years then ended, in conformity with generally accepted accounting principles consistently applied. Our examinations of these statements were made in accordance with generally accepted auditi: g standards and accord-ingly included such tests of the accounting records and such other auditing proce-deres as we considered necessary in the circumstances.
February 26,1980
?W
16 Balance She
- j Consolidated Edison Company of New York, Inc.
Assets
.l I
At December 31 (Thousands of Dollars) 1979 1978-Utility plant, at original cost (Notes A and E)
Electric
- $6,353,822
$6,173,081 Gas 515,500 481,464-
, 214,854 208,572 Steam 4
General 254,691
.234,211 Total 7,338,867 7,09/,328 Less-Accumulated depreciation 1,695,519 1,580.506 Net 5,643,348 5,516,822 Construction work in progress 275,116 262,633 Nuclear fuel assemblies and components,less accumulated amortization of $62,214 and $52,484 41,632 24,018 Net utility plant 5,960,096 5,803,373 Current assets Cash 20,401
-20,168 Temporary cash investments, at cost which approximates market 313,817 354,110 -
Funds held for retirement of bonds and preferred stcck due within one year 2,101 13,266' Accounts receivable-customers,less allowance for uncollectible accounts of $24,315 and $29,611 224,763 197,387 Other receivables 40,900.
32,081 Fuel, at average cost 168,130 81,079 Gas in storage, at average cost 16,118.
14,202 Materials and supplies, at average cost 101,907 83,981 Prepayments and other current assets '
21,513 18,764 Total current assets 909,650 815,038 investments and nonutility property Funds held for retirement of bonds due 1981-82, at cost 177,365 161,531 Nonutility property and other investments 5,753 5,226 l
' Total investments and nonuti'.y property 183,118 166,757 Deferred charges Recoverable fuel costs (Note A) 46,387 10,047 Una11ortized debt expense 21,825 23,072 Other deferred charges 12,134 12,351 Totaldeferred charges 80,346 45,470-Total
..$7,133,210 S6,830,638 i
1+
17 Capitalization and Liabilities At December 31 (Thousands of Dollars) 1979 1978
~
Capitalization (See Statement of Capitalization)
Common shareholders' equity
$2,745,928
$2,604,456
. Preferred stock subject to mandatory redemption 68,250 70,500 Other preferred stock 644,277 656,575 Long-term debt 2,769,117 2,769,718 Totalcapitalization 6,227,572 6,101,249-t Current liabilities Long-term debt due within one year (Note E) 197 11,783
' Preferred stock to be redeemed within one year (Note E) 2,250 2,250
- Accounts payable 172,237 126,726 Accrued income taxes 61,618.
25,797 Other accrued taxes 53,536 39,863 Accrued interest 47,272 46,963
. Accrued wages and other current liabilities 77,682 68,456
. Customers' deposits 64,905 61,192 Dividends payable 10,509 10,739 Totalcurrentliabilities 490,206 393,769 Deferred credits '
Accumulated deferred federal income tax (Note B) 224,883 179,620 Accumulated deferred investment tax credits (Note B) 150,200 132,860
- Other deferred credits and reserves 40,349 23,140 Total deferred cre)lts 415,432 335,620
- Commitments and contingencies (Note G)
Total
$7,133,210
$6,830,633 i
~
e 18 income Statement Consolidated Edison Company of New. York,Inc.
e 1979 1978 Year Ended December 31 (Thousands of Dollayf Operating revenues (Note A)
Electric '
$2,723,390
$2,450,726 Gas-369,859 337,586,
Steam -
239,537 222,658 Totaloperating revenues 3,332,786 3,010,970 Operating expenses Fueland purchased power 1,010,482 854,714'
' Gas purchased for resale 152,222 117,474 Other operations -
529,699 506,301 Maintenance 261,257 233,201 Depreciation (Note A) 184,391 173,668 Taxes, otherthan federalincome 591,354 556,313, Federalincome tax (Note B) 55,230 64,490 Federalincome tax deferred (Note B) 45,620_
22,650 investment tax credits deferred (Note B) 20,740 27,950 Totaloperating expenses 2,859,995 2,556,761
' Operating income 472,791 454,209 Otherincome (deductions)
Interest on temporaryinvestments 50,113 43,851 Allowance for equity funds used during construction (Note A) 3,736 7,000 Other income less miscellaneous deductions (3,641)
(1,194)'
Federalincome tax (Note B)
(21,970)
(19,810)
Totalotherincome 28,208 29,847 incc me before interest charges -
501,029 484,056 interest on long-term debt 171,688 173,055 Otherinterest 7,067 4,763 Allowance for borrowed funds used during construction (Note A)
(1,638)
(3,331)
Netinterer.t charges 177,117 174,487 Netincome 323,912 309,569 Preferred stock dividend requirements 42,482 43,378.
. Net income for common stock
$ 281,430
$ 266,191 Earnings per common share based on weighted average number of shares outstanding during each year (62,411 - 786 and 62,023,924) (a)
M 51
$4.29 (a) Fully; diluted earnings per share, based on the assumption of full conversian of the outstanding' shares of Cumulative Preference Stock,6% Convertible 3eries B, have not been shown since dilution is less than 3 percent.
{
-Statement of Changesin 19:
- Financi:1 Position Consolidated Edison Company
- of New York, Inc.
-Year Ended December 31 (Thousands of Dollars) 1979 1978' j
Financial recources were provided by:
Net incom9
$ 323,912 S 309,569 Principal non-cash charges (credits) to income:
Depreciation _
184,391 173,668 Amortization ~of nuclearfuel 22,894 16,637
.j Federalincome tax deferred 45,620-22,650 investment tax credits deferred 20,740 27,950 Common equitycor.iponent of allowance
~ (6,148) for funds used during construction (3,311)
Totalfinancial resources provided
$ 594,246
-S 544,326 Financialresources were used for:
Construction expenditures (a)
$ 316,275 5 313,748 Nuclearfuelexpenditures 40,508 -
8,641 Common equity component of allowance for funds used during construction (3,311)
(6,148)
Preferred and common dividends 194,738 179,810 Increase in funds held for retirement of bonds due 1981-82 15,834 161,531 Retirement of long-term debt and preferred stock 14,032
_ 40,292 i
Deferred recoverable fuel costs 36,340 (18,687) i Increase (decrease) in other assets and liabilities '
(6,759) 23,780 (Decrease)in working capital (b)
(13,411)
(158,641)
Total financialresources used
$ 594,246 S 544,326 Changes in working capital:
Current assets-increase (decrease)
Cash 233 S
(3,033)
Temporary cash investments -
(40,293)
(95,945)
Funds held for retirement of bonds and preferred stock due within one year (11,165)
(23,874)
U.S. Government securities held for payment (98,051) of income taxes Receivables, less allowance for uncollectibles 36,195
_ (6,626)
Materials and supplies, including Fuel and G~ s a
~in storage 106,893.
11,547 Prepayments and other current assets 2,749 732 Total.
94,612 (215,250)
Current liabilities-(increase) decrease
' Accounts payable (45,511)
(20,618)
Accrued taxes (49,494) 81,609 Accrued interest, wages and other (9,535) 1,358
' Customers' deposits; (3,713)
(5,967)
Dividends payable ~
230' 227-
- Total -
(108,023) 56,609 Total changes in working capital
$ - (13,411)
S(158,641)
~
_ (a) includes allowance for funds used during construction.
(b) Excludes long-term debt.due and preferred stock to be redeemed within one year.
=
20 Statementcf
- Capitalization l
. Consolidated Edison Company of New York, Inc.
l
' At D:cember 31 (Thousands of Dollars) 1979 1978 Common Shareholders' Equity Common stock, $10 par value, authorized 85,000,000 shares; outstanding 62,574,953 shares and 62,175,271 shares (Note E).
$1,369,850
$1,357,552 Retained earnings 1,410,219 1,281,055 Capital stock expense (34,141)
(34,151)
Tctal common shareholders' equity 2,745,928 2,604,456 Shares Outstanding Dec.31,1979 Dec.31,1978 Pr:ferred Stock (Note E)
Subject to mandatory redemption l
Cumulative Preferred, $100 par value,8% %
l Series H (mandatory redemption amount i
. $70,500 and $72,750) 705,000 727,500 70,500 72,750 l
' Les amounts to be redeemed within one year 2,250 2,250 l
Tct:1 subject to mandatory redemption 68,250
.70,500 Oth:r prefer:ed stock
$5 Cumulative Pref erred, without par value, authorized 1,915,319 shares 1,915,319 1,915,319 175,000 175,000' Cumulative Preferred, $100 par value, authorized 6,000,000 shares *:
5%% Series A 600,000 600,000 60,000 60,000 5% % Series B 750,000 750,000 75,000 75,000 L
4.65% Series C 600,000 600,000 60,000 60,000 4.65% Series D 750,000 750,000 75,000 75,000 5%% Series E 500,000 500,000 50,000 50,000 S.20% Series F 400,000 400,000 40,000 40,000 l
8.30% Series G -
500,000 500,000 50,000 50,000 Cumulative Preference, $100 par value, authorized 2,250,000 shares:
6% Convertible Series B 592,771 715,750 59,277 71,575 Tct:1cther preferred stock 644,277 656,575
- Tit:1 preferred stock 712,527 727.075-
- Represents total authorized shares of cumulative preferred stock, $100 par value, including 8W % Series H.
1 I
4 O
^
21 m,
At December 31 (Thousands of Dollars) 1979 1978 Long-term Debt (Note E)
First and Refunding Mortgage Brnds (open-end Mortgage):
Maturity Interest Rate Series 1981 3
F 44,893 44,893 1981
~3%
G 30,242 30,242 1982 2%
A 85,719 85,719 1982 3%
H 35,961 35,961 1983 3%
I 40,000 40,000 1984 3%
J 35,000 35,000
~1985 3%
K 70,000 70,000 1986 3%
L 30,000 30,000 1986 4%
M 40,000 40,000 1987 5
N 60,000 60,000 1988 4
0 50,000 50,000 1990 4%
R 50,000 50,000
'1990 5
S 75,000 75,000 1991 4%
T 50,000 50,000 1991 4%
U 60,000 60,000 1992 4%
V 100,000 100,000 1992 4%
W 75,000 75,000 1992 4%
X 60,000 60,000 1993 4.40 Y
75,000 75,000
-1993
- 4%
AA 75,000 75,000 1994 4.60 BB 125,000 125,000 1996.
5 CC 100,000 100,000
- 1996-5.90 DD 75,000 75,000 1997 6%
EE 80,000 80,000 1997 8%
LL 75,000 75,000 1998 6.85
~ FF 60,00G 60,000 1999
- 7.90 GG 80,000 80,000 2000 8.90 HH.
125,000 125,000 2000 9%
11 150,000 150,000 2001 7.90 JJ 150,000 150,000 2002 7.90 KK 150,000 150,000 2003 7%
MM 150,000 150,000 2003 8.40-NN 150,000 150,000 2004 9W 00 150,000 150,000 2,761,815 2,761,815
- Other long-term debt 4,543 -
'16,325 Unamortized debt premium 2,956 3,361 Total -
_ 2,769,314 2,781,501 Less:long-term debt due within one year 197 11,783
- Total long-terin debt -
2,769,117 2,769,718 Totalcapitalization
$6,227,572 S6,101,249 4
22 R:tained Ecrnings Statement Consolidated Edison Company of New York, Inc.
Year Ended December 31 (Thousands of Dollars) 1979 1978 Balance, January 1
$1,281,055
$1,151,306 Netincome for the year 323,912 309,569 Total 1,604,967 1,460,875 Dividends declared on capitalstock Cumulative preferred at required annual rates (See Statement 'f Capitalization) 38,612 38,795 Cumulative Profe rice,6% Convertible Series B 3,793 4,512 Common, $2.44 r,d $2.20 per share 152,333 136,503 l
Totaldividenc' declared 194,738 179,810 Capital stock wpense: Redeemed shares of Cumulative Preierred Stock,8W % Series H (Note E) 10 10 Total deductions 194,748 179,820 Balance, December 31
$1,410,219
$1,281,055 l
l 6
1 l
1
Notes tD Financi:1 Statements 23 Note A Summary of Significant Accounting Policies Regulation The Company is subject to regulation by the New York Public Service Commission (PSC) and the Federal Energy Regulatory Commission (FERC). The Company's ac-counting policies conform to generally accepted accounting principles, as applied in the case of regulated public utilities, and to the accounting requirements and rate-making practices of these regulatory authorities.
Utility Plant and The capitalized cost of additions to utility plant includes indirect costs such as en-Depreciation -
gineering, supervision, payroll taxes and pension benefits, and an allowance for funds used during construction (AFDC). The original cost of property, together with removal cost, less salvage, is charged to accumulated depreciation as property is retired. The cost of repairs and maintenance is charged to expense, and the cost of betterments is capitalized. Nuclear fuel assemblies and component; include the cost of fabrication and overhead costs.
The annual charge for depreciation is computed on the straight-line method for fi-nancial statement purposes, using rates based on average service lives and net salvage. Depreciation rates averaged 2.6 percent in 1979 and 2.5 percent in 1978. In the Company's most recent electric rate case, the PSC ordered the Company to cease using average service lives for the Indian Point nuclear plants and to utilize a remaining life amortization method effective May 1,1979. This resulted in a decrease in the annual charge for depreciation. The PSC determined that an annual provision equal to the amount of such decrease would be sufficient to provide for the costs of
" decommissioning" the two nuclear r using the dismantlement and removal method. The PSC estimated that such ( asts would be approximately $246 million in the early 21st century when dismantlement and removal of both units is assumed to take place. The Company believes the costs will not be less than this estimate (which, stated in terms of 1977 dellars, is equivalent to $51.65 million) and could be substantially greater. With respect to one of these units, Indian Point No.1 which has been shut down since 1974, the PSC ordered the Company, effective May 1, 1979, to remove the net investment in the unit from rate base and to defer carrying costs incurred, including a return on the net investment. The PSC further stated that these deferred carrying costs will be billed to customers in the future whether or not the unit is returned to service.
Rates used for AFDC include the cost of borrowed funds used for construction purposes ard a reasonable rate on the Company's own funds when so used, de-termined in accordance with the FERC and PSC regulations. For 1979 and 1978 the Company used a rate of 8.75 percent, compounded semi-annually, and treated the amount applicable _to borrowed funds as a reduction of interest charges.
The_ Company is joint owner of two 1200 megawatt electric generating stations:(1)
Bowline Point, operated by Orange and Rockland Utilities, Inc. with Con Edison owning two thirds of the investment and (2) Roseton, operated by Central Hudson
-Gas & Electric Corp. with the investment shared by Con Edison (40%), Niagara Mohawk Power Corp. (30%) and Central Hudson (30%). Con Edison's share of the a
24; inv stm:ntin these stations at original cost and as included in its balanca shnt ft; Dec:mber 31,1979 and December 31,1978 was:
Bowline Point Ros: ton (Thousands of Dollars) 1979 1978 1979 1978:
Plant in service
$173,964 S173,345-
- $135,355 - $134,501 '
Construction work in progress 5,459 4,684 3,337' 2,782 Accumulated depreciation for the Company's share of the Roseton station at De -
cember 31,1979 and 1978 was S19.5 million and $16.9 million. A separate depre-ciation account is not maintained for the Company's share of the Bowline Point.
station. The Company's share of operating expenses for these statians is included in its income statement.
Nuclear Fuel Nuclear fuel assemblies and components and a provision for the storage of the-spent fuel are amortized to operating expenses based on the quantity of heat pro.
duced for the generation of electricity. Nuclear fuel costs are recovered in revenues c through base rates or through the fuel rider.
Leases All leases are treated as operating leases for rate-making and accounting purposes.
Revenues Revenues are recognized on a monthly cycle billing basis. The Company'does not accrue revenues for energy delivered after the cycle billing date. Fuel rider reve-nues are not recorded until billed.
Recoverable Fuel costs which are above the levels included in base rates are recoverable under:
Fuel Costs electric, gas and steam fuel riders. If costs fall below these levels, the difference is credited to customers. For electric and steam, such costs are deferreu until the peri-od in which they are billed or credited to customers (40 days for electric,30 days for steam). For gas, the excess or deficiency is accumulated for refund or surcharge :
to customers on an annual basis.
In recent PSC decisions the Company was allowed to recover in rates certain de-
- ferred recoverable fuel costs which were affected by shortening the billing lag peri-od or increasing the base cost of fuel.The Company believes that remaining deferred recoverable fuel costs would be recovered if there were any_further revisions in; tariffs similarly affecting these items.
Federal The Company provides for deferred federal income taxes with respect to benefits income Tax realized from the class life system of depreciation, deferred fuel accounting and certain other specific items, when approved by the PSC.The Company defers the -
benefits of all investment tax credits realized.
For rate-making purposes, accumulated deferred federal income taxes are de--
ducted from rate base and amortized or otherwise applied as a reduction (or in -
crease) in federal income tax expense in future years. Accumulated deferred invest-ment tax credits are amortized ratably over the lives of.the related properties.
Tax reductions resulting from use of an accelerated method of depreciation and other differences (principally interest, pensions and taxes charged to construction) between income for' financial statement puposes and for federal income tax pur---
poses are accounted for as current reductions in federal income tax provisions.
Research and
'Research and development cests relating to specific construction p'rojects and.to Development '
certain projects in advance of construction are capitalized. All other such. costs are Costs
~
- charged to operating expenses as incurred. All research and development costs in 1979 and 1978 amounting to $15,086,000 and $17,535,000,- respectivelynwere
_ harged to operating expenses.
c
Note D Feder:I Income Tcx 25' Year Ended December 31 (Thousands of DcIlars) 1979 1978 Reconciliation of Net income
$323,912
$309,569 Reported Net Federal income tax 77,200 84,300 income with Federalincome tax deferred 45,620 22,650 Taxableincome
' investment tax credits deferred 20,740 27,950 income before federalincome tax 467,472 444,469 Adjcalments decreasing (increasing) taxable income:
Tax depreciation in excess of houk depreciation:
Classlife system (ADR) 109,430 100,815 Other tax depreciation 67,509 76,382 Deferred recoverable fuel costs 36,340 (18,686)
Nuclear fuel storage costs (10,566)
(8.137)
Allow ance for funds used during construction 5,374 10,331 Overhead costs of construction 36,787 38,706 Other-net (1,628) 2,292 Total 243,246 201,703 Taxable income
$224,226
$242,766 Federalinenme tax:
Amount computed at statutory rates
$103,200
$116,530 Investment tax credits (26,000)
(32,230)
Total
$ 77,200 S 84,300 Charged to:
Operations
$ 55,230
$ 64,490 Otherincome 21,970 19,810 Total
$ 77,200 S 84,300 Federal Income Provisions for deferred federal income taxes consist Tax Deferred of the following tax effects of timing differences between tax and bookincome:
Classlife system (ADR)
$ 50,338
$ 48,390 Deferted recoverable fuelcosts 16,539 (8,970)
Nuclear fuel storage costs (4,860)
(3,900)
Other-net (4,113)
(360)
Total 57,904 35,160 Less: Amortization 12,284 12,510 Total-charged to operations
$ 45,620 S 22,650 Investment Tax in 1979 and 1978 the Company utilized $26,000,000 and $32,230,000, respectively, Credits Deferred of investment tax credits to reduce federal income tax otherwise payable. These amounts included $3,400,000 and $4,280,000, respectively, related to the Com-pany's Tax Reduction Act Stock Ownership Plan (TRASOP). The Company made provision for deferral of these credits which, except for credits related to TRASOP, are amortized ratably over the remaining life of the related properties ($5,260,000 l
in 1979 and $4,280,000 in 1978). The TRASOP credits are used to purchase common stock for employees.
1
- Note C Pension Plan The. pension plan is designed to comply with the Employee Retirement income Secur.ty Act of 1974 (ERISA). Contributions are made solely by the Company based on an actuarial valuation, and are not less than the minimum amount necessary to maintain the plan's qualified status under the Internal Revenue Code and ERISA.
. The Company's policy is to fund annually the current pension cost as such cost ac-w
26 crues and to provide for tho amortization of unfunded past service cost over 40-year periods except that past service cost arising from plan amendments after Jan-uarv 1,1976 are funded over 30 years and actuarial gains or losses are amortized ovt
,5 years.
The pension plan assets, consistino principally of investments stated at estimated market value, amounted to approximately $523,000,000 at December 31,1979 and
$420,000,000 at December 31,1978.
The Company reserves th9 right to amend or terminate the pension plan as provided therein. However, under ENSA, in the event of termination, the Company would become liable to the Pension Benefit Guaranty Corporation of the United States Department of Labor for the amount, if any, by which the actuarial value of vested benefits which are guaranteed under ERISA exceeds the value of the plan's assets allocable to such benefits at the time of termination.
The actuarial value of vested benefits accrued under the pension plan to partic! pants who have attained the minimum service requirements as of December 31,1979 ex-ceeded the market value of the assets of the pension fund as of that date by approxi-mately $330,000,000.
Pension costs amounted to S106,761,000 in 1979 and $98,826,000 in 1978 of which S84,793,000 in 1979 and $76,939,000 in 1978 were charged to operating expenses.
Pension costs allocable to construction are capitalized.
Note D Leases The Company has leases expiring between 1995 and 1997 for gas turbine generat-ing facilioes with a total cost of approximately S120.9 million. The Company has Guaranteed $15.7 minion of notes issued by one of the lessors and interest thereon at 9% percent per annum. The Company has the obligation to maintain the gas tur-bines in good condition and the option at the end of the leases to purchase them at market value.
The Company leases the nuclear fuel for Indian Point No.1. The rental payments on such nuclear fuel have been charged to a deferred account since May 1,1979 by order of the PSC. During 1979 and 1978 the Company also leased fuel for Indian Point No. 2 cnd charged the rental payments to operations.
The Company also leases certain fuel storage facilities, steam boilers, transmission and distribution facilities, substations, office space and business machines, a ther-mcl outfall structure, a demineralization facility, and other items.
Pursuant to PSC rate-making practices, all leases are treated as operating leases for accounting purposes although some meet the criteria for capitalization estab-lished by the Financial Accounting Standards Board. If such leases had been capi-talized from their inception, the balance sheet effect at December 31,1979 and December 31,1978 would have been:
Gross Plant Less Accumulated Depreciation Liabilities (Thousands of Dollars) 1979 1978 1979 1978 Gas turbines
$76,224 S 81,883
$104,751 S107,479 Nuclear fuel 7,381 9,804 7,381 9,804 Buildings 14,156 14,853 17,607 17,934 Other 1,609 1,647 1,969 1,992 Total
$99,370
$108,187
$131,708 S137,209 Of the liabilities stated above, S1.7 million would be classified as current liabilities at December 31,1979 and $4.1 million at December 31,1978.
{
27 H:d th:se I:ases be:n capitalized, the effect on operating expenses before fed-eral income tax would have been an incrcase of S3,637,000 in 1979 and $3,790,000 in 1978. The Company believes that such ircrease would have been reflected in additional revenues if capitalization of such leases were accepted for rate-making purposes by the PSC and that not income would, therefore, have been unchanged.
Rental expense for 1979 and 19,'8 was $36.2 million and $34.6 million,respectively.
Future minimum lease payments under all of the Company's noncancellable leases consisted of the following at December 31,1979:
(Thousandsof Dollars) 1980
$ 20,995 1985-1989 S100,204 1981 20,166 1990-1994 99,321 1982 20,534 1995-1999 49,789 1983 20,223 Later Years 31,103 1984 20,140 Note E Capitalization Common Stock Each share of Preference Stock is convertible into 3.25 sharea of Common Stock at a and Preferred conversion price of $30.79 per share. During 1979, 122,979 shares of Preference Stock Not Subject Stock were conserted into 399,682 shares of Comrnon Stock. At December 31,1979, to Mandatory 1,926,506 shares of Common Stock were reserved for conversion of Preference Redemption
_ Stock. The Preference Stock is subordinate to the $5 Cumulative Preferred Stock and Cumulative Preferred Stock with respect to dividends and liquidation rights.
The Board of Trustees has by resolution determined that an amount equal to the excess of the $100 per share involuntary liquidating value over the stated value of the outstanding $5 Cumulative Preferred Stock will not be applied to the payment of dividends. The amount of such excess is $16,532,000.
Redemption prices of Preferred Stock (in each case plus accrued dividends):
Dec. 31,1979 Through Eventual Minimum S5 Cumulative Preferred Stock
$105.00 S105.00 Cumulative Preferred Stock:
' Series A 103.50 1/31/80 102.00 Series B 104.00 1/31/80 102.00 Series C 101.00 101.00 Series D 102.25 7/31/80 101.00 Series E 103.C4 7/31/81 101.00 Series F 107.00 7/31/82 102.50 Series G 110.00 10/31/80 101.00 Cumulative Preference Stock:
6% Convertible Series B 100.00 100.00 Preferred Stock On November 1 of each year the Company is required to redeem 22.500 of the Subject to Series H shares (or the number of Series H shares then o"tstanding if less than Mandatory 22,500), at a price of $100 per share plus d'vidends accrued to the redemption date.
Redemption Subject, prior to November 1,1982, to certain restrictions regarding refunding op-erations, the Company has the option, on November 1 of each year, to redeem up to 22,500 additional Series H shares at a price of $100 per share, plus accrued divi-dends, up to a maximum aggregate of 250,000 shares. Subject to the same restric-tions, the Series H shares are also redeemabk at the option of the Company at a redemption price of $106.41 through October 31,1980 and thereafter at prices de-clining annually to $100.00 after October 31,2005 (in each case, plus accrued divi-dends). No such optional redemption constihtes a credit against the mandatory redemption requirement.
y
1 28 Seri:s H shar;s may not be call:d for cith;r mandatory or optional redemption while divid:nds aro in art:ars on outstanding shares of $5 Cumulative Preferred Stock or Cumulative Pref:rr:d Stock. N;v;rthcless, the annual mandatory rddemption obliga-tion of the Company with respect to Serics H shares is cumulative and, so long as any Series H shares are outstanding, the Company may not purchase or redeem or pay any dividends on the Common Stock or any other stock ranking junior as to divi-dends or assets to the Cumulative Preferred Stock, except for payments or distribu-tions in Common Stock or such junior stock,if at the time the mandatory redemption requirement for the Series H shares is in s ' cars.
Long Term Debt Total long-term debt maturing in the period 1980-84 is as follows:
1980 1981 1982 1983 1984 S197,000 S75,843,000
$121,757,000 S45,081,000 S40,085,000 Substantially all properties and franchises of the Company, other than expressly ex-cepted property, are subject to the liens securing the Company's First and Refund-ing Mortgage Bonds and the mortgage bonds of acquired companies.
On November 1,1983 and each November 1 therea,ter, the Company is required to redeem S5,000,000 aggregate principal amount of Series LL Bonds at 100 percent of their principal amount plus accrued interest. These amounts are included in the,
debt maturing in 1983 and 1984 shown above.
Note F Compensating Balances The Company has bank lines of credit amounting to $50 million with borrowing l
thereunder to be at such banks' respecti"e pri;ne rates. The credit lines require aver-age compensating balances of up to 11 percent of the credit lines and up to 10 per-cent of amounts borrowed. The ComNny had no bank borrowings during 1979 or 1978. The Company exercised its option to satisfy a portion of such compensating balance requirements during 1979 by maintaining, in il 2 of demand deposits, lesser amounts of 90-day non-interest bearing time deposits. The Company has a similar option to satisfy its 1980 compensating t : lance requirements. Except for such time i
deposits, there are no legal restrictions applicable to the Company's cash balances resulting from its obligation to maintain compensating balances.
l l
Note G Commitments and Contingencies Construction Construction programs for the years 1980 and 1981 are budgeted at $411 million and $472 million.
T ransmission Under a contract with the Power Authority of the State of New York (PASNY), the Contract Company purchases power imported from Hydro-Quebec of Canada over a trans-mission line owned by PASNY. The Company's minimum payment obligations to PASNY for transmission services through 1990 amount to approximately S28.5 mil-tion per year (subject to reduction on account of certain contingent credits). Such minimum payment ob!igations may be increased by PASNY.
Blackout As a result of the 1977 blackout numerous suits and claims are pending against the Company. They include individual suits and claims for an aggregate amount esti-mated as of December 31,1979 at approximately S200 million. Certain purported class action suits have been dismissed but are subject to appeal. It is the judgment of the Company and its General Cnunsel that the Company should prevail in its defense of these suits and claims and that, in any event, they should not have any material adverse effect upon the Campany's financial position and results of operations.
Permits from regulatory agencies require, in effect, that cooling towers be installed
. at the Company's Bowline Point, Roseton, Arthur Kill and Indian Point No.2 units.The Company is contesting these requirements which would result in capital costs to the Company, estimated at $320 million, and substantial increases in operating costs.
29 Cornwall. ~
The Company's investment in th Cornwall' pumped-storago project at D:c:mb:r -
31,1979 cmounted to approximately $36.2 million, excluding $1.7 million for land.
Construction is suspended as a result of protracted licensing and environmentalliti-gation, if unable to construct the plant, the Company will have to write off most of this investment, and will ask the PSC for. permission to treat such amount as an ex-traordinary property loss chargeable to operations and recoverable in rates over a number of years.-
Indian Point No.1 In 197j the Company shut down its Indian Point No.1 nuclear unit because further operation was not permitted until an emergency core cooling system was installed.
-Since 1974 the unit has been used to store its spent nuclear fuel and for research and development. Some of its facilities are used to support operation of Indian Point No. 2 and No. 3.
On' February 11,1980 the U.S. Nuclear Regulatory Commission issued an order
. to show cause why the Company's operating authority for Indian Point No.1 should not be revoked and why the Company should not submit a plan to " decommission"
. the unit. '
The. Company has concluded that, because of economic, technical and licensing considerations, it is not feasible to return Indian Point No.1 to service as an electric generating facility and that those portions of the unit not required for support of the two other units at Indian Point should be retired from service.
At December 31,- 1979 the Company's not investment in the portion of the unit pres-
- ently expected to be retired was approximately $35 million, additional retirement costs, mainly for termination of a nuclear fuel lease, are estimated at $8 million.
The sevenue requirement reflected in the Company's next application for an electric
. rate increase will include the annual effect of amortizing these amounts as an extra-ordinary property loss chargeable to operations over a number of years.
Indian Point No. 2 Nuclear generating units similar in design to the Cumpany's Indian Point No. 2 unit Steam Generators have experienced corrosion problems of varying severity in their steam generators.
Inspections of the Indian Point No. 2 steam generators have revealed tube denting and some deformation of tube support plates. These conditions appear to be pro-gressive. The Company is presently unable to determine the remaining service life of the steam generators. It anticipates that such life will be shorter than the unit's life, but, based on corrosion mitigation measures presently being implemented or under study, the Company estimates that steam generator replacement will not be required prior to the end of 1983, and probably not until some years later. Replace-ment or retubing of the steam generators is presently estimated to cost in the range of.$100 million (exclusive of replacement power costs) and require an outage of up to a year.
Nuclear -
. The Company may be assessed additional premiums under the property damage Insurance-insurance covering its nuclear units if the insurer's losses exceed reserves. As of Decem er 31,1979 the maximum aggregete amount which may be assessed was b
$97.6 million.
Under certain circumstances, in the event of nuclear incider',ts at facilities covered by the federal government's third-party liability indemnification program, the Com-
- pany could be assessed up to $10 million per incident, but not more than $20 million in a calenda'r year.
e i.
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}-
x
30 Not] H Financi:1Inf;rm; tion by Cusines3 Segments (Thousands of Dollars)
Electric Str m 1979 1978 1977 1979 1978 1977 Operating revenues *
$2,729,515 $2.459,155 S2,502,484
$ 240,958 S 223,379 $ 232.469 Operating expenses Fueland purchased power 880,463 726.696 760,417 139,019 128,018-134,441 Other operations and maintenance
- 652,764 589,699 542,271 36,611 53,466 53,050
~
Depreciation 167,084 157,581 154,558 5,194 4,814 4,675 Taxes, other than federalincome 508,862 477,910 474,055 27,699 26,998 27,113 Federal income tax 105,092 103,000 132,554 10,100 (173) 1,242 Tcttioperating expenses
- 2,314,265 2,054,886 2,063,855 218,623 213,123 220,521 Op;ratingincome
$ 415,250 $ 404,269 5 438,629 5
22,335 S 10,256 S 11,948 C;pital expenditures
$ 267,311 S 261,905 S 242,671 6,660 S 16.548 $
12,154 Net utility plant"
$5,306,618 $5,183,742 $5,071,991
$ 182,808 S 181,015 S 170,702 Fuel 167,972 80,942 81,669 158 137 155 Otheridentifiabic assets 129,615 81,058 85,178 10,732 6.302 10,860
- Intersegment rentalsincluded in segments' income but eliminated for totalcompany Operating revenues 6,125 S 8,429 S 10,062 1,421 S
721 S 667 Operating expenses 2,093 1,445 1,337 6,438 8,703 10,245 Gas Total Company 1979 1978 1977 1979 1978 1977 Op; rating revenues *
$ 370,860 S 338,600 $ 299,545
$3,332,786 S3.010,970 S3,022.900 Op: rating expenses Fuel and purchased power 1,019,482 854,714
_894,858 Gas purchased for resale 152,222 117,474 107,478 152,222 117,474 107,478 Other operations and maintenance
- 110,128 106,501 103,035 790,956 739,502 686,758 Depreciation 12,113 11,273 10,644 184,391 173,668 169,877 Taxes, other than federalincome 54,793 51,405 46,673 591,354 556,313 547,841 Federalincome tax 6,398 12.263 3,054 121,590 115,090 136,850 TotIl operating expenses
- 335,654 298,916 270,864 2,859,995 2,556.761 2,543,662 Op: rating income 35,206 S 29,684 S 28,66'1
$ 472,791 S 454,209 5 479,238 Capitalexpenditures 42,304 S 35,295 S 29,366
$ 316,275 S 313,748 S 284,191 Net utility plant"
$ 470,670 S 438,616 S 412,658
$5,960,096 SS,803,373 S5,655,351 Fuel and gas in storage 16,118 14,202 12,454 184,248 95,281 94,278 Other identifiable assets 7,947 7,668 6,132 148,294 94,028 102,170 Other corporate assets 840,572 837,956 902,954 l
l Tctniasseis
$7,133,210 $6,830,638 S6,754,753 i
l
- lntersegment rentals included in I
segments
- income but l
eliminated for total company Operating revenues 1,001 S
1,014 S 869
,8,547 $
10,164 S 11,598
' Operating expenses 16 16 16 8,547 10,164 11,598
" General Utility Plant was allocated to Electric and Gas on the basis of the departmental use of such plant. Pursuant
' to PSC requirements the Steam Department is charged an interdepartmental rent for General Plant used in Steam -
operations which is credited to the Electric and Gas departments,
Note I impact ofInflation (Unaudited) 31 Inflation is a p;rvasiv3 and significant factor in the Company's cconomic environ-ment, and this note is intended to show in an approximate way the impact thereof.
Inflation and The prices charged by the Company are mgulated, and thus the Company is not Regulation so free as a nonregulated enterprise to raise its prices in response to inflation.
Further, except in the case of fuel adjustment clauses, the regulatory process intro-duces a substantial time lag during which increased operating expenses are not recovered.
Moreover, the regulatory process does not permit the Company to recover through depreciation charges any more than the historical cost of its plant assets even though in an inflationary economy the cost to replace such assets upon their retirement will substantially exceed historical cost. Thus, the amount by which infla-tion during 1979 increased the cost to replace the Company's net plant assets is not reflected in the historical cost upon which the Company's rates are based and in that sense is an economic loss to the Company. This loss is shown in the state-ment which follows under the caption " Reduction to net recoverable cost of plant assets" On the other hand, inflation decreases the value of the net amounts owed by the Company. The Company has, for example, a large amount of long-term debt out-standing and, assuming continuing inflation, it will repay this long-term debt with dol!ars having substantially less purchasing power than the dollars which it origi-nally horrowed. The economic gain to the Company by reason of the decrease dur-ing 1979 in the value of the net amounts owed is shown in the statement presented below under the caption " Gain from decline in purchasing power of net amounts owed." During the year 1979 the gain from the decline in value of net amounts owed by the Company was more than offset by the economic loss resulting from the fact that under regulatory requirements the Company is prevented from recover-ing through depreciation the inflation-adjusted cost of its plant assets.
Adjusting for This note adjusts for inflation on both a " constant dollar" basis and a " current Inflation cost" basis. Constant dollar reporting restates certain historical costs in terms of dollars of equal purchasing power. This adjustment is made on the basis of changes in general price levels as measured by the Consumer Price Index for All Urban Con-sumers. A second approach, known as current cost reporting, estimates what it would cost currently to acquire assets of the same service potential as the assets owned. " Current cost" adjusts for changes in the price levels of specific classes of the Company's assets, as measured by the Handy-Whitman Index of Public Utility Construction Costs or other indices or estimates. Depreciation expense for the statement which fonows was developed by applying the existing depreciation rates to the various plant accounts after so adjusting such accounts for inflation. Fossil fuel inventories and related expenseswere not repriced because cost increases are recoverable through fuel adjustment clauses within a relatively s'iort time. Nuclear fuel costs were repriced since a significant time lag exists betwten the expendi-ture for nuclear fuel and its recovery in rates. Operating revenues, other operating expenses, and federal income tax were not restated.
Federal Income Federal income tax policy ignores the effect of inflation in measuring taxable in-Tax Policy _
come, primarily in that higher depreciation expenses under constant dollar and current cost accounting are not tax deductible. Therefore, the C,mpany's effective tax rate, when adjusted for inflation, is 53.7 percent under constant dollar accounting and 76.9 percent under current cost accounting, each of which exceeds its re-ported effective tax rate of 30.7 percent and the statutory rate of 46 percent.
- 32 Statem:nt cf inc:me from Continuing Oper:ti;na Adjusted f;r Changing Prices Adjusted for Adjusted for General Specific Price !
As neported in inflatien Changes conv Year Ended December 31,1979 p, ancia Avera o ve e
(Thousands of Dollars)
Statements 1979 Dollars 1979 Dollars Operating revenues S3,332,786 S3,332,786 S3,332,786 4 Fuel, purchased power and gas 1,171,704 1,174,611 1,174,671 Depreciation 184,391 381,752 462,306 Federalincome tax 121,590 121,590 121,590 Other operating expenses 1,382,310 1,382,310 1,382,310 Total operating expenses 2.859,995 3,060,263 3,140,877,
Operating income 472,791 272,523 191,909 '
Other income and deductions 50,208 50,208 50,208 Federalincome tax on otherincome (21,970)
(21,970)
(21,970) income before interest charges 501,029 300,761 220,147 Net interest charges 177,117 177,117 177,117 income frcia continuing operations S 323,912 S 123,644* S 43,030 Per common share (after preferred dividend requirements)
S4.51
$1.30 S0.01 l
Change in net plant assets during 1979 due to increases in specific prices
$1,679,214 t
l Less: Increase in general price level 1,720,513 Net change during 1979
$ (41,299)
Reduction to net recoverable cost of plant assets S (538,892)
S (416,979)
Gain from decline in purchasing power of l
net amounts owed S 395.400 S 395,400 l
- Income from continuing operations on a constant dollar basis would have been a loss of $415,248,000 if it had included the reduction to net recoverable cost of plant assets of (S538,892,000).
- *At December 31,1979 current cost of plant assets, net of accumulated depre-ciation and amortization of nuclear fuel assemblies and components was
$14,556,852,000 while the historical or net recovereble cost was $5,964,036,000.
Net assets (common shareholders' equity) at December 31,1979 at net recover-able cost for constant dollar and current cost were S2,652,683,000 in average 1979 dollars.
Fiv]Yccr Comp:risoncf Select:d Fin:nci:1 33 D:ta in Av:r:ge 1979 C:nstant Dall;rs Ycar Ended December 31 (Thousands of Dollars) 1979 1978 1977 1976 1975 j
Operating revenues As reported
$3,332,786 S3,010,970 S3,022,900
$2,880,302
$2,667,938 In 1979 purchasing power 3,332,786 3,349,974 3,620,818 3,672,596 3,598,075 Cash dividends per common share
- ,s reported
$ 2.44 S 2.20 S 2.00 S 1.60 S 1.20 In 1979 purchasing power 2.44 2.45 2.40 2.04 1.62 Market price per common share at year-end As reported
$24.25 S23.125
$25.375
$21.00 S15.00
- In December 1979 purchasing power 24.25 26.25 31.375 27.75 20.75 Average consumer price index 217.4-195.4 ~
i81.5 170.5 161.2 December consumer price index 229.9 202.9 186.1 174.3 166.3 I
Additional Financial Data In Average 1975 Constant Dollars
. Operating revenues As reported
$3,332,786
$3,010,970
$3,022,900 S2,880,302 S2,667,938 In 1975 purchasing power 2,471,229 2,483,973 2,684,802 2,723,195 2,667,938 Earnings per common share As reported S 4.51 S 4.29
$ 4.53 S 4.18 S 3.74*
In 1975 purchasing power 3.34 3.54 4.02 3.95 3.74 Cash dividends per common share As reported
$ 2.44 S 2.20 S 2.00 S 1.60
$ 1.20 in 1975 purchasing power 1.81 1.81 1.78 1.51 1.20
- Market price per common share at year-end As reported
$24.25 S23.125
$25.375 S21.00 S15.00 in December 1975 purchasing power 17.50 19.00 22.675 20.00 15.00 Before extraordinaryitem.
Note J Selected Quarterly information (Unaudited) (Thousands of Dollars)
First Second Third Fourth 1979 Quarter Quarter Quarter Quarter Operating revenues
$810,029
$728,613
$937,170
$856,974 Operating income 117,137 93,093 155,735 106,826 Net income 80,280 55,922 118,131 69,579 Netincome for common stock 69,568 45,275 107,538 59,049 Earnings per common share
$1.12
$.72
$1.73 S.94 1978 Operating revenues
$814,708
$688,005
$800,664 S707,593 Operating income 134,179 87,384 140,719 91,927 Net income 97,922 51,607 104,322 55,718 Netincome for common stock 87,007 40,733 93,494 44,957 Earnings per common share
$1.41 S.65 S1.51 S.72 In the opinion of the Company these amounts include all adjustments, consisting only of normal recurring accruals, necessary for a fair presentation.
34 Statistics 1979 1978 1977 1976 1975 Custrmers-Average for year E:3ctric 2,705,158 2,693,567 2,708,579 2,739,257 2,807,278 Gas 1,029,067 1,036,144 1,054,689 1,086,383 1,148,000 Steam 2,228 2,351 2,462 2,512 2,532 S,lsa volumes Electric (Thousands of kwh)
Con Edison customers 26,689,793 26,597,009 27,850,286 31,923,869 32,417,600 Delivery service to PASNY 6,080,248 5,999,066 4,607,614 705,779 Other electric utilities (a) 2,661,192 2.645,385 2,153,284 283,032 133,184 Gas (Thousands of cu. f t )
73,873,627 72,479,694 69,551,045 75,025,554 73,059,589 Steam (Thousands of Ibs.)
29,566,747 32,993,473 34,326,848 35,571,453 34,740,424 Oparating revenues (000 omitted)
Electric sales Con Edison customers S 2,496,041 S 2,262,166 S 2,353,817 S 2,354,216 S 2,252,658 PASNY delivery charges 103,125 94,567 74,049 11,450 Sales to other electric utilities 110,177 84,116 54,764 7,538 4,197 Ciber electric revenues 14,047 9,877 9,792 8,639 9,384 Total 2,723,390 2,450,726 2,492,422 2,381,843 2,266,239 Gas sales revenues 367,325 334,629 296,575 268,991 204,707 Other gas revenues 2,534 2,957 2,101 2,179 1,756 Total 369,859 337,586 298,676 271,170 206,463 Steam sales revenues 239,383 222,681 231,805 226,898 194,410 Other steam revenues 154 (23)
(3) 391 826 Total 239,537 222,658 231,802 227,289 195,236 Tctrl
$ 3,332,786 S 3,010,970 S 3,022,900
$ 2,880,302 S 2,667,938 (a) Includes thousands of kwh sold to PASNY and included in delivery service to PASNY 921,833 420,223 758,926 72,115
35 1979 1978 1977 1976 1975 Taxas, other than federalincome (Ouv,;rnitted)
Property taxes 363,014 S
352,592 S
345,497 S
328,869 296,768 Revenue taxes 183,013 165,092 167,207 164,123 151,801 Other S?,686 73,268 69,327 68,336 66,070 Total 628,713 590,952 S
582,031 S
561,328 S
514,639 Charged to:
Operating taxes 591,354 S
556,313 547,841 S
525,904 S
476,135 Operations-principally fuel 23,922 20,099 22,668 23,627 23,359 Construction and other accounts 13,437 14,540 11,522 11,797 15,145 Total 628,713 590,952 S
582,031 S
561,328 S
514,639 Op:: rating income (000 omitted) (b)
Electric 415,250 S
/04,269 S
438,629 409,402 S
404,535 Gas 35,206 39,684 28,661 29,579 16,734 Steam 22,335 10,256 11,948 16,383 5,692 Total 472,791 S
454,209 479,238 S
455,364 S
426,961 Sharcholders at December 31 Common 248,155 257,918 265,374 275,228 287,888 Preferred 50,519 53,809 56,623 59,381 61,404 Total 298,674 311,727 321,997 334,609 349,292 Shares outstanding at December 31 Common 62,574,95,9 62,175,271 61,785,247 61,548,529 61,548,282 Preferred 7,313,09C 7,458,569 7,601,146 7,674,262 7,674,338 Employses at December 31 23,074 23,467 23,668 24,319 24,645 Active payroll (000 omitted)
Operating 401,602 S
370,053 S
342,728 318.106 S
290,196 Construction 130,458 135,540 129,798 127,156 117,616 Total 532,060 S
505,593 S
472,526 S
445,262 S
407,812 (b) Because of the substantial amounts of interest charges (which are not identified with any particular service) in the Company's income statement, it is not practicable to state the contribution of each service to net income.
36 El:ctric System C:n Edison Customers Only N;t G:nerating Capability At Time O!
Con Edison Heat Crptcity System Peak Period-Kilowatts Customer Peak
- Rate Residential Ystr o t Ca a t ur hases e ou ces Dato Kilowatts h
at er per Kw 1979 9,400,000 9,438,000 1,109,000**
10,547,000 August 2 6,702,000 11,600 3,255 10.53 1978 9.454,000 9,493,000 296,000**
9,789,000 August 17 6,714,000 11,312 3,255 9.6 1977 9,659,000 9,796,000 391,000**
10,187,000 July 21 7,193,000 11,206 3,300 9.6 1976 9,880,000 10,030,000 437,000**
10,467,000 June 24 7,579,000 11.094 3,314 8.8 l
1975 10.015,000 10,126.000 269,000 10,395,000 June 24 8,051,000 11,221 3,300 8.2
- One hour net maximum load distributed to Con Edison customers.
- Excludes reserve credit for PASNY purchases.
1 El:ctric System l
Ccn Edison Franchise Area j
including Delivery Service to PASNY Customers Capability At Time of System Peak Period-Kilowatts Franchise Area Peak
- Net Generating Net Firm Total Capacity Yatr Capacity *
- Purchases"*
Resources Date Kilowatts l
l 1979 11,178,000 902,000 12,080,000 August 1 7,789,000 1978 11,141,000 164,000 11,305,000 August 17 7,698,000 1977 11,169,000 257,000 11,426,000 July 21 8,232,000
- One hour net maximum load distributed in franchise area.
- *lncludes the capacity of PASNY's Astoria No. 6 and Indian Point No. 3.
- *
- Excludes firm purchases from Astoria No. 6 and Indian Point No. 3 and reserve credit from other PASNY purchases.
Market Price Range on New York Stock Exchange
- and Dividends Paid on Voting Stock 1979 1978 Dividends Dividends High Low Paid High Low Paid Common:
1st Quarter.
$25
$23%
$.61 S25 %
S22W S.55 2nd Quarter..
24 %
21
.61 23 %
21 %
.55 3rd Quarter.
24 %
22 %
.61 24 %
227/8
.55 4th Quarter.
24 %
21 %
.61 24 %
21 %
.55
$5 Cumulative Preferred:
1st Quarter.
$49%
$46%
$1.25
$53%
$50%
$1.25 2nd Quarter.
50 45 %
1.25 51 %
49W 1.25 3rd Quarter.
50 45 %
1.25 51 W 49W 1.25 4th Quarter.
46 %
39 %
1.25 50W 46 %
1.25
- Price ranges are based on prices as reported on the New York Stock Exchange consolidated tape, which includes transactions on other exchanges.
m
1979 Sal:s end Rsv:nuss 37
% increase
% increase Thousands of or (Decrease)
Sales or (Decrease)
El;ctric Kilowatt-hours from 1978 Revenues from 1978 (Ir.cussnds of Dohars)
Residential 7,707,012 0.4 S 810,732 10.0 Commercial-industrial 18,517,238 0.7 1,649,021 11.2 Railroads and railways 118,447 (7.4) 9,448 (5.3)
Public autborities 347,096 (14.9) 26,840 (14.7)
' Total sales to Con Edison customers 26,689,793 0.3 2,496,041 10.3 Delivery service to PASNY customers 6,080,248 1.4 103,125 9.1
. Total sales in franch se area 32,770,041 0.5 S2,599,166 10.3
, Sales to other electric utilities 2,661,192*
0.6 S 110,177 31.0
- See footnote (a) on Statistics, page 34.
Residential-Saies directly to residential customers and to religious institutions.
Commercial-industrial-Sales to all types of general customers, also to customers who include residential or commercial tenant-use in the rent and to customers who resell energy to commercial and industrial tenants.
Railroads and railways-Sales to certain electrif;ed railroads.
Public authorities-Sales to municipal and other governmental authorities.
Delivery service to PASNY customers-Electricity supplied by PASNY and distrib-uted by Con Edison to certain governmental customers.
% Increase Thousands of or (Decrease)
Sales
% increase Gas cubic Feet from 1978 Revenues from 1978 se (Thousands of Dollars)
Firm sales j
' Residential 36,984,050 (3.8)
S217,953 4.5 General 26,132,670 0.4 118,028 10.4 Total firm sales 63,116,720 (2.1) 335,981 6.5 Interruptible sales 10,756,907 34.3 31,344 64.0 Total 73,873,627 1.9 S367,325 9.8 Residential-Sales directly to residential customers and to religious institutions, in-cluding sales for heating.
General-Sales to commercial, industrial and governmental customers who use gas for various purposes in their operations.
Interruptible-Sales to certain general-use customers who use gas on an interrupti-ble basis.
Thousands of
% (Decrease)
Sales
% Increase St:am Pounds from 1978 Revenues from 1978 (Thousands of oollars)
General 1,386,639 (10.4)
$ 15,122 2.4 Annual power 22,736,182 (10.7) 181,089 7.9 Apartment housa 5,443,926 (8.9) 43,172 7.7 Total 29,566,747 (10.4)
S239,383 7.5 General-Sales to relatively small use customers.
Annual power-Sales for power, or power and heat use.
Apartment house-Sales to apartment houses and hotels.
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Myles V. Whalen, Jr.
William S. Renchard P v' 9
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- Jonald C. Platten ment) han nun of the Board Chomical low York Corporat on and Chemma; 3ank New Yoik. N Y
M: nag ment Chairmanof theBoard Vice Fresidents Raymond P. Priore Charles F. Luce Systems and information Processing Administrative Assistant VincentJ.Brady to the Chairman Purchasing Murray Selman Miriam V. Mannix Bronx Division Stephen B. Bram President System Operation and Charles F. Soutar Arthur Hauspurg Central Substation Central Services John F. Burgess Joy Tannian Executive Vice Presidents Queens Division Rate Proceedings j
William J. Cahill, Jr.
A. Norman Terreri l
Joseph D. Block Quality Assurance.
Technical Services Administration Reliability and Peter Zarakas Nuclear Licensing Morris Dantzker Engineering Division Operations Warren B.Coburn Brooklyn Division John V.Thornton Finance John E. Deegan, Jr.
Planning Senior Vice Presidents George J. Delaney Westchester Division Carroll H. Dunn Salvatore Fasciana Construction, Engineeririg Construction and Environmental Affairs Joseph T. Hydok Joyce Hergenhan On Loan to the City of Public Affairs New York as Director Aaron S. Sadove of Operations Employee Relations Edward G. Kelleher Bertram Schwartz Environmental Affairs Planning, Fuel Supply, Edward W. Livingston l
Inter-Utility Affairs and Government and Load Management Community Relations George W. Lowell General Counsel Gas Operations Walter A. Morris,Jr.
Raymond J. McCann General Auditor Manhattan Division Thomas J. Galvin Eugene R. McGrath Secretary Power Generation Archie M. Bankston Donald L. Miller Controller Personnel CarlW. Greene Bertram D. Moll Treasurer Fuel Supply and Edward J. Carey Inter-Utility Affairs GeneralTax Counsel Leonard D. Murphy Frederick J. Hunziker, Jr.
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L Annual Stockholders' Meeting Additional Information g
The Annual Meeting of Stockholders will be A supplement containing addmanal fmanc.
(l held at 1:30 P.M. on Monday, May 19,1980, and operating data for the latest 10-year r=
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in Felt Forum, Madison Square Garden Cen-iod may be obtained by writing to tne seen; ter, 8th Avenue and 33rd Street, New York, tary of the Company.
NY. Proxies will be requested from stock-holders when the notice of meeting and proxy The Company reports details concerning g.
sta ment are mailed on or about April 7' its operations and other matters annually to the Securities and Exchange Commission F
on Form 10 K, which is available without charge to the Company's security holders Stock Listing on written request to:
The Common Stock is listed on the New York, Archie M Bankston
, Midwest, Pacific and Amsterdam Stock Ex-Secretary F -
changes. The SS Cumulative Preferred Stock, Con Edison the Cumulative Preferred Stock, 4.65% Se-4 Irving Place i
ries C, and the Cumulative Preference Stock, New York, NY 10003.
'H 6% Convertible Series B, are listed on the
{j New York Stock Exchange.
wn Transfer Agents The Company's Investor Services Center,30 Flatbush Avenue, 7th Floor, Brooklyn, NY.
Mail Address: P.O. Box 149, Cooper Station, p'.
New York, NY 10003. Toll-free telephone:
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_ 800 522-5522 in New York State; 800 221-f>
' 66G4 outside of New York State.
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. The Common Stock may also be transferred
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. at The First National Bank of Chicago,1 First National Plaza, Chicago,' IL'60670, and at;.
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. Bank of America National Trust and Savingst
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- registered at The First National Bank of Chi x
. cago;il First National Plaza, Chicago, IL -
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c 60670, and at Bank of America National Trust,
- and ' Savings ' Association, 55 Hawthorne
- Street,' San Francisco, CA 94105. - <
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