Consolidated Edison (ED), NYSPSC Enter Joint Proposal

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April 20, 2015 5:11 PM EDT

On April 20, 2015, Consolidated Edison Company of New York, Inc. (CECONY) (NYSE: ED) entered into a Joint Proposal with the staff of the New York State Public Service Commission (NYSPSC) and other parties for the extension of CECONY’s current electric rate plan for an additional year through 2016. Under the Joint Proposal, which is subject to NYSPSC approval, the rate plan for 2016 does not include a rate increase or decrease. The rate plan for 2016 includes additional revenues from the amortization to income of net regulatory liabilities. The following table contains a summary of the rate plan for 2016:

Effective period January 2016 – December 2016
Base rate changes None(a)
Amortizations to income of net regulatory (assets) liabilities Additional $123 million of net regulatory liabilities(b)
Other revenue sources Continuation of retention of $90 million of annual transmission congestion revenues
Revenue decoupling mechanism Continuation of reconciliation of actual to authorized electric delivery revenues
Recoverable energy costs Continuation of current rate recovery of purchased power and fuel costs
Negative revenue adjustments Continuation of potential penalties (up to $400 million annually) if certain performance targets are not met
Cost reconciliations Continuation of reconciliation of expenses for pension and other postretirement benefits, variable-rate tax-exempt debt, major storms, property taxes(c), municipal infrastructure support, the impact of new laws and environmental remediation to amounts reflected in rates
Net utility plant reconciliations

Target levels reflected in rates:

Transmission and distribution: $17,929 million

Storm hardening: $268 million

Other: $2,069 million

Average rate base $18,282 million
Weighted average cost of capital (after-tax) 6.91 percent
Authorized return on common equity 9.0 percent
Earnings sharing Most earnings above an annual earnings threshold of 9.6 percent are to be applied to reduce regulatory assets for environmental remediation and other costs
Cost of long-term debt 5.09 percent
Common equity ratio 48 percent

(a)The impact of 2014 and 2015 base rate changes under the current electric rate plan will continue to be deferred. $249 million of annual revenues collected from electric customers will continue to be subject to potential refund following NYSPSC staff review of certain costs. Revenues will continue to include $21 million as funding for major storm reserve.
(b)The Joint Proposal also provides for continuation of the amortization of $107 million of the regulatory asset for deferred Superstorm Sandy and other major storm costs and recommends that the costs recoverable from customers be reduced by $4 million, the costs no longer be subject to NYSPSC staff review and the recovery of the costs no longer be subject to refund.
(c)Deferrals for property taxes will continue to be limited to 90 percent of the difference from amounts reflected in rates, subject to an annual maximum for the remaining difference of not more than a 10 basis point impact on return on common equity.

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