Consolidated Edison, Inc. (ED, Financial) has announced that its subsidiary, Orange and Rockland Utilities, Inc. (O&R), in collaboration with the New York State Department of Public Service (NYSDPS) and other parties, has entered into a joint proposal for new electric and gas rate plans. This proposal covers a three-year period from January 2025 through December 2027 and is currently pending approval by the New York State Public Service Commission (NYSPSC).
The joint proposal outlines several key financial adjustments and strategies. Notably, it recommends no change in base rates for the first year, followed by increases of $17.7 million in both the second and third years. Additionally, the proposal includes provisions for deferring property taxes, with limits set at 90% of the difference from amounts reflected in rates. These deferrals are subject to an annual maximum impact on return on common equity, decreasing from 10.0 basis points in the first year to 5.0 basis points by the third year.
Energy efficiency costs are also addressed in the proposal, with plans to defer these costs as regulatory assets and amortize them over a 15-year period. The balances will be reconciled to the revenue requirement effect of actual costs incurred compared to rate plan targets. Should the NYSPSC authorize modified energy efficiency spending budgets, O&R will adjust for any variance between the level in rates and the authorized budgets, ensuring collection or refund to customers in the next base rate case.
Furthermore, the proposal includes a reconciliation mechanism for uncollectible expenses and late payment charges, with a combined annual threshold of $0.9 million. Once this threshold is met, O&R will defer the variance between actual expenses and the level set forth in rates above the threshold. Recovery or refunds will be managed via surcharge or sur-credit, with surcharge recovery capped to ensure no more than a 0.5% total customer bill impact annually.
This strategic proposal aims to balance financial stability for O&R while addressing customer needs and regulatory requirements. The approval of the NYSPSC will be a critical next step in implementing these proposed changes.
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