8-K: Con Edison lifts 2025 EPS view; Q3 beats

Con Edison posted higher Q3 profit, nudged full‑year adjusted EPS guidance to the upper half of its range, and advanced a three‑year New York rate plan with a 9.4% ROE.

Summary

• Q3 2025 GAAP EPS was $1.91 (vs. $1.70 in Q3 2024); adjusted EPS (non-GAAP) was $1.90 (vs. $1.68).
• Q3 2025 net income for common stock: $688 million (vs. $588 million in Q3 2024).
• YTD 2025 GAAP EPS: $4.84 (vs. $4.37 in YTD 2024); YTD adjusted EPS: $4.82 (vs. $4.42).
• 2025 adjusted EPS guidance narrowed to $5.60–$5.70 (previously $5.50–$5.70); excludes MVP basis accretion (~$(0.03)/sh after tax) and other non-core items.
• Entered a joint proposal for CECONY’s 2026–2028 electric and gas rate plans (subject to NYSPSC approval) with a 9.40% ROE and 48% equity ratio.
• Proposed CECONY electric base rate increases (shaped): $234m (2026), $410m (2027), $421m (2028); gas: $28m, $69m, $70m; total annual shaped bill impact: electric 2.80%, gas 2.01%.
• Average CECONY electric rate base forecast under joint proposal: $32.935b (2026), $35.149b (2027), $39.174b (2028); gas: $11.485b, $12.050b, $12.615b.
• Planned capital investments at CECONY (electric): $4.55b (2026), $4.474b (2027), $4.712b (2028); gas: $1.093b, $1.057b, $1.065b.
• Declared a quarterly dividend of $0.85 per share on October 16, 2025.
• Financing activity YTD 2025: ~$1.308b common equity issued (including $677m forward settlement), $250m O&R 5.99% debentures due 2055, $500m new 364‑day revolver, and $200m term loan draw.
• Con Edison Transmission owns ~6.6% of Mountain Valley Pipeline (MVP); carrying value $162m; cash contributions $530m; Q3 2025 pro rata MVP earnings ~$6m after tax.
• MVP Boost expansion filed at FERC in October 2025 to add 600 MDth/d capacity (project cost $468.4m; Con Edison share ~$31m). Strategic alternatives for MVP under evaluation.
• NY Transco settlements (subject to FERC approval) increase base ROE to 9.99% and equity ratio to 54% for TOTS and NYES, retroactive to March 12, 2025.
• Regulatory developments include enhanced energy affordability programs (effective 2026), UTEN pilot cost increases (CECONY to $415m; O&R to $112m; approvals pending), and NYISO-identified NYC reliability needs from summer 2026–2030.
• CECONY actual regulated ROE (12 months ended 9/30/25): 10.12% vs. 9.25% authorized; O&R overall actual ROE: 9.93% vs. 9.61% authorized.

Sentiment

Score: 7

Explanation: Solid Q3 results, narrowed/raised guidance, and a constructive three-year rate proposal bolster visibility; partially offset by equity dilution, project cost inflation, and regulatory/program affordability headwinds.

Positives

• Raised 2025 adjusted EPS guidance to $5.60–$5.70 (upper half of prior range).
• Q3 2025 adjusted EPS up 13% year over year ($1.90 vs. $1.68); GAAP EPS up 12% ($1.91 vs. $1.70).
• Entered a three-year joint rate proposal (2026–2028) with a 9.40% ROE and 48% equity ratio, supporting rate base and earnings visibility (subject to NYSPSC approval).
• CECONY actual ROE exceeded authorization (10.12% vs. 9.25%) for the 12 months ended 9/30/25; O&R also above authorized (9.93% vs. 9.61%).
• Strong multi-year capital plan aligned to demand growth and resilience: 14 new substations by 2030 and ~$17b in CECONY investments over 2026–2028.
• Dividend continuity: $0.85 per share declared on October 16, 2025; 51 consecutive annual dividend increases (Dividend King).
• FERC settlements (pending approval) raise base ROE to 9.99% for key NY Transco assets, enhancing CET returns.

Negatives

• Equity dilution weighed on EPS (Q3 2025 dilution impact of approximately $(0.08) per share).
• Utility-Scale Thermal Energy Network (UTEN) project cost estimates increased materially (CECONY: $415m from $255m; O&R: $112m from $46m), with excess budgets pending approval.
• Customer affordability headwinds: forecast growth in CLCPA bill-share by 2029 and expansion of energy affordability programs (budget cap rising from 2% to 3% of revenues).
• MVP exposure remains uncertain with strategic alternatives under evaluation and new MVP Boost capex (~$31m share) contemplated.
• CECONY gas weld film issue ties $33.3m of annual gas revenue requirement (2026–2028; $100m aggregate) to a rate adjustment mechanism subject to refund.
• NYISO flagged a NYC reliability need from summer 2026–2030, implying potential incremental investment and execution risk.
• Ongoing tariff and supply chain pressures could elevate material costs and affect project timing.

Risks

• Regulatory approval risk: CECONY’s 2026–2028 electric and gas joint proposal (including 9.40% ROE, 48% equity ratio, and shaped rate changes) is subject to NYSPSC approval.
• UTEN pilot budget increases (CECONY to $415m; O&R to $112m) require NYSPSC authorization for amounts beyond previously approved levels.
• NYISO-identified bulk system reliability need in New York City from summer 2026–2030 introduces planning and execution risk; timing of related projects (e.g., CHPE, Empire Wind, Propel NY) is uncertain.
• MVP investment uncertainty: Con Edison Transmission is evaluating strategic alternatives; MVP Boost expansion requires FERC approval and would add ~$31m of capex exposure.
• Customer affordability mandates: Enhanced Energy Affordability Programs expand eligibility and raise program budgets to 3% of revenues (beginning 2026), affecting collections and cost recovery.
• CECONY gas weld film matter: $33.3m annual gas revenue requirement (2026–2028) recovered through a rate adjustment mechanism subject to refund.
• Exposure to tariffs, inflation, and supply chain disruptions could raise costs and impact schedules.
• Access to capital markets is required to fund large multi-year investments; adverse conditions could increase financing costs.
• Cybersecurity and operational risks, including potential facility failures and workforce challenges, could adversely affect operations.
• Environmental/climate-related risks, including resilience costs and extreme weather impacts, could increase expenditures.

Future Outlook

Management targets 2025 adjusted EPS of $5.60–$5.70 and expects multi-year earnings support from a three-year CECONY rate plan (9.4% ROE, 48% equity ratio) if approved, with sizable capital investment in substations, transmission, and resiliency through 2028 and continued dividend growth. The company plans to update forecasts through 2030 in February 2026 and may pursue regulated backstop solutions to NYISO-identified NYC reliability needs. Strategic alternatives for MVP are under evaluation while FERC approval is sought for MVP Boost and higher NY Transco ROEs.

Management Comments

• “We continue to deliver the safe, resilient grid New Yorkers rely on and have reached a Joint Settlement Agreement on a three-year investment plan that, if approved, will fund critical infrastructure investments while keeping affordability and reliability front and center.” – Tim Cawley, Chairman and CEO
• “Landmark projects, including New York’s first all-electric skyscraper, the new Queens soccer stadium, and JFK Airport’s redevelopment, highlight growing demand for reliable energy.” – Tim Cawley
• “We plan to complete construction of 14 new substations, along with substation upgrades, transmission lines and storm resiliency measures by 2030.” – Kirk Andrews, SVP and CFO
• “The revenue predictability that our business model provides, our strong balance sheet and our investments make Con Edison an attractive option for investors.” – Kirk Andrews

Industry Context

The results reflect the broader U.S. regulated utility trend of earnings supported by rate base growth, grid modernization, and electrification investments. New York’s framework (decoupling, timely recovery mechanisms, and formulaic ROE setting) provides visibility similar to peers, while affordability programs and CLCPA-driven policies shape cost recovery and capital allocation. Regional reliability needs and offshore wind uncertainties are driving proactive transmission planning across Northeast utilities.

Comparison to Industry Standards

• Authorized ROE: The proposed 9.40% ROE for CECONY aligns with the recent U.S. regulated electric utility range (~9%–10%), and is comparable to outcomes seen for large-cap peers in recent rate cases.
• Earnings mix: A pure-play regulated profile with revenue decoupling and weather normalization resembles structures at peers like Eversource and PSEG, contrasting with mixed regulated/merchant models (e.g., NextEra’s competitive renewables).
• Rate base growth: Multi-year visibility to mid- to high-single-digit rate base growth through 2028 is consistent with large-cap regulated utilities pursuing grid upgrades and electrification (e.g., Duke, Dominion, and National Grid’s U.S. operations).
• Dividend profile: 51 consecutive annual dividend increases places Con Edison among Dividend Kings in the utility sector, comparable to best-in-class dividend track records.
• Transmission returns: Proposed 9.99% base ROEs for NY Transco assets (subject to FERC approval) are in line with FERC-jurisdictional returns seen for regional transmission projects, supporting competitive CET returns.

Stakeholder Impact

• Shareholders: Higher Q3 EPS and guidance improved; dividend maintained at $0.85 per share; long-term earnings supported by rate base growth.
• Customers: Shaped base rate increases and expanded affordability programs aim to balance infrastructure investment with bill impacts (electric ~2.80% and gas ~2.01% annual bill impacts).
• Regulators: Joint proposal provides a multi-year framework with reconciliation mechanisms and affordability provisions.
• Creditors: Continued access to capital with new revolver, term loan utilization, and long-dated debt issuance supports funding of capital plans.
• Communities: Planned investments in resilience and capacity (including substations and transmission) support reliability amid electrification and major development projects.

Next Steps

• Seek NYSPSC approval of the CECONY 2026–2028 electric and gas joint rate proposal (9.40% ROE, 48% equity ratio).
• Update companywide forecast through 2030 in February 2026.
• Pursue FERC approval for MVP Boost and finalize evaluation of strategic alternatives for MVP and Honeoye Storage Corporation.
• Implement enhanced Energy Affordability Program changes beginning in 2026, including cost recovery plans and tracking.
• Advance UTEN pilot to Stage 3 (customer enrollment and construction) upon NYSPSC approval of revised budgets.
• Develop potential regulated backstop solutions in response to NYISO’s NYC reliability need (2026–2030).
• Construct 14 new substations and associated grid upgrades by 2030.

Key Dates

Recommendation

Results and guidance were modestly better, and the proposed three-year NY rate plan increases visibility; however, equity dilution, rising program/affordability obligations, project cost inflation (UTEN), and MVP uncertainty temper near-term upside. Maintain a hold pending NYSPSC approval of the joint proposal and clarity on MVP strategy.

Keywords

Con Edison, ED, Q3 2025 earnings, adjusted EPS, guidance, rate case, NYSPSC, CECONY, Orange and Rockland, rate base, capital investments, Mountain Valley Pipeline, MVP Boost, New York Transco, dividend, ROE, electric reliability, energy affordability, UTEN, CLCPA