10-K: Con Edison Reports Strong 2025 Earnings, Outlines Major Capital Plans

Consolidated Edison, Inc. announced a significant increase in net income for 2025, driven by utility rate plan approvals and substantial planned investments in energy delivery systems through 2030.

Summary

• Con Edison reported 2025 net income for common stock of $2,023 million ($5.66 per share), an increase from $1,820 million ($5.26 per share) in 2024.
• Adjusted earnings (non-GAAP) for 2025 were $2,038 million ($5.70 per share), up from $1,868 million ($5.40 per share) in 2024.
• The Utilities (CECONY and O&R) invested $4,946 million in 2025 to upgrade energy delivery systems, while Con Edison Transmission invested $50 million.
• Planned capital investments for the Utilities from 2026 through 2030 are projected to be $6,533 million (2026), $6,592 million (2027), $6,939 million (2028), $8,524 million (2029), and $8,571 million (2030).
• Con Edison Transmission expects to invest $62 million (2026), $167 million (2027), $213 million (2028), $75 million (2029), and $17 million (2030) in electric transmission.
• The New York State Public Service Commission (NYSPSC) approved new electric rate plans for CECONY for 2026-2028, providing for increases of $222 million (2026), $473 million (2027), and $329 million (2028).
• CECONY's new gas rate plan for 2026-2028 includes rate changes of $(46) million (2026), $170 million (2027), and $93 million (2028).
• CECONY filed a request with the NYSPSC for a steam rate increase of $66 million, effective November 1, 2026.
• Con Edison Transmission completed the sale of approximately 40 percent of its 6.6 percent interest in Mountain Valley Pipeline, LLC (MVP) in January 2026 and expects to sell the remaining interest in the first half of 2026 for a total aggregate consideration of $357.5 million.
• CECONY and O&R recorded $54 million and $1 million, respectively, in earnings adjustment mechanisms and positive incentives in 2025, primarily for achieving energy efficiency and vehicle electrification measures.

Sentiment

Score: 7

Explanation: StockSavvy.ai views this as a positive report for a regulated utility, demonstrating solid earnings growth, significant planned capital investments in critical infrastructure and clean energy, and favorable rate plan approvals. The identified risks are typical for the industry, and the company appears to be proactively managing them.

Positives

• Strong financial performance with 2025 net income for common stock increasing to $2,023 million ($5.66/share) from $1,820 million ($5.26/share) in 2024.
• Adjusted earnings also showed significant growth, reaching $2,038 million ($5.70/share) in 2025, up from $1,868 million ($5.40/share) in 2024.
• Approved electric and gas rate plans for CECONY for 2026-2028 provide for substantial rate increases, ensuring revenue stability and recovery of costs.
• Significant planned capital investments by the Utilities ($37.1 billion from 2026-2030) and Con Edison Transmission ($534 million from 2026-2030) indicate commitment to infrastructure modernization and clean energy transition.
• Achievement of energy efficiency and vehicle electrification measures resulted in $54 million (CECONY) and $1 million (O&R) in earnings adjustment mechanisms and positive incentives in 2025.
• Successful sale of a portion of the Mountain Valley Pipeline interest in January 2026, with the remaining interest expected to be sold in H1 2026 for a total of $357.5 million, providing capital.
• Forecasted average annual increase in electric peak demand for O&R (4.1%) and CECONY (0.7%) over the next five years, indicating continued load growth.
• Forecasted average annual increase in gas peak demand for O&R (1.2%) and CECONY (0.2%) over the next five years.
• Effective internal control over financial reporting as of December 31, 2025, as concluded by management and audited by PricewaterhouseCoopers LLP.
• A quarterly dividend of 88.75 cents per common share was declared on January 27, 2026, payable on March 16, 2026.

Negatives

• CECONY's gas rate plan for 2026 includes an initial rate decrease of $(46) million.
• CECONY's steam operating income decreased to $5 million in 2025 from $13 million in 2024.
• O&R's gas operating income decreased to $45 million in 2025 from $49 million in 2024.
• Con Edison Transmission's net income for common stock decreased significantly to $14 million in 2025 from $45 million in 2024, primarily due to transaction costs, impairment loss related to Honeoye, and remeasurement of deferred state income taxes related to MVP.
• Aged accounts receivable balances remain high: CECONY $1,427 million (December 31, 2025) and O&R $27 million (December 31, 2025), impacting liquidity.
• The NYSPSC is conducting a focused operations audit of the Utilities' financial accounting for income taxes, investigating an inadvertent understatement of federal income tax expense for ratemaking purposes, which may be material.
• CECONY discovered non-conforming gas and steam main welds, leading to an NYSDPS investigation into compliance and prudence of oversight, with $33.3 million in annual gas revenue requirement subject to refund.
• The U.S. Department of the Interior issued stop work orders to offshore wind projects (Sunrise Wind and Empire Wind 1) in December 2025, citing national security risks, though preliminary injunctions allowed construction to resume in January/February 2026.
• The Climate Change Superfund Act in New York State requires 'responsible parties' to pay $75 billion over 25 years, and while the Utilities are not directly defined as responsible parties, they may be subject to other requirements.
• Con Edison's total shareholder return (15.16%) in 2025 lagged the S&P 500 Index (17.86%).

Risks

• Extensive regulation by federal, state, and local agencies, with potential for substantial penalties for violations, new laws, regulations, or reinterpretations that could adversely affect operations.
• Utilities' rate plans may not provide a reasonable return, and actual costs may exceed levels provided in rate plans, with regulators potentially denying cost recovery if deemed imprudently incurred.
• Inability to effectively manage customer accounts receivable balances and obtain recovery in rates for carrying costs and write-offs could materially impact businesses and liquidity, especially with continued slow recovery of aged balances.
• Failure of, or damage to, facilities (electric, gas, steam) due to natural disasters, climate change impacts (sea level rise, flooding, high winds, extreme heat/cold), or operational errors could result in bodily injury or death, property damage, hazardous substance release, or extended service interruptions.
• Heightened risk of cyber attacks on critical energy infrastructure and information systems, potentially leading to operational disruption, financial losses, data theft, increased regulation, litigation, penalties, and reputational damage, with emerging AI technologies introducing new cyber risks.
• Failure of business processes, information systems, or third-party contractors; inability to attract and retain qualified employees and contractors; or employee/contractor misconduct could adversely affect operations, liquidity, and result in substantial liability or penalties.
• Exposure to risks from environmental consequences of operations, including increased costs related to climate change adaptation and compliance with emissions reduction regulations (e.g., CLCPA, Climate Mobilization Act).
• Liability for hazardous substances (asbestos, PCBs, coal tar) at current or former sites, with potential for material, unquantifiable losses.
• Con Edison's ability to pay dividends or interest depends on dividends from subsidiaries, which are limited by NYSPSC regulations.
• Changes to tax laws, regulations, or interpretations thereof could have a material adverse impact on financial health, credit ratings, and liquidity.
• Requirement to access capital markets for significant funding needs ($37.1 billion for Utilities over the next five years); changes in financial market conditions or credit ratings could affect the timing and cost of financing.
• Disruptions in wholesale energy markets, increased commodity costs, or failure by energy suppliers/operators could adversely affect the ability to meet customer needs and financial performance, with extreme cold weather potentially leading to supply interruptions and large-scale outages.
• Failure to identify, plan, and execute strategies to address changes in the external business environment (competition, public policy, technology, customer behavior) could impact the value of energy delivery facilities and transmission projects, and future investment opportunities.
• Global and U.S. supply chain disruptions, shortages of materials, equipment, labor, and other resources leading to increased prices and lead times, potentially causing prolonged customer outages and unrecovered costs.
• Inflation and the imposition of tariffs (or subsequent changes) may raise costs in excess of rate plan allowances and increase capital raising needs.
• Results of operations can be affected by circumstances or events beyond control, such as weather, energy efficiency efforts, terrorist/physical attacks, or economic conditions affecting customer demand and ability to pay.

Future Outlook

Con Edison anticipates that its Utilities (CECONY and O&R) will continue to provide substantially all of its earnings over the next few years, supported by approved rate plans. The Utilities expect to invest $37.1 billion in energy delivery systems from 2026 through 2030, while Con Edison Transmission plans $534 million in electric transmission projects over the same period. Con Edison intends to finance these capital requirements through internally-generated funds, long-term debt issuance (up to $3.2 billion in 2026, $3 billion in 2027, and $9.9 billion in 2028-2030 for Utilities), and common equity issuance (up to $1.1 billion in 2026, $1.2 billion in 2027, and $3.3 billion in 2028-2030). CECONY forecasts average annual increases in peak demand over the next five years for electricity (0.7%) and gas (0.2%), with a decrease in steam peak demand (0.9%). O&R forecasts average annual increases in electric peak demand (4.1%, driven by commercial customers like data centers and EVs) and gas peak demand (1.2%). CECONY projects $72 billion in capital expenditures between 2025 and 2034 to implement its decarbonization strategy. The NYISO identifies a bulk power system electric reliability need in New York City starting in summer 2026 and continuing through 2030, with CECONY projecting needs of 125 MW by 2032, increasing to 750 MW by 2036. The Companies expect distributed energy resources and electric alternatives to gas and steam to increase, leading to a decrease in gas and steam usage, due to CLCPA and Climate Mobilization Act implementation. Con Edison expects to claim tax refunds of approximately $45 million ($161 million for CECONY) and reduce its CAMT credit carryover by approximately $181 million ($161 million for CECONY) due to new IRS guidance on CAMT.

Management Comments

• Con Edison's mission is to provide energy services to our customers safely, reliably, efficiently and in keeping with our vision for a clean energy future; to provide an inclusive workplace that embraces our diverse experiences and backgrounds, and allows employees to realize their full potential; to provide a fair return to our investors; and to improve the quality of life in the communities we serve.
• Con Edison seeks to provide shareholder value through continued dividend growth, supported by earnings growth in regulated utilities and electric transmission projects.
• The company invests to provide reliable, resilient, safe and clean energy critical for its New York and New Jersey customers. Con Edison is a responsible neighbor, helping the communities it serves become more sustainable.
• Management believes that these non-GAAP financial measures [adjusted earnings and adjusted EPS] are also useful and meaningful to investors to facilitate their analysis of the company's financial performance.
• The Companies are unable to predict changes in regulations, regulatory guidance, legal interpretations, policy positions and implementation actions that may result from the Federal Actions.
• The Companies are unable to predict the impact that the implementation of this law [CLCPA] will have on them.
• The Companies are unable to predict the potential impact, if any, that the Act [Climate Change Superfund Act] may have on them.
• Management's assessment is that the income tax regulatory assets as of December 31, 2025 are probable of collection through future rates.
• Given the nature of the non-conforming welds identified, CECONY does not anticipate significant impact to the operation of its gas and steam mains.

Industry Context

StockSavvy.ai notes that Con Edison's substantial capital investment plans align with broader utility industry trends towards grid modernization, resilience against extreme weather, and decarbonization efforts driven by state-level mandates like New York's CLCPA. The focus on energy efficiency, vehicle electrification, and energy storage reflects the industry's shift towards distributed energy resources and demand-side management. The sale of the Mountain Valley Pipeline interest indicates a strategic pivot away from certain non-core fossil fuel infrastructure, consistent with ESG pressures and clean energy goals, while continued investment in electric transmission (e.g., Propel NY Energy) supports the integration of renewable energy. The challenges with aged accounts receivable and regulatory audits are common across regulated utilities, particularly in densely populated and highly regulated markets.

Comparison to Industry Standards

• Con Edison's 2025 total shareholder return of 15.16% lagged the S&P 500 Index (17.86%) for the year.
• Over the five-year period from 2021 through 2025, Con Edison's total shareholder return of 64.48% outperformed the S&P 500 Utilities Index (59.06%) but lagged the S&P 500 Index (95.98%).
• The company's common equity ratio of 48.6% for Con Edison and 47.8% for CECONY as of December 31, 2025, is consistent with the authorized 48% in their rate plans, which is a standard regulatory practice for ensuring financial stability in the utility sector.
• The authorized return on common equity for CECONY (9.40%) and O&R (9.75%) for their new rate plans are within typical ranges for regulated utilities, balancing investor returns with customer affordability.

Management Changes

Corporate Governance

Legal Proceedings

• NYSDPS initiated an investigation into CECONY's compliance with weld requirements and prudence of oversight after CECONY discovered non-conforming gas and steam main welds and contractor misconduct. $33.3 million in annual gas revenue requirement (2026-2028) is subject to refund. Two third-party contractor employees were indicted for wire fraud.
• NYSPSC continued its focused operations audit of the Utilities' financial accounting for income taxes, investigating an inadvertent understatement of federal income tax expense for ratemaking purposes, which may be material. The Utilities plan to pursue a private letter ruling from the IRS.
• CECONY is a Potentially Responsible Party (PRP) at the Gowanus Canal Superfund Site, where significant contamination was found. Remedial design costs are estimated at $115 million, and dredging and stabilization in the upper segment cost approximately $260 million. The EPA estimated the middle segment cleanup at $369 million, and a PRP lawsuit estimates total cleanup costs over $1,000 million. CECONY is unable to estimate its total exposure.
• CECONY is a PRP at the Newtown Creek Superfund Site, where sediments are contaminated. A feasibility study is expected by 2028, and the EPA approved a potential early action remedy for the East Branch tributary at $250 million. CECONY is unable to estimate its exposure.
• The New York State Climate Change Superfund Act, requiring 'responsible parties' to pay $75 billion over 25 years, is being challenged as unconstitutional by a group of states. The Companies are unable to predict its potential impact.
• CECONY faces potential monetary sanctions exceeding $0.3 million for violations related to a dielectric fluid discharge in New Rochelle in July 2021. Third-party damage claims were also received.
• Numerous lawsuits are pending against the Utilities for deaths and injuries allegedly caused by asbestos exposure, with total claims in billions, though the Utilities believe these amounts are exaggerated. Accrued liability for asbestos suits is $11 million (Con Edison) and $10 million (CECONY), and for workers' compensation is $51 million (Con Edison) and $49 million (CECONY).

Related Party Transactions

• CECONY provides and receives administrative and other services to/from Con Edison and its other subsidiaries under NYSPSC-approved cost allocation procedures.
• CECONY and O&R have joint gas supply arrangements, with CECONY selling to, or acting as agent to purchase for, O&R $114 million of natural gas in 2025.
• CECONY's net receivable from Con Edison for income taxes was $24 million at December 31, 2025.
• The Utilities perform work for New York Transco (a company in which Con Edison Transmission owns an interest); amounts billed were immaterial in 2025 and 2024.
• CECONY has a 20-year transportation contract with Mountain Valley Pipeline (MVP), in which Con Edison Transmission owns an interest. Amounts billed by MVP to CECONY were $55 million in 2025.
• FERC authorized CECONY to lend up to $250 million to O&R for up to 12 months; no outstanding loans at December 31, 2025.
• Con Edison made a $12 million contribution to the Consolidated Edison Foundation, Inc. in March 2025, which was accrued as an expense in 2024.

Stakeholder Impact

• Shareholders: Increased net income and adjusted earnings, along with a dividend increase, suggest positive returns. Significant capital investment plans and planned equity issuances could dilute existing shares but support long-term growth.
• Customers: Rate increases for electric, gas, and proposed for steam will impact customer bills. Energy affordability programs are being expanded to help low-income households. Investments in reliability and clean energy aim to improve service and environmental outcomes.
• Employees: Commitment to attracting, developing, and retaining a talented workforce, with ongoing training and career development programs. Collective bargaining agreements cover a significant portion of the workforce.
• Communities: Investments in clean energy infrastructure and environmental remediation efforts contribute to community sustainability and safety. The Climate Change Superfund Act and other environmental regulations could lead to significant costs, potentially passed to customers.
• Creditors: Plans for substantial long-term debt issuance indicate continued reliance on debt financing, but the company maintains compliance with debt covenants and strong credit ratings.

Next Steps

• CECONY to develop a reliability contingency plan for New York City by June 2026.
• CECONY to file a request with the NYSPSC for a steam rate increase of $66 million, effective November 1, 2026.
• Con Edison Transmission expects to complete the sale of its remaining interest in Mountain Valley Pipeline (MVP) during the first half of 2026.
• Con Edison and CECONY are considering strategic alternatives for their investments in Honeoye Storage Corporation.
• NYSDEC to promulgate regulations implementing the Climate Change Superfund Act by June 2027.
• Companies to file a quick refund claim by April 15, 2026, for the 2025 tax year and amend their federal tax return for the 2024 tax year based on new IRS guidance on CAMT.
• NYSPSC to develop specific cybersecurity regulations to enhance and codify standards and practices for New York gas and electric utilities.
• CECONY and O&R to track enrollment and participation in the Enhanced Energy Affordability Program over an initial two-year pilot period.

Key Dates

Recommendation

Con Edison demonstrates stable financial performance with consistent earnings growth, supported by its regulated utility model and approved rate plans. The significant capital investment program aligns with long-term clean energy goals and infrastructure modernization, which are positive for future stability. However, the substantial capital requirements necessitate ongoing debt and equity raises, which could create some dilution pressure. While the company is addressing regulatory and environmental challenges, these represent ongoing costs and potential liabilities. The stock's performance relative to the S&P 500 Utilities Index is generally favorable over the long term, but recent underperformance against the broader S&P 500 suggests a 'hold' position, balancing stability and growth prospects against capital needs and regulatory scrutiny.

Keywords

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