Consolidated Edison Financial Model

• Total assets: Approximately $71 billion.
• Key asset categories: Utility Plant (PP&E) makes up the vast majority. Regulatory Assets are also highly material, representing costs that the regulator has approved for future recovery from customers.
• Goodwill & intangibles: Minimal (less than 1% of assets) following the sale of the Clean Energy Businesses.
• Working capital profile:
• Days Sales Outstanding (DSO): 35-45 days.
• Days Inventory Outstanding (DIO): 15-20 days (primarily stored natural gas and materials).
• Days Payable Outstanding (DPO): 30-40 days.
• Net working capital: Often negative or neutral. Utilities frequently carry large under-recovered or over-recovered fuel balances depending on commodity price swings.
• PP&E: Consists of substations, transformers, transmission lines, gas mains, and steam generation plants. Useful lives range from 30 to 60+ years.
• Right-of-use assets: Immaterial compared to owned infrastructure.

• Capex as % of revenue: 45-55% (massive capital intensity).
• Maintenance capex vs. growth capex: Approximately 40% maintenance (replacing aging infrastructure) and 60% growth (clean energy transition, grid resilience, Brooklyn Clean Energy Hub).
• Major capex programmes underway: The company is executing a $37 billion capital plan from 2025 through 2029 (averaging over $7.4 billion annually).
• Capitalised software: Material for IT and billing systems, though subject to strict regulatory caps.
• M&A pattern: Organic grower. The company recently divested non-core assets (Clean Energy Businesses, Mountain Valley Pipeline stake) to focus entirely on its regulated footprint.

• Total debt: Approximately $25 billion to $28 billion.
• Debt/EBITDA ratio: Typically 5.0x to 5.5x.
• Credit rating: A- / Baa1 (investment grade is critical for regulatory purposes).
• Key debt instruments: Long-term unsecured utility bonds issued at the CECONY and O&R subsidiary levels.
• Maturity profile: Well-laddered over 10 to 40 years to match the long-duration asset base.
• Interest rate profile: Predominantly fixed-rate long-term debt.
• Covenants: Standard debt-to-capitalisation limits (usually capped at 65%).
• Share repurchase programme: Inactive. The company is a net issuer of equity to fund its capex programme.
• Dividend policy: Dividend King (51 consecutive years of increases). Annualised dividend of $3.40 per share for 2025. Target payout ratio is 55-65% of adjusted earnings.

• Operating cash flow conversion: OCF is typically 1.2x to 1.5x Net Income due to massive depreciation add-backs and deferred taxes.
• Free cash flow margin: Deeply negative. OCF does not cover the $7.5 billion annual capex budget.
• Major non-cash items: Depreciation, deferred income taxes, and regulatory asset/liability amortisation.
• Working capital cash flow impact: Can swing wildly year-over-year based on winter weather and wholesale gas prices.
• Capex intensity: The defining feature of the cash flow statement. The company relies entirely on external debt and equity markets to fund the gap between OCF and Capex + Dividends.
• Cash tax rate: Near zero or negative in many years due to accelerated depreciation (MACRS) on massive capital investments, creating large deferred tax liabilities.

1. Assumptions: Hardcoded inputs for rate base growth, allowed ROE, capex schedule, debt/equity issuance plans, and dividend growth.
2. Summary: Dashboard showing EPS, Rate Base, Capex, FCF, and funding gap.
3. Income Statement: Broken down by segment (CECONY Electric, CECONY Gas, CECONY Steam, O&R, Transmission). Must separate pass-through revenues (fuel/power) from delivery revenues.
4. Rate Base & Capex: The engine of the model. Tracks beginning rate base, plus capex, minus depreciation, minus deferred taxes, to calculate ending rate base.
5. Balance Sheet: Standard utility format, highlighting Utility Plant, Regulatory Assets, and Regulatory Liabilities.
6. Cash Flow Statement: Bridges Net Income to OCF, deducts Capex to show the massive FCF deficit, and models the financing cash flows required to plug the gap.
7. Debt & Equity Schedule: Models the issuance of new long-term debt and common stock. Calculates interest expense and tracks the growing share count.
8. Regulatory Mechanisms: Tracks the decoupling balances and weather normalisation adjustments.
9. DCF & DDM: Valuation sheet using both a standard Unlevered DCF and a Dividend Discount Model (DDM), which is often preferred for regulated utilities.

1. "CECONY Electric Delivery Revenue = CECONY Electric Average Rate Base x Allowed ROE + Recoverable O&M + D&A + Property Taxes"
2. "Total Operating Revenue = Delivery Revenue + Pass-Through Fuel & Purchased Power"
3. "Ending Rate Base = Beginning Rate Base + Capital Expenditures - Depreciation - Change in Deferred Income Taxes"
4. "Net Income = Operating Income - Interest Expense - Income Taxes"
5. "Free Cash Flow = Operating Cash Flow - Capital Expenditures"
6. "Funding Gap = Free Cash Flow - Dividends Paid"
7. "New Debt Issuance = Funding Gap x Target Debt Capitalisation Ratio (approx 50%)"
8. "New Equity Issuance = Funding Gap x Target Equity Capitalisation Ratio (approx 50%)"
9. "Ending Share Count = Beginning Share Count + (New Equity Issuance / Average Share Price)"
10. "EPS = Net Income for Common Stock / Ending Share Count"
11. "Dividends Paid = Annualised Dividend Per Share x Ending Share Count"
12. "Depreciation Expense = Average Gross Utility Plant x Composite Depreciation Rate"

The Rate Base & Capex sheet is the critical engine. Capex drives the Rate Base. The Rate Base feeds the Income Statement to generate Delivery Revenue and Operating Income. Operating Income feeds the Cash Flow Statement, which subtracts Capex and Dividends to determine the Funding Gap. The Funding Gap feeds the Debt & Equity Schedule, which triggers new debt and equity issuances. The new debt generates Interest Expense, which flows back to the Income Statement (reducing Net Income). The new equity increases the share count, which dilutes EPS and increases total Dividends Paid, further widening the Funding Gap. This creates a circular reference that must be managed with an iterative calculation or a circuit breaker toggle.

• Revenues and Assets: Positive.
• Expenses (O&M, D&A, Interest, Taxes): Positive in their specific schedules, subtracted in the Income Statement totals.
• Capital Expenditures: Positive in the Capex schedule, negative in the Cash Flow Statement.
• Dividends: Positive in the per-share assumptions, negative in the Cash Flow Statement.
• Debt/Equity Issuance: Positive in the Cash Flow Statement.

• Ignoring the Clean Energy Businesses sale: Historical consolidated financials from 2022 and earlier include the unregulated renewables business. The model must use 2024 as the clean base year for the pure-play utility.
• Mismodelling revenue drivers: Utility revenue is NOT driven by volume (kWh or therms). If you model revenue as "Volume x Price", the model is fundamentally broken. Revenue is driven by Rate Base x Allowed Return.
• Forgetting EPS dilution: Con Edison plans to issue $1.35 billion in equity in 2025 and $1.85 billion in 2026. Failing to increase the share count will drastically overstate EPS.
• Misunderstanding pass-through costs: Spikes in natural gas prices increase revenue and COGS equally. This inflates the top line but has zero impact on gross profit dollars, causing the operating margin percentage to artificially compress.
• Ignoring deferred taxes in the rate base: Accelerated tax depreciation creates deferred tax liabilities. Regulators deduct these liabilities from the rate base, which lowers future earnings power.
• Capitalising denied IT costs: The NYSPSC recently denied capitalisation of certain billing system costs. The model must expense these items in O&M rather than adding them to the rate base.
• Overestimating gas growth: New York's strict climate laws mean the gas rate base will eventually stagnate or decline. Growth must be heavily weighted toward the electric segment.
• Circularity errors: The interest expense / debt balance / cash flow loop will break the model if not structured with a proper interest switch.

• "Rate base growth should be approximately 6.4% annually; flag if outside the 6.0-7.0% band."
• "Dividend payout ratio must remain between 55% and 65% of adjusted EPS."
• "Total capitalisation should remain roughly 50% debt and 50% equity to comply with regulatory targets."
• "Free Cash Flow must be deeply negative in every projected year due to the $7.5 billion annual capex plan."
• "Effective tax rate should be significantly lower than the statutory 21% rate due to utility-specific tax credits and flow-through accounting."
• "Balance sheet must balance: Total Assets = Total Liabilities + Equity in every period."
• "Operating margin should fluctuate inversely with wholesale energy prices (higher energy prices = lower margin % but flat margin $)."

• Filings: SEC EDGAR (Form 10-K, Form 10-Q, Form 8-K).
• Investor Relations: Con Edison Investor Relations website (specifically the March 2025 Investor Update presentation).
• Regulatory Filings: New York State Department of Public Service (NYSDPS) document and matter management system for detailed rate case dockets.
• Key Peers: Eversource Energy (ES), Public Service Enterprise Group (PEG), Edison International (EIX), Sempra (SRE).
• Consensus Estimates: FactSet or Bloomberg for EPS and Capex consensus.

• Consolidated Edison, Inc. 2024 Annual Report on Form 10-K
• Consolidated Edison, Inc. Q4 2024 Earnings Release (February 20, 2025)
• Consolidated Edison, Inc. Investor Update Presentation (March 2025)
• Consolidated Edison, Inc. Q2 2025 Earnings Release (August 7, 2025)
• Consolidated Edison, Inc. Q3 2025 Earnings Release (November 6, 2025)
• Consolidated Edison, Inc. 2025 Earnings and 2030 Capital Plan Update (February 19, 2026)