Con Edison (ED) Q4 2025 earnings review
Reliability Costs Weigh on Q4, but Full-Year Beats and Guidance Accelerates
Con Edison delivered a solid fiscal year, with FY25 Adjusted EPS of $5.70 coming in at the very top of the $5.50-$5.70 guidance range. However, the fourth quarter revealed emerging cost pressures: while Revenue grew 8.9% YoY to $3.99B, Adjusted EPS fell 9% YoY to $0.89, missing the prior year's $0.98. The drag came from significantly higher Operations & Maintenance (O&M) expenses and interest costs, which outweighed rate base growth. Despite the soft Q4 close, the narrative is bullish: the company secured a critical 3-year rate plan approval in January 2026, raised its dividend for the 52nd consecutive year, and issued strong FY26 guidance ($6.00-$6.20) implying ~7% earnings growth.
🐂 Bull Case
The January 2026 approval of the CECONY electric and gas rate plans (2026-2028) removes a major overhang. The plan allows for an ROE of 9.40% and supports ~$17 billion in capital investment, ensuring predictable rate base growth.
Management initiated FY26 guidance with a midpoint of $6.10, representing 7% growth over FY25. They reaffirmed a long-term 6-7% CAGR target through 2030, underpinned by the new rate plan and electrification demand.
🐻 Bear Case
Q4 O&M expenses surged, dragging CECONY's EPS contributions down by $0.10 YoY. Combined with higher interest expenses ($0.11 EPS headwind for the full year), the cost of maintaining reliability is becoming increasingly expensive.
The NYISO has identified a bulk power reliability need in NYC starting Summer 2026 due to demand growth and generation retirements. While Con Ed is developing a contingency plan, this implies urgent, potentially higher-cost investments or stop-gap measures.
⚖️ Verdict: 🟢
Solid. While Q4 showed some expense leakage, the long-term thesis is stronger than ever thanks to the newly approved 3-year rate plan and the exit from non-core assets (MVP). The 7% implied growth for 2026 exceeds the typical utility profile.
Key Themes
Interest and O&M Expense Drag
Operating expenses and interest are eating into the benefits of rate increases. In Q4 specifically, higher O&M expenses negatively impacted CECONY EPS by $0.10, and higher corporate expenses removed another $0.06. For the full year, interest expense rose to $1.23B from $1.19B in FY24. This trend requires strict monitoring as the company ramps up CapEx to $6.6B next year.
Electrification Demand Surge
Con Ed is seeing tangible demand acceleration. 44% of new business load is now for electric heat or EV charging. In 2025, fast-charging capacity installations grew 18% YoY. New building electric demand requests are up 20-25%. This supports the aggressive capital plan ($24B for 2028-2030) and justifies the rate base expansion.
Divesting Non-Core Assets (MVP)
Con Ed is exiting its position in the Mountain Valley Pipeline (MVP). It sold 40% of its interest in Jan 2026 and expects to sell the remainder in H1 2026 for ~$357.5M total. This simplifies the story, removing volatility associated with non-utility midstream assets and redeploying capital into the regulated core.
Immediate Reliability Needs in NYC
The NYISO's Q3 and Q4 assessments identified a reliability deficit in NYC starting Summer 2026, driven by peak demand and generation deactivations (Peaker plants/barges). Con Ed must develop a 'reliability contingency plan' by June 2026. This creates execution risk and potential for unbudgeted expenditures in the very near term.
Accounts Receivable Aging
While total AR is stable, aged receivables (>60 days) at CECONY remain elevated at $1.43B, though down from $1.65B a year ago. However, this is still more than 3x the pre-pandemic level of $408M (Feb 2020), indicating a persistent structural issue in customer ability to pay.
Other KPIs
Decelerating. Down from $331M in 24Q4. While the electric rate base grew, it was insufficient to offset the spike in operations and maintenance costs and higher corporate expenses during the quarter.
Stable/Growing. The company announced a 4.4% increase to the annualized dividend (up $0.15). This marks the 52nd consecutive year of increases, reinforcing its status as a Dividend King.
Decelerating. Down from $22M in 24Q4. The decline was driven by the timing of revenue recognition and higher interest/storm costs.
Guidance
Accelerating. The midpoint ($6.10) implies 7% YoY growth from FY25's $5.70. This is a strong acceleration compared to the 5.5% growth delivered in FY25 (vs FY24). Driven by the new rate plan implementation.
Accelerating significantly. This represents a 32% increase over the $4,996 million deployed in FY25, marking the start of a major infrastructure ramp-up under the new rate plan.
Stable. The company plans to fund its massive CapEx ramp with a mix of internally generated funds, debt ($3.2B), and ~$1.1B in equity (excluding DRIP/Employee plans).
Key Questions
Mitigating O&M Volatility
Q4 saw a significant negative impact from O&M expenses ($0.10 EPS drag). Was this a timing anomaly, or should investors model a structurally higher O&M run-rate for FY26 given the reliability challenges in NYC?
NYC Summer 2026 Reliability Plan
With the NYISO identifying a reliability need starting this summer, what specific capital or operational measures are included in the June 2026 contingency plan, and are these costs fully recoverable under the newly approved rate plan?
MVP Proceeds Allocation
You expect ~$357.5M from the MVP sale. Will these proceeds be used to offset the $1.1B planned equity issuance for FY26, or are they earmarked for specific incremental debt reduction?