Con Edison (ED) Q3 2026 earnings review
Con Edison's profit rises 9%, but its cash shortfall widens
Con Edison, the New York energy company, earned more, but paid for its grid work with debt and new shares. Profit per share excluding one-offs rose 9%, mainly because regulators let it charge for a bigger electric grid. By our math, the full-year outlook now needs about 15% growth in the fourth quarter.
| Profit per share, excluding one-offs | $2.07 +9% from $1.90 a year ago |
|---|---|
| Average rate base (assets it earns a regulated return on) | $48.2 billion +8.1% from a year ago |
| Cash after network spending, nine months | -$1.23 billion -$140 million a year ago |
| Full-year profit outlook, excluding one-offs | Narrowed, middle unchanged middle of the range: $6.10, about 7% growth |
⚖️ Verdict: ⚪ Neutral
The story is unchanged, because the quarter delivered the growth the plan needed without lifting the plan. Con Edison narrowed its range around the same middle and slightly trimmed later spending plans. One caution: operating cash fell 15% in nine months, while network spending climbed 17%.
The question now is how far New York's new affordability law will hold down rate increases after 2027. Regulators may still approve the grid spending, or inflation caps may slow the asset growth the long-term plan counts on. The first filing under the law, probably from Orange and Rockland, will tell.
🐂 Bull Case
Bigger Electric Grid Lifted Profit Per Share 9%
Con Edison earns a return that state regulators set on its rate base, the value of the cables, substations and pipes it owns. Chief executive Tim Cawley said the group is "building the capacity and resilience New York needs to grow".
Third-quarter profit per share excluding one-offs reached $2.07, against $1.90 a year earlier. Its own breakdown shows the bigger electric grid did most of the work, while new shares held part of the gain back.
- Higher electric rate base: +17 cents a share
- Construction interest regulators let it book: +3 cents
- Lower health care costs: +2 cents
- New shares issued: -5 cents
This matters because the outlook needed a faster second half after a slow first half. The asset base it earns on grew 8.1% over the past year, against 6.9% a quarter earlier. So the gain comes from assets that keep earning. Con Edison did trim its five-year growth target for its regulated investment base to 8.7% a year, from 8.8%.
What to watch: the average rate base in February's full-year report. A figure near the $49.0 billion plan would show the building pace held through a year of share sales.
Steam Deal Sets a Higher Return Than Staff Proposed
Con Edison runs the largest steam network in the US, serving about 1,465 customers in Manhattan. Finance chief Kirk Andrews said it reached agreement on "a new investment plan for our Steam business that is awaiting approval".
The September deal lets the utility earn 9.5% on shareholders' money, above the 9.3% that state staff proposed. Its first-year rate rise of $13 million looks smaller than staff's figure. But lower forecast property taxes, which customers pay at cost, explain that gap, so the profit terms beat staff's.
What to watch: the state commission's vote, with sessions set for November 19 and December 17. Approval would lock in a return far above the 5.8% steam earned over the past year.
Positives this quarter didn't test
Two standing positives got new readings this quarter. Neither moved far enough to change Con Edison's spending plan for the city's grid, so both stay open.
- Reliability needs: state grid operator NYISO dropped its near-term New York City shortfall after the Champlain Hudson power line proved its capacity. Con Edison's own report pushed its city need back a year, to 2033. Regulators' approval of its battery-storage plan would turn the need into spending.
- Electricity demand: the main utility raised its five-year peak-demand forecast to 0.8% a year, from 0.7%. Orange and Rockland cut its forecast to 2.6%, citing slower electric-vehicle uptake. A higher forecast would justify more of the 28 planned substations.
🐻 Bear Case
Spending Outran Cash, So Con Edison Sold Shares
Chief executive Tim Cawley described Con Edison as "supported by consistent performance, financial strength". A utility that spends more than it collects must borrow or sell shares, so cash flow tests that claim.
Tax refunds not yet received and other receivables held back operating cash, the group said in its quarterly filing. Network spending kept climbing, so Con Edison sold shares and $1.3 billion of bonds.
- Operating cash, nine months: $2.83 billion, down 15%
- Network spending: $4.05 billion, up 17%
- Cash after that spending: minus $1.23 billion, against minus $140 million
- Cash on hand: $100 million, from $1.63 billion in December
The third quarter alone improved, because operating cash reached $854 million against $504 million. Even so, the yearly gap decides how many shares Con Edison sells, and each sale spreads profit across more owners. Moody's has kept a negative outlook since the first quarter. Customer bills unpaid for over 60 days fell 11% from a year ago, but still stand at 3.3 times their pre-pandemic level.
What to watch: full-year operating cash in February. A second year of decline would mean more share sales in 2027 than this year.
New York Law Could Cap Future Rate Increases
In May, New York passed Chapter 58 for rate cases filed after January 1, 2027. Utilities must add a "budget-constrained rate plan" that holds revenue growth to recent inflation, and hand back profit above the allowed level. Con Edison says its electric bills already run 12% below comparable utilities.
In September, regulators began an affordability index that can trigger an outside monitor. The utilities are "continuing to assess the impact of the new law and the timing of their upcoming rate case filings", Con Edison wrote. Its plan puts the fastest asset growth after 2027.
What to watch: the first filing under the law, probably from Orange and Rockland, whose New York plans end in December 2027. Its terms will show what a capped plan allows.
Risks this quarter didn't answer
Four standing risks got no answer in this quarter's filings. Each could still cost Con Edison money, and none has a date for a decision.
- Second-half profit: by our math, the fourth quarter needs about $1.02 a share excluding one-offs, against $0.89 a year ago. February's results settle it.
- Tax audit: regulators still review a $1.0 billion tax asset at the main utility that earns no return. An IRS ruling would decide whether it can stay.
- Weld and charging cases: $100 million of gas revenue remains subject to refund. The utilities answered the electric-vehicle charging order in October; regulators have set no penalty yet.
- Gas and steam volumes: weather-adjusted steam deliveries fell 7.8% in the quarter. The main utility now expects peak gas demand to drop 0.2% a year.
👓 Other Themes
Con Edison Sold Its Last Gas Storage Stake
Con Edison closed the sale of Honeoye, an upstate gas storage company, in October for $5 million. It sold its Mountain Valley Pipeline stake in the first quarter for $357.5 million. With both gone, the transmission unit earned $6 million in the third quarter, against $11 million a year ago. It now holds mainly stakes in power-line projects.
Court Ruling May Refund Some Tariff Costs
In February, the Supreme Court ruled that tariffs imposed under an emergency-powers law were unauthorized. Con Edison is checking whether it can recover such duties paid through its suppliers. Other tariffs remain, and the group wrote that "the cost of materials has increased across various supply chain contract portfolios". An August executive order also lets the Energy Department restrict some foreign grid equipment.
Regulator Approved One Heat Network, Rejected Another
Regulators are testing utility thermal energy networks through pilot projects. In October, they let Orange and Rockland's Haverstraw West Loop advance to "Customer Enrollment and Construction", with costs capped at $50.1 million and recovered through a surcharge. The main utility's pilots did not advance, but regulators let it defer about $21.2 million of development costs for later recovery.
💲 Other KPIs
Con Edison's tax rate rose to 25.0% from 22.7% a year ago. Smaller benefits from a state transit tax credit and from bad-debt write-offs drove it, the group said. By our math, the higher rate cost about 6 cents a share. The rate has held near 25% all year, after 21% in last year's fourth quarter.
Shareholders' money now funds 49.5% of Con Edison's long-term capital, up from 48.6% in December. This year's share sales lifted it. At the main utility, the ratio reached 48.6%, close to the 48% its rate plans assume.
Debt minus cash rose 4.3% since December, to $27.4 billion by our math. New bonds and a $1.5 billion drop in cash outweighed repaid short-term loans. Long-term debt reached $27.1 billion.
🔮 Guidance
Unchanged in the middle. Con Edison narrowed the range, so the plan still has profit per share excluding one-offs rising about 7% this year. By our math, that leaves about $1.02 for the fourth quarter, roughly 15% above a year ago. The middle has not moved in four quarters. In each of the past two years, the group finished at the top of its first range.
Cut slightly. The plan for 2027 now sits $50 million lower. Later years fell by similar small amounts, which Con Edison tied to the smaller spending in the steam deal. By our math, the utilities still need about $2.5 billion of network spending in the fourth quarter to meet this year's plan.
Unchanged. The plan still allows up to $1.1 billion of new shares this year, outside dividend reinvestment and staff plans. Con Edison has raised $992 million so far. It plans to settle its remaining forward sales, agreements to sell shares later at a set price, before year-end. By our math, that brings the total to about $1.1 billion, right at the cap.
Unchanged. The plan allows up to $3.2 billion of long-term borrowing this year. The main utility sold $1.3 billion of bonds in June. Orange and Rockland sold $100 million in October and agreed to sell $75 million more in December. By our math, that leaves about $1.7 billion of room.
❓ Key Questions
Will fourth-quarter spending reach the 2026 plan?
The utilities spent 62% of their 2026 network plan in nine months. By our math, the fourth quarter needs about $2.5 billion in cash spending, well above the third quarter's $1.6 billion.
When will the utilities file under the new law?
Chapter 58 applies to rate filings after January 1, 2027. Orange and Rockland's New York plans end in December 2027, so its next case may be the first test of an inflation-capped plan.
How much could the Gowanus Canal claim cost?
In July, New York City filed a claim against Con Edison over a canal cleanup project it puts at about $1.7 billion. The group said it cannot estimate its share.
When will the IRS rule on the tax asset?
The utilities still plan to seek a ruling that would let them recover a $1.0 billion tax asset through rates. Without one, regulators could order a write-off. The audit has run since 2018.
Will Moody's outlook change next year's share sales?
Moody's has held a negative outlook on Con Edison since the first quarter. Weaker operating cash this year could push the company to sell more shares in 2027 or slow its spending.