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Con Edison Allocates Most of Its Capital to Regulated Segment

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Capital expenditures

Consolidated Edison (ED) expects its main service territory, New York, to continue its GDP (gross domestic product) growth, which will drive the company’s performance in the future. Job growth in New York is outpacing the nation, which is changing the energy landscape. Con Edison management is expecting this economic activity to produce 1.5% annual growth in both electric and gas usage. Con Edison has an aggressive investment plan for this transformation.

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Growth opportunities

The regulated electric and gas distribution segments have been the top performers for Con Edison. However, Con Edison sees room for expansion in these areas. For 2015 and 2016, Con Edison is planning to spend a total capital of $7 billion. Investment in its delivery business alone is expected to increase by $5 billion.

Con Edison is planning to increase its energy distribution area by investing in infrastructure and storage systems. It’s planning to invest $2.5 billion to improve Consolidated Edison Company of New York’s (or CECONY) infrastructure. Its planned investments also include $200 million annually to replace pipes at CECONY’s transmission system. Orange & Rockland Utilities has an estimated capital investment of $170 million annually. Nearly $1.5 billion is allocated to its large-scale development in the renewable segment.

Con Edison has increased its estimates of capital expenditures by its competitive energy businesses from $375 million to $835 million for 2015 and from $366 million to $985 million for 2016 to reflect additional renewable energy project development.

Consolidated Edison formed Con Edison’s Transmission Planning to extend its regional transmission infrastructure. Management is planning an upgradation of New York’s electric transmission grid. It’s also looking to bring clean natural gas (UNG) into its service territory. Many utilities (XLU) such as Duke Energy (DUK) and American Electric Power (AEP) are regularly spending on their transmission businesses.

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