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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
|X| Annual Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the fiscal year ended DECEMBER 31, 2000
OR
|_| Transition Report pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the transition period from ____________ to ____________
Commission Exact name of registrant as specified in its charter State of I.R.S. Employer
File Number and principal office address and telephone number Incorporation ID. Number
1-14514 Consolidated Edison, Inc. New York 13-3965100
4 Irving Place, New York, New York 10003
(212) 460-4600
1-1217 Consolidated Edison Company of New York, Inc. New York 13-5009340
4 Irving Place, New York, New York 10003
(212) 460-4600
1-4315 Orange and Rockland Utilities, Inc. New York 13-1727729
One Blue Hill Plaza, Pearl River, New York 10965
(914) 352-6000
Securities Registered Pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
Consolidated Edison, Inc.,
Common Shares ($ .10 par value) New York Stock Exchange
Consolidated Edison Company of New York, Inc.,
7 3/4% Quarterly Income Capital Securities (Series A
Subordinated Deferrable Interest Debentures) New York Stock Exchange
7.35% Public Income NotES (7.35% Debentures,
Series 1999A) due 2039 New York Stock Exchange
$5 Cumulative Preferred Stock, without par value New York Stock Exchange
Cumulative Preferred Stock, 4.65% Series C ($100 par value) New York Stock Exchange
Securities Registered Pursuant to Section 12(g) of the Act:
Title of each class
Consolidated Edison Company of New York, Inc.,
Cumulative Preferred Stock, 4.65% Series D ($100 par value)
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Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes |X| No |_|
Indicate by check mark if the disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in the definitive proxy statement incorporated
by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. |_|
The aggregate market value of the common equity of Consolidated Edison, Inc.
("Con Edison") held by non-affiliates of Con Edison, as of January 31, 2001, was
approximately $7.4 billion. Not reflected in this amount are the 60,606 Con
Edison Common Shares ($.10 par value) held by Con Edison's Directors who are the
only stockholders of Con Edison, known to Con Edison, who might be deemed
"affiliates" of Con Edison. As of February 28, 2001, Con Edison had outstanding
212,031,531 Common Shares ($.10 par value).
All of the outstanding common equity of Consolidated Edison Company of New York,
Inc. ("Con Edison of New York") and Orange and Rockland Utilities, Inc. ("O&R")
is held by Con Edison.
O&R MEETS THE CONDITIONS SPECIFIED IN GENERAL INSTRUCTION (I)(1)(a) AND (b) OF
FORM 10-K AND IS THEREFORE FILING THIS FORM WITH THE REDUCED DISCLOSURE FORMAT.
Documents Incorporated By Reference
Portions of Con Edison's definitive joint proxy statement for its 2000 Annual
Meeting of Stockholders, to be filed with the Commission pursuant to Regulation
14A not later than 120 days after December 31, 2000, are incorporated in Part
III of this report.
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FILING FORMAT
This Annual Report on Form 10-K is a combined report being filed separately by
three different registrants: Con Edison, Con Edison of New York and O&R. Neither
Con Edison of New York nor O&R makes any representation as to the information
contained in this report relating to Con Edison or the subsidiaries of Con
Edison other than itself.
TABLE OF CONTENTS
Page
----
FORWARD-LOOKING STATEMENTS 5
PART I
ITEM 1. Business 5
Con Edison 6
Con Edison of New York 7
O&R 15
ITEM 2. Properties
Con Edison 18
Con Edison of New York 18
O&R 19
ITEM 3. Legal Proceedings
Con Edison 20
Con Edison of New York 20
O&R 27
ITEM 4. Submission of Matters to a Vote of Security Holders None
Executive Officers of the Registrant
Con Edison 29
Con Edison of New York 29
O&R Omitted*
PART II
ITEM 5. Market for Registrant's Common Equity and Related
Stockholder Matters
Con Edison 33
Con Edison of New York None
O&R None
ITEM 6. Selected Financial Data
Con Edison 34
Con Edison of New York 34
O&R Omitted*
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ITEM 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Con Edison 35
Con Edison of New York 47
O&R Omitted*
O&R Management's Narrative Analysis of the Results of
Operations 56
ITEM 7A. Quantitative and Qualitative Disclosures About Market Risk
Con Edison 59
Con Edison of New York 59
O&R 59
ITEM 8. Financial Statements and Supplementary Data 59
Con Edison 63
Con Edison of New York 89
O&R 112
ITEM 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure
Con Edison None
Con Edison of New York None
O&R 2
PART III
ITEM 10. Directors and Executive Officers
ITEM 11. Executive Compensation
ITEM 12. Security Ownership of Certain Beneficial Owners and
Management
ITEM 13. Certain Relationships and Related Transactions
Con Edison Incorporated**
Con Edison of New York 132
O&R Omitted*
PART IV
ITEM 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K 133
SIGNATURES 140
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* O&R is omitting the information pursuant to General Instruction I of Form
10-K.
** Incorporated by reference from Con Edison's definitive proxy statement for
its Annual Meeting of Stockholders to be held on May 21, 2001.
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FORWARD-LOOKING STATEMENTS
This report includes forward-looking statements, which are statements of future
expectations and not facts. Words such as "expects," "anticipates," "plans" and
similar expressions identify forward-looking statements. Actual results or
developments might differ materially from those included in the forward-looking
statements because of factors such as those discussed under the caption
"Forward-Looking Statements" in each of Con Edison's and Con Edison of New
York's Management's Discussion and Analysis of Financial Condition and Results
of Operations ("MD&A") in Item 7.
PART I
ITEM 1. BUSINESS
Contents of Item 1 Page
Con Edison
Corporate Overview 6
Operating Segments 6
Regulation 6
Competition 6
Unregulated Subsidiaries 7
Capital Requirements and Financing 7
State Antitakeover Law 7
Employees 7
Con Edison of New York
Corporate Overview 7
Operating Segments 8
Electric Operations 8
Gas Operations 9
Steam Operations 10
Regulation 11
Competition 11
Capital Requirements and Financing 11
Environmental Matters 12
Operating Statistics 13
O&R
General Nature and Scope of Business 15
Operating Statistics 16
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CON EDISON
Corporate Overview
Consolidated Edison, Inc. ("Con Edison"), incorporated in New York State in
1997, became the holding company for Consolidated Edison Company of New York,
Inc. ("Con Edison of New York") on January 1, 1998 and acquired Orange and
Rockland Utilities, Inc. ("O&R") in July 1999. Con Edison has no significant
business operations other than those of its regulated utility subsidiaries, Con
Edison of New York and O&R, and its unregulated subsidiaries.
For information about legal proceedings relating to Con Edison's October 1999
agreement to acquire Northeast Utilities, see Note P to the Con Edison financial
statements in Item 8 (which information is incorporated herein by reference).
Operating Segments
Con Edison's principal business segments are its regulated electric, gas and
steam utility businesses. In 2000, electric, gas and steam utility operating
revenues were 73.5 percent, 13.3 percent and 4.8 percent, respectively, of Con
Edison's operating revenues. For a discussion of operating revenues and
operating income for each segment, see "Results of Operations" in Con Edison's
MD&A in Item 7 (which information is incorporated herein by reference). For
additional information about the segments, see Note N to the Con Edison
financial statements in Item 8 (which information is incorporated herein by
reference) and the discussions of the businesses of Con Edison of New York and
O&R below in this Item 1.
Regulation
Con Edison's utility subsidiaries are subject to extensive federal and state
regulation, including by state utility commissions, the Federal Energy
Regulatory Commission and the Nuclear Regulatory Commission. Con Edison, itself,
is not subject to such regulation except to the extent that the rules or orders
of these agencies impose restrictions on relationships between Con Edison and
its utility subsidiaries.
Con Edison is a "holding company" under the Public Utility Holding Company Act
of 1935 ("PUHCA"). Con Edison is exempt from all provisions of PUHCA, except
Section 9(a)(2) (which requires SEC approval for a direct or indirect
acquisition of 5 percent or more of the voting securities of any other electric
or gas utility company) on the basis that Con Edison, Con Edison of New York and
O&R are each organized and carry on their utility businesses substantially in
the State of New York and that neither derives any material part of its income
from a public utility company organized outside of the State of New York. This
exemption is available even though Con Edison subsidiaries that are neither an
"electric utility company" nor a "gas utility company" under PUHCA will engage
in interstate activities.
Con Edison has been and is expected to continue to be impacted by legislative
and regulatory developments. The electric and gas utility industries are
undergoing restructuring, deregulation and increased competition. Con Edison's
utility subsidiaries are subject to extensive regulation in New York, New Jersey
and Pennsylvania. Changes in regulation or legislation applicable to the
company's utility subsidiaries could have a material adverse effect on the
company. For information about such changes, see "State Regulatory Matters" in
the MD&As of Con Edison and Con Edison of New York in Item 7 (which information
is incorporated herein by reference).
Competition
Legislative and regulatory developments are promoting increased competition in
Con Edison's businesses. For information about competition, see "Competition,"
below in the discussion of Con Edison of New York's business in this Item 1 and
"Unregulated Subsidiaries," below.
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Unregulated Subsidiaries
Con Edison has unregulated subsidiaries that are subject to competition and
different business risks than Con Edison's utility subsidiaries. In March 2001,
a competitor of Consolidated Edison Communications, Inc. petitioned the New York
State Public Service Commission ("NYPSC") to revoke the Con Edison subsidiary's
authority to provide fiber-optic transport services in New York City. The
petition, which alleges anti-competitive conduct and practices by the subsidiary
and Con Edison of New York, also seeks commencement of a penalty action. The
NYSPSC has established procedures "to resolve the issues presented efficiently
and expeditiously." Con Edison believes that the petition is without merit. For
information about Con Edison's unregulated subsidiaries, see "Liquidity and
Capital Resources - Unregulated Subsidiaries" and "Results of Operations" in Con
Edison's MD&A in Item 7 (which information is incorporated herein by reference).
Capital Requirements and Financing
For information about Con Edison's capital requirements, financing and
securities ratings, see "Liquidity and Capital Resources - Capital Resources,
Capital Requirements" and "Financial Market Risks" in Con Edison's MD&A in Item
7 (which information is incorporated herein by reference). Securities ratings
assigned by rating organizations are expressions of opinion and are not
recommendations to buy, sell or hold securities. A securities rating is subject
to revision or withdrawal at any time by the assigning rating organization. Each
rating should be evaluated independently of any other rating.
State Antitakeover Law
New York State law provides that a "resident domestic corporation," such as Con
Edison, may not consummate a merger, consolidation or similar transaction with
the beneficial owner of a 20 percent or greater voting stock interest in the
corporation, or with an affiliate of the owner, for five years after the
acquisition of the voting stock interest, unless the transaction or the
acquisition of the voting stock interest was approved by the corporation's board
of directors prior to the acquisition of the voting stock interest. After the
expiration of the five-year period, the transaction may be consummated only
pursuant to a stringent "fair price" formula or with the approval of a majority
of the disinterested stockholders.
Employees
Con Edison has no employees other than those of Con Edison of New York, O&R and
Con Edison's unregulated subsidiaries (which at December 31, 2000 had 13,231,
999 and 233 employees, respectively).
CON EDISON OF NEW YORK
Corporate Overview
Con Edison of New York, incorporated in New York State in 1884, is a subsidiary
of Con Edison which has no significant subsidiaries of its own. Con Edison of
New York provides electric service in all of New York City (except part of
Queens) and most of Westchester County, an approximately 660 square mile service
area with a population of more than 8 million. It also provides gas service in
Manhattan, The Bronx and parts of Queens and Westchester, and steam service in
part of Manhattan.
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Operating Segments
Con Edison of New York's principal business segments are its regulated electric,
gas and steam utility businesses. In 2000, electric, gas and steam operating
revenues were 80.8 percent, 13.5 percent and 5.7 percent, respectively, of its
operating revenues. For a discussion of the company's operating revenues and
operating income for each segment, see "Results of Operations" in its MD&A in
Item 7 (which information is incorporated herein by reference). For additional
information about the segments, see Note L to the company's financial statements
in Item 8 (which information is incorporated herein by reference).
Electric Operations
There have been and are continuing to be significant changes in Con Edison of
New York's electric operations, including the establishment of the company's
electric Retail Choice program (under which all of the company's electric
customers are able to purchase electricity from other suppliers) and the
company's sale of most of its electric generating capacity. See "State
Regulatory Matters - Electric" in the MD&As of Con Edison and Con Edison of New
York in Item 7 and "Rate and Restructuring Agreements" in Note A to the Con
Edison and Con Edison of New York financial statements in Item 8 (which
information is incorporated herein by reference).
Electric Sales. Electric operating revenues were $6.5 billion in 2000 or
80.8 percent of Con Edison of New York's operating revenues. The percentages
were 81.5 and 81.7, respectively, in the two preceding years. In 2000, 62.1
percent of the electricity delivered by Con Edison of New York in its service
area was sold by Con Edison of New York to its full-service customers, 18.1
percent was sold by other suppliers, including Consolidated Edison Solutions,
Inc., an unregulated subsidiary of Con Edison, to the company's customers under
its electric Retail Choice program and the balance was delivered to the state
and municipal customers of the New York Power Authority ("NYPA") and the
customers of municipal electric agencies. The company charges for the delivery
of electricity sold by other suppliers to customers in its service area.
For additional information about electricity sales, see "Operating Statistics,"
below, and "Results of Operations - Electric" in the MD&As of Con Edison and Con
Edison of New York in Item 7 (which information is incorporated herein by
reference).
Electric Peak Load. The electric peak load in Con Edison of New York's
service area occurs during the summer air conditioning season. The record
one-hour service area peak load, which occurred on July 6, 1999, was 11,850
thousand kilowatts ("MW"). The 2000 peak load, which occurred on June 26, 2000,
was 11,231 MW, including an estimated 7,503 MW for Con Edison of New York's
full-service customers, 1,903 MW for the company's customers participating in
its electric Retail Choice program and 1,825 MW for NYPA's customers and
municipal electric agency customers. The 2000 peak, if adjusted to historical
design weather conditions, would have been 11,825 MW, 175 MW higher than the
record peak in 1999 when similarly adjusted. Con Edison of New York estimates
that, under design weather conditions, the summer 2001 service peak load would
be 12,025 MW, including an estimated 7,555 MW for the company's full-service
customers, 2,500 for its electric Retail Choice program customers and 1,970 MW
for NYPA's customers and municipal electric agency customers. "Design weather"
for the electric system is a standard to which the actual peak load is adjusted
for evaluation.
Electric Supply. Most of the electricity sold by Con Edison of New York to
its customers in 2000 was purchased under firm power contracts or through the
wholesale electricity market administered by the New York State Independent
System Operator (the "NYISO"). The firm power contracts were with non-utility
generators ("NUGs") and utilities (including Hydro-Quebec). The company sold
most of its electric generating capacity in 1999 (see Note I to the Con Edison
and Con Edison of New York financial statements in Item 8).
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The company plans to meet its continuing obligation to supply electricity to its
customers with electric energy purchased under contracts with NUGs or others,
generated from its remaining electric generating facilities (which, including
Indian Point 2, have a capacity of approximately 1,500 MW) or purchased through
the NYISO's wholesale electricity market. The company is entering into financial
arrangements to mitigate market price volatility for a portion of its expected
electric energy purchases in 2001. For additional information about electric
power purchases, see "Electric Power Purchases" in Con Edison and Con Edison of
New York's MD&As in Item 7 and "Recoverable Energy Costs" in Note A to the Con
Edison and Con Edison of New York financial statements in Item 8 (which
information is incorporated herein by reference).
For information about the company's contracts with NUGs for approximately 2,100
MW of electric generating capacity, see Note H to the Con Edison and Con Edison
of New York financial statements in Item 8 (which information is incorporated
herein by reference).
Con Edison of New York has an agreement with Hydro-Quebec (a government-owned
Canadian electric utility) for the five-year period ending March 2004 to
purchase 400 MW of firm capacity during the months of April through October. The
amount and price of a "basic amount" of energy the company is entitled to
purchase in each year is subject to negotiation with Hydro-Quebec. In accordance
with the agreement, the company can also purchase additional energy during the
summer, which it would be obligated to return to Hydro-Quebec during the
following winter.
The company's Indian Point 2 nuclear generating unit, which has a capacity of
approximately 1,000 MW, was out of service for most of 2000 but returned to
service in January 2001 following replacement of its steam generators. In
November 2000, the company agreed to sell Indian Point 2 and enter into a power
purchase agreement for the output from Indian Point 2 through the end of 2004.
For more information about Indian Point 2, see Note G to the Con Edison and Con
Edison of New York financial statements in Item 8 (which information is
incorporated herein by reference). For additional information about the
company's remaining electric generating facilities, see Item 2 (which
information is incorporated herein by reference).
The NYISO is a not-for-profit organization which controls and operates most of
the electric transmission facilities in New York State as an integrated system
and administers a wholesale market for electricity in New York State. The NYISO,
for reliability reasons, requires that entities supplying electricity to
customers in New York State have generating capacity (either owned or contracted
for) in an amount that is 18 percent or more above the expected peak load for
their customers. In addition, entities that serve customers in New York City
must have enough New York City-located capacity to cover 80 percent of their New
York City customer peak load. Con Edison of New York met these requirements in
2000 with respect to its full-service customers and expects to meet them in
2001.
In February 2001, the NYISO issued a study which found that approximately 300 MW
of additional capacity, or a similar reduction in electricity demand, will be
needed in New York City to meet reliability standards in summer 2001. Additional
capacity that would meet this requirement is currently under construction. In
March 2001, the NYISO issued a report recommending the addition of 8,600 MW of
new installed electric generating capacity in New York State by 2005, a
substantial portion of which would need to be located in New York City, in order
to avoid serious electricity shortages, improve air quality, continue New York's
economic growth, and avert strong upward pressure on prices.
Gas Operations
There have been and are continuing to be significant changes in Con Edison of
New York's gas operations in recent years, including the establishment of the
company's gas Retail Choice program under which all of the company's gas
customers are able to purchase gas from other suppliers.
Gas Sales. Gas operating revenues in 2000 were $1.1 billion or 13.5
percent of Con Edison of New York's operating revenues. The percentages were
13.6 and 13.7, respectively, in the two preceding years. In 2000, 41 percent of
the gas delivered by the company in its service area was sold by the company to
its full-service (firm and interruptible) customers and 59 percent was sold by
other suppliers, including Consolidated Edison Solutions, Inc., to their supply
customers. For additional information about gas sales, see "Operating
Statistics," below, and "Results of Operations - Gas" in the MD&As of Con Edison
and Con Edison of New York in Item 7 (which information is incorporated herein
by reference).
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Gas Requirements. Firm demand for gas in Con Edison of New York's service
area peaks during the winter heating season. The design criteria for the
company's gas system assume severe weather conditions that have not occurred in
the service area since 1934. Under these criteria, the company estimates that
the requirements to supply its firm gas customers would amount to 64,800
thousand dekatherms (mdth) of gas during the November 2000/March 2001 winter
heating season and that gas available to the company would amount to 85,000
mdth. For the November 2001/March 2002 winter heating season, the company
estimates that the requirements would amount to approximately 65,100 mdth and
that the gas available to the company would amount to approximately 85,000 mdth.
As of March 15, 2001, the November 2000/March 2001 winter heating season peak
day sendout to the company's customers was 880 mdth, which occurred on December
28, 2000. The company estimates that, under the design criteria, the peak day
requirements for firm customers during the November 2001/March 2002 winter
heating season would amount to approximately 877 mdth and expects that it would
have sufficient gas available to meet these requirements.
Gas Supply. Con Edison of New York has contracts with suppliers for the
firm purchase of natural gas. Charges under these contracts, which are based on
formulas or indexes or are subject to negotiation, are generally designed to
approximate market prices. The contracts are for various terms extending to
2006. The company also has contracts with interstate pipeline companies for the
purchase of firm transportation and storage services. Charges under these
contracts are approved by the Federal Energy Regulatory Commission. The
contracts are for various terms extending to 2013. The company is required to
pay certain charges under the supply, transportation and storage contracts
whether or not it actually uses the contracted capacity. These fixed charges
amounted to approximately $122 million in 2000.
In addition, Con Edison of New York purchases gas on the spot market and has
interruptible gas transportation contracts. The company has no obligation to
make any such purchases and any such purchases are at market prices.
Con Edison of New York recovers its gas supply, transportation and storage
costs, less net proceeds of sales of excess capacity (excluding any incentives
earned by the company for such sales), from customers pursuant to rate
provisions approved by the NYPSC. See "Recoverable Energy Costs" in Note A to
the Con Edison and Con Edison of New York financial statements in Item 8 (which
information is incorporated herein by reference).
In 1998, the NYPSC issued a policy statement recommending that all New York
State gas utilities terminate their gas supply or "merchant" functions within
three to seven years. The policy statement provides that utilities will have a
reasonable opportunity to recover any stranded costs. A NYPSC proceeding to
address the company's plans and rate issues resulted in a November 2000
agreement extending the company's 1996 gas settlement agreement through
September 2001. See "Rate and Restructuring Agreements" in Note A to the Con
Edison of New York financial statements in Item 8. Discussions are continuing on
a longer-term rate agreement and reliability, provider of last resort and market
power issues.
Steam Operations
Steam Sales. Con Edison of New York sells steam in Manhattan south of 96th
Street, mostly to large office buildings, apartment houses and hospitals. In
2000, steam operating revenues were $452 million or 5.7 percent of the company's
operating revenues. The percentages were 4.9 and 4.6, respectively, in the two
preceding years.
For information about Con Edison of New York's steam operations, see "State
Regulatory Matters - Steam" and "Results of Operations - Steam" in the MD&As of
Con Edison and Con Edison of New York in Item 7, the discussion of Con Edison of
New York's steam facilities in Item 2 and "Operating Statistics"," below (which
information is incorporated herein by reference).
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Steam Peak Load and Capacity. Demand for steam in Con Edison of New York's
service area peaks during the winter heating season. The one-hour peak load
during the winter of 2000/2001 (through March 15, 2001) occurred on December 26,
2001 when the load reached 9.2 million pounds. The company's estimate for the
winter of 2001/2002 peak demand of its steam customers is approximately 12.0
million pounds per hour under design criteria, which assume severe weather.
On December 31, 2000, the steam system had the capability of delivering about
13.4 million pounds of steam per hour. This figure does not reflect the
unavailability or reduced capacity of generating facilities resulting from
repair or maintenance. Con Edison of New York estimates that, on a comparable
basis, the system will have the capability to deliver approximately 13.4 million
pounds of steam per hour in the 2001/2002 winter.
Steam Supply. 37 percent of the steam sold by Con Edison of New York in
2000 was produced in the company's steam/electric generating stations, where it
is first used to generate electricity. 15 percent of the steam sold by the
company in 2000 was purchased from a NUG. The remainder was produced in the
company's steam-only generating units. See Item 2 for a discussion of Con Edison
of New York's steam facilities (which information is incorporated herein by
reference).
Regulation
The NYPSC regulates, among other things, Con Edison of New York's electric, gas
and steam rates, the siting of its transmission lines and the issuance of its
securities. Certain activities of Con Edison of New York are subject to the
jurisdiction of the Federal Energy Regulatory Commission. The Nuclear Regulatory
Commission regulates Con Edison of New York's Indian Point 2 and its retired
Indian Point 1 nuclear units. In addition, various matters relating to the
construction and operation of Con Edison of New York's facilities are subject to
regulation by other governmental agencies. Changes in regulation or legislation
applicable to Con Edison of New York could have a material adverse effect on the
company. For additional information, including information about the company's
electric, gas and steam rates, see "State Regulatory Matters" in Con Edison of
New York's MD&A in Item 7 (which information is incorporated herein by
reference).
Competition
For information about federal and state initiatives promoting the development of
competition in the supply of electricity and gas, see "State Regulatory Matters"
in the MD&As of Con Edison and Con Edison of New York in Item 7 (which
information is incorporated herein by reference). In addition, competition from
other suppliers of electricity or gas, suppliers of oil and other sources of
energy, including distributed generation (such as fuel cells and micro-turbines)
may provide alternatives for Con Edison of New York customers. The company's
electric, gas and steam rates are among the highest in the country.
Capital Requirements and Financing
For information about Con Edison of New York's capital requirements, financing
and securities ratings, see "Liquidity and Capital Resources - Capital
Resources" and "Capital Requirements and Financial Market Risks" in Con Edison
of New York's MD&A in Item 7 (which information is incorporated herein by
reference).
Securities ratings assigned by rating organizations are expressions of opinion
and are not recommendations to buy, sell or hold securities. A securities rating
is subject to revision or withdrawal at any time by the assigning rating
organization. Each rating should be evaluated independently of any other rating.
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Environmental Matters
General. Con Edison of New York's capital expenditures for environmental
protection facilities and related studies were approximately $14 million in 2000
and are estimated to be approximately $29 million in 2001.
Superfund. The Federal Comprehensive Environmental Response, Compensation
and Liability Act of 1980 ("Superfund") by its terms imposes joint and several
strict liability, regardless of fault, upon generators of hazardous substances
for resulting removal and remedial costs and environmental damages. In the
course of Con Edison of New York's operations, materials are generated that are
deemed to be hazardous substances under Superfund. These materials include
asbestos and dielectric fluids containing polychlorinated biphenyls ("PCBs").
Other hazardous substances are generated in Con Edison of New York's operations
or may be present at company locations. Also, hazardous substances were
generated at the manufactured gas plants that the company and its predecessor
companies used to operate. See "Superfund" in the discussion of Con Edison of
New York's legal proceedings in Item 3 and Note F to the Con Edison and Con
Edison of New York financial statements in Item 8 (which information is
incorporated herein by reference).
Asbestos. Asbestos is present in numerous Con Edison of New York
facilities. For information about asbestos, see "Asbestos Litigation" in the
discussion of the company's legal proceedings in Item 3 and Note F to the Con
Edison and Con Edison of New York financial statements in Item 8 (which
information is incorporated herein by reference).
Toxic Substances Control Act. Virtually all electric utilities, including
Con Edison of New York, own equipment containing PCBs. PCBs are regulated under
the Federal Toxic Substances Control Act of 1976. The company has reduced
substantially the amount of PCBs in electrical equipment it uses, including
transformers located in or near public buildings.
Indian Point. Con Edison of New York believes that a serious accident at
its Indian Point 2 nuclear unit is extremely unlikely, but despite substantial
insurance coverage, the losses to the company in the event of a serious accident
could materially adversely affect the company's financial position and results
of operations. For additional information about Indian Point 2 and the company's
retired Indian Point 1 nuclear unit, including their pending sale, see Note G to
the Con Edison and Con Edison of New York financial statements in Item 8 (which
information is incorporated herein by reference).
Water Quality. The Federal Clean Water Act provides for effluent
limitations, to be implemented by a permit system, to regulate the discharge of
pollutants, including heat, into United States waters. In 1981, Con Edison of
New York entered into a 10-year agreement with the United States Environmental
Protection Agency ("EPA") and others with respect to Indian Point 2 (which is
located adjacent to the Hudson River) in which the company agreed to certain
plant modifications, operating restrictions and other measures. In 1991, three
environmental interest groups commenced litigation challenging Indian Point 2's
permit status pending renewal of its discharge permits, which expired in October
1992. Under a consent order settling this litigation, certain restrictions on
Indian Point 2's usage of Hudson River water were imposed on an interim basis.
Permit renewal applications were filed in April 1992, after which the New York
State Department of Environmental Conservation ("DEC") determined that the
company must submit a draft environmental impact statement ("DEIS") to provide a
basis for determining new permit conditions. A preliminary DEIS, which includes
an evaluation of the costs and environmental benefits of potential mitigation
alternatives (one of which is the installation of cooling towers), has been
released for public comment. Pending issuance of final renewal permits, the
terms and conditions of the expired permits continue in effect.
Certain governmental authorities are investigating contamination in the Hudson
River and the New York Harbor. These waters are along the shoreline of Con
Edison of New York's service area. Governmental authorities could require
entities that generated hazardous substances that contaminated these waters to
bear the costs of investigation and remediation, which could be substantial.
- 13 -
OPERATING STATISTICS - CON EDISON OF NEW YORK
Year Ended December 31 2000 1999 1998 1997 1996
- ------------------------------------------------------------------------------------------------------
ELECTRIC ENERGY (MWhrs)
Generated (a) 3,259,790 15,266,628 16,541,078 15,877,467 17,823,778
Purchased from others (a) 35,780,429 29,303,386 26,372,576 27,105,143 26,178,042
--------------------------------------------------------------
Total Generated and Purchased 39,040,219 44,570,014 42,913,654 42,982,610 44,001,820
Less: Supplied without
direct charge -- 38 68 71 71
Used by
Company 191,445 151,090 155,172 155,934 164,206
Distribution losses and
other variances 2,768,249 2,682,594 2,429,301 2,799,039 2,716,235
--------------------------------------------------------------
Net Generated and Purchased 36,080,525 41,736,292 40,329,113 40,027,566 41,121,308
Electric Energy Sold
Residential 11,637,167 11,854,995 11,282,669 11,002,745 10,867,085
Commercial and
Industrial 19,930,376 20,238,777 24,455,265 25,911,199 25,725,502
Railroads and Railways 95,457 71,447 87,514 75,392 47,004
Public Authorities 257,706 465,287 548,569 538,643 564,363
--------------------------------------------------------------
Total Sales to Con Edison of New York 31,920,706 32,630,506 36,374,017 37,527,979 37,203,954
Customers
Off-System Sales (a)(b) 4,159,819 9,105,786 3,955,096 2,499,587 3,917,354
--------------------------------------------------------------
Total Electric Energy Sold 36,080,525 41,736,292 40,329,113 40,027,566 41,121,308
==============================================================
Total Sales to Con Edison of New York
Customers 31,920,706 32,630,506 36,374,017 37,527,979 37,203,954
Delivery Service for Retail Choice 9,321,630 7,935,827 2,417,321 -- --
Delivery Service to NYPA
Customers and Others 9,631,618 9,335,230 9,039,674 8,793,378 8,816,873
Service for Municipal Agencies 526,816 624,229 814,575 845,895 617,293
--------------------------------------------------------------
Total Sales in Franchise Area 51,400,770 50,525,792 48,645,587 47,167,252 46,638,120
==============================================================
Average Annual kWhr Use Per
Residential Customer (c) 4,372 4,487 4,303 4,225 4,184
Average Revenue Per kWhr Sold (cents)
Residential (c) 18.5 15.9 16.2 16.6 16.5
Commercial and Industrial (c) 15.5 12.7 12.7 13.0 12.9
(a) For 1997, 1996 and 1995, amounts generated include 973,483, 1,672,603 and
3,159,047 MWhrs., respectively, that Con Edison of New York, for a fee,
generated for others using as boiler fuel the gas that they provided.
These amounts are also included in off-system sales. For 1997, 1996 and
1995, amounts purchased include 929,483, 1,553,764 and 2,666,837 MWhrs.,
respectively, of such electric energy that was subsequently purchased by
Con Edison.
(b) For 2000, 1999 and 1998, includes sales to Consolidated Edison Solutions,
Inc., an unregulated subsidiary of Con Edison.
(c) Includes Municipal Agency sales.
- 14 -
OPERATING STATISTICS - CON EDISON OF NEW YORK (continued)
Year Ended December 31 2000 1999 1998 1997 1996
- -----------------------------------------------------------------------------------------------------------------------
GAS (Dth)
Purchased 157,800,083 245,496,798 232,560,023 242,296,610 219,439,813
Storage - net change 774,660 1,964,581 (4,404,888) (1,630,463) (4,032,224)
Used as boiler fuel at Electric
and Steam Stations (27,674,312) (67,331,325) (109,240,109) (109,508,555) (84,849,049)
----------------------------------------------------------------------------
Gas Purchased for Resale 130,900,431 180,130,054 118,915,026 131,157,592 130,558,540
Less: Gas used by Company 294,937 369,938 376,577 239,359 272,040
Off-System Sales & NYPA 29,563,339 92,072,772 26,104,143 14,216,403 11,023,023
Distribution losses and
other variances 7,060,117 1,998,637 (820,174) 104,531 176,930
----------------------------------------------------------------------------
Total Gas Sold to Con Edison of New York 93,982,038 85,688,707 93,254,480 116,597,299 119,086,547
Customers
Gas Sold
Firm Sales
Residential 47,602,792 44,705,689 45,106,269 53,217,428 56,590,018
General 30,468,676 27,271,134 30,685,310 39,468,337 42,190,091
----------------------------------------------------------------------------
Total Firm Sales 78,071,468 71,976,823 75,791,579 92,685,765 98,780,109
Interruptible Sales 15,910,570 13,711,884 17,462,901 23,911,534 20,306,438
----------------------------------------------------------------------------
Total Gas Sold to Con Edison of New York 93,982,038 85,688,707 93,254,480 116,597,299 119,086,547
Customers
Transportation of Customer-owned Gas
Firm Transportation 18,215,120 17,382,490 8,634,659 808,026 --
NYPA 19,857,321 11,268,947 4,260,908 17,041,695 4,966,983
Other 97,155,425 22,560,029 14,478,269 7,656,874 5,011,124
Off-System Sales 23,067,713 32,942,436 25,982,200 13,958,984 11,293,425
----------------------------------------------------------------------------
Total Sales and Transportation 252,277,617 169,842,609 146,610,516 156,062,878 140,358,079
============================================================================
Average Revenue Per Dth Sold
Residential $ 11.62 $ 11.20 $ 11.75 $ 11.22 $ 10.00
General $ 8.44 $ 7.70 $ 7.95 $ 8.14 $ 7.15
STEAM Sold (Mlbs) 26,733,260 26,532,797 24,995,694 27,422,561 29,995,762
Average Revenue Per Mlb Sold $ 16.37 $ 12.80 $ 12.83 $ 14.23 $ 13.34
CUSTOMERS - Average for year
Electric 3,078,648 3,054,693 3,030,746 3,010,139 3,001,870
Gas 1,051,555 1,046,133 1,040,410 1,036,098 1,035,528
Steam 1,861 1,879 1,898 1,920 1,932
- 15 -
O&R
General Nature and Scope of Business
O&R, incorporated in New York State in 1926, is a subsidiary of Con Edison which
has two wholly-owned utility subsidiaries, Rockland Electric Company ("RECO"), a
New Jersey corporation, and Pike County Light & Power Company ("Pike"), a
Pennsylvania corporation.
O&R and its utility subsidiaries provide electric service in southeastern New
York and in adjacent sections of New Jersey and northeastern Pennsylvania, an
approximately 1,350 square mile service area. They also provide gas service in
southeastern New York and Pennsylvania. O&R's business is subject to regulation
by the NYPSC, the New Jersey and Pennsylvania state utility commissions and the
Federal Energy Regulatory Commission. Changes in regulation or legislation
applicable to O&R could have a material adverse effect on the company's
financial position, results of operations or liquidity.
O&R's principal business segments are its regulated electric and gas utility
businesses. In 2000, electric and gas operating revenues were 73.2 percent and
26.2 percent, respectively, of its operating revenues.
For additional information about O&R's business, see O&R Management's Narrative
Analysis of the Results of Operations in Item 7 and the notes to the O&R
financial statements in Item 8 (which information is incorporated herein by
reference).
- 16 -
OPERATING STATISTICS - O&R
Year Ended December 31 2000 1999 1998 1997 1996
- ---------------------------------------------------------------------------------------------------------
ELECTRIC ENERGY (MWhrs)
Generated -- 1,871,898 4,061,371 3,059,038 2,545,717
Purchased from others 4,879,400 3,153,359 1,198,709 1,786,381 2,539,710
----------------------------------------------------------
Total Generated and Purchased 4,879,400 5,025,257 5,260,080 4,845,419 5,085,427
Less: Supplied without direct charge 20 23 166 -- --
Used by Company 19,337 134,587 251,947 211,023 187,558
Distribution losses and other variances 410,469 369,433 314,909 315,699 285,072
----------------------------------------------------------
Net Generated and Purchased 4,449,574 4,521,214 4,693,058 4,318,697 4,612,797
Electric Energy Sold
Residential 1,881,680 1,942,347 1,836,916 1,791,676 1,731,105
Commercial and Industrial 2,463,745 2,373,415 2,228,938 2,182,433 2,610,384
Public Authorities 104,150 96,294 70,525 39,143 80,914
----------------------------------------------------------
Total Sales to Orange and Rockland Customers 4,449,574 4,412,056 4,136,379 4,013,252 4,422,403
Off-System Sales -- 109,158 556,679 305,445 190,394
----------------------------------------------------------
Total Electric Energy Sold 4,449,574 4,521,214 4,693,058 4,318,697 4,612,797
==========================================================
Total Sales to Orange and Rockland Customers 4,449,574 4,412,056 4,136,379 4,013,252 4,422,403
Delivery Service for Retail Choice 606,793 589,223 691,891 617,280 182,859
----------------------------------------------------------
Total Sales in Franchise Area 5,056,368 5,001,279 4,828,270 4,630,532 4,605,262
==========================================================
Average Annual kWhr Use Per
Residential Customer 7,854 8,065 7,716 7,642 7,459
Average Revenue Per kWhr Sold (cents)
Residential 12.22 11.84 12.01 12.32 12.19
Commercial and Industrial 9.93 8.18 8.38 8.54 8.84
- 17 -
OPERATING STATISTICS - O&R (continued)
Year Ended December 31 2000 1999 1998 1997 1996
- -------------------------------------------------------------------------------------------------------------------------
GAS (Dth)
Purchased 25,042,346 36,711,658 53,030,119 42,492,515 35,294,805
Storage - net change (1,099,134) 890,604 (278,878) (1,242,537) (252,743)
Used as boiler fuel at Electric Stations -- (15,252,652) (31,757,453) (16,567,916) (8,903,618)
-----------------------------------------------------------------------
Gas Purchased for Resale 23,943,212 22,349,610 20,993,788 24,682,062 26,138,444
Less: Gas used by Company 57,828 77,612 54,392 163,089 74,015
Distribution losses and
other variances 841,295 705,214 1,395,332 840,198 534,412
-----------------------------------------------------------------------
Total Gas Sold to Orange and Rockland Customers 23,044,089 21,566,784 19,544,064 23,678,775 25,530,017
Gas Sold
Firm Sales
Residential 14,281,013 13,702,735 12,913,578 15,477,043 16,154,948
General 4,473,533 4,389,977 3,410,481 4,561,624 5,258,857
-----------------------------------------------------------------------
Total Firm Sales 18,754,546 18,092,712 16,324,059 20,038,667 21,413,805
Interruptible Sales 3,260,329 3,474,072 3,220,005 3,640,108 4,116,212
Sales to Con Edison 1,029,214 -- -- -- --
-----------------------------------------------------------------------
Total Gas Sold to Orange and Rockland Customers 23,044,089 21,566,784 19,544,064 23,678,775 25,530,017
Transportation of Customer-owned Gas
Firm Transportation 3,415,804 2,207,541 1,614,284 935,231 135,424
Other 4,222,835 1,905,807 4,059,829 3,660,687 3,233,442
Off-System Sales 4,984,794 264,277 -- -- --
-----------------------------------------------------------------------
Total Sales and Transportation 35,667,522 25,944,409 25,218,177 28,274,693 28,898,883
=======================================================================
Average Revenue Per Dth Sold
Residential $ 8.32 $ 7.77 $ 7.25 $ 7.45 $ 7.24
General $ 7.65 $ 6.92 $ 6.87 $ 7.13 $ 6.93
CUSTOMERS - Average for year
Electric 278,851 275,640 272,111 268,233 264,877
Gas 118,707 117,283 115,708 113,852 112,588
- 18 -
ITEM 2. PROPERTIES
CON EDISON
Con Edison has no significant properties other than those of Con Edison of New
York, O&R and Con Edison's unregulated subsidiaries. At December 31, 2000, the
capitalized cost of Con Edison's utility plant, net of accumulated depreciation,
was comprised as follows (in millions of dollars):
Con Edison of Unregulated
New York O&R Subsidiaries Con Edison
Electric Amount Percent Amount Percent Amount Percent Amount Percent
Generation $ 497.5 4% $ -- -- -- -- $ 497.5 4%
Transmission 1,075.6 10% 78.7 11% -- -- 1,154.3 10%
Distribution 5,862.1 54% 349.2 49% -- -- 6,211.3 52%
Gas 1,520.5 14% 190.1 26% -- -- 1,710.6 14%
Steam 528.8 5% -- -- -- -- 528.8 5%
General 868.3 8% 72.0 10% -- -- 940.3 8%
Held for Future Use 6.2 -- 1.9 -- -- -- 8.1 --
Unregulated generating assets -- -- -- -- 230.4 100% 230.4 2%
Construction Work in Progress 476.4 4% 28.1 4% -- -- 504.5 4%
Nuclear fuel assemblies and components,
less accumulated
amortization 107.6 1% -- -- -- -- 107.6 1%
----------------------------------------------------------------------
Net Utility Plant $10,943.0 100% $720.0 100% $230.4 100% $11,893.4 100%
CON EDISON OF NEW YORK
Electric Facilities
Generating Facilities. Con Edison of New York has sold most of its
electric generating facilities, and has agreed to sell its approximately 1,000
MW Indian Point 2 nuclear generating unit and related assets (located in
Westchester County, New York). See Notes G and I to the Con Edison and Con
Edison of New York financial statements in Item 8 (which information is
incorporated herein by reference). The company expects to have sufficient
amounts of fuel available in 2000 for use in its remaining electric generating
facilities. Immediately following the sale of Indian Point 2, the company's
remaining electric generating facilities will consist of plants located in New
York City with an aggregate capacity of approximately 500 MW, including its
approximately 300 MW East River and 160 MW Waterside steam-electric generating
stations. The company intends to add incremental generating capacity of
approximately 200 MW through the repowering of its East River station and the
closing of its Waterside station. See "Liquidity and Capital Resources - Capital
Requirements" in the MD&As of Con Edison and Con Edison of New York in Item 7
(which information is incorporated herein by reference).
Transmission Facilities. Con Edison of New York's transmission facilities,
other than those located underground, are controlled and operated by the NYISO.
See "Electric Operations- Electric Supply" in Item 1 (which information is
incorporated herein by reference). At December 31, 2000, Con Edison of New
York's transmission system had approximately 432 miles of overhead circuits
operating at 138, 230, 345 and 500 kilovolts and approximately 381 miles of
underground circuits operating at 138 and 345 kilovolts. There are approximately
267 miles of radial subtransmission circuits operating at 69 and 138 kilovolts.
The company's 14 transmission substations, supplied by circuits operated at 69
kilovolts and above, have a total transformer capacity of approximately 15,731
megavolt amperes. The company's transmission facilities are located in New York
City and Westchester, Orange, Rockland, Putnam and Dutchess counties in New York
State.
Con Edison of New York has transmission interconnections with Niagara Mohawk,
Central Hudson Gas & Electric Corporation, O&R, New York State Electric and Gas
Corporation, Connecticut Light and Power Company, Long Island Lighting Company,
NYPA and Public Service Electric and Gas Company.
- 19 -
Distribution Facilities. Con Edison of New York owns various distribution
substations and facilities located throughout New York City and Westchester
County. At December 31, 2000, the company's distribution system had a
transformer capacity of approximately 20,300 megavolt amperes, approximately
32,500 miles of overhead distribution lines and approximately 88,800 miles of
underground distribution lines.
Gas Facilities
Natural gas is delivered by pipeline to Con Edison of New York at various points
in its service territory and is distributed to customers by the company through
approximately 4,200 miles of mains and 368, service lines. The company owns a
natural gas liquefaction facility and storage tank at its Astoria property in
Queens, New York. The plant can store approximately 1,000 mdth of which a
maximum of about 250 mdth can be withdrawn per day. The company has about 1,230
mdth of additional natural gas storage capacity at a field in upstate New York,
owned and operated by Honeoye Storage Corporation, a corporation 28.8 percent
owned by Con Edison of New York.
Steam Facilities
Con Edison of New York generates steam for distribution at two steam/electric
generating stations and six steam-only generating stations and distributes steam
to customers through approximately 87 miles of mains and 18 miles of service
lines. For information about the planned repowering of the East River
steam-electric station, see "Electric Facilities- Generating Facilities," above.
O&R
Electric Transmission and Distribution Facilities
O&R and its utility subsidiaries, RECO and Pike, own, in whole or in part,
transmission and distribution facilities which include 601 circuit miles of
transmission lines, 13 transmission substations (with a total transformer
capacity of approximately 3,362 megavolt amperes), 58 distribution substations
(with a total transformer capacity of 1,867 megavolt amperes), 88,892 in-service
line transformers, 5,062 pole miles of overhead distribution lines and 2,519
miles of underground distribution lines.
Gas Facilities
O&R and Pike own their gas distribution systems, which include 1,765 miles of
mains.
RECO & Pike Mortgages
Substantially all of the utility plant and other physical property of O&R's
utility subsidiaries, RECO and Pike, is subject to the liens of the respective
indentures securing first mortgage bonds of each company.
- 20 -
ITEM 3. LEGAL PROCEEDINGS
CON EDISON
For information about legal proceedings relating to Con Edison's October 1999
agreement to acquire Northeast Utilities, see Note P to the Con Edison financial
statements in Item 8 (which information is incorporated herein by reference).
Con Edison's only other material pending legal proceedings are those of Con
Edison of New York and O&R discussed below.
CON EDISON OF NEW YORK
Superfund
The following is a discussion of significant proceedings pending under Superfund
or similar statutes involving sites for which Con Edison of New York has been
asserted to have a liability. Additional such proceedings may arise in the
future. For a further discussion of claims and possible claims against Con
Edison of New York under Superfund, the estimated liability accrued for certain
Superfund claims and recovery from customers of site investigation and
remediation costs, see "Environmental Matters - Superfund" in Item 1, and
"Environmental Matters " in Note F to Con Edison of New York's financial
statements in Item 8 (which information is incorporated herein by reference).
Maxey Flats Nuclear Disposal Site. In 1986, the EPA designated Con Edison
of New York a potentially responsible party (PRP) under Superfund for the
investigation and cleanup of the Maxey Flats Nuclear Disposal Site in Morehead,
Kentucky. The site is owned by the State of Kentucky and was operated as a
disposal facility for low level radioactive waste from 1963 through 1977 by the
Nuclear Engineering Corporation (now known as U.S. Ecology Corporation). In
1995, the United States, the State of Kentucky and various de minimis PRPs,
large private party PRPs (including Con Edison of New York) and large federal
agency PRPs entered into consent decrees with respect to the funding and
implementation of the cleanup program required by EPA for the site. Under the
consent decrees, the large private party PRPs are responsible for implementing
phase one of the program and any corrective actions required during the first 10
years following completion of phase one. The costs of those activities are being
shared with the large federal agency PRPs. Also, if during this ten-year period
the EPA determines that horizontal flow barriers are required, the large private
party PRPs will construct the barriers and share the cost of that work with the
large federal agency PRPs and the State of Kentucky. The large private party
PRPs are not responsible for any costs after the ten-year period expires. The
State of Kentucky will implement and fund the remainder of the cleanup program.
Con Edison of New York's share of the cleanup costs is estimated to be between
$500,000 and $600,000.
Curcio Scrap Metal Site. In 1987, the EPA designated Con Edison of New
York, a Superfund PRP for the Curcio Scrap Metal, Inc. Site in Saddle Brook, New
Jersey, because Con Edison of New York had previously sold PCB-contaminated
scrap electric transformers to a metal broker who in turn sold them to the owner
of the site for salvaging. In 1991, the EPA issued a Unilateral Administrative
Order which required Con Edison of New York and three other PRPs to implement a
soil and sediment cleanup program at and around the site. In 1997, the EPA
issued a Record of Decision in which it concluded that the soil and sediment
cleanup had successfully remediated the principal threats associated with the
site and required periodic groundwater monitoring at the site for five years.
Con Edison of New York is conducting the required groundwater monitoring
program, which is expected to cost about $300,000, under an EPA Administrative
Consent Order. Depending on the results of the monitoring, the EPA could extend
the monitoring program for an additional five years or require remedial
measures, such as groundwater treatment or cleanup work.
- 21 -
Metal Bank of America Site. In 1987, the EPA designated Con Edison of New
York a Superfund PRP for the Metal Bank of America Site in Philadelphia. The
site, a former metal recycling facility, was placed on the EPA's national
priority list in 1983. PCBs have been found in the site soil and groundwater and
in the sediment from areas of a tidal mudflat and the Delaware River along the
site's shoreline. During the 1970s, Con Edison of New York sold approximately
125 transformers to scrap metal dealers who salvaged or may have salvaged the
transformers at the site. In 1997, the EPA issued a Record of Decision that
calls for, among other things, the removal and disposal of contaminated
sediments in the areas of the tidal mudflat and the Delaware River along the
site's shoreline. In 1998, the EPA ordered the electric utility PRPs to design
and implement the cleanup program. The cost of the required cleanup program,
estimated at between $24 million and $30 million, will be allocated among the
utilities, with Con Edison of New York's share expected to be approximately one
percent.
Narrowsburg Site. In 1987, the New York State Attorney General notified
Con Edison of New York that it is a Superfund PRP for the Cortese Landfill Site
in Narrowsburg, New York, because during 1974 the company had disposed of waste
oil at the landfill. The Cortese Landfill is listed on the EPA's Superfund
National Priorities List. In 1983, the Attorney General commenced an action
under Superfund in the United States District Court for the Southern District of
New York against the Cortese Landfill site owner and operator and SCA Services
("SCA"), an alleged transporter of hazardous substances to the site. In 1989,
SCA commenced a third-party action for contribution against Con Edison of New
York and various other parties whose chemical waste was allegedly disposed of at
the site. Con Edison of New York and SCA have reached a settlement of the
third-party action under which Con Edison of New York paid $114,485 toward the
cost of the site environmental studies and will pay 6 percent of the first $25
million of remedial costs for the site. SCA has agreed to indemnify Con Edison
of New York for any other remedial costs and natural resource damages that it
has to pay. The EPA has selected a cleanup program for the site that is
estimated to cost $12 million and the court has approved a consent decree under
which SCA, Con Edison of New York and various other site PRPs have agreed to
implement the cleanup program, pay the EPA's oversight costs for the site and
pay approximately $220,000 for natural resource damages.
Carlstadt Site. In 1990, Con Edison of New York was served with a
third-party complaint in a Superfund cost contribution action for a former waste
solvent and oil recycling facility located in Carlstadt, New Jersey. The
complaint in the action, which is pending before the United States District
Court for the District of New Jersey, alleges that Con Edison of New York is one
of several hundred parties who are responsible under Superfund for the study and
cleanup of the facility. The plaintiffs in the action, which include a group of
former customers of the facility, have completed a $3 million remedial
investigation and feasibility study for the site. Plaintiffs estimate that 7 to
15 million gallons of waste solvents and oil were recycled at the site and based
on this estimate, Con Edison of New York's share of the cleanup costs is
estimated at about 0.8 to 1.7 percent. The costs of the cleanup alternatives
that were evaluated in the remedial investigation and feasibility study range
from $8 million to $321 million. Plaintiffs have completed an interim remedy,
which plaintiffs claim cost more than $10 million, to control releases from the
site while the EPA evaluates and develops a final cleanup remedy.
Global Landfill Site. Con Edison of New York is a PRP under Superfund and
the New Jersey Spill Compensation and Control Act (Spill Act) for the Global
Landfill Site in Old Bridge, New Jersey. The site, a former sanitary landfill
that was authorized to accept municipal refuse and industrial waste, is included
on the Superfund National Priorities List and is being administered by the New
Jersey Department of Environmental Protection and Energy ("NJDEPE") pursuant to
an agreement between the EPA and the State of New Jersey. In 1993, a group of
site PRP's, including Con Edison of New York, entered into a consent decree with
the NJDEPE to implement, with partial funding from NJDEPE, a Phase I remedy,
estimated to cost $30 million. In 1997, the EPA issued a Record of Decision in
which it selected a Phase II remedy. The site PRP group and the NJDPE are
currently negotiating a consent decree under which the site PRP group would also
design and implement the Phase II remedy. Con Edison of New York's share of the
costs of the Phase I and Phase II remedies is not expected to exceed $150,000.
- 22 -
Chemsol Site. In 1991, the EPA advised Con Edison of New York that it had
documented the release of hazardous substances at the Chemsol Site in
Piscataway, New Jersey and that it had reason to believe that Con Edison of New
York sent waste materials to the site during the period from 1960 through 1965.
In response to the EPA's demand for records relating to the Con Edison of New
York's dealings with the site and various specified companies, including Cenco
Instruments Corporation, the company submitted to the EPA records of payments to
Central Scientific Company, a Division of Cenco Instruments Corporation. Con
Edison of New York is unable at this time to determine either the purpose of the
payments to Central Scientific Company or the connection of that company to the
site. The EPA has not designated Con Edison of New York as a PRP and has not yet
selected a final cleanup program for the site. However, the EPA has selected an
interim remedy, expected to cost about $8 million, for the site groundwater
contamination and has ordered several designated PRPs to implement that remedy.
Echo Avenue Site. In 1987, the DEC classified Con Edison of New York's
former Echo Avenue substation site in New Rochelle, New York as an "Inactive
Hazardous Waste Disposal Site" because of the presence of PCBs in the soil and
in the buildings on the site. Remedial action has been taken under a consent
order with the DEC. In 1993, the owners of Echo Bay Marina filed suit in the
United States District Court for the Southern District of New York alleging that
PCBs were being discharged into the Long Island Sound from the substation site.
Plaintiffs sought $24 million for personal injuries and property damages, a
declaration that Con Edison of New York is in violation of the Clean Water Act,
civil penalties of $25,000 per day for each violation, remediation costs, an
injunction against further discharges and legal fees. In 1994, the court
dismissed plaintiffs' claims for property damage, including loss of business. In
July 1999, the court dismissed the remaining claims. In June 2000, the United
States Court of Appeals for the Second Circuit affirmed the trial court's
dismissal of plaintiffs' personal injury and property damage claims, but
remanded the case to the trial court for further proceedings on plaintiffs' site
clean up claims. In February 2001, the trial court granted summary judgment to
the company and dismissed the claims that had been remanded.
PCB Treatment, Inc. Sites. In 1994, the EPA designated Con Edison of New
York as a Superfund PRP for the PCB Treatment, Inc. (PTI) Sites in Kansas City,
Kansas and Kansas City, Missouri, because during the mid-1980's it shipped
almost 2.9 million pounds of PCB-containing oil and electric equipment to two
buildings that PTI used at the sites for the storage, processing, and treatment
of PCB-containing electric equipment, dielectric oils, and materials. Con Edison
of New York is member of a PRP steering committee that, in May 2000, completed
environmental studies and engineering evaluations for the sites under an EPA
administrative consent order. The results of the studies indicate that portions
of the buildings' floor slabs, support columns, and walls and the soil around
the buildings' outdoor loading dock areas are contaminated with PCBs. In August
2000, EPA selected a removal action program for the contaminated buildings and
soil at the sites. Under the program, which could cost as much as $34 million to
complete, the buildings will be demolished and the contaminated soil will be
excavated and shipped to off-site disposal facilities. Based on allocation
information recently developed by EPA, Con Edison of New York believes that its
share of the investigation and remediation costs for the sites could range
between $2.5 and $5 million.
Astoria Site. Con Edison of New York is required to conduct a site
investigation and, where necessary, a remediation program as a condition to
renewal by the DEC of Con Edison of New York's permit to store PCBs at Con
Edison of New York's former Astoria generating station site in Queens, New York.
The site investigation was completed in 1998 and reports, indicating
PCB-contamination of portions of the site, have been submitted to the DEC and
the New York State Department of Health. Depending on the remediation action
required, the costs of remediation could be material. In 1999, Con Edison of New
York completed the sale of its Astoria generating station pursuant to an
agreement in which the buyer has generally agreed to assume all environmental
liabilities relating to the assets sold other than those for prior offsite
disposal of hazardous waste.
- 23 -
Borne Chemical Site. In 1997, Con Edison of New York was named as an
additional third-party defendant in a private cost recovery action in the New
Jersey Superior Court (Union County) under the New Jersey Spill Compensation and
Control Act for the Borne Chemical site in Elizabeth, New Jersey. Borne Chemical
used the site for the processing and blending of various types of petroleum,
dyes and chemical products from approximately 1917 until 1985 when it became
bankrupt and abandoned the site. Between 1971 and 1981, a portion of the site
was occupied by a waste transporter and oil spill cleanup contractor that did
work for Con Edison of New York at various times. Con Edison of New York and
four other third-party defendants in the lawsuit have entered into a settlement
with the third-party plaintiffs under which Con Edison of New York paid $70,434
towards the cost of certain work that plaintiffs had already completed and
agreed to assume responsibility for approximately 0.67% of the expenses that the
third-party plaintiffs incured conducting the site investigation study ordered
by the NJDEPE and any soil or groundwater cleanup program that the NJDEPE may
require after the site investigation study is completed.
Capasso Site. In 1997, Con Edison of New York was served with a complaint
by DMJ Associates seeking to compel Con Edison of New York and 16 other
defendants to clean up contamination at the Capasso property located in Long
Island City, New York. The complaint alleges that Con Edison of New York sent
waste to the Quanta Resources facility (Quanta) and that contamination,
including PCB contamination, has migrated from Quanta to the Capasso property
and is contributing to the contamination on or about the Capasso property. Con
Edison of New York is continuing to investigate whether it sent any waste to
Quanta. Con Edison of New York is defending this action pursuant to a joint
defense agreement with the other generator defendants.
Arthur Kill Transformer Site. Following a September 1998 transformer fire
at Con Edison of New York's former Arthur Kill generating station, it was
determined that oil containing high levels of PCBs was released to the
environment during the incident. Con Edison of New York is cooperating with the
investigations and has completed DEC-approved cleanup programs for the station's
facilities and various soil and pavement areas of the site affected by the PCB
release. Pursuant to a July 1999 DEC consent order, Con Edison of New York is
carrying out a DEC-approved Remedial Investigation/Feasibility Program to assess
the nature and extent of the contamination in, and to recommend a proposed
remediation program for, the waterfront area of the station. After soliciting
public comment, the DEC will select a remedial alternative to be implemented by
Con Edison of New York. In 1999, Con Edison of New York completed the sale of
its Arthur Kill generating station pursuant to an agreement in which the buyer
generally agreed to assume all environmental liabilities relating to the assets
sold other than those for prior offsite disposal of hazardous waste and
liabilities arising out of the transformer fire. In April 2000, Con Edison of
New York entered into a Stipulation and Order of Consent with the United States
Attorney for the Southern District of New York pursuant to which the United
States Attorney agreed not to prosecute the company in connection with its
response to the release of PCBs during the September 1998 transformer fire and,
among other things, the company agreed to continue to develop, implement and
maintain an effective environmental compliance program and to submit the program
to an examination and evaluation by a person selected by the United States
Attorney.
BCF Oil Refining Site. In May 2000, the EPA designated Con Edison of New
York and numerous other parties as PRPs for the BCF oil refining site in
Brooklyn, New York. The site was operated as a waste oil reprocessing facility
from the late 1970's until August 1994, when the facility was forced to close
down because its storage and processing tanks had become contaminated with
elevated concentrations of PCBs. In November 1994, the owners of the site sued
Con Edison of New York, alleging that its shipments of waste oil and oily
wastewater to the facility were the source of the high concentration of PCBs
that had contaminated the facility's tanks. The action was dismissed after a
jury verdict in Con Edison of New York's favor. However, the facility's tanks
still contain significant quantities of PCB-contaminated oil and EPA has
determined that an emergency cleanup program estimated to cost $2.1 million is
required for them. EPA is currently attempting to negotiate with the owners of
the facility for the implementation of the required emergency cleanup program,
but has indicated that it may order PRPs who shipped waste oil to the facility
to implement or to fund the program if the facility owners do not agree to carry
out the program.
- 24 -
Mattiace Petrochemical Company Site. In July 2000, Con Edison of New York
was served with an EPA Superfund information request for the Mattiace
Petrochemical Company Superfund site in Glen Cove, New York. According to EPA,
the Mattiace Petrochemical Company processed, blended, repacked, and distributed
solvents at the site from the mid-1960's until 1987. Between 1974 and 1982,
Mattiace Petrochemical's affiliate, the M&M Drum Company, cleaned and
refurbished metal drums at the site. EPA has reportedly incurred expenses
totaling approximately $21 million since 1988, conducting emergency removal and
cleanup work and other response actions at the site, including the portions of
the site used by the M&M Drum Company. During the late 1970's and early 1980's,
Con Edison of New York purchased naphta and a mineral spirit-based solvent
product from Mattiace Petrochemical and sold empty scrap drums to Mattiace
Petrochemical and M&M Drum. Based on Con Edison of New York's response to the
information request for the site and M&M Drum Company records that EPA recently
obtained from the Nassau County District Attorney's office, EPA claims that Con
Edison of New York is responsible for about 53% of the scrap drums that Mattiace
Petrochemical and M&M Drums handled at site. EPA has indicated that it is
developing an allocation proposal for its past site costs and that it will begin
settlement negotiations with site PRPs as soon as its allocation proposal has
been approved by the United States Department of Justice.
Croton Point Sanitary Landfill Site. The New York Attorney General has
alleged that Con Edison of New York and numerous other businesses with
commercial and industrial facilities within Westchester County, New York are
Superfund PRPs for the County of Westchester's Croton Point Sanitary Landfill in
Croton on the Hudson, New York, because they formerly used the landfill for the
disposal of refuse and waste materials that contained hazardous substances.
According to the New York Attorney General, the State of New York has spent over
$27 million since 1993 assisting the County of Westchester in implementing
response actions needed to prevent releases of hazardous substances from the
landfill and to properly close the landfill. Con Edison of New York intends to
join a group of other designated site PRPs that is currently attempting to
negotiate with the Attorney General a settlement under which the State of New
York's past response costs would be equitably allocated among all known site
PRPs, including the County of Westchester and various municipalities within
Westchester County that disposed of incinerator ash and other materials
containing hazardous substances at the landfill.
Manufactured Gas Sites. In 1999, Con Edison of New York submitted a report
to the DEC identifying 32 sites where Con Edison of New York or its predecessors
manufactured gas many years ago and 17 sites where the company or its
predecessors maintained storage holders for manufactured gas in the past. The
company may be required to investigate and, if necessary, remediate each of the
sites, the cost of which is not presently determinable but may be material to
its financial position, results of operations or liquidity. Coal tar and other
manufactured gas plant-related environmental contaminants have been detected at
several of the sites, including lower Manhattan and the Hunts Point section of
New York City and in Tarrytown, Pelham Manor and White Plains in Westchester
County.
As to the lower Manhattan site, located near the Hudson River, the cost of the
DEC-approved cleanup work is estimated at $10 million, and the DEC has demanded
that the company conduct off-site testing to determine whether the contamination
has migrated.
As to the Hunts Point site, which was sold to New York City in the 1960's, the
New York City Economic Development Corporation ("EDC") is implementing
DEC-approved investigation programs for five vacant parcels at the site for
which development is planned and will implement DEC-approved remediation
programs for the five parcels. Con Edison of New York and the City have
negotiated a settlement agreement under which the company would reimburse the
City for up to $14.2 million of the expenses it incurs to implement the
remediation programs for the four vacant parcels for which it has already
completed the required DEC-approved investigation programs. The proposed
settlement agreement is currently being reviewed by the New York City
Controller. DEC has demanded that the company assess the current environmental
conditions of the remaining parcels at the site.
- 25 -
As to the Tarrytown site, which is adjacent to the Hudson River, the company
recently completed a DEC-approved supplemental investigation program to compile
the additional data needed by the DEC to determine the scope of the required
cleanup program for the contaminated sections of the site and the Hudson River.
Depending on DEC requirements, the costs of the remediation programs could
exceed $20 million.
As to the Pelham Manor site, now used as a shopping center, the company is
funding site studies and has agreed to participate with the site ground lessee
in the development and implementation of a cleanup plan that is acceptable to
the DEC, the costs of which have not yet been determined.
As to the White Plains site, based on the limited testing conducted to date, it
appears that the contamination extends to at least one neighboring property and
possibly others. Additional studies are planned to delineate the full extent of
the contamination. Depending on the results of those studies and the cleanup
requirements imposed by the DEC, the costs of cleaning up the contamination
could exceed $10 million.
Asbestos Litigation
Asbestos is present in numerous Con Edison of New York facilities. The following
is a discussion of the significant suits involving asbestos in which Con Edison
of New York has been named a defendant. The listing is not exhaustive and
additional suits may arise in the future. See "Environmental Matters" in Note F
to the Con Edison of New York financial statements in Item 8 (which information
is incorporated herein by reference).
Mass Tort Cases. Numerous suits have been brought in New York State and
Federal courts against Con Edison of New York and many other defendants for
death and injuries allegedly caused by exposure to asbestos at various Con
Edison of New York premises. Many of these suits have been disposed of without
any payment by Con Edison of New York, or for immaterial amounts. The amounts
specified in the remaining suits, including the Moran v. Vacarro suit discussed
below, total billions of dollars, but Con Edison of New York believes that these
amounts are greatly exaggerated, as were the claims already disposed of.
Moran, et al. v. Vacarro, et al. In 1988, Con Edison of New York was
served with a complaint and an amended complaint in an action in the New York
State Supreme Court, New York County, in which approximately 188 Con Edison of
New York employees and their union alleged that the employees were exposed to
dangerous levels of asbestos as a result of alleged intentional conduct of
supervisory employees. Each of the employee plaintiffs sought $1 million in
punitive damages, $1 million in damages for mental distress, unspecified
additional compensatory damages, and to enjoin Con Edison of New York from
violating EPA regulations and exposing employees to asbestos without first
taking certain safety measures. In 1990, the complaint was amended to add the
spouses of 131 plaintiffs as additional plaintiffs and to remove the union as a
plaintiff. Each spouse seeks medical monitoring, $1 million for emotional
distress and $1 million for punitive damages. In 1995, the court dismissed the
claims of the employee plaintiffs, leaving employee spouses as the only
plaintiffs.
- 26 -
Employees' Class Action
In January 1998, seven current employees and one former employee of Con Edison
of New York sought class certification in a proceeding, entitled Sheppard, et
al. v. Con Edison of New York, that had been initiated 1994 in the United States
District Court for the Eastern District of New York. Plaintiffs allege denial of
promotions or transfer because of their race and seek back-pay, compensatory and
punitive damages, injunctive relief (including promotions for those allegedly
improperly denied promotions), and reformation of Con Edison of New York's
personnel practices. In December 2000, the court issued a decision in which it
disapproved a settlement with the plaintiffs (that the court had preliminarily
approved in June 2000) pursuant to which company was to pay an estimated
aggregate $10 million (including attorneys' fees) and take certain actions with
respect to its personnel practices. At December 31, 2000, the company had
accrued an approximately $12.1 million liability with respect to this action.
Nuclear Fuel Disposal
Reference is made to the discussion of nuclear fuel in Note G to the Con Edison
and Con Edison of New York financial statements in Item 8 for information
concerning proceedings brought by Con Edison of New York and a number of other
utilities against the United States Department of Energy (which information is
incorporated herein by reference). The proceedings are entitled Northern States
Power Co., et al. v. Department of Energy, et al.
Washington Heights Power Outage
Lawsuits relating to a July 1999 interruption of electric service to customers
served by Con Edison of New York's Washington Heights distribution network are
pending in New York State Supreme Court, New York County. The plaintiffs are
seeking aggregate damages in excess of in excess of $100 million compensatory
damage and injunctive relief. In August 2000, the court denied plaintiffs'
motion to certify a class action. In September 2000, plaintiffs appealed the
court's denial to the Appellate Division of the New York State Supreme Court,
First Department. The City of New York has petitioned the NYPSC to impose a $3
million penalty on the company. The NYPSC may sue the company for penalties
relating to the outage. The company does not expect that the outage will have a
material adverse effect on its financial position, results of operation or
liquidity.
Ronel Bennett
In December 1999, Ronel Bennett, Inc. and its president commenced an action in
the Supreme Court of the State of New York, County of Queens, against Con Edison
of New York and six of its employees seeking $300 million in damages and
alleging breach of contract and torts. Ronel Bennett performed work for the
company at its former Ravenswood generating station from September 1996 through
sometime in Spring 1997. Plaintiffs claim that the company failed to maintain a
safe working environment, misrepresented conditions, failed to disclose
information about hazardous and toxic substances, violated federal and New York
laws regarding hazardous substances and retaliated against the plaintiffs. The
company does not expect this proceeding to have a material adverse effect on its
financial condition, results of operation or liquidity.
- 27 -
O&R
Superfund
The following is a discussion of significant proceedings pending under Superfund
or similar statutes involving sites for which O&R has been asserted to have a
liability. Additional such proceedings may arise in the future. For a further
discussion of claims and possible claims against O&R under Superfund and the
estimated liability accrued for certain Superfund claims, see "Environmental
Matters " in Note F to the O&R financial statements in Item 8 (which information
is incorporated herein by reference).
Metal Bank of America Site. O&R is a PRP with respect to the site
described under "Superfund - Metal Bank of America Site" above in the
description of Con Edison of New York's legal proceedings in this Item 3. O&R's
share of the estimated $24 million to $30 million cost of the cleanup program is
expected to be approximately 4.6 percent.
Borne Chemical Site. O&R is a PRP with respect to the site described under
"Superfund - Borne Chemical Site" above in the description of Con Edison of New
York's legal proceedings in this Item 3. In October 1995, various site PRPs,
including O&R, entered into an administrative consent order with the NJDEPE
which obligates them to perform a remedial investigation to determine what, if
any, subsurface remediation at is required.
West Nyack Site. In 1994 and 1997, O&R entered into consent orders with
DEC pursuant to which O&R agreed to conduct a remedial investigation and
remediate certain property it owns in West Nyack, New York at which PCBs were
discovered. Petroleum contamination related to a leaking underground storage
tank was found as well. O&R has completed all remediation at the site that the
DEC has to date required. The DEC is expected to determine whether any
additional groundwater remediation will be required.
Orange County Landfill Site. In August 2000, the New York Attorney General
informed O&R that it had been identified as a Superfund PRP for the Orange
County Landfill Site in Goshen, New York. The site, a former sanitary landfill,
was operated by the Orange County Department of Works between 1974 and January
1992 and was reportedly used for the disposal of approximately 7 million cubic
yards of municipal waste as well as small quantities of waste oil, industrial
waste, septic sludge, and hazardous waste. In March 1992, the DEC designated the
landfill site a Class 2 Inactive Hazardous Waste Disposal Site after finding
groundwater contamination in the vicinity of the site. Since then, the State of
New York has incurred expenses totaling more than $12 million in connection with
various required response actions for the site, including the capping and proper
closure of the landfill. Orange County has reportedly spent an additional $5
million in connection with those actions. O&R's records indicate that during the
period 1988 through 1990, it disposed of approximately 1.5 cubic yards of
oil-soaked debris and four cubic yards of oil and/or solvent-contaminated metal
at the landfill. O&R is investigating whether private refuse carters that picked
up trash from its facilities may have used the landfill for the disposal of the
trash.
Ramapo Landfill Site. In November 2000, the New York Attorney General
informed O&R that it was considered a Superfund PRP for the Ramapo Landfill Site
in the Town of Ramapo, New York, because a commercial carting company that had
picked up trash from its facilities in Rockland County, New York during the
early 1980's may have disposed of that material at the site. The site, a former
municipal waste and construction and demolition debris landfill, is included on
the Superfund National Priorities List and is being administered by the DEC. In
1992, the EPA issued a Record of Decision selecting a comprehensive cleanup
program for the site which is estimated will cost between $21 million and $28
million to complete. The State of New York has reportedly spent more than $19
million assisting the Town of Ramapo to implement the required cleanup program.
- 28 -
Manufactured Gas Sites. Coal tar and related environmental contaminants
have been detected at the sites where the company or its predecessors
manufactured gas many years ago. O&R and the DEC executed consent orders in
1996, 1998 and 1999 requiring O&R to investigate and remediate seven such sites,
the aggregate cost of which is currently estimated at as much as $64.8 million.
Pursuant to a NYPSC order, O&R may defer as a regulatory asset the costs of
investigating and remediating these sites. At December 31, 2000, O&R has paid
$2.3 million of such costs, accrued a liability of $31.7 million for the sites,
and recorded a related regulatory asset of $34.0 million.
O&R Clean Air Act Proceeding
In May 2000, the DEC issued notices of violation to O&R and four other companies
that have operated coal-fired electric generating facilities in New York State.
The notices allege violations of the federal Clean Air Act and the New York
State Environmental Conservation Law resulting from the alleged failure of the
companies to obtain DEC permits for physical modifications to their generating
facilities and to install air pollution control equipment that would have
reduced harmful emissions. The notice of violation received by O&R relates to
the Lovett Generating Station that it sold in June 1999. O&R is unable to
predict whether or not the alleged violations will have a material adverse
effect on its financial position, results of operation or liquidity.
Asbestos Litigation
Asbestos is present in numerous O&R facilities. Numerous suits have been brought
in New York State and Federal courts against O&R and many other defendants for
death and injuries allegedly caused by exposure to asbestos at various O&R
premises. Many of these suits have been disposed of without any payment by O&R,
or for immaterial amounts. The amounts specified in the remaining suits total
billions of dollars, but O&R believes that these amounts are greatly
exaggerated, as were the claims already disposed of. See "Environmental Matters"
in Note F to the O&R financial statements in Item 8 (which information is
incorporated herein by reference).
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
- 29 -
EXECUTIVE OFFICERS OF THE REGISTRANT
The following table sets forth certain information about the executive officers
of Con Edison and Con Edison of New York, as of March 1, 2001. Unless otherwise
indicated, all positions and offices listed are at Con Edison of New York. Mr.
McGrath has an employment agreement with Con Edison which provides that he will
serve as Chairman of the Board and Chief Executive Officer of Con Edison and Con
Edison of New York through August 31, 2005 (subject to one year extensions
unless terminated on six months prior notice). Messrs. Burke and McMahon and Ms.
Freilich have employment agreements with Con Edison which provide that they will
serve in senior executive positions through August 31, 2005 (subject to one year
extensions unless terminated on six months prior notice).The term of office of
each other officer is until the next election of directors (trustees) of their
company and until his or her successor is chosen and qualifies. Officers are
subject to removal at any time by the board of directors (trustees) of their
company.
Name Age Offices and Positions During Past Five Years
Eugene R. McGrath 59 10/97 to present - Chairman, President, Chief Executive Officer
and Director of Con Edison
3/98 to present - Chairman, Chief Executive Officer and
Trustee of Con Edison of New York
9/90 to 2/98 - Chairman, President, Chief Executive Officer and
Trustee of Con Edison of New York
Kevin Burke 50 9/00 to present - President and Chief Operating Officer
7/99 to 8/00 - President of Orange and Rockland Utilities, Inc.
7/98 to 6/99 - Senior Vice President - Customer Service
3/98 to 6/98 - Senior Vice President - Corporate Planning
3/93 to 2/98 - Vice President - Corporate Planning
Joan S. Freilich 59 3/98 to present - Executive Vice President, Chief Financial
Officer and Director (Trustee) of Con Edison and Con Edison of
New York
10/97 to 2/98 - Senior Vice President, Chief Financial Officer
and Director of Con Edison
3/97 to 2/98 - Trustee of Con Edison of New York
7/96 to 2/98 - Senior Vice President and Chief Financial Officer
9/94 to 7/96 - Vice President, Controller and Chief Accounting
Officer
Charles F. Soutar 64 7/95 to present - Executive Vice President - Central Services
Robert W. Donohue, Jr. 58 8/99 to present - Senior Vice President - Electric Operations
1/98 to 7/99 - Vice President - Brooklyn & Queens Customer Service
2/94 to 12/97 - Vice President - Queens Customer Service
John F. Groth 63 7/99 to present - Senior Vice President - Nuclear Operations
5/93-6/99 - Vice President - Nuclear Generation, Houston
Lighting & Power
Mary Jane McCartney 52 10/93 to present - Senior Vice President - Gas
John D. McMahon 49 8/98 to present - Senior Vice President and General Counsel
of Con Edison and Con Edison of New York
10/97 to 8/98 - Deputy General Counsel, Corporate and
Regulatory
2/96 to 10/97 - Associate General Counsel, Utility Affairs
- 30 -
Name Age Offices and Positions During Past Five Years
Luther Tai 52 9/00 to present - Senior Vice President - Central Operations
7/98 to 8/00- Vice President - Corporate Planning
7/94 to 6/98 - Director - Corporate Planning
Stephen B. Bram 58 9/00 to present - President of Orange and Rockland Utilities, Inc.
4/95 to 8/00 - Senior Vice President - Central Operations
Archie M. Bankston 63 12/97 to present - Secretary of Con Edison
6/89 to present - Secretary and Associate General Counsel
A. Alan Blind 47 6/98 to present - Vice President - Nuclear Power
1/98 to 5/98 - Vice President, Nuclear Engineering -
American Electric Power
5/94 to 1/98 - Site Vice President, American Electric Power
James S. Baumstark 58 7/98 to present - Vice President - Nuclear Engineering
1/98 to 7/98 - Engineering Director, Crystal River Nuclear
Plant, Florida Power Corp.
6/96 to 12/97 - Quality Programs Director, Crystal River Nuclear
Plant, Florida Power Corp.
6/94 to 5/96 - Plant Manager, Sequoyah Nuclear Plant,
Tennessee Valley Authority
Marilyn Caselli 46 8/98 to present - Vice President - Customer Operations
10/97 to 7/98 - Vice President - Staten Island Customer Service
5/96 to 9/97 - General Manager - Queens
3/96 to 4/96 - General Manager - Gas Operations
V. Richard Conforti 62 8/96 to present - Vice President - Central Field Services
7/92 to 7/96 - Assistant Vice President - Gas Operations
Richard P. Cowie 54 3/94 to present - Vice President - Employee Relations
David Davidowitz 54 12/00 to present - Vice President - Gas Engineering
4/00 to 11/00 - General Manager - Manhattan Gas Operations
7/99 to 10/99 - General Manager - Environmental, Health & Safety
12/95 to 6/99 - General Manager - Tunnel Maintenance
David F. Gedris 52 8/99 to present - Vice President - Brooklyn & Queens Customer Service
10/97 to 7/99 - Vice President - Fossil Power
2/96 to 9/97 - Vice President - Westchester Customer Service
2/94 to 1/96 - Vice President - Maintenance and Construction
George Greenwood 54 12/00 to present - Vice President - Emergency Management
1/00 to 11/00 - General Manager - Environmental Affairs
12/95 to 12/99 - General Manager - Customer Service
William A. Harkins 55 2/97 to present - Vice President - Energy Management
2/89 to 2/97 - Vice President - Planning and Inter-Utility Affairs
- 31 -
Name Age Offices and Positions During Past Five Years
Andrew L. Jacob 52 8/99 to present - Vice President - Steam Operations
1/93 to 7/99 - Chief Engineer
Paul H. Kinkel 56 9/98 to present - Vice President - Bronx and Westchester
Customer Service
1/98 to 9/98 - Vice President - Nuclear Power
2/96 to 12/97 - Vice President - Maintenance and Construction
M. Peter Lanahan, Jr. 57 8/96 to present - Vice President - Environment, Health & Safety
5/95 to 8/96 - Vice President - Environmental Affairs
Thomas Newell 42 12/00 to present - Vice President - Gas Operations
10/97 to 11/00 - General Manager - Manhattan Gas Operations
1/95 to 9/97 - Department Manager - Steam
James P. O'Brien 53 3/99 to present - Vice President & General Auditor
1/98 to 2/99 - General Auditor
3/94 to 12/97 - Vice President - Information Resources
Stephen E. Quinn 54 1/98 to present - Vice President - Maintenance Services
9/94 to 12/97 - Vice President - Nuclear Power
Louis L. Rana 52 4/00 to present - Vice President - Manhattan Customer Service
3/98 to 3/00 - Vice President - System and Transmission
Operations
10/97 to 2/98 - General Manager - System Operation
8/97 to 9/97 - General Manager - Manhattan Electric Operations
1/94 to 7/97 - Chief Distribution Engineer
Edward J. Rasmussen 52 12/00 to present - Vice President and Controller of Con Edison
and Con Edison of New York
4/93 to 11/00 - Assistant Controller
Frances A. Resheske 40 5/99 to present - Vice President - Public Affairs
2/99 to 4/99 - Director - Public Affairs
6/95 to 2/99 - General Manager - Government Relations and
Community Development, Brooklyn Union
Robert A. Saya 59 4/00 to present - Vice President - System and Transmission
Operations
1/95-3/00 - Chief Engineer, Substation and Transmission
Engineering
Hyman Schoenblum 52 12/00 to present - Vice President - Corporate Planning
12/97 to 11/00 - Vice President and Controller of Con Edison
10/97 to 11/00 - Vice President and Controller
3/97 to 9/97 - Vice President and Treasurer
6/96 to 2/97 - Director - Financial Restructuring
11/93 to 5/96 - Director - Corporate Planning
Edwin W. Scott 62 6/89 to present - Vice President and Deputy General Counsel
- 32 -
Name Age Offices and Positions During Past Five Years
Wanda Skalba 51 1/98 to present- Vice President - Information Resources
4/96 to 12/97 - Director - Information Resources
Minto L. Soares 64 1/98 to present - Vice President - Substation Operations
6/91 to 12/97 - Vice President - Bronx Customer Service
Saddie L. Smith 48 8/98 to present -Vice President - Staten Island Customer
Service
7/97 to 7/98 - Director - Facilities and Office Services
7/95 to 7/97 - Director - Equal Employment Opportunity Affairs
Robert P. Stelben 58 12/97 to present - Vice President and Treasurer of Con Edison
10/97 to present - Vice President and Treasurer
8/97 to 9/97 - Vice President - Finance
11/95 to 8/97 - Vice President and Treasurer, Johnson & Higgins
Alfred R. Wassler 56 8/96 to present - Vice President - Purchasing
3/94 to 8/96 - Vice President - Purchasing, Transportation & Stores
Stephen F. Wood 48 7/00 to present - Vice President - Engineering Services
2/95 to 6/00 - President and Chief Executive Officer,
Constellation Energy Projects & Services, Inc.
- 33 -
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
CON EDISON
Con Edison's Common Shares ($.10 par value), the only class of common equity of
Con Edison, are traded on the New York Stock Exchange. As of January 31, 2001,
there were 108,999 holders of record of Con Edison's Common Shares.
The market price range for Con Edison's Common Shares during 2000 and 1999, as
reported in the consolidated reporting system, and the dividends paid by Con
Edison in 2000 and 1999 were as follows:
2000 1999
Dividends Dividends
High Low Paid High Low Paid
- --------------------------------------------------------------------------------
1st Quarter $36.19 $26.19 $ .545 $53.44 $45.13 $ .535
2nd Quarter 36.81 28.88 .545 49.88 43.88 .535
3rd Quarter 35.56 29.81 .545 46.63 40.00 .535
4th Quarter 39.50 32.06 .545 43.06 33.56 .535
On January 18, 2001, Con Edison's Board of Directors declared a quarterly
dividend of $.55 per Common Share which was paid on March 15, 2001.
Con Edison expects to pay dividends to its shareholders primarily from dividends
and other distributions it receives from its subsidiaries. The payment of
dividends, however, is subject to approval and declaration by Con Edison's Board
of Directors, and will depend on a variety of factors, including business,
financial and regulatory considerations. For additional information about the
payment of dividends by Con Edison, see "Dividends" in Note B to the Con Edison
financial statements in Item 8 (which information is incorporated herein by
reference).
CON EDISON OF NEW YORK
The outstanding shares of Con Edison of New York's Common Stock ($2.50 par
value), the only class of common equity of Con Edison of New York, are held by
Con Edison and are not traded.
The dividends declared by Con Edison of New York in 2000 and 1999 are shown in
its Consolidated Statement of Retained Earnings included in Item 8 (which
information is incorporated herein by reference). For additional information
about the payment of dividends by Con Edison of New York, and restrictions
thereon, see "Dividends" in Note B to the Con Edison of New York financial
statements in Item 8 (which information is incorporated herein by reference).
O&R
The outstanding shares of O&R's Common Stock ($5.00 par value), the only class
of common equity of O&R, are held by Con Edison and are not traded.
The dividends declared by O&R in 2000 and 1999 are shown in its Consolidated
Statement of Retained Earnings included in Item 8 (which information is
incorporated herein by reference).
- 34 -
ITEM 6. SELECTED FINANCIAL DATA
CON EDISON*
Year Ended December 31 (Millions of Dollars) 2000 1999 1998 1997 1996
Operating revenues $ 9,431.4 $ 7,491.3 $ 7,093.0 $ 7,196.2 $ 7,133.1
Purchased power 3,642.9 1,824.0 1,253.8 1,349.6 1,272.9
Fuel 350.8 430.1 579.0 596.8 573.3
Gas purchased for resale 790.9 485.2 437.3 552.6 590.4
Operating income 1,016.1 1,019.8 1,053.3 1,035.3 1,012.5
Net income for common stock 582.8 700.6 712.7 694.5 688.2
Total assets 16,767.2 15,531.5 14,381.4 14,722.5 14,057.2
Long-term debt 5,415.4 4,524.6 4,050.1 4,188.9 4,238.6
Preferred stock subject to
mandatory redemption 37.1 37.1 37.1 84.6 84.6
Common shareholders' equity 5,472.4 5,412.0 6,025.6 5,930.1 5,727.6
Basic earnings per share $ 2.75 $ 3.14 $ 3.04 $ 2.95 $ 2.93
Diluted earnings per share $ 2.74 $ 3.13 $ 3.04 $ 2.95 $ 2.93
Cash dividends per
common share $ 2.18 $ 2.14 $ 2.12 $ 2.10 $ 2.08
Average common shares
outstanding (millions) 212.2 223.4 234.3 235.1 235.0
* Con Edison, which was established as the parent holding company for Con Edison
of New York effective January 1, 1998, owns all of Con Edison of New York's
outstanding shares of common stock.
CON EDISON OF NEW YORK*
Year Ended December 31 (Millions of Dollars) 2000 1999 1998 1997 1996
Operating revenues $ 8,000.7 $ 6,956.0 $ 6,998.7 $ 7,196.2 $ 7,133.1
Purchased power 2,988.1 1,669.2 1,252.0 1,349.6 1,272.9
Fuel 322.1 430.2 579.0 596.8 573.3
Gas purchased for resale 490.6 351.8 370.1 552.6 590.4
Operating income 952.1 1,001.5 1,067.1 1,035.3 1,012.5
Net income for common stock 570.1 698.3 728.1 694.5 688.2
Total assets 14,547.9 13,682.2 14,172.8 14,722.5 14,057.2
Long-term debt 4,915.1 4,243.1 4,050.1 4,188.9 4,238.6
Preferred stock subject to
mandatory redemption 37.1 37.1 37.1 84.6 84.6
Common shareholder's equity 4,479.6 4,393.8 5,842.7 5,930.