By Michael Kuser

Consolidated Edison’s first-quarter earnings jumped more than 10% on an increased rate base and a weather-related boost in steam revenues, but the company noted Thursday that it faces regulatory scrutiny for its role in subway power outages, its tax accounting and its storm response preparedness.

The company earned $428 million in the first quarter, compared with $388 million in the same period a year ago.

“While we continue to face challenging weather events, we remain focused on our long-term strategy of providing customers with the technology and options they need to live and work today,” CEO John McAvoy said in a statement accompanying Con Ed’s May 3 earnings release.

Regulatory Update

A company presentation pointed out that, in a proceeding investigating a New York City subway power outage last April, the New York Public Service Commission last year issued orders requiring Consolidated Edison Company of New York (CECONY) to upgrade the electrical equipment that serves the subway system. The utility plans to complete the required actions this year.

The PSC in January also initiated an audit of the income tax accounting of certain state utilities, including CECONY and sister utility Orange and Rockland Utilities (O&R), which serves customers in southeastern New York and northern New Jersey (18-M-0013).

Con Ed noted that two storms in March damaged its utilities’ electric distribution systems, interrupting service to approximately 209,000 CECONY customers, 93,000 O&R customers and 44,000 Rockland Electric customers. Con Ed said the recovery of $106 million in storm-related costs is subject to review by the PSC and the New Jersey Board of Public Utilities, both of which are investigating utilities preparation and response to the storms, and may penalize them.

O&R last month updated its January rate filing with New York PSC, asking to increase its electric rates from $20.3 million to $22.5 million.

Tax Cuts and Rates

Con Ed expects the federal Tax Cuts and Jobs Act of 2017 to result in customer rates likely being reduced to reflect the reduction in the corporate tax rate from 35% to 21%, elimination of bonus depreciation and the amortization of excess deferred federal income taxes the utilities collected from their customers that will not need to be paid.

The PSC opened a proceeding on the new law (17-M-0815), and commission staff on March 29 recommended that most utilities be required to begin to credit their customers’ bills with the net benefits of the tax cuts on Oct. 1.

The company expects a commission decision after the 90-day comment period expires in late June.