Consolidated Edison
A durable urban utility with predictable growth but capital intensity and policy risk cap the upside
Consolidated Edison is a regulated electric, gas, and steam utility serving New York City and surrounding areas. Its competitive position rests on efficient-scale local monopolies protected by state regulation, substantial switching barriers, and hard-to-replicate underground urban networks.
Revenue predictability is reinforced by revenue decoupling and true-up mechanisms, and the New York Public Service Commission approved a three-year rate plan in January 2026 that shapes bill impacts while supporting needed grid investments.
Rate base stood near 46.4 billion dollars in 2025 and is forecast to grow at roughly an 8 to 9 percent CAGR through 2030, aligned with building and transportation electrification and resilience projects.
Financially, the company produced about 4.8 billion dollars of operating cash flow in 2025 but free cash flow remained negative on a trailing basis due to approximately 5.25 billion dollars of annual capital spending. Equity issuance and debt funding are integral to the plan, and regulators have been assertive in limiting requested increases.
We value the business on normalized “owner earnings” (OCF less maintenance capex approximated by D&A), dividend durability, and allowed-ROE-driven earnings growth. The franchise is dependable and long-lived, but political and affordability pressures, gas network transition risk, and sustained capex needs argue for discipline on entry price.
Does Consolidated Edison have a strong competitive moat?
Efficient scale and regulatory franchise produce a durable moat in a dense urban territory that would be prohibitively expensive to duplicate.
Component view: efficient scale 95/100; switching costs 85/100 (customers have no practical alternative to the local wires and pipes even as behind-the-meter solutions grow); intangible and regulatory assets 90/100 (franchise rights, permits, operating know-how in NYC); cost advantages 55/100 (scale and underground network density help, but property taxes and labor temper cost leadership); network effects 5/100 (not central).
Weighted, this supports a strong overall moat. Erosion risks include policy shifts that pressure allowed returns, the long-run gas transition that could strand assets, and distributed resources reducing volumetric throughput, though decoupling mechanisms mitigate revenue impact.
Sources: NY PSC joint plan approval, rate-base and ROE disclosures, ReliabilityOne recognition, and company filings.
Does Consolidated Edison have pricing power in its industry?
As a regulated utility, nominal pricing power is constrained by allowed returns and bill affordability. The January 2026 settlement materially reduced the initial revenue ask and shapes customer bill impacts, underscoring limited unilateral pricing latitude.
Offsetting this, formulaic ROE setting, decoupling, and timely cost recovery reduce regulatory lag and support earnings visibility. Margin expansion primarily follows rate-base growth rather than discretionary price hikes. Sources: PSC order summary; company slides summarizing allowed ROE, equity ratio, revenue decoupling, and shaped bill impacts.
How predictable is Consolidated Edison's business?
Revenue decoupling, weather normalization clauses, and true-up mechanisms for major costs (property taxes, pensions, environmental, variable-rate debt) make earnings more rule-based than volume-based.
Management targets mid-single-digit adjusted EPS growth tied to an 8 to 9 percent rate-base CAGR driven by electrification, resilience, and transmission. Reliability metrics are top-tier, and rate plans are multi-year. Predictability is high, with residual exposure to storm events, interest costs, and policy decisions.
Sources: company 2025 Q4 materials, 2025 guidance and long-range plan data, ReliabilityOne award.
Is Consolidated Edison financially strong?
2025 operating cash flow was about 4.8 billion dollars; long-term debt at year-end was roughly 25.6 billion dollars and consolidated equity about 24.2 billion dollars. Credit profiles remain investment-grade (A-/BBB+ at operating utilities), and agency frameworks cite CFO pre-working-capital to debt near the high teens as a guardrail.
That said, free cash flow is negative after capex, necessitating ongoing debt and equity issuance under the multi-year capital plan. Liquidity is adequate with CP programs and revolvers, but rising rates and arrears can pressure metrics. Sources: 2025 year-end cash flow and balance sheet slides, 2025 Q3 10-Q debt tables, rating commentary.
How effective is Consolidated Edison's capital allocation strategy?
Strategy centers on regulated delivery with disciplined rate-case execution and divestiture of merchant renewables (sale to RWE in 2023). Capital intensity is structurally high, but projects map to approved rate-base growth.
Equity issuance is an explicit funding pillar: 2025 common share issuances and a February 2026 7 million-share forward support the plan while introducing dilution. Dividend growth continues with a 55 to 65 percent adjusted EPS payout target.
We view allocation as steady and appropriate for a regulated utility, though dilution and large capex reduce per-share compounding versus asset-light businesses. Sources: 2024 earnings release financing plan, 2026 dividend increase, 2026 forward share offering, company 2025 slides.
Does Consolidated Edison have high-quality management?
Management consistently executes complex urban projects and maintains nation-leading reliability. Communication of long-range plans, rate-base forecasts, and credit guardrails is clear. However, the franchise operates under intense political scrutiny on affordability and executive compensation, and outcomes are ultimately bounded by regulators.
No founder-CEO dynamic is present; incentives appear aligned with service reliability, safety, and regulatory outcomes. Sources: company reliability announcements, PSC process records, investor materials.
Is Consolidated Edison a quality company?
Consolidated Edison is a good quality company with a quality score of 72/100
- Moat stems from efficient-scale local monopoly, regulatory franchise, and irreplicable NYC underground infrastructure; revenue decoupling and weather normalization further stabilize cash flows.
- NY PSC adopted a three-year plan effective January 2026 with shaped bill impacts and allowed ROE of about 9.4 percent on a 48 percent equity layer; total 2025 rate base was roughly 46.4 billion dollars and management shows an 8.6 percent rate base CAGR to 2030.
- 2025 operating cash flow was about 4.8 billion dollars versus approximately 5.25 billion dollars of investing cash flows, keeping reported FCF negative; normalized owner earnings using OCF minus D&A are approximately 2.4 to 2.6 billion dollars.
- Capital structure is investment-grade (A-/BBB+ across operating utilities) but will remain funding-dependent; 2025 and 2026 common equity offerings and a newly announced 7 million-share forward in February 2026 highlight dilution as a recurring tool.
- Dividend raised for a 52nd consecutive year with a stated 55 to 65 percent payout of adjusted EPS; customer affordability scrutiny, property taxes, and decarbonization of gas create ongoing regulatory and reputational risk.
What is the fair value of Consolidated Edison stock?
Is Consolidated Edison a good investment at $113?
The following analysis is provided for informational and educational purposes only. It does not constitute financial advice, investment advice, or a recommendation to buy or sell any security. The opinions expressed are based on publicly available information and historical data. Beanvest and its contributors may hold positions in the securities mentioned. Investors should conduct their own due diligence or consult a licensed financial advisor before making any investment decision.