Consolidated Edison Rides on Investments & Renewable Energy Expansion

Consolidated Edison’s ED systematic capital investment plan should further boost its operations and improve its service reliability. The expansion of the company’s renewable energy portfolio enhances its ability to derive economic value and meet key ESG objectives through utility-scale renewable developments.

However, this Zacks Rank #3 (Hold) company faces risks related to regulator-approved rate plans, which may limit pricing and restrict recovery of certain costs.

Factors Acting in Favor of ED

To meet the rapidly increasing electricity demand across the United States, Consolidated Edison continues to follow a systematic capital investment plan for infrastructure development and maintenance of its electric, gas and steam delivery systems. The company has a robust capital expenditure plan of $38 billion for the 2025-2029 period. Over the next 10 years, it aims to invest $72 billion in significant energy infrastructure. Such investments should enable Consolidated Edison to provide reliable, resilient, safe and clean energy to its customers in New York.

As part of its 10-year capital expenditure plan, ED aims to spend $2.9 billion to support clean energy generation and $2.6 billion to address climate resilience. Through these investments and the aforementioned renewable energy development, the company aims to build an energy grid that will deliver reliable, clean energy and meet its customers’ electrification needs. Such initiatives should enable Consolidated Edison to duly meet its net-zero carbon emission goal by 2050.

With industries across the board rapidly adopting clean energy as their preferred choice of energy source, utility providers like Consolidated Edison are expanding their renewable energy portfolio to earn the economic and ESG incentives offered by the utility-scale renewable energy market.

Challenges Faced by ED

The company operates under rate plans approved by state utility regulators, which set limits on the rates it can charge customers. These rate plans are meant to help the utility companies recover their service costs, including a return on equity, but they do not ensure full recovery.

ED’s actual costs can sometimes be higher than the amounts allowed in the rate plans. Regulators may also review whether certain costs, such as energy or storm restoration expenses, were incurred prudently. If the regulators decide that any cost was not prudent, the companies may not be allowed to recover those amounts from customers.

ED’s Share Price Performance

In the past year, shares of the company have risen 2.2% compared with the industry’s 17.2% growth.

Stocks to Consider

Some better-ranked stocks from the same industry are NiSource NI, Alliant Energy LNT and Ameren AEE, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

NiSource’s long-term (three to five years) earnings growth rate is 7.93%. The Zacks Consensus Estimate for NI’s 2025 EPS implies an improvement of 7.4% from that recorded in 2024.

LNT’s long-term earnings growth rate is 7.15%. The company delivered an average earnings surprise of 13.5% in the last four quarters.

AEE’s long-term earnings growth rate is 8.52%. The Zacks Consensus Estimate for AEE’s 2025 EPS implies an improvement of 7.8% from that recorded in 2024.

 

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This article originally published on Zacks Investment Research (zacks.com).

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