SLIDE NO. 1
The Northeast's Energy Company
Edison Electric Institute
Financial Conference
San Francisco, CA
October 31, 2000
SLIDE NO. 2
Joan S. Freilich
Executive Vice President &
Chief Financial Officer
Consolidated Edison, Inc.
SLIDE NO. 3
This presentation contains forward-looking statements, which are statements
of future expectations and not facts. Actual results or developments might
differ materially from those included in the forward-looking statements
because of factors such as competition and industry restructuring, changes in
economic conditions, changes in historical weather patterns, changes in laws,
regulations or regulatory policies, developments, in legal or public policy
doctrines, technological developments and other presently unknown or
unforeseen factors. Other risk factors are detailed from time to time in the
two companies' SEC reports.
SLIDE NO. 4
Con Edison's track record of delivering on promises
Earned 12%+ ROE in 13 of last 14 years
Accretive acquisition of O&R
Constructive rate agreements
$1 billion share repurchase completed
SLIDE NO. 5
Northeast Utilities completes three-year recovery
Profitability restored
Extremely strong Millstone performance over the past 15 months
Restructuring successfully implemented in CT and MA
Restructuring agreement approved by NH governor, legislature and regulators
Yankee Gas merger successfully completed
SLIDE NO. 6 (Map)
Con Edison:
The Northeast's Energy Company
Total assets $ 26 billion
Electric customers 5.0 million
Gas customers 1.4 million
Region:
19% of U.S. population
25% of electricity output
SLIDE NO. 7 (Graph)
Our "wires and pipes" businesses provide a strong foundation for future
success
Telecom & Technology
Specialized Generation Products & Services
Electric, Gas and Steam Distribution Customers/Assets
SLIDE NO. 8
New York Global Agreement addresses major issues
Extension of current agreement
Continued recovery of energy costs and stranded costs
Provides framework for solid earnings
Approval of NU merger recommended
SLIDE NO. 9
Provides extension of current agreement
Agreement was to expire March 2002
Full rate case would have to be filed in 2001
Global agreement extends rate freeze 3 years - March 2005
Makes permanent the April 2001 rate reduction
Shareholder protections continue (environmental, taxes, inflation, etc.)
SLIDE NO. 10
Provides regulatory certainty
Continued full recovery of all commodity costs
Continued full recovery of all stranded costs
$170 million rate reduction funded by
Achieved productivity and sales growth
Divestiture proceeds
SLIDE NO. 11
Provides Framework for Solid earnings
No sharing target for year ending March 2001
12.9% threshold for year ending March 2002
11.75% threshold for years ending March 2003, 2004 and 2005
Additional 25 basis points (12% total)
Based on operating performance
Merger savings and incentives/penalties excluded from sharing formula
SLIDE NO. 12
Recommends approval of NU merger
50/50 sharing of net synergies
Rate reduction of $18.5 million
Present value of 10 year synergies
Opportunity to continue sharing after 2005
No tracking of synergy savings
SLIDE NO. 13
We are working hard to reduce market volatility
Made recommendations to PSC/FERC
Working through the ISO to point out deficiencies
50% hedged in summer, 75% in winter through NUG contracts and own generation
Issued RFP for winter load
SLIDE NO. 14
Merger approval process
Approvals required from NY, NH and CT
SEC and DOJ also required
Connecticut DPUC votes 4-1 to approve merger with conditions on October 19,
2000
Request for Reconsideration filing within 15 days of final decision
DPUC reply within 25 days from receipt of Request for Reconsideration
SLIDE NO. 15 (Graph)
Regulated Business
5% Annual Growth Target
Maximize Value of Assets
Economic Growth
Efficiencies
Superb Customer Service
Critical Mass of Electric, Gas and Steam Customers
SLIDE NO. 16
Our expertise assures that we will take full advantage of our growth
potential
Highest electric reliability performance
Continuing high load growth
Unparalleled knowledge of Northeast energy markets
Unmatched expertise in underground cable build-out and operation
High-tech, learning organization
SLIDE NO. 17 Graph
Gas distribution growth through conversions
Home heating potential market
% of market not served by natural gas
Con Edison of New York 45%
Yankee Gas 65%
SLIDE NO. 18
We are continuing the focus that is the foundation of our success
Increased efficiency and productivity
Economies of scale - B2B
Best practices
Technology
Reinforce infrastructure for new growth
Long-term rate agreements
Capture gains for shareholder
SLIDE NO. 19
John H. Forsgren
Executive Vice President & Chief Financial Officer
Northeast Utilities System
Acting Chairman and CEO
NEON Communications, Inc.
SLIDE NO. 20
We are exiting the nuclear business to reduce business risk
Connecticut - Millstone 1, 2 & 3
Dominion to acquire units for $1.3 billion
CL&P to receive $843 million; WMECO $196 million
Closing expected April 2001
New Hampshire - Seabrook
Auction to follow final approval of restructuring plan
New York - Indian Point 2
Winner to be announced in the Fall
Closing in mid 2001
SLIDE NO. 21
We are creating value for shareholders in regulated and unregulated markets
We can achieve 5% growth in the regulated business
We are exploring opportunities in various areas and looking to create
alliances
Generation will have a niche role in earnings growth
Telecom has the potential to be an engine for growth
SLIDE NO. 22 (Graph)
Combined Con Edison/NU non-regulated activities provide a strong growth
platform
Con Edison Northeast Utilities
Solutions Retail Marketing & Select
Energy Services
Energy Wholesale Marketing HEC
Generation: NGC
Development Development,
Ownership, Services NGS
Communications Telecommunications Mode 1/NEON
SLIDE NO. 23 (Graph)
We will leverage our knowledge of the energy market
Specialized Generation Products & Services
SLIDE NO. 24 (Map)
Investments in strategic power generation facilities will enhance growth
1. Northfield Mtn. NEPOOL - 23,000 MW
NYPOOL - 30,000 MW
2. CEEMI PJM - 52,000 MW
3. Mt. Tom
4. Holyoke Project
5. Housatonic Hydro
6. Eastern Hydro
7. Newington (under construction)
8. Lakewood
Con Edison/NU combined capacity 2,500 MW
Regional 1999 peak load 105,000 MW
SLIDE NO. 25 (Graph)
We will leverage our customer base and infrastructure skills through telecom
investments and alliances
Telecom & Technology
SLIDE NO. 26
Our telecommunications business is rapidly emerging as a significant earnings
growth driver
Con Edison Communications
Building out in NYC and Westchester
NYC franchise received
Expected to:
Become profitable by year-end 2001
Generate $50 million in income by 2004
Strategic partnership with NEON
Other alliances being evaluated
SLIDE NO. 27 (Map)
Market metrics
Target market includes 12 states
30 million people
1 million businesses
19 million access lines
Ownership
NU owns 4.8 million shares, or 22%
Con Edison acquired 10.75% stake
7.5 million shares publicly traded (NASDAQ: NOPT)
SLIDE NO. 28
NEON's Business Plan: Focus on Wholesale Market
65,000 fiber miles, 1,100 route miles from New York to Maine
Partnership at Con Edison Communications and Exelon would add 440 route
miles, about 9,000 fiber miles
Focus on large and medium-size cities in New England
Install advanced optronic equipment
Major customers include AT&T Local, MCI WorldCom, Sprint, RCN, CTC
Communications, Network PLUS
SLIDE NO. 29
We offer low-risk and dependable return potential
Strong growth at Con Edison and NU
Synergies and cost controls increase growth
Plant sales and securitizations greatly reduce stranded cost exposure
Leveraging core assets provides even greater earnings growth and returns to
shareholders
Demonstrated ability and commitment to achieve targets
SLIDE NO. 30
Our commitment to the future
Achieve accelerated growth in regulated businesses
Capitalize on unregulated growth opportunities
Leverage strong management team
DELIVER VALUE TO SHAREHOLDERS
