Consolidated Edison’s operations generated less cash in the first half of 2026 even as reported profit increased. Operating cash flow fell 30.0%, leaving a $1.34 billion shortfall after capital spending, equipment removal and cash dividends. Higher regulated utility earnings supported the business, while a pipeline sale boosted reported profit. The distinction matters because network investment requires cash upfront, with recovery from customers spread over future bills and subject to regulation.
Reporting basis: Consolidated Edison, Inc. (NYSE: ED) and subsidiaries; unaudited Form 10-Q for the quarter ended June 30, 2026, filed August 6, 2026. Accession: 0001047862-26-000142. Q2 means April–June; H1 means January–June. Financial comparisons use consolidated results under U.S. generally accepted accounting principles (GAAP), the standard financial-reporting rules, unless identified as subsidiary or calculated measures. Information cutoff: October 2, 2026; operating actuals end June 30, 2026. Dollar tables use millions ($M).
1. Operating Cash Fell Below Capital Spending in H1 2026
Con Edison’s operating cash decline primarily reflected changes in receivables and payment timing, despite higher reported earnings. Operating cash flow—the cash generated by running the business—fell to $1.97 billion from $2.82 billion. Capital spending remained broadly steady, so the reduction widened the amount requiring other funding.
The key comparison below is operating cash against investment and dividends paid during the same six months.
| Consolidated cash allocation ($M) | H1 2025 | H1 2026 |
|---|---|---|
| Operating cash flow | 2,816 | 1,971 |
| Capital expenditures, positive cash spending | 2,421 | 2,474 |
| Free cash flow: operating cash less capital expenditures | 395 | -503 |
| Equipment removal costs, net of salvage proceeds | 251 | 208 |
| Cash remaining after capital expenditures and removals | 144 | -711 |
| Cash dividends paid | 576 | 624 |
| Cash remaining after investment, removals and dividends | -432 | -1,335 |
Source: 2026 Form 10-Q, Con Edison consolidated cash-flow statement, p. 9. Capital expenditures include utility and non-utility purchases. Removal costs are separately reported investing outflows, so they are shown separately from the defined free-cash-flow measure. Derived rows are calculations, not company-reported GAAP subtotals.
1-1. Receivables and Payment Movements Explain Much of the Cash Decline
Four changes identified by management account for a combined $853 million unfavorable movement against the prior year. Accounts-payable cash movements deteriorated by $264 million. Other receivables and other current assets contributed $262 million, taxes receivable $197 million, and prepayments $130 million. All remaining operating cash-flow movements together offset $8 million, producing the reported $845 million decline.
These are changes in cash-flow contributions between periods, not four expenses newly deducted from profit. For example, settling a supplier invoice consumes cash when paid, even if its cost was recognized earlier. Likewise, a tax refund changes cash without necessarily changing current-period tax expense. The reconciliation explains the decline, but does not establish when these movements will reverse or how much cash will return.
The prior-year comparison also benefited from tax refunds. Con Edison received a net $181 million in income-tax cash during H1 2025, versus paying $19 million in H1 2026. That $200 million swing provides context for the deterioration; it is not an additional item to add to the reconciliation above.
Source: 2026 Form 10-Q, cash-flow statement, supplemental cash information, p. 9.
The longer comparison prevents an overly negative reading. Operating cash was $1.91 billion in H1 2024, making H1 2026 slightly higher despite its decline from H1 2025. Operating cash divided by net income was 2.07, 2.71 and 1.60 times across those three periods. These ratios show how much operating cash the company generated for each dollar of reported profit; payment timing and non-cash accounting entries affect the comparison.
Sources: 2025 Form 10-Q, cash-flow statement, p. 9, and 2026 Form 10-Q, p. 9.
In H1 2026, depreciation and amortization added back $1.15 billion and deferred income taxes added $451 million when reconciling profit to operating cash. Depreciation and amortization spread asset costs over time; deferred taxes reflect differences between when taxes affect accounting profit and when they are payable. Neither adjustment represents fresh cash receipts. Conversely, the $189 million pipeline disposal gain was removed because its sale proceeds belong in investing activities. These adjustments help explain why cash generation and net income can move in opposite directions.
1-2. Equity and Asset-Sale Proceeds Helped Fund the Gap
Con Edison raised equity while shifting borrowing toward longer maturities. Equity provides funding without a scheduled repayment, but spreads future earnings across more shares. Long-term borrowing better matches assets used for decades, while creating continuing interest obligations.
The following table reconciles the three cash-flow categories to the change in the reported cash balance.
| Consolidated cash movement ($M) | H1 2025 | H1 2026 |
|---|---|---|
| Beginning cash, temporary investments and restricted cash | 1,333 | 1,630 |
| Operating cash flow | 2,816 | 1,971 |
| Investing cash flow | -2,655 | -2,354 |
| Financing cash flow | 13 | 223 |
| Net change in cash during the period | 174 | -160 |
| Ending cash, temporary investments and restricted cash | 1,507 | 1,470 |
Source: 2026 Form 10-Q, consolidated cash-flow statement, p. 9. These balances include restricted cash. The H1 2026 decrease of $160 million measures movement from the beginning of that year, rather than the difference between the two June ending balances.
The company received $884 million from public share issuance and $34 million from stock plans. It also received $358 million from selling its Mountain Valley Pipeline interest. Those receipts helped fund the investment-and-dividend shortfall without increasing total borrowing on a cash basis.
Debt issuance supplied $1,300 million, while net short-term debt repayments and repayment of the term loan totaled $1,354 million. Together with $17 million of debt issuance costs and $30 million of other investing outflows, these transactions and the equity and sale receipts above reconcile the $1,335 million shortfall to the $160 million cash decrease. The cash-flow statement reports no share repurchases during the period.
Source: 2026 Form 10-Q, p. 9; Note C, pp. 24–25.
Capital expenditures consumed 27.0% of H1 revenue. The main New York utility subsidiary describes investments in cables, transformers and substations to improve reliability and support demand. Its May 27, 2026 system-upgrade announcement describes both equipment replacement and added capacity. Neither that announcement nor the quarterly cash-flow statement provides a maintenance-versus-growth spending split; depreciation cannot supply one.
2. Utility Earnings Improved, While a Pipeline Sale Lifted H1 Profit
The utility business improved, but the first-half earnings increase overstates the improvement in recurring operations. Consolidated net income rose $194 million, of which $134 million came from the after-tax Mountain Valley Pipeline sale gain. That gain represented 69.1% of the reported increase.
Source: 2026 Form 10-Q, MD&A, six-month earnings variation table, p. 55.
Read the operating-income row separately from net income because disposal gains affected different lines in different years.
| Consolidated earnings metric | H1 2023 | H1 2024 | H1 2025 | H1 2026 | Three-year compound annual growth, H1 2023–H1 2026 |
|---|---|---|---|---|---|
| Revenue ($M) | 7,347 | 7,495 | 8,393 | 9,164 | 7.6% |
| Operating income ($M) | 2,022 | 1,331 | 1,480 | 1,730 | -5.1% |
| Net income for common stock ($M) | 1,658 | 922 | 1,038 | 1,232 | -9.4% |
| Consolidated profit margins (%) | H1 2024 | H1 2025 | H1 2026 |
|---|---|---|---|
| Operating income divided by revenue | 17.8 | 17.6 | 18.9 |
| Net income for common stock divided by revenue | 12.3 | 12.4 | 13.4 |
Sources for both tables: 2026 Form 10-Q, consolidated income statement, p. 7; 2025 Form 10-Q, p. 7; 2024 Form 10-Q, p. 7. Compound annual growth is the constant annual rate connecting the endpoints. These are three-year growth calculations, not annualized quarterly results. Margins are calculated from reported amounts.
The negative profit growth rates across three years primarily reflect an unusually large starting-period disposal gain. H1 2023 operating income included an $867 million Clean Energy Businesses sale gain. H1 2024 included a $30 million sale-related loss. Excluding only those disclosed disposal items gives operating income of $1,155 million and $1,361 million, respectively, versus reported $1,480 million in H1 2025 and $1,730 million in H1 2026.
That calculation isolates disposal effects; it is not a complete measure of recurring profit. The 2026 pipeline gain sits below operating income, so subtracting it from operating income would be incorrect. Business scope also changed after the Clean Energy Businesses sale.
Sources: income statements linked immediately above; 2026 Form 10-Q, Note Q, pp. 45–46.
2-1. Approved Investment Returns Mattered More Than Sales Volume
H1 revenue rose 9.2%, while operating income increased 16.9%. Operating margin—the share of revenue remaining after operating expenses—rose from 17.6% to 18.9%. The company retained about $18.90 of operating profit per $100 of revenue, compared with $17.60 a year earlier.
Operating-profit growth was approximately 1.84 times revenue growth in this comparison. This describes the past relationship, rather than forecasting how future revenue changes will affect profit. Purchased energy costs generally pass through to customer bills, while regulatory settlements also change revenues and expenses.
Consolidated Edison Company of New York (CECONY), the main New York utility subsidiary, attributed $59 million of its H1 after-tax earnings improvement to higher electric and gas rate bases. A rate base is the regulator-approved investment amount on which a utility may earn a return. Orange and Rockland contributed another $6 million of net-income growth. These subsidiary contributions come from the filing’s explanation of changes in consolidated earnings, rather than an unadjusted addition of subsidiary operating profits.
Source: 2026 Form 10-Q, MD&A, six-month earnings variation table and footnotes, p. 55.
Q2 itself showed a stronger operating improvement: consolidated operating income rose to $552 million from $355 million. Net income increased to $308 million from $246 million. CECONY attributed $48 million of the quarterly earnings increase to higher rate bases and the timing of billing rate increases. The billing qualification matters when judging how much of the quarterly growth will repeat.
Source: 2026 Form 10-Q, income statement and quarterly earnings variation table, pp. 7 and 54.
2-2. Lower Pension Credits and More Shares Tempered Earnings Growth
H1 purchased power, fuel and gas costs rose by $363 million in total. Their recovery through customer bills limits their direct effect on earnings, although they still affect cash timing. Operations and maintenance fell $24 million, while depreciation and amortization rose $10 million and taxes other than income taxes rose $172 million.
Source: 2026 Form 10-Q, consolidated income statement, p. 7.
The filing does not divide all costs into fixed and variable categories. Depreciation and much of the network’s operating infrastructure do not change directly with near-term deliveries. However, regulatory adjustments make a conventional manufacturing-style cost analysis misleading. CECONY’s lower electric operations and maintenance expense included $35 million of lower pension and retiree-benefit costs reflecting reconciliation to rate-plan amounts.
Below operating income, total other income fell $124 million. CECONY reported $120 million of lower pension and retiree-benefit credits unrelated to employees’ current service. These credits are accounting benefits that increase income; their decline therefore held back earnings. These accounting movements explain part of the gap between operating-profit growth and utility net-income growth.
Source: 2026 Form 10-Q, p. 7 and MD&A, CECONY six-month “Other Income”.
Share issuance also reduced earnings growth per share. H1 net income increased 18.7%, but basic earnings per share rose 15.0%, from $2.93 to $3.37. Average basic shares increased 3.1%, from 354.5 million to 365.6 million. Using those disclosed share counts, spreading the same current-period profit across the larger number of shares reduced basic earnings by approximately $0.11 per share versus holding the earlier share count constant. This isolates the arithmetic effect of the share count; it does not estimate what earnings would have been without the additional funding.
Source: 2026 Form 10-Q, Note A, earnings-per-share table, p. 20.
3. Network Assets Expanded Without a Material Increase in Total Debt
Balance-sheet growth was concentrated in utility infrastructure, while share issuance and retained profit increased shareholders’ equity. Total assets increased $1.86 billion, while shareholders’ equity increased $1.53 billion. Interest-bearing debt was nearly unchanged because new long-term borrowing replaced short-term obligations.
The table separates infrastructure growth from balances that mainly reflect collections, regulation or financing.
| Consolidated balance-sheet item ($M) | December 31, 2025 | June 30, 2026 | Change (%) |
|---|---|---|---|
| Cash and temporary cash investments | 1,629 | 1,470 | -9.8 |
| Customer receivables, net | 2,583 | 2,559 | -0.9 |
| Accrued unbilled revenue | 821 | 668 | -18.6 |
| Fuel, stored gas, materials and supplies | 530 | 534 | 0.8 |
| Net utility plant, including construction in progress | 55,402 | 57,102 | 3.1 |
| Goodwill | 406 | 406 | 0.0 |
| Regulatory assets, current and noncurrent | 5,702 | 5,952 | 4.4 |
| Total assets | 74,603 | 76,459 | 2.5 |
| Interest-bearing debt, including current maturities | 27,876 | 27,814 | -0.2 |
| Accounts payable | 1,947 | 1,772 | -9.0 |
| Total liabilities | 50,413 | 50,740 | 0.6 |
| Shareholders’ equity | 24,190 | 25,719 | 6.3 |
Source: 2026 Form 10-Q, Con Edison consolidated balance sheet, pp. 10–11. Debt combines long-term debt, its current portion, notes payable and the term loan. Goodwill is the acquisition premium recorded above the value assigned to identifiable net assets; the balance sheet does not present a separate aggregate purchased-intangible-assets line. Total liabilities are calculated from the reported liability categories.
3-1. Utility Infrastructure Grew $1.70 Billion, Including Unfinished Projects
Net utility plant—the recorded value of utility infrastructure after accumulated depreciation—increased $1.70 billion, including a $252 million increase in construction work in progress. That supports future service capacity, but unfinished projects require funding before delivering their full operating benefit. Inventory barely changed and is carried at average cost, rather than last-in, first-out accounting.
Regulatory assets rose $250 million. These are accounting balances for costs the company expects to collect from customers through future rates, rather than cash already received. Some relate to obligations for which the company has not yet paid cash, so the total does not measure cash already spent and awaiting recovery. Their recoverability and collection schedule therefore matter alongside their reported value. Operating lease assets, representing rights to use leased property, were $468 million, with corresponding current and noncurrent lease liabilities totaling $506 million.
Source: 2026 Form 10-Q, pp. 10–11 and Note B, pp. 23–24.
Financing obligations differ from operating liabilities. Accounts payable fell $175 million, while customer deposits increased $50 million to $548 million. Regulatory liabilities totaled $5.66 billion, representing amounts to return to customers or recognize through future rates. Deferred income taxes and unamortized investment tax credits were another $10.13 billion; these are not equivalent to bank loans with immediate repayment dates.
Source: 2026 Form 10-Q, p. 11.
3-2. Longer Maturities Reduced Near-Term Borrowing Dependence
CECONY’s June debt issue raised $1.30 billion, with maturities in 2036 and 2056. Its principal-weighted coupon—the contractual interest rate averaged by the amount borrowed—was 5.62%, equivalent to about $73 million of annual coupon interest before interest is added to construction asset costs or recovered through rates. That is a gross funding cost, not a forecast of the net earnings effect, because the company also repaid other borrowing.
Scheduled long-term principal maturities in calendar years 2026–2028 total $1.83 billion, or 6.7% of the approximately $27.35 billion of long-term principal outstanding after June’s issuance. This specified calendar window is not an exact rolling three-year maturity measure. It indicates limited immediate long-term refinancing concentration, while $721 million of commercial paper, a form of short-term borrowing, still requires repayment or renewal.
Sources: 2025 Form 10-K, Note C, pp. 131–132, company-hosted copy, and 2026 Form 10-Q, Notes C–D, pp. 24–26.
The group also had an undrawn $3.50 billion revolving credit agreement expiring in March 2031. This committed bank facility supports commercial paper and general funding needs, subject to borrower limits and covenants—the conditions attached to borrowing. The filing reports compliance with significant debt covenants. This provides a liquidity buffer, but does not replace the need to collect bills and finance construction.
Source: 2026 Form 10-Q, Note D and MD&A, “Liquidity and Capital Resources”.
3-3. Share Issuance and Retained Profit Increased Equity
Common stock plus additional paid-in capital—the amounts recorded from shareholder contributions—increased to $12.43 billion from $11.48 billion. Retained earnings, the accumulated profits remaining after declared dividends, rose $584 million to $15.44 billion. That change equals $1,232 million of income less $648 million of dividends recognized in equity.
Cash dividends were lower, at $624 million, with the $24 million difference matching shares issued through dividend reinvestment. Treasury stock, the cost of previously repurchased shares held by the company, remained a $2.02 billion deduction from equity. There were no new repurchases to reduce equity during the period.
Accumulated other comprehensive income—certain accounting changes recorded outside net income—fell $3 million. Capital stock expense, a deduction for share-issuance costs, increased by $11 million.
Source: 2026 Form 10-Q, equity statement and cash-flow supplemental disclosures, pp. 9 and 12.
4. Approved Rates Support Expansion, but Collection and Recovery Risks Remain
Regulated investment provides an identifiable earnings foundation, although permission to recover costs does not guarantee prompt cash collection. For this utility, approved rate base, allowed returns and overdue customer bills are more informative than commodity sales growth alone.
4-1. Approved Electric and Gas Rate Bases Rise 16.6% Through 2028
CECONY’s approved electric rate base rises from $32.94 billion in 2026 to $39.17 billion in 2028. Its gas rate base rises from $11.49 billion to $12.62 billion. The combined increase is 16.6%, based on planned averages rather than assets already earning at June 2026. The plans allow a 9.4% return on shareholder-funded capital. They assume shareholders supply 48% of regulated capital, with borrowing funding the remainder.
The authorized return applies to the equity-funded portion of the regulated investment base; it is not a guaranteed return on every dollar of assets. Construction delivery, operating performance and cost recovery determine actual results. The plans also preserve mechanisms that largely separate delivery revenue from fluctuations in customer usage.
Sources: company’s January 2026 rate-plan summary, p. 1, and 2025 Form 10-K, Note B, CECONY electric and gas rate plans, pp. 114–120, company-hosted copy.
This structure explains why higher electricity consumption is not itself the earnings thesis. CECONY’s H1 electricity deliveries rose 2.1%, whereas approved investment returns were a clearer disclosed earnings driver. Network demand supports the need for investment; regulation governs how that investment becomes revenue and profit.
Source: 2026 Form 10-Q, CECONY electric deliveries and earnings variation tables.
4-2. Nearly Half of Customer Receivables Were More Than 60 Days Old
Collections remained a material weakness despite a modest improvement in overdue balances. Combined CECONY and Orange and Rockland receivables over 60 days old fell to $1.42 billion from $1.45 billion at year-end. They still represented 46.9% of gross customer receivables, almost unchanged from 47.1%. That leaves a substantial amount of billed revenue unavailable to fund current investment.
Management describes flexible payment arrangements, targeted customer communications and increased field collection activity. Rate mechanisms permit recovery of certain uncollectible costs, subject to thresholds and annual bill-impact caps. Those protections reduce some earnings exposure while potentially postponing cash recovery.
Source: 2026 Form 10-Q, MD&A, “Aged Accounts Receivable Balances,” p. 48.
The customer credit-loss allowance—an accounting deduction from receivables for amounts expected to go unpaid, rather than cash set aside—fell $49 million, but that decline should not be read as a $49 million earnings benefit. Its disclosed reconciliation is $507 million opening balance, plus $108 million of reserve adjustments, plus $38 million of recoveries, less $195 million of write-offs, ending at $458 million. Write-offs exceeded reserve additions and recoveries combined. Regulatory accounting also affects how those movements reach earnings.
Source: 2026 Form 10-Q, Note L, six-month allowance table, p. 35.
4-3. Tax Recovery and Weld Disputes Expose Assets and Future Revenue
Regulatory approval remains consequential for several existing balances. Approximately $1.02 billion of income-tax regulatory assets relates to an ongoing review of historical ratemaking calculations. These balances are netted against related regulatory liabilities and do not earn a return. Management considers collection probable, but an adverse order could require a write-down; the company cannot estimate the possible loss.
The gas-main weld investigation creates a separate revenue exposure. The approved plan provides for $33.3 million of annual gas revenue, or $100 million across 2026–2028, to be recovered subject to possible refunds. The company says it is investigating, remediating and monitoring affected welds. Neither this amount nor the tax balance should be treated as an established loss.
Source: 2026 Form 10-Q, Note B, “Other Regulatory Matters,” pp. 21–22.
Environmental liabilities also extend beyond current accruals. Con Edison recorded $1.08 billion for Superfund site cleanup obligations, with a similar regulatory asset balance. Superfund refers here to cleanup responsibilities under federal and similar state environmental laws. Separately, the filing identifies a reasonable possibility of asbestos losses exceeding recorded liabilities, without an estimable range. Future recovery through rates can protect earnings while leaving timing and regulatory-approval risks.
Source: 2026 Form 10-Q, Note G, pp. 28–29.
4-4. A Later Capacity-Need Forecast Preserves Investment Choices
Management is directing the business toward regulated electric infrastructure. Selling the pipeline interest supplied cash and reduced exposure to that investment. The associated earnings gain will not recur, so future growth must come from the remaining operations and completed projects.
The need for new electric capacity remains meaningful, but its timing is adjustable. In July, CECONY projected a New York City reliability need of 125 megawatts beginning in 2033, increasing to 675 megawatts by 2036. Megawatts measure power capacity. That forecast delayed the need by one year and reduced its size relative to January. Management proposed competitive battery-storage procurement while retaining transmission construction as an alternative, subject to approval and cost recovery.
Source: 2026 Form 10-Q, MD&A, “Electric Reliability Needs,” pp. 48–49.
The later CECONY forecast does not remove all near-term reliability concerns. The same filing describes the New York Independent System Operator’s separate assessment, which continued to identify near-term needs dependent on planned projects being completed and delivering their expected capability. The operator manages New York’s wholesale electricity market and bulk power system. The two assessments should not be treated as interchangeable.
Source: 2026 Form 10-Q, MD&A, “Electric Reliability Needs,” pp. 48–49.
Management’s response preserves alternatives as demand and available generation change. It also argues against treating every possible project as a committed spending requirement. The useful test is whether approved projects address demonstrated needs at recoverable costs, without placing excessive pressure on customer bills and cash collections.
5. The Business Can Grow, but Profit Alone Does Not Fund the Buildout
Con Edison’s regulated utility earnings improved, while its investment program continued to require external capital. The pipeline gain strengthened reported H1 profit and supplied disposal proceeds, but neither establishes recurring funding capacity. Approved rate-base growth provides a more credible basis for future operating earnings.
The cash decline deserves attention without being mistaken for a collapse in the underlying utility. First-half operating cash remained close to its 2024 level, and 2025 benefited from tax refunds. New equity and longer-dated borrowing helped fund investment while keeping total debt broadly stable. However, overdue customer balances and cash spending above internally generated funds leave continued financing access important.
The next evidence that would strengthen this assessment is better collection of overdue bills alongside earnings from completed, approved investments. Faster collections would reduce external funding needs without requiring another asset sale. Conversely, disallowed recovery, customer refunds or construction spending that outruns approved funding would weaken financial resilience even if reported profit kept rising.
Con Edison therefore enters the next phase with a supported regulated growth plan and a continuing cash-funding burden. The central business question is how efficiently investment becomes recoverable revenue and collected cash. That is the link that will determine whether network expansion strengthens the company as well as enlarging it.
Calculation notes: Percentage changes use reported amounts before rounding the calculated result. Margins divide the relevant profit by revenue. Three-year compound growth uses (H1 2026 / H1 2023)^(1/3) − 1. Cash conversion uses consolidated net income, with H1 inputs of $1,912/$922 million in 2024, $2,816/$1,038 million in 2025 and $1,971/$1,232 million in 2026. The maturity calculation uses $250 million due in 2026, $780 million in 2027 and $800 million in 2028, divided by $26,050 million of year-end long-term principal plus $1,300 million issued in June. Year-end principal equals the $25,801 million carrying amount plus $249 million of unamortized debt expense and discount. Principal amounts differ from balance-sheet carrying values, which include accounting adjustments; this maturity denominator excludes short-term borrowing. June’s weighted coupon is (450 × 5.15% + 850 × 5.875%) / 1,300. Gross receivables combine the two utility balances before allowances. At June 30, assets reconcile to $50,740 million of liabilities plus $25,719 million of equity, equaling $76,459 million.
This analysis is based on filings submitted to the U.S. Securities and Exchange Commission and is provided for informational purposes only. It is not investment advice.
Source: SEC Form 10-Q, filed August 6, 2026.