REPORT TO THE FINANCIAL COMMUNITY AND 10 Q
Third Quarter
September 30, 2001

 Table of Contents 
 Consolidated Edison, Inc. Has Increased Its Dividend For 27 Consecutive Years  
 Con Edison Rises to Unprecedented Challenge, Restoring Energy Services in Lower Manhattan 
 IN MEMORIAM 
 Consolidated Edison, Inc. 2001 Third Quarter Earnings Release 
 Consolidated Edison, Inc. Financial Information 
 How to Reach Us 
 Third Quarter Filing with the SEC 
     

Consolidated Edison, Inc. Has Increased Its Dividend For 27 Consecutive Years





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Con Edison Rises to Unprecedented Challenge, Restoring Energy Services in Lower Manhattan

At 8:48 in the morning on September 11th, the World Trade Center came under terrorist attack as a hijacked airliner was flown into Tower 1. Approximately 15 minutes later, a second aircraft crashed into Tower 2. In less than two hours, both towers collapsed, and lower Manhattan was transformed into a disaster zone.

Crisis Response

Within minutes of the first attack, Con Edison implemented its Corporate Emergency Response Procedure. Con Edison field crews reached the disaster zone while the towers were still standing. These crews were the vanguard of a 24-hour-a-day Con Edison presence.

In an emergency, our first task is to help ensure the safety of the public. In addition to securing our own system, Con Edison crews joined with police, fire, and emergency response personnel in helping survivors and facilitating evacuation of the area.

At the same time, Con Edison’s emergency command center was activated in our headquarters building, to provide overall direction and management of the company’s response to the attack, including engineering and logistics support. Hundreds of additional field crews were dispatched to the WTC area. The towers were reduced to a pile of rubble. Fires burned and the entire vicinity was covered by inches of thick white dust, ash, and debris, through which our forces had to dig to reach critical valves and manholes.

As the day progressed, Con Edison crews assessed the extent of damage to the energy-delivery infrastructure in the area. Two electric substations were located below World Trade Center #7, a 47-story tower across the street from the main WTC complex. Falling debris set that building on fire, and by late afternoon it was clear that the building could not be saved. Con Edison shut off power to the building at 4:47 p.m. At 5:20 p.m., the building collapsed and destroyed the substations. Now, most of lower Manhattan was without power. There were 13,000 customers without electricity, 1,400 without gas, 240 without steam.

Service Restoration

"The workers of Con Edison restored more than power to lower Manhattan: they restored confidence to the American people..."
With a number of electrical networks rendered inoperative, Con Edison made return of electricity a priority. Electrical service was needed to resume operation of undamaged buildings in lower Manhattan, and was also vitally important to the search and rescue efforts at ground zero. In addition, expediting the reopening of the New York Stock Exchange was important not only to financial markets and the local economy, but to the nation as a whole.

Employees throughout the company worked 12-hour shifts for the duration of the emergency. Many field crews stayed on station for 16 hours, interrupting their work only to sleep or eat quick meals at their work sites. Some did not go home for days.

Con Edison engineers and operations specialists developed a strategy for restoring energy service. Immediate restoration focused on re-energizing undamaged electrical systems, bypassing damaged electrical equipment, and deploying on-site generators. In addition, company representatives reached out to facility managers in lower Manhattan and arranged for buildings with their own stand-by generators to supply power.

Because the loss of two substations required redesign, in effect, of the lower Manhattan electric networks, existing ducts could not be used for the electric cabling needed. In all, 36 miles of electric cable were run above ground or in shallow trenches. Eighty on-site generators were deployed, producing 100 MW in total, enough to power a city the size of Albany. Many of these supported the New York Stock Exchange and its trading partners, enabling the NYSE to reopen successfully on September 17.

Logistical support for field forces was crucial. Items brought to the affected area included respirators, air bottles, thousands of feet of cable, gloves, mobile generators, cots, 30,000 pounds of ice, tools, fuel, raingear, and much more. Con Edison’s Transportation department set up round-the-clock fueling operations for all of the mobile generators in the area.

Throughout, Con Edison representatives worked closely with the Office of Emergency Management, New York City officials, the city’s uniformed services, and the media. Customers were kept up to date by means of the Customer Service call system, and also by frequent updates to the media. Con Edison assigned a customer outreach team to help staff New York City’s business assistance center at 80 Pine Street. More than 80 Energy Services representatives worked with building operators and facility managers on technical and restoration issues.

With more than 1,900 workers active in the field and hundreds more supporting them around the clock, substantial progress toward service restoration was made hourly. Cutting, splicing, cable work, and shunting continued for days throughout the affected area of lower Manhattan.

The gas system remained pressurized, except for several blocks around the WTC complex, where engineers worked alongside field crews, cutting and capping gas mains to isolate damaged sections. Leak-survey crews continually patrolled surrounding neighborhoods to ensure that no problems had been missed.

Pressure in the steam system dropped rapidly following the attack, as a result of breaks in steam pipes running through the World Trade Center complex. In order to isolate the damage, a substantial part of the steam system in lower Manhattan was shut off. Steam up to the customer service valve was quickly restored to Beekman Hospital, Gouverneur Hospital, 1 Chase Plaza, the Stock Exchange, and other customers who were ready to accept steam service.

The success of lower Manhattan restoration efforts reflected unprecedented teamwork by all the forces involved. At the same time, Con Edison’s crews were sustained and inspired by the outpouring of support from the hundreds of volunteers who distributed essentials ranging from cold water to dry socks, from the owners of local restaurants (some of the finest in New York) who set up buffets for hungry workers, and from the groups of people who gathered both day and night along the highway leading to ground zero to cheer them as they came and went.

In a letter from The Business Council of New York State, President and CEO Daniel B. Walsh wrote: “The workers of Con Edison restored more than power to lower Manhattan: they restored confidence to the American people… Their sweat, toil, and courage inspire us all. We know there is much work ahead for you, for us, and for all Americans, but you and your employees have given us a standard we can strive to match.”

The Public Service Commission, under the leadership of Chairman Maureen Helmer, acknowledged Con Edison’s accomplishment in a resolution adopted on October 24th. The document concludes: “Now, therefore, be it resolved that the Commission, with a profound sense of gratitude, records its high esteem for these men, women, and organizations for their extraordinary service to the people and the State of New York in a time of unparalleled crisis…”

Repair and Rebuilding

Service restoration in lower Manhattan was Con Edison’s initial objective, but completing permanent repairs, which involves rebuilding lower Manhattan’s energy delivery infrastructure, will take much longer. Con Edison’s very high levels of service reliability reflect the robust electric, gas, and steam infrastructures in the affected area, much of which will remain in service. However, the destruction at the World Trade Center complex itself and on the periphery will necessitate considerable rebuilding.

The capacity of the two destroyed substations will have to be replaced. Con Edison engineers and operators have developed plans to replace one of these by expanding capacity at an existing substation by the summer of 2002, and the second, by constructing a new substation by the summer of 2003. Substantial reconfiguration and reconstruction of the lower Manhattan electric transmission and delivery infrastructure will be required. In the coming months, Con Edison forces will install more than 85 miles of new underground conduit and fresh cable, and build more than 50 new manholes.

A great deal of ancillary work will be necessary to support this restoration program. Feeders and transformers will have to be relabeled, remote monitoring systems will have to be reprogrammed, relay settings and control systems will have to be modified, and all new construction will have to be thoroughly documented to reflect changes in the system.

Permanent repairs will also be required for parts of the gas and steam systems in lower Manhattan. Some gas mains will be removed and replaced, along with associated regulation and control equipment. Four portions of the steam system that sustained damage will also have to be rebuilt.

Con Edison estimates the cost of restoring lower Manhattan’s energy systems at approximately $400 million. The company is seeking federal reimbursement for its response and recovery costs.

Although the acute crisis-response phase is past, Con Edison’s rebuilding program remains intensely active. Thousands of employees, from field crews to senior executives, are focused on construction of the permanent new energy delivery infrastructures for the affected area that will restore and further enhance the reliability and security of our service and will provide for the growth that we are confident we will see in the future.

Currently, 90 percent of the buildings in lower Manhattan are functioning and fully operational. Customers near ground zero and adjacent neighborhoods include major banks, financial institutions, the Federal Reserve Bank, and many others. According to a special report on the impact of the World Trade Center attack by Insignia/ESG, about 30 percent of World Trade Center tenants who were displaced by the attack are relocating outside the city. In fact, about 66 percent of the space leased by displaced companies is in Manhattan.

Although the architectural solution has not been determined, the World Trade Center site will be redeveloped. Before the September 11th attack, the World Trade Center complex provided 12.9 million square feet of commercial and office space. That represented four percent of Manhattan’s office real estate, and approximately 13 percent of the downtown office market. The restoration is likely to provide as much space.

Con Edison will have lower Manhattan’s energy infrastructure rebuilt to accommodate future growth in our customer base and the increased demand for energy transmission and delivery service it represents. Despite the systems damage and the expenditures needed for reconstruction, Con Edison is, and will continue to be, very strong financially.



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IN MEMORIAM

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Consolidated Edison, Inc. 2001 Third Quarter Results

Consolidated Edison, Inc. [NYSE: ED] reported net income for common stock for the third quarter of 2001 of $277.3 million or $1.31 a share, compared with earnings of $279.9 million or $1.32 a share for the third quarter of 2000. The company also declared a quarterly dividend of 55 cents a share on its common stock payable December 15, 2001, to stockholders of record as of November 14, 2001.

"The overwhelming response of individuals, businesses, as well as government officials to the September 11th attacks on our city and our nation confirms our belief that the spirit and the economic base of New York are strong and resilient and that the economic effects of the attacks will be limited in scope and duration," said Chairman and Chief Executive Officer Eugene R. McGrath. "Con Edison and its 14,000 men and women will contribute their individual and corporate strengths to the restoration of our great city, while continuing to work hard for our investors."

The company's net income for common stock for the first nine months of 2001, was $557.1 million or $2.63 a share, compared with $536.8 million or $2.53 a share for the first nine months of 2000.

The company's net income for common stock for the 12 months ended September 30, 2001, was $603.2 million or $2.84 a share, compared with $658.3 million or $3.09 a share for the 12 months ended September 30, 2000.

Excluding non-recurring charges for the year 2000, earnings per share for the third quarter, first nine months, and 12 months ended September 30, 2000, would have been $1.40, $2.71, and $3.27, respectively, while the earnings per share for the 12 months ended September 30, 2001, would have been $3.16.

The annual after-tax impact of the loss of electric, gas and steam services to buildings destroyed or damaged in the World Trade Center attack is approximately $15 million.

Electric sales for Con Edison of New York, excluding effects of weather, increased by 3.0 percent for the first nine months of 2001 compared to the prior year, and firm gas sales increased by 2.1 percent.

On August 9, 2001, Con Edison reported all-time highs for energy demand when the electric peak load reached 12,207 megawatts. On July 25, hourly gas throughput reached a new record of 58,759 dekatherms, and on Thursday, August 9, a new summer total gas system daily delivery record of 1,077,858 dekatherms was achieved. Through September 30, $50 million of costs were incurred as a result of the World Trade Center attack, of which $12 million was charged to capital and $38 million of expenses were deferred. Almost all of the remaining amount to be spent will be capital investment. Con Edison is seeking federal reimbursement for its response and recovery costs.

For the full year 2001, the company narrowed its forecast earnings range to $3.20 to $3.25 a share, reflecting the short-term economic impact of the September 11th attacks, partially offset by stringent cost controls.

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Consolidated Edison, Inc. Financial Information

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How to Reach Us

Consolidated Edison, Inc.
4 Irving Place
New York, NY 10003
(212) 460-4600
http://www.conedison.com/


Regulated Utilities

Consolidated Edison
Company of New York, Inc.
4 Irving Place
New York, NY 10003
(212) 460-4600
www.conEd.com

Orange and Rockland Utilities, Inc.
One Blue Hill Plaza
Pearl River, NY 10965
(845) 352-6000
www.oru.com
Competitive Businesses

Consolidated Edison Solutions, Inc.
701 Westchester Avenue, Suite 300 East
White Plains, NY 10604
(914) 286-7000
www.conEdsolutions.com

Consolidated Edison Energy, Inc.
701 Westchester Avenue, Suite 201 West
White Plains, NY 10604
(914) 993-2189
www.conEdenergy.com

Consolidated Edison Development, Inc.
111 Broadway, 16th Floor
New York, NY 10006
(212) 393-9242
www.conEdison.com/coned-development.htm

Consolidated Edison Communications, Inc.
132 West 31st Street
New York, NY 10001
(212) 324-5000
www.electricfiber.com



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Consolidated Edison, Inc. (Con Edison) is one of the nation’s largest investor-owned energy companies, with approximately $10 billion in annual revenues and approximately $17 billion in assets. The company provides a wide range of energy-related products and services to its customers through its two regulated subsidiaries: Consolidated Edison Company of New York, Inc. (Con Edison of New York), a regulated utility providing electric, gas, and steam service to New York City and Westchester County, New York; and Orange and Rockland Utilities, Inc. (O&R), a regulated utility serving customers in a 1,350 square mile area in southeastern New York State, as well as adjacent sections of northern New Jersey and northeastern Pennsylvania; and through its four unregulated businesses: Con Edison Solutions, a retail energy services company; Con Edison Energy, a wholesale energy supply company; Con Edison Development, an infrastructure development company; and Con Edison Communications, a telecommunications infrastructure company. For additional financial, operations, and customer service information, visit the Consolidated Edison, Inc. Web site at http://www.conedison.com/.