Consolidated Edison, Inc. (ED) Earnings Call Transcript & Summary

Good morning. My name is Jan Childress, Director of Investor Relations. Welcome to Consolidated Edison's ESG presentation. Before we begin, I want to read our forward-looking statement. This presentation contains forward-looking statements that are intended to qualify for the safe harbor provisions of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are statements of future expectations and not facts. Words such as forecasts, expects, estimates, anticipates, intends, believes, plans, will and similar expressions identify forward-looking statements. The forward-looking statements reflect information available and assumptions at the time the statements are made and speak only as of that time. Actual results or developments may differ materially from those included in the forward-looking statements because of various factors, such as those identified in reports the company has filed with the Securities and Exchange Commission, including that the company's subsidiaries are extensively regulated and are subject to penalties; its utility subsidiaries' rate plans may not provide a reasonable return; it may be adversely affected by changes to the utility subsidiaries' rate plans; the failure of processes and systems and the performance of employees and contractors could adversely affect it; the failure of, or damage to, its subsidiaries' facilities could adversely affect it; a cyber-attack could adversely affect it; it is exposed to risks from the environmental consequences of its subsidiaries' operations, including increased costs related to climate change; a disruption in the wholesale energy markets or failure by an energy supplier or customer could adversely affect it; it has substantial unfunded pension and other post-retirement benefit liabilities; its ability to pay dividends or interest depends on dividends from its subsidiaries; it requires access to capital markets to satisfy funding requirements; changes to tax laws could adversely affect it; the strategies may be -- may not be effective to address changes in the external business environment; it faces risks related to health epidemics and other outbreaks, including COVID-19; and it also faces other risks that are beyond its control. Con Edison assumes no obligation to update forward-looking statements. [Operator Instructions] We will cycle through these questions during the question-and-answer portion at the end of the presentation. Now it's my pleasure to introduce John McAvoy, Chairman, President and CEO of Consolidated Edison.

Thank you, Jan. Good morning to all, and thank you for being with us today on this webcast. We have a comprehensive presentation to share with you, and then we'll certainly have time to hear your comments and feedback and to respond to your questions. So it was just 3 weeks ago that a historically destructive tropical storm ravaged the U.S. from the Carolinas to Vermont. Major storms today serve as painful reminders of the evidence of climate science resulting in an increase in the frequency and severity of major storms. And as a society, we simply cannot continue to allow that to happen. Today, we'll discuss the steps that we are taking to combat climate change. I have several members of our senior management team with me here to discuss climate change and the broader topic of ESG, environmental, social and governance responsibility. Joining me are Mary Kelly, the Senior Vice President of Corporate Shared Services at Con Edison Company of New York or CECONY, as we call it; Bob Sanchez, the President of Orange & Rockland Utilities or O&R; Tim Cawley, the President of CECONY; and Robert Hoglund, Senior Vice President and Chief Financial Officer. Now many of you are already familiar with Con Edison. We primarily provide electric, gas and steam service in New York City and the surrounding areas, including Westchester, Rockland and Orange counties and parts of Northern New Jersey. Our regulated utilities, Con Edison Company of New York and Orange & Rockland, represent our core business. Our clean energy businesses primarily develop, construct, own and operate a portfolio of utility scale, solar and wind powered electric generation projects. They also help customers across the country, mainly federal, state and local governments, implement energy efficiency programs. And Con Ed transmission owns interest in FERC-regulated electric and gas transmission assets and seeks to connect renewable resources to customers. We have a very special service area, serving the most densely populated city in North America. As an entry point for immigrants over the generations, New York City is one of the most ethnically diverse cities in the world. Over 800 languages are spoken here. Our city has evolved into a global financial and media center with a diverse economy, bridging work opportunities in finance, technology, health care, education, entertainment, food service and a host of other industries. And yet within the span of a few months, we've had to face the human and economic consequences of being at the epicenter of the COVID-19 pandemic. The pandemic has laid bare socioeconomic inequities that were further punctuated by the murder of George Floyd. The hurt and pain of racism for the Black American community and for all communities has been tragically evident. Today, I want to get beneath this pain and show you who we are and what our 14,000 employees collectively stand for. At Con Ed, we embrace a triple bottom line: people; planet; and profits. We are the longest continuously listed company on the New York Stock Exchange dating back to 1823. We have a history of enlighting transformation, spurred by the needs of our stakeholders. We converted the coal-fired plants we used to own to clean up fossil fuels nearly 50 years ago. We started our very first energy efficiency programs at the same time. In 1999, we divested all of our regulated fossil fuel generation pants, except for a few small plants that provide steam to a district steam system in Manhattan. And in 2008, we sold all of our merchant fossil fuel generating plants. Today, we're investing in renewables and smart technology to evolve into a next-generation clean energy company. Our divestiture of fossil fuel plants and focus on clean energy has dramatically changed our fuel mix over the last 20 years. Today, 71% of the electricity made by the generating plants that we own are produced from the sun and the wind. We don't own or lease any coal or any nuclear plants. The generation that we own stands in contrast to what our delivery customers consume, which we do not control. The fuel mix assigned to our utility customers by the New York independent system operator offers insight into the challenged New York State faces to achieve its goal of 100% clean energy. Bob and Tim will discuss this more later. We have 3 priorities that guide us towards creating a sustainable future for our company. First and most important, we are focused on safety, and our focus extends both for safety of our employees and to the public we serve. Our second priority is achieving operational excellence. Achieving excellence in operations requires the rigor and precision and quality by which we design, construct, operate and maintain our energy systems. Our third priority is providing an outstanding customer experience. We are taking advantage of technology and innovation to provide customers with tools to help them save money and help us keep our services safe, affordable and reliable. While so much is changing each day, our commitment to our 3 guiding principles never waivers. Safety is the foundation for all that we do, and that principle was our touchstone as the pandemic struck New York very hard in March. We have benefited from our practice of preparing for the unlikely. We've had a pandemic planning team for close to a decade. That team had met regularly, had prepared a set of response procedures and a playbook and had performed several tabletop drills in the past. We also operate a mature incident command structure that provides the emergency management resources that we need in a crisis. When the pandemic broke, we quickly mobilized our plans on our incident command structure to help all our stakeholders through this crisis. There has been tremendous sadness and loss, but all women and men have also demonstrated an incredible professionalism, ingenuity and resolve. Our workforce has had to work differently to maintain essential service, including proper personal protective equipment, social distancing, staggered work shifts, remote work where possible and later, daily health assessments for employees reentering our facilities. During the pandemic, we have suspended service disconnections for customers with unpaid bills. And we have maintained our workforce throughout the crisis with more than 8,000 of our 14,000 employees working remotely. Our focus enabled us to provide bright spots in a dark time. Our people brought electric supplies to emergency field hospitals and provided power to drive through testing sites. We produced tens of thousands of plexiglass face shields for health care workers and donated nearly 100,000 N95 Masks from our inventory, balancing the safety needs of our employees and our communities. In the weeks and months ahead, we will work with various stakeholders as the city and state transition to the new normal. We'll also be assessing the long-term impact to our business and our service territory. The women and men at Con Edison are what make us such an incredible responsive company. Their safety is our leadership's top concern. And as a company, we've made substantial improvement over the last decade. Since 2009, employee injuries are down 64% at CECONY and 69% at O&R. Our vision is for an accident-free workplace. And our passion for safety extends equally to the public we serve. We're investing heavily in public safety. Our gas main replacement and leak repair efforts are some of the most important investments in our system to reduce safety risk and cut methane emissions. We survey our electric and gas systems for stray voltage and methane leakage 12 times a year, far exceeding industry standards. And we augment that surveillance of our underground electric network with real-time detectors that monitor equipment condition and can send us any notification of problems before small issues can become big risks. We're also installing our first of its kind natural gas detector in customers' homes and businesses that alert us directly through our smart meter network when a gas leak is detected. Reliability is very much a part of the safety equation. When you consider that it takes electricity to get elevators and water up high-rise buildings, to move 6 million people daily through the subways and to light a city that never sleeps. We take pride in our reliability, which is the best in the United States. The reliability of CECONY's underground electric delivery system is unparalleled. Nevertheless, we always strive to improve. We invest more than $3 billion each year in our energy systems, using a risk-based approach to maximize the value of each dollar spent. And we're deploying sensors, using robotics to monitor our systems, applying analytics and using other technologies to achieve the operational excellence that our customers deserve. Safety and wellness also encompasses the air we breathe by keeping it free of harmful emissions. Con Edison has a long history of leadership in carbon emission reductions. We've reduced our carbon emissions by 51% since 2005. And that metric doesn't include the fact that we sold our regulated plants at the end of the last century and then we sold all our competitive fossil plants in 2008. We have also been successful in reducing other harmful emissions like Methane and sulfur hexafluoride. Empowering our customers with near real-time intelligence to manage their energy use is an integral part of our commitment to the environment. To that end, we're investing $1.4 billion in a multiyear electric and gas smart meter deployment that is the cornerstone of our commitment. Smart meters are a game-changer. With demonstrated savings that are expected to accumulate over to $1 billion over the life of the assets and truly transformational capabilities for both the customer and our company. The environmental benefits are substantial as well. We expect to be able to reduce distribution voltage by as much as 3% which will result in a 1.5% reduction in energy usage. Smart meters also made possible more interactive rate designs that send the right signals to customers to be efficient in their energy consumption. Complementary to our smart meter rollout are 2 customer-focused investments that will further enhance the customer experience. First, we have been enhancing our customer internet portal over the past couple of years to make it easier for customers to learn about energy savings opportunities and to pay their bills. And second, we plan to switch to a completely new customer care system in 2023. Our smart meter investments will enhance what I feel is one of the most important aspects of our clean energy commitment, and that is energy efficiency. The triple bottom line rewards of energy efficiency are proven and compelling. Customers lower their bills by using less energy, be it electric, gas or steam. Lower usage means avoided emissions that makes the air cleaner for all of us. In fact, New York City is enjoying the cleanest air in over 50 years. And finally, the investments earn a return for our shareholders. Energy efficiency is part of our vision for a clean, smart and reliable energy future. Our clean energy commitment entails tripling energy efficiency investments by 2030, achieving 100% clean electricity in our state by 2040, electrifying our entire light-duty vehicle fee by 2040, providing all in support for electric vehicles across our service area and accelerating the reduction of fossil fuels for building heating. The vision reflects the commitment of the Con Edison team, including our Board of Directors. Our Board is actively involved in assessing and guiding the sustainability of our business. In 2019, we reorganized our committee structure to emphasize this priority by forming a safety, environment, operations and sustainability committee of the Board. The committee oversees the company's efforts relating to corporate responsibility and sustainability, but the responsibility for ESG permeates each of the 6 committees of our Board. Since 2011, we have proactively engaged with corporate governance officials and our top shareholders, gaining valuable feedback for our Board. Listening to our stakeholders, we have adopted sustainability reporting standards that include the task force on climate-related financial disclosures, the sustainability accounting standards board and standards developed by our industry trade groups, the Edison Electric Institute, EEI, and the American Gas Association, AGA. We have a strong, informed and responsive board. They reflect the great mosaic of a service territory with diversity in tenure, race, ethnicity, gender and skills. We benefit from new members who provide a fresh perspective and varied skills as well as long-tenured members who have guided us through our successes and our challenges. Our Board provides the responsible leadership we need to continue to evolve as a sustainable energy company. That leadership is critical as we navigate the current strains of our -- on our global health and social fabric. With that, I will introduce Mary Kelly, whose corporate shared services responsibility include human resources and information technology.

Thank you, John. George Floyd's murder graphically brought the issue of racial injustice into households and workplaces across the globe. Our response at Con Edison was quick. Our human resources department partnered with one of our employee resource groups, Black United in Leadership and Development, or BUILD, as we call it. And between the third and 19th of June, we conducted 12 voluntary open sessions for employees to listen and be heard on the issues of race and inequality. We had 15% of our workforce participate in these courageous conversations, and that's the highest employee participation we've ever seen in a voluntary program over such a short period of time. BUILD is one of a number of resource groups at Con Ed that provide opportunities for our employees to come together based on shared characteristics, experiences and interests. Over the years, Con Edison has had a concerted effort for recruitment and employee development practices to benefit from the diversity of our city. We have a board mandate to consider diverse candidates for board membership and senior executive positions, the so-called Rooney Rule, that spirit of inclusion extends to our entire workforce. Diversity offers us a wealth of ideas and perspectives. But it takes more than just diversity, it takes respect and inclusion to make a wonderful human tapestry and asset. That's who we are as a company, and it's not a coincidence, because we work hard at it. We recruit, train and empower employees to take advantage of our differences to celebrate successes and to grow from our mistakes. We set high standards for respect and fairness throughout the company. We implement systems, policies, processes that support and sustain inclusion and eliminate discrimination and harassment. We provide tuition reimbursements, skills training, mentoring, growth promotional opportunities and a wide range of benefits for retention and upward mobility. We have a dedicated learning center through which we offer instructor-led and online skills training for employees. We have award-winning support for Veterans and for employees on active duty and in the reserves. We work with parents to achieve work-life balance, and we have scholarships, internships and job shadowing programs for young people. Our commitment to diversity and inclusion is part of our contribution to a greater society. We recently extended our corporate commitment when John joined 26 other CEOs from the largest employers in the New York area to launch the New York Jobs CEO Council. The new CEO-led-results-oriented coalition will collaborate with educational institutions, community organizations and nonprofits to develop the skills that New York businesses need for today's and tomorrow's workplace. The member organizations aimed to hire 100,000 traditionally underserved new Yorkers by 2030, a goal which includes job opportunities and apprenticeships for 25,000 CUNY students. Our focus will be low-income Black, Latinx and Asian communities. As a corporation, the CEO council is the kind of hands-on activity that we engage in when we seek to affect social change. We do not use corporate funds directly for political contributions. Culturally, that's just not who we are. We scored 90% in the CPA-Zicklin Index of corporate political disclosure and accountability. That score designated Con Edison among the 2019 trend-setters for this annual ranking for political accountability of the S&P 500 companies. We do, however, raise our voice against measures that dilute environmental goals. Recently, we joined peer companies in filing a lawsuit challenging a rule issued by the EPA and the Department of Transportation. The rule significantly weakens the fuel economy and tailpipe emission standards for light-duty passenger vehicles and trucks, that was set in 2012. Standing up to be counted as a responsible corporate citizen is who we are. Our corporate citizenship includes protecting our stakeholders from cybersecurity breaches. This has become even more challenging during the pandemic. Cyber-attacks are one of our critical enterprise risks. Attackers possess knowledge and capabilities to impact the energy sector. E-mail is one of the primary vehicles used to execute attacks and mobile devices are increasingly being targeted. We go to great lengths to protect our computer systems and equipment from the threat of cyber-attack. Our comprehensive program is designed to protect us from both internal and external threats. We've expanded our use of next-generation intrusion detection and prevention tools to further protect our customers' personal information. And we've incorporated added security into our smart meter implementation. We regularly train our employees to stay aware of potential cyber threats. Our corporate leadership and our Board of Directors are actively engaged in our cybersecurity efforts. Cybersecurity is but one of the risks borne by our company and our society. Among the other risks is climate change. And for a discussion of that topic, I'll introduce Bob Sanchez, the President of Orange & Rockland Utilities, who will delve into some of our efforts in this critical area. Bob?

Thank you, Mary, and good morning, everyone. To take on the challenges that climate change poses to our company and society, we knew that we had to partner with government, corporations and other stakeholders. And we have found such partnership in New York, the principal service area of both O&R and CECONY. Our commitment to 100% clean electricity by 2040 is in sync with the state's clean energy targets as well as those at the local level. Between CECONY and O&R, we deliver more than 40% of the electricity consumed within the state of New York. Success in our service territory is, therefore, critical for the state of achieving its clean energy objectives. At the utilities, we're making our case to the New York State Public Service Commission to lift restrictions on utility ownership of large-scale renewables. We believe that allowing us to invest in renewables in the state will lower the overall cost of customers and accelerate the development of renewable energy in New York. It is ironic that Con Edison is the second-largest owner of solar electric production in North America, but we're restricted from owning large-scale solar or wind in our home state. We feel that customers will be better served by committing us to leverage our experience in building and operating large-scale renewables. Through efforts like ours and through public policy initiatives, over the past few decades, power plants are no longer the biggest source of emissions within the state of New York, both the transportation and building sectors produce more carbon than the electric generation sector. The 2 sources combined account for 2/3 of all emissions within the state. So in order to further reduce emissions within the state, we need to engage, equip and then send customers to make environmentally sound energy consumption decisions. This is where enhancing the customer experience through better customer interaction, smart meters, educational and promotional program helps us move towards our climate change goals. Both O&R and CECONY offer our customers tools to evaluate and incentives them to purchase distributed resources such as rooftop solar and battery storage. Working with our customers, we continue to see the growth in the distribution -- excuse me, the distributed resources within our service territory, particularly solar, enabling customers' adoption of distributed generation and storage is part of our commitment to build a stronger customer-centric company. Our streamlined services have helped distributed resources in CECONY service area to increase more than 90% by 2015 -- since 2015. The growth rate is even faster at O&R. The less urban nature of O&R service area allows for a relatively high amount of distributed resources, especially solar. Our streamlined services have helped distributed resources in O&R service area to more than double since 2015. And we do expect that percentage to continue to grow in both service areas. Accommodating customer-sited resources also requires us to modify our grid to manage the 2-way flow of energy from utility to customer and increasingly from customer to the grid. As utilities, we have an integral role in developing an economy that can operate on 100% clean electricity. A major challenge to achieving that goal is building energy storage that can take advantage of periods where low energy consumption allows us to store the energy to help us meet those peak demands. In late 2018, CECONY put in service a 2 megawatt, 11 megawatt hour battery storage system, along the Brooklyn Queens border. The batteries are a much larger effort to delay a traditional substation transmission investment of more than $1 billion. And this is to help meet the growing demands within that area. These non-wire solutions, as we call them, includes a portfolio of alternatives to -- from traditional utility investments. The portfolio includes renewable electric generation, battery storage and energy efficiency investments. At O&R, we're developing a 3 megawatt, 12-megawatt hour battery for a similar effort in our service territory that's expected to be in service before the end of the year. We're also working with customers and third parties on other storage projects that's going to expect us to add more than 80 megawatts of storage capability on our system by the end of 2024. As John mentioned earlier, a major component of our nontraditional investments has been energy efficiency. Energy efficiency is the cleanest of the energy alternatives because its energy avoided. And avoiding energy consumption is a cost savers for our customers. Earlier this year, the New York State Public Service Commission concluded its New Efficiency: New York, or NENY, proceedings by setting a plan for energy efficiency across the state between now and 2025. The investment by both utilities will triple from the present levels to accumulative $1.5 billion by 2025. Our aim is to slow the growth of consumers' electric consumption, ultimately benefiting the environment. These investments and alternatives to traditional utility construction, including money spent on customer incentives, are treated for regulatory purposes in the same way as capital investments, and they're amortized over 10 years, earning the utilities to cost of capital during that period. This means cost savings for customers that lower their energy usage, less utility infrastructure to maintain and earnings for shareholders. That's truly a win-win-win proposition for a broader stakeholder base. This is a major step in a State's energy agenda and our own clean energy commitment. To discuss more of our role in the clean energy future, I'd like to introduce Tim Cawley, President of Con Edison of New York.

Thanks, Bob. So energy efficiency investments increased substantially under the New Efficiency: New York order along with energy efficiency targets. And as Bob mentioned, it's worth repeating that these investments are treated as capital, earning the utility rate of return for investors while producing customer and societal benefits. The comprehensive array of energy efficiency programs for utilities in the State are expected to deliver, in aggregate, nearly 1/3 of the greenhouse gas emission reductions needed to meet New York State's 40% reduction by 2030. We have a long history of providing programmatic edge efficiency to our customers. Since 2009, more than 1 million of our electric and gas customers have benefited from our programs, preventing 7 million metric tons of carbon emissions. That's equal to taking about 1 million cars off the road. Our energy efficiency programs offer customers' rebates and incentives on such things as energy-efficient lighting, cooling heating systems, including high-efficiency electric heat pumps. These programs are expected to make significant contributions to reducing building emissions, which, as Bob noted earlier, are the second largest contributor to statewide emissions. Energy efficiency is not just a component of our non-wires or electric solutions, but also on nonpipes or gas solutions. Just as we work to delay or eliminate the need for traditional growth capital expenditures on our electric system, we have an array of tools to apply to our natural gas distribution systems. The priority place that we apply these rules is where we are addressing tight supplies, particularly in Westchester County, where we had a temporary moratorium in place for new firm gas service. Our nonpipe solutions include demand side and supply side programs to reduce or offset peak-day natural gas demand. We offer customers incentives to switch from natural gas to alternative method of space heating like geothermal and air source heat pumps. We're also facilitating the growth of the renewable natural gas industry by establishing a standard interconnection procedure. In addition, as we do in our electric business, we're soliciting the marketplace for ideas to lower natural gas usage. Currently, we're evaluating responses to our second round of solicitations. This latest request for information includes a proposal for green hydrogen. The focus on nonpipe solutions is part of a broader examination of the future of natural gas in New York's future clean energy economy. Our current rate plan approved by the New York State Public Service Commission, calls for a depreciation study on our gas system. At present, our customers prefer natural gas for heating and cooking, and our obligation is to serve that need. But while meeting that obligation, we'll work with the state and our customers to develop viable alternatives for our clean energy future. Seasonal storage will have to be an important element of the future. And so we're working with EPRI, the Electric Power Research Institute, on ways to develop and deploy seasonal storage and green hydrogen, and we'll keep you posted on that. In order to tackle the largest contributors of statewide greenhouse gas emissions, we're encouraging the purchase and use of electric vehicles through various initiatives. We're building fast charging stations, sponsoring a pilot that uses electric school buses as batteries during peak summer months when the buses are not in service. And we're providing EV owners with a free connected device that reads charging information and offers significant rebates for any off-peak charging. Last month, the New York Public Service Commission completed its electric vehicle proceeding by authorizing a more substantial investment in vehicle charging infrastructure. Of the $700 million of expenditures authorized by the PSC, CECONY and O&R were authorized to spend more than $300 million of that total to support the deployment of thousands of electric vehicle chargers through 2025. While we're focused on alleviating the causes of climate change, we also need to plan for the consequences. Following Superstorm Sandy, we knew we needed to bring the latest global climate science down to the local level to assess our system vulnerabilities and to develop a plan to address them. Tropical storm Isaias, which caused the second largest number of power outages in our history, second only to Sandy, only reinforces the importance of this effort. In December 2019, we released our climate change vulnerability study. And at the end of this year, we'll release its corollary, a climate change implementation plan. The vulnerability study, as I mentioned, issued last year, addresses a broad range of science-based climate-related system considerations and examining our system vulnerabilities, the study moved beyond the 2-degree Celsius global warming scenario established by the Paris agreement. In other words, we're preparing for more severe climate change scenarios. Our vulnerability study estimated that we would need to spend between $1.8 billion and $5.2 billion over the next 30 years to fortify our systems. And that range really depends on which stress test we apply, the 2-degree Celsius warming or the 4-degree Celsius. We would expect that most of this investment will occur incrementally as higher standards are designed into our construction plans and projects. The investments could be higher or lower depending on the type and timing of the measures implemented plus external influences. Efforts like those undertaking in our clean energy commitment, along with actions across the globe, will invariably impact the design of our system as we evolve. For instance, we've yet to factor in the impacts of electrification of space heating and electric vehicles on the system. The potentially higher peak system demand results from these changes would have further design and cost implications. Further, we'll need to incorporate future science-based climate forecast into our implementation plan. As for our climate change implementation plan, the work is underway and the report is due by the end of this year. The plan will set out a set of priority actions for the next 5, 10 and 20 years. We've assembled an external group to provide input to this important study. The group includes the New York State Public Service Commission, the City of New York, a number of environmental groups, subject matter experts and other stakeholders. Over the next several months, we'll coordinate the implementation and oversight of the plan, incorporate climate science updates that will be reviewed at least every 5 years and establish our internal governance, including Board of Director oversight. The climate change implementation plan and subsequent updates of climate science will be incorporated into our long-range business planning process. We think that approach in this planning process demonstrates our adherence to good environmental, social and governance practices. To discuss how this sound approach is shared by the businesses other than our utilities, I'll now turn it over to the company's Chief Financial Officer, Robert Hoglund.

Thank you, Tim. In transitioning to a clean energy economy, New York and Con Edison are far ahead of the United States as a whole. The majority of the electricity that con Edison produces is sourced from the sun and the wind. We own no coal or nuclear plants. Our largely clean fuel mix contrasts sharply with our home state of New York and the country. The only fossil fuel plants we own through serve our steam system, which is the largest in the U.S., serving more than 3 million New Yorkers. More than 60% of our steam production is from high-efficiency cogeneration units. These cogeneration units produce electricity as a byproduct of the steam that's produced for CECONY's district steam system. The unit supply approximately 615 megawatts of electric capacity to our grid in New York City. Cogeneration reduces carbon emissions by approximately 25% of what would have otherwise been emitted through traditional boilers. That's equal to removing approximately 200,000 vehicles from the road every year. We are also pursuing new technologies to further reduce our steam systems' carbon emissions. The fossil plants supporting our district steam system are dwarfed by the growing renewable energy portfolio of our nonutility clean energy businesses. Since our first solar plant went into service in 2010, we have developed a 3,400 megawatt portfolio of renewably produced electricity. We have invested more than $6 billion in solar and wind generation projects across the United States, and we plan to invest more than $1 billion in this business over the next 3 years. Our renewable generation portfolio is comprised of 85% solar and 15% wind by capacity. We are the seventh-largest owner and producer of solar electricity in the world and the second-largest in North America. Our renewable generation projects are located in 20 different states. State-level clean energy targets and advancements in battery storage present opportunities for additional investment. We have adopted a range of project development strategies that include developing projects from early-stage through long-term ownership, acquiring mid and late-stage development projects, constructing and owning them, and developing and constructing projects for third-party owners. As part of our strategy, we have also developed and subsequently sold projects to third parties, recycling the capital for further development opportunities. In acquiring operating solar and wind assets from Sempra Energy and JOULE, respectively. We also acquired significant portfolios of early-stage projects. We believe that our development pipeline supports our capital expenditure forecast for the next few years. As Bob Sanchez mentioned, we are also making our case to the New York Public Service Commission that they should lift restrictions on utility ownership of large-scale renewables for the benefit of consumers in New York. Our final business line is FERC-regulated transmission. Con Edison transmission will invest in new electric transmission to support the increased use of clean energy resources, including offshore wind. With offshore wind, we are interested in owning the associated wet transmission. We are not pursuing ownership of offshore wind generation at this time. At this early stage, we feel that the risks associated with building offshore wind in the U.S. are too high for our investors. As the CFO, I am also responsible for raising the capital needed to fund our initiatives. In March, we issued $1.6 billion in green bonds at CECONY to support our clean energy commitment. Our green bond issue, the largest in the U.S. so far, is providing us with access to capital from new investors who share our commitment to the environment. The proceeds from the green bond issuance in March will be used for CECONY's investments in energy efficiency, smart meters and electric vehicle charging stations. More recently, we drew down $820 million from a supplemental credit agreement that we put into place in April and increased in June. We still have plans to issue up to $600 million of equity this year and perhaps more long-term debt at CECONY. Both issuances would be consistent with the financing guidance that we gave in January. Our focus on the long-term sustainability of our business has enabled us to continue to raise the dividend. We have delivered 46 years of consecutive dividend increases, the longest of any utility in the S&P 500. We continue to support a payout in the range of 60% to 70% of net income. Now I will turn our commentary back over to John for closing remarks.

Great. Thanks, Robert. So I hope we've given you a broader view of Con Edison and demonstrated how we are a highly responsible member of our broader community. This responsibility to our broader stakeholders is ingrained in our culture. Last year, we provided $12.5 million to area nonprofits, including cultural organizations as well as those helping to foster the next-generation of workforce. Our employees give thousands of hours supporting company-sponsored volunteer efforts. Such is our Scholars Network. This network provides scholarships to students in STEM fields and then parish those students with mentors at Con Edison. We're also providing assistance to young people considering careers in the green economy. We are proud of our standing as a responsible corporate citizen. Con Edison received a AA rating in the MSCI, ESG rankings, which many of our investors track. We are also recognized for our diversity and strides in customer satisfaction. And as Mary mentioned, with the score of 90%, we are among the trend setters in the CPA-Zicklin Index for political accountability. We continue to be guided by our core principles and our focus on sustainability. We have a solid balance sheet and investment-grade credit ratings. We have attractive growth opportunities as we pursue our clean energy commitment. We've delivered 46 years of consecutive dividend increases, the longest of any utility in the S&P 500. Our success comes from a richly talented, dedicated and diverse workforce that shares the 3 core principles of our company. As I look across our global society, I see us caught up in the iron grip of a devastating pandemic, climate change and social and economic injustices, all seemingly converging at once. People, planet and profits, all 3 are being pressured. The blow to our beliefs and our foundations is staggering, and we'll need to each other to hold to our roots, to measure ourselves and to respond in a responsible and empathetic ways. To the ESG minded investors, I'm very glad that we have your voice. This is the reason why the senior team at Con Edison wanted to address you today. Your voice has always been needed, and it is now that I think more of greater society will be listening. We at Con Edison are certainly listening, and we value our partnership with you and our broad stakeholders. Thank you for your interest in what we are doing and we'll now be happy to take any comments or feedback or respond to any questions that you may have.

John, we have a number of questions, and I'm going to take them in the order in which I've received them. The first one is as follows: how will the Indian Point shutdown and planned offshore wind generation projects impact electric reliability and cost to customers?

So Indian Point has 2 operating -- 2 plants, Indian Point 2 and 3 that were related to the shutdown. Indian Point 2 have shut down in April. And Indian Point 3 is expected to shut down in next April 2021. Together, they provided 2,000 megawatts. We had foreseen the plants were approaching their end of license in the roughly 2010 time frame. And so we engaged with the Public Service Commission and other stakeholders and laid out a plan to ensure that the grid was prepared for that shutdown. We implemented kind of a 3-pronged approach to use transmission -- new transmission and transmission improvements to bring more power into the lower Hudson Valley in New York City. Those projects were all done by the New York Transco, which is a partnership of all the investor-owned utilities in New York State. We are the largest owner of the Transco at 46%. And those projects all went into operation in 2016. We also designed some enhanced energy efficiency programs as well as incentive programs for Combined Heat and Power. The result is that we were able to get to a place where we are able to meet all of our reliability needs, even with the retirement of both of the 2 Indian Point plants. Offshore wind is on the horizon. Obviously, New York State has a tremendous commitment to offshore wind. And that will further enhance reliability by bringing in new power at a fairly good capacity level. We'll be working to make sure it interconnects at places that are optimal to the system and that we're providing the necessary ramping and response capabilities to address the intermittency associated with offshore wind.

John, there's a follow-up to that question. And it is, what is the possibility of blackouts or brand outs, such as those experienced in California this summer?

So at this point, we -- New York State and Con Edison and Orange & Rockland are meeting all of our reliability planning criteria. These are laid out and have been for decades in pretty significant detail. And there's a special entity in New York State, unlike just about any other state called, the New York State Reliability Council that oversees the implementation of that reliability. And so we're in a position where we meet all of our reliability criteria, both in the planning and in the operational stage. That being said, that doesn't mean that there's not a lot to learn. And we are closely monitoring what is going on in California. And what are the causes of that to make sure that as we expand our renewable portfolio here in New York, that we aren't subject to similar circumstances.

The next question is, it currently appears that New York State will not approve new gas pipelines. If the state does not approve new pipelines, what are Con Edison's plans to prevent gas shortages for itself and its customers?

So we currently have a gas moratorium for most of the Westchester County, where we're not able to take on new customers. We're pursuing 2 projects, not for new gas pipelines, but that would increase the capacity on existing pipelines, one that would aid Westchester County and the other that would aid New York City. And basically, it includes compression stations that are installed on existing interstate pipelines so that we can transmit more on the existing pipelines. That is the fundamental strategy, both pipeline enhancements in the local permitting process, and we'll have to see how it works through that process. While we're doing that, we're also, in a fairly aggressive manner, working to manage the gas we use as efficiently as possible. So we rolled out a couple of years ago, a few items to help us achieve that. Many of them somewhat groundbreaking in terms of how they're being approached. First, we doubled the amount that we're contributing to gas energy efficiency projects. Second, we've developed a first of its kind, at least in our history, I think it is, a gas demand response program, where just like we do on the electric system, we encourage customers and reward them monetarily for reducing usage at types of peak volume. We're doing the same now on the gas system. And we also went out with several RFIs and request for information and request for proposals to get thoughts from others in the marketplace on how we can use the gas supply we have more efficiently. And finally, we are incenting alternatives to gas heating, electric heating, and that includes air source heat pumps as well as geothermal systems. And that's something that, while it's still at the relatively early stages, can provide a lot of opportunity for the future.

Sticking with the subject of natural gas. The next question is, how do your investments in Stagecoach and Mountain Valley pipeline fit into the company's longer-term environmental commitments?

Yes. So we made those investments 5 to 7 years ago. And at that time, we, and frankly, many others, viewed natural gas as having a fairly large role in the transition to the clean energy economy. And it was going to be for a multitude of reasons. First, it was going to replace coal, oil and propane and other dirty of fuels, gas much cleaner, 40% less tox, 40% -- virtually no SOx, 40% less carbon. And that would allow it to become the fuel of choice for space heating and the like. And secondly, highly efficient combined-cycle gas turbines fueled by natural gas, would address the in-eminency issue associated with renewables. That was the view 5 to 7 years ago, and that's when we invested in the Menton Valley pipeline and in Stagecoach Gas Services. That view has largely changed. And natural gas, while it can provide emissions reductions, is no longer really -- I think in New York and probably in general, in the Northeast and surrounding states, is not a big part of the longer-term view of the transition to the clean energy economy. So as those assets are part of Con Ed transmission, I don't expect we'll be making any further investments in those type of gas transmission assets outside. And our focus now for Con Ed transmission is on the electric side, new electric transmission project, primarily to bring renewable power to where the load centers to where the people are. As is expected, we need it in fairly significant supply. And we actually have 1 project that's under development that was awarded last year to -- again, to the New York Transco, for what's called the New York Energy Solution, roughly a 50-mile new transmission line that will go from Dutchess County up to approximately the open area. That's currently in the design and we'll then pursued through the permitting process and then go on to construction.

John, I want to stick with this subject because we got a number of questions on the gas transmission asset. The next question is, would you consider monetizing these businesses in order to fund clean energy business and refine the ESG attributes of an investment in Con Edison? And the question then goes on to say that other sector peers, such as Dominion and PS, public service, enterprises have made similar moves recently to shift away from fossil businesses and have been well received by investors. The question then goes on to say that further, given the admirable targets that you have laid out elsewhere in the businesses, are the gas transmission businesses a distraction for management from these goals?

So a number of aspects to those questions, Jan. So first, would we consider monetizing those projects? We certainly would. We -- outside of the regulated utilities, we periodically look at all our nonutility assets and decide whether or not we have best served and our stakeholders are best served by us holding those assets and continue to operate, maintain or if there is an opportunity to monetize. And we've done that several times over the last 5 years. Even though we had a very successful retail commodity business, we decided that the financials had more volatility than we typically like to see. And so we sold that business and did well in that and that line of business is part of a separate organization. We -- I mentioned in my discussions, we sold our merchant fossil plants in 2008. And so we certainly can and will periodically consider whether or not we will monetize the value in those 2 gas investments, MVP and Stagecoach Gas Services. And if so, what would be the right time to do so. As far as it being a management distraction, they are really -- they are 2 separate entities. They're relatively small as compared to the larger operations of the company. And they really do not prevent -- present a burden to management in terms of our attention. And of course, they are overseen by individuals who are separate from the regulated utilities.

Great. A follow-up to that is, has the value of your investment in MVP improved following recent court decisions and the cancellation of the major competitor project, ACP? Wouldn't third parties who are less focused on clean energy be very interested in this asset?

Yes. So there's probably a curve that you could put every time that there is a court decision or a permit approved or permit denied, whether -- how it affects the value of the MVP investment. I guess in some short-term cases, it does and it doesn't. We're focused on getting it across the finish line with our partners. The project is essentially 90% constructed. There are 2 major permitting issues that we have to continue to work through. There's, of course, for optimism in both, but there still can be hurdles in both. And we're working to bring the project to completion and into service next year.

Next question on a different topic. What are you doing, or what are you planning to do to encourage and/or subsidize customers to use electric vehicles?

Yes. So a couple of things there. First, we -- and Tim and Bob touched on this in their discussion. We have a fairly significant make ready program for electric vehicles. I think it's the second-largest in the country now. Where for us, for the combined utilities, it will be about $350 million, in addition to the $30 million to $50 million we were spending each year over the next several years to get -- to prepare and have ready charging stations. The other thing we've done, and this has been really well received, we worked with a third-party to develop a device that basically plugs into the computer module of an electric vehicle. And it monitors when and where you're charging. And if you're in our service territory, charging during off-peak hours, you basically get a 40% reduction in the cost of charging. And it's pretty much hands-free, easy to use. And I think it's -- it can be a predecessor to -- for the time of rate charging that we want to have to encourage one, so we don't have to unnecessarily build out the asset system, the electric system, to meet charging your peak and to reward customers for that by having lower charging costs.

Great. Next question is on the subject of offshore wind. Would the company consider partnering with an offshore wind developer for an investment in offshore wind farms? Or will offshore wind investment remain focused only on the transmission assets?

So we're at the very earliest stages in this country of offshore wind development. And I give complete respect and sort of the accomplishments of the European developers and what have achieved in Europe. But when we look at our nonutility investments, we're working to maintain a relatively low-risk profile. One that largely mimics the risk profile of the regulated utilities, kind of makes sense to me and to us that we should -- we have a relatively low-risk profile for 90% of the business. Let's not dilute that with risky projects and the 10% of the business that's nonutility. And I think the challenges are first of its kind activity, such as offshore wind development, which includes permitting, siting, labor and training issues, construction potential. They don't -- are a bit above our risk tolerance. Down the road, could we see ourselves potentially investing in the offshore wind assets themselves? Yes, if we see that, that risk tolerance is -- excuse me, if that risk exposure is reduced, coming close to our risk tolerance, I could see us doing that as well. We do have wind experience and we do have roughly 50% of on-land wind generation in our renewables portfolio. So I do see that as a possibility further down the line. In the shorter term, though, we are -- have talked to several of the major developers around a role for us to do the underground and underwater transmission, sometimes called the wet and the dry transmission. Because that's an area where we have expertise. And we think there may be an approach that would derisk it so that it would be suitable for our risk tolerance.

And John, on the same topic, the questioner asks, have you talked with PSE&G about offshore wind generation for Long Island customers that they serve?

So the discussions around New York's requirements have all been generally done through NYSERDA. And that is -- they are kind of the clearing house for both taking bids and issuing the projects. That's their domain. Then once there is an award given or there -- somebody's making a bid, that's the point at which we work with the developers.

Next question concerns hydrogen. And specifically, how could hydrogen play a part in New York's energy future over the long term?