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

Good morning, and thank you for joining us. I'm Jan Childress, Director of Investor Relations for Consolidated Edison. We're happy to have you join us today to talk about our 2023 clean energy future. This presentation contains forward-looking statements of future expectations and not facts that are intended to qualify for the safe harbor provisions of the federal securities laws. Actual results or developments may differ materially from those included in the forward-looking statements. Please refer to Slide 2 shown here for our full statement. [Operator Instructions] And now it's my pleasure to turn this over to our Chairman and CEO, Tim Cawley.

Thank you, Jan, and good morning to all. I want to thank you for being here for our fourth annual webinar to talk about our clean energy future. I'm really happy to be here today to discuss the progress we continue to make and where we're going moving forward. Con Edison is among the nation's largest investor-owned utilities. Through Con Edison of New York and O&R, we provide electric, gas and steam service to 10 million people in our region. We deliver effectively 44% of New York State's electricity, and most of our electric gas and steam systems are underground. We also operate the largest steam system in the U.S. And as you'll hear, that gives us some unique opportunities in the transition from fossil fuels. And Con Ed transmission will help deliver clean energy to customers throughout the Northeast. Not only that but we've been around for quite a while, this year, we celebrated our 200th year in business, and we are the longest continuously traded company on the New York Stock Exchange. We may not have been around so long if we weren't so reliable. And when we speak about reliability, we really are in a class by ourselves. We are ranked as the most reliable energy company in the U.S., serving one of the nation's largest economies. Our electric delivery system is 7x more reliable than the national average. You can see that in the chart. That world-class reliability is critically important to our customers and the region we serve. And that will need to only intensify as we move to electrified transportation and heating. Our nearly 14,000 employees are working every day to make sure the system remains safe and reliable. At Con Edison, the pillars of our company culture remain consistent. We work to maintain the safety of our employees and the public every day. We value operational excellence, which shows up in all our work and leads the reliability metrics that I just discussed. We know our customers count on us, and we work every day to maintain their trust. We invest in the customer experience. We're about to deploy a new state-of-the-art customer information system that will significantly improve the way we interact with customers every day. Con Edison is committed to excellence and equity across our company and across our service territory. We've deployed meaningful diversity, equity and inclusion initiatives which help us attract and retain bright new talent that will grow Con Edison for decades to come. And we focus on our shareholders, prudently managing our companies so that we deliver for our investors including the thousands of retirees who maintain investments in our company and rely on Con Edison for stable, reliable financial performance. In all we do and everyone we serve, we remain intensely focused on leading the nation's energy sector through these actions, and we'll leverage these values to continue delivering a reliable and efficient transition to a clean energy future. Our focus on clean, affordable energy is not a new one. Con Edison has been a leader in energy efficiency programs since the 1970s. But we've come a long way from the Save-a-Watt program that were brought about 50 years ago. We spent $50 million on energy efficiency programs last year alone and recently achieved a very big milestone. Our programs have helped small and medium business customers save 100 million-megawatt hours of energy. Events like Superstorm Sandy made us change the way we think about the energy future. We know that sustainability and resilience go hand in hand. So 10 years ago, we set the wheels in motion for our first gold standard climate change vulnerability study and associated resiliency plan. In September, we released the results of the first follow-up study. We're learning that climate change is happening even faster than we predicted just in 2019. If you look at the events on Friday, major flooding in New York City, our systems performed really well but it's an indication that the climate is changing. But even before these studies, we know we needed to change our approach to how we use gas in our system. By 2018, we were launching our nonpipe solutions plan and smart solutions for gas customers to help customers and our businesses begin to shift away from fossil fuels. We've been picking up speed since then acting on the results of our studies with a bold clean energy commitment that makes clean our stance on achieving sustainable clean energy for all our customers. Just last month, we completed the first segment of our reliable clean city project that will enable the closing of three peaker plants that don't meet environmental standards. And just a week ago, we broke ground on our Brooklyn Clean Energy hub, which will ensure reliability as more buildings and vehicles electrify. The hub has the added flexibility to provide plug-in options for developers of offshore wind to connect to our grid. In July, the Public Service Commission approved Con Edison of New York's proposal for a new rate plan. The plan includes new electric and gas rates that will advance the state's clean energy goals while also enabling the continuation of safe, reliable service. The approved plan supports critical investments in the transition away from fossil fuels and further improves reliability. With a record of on-time, on-budget infrastructure investments and reliable power to millions of customers, we will usher in a clean energy future equitably and efficiently so every New Yorker can share in the benefits. This investment plan will also spur infrastructure development across New York City and Westchester. And fund initiatives that will reduce emissions, promote resiliency and continue improving our nation-leading reliability, particularly in disadvantaged communities. We're deploying the $4 billion in net proceeds from the sale of our Clean Energy Businesses as planned. We've completed our $1 billion share repurchase program. We've invested $1.74 billion in our two utilities, allowing us to forgo equity issuances other than that, which we raised through our stock plans until 2025. We paid off $650 million in long-term debt holding. And by the end of the year, we will have paid off the remaining $600 million. With no holding -- no long-term holding company debt at year-end, we will have one of the strongest balance sheets in the industry. Selling the CEBs to RWE, a leader in renewables, will allow that business to grow while we focus on investing in the clean energy infrastructure closer to home. Con Ed is a leader in the clean energy transition, and we were among the first utilities to adopt a clean energy commitment as a way of holding ourselves accountable for the changes we want to see in our industry and our system. Our commitment covers 5 main areas or pillars. We will build the grid of the future by investing in our infrastructure so that our system can reliably deliver clean energy to all our customers. Empower our customers to meet their climate goals by leveraging incentive programs to electrify heating and transportation. Reimagine our gas system, focusing on transitioning customers to electrification and decarbonizing through investments in alternate fuels and reduce our own carbon footprint, focusing on electrifying our own vehicle fleet and reducing emissions from all our operations. And finally, we remain committed to partnering with stakeholders, including our customers, the communities we serve and advocates in the environmental justice community to ensure the costs and benefits of the clean energy transition are borne equitably. We're proud of this commitment but prouder still of the progress we make every single day in achieving it. Across the clean energy landscape, we are seeing real measurable results every day. I'm excited the team has joined us here to talk through the actions we've taken, the progress we're making and our plans for the future. I'll now turn it over to Jen Hensley, our Senior Vice President of Corporate Affairs. All yours, Jen. Thanks.

Thanks so much, Tim. Really very happy to be here today, and thanks, everybody, for joining us. New York has long been a leader in progressive climate policies and has some of the most ambitious climate change laws in the country. And the Climate Leadership and Community Protection Act, which was signed into law in 2019, the CLCPA is a driving force behind our company's goals. It sets forth targets, including reducing greenhouse gas emissions by 40% of 1990 emissions levels by 2030, increasing renewable resources to 70% of statewide electricity production by 2030, net zero emissions from electricity production by 2040 and ensuring GHG emissions are less than 15% of 1990 levels in 2050 with offsets to reduce net emissions to zero. And developing or supporting solar and wind generation and energy storage capacity. The CLCPA also requires between 35% and 40% of the benefits on spending on clean energy or efficiency programs being disadvantaged communities and mandates an air monitoring program in at least 4 such communities. Even within the context of the bold statewide goals, New York City, which accounts for 78% of Con Edison's customer base has one of the most ambitious plans in the nation for reducing emissions. We support these goals and are working to ensure timely and complete implementation of these laws as well as additional legislation, regulation and rules that support the clean energy transition. The assembly pass and Governor Hochul signed in May, a new statewide law banning the use of fossil fuels in new small buildings starting in 2026 and in new large buildings beginning in 2029. The bans under the city laws start two years earlier for each building classification. Local Law 97 was included in the Climate Mobilization Act passed by the New York City Council last year. It requires most buildings over 25,000 square feet to meet new energy efficiency and greenhouse gas emissions limits by 2024, with stricter limits coming in 2030. The goal is to reduce the emissions produced by the city's largest buildings by 40% by 2030 and 80% by 2050. New York City Mayor, Eric Adams released a new PlaNYC: Getting Sustainability Done plan, which lays out further strategies to reduce emissions in building and transportation throughout the city. We work with a broad range of partners and stakeholders to advance policy changes that will further our region's clean energy goals. We are all in on policy reforms and changes to building codes that reduce the use of fossil fuels. Repealing the so-called 100-Foot Rule, which subsidizes new gas connections is one example. Legislative proposals like these will help change the trajectory of gas consumption and help ensure that we meet the state and the city's clean energy goals. Likewise, we support legislation that would change permitting rules for closed-loop geothermal boreholes. You'll hear more about utility thermal networks later but the new regulations would reduce cost barriers for ground source heat pumps and make it easier to use thermal energy networks in higher density environments like New York City. It also furthers the goals of the Utility Thermal Energy Network and Jobs Act, part of the CLCPA. In New York City trees are often not thought of as a critical part of our infrastructure but they are. We believe a cleaner and greener New York is important for our future, and Con Edison is really proud to be a part of the Forest For All coalition, which helps plant and care for trees in every neighborhood across the city so that everyone can benefit from the tree canopy. It's why we support newly introduced city council legislation, like the Urban Forest Master Plan and local laws to amend the New York City charter in relation to the role of trees, tree canopy and vegetation in the planning of our city. We have also supported a local law that will mandate solar canopies on all city-controlled parking lots with sun exposure as well as infrastructure that would support electric vehicle charging stations. We submitted testimony at the New York City Council oversight hearing on ensuring there is enough infrastructure to support the demand for EVs in both private and city-owned fleets. And finally, Con Edison testified at the Department of City Planning's City of Yes, rezoning hearing stating that the administrative changes proposed would reduce many of the barriers and ease the way for more EV charging stations. Composting is also a great way to reduce trash and improve the environment. And that's why we've also supported a bill that would require the New York City Department of Parks and Recreation to establish composting sites in the city's largest parks by 2027. The Clean Slate Act, which will help address the systemic barriers to jobs, housing and education, posed by old conviction records that disproportionately impacts black and brown New Yorkers by automatically sealing criminal records after three years for misdemeanors and seven years for felonies. The Clean Slate Act will also help boost the economy. A study found that New York loses an estimated $7.1 billion in wages because of unemployment and underemployment among people with conviction records. This is all part of a strong and proactive strategy to advocate for policies and programs that make our community stronger. And our science-based approach to identifying and managing critical climate risks is based on research in partnership with Columbia University. Our first climate change vulnerability study completed in 2019, identified climate risk to our territory and our energy system. The second iteration of that study hot off the presses has confirmed that heat remains a high-priority hazard. Temperatures in our region will increase faster than previously projected and the number of days that are expected to reach over 95 degrees will also increase. The finding one of many included in our second climate change vulnerability study highlights how necessary continuous investment and strategic planning will be for our company as increased extreme weather events, sea level rise and coastal flooding threatened to disrupt our reliability and infrastructure. As recently as last Friday, we experienced record rainfalls and precipitation continues to be an elevated risk. Projections have increased relative to historical norms and last Friday, demonstrated that for certain. While projections for sea level rises -- rise has not changed, it remains an important hazard with 16 inches of sea rise expected in our territory by 2050. We expect hurricanes and heat waves to increase in frequency and intensity while [ cold stamps ] and nor'easter will become less frequent but more intense. Our work has never been more important or more urgent. And now Matt Ketschke, President of Con Edison of New York, we'll talk more about how that research is informing our long-term planning as we build our grid of the future. Matt?

Thank you, Jen, and hello, everyone. It's nice to be with you all. For decades, New York only build energy infrastructure to serve growing customer needs rather than reimagining energy for the future. That's not how we do things anymore. We can't. Reaching the city and state's emission reduction goals will drive our peak electric demand up and change the shape of daily electric use. The first pillar of the Clean Energy commitment is to build a resilient 22nd century electric grid that delivers 100% clean electricity by 2040. Increasing adoption of electric transportation and building electrification, will drastically increase electric use. With this shift away from fossil fuels, the system peak demand is anticipated to approximately double by 2050, which is equivalent to the peak electric growth we've experienced over the last half century. And due to the amount of electric energy required for space heating, we expect to be a winter peaking electric utility by 2040. From there, we expect to both grow summer and winter electric peaks as we continue to grow. The electric system will need significant investment to increase grid capacity, maintain grid reliability, increase grid flexibility and balance intermittent renewables. Over the next 10 years, our two utilities will be investing $72 billion in significant electric infrastructure and customer incentives to advance the clean energy future that they are expecting and deserve. We use a 10-year forecasting to identify capacity constraints across our system. CECONY used a top-down and bottom-up economic analysis for each of our 80-plus networks in our planning process. We can then develop solutions including non-wire alternatives such as energy efficiency and demand response and vet them in the regulatory process. Our planning process dictates the need for 5 new distribution and transmission substations over the next 10 years to meet our reliability criteria as electricity use grows. New substations include the Brooklyn Clean Energy Hub approved this year and the proposed Reliable Clean City Eastern Queens/Idlewild project. The Eastern Queens/Idlewild project will split an existing network into two and add transmission and distribution substations to accommodate growth spurred by the modernization of JFK Airport. The modernization will include the electrification of the entire fleet servicing the nation's sixth busiest airport. Tim cited our reliability record. We will need to maintain that world-class reliability as we transition to a clean energy economy. That means taking measures in preparation for power plant retirements in cases where the plants fail to meet environmental standards. Ensuring reliability also means enhancing the accessibility of clean energy, including offshore winds to different parts of the state. Propel New York will accomplish that by reinforcing and upgrading the Long Island transmission system to provide import and export capabilities with New York City and the rest of the state. These projects are part of our $14.6 billion capital investment plan over the next three years. We are making sure sustainability and resilience are built into our facilities and our operations to ensure reliability. Jen already spoke about the latest climate study findings. This ongoing evaluation of climate change impacts on our service area will continue to inform us as we upgrade our energy delivery systems by protecting our sites from flooding and more frequent heat waves, by replacing transformers and through gas main replacement projects. We'll be mitigating vulnerabilities through selective undergrounding of overhead lines, installing interrupter switches to minimize cascading failures, and by utilizing remote operated valves to isolate gas and steam outages. We continue to improve our response through linking our outage management system to our smart meters and improving our dispatch visibility and efficiency. Our updated customer service system is another big step forward. Reaching New York's emission goals require significant changes across all our commodities. On the electric side, we expect dramatic transition from natural gas to electric. Even with aggressive efficiency programs, we will see consumption grow from between 40% to 85% by 2050. This means new investment in transmission and delivery systems to accommodate this growth. For gas, we're expecting decreases in demand of 60% or more over that same period. Depending on R&D efforts and market changes, we expect to see our infrastructure leverage for delivery of non-carbon fuels to continue serving some customers, including those that are hard to electrify. Con Edison operates one of the largest steam systems in the world. We believe that steam will play an important role in helping our customers meet the demands of Local Law 97, as we work aggressively to decarbonize the steam production process. We believe this will be vastly more cost-effective way to meet the city's requirements and electrification solutions for most of our steam customers. We expect the conversion of some of our steam customers and our energy efficiency efforts to drive down sales volumes gradually over time by 20% to 40%. So we are planning for lots of changes going forward and working to help legislators, regulators and customers understand these expected changes. Reliability is a critical measure of our success. But also important to us as we transition to a clean energy future are our emissions reduction targets. Bob Sanchez, President of Orange & Rockland Utilities will talk about how we are meeting our goals for emissions targets. Bob?

Thanks Matt and good morning, everyone. We are investing to position ourselves to integrate offshore wind and other renewables into the grid. Con Edison and O&R received approval for several projects in response to the Public Service Commission and solicitations or Phase 1 projects, and that's to ensure that we're advancing the clean energy transition. Con Ed's three reliable clean city transmission projects in Queens, Brooklyn and Staten Island are essential to ensure reliable transmission capacity in these neighborhoods when existing peaker plants retire and new renewables come online. Across the CEI companies, Phase 2 is focused on transmission and grid connections for upcoming offshore wind projects. Matt already covered our proposed Eastern Queens Idlewild transmission project that represents the opportunity for us and for our customers. At O&R, we received accelerated approval for a series of Phase 1 projects in Orange County. And we're seeking to transition three additional projects to Phase 2. Utilities have also invested in storage projects that bring our grid nearly 22 megawatts of storage capacity to support dispatching of renewable resources for when they're needed most. Optimizing battery storage will position us to strategically deploy and integrate large-scale renewables. We strongly believe that utilities are well positioned in the current market to deliver efficient and reliable generation of renewables in a cost-effective manner for our customers. We're going to continue to make sure and make that case with the legislature and our regulators to win the right to deploy generation to benefit our customers. We see so much opportunity on the horizon for our business and we're eager to pursue every opportunity that supports the excellent service we provide. As mentioned earlier, CLCPA sets ambitious clean energy goals to have 6 gigawatts of distributed solar by 2025 and 6 gigawatts of energy storage by 2030. We recognize the critical role distributed energy resources have in meeting the clean energy goals. We've made it easier for our customers to install rooftop solar panels, battery systems and other clean energy technology by way of educational outreach initiatives and incentives. We have approximately 750 megawatts of installed solar capacity on our combined service territories, and we expect that these opportunities will continue to grow for our customers. As shown on the right, we've helped to support our customers to connect approximately 60 megawatts of customer-owned battery storage. Energy storage is critical to a clean energy future, and we'll continue to work with our customers and regulators to advance the storage goals. The CLCPA was equally ambitious for transportation electrification with a goal of 3 million zero-emission light-duty vehicles in use by 2030. To support the move to electric vehicles, we've invested heavily in the charging infrastructure. In 2020, we launched a power-ready EV infrastructure incentive program, supporting the development of widespread charging stations a total of about over 4,200 across our service territory. This program, along with our Smart Charge New York program offers incentives to both EV stations and drivers to make the transition to electric vehicles easier and more affordable. The expansion of charging infrastructure has generated a high level of market interest and customer adoption of EVs. As a matter of fact, we've seen an exponential growth in light-duty vehicle registrations within our service territories. Looking ahead to 2035, Con Ed is planning for 400,000 electric vehicle charging plugs and a fully electrified light-duty fleet of our own. We're transitioning our own light-duty electric fleet vehicles with 140 chargers. And last year, we introduced our first-ever electric Bucket Truck into the fleet/ We; plan to deliver the net zero electricity by 2040. And by 2050, we'll have enabled and supported more than 1 million electric vehicle chargers within our service territory. Next slide. Transitioning to a clean energy economy involves partnering with customers, Vicki Kuo, Senior Vice President of Customer Energy Solutions, will share how we're working to meet our customers' climate goals. Vicki?

Thanks, Bob. Good morning, everyone. The second pillar in our clean energy commitment is empowering customers to meet their climate goals. This involves providing customers with the information and incentives they need to accelerate adoption of clean transportation and energy efficiency and to decarbonize buildings. To achieve net zero greenhouse gas emissions by 2050, customers will need to dramatically change how they consume energy. Our analysis of the required changes in energy use to achieve deep greenhouse gas reduction shows that there's significant uncertainty in the evolution and adoption of customer solutions, largely due to technology and customer behavior. Our task is to address both uncertainties. I'll give you a sense of where we need to be by 2050. Vehicles on the road need to transform from more than 99% fossil-fueled vehicles to 85% to 90% clean electricity-fueled vehicles and 5% to 15% low to zero carbon gas-fueled vehicles. Building energy efficiency will have to increase annually from 2 trillion BTUs to 4 million to 8 trillion BTUs. And building space heating will need to transform from more than 95% fossil fuel today to 40% to 95% clean electricity fueled and 5% to 40% low to zero carbon gas fuels or clean steam. Those are significant changes for our customers. So our plan reflects the need to increase awareness and develop incentives to improve customer economics. We will need to address customer and market considerations such as technical constraints, customer adoption complexities and concerns about the performance of clean energy alternatives. Let me walk you through some of these major initiatives. Buildings and transportation comprise the 2 largest sources of emissions in our service territory. As Bob told you, our power-ready initiatives are supporting the installation of 23,000 charging plugs, including almost 3,000 plugs in or near disadvantaged communities. Our current authorization totals $313 million in program investment through 2025. Another potential of $290 million incremental funding is to be determined later this year as part of a regulatory proceeding. CECONY's residential managed charging program, Smart Charge New York, rewards drivers for charging during off-peak periods. This was relaunched earlier in 2023 and expanded to Orange & Rockland in April. CECONY has enrolled over 7,500 vehicles in this program and Orange & Rockland having enrolled another 1,000 vehicle. Helping our customers to manage their charging needs is a win-win for the customer and our distribution grid. The cheapest and cleanness of energy is the energy we don't use. That's why energy efficiency is at the heart of a clean energy future. We offer a broad array of energy efficiency initiatives to reduce greenhouse emissions, low lower customer bills and give New Yorkers control over their energy use. We have ramped up energy efficiency programs that are facilitating New York's ambitious clean energy goals. Since 2009, our energy efficiency programs have helped more than 2.5 million customers make their homes and businesses more efficient. That work has saved 11 million metric tons of carbon emissions, the equivalent of taking 240,000 gasoline vehicles permanently off the road. We have also helped with over 2,000 affordable housing buildings. From 2020 to 2025, we will have invested $2.2 billion in energy efficiency and building electrification programs. A New York State Public Service Commission order in July adopted a strategic framework for energy efficiency and building electrification portfolios. And direct New York utilities to file proposal in response. The new proceeding will increase our investment in energy efficiency and building electrification to $5 billion by 2030. But we still have a lot of work to do. Another key to our path to net zero is our Clean Heat program to address building submissions. Since 2020, we have helped -- we have been working with customers to equip more than 40,000 dwellings with clean heating solutions and we're targeting another 80,000 dwellings by the end of the decade. These replace fossil fuel equipment to eliminate on-site air pollution and improve occupant comfort. The technology is giving households and businesses new ways to reduce energy use, and we're at the forefront in helping customers to gain more value for their money while protecting the environment. As we make this transition to a clean energy economy, we're focused on mitigating customer bill impact, especially for those customers who can least afford it. We have programs in place that limit utility bills to 6% of the average annual income for our customers who received public assistance. We have extensive outreach programs to increase customer enrollment in our energy affordability program and expand our low to moderate income energy efficiency programs. Our low to moderate income energy efficiency program reached 80,000 families in 2022. Compared to the national average, our rate per kilowatt hour high but total customer bills are below or near average due to lower-than-average consumption. Our smart meter programs and our new customer service system are part of our commitment to minimizing cost pressure on our customers. We have so far focused a lot of attention on the electric side of our business. But another major part of our clean energy commitment involves our natural gas system. To discuss our approach, I introduced Kathy Boden, Senior Vice President of Gas Operations at Con Edison.

Thank you, Vicki, and good morning, everyone. The third pillar in our clean energy commitment is reimagining the gas system. And our natural gas system serves 1.2 million customers. And these folks are electric customers, too. We'll stay focused on safety and reliability of our natural gas system as we transition to a cleaner energy economy. This will involve decarbonizing the supply and reducing the use of natural gas, primarily for heating since as you can see on the pie chart, buildings are one of the highest emitters in our territory. This is essential for New York State and New York City to achieve their goals of net zero greenhouse gas emissions by 2050, and we've been an early mover in reducing greenhouse gas emissions in our region in a variety of ways, many of which Vicki addressed on the customer side. And on our own gas system, we've seen a 57% reduction in greenhouse gas emissions since 1990 as of 2022, primarily due to our main replacement program. There are a number of things that we're doing as we focus on the long-term natural gas strategy. As part of our statewide gas planning proceeding, in May of 2022, the New York State PSC implemented a proceeding requiring each company to file their long-term gas plan. And in September, we issued a long-term gas plan, which is a 20-year horizon and includes three pathways. The first is a reference pathway reflecting the current legal and policy framework and based on investments approved by the New York PSC, an alternate hybrid electric generation and low carbon fuels pathway and an alternate deep electrification pathway. Our hybrid and deep electrification pathways meet the CLCPA emissions goals, and our plan will need to be approved by the Public Service Commission. On this slide, you'll see our long-term gas strategy is comprised of four areas: Preparing our customers for electrification to reduce gas consumption, decarbonizing the supply for customers that remain on the system, focusing on the economic viability of the business and maintaining the safety and reliability of the gas system as customers migrate partially or fully to electric. Our strategy is consistent with City and State laws and calls for phasing out most new customer connections. We expect firm customer gas volume in our system to shrink as existing gas customers migrate to electricity. We'll need to leverage nonpipeline alternatives to meet targeted customer and energy system needs and we'll stay focused on serving the difficult to electrify customers. We'll seek regulatory and policy changes to address necessary future investments in the gas system for safety and reliability, and those ongoing investments include our main replacement program and other projects to reduce fugitive methane emissions across the natural gas production through delivery value chain. Our gas utilities will need to fully recover the investments made to date and to attract the capital necessary to continue to operate effectively while customers are still connected. Our long-term plan envisions a gas distribution system that utilizes low-carbon alternatives for those customers remaining on the system. The curve on this slide is hypothetical, and it's a simplified version of our hybrid case in our long-term plan. The alternatives to fossil gas may include renewable natural gas, synthetic natural gas and green hydrogen. As you can see, the demand drops quickly after 2030 and by 2050 is expected to have a much lower carbon footprint than it has today. We are a founding member of the low carbon resources initiative, started in 2021 and sponsored by the Electric Power Research Institute and GTI Energy. And through efforts like this one, the electric and gas industries are working toward rapid decarbonization of gas supply for heavy energy end uses like dispatchable, electric generation, steam generation, manufacturing and commercial customers like laundromat and hospitals. Another way to decarbonize energy uses like heating and air conditioning without overburdening the electric system is through geothermal networks. And we're proposing to pilot the installation of closed-loop geothermal heating and cooling systems, and this is a key strategy identified in the final scoping plan adopted by the Climate Action Council. Last year, the Public Service Commission initiated in order to implement the state's Thermal Energy Network and Jobs Act, directing the state's utilities to propose pilots for approval. Thermal energy networks connect multiple buildings into a shared network with sources of thermal energy such as geothermal boreholes, surface water and wastewater. In addition, waste heat from large industrial buildings can also be used to heat smaller residential buildings. We've submitted pilot projects at a total cost of approximately $308 million. Under our proposals, our utilities would own, operate and maintain the shared network pipe infrastructure. And now we'll move on to our steam system and other company programs. I'll turn it over to Steve Parisi, Senior Vice President of Central Operations.

Steve, I think you're muted.

Excuse me. Thank you. Thanks, Kathy. The fourth pillar in our clean energy commitment is to lead by reducing our company's carbon footprint. We aim for net zero emissions by 2040, and that means focusing on decarbonizing our steam system and other operations. We're proud to say that since 2005, we have reduced our direct emissions of nitrogen oxides by approximately 70% and sulfur dioxide by about 99%. And we've achieved this by adding natural gas capability to several generating units at our steam plants. We also make use of emissions reducing controls such as low NOx burners. Increasing the proportion of cleaner burning natural gas used to produce steam was a key factor in these emission-reducing efforts. We have also drastically reduced our SO2 emissions by using predominantly natural gas and low sulfur fuels. Since 1990, we have reduced our district steam greenhouse gas emissions by 61%. Reducing our Scope 1 emissions also involves providing 100% clean electricity for Con Ed facilities by 2030. And we'll do this by installing solar, electrifying our fleet and implementing energy efficiency measures. Newly constructed company-owned business -- newly constructed company-owned buildings will be 100% electric where feasible. We anticipate investing approximately $1.5 billion over the next 10 years to decarbonize our systems. And we will continue investing across our steam system to ultimately achieve economy-wide net zero greenhouse gas emissions by 2050. The steam system comprises 85% of our Scope 1 emissions. Our long-range plan addresses pathways to decarbonizing our steam system. They include energy efficiency, low carbon fuels, electrification of boilers, carbon capture and other technologies. Our steam system has been providing reliable and efficient service since 1882. It is the largest district energy system in the Western Hemisphere. The system serves roughly 1,600 customers, including some of the most iconic buildings in New York City, the Empire State Building, One World Trade Center and the Metropolitan Museum of Art. Approximately 60% of our steam system is produced through cogeneration, which offsets a significant number of emissions that would otherwise be emitted by simple cycle units. This efficient use of waste heat also helps reduce the per unit non-greenhouse gas emissions. Our system could create a more energy diverse portfolio through centralized investments that immediately benefit hard-to-electrify buildings. As it may be a more cost-effective option to meet CLCPA and local emissions compliance. Depending on the building type, age and class and individual building electrification modifications can be prohibitively expensive, and the steam system is a potential solution for these buildings. Our steam proposal would further reduce emissions from our system, which already has the lowest rate of greenhouse gas emissions of any energy system in New York City. A cleaner steam service will help customers switch from on-site fossil fuel combustion and will be a key to helping New York meet its climate goals. We take our obligation to carefully manage spending on behalf of our customers very seriously, which is why we had not requested a new steam rates for nearly a decade. In support of our clean energy commitment, 100% of new light-duty vehicles will be EVs. Our goal is to have 80% of our light-duty fleet electrified by 2030 and 100% by 2035. As of last year, 14% of CECONY's light-duty fleet are EVs and 18% of O&R's light-duty fleet are EV. Our R&D department is pursuing alternative technologies to reduce fossil fuels for medium- and heavy-duty vehicles. Last December, we introduced the first all-electric bucket truck to our fleet, and we are expanding the current charging infrastructure to support EVs. This includes installing higher output Level 2 and DC fast chargers for our fleet and dedicated workplace charges for our employees' vehicles. The United Nations Sustainable Development Goals include protection of biodiversity as one of the keys to a healthy planet. In 2002, we embarked on a new endeavor to formalize and adopt policies to protect and restore biodiversity in unique creative ways. One priority was to launch a formal program to protect habitat and enhance biodiversity in the ecosystems in which we work, including on our own properties. Our recent biodiversity action plan highlights the importance of biodiversity and list our plans and metric-driven goals to address the main drivers of biodiversity loss. As you can see, we are not pursuing our goals alone. This is a collective effort. To talk more about the partnerships at the heart of our company, our employees, I introduced Venetia Lannon, Vice President of Environmental Health and Safety.

Thank you, Steve. So up to this point, we've talked a lot about the City and State's goals and what we're doing to achieve those goals. To be effective, we need the support of our workforce, our Board and the communities we serve. I'll start with the wider constituency, our community. To make deeper, more meaningful impacts in our communities we serve, this year, we aligned our grantmaking to the company's business priorities and values. Our philanthropic activities are targeted supportive of environmental stewardship and responsive to inequalities, economic, social and environmental. The expanded budget and tighter focus enabled us to have a more tangible impact as we align investments with our community, political and regulatory priorities. We're addressing climate change by creating and sustaining equitable climate-resilient communities, prioritizing organizations and programs for funding that focus on disadvantaged communities. We're building clean energy and tech careers by supporting education resources, programs and alliances that help high school, college and trade school students with the skills and competencies for growing green, clean energy careers. And we're advancing social justice and environmental equality through community engagement, empowerment and policy solutions. We want to break down gender, racial and economic barriers and create pathways to equity and inclusion in historically marginalized communities. Turning to our sustainable supply chain strategies. Last year, we released our human rights statement to build on our standards of business conduct and our vendor standards of business conduct. This is part of our determination to maintain a responsible supply chain as we advance toward our clean energy future. Partnering involves shared goals and commitments, and that is what we are accomplishing as we expand opportunities to small businesses and enterprises owned by women and people of color. Initiatives like green energy opportunities and clean energy academy create job training opportunities for veterans and residents of disadvantaged communities. We serve one of the most richly diverse cities in the world. We understand that taking advantage of that wealth of experience, talent and viewpoint will help accelerate our goals. In our 200 years, we have never been at a crossroads quite like this, reimagining the way we do business, helping a broad customer base adopting new ways of consuming energy and responding to a global climate crisis. To fulfill our commitment to a cleaner, more just planet, we need the full range of energy ideas intellect and spirit that the people of our community offer. Last year, we had the highest number of new hires in 14 years. We have nearly 10,000 employees attend leadership and career training that included more than 600,000 hours of instruction. We're looking for the best talent, and we are finding it in the wide tapestry of skills at New York City and the surrounding area offers. To keep this wealth of talent functioning to take advantage of the blend of diverse viewpoints so essential to the path we are on, we have dedicated ourselves to fostering a workplace of open communication. It won't just happen. We work at it through a 14-point action plan and employee resource groups that give voice to our 14,000 employees. And we have a DEI metric tied to executive compensation. Building bridges of communication and opportunity within our workforce and communities is a big part of our mission. The CLCPA mandates the disadvantaged communities receive at least 35% with an ultimate goal of 45 -- excuse me, 40% of the benefits of state spending on clean energy and energy efficiency. As discussed, our recent climate change vulnerability study will inform a filing later this year that identifies resilience and adaptation investments, we will need to protect our systems against climate change. The study includes a new section that maps disadvantaged communities and addresses related equity issues. Given our focus on investments, it's only appropriate that I introduce Robert Hoglund, Senior Vice President and CFO, to talk about the financial implications.

Thank you, Venetia. It takes a lot of know-how and financial discipline to operate for the last 200 years, and we have accomplished that. We have a purely regulated business model that consists of state-regulated utilities with a small percentage of FERC-regulated transmission. In the last year, we have simplified our balance sheet along with our business model. We will have no long-term holding company debt by the end of this year after paying off on maturing note in December. We expect that our business will continue to grow as New York transitions to clean energy, and we will finance that growth through an appropriate balance of equity and debt. We do not expect to issue equity other than through our stock plans until 2025. We were also focused on shareholder value. As part of that continuing focus, we have increased our dividend annually for 49 consecutive years. Value creation from Consolidated Edison reaches deep within our community. Just looking at our economic impact in New York City and Westchester County, we powered the heart of New York, the New York metro economy, generating thousands of jobs and billions of dollars of economic activity. We spent over $12.4 billion in 2021 to support businesses and households that spend an additional $6.4 billion in New York State. We dominate New York state's utilities industry. Our employees account for more than 1/3 of all New York state utility workers. We don't only generate jobs inside our company. Consolidated Edison supports 32,800 jobs in New York City, Westchester County and New York State, both directly and indirectly. We pay more than our fair share of taxes. We generated a total of $3.8 billion in fiscal revenue, an equivalent of 2% of all taxes collected by New York City and New York State. We are an impressively diverse and inclusive bunch. Our employees are significantly more diverse than our industry peers or even New York State's employees overall. As Venetia underscored, that means a wealth of talent and ideas as we transition to a new clean energy economy. Our impact is expected to grow as we invest in New York's clean energy future. Over the next decade, we anticipate investing $72 billion at our two utilities. We have grouped our investments into three categories: Core service, clean energy and resilience. Informed by our climate change studies and our long-range plans, we will move the needle on climate change. Con Edison Transmission is also playing a critical role in this energy transition as part of New York Transco. We are nearing completion of the New York Energy Solution project that connects upstate renewable energy to downstate. Most of that project is already in service and ahead of schedule. New York Transco was also selected to develop a transmission solution for Long Island that will allow the import and export of power between Long Island and the rest of the state. This project will improve the reliability and resilience of the Long Island transmission network while providing benefits to New York City and the rest of State electricity market. CET will have a 42% interest in New York Transco's projected $2.2 billion investment in this project, which is required to be in service in May of 2030. Now I will turn the program back over to Tim Cawley for closing remarks.

Thank you, Robert, and thanks to the entire team. Really appreciate it. We have a lot of work ahead of us. And we have and will continue to need top-notch people to get the job done, and we have that. On the governance side, our Board of Directors has a strong and compelling blend of diversity, tenure and skills. And we leverage their experience to improve our operations, set leadership standards and understand best practices. Venetia talked about open communication. We have that at the Board level as well, and we are a stronger company as a result of it. But it's not just us saying we are stronger, though. We've been recognized by the New York Times, the As You Sow racial justice report and many others for our clean energy commitment, our focus on racial justice and eradication of systemic racism and diversity, equity and inclusion. And we're proud of these recognitions and prouder still of the work they represent. So with that, we appreciate your engagement and listening. Let me conclude by saying I've never felt more confident about Con Edison's impact on the environment and our customers, and never more excited about the critical role we'll all play in delivering the future for New York. So thanks again, and I'm happy to take a few questions, Jan, if we've received any.

Yes, we have. I know we're running up against time but let me run through these questions. The first one, Tim, is with constant advancing of PV solar panels, what is Con Edison's plan on replacing and recycling old panels for new, more efficient panels? And is there a trigger point when the old panels are identified as inefficient with the megawatts -- with the megawatt production?

Got it. Thanks Jan. And I'll frame it up a little bit. So quite right, technology is improving in all the spaces and we'll need innovation on this clean energy transition. So whether it's solar or storage or EVs or heat pumps, we need that. We participate with lots of groups every notably to help advance these technologies. So I frame up on the question, Con Edison of New York, the regulated utilities do not own solar, and we recently sold our Clean Energy business, a large solar producer to RWE, so that we can focus on New York customers. We think we can play a role in New York State's achievement of its ambitious clean energy goals through ownership of renewables but we continue to make that case. For our customers, we encourage solar panels. In fact, over 70,000 of our customers have been sold 700 megawatts across CECONY and O&R. And in terms of the trigger point for those change outs, that's a customer decision but it's basically an economic issue, cost upfront versus the added benefit of megawatts from the newer technology. Thanks for the question, Jan.

Great. The next question regards, have you sized the investment opportunity around building electrification, economics on heat pumps in New York City given the winters and the cost risk that we may see around implementing building electrification?