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Abstract

Consolidated Edison of New York, Inc. (Con Edison) is an investor-owned urban utility which provides electricity to New York City and most of Westchester County. It is representative of the older investor-owned utilities which are currently in the poorest financial condition. Although these utilities do not serve rapidly expanding service areas, the replacement of obsolete generating plants necessitates continued large capital expenditures. Present conditions raise the possibility that older investor-owned utilities cannot survive in their present form of "regulated private monopoly." The failure of Con Edison to pay a quarterly dividend on April 23, 1974 focused attention on the deteriorating financial condition of the utility industry. Investor confidence in all utility securities plummeted and an unprecedented plunge in the value of such securities followed. The key to Con Edison's financial dilemma is that revenues have not increased sufficiently to compensate for higher operating and capital costs. While some of Con Edison's problems are unique, its financial crisis stems from forces buffeting the entire utility industry. This Comment will examine its problems and make suggestions for ameliorating them.

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