Consolidated Edison, Inc. (ED): Will Natural Gas Prices Tank This Stock?

A distant, watery threat?
Rising prices may not be the end of bad news for the company. Last week, the New York Public Service Commission approved a new 1,000 MW transmission line from Quebec to New York City. The 335-mile line will be built by a subsidiary of The Blackstone Group L.P. (NYSE:BX) for $2.2 billion and carry electricity sourced from hydro plants.

Whether or not it signals a shift from local power generation remains to be seen, but it will provide about 10% of New York City’s electricity needs. That extra competition comes at a time when power consumption is falling in the city — already one of America’s most efficient — although it will sure help with peak summer demand. Couple a mildly worst-case scenario from the new transmission line with rising natural gas prices, and it’s not difficult to imagine that the best of times may be behind the company and its stock.

Foolish bottom line
New York City is a curse and a blessing for ConEd. It is a massive and worldly city that will need large amounts of energy and heat for the foreseeable future. When the spark spread is wide, the company can generate record profits. When the spread shrinks, the company’s investors will need to adjust their expectations. Unfortunately, I believe now is a good time to start making some adjustments.

The article Will Natural Gas Prices Tank Consolidated Edison Stock? originally appeared on Fool.com.

Fool contributor Maxx Chatsko has no position in any stocks mentioned. Check out his personal portfolio or his CAPS page, or follow him on Twitter, @BlacknGoldFool, to keep up with his writing on energy, bioprocessing, and emerging technologies.The Motley Fool recommends National Grid.

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