To Our Shareholders Investing for Growth, Focusing on Core Business Reliability Is Our Focus 2003 was a year of both challenge and accomplishment. We are proud of our achievements in continuing to provide service to customers at the highest levels of reliability. Although earnings declined somewhat, we maintained our strong balance sheet and solid credit ratings. long-range strategy. W e will sustain the strong financial position that will enable us to make new capital investments. Preparing for the region’s future energy needs will increase our costs. But our program of capital investment in the energy infrastructure will serve to maintain service reliability, build our equity base, and provide a source of future ear nings growth. between the strength of our infrastruc- ture and the prospects of our service area — between our own financial and operational health and that of the communities we serve. A robust economy generates greater demand for electricity and power, which boosts our business. But a healthy economy can’t function and thrive without reliable and safe electric service — day in and day out. While many indicators point to an improving economy in 2004, it will be some time before New York recovers fully from the recent slowdown. Nevertheless, we must put in place the infrastructure necessary to support tomorrow’s economic growth and to enhance our customers’ quality of life. As we do so, we will maintain our focus on operating excellence and We’re proud to serve an area that includes the world’s gr eatest city, where a reliable supply of energy is especially important. Like New York’s bridges, tunnels, subways, express- ways, telecommunications  systems, and airports, Con Edison’s facilities are a key component of the region’s overall economic infrastructure. There is a deep and enduring link Today, everyone uses increasing amounts of energy to operate our businesses, power our computers, run our appliances, and heat and cool our homes. In New York, people also depend on electricity, every day, to move — vertically, in high-rise office and apartment towers, and horizontally, on the subway. And thanks to the energy and skills of our 14,000 Con Edison Annual Report 2003 1 Front Cover, Left: The computers and other devices so integral to today’s quality of life require a re liable supply of energy. Center Top: Con Edison serves 3.1 million electric customers, 1.1 million gas customers, and 1,825 steam customers. Center Bottom: Anthony J. Rendino, mechanic B. Right: In 2003, with the help of its employees, Con Edison was again recognized as the most reliable utility in North America. Solano Santiago, mechanic B, assists with trenching for new ductwork. Page 1, Left: Every hour of every day, the metropolitan New York City area relies on the power Con Edison provides. Right: Eugene R. McGrath, Chairman, President, and Chief Executive Officer.