UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q



x	Quarterly Report Pursuant To Section 13 or 15(d) of the Securities Exchange Act of 1934

FOR THE QUARTERLY PERIOD ENDED ~~SEPTEMBER~~JUNE 30, ~~2016~~2017



¨	Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from to



Commission File Number	Exact name of registrant as specified in its charter and principal executive office address and telephone number	State of Incorporation	I.R.S. Employer ID. Number
1-14514	Consolidated Edison, Inc.	New York	13-3965100
	4 Irving Place, New York, New York 10003
	(212) 460-4600
1-1217	Consolidated Edison Company of New York, Inc.	New York	13-5009340
	4 Irving Place, New York, New York 10003
	(212) 460-4600

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.



Consolidated Edison, Inc. (Con Edison)	Yes x	No ¨
Consolidated Edison Company of New York, Inc. (CECONY)	Yes x	No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).



Con Edison	Yes x	No ¨
CECONY	Yes x	No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, ~~or a~~ smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated ~~filer” and~~filer,” “smaller reporting ~~company”~~company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.



Con Edison
Large accelerated filer x	Accelerated filer ¨	Non-accelerated filer ¨
Smaller reporting company ¨
		Emerging growth company ¨
CECONY
Large accelerated filer ¨	Accelerated filer ¨	Non-accelerated filerx
Smaller reporting company ¨	Emerging growth company ¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).



Con Edison	Yes ¨	No x
CECONY	Yes ¨	No x

As of ~~October 28, 2016,~~July 31, 2017, Con Edison had outstanding ~~304,727,523~~305,674,488 Common Shares ($.10 par value). All of the outstanding common equity of CECONY is held by Con Edison.

Filing Format

This Quarterly Report on Form 10-Q is a combined report being filed separately by two different registrants: Consolidated Edison, Inc. (Con Edison) and Consolidated Edison Company of New York, Inc. (CECONY). CECONY is a wholly-owned subsidiary of Con Edison and, as such, the information in this report about CECONY also applies to Con Edison. As used in this report, the term the “Companies” refers to Con Edison and CECONY. However, CECONY makes no representation as to the information contained in this report relating to Con Edison or the subsidiaries of Con Edison other than itself.

~~Table of Contents~~

Glossary of Terms

The following is a glossary of abbreviations or acronyms that are used in the Companies’ SEC reports:



Con Edison Companies
Con Edison		Consolidated Edison, Inc.
CECONY		Consolidated Edison Company of New York, Inc.
Clean Energy Businesses		Con Edison Clean Energy Businesses, Inc., together with its subsidiaries
Con Edison Development		Consolidated Edison Development, Inc.
Con Edison Energy		Consolidated Edison Energy, Inc.
Con Edison Solutions		Consolidated Edison Solutions, Inc.
Con Edison Transmission		Con Edison Transmission, Inc., together with its subsidiaries
CET Electric		Consolidated Edison Transmission, LLC
CET Gas		Con Edison Gas Pipeline and Storage, LLC
O&R		Orange and Rockland Utilities, Inc.
~~Pike~~		~~Pike County Light & Power Company~~
RECO		Rockland Electric Company
The Companies		Con Edison and CECONY
The Utilities		CECONY and O&R

Regulatory Agencies, Government Agencies and Other Organizations
EPA		U.S. Environmental Protection Agency
FASB		Financial Accounting Standards Board
FERC		Federal Energy Regulatory Commission
IASB		International Accounting Standards Board
IRS		Internal Revenue Service
NJBPU		New Jersey Board of Public Utilities
NJDEP		New Jersey Department of Environmental Protection
NYISO		New York Independent System Operator
NYPA		New York Power Authority
NYSDEC		New York State Department of Environmental Conservation
NYSERDA		New York State Energy Research and Development Authority
NYSPSC		New York State Public Service Commission
NYSRC		New York State Reliability Council, LLC
~~PAPUC~~		~~Pennsylvania Public Utility Commission~~
PJM		PJM Interconnection LLC
SEC		U.S. Securities and Exchange Commission

Accounting
AFUDC		Allowance for funds used during construction
ASU		Accounting Standards Update
GAAP		Generally Accepted Accounting Principles in the United States of America
OCI		Other Comprehensive Income
VIE		Variable ~~interest entity~~Interest Entity

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Environmental
CO2		Carbon dioxide
GHG		Greenhouse gases
MGP Sites		Manufactured gas plant sites
PCBs		Polychlorinated biphenyls
PRP		Potentially responsible party
RGGI		Regional Greenhouse Gas Initiative
Superfund		Federal Comprehensive Environmental Response, Compensation and Liability Act of 1980 and similar state statutes

Units of Measure
AC		Alternating current
Bcf		Billion cubic feet
Dt		Dekatherms
kV		Kilovolt
kWh		Kilowatt-hour
MDt		Thousand dekatherms
MMlb		Million pounds
MVA		Megavolt ampere
MW		Megawatt or thousand kilowatts
MWh		Megawatt hour

Other
~~AFUDC~~		~~Allowance for funds used during construction~~
AMI		Advanced metering infrastructure
COSO		Committee of Sponsoring Organizations of the Treadway Commission
DER		Distributed energy resources
EGWP		Employer Group Waiver Plan
Fitch		Fitch Ratings
First Quarter Form 10-Q		The Companies' combined Quarterly Report on Form 10-Q for the quarterly period ended March 31 of the current year
Second Quarter Form 10-Q		The Companies' combined Quarterly Report on Form 10-Q for the quarterly period ended June 30 of the current year
~~Third Quarter Form 10-Q~~		~~The Companies' combined Quarterly Report on Form 10-Q for the quarterly period ended September 30 of the current year~~
Form 10-K		The Companies’ combined Annual Report on Form 10-K for the year ended December 31, ~~2015~~2016
LTIP		Long Term Incentive Plan
Moody’s		Moody’s Investors Service
REV		Reforming the Energy Vision
S&P		~~Standard & Poor’s Financial Services LLC~~S&P Global Ratings
VaR		Value-at-Risk

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TABLE OF CONTENTS



		PAGE
PART I—Financial Information
ITEM 1	Financial Statements (Unaudited)
	Con Edison
	Consolidated Income Statement	67
	Consolidated Statement of Comprehensive Income	78
	Consolidated Statement of Cash Flows	89
	Consolidated Balance Sheet	910
	Consolidated Statement of Equity	1112
	CECONY
	Consolidated Income Statement	1213
	Consolidated Statement of Comprehensive Income	1314
	Consolidated Statement of Cash Flows	1415
	Consolidated Balance Sheet	1516
	Consolidated Statement of Shareholder’s Equity	1718
	Notes to the Financial Statements (Unaudited)	1819
ITEM 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	4440
ITEM 3	Quantitative and Qualitative Disclosures About Market Risk	7470
ITEM 4	Controls and Procedures	7470
PART II—Other Information		7571
ITEM 1	Legal Proceedings	7571
ITEM 1A	Risk Factors	7571
ITEM 6	Exhibits	7571
	Signatures	7672

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FORWARD-LOOKING STATEMENTS

This report includes forward-looking statements 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 expectation and not facts. Words such as “forecasts,” “expects,” “estimates,” “anticipates,” “intends,” “believes,” “plans,” “will” and similar expressions identify forward-looking statements. Forward-looking statements are based on information available at the time the statements are made, and accordingly speak only as of that time. Actual results or developments might differ materially from those included in the forward-looking statements because of various factors ~~including:~~including, but not limited to:

the Companies are extensively regulated and are subject to penalties;

the Utilities’ rate plans may not provide a reasonable return;

the Companies may be adversely affected by changes to the Utilities’ rate plans;

the intentional misconduct of employees or contractors could adversely affect the Companies;

the failure of, or damage to, the Companies’ facilities could adversely affect the Companies;

a cyber attack could adversely affect the Companies;

the Companies are exposed to risks from the environmental consequences of their operations;

a disruption in the wholesale energy markets or failure by an energy supplier could adversely affect the Companies;

the Companies have substantial unfunded pension and other postretirement benefit liabilities;

Con Edison’s ability to pay dividends or interest depends on dividends from its subsidiaries;

the Companies require access to capital markets to satisfy funding requirements;

changes to tax laws could adversely affect the Companies;

the Companies’ strategies may not be effective to address changes in the external business environment; and

the Companies also face other risks that are beyond their control.

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Consolidated Edison, Inc.

CONSOLIDATED INCOME STATEMENT (UNAUDITED)


	For the Three Months Ended September 30,		For the Nine Months Ended September 30,		For the Three Months Ended June 30,		For the Six Months Ended June 30,
	2016	2015	2016	2015	2017	2016	2017	2016
	(Millions of Dollars/ Except Share Data)				(Millions of Dollars/ Except Per Share Data)
OPERATING REVENUES
Electric	$2,769	$2,762	$6,717	$6,937	$1,965	$2,035	$3,899	$3,947
Gas	235	237	1,246	1,293	435	336	1,297	1,012
Steam	63	58	406	529	88	85	385	343
Non-utility	350	386	999	1,088	145	338	280	648
TOTAL OPERATING REVENUES	3,417	3,443	9,368	9,847	2,633	2,794	5,861	5,950
OPERATING EXPENSES
Purchased power	798	860	2,047	2,404	408	558	793	1,249
Fuel	29	31	133	216	38	33	139	104
Gas purchased for resale	81	64	320	415	149	81	470	239
Other operations and maintenance	840	869	2,447	2,485	773	820	1,553	1,607
Depreciation and amortization	305	285	905	840	332	302	662	599
Taxes, other than income taxes	528	504	1,523	1,459	511	485	1,052	995
TOTAL OPERATING EXPENSES	2,581	2,613	7,375	7,819	2,211	2,279	4,669	4,793
Gain on sale of retail electric supply business	104	—	104	—
Gain on sale of solar electric production project					1	—	1	—
OPERATING INCOME	940	830	2,097	2,028	423	515	1,193	1,157
OTHER INCOME (DEDUCTIONS)
Investment and other income	51	12	70	31
Investment income					20	7	39	7
Other income					17	8	23	12
Allowance for equity funds used during construction	3	1	7	3	2	2	5	4
Other deductions	(5)	(4)	(16)	(11)	(5)	(6)	(7)	(11)
TOTAL OTHER INCOME	49	9	61	23	34	11	60	12
INCOME BEFORE INTEREST AND INCOME TAX EXPENSE	989	839	2,158	2,051	457	526	1,253	1,169
INTEREST EXPENSE
Interest on long-term debt	174	157	504	469	179	167	356	330
Other interest	5	6	17	19	3	5	7	12
Allowance for borrowed funds used during construction	(1)	(1)	(4)	(2)	(2)	(2)	(3)	(3)
NET INTEREST EXPENSE	178	162	517	486	180	170	360	339
INCOME BEFORE INCOME TAX EXPENSE	811	677	1,641	1,565	277	356	893	830
INCOME TAX EXPENSE	314	249	602	548	102	124	330	288
NET INCOME	$497	$428	$1,039	$1,017	$175	$232	$563	$542
Net income per common share—basic	$1.63	$1.46	$3.47	$3.47	$0.57	$0.78	$1.84	$1.83
Net income per common share—diluted	$1.62	$1.45	$3.46	$3.46	$0.57	$0.77	$1.84	$1.82
DIVIDENDS DECLARED PER COMMON SHARE	$0.67	$0.65	$2.01	$1.95	$0.69	$0.67	$1.38	$1.34
AVERAGE NUMBER OF SHARES OUTSTANDING—BASIC (IN MILLIONS)	304.5	292.9	299.1	292.9	305.4	299.1	305.3	296.7
AVERAGE NUMBER OF SHARES OUTSTANDING—DILUTED (IN MILLIONS)	305.9	294.2	300.5	294.2	306.8	300.4	306.7	298.0

The accompanying notes are an integral part of these financial statements.

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Consolidated Edison, Inc.

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED)


	For the Three Months Ended September 30,		For the Nine Months Ended September 30,		For the Three Months Ended June 30,		For the Six Months Ended June 30,
	2016	2015	2016	2015	2017	2016	2017	2016
	(Millions of Dollars)				(Millions of Dollars)
NET INCOME	$497	$428	$1,039	$1,017	$175	$232	$563	$542
OTHER COMPREHENSIVE INCOME, NET OF TAXES
Pension and other postretirement benefit plan liability adjustments, net of taxes	1		2	7	1		—	1
TOTAL OTHER COMPREHENSIVE INCOME, NET OF TAXES	1		2	7	1		—	1
COMPREHENSIVE INCOME	$498	$429	$1,041	$1,024	$176	$233	$563	$543

The accompanying notes are an integral part of these financial statements.

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Consolidated Edison, Inc.

CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)


	For the Nine Months Ended September 30,				For the Six Months Ended June 30,
	2016		2015		2017	2016
	(Millions of Dollars)				(Millions of Dollars)
OPERATING ACTIVITIES
Net income	$1,039		$1,017		$563	$542
PRINCIPAL NON-CASH CHARGES/(CREDITS) TO INCOME
Depreciation and amortization	905		840		662	599
Deferred income taxes	524		466		359	268
Rate case amortization and accruals	(157)		(38)		(62)	(112)
Common equity component of allowance for funds used during construction	(7)		(3)		(5)	(4)
Net derivative (gains)/losses	(7)		(4)		2	(33)
Pre-tax gain on sale of retail electric supply business	(104)		—
(Gain)/Loss on sale of solar electric production project					(1)	—
Other non-cash items, net	99		73		(43)	42
CHANGES IN ASSETS AND LIABILITIES
Accounts receivable – customers	(138)		(82)		128	101
Materials and supplies, including fuel oil and gas in storage	15		32		(18)	29
Other receivables and other current assets	90		44		12	(38)
Income taxes receivable	100		194		29	151
Prepayments	(403)		(568)		(36)	(15)
Accounts payable	142		83		(94)	(21)
Pensions and retiree benefits obligations, net	464		566		213	302
Pensions and retiree benefits contributions	(510)		(753)		(283)	(307)
Accrued taxes	(21)		(19)		(22)	(16)
Accrued interest	66		48		(18)	3
Superfund and environmental remediation costs, net	68		23		(6)	60
Distributions from equity investments	45		29		52	24
System benefit charge					132	151
Deferred charges, noncurrent assets and other regulatory assets	(104)		(17)		(45)	(98)
Deferred credits and other regulatory liabilities	116		220		(17)	75
Other current and noncurrent liabilities	114		48		72	(72)
NET CASH FLOWS FROM OPERATING ACTIVITIES	2,336		2,199		1,574	1,631
INVESTING ACTIVITIES
Utility construction expenditures	(2,057)		(1,838)		(1,425)	(1,344)
Cost of removal less salvage	(149)		(156)		(122)	(95)
Non-utility construction expenditures	(436)		(366)		(225)	(331)
Investments in/acquisitions of renewable electric production and electric and gas transmission projects	(1,281)		(286)
Investments in electric and gas transmission projects					(16)	(79)
Investments in/acquisitions of renewable electric production projects					(1)	(1,171)
Proceeds from the transfer of assets to NY Transco					—	122
Proceeds from sale of assets	250		—		34	—
Proceeds from the transfer of assets to NY Transco	122		—
Restricted cash	(21)		(23)		28	(6)
Other investing activities	(145)		(18)		24	(82)
NET CASH FLOWS USED IN INVESTING ACTIVITIES	(3,717)		(2,687)		(1,703)	(2,986)
FINANCING ACTIVITIES
Net (payment)/issuance of short-term debt	(928)		360
Net payment of short-term debt					(18)	(821)
Issuance of long-term debt	1,765		238		997	1,765
Retirement of long-term debt	(407)		(145)		(426)	(6)
Debt issuance costs	(16)		(2)		(11)	(15)
Common stock dividends	(570)		(560)		(398)	(378)
Issuance of common shares - public offering	702		—		—	702
Issuance of common shares for stock plans, net of repurchases	38		(9	)
Issuance of common shares for stock plans					25	27
Distribution to noncontrolling interest	(1)		—		—	(1)
NET CASH FLOWS FROM/(USED IN) FINANCING ACTIVITIES	583		(118)
NET CASH FLOWS FROM FINANCING ACTIVITIES					169	1,273
CASH AND TEMPORARY CASH INVESTMENTS:
NET CHANGE FOR THE PERIOD	(798)		(606)		40	(82)
BALANCE AT BEGINNING OF PERIOD	944		699		776	944
BALANCE AT END OF PERIOD	146		93		$816	$862
LESS: CHANGE IN CASH BALANCES HELD FOR SALE	(4	)	2
BALANCE AT END OF PERIOD EXCLUDING HELD FOR SALE	$150		$91
SUPPLEMENTAL DISCLOSURE OF CASH INFORMATION
Cash paid/(received) during the period for:
Interest	$437		$411		$372	$318
Income taxes	$(144)		$(7)		$(35)	$(142)
SUPPLEMENTAL DISCLOSURE OF NON-CASH INFORMATION
Construction expenditures in accounts payable	$242		$204		$308	$254
Issuance of common shares for dividend reinvestment	$35		$11		$23

The accompanying notes are an integral part of these financial statements.

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Consolidated Edison, Inc.

CONSOLIDATED BALANCE SHEET (UNAUDITED)


	September 30, 2016	December 31, 2015	June 30, 2017	December 31, 2016
	(Millions of Dollars)		(Millions of Dollars)
ASSETS
CURRENT ASSETS
Cash and temporary cash investments	$150	$944	$816	$776
Special deposits	3	3
Accounts receivable – customers, less allowance for uncollectible accounts of $75 and $85 in 2016 and 2015, respectively	1,157	1,052
Other receivables, less allowance for uncollectible accounts of $13 and $11 in 2016 and 2015, respectively	165	304
Accounts receivable – customers, less allowance for uncollectible accounts of $63 and $69 in 2017 and 2016, respectively			984	1,106
Other receivables, less allowance for uncollectible accounts of $8 and $14 in 2017 and 2016, respectively			165	195
Income taxes receivable	66	166	50	79
Accrued unbilled revenue	373	360	436	447
Fuel oil, gas in storage, materials and supplies, at average cost	335	350	357	339
Prepayments	580	177	195	159
Regulatory assets	119	132	77	100
Assets held for sale	—	157
Restricted cash			26	54
Other current assets	206	191	174	151
TOTAL CURRENT ASSETS	3,154	3,836	3,280	3,406
INVESTMENTS	1,931	884	1,961	1,921
UTILITY PLANT, AT ORIGINAL COST
Electric	27,239	26,358	28,339	27,747
Gas	7,253	6,858	7,828	7,524
Steam	2,374	2,336	2,452	2,421
General	2,657	2,622	2,844	2,719
TOTAL	39,523	38,174	41,463	40,411
Less: Accumulated depreciation	8,451	8,044	8,738	8,541
Net	31,072	30,130	32,725	31,870
Construction work in progress	1,286	1,003	1,212	1,175
NET UTILITY PLANT	32,358	31,133	33,937	33,045
NON-UTILITY PLANT
Non-utility property, less accumulated depreciation of $122 and $95 in 2016 and 2015, respectively	1,127	832
Non-utility property, less accumulated depreciation of $170 and $140 in 2017 and 2016, respectively			1,535	1,482
Construction work in progress	421	244	779	689
NET PLANT	33,906	32,209	36,251	35,216
OTHER NONCURRENT ASSETS
Goodwill	429	429	428
Intangible assets, less accumulated amortization of $5 and $4 in 2016 and 2015, respectively	—	2
Intangible assets, less accumulated amortization of $10 and $6 in 2017 and 2016, respectively			116	124
Regulatory assets	7,544	8,096	6,935	7,024
Other deferred charges and noncurrent assets	352	186	128	136
TOTAL OTHER NONCURRENT ASSETS	8,325	8,713	7,607	7,712
TOTAL ASSETS	$47,316	$45,642	$49,099	$48,255

The accompanying notes are an integral part of these financial statements.

910

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Consolidated Edison, Inc.

CONSOLIDATED BALANCE SHEET (UNAUDITED)


	September 30, 2016	December 31, 2015	June 30, 2017	December 31, 2016
	(Millions of Dollars)		(Millions of Dollars)
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES
Long-term debt due within one year	$346	$739	$637	$39
Notes payable	601	1,529	1,036	1,054
Accounts payable	1,113	1,008	973	1,147
Customer deposits	356	354	345	352
Accrued taxes	41	62	42	64
Accrued interest	202	136	132	150
Accrued wages	101	97	103	101
Fair value of derivative liabilities	70	66	64	77
Regulatory liabilities	123	115	64	128
Liabilities held for sale	—	89
System benefit charge			566	434
Other current liabilities	638	525	367	297
TOTAL CURRENT LIABILITIES	3,591	4,720	4,329	3,843
NONCURRENT LIABILITIES
Provision for injuries and damages	170	185	171	160
Pensions and retiree benefits	2,197	2,911	1,652	1,847
Superfund and other environmental costs	752	765	745	753
Asset retirement obligations	254	242	252	246
Fair value of derivative liabilities	52	39	74	40
Deferred income taxes and unamortized investment tax credits	10,155	9,537	10,549	10,205
Regulatory liabilities	1,920	1,977	1,886	1,905
Other deferred credits and noncurrent liabilities	203	199	240	215
TOTAL NONCURRENT LIABILITIES	15,703	15,855	15,569	15,371
LONG-TERM DEBT	13,747	12,006	14,703	14,735
EQUITY
Common shareholders’ equity	14,267	13,052	14,490	14,298
Noncontrolling interest	8	9	8
TOTAL EQUITY (See Statement of Equity)	14,275	13,061	14,498	14,306
TOTAL LIABILITIES AND EQUITY	$47,316	$45,642	$49,099	$48,255

The accompanying notes are an integral part of these financial statements.

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Consolidated Edison, Inc.

CONSOLIDATED STATEMENT OF EQUITY (UNAUDITED)


(In Millions)	Common Stock		Additional Paid-In Capital	Retained Earnings	Treasury Stock		Capital Stock Expense	Accumulated Other Comprehensive Income/(Loss)	Noncontrolling Interest	Total	Common Stock		Additional Paid-In Capital	Retained Earnings	Treasury Stock		Capital Stock Expense	Accumulated Other Comprehensive Income/(Loss)	Noncontrolling Interest	Total
	Shares	Amount			Shares	Amount					Shares	Amount			Shares	Amount
BALANCE AS OF DECEMBER 31, 2014	293	$32	$4,991	$8,691	23	$(1,032)	$(61)	$(45)	$9	$12,585
Net income				370						370
Common stock dividends				(190)						(190)
Issuance of common shares for stock plans, net of repurchases	—		2		—	(2)				—
Other comprehensive income								5		5
BALANCE AS OF MARCH 31, 2015	293	$32	$4,993	$8,871	23	$(1,034)	$(61)	$(40)	$9	$12,770
Net income				219						219
Common stock dividends				(190)						(190)
Issuance of common shares for stock plans, net of repurchases	—		—		—	(3)				(3)
Other comprehensive income								1		1
BALANCE AS OF JUNE 30, 2015	293	$32	$4,993	$8,900	23	$(1,037)	$(61)	$(39)	$9	$12,797
Net income				428						428
Common stock dividends				(191)						(191)
Issuance of common shares for stock plans, net of repurchases	—		15		—	(1)				14
Other comprehensive income								1		1
BALANCE AS OF SEPTEMBER 30, 2015	293	$32	$5,008	$9,137	23	$(1,038)	$(61)	$(38)	$9	$13,049
BALANCE AS OF DECEMBER 31, 2015	293	$32	$5,030	$9,123	23	$(1,038)	$(61)	$(34)	$9	$13,061	293	$32	$5,030	$9,123	23	$(1,038)	$(61)	$(34)	$9	$13,061
Net income				310						310				310						310
Common stock dividends				(197)						(197)				(197)						(197)
Issuance of common shares for stock plans	1		28							28	1		28							28
Other comprehensive income								—		—										—
Noncontrolling interest									(1)	(1)									(1)	(1)
BALANCE AS OF MARCH 31, 2016	294	$32	$5,058	$9,236	23	$(1,038)	$(61)	$(34)	$8	$13,201	294	$32	$5,058	$9,236	23	$(1,038)	$(61)	$(34)	$8	$13,201
Net income				232						232				232						232
Common stock dividends				(204)						(204)				(204)						(204)
Issuance of common shares - public offering	10	1	723				(22)			702	10	1	723				(22)			702
Issuance of common shares for stock plans	—		26							26			26							26
Other comprehensive income								1		1								1		1
Noncontrolling interest																				—
BALANCE AS OF JUNE 30, 2016	304	$33	$5,807	$9,264	23	$(1,038)	$(83)	$(33)	$8	$13,958	304	$33	$5,807	$9,264	23	$(1,038)	$(83)	$(33)	$8	$13,958

BALANCE AS OF DECEMBER 31, 2016											305	$33	$5,854	$9,559	23	$(1,038)	$(83)	$(27)	$8	$14,306
Net income														388						388
Common stock dividends														(211)						(211)
Issuance of common shares for stock plans													24							24
Other comprehensive loss																		(1)		(1)
Noncontrolling interest																				—
BALANCE AS OF MARCH 31, 2017											305	$33	$5,878	$9,736	23	$(1,038)	$(83)	$(28)	$8	$14,506
Net income				497						497				175						175
Common stock dividends				(204)						(204)				(210)						(210)
Issuance of common shares for stock plans	1		23							23	1		26							26
Other comprehensive income								1		1								1		1
BALANCE AS OF SEPTEMBER 30, 2016	305	$33	$5,830	$9,557	23	$(1,038)	$(83)	$(32)	$8	$14,275
Noncontrolling interest																				—
BALANCE AS OF JUNE 30, 2017											306	$33	$5,904	$9,701	23	$(1,038)	$(83)	$(27)	$8	$14,498

The accompanying notes are an integral part of these financial statements.

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Consolidated Edison Company of New York, Inc.

CONSOLIDATED INCOME STATEMENT (UNAUDITED)


	For the Three Months Ended September 30,		For the Nine Months Ended September 30,		For the Three Months Ended June 30,		For the Six Months Ended June 30,
	2016	2015	2016	2015	2017	2016	2017	2016
	(Millions of Dollars)				(Millions of Dollars)
OPERATING REVENUES
Electric	$2,557	$2,558	$6,222	$6,416	$1,817	$1,892	$3,610	$3,665
Gas	208	213	1,113	1,177	388	304	1,153	905
Steam	63	58	406	529	88	85	386	343
TOTAL OPERATING REVENUES	2,828	2,829	7,741	8,122	2,293	2,281	5,149	4,913
OPERATING EXPENSES
Purchased power	495	526	1,216	1,423	363	369	710	721
Fuel	29	31	133	216	38	33	139	104
Gas purchased for resale	34	30	217	282	84	51	314	183
Other operations and maintenance	724	750	2,105	2,140	638	701	1,301	1,381
Depreciation and amortization	278	262	825	773	296	275	591	547
Taxes, other than income taxes	502	485	1,446	1,399	487	460	1,003	944
TOTAL OPERATING EXPENSES	2,062	2,084	5,942	6,233	1,906	1,889	4,058	3,880
OPERATING INCOME	766	745	1,799	1,889	387	392	1,091	1,033
OTHER INCOME (DEDUCTIONS)
Investment and other income	4	(1)	6	3	3	1	7	2
Allowance for equity funds used during construction	2	1	6	3	2		5	4
Other deductions	(4)	(3)	(10)		(4)	(1)	(6)	(6)
TOTAL OTHER INCOME (DEDUCTIONS)	2	(3)	2	(4)
TOTAL OTHER INCOME					1	2	6	—
INCOME BEFORE INTEREST AND INCOME TAX EXPENSE	768	742	1,801	1,885	388	394	1,097	1,033
INTEREST EXPENSE
Interest on long-term debt	150	141	440	423	151	146	301	290
Other interest	5		14		4		8	9
Allowance for borrowed funds used during construction	(1)		(3)	(2)	(1)		(3)	(2)
NET INTEREST EXPENSE	154	145	451	435	154	149	306	297
INCOME BEFORE INCOME TAX EXPENSE	614	597	1,350	1,450	234	245	791	736
INCOME TAX EXPENSE	226	222	491	515	91	84	309	264
NET INCOME	$388	$375	$859	$935	$143	$161	$482	$472

The accompanying notes are an integral part of these financial statements.

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Consolidated Edison Company of New York, Inc.

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED)


	For the Three Months Ended September 30,		For the Nine Months Ended September 30,		For the Three Months Ended June 30,		For the Six Months Ended June 30,
	2016	2015	2016	2015	2017	2016	2017	2016
	(Millions of Dollars)				(Millions of Dollars)
NET INCOME	$388	$375	$859	$935	$143	$161	$482	$472
OTHER COMPREHENSIVE INCOME, NET OF TAXES
Pension and other postretirement benefit plan liability adjustments, net of taxes	—	1		2	—	1	—	1
TOTAL OTHER COMPREHENSIVE INCOME, NET OF TAXES	—	1		2	—	1	—	1
COMPREHENSIVE INCOME	$388	$376	$860	$937	$143	$162	$482	$473

The accompanying notes are an integral part of these financial statements.

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Consolidated Edison Company of New York, Inc.

CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)


	For the Nine Months Ended September 30,		For the Six Months Ended June 30,
	2016	2015	2017	2016
	(Millions of Dollars)		(Millions of Dollars)
OPERATING ACTIVITIES
Net income	$859	$935	$482	$472
PRINCIPAL NON-CASH CHARGES/(CREDITS) TO INCOME
Depreciation and amortization	825	773	591	547
Deferred income taxes	569	391	326	283
Rate case amortization and accruals	(170)	(57)	(72)	(120)
Common equity component of allowance for funds used during construction	(6)	(3)	(5)	(4)
Other non-cash items, net	7	13	(18)	15
CHANGES IN ASSETS AND LIABILITIES
Accounts receivable – customers	(79)	(51)	125	102
Materials and supplies, including fuel oil and gas in storage	15	34	(4)	18
Other receivables and other current assets	18	60	56	(64)
Accounts receivable from affiliated companies	38	(32)	17	92
Prepayments	(351)	(336)	(20)	3
Accounts payable	82	18	(60)	(54)
Accounts payable to affiliated companies	8	5	3	5
Pensions and retiree benefits obligations, net	439	530	191	287
Pensions and retiree benefits contributions	(472)	(700)	(281)	(306)
Superfund and environmental remediation costs, net	76	21	(4)	67
Accrued taxes	(17)	(1)	(17)	(15)
Accrued taxes to affiliated companies	(2)	(8)	(119)	(2)
Accrued interest	43	37	—	(3)
System benefit charge			120	138
Deferred charges, noncurrent assets and other regulatory assets	(153)	(49)	(72)	(100)
Deferred credits and other regulatory liabilities	165	222	11	89
Other current and noncurrent liabilities	123	—	(16)	(51)
NET CASH FLOWS FROM OPERATING ACTIVITIES	2,017	1,802	1,234	1,399
INVESTING ACTIVITIES
Utility construction expenditures	(1,932)	(1,732)	(1,341)	(1,268)
Cost of removal less salvage	(146)	(149)	(119)	(92)
Proceeds from the transfer of assets to NY Transco	122	—	—	122
Restricted cash	13	(19)	—	13
NET CASH FLOWS USED IN INVESTING ACTIVITIES	(1,943)	(1,900)	(1,460)	(1,225)
FINANCING ACTIVITIES
Net (payment)/issuance of short-term debt	(553)	199
Net issuance/(payment) of short-term debt			150	(425)
Issuance of long-term debt	550	—	500	550
Retirement of long-term debt	(400)	—
Debt issuance costs	(6)	(1)	(6)	(6)
Capital contribution by parent	76	—	45	51
Dividend to parent	(558)	(694)	(398)	(372)
NET CASH FLOWS USED IN FINANCING ACTIVITIES	(891)	(496)
NET CASH FLOWS FROM/(USED IN) FINANCING ACTIVITIES			291	(202)
CASH AND TEMPORARY CASH INVESTMENTS:
NET CHANGE FOR THE PERIOD	(817)	(594)	65	(28)
BALANCE AT BEGINNING OF PERIOD	843	645	702	843
BALANCE AT END OF PERIOD	$26	$51	$767	$815
SUPPLEMENTAL DISCLOSURE OF CASH INFORMATION
Cash paid/(received) during the period for:
Interest	$386	$376	$296	$285
Income taxes	$(130)	$143	$86	$(117)
SUPPLEMENTAL DISCLOSURE OF NON-CASH INFORMATION
Construction expenditures in accounts payable	$195	$152	$234	$196

The accompanying notes are an integral part of these financial statements.

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Consolidated Edison Company of New York, Inc.

CONSOLIDATED BALANCE SHEET (UNAUDITED)


	September 30, 2016	December 31, 2015	June 30, 2017	December 31, 2016
	(Millions of Dollars)		(Millions of Dollars)
ASSETS
CURRENT ASSETS
Cash and temporary cash investments	$26	$843	$767	$702
Special deposits	2
Accounts receivable – customers, less allowance for uncollectible accounts of $70 and $80 in 2016 and 2015, respectively	1,076	987
Other receivables, less allowance for uncollectible accounts of $12 and $11 in 2016 and 2015, respectively	55	70
Accounts receivable – customers, less allowance for uncollectible accounts of $58 and $65 in 2017 and 2016, respectively			914	1,032
Other receivables, less allowance for uncollectible accounts of $7 and $13 in 2017 and 2016, respectively			78	81
Accrued unbilled revenue	330	327	400	399
Accounts receivable from affiliated companies	152	190	92	109
Fuel oil, gas in storage, materials and supplies, at average cost	273	288	274	270
Prepayments	464	113	120	100
Regulatory assets	111	121	68	90
Restricted cash			2
Other current assets	98	131	46	95
TOTAL CURRENT ASSETS	2,587	3,072	2,761	2,880
INVESTMENTS	318	286	361	315
UTILITY PLANT, AT ORIGINAL COST
Electric	25,648	24,828	26,687	26,122
Gas	6,564	6,191	7,095	6,814
Steam	2,374	2,336	2,452	2,421
General	2,437	2,411	2,597	2,490
TOTAL	37,023	35,766	38,831	37,847
Less: Accumulated depreciation	7,750	7,378	8,017	7,836
Net	29,273	28,388	30,814	30,011
Construction work in progress	1,200	922	1,140	1,104
NET UTILITY PLANT	30,473	29,310	31,954	31,115
NON-UTILITY PROPERTY
Non-utility property, less accumulated depreciation of $25 in 2016 and 2015	4	5
Non-utility property, less accumulated depreciation of $25 in 2017 and 2016			4
NET PLANT	30,477	29,315	31,958	31,119
OTHER NONCURRENT ASSETS
Regulatory assets	6,986	7,482	6,404	6,473
Other deferred charges and noncurrent assets	68	75	64	69
TOTAL OTHER NONCURRENT ASSETS	7,054	7,557	6,468	6,542
TOTAL ASSETS	$40,436	$40,230	$41,548	$40,856

The accompanying notes are an integral part of these financial statements.

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Consolidated Edison Company of New York, Inc.

CONSOLIDATED BALANCE SHEET (UNAUDITED)


	September 30, 2016	December 31, 2015	June 30, 2017	December 31, 2016
	(Millions of Dollars)		(Millions of Dollars)
LIABILITIES AND SHAREHOLDER’S EQUITY
CURRENT LIABILITIES
Long-term debt due within one year	$250	$650	$600		$—
Notes payable	480	1,033	750	600
Accounts payable	838	771	756	876
Accounts payable to affiliated companies	20	12	13	10
Customer deposits	341	339	333	336
Accrued taxes	32	49	33	50
Accrued taxes to affiliated companies	—	2	—	119
Accrued interest	161	118	111	111
Accrued wages	92	88	94	91
Fair value of derivative liabilities	61	50	49	66
Regulatory liabilities	96	84	42	90
System benefit charge			518	398
Other current liabilities	558	443	206	242
TOTAL CURRENT LIABILITIES	2,929	3,639	3,505	2,989
NONCURRENT LIABILITIES
Provision for injuries and damages	164	178	165	154
Pensions and retiree benefits	1,895	2,565	1,318	1,544
Superfund and other environmental costs	661	665	651	655
Asset retirement obligations	241	234	231	227
Fair value of derivative liabilities	45	36	66	33
Deferred income taxes and unamortized investment tax credits	9,472	8,755	9,793	9,450
Regulatory liabilities	1,725	1,789	1,686	1,712
Other deferred credits and noncurrent liabilities	177	167	205	190
TOTAL NONCURRENT LIABILITIES	14,380	14,389	14,115	13,965
LONG-TERM DEBT	11,334	10,787	11,970	12,073
SHAREHOLDER’S EQUITY (See Statement of Shareholder’s Equity)	11,793	11,415	11,958	11,829
TOTAL LIABILITIES AND SHAREHOLDER’S EQUITY	$40,436	$40,230	$41,548	$40,856

The accompanying notes are an integral part of these financial statements.

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Consolidated Edison Company of New York, Inc.

CONSOLIDATED STATEMENT OF SHAREHOLDER’S EQUITY (UNAUDITED)


	Common Stock		Additional Paid-In Capital	Retained Earnings	Repurchased Con Edison Stock	Capital Stock Expense	Accumulated Other Comprehensive Income/(Loss)	Total	Common Stock		Additional Paid-In Capital	Retained Earnings	Repurchased Con Edison Stock	Capital Stock Expense	Accumulated Other Comprehensive Income/(Loss)	Total
(In Millions)	Shares	Amount							Shares	Amount
BALANCE AS OF DECEMBER 31, 2014	235	$589	$4,234	$7,399	$(962)	$(61)	$(11)	$11,188
Net income				348				348
Common stock dividend to parent				(338)				(338)
Other comprehensive income							—	—
BALANCE AS OF MARCH 31, 2015	235	$589	$4,234	$7,409	$(962)	$(61)	$(11)	$11,198
Net income				211				211
Common stock dividend to parent				(178)				(178)
Other comprehensive income							1
BALANCE AS OF JUNE 30, 2015	235	$589	$4,234	$7,442	$(962)	$(61)	$(10)	$11,232
Net income				375				375
Common stock dividend to parent				(178)				(178)
Other comprehensive income							1
BALANCE AS OF SEPTEMBER 30, 2015	235	$589	$4,234	$7,639	$(962)	$(61)	$(9)	$11,430

BALANCE AS OF DECEMBER 31, 2015	235	$589	$4,247	$7,611	$(962)	$(61)	$(9)	$11,415	235	$589	$4,247	$7,611	$(962)	$(61)	$(9)	$11,415
Net income				310				310				310				310
Common stock dividend to parent				(186)				(186)				(186)				(186)
Capital contribution by parent			23					23			23					23
Other comprehensive income							—	—							—	—
BALANCE AS OF MARCH 31, 2016	235	$589	$4,270	$7,735	$(962)	$(61)	$(9)	$11,562	235	$589	$4,270	$7,735	$(962)	$(61)	$(9)	$11,562
Net income				161				161				161				161
Common stock dividend to parent				(186)				(186)				(186)				(186)
Capital contribution by parent			28					28			28					28
Other comprehensive income							1								1
BALANCE AS OF JUNE 30, 2016	235	$589	$4,298	$7,710	$(962)	$(61)	$(8)	$11,566	235	$589	$4,298	$7,710	$(962)	$(61)	$(8)	$11,566

BALANCE AS OF DECEMBER 31, 2016									235	$589	$4,347	$7,923	$(962)	$(61)	$(7)	$11,829
Net income				388				388				339				339
Common stock dividend to parent				(186)				(186)				(199)				(199)
Capital contribution by parent			25					25			22					22
Other comprehensive income							—	—								—
BALANCE AS OF SEPTEMBER 30, 2016	235	$589	$4,323	$7,912	$(962)	$(61)	$(8)	$11,793
BALANCE AS OF MARCH 31, 2017									235	$589	$4,369	$8,063	$(962)	$(61)	$(7)	$11,991
Net income												143				143
Common stock dividend to parent												(199)				(199)
Capital contribution by parent											23					23
Other comprehensive income																—
BALANCE AS OF JUNE 30, 2017									235	$589	$4,392	$8,007	$(962)	$(61)	$(7)	$11,958

The accompanying notes are an integral part of these financial statements.

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NOTES TO THE FINANCIAL STATEMENTS (UNAUDITED)

General

These combined notes accompany and form an integral part of the separate consolidated financial statements of each of the two separate registrants: Consolidated Edison, Inc. and its subsidiaries (Con Edison) and Consolidated Edison Company of New York, Inc. and its subsidiaries (CECONY). CECONY is a subsidiary of Con Edison and as such its financial condition and results of operations and cash flows, which are presented separately in the CECONY consolidated financial statements, are also consolidated, along with those of ~~Con Edison’s other utility subsidiary,~~ Orange and Rockland Utilities, Inc. (O&R), Con Edison Clean Energy Businesses, Inc. (together with its subsidiaries, the Clean Energy Businesses) and Con Edison Transmission, Inc. ~~(Con~~(together with its subsidiaries, Con Edison Transmission) ~~and Con Edison’s competitive energy businesses~~ in Con Edison’s consolidated financial statements. The term “Utilities” is used in these notes to refer to CECONY and O&R.

As used in these notes, the term “Companies” refers to Con Edison and CECONY and, except as otherwise noted, the information in these combined notes relates to each of the Companies. However, CECONY makes no representation as to information relating to Con Edison or the subsidiaries of Con Edison other than itself.

The separate interim consolidated financial statements of each of the Companies are unaudited but, in the opinion of their respective managements, reflect all adjustments (which include only normally recurring adjustments) necessary for a fair presentation of the results for the interim periods presented. The Companies’ separate interim consolidated financial statements should be read together with their separate audited financial statements (including the combined notes thereto) included in Item 8 of their combined Annual Report on Form 10-K for the year ended December 31, ~~2015~~2016 and their separate unaudited financial statements (including the combined notes thereto) included in Part I,1, Item 1 of their combined Quarterly Report on Form 10-Q for the quarterly ~~periods~~period ended March 31, ~~2016 and June 30, 2016.~~2017. Certain prior period amounts have been reclassified to conform to the current period presentation.

Con Edison has two regulated utility subsidiaries: CECONY and O&R. CECONY provides electric service and gas service in New York City and Westchester County. The company also provides steam service in parts of Manhattan. O&R, along with its regulated utility subsidiary, provides electric service in southeastern New York and northern New Jersey and gas service in southeastern New York. Con Edison Clean Energy Businesses, Inc. has ~~the following competitive energy businesses:~~three subsidiaries: Consolidated Edison ~~Solutions,~~Development, Inc. (Con Edison ~~Solutions)~~Development), a company ~~which provides energy-related products~~that develops, owns and ~~services to retail customers;~~operates renewable and energy infrastructure projects; Consolidated Edison Energy, Inc. (Con Edison Energy), a company that provides energy-related products and services to wholesale customers; and Consolidated Edison ~~Development,~~Solutions, Inc. (Con Edison ~~Development)~~Solutions), a company that ~~develops, owns~~provides energy-related products and ~~operates renewable and energy infrastructure projects. In addition, Con Edison has a subsidiary,~~services to retail customers. Con Edison Transmission, ~~that~~Inc. invests in electric transmission facilities through its subsidiary, Consolidated Edison Transmission, LLC (CET Electric), and invests in gas pipeline and storage facilities through its subsidiary Con Edison Gas Pipeline and Storage, LLC (CET Gas). ~~See Note P.~~

Note A – Summary of Significant Accounting Policies

Earnings Per Common Share

~~For the three and nine months ended September 30, 2016 and 2015,~~Con Edison presents basic and diluted earnings per share on the face of its consolidated income statement. Basic earnings per share (EPS) are calculated by dividing earnings available to common shareholders (“Net income” on Con Edison’s consolidated income statement) by the weighted average number of Con Edison common shares outstanding during the period. In the calculation of diluted EPS, weighted average shares outstanding are increased for additional shares that would be outstanding if potentially dilutive securities were converted to common stock.

Potentially dilutive securities for Con Edison consist of restricted stock units, deferred stock units and stock options for which the average market price of the common shares for the period was greater than the exercise price.

For the three and six months ended June 30, 2017 and 2016, basic and diluted EPS for Con Edison are calculated as follows:

For the Three Months Ended September 30, For the Nine Months Ended September 30,
(Millions of Dollars, except per share amounts/Shares in Millions) 2016 2015 2016 2015
Net income $497 $428 $1,039 $1,017
Weighted average common shares outstanding – basic 304.5 292.9 299.1 292.9
Add: Incremental shares attributable to effect of potentially dilutive securities 1.4 1.3 1.4 1.3
Adjusted weighted average common shares outstanding – diluted 305.9 294.2 300.5 294.2
Net income per common share – basic $1.63 $1.46 $3.47 $3.47
Net income per common share – diluted $1.62 $1.45 $3.46 $3.46

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	For the Three Months Ended June 30,		For the Six Months Ended June 30,
(Millions of Dollars, except per share amounts/Shares in Millions)	2017	2016	2017	2016
Net income	$175	$232	$563	$542
Weighted average common shares outstanding – basic	305.4	299.1	305.3	296.7
Add: Incremental shares attributable to effect of potentially dilutive securities	1.4	1.3	1.4	1.3
Adjusted weighted average common shares outstanding – diluted	306.8	300.4	306.7	298.0
Net Income per common share – basic	$0.57	$0.78	$1.84	$1.83
Net Income per common share – diluted	$0.57	$0.77	$1.84	$1.82

The computation of diluted EPS for the six months ended June 30, 2016 excludes immaterial amounts of performance share awards that were not included because of their anti-dilutive effect.

Changes in Accumulated Other Comprehensive Income/(Loss) by Component

For the three and ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017 and ~~2015,~~2016, changes to accumulated other comprehensive income/(loss) (OCI) for Con Edison and CECONY are as follows:


	For the Three Months Ended September 30,				For the Three Months Ended June 30,
	Con Edison		CECONY		Con Edison		CECONY
(Millions of Dollars)	2016	2015	2016	2015	2017	2016	2017	2016
Beginning balance, accumulated OCI, net of taxes (a)	$(33)	$(39)	$(8)	$(10)	$(28)	$(34)	$(7)	$(9)
Amounts reclassified from accumulated OCI related to pension plan liabilities, net of tax of $(1) for Con Edison in 2016 and 2015 (a)(b)	1		—	1
Amounts reclassified from accumulated OCI related to pension plan liabilities, net of tax of $(1) for Con Edison in 2017 and 2016 (a)(b)					1		—	1
Current period OCI, net of taxes	1	1	—	1	1	1	—	1
Ending balance, accumulated OCI, net of taxes	$(32)	$(38)	$(8)	$(9)	$(27)	$(33)	$(7)	$(8)


	For the Nine Months Ended September 30,				For the Six Months Ended June 30,
	Con Edison		CECONY		Con Edison		CECONY
(Millions of Dollars)	2016	2015	2016	2015	2017	2016	2017	2016
Beginning balance, accumulated OCI, net of taxes (a)	$(34)	$(45)	$(9)	$(11)	$(27)	$(34)	$(7)	$(9)
OCI before reclassifications, net of tax of $1 and $(2) for Con Edison in 2016 and 2015, respectively	(1)	3	—	—
Amounts reclassified from accumulated OCI related to pension plan liabilities, net of tax of $(2) and $(3) for Con Edison in 2016 and 2015 (a)(b)	3	4	1	2
OCI before reclassifications, net of tax of $1 for Con Edison in 2017 and 2016					(2)	(1)	—	—
Amounts reclassified from accumulated OCI related to pension plan liabilities, net of tax of $(2) for Con Edison in 2017 and 2016 (a)(b)					2	2	—	1
Current period OCI, net of taxes	2	7	1	2	—	1	—	1
Ending balance, accumulated OCI, net of taxes	$(32)	$(38)	$(8)	$(9)	$(27)	$(33)	$(7)	$(8)


(a)	Tax reclassified from accumulated OCI is reported in the income tax expense line item of the consolidated income statement.


(b)	For the portion of unrecognized pension and other postretirement benefit costs relating to the Utilities, costs are recorded into, and amortized out of, regulatory assets instead of OCI. The net actuarial losses and prior service costs recognized during the period are included in the computation of total periodic pension and other postretirement benefit cost. See Notes E and F.

Table of Contents

Note B — Regulatory Matters

Rate Plans

~~CECONY -~~Rockland Electric Company (RECO)

In ~~September 2016, CECONY, the staff of~~February 2017, the New ~~York State~~Jersey Board of Public ~~Service Commission (NYSPSC) and other parties entered into~~Utilities (NJBPU) approved a ~~Joint Proposal~~stipulation of settlement for a ~~CECONY~~RECO electric rate plan ~~for the three-year period January 2017 through December 2019. The Joint Proposal is subject to NYSPSC approval.~~commencing March 2017. The following table contains a summary of the electric rate plan.

~~Table of Contents~~



RECO
Effective period		~~January~~March 2017 ~~- December 2019~~(a)
Base rate changes ~~(a)~~		Yr. 1 - ~~$195 million~~ ~~Yr. 2 - $155 million~~ ~~Yr. 3 - $155~~$1.7 million
~~Amortizations~~Amortization to income of net regulatory (assets) and liabilities		~~Yr. 1 - $84~~$0.2 million ~~Yr. 2 - $83 million~~ ~~Yr. 3 - $69 million~~
~~Other revenue sources~~		~~Retention~~ over three years and continuation of ~~$75~~$(25.6) million of ~~annual transmission congestion revenues.~~ ~~Potential earnings adjustment mechanism incentives for energy efficiency and other potential incentives of up to: Yr. 1 - $28 million; Yr. 2 - $47 million; and Yr. 3 - $64 million.~~
~~Revenue decoupling mechanism~~		~~Continuation of reconciliation of actual to authorized electric delivery revenues.~~deferred storm costs over four years expiring July 31, 2018 (b)
Recoverable energy costs		~~Continuation of current~~Current rate recovery of purchased power ~~and fuel~~ costs.
~~Negative revenue adjustments~~		~~Potential penalties if certain performance targets relating to service, reliability, safety and other matters are not met: Yr. 1 - $376 million; Yr. 2 - $383 million; and Yr. 3 - $395 million.~~
Cost reconciliations		Continuation of reconciliation of expenses for pension and other postretirement benefits, variable-rate tax-exempt debt, major storms, property taxes(b), municipal infrastructure support costs(c), the impact of new laws and environmental site investigation and remediation to amounts reflected in rates.(d)
~~Net utility plant reconciliations~~		~~Target levels reflected in rates:~~ ~~Electric average net plant target excluding advanced metering infrastructure (AMI): Yr. 1 - $21,689 million; Yr. 2 - $22,338 million; Yr. 3 - $23,002 million~~ ~~AMI: Yr. 1 - $126 million; Yr. 2 - $257 million; Yr. 3 - $415 million~~None
Average rate base		Yr. 1 - ~~$18,902 million~~ ~~Yr. 2 - $19,530 million~~ ~~Yr. 3 - $20,277~~$178.7 million
Weighted average cost of capital (after-tax)		~~Yr. 1 - 6.82 percent~~ ~~Yr. 2 - 6.80 percent~~ ~~Yr. 3 - 6.73~~7.47 percent
Authorized return on common equity		~~9.00~~9.6 percent
~~Earnings sharing~~		~~Most earnings above an annual earnings threshold of 9.5 percent are to be applied to reduce regulatory assets for environmental remediation and other costs accumulated in the rate year.~~
Cost of long-term debt		~~Yr. 1 - 4.93 percent~~ ~~Yr. 2 - 4.88 percent~~ ~~Yr. 3 - 4.74~~5.37 percent
Common equity ratio		4849.7 percent


(a)	~~The electric base~~Effective until a new rate ~~increases shown above are in addition to a $48 million increase resulting from~~plan approved by the ~~December 2016 expiration of a temporary credit under the current rate plan. At the NYSPSC’s option, these increases may be implemented with increases of $199 million in each rate year.~~NJBPU goes into effect.

(b)

~~Deferrals for property taxes are limited~~In January 2016, the NJBPU approved RECO’s plan to ~~90 percent~~spend $15.7 million in capital over three years to harden its electric system against storms, the costs of ~~the difference from amounts reflected~~which RECO, beginning in ~~rates, subject to an annual maximum for the remaining difference of not more than~~2017, is collecting through a ~~maximum number of basis points impact on return on common equity: Yr. 1 - 10.0 basis points; Yr. 2 - 7.5 basis points; and Yr. 3 - 5.0 basis points.~~

~~(c)~~

In general, if actual expenses for municipal infrastructure support (other than company labor) are below the amounts reflected in rates the company will defer the difference for credit to customers, and if the actual expenses are above the amount reflected in rates the company will defer for recovery from customers 80 percent of the difference subject to a maximum deferral of 30 percent of the amount reflected in rates.

~~(d)~~

In addition, amounts reflected in rates relating to the regulatory asset for future income tax and the excess deferred federal income tax liability are subject to reconciliation. The NYSPSC staff is to audit the regulatory asset and the tax liability. Differences resulting from the NYSPSC staff review will be deferred for NYSPSC determination of any amounts to be refunded or collected from customers.customer surcharge.

In April 2016, the Federal Energy Regulatory Commission (FERC) rejected CECONY’s challenge to FERC’s approval of substantially increased charges allocated to CECONY for transmission service provided pursuant to the open access tariff of PJM Interconnection LLC (PJM). CECONY will continue to challenge FERC’s approval of the increased charges that will be incurred over the remaining contract term, and in May 2016 filed an appeal of FERC's decision with the U.S. Court of Appeals. In ~~April 2016, CECONY notified PJM that it will not be exercising its option to continue the service beyond April 2017.~~

~~CECONY - Gas~~

~~In September 2016, CECONY, the staff of the NYSPSC and other parties entered into a Joint Proposal for a CECONY gas rate plan for the three-year period~~ January 2017, ~~through December 2019. The Joint Proposal is subject to NYSPSC approval. The following table contains a summary of the gas rate plan.~~

~~Table of Contents~~



~~Effective period~~		~~January 2017 - December 2019~~
~~Base rate changes~~		~~Yr. 1 - $(5) million(a)~~ ~~Yr. 2 - $92 million~~ ~~Yr. 3 - $90 million~~
~~Amortizations to income of net regulatory (assets) liabilities~~		~~Yr. 1 - $39 million~~ ~~Yr. 2 - $37 million~~ ~~Yr. 3 - $36 million~~
~~Other revenue sources~~		~~Retention of annual revenues from non-firm customers of up to $65 million and 15 percent of any such revenues above $65 million.~~ ~~Potential incentives if performance targets related to gas leak backlog, leak prone pipe and service terminations are met: Yr. 1 - $7 million; Yr. 2 - $8 million; and Yr. 3 - $8 million.~~
~~Revenue decoupling mechanism~~		~~Continuation of reconciliation of actual to authorized gas delivery revenues.~~
~~Recoverable energy costs~~		~~Continuation of current rate recovery of purchased gas costs.~~
~~Negative revenue adjustments~~		~~Potential penalties if performance targets relating to service, safety and other matters are not met: Yr. 1 - $68 million; Yr. 2 - $75 million; and Yr. 3 - $83 million.~~
~~Cost reconciliations~~		Continuation of reconciliation of expenses for pension and other postretirement benefits, variable-rate tax-exempt debt, major storms, property taxes, municipal infrastructure support costs, the impact of new laws and environmental site investigation and remediation to amounts reflected in rates.(b)
~~Net utility plant reconciliations~~		~~Target levels reflected in rates:~~ ~~Gas average net plant target excluding AMI: Yr. 1 - $5,844 million; Yr. 2 - $6,512 million; Yr. 3 - $7,177 million~~ ~~AMI: Yr. 1 - $27 million; Yr. 2 - $57 million; Yr. 3 - $100 million~~
~~Average rate base~~		~~Yr. 1 - $4,841 million~~ ~~Yr. 2 - $5,395 million~~ ~~Yr. 3 - $6,005 million~~
~~Weighted average cost of capital (after-tax)~~		~~Yr. 1 - 6.82 percent~~ ~~Yr. 2 - 6.80 percent~~ ~~Yr. 3 - 6.73 percent~~
~~Authorized return on common equity~~		~~9.00 percent~~
~~Earnings sharing~~		~~Most earnings above an annual earnings threshold of 9.5 percent are to be applied to reduce regulatory assets for environmental remediation and other costs accumulated in the rate year.~~
~~Cost of long-term debt~~		~~Yr. 1 - 4.93 percent~~ ~~Yr. 2 - 4.88 percent~~ ~~Yr. 3 - 4.74 percent~~
~~Common equity ratio~~		~~48 percent~~


~~(a)~~	~~The base rate decrease is offset by a $41 million increase resulting from the December 2016 expiration of a temporary credit under the current rate plan.~~


~~(b)~~	~~See footnotes (b), (c) and (d) to the table under “CECONY-Electric,” above.~~

~~Rockland Electric Company (RECO)~~

~~In April 2016,~~ RECO filed a request with ~~the New Jersey Board of Public Utilities~~FERC for an ~~electric rate~~ increase ~~of $10 million, effective March 2017. The filing reflected a return on common equity of 10.20 percent and a common equity ratio of 49.81 percent. In October 2016, RECO filed an update~~ to its ~~April 2016 request. The company decreased its requested March 2017 rate increase by $4~~annual transmission revenue requirement from $11.8 million to $6$19.7 million. The ~~updated~~ filing reflects a return on common equity of ~~10.20~~10.7 percent and a common equity ratio of ~~50.15~~48 percent. ~~The filing reflects continuation of provisions pursuant to which the company recovers its purchased power and fuel costs from customers.~~

~~Table of Contents~~

Other Regulatory Matters

~~In April 2016,~~At its August 2, 2017 meeting, the NYSPSC approved the September 2015 Joint Proposal among CECONY, the NYSPSC staff and others with respect to the prudence proceeding the NYSPSC commenced in February 2009 and related matters. Pursuant to the Joint Proposal, the company is required to credit $116 million to customers and, for the period 2017 through 2044, to not seek to recover from customers an aggregate $55 million relating to return on its capital expenditures. In addition, the company’s revenues that were made subject to potential refund in this proceeding are no longer subject to refund. At September 30, 2016, the company had a $96 million regulatory liability for the remaining amount to be credited to customers related to this matter.

~~In June 2014, the NYSPSC initiated a proceeding to investigate the practices of qualifying persons to perform plastic fusions on gas facilities.~~ New York State ~~regulations require gas utilities~~Public Service Commission (NYSPSC) voted to ~~qualify and, except~~issue an order in ~~certain circumstances, annually requalify workers that perform fusion to join plastic pipe.~~its proceeding investigating an April 21, 2017 Metropolitan Transportation Authority (MTA) subway power outage. The NYSPSC directed the New York gas utilities to provide information in this proceeding about their compliance with the qualification and requalification requirements and related matters; their procedures for compliance with all gas safety regulations; and their annual chief executive officer certifications regarding these and other procedures. CECONY’s qualification and requalification procedures had not included certain required testing to evaluate specimen fuses. In addition, CECONY and O&R had not timely requalified certain workers that had been qualified under their respective procedures to perform fusion to join plastic pipe. CECONY and O&R have requalified their workers who perform plastic pipe fusions. In May 2015, the NYSPSC, which indicated that ~~it would address enforcement at~~the outage resulted from a ~~later date, ordered CECONY, O&R~~failure of CECONY’s electricity supply to a subway station and ~~other gas utilities~~led to ~~perform risk assessment and remediation plans, additional leakage surveying and reporting; CECONY to hire an independent statistician to develop~~ a ~~risk assessment and remediation plan; and~~loss of the ~~gas utilities to implement certain new plastic fusion requirements. In December 2015, the~~subway signals. The NYSPSC ~~staff informed O&R~~also indicated that the company’s failure to document the rerouting of secondary services to the MTA facility significantly delayed repair. The company ~~had satisfactorily completed its risk assessment and remediation plan. CECONY submitted its risk assessment and remediation plan~~anticipates that, pursuant to the NYSPSC ~~staff in October 2016.~~

~~In November 2015,~~order, it will be required to take certain actions, including performing inspections of electrical equipment that serves the MTA system, analyzing power supply and power quality events affecting the MTA’s signaling services, providing new monitoring and other equipment and filing monthly reports with the NYSPSC ordered CECONY to show cause why the NYSPSC should not commence proceedings to penalize the company for alleged violations of gas safety regulations identified by the NYSPSC staff in its investigation of a March 2014 explosion and fire and to review the prudenceon all of the company's ~~conduct associated with~~activities related to the ~~incident. See "Manhattan Explosion and Fire" in Note H.~~MTA system. In ~~December 2015,~~July 2017, the Chairman of the NYSPSC notified the company ~~responded~~that the April 21, 2017 subway power outage incident will likely result in a prudence review of the reasonableness of CECONY’s actions and conduct. The company does not anticipate that the NYSPSC ~~should not institute the proceedings and disputed the alleged violations.~~

~~At September 30, 2016, CECONY had~~order will commence a ~~$28 million regulatory liability related to the June 2014 plastic fusion proceeding and the November 2015 order to show cause.~~prudence review or address cost recovery. The company is unable to estimate the amount or range of its possible ~~loss~~costs related to ~~these matters in excess of~~ this ~~regulatory liability.~~matter.

CECONY has incurred costs for gas emergency response activities in 2014, 2015 and 2016 in excess of amounts reflected in the company’s gas rate plan. The company has requested NYSPSC authorization to defer as a regulatory asset $29 million and $35 million of such incremental costs incurred in 2014 and 2015, respectively. The company estimates that it will incur $37 million of such incremental costs in 2016. At September 30, 2016, the company had not deferred any such incremental costs.

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Regulatory Assets and Liabilities

Regulatory assets and liabilities at ~~September~~June 30, ~~2016~~2017 and December 31, ~~2015~~2016 were comprised of the following items:


	Con Edison		CECONY		Con Edison		CECONY
(Millions of Dollars)	2016	2015	2016	2015	2017	2016	2017	2016
Regulatory assets
Unrecognized pension and other postretirement costs	$3,369	$3,876	$3,220	$3,697	$2,768	$2,874	$2,612	$2,730
Future income tax	2,429	2,350	2,312	2,232	2,413	2,439	2,302	2,325
Environmental remediation costs	823	904	720	800	807	823	697	711
Revenue taxes	298	253	283	240	327	295	311	280
Deferred derivative losses					77	48	70	42
Pension and other postretirement benefits deferrals					59	38	32	7
Municipal infrastructure support costs					54	44	54	44
Deferred storm costs	89	185	30	110	44	56	—	3
Deferred derivative losses	55	50	49	46
Unamortized loss on reacquired debt	45	50	43	48	40	43	38	41
Indian Point Energy Center program costs					40	50	40	50
Surcharge for New York State assessment	43	44	40		32	28	30	26
O&R property tax reconciliation	39	46	—	—	32	37	—	—
Pension and other postretirement benefits deferrals	34	45	3	16
Brooklyn Queens demand management program					26	29	26	29
Preferred stock redemption					25		25
Net electric deferrals	29	44	29	44	17	24	17	24
Preferred stock redemption	25	26	25	26
Recoverable energy costs					15	42	15	38
Workers’ compensation					14	13	14	13
O&R transition bond charges	16	21	—	—	12	15	—	—
Workers’ compensation	15	11	15	11
Recoverable energy costs	7	16	5	15
Other	228	175	212	157	133	101	121	85
Regulatory assets – noncurrent	7,544	8,096	6,986	7,482	6,935	7,024	6,404	6,473
Deferred derivative losses	94	113	87	103	71	91	65	86
Recoverable energy costs	25	19	24	18	6	9	3	4
Regulatory assets – current	119	132	111	121	77	100	68	90
Total Regulatory Assets	$7,663	$8,228	$7,097	$7,603	$7,012	$7,124	$6,472	$6,563
Regulatory liabilities
Allowance for cost of removal less salvage	$713	$676	$602	$570	$786	$755	$661	$641
Property tax reconciliation	205	303	205	303
Pension and other postretirement benefit deferrals	163	76	130	46	206	193	177	162
Net unbilled revenue deferrals	121	109	121	109	164	145	164	145
Prudence proceeding	96	99	96	99
Property tax reconciliation					148	178	148	178
Unrecognized other postretirement costs	91	28	91	28	88	60	88	60
Settlement of prudence proceeding					80	95	80	95
Carrying charges on repair allowance and bonus depreciation					55	68	54	67
New York State income tax rate change	66	75	64	72	53	61	52	60
Variable-rate tax-exempt debt – cost rate reconciliation					43	55	38	48
Base rate change deferrals	62	128	62	128	31	40	31	40
Variable-rate tax-exempt debt – cost rate reconciliation	60	70	52	60
Carrying charges on repair allowance and bonus depreciation	57	49	56	48
Settlement of gas proceedings					27		27
Earnings sharing - electric, gas and steam	34	80	26	80	22	39	13	28
Net utility plant reconciliations	27	32	27	31	12	16	10	15
Property tax refunds	12	44	12	44
World Trade Center settlement proceeds	5	21	5	21
Other	208	187	176	150	171	173	143	146
Regulatory liabilities – noncurrent	1,920	1,977	1,725	1,789	1,886	1,905	1,686	1,712
Refundable energy costs					29		10	5
Revenue decoupling mechanism	74	45	70	45	29	71	27	61
Refundable energy costs	37	64	18	33
Deferred derivative gains	12	6	8	6	6	28	5	24
Regulatory liabilities – current	123	115	96	84	64	128	42	90
Total Regulatory Liabilities	$2,043	$2,092	$1,821	$1,873	$1,950	$2,033	$1,728	$1,802

~~Table of Contents~~

Note C — Capitalization

In ~~February 2016, a Con Edison Development subsidiary issued $218 million aggregate principal amount of 4.21 percent senior notes, due 2041, secured by the company's Texas Solar 7 solar project.~~

~~In May 2016,~~March 2017, Con Edison issued ~~approximately 10 million common shares resulting in net proceeds, after issuance expenses, of $702 million, and $500~~$400 million aggregate principal amount of 2.00 percent debentures, due ~~2021.~~2020, and prepaid the $400 million variable rate term loan that was to mature in 2018. Also, in ~~May 2016,~~March 2017, a Con Edison Development subsidiary issued ~~$95~~$97 million aggregate principal amount of ~~4.07~~4.45 percent senior notes, due ~~2036,~~ 2042,

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secured by the ~~company's California Holding 3 solar projects.~~company’s Upton County Solar project. In June 2016, Con Edison borrowed $400 million pursuant to a credit agreement with a syndicate of banks. The borrowing matures in 2018 and bears interest at a LIBOR plus margin of 1.00 percent. Also in June 2016,2017, CECONY issued ~~$550~~$500 million aggregate principal amount of ~~3.85~~3.875 percent debentures, due 2046. Also, in June 2016, a Con Edison Solutions subsidiary borrowed $2 million pursuant to a loan agreement with a New Jersey utility. The borrowing matures in 2026, bears interest of 11.18 percent and may be repaid in cash or project Solar Renewable Energy Certificates.2047.

In September 2016, CECONY redeemed at maturity $400 million aggregate principal amount of 5.50 percent debentures. In September 2016, O&R agreed to issue and sell for delivery in December 2016 $75 million aggregate principal amount of 3.88 percent debentures, due 2046. In October 2016, O&R redeemed at maturity $75 million aggregate principal amount of 5.45 percent debentures.

The carrying amounts and fair values of long-term debt at ~~September~~June 30, ~~2016~~2017 and December 31, ~~2015~~2016 were:


(Millions of Dollars)	2016		2015		2017		2016
Long-Term Debt (including current portion)(a)	Carrying Amount	Fair Value	Carrying Amount	Fair Value	Carrying Amount	Fair Value	Carrying Amount	Fair Value
Con Edison	$14,093	$16,325	$12,745	$13,856	$15,340	$17,052	$14,774	$16,093
CECONY	$11,584	$13,564	$11,437	$12,427	$12,570	$14,104	$12,073	$13,268


(a)	Amounts shown are net of unamortized debt expense and unamortized debt discount of $139 million and $116 million for Con Edison and CECONY, respectively, as of June 30, 2017 and $134 million and $113 million for Con Edison and CECONY, respectively, as of December 31, 2016.

Fair values of long-term debt have been estimated primarily using available market information. For Con Edison, ~~$15,689~~$16,416 million and $636 million of the fair value of long-term debt at ~~September~~June 30, ~~2016~~2017 are classified as Level 2 and Level 3, respectively. For CECONY, ~~$12,928~~$13,468 million and $636 million of the fair value of long-term debt at ~~September~~June 30, ~~2016~~2017 are classified as Level 2 and Level 3, respectively (see Note L). The $636 million of long-term debt classified as Level 3 is CECONY’s tax-exempt, auction-rate securities for which the market is highly illiquid and there is a lack of observable inputs.

Note D — Short-Term Borrowing

At ~~September~~June 30, ~~2016,~~2017, Con Edison had ~~$601~~$1,036 million of commercial paper outstanding of which ~~$480~~$750 million was outstanding under CECONY’s program. The weighted average interest rate at ~~September~~June 30, ~~2016~~2017 was ~~0.7~~1.3 percent for both Con Edison and CECONY. At December 31, ~~2015,~~2016, Con Edison had ~~$1,529~~$1,054 million of commercial paper outstanding of which ~~$1,033~~$600 million was outstanding under CECONY’s program. The weighted average interest rate at December 31, ~~2015~~2016 was ~~0.7~~1.0 percent for both Con Edison and CECONY.

At ~~September~~June 30, ~~2016~~2017 and December 31, ~~2015,~~2016, no loans were outstanding under the credit agreement (Credit Agreement). An immaterial amount and $2 million (including $2 million for CECONY) ~~and $15 million~~ of letters of credit were outstanding under the Credit Agreement as of June 30, 2017 and December 31, 2016, respectively.

Note E — Pension Benefits

Total Periodic Benefit Cost

The components of the Companies’ total periodic benefit costs for the three and ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017 and ~~2015~~2016 were as follows:



	For the Three Months Ended June 30,
	Con Edison		CECONY
(Millions of Dollars)	2017	2016	2017	2016
Service cost – including administrative expenses	$66	$69	$61	$65
Interest cost on projected benefit obligation	148	149	139	140
Expected return on plan assets	(243)	(237)	(229)	(225)
Recognition of net actuarial loss	149	149	141	141
Recognition of prior service costs	(4)	1	(5)	—
TOTAL PERIODIC BENEFIT COST	$116	$131	$107	$121
Cost capitalized	(51)	(53)	(48)	(50)
Reconciliation to rate level	(3)	13	(5)	14
Cost charged to operating expenses	$62	$91	$54	$85

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	For the Three Months Ended September 30,				For the Six Months Ended June 30,
	Con Edison		CECONY		Con Edison		CECONY
(Millions of Dollars)	2016	2015	2016	2015	2017	2016	2017	2016
Service cost – including administrative expenses	$69	$74	$65	$70	$132	$138	$123	$129
Interest cost on projected benefit obligation	149	144	140	135	296	298	277	280
Expected return on plan assets	(237)	(222)	(225)	(210)	(484)	(474)	(459)	(449)
Recognition of net actuarial loss	149	194	141	183	297	298	282
Recognition of prior service costs	1	1	—	—	(9)	2	(10)	1
NET PERIODIC BENEFIT COST	$131	$191	$121	$178	$232	$262	$213	$243
Amortization of regulatory asset	—	1	—	1
TOTAL PERIODIC BENEFIT COST	$131	$192	$121	$179
Cost capitalized	(51)	(80)	(49)	(76)	(94)	(106)	(88)	(99)
Reconciliation to rate level	10	(14)	13	(14)	(14)	26	(16)	26
Cost charged to operating expenses	$90	$98	$85	$89	$124	$182	$109	$170

For the Nine Months Ended September 30,
Con Edison CECONY
(Millions of Dollars) 2016
2015 2016
2015
Service cost – including administrative expenses $207 $223 $194 $209
Interest cost on projected benefit obligation 447 431 419 404
Expected return on plan assets (711) (664) (674) (630)
Recognition of net actuarial loss 447 581 424 550
Recognition of prior service costs 3 3 1 1
NET PERIODIC BENEFIT COST $393 $574 $364 $534
Amortization of regulatory asset —
2 —
2
TOTAL PERIODIC BENEFIT COST $393 $576 $364 $536
Cost capitalized (157) (224) (148) (214)
Reconciliation to rate level 35 (56) 39 (56)
Cost charged to operating expenses $271 $296 $255 $266

Expected Contributions

Based on estimates as of ~~September~~June 30, ~~2016,~~2017, the Companies expect to make contributions to the pension plans during ~~2016~~2017 of ~~$508~~$450 million (of which ~~$469~~$412 million is to be contributed by CECONY). The Companies’ policy is to fund the total periodic benefit cost of the qualified plan to the extent tax deductible and to also contribute to the non-qualified supplemental plans. During the first ~~nine~~six months of ~~2016,~~2017, the Companies contributed ~~$504~~$283 million ~~(of~~to the pension plans, nearly all of which ~~$466 million~~ was contributed by ~~CECONY) to the pension plans.~~CECONY. CECONY also contributed ~~$17~~$14 million to its external trust ~~for~~ supplemental plans.

Note F — Other Postretirement Benefits

Total Periodic Benefit Cost

The components of the Companies’ total periodic other postretirement benefit costs for the three and ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017 and ~~2015~~2016 were as follows:


	For the Three Months Ended September 30,				For the Three Months Ended June 30,
	Con Edison		CECONY		Con Edison		CECONY
(Millions of Dollars)	2016	2015	2016	2015	2017	2016	2017	2016
Service cost	$4	$5	$3	$4	$5	$4	$3
Interest cost on accumulated other postretirement benefit obligation	12	13	10	11	11	12	10
Expected return on plan assets	(19)	(20)	(17)		(17)	(19)	(15)	(17)
Recognition of net actuarial loss	1	8	1	7
Recognition of net actuarial loss/(gain)					1	1	(1)	1
Recognition of prior service cost	(5)	(5)	(3)	(4)	(4)	(5)	(3)	(3)
TOTAL PERIODIC OTHER POSTRETIREMENT BENEFIT COST	$(7)	$1	$(6)	$1	$(4)	$(7)	$(6)	$(6)
Cost capitalized	2	(1)	2	(1)	2	2	3	2
Reconciliation to rate level	7	4	6	2	(1)	7	(1)	6
Cost charged to operating expenses	$2	$4	$2	$2	$(3)	$2	$(4)	$2



	For the Six Months Ended June 30,
	Con Edison		CECONY
(Millions of Dollars)	2017	2016	2017	2016
Service cost	$10	$9	$7	$7
Interest cost on accumulated other postretirement benefit obligation	23	24	19	20
Expected return on plan assets	(35)	(38)	(30)	(34)
Recognition of net actuarial loss/(gain)	1	2	(2)	1
Recognition of prior service cost	(8)	(10)	(6)	(7)
TOTAL PERIODIC OTHER POSTRETIREMENT BENEFIT COST	$(9)	$(13)	$(12)	$(13)
Cost capitalized	4	3	5	3
Reconciliation to rate level	(2)	14	(1)	14
Cost charged to operating expenses	$(7)	$4	$(8)	$4

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For the Nine Months Ended September 30,
Con Edison CECONY
(Millions of Dollars) 2016 2015 2016 2015
Service cost $13 $15 $10 $11
Interest cost on accumulated other postretirement benefit obligation 36 38 30 32
Expected return on plan assets (58) (59) (50) (51)
Recognition of net actuarial loss 4 24 2 21
Recognition of prior service cost (15) (15) (11) (10)
TOTAL PERIODIC OTHER POSTRETIREMENT BENEFIT COST $(20) $3 $(19) $3
Cost capitalized 5 (2) 5 (2)
Reconciliation to rate level 20 12 19 5
Cost charged to operating expenses $5 $13 $5 $6

Expected Contributions

~~During the first nine months~~Based on estimates as of ~~2016, the Companies contributed $6~~June 30, 2017, Con Edison expects to make a contribution of $16 million, ~~nearly all~~ of which ~~was~~$8 million is to be contributed by CECONY, to the other postretirement benefit ~~plans.~~plans in 2017. The Companies' policy is to fund the total periodic benefit cost of the plans to the extent tax deductible.

Note G — Environmental Matters

Superfund Sites

Hazardous substances, such as asbestos, polychlorinated biphenyls (PCBs) and coal tar, have been used or generated in the course of operations of the Utilities and their predecessors and are present at sites and in facilities and equipment they currently or previously owned, including sites at which gas was manufactured or stored.

The Federal Comprehensive Environmental Response, Compensation and Liability Act of 1980 and similar state statutes (Superfund) impose joint and several liability, regardless of fault, upon generators of hazardous substances for investigation and remediation costs (which include costs of demolition, removal, disposal, storage, replacement, containment and monitoring) and natural resource damages. Liability under these laws can be material and may be imposed for contamination from past acts, even though such past acts may have been lawful at the time they occurred. The sites at which the Utilities have been asserted to have liability under these laws, including their manufactured gas plant sites and any neighboring areas to which contamination may have migrated, are referred to herein as “Superfund Sites.”

For Superfund Sites where there are other potentially responsible parties and the Utilities are not managing the site investigation and remediation, the accrued liability represents an estimate of the amount the Utilities will need to pay to investigate and, where determinable, discharge their related obligations. For Superfund Sites (including the manufactured gas plant sites) for which one of the Utilities is managing the investigation and remediation, the accrued liability represents an estimate of the company’s share of the undiscounted cost to investigate the sites and, for sites that have been investigated in whole or in part, the cost to remediate the sites, if remediation is necessary and if a reasonable estimate of such cost can be made. Remediation costs are estimated in light of the information available, applicable remediation standards and experience with similar sites.

The accrued liabilities and regulatory assets related to Superfund Sites at ~~September~~June 30, ~~2016~~2017 and December 31, ~~2015~~2016 were as follows:


	Con Edison		CECONY		Con Edison		CECONY
(Millions of Dollars)	2016	2015	2016	2015	2017	2016	2017	2016
Accrued Liabilities:
Manufactured gas plant sites	$664	$679	$574	$579	$659	$664	$565	$567
Other Superfund Sites	88	86	87	86	86	89	86	88
Total	$752	$765	$661	$665	$745	$753	$651	$655
Regulatory assets	$823	$904	$720	$800	$807	$823	$697	$711

Most of the accrued Superfund Site liability relates to sites that have been investigated, in whole or in part. However, for some of the sites, the extent and associated cost of the required remediation has not yet been determined. As investigations progress and information pertaining to the required remediation becomes available,

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the Utilities expect that additional liability may be accrued, the amount of which is not presently determinable but may be material. The Companies are unable to estimate the time period over which the remaining accrued liability will be incurred because, among other things, the required remediation has not been determined for some of the sites. Under their current rate plans, the Utilities are permitted to recover or defer as regulatory assets (for subsequent recovery through rates) ~~certain~~prudently incurred site investigation and remediation costs.

Environmental remediation costs incurred related to Superfund Sites for the three and ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017 and ~~2015~~2016 were as follows:


	For the Three Months Ended September 30,				For the Three Months Ended June 30,
	Con Edison		CECONY		Con Edison		CECONY
(Millions of Dollars)	2016	2015	2016	2015	2017	2016	2017	2016
Remediation costs incurred	$8	$6	$5	$6	$7	$9	$4	$3

For the Nine Months Ended September 30,
Con Edison CECONY
(Millions of Dollars) 2016 2015 2016 2015
Remediation costs incurred $20 $21 $10 $18

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	For the Six Months Ended June 30,
	Con Edison		CECONY
(Millions of Dollars)	2017	2016	2017	2016
Remediation costs incurred	$14	$12	$11	$5

Insurance recoveries received by Con Edison ~~and~~or CECONY ~~received $1 million in insurance recoveries~~were immaterial for the three and ~~nine~~six months ended ~~September~~June 30, ~~2016.~~2017. No insurance recoveries were received by Con Edison or CECONY for the three ~~and nine~~or six months ended ~~September~~June 30, ~~2015.~~2016.

In ~~2015,~~2016, Con Edison and CECONY estimated that for their manufactured gas plant sites (including CECONY’s Astoria site), the aggregate undiscounted potential liability for the investigation and remediation of coal tar and/or other environmental contaminants could range up to $2.8 billion and ~~$2.7~~$2.6 billion, respectively. These estimates were based on the assumption that there is contamination at all sites, including those that have not yet been fully investigated and additional assumptions about the extent of the contamination and the type and extent of the remediation that may be required. Actual experience may be materially different.

Asbestos Proceedings

Suits have been brought in New York State and federal courts against the Utilities and many other defendants, wherein a large number of plaintiffs sought large amounts of compensatory and punitive damages for deaths and injuries allegedly caused by exposure to asbestos at various premises of the Utilities. The suits that have been resolved, which are many, have been resolved without any payment by the Utilities, or for amounts that were not, in the aggregate, material to them. The amounts specified in all the remaining thousands of suits total billions of dollars; however, the Utilities believe that these amounts are greatly exaggerated, based on the disposition of previous claims. At ~~September~~June 30, ~~2016,~~2017, Con Edison and CECONY ~~had~~have accrued their estimated aggregate undiscounted potential liabilities for these suits and additional suits that may be brought over the next 15 years as shown in the following table. ~~The~~These estimates were based upon a combination of modeling, historical data analysis and risk factor assessment. ~~Trial courts~~Courts have begun, and unless otherwise determined ~~by an appellate court~~on appeal may continue, to apply a different ~~standard~~standards for determining liability in asbestos suits than the standard that applied historically. As a result, the Companies currently believe that there is a reasonable possibility of an exposure to loss in excess of the liability accrued for the suits. The Companies are unable to estimate the amount or range of such loss. In addition, certain current and former employees have claimed or are claiming workers’ compensation benefits based on alleged disability from exposure to asbestos. ~~Under its current rate plans,~~ CECONY is permitted to defer as regulatory assets (for subsequent recovery through rates) costs incurred for its asbestos lawsuits and workers’ compensation claims.

The accrued liability for asbestos suits and workers’ compensation proceedings (including those related to asbestos exposure) and the amounts deferred as regulatory assets for the Companies at ~~September~~June 30, ~~2016~~2017 and December 31, ~~2015~~2016 were as follows:



	Con Edison		CECONY
(Millions of Dollars)	2017	2016	2017	2016
Accrued liability – asbestos suits	$8	$8	$7	$7
Regulatory assets – asbestos suits	$8	$8	$7	$7
Accrued liability – workers’ compensation	$89	$88	$85	$83
Regulatory assets – workers’ compensation	$14	$13	$14	$13

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Con Edison CECONY
(Millions of Dollars) 2016 2015 2016 2015
Accrued liability – asbestos suits $8 $8 $7 $7
Regulatory assets – asbestos suits $8 $8 $7 $7
Accrued liability – workers’ compensation $90 $86 $85 $81
Regulatory assets – workers’ compensation $15 $11 $15 $11

Note H — Other Material Contingencies

Manhattan Steam Main Rupture

In July 2007, a CECONY steam main located in midtown Manhattan ruptured. It has been reported that one person died and others were injured as a result of the incident. Several buildings in the area were damaged. Debris from the incident included dirt and mud containing asbestos. The response to the incident required the closing of several buildings and streets for various periods. Approximately ~~sixty~~forty-five suits are pending against the company seeking generally unspecified compensatory and, in some cases, punitive damages, for wrongful death, personal injury, property damage and business interruption. In July 2017, the company reached agreements to resolve most of these suits which, after payment by the company of agreed-upon settlement amounts, are expected to be discontinued. The company has notified its insurers of the incident and believes that the policies in force at the time of the incident will cover the company’s costs to satisfy its liability to others in connection with the suits. In the company’s estimation, there is not a reasonable possibility that an exposure to loss exists for the suits that is materially in excess of the estimated liability accrued. At ~~September~~June 30, ~~2016,~~2017, the company has accrued its estimated liability for the suits of ~~$30~~$18 million and an insurance receivable of ~~$39~~$18 million.

Manhattan Explosion and Fire

On March 12, 2014, two multi-use five-story tall buildings located on Park Avenue between 116^th and 117^th ~~Street~~Streets in Manhattan were destroyed by an explosion and fire. CECONY had delivered gas to the buildings through service lines from a distribution main located below ground on Park Avenue. Eight people died and more than 50 people were injured. Additional buildings were also damaged. The National Transportation Safety Board (NTSB) investigated. The parties to the investigation included the company, the City of New York, the Pipeline and Hazardous Materials Safety Administration and the ~~NYSPSC (which also conducted an investigation).~~NYSPSC. In June 2015, the NTSB issued a final report concerning the incident, its probable cause and safety recommendations. The NTSB determined that the probable cause of the incident was (1) the failure of a defective fusion joint at a service tee (which joined a plastic service line to a plastic distribution main) installed by the company that allowed gas to leak from the distribution main and migrate into a building where it ignited and (2) a breach in a City sewer line that allowed groundwater and soil to flow into the sewer, resulting in a loss of support for the distribution main, which caused it to sag and overstressed the defective fusion joint. The NTSB also made safety recommendations, including recommendations to the company that addressed its procedures for the preparation and examination of plastic fusions, training of its staff on conditions for notifications to the City’s Fire Department and extension of its gas main isolation valve installation program. In February 2017, the NYSPSC approved a settlement agreement with the company related to the NYSPSC's investigations of the incident and the practices of qualifying persons to perform plastic fusions. Pursuant to the agreement, the company will not recover from customers $126 million of costs it incurred for gas emergency response activities in 2014, 2015 and 2016 in excess of the amounts reflected in its gas rate plan and will provide $27 million of future benefits to customers (for which it has accrued a regulatory liability, see Note B). Approximately ~~seventy~~eighty suits are pending against the company seeking generally unspecified damages and, in some cases, punitive damages, for wrongful death, personal injury, property damage and business interruption. The company has notified its insurers of the incident and believes that the policies in force at the time of the incident will cover the company’s costs, in excess of a required retention (the amount of which is not material), to satisfy any liability it may have for damages in connection with the incident. The company is unable to estimate the amount or range of its possible loss for damages related to the incident. At ~~September~~June 30, ~~2016,~~2017, the company had not accrued a liability for damages related to the incident.

Other Contingencies

See ~~“Other~~"Other Regulatory ~~Matters”~~Matters" in Note B and “Uncertain Tax Positions” in Note I.

Guarantees

Con Edison and its subsidiaries enter into various agreements providing financial or performance assurance primarily to third parties on behalf of their subsidiaries. Maximum amounts guaranteed by Con Edison totaled ~~$2,422~~$2,329 million and ~~$2,856~~$2,370 million at ~~September~~June 30, ~~2016~~2017 and December 31, ~~2015,~~2016, respectively.

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A summary, by type and term, of Con Edison’s total guarantees at ~~September~~June 30, ~~2016~~2017 is as follows:


Guarantee Type	0 – 3 years	4 – 10 years	> 10 years		Total	0 – 3 years	4 – 10 years	> 10 years		Total
	(Millions of Dollars)					(Millions of Dollars)
Con Edison Transmission	$618	$430		$—	$1,048	$643	$404		$—	$1,047
Energy transactions	635	57	91		783	497	31	215		743
Renewable electric production projects	445	—	18		463	392	—	19		411
Other	128	—	—		128	128	—	—		128
Total	$1,826	$487	$109		$2,422	$1,660	$435	$234		$2,329

Con Edison Transmission — Con Edison has guaranteed payment by CET Electric of the contributions CET Electric agreed to make to New York Transco LLC (NY Transco). CET Electric acquired a 45.7 percent interest in NY Transco when it was formed in 2014. ~~NY Transco’s transmission projects are expected to be initially developed by CECONY and other New York transmission owners and then transferred to NY Transco.~~ In May 2016, the transmission owners transferred certain projects to NY Transco, ~~as to~~for which CET Electric made its required contributions. ~~The~~NY Transco has proposed other transmission projects in the New York Independent System Operator's competitive bidding process. These other projects ~~that were proposed when NY Transco was formed remain~~are subject to certain authorizations from the NYSPSC, the FERC and, as applicable, other federal, state and local agencies. Guarantee amount shown is for the maximum possible required amount of CET Electric’s contributions for these other projects as calculated based on the assumptions that the projects are completed at 175 percent of their estimated costs and NY Transco does not use any debt financing for the projects. Guarantee term shown is assumed as the selection of the projects and resulting timing of the contributions is not certain. Also included within the table above is a guarantee for $25 million from Con Edison on behalf of CET Gas in relation to a proposed gas transmission project in West Virginia and Virginia. ~~See Note P.~~

Energy Transactions — Con Edison guarantees payments on behalf of ~~its competitive energy businesses~~the Clean Energy Businesses in order to facilitate physical and financial transactions in electricity, gas, pipeline capacity, transportation, oil, renewable energy credits and energy services. To the extent that liabilities exist under the contracts subject to these guarantees, such liabilities are included in Con Edison’s consolidated balance sheet. Guarantee amounts shown above include ~~$123~~$21 million of guarantees ~~or other credit support~~ provided by Con Edison on behalf of Con Edison Solutions that may continue in effect during the period in which Con Edison Solutions provides transition services in connection with the retail electric supply business it sold in September 2016. ~~See Note P.~~ As part of the sale agreement, the purchaser has agreed to pay Con Edison Solutions for draws on such ~~guarantees or other credit support.~~guarantees.

Renewable Electric Production Projects — Con Edison, Con Edison Development, and Con Edison Solutions guarantee payments ~~associated with the investment in solar and wind energy facilities~~ on behalf of their wholly-owned ~~subsidiaries.~~subsidiaries associated with their investment in, or development for others of, solar and wind energy facilities.

Other — Other guarantees include $70 million in guarantees provided by Con Edison to Travelers Insurance Company for indemnity agreements for surety bonds in connection with ~~energy service projects and~~ operation of solar energy facilities and energy service projects of Con Edison ~~Solutions~~Development and Con Edison ~~Development,~~Solutions, respectively. Other guarantees also includes Con Edison's guarantee (subject to a $53 million maximum amount) of certain obligations of Con Edison Solutions under ~~its~~the agreement pursuant to ~~sell~~which it sold its retail electric supply business. ~~See Note P.~~ In addition, Con Edison issued a guarantee estimated at $5 million to the Public Utility Commission of Texas covering obligations of Con Edison Solutions as a retail electric provider. As part of the sale agreement for the retail electric supply business discussed above, the purchaser has agreed to pay Con Edison Solutions for draws on the guarantee to the Public Utility Commission of Texas.

Note I — Income Tax

Con Edison’s income tax expense ~~increased~~decreased to ~~$314~~$102 million for the three months ended ~~September~~June 30, ~~2016~~2017 from ~~$249~~$124 million for the three months ended ~~September~~June 30, ~~2015.~~2016. Con Edison's effective tax rate for the three months ended ~~September~~June 30, ~~2016~~2017 and 2015 was 39 percent and 37 percent, respectively. The increase in Con Edison's effective tax rate is primarily due to higher state income taxes and a decrease in tax benefits for plant-related flow through items, offset in part by higher tax benefits for injuries and damages payments, research and development tax credits and renewable energy tax credits.

~~CECONY’s income tax expense increased to $226 million for the three months ended September 30,~~ 2016 from $222 million for the three months ended September 30, 2015. CECONY's effective tax rate for the three months ended September 30, 2016 and 2015 was 37 percent. The decrease in tax benefits for plant-related flow through items, were more than offset by lower state income taxes and increased tax benefits as a result of higher injuries and damages payments and research and development tax credits.

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Con Edison’s income tax expense increased to $602 million for the nine months ended September 30, 2016 from $548 million for the nine months ended September 30, 2015. Con Edison's effective tax rate for the nine months ended September 30, 2016 and 2015 was 37 percent and 35 percent, respectively. The increase in Con Edison's effective tax rate is primarily due to ~~higher state income taxes and~~ a decrease in tax benefits for plant-related flow through items and higher reserves for injuries and damages, offset in part by ~~higher tax benefits for injuries~~lower state income taxes and ~~damages payments, research and development tax credits and renewable energy tax credits.~~bad debt expense.

CECONY’s income tax expense ~~decreased~~increased to ~~$491~~$91 million for the ~~nine~~three months ended ~~September~~June 30, ~~2016~~2017 from ~~$515~~$84 million for the ~~nine~~three months ended ~~September~~June 30, ~~2015.~~2016. CECONY's effective tax rate for the ~~nine~~three months ended ~~September~~June 30, 2017 and 2016 ~~and 2015~~ was 3639 percent and 3534 percent, respectively. The increase in CECONY's effective tax rate is primarily ~~related~~due to a decrease in tax benefits for plant-related flow through items and higher reserves for injuries and damages, offset in part by lower state income taxes and bad debt expense.

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Con Edison’s income tax expense increased to $330 million for the six months ended June 30, 2017 from $288 million for the six months ended June 30, 2016. Con Edison's effective tax rate for the six months ended June 30, 2017 and 2016 was 37 percent and 35 percent, respectively. The increase in Con Edison's effective tax rate is primarily due to a decrease in tax benefits for plant-related flow through items and higher reserves for injuries and damages, offset in part by lower state income taxes and bad debt expense.

CECONY’s income tax expense increased to $309 million for the six months ended June 30, 2017 from $264 million for the six months ended June 30, 2016. CECONY's effective tax rate for the six months ended June 30, 2017 and 2016 was 39 percent and 36 percent, respectively. The increase in CECONY's effective tax rate is primarily due to a decrease in tax benefits for plant-related flow through items, lower research and development tax ~~credits.~~credits and higher reserve for injuries and damages, offset in part by lower state income taxes and bad debt expense.

In September 2016, Con Edison filed its 2015 federal income tax return, requesting a refund of $19 million of estimated tax payments and, in October 2016, the company received the refund. The company carried back a 2015 net operating loss to 2007, requesting a refund of $16 million of federal income tax and, in October 2016, the company received the refund. Con Edison anticipates a federal consolidated net operating loss for ~~2016,~~2017, primarily due to bonus depreciation. Con Edison expects to carryback a portion of its ~~2016~~2017 net operating loss ~~and~~to recover ~~$32~~$18 million of income tax. ~~General~~The remaining 2017 net operating loss, as well as general business tax credits ~~that became available as a result of the net operating loss carryback, as well as the remaining 2016 net operating loss~~generated in 2017, will be carried forward to future tax years. A deferred tax asset for these tax attribute carryforwards was recorded, and no valuation allowance has been provided, as it is more likely than not that the deferred tax asset will be realized.

Uncertain Tax Positions

At ~~September~~June 30, ~~2016,~~2017, the estimated liability for uncertain tax positions for Con Edison was ~~$37~~$40 million ($521 million for CECONY). Con Edison reasonably expects to resolve approximately ~~$29~~$33 million ($2023 million, net of federal taxes) of its uncertain tax positions within the next twelve months, including $19 million ($13 million, net of federal taxes), which, ~~the entire amount,~~ if recognized, would reduce Con Edison’s effective tax rate. The amount related to CECONY is approximately $5$17 million ($412 million, net of federal taxes), ofincluding $2 million, which, ~~the entire amount,~~ if recognized, would reduce CECONY’s effective tax rate. The total amount of unrecognized tax benefits, if recognized, that would reduce Con Edison’s effective tax rate is ~~$37~~$23 million ($2516 million, net of federal taxes).

The Companies recognize interest on liabilities for uncertain tax positions in interest expense and would recognize penalties, if any, in operating expenses in the Companies’ consolidated income statements. In the three and ~~nine~~six months ended ~~September~~June 30, ~~2016,~~2017, the Companies recognized an immaterial amount of interest expense and no penalties for uncertain tax positions in their consolidated income statements. At ~~September~~June 30, ~~2016~~2017 and December 31, ~~2015,~~2016, the Companies recognized an immaterial amount of accrued interest on their consolidated balance sheets.

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Note J — Financial Information by Business Segment

Con Edison’s principal business segments ~~prior to June 2016 were~~are CECONY’s regulated utility activities, O&R’s regulated utility activities, the Clean Energy Businesses and Con ~~Edison’s competitive energy businesses.~~Edison Transmission. CECONY’s principal business segments are its regulated electric, gas and steam utility activities. In 2016, Con Edison Transmission began investing, through CET Electric and CET Gas, in electric transmission and gas pipeline and storage assets (see Note P). As a result of these investments, in June 2016 Con Edison changed its business segments to add Con Edison Transmission as a separate reportable segment based on management’s reporting and decision-making, including performance evaluation and resource allocation. For comparison purposes, the previously reported financial information by business segments was reclassified to reflect the current business segment presentation.

The financial data for the business segments ~~are~~for the three and six months ended June 30, 2017 and 2016 were as follows:

As of and for the Three Months Ended September 30,

Operating
revenues
Inter-segment
revenues
Depreciation and
amortization
Operating
income
Other income (deductions) Interest charges Income taxes on operating income Total assets Construction expenditures
(Millions of Dollars) 2016 2015 2016 2015 2016 2015 2016 2015 2016 2015 2016 2015 2016 2015 2016 2015 2016 2015
CECONY
Electric $2,557 $2,558 $5 $4 $217 $207 $841 $811 $2 $(2) $117 $111 $275 $260 $30,580 $30,369 $411 $419
Gas 208 213 1 1 41 35 (28) (17) —
(1) 27 24 (24) (17) 7,300 6,687 224 178
Steam 63 58 22 22 20 20 (47) (49) —
—
10 10 (17) (18) 2,556 2,614 24 27
Consolidation adjustments —
—
(28) (27) —
—
—
—
—
—
—
—
—
—
—
—
—
—
Total CECONY $2,828 $2,829
$—

$—
$278 $262 $766 $745 $2 $(3) $154 $145 $234 $225 $40,436 $39,670 $659 $624
O&R
Electric $213 $205
$—

$—
$12 $13 $55 $51 $1 $(4) $6 $6 $20 $17 $1,985 $1,959 $24 $26
Gas 27 24 —
—
5 4 (7) (9) —
(1) 3 3 (4) (5) 799 754 14 12
Total O&R $240 $229
$—

$—
$17 $17 $48 $42 $1 $(5) $9 $9 $16 $12 $2,784 $2,713 $38 $38
Competitive energy businesses $350 $386 $(2) $(2) $11 $6 $125 $43 $27 $17 $7 $2 $67 $21 $2,394 $1,547 $121 $212
Con Edison Transmission —
—
—
—
—
—
(1) —
20 —
3 —
—
—
1,072 2 —
—
Other (a) (1) (1) 2 2 (1) —
2 —
(1) —
5 6 4 2 630 1,039 —
—
Total Con Edison $3,417 $3,443
$—

$—
$305 $285 $940 $830 $49 $9 $178 $162 $321 $260 $47,316 $44,971 $818 $874


~~(a)~~	~~Parent company and consolidation adjustments. Other does not represent a business segment.~~

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	For the Three Months Ended June 30,
	Operating revenues		Inter-segment revenues				Depreciation and amortization		Operating income/(loss)
(Millions of Dollars)	2017	2016	2017		2016		2017	2016	2017	2016
CECONY
Electric	$1,817	$1,892	$4		$4		$229	$215	$330	$371
Gas	388	304	2		1		45	39	83	48
Steam	88	85	18		21		22	21	(26)	(27)
Consolidation adjustments	—	—	(24)		(26)		—	—	—	—
Total CECONY	$2,293	$2,281		$—		$—	$296	$275	$387	$392
O&R
Electric	$148	$144		$—		$—	$13	$13	$14	$14
Gas	47	31	—		—		4	4	5	(1)
Total O&R	$195	$175		$—		$—	$17	$17	$19	$13
Clean Energy Businesses	$146	$338		$—	$3		$18	$10	$18	$109
Con Edison Transmission	—	—	—		—		—	—	(2)	(1)
Other (a)	(1)	—	—		(3)		1	—	1	2
Total Con Edison	$2,633	$2,794		$—		$—	$332	$302	$423	$515


	As of and for the Nine Months Ended September 30,																				For the Six Months Ended June 30,
	Operating revenues		Inter-segment revenues				Depreciation and amortization		Operating income		Other income (deductions)		Interest charges		Income taxes on operating income		Total assets		Construction expenditures		Operating revenues		Inter-segment revenues				Depreciation and amortization		Operating income/(loss)
(Millions of Dollars)	2016	2015	2016		2015		2016	2015	2016	2015	2016	2015	2016	2015	2016	2015	2016	2015	2016	2015	2017	2016	2017		2016		2017	2016	2017	2016
CECONY
Electric	$6,222	$6,416	$13				$645	$610	$1,487	$1,511	$3	$(3)	$342	$333	$412	$401	$30,580	$30,369	$1,133	$1,165	$3,610	$3,665	$8		$9		$458	$428	$622	$645
Gas	1,113	1,177	4				118	105	273	278	(1)		79	71	73	82	7,300	6,687	589	466	1,153	905	3				90	78	374	301
Steam	406	529	65				62	58	39	100	—	—	30	31	18	42	2,556	2,614	74	65	386	343	37		44		43	41	95	87
Consolidation adjustments	—	—	(82)				—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	(48)		(56)		—	—	—	—
Total CECONY	$7,741	$8,122		$—		$—	$825	$773	$1,799	$1,889	$2	$(4)	$451	$435	$503	$525	$40,436	$39,670	$1,796	$1,696	$5,149	$4,913		$—		$—	$591	$547	$1,091	$1,033
O&R
Electric	$497	$523		$—		$—	$37	$38	$86	$85	$1	$(2)	$19	$18	$27	$26	$1,985	$1,959	$70	$72	$289	$284		$—		$—	$25	$24	$27	$32
Gas	133	117	—		—		13		28	—	—	(2)	9		8	(4)	799	754	36	29	144	106	—		—		10	9	44	34
Total O&R	$630	$640		$—		$—	$50	$51	$114	$85	$1	$(4)	$28	$27	$35	$22	$2,784	$2,713	$106	$101	$433	$390		$—		$—	$35	$33	$71	$66
Competitive energy businesses	$998	$1,087	$7		$(5)		$30	$16	$184	$53	$36	$33	$23	$5	$76	$24	$2,394	$1,547	$677	$676
Clean Energy Businesses																					$283	$648		$—	$9		$36	$19	$34	$58
Con Edison Transmission	—	—	—		—		—	—	(1)	—	23	—	4	—	—	—	1,072	2	—	—	—	—	—		—		—	—	(4)	(1)
Other (a)	(1)	(2)	(7)		5		—	—	1		(1)	(2)	11	19	6	3	630	1,039	—	—	(4)	(1)	—		(9)		—	—	1
Total Con Edison	$9,368	$9,847		$—		$—	$905	$840	$2,097	$2,028	$61	$23	$517	$486	$620	$574	$47,316	$44,971	$2,579	$2,473	$5,861	$5,950		$—		$—	$662	$599	$1,193	$1,157


~~(a)~~	~~Parent company and consolidation adjustments. Other does not represent a business segment.~~

(a)Parent company and consolidation adjustments. Other does not represent a business segment.

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Note K — Derivative Instruments and Hedging Activities

Con Edison’s subsidiaries hedge market price fluctuations associated with physical purchases and sales of electricity, natural gas, steam and, to a lesser extent, refined fuels by using derivative instruments including futures, forwards, basis swaps, options, transmission congestion contracts and financial transmission rights contracts. Derivatives are recognized on the consolidated balance sheet at fair value (see Note L), unless an exception is available under the accounting rules for derivatives and hedging. Qualifying derivative contracts that have been designated as normal purchases or normal sales contracts are not reported at fair value under the accounting rules.

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The fair values of the Companies’ commodity derivatives including the offsetting of assets and liabilities on the consolidated balance sheet at ~~September~~June 30, ~~2016~~2017 and December 31, ~~2015~~2016 were:


(Millions of Dollars)	2016				2015				2017				2016
Balance Sheet Location	Gross Amounts of Recognized Assets/(Liabilities)	Gross Amounts Offset	Net Amounts of Assets/ (Liabilities) (a)		Gross Amounts of Recognized Assets/(Liabilities)	Gross Amounts Offset	Net Amounts of Assets/ (Liabilities) (a)		Gross Amounts of Recognized Assets/(Liabilities)	Gross Amounts Offset	Net Amounts of Assets/ (Liabilities) (a)		Gross Amounts of Recognized Assets/(Liabilities)	Gross Amounts Offset	Net Amounts of Assets/ (Liabilities) (a)
Con Edison
Fair value of derivative assets
Current	$75	$(60)	$15	(b)	$59	$(41)	$18	(b)	$93	$(78)	$15	(b)	$81	$(64)	$17	(b)
Current - assets held for sale (c)	—	—	—		51	(50)	1
Noncurrent	58	(57)	1		57	(54)	3		63	(63)	—		49	(43)	6
Noncurrent - assets held for sale (c)	—	—	—		15	(15)	—
Total fair value of derivative assets	$133	$(117)	$16		$182	$(160)	$22		$156	$(141)	$15		$130	$(107)	$23
Fair value of derivative liabilities
Current	$(143)	$73	$(70)		$(144)	$78	$(66)		$(153)	$89	$(64)		$(138)	$61	$(77)
Current - liabilities held for sale (c)	—	—	—		(115)	50	(65)
Noncurrent	(111)	59	(52)		(102)	63	(39)		(136)	62	(74)		(91)	52	(39)	(c)
Noncurrent - liabilities held for sale (c)	—	—	—		(28)	15	(13)
Total fair value of derivative liabilities	$(254)	$132	$(122)		$(389)	$206	$(183)		$(289)	$151	$(138)		$(229)	$113	$(116)
Net fair value derivative assets/(liabilities)	$(121)	$15	$(106)	(b)	$(207)	$46	$(161)	(b)	$(133)	$10	$(123)	(b)	$(99)	$6	$(93)	(b) (c)
CECONY
Fair value of derivative assets
Current	$52	$(46)	$6	(b)	$40	$(32)	$8	(b)	$52	$(48)	$4	(b)	$52	$(45)	$7	(b)
Noncurrent	45	(45)	—		48	(47)	1		53	(53)	—		41	(35)	6
Total fair value of derivative assets	$97	$(91)	$6		$88	$(79)	$9		$105	$(101)	$4		$93	$(80)	$13
Fair value of derivative liabilities
Current	$(122)	$61	$(61)		$(121)	$71	$(50)		$(105)	$56	$(49)		$(111)	$45	$(66)
Noncurrent	(92)	47	(45)		(92)	56	(36)		(119)	53	(66)		(77)	44	(33)
Total fair value of derivative liabilities	$(214)	$108	$(106)		$(213)	$127	$(86)		$(224)	$109	$(115)		$(188)	$89	$(99)
Net fair value derivative assets/(liabilities)	$(117)	$17	$(100)	(b)	$(125)	$48	$(77)	(b)	$(119)	$8	$(111)	(b)	$(95)	$9	$(86)	(b)

(a)

Derivative instruments and collateral were offset on the consolidated balance sheet as applicable under the accounting rules. The Companies enter into master agreements for their commodity derivatives. These agreements typically provide offset in the event of contract termination. In such case, generally the non-defaulting party’s payable will be offset by the defaulting party’s payable. The non-defaulting party will customarily notify the defaulting party within a specific time period and come to an agreement on the early termination amount.

(b)

At ~~September~~June 30, ~~2016~~2017 and December 31, ~~2015,~~2016, margin deposits for Con Edison ($127 million and ~~$26~~$7 million, respectively) and CECONY ($127 million and ~~$26~~$7 million, respectively) were classified as derivative assets on the consolidated balance sheet, but not included in the table. Margin is collateral, typically cash, that the holder of a derivative instrument is required to deposit in order to transact on an exchange and to cover its potential losses with its broker or the exchange.


(c)	~~Amounts represent derivative assets and liabilities included in assets and liabilities held~~Does not include $(1) million for ~~sale on the consolidated balance sheet.~~interest rate swap.

The Utilities generally recover their prudently incurred fuel, purchased power and gas costs, including hedging gains and losses, in accordance with rate provisions approved by the applicable state utility regulators. In accordance with the accounting rules for regulated operations, the Utilities record a regulatory asset or liability to defer recognition of unrealized gains and losses on their electric and gas derivatives. As gains and losses are realized in future periods, they will be recognized as purchased power, gas and fuel costs in the Companies’ consolidated income statements. ~~Con Edison’s competitive energy businesses~~The Clean Energy Businesses record realized and unrealized gains and losses on their derivative contracts in purchased power, gas purchased for resale and non-utility revenue in the

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reporting period in which they occur. Management believes that these derivative instruments represent economic hedges that mitigate exposure to fluctuations in commodity prices.

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The following table presents the realized and unrealized gains or losses on commodity derivatives that have been deferred or recognized in earnings for the three and ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017 and ~~2015:~~2016:


		For the Three Months Ended September 30,									For the Three Months Ended June 30,
		Con Edison				CECONY					Con Edison					CECONY
(Millions of Dollars)	Balance Sheet Location	2016		2015		2016		2015		Balance Sheet Location	2017			2016		2017		2016
Pre-tax gains/(losses) deferred in accordance with accounting rules for regulated operations:	Pre-tax gains/(losses) deferred in accordance with accounting rules for regulated operations:									Pre-tax gains/(losses) deferred in accordance with accounting rules for regulated operations:
Current	Deferred derivative gains	$(1)		$(1)		$(3)		$(1)		Deferred derivative gains	$(21)			$10		$(17)		$9
Noncurrent	Deferred derivative gains	(2)		—		—		—		Deferred derivative gains	—			1		—		—
Total deferred gains/(losses)		$(3)		$(1)		$(3)		$(1)			$(21)			$11		$(17)		$9
Current	Deferred derivative losses	$(19)		$8		$(18)		$8		Deferred derivative losses	$22			$68		$20		$61
Current	Recoverable energy costs	(39)		(53)		(35)		(49)		Recoverable energy costs	(40)			(52)		(39)		(47)
Noncurrent	Deferred derivative losses	(17)		14		(14)		13		Deferred derivative losses	(9)			68		(8)		62
Total deferred gains/(losses)		$(75)		$(31)		$(67)		$(28)			$(27)			$84		$(27)		$76
Net deferred gains/(losses)		$(78)		$(32)		$(70)		$(29)			$(48)			$95		$(44)		$85
	Income Statement Location									Income Statement Location
Pre-tax gain/(loss) recognized in income	Pre-tax gain/(loss) recognized in income									Pre-tax gain/(loss) recognized in income
	Purchased power expense	$(37)	(a)	$(31)	(b)		$—		$—	Purchased power expense		$—		$45	(b)		$—		$—
	Gas purchased for resale	(38)		(26)		—		—		Gas purchased for resale	(51)			(23)		—		—
	Non-utility revenue	(2)	(a)	5	(b)	—		—		Non-utility revenue	(8)		(a)	5	(b)	—		—
Total pre-tax gain/(loss) recognized in income	Total pre-tax gain/(loss) recognized in income	$(77)		$(52)			$—		$—	Total pre-tax gain/(loss) recognized in income	$(59)			$27			$—		$—


(a)	For the three months ended ~~September~~June 30, ~~2016,~~2017, Con Edison recorded an unrealized ~~losses~~pre-tax loss in non-utility operating revenue ($~~2 million) and purchase power expense ($23~~7 million).


(b)	For the three months ended ~~September~~June 30, ~~2015,~~2016, Con Edison recorded an unrealized pre-tax gain in purchased power expense ~~an unrealized pre-tax gain of $12 million.~~($97 million gain).


		For the Nine Months Ended September 30,										For the Six Months Ended June 30,
		Con Edison					CECONY					Con Edison					CECONY
(Millions of Dollars)	Balance Sheet Location	2016		2015			2016		2015		Balance Sheet Location	2017			2016		2017		2016
Pre-tax gains/(losses) deferred in accordance with accounting rules for regulated operations:	Pre-tax gains/(losses) deferred in accordance with accounting rules for regulated operations:										Pre-tax gains/(losses) deferred in accordance with accounting rules for regulated operations:
Current	Deferred derivative gains	$6			$—		$2		$1		Deferred derivative gains	$(22)			$7		$(19)		$5
Noncurrent	Deferred derivative gains	(1)		—			(1)		—		Deferred derivative gains	(3)			1		(3)		(1)
Total deferred gains/(losses)		$5			$—		$1		$1			$(25)			$8		$(22)		$4
Current	Deferred derivative losses	$19		$40			$16		$40		Deferred derivative losses	$20			$38		$21		$33
Current	Recoverable energy costs	(163)		(92)			(148)		(87)		Recoverable energy costs	(85)			(125)		(78)		(113)
Noncurrent	Deferred derivative losses	(5)		(7)			(3)		(5)		Deferred derivative losses	(29)			12		(28)		11
Total deferred gains/(losses)		$(149)		$(59)			$(135)		$(52)			$(94)			$(75)		$(85)		$(69)
Net deferred gains/(losses)		$(144)		$(59)			$(134)		$(51)			$(119)			$(67)		$(107)		$(65)
	Income Statement Location										Income Statement Location
Pre-tax gain/(loss) recognized in income	Pre-tax gain/(loss) recognized in income										Pre-tax gain/(loss) recognized in income
	Purchased power expense	$(106)	(a)	$(60)		(b)		$—		$—	Purchased power expense		$—		$(70)	(b)		$—		$—
	Gas purchased for resale	(72)		(94)			—		—		Gas purchased for resale	(114)			(33)		—		—
	Non-utility revenue	15	(a)	20		(b)	—		—		Non-utility revenue	6		(a)	17	(b)	—		—
Total pre-tax gain/(loss) recognized in income	Total pre-tax gain/(loss) recognized in income	$(163)		$(134)				$—		$—	Total pre-tax gain/(loss) recognized in income	$(108)			$(86)			$—		$—


(a)	For the ~~nine~~six months ended ~~September~~June 30, ~~2016,~~2017, Con Edison recorded an unrealized ~~gains and losses~~pre-tax loss in non-utility operating revenue ($~~3 million loss) and purchase power expense ($11 million gain)~~4 million).


(b)	For the ~~nine~~six months ended ~~September~~June 30, ~~2015,~~2016, Con Edison recorded unrealized pre-tax gains and losses in non-utility operating revenue ($31 million loss) and purchased power expense ($635 million gain).

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The following table presents the hedged volume of Con Edison’s and CECONY’s derivative transactions at ~~September~~June 30, ~~2016:~~2017:


	Electric Energy (MWh) (a)(b)	Capacity (MW) (a)	Natural Gas (Dt) (a)(b)	Refined Fuels (gallons)	Electric Energy (MWh) (a)(b)	Capacity (MW) (a)	Natural Gas (Dt) (a)(b)	Refined Fuels (gallons)
Con Edison	22,797,395	15,472	69,954,738	1,344,000	33,854,855	9,319	99,241,963	1,680,000
CECONY	20,724,225	9,000	70,100,000	1,344,000	31,442,175	4,500	91,970,000	1,680,000


(a)	Volumes are reported net of long and short positions, except natural gas collars where the volumes of long positions are reported.


(b)	Excludes electric congestion and gas basis swap contracts, which are associated with electric and gas contracts and hedged volumes.

The Companies are exposed to credit risk related to transactions entered into primarily for the various energy supply and hedging activities by the Utilities and the ~~competitive energy businesses.~~Clean Energy Businesses. Credit risk relates to the loss that may result from a counterparty’s nonperformance. The Companies use credit policies to manage this risk, including an established credit approval process, monitoring of counterparty limits, netting provisions within agreements, collateral or prepayment arrangements, credit insurance and credit default swaps. The Companies measure credit risk exposure as the replacement cost for open energy commodity and derivative positions plus amounts owed from counterparties for settled transactions. The replacement cost of open positions represents unrealized gains, net of any unrealized losses where the Companies have a legally enforceable right to offset.

At ~~September~~June 30, ~~2016,~~2017, Con Edison and CECONY had ~~$141~~$70 million and ~~$13~~$9 million of credit exposure in connection with energy supply and hedging activities, net of collateral, respectively. Con Edison’s net credit exposure consisted of ~~$77 million with independent system operators, $34~~$23 million with investment-grade counterparties, ~~$20~~$21 million with non-investment grade/non-rated counterparties$13 million with commodity exchange brokers, and ~~$10~~$13 million with ~~non-investment grade/non-rated counterparties.~~independent system operators. CECONY’s net credit exposure consisted of ~~$12~~$7 million with commodity exchange brokers and $1$2 million with investment-grade counterparties.

The collateral requirements associated with, and settlement of, derivative transactions are included in net cash flows from operating activities in the Companies’ consolidated statement of cash flows. Most derivative instrument contracts contain provisions that may require a party to provide collateral on its derivative instruments that are in a net liability position. The amount of collateral to be provided will depend on the fair value of the derivative instruments and the party’s credit ratings.

The following table presents the aggregate fair value of the Companies’ derivative instruments with credit-risk-related contingent features that are in a net liability position, the collateral posted for such positions and the additional collateral that would have been required to be posted had the lowest applicable credit rating been reduced one level and to below investment grade at ~~September~~June 30, ~~2016:~~2017:


(Millions of Dollars)	Con Edison (a)		CECONY (a)		Con Edison (a)		CECONY (a)
Aggregate fair value – net liabilities	$111		$97		$128		$113
Collateral posted	24		23		41		41
Additional collateral (b) (downgrade one level from current ratings)	18		15		16		15
Additional collateral (b) (downgrade to below investment grade from current ratings)	106	(c)	84	(c)	99	(c)	84	(c)

(a)

Non-derivative transactions for the purchase and sale of electricity and gas and qualifying derivative instruments, which have been designated as normal purchases or normal sales, are excluded from the table. These transactions primarily include purchases of electricity from independent system operators. In the event the Utilities and the ~~competitive energy businesses~~Clean Energy Businesses were no longer extended unsecured credit for such purchases, the Companies would be required to post additional collateral of ~~$10~~$12 million at ~~September~~June 30, ~~2016.~~2017. For certain other such non-derivative transactions, the Companies could be required to post collateral under certain circumstances, including in the event counterparties had reasonable grounds for insecurity.

(b)

The Companies measure the collateral requirements by taking into consideration the fair value amounts of derivative instruments that contain credit-risk-related contingent features that are in a net ~~liabilities~~liability position plus amounts owed to counterparties for settled transactions and amounts required by counterparties for minimum financial security. The fair value amounts represent unrealized losses, net of any unrealized gains where the Companies have a legally enforceable right to offset.


(c)	Derivative instruments that are net assets have been excluded from the table. At ~~September~~June 30, ~~2016,~~2017, if Con Edison had been downgraded to below investment grade, it would have been required to post additional collateral for such derivative instruments of $9$14 million.

Interest Rate Swap

In December 2016, the Clean Energy Businesses acquired Coram Wind project which holds an interest rate swap that terminates in June 2024, pursuant to which it pays a fixed-rate of 2.0855 percent and receives a LIBOR-based variable rate. The fair value of this interest rate swap was a liability of $1 million as of June 30, 2017 and December 31, 2016 on Con Edison’s consolidated balance sheet.

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Note L — Fair Value Measurements

The accounting rules for fair value measurements and disclosures define fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date in a principal or most advantageous market. Fair value is a market-based measurement that is determined based on inputs, which refer broadly to assumptions that market participants use in pricing assets or

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liabilities. These inputs can be readily observable, market corroborated, or generally unobservable firm inputs. The Companies often make certain assumptions that market participants would use in pricing the asset or liability, including assumptions about risk, and the risks inherent in the inputs to valuation techniques. The Companies use valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs.

The accounting rules for fair value measurements and disclosures established a fair value hierarchy, which prioritizes the inputs to valuation techniques used to measure fair value in three broad levels. The rules require that assets and liabilities be classified in their entirety based on the level of input that is significant to the fair value measurement. Assessing the significance of a particular input may require judgment considering factors specific to the asset or liability, and may affect the valuation of the asset or liability and their placement within the fair value hierarchy. The Companies classify fair value balances based on the fair value hierarchy defined by the accounting rules for fair value measurements and disclosures as follows:

Level 1 – Consists of assets or liabilities whose value is based on unadjusted quoted prices in active markets at the measurement date. An active market is one in which transactions for assets or liabilities occur with sufficient frequency and volume to provide pricing information on an ongoing basis. This category includes contracts traded on active exchange markets valued using unadjusted prices quoted directly from the exchange.

Level 2 – Consists of assets or liabilities valued using industry standard models and based on prices, other than quoted prices within Level 1, that are either directly or indirectly observable as of the measurement date. The industry standard models consider observable assumptions including time value, volatility factors and current market and contractual prices for the underlying commodities, in addition to other economic measures. This category includes contracts traded on active exchanges or in over-the-counter markets priced with industry standard models.

Level 3 – Consists of assets or liabilities whose fair value is estimated based on internally developed models or methodologies using inputs that are generally less readily observable and supported by little, if any, market activity at the measurement date. Unobservable inputs are developed based on the best available information and subject to cost benefit constraints. This category includes contracts priced using models that are internally developed and contracts placed in illiquid markets. It also includes contracts that expire after the period of time for which quoted prices are available and internal models are used to determine a significant portion of the value.

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Assets and liabilities measured at fair value on a recurring basis as of ~~September~~June 30, ~~2016~~2017 and December 31, ~~2015~~2016 are summarized below.

2016 2015
(Millions of Dollars) Level 1 Level 2 Level 3
Netting
Adjustment (e)
Total Level 1 Level 2 Level 3
Netting
Adjustment (e)
Total
Con Edison
Derivative assets:
Commodity (a)(b)(c) $6 $21 $6 $(5) $28 $2 $25 $13 $7 $47
Commodity held for sale (f) —
—
—
—
—
—
63 1 (63) 1
Other (a)(b)(d) 224 113 —
—
337 185 112 —
—
297
Total assets $230 $134 $6 $(5) $365 $187 $200 $14 $(56) $345
Derivative liabilities:
Commodity (a)(b)(c) $3 $146 $5 $(32) $122 $16 $153 $1 $(65) $105
Commodity held for sale (f) —
—
—
—
—
1 133 7 (63) 78
Total liabilities $3 $146 $5 $(32) $122 $17 $286 $8 $(128) $183
CECONY
Derivative assets:
Commodity (a)(b)(c) $4 $7 $1 $6 $18 $1 $9 $8 $17 $35
Other (a)(b)(d) 200 108 —
—
308 171 105 —
—
276
Total assets $204 $115 $1 $6 $326 $172 $114 $8 $17 $311
Derivative liabilities:
Commodity (a)(b)(c) $2 $126 $1 $(23) $106 $14 $129
$—
$(57) $86

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	2017					2016
(Millions of Dollars)	Level 1	Level 2	Level 3	Netting Adjustment (e)	Total	Level 1	Level 2	Level 3		Netting Adjustment (e)	Total
Con Edison
Derivative assets:
Commodity (a)(b)(c)	$6	$37	$4	$(25)	$22	$14	$33	$7		$(24)	$30
Other (a)(b)(d)	264	116	—	—	380	222	111	—		—	333
Total assets	$270	$153	$4	$(25)	$402	$236	$144	$7		$(24)	$363
Derivative liabilities:
Commodity (a)(b)(c)	$3	$162	$14	$(42)	$137	$4	$144	$6		$(38)	$116
Interest Rate Swap (a)(b)(c)	—	1	—	—	1	—	1	—		—	1
Total liabilities	$3	$163	$14	$(42)	$138	$4	$145	$6		$(38)	$117
CECONY
Derivative assets:
Commodity (a)(b)(c)	$3	$5	$1	$2	$11	$10	$19	$1		$(10)	$20
Other (a)(b)(d)	241	111	—	—	352	200	106	—		—	306
Total assets	$244	$116	$1	$2	$363	$210	$125	$1		$(10)	$326
Derivative liabilities:
Commodity (a)(b)(c)	$1	$120	$7	$(13)	$115	$1	$124		$—	$(26)	$99


(a)	The Companies’ policy is to review the fair value hierarchy and recognize transfers into and transfers out of the levels at the end of each reporting period. There were no transfers between levels 1, 2 and 3 for the ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017 and for the year ended December 31, ~~2015.~~2016.

(b)

Level 2 assets and liabilities include investments held in the deferred compensation plan and/or non-qualified retirement plans, exchange-traded contracts where there is insufficient market liquidity to warrant inclusion in Level 1, certain over-the-counter derivative instruments for electricity, refined products and natural gas. Derivative instruments classified as Level 2 are valued using industry standard models that incorporate corroborated observable inputs; such as pricing services or prices from similar instruments that trade in liquid markets, time value and volatility factors.

(c)

The accounting rules for fair value measurements and disclosures require consideration of the impact of nonperformance risk (including credit risk) from a market participant perspective in the measurement of the fair value of assets and liabilities. At ~~September~~June 30, ~~2016~~2017 and December 31, ~~2015,~~2016, the Companies determined that nonperformance risk would have no material impact on their financial position or results of operations.


(d)	Other assets are comprised of assets such as life insurance contracts within the deferred compensation plan and non-qualified retirement plans.


(e)	Amounts represent the impact of legally-enforceable master netting agreements that allow the Companies to net gain and loss positions and cash collateral held or placed with the same counterparties.


~~(f)~~	~~Amounts represent derivative assets and liabilities included in Assets and Liabilities held for sale on the consolidated balance sheet.~~

The employees in the Companies’ risk management group develop and maintain the Companies’ valuation policies and procedures for, and verify pricing and fair value valuation of, commodity derivatives. Under the Companies’ policies and procedures, multiple independent sources of information are obtained for forward price curves used to value commodity derivatives. Fair value and changes in fair value of commodity derivatives are reported on a monthly basis to the Companies’ risk committees, comprised of officers and employees of the Companies that oversee energy hedging at the Utilities and the ~~competitive energy businesses.~~Clean Energy Businesses. The risk management group reports to the Companies’ Vice President and Treasurer.

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	~~Fair Value of Level 3 at September 30, 2016~~		~~Valuation~~ ~~Techniques~~	~~Unobservable Inputs~~	~~Range~~
	~~(Millions of Dollars)~~		~~Valuation~~ ~~Techniques~~	~~Unobservable Inputs~~	~~Range~~
~~Con Edison – Commodity~~
~~Electricity~~	~~$(1)~~		~~Discounted Cash Flow~~	~~Forward energy prices (a)~~	~~$19.75-$80.00 per MWh~~
	1		~~Discounted Cash Flow~~	~~Forward capacity prices (a)~~	~~$2.68-$9.45 per kW-month~~
~~Transmission Congestion Contracts/Financial Transmission Rights~~	1		~~Discounted Cash Flow~~	~~Discount to adjust auction prices for inter-zonal forward price curves (b)~~	~~52.8%-59.4%~~
				~~Discount/(premium) to adjust auction prices for historical monthly realized settlements (b)~~	~~(44.9)%-58.9%~~
				~~Inter-zonal forward price curves adjusted for historical zonal losses (b)~~	~~$(0.14)-$2.82 per MWh~~
~~Total Con Edison—Commodity~~	$1
~~CECONY—Commodity~~
~~Electricity~~	~~$(1)~~		~~Discounted Cash Flow~~	~~Forward energy prices (a)~~	~~$21.10-$80.00 per MWh~~
~~Transmission Congestion Contracts~~	$1		~~Discounted Cash Flow~~	~~Discount to adjust auction prices for inter-zonal forward price curves (b)~~	~~52.8%-59.4%~~
				~~Discount/(premium) to adjust auction prices for historical monthly realized settlements (b)~~	~~(44.9)%-58.9%~~
~~Total CECONY—Commodity~~		$—



	Fair Value of Level 3 at June 30, 2017	Valuation Techniques	Unobservable Inputs	Range
	(Millions of Dollars)	Valuation Techniques	Unobservable Inputs	Range
Con Edison – Commodity
Electricity	$(11)	Discounted Cash Flow	Forward energy prices (a)	$15.89-$79.00 per MWh
		Discounted Cash Flow	Forward capacity prices (a)	$2.42-$9.75 per kW-month
Transmission Congestion Contracts/Financial Transmission Rights	1	Discounted Cash Flow	Discount to adjust auction prices for inter-zonal forward price curves (b)	50.0%
			Inter-zonal forward price curves adjusted for historical zonal losses (b)	$0.50-$9.30 per MWh
Total Con Edison—Commodity	$(10)
CECONY—Commodity
Electricity	$(7)	Discounted Cash Flow	Forward energy prices (a)	$22.50-$77.25 per MWh
Transmission Congestion Contracts	$1	Discounted Cash Flow	Discount to adjust auction prices for inter-zonal forward price curves (b)	50.0%
Total CECONY—Commodity	$(6)


(a)	Generally, increases/(decreases) in this input in isolation would result in a higher/(lower) fair value measurement.


(b)	Generally, increases/(decreases) in this input in isolation would result in a lower/(higher) fair value measurement.

The table listed below provides a reconciliation of the beginning and ending net balances for assets and liabilities measured at fair value as of ~~September~~June 30, ~~2016~~2017 and ~~2015~~2016 and classified as Level 3 in the fair value hierarchy:

For the Three Months Ended September 30,
Con Edison CECONY
(Millions of Dollars) 2016
2015
2016
2015
Beginning balance as of July 1, $5 $13 $2 $11
Included in earnings (4) (4) —
(1)
Included in regulatory assets and liabilities (5) (1) (3) (1)
Purchases —
1 —
1
Sales (a) 4 —
—
—
Settlements 1 (5) 1 (2)
Ending balance as of September 30, $1 $4
$—
$8

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	For the Three Months Ended June 30,
	Con Edison		CECONY
(Millions of Dollars)	2017	2016	2017	2016
Beginning balance as of April 1,	$3	$(4)	$1	$2
Included in earnings	2	5	1	—
Included in regulatory assets and liabilities	(11)	1	(7)	(1)
Purchases	—	1	—	1
Settlements	(4)	2	(1)	—
Ending balance as of June 30,	$(10)	$5	$(6)	$2


	For the Nine Months Ended September 30,					For the Six Months Ended June 30,
	Con Edison		CECONY			Con Edison		CECONY
(Millions of Dollars)	2016	2015	2016		2015	2017	2016	2017	2016
Beginning balance as of January 1,	$6	$20	$8		$13	$1	$6	$1	$8
Included in earnings	(1)	(18)	(1)		(5)	1	(2)	—	(1)
Included in regulatory assets and liabilities	(11)	(1)	(6)		(1)	(9)	(2)	(7)	(5)
Purchases	2	9	1		5	1	1	1	1
Sales (a)	4	—	—		—
Settlements	1	(6)	(2)		(4)	(4)	2	(1)	(1)
Ending balance as of September 30,	$1	$4		$—	$8
Ending balance as of June 30,						$(10)	$5	$(6)	$2


~~(a)~~	~~Amounts represent derivative instruments novated as part of the assets of Con Edison Solutions’ retail electric supply business which were sold to a subsidiary of Exelon Corporation (see Note P).~~

For the Utilities, realized gains and losses on Level 3 commodity derivative assets and liabilities are reported as part of purchased power, gas and fuel costs. The Utilities generally recover these costs in accordance with rate provisions approved by the applicable state public utilities regulators. Unrealized gains and losses for commodity derivatives are generally deferred on the consolidated balance sheet in accordance with the accounting rules for regulated operations.

For the ~~competitive energy businesses,~~Clean Energy Businesses, realized and unrealized gains and losses on Level 3 commodity derivative assets and liabilities are reported in non-utility revenues (immaterial for both periods) and purchased power costs ($51 million loss and $3$5 million ~~loss)~~gain) on the consolidated income statement for the three months ended ~~September~~June 30, ~~2016~~2017 and ~~2015,~~2016, respectively. Realized and unrealized gains and losses on Level 3 commodity derivative assets and liabilities are reported in non-utility revenues (immaterial for both periods) and purchased power costs ($61 million loss and ~~$12~~$2 million loss) on the consolidated income statement for the ~~nine~~six months ended ~~September~~June 30, ~~2016,~~2017 and ~~2015,~~2016, respectively. The change in fair value relating to Level 3 commodity derivative assets and liabilities held at ~~September~~June 30, ~~2016~~2017 and ~~2015~~2016 is included in non-utility revenues (immaterial for both periods) and purchased power costs ($42 million loss and $3$7 million ~~loss)~~gain) on the consolidated income statement for the three months ended ~~September~~June 30, ~~2016~~2017 and ~~2015,~~2016, respectively. For the ~~nine~~six months ended ~~September~~June 30, ~~2016,~~2017 and ~~2015,~~2016, the change in fair value relating to Level 3

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commodity derivative assets and liabilities is included in non-utility revenues (immaterial for both periods) and purchased power costs ($2 million loss and $8$3 million ~~loss)~~gain) on the consolidated income statement, respectively.

Note M — Variable Interest Entities

Con Edison enters into arrangements including leases, partnerships and electricity purchase agreements, with various entities. As a result of these arrangements, Con Edison retains or may retain a variable interest in these entities.

CECONY ~~had~~has an ongoing long-term electricity purchase agreement with Brooklyn Navy Yard Cogeneration Partners, LP, a ~~variable interest in a non-consolidated~~potential variable interest entity (VIE)~~, Astoria Energy, LLC (Astoria Energy), with which CECONY entered into a~~. In April 2017, CECONY's long-term electricity purchase agreement ~~that expired in April 2016. CECONY has ongoing long-term electricity purchase agreements~~ with ~~the following two potential VIEs:~~ Cogen Technologies Linden Venture, LP, ~~and Brooklyn Navy Yard Cogeneration Partners, LP.~~another potential VIE, expired. In ~~2015,~~2016, requests were made of these ~~two~~ counterparties for information necessary to determine whether the entity was a VIE and whether CECONY is the primary beneficiary; however, the information was not made available. The payments for these contracts constitute CECONY’s maximum exposure to loss with respect to the potential VIEs.

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The following table summarizes the VIEs in which Con Edison Development has entered into as of ~~September~~June 30, ~~2016:~~2017:


Project Name (a)	Generating Capacity (b) (MW AC)	Power Purchase Agreement Term (in Years)	Year of Initial Investment	Location	Maximum Exposure to Loss (Millions of Dollars) (c)	Generating Capacity (b) (MW AC)	Power Purchase Agreement Term (in Years)	Year of Initial Investment	Location	Maximum Exposure to Loss (Millions of Dollars) (c)
Copper Mountain Solar 3	128	20	2014	Nevada	$179	128	20	2014	Nevada	$176
Panoche Valley (d)	120	20	2015	California	274
Mesquite Solar 1	83	20	2013	Arizona	107	83	20	2013	Arizona	102
Copper Mountain Solar 2	75	25	2013	Nevada	84	75	25	2013	Nevada	83
California Solar	55	25	2012	California	70	55	25	2012	California	62
Broken Bow II	38	25	2014	Nebraska	51	38	25	2014	Nebraska	46
Texas Solar 4	32	25	2014	Texas	43	32	25	2014	Texas	47

(a) With the exception of Texas Solar 4, Con Edison’s ownership interest is 50 percent and these projects are accounted for using the equity method of accounting. With the exception of Texas Solar 4, Con Edison is not the primary beneficiary since the power to direct the activities that most significantly impact the economics of the entities are shared equally between Con Edison Development and third parties. Con Edison’s ownership interest in Texas Solar 4 is 80 percent and is consolidated in the financial statements. Con Edison is the primary beneficiary since the power to direct the activities that most significantly impact the economics of Texas Solar 4 is held by Con Edison Development. ~~The maximum exposure for Texas Solar 4 is the net assets of the investment offset by an $8 million noncontrolling interest.~~

(b) Represents Con Edison Development’s ownership interest in the project.

(c) For investments accounted for under the equity method, maximum exposure is equal to the carrying value of the investment on the consolidated balance ~~sheet and any related receivables due from the project.~~sheet. For consolidated investments, such as Texas Solar 4, maximum exposure is equal to the net assets of the project on the consolidated balance sheet less any applicable noncontrolling ~~interest.~~interest ($7 million for Texas Solar 4). Con Edison did not provide any financial or other support during the ~~year~~three and six months ended June 30, 2017 that was not previously contractually required.

~~(d) In October 2016, Con Edison Development acquired the remaining 50 percent ownership interest in the project. See Note P.~~

Note N ~~— Related Party Transactions~~

The Utilities perform work and incur expenses on behalf of NY Transco, a company in which CET Electric has a 45.7 percent equity interest (see Note P). The Utilities bill NY Transco for such work and expenses in accordance with established policies. For the three and nine months ended September 30, 2016, the amounts billed by CECONY to NY Transco were immaterial.

CECONY has storage and wheeling service contracts with Stagecoach Gas Services LLC (Stagecoach), a joint venture formed by a subsidiary of CET Gas and a subsidiary of Crestwood Equity Partners LP (Crestwood) (see Note P). In addition, CECONY is the replacement shipper on one of Crestwood’s firm transportation agreements with Tennessee Gas Pipeline Company LLC. For the three months ended September 30, 2016, the amount of storage and wheeling services received by CECONY from Stagecoach was $8 million. Since the formation of the joint venture in June 2016, the amount of storage and wheeling services received by CECONY from Stagecoach was $10 million.

CECONY has a financial electric capacity contract with Con Edison Energy for the period May 2016 through April 2017. For the three and nine months ended September 30, 2016, Con Edison Energy's realized losses under this contract were $1 million.

At September 30, 2016 Con Edison Development has an outstanding note receivable of $234 million from Panoche Valley, a solar electric production project in which Con Edison Development has an ownership interest of 50 percent (see Note M). In October 2016, Con Edison Development acquired the remaining 50 percent interest in the project (see Note P).

~~Note O~~ — New Financial Accounting Standards

In May 2014, the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board jointly issued a revenue recognition standard that will supersede the revenue recognition requirements within Accounting Standards Codification Topic 605, “Revenue Recognition,” and most industry-specific guidance under the Codification through Accounting Standards Update (ASU) No. 2014-09, “Revenue from Contracts with Customers (Topic 606).” The purpose of the new guidance is to create a consistent framework for revenue recognition. The guidance clarifies how to measure and recognize revenue arising from customer contracts to depict the transfer of goods or services in an amount that reflects the consideration the entity expects to receive. ~~Additionally, in March and April 2016, respectively, the FASB~~Amendments were issued ~~ASU No. 2016-08, “Revenue from Contracts with Customers (Topic 606): Principal Versus Agent Considerations (Reporting Revenue Gross Versus Net)”~~subsequently to clarify ~~how to apply the implementation guidance for principal versus~~ key areas including principal/agent considerations, ~~and ASU No. 2016-10,“Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing”~~

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~~to clarify the guidance pertaining to identifying~~ performance obligations, ~~and~~ licensing, implementation guidance. Furthermore in May 2016, the FASB issued ASU No. 2016-12, “Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients” to clarify assessing collectibility, presentation of sales taxes, noncash consideration, ~~contract modification at transition,~~ and ~~completed contracts at transition.~~contracts. The new standard is effective for reporting periods beginning after December 15, 2017. Early adoption is permitted for reporting periods beginning after December 15, ~~2016. The~~2016, however, the Companies ~~are in the process of evaluating the application and impact of~~plan to adopt the new ~~guidance on the Companies’ financial position, results of operations and liquidity.~~

In January 2016, the FASB issued amendments on certain aspects of recognition, measurement, presentation, and disclosure of financial instruments through ASU No. 2016-01, “Financial Instruments (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities.” The amendments require changes to the accounting for equity investments, the presentation and disclosure requirements for financial liabilities under the fair value option, and the presentation and disclosure requirements for financial instruments. In addition, clarification was provided related to the valuation allowance assessment when recognizing deferred tax assets resulting from unrealized losses on available-for-sale debt securities. For public entities, the amendments are effectivestandard for reporting periods beginning after December 15, 2017. ~~Early adoption is permitted for portions~~

Under the new standard, companies may use either of the ~~standard.~~following transition methods: (i) a full retrospective approach reflecting the application of the standard in each prior reporting period with the option to elect certain practical expedients, or (ii) a modified retrospective approach with the cumulative effect of initially adopting ASU 2014-09 recognized at the date of adoption (which includes additional footnote disclosures). The Companies anticipate using the modified retrospective approach.

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The Companies are currently in the process of evaluating the ~~potential~~ impact of the new ~~guidance~~standard on their various revenue streams. The majority of the Companies’ sales are derived from tariffs to provide electric, gas, and steam service to customers. For such tariffs, the Companies expect that the revenue from contracts with the customer under ASU 2014-09 will be equivalent to the electricity, gas, or steam supplied in that period which is consistent with current practice. Consequently, the Companies do not anticipate that the new standard will materially impact the amount and/or timing of such revenues. The Companies continue to review the potential impacts of other revenue at the Utilities and the Clean Energy Businesses on the ~~Companies’~~Companies' financial position, results of operations and ~~liquidity.~~liquidity as well as the additional disclosures required under the new standard.

In February 2016, the FASB issued amendments on financial reporting of leasing transactions through ASU No. 2016-02, “Leases (Topic 842)." The amendments require lessees to recognize assets and liabilities on the balance sheet and disclose key information about leasing arrangements. Lessees will need to recognize a right-of-use asset and a lease liability for virtually all of their leases (other than leases that meet the definition of a short-term lease). Lessor accounting is similar to the current model, but updated to align with certain changes to the lessee model. For income statement purposes, the pattern of expense recognition will be dependent on whether transactions are designated as operating leases or finance leases. The amendments are effective for reporting periods beginning after December 15, 2018. Early adoption is permitted. The amendments must be adopted using a modified retrospective transition and provide for certain practical expedients. Based on the existing portfolio of leases at implementation, for leases currently classified as operating leases, the Companies expect to recognize on the statements of financial position right-of-use assets and lease liabilities. The Companies are in the process of evaluating the potential impact of the new guidance on the Companies’ ~~financial position,~~ results of operations and liquidity.

In ~~March 2016,~~January 2017, the FASB issued amendments to the guidance for ~~Derivatives and Hedging accounting~~Business Combinations through ASU ~~2016-05, “Derivatives and Hedging~~2017-01, “Business Combinations (Topic ~~815)~~805): ~~Effect~~Clarifying the Definition of ~~Derivative Contract Novations on Existing Hedge Accounting Relationships." The amendments clarify that~~ a change in the counterparty to a derivative instrument that has been designated as a hedging instrument under Topic 815 does not, in and of itself, require discontinuation of the application of hedge accounting.Business.” The amendments in this update are effective for financial statements issued for reporting periods beginning after December 15, 2016. Early adoption is permitted. The application of this guidance is not expected to have a material impact on the Companies’ financial position, results of operations and liquidity.

~~In March 2016, the FASB issued amendments to~~ clarify the ~~guidance for assessing whether contingent call (put) options that can accelerate the payment~~definition of ~~principal on debt instruments are clearly~~a business and closely related to their debt hosts through ASU No. 2016-06, “Derivatives & Hedging (Topic 815): Contingent Put and Call Options in Debt Instruments.” An entity performing the assessment under the amendments is required to assess the embedded call (put) options solely in accordance with the four-step decision sequence. The amendments are effective for financial statements issued for reporting periods beginning after December 15, 2016. Early adoption is permitted. The application of this guidance is not expected to have a material impact on the Companies’ financial position, results of operations and liquidity.

In March 2016, the FASB issued amendments to eliminate the requirement to retroactively adopt the equity method of accounting when a company increases its level of ownership or degree of influence over an investment through ASU No. 2016-07, “Investments-Equity Method and Joint Ventures (Topic 323): Simplifying the Transition to the Equity Method of Accounting.” This amendment requires that an entity that has an available-for-sale equity security that becomes qualified for the equity method of accounting recognize through earnings the unrealized holding gain or loss in Accumulated Other Comprehensive Income at the date the investment qualifies for the equity method. The amendments in this Update are effective for reporting periods beginning after December 15, 2016. The application of this guidance is not expected to have a material impact on the Companies’ financial position, results of operations and liquidity.

In March 2016, the FASB issued amendments to simplify several aspects of the accounting for share-based payment transactions through ASU No. 2016-09, “Compensation - Stock Compensation (Topic 718): Improvements

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to Employee Share-Based Payment Accounting.” The amendments simplify areas such as income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The amendments are effective for reporting periods beginning after December 15, 2016. Early adoption is permitted. The application of this guidance is not expected to have a material impact on the Companies’ financial position, results of operations and liquidity.

~~In May 2016, the FASB issued amendments to the~~provide guidance on ~~revenue recognition and derivatives and hedging through ASU 2016-11, “Revenue Recognition (Topic 605) and Derivatives and Hedging (Topic 815): Rescission~~evaluating whether transactions should be accounted for as acquisitions (or disposals) of SEC Guidance Because of Accounting Standards Updates 2014-09 and 2014-16 Pursuant to Staff Announcements at the March 3, 2016 EITF Meeting (SEC Update).” The amendment rescinds certain SEC guidance superseded by the newly issued revenue recognition and hedging guidance (ASU 2014-09 and 2014-16 respectively). The amendments will be effective upon adoption of the 2014-09 and 2014-16. The Companies are in the process of evaluating the potential impact of the amendments on the Companies’ financial position, results of operations and liquidity.

~~In June 2016, the FASB issued amendments to the guidance for recognition of credit losses for financial~~

instruments through ASU 2016-13, “Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.” The amendment replaces the incurred loss impairment methodology which involved delayed recognition of credit losses. As the updated guidance now requires credit losses to be recognized when expected rather than when incurred, a broader range of reasonable and supportable information must be considered in developing the credit loss estimates. This includes financial instruments that are valued at amortized cost and available for sale. For public entities, the amendments are effective for reporting periods beginning after December 15, 2019. Early adoption is permitted for reporting periods beginning after December 15, 2018. The application of this guidance is not expected to have a material impact on the Companies’ financial position, results of operations and liquidity.

In August 2016, the FASB issued amendments to the guidance for the Statement of Cash Flows through ASU 2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (a consensus of the Emerging Issues Task Force).” The amendment specifies the classification and presentation of certain cash flow items to reduce diversity in practice.assets or businesses. For public entities, the amendments are effective for reporting periods beginning after December 15, 2017. Early adoption is permitted. The application of this guidance is not expected to have a material impact on the Companies’ financial position, results of operations and liquidity.

In ~~October 2016,~~January 2017, the FASB issued amendments to the guidance for ~~Income Taxes~~the subsequent measurement of goodwill through ASU ~~2016-16, “Income Taxes~~2017-04, “Intangibles-Goodwill and Other (Topic ~~740)~~350): ~~Intra-Entity Transfers of Assets Other Than Inventory.~~Simplifying the Test for Goodwill Impairment.” The ~~amendment clarifies~~amendments in this update simplify goodwill impairment testing by eliminating Step 2 of the ~~tax treatment~~goodwill impairment test wherein an entity has to compute the implied fair value of ~~intra-entity transfers~~goodwill by performing procedures to determine the fair value of its assets and liabilities. Under the new guidance, an entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value up to the total amount of goodwill allocated to that reporting unit. For public entities, the amendments are effective for reporting periods beginning after December 15, 2019. Early adoption is permitted. The application of this guidance is not expected to have a material impact on the Companies’ financial position, results of operations and liquidity.

In February 2017, the FASB issued amendments to the guidance for other income through ASU 2017-05, “Other Income-Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20): Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets.” The amendments in this update clarify the scope of assets within Subtopic 610-20 and add guidance for partial sales of nonfinancial assets. The amendments are effective upon the adoption of ASU 2014-09, and therefore will be effective for reporting periods beginning after December 15, 2017. The Company is in the process of evaluating the potential impact of the new guidance on the Company’s financial position, results of operations and liquidity.

In March 2017, the FASB issued amendments to the guidance for retirement benefits through ASU 2017-07, “Compensation-Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost.” The amendments in this update modify the presentation of net benefit cost, where the service component must be disaggregated from the other ~~than inventory.~~components of net benefit cost and be presented in the same line item as current employee compensation costs. The ~~updated~~remaining components of the net benefit cost should be presented outside of income from operations. Additionally, the update allows only the service cost component to be eligible for capitalization. For public entities, the amendments are effective for reporting periods beginning after December 15, 2017. Early adoption is permitted. The Companies are in the process of

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evaluating the potential impact of the new guidance ~~requires~~on the Companies’ financial position, results of operations and liquidity.

In March 2017, the FASB issued amendments to the guidance for debt securities through ASU 2017-08, “Receivables-Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities.” The amendments in this update shorten the amortization period for certain callable debt securities held at a premium. The amendments do not require an accounting change for securities held at a discount; the discount continues to be amortized to maturity. For public entities, ~~recognize~~ the ~~income tax consequences~~amendments are effective for reporting periods beginning after December 15, 2018. Early adoption is permitted. The application of this guidance is not expected to have a material impact on the Companies’ financial position, results of operations and liquidity.

In May 2017, the FASB issued amendments to the guidance for stock compensation through ASU 2017-09, “Compensation-Stock Compensation (Topic 718): Scope of Modification Accounting.” The amendments in this update specify that changes to value, vesting conditions, or classification of an ~~intra-entity transfer~~existing share-based payment award require application of ~~assets other than inventory when the transfer occurs.~~modification accounting in Topic 718. For public entities, the amendments are effective for reporting periods beginning after December 15, 2017. Early adoption is permitted. The application of this guidance is not expected to have a material impact on the Companies’ financial position, results of operations and liquidity.

Note PO — ~~Acquisitions, Investments and~~ Dispositions

~~Acquisitions and Investments~~

~~Texas Solar 7~~Upton 2

In ~~January 2016,~~May 2017, Con Edison Development ~~acquired~~sold Upton 2, a ~~100 percent interest in a company that is the owner of a 106 MW (AC)~~development stage solar electric production project, ~~in Texas (Texas Solar 7)~~ for $227 million; $218 million was recorded as non-utility construction work in progress and the remaining $9 million was recorded as other receivables. At September 30, 2016 net assets of the project are approximately $123 million. The project has been financed, in part, by debt secured by the project (see Note C). Electricity generated by this project is to be purchased by the City of San Antonio pursuant to a long-term power purchase agreement. The project commenced commercial operation in the third quarter of 2016. Con Edison's interest in Texas Solar 7 is consolidated in the financial statements.

~~Mountain Valley Pipeline~~

In January 2016, CET Gas acquired a 12.5 percent equity interest in Mountain Valley Pipeline, LLC (MVP), a company developing a proposed gas transmission project in West Virginia and Virginia. The company's initial contribution to MVP was $18 million. At September 30, 2016, CET Gas' investment in MVP was $41 million. The estimated total project cost is $3,000$11 million to ~~$3,500 million. Subject to FERC approval, MVP is targeting to be fully in-service during 2018. Con Edison is accounting for its equity interest in MVP as an equity method investment.~~

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~~Stagecoach Gas Services~~

In April 2016, a CET Gas subsidiary agreed with a subsidiary of Crestwood to form a joint venture to own, operate and further develop existing natural gas pipeline and storage businesses located in northern Pennsylvania and southern New York. The transaction was substantially completed during June 2016. Crestwood contributed businesses to a new entity, Stagecoach, and the CET Gas subsidiary purchased a 50 percent equity interest in Stagecoach for $945 million (subject to closing adjustments). At September 30, 2016, CET Gas' investment in Stagecoach was $968 million. Con Edison is accounting for its equity interest in Stagecoach as an equity method investment.

~~NY Transco~~

In January 2016, CECONY entered into an agreement to transfer certain electric transmission projects to NY Transco, a company in which CET Electric has a 45.7 percent equity interest. In April 2016, the NYSPSC authorized CECONY, subject to certain conditions, to transfer the projects to NY Transco. In May 2016, CECONY transferred the projects to NY Transco for a purchase price of $122 million and an $8 million payment for easement rights on certain associated property. At September 30, 2016, CET Electric's investment in NY Transco was $53 million. Con Edison is accounting for its equity interest in NY Transco as an equity method investment.

~~Pilesgrove~~

In June 2016, Con Edison Development recorded an $8 million ($5 million, net of taxes) impairment charge on its 50 percent interest in Pilesgrove Solar, LLC (Pilesgrove), which owns an 18 MW (AC) solar electric production project in New Jersey. In August 2016, Con Edison Development acquired the remaining 50 percent interest in Pilesgrove for a purchase price of approximately $16 millionVistra Asset Co. and recorded a ~~bargain purchase~~$1 million gain ~~of $8 million~~on sale ($50.7 million, net of taxes). The impairment charge and bargain purchase gain are included in Investment and other income on Con Edison’s consolidated income statement. Con Edison's interest in Pilesgrove is consolidated in the financial statements subsequent to the August 2016 acquisition. At September 30, 2016, net assets of the project are approximately $48 million, consisting primarily of $45 million recorded as non-utility property and $3 million recorded in current assets.

~~Panoche Valley~~

In ~~October 2016,~~addition, Con Edison Development ~~acquired~~agreed to perform the ~~remaining 50 percent interest in Panoche Holdings, LLC,~~engineering, procurement and construction for the 180 MW (AC) project, which is ~~developing a 240 MW (AC) solar electric production project~~expected to be substantially completed in California, for cash consideration of $37 million, net of applicable purchase price adjustments. Con Edison will consolidate the project on its financial statements as of the date of acquisition. See Note M.2018.

~~Dispositions~~

~~Pike County Light & Power Company (Pike)~~

In October 2015, upon evaluating strategic alternatives, O&R entered into an agreement to sell Pike to Corning Natural Gas Holding Corporation (Corning). In August 2016, the sale was completed. O&R received cash consideration of $15 million for the sale. O&R has agreed to provide transition services to Corning for operations and customer support for a period of up to 18 months subsequent to the sale. In addition, O&R will continue to purchase and sell to Pike electric and gas commodity for three years. Pike has an option to extend the service for up to an additional three years.

At September 30, 2015, O&R recorded an impairment charge of $5 million ($3 million, net of taxes), representing the difference between the carrying amount of Pike’s assets and the estimated sales proceeds. At December 31, 2015, Pike’s total assets and liabilities held for sale were $23 million and $5 million, respectively. There were no amounts outstanding at September 30, 2016.

~~Con Edison Solutions' Retail Electric Supply Business~~

In July 2016, Con Edison Solutions entered into an agreement to sell the assets of its retail electric supply business (including retail contracts, related derivative instruments, information systems, and accounts receivable) to a subsidiary of Exelon Corporation (Exelon). In September 2016, the sale was completed for cash consideration of $235 million, subject to working capital adjustments. The sale resulted in a gain of $104 million ($47 million, net of taxes), inclusive of a $65 million ($42 million, net of taxes) gain on derivative instruments. The tax effect of the sale includes $29 million ($19 million, net of federal tax) of state taxes related to a change in the apportionment of state income taxes. Con Edison Solutions has agreed to provide transition services to the Exelon subsidiary for operations and customer support through the end of 2017 during which period certain guarantees or other credit support provided by Con Edison in connection with the retail electric supply business may continue in effect. See

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~~Note H. At December 31, 2015, Con Edison Solutions' total assets and liabilities held for sale were $134 million and $84 million, respectively. There were no amounts outstanding at September 30, 2016.~~

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Item 2: Management’s Discussion and Analysis of Financial Condition and Results of Operations

This combined management’s discussion and analysis of financial condition and results of operations (MD&A) relates to the consolidated financial statements (the ~~Third~~Second Quarter Financial Statements) included in this report of two separate registrants: Consolidated Edison, Inc. (Con Edison) and Consolidated Edison Company of New York, Inc. (CECONY). As used in this report, the term the “Companies” refers to Con Edison and CECONY. CECONY is a subsidiary of Con Edison and, as such, information in this management’s discussion and analysis about CECONY applies to Con Edison.

This MD&A should be read in conjunction with the ~~Third~~Second Quarter Financial Statements and the notes thereto, the MD&A in Item 7 of the Companies’ combined Annual Report on Form 10-K for the year ended December 31, ~~2015~~2016 (File Nos. 1-14514 and 1-1217, the Form 10-K) and the MD&A in Part 1, Item 2 of the ~~Companies’~~Companies' combined Quarterly ~~Reports~~Report on Form 10-Q for the quarterly ~~periods~~period ended March 31, ~~2016 and June 30, 2016~~2017 (File Nos. 1-14514 and 1-1217).

Information in any item of this report referred to in this discussion and analysis is incorporated by reference herein. The use of terms such as “see” or “refer to” shall be deemed to incorporate by reference into this discussion and analysis the information to which reference is made.

Con Edison, incorporated in New York State in 1997, is a holding company that owns all of the outstanding common stock of CECONY, Orange and Rockland Utilities, Inc. (O&R), ~~the competitive energy businesses~~Con Edison Clean Energy Businesses, Inc. and Con Edison Transmission, Inc. ~~(Con Edison Transmission).~~ As used in this report, the term the “Utilities” refers to CECONY and O&R.

Con Edison’s principal business operations are those of CECONY, O&R, the ~~competitive energy businesses~~Clean Energy Businesses and Con Edison Transmission. CECONY’s principal business operations are its regulated electric, gas and steam delivery businesses. O&R’s principal business operations are its regulated electric and gas delivery businesses. The ~~competitive energy businesses provide energy-related products and services, and~~Clean Energy Businesses develop, own and operate renewable and energy infrastructure ~~projects.~~projects and provide energy-related products and services to wholesale and retail customers. Con Edison Transmission invests in electric transmission facilities and gas pipeline and storage facilities.

Con Edison seeks to provide shareholder value through continued dividend growth, supported by earnings growth in regulated utilities and contracted assets. The company invests to provide reliable, resilient, safe and clean energy critical for New York City’s growing economy. The company is an industry leading owner and operator of contracted, large-scale solar generation in the United States. Con Edison is a responsible neighbor, helping the communities it serves become more sustainable.

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CECONY

Electric

CECONY provides electric service to approximately 3.4 million customers in all of New York City (except a part of Queens) and most of Westchester County, an approximately 660 square mile service area with a population of more than nine million.

~~During the summer of~~CECONY's 2016 ~~electric~~service area peak demand ~~in the company's service area~~ was 12,652 MW, ~~(which occurred on August 11, 2016). At~~including an estimated 4,541 MW for CECONY's full-service customers, 6,114 MW for customers participating in its electric retail choice program and 1,997 MW for NYPA's electric commodity customers and municipal electric agency customers. The company estimates that, under design weather conditions, ~~electric~~the 2017 service area peak demand ~~in the company's service area would have been approximately 13,450~~will be 13,470 MW, ~~in 2016 compared to the company's forecast of 13,650 MW. The company's five-year forecast of average annual growth of the~~including an estimated 4,912 MW for its full-service customers, 6,402 MW for its electric ~~peak demand in its service area at design conditions is approximately 0.2 percent~~retail choice customers and 2,156 MW for ~~2017 to 2021 (the same as its forecast for 2016 to 2020).~~NYPA's customers and municipal electric agency customers.

Gas

CECONY delivers gas to approximately 1.1 million customers in Manhattan, the Bronx, parts of Queens and most of Westchester County.

In May 2017, the company decreased its five-year forecast of average annual growth of the peak gas demand in its service area at design conditions from approximately 2.3 percent (for 2017 to 2021) to 1.6 percent (for 2018 to 2022). The decrease reflects, among other things, that in rolling the forecast forward a year, another year of oil-to-gas conversions has been completed and fewer opportunities to convert remain.

Steam

CECONY operates the largest steam distribution system in the United States by producing and delivering approximately ~~22,000~~20,000 MMlb of steam annually to approximately ~~1,700~~1,650 customers in parts of Manhattan.

~~Collective Bargaining Agreement~~

~~In June 2016, CECONY reached a four-year collective bargaining agreement with its largest union covering approximately 8,000 employees, effective June 26, 2016.~~

O&R

Electric

O&R and its utility subsidiary, Rockland Electric Company (RECO) (together referred to herein as O&R) provide electric service to approximately 0.3 million customers in southeastern New York and in northern New Jersey, an approximately 1,300 square mile service area.

During the summer of 2016, electric peak demand in the company's service area was 1,435 MW (which occurred on July 22, 2016). At design conditions, electric peak demand in the company's service area would have been approximately 1,615 MW in 2016 compared to the company's forecast of 1,632 MW. The company decreased its five-year forecast of average annual growth of the electric peak demand in its service area at design conditions from approximately 0.3 percent (for 2016 to 2020) to (0.1) percent (for 2017 to 2021) primarily due to a forecasted increase in distributed generation (photovoltaic) as well as lower growth in demand from customers.

Gas

O&R delivers gas to over 0.1 million customers in southeastern New York.

~~Sale of Pike County Light & Power Company (Pike)~~

~~In August 2016, O&R sold its Pennsylvania subsidiary, Pike, to Corning Natural Gas Holding Corporation (see Note P to the Third Quarter Financial Statements).~~

~~Competitive~~Clean Energy Businesses

Con Edison ~~pursues competitive energy opportunities through~~Clean Energy Businesses, Inc. has three wholly-owned subsidiaries: Consolidated Edison Development, Inc. (Con Edison Development), Consolidated Edison Energy, Inc. (Con Edison Energy) and Consolidated Edison Solutions, Inc. (Con Edison Solutions). Con Edison ~~Solutions, Con Edison~~Clean Energy ~~and Con Edison Development. These businesses provide energy-related products and services~~Businesses, Inc., together with these subsidiaries (which were formerly referred to ~~wholesale and retail customers, and develop, own and operate renewable and~~as the competitive energy ~~infrastructure projects.~~businesses), are referred to in this report as the Clean Energy Businesses.

~~Sale of the Retail Electric Supply Business~~

In September 2016, Con Edison sold the retail electric supply business of its ~~competitive energy businesses~~Clean Energy Businesses to a subsidiary of Exelon Corporation ~~(see~~for cash consideration of $235 million. In addition, Con Edison received $23 million in cash as a working capital adjustment in February 2017.

In May 2017, Con Edison Development sold a development-stage solar electric production project for $11 million and agreed to perform engineering, procurement and construction for the project. See Note PO to the ~~Third~~Second Quarter Financial ~~Statements).~~Statements.

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Con Edison Transmission

Con Edison Transmission, Inc. invests in electric and gas transmission projects through its wholly-owned subsidiaries, Consolidated Edison Transmission, LLC (CET Electric) and Con Edison Gas Pipeline and Storage, LLC ~~(formerly known as Con Edison Gas Midstream, LLC, CET~~(CET Gas). CET Electric owns a 45.7 percent interest in New York Transco LLC, which ~~was formed in 2014,~~owns and is ~~investing in a company that owns~~proposing to build additional electric transmission assets in New York. CET Gas ~~which was formed in 2016,~~ owns, through ~~a subsidiary,~~subsidiaries, a 50 percent ~~equity~~ interest in a joint venture that owns, operates and will further develop an existing gas pipeline and storage business located in northern Pennsylvania and southern New York and a 71.2 percent interest in Honeoye Storage Corporation which operates a gas storage business in upstate New York. In addition, CET Gas owns a 12.5 percent ~~equity~~ interest in a company developing a proposed gas transmission project in West Virginia and Virginia. ~~See “Con~~Con Edison Transmission,~~” below.~~ Inc., together with CET Electric and CET Gas, are referred to in this report as Con Edison Transmission.

Certain financial data of Con Edison’s businesses are presented below:


	For the Three Months Ended September 30, 2016						For the Nine Months Ended September 30, 2016						At September 30, 2016			For the Three Months Ended June 30, 2017						For the Six Months Ended June 30, 2017						At June 30, 2017
(Millions of Dollars, except percentages)	Operating Revenues			Net Income			Operating Revenues			Net Income			Assets			Operating Revenues			Net Income			Operating Revenues			Net Income			Assets
CECONY	$2,828	83	%	$388	78	%	$7,741	82	%	$859	83	%	$40,436	85	%	$2,293	87	%	$143	82	%	$5,149	88	%	$482	86	%	$41,548	85	%
O&R	240	7		27	5		630	7		55	5		2,784	6		195	7		5	3		433	7		31	5		2,770	6
Total Utilities	3,068	90		415	83		8,371	89		914	88		43,220	91		2,488	94		148	85		5,582	95		513	91		44,318	91
Competitive energy businesses (a)	350	10		78	16		998	11		120	12		2,394	5
Clean Energy Businesses (a)																146	6		21	12		283	5		28	5		2,773	6
Con Edison Transmission	—	—		10	2		—	—		11	1		1,072	2		—	—		9	5		—	—		16	3		1,170	2
Other (b)	(1)	—		(6)	(1	)	(1)	—		(6)	(1	)	630	2		(1)	—		(3)	(2	)	(4)	—		6	1		838	1
Total Con Edison	$3,417	100	%	$497	100	%	$9,368	100	%	$1,039	100	%	$47,316	100	%	$2,633	100	%	$175	100	%	$5,861	100	%	$563	100	%	$49,099	100	%

(a)

Net income from the ~~competitive energy businesses~~Clean Energy Businesses includes for the three and ~~nine~~six months ended ~~September~~June 30, ~~2016 includes $47~~2017 $1 million of net after-tax gain related to the sale of ~~the retail electric supply business, $5 million of net gain related to the acquisition of~~ a development stage solar electric production ~~investment and for the nine months ended September 30, 2016 includes $5 million of net loss related~~project (see Note O to the ~~impairment of a solar electric production investment (see Note P to the Third~~Second Quarter Financial Statements). Also includes for the three and ~~nine~~six months ended ~~September~~June 30, ~~2016 $(15)~~2017 $4 million and $5$3 million ~~respectively,~~ of net after-tax mark-to-market ~~gains/(losses).~~losses, respectively.


(b)	Other includes parent company and consolidation adjustments.

Results of Operations

Net income and earnings per share for the three and ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017 and ~~2015~~2016 were as follows:


	For the Three Months Ended September 30,								For the Nine Months Ended September 30,								For the Three Months Ended June 30,								For the Six Months Ended June 30,
	2016	2015	2016			2015			2016	2015	2016			2015			2017	2016	2017			2016			2017	2016	2017		2016
(Millions of Dollars, except per share amounts)	Net Income		Earnings per Share						Net Income		Earnings per Share						Net Income		Earnings per Share						Net Income		Earnings per Share
CECONY	$388	$375		$1.27			$1.28		$859	$935		$2.87			$3.19		$143	$161		$0.47			$0.54		$482	$472		$1.58		$1.59
O&R ~~(a)~~	27	20	0.09			0.07			55	35	0.18			0.12			5	2	0.01			0.01			31	28	0.10		0.10
Competitive energy businesses (b)	78	37	0.26			0.12			120	55	0.40			0.19
Clean Energy Businesses (a)																	21	72	0.07			0.24			28	42	0.09		0.14
Con Edison Transmission	10	—	0.03			—			11	—	0.04			—			9	1	0.03			—			16	1	0.05		—
Other ~~(c)~~(b)	(6)	(4)	(0.02		)	(0.01		)	(6)	(8)	(0.02		)	(0.03		)	(3)	(4)	(0.01		)	(0.01		)	6	(1)	0.02		—
Con Edison ~~(d)~~(c)	$497	$428		$1.63			$1.46		$1,039	$1,017		$3.47			$3.47		$175	$232		$0.57			$0.78		$563	$542		$1.84		$1.83

(a)

Includes $3$(4) million or ~~$0.01~~$(0.01) a share and $58 million or $0.20 a share of net ~~loss~~after-tax mark-to-market gains/(losses) for the three months ended June 30, 2017 and 2016, respectively, and $(3) million or $(0.01) a share and $20 million or $0.07 a share of net after-tax mark-to-market gains/(losses) for the six months ended June 30, 2017 and 2016, respectively. Substantially all the mark-to-market effects in the 2016 periods related to the retail electric supply business sold in September 2016. Also includes a $1 million or $0.00 a share net after-tax gain on the sale of a solar electric production project for the three and ~~nine~~six months ended ~~September~~June 30, ~~2015 related~~2017 (see Note O to the ~~impairment of certain assets held for sale (see Note P to the Third~~Second Quarter Financial Statements).

~~(b)~~

~~Includes $47 million or $0.15~~ and a ~~share of net gain related to the sale of the retail electric supply business,~~ $5 million or $0.02 a share of net ~~gain related to the acquisition of a solar electric production investment for the three and nine months ended September 30, 2016 and $5 million and or $0.02 a share of net~~after-tax loss related to the impairment of a solar electric production investment for the ~~nine~~three and six months ended ~~September~~June 30, 2016 (see Note P to the Third Quarter Financial Statements). Also includes $(15) million or $(0.05) a share and $7 million or $0.02 a share of net after-tax mark-to-market gains/(losses) for the three months ended September 30, 2016 and 2015, respectively, and $5 million or $0.02 a share and $2 million or $0.01 a share of net after-tax mark-to-market gains for the nine months ended September 30, 2016 and 2015, respectively.2016.


~~(c)~~(b)	Other includes parent company and consolidation adjustments.


~~(d)~~(c)	Earnings per share on a diluted basis were ~~$1.62~~$0.57 a share and ~~$1.45~~$0.77 a share for the three months ended ~~September~~June 30, ~~2016~~2017 and ~~2015,~~2016, respectively, and ~~$3.46~~$1.84 a share and $1.82 a share for the ~~nine~~six months ended ~~September~~June 30, 2017 and 2016, ~~and 2015.~~respectively.

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The Companies’ results of operations for the three and ~~nine~~six months ended ~~September~~June 30, ~~2016,~~2017, as compared with the ~~2015~~2016 periods, reflect changes in the Utilities' rate plans and regulatory charges and ~~in the nine month period,~~ the impact of ~~warmer than normal~~ weather on steam revenues. The new electric rate plan of CECONY includes changes in the timing of recognition of annual revenues between quarters. Other ~~lower~~ operations and maintenance expenses for CECONY reflect lower ~~surcharges~~costs for pensions and other postretirement benefits and lower regulatory assessments and fees that are collected in revenues from customers, ~~at the Utilities. In the nine month period, these expenses also reflect~~offset in part by higher ~~expenses~~costs for ~~emergency response,~~ municipal infrastructure ~~support and stock-based compensation at CECONY. In addition, the Utilities'~~support. The rate plans provide for revenues to cover expected changes in certain operating costs including depreciation, property taxes and other tax matters. The results of operations also include higher electric retail gross profit and income from renewable investments, the gain on sale of retail electric supply business, the gain and impairment related to a solar electric production investment, and the impact of the net mark-to-market effects of the ~~competitive energy businesses.~~Clean Energy Businesses.

Table of Contents

The following table presents the estimated effect on earnings per share and net income for the three and ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017 period as compared with ~~2015 periods,~~2016 period, resulting from these and other major factors:


	Three Months Variation		Nine Months Variation			Three Months Variation		Six Months Variation
(Millions of Dollars, except per share amounts)	Earnings per Share Variation	Net Income Variation	Earnings per Share Variation		Net Income Variation	Earnings per Share Variation	Net Income Variation	Earnings per Share Variation	Net Income Variation
CECONY (a)
Changes in rate plans and regulatory charges(b)	$0.05	$16	$0.14		$40	$(0.04)	$(11)	$0.16	$48
Weather impact on steam revenues	—	1	(0.12)		(36)	—	(1)	0.02	5
Other operations and maintenance expenses	0.05	16	0.07		21
Other operations and maintenance expenses (c)						0.13	38	0.16	48
Depreciation, property taxes and other tax matters(d)	(0.06)	(18)	(0.30)		(88)	(0.12)	(38)	(0.26)	(78)
Other ~~(b)~~(e)	(0.05)	(2)	(0.11)		(13)	(0.04)	(6)	(0.09)	(13)
Total CECONY	(0.01)	13	(0.32)		(76)	(0.07)	(18)	(0.01)	10
O&R (a)
Changes in rate plans and regulatory charges	0.02	5	0.02		7	0.03	7	0.04	11
Other operations and maintenance expenses	0.01	3	0.06		17
Other operations and maintenance expenses (f)						(0.02)	(4)	(0.03)	(7)
Depreciation and property taxes	(0.01)	(3)	(0.03)		(8)	—	—	(0.01)	(2)
Other ~~(c)~~(e)	—	2	0.01		4	(0.01)	—	—	1
Total O&R	0.02	7	0.06		20	—	3	—	3
Competitive energy businesses
Clean Energy Businesses
Operating revenues less energy costs(g)	(0.02)	(7)	0.14		41	(0.15)	(46)	—	(1)
Other operations and maintenance expenses	—	(2)	(0.05)		(16)	(0.02)	(5)	(0.02)	(6)
Gain on sale of retail electric supply business	0.15	47	0.15		47
Other (b)	0.01	3	(0.03)		(7)
Total competitive energy businesses (c)	0.14	41	0.21		65
Con Edison Transmission	0.03	10	0.04		11
Other, including parent company expenses	(0.01)	(2)	0.01		2
Depreciation						(0.02)	(5)	(0.04)	(10)
Net interest expense						—	(2)	(0.01)	(4)
Other (e) (h)						0.02	7	0.02	7
Total Clean Energy Businesses						(0.17)	(51)	(0.05)	(14)
Con Edison Transmission (e) (i)						0.03	8	0.05	15
Other, including parent company expenses (e) (j)						—	1	0.02	7
Total variations	$0.17	$69		$—	$22	$(0.21)	$(57)	$0.01	$21

(a)

Under the revenue decoupling mechanisms in the Utilities’ New York electric and gas rate plans and the weather-normalization clause applicable to their gas businesses, revenues are generally not affected by changes in delivery volumes from levels assumed when rates were approved. In general, the Utilities recover on a current basis the fuel, gas purchased for resale and purchased power costs they incur in supplying energy to their full-service customers. Accordingly, such costs do not generally affect the ~~Companies’~~Companies' results of operations.

(b)

For the three months ended June 30, 2017 as compared to the 2016 period, reflects lower electric net base revenues of $(0.05) a share, resulting from the timing of recognition of annual revenues between quarters under the company's new electric rate plan which reflected decreased assumed delivery volumes that offset increased base rates. For the six months ended June 30, 2017 as compared with the 2016 period, reflects higher electric net base revenues of $0.02 a share, as over the six month period increased base rates offset decreased assumed delivery volumes. Also, for the three and six months ended June 30, 2017 as compared with the 2016 periods, reflects higher gas net base revenues ($0.05 a share and $0.15 a share, respectively) and lower surcharges for assessments and fees that are collected in revenues from customers ($(0.03) a share and $(0.02) a share, respectively). For the six months ended June 30, 2017 as compared with the 2016 period, reflects growth in the number of gas customers of $0.02 a share.

(c)

Reflects lower pension and other postretirement benefits costs of $0.07 a share and $0.15 a share as well as lower regulatory assessments and fees that are collected in revenues from customers of $0.03 a share and $0.02 a share for the three and six months ended June 30, 2017 as compared with the 2016 periods, offset, in part, by higher municipal infrastructure costs of $(0.01) a share and $(0.02) a share for the three and six months ended June 30, 2017 as compared with the 2016 periods.


(d)	Reflects higher depreciation and amortization expense of $(0.04) a share and $(0.09) a share, property taxes of $(0.04) a share and $(0.09) a share, and income taxes of $(0.04) a share and $(0.08) a share for the three and six months ended June 30, 2017 as compared with the 2016 periods.


(e)	Includes the impact of the dilutive effect of Con Edison's stock issuances.


~~(c)~~(f)	~~These variations include~~Reflects higher pension costs of $(0.01) a share and $(0.01) a share for the three and six months ended June 30, 2017 as compared with the 2016 periods. Also, for the six months ended June 30, 2017 as compared with the 2016 period, reflects higher regulatory assessments and fees that are collected from customers of $(0.01) a share.

(g)

Reflects higher revenues from renewable electric production projects, offset by lower revenues from the retail electric supply business which was sold in September 2016.Includes $(0.01) a share and $0.20 a share of net after-tax mark-to-market gains/(losses) for the three months ended June 30, 2017 and 2016, respectively, and $(0.01) a share and $0.07 a share of net after-tax mark-to-market gains/(losses) for the six months ended June 30, 2017 and 2016, respectively. Substantially all the mark-to-market effects in the 2016 periods related to the retail electric supply business sold in September 2016.


(h)	Includes $0.02 a share of net after-tax loss related to the impairment of ~~certain assets held for sale in 2015, the gain and impairment related to~~ a solar electric production investment for the three and ~~net mark-to-market effects shown in notes (a) and (b) in the Results of Operations table above.~~six months ended June 30, 2016.


(i)	Reflects income from equity investments.


(j)	Reflects higher state income tax benefits.

Table of Contents

The Companies’ other operations and maintenance expenses for the three and ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017 and ~~2015~~2016 were as follows:


	For the Three Months Ended September 30,		For the Nine Months Ended September 30,		For the Three Months Ended June 30,		For the Six Months Ended June 30,
(Millions of Dollars)	2016	2015	2016	2015	2017	2016	2017	2016
CECONY
Operations	$381	$383	$1,109	$1,074	$377	$369	$761	$728
Pensions and other postretirement benefits	87	91	261	273	51	87	101	174
Health care and other benefits	44	38	122	116	42	44	82	78
Regulatory fees and assessments (a)	129	153	346	433	102	116	213	226
Other	83	85	267	244	66	85	144	175
Total CECONY	724	750	2,105	2,140	638	701	1,301	1,381
O&R	77	82	220	249	79	73	155	143
Competitive energy businesses	40	37	124	98
Clean Energy Businesses					56	47	94	84
Con Edison Transmission	1	—	1	—	2	1	4	1
Other (b)	(2)	—	(3)	(2)	(2)		(1)	(2)
Total other operations and maintenance expenses	$840	$869	$2,447	$2,485	$773	$820	$1,553	$1,607


(a)	Includes Demand Side Management, System Benefit Charges and Public Service Law 18A assessments which are collected in revenues.


(b)	Includes parent company and consolidation adjustments.

Con Edison’s principal business segments are CECONY’s regulated utility activities, O&R’s regulated utility activities, Con Edison’s competitive energy businesses and Con Edison Transmission. CECONY’s principal business segments are its regulated electric, gas and steam utility activities. A discussion of the results of operations by principal business segment for the three and ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017 and ~~2015~~2016 follows. For additional business segment financial information, see Note J to the ~~Third~~Second Quarter Financial Statements.

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Three Months Ended ~~September~~June 30, ~~2016~~2017 Compared with Three Months Ended ~~September~~June 30, ~~2015~~2016

The Companies’ results of operations in ~~2016~~2017 compared with ~~2015~~2016 were:


	CECONY			O&R			Competitive Energy Businesses			Con Edison Transmission				Other (a)				Con Edison (b)			CECONY			O&R			Clean Energy Businesses			Con Edison Transmission				Other (a)			Con Edison (b)
(Millions of Dollars)	Increases (Decreases) Amount	Increases (Decreases) Percent		Increases (Decreases) Amount	Increases (Decreases) Percent		Increases (Decreases) Amount	Increases (Decreases) Percent		Increases (Decreases) Amount		Increases (Decreases) Percent		Increases (Decreases) Amount		Increases (Decreases) Percent		Increases (Decreases) Amount	Increases (Decreases) Percent		Increases (Decreases) Amount	Increases (Decreases) Percent		Increases (Decreases) Amount	Increases (Decreases) Percent		Increases (Decreases) Amount	Increases (Decreases) Percent		Increases (Decreases) Amount		Increases (Decreases) Percent		Increases (Decreases) Amount	Increases (Decreases) Percent		Increases (Decreases) Amount	Increases (Decreases) Percent
Operating revenues	$(1)	—	%	$11	4.8	%	$(36)	(9.3	)%		$—	—	%		$—	—%		$(26)	(0.8	)%	$12	0.5	%	$20	11.4	%	$(192)	(56.8	)%		$—	—	%	$(1)	—	%	$(161)	(5.8	)%
Purchased power	(31)	(5.9	)	5	7.8		(36)	(13.3	)	—		—		—		—		(62)	(7.2	)	(6)	(1.6	)	1	2.2		(144)	Large		—		—		(1)	—		(150)	(26.9	)
Fuel	(2)	(6.5	)	—	—		—	—		—		—		—		—		(2)	(6.5	)	5	15.2		—	—		—	—		—		—		—	—		5	15.2
Gas purchased for resale	4	13.3		(1)	(11.1	)	14	56.0		—		—		—		—		17	26.6		33	64.7		6	75.0		28	Large		—		—		1	Large		68	84.0
Other operations and maintenance	(26)	(3.5	)	(5)	(6.1	)	3	8.1		1		—		(2)		—		(29)	(3.3	)	(63)	(9.0	)	6	8.2		9	19.1		1		Large		—	—		(47)	(5.7	)
Depreciation and amortization	16	6.1		—	—		5	83.3		—		—		(1)		—		20	7.0		21	7.6		—	—		8	80.0		—		—		1	—		30	9.9
Taxes, other than income taxes	17	3.5		6	40.0		—	—		—		—		1		Large		24	4.8		27	5.9		1	5.3		(1)	(20.0	)	—		—		(1)	Large		26	5.4
Gain on sale of retail electric supply business	—	—		—	—		104	—		—		—		—		—		104	—
Gain on sale of solar electric production project																					—	—		—	—		1	—		—		—		—	—		1	—
Operating income	21	2.8		6	14.3		82	Large		(1)		—		2		—		110	13.3		(5)	(1.3	)	6	46.2		(91)	(83.5	)	(1)		Large		(1)	(50.0	)	(92)	(17.9	)
Other income less deductions	5	Large		6	Large		10	58.8		20		—		(1)		—		40	Large		(1)	(50.0	)	—	—		7	Large		17		Large		—	—		23	Large
Net interest expense	9	6.2		—	—		5	Large		3		—		(1)		(16.7	)	16	9.9		5	3.4		—	—		2	25.0		3		Large		—	—		10	5.9
Income before income tax expense	17	2.8		12	42.9		87	Large		16		—		2		33.3		134	19.8		(11)	(4.5	)	6	Large		(86)	(79.6	)	13		Large		(1)	(50.0	)	(79)	(22.2	)
Income tax expense	4	1.8		5	62.5		46	Large		6		—		4		Large		65	26.1		7	8.3		3	Large		(35)	(97.2	)	5		—		(2)	Large		(22)	(17.7	)
Net income	$13	3.5	%	$7	35.0	%	$41	Large		$10		—	%	$(2)		(50.0	)%	$69	16.1	%	$(18)	(11.2	)%	$3	Large		$(51)	(70.8	)%	$8		Large		$1	25.0	%	$(57)	(24.6	)%


(a)	Includes parent company and consolidation adjustments.


(b)	Represents the consolidated ~~financial~~ results of operations of Con Edison and its businesses.

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CECONY


	For the Three Months Ended September 30, 2016				For the Three Months Ended September 30, 2015					For the Three Months Ended June 30, 2017				For the Three Months Ended June 30, 2016
(Millions of Dollars)	Electric	Gas	Steam	2016 Total	Electric	Gas	Steam	2015 Total	2016-2015 Variation	Electric	Gas	Steam	2017 Total	Electric	Gas	Steam	2016 Total	2017-2016 Variation
Operating revenues	$2,557	$208	$63	$2,828	$2,558	$213	$58	$2,829	$(1)	$1,817	$388	$88	$2,293	$1,892	$304	$85	$2,281	$12
Purchased power	486	—	9	495	519	—	7	526	(31)	358	—	5	363	364	—	5	369	(6)
Fuel	21	—	8	29	24	—	7	31	(2)	27	—	11	38	22	—	11	33	5
Gas purchased for resale	—	34	—	34	—	30	—	30	4	—	84	—	84	—	51	—	51	33
Other operations and maintenance	578	102	44	724	598	106	46	750	(26)	485	107	46	638	552	101	48	701	(63)
Depreciation and amortization	217	41	20	278	207	35	20	262	16	229	45	22	296	215	39	21	275	21
Taxes, other than income taxes	414	59	29	502	399	59	27	485	17	388	69	30	487	368	65	27	460	27
Operating income	$841	$(28)	$(47)	$766	$811	$(17)	$(49)	$745	$21	$330	$83	$(26)	$387	$371	$48	$(27)	$392	$(5)

Electric

CECONY’s results of electric operations for the three months ended ~~September~~June 30, ~~2016~~2017 compared with the ~~2015~~2016 period is as follows:


	For the Three Months Ended			For the Three Months Ended
(Millions of Dollars)	September 30, 2016	September 30, 2015	Variation	June 30, 2017	June 30, 2016	Variation
Operating revenues	$2,557	$2,558	$(1)	$1,817	$1,892	$(75)
Purchased power	486	519	(33)	358	364	(6)
Fuel	21	24	(3)	27	22	5
Other operations and maintenance	578	598	(20)	485	552	(67)
Depreciation and amortization	217	207	10	229	215	14
Taxes, other than income taxes	414	399	15	388	368	20
Electric operating income	$841	$811	$30	$330	$371	$(41)

CECONY’s electric sales and deliveries for the three months ended ~~September~~June 30, ~~2016~~2017 compared with the ~~2015~~2016 period were:


	Millions of kWh Delivered						Revenues in Millions (a)					Millions of kWh Delivered							Revenues in Millions (a)
	For the Three Months Ended						For the Three Months Ended					For the Three Months Ended							For the Three Months Ended
Description	September 30, 2016	September 30, 2015	Variation	Percent Variation			September 30, 2016	September 30, 2015	Variation	Percent Variation		June 30, 2017	June 30, 2016	Variation		Percent Variation			June 30, 2017	June 30, 2016	Variation	Percent Variation
Residential/Religious (b)	3,653	3,577	76	2.1	%		$883	$903	$(20)	(2.2	)%	2,062	2,141	(79	)	(3.7	)%		$546	$549	$(3)	(0.5	)%
Commercial/Industrial	2,749	2,692	57	2.1			551	574	(23)	(4.0	)	2,090	2,180	(90	)	(4.1	)		429	415	14	3.4
Retail choice customers	8,136	7,822	314	4.0			918	888	30	3.4		5,934	6,056	(122	)	(2.0	)		593	601	(8)	(1.3	)
NYPA, Municipal Agency and other sales	2,764	2,731	33	1.2			204	198	6	3.0		2,330	2,377	(47	)	(2.0	)		146	139	7	5.0
Other operating revenues (c)	—	—	—	—			1	(5)	6	Large		—	—	—		—			103	188	(85)	(45.2	)
Total	17,302	16,822	480	2.9	%	(d)	$2,557	$2,558	$(1)	—	%	12,416	12,754	(338	)	(2.7	%)	(d)	$1,817	$1,892	$(75)	(4.0	%)


(a)	Revenues from electric sales are subject to a revenue decoupling mechanism, as a result of which delivery revenues generally are not affected by changes in delivery volumes from levels assumed when rates were approved.


(b)	“Residential/Religious” generally includes single-family dwellings, individual apartments in multi-family dwellings, religious organizations and certain other not-for-profit organizations.


(c)	Other electric operating revenues generally reflect changes in regulatory assets and liabilities in accordance with the revenue decoupling mechanism and other provisions of the company’s rate plans.


(d)	After adjusting for variations, ~~principally~~primarily weather and billing days, electric delivery volumes in CECONY’s service area ~~increased 1.0~~decreased 0.9 percent in the three months ended ~~September~~June 30, ~~2016~~2017 compared with the ~~2015~~2016 period.

5047

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Operating revenues decreased $1$75 million in the three months ended ~~September~~June 30, ~~2016~~2017 compared with the ~~2015~~2016 period due primarily to lower revenues from the electric rate plan ($55 million) and lower purchased power ~~costs ($33 million) and fuel~~ expenses ($36 million), offset in part by higher fuel expenses ($5 million). The lower revenues ~~from~~included the timing of recognition of annual revenues between quarters under the new electric rate plan ($3523 million) and the decline in surcharges for assessments and fees that were collected in revenues from customers ($15 million).

Purchased power expenses decreased ~~$33~~$6 million in the three months ended ~~September~~June 30, ~~2016~~2017 compared with the ~~2015~~2016 period due to lower ~~unit costs~~purchased volumes ($399 million), offset by higher ~~purchased volumes~~unit costs ($63 million).

Fuel expenses ~~decreased $3~~increased $5 million in the three months ended ~~September~~June 30, ~~2016~~2017 compared with the ~~2015~~2016 period due to ~~lower~~higher purchased volumes from the company's electric generating facilities ($3 million) and higher unit ~~costs.~~costs ($2 million).

Other operations and maintenance expenses decreased ~~$20~~$67 million in the three months ended ~~September~~June 30, ~~2016~~2017 compared with the ~~2015~~2016 period due primarily to ~~a decrease in the~~lower pension and other post employment benefits costs ($38 million), surcharges for assessments and fees that are collected in revenues from ~~customers.~~customers ($15 million) and uncollectible expense ($6 million).

Depreciation and amortization increased ~~$10~~$14 million in the three months ended ~~September~~June 30, ~~2016~~2017 compared with the ~~2015~~2016 period due primarily to higher electric utility plant balances.

Taxes, other than income taxes increased ~~$15~~$20 million in the three months ended ~~September~~June 30, ~~2016~~2017 compared with the ~~2015~~2016 period ~~principally~~ due primarily to higher property taxes ($1316 million) and the absence in 2017 of a favorable state ~~and local taxes~~audit settlement in 2016 ($25 million).

Gas

CECONY’s results of gas operations for the three months ended ~~September~~June 30, ~~2016~~2017 compared with the ~~2015~~2016 period is as follows:


	For the Three Months Ended			For the Three Months Ended
(Millions of Dollars)	September 30, 2016	September 30, 2015	Variation	June 30, 2017	June 30, 2016	Variation
Operating revenues	$208	$213	$(5)	$388	$304	$84
Gas purchased for resale	34	30	4	84	51	33
Other operations and maintenance	102	106	(4)	107	101	6
Depreciation and amortization	41	35	6	45	39	6
Taxes, other than income taxes	59		—	69	65	4
Gas operating income	$(28)	$(17)	$(11)	$83	$48	$35

CECONY’s gas sales and deliveries, excluding off-system sales, for the three months ended ~~September~~June 30, ~~2016~~2017 compared with the ~~2015~~2016 period were:

Table of Contents


	Thousands of Dt Delivered							Revenues in Millions (a)					Thousands of Dt Delivered							Revenues in Millions (a)
	For the Three Months Ended							For the Three Months Ended					For the Three Months Ended							For the Three Months Ended
Description	September 30, 2016	September 30, 2015	Variation		Percent Variation			September 30, 2016	September 30, 2015	Variation	Percent Variation		June 30, 2017	June 30, 2016	Variation		Percent Variation			June 30, 2017	June 30, 2016	Variation	Percent Variation
Residential	4,335	4,118	217		5.3	%		$88	$83	$5	6.0	%	10,303	9,692	611		6.3	%		$171	$140	$31	22.1	%
General	3,963	3,226	737		22.8			41	35	6	17.1		6,503	6,014	489		8.1			74	56	18	32.1
Firm transportation	8,305	8,185	120		1.5			53	58	(5)	(8.6	)	14,771	14,409	362		2.5			102	88	14	15.9
Total firm sales and transportation	16,603	15,529	1,074		6.9		(b)	182	176	6	3.4		31,577	30,115	1,462		4.9		(b)	347	284	63	22.2
Interruptible sales (c)	1,664	1,772	(108	)	(6.1	)		4	6	(2)	(33.3	)	2,109	1,815	294		16.2			9	5	4	80.0
NYPA	12,800	14,023	(1,223	)	(8.7	)		1	1	—	—		10,493	11,062	(569	)	(5.1	)		1	1	—	—
Generation plants	35,745	30,610	5,135		16.8			7	7	—	—		14,476	22,879	(8,403	)	(36.7	)		6	6	—	—
Other	4,975	4,512	463		10.3			6	6	—	—		4,073	4,682	(609	)	(13.0	)		7	8	(1)	(12.5	)
Other operating revenues (d)	—	—	—		—			8	17	(9)	(52.9	)	—	—	—		—			18	—	18	—
Total	71,787	66,446	5,341		8.0	%		$208	$213	$(5)	(2.3	)%	62,728	70,553	(7,825	)	(11.1	%)		$388	$304	$84	27.6	%


(a)	Revenues from gas sales are subject to a weather normalization clause and a revenue decoupling mechanism, as a result of which delivery revenues are generally not affected by changes in delivery volumes from levels assumed when rates were approved.

~~Table of Contents~~

(b)

After adjusting for variations, ~~principally~~primarily billing days, firm gas sales and transportation volumes in the company’s service area increased ~~7.8~~2.2 percent in the three months ended ~~September~~June 30, ~~2016~~2017 compared with the ~~2015~~2016 period, reflecting primarily increased volumes attributable to ~~additional customers that have converted from oil-to-gas as heating fuel for their buildings.~~the growth in the number of gas customers.


(c)	Includes ~~915~~1,217 thousands and ~~765~~915 thousands of Dt for the ~~2016~~2017 and ~~2015~~2016 periods, respectively, which are also reflected in firm transportation and other.


(d)	Other gas operating revenues generally reflect changes in regulatory assets and liabilities in accordance with the company’s rate plans.

Operating revenues ~~decreased $5~~increased $84 million in the three months ended ~~September~~June 30, ~~2016~~2017 compared with the ~~2015~~2016 period due primarily to ~~changes~~higher revenues from the gas rate plan and growth in ~~regulatory charges~~the number of customers ($1235 million)~~, offset in part by~~ and higher gas purchased for resale expense ($433 million).

Gas purchased for resale increased $4$33 million in the three months ended ~~September~~June 30, ~~2016~~2017 compared with the ~~2015~~2016 period due to higher unit costs ($742 million), offset by lower ~~sendout~~purchased volumes ($39 million).

Other operations and maintenance expenses ~~decreased $4~~increased $6 million in the three months ended ~~September~~June 30, ~~2016~~2017 compared with the ~~2015~~2016 period due primarily to ~~a decrease in the surcharges for assessments~~higher pension and ~~fees that are collected in revenues from customers~~other post employment benefits costs ($24 million) and ~~lower stock-based compensation~~ costs for maintenance of gas mains ($21 million).

Depreciation and amortization increased $6 million in the three months ended ~~September~~June 30, ~~2016~~2017 compared with the ~~2015~~2016 period due primarily to higher gas utility plant balances.

Taxes, other than income taxes increased $4 million in the three months ended June 30, 2017 compared with the 2016 period due primarily to higher property taxes ($3 million) and payroll taxes ($1 million).

Steam

CECONY’s results of steam operations for the three months ended ~~September~~June 30, ~~2016~~2017 compared with the ~~2015~~2016 period is as follows:


	For the Three Months Ended			For the Three Months Ended
(Millions of Dollars)	September 30, 2016	September 30, 2015	Variation	June 30, 2017	June 30, 2016	Variation
Operating revenues	$63	$58	$5	$88	$85	$3
Purchased power	9	7	2	5		—
Fuel	8	7	1	11		—
Other operations and maintenance	44	46	(2)	46	48	(2)
Depreciation and amortization	20		—	22	21	1
Taxes, other than income taxes	29	27	2	30	27	3
Steam operating income	$(47)	$(49)	$2	$(26)	$(27)	$1

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CECONY’s steam sales and deliveries for the three months ended ~~September~~June 30, ~~2016~~2017 compared with the ~~2015~~2016 period were:


	Millions of Pounds Delivered							Revenues in Millions						Millions of Pounds Delivered							Revenues in Millions
	For the Three Months Ended							For the Three Months Ended						For the Three Months Ended							For the Three Months Ended
Description	September 30, 2016	September 30, 2015	Variation		Percent Variation			September 30, 2016	September 30, 2015	Variation		Percent Variation		June 30, 2017	June 30, 2016	Variation		Percent Variation			June 30, 2017	June 30, 2016	Variation		Percent Variation
General	10	19	(9	)	(47.4	)%		$2			$—	—	%	58	68	(10	)	(14.7	)%		$4			$—	—	%
Apartment house	776	816	(40	)	(4.9	)		15	16	(1)		(6.3	)	1,032	1,094	(62	)	(5.7	)		26		—		—
Annual power	2,950	2,961	(11	)	(0.4	)		49	46	3		6.5		2,335	2,511	(176	)	(7.0	)		61	62	(1)		(1.6	)
Other operating revenues (a)	—	—	—		—			(3)	(6)	3		50.0		—	—	—		—			(3)	(7)	4		(57.1	)
Total	3,736	3,796	(60	)	(1.6	)%	(b)	$63	$58	$5		8.6	%	3,425	3,673	(248	)	(6.8	)%	(b)	$88	$85	$3		3.5	%


(a)	Other steam operating revenues generally reflect changes in regulatory assets and liabilities in accordance with the company’s rate plan.


(b)	After adjusting for variations, ~~principally~~primarily weather and billing days, steam sales and deliveries decreased ~~3.4~~2.6 percent in the three months ended ~~September~~June 30, ~~2016~~2017 compared with the ~~2015~~2016 period.

Operating revenues increased $5$3 million in the three months ended ~~September~~June 30, ~~2016~~2017 compared with the ~~2015~~2016 period due primarily to higher revenues from the steam rate ~~plan ($3 million), purchased power costs ($2 million) and fuel expenses ($1 million).~~

~~Purchased power~~ ~~expenses increased $2 million in the three months ended September 30, 2016 compared with the 2015 period due to higher unit costs.~~

~~Table of Contents~~

~~Fuel~~ ~~expenses increased $1 million in the three months ended September 30, 2016 compared with the 2015 period due to higher unit costs.~~plan.

Other operations and maintenance expenses decreased $2 million in the three months ended ~~September~~June 30, ~~2016~~2017 compared with the ~~2015~~2016 period due primarily to lower ~~stock-based compensation~~municipal infrastructure support costs.

Depreciation and amortization increased $1 million in the three months ended June 30, 2017 compared with the 2016 period due primarily to higher steam utility plant balances.

Taxes, other than income taxes increased $2$3 million in the three months ended ~~September~~June 30, ~~2016~~2017 compared with the ~~2015~~2016 period ~~principally~~ due primarily to higher property taxes.

Other Income (Deductions)

Other income (deductions) decreased $1 million in the three months ended June 30, 2017 compared with the 2016 period due primarily to an increase in other income deductions ($3 million), offset by an increase in investment and other income ($2 million).

Net Interest Expense

Net interest expense increased $9$5 million in the three months ended ~~September~~June 30, ~~2016~~2017 compared with the ~~2015~~2016 period due primarily to higher long-term debt balances in the ~~2016~~2017 period.

Income Tax Expense

Income taxes increased $4$7 million in the three months ended ~~September~~June 30, ~~2016~~2017 compared with the ~~2015~~2016 period due primarily to ~~higher income before income tax expense ($7 million) and~~ plant-related flow through items ($1311 million) and a higher reserve for injuries and damages ($5 million), offset in part by lower income before income tax expense ($4 million), a decrease in bad debt expense ($3 million) and lower state income taxes ($~~8 million), a research and development tax credit ($5 million) and higher settlement payments related to injuries and damages ($~~2 million).

Table of Contents

O&R


	For the Three Months Ended September 30, 2016			For the Three Months Ended September 30, 2015				For the Three Months Ended June 30, 2017			For the Three Months Ended June 30, 2016
(Millions of Dollars)	Electric	Gas	2016 Total	Electric	Gas	2015 Total	2016-2015 Variation	Electric	Gas	2017 Total	Electric	Gas	2016 Total	2017-2016 Variation
Operating revenues	$213	$27	$240	$205	$24	$229	$11	$148	$47	$195	$144	$31	$175	$20
Purchased power	69	—	69	64	—	64	5	46	—	46	45	—	45	1
Gas purchased for resale	—	8	8	—	9	9	(1)	—	14	14	—	8	8	6
Other operations and maintenance	63	14	77	66	16	82	(5)	62	17	79	60	13	73	6
Depreciation and amortization	12	5	17	13	4	17	—	13	4	17	13	4	17	—
Taxes, other than income taxes	14	7	21	11	4	15	6	13	7	20	12	7	19	1
Operating income	$55	$(7)	$48	$51	$(9)	$42	$6	$14	$5	$19	$14	$(1)	$13		$6

Electric

O&R’s results of electric operations for the three months ended ~~September~~June 30, ~~2016~~2017 compared with the ~~2015~~2016 period is as follows:

For the Three Months Ended

(Millions of Dollars) September 30, 2016 September 30, 2015 Variation
Operating revenues $213 $205 $8
Purchased power 69 64 5
Other operations and maintenance 63 66 (3)
Depreciation and amortization 12 13 (1)
Taxes, other than income taxes 14 11 3
Electric operating income $55 $51 $4

~~Table of Contents~~



	For the Three Months Ended
(Millions of Dollars)	June 30, 2017	June 30, 2016	Variation
Operating revenues	$148	$144	$4
Purchased power	46	45	1
Other operations and maintenance	62	60	2
Depreciation and amortization	13	13	—
Taxes, other than income taxes	13	12	1
Electric operating income	$14	$14		$—

O&R’s electric sales and deliveries for the three months ended ~~September~~June 30, ~~2016~~2017 compared with the ~~2015~~2016 period were:


	Millions of kWh Delivered							Revenues in Millions (a)						Millions of kWh Delivered							Revenues in Millions (a)
	For the Three Months Ended							For the Three Months Ended						For the Three Months Ended							For the Three Months Ended
Description	September 30, 2016	September 30, 2015	Variation		Percent Variation			September 30, 2016	September 30, 2015	Variation		Percent Variation		June 30, 2017	June 30, 2016	Variation		Percent Variation			June 30, 2017	June 30, 2016	Variation	Percent Variation
Residential/Religious (b)	585	533	52		9.8	%		$109	$99	$10		10.1	%	359	366	(7	)	(1.9	)%		$69	$66	$3	4.5	%
Commercial/Industrial	216	220	(4	)	(1.8	)		35		—		—		177	197	(20	)	(10.2	)		27	28	(1)	(3.6	)
Retail choice customers	925	926	(1	)	(0.1	)		70	69	1		1.4		730	768	(38	)	(4.9	)		48	50	(2)	(4.0	)
Public authorities	31	28	3		10.7			2	3	(1	)	(33.3	)	24	23	1		4.3			2		—	—
Other operating revenues (c)	—	—	—		—			(3)	(1)	(2)		Large		—	—	—		—			2	(2)	4	Large
Total	1,757	1,707	50		2.9	%	(d)	$213	$205	$8		3.9	%	1,290	1,354	(64	)	(4.7	)%	(d)	$148	$144	$4	2.8	%


(a)	O&R’s New York electric delivery revenues are subject to a revenue decoupling mechanism, as a result of which delivery revenues are generally not affected by changes in delivery volumes from levels assumed when rates were approved. O&R’s electric sales in New Jersey ~~and Pennsylvania~~ are not subject to a decoupling mechanism, and as a result, changes in such volumes do impact revenues.


(b)	“Residential/Religious” generally includes single-family dwellings, individual apartments in multi-family dwellings, religious organizations and certain other not-for-profit organizations.


(c)	Other electric operating revenues generally reflect changes in regulatory assets and liabilities in accordance with the company’s electric rate ~~plans.~~plan.


(d)	After adjusting for weather and other variations, electric delivery volumes in O&R’s service area decreased ~~0.9~~2.3 percent in the three months ended ~~September~~June 30, ~~2016~~2017 compared with the ~~2015~~2016 period.

Operating revenues increased $8$4 million in the three months ended ~~September~~June 30, ~~2016~~2017 compared with the ~~2015~~2016 period due primarily to higher revenues from the New York electric rate ~~plans~~plan ($63 million) and higher purchased power ~~costs~~expenses ($51 million).

Purchased power expenses increased $5$1 million in the three months ended ~~September~~June 30, ~~2016~~2017 compared with the ~~2015~~2016 period due to higher purchased volumes ($63 million), offset by lower unit costs ($12 million).

Table of Contents

Other operations and maintenance expenses ~~decreased $3~~increased $2 million in the three months ended ~~September~~June 30, ~~2016~~2017 compared with the ~~2015~~2016 period due primarily to ~~regulatory accounting effects of pension costs.~~

~~Depreciation~~a higher reserve for injuries and ~~amortization~~ ~~decreased $1 million~~damages, higher surcharges for assessments and fees that are collected in ~~the three months ended September 30, 2016 compared with the 2015 period due primarily~~revenues from customers, and operating costs related to ~~lower average depreciation rates.~~weather events in 2017.

Taxes, other than income taxes increased $3$1 million in the three months ended ~~September~~June 30, ~~2016~~2017 compared with the ~~2015~~2016 period ~~principally~~ due primarily to higher property taxes.

Gas

O&R’s results of gas operations for the three months ended ~~September~~June 30, ~~2016~~2017 compared with the ~~2015~~2016 period is as follows:

For the Three Months Ended

(Millions of Dollars) September 30, 2016 September 30, 2015 Variation
Operating revenues $27 $24 $3
Gas purchased for resale 8 9 (1)
Other operations and maintenance 14 16 (2)
Depreciation and amortization 5 4 1
Taxes, other than income taxes 7 4 3
Gas operating income $(7) $(9) $2

~~Table of Contents~~



	For the Three Months Ended
(Millions of Dollars)	June 30, 2017	June 30, 2016	Variation
Operating revenues	$47	$31	$16
Gas purchased for resale	14	8	6
Other operations and maintenance	17	13	4
Depreciation and amortization	4	4	—
Taxes, other than income taxes	7	7	—
Gas operating income	$5	$(1)	$6

O&R’s gas sales and deliveries, excluding off-system sales, for the three months ended ~~September~~June 30, ~~2016~~2017 compared with the ~~2015~~2016 period were:


	Thousands of Dt Delivered							Revenues in Millions (a)					Thousands of Dt Delivered							Revenues in Millions (a)
	For the Three Months Ended							For the Three Months Ended					For the Three Months Ended							For the Three Months Ended
Description	September 30, 2016	September 30, 2015	Variation		Percent Variation			September 30, 2016	September 30, 2015	Variation	Percent Variation		June 30, 2017	June 30, 2016	Variation		Percent Variation			June 30, 2017	June 30, 2016	Variation	Percent Variation
Residential	550	481	69		14.3	%		$9	$7	$2	28.6	%	1,092	1,150	(58	)	(5.0	)%		$19	$12	$7	58.3	%
General	177	120	57		47.5			2	1		Large		292	281	11		3.9			4	1	3	Large
Firm transportation	884	980	(96	)	(9.8	)		8		—	—		1,457	1,722	(265	)	(15.4	)		13	12	1	8.3
Total firm sales and transportation	1,611	1,581	30		1.9		(b)	19	16	3	18.8		2,841	3,153	(312	)	(9.9	)	(b)	36	25	11	44.0
Interruptible sales	893	938	(45	)	(4.8	)		—	—	—	—		959	946	13		1.4			1		—	—
Generation plants	3	10	(7	)	(70.0	)		—	—	—	—		1	11	(10	)	(90.9	)		—	—	—	—
Other	70	70	—		—			—	—	—	—		118	132	(14	)	(10.6	)		1	—	1	—
Other gas revenues	—	—	—		—			8		—	—		—	—	—		—			9	5	4	80.0
Total	2,577	2,599	(22	)	(0.8	)%		$27	$24	$3	12.5	%	3,919	4,242	(323	)	(7.6	)%		$47	$31	$16	51.6	%


(a)	Revenues from New York gas sales are subject to a weather normalization clause and a revenue decoupling mechanism as a result of which delivery revenues are generally not affected by changes in delivery volumes from levels assumed when rates were approved.


(b)	After adjusting for weather and other variations, total firm sales and transportation volumes decreased ~~1.7~~0.5 percent in the three months ended ~~September~~June 30, ~~2016~~2017 compared with ~~2015~~2016 period.

Operating revenues increased $3$16 million in the three months ended ~~September~~June 30, ~~2016~~2017 compared with the ~~2015~~2016 period due primarily to higher revenues from the New York gas rate plan ($49 million)~~, offset by a decrease in~~ and increased gas purchased for resale ($16 million).

Gas purchased for resale ~~decreased $1~~increased $6 million in the three months ended ~~September~~June 30, ~~2016~~2017 compared with the ~~2015~~2016 period due to ~~lower~~higher purchased volumes ($29 million), offset by ~~higher~~lower unit costs ($13 million).

Other operations and maintenance expenses ~~decreased $2~~increased $4 million in the three months ended ~~September~~June 30, ~~2016~~2017 compared with the ~~2015 period due primarily to regulatory accounting effects of pension costs.~~

~~Depreciation and amortization~~ ~~increased $1 million in the three months ended September 30,~~ 2016 ~~compared with the 2015~~ period due primarily to higher ~~gas utility plant balances.~~pension costs.

~~Taxes, other than income taxes~~ ~~increased $3 million in the three months ended September 30, 2016 compared with the 2015 period principally due to higher property taxes.~~

~~Other Income (Deductions)~~

Other income (deductions) increased $6 million in the three months ended September 30, 2016 compared with the 2015 period due primarily to the impairment of certain assets held for sale in 2015 (see Note P to the Third Quarter Financial Statements).

Income Tax Expense

Income taxes increased $5$3 million in the three months ended ~~September~~June 30, ~~2016~~2017 compared with the ~~2015~~2016 period due primarily to higher income before income tax expense.

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~~Competitive~~

Clean Energy Businesses

The ~~competitive energy businesses’~~Clean Energy Businesses’ results of operations for the three months ended ~~September~~June 30, ~~2016~~2017 compared with the ~~2015~~2016 period is as follows:


	For the Three Months Ended			For the Three Months Ended
(Millions of Dollars)	September 30, 2016	September 30, 2015	Variation	June 30, 2017	June 30, 2016	Variation
Operating revenues	$350	$386	$(36)	$146	$338	$(192)
Purchased power	234	270	(36)	—	144	(144)
Gas purchased for resale	39	25	14	51	23	28
Other operations and maintenance	40	37	3	56	47	9
Depreciation and amortization	11	6	5	18	10	8
Taxes, other than income taxes	5	5	—	4	5	(1)
Gain on sale of retail electric supply business	(104)	—	(104)
Gain on sale of solar electric production project (a)				1	—	1
Operating income	$125	$43	$82	$18	$109	$(91)

(a) See Note O to the Second Quarter Financial Statements.

Operating revenues decreased ~~$36~~$192 million in the three months ended ~~September~~June 30, ~~2016~~2017 compared with the ~~2015~~2016 period, due primarily to lower electric retail revenues ~~due in part to~~of $263 million from the sale of the retail electric supply business ~~(see Note P to the Third Quarter Financial Statements). Electric retail revenues decreased $71 million due to lower sales volume ($57 million) and unit prices ($14 million).~~in September 2016. Renewable revenues increased ~~$15~~$36 million due primarily ~~due~~ to an increase in renewable electric production projects in operation. See "Con Edison Development," below. Energy services revenues increased $9$7 million. Wholesale revenues increased ~~$12~~$35 million due to higher sales volumes. Net mark-to-market values decreased ~~$36~~$104 million, due primarily to the sale of the retail electric supply business, of which ~~$35~~$97 million in losses are reflected in purchased power costs and $1$7 million in losses are reflected in revenues.

Purchased power expenses decreased ~~$36~~$144 million in the three months ended ~~September~~June 30, ~~2016~~2017 compared with the ~~2015~~2016 period due primarily to lower ~~volumes~~electric costs due to the sale of the retail electric supply business in September 2016 ($~~51 million) and lower unit prices ($20~~240 million), offset by changes in mark-to-market ~~losses~~values ($3596 million).

Gas purchased for resale increased ~~$14~~$28 million in the three months ended ~~September~~June 30, ~~2016~~2017 compared with the ~~2015~~2016 period due to higher ~~sale~~purchased volumes.

Other operations and maintenance expenses increased $3$9 million in the three months ended ~~September~~June 30, ~~2016~~2017 compared with the ~~2015~~2016 period due primarily to an increase in energy services costs.

Depreciation and amortization increased $5$8 million in the three months ended ~~September~~June 30, ~~2016~~2017 compared with the ~~2015~~2016 period due to an increase in solar electric production projects in operation during ~~2016.~~2017.

~~Gain on sale of retail electric supply business~~Taxes, other than income taxes ~~was $104~~decreased $1 million in the three months ended ~~September~~June 30, 2017 compared with the 2016 ~~reflecting~~period primarily due to lower gross receipts tax from the sale of the ~~competitive energy businesses'~~ retail electric supply ~~business (see Note P to the Third Quarter Financial Statements).~~business.

Other Income (Deductions)

Other income (deductions) increased ~~$10~~$7 million in the three months ended ~~September~~June 30, ~~2016~~2017 compared with the ~~2015~~2016 period due primarily to the ~~gain related to the acquisition~~impairment of a solar electric production investment ~~(see Note P to the Third Quarter Financial Statements).~~in 2016 of $8 million.

Net Interest Expense

Net interest expense increased $5$2 million in the three months ended ~~September~~June 30, ~~2016~~2017 compared with the ~~2015~~2016 period due primarily to increased debt on solar electric production projects.

Income Tax Expense

Income taxes ~~increased $46~~decreased $35 million in the three months ended ~~September~~June 30, ~~2016~~2017 compared with the ~~2015~~2016 period due primarily to ~~higher~~lower income before income tax ~~expense ($35 million) and an adjustment to deferred state income taxes as a result of the sale of the retail electric supply business that increased the competitive energy businesses'~~expense.

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~~state apportionment factors on its cumulative temporary differences ($13 million), offset in part by higher renewable energy tax credits ($2 million).~~

Con Edison Transmission

Net Interest Expense

Net interest expense increased $3 million in the three months ended June 30, 2017 compared with the 2016 period due primarily to a new debt issuance in 2016.

Other Income (Deductions)

Other income (deductions) increased ~~$20~~$17 million in the three months ended ~~September~~June 30, ~~2016~~2017 compared with the ~~2015~~2016 period due primarily to earnings from equity investments in Stagecoach Gas Services, LLC, substantially all of which were made in June 2016.

Income Tax Expense

Income taxes increased $5 million in the three months ended June 30, 2017 compared with the 2016 ~~(see Note P).~~period due primarily to higher income before income tax expense.

Other

For Con Edison, “Other” includes parent company and consolidation adjustments.

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~~Nine~~Six Months Ended ~~September~~June 30, ~~2016~~2017 Compared with ~~Nine~~Six Months Ended ~~September~~June 30, ~~2015~~2016

The Companies’ results of operations in ~~2016~~2017 compared with ~~2015~~2016 were:


	CECONY			O&R			Competitive Energy Businesses			Con Edison Transmission				Other (a)			Con Edison (b)			CECONY			O&R			Clean Energy Businesses			Con Edison Transmission				Other (a)		Con Edison (b)
(Millions of Dollars)	Increases (Decreases) Amount	Increases (Decreases) Percent		Increases (Decreases) Amount	Increases (Decreases) Percent		Increases (Decreases) Amount	Increases (Decreases) Percent		Increases (Decreases) Amount		Increases (Decreases) Percent		Increases (Decreases) Amount	Increases (Decreases) Percent		Increases (Decreases) Amount	Increases (Decreases) Percent		Increases (Decreases) Amount	Increases (Decreases) Percent		Increases (Decreases) Amount	Increases (Decreases) Percent		Increases (Decreases) Amount	Increases (Decreases) Percent		Increases (Decreases) Amount		Increases (Decreases) Percent		Increases (Decreases) Amount	Increases (Decreases) Percent	Increases (Decreases) Amount	Increases (Decreases) Percent
Operating revenues	$(381)	(4.7	)%	$(10)	(1.6	)%	$(89)	(8.2	)%		$—	—	%	$1	50.0	%	$(479)	(4.9	)%	$236	4.8	%	$43	11.0	%	$(365)	(56.3	)%		$—	—	%	$(3)	Large	$(89)	(1.5	)%
Purchased power	(207)	(14.5	)	(15)	(8.9	)	(136)	(16.7	)	—		—		1	—		(357)	(14.9	)	(11)	(1.5	)	3	3.5		(445)	Large		—		—		(3)	—	(456)	(36.5	)
Fuel	(83)	(38.4	)	—	—		—	—		—		—		—	—		(83)	(38.4	)	35	33.7		—	—		—	—		—		—		—	—	35	33.7
Gas purchased for resale	(65)	(23.0	)	(8)	(20.0	)	(22)	(23.4	)	—		—		—	—		(95)	(22.9	)	131	71.6		19	82.6		81	Large		—		—		—	—	231	96.7
Other operations and maintenance	(35)	(1.6	)	(29)	(11.6	)	26	26.5		1		—		(1)	(50.0	)	(38)	(1.5	)	(80)	(5.8	)	12	8.4		10	11.9		3		Large		1	50.0	(54)	(3.4	)
Depreciation and amortization	52	6.7		(1)	(2.0	)	14	87.5		—		—		—	—		65	7.7		44	8.0		2	6.1		17	89.5		—		—		—	—	63	10.5
Taxes, other than income taxes	47	3.4		14	30.4		2	14.3		—		—		1	—		64	4.4		59	6.3		2	5.0		(3)	(27.3	)	—		—		(1)	—	57	5.7
Gain on sale of retail electric supply business	—	—		—	—		104	—		—		—		—	—		104	—
Gain on sale of solar electric production project																				—	—		—	—		1	—		—		—		—	—	1	—
Operating income	(90)	(4.8	)	29	34.1		131	Large		(1)		—		—	—		69	3.4		58	5.6		5	7.6		(24)	(41.4	)	(3)		Large		—	—	36	3.1
Other income less deductions	6	Large		5	Large		3	9.4		23		—		1	Large		38	Large		6	—		—	—		6	66.7		36		Large		—	—	48	Large
Net interest expense	16	3.7		1	3.7		18	Large		4		—		(8)	(42.1	)	31	6.4		9	3.0		(1)	(5.3	)	6	37.5		7		Large		—	—	21	6.2
Income before income tax expense	(100)	(6.9	)	33	61.1		116	Large		18		—		9	47.4		76	4.9		55	7.5		6	12.8		(24)	(47.1	)	26		Large		—	—	63	7.6
Income tax expense	(24)	(4.7	)	13	68.4		51	Large		7		—		7	63.6		54	9.9		45	17.0		3	15.8		(10)	Large		11		—		(7)	Large	42	14.6
Net income	$(76)	(8.1	)%	$20	57.1	%	$65	Large		$11		—	%	$2	25.0	%	$22	2.2	%	$10	2.1	%	$3	10.7	%	$(14)	(33.3	%)	$15		Large		$7	Large	$21	3.9	%


(a)	Includes parent company and consolidation adjustments.


(b)	Represents the consolidated ~~financial~~ results of operations of Con Edison and its businesses.

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CECONY


	For the Nine Months Ended September 30, 2016				For the Nine Months Ended September 30, 2015					For the Six Months Ended June 30, 2017				For the Six Months Ended June 30, 2016
(Millions of Dollars)	Electric	Gas	Steam	2016 Total	Electric	Gas	Steam	2015 Total	2016-2015 Variation	Electric	Gas	Steam	2017 Total	Electric	Gas	Steam	2016 Total	2017-2016 Variation
Operating revenues	$6,222	$1,113	$406	$7,741	$6,416	$1,177	$529	$8,122	$(381)	$3,610	$1,153	$386	$5,149	$3,665	$905	$343	$4,913	$236
Purchased power	1,191	—	25	1,216	1,395	—	28	1,423	(207)	691	—	19	710	705	—	16	721	(11)
Fuel	81	—	52	133	96	—	120	216	(83)	70	—	69	139	60	—	44	104	35
Gas purchased for resale	—	217	—	217	—	282	—	282	(65)	—	314	—	314	—	183	—	183	131
Other operations and maintenance	1,659	307	139	2,105	1,677	323	140	2,140	(35)	982	225	94	1,301	1,081	204	96	1,381	(80)
Depreciation and amortization	645	118	62	825	610	105	58	773	52	458	90	43	591	428	78	41	547	44
Taxes, other than income taxes	1,159	198	89	1,446	1,127	189	83	1,399	47	787	150	66	1,003	746	139	59	944	59
Operating income	$1,487	$273	$39	$1,799	$1,511	$278	$100	$1,889	$(90)	$622	$374	$95	$1,091	$645	$301	$87	$1,033	$58

Electric

CECONY’s results of electric operations for the ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017 compared with the ~~2015~~2016 period is as follows:


	For the Nine Months Ended			For the Six Months Ended
(Millions of Dollars)	September 30, 2016	September 30, 2015	Variation	June 30, 2017	June 30, 2016	Variation
Operating revenues	$6,222	$6,416	$(194)	$3,610	$3,665	$(55)
Purchased power	1,191	1,395	(204)	691	705	(14)
Fuel	81	96	(15)	70	60	10
Other operations and maintenance	1,659	1,677	(18)	982	1,081	(99)
Depreciation and amortization	645	610	35	458	428	30
Taxes, other than income taxes	1,159	1,127	32	787	746	41
Electric operating income	$1,487	$1,511	$(24)	$622	$645	$(23)

CECONY’s electric sales and deliveries for the ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017 compared with the ~~2015~~2016 period were:


	Millions of kWh Delivered							Revenues in Millions (a)					Millions of kWh Delivered							Revenues in Millions (a)
	For the Nine Months Ended							For the Nine Months Ended					For the Six Months Ended							For the Six Months Ended
Description	September 30, 2016	September 30, 2015	Variation		Percent Variation			September 30, 2016	September 30, 2015	Variation	Percent Variation		June 30, 2017	June 30, 2016	Variation		Percent Variation			June 30, 2017	June 30, 2016	Variation	Percent Variation
Residential/Religious (b)	8,130	8,247	(117	)	(1.4	)%		$2,017	$2,198	$(181)	(8.2	)%	4,339	4,476	(137	)	(3.1	)%		$1,120	$1,134	$(14)	(1.2	)%
Commercial/Industrial	7,220	7,375	(155	)	(2.1	)		1,381	1,549	(168)	(10.8	)	4,395	4,471	(76	)	(1.7	)		859	830	29	3.5
Retail choice customers	20,404	20,339	65		0.3			2,114	2,102	12	0.6		12,238	12,269	(31	)	(0.3	)		1,225	1,196	29	2.4
NYPA, Municipal Agency and other sales	7,641	7,687	(46	)	(0.6	)		474	467	7	1.5		4,843	4,877	(34	)	(0.7	)		275	270	5	1.9
Other operating revenues (c)	—	—	—		—			236	100	136	Large		—	—	—		—			131	235	(104)	(44.3	)
Total	43,395	43,648	(253	)	(0.6	)%	(d)	$6,222	$6,416	$(194)	(3.0	)%	25,815	26,093	(278	)	(1.1	)%	(d)	$3,610	$3,665	$(55)	(1.5	)%


(a)	Revenues from electric sales are subject to a revenue decoupling mechanism, as a result of which delivery revenues generally are not affected by changes in delivery volumes from levels assumed when rates were approved.


(b)	“Residential/Religious” generally includes single-family dwellings, individual apartments in multi-family dwellings, religious organizations and certain other not-for-profit organizations.


(c)	Other electric operating revenues generally reflect changes in regulatory assets and liabilities in accordance with the revenue decoupling mechanism and other provisions of the company’s rate plans.


(d)	After adjusting for variations, ~~principally~~primarily weather and billing days, electric delivery volumes in CECONY’s service area ~~increased 0.5~~decreased 0.6 percent in the ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017 compared with the ~~2015~~2016 period.

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Operating revenues decreased ~~$194~~$55 million in the ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017 compared with the ~~2015~~2016 period due primarily to lower revenues from the electric rate plan ($23 million) and lower purchased power costs ($~~204 million) and fuel expenses ($15~~14 million), offset in part by ~~changes~~higher fuel expenses ($10 million). The lower revenues reflected the decline in ~~regulatory charges~~surcharges for assessments and fees that were collected in revenues from customers ($2019 million).

Purchased power expenses decreased ~~$204~~$14 million in the ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017 compared with the ~~2015~~2016 period due to lower purchased volumes ($24 million), offset by higher unit costs ($~~169 million) and purchased volumes ($35~~10 million).

Fuel expenses ~~decreased $15~~increased $10 million in the ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017 compared with the ~~2015~~2016 period due to ~~lower~~higher unit costs ($205 million)~~, offset by higher sendout~~ and purchased volumes from the company’s electric generating facilities ($5 million).

Other operations and maintenance expenses decreased ~~$18~~$99 million in the ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017 compared with the ~~2015~~2016 period due primarily to ~~a decrease in the~~lower pension and other post employment benefits costs ($73 million) and surcharges for assessments and fees that are collected in revenues from customers ($~~62 million), offset in part by higher costs for municipal infrastructure support ($15 million), emergency response ($13 million), stock-based compensation ($7 million) and injuries and damages ($6~~19 million).

Depreciation and amortization increased ~~$35~~$30 million in the ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017 compared with the ~~2015~~2016 period due primarily to higher electric utility plant balances.

Taxes, other than income taxes increased ~~$32~~$41 million in the ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017 compared with the ~~2015~~2016 period ~~principally~~ due primarily to higher property taxes ($4732 million), ~~offset~~the absence in ~~part by lower~~2017 of a favorable state audit settlement in 2016 ($5 million) and higher state and local taxes ($~~6 million), a favorable state audit settlement ($4 million) and lower sales and use tax reserve based on a favorable audit settlement ($3~~1 million).

Gas

CECONY’s results of gas operations for the ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017 compared with the ~~2015~~2016 period is as follows:

For the Nine Months Ended

(Millions of Dollars) September 30, 2016 September 30, 2015 Variation
Operating revenues $1,113 $1,177 $(64)
Gas purchased for resale 217 282 (65)
Other operations and maintenance 307 323 (16)
Depreciation and amortization 118 105 13
Taxes, other than income taxes 198 189 9
Gas operating income $273 $278 $(5)

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	For the Six Months Ended
(Millions of Dollars)	June 30, 2017	June 30, 2016	Variation
Operating revenues	$1,153	$905	$248
Gas purchased for resale	314	183	131
Other operations and maintenance	225	204	21
Depreciation and amortization	90	78	12
Taxes, other than income taxes	150	139	11
Gas operating income	$374	$301	$73

CECONY’s gas sales and deliveries, excluding off-system sales, for the ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017 compared with the ~~2015~~2016 period were:


	Thousands of Dt Delivered							Revenues in Millions (a)					Thousands of Dt Delivered							Revenues in Millions (a)
	For the Nine Months Ended							For the Nine Months Ended					For the Six Months Ended							For the Six Months Ended
Description	September 30, 2016	September 30, 2015	Variation		Percent Variation			September 30, 2016	September 30, 2015	Variation	Percent Variation		June 30, 2017	June 30, 2016	Variation		Percent Variation			June 30, 2017	June 30, 2016	Variation	Percent Variation
Residential	35,565	39,010	(3,445	)	(8.8	)%		$506	$532	$(26)	(4.9	)%	34,910	31,231	3,679		11.8	%		$509	$417	$92	22.1	%
General	20,962	22,641	(1,679	)	(7.4	)		200	217	(17)	(7.8	)	19,306	16,997	2,309		13.6			206	160	46	28.8
Firm transportation	51,333	57,578	(6,245	)	(10.8	)		332	342	(10)	(2.9	)	45,186	43,028	2,158		5.0			325	279	46	16.5
Total firm sales and transportation	107,860	119,229	(11,369	)	(9.5	)	(b)	1,038	1,091	(53)	(4.9	)	99,402	91,256	8,146		8.9		(b)	1,040	856	184	21.5
Interruptible sales (c)	7,587	5,933	1,654		27.9			29	45	(16)	(35.6	)	4,417	5,923	(1,506	)	(25.4	)		22	25	(3)	(12.0	)
NYPA	31,970	33,825	(1,855	)	(5.5	)		2	2	—	—		20,085	19,171	914		4.8			1	1	—	—
Generation plants	70,895	62,650	8,245		13.2			19	20	(1)	(5.0	)	24,921	35,150	(10,229	)	(29.1	)		11	12	(1)	(8.3	)
Other	16,442	16,285	157		1.0			25	21	4	19.0		12,269	11,467	802		7.0			18	19	(1)	(5.3	)
Other operating revenues (d)	—	—	—		—			—	(2)	2	Large		—	—	—		—			61	(8)	69	Large
Total	234,754	237,922	(3,168	)	(1.3	)%		$1,113	$1,177	$(64)	(5.4	)%	161,094	162,967	(1,873	)	(1.1	)%		$1,153	$905	$248	27.4	%


(a)	Revenues from gas sales are subject to a weather normalization clause and a revenue decoupling mechanism as a result of which delivery revenues are generally not affected by changes in delivery volumes from levels assumed when rates were approved.

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(b)

After adjusting for variations, ~~principally~~primarily billing days, firm gas sales and transportation volumes in the company’s service area increased ~~4.1~~6.4 percent in the ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017 compared with the ~~2015~~2016 period, reflecting primarily increased volumes attributable to ~~additional customers that have converted from oil-to-gas as heating fuel for their buildings.~~the growth in the number of gas customers.


(c)	Includes ~~3,940~~2,027 thousands and ~~1,809~~3,376 thousands of Dt for the ~~2016~~2017 and ~~2015~~2016 periods, respectively, which are also reflected in firm transportation and other.


(d)	Other gas operating revenues generally reflect changes in regulatory assets and liabilities in accordance with the company’s rate plans.

Operating revenues ~~decreased $64~~increased $248 million in the ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017 compared with the ~~2015~~2016 period due primarily to ~~lower~~higher gas purchased for resale expense ($65131 million) and ~~changes in regulatory charges ($17 million), offset in part by~~ higher revenues from the gas rate plan and growth in the number of customers ($26101 million) ~~reflecting primarily higher delivery volumes attributable to oil-to-gas conversions.~~.

Gas purchased for resale ~~decreased $65~~increased $131 million in the ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017 compared with the ~~2015~~2016 period due to ~~lower~~higher unit ~~costs ($48 million) and sendout volumes ($17 million).~~costs.

Other operations and maintenance expenses ~~decreased $16~~increased $21 million in the ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017 compared with the ~~2015~~2016 period due primarily to ~~a decrease in the surcharges for assessments and fees that are collected in revenues from customers ($19 million), offset in part by~~ higher costs for maintenance of gas mains ($5 million), pension and other post employment benefits costs ($4 million), health and life expenses ($4 million), and municipal infrastructure support ($52 million).

Depreciation and amortization increased ~~$13~~$12 million in the ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017 compared with the ~~2015~~2016 period due primarily to higher gas utility plant balances.

Taxes, other than income taxes increased $9$11 million in the ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017 compared with the ~~2015~~2016 period ~~principally~~ due primarily to higher property taxes ($126 million), ~~offset in part by lower~~payroll taxes ($2 million), and state and local taxes ($12 million).

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Steam

CECONY’s results of steam operations for the ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017 compared with the ~~2015~~2016 period is as follows:


	For the Nine Months Ended			For the Six Months Ended
(Millions of Dollars)	September 30, 2016	September 30, 2015	Variation	June 30, 2017	June 30, 2016	Variation
Operating revenues	$406	$529	$(123)	$386	$343	$43
Purchased power	25	28	(3)	19	16	3
Fuel	52	120	(68)	69	44	25
Other operations and maintenance	139	140	(1)	94	96	(2)
Depreciation and amortization	62	58	4	43	41	2
Taxes, other than income taxes	89	83	6	66	59	7
Steam operating income	$39	$100	$(61)	$95	$87	$8

CECONY’s steam sales and deliveries for the ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017 compared with the ~~2015~~2016 period were:


	Millions of Pounds Delivered							Revenues in Millions						Millions of Pounds Delivered							Revenues in Millions
	For the Nine Months Ended							For the Nine Months Ended						For the Six Months Ended							For the Six Months Ended
Description	September 30, 2016	September 30, 2015	Variation		Percent Variation			September 30, 2016		September 30, 2015	Variation	Percent Variation		June 30, 2017	June 30, 2016	Variation		Percent Variation			June 30, 2017	June 30, 2016	Variation	Percent Variation
General	345	460	(115	)	(25.0	)%		$18		$24	$(6)	(25.0	)%	351	334	17		5.1	%		$18	$16	$2	12.5	%
Apartment house	4,251	5,056	(805	)	(15.9	)		107		145	(38)	(26.2	)	3,500	3,475	25		0.7			103	92	11	12.0
Annual power	10,640	12,593	(1,953	)	(15.5	)		284		379	(95)	(25.1	)	7,634	7,691	(57	)	(0.7	)		258	235	23	9.8
Other operating revenues (a)	—	—	—		—			(3	)	(19)	16	84.2	%	—	—	—		—			7	—	7	—
Total	15,236	18,109	(2,873	)	(15.9	)%	(b)	$406		$529	$(123)	(23.3	)%	11,485	11,500	(15	)	(0.1	)%	(b)	$386	$343	$43	12.5	%


(a)	Other steam operating revenues generally reflect changes in regulatory assets and liabilities in accordance with the company’s rate plan.


(b)	After adjusting for variations, ~~principally~~primarily weather and billing days, steam sales and deliveries decreased ~~0.5~~2.1 percent in ~~nine~~the six months ended ~~September~~June 30, ~~2016~~2017 compared with the ~~2015~~2016 period.

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Operating revenues ~~decreased $123~~increased $43 million in the ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017 compared with the ~~2015~~2016 period due primarily to ~~lower~~higher fuel expenses ($6825 million), the weather impact on revenues ($598 million) ~~and lower~~, higher purchased power costs ($3 million), ~~offset in part by~~and higher revenues from the steam rate plan ($122 million).

Purchased power expenses ~~decreased~~increased $3 million in the ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017 compared with the ~~2015~~2016 period due to ~~lower~~higher unit costs ($26 million) ~~and~~, offset by lower purchased volumes ($13 million).

Fuel expenses ~~decreased $68~~increased $25 million in the ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017 compared with the ~~2015~~2016 period due to ~~lower~~higher unit costs ($5924 million) and ~~sendout~~purchased volumes from the company’s steam generating facilities ($91 million).

Other operations and maintenance expenses decreased $1$2 million in the ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017 compared with the ~~2015~~2016 period due primarily to ~~a decrease in the~~lower surcharges for assessments and fees that are collected in revenues from ~~customers ($6 million), offset in part by higher costs for municipal infrastructure support ($6 million).~~customers.

Depreciation and amortization increased $4$2 million in the ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017 compared with the ~~2015~~2016 period due primarily to higher steam utility plant balances.

Taxes, other than income taxes increased $6$7 million in the ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017 compared with the ~~2015~~2016 period ~~principally~~ due primarily to higher property taxes ($95 million)~~, offset in part by lower~~ and state and local taxes ($31 million).

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Net Interest Expense

Net interest expense increased ~~$16~~$9 million in the ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017 compared with the ~~2015~~2016 period due primarily to higher long-term debt balances in the ~~2016~~2017 period.

Income Tax Expense

Income taxes ~~decreased $24~~increased $45 million in the ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017 compared with the ~~2015~~2016 period due primarily to ~~lower~~higher income before income tax expense ($4022 million), ~~lower state income taxes~~a decrease in tax benefits for plant-related flow through items ($1021 million), alower research and development tax ~~credit~~credits ($148 million) and a higher ~~settlement payments related to~~reserve for injuries and damages ($46 million), offset in part by ~~plant-related flow through items~~lower state income taxes ($416 million) and ~~an increase~~a decrease in ~~uncertain tax positions~~bad debt expense ($34 million).

O&R


	For the Nine Months Ended September 30, 2016			For the Nine Months Ended September 30, 2015				For the Six Months Ended June 30, 2017			For the Six Months Ended June 30, 2016
(Millions of Dollars)	Electric	Gas	2016 Total	Electric	Gas	2015 Total	2016-2015 Variation	Electric	Gas	2017 Total	Electric	Gas	2016 Total	2017-2016 Variation
Operating revenues	$497	$133	$630	$523	$117	$640	$(10)	$289	$144	$433	$284	$106	$390	$43
Purchased power	154	—	154	169	—	169	(15)	88	—	88	85	—	85	3
Gas purchased for resale	—	32	32	—	40	40	(8)	—	42	42	—	23	23	19
Other operations and maintenance	180	40	220	198	51	249	(29)	122	33	155	117	26	143	12
Depreciation and amortization	37	13	50	38	13	51	(1)	25	10	35	24	9	33	2
Taxes, other than income taxes	40	20	60	33	13	46	14	27	15	42	26	14	40	2
Operating income	$86	$28	$114	$85	$0	$85	$29	$27	$44	$71	$32	$34	$66	$5

Electric

O&R’s results of electric operations for the ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017 compared with the ~~2015~~2016 period is as follows:

For the Nine Months Ended

(Millions of Dollars) September 30, 2016 September 30, 2015 Variation
Operating revenues $497 $523 $(26)
Purchased power 154 169 (15)
Other operations and maintenance 180 198 (18)
Depreciation and amortization 37 38 (1)
Taxes, other than income taxes 40 33 7
Electric operating income $86 $85 $1

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	For the Six Months Ended
(Millions of Dollars)	June 30, 2017	June 30, 2016	Variation
Operating revenues	$289	$284	$5
Purchased power	88	85	3
Other operations and maintenance	122	117	5
Depreciation and amortization	25	24	1
Taxes, other than income taxes	27	26	1
Electric operating income	$27	$32	$(5)

O&R’s electric sales and deliveries for the ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017 compared with the ~~2015~~2016 period were:


	Millions of kWh Delivered							Revenues in Millions (a)					Millions of kWh Delivered							Revenues in Millions (a)
	For the Nine Months Ended							For the Nine Months Ended					For the Six Months Ended							For the Six Months Ended
Description	September 30, 2016	September 30, 2015	Variation		Percent Variation			September 30, 2016	September 30, 2015	Variation	Percent Variation		June 30, 2017	June 30, 2016	Variation		Percent Variation			June 30, 2017	June 30, 2016	Variation	Percent Variation
Residential/Religious (b)	1,307	1,278	29		2.3	%		$240	$246	$(6)	(2.4	)%	708	722	(14	)	(1.9	%)		$137	$131	$6	4.6	%
Commercial/Industrial	607	611	(4	)	(0.7	)		89	98	(9)	(9.2	)	368	391	(23	)	(5.9	)		54		—	—
Retail choice customers	2,434	2,504	(70	)	(2.8	)		166	168	(2)	(1.2	)	1,437	1,509	(72	)	(4.8	)		91	96	(5)	(5.2	)
Public authorities	76	78	(2	)	(2.6	)		6	8	(2)	(25.0	)	48	45	3		6.7			4		—	—
Other operating revenues (c)	—	—	—		—			(4)	3	(7)	Large		—	—	—		—			3	(1)	4	Large
Total	4,424	4,471	(47	)	(1.1	)%	(d)	$497	$523	$(26)	(5.0	)%	2,561	2,667	(106	)	(4.0	)%	(d)	$289	$284	$5	1.8	%


(a)	O&R’s New York electric delivery revenues are subject to a revenue decoupling mechanism, as a result of which delivery revenues are generally not affected by changes in delivery volumes from levels assumed when rates were approved. O&R’s electric sales in New Jersey ~~and Pennsylvania~~ are not subject to a decoupling mechanism, and as a result, changes in such volumes do impact revenues.


(b)	“Residential/Religious” generally includes single-family dwellings, individual apartments in multi-family dwellings, religious organizations and certain other not-for-profit organizations.


(c)	Other electric operating revenues generally reflect changes in regulatory assets and liabilities in accordance with the company’s electric rate ~~plans.~~plan.


(d)	After adjusting for weather and other variations, electric delivery volumes in O&R’s service area decreased ~~1.1~~1.4 percent in the ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017 compared with the ~~2015~~2016 period.

Operating revenues ~~decreased $26~~increased $5 million in the ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017 compared with the ~~2015~~2016 period due primarily to ~~lower purchased power costs ($15 million) and~~higher revenues from the New York electric rate ~~plans~~plan ($24 million) and higher purchased power expense ($3 million).

Purchased power expenses ~~decreased $15~~increased $3 million in the ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017 compared with the ~~2015~~2016 period due to ~~lower unit costs~~higher purchased volumes ($164 million), offset by lower ~~purchased volumes~~unit costs ($1 million).

Other operations and maintenance expenses ~~decreased $18~~increased $5 million in the ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017 compared with the ~~2015~~2016 period due primarily to ~~regulatory accounting effects of pension costs ($9 million), lower~~higher surcharges for assessments and fees that are collected in revenues from customers ($72 million) ~~and~~, operating costs related to weather events in 2017 ($32 million), and a higher reserve for injuries and damages ($1 million).

Depreciation and amortization ~~decreased~~increased $1 million in the ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017 compared with the ~~2015~~2016 period due primarily to ~~lower average depreciation rates.~~higher electric utility plant balances.

Taxes, other than income taxes increased $7$1 million in the ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017 compared with the ~~2015~~2016 period ~~principally~~ due primarily to higher property taxes.

Gas

O&R’s results of gas operations for the ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017 compared with the ~~2015~~2016 period is as follows:

For the Nine Months Ended

(Millions of Dollars) September 30, 2016 September 30, 2015 Variation
Operating revenues $133 $117 $16
Gas purchased for resale 32 40 (8)
Other operations and maintenance 40 51 (11)
Depreciation and amortization 13 13 —
Taxes, other than income taxes 20 13 7
Gas operating income $28 $0 $28

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	For the Six Months Ended
(Millions of Dollars)	June 30, 2017	June 30, 2016	Variation
Operating revenues	$144	$106	$38
Gas purchased for resale	42	23	19
Other operations and maintenance	33	26	7
Depreciation and amortization	10	9	1
Taxes, other than income taxes	15	14	1
Gas operating income	$44	$34	$10

O&R’s gas sales and deliveries, excluding off-system sales, for the ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017 compared with the ~~2015~~2016 period were:


	Thousands of Dt Delivered							Revenues in Millions (a)						Thousands of Dt Delivered							Revenues in Millions (a)
	For the Nine Months Ended							For the Nine Months Ended						For the Six Months Ended							For the Six Months Ended
Description	September 30, 2016	September 30, 2015	Variation		Percent Variation			September 30, 2016	September 30, 2015	Variation		Percent Variation		June 30, 2017	June 30, 2016	Variation		Percent Variation			June 30, 2017	June 30, 2016	Variation	Percent Variation
Residential	5,266	5,789	(523	)	(9.0	)%		$55			$—	—	%	4,977	4,712	265		5.6	%		$68	$46	$22	47.8	%
General	1,224	1,294	(70	)	(5.4	)		10		—		—		1,250	1,046	204		19.5			14	8	6	75.0
Firm transportation	7,188	9,012	(1,824	)	(20.2	)		49	51	(2)		(3.9	)	5,645	6,297	(652	)	(10.4	)		42	41	1	2.4
Total firm sales and transportation	13,678	16,095	(2,417	)	(15.0	)	(b)	114	116	(2)		(1.7	)	11,872	12,055	(183	)	(1.5	)	(b)	124	95	29	30.5
Interruptible sales	3,020	3,237	(217	)	(6.7	)		2		—		—		2,147	2,125	22		1.0			4	2		Large
Generation plants	15	25	(10	)	(40.0	)		—	—	—		—		2	12	(10	)	(83.3	)		—	—	—	—
Other	583	674	(91	)	(13.5	)		—	—	—		—		515	512	3		0.6			1	—	1	—
Other gas revenues	—	—	—		—			17	(1)	18		Large		—	—	—		—			15	9	6	66.7	%
Total	17,296	20,031	(2,735	)	(13.7	)%		$133	$117	$16		13.7	%	14,536	14,704	(168	)	(1.1	)%		$144	$106	$38	35.8	%


(a)	Revenues from New York gas sales are subject to a weather normalization clause and a revenue decoupling mechanism as a result of which delivery revenues are generally not affected by changes in delivery volumes from levels assumed when rates were approved.


(b)	After adjusting for weather and other variations, total firm sales and transportation volumes ~~increased 2.3~~decreased 0.2 percent in the ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017 compared with ~~2015~~2016 period.

Operating revenues increased ~~$16~~$38 million in the ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017 compared with the ~~2015~~2016 period due primarily to ~~the charge-off of certain regulatory assets~~an increase in ~~2015~~gas purchased for resale ($1419 million) and higher revenues from the New York gas rate plan ($~~13 million), offset in part by a decrease in gas purchased for resale ($8~~16 million).

Gas purchased for resale ~~decreased $8~~increased $19 million in the ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017 compared with the ~~2015~~2016 period due to ~~lower purchased volumes ($11 million), offset by~~ higher unit costs ($310 million) and higher purchased volumes ($9 million).

Other operations and maintenance expenses ~~decreased $11~~increased $7 million in the ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017 compared with the ~~2015~~2016 period due primarily to ~~regulatory accounting effects of~~higher pension ~~costs ($10 million)~~costs.

Depreciation and ~~lower surcharges for assessments and fees that are collected~~amortization increased $1 million in ~~revenues from customers ($2 million).~~the six months ended June 30, 2017 compared with the 2016 period due primarily to higher gas utility plant balances.

Taxes, other than income taxes increased $7$1 million in the ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017 compared with the ~~2015 period principally due to higher property taxes.~~

~~Other Income (Deductions)~~

~~Other income (deductions) increased $5 million in the nine months ended September 30,~~ 2016 ~~compared with the 2015~~ period due primarily to ~~the impairment of certain assets held for sale in 2015 (see Note P to the Third Quarter Financial Statements).~~higher state and local taxes.

Income Tax Expense

Income taxes increased ~~$13~~$3 million in the ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017 compared with the ~~2015~~2016 period due primarily to higher income before income tax ~~expense ($13 million) and plant-related flow through items ($3 million), offset in part by lower state income taxes ($1 million) and lower reimbursement in insurance claims ($1 million).~~expense.

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~~Competitive~~Clean Energy Businesses

The ~~competitive energy businesses’~~Clean Energy Businesses’ results of operations for the ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017 compared with the ~~2015~~2016 period is as follows:


	For the Nine Months Ended			For the Six Months Ended
(Millions of Dollars)	September 30, 2016	September 30, 2015	Variation	June 30, 2017	June 30, 2016	Variation
Operating revenues	$998	$1,087	$(89)	$283	$648	$(365)
Purchased power	676	812	(136)	(2)	443	(445)
Gas purchased for resale	72	94	(22)	114	33	81
Other operations and maintenance	124	98	26	94	84	10
Depreciation and amortization	30	16	14	36	19	17
Taxes, other than income taxes	16	14	2	8	11	(3)
Gain on sale of retail electric supply business	(104)	—	(104)
Gain on sale of solar electric production project (a)				1	—	1
Operating income	$184	$53	$131	$34	$58	$(24)

(a) See Note O to the Second Quarter Financial Statements.

Operating revenues decreased ~~$89~~$365 million in the ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017 compared with the ~~2015~~2016 period, due primarily to lower electric retail revenues ~~due in part to~~of $525 million from the sale of the retail electric supply business (see Note P to the Third Quarter Financial Statements). Electric retail revenues decreased $135 million due to lower unit prices ($98 million) and lower sales volume ($37 million). Wholesale revenues decreased $25 million due to lower sales volumes.in September 2016. Renewable revenues increased ~~$40~~$56 million due primarily ~~due~~ to an increase in renewable electric production projects in operation. See "Con Edison Development," below. Energy services revenues increased ~~$31~~$12 million. Wholesale revenues increased $95 million due to higher sales volumes. Net mark-to-market values increased $38 million, due primarily to the sale of the retail electric supply business, of which $35 million in losses are reflected in purchased power costs and $3 million in losses are reflected in revenues.

Purchased power expenses decreased ~~$136~~$445 million in the ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017 compared with the ~~2015~~2016 period due primarily to lower ~~unit prices~~electric costs due to the sale of the retail electric supply business in September 2016 ($85480 million)~~, lower volumes ($46 million) and~~ offset by changes in mark-to-market ~~gains~~values ($535 million).

Gas purchased for resale ~~decreased $22~~increased $81 million in the ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017 compared with the ~~2015~~2016 period due to ~~lower sales~~higher purchased volumes.

Other operations and maintenance expenses increased ~~$26~~$10 million in the ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017 compared with the ~~2015~~2016 period due primarily to an increase in energy services costs.

Depreciation and amortization increased ~~$14~~$17 million in the ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017 compared with the ~~2015~~2016 period due to an increase in solar electric production projects in operation during ~~2016.~~2017.

~~Gain on sale of retail electric supply business~~Taxes, other than income taxes ~~was $104~~decreased $3 million in the ~~nine~~six months ended ~~September~~June 30, 2017 compared with the 2016 ~~reflecting~~period due to lower gross receipts tax from the sale of the ~~competitive energy businesses'~~ retail electric supply business ~~(see Note P to the Third Quarter Financial Statements).~~in September 2016.

Other Income (Deductions)

Other income (deductions) increased $3$6 million in the ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017 compared with the ~~2015~~2016 period due primarily to the ~~earnings from equity investments.~~impairment of a solar electric production investment in 2016 of $8 million.

Net Interest Expense

Net interest expense increased ~~$18~~$6 million in the ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017 compared with the ~~2015~~2016 period due primarily to increased debt on solar electric production projects.

Income Tax Expense

Income taxes ~~increased $51~~decreased $10 million in the ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017 compared with the ~~2015~~2016 period due primarily to ~~higher~~lower income before income tax expense ($46 million) and an adjustment to deferred state income taxes as a result of the sale of the retail electric supply business that increased the competitive energy businesses' state apportionment factors on its cumulative temporary differences ($13 million), offset in part by higher renewable energy tax credits ($7 million).expense.

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Con Edison Transmission

Other Operations and Maintenance

Other operations and maintenance increased $3 million in the six months ended June 30, 2017 compared with the 2016 period due primarily to CET having no employees or other direct costs until January 1, 2017.

Net Interest Expense

Net interest expense increased $7 million in the six months ended June 30, 2017 compared with the 2016 period due primarily to a new debt issuance in 2016.

Other Income (Deductions)

Other income (deductions) increased ~~$23~~$36 million in the ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017 compared with the ~~2015~~2016 period due primarily to earnings from ~~the~~ equity investments in Stagecoach Gas Services, LLC, substantially all of which were made in June 2016.

Income Tax Expense

Income taxes increased $11 million in the six months ended June 30, 2017 compared with the 2016 ~~(see Note P).~~period due primarily to higher income before income tax expense.

Other

For Con Edison, “Other” includes parent company and consolidation adjustments.

Liquidity and Capital Resources

The Companies’ liquidity reflects cash flows from operating, investing and financing activities, as shown on their respective consolidated statement of cash flows and as discussed below.

Changes in the Companies’ cash and temporary cash investments resulting from operating, investing and financing activities for the ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017 and ~~2015~~2016 are summarized as follows:


	For the Nine Months Ended September 30,						For the Six Months Ended June 30,
	Con Edison			CECONY			Con Edison			CECONY
(Millions of Dollars)	2016	2015	Variation	2016	2015	Variation	2017	2016	Variation	2017	2016	Variation
Operating activities	$2,336	$2,199	$137	$2,017	$1,802	$215	$1,574	$1,631	$(57)	$1,234	$1,399	$(165)
Investing activities	(3,717)	(2,687)	(1,030)	(1,943)	(1,900)	(43)	(1,703)	(2,986)	1,283	(1,460)	(1,225)	(235)
Financing activities	583	(118)	701	(891)	(496)	(395)	169	1,273	(1,104)	291	(202)	493
Net change for the period	(798)	(606)	(192)	(817)	(594)	(223)	40	(82)	122	65	(28)	93
Balance at beginning of period	944	699	245	843	645	198	776	944	(168)	702	843	(141)
Balance at end of period	146	93	53	26	51	(25)	$816	$862	$(46)	$767	$815	$(48)
Less: Change in cash balances held for sale	(4)	2	(6)	—	—	—
Balance at end of period excluding held for sale	$150	$91	$59	$26	$51	$(25)

Cash Flows ~~From~~from Operating Activities

The Utilities’ cash flows from operating activities reflect ~~principally~~primarily their energy sales and deliveries and cost of operations. The volume of energy sales and deliveries is affected primarily by factors external to the Utilities, such as growth of customer demand, weather, market prices for energy and economic ~~conditions and measures~~conditions. Measures that promote distributed energy ~~efficiency.~~resources, such as distributed generation, demand reduction and energy efficiency, also affect the volume of energy sales and deliveries. Under the revenue decoupling mechanisms in the Utilities’ New York electric and gas rate plans, changes in delivery volumes from levels assumed when rates were approved may affect the timing of cash flows but generally not net income. The prices at which the Utilities provide energy to their customers are determined in accordance with their rate plans. In general, changes in the Utilities’ cost of purchased power, fuel and gas may affect the timing of cash flows but not net income because the costs are recovered in accordance with rate plans.

Net income is the result of cash and non-cash (or accrual) transactions. Only cash transactions affect the Companies’ cash flows from operating activities. Principal non-cash charges or credits include depreciation, deferred income tax expense and amortizations of certain regulatory assets and liabilities. Non-cash charges or credits may also be accrued under the revenue decoupling and cost reconciliation mechanisms in the Utilities’ New York electric and gas rate plans.

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Net cash flows from operating activities for the ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017 for Con Edison and CECONY were ~~$137~~$57 million and ~~$215~~$165 million ~~higher,~~lower, respectively, than in the ~~2015~~2016 period. The change in net cash flows for Con Edison and CECONY reflects primarily ~~the income taxes~~lower cash paid, net of refunds received, for income taxes in the ~~2016~~2017 period as compared with the ~~2015~~2016 period ~~($137~~of $107 million and ~~$273~~$203 million, ~~respectively).~~respectively. The ~~amount and timing of~~ income tax ~~payments and refunds reflect, among other things,~~refund received in 2016 reflected the extension of bonus depreciation in late 2015, resulting in a refund of the 2015 estimated federal tax ~~provisions.~~payments. This was offset in part by a change in the other current assets balance associated with the revenue decoupling mechanism in the 2017 period as compared with the 2016 period of $65 million and $69 million for Con Edison and CECONY, respectively.

The change in net cash flows also reflects the timing of payments for and recovery of energy costs. This timing is reflected within changes to accounts receivable – customers, recoverable and refundable energy costs within other regulatory assets and liabilities and accounts payable balances.

The changes in regulatory assets primarily reflect changes in deferred pension costs in accordance with the accounting rules for retirement benefits.

Cash Flows Used in Investing Activities

Net cash flows used in investing activities for Con Edison and CECONY were ~~$1,030~~$1,283 million lower and ~~$43~~$235 million higher, respectively, for the ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017 compared with the ~~2015~~2016 period. The change for Con Edison reflects primarily ~~increased~~no new investments ~~in/acquisitions of~~in renewable electric production projects ($1,170 million), a decrease in non-utility construction expenditures ($106 million) and investments in electric and gas

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transmission projects ($~~995~~63 million), offset in part by increased utility construction expenditures in ~~2016~~2017 ($219 million) and increased non-utility construction expenditures related to development of renewable electric production projects ($70 million), offset in part by the proceeds from the sale of assets ($25081 million). ~~In addition, the~~The change for CECONY reflects primarily increased utility construction expenditures ~~in 2016~~ ($~~200~~73 million)~~, offset in part by the~~ and absence of proceeds from the transfer of assets to NY Transco in 2016 ($122 million).

Cash Flows ~~From/(Used In)~~From Financing Activities

Net cash flows from financing activities for Con Edison and CECONY were ~~$701~~$1,104 million ~~higher~~lower and ~~$395~~$493 million ~~lower,~~higher, respectively, in the ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017 compared with the ~~2015~~2016 period.

In June ~~2016,~~2017, CECONY issued $500 million aggregate principal amount of 3.875 percent debentures, due 2047, the net proceeds from the sale of which were used to repay short-term borrowings and for other general corporate purposes.

In March 2017, Con Edison ~~borrowed~~issued $400 million ~~pursuant~~aggregate principal amount of 2.00 percent debentures, due 2020, and prepaid the June 2016 $400 million variable rate term loan that was to ~~a credit agreement with a syndicate of banks. The borrowing matures~~mature in ~~2018 and bears interest at a LIBOR plus margin of 1.00 percent.~~2018.

Also, in March 2017, a Con Edison Development subsidiary issued $97 million aggregate principal amount of 4.45 percent senior notes, due 2042, secured by the company’s Upton County Solar project.

In May 2016, Con Edison issued approximately 10 million common shares resulting in net proceeds, after issuance expenses, of $702 million and $500 million aggregate principal amount of 2.00 percent debentures, due 2021, the net proceeds from the sale of which were used in connection with the acquisition by a CET Gas subsidiary of a 50 percent equity interest in a gas pipeline and storage joint venture (see ~~"Con~~Con Edison ~~Transmission",~~Transmission, below) and for general corporate purposes.

In June 2016, CECONY issued $550 million aggregate principal amount of 3.85 percent ~~30-year~~ debentures, due 2046, the net proceeds from the sale of which were used to repay short-term borrowings and for other general corporate purposes. ~~In September 2016, CECONY redeemed at maturity $400 million of 5.50 percent 10-year debentures.~~

In June 2016, a Con Edison Solutions subsidiary borrowed $2 million pursuant to a loan agreement with a New Jersey utility. The borrowing matures in 2026, bears interest of 11.18 percent and may be repaid in cash or project Solar Renewable Energy Certificates.

In May 2016, a Con Edison Development subsidiary issued $95 million aggregate principal amount of 4.07 percent senior notes, due 2036, secured by the company's California Holdings 3 solar project.

In February 2016, a Con Edison Development subsidiary issued $218 million aggregate principal amount of 4.21 percent senior notes, due 2041, secured by the company's Texas Solar 7 solar project. ~~In June 2015, a Con Edison Development subsidiary issued $118 million aggregate principal amount of 3.94 percent senior notes, due 2036, secured by four of the company's solar projects.~~

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Con Edison’s cash flows from financing for six months ended June ~~2015, O&R issued $120 million of 4.95 percent 30-year debentures,~~30, 2017 and 2016 also reflect the ~~net~~ proceeds, and reduction in cash used for reinvested dividends, resulting from the ~~sale~~issuance of ~~which were used to repay short-term borrowings~~common shares under the company’s dividend reinvestment, stock purchase and ~~for other general corporate purposes. In April 2015, O&R redeemed at maturity $40~~long-term incentive plans of $50 million ~~of 5.30 percent 10-year debentures. In August 2015, O&R redeemed at maturity $55~~and $53 million, ~~of 2.50 percent 5-year debentures and $44 million of variable rate tax-exempt 20-year debt.~~respectively.

Cash flows used in financing activities of the Companies also reflect commercial paper ~~issuance.~~issuances and repayments. The commercial paper amounts outstanding at ~~September~~June 30, ~~2016~~2017 and ~~2015~~2016 and the average daily balances for the ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017 and ~~2015~~2016 for Con Edison and CECONY were as follows:


	2016		2015		2017		2016
(Millions of Dollars, except Weighted Average Yield)	Outstanding at September 30,	Daily average	Outstanding at September 30,	Daily average	Outstanding at June 30,	Daily average	Outstanding at June 30,	Daily average
Con Edison	$601	$813	$1,160	$765	$1,036	$699	$708	$992
CECONY	$480	$385	$649	$367	$750	$330	$608	$418
Weighted average yield	0.7%	0.6%	0.3%	0.4%	1.3%	1.0%	0.7%	0.6%

Capital Requirements and Resources

Con Edison has ~~increased~~decreased its estimates for capital requirements for ~~2016~~the retirement of long-term securities for 2018 from ~~$4,892~~$1,688 million to ~~$6,117~~$1,288 million. The ~~increase~~decrease reflects the ~~$975~~$400 million ~~purchase~~prepayment of a ~~50 percent equity interest~~variable rate term loan that was to mature in ~~a gas pipeline and storage joint venture.~~2018. See ~~“Con Edison Transmission,” below. The increase also reflects increased estimates of capital expenditures by its competitive energy businesses from $985 million~~Note C to $1,235 million to reflect additional renewable energy project development. See "Con Edison Development," below. The company plans to meet its 2016 capital requirements, including for maturing securities, through internally-generated funds and the ~~issuance of securities. See "Cash Flows From/(Used In) Financing Activities~~," ~~above. In September 2016, O&R agreed to issue~~

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~~and sell for delivery in December 2016 $75 million aggregate principal amount of 3.88 percent debentures, due 2046. CECONY plans to issue up to $750 million of long-term debt later in 2016.~~

Con Edison has also increased its estimates of capital expenditures by its competitive energy businesses from $360 million to $400 million for both 2017 and 2018 to reflect additional renewable energy project development.Second Quarter Financial Statements.

For each of the Companies, the ratio of earnings to fixed charges (Securities and Exchange Commission basis) for the ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017 and ~~2015~~2016 and the twelve months ended December 31, ~~2015~~2016 was:


	Ratio of Earnings to Fixed Charges			Ratio of Earnings to Fixed Charges
	For the Nine Months Ended September 30, 2016	For the Nine Months Ended September 30, 2015	For the Twelve Months Ended December 31, 2015	For the Six Months Ended June 30, 2017	For the Six Months Ended June 30, 2016	For the Twelve Months Ended December 31, 2016
Con Edison	4.0	3.9	3.5	3.3	3.2	3.6
CECONY	3.8	4.1	3.6	3.4	3.3	3.6

For each of the Companies, the common equity ratio at ~~September~~June 30, ~~2016~~2017 and December 31, ~~2015~~2016 was:

Common Equity Ratio
(Percent of total capitalization)

September 30, 2016 December 31, 2015
Con Edison 50.9 52.1
CECONY 51.0 51.4

~~Contractual Obligations~~

Con Edison’s obligations to make payments pursuant to contracts increased to $38,611 million at September 30, 2016 from $34,884 million at December 31, 2015 due primarily to increases in the company’s long-term debt ($1,358 million, including $150 million for CECONY, see "~~Cash Flows From/(Used In) Financing Activities~~," above) and interest on long-term debt ($891 million, including $704 million for CECONY). The change also reflects increases in obligations under natural gas supply, transportation and storage contracts ($1,862 million, including $1,577 million for CECONY). In addition, in October 2016, CECONY's obligations increased by $878 million reflecting the estimated aggregate annual amounts payable under the twenty-year renewal of the New York City revocable consent for the use of streets and public places for installation and operation of transformers and associated vaults and equipment.



	Common Equity Ratio (Percent of total capitalization)
	June 30, 2017	December 31, 2016
Con Edison	49.6	49.3
CECONY	50.0	49.5

Other Changes in Assets and Liabilities

The following table shows changes in certain assets and liabilities at ~~September~~June 30, ~~2016,~~2017, compared with December 31, ~~2015.~~2016.

Con Edison CECONY
(Millions of Dollars)
2016 vs. 2015
Variation
2016 vs. 2015
Variation
Assets
Investments $1,047 $32
Prepayments 403 351
Regulatory asset — Unrecognized pension and other postretirement costs (507) (477)
Income taxes receivable (100) —
Liabilities
Deferred income taxes and investment tax credits $618 $717
Pension and retiree benefits (714) (670)



	Con Edison	CECONY
(Millions of Dollars)	2017 vs. 2016 Variation	2017 vs. 2016 Variation
Assets
Regulatory asset - Unrecognized pension and other postretirement costs	$(106)	$(118)
Liabilities
Pension and retiree benefits	$(195)	$(226)
Deferred income taxes and unamortized investment tax credits	344	343
System benefit charge	132	120

~~Investments~~

The increase in investments for Con Edison reflects the purchase of a 50 percent equity interest in a natural gas pipeline and storage joint venture. See “Con Edison Transmission,” below and Note P to the Third Quarter Financial Statements.

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~~Prepayments~~

~~The increase in prepayments for Con Edison and CECONY reflects primarily the portion allocable to the 2016 fourth quarter of CECONY's July 2016 payment of its New York City semi-annual property taxes.~~

Regulatory Asset for Unrecognized Pension and Other Postretirement Costs and Liability for Pension and Retiree Benefits

The decrease in the regulatory asset for unrecognized pension and other postretirement costs and the liability for pension and retiree benefits reflects the final actuarial valuation of the pension and other retiree benefit plans as measured at December 31, ~~2015,~~2016, in accordance with the accounting rules for retirement benefits. The change in the regulatory asset also reflects the year’s amortization of accounting costs. The change in the liability for pension and retiree benefits reflects in part contributions to the plans made by the Utilities in ~~2016.~~2017. See Notes B, E and F to the ~~Third~~Second Quarter Financial Statements.

~~Income Taxes Receivable~~

The decrease in income taxes receivable for Con Edison reflects primarily the refund received in February 2016 from the Internal Revenue Service as a result of the extension of bonus depreciation in December 2015.

Deferred Income Taxes and Unamortized Investment Tax Credits

The increase in the liability for deferred income taxes and unamortized investment tax credits for Con Edison and CECONY reflects primarily bonus depreciation in ~~2016,~~2017, partially offset by the increase in deferred income tax assets associated with the federal tax attribute carryforwards related to the net operating loss and general business tax credits. See Note I to the Second Quarter Financial Statements.

System Benefit Charge

The increase in the liability for the system benefit charge reflects amounts collected by the Utilities from their customers that will be required to be paid to NYSERDA.

Off-Balance Sheet Arrangements

None of the Companies’ ~~interests in variable interest entities (VIEs) meet~~transactions, agreements or other contractual arrangements meets the ~~Securities and Exchange Commission~~SEC definition of off-balance sheet arrangements. ~~For information regarding the Companies’ VIEs, see Note M to the Third Quarter Financial Statements.~~

Regulatory Matters

In March 2016, the New York State Public Service Commission (NYSPSC) issued an order in which it approved CECONY’s advanced metering infrastructure (AMI) plan for the company’s electric and gas delivery businesses, subject to a cap on capital expenditures of $1,285 million. AMI components include smart meters, a communication network, information technology systems and business applications. The plan provides for full deployment of AMI to the company’s customers to be implemented over a six-year period. The NYSPSC directed CECONY to submit a customer engagement plan, an update to the company’s benefit cost analysis and metrics that the NYSPSC can use to monitor the success of the project.

~~In May 2016,~~2017, the NYSPSC issued an order ~~in its Reforming~~that changes the Energy Vision (REV) proceeding adopting a ratemaking and utility revenue framework. The order indicated that utilities will have four ways of achieving earnings: traditional cost-of-service earnings; earnings tied to achievement of alternatives that reduce utility capital spending and provide definitive consumer benefit; earnings from market-facing platform activities; and transitional outcome-based performance measures. The order also indicated, among other things, that existing measures for negative revenue adjustments for utility failure to meet basic service standards should generally be retained and net utility plant reconciliations should be modified to encourage cost-effectiveway distributed energy resources ~~(DER) as an alternative~~are compensated and begins to ~~utility capital investment.~~phase out net energy metering. In New York, net energy metering compensates kilowatt-hours exported to the electric distribution system at the full service rate (that is production plus delivery plus taxes and fees). To provide a gradual transition, the NYSPSC allowed all existing resources to keep their current rate treatment and will delay making significant changes to policies affecting new residential and small commercial rooftop solar until 2020. Larger installations, including new commercial and industrial projects and new community solar projects, will be paid for the value of their exports to the electricity distribution system. The ~~order directs each utility~~new policy establishes a 2 percent limit on bill increases, reducing the shifting of avoided distribution costs to ~~file~~non-participating residential customers that would have occurred under net energy metering.

For additional information about the Utilities’ regulatory matters, see Note B to the Second Quarter Financial Statements.

Environmental Matters

In May 2017, a ~~system efficiency proposal; an interconnection survey process~~transformer failure at a CECONY substation discharged thousands of gallons of transformer oil into the soil. Some of the transformer oil, which contained small amounts of polychlorinated biphenyls (PCBs), leaked into the East River. The company, the U.S. Coast Guard, the New York State Department of Environmental Conservation and ~~proposed earnings adjustment mechanism;~~other agencies responded to the incident. The company has replaced the transformer, and is continuing to remediate and monitor the site, the costs of which are not expected to have a ~~progress report~~material adverse effect on ~~aggregated data reporting automation; an aggregated data privacy policy statement; revisions to standby service tariffs~~its financial condition, results of operations or liquidity. In connection with the incident, the company may incur monetary sanctions of more than $0.1 million for violations of certain provisions regulating the discharge of materials into, and ~~cost allocation matrix; one or more smart home rate demonstration proposals; and revisions to voluntary time~~for the protection of, ~~use rates and promotion and education tools.~~the environment.

In June ~~2016,~~2017, CECONY received a notice of potential liability from the U.S. Environmental Protection Agency (EPA) with respect to the Newtown Creek site that was listed in 2010 on the EPA’s National Priorities List of Superfund sites. The EPA has identified fourteen potentially responsible parties (PRPs) with respect to the site, including CECONY, and ~~O&R each filed initial distributed system implementation plans with~~has indicated that it will notify the ~~NYSPSC,~~company as additional PRPs are identified and notified by the EPA. Newtown Creek and its tributaries (collectively, Newtown Creek) form a 3.8 mile border between Brooklyn and Queens, New York. Currently, the predominant land use around Newtown Creek includes industrial, petroleum, recycling, manufacturing and distribution facilities and warehouses. Other uses include trucking, concrete manufacture, transportation infrastructure and a wastewater treatment plant. Newtown Creek is near several residential neighborhoods. Six PRPs, not including CECONY, pursuant to ~~which~~an administrative settlement agreement and order on consent the ~~companies provide additional system and planning information for third-party developers~~EPA issued to ~~facilitate the integration of DER~~them in ~~the distributed system platform.~~

~~In August 2016, the NYSPSC issued an order adopting the New York State Energy Plan’s goal of 50 percent~~2011, have been performing a remedial investigation of the ~~State’s electricity~~site. The EPA indicated that sampling events have shown the sediments in Newtown Creek to be ~~generated by renewable sources by 2030 as part of~~contaminated with a ~~strategy to reduce statewide greenhouse gas emissions 40 percent by 2030. The NYSPSC also adopted a Clean Energy Standard (CES) that~~

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~~includes renewable energy credit (REC)~~wide variety of hazardous substances including PCBs, metals, pesticides, polycyclic aromatic hydrocarbons and ~~zero-emissions credit (ZEC) requirements. Beginning in 2017, load serving entities (LSEs), including~~volatile organic contaminants. The EPA also indicated that it has reason to believe that hazardous substances have come to be released from CECONY facilities into Newtown Creek. The EPA’s current schedule anticipates completion of a feasibility study for the site by late 2018 and ~~O&R~~issuance of its record of decision selecting a remedy for ~~their full-service customers, will be required~~the site by late 2020. CECONY is unable to ~~obtain RECs and ZECs in amounts determined by~~estimate its exposure to liability for the NYSPSC. LSEs may satisfy their REC obligation by either purchasing RECs acquired through central procurement by the New York State Energy Research and Development Authority (NYSERDA), by self-supply through direct purchase of tradable RECs, or by making alternative compliance payments. LSEs will purchase ZECs from NYSERDA at prices determined by the NYSPSC. The order establishes an annual NYSPSC staff review and triennial NYSPSC review of the CES. Newtown Creek site.

For ~~certain~~additional information about the ~~Utilities' rate plans and other regulatory~~Companies’ environmental matters, ~~affecting the Companies,~~ see Note BG to the ~~Third~~Second Quarter Financial Statements.

Con Edison Development

The following table provides information about the renewable electric production projects Con Edison Development owned at ~~September~~June 30, ~~2016:~~2017:


Project Name	Production Technology	Generating Capacity (a) (MW AC)	Power Purchase Agreement Term (in Years)	Actual/Expected In-Service Date	Location	Production Technology	Generating Capacity (a) (MW AC)	Purchased Power Agreement (PPA)Term (In Years) (b)	Actual/Expected In-Service Date (c)	Location (State)
Wholly owned projects
Pilesgrove ~~(c)~~	Solar	18	n/a (b)	2011	New Jersey	Solar	18	(d)	2011	New Jersey
Flemington Solar	Solar	8	n/a (b)	2011	New Jersey	Solar	8	(d)	2011	New Jersey
Frenchtown I, II and III	Solar	14	n/a (b)	2011-13	New Jersey	Solar	14	(d)	2011-13	New Jersey
PA Solar	Solar	10	n/a (b)	2012	Pennsylvania	Solar	10		2012	Pennsylvania
California Solar 2(e)	Solar	80	20	2014-16	California	Solar	80	20	2014-16	California
Oak Tree Wind	Wind	20		2014	South Dakota	Wind	20		2014	South Dakota
Texas Solar 3	Solar	6	25	2015	Texas	Solar	6	25	2015	Texas
Texas Solar 5(e)	Solar	95	25	2015	Texas	Solar	95	25	2015	Texas
Campbell County Wind	Wind	95	30	2015	South Dakota	Wind	95	30	2015	South Dakota
Texas Solar 7 ~~(c)~~(e)	Solar	106	25	2016	Texas	Solar	106	25	2016	Texas
California Solar 3 (e)						Solar	110	20	2016	California
Adams Wind (e)						Wind	23	7	2016	Minnesota
Valley View (e)						Wind	10	14	2016	Minnesota
Coram (e)						Wind	102	16	2016	California
Projects of less than 5 MW	Solar	20	Various (b)	Various	Various	Solar / Wind	25	Various	Various	Various
Jointly owned projects (d)
Jointly owned projects (e) (f)
California Solar	Solar	55	25	2012-13	California	Solar	55	25	2012-13	California
Mesquite Solar 1	Solar	83	20	2013	Arizona	Solar	83	20	2013	Arizona
Copper Mountain Solar 2	Solar	75	25	2013-15	Nevada	Solar	75	25	2013-15	Nevada
Copper Mountain Solar 3	Solar	128	20	2014-15	Nevada	Solar	128	20	2014-15	Nevada
Broken Bow II	Wind	38	25	2014	Nebraska	Wind	38	25	2014	Nebraska
Texas Solar 4	Solar	32	25	2014	Texas	Solar	32	25	2014	Texas
Total MW (AC) in Operation		883					1,133
California Solar 3	Solar	110	20	2016	California
Upton County	Solar	150	25	2017	Texas
Panoche Valley (d)	Solar	120	20	2019	California
Upton County Solar (e)						Solar	158	25	2017	Texas
Panoche Valley						Solar	240	20	2018	California
Total MW (AC) in Construction		380					398
Total MW (AC), All Projects		1,263 (e)					1,531


~~(a)~~	~~Represents Con Edison Development’s ownership interest in the project.~~


~~(b)~~	~~New Jersey, Pennsylvania and Massachusetts assets have 3-4 year Solar Renewable Energy Credit hedges in place.~~

~~(c)~~

(a) Represents Con Edison Development’s ownership interest in the project.

(b) Represents PPA contractual term or remaining term from Con Edison Development’s date of acquisition.

(d) Have Solar Renewable Energy Credit hedges in place, in lieu of PPAs, out to 2020.

(e) Project has been pledged to secure financing for the project.

(f) All of the jointly-owned projects are 50 percent owned, except for Texas Solar 4 (which is 80 percent owned). See Note M to the Second

~~See Note P to the Third~~ Quarter Financial Statements.


~~(d)~~	~~See Note M to the Third Quarter Financial Statements.~~


~~(e)~~	~~Additionally, in October 2015, Con Edison Development purchased Lost Hills, which is developing but has not started constructing, a 20 MW (AC) solar electric production project in California.~~

Con Edison Development's renewable electric production volumes generated for the three and six months ended June 30, 2017 compared with the 2016 period were:

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~~Con Edison Transmission~~

~~CET Electric~~

In March 2016, the Federal Energy Regulatory Commission approved a November 2015 settlement agreement applicable to three transmission projects that the NYSPSC approved in October 2013 in its proceeding to address potential needs that could arise should the Indian Point Energy Center (which is owned by Entergy Corporation subsidiaries) no longer be able to operate. CECONY developed and, in May 2016, transferred two of the projects to New York Transco LLC. See Note P to the Third Quarter Financial Statements. The settlement agreement, among other things, provides for a 10 percent return on common equity (and/or 9.5 percent for capital costs in excess of $228 million incurred for initial commercial operation), a maximum common equity ratio of 53 percent and allocation of 63 percent of the costs of the projects to load serving entities in the CECONY and O&R service areas.

~~CET Gas~~

In April 2016, a CET Gas subsidiary agreed with a subsidiary of Crestwood Equity Partners LP to form a joint venture to own, operate and further develop a gas pipeline and storage business located in northern Pennsylvania and southern New York. In June 2016, the transaction was substantially completed. See Note P to the ~~Third~~ ~~Quarter Financial Statements.~~



	Millions of kWh Generated
	For the Three Months Ended					For the Six Months Ended
Description	June 30, 2017	June 30, 2016	Variation	Percent Variation		June 30, 2017	June 30, 2016	Variation	Percent Variation
Renewable electric production projects
Solar	612	438	174	39.7	%	1,011	757	254	33.6	%
Wind	279	172	107	62.2	%	517	327	190	58.1	%
Total	891	610	281	46.1	%	1,528	1,084	444	41.0	%

Financial and Commodity Market Risks

The Companies are subject to various risks and uncertainties associated with financial and commodity markets. The most significant market risks include interest rate risk, commodity price risk, credit risk and investment risk.

Interest Rate Risk

The Companies’ interest rate risk relates primarily to variable rate debt and to new debt financing needed to fund capital requirements, including the construction expenditures of the Utilities and maturing debt securities. Con Edison and its businesses manage interest rate risk through the issuance of mostly fixed-rate debt with varying maturities and through opportunistic refinancing of debt. Con Edison and CECONY estimate that at ~~September~~June 30, ~~2016,~~2017, a 10 percent increase in interest rates applicable to its variable rate debt would result in an increase in annual interest expense of $2$3 million. Under CECONY’s current electric, gas ~~steam~~ and ~~electric~~steam rate plans, variations in actual variable rate tax-exempt debt interest expense are reconciled to levels reflected in rates.

Commodity Price Risk

Con Edison’s commodity price risk relates primarily to the purchase and sale of electricity, gas and related derivative instruments. The Utilities and ~~Con Edison’s competitive energy businesses~~the Clean Energy Businesses apply risk management strategies to mitigate their related exposures. See Note K to the ~~Third~~Second Quarter Financial Statements.

Con Edison estimates that, as of ~~September~~June 30, ~~2016,~~2017, a 10 percent decline in market prices would result in a decline in fair value of ~~$61~~$55 million for the derivative instruments used by the Utilities to hedge purchases of electricity and gas, of which ~~$54~~$48 million is for CECONY and $7 million is for O&R. Con Edison expects that any such change in fair value would be largely offset by directionally opposite changes in the cost of the electricity and gas purchased. In accordance with provisions approved by state regulators, the Utilities generally recover from customers the costs they incur for energy purchased for their customers, including gains and losses on certain derivative instruments used to hedge energy purchased and related costs.

~~Con Edison’s competitive energy businesses~~The Clean Energy Businesses use a value-at-risk (VaR) model to assess the market price risk of their portfolio of electricity and gas commodity fixed-price purchase and sales commitments, physical forward contracts, generating assets and commodity derivative instruments. VaR represents the potential change in fair value of the portfolio due to changes in market prices, for a specified time period and confidence level. These businesses estimate VaR across their portfolio using a delta-normal variance/covariance model with a 95 percent confidence level and compare the measured VaR results against performance due to actual prices and stress test the portfolio each quarter using an assumed 30 percent price change from forecast. Since the VaR calculation involves complex methodologies and estimates and assumptions that are based on past experience, it is not necessarily indicative of future results. VaR for the portfolio, assuming a one-day holding period, for the ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017 and the year ended December 31, ~~2015,~~2016, respectively, was as follows:



95% Confidence Level, One-Day Holding Period	June 30, 2017		December 31, 2016
	(Millions of Dollars)
Average for the period		$—	$2
High	1		4
Low	—		1

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95% Confidence Level, One-Day Holding Period September 30, 2016 December 31, 2015
(Millions of Dollars)
Average for the period $2 $1
High 4 2
Low 1 —

Credit Risk

The Companies are exposed to credit risk related to transactions entered into primarily for the various energy supply and hedging activities by the Utilities and the ~~competitive energy businesses.~~Clean Energy Businesses. See the discussion of credit exposure in Note K to the ~~Third~~Second Quarter Financial Statements.

Investment Risk

The Companies’ investment risk relates to the investment of plan assets for their pension and other postretirement benefit ~~plans.~~ plans and to the investments of the Clean Energy Businesses and Con Edison Transmission that are accounted for under the equity method.

The Companies’ current investment policy for pension plan assets includes investment targets of 5553 to 6563 percent equities and 35 to 4549 percent fixed income and other securities. At ~~September~~June 30, ~~2016,~~2017, the pension plan investments consisted of 58 percent equity and 42 percent fixed income and other securities.

For the Utilities’ pension and other postretirement benefit plans, regulatory accounting treatment is generally applied in accordance with the accounting rules for regulated operations. In accordance with the Statement of Policy issued by the NYSPSC and its current electric, gas and steam rate plans, CECONY defers for payment to or recovery from customers the difference between the pension and other postretirement benefit expenses and the amounts for such expenses reflected in rates. Generally, O&R also defers such difference pursuant to its rate plans.

Material Contingencies

For information concerning potential liabilities arising from the Companies’ material contingencies, see "Other Regulatory Matters" in Note B and Notes B, G and H to the ~~Third~~Second Quarter Financial Statements.

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Item 3: Quantitative and Qualitative Disclosures About Market Risk

For information about the Companies’ primary market risks associated with activities in derivative financial instruments, other financial instruments and derivative commodity instruments, see “Financial and Commodity Market Risks,” in Part I, Item 2 of this report, which information is incorporated herein by reference.

Item 4: Controls and Procedures

The Companies maintain disclosure controls and procedures designed to provide reasonable assurance that the information required to be disclosed in the reports that they submit to the Securities and Exchange Commission (SEC) is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Securities Exchange Act of 1934, as amended, is accumulated and communicated to the issuer’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. For each of the Companies, its management, with the participation of its principal executive officer and principal financial officer, has evaluated its disclosure controls and procedures as of the end of the period covered by this report and, based on such evaluation, has concluded that the controls and procedures are effective to provide such reasonable assurance. Reasonable assurance is not absolute assurance, however, and there can be no assurance that any design of controls or procedures would be effective under all potential future conditions, regardless of how remote.

There was no change in the Companies’ internal control over financial reporting that occurred during the Companies’ most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Companies’ internal control over financial reporting.

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Part II Other Information

Item 1: Legal Proceedings

For information about certain legal proceedings affecting the Companies, see "Other Regulatory Matters" in Note B and Notes B, G and H to the financial statements in Part I, Item 1 of this report and "Environmental Matters" in Part I, Item 2 of this report, which information is incorporated herein by reference.

Item 1A: Risk Factors

There were no material changes in the Companies’ risk factors compared to those disclosed in Item 1A of the Form 10-K.

Item 6: Exhibits

Con Edison



Exhibit 10.1	Amendment to the Severance Program for Officers of Consolidated Edison, Inc. and its Subsidiaries.
Exhibit 12.1	Statement of computation of Con Edison’s ratio of earnings to fixed charges for the ~~nine-month~~six-month periods ended ~~September~~June 30, ~~2016~~2017 and ~~2015,~~2016, and the 12-month period ended December 31, ~~2015.~~2016.
Exhibit 31.1.1	Rule 13a-14(a)/15d-14(a) Certifications – Chief Executive Officer.
Exhibit 31.1.2	Rule 13a-14(a)/15d-14(a) Certifications – Chief Financial Officer.
Exhibit 32.1.1	Section 1350 Certifications – Chief Executive Officer.
Exhibit 32.1.2	Section 1350 Certifications – Chief Financial Officer.
Exhibit 101.INS	XBRL Instance Document.
Exhibit 101.SCH	XBRL Taxonomy Extension Schema.
Exhibit 101.CAL	XBRL Taxonomy Extension Calculation Linkbase.
Exhibit 101.DEF	XBRL Taxonomy Extension Definition Linkbase.
Exhibit 101.LAB	XBRL Taxonomy Extension Label Linkbase.
Exhibit 101.PRE	XBRL Taxonomy Extension Presentation Linkbase.

CECONY



Exhibit 4.2	Form of CECONY’s 3.875% Debentures, Series 2017 A (Designated in CECONY’s Edison's Current Report on Form 8-K, dated June 5, 2017 (File No. 1-1217) as Exhibit 4).
Exhibit 10.2	The Consolidated Edison Company of New York, Inc. 2005 Executive Incentive Plan, as amended and restated effective January 1, 2017.
Exhibit 12.2	Statement of computation of CECONY’s ratio of earnings to fixed charges for the ~~nine-month~~six-month periods ended ~~September~~June 30, ~~2016~~2017 and ~~2015,~~2016, and the 12-month period ended December 31, ~~2015.~~2016.
Exhibit 31.2.1	Rule 13a-14(a)/15d-14(a) Certifications – Chief Executive Officer.
Exhibit 31.2.2	Rule 13a-14(a)/15d-14(a) Certifications – Chief Financial Officer.
Exhibit 32.2.1	Section 1350 Certifications – Chief Executive Officer.
Exhibit 32.2.2	Section 1350 Certifications – Chief Financial Officer.
Exhibit 101.INS	XBRL Instance Document.
Exhibit 101.SCH	XBRL Taxonomy Extension Schema.
Exhibit 101.CAL	XBRL Taxonomy Extension Calculation Linkbase.
Exhibit 101.DEF	XBRL Taxonomy Extension Definition Linkbase.
Exhibit 101.LAB	XBRL Taxonomy Extension Label Linkbase.
Exhibit 101.PRE	XBRL Taxonomy Extension Presentation Linkbase.

Pursuant to Item 601(b)(4)(iii)(A) of Regulation S-K, instruments defining the rights of holders of long-term debt of Con Edison’s subsidiaries other than CECONY, the total amount of which does not exceed ten percent of the total assets of Con Edison and its subsidiaries on a consolidated basis, are not filed as exhibits to Con Edison’s Form 10-K or Form 10-Q. Con Edison agrees to furnish to the SEC upon request a copy of any such instrument.

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Table of Contents

Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, each Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



	Consolidated Edison, Inc.
	Consolidated Edison Company of New York, Inc.

Date: ~~November~~August 3, ~~2016~~2017	By	/s/ Robert Hoglund
		Robert Hoglund Senior Vice President, Chief Financial Officer and Duly Authorized Officer

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	Common Equity Ratio (Percent of total capitalization)
	September 30, 2016	December 31, 2015
Con Edison	50.9	52.1
CECONY	51.0	51.4