NOTES TO THE FINANCIAL STATEMENTS (UNAUDITED)
General
These combined notes accompany and form an integral part of the separate interim consolidated financial statements of each of the two2 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 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. (together with its subsidiaries, Con Edison Transmission) 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 presentationstatement 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, 2016 and their separate unaudited financial statements (including the combined notes thereto) included in Part 1, Item 1 of their combined Quarterly Report on Form 10-Q for the quarterly periods ended March 31, 2017 and June 30, 2017. Certain prior period amounts have been reclassified to conform to the current period presentation.2021.
Con Edison has two2 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 YorkNY and northern New JerseyNJ and gas service in southeastern New York.NY. Con Edison Clean Energy Businesses, Inc. has three subsidiaries: Consolidated Edison Development, Inc. (Con Edison Development), a company thatthrough its subsidiaries, develops, owns and operates renewable and sustainable energy infrastructure projects; Consolidated Edison Energy, Inc. (Con Edison Energy), a company thatprojects and provides energy-related products and services to wholesale customers; and Consolidated Edison Solutions, Inc. (Con Edison Solutions), a company that provides energy-related products and services to retail customers. Con Edison Transmission, Inc. invests in and seeks to develop electric transmission facilitiesprojects through its subsidiary, Consolidated Edison Transmission, LLC (CET Electric), and investsmanages, through joint ventures, investments in gas pipeline and storage facilities through its subsidiary Con Edison Gas Pipeline and Storage, LLC (CET Gas). See “Investments” in Note A.
Note A – Summary of Significant Accounting Policies and Other Matters
Accounting Policies
The accounting policies of Con Edison and its subsidiaries conform to generally accepted accounting principles in the United States of America (GAAP). For the Utilities, these accounting principles include the accounting rules for regulated operations and the accounting requirements of the Federal Energy Regulatory Commission (FERC) and the state regulators having jurisdiction.
Investments
Con Edison's investments consist primarily of the investments of Con Edison Transmission that are accounted for under the equity method and the fair value of the Utilities' supplemental retirement income plan and deferred income plan assets.
2021 Partial Impairment of Investment in Stagecoach Gas Services LLC (Stagecoach)
At March 31, 2021, Con Edison Transmission owned, through subsidiaries, a 50 percent interest in Stagecoach Gas Services, LLC (Stagecoach), a joint venture that owns and operates an existing gas pipeline and storage business located in northeastern PA and the southern tier of NY. Con Edison was in the process of considering strategic alternatives regarding its 50 percent interest in Stagecoach. As a result of information made available to Stagecoach as part of that process, Stagecoach performed a goodwill impairment test that resulted in Stagecoach recording a goodwill impairment charge of $343 million at March 31, 2021. Accordingly, Con Edison recorded a pre-tax loss on its interest in Stagecoach of $172 million ($120 million after-tax) within "Investment income/(loss)" on Con Edison's consolidated income statement at March 31, 2021 that reduced the carrying value of its investment in Stagecoach from $839 million to $667 million.
Stagecoach's goodwill impairment charge and information obtained from Con Edison's strategic evaluation process constituted a triggering event for Con Edison's investment in Stagecoach as of March 31, 2021. Con Edison evaluated the carrying value of its investment in Stagecoach of $667 million for an other-than-temporary decline in value using an income and market-based approach. Con Edison determined that the carrying value of its investment in Stagecoach of $667 million was not impaired as of March 31, 2021.
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In May 2021, a subsidiary of Con Edison Gas Pipeline and Storage, LLC (CET Gas) and its joint venture partner agreed to sell their combined interests in Stagecoach for a total of $1,225 million, of which $629 million, including closing adjustments, was attributed to CET Gas for its 50 percent interest. The purchase and sale agreement provided for a two-stage closing, the first of which was completed in July 2021 and the second of which was completed in November 2021. For the year ended December 31, 2021, CET Gas recorded pre-tax impairment losses on its interest in Stagecoach of $212 million in aggregate ($147 million after-tax). CET Gas had no remaining investment in Stagecoach as of December 31, 2021 and March 31, 2022.
2021 and 2020 Partial Impairments of Investment in Mountain Valley Pipeline, LLC (MVP)
In January 2016, Con Edison Gas Pipeline and Storage, LLC (CET Gas), an indirect subsidiary of Con Edison, acquired a 12.5 percent equity interest in MVP, a company developing a proposed 300-mile gas transmission project (the Project) in WV and VA. During 2019, Con Edison exercised its right to limit, and did limit, its cash contributions to the joint venture to approximately $530 million, which reduced CET Gas' interest in MVP to 11.3 percent and 10.2 percent as of December 31, 2020 and 2021, respectively. As of March 31, 2022 CET Gas' interest in MVP is 10.0 percent and is expected to be reduced to 8.0 percent based on the Project's current cost estimate and CET Gas' previous capping of its cash contributions. As of December 31, 2020 and 2021, the Project was approximately 92 percent and 94 percent complete, respectively.
During 2020, progress was made on the construction of the Project, and the U.S. Supreme Court issued favorable decisions in cases unrelated to MVP regarding the permitting process for pipeline construction and water crossings. In November 2020, the U.S. Court of Appeals for the Fourth Circuit issued a stay on the Nationwide Permit 12, effectively blocking the Project’s ability to pursue water crossings under that permit. As a result, in November 2020 the Project applied to the FERC for a certificate amendment to bore under water bodies in a portion of the Project in WV, allowing this portion of the pipe to be completed and placed in-service while a plan for the remaining water crossings was pursued. If approved, this certificate amendment would have led to additional Project costs and would have extended the anticipated in-service date. In January 2021, the FERC did not approve the requested certificate amendment. Later in January 2021, the Project indicated its plans to apply for U.S. Army Corps of Engineers individual permits for certain water crossings and a new certificate amendment application to the FERC to bore under other water crossings that, in total, would cover the entire Project length.
The uncertainty related to obtaining necessary water crossing permits, the resulting Project costs and the likelihood of the Project not reaching eventual completion increased as a result of actions taken by the U.S. Court of Appeals for the Fourth Circuit. This action and associated delays constituted a triggering event (the "2020 triggering event") that required Con Edison to test its investment in MVP for an other-than-temporary impairment as of December 31, 2020.
In December 2021, the Virginia Department of Environmental Quality and the West Virginia Department of Environmental Protection both issued water quality certification permits which are required in order for the U.S. Army Corps of Engineers to proceed with the permitting process for construction of certain Project water crossings. In January 2022, the U.S. Court of Appeals for the Fourth Circuit rejected permits for crossings through the Jefferson National Forest issued by the U.S. Forest Service and Bureau of Land Management. In February 2022, the U.S. Court of Appeals for the Fourth Circuit vacated a biological opinion from the U.S. Fish and Wildlife Service, applicable to all remaining construction. The biological opinion had been issued and was the subject of litigation prior to December 31, 2021. Con Edison believed that the February 2022 action by the U.S. Court of Appeals for the Fourth Circuit, along with the potential outcome of other matters pending before that Court, may lead to further delays and increased Project costs, which constituted a triggering event (the “2021 triggering event”) that required Con Edison to test its investment in MVP for an other-than-temporary impairment as of December 31, 2021.
In response to the 2020 triggering event and 2021 triggering event, Con Edison assessed the value of its equity investment in the Project to determine whether the fair value of its investment in MVP had declined below its carrying value on an other-than-temporary basis as of December 31, 2020 and 2021, respectively. The estimated fair value of the investment was determined using a discounted cash flow analysis, which is a level 3 fair value measurement. The analysis discounted probability-weighted future cash flows, including revenues based on long-term firm transportation contracts, that are secured for the first 20 years following completion of the Project. See Note Q. Con Edison has also assumed cash flows extending beyond this period. All cash flows were discounted at a pre-tax discount rate of 8.3 percent and then weighted based on Con Edison’s estimate of the likelihood that the Project will be completed. For the 2020 triggering event, Con Edison estimated that the likelihood of Project completion was in the upper end of a reasonably possible range. For the 2021 triggering event, Con Edison anticipated that the Project faces legal and regulatory challenges that make construction completion increasingly remote. The Project faces additional delays and increased costs that could further reduce CET Gas' interest in MVP
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to below 8 percent based on CET Gas' previous capping of its cash contributions. The likelihood that the Project will be completed and, for 2020, the discount rate, are the most significant and sensitive assumptions; changes in these assumptions may materially change the results of the impairment calculation.
Based on the discounted cash flow analyses, Con Edison concluded as of December 31, 2020 and 2021 that the fair value of its investment in MVP declined below its carrying value and the declines were other-than-temporary. Accordingly, Con Edison recorded a pre-tax impairment loss of $320 million ($223 million, after tax) for the year ended December 31, 2020 that reduced the carrying value of its investment in MVP from $662 million to $342 million, with an associated deferred tax asset of $53 million. Additionally, Con Edison recorded a pre-tax impairment loss of $231 million ($162 million, after tax) for the year ended December 31, 2021 that reduced the carrying value of its investment in MVP from $342 million to $111 million with an additional $77 million associated deferred tax asset, totaling a deferred tax asset of $130 million at December 31, 2021 and March 31, 2022. The impairments were recorded within “Investment income (loss)” on Con Edison’s Consolidated Income Statement. In addition, Con Edison did not record non-cash equity in earnings from allowance for funds used during construction from MVP beginning in January 2021 and will continue to refrain from recording such amounts until such time as substantial construction activities resume, which would be indicative of probable Project completion. There were no impairments or substantial changes in the carrying value of Con Edison's investment in MVP for the three months ended March 31, 2022.
There is risk that the fair value of Con Edison’s investment in MVP may be further or fully impaired in the future. There are ongoing legal and regulatory matters that must be resolved favorably before the Project can be completed. Assumptions and estimates used to test Con Edison’s investment in MVP for impairment may change if adverse or delayed resolutions to the Project’s pending legal and regulatory challenges were to occur, which could have a material adverse effect on the fair value of Con Edison’s investment in MVP.
Reclassification
Certain prior period amounts have been reclassified within the Companies' Consolidated Statements of Cash Flows and Consolidated Balance Sheets to conform with current period presentation.
Earnings Per Common Share
Con Edison presents basic and diluted earnings per share (EPS) on the face of its consolidated income statement. Basic EPS is calculated by dividing earnings available to common shareholders (“Net income”income for common stock” 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 and deferred stock units and stock options for which the average market price of the common shares for the period was greater than the exerciseestimated vesting price.
For the three and nine months ended September 30, 2017March 31, 2022 and 2016,2021, basic and diluted EPS for Con Edison are calculated as follows:
| For the Three Months Ended March 31, | ||||||||
| (Millions of Dollars, except per share amounts/Shares in Millions) | 2022 | 2021 | ||||||
| Net income for common stock | $602 | $419 | ||||||
| Weighted average common shares outstanding – basic | 354.1 | 342.2 | ||||||
| Add: Incremental shares attributable to effect of potentially dilutive securities | 1.0 | 0.8 | ||||||
| Adjusted weighted average common shares outstanding – diluted | 355.1 | 343.0 | ||||||
| Net Income per common share – basic | $1.70 | $1.23 | ||||||
| Net Income per common share – diluted | $1.70 | $1.22 | ||||||
The computation of diluted EPS for the three months ended March 31, 2022 and 2021 excludes immaterial amounts of performance share awards that were not included because of their anti-dilutive effect.
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| For the Three Months Ended September 30, | For the Nine Months Ended September 30, | |||
| (Millions of Dollars, except per share amounts/Shares in Millions) | 2017 | 2016 | 2017 | 2016 |
| Net income | $457 | $497 | $1,020 | $1,039 |
| Weighted average common shares outstanding – basic | 307.8 | 304.5 | 306.2 | 299.1 |
| Add: Incremental shares attributable to effect of potentially dilutive securities | 1.5 | 1.4 | 1.5 | 1.4 |
| Adjusted weighted average common shares outstanding – diluted | 309.3 | 305.9 | 307.7 | 300.5 |
| Net Income per common share – basic | $1.48 | $1.63 | $3.33 | $3.47 |
| Net Income per common share – diluted | $1.48 | $1.62 | $3.31 | $3.46 |
Changes in Accumulated Other Comprehensive Income/(Loss) by Component
For the three and nine months ended September 30, 2017March 31, 2022 and 2016,2021, changes to accumulated other comprehensive income/(loss) (OCI) for Con Edison and CECONY are as follows:
| For the Three Months Ended March 31, | ||||||||||||||
| Con Edison | CECONY | |||||||||||||
| (Millions of Dollars) | 2022 | 2021 | 2022 | 2021 | ||||||||||
| Beginning balance, accumulated OCI, net of taxes (a) | $5 | $(25) | $— | $(7) | ||||||||||
| OCI before reclassifications, net of tax of $1 and $(1) for Con Edison in 2022 and 2021, respectively | (1) | 2 | — | — | ||||||||||
| Amounts reclassified from accumulated OCI related to pension plan liabilities, net of tax of $(1) for Con Edison in 2021 (a)(b) | 1 | 2 | 1 | — | ||||||||||
| Current period OCI, net of taxes | — | 4 | 1 | — | ||||||||||
| Ending balance, accumulated OCI, net of taxes (a) | $5 | $(21) | $1 | $(7) | ||||||||||
| For the Three Months Ended September 30, | |||||
| Con Edison | CECONY | ||||
| (Millions of Dollars) | 2017 | 2016 | 2017 | 2016 | |
| Beginning balance, accumulated OCI, net of taxes (a) | $(27) | $(33) | $(7) | $(8) | |
| 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 | 1 | — | |
| Current period OCI, net of taxes | 1 | 1 | 1 | — | |
| Ending balance, accumulated OCI, net of taxes | $(26) | $(32) | $(6) | $(8) | |
Reconciliation of Cash, Temporary Cash Investments and Restricted Cash
Cash, temporary cash investments and restricted cash are presented on a combined basis in the Companies’ consolidated statements of cash flows. At March 31, 2022 and 2021, cash, temporary cash investments and restricted cash for Con Edison and CECONY were as follows:
| At March 31, | ||||||||||||||
| Con Edison | CECONY | |||||||||||||
| (Millions of Dollars) | 2022 | 2021 | 2022 | 2021 | ||||||||||
| Cash and temporary cash investments | $108 | $76 | $49 | $30 | ||||||||||
| Restricted cash (a)(b) | 89 | 81 | 4 | — | ||||||||||
| Total cash, temporary cash investments and restricted cash | $197 | $157 | $53 | $30 | ||||||||||
(a)Restricted cash included cash of the Clean Energy Businesses' renewable electric project subsidiaries ($85 million and $81 million at March 31, 2022 and 2021, respectively) that, under the related project debt agreements, is restricted to being used for normal operating expenditures, debt service, and required reserves until the various maturity dates of the project debt.
(b)Restricted cash also included cash paid by CECONY into an escrow account ($4 million at March 31, 2022) for a real estate transaction to support electric transmission facilities.
| For the Nine Months Ended September 30, | ||||||
| Con Edison | CECONY | |||||
| (Millions of Dollars) | 2017 | 2016 | 2017 | 2016 | ||
| Beginning balance, accumulated OCI, net of taxes (a) | $(27) | $(34) | $(7) | $(9) | ||
| 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) | 3 | 3 | 1 | 1 | ||
| Current period OCI, net of taxes | 1 | 2 | 1 | 1 | ||
| Ending balance, accumulated OCI, net of taxes | $(26) | $(32) | $(6) | $(8) | ||
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Note B —– Regulatory Matters
Rate Plans
CECONY – Electric
In April 2022, CECONY updated its January 2022 request to the New York State Public Service Commission (NYSPSC) for an electric rate increase effective January 2023. The company decreased its requested January 2023 rate increase by $161 million to $1,038 million, decreased its illustrated January 2024 rate increase by $109 million to $744 million and increased its illustrated January 2025 rate increase by $7 million to $615 million.
CECONY – Gas
In April 2022, CECONY updated its January 2022 request to the NYSPSC for a gas rate increase effective January 2023. The company decreased its requested January 2023 rate increase by $101 million to $402 million, decreased its illustrated January 2024 rate increase by $29 million to $205 million and decreased its illustrated January 2025 rate increase by $42 million to $176 million.
CECONY - Electric and Gas
Pursuant to its electric and gas rate plans, CECONY recorded $92 million of earnings for the year ended December 31, 2021 of earnings adjustment mechanisms and positive incentives, primarily reflecting the achievement of certain energy efficiency measures. For the three months ended March 31, 2022, CECONY recorded a reduction in the amount of previously recorded earnings adjustment mechanisms of $4.5 million.
O&R NY - Electric and Gas
In April 2022, the NYSPSC approved the October 2021 joint proposal for new electric and gas rates. The joint proposal provides for electric rate increases of $4.9 million, $16.2 million and $23.1 million, effective January 1, 2022, 2023 and 2024, or $11.7 million on a levelized annual billed basis, respectively. The joint proposal provides for gas rate increases of $0.7 million, $7.4 million and $9.9 million, effective January 1, 2022, 2023 and 2024, or $4.4 million on a levelized annual billed basis, respectively. The joint proposal also includes certain COVID-19 provisions, such as: recovery of 2020 late payment charges over three years ($2.8 million); reconciliation of late payment charges to amounts reflected in rates for years 2021 through 2024, with full recovery/refund via surcharge/sur-credit once the annual variance equals or exceeds 5 basis points of return on equity; and reconciliation of write-offs of customer accounts receivable balances to amounts reflected in rates from January 1, 2020 through December 31, 2024, with full recovery/refund via surcharge/sur-credit once the annual variance equals or exceeds 5 basis points of return on equity.
Rockland Electric Company (RECO)
In September 2017,January 2022, RECO the New Jersey Division of Rate Counsel and the New Jersey Board of Public Utilities entered intofiled a settlement agreement, which is subjectrequest with FERC for an increase to FERC approval, that increases RECO'sits annual transmission revenue requirement from $11.8$16.9 million to $17.7 million, effective April 2017.$20.4 million. The revenue requirement reflects a return on common equity of 10.011.04 percent and a common equity ratio of 47 percent.
In March 2022, RECO filed a request with the NJBPU to implement a $209 million Infrastructure Investment Program (IIP) over a five-year period (2023 – 2027). RECO’s IIP proposes accelerated infrastructure investments to enhance safety, reliability, and/or resiliency.
COVID-19 Regulatory Matters
Governors, public utility commissions and other regulatory agencies in the states in which the Utilities operate have issued orders related to the COVID-19 pandemic that impact the Utilities as described below.
NY Regulation
In March 2020, former New York State Governor Cuomo declared a State Disaster Emergency for the State of NY due to the COVID-19 pandemic and signed the "New York State on PAUSE" executive order that temporarily closed all non-essential businesses statewide. The former Governor then lifted these closures over time and ended the emergency declaration in June 2021. As a result of the emergency declaration, and due to economic conditions, the NYSPSC and the Utilities have worked to mitigate the potential impact of the COVID-19 pandemic on the Utilities, their customers and other stakeholders.
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In March 2020, the Utilities began suspending service disconnections, certain collection notices, final bill collection agency activity, new late payment charges and certain other fees for all customers. The Utilities also began providing payment extensions for all customers that were scheduled to be disconnected prior to the start of the COVID-19 pandemic. In June 2020, the state of NY enacted a law prohibiting NY utilities, including CECONY and O&R, from disconnecting residential customers, and starting in May 2021 small business customers, during the COVID-19 state of emergency, which ended in June 2021. In addition, such prohibitions were in effect until December 21, 2021 for residential and small business customers who experienced a change in financial circumstances due to the COVID-19 pandemic.
In November 2021, the NYSPSC issued an order establishing a surcharge recovery mechanism for CECONY to collect, commencing December 1, 2021 through December 31, 2022, $43 million and $7 million for electric and gas, respectively, of late payment charges and fees that were not billed for the year ended December 31, 2020. The company recorded such amounts as revenue for the year ended December 31, 2021, as permitted under the accounting rules for regulated utilities, and also accrued such amounts as a current asset at December 31, 2021. Pursuant to the November 2021 order, the company also established a recovery mechanism for CECONY to collect, commencing January 2023 through December 2023, $19 million and $4 million for electric and gas, respectively, of late payment charges and fees that were not billed for the year ended December 31, 2021 and the company recorded such amounts as revenue for the year ended December 31, 2021, as permitted under the accounting rules for regulated utilities, and also accrued such amounts as a current asset at December 31, 2021. In addition, pursuant to the November 2021 order, CECONY established a reserve of $7 million toward addressing customer arrearages for the year ended December 31, 2021. The order also established a surcharge recovery or surcredit mechanism for any late payment charges and fee deferrals, subject to offsetting related savings resulting from the COVID-19 pandemic, for 2022 starting in January of 2024 over a twelve-month period. CECONY resumed late payment charges for commercial and residential customers who have not experienced a change in financial circumstances due to the COVID-19 pandemic on September 3, 2021 and October 1, 2021, respectively. Pursuant to the October 2021 joint proposal for new electric and gas rates for O&R that was approved by the NYSPSC in April 2022. O&R recorded late payment charges and fees that were not billed for the years ended December 31, 2020 and December 31, 2021 of $1.7 million and $2.4 million, respectively, as revenue for the year ended December 31, 2021, as permitted under the accounting rules for regulated utilities, and also accrued such amounts as a current asset at December 31, 2021.See “Rate Plans,” above. O&R resumed late payment charges for commercial and residential customers who have not experienced a change in financial circumstances due to the COVID-19 pandemic on October 1, 2021.
The Utilities’ NY rate plans allow them to defer costs resulting from a change in legislation, regulation and related actions that have taken effect during the term of the rate plans once the costs exceed a specified threshold. The total reserve increases to the allowance for uncollectible accounts from January 1, 2020 through March 31, 2022 reflecting the impact of the COVID-19 pandemic for CECONY electric and gas operations and O&R electric and gas operations were $260 million and $6 million, respectively, and were deferred pursuant to the legislative, regulatory and related actions provisions of the rate plans as a result of the New York State on PAUSE and related executive orders, that have since been lifted, as described above. The Utilities’ NY rate plans also provide for an allowance for write-offs of customer accounts receivable balances. The above amounts deferred pursuant to the legislative, regulatory and related actions provisions were reduced by the amount that the actual write-offs of customer accounts receivable balances were below the allowance reflected in rates which differences were $1 million and $3 million for CECONY and O&R, respectively, from March 1, 2020 through March 31, 2022.
In June 2020, the NYSPSC directed CECONY to implement a summer cooling credit program to help mitigate the cost of staying home and operating air conditioning for health-vulnerable low-income customers due to the limited availability of public cooling facilities as a result of the COVID-19 social distancing measures. The $63.4 million cost of the program is being recovered over a five-year period that began January 2021.
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In April 2021, NY passed a law that creates a program that allows eligible residential renters in NY who require assistance with rent and utility bills to have up to twelve months of electric and gas utility bill arrears forgiven, provided that such arrears were accrued on or after March 13, 2020. The program will be administered by the State Office of Temporary Disability Assistance (OTDA) in coordination with the NYSDPS. Under the program, CECONY and O&R qualify for a refundable tax credit for NY gross-receipts tax equal to the amount of arrears waived by the Utilities in the year that the arrears are waived and certified by the NYSPSC. OTDA may also use the program funds to provide additional Home Energy Assistance Program payments to the Utilities on behalf of low-income customers. For the three months ended March 31, 2022, CECONY received $5.9 million in payments from OTDA. In April 2022, CECONY received additional payments of $13.7 million and qualified for tax credits of $12.2 million to reduce customer accounts receivable balances. O&R has not received any payments from OTDA to date and an immaterial amount of tax credits. The total amount that may be allocated to CECONY and O&R under this program to address customer arrearages is not yet known.
In April 2022, NY approved the 2022-2023 state budget, which includes $250 million for addressing residential statewide utility arrears accrued from March 7, 2020 through March 1, 2022. Funds are expected to be distributed by the NYSDPS to NY utilities on behalf of customers. The allocation of funds to NY utilities, including CECONY and O&R, is to be based on their share of statewide eligible utility arrears of customers participating in energy affordability programs, and funds are expected to be disbursed no later than August 1, 2022.
In May 2021, CECONY and O&R, along with other large NY utilities, submitted joint comments to the NYSDPS' February 2021 report on New York State’s Energy Affordability Policy. The report recommends, among other things, that residential and commercial customers’ late payment fees and interest on deferred payment agreements be waived until two years after the expiration of the New York State moratorium on utility terminations (the moratorium expired on December 21, 2021) and each utility develop an arrears management program to mitigate the financial burdens of the COVID-19 pandemic on NY households and that program costs be shared, perhaps equally, between shareholders and customers.The May 2021 joint comments stated that it is not necessary for the NYSPSC to adopt the report’s COVID-19 related recommendations because New York State already passed laws that address the issues in the report, as described above.
The Utilities’ rate plans have revenue decoupling mechanisms in their NY electric and gas businesses that largely reconcile actual energy delivery revenues to the authorized delivery revenues approved by the NYSPSC per month and reconcile the deferred balances semi-annually under CECONY's electric rate plan (January through June and July through December, respectively) and annually under CECONY's gas rate plan and O&R's NY electric and gas rate plans (January through December). Differences are accrued with interest each month for CECONY's and O&R's NY electric customers and after the annual deferral period ends for CECONY's and O&R's NY gas customers for refund to, or recovery from customers, as applicable. Generally, the refund to or recovery from customers begins August and February of each year over an ensuing six-month period for CECONY's electric customers and February of each year over an ensuing twelve-month period for CECONY's gas and O&R's NY electric and gas customers.
NJ Regulation
In March 2020, NJ Governor Murphy declared a Public Health Emergency and State of Emergency for the State of NJ. In June 2021, the Governor ended the emergency declaration. As a result of the emergency declaration, and due to economic conditions, the NJBPU and RECO have worked to mitigate the potential impact of the COVID-19 pandemic on RECO, its customers and other stakeholders. In March 2020, RECO began suspending late payment charges, terminations for non-payment, and no access fees during the COVID-19 pandemic. The suspension of these fees continued through July 31, 2021 and were not material.
In July 2020, the NJBPU authorized RECO and other NJ utilities to create a COVID-19-related regulatory asset by deferring prudently incurred incremental costs related to the COVID-19 pandemic beginning on March 9, 2020, and has extended such deferrals through December 31, 2022. RECO deferred net incremental COVID-19 related costs of $0.8 million through March 31, 2022.
Gas Safety
In April 2020, the NYSPSC issued an order that extended the deadlines to complete certain gas inspections by all New York gas utilities, including CECONY and O&R, from April 1, 2020 to August 1, 2020. The deadlines were subsequently extended to September 2, 2020 and June 1, 2022, and CECONY and O&R have taken all reasonable measures to complete such inspections.
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Other Regulatory Matters
CECONY, under its electric rate plan that was approved in January 2020, is amortizing its TCJA net benefits prior to January 1, 2019 allocable to its electric customers ($377 million) over a three-year period, the IRS “protected” portion of its net regulatory liability for future income taxes related to certain accelerated tax depreciation benefits allocable to its electric customers ($1,663 million) over the remaining lives of the related assets and the remainder, or “unprotected” portion of the net regulatory liability allocable to its electric customers ($784 million) over a five-year period. CECONY, under its gas rate plan that was approved in January 2020, amortized TCJA net benefits prior to January 1, 2019 allocable to its gas customers ($63 million) over a two-year period, The protected portion of its net regulatory liability for future income taxes allocable to its gas customers ($725 million) is being amortized over the remaining lives of the related assets and the unprotected portion of the net regulatory liability allocable to its gas customers ($107 million) over a five-year period.
CECONY’s net regulatory liability for future income taxes, including both the protected and unprotected portions, allocable to the company’s steam customers ($185 million) is being amortized over the remaining lives of the related assets (with the amortization period for the unprotected portion subject to review in its next steam rate proceeding).
O&R, under its current electric and gas rate plans, has reflected its TCJA net benefits in its electric and gas rates beginning as of January 1, 2019. Under the rate plans, O&R amortized its net benefits prior to January 1, 2019 ($22 million) over a three-year period. The protected portion of its net regulatory liability for future income taxes ($123 million) is being amortized over the remaining lives of the related assets). Pursuant to the October 2021 Joint Proposal, O&R will amortize the remaining unprotected portion of its net regulatory liability for future income taxes ($34 million) over a six-year period beginning January 1, 2022.
In January 2018, the NYSPSC issued an order in its proceeding investigating an April 21, 2017 Metropolitan Transportation Authority (MTA) subway power outage. The order indicated that the investigation determined that the outage was caused byinitiating a failure of CECONY’s electricity supply to a subway station, which led to a lossfocused operations audit of the subway signals, and that oneUtilities’ financial accounting for income taxes. The audit is investigating the Utilities’ inadvertent understatement of a portion, the secondary services to the MTA facility had been improperly rerouted andamount of which may be material, of their calculation of total federal income tax expense for ratemaking purposes. The understatement was not properly documented by the company. The order also indicated that the loss of power to the subway station affected multiple subway lines and caused widespread delays across the subway system. Pursuant to the order, the company is 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 on all of the company's activities related to the MTA system. In July 2017,calculation of plant retirement-related cost of removal. As a result of such understatement, the ChairmanUtilities accumulated significant income tax regulatory assets that were not reflected in O&R’s rate plans prior to 2014, CECONY’s electric and gas rate plans prior to 2015 and 2016, respectively, and is currently not reflected in CECONY’s steam rate plan. This understatement of historical income tax expense materially reduced the amount of revenue collected from the Utilities' customers in the past. As part of the NYSPSC notifiedaudit, the companyUtilities plan to pursue a private letter ruling from the Internal Revenue Service (IRS) that the April 21, 2017 subway power outage incident will likely resultis expected to confirm, among other things, that in order to comply with IRS normalization rules, such understatement may not be corrected through a prudence reviewwrite-down of a portion of the reasonablenessregulatory asset and must be corrected through an increase in future years’ revenue requirements. The regulatory asset ($1,165 million and $25 million for CECONY and O&R, respectively, as of CECONY's actionsMarch 31, 2022) and conduct.($1,176 million and $26 million for CECONY and O&R, respectively, as of December 31, 2021) is netted against the future income tax regulatory liability on the Companies’ consolidated balance sheet. The order did not commence a prudence review or address cost recovery. Under the New York State Administrative Procedure Act, the order could not remain in effect for more than 90 days without further action by the NYSPSC because it was adopted on an emergency basis. At its October 19, 2017 meeting, the NYSPSC approved another order in this proceeding. The NYSPSC has not yet issued this other order. The company isUtilities are unable to estimate the amount or range of itstheir possible costsloss, if any, related to this matter. At March 31, 2022, the Utilities had not accrued a liability related to this matter.
In October 2020, the NYSPSC issued an order instituting a proceeding to consider requiring NY’s large, investor-owned utilities, including CECONY and O&R, to annually disclose what risks climate change poses to their companies, investors and customers going forward. The order notes that some holding companies, including Con Edison, already disclose climate change risks at the holding company level, but states that the NYSPSC believes that climate-related risk disclosures should be issued specific to the operating companies in NY, such as CECONY and O&R, and that such climate-related risk disclosures should be included annually with the utilities’ financial reports. In December 2020, CECONY and O&R, along with other large NY utilities, filed comments supporting climate change risk disclosures in annual reports filed with the NYSPSC and recommended the use of an industry-specific template.
In May 2020, the president of the United States issued the "Securing the United States Bulk-Power System" executive order, which has since expired. The executive order declared threats to the bulk-power system by foreign adversaries constitute a national emergency and prohibits the acquisition, importation, transfer or installation of certain bulk-power system electric equipment that is sourced from foreign adversaries. In April 2021 and November
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2021, the Department of ContentsEnergy (DOE) issued requests for information to: (1) assist the DOE in developing additional orders and/or regulations to secure the United States’ critical electric infrastructure and (2) enable the DOE to perform an energy sector supply chain review. In September 2021, the Cybersecurity and Infrastructure Security Agency and the National Institute of Standards and Technology issued preliminary cybersecurity goals for critical infrastructure control systems, with final goals to be issued by September 2022. The Companies are unable to predict the impact on them of any orders or regulations that may be adopted regarding critical infrastructure.
In July 2021, the NYSPSC approved a settlement agreement among CECONY, O&R and the NYSDPS that fully resolves all issues and allegations that have been raised or could have been raised by the NYSPSC against CECONY and O&R with respect to: (1) the July 2018 rupture of a CECONY steam main located on Fifth Avenue and 21st Street in Manhattan (the “2018 Steam Incident”); (2) the July 2019 electric service interruptions to approximately 72,000 CECONY customers on the west side of Manhattan and to approximately 30,000 CECONY customers primarily in the Flatbush area of Brooklyn (the “2019 Manhattan and Brooklyn Outages”); (3) the August 2020 electric service interruptions to approximately 330,000 CECONY customers and approximately 200,000 O&R customers following Tropical Storm Isaias (the “Tropical Storm Isaias Outages”) and (4) the August 2020 electric service interruptions to approximately 190,000 customers resulting from faults at CECONY’s Rainey substation following Tropical Storm Isaias (the “Rainey Outages”). Pursuant to the settlement agreement, CECONY and O&R agreed to a total settlement amount of $75.1 million and $7.0 million, respectively. CECONY and O&R agreed to forgo recovery from customers of $25 million and $2.5 million, respectively, associated with the return on existing storm hardening assets beginning with the next rate plan for each utility (over a period of 35 years). CECONY and O&R also agreed to incur ongoing operations and maintenance costs of up to $15.8 million and $2.9 million, respectively, for, among other things, costs to maintain a certain level of contractor and vehicle storm emergency support and storm preparation audits. For CECONY, the settlement agreement included previously incurred or accrued costs of $34.3 million, including negative revenue adjustments of $5 million for the Rainey Outages and $15 million for the 2019 Manhattan and Brooklyn Outages and $14.3 million in costs to reimburse customers for food and medicine spoilage and other previously incurred expenses related to Tropical Storm Isaias and the 2018 Steam Incident. For O&R, the settlement agreement included previously incurred costs of $1.6 million to reimburse customers for food and medicine spoilage and other expenses related to the Tropical Storm Isaias Outages.
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Regulatory Assets and Liabilities
Regulatory assets and liabilities at September 30, 2017March 31, 2022 and December 31, 20162021 were comprised of the following items:
| Con Edison | CECONY | ||||||||||||||||
| (Millions of Dollars) | 2022 | 2021 | 2022 | 2021 | |||||||||||||
| Regulatory assets | |||||||||||||||||
| Environmental remediation costs | $933 | $938 | $854 | $860 | |||||||||||||
| Pension and other postretirement benefits deferrals | 447 | 496 | 392 | 435 | |||||||||||||
| Revenue taxes | 409 | 395 | 391 | 378 | |||||||||||||
| System peak reduction and energy efficiency programs | 330 | 285 | 329 | 284 | |||||||||||||
| COVID-19 pandemic deferrals | 304 | 282 | 297 | 277 | |||||||||||||
| Deferred storm costs | 292 | 276 | 178 | 158 | |||||||||||||
| Property tax reconciliation | 178 | 202 | 178 | 202 | |||||||||||||
| MTA power reliability deferral | 128 | 140 | 128 | 140 | |||||||||||||
| Unrecognized pension and other postretirement costs | 112 | 128 | 89 | 110 | |||||||||||||
| Deferred derivative losses - long term | 85 | 51 | 80 | 45 | |||||||||||||
| Municipal infrastructure support costs | 41 | 44 | 41 | 44 | |||||||||||||
| Brooklyn Queens demand management program | 34 | 36 | 34 | 36 | |||||||||||||
| Meadowlands heater odorization project | 29 | 29 | 29 | 29 | |||||||||||||
| Non-wire alternative projects | 23 | 23 | 23 | 23 | |||||||||||||
| Preferred stock redemption | 20 | 20 | 20 | 20 | |||||||||||||
| Unamortized loss on reacquired debt | 14 | 16 | 13 | 14 | |||||||||||||
| Recoverable REV demonstration project costs | 14 | 16 | 13 | 15 | |||||||||||||
| Gate station upgrade project | 14 | 14 | 14 | 14 | |||||||||||||
| Other | 273 | 248 | 248 | 232 | |||||||||||||
| Regulatory assets – noncurrent | 3,680 | 3,639 | 3,351 | 3,316 | |||||||||||||
| Deferred derivative losses - short term | 177 | 141 | 165 | 133 | |||||||||||||
| Recoverable energy costs | 112 | 65 | 104 | 55 | |||||||||||||
| Regulatory assets – current | 289 | 206 | 269 | 188 | |||||||||||||
| Total Regulatory Assets | $3,969 | $3,845 | $3,620 | $3,504 | |||||||||||||
| Regulatory liabilities | |||||||||||||||||
| Future income tax | $1,931 | $1,984 | $1,790 | $1,840 | |||||||||||||
| Allowance for cost of removal less salvage | 1,215 | 1,199 | 1,046 | 1,033 | |||||||||||||
| Unrecognized pension and other postretirement costs | 231 | 32 | 199 | — | |||||||||||||
| Net unbilled revenue deferrals | 131 | 209 | 131 | 209 | |||||||||||||
| Pension and other postretirement benefit deferrals | 108 | 102 | 63 | 55 | |||||||||||||
| Deferred derivative gains - long term | 106 | 61 | 96 | 55 | |||||||||||||
| Net proceeds from sale of property | 95 | 103 | 94 | 103 | |||||||||||||
| TCJA net benefits* | 92 | 125 | 91 | 123 | |||||||||||||
| System benefit charge carrying charge | 72 | 70 | 64 | 63 | |||||||||||||
| Property tax refunds | 35 | 35 | 35 | 35 | |||||||||||||
| Sales and use tax refunds | 30 | 17 | 29 | 16 | |||||||||||||
| BQDM and REV Demo reconciliations | 25 | 25 | 22 | 22 | |||||||||||||
| Earnings sharing - electric, gas and steam | 13 | 13 | 10 | 10 | |||||||||||||
| Settlement of gas proceedings | 10 | 12 | 10 | 12 | |||||||||||||
| Workers' compensation | 10 | 8 | 10 | 8 | |||||||||||||
| Energy efficiency portfolio standard unencumbered funds | 6 | 15 | 7 | 19 | |||||||||||||
| Settlement of prudence proceeding | 6 | 6 | 6 | 6 | |||||||||||||
| Other | 387 | 365 | 331 | 312 | |||||||||||||
| Regulatory liabilities – noncurrent | 4,503 | 4,381 | 4,034 | 3,921 | |||||||||||||
| Deferred derivative gains - short term | 480 | 142 | 443 | 132 | |||||||||||||
| Refundable energy costs | 50 | 32 | 19 | 2 | |||||||||||||
| Revenue decoupling mechanism | 13 | 11 | — | — | |||||||||||||
| Regulatory liabilities – current | 543 | 185 | 462 | 134 | |||||||||||||
| Total Regulatory Liabilities | $5,046 | $4,566 | $4,496 | $4,055 | |||||||||||||
* See "Other Regulatory Matters," above.
In general, the Utilities receive or are being credited with a return at the Other Customer-Provided Capital rate for regulatory assets that have not been included in rate base, and receive or are being credited with a return at the pre-tax weighted average cost of capital once the asset is included in rate base. Similarly, the Utilities pay to or
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| Con Edison | CECONY | ||||||
| (Millions of Dollars) | 2017 | 2016 | 2017 | 2016 | |||
| Regulatory assets | |||||||
| Unrecognized pension and other postretirement costs | $2,626 | $2,874 | $2,476 | $2,730 | |||
| Future income tax | 2,419 | 2,439 | 2,308 | 2,325 | |||
| Environmental remediation costs | 803 | 823 | 690 | 711 | |||
| Revenue taxes | 341 | 295 | 325 | 280 | |||
| Deferred derivative losses | 88 | 48 | 78 | 42 | |||
| Pension and other postretirement benefits deferrals | 70 | 38 | 45 | 7 | |||
| Municipal infrastructure support costs | 57 | 44 | 57 | 44 | |||
| Deferred storm costs | 43 | 56 | — | 3 | |||
| Unamortized loss on reacquired debt | 39 | 43 | 37 | 41 | |||
| Indian Point Energy Center program costs | 32 | 50 | 32 | 50 | |||
| O&R property tax reconciliation | 29 | 37 | — | — | |||
| Brooklyn Queens demand management program | 28 | 29 | 28 | 29 | |||
| Preferred stock redemption | 24 | 25 | 24 | 25 | |||
| Surcharge for New York State assessment | 18 | 28 | 16 | 26 | |||
| Net electric deferrals | 13 | 24 | 13 | 24 | |||
| Workers’ compensation | 12 | 13 | 12 | 13 | |||
| O&R transition bond charges | 10 | 15 | — | — | |||
| Recoverable energy costs | 4 | 42 | 4 | 38 | |||
| Other | 113 | 101 | 103 | 85 | |||
| Regulatory assets – noncurrent | 6,769 | 7,024 | 6,248 | 6,473 | |||
| Deferred derivative losses | 81 | 91 | 75 | 86 | |||
| Recoverable energy costs | 28 | 9 | 25 | 4 | |||
| Regulatory assets – current | 109 | 100 | 100 | 90 | |||
| Total Regulatory Assets | $6,878 | $7,124 | $6,348 | $6,563 | |||
| Regulatory liabilities | |||||||
| Allowance for cost of removal less salvage | $798 | $755 | $671 | $641 | |||
| Pension and other postretirement benefit deferrals | 202 | 193 | 174 | 162 | |||
| Net unbilled revenue deferrals | 166 | 145 | 166 | 145 | |||
| Property tax reconciliation | 140 | 178 | 140 | 178 | |||
| Unrecognized other postretirement costs | 84 | 60 | 84 | 60 | |||
| Settlement of prudence proceeding | 73 | 95 | 73 | 95 | |||
| Carrying charges on repair allowance and bonus depreciation | 49 | 68 | 48 | 67 | |||
| New York State income tax rate change | 48 | 61 | 48 | 60 | |||
| Variable-rate tax-exempt debt – cost rate reconciliation | 36 | 55 | 32 | 48 | |||
| Property tax refunds | 28 | 1 | 28 | 1 | |||
| Settlement of gas proceedings | 27 | 27 | 27 | 27 | |||
| Base rate change deferrals | 26 | 40 | 26 | 40 | |||
| Earnings sharing - electric, gas and steam | 24 | 39 | 15 | 28 | |||
| Net utility plant reconciliations | 11 | 16 | 8 | 15 | |||
| Other | 161 | 172 | 133 | 145 | |||
| Regulatory liabilities – noncurrent | 1,873 | 1,905 | 1,673 | 1,712 | |||
| Refundable energy costs | 29 | 29 | 9 | 5 | |||
| Revenue decoupling mechanism | 27 | 71 | 27 | 61 | |||
| Deferred derivative gains | 2 | 28 | 2 | 24 | |||
| Regulatory liabilities – current | 58 | 128 | 38 | 90 | |||
| Total Regulatory Liabilities | $1,931 | $2,033 | $1,711 | $1,802 | |||
In general, the Utilities are receiving or being credited with a return on their regulatory assets for which a cash outflow has been made ($1,983 million and $1,962 million for Con Edison, and $1,777 million and $1,751 million for CECONY at March 31, 2022 and December 31, 2021, respectively). Regulatory assets of RECO for which a cash outflow has been made ($22 million and $25 million at March 31, 2022 and December 31, 2021, respectively) are not receiving or being credited with a return. RECO recovers regulatory assets over a period of up to four years or until they are addressed in its next base rate case in accordance with the rate provisions approved by the NJBPU. Regulatory liabilities are treated in a consistent manner.
Regulatory assets that represent future financial obligations and were deferred in accordance with the Utilities’ rate plans or orders issued by state regulators do not earn a return until such time as a cash outlay has been made. Regulatory liabilities are treated in a consistent manner. At March 31, 2022 and December 31, 2021, regulatory assets for Con Edison and CECONY that did not earn a return consisted of the following items:
Regulatory Assets Not Earning a Return*
| Con Edison | CECONY | |||||||||||||
| (Millions of Dollars) | 2022 | 2021 | 2022 | 2021 | ||||||||||
| Unrecognized pension and other postretirement costs | $112 | $128 | $89 | $110 | ||||||||||
| Environmental remediation costs | 922 | 928 | 843 | 850 | ||||||||||
| Revenue taxes | 388 | 375 | 372 | 359 | ||||||||||
| COVID-19 Deferral for Uncollectible Accounts Receivable | 265 | 236 | 258 | 231 | ||||||||||
| Deferred derivative losses - current | 177 | 141 | 165 | 134 | ||||||||||
| Deferred derivative losses - long term | 85 | 51 | 80 | 45 | ||||||||||
| Other | 37 | 24 | 36 | 24 | ||||||||||
| Total | $1,986 | $1,883 | $1,843 | $1,753 | ||||||||||
*This table presents regulatory assets not earning a return for which no cash outlay has been made.
The recovery periods for regulatory assets for which a cash outflow has not been made and that do not earn a return have not yet been determined, except as noted below, and are expected to be determined pursuant to the Utilities’ future rate plans to be filed or orders issued by the state regulators in connection therewith.
The Utilities recover unrecognized pension and other postretirement costs over 10 years, and the portion of investment gains or losses recognized in expense over 15 years, pursuant to NYSPSC policy.
The deferral for revenue taxes represents the New York State metropolitan transportation business tax surcharge on the cumulative temporary differences between the book and tax basis of assets and liabilities of the Utilities, as well as the difference between taxes collected and paid by the Utilities to fund mass transportation. The Utilities recover the majority of the revenue taxes over the remaining book lives of the electric and gas plant assets, as well as the steam plant assets for CECONY.
The Utilities recover deferred derivative losses – current within one year, and noncurrent generally within three years.
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Note C —– Capitalization
The carrying amounts and fair values of long-term debt at September 30, 2017March 31, 2022 and December 31, 20162021 were:
| (Millions of Dollars) | 2022 | 2021 | ||||||||||||
| Long-Term Debt (including current portion) (a) | Carrying Amount | Fair Value | Carrying Amount | Fair Value | ||||||||||
| Con Edison | $23,022 | $23,812 | $23,044 | $26,287 | ||||||||||
| CECONY | $18,384 | $19,175 | $18,382 | $21,382 | ||||||||||
| (Millions of Dollars) | 2017 | 2016 | ||
| Long-Term Debt (including current portion) (a) | Carrying Amount | Fair Value | Carrying Amount | Fair Value |
| Con Edison | $15,338 | $17,195 | $14,774 | $16,093 |
| CECONY | $12,571 | $14,213 | $12,073 | $13,268 |
(a)Amounts shown are net of unamortized debt expense and unamortized debt discount of $223 million and $191 million for Con Edison and CECONY, respectively, as of March 31, 2022 and $226 million and $193 million for Con Edison and CECONY, respectively, as of December 31, 2021.
The fair values of the Companies' long-term debt have been estimated primarily using available market information. For Con Edison, $16,559 millioninformation and $636 million of the fair value of long-term debt at September 30, 2017March 31, 2022 are classified as Level 2 and Level 3, respectively. For CECONY, $13,577 million and $636 million of the fair value of long-term debt at September 30, 2017 are classified as Level 2 and Level 3, respectivelyliabilities (see Note L)O). 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 30, 2017,March 31, 2022, Con Edison had $356$1,313 million of commercial paper outstanding of which $147$1,061 million was outstanding under CECONY’s program. The weighted average interest rate at September 30, 2017March 31, 2022 was 1.30.8 percent for both Con Edison and CECONY. At December 31, 2016,2021, Con Edison had $1,054$1,488 million of commercial paper outstanding of which $600$1,361 million was outstanding under CECONY’s program. The weighted average interest rate at December 31, 20162021 was 1.00.3 percent for both Con Edison and CECONY.
At September 30, 2017March 31, 2022 and December 31, 2016,2021, no loans were outstanding under the Companies' December 2016 credit agreement (Credit Agreement). An immaterial amount and $2 million (including $2 million for CECONY) of letters of credit were outstanding under the Credit Agreement as of September 30, 2017March 31, 2022 and December 31, 2016, respectively.2021.
In March 2022, CECONY entered into a 364-Day Revolving Credit Agreement (the CECONY Credit Agreement) under which banks are committed to provide loans up to $750 million on a revolving credit basis. The CECONY Credit Agreement expires on March 30, 2023 and supports CECONY’s commercial paper program and loans issued under the CECONY Credit Agreement may also be used for other general corporate purposes. The banks’ commitments under the CECONY Credit Agreement are subject to certain conditions, including that there be no event of default and that CECONY shall have received the required regulatory approval. The commitments are not subject to maintenance of credit rating levels or the absence of a material adverse change. Upon a change of control of, or upon an event of default by CECONY, the banks may terminate their commitments and declare the loans, accrued interest and any other amounts due by CECONY immediately due and payable. Events of default include CECONY exceeding at any time a ratio of consolidated debt to consolidated total capital of 0.65 to 1; having liens on its assets in an aggregate amount exceeding 5 percent of its consolidated total capital, subject to certain exceptions; CECONY failing to make one or more payments in respect of material financial obligations (in excess of an aggregate $150 million of debt); cross default to other financial obligations of $150 million or more of CECONY which would permit the holder to accelerate the obligations; and other customary events of default.
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Note E —– Pension Benefits
Total Periodic Benefit Cost
The components of the Companies’ total periodic benefit costscost for the three and nine months ended September 30, 2017March 31, 2022 and 20162021 were as follows:
| For the Three Months Ended March 31, | ||||||||||||||
| Con Edison | CECONY | |||||||||||||
| (Millions of Dollars) | 2022 | 2021 | 2022 | 2021 | ||||||||||
| Service cost – including administrative expenses | $72 | $86 | $67 | $81 | ||||||||||
| Interest cost on projected benefit obligation | 126 | 118 | 119 | 111 | ||||||||||
| Expected return on plan assets | (292) | (276) | (277) | (262) | ||||||||||
| Recognition of net actuarial loss | 94 | 199 | 89 | 189 | ||||||||||
| Recognition of prior service credit | (4) | (4) | (5) | (5) | ||||||||||
| TOTAL PERIODIC BENEFIT COST/(CREDIT) | $(4) | $123 | $(7) | $114 | ||||||||||
| Cost capitalized | (33) | (39) | (32) | (37) | ||||||||||
| Reconciliation to rate level | 64 | (57) | 61 | (55) | ||||||||||
| Total expense recognized | $27 | $27 | $22 | $22 | ||||||||||
| For the Three Months Ended September 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 | (40) | (51) | (37) | (49) | |
| Reconciliation to rate level | (14) | 10 | (16) | 13 | |
| Cost charged to operating expenses | $62 | $90 | $54 | $85 | |
Components of net periodic benefit cost other than service cost are presented outside of operating income on the Companies' consolidated income statements, and only the service cost component is eligible for capitalization. Accordingly, the service cost component is included in the line "Other operations and maintenance" and the non-service cost components are included in the line "Other deductions" in the Companies' consolidated income statements. The increase in the "Pension and retiree benefits" asset in the Companies' consolidated balance sheets from December 31, 2021 to March 31, 2022 is primarily due to favorable plan liability experience.
| For the Nine Months Ended September 30, | ||||
| Con Edison | CECONY | |||
| (Millions of Dollars) | 2017 | 2016 | 2017 | 2016 |
| Service cost – including administrative expenses | $197 | $207 | $184 | $194 |
| Interest cost on projected benefit obligation | 444 | 447 | 416 | 419 |
| Expected return on plan assets | (726) | (711) | (689) | (674) |
| Recognition of net actuarial loss | 446 | 447 | 423 | 424 |
| Recognition of prior service costs | (13) | 3 | (14) | 1 |
| TOTAL PERIODIC BENEFIT COST | $348 | $393 | $320 | $364 |
| Cost capitalized | (134) | (157) | (125) | (148) |
| Reconciliation to rate level | (28) | 35 | (32) | 39 |
| Cost charged to operating expenses | $186 | $271 | $163 | $255 |
Expected Contributions
Based on estimates as of September 30, 2017,March 31, 2022, the Companies expect to make contributions to the pension plans during 20172022 of $450$31 million (of which $412$18 million is to be contributedmade 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 ninethree months of 2017,2022, the Companies contributed $446$5 million to the pension plans, (of$4 million of which $409 million was contributed by CECONY). CECONY also contributed $14 million to its external trust for supplemental plans.CECONY.
Note F —– Other Postretirement Benefits
Total Periodic Benefit Cost
The components of the Companies’ total periodic other postretirement benefit costscost/(credit) for the three and nine months ended September 30, 2017March 31, 2022 and 20162021 were as follows:
| For the Three Months Ended March 31, | ||||||||||||||
| Con Edison | CECONY | |||||||||||||
| (Millions of Dollars) | 2022 | 2021 | 2022 | 2021 | ||||||||||
| Service cost - including administrative expenses | $5 | $7 | $4 | $5 | ||||||||||
| Interest cost on projected other postretirement benefit obligation | 9 | 8 | 8 | 7 | ||||||||||
| Expected return on plan assets | (18) | (17) | (14) | (14) | ||||||||||
| Recognition of net actuarial loss | (1) | 6 | (1) | 5 | ||||||||||
| Recognition of prior service credit | — | (1) | — | — | ||||||||||
| TOTAL PERIODIC OTHER POSTRETIREMENT BENEFIT COST | $(5) | $3 | $(3) | $3 | ||||||||||
| Cost capitalized | (2) | (3) | (2) | (2) | ||||||||||
| Reconciliation to rate level | 4 | — | 4 | (2) | ||||||||||
| Total credit recognized | ($3) | $— | $(1) | $(1) | ||||||||||
| For the Three Months Ended September 30, | |||||
| Con Edison | CECONY | ||||
| (Millions of Dollars) | 2017 | 2016 | 2017 | 2016 | |
| Service cost | $5 | $4 | $3 | $3 | |
| Interest cost on accumulated other postretirement benefit obligation | 11 | 12 | 9 | 10 | |
| Expected return on plan assets | (17) | (19) | (15) | (17) | |
| Recognition of net actuarial loss | 1 | 1 | — | 1 | |
| Recognition of prior service cost | (5) | (5) | (3) | (3) | |
| TOTAL PERIODIC OTHER POSTRETIREMENT BENEFIT COST | $(5) | $(7) | $(6) | $(6) | |
| Cost capitalized | 2 | 2 | 2 | 2 | |
| Reconciliation to rate level | (1) | 7 | — | 6 | |
| Cost charged to operating expenses | $(4) | $2 | $(4) | $2 | |
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| For the Nine Months Ended September 30, | ||||
| Con Edison | CECONY | |||
| (Millions of Dollars) | 2017 | 2016 | 2017 | 2016 |
| Service cost | $15 | $13 | $10 | $10 |
| Interest cost on accumulated other postretirement benefit obligation | 34 | 36 | 28 | 30 |
| Expected return on plan assets | (52) | (58) | (45) | (50) |
| Recognition of net actuarial loss/(gain) | 2 | 4 | (2) | 2 |
| Recognition of prior service cost | (13) | (15) | (9) | (11) |
| TOTAL PERIODIC OTHER POSTRETIREMENT BENEFIT COST | $(14) | $(20) | $(18) | $(19) |
| Cost capitalized | 6 | 5 | 7 | 5 |
| Reconciliation to rate level | (3) | 20 | (1) | 19 |
| Cost charged to operating expenses | $(11) | $5 | $(12) | $5 |
For information about the presentation of Contents
the components of other postretirement benefit costs, see Note E. The "Pensions and retiree benefits" noncurrent asset and noncurrent liability on the Companies' consolidated balance sheets as of March 31, 2022 reflect the December 31, 2021 funded status and final census data, and current year activity. The other postretirement benefit plans valuation for 2022 is expected to be finalized in the second quarter of 2022.Expected Contributions
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 30, 2017March 31, 2022 and December 31, 20162021 were as follows:
| Con Edison | CECONY | |||||||||||||
| (Millions of Dollars) | 2022 | 2021 | 2022 | 2021 | ||||||||||
| Accrued Liabilities: | ||||||||||||||
| Manufactured gas plant sites | $840 | $845 | $750 | $755 | ||||||||||
| Other Superfund Sites | 94 | 95 | 93 | 95 | ||||||||||
| Total | $934 | $940 | $843 | $850 | ||||||||||
| Regulatory assets | $933 | $938 | $854 | $860 | ||||||||||
| Con Edison | CECONY | |||
| (Millions of Dollars) | 2017 | 2016 | 2017 | 2016 |
| Accrued Liabilities: | ||||
| Manufactured gas plant sites | $659 | $664 | $563 | $567 |
| Other Superfund Sites | 86 | 89 | 85 | 88 |
| Total | $745 | $753 | $648 | $655 |
| Regulatory assets | $803 | $823 | $690 | $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, the Utilities expect that additional liability may be accrued, the amount of which is not presently determinable but may be material. The Utilities are permitted to recover or defer as regulatory assets (for subsequent recovery through rates) prudently incurred site investigation and remediation costs.
Environmental remediation costs incurred related to Superfund Sites for the three and nine months ended September 30, 2017March 31, 2022 and 20162021 were as follows:
| For the Three Months Ended September 30, | ||||
| Con Edison | CECONY | |||
| (Millions of Dollars) | 2017 | 2016 | 2017 | 2016 |
| Remediation costs incurred | $4 | $8 | $3 | $5 |
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| For the Three Months Ended March 31, | ||||||||||||||
| Con Edison | CECONY | |||||||||||||
| (Millions of Dollars) | 2022 | 2021 | 2022 | 2021 | ||||||||||
| Remediation costs incurred | $8 | $8 | $7 | $8 | ||||||||||
| For the Nine Months Ended September 30, | ||||
| Con Edison | CECONY | |||
| (Millions of Dollars) | 2017 | 2016 | 2017 | 2016 |
| Remediation costs incurred | $18 | $20 | $13 | $10 |
Insurance and other third-party recoveries received by Con Edison or CECONY were immaterial for the three and nine months ended September 30, 2017. Con EdisonMarch 31, 2022 and CECONY received $1 million in insurance recoveries for the three and nine months ended September 30, 2016.2021.
In 2016,2021, 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$2,980 million and $2.6 billion,$2,840 million, 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 30, 2017,March 31, 2022, Con Edison and CECONY 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. These estimates were based upon a combination of modeling, historical data analysis and risk factor assessment. Courts have begun, and unless otherwise determined on appeal may continue, to apply different 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. 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 or liabilities for the Companies at September 30, 2017March 31, 2022 and December 31, 20162021 were as follows:
| Con Edison | CECONY | |||||||||||||
| (Millions of Dollars) | 2022 | 2021 | 2022 | 2021 | ||||||||||
| Accrued liability – asbestos suits | $8 | $8 | $7 | $7 | ||||||||||
| Regulatory assets – asbestos suits | $8 | $8 | $7 | $7 | ||||||||||
| Accrued liability – workers’ compensation | $63 | $65 | $60 | $62 | ||||||||||
| Regulatory liabilities – workers’ compensation | $10 | $8 | $10 | $8 | ||||||||||
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| 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 | $87 | $88 | $83 | $83 |
| Regulatory assets – workers’ compensation | $12 | $13 | $12 | $13 |
Note H — Other– Material Contingencies
Manhattan Explosion and Fire
On March 12, 2014, two2 multi-use five-story tall buildings located on Park Avenue between 116th and 117th 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. EightNaN 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. 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 provideis providing $27 million of future benefits to customers (for which it has accrued a regulatory liability, see Note B).liability) and will not recover from customers $126 million of costs for gas emergency response activities that it had previously incurred and expensed. Approximately eighty80 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 30, 2017,During 2020, the company had not accrued aits estimated liability for damages related to the incident.suits of $40 million and an insurance receivable in the same amount, which estimated liability did not change as of March 31, 2022.
Other Contingencies
Guarantees
Con Edison and its subsidiaries enterhave entered into various agreements providing financial or performance assurance primarily to third parties on behalf of their subsidiaries. Maximum amounts guaranteed by Con Edison and its subsidiaries under these agreements totaled $2,162$2,067 million and $2,370$2,157 million at September 30, 2017March 31, 2022 and December 31, 2016,2021, respectively.
A summary, by type and term, of Con Edison’sEdison's total guarantees under these agreements at September 30, 2017March 31, 2022 is as follows:
| Guarantee Type | 0 – 3 years | 4 – 10 years | > 10 years | Total | ||||||||||
| (Millions of Dollars) | ||||||||||||||
| Con Edison Transmission | $480 | $— | $— | $480 | ||||||||||
| Energy transactions | 456 | 31 | 292 | 779 | ||||||||||
| Renewable electric projects | 303 | 59 | 376 | 738 | ||||||||||
| Other | 70 | — | — | 70 | ||||||||||
| Total | $1,309 | $90 | $668 | $2,067 | ||||||||||
| Guarantee Type | 0 – 3 years | 4 – 10 years | > 10 years | Total | |||
| (Millions of Dollars) | |||||||
| Con Edison Transmission | $643 | $404 | $— | $1,047 | |||
| Energy transactions | 459 | 30 | 211 | 700 | |||
| Renewable electric production projects | 268 | — | 19 | 287 | |||
| Other | 128 | — | — | 128 | |||
| Total | $1,498 | $434 | $230 | $2,162 | |||
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 acquiredowns a 45.7 percent interest in NY Transco when it was formed in 2014.Transco. In May 2016, the transmission owners transferred certain projects to NY Transco, for which CET Electric made its required contributions. NY Transco has proposed other transmission projects inApril 2019, the New York Independent System Operator's competitive bidding process. These otherOperator (NYISO) selected a transmission project that was jointly proposed by National Grid and NY Transco. The siting, construction and operation of the project will require approvals and permits from appropriate governmental agencies and authorities, including the NYSPSC. The NYISO indicated it will work with the developers to enter into agreements for the development and operation of the projects, are subject to certain authorizations from the NYSPSC, the FERC and, as applicable, other federal, state and local agencies.including a schedule for entry into service by December 2023. Guarantee amount shown is forincludes the maximum possible required amount of CET Electric’s contributions for these other projectsthis project as calculated based on the
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assumptions that the projects areproject is completed at 175 percent of theirits 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 fromproject.
Energy Transactions — Con Edison on behalf of CET Gas in relation to a proposed gas transmission project in West Virginia and Virginia.
the Clean Energy Transactions — Con Edison guaranteesBusinesses guarantee payments on behalf of the Clean Energy Businessestheir subsidiaries 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.
Renewable Electric Production Projects — Con Edison Con Edison Development, and Con Edison Solutionsthe Clean Energy Businesses guarantee payments on behalf of their wholly-owned subsidiaries associated with their investment in, or development for others of, solar and wind energy facilities.
Other — Other guarantees includeconsist of a $70 million in guaranteesguarantee provided by Con Edison to Travelers Insurance Company for indemnity agreements for surety bonds in connection with the operation of solar energy facilities and energy service projects of Con Edison Development and Con Edison 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 the agreement pursuant to which it sold its retail electric supply business. 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.Clean Energy Businesses.
Note I —– Leases
Operating lease cost and cash paid for amounts included in the measurement of lease liabilities for the three months ended March 31, 2022 and 2021 were as follows:
| For the Three Months Ended March 31, | ||||||||||||||
| Con Edison | CECONY | |||||||||||||
| (Millions of Dollars) | 2022 | 2021 | 2022 | 2021 | ||||||||||
| Operating lease cost | $21 | $22 | $16 | $17 | ||||||||||
| Operating lease cash flows | $9 | $8 | $4 | $4 | ||||||||||
As of March 31, 2022 and December 31, 2021, assets recorded as finance leases were $2 million for Con Edison and $1 million for CECONY, and the accumulated amortization associated with finance leases for Con Edison and CECONY were $4 million and $2 million, respectively.
For the three months ended March 31, 2022 and 2021, finance lease costs and cash flows for Con Edison and CECONY were immaterial.
Right-of-use assets obtained in exchange for operating lease obligations for Con Edison and CECONY were $44 million and $1 million, respectively, for the three months ended March 31, 2022. Right-of-use assets obtained in exchange for operating lease obligations for Con Edison and CECONY were $16 million and $1 million, respectively, for the three months ended March 31, 2021.
Other information related to leases for Con Edison and CECONY at March 31, 2022 and December 31, 2021 were as follows:
| Con Edison | CECONY | |||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||
| Weighted Average Remaining Lease Term: | ||||||||||||||
| Operating leases | 18.2 years | 18.5 years | 11.9 years | 12.1 years | ||||||||||
| Finance leases | 7.2 years | 7.1 years | 3.0 years | 3.1 years | ||||||||||
| Weighted Average Discount Rate: | ||||||||||||||
| Operating leases | 4.3% | 4.3% | 3.5% | 3.5% | ||||||||||
| Finance leases | 1.8% | 1.8% | 1.1% | 1.1% | ||||||||||
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Future minimum lease payments under non-cancellable leases at March 31, 2022 were as follows:
| (Millions of Dollars) | Con Edison | CECONY | ||||||||||||
| Year Ending March 31, | Operating Leases | Finance Leases | Operating Leases | Finance Leases | ||||||||||
| 2023 | $84 | $— | $60 | $— | ||||||||||
| 2024 | 77 | — | 59 | — | ||||||||||
| 2025 | 78 | 1 | 59 | 1 | ||||||||||
| 2026 | 78 | — | 60 | — | ||||||||||
| 2027 | 76 | — | 60 | — | ||||||||||
| All years thereafter | 871 | 1 | 394 | — | ||||||||||
| Total future minimum lease payments | $1,264 | $2 | $692 | $1 | ||||||||||
| Less: imputed interest | (428) | — | (135) | — | ||||||||||
| Total | $836 | $2 | $557 | $1 | ||||||||||
| Reported as of March 31, 2022 | ||||||||||||||
| Operating lease liabilities (current) | $120 | $— | $92 | $— | ||||||||||
| Operating lease liabilities (noncurrent) | 716 | — | 465 | — | ||||||||||
| Other noncurrent liabilities | — | 2 | — | 1 | ||||||||||
| Total | $836 | $2 | $557 | $1 | ||||||||||
At March 31, 2022, the Companies had an additional operating lease agreement that had not yet commenced, for a solar electric facility under construction by the Clean Energy Businesses, for which the present value of the lease payments is $6 million. This lease is expected to commence within one year, with a lease term of approximately 45 years.
The Companies are lessors under certain leases whereby the Companies own real estate and distribution poles and lease portions of them to others. Revenue under such leases was immaterial for Con Edison and CECONY for the three months ended March 31, 2022 and 2021.
Note J – Income Tax
Con Edison’s income tax expense decreasedincreased to $270$153 million for the three months ended September 30, 2017March 31, 2022 from $314$78 million for the three months ended September 30, 2016. Con Edison's effectiveMarch 31, 2021. The increase in income tax rate for the three months ended September 30, 2017 and 2016 was 37 percent and 39 percent, respectively. The decrease in Con Edison's effective tax rateexpense is primarily due to lowerhigher income before income tax expense, higher state income taxes, offset in part by a decrease in tax benefits for plant-related flow through items.and lower income attributable to non-controlling interests.
CECONY’s income tax expense increased to $242$117 million for the three months ended September 30, 2017March 31, 2022 from $226$114 million for the three months ended September 30, 2016. CECONY's effectiveMarch 31, 2021. The increase in income tax expense is primarily due to higher income before income tax expense and lower flow-through tax benefits in 2022 for plant-related items, offset in part by a higher general business tax credit.
Reconciliation of the difference between income tax expense and the amount computed by applying the prevailing statutory income tax rate to income before income taxes for the three months ended September 30, 2017March 31, 2022 and 2016 was 38 percent and 37 percent, respectively. The increase in CECONY's effective2021 is as follows:
| Con Edison | CECONY | |||||||||||||
| (% of Pre-tax income) | 2022 | 2021 | 2022 | 2021 | ||||||||||
| STATUTORY TAX RATE | ||||||||||||||
| Federal | 21 | % | 21 | % | 21 | % | 21 | % | ||||||
| Changes in computed taxes resulting from: | ||||||||||||||
| State income tax, net of federal income tax benefit | 5 | 4 | 5 | 5 | ||||||||||
| Amortization of excess deferred federal income taxes | (6) | (9) | (7) | (7) | ||||||||||
| Taxes attributable to non-controlling interests | 2 | — | — | — | ||||||||||
| Cost of removal | 1 | 2 | 1 | 1 | ||||||||||
| Other plant-related items | — | (1) | — | — | ||||||||||
| Renewable energy credits | (1) | (1) | — | — | ||||||||||
| Effective tax rate | 22 | % | 16 | % | 20 | % | 20 | % | ||||||
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In April 2021, New York State passed a law that increased the corporate franchise tax rate is primarily dueon business income from 6.5% to 7.25%, retroactive to January 1, 2021, for taxpayers with taxable income greater than $5 million. The law also reinstated the business capital tax at 0.1875%, not to exceed an annual maximum tax liability of $5 million per taxpayer. New York State requires a decrease incorporate franchise taxpayer to calculate and pay the highest amount of tax benefits for plant-related flow through items and lower research and development credits, offset in part by lower state income taxes.
Uncertain Tax Positions
At September 30, 2017,March 31, 2022, the estimated liability for uncertain tax positions for Con Edison was $41$16 million ($215 million for CECONY). Con Edison reasonably expects to resolve approximately $35 million ($24 million, net of federal taxes) of its uncertain tax positions within the next twelve months including $21approximately $12 million ($15 million, net of various federal taxes),and state uncertainties due to the expected completion of ongoing tax examinations, of which the entire amount, if recognized, would reduce Con Edison’sEdison's effective tax rate. The amount related to CECONY is approximately $18 million ($13 million, net of federal taxes), including $4$3 million, which, 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 $25$16 million ($1815 million, net of federal taxes). with $5 million attributable to CECONY.
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. InFor the three and nine months ended September 30, 2017,March 31, 2022 and 2021, the Companies recognized an immaterial amount of interest expense and no penalties for uncertain tax positions in their consolidated income statements. At September 30, 2017March 31, 2022 and December 31, 2016,2021, the Companies recognized an immaterial amount of accrued interest on their consolidated balance sheets.
Note J —K – Revenue Recognition
The following table presents, for the three months ended March 31, 2022 and 2021, revenue from contracts with customers as defined in Accounting Standards Codification Topic 606, "Revenue from Contracts with Customers," as well as additional revenue from sources other than contracts with customers, disaggregated by major source.
| For the Three Months Ended March 31, 2022 | For the Three Months Ended March 31, 2021 | |||||||||||||||||||||||||
| (Millions of Dollars) | Revenues from contracts with customers | Other revenues (a) | Total operating revenues | Revenues from contracts with customers | Other revenues (a) | Total operating revenues | ||||||||||||||||||||
| CECONY | ||||||||||||||||||||||||||
| Electric | $2,107 | $(23) | $2,084 | $1,966 | $2 | $1,968 | ||||||||||||||||||||
| Gas | 1,104 | 27 | 1,131 | 946 | 27 | 973 | ||||||||||||||||||||
| Steam | 299 | 3 | 302 | 261 | 3 | 264 | ||||||||||||||||||||
| Total CECONY | $3,510 | $7 | $3,517 | $3,173 | $32 | $3,205 | ||||||||||||||||||||
| O&R | ||||||||||||||||||||||||||
| Electric | 163 | 3 | 166 | 144 | 1 | 145 | ||||||||||||||||||||
| Gas | 120 | (1) | 119 | 108 | (5) | 103 | ||||||||||||||||||||
| Total O&R | $283 | $2 | $285 | $252 | ($4) | $248 | ||||||||||||||||||||
| Clean Energy Businesses | ||||||||||||||||||||||||||
| Renewables | 140 | — | 140 | 154 | — | 154 | ||||||||||||||||||||
| Energy services | 19 | — | 19 | 22 | — | 22 | ||||||||||||||||||||
| Other | — | 101 | 101 | — | 48 | 48 | ||||||||||||||||||||
| Total Clean Energy Businesses | $159 | $101 | $260 | $176 | $48 | $224 | ||||||||||||||||||||
| Con Edison Transmission | 1 | — | 1 | 1 | — | 1 | ||||||||||||||||||||
| Other (b) | — | (3) | (3) | — | (1) | (1) | ||||||||||||||||||||
| Total Con Edison | $3,953 | $107 | $4,060 | $3,602 | $75 | $3,677 | ||||||||||||||||||||
(a) For the Utilities, this includes primarily revenue or negative revenue adjustments from alternative revenue programs, such as the revenue decoupling mechanisms under their NY electric and gas rate plans (see "Rate Plans" in Note B). For the Clean Energy Businesses, this includes revenue from wholesale services.
(b) Parent company and consolidation adjustments.
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| 2022 | 2021 | |||||||||||||||||||
| (Millions of Dollars) | Unbilled contract revenue (a) | Unearned revenue (b) | Unbilled contract revenue (a) | Unearned revenue (b) | ||||||||||||||||
| Beginning balance as of January 1, | $35 | $7 | $11 | $41 | ||||||||||||||||
| Additions (c) | 21 | — | 24 | — | ||||||||||||||||
| Subtractions (c) | 36 | 4 | (d) | 13 | 1 | (d) | ||||||||||||||
| Ending balance as of March 31, | $20 | $3 | $22 | $40 | ||||||||||||||||
(a)Unbilled contract revenue represents accumulated incurred costs and earned profits on contracts (revenue arrangements), which have been recorded as revenue, but have not yet been billed to customers, and which represent contract assets as defined in Topic 606. Substantially all accrued unbilled contract revenue is expected to be collected within one year. Unbilled contract revenue arises from the cost-to-cost method of revenue recognition. Unbilled contract revenue from fixed-price type contracts is converted to billed receivables when amounts are invoiced to customers according to contractual billing terms, which generally occur when deliveries or other performance milestones are completed.
(b)Unearned revenue represents a liability for billings to customers in excess of earned revenue, which are contract liabilities as defined in Topic 606.
(c)Additions for unbilled contract revenue and subtractions for unearned revenue represent additional revenue earned. Additions for unearned revenue and subtractions for unbilled contract revenue represent billings. Activity also includes appropriate balance sheet classification for the period.
(d)Of the subtractions from unearned revenue, $4 million and $1 million were included in the balances as of January 1, 2022 and 2021, respectively.
As of March 31, 2022, the aggregate amount of the remaining fixed performance obligations of the Clean Energy Businesses under contracts with customers for energy services was $114 million, of which $76 million will be recognized within the next two years, and the remaining $38 million will be recognized pursuant to long-term service and maintenance agreements.
Utilities' Assessment of Late Payment Charges
In March 2020, the Utilities began suspending new late payment charges and certain other fees for all customers. For the three months ended March 31, 2021, the estimated amount of these revenues was $18 million and $17 million for Con Edison and CECONY, respectively. The Utilities also began providing payment extensions for all customers that were scheduled to be disconnected prior to the start of the COVID-19 pandemic. In November 2021, the NYSPSC issued an order establishing a surcharge recovery mechanism for CECONY to collect, commencing December 1, 2021 through December 31, 2022, $43 million and $7 million for electric and gas, respectively, of late payment charges and fees that were not billed for the year ended December 31, 2020. In April 2022, the NYSPSC approved the October 2021 O&R NY joint proposal for new electric and gas rate plans for the three-year period January 2022 through December 2024 that includes certain COVID-19 provisions, such as: recovery of 2020 late payment charges over three years; reconciliation of late payment charges to amounts reflected in rates for years 2021 through 2024; and reconciliation of write-offs of customer accounts receivable balances to amounts reflected in rates from January 1, 2020 through December 31, 2024. CECONY resumed late payment charges for commercial and residential customers who have not experienced a change in financial circumstances due to the COVID-19 pandemic in September 2021 and October 2021, respectively. O&R resumed late payment charges for commercial and residential customers who have not experienced a change in financial circumstances due to the COVID-19 pandemic in October 2021. See "COVID-19 Regulatory Matters" in Note B.
Note L – Current Expected Credit Losses
Allowance for Uncollectible Accounts
The Utilities’ “Account receivable – customers” balance consists of utility bills due (bills are generally due the month following billing) from customers who have energy delivered, generated, or services provided by the Utilities. The balance also reflects the Utilities’ purchase of receivables from energy service companies to support the retail choice programs.
“Other receivables” balance generally reflects costs billed by the Utilities for goods and services provided to external parties, such as accommodation work for private parties and certain governmental entities, real estate rental and pole attachments.
The Clean Energy Businesses’ customer accounts receivable balance generally reflects the management of energy supply assets, energy-efficiency services to government and commercial customers, and the engineering, procurement, and construction services of renewable energy projects. The Clean Energy Businesses calculate an allowance for uncollectible accounts related to their energy services customers based on an aging and customer-specific analysis. The amount of such reserves was not material at March 31, 2022 and December 31, 2021.
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The Companies develop expected loss estimates using past events data and consider current conditions and future reasonable and supportable forecasts. Changes to the Utilities’ reserve balances that result in write-offs of customer accounts receivable balances above existing rate allowances are not reflected in rates during the term of the current rate plans. For the Utilities’ customer accounts receivable allowance for uncollectible accounts, past events considered include write-offs relative to customer accounts receivable; current conditions include macro-and micro-economic conditions related to trends in the local economy, bankruptcy rates and aged customer accounts receivable balances, among other factors; and forecasts about the future include assumptions related to the level of write-offs and recoveries. Generally, the Utilities write off customer accounts receivable as uncollectible 90 days after the account is turned off for non-payment, or the account is closed during the collection process. See "COVID-19 Regulatory Matters" in Note B.
Other receivables allowance for uncollectible accounts is calculated based on a historical average of collections relative to total other receivables, including current receivables. Current macro- and micro-economic conditions are also considered when calculating the current reserve. Probable outcomes of pending litigation, whether favorable or unfavorable to the Companies, are also included in the consideration.
Starting in 2020, the potential economic impact of the COVID-19 pandemic was also considered in forward-looking projections related to write-off and recovery rates and resulted in increases to the allowance for uncollectible accounts. The increases to the allowance for customer uncollectible accounts for Con Edison and CECONY were $19 million and $20 million, respectively from December 31, 2021 to March 31, 2022. The increases to the allowance for uncollectible accounts for Con Edison were $33 million, substantially all of which related to CECONY from December 31, 2020 to March 31, 2021.
Customer accounts receivable and the associated allowance for uncollectible accounts are included in the line “Accounts receivable – customers” on the Companies’ consolidated balance sheets. Other receivables and the associated allowance for uncollectible accounts are included in “Other receivables” on the consolidated balance sheets.
The table below presents a rollforward by major portfolio segment type for the three months ended March 31, 2022 and 2021:
| For the Three Months Ended March 31, | ||||||||||||||||||||||||||
| Con Edison | CECONY | |||||||||||||||||||||||||
| Accounts receivable - customers | Other receivables | Accounts receivable - customers | Other receivables | |||||||||||||||||||||||
| (Millions of Dollars) | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | ||||||||||||||||||
| Allowance for credit losses | ||||||||||||||||||||||||||
| Beginning Balance at January 1, | $317 | $148 | $22 | $7 | $304 | $138 | $19 | $4 | ||||||||||||||||||
| Recoveries | 5 | 3 | — | — | 4 | 3 | — | — | ||||||||||||||||||
| Write-offs | (30) | (21) | (3) | (1) | (28) | (20) | (2) | — | ||||||||||||||||||
| Reserve adjustments | 44 | 51 | 6 | 1 | 44 | 50 | 6 | 1 | ||||||||||||||||||
| Ending Balance March 31, | $336 | $181 | $25 | $7 | $324 | $171 | $23 | $5 | ||||||||||||||||||
39
Note M – Financial Information by Business Segment
Con Edison’s principal business segments are CECONY’s regulated utility activities, O&R’s regulated utility activities, the Clean Energy Businesses and Con Edison Transmission. CECONY’s principal business segments are its regulated electric, gas and steam utility activities. The financial data for the business segments for the three and nine months ended September 30, 2017March 31, 2022 and 20162021 were as follows:
| For the Three Months Ended March 31, | ||||||||||||||||||||||||||
| Operating revenues | Inter-segment revenues | Depreciation and amortization | Operating income/(loss) | |||||||||||||||||||||||
| (Millions of Dollars) | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | ||||||||||||||||||
| CECONY | ||||||||||||||||||||||||||
| Electric | $2,084 | $1,968 | $4 | $4 | $332 | $315 | $170 | $247 | ||||||||||||||||||
| Gas | 1,131 | 973 | 2 | 2 | 90 | 77 | 451 | 439 | ||||||||||||||||||
| Steam | 302 | 264 | 19 | 19 | 24 | 23 | 90 | 100 | ||||||||||||||||||
| Consolidation adjustments | — | — | (25) | (25) | — | — | — | — | ||||||||||||||||||
| Total CECONY | $3,517 | $3,205 | $— | $— | $446 | $415 | $711 | $786 | ||||||||||||||||||
| O&R | ||||||||||||||||||||||||||
| Electric | $166 | $145 | $— | $— | $17 | $17 | $8 | $9 | ||||||||||||||||||
| Gas | 119 | 103 | — | — | 7 | 7 | 38 | 40 | ||||||||||||||||||
| Total O&R | $285 | $248 | $— | $— | $24 | $24 | $46 | $49 | ||||||||||||||||||
| Clean Energy Businesses | $260 | $224 | $— | $— | $59 | $58 | $46 | $28 | ||||||||||||||||||
| Con Edison Transmission | 1 | 1 | — | — | — | — | (3) | (3) | ||||||||||||||||||
| Other (a) | (3) | (1) | — | — | — | — | (1) | — | ||||||||||||||||||
| Total Con Edison | $4,060 | $3,677 | $— | $— | $529 | $497 | $799 | $860 | ||||||||||||||||||
| For the Three Months Ended September 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 | $2,469 | $2,557 | $4 | $5 | $232 | $217 | $855 | $841 | ||||||||||
| Gas | 268 | 208 | 2 | 1 | 47 | 41 | (12) | (28) | ||||||||||
| Steam | 62 | 63 | 19 | 22 | 21 | 20 | (43) | (47) | ||||||||||
| Consolidation adjustments | — | — | (25) | (28) | — | — | — | — | ||||||||||
| Total CECONY | $2,799 | $2,828 | $— | $— | $300 | $278 | $800 | $766 | ||||||||||
| O&R | ||||||||||||||||||
| Electric | $206 | $213 | $— | $— | $13 | $12 | $56 | $55 | ||||||||||
| Gas | 28 | 27 | — | — | 5 | 5 | (11) | (7) | ||||||||||
| Total O&R | $234 | $240 | $— | $— | $18 | $17 | $45 | $48 | ||||||||||
| Clean Energy Businesses | $177 | $350 | $— | $(2) | $19 | $11 | $29 | $125 | ||||||||||
| Con Edison Transmission | 1 | — | — | — | — | — | (2) | (1) | ||||||||||
| Other (a) | — | (1) | — | 2 | — | (1) | 1 | 2 | ||||||||||
| Total Con Edison | $3,211 | $3,417 | $— | $— | $337 | $305 | $873 | $940 | ||||||||||
| For the Nine Months Ended September 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 | $6,079 | $6,222 | $12 | $13 | $690 | $645 | $1,477 | $1,487 | ||||||||||
| Gas | 1,421 | 1,113 | 5 | 4 | 137 | 118 | 362 | 273 | ||||||||||
| Steam | 448 | 406 | 55 | 65 | 64 | 62 | 52 | 39 | ||||||||||
| Consolidation adjustments | — | — | (72) | (82) | — | — | — | — | ||||||||||
| Total CECONY | $7,948 | $7,741 | $— | $— | $891 | $825 | $1,891 | $1,799 | ||||||||||
| O&R | ||||||||||||||||||
| Electric | $495 | $497 | $— | $— | $38 | $37 | $83 | $86 | ||||||||||
| Gas | 172 | 133 | — | — | 15 | 13 | 33 | 28 | ||||||||||
| Total O&R | $667 | $630 | $— | $— | $53 | $50 | $116 | $114 | ||||||||||
| Clean Energy Businesses | $460 | $998 | $— | $7 | $54 | $30 | $63 | $184 | ||||||||||
| Con Edison Transmission | 1 | — | — | — | — | — | (6) | (1) | ||||||||||
| Other (a) | (4) | (1) | — | (7) | — | — | 2 | 1 | ||||||||||
| Total Con Edison | $9,072 | $9,368 | $— | $— | $998 | $905 | $2,066 | $2,097 | ||||||||||
(a)Parent company and consolidation adjustments. Other does not represent a business segment.
Note K —N – 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. These are economic hedges, for which the Utilities and the Clean Energy Business do not elect hedge accounting. The Clean Energy Businesses use interest rate swaps to manage the risks associated with interest rates related to outstanding and expected future debt issuances and borrowings. Derivatives are recognized on the consolidated balance sheet at fair value (see Note L)O), 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.
40
The fair values of the Companies’ commodity derivatives including the offsetting of assets and liabilities on the consolidated balance sheet at September 30, 2017March 31, 2022 and December 31, 20162021 were:
| (Millions of Dollars) | 2022 | 2021 | ||||||||||||||||||||||||
| 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) | ||||||||||||||||||||
| Con Edison | ||||||||||||||||||||||||||
| Fair value of derivative assets | ||||||||||||||||||||||||||
| Current | $637 | $(328) | $309 | (b) | $285 | $(158) | $127 | (b) | ||||||||||||||||||
| Noncurrent | 154 | (18) | 136 | (c) | 90 | (13) | 77 | |||||||||||||||||||
| Total fair value of derivative assets | $791 | $(346) | $445 | $375 | $(171) | $204 | ||||||||||||||||||||
| Fair value of derivative liabilities | ||||||||||||||||||||||||||
| Current | $(330) | $196 | $(134) | (c) | $(289) | $137 | $(152) | (d) | ||||||||||||||||||
| Noncurrent | (94) | 18 | (76) | (c) | (94) | 10 | (84) | (d) | ||||||||||||||||||
| Total fair value of derivative liabilities | $(424) | $214 | $(210) | $(383) | $147 | $(236) | ||||||||||||||||||||
| Net fair value derivative assets/(liabilities) | $367 | ($132) | $235 | $(8) | $(24) | $(32) | ||||||||||||||||||||
| CECONY | ||||||||||||||||||||||||||
| Fair value of derivative assets | ||||||||||||||||||||||||||
| Current | $497 | $(270) | $227 | (b) | $135 | $(64) | $71 | (b) | ||||||||||||||||||
| Noncurrent | 110 | (22) | 88 | 71 | (15) | 56 | ||||||||||||||||||||
| Total fair value of derivative assets | $607 | $(292) | $315 | $206 | $(79) | $127 | ||||||||||||||||||||
| Fair value of derivative liabilities | ||||||||||||||||||||||||||
| Current | $(215) | $119 | $(96) | $(131) | $43 | $(88) | ||||||||||||||||||||
| Noncurrent | (82) | 19 | (63) | (50) | 10 | (40) | ||||||||||||||||||||
| Total fair value of derivative liabilities | $(297) | $138 | $(159) | $(181) | $53 | $(128) | ||||||||||||||||||||
| Net fair value derivative assets/(liabilities) | $310 | $(154) | $156 | $25 | $(26) | $(1) | ||||||||||||||||||||
| (Millions of Dollars) | 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) | ||
| Con Edison | ||||||||
| Fair value of derivative assets | ||||||||
| Current | $77 | $(67) | $10 | (b) | $81 | $(64) | $17 | (b) |
| Noncurrent | 64 | (61) | 3 | 49 | (43) | 6 | ||
| Total fair value of derivative assets | $141 | $(128) | $13 | $130 | $(107) | $23 | ||
| Fair value of derivative liabilities | ||||||||
| Current | $(141) | $71 | $(70) | $(138) | $61 | $(77) | ||
| Noncurrent | (143) | 60 | (83) | (91) | 52 | (39) | (c) | |
| Total fair value of derivative liabilities | $(284) | $131 | $(153) | $(229) | $113 | $(116) | ||
| Net fair value derivative assets/(liabilities) | $(143) | $3 | $(140) | (b) | $(99) | $6 | $(93) | (b) (c) |
| CECONY | ||||||||
| Fair value of derivative assets | ||||||||
| Current | $55 | $(53) | $2 | (b) | $52 | $(45) | $7 | (b) |
| Noncurrent | 57 | (55) | 2 | 41 | (35) | 6 | ||
| Total fair value of derivative assets | $112 | $(108) | $4 | $93 | $(80) | $13 | ||
| Fair value of derivative liabilities | ||||||||
| Current | $(116) | $57 | $(59) | $(111) | $45 | $(66) | ||
| Noncurrent | (127) | 54 | (73) | (77) | 44 | (33) | ||
| Total fair value of derivative liabilities | $(243) | $111 | $(132) | $(188) | $89 | $(99) | ||
| Net fair value derivative assets/(liabilities) | $(131) | $3 | $(128) | (b) | $(95) | $9 | $(86) | (b) |
(b)At March 31, 2022 and December 31, 2021, margin deposits of $1 million and an immaterial amount for Con Edison and CECONY, 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)Includes amounts for interest rate swaps of $24 million in noncurrent assets, $(9) millionin current liabilities and $(4) million in noncurrent liabilities. At March 31, 2022, the Clean Energy Businesses had interest rate swaps with notional amounts of $1,014 million. The expiration dates of the swaps range from 2025-2041.
(d)Includes amounts for interest rate swaps of $4 million in noncurrent assets, $(20) million in current liabilities and $(38) million in noncurrent liabilities. At December 31, 2021, the Clean Energy Businesses had interest rate swaps with notional amounts of $1,031 million. The expiration dates of the swaps ranged from 2025-2041. In 2021, as part of the Clean Energy Businesses sale of a renewable electric project, interest rate swaps terminating in 2024 were assumed by the buyer.
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 regulatory 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.
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 reporting period in which they occur. The Clean Energy Businesses record changes in the fair value of their interest rate swaps in other interest expense at the end of each reporting period. Management believes that these derivative instruments represent economic hedges that mitigate exposure to fluctuations in commodity prices.prices and interest rates.
41
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 months ended September 30, 2017March 31, 2022 and 2016:2021:
| For the Three Months Ended March 31, | ||||||||||||||||||||
| Con Edison | CECONY | |||||||||||||||||||
| (Millions of Dollars) | Balance Sheet Location | 2022 | 2021 | 2022 | 2021 | |||||||||||||||
| Pre-tax gains/(losses) deferred in accordance with accounting rules for regulated operations: | ||||||||||||||||||||
| Current | Deferred derivative gains | $339 | $19 | $312 | $17 | |||||||||||||||
| Noncurrent | Deferred derivative gains | 45 | (3) | 41 | (3) | |||||||||||||||
| Total deferred gains/(losses) | $384 | $16 | $353 | $14 | ||||||||||||||||
| Current | Deferred derivative losses | $(36) | $4 | $(32) | $3 | |||||||||||||||
| Current | Recoverable energy costs | 157 | — | 143 | 2 | |||||||||||||||
| Noncurrent | Deferred derivative losses | (34) | 23 | (34) | 20 | |||||||||||||||
| Total deferred gains/(losses) | 87 | $27 | $77 | $25 | ||||||||||||||||
| Net deferred gains/(losses) (a) | $471 | $43 | $430 | $39 | ||||||||||||||||
| Income Statement Location | ||||||||||||||||||||
| Pre-tax gains/(losses) recognized in income | ||||||||||||||||||||
| Gas purchased for resale | $5 | $1 | $— | $— | ||||||||||||||||
| Non-utility revenue | (17) | 3 | — | — | ||||||||||||||||
| Other operations and maintenance expense | 3 | 2 | 3 | 2 | ||||||||||||||||
| Other interest expense | 65 | 59 | — | — | ||||||||||||||||
| Total pre-tax gains/(losses) recognized in income | $56 | $65 | $3 | $2 | ||||||||||||||||
| For the Three Months Ended September 30, | |||||||||||||
| Con Edison | CECONY | ||||||||||||
| (Millions of Dollars) | Balance Sheet Location | 2017 | 2016 | 2017 | 2016 | ||||||||
| Pre-tax gains/(losses) deferred in accordance with accounting rules for regulated operations: | |||||||||||||
| Current | Deferred derivative gains | $(4) | $(1) | $(3) | $(3) | ||||||||
| Noncurrent | Deferred derivative gains | 1 | (2) | 1 | — | ||||||||
| Total deferred gains/(losses) | $(3) | $(3) | $(2) | $(3) | |||||||||
| Current | Deferred derivative losses | $(11) | $(19) | $(9) | $(18) | ||||||||
| Current | Recoverable energy costs | (40) | (39) | (38) | (35) | ||||||||
| Noncurrent | Deferred derivative losses | (12) | (17) | (8) | (14) | ||||||||
| Total deferred gains/(losses) | $(63) | $(75) | $(55) | $(67) | |||||||||
| Net deferred gains/(losses) | $(66) | $(78) | $(57) | $(70) | |||||||||
| Income Statement Location | |||||||||||||
| Pre-tax gains/(losses) recognized in income | |||||||||||||
| Purchased power expense | $— | $(37) | (b) | $— | $— | ||||||||
| Gas purchased for resale | (47) | (38) | — | — | |||||||||
| Non-utility revenue | 5 | (a) | (2) | (b) | — | — | |||||||
| Total pre-tax gains/(losses) recognized in income | $(42) | $(77) | $— | $— | |||||||||
| For the Nine Months Ended September 30, | |||||||||||||
| Con Edison | CECONY | ||||||||||||
| (Millions of Dollars) | Balance Sheet Location | 2017 | 2016 | 2017 | 2016 | ||||||||
| Pre-tax gains/(losses) deferred in accordance with accounting rules for regulated operations: | |||||||||||||
| Current | Deferred derivative gains | $(26) | $6 | $(22) | $2 | ||||||||
| Noncurrent | Deferred derivative gains | (2) | (1) | (2) | (1) | ||||||||
| Total deferred gains/(losses) | $(28) | $5 | $(24) | $1 | |||||||||
| Current | Deferred derivative losses | $10 | $19 | $11 | $16 | ||||||||
| Current | Recoverable energy costs | (125) | (163) | (116) | (148) | ||||||||
| Noncurrent | Deferred derivative losses | (40) | (5) | (36) | (3) | ||||||||
| Total deferred gains/(losses) | $(155) | $(149) | $(141) | $(135) | |||||||||
| Net deferred gains/(losses) | $(183) | $(144) | $(165) | $(134) | |||||||||
| Income Statement Location | |||||||||||||
| Pre-tax gains/(losses) recognized in income | |||||||||||||
| Purchased power expense | $— | $(106) | (b) | $— | $— | ||||||||
| Gas purchased for resale | (161) | (72) | — | — | |||||||||
| Non-utility revenue | 11 | (a) | 15 | (b) | — | — | |||||||
| Total pre-tax gains/(losses) recognized in income | $(150) | $(163) | $— | $— | |||||||||
higher electric and gas commodity prices during the three months ended March 31, 2022. Upon settlement, short-term deferred derivative gains generally reduce the recoverable costs of electric and gas purchases.
The following table presents the hedged volume of Con Edison’s and CECONY’s commodity derivative transactions at September 30, 2017:March 31, 2022:
| Electric Energy (MWh) (a)(b) | Capacity (MW) (a) | Natural Gas (Dt) (a)(b) | Refined Fuels (gallons) | |||||||||||
| Con Edison | 24,078,605 | 37,114 | 229,787,936 | 2,688,000 | ||||||||||
| CECONY | 22,015,475 | 26,100 | 214,090,000 | 2,688,000 | ||||||||||
Electric Energy (MWh) (a)(b) | Capacity (MW) (a) | Natural Gas (Dt) (a)(b) | Refined Fuels (gallons) | |||||
| Con Edison | 32,596,372 | 6,790 | 166,913,644 | 672,000 | ||||
| CECONY | 30,492,575 | 3,000 | 158,500,000 | 672,000 | ||||
(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 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 30, 2017,March 31, 2022, Con Edison and CECONY had $80$643 million and $8$387 million of credit exposure in connection with open energy supply net receivables and hedging activities, net of collateral, respectively. Con Edison’s net credit exposure consisted of $23$100 million with investment-grade counterparties, $23independent system operators, $49 million with non-investment grade/non-rated counterparties, $19 million with independent system operators and $15$194 million with commodity exchange brokers.brokers, and $300 million with investment-grade counterparties. CECONY’s net credit exposure consisted of $7$157 million with commodity exchange brokers, $229 million with investment-grade counterparties, and $1 million with investment-gradenon-investment grade/non-rated 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.
42
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 30, 2017:March 31, 2022:
| (Millions of Dollars) | Con Edison (a) | CECONY (a) | ||||||||||||
| Aggregate fair value – net liabilities | $130 | $99 | ||||||||||||
| Collateral posted | 100 | 100 | ||||||||||||
| Additional collateral (b) (downgrade one level from current ratings) | 36 | 2 | ||||||||||||
| Additional collateral (b)(c) (downgrade to below investment grade from current ratings) | 88 | 37 | ||||||||||||
| (Millions of Dollars) | Con Edison (a) | CECONY (a) | ||
| Aggregate fair value – net liabilities | $148 | $131 | ||
| Collateral posted | 61 | 56 | ||
| Additional collateral (b) (downgrade one level from current ratings) | 23 | 22 | ||
| Additional collateral (b) (downgrade to below investment grade from current ratings) | 101 | (c) | 88 | (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 |
(b)The Companies measure the collateral requirements by taking into consideration the fair value amounts of derivative instruments that terminatescontain credit-risk-related contingent features that are in June 2024, pursuanta net liability position plus amounts owed to which it pays a fixed-rate of 2.0855 percentcounterparties for settled transactions and receives a LIBOR-based variable rate.amounts required by counterparties for minimum financial security. The fair value amounts represent unrealized losses, net of this interest rate swap was immaterial asany 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 March 31, 2022, if Con Edison had been downgraded to below investment grade, it would have been required to post additional collateral for such derivative instruments of September 30, 2017 and a liability of $1 million as of December 31, 2016 on Con Edison’s consolidated balance sheet.$39 million.
Note L —O – 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 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
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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.
For information on the measurement of Con Edison's investment in MVP, which was measured at fair value on a
non-recurring basis, see Note A. Assets and liabilities measured at fair value on a recurring basis as of September 30, 2017March 31, 2022 and December 31, 20162021 are summarized below.
| 2022 | 2021 | |||||||||||||||||||||||||||||||
| (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) | $191 | $482 | $28 | $(279) | $422 | $95 | $260 | $17 | $(171) | $201 | ||||||||||||||||||||||
| Interest rate swaps (a)(b)(c) | — | 24 | — | — | 24 | — | 4 | — | — | 4 | ||||||||||||||||||||||
| Other (a)(b)(d) | 467 | 129 | — | — | 596 | 492 | 135 | — | — | 627 | ||||||||||||||||||||||
| Total assets | $658 | $635 | $28 | $(279) | $1,042 | $587 | $399 | $17 | $(171) | $832 | ||||||||||||||||||||||
| Derivative liabilities: | ||||||||||||||||||||||||||||||||
| Commodity (a)(b)(c) | $24 | $309 | $14 | $(150) | $197 | $33 | $266 | $28 | $(148) | $179 | ||||||||||||||||||||||
| Interest rate swaps (a)(b)(c) | — | 13 | — | — | 13 | — | 57 | — | — | 57 | ||||||||||||||||||||||
| Total liabilities | $24 | $322 | $14 | $(150) | $210 | $33 | $323 | $28 | $(148) | $236 | ||||||||||||||||||||||
| CECONY | ||||||||||||||||||||||||||||||||
| Derivative assets: | ||||||||||||||||||||||||||||||||
| Commodity (a)(b)(c) | $163 | $381 | $— | $(228) | $316 | $67 | $138 | $1 | $(79) | $127 | ||||||||||||||||||||||
| Other (a)(b)(d) | 450 | 122 | — | — | 572 | 474 | 127 | — | — | 601 | ||||||||||||||||||||||
| Total assets | $613 | $503 | $— | $(228) | $888 | $541 | $265 | $1 | $(79) | $728 | ||||||||||||||||||||||
| Derivative liabilities: | ||||||||||||||||||||||||||||||||
| Commodity (a)(b)(c) | $— | $229 | $6 | $(75) | $160 | $1 | $172 | $8 | $(53) | $128 | ||||||||||||||||||||||
| 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 | $28 | $2 | $(18) | $18 | $14 | $33 | $7 | $(24) | $30 | |||||||||
| Other (a)(b)(d) | 271 | 118 | — | — | 389 | 222 | 111 | — | — | 333 | |||||||||
| Total assets | $277 | $146 | $2 | $(18) | $407 | $236 | $144 | $7 | $(24) | $363 | |||||||||
| Derivative liabilities: | |||||||||||||||||||
| Commodity (a)(b)(c) | $2 | $155 | $22 | $(26) | $153 | $4 | $144 | $6 | $(38) | $116 | |||||||||
| Interest Rate Swap (a)(b)(c) | — | — | — | — | — | — | 1 | — | — | 1 | |||||||||
| Total liabilities | $2 | $155 | $22 | $(26) | $153 | $4 | $145 | $6 | $(38) | $117 | |||||||||
| CECONY | |||||||||||||||||||
| Derivative assets: | |||||||||||||||||||
| Commodity (a)(b)(c) | $5 | $12 | $1 | $(9) | $9 | $10 | $19 | $1 | $(10) | $20 | |||||||||
| Other (a)(b)(d) | 248 | 113 | — | — | 361 | 200 | 106 | — | — | 306 | |||||||||
| Total assets | $253 | $125 | $1 | $(9) | $370 | $210 | $125 | $1 | $(10) | $326 | |||||||||
| Derivative liabilities: | |||||||||||||||||||
| Commodity (a)(b)(c) | $1 | $133 | $15 | $(17) | $132 | $1 | $124 | $— | $(26) | $99 | |||||||||
(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, and 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 March 31, 2022 and December 31, 2021, 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.
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.derivatives and interest rate swaps. Under the Companies’ policies and procedures, multiple independent sources of information are obtained for forward price curves used to value commodity derivatives.derivatives and interest rate swaps. Fair value and changes in fair value of commodity derivatives and interest rate swaps 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 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, 2017 | Valuation Techniques | Unobservable Inputs | Range | |
| (Millions of Dollars) | ||||
| Con Edison – Commodity | ||||
| Electricity | $(21) | Discounted Cash Flow | Forward energy prices (a) | $19.00-$76.25 per MWh |
| Discounted Cash Flow | Forward capacity prices (a) | $1.26-$9.47 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-$6.75 per MWh | |||
| Total Con Edison—Commodity | $(20) | |||
| CECONY – Commodity | ||||
| Electricity | $(15) | Discounted Cash Flow | Forward energy prices (a) | $20.50-$76.25 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 | $(14) | |||
| Valuation Techniques | Unobservable Inputs | Range | ||||||||||||
| (Millions of Dollars) | ||||||||||||||
| Con Edison – Commodity | ||||||||||||||
| Electricity | $20 | Discounted Cash Flow | Forward energy prices (a) | $22.50-$82.00 per MWh | ||||||||||
| (7) | Discounted Cash Flow | Forward capacity prices (a) | $0.45-$7.13 per kW-month | |||||||||||
| Transmission Congestion Contracts/Financial Transmission Rights | 1 | Discounted Cash Flow | Inter-zonal forward price curves adjusted for historical zonal losses (b) | $(44.01)-$13.89 per MWh | ||||||||||
| Total Con Edison—Commodity | $14 | |||||||||||||
| CECONY – Commodity | ||||||||||||||
| Discounted Cash Flow | Forward capacity prices (a) | $1.51-$7.13 per kW-month | ||||||||||||
| 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 30, 2017March 31, 2022 and 20162021 and classified as Level 3 in the fair value hierarchy:
| For the Three Months Ended March 31, | ||||||||||||||
| Con Edison | CECONY | |||||||||||||
| (Millions of Dollars) | 2022 | 2021 | 2022 | 2021 | ||||||||||
| Beginning balance as of January 1, | $(11) | $(19) | $(7) | $(10) | ||||||||||
| Included in earnings | 24 | (2) | (1) | (2) | ||||||||||
| Included in regulatory assets and liabilities | 1 | 4 | — | 2 | ||||||||||
| Settlements | — | 5 | 2 | 3 | ||||||||||
| Ending balance as of March 31, | $14 | $(12) | $(6) | $(7) | ||||||||||
| For the Three Months Ended September 30, | ||||||||
| �� Con Edison | CECONY | |||||||
| (Millions of Dollars) | 2017 | 2016 | 2017 | 2016 | ||||
| Beginning balance as of July 1, | $(10) | $5 | $(6) | $2 | ||||
| Included in earnings | 7 | (4) | 1 | — | ||||
| Included in regulatory assets and liabilities | (13) | (5) | (8) | (3) | ||||
| Sales | — | 4 | — | — | ||||
| Settlements | (4) | 1 | (1) | 1 | ||||
| Ending balance as of September 30, | $(20) | $1 | $(14) | $— | ||||
| For the Nine Months Ended September 30, | ||||||||
| Con Edison | CECONY | |||||||
| (Millions of Dollars) | 2017 | 2016 | 2017 | 2016 | ||||
| Beginning balance as of January 1, | $1 | $6 | $1 | $8 | ||||
| Included in earnings | 8 | (1) | 1 | (1) | ||||
| Included in regulatory assets and liabilities | (21) | (11) | (14) | (6) | ||||
| Purchases | 1 | 2 | 1 | 1 | ||||
| Sales | — | 4 | — | — | ||||
| Settlements | (9) | 1 | (3) | (2) | ||||
| Ending balance as of September 30, | $(20) | $1 | $(14) | $— | ||||
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 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 ($427 million gain and $5$3 million loss)gain) on the consolidated income statement for the three months ended September 30, 2017March 31, 2022 and 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 ($3 million gain and $6 million loss) on the consolidated income statement for the nine months ended September 30, 2017 and 2016, respectively. The change in fair value relating to Level 3 commodity derivative assets and liabilities held at September 30, 2017 and 2016 is included in non-utility revenues (immaterial for both periods) and purchased power costs ($4 million gain and $4 million loss) on the consolidated income statement for the three months ended
Note M —P – Variable Interest Entities
The Companies enter into arrangements including leases, partnerships and electricity purchase agreements, with various entities. As a result of these arrangements, Con Edison retainsthe Companies retain or may retain a variable interest in these entities.
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CECONY
CECONY has an ongoing long-term electricity purchase agreement with Brooklyn Navy Yard Cogeneration Partners, LP, a potential variable interest entity (VIE).VIE. In April 2017, CECONY's long-term electricity purchase agreement with Cogen Technologies Linden Venture, LP, another potential VIE, expired. In 2016, requests were2021, a request was made of these counterpartiesthis counterparty 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 contractsthis contract constitute CECONY’s maximum exposure to loss with respect to the potential VIEs.VIE.
In February 2021, a subsidiary of the VIEsClean Energy Businesses entered into an agreement relating to certain projects (CED Nevada Virginia) with a noncontrolling tax equity investor to which a percentage of earnings, tax attributes and cash flows will be allocated. CED Nevada Virginia is a consolidated entity in which Con Edison Development has entered into as of September 30, 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) |
| Copper Mountain Solar 3 | 128 | 20 | 2014 | Nevada | $175 |
| Mesquite Solar 1 | 83 | 20 | 2013 | Arizona | 102 |
| Copper Mountain Solar 2 | 75 | 25 | 2013 | Nevada | 83 |
| California Solar | 55 | 25 | 2012 | California | 64 |
| Broken Bow II | 38 | 25 | 2014 | Nebraska | 44 |
| Texas Solar 4 | 32 | 25 | 2014 | Texas | 47 |
For the three months ended March 31, 2022, the HLBV method of accounting for CED Nevada Virginia resulted in a $42 million loss ($32 million, after-tax) for the tax equity investor and $39 million of income ($30 million, after-tax) for Con Edison.
In 2018,the Clean Energy Businesses completed its acquisition of Sempra Solar Holdings, LLC. Included in the acquisition were certain operating projects (Tax Equity Projects) with a noncontrolling tax equity investor to which a percentage of earnings, tax attributes and cash flows are allocated. The Tax Equity Projects are consolidated entities in which Con Edison Development.
For the three months ended March 31, 2022, the HLBV method of accounting for the Tax Equity Projects resulted in a $5 million loss ($4 million, after tax) for the tax equity investor and $10 million of income ($7 million, after-tax) for Con Edison. For the three months ended March 31, 2021, the HLBV method of accounting for the Tax Equity Projects resulted in $2 million of income ($1 million, after-tax) for the tax equity investor and $3 million of income ($2 million, after-tax) for Con Edison.
Con Edison has determined that the use of HLBV accounting is reasonable and appropriate to attribute income and loss to the tax equity investors. Using the HLBV method, the company's earnings from the projects are adjusted to reflect the income or loss allocable to the tax equity investors calculated based on how the project would allocate and distribute its cash if it were to sell all of its assets for their carrying amounts and liquidate at a particular point in time. Under the HLBV method, the company calculates the liquidation value allocable to the tax equity investors at the beginning and end of each period based on the contractual liquidation waterfall and adjusts its income for the period to reflect the change in the project.
At March 31, 2022 and December 31, 2021, Con Edison’s consolidated balance sheet. For consolidated investments, such as Texas Solar 4, maximum exposure is equal tosheet included the netfollowing amounts associated with its VIEs:
| Tax Equity Projects | ||||||||||||||||||||
| Great Valley Solar (c)(d) | Copper Mountain - Mesquite Solar (c)(e) | CED Nevada Virginia (c)(h) | ||||||||||||||||||
| (Millions of Dollars) | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | ||||||||||||||
| Non-utility property, less accumulated depreciation (f)(g) | $273 | $275 | $428 | $431 | $636 | $643 | ||||||||||||||
| Other assets | 41 | 37 | 169 | 167 | 57 | 55 | ||||||||||||||
| Total assets (a) | $314 | $312 | $597 | $598 | $693 | $698 | ||||||||||||||
| Other liabilities | 15 | 14 | 77 | 74 | 327 | 315 | ||||||||||||||
| Total liabilities (b) | $15 | $14 | $77 | $74 | $327 | $315 | ||||||||||||||
(a)The assets of the project onTax Equity Projects and CED Nevada Virginia represent assets of a consolidated VIE that can be used only to settle obligations of the consolidated balance sheet less any applicable noncontrolling interest ($7 millionVIE.
(b)The liabilities of the Tax Equity Projects and CED Nevada Virginia represent liabilities of a consolidated VIE for Texas Solar 4). which creditors do not have recourse to the general credit of the primary beneficiary.
(c)Con Edison did not provide any financial or other support during the three and nine months ended September 30, 2017year that was not previously contractually required.
(d)Great Valley Solar consists of the Great Valley Solar 1, Great Valley Solar 2, Great Valley Solar 3 and Great Valley Solar 4 projects, for which the noncontrolling interest of the tax equity investor was $80 million and $84 million at March 31, 2022 and December 31, 2021, respectively.
(e)Copper Mountain - Mesquite Solar consists of the Copper Mountain Solar 4, Mesquite Solar 2 and Mesquite Solar 3 projects for which the noncontrolling interest of the tax equity investor was $112 million and $118 million at March 31, 2022 and December 31, 2021, respectively.
(f)Non-utility property is reduced by accumulated depreciation of $29 million for Great Valley Solar, $48 million for Copper Mountain - Mesquite Solar, and $15 million for CED Nevada Virginia at March 31, 2022.
(g)Non-utility property is reduced by accumulated depreciation of $26 million for Great Valley Solar, $44 million for Copper Mountain - Mesquite Solar, and $10 million for CED Nevada Virginia at December 31, 2021.
(h)CED Nevada Virginia consists of the Copper Mountain Solar 5, Battle Mountain Solar and Water Strider Solar projects for which the noncontrolling interest of the tax equity investor was $51 million and $95 million at March 31, 2022 and December 31, 2021, respectively.
Note N —Q – Related Party Transactions
The NYSPSC generally requires that the Utilities and Con Edison’s other subsidiaries be operated as separate entities. The Utilities and the other subsidiaries are required to have separate operating employees and operating officers of the Utilities may not be operating officers of the other subsidiaries. The Utilities may provide administrative and other services to, and receive such services from, Con Edison and its other subsidiaries only pursuant to cost allocation procedures approved by the NYSPSC. Transfers of assets between the Utilities and Con Edison or its other subsidiaries may be made only as approved by the NYSPSC. The debt of the Utilities is to be raised directly by the Utilities and not derived from Con Edison. Without the prior permission of the NYSPSC, the Utilities may not make loans to, guarantee the obligations of, or pledge assets as security for the indebtedness of Con Edison or its other subsidiaries. The NYSPSC limits the dividends that the Utilities may pay Con Edison to not more than 100 percent of their respective income available for dividends calculated on a two–year rolling average basis. Excluded from the calculation of “income available for dividends” are non-cash charges to income resulting from accounting changes or charges to income resulting from significant unanticipated events. The restriction also does not apply to dividends paid in order to transfer to Con Edison proceeds from major transactions, such as asset sales, or to dividends reducing each utility subsidiary’s equity ratio to a level appropriate to its business risk. As a result, substantially all of the net assets of CECONY and O&R ($16,618 million and $903 million, respectively), at March 31, 2022, are considered restricted net assets. The NYSPSC may impose additional measures to separate, or “ring fence,” the Utilities from Con Edison and its other subsidiaries.
The costs of administrative and other services provided by CECONY to, and received by it from, Con Edison and its other subsidiaries for the three months ended March 31, 2022 and 2021 were as follows:
| For the Three Months Ended March 31, | ||||||||
| CECONY | ||||||||
| (Millions of Dollars) | 2022 | 2021 | ||||||
| Cost of services provided | $33 | $31 | ||||||
| Cost of services received | 17 | 17 | ||||||
In addition, CECONY and O&R have joint gas supply arrangements in connection with which CECONY sold to O&R $45 million, and $27 million of natural gas for the three months ended March 31, 2022 and 2021, respectively. These amounts are net of the effect of related hedging transactions.
At March 31, 2022 and December 31, 2021, CECONY's net payable to Con Edison for income taxes was $9 million and $10 million, respectively.
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. The Utilities bill NY Transco for such work and expenses in accordance with established policies. For the three months ended March 31, 2022 and 2021, the amounts billed by the Utilities to NY Transco were $1 million and an immaterial amount, respectively.
CECONY has storage and wheeling service contracts with Stagecoach Gas Services LLC (Stagecoach), a joint venture formerly owned by a subsidiary of CET Gas and a subsidiary of Crestwood Equity Partners LP (Crestwood). In addition, CECONY is the replacement shipper on one of Crestwood’s firm transportation agreements with Tennessee Gas Pipeline Company LLC. CECONY incurred costs for storage and wheeling services from Stagecoach of $8 million for the three months ended March 31, 2021. During 2021, a subsidiary of CET Gas completed the sale of its 50 percent interest in Stagecoach.
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CECONY has a 20-year transportation contract with Mountain Valley Pipeline, LLC (MVP) for 250,000 dekatherms per day of capacity. CET Gas owns a 10.0 percent equity interest in MVP (that is expected to be reduced to 8.0 percent). See "Investments - 2020 and 2021 Partial Impairments of Investment in Mountain Valley Pipeline, LLC (MVP) in Note A. In October 2017, the Environmental Defense Fund and the Natural Resource Defense Council requested the NYSPSC to prohibit CECONY from recovering costs under its MVP contract unless CECONY can demonstrate that the contract is in the public interest. CECONY advised the NYSPSC that it would respond to the request if the NYSPSC opened a proceeding to consider this request. For the three months ended March 31, 2022 and 2021, CECONY incurred no costs under the contract.
FERC has authorized CECONY to lend funds to O&R for a period of not more than 12 months, in an amount not to exceed $250 million, at prevailing market rates. At March 31, 2022 and December 31, 2021 there were no outstanding loans to O&R.
The Clean Energy Businesses had financial electric capacity contracts with CECONY and O&R. For the three months ended March 31, 2022 and 2021, the Clean Energy Businesses realized a $2 million gain and an immaterial gain, respectively, under these contracts.
Note R – 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. Amendments were issued subsequently to clarify key areas including principal/agent considerations, performance obligations, licensing, sales taxes, noncash consideration, and 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, however, the Companies plan to adopt the new standard for reporting periods beginning after December 15, 2017.
discontinued. In January 2017,2021, the FASB issued amendments to the guidance for Business Combinations through ASU 2017-01, “Business Combinations2021-01 to include all contract modifications and hedging relationships affected by reference rate reform, including those that do not directly reference LIBOR or another reference rate expected to be discontinued, and clarify which optional expedients may be applied to them. The guidance can be applied prospectively. The optional relief is temporary and generally cannot be applied to contract modifications and hedging relationships entered into or evaluated after December 31, 2022. The Companies do not expect the new guidance to have a material impact on their financial position, results of operations or liquidity.
In December 2021, the FASB issued amendments to the guidance on accounting for government assistance through ASU 2021-10, Government Assistance (Topic 805)832): Clarifying the Definition of a Business.”Disclosures by Business Entities about Government Assistance. The amendments in this update clarifyrequire that business entities disclose 1) the definitiontypes of a businessassistance, 2) an entity’s
accounting for the assistance, and provide guidance3) the effect of the assistance on evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses.an entity’s financial statements. For public entities, the amendments are effective for reporting periods beginning after December 15, 2017.2021. Early adoption is permitted. The application of thisCompanies have concluded the new guidance iswill not expected to have a material impact on the Companies’ financial position, results of operations and liquidity.
Note S – Dispositions
In January 2017,April 2021, a subsidiary of the FASB issued amendmentsClean Energy Businesses entered into an agreement to sell substantially all of its membership interests in a renewable electric project that it developed and also all of its membership interests in arenewable electric project that it acquired in 2016. The sales were completed in June 2021. The combined carrying value of both projects was approximately $192 million in June 2021. The net pre-tax gain on the sales was $3 million ($2 million after-tax) and was included within "Other operations and maintenance" on Con Edison's consolidated income statement for the year ended December 31, 2021. The retained portion of the membership interest in the renewable electric project, of $11 million, was calculated based on a discounted cash flow of future projected earnings, and the retained portion is accounted for as an equity method investment. The portion of the gain attributable to the guidanceretained portion of the membership interest was not material for the subsequent measurement of goodwill through ASU 2017-04, “Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment.” The amendments in this update simplify goodwill impairment testing by eliminating Step 2 of the goodwill impairment test wherein an entity has to compute the implied fair value of 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 afteryear ended 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.31, 2021.
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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 ThirdFirst 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 ThirdFirst Quarter Financial Statements and the notes thereto and the MD&A in Item 7 of the Companies’ combined Annual Report on Form 10-K for the year ended December 31, 20162021 (File Nos. 1-14514Nos.1-14514 and 1-1217, the Form 10-K) and the MD&A in Part 1, Item 2 of the Companies' combined Quarterly Reports on Form 10-Q for the quarterly periods ended March 31, 2017 and June 30, 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), Con Edison Clean Energy Businesses, Inc. and Con Edison Transmission, Inc. As used in this report, the term the “Utilities” refers to CECONY and O&R.
| Con Edison | ||||||||||||||||||||||||||||||||
| CECONY | O&R | Clean Energy Businesses | Con Edison Transmission | |||||||||||||||||||||||||||||
•RECO | •CET Electric | |||||||||||||||||||||||||||||||
•CET Gas | ||||||||||||||||||||||||||||||||
Con Edison’s principal business operations are those of CECONY, O&R, the 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 Clean Energy Businesses develop, own and operate renewable and sustainable energy infrastructure projects and provide energy-related products and services to wholesale and retail customers. Con Edison is considering strategic alternatives with respect to the Clean Energy Businesses. Con Edison Transmission invests in electric transmission facilitiesprojects and manages both electric and gas pipeline and storage facilities.assets while seeking to develop electric transmission projects. See "Investments" in Note A to the First Quarter Financial Statements.
Con Edison seeks to provide shareholder value through continued dividend growth, supported by earnings growth in regulated utilities and contracted electric and gas assets. The company invests to provide reliable, resilient, safe and clean energy critical for New York City’s growing economy.its NY customers. 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.
In addition to the Companies’ material contingencies described in Notes B, G and H to the First Quarter Financial Statements, the Companies’ management considers the following events, trends, and uncertainties to be important to understanding the Companies’ current and future financial condition.
CECONY Electric and Gas Rate Plans
In January 2022, CECONY filed a request with the NYSPSC for electric and gas rate increases of $1,199 million and $503 million, respectively, effective January 2023. In April 2022, CECONY updated its January 2022 request
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and decreased its requested January 2023 increase for electric and gas rate increases to $1,038 million and $402 million, respectively. CECONY’s future earnings will depend on the rates authorized in, and the other provisions of, Contentsits January 2023 rate plans and CECONY’s ability to operate its businesses in a manner consistent with such rate plans. Therefore, the outcome of CECONY’s rate request, which requires approval by the NYSPSC, will impact the Companies’ future financial condition, results of operations and liquidity. See “Rate Plans” in Note B to the First Quarter Financial Statements.
Pursuant to its electric and gas rate plans, CECONY recorded $92 million of earnings for the year ended December 31, 2021 of earnings adjustment mechanisms and positive incentives, primarily reflecting the achievement of certain energy efficiency measures. For the three months ended March 31, 2022, CECONY recorded a reduction in the amount of previously recorded earnings adjustment mechanisms of $4.5 million. The amount of earnings or losses CECONY records pursuant to the earnings adjustment mechanisms and positive incentives will also impact the Companies’ future financial condition, results of operations and liquidity. See “Rate Plans” in Note B to the First Quarter Financial Statements.
Clean Energy Goals
The success of the Companies’ efforts to meet federal, state and city clean energy policy goals and the impact of such goals on CECONY’s electric, gas and steam businesses and O&R’s electric and gas businesses may impact the Companies’ future financial condition. The Utilities expect electric demand to increase and gas and steam usage to decrease in their service territories as federal, state and local laws and policies are enacted and implemented that continue to promote renewable electric energy. In particular, the long-term future of the Utilities’ gas businesses depends upon the role that natural gas or other gaseous fuels will play in facilitating New York State’s and New York City’s climate goals. In addition, the impact and costs of climate change on the Utilities’ systems and the success of the Utilities’ efforts to increase system reliability and manage service interruptions resulting from severe weather may impact the Companies’ future financial condition, results of operations and liquidity.
Clean Energy Businesses
The Clean Energy Businesses develop, own and operate renewable and sustainable energy infrastructure projects. The success of the Clean Energy Businesses’ strategy to increase earnings is dependent upon the expansion of their renewable energy portfolio and successful execution of develop/transfer opportunities. Con Edison is considering strategic alternatives with respect to the Clean Energy Businesses. The outcome of such evaluation may impact Con Edison’s future financial condition, results of operations and liquidity.
Con Edison Transmission
Con Edison Transmission has taken steps to realign its portfolio to focus on electric transmission rather than gas by completing the sale of its 50 percent interest in Stagecoach in 2021. During 2020 and 2021, Con Edison Transmission recorded impairments on its investment in Mountain Valley Pipeline, LLC and during 2021, Con Edison Transmission recorded impairments on its previously held interest in Stagecoach and its interest in Honeoye Storage Corporation (Honeoye). Any future impairments of Con Edison Transmission’s investments may impact Con Edison’s future financial condition and results of operations. Con Edison Transmission is pursuing opportunities and participating in competitive solicitations to develop electric transmission projects that will deliver offshore wind energy to high voltage electric grids in NY, through its NY Transco partnership, and in NJ, and to deliver renewable energy from northern ME to the New England transmission system within southern ME. The success of Con Edison Transmission’s efforts in these competitive solicitations and to grow its electric transmission portfolio may impact Con Edison’s future capital requirements. See “Investments” in Note A to the First Quarter Financial Statements.
COVID-19
The Coronavirus Disease 2019 (COVID-19) pandemic has impacted, and continues to impact, countries, communities, supply chains and markets. As a result of the COVID-19 pandemic, there has been an economic slowdown in the Companies’ service territories and changes in governmental and regulatory policy. The decline in business activity in the Companies’ service territories has resulted in a slower recovery of cash from outstanding customer accounts receivable balances, material increases in customer accounts receivable balances, increases to the allowance for uncollectible accounts, and may result in increases to write-offs and recoveries of customer accounts. The extent to which COVID-19 will continue to impact the Companies, in particular, the Companies’ ability to recover cash from outstanding customer accounts receivable balances and the amount of write-offs of customer accounts, may impact Con Edison’s future financial condition, results of operations and liquidity. See “Coronavirus Disease 2019 (COVID-19) Impacts” below and “COVID-19 Regulatory Matters” in Note B to the First Quarter Financial Statements.
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CECONY
Electric
CECONY provides electric service to approximately 3.43.5 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.
Gas
CECONY delivers gas to approximately 1.1 million customers in Manhattan, the Bronx, parts of Queens and most of Westchester County.
Steam
CECONY operates the largest steam distribution system in the United States by producing and delivering approximately 19,50016,727 MMlb of steam annually to approximately 1,6401,545 customers in parts of Manhattan.
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 YorkNY and northern New Jersey,NJ, an approximately 1,300 square mile service area.
Gas
O&R delivers gas to over 0.1 million customers in southeastern New York.NY.
Clean Energy Businesses
Con Edison 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 Clean Energy Businesses, Inc., together with theseits subsidiaries, (which were formerly referred to as the competitive energy businesses), are referred to in this report as the Clean Energy Businesses.
Con Edison Transmission
Con Edison Transmission, Inc. invests in electric transmission projects and manages both electric and gas transmission projectsassets through its wholly-owned subsidiaries, Consolidated Edison Transmission, LLC (CET Electric) and Con Edison Gas Pipeline and Storage, LLC (CET Gas). CET Electric owns a 45.7 percent interest in New York Transco LLC, which owns and is proposinghas been selected to build additional electric transmission assets in New York. CET Gas owns, through subsidiaries, a 50 percent interest in Stagecoach Gas Services, LLC, 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. Also,NY. CET Gas and CECONY own 71.2 percent and 28.8 percent interests, respectively, in Honeoye, Storage Corporation which operates a gas storage businessfacility in upstate New York.NY. In addition, CET Gas owns a 12.510.0 percent interest (that is expected to be reduced to 8.0 percent based on the current project cost estimate and CET Gas’ previous capping of its cash contributions to the joint venture) in Mountain Valley Pipeline LLC (MVP), a joint venture developing a proposed 300 mile300-mile gas transmission project in West VirginiaWV and Virginia (Mountain Valley Pipeline).VA. Con Edison Transmission, 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:
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| For the Three Months Ended March 31, 2022 | At March 31, 2022 | |||||||||||||||||||||||||||||||
| (Millions of Dollars, except percentages) | Operating Revenues | Net Income for Common Stock | Assets | |||||||||||||||||||||||||||||
| CECONY | $3,517 | 87 | % | $475 | 79 | % | $53,213 | 84 | % | |||||||||||||||||||||||
| O&R | 285 | 7 | 30 | 5 | 3,359 | 5 | ||||||||||||||||||||||||||
| Total Utilities | 3,802 | 94 | 505 | 84 | 56,572 | 89 | ||||||||||||||||||||||||||
| Clean Energy Businesses (a) | 260 | 6 | 107 | 18 | 6,554 | 10 | ||||||||||||||||||||||||||
| Con Edison Transmission | 1 | — | — | — | 260 | — | ||||||||||||||||||||||||||
Other (b) | (3) | — | (10) | (2) | 351 | 1 | ||||||||||||||||||||||||||
| Total Con Edison | $4,060 | 100 | % | $602 | 100 | % | $63,737 | 100 | % | |||||||||||||||||||||||
(a)Net income for common stock from the Clean Energy Businesses for the three months ended March 31, 2022 reflects $51 million of net after-tax mark-to-market effects and $36 million (after-tax) of the effects of HLBV accounting for tax equity investments in certain renewable and sustainable electric projects.
(b)Other includes parent company and consolidation adjustments. Net income for common stock for the three months ended March 31, 2022 includes $(4) million of income tax impact on the net after-tax mark-to-market effect and $(3) million (after-tax) of income tax impact on the effects of HLBV accounting for tax equity investments in certain renewable and sustainable projects.
Coronavirus Disease 2019 (COVID-19) Impacts
The Companies continue to respond to the COVID-19 global pandemic by working to reduce the potential risks posed by its spread to employees, customers and other stakeholders. The Companies continue to employ an incident command structure led by a pandemic planning team. The Companies support employee health and facility hygiene through regular cleaning and disinfecting of all work and common areas, promoting social distancing, allowing employees to work remotely and directing employees to stay at home if they are experiencing COVID or flu-like symptoms. Employees who test positive for COVID-19 are directed to quarantine at home and are evaluated for close, prolonged contact with other employees that would require those employees to quarantine at home. Following the Centers for Disease Control and Prevention guidelines, sick or quarantined employees return to work when they can safely do so. The Utilities continue to provide critical electric, gas and steam service to customers during the pandemic. Additional safety protocols have been implemented to protect employees, customers and the public, when work at customer premises is required.
In October 2021, in response to President Biden's Executive Order 14042, the Companies announced that they are committed to complying with the mandate for employees of federal contractors and subcontractors to be fully vaccinated against COVID-19 by the federally-required deadline, unless employees are legally entitled to an accommodation. In December 2021, an injunction was issued in the United States District Court for the Southern District of Georgia which currently prevents the U.S. government from enforcing this federal contractor vaccine mandate nationwide. The Eleventh Circuit of the U.S. Court of Appeals heard oral arguments in April 2022.
In December 2021, New York City instituted a vaccination mandate that requires employees of private businesses located in New York City who perform in-person work or interact with the public to be vaccinated against COVID-19. In furtherance of the mandate, in December 2021, the New York City Commissioner of Health and Mental Hygiene issued an order that requires workers entering workplaces within New York City to provide proof of COVID-19 vaccination, except in cases of a medical or religious exemption. This order is applicable to the Companies’ employees and contractors who report in-person to a company workplace located in New York City and the Companies are complying with its requirements.
The Companies are continuing to monitor the vaccination mandates closely and are implementing appropriate measures to mitigate any workforce and cost impacts that may occur.
Below is additional information related to the effects of the COVID-19 pandemic and the Companies’ actions. Also, see “COVID-19 Regulatory Matters” in Note B to the First Quarter Financial Statements.
Impact of CARES Act and 2021 Appropriations Act on Accounting for Income Taxes
In response to the economic impacts of the COVID-19 pandemic, the Coronavirus Aid, Relief, and Economic Security (CARES) Act became law on March 27, 2020. The CARES Act has several key business tax relief measures that may present potential cash benefits and/or refund opportunities for Con Edison and its subsidiaries, including permitting a five-year carryback of a NOL for tax years 2018, 2019 and 2020, temporary removal of the 80 percent limitation of NOL carryforwards against taxable income for tax years before 2021, temporary relaxation of the limitations on interest deductions, Employee Retention Tax Credit and deferral of payments of employer payroll taxes.
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| For the Three Months Ended September 30, 2017 | For the Nine Months Ended September 30, 2017 | At September 30, 2017 | ||||||||||||||
| (Millions of Dollars, except percentages) | Operating Revenues | Net Income | Operating Revenues | Net Income | Assets | |||||||||||
| CECONY | $2,799 | 87 | % | $401 | 88 | % | $7,948 | 88 | % | $883 | 87 | % | $41,647 | 85 | % | |
| O&R | 234 | 7 | 22 | 5 | 667 | 7 | 53 | 5 | 2,832 | 6 | ||||||
| Total Utilities | 3,033 | 94 | 423 | 93 | 8,615 | 95 | 936 | 92 | 44,479 | 91 | ||||||
| Clean Energy Businesses (a) | 177 | 6 | 26 | 5 | 460 | 5 | 54 | 5 | 2,811 | 6 | ||||||
| Con Edison Transmission | 1 | — | 9 | 2 | 1 | — | 25 | 2 | 1,210 | 2 | ||||||
| Other (b) | — | — | (1) | — | (4) | — | 5 | 1 | 746 | 1 | ||||||
| Total Con Edison | $3,211 | 100 | % | $457 | 100 | % | $9,072 | 100 | % | $1,020 | 100 | % | $49,246 | 100 | % | |
The CARES Act also allows employers to defer payments of the employer share of Social Security payroll taxes that would have otherwise been owed from March 27, 2020 through December 31, 2020. The Companies deferred the payment of employer payroll taxes for the period April 1, 2020 through December 31, 2020 of approximately $71 million ($63 million of which is for CECONY). The Companies paid half of this liability during 2021 and will repay the other half by December 31, 2022.
Under the CARES Act, the Companies qualified for an employee retention tax credit for “eligible employers” related to governmental authorities imposing restrictions that partially suspended their operation for a portion of their workforce due to the COVID-19 pandemic. In December 2020, the Consolidated Appropriations Act, 2021 (the 2021 Appropriations Act) was signed into law. The 2021 Appropriations Act, among other things, extended the expiring employee retention tax credit to include qualified wages paid in the first two quarters of 2021, increased the qualified wages paid to an employee from 50 percent up to $10,000 annually in 2020 to 70 percent up to $10,000 per quarter in 2021 and increased the maximum employee retention tax credit amount an employer could take per employee from $5,000 in 2020 to $14,000 in the first two quarters of 2021. In March 2021, the American Rescue Plan Act was signed into law that expanded the 2021 Appropriations Act to extend the period for eligible employers to receive the employer retention credit from June 30, 2021 to December 31, 2021. In November 2021, the Infrastructure and Investment and Jobs Act was signed into law and accelerated the end of the employee retention tax credit retroactive to October 1, 2021, rather than December 31, 2021. This effectively reduced the maximum credit available from $28,000 to $21,000 per employee. For the three months ended March 31, 2021, Con Edison recognized an immaterial tax benefit to Taxes, other than income taxes.
Accounting Considerations
Due to the COVID-19 pandemic and subsequent New York State on PAUSE and related executive orders (that have since been lifted), decline in business, bankruptcies, layoffs and furloughs, among other factors, both commercial and residential customers have had and may continue to have increased difficulty paying their utility bills. In June 2020, the state of NY enacted a law prohibiting NY utilities, including CECONY and O&R, from disconnecting residential customers, and starting in May 2021 small business customers, during the COVID-19 state of emergency, which ended in June 2021. In addition, such prohibitions were in effect until December 21, 2021 for residential and small business customers who have experienced a change in financial circumstances due to the COVID-19 pandemic.
CECONY and O&R have existing allowances for uncollectible accounts established against their customer accounts receivable balances that are reevaluated each quarter and updated accordingly. Changes to the Utilities’ reserve balances that result in write-offs of customer accounts receivable balances are not reflected in rates during the term of the current rate plans. CECONY’s and O&R’s "accounts receivable – customers" balance (net allowance for uncollectible accounts) changed from $1,841 million and $91 million at December 31, 2021 to $2,026 million and $107 million at March 31, 2022, respectively. The amount of the customer accounts receivable balances that are over 60 days in arrears for CECONY and O&R are $1,348 million and $29 million, respectively, as of March 31, 2022, and $1,272 million and $29 million, respectively, as of December 31, 2021. CECONY’s and O&R’s allowances for uncollectible customer accounts reserve changed from $304 million and $12.3 million at December 31, 2021 to $324 million and $11.4 million at March 31, 2022 respectively. In April 2021 and April 2022, NY passed laws to create programs to address statewide utility arrears, the amount of which may be allocated to address CECONY’s and O&R’s customer arrearages is not yet known. In addition, the NYSPSC may consider programs to address utility arrearages as part of a utility arrearage program. CECONY and O&R expect to reduce customer accounts receivables balances commensurate with amounts authorized to be recovered under customer arrearage programs, the amount of which is unknown. See "COVID-19 Regulatory Matters" in Note B and Note L to the First Quarter Financial Statements.
During the first quarter of 2022, the potential economic impact of the COVID-19 pandemic was also considered in forward-looking projections related to write-off and recovery rates, resulting in increases to the customer allowance for uncollectible accounts as detailed herein. The Companies test goodwill for impairment at least annually or whenever there is a triggering event, and test long-lived and intangible assets for recoverability when events or changes in circumstances indicate that the carrying value of long-lived or intangible assets may not be recoverable. The Companies identified no triggering events or changes in circumstances related to the COVID-19 pandemic that would indicate that the carrying value of goodwill, long-lived or intangible assets may not be recoverable at March 31, 2022.
NY Legislation
In April 2021, NY passed a law that increases the corporate franchise tax rate on business income from 6.5% to 7.25%, retroactive to January 1, 2021, for taxpayers with taxable income greater than $5 million. The law also reinstates the business capital tax at 0.1875%, not to exceed a maximum tax liability of $5 million per taxpayer. NY
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requires a corporate franchise taxpayer to calculate and pay the highest amount of tax under the three alternative methods: a tax on business income; a tax on business capital; or a fixed dollar minimum. The provisions to increase the corporate franchise tax rate and reinstate a capital tax are scheduled to expire after 2023 and are not expected to have a material impact on the Companies’ financial position, results of operations or liquidity.
In addition, the new law created a program that allows eligible residential renters in NY who require assistance with rent and utility bills to have up to twelve months of electric and gas utility bill arrears forgiven, provided that such arrears were accrued on or after March 13, 2020. The program will be administered by the State Office of Temporary and Disability Assistance in coordination with the NYSDPS and the NYSPSC. Under the program, CECONY and O&R would qualify for a refundable tax credit for NY gross-receipts tax equal to the amount of arrears waived by the Utilities in the year that the arrears are waived and certified by the NYSPSC. See "COVID-19 Regulatory Matters” in Note B to the First Quarter Financial Statements.
In April 2022, NY approved the 2022-2023 state budget, which includes $250 million for addressing residential statewide utility arrears accrued from March 7, 2020 through March 1, 2022. Funds are expected to be distributed by the NYSDPS to NY utilities on behalf of customers. The allocation of funds to NY utilities, including CECONY and O&R, is to be based on their share of statewide eligible utility arrears of customers participating in energy affordability programs, and funds are expected to be disbursed no later than August 1, 2022.
Liquidity and Financing
The Companies continue to monitor the impacts of the COVID-19 pandemic on the financial markets closely, including borrowing rates and daily cash collections. The Companies have been able to access the capital markets as needed since the start of the COVID-19 pandemic in March 2020. See Notes C and D to the First Quarter Financial Statements. However, a continued economic downturn as a result of the COVID-19 pandemic has increased the amount of capital needed by the Utilities and could impact the costs of such capital.
The decline in business activity in the Utilities’ service territory as a result of the COVID-19 pandemic and subsequent New York State on PAUSE and related executive orders (that have since been lifted), resulted in a slower recovery in cash of outstanding customer accounts receivable balances in 2020, 2021 and for the three months ended March 31, 2022. In addition, increases in electric and gas commodity prices during the first quarter of 2022, coupled with the decline in business activity due to the COVID-19 pandemic, may further contribute to a slower recovery of cash from outstanding customer accounts receivable balances. These trends will likely continue through the remainder of 2022. See "COVID-19 Regulatory Matters" in Note B to the First Quarter Financial Statements and “Financial and Commodity Market Risks – Commodity Price Risk,” below.
Con Edison and the Utilities have a $2,250 million credit agreement (Credit Agreement) in place under which banks are committed to provide loans on a revolving credit basis until December 2023 ($2,200 million of commitments from December 2022), subject to certain conditions. In March 2022, CECONY entered into a 364-Day Revolving Credit Agreement (CECONY Credit Agreement) under which banks are committed to provide loans up to $750 million on a revolving credit basis until March 30, 2023, subject to certain conditions. In April 2022, FERC issued an order that increases CECONY's authorization to issue short-term debt from $2,250 million to $3,000 million effective May 2022. Con Edison and the Utilities have not entered into any loans under the Credit Agreement and CECONY has not entered into any loans under the CECONY Credit Agreement. See Note D to the First Quarter Financial Statements.
Results of Operations
Net income for common stock and earnings per share for the three and nine months ended September 30, 2017March 31, 2022 and 20162021 were as follows:
| For the Three Months Ended September 30, | For the Nine Months Ended September 30, | |||||||||||||||
| 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 | ||||||||||||
| CECONY | $401 | $388 | $1.30 | $1.27 | $883 | $859 | $2.88 | $2.87 | ||||||||
| O&R | 22 | 27 | 0.07 | 0.09 | 53 | 55 | 0.18 | 0.18 | ||||||||
| Clean Energy Businesses (a) | 26 | 78 | 0.08 | 0.26 | 54 | 120 | 0.18 | 0.40 | ||||||||
| Con Edison Transmission | 9 | 10 | 0.03 | 0.03 | 25 | 11 | 0.08 | 0.04 | ||||||||
| Other (b) | (1) | (6) | — | (0.02 | ) | 5 | (6) | 0.01 | (0.02 | ) | ||||||
| Con Edison (c) | $457 | $497 | $1.48 | $1.63 | $1,020 | $1,039 | $3.33 | $3.47 | ||||||||
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| For the Three Months Ended March 31, | ||||||||||||||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||||||||||||
| (Millions of Dollars, except per share amounts) | Net Income for Common Stock | Earnings per Share | ||||||||||||||||||||||||
| CECONY | $475 | $465 | $1.34 | $1.36 | ||||||||||||||||||||||
| O&R | 30 | 27 | 0.09 | 0.08 | ||||||||||||||||||||||
| Clean Energy Businesses (a) | 107 | 49 | 0.30 | 0.14 | ||||||||||||||||||||||
Con Edison Transmission (b) | — | (122) | — | (0.35) | ||||||||||||||||||||||
Other (c) | (10) | — | (0.03) | — | ||||||||||||||||||||||
Con Edison (d) | $602 | $419 | $1.70 | $1.23 | ||||||||||||||||||||||
(b)Net income for common stock from Con Edison Transmission for the three months ended March 31, 2021 includes $(125) million or $(0.36)
a share of net after-tax goodwill impairment loss related to its investment in Stagecoach. See "Investments - 2021 Partial Impairment of Investment in Stagecoach Gas Services LLC (Stagecoach) in Note A to the First Quarter Financial Statements.
(c)Other includes parent company and consolidation adjustments. Net income for common stock and earnings per share for the three months ended March 31, 2022 and 2021 includes ($4) million or ($0.01) a share and ($4) million or ($0.01) a share, respectively, of income tax matters.impact on the net after-tax mark-to-market effects. Net income for common stock and earnings per share for the three months ended March 31, 2022 and 2021 also includes ($3) million or ($0.01) a share (after-tax) and an immaterial amount, respectively, of income tax impact on the effects of HLBV accounting for tax equity investments in certain renewable and sustainable electric projects.
Net income for common stock and earnings per share for the three months ended March 31, 2021 includes $5 million or $0.01 a share of income tax impact for the impairment loss related to Con Edison Transmission’s investment in Stagecoach. See "Investments - 2021 Partial Impairment of Investment in Stagecoach Gas Services LLC (Stagecoach)" in Note A to the First Quarter Financial Statements.
(d) Earnings per share on a diluted basis were $1.70 a share and $1.22 a share for the three months ended March 31, 2022 and 2021,
respectively.
The following table presentspresent the estimated effect of major factors on earnings per share and net income for common stock for the three and nine months ended September 30, 2017 periodMarch 31, 2022 as compared with 2016 period, resulting from these and other major factors:the 2021 period.
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| Three Months Variation | Nine Months Variation | ||||||
| (Millions of Dollars, except per share amounts) | Earnings per Share Variation | Net Income Variation | Earnings per Share Variation | Net Income Variation | |||
| CECONY (a) | |||||||
| Changes in rate plans and regulatory charges (b) | $0.12 | $35 | $0.29 | $87 | |||
| Weather impact on steam revenues | — | (1) | 0.01 | 4 | |||
| Other operations and maintenance expenses (c) | 0.07 | 22 | 0.24 | 73 | |||
| Depreciation, property taxes and other tax matters (d) | (0.10) | (30) | (0.36) | (108) | |||
| Other (e) | (0.06) | (13) | (0.17) | (32) | |||
| Total CECONY | 0.03 | 13 | 0.01 | 24 | |||
| O&R (a) | |||||||
| Changes in rate plans and regulatory charges | — | 1 | 0.04 | 12 | |||
| Other operations and maintenance expenses (f) | (0.01) | (2) | (0.03) | (9) | |||
| Depreciation and property taxes | (0.01) | (4) | (0.02) | (6) | |||
| Other (e) | — | — | 0.01 | 1 | |||
| Total O&R | (0.02) | (5) | — | (2) | |||
| Clean Energy Businesses | |||||||
| Operating revenues less energy costs (g) | 0.10 | 32 | 0.10 | 31 | |||
| Other operations and maintenance expenses (h) | (0.08) | (23) | (0.10) | (30) | |||
| Depreciation | (0.02) | (5) | (0.05) | (15) | |||
| Net interest expense | (0.01) | (3) | (0.02) | (6) | |||
| Other (e) (i) | (0.17) | (53) | (0.15) | (46) | |||
| Total Clean Energy Businesses | (0.18) | (52) | (0.22) | (66) | |||
| Con Edison Transmission (e) (j) | — | (1) | 0.04 | 14 | |||
| Other, including parent company expenses (e) (k) | 0.02 | 5 | 0.03 | 11 | |||
| Total variations | $(0.15) | $(40) | $(0.14) | $(19) | |||
| Variation for the Three Months Ended March 31, 2022 vs. 2021 | ||||||||
| Net Income for Common Stock (Millions of Dollars) | Earnings per Share | |||||||
| CECONY (a) | ||||||||
| Higher gas rate base | $29 | $0.08 | ||||||
| Resumption of the billing of late payment charges and other fees to allowed rate plan levels | 14 | 0.04 | ||||||
| Higher electric rate base | 6 | 0.02 | ||||||
| Higher interest expense | (10) | (0.03) | ||||||
| Lower incentives earned under the electric and gas earnings adjustment mechanisms (EAMs) | (9) | (0.03) | ||||||
| Higher stock based compensation costs | (6) | (0.02) | ||||||
| Higher payroll taxes | (4) | (0.01) | ||||||
| Weather impact on steam revenues | (3) | (0.01) | ||||||
| Dilutive effect of stock issuances | — | (0.05) | ||||||
| Other | (7) | (0.01) | ||||||
| Total CECONY | 10 | (0.02) | ||||||
| O&R (a) | ||||||||
| Electric base rate increase | 2 | 0.01 | ||||||
| Gas base rate increase | 2 | 0.01 | ||||||
| Other | (1) | (0.01) | ||||||
| Total O&R | 3 | 0.01 | ||||||
| Clean Energy Businesses | ||||||||
| HLBV effects | 37 | 0.10 | ||||||
| Higher operating revenue | 26 | 0.08 | ||||||
| Lower operation and maintenance expense | 17 | 0.05 | ||||||
| Net mark-to-market effects | 2 | 0.01 | ||||||
| Higher gas purchased for resale | (29) | (0.09) | ||||||
| Other | 5 | 0.01 | ||||||
| Total Clean Energy Businesses | 58 | 0.16 | ||||||
| Con Edison Transmission | ||||||||
| Impairment loss related to investment in Stagecoach in 2021 | 125 | 0.36 | ||||||
| Other | (3) | (0.01) | ||||||
| Total Con Edison Transmission | 122 | 0.35 | ||||||
| Other, including parent company expenses | ||||||||
| Impairment tax benefits related to investment in Stagecoach in 2021 | (5) | (0.01) | ||||||
| HLBV effects | (3) | (0.01) | ||||||
| Other | (2) | (0.01) | ||||||
| Total Other, including parent company expenses | (10) | (0.03) | ||||||
| Total Reported (GAAP basis) | $183 | $0.47 | ||||||
a.Under the revenue decoupling mechanisms in the Utilities’ NY 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 Con Edison’s results of operations. | ||||||||
56
The Companies’ other operations and maintenance expenses for the three and nine months ended September 30, 2017March 31, 2022 and 20162021 were as follows:
| For the Three Months Ended March 31, | ||||||||||||||
| (Millions of Dollars) | 2022 | 2021 | ||||||||||||
| CECONY | ||||||||||||||
| Operations | $437 | $428 | ||||||||||||
| Pensions and other postretirement benefits | 102 | (10) | ||||||||||||
| Health care and other benefits | 35 | 37 | ||||||||||||
| Regulatory fees and assessments (a) | 87 | 78 | ||||||||||||
| Other | 80 | 75 | ||||||||||||
| Total CECONY | 741 | 608 | ||||||||||||
| O&R | 86 | 80 | ||||||||||||
| Clean Energy Businesses | 76 | 99 | ||||||||||||
| Con Edison Transmission | 4 | 4 | ||||||||||||
| Other (b) | (2) | (1) | ||||||||||||
| Total other operations and maintenance expenses | $905 | $790 | ||||||||||||
(a)Includes Demand Side Management, System Benefit Charges and Public Service Law 18A assessments which are collected in revenues.
| For the Three Months Ended September 30, | For the Nine Months Ended September 30, | |||
| (Millions of Dollars) | 2017 | 2016 | 2017 | 2016 |
| CECONY | ||||
| Operations | $386 | $381 | $1,147 | $1,109 |
| Pensions and other postretirement benefits | 51 | 87 | 152 | 261 |
| Health care and other benefits | 45 | 47 | 127 | 124 |
| Regulatory fees and assessments (a) | 142 | 135 | 355 | 361 |
| Other | 67 | 74 | 211 | 250 |
| Total CECONY | 691 | 724 | 1,992 | 2,105 |
| O&R | 80 | 77 | 236 | 220 |
| Clean Energy Businesses | 79 | 40 | 174 | 124 |
| Con Edison Transmission | 3 | 1 | 7 | 1 |
| Other (b) | (1) | (2) | (3) | (3) |
| Total other operations and maintenance expenses | $852 | $840 | $2,406 | $2,447 |
A discussion of the results of operations by principal business segment for the three and nine months ended September 30, 2017March 31, 2022 and 20162021 follows. For additional business segment financial information, see Note JM to the ThirdFirst Quarter Financial Statements.
57
The Companies’ results of operations for the three months ended March 31, 2022 and 2021 were as follows:
| CECONY | O&R | Clean Energy Businesses | Con Edison Transmission | Other (a) | Con Edison (b) | |||||||||||||||||||||||||||||||||
| (Millions of Dollars) | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||||||||
| Operating revenues | $3,517 | $3,205 | $285 | $248 | $260 | $224 | $1 | $1 | $(3) | $(1) | $4,060 | $3,677 | ||||||||||||||||||||||||||
| Purchased power | 430 | 396 | 59 | 41 | — | — | — | — | (2) | — | 487 | 437 | ||||||||||||||||||||||||||
| Fuel | 144 | 93 | — | — | — | — | — | — | — | — | 144 | 93 | ||||||||||||||||||||||||||
| Gas purchased for resale | 324 | 233 | 47 | 31 | 72 | 32 | — | — | — | — | 443 | 296 | ||||||||||||||||||||||||||
| Other operations and maintenance | 741 | 608 | 86 | 80 | 76 | 99 | 4 | 4 | (2) | (1) | 905 | 790 | ||||||||||||||||||||||||||
| Depreciation and amortization | 446 | 415 | 24 | 24 | 59 | 58 | — | — | — | — | 529 | 497 | ||||||||||||||||||||||||||
| Taxes, other than income taxes | 721 | 674 | 23 | 23 | 7 | 7 | — | — | 2 | — | 753 | 704 | ||||||||||||||||||||||||||
| Operating income | 711 | 786 | 46 | 49 | 46 | 28 | (3) | (3) | (1) | — | 799 | 860 | ||||||||||||||||||||||||||
| Other income (deductions) (c) | 81 | (23) | 5 | (3) | — | — | 4 | (159) | — | (1) | 90 | (186) | ||||||||||||||||||||||||||
| Net interest expense | 200 | 184 | 11 | 11 | (37) | (28) | 1 | 5 | 7 | 4 | 182 | 176 | ||||||||||||||||||||||||||
| Income before income tax expense | 592 | 579 | 40 | 35 | 83 | 56 | — | (167) | (8) | (5) | 707 | 498 | ||||||||||||||||||||||||||
| Income tax expense | 117 | 114 | 10 | 8 | 24 | 6 | — | (45) | 2 | (5) | 153 | 78 | ||||||||||||||||||||||||||
| Net income | $475 | $465 | $30 | $27 | $59 | $50 | $— | ($122) | $(10) | $— | $554 | $420 | ||||||||||||||||||||||||||
| Income (loss) attributable to non-controlling interest | — | — | — | — | (48) | 1 | — | — | — | — | (48) | 1 | ||||||||||||||||||||||||||
| Net income for common stock | $475 | $465 | $30 | $27 | $107 | $49 | $— | ($122) | $(10) | $— | $602 | $419 | ||||||||||||||||||||||||||
(a)Includes parent company and consolidation adjustments.
(b)Represents the consolidated results of operations of Con Edison and its businesses.
(c)For the three months ended March 31, 2021, Con Edison Transmission recorded a pre-tax goodwill impairment loss of $172 million ($120 million after-tax) that reduced the carrying value of
its investment in 2017 compared with 2016 were:
Stagecoach from $839 million to $667 million. See “Investments” in Note A to the First Quarter Financial Statements.
58
| 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 | |||||||||||
| Operating revenues | $(29) | (1.0 | )% | $(6) | (2.5 | )% | $(173) | (49.4 | )% | $1 | — | % | $1 | Large | $(206) | (6.0 | )% | ||||||
| Purchased power | (95) | (19.2 | ) | (9) | (13.0 | ) | (234) | Large | — | — | — | — | (338) | (42.4 | ) | ||||||||
| Fuel | 1 | 3.4 | — | — | — | — | — | — | — | — | 1 | 3.4 | |||||||||||
| Gas purchased for resale | 24 | 70.6 | 2 | 25.0 | 8 | 20.5 | — | — | — | — | 34 | 42.0 | |||||||||||
| Other operations and maintenance | (33) | (4.6 | ) | 3 | 3.9 | 39 | 97.5 | 2 | Large | 1 | (50.0 | ) | 12 | 1.4 | |||||||||
| Depreciation and amortization | 22 | 7.9 | 1 | 5.9 | 8 | 72.7 | — | — | 1 | Large | 32 | 10.5 | |||||||||||
| Taxes, other than income taxes | 18 | 3.6 | — | — | (2) | (40.0 | ) | — | — | — | — | 16 | 3.0 | ||||||||||
| Gain on sale of retail electric supply business (2016) | — | — | — | — | (104) | Large | — | — | — | — | (104) | Large | |||||||||||
| Operating income | 34 | 4.4 | (3) | (6.3 | ) | (96) | (76.8 | ) | (1) | Large | (1) | (50.0 | ) | (67) | (7.1 | ) | |||||||
| Other income less deductions | (2) | Large | (1) | Large | (9) | (33.3 | ) | 1 | 5.0 | 1 | Large | (10) | (20.4 | ) | |||||||||
| Net interest expense | 3 | 1.9 | — | — | 5 | 71.4 | 1 | 33.3 | (2) | (40.0 | ) | 7 | 3.9 | ||||||||||
| Income before income tax expense | 29 | 4.7 | (4) | (10.0 | ) | (110) | (75.9 | ) | (1) | (6.3 | ) | 2 | 50.0 | (84) | (10.4 | ) | |||||||
| Income tax expense | 16 | 7.1 | 1 | 7.7 | (58) | (86.6 | ) | — | — | (3) | Large | (44) | (14.0 | ) | |||||||||
| Net income | $13 | 3.4 | % | $(5) | (18.5 | )% | $(52) | (66.7 | )% | $(1) | (10.0 | )% | $5 | 83.3 | % | $(40) | (8.0 | )% | |||||
CECONY
| For the Three Months Ended March 31, 2022 | For the Three Months Ended March 31, 2021 | ||||||||||||||||||||||||||||
| (Millions of Dollars) | Electric | Gas | Steam | 2022 Total | Electric | Gas | Steam | 2021 Total | 2022-2021 Variation | ||||||||||||||||||||
| Operating revenues | $2,084 | $1,131 | $302 | $3,517 | $1,968 | $973 | $264 | $3,205 | $312 | ||||||||||||||||||||
| Purchased power | 411 | — | 20 | 431 | 383 | — | 13 | 396 | 35 | ||||||||||||||||||||
| Fuel | 66 | — | 78 | 144 | 45 | — | 48 | 93 | 51 | ||||||||||||||||||||
| Gas purchased for resale | — | 323 | — | 323 | — | 233 | — | 233 | 90 | ||||||||||||||||||||
| Other operations and maintenance | 573 | 118 | 50 | 741 | 475 | 92 | 41 | 608 | 133 | ||||||||||||||||||||
| Depreciation and amortization | 332 | 90 | 24 | 446 | 315 | 77 | 23 | 415 | 31 | ||||||||||||||||||||
| Taxes, other than income taxes | 532 | 149 | 40 | 721 | 503 | 132 | 39 | 674 | 47 | ||||||||||||||||||||
| Operating income | $170 | $451 | $90 | $711 | $247 | $439 | $100 | $786 | $(75) | ||||||||||||||||||||
| For the Three Months Ended September 30, 2017 | For the Three Months Ended September 30, 2016 | ||||||||||||||
| (Millions of Dollars) | Electric | Gas | Steam | 2017 Total | Electric | Gas | Steam | 2016 Total | 2017-2016 Variation | ||||||
| Operating revenues | $2,469 | $268 | $62 | $2,799 | $2,557 | $208 | $63 | $2,828 | $(29) | ||||||
| Purchased power | 393 | — | 7 | 400 | 486 | — | 9 | 495 | (95) | ||||||
| Fuel | 24 | — | 6 | 30 | 21 | — | 8 | 29 | 1 | ||||||
| Gas purchased for resale | — | 58 | — | 58 | — | 34 | — | 34 | 24 | ||||||
| Other operations and maintenance | 547 | 104 | 40 | 691 | 578 | 102 | 44 | 724 | (33) | ||||||
| Depreciation and amortization | 232 | 47 | 21 | 300 | 217 | 41 | 20 | 278 | 22 | ||||||
| Taxes, other than income taxes | 418 | 71 | 31 | 520 | 414 | 59 | 29 | 502 | 18 | ||||||
| Operating income | $855 | $(12) | $(43) | $800 | $841 | $(28) | $(47) | $766 | $34 | ||||||
Electric
CECONY’s results of electric operations for the three months ended September 30, 2017March 31, 2022 compared with the 20162021 period iswere as follows:
| For the Three Months Ended | |||||||||||
| (Millions of Dollars) | March 31, 2022 | March 31, 2021 | Variation | ||||||||
| Operating revenues | $2,084 | $1,968 | $116 | ||||||||
| Purchased power | 411 | 383 | 28 | ||||||||
| Fuel | 66 | 45 | 21 | ||||||||
| Other operations and maintenance | 573 | 475 | 98 | ||||||||
| Depreciation and amortization | 332 | 315 | 17 | ||||||||
| Taxes, other than income taxes | 532 | 503 | 29 | ||||||||
| Electric operating income | $170 | $247 | $(77) | ||||||||
| For the Three Months Ended | |||
| (Millions of Dollars) | September 30, 2017 | September 30, 2016 | Variation |
| Operating revenues | $2,469 | $2,557 | $(88) |
| Purchased power | 393 | 486 | (93) |
| Fuel | 24 | 21 | 3 |
| Other operations and maintenance | 547 | 578 | (31) |
| Depreciation and amortization | 232 | 217 | 15 |
| Taxes, other than income taxes | 418 | 414 | 4 |
| Electric operating income | $855 | $841 | $14 |
CECONY’s electric sales and deliveries for the three months ended September 30, 2017March 31, 2022 compared with the 20162021 period were:
| Millions of kWh Delivered | Revenues in Millions (a) | ||||||||||||||||||||||||||||
| For the Three Months Ended | For the Three Months Ended | ||||||||||||||||||||||||||||
| Description | March 31, 2022 | March 31, 2021 | Variation | Percent Variation | March 31, 2022 | March 31, 2021 | Variation | Percent Variation | |||||||||||||||||||||
| Residential/Religious (b) | 2,641 | 2,606 | 35 | 1.3 | % | $783 | $753 | $30 | 4.0 | % | |||||||||||||||||||
| Commercial/Industrial | 2,515 | 2,354 | 161 | 6.8 | 614 | 528 | 86 | 16.3 | |||||||||||||||||||||
| Retail choice customers | 5,144 | 5,229 | (85) | (1.6) | 537 | 581 | (44) | (7.6) | |||||||||||||||||||||
| NYPA, Municipal Agency and other sales | 2,398 | 2,288 | 110 | 4.8 | 162 | 148 | 14 | 9.5 | |||||||||||||||||||||
| Other operating revenues (c) | — | — | — | — | (12) | (42) | 30 | (71.4) | |||||||||||||||||||||
| Total | 12,698 | 12,477 | 221 | 1.8 | % | (d) | $2,084 | $1,968 | $116 | 5.9 | % | ||||||||||||||||||
(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.
| Millions of kWh Delivered | Revenues in Millions (a) | |||||||||||||
| For the Three Months Ended | For the Three Months Ended | |||||||||||||
| Description | September 30, 2017 | September 30, 2016 | Variation | Percent Variation | September 30, 2017 | September 30, 2016 | Variation | Percent Variation | ||||||
| Residential/Religious (b) | 3,237 | 3,653 | (416 | ) | (11.4 | )% | $805 | $883 | $(78) | (8.8 | )% | |||
| Commercial/Industrial | 2,570 | 2,749 | (179 | ) | (6.5 | ) | 534 | 551 | (17) | (3.1 | ) | |||
| Retail choice customers | 7,510 | 8,136 | (626 | ) | (7.7 | ) | 867 | 918 | (51) | (5.6 | ) | |||
| NYPA, Municipal Agency and other sales | 2,705 | 2,764 | (59 | ) | (2.1 | ) | 207 | 204 | 3 | 1.5 | ||||
| Other operating revenues (c) | — | — | — | — | 56 | 1 | 55 | Large | ||||||
| Total | 16,022 | 17,302 | (1,280 | ) | (7.4 | )% | (d) | $2,469 | $2,557 | $(88) | (3.4 | )% | ||
(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 the revenue decoupling mechanism current asset or regulatory liability and changes in regulatory assets and liabilities in accordance with other provisions of the company’s rate plans.
(d)After adjusting for variations, primarily weather and billing days, electric delivery volumes in CECONY’s service area increased 2.6 percent in the three months ended March 31, 2022 compared with the 2021 period.
Operating revenues decreased $88 increased $116 million in the three months ended September 30, 2017March 31, 2022 compared with the 20162021 period primarily due primarily to lower purchased power expenses ($93 million), offset by higheran increase in revenues from the electric rate plan ($2756 million), higher purchased power expenses ($28 million) and higher fuel expenses ($21 million).
59
Purchased power expenses decreased $93increased $28 million in the three months ended September 30, 2017March 31, 2022 compared with the 20162021 period due to higher unit costs ($53 million), offset in part by lower purchased volumes ($6625 million) and unit costs ($27 million).
Fuel expenses increased $3$21 million in the three months ended September 30, 2017March 31, 2022 compared with the 20162021 period due to higher unit costs ($619 million), offset by lower and purchased volumes from the company's electric generating facilities ($32 million).
Other operations and maintenance expenses decreased $31increased $98 million in the three months ended September 30, 2017March 31, 2022 compared with the 20162021 period primarily due primarily to lower pensionhigher costs for pensions and other postretirement benefitsbenefit, reflecting reconciliation to the rate plan level ($3881 million) and environmental costs ($6 million), offset by higher surcharges for assessments and fees that are collected in revenues from customers ($68 million) and uncollectible expensehigher healthcare costs ($54 million).
Depreciation and amortizationincreased $15$17 million in the three months ended September 30, 2017March 31, 2022 compared with the 20162021 period primarily due primarily to higher electric utility plant balances.
Taxes, other than income taxes increased $4$29 million in the three months ended September 30, 2017March 31, 2022 compared with the 20162021 period due primarily to a higher deferral of over-collected property taxes ($1123 million), offset by lowerhigher payroll taxes ($4 million) and higher state and local taxes ($52 million).
Gas
CECONY’s results of gas operations for the three months ended September 30, 2017March 31, 2022 compared with the 20162021 period iswere as follows:
| For the Three Months Ended | |||||||||||
| (Millions of Dollars) | March 31, 2022 | March 31, 2021 | Variation | ||||||||
| Operating revenues | $1,131 | $973 | $158 | ||||||||
| Gas purchased for resale | 323 | 233 | 90 | ||||||||
| Other operations and maintenance | 118 | 92 | 26 | ||||||||
| Depreciation and amortization | 90 | 77 | 13 | ||||||||
| Taxes, other than income taxes | 149 | 132 | 17 | ||||||||
| Gas operating income | $451 | $439 | $12 | ||||||||
| For the Three Months Ended | |||
| (Millions of Dollars) | September 30, 2017 | September 30, 2016 | Variation |
| Operating revenues | $268 | $208 | $60 |
| Gas purchased for resale | 58 | 34 | 24 |
| Other operations and maintenance | 104 | 102 | 2 |
| Depreciation and amortization | 47 | 41 | 6 |
| Taxes, other than income taxes | 71 | 59 | 12 |
| Gas operating income | $(12) | $(28) | $16 |
CECONY’s gas sales and deliveries, excluding off-system sales, for the three months ended September 30, 2017March 31, 2022 compared with the 20162021 period were:
| Thousands of Dt Delivered | Revenues in Millions (a) | ||||||||||||||||||||||||||||
| For the Three Months Ended | For the Three Months Ended | ||||||||||||||||||||||||||||
| Description | March 31, 2022 | March 31, 2021 | Variation | Percent Variation | March 31, 2022 | March 31, 2021 | Variation | Percent Variation | |||||||||||||||||||||
| Residential | 25,058 | 26,221 | (1,163) | (4.4 | %) | $522 | $455 | $67 | 14.7 | % | |||||||||||||||||||
| General | 13,960 | 12,912 | 1,048 | 8.1 | 210 | 168 | 42 | 25.0 | |||||||||||||||||||||
| Firm transportation | 32,847 | 34,846 | (1,999) | (5.7) | 348 | 305 | 43 | 14.1 | |||||||||||||||||||||
| Total firm sales and transportation | 71,865 | 73,979 | (2,114) | (2.9) | (b) | 1,080 | 928 | 152 | 16.4 | ||||||||||||||||||||
| Interruptible sales (c) | 2,697 | 1,853 | 844 | 45.5 | 20 | 9 | 11 | Large | |||||||||||||||||||||
| NYPA | 7,785 | 9,378 | (1,593) | (17.0) | 1 | 1 | — | — | |||||||||||||||||||||
| Generation plants | 9,952 | 5,974 | 3,978 | 66.6 | 5 | 5 | — | — | |||||||||||||||||||||
| Other | 5,979 | 6,920 | (941) | (13.6) | 12 | 13 | (1) | (7.7) | |||||||||||||||||||||
| Other operating revenues (d) | — | — | — | — | 13 | 17 | (4) | (23.5) | |||||||||||||||||||||
| Total | 98,278 | 98,104 | 174 | 0.2 | % | $1,131 | $973 | $158 | 16.2 | % | |||||||||||||||||||
(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.
(b)After adjusting for variations, primarily billing days, firm gas sales and transportation volumes in the company’s service area increased 8.6 percent in the three months ended March 31, 2022 compared with the 2021 period.
(c)Includes 1,391 thousand and 448 thousand of Dt for the 2022 and 2021 periods, respectively, which are also reflected in firm transportation and other.
(d)Other gas operating revenues generally reflect changes in the revenue decoupling mechanism and weather normalization clause current asset or regulatory liability and changes in regulatory assets and liabilities in accordance with other provisions of the company’s rate plans.
| Thousands of Dt Delivered | Revenues in Millions (a) | ||||||||||||||
| For the Three Months Ended | For the Three Months Ended | ||||||||||||||
| Description | September 30, 2017 | September 30, 2016 | Variation | Percent Variation | September 30, 2017 | September 30, 2016 | Variation | Percent Variation | |||||||
| Residential | 4,731 | 4,335 | 396 | 9.1 | % | $104 | $88 | $16 | 18.2 | % | |||||
| General | 4,292 | 3,963 | 329 | 8.3 | 49 | 41 | 8 | 19.5 | |||||||
| Firm transportation | 8,766 | 8,305 | 461 | 5.6 | 67 | 53 | 14 | 26.4 | |||||||
| Total firm sales and transportation | 17,789 | 16,603 | 1,186 | 7.1 | (b) | 220 | 182 | 38 | 20.9 | ||||||
| Interruptible sales (c) | 2,108 | 1,664 | 444 | 26.7 | 8 | 4 | 4 | Large | |||||||
| NYPA | 10,148 | 12,800 | (2,652 | ) | (20.7 | ) | 1 | 1 | — | — | |||||
| Generation plants | 24,068 | 35,745 | (11,677 | ) | (32.7 | ) | 7 | 7 | — | — | |||||
| Other | 4,487 | 4,975 | (488 | ) | (9.8 | ) | 6 | 6 | — | — | |||||
| Other operating revenues (d) | — | — | — | — | 26 | 8 | 18 | Large | |||||||
| Total | 58,600 | 71,787 | (13,187 | ) | (18.4 | )% | $268 | $208 | $60 | 28.8 | % | ||||
60
Operating revenues increased $60$158 million in the three months ended September 30, 2017March 31, 2022 compared with the 20162021 period primarily due primarily to higheran increase in revenues from the gas rate plan and growth in the number of customers ($2972 million) and higher gas purchased for resale expense ($2490 million).
Gas purchased for resale increased $24$90 million in the three months ended September 30, 2017March 31, 2022 compared with the 20162021 period due to higher unit costs ($2056 million) and higher purchased volumes ($434 million).
Other operations and maintenance expenses increased $2$26 million in the three months ended September 30, 2017March 31, 2022 compared with the 20162021 period primarily due primarily to higher surchargescosts for assessmentspensions and fees that were collected in revenues from customers.other postretirement benefits, reflecting reconciliation to the rate plan level ($17 million), higher healthcare costs ($1 million), higher uncollectible expense ($1 million) and higher municipal infrastructure support costs ($1 million).
Depreciation and amortization increased $6$13 million in the three months ended September 30, 2017March 31, 2022 compared with the 20162021 period primarily due primarily to higher gas utility plant balances.
Taxes, other than income taxes increased $12$17 million in the three months ended September 30, 2017March 31, 2022 compared with the 20162021 period primarily due primarily to a higher deferral of over-collected property taxes ($6 million), higher property taxes ($5 million) and higher state and local taxes ($45 million) and payroll taxes ($1 million).
Steam
CECONY’s results of steam operations for the three months ended September 30, 2017March 31, 2022 compared with the 20162021 period iswere as follows:
| For the Three Months Ended | |||||||||||
| (Millions of Dollars) | March 31, 2022 | March 31, 2021 | Variation | ||||||||
| Operating revenues | $302 | $264 | $38 | ||||||||
| Purchased power | 20 | 13 | 7 | ||||||||
| Fuel | 78 | 48 | 30 | ||||||||
| Other operations and maintenance | 50 | 41 | 9 | ||||||||
| Depreciation and amortization | 24 | 23 | 1 | ||||||||
| Taxes, other than income taxes | 40 | 39 | 1 | ||||||||
| Steam operating income | $90 | $100 | $(10) | ||||||||
| For the Three Months Ended | |||
| (Millions of Dollars) | September 30, 2017 | September 30, 2016 | Variation |
| Operating revenues | $62 | $63 | $(1) |
| Purchased power | 7 | 9 | (2) |
| Fuel | 6 | 8 | (2) |
| Other operations and maintenance | 40 | 44 | (4) |
| Depreciation and amortization | 21 | 20 | 1 |
| Taxes, other than income taxes | 31 | 29 | 2 |
| Steam operating income | $(43) | $(47) | $4 |
CECONY’s steam sales and deliveries for the three months ended September 30, 2017March 31, 2022 compared with the 20162021 period were:
| Millions of Pounds Delivered | Revenues in Millions | ||||||||||||||||||||||||||||
| For the Three Months Ended | For the Three Months Ended | ||||||||||||||||||||||||||||
| Description | March 31, 2022 | March 31, 2021 | Variation | Percent Variation | March 31, 2022 | March 31, 2021 | Variation | Percent Variation | |||||||||||||||||||||
| General | 315 | 334 | (19) | (5.7 | %) | $15 | $14 | $1 | 7.1 | % | |||||||||||||||||||
| Apartment house | 2,252 | 2,313 | (61) | (2.6) | 76 | 66 | 10 | 15.2 | |||||||||||||||||||||
| Annual power | 5,083 | 5,161 | (78) | (1.5) | 202 | 175 | 27 | 15.4 | |||||||||||||||||||||
| Other operating revenues (a) | — | — | — | — | 9 | 9 | — | — | |||||||||||||||||||||
| Total | 7,650 | 7,808 | (158) | (2.0) | % | (b) | $302 | $264 | $38 | 14.4 | % | ||||||||||||||||||
(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, primarily weather and billing days, steam sales and deliveries increased 1.0 percent in the three months ended March 31, 2022 compared with the 2021 period.
Operating revenues increased $38 million in the three months ended March 31, 2022 compared with the 2021 period primarily due to higher fuel expenses ($30 million), higher purchased power expenses ($7 million) and higher tax law surcharge ($7 million), offset in part by the impact of warmer winter weather ($5 million).
Purchased power increased $7 million in the three months ended March 31, 2022 compared with the 2021 period due to higher unit costs ($9 million), offset, in part by lower purchased volumes ($2 million)
Fuel increased $30 million in the three months ended March 31, 2022 compared with the 2021 period due to higher unit costs ($22 million) and higher purchased volumes from the company's steam generating facilities ($8 million).
61
| Millions of Pounds Delivered | Revenues in Millions | |||||||||||||||
| For the Three Months Ended | For the Three Months Ended | |||||||||||||||
| Description | September 30, 2017 | September 30, 2016 | Variation | Percent Variation | September 30, 2017 | September 30, 2016 | Variation | Percent Variation | ||||||||
| General | 13 | 10 | 3 | 30.0 | % | $2 | $2 | $— | — | % | ||||||
| Apartment house | 748 | 776 | (28 | ) | (3.6 | ) | 15 | 15 | — | — | ||||||
| Annual power | 2,439 | 2,950 | (511 | ) | (17.3 | ) | 42 | 49 | (7) | (14.3 | ) | |||||
| Other operating revenues (a) | — | — | — | — | 3 | (3) | 6 | Large | ||||||||
| Total | 3,200 | 3,736 | (536 | ) | (14.3 | )% | (b) | $62 | $63 | $(1) | (1.6 | )% | ||||
Depreciation and amortization increased $1 million in the three months ended September 30, 2017March 31, 2022 compared with the 20162021 period primarily due to higher steam utility plant balances.
Other Income (Deductions)
Other income increased $104 million in the three months ended March 31, 2022 compared with the 2021 period primarily due to lower purchased power expensescosts associated with components of pension and other postretirement benefits other than service cost.
Net Interest Expense
Net Interest Expense increased $16 million in the three months ended March 31, 2022 compared with the 2021 period primarily due to higher interest on long-term debt.
Income Tax Expense
Income taxes increased $3 million in the three months ended March 31, 2022 compared with the 2021 period primarily due to higher income before income tax expense ($23 million) and lower fuel expensesflow-through tax benefits in 2022 for plant-related items ($2 million), offset in part by a propertyhigher general business tax refund incentive ($3 million).
O&R
| For the Three Months Ended March 31, 2022 | For the Three Months Ended March 31, 2021 | ||||||||||||||||||||||
| (Millions of Dollars) | Electric | Gas | 2022 Total | Electric | Gas | 2021 Total | 2022-2021 Variation | ||||||||||||||||
| Operating revenues | $166 | $119 | $285 | $145 | $103 | $248 | $37 | ||||||||||||||||
| Purchased power | 59 | — | 59 | 41 | — | 41 | 18 | ||||||||||||||||
| Gas purchased for resale | — | 47 | 47 | — | 31 | 31 | 16 | ||||||||||||||||
| Other operations and maintenance | 67 | 19 | 86 | 64 | 16 | 80 | 6 | ||||||||||||||||
| Depreciation and amortization | 17 | 7 | 24 | 17 | 7 | 24 | — | ||||||||||||||||
| Taxes, other than income taxes | 15 | 8 | 23 | 14 | 9 | 23 | — | ||||||||||||||||
| Operating income | $8 | $38 | $46 | $9 | $40 | $49 | $(3) | ||||||||||||||||
| For the Three Months Ended September 30, 2017 | For the Three Months Ended September 30, 2016 | |||||||||||
| (Millions of Dollars) | Electric | Gas | 2017 Total | Electric | Gas | 2016 Total | 2017-2016 Variation | |||||
| Operating revenues | $206 | $28 | $234 | $213 | $27 | $240 | $(6) | |||||
| Purchased power | 60 | — | 60 | 69 | — | 69 | (9) | |||||
| Gas purchased for resale | — | 10 | 10 | — | 8 | 8 | 2 | |||||
| Other operations and maintenance | 63 | 17 | 80 | 63 | 14 | 77 | 3 | |||||
| Depreciation and amortization | 13 | 5 | 18 | 12 | 5 | 17 | 1 | |||||
| Taxes, other than income taxes | 14 | 7 | 21 | 14 | 7 | 21 | — | |||||
| Operating income | $56 | $(11) | $45 | $55 | $(7) | $48 | $(3) | |||||
Electric
O&R’s results of electric operations for the three months ended September 30, 2017March 31, 2022 compared with the 20162021 period iswere as follows:
| For the Three Months Ended | |||||||||||
| (Millions of Dollars) | March 31, 2022 | March 31, 2021 | Variation | ||||||||
| Operating revenues | $166 | $145 | $21 | ||||||||
| Purchased power | 59 | 41 | 18 | ||||||||
| Other operations and maintenance | 67 | 64 | 3 | ||||||||
| Depreciation and amortization | 17 | 17 | — | ||||||||
| Taxes, other than income taxes | 15 | 14 | 1 | ||||||||
| Electric operating income | $8 | $9 | $(1) | ||||||||
62
| For the Three Months Ended | |||||
| (Millions of Dollars) | September 30, 2017 | September 30, 2016 | Variation | ||
| Operating revenues | $206 | $213 | $(7) | ||
| Purchased power | 60 | 69 | (9) | ||
| Other operations and maintenance | 63 | 63 | — | ||
| Depreciation and amortization | 13 | 12 | 1 | ||
| Taxes, other than income taxes | 14 | 14 | — | ||
| Electric operating income | $56 | $55 | $1 | ||
O&R’s electric sales and deliveries for the three months ended September 30, 2017March 31, 2022 compared with the 20162021 period were:
| Millions of kWh Delivered | Revenues in Millions (a) | ||||||||||||||||||||||||||||
| For the Three Months Ended | For the Three Months Ended | ||||||||||||||||||||||||||||
| Description | March 31, 2022 | March 31, 2021 | Variation | Percent Variation | March 31, 2022 | March 31, 2021 | Variation | Percent Variation | |||||||||||||||||||||
| Residential/Religious (b) | 417 | 381 | 36 | 9.4 | % | $85 | $70 | $15 | 21.4 | % | |||||||||||||||||||
| Commercial/Industrial | 227 | 200 | 27 | 13.5 | 33 | 25 | 8 | 32.0 | |||||||||||||||||||||
| Retail choice customers | 629 | 673 | (44) | (6.5) | 44 | 48 | (4) | (8.3) | |||||||||||||||||||||
| Public authorities | 25 | 25 | — | — | 4 | 2 | 2 | Large | |||||||||||||||||||||
| Other operating revenues (c) | — | — | — | — | — | — | — | — | |||||||||||||||||||||
| Total | 1,298 | 1,279 | 19 | 1.5 | % | (d) | $166 | $145 | $21 | 14.5 | % | ||||||||||||||||||
(a)O&R’s NY 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. Effective July 2021, the majority of O&R’s electric distribution revenues in NJ are subject to a conservation incentive program, as a result of which distribution revenues are generally not affected by changes in delivery volumes from levels assumed when rates were approved. O&R’s electric transmission revenues in NJ are not subject to a conservation incentive program, and as a result, changes in such volumes do impact revenues.
| Millions of kWh Delivered | Revenues in Millions (a) | ||||||||||||||
| For the Three Months Ended | For the Three Months Ended | ||||||||||||||
| Description | September 30, 2017 | September 30, 2016 | Variation | Percent Variation | September 30, 2017 | September 30, 2016 | Variation | Percent Variation | |||||||
| Residential/Religious (b) | 500 | 585 | (85 | ) | (14.5 | )% | $105 | $109 | $(4) | (3.7 | )% | ||||
| Commercial/Industrial | 206 | 216 | (10 | ) | (4.6 | ) | 34 | 35 | (1) | (2.9 | ) | ||||
| Retail choice customers | 818 | 925 | (107 | ) | (11.6 | ) | 64 | 70 | (6) | (8.6 | ) | ||||
| Public authorities | 31 | 31 | — | — | 3 | 2 | 1 | 50.0 | |||||||
| Other operating revenues (c) | — | — | — | — | — | (3) | 3 | Large | |||||||
| Total | 1,555 | 1,757 | (202 | ) | (11.5 | )% | (d) | $206 | $213 | $(7) | (3.3 | )% | |||
(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 plan.
(d)After adjusting for weather and other variations, electric delivery volumes in O&R’s service area increased 2.6 percent in the three months ended March 31, 2022 compared with the 2021 period.
Operating revenues decreased $7 increased $21 million in the three months ended September 30, 2017March 31, 2022 compared with the 20162021 period primarily due primarily to lowerhigher purchased power expenses ($918 million), offset by and higher revenues from the New YorkNY electric rate plan ($32 million).
Purchased power expenses decreased $9increased $18 million in the three months ended September 30, 2017March 31, 2022 compared with the 20162021 period due to lower purchased volumes ($10 million), offset by higher unit costs ($116 million) and higher purchased volumes ($2 million).
Gas
O&R’s results of gas operations for the three months ended September 30, 2017March 31, 2022 compared with the 20162021 period iswere as follows:
| For the Three Months Ended | |||||||||||
| (Millions of Dollars) | March 31, 2022 | March 31, 2021 | Variation | ||||||||
| Operating revenues | $119 | $103 | $16 | ||||||||
| Gas purchased for resale | 47 | 31 | 16 | ||||||||
| Other operations and maintenance | 19 | 16 | 3 | ||||||||
| Depreciation and amortization | 7 | 7 | — | ||||||||
| Taxes, other than income taxes | 8 | 9 | (1) | ||||||||
| Gas operating income | $38 | $40 | ($2) | ||||||||
63
| For the Three Months Ended | ||||
| (Millions of Dollars) | September 30, 2017 | September 30, 2016 | Variation | |
| Operating revenues | $28 | $27 | $1 | |
| Gas purchased for resale | 10 | 8 | 2 | |
| Other operations and maintenance | 17 | 14 | 3 | |
| Depreciation and amortization | 5 | 5 | — | |
| Taxes, other than income taxes | 7 | 7 | — | |
| Gas operating income | $(11) | $(7) | $(4) | |
O&R’s gas sales and deliveries, excluding off-system sales, for the three months ended September 30, 2017March 31, 2022 compared with the 20162021 period were:
| Thousands of Dt Delivered | Revenues in Millions (a) | ||||||||||||||||||||||||||||
| For the Three Months Ended | For the Three Months Ended | ||||||||||||||||||||||||||||
| Description | March 31, 2022 | March 31, 2021 | Variation | Percent Variation | March 31, 2022 | March 31, 2021 | Variation | Percent Variation | |||||||||||||||||||||
| Residential | 6,165 | 5,260 | 905 | 17.2 | % | $84 | $66 | $18 | 27.3 | % | |||||||||||||||||||
| General | 1,350 | 1,108 | 242 | 21.8 | 16 | 12 | 4 | 33.3 | |||||||||||||||||||||
| Firm transportation | 3,074 | 3,582 | (508) | (14.2) | 20 | 25 | (5) | (20.0) | |||||||||||||||||||||
| Total firm sales and transportation | 10,589 | 9,950 | 639 | 6.4 | (b) | 120 | 103 | 17 | 16.5 | ||||||||||||||||||||
| Interruptible sales | 1,214 | 1,217 | (3) | (0.2) | 2 | 2 | — | — | |||||||||||||||||||||
| Generation plants | 5 | 4 | 1 | 25.0 | — | — | — | — | |||||||||||||||||||||
| Other | 285 | 181 | 104 | 57.5 | — | — | — | — | |||||||||||||||||||||
| Other gas revenues | — | — | — | — | (3) | (2) | (1) | 50.0 | |||||||||||||||||||||
| Total | 12,093 | 11,352 | 741 | 6.5 | % | $119 | $103 | $16 | 15.5 | % | |||||||||||||||||||
(a)Revenues from NY 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.
| Thousands of Dt Delivered | Revenues in Millions (a) | ||||||||||||||||
| For the Three Months Ended | For the Three Months Ended | ||||||||||||||||
| Description | September 30, 2017 | September 30, 2016 | Variation | Percent Variation | September 30, 2017 | September 30, 2016 | Variation | Percent Variation | |||||||||
| Residential | 579 | 550 | 29 | 5.3 | % | $11 | $9 | $2 | 22.2 | % | |||||||
| General | 198 | 177 | 21 | 11.9 | 2 | 2 | — | — | |||||||||
| Firm transportation | 898 | 884 | 14 | 1.6 | 8 | 8 | — | — | |||||||||
| Total firm sales and transportation | 1,675 | 1,611 | 64 | 4.0 | (b) | 21 | 19 | 2 | 10.5 | ||||||||
| Interruptible sales | 819 | 893 | (74 | ) | (8.3 | ) | 1 | — | 1 | — | |||||||
| Generation plants | 5 | 3 | 2 | 66.7 | — | — | — | — | |||||||||
| Other | 74 | 70 | 4 | 5.7 | — | — | — | — | |||||||||
| Other gas revenues | — | — | — | — | 6 | 8 | (2) | (25.0 | ) | ||||||||
| Total | 2,573 | 2,577 | (4 | ) | (0.2 | )% | $28 | $27 | $1 | 3.7 | % | ||||||
(b)After adjusting for weather and other variations, total firm sales and transportation volumes increased 1.7 percent in the three months ended March 31, 2022 compared with the 2021 period.
Operating revenues increased $1$16 million in the three months ended September 30, 2017March 31, 2022 compared with the 20162021 period primarily due primarily to higher gas purchased for resale ($216 million), offset by lower revenues from the New York gas rate plan ($1 million).
Gas purchased for resale increased $2$16 million in the three months ended September 30, 2017March 31, 2022 compared with the 20162021 period due to higher unit costs ($12 million) and higher purchased volumes ($34 million), offset by lower unit costs ($1 million).
Other operations and maintenance expenses increased $3 million in the three months ended September 30, 2017March 31, 2022 compared with the 20162021 period primarily due primarily to higher pension costs.costs, reflecting reconciliation to the rate plan level.
Income Tax Expense
Income taxes increased $1$2 million in the three months ended September 30, 2017March 31, 2022 compared with the 20162021 period
primarily due primarily to the absence in 2017 of a tax benefit from a corporate-owned life insurance policy in 2016 ($2 million), offset in part by lowerhigher income before income tax expense ($1 million) and higher state income taxes ($1 million).
Clean Energy Businesses
The Clean Energy Businesses’ results of operations for the three months ended September 30, 2017March 31, 2022 compared with the 20162021 period iswere as follows:
| For the Three Months Ended | |||||||||||
| (Millions of Dollars) | March 31, 2022 | March 31, 2021 | Variation | ||||||||
| Operating revenues | $260 | $224 | $36 | ||||||||
| Gas purchased for resale | 72 | 32 | 40 | ||||||||
| Other operations and maintenance | 76 | 99 | (23) | ||||||||
| Depreciation and amortization | 59 | 58 | 1 | ||||||||
| Taxes, other than income taxes | 7 | 7 | — | ||||||||
| Operating income | $46 | $28 | $18 | ||||||||
| For the Three Months Ended | ||||
| (Millions of Dollars) | September 30, 2017 | September 30, 2016 | Variation | |
| Operating revenues | $177 | $350 | $(173) | |
| Purchased power | — | 234 | (234) | |
| Gas purchased for resale | 47 | 39 | 8 | |
| Other operations and maintenance | 79 | 40 | 39 | |
| Depreciation and amortization | 19 | 11 | 8 | |
| Taxes, other than income taxes | 3 | 5 | (2) | |
| Gain on sale of retail electric supply business (2016) | — | (104) | 104 | |
| Operating income | $29 | $125 | $(96) | |
Operating revenues decreased $173 increased $36 million in the three months ended September 30, 2017March 31, 2022 compared with the 20162021 period due primarily to lower electric retail revenues of $256 million from the sale of the retail electric supply business in September 2016. Renewable revenues increased $56 million due primarily to an increase in renewable electric production projects in operation and revenues from the engineering, procurement and construction of Upton
Gas purchased for resaleincreased $32 million, due primarily to the sale of the retail electric supply business, of which $24 million in gains are reflected in purchased power costs and $8 million in gains are reflected in revenues.
64
Net interest expense decreased $9 million in the three months ended September 30, 2017March 31, 2022 compared with the 20162021 period primarily due to lower unrealized gains on interest rate derivatives.
Income Tax Expense
Income taxes increased $18 million in the three months ended March 31, 2022 compared with the 2021 period primarily due to higher income before income tax expense ($6 million), lower income attributable to non-controlling interest ($12 million) and higher state income taxes ($1 million), offset in part by higher renewable energy credits ($2 million).
Income (Loss) Attributable to Non-Controlling Interest
Income attributable to non-controlling interest decreased $49 million in the three months ended March 31, 2022 compared with the 2021 period primarily due to lower income in the 2022 period attributable to a tax equity investor in renewable electric projects accounted for under the HLBV method of accounting. See Note P to the gain relatedFirst Quarter Financial Statements.
Con Edison Transmission
Other Income (Deductions)
Other income increased $163 million in the three months ended March 31, 2022 compared with the 2021 period primarily due to losses in 2021 from CET Gas’ pre-tax impairment loss of $172 million on its investment in Stagecoach (See "Investments" in Note A to the acquisition of a solar electric productionFirst Quarter Financial Statements) offset in part by investment in 2016.income from Stagecoach ($8 million) and NY Transco ($4 million), compared to 2022 investment income from NY Transco ($4 million).
Net Interest Expense
Net interest expense increased $5decreased $4 million in the three months ended September 30, 2017March 31, 2022 compared with the 20162021 period primarily due primarily to increased debt on solar electric production projects.
| 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 | |||||||||||
| Operating revenues | $207 | 2.7 | % | $37 | 5.9 | % | $(538) | (53.9 | )% | $1 | — | % | $(3) | Large | $(296) | (3.2 | )% | ||||||
| Purchased power | (106) | (8.7 | ) | (6) | (3.9 | ) | (679) | Large | — | — | (3) | Large | (794) | (38.8 | ) | ||||||||
| Fuel | 36 | 27.1 | — | — | — | — | — | — | — | — | 36 | 27.1 | |||||||||||
| Gas purchased for resale | 155 | 71.4 | 20 | 62.5 | 89 | Large | — | — | — | — | 264 | 82.5 | |||||||||||
| Other operations and maintenance | (113) | (5.4 | ) | 16 | 7.3 | 50 | 40.3 | 6 | Large | — | — | (41) | (1.7 | ) | |||||||||
| Depreciation and amortization | 66 | 8.0 | 3 | 6.0 | 24 | 80.0 | — | — | — | — | 93 | 10.3 | |||||||||||
| Taxes, other than income taxes | 77 | 5.3 | 2 | 3.3 | (4) | (25.0 | ) | — | — | (1) | Large | 74 | 4.9 | ||||||||||
Gain on sale of retail electric supply business (2016) and solar electric production project (2017) | — | — | — | — | (103) | Large | — | — | — | — | (103) | Large | |||||||||||
| Operating income | 92 | 5.1 | 2 | 1.8 | (121) | (65.8 | ) | (5) | Large | 1 | Large | (31) | (1.5 | ) | |||||||||
| Other income less deductions | 4 | Large | (1) | Large | (2) | (5.7 | ) | 37 | Large | (1) | — | 37 | 60.7 | ||||||||||
| Net interest expense | 12 | 2.7 | (1) | (3.6 | ) | 11 | 47.8 | 8 | Large | (2) | (18.2 | ) | 28 | 5.4 | |||||||||
| Income before income tax expense | 84 | 6.2 | 2 | 2.3 | (134) | (68.4 | ) | 24 | Large | 2 | (20.0 | ) | (22) | (1.3 | ) | ||||||||
| Income tax expense | 60 | 12.2 | 4 | 12.5 | (68) | (89.5 | ) | 10 | Large | (9) | Large | (3) | (0.5 | ) | |||||||||
| Net income | $24 | 2.8 | % | $(2) | (3.6 | )% | $(66) | (55.0 | )% | $14 | Large | $11 | Large | $(19) | (1.8 | )% | |||||||
| For the Nine Months Ended September 30, 2017 | For the Nine Months Ended September 30, 2016 | ||||||||||||||
| (Millions of Dollars) | Electric | Gas | Steam | 2017 Total | Electric | Gas | Steam | 2016 Total | 2017-2016 Variation | ||||||
| Operating revenues | $6,079 | $1,421 | $448 | $7,948 | $6,222 | $1,113 | $406 | $7,741 | $207 | ||||||
| Purchased power | 1,084 | — | 26 | 1,110 | 1,191 | — | 25 | 1,216 | (106) | ||||||
| Fuel | 95 | — | 74 | 169 | 81 | — | 52 | 133 | 36 | ||||||
| Gas purchased for resale | — | 372 | — | 372 | — | 217 | — | 217 | 155 | ||||||
| Other operations and maintenance | 1,528 | 330 | 134 | 1,992 | 1,659 | 307 | 139 | 2,105 | (113) | ||||||
| Depreciation and amortization | 690 | 137 | 64 | 891 | 645 | 118 | 62 | 825 | 66 | ||||||
| Taxes, other than income taxes | 1,205 | 220 | 98 | 1,523 | 1,159 | 198 | 89 | 1,446 | 77 | ||||||
| Operating income | $1,477 | $362 | $52 | $1,891 | $1,487 | $273 | $39 | $1,799 | $92 | ||||||
| For the Nine Months Ended | |||
| (Millions of Dollars) | September 30, 2017 | September 30, 2016 | Variation |
| Operating revenues | $6,079 | $6,222 | $(143) |
| Purchased power | 1,084 | 1,191 | (107) |
| Fuel | 95 | 81 | 14 |
| Other operations and maintenance | 1,528 | 1,659 | (131) |
| Depreciation and amortization | 690 | 645 | 45 |
| Taxes, other than income taxes | 1,205 | 1,159 | 46 |
| Electric operating income | $1,477 | $1,487 | $(10) |
| Millions of kWh Delivered | Revenues in Millions (a) | |||||||||||||
| For the Nine Months Ended | For the Nine Months Ended | |||||||||||||
| Description | September 30, 2017 | September 30, 2016 | Variation | Percent Variation | September 30, 2017 | September 30, 2016 | Variation | Percent Variation | ||||||
| Residential/Religious (b) | 7,576 | 8,130 | (554 | ) | (6.8 | )% | $1,925 | $2,017 | $(92) | (4.6 | )% | |||
| Commercial/Industrial | 6,965 | 7,220 | (255 | ) | (3.5 | ) | 1,393 | 1,381 | 12 | 0.9 | ||||
| Retail choice customers | 19,748 | 20,404 | (656 | ) | (3.2 | ) | 2,092 | 2,114 | (22) | (1.0 | ) | |||
| NYPA, Municipal Agency and other sales | 7,548 | 7,641 | (93 | ) | (1.2 | ) | 483 | 474 | 9 | 1.9 | ||||
| Other operating revenues (c) | — | — | — | — | 186 | 236 | (50) | (21.2 | ) | |||||
| Total | 41,837 | 43,395 | (1,558 | ) | (3.6 | )% | (d) | $6,079 | $6,222 | $(143) | (2.3 | )% | ||
| For the Nine Months Ended | |||
| (Millions of Dollars) | September 30, 2017 | September 30, 2016 | Variation |
| Operating revenues | $1,421 | $1,113 | $308 |
| Gas purchased for resale | 372 | 217 | 155 |
| Other operations and maintenance | 330 | 307 | 23 |
| Depreciation and amortization | 137 | 118 | 19 |
| Taxes, other than income taxes | 220 | 198 | 22 |
| Gas operating income | $362 | $273 | $89 |
| Thousands of Dt Delivered | Revenues in Millions (a) | |||||||||||||||
| For the Nine Months Ended | For the Nine Months Ended | |||||||||||||||
| Description | September 30, 2017 | September 30, 2016 | Variation | Percent Variation | September 30, 2017 | September 30, 2016 | Variation | Percent Variation | ||||||||
| Residential | 39,814 | 35,565 | 4,249 | 11.9 | % | $613 | $506 | $107 | 21.1 | % | ||||||
| General | 23,427 | 20,962 | 2,465 | 11.8 | 255 | 200 | 55 | 27.5 | ||||||||
| Firm transportation | 53,952 | 51,333 | 2,619 | 5.1 | 390 | 332 | 58 | 17.5 | ||||||||
| Total firm sales and transportation | 117,193 | 107,860 | 9,333 | 8.7 | (b) | 1,258 | 1,038 | 220 | 21.2 | |||||||
| Interruptible sales (c) | 6,526 | 7,587 | (1,061 | ) | (14.0 | ) | 30 | 29 | 1 | 3.4 | ||||||
| NYPA | 30,233 | 31,970 | (1,737 | ) | (5.4 | ) | 2 | 2 | — | — | ||||||
| Generation plants | 48,989 | 70,895 | (21,906 | ) | (30.9 | ) | 19 | 19 | — | — | ||||||
| Other | 16,756 | 16,442 | 314 | 1.9 | 24 | 25 | (1) | (4.0 | ) | |||||||
| Other operating revenues (d) | — | — | — | — | 88 | — | 88 | — | ||||||||
| Total | 219,697 | 234,754 | (15,057 | ) | (6.4 | )% | $1,421 | $1,113 | $308 | 27.7 | % | |||||
| For the Nine Months Ended | |||
| (Millions of Dollars) | September 30, 2017 | September 30, 2016 | Variation |
| Operating revenues | $448 | $406 | $42 |
| Purchased power | 26 | 25 | 1 |
| Fuel | 74 | 52 | 22 |
| Other operations and maintenance | 134 | 139 | (5) |
| Depreciation and amortization | 64 | 62 | 2 |
| Taxes, other than income taxes | 98 | 89 | 9 |
| Steam operating income | $52 | $39 | $13 |
| Millions of Pounds Delivered | Revenues in Millions | |||||||||||||
| For the Nine Months Ended | For the Nine Months Ended | |||||||||||||
| Description | September 30, 2017 | September 30, 2016 | Variation | Percent Variation | September 30, 2017 | September 30, 2016 | Variation | Percent Variation | ||||||
| General | 364 | 345 | 19 | 5.5 | % | $20 | $18 | $2 | 11.1 | % | ||||
| Apartment house | 4,248 | 4,251 | (3 | ) | (0.1 | ) | 119 | 107 | 12 | 11.2 | ||||
| Annual power | 10,074 | 10,640 | (566 | ) | (5.3 | ) | 300 | 284 | 16 | 5.6 | ||||
| Other operating revenues (a) | — | — | — | — | 9 | (3) | 12 | Large | ||||||
| Total | 14,686 | 15,236 | (550 | ) | (3.6 | )% | (b) | $448 | $406 | $42 | 10.3 | % | ||
Income Tax Expense
Income taxes increased $60$45 million in the ninethree months ended September 30, 2017March 31, 2022 compared with the 20162021 period primarily due primarily to higher income before income tax expense ($33 million), a decrease in tax benefits for plant-related flow through items ($27 million), lower research and development tax credits ($1035 million) and a higher reserve for injuries and damages ($9 million), offset in part by lower state income taxes ($7 million), higher research and development tax credits included in Con Edison's filing of its 2016 consolidated federal tax return in September 2017 ($5 million), a decrease in bad debt expense ($2 million) and a decrease in uncertain tax positions ($111 million).
| For the Nine Months Ended September 30, 2017 | For the Nine Months Ended September 30, 2016 | ||||||||||
| (Millions of Dollars) | Electric | Gas | 2017 Total | Electric | Gas | 2016 Total | 2017-2016 Variation | ||||
| Operating revenues | $495 | $172 | $667 | $497 | $133 | $630 | $37 | ||||
| Purchased power | 148 | — | 148 | 154 | — | 154 | (6) | ||||
| Gas purchased for resale | — | 52 | 52 | — | 32 | 32 | 20 | ||||
| Other operations and maintenance | 185 | 51 | 236 | 180 | 40 | 220 | 16 | ||||
| Depreciation and amortization | 38 | 15 | 53 | 37 | 13 | 50 | 3 | ||||
| Taxes, other than income taxes | 41 | 21 | 62 | 40 | 20 | 60 | 2 | ||||
| Operating income | $83 | $33 | $116 | $86 | $28 | $114 | $2 | ||||
| For the Nine Months Ended | |||
| (Millions of Dollars) | September 30, 2017 | September 30, 2016 | Variation |
| Operating revenues | $495 | $497 | $(2) |
| Purchased power | 148 | 154 | (6) |
| Other operations and maintenance | 185 | 180 | 5 |
| Depreciation and amortization | 38 | 37 | 1 |
| Taxes, other than income taxes | 41 | 40 | 1 |
| Electric operating income | $83 | $86 | $(3) |
| Millions of kWh Delivered | Revenues in Millions (a) | |||||||||||||
| For the Nine Months Ended | For the Nine Months Ended | |||||||||||||
| Description | September 30, 2017 | September 30, 2016 | Variation | Percent Variation | September 30, 2017 | September 30, 2016 | Variation | Percent Variation | ||||||
| Residential/Religious (b) | 1,208 | 1,307 | (99 | ) | (7.6 | )% | $242 | $240 | $2 | 0.8 | % | |||
| Commercial/Industrial | 574 | 607 | (33 | ) | (5.4 | ) | 88 | 89 | (1) | (1.1 | ) | |||
| Retail choice customers | 2,255 | 2,434 | (179 | ) | (7.4 | ) | 155 | 166 | (11) | (6.6 | ) | |||
| Public authorities | 79 | 76 | 3 | 3.9 | 7 | 6 | 1 | 16.7 | ||||||
| Other operating revenues (c) | — | — | — | — | 3 | (4) | 7 | Large | ||||||
| Total | 4,116 | 4,424 | (308 | ) | (7.0 | )% | (d) | $495 | $497 | $(2) | (0.4 | )% | ||
| Other |
| For the Nine Months Ended | |||
| (Millions of Dollars) | September 30, 2017 | September 30, 2016 | Variation |
| Operating revenues | $172 | $133 | $39 |
| Gas purchased for resale | 52 | 32 | 20 |
| Other operations and maintenance | 51 | 40 | 11 |
| Depreciation and amortization | 15 | 13 | 2 |
| Taxes, other than income taxes | 21 | 20 | 1 |
| Gas operating income | $33 | $28 | $5 |
| Thousands of Dt Delivered | Revenues in Millions (a) | ||||||||||||||||
| For the Nine Months Ended | For the Nine Months Ended | ||||||||||||||||
| Description | September 30, 2017 | September 30, 2016 | Variation | Percent Variation | September 30, 2017 | September 30, 2016 | Variation | Percent Variation | |||||||||
| Residential | 5,556 | 5,266 | 290 | 5.5 | % | $79 | $55 | $24 | 43.6 | % | |||||||
| General | 1,447 | 1,224 | 223 | 18.2 | 16 | 10 | 6 | 60.0 | |||||||||
| Firm transportation | 6,543 | 7,188 | (645 | ) | (9.0 | ) | 50 | 49 | 1 | 2.0 | |||||||
| Total firm sales and transportation | 13,546 | 13,678 | (132 | ) | (1.0 | ) | (b) | 145 | 114 | 31 | 27.2 | ||||||
| Interruptible sales | 2,966 | 3,020 | (54 | ) | (1.8 | ) | 5 | 2 | 3 | Large | |||||||
| Generation plants | 6 | 15 | (9 | ) | (60.0 | ) | — | — | — | — | |||||||
| Other | 589 | 583 | 6 | 1.0 | 1 | — | 1 | — | |||||||||
| Other gas revenues | — | — | — | — | 21 | 17 | 4 | 23.5 | % | ||||||||
| Total | 17,107 | 17,296 | (189 | ) | (1.1 | )% | $172 | $133 | $39 | 29.3 | % | ||||||
Income Tax Expense
Income taxes increased $4$7 million in the ninethree months ended September 30, 2017March 31, 2022 compared with the 20162021 period due primarily to higher income before income tax expense ($1 million), a decrease in tax benefits for plant-related flow through items ($1 million) and the absence in 2017 of a tax benefit from a corporate-owned life insurance policy in 2016 ($2 million).
| For the Nine Months Ended | |||
| (Millions of Dollars) | September 30, 2017 | September 30, 2016 | Variation |
| Operating revenues | $460 | $998 | $(538) |
| Purchased power | (3) | 676 | (679) |
| Gas purchased for resale | 161 | 72 | 89 |
| Other operations and maintenance | 174 | 124 | 50 |
| Depreciation and amortization | 54 | 30 | 24 |
| Taxes, other than income taxes | 12 | 16 | (4) |
| Gain on sale of retail electric supply business (2016) and solar electric production project (2017) (a) | (1) | (104) | 103 |
| Operating income | $63 | $184 | $(121) |
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.
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The Companies’ cash, and temporary cash investments and restricted cash resulting from operating, investing and financing activities for the ninethree months ended September 30, 2017March 31, 2022 and 20162021 are summarized as follows:
| For the Three Months Ended March 31, | ||||||||||||||||||||||||||||||||||||||
| CECONY | O&R | Clean Energy Businesses | Con Edison Transmission | Other (a) | Con Edison (b) | |||||||||||||||||||||||||||||||||
| (Millions of Dollars) | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||||||||
| Operating activities | $477 | $220 | $47 | $15 | $13 | $(124) | $10 | $— | $(74) | $178 | $473 | $289 | ||||||||||||||||||||||||||
Investing activities | (873) | (902) | (44) | (52) | (25) | (141) | (10) | — | — | (1) | (952) | (1,096) | ||||||||||||||||||||||||||
| Financing activities | (471) | (355) | (1) | 24 | (56) | 175 | — | — | 58 | (316) | (470) | (472) | ||||||||||||||||||||||||||
| Net change for the period | (867) | (1,037) | 2 | (13) | (68) | (90) | — | — | (16) | (139) | (949) | (1,279) | ||||||||||||||||||||||||||
| Balance at beginning of period | 920 | 1,067 | 29 | 37 | 178 | 187 | — | — | 19 | 145 | 1,146 | 1,436 | ||||||||||||||||||||||||||
| Balance at end of period (c) | $53 | $30 | $31 | $24 | $110 | $97 | $— | $— | $3 | $6 | $197 | $157 | ||||||||||||||||||||||||||
(a) Includes parent company and consolidation adjustments.
(b) Represents the consolidated results of operations of Con Edison and its businesses.
(c) See "Reconciliation of Cash, Temporary Cash Investments and Restricted Cash" in Note A to the First Quarter Financial Statements.
+
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| For the Nine Months Ended September 30, | ||||||||||
| Con Edison | CECONY | |||||||||
| (Millions of Dollars) | 2017 | 2016 | Variation | 2017 | 2016 | Variation | ||||
| Operating activities | $2,227 | $2,336 | $(109) | $1,790 | $2,017 | $(227) | ||||
| Investing activities | (2,572) | (3,717) | 1,145 | (2,197) | (1,943) | (254) | ||||
| Financing activities | (362) | 583 | (945) | (278) | (891) | 613 | ||||
| Net change for the period | (707) | (798) | 91 | (685) | (817) | 132 | ||||
| Balance at beginning of period | 776 | 944 | (168) | 702 | 843 | (141) | ||||
| Balance at end of period | $69 | $146 | $(77) | $17 | $26 | $(9) | ||||
| Less: Change in cash balances held for sale | — | (4) | 4 | — | — | — | ||||
| Balance at end of period excluding held for sale | $69 | $150 | $(81) | $17 | $26 | $(9) | ||||
Cash Flows from Operating Activities
The Utilities’ cash flows from operating activities primarily reflect primarily their energy sales and deliveries and cost of operations. The volume of energy sales and deliveries is primarily affected primarily by factors external to the Utilities, such as growth of customer demand, weather, market prices for energy and economic conditions. Measures that promote distributed energy resources, such as distributed generation, demand reduction and energy efficiency, also affect the volume of energy sales and deliveries.
During 2020 and 2021, the decline in business activity in the Utilities’ service territory due to the COVID-19 pandemic resulted in a slower recovery of cash from outstanding customer accounts receivable balances, material increases in customer accounts receivable balances, increases to the allowance for uncollectible accounts, and may result in increases to write-offs of customer accounts, as compared to prior to the COVID-19 pandemic. These trends may continue through 2022. Under the revenue decoupling mechanisms in the Utilities’ New YorkNY electric and gas rate plans, changes in delivery volumes from levels assumed when rates were approved may affect the timing of cash flows, but generallylargely not net income. The prices at which the Utilities provide energy to their customers are determined in accordance with their rate plans. However, increases in electric and gas commodity prices, coupled with the decline in business activity due to the COVID-19 pandemic, may further contribute to a slower recovery of cash from outstanding customer accounts receivable balances, increases to the allowance for uncollectible accounts, and increases to write-offs of customer accounts receivable balances. 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.
The Utilities’ NY rate plans allow them to defer costs resulting from a change in legislation, regulation and related actions that have taken effect during the term of the rate plans once the costs exceed a specified threshold. Increases to the allowance for uncollectible accounts related to the COVID-19 pandemic have been deferred pursuant to the legislative, regulatory and related actions provisions of their rate plans. In November 2021, the NYSPSC issued an order establishing a surcharge recovery mechanism commencing December 1, 2021 through December 31, 2022 for CECONY to collect late payment charges and fees that were not billed for the year ended December 31, 2020 due to the COVID-19 pandemic. The order also established a surcharge recovery or surcredit mechanism for any fee deferrals for 2021 and 2022. In April 2022, the NYSPSC approved the October 2021 joint proposal for new electric and gas rates for O&R for the three-year period January 2022 through December 2024 (the Joint Proposal) that includes certain COVID-19 provisions, such as: recovery of 2020 late payment charges over three years; reconciliation of late payment charges to amounts reflected in rates for years 2021 through 2024; and reconciliation of write-offs of customer accounts receivable balances to amounts reflected in rates from January 1, 2020 through December 31, 2024. See “COVID-19 Regulatory Matters” and “Other Regulatory Matters” in Note B to the First Quarter Financial Statements and “Coronavirus Disease 2019 (COVID-19) Impacts - Liquidity and Financing,” above.
Pursuant to their rate plans, the Utilities have recovered from customers a portion of the tax liability they will pay in the future as a result of temporary differences between the book and tax basis of assets and liabilities. These temporary differences affect the timing of cash flows, but not net income, as the Companies are required to record deferred tax assets and liabilities at the current corporate tax rate for the temporary differences. For the Utilities, credits to their customers of the net benefits of the TCJA, including the reduction of the corporate tax rate to 21 percent, decrease cash flows from operating activities. Pursuant to their rate plans, the Utilities also recover from customers the amount of property taxes they will pay. The payment of property taxes by the Utilities affects the timing of cash flows and increases the amount of short-term borrowings issued by the Utilities when property taxes are due and as property taxes increase, but generally does not impact net income. See “Rate Plans” in Note B, "COVID-19 Regulatory Matters" in Note B, “Other Regulatory Matters” in Note B and Note J to the First Quarter Financial Statements and "Coronavirus Disease 2019 (COVID-19) Impacts - Liquidity and Financing," above.
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.liabilities and accrued unbilled revenue. Non-cash charges or credits may also be accrued under the revenue decoupling and cost reconciliation mechanisms in the Utilities’ New YorkNY electric and gas rate plans. For Con Edison, net income for the three months ended March 31, 2021 included a non-cash loss recognized with respect to a partial goodwill impairment of Con Edison Transmission’s investment in Stagecoach. See “Investments” in Note A to the First Quarter Financial Statements.
Net cash flows from operating activities for the ninethree months ended September 30, 2017March 31, 2022 for Con Edison and CECONY were $109$184 million higher and $227$257 million lower,higher, respectively, than in the 20162021 period. The changechanges in net cash flows for Con Edison and CECONY reflects primarily reflect net higher cash paid fordeferred credits and other regulatory liabilities balances ($218 million and $191 million, respectively), higher deferred income taxes in the 2017 period as compared with the 2016 period of $110($90 million and $226$5 million, respectively,
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respectively), higher recoveries of depreciation ($32 million and $31 million, respectively), lower prepayments ($29 million and $29 million, respectively), higher rate case amortizations and accruals ($25 million and $23 million, respectively), higher accrued interest ($13 million and $18 million, respectively) and lower revenue decoupling mechanism receivable balances ($14 million and $13 million, respectively), offset in part by higher other receivables and other current asset balances ($241 million and $178 million, respectively). For CECONY, the changes also reflect a lower increase of accounts receivables balances from customers, net of refunds received. The income tax refund receivedallowance for uncollectible accounts ($51 million) (see “COVID-19 Regulatory Matters” in 2016 reflectedNote B to the extension of bonus depreciation in late 2015, resulting in a refund of the 2015 estimated federal tax payments.First Quarter Financial Statements and “Coronavirus Disease 2019 (COVID-19) Impacts", "Accounting Considerations” and “Liquidity and Financing,” above) and higher accrued taxes ($29 million).
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.
Cash Flows Used in Investing Activities
Net cash flows used in investing activities for Con Edison and CECONY were $1,145$144 million lower and $254$29 million higher,lower, respectively, for the ninethree months ended September 30, 2017March 31, 2022 compared with the 20162021 period. The change for Con Edison reflects primarily lower new investments in electric and gas transmission projects ($1,011 million) and renewable electric production projects ($240 million), andreflects a decrease in non-utility construction expenditures at the Clean Energy Businesses ($148116 million), offset in part by lower proceeds from sale due to construction of assets ($216 million). The change for CECONY primarily reflects absencethe CED Nevada Virginia projects being completed during the first half of proceeds from the transfer of assets to NY Transco2021 and a decrease in 2016 ($122 million) and increased utility construction expenditures at CECONY ($8824 million) and O&R ($7 million).
Cash Flows from Financing Activities
Net cash flows from financing activities for Con Edison and CECONY were $945$2 million lower and $613$116 million higher, respectively, in the ninethree months ended September 30, 2017March 31, 2022 compared with the 20162021 period.
In August 2017, Con Edison issued 4.1 million common shares resulting in net proceedsFebruary 2021, a subsidiary of $343 million, after issuance expenses, that were invested by Con Edison in its subsidiaries, principally CECONY and the Clean Energy Businesses borrowed $250 million at a variable rate, due 2028, secured by equity interests in four of the company’s solar electric projects, the interest rate for fundingwhich was swapped to a fixed rate of their construction expenditures and for other general corporate purposes.3.39 percent.
In February 2021, a subsidiary of the Clean Energy Businesses entered into an agreement with a tax equity investor for the financing of a portfolio of three of the Clean Energy Businesses’ solar electric projects (CED Nevada Virginia). Under the financing, the tax equity investor acquired a noncontrolling interest in the portfolio and will receive a percentage of earnings, tax attributes and cash flows. In March 2021, May 2021, June 2017, CECONY issued $5002021, July 2021, and August 2021, the tax equity investor funded $39 million, $13 million, $47 million, $53 million and $111 million, respectively. The Clean Energy Businesses will continue to consolidate this entity and will report the noncontrolling tax equity investor’s interest in the tax equity arrangement. See Note P to the First Quarter Financial Statements.
In March 2021, a subsidiary of the Clean Energy Businesses agreed to issue $229 million aggregate principal amount of 3.8753.77 percent debentures,senior notes, due 2047,2046. In June 2021, July 2021, and August 2021 CED Nevada Virginia issued $38 million, $61 million and $130 million, respectively, of the net$229 million senior notes, which are secured by equity interests in CED Nevada and the proceeds from the sale of which were used to repay short-termrepaid a portion of the borrowings and for other general corporate purposes.outstanding under a construction loan facility.
Con Edison’s cash flows from financing for ninethe three months ended September 30, 2017March 31, 2022 and 20162021 also reflect the proceeds, and reduction in cash used for reinvested dividends, resulting from the issuance of common shares under the company’s dividend reinvestment, stock purchase and long-term incentive plans of $74$18 million and $77$28 million, respectively.
Cash flows used in financing activities of the Companies also reflect commercial paper issuances and repayments. The commercial paper amounts outstanding at September 30, 2017March 31, 2022 and 20162021 and the average daily balances for the ninethree months ended September 30, 2017March 31, 2022 and 20162021 for Con Edison and CECONY were as follows:
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| 2017 | 2016 | 2022 | 2021 | |||||||||||||||
| (Millions of Dollars, except Weighted Average Yield) | Outstanding at September 30, | Daily average | Outstanding at September 30, | Daily average | (Millions of Dollars, except Weighted Average Yield) | Outstanding at March 31, | Daily average | Outstanding at March 31, | Daily average | |||||||||
| Con Edison | $356 | $645 | $601 | $813 | Con Edison | $1,313 | $1,275 | $1,581 | $1,547 | |||||||||
| CECONY | $147 | $323 | $480 | $385 | CECONY | $1,061 | $1,089 | $1,427 | $1,492 | |||||||||
| Weighted average yield | 1.3 | 1.1 | 0.7 | 0.6 | Weighted average yield | 0.8 | % | 0.4 | % | 0.2 | % | 0.2 | % | |||||
Capital Requirements and Resources
| Ratio of Earnings to Fixed Charges | |||
| For the Nine Months Ended September 30, 2017 | For the Nine Months Ended September 30, 2016 | For the Twelve Months Ended December 31, 2016 | |
| Con Edison | 3.8 | 4.0 | 3.6 |
| CECONY | 3.9 | 3.8 | 3.6 |
Capital Resources
For each of the Companies, the common equity ratio at September 30, 2017March 31, 2022 and December 31, 20162021 was:
| Common Equity Ratio (Percent of total capitalization) | ||||||||
| March 31, 2022 | December 31, 2021 | |||||||
| Con Edison | 47.7 | 47.4 | ||||||
| CECONY | 47.5 | 47.0 | ||||||
Common Equity Ratio (Percent of total capitalization) | ||
| September 30, 2017 | December 31, 2016 | |
| Con Edison | 50.8 | 49.3 |
| CECONY | 50.9 | 49.5 |
The following table shows changes in certainCompanies' assets, liabilities, and liabilitiesequity at September 30, 2017, compared withMarch 31, 2022 and December 31, 2016.2021 are summarized as follows.
| CECONY | O&R | Clean Energy Businesses | Con Edison Transmission | Other (a) | Con Edison (b) | |||||||||||||||||||||||||||||||||
| (Millions of Dollars) | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||||||||
| ASSETS | ||||||||||||||||||||||||||||||||||||||
Current assets | $4,582 | $4,703 | $328 | $290 | $545 | $542 | $3 | $2 | $4 | $14 | $5,462 | $5,551 | ||||||||||||||||||||||||||
| Investments | 579 | 608 | 24 | 26 | — | — | 233 | 223 | (3) | (4) | 833 | 853 | ||||||||||||||||||||||||||
| Net plant | 42,015 | 41,613 | 2,616 | 2,599 | 4,370 | 4,367 | 17 | 17 | — | — | 49,018 | 48,596 | ||||||||||||||||||||||||||
| Other noncurrent assets | 6,037 | 5,731 | 391 | 377 | 1,639 | 1,645 | 7 | 7 | 350 | 356 | 8,424 | 8,116 | ||||||||||||||||||||||||||
| Total Assets | $53,213 | $52,655 | $3,359 | $3,292 | $6,554 | $6,554 | $260 | $249 | $351 | $366 | $63,737 | $63,116 | ||||||||||||||||||||||||||
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||||||||||||||||||||||||||||||||
| Current liabilities | $4,238 | $4,321 | $401 | $372 | $966 | $1,011 | $110 | $100 | $(300) | $(377) | $5,415 | $5,427 | ||||||||||||||||||||||||||
| Noncurrent liabilities | 13,973 | 13,640 | 1,087 | 1,064 | 162 | 121 | (89) | (90) | (17) | 14 | 15,116 | 14,749 | ||||||||||||||||||||||||||
| Long-term debt | 18,384 | 18,382 | 968 | 968 | 2,583 | 2,607 | — | — | 648 | 647 | 22,583 | 22,604 | ||||||||||||||||||||||||||
| Equity | 16,618 | 16,312 | 903 | 888 | 2,843 | 2,815 | 239 | 239 | 20 | 82 | 20,623 | 20,336 | ||||||||||||||||||||||||||
| Total Liabilities and Equity | $53,213 | $52,655 | $3,359 | $3,292 | $6,554 | $6,554 | $260 | $249 | $351 | $366 | $63,737 | $63,116 | ||||||||||||||||||||||||||
(a) Includes parent company and consolidation adjustments.
| Con Edison | CECONY | ||
| (Millions of Dollars) | 2017 vs. 2016 Variation | 2017 vs. 2016 Variation | |
| Assets | |||
| Prepayments | $433 | $398 | |
| Non-utility property, less accumulated depreciation | 204 | — | |
| Regulatory asset - Unrecognized pension and other postretirement costs | (248) | (254) | |
| Liabilities | |||
| Pension and retiree benefits | $(404) | $(394) | |
| Deferred income taxes and unamortized investment tax credits | 539 | 610 | |
| System benefit charge | 194 | 175 | |
CECONY
Current assets at March 31, 2022 were $121 million lower than at December 31, 2021. The change in current assets primarily reflects a decrease in cash and temporary cash investments ($871 million), primarily the portion allocabledue to the 2017 fourth quarter of CECONY's July 2017January 2022 payment of its New York City semi-annual property taxes.taxes and a decrease to deferral of unbilled late payment charges over the rate allowance that are being recovered through a surcharge mechanism established by the New York Public Service Commission in its November 2021 order ($44 million). The decrease is offset in part by an increase in prepayments reflecting primarily the January 2022 payment of New York City semi-annual property taxes, offset in part by three months of amortization, while the December 2021 balance reflects the amortization of the entire previous semi-annual payment made in July 2021 ($468 million), an increase in accounts receivables, net of allowance for uncollectible accounts ($185 million) (see “COVID-19 Regulatory Matters” in Note B to the First Quarter Financial Statements and “Coronavirus Disease 2019 (COVID-19) Impacts - Accounting Considerations” and “Liquidity and Financing,” above) and an increase in the fair value of short-term derivative assets ($157 million).
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Investments at March 31, 2022 were $29 million lower than at December 31, 2021. The change in investments primarily reflects a decrease in supplemental retirement income plan assets ($26 million) and deferred income plan assets ($3 million). See Note E to the First Quarter Financial Statements.
Net plant at March 31, 2022 was $402 million higher than at December 31, 2021. The change in net plant primarily reflects an increase in electric ($331 million), gas ($265 million), general ($68 million) and steam ($20 million) plant balances, offset in part by an increase in accumulated depreciation ($230 million) and a decrease in construction work in progress ($52 million).
Other noncurrent assets at March 31, 2022 were $306 million higher than at December 31, 2021. The change in other noncurrent assets primarily reflects an increase in pension and retiree benefits ($255 million), an increase in the regulatory asset for system peak reduction and energy efficiency programs ($45 million), deferred derivative losses ($35 million), deferred storm costs ($20 million) and deferrals for increased costs related to the COVID-19 pandemic ($20 million). The increase is offset in non-utility property, less accumulated depreciation, for Con Edison reflects the completion of construction of Con Edison Development's Upton County Solar renewable electric production project (see Con Edison Development, below).
Current liabilities at March 31, 2022 were $83 million lower than at December 31, 2021. The change in current liabilities primarily reflects decreases in notes payable ($300 million), accounts payable ($169 million) and accrued benefits for management incentive awards ($55 million), offset in part by increases in the regulatory liability for deferred derivative gains ($311 million), accrued interest ($108 million), increases in the regulatory liability for refundable energy costs ($17 million) and customer deposits ($13 million).
Noncurrent liabilities at March 31, 2022 were $333 million higher than at December 31, 2021. The change in noncurrent liabilities primarily reflects an increase in deferred income taxes and unamortized investment tax credits ($181 million) primarily due to accelerated tax depreciation, repair deductions and the prepayment of New York City property taxes. See Note J to the First Quarter Financial Statements. The change also reflects an increase in regulatory liabilities for unrecognized other postretirement costs ($199 million) and an increase in the liability for pension and retiree benefits ($23 million) that primarily reflects the final actuarial valuation, as measured at December 31, 2021, of the plans in accordance with the accounting rules for retirement benefits. See Notes E and F to the First Quarter Financial Statements. These increases are offset in part by a decrease in the regulatory liability for net unbilled revenue deferrals ($78 million).
Equity at March 31, 2022 was $306 million higher than at December 31, 2021. The change in equity primarily reflects net income for the three months ended March 31, 2022 ($475 million), capital contributions from parent ($75 million) in 2022, offset in part by common stock dividends to parent ($245 million) in 2022.
O&R
Current assets at March 31, 2022 were $38 million higher than at December 31, 2021. The change in current assets primarily reflects increases in the fair value of short-term derivative assets ($18 million), accounts receivables, net of allowance for uncollectible accounts ($16 million) and other receivables, net of allowance for uncollectible accounts ($5 million).
Net plant at March 31, 2022 was $17 million higher than at December 31, 2021. The change in net plant primarily reflects an increase in electric ($55 million), gas ($11 million), and general ($2 million) plant balances, offset in part by a decrease in construction work in progress ($40 million) and an increase in accumulated depreciation ($11 million).
Other noncurrent assets at March 31, 2022 were $14 million higher than at December 31, 2021. The change in
other noncurrent assets primarily reflects an increase in the regulatory asset for recoverable energy costs ($6 million), regulatory asset for unrecognized pension and other postretirement costs and the liability for pension and retiree benefits reflectsto reflect the final actuarial valuation, as measured at December 31, 2021, of the pension and other retiree benefit plans as measured at December 31, 2016, in accordance with the accounting rules for retirement benefits.benefits ($5 million), the fair value of long-term derivative assets ($4 million), pension and retiree benefits ($2 million), and operating lease right-of-use asset ($2 million). This increase is offset in part by a decrease in the regulatory asset for deferred pension and other postretirement benefits ($6 million). The change in
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the regulatory asset also reflects the year’speriod's amortization of accounting costs. See Notes B, E and F to the First Quarter Financial Statements.
Current liabilities at March 31, 2022 were $29 million higher than at December 31, 2021. The change in current liabilities primarily reflects an increase in the regulatory liability for deferred derivative gains ($27 million).
Noncurrent liabilities at March 31, 2022 were $23 million higher than at December 31, 2021. The change in noncurrent liabilities primarily reflects an increase in the liability for pension and retiree benefits ($9 million), long-term operating lease liabilities ($3 million), regulatory liabilities for allowance for cost of removal less salvage ($3 million), long-term deferred derivative gains ($3 million), and an increase in other deferred credits ($2 million).
Equity at March 31, 2022 was $15 million higher than at December 31, 2021. The change in equity primarily reflects net income for the three months ended March 31, 2022 ($30 million), offset in part contributionsby common stock dividends to parent ($14 million) in 2022.
Clean Energy Businesses
Current assets at March 31, 2022 were $3 million higher than at December 31, 2021. The change in current assets primarily reflects an increase in other currents assets ($60 million), accrued unbilled revenue ($7 million) and fair value of short-term derivative assets ($7 million), offset in part by a decrease in restricted cash ($69 million).
Net plant at March 31, 2022 was $3 million higher than at December 31, 2021. The change in net plant primarily reflects additional capital expenditures.
Other noncurrent assets at March 31, 2022 were $6 million lower than at December 31, 2021. The change in other noncurrent assets primarily reflects the divestiture of renewable electric projects.
Current liabilities at March 31, 2022 were $45 million lower than at December 31, 2021. The change in current liabilities primarily reflects a decrease in the fair value of derivative liabilities ($26 million) and a decrease in accounts payable ($18 million).
Noncurrent liabilities at March 31, 2022 were $41 million higher than at December 31, 2021. The change in noncurrent liabilities primarily reflects the increase of deferred taxes ($80 million), offset in part by the change in the fair value of derivative liabilities ($33 million).
Long-term debt at March 31, 2022 was $24 million lower than at December 31, 2021. The change in long-term debt primarily reflects the timing of principal loan repayment.
Equity at March 31, 2022 was $28 million higher than at December 31, 2021. The change in equity primarily reflects an increase in net income for the three months ended March 31, 2022 ($107 million), offset in part by a decrease in noncontrolling tax equity interest ($54 million) (see Note P to the plans made by the UtilitiesFirst Quarter Financial Statements) and common stock dividends to parent ($24 million) in 2017.2021.
Con Edison Transmission
Investments at March 31, 2022 were $10 million higher than at December 31, 2021. The increase in investments primarily reflects additional investment in NY Transco ($10 million). See Notes E and F"Investments" in Note A to the ThirdFirst Quarter Financial Statements.
Current liabilities at March 31, 2022 were $10 million higher than at December 31, 2021. The change in current liabilities primarily reflects an increase in the liability for deferred income taxes and unamortized investment tax credits for Con Edison and CECONY reflects primarily bonus depreciation in 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 Third Quarter Financial Statements.short-term borrowings under an intercompany capital funding facility.
Off-Balance Sheet Arrangements
Regulatory Matters
For additional information about the Utilities’ regulatory matters, see Note B to the ThirdFirst Quarter Financial Statements.
Environmental Matters
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In May 2017, a transformer failure atJuly 2021, a CECONY substation dischargedfeeder failure led to the discharge of thousands of gallons of transformer oil intodielectric fluid from a street manhole in New Rochelle, NY. Dielectric fluid reached nearby streets, properties and the soil. Some of the transformer oil, which contained small amounts of polychlorinated biphenyls (PCBs), leaked into the East River. The company,New Rochelle Harbor. CECONY, the U.S. Coast Guard, the New York State Department of Environmental ConservationNYSDEC and other agencies responded to the incident. TheCECONY stopped the feeder leak on the same day the discharge occurred and has completed the spill recovery operations. In coordination with federal and state regulators, CECONY is evaluating certain shoreline areas for the potential presence of residual dielectric fluid and the extent to which additional cleaning in such areas may be necessary. In addition, the company has replaced the transformer, and is continuing to remediate and monitor the site, thereceived third-party damage claims. The costs of whichassociated with this matter are not expected to have a material adverse effect on itsthe company’s financial condition, results of operations or liquidity. In connection with the incident, the company may incur monetary sanctions of more than $0.1$0.3 million for violations of certain provisions regulating the discharge of materials into, and for the protection of, the environment.
In June 2017, CECONY receivedAugust 2019, following the enactment of the Climate Leadership and Community Protection Act (CLCPA), the NYSPSC initiated a noticeproceeding to “reconcile resource adequacy programs with New York State’s renewable energy and environmental emission reduction goals.” In May 2020, the NYSPSC initiated a proceeding implementing the Accelerated Renewable Energy Growth and Community Benefit Act to align New York State’s electric system with CLCPA goals. In November 2020, NY’s investor-owned utilities (including the Utilities) and the Long Island Power Authority filed a comprehensive report in this proceeding, identifying proactive local transmission and distribution investments in their systems to facilitate achieving the goals 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 ListCLCPA and setting out policy recommendations for how they will identify, prioritize and allocate costs of Superfund sites. The EPA has identified fourteen potentially responsible parties (PRPs) with respect to the site, includingthese and future such projects going forward. CECONY and has indicated that it will notifyO&R identified approximately $4,500 million and $400 million, respectively, in local transmission investment. In January 2022, the company as additional PRPs are identified and notified by the EPA. Newtown Creek andNYSPSC issued 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 an administrative settlement agreement and order on consentpower grid study recommendations that authorized CECONY to file a comprehensive petition addressing a proposed “Con Edison Hub” in Brooklyn, NY that could accommodate offshore wind generation. In April 2022, CECONY filed the EPA issued to them in 2011, have been performing a remedial investigation of the site. The EPA indicated that sampling events have shown the sediments in Newtown Creek to be contaminated with a wide variety of hazardous substances including PCBs, metals, pesticides, polycyclic aromatic hydrocarbons and 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 studypetition, seeking cost recovery approval for the site by late 2018proposed Con Edison Hub at an estimated cost of $1,000 million and issuancean estimated in-service date of its record2027. The proposed Con Edison Hub would create interconnection points to connect up to 6,000 MW of decision selecting a remedy for the site by late 2020. CECONY is unable to estimate its exposure to liability for the Newtown Creek site.
For additional information about the Companies’ environmental matters, see Note G to the ThirdFirst Quarter Financial Statements.
Clean Energy Businesses
The following table provides information about the Clean Energy Businesses' renewable electric production projects Con Edison Development ownedthat are in operation and/or in construction at September 30, 2017:March 31, 2022:
| Project Name | Generating Capacity (MW AC) | Power Purchase Agreement (PPA) Term (In Years) (a) | Actual In-Service/Acquisition Date | State | PPA Counterparty | ||||||||||||
| Utility Scale | |||||||||||||||||
| Solar | |||||||||||||||||
| PJM assets (c) | 73 | (b) | 2011/2013 | NJ/PA | Various | ||||||||||||
| New England assets (c) | 24 | Various | 2011/2017 | MA/RI | Various | ||||||||||||
| California Solar | 110 | 25 | 2012/2013 | CA | PG&E | ||||||||||||
| Mesquite Solar 1 | 165 | 20 | 2013 | AZ | PG&E | ||||||||||||
| Copper Mountain Solar 2 | 150 | 25 | 2013/2015 | NV | PG&E | ||||||||||||
| Copper Mountain Solar 3 | 255 | 20 | 2014/2015 | NV | SCPPA | ||||||||||||
| California Solar 2 | 80 | 20 | 2014/2016 | CA | SCE/PG&E | ||||||||||||
| Texas Solar 4 | 40 | 25 | 2014 | TX | City of San Antonio | ||||||||||||
| Texas Solar 5 | 100 | 25 | 2015 | TX | City of San Antonio | ||||||||||||
| Texas Solar 7 | 112 | 25 | 2016 | TX | City of San Antonio | ||||||||||||
| California Solar 3 | 110 | 20 | 2016/2017 | CA | SCE/PG&E | ||||||||||||
| Upton Solar | 158 | 25 | 2017 | TX | City of Austin | ||||||||||||
| California Solar 4 | 240 | 20 | 2017/2018 | CA | SCE | ||||||||||||
| Copper Mountain Solar 1 | 58 | 12 | 2018 | NV | PG&E | ||||||||||||
| Copper Mountain Solar 4 (d) | 94 | 20 | 2018 | NV | SCE | ||||||||||||
| Mesquite Solar 2 (d) | 100 | 18 | 2018 | AZ | SCE | ||||||||||||
| Mesquite Solar 3 (d) | 150 | 23 | 2018 | AZ | WAPA (U.S. Navy) | ||||||||||||
| Great Valley Solar (d) | 200 | 17 | 2018 | CA | MCE/SMUD/PG&E/SCE | ||||||||||||
| Water Strider Solar (d) | 80 | 20 | 2021 | VA | VEPCO | ||||||||||||
| Battle Mountain Solar/Battery Energy Storage System (d) | 101 | 25 | 2021 | NV | SPP | ||||||||||||
| Copper Mountain Solar 5 (d) | 250 | 25 | 2021 | NV | NPC | ||||||||||||
| Other (c) | 26 | Various | Various | Various | Various | ||||||||||||
| Total Solar | 2,676 | ||||||||||||||||
| Wind | |||||||||||||||||
| Broken Bow II | 75 | 25 | 2014 | NE | NPPD | ||||||||||||
| Wind Holdings | 180 | Various | Various | SD/MT | NWE/Basin Electric | ||||||||||||
| Adams Rose Wind | 23 | 7 | 2016 | MN | Dairyland | ||||||||||||
| Other (c) | 42 | Various | Various | Various | Various | ||||||||||||
| Total Wind | 320 | ||||||||||||||||
| Total MW (AC) in Operation | 2,996 | ||||||||||||||||
| Total MW (AC) in Construction (c) | 48 | ||||||||||||||||
| Total MW (AC) Utility Scale | 3,044 | ||||||||||||||||
| Behind the Meter | |||||||||||||||||
| Total MW (AC) in Operation (c) | 66 | ||||||||||||||||
| Total MW (AC) in Construction (c) | 3 | ||||||||||||||||
| Total MW Behind the Meter | 69 | ||||||||||||||||
| Project Name | 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 | Solar | 18 | (d) | 2011 | New Jersey |
| Flemington Solar | Solar | 8 | (d) | 2011 | New Jersey |
| Frenchtown I, II and III | Solar | 14 | (d) | 2011-13 | New Jersey |
| PA Solar | Solar | 10 | 2012 | Pennsylvania | |
| California Solar 2 (e) | Solar | 80 | 20 | 2014-16 | California |
| Oak Tree Wind | Wind | 20 | 20 | 2014 | South Dakota |
| Texas Solar 3 | Solar | 6 | 25 | 2015 | Texas |
| Texas Solar 5 (e) | Solar | 95 | 25 | 2015 | Texas |
| Campbell County Wind | Wind | 95 | 30 | 2015 | South Dakota |
| Texas Solar 7 (e) | 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 |
| Upton County Solar (e) | Solar | 158 | 25 | 2017 | Texas |
| Projects of less than 5 MW | Solar / Wind | 25 | Various | Various | Various |
| Jointly owned projects (e) (f) | |||||
| California Solar | Solar | 55 | 25 | 2012-13 | California |
| Mesquite Solar 1 | Solar | 83 | 20 | 2013 | Arizona |
| Copper Mountain Solar 2 | Solar | 75 | 25 | 2013-15 | Nevada |
| Copper Mountain Solar 3 | Solar | 128 | 20 | 2014-15 | Nevada |
| Broken Bow II | Wind | 38 | 25 | 2014 | Nebraska |
| Texas Solar 4 | Solar | 32 | 25 | 2014 | Texas |
| Total MW (AC) in Operation | 1,291 | ||||
| Panoche Valley | Solar | 240 | 20 | 2018 | California |
| Total MW (AC) in Construction | 240 | ||||
| Total MW (AC), All Projects | 1,531 | ||||
(a) Represents Con Edison Development’s ownership interest in the project.
(d)Projects are financed with tax equity. See Note P to secure financingthe First Quarter Financial Statements
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Renewable Electric Generation
Renewable electric production volumes from utility scale assets for the project.three months ended March 31, 2022 compared with the 2021 period were:
| Millions of kWh | ||||||||||||||||||||||||||
| For the Three Months Ended | ||||||||||||||||||||||||||
| Description | March 31, 2022 | March 31, 2021 | Variation | Percent Variation | ||||||||||||||||||||||
| Renewable electric projects | ||||||||||||||||||||||||||
| Solar | 1,505 | 1,211 | 294 | 24.3 | % | |||||||||||||||||||||
| Wind | 371 | 342 | 29 | 8.5 | % | |||||||||||||||||||||
| Total | 1,876 | 1,553 | 323 | 20.8 | % | |||||||||||||||||||||
Con Edison Development's renewable electric production volumes generatedTransmission
CET Gas
In May 2022, the operator of the Mountain Valley Pipeline, which is being constructed by a joint venture in which CET Gas owns a 10.0 percent interest (which is expected to be reduced to 8.0 percent based on the latest project cost estimate and CET Gas’ previous capping of its cash contributions to the joint venture), indicated it plans to pursue new permits and is now targeting a full in-service date during the second half of 2023 at a total project cost of approximately $6,600 million, excluding allowance for funds used during construction. At March 31, 2022, CET Gas’ carrying value of its investment in MVP was $111 million and CET Gas’ cash contributions to the three and nine months ended September 30, 2017 compared with the 2016 period were:joint venture amounted to $530 million.
| Millions of kWh Generated | |||||||||||||
| For the Three Months Ended | For the Nine Months Ended | ||||||||||||
| Description | September 30, 2017 | September 30, 2016 | Variation | Percent Variation | September 30, 2017 | September 30, 2016 | Variation | Percent Variation | |||||
| Renewable electric production projects | |||||||||||||
| Solar | 668 | 458 | 210 | 45.9 | % | 1,679 | 1,215 | 464 | 38.2 | % | |||
| Wind | 217 | 137 | 80 | 58.4 | % | 734 | 464 | 270 | 58.2 | % | |||
| Total | 885 | 595 | 290 | 48.7 | % | 2,413 | 1,679 | 734 | 43.7 | % | |||
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’Companies' interest rate risk relates primarily to variable rate debt andrelates to new debt financing needed to fund capital requirements, including the construction expenditures of the Utilities and maturing debt securities.securities, and variable-rate debt. Con Edison and its businessessubsidiaries manage interest rate risk through the issuance of mostly fixed-rate debt with varying maturities and through opportunistic refinancing of debt. The Clean Energy Businesses use interest rate swaps to exchange variable-rate project financed debt for a fixed interest rate. See Note N to the First Quarter Financial Statements. Con Edison and CECONY estimate that at September 30, 2017,March 31, 2022, a 10 percent increase in interest rates applicable to its variable rate debt would result in an increase in annual interest expense of $2$1 million. Under CECONY’s current electric, gas and steam rate plans, variations in actual variable rate tax-exempt debt interest expense, including costs associated with the refinancing of the variable rate tax-exempt debt, are reconciled to levels reflected in rates.
Commodity Price Risk
Con Edison’s commodity price risk primarily relates primarily to the purchase and sale of electricity, gas and related derivative instruments. The Utilities and the Clean Energy Businesses apply risk management strategies to mitigate their related exposures. See Note KN to the ThirdFirst Quarter Financial Statements.
Con Edison estimates that, as of September 30, 2017,March 31, 2022, a 10 percent decline in market prices would result in a decline in fair value of $66$152 million for the derivative instruments used by the Utilities to hedge purchases of electricity and gas, of which $60$135 million is for CECONY and $6$17 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.
The Utilities do not make any margin or profit on the electricity or gas they sell. In accordance with provisions
approved by state regulators, the Utilities generally recover from full-service customers the costs they incur for energy purchased for theirthose customers, including gains and losses on certain derivative instruments used to hedge energy purchased and related costs. However, increases in electric and gas commodity prices may contribute to a slower recovery of cash from outstanding customer accounts receivable balances and increases to the allowance for uncollectible accounts, and may result in increases to write-offs of customer accounts receivable balances.
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In February 2022, the NYSPSC, in response to higher customer bills, requested that CECONY enhance its efforts to mitigate customer bill volatility due to commodity price increases by reassessing its power supply billing practices and improve communications to customers regarding forecasted significant bill increases resulting from commodity price increases. In March 2022, CECONY filed with the NYSPSC a proposed amendment to its electric tariff, effective June 1, 2022, to change how CECONY recovers the cost of electricity supplied to its full-service electric customers to reduce the likelihood of customer bill volatility by more closely aligning supply prices with CECONY's electric supply hedging positions. The proposed amendment is subject to NYSPSC approval. CECONY also committed to provide notice to customers in cases where supply price increases could result in significantly higher bills.
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 ninethree months ended September 30, 2017March 31, 2022 and the year ended December 31, 2016,2021, respectively, was as follows:
| 95% Confidence Level, One-Day Holding Period | March 31, 2022 | December 31, 2021 | ||||||
| (Millions of Dollars) | ||||||||
| Average for the period | $1 | $1 | ||||||
| High | 2 | 3 | ||||||
| Low | 1 | — | ||||||
| 95% Confidence Level, One-Day Holding Period | September 30, 2017 | December 31, 2016 | ||
| (Millions of Dollars) | ||||
| Average for the period | $— | $2 | ||
| High | 1 | 4 | ||
| Low | — | 1 | ||
Investment Risk
The Companies’ investment risk relates to the investment of plan assets for their pension and other postretirement benefit plans andplans. Con Edison's investment risk also relates to the investments of the Clean Energy Businesses and Con Edison Transmission that are accounted for under the equity method. See "Investments" in Note A to the First Quarter Financial Statements.
The Companies’ current investment policy for pension plan assets includes investment targets of 5345 to 6355 percent equitiesequity securities, 33 to 43 percent debt securities and 3510 to 4914 percent fixed income and other securities.real estate. At September 30, 2017,March 31, 2022, the pension plan investments consisted of 5849 percent equity securities, 38 percent debt securities and 4213 percent fixed income and other securities.real estate.
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 NY rate plans.
Material Contingencies
For information concerning potential liabilities arising from the Companies’ material contingencies, see "Other Regulatory Matters" in Note B and Notes G and H to the ThirdFirst 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 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
| 10.1 | |||||
| Exhibit 101.INS | XBRL Instance | ||||
| 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. | ||||
| Exhibit 104 | Cover Page Interactive Data File - the cover page XBRL tags are embedded within the Inline XBRL document. | ||||
CECONY
| 10.2 | 364-Day Revolving Credit Agreement, dated as of March 31, 2022, among CECONY, | ||||
| Exhibit 101.INS | XBRL Instance | ||||
| 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. | ||||
| Exhibit 104 | Cover Page Interactive Data File - the cover page XBRL tags are embedded within the Inline XBRL document. | ||||
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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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: | By | /s/ Robert Hoglund | ||||||
Robert Hoglund Senior Vice President, Chief Financial Officer and Duly Authorized Officer | ||||||||
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