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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
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☒ | Quarterly Report Pursuant To Section 13 or 15(d) of the Securities Exchange Act of 1934 |
FOR THE QUARTERLY PERIOD ENDED September 30, 20222023
OR
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☐ | Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
For the transition period from to
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Commission File Number | | Exact name of registrant as specified in its charter and principal executive office address and telephone number | | State of Incorporation | | I.R.S. Employer ID. Number |
1-14514 | | Consolidated Edison, Inc. | | New York | | 13-3965100 |
| | 4 Irving Place, | New York, | New York | 10003 | | | | |
| | (212) | 460-4600 | | | | | | |
1-01217 | | Consolidated Edison Company of New York, Inc. | | New York | | 13-5009340 |
| | 4 Irving Place, | New York, | New York | 10003 | | | | |
| | (212) | 460-4600 | | | | | | |
Securities Registered Pursuant to Section 12(b) of the Act:
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Title of each class | | Trading Symbol | | Name of each exchange on which registered |
Consolidated Edison, Inc., | | ED | | New York Stock Exchange |
Common Shares ($.10 par value) | | | | |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
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Consolidated Edison, Inc. (Con Edison) | Yes | ☒ | No ☐ |
Consolidated Edison Company of New York, Inc. (CECONY) | Yes | ☒ | No ☐ |
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
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Con Edison | Yes | ☒ | No ☐ |
CECONY | Yes | ☒ | No ☐ |
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
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Con Edison |
Large accelerated filer | ☒ | | Accelerated filer ☐
| | Non-accelerated filer | ☐ |
Smaller reporting company | ☐ | Emerging growth company | ☐ | | |
CECONY |
Large accelerated filer | ☐ | | Accelerated filer ☐ | | Non-accelerated filer | ☒ |
Smaller reporting company | ☐ | Emerging growth company | ☐ | | |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
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Con Edison | Yes | ☐ | No | ☒ |
CECONY | Yes | ☐ | No | ☒ |
As of October 31, 2022,2023, Con Edison had outstanding 354,862,848345,219,779 Common Shares ($.10 par value). All of the outstanding common equity of CECONY is held by Con Edison.
Filing Format
This Quarterly Report on Form 10-Q is a combined report being filed separately by two different registrants: Consolidated Edison, Inc. (Con Edison) and Consolidated Edison Company of New York, Inc. (CECONY). CECONY is a wholly-owned subsidiary of Con Edison and, as such, the information in this report about CECONY also applies to Con Edison. As used in this report, the term the “Companies” refers to Con Edison and CECONY. However, CECONY makes no representation as to the information contained in this report relating to Con Edison or the subsidiaries of Con Edison other than itself.
Glossary of Terms
The following is a glossary of abbreviations or acronyms that are used in the Companies’ SEC reports:
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Con Edison Companies |
Con Edison | | Consolidated Edison, Inc. |
CECONY | | Consolidated Edison Company of New York, Inc. |
Clean Energy Businesses | | Con Edison Clean Energy Businesses, Inc., together with its subsidiaries, including Consolidated Edison Development, Inc., Consolidated Edison Energy, Inc. and Consolidated Edison Solutions, Inc. |
Con Edison Transmission | | Con Edison Transmission, Inc., together with its subsidiaries |
CET Electric | | Consolidated Edison Transmission, LLC |
CET Gas | | Con Edison Gas Pipeline and Storage, LLC |
O&R | | Orange and Rockland Utilities, Inc. |
RECO | | Rockland Electric Company |
The Companies | | Con Edison and CECONY |
The Utilities | | CECONY and O&R |
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Regulatory Agencies, Government Agencies and Other Organizations |
EPA | | U.S. Environmental Protection Agency |
FASB | | Financial Accounting Standards Board |
FERC | | Federal Energy Regulatory Commission |
IRS | | Internal Revenue Service |
NJBPU | | New Jersey Board of Public Utilities |
NJDEP | | New Jersey Department of Environmental Protection |
NYISO | | New York Independent System Operator |
NYPA | | New York Power Authority |
NYSDEC | | New York State Department of Environmental Conservation |
NYSDPS | | New York State Department of Public Service |
NYSERDA | | New York State Energy Research and Development Authority |
NYSPSC | | New York State Public Service Commission |
NYSRC | | New York State Reliability Council, LLC |
OTDA | | Office of Temporary and Disability Assistance |
PJM | | PJM Interconnection LLC |
SEC | | U.S. Securities and Exchange Commission |
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Accounting | | |
AFUDC | | Allowance for funds used during construction |
ASU | | Accounting Standards Update |
GAAP | | Generally Accepted Accounting Principles in the United States of America |
HLBV | | Hypothetical Liquidation at Book Value |
NOL | | Net Operating Loss |
OCI | | Other Comprehensive Income |
VIE | | Variable Interest Entity |
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Environmental | | |
CO2 | | Carbon dioxide |
GHG | | Greenhouse gases |
MGP Sites | | Manufactured gas plant sites |
PCBs | | Polychlorinated biphenyls |
PRP | | Potentially responsible party |
RGGI | | Regional Greenhouse Gas Initiative |
Superfund | | Federal Comprehensive Environmental Response, Compensation and Liability Act of 1980 and similar state statutes |
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Units of Measure | | |
AC | | Alternating current |
Bcf | | Billion cubic feet |
Dt | | Dekatherms |
kV | | Kilovolt |
kWh | | Kilowatt-hour |
MDt | | Thousand dekatherms |
MMlb | | Million pounds |
MVA | | Megavolt ampere |
MW | | Megawatt or thousand kilowatts |
MWh | | Megawatt hour |
| | |
Other | | |
AMI | | Advanced Metering Infrastructure |
CARES Act | | Coronavirus Aid, Relief, and Economic Security Act, as enacted on March 27, 2020 |
CLCPA | | Climate Leadership and Community Protection Act |
COSO | | Committee of Sponsoring Organizations of the Treadway Commission |
COVID-19 | | Coronavirus Disease 2019 |
DER | | Distributed energy resources |
Fitch | | Fitch Ratings |
First Quarter Form 10-Q | | The Companies' combined Quarterly Report on Form 10-Q for the quarterly period ended March 31 of the current year |
Second Quarter Form 10-Q | | The Companies' combined Quarterly Report on Form 10-Q for the quarterly period ended June 30 of the current year |
Third Quarter Form 10-Q | | The Companies' combined Quarterly Report on Form 10-Q for the quarterly period ended September 30 of the current year |
Form 10-K | | The Companies’ combined Annual Report on Form 10-K for the year ended December 31, 2021 |
LTIP | | Long Term Incentive Plan |
Moody’s | | Moody’s Investors Service |
REV | | Reforming the Energy Vision |
S&P | | S&P Global Ratings |
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TCJA | | The federal Tax Cuts and Jobs Act of 2017, as enacted on December 22, 2017 |
VaR | | Value-at-Risk |
TABLE OF CONTENTS
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ITEM 1 | Financial Statements (Unaudited) | |
| Con Edison | |
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| CECONY | |
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ITEM 2 | | |
ITEM 3 | | |
ITEM 4 | | |
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ITEM 1 | | |
ITEM 1A | | |
ITEM 6 | | |
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FORWARD-LOOKING STATEMENTS
This report contains forward-looking statements that are intended to qualify for the safe-harbor provisions of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are statements of future expectations and not facts. Words such as “forecasts,” “expects,” “estimates,” “anticipates,” “intends,” “believes,” “plans,” “will,” “target,” “guidance,” “potential,” “consider” and similar expressions identify forward-looking statements. The forward-looking statements reflect information available and assumptions at the time the statements are made, and accordingly speak only as of that time. Actual results or developments might differ materially from those included in the forward-looking statements because of various factors such as those identified in reports the Companies have filed with the Securities and Exchange Commission, including, but not limited to:
•the Companies are extensively regulated and are subject to substantial penalties;
•the Utilities’ rate plans may not provide a reasonable return;
•the Companies may be adversely affected by changes to the Utilities’ rate plans;
•the failure of, or damage to, the Companies’ facilities could adversely affect the Companies;
•a cyber attack could adversely affect the Companies;
•the failure of processes and systems and the performance ofand failure to retain and attract employees and contractors could adversely affect the Companies;
•the Companies are exposed to risks from the environmental consequences of their operations, including increased costs related to climate change;
•Con Edison’s ability to pay dividends or interest depends on dividends from its subsidiaries;
•changes to tax laws could adversely affect the Companies;
•the Companies require access to capital markets to satisfy funding requirements;
•a disruption in the wholesale energy markets, increased commodity costs or failure by an energy supplier or customer could adversely affect the Companies;
•the Companies may have substantial unfunded pension and other postretirement benefit liabilities;
•the Companies face risks related to health epidemics and other outbreaks, including the COVID-19 pandemic;outbreaks;
•the Companies’ strategies may not be effective to address changes in the external business environment;
•the Companies face risks related to supply chain disruption and inflation; and
•the Companies also face other risks that are beyond their control, including inflation and supply chain disruptions.control.
The Companies assume no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
Consolidated Edison, Inc.
CONSOLIDATED INCOME STATEMENT (UNAUDITED)
| | | For the Three Months Ended September 30, | For the Nine Months Ended September 30, | | For the Three Months Ended September 30, | For the Nine Months Ended September 30, |
(Millions of Dollars/Except Share Data) | (Millions of Dollars/Except Share Data) | 2022 | 2021 | 2022 | 2021 | (Millions of Dollars/Except Share Data) | 2023 | 2022 | 2023 | 2022 |
OPERATING REVENUES | OPERATING REVENUES | | OPERATING REVENUES | | |
Electric | Electric | $3,328 | $2,952 | $7,994 | $7,180 | Electric | $3,469 | $3,328 | $8,309 | $7,994 |
Gas | Gas | 453 | 341 | 2,345 | 1,907 | Gas | 353 | 453 | 2,354 | 2,345 |
Steam | Steam | 58 | 55 | 444 | 393 | Steam | 49 | 58 | 425 | 444 |
Non-utility | Non-utility | 326 | 265 | 856 | 781 | Non-utility | 1 | 326 | 131 | 856 |
TOTAL OPERATING REVENUES | TOTAL OPERATING REVENUES | 4,165 | 3,613 | 11,639 | 10,261 | TOTAL OPERATING REVENUES | 3,872 | 4,165 | 11,219 | 11,639 |
OPERATING EXPENSES | OPERATING EXPENSES | | OPERATING EXPENSES | | |
Purchased power | Purchased power | 731 | 548 | 1,851 | 1,448 | Purchased power | 796 | 731 | 1,993 | 1,851 |
Fuel | Fuel | 59 | 44 | 255 | 166 | Fuel | 34 | 59 | 241 | 255 |
Gas purchased for resale | Gas purchased for resale | 185 | 83 | 833 | 461 | Gas purchased for resale | 73 | 185 | 640 | 833 |
Other operations and maintenance | Other operations and maintenance | 999 | 849 | 2,785 | 2,443 | Other operations and maintenance | 933 | 999 | 2,678 | 2,785 |
Depreciation and amortization | Depreciation and amortization | 525 | 512 | 1,593 | 1,511 | Depreciation and amortization | 512 | 525 | 1,506 | 1,593 |
Taxes, other than income taxes | Taxes, other than income taxes | 777 | 727 | 2,248 | 2,103 | Taxes, other than income taxes | 801 | 777 | 2,282 | 2,248 |
TOTAL OPERATING EXPENSES | TOTAL OPERATING EXPENSES | 3,276 | 2,763 | 9,565 | 8,132 | TOTAL OPERATING EXPENSES | 3,149 | 3,276 | 9,340 | 9,565 |
| Gain (Loss) on sale of the Clean Energy Businesses | | Gain (Loss) on sale of the Clean Energy Businesses | (1) | — | 866 | — |
OPERATING INCOME | OPERATING INCOME | 889 | 850 | 2,074 | 2,129 | OPERATING INCOME | 722 | 889 | 2,745 | 2,074 |
OTHER INCOME (DEDUCTIONS) | OTHER INCOME (DEDUCTIONS) | | OTHER INCOME (DEDUCTIONS) | | |
Investment income (loss) | 5 | 15 | (180) | |
Investment income | | Investment income | 8 | 5 | 23 | 15 |
Other income | Other income | 101 | 5 | 296 | 19 | Other income | 210 | 101 | 625 | 296 |
Allowance for equity funds used during construction | Allowance for equity funds used during construction | 4 | 5 | 15 | Allowance for equity funds used during construction | 7 | 4 | 20 | 15 |
Other deductions | Other deductions | (21) | (37) | (57) | (113) | Other deductions | (18) | (21) | (57) |
TOTAL OTHER INCOME (DEDUCTIONS) | 89 | (22) | 269 | (259) | |
TOTAL OTHER INCOME | | TOTAL OTHER INCOME | 207 | 89 | 611 | 269 |
INCOME BEFORE INTEREST AND INCOME TAX EXPENSE | INCOME BEFORE INTEREST AND INCOME TAX EXPENSE | 978 | 828 | 2,343 | 1,870 | INCOME BEFORE INTEREST AND INCOME TAX EXPENSE | 929 | 978 | 3,356 | 2,343 |
INTEREST EXPENSE (INCOME) | INTEREST EXPENSE (INCOME) | | INTEREST EXPENSE (INCOME) | | |
Interest on long-term debt | Interest on long-term debt | 246 | 235 | 728 | 693 | Interest on long-term debt | 234 | 246 | 719 | 728 |
Other interest expense (income) | Other interest expense (income) | (32) | (2) | (119) | (15) | Other interest expense (income) | 39 | (32) | 78 | (119) |
Allowance for borrowed funds used during construction | Allowance for borrowed funds used during construction | (15) | (1) | (23) | (9) | Allowance for borrowed funds used during construction | (14) | (15) | (39) | (23) |
NET INTEREST EXPENSE | NET INTEREST EXPENSE | 199 | 232 | 586 | 669 | NET INTEREST EXPENSE | 259 | 199 | 758 | 586 |
INCOME BEFORE INCOME TAX EXPENSE | INCOME BEFORE INCOME TAX EXPENSE | 779 | 596 | 1,757 | 1,201 | INCOME BEFORE INCOME TAX EXPENSE | 670 | 779 | 2,598 | 1,757 |
INCOME TAX EXPENSE | INCOME TAX EXPENSE | 160 | 127 | 330 | 194 | INCOME TAX EXPENSE | 144 | 160 | 416 | 330 |
NET INCOME | NET INCOME | 619 | 469 | 1,427 | 1,007 | NET INCOME | 526 | 619 | 2,182 | 1,427 |
Income (loss) attributable to non-controlling interest | 6 | (69) | (43) | (115) | |
Income (Loss) attributable to non-controlling interest | | Income (Loss) attributable to non-controlling interest | — | 6 | (3) | (43) |
NET INCOME FOR COMMON STOCK | NET INCOME FOR COMMON STOCK | $613 | $538 | $1,470 | $1,122 | NET INCOME FOR COMMON STOCK | $526 | $613 | $2,185 | $1,470 |
Net income per common share—basic | Net income per common share—basic | $1.73 | $1.52 | $4.15 | $3.23 | Net income per common share—basic | $1.53 | $1.73 | $6.27 | $4.15 |
Net income per common share—diluted | Net income per common share—diluted | $1.72 | $1.52 | $4.13 | $3.23 | Net income per common share—diluted | $1.52 | $1.72 | $6.24 | $4.13 |
AVERAGE NUMBER OF SHARES OUTSTANDING—BASIC (IN MILLIONS) | AVERAGE NUMBER OF SHARES OUTSTANDING—BASIC (IN MILLIONS) | 354.6 | 353.4 | 354.4 | 346.8 | AVERAGE NUMBER OF SHARES OUTSTANDING—BASIC (IN MILLIONS) | 345.0 | 354.6 | 348.4 | 354.4 |
AVERAGE NUMBER OF SHARES OUTSTANDING—DILUTED (IN MILLIONS) | AVERAGE NUMBER OF SHARES OUTSTANDING—DILUTED (IN MILLIONS) | 355.9 | 354.1 | 355.7 | 347.5 | AVERAGE NUMBER OF SHARES OUTSTANDING—DILUTED (IN MILLIONS) | 346.5 | 355.9 | 349.9 | 355.7 |
The accompanying notes are an integral part of these financial statements.
Consolidated Edison, Inc.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED)
| | | Three Months Ended September 30, | Nine Months Ended September 30, | | Three Months Ended September 30, | Nine Months Ended September 30, |
(Millions of Dollars) | (Millions of Dollars) | 2022 | 2021 | 2022 | 2021 | (Millions of Dollars) | 2023 | 2022 | 2023 | 2022 |
NET INCOME | NET INCOME | $619 | $469 | $1,427 | $1,007 | NET INCOME | $526 | $619 | $2,182 | $1,427 |
(INCOME) LOSS ATTRIBUTABLE TO NON-CONTROLLING INTEREST | (INCOME) LOSS ATTRIBUTABLE TO NON-CONTROLLING INTEREST | (6) | 69 | 43 | 115 | (INCOME) LOSS ATTRIBUTABLE TO NON-CONTROLLING INTEREST | — | (6) | 3 | 43 |
OTHER COMPREHENSIVE INCOME, NET OF TAXES | OTHER COMPREHENSIVE INCOME, NET OF TAXES | | OTHER COMPREHENSIVE INCOME, NET OF TAXES | |
Pension and other postretirement benefit plan liability adjustments, net of taxes | Pension and other postretirement benefit plan liability adjustments, net of taxes | 1 | 2 | 6 | 8 | Pension and other postretirement benefit plan liability adjustments, net of taxes | — | 1 | | 3 | 6 | |
| TOTAL OTHER COMPREHENSIVE INCOME, NET OF TAXES | TOTAL OTHER COMPREHENSIVE INCOME, NET OF TAXES | 1 | 2 | 6 | 8 | TOTAL OTHER COMPREHENSIVE INCOME, NET OF TAXES | — | 1 | | 3 | 6 | |
COMPREHENSIVE INCOME | COMPREHENSIVE INCOME | $614 | $540 | $1,476 | $1,130 | COMPREHENSIVE INCOME | $526 | $614 | $2,188 | $1,476 |
The accompanying notes are an integral part of these financial statements.
Consolidated Edison, Inc.
CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
| | | For the Nine Months Ended September 30, | | For the Nine Months Ended September 30, |
(Millions of Dollars) | (Millions of Dollars) | 2022 | 2021 | (Millions of Dollars) | 2023 | 2022 |
OPERATING ACTIVITIES | OPERATING ACTIVITIES | | OPERATING ACTIVITIES | |
Net income | Net income | $1,427 | $1,007 | Net income | $2,182 | $1,427 |
PRINCIPAL NON-CASH CHARGES/(CREDITS) TO INCOME | PRINCIPAL NON-CASH CHARGES/(CREDITS) TO INCOME | | PRINCIPAL NON-CASH CHARGES/(CREDITS) TO INCOME | |
Depreciation and amortization | Depreciation and amortization | 1,593 | 1,511 | Depreciation and amortization | 1,506 | 1,593 |
Investment loss/impairment | — | 211 | | |
| Deferred income taxes | Deferred income taxes | 317 | 167 | Deferred income taxes | 99 | 317 |
| Rate case amortization and accruals | | Rate case amortization and accruals | 67 | 55 |
| Net derivative gains | Net derivative gains | (161) | (26) | Net derivative gains | 11 | (161) |
| Pre-tax gain on sale of the Clean Energy Businesses | | Pre-tax gain on sale of the Clean Energy Businesses | (866) | — | |
Other non-cash items, net | Other non-cash items, net | 195 | 7 | Other non-cash items, net | (87) | 180 |
CHANGES IN ASSETS AND LIABILITIES | CHANGES IN ASSETS AND LIABILITIES | | CHANGES IN ASSETS AND LIABILITIES | |
Accounts receivable – customers | Accounts receivable – customers | (140) | (387) | Accounts receivable – customers | 179 | (140) |
Allowance for uncollectible accounts – customers | Allowance for uncollectible accounts – customers | (12) | 165 | Allowance for uncollectible accounts – customers | (46) | (12) |
| Materials and supplies, including fuel oil and gas in storage | | Materials and supplies, including fuel oil and gas in storage | 53 | (96) |
Revenue decoupling mechanism receivable | | Revenue decoupling mechanism receivable | (130) | 23 |
Other receivables and other current assets | Other receivables and other current assets | (193) | (234) | Other receivables and other current assets | 144 | (120) |
| Unbilled revenue and net unbilled revenue deferrals | | Unbilled revenue and net unbilled revenue deferrals | 78 | (40) |
Prepayments | Prepayments | (588) | (576) | Prepayments | (841) | (588) |
Accounts payable | Accounts payable | 61 | (15) | Accounts payable | (573) | 61 |
Pensions and retiree benefits obligations, net | Pensions and retiree benefits obligations, net | 105 | 237 | Pensions and retiree benefits obligations, net | (161) | 105 |
Pensions and retiree benefits contributions | Pensions and retiree benefits contributions | (34) | (467) | Pensions and retiree benefits contributions | (30) | (34) |
Accrued taxes | Accrued taxes | (10) | (27) | Accrued taxes | (1) | (10) |
Accrued interest | Accrued interest | 126 | Accrued interest | 108 | | 126 |
| Distributions from equity investments | Distributions from equity investments | 14 | 18 | Distributions from equity investments | 23 | 14 |
| Deferred charges, noncurrent assets, leases, net and other regulatory assets | Deferred charges, noncurrent assets, leases, net and other regulatory assets | (550) | (478) | Deferred charges, noncurrent assets, leases, net and other regulatory assets | (613) | (550) |
Deferred credits, noncurrent liabilities and other regulatory liabilities | Deferred credits, noncurrent liabilities and other regulatory liabilities | 468 | 612 | Deferred credits, noncurrent liabilities and other regulatory liabilities | (31) | 468 |
Other current liabilities | Other current liabilities | — | (139) | Other current liabilities | 110 | — |
NET CASH FLOWS FROM OPERATING ACTIVITIES | NET CASH FLOWS FROM OPERATING ACTIVITIES | 2,618 | 1,712 | NET CASH FLOWS FROM OPERATING ACTIVITIES | 1,181 | 2,618 |
INVESTING ACTIVITIES | INVESTING ACTIVITIES | | INVESTING ACTIVITIES | |
Utility construction expenditures | Utility construction expenditures | (2,844) | (2,697) | Utility construction expenditures | (3,097) | (2,844) |
Cost of removal less salvage | Cost of removal less salvage | (247) | (242) | Cost of removal less salvage | (289) | (247) |
Non-utility construction expenditures | Non-utility construction expenditures | (210) | (289) | Non-utility construction expenditures | (141) | (210) |
Investments in electric and gas transmission projects | Investments in electric and gas transmission projects | (48) | (16) | | Investments in electric and gas transmission projects | (48) | (48) | |
| Proceeds from sale of assets | — | 614 | |
Divestiture of renewable electric projects, net | — | 183 | |
Proceeds from sale of the Clean Energy Businesses, net of cash and cash equivalents sold | | Proceeds from sale of the Clean Energy Businesses, net of cash and cash equivalents sold | 3,927 | — |
| Other investing activities | Other investing activities | 3 | 10 | Other investing activities | — | 3 | |
NET CASH FLOWS USED IN INVESTING ACTIVITIES | (3,346) | (2,437) | |
NET CASH FLOWS FROM (USED IN) INVESTING ACTIVITIES | | NET CASH FLOWS FROM (USED IN) INVESTING ACTIVITIES | 352 | (3,346) |
FINANCING ACTIVITIES | FINANCING ACTIVITIES | | FINANCING ACTIVITIES | |
Net issuance (retirement) of short-term debt | Net issuance (retirement) of short-term debt | 1,003 | (834) | Net issuance (retirement) of short-term debt | (1,160) | 1,003 |
Issuance of long-term debt | Issuance of long-term debt | — | 1,979 | Issuance of long-term debt | 500 | — | |
Retirement of long-term debt | Retirement of long-term debt | (383) | (1,904) | Retirement of long-term debt | (60) | (383) |
Debt issuance costs | Debt issuance costs | — | | (30) | Debt issuance costs | (5) | — |
Common stock dividends | Common stock dividends | (812) | (768) | Common stock dividends | (829) | (812) |
Issuance of common shares - public offering | — | 775 | |
| Issuance of common shares for stock plans | Issuance of common shares for stock plans | 43 | 45 | Issuance of common shares for stock plans | 41 | | 43 |
Repurchase of common shares | | Repurchase of common shares | (1,000) | — |
Distribution to noncontrolling interest | Distribution to noncontrolling interest | (28) | (15) | Distribution to noncontrolling interest | (4) | (28) |
Sale of equity interest | — | 256 | |
| | NET CASH FLOWS USED IN FINANCING ACTIVITIES | NET CASH FLOWS USED IN FINANCING ACTIVITIES | (177) | (496) | NET CASH FLOWS USED IN FINANCING ACTIVITIES | (2,517) | (177) |
CASH, TEMPORARY CASH INVESTMENTS, AND RESTRICTED CASH: | CASH, TEMPORARY CASH INVESTMENTS, AND RESTRICTED CASH: | | CASH, TEMPORARY CASH INVESTMENTS, AND RESTRICTED CASH: | |
NET CHANGE FOR THE PERIOD | NET CHANGE FOR THE PERIOD | (905) | (1,221) | NET CHANGE FOR THE PERIOD | (984) | (905) |
BALANCE AT BEGINNING OF PERIOD | BALANCE AT BEGINNING OF PERIOD | 1,146 | 1,436 | BALANCE AT BEGINNING OF PERIOD | 1,530 | 1,146 |
BALANCE AT END OF PERIOD | BALANCE AT END OF PERIOD | $241 | $215 | BALANCE AT END OF PERIOD | $546 | $241 |
| LESS: CASH BALANCES HELD FOR SALE | | LESS: CASH BALANCES HELD FOR SALE | 6 | — | |
BALANCE AT END OF PERIOD EXCLUDING HELD FOR SALE | | BALANCE AT END OF PERIOD EXCLUDING HELD FOR SALE | $540 | $241 |
SUPPLEMENTAL DISCLOSURE OF CASH INFORMATION | SUPPLEMENTAL DISCLOSURE OF CASH INFORMATION | | SUPPLEMENTAL DISCLOSURE OF CASH INFORMATION | |
Cash paid/(received) during the period for: | Cash paid/(received) during the period for: | | Cash paid/(received) during the period for: | |
Interest | Interest | $583 | $565 | Interest | $624 | $583 |
Income taxes | $30 | $(9) | |
SUPPLEMENTAL DISCLOSURE OF NON-CASH INFORMATION | | |
Construction expenditures in accounts payable | $486 | $388 | |
Issuance of common shares for dividend reinvestment | $28 | $37 | |
Software licenses acquired but unpaid as of end of period | $2 | $24 | |
Equipment acquired but unpaid as of end of period | $17 | $22 | |
| | | | | | | | |
Income taxes | $360 | $30 |
SUPPLEMENTAL DISCLOSURE OF NON-CASH INFORMATION | | |
Construction expenditures in accounts payable | $419 | $486 |
Issuance of common shares for dividend reinvestment | $20 | $28 |
Software licenses acquired but unpaid as of end of period | $— | $2 |
Equipment acquired but unpaid as of end of period | $11 | $17 |
The accompanying notes are an integral part of these financial statements.
Consolidated Edison, Inc.
CONSOLIDATED BALANCE SHEET (UNAUDITED)
| (Millions of Dollars) | (Millions of Dollars) | September 30, 2022 | December 31, 2021 | (Millions of Dollars) | September 30, 2023 | December 31, 2022 |
ASSETS | ASSETS | | ASSETS | |
CURRENT ASSETS | CURRENT ASSETS | | CURRENT ASSETS | |
Cash and temporary cash investments | Cash and temporary cash investments | $78 | $992 | Cash and temporary cash investments | $539 | $1,282 |
Accounts receivable – customers, net allowance for uncollectible accounts of $305 and $317 in 2022 and 2021, respectively | 2,095 | 1,943 | |
Other receivables, net allowance for uncollectible accounts of $9 and $22 in 2022 and 2021, respectively | 330 | 298 | |
Accounts receivable – customers, net allowance for uncollectible accounts of $276 and $322 in 2023 and 2022, respectively | | Accounts receivable – customers, net allowance for uncollectible accounts of $276 and $322 in 2023 and 2022, respectively | 2,048 | 2,192 |
Other receivables, net allowance for uncollectible accounts of $31 and $10 in 2023 and 2022, respectively | | Other receivables, net allowance for uncollectible accounts of $31 and $10 in 2023 and 2022, respectively | 418 | 164 |
Taxes receivable | Taxes receivable | 9 | 13 | Taxes receivable | 3 | 10 |
Accrued unbilled revenue | Accrued unbilled revenue | 619 | 662 | Accrued unbilled revenue | 547 | 702 |
Fuel oil, gas in storage, materials and supplies, at average cost | Fuel oil, gas in storage, materials and supplies, at average cost | 533 | 437 | Fuel oil, gas in storage, materials and supplies, at average cost | 455 | 492 |
Prepayments | Prepayments | 913 | 295 | Prepayments | 1,110 | 264 |
Regulatory assets | Regulatory assets | 282 | 206 | Regulatory assets | 180 | 305 |
Restricted cash | Restricted cash | 163 | 154 | Restricted cash | 1 | — | |
Revenue decoupling mechanism receivable | Revenue decoupling mechanism receivable | 167 | 190 | Revenue decoupling mechanism receivable | 294 | 164 |
Fair value of derivative assets | Fair value of derivative assets | 256 | 128 | Fair value of derivative assets | 62 | 59 |
Assets held for sale | | Assets held for sale | 163 | 7,162 |
Other current assets | Other current assets | 288 | 233 | Other current assets | 119 | 176 |
TOTAL CURRENT ASSETS | TOTAL CURRENT ASSETS | 5,733 | 5,551 | TOTAL CURRENT ASSETS | 5,939 | 12,972 |
INVESTMENTS | INVESTMENTS | 805 | 853 | INVESTMENTS | 933 | 841 |
UTILITY PLANT, AT ORIGINAL COST | UTILITY PLANT, AT ORIGINAL COST | | UTILITY PLANT, AT ORIGINAL COST | |
Electric | Electric | 36,346 | 34,938 | Electric | 38,283 | 36,819 |
Gas | Gas | 13,068 | 12,303 | Gas | 13,986 | 13,378 |
Steam | Steam | 2,895 | 2,828 | Steam | 3,029 | 2,935 |
General | General | 4,167 | 4,170 | General | 4,340 | 4,205 |
TOTAL | TOTAL | 56,476 | 54,239 | TOTAL | 59,638 | 57,337 |
Less: Accumulated depreciation | Less: Accumulated depreciation | 12,831 | 12,177 | Less: Accumulated depreciation | 13,865 | 13,069 |
Net | Net | 43,645 | 42,062 | Net | 45,773 | 44,268 |
Construction work in progress | Construction work in progress | 2,234 | 2,152 | Construction work in progress | 2,748 | 2,484 |
NET UTILITY PLANT | NET UTILITY PLANT | 45,879 | 44,214 | NET UTILITY PLANT | 48,521 | 46,752 |
NON-UTILITY PLANT | NON-UTILITY PLANT | | NON-UTILITY PLANT | |
Non-utility property, net accumulated depreciation of $731 and $626 in 2022 and 2021, respectively | 4,128 | 4,194 | |
Non-utility property, net accumulated depreciation of $24 and $23 in 2023 and 2022, respectively | | Non-utility property, net accumulated depreciation of $24 and $23 in 2023 and 2022, respectively | 13 |
Construction work in progress | Construction work in progress | 385 | 188 | Construction work in progress | 1 |
NET PLANT | NET PLANT | 50,392 | 48,596 | NET PLANT | 48,535 | 46,766 |
OTHER NONCURRENT ASSETS | OTHER NONCURRENT ASSETS | | OTHER NONCURRENT ASSETS | |
Goodwill | Goodwill | 439 | Goodwill | 408 |
Intangible assets, net accumulated amortization of $368 and $297 in 2022 and 2021, respectively | 1,222 | 1,293 | |
| Regulatory assets | Regulatory assets | 3,705 | 3,639 | Regulatory assets | 4,334 | 3,974 |
Pension and retiree benefits | Pension and retiree benefits | 2,188 | 1,654 | Pension and retiree benefits | 3,384 | 3,269 |
Operating lease right-of-use asset | Operating lease right-of-use asset | 844 | 809 | Operating lease right-of-use asset | 545 | 568 |
Fair value of derivative assets | Fair value of derivative assets | 250 | 77 | Fair value of derivative assets | 26 | 85 |
Other deferred charges and noncurrent assets | Other deferred charges and noncurrent assets | 185 | 205 | Other deferred charges and noncurrent assets | 301 | 182 |
TOTAL OTHER NONCURRENT ASSETS | TOTAL OTHER NONCURRENT ASSETS | 8,833 | 8,116 | TOTAL OTHER NONCURRENT ASSETS | 8,998 | 8,486 |
TOTAL ASSETS | TOTAL ASSETS | $65,763 | $63,116 | TOTAL ASSETS | $64,405 | $69,065 |
The accompanying notes are an integral part of these financial statements.
Consolidated Edison, Inc.
CONSOLIDATED BALANCE SHEET (UNAUDITED)
| (Millions of Dollars) | (Millions of Dollars) | September 30, 2022 | December 31, 2021 | (Millions of Dollars) | September 30, 2023 | December 31, 2022 |
LIABILITIES AND SHAREHOLDERS’ EQUITY | LIABILITIES AND SHAREHOLDERS’ EQUITY | | LIABILITIES AND SHAREHOLDERS’ EQUITY | |
CURRENT LIABILITIES | CURRENT LIABILITIES | | CURRENT LIABILITIES | |
Long-term debt due within one year | Long-term debt due within one year | $323 | $440 | Long-term debt due within one year | $650 | $649 |
Term loan | Term loan | 550 | — | Term loan | — | 400 |
Notes payable | Notes payable | 1,941 | 1,488 | Notes payable | 1,880 | 2,640 |
Accounts payable | Accounts payable | 1,587 | 1,497 | Accounts payable | 1,306 | 1,955 |
Customer deposits | Customer deposits | 345 | 300 | Customer deposits | 401 | 358 |
Accrued taxes | Accrued taxes | 94 | 104 | Accrued taxes | 85 | 102 |
Accrued interest | Accrued interest | 277 | 151 | Accrued interest | 283 | 153 |
Accrued wages | Accrued wages | 117 | 113 | Accrued wages | 124 | 116 |
Fair value of derivative liabilities | Fair value of derivative liabilities | 70 | 152 | Fair value of derivative liabilities | 86 | 42 |
Regulatory liabilities | Regulatory liabilities | 568 | 185 | Regulatory liabilities | 189 | 374 |
System benefit charge | System benefit charge | 423 | System benefit charge | 439 | 390 |
Operating lease liabilities | Operating lease liabilities | 131 | 113 | Operating lease liabilities | 114 | 103 |
Liabilities held for sale | | Liabilities held for sale | 76 | 3,610 |
Other current liabilities | Other current liabilities | 464 | 461 | Other current liabilities | 417 | 444 |
TOTAL CURRENT LIABILITIES | TOTAL CURRENT LIABILITIES | 6,890 | 5,427 | TOTAL CURRENT LIABILITIES | 6,050 | 11,336 |
NONCURRENT LIABILITIES | NONCURRENT LIABILITIES | | NONCURRENT LIABILITIES | |
Provision for injuries and damages | Provision for injuries and damages | 176 | 183 | Provision for injuries and damages | 182 | 181 |
Pensions and retiree benefits | Pensions and retiree benefits | 688 | 737 | Pensions and retiree benefits | 638 | 577 |
Superfund and other environmental costs | Superfund and other environmental costs | 923 | 940 | Superfund and other environmental costs | 996 | 997 |
Asset retirement obligations | Asset retirement obligations | 591 | 577 | Asset retirement obligations | 513 | 500 |
Fair value of derivative liabilities | Fair value of derivative liabilities | 31 | 84 | Fair value of derivative liabilities | 68 | 13 |
Deferred income taxes and unamortized investment tax credits | Deferred income taxes and unamortized investment tax credits | 7,387 | 6,873 | Deferred income taxes and unamortized investment tax credits | 7,992 | 7,641 |
Operating lease liabilities | Operating lease liabilities | 772 | 717 | Operating lease liabilities | 477 | 476 |
Regulatory liabilities | Regulatory liabilities | 4,717 | 4,381 | Regulatory liabilities | 5,401 | 6,027 |
Other deferred credits and noncurrent liabilities | Other deferred credits and noncurrent liabilities | 262 | 257 | Other deferred credits and noncurrent liabilities | 360 | 281 |
TOTAL NONCURRENT LIABILITIES | TOTAL NONCURRENT LIABILITIES | 15,547 | 14,749 | TOTAL NONCURRENT LIABILITIES | 16,627 | 16,693 |
LONG-TERM DEBT | LONG-TERM DEBT | 22,350 | 22,604 | LONG-TERM DEBT | 20,650 | 20,147 |
COMMITMENTS, CONTINGENCIES, AND GUARANTEES (Note B, Note G, and Note H) | COMMITMENTS, CONTINGENCIES, AND GUARANTEES (Note B, Note G, and Note H) | | COMMITMENTS, CONTINGENCIES, AND GUARANTEES (Note B, Note G, and Note H) | |
EQUITY | EQUITY | | EQUITY | |
Common shareholders’ equity | Common shareholders’ equity | 20,748 | 20,037 | Common shareholders’ equity | 21,078 | 20,687 |
Noncontrolling interest | Noncontrolling interest | 228 | 299 | Noncontrolling interest | — | 202 |
TOTAL EQUITY (See Statement of Equity) | TOTAL EQUITY (See Statement of Equity) | 20,976 | 20,336 | TOTAL EQUITY (See Statement of Equity) | 21,078 | 20,889 |
TOTAL LIABILITIES AND EQUITY | TOTAL LIABILITIES AND EQUITY | $65,763 | $63,116 | TOTAL LIABILITIES AND EQUITY | $64,405 | $69,065 |
The accompanying notes are an integral part of these financial statements.
Consolidated Edison, Inc.
CONSOLIDATED STATEMENT OF EQUITY (UNAUDITED)
| (In Millions, except for dividends per share) | (In Millions, except for dividends per share) | Common Stock | Additional Paid-In Capital | Retained Earnings | Treasury Stock | Capital Stock Expense | Accumulated Other Comprehensive Income/(Loss) | Non- controlling Interest | Total | (In Millions, except for dividends per share) | Common Stock | Additional Paid-In Capital | Retained Earnings | Treasury Stock | Capital Stock Expense | Accumulated Other Comprehensive Income/(Loss) | Non- controlling Interest | Total |
Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount |
| BALANCE AS OF DECEMBER 31, 2020 | 342 | $36 | $8,808 | $11,178 | 23 | $(1,038) | $(112) | $(25) | $218 | $19,065 | |
Net income | | 419 | | 1 | 420 | |
Common stock dividends ($0.775 per share) | | (265) | | (265) | |
| Issuance of common shares for stock plans | | 28 | | 28 | |
Other comprehensive income | | 4 | | 4 | |
Distributions to noncontrolling interests | | (3) | |
Net proceeds from sale of equity interest | | 33 | |
BALANCE AS OF MARCH 31, 2021 | 342 | $36 | $8,836 | $11,332 | 23 | $(1,038) | $(112) | $(21) | $249 | $19,282 | |
Net income (loss) | | 165 | | (47) | 118 | |
Common stock dividends ($0.775 per share) | | (266) | | (266) | |
Issuance of common shares - public offering | 11 | 1 | 785 | | (11) | | 775 | |
Issuance of common shares for stock plans | | 34 | | 34 | |
Other comprehensive income | | 2 | | 2 | |
Distributions to noncontrolling interests | | (4) | |
Net proceeds from sale of equity interest | | 112 | |
BALANCE AS OF JUNE 30, 2021 | 353 | $37 | $9,655 | $11,231 | 23 | $(1,038) | $(123) | $(19) | $310 | $20,053 | |
Net income (loss) | | 538 | | (69) | 469 | |
Common stock dividends ($0.775 per share) | | (274) | | (274) | |
Issuance of common shares - public offering | 1 | | — | |
Issuance of common shares for stock plans | | 28 | | 28 | |
Other comprehensive income | | 2 | | 2 | |
Distributions to noncontrolling interests | | (8) | |
Net proceeds from sale of equity interest | | 107 | |
BALANCE AS OF SEPTEMBER 30, 2021 | 354 | $37 | $9,683 | $11,495 | 23 | $(1,038) | $(123) | $(17) | $340 | $20,377 | |
| | BALANCE AS OF DECEMBER 31, 2021 | BALANCE AS OF DECEMBER 31, 2021 | 354 | $37 | $9,710 | $11,445 | 23 | $(1,038) | $(122) | $5 | $299 | $20,336 | BALANCE AS OF DECEMBER 31, 2021 | 354 | $37 | $9,710 | $11,445 | 23 | $(1,038) | $(122) | $5 | $299 | $20,336 |
Net income (loss) | Net income (loss) | | 602 | | (48) | 554 | Net income (loss) | | 602 | | (48) | 554 |
Common stock dividends ($0.79 per share) | Common stock dividends ($0.79 per share) | | (280) | | (280) | Common stock dividends ($0.79 per share) | | (280) | | (280) |
Issuance of common shares - public offering | Issuance of common shares - public offering | | 1 | | 1 | Issuance of common shares - public offering | | 1 | | 1 |
Issuance of common shares for stock plans | Issuance of common shares for stock plans | | 18 | | 18 | Issuance of common shares for stock plans | | 18 | | 18 |
| Distributions to noncontrolling interests | Distributions to noncontrolling interests | | (6) | Distributions to noncontrolling interests | | (6) |
| BALANCE AS OF MARCH 31, 2022 | BALANCE AS OF MARCH 31, 2022 | 354 | $37 | $9,728 | $11,767 | 23 | $(1,038) | $(121) | $5 | $245 | $20,623 | BALANCE AS OF MARCH 31, 2022 | 354 | $37 | $9,728 | $11,767 | 23 | $(1,038) | $(121) | $5 | $245 | $20,623 |
Net income (loss) | Net income (loss) | | 255 | | (1) | 254 | Net income (loss) | | 255 | | (1) | 254 |
Common stock dividends ($0.79 per share) | Common stock dividends ($0.79 per share) | | (280) | | (280) | Common stock dividends ($0.79 per share) | | (280) | | (280) |
| Issuance of common shares for stock plans | Issuance of common shares for stock plans | | 29 | | 29 | Issuance of common shares for stock plans | | 29 | | 29 |
Other comprehensive income | | Other comprehensive income | | 5 | | 5 |
Distributions to noncontrolling interests | | Distributions to noncontrolling interests | | (10) |
| BALANCE AS OF JUNE 30, 2022 | | BALANCE AS OF JUNE 30, 2022 | 354 | $37 | $9,757 | $11,742 | 23 | $(1,038) | $(121) | $10 | $234 | $20,621 |
Net income | | Net income | | 613 | | 6 | 619 |
Common stock dividends ($0.79 per share) | | Common stock dividends ($0.79 per share) | | (280) | | (280) |
Issuance of common shares - public offering | | Issuance of common shares - public offering | 1 | | — |
Issuance of common shares for stock plans | | Issuance of common shares for stock plans | | 27 | | 27 |
Other comprehensive income | | Other comprehensive income | | 1 | | 1 |
Distributions to noncontrolling interests | | Distributions to noncontrolling interests | | (12) |
BALANCE AS OF SEPTEMBER 30, 2022 | | BALANCE AS OF SEPTEMBER 30, 2022 | 355 | $37 | $9,784 | $12,075 | 23 | $(1,038) | $(121) | $11 | $228 | $20,976 |
| | BALANCE AS OF DECEMBER 31, 2022 | | BALANCE AS OF DECEMBER 31, 2022 | 355 | $37 | $9,803 | $11,985 | 23 | $(1,038) | $(122) | $22 | $202 | $20,889 |
Net income (loss) | | Net income (loss) | | 1,433 | | (3) | 1,430 |
Common stock dividends ($0.81 per share) | | Common stock dividends ($0.81 per share) | | (288) | | (288) |
| Issuance of common shares for stock plans | | Issuance of common shares for stock plans | | 15 | | 15 |
Common stock repurchases | | Common stock repurchases | (9) | | (200) | | 9 | (808) | | (1,008) |
Other comprehensive income | | Other comprehensive income | | 4 | | 4 |
Distributions to noncontrolling interests | | Distributions to noncontrolling interests | | (4) |
Disposal of the Clean Energy Businesses | | Disposal of the Clean Energy Businesses | | (195) |
BALANCE AS OF MARCH 31, 2023 | | BALANCE AS OF MARCH 31, 2023 | 346 | $37 | $9,618 | $13,130 | 32 | $(1,846) | $(122) | $26 | $— | $20,843 |
Net income | | Net income | | 226 | | 226 |
Common stock dividends ($0.81 per share) | | Common stock dividends ($0.81 per share) | | (281) | | (281) |
| Issuance of common shares for stock plans | | Issuance of common shares for stock plans | | 20 | | 20 |
Common stock repurchases | | Common stock repurchases | (2) | | 169 | | 2 | (171) | | (2) |
Other comprehensive loss | | Other comprehensive loss | | (1) | | (1) |
| BALANCE AS OF JUNE 30, 2023 | | BALANCE AS OF JUNE 30, 2023 | 344 | $37 | $9,807 | $13,075 | 34 | $(2,017) | $(122) | $25 | $— | $20,805 |
Net income | | Net income | | 526 | | 526 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Other comprehensive income | | | | | | | | 5 | | 5 |
Distributions to noncontrolling interests | | | | | | | | | (10) | (10) |
| | | | | | | | | | |
BALANCE AS OF JUNE 30, 2022 | 354 | $37 | $9,757 | $11,742 | 23 | $(1,038) | $(121) | $10 | $234 | $20,621 |
Net income | | | | 613 | | | | | 6 | 619 |
Common stock dividends ($0.79 per share) | | | | (280) | | | | | | (280) |
Issuance of common shares - public offering | 1 | | | | | | | | | — |
Issuance of common shares for stock plans | | | 27 | | | | | | | 27 |
Other comprehensive income | | | | | | | | 1 | | 1 |
Distributions to noncontrolling interests | | | | | | | | | (12) | (12) |
BALANCE AS OF SEPTEMBER 30, 2022 | 355 | $37 | $9,784 | $12,075 | 23 | $(1,038) | $(121) | $11 | $228 | $20,976 |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Common stock dividends ($0.81 per share) | | | | (280) | | | | | | (280) |
| | | | | | | | | | |
Issuance of common shares for stock plans | 1 | | 27 | | | | | | | 27 |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
BALANCE AS OF SEPTEMBER 30, 2023 | 345 | $37 | $9,834 | $13,321 | 34 | $(2,017) | $(122) | $25 | $— | $21,078 |
The accompanying notes are an integral part of these financial statements.
Consolidated Edison Company of New York, Inc.
CONSOLIDATED INCOME STATEMENT (UNAUDITED)
| | | For the Three Months Ended September 30, | For the Nine Months Ended September 30, | | For the Three Months Ended September 30, | For the Nine Months Ended September 30, |
(Millions of Dollars) | (Millions of Dollars) | 2022 | 2021 | 2022 | 2021 | (Millions of Dollars) | 2023 | 2022 | 2023 | 2022 |
OPERATING REVENUES | OPERATING REVENUES | | | OPERATING REVENUES | |
Electric | Electric | $3,077 | $2,730 | $7,401 | $6,661 | Electric | $3,223 | $3,077 | $7,722 | $7,401 |
Gas | Gas | 414 | 307 | 2,127 | 1,730 | Gas | 318 | 414 | 2,140 | 2,127 |
Steam | Steam | 58 | 55 | 444 | 393 | Steam | 49 | 58 | 425 | 444 |
TOTAL OPERATING REVENUES | TOTAL OPERATING REVENUES | 3,549 | 3,092 | 9,972 | 8,784 | TOTAL OPERATING REVENUES | 3,590 | 3,549 | 10,287 | 9,972 |
OPERATING EXPENSES | OPERATING EXPENSES | | OPERATING EXPENSES | |
Purchased power | Purchased power | 643 | 481 | 1,639 | 1,294 | Purchased power | 719 | 643 | 1,802 | 1,639 |
Fuel | Fuel | 59 | 44 | 255 | 166 | Fuel | 34 | 59 | 241 | 255 |
Gas purchased for resale | Gas purchased for resale | 113 | 61 | 582 | 357 | Gas purchased for resale | 62 | 113 | 518 | 582 |
Other operations and maintenance | Other operations and maintenance | 807 | 650 | 2,267 | 1,848 | Other operations and maintenance | 834 | 807 | 2,341 | 2,267 |
Depreciation and amortization | Depreciation and amortization | 441 | 429 | 1,341 | 1,267 | Depreciation and amortization | 485 | 441 | 1,428 | 1,341 |
Taxes, other than income taxes | Taxes, other than income taxes | 748 | 699 | 2,159 | 2,016 | Taxes, other than income taxes | 777 | 748 | 2,207 | 2,159 |
TOTAL OPERATING EXPENSES | TOTAL OPERATING EXPENSES | 2,811 | 2,364 | 8,243 | 6,948 | TOTAL OPERATING EXPENSES | 2,911 | 2,811 | 8,537 | 8,243 |
OPERATING INCOME | OPERATING INCOME | 738 | 728 | 1,729 | 1,836 | OPERATING INCOME | 679 | 738 | 1,750 | 1,729 |
OTHER INCOME (DEDUCTIONS) | OTHER INCOME (DEDUCTIONS) | | OTHER INCOME (DEDUCTIONS) | |
Investment and other income | Investment and other income | 93 | 5 | 280 | 15 | Investment and other income | 191 | 93 | 566 | 280 |
Allowance for equity funds used during construction | Allowance for equity funds used during construction | 4 | 5 | 13 | 14 | Allowance for equity funds used during construction | 6 | 4 | 17 | 13 |
Other deductions
| Other deductions
| (16) | (33) | (48) | (99) | Other deductions
| (13) | (16) | (33) | (48) |
TOTAL OTHER INCOME (DEDUCTIONS) | 81 | (23) | 245 | (70) | |
TOTAL OTHER INCOME | | TOTAL OTHER INCOME | 184 | 81 | 550 | 245 |
INCOME BEFORE INTEREST AND INCOME TAX EXPENSE | INCOME BEFORE INTEREST AND INCOME TAX EXPENSE | 819 | 705 | 1,974 | 1,766 | INCOME BEFORE INTEREST AND INCOME TAX EXPENSE | 863 | 819 | 2,300 | 1,974 |
INTEREST EXPENSE (INCOME) | INTEREST EXPENSE (INCOME) | | INTEREST EXPENSE (INCOME) | |
Interest on long-term debt | Interest on long-term debt | 201 | 194 | 600 | 564 | Interest on long-term debt | 220 | 201 | 656 | 600 |
Other interest expense | Other interest expense | 15 | 3 | 25 | 11 | Other interest expense | 32 | 15 | 75 | 25 |
Allowance for borrowed funds used during construction | Allowance for borrowed funds used during construction | (14) | — | (21) | (8) | Allowance for borrowed funds used during construction | (13) | (14) | (36) | (21) |
NET INTEREST EXPENSE | NET INTEREST EXPENSE | 202 | 197 | 604 | 567 | NET INTEREST EXPENSE | 239 | 202 | 695 | 604 |
INCOME BEFORE INCOME TAX EXPENSE | INCOME BEFORE INCOME TAX EXPENSE | 617 | 508 | 1,370 | 1,199 | INCOME BEFORE INCOME TAX EXPENSE | 624 | 617 | 1,605 | 1,370 |
INCOME TAX EXPENSE | INCOME TAX EXPENSE | 124 | 90 | 232 | 188 | INCOME TAX EXPENSE | 109 | 124 | 297 | 232 |
NET INCOME | NET INCOME | $493 | $418 | $1,138 | $1,011 | NET INCOME | $515 | $493 | $1,308 | $1,138 |
|
The accompanying notes are an integral part of these financial statements.
Consolidated Edison Company of New York, Inc.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED)
| | | Three Months Ended September 30, | Nine Months Ended September 30, | | For the Three Months Ended September 30, | For the Nine Months Ended September 30, |
(Millions of Dollars) | (Millions of Dollars) | 2022 | 2021 | 2022 | 2021 | (Millions of Dollars) | 2023 | 2022 | 2023 | 2022 |
NET INCOME | NET INCOME | $493 | $418 | $1,138 | $1,011 | NET INCOME | $515 | $493 | $1,308 | $1,138 |
| OTHER COMPREHENSIVE INCOME/(LOSS), NET OF TAXES | | OTHER COMPREHENSIVE INCOME/(LOSS), NET OF TAXES | |
Pension and other postretirement benefit plan liability adjustments, net of taxes | Pension and other postretirement benefit plan liability adjustments, net of taxes | — | 1 | — | Pension and other postretirement benefit plan liability adjustments, net of taxes | — | (1) | 1 |
TOTAL OTHER COMPREHENSIVE INCOME, NET OF TAXES | — | | — | | 1 | — | |
TOTAL OTHER COMPREHENSIVE INCOME/(LOSS), NET OF TAXES | | TOTAL OTHER COMPREHENSIVE INCOME/(LOSS), NET OF TAXES | — | (1) | 1 |
COMPREHENSIVE INCOME | COMPREHENSIVE INCOME | $493 | $418 | $1,139 | $1,011 | COMPREHENSIVE INCOME | $515 | $493 | $1,307 | $1,139 |
The accompanying notes are an integral part of these financial statements.
Consolidated Edison Company of New York, Inc.
CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
| | | For the Nine Months Ended September 30, | | For the Nine Months Ended September 30, |
(Millions of Dollars) | (Millions of Dollars) | 2022 | 2021 | (Millions of Dollars) | 2023 | 2022 |
OPERATING ACTIVITIES | OPERATING ACTIVITIES | | OPERATING ACTIVITIES | |
Net income | Net income | $1,138 | $1,011 | Net income | $1,308 | $1,138 |
PRINCIPAL NON-CASH CHARGES/(CREDITS) TO INCOME | PRINCIPAL NON-CASH CHARGES/(CREDITS) TO INCOME | | PRINCIPAL NON-CASH CHARGES/(CREDITS) TO INCOME | |
Depreciation and amortization | Depreciation and amortization | 1,341 | 1,267 | Depreciation and amortization | 1,428 | 1,341 |
Deferred income taxes | Deferred income taxes | 235 | 166 | Deferred income taxes | 674 | 235 |
| Rate case amortization and accruals | | Rate case amortization and accruals | 52 | 41 |
| Other non-cash items, net | Other non-cash items, net | 230 | 21 | Other non-cash items, net | (75) | 173 |
CHANGES IN ASSETS AND LIABILITIES | CHANGES IN ASSETS AND LIABILITIES | | CHANGES IN ASSETS AND LIABILITIES | |
Accounts receivable – customers | Accounts receivable – customers | (134) | (383) | Accounts receivable – customers | 185 | (134) |
Allowance for uncollectible accounts – customers | Allowance for uncollectible accounts – customers | (7) | 162 | Allowance for uncollectible accounts – customers | (45) | (7) |
| Materials and supplies, including fuel oil and gas in storage | | Materials and supplies, including fuel oil and gas in storage | 36 | (71) |
Revenue decoupling mechanism receivable | | Revenue decoupling mechanism receivable | (128) | 24 |
Other receivables and other current assets | Other receivables and other current assets | (5) | (290) | Other receivables and other current assets | (115) | 42 |
Unbilled revenue and net unbilled revenue deferrals | | Unbilled revenue and net unbilled revenue deferrals | 77 | 16 |
Accounts receivable from affiliated companies | Accounts receivable from affiliated companies | (66) | 18 | Accounts receivable from affiliated companies | (400) | (66) |
Prepayments | Prepayments | (559) | (573) | Prepayments | (699) | (559) |
Accounts payable | Accounts payable | (12) | (49) | Accounts payable | (408) | (12) |
Accounts payable to affiliated companies | Accounts payable to affiliated companies | 4 | 1 | Accounts payable to affiliated companies | 7 | 4 |
Pensions and retiree benefits obligations, net | Pensions and retiree benefits obligations, net | 101 | 234 | Pensions and retiree benefits obligations, net | (161) | 101 |
Pensions and retiree benefits contributions | Pensions and retiree benefits contributions | (22) | (430) | Pensions and retiree benefits contributions | (28) | (22) |
| Accrued taxes | Accrued taxes | (3) | (31) | Accrued taxes | (42) | (3) |
Accrued taxes to affiliated companies | Accrued taxes to affiliated companies | 2 | 6 | Accrued taxes to affiliated companies | (89) | 2 |
Accrued interest | Accrued interest | 109 | 103 | Accrued interest | 128 | 109 |
| System benefit charge | | System benefit charge | 48 | (4) | |
Deferred charges, noncurrent assets, leases, net and other regulatory assets | Deferred charges, noncurrent assets, leases, net and other regulatory assets | (553) | (452) | Deferred charges, noncurrent assets, leases, net and other regulatory assets | (598) | (553) |
Deferred credits, noncurrent liabilities and other regulatory liabilities | Deferred credits, noncurrent liabilities and other regulatory liabilities | 409 | 533 | Deferred credits, noncurrent liabilities and other regulatory liabilities | (15) | 409 |
Other current liabilities | Other current liabilities | (17) | (63) | Other current liabilities | 81 | (13) |
NET CASH FLOWS FROM OPERATING ACTIVITIES | NET CASH FLOWS FROM OPERATING ACTIVITIES | 2,191 | 1,251 | NET CASH FLOWS FROM OPERATING ACTIVITIES | 1,221 | 2,191 |
INVESTING ACTIVITIES | INVESTING ACTIVITIES | | INVESTING ACTIVITIES | |
Utility construction expenditures | Utility construction expenditures | (2,687) | (2,545) | Utility construction expenditures | (2,894) | (2,687) |
Cost of removal less salvage | Cost of removal less salvage | (242) | (237) | Cost of removal less salvage | (284) | (242) |
| NET CASH FLOWS USED IN INVESTING ACTIVITIES | NET CASH FLOWS USED IN INVESTING ACTIVITIES | (2,929) | | (2,782) | NET CASH FLOWS USED IN INVESTING ACTIVITIES | (3,178) | | (2,929) |
FINANCING ACTIVITIES | FINANCING ACTIVITIES | | FINANCING ACTIVITIES | |
Net issuance (repayment) of short-term debt | 428 | (718) | |
Net issuance (retirement) of short-term debt | | Net issuance (retirement) of short-term debt | (502) | 428 |
Issuance of long-term debt | Issuance of long-term debt | — | 1,500 | Issuance of long-term debt | 500 | — | |
Retirement of long-term debt | — | (640) | |
| Debt issuance costs | Debt issuance costs | (1) | (20) | Debt issuance costs | (5) | | (1) |
Capital contribution by parent | 150 | 1,101 | |
Dividend to parent | (734) | (741) | |
Capital contribution by Con Edison | | Capital contribution by Con Edison | 1,720 | 150 |
Dividend to Con Edison | | Dividend to Con Edison | (792) | (734) |
NET CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES | NET CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES | (157) | 482 | NET CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES | 921 | (157) |
CASH AND TEMPORARY CASH INVESTMENTS | CASH AND TEMPORARY CASH INVESTMENTS | | CASH AND TEMPORARY CASH INVESTMENTS | |
NET CHANGE FOR THE PERIOD | NET CHANGE FOR THE PERIOD | (895) | | (1,049) | NET CHANGE FOR THE PERIOD | (1,036) | | (895) |
BALANCE AT BEGINNING OF PERIOD | BALANCE AT BEGINNING OF PERIOD | 920 | 1,067 | BALANCE AT BEGINNING OF PERIOD | 1,056 | 920 |
BALANCE AT END OF PERIOD | BALANCE AT END OF PERIOD | $25 | $18 | BALANCE AT END OF PERIOD | $20 | $25 |
SUPPLEMENTAL DISCLOSURE OF CASH INFORMATION | SUPPLEMENTAL DISCLOSURE OF CASH INFORMATION | | SUPPLEMENTAL DISCLOSURE OF CASH INFORMATION | |
Cash paid/(received) during the period for: | Cash paid/(received) during the period for: | | Cash paid/(received) during the period for: | |
Interest | Interest | $466 | $446 | Interest | $538 | $466 |
Income taxes | Income taxes | $60 | $(2) | Income taxes | $90 | $60 |
SUPPLEMENTAL DISCLOSURE OF NON-CASH INFORMATION | SUPPLEMENTAL DISCLOSURE OF NON-CASH INFORMATION | | SUPPLEMENTAL DISCLOSURE OF NON-CASH INFORMATION | |
Construction expenditures in accounts payable | Construction expenditures in accounts payable | $414 | $335 | Construction expenditures in accounts payable | $399 | $414 |
Software licenses acquired but unpaid as of end of period | Software licenses acquired but unpaid as of end of period | $2 | $22 | Software licenses acquired but unpaid as of end of period | $— | $2 |
Equipment acquired but unpaid as of end of period | Equipment acquired but unpaid as of end of period | $17 | $22 | Equipment acquired but unpaid as of end of period | $11 | $17 |
The accompanying notes are an integral part of these financial statements.
Consolidated Edison Company of New York, Inc.
CONSOLIDATED BALANCE SHEET (UNAUDITED)
| (Millions of Dollars) | (Millions of Dollars) | September 30, 2022 | December 31, 2021 | (Millions of Dollars) | September 30, 2023 | December 31, 2022 |
ASSETS | ASSETS | | ASSETS | |
CURRENT ASSETS | CURRENT ASSETS | | CURRENT ASSETS | |
Cash and temporary cash investments | Cash and temporary cash investments | $25 | $920 | Cash and temporary cash investments | $20 | $1,056 |
Accounts receivable – customers, net allowance for uncollectible accounts of $297 and $304 in 2022 and 2021, respectively | 1,982 | 1,841 | |
Other receivables, net allowance for uncollectible accounts of $7 and $19 in 2022 and 2021, respectively | 116 | 121 | |
Accounts receivable – customers, net allowance for uncollectible accounts of $269 and $314 in 2023 and 2022, respectively | | Accounts receivable – customers, net allowance for uncollectible accounts of $269 and $314 in 2023 and 2022, respectively | 1,959 | 2,099 |
Other receivables, net allowance for uncollectible accounts of $27 and $7 in 2023 and 2022, respectively | | Other receivables, net allowance for uncollectible accounts of $27 and $7 in 2023 and 2022, respectively | 300 | 147 |
Taxes receivable | Taxes receivable | 5 | Taxes receivable | 2 | 5 |
Accrued unbilled revenue | Accrued unbilled revenue | 450 | 549 | Accrued unbilled revenue | 505 | 573 |
Accounts receivable from affiliated companies | Accounts receivable from affiliated companies | 104 | 38 | Accounts receivable from affiliated companies | 446 | 46 |
Fuel oil, gas in storage, materials and supplies, at average cost | Fuel oil, gas in storage, materials and supplies, at average cost | 440 | 369 | Fuel oil, gas in storage, materials and supplies, at average cost | 404 | 440 |
Prepayments | Prepayments | 771 | 212 | Prepayments | 922 | 223 |
Regulatory assets | Regulatory assets | 271 | 188 | Regulatory assets | 163 | 286 |
| Revenue decoupling mechanism receivable | Revenue decoupling mechanism receivable | 167 | 191 | Revenue decoupling mechanism receivable | 292 | 164 |
Fair value of derivative assets | Fair value of derivative assets | 190 | 71 | Fair value of derivative assets | 56 | 51 |
Other current assets | Other current assets | 146 | 198 | Other current assets | 97 | 157 |
TOTAL CURRENT ASSETS | TOTAL CURRENT ASSETS | 4,667 | 4,703 | TOTAL CURRENT ASSETS | 5,166 | 5,247 |
INVESTMENTS | INVESTMENTS | 518 | 608 | INVESTMENTS | 571 | 539 |
UTILITY PLANT, AT ORIGINAL COST | UTILITY PLANT, AT ORIGINAL COST | | UTILITY PLANT, AT ORIGINAL COST | |
Electric | Electric | 34,177 | 32,846 | Electric | 36,029 | 34,636 |
Gas | Gas | 12,044 | 11,321 | Gas | 12,908 | 12,338 |
Steam | Steam | 2,895 | 2,828 | Steam | 3,030 | 2,935 |
General | General | 3,842 | 3,854 | General | 4,052 | 3,879 |
TOTAL | TOTAL | 52,958 | 50,849 | TOTAL | 56,019 | 53,788 |
Less: Accumulated depreciation | Less: Accumulated depreciation | 11,818 | 11,223 | Less: Accumulated depreciation | 12,864 | 12,047 |
Net | Net | 41,140 | 39,626 | Net | 43,155 | 41,741 |
Construction work in progress | Construction work in progress | 2,066 | 1,985 | Construction work in progress | 2,501 | 2,268 |
NET UTILITY PLANT | NET UTILITY PLANT | 43,206 | 41,611 | NET UTILITY PLANT | 45,656 | 44,009 |
NON-UTILITY PROPERTY | NON-UTILITY PROPERTY | | NON-UTILITY PROPERTY | |
Non-utility property, net accumulated depreciation of $25 in 2022 and 2021 | 2 | |
Non-utility property, net accumulated depreciation of $25 in 2023 and 2022 | | Non-utility property, net accumulated depreciation of $25 in 2023 and 2022 | 2 |
NET PLANT | NET PLANT | 43,208 | 41,613 | NET PLANT | 45,658 | 44,011 |
OTHER NONCURRENT ASSETS | OTHER NONCURRENT ASSETS | | OTHER NONCURRENT ASSETS | |
Regulatory assets | Regulatory assets | 3,396 | 3,316 | Regulatory assets | 4,057 | 3,669 |
Operating lease right-of-use asset | Operating lease right-of-use asset | 577 | 545 | Operating lease right-of-use asset | 543 | 567 |
Pension and retiree benefits | Pension and retiree benefits | 2,178 | 1,677 | Pension and retiree benefits | 3,299 | 3,184 |
Fair value of derivative assets | Fair value of derivative assets | 136 | 56 | Fair value of derivative assets | 26 | 80 |
Other deferred charges and noncurrent assets | Other deferred charges and noncurrent assets | 132 | 137 | Other deferred charges and noncurrent assets | 267 | 148 |
TOTAL OTHER NONCURRENT ASSETS | TOTAL OTHER NONCURRENT ASSETS | 6,419 | 5,731 | TOTAL OTHER NONCURRENT ASSETS | 8,192 | 7,648 |
TOTAL ASSETS | TOTAL ASSETS | $54,812 | $52,655 | TOTAL ASSETS | $59,587 | $57,445 |
The accompanying notes are an integral part of these financial statements.
Consolidated Edison Company of New York, Inc.
CONSOLIDATED BALANCE SHEET (UNAUDITED)
| (Millions of Dollars) | (Millions of Dollars) | September 30, 2022 | December 31, 2021 | (Millions of Dollars) | September 30, 2023 | December 31, 2022 |
LIABILITIES AND SHAREHOLDER’S EQUITY | LIABILITIES AND SHAREHOLDER’S EQUITY | | LIABILITIES AND SHAREHOLDER’S EQUITY | |
CURRENT LIABILITIES | CURRENT LIABILITIES | | CURRENT LIABILITIES | |
| Notes payable | Notes payable | $1,789 | $1,361 | Notes payable | $1,798 | $2,300 |
Accounts payable | Accounts payable | 1,282 | 1,285 | Accounts payable | 1,194 | 1,763 |
Accounts payable to affiliated companies | Accounts payable to affiliated companies | 22 | 18 | Accounts payable to affiliated companies | 24 | 17 |
Customer deposits | Customer deposits | 330 | 285 | Customer deposits | 383 | 341 |
Accrued taxes | Accrued taxes | 75 | 78 | Accrued taxes | 48 | 93 |
Accrued taxes to affiliated companies | Accrued taxes to affiliated companies | 12 | 10 | Accrued taxes to affiliated companies | — | 89 |
Accrued interest | Accrued interest | 236 | 127 | Accrued interest | 262 | 134 |
Accrued wages | Accrued wages | 106 | 103 | Accrued wages | 113 | 105 |
Fair value of derivative liabilities | Fair value of derivative liabilities | 50 | 88 | Fair value of derivative liabilities | 79 | 35 |
Regulatory liabilities | Regulatory liabilities | 486 | 134 | Regulatory liabilities | 153 | 308 |
System benefit charge | System benefit charge | 380 | 372 | System benefit charge | 399 | 351 |
Operating lease liabilities | Operating lease liabilities | 99 | 90 | Operating lease liabilities | 113 | 103 |
Other current liabilities | Other current liabilities | 340 | 370 | Other current liabilities | 374 | 397 |
TOTAL CURRENT LIABILITIES | TOTAL CURRENT LIABILITIES | 5,207 | 4,321 | TOTAL CURRENT LIABILITIES | 4,940 | 6,036 |
NONCURRENT LIABILITIES | NONCURRENT LIABILITIES | | NONCURRENT LIABILITIES | |
Provision for injuries and damages | Provision for injuries and damages | 171 | 178 | Provision for injuries and damages | 179 | 177 |
Pensions and retiree benefits | Pensions and retiree benefits | 640 | 669 | Pensions and retiree benefits | 589 | 526 |
Superfund and other environmental costs | Superfund and other environmental costs | 833 | 850 | Superfund and other environmental costs | 902 | 903 |
Asset retirement obligations | Asset retirement obligations | 514 | 504 | Asset retirement obligations | 512 | 499 |
Fair value of derivative liabilities | Fair value of derivative liabilities | 15 | 40 | Fair value of derivative liabilities | 60 | 9 |
Deferred income taxes and unamortized investment tax credits | Deferred income taxes and unamortized investment tax credits | 7,223 | 6,796 | Deferred income taxes and unamortized investment tax credits | 8,060 | 7,144 |
Operating lease liabilities | Operating lease liabilities | 523 | 462 | Operating lease liabilities | 476 | 475 |
Regulatory liabilities | Regulatory liabilities | 4,215 | 3,921 | Regulatory liabilities | 4,890 | 5,481 |
Other deferred credits and noncurrent liabilities | Other deferred credits and noncurrent liabilities | 215 | 220 | Other deferred credits and noncurrent liabilities | 283 | 237 |
TOTAL NONCURRENT LIABILITIES | TOTAL NONCURRENT LIABILITIES | 14,349 | 13,640 | TOTAL NONCURRENT LIABILITIES | 15,951 | 15,451 |
LONG-TERM DEBT | LONG-TERM DEBT | 18,389 | 18,382 | LONG-TERM DEBT | 19,583 | 19,080 |
COMMITMENTS AND CONTINGENCIES (Note B and Note G) | COMMITMENTS AND CONTINGENCIES (Note B and Note G) | | COMMITMENTS AND CONTINGENCIES (Note B and Note G) | |
SHAREHOLDER’S EQUITY (See Statement of Shareholder’s Equity) | SHAREHOLDER’S EQUITY (See Statement of Shareholder’s Equity) | 16,867 | 16,312 | SHAREHOLDER’S EQUITY (See Statement of Shareholder’s Equity) | 19,113 | 16,878 |
TOTAL LIABILITIES AND SHAREHOLDER’S EQUITY | TOTAL LIABILITIES AND SHAREHOLDER’S EQUITY | $54,812 | $52,655 | TOTAL LIABILITIES AND SHAREHOLDER’S EQUITY | $59,587 | $57,445 |
The accompanying notes are an integral part of these financial statements.
Consolidated Edison Company of New York, Inc.
CONSOLIDATED STATEMENT OF SHAREHOLDER’S EQUITY (UNAUDITED)
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| Common Stock | Additional Paid-In Capital | Retained Earnings | Repurchased Con Edison Stock | Capital Stock Expense | Accumulated Other Comprehensive Income/(Loss) | Total | |
(In Millions)/Except Share Data) | Shares | Amount | |
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BALANCE AS OF DECEMBER 31, 2020 | 235 | $589 | $6,169 | $9,122 | $(962) | $(62) | $(7) | $14,849 | |
Net income | | | | 465 | | | | 465 | |
Common stock dividend to parent | | | | (247) | | | | (247) | |
Capital contribution by parent | | | 125 | | | | | 125 | |
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BALANCE AS OF MARCH 31, 2021 | 235 | $589 | $6,294 | $9,340 | $(962) | $(62) | $(7) | $15,192 | |
Net income | | | | 128 | | | | 128 | |
Common stock dividend to parent | | | | (247) | | | | (247) | | |
Capital contribution by parent | | | 851 | | | | | 851 | |
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BALANCE AS OF JUNE 30, 2021 | 235 | $589 | $7,145 | $9,221 | $(962) | $(62) | $(7) | $15,924 | |
Net income | | | | 418 | | | | 418 | |
Common stock dividend to parent | | | | (247) | | | | (247) | |
Capital contribution by parent | | | 125 | | | | | 125 | |
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BALANCE AS OF SEPTEMBER 30, 2021 | 235 | $589 | $7,270 | $9,392 | $(962) | $(62) | $(7) | $16,220 | |
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BALANCE AS OF DECEMBER 31, 2021 | 235 | $589 | $7,269 | $9,478 | $(962) | $(62) | $— | $16,312 | |
Net income | | | | 475 | | | | 475 | |
Common stock dividend to parent | | | | (245) | | | | (245) | |
Capital contribution by parent | | | 75 | | | | | 75 | |
Other comprehensive income | | | | | | | 1 | 1 | |
BALANCE AS OF MARCH 31, 2022 | 235 | $589 | $7,344 | $9,708 | $(962) | $(62) | $1 | $16,618 | |
Net income | | | | 170 | | | | 170 | |
Common stock dividend to parent | | | | (245) | | | | (245) | |
Capital contribution by parent | | | 25 | | | | | 25 | |
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BALANCE AS OF JUNE 30, 2022 | 235 | $589 | $7,369 | $9,633 | $(962) | $(62) | $1 | $16,568 | |
Net income | | | | 493 | | | | 493 | |
Common stock dividend to parent | | | | (244) | | | | (244) | |
Capital contribution by parent | | | 50 | | | | | 50 | |
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BALANCE AS OF SEPTEMBER 30, 2022 | 235 | $589 | $7,419 | $9,882 | $(962) | $(62) | $1 | $16,867 | |
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| Common Stock | Additional Paid-In Capital | Retained Earnings | Repurchased Con Edison Stock | Capital Stock Expense | Accumulated Other Comprehensive Income/(Loss) | Total |
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BALANCE AS OF DECEMBER 31, 2021 | 235 | $589 | $7,269 | $9,478 | $(962) | $(62) | $— | $16,312 |
Net income | | | | 475 | | | | 475 |
Common stock dividend to Con Edison | | | | (245) | | | | (245) |
Capital contribution by Con Edison | | | 75 | | | | | 75 |
Other comprehensive income | | | | | | | 1 | 1 |
BALANCE AS OF MARCH 31, 2022 | 235 | $589 | $7,344 | $9,708 | $(962) | $(62) | $1 | $16,618 |
Net income | | | | 170 | | | | 170 |
Common stock dividend to Con Edison | | | | (245) | | | | (245) |
Capital contribution by Con Edison | | | 25 | | | | | 25 |
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BALANCE AS OF JUNE 30, 2022 | 235 | $589 | $7,369 | $9,633 | $(962) | $(62) | $1 | $16,568 |
Net income | | | | 493 | | | | 493 |
Common stock dividend to Con Edison | | | | (244) | | | | (244) |
Capital contribution by Con Edison | | | 50 | | | | | 50 |
BALANCE AS OF SEPTEMBER 30, 2022 | 235 | $589 | $7,419 | $9,882 | $(962) | $(62) | $1 | $16,867 |
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BALANCE AS OF DECEMBER 31, 2022 | 235 | $589 | $7,419 | $9,890 | $(962) | $(62) | $4 | $16,878 |
Net income | | | | 604 | | | | 604 |
Common stock dividend to Con Edison | | | | (264) | | | | (264) |
Capital contribution by Con Edison | | | 1,675 | | | | | 1,675 |
Other comprehensive loss | | | | | | | (1) | (1) |
BALANCE AS OF MARCH 31, 2023 | 235 | $589 | $9,094 | $10,230 | $(962) | $(62) | $3 | $18,892 |
Net income | | | | 189 | | | | 189 |
Common stock dividend to Con Edison | | | | (264) | | | | (264) |
Capital contribution by Con Edison | | | 26 | | | | | 26 |
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BALANCE AS OF JUNE 30, 2023 | 235 | $589 | $9,120 | $10,155 | $(962) | $(62) | $3 | $18,843 |
Net income | | | | 515 | | | | 515 |
Common stock dividend to Con Edison | | | | (264) | | | | (264) |
Capital contribution by Con Edison | | | 19 | | | | | 19 |
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BALANCE AS OF SEPTEMBER 30, 2023 | 235 | $589 | $9,139 | $10,406 | $(962) | $(62) | $3 | $19,113 |
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The accompanying notes are an integral part of these financial statements.
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 two separate registrants: Consolidated Edison, Inc. and its subsidiaries (Con Edison) and Consolidated Edison Company of New York, Inc. and its subsidiaries (CECONY). CECONY is a subsidiary of Con Edison and as such its financial condition and results of operations and cash flows, whichthat 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 Transmission, Inc. (together with its subsidiaries, Con Edison Transmission) and its former subsidiary, 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. On March 1, 2023, Con Edison completed the sale of substantially all of the assets of the Clean Energy Businesses. See Note S and Note T. 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 statement 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, 20212022 and their separate unaudited financial statements (including the combined notes thereto)
included in Part 1, Item 1 of their combined Quarterly Reports on Form 10-Q for the quarterly periods ended March 31, 20222023 and June 30, 2022.2023.
Con Edison has two regulated utility subsidiaries: CECONY and O&R. CECONY provides electric service and gas service in New York City and Westchester County. The company also providesCounty and steam service in parts of Manhattan. O&R, along with its regulated utility subsidiary, provides electric service in southeastern New York, "NY", and northern New Jersey, "NJ", and gas service in southeastern NY. The Clean Energy Businesses, through its subsidiaries, develops, owns and operates renewable and sustainable energy infrastructure projects and provides energy-related products and services to wholesale and retail customers. In October 2022, Con Edison entered into a purchase and sale agreement pursuant to which Con Edison agreed to sell the Clean Energy Businesses to RWE Renewables America, LLC, a subsidiary of RWE Aktiengesellschaft. See Note T.New York. Con Edison Transmission invests in and seeks to develop electric transmission projects through its subsidiary, Consolidated Edison Transmission, LLC (CET Electric), and manages through joint ventures, investments in gas pipeline and storage facilities through its subsidiary Con Edison Gas Pipeline and Storage, LLC (CET Gas).facilities. 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)
In May 2021, a subsidiary of Con Edison Gas Pipeline and Storage, LLC (CET Gas) entered into a purchase and sale agreement pursuant to which the subsidiary and its joint venture partner agreed to sell their combined interests in Stagecoach Gas Services LLC (Stagecoach) for a total of $1,225 million, of which $629 million was attributed to CET Gas for its 50 percent interest. The purchase and sale agreement contemplated a two-stage closing, the first of which was completed in July 2021 and the second of which was completed in November 2021.
As a result of information made available to Stagecoach as part of the sale process, Stagecoach performed impairment tests that resulted in Stagecoach recording impairment charges of $414 million for the nine months ended September 30, 2021. Accordingly, Con Edison recorded pre-tax impairment losses on its 50 percent interest in Stagecoach of $211 million ($147 million after-tax), including working capital and transaction cost adjustments,
within "Investment income/(loss)" on Con Edison's consolidated income statements for the nine months ended September 30, 2021. These charges reduced the carrying value of its investment in Stagecoach to $630 million at June 30, 2021.
Stagecoach's impairment charges and information obtained from the sales processes constituted triggering events for Con Edison's investment in Stagecoach as of March 31, 2021 and June 30, 2021. Con Edison evaluated the carrying value of its investment in Stagecoach for other-than-temporary declines in value using income and market-based approaches. Con Edison determined that the carrying value of its investment in Stagecoach of $667 million and $630 million as of March 31, 2021 and June 30, 2021, respectively, was not impaired. The carrying value of $630 million at June 30, 2021 reflected the final sales price received in July and the remaining amount received in November 2021, including closing adjustments. CET Gas had no remaining investment in Stagecoach as of December 31, 2021 and September 30, 2022.
2020 and 2021 Partial Impairments of Investment in Mountain Valley Pipeline, LLC (MVP)
In January 2016, Con Edison Gas Pipeline and Storage, LLC (CET Gas), an indirecta subsidiary of Con Edison Transmission acquired a 12.5 percent equity interest in MVP, a company developing a proposed 300-mile gas transmission project (the Project)Mountain Valley Pipeline) in WVWest Virginia and VA.Virginia. During 2019, Con Edison exercised its right to limit, and did limit, its cash contributions to the joint venture to approximately $530 million, whichthat reduced CET Gas'Con Edison Transmission’s interest in MVP to 11.3 percent, 10.2 percent and 10.29.6 percent as of December 31, 2020, 2021 and 2021,2022, respectively. As of September 30, 2022 CET Gas'2023, Con Edison Transmission's interest in MVP is 9.78.8 percent and is expected to be reduced to 8.0as low as 7.3 percent based on the Project'sMountain Valley Pipeline's current cost estimate and CET Gas'Con Edison Transmission’s previous capping of its cash contributions. As of December 31, 20202022 and 2021,September 30, 2023, the ProjectMountain Valley Pipeline 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.complete.
In December 2021,June 2023, the Virginia DepartmentPresident of Environmental Qualitythe United States signed the Fiscal Responsibility Act of 2023. Section 324 of the legislation approved all permits and the West Virginia Department of Environmental Protection both issued water quality certification permits which are required in orderauthorizations necessary for the U.S. Army Corpsconstruction and initial operation of Engineers to proceed with the permitting process forMountain Valley Pipeline. In mid-August 2023, construction of the Mountain Valley Pipeline resumed after resolution of certain Project water crossings.legal challenges. In January 2022,October 2023, the U.S. Courtoperator 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 believedMountain Valley Pipeline indicated 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.it is now
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. Fortargeting an in-service date for the 2020 triggering event,project in the first quarter of 2024 at an overall project cost of approximately $7,200 million excluding allowance for funds used during construction. At September 30, 2023, 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 to below 8.0 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 theTransmission’s 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 toMountain Valley Pipeline was $111 million with an additional $77 million associated deferred tax asset, totaling a deferred tax asset of $130 million at December 31, 2021 and September 30, 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 continueits cash contributions 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 nine months ended September 30, 2022.joint venture amounted to $530 million.
There is risk that the fair value of Con Edison’s investment in MVP may be further or fully impaired in the future. There are ongoing legal and regulatory matters that must be resolved favorably before the Project can be completed. Assumptions and estimates used to test Con Edison’s investment in MVP for impairment may change if adverse or delayed resolutions todevelopments impacting the Project’s pending legal and regulatory challengesconstruction of the Mountain Valley Pipeline were to occur which could havethen result in a material adverse effect on the fair value of Con Edison’s investment in MVP.
Reclassification
Certain prior period amounts have been reclassified within the Companies' Consolidated Statements of Cash Flows and Consolidated Balance Sheets to conform with the current period presentation.
Earnings Per Common Share
Con Edison presents basic and diluted earnings per share (EPS) on the face of its consolidated income statement. Basic EPS is calculated by dividing earnings available to common shareholders (“Net income for common stock” on Con Edison’s consolidated income statement) by the weighted average number of Con Edison common sharesCommon Shares ($.10 par value) (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 for which the average market price of the common sharesCommon Shares for the period was greater than the estimated vesting price.
For the three and nine months ended September 30, 20222023 and 2021,2022, basic and diluted EPS for Con Edison are calculated as follows:
| | | | | | | | | | | | | | |
| For the Three Months Ended September 30, | For the Nine Months Ended September 30, |
(Millions of Dollars, except per share amounts/Shares in Millions) | 2022 | 2021 | 2022 | 2021 |
Net income for common stock | $613 | $538 | $1,470 | $1,122 |
Weighted average common shares outstanding – basic | 354.6 | 353.4 | 354.4 | 346.8 |
Add: Incremental shares attributable to effect of potentially dilutive securities | 1.3 | 0.7 | 1.3 | 0.7 |
Adjusted weighted average common shares outstanding – diluted | 355.9 | 354.1 | 355.7 | 347.5 |
Net Income per common share – basic | $1.73 | $1.52 | $4.15 | $3.23 |
Net Income per common share – diluted | $1.72 | $1.52 | $4.13 | $3.23 |
The computation of diluted EPS for the three and nine months ended September 30, 2021 excludes immaterial amounts of performance share awards that were not included because of their anti-dilutive effect.
| | | | | | | | | | | | | | |
| For the Three Months Ended September 30, | For the Nine Months Ended September 30, |
(Millions of Dollars, except per share amounts/Shares in Millions) | 2023 | 2022 | 2023 | 2022 |
Net income for common stock | $526 | $613 | $2,185 | $1,470 |
Weighted average common shares outstanding – basic | 345.0 | 354.6 | 348.4 | 354.4 |
Add: Incremental shares attributable to effect of potentially dilutive securities | 1.5 | 1.3 | 1.5 | 1.3 |
Adjusted weighted average common shares outstanding – diluted | 346.5 | 355.9 | 349.9 | 355.7 |
Net Income per common share – basic | $1.53 | $1.73 | $6.27 | $4.15 |
Net Income per common share – diluted | $1.52 | $1.72 | $6.24 | $4.13 |
22
Changes in Accumulated Other Comprehensive Income/(Loss) by Component
For the three and nine months ended September 30, 20222023 and 2021,2022, changes to accumulated other comprehensive income/(loss) (OCI) for Con Edison and CECONY are as follows:
| | | For the Three Months Ended September 30, | | For the Three Months Ended September 30, |
| | Con Edison | CECONY | | Con Edison | CECONY |
(Millions of Dollars) | (Millions of Dollars) | 2022 | 2021 | 2022 | 2021 | (Millions of Dollars) | 2023 | 2022 | 2023 | 2022 |
Beginning balance, accumulated OCI, net of taxes (a) | Beginning balance, accumulated OCI, net of taxes (a) | $10 | $(19) | $1 | $(7) | Beginning balance, accumulated OCI, net of taxes (a) | $25 | $10 | $3 | $1 | |
| Amounts reclassified from accumulated OCI related to pension plan liabilities, net of tax $(1) for Con Edison in 2021 (a)(b) | 1 | 2 | — | | — | | |
| Amounts reclassified from accumulated OCI related to pension plan liabilities, net of tax (a)(b) | | Amounts reclassified from accumulated OCI related to pension plan liabilities, net of tax (a)(b) | — | 1 | — | | — | |
Current period OCI, net of taxes | Current period OCI, net of taxes | 1 | 2 | — | | — | | Current period OCI, net of taxes | — | 1 | | — | | — | |
Ending balance, accumulated OCI, net of taxes (a) | Ending balance, accumulated OCI, net of taxes (a) | $11 | $(17) | $1 | $(7) | Ending balance, accumulated OCI, net of taxes (a) | $25 | $11 | $3 | $1 |
(a) Tax reclassified from accumulated OCI is reported in the income tax expense line item of the consolidated income statement.(b)For the portion of unrecognized pension and other postretirement benefit costs relating to the Utilities, costs are recorded into, and amortized out of, regulatory assets and liabilities instead of OCI. The net actuarial losses and prior service costs recognized during the period are included in the computation of total periodic pension and other postretirement benefit costs. See Notes E and F. For Con Edison in 2023, amounts reclassified also include accumulated OCI of the Clean Energy Businesses that were sold on March 1, 2023. See Note S.
| | | | | | | | | | | | | | |
| For the Nine Months Ended September 30, |
| 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) for Con Edison in 2022 and 2021 | 4 | 2 | — | | — | |
Amounts reclassified from accumulated OCI related to pension plan liabilities, net of tax of $(1) and $(2) for Con Edison in 2022 and 2021, respectively (a)(b) | 2 | 6 | 1 | | — | |
Current period OCI, net of taxes | 6 | 8 | 1 | | — | |
Ending balance, accumulated OCI, net of taxes (a) | $11 | $(17) | $1 | $(7) |
| | | | | | | | | | | | | | |
| For the Nine Months Ended September 30, |
| Con Edison | CECONY |
(Millions of Dollars) | 2023 | 2022 | 2023 | 2022 |
Beginning balance, accumulated OCI, net of taxes (a) | $22 | $5 | $4 | $— | |
| | | | |
OCI before reclassifications, net of tax of $(1) for Con Edison in 2022 | 1 | 4 | | (1) | | — | |
Amounts reclassified from accumulated OCI related to pension plan liabilities, net of tax of $(1) for Con Edison in 2022 (a)(b) | 2 | 2 | — | | 1 | |
Current period OCI, net of taxes | 3 | 6 | | (1) | | 1 | |
Ending balance, accumulated OCI, net of taxes (a) | $25 | $11 | $3 | $1 |
(a) Tax reclassified from accumulated OCI is reported in the income tax expense line item of the consolidated income statement.
(b)For the portion of unrecognized pension and other postretirement benefit costs relating to the Utilities, costs are recorded into, and amortized out of, regulatory assets and liabilities instead of OCI. The net actuarial losses and prior service costs recognized during the period are included in the computation of total periodic pension and other postretirement benefit costs. See Notes E and F. For Con Edison in 2023, amounts reclassified also include accumulated OCI of the Clean Energy Businesses that were sold on March 1, 2023. See Note S.
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 September 30, 20222023 and 2021,2022, cash, temporary cash investments and restricted cash for Con Edison and CECONY were as follows:
| | | At September 30, | | At September 30, |
| | Con Edison | CECONY | | Con Edison | CECONY |
(Millions of Dollars) | (Millions of Dollars) | 2022 | 2021 | 2022 | 2021 | (Millions of Dollars) | 2023 | 2022 | 2023 | 2022 |
Cash and temporary cash investments | Cash and temporary cash investments | $78 | $66 | $25 | $18 | Cash and temporary cash investments | $539 | $78 | $20 | $25 |
Restricted cash (a) | Restricted cash (a) | 163 | 149 | — | | — | | Restricted cash (a) | 6 | 163 | — | | — | |
Total cash, temporary cash investments and restricted cash | Total cash, temporary cash investments and restricted cash | $241 | $215 | $25 | $18 | Total cash, temporary cash investments and restricted cash | $545 | $241 | $20 | $25 |
(a)Restricted cashCon Edison restricted cash included cash of the Clean Energy Businesses' renewable electric project subsidiaries ($1635 million and $149$163 million at September 30, 2023 and2022, and 2021, respectively) that, under the related project debt agreements, iswas restricted to being used for normal operating expenditures, debt service, and required reserves until the various maturity dates of the project debt. On March 1, 2023, Con Edison completed the sale of substantially all of the assets of the Clean Energy Businesses. See Note S. Con Edison retained one deferred project, debt.Broken Bow II, a 75MW nameplate capacity wind power project located in Nebraska. Con Edison's restricted cash for the 2023 period includes restricted cash of Broken Bow II that continued to be classified as held for sale as of September 30, 2023. See Note T.
Assets Held for Sale
Generally, a long-lived asset or business to be sold is classified as held for sale in the period in which management, with approval from the Board of Directors, commits to a plan to sell, and a sale is expected to be completed within one year. During the first nine months of 2022, Con Edison considered strategic alternatives with respect to the Clean Energy Businesses. As described further in Note T,S, on October 1, 2022, Con Edison's management received authority to commit to a plan to sell the Clean Energy Businesses and entered into a purchase and sale agreement. AsOn March 1, 2023, Con Edison completed the sale of September 30, 2022,substantially all of the assets of the Clean Energy Businesses did not meetwith the held-for-sale criteria, but did meet the criteria subsequentexception of two tax equity interests and one deferred project, Broken Bow II. Broken Bow II continued to be classified as held for sale as of September 30, 2022, on October 1, 2022. 2023. See Note S and Note T. Con Edison records assets and liabilities, once
held for sale, at the lower of their carrying value or their estimated fair value less cost to sell, and also stops recording depreciation on assets held for sale.
Fair value is the amount at which an asset, liability or business could be bought or sold in a current transaction between willing parties and may be estimated using a number of techniques, or may be observable using quoted market prices. Con Edison used a market approach consisting of the contractual sales price adjusted for estimated working capital and other contractual purchase price adjustments to determine the fair value of the Clean Energy Businesses in October 2022, and subtracted estimated costs to sell from that calculated fair value. The resulting net fair value of the Clean Energy Businesses exceeded the carrying value of the Clean Energy Businesses, and accordingly no impairments were noted.
The sale of the Clean Energy Businesses doesdid not represent a strategic shift that has or will havehad a major effect on Con Edison, and as such, doesdid not qualify for treatment as a discontinued operation.
For further information, see Note T.
Note B – Regulatory Matters
Rate Plans
CECONY – Electric
In April 2022, CECONY updated its January 2022 request to2023, the New York State Public Service Commission (NYSPSC) approved CECONY’s December 2022 petition seeking cost recovery approval for a proposed clean energy hub in Brooklyn, New York (Brooklyn Clean Energy Hub) at an electricestimated cost of $810 million, that is in addition to the capital expenditures approved in the CECONY joint proposal discussed below. The Brooklyn Clean Energy Hub has an estimated in-service date of December 2027 and addresses a 2028 reliability need. The Brooklyn Clean Energy Hub provides the flexibility for offshore wind resources to interconnect to it during construction and after it commences operation.
In August 2023, CECONY filed a petition with the NYSPSC requesting authorization and cost recovery to construct two new substations in Jamaica, Queens (the Reliable Clean City - Idlewild Project) by May 2028 to meet anticipated reliability needs and to support New York State’s electrification and the Climate Leadership and Community Protection Act (CLCPA) goals. CECONY estimates that construction will cost $1,200 million. CECONY proposed cost recovery through a surcharge or base rates, depending on the in-service date and the timing of future rate increase effective January 2023. The company decreased its requested Januaryfilings. CECONY’s petition is subject to approval by the NYSPSC.
CECONY - Electric and Gas
In July 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. In May 2022,the NYSPSC approved the February 2023 joint proposal among CECONY, the New York State Department of Public Service (NYSDPS) submitted testimony inand other parties for electric and gas rate plans for the NYSPSC proceeding in whichthree-year period January 1, 2023 through December 31, 2025. The CECONY requested an electric and gas rate increase, effective January 2023. The NYSDPS testimony supports an electric rate increase of $278 million reflecting, among other things, an 8.80plans reflect a 9.25 percent return on common equity and a common equity ratio of 48 percent.
The electric rate plan provides for rate increases of $442 million, $518 million and $382 million, effective January 1, 2023, 2024 and 2025, respectively. The gas rate plan provides for rate increases of $217 million, $173 million and $122 million, effective January 1, 2023, 2024 and 2025, respectively. The base rate increases will be implemented with increases of $457 million in each of the three rate years for electric and with increases of $187 million in each of the three rate years for gas in order to levelize the customer bill impact. The CECONY – Gas
In April 2022, CECONY updated its January 2022 requestrate plans provide for total capital expenditures over the three-year rate period of $8,513 million and $3,297 million for electric and gas, respectively. Pursuant 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. In May 2022, the NYSDPS submitted testimony in the NYSPSC proceeding in which CECONY requested a gas rate increase, effective January 2023. The NYSDPS testimony supports a gas rate increase of $164 million reflecting, among other things, an 8.80 percent return on common equity and a common equity ratio of 48 percent.
CECONY – Electric and Gas
Pursuant to its electric and gas rate plans, new rates were effective as of January 1, 2023 and CECONY recorded $92 millionreflected the provisions of earningsthe February 2023 joint proposal in its financial statements beginning January 1, 2023. The new base rates were implemented on August 1, 2023 and make-whole recovery for January 1, 2023 to July 31, 2023 will be collected via a surcharge through 2024 for electric and through 2025 for gas, including a carrying charge on the year ended December 31, 2021 of earnings adjustment mechanisms and positive incentives, primarily reflecting the achievement of certain energy efficiency measures. For the nine months ended September 30, 2022, CECONY recorded a reduction in the amount of previously recorded earnings adjustment mechanisms of $4.9 million.outstanding balance.
O&R NY – Electric and GasCECONY - Steam
In April 2022,September 2023, CECONY, the NYSPSC approvedNYSDPS and other parties entered into a Joint Proposal for a CECONY steam rate plan for the three-year period November 1, 2023 through October 2021 joint proposal for new electric31, 2026. The Joint Proposal is subject to approval by the NYSPSC. The following table contains a summary of the steam Joint Proposal.
| | | | | | | | | | | |
CECONY – Steam | | | |
Effective period | | | November 2023 – October 2026 |
Base rate changes | | | Yr. 1 – $110 million (a) Yr. 2 – $44 million (a) Yr. 3 – $45 million (a) |
Capital expenditures | | | Yr. 1 - $106 million Yr. 2 - $107 million Yr. 3 - $105 million |
Amortizations to income of net regulatory liabilities | | | Yr. 1 – $15 million (b) Yr. 2 – $3 million (b) Yr. 3 – $3 million (b) |
Weather Normalization Adjustment | | | Implementation of a weather normalization adjustment that adjusts base rates to reflect normal weather conditions during the heating season. |
Recoverable energy costs | | | Continuation of current rate recovery of purchased power and fuel costs. |
Negative revenue adjustments | | | Potential charges if certain performance targets relating to service, reliability, safety and other matters are not met: Yr. 1 - $3.7 million Yr. 2 - $3.8 million Yr. 3 - $3.8 million |
Regulatory reconciliations | | | Reconciliation of uncollectible expenses 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 (c) and expenses for pension and other postretirement benefits, variable-rate debt, property taxes (d), municipal infrastructure support costs (e), the impact of new laws and environmental site investigation and remediation to amounts reflected in rates. (f) |
Net utility plant reconciliations | | | Yr. 1 - $2,025 million Yr. 2 - $2,029 million Yr. 3 - $2,015 million |
Average rate base | | | Yr. 1 - $1,799 million Yr. 2 - $1,848 million Yr. 3 - $1,882 million |
Weighted average cost of capital (after-tax) | | | Yr. 1 - 6.78 percent Yr. 2 - 6.81 percent Yr. 3 - 6.83 percent |
Authorized return on common equity | | | 9.25 percent |
Earnings sharing | | | Most earnings above an annual earnings threshold of 9.75 percent are to be applied to reduce regulatory assets for environmental remediation and other costs accumulated in the rate year. |
Cost of long-term debt | | | Yr. 1 – 4.51 percent Yr. 2 – 4.58 percent Yr. 3 – 4.62 percent |
Common equity ratio | | | 48 percent |
(a)The base rate increases will be implemented with increases of $77.8 million in Yr. 1; $77.8 million in Yr. 2; and $77.8 million in Yr. 3 to levelize the customer bill impact. New rates will be effective as of November 1, 2023. CECONY will begin billing customers at the new levelized rate once the Joint Proposal is approved by the NYSPSC. Any shortfall in revenues due to the timing of billing to customers will be collected through a surcharge.
(b)Amounts reflect amortization of the tax savings under the federal Tax Cuts and Jobs Act of 2017 (TCJA) for the unprotected portion of the regulatory liability for excess deferred income taxes allocable to CECONY’s steam customers (the entire $24 million in Yr.1), the protected portion of the regulatory liability for excess deferred income taxes allocable to CECONY’s steam customers over the remaining lives of the related assets ($3 million in Yr. 1; $5 million in Yr. 2; and $6 million in Yr. 3) and the non-plant portion of the regulatory asset for deficient deferred income taxes allocable to CECONY’s steam customers (the entire $11 million in Yr.1).
(c)CECONY will defer the difference between its actual write-offs of uncollectible expenses and late payment fees (from January 1, 2020 through October 31, 2026) to amounts reflected in rates, for years 2021 through 2024, with full recovery/refund from or to customers via surcharge/sur-credit oncesur-credit. Surcharge recoveries for write-offs of uncollectible expenses and late payment fees will each be subject to an annual cap that produces no more than a half percent (0.5 percent) total customer bill impact (estimated to be $2.5 million, $3.0 million, $3.5 million for Yr. 1, Yr. 2 and Yr. 3, respectively). Amounts in excess of the annual variance equals or exceeds 5 basis pointssurcharge cap in a specific year may be rolled forward for recovery and will count towards the following year’s surcharge cap. Amounts in excess of return on equity; and reconciliation of write-offs of customer accounts receivable balances to amounts reflectedthe surcharge cap will be deferred as a regulatory asset for recovery 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.
CECONY’s next steam base rate case.
Rockland Electric Company (RECO)
Effective July 2021, the New Jersey Board of Public Utilities (NJBPU) authorized a conservation incentive program for RECO, that covers all residential and most commercial customers, under which RECO’s actual electric
distribution revenues
(d)Deferrals for property taxes are compared with the authorized distribution revenues andlimited to 90 percent of the difference accrued,from amounts reflected in rates, subject to an annual maximum for the remaining difference of not more than a maximum number of basis points impact on return on common equity (Yr. 1 – 10.0 basis points; Yr. 2 – 7.5 basis points; and Yr. 3 – 5.0 basis points), with interest,recovery/refund from or to customers via surcharge/sur-credit. Surcharge recoveries will be subject to an annual cap that produces no more than a half percent (0.5 percent) total customer bill impact (estimated to be $2.5 million, $3.0 million, $3.5 million for refundYr. 1, Yr. 2 and Yr. 3, respectively). Amounts in excess of the annual surcharge cap in a specific year may be rolled forward for recovery and will count towards the following year’s surcharge cap. Amounts in excess of the surcharge cap will be deferred as a regulatory asset for recovery in CECONY’s next steam base rate case.
(e)In general, if actual expenses for municipal infrastructure support (other than company labor) are below the amounts reflected in rates, CECONY will defer the difference for credit to orcustomers, and if the actual expenses are above the amount reflected in rates, CECONY will defer for recovery from customers as applicable.80 percent of the difference subject to a maximum deferral, subject to certain conditions, of 30 percent of the amount reflected in the rate plan.
(f)In addition, the NYSDPS continues its focused operations audit to investigate CECONY's income tax accounting. The conservation incentive programaudit is investigating CECONY’s inadvertent understatement of a portion, the amount of which may be material, of its calculation of total federal income tax expense for ratemaking purposes. The understatement was related to the tax accounting treatment of its plant retirement-related cost of removal. As a result of such understatement, CECONY accumulated significant income tax regulatory assets that were not permitted if RECO’s actual return on equity exceedsreflected in CECONY’s steam rate plans prior to November 1, 2023. A prospective correction is set forth for steam rates in the approved base rate filing return on equity by 50 basis points or more.joint proposal.
Pursuant to the Joint Proposal, CECONY may file petitions for approval of future decarbonization projects and may defer/capitalize up to $3 million in total incremental operation and maintenance and/or capital costs for preliminary work on future decarbonization projects until there is a NYSPSC order on cost recovery.
Rockland Electric Company (RECO)
In January 2022,October 2023, FERC approved a July 2023 settlement agreement among RECO, filed a request with FERCthe New Jersey Division of Rate Counsel and the NJBPU that resolves all issues set for an increase to itshearing and increases RECO's annual transmission revenue requirement from $16.9 million to $20.4 million. The revenue requirement reflects a return on common equity of 11.04 percent$18.2 million, effective August 30, 2022 through December 31, 2023 and a common equity ratio of 47 percent.to $20.7 million, effective January 1, 2024.
In March 2022,May 2023, RECO filed a requestpetition with the NJBPU requesting permission to implement a $209defer costs of $5.1 million Infrastructure Investment Program (IIP) over a five-year period (2023 – 2027).related to major storms during 2022 and 2023 until RECO’s IIP proposes accelerated infrastructure investments to enhance safety, reliability, and/or resiliency.next base rate case.
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.
NYNew York Regulation
In March 2020, a former New York State governor declared a State Disaster Emergency for the State of NYNew York 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.
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 NYNew York enacted a law prohibiting NYNew York 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, whichthat ended in June 2021. In addition,However, 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 companyCECONY 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 companyCECONY 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 companyCECONY 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 and that, pursuant to athe June 2022 NYSPSC orderPhase 1 Order (as discussed below,below), was used to fund a portion of the COVID-19 arrears assistance program for low-income customers. The November 2021 order also established a surcharge recovery or surcreditsur-credit 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 2024 over a twelve-month period. The current 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 byrate plans include the NYSPSC in April 2022. O&R recordedimpact of the 2022 late payment charges and feesfee deferrals in the proposed revenue requirements, superseding the provisions in the November 2021 order.
CECONY’s and O&R’s rate plans that were not billed for the years ended December 31, 2020in effect through 2022 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 allowallowed 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. CECONY's and O&R’s current rate plans have deferral provisions related to uncollectible expenses. CECONY’s 2023 - 2025 rate plans include reconciliation of late payment charges (from January 1, 2023 through December 31, 2025) and write-offs of customer accounts receivable balances (from January 1, 2020 through December 31, 2025) to amounts reflected in rates, with recovery/refund from or to customers via surcharge/sur-credit. Surcharge recoveries for late payment charges and write-offs of accounts receivable balances will, collectively, be subject to separate annual caps for electric and gas that produce no more than a half percent (0.5 percent) total customer bill impact per commodity (estimated for electric to be $57.3 million, $60.3 million, $62.6 million for 2023, 2024 and 2025, respectively, and for gas to be $14.8 million, $15.9 million and $16.8 million for 2023, 2024 and 2025, respectively). Amounts in excess of the surcharge caps will be deferred as a regulatory asset for recovery in CECONY’s next base rate cases. O&R’s 2022 – 2024 rate plans include reconciliation of late payment charges to amounts reflected in rates for years 2022 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. The total reserve increases to the allowance for uncollectible accounts from January 1, 2020 through September 30, 20222023 reflecting the impact of the COVID-19 pandemic for CECONY electric and gas operations and O&R electric and gas operations were $232$205 million and $3$2 million, respectively,respectively. CECONY's 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’ NYO&R's 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 thewhich actual write-offs of customer accounts receivable balances were belowexceeded the allowanceallowances reflected in rates whichwere deferred pursuant to CECONY's and O&R's New York rate plans. Such differences were $19$55 million and $1$2 million for CECONY and O&R, respectively, from March 1, 2020 through September 30, 2022.2023.
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.
In April 2021, NYNew York passed a law that created a program that allows eligible residential renters in NYNew York 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 is administered by the State Office of Temporary and Disability Assistance (OTDA) in coordination with the NYSDPS (the OTDA Program). Under the OTDA Program, CECONY and O&R qualify for a refundable tax credit for NYNew York 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.
In April 2022, NYNew York approved the 2022-2023 state budget, whichthat included $250 million for addressing statewide residential utility customers' arrears balances accrued from March 7, 2020 through March 1, 2022. In June 2022, the NYSPSC issued an order implementing a COVID-19 arrears assistance program that provides credits towards reducing the arrears balances of low-income electric and gas customers of CECONY and O&R. At the time the order was issued, the Utilities’ eligible arrears balances were estimated to be $340 million, comprised of: (1) $164.5 million and $1.6 million of the funding allocated pursuant to the NY budget to CECONY and O&R respectively, and (2) a surcharge mechanism for recovery of the remaining eligible credit amounts over a four- year period commencing after credits are issued for CECONY and over a one year period commencing after credits are issued for O&R.(Phase 1 Order). Pursuant to the order,Phase 1 Order, CECONY and O&R agreed not to seek recovery of incremental financing costs incurred associated with low-income customers' arrears from March 2020 through March 2022 of $11 million, most of which is attributable to CECONY, in addition to the $7 million reserve established by CECONY for the year ended December 31, 2021, as described above. The amounts available to credit the arrears balances of low-income CECONY and O&R customers pursuant to the June 2022November 2021 order, may be reduced by amounts credited pursuant to the OTDA Program.described above.
For the three and nine monthsyear ended September 30,December 31, 2022, CECONY issued total credits of $265.8 million and $315.1 million, respectively and O&R issued total credits of $4.7$359.9 million and $5.5$6.1 million, respectively, towards reducing customers’ accounts receivable balances. For the three and nine monthsyear ended September 30,December 31, 2022, the total credits for CECONY were comprised of: $148.4$164.5 million pursuant to the NY funding; $89.6 million that will be recovered via a surcharge mechanism that began September 1, 2022, as described above; the $7 million reserve for CECONY described above; and $20.9 million and $70.1 million, respectively, in qualified tax credits and payments pursuant to the OTDA Program described above. For the three and nine months ended September 30, 2022, the total credits for O&R were comprised of: $1.6 million pursuant to the NY funding; $2.7 million that will be recovered via a surcharge mechanism that began September 1, 2022, as described above; and $0.4 million and $1.2 million, respectively, in qualified tax credits and payments pursuant to the OTDA Program described above. At September 30, 2022, the customer accounts receivable balances at CECONY and O&R were $2,279 million and $109 million, respectively.
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 lawsfunding; $108.4 million
pursuant to the Phase 1 Order, that addresswill be recovered over a four-year period via a surcharge mechanism that began September 1, 2022; the issues$7 million reserve for CECONY described above; and $80.0 million in qualified tax credits and payments pursuant to the report. OTDA Program described above. For the year ended December 31, 2022, the total credits for O&R were comprised of: $1.6 million pursuant to the New York funding; $3.2 million pursuant to the Phase 1 Order, that will be recovered over a one-year period via a surcharge mechanism that began September 1, 2022; and $1.3 million in qualified tax credits and payments pursuant to the OTDA Program described above.
In June 2022,January 2023, the NYSPSC issued an order in this proceeding establishingimplementing a COVID-19 arrears assistance program that provides credits towards reducing the arrears balances of residential and small commercial electric and gas customers of CECONY and O&R (Phase 2 Order). The Phase 2 Order authorizes a surcharge mechanism for low-income customers, as described above.recovery of the eligible credit amounts over a ten-year period commencing after credits are issued for CECONY and over a one-year period commencing after credits are issued for O&R. Pursuant to the Phase 2 Order, CECONY and O&R agreed not to seek recovery of incremental financing costs incurred associated with arrears from March 2020 through December 2022 estimated to be $46 million, most of which is attributable to CECONY.
For the three months ended September 30, 2023, CECONY and O&R issued total net credits of $4.9 million and $0.2 million, respectively, towards reducing customers' account receivable balances. Total net credits were comprised of qualified tax credits and payments pursuant to the OTDA Program.
For the nine months ended September 30, 2023, CECONY and O&R issued total net credits of $348.4 million and $2.8 million, respectively, towards reducing customers' account receivable balances. For the nine months ended September 30, 2023, the total credits for CECONY were comprised of: $13.2 million pursuant to the Phase 1 Order, $327.6 million pursuant to the Phase 2 Order, and $7.6 million in qualified tax credits and payments pursuant to the OTDA Program. For the nine months ended September 30, 2023, the total credits for O&R were comprised of: $0.1 million pursuant to the Phase 1 Order, $2.1 million pursuant to the Phase 2 Order, and $0.6 million in qualified tax credits and payments pursuant to the OTDA Program.
The Utilities’ rate plans have revenue decoupling mechanisms in their NYNew York 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 NYNew York electric and gas rate plans (January through December). Differences are accrued with interest each month for CECONY's and O&R's NYNew York electric customers and after the annual deferral period ends for CECONY's and O&R's NYNew York 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 NYNew York electric and gas customers.
NJNew Jersey Regulation
In March 2020, NJNew Jersey Governor Murphy declared a Public Health Emergency and State of Emergency for the State of NJ.New Jersey. 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 NJNew Jersey 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 has2020. Through a series of orders, the NJBPU extended such deferrals through December 31, 2022.March 15, 2023. Pursuant to a June 2023 order from the NJBPU, RECO is required to filewill defer its verified COVID-19 costregulatory asset of $0.3 million and seek recovery petition by no later than March 2, 2023. RECO deferred net incremental COVID-19 related costs of $0.4 million through September 30, 2022.in its next base rate case.
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. CECONY and O&R have taken all reasonable measures to complete such inspections. As of June 1, 2022, O&R completed all of its required inspections andinspections. As of June 1, 2022, CECONY substantially completed its required inspections and continues to make progress on completing such required inspections. CECONY is unable to estimate the amount or range of its possible loss, if any, related to this matter. At September 30, 2022,2023, CECONY had not accrued a liability related to this matter.
Other Regulatory Matters
In August 2018, the NYSPSC ordered CECONY to begin on January 1, 2019 to credit the company's electric and gas customers, and to begin on October 1, 2018 to credit its steam customers, with the net benefits of the federal Tax Cuts and Jobs Act of 2017 (TCJA) as measured based on amounts reflected in its rate plans prior to the enactment of the TCJA in December 2017. The net benefits include the revenue requirement impact of the reduction in the corporate federal income tax rate to 21 percent, the elimination for utilities of bonus depreciation and the amortization of excess deferred federal income taxes.
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. UnderOther Regulatory Matters
In October 2023, CECONY and O&R replaced their separate existing customer billing and information systems with a single new customer billing and information system. In April 2023, CECONY filed a petition with the NYSPSC for permission to capitalize incremental costs (estimated at $75 million) for the new system above a $421 million limit on capital expenditures included in CECONY’s 2020 – 2022 electric and gas rate plans, O&R amortized its net benefits priorsubject to January 1, 2019 ($22 million) overNYSPSC review. At September 30, 2023, CECONY's incurred costs for the new system were $452.9 million. O&R's 2022 - 2024 electric and gas rate plans do not include a three-year period. The protected portionlimit on capitalization 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 that began January 1, 2022.new system costs.
In January 2018, the NYSPSC issued an order initiating a focused operations audit of the Utilities’ financial accounting for income taxes. The audit is investigating the Utilities’ inadvertent understatement of a portion, the amount of which may be material, of their calculation of total federal income tax expense for ratemaking purposes. The understatement waswas related to the calculation of plant retirement-related cost of removal. As a result of such understatement, the Utilities 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 a prospective correction is currently not reflectedset forth for steam rates in CECONY’s steam rate plan.CECONY's September 2023 joint proposal. 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 audit, the Utilities plan to pursue a private letter ruling from the Internal Revenue Service (IRS) that is expected to confirm, among other things, that in order to comply with IRS normalization rules, such understatement may not be corrected through a write-down of a portion of the regulatoryregulatory asset and must be corrected through an increase in future years’ revenue requirements.requirements. The regulatory asset ($1,1471,116 million and $23$19 million for CECONY and O&R, respectively, as of September 30, 2022)2023) and ($1,1761,150 million and $26$22 million for CECONY and O&R, respectively, as of December 31, 2021)2022 and which is not earning a return) is netted against the future income tax regulatory liability on the Companies’ consolidated balance sheet. The Utilities are unable to estimate the amount or range of their possible loss, if any, related to this matter. At September 30, 2022,2023, 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 April 2021, the Department of Energy (DOE) issued a request for information to assist the DOE in developing orders and/or regulations to secure the United States’ critical electric infrastructure. Separately, 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 voluntary goals issued in October 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.
Regulatory Assets and Liabilities
Regulatory assets and liabilities at September 30, 20222023 and December 31, 20212022 were comprised of the following items:
| | | Con Edison | | CECONY | | Con Edison | | CECONY |
(Millions of Dollars) | (Millions of Dollars) | 2022 | 2021 | | 2022 | 2021 | (Millions of Dollars) | 2023 | 2022 | | 2023 | 2022 |
Regulatory assets | Regulatory assets | | | | Regulatory assets | | | |
Unrecognized pension and other postretirement costs | | Unrecognized pension and other postretirement costs | $125 | $78 | | $125 | $78 |
| Environmental remediation costs | Environmental remediation costs | $919 | $938 | | $840 | $860 | Environmental remediation costs | 983 | 991 | | 899 | 906 |
Revenue taxes | | Revenue taxes | 468 | 436 | | 448 | 417 |
Deferred storm costs | | Deferred storm costs | 221 | 270 | | 129 | 173 |
Municipal infrastructure support costs | | Municipal infrastructure support costs | 20 | 29 | | 20 | 29 | |
| Brooklyn Queens Demand Management (BQDM) program | | Brooklyn Queens Demand Management (BQDM) program | 31 | 33 | | 31 | 33 |
Meadowlands heater odorization project | | Meadowlands heater odorization project | 24 | 27 | | 24 | 27 |
Recoverable Demonstration project costs | | Recoverable Demonstration project costs | 18 | 17 | | 18 | 16 |
Gate station upgrade project | | Gate station upgrade project | 14 | | 14 | 14 |
| System peak reduction and energy efficiency programs | System peak reduction and energy efficiency programs | 546 | 285 | | 546 | 284 | System peak reduction and energy efficiency programs | 868 | 783 | | 860 | 780 |
Unamortized loss on reacquired debt | | Unamortized loss on reacquired debt | 9 | 11 | | 8 | 10 |
Deferred derivative losses - long term | | Deferred derivative losses - long term | 99 | 31 | | 89 | 26 |
Property tax reconciliation | | Property tax reconciliation | 195 | 121 | | 195 | 121 |
Legacy meters | | Legacy meters | 17 | 20 | | — | — |
Gas service line deferred costs | | Gas service line deferred costs | 49 | 99 | | 49 | 99 |
COVID - 19 customer arrears relief programs | | COVID - 19 customer arrears relief programs | 418 | 104 | | | 415 | 101 | |
Pension and other postretirement benefits deferrals | Pension and other postretirement benefits deferrals | 369 | 496 | | 325 | 435 | Pension and other postretirement benefits deferrals | 56 | 279 | | 41 | 240 |
Revenue taxes | 428 | 395 | | 409 | 378 | |
COVID-19 pandemic deferrals | 275 | 282 | | 272 | 277 | |
Deferred storm costs | 270 | 276 | | 168 | 158 | | |
Property tax reconciliation | 142 | 202 | | 140 | 202 | |
| Preferred stock redemption | | Preferred stock redemption | 18 | 19 | | 18 | 19 |
MTA power reliability deferral | MTA power reliability deferral | 104 | 140 | | 104 | 140 | MTA power reliability deferral | 69 | 92 | | 69 | 92 |
Gas Service Line Deferred Costs | 107 | 100 | | 107 | 100 | |
COVID-19 arrears relief program deferral | 91 | — | | | 88 | — | | |
Municipal infrastructure support costs | 33 | 44 | | 33 | 44 | |
Brooklyn Queens demand management program | 33 | 36 | | 33 | 36 | |
Deferred derivative losses - long term | 32 | 51 | | 27 | 45 | |
Meadowlands heater odorization project | 27 | 29 | | 27 | 29 | |
Unrecognized pension and other postretirement costs | 24 | 128 | | 10 | 110 | |
Non-wire alternative projects | Non-wire alternative projects | 23 | | 23 | 23 | Non-wire alternative projects | 20 | 22 | | 20 | 22 |
Legacy meters | 20 | 2 | | — | — | |
Preferred stock redemption | 19 | 20 | | 19 | 20 | |
Recoverable REV demonstration project costs | 17 | 16 | | 17 | 15 | |
Gate station upgrade project | 14 | | 14 | 14 | |
Unamortized loss on reacquired debt | 12 | 16 | | 11 | 14 | |
COVID - 19 pandemic deferrals | | COVID - 19 pandemic deferrals | 333 | 292 | | 329 | 288 |
Electric vehicle make ready | | Electric vehicle make ready | 59 | 33 | | 55 | 30 |
Other | Other | 200 | 146 | | 183 | 132 | Other | 220 | 173 | | 201 | 148 |
Regulatory assets – noncurrent | Regulatory assets – noncurrent | 3,705 | 3,639 | | 3,396 | 3,316 | Regulatory assets – noncurrent | 4,334 | 3,974 | | 4,057 | 3,669 |
Deferred derivative losses - short term | Deferred derivative losses - short term | 91 | 141 | | 88 | 133 | Deferred derivative losses - short term | 137 | 184 | | 132 | 178 |
Recoverable energy costs | Recoverable energy costs | 191 | 65 | | 183 | 55 | Recoverable energy costs | 43 | 121 | | 31 | 108 |
Regulatory assets – current | Regulatory assets – current | 282 | 206 | | 271 | 188 | Regulatory assets – current | 180 | 305 | | 163 | 286 |
Total Regulatory Assets | Total Regulatory Assets | $3,987 | $3,845 | | $3,667 | $3,504 | Total Regulatory Assets | $4,514 | $4,279 | | $4,220 | $3,955 |
Regulatory liabilities | Regulatory liabilities | | | | Regulatory liabilities | | | |
Future income tax | $1,819 | $1,984 | | $1,681 | $1,840 | |
Future income tax* | | Future income tax* | 1,583 | 1,753 | | 1,450 | 1,616 |
Allowance for cost of removal less salvage | Allowance for cost of removal less salvage | 1,238 | 1,199 | | 1,063 | 1,033 | Allowance for cost of removal less salvage | 1,368 | 1,315 | | 1,181 | 1,137 |
Net unbilled revenue deferrals | | Net unbilled revenue deferrals | 214 | 204 | | 214 | 204 | |
Energy efficiency portfolio standard unencumbered funds | | Energy efficiency portfolio standard unencumbered funds | 5 | | 7 | 7 |
Settlement of prudence proceeding | | Settlement of prudence proceeding | 8 | 10 | | 8 | 10 |
| Earnings sharing - electric, gas and steam | | Earnings sharing - electric, gas and steam | 13 | 13 | | | 10 | 10 | |
System benefit charge carrying charge | | System benefit charge carrying charge | 87 | 73 | | 83 | 69 |
BQDM and Demonstration project reconciliations | | BQDM and Demonstration project reconciliations | 15 | 23 | | 15 | 21 |
Pension and other postretirement benefit deferrals | | Pension and other postretirement benefit deferrals | 194 | 144 | | 146 | 98 |
Property tax refunds | | Property tax refunds | 35 | | 35 | 35 |
| COVID - 19 pandemic uncollectible reconciliation deferral | | COVID - 19 pandemic uncollectible reconciliation deferral | 1 | 12 | | 1 | 12 |
Late payment charge deferral | | Late payment charge deferral | 160 | 127 | | | 155 | 123 | |
Unrecognized pension and other postretirement costs | Unrecognized pension and other postretirement costs | 429 | 32 | | 368 | — | | Unrecognized pension and other postretirement costs | 1,276 | 1,638 | | 1,197 | 1,536 |
Net unbilled revenue deferrals | 126 | 209 | | 126 | 209 | |
Net proceeds from sale of property | | Net proceeds from sale of property | 54 | 69 | | 52 | 69 |
Sales and use tax refunds | | Sales and use tax refunds | 29 | 37 | | 27 | 36 |
Workers’ compensation | | Workers’ compensation | 15 | 11 | | 15 | 11 | |
Deferred derivative gains - long term | Deferred derivative gains - long term | 152 | 61 | | 134 | 55 | Deferred derivative gains - long term | 17 | 145 | | 17 | 130 |
Pension and other postretirement benefit deferrals | 130 | 102 | | 85 | 55 | |
2022 Late Payment Charge Deferral | 92 | — | | | 92 | — | | |
Net proceeds from sale of property | 78 | 103 | | 77 | 103 | |
System benefit charge carrying charge | 72 | 70 | | 67 | 63 | |
Property tax refunds | 37 | 35 | | 35 | 35 | |
TCJA net benefits* | 30 | 125 | | 29 | 123 | |
Sales and use tax refunds | 28 | 17 | | 27 | 16 | |
BQDM and REV Demo reconciliations | 24 | 25 | | 21 | 22 | |
COVID-19 pandemic uncollectible reconciliation deferral | 20 | — | | | 19 | — | | |
Earnings sharing - electric, gas and steam | 13 | | 10 | 10 | |
Workers' compensation | 11 | 8 | | 11 | 8 | |
Settlement of prudence proceeding | 6 | | 6 | 6 | |
Energy efficiency portfolio standard unencumbered funds | 5 | 15 | | 7 | 19 | | |
Settlement of gas proceedings | 4 | 12 | | 4 | 12 | |
Other | Other | 403 | 365 | | 353 | 312 | Other | 327 | 413 | | 277 | 357 |
Regulatory liabilities – noncurrent | Regulatory liabilities – noncurrent | 4,717 | 4,381 | | 4,215 | 3,921 | Regulatory liabilities – noncurrent | 5,401 | 6,027 | | 4,890 | 5,481 |
Deferred derivative gains - short term | 521 | 142 | | 482 | 132 | |
Refundable energy costs | Refundable energy costs | 34 | 32 | | 4 | 2 | Refundable energy costs | 99 | 34 | | 70 | — |
Revenue decoupling mechanism | Revenue decoupling mechanism | 13 | 11 | | — | | — | | Revenue decoupling mechanism | — | 29 | | — | 21 |
Deferred derivative gains - short term | | Deferred derivative gains - short term | 90 | 311 | | 83 | 287 |
| Regulatory liabilities – current | Regulatory liabilities – current | 568 | 185 | | 486 | 134 | Regulatory liabilities – current | 189 | 374 | | 153 | 308 |
Total Regulatory Liabilities | Total Regulatory Liabilities | $5,285 | $4,566 | | $4,701 | $4,055 | Total Regulatory Liabilities | $5,590 | $6,401 | | $5,043 | $5,789 |
* 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 credit customers with a return at the Other Customer-Provided Capital rate for regulatory liabilities that have not been included in rate base, and pay to or credit customers with a return at the pre-tax weighted average cost of capital once the liability is included in rate base. The Other Customer-Provided Capital rate for the nine months ended September 30, 2023 and 2022 and 2021 was 1.755.20 percent and 1.801.75 percent, respectively.
In general, the Utilities are receiving or being credited with a return on their regulatory assets for which a cash outflow has been made ($2,2212,406 million and $1,962$2,304 million for Con Edison, and $2,024$2,233 million and $1,751$2,097 million for CECONY at September 30, 20222023 and December 31, 2021,2022, respectively). Regulatory assets of RECO for which a cash outflow has been made ($2119 million and $25$21 million at September 30, 20222023 and December 31, 2021,2022, 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 September 30, 20222023 and December 31, 2021,2022, regulatory assets for Con Edison and CECONY that did not earn a return consisted of the following items:
Regulatory Assets Not Earning a Return*Return*
| | | Con Edison | CECONY | | Con Edison | CECONY |
(Millions of Dollars) | (Millions of Dollars) | 2022 | 2021 | 2022 | 2021 | (Millions of Dollars) | 2023 | 2022 | 2023 | 2022 |
Unrecognized pension and other postretirement costs | Unrecognized pension and other postretirement costs | $24 | $128 | $10 | $110 | Unrecognized pension and other postretirement costs | $125 | $78 | $125 | $78 |
Environmental remediation costs | Environmental remediation costs | 913 | 928 | 833 | 850 | Environmental remediation costs | 983 | 987 | 899 | 903 |
Revenue taxes | Revenue taxes | 408 | 375 | 392 | 359 | Revenue taxes | 494 | 414 | 474 | 397 |
COVID-19 Deferral for Uncollectible Accounts Receivable | COVID-19 Deferral for Uncollectible Accounts Receivable | 236 | 232 | 231 | COVID-19 Deferral for Uncollectible Accounts Receivable | 207 | 253 | 205 | 249 |
Deferred derivative losses - current | Deferred derivative losses - current | 91 | 141 | 88 | 134 | Deferred derivative losses - current | 137 | 184 | 133 | 178 |
Deferred derivative losses - long term | Deferred derivative losses - long term | 32 | 51 | 27 | 45 | Deferred derivative losses - long term | 99 | 31 | 89 | 26 |
Other | Other | 62 | 24 | 61 | 24 | Other | 63 | 28 | 62 | 27 |
Total | Total | $1,766 | $1,883 | $1,643 | $1,753 | Total | $2,108 | $1,975 | $1,987 | $1,858 |
*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.
Note C – Capitalization
In February 2023, CECONY issued $500 million aggregate principal amount of 5.20 percent debentures, due 2033.
In March 2023, Con Edison entered into accelerated share repurchase agreements (ASR Contracts) with two dealers to repurchase $1,000 million in aggregate of Con Edison’s Common Shares ($.10 par value) (Common Shares). Pursuant to the ASR Contracts, Con Edison made payments of $1,000 million in aggregate to the dealers and received initial deliveries of 8,730,766 Common Shares in aggregate that were recorded in treasury stock at fair value based on the closing price on March 6, 2023 of $91.63 per Common Share or $800 million. The remaining $200 million was recorded as additional paid-in-capital, representing the value of the forward contract to purchase additional shares.
The final settlements of the transactions under the ASR Contracts occurred during the second quarter of 2023. At final settlement, the dealers delivered an additional 1,812,497 Common Shares in aggregate to Con Edison. The number of Common Shares received from the dealers was based on the volume-weighted average share price of
Note C – Capitalization
In June 2022,Common Shares during the term of the applicable transaction, less a discount. Upon receipt of the additional Common Shares, Con Edison redeemed at maturity $293transferred $169 million from additional paid-in-capital to treasury stock, reflecting the fair value of 8.71 percent senior unsecured notes.the Common Shares delivered to Con Edison.
In November 2022,October 2023, O&R issued $100agreed to issue in December 2023 $50 million aggregate principal amount of 5.706.59 percent debentures, due 2032.2053.
The carrying amounts and fair values of long-term debt at September 30, 20222023 and December 31, 20212022 were:
| (Millions of Dollars) | (Millions of Dollars) | 2022 | 2021 | (Millions of Dollars) | 2023 | | 2022 | |
Long-Term Debt (including current portion) (a) | Long-Term Debt (including current portion) (a) | Carrying Amount | Fair Value | Carrying Amount | Fair Value | Long-Term Debt (including current portion) (a) | Carrying Amount | | Fair Value | | Carrying Amount | | Fair Value | |
Con Edison | Con Edison | $22,673 | $19,311 | $23,044 | $26,287 | Con Edison | $21,300 | (c) | $17,726 | (c) | $20,796 | (b) | $18,234 | (b) |
CECONY | CECONY | $18,389 | $15,465 | $18,382 | $21,382 | CECONY | $19,583 | | $16,213 | | $19,080 | | $16,699 | |
(a)Amounts shown are net of unamortized debt expense and unamortized debt discount of $216$200 million and $186$192 million for Con Edison and CECONY, respectively, as of September 30, 20222023 and $226$202 million and $193$195 million for Con Edison and CECONY, respectively, as of December 31, 2021.2022.
(b)Amounts shown exclude the debt of the Clean Energy Businesses, that were classified as held for sale as of December 31, 2022. The carrying value and fair value of the Clean Energy Businesses’ long-term debt, including the current portion, as of December 31, 2022 was $2,645 million and $2,489 million, respectively. On March 1, 2023, Con Edison completed the sale of substantially all of the assets of the Clean Energy Businesses. See Note S and Note T.
(c)Amounts shown exclude an immaterial amount of debt of Broken Bow II, a deferred project, that was classified as held for sale as of December 31, 2022 and September 30, 2023. See Note S and Note T.
The fair values of the Companies' long-term debt have been estimated primarily using available market information and at September 30, 20222023 are classified as Level 2 liabilities (seeliabilities. See Note O).
O.
Note D – Short-Term Borrowing
At September 30, 2022, Con Edison had $1,941 million of commercial paper outstanding of which $1,789 million was outstanding under CECONY’s program. The weighted average interest rate at September 30, 2022 was 3.4 percent for bothIn March 2023, Con Edison and CECONY. At December 31, 2021, Con Edison had $1,488the Utilities entered into a $2,500 million of commercial paper outstanding of which $1,361 million was outstanding under CECONY’s program. The weighted average interest rate at December 31, 2021 was 0.3 percent for both Con Edison and CECONY.
At September 30, 2022 and December 31, 2021, no loans were outstanding undercredit agreement (the Credit Agreement), that replaced the Companies' December 2016 credit agreement, (Credit Agreement). An immaterial amountunder which banks are committed to provide loans and letters of credit on a revolving credit basis. The Credit Agreement expires in March 2028, unless extended for up to two additional one–year terms. There is a maximum of $2,500 million of credit available to CECONY and $800 million (subject to increase up to $1,000 million) available to Con Edison, including up to $900 million of letters of credit. The Credit Agreement supports the Companies’ commercial paper programs. Loans and letters of credit were outstanding issued
under the Credit Agreement as of September 30, 2022 and December 31, 2021.may also be used for other general corporate purposes. Any borrowings under the
Credit Agreement would generally be at variable interest rates.
In March 2023, Con Edison repaid $200 million and $400 million that it borrowed in January 2023 and June 2022, respectively, under a 364-Day Senior Unsecured Term Loan Credit Agreement that Con Edison entered into in June 2022 that was amended in November 2022.
In March 2023, CECONY entered into a 364-Day Revolving Credit Agreement (the CECONY Credit Agreement) that replaced the CECONY 2022 364-Day Credit Agreement, under which banks are committed to provide loans up to $750$500 million on a revolving credit basis. The CECONY Credit Agreement expires onin March 30, 20232024 and supports CECONY’s commercial paper program. Loans and letters of credit issued under the CECONY Credit Agreement may also be used for other general corporate purposes. Any borrowings under the CECONY Credit Agreement would generally be at variable interest rates.
At September 30, 2023, Con Edison had $1,880 million of commercial paper outstanding of which $1,798 million was outstanding under CECONY’s program. The weighted average interest rate at September 30, 2023 was 5.5 percent for both Con Edison and CECONY. At December 31, 2022, Con Edison had $2,640 million of commercial paper outstanding of which $2,300 million was outstanding under CECONY’s program. The weighted average interest rate at December 31, 2022 was 4.8 percent for both Con Edison and CECONY.
At September 30, 2023 and December 31, 2022, no loans were outstanding under the Companies' Credit Agreement and December 2016 credit agreement, respectively, and no loans were outstanding under the CECONY Credit Agreement and the CECONY 2022 364-Day Credit Agreement, respectively. An immaterial amount of letters of credit were outstanding under the Credit Agreement and the December 2016 credit agreement as of September 30, 2023 and December 31, 2022, respectively.
The banks’ commitments under the Credit Agreement and 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 five 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.
In June 2022, Con Edison entered into and borrowed $400 million under a 364-Day Senior Unsecured Term Loan Credit Agreement (the June 2022 Term Loan Credit Agreement) under which a bank is committed, until November 30, 2022, to provide to Con Edison one or more tranches of incremental term loans in an aggregate amount not to exceed $200 million, in addition to the $400 million borrowed on June 30, 2022. The bank’s commitments under the agreement are subject to certain conditions, including that there be no event of default. 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 Con Edison,one of the bankCompanies under the Credit Agreement or by CECONY under the CECONY Credit Agreement, the banks may terminate itstheir commitments andwith respect to that company, declare any amounts owed by that company under the loans, accrued interest and any other amounts due by Con EdisonCredit Agreement or the CECONY Credit Agreement, respectively, immediately due and payable.payable and for the Credit Agreement, require that company to provide cash collateral relating to the letters of credit issued for it under the Credit Agreement. Events of default for a company include Con Edisonthat company exceeding at any time of a ratio of consolidated debt to consolidated total capital of 0.65 to 1; Con Edison or its subsidiariesthat company having liens on its or their assets in an aggregate amount exceeding 510 percent of Con Edison’sits consolidated total capital,net tangible assets, subject to certain exceptions; Con Edisonthat company or any of its material subsidiaries failing to make one or more payments in respect of material financial obligations (in excess of an aggregate $150 million of debt or derivative obligations other than non-recourse debt); of that company; theoccurrence of an event or condition which results in
the acceleration of the maturity of any material debt (in excess of an aggregate $150 million of debt other than non-recourse debt) of that company or enables the holders of such debt to accelerate the maturity thereof; and other customary events of default.Subject to certain exceptions, Interest and fees charged for the commitmentsrevolving credit facilities and any term loans made or letters of credit issued under the June 2022 Term Loan Credit Agreement are subject to mandatory termination and prepayment withreflect the net cash proceeds of certain equity issuances or asset sales by Con Edison.
In August 2022, the Clean Energy Businesses entered into and borrowed $150 million under a 364-Day Senior Unsecured Term Loan Credit Agreement, which is guaranteed by Con Edison and includes customary terms and conditions.Upon a change of control of the Clean Energy Businesses, the bank may declare the loan, accrued interest and any other amounts due by the Clean Energy Businesses immediately due and payable if the bank does not consent to a guarantee from the successor company, which consent may not be unreasonably withheld.Upon an event of default of the Clean Energy Businesses, the bank may declare the loan, accrued interest and any other amounts due by the Clean Energy Businesses immediately due and payable. See Note H.Companies’ respective credit ratings.
Note E – Pension Benefits
Total Periodic Benefit Cost
The components of the Companies’ total periodic benefit costcost/(credit) for the three and nine months ended September 30, 20222023 and 20212022 were as follows:
| | | For the Three Months Ended September 30, | | For the Three Months Ended September 30, |
| | Con Edison | CECONY | | Con Edison | CECONY |
(Millions of Dollars) | (Millions of Dollars) | 2022 | 2021 | 2022 | 2021 | (Millions of Dollars) | 2023 | 2022 | 2023 | 2022 |
Service cost – including administrative expenses | Service cost – including administrative expenses | $72 | $85 | $67 | $80 | Service cost – including administrative expenses | $40 | $72 | $38 | $67 |
Interest cost on projected benefit obligation | Interest cost on projected benefit obligation | 126 | 118 | 119 | 111 | Interest cost on projected benefit obligation | 162 | 126 | 153 | 119 |
Expected return on plan assets | Expected return on plan assets | (292) | (274) | (277) | (260) | Expected return on plan assets | (279) | (292) | (265) | (277) |
Recognition of net actuarial loss | 94 | 197 | 89 | 187 | |
Recognition of net actuarial loss/(gain) | | Recognition of net actuarial loss/(gain) | (58) | 94 | (55) | 89 |
Recognition of prior service credit | Recognition of prior service credit | (4) | (5) | (5) | Recognition of prior service credit | (4) | (5) | (5) |
TOTAL PERIODIC BENEFIT COST/(CREDIT) | $(4) | $122 | $(7) | $113 | |
TOTAL PERIODIC BENEFIT CREDIT | | TOTAL PERIODIC BENEFIT CREDIT | $(139) | $(4) | $(134) | $(7) |
Cost capitalized | Cost capitalized | (32) | (41) | (30) | (39) | Cost capitalized | (19) | (32) | (18) | (30) |
Reconciliation to rate level | Reconciliation to rate level | 63 | (54) | 59 | (52) | Reconciliation to rate level | 72 | 63 | 66 | 59 |
Total expense recognized | $27 | $22 | $22 | |
Total expense (credit) recognized | | Total expense (credit) recognized | $(86) | $27 | $(86) | $22 |
| | | For the Nine Months Ended September 30, | | For the Nine Months Ended September 30, |
| | Con Edison | CECONY | | Con Edison | CECONY |
(Millions of Dollars) | (Millions of Dollars) | 2022 | 2021 | 2022 | 2021 | (Millions of Dollars) | 2023 | 2022 | 2023 | 2022 |
Service cost – including administrative expenses | Service cost – including administrative expenses | $215 | $257 | $202 | $241 | Service cost – including administrative expenses | $122 | $215 | $113 | $202 |
Interest cost on projected benefit obligation | Interest cost on projected benefit obligation | 379 | 353 | 357 | 332 | Interest cost on projected benefit obligation | 486 | 379 | 458 | 357 |
Expected return on plan assets | Expected return on plan assets | (876) | (822) | (832) | (779) | Expected return on plan assets | (837) | (876) | (795) | (832) |
Recognition of net actuarial loss | 283 | 590 | 268 | 559 | |
Recognition of net actuarial loss/(gain) | | Recognition of net actuarial loss/(gain) | (174) | 283 | (164) | 268 |
Recognition of prior service credit | Recognition of prior service credit | (12) | (15) | (15) | Recognition of prior service credit | (12) | (15) | (15) |
TOTAL PERIODIC BENEFIT COST/(CREDIT) | ($11) | $366 | ($20) | $338 | |
TOTAL PERIODIC BENEFIT CREDIT | | TOTAL PERIODIC BENEFIT CREDIT | $(415) | $(11) | $(403) | $(20) |
Cost capitalized | Cost capitalized | (100) | (120) | (95) | (113) | Cost capitalized | (61) | (100) | (58) | (95) |
Reconciliation to rate level | Reconciliation to rate level | 192 | (165) | 182 | (158) | Reconciliation to rate level | 218 | 192 | 202 | 182 |
Total expense recognized | $81 | $67 | $67 | |
Total expense (credit) recognized | | Total expense (credit) recognized | $(258) | $81 | $(259) | $67 |
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 lines "Investment and other income" and "Other deductions" in the Companies' consolidated income statements. The increase in the "Pension and retiree benefits" asset on the Companies' consolidated balance sheets from December 31, 2021 to September 30, 2022 is primarily due to favorable plan liability experience.
Expected Contributions
Based on estimates as of September 30, 2022,2023, the Companies expect to make contributions to the pension plans during 20222023 of $31$22 million (of which $18$19 million is to be made 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. DuringNo funding is anticipated for the qualified plan during 2023, and during the first nine months of 2022,2023, the Companies contributed $25$15 million to the non-qualified supplemental pension plans, $13 million of which was contributed by CECONY. CECONY also contributed $17$10 million to the external
trust for its non-qualified supplemental plan.
Note F – Other Postretirement Benefits
Total Periodic Benefit Cost
The components of the Companies’ total periodic other postretirement benefit cost/(credit) for the three and nine months ended September 30, 20222023 and 20212022 were as follows:
| | | For the Three Months Ended September 30, | | For the Three Months Ended September 30, |
| | Con Edison | CECONY | | Con Edison | CECONY |
(Millions of Dollars) | (Millions of Dollars) | 2022 | 2021 | 2022 | 2021 | (Millions of Dollars) | 2023 | 2022 | 2023 | 2022 |
Service cost - including administrative expenses | Service cost - including administrative expenses | $5 | $2 | $4 | $1 | Service cost - including administrative expenses | $4 | $5 | $3 | $4 |
Interest cost on projected other postretirement benefit obligation | Interest cost on projected other postretirement benefit obligation | 8 | 7 | 8 | 6 | Interest cost on projected other postretirement benefit obligation | 14 | 8 | 12 | 8 |
Expected return on plan assets | Expected return on plan assets | (18) | (17) | (14) | (14) | Expected return on plan assets | (18) | (14) | (14) |
Recognition of net actuarial loss/(gain) | (4) | 4 | (3) | 3 | |
TOTAL PERIODIC OTHER POSTRETIREMENT BENEFIT COST/(CREDIT) | $(9) | ($4) | | $(5) | $(4) | |
Recognition of net actuarial gain | | Recognition of net actuarial gain | (4) | (2) | (3) |
Recognition of prior service credit | | Recognition of prior service credit | — | — | — | — |
TOTAL PERIODIC OTHER POSTRETIREMENT CREDIT | | TOTAL PERIODIC OTHER POSTRETIREMENT CREDIT | $(4) | $(9) | $(1) | $(5) |
Cost capitalized | Cost capitalized | (2) | (3) | (2) | (3) | Cost capitalized | (2) | (2) | (2) |
Reconciliation to rate level | Reconciliation to rate level | 7 | 7 | 6 | 6 | Reconciliation to rate level | 1 | 7 | — | 6 |
Total credit recognized | Total credit recognized | $(4) | $— | $(1) | $(1) | Total credit recognized | $(5) | $(4) | $(3) | $(1) |
| | | | | | | | | | | | | | |
| For the Nine Months Ended September 30, |
| Con Edison | CECONY |
(Millions of Dollars) | 2022 | 2021 | 2022 | 2021 |
Service cost - including administrative expenses | $14 | $15 | $11 | $11 |
Interest cost on projected other postretirement benefit obligation | 26 | 23 | 23 | 19 |
Expected return on plan assets | (54) | (51) | (43) | (41) |
Recognition of net actuarial loss/(gain) | (11) | 17 | (7) | 13 |
Recognition of prior service credit | (1) | | (2) | — | | (1) |
TOTAL PERIODIC OTHER POSTRETIREMENT BENEFIT COST/(CREDIT) | $(26) | $2 | | $(16) | $1 |
Cost capitalized | (6) | (9) | (5) | (7) |
Reconciliation to rate level | 22 | 7 | 18 | 2 |
Total credit recognized | $(10) | $— | $(3) | $(4) |
| | | | | | | | | | | | | | |
| For the Nine Months Ended September 30, |
| Con Edison | CECONY |
(Millions of Dollars) | 2023 | 2022 | 2023 | 2022 |
Service cost - including administrative expenses | $11 | $14 | $9 | $11 |
Interest cost on projected other postretirement benefit obligation | 43 | 26 | 37 | 23 |
Expected return on plan assets | (53) | (54) | (42) | (43) |
Recognition of net actuarial gain | (12) | (11) | (6) | (7) |
Recognition of prior service credit | (1) | (1) | — | — |
TOTAL PERIODIC OTHER POSTRETIREMENT CREDIT | $(12) | $(26) | $(2) | $(16) |
Cost capitalized | (5) | (6) | (4) | (5) |
Reconciliation to rate level | 2 | 22 | (2) | 18 |
Total credit recognized | $(15) | $(10) | $(8) | $(3) |
For information about the presentation of the components of other postretirement benefit costs, see Note E.
Contributions
As of September 30, 2022,2023, the Companies contributed $9$15 million (all of which was made by CECONY) to the other postretirement benefit plans in 2022.2023. The Companies' policy is to fund the total periodic benefit cost of the plans to the extent tax deductible.
Note G – Environmental Matters
Superfund Sites
Hazardous substances, such as asbestos, polychlorinated biphenyls (PCBs) and coal tar, have been used or generated in the course of operations of the Utilities and their predecessors and are present at sites and in facilities and equipment they currently or previously owned, including sites at which gas was manufactured or stored.
The Federal Comprehensive Environmental Response, Compensation and Liability Act of 1980 and similar state statutes (Superfund) impose joint and several liability, regardless of fault, upon generators of hazardous substances
for investigation and remediation costs (which include costs of demolition, removal, disposal, storage, replacement, containment and monitoring) and natural resource damages. Liability under these laws can be material and may be imposed for contamination from past acts, even though such past acts may have been lawful at the time they occurred. The sites at which the Utilities have been asserted to have liability under these laws, including their manufactured gas plant sites and any neighboring areas to which contamination may have migrated, are referred to herein as “Superfund Sites.”
For Superfund Sites where there are other potentially responsible parties and the Utilities are not managing the site investigation and remediation, the accrued liability represents an estimate of the amount the Utilities will need to pay to investigate and, where determinable, discharge their related obligations. For Superfund Sites (including the manufactured gas plant sites) for which one of the Utilities is managing the investigation and remediation, the accrued liability represents an estimate of the company's share of the undiscounted cost to investigate the sites and, for sites that have been investigated in whole or in part, the cost to remediate the sites, if remediation is necessary and if a reasonable estimate of such cost can be made. Remediation costs are estimated in light of the information available, applicable remediation standards and experience with similar sites.
The accrued liabilities and regulatory assets related to Superfund Sites at September 30, 20222023 and December 31, 20212022 were as follows:
| | | Con Edison | CECONY | | Con Edison | CECONY |
(Millions of Dollars) | (Millions of Dollars) | 2022 | 2021 | 2022 | 2021 | (Millions of Dollars) | 2023 | 2022 | 2023 | 2022 |
Accrued Liabilities: | Accrued Liabilities: | | | | Accrued Liabilities: | | | |
Manufactured gas plant sites | Manufactured gas plant sites | $833 | $845 | $744 | $755 | Manufactured gas plant sites | $874 | $876 | $780 | $782 |
Other Superfund Sites | Other Superfund Sites | 90 | 95 | 89 | 95 | Other Superfund Sites | 122 | 121 | 121 | 121 |
Total | Total | $923 | $940 | $833 | $850 | Total | $996 | $997 | $901 | $903 |
Regulatory assets | Regulatory assets | $919 | $938 | $840 | $860 | Regulatory assets | $983 | $991 | $899 | $906 |
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, 20222023 and 20212022 were as follows:
| | | For the Three Months Ended September 30, | | For the Three Months Ended September 30, |
| | Con Edison | CECONY | | Con Edison | CECONY |
(Millions of Dollars) | (Millions of Dollars) | 2022 | 2021 | 2022 | 2021 | (Millions of Dollars) | 2023 | 2022 | 2023 | 2022 |
Remediation costs incurred | Remediation costs incurred | $3 | $7 | $3 | $7 | Remediation costs incurred | $1 | $3 | $1 | $3 |
| | | For the Nine Months Ended September 30, | | For the Nine Months Ended September 30, |
| | Con Edison | CECONY | | Con Edison | CECONY |
(Millions of Dollars) | (Millions of Dollars) | 2022 | 2021 | 2022 | 2021 | (Millions of Dollars) | 2023 | 2022 | 2023 | 2022 |
Remediation costs incurred | Remediation costs incurred | $17 | $21 | $16 | $20 | Remediation costs incurred | $8 | $17 | $8 | $16 |
Insurance and other third-party recoveries received by Con Edison or CECONY were immaterial for the three and nine months ended September 30, 20222023 and 2021.2022.
In 2021,2022, 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 $2,980$3,140 million and $2,840$2,990 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, whichthat 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, 2022,2023, 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, 20222023 and December 31, 20212022 were as follows:
| | | Con Edison | CECONY | | Con Edison | CECONY |
(Millions of Dollars) | (Millions of Dollars) | 2022 | 2021 | 2022 | 2021 | (Millions of Dollars) | 2023 | 2022 | 2023 | 2022 |
Accrued liability – asbestos suits | Accrued liability – asbestos suits | $8 | $7 | $7 | Accrued liability – asbestos suits | $8 | $7 | $7 |
Regulatory assets – asbestos suits | Regulatory assets – asbestos suits | $8 | $7 | $7 | Regulatory assets – asbestos suits | $8 | $7 | $7 |
Accrued liability – workers’ compensation | Accrued liability – workers’ compensation | $62 | $65 | $59 | $62 | Accrued liability – workers’ compensation | $57 | $61 | $55 | $59 |
Regulatory liabilities – workers’ compensation | Regulatory liabilities – workers’ compensation | $11 | $8 | $11 | $8 | Regulatory liabilities – workers’ compensation | $12 | $11 | $15 | $11 |
Note H – Material Contingencies
Manhattan Explosion and Fire
On March 12, 2014, two 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. Eight people died and more than 50 people were injured. Additional buildings were also damaged. The National Transportation Safety Board (NTSB) investigated. The parties to the investigation included the company,CECONY, 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 companyCECONY 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, whichthat caused it to sag and overstressed the defective fusion joint. The NTSB also made safety recommendations, including recommendations to the companyCECONY 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 companyCECONY 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 is providingCECONY provided $27 million of future benefits to customers (for which it has accrued a regulatory liability) and willdid not recover from customers $126 million of costs for gas emergency response activities that it had previously incurred and expensed. Approximately eighty suitsLawsuits are pending against the companyCECONY seeking generally unspecified damages and, in some cases, punitive damages, for wrongful death, personal injury, property damage and business interruption. The companyCECONY notified its insurers of the incident and believes that the policies in force at the time of the incident will cover the company’sCECONY’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. During 2020, the companyCECONY accrued its estimated liability for the suits of $40$40 million and an insurance receivable in the same amount,, which and such estimated liability and receivable did not change as of September 30, 2022.2023.
Other Contingencies
For additional contingencies, see "COVID-19 Regulatory Matters" and "Other Regulatory Matters" in Note B, Note G and “Uncertain Tax Positions” in Note J.
Guarantees
Con Edison and its subsidiaries havehas entered into various agreements providing financial or performance assurance primarily to third parties on behalf of theirits subsidiaries. In addition, Con Edison has provided guarantees to third parties on behalf of its former subsidiary, the Clean Energy Businesses, that are in the process of being transferred to the buyer of the Clean Energy Businesses, RWE Aktiengesellschaft (RWE). Maximum amounts guaranteed by Con Edison and its subsidiaries under these agreements totaled $2,232$218 million and $2,157and $2,412 million at September 30, 20222023 and December 31, 2021,2022, respectively.
A summary, by type and term, of Con Edison's total guarantees under these agreements at September 30, 20222023 is as follows:
| Guarantee Type | Guarantee Type | 0 – 3 years | 4 – 10 years | > 10 years | Total | Guarantee Type | 0 – 3 years | 4 – 10 years | > 10 years | Total |
| | (Millions of Dollars) | | (Millions of Dollars) |
Con Edison Transmission | Con Edison Transmission | $442 | $— | | $— | | $442 | Con Edison Transmission | $78 | $— | $78 |
Energy transactions | 493 | 22 | 292 | 807 | |
Renewable electric projects | 332 | 69 | 360 | 761 | |
Other | 222 | — | | — | | 222 | |
Guarantees on behalf of the Clean Energy Businesses (a) | | Guarantees on behalf of the Clean Energy Businesses (a) | 100 | — | 31 | 131 |
Broken Bow II | | Broken Bow II | — | 9 |
| Total | Total | $1,489 | $91 | $652 | $2,232 | Total | $178 | $— | $40 | $218 |
(a) On March 1, 2023, Con Edison completed the sale of substantially all of the assets of the Clean Energy Businesses. See Note S and Note T. Guarantee amount shown represents guarantees issued on behalf of the Clean Energy Businesses that remain outstanding at September 30, 2023. Prior to and following the sale, RWE, with Con Edison's assistance, engaged in the process of transferring responsibility for these guarantees from Con Edison to RWE and that process is ongoing. Pursuant to the purchase and sale agreement, RWE is obligated to reimburse and hold harmless Con Edison for any payments Con Edison makes under guarantees issued by Con Edison on behalf of the Clean Energy Businesses. As of September 30, 2023, no such payments have been, or are probable of being, made.
Con Edison Transmission — Con Edison has guaranteed payment by CET ElectricCon Edison Transmission of the contributions CET ElectricCon Edison Transmission agreed to make to New York Transco LLC (NY(New York Transco). CET ElectricCon Edison Transmission owns a 45.7 percent interest in NY Transco. In April 2019, the New York Independent System Operator (NYISO) selected a transmissionTransco’s New York Energy Solution project, that was jointly proposed by National Grid and NY Transco. The siting, construction and operationthe majority 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, including a schedule for entry into service by December 2023.
which has been completed. Guarantee amount shown includes the maximum possible required amount of CET Electric’sCon Edison Transmission's contributions for the remainder of this project as calculated based on the assumptions that the project is completed at 175 percent of its estimated remaining costs and NYNew York Transco does not use any debt financing for the project.
Energy TransactionsBroken Bow II — Con Edison and the Clean Energy Businesses guarantee paymentshas guaranteed obligations on behalf of their 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 Projects — Con Edison and the Clean Energy Businesses guarantee payments on behalf of their wholly-owned subsidiariesits indirect subsidiary, Broken Bow II, associated with theirits investment in or development for others of, solar anda wind energy facilities.
Other — Other guarantees include a $70 million guarantee provided by Con Edison to Travelers Insurance Companyfacility. Broken Bow II is held for indemnity agreements for surety bonds in connection with the operationsale as of solar energy facilities and energy service projects of the Clean Energy Businesses. Other guarantees also include a guarantee provided by Con Edison in connection with the Clean Energy Businesses’ obligations under a $150 million, 364-Day Senior Unsecured Term Loan Credit Agreement.September 30, 2023. See Note D.T.
Note I – Leases
Operating lease cost and cash paid for amounts included in the measurement of lease liabilities for the three and nine months ended September 30, 20222023 and 20212022 were as follows:
| | | For the Three Months Ended September 30, | | For the Three Months Ended September 30, |
| | Con Edison | CECONY | | Con Edison | CECONY |
(Millions of Dollars) | (Millions of Dollars) | 2022 | 2021 | 2022 | 2021 | (Millions of Dollars) | 2023 | 2022 | 2023 | 2022 |
Operating lease cost | Operating lease cost | $22 | | $22 | | $17 | | $16 | | Operating lease cost | $17 | | $22 | | $17 | | $17 | |
Operating lease cash flows | Operating lease cash flows | $11 | | $10 | | $5 | | $6 | | Operating lease cash flows | $6 | | $11 | | $6 | | $5 | |
| | | | | | | | | | | | | | |
| For the Nine Months Ended September 30, |
| Con Edison (a) | CECONY |
(Millions of Dollars) | 2023 | 2022 | 2023 | 2022 |
Operating lease cost | $53 | | $66 | | $49 | | $50 | |
Operating lease cash flows | $17 | | $28 | | $14 | | $13 | |
36
| | | | | | | | | | | | | | |
| For the Nine Months Ended September 30, |
| Con Edison | CECONY |
(Millions of Dollars) | 2022 | 2021 | 2022 | 2021 |
Operating lease cost | $66 | | $65 | | $50 | | $49 | |
Operating lease cash flows | $28 | | $26 | | $13 | | $15 | |
(a) Amounts for Con Edison include amounts for the Clean Energy Businesses through February 2023. On March 1, 2023, Con Edison completed the sale of substantially all of the assets of the Clean Energy Businesses. See Note S and Note T.
As of September 30, 20222023 and December 31, 2021,2022, 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$2 million and $1 million as of September 30, 2023, respectively, and $5 million and $2 million as of December 31, 2022, respectively.
For the three and nine months ended September 30, 20222023 and 2021,2022, 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 $9 million for the three months ended September 30, 2023 and $11 million for the nine months ended September 30, 2023. Right-of-use assets obtained in exchange for operating lease obligations for Con Edison and CECONY were $5 million and $3 million, respectively, for the three months ended September 30, 2022 and $76 million and $67 million, respectively, for the nine months ended September 30, 2022. Right-of-use assets obtained in exchange for operating lease obligations for Con Edison and CECONY were $15 million and $5 million, respectively, for the three months ended September 30, 2021 and $32 million and $7 million, respectively, for the nine months ended September 30, 2021.
Other information related to leases for Con Edison and CECONY at September 30, 20222023 and December 31, 20212022 were as follows: | | | Con Edison | CECONY | | Con Edison | CECONY |
| | 2022 | 2021 | 2022 | 2021 | | 2023 | 2022 | 2023 | 2022 |
Weighted Average Remaining Lease Term: | Weighted Average Remaining Lease Term: | | | | Weighted Average Remaining Lease Term: | | | |
Operating leases(b) | Operating leases(b) | 18.2 years | 18.5 years | 12.6 years | 12.1 years | Operating leases(b) | 11.6 years | 12.3 years | 11.6 years | 12.4 years |
Finance leases | Finance leases | 7.2 years | 7.1 years | 2.5 years | 3.1 years | Finance leases | 6.5 years | 7.2 years | 2.9 years | 2.3 years |
Weighted Average Discount Rate: | Weighted Average Discount Rate: | | | | Weighted Average Discount Rate: | | | |
Operating leases(b) | Operating leases(b) | 4.3% | 3.7% | 3.5% | Operating leases(b) | 3.7% | 3.7% | 3.7% |
Finance leases | Finance leases | 1.9% | 1.8% | 1.0% | 1.1% | Finance leases | 3.0% | 1.9% | 3.0% | 1.0% |
(a)Amounts for Con Edison exclude operating leases of the Clean Energy Businesses, inclusive of Broken Bow II, that were classified as held for sale as of December 31, 2022. Including the operating leases of the Clean Energy Businesses would result in a weighted average remaining lease term of 18.3 years and a weighted average discount rate of 4.4 percent as of December 31, 2022. On March 1, 2023, Con Edison completed the sale of substantially all of the assets of the Clean Energy Businesses. See Note S and Note T.
(b)Amounts for Con Edison in 2023 exclude the operating lease of Broken Bow II, that was classified as held for sale as of September 30, 2023. Including the operating lease of Broken Bow II would result in a weighted average remaining lease term of 11.7 years and a weighted average discount rate of 3.8% as of September 30, 2023. See Note T.
Future minimum lease payments under non-cancellable leases at September 30, 20222023 were as follows:follows:
| (Millions of Dollars) | (Millions of Dollars) | Con Edison | CECONY | (Millions of Dollars) | Con Edison | CECONY |
Year Ending September 30,(b) | Year Ending September 30,(b) | Operating Leases | Finance Leases | Operating Leases | Finance Leases | Year Ending September 30,(b) | Operating Leases | Finance Leases | Operating Leases | Finance Leases |
2023 | $84 | $— | | $63 | $— | | |
2024 | 2024 | 81 | 1 | 62 | 1 | 2024 | $65 | $1 | $65 | $1 |
2025 | 2025 | 82 | — | | 63 | — | | 2025 | 66 | — | 65 | — |
2026 | 2026 | 81 | — | | 63 | — | | 2026 | 65 | — | 65 | — |
2027 | 2027 | 81 | — | | 64 | — | | 2027 | 65 | — | 65 | — |
2028 | | 2028 | 60 | — | 60 | — |
All years thereafter | All years thereafter | 963 | 1 | 472 | — | | All years thereafter | 419 | 1 | 419 | — |
Total future minimum lease payments | Total future minimum lease payments | $1,372 | $2 | $787 | $1 | Total future minimum lease payments | $740 | $2 | $739 | $1 |
Less: imputed interest | Less: imputed interest | (469) | — | | (165) | — | | Less: imputed interest | (149) | — | (149) | — |
Total | Total | $903 | $2 | $622 | $1 | Total | $591 | $2 | $590 | $1 |
Reported as of September 30, 2022 | | | | |
Reported as of September 30, 2023 | | Reported as of September 30, 2023 | | | |
Operating lease liabilities (current)(a) | Operating lease liabilities (current)(a) | $131 | $— | | $99 | $— | | Operating lease liabilities (current)(a) | $114 | $— | $114 | $— |
Operating lease liabilities (noncurrent)(a) | Operating lease liabilities (noncurrent)(a) | 772 | — | | 523 | — | | Operating lease liabilities (noncurrent)(a) | 477 | — | 476 | — |
Other noncurrent liabilities | Other noncurrent liabilities | — | | 2 | — | | 1 | Other noncurrent liabilities | — | 2 | — | 1 |
Total | Total | $903 | $2 | $622 | $1 | Total | $591 | $2 | $590 | $1 |
(a)
AtAmounts exclude operating lease liabilities of Broken Bow II ($7 million) that are classified as current liabilities held for sale on Con Edison's consolidated balance sheet as of September 30, 2022, the Companies had an additional2023. See Note T.
(b)Amounts exclude future minimum operating lease agreement that had not yet commenced,payments of Broken Bow II, of $3 million in total for a solar electric facility under construction by the Clean Energy Businesses,years ended September 30, 2024 through 2028, and $10 million for which the present valueall years thereafter, and imputed interest of the
lease payments is $3 million. This lease is expected to commence within one year, with a lease term of approximately 40 years.
T
The Companieshe Utilities are lessors under certain leases whereby the CompaniesUtilities 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 and nine months ended September 30, 20222023 and 2021.2022.
Note J – Income Tax
Con Edison’s income tax expense increased towas $144 million for the three months ended September 30, 2023 and $160 million for the three months ended September 30, 2022 from $1272022. The decrease in income tax expense is primarily due to lower income before income tax expense and higher flow-through of COVID-19 assistance benefits for uncollectible accounts, offset in part by changes in state apportionments resulting in higher state income taxes and lower renewable energy tax credits.
CECONY’s income tax expense was $109 million for the three months ended September 30, 2021.2023 and $124 million for the three months ended September 30, 2022. The increasedecrease in income tax expense is primarily due to higher income before income tax expense, higher state income taxesflow-through of COVID-19 assistance benefits for uncollectible accounts and assistance received from a New York State COVID-19 arrears program in 2022 (see “COVID-19 Regulatory Matters” in Note B), offset in part by higher income attributable to non-controlling interest and lower reserve for injuries and damages.
CECONY’s income tax expense increased to $124 million for the three months ended September 30, 2022 from $90 million for the three months ended September 30, 2021. The increase in income tax expense is primarily due to higher income before income tax expense, higher state income taxes, assistance received from a New York State COVID-19 arrears program in 2022 (see “COVID-19 Regulatory Matters” in Note B) and the absence of a favorable tax adjustment from a prior year tax return primarily due to an increase in the general business tax credits, offset in part by lowerhigher income before income tax expense and higher reserve for injuries and damages.
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, 20222023 and 20212022 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 | 6 | | 5 | | 5 | | 5 | |
Amortization of excess deferred federal income taxes | (6) | | (7) | | (7) | | (8) | |
Taxes attributable to non-controlling interest | — | | 4 | | — | | — | |
Cost of removal | 1 | | 1 | | 1 | | 1 | |
Other plant-related items | — | | (1) | | — | | (1) | |
Renewable energy credits | (1) | | (1) | | — | | — | |
Allowance for uncollectible accounts, net of COVID-19 assistance | — | | — | | 1 | | — | |
Injuries and damages reserve
| — | | — | | — | | 1 | |
| | | | |
| | | | |
Prior period federal income tax return adjustments | — | | (1) | | — | | (1) | |
| | | | |
| | | | |
Other | — | | — | | (1) | | — | |
Effective tax rate | 21 | % | 21 | % | 20 | % | 18 | % |
38
| | | | | | | | | | | | | | | | |
| For the Three Months Ended September 30, | | |
| Con Edison | CECONY | | |
(% of Pre-tax income) | 2023 | 2022 | 2023 | 2022 | | |
STATUTORY TAX RATE | | | | | | |
Federal | 21 | % | 21 | % | 21 | % | 21 | % | | |
Changes in computed taxes resulting from: | | | | | | |
State income tax, net of federal income tax benefit | 8 | | 6 | | 5 | | 5 | | | |
Amortization of excess deferred federal income taxes | (6) | | (6) | | (7) | | (7) | | | |
| | | | | | |
Cost of removal | 1 | | 1 | | 1 | | 1 | | | |
| | | | | | |
| | | | | | |
Renewable energy credits | — | | (1) | | — | | — | | | |
Allowance for uncollectible accounts, net of COVID-19 assistance | (2) | | — | | (2) | | 1 | | | |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
Impacts from the sale of the Clean Energy Businesses: | | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
State taxes on sale of subsidiary, net of federal income tax benefit | 1 | | — | | — | | — | | | |
| | | | | | |
Other | (2) | | — | | (1) | | (1) | | | |
Effective tax rate | 21 | % | 21 | % | 17 | % | 20 | % | | |
Con Edison’s income tax expense increased towas $416 million for the nine months ended September 30, 2023 and $330 million for the nine months ended September 30, 2022 from $194 million for the nine months ended September 30, 2021.2022. The increase in income tax expense is primarily due to higher income before income tax expense higher state income taxes and an increase indue to the reserve for uncertain tax positions for prior years atgain on the sale of the Clean Energy Businesses ($214 million), lower renewable energy tax credits ($13 million), offset in part by a lower loss attributable to non-controlling interesthigher flow-through of COVID-19 assistance benefits for uncollectible accounts ($19 million), tax benefits from the recognition of deferred unamortized investment tax credits ($105 million), and an increasechanges in research and development credits from prior years at the Utilities.state apportionments, net of federal income taxes ($27 million).
CECONY’s income tax expense increased towas $297 million for the nine months ended September 30, 2023 and $232 million for the nine months ended September 30, 2022 from $188 million for the nine months ended September 30, 2021.2022. The increase in income tax expense is primarily due to higher income before income tax expense, higher state income taxes and lower flow-through tax benefits in 20222023 for plant-related items, offset in part by higherlower research and development credits from prior years.years, a remeasurement of state deferred tax assets and liabilities as a result of the enacted New York State legislation and a decrease in the amortization of excess deferred federal income taxes due to the TCJA, offset in part by lower allowance for uncollectible accounts and higher flow-through of COVID-19 assistance benefits for uncollectible accounts.
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 nine months ended September 30, 20222023 and 20212022 is as follows:
38 | | | | | | | | | | | | | | |
| For the Nine Months Ended September 30, |
| Con Edison | CECONY |
(% of Pre-tax income) | 2023 | 2022 | 2023 | 2022 |
STATUTORY TAX RATE | | | | |
Federal | 21 | % | 21 | % | 21 | % | 21 | % |
Changes in computed taxes resulting from: | | | | |
State income tax, net of federal income tax benefit | 5 | | 6 | | 5 | | 5 | |
Taxes attributable to non-controlling interest | — | | 1 | | — | | — | |
Cost of removal | 1 | | 1 | | 2 | | 2 | |
Other plant-related items | — | | — | | (1) | | (1) | |
| | | | |
Renewable energy credits | (1) | | (2) | | — | | — | |
| | | | |
| | | | |
| | | | |
| | | | |
Amortization of excess deferred federal income taxes | (5) | | (8) | | (8) | | (10) | |
| | | | |
| | | | |
| | | | |
| | | | |
| | | | |
Impacts from the sale of the Clean Energy Businesses: | | | | |
| | | | |
| | | | |
| | | | |
Changes in state apportionments, net of federal income taxes | (1) | | — | | — | | — | |
Deferred unamortized investment tax credit recognized on sale of subsidiary | (4) | | — | | — | | — | |
Other | — | | — | | — | | — | |
Effective tax rate | 16 | % | 19 | % | 19 | % | 17 | % |
| | | | | | | | | | | | | | |
| 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 | 6 | | 5 | | 5 | | 5 | |
Amortization of excess deferred federal income taxes | (8) | | (11) | | (10) | | (11) | |
Taxes attributable to non-controlling interest | 1 | | 3 | | — | | — | |
Cost of removal | 1 | | 2 | | 2 | | 2 | |
Other plant-related items | — | | (1) | | (1) | | (1) | |
Renewable energy credits | (2) | | (2) | | — | | — | |
| | | | |
| | | | |
| | | | |
| | | | |
| | | | |
| | | | |
| | | | |
| | | | |
Other | — | | (1) | | — | | — | |
Effective tax rate | 19 | % | 16 | % | 17 | % | 16 | % |
On March 1, 2023, Con Edison completed the sale of the Clean Energy Businesses, which was accounted for as a stock sale for GAAP purposes and a deemed sale of assets and liquidation for tax purposes. Con Edison's pre-tax gain on the sale of the Clean Energy Businesses was $866 million ($784 million, net of tax) for the nine months ended September 30, 2023. The sale included all assets, operations and projects of the Clean Energy Businesses with the exception of tax equity interests and a deferred project, that were treated as distributions to Con Edison. See Note S and Note T.
In April 2021,2023, the IRS released Revenue Procedure 2023-15, which provides a safe harbor method of accounting that taxpayers may use to determine whether certain expenditures to maintain, repair, replace, or improve natural gas transmission and distribution property must be capitalized as improvements by the taxpayer or currently deducted for federal income tax purposes. This revenue procedure also provides procedures for taxpayers to obtain automatic consent to change their method of accounting to the safe harbor method of accounting permitted by this revenue procedure. Con Edison recorded a reduction in its current tax payable and an increase in accumulated deferred tax liabilities of $228 million ($204 million for CECONY) to reflect the cumulative impact of this change in accounting method for the Utilities.
In May 2023, New York State passed a law that increasedextended the increase in the corporate franchise tax rate on business income from 6.5%6.5 percent to 7.25%, retroactive to January 1, 2021,7.25 percent for another three-year period, through tax year 2026, for taxpayers with taxable income greater than $5 million. The law also reinstatedtemporarily extended the business capital tax at 0.1875%,through tax year 2026, not to exceed an annual maximum tax liability of $5 million per taxpayer.taxpayer, with a corporation paying the higher of its franchise or income tax liability during the same period. New York State requiresalso passed a corporate franchise taxpayerlaw establishing a permanent rate of 30 percent for the metropolitan transportation business tax surcharge. As a result of the sale of the Clean Energy Businesses in 2023, Con Edison has New York State taxable income in excess of $5 million after using its entire New York State NOL carryforward, and therefore, the group is subject to calculatethe higher 7.25 percent rate (9.425 percent with the surcharge rate) on its taxable income for tax year 2023. As a result of this legislation, CECONY remeasured its deferred tax assets and payliabilities that would reverse before 2027 and recorded state deferred income tax expense (net of federal benefit) and an increase in accumulated deferred tax liabilities of $10 million for the highest amountnine months ended September 30, 2023, all of tax underwhich was recorded in 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 business capital tax are scheduled to expire after 2023 and are not expected to have a material impact on the Companies’ financial position, resultssecond quarter of operations or liquidity.2023.
Uncertain Tax Positions
As a result of an unfavorable settlement reached at appeals with the IRS in the second quarter of 2022, the Clean Energy Businesses increased its reserve for uncertain tax positions for prior years by $5 million. At September 30, 2022,2023, the estimated liability for uncertain tax positions for Con Edison was $21$10 million ($7 million for CECONY). For the nine months ended September 30, 2023, Con Edison recognized $2 million of income tax expense mostly related to research and development credits on the Clean Energy Businesses. In the third quarter of 2023, Con Edison settled with the IRS on the research and development credits related to the Clean Energy Businesses for the 2016-2020 tax years which resulted in a reduction in both uncertain tax positions and related deferred tax assets for general business credit carryovers of $12 million. In addition, CECONY reversed $4 million in uncertain tax positions related to the same tax years that reduced its effective tax rate. Con Edison reasonably expects to resolve within the next twelve months approximately $17$9 million of various federal uncertainties due to the expected completion of ongoing tax examinations, of which the entire amount, if recognized, would reduce Con Edison's effective tax rate. The amount related to CECONY is $4$5 million, which,that, 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 $21$10 million, with $7 million attributable to CECONY.
In October 2023, Con Edison reached a settlement with New York State and closed its open examinations for the 2010-2014 tax years and paid $6 million in interest and $4 million in income taxes after applying the remaining $12 million of a special deposit made in 2013. New York State tax returns for 2015-2021 remain open.
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. For the nine months ended September 30, 20222023 and 2021,2022, the Companies recognized an immaterial amount of interest expense and no penalties for uncertain tax positions in their consolidated income statements. At September 30, 20222023 and December 31, 2021,2022, the Companies recognized an immaterial amount of accrued interest on their consolidated balance sheets.
Note K – Revenue Recognition
The following table presents, for the three and nine months ended September 30, 20222023 and 2021,2022, 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.
39 | | | | | | | | | | | | | | | | | | | | | | | | | | |
| For the Three Months Ended September 30, 2023 | For the Three Months Ended September 30, 2022 |
(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 | $3,195 | | $28 | $3,223 | $3,165 | | $(88) | $3,077 |
Gas | 338 | | (20) | 318 | 409 | | 5 | 414 |
Steam | 46 | | 3 | 49 | 55 | | 3 | 58 |
Total CECONY | $3,579 | | $11 | $3,590 | $3,629 | | $(80) | $3,549 |
O&R | | | | | | | | |
Electric | 242 | | 4 | 246 | 256 | | (4) | 252 |
Gas | 31 | | 4 | 35 | 29 | | 10 | 39 |
Total O&R | $273 | | $8 | $281 | $285 | | $6 | $291 |
Clean Energy Businesses (c) | | | | | | | | |
Renewables | — | | — | — | 197 | | — | | 197 |
Energy services | — | | — | — | 13 | | — | | 13 |
Develop/Transfer Projects | — | | — | — | 37 | | — | | 37 | |
Other | — | | — | — | — | | | 78 | | 78 | |
Total Clean Energy Businesses | $— | | $— | $— | $247 | | $78 | | $325 |
Con Edison Transmission | 1 | | — | 1 | 1 | | — | | 1 |
Other (b) | — | | — | — | — | | | (1) | (1) |
Total Con Edison | $3,853 | | $19 | $3,872 | $4,162 | | $3 | $4,165 |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| For the Three Months Ended September 30, 2022 | For the Three Months Ended September 30, 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 | $3,165 | | $(88) | $3,077 | $2,776 | | $(46) | $2,730 |
Gas | 409 | | 5 | 414 | 305 | | 2 | 307 |
Steam | 55 | | 3 | 58 | 52 | | 3 | 55 |
Total CECONY | $3,629 | | $(80) | $3,549 | $3,133 | | $(41) | $3,092 |
O&R | | | | | | | | |
Electric | 256 | | (4) | 252 | 229 | | (6) | 223 |
Gas | 29 | | 10 | 39 | 32 | | 2 | 34 |
Total O&R | $285 | | $6 | $291 | $261 | | $(4) | $257 |
Clean Energy Businesses | | | | | | | | |
Renewables | 197 | | — | | 197 | 185 | | — | | 185 |
Energy services | 13 | | — | | 13 | 65 | | — | | 65 |
Develop/Transfer Projects | 37 | | — | | 37 | 14 | | — | | 14 |
Other | — | | | 78 | 78 | — | | | — | | — | |
Total Clean Energy Businesses | $247 | | $78 | $325 | $264 | | $— | | $264 |
Con Edison Transmission | 1 | | — | | 1 | 1 | | — | | 1 |
Other (b) | — | | | (1) | | (1) | — | | | (1) | (1) |
Total Con Edison | $4,162 | | $3 | $4,165 | $3,659 | | $(46) | $3,613 |
(a) For the Utilities, this includes primarily revenue or negative revenue adjustments from alternative revenue programs, such as the revenue decoupling mechanisms under their NYNew York electric and gas rate plans (see "Rate Plans" in Note B). For the Clean Energy Businesses, this includes revenue from wholesale services. On March 1, 2023, Con Edison completed the sale of substantially all of the assets of the Clean Energy Businesses. See Note S and Note T.
(b) Parent company and consolidation adjustments.
(b) Other includes the parent company, Con Edison's tax equity investments, the deferred project held for sale and consolidated adjustments. See Note T.
(c) On March 1, 2023, Con Edison completed the sale of substantially all of the assets of the Clean Energy Businesses. See Note S and Note T.
| | | For the Nine Months Ended September 30, 2022 | For the Nine Months Ended September 30, 2021 | | For the Nine Months Ended September 30, 2023 | For the Nine Months Ended September 30, 2022 |
(Millions of Dollars) | (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 | (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 | CECONY | | | | | | CECONY | | | | | |
Electric | Electric | $7,525 | | $(124) | $7,401 | $6,695 | | $(34) | $6,661 | Electric | $7,449 | | $273 | $7,722 | $7,525 | | $(124) | $7,401 |
Gas | Gas | 2,090 | | 37 | 2,127 | 1,699 | | 31 | 1,730 | Gas | 2,117 | | 23 | 2,140 | 2,090 | | 37 | 2,127 |
Steam | Steam | 436 | | 8 | 444 | 383 | | 10 | 393 | Steam | 414 | | 11 | 425 | 436 | | 8 | 444 |
Total CECONY | Total CECONY | $10,051 | | $(79) | $9,972 | $8,777 | | $7 | $8,784 | Total CECONY | $9,980 | | $307 | $10,287 | $10,051 | | $(79) | $9,972 |
O&R | O&R | | | | O&R | | | |
Electric | Electric | 595 | | (1) | 594 | 535 | | (13) | 522 | Electric | $574 | | $14 | $588 | $595 | | $(1) | $594 |
Gas | Gas | 217 | | 2 | 219 | 184 | | (7) | 177 | Gas | 211 | | 4 | 215 | 217 | | 2 | 219 |
Total O&R | Total O&R | $812 | | $1 | $813 | $719 | | $(20) | $699 | Total O&R | $785 | | $18 | $803 | $812 | | $1 | $813 |
Clean Energy Businesses(c) | Clean Energy Businesses(c) | | | | Clean Energy Businesses(c) | | | | | |
Renewables | Renewables | 524 | | — | | 524 | 519 | | — | | 519 | Renewables | $68 | | $— | $68 | $524 | | $— | $524 |
Energy services | Energy services | 57 | | — | | 57 | 168 | | — | | 168 | Energy services | 7 | | — | 7 | 57 | | — | | 57 |
Develop/Transfer Projects | Develop/Transfer Projects | 56 | | — | | 56 | 26 | | — | | 26 | | Develop/Transfer Projects | 7 | | — | 7 | 56 | | — | | 56 | |
Other | Other | — | | | 220 | — | | | 66 | Other | — | | 47 | — | | | 220 | | 220 | |
Total Clean Energy Businesses | Total Clean Energy Businesses | $637 | | $220 | $857 | $713 | | $66 | $779 | Total Clean Energy Businesses | $82 | | $47 | $129 | $637 | | $220 | | $857 |
Con Edison Transmission | Con Edison Transmission | 3 | | — | | 3 | 3 | | — | | 3 | Con Edison Transmission | $3 | | $— | $3 | $3 | | — | | $3 |
Other (b) | Other (b) | — | | | (6) | | (6) | — | | | (4) | Other (b) | — | | (3) | — | | | (6) |
Total Con Edison | Total Con Edison | $11,503 | | $136 | $11,639 | $10,212 | | $49 | $10,261 | Total Con Edison | $10,850 | | $369 | $11,219 | $11,503 | | $136 | $11,639 |
(a) For the Utilities, this includes primarily revenue or negative revenue adjustments from alternative revenue programs, such as the revenue decoupling mechanismsmechanisms under their NYNew York electric and gas rate plans (see "Rate Plans" in Note B). For the Clean Energy Businesses, this includes revenue from wholesale services. On March 1, 2023, Con Edison completed the sale of substantially all of the assets of the Clean Energy Businesses. See Note S and Note T.
(b) ParentOther includes the parent company, Con Edison's tax equity investments, the deferred project held for sale and consolidationconsolidated adjustments. See Note T.
(c) On March 1, 2023, Con Edison completed the sale of substantially all of the assets of the Clean Energy Businesses. See Note S and Note T.
Use of the Percentage-of-Completion Method
Sales and profits on each percentage-of-completion contract at the Clean Energy Businesses were recorded each month based on the ratio of actual cumulative costs incurred to the total estimated costs at completion of the contract, multiplied by the total estimated contract revenue, less cumulative revenues recognized in prior periods (the ‘‘cost-to-cost’’ method). The impact of revisions of contract estimates, that may result from contract modifications, performance or other reasons, were recognized on a cumulative catch-up basis in the period in which the revisions are made. On March 1, 2023, Con Edison completed the sale of substantially all of the assets of the Clean Energy Businesses. See Note S.
40
| | | 2022 | 2021 | | 2023 | 2022 |
(Millions of Dollars) | (Millions of Dollars) | Unbilled contract revenue (a) | Unearned revenue (b) | | Unbilled contract revenue (a) | Unearned revenue (b) | | (Millions of Dollars) | Unbilled contract revenue (a) | | Unearned revenue (b) | | Unbilled contract revenue (a) | Unearned revenue (b) | |
Beginning balance as of January 1, | Beginning balance as of January 1, | $35 | $7 | | $11 | $41 | | Beginning balance as of January 1, | $80 | | $3 | | $35 | $7 | |
Additions (c) | Additions (c) | 103 | — | | | 174 | — | | Additions (c) | 2 | | — | | 103 | — | |
Subtractions (c) | Subtractions (c) | 81 | 4 | (d) | 127 | 31 | (d) | Subtractions (c) | 78 | | 3 | (d) | 81 | 4 | (d) |
Ending balance as of September 30, | Ending balance as of September 30, | $57 | $3 | | $58 | $10 | | Ending balance as of September 30, | $4 | (e) | $— | | $57 | $3 | |
(a)Unbilled contract revenue represents accumulated incurred costs and earned profits on contracts (revenue arrangements), whichthat 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, whichthat 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, whichthat 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. Of the subtractions in 2023, $21 million and $1 million relate to the sale of the Clean Energy Businesses for unbilled contract revenue and unearned revenue, respectively. See (e) below.
(d)Of the subtractions from unearned revenue, $4$3 million and $31$4 million were included in the balances as of January 1, 20222023 and 2021,2022, respectively.
(e)
As of September 30, 2022,Following the aggregate amount of the remaining fixed performance obligationssale of the Clean Energy Businesses, under contracts with customers for energy services was $303 million, of which $265 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 September 30, 2021, the estimated amount of these revenues was $12 million and $11 million for Con Edison and CECONY, respectively. For the nine months ended September 30, 2021, the estimated amountreceived substantially all contract revenue, net of these revenues was $49 million and $46 millioncertain costs incurred, 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 reflectedbattery storage project located 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.Imperial County, California. See "COVID-19 Regulatory Matters" in Note B.S.
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 September 30, 2022 and December 31, 2021.
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 ratesrates and resulted in increases to the allowance for uncollectible accounts. The increases/(decreases) to the allowance for customer uncollectible accounts for Con Edison and CECONY were $1 million and $3 million, respectively, for the three months ended September 30, 2023 and $(46) million and $(45) million, respectively, for the nine months ended September 30, 2023. The decreases primarily resulted from the credits issued pursuant to the New York State COVID-19 arrears assistance programs. See "COVID-19 Regulatory Matters" in Note B. The decreases to the allowance for customer uncollectible accounts for Con Edison and CECONY were $31 million and $27 million, respectively, for the three months ended September 30, 2022 and $12 million and $7 million, respectively, for the nine months ended September 30, 2022. The decreases primarily resulted from the credits issued pursuant to the New York State COVID-19 arrears assistance programs. See "COVID-19 Regulatory Matters" in Note B. The increases to the allowance for uncollectible accounts for Con Edison and CECONY were $38 million for the three months ended September 30, 2021 and $165 million and $162 million, respectively, for the nine months ended September 30, 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 rollforwardroll forward by major portfolio segment type for the three and nine months ended September 30, 20222023 and 2021:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| For the Three Months Ended September 30, |
| 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 July 1, | $336 | $275 | $9 | $7 | $324 | $262 | $7 | $4 |
Recoveries | 4 | 3 | — | | — | | 4 | 3 | — | | — | |
Write-offs | 2 | (24) | (2) | — | | 4 | (23) | (1) | — | |
Reserve adjustments | (37) | 59 | 2 | — | (35) | 58 | 1 | 1 |
Ending Balance September 30, | $305 | $313 | $9 | $7 | $297 | $300 | $7 | $5 |
2022:
| | | For the Nine Months Ended September 30, | | For the Three Months Ended September 30, |
| | Con Edison | CECONY | | Con Edison | CECONY |
| | Accounts receivable - customers | Other receivables | Accounts receivable - customers | Other receivables | | Accounts receivable - customers | Other receivables | Accounts receivable - customers | Other receivables |
(Millions of Dollars) | (Millions of Dollars) | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | (Millions of Dollars) | 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | 2023 | 2022 |
Allowance for credit losses | Allowance for credit losses | | | | Allowance for credit losses | | | |
Beginning Balance at January 1, | $317 | $148 | $22 | $7 | $304 | $138 | $19 | $4 | |
Beginning Balance at July 1, | | Beginning Balance at July 1, | $275 | $336 | $28 | $9 | $266 | $324 | $24 | $7 |
Recoveries | Recoveries | 13 | | 9 | | — | | — | | 12 | 8 | — | | — | | Recoveries | 3 | 4 | — | | — | | 3 | 4 | — | | — | |
Write-offs | Write-offs | (62) | | (66) | | (5) | | (1) | (56) | (62) | (3) | | — | | Write-offs | (43) | 2 | (4) | (2) | (41) | 4 | (3) | (1) | |
Reserve adjustments | Reserve adjustments | 37 | | 222 | | (8) | | 1 | | 37 | 216 | (9) | 1 | | Reserve adjustments | 41 | (37) | 7 | 2 | 41 | (35) | 6 | 1 |
Ending Balance September 30, | Ending Balance September 30, | $305 | $313 | $9 | $7 | $297 | $300 | $7 | $5 | Ending Balance September 30, | $276 | $305 | $31 | $9 | $269 | $297 | $27 | $7 |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| For the Nine Months Ended September 30, |
| Con Edison | CECONY |
| Accounts receivable - customers | Other receivables | Accounts receivable - customers | Other receivables |
(Millions of Dollars) | 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | 2023 | 2022 |
Allowance for credit losses | | | | | | | | |
Beginning Balance at January 1, | $322 | $317 | $10 | $22 | $314 | $304 | $7 | $19 |
Recoveries | 11 | 13 | — | | — | | 10 | 12 | — | | — | |
Write-offs | (135) | (62) | (5) | (5) | (130) | (56) | (3) | (3) | |
Reserve adjustments | 78 | 37 | 26 | (8) | 75 | 37 | 23 | (9) |
Ending Balance September 30, | $276 | $305 | $31 | $9 | $269 | $297 | $27 | $7 |
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, 20222023 and 20212022 were as follows:
| | | For the Three Months Ended September 30, | | For the Three Months Ended September 30, |
| | Operating revenues | Inter-segment revenues | Depreciation and amortization | Operating income/(loss) | | Operating revenues | Inter-segment revenues | Depreciation and amortization | Operating income/(loss) |
(Millions of Dollars) | (Millions of Dollars) | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | (Millions of Dollars) | 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | 2023 | 2022 |
CECONY | CECONY | | CECONY | |
Electric | Electric | $3,077 | $2,730 | $5 | $324 | $843 | $834 | Electric | $3,223 | $3,077 | $4 | $5 | $352 | $324 | $867 | $843 |
Gas | Gas | 414 | 307 | 2 | 93 | 82 | (40) | (48) | Gas | 318 | 414 | 2 | 108 | 93 | (108) | (40) |
Steam | Steam | 58 | 55 | 19 | 18 | 24 | 23 | (65) | (58) | Steam | 49 | 58 | 19 | 25 | 24 | (80) | (65) |
Consolidation adjustments | Consolidation adjustments | — | | — | | (26) | (25) | — | | — | | — | | — | | Consolidation adjustments | — | — | | (25) | (26) | — | | — | | — | — | |
Total CECONY | Total CECONY | $3,549 | $3,092 | $— | | $— | | $441 | $429 | $738 | $728 | Total CECONY | $3,590 | $3,549 | $— | $— | | $485 | $441 | $679 | $738 |
O&R | O&R | | O&R | |
Electric | Electric | $252 | $223 | $— | | $— | | $18 | $61 | $55 | Electric | $246 | $252 | $— | $— | | $19 | $18 | 59 | $61 |
Gas | Gas | 39 | 34 | — | | — | | 7 | 6 | (10) | (8) | Gas | 35 | 39 | — | — | | 7 | (11) | (10) |
Total O&R | Total O&R | $291 | $257 | $— | | $— | | $25 | $24 | $51 | $47 | Total O&R | $281 | $291 | $— | $— | | $26 | $25 | $48 | $51 |
Clean Energy Businesses(a) | Clean Energy Businesses(a) | $325 | $264 | $— | | $— | | $60 | $58 | $104 | $79 | Clean Energy Businesses(a) | $— | $325 | $— | $— | | $— | $60 | — | $104 |
Con Edison Transmission | Con Edison Transmission | 1 | — | | — | | — | | — | | (2) | Con Edison Transmission | 1 | — | — | | 1 | — | | (2) |
Other (a)(b) | Other (a)(b) | (1) | (1) | | — | | — | | (1) | | 1 | | (2) | Other (a)(b) | — | (1) | | — | — | | — | (1) | | (3) | (2) |
Total Con Edison | Total Con Edison | $4,165 | $3,613 | $— | | $— | | $525 | $512 | $889 | $850 | Total Con Edison | $3,872 | $4,165 | $— | $— | | $512 | $525 | $722 | $889 |
(a) Parent On March 1, 2023, Con Edison completed the sale of substantially all of the assets of the Clean Energy Businesses. As a result of this sale, the Clean Energy Businesses are no longer a principal segment. See Note S and Note T.
(b) Other includes the parent company, Con Edison’s tax equity investments, the deferred project held for sale and consolidation adjustments. Other does not represent a business segment. See Note T.
| | | For the Nine Months Ended September 30, | | For the Nine Months Ended September 30, |
| | Operating revenues | Inter-segment revenues | Depreciation and amortization | Operating income/(loss) | | Operating revenues | Inter-segment revenues | Depreciation and amortization | Operating income/(loss) |
(Millions of Dollars) | (Millions of Dollars) | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | (Millions of Dollars) | 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | 2023 | 2022 |
CECONY | CECONY | | CECONY | |
Electric | Electric | $7,401 | $6,661 | $14 | $994 | $959 | $1,233 | $1,337 | Electric | $7,722 | $7,401 | $14 | $1,035 | $994 | $1,292 | $1,233 |
Gas | Gas | 2,127 | 1,730 | 6 | 275 | 239 | 511 | 490 | Gas | 2,140 | 2,127 | 6 | 319 | 275 | 533 | 511 |
Steam | Steam | 444 | 393 | 57 | 55 | 72 | 69 | (15) | 9 | Steam | 425 | 444 | 55 | 57 | 74 | 72 | (75) | (15) |
Consolidation adjustments | Consolidation adjustments | — | | — | | (77) | (75) | — | | — | | — | | — | | Consolidation adjustments | — | | — | | (75) | (77) | — | | — | | — | | — | |
Total CECONY | Total CECONY | $9,972 | $8,784 | $— | | $— | | $1,341 | $1,267 | $1,729 | $1,836 | Total CECONY | $10,287 | $9,972 | $— | | $— | | $1,428 | $1,341 | $1,750 | $1,729 |
O&R | O&R | | O&R | |
Electric | Electric | $594 | $522 | $— | | $— | | $53 | $52 | $85 | $78 | Electric | $588 | $594 | $— | | $— | | $56 | $53 | $73 | $85 |
Gas | Gas | 219 | 177 | — | | — | | 20 | 19 | 25 | 30 | Gas | 215 | 219 | — | | — | | 22 | 20 | 27 | 25 |
Total O&R | Total O&R | $813 | $699 | $— | | $— | | $73 | $71 | $110 | $108 | Total O&R | $803 | $813 | $— | | $— | | $78 | $73 | $100 | $110 |
Clean Energy Businesses(a) | Clean Energy Businesses(a) | $857 | $779 | $— | | $— | | $178 | $172 | $248 | $196 | Clean Energy Businesses(a) | $129 | $857 | $— | | $— | | $— | $178 | $37 | $248 |
Con Edison Transmission | Con Edison Transmission | 3 | — | | — | | 1 | (8) | (7) | Con Edison Transmission | 3 | — | | — | | 1 | | 1 | | (6) | (8) |
Other (a)(b) | Other (a)(b) | (6) | (4) | | — | | — | | — | | — | | (5) | (4) | Other (a)(b) | (3) | (6) | | — | | — | | (1) | | — | | 864 | (5) |
Total Con Edison | Total Con Edison | $11,639 | $10,261 | $— | | $— | | $1,593 | $1,511 | $2,074 | $2,129 | Total Con Edison | $11,219 | $11,639 | $— | $— | | $1,506 | $1,593 | $2,745 | $2,074 |
(a) Parent(a) On March 1, 2023, Con Edison completed the sale of substantially all of the assets of the Clean Energy Businesses. As a result of this sale, the Clean Energy Businesses are no longer a principal segment. See Note S and Note T.
(b) Other includes the parent company, Con Edison’s tax equity investments, the deferred project held for sale and consolidation adjustments. Other does not represent a business segment.
See Note T.
Note 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 BusinessesCompanies use interest rate swapseconomic hedges to manage commodity price risk in accordance with provisions set by state regulators. The volume of hedging activity at the risks associated with interest rates relatedUtilities is dependent upon the forecasted volume of physical commodity supply to outstandingmeet customer needs, and expected future debt issuances and borrowings.program costs or benefits are recovered from or credited to full-service customers, respectively. Derivatives are recognized on the consolidated balance sheet at fair value (see Note 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.rules. On March 1, 2023, Con Edison completed the sale of substantially all of the assets of the Clean Energy Businesses. See Note S and Note T.
The fair values of the Companies’ derivatives including the offsetting of assets and liabilities on the consolidated balance sheet at September 30, 20222023 and December 31, 20212022 were:
| (Millions of Dollars) | (Millions of Dollars) | 2022 | | 2021 | | (Millions of Dollars) | 2023 | | 2022 | |
Balance Sheet Location | 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) | | 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 | Con Edison | | | | Con Edison | | | |
Fair value of derivative assets | Fair value of derivative assets | | | | Fair value of derivative assets | | | |
Current | Current | $667 | $(415) | $252 | (b)(c) | $285 | $(158) | $127 | (b) | Current | $115 | $(63) | $52 | (b) | $378 | $(332) | $46 | (b) |
Noncurrent | Noncurrent | 303 | (53) | | 250 | (c) | 90 | (13) | 77 | (d) | Noncurrent | 63 | (37) | 26 | | 193 | (108) | 85 | |
Total fair value of derivative assets held and used | | Total fair value of derivative assets held and used | 178 | (100) | 78 | | 571 | (440) | 131 | |
Current - assets held for sale (d) | | Current - assets held for sale (d) | — | | 93 | (8) | 85 | (c)(d) |
Noncurrent - assets held for sale (d) | | Noncurrent - assets held for sale (d) | — | | 83 | 11 | 94 | (c)(d) |
Total fair value of derivative assets | Total fair value of derivative assets | $970 | $(468) | $502 | | $375 | $(171) | $204 | | Total fair value of derivative assets | $178 | $(100) | $78 | | $747 | $(437) | $310 | |
Fair value of derivative liabilities | Fair value of derivative liabilities | | | | Fair value of derivative liabilities | | | |
Current | Current | $(212) | $142 | $(70) | (b) | $(289) | $137 | $(152) | (d) | Current | $(135) | $64 | $(71) | (b) | $(198) | $166 | $(32) | (b) |
Noncurrent | Noncurrent | (68) | 37 | (31) | | (94) | 10 | (84) | (d) | Noncurrent | (108) | 40 | (68) | | (49) | 36 | (13) | |
Total fair value of derivative liabilities held and used | | Total fair value of derivative liabilities held and used | $(243) | $104 | $(139) | | $(247) | $202 | $(45) | |
Current - liabilities held for sale (d) | | Current - liabilities held for sale (d) | — | | (31) | 6 | (25) | (d) |
Noncurrent - liabilities held for sale (d) | | Noncurrent - liabilities held for sale (d) | — | | (3) | (8) | (11) | (d) |
Total fair value of derivative liabilities | Total fair value of derivative liabilities | $(280) | $179 | $(101) | | $(383) | $147 | $(236) | | Total fair value of derivative liabilities | $(243) | $104 | $(139) | | $(281) | $200 | $(81) | |
Net fair value derivative assets/(liabilities) | Net fair value derivative assets/(liabilities) | $690 | ($289) | | $401 | | $(8) | $(24) | $(32) | | Net fair value derivative assets/(liabilities) | $(65) | $4 | $(61) | | $466 | $(237) | $229 | |
CECONY | CECONY | | | | CECONY | | | |
Fair value of derivative assets | Fair value of derivative assets | | | | Fair value of derivative assets | | | |
Current | Current | $521 | $(335) | $186 | (b) | $135 | $(64) | $71 | (b) | Current | $107 | $(60) | $47 | (b) | $350 | $(312) | $38 | (b) |
Noncurrent | Noncurrent | 181 | (45) | 136 | | 71 | (15) | 56 | | Noncurrent | 60 | (34) | 26 | | 176 | (96) | 80 | |
Total fair value of derivative assets | Total fair value of derivative assets | $702 | $(380) | $322 | | $206 | $(79) | $127 | | Total fair value of derivative assets | $167 | $(94) | $73 | | $526 | $(408) | $118 | |
Fair value of derivative liabilities | Fair value of derivative liabilities | | | | Fair value of derivative liabilities | | | |
Current | Current | $(134) | $84 | $(50) | | $(131) | $43 | $(88) | | Current | $(129) | $61 | $(68) | (b) | $(189) | $160 | $(29) | |
Noncurrent | Noncurrent | (50) | 35 | (15) | | (50) | 10 | (40) | | Noncurrent | (98) | 38 | (60) | | (43) | 34 | (9) | |
Total fair value of derivative liabilities | Total fair value of derivative liabilities | $(184) | $119 | $(65) | | $(181) | $53 | $(128) | | Total fair value of derivative liabilities | $(227) | $99 | $(128) | | $(232) | $194 | $(38) | |
Net fair value derivative assets/(liabilities) | Net fair value derivative assets/(liabilities) | $518 | $(261) | $257 | | $25 | $(26) | $(1) | | Net fair value derivative assets/(liabilities) | $(60) | $5 | $(55) | | $294 | $(214) | $80 | |
(a)Derivative instruments and collateral were offset on the consolidated balance sheet as applicable under the accounting rules. The Companies enter into master agreements for their commodity derivatives. These agreements typically provide offset in the event of contract termination. In such case, generally the non-defaulting party’s payable will be offset by the defaulting party’s payable. The non-defaulting party will customarily notify the defaulting party within a specific time period and come to an agreement on the early termination amount.
(b)At September 30, 2022,2023, margin deposits for Con Edison ($410 million and an immaterial amount)$(15) million) were classified as derivative assets and derivative liabilities, respectively, and for CECONY $4($9 million wasand $(11) million) were classified as derivative assets and derivative liabilities, respectively, on the consolidated balance sheet, but not included in the table. At December 31, 20212022 margin deposits for Con Edison and CECONY of $1$13 million and an immaterial amount, respectively, were classified as derivative assets, and ($(10) million and $(6) million, respectively) were classified as derivative liabilities 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 $21$75 million in noncurrent assets, $31 million in current assets and $84 million in noncurrent assets. At September 30,December 31, 2022, the Clean Energy Businesses had interest rate swaps with notional amounts of $996 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$982 million. The expiration dates of the swaps ranged from 2025-2041.
(d)Amounts represent derivative assets and liabilities included in current assets and current liabilities held for sale, respectively, on Con Edison's consolidated balance sheet as of December 31, 2022. On March 1, 2023, Con Edison completed the sale of substantially all of the assets of the Clean Energy Businesses. See Note S and Note T.
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 recordrecorded realized and unrealized gains and losses on their derivative contracts in gas purchased for resale and non-utility revenue in the reporting period in which they occur.occurred. The Clean Energy Businesses recordrecorded 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 and interest rates.rates. On March 1, 2023, Con Edison completed the sale of substantially all of the assets of the Clean Energy Businesses. See Note S and Note T.
The following table presents the realized and unrealized gains or losses on derivatives that have been deferred or recognized in earnings for the three and nine months ended September 30, 20222023 and 2021:2022:
| | | | | | | | | | | | | | | | | | | | |
| | For the Three Months Ended September 30, |
| | Con Edison | | CECONY |
(Millions of Dollars) | Balance Sheet Location | 2023 | 2022 | | 2023 | 2022 |
Pre-tax gains/(losses) deferred in accordance with accounting rules for regulated operations: | | | |
Current | Regulatory liabilities | $(11) | $31 | | $(9) | $30 |
Noncurrent | Regulatory liabilities | (11) | 23 | | (9) | 17 |
Total deferred gains/(losses) | | $(22) | $54 | | $(18) | $47 |
Current | Regulatory assets | $22 | $41 | | $20 | $37 |
Current | Recoverable energy costs | (98) | 168 | | (94) | 152 |
Noncurrent | Regulatory assets | (34) | 49 | | (29) | 45 |
Total deferred gains/(losses) | | $(110) | $258 | | $(103) | $234 |
Net deferred gains/(losses) | | $(132) | $312 | | $(121) | $281 |
| Income Statement Location | | | | | |
Pre-tax gains/(losses) recognized in income | | | | | |
| Gas purchased for resale | $— | $(2) | | $— | | $— | |
| Non-utility revenue | — | (1) | | — | | — | |
| Other operations and maintenance expense | 1 | | (1) | | 1 | | (1) | |
| Other interest expense (a) | — | 49 | | — | | — | |
Total pre-tax gains/(losses) recognized in income | $1 | $45 | | $1 | | ($1) | |
(a)Comprised of amounts related to interest rate swaps of the Clean Energy Businesses. On March 1, 2023, Con Edison completed the sale of substantially all of the assets of the Clean Energy Businesses. See Note S and Note T.
| | | | | | | | | | | | | | | | | | | | |
| | For the Nine Months Ended September 30, |
| | Con Edison | | CECONY |
(Millions of Dollars) | Balance Sheet Location | 2023 | 2022 | | 2023 | 2022 |
Pre-tax gains/(losses) deferred in accordance with accounting rules for regulated operations: | | | |
Current | Regulatory liabilities | $(221) | $379 | | $(203) | $350 |
Noncurrent | Regulatory liabilities | (128) | 91 | | (113) | 79 |
Total deferred gains/(losses) | | $(349) | $470 | | $(316) | $429 |
Current | Regulatory assets | $47 | $50 | | $45 | $45 |
Current | Recoverable energy costs | (474) | 357 | | (449) | 324 |
Noncurrent | Regulatory assets | (68) | 19 | | (63) | 18 |
Total deferred gains/(losses) | | $(495) | $426 | | $(467) | $387 |
Net deferred gains/(losses) | | $(844) | $896 | | $(783) | $816 |
| Income Statement Location | | | | | |
Pre-tax gains/(losses) recognized in income | | | | | |
| Gas purchased for resale | $4 | $1 | | $— | | $— | |
| Non-utility revenue | 17 | (23) | | — | | — | |
| Other operations and maintenance expense | 1 | | 4 | | 1 | | 4 | |
| Other interest expense (a) | 5 | 158 | | — | | — | |
Total pre-tax gains/(losses) recognized in income | $27 | $140 | | $1 | | $4 | |
(a)Comprised of amounts related to interest rate swaps of the Clean Energy Businesses. On March 1, 2023, Con Edison completed the sale of substantially all of the assets of the Clean Energy Businesses. See Note S and Note T.
| | | | | | | | | | | | | | | | | | | | |
| | For the Three Months Ended September 30, |
| | 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 | $31 | $296 | | $30 | $279 |
Noncurrent | Deferred derivative gains | 23 | 70 | | 17 | 66 |
Total deferred gains/(losses) | | $54 | $366 | | $47 | $345 |
Current | Deferred derivative losses | $41 | $(4) | | $37 | $(3) |
Current | Recoverable energy costs | 168 | 17 | | 152 | 13 |
Noncurrent | Deferred derivative losses | 49 | (61) | | 45 | (55) |
Total deferred gains/(losses) | | $258 | $(48) | | $234 | $(45) |
Net deferred gains/(losses) | | $312 | $318 | | $281 | $300 |
| Income Statement Location | | | | | |
Pre-tax gains/(losses) recognized in income | | | | | |
| Gas purchased for resale | $(2) | $2 | | $— | | $— | |
| Non-utility revenue | (1) | (23) | | — | | — | |
| Other operations and maintenance expense | (1) | 1 | | (1) | | 1 | |
| Other interest expense (a) | 49 | 11 | | — | | — | |
Total pre-tax gains/(losses) recognized in income | $45 | $(9) | | ($1) | | $1 | |
(a)See (b) below.
| | | | | | | | | | | | | | | | | | | | |
| | For the Nine Months Ended September 30, |
| | 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 | $379 | $443 | | $350 | $415 |
Noncurrent | Deferred derivative gains | 91 | 106 | | 79 | 97 |
Total deferred gains/(losses) | | $470 | $549 | | $429 | $512 |
Current | Deferred derivative losses | $50 | $25 | | $45 | $22 |
Current | Recoverable energy costs | 357 | (30) | | 324 | (29) |
Noncurrent | Deferred derivative losses | 19 | (16) | | 18 | (13) |
Total deferred gains/(losses) | | $426 | $(21) | | $387 | $(20) |
Net deferred gains/(losses) (a) | | $896 | $528 | | $816 | $492 |
| Income Statement Location | | | | | |
Pre-tax gains/(losses) recognized in income | | | | | |
| Gas purchased for resale | $1 | $4 | | $— | | $— | |
| Non-utility revenue | (23) | (22) | | — | | — | |
| Other operations and maintenance expense | 4 | 5 | | 4 | | 5 | |
| Other interest expense (b) | 158 | 45 | | — | | — | |
Total pre-tax gains/(losses) recognized in income | $140 | $32 | | $4 | | $5 | |
(a)Unrealized net deferred gains on electric and gas derivatives for the Utilities increased as a result of higher electric and gas commodity prices during the nine months ended September 30, 2022. Upon settlement, short-term deferred derivative gains generally reduce the recoverable costs of electric and gas purchases.
(b)Gains recognized in other interest expense relate to interest rate swaps at the Clean Energy Businesses. The gains recognized are consistent with the increasing interest rate environment in 2022.
The following table presents the hedged volume of Con Edison’s and CECONY’s commodity derivative transactions at September 30, 2022:2023:
| | | Electric Energy (MWh) (a)(b) | Capacity (MW) (a) | Natural Gas (Dt) (a)(b) | Refined Fuels (gallons) | | Electric Energy (MWh) (a)(b) | Capacity (MW) (a) | Natural Gas (Dt) (a)(b) | Refined Fuels (gallons) |
Con Edison | Con Edison | 29,387,725 | | 36,037 | | 289,274,503 | | 672,000 | | Con Edison | 30,376,045 | | 49,800 | | 353,360,000 | | 2,520,000 | |
CECONY | CECONY | 27,281,075 | | 22,350 | | 272,830,000 | | 672,000 | | CECONY | 27,714,325 | | 39,000 | | 334,950,000 | | 2,520,000 | |
(a)Volumes are reported net of long and short positions, except natural gas collars where the volumes of long positions are reported.
(b)Excludes electric congestion and gas basis swap contracts whichthat 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.Utilities. 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, 2022,2023, Con Edison and CECONY had $859$76 million and $543$72 million, respectively, of credit exposure in connection with open energy supply net receivables and hedging activities, net of collateral, respectively.collateral. Con Edison’s net credit exposure consisted of $110$6 million with independent system operators, $61 million with non-investment grade/non-ratedinvestment-grade counterparties, $222$18 million with commodity exchange brokers, and $466$52 million with investment-gradenon-investment grade/non-rated counterparties. CECONY’s net credit exposure consisted of $169$3 million with commodity exchange brokers, $17 million with investment-grade counterparties and $374$52 million with investment-grade counterparties.non-investment grade/non-rated counterparties. On March 1, 2023, Con Edison completed the sale of substantially all of the assets of the Clean Energy Businesses. See Note S and Note T.
The collateral requirements associated with, and settlement of, derivative transactions are included in net cash flows from operating activities in the Companies’ consolidated statement of cash flows. Most derivative instrument contracts contain provisions that may require a party to provide collateral on its derivative instruments that are in a net liability position. The amount of collateral to be provided will depend on the fair value of the derivative instruments and the party’s credit ratings.
The following table presents the aggregate fair value of the Companies’ derivative instruments with credit-risk-related contingent features that are in a net liability position, the collateral posted for such positions and the additional collateral that would have been required to be posted had the lowest applicable credit rating been reduced one level and to below investment grade at September 30, 2022:2023:
| (Millions of Dollars) | (Millions of Dollars) | Con Edison (a) | | CECONY (a) | | (Millions of Dollars) | Con Edison (a) | | CECONY (a) | |
Aggregate fair value – net liabilities | Aggregate fair value – net liabilities | $116 | | $55 | | Aggregate fair value – net liabilities | $133 | | $125 | |
Collateral posted | Collateral posted | 100 | | 100 | | Collateral posted | 73 | | 67 | |
Additional collateral (b) (downgrade one level from current ratings) | Additional collateral (b) (downgrade one level from current ratings) | 25 | | — | | Additional collateral (b) (downgrade one level from current ratings) | 51 | | 46 | |
Additional collateral (b)(c) (downgrade to below investment grade from current ratings) | Additional collateral (b)(c) (downgrade to below investment grade from current ratings) | 59 | | 20 | | Additional collateral (b)(c) (downgrade to below investment grade from current ratings) | 137 | | 126 | |
(a)Non-derivative transactions for the purchase and sale of electricity and gas and qualifying derivative instruments, whichthat have been designated as normal purchases or normal sales, are excluded from the table. These transactions primarily include purchases of electricity from independent system operators. In the event the Utilities and the Clean Energy Businesses wereare no longer extended unsecured credit for such purchases, the Companies would be required to post $6$1 million of additional collateral at September 30, 2022.2023. For certain other such non-derivative transactions, the Companies could bewould have been required to post collateral under certain circumstances, including in the event counterparties had reasonable grounds for insecurity.
(b)The Companies measure the collateral requirements by taking into consideration the fair value amounts of derivative instruments that contain credit-risk-related contingent features that are in a net liability position plus amounts owed to counterparties for settled transactions and amounts required by counterparties for minimum financial security. The fair value amounts represent unrealized losses, net of any unrealized gains where the Companies have a legally enforceable right to offset.
(c)Derivative instruments that are net assets have been excluded from the table. At September 30, 2022,2023, if Con Edison had been downgraded to below investment grade, it would have been required to post additional collateral for such derivative instruments of $96$19 million.
Note 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, whichthat 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, whichthat prioritizes the inputs to valuation techniques used to measure fair value in three broad levels. The rules require that assets and liabilities be classified in their entirety based on the level of input that is significant to the fair value measurement. Assessing the significance of a particular input may require judgment considering factors specific to the asset or liability and may affect the valuation of the asset or liability and their placement within the fair value
hierarchy. The Companies classify fair value balances based on the fair value hierarchy defined by the accounting rules for fair value measurements and disclosures as follows:
•Level 1 – Consists of assets or liabilities whose value is based on unadjusted quoted prices in active markets at the measurement date. An active market is one in which transactions for assets or liabilities occur with sufficient frequency and volume to provide pricing information on an ongoing basis. This category includes contracts traded on active exchange markets valued using unadjusted prices quoted directly from the exchange.
•Level 2 – Consists of assets or liabilities valued using industry standard models and based on prices, other than quoted prices within Level 1, that are either directly or indirectly observable as of the measurement date. The industry standard models consider observable assumptions including time value, volatility factors and current market and contractual prices for the underlying commodities, in addition to other economic measures. This category includes contracts traded on active exchanges or in over-the-counter markets priced with industry standard models.
•Level 3 – Consists of assets or liabilities whose fair value is estimated based on internally developed models or methodologies using inputs that are generally less readily observable and supported by little, if any, market activity at the measurement date. Unobservable inputs are developed based on the best available information and subject to cost benefit constraints. This category includes contracts priced using models that are internally developed and contracts placed in illiquid markets. It also includes contracts that expire after the period of time for which quoted prices are available and internal models are used to determine a significant portion of the value.
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, 20222023 and December 31, 20212022 are summarized below.
| | | 2022 | 2021 | | 2023 | 2022 |
(Millions of Dollars) | (Millions of Dollars) | Level 1 | Level 2 | Level 3 | Netting Adjustment (e) | Total | Level 1 | Level 2 | Level 3 | Netting Adjustment (e) | Total | (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 | Con Edison | | | | Con Edison | | | |
Derivative assets: | Derivative assets: | | | | Derivative assets: | | | |
Commodity (a)(b)(c) | Commodity (a)(b)(c) | $189 | $610 | $37 | $(435) | $401 | $95 | $260 | $17 | $(171) | $201 | Commodity (a)(b)(c) | $21 | $137 | $5 | $(75) | $88 | $84 | $476 | $2 | $(420) | $142 |
Interest rate swaps (a)(b)(c) | — | | 105 | | — | | — | | 105 | | — | | 4 | | — | | — | | 4 | | |
Commodity held for sale (g) | | Commodity held for sale (g) | — | | — | | — | | — | | — | | 6 | | 34 | | 31 | | 2 | | 73 | |
Interest rate swaps (a)(b)(c)(f)(g) | | Interest rate swaps (a)(b)(c)(f)(g) | — | | — | | — | | — | | — | | — | | 106 | | — | | — | | 106 | |
Other (a)(b)(d) | Other (a)(b)(d) | 415 | 116 | — | | — | | 531 | 492 | 135 | — | | — | | 627 | Other (a)(b)(d) | 462 | 121 | — | | — | | 583 | 437 | 116 | — | | — | | 553 |
Total assets | Total assets | $604 | $831 | $37 | $(435) | $1,037 | $587 | $399 | $17 | $(171) | $832 | Total assets | $483 | $258 | $5 | $(75) | $671 | $527 | $732 | $33 | $(418) | $874 |
Derivative liabilities: | Derivative liabilities: | | | | Derivative liabilities: | | | |
Commodity (a)(b)(c) | Commodity (a)(b)(c) | $17 | $211 | $21 | $(148) | $101 | $33 | $266 | $28 | $(148) | $179 | Commodity (a)(b)(c) | $16 | $196 | $15 | $(72) | $155 | $18 | $204 | $16 | $(184) | $54 |
Interest rate swaps (a)(b)(c) | — | | — | | — | | — | | — | — | | 57 | — | | — | | 57 | |
Commodity held for sale (g) | | Commodity held for sale (g) | — | | — | | — | | — | | — | 8 | | 24 | 2 | | 2 | | 36 |
Total liabilities | Total liabilities | $17 | $211 | $21 | $(148) | $101 | $33 | $323 | $28 | $(148) | $236 | Total liabilities | $16 | $196 | $15 | $(72) | $155 | $26 | $228 | $18 | $(182) | $90 |
CECONY | CECONY | | | | | | CECONY | | | |
Derivative assets: | Derivative assets: | | | | Derivative assets: | | | |
Commodity (a)(b)(c) | Commodity (a)(b)(c) | $170 | $497 | $9 | $(350) | $326 | $67 | $138 | $1 | $(79) | $127 | Commodity (a)(b)(c) | $21 | $130 | $3 | $(73) | $81 | $83 | $434 | $2 | $(388) | $131 |
Other (a)(b)(d) | Other (a)(b)(d) | 400 | 110 | — | | — | | 510 | 474 | 127 | — | | — | | 601 | Other (a)(b)(d) | 450 | 114 | — | | — | | 564 | 422 | 110 | — | | — | | 532 |
Total assets | Total assets | $570 | $607 | $9 | $(350) | $836 | $541 | $265 | $1 | $(79) | $728 | Total assets | $471 | $244 | $3 | $(73) | $645 | $505 | $544 | $2 | $(388) | $663 |
Derivative liabilities: | Derivative liabilities: | | | | Derivative liabilities: | | | |
Commodity (a)(b)(c) | Commodity (a)(b)(c) | $5 | $144 | $9 | $(93) | $65 | $1 | $172 | $8 | $(53) | $128 | Commodity (a)(b)(c) | $15 | $187 | $10 | $(73) | $139 | $18 | $198 | $8 | $(180) | $44 |
Total liabilities | Total liabilities | $5 | $144 | $9 | $(93) | $65 | $1 | $172 | $8 | $(53) | $128 | Total liabilities | $15 | $187 | $10 | $(73) | $139 | $18 | $198 | $8 | $(180) | $44 |
(a)The Companies’ policy is to review the fair value hierarchy and recognize transfers into and transfers out of the levels at the end of each reporting period. Con Edison and CECONY had $1had $10 million of commodity derivative liabilitiesassets transferred from level 3 to level 2 during the nine months ended September 30, 20222023 because of availability of observable market data due to the decrease in the terms of certain contracts from beyond three years as of MarchDecember 31, 2022 to less than three years as of JuneSeptember 30, 20222023. Con Edison and CECONY had $1an immaterial amount of derivative liabilities and $10 million and $9 million of commodity derivative assets, and $4 million and $3 million of commodity derivative liabilities, respectively, transferred from level 3 to level 2 during the year ended December 31, 20212022 because of availability of observable market data due to the decrease in the terms of certain contracts from beyond three years as of September 30, 20212022 to less than three years as of December 31, 2021.2022.
(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 September 30, 20222023 and December 31, 2021,2022, the Companies determined that nonperformance risk would have no material impact on their financial position or results of operations.
(d)Other assets are comprised of assets such as life insurance contracts within the deferred compensation plan and non-qualified retirement plans.
(e)Amounts represent the impact of legally-enforceable master netting agreements that allow the Companies to net gain and loss positions and cash collateral held or placed with the same counterparties.
(f)See Note N.
(g)On March 1, 2023, Con Edison completed the sale of substantially all of the assets of the Clean Energy Businesses. See Note S and Note T.
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 and interest rate swaps.derivatives. Under the Companies’ policies and procedures, multiple independent sources of information are obtained for forward price curves used to value commodity derivatives and interest rate swaps.derivatives. Fair value and changes in fair value of commodity derivatives and interest rate swaps are reported monthly 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.Utilities. The risk management group reports to the Companies’ Vice President and Treasurer.
| | | | | | | | | | | | | | |
| Fair Value of Level 3 at September 30, 20222023 | Valuation Techniques | Unobservable Inputs | Range |
| (Millions of Dollars) |
Con Edison – Commodity |
Electricity | $17(6) | Discounted Cash Flow | Forward energy prices (a) | $22.25-33.95-$172.80137.60 per MWh |
Electricity
| (4)(5) | Discounted Cash Flow | Forward capacity prices (a) | $0.55-1.90-$7.2611.75 per kW-month |
Natural Gas | — | Discounted Cash Flow | Forward natural gas prices (a) | $3.75-$21.37 per Dt |
Transmission Congestion Contracts/Financial Transmission RightsContracts | 31 | Discounted Cash Flow | Inter-zonal forward price curves adjusted for historical zonal losses (b) | $(12.89)-0.09-$207.833.80 per MWh |
Total Con Edison—Commodity | $16(10) | | | |
CECONY – Commodity |
Electricity | $4(4) | Discounted Cash Flow | Forward energy prices (a) | $37.33-37.55-$172.80137.60 per MWh |
Electricity | (6)(4) | Discounted Cash Flow | Forward capacity prices (a) | $1.10-1.90-$7.2611.75 per kW-month |
Transmission Congestion Contracts | 21 | Discounted Cash Flow | Inter-zonal forward price curves adjusted for historical zonal losses (b) | $1.03-0.09-$5.513.80 per MWh |
Total CECONY—Commodity | $—(7) | | | |
(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, 20222023 and 20212022 and classified as Level 3 in the fair value hierarchy:
| | | | | | | | | | | | | | |
| For the Three Months Ended September 30, |
| Con Edison | CECONY |
(Millions of Dollars) | 2022 | 2021 | 2022 | 2021 |
Beginning balance as of July 1, | $9 | $(9) | $(11) | $(7) |
Included in earnings | (10) | 21 | (1) | 1 |
Included in regulatory assets and liabilities | 14 | (17) | 11 | (11) |
Purchases | 1 | — | | — | | — |
Settlements | 2 | — | 1 | — |
Ending balance as of September 30, | $16 | $(5) | $— | $(17) |
| | | | | | | | | | | | | | |
| For the Three Months Ended September 30, |
| Con Edison | CECONY |
(Millions of Dollars) | 2023 | 2022 | 2023 | 2022 |
Beginning balance as of July 1, | $(7) | $9 | $(4) | $(11) |
Included in earnings | 2 | | (10) | | 1 | | (1) | |
Included in regulatory assets and liabilities | (3) | | 14 | | (3) | | 11 | |
Purchases | — | | 1 | | — | | — | |
Settlements | (2) | | 2 | | (1) | | 1 | |
| | | | |
| | | | |
Transfer out of level 3 | — | | — | | — | | — | |
Ending balance as of September 30, | $(10) | $16 | | $(7) | $— |
| | | | | | | | | | | | | | |
| For the Nine Months Ended September 30, |
| Con Edison | CECONY |
(Millions of Dollars) | 2023 | 2022 | 2023 | 2022 |
Beginning balance as of January 1, | $15 | $(11) | $(6) | $(7) |
Included in earnings | (2) | | 13 | (1) | | (3) | |
Included in regulatory assets and liabilities | 16 | | 7 | 10 | | 5 | |
Purchases | — | | 3 | | — | | — | |
| | | | |
Settlements | — | | 3 | | — | | 4 | |
Decrease due to the sale of the Clean Energy Businesses (a) | (29) | | — | — | | — | |
Transfer out of level 3 | (10) | | 1 | | (10) | | 1 | |
Ending balance as of September 30, | $(10) | $16 | | $(7) | $— |
| | | | | | | | | | | | | | |
| For the Nine Months Ended September 30, |
| Con Edison | CECONY |
(Millions of Dollars) | 2022 | 2021 | 2022 | 2021 |
Beginning balance as of January 1, | $(11) | $(19) | $(7) | $(10) |
Included in earnings | 13 | 20 | (3) | (2) |
Included in regulatory assets and liabilities | 7 | (9) | 5 | (7) |
Purchases | 3 | — | | — | | — |
Settlements | 3 | 3 | 4 | 2 |
Transfer out of level 3 | 1 | — | | 1 | — | |
Ending balance as of September 30, | $16 | $(5) | $— | $(17) |
(a) On March 1, 2023, Con Edison completed the sale of substantially all of the assets of the Clean Energy Businesses. See Note S and Note T.
For the Utilities, realized gains and losses on Level 3 commodity derivative assets and liabilities are reported as part of purchased power, gas and fuel costs. The Utilities generally recover these costs in accordance with rate provisions approved by the applicable state public utilities regulators. Unrealized gains and losses for commodity derivatives are generally deferred on the consolidated balance sheet in accordance with the accounting rules for regulated operations.
For the Clean Energy Businesses, realized and unrealized gains and losses on Level 3 commodity derivative assets and liabilities are reportedreported in non-utility revenues ($(8) million loss and $20 million gain) on the consolidated income statement forstatement. The Clean Energy Businesses recorded an $8 million loss. For the three months ended September 30, 2022 and 2021, respectively,a $17 million loss and ($20$20 million gain and $24 million gain) for the nine months ended September 30, 2023 and 2022, respectively. On March 1, 2023, Con Edison completed the sale of substantially all of the assets of the Clean Energy Businesses and 2021, respectively.amounts for 2023 are shown through the date of sale. See Note S and Note T.
Note P – Variable Interest Entities
The accounting rules for consolidation address the consolidation of a variable interest entity (VIE) by a business enterprise that is the primary beneficiary. A VIE is an entity that does not have a sufficient equity investment at risk to permit it to finance its activities without additional subordinated financial support, or whose equity investors lack the characteristics of a controlling financial interest. The primary beneficiary is the business enterprise that has the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance and either absorbs a significant amount of the VIE’s losses or has the right to receive benefits that could be significant to the VIE.
The Companies enter into arrangements including leases, partnerships and electricity purchase agreements, with various entities. As a result of these arrangements, the Companies retain or may retain a variable interest in these entities.
CECONY
CECONY has an ongoing long-term electricity purchase agreement with Brooklyn Navy Yard Cogeneration Partners, LP, a potential VIE. In 2021,2022, a request was made of this 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 this contract constitute CECONY’s maximum exposure to loss with respect to the potential VIE.
Clean Energy Businesses
In June 2021, a subsidiaryOn March 1, 2023, Con Edison completed the sale of substantially all of the assets of the Clean Energy Businesses, sold substantially allincluding CED Nevada Virginia and the Tax Equity Projects, defined below. See Note S.
In connection with the sale, Con Edison retained a tax equity interest valued at $20 million in two renewable electric projects located in Virginia that is accounted for as an equity method investment and that represents the maximum exposure to loss for this investment. See Note S. The earnings of the projects, once in service, are determined using the hypothetical liquidation at book value (HLBV) method of accounting and resulted in losses of $4 million ($3 million, after tax) and $8 million ($6 million, after tax) for the three and nine months ended September 30, 2023, respectively. Con Edison is not the primary beneficiary since the power to direct the activities that most significantly impact the economics of the renewable electric projects is not held by Con Edison.
Con Edison also retained its membership$11 million equity interest in a renewable electricthe Crane solar project that was valued at $0 as of September 30, 2023 and retained an equity interest of $11 million in the project whichthat is accounted for as an equity method investment. See Note S. The earnings of the project are determined using the hypothetical liquidation at book value (HLBV)HLBV method of accounting and such earnings were not material for the three and nine months ended September 30, 2022 and 2021.2023 or 2022. Con Edison is not the primary beneficiary since the power to direct the activities that most significantly impact the economics of the renewable electric project is not held by the Clean Energy Businesses.Con Edison.
HLBV Accounting
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'sCon Edison'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 companyCon Edison 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 liquidation value allocable to the tax equity investors.
CED Nevada Virginia
In February 2021, a subsidiary of the Clean 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 hashad less than a 100 percent membership interest.interest at December 31, 2022 and has no interest subsequent to the sale of
the Clean Energy Business on March 1, 2023. Con Edison iswas the primary beneficiary since the power to direct the activities that most significantly impact the economics of CED Nevada Virginia iswas held by the Clean Energy Businesses. Con Edison.The HLBV method of accounting resulted in an immaterial amount of income/(loss) for Con Edison and the tax equity investor for the nine months ended September 30, 2023; the amounts for the three and nine months ended September 30, 2022 and 2021 as follows:are presented below. On March 1, 2023, Con Edison completed the sale of substantially all of the assets of the Clean Energy Businesses. See Note S.
| | | | | | | | | | | | | | |
| For the Three Months Ended September 30, | For the Nine Months Ended September 30, |
(Millions of Dollars) | 2022 | 2021 | 2022 | 2021 |
Tax equity investor | $6 | $(74) | $(36) | $(127) |
After tax | 5 | (56) | (27) | (96) |
Con Edison | (7) | 74 | 32 | 127 |
After tax | (5) | 56 | 24 | 96 |
| | | | | | | | | | |
| For the Three Months Ended September 30, | For the Nine Months Ended September 30, | |
(Millions of Dollars) | 2022 | 2022 | | |
| | | | |
Income/(Loss) attributable to tax equity investor | $6 | $(36) | | |
Income/(Loss) attributable to tax equity investor after tax | 5 | (27) | | |
Income/(Loss) attributable to Con Edison | (7) | 32 | | |
Income/(Loss) attributable to Con Edison after tax | (5) | 24 | | |
Tax Equity Projects
In 2018,the Clean Energy Businesses completed its acquisition of Sempra Solar Holdings, LLC. Included in the acquisitionacquisition 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 arewere consolidated entities in which Con Edison hashad less than a 100 percent membership interest.interest at December 31, 2022 and has no interest in subsequent to the sale of the Clean Energy Businesses on March 1, 2023. Con Edison iswas the primary beneficiary since the power to direct the activities that most significantly impact the economics of the Tax Equity Projects iswas held by the Clean Energy Businesses.Con Edison. Electricity generated by the Tax Equity Projects is sold to utilities and municipalities pursuant to long-term power purchase agreements. The HLBV method of accounting resulted in an immaterial amount of income/(loss) for Con Edison and the tax equity investor for the nine months ended September 30, 2023; the amounts for the three and nine months ended September 30, 2022 and 2021 as follows:are presented below. On March 1, 2023, Con Edison completed the sale of substantially all of the assets of the Clean Energy Businesses. See Note S.
| | | | | | | | | | | | | | |
| For the Three Months Ended September 30, | For the Nine Months Ended September 30, |
(Millions of Dollars) | 2022 | 2021 | 2022 | 2021 |
Tax equity investor | $— | $— | $(7) | $8 |
After tax | — | — | (5) | 6 |
Con Edison | 16 | 14 | 44 | 27 |
After tax | 12 | 11 | 33 | 20 |
| | | | | | | | |
| For the Three Months Ended September 30, | For the Nine Months Ended September 30, |
(Millions of Dollars) | 2022 | 2022 |
Income/(Loss) attributable to tax equity investor | $— | $(7) |
Income/(Loss) attributable to tax equity investor after tax | — | (5) |
Income/(Loss) attributable to Con Edison | 16 | 44 |
Income/(Loss) attributable to Con Edison after tax | 12 | 33 |
At September 30, 2022 and December 31, 2021,2022, Con Edison’s consolidated balance sheet included the following amounts associated with its VIEs:
| | | Tax Equity Projects | | | Tax Equity Projects | |
| | Great Valley Solar (c)(d) | Copper Mountain - Mesquite Solar (c)(e) | CED Nevada Virginia (c)(h) | | Great Valley Solar (c)(d) | Copper Mountain - Mesquite Solar (c)(e) | CED Nevada Virginia (c)(f) |
(Millions of Dollars) | (Millions of Dollars) | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | (Millions of Dollars) | 2022 |
Non-utility property, less accumulated depreciation (f)(g) | $269 | $275 | $420 | $431 | $627 | $643 | |
Other assets | 40 | 37 | 168 | 167 | 61 | 55 | |
Assets held for sale (a) | | Assets held for sale (a) | $305 | $580 | $686 |
| Total assets (a) | Total assets (a) | $309 | $312 | $588 | $598 | $688 | $698 | Total assets (a) | $305 | $580 | $686 |
| Other liabilities | 19 | 14 | 83 | 74 | 325 | 315 | |
Liabilities held for sale (b) | | Liabilities held for sale (b) | 20 | 81 | 331 |
| Total liabilities (b) | Total liabilities (b) | $19 | $14 | $83 | $74 | $325 | $315 | Total liabilities (b) | $20 | $81 | $331 |
(a)The assets of the Tax Equity Projects and CED Nevada Virginia represent assets of a consolidated VIE that can be used only to settle obligations of the consolidated VIE. Amounts shown for 2022 are included in current assets held for sale on Con Edison's consolidated balance sheet as of December 31, 2022. On March 1, 2023, Con Edison completed the sale of substantially all of the assets of the Clean Energy Businesses. See Note S and Note T. For the disposal of the noncontrolling interest, see Con Edison's Consolidated Statement of Equity.
(b)The liabilities of the Tax Equity Projects and CED Nevada Virginia represent liabilities of a consolidated VIE for which creditors do not have recourse to the general credit of the primary beneficiary. Amounts shown for 2022 are included in current liabilities held for sale on Con Edison's consolidated balance sheet as of December 31, 2022. On March 1, 2023, Con Edison completed the sale of substantially all of the
assets of the Clean Energy Businesses. See Note S and Note T. For the disposal of the noncontrolling interest, see Con Edison's Consolidated Statement of Equity.
(c)Con Edison did not provide any financial or other support during the year 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 $71 million and $84$67 million at September 30, 2022 and December 31, 2021, respectively.2022.
(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 $100$94 million and $118 million at September 30, 2022 and December 31, 2021, respectively.
(f)Non-utility property is reduced by accumulated depreciation of $33 million for Great Valley Solar, $55 million for Copper Mountain - Mesquite Solar, and $24 million for CED Nevada Virginia at September 30, 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, 2021.2022.
(h)(f)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 $54 million and $95$39 million at September 30, 2022 and December 31, 2021, respectively.2022.
Note 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 ($16,86719,113 million and $923$1,057 million, respectively), at September 30, 2022,2023, 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 and nine months ended September 30, 20222023 and 20212022 were as follows:
| | | For the Three Months Ended September 30, | | For the Three Months Ended September 30, |
| | CECONY | | CECONY |
(Millions of Dollars) | (Millions of Dollars) | 2022 | 2021 | (Millions of Dollars) | 2023 | 2022 |
Cost of services provided | Cost of services provided | $35 | $34 | Cost of services provided | $39 | | $35 |
Cost of services received | Cost of services received | 19 | 18 | Cost of services received | $21 | | $19 |
| | | For the Nine Months Ended September 30, | | For the Nine Months Ended September 30, |
| | CECONY | | CECONY (a) |
(Millions of Dollars) | (Millions of Dollars) | 2022 | 2021 | (Millions of Dollars) | 2023 | 2022 |
Cost of services provided | Cost of services provided | $101 | $100 | Cost of services provided | $105 | | $101 |
Cost of services received | Cost of services received | 56 | 51 | Cost of services received | $61 | | $56 |
(a) On March 1, 2023, Con Edison completed the sale of substantially all of the assets of the Clean Energy Businesses. See Note S and Note T.
In addition, CECONY and O&R have joint gas supply arrangements in connection with which CECONY sold to O&R, $26$14 million and $17$26 million of natural gas for the three months ended September 30, 20222023 and 2021,2022, respectively, and $97$60 million and $59$97 million for the nine months ended September 30, 20222023 and 2021,2022, respectively. These amounts are net of the effect of related hedging transactions.
At September 30, 20222023 and December 31, 2021,2022, CECONY's net payable receivable (payable) from/to Con Edison for income taxes was $12$418 million and $10$(89) million, respectively.
The Utilities perform work and incur expenses on behalf of NY Transco, a company in which CET ElectricNew York Transco. Con Edison Transmission has a 45.7 percent equity interest.interest in New York Transco's New York Energy Solution project and a 41.7 percent interest in New York Transco's share of the Propel NY Energy project that is jointly owned with the New York Power Authority. The Utilities bill NYNew York Transco for such work and expenses in accordance with established policies. For the three months ended September 30, 20222023 and 2021,2022, the amounts billed by the Utilities to NYNew York Transco were
$1 million and $2 million, and an immaterial amount, respectively, and $6 million and an immaterial amount for the nine months ended September 30, 2023 and 2022, and 2021, 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 $8amounts were $7 million and $23$6 million, for the three and nine months ended September 30, 2021, respectively. During 2021, a subsidiary of CET Gas completed the sale of its 50 percent interest in Stagecoach.
CECONY has a 20-year transportation contract with the Mountain Valley Pipeline, LLC (MVP) for 250,000 dekatherms per day of capacity. CET Gas owns a 9.7 percent equityCon Edison Transmission has an interest in MVP (that is expected to be reduced to 8.0 percent).MVP. 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 and nine months ended September 30, 2022 and 2021, CECONY has not incurred no costs under the contract.
FERC has authorized CECONY to lend funds to O&R for a period of notno more than 12 months, in an amount not to exceed $250 million, at prevailing market rates. At September 30, 20222023 and December 31, 20212022 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 September 30, 2022 and 2021, the Clean Energy Businesses realized a $1 million gain and $4 million gain and $2 million gain for the nine months ended September 30, 2022, the Clean Energy Businesses realized gains of $1 millionand 2021,$2 million, respectively, under these contracts.contracts. On March 1, 2023, Con Edison completed the sale of substantially all of the assets of the Clean Energy Businesses. As a result of the sale, the Clean Energy Businesses are no longer recognized as a related party. See Note S and Note T.
Note R – New Financial Accounting Standards
In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting (ASU 2020-04). In 2017, the United Kingdom’s Financial Conduct Authority announced that it intends to stop persuading or compelling banks to submit the London Interbank Offered Rate (LIBOR), a benchmark interest rate referenced in a variety of agreements, after 2021. The United Kingdom's Financial Conduct Authority (the UK FCA) ceased publication of U.S. Dollar LIBOR after December 31, 2021 for one-week and two-month U.S. Dollar LIBOR tenors, and on June 30, 2023 it ceased publishing the overnight and twelve-month U.S. Dollar LIBOR. The UK FCA expects to cease publishing after June 30, 2023 for all otherthe one-month, three-month and six-month U.S. Dollar LIBOR tenors.after September 2024. ASU 2020-04 provides entities with optional expedients and exceptions for applying generally accepted accounting principles to contract modifications and hedging relationships, subject to meeting certain criteria, that reference LIBOR or another reference rate expected to be discontinued. In January 2021, the FASB issued amendments to the guidance through ASU 2021-01 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. As the Companies continue to modify contracts that contain references to LIBOR to allow for the use of an alternative rate, they have applied the practical expedient to not assess each change for a contract modification. 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. On December 31, 2022, ASU 2022-06, Reference Rate Reform (Topic 848):
Deferral of the Sunset Date of Topic 848 was issued, which extended the period of time entities can utilize the
reference rate reform relief guidance under ASU 2020-04 from December 31, 2022 to December 31, 2024.The Companies do not expect the new guidance to have a material impact on their financial position, results of operations and liquidity.
In March 2023, the FASB issued amendments to the guidance on accounting for Investments—Equity Method and Joint Ventures (Topic 323) through ASU 2023-02. The amendments would expand the use of the proportional amortization method of income recognition. The Companies do not expect the new guidance to have a material impact on their financial position, results of operations orand liquidity.
In December 2021, the FASB issued amendments to the guidance on accounting for government assistance through ASU 2021-10, Government Assistance (Topic 832): Disclosures by Business Entities about Government Assistance. The amendments require that business entities disclose 1) the types of assistance, 2) an entity’s
accounting for the assistance, and 3) the effect of the assistance on an entity’s financial statements. For public entities, the amendments are effective for reporting periods beginning after December 15, 2021. Early adoption is permitted. The Companies have concluded the new guidance will not have a material impact on the Companies’ financial position, results of operations and liquidity.
Note S – Dispositions
In April 2021, a subsidiary
During the first nine months of 2022, Con Edison considered strategic alternatives with respect to the Clean 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 retained portion of the membership interest was not material for the year ended December 31, 2021. See Note P.
Note T - Subsequent Events
Held-for-Sale Treatment of the Clean Energy Businesses
Businesses. On October 1, 2022, following the conclusion of such review and to allow for continued focus on the Utilities and their clean energy transition, Con Edison entered into a purchase and sale agreement pursuant to which Con Edison agreed to sell the Clean Energy Businesses to RWE Renewables Americas, LLC, a subsidiary of RWE Aktiengesellschaft (RWE) for a total of $6,800 million, subject to closing adjustments. On March 1, 2023, Con Edison completed the sale of substantially all of the assets of the Clean Energy Businesses to RWE for $3,993 million. The preliminary purchase price will beat closing was adjusted (i) upward for certain cash and cash equivalents, (ii) downward for certain indebtedness and debt-like items, (iii) downward for certain transaction expenses, (iv) upward or downward to the extent that the net working capital variesvaried from a set target, (v) upward or downward to the extent that capital expenditures incurred prior to the closing of the transaction varyvaried from a set budget, and (vi) downward by the value allocated to certain assets and projectsBroken Bow II, a project that arewas not able to be conveyed to RWE upon closing of the transaction. The final purchase and sale agreement includes certain customary representations, warranties and covenants. The transactionprice is subject to customary closing conditions, including,adjustments for timing differences and a final valuation report, among other things, expiration or early termination offactors; the waiting period underprocess to finalize the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and approvals by the Committee on Foreign Investment in the United States and the FERC.purchase price is ongoing. The transaction is expectedwas completed at arm’s length and RWE was not, and will not be, considered a related party to close in the first half of 2023, subject to satisfaction of the foregoing conditions, among other things.Con Edison.
Con Edison's preliminary gain on the sale of the Clean Energy Businesses was $866 million ($784 million, after tax) for the nine months ended September 30, 2023, including an immaterial amount for the three months ended September 30, 2023 resulting from certain finalization adjustments, and remains subject to true-up for the finalization adjustments described above. The portion of the gain attributable to the non-controlling interest retained in certain tax-equity projects was not material. The sale included all assets, operations and projects of the Clean Energy Businesses with the exception of tax equity interests in three projects, described below, and one deferred project, Broken Bow II, a 75MW nameplate capacity wind power project located in Nebraska. See Note T. Transfer of the project is dependent on one outstanding counterparty consent, and if and when such consent is obtained within two years of the sale of the Clean Energy Businesses, i.e., by February 28, 2025, the project will transfer. RWE Renewables Americas, LLC is operating the facility on behalf of Con Edison pursuant to certain service agreements, for which the fees are not material.
Con Edison retained the Clean Energy Businesses' tax equity investment interest in the Crane solar project and another tax equity investment interest in two solar projects located in Virginia. These tax equity partnerships produce renewable energy tax credits that can be used to reduce Con Edison’s federal income tax in the year in which the projects are placed in service. These tax credits would be subject to recapture, in whole or in part, if the assets were sold within a five-year period beginning on the date on which the assets are placed in service. Con Edison will continue to employ HLBV accounting for its interests in these tax equity partnerships. The combined carrying value of the retained tax equity interests is approximately $13 million at September 30, 2023.
Con Edison has also retained any post-sale deferred income taxes (federal and state income taxes, including tax attributes), any valuation allowances associated with the deferred tax assets, all current federal taxes and New York State taxes and the estimated liability for uncertain tax positions. The unamortized deferred investment tax credits of the Clean Energy Businesses were recognized in full upon the completion of the sale of the Clean Energy Businesses.
Concurrent with entering into the purchase and sale agreement, Con Edison incurred costs in the normal course of the sale process. Substantially all of the expected transactionTransaction costs of approximately $50 million to $60$48 million ($35 million to $45after-tax) were recorded in 2022, and $11 million ($8 million after-tax) are expected to be incurredwas recorded in 2022.the first three and nine months of 2023. Also, as described in Note A, depreciation and amortization expense of approximately $60 $41 million ($3928 million after-tax) willwere not be recorded on the assets of the Clean Energy Businesses in 2023 through the fourth quarterclosing of 2022. Further, sincethe transaction.
Following the sale of the Clean Energy Businesses and pursuant to a reimbursement and indemnity agreement with RWE, Con Edison remains responsible for certain potential costs related to a battery storage project located in Imperial County, California. Con Edison's exposure under the agreement could range up to approximately $172 million. As of September 30, 2023, no amounts were designatedrecorded as held for sale as of October 1, 2022 and the transaction is expectedliabilities on Con Edison's consolidated balance sheet related to close inthis agreement. During the first halfnine months of 2023, Con Edison is analyzing the potential impactreceived $24 million of the anticipated sale on its state apportionment factors. Based on current estimates, Con Edison expects to record an increase to its net deferred income tax liabilitiesproceeds from this battery storage project, and corresponding deferred income tax expense$4 million was recorded as unbilled contract revenue as of approximately $100 million to $140 million (net of federal income taxes) in the fourth quarter of 2022.September 30, 2023. See Note K.
The following table shows the pre-tax operating income for the Clean Energy Business represent a reportable segment.Businesses. The 2023 period shown is through the date of the sale of the Clean Energy Businesses and as such there is no applicable data for the three months ended September 30, 2023.
| | | | | | | | | | | |
| For the Three Months Ended September 30, | For the Nine Months Ended September 30, |
(Millions of Dollars) | 2022 | 2023 | 2022 |
Pre-tax operating income | $118 | $25 | $361 |
Pre-tax operating income, excluding non-controlling interest | $123 | $21 | $317 |
Note T – Assets and Liabilities Held-for-Sale
On March 1, 2023, Con Edison completed the sale of substantially all of the assets of the Clean Energy Businesses. See Note M. S. The sale included all assets, operations and projects of the Clean Energy Businesses with the exception of tax equity interests in three projects and one deferred project, Broken Bow II, a 75 MW nameplate capacity wind power project located in Nebraska. Transfer of the project from Con Edison to RWE is dependent on one outstanding counterparty consent, and if and when such consent is obtained within two years of the sale of the Clean Energy Businesses, i.e., by February 28, 2025, the project will transfer. RWE Renewables Americas, LLC is operating the facility on behalf of Con Edison pursuant to certain service agreements for which the fees are not material.
At September 30, 2022,2023, the carrying amounts of the major classes of assets and liabilities of the Clean Energy Businesses, which subsequent to September 30, 2022 met the accounting criteriaBroken Bow II that are expected to be designated as held for sale,sold are presented as if on a held for saleheld-for-sale basis, and accordingly exclude certain intercompany and net deferred tax liability balances, as follows:
| | | | | |
(Millions of Dollars) | September 30,
20222023 |
ASSETS | |
CURRENT ASSETS | |
Cash and temporary cash investments | $18 |
Accounts receivable and other receivables - net allowance for uncollectible accountsRestricted cash | 204$5 |
| |
Accrued unbilled revenue | 120 |
Fuel oil, gas in storage, materials and supplies, at average cost | 40 |
Restricted cash | 163 |
Fair value of derivatives assets | 58 |
| |
Other current assets | 1733 |
TOTAL CURRENT ASSETS | 7768 |
| |
NON-UTILITY PLANT | |
Non-utility property, net accumulated depreciation | 4,11476 |
Construction work in progress | 385 |
NET PLANT | 4,49976 |
OTHER NONCURRENT ASSETS | |
Goodwill | 31 |
Intangible assets,Assets less accumulated amortization | 1,22272 |
Operating lease right-of-use asset | 2667 |
Fair value of derivatives assets | 104 |
Other deferred charges and noncurrent assets | 22 |
| |
TOTAL OTHER NONCURRENT ASSETS | 1,64579 |
TOTAL ASSETS | $6,920163 |
| | | | | |
(Millions of Dollars) | September 30,
20222023 |
LIABILITIES | |
CURRENT LIABILITIES | |
Long-term debt due within one year | $323 |
Term loan | 1502 |
| |
Accounts payable | 217 |
| |
| |
Operating lease liabilities | 322 |
| |
Other current liabilities | 1433 |
TOTAL CURRENT LIABILITIES | 8657 |
NONCURRENT LIABILITIES | |
Asset retirement obligations | 763 |
| |
Operating lease liabilities | 2485 |
Other deferred credits and noncurrent liabilities | 20 |
TOTAL NONCURRENT LIABILITIES | 3448 |
LONG-TERM DEBT | 2,34461 |
TOTAL LIABILITIES | $3,55376 |
Item 2: Management’s Discussion and Analysis of Financial Condition and Results of Operations
This combined management’s discussion and analysis of financial condition and results of operations (MD&A) relates to the consolidated financial statements (the Third Quarter Financial Statements) included in this report of two separate registrants: Consolidated Edison, Inc. (Con Edison) and Consolidated Edison Company of New York, Inc. (CECONY). As used in this report, the term the “Companies” refers to Con Edison and CECONY. CECONY is a subsidiary of Con Edison and, as such, information in this management’s discussion and analysis about CECONY applies to Con Edison.
This MD&A should be read in conjunction with the Third 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, 20212022 (File Nos.1-14514 and 1-01217, 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 endedended March 31, 20222023 and June 30, 20222023 (File Nos. 1-14514 and 1-01217).
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.
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| | | | 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. In October 2022, Con Edison entered into a purchase and sale agreement pursuant to which Con Edison agreed to sell the Clean Energy Businesses to RWE Renewables Americas, LLC, a subsidiary of RWE Aktiengesellschaft. See Note T to the Third Quarter Financial Statements. Con Edison Transmission invests in electric transmission projects and manages both electric and gas assets while seeking to develop electric transmission projects. See "Investments" in Note A to the Third Quarter Financial Statements. On March 1, 2023, Con Edison completed the sale of substantially all of the assets of the Clean Energy Businesses. See Note S and Note T to the Third 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 companyCon Edison invests to provide reliable, resilient, safe and clean energy critical for its NYNew York 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 Third 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.
Anticipated Sale of the Clean Energy Businesses
On October 1, 2022, Con Edison entered into a purchase and sale agreement pursuant to which Con Edison agreed to sell the Clean Energy Businesses to RWE Renewables Americas, LLC, a subsidiary of RWE Aktiengesellschaft (RWE) for a total of $6,800 million, subject to closing adjustments. The purchase price will be adjusted (i) upward for certain cash and cash equivalents, (ii) downward for certain indebtedness and debt-like items, (iii) downward for certain transaction expenses, (iv) upward or downward to the extent that the net working capital varies from a set target, (v) upward or downward to the extent that capital expenditures incurred prior to the closing of the transaction vary from a set budget, and (vi) downward by the value allocated to certain assets and projects that are not able to be conveyed to RWE upon closing of the transaction.The purchase and sale agreement includes certain customary representations, warranties and covenants. The transaction is subject to customary closing conditions, including, among other things, expiration or early termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (HSR), and approvals by the Committee on Foreign Investment in the United States (CFIUS) and the FERC. The HSR notification and report form and the FERC filings were submitted on October 28, 2022 and the CFIUS filing is expected to be submitted in early December 2022. The transaction is expected to close in the first half of 2023, subject to satisfaction of the foregoing conditions, among other things.
Subject to the closing of the transaction, Con Edison intends to use the net proceeds from the sale to repay $1,050 million of parent company debt in 2023, invest in the Utilities and, subject to board approval, institute a share repurchase program.
In anticipation of the proceeds from the pending transaction, Con Edison intends to forego common equity issuances in 2022 and 2023 and will evaluate equity needs for 2024.
See “Assets Held for Sale” in Note A and Note T to the Third Quarter Financial Statements and "Liquidity and Financing," below.
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 and decreased its requested January 2023 increase for electric and gas rate increases to $1,038 million and $402 million, respectively. In May 2022, the NYSDPS submitted testimony in the NYSPSC proceeding in which CECONY requested electric and gas rate increases, effective January 2023. The NYSDPS testimony supports electric and gas rate increases of $278 million and $164 million, respectively. CECONY’s future earnings will depend on the rates authorized in, and the other provisions of, its 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 Third 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 nine months ended September 30, 2022, CECONY recorded a reduction in the amount of previously recorded earnings adjustment mechanisms of $4.9 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 Third 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 energy consumers' efforts to meet 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 demandusage to increase and gas and steam usage to decrease in their serviceservice territories as federal, state and local laws and policies are enacted and implemented that continueaim to promote renewablereduce the carbon intensity of the energy that is consumed. The Utilities’ and their regulators’ efforts to maintain electric energy. In particular,reliability in their service territories as electric usage increases may also impact the Companies’ future financial condition. 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 increasemaintain system reliability and manage service interruptions resulting from severe weather may impact the Companies’ future financial condition, results of operations and liquidity.
57 Aged Accounts Receivable Balances
Con Edison Transmission
Con Edison Transmission has taken steps to realign its portfolio to focus on electric transmission rather than gas by completing the saleAt September 30, 2023, CECONY’s and O&R’s customer accounts receivables balances of its 50 percent interest$2,228 million and $96 million, respectively, included aged accounts receivables (balances outstanding in Stagecoachexcess of 60 days) of $1,041 million and $15 million, respectively. In comparison, CECONY’s and O&R’s customer accounts receivable balances at February 28, 2020 were $1,322 million and $89 million, respectively, including aged accounts receivables (balances outstanding in 2021. During 2020excess of 60 days) of $408 million 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. 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$15 million, respectively. Prior to the Third Quarter Financial Statements.
COVID-19
The Coronavirus Disease 2019 (COVID-19) pandemic has impacted, and continues to impact, countries, communities, supply chains and markets. Thestart of the COVID-19 pandemic, resultedthe Utilities’ practice was to write off customer accounts receivables as uncollectible 90 days after the account is disconnected for non-payment or the account is closed during the collection process. In general, the Utilities suspended service disconnections during the COVID-19 pandemic. CECONY’s electric and gas rate plans include reconciliation of late payment charges (from January 1, 2023 through December 31, 2025) and write-offs of customer accounts receivable balances (from January 1, 2020 through December 31, 2025) to amounts reflected in changesrates, with recovery/refund from or to customers via surcharge/sur-credit. Surcharge recoveries for late payment charges and write-offs of accounts receivable balances will, collectively, be subject to separate annual caps for electric and gas that produce no more than a half percent (0.5 percent) total customer bill impact per commodity (estimated for electric to be $57.3 million, $60.3 million, $62.6 million for 2023, 2024 and 2025, respectively, and for gas to be $14.8 million, $15.9 million and $16.8 million for 2023, 2024 and 2025, respectively). Amounts in governmentalexcess of the surcharge caps will be deferred as a regulatory asset for recovery in CECONY’s next base rate cases. O&R’s 2022 - 2024 rate plans include reconciliation of late payment charges to amounts reflected in rates for years 2022 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. Although these regulatory policy and contributed to an economic slowdownmechanisms are in the Companies’ service territories. The decline in business activity in the Companies’ service territories resulted inplace, a continued slower recovery ofin cash fromof outstanding customer accounts receivable balances material increases inhas impacted the Companies’ liquidity and may continue to impact liquidity. The Utilities resumed collection activities, including write-offs of uncollectible customer accounts receivable balances, increases to the allowance for uncollectible accounts,balances. See “Liquidity and may result in increases to write-offsCapital Resources” 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 for outstanding customer accounts receivable balances“Capital Requirements 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”Resources,” below and “COVID-19 Regulatory Matters”"Regulatory Matters – Rate Plans – CECONY Electric and Gas” in Note B to the Third Quarter Financial Statements.
CECONY
Electric
CECONY provides electric service to approximately 3.6 million customers in all of New York City (except a part of Queens) and most of Westchester County, an approximately 660 square mile service area with a population of more than nine million.
During the summer of 2022, electric peak demand in CECONY's service area was 12,424 MW (which occurred on August 9, 2022). At design conditions, electric peak demand in CECONY's service area would have been approximately 12,692 MW in 2022 compared to CECONY's forecast of 12,570 MW. The higher peak demand at design conditions as compared to the forecast primarily reflects a moderate pace of recovery in electric demand in CECONY's territory during the emergence from the COVID-19 pandemic. CECONY increased its five-year forecast of average annual change in electric peak demand in its service area at design conditions from approximately 0.4 percent (for 2022 to 2026) to approximately 0.6 percent (for 2023 to 2027).
Gas
CECONY delivers gas to approximately 1.1 million customers in Manhattan, the Bronx, parts of Queens and most of Westchester County.
In May 2022, CECONY decreased its five-year forecast of average annual growth of the firm peak gas demand in its service area at design conditions from approximately 1.3 percent (for 2022 to 2026) to approximately 1.0 percent (for 2023 to 2027). The decrease primarily reflects an expected increase in customers’ energy efficiency measures and electrification of space heating. The decrease also reflects expected lower commercial building occupancy levels to continue in the aftermath of the COVID-19 pandemic.
In March 2019, due to gas supply constraints, CECONY established a temporary moratorium on new applications for firm gas service in most of Westchester County. In July 2020, CECONY filed a gas planning analysis with the NYSPSC that stated the moratorium could be lifted when increased pipeline capacity is achieved upon completion of Tennessee Gas Pipeline’s East 300 Upgrade Project (the East 300 Upgrade Project) or peak demand is reduced through efficiency and other demand side reductions to a level that would enable CECONY to lift the moratorium. The East 300 Upgrade Project would involve modifying two existing compressor stations in Pennsylvania and NJ and construction of one new compressor station in NJ. In April 2022, FERC issued a certificate of public convenience and necessity that authorizes Tennessee Gas Pipeline to construct and operate the East 300 Upgrade
Project. In October 2022, FERC approved Tennessee Gas Pipeline's request to begin construction activities for the existing compressor station in Pennsylvania and the new compressor station in NJ. The Clean Air permit and FERC approval to begin construction have not yet been obtained for the existing compressor station in NJ. The Tennessee Gas Pipeline’s East 300 Upgrade Project is expected to be completed by November 2023.
CECONY’s gas planning analysis also stated that the company is monitoring a gas supply constraint for the New York City portion of its service territory. In May 2022, the NYSPSC issued orders on gas planning and moratorium management. The orders set forth a schedule for filing future gas planning analyses and the process for initiating, operating and lifting a natural gas moratorium.
Steam
CECONY operates the largest steam distribution system in the United States by producing and delivering approximately 17,112 MMlb of steam annually to approximately 1,530 customers in parts of Manhattan.
In May 2022, CECONY decreased its five-year forecast of average annual growth in the peak steam demand in its service area at design conditions from a 0.1 percent increase (for 2022 to 2026) to a 0.1 percent decrease (for 2023 to 2027). The decrease reflects expected lower commercial building occupancy levels in the aftermath of the COVID-19 pandemic.
O&R
Electric
O&R and its utility subsidiary, Rockland Electric Company (RECO) (together referred to herein as O&R) provide electric service to approximately 0.3 million customers in southeastern New York, "NY", and northern New Jersey "NJ", an approximately 1,300 square mile service area.
During the summer of 2022, electric peak demand in O&R's service area was 1,457 MW (which occurred on August 9, 2022). At design conditions, electric peak demand in O&R's service area would have been approximately 1,536 MW in 2022 compared to O&R's forecast of 1,570 MW. This year's lower than expected peak demand at design conditions is primarily attributed to a reduction in new business. O&R increased its five-year forecast of average annual change in electric peak demand in its service area at design conditions from an approximately 0.3 percent decrease (for 2022 to 2026) to approximately a 0.4 percent increase (for 2023 to 2027).
Gas
O&R delivers gas to over 0.1 million customers in southeastern NY.
In May 2022, O&R decreased its five-year forecast of average annual growth of the firm peak gas demand in its service area at design conditions from approximately a 0.1 percent increase (for 2022 to 2026) to approximately a 0.1 percent decrease (for 2023 to 2027). The decrease primarily reflects an expected increase in customers' energy efficiency measures and electrification of space heating.
Clean Energy Businesses
Con Edison Clean Energy Businesses, Inc., together with its subsidiaries, are referred to in this report as the Clean Energy 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. The Clean Energy Businesses have approximately 3,200 megawatts (AC) of renewable energy projects in the U.S. In October 2022, Con Edison entered into a purchase and sale agreement pursuant to which Con Edison agreed to sell the Clean Energy Businesses to RWE Renewables Americas, LLC, a subsidiary of RWE Aktiengesellschaft. The closing of the transaction is subject to certain customary closing conditions, including, among other things, expiration or early termination of any required waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended and approvals by the Committee on Foreign Investment in the United States and FERC. The transaction is expected to close in the first half of 2023, subject to satisfaction of the foregoing conditions, among other things. See Note T to the Third Quarter Financial Statements.
Con Edison Transmission
Con Edison Transmission, Inc. invests in electric transmission projects and manages both electric and gas assets 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 ownspartnership and has been selectedjointly with the New York Power Authority, is developing the Propel NY Energy transmission project that will deliver offshore wind energy from Long Island to buildNew York City, Westchester County and the rest of the state's high voltage power grid. Con Edison Transmission expects to continue to participate in competitive solicitations to develop additional electric projects. The success of Con Edison Transmission’s efforts in these competitive solicitations and to grow its electric transmission assetsportfolio may impact Con Edison’s future capital requirements. During 2020 and 2021, Con Edison Transmission recorded impairments on its investment in NY. CET Gasthe Mountain Valley Pipeline, LLC (MVP). Any future impairments of Con Edison Transmission’s investment in MVP may impact Con Edison’s future financial condition and results of operations. See "Investments" in Note A to the Third Quarter Financial Statements and “Con Edison Transmission,” below.
CECONY
Electric
CECONY own 71.2provides electric service to approximately 3.6 million customers in all of New York City (except a part of Queens) and most of Westchester County, an approximately 660 square mile service area with a population of more than nine million.
During the summer (June-August) of 2023, electric peak demand in CECONY's service area was 11,464 MW (which occurred on July 27, 2023). At design conditions, electric peak demand in CECONY's service area would have been approximately 12,567 MW in 2023 compared to CECONY's forecast of 12,990 MW. The lower peak demand at design conditions as compared to the forecast reflects lower than anticipated new business, higher than anticipated energy efficiency measures by customers and variability in customers’ hybrid work schedules. CECONY increased its five-year forecast of average annual growth in electric peak demand in its service area at design conditions from approximately 0.6 percent (for 2023 to 2027) to approximately 0.7 percent (for 2024 to 2028).
Gas
CECONY delivers gas to approximately 1.1 million customers in Manhattan, the Bronx, parts of Queens and 28.8most of Westchester County.
In June 2023, CECONY decreased its five-year forecast of average annual growth of the firm peak gas demand in its service area at design conditions from 1.0 percent interests, respectively, in Honeoye, which operates a gas storage facility in upstate NY. In addition, CET Gas owns a 9.7(for 2023 to 2027) to 0.8 percent interest (that is expected(for 2024 to be reduced to 8.0 percent based2028). The decrease primarily reflects customers’ energy efficiency measures and electrification of space heating plus New York State’s prohibition on the current project cost estimateinstallation of fossil-fuel combustion equipment in certain new buildings within the next five years.
Steam
CECONY operates the largest steam distribution system in the United States by producing and CET Gas’ previous cappingdelivering approximately 15,794 MMlb of steam annually to approximately 1,520 customers in parts of Manhattan.
In June 2023, CECONY decreased its cash contributionsfive-year forecast of the average annual peak steam demand in its service area at design conditions from a 0.1 percent decrease (for 2023 to 2027) to a 0.5 percent decrease (for 2024 to 2028). The decrease reflects continued lower commercial building occupancy levels in the aftermath of the COVID-19 pandemic and customer migration to other heating sources.
O&R
Electric
O&R and its utility subsidiary, Rockland Electric Company (RECO) (together referred to herein as O&R) provide electric service to approximately 0.3 million customers in southeastern New York and northern New Jersey an approximately 1,300 square mile service area.
During the summer (June-August) of 2023, electric peak demand in O&R's service area was 1,336 MW (which occurred on July 28, 2023). At design conditions, electric peak demand in O&R's service area would have been approximately 1,493 MW in 2023 compared to O&R's forecast of 1,545 MW. The lower peak demand at design conditions as compared to the joint venture)forecast primarily reflects lower than anticipated new business, higher than anticipated solar energy contributions from customers and variability in Mountain Valley Pipeline LLC (MVP),customers’ hybrid work schedules. O&R increased its five-year forecast of average annual growth in electric peak demand in its service area at design conditions from approximately 0.4 percent (for 2023 to 2027) to approximately 2.0 percent (for 2024 to 2028).
Gas
O&R delivers gas to over 0.1 million customers in southeastern New York.
In June 2023, O&R decreased its five-year forecast of the average annual firm peak gas demand in its service area at design conditions from a joint venture developing0.1 percent decrease (for 2023 to 2027) to a proposed 300-mile gas transmission project0.2 percent decrease (for 2024 to 2028). The decrease primarily reflects customers’ energy efficiency measures and electrification of space heating plus New York State’s prohibition on the installation of fossil-fuel combustion equipment in WV and VA. Con Edison Transmission, Inc., together with CET Electric and CET Gas, are referred to in this report as Con Edison Transmission.certain new buildings within the next five years.
Certain financial data of Con Edison’s businesses are presented below:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| For the Three Months Ended September 30, 2022 | For the Nine Months Ended September 30, 2022 | At September 30, 2022 |
(Millions of Dollars, except percentages) | Operating Revenues | Net Income for Common Stock | Operating Revenues | Net Income for Common Stock | Assets |
CECONY | $3,549 | 85 | % | $493 | 80 | % | $9,972 | 86 | % | $1,138 | 77 | % | $54,812 | 84 | % |
O&R | 291 | 7 | | 34 | 6 | | 813 | 7 | | 72 | 5 | | 3,424 | 5 | |
Total Utilities | $3,840 | 92 | % | $527 | 86 | % | $10,785 | 93 | % | $1,210 | 82 | % | $58,236 | 89 | % |
Clean Energy Businesses (a) | 325 | 8 | | 97 | 16 | | 857 | 7 | | 293 | 20 | | 6,923 | 11 | |
Con Edison Transmission | 1 | — | | 1 | — | | 3 | — | | 2 | — | | 302 | — | |
Other (b) | (1) | | — | | (12) | (2) | | (6) | — | | (35) | (2) | | 302 | — | |
Total Con Edison | $4,165 | 100 | % | $613 | 100 | % | $11,639 | 100 | % | $1,470 | 100 | % | $65,763 | 100 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| For the Three Months Ended September 30, 2023 | For the Nine Months Ended September 30, 2023 | At September 30, 2023 |
(Millions of Dollars, except percentages) | Operating Revenues | Net Income for Common Stock | Operating Revenues | Net Income for Common Stock | Assets |
CECONY | $3,590 | 93 | % | $515 | 98 | % | $10,287 | 92 | % | $1,308 | 60 | % | $59,587 | 92 | % |
O&R | 281 | 7 | | 36 | 7 | | 803 | 7 | | 75 | 3 | | 3,622 | 6 | |
Total Utilities | $3,871 | 100 | % | $551 | 105 | % | $11,090 | 99 | % | $1,383 | 63 | % | $63,209 | 98 | % |
Clean Energy Businesses (a)(c) | — | — | | — | — | | 129 | 1 | | 22 | 1 | | — | — | |
Con Edison Transmission | 1 | — | | 4 | 1 | | 3 | — | | 10 | — | | 377 | 1 | |
Other (b)(c) | — | | — | | (29) | (6) | | (3) | — | | 770 | 36 | | 819 | 1 | |
Total Con Edison | $3,872 | 100 | % | $526 | 100 | % | $11,219 | 100 | % | $2,185 | 100 | % | $64,405 | 100 | % |
(a)Net income for common stock from the Clean Energy Businesses for the three andnine months ended September 30, 2023 includes $(9) million net after-tax mark-to-market effects. Net income for common stock from the Clean Energy Businesses for the nine months ended September 30, 2022 reflects $41 million and $121 million, respectively, of net after-tax mark-to-market effects and ($4)2023 also includes $2 million (after-tax) and $33 million (after-tax), respectively,net of the effects of HLBV accounting for tax equity investments in certain renewable and sustainable electric projects. Depreciation and amortization expenses on their assets of $31 million (after-tax) were not recorded for the nine months ended September 30, 2023. See "Assets Held for Sale" in Note A, Note S and Note T to the Third Quarter Financial Statements.
(b)Other includes the parent company, Con Edison’s tax equity investments, the deferred project held for sale and consolidation adjustments. Net income for common stock for the nine months ended September 30, 2023 includes an immaterial amount of income tax impact on the net after-tax mark-to-market effects. Net income for common stock for the three and nine months ended September 30, 20222023 also includes $(3) million net of tax and $(10)$(7) million respectively,net of income tax impact on the net after-tax mark-to-market effect and an immaterial amount and $(3) million (after-tax), respectively, of income tax impact on the effects of HLBV accountingaccounting for tax equity investments in certain renewable electric projects. Net income for common stock for the three and sustainable projects.nine months ended September 30, 2023 also includes $(5) million net of tax and $(13) million net of tax, respectively, of transaction costs and other accruals related to the sale of the Clean Energy Businesses. Impact of the sale of the Clean Energy Businesses on the changes in state unitary tax apportionments (net of federal taxes) for the three and nine months ended September 30, 2023 includes $(7) million and $(17) million, respectively. Depreciation and amortization expenses on the assets of the Clean Energy Businesses of $(3) million (after-tax) were not recorded for the nine months ended September 30, 2023. Net income for common stock for the three months ended September 30, 2023 includes an increase in state taxes on sale of $(19) million (after-tax). Net income for common stock for the nine months ended September 30, 2023 includes $784 million (after-tax) for the gain on the sale of substantially all of the assets of the Clean Energy Businesses. See Note S and Note T to the Third Quarter Financial Statements.
(c)On March 1, 2023, Con Edison completed the sale of substantially all of the assets of the Clean Energy Businesses. See Note S and Note T to the Third Quarter Financial Statements.
Inflation Reduction Act
On August 16, 2022, the Inflation Reduction Act of 2022 (the Act) was signed into law and included a new 15% corporate alternative minimum tax15 percent Corporate Alternative Minimum Tax (CAMT) for corporations that report over $1,000 million in profits (i.e., based on book income). Under the Act, a corporation will be subject to the CAMT if its average annual Adjusted Financial Statement Income (AFSI) for the three taxable year period ending prior to the taxable year exceeds $1,000 million. The CAMTmillion, and will apply to tax years beginning after December 31, 2022. Based on management’s preliminary calculations, Con Edison and the Utilities willCECONY do not expect to be subject to the CAMT in 2023 but are expected to be subject to the CAMT in subsequent years. However, the provisions of the CAMT are not expected to have a material impact on Con Edison and the Utilities'Companies’ financial position, results of operations or liquidity in the four years that management calculated an estimated CAMT in 2024 through 2027. Con Edison and the Utilities are continuing to assess the impacts of the Act on them and such assessments may be impacted by guidance to be issued by the U.S. Treasury in the future.liquidity.
Coronavirus Disease 2019 (COVID-19) Impacts
The Companies continue to monitor the impact of the COVID-19 global pandemic on their employees, customers and other stakeholders. The Companies support employee health and facility hygiene through regular cleaning and disinfecting of their facilities and leveraging technology through hybrid (combination of in-person and remote) meetings. Employees who test positive for COVID-19 are directed to isolate at home and are evaluated for close, prolonged contact with other employees. Following the Centers for Disease Control and Prevention guidelines, sick 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 emergence from the pandemic.New York Legislation
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 prevented the U.S. government from enforcing this federal contractor vaccine mandate nationwide. In August 2022, the Eleventh Circuit of the U.S. Court of Appeals issued a decision upholding the injunction against the federal contractor vaccine mandate in states that were a party to the action. The federal government subsequently announced that it would not enforce the vaccine mandate in all states.
In DecemberApril 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. The New York City vaccination mandate was rescinded on November 1, 2022.
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 Third 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 had several key business tax relief measures that presented cash benefits and/or refunds 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.
The CARES Act also allowed 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 nine months ended September 30, 2021, Con Edison and CECONY recognized a tax benefit to Taxes, other than income taxes of $9 million and $4 million, respectively.
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 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. For the three and nine months ended September 30, 2022, CECONY issued total credits of $265.8 million and $315.1 million, respectively, and O&R issued total credits of $4.7 million and $5.5 million, respectively, towards reducing customers’ accounts receivable balances pursuant to COVID-19 arrears assistance programs. See "COVID-19 Regulatory Matters" in Note B to the Third Quarter Financial Statements. The NYSPSC may consider additional programs to address utility arrearages. CECONY and O&R reduced customer accounts receivables balances commensurate with amounts authorized to be recovered under customer arrearage programs and expect to further reduce customer accounts balances for additional amounts that may be authorized by the NYSPSC. See "COVID-19 Regulatory Matters" in Note B to the Third Quarter Financial Statements and "Liquidity and Financing," below.
CECONY’s and O&R’s "accounts receivable – customers" balance (net allowance for uncollectible accounts)
increased from $1,841 million and $91 million at December 31, 2021 to $1,982 million and $101 million at September 30, 2022, respectively. The amount of the customer accounts receivable balances that are over 60 days in arrears for CECONY and O&R decreased from $1,272 million and $29 million, respectively, as of December 31, 2021 to $1,247 million and $21 million, respectively, as of September 30, 2022. CECONY’s and O&R’s allowances for uncollectible customer accounts reserve decreased from $304 million and $12.3 million at December 31, 2021 to $297 million and $7.9 million at September 30, 2022 respectively.
During the first nine months of 2022, the potential economic impact of the COVID-19 pandemic and the COVID-19 arrears assistance programs, were considered in forward-looking projections related to write-off and recovery rates, resulting in changes 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 September 30, 2022.
NY Legislation
In April 2021, NY passed a law that increasesincreased the corporate franchise tax rate on business income from 6.5%6.5 percent to 7.25%,7.25 percent, retroactive to January 1, 2021, for taxpayers with taxable income greater than $5 million. The law also reinstatesreinstated the business capital tax at 0.1875%,0.1875 percent, not to exceed a maximum tax liability of $5 million per taxpayer. NYNew York 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 arewere scheduled to expire after 2023. In May 2023, and are not expected to haveNew York passed a material impact onlaw that extended 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 (OTDA) in coordination with the NYSDPS and the NYSPSC (the OTDA Program). Under the OTDA 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 Utilitiesincrease in the corporate franchise tax rate from 6.5 percent to 7.25 percent for an additional three years, through tax year that2026 and extended the arrears are waived and certified bybusiness capital tax through tax year 2026. New York also passed a law establishing a permanent rate of 30 percent for the NYSPSC. See "COVID-19 Regulatory Matters” in Note B to the Third Quarter Financial Statements.
Liquidity and Financing
The Companies continue to monitor the impactsmetropolitan transportation business tax surcharge. As a result 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 startsale of the COVID-19 pandemicClean Energy Businesses in March 2020. Inflationary pressure and higher interest rates could increase the amount of capital needed by the Utilities and the costs of such capital. See Note C and Note D to the Third Quarter Financial Statements and "Interest Rate Risk," below.
The decline in business activity in the Utilities’ service territory due to the COVID-19 pandemic and subsequent2023, Con Edison has New York State taxable income in excess of $5 million after using its entire New York state NOL carryforward, and therefore, the group is subject to the higher 7.25 percent rate (9.425 percent with the surcharge rate) on PAUSEits taxable income for tax year 2023. As a result of this legislation, CECONY remeasured its deferred tax assets and related executive orders (that have since been lifted) resultedliabilities that would reverse before 2027 and recorded state deferred income tax expense (net of federal tax benefit) and an increase in a slower recovery in cash accumulated deferred tax liabilities of outstanding customer accounts receivable balances in 2020 and 2021. During$10 million for the nine months ended September 30, 2022, increases2023, all of which was recorded in electric and gas commodity prices have contributed and may further contribute to a slower recoverythe second quarter 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 Third Quarter Financial Statements and “Financial and Commodity Market Risks – Commodity Price Risk,” below.2023.
New York State and the NYSPSC implemented COVID-19 arrears assistance programs that provide credits and establishes surcharge recovery mechanisms towards reducing the arrears balances of low-income electric and gas customers of CECONY and O&R. See "COVID-19 Regulatory Matters" in Note B and Note L to the Third Quarter Financial Statements and “Coronavirus Disease 2019 (COVID-19) Impacts – Accounting Considerations,” above.
In October 2022, Con Edison entered into an agreement to sell the Clean Energy Businesses for $6,800 million, subject to closing adjustments, including working capital adjustments and downward adjustments for indebtedness, transaction expenses and the value of certain assets and projects that are not able to be conveyed to the buyer upon closing of the transaction. The transaction is subject to, among other things, customary closing conditions and receipt of regulatory approvals, and is expected to close in the first half of 2023. Subject to the closing of the transaction, Con Edison intends to use the proceeds from the sale to repay $1,050 million of parent company debt in 2023, invest in its regulated utilities and, subject to board approval, institute a share repurchase program. In
anticipation of the proceeds from the pending transaction, Con Edison intends to forego common equity issuances in 2022 and 2023 and will evaluate equity needs for 2024. See "Assets Held for Sale" in Note A and Note T to the Third Quarter Financial Statements and "Anticipated Sale of the Clean Energy Business," above.
Results of Operations
Net income for common stock and earnings per share for the three and nine months ended September 30, 20222023 and 20212022 were as follows:
| | | For the Three Months Ended September 30, | For the Nine Months Ended September 30, | | For the Three Months Ended September 30, | For the Nine Months Ended September 30, |
| | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | | 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | 2023 | 2022 |
(Millions of Dollars, except per share amounts) | (Millions of Dollars, except per share amounts) | Net Income for Common Stock | Earnings per Share | Net Income for Common Stock | Earnings per Share | (Millions of Dollars, except per share amounts) | Net Income for Common Stock | Earnings per Share | Net Income for Common Stock | Earnings per Share |
CECONY | CECONY | $493 | $418 | $1.39 | $1.19 | $1,138 | $1,011 | $3.21 | $2.92 | CECONY | $515 | $493 | $1.49 | $1.39 | $1,308 | $1,138 | $3.75 | $3.21 |
O&R | O&R | 34 | 26 | 0.09 | 0.07 | 72 | 53 | 0.20 | 0.15 | O&R | 36 | 33 | 0.10 | 0.09 | 75 | 72 | 0.21 | 0.20 |
Clean Energy Businesses (a) (e)(d) | Clean Energy Businesses (a) (e)(d) | 97 | 106 | 0.28 | 0.30 | 293 | 223 | 0.83 | 0.64 | Clean Energy Businesses (a) (e)(d) | — | 97 | — | 0.28 | 22 | 293 | 0.06 | 0.83 |
Con Edison Transmission (b) | Con Edison Transmission (b) | 1 | — | 2 | (142) | 0.01 | (0.41) | Con Edison Transmission (b) | 4 | 1 | 0.01 | — | 10 | 2 | 0.03 | 0.01 |
Other (c)(b) | Other (c)(b) | (12) | | (13) | (0.03) | | (0.04) | (35) | (23) | (0.10) | (0.07) | Other (c)(b) | (29) | | (11) | (0.07) | | (0.03) | 770 | (35) | 2.22 | (0.10) |
Con Edison (d)(c) | Con Edison (d)(c) | $613 | $538 | $1.73 | $1.52 | $1,470 | $1,122 | $4.15 | $3.23 | Con Edison (d)(c) | $526 | $613 | $1.53 | $1.73 | $2,185 | $1,470 | $6.27 | $4.15 |
(a)Net income for common stock and earnings per share from the Clean Energy Businesses for the three and nine months ended September 30, 2023 includes $(9) million or $(0.03) a share net after-tax mark-to-market effects. Net income for common stock and earnings per share from the Clean Energy Businesses for the nine months ended September 30, 2023 also includes $2 million or $0.01 a share (after-tax) net of the effects of HLBV accounting for tax equity investments in certain renewable electric projects. Depreciation and amortization expenses on their assets of $31 million or $0.09 a share (after-tax) were not recorded for the nine months ended September 30, 2023. See "Assets Held for Sale" in Note A, Note S and Note T to the Third Quarter Financial Statements.
Net income for common stock and earnings per share from the Clean Energy Businesses for the three and nine months ended September 30, 2022 includes $41 million or $0.12 a share and $121 million or $0.35 a share, respectively, of net after-tax mark-to-market effects. Net income for common stock and earnings per share from the Clean Energy Businesses for the three and nine months ended September 30, 2022 also includes ($4) million or ($0.01) a share (after-tax) and $33 million or $0.09 a share (after-tax), respectively, of the effects of HLBV accounting for tax equity investments in certain renewable and sustainable electric projects.
(b) Other includes the parent company, Con Edison’s tax equity investments, the deferred project held for sale and consolidation adjustments. Net income for common stock and earnings per share fromfor the Clean Energy Businessesnine months ended September 30, 2023 includes an immaterial amount or $0.00 a share net of income tax impact on the net after-tax mark-to-market effects. Net income for common stock and earnings per share for the three and nine months ended September 30, 20212023 also includes $(9) $(3) million or $(0.03)$(0.01) a share and $20$(7) million or $0.06$(0.02), a share net of income tax impact on the effects of HLBV accounting, respectively, for tax equity investments in certain renewable electric projects. Net income for common stock for the three and nine months ended September 30, 2023 also includes $(5) million or $(0.01) a share and $(13) million and $(0.04) a share of net after-tax mark-to-market effects.transaction costs and other accruals, respectively, related to the sale of the Clean Energy Businesses (net of tax). Impact of the sale of the Clean Energy Businesses on the changes in state unitary tax apportionments (net of federal taxes) is $(7) million or $(0.02) per share and $(17) million or $(0.05) per share for the three and nine months ended September 30, 2023, respectively. Depreciation and amortization expenses on the assets of the Clean Energy Businesses of $(3) million or $(0.01) a share (after-tax) were not recorded for the nine months ended September 30, 2023. Net income for common stock and earnings per share fromfor the Clean Energy Businesses for the three and nine months ended September 30, 2021 also includes $522023 includes an increase in the state taxes on sale of $(19) million or $0.15$(0.05) a share (after-tax) and $87 million or $0.25 a share (after-tax), respectively, of the effects of HLBV accounting for tax equity investments in certain renewable and sustainable electric projects.share. Net income for common stock and earnings per share from the Clean Energy Businesses for the three and nine months ended September 30, 2021 also includes $(3) million or $(0.01) a share (after-tax) for the loss from the sale of a renewable electric production project.
(b)foNet income for common stock from Con Edison Transmission forr the nine months ended September 30, 2021 includes $(153)2023 includes $784 million (after-tax) or $(0.44)$2.25 a shareshare (after-tax) for the gain on the sale of net after-tax impairment loss related to its investment in Stagecoach.substantially all of the assets of the Clean Energy Businesses. See "Investments - 2021 Partial Impairment of Investment in Stagecoach Gas Services LLC (Stagecoach) in Note AS and Note T to the Third Quarter Financial Statements.
(c)Other includes parent company and consolidation adjustments. Net income for common stock and earnings per share for the three and nine months ended September 30, 2022 includes $(3) million or $(0.01) a share and $(10) million or $(0.03) a share, respectively, of income tax impact on the net after-tax mark-to-market effects. Net income for common stock and earnings per share for the three and nine months ended September 30, 2022 also includes an immaterial amount or $(0.00) a share (after-tax) and $(3) million or $(0.01) a share (after-tax) 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 and nine months ended September 30, 2021 includes $(4) million or $(0.01) a share and $(7) million or $(0.02) a share, respectively, of income tax impact on the effects of HLBV accounting for tax equity investments in certain renewable and sustainable electric projects, and $6 million or $0.01 a share and $(2) million or $(0.01) a share, respectively, of income tax impact for the impairment loss related to Con Edison Transmission’s investment in Stagecoach and after-tax mark-to-market loss. See "Investments - 2021 Partial Impairment of Investment in Stagecoach Gas Services LLC (Stagecoach)" in Note A to the Third Quarter Financial Statements.
(d)(c) Earnings per share on a diluted basis were $1.72$1.52 a share and $1.52$1.72 a share for the three months ended September 30, 20222023 and 2021,
2022, respectively, and $4.13$6.24 a share and $3.23 and $4.13 a share for the nine months ended September 30, 2023 and 2022, and 2021, respectively.
(e) On October 1, 2022, In March 2023, Con Edison entered into a purchase and sale agreement pursuantASR Contracts with two dealers to whichrepurchase $1,000 million in aggregate of Common Shares. Con Edison’s share repurchase was completed in the second quarter of 2023. See Note C to the Third Quarter Financial Statements.
(d) On March 1, 2023, Con Edison agreed to sellcompleted the sale of substantially all of the assets of the Clean Energy Businesses. See Note S and Note T to the Third Quarter Financial Statements.
The following tables present 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, 20222023 as compared with the 20212022 period.
| | | | | | | | | |
Variation for the Three Months Ended September 30, 2023 vs. 2022 | |
| Net Income for Common Stock (Net of Tax) (Millions of Dollars) | Earnings per Share | |
CECONY (a) | | | |
Electric base rate increase | $123 | $0.35 | |
Higher operations maintenance activities | (40) | (0.11) | |
Higher interest expense | (28) | (0.08) | |
Higher operation and maintenance expense for stock-based compensation, health care costs and injuries and damages
| (15) | (0.04) | |
Change in incentives earned under the electric and gas earnings adjustment mechanisms (EAMs) | (10) | (0.03) | |
| | | |
Gas base rate change | (6) | (0.02) | |
Higher payroll taxes | (4) | (0.01) | |
| | | |
Accretive effect of share repurchase | — | 0.04 | |
| | | |
| | | |
| | | |
| | | |
| | | |
Other | 2 | — | |
Total CECONY | 22 | 0.10 | |
O&R (a) | | | |
Electric base rate increase | 3 | 0.01 | |
Gas base rate increase | 1 | — | |
| | | |
| | | |
Other | (2) | — | |
Total O&R | 2 | 0.01 | |
Clean Energy Businesses (b) | | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
Total Clean Energy Businesses | (97) | (0.28) | |
Con Edison Transmission | | | |
Higher investment income | 2 | 0.01 | |
| | | |
| | | |
| | | |
| | | |
Other | 1 | — | |
| | | |
Total Con Edison Transmission | 3 | 0.01 | |
Other, including parent company expenses | | | |
Higher interest income primarily related to the proceeds from sale of the Clean Energy Businesses | 5 | 0.01 | |
Lower interest expense | 4 | 0.01 | |
Net mark-to-market effects | 4 | 0.01 | |
| | | |
Gain and other impacts related to the sale of the Clean Energy Businesses | (31) | (0.08) | |
HLBV effects | (4) | (0.01) | |
| | | |
| | | |
Other | 5 | 0.02 | |
Total Other, including parent company expenses | (17) | (0.04) | |
Total Reported (GAAP basis) | $(87) | $(0.20) | |
| | | |
a.Under the revenue decoupling mechanisms in the Utilities’ New York electric and gas rate plans and the weather-normalization clause applicable to their gas businesses, revenues are generally not affected by changes in delivery volumes from levels assumed when rates were approved. In general, the Utilities recover on a current basis the fuel, gas purchased for resale and purchased power costs they incur in supplying energy to their full-service customers. Accordingly, such costs do not generally affect Con Edison’s results of operations. | |
b. On March 1, 2023, Con Edison completed the sale of substantially all of the assets of the Clean Energy Businesses. | |
| | | | | | | | | | | |
Variation for the Three Months Ended September 30, 2022 vs. 2021 | |
| Net Income for Common Stock (Millions of Dollars) | Earnings per Share | |
CECONY (a) | | | |
Higher electric rate base | $29 | $0.08 | |
Lower costs related to heat events | 14 | 0.04 | |
Higher income from allowance for funds used during construction reflecting higher short-term interest rates | 10 | 0.03 | |
Resumption of the billing of late payment charges and other fees to allowed rate plan levels | 9 | 0.03 | |
Higher incentives earned under the electric and gas earnings adjustment mechanisms (EAMs) and positive incentives | 5 | 0.02 | |
Higher rental revenue from real estate properties | 5 | 0.01 | |
Lower stock based compensation costs | 2 | 0.01 | |
Lower health care and other employee benefits costs | 2 | 0.01 | |
Higher interest expense | (14) | (0.04) | |
Dilutive effect of stock issuances | — | (0.01) | |
| | | |
| | | |
| | | |
| | | |
| | | |
Other | 13 | 0.02 | |
Total CECONY | 75 | 0.20 | |
O&R (a) | | | |
Electric base rate increase | 8 | 0.02 | |
Gas base rate increase | 1 | — | |
| | | |
| | | |
Other | (1) | — | |
Total O&R | 8 | 0.02 | |
Clean Energy Businesses | | | |
Net mark-to-market effects | 51 | 0.15 | |
Lower operation and maintenance expense from engineering, procurement and construction of renewable electric projects | 10 | 0.03 | |
HLBV effects | (56) | (0.16) | |
Higher gas purchased for resale | (35) | (0.10) | |
Higher wholesale revenue | 23 | 0.07 | |
Other | (2) | (0.01) | |
| | | |
| | | |
| | | |
| | | |
| | | |
Total Clean Energy Businesses | (9) | (0.02) | |
Con Edison Transmission | | | |
| | | |
| | | |
| | | |
Higher interest expense | (1) | (0.01) | |
| | | |
| | | |
Other | 1 | 0.01 | |
Total Con Edison Transmission | — | — | |
Other, including parent company expenses | | | |
| | | |
Tax impact of net mark-to-market effects | (4) | (0.01) | |
Tax impact of HLBV tax effects | 4 | 0.01 | |
| | | |
Other | 1 | 0.01 | |
Total Other, including parent company expenses | 1 | 0.01 | |
Total Reported (GAAP basis) | $75 | $0.21 | |
| | | |
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. | |
| | | | | | | | |
Variation for the Nine Months Ended September 30, 2023 vs. 2022 |
| Net Income for Common Stock (Net of Tax) (Millions of Dollars) | Earnings per Share |
CECONY (a) | | |
Electric base rate increase | $193 | $0.55 |
Gas base rate increase | 55 | 0.16 |
Higher interest income | 7 | 0.02 |
Lower operation and maintenance expense from stock-based compensation, health care costs and injuries and damages | 2 | 0.01 |
Higher income from allowance for equity funds used during construction | 2 | 0.01 |
Higher interest expense | (68) | (0.19) |
Weather impact on steam revenues | (25) | (0.07) |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
Higher electric operations maintenance activities | (6) | (0.02) |
Change in incentives earned under the electric and gas earnings adjustment mechanisms (EAMs) | (3) | (0.01) |
Accretive effect of share repurchase | — | 0.06 |
Other | 13 | 0.02 |
Total CECONY | 170 | 0.54 |
O&R (a) | | |
Electric base rate increase | 5 | 0.01 |
Gas base rate increase | 4 | 0.01 |
Higher storm-related costs | (3) | (0.01) |
Other | (3) | — |
Total O&R | 3 | 0.01 |
Clean Energy Businesses (b) | | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
Total Clean Energy Businesses | (271) | (0.77) |
Con Edison Transmission | | |
Higher investment income | 6 | 0.02 |
| | |
| | |
Other | 2 | — |
Total Con Edison Transmission | 8 | 0.02 |
Other, including parent company expenses | | |
Gain and other impacts related to the sale of the Clean Energy Businesses | 753 | 2.16 |
Higher interest income primarily related to proceeds from sale of the Clean Energy Businesses | 15 | 0.04 |
Lower interest expense | 12 | 0.03 |
Net mark-to-market effects | 10 | 0.03 |
Production tax credit from deferred project | 4 | 0.01 |
Lower New York state capital taxes | 4 | 0.01 |
Lower expenses related to the capital funding facility | 4 | 0.01 |
HLBV effects | (4) | (0.01) |
Accretive effect of share repurchase | — | 0.04 |
Other | 7 | — |
Total Other, including parent company expenses | 805 | 2.32 |
Total Reported (GAAP basis) | $715 | $2.12 |
| | |
a.Under the revenue decoupling mechanisms in the Utilities’ New York electric and gas rate plans and the weather-normalization clause applicable to their gas businesses, revenues are generally not affected by changes in delivery volumes from levels assumed when rates were approved. In general, the Utilities recover on a current basis the fuel, gas purchased for resale and purchased power costs they incur in supplying energy to their full-service customers. Accordingly, such costs do not generally affect Con Edison’s results of operations. |
b. On March 1, 2023, Con Edison completed the sale of substantially all of the assets of the Clean Energy Businesses. |
| | | | | | | | |
Variation for the Nine Months Ended September 30, 2022 vs. 2021 |
| Net Income for Common Stock (Millions of Dollars) | Earnings per Share |
CECONY (a) | | |
Higher electric rate base | $42 | $0.12 |
Resumption of the billing of late payment charges and other fees to allowed rate plan levels | 36 | 0.11 |
Higher gas rate base
| 33 | 0.10 |
Lower costs related to winter storms and heat events | 24 | 0.07 |
Lower health care and other employee benefits costs | 18 | 0.05 |
Higher income from allowance for funds used during construction reflecting higher short-term interest rates | 10 | 0.03 |
Weather impact on steam revenues | 2 | 0.01 |
Higher interest expense | (37) | (0.11) |
Higher stock based compensation cost | (12) | (0.04) |
Dilutive effect of stock issuances | — | | (0.07) |
| | |
| | |
| | |
| | |
Other | 11 | 0.02 |
Total CECONY | 127 | 0.29 |
O&R (a) | | |
Electric base rate increase | 13 | 0.04 |
Gas base rate increase | 6 | 0.02 |
Other | — | (0.01) |
Total O&R | 19 | 0.05 |
Clean Energy Businesses | | |
Net mark-to-market effects | 101 | 0.29 |
Lower operation and maintenance expense from engineering, procurement and construction of renewable electric projects | 75 | 0.22 |
Higher wholesale revenue | 41 | 0.12 |
Loss from sale of a renewable electric project in 2021 | 3 | 0.01 |
Higher gas purchased for resale | (82) | (0.24) |
HLBV effects | (54) | (0.16) |
Higher depreciation and amortization expense | (5) | (0.01) |
Gain from sale of a renewable electric project in 2021 | (4) | (0.01) |
Dilutive effect of stock issuances | — | (0.02) |
| | |
| | |
Other | (5) | (0.01) |
Total Clean Energy Businesses | 70 | 0.19 |
Con Edison Transmission | | |
Impairment loss related to investment in Stagecoach in 2021 | 153 | 0.44 |
Lower interest expense | 4 | 0.01 |
Lower investment income attributable to Stagecoach | (15) | (0.04) |
Other | 2 | 0.01 |
Total Con Edison Transmission | 144 | 0.42 |
Other, including parent company expenses | | |
Impairment tax benefits related to investment in Stagecoach in 2021 | (6) | (0.01) |
Tax impact of net mark-to-market effects | (8) | (0.02) |
Tax impacts of HLBV effects | 4 | 0.01 |
| | |
Other | (2) | (0.01) |
Total Other, including parent company expenses | (12) | (0.03) |
Total Reported (GAAP basis) | $348 | $0.92 |
| | |
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. |
The Companies’ other operations and maintenance expenses for the three and nine months ended September 30, 20222023 and 20212022 were as follows:
| | | For the Three Months Ended September 30, | For the Nine Months Ended September 30, | | For the Three Months Ended September 30, | For the Nine Months Ended September 30, |
(Millions of Dollars) | (Millions of Dollars) | 2022 | 2021 | 2022 | 2021 | (Millions of Dollars) | 2023 | 2022 | 2023 | 2022 |
CECONY | CECONY | | CECONY | |
Operations | Operations | $420 | $445 | $1,276 | $1,283 | Operations | $513 | $420 | $1,383 | $1,276 |
Pensions and other postretirement benefits | Pensions and other postretirement benefits | 104 | (6) | 312 | (23) | Pensions and other postretirement benefits | 87 | 104 | 259 | 312 |
Health care and other benefits | Health care and other benefits | 39 | 42 | 109 | 134 | Health care and other benefits | 52 | 39 | 124 | 109 |
Regulatory fees and assessments (a) | Regulatory fees and assessments (a) | 104 | 99 | 271 | 252 | Regulatory fees and assessments (a) | 111 | 104 | 283 | 271 |
Other | Other | 140 | 70 | 299 | 202 | Other | 71 | 140 | 292 | 299 |
Total CECONY | Total CECONY | $807 | $650 | $2,267 | $1,848 | Total CECONY | $834 | $807 | $2,341 | $2,267 |
O&R | O&R | 88 | 83 | 259 | 240 | O&R | 96 | 88 | 283 | 259 |
Clean Energy Businesses(b) | Clean Energy Businesses(b) | 101 | 114 | 252 | 348 | Clean Energy Businesses(b) | — | 101 | 47 | 252 |
Con Edison Transmission | Con Edison Transmission | 3 | 10 | 9 | Con Edison Transmission | 2 | 3 | 8 | 10 |
Other (b)(c) | Other (b)(c) | — | (1) | (3) | (2) | | Other (b)(c) | 1 | — | (1) | (3) | |
Total other operations and maintenance expenses | Total other operations and maintenance expenses | $999 | $849 | $2,785 | $2,443 | Total other operations and maintenance expenses | $933 | $999 | $2,678 | $2,785 |
(a)Includes Demand Side Management, System Benefit Charges and Public Service Law 18A assessments whichthat are collected in revenues.
(b)IncludesOn March 1, 2023, Con Edison completed the sale of substantially all of the assets of the Clean Energy Businesses. See Note S and Note T to the Third Quarter Financial Statements.
(c)Other includes the parent company, Con Edison’s tax equity investments, the deferred project held for sale and consolidation adjustments. See Note T.
A discussion of the results of operations by principal business segment for the three and nine months ended September 30, 20222023 and 20212022 follows. For additional business segment financial information, see Note M to the Third Quarter Financial Statements.
The Companies’ results of operations for the three months ended September 30, 20222023 and 20212022 were as follows:
| | | CECONY | O&R | Clean Energy Businesses (c) | Con Edison Transmission | Other (a) | Con Edison (b) | | CECONY | O&R | Clean Energy Businesses (a) | Con Edison Transmission | Other (b) | Con Edison (c) |
(Millions of Dollars) | (Millions of Dollars) | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | (Millions of Dollars) | 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | 2023 | 2022 |
Operating revenues | Operating revenues | $3,549 | $3,092 | $291 | $257 | $325 | $264 | $1 | $1 | $(1) | $(1) | $4,165 | $3,613 | Operating revenues | $3,590 | $3,549 | $281 | $291 | $— | $325 | $1 | $1 | $— | $(1) | $3,872 | $4,165 |
Purchased power | Purchased power | 643 | 481 | 89 | 68 | — | — | — | — | (1) | (1) | 731 | 548 | Purchased power | 719 | 643 | 77 | 89 | — | — | — | — | — | (1) | 796 | 731 |
Fuel | Fuel | 59 | 44 | — | — | — | — | — | — | — | — | 59 | 44 | Fuel | 34 | 59 | — | — | — | — | — | — | — | — | 34 | 59 |
Gas purchased for resale | Gas purchased for resale | 113 | 61 | 16 | 13 | 55 | 9 | — | — | 1 | — | 185 | 83 | Gas purchased for resale | 62 | 113 | 11 | 16 | — | 55 | — | — | — | 1 | 73 | 185 |
Other operations and maintenance | Other operations and maintenance | 807 | 650 | 88 | 83 | 101 | 114 | 3 | 3 | — | (1) | 999 | 849 | Other operations and maintenance | 834 | 807 | 96 | 88 | — | 101 | 2 | 3 | 1 | — | 933 | 999 |
Depreciation and amortization | Depreciation and amortization | 441 | 429 | 25 | 24 | 60 | 58 | — | — | (1) | 1 | 525 | 512 | Depreciation and amortization | 485 | 441 | 26 | 25 | — | 60 | 1 | — | — | (1) | 512 | 525 |
Taxes, other than income taxes | Taxes, other than income taxes | 748 | 699 | 22 | 22 | 5 | 4 | — | — | 2 | 2 | 777 | 727 | Taxes, other than income taxes | 777 | 748 | 23 | 22 | — | 5 | — | — | 1 | 2 | 801 | 777 |
Gain on sale of the Clean Energy Businesses | | Gain on sale of the Clean Energy Businesses | — | — | — | — | — | — | — | (1) | — | (1) | — |
| Operating income | 738 | 728 | 51 | 47 | 104 | 79 | (2) | (2) | (2) | (2) | 889 | 850 | |
Operating income (loss) | | Operating income (loss) | 679 | 738 | 48 | 51 | — | 104 | (2) | (2) | (3) | (2) | 722 | 889 |
Other income (deductions) | Other income (deductions) | 81 | (23) | 6 | (4) | 1 | — | 5 | 5 | (4) | — | 89 | (22) | Other income (deductions) | 184 | 81 | 12 | 5 | — | 1 | 8 | 5 | 3 | (3) | 207 | 89 |
Net interest expense | Net interest expense | 202 | 197 | 11 | 10 | (19) | 18 | 2 | 1 | 3 | 6 | 199 | 232 | Net interest expense | 239 | 202 | 13 | 11 | — | (19) | — | 2 | 7 | 3 | 259 | 199 |
Income before income tax expense | 617 | 508 | 46 | 33 | 124 | 61 | 1 | 2 | (9) | (8) | 779 | 596 | |
Income (loss) before income tax expense | | Income (loss) before income tax expense | 624 | 617 | 47 | 45 | — | 124 | 6 | 1 | (7) | (8) | 670 | 779 |
Income tax expense | Income tax expense | 124 | 90 | 12 | 7 | 21 | 24 | — | 1 | 3 | 5 | 160 | 127 | Income tax expense | 109 | 124 | 11 | 12 | — | 21 | 2 | — | 22 | 3 | 144 | 160 |
Net income | $493 | $418 | $34 | $26 | $103 | $37 | $1 | $1 | $(12) | $(13) | $619 | $469 | |
Net income (loss) | | Net income (loss) | $515 | $493 | $36 | $33 | $— | $103 | $4 | $1 | $(29) | $(11) | $526 | $619 |
Income (loss) attributable to non-controlling interest | Income (loss) attributable to non-controlling interest | — | — | — | 6 | (69) | — | — | — | — | 6 | (69) | Income (loss) attributable to non-controlling interest | — | — | — | — | 6 | — | — | — | — | — | 6 |
Net income for common stock | $493 | $418 | $34 | $26 | $97 | $106 | $1 | $1 | $(12) | $(13) | $613 | $538 | |
Net income (loss) for common stock | | Net income (loss) for common stock | $515 | $493 | $36 | $33 | $— | $97 | $4 | $1 | $(29) | $(11) | $526 | $613 |
|
(a)IncludesOn March 1, 2023, Con Edison completed the sale of substantially all of the assets of the Clean Energy Businesses. See Note S and Note T to the Third Quarter Financial Statements.
(b)Other includes the parent company, Con Edison’s tax equity investments, the deferred project held for sale and consolidation adjustments. See Note T to the Third Quarter Financial Statements.
(b)(c)Represents the consolidated results of operations of Con Edison and its businesses.
(c)
On October 1, 2022, Con Edison entered into a purchase and sale agreement pursuant to which Con Edison agreed to sell the Clean Energy Businesses. See Note T to the Third Quarter Financial Statements.
CECONY
| | | For the Three Months Ended September 30, 2022 | | For the Three Months Ended September 30, 2021 | | | For the Three Months Ended September 30, 2023 | | For the Three Months Ended September 30, 2022 | |
(Millions of Dollars) | (Millions of Dollars) | Electric | Gas | Steam | 2022 Total | Electric | Gas | Steam | 2021 Total | 2022-2021 Variation | (Millions of Dollars) | Electric | Gas | Steam | 2023 Total | Electric | Gas | Steam | 2022 Total | 2023-2022 Variation |
Operating revenues | Operating revenues | $3,077 | $414 | $58 | $3,549 | $2,730 | $307 | $55 | $3,092 | $457 | Operating revenues | $3,223 | $318 | $49 | $3,590 | $3,077 | $414 | $58 | $3,549 | $41 |
Purchased power | Purchased power | 628 | — | | 15 | 643 | 473 | — | | 8 | 481 | 162 | Purchased power | 713 | — | | 6 | 719 | 628 | — | | 15 | 643 | 76 |
Fuel | Fuel | 58 | — | | 1 | 59 | 39 | — | | 5 | 44 | 15 | Fuel | 33 | — | | 1 | 34 | 58 | — | | 1 | 59 | (25) |
Gas purchased for resale | Gas purchased for resale | — | | 113 | — | | 113 | — | | 61 | — | | 61 | 52 | Gas purchased for resale | — | | 62 | — | | 62 | — | | 113 | — | | 113 | (51) |
Other operations and maintenance | Other operations and maintenance | 645 | 114 | 48 | 807 | 516 | 92 | 42 | 650 | 157 | Other operations and maintenance | 644 | 129 | 61 | 834 | 645 | 114 | 48 | 807 | 27 |
Depreciation and amortization | Depreciation and amortization | 324 | 93 | 24 | 441 | 324 | 82 | 23 | 429 | 12 | Depreciation and amortization | 352 | 108 | 25 | 485 | 324 | 93 | 24 | 441 | 44 |
Taxes, other than income taxes | Taxes, other than income taxes | 579 | 134 | 35 | 748 | 544 | 120 | 35 | 699 | 49 | Taxes, other than income taxes | 614 | 127 | 36 | 777 | 579 | 134 | 35 | 748 | 29 |
Operating income | Operating income | $843 | $(40) | $(65) | $738 | $834 | $(48) | $(58) | $728 | $10 | Operating income | $867 | $(108) | $(80) | $679 | $843 | $(40) | $(65) | $738 | $(59) |
Electric
CECONY’s results of electric operations for the three months ended September 30, 20222023 compared with the 20212022 period were as follows:
| | | For the Three Months Ended | | | For the Three Months Ended | |
(Millions of Dollars) | (Millions of Dollars) | September 30, 2022 | September 30, 2021 | Variation | (Millions of Dollars) | September 30, 2023 | September 30, 2022 | Variation |
Operating revenues | Operating revenues | $3,077 | $2,730 | $347 | Operating revenues | $3,223 | $3,077 | $146 |
Purchased power | Purchased power | 628 | 473 | 155 | Purchased power | 713 | 628 | 85 |
Fuel | Fuel | 58 | 39 | 19 | Fuel | 33 | 58 | (25) |
Other operations and maintenance | Other operations and maintenance | 645 | 516 | 129 | Other operations and maintenance | 644 | 645 | (1) |
Depreciation and amortization | Depreciation and amortization | 324 | — | Depreciation and amortization | 352 | 324 | 28 |
Taxes, other than income taxes | Taxes, other than income taxes | 579 | 544 | 35 | Taxes, other than income taxes | 614 | 579 | 35 |
Electric operating income | Electric operating income | $843 | $834 | $9 | Electric operating income | $867 | $843 | $24 |
CECONY’s electric sales and deliveries for the three months ended September 30, 20222023 compared with the 20212022 period were:
| | | Millions of kWh Delivered | | Revenues in Millions (a) | | Millions of kWh Delivered | | Revenues in Millions (a) |
| | For the Three Months Ended | | | For the Three Months Ended | | | For the Three Months Ended | | | For the Three Months Ended | |
Description | Description | September 30, 2022 | September 30, 2021 | Variation | Percent Variation | | September 30, 2022 | September 30, 2021 | Variation | Percent Variation | Description | September 30, 2023 | September 30, 2022 | Variation | Percent Variation | | September 30, 2023 | September 30, 2022 | Variation | Percent Variation |
Residential/Religious (b) | Residential/Religious (b) | 4,303 | 3,905 | 398 | 10.2 | % | | $1,069 | $1,025 | $44 | 4.3 | % | Residential/Religious (b) | 3,960 | 4,303 | (343) | (8.0) | % | | $1,233 | $1,069 | $164 | 15.3 | % |
Commercial/Industrial | Commercial/Industrial | 3,003 | 2,645 | 358 | 13.5 | | | 808 | 652 | 156 | 23.9 | | Commercial/Industrial | 3,052 | 3,003 | 49 | 1.6 | | | 840 | 808 | 32 | 4.0 | |
Retail choice customers | Retail choice customers | 6,107 | 6,274 | (167) | (2.7) | | | 825 | 861 | (36) | (4.2) | | Retail choice customers | 5,914 | 6,107 | (193) | (3.2) | | | 817 | 825 | (8) | (1.0) | |
NYPA, Municipal Agency and other sales | NYPA, Municipal Agency and other sales | 2,611 | 2,466 | 145 | 5.9 | | | 240 | 228 | 12 | 5.3 | | NYPA, Municipal Agency and other sales | 2,657 | 2,611 | 46 | 1.8 | | | 284 | 240 | 44 | 18.3 | |
Other operating revenues (c) | Other operating revenues (c) | — | | — | | — | | — | | 135 | (36) | 171 | Large | Other operating revenues (c) | — | | — | | — | | — | | 49 | 135 | (86) | (63.7) | |
Total | Total | 16,024 | 15,290 | 734 | 4.8 | % | (d) | $3,077 | $2,730 | $347 | 12.7 | % | Total | 15,583 | 16,024 | (441) | (2.8) | % | (d) | $3,223 | $3,077 | $146 | 4.7 | % |
(a)Revenues from electric sales are subject to a revenue decoupling mechanism, as a result of which delivery revenues generally are not affected by changes in delivery volumes from levels assumed when rates were approved.
(b)“Residential/Religious” generally includes single-family dwellings, individual apartments in multi-family dwellings, religious organizations and certain other not-for-profit organizations.
(c)Other electric operating revenues generally reflect changes in the revenue decoupling mechanism current asset or regulatory liability and changes in regulatory assets and liabilities in accordance with other provisions of the company’sCECONY's rate plans.
(d)After adjusting for variations, primarily weather and billing days, electric delivery volumes in CECONY’s service area increased 4.20.2 percent in the three months ended September 30, 20222023 compared with the 20212022 period.
Operating revenues increased $347$146 million in the three months ended September 30, 20222023 compared with the 20212022 period primarily due to higher purchased power expenses ($155 million), an increase in revenues from the electric rate plan ($90166 million) and higher purchased power expenses ($85 million), and higheroffset in part by lower unbilled revenue accrual ($71 million), lower fuel expenses ($1925 million) and a change in incentives earned under the earnings adjustment mechanisms (EAMs) ($10 million).
Purchased power expenses increased $155$85 million in the three months ended September 30, 20222023 compared with the 20212022 period primarily due to higher unit costs ($77187 million) and higher, offset in part by lower purchased volumes ($78102 million).
Fuel expenses increased $19decreased $25 million in the three months ended September 30, 20222023 compared with the 20212022 period due to higherlower unit costs ($2228 million), offset in part by lowerhigher purchased volumes from the company'sCECONY's electric generating facilities ($3 million).
Other operationsDepreciation and maintenanceamortization expenses increased $129$28 million in the three months ended September 30, 20222023 compared with the 20212022 period primarily due to higher costs for pension and other postretirement benefits, reflecting reconciliation to the rate plan level ($85 million), higher municipal infrastructure support costs ($22 million), higher surcharges for assessments and fees that are collected in revenues from customers ($4 million), higher costs for injuries and damages ($2 million), higher uncollectible expense ($1 million), and higher health care cost ($1 million).electric utility plant balances.
Taxes, other than income taxes increased $35 million in the three months ended September 30, 20222023 compared with the 20212022 period due to higher property taxes ($2254 million) and payroll taxes ($4 million), a higheroffset in part by lower deferral of over-collected property taxes ($5 million) and higher state and local taxes ($926 million).
Gas
CECONY’s results of gas operations for the three months ended September 30, 20222023 compared with the 20212022 period were as follows:
| | | For the Three Months Ended | | | For the Three Months Ended | |
(Millions of Dollars) | (Millions of Dollars) | September 30, 2022 | September 30, 2021 | Variation | (Millions of Dollars) | September 30, 2023 | September 30, 2022 | Variation |
Operating revenues | Operating revenues | $414 | $307 | $107 | Operating revenues | $318 | $414 | $(96) |
Gas purchased for resale | Gas purchased for resale | 113 | 61 | 52 | Gas purchased for resale | 62 | 113 | (51) |
Other operations and maintenance | Other operations and maintenance | 114 | 92 | 22 | Other operations and maintenance | 129 | 114 | 15 |
Depreciation and amortization | Depreciation and amortization | 93 | 82 | 11 | Depreciation and amortization | 108 | 93 | 15 |
Taxes, other than income taxes | Taxes, other than income taxes | 134 | 120 | 14 | Taxes, other than income taxes | 127 | 134 | (7) |
Gas operating income | Gas operating income | $(40) | $(48) | $8 | Gas operating income | $(108) | $(40) | $(68) |
CECONY’s gas sales and deliveries, excluding off-system sales, for the three months ended September 30, 20222023 compared with the 20212022 period were:
| | | Thousands of Dt Delivered | | Revenues in Millions (a) | | Thousands of Dt Delivered | | Revenues in Millions (a) |
| | For the Three Months Ended | | | For the Three Months Ended | | | For the Three Months Ended | | | For the Three Months Ended | |
Description | Description | September 30, 2022 | September 30, 2021 | Variation | Percent Variation | | September 30, 2022 | September 30, 2021 | Variation | Percent Variation | Description | September 30, 2023 | September 30, 2022 | Variation | Percent Variation | | September 30, 2023 | September 30, 2022 | Variation | Percent Variation |
Residential | Residential | 4,467 | | 4,158 | | 309 | | 7.4 | % | | $150 | $128 | $22 | 17.2 | % | Residential | 3,884 | | 4,467 | | (583) | | (13.1) | % | | $131 | $150 | $(19) | (12.7) | % |
General | General | 4,759 | | 4,133 | | 626 | | 15.1 | | | 94 | 59 | 35 | 59.3 | | General | 4,094 | | 4,759 | | (665) | | (14.0) | | | 58 | 94 | (36) | (38.3) | |
Firm transportation | Firm transportation | 8,821 | | 8,943 | | (122) | | (1.4) | | | 88 | 80 | 8 | 10.0 | | Firm transportation | 9,953 | | 8,821 | | 1,132 | | 12.8 | | | 85 | 88 | (3) | (3.4) | |
Total firm sales and transportation | Total firm sales and transportation | 18,047 | | 17,234 | | 813 | | 4.7 | | (b) | 332 | 267 | 65 | 24.3 | | Total firm sales and transportation | 17,931 | | 18,047 | | (116) | | (0.6) | % | (b) | $274 | $332 | $(58) | (17.5) | % |
Interruptible sales (c) | Interruptible sales (c) | 1,222 | | 1,198 | | 24 | | 2.0 | | | 10 | 6 | 4 | 66.7 | | Interruptible sales (c) | 2,693 | | 1,222 | | 1,471 | | Large | | 13 | 10 | 3 | 30.0 | |
NYPA | NYPA | 14,381 | | 15,187 | | (806) | | (5.3) | | | 1 | 1 | — | — | NYPA | 15,214 | | 14,381 | | 833 | | 5.8 | | | 1 | 1 | — |
Generation plants | Generation plants | 19,633 | | 14,955 | | 4,678 | | 31.3 | | | 11 | 7 | 4 | 57.1 | | Generation plants | 23,215 | | 19,633 | | 3,582 | | 18.2 | | | 6 | 11 | (5) | (45.5) | |
Other | Other | 4,141 | | 4,193 | | (52) | | (1.2) | | | 6 | 6 | — | — | Other | 4,023 | | 4,141 | | (118) | | (2.8) | | | 6 | 6 | — |
Other operating revenues (d) | Other operating revenues (d) | — | | — | | — | | — | | 54 | 20 | 34 | Large | Other operating revenues (d) | — | | — | | — | | — | | 18 | 54 | (36) | (66.7) | |
Total | Total | 57,424 | | 52,767 | | 4,657 | | 8.8 | % | | $414 | $307 | $107 | 34.9 | % | Total | 63,076 | | 57,424 | | 5,652 | | 9.8 | % | | $318 | $414 | $(96) | (23.2) | % |
(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’sCECONY’s service area increased 8.4decreased 2.3 percent in the three months ended September 30, 20222023 compared with the 20212022 period.
(c)Includes 2731,819 thousand and 572273 thousand of Dt for the 20222023 and 20212022 periods, respectively, whichthat 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’sCECONY’s rate plans.
Operating revenues increased $107decreased $96 million in the three months ended September 30, 20222023 compared with the 20212022 period primarily due to higherlower gas purchased for resale ($5251 million) and an increase, lower unbilled revenue accrual ($16 million), a certain rate plan reconciliation ($13 million), a decrease in revenues from the gas rate plan ($298 million) and a change in incentives earned under the earnings adjustment mechanisms (EAMs) ($4 million).
Gas purchased for resale increased $52decreased $51 million in the three months ended September 30, 20222023 compared with the 20212022 period due to higherlower unit costs ($5140 million) and lower purchased volumes ($11 million).
Other operations and maintenance expenses increased $15 million in the three months ended September 30, 2023 compared with the 2022 period primarily due to higher gas operations costs ($15 million).
Depreciation and amortization expenses increased $15 million in the three months ended September 30, 2023 compared with the 2022 period primarily due to higher gas utility plant balances.
Taxes, other than income taxes decreased $7 million in the three months ended September 30, 2023 compared with the 2022 period primarily due to a lower deferral of over-collected property taxes ($25 million), offset in part by higher property taxes ($19 million).
Steam
CECONY’s results of steam operations for the three months ended September 30, 2023 compared with the 2022 period were as follows:
| | | | | | | | | | | |
| For the Three Months Ended | |
(Millions of Dollars) | September 30, 2023 | September 30, 2022 | Variation |
Operating revenues | $49 | $58 | $(9) |
Purchased power | 6 | 15 | (9) |
Fuel | 1 | 1 | — |
Other operations and maintenance | 61 | 48 | 13 |
Depreciation and amortization | 25 | 24 | 1 |
Taxes, other than income taxes | 36 | 35 | 1 |
Steam operating income | $(80) | $(65) | $(15) |
CECONY’s steam sales and deliveries for the three months ended September 30, 2023 compared with the 2022 period were:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Millions of Pounds Delivered | | Revenues in Millions |
| For the Three Months Ended | | | For the Three Months Ended | |
Description | September 30, 2023 | September 30, 2022 | Variation | Percent Variation | | September 30, 2023 | September 30, 2022 | Variation | Percent Variation |
General | 7 | | 7 | | — | | — | % | | $2 | $2 | $— | — | % |
Apartment house | 568 | | 582 | | (14) | | (2.4) | | | 12 | 13 | (1) | (7.7) | |
Annual power | 1,796 | | 2,006 | | (210) | | (10.5) | | | 30 | 38 | (8) | (21.1) | |
Other operating revenues (a) | — | | — | | — | | — | | 5 | 5 | — | — |
Total | 2,371 | | 2,595 | | (224) | | (8.6) | % | (b) | $49 | $58 | $(9) | (15.5) | % |
(a)Other steam operating revenues generally reflect changes in regulatory assets and liabilities in accordance with CECONY’s rate plan.
(b)After adjusting for variations, primarily weather and billing days, steam sales and deliveries decreased 8.0 percent in the three months ended September 30, 2023 compared with the 2022 period.
Operating revenues decreased $9 million in the three months ended September 30, 2023 compared with the 2022 period primarily due to lower purchased power ($9 million).
Purchased power decreased $9 million in the three months ended September 30, 2023 compared with the 2022 period due to lower unit costs ($8 million) and lower purchased volumes ($1 million).
Other operations and maintenance expenses increased $22$13 million in the three months ended September 30, 20222023 compared with the 20212022 period primarily due to higher costs for pension and other postretirement benefits, reflecting reconciliation to the rate plan level ($186 million), and higher surcharges for assessments and fees that are collectedan increase in revenues from customersmunicipal infrastructure support ($14 million).
Taxes, Other Than Income Taxes
DepreciationAt $777 million, taxes other than income taxes remain one of CECONY’s largest operating expenses for the three months ended September 30, 2023. The principal components of, and amortization variations in, taxes other than income taxes were:
| | | | | | | | | | | | | | | | | |
| For the Three Months Ended September 30, | |
(Millions of Dollars) | 2023 | | 2022 | | Variation |
Property taxes | $681 | | $604 | | $77 |
State and local taxes related to revenue receipts | 115 | | 114 | | 1 |
Payroll taxes | 19 | | 14 | | 5 |
Other taxes | (38) | | 16 | | (54) |
Total | $777 | (a) | $748 | (a) | $29 |
(a)expensesIncluding sales tax on customers’ bills, total taxes other than income taxes in 2023 and 2022 were $990 million and $913 million, respectively.
Other Income (Deductions)
Other income increased $11$103 million in the three months ended September 30, 20222023 compared with the 20212022 period primarily due to lower costs associated with components of pension and other postretirement benefits other than service cost ($91 million) and higher gas utility plant balances.interest accrual ($1 million).
Taxes, other than income taxesNet Interest Expense
Net Interest Expense increased $14$37 million in the three months ended September 30, 20222023 compared with the 20212022 period primarily due to higher interest on long-term debt ($20 million) and short-term debt ($18 million).
Income Tax Expense
Income taxes decreased $15 million in the three months ended September 30, 2023 compared with the 2022 period primarily due to higher flow-through of COVID-19 assistance benefits for uncollectible accounts ($24 million) and a higher deferral of over-collected property taxesfavorable tax adjustment from a prior year tax return primarily due to an increase in general business tax credits ($84 million), offset in part by an increase in allowance for uncollectible accounts ($7 million), higher property taxesreserve for injuries and damages ($3 million) and higher state and local taxesincome before income tax expense ($31 million).
Steam
CECONY’s
O&R
| | | | | | | | | | | | | | | | | | | | | | | |
| For the Three Months Ended September 30, 2023 | | For the Three Months Ended September 30, 2022 | | |
(Millions of Dollars) | Electric | Gas | 2023 Total | Electric | Gas | 2022 Total | 2023-2022 Variation |
Operating revenues | $246 | $35 | $281 | $252 | $39 | $291 | $(10) |
Purchased power | 77 | — | | 77 | 89 | — | | 89 | (12) |
Gas purchased for resale | — | | 11 | 11 | — | | 16 | 16 | (5) |
Other operations and maintenance | 76 | 20 | 96 | 69 | 19 | 88 | 8 |
Depreciation and amortization | 19 | 7 | 26 | 18 | 7 | 25 | 1 |
Taxes, other than income taxes | 15 | 8 | 23 | 15 | 7 | 22 | 1 |
Operating income (loss) | $59 | $(11) | $48 | $61 | $(10) | $51 | $(3) |
Electric
O&R’s results of steamelectric operations for the three months ended September 30, 20222023 compared with the 20212022 period were as follows:
| | | | | | | | | | | |
| For the Three Months Ended | |
(Millions of Dollars) | September 30, 2022 | September 30, 2021 | Variation |
Operating revenues | $58 | $55 | $3 |
Purchased power | 15 | 8 | 7 |
Fuel | 1 | 5 | (4) |
Other operations and maintenance | 48 | 42 | 6 |
Depreciation and amortization | 24 | 23 | 1 |
Taxes, other than income taxes | 35 | 35 | — |
Steam operating income | $(65) | $(58) | $(7) |
CECONY’s steam sales and deliveries for the three months ended September 30, 2022 compared with the 2021 period were:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Millions of Pounds Delivered | | Revenues in Millions |
| For the Three Months Ended | | | For the Three Months Ended | |
Description | September 30, 2022 | September 30, 2021 | Variation | Percent Variation | | September 30, 2022 | September 30, 2021 | Variation | Percent Variation |
General | 7 | | 4 | | 3 | | 75.0 | % | | $2 | $2 | $— | — | % |
Apartment house | 582 | | 588 | | (6) | | (1.0) | | | 13 | 13 | — | — |
Annual power | 2,006 | | 1,904 | | 102 | | 5.4 | | | 38 | 34 | 4 | 11.8 | |
Other operating revenues (a) | — | | — | | — | | — | | 5 | 6 | (1) | (16.7) | |
Total | 2,595 | | 2,496 | | 99 | | 4.0 | % | (b) | $58 | $55 | $3 | 5.5 | % |
(a)Other steam operating revenues generally reflect changes in regulatory assets and liabilities in accordance with the company’s rate plan.
(b)After adjusting for variations, primarily weather and billing days, steam sales and deliveries increased 3.0 percent in the three months ended September 30, 2022 compared with the 2021 period.
Operating revenues increased $3 million in the three months ended September 30, 2022 compared with the 2021 period primarily due to higher purchased power expenses ($7 million), offset in part by lower fuel expenses ($4 million).
Purchased power increased $7 million in the three months ended September 30, 2022 compared with the 2021 period due to higher unit costs ($6 million) and higher purchased volumes ($1 million).
Fuel expenses decreased $4 million in the three months ended September 30, 2022 compared with the 2021 period due to lower unit costs ($4 million). | | | | | | | | | | | |
| For the Three Months Ended | |
(Millions of Dollars) | September 30, 2023 | September 30, 2022 | Variation |
Operating revenues | $246 | $252 | $(6) |
Purchased power | 77 | 89 | (12) |
Other operations and maintenance | 76 | 69 | 7 |
Depreciation and amortization | 19 | 18 | 1 |
Taxes, other than income taxes | 15 | 15 | — |
Electric operating income | $59 | $61 | $(2) |
Other operations and maintenance expenses increased $6 million in the three months ended September 30, 2022 compared with the 2021 period primarily due to higher costs for pension and other postretirement benefits, reflecting reconciliation to the rate plan level ($7 million).
Depreciation and amortization expenses increased $1 million in the three months ended September 30, 2022 compared with the 2021 period primarily due to higher steam utility plant balances.
Other Income (Deductions)
Other income increased $104 million in the three months ended September 30, 2022 compared with the 2021 period primarily due to lower costs associated with components of pension and other postretirement benefits other than service cost ($110 million), offset in part by lower expenses resulting from investment performance in a deferred income plan ($6 million)
Net Interest Expense
Net Interest Expense increased $5 million in the three months ended September 30, 2022 compared with the 2021 period primarily due to higher interest on short-term debt ($10 million) and higher interest on long-term debt ($7 million), offset in part by an increase in allowance for borrowed funds used during construction ($14 million).
Income Tax Expense
Income taxes increased $34 million in the three months ended September 30, 2022 compared with the 2021 period primarily due to higher income before income tax expense ($23 million), higher state income taxes ($6 million), assistance received from a New York State COVID-19 arrears program in 2022 (see "COVID-19 Regulatory Matters" in Note B to the Third Quarter Financial Statements) ($6 million) and the absence of a favorable tax adjustment from the prior year tax return due to an increase in the general business tax credits ($4 million), offset in part by lower reserve for injuries and damages ($4 million).
O&R
| | | | | | | | | | | | | | | | | | | | | | | |
| For the Three Months Ended September 30, 2022 | | For the Three Months Ended September 30, 2021 | | |
(Millions of Dollars) | Electric | Gas | 2022 Total | Electric | Gas | 2021 Total | 2022-2021 Variation |
Operating revenues | $252 | $39 | $291 | $223 | $34 | $257 | $34 |
Purchased power | 89 | — | | 89 | 68 | — | | 68 | 21 |
Gas purchased for resale | — | | 16 | 16 | — | | 13 | 13 | 3 |
Other operations and maintenance | 69 | 19 | 88 | 67 | 16 | 83 | 5 |
Depreciation and amortization | 18 | 7 | 25 | 18 | 6 | 24 | 1 |
Taxes, other than income taxes | 15 | 7 | 22 | 15 | 7 | 22 | — |
Operating income | $61 | $(10) | $51 | $55 | $(8) | $47 | $4 |
Electric
O&R’s results of electric operations for the three months ended September 30, 2022 compared with the 2021 period were as follows:
| | | | | | | | | | | |
| For the Three Months Ended | |
(Millions of Dollars) | September 30, 2022 | September 30, 2021 | Variation |
Operating revenues | $252 | $223 | $29 |
Purchased power | 89 | 68 | 21 |
Other operations and maintenance | 69 | 67 | 2 |
Depreciation and amortization | 18 | 18 | — |
Taxes, other than income taxes | 15 | 15 | — |
Electric operating income | $61 | $55 | $6 |
O&R’s electric sales and deliveries for the three months ended September 30, 20222023 compared with the 20212022 period were:
| | | Millions of kWh Delivered | | Revenues in Millions (a) | | Millions of kWh Delivered | | Revenues in Millions (a) |
| | For the Three Months Ended | | | For the Three Months Ended | | | For the Three Months Ended | | | For the Three Months Ended | |
Description | Description | September 30, 2022 | September 30, 2021 | Variation | Percent Variation | | September 30, 2022 | September 30, 2021 | Variation | Percent Variation | Description | September 30, 2023 | September 30, 2022 | Variation | Percent Variation | | September 30, 2023 | September 30, 2022 | Variation | Percent Variation |
Residential/Religious (b) | Residential/Religious (b) | 654 | | 581 | | 73 | | 12.6 | % | | $141 | $114 | $27 | 23.7 | % | Residential/Religious (b) | 627 | | 654 | | (27) | | (4.1) | % | | $140 | $141 | $(1) | (0.7) | % |
Commercial/Industrial | Commercial/Industrial | 265 | | 221 | | 44 | | 19.9 | | | 45 | 32 | 13 | 40.6 | | Commercial/Industrial | 252 | | 265 | | (13) | | (4.9) | | | 41 | 45 | (4) | (8.9) | |
Retail choice customers | Retail choice customers | 747 | | 820 | | (73) | | (8.9) | | | 67 | 75 | (8) | | (10.7) | | Retail choice customers | 703 | | 747 | | (44) | | (5.9) | | | 62 | 67 | (5) | | (7.5) | |
Public authorities | Public authorities | 36 | | 32 | | 4 | | 12.5 | | | 5 | 4 | 1 | 25.0 | | Public authorities | 34 | | 36 | | (2) | | (5.6) | | | 3 | 5 | (2) | (40.0) | |
Other operating revenues (c) | Other operating revenues (c) | — | | — | | — | | — | | (6) | (2) | (4) | Large | Other operating revenues (c) | — | | — | | — | | — | | — | (6) | 6 | Large |
Total | Total | 1,702 | | 1,654 | | 48 | | 2.9 | % | (d) | $252 | $223 | $29 | 13.0 | % | Total | 1,616 | | 1,702 | | (86) | | (5.1) | % | (d) | $246 | $252 | $(6) | (2.4) | % |
(a)O&R’s NYNew York electric delivery revenues are subject to a revenue decoupling mechanism, as a result of which delivery revenues are generally not affected by changes in delivery volumes from levels assumed when rates were approved. Effective July 2021, the majority of O&R’s electric distribution revenues in NJNew Jersey 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 NJNew Jersey are not subject to a conservation incentive program, and as a result, changes in such volumes do impact revenues.
(b)“Residential/Religious” generally includes single-family dwellings, individual apartments in multi-family dwellings, religious organizations and certain other not-for-profit organizations.
(c)Other electric operating revenues generally reflect changes in regulatory assets and liabilities in accordance with the company’sO&R’s electric rate plan.
(d)After adjusting for weather and other variations, electric delivery volumes in O&R’s service area increased 2.6decreased 2.7 percent in the three months ended September 30, 20222023 compared with the 20212022 period.
Operating revenues increased $29decreased $6 million in the three months ended September 30, 20222023 compared with the 20212022 period primarily due to higherlower purchased power expenses ($2112 million) and, offset in part by higher revenues from the NYNew York electric rate plan ($107 million).
Purchased power expenses increased $21decreased $12 million in the three months ended September 30, 20222023 compared with the 20212022 period due to higherlower purchased volumes ($8 million) and lower unit costs ($11 million), and higher purchased volumes ($104 million).
Other operations and maintenance expenses increased $2$7 million in the three months ended September 30, 20222023 compared with the 20212022 period primarily due to higher customer assistance costs for pension, reflecting reconciliation to the rate plan level.($2 million), higher administrative and general expenses ($2 million), higher non-deferred storm costs ($1 million) and higher tree trimming expenses ($1 million).
Gas
O&R’s results of gas operations for the three months ended September 30, 20222023 compared with the 20212022 period were as follows:
| | | For the Three Months Ended | | | For the Three Months Ended | |
(Millions of Dollars) | (Millions of Dollars) | September 30, 2022 | September 30, 2021 | Variation | (Millions of Dollars) | September 30, 2023 | September 30, 2022 | Variation |
Operating revenues | Operating revenues | $39 | $34 | $5 | Operating revenues | $35 | $39 | $(4) |
Gas purchased for resale | Gas purchased for resale | 16 | 13 | 3 | Gas purchased for resale | 11 | 16 | (5) |
Other operations and maintenance | Other operations and maintenance | 19 | 16 | 3 | Other operations and maintenance | 20 | 19 | 1 |
Depreciation and amortization | Depreciation and amortization | 7 | 6 | 1 | | Depreciation and amortization | 7 | — | |
Taxes, other than income taxes | Taxes, other than income taxes | 7 | — | | Taxes, other than income taxes | 8 | 7 | 1 | |
Gas operating income | Gas operating income | $(10) | $(8) | ($2) | | Gas operating income | $(11) | $(10) | ($1) | |
O&R’s gas sales and deliveries, excluding off-system sales, for the three months ended September 30, 20222023 compared with the 20212022 period were:
| | | Thousands of Dt Delivered | | Revenues in Millions (a) | | Thousands of Dt Delivered | | Revenues in Millions (a) |
| | For the Three Months Ended | | | For the Three Months Ended | | | For the Three Months Ended | | | For the Three Months Ended | |
Description | Description | September 30, 2022 | September 30, 2021 | Variation | Percent Variation | | September 30, 2022 | September 30, 2021 | Variation | Percent Variation | Description | September 30, 2023 | September 30, 2022 | Variation | Percent Variation | | September 30, 2023 | September 30, 2022 | Variation | Percent Variation |
Residential | Residential | 548 | | 900 | | (352) | | (39.1 | %) | | $16 | $18 | $(2) | (11.1 | %) | Residential | 908 | | 548 | | 360 | | 65.7 | % | | $18 | $16 | $2 | 12.5 | % |
General | General | 139 | | 258 | | (119) | | (46.1) | | | 3 | 4 | (1) | (25.0) | | General | 262 | | 139 | | 123 | | 88.5 | | | 3 | 3 | — |
Firm transportation | Firm transportation | 548 | | 736 | | (188) | | (25.5) | | | 4 | 6 | (2) | (33.3) | | Firm transportation | 575 | | 548 | | 27 | | 4.9 | | | 4 | 4 | — |
Total firm sales and transportation | Total firm sales and transportation | 1,235 | | 1,894 | | (659) | | (34.8) | | (b) | $23 | $28 | $(5) | (17.9) | | Total firm sales and transportation | 1,745 | | 1,235 | | 510 | | 41.3 | % | (b) | $25 | $23 | $2 | 8.7 | % |
Interruptible sales | Interruptible sales | 830 | | 844 | | (14) | | (1.7) | | | 1 | — | 1 | Large | Interruptible sales | 896 | | 830 | | 66 | | 8.0 | | | 1 | 1 | — |
Generation plants | Generation plants | 6 | | 13 | | (7) | | (53.8) | | | — | | — | | — | — | Generation plants | 3 | | 6 | | (3) | | (50.0) | | | — | | — | | — |
Other | Other | 56 | | 26 | | 30 | | Large | | 1 | | 1 | — | — | Other | 7 | | 56 | | (49) | | (87.5) | | | — | | 1 | | (1) | — |
Other gas revenues | Other gas revenues | — | | — | | — | | — | | 14 | 5 | 9 | Large | Other gas revenues | — | | — | | — | | — | | 9 | 14 | (5) | (35.7) | |
Total | Total | 2,127 | | 2,777 | | (650) | | (23.4 | %) | | $39 | $34 | $5 | 14.7 | % | Total | 2,651 | | 2,127 | | 524 | | 24.6 | % | | $35 | $39 | $(4) | (10.3) | % |
(a)Revenues from NYNew York gas sales are subject to a weather normalization clause and a revenue decoupling mechanism as a result of which delivery revenues are generally not affected by changes in delivery volumes from levels assumed when rates were approved.
(b)After adjusting for weather and other variations, total firm sales and transportation volumes decreased 5.4increased 7.9 percent in the three months ended September 30, 20222023 compared with the 20212022 period.
Operating revenues increased $5decreased $4 million in the three months ended September 30, 20222023 compared with the 20212022 period primarily due to higherlower gas purchased for resale ($35 million) and, offset in part by higher revenues from the NYNew York gas rate plan ($21 million).
Gas purchased for resale increased $3 million in the three months ended September 30, 2022 compared with the 2021 period due to higher unit costs ($3 million).
Other operations and maintenance expenses increased $3 million in the three months ended September 30, 2022 compared with the 2021 period primarily due to higher costs for pension, reflecting reconciliation to the rate plan level.
Depreciation and amortization expensesincreased $1 million in the three months ended September 30, 2022 compared with the 2021 period primarily due to higher gas utility plant balances.
Income Tax Expense
Income taxes increaseddecreased $5 million in the three months ended September 30, 20222023 compared with the 20212022 period
primarily due to higher income before income tax expenselower unit costs ($35 million), higher state.
Taxes, Other Than Income Taxes
Taxes, other than income taxes, ($1 million)remained consistent in 2023 compared with 2022 for the three months ended September 30, 2023. The principal components of taxes, other than income taxes, were:
| | | | | | | | | | | | | | | | | |
| For the Three Months Ended September 30, |
(Millions of Dollars) | 2023 | | 2022 | | Variation |
Property taxes | $18 | | $17 | | $1 |
State and local taxes related to revenue receipts | 3 | | 3 | | — | |
Payroll taxes | 2 | | 2 | | — | |
Total | $23 | (a) | $22 | (a) | $1 | |
(a)Including sales tax on customers’ bills, total taxes other than income taxes in 2023 and assistance received from a New York State COVID-19 arrears program in 2022 (see "COVID-19 Regulatory Matters" in Note B to the Third Quarter Financial Statements) ($1 million).were $32 million and $35 million, respectively.
Clean Energy Businesses
On March 1, 2023, Con Edison completed the sale of substantially all of the assets of the Clean Energy Businesses. See Note S and Note T to the Third Quarter Financial Statements. The Clean Energy Businesses’ results of operations for the three months ended September 30, 20222023 compared with the 20212022 period were as follows:
| | | For the Three Months Ended | | | For the Three Months Ended | |
(Millions of Dollars) | (Millions of Dollars) | September 30, 2022 | September 30, 2021 | Variation | (Millions of Dollars) | September 30, 2023 | September 30, 2022 | Variation |
Operating revenues | Operating revenues | $325 | $264 | $61 | Operating revenues | $— | $325 | $(325) |
| Gas purchased for resale | Gas purchased for resale | 55 | 9 | 46 | Gas purchased for resale | — | 55 | (55) |
Other operations and maintenance | Other operations and maintenance | 101 | 114 | (13) | Other operations and maintenance | — | 101 | (101) |
Depreciation and amortization | Depreciation and amortization | 60 | 58 | 2 | Depreciation and amortization | — | 60 | (60) |
Taxes, other than income taxes | Taxes, other than income taxes | 5 | 4 | 1 | Taxes, other than income taxes | — | 5 | (5) |
| Operating income | Operating income | $104 | $79 | $25 | Operating income | $— | $104 | $(104) |
Con Edison Transmission
Other Income (Deductions)
Other income increased $61$3 million in the three months ended September 30, 20222023 compared with the 20212022 period primarily due to higher wholesale revenuesinvestment income from New York Transco ($483 million), higher net mark-to-market values ($30 million) and higher energy services revenues ($2 million), offset in part by lower revenue from engineering, procurement and construction of renewable electric projects ($19 million).
Gas purchased for resale increased $46 million in the three months ended September 30, 2022 compared with the 2021 period due to higher purchased volumes and prices.
Other operations and maintenance expenses decreased $13 million in the three months ended September 30, 2022 compared with the 2021 period primarily due to lower costs from engineering, procurement and construction of renewable electric projects.
Depreciation and amortization expensesIncome taxes increased $2 million in the three months ended September 30, 20222023 compared with the 2021 period primarily due to an increase in renewable electric projects in operation during 2022.
Net Interest Expense
Net interest expense decreased $37 million in the three months ended September 30, 2022 compared with the 2021 period primarily due to higher unrealized gains on interest rate swaps in the 2022 period.
Income Tax Expense
Income taxes decreased $3 million in the three months ended September 30, 2022 compared with the 2021 period primarily due to higher income attributable to non-controlling interest ($19 million), offset in part by higher income before income tax expense ($13 million) and higher state income taxes ($3 million).
Income (Loss) Attributable to Non-Controlling Interest
Income attributable to non-controlling interest increased $75 million to a gain of $6 million in the three months ended September 30, 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 Third Quarter Financial Statements.
expense.
Other
Income Tax Expense
Income taxes decreased $2increased $19 million in the three months ended September 30, 20222023 compared with the 20212022 period primarily due to lowera higher unitary state income taxes.tax adjustment, net of federal benefit ($7 million), changes in valuation allowance and state apportionments as a result of the sale of the Clean Energy Businesses ($14 million), offset in part by an increase in renewable energy tax credits ($2 million).
The Companies’ results of operations for the nine months ended September 30, 2023 and 2022 were as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| CECONY | O&R | Clean Energy Businesses (a) | Con Edison Transmission | Other (b) | Con Edison (c) |
(Millions of Dollars) | 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | 2023 | 2022 |
Operating revenues | $10,287 | $9,972 | $803 | $813 | $129 | $857 | $3 | $3 | $(3) | $(6) | $11,219 | $11,639 |
Purchased power | 1,802 | 1,639 | 191 | 210 | — | 6 | — | — | — | (4) | 1,993 | 1,851 |
Fuel | 241 | 255 | — | — | — | — | — | — | — | — | 241 | 255 |
Gas purchased for resale | 518 | 582 | 82 | 94 | 41 | 157 | — | — | (1) | — | 640 | 833 |
Other operations and maintenance | 2,341 | 2,267 | 283 | 259 | 47 | 252 | 8 | 10 | (1) | (3) | 2,678 | 2,785 |
Depreciation and amortization | 1,428 | 1,341 | 78 | 73 | — | 178 | 1 | 1 | (1) | — | 1,506 | 1,593 |
Taxes, other than income taxes | 2,207 | 2,159 | 69 | 67 | 4 | 16 | — | — | 2 | 6 | 2,282 | 2,248 |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
Gain on sale of the Clean Energy Businesses | — | — | — | — | — | — | — | — | 866 | — | 866 | — |
Operating income | 1,750 | 1,729 | 100 | 110 | 37 | 248 | (6) | (8) | 864 | (5) | 2,745 | 2,074 |
Other income (deductions) | 550 | 245 | 36 | 16 | 1 | 2 | 22 | 14 | 2 | (8) | 611 | 269 |
Net interest expense | 695 | 604 | 38 | 33 | 16 | (68) | 2 | 3 | 7 | 14 | 758 | 586 |
Income before income tax expense | 1,605 | 1,370 | 98 | 93 | 22 | 318 | 14 | 3 | 859 | (27) | 2,598 | 1,757 |
Income tax expense | 297 | 232 | 23 | 21 | 3 | 68 | 4 | 1 | 89 | 8 | 416 | 330 |
Net income | $1,308 | $1,138 | $75 | $72 | $19 | $250 | $10 | $2 | $770 | $(35) | $2,182 | $1,427 |
Loss attributable to non-controlling interest | — | | — | — | | — | (3) | (43) | — | | — | — | | — | (3) | (43) |
Net income for common stock | $1,308 | $1,138 | $75 | $72 | $22 | $293 | $10 | $2 | $770 | $(35) | $2,185 | $1,470 |
(a)On March 1, 2023, Con Edison completed the sale of substantially all of the assets of the Clean Energy Businesses. See Note S and Note T to the Third Quarter Financial Statements.
(b)Other includes the parent company, Con Edison’s tax equity investments, the deferred project held for sale and consolidation adjustments. See Note T to the Third Quarter Financial Statements.
(c)Represents the consolidated results of operations of Con Edison and its businesses.
The Companies’ results of operations for the nine months ended September 30, 2022 and 2021 were as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| CECONY | O&R | Clean Energy Businesses (d) | Con Edison Transmission (c) | Other (a) | Con Edison (b) |
(Millions of Dollars) | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 |
Operating revenues | $9,972 | $8,784 | $813 | $699 | $857 | $779 | $3 | $3 | $(6) | $(4) | $11,639 | $10,261 |
Purchased power | 1,639 | 1,294 | 210 | 157 | 6 | — | — | — | (4) | (3) | 1,851 | 1,448 |
Fuel | 255 | 166 | — | — | — | — | — | — | — | — | 255 | 166 |
Gas purchased for resale | 582 | 357 | 94 | 56 | 157 | 49 | — | — | — | (1) | 833 | 461 |
Other operations and maintenance | 2,267 | 1,848 | 259 | 240 | 252 | 348 | 10 | 9 | (3) | (2) | 2,785 | 2,443 |
Depreciation and amortization | 1,341 | 1,267 | 73 | 71 | 178 | 172 | 1 | 1 | — | — | 1,593 | 1,511 |
Taxes, other than income taxes | 2,159 | 2,016 | 67 | 67 | 16 | 14 | — | — | 6 | 6 | 2,248 | 2,103 |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
Operating income | 1,729 | 1,836 | 110 | 108 | 248 | 196 | (8) | (7) | (5) | (4) | 2,074 | 2,129 |
Other income (deductions) (c) | 245 | (70) | 16 | (9) | 2 | — | 14 | (178) | (8) | (2) | 269 | (259) |
Net interest expense | 604 | 567 | 33 | 32 | (68) | 44 | 3 | 8 | 14 | 18 | 586 | 669 |
Income before income tax expense | 1,370 | 1,199 | 93 | 67 | 318 | 152 | 3 | (193) | (27) | (24) | 1,757 | 1,201 |
Income tax expense | 232 | 188 | 21 | 14 | 68 | 44 | 1 | (51) | 8 | (1) | 330 | 194 |
Net income | $1,138 | $1,011 | $72 | $53 | $250 | $108 | $2 | ($142) | $(35) | $(23) | $1,427 | $1,007 |
Loss attributable to non-controlling interest | — | | — | — | | — | (43) | (115) | — | | — | — | | — | (43) | (115) |
Net income for common stock | $1,138 | $1,011 | $72 | $53 | $293 | $223 | $2 | ($142) | $(35) | $(23) | $1,470 | $1,122 |
(a)Includes parent company and consolidation adjustments.
(b)Represents the consolidated results of operations of Con Edison and its businesses.
(c)For the nine months ended September 30, 2021, Con Edison Transmission recorded pre-tax impairment losses of $211 million ($147 million, after-tax) on its investment in Stagecoach. See “Investments” in Note A to the Third Quarter Financial Statements.
(d)On October 1, 2022, Con Edison entered into a purchase and sale agreement pursuant to which Con Edison agreed to sell the Clean Energy Businesses. See Note T to the Third Quarter Financial Statements.
CECONY
| | | For the Nine Months Ended September 30, 2022 | | For the Nine Months Ended September 30, 2021 | | | For the Nine Months Ended September 30, 2023 | | For the Nine Months Ended September 30, 2022 | |
(Millions of Dollars) | (Millions of Dollars) | Electric | Gas | Steam | 2022 Total | Electric | Gas | Steam | 2021 Total | 2022-2021 Variation | (Millions of Dollars) | Electric | Gas | Steam | 2023 Total | Electric | Gas | Steam | 2022 Total | 2023-2022 Variation |
Operating revenues | Operating revenues | $7,401 | $2,127 | $444 | $9,972 | $6,661 | $1,730 | $393 | $8,784 | $1,188 | Operating revenues | $7,722 | $2,140 | $425 | $10,287 | $7,401 | $2,127 | $444 | $9,972 | $315 |
Purchased power | Purchased power | 1,593 | — | | 46 | 1,639 | 1,267 | — | | 27 | 1,294 | 345 | Purchased power | 1,771 | — | | 31 | 1,802 | 1,593 | — | | 46 | 1,639 | 163 |
Fuel | Fuel | 170 | — | | 85 | 255 | 107 | — | | 59 | 166 | 89 | Fuel | 129 | — | | 112 | 241 | 170 | — | | 85 | 255 | (14) |
Gas purchased for resale | Gas purchased for resale | — | | 582 | — | | 582 | — | | 357 | — | | 357 | 225 | Gas purchased for resale | — | | 518 | — | | 518 | — | | 582 | — | | 582 | (64) |
Other operations and maintenance | Other operations and maintenance | 1,774 | 346 | 147 | 2,267 | 1,450 | 277 | 121 | 1,848 | 419 | Other operations and maintenance | 1,781 | 386 | 174 | 2,341 | 1,774 | 346 | 147 | 2,267 | 74 |
Depreciation and amortization | Depreciation and amortization | 994 | 275 | 72 | 1,341 | 959 | 239 | 69 | 1,267 | 74 | Depreciation and amortization | 1,035 | 319 | 74 | 1,428 | 994 | 275 | 72 | 1,341 | 87 |
Taxes, other than income taxes | Taxes, other than income taxes | 1,637 | 413 | 109 | 2,159 | 1,541 | 367 | 108 | 2,016 | 143 | Taxes, other than income taxes | 1,714 | 384 | 109 | 2,207 | 1,637 | 413 | 109 | 2,159 | 48 |
Operating income | Operating income | $1,233 | $511 | $(15) | $1,729 | $1,337 | $490 | $9 | $1,836 | $(107) | Operating income | $1,292 | $533 | $(75) | $1,750 | $1,233 | $511 | $(15) | $1,729 | $21 |
Electric
CECONY’s results of electric operations for the nine months ended September 30, 20222023 compared with the 20212022 period were as follows:
| | | For the Nine Months Ended | | | For the Nine Months Ended | |
(Millions of Dollars) | (Millions of Dollars) | September 30, 2022 | September 30, 2021 | Variation | (Millions of Dollars) | September 30, 2023 | September 30, 2022 | Variation |
Operating revenues | Operating revenues | $7,401 | $6,661 | $740 | Operating revenues | $7,722 | $7,401 | $321 |
Purchased power | Purchased power | 1,593 | 1,267 | 326 | Purchased power | 1,771 | 1,593 | 178 |
Fuel | Fuel | 170 | 107 | 63 | Fuel | 129 | 170 | (41) |
Other operations and maintenance | Other operations and maintenance | 1,774 | 1,450 | 324 | Other operations and maintenance | 1,781 | 1,774 | 7 |
Depreciation and amortization | Depreciation and amortization | 994 | 959 | 35 | Depreciation and amortization | 1,035 | 994 | 41 |
Taxes, other than income taxes | Taxes, other than income taxes | 1,637 | 1,541 | 96 | Taxes, other than income taxes | 1,714 | 1,637 | 77 |
Electric operating income | Electric operating income | $1,233 | $1,337 | $(104) | Electric operating income | $1,292 | $1,233 | $59 |
CECONY’s electric sales and deliveries for the nine months ended September 30, 20222023 compared with the 20212022 period were:
| | | Millions of kWh Delivered | | Revenues in Millions (a) | | Millions of kWh Delivered | | Revenues in Millions (a) |
| | For the Nine Months Ended | | | For the Nine Months Ended | | | For the Nine Months Ended | | | For the Nine Months Ended | |
Description | Description | September 30, 2022 | September 30, 2021 | Variation | Percent Variation | | September 30, 2022 | September 30, 2021 | Variation | Percent Variation | Description | September 30, 2023 | September 30, 2022 | Variation | Percent Variation | | September 30, 2023 | September 30, 2022 | Variation | Percent Variation |
Residential/Religious (b) | Residential/Religious (b) | 9,283 | | 8,828 | | 455 | | 5.2 | % | | $2,600 | $2,415 | $185 | 7.7 | % | Residential/Religious (b) | 8,854 | | 9,283 | | (429) | | (4.6) | % | | $2,614 | $2,600 | $14 | 0.5 | % |
Commercial/Industrial | Commercial/Industrial | 7,857 | | 6,981 | | 876 | | 12.5 | | | 2,026 | 1,657 | 369 | 22.3 | | Commercial/Industrial | 8,179 | | 7,857 | | 322 | | 4.1 | | | 2,083 | 2,026 | 57 | 2.8 | |
Retail choice customers | Retail choice customers | 16,204 | | 16,310 | | (106) | | (0.6) | | | 1,950 | 2,008 | (58) | (2.9) | | Retail choice customers | 15,363 | | 16,204 | | (841) | | (5.2) | | | 1,781 | 1,950 | (169) | (8.7) | |
NYPA, Municipal Agency and other sales | NYPA, Municipal Agency and other sales | 7,185 | | 6,854 | | 331 | | 4.8 | | | 576 | 536 | 40 | 7.5 | | NYPA, Municipal Agency and other sales | 7,113 | | 7,185 | | (72) | | (1.0) | | | 609 | 576 | 33 | 5.7 | |
Other operating revenues (c) | Other operating revenues (c) | — | | — | | — | | — | | 249 | 45 | 204 | Large | Other operating revenues (c) | — | | — | | — | | — | | 635 | 249 | 386 | Large |
Total | Total | 40,529 | | 38,973 | | 1,556 | | 4.0 | % | (d) | $7,401 | $6,661 | $740 | 11.1 | % | Total | 39,509 | | 40,529 | | (1,020) | | (2.5) | % | (d) | $7,722 | $7,401 | $321 | 4.3 | % |
(a)Revenues from electric sales are subject to a revenue decoupling mechanism, as a result of which delivery revenues generally are not affected by changes in delivery volumes from levels assumed when rates were approved.
(b)“Residential/Religious” generally includes single-family dwellings, individual apartments in multi-family dwellings, religious organizations and certain other not-for-profit organizations.
(c)Other electric operating revenues generally reflect changes in the revenue decoupling mechanism current asset or regulatory liability and changes in regulatory assets and liabilities in accordance with other provisions of the company’sCECONY’s rate plans.
(d)After adjusting for variations, primarily weather and billing days, electric delivery volumes in CECONY’s service area increased 3.4decreased 0.4 percent in the nine months ended September 30, 20222023 compared with the 20212022 period.
Operating revenues increased $740$321 million in the nine months ended September 30, 20222023 compared with the 20212022 period primarily due to higher purchased power expenses ($326 million), an increase in revenues from the electric rate plan ($231261 million) and higher purchased power expenses ($178 million), offset in part by lower unbilled revenue accrual ($102 million), lower fuel expenses ($6341 million) and a change in incentives earned under the earnings adjustment mechanisms (EAMs) ($6 million).
Purchased power expenses increased $326$178 million in the nine months ended September 30, 20222023 compared with the 20212022 period due to higher unit costs ($311259 million), and higher offset in part by lower purchased volumes ($1581 million).
Fuel expenses increased $63decreased $41 million in the nine months ended September 30, 20222023 compared with the 20212022 period due to higherlower unit costs ($7049 million), offset in part by lowerhigher purchased volumes from the company'sCECONY's electric generating facilities ($78 million).
Other operations and maintenance expenses increased $324$7 million in the nine months ended September 30, 20222023 compared with the 20212022 period primarily due to higher costs for pension and other postretirement benefits, reflecting reconciliation to the rate plan levelelectric operations maintenance activities ($260 million), higher municipal infrastructure support costs ($20 million), higher surcharges for assessments and fees that are collected in revenues from customers ($17 million), higher stock-based compensation costs ($13 million), higher uncollectible expense ($6 million), and higher costs for injuries and damages ($28 million).
Depreciation and amortization expenses increased $35$41 million in the nine months ended September 30, 20222023 compared with the 20212022 period primarily due to higher electric utility plant balances.
Taxes, other than income taxes increased $96$77 million in the nine months ended September 30, 20222023 compared with the 20212022 period primarily due to higher property taxes ($130 million), offset in part by a higherlower deferral of over-collected property taxes ($50 million), higher property taxes ($22 million), higher state and local taxes ($19 million) and higher payroll taxes ($554 million).
Gas
CECONY’s results of gas operations for the nine months ended September 30, 20222023 compared with the 20212022 period were as follows:
| | | For the Nine Months Ended | | | For the Nine Months Ended | |
(Millions of Dollars) | (Millions of Dollars) | September 30, 2022 | September 30, 2021 | Variation | (Millions of Dollars) | September 30, 2023 | September 30, 2022 | Variation |
Operating revenues | Operating revenues | $2,127 | $1,730 | $397 | Operating revenues | $2,140 | $2,127 | $13 |
Gas purchased for resale | Gas purchased for resale | 582 | 357 | 225 | Gas purchased for resale | 518 | 582 | (64) |
Other operations and maintenance | Other operations and maintenance | 346 | 277 | 69 | Other operations and maintenance | 386 | 346 | 40 |
Depreciation and amortization | Depreciation and amortization | 275 | 239 | 36 | Depreciation and amortization | 319 | 275 | 44 |
Taxes, other than income taxes | Taxes, other than income taxes | 413 | 367 | 46 | Taxes, other than income taxes | 384 | 413 | (29) |
Gas operating income | Gas operating income | $511 | $490 | $21 | Gas operating income | $533 | $511 | $22 |
CECONY’s gas sales and deliveries, excluding off-system sales, for the nine months ended September 30, 20222023 compared with the 20212022 period were:
| | | Thousands of Dt Delivered | | Revenues in Millions (a) | | Thousands of Dt Delivered | | Revenues in Millions (a) |
| | For the Nine Months Ended | | | For the Nine Months Ended | | | For the Nine Months Ended | | | For the Nine Months Ended | |
Description | Description | September 30, 2022 | September 30, 2021 | Variation | Percent Variation | | September 30, 2022 | September 30, 2021 | Variation | Percent Variation | Description | September 30, 2023 | September 30, 2022 | Variation | Percent Variation | | September 30, 2023 | September 30, 2022 | Variation | Percent Variation |
Residential | Residential | 39,172 | | 39,231 | | (59) | | (0.2) | % | | $942 | $789 | $153 | 19.4 | % | Residential | 34,900 | | 39,172 | | (4,272) | | (10.9) | % | | $925 | $942 | $(17) | (1.8) | % |
General | General | 25,507 | | 23,663 | | 1,844 | | 7.8 | | | 428 | 313 | 115 | 36.7 | | General | 22,756 | | 25,507 | | (2,751) | | (10.8) | | | 410 | 428 | (18) | (4.2) | |
Firm transportation | Firm transportation | 57,307 | | 58,783 | | (1,476) | | (2.5) | | | 590 | 523 | 67 | 12.8 | | Firm transportation | 55,808 | | 57,307 | | (1,499) | | (2.6) | | | 643 | 590 | 53 | 9.0 | |
Total firm sales and transportation | Total firm sales and transportation | 121,986 | | 121,677 | | 309 | | 0.3 | | (b) | 1,960 | 1,625 | 335 | 20.6 | | Total firm sales and transportation | 113,464 | | 121,986 | | (8,522) | | (7.0) | | (b) | 1,978 | 1,960 | 18 | 0.9 | |
Interruptible sales (c) | Interruptible sales (c) | 4,875 | | 4,747 | | 128 | | 2.7 | | | 40 | 22 | 18 | 81.8 | | Interruptible sales (c) | 6,136 | | 4,875 | | 1,261 | | 25.9 | | | 43 | 40 | 3 | 7.5 | |
NYPA | NYPA | 34,867 | | 36,601 | | (1,734) | | (4.7) | | | 2 | 2 | — | | — | NYPA | 39,306 | | 34,867 | | 4,439 | | 12.7 | | | 2 | 2 | — | | — |
Generation plants | Generation plants | 42,329 | | 32,653 | | 9,676 | | 29.6 | | | 24 | 18 | 6 | 33.3 | | Generation plants | 46,449 | | 42,329 | | 4,120 | | 9.7 | | | 20 | 24 | (4) | (16.7) | |
Other | Other | 14,956 | | 15,872 | | (916) | | (5.8) | | | 27 | 27 | — | — | Other | 14,767 | | 14,956 | | (189) | | (1.3) | | | 27 | 27 | — |
Other operating revenues (d) | Other operating revenues (d) | — | | — | | — | | — | | 74 | 36 | 38 | Large | Other operating revenues (d) | — | | — | | — | | — | | 70 | 74 | (4) | (5.4) | |
Total | Total | 219,013 | | 211,550 | | 7,463 | | 3.5 | % | | $2,127 | $1,730 | $397 | 22.9 | % | Total | 220,122 | | 219,013 | | 1,109 | | 0.5 | % | | $2,140 | $2,127 | $13 | 0.6 | % |
(a)Revenues from gas sales are subject to a weather normalization clause and a revenue decoupling mechanism as a result of which delivery revenues are generally not affected by changes in delivery volumes from levels assumed when rates were approved.
(b)After adjusting for variations, primarily billing days, firm gas sales and transportation volumes in the company’sCECONY’s service area increased 0.62.1 percent in the nine months ended September 30, 20222023 compared with the 20212022 period.
(c)Includes 1,7022,564 thousand and 1,7001,702 thousand of Dt for the 20222023 and 20212022 periods, respectively, whichthat 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’sCECONY’s rate plans.
Operating revenues increased $397$13 million in the nine months ended September 30, 20222023 compared with the 20212022 period primarily due to higher gas purchased for resale expense ($225 million) and an increase in revenues from the gas rate plan ($15173 million) and a change in incentives earned under the earnings adjustment mechanisms (EAMs) ($3 million), offset in part by a decrease in gas purchased for resale ($64 million).
Gas purchased for resale increased $225decreased $64 million in the nine months ended September 30, 20222023 compared with the 20212022 period due to lower purchased volumes ($163 million), offset in part by higher unit costs ($172 million) and higher purchased volumes ($5399 million).
Other operations and maintenance expenses increased $69$40 million in the nine months ended September 30, 20222023 compared with the 20212022 period primarily due to higher gas operations cost ($36 million) and an increase in municipal infrastructure support ($3 million).
Depreciation and amortization expenses increased $44 million in the nine months ended September 30, 2023 compared with the 2022 period primarily due to higher gas utility plant balances.
Taxes, other than income taxes decreased $29 million in the nine months ended September 30, 2023 compared with the 2022 period primarily due to a lower deferral of over-collected property taxes ($66 million), offset in part by higher property taxes ($32 million) and higher state and local taxes ($4 million).
Steam
CECONY’s results of steam operations for the nine months ended September 30, 2023 compared with the 2022 period were as follows:
| | | | | | | | | | | |
| For the Nine Months Ended | |
(Millions of Dollars) | September 30, 2023 | September 30, 2022 | Variation |
Operating revenues | $425 | $444 | $(19) |
Purchased power | 31 | 46 | (15) |
Fuel | 112 | 85 | 27 |
Other operations and maintenance | 174 | 147 | 27 |
Depreciation and amortization | 74 | 72 | 2 |
Taxes, other than income taxes | 109 | 109 | — |
Steam operating income | $(75) | $(15) | $(60) |
CECONY’s steam sales and deliveries for the nine months ended September 30, 2023 compared with the 2022 period were:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Millions of Pounds Delivered | | Revenues in Millions |
| For the Nine Months Ended | | | For the Nine Months Ended | |
Description | September 30, 2023 | September 30, 2022 | Variation | Percent Variation | | September 30, 2023 | September 30, 2022 | Variation | Percent Variation |
General | 315 | | 390 | | (75) | | (19.2) | % | | $19 | $21 | $(2) | (9.5) | % |
Apartment house | 3,408 | | 3,781 | | (373) | | (9.9) | | | 114 | 115 | (1) | (0.9) | |
Annual power | 7,924 | | 9,109 | | (1,185) | | (13.0) | | | 278 | 297 | (19) | (6.4) | |
Other operating revenues (a) | — | | — | | — | | — | | 14 | 11 | 3 | 27.3 | |
Total | 11,647 | | 13,280 | | (1,633) | | (12.3) | % | (b) | $425 | $444 | $(19) | (4.3) | % |
(a)Other steam operating revenues generally reflect changes in regulatory assets and liabilities in accordance with CECONY’s rate plan.
(b)After adjusting for variations, primarily weather and billing days, steam sales and deliveries increased 0.6 percent in the nine months ended September 30, 2023 compared with the 2022 period.
Operating revenues decreased $19 million in the nine months ended September 30, 2023 compared with the 2022 period primarily due to the impact of milder than normal weather in the 2022 period ($34 million), lower purchased power expenses ($15 million), offset in part by higher fuel expenses ($27 million) and higher revenues from the increase in average normalized use per customer ($7 million).
Purchased power expenses decreased $15 million in the nine months ended September 30, 2023 compared with the 2022 period due to lower unit costs ($18 million), offset in part by higher purchased volumes ($3 million).
Fuel expenses increased $27 million in the nine months ended September 30, 2023 compared with the 2022 period due to higher unit costs ($52 million), offset in part by lower purchased volumes from CECONY’s steam generating facilities ($25 million).
Other operations and maintenance expenses increased $27 million in the nine months ended September 30, 2023 compared with the 2022 period primarily due to higher costs for pension and other postretirement benefits, reflecting reconciliation to the rate plan level ($5318 million), higher stock-based compensation costs ($3 million), higher departmental gas operations cost ($1 million), higher uncollectible expense ($1 million), higher and an increase in municipal infrastructure support costs ($1 million), and higher surcharges for assessments and fees that are collected in revenues from customers ($1 million).
Depreciation and amortization expenses increased $36 million in the nine months ended September 30, 2022 compared with the 2021 period primarily due to higher gas utility plant balances.
Taxes, other than income taxes increased $46 million in the nine months ended September 30, 2022 compared with the 2021 period primarily due to a higher deferral of over-collected property taxes ($20 million), higher property taxes ($14 million) and higher state and local taxes ($10 million).
Steam
CECONY’s results of steam operations for the nine months ended September 30, 2022 compared with the 2021 period were as follows:
| | | | | | | | | | | |
| For the Nine Months Ended | |
(Millions of Dollars) | September 30, 2022 | September 30, 2021 | Variation |
Operating revenues | $444 | $393 | $51 |
Purchased power | 46 | 27 | 19 |
Fuel | 85 | 59 | 26 |
Other operations and maintenance | 147 | 121 | 26 |
Depreciation and amortization | 72 | 69 | 3 |
Taxes, other than income taxes | 109 | 108 | 1 |
Steam operating income | $(15) | $9 | $(24) |
CECONY’s steam sales and deliveries for the nine months ended September 30, 2022 compared with the 2021 period were:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Millions of Pounds Delivered | | Revenues in Millions |
| For the Nine Months Ended | | | For the Nine Months Ended | |
Description | September 30, 2022 | September 30, 2021 | Variation | Percent Variation | | September 30, 2022 | September 30, 2021 | Variation | Percent Variation |
General | 390 | | 396 | | (6) | | (1.5) | % | | $21 | $19 | $2 | 10.5 | % |
Apartment house | 3,781 | | 3,768 | | 13 | | 0.3 | | | 115 | 100 | 15 | 15.0 | |
Annual power | 9,109 | | 8,888 | | 221 | | 2.5 | | | 297 | 256 | 41 | 16.0 | |
Other operating revenues (a) | — | | — | | — | | — | | 11 | 18 | (7) | (38.9) | |
Total | 13,280 | | 13,052 | | 228 | | 1.7 | % | (b) | $444 | $393 | $51 | 13.0 | % |
(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 0.7 percent in the nine months ended September 30, 2022 compared with the 2021 period.
Operating revenues increased $51 million in the nine months ended September 30, 2022 compared with the 2021 period primarily due to higher fuel expenses ($26 million), higher purchased power expenses ($19 million), and the impact of milder than normal weather in the 2021 period ($3 million).
Purchased power expenses increased $19 million in the nine months ended September 30, 2022 compared with the 2021 period due to higher unit costs ($23 million), offset in part by lower purchased volumes ($4 million).
Taxes, Other Than Income Taxes
FuelAt $2,207 million, taxes other than income taxes remain one of CECONY’s largest operating expenses for expenses increased $26 million in the nine months ended September 30, 2022 compared with the 2021 period due to higher unit costs ($20 million)2023. The principal components of, and higher purchased volumes from the company’s steam generating facilities ($6 million).
Other operations and maintenance expenses increased $26 millionvariations in, the nine months ended September 30, 2022 compared with the 2021 period primarily due to higher costs for pension and other postretirement benefits, reflecting reconciliation to the rate plan level ($22 million), higher surcharges for assessments and fees that are collected in revenues from customers ($1 million), and higher stock-based compensation costs ($1 million).
Depreciation and amortization expenses increased $3 million in the nine months ended September 30, 2022 compared with the 2021 period due to higher steam utility plant balances.
Taxes,taxes other than income taxes were:
| | | | | | | | | | | | | | | | | |
| For the Nine Months Ended September 30, | |
(Millions of Dollars) | 2023 | | 2022 | | Variation |
Property taxes | $1,887 | | $1,718 | | $169 |
State and local taxes related to revenue receipts | 312 | | 312 | | — |
Payroll taxes | 66 | | 62 | | 4 |
Other taxes | (58) | | 67 | | (125) |
Total | $2,207 | (a) | $2,159 | (a) | $48 |
(a) increased $1Including sales tax on customers’ bills, total taxes other than income taxes in 2023 and 2022 were $2,747 million in the nine months ended September 30, 2022 compared with the 2021 period primarily due to higher property taxes.and $2,650 million, respectively.
Other Income (Deductions)
Other income increased $315$305 million in the nine months ended September 30, 20222023 compared with the 20212022 period primarily due to lower costs associated with components of pension and other postretirement benefits other than service cost ($335272 million), offset in part by lower expenses resulting from investment performance in a deferred income plan and higher hedging program interest accrual ($215 million).
Net Interest Expense
Net interest expense increased $37$91 million in the nine months ended September 30, 20222023 compared with the 20212022 period primarily due to higher interest expense for long-term debt ($3756 million) and higher interest for short-term debt ($1345 million), offset in part by an increase in allowance for borrowed funds used during construction ($1415 million).
Income Tax Expense
Income taxes increased $44$65 million in the nine months ended September 30, 20222023 compared with the 20212022 period primarily due to higher income before income tax expense ($3661 million), a remeasurement of state deferred tax assets and liabilities as a result of the enacted New York State legislation ($10 million), a decrease in the amortization of excess deferred federal income taxes due to the TCJA ($6 million), higher state income taxesreserve for injuries and damages ($85 million) and, lower flow-through tax benefits in 20222023 for plant-related items ($54 million) and lower research and development credits from prior years net of uncertain tax positions ($2 million), offset in part by higher researchflow-through of COVID-19 assistance benefits for uncollectible accounts ($15 million), a favorable tax adjustment from a prior year tax return ($4 million) and development creditslower allowance for uncollectible accounts ($6 million, including $5 million from prior years)4 million).
O&R
| | | For the Nine Months Ended September 30, 2022 | | For the Nine Months Ended September 30, 2021 | | | | For the Nine Months Ended September 30, 2023 | | For the Nine Months Ended September 30, 2022 | | |
(Millions of Dollars) | (Millions of Dollars) | Electric | Gas | 2022 Total | Electric | Gas | 2021 Total | 2022-2021 Variation | (Millions of Dollars) | Electric | Gas | 2023 Total | Electric | Gas | 2022 Total | 2023-2022 Variation |
Operating revenues | Operating revenues | $594 | $219 | $813 | $522 | $177 | $699 | $114 | Operating revenues | $588 | $215 | $803 | $594 | $219 | $813 | $(10) |
Purchased power | Purchased power | 210 | — | | 210 | 157 | — | | 157 | 53 | Purchased power | 191 | — | | 191 | 210 | — | | 210 | (19) |
Gas purchased for resale | Gas purchased for resale | — | | 94 | — | | 56 | 38 | Gas purchased for resale | — | | 82 | — | | 94 | (12) |
Other operations and maintenance | Other operations and maintenance | 203 | 56 | 259 | 193 | 47 | 240 | 19 | Other operations and maintenance | 223 | 60 | 283 | 203 | 56 | 259 | 24 |
Depreciation and amortization | Depreciation and amortization | 53 | 20 | 73 | 52 | 19 | 71 | 2 | Depreciation and amortization | 56 | 22 | 78 | 53 | 20 | 73 | 5 |
Taxes, other than income taxes | Taxes, other than income taxes | 43 | 24 | 67 | 43 | 24 | 67 | — | Taxes, other than income taxes | 45 | 24 | 69 | 43 | 24 | 67 | 2 |
Operating income | Operating income | $85 | $25 | $110 | $77 | $31 | $108 | $2 | Operating income | $73 | $27 | $100 | $85 | $25 | $110 | $(10) |
Electric
O&R’s results of electric operations for the nine months ended September 30, 20222023 compared with the 20212022 period were as follows:
| | | For the Nine Months Ended | | | For the Nine Months Ended | |
(Millions of Dollars) | (Millions of Dollars) | September 30, 2022 | September 30, 2021 | Variation | (Millions of Dollars) | September 30, 2023 | September 30, 2022 | Variation |
Operating revenues | Operating revenues | $594 | $522 | $72 | Operating revenues | $588 | $594 | $(6) |
Purchased power | Purchased power | 210 | 157 | 53 | Purchased power | 191 | 210 | (19) |
Other operations and maintenance | Other operations and maintenance | 203 | 193 | 10 | Other operations and maintenance | 223 | 203 | 20 |
Depreciation and amortization | Depreciation and amortization | 53 | 52 | 1 | Depreciation and amortization | 56 | 53 | 3 |
Taxes, other than income taxes | Taxes, other than income taxes | 43 | — | Taxes, other than income taxes | 45 | 43 | 2 |
Electric operating income | Electric operating income | $85 | $77 | $8 | Electric operating income | $73 | $85 | $(12) |
O&R’s electric sales and deliveries for the nine months ended September 30, 20222023 compared with the 20212022 period were:
| | | Millions of kWh Delivered | | Revenues in Millions (a) | | Millions of kWh Delivered | | Revenues in Millions (a) |
| | For the Nine Months Ended | | | For the Nine Months Ended | | | For the Nine Months Ended | | | For the Nine Months Ended | |
Description | Description | September 30, 2022 | September 30, 2021 | Variation | Percent Variation | | September 30, 2022 | September 30, 2021 | Variation | Percent Variation | Description | September 30, 2023 | September 30, 2022 | Variation | Percent Variation | | September 30, 2023 | September 30, 2022 | Variation | Percent Variation |
Residential/Religious (b) | Residential/Religious (b) | 1,482 | | 1,366 | | 116 | 8.5 | % | | $315 | $257 | $58 | 22.6 | % | Residential/Religious (b) | 1,510 | | 1,482 | | 28 | 1.9 | % | | $329 | $315 | $14 | 4.4 | % |
Commercial/Industrial | Commercial/Industrial | 706 | | 625 | | 81 | 13.0 | | | 111 | 83 | 28 | 33.7 | | Commercial/Industrial | 745 | | 706 | | 39 | 5.5 | | | 112 | 111 | 1 | 0.9 | |
Retail choice customers | Retail choice customers | 2,015 | | 2,201 | | (186) | (8.5) | | | 159 | 176 | (17) | (9.7) | | Retail choice customers | 1,761 | | 2,015 | | (254) | (12.6) | | | 132 | 159 | (27) | (17.0) | |
Public authorities | Public authorities | 86 | | 83 | | 3 | 3.6 | | | 12 | 8 | 4 | 50.0 | | Public authorities | 87 | | 86 | | 1 | 1.2 | | | 9 | 12 | (3) | (25.0) | |
Other operating revenues (c) | Other operating revenues (c) | — | | — | | — | | — | | (3) | (2) | (1) | — | | Other operating revenues (c) | — | | — | | — | | — | | 6 | (3) | 9 | — | |
Total | Total | 4,289 | | 4,275 | | 14 | | 0.3 | % | (d) | $594 | $522 | $72 | 13.8 | % | Total | 4,103 | | 4,289 | | (186) | | (4.3) | % | (d) | $588 | $594 | $(6) | (1.0) | % |
(a)O&R’s New York electric delivery revenues are subject to a revenue decoupling mechanism, as a result of which delivery revenues are generally not affected by changes in delivery volumes from levels assumed when rates were approved. Effective July 2021, the majority of O&R’s electric distribution revenues in NJNew Jersey 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 NJNew Jersey are not subject to a conservation incentive program, and as a result, changes in such volumes do impact revenues.
(b)“Residential/Religious” generally includes single-family dwellings, individual apartments in multi-family dwellings, religious organizations and certain other not-for-profit organizations.
(c)Other electric operating revenues generally reflect changes in regulatory assets and liabilities in accordance with the company’sO&R’s electric rate plan.
(d)After adjusting for weather and other variations, electric delivery volumes in O&R’s service area increased 1.5decreased 0.6 percent in the nine months ended September 30, 20222023 compared with the 20212022 period.
Operating revenues increased $72decreased $6 million in the nine months ended September 30, 20222023 compared with the 20212022 period primarily due to higherlower purchased power expenses ($5319 million) and, offset in part by higher revenues from the New York electric rate plan ($1714 million).
Purchased power expenses increased $53decreased $19 million in the nine months ended September 30, 20222023 compared with the 20212022 period primarily due to higherlower purchased volumes ($10 million) and lower unit costs ($47 million) and higher purchased volumes ($79 million).
Other operations and maintenance expenses increased $10$20 million in the nine months ended September 30, 20222023 compared with the 20212022 period primarily due to higher non-deferred storm costs for($4 million), higher tree trimming
expenses ($3 million), higher uncollectible expenses ($2 million), higher shared services costs ($2 million), higher administrative and general expenses ($2 million), higher customer assistance costs ($1 million) and higher pension costs, reflecting reconciliation to the rate plan level.
Depreciation and amortization increased $1 million in the nine months ended September 30, 2022 compared with the 2021 period primarily due to higher electric utility plant balances.level ($1 million).
Gas
O&R’s results of gas operations for the nine months ended September 30, 20222023 compared with the 20212022 period were as follows:
| | | For the Nine Months Ended | | | For the Nine Months Ended | |
(Millions of Dollars) | (Millions of Dollars) | September 30, 2022 | September 30, 2021 | Variation | (Millions of Dollars) | September 30, 2023 | September 30, 2022 | Variation |
Operating revenues | Operating revenues | $219 | $177 | $42 | Operating revenues | $215 | $219 | $(4) |
Gas purchased for resale | Gas purchased for resale | 94 | 56 | 38 | Gas purchased for resale | 82 | 94 | (12) |
Other operations and maintenance | Other operations and maintenance | 56 | 47 | 9 | Other operations and maintenance | 60 | 56 | 4 |
Depreciation and amortization | Depreciation and amortization | 20 | 19 | 1 | Depreciation and amortization | 22 | 20 | 2 |
Taxes, other than income taxes | Taxes, other than income taxes | 24 | — | Taxes, other than income taxes | 24 | — |
Gas operating income | Gas operating income | $25 | $31 | $(6) | Gas operating income | $27 | $25 | $2 |
O&R’s gas sales and deliveries, excluding off-system sales, for the nine months ended September 30, 20222023 compared with the 20212022 period were:
| | | Thousands of Dt Delivered | | Revenues in Millions (a) | | Thousands of Dt Delivered | | Revenues in Millions (a) |
| | For the Nine Months Ended | | | For the Nine Months Ended | | | For the Nine Months Ended | | | For the Nine Months Ended | |
Description | Description | September 30, 2022 | September 30, 2021 | Variation | Percent Variation | | September 30, 2022 | September 30, 2021 | Variation | Percent Variation | Description | September 30, 2023 | September 30, 2022 | Variation | Percent Variation | | September 30, 2023 | September 30, 2022 | Variation | Percent Variation |
Residential | Residential | 8,433 | | 7,784 | | 649 | | 8.3 | % | | $144 | $108 | $36 | 33.3 | % | Residential | 7,640 | | 8,433 | | (793) | | (9.4) | % | | $142 | $144 | $(2) | (1.4) | % |
General | General | 1,945 | | 1,729 | | 216 | | 12.5 | | | 27 | 19 | 8 | 42.1 | | General | 1,669 | | 1,945 | | (276) | | (14.2) | | | 24 | 27 | (3) | (11.1) | |
Firm transportation | Firm transportation | 4,702 | | 5,514 | | (812) | | (14.7) | | | 33 | 41 | (8) | (19.5) | | Firm transportation | 3,783 | | 4,702 | | (919) | | (19.5) | | | 29 | 33 | (4) | (12.1) | |
Total firm sales and transportation | Total firm sales and transportation | 15,080 | | 15,027 | | 53 | | 0.4 | | (b) | $204 | $168 | $36 | 21.4 | | Total firm sales and transportation | 13,092 | | 15,080 | | (1,988) | | (13.2) | | (b) | $195 | $204 | $(9) | (4.4) | |
Interruptible sales | Interruptible sales | 2,936 | | 3,002 | | (66) | | (2.2) | | | 4 | 4 | — | | — | | Interruptible sales | 2,656 | | 2,936 | | (280) | | (9.5) | | | 4 | 4 | — | | — | |
Generation plants | Generation plants | 11 | | 24 | | (13) | | (54.2) | | | — | | — | | — | | — | | Generation plants | 4 | | 11 | | (7) | | (63.6) | | | — | | — | | — | | — | |
Other | Other | 437 | | 271 | | 166 | | 61.3 | | | 1 | 1 | — | | — | | Other | 312 | | 437 | | (125) | | (28.6) | | | 1 | 1 | — | | — | |
Other gas revenues | Other gas revenues | — | | — | | — | | — | | 10 | 4 | 6 | Large | Other gas revenues | — | | — | | — | | — | | 15 | 10 | 5 | 50.0 | |
Total | Total | 18,464 | | 18,324 | | 140 | | 0.8 | % | | $219 | $177 | $42 | 23.7 | % | Total | 16,064 | | 18,464 | | (2,400) | | (13.0) | % | | $215 | $219 | $(4) | (1.8) | % |
(a)Revenues from New York gas sales are subject to a weather normalization clause and a revenue decoupling mechanism as a result of which delivery revenues are generally not affected by changes in delivery volumes from levels assumed when rates were approved.
(b)After adjusting for weather and other variations, total firm sales and transportation volumes increased 10.4 percent in the nine months ended September 30, 20222023 compared with 20212022 period.
Operating revenues increased $42decreased $4 million in the nine months ended September 30, 20222023 compared with the 20212022 period primarily due to an increasea decrease in gas purchased for resale ($3812 million) and, offset in part by higher revenues from the NYNew York gas rate plan ($85 million).
Gas purchased for resale increased $38decreased $12 million in the nine months ended September 30, 20222023 compared with the 20212022 period primarily due to lower purchased volumes ($17 million), offset in part by higher unit costs ($30 million) and higher purchased volumes ($75 million).
Other operations and maintenance expenses increased $9$4 million in the nine months ended September 30, 20222023 compared with the 20212022 period primarily due to higher pension costs, for pension, reflecting reconciliation to the rate plan level.level ($1 million) and higher uncollectible expenses ($1 million).
Depreciation and amortization expensesTaxes, Other Than Income Taxes
Taxes, other than income taxes, increased $1by $2 million in 2023 compared with 2022 for the nine months ended September 30, 2022 compared with the 2021 period primarily due to higher gas utility plant balances.2023. The principal components of taxes, other than income taxes, were:
Income Tax Expense
Income taxes increased $7 million in the nine months ended September 30, 2022 compared with the 2021 period primarily due to higher income before income tax expense ($5 million) and higher state income taxes ($3 million), offset in part by an increase in the amortization of excess deferred federal income taxes due to the TCJA ($1 million).
| | | | | | | | | | | | | | | | | |
| For the Nine Months Ended September 30, |
(Millions of Dollars) | 2023 | | 2022 | | Variation |
Property taxes | $53 | | $52 | | $1 |
State and local taxes related to revenue receipts | 9 | | 9 | | — | |
Payroll taxes | 7 | | 6 | | 1 | |
Total | $69 | (a) | $67 | (a) | $2 | |
(a)Including sales tax on customers’ bills, total taxes other than income taxes in 2023 and 2022 were $93 million and $101 million, respectively.
Clean Energy Businesses
On March 1, 2023, Con Edison completed the sale of substantially all of the assets of the Clean Energy Businesses. See Note S and Note T to the Third Quarter Financial Statements. The Clean Energy Businesses’ results of operations for the nine months ended September 30, 20222023 compared with the 20212022 period were as follows:
| | | For the Nine Months Ended | | | For the Nine Months Ended | |
(Millions of Dollars) | (Millions of Dollars) | September 30, 2022 | September 30, 2021 | Variation | (Millions of Dollars) | September 30, 2023 | September 30, 2022 | Variation |
Operating revenues | Operating revenues | $857 | $779 | $78 | Operating revenues | $129 | $857 | $(728) |
Purchased power | Purchased power | 6 | — | | 6 | | Purchased power | — | 6 | | (6) | |
Gas purchased for resale | Gas purchased for resale | 157 | 49 | 108 | Gas purchased for resale | 41 | 157 | (116) |
Other operations and maintenance | Other operations and maintenance | 252 | 348 | (96) | Other operations and maintenance | 47 | 252 | (205) |
Depreciation and amortization | Depreciation and amortization | 178 | 172 | 6 | Depreciation and amortization | — | 178 | (178) |
Taxes, other than income taxes | Taxes, other than income taxes | 16 | 14 | 2 | Taxes, other than income taxes | 4 | 16 | (12) |
| Operating income | Operating income | $248 | $196 | $52 | Operating income | $37 | $248 | $(211) |
Net Interest Expense
Operating revenuesNet interest expense increased $78$84 million in the nine months ended September 30, 20222023 compared with the 20212022 period primarily due to higher wholesale revenues ($130 million), net mark-to-market values ($23 million), offset in part by lower revenue from engineering, procurement and construction of renewable electric projects ($71 million), and lower energy services revenues ($4 million).
Purchased power increased $6 million in the nine months ended September 30, 2022 compared with the 2021 period due to higher costs from renewable electric projects.
Gas purchased for resale increased $108 million in the nine months ended September 30, 2022 compared with the 2021 period primarily due to higher purchased volumes and prices.
Other operations and maintenance expenses decreased $96 million in the nine months ended September 30, 2022 compared with the 2021 period primarily due to lower costs from engineering, procurement and construction of renewable electric projects.
Depreciation and amortization expenses increased $6 million in the nine months ended September 30, 2022 compared with the 2021 period primarily due to an increase in renewable electric projects in operation during 2022.
Net Interest Expense
Net interest expense decreased $112 million in the nine months ended September 30, 2022 compared with the 2021 period primarily due to higher unrealized gains on interest rate swaps in the 20222023 period. On March 1, 2023, Con Edison completed the sale of substantially all of the assets of the Clean Energy Businesses and the impact on the 2023 period is shown through the date of sale. See Note S and Note T to the Third Quarter Financial Statements.
Income Tax Expense
Income taxes increased $24decreased $65 million in the nine months ended September 30, 20222023 compared with the 20212022 period primarily due to higherlower income before income tax expense ($3574 million), higher statelower income taxesattributable to non-controlling interest ($712 million) and an increase in thea lower reserve for uncertain tax positions ($5 million), offset in part by a lower loss attributable to non-controlling interest ($18 million) and higher renewable energy tax credits ($420 million). On March 1, 2023, Con Edison completed the sale of substantially all of the assets of the Clean Energy Businesses and the impact for the nine months ended September 30, 2023 is shown through the date of the sale. See Note S and Note T to the Third Quarter Financial Statements.
Income (Loss) Attributable to Non-Controlling Interest
Income attributable to non-controlling interest increased $72$40 million to a loss of $43$3 million in the nine months ended September 30, 20222023 compared with the 20212022 period primarily due to lower income attributable inthe sale of the 2021 period to a tax equity investor in renewable electric projects accounted for under the HLBV method of accounting. See Note P to the Third Quarter Financial Statements.Clean Energy Businesses.
Con Edison Transmission
Other Income (Deductions)
Other income (deductions) increased $192 million from $178 million of other deductions to $14 million of other income in the nine months ended September 30, 2022 compared with the 2021 period primarily due to losses in the 2021 period from CET Gas' pre-tax impairment loss of $211 million on its investment in Stagecoach (See "Investments" in Note A to the Third Quarter Financial Statements), offset in part by investment income from Stagecoach ($22 million) and NY Transco ($11 million), compared to 2022 investment income from NY Transco ($14 million).
Net Interest Expense
Net interest expense decreased $5$8 million in the nine months ended September 30, 20222023 compared with the 20212022 period primarily due to the repayment of an intercompany loanhigher investment income from the parent company from a portion of the proceeds from the substantial completion of the sale of Stagecoach.New York Transco ($8 million).
Income Tax Expense
Income taxes increased $52$3 million in the nine months ended September 30, 20222023 compared with the 20212022 period primarily due to higher income before income tax expense.
Other
Income Tax Expense
Income taxes increased $81 million in the nine months ended September 30, 2023 compared with the 2022 period primarily due to higher income before income tax expense due to the sale of the Clean Energy Businesses ($41 207
million) and a higher unitary state income taxestax adjustment, net of federal benefit ($1317 million), offset in part by a decreasethe recognition of unamortized investment tax credits ($108 million) and lower state taxes due to change in the amortizationstate apportionments, net of deficient deferred federal income taxes due($27 million), both related to the TCJAsale of the Clean Energy Businesses and an increase in renewable energy tax credits ($15 million).
Other
Income Tax Expense
Income taxes increased $9 million in the nine months ended September 30, 2022 compared with the 2021 period primarily due to higher state income taxes.
Liquidity and Capital Resources
The Companies monitor the financial markets closely, including borrowing rates and daily cash collections. Increases in aged accounts receivable balances, inflationary pressure and higher interest rates have increased the amount of capital needed by the Utilities and the costs of such capital. See Note C and Note D to the Third Quarter Financial Statements and "Interest Rate Risk," below, "Aged Accounts Receivable Balances," above, "Capital Requirements and Resources," below and "Regulatory Matters - Rate Plans - CECONY Electric and Gas" and "COVID-19 Regulatory Matters" in Note B to the Third Quarter Financial Statements.
Con Edison and the Utilities have a $2,500 million revolving credit agreement (the Credit Agreement) in place under which banks are committed to provide loans on a revolving credit basis until March 2028, unless extended for up to two additional one-year terms, subject to certain conditions. CECONY has a $500 million 364-day revolving credit agreement (the CECONY Credit Agreement) in place under which banks are committed to provide loans on a revolving credit basis until March 2024, subject to certain conditions. 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 Third Quarter Financial Statements.
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.
The Companies’ cash, temporary cash investments and restricted cash resulting from operating, investing and financing activities for the nine months ended September 30, 20222023 and 20212022 are summarized as follows:
| | | For the Nine Months Ended September 30, | | For the Nine Months Ended September 30, |
| | CECONY | O&R | Clean Energy Businesses (d) | Con Edison Transmission | Other (a) | Con Edison (b) | | CECONY | O&R | Clean Energy Businesses (d) | Con Edison Transmission | Other (a)(b) | Con Edison (c) |
(Millions of Dollars) | (Millions of Dollars) | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | (Millions of Dollars) | 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | 2023 | 2022 |
Operating activities | Operating activities | $2,191 | $1,251 | $165 | $106 | $251 | $56 | $49 | $43 | $(38) | $256 | $2,618 | $1,712 | Operating activities | $1,221 | $2,191 | $127 | $165 | $— | $251 | $(145) | $49 | $(22) | $(38) | $1,181 | $2,618 |
Investing activities | Investing activities | (2,929) | (2,782) | (162) | (157) | (206) | (106) | (49) | 608 | — | — | (3,346) | (2,437) | Investing activities | (3,178) | (2,929) | (208) | (162) | (248) | (206) | (49) | (49) | 4,035 | — | 352 | (3,346) |
Financing activities | Financing activities | (157) | 482 | (2) | 39 | (42) | 35 | — | (651) | 24 | (400) | (177) | (496) | Financing activities | 921 | (157) | 75 | (2) | — | (42) | 212 | — | (3,725) | 24 | (2,517) | (177) |
Net change for the period | Net change for the period | (895) | (1,049) | 1 | (12) | 3 | (15) | — | | — | (14) | (145) | (905) | (1,221) | Net change for the period | (1,036) | (895) | (6) | 1 | (248) | 3 | 18 | | — | 288 | (14) | (984) | (905) |
Balance at beginning of period | Balance at beginning of period | 920 | 1,067 | 29 | 37 | 178 | 187 | — | | — | 19 | 145 | 1,146 | 1,436 | Balance at beginning of period | 1,056 | 920 | 35 | 29 | 248 | 178 | — | | — | 191 | 19 | 1,530 | 1,146 |
Balance at end of period (c) | Balance at end of period (c) | $25 | $18 | $30 | $25 | $181 | $172 | $— | | $— | $5 | $0 | $241 | $215 | Balance at end of period (c) | $20 | $25 | $29 | $30 | $— | $181 | $18 | | $— | $479 | $5 | $546 | $241 |
| Less: Cash balances held for sale (d) | | Less: Cash balances held for sale (d) | — | — | — | — | — | — | | — | 6 | | — | 6 | — |
Balance at end of period excluding held for sale | | Balance at end of period excluding held for sale | $20 | $25 | $29 | $30 | $— | $181 | $18 | | $— | $473 | $5 | $540 | $241 |
(a) IncludesOther includes the parent company, Con Edison’s tax equity investments, the deferred project held for sale and consolidation adjustments. See Note T to the Third Quarter Financial Statements.
(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 Third Quarter Financial Statements.
(d) On OctoberMarch 1, 2022,2023, Con Edison entered into a purchase and sale agreement pursuant to which Con Edison agreed to sellsold substantially all of the assets of the Clean Energy Businesses. See Note S and Note T to the Third Quarter
Financial Statements.
Cash Flows from Operating Activities
The Utilities’ cash flows from operating activities primarily reflect their energy sales and deliveries and cost of operations. The volume of energy sales and deliveries is primarily affected by factors external to the Utilities, such as 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, theThe decline in business activity in the Utilities’ service territory from 2020 through 2022 due to the COVID-19 pandemic and the Utilities' suspension of service disconnections, bill collection activities and certain charges and fees 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. Under the revenue decoupling mechanisms in the Utilities’ NYNew York electric and gas rate plans, changes in delivery volumes from levels assumed when rates were approved may affect the timing of cash flows, but largely not net income. The Utilities’ New York electric and gas rate plans also include COVID-19 provisions for the reconciliation of write-offs of customer accounts receivable balances to amounts reflected in rates that may affect the timing of cash flows, but largely not net income. The prices at which the Utilities provide energy to their customers are determined in accordance with their rate plans. During the nine months ended September 30, 2022, increases in electric and gas commodity prices havefurther contributed and 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. See “Financial and Commodity Market Risks – Commodity Price Risk,” below.
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. In June 2022, the NYSPSC issued an order implementing a COVID-19 arrears assistance program that provides credits towards the arrears balances of low-income electric and gas customers of CECONY and O&R. See “COVID-19 Regulatory Matters” and “Other Regulatory Matters” in Note B to the Third Quarter Financial Statements, "Aged Accounts Receivable Balances," above and “Coronavirus Disease 2019 (COVID-19) Impacts - Liquidity“Financial and Financing,Commodity Market Risks – Commodity Price Risk,” 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 Third Quarter Financial Statements and "Coronavirus Disease 2019 (COVID-19) Impacts - Liquidity and Financing," above.below.
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, amortizations of certain regulatory assets and 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’ NYNew York electric and gas rate plans. For Con Edison, net income for the nine months ended September 30, 2021 included non-cash losses recognized with respect to a partial goodwill impairment of Con Edison Transmission’s investment in Stagecoach. See “Investments” in Note A to the Third Quarter Financial Statements.
Net cash flows from operating activities for the nine months ended September 30, 20222023 for Con Edison and CECONY were $906$1,437 million higherlower and $940$970 million higher,lower, respectively, than in the 20212022 period. The changeschange in net cash flows for Con Edison primarily reflects a decrease in accounts payable ($634 million), lower net deferred credits, noncurrent liabilities and other regulatory liabilities balances ($562 million) and an increase in prepayments ($253 million). For CECONY, changes in net cash flows primarily reflectreflects lower net lowerdeferred credits, noncurrent liabilities and other regulatory liabilities balances ($469 million), a decrease in accounts payable ($396 million), a decrease in the pension and retiree benefits contributionsobligations, net ($433 million262 million), an increase in the revenue decoupling mechanism receivable ($152 million), and $408 million, respectively)an increase in prepayments ($140 million), higher deferred income taxes ($150 million and $69 million, respectively), higher other current liabilities balances ($139 million and $46 million, respectively) and higher recoveries of depreciation and amortization ($82 million and $74 million, respectively),offset in part by a higherlower increase of accounts receivablesreceivable balances from customers net of allowance for uncollectible accounts ($70 million and $80 million, respectively)281 million) (see “COVID-19 Regulatory Matters” in Note B to the Third Quarter Financial Statements and “Coronavirus Disease 2019 (COVID-19) Impacts", "Accounting Considerations” and “Liquidity and Financing,"Aged Accounts Receivable Balances,” above), a decrease in materials and highersupplies, including fuel oil and gas in storage ($107 million) and an increase of accounts payable balancesin the system benefit charge ($76 million and $37 million, respectively), offset in part by net lower deferred credits, noncurrent liabilities and other regulatory liabilities balances ($216 million and $225 million, respectively). For Con Edison, it also reflects higher other receivables and current asset balances ($4152 million). For CECONY, the higher net cash flows from operating activities also reflects lower other receivables and other current asset balances ($285 million), and higher accrued taxes ($28 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 inFrom (Used in) Investing Activities
Net cash flows from investing activities for Con Edison were $3,698 million higher for the nine months ended September 30, 2023 compared with the 2022 period. Net cash flows used in investing activities for Con Edison and CECONY were $909$249 million higher and $147 million higher, respectively, for the nine months ended September 30, 20222023 compared with the 20212022 period. The change for Con Edison primarily reflects the proceeds from substantially all of the saleassets of Stagecoach in 2021 ($614 million), proceeds from the divestiture of renewable electric projects at the Clean Energy Businesses, in 2021net of cash and cash equivalents sold ($1833,927 million) and a decrease in non-utility construction expenditures ($69 million), offset in part by an increase in utility construction expenditures at($253 million) and higher cost of removal less salvage ($42 million). The change for CECONY ($142 million), partially offset by a decreaseprimarily reflects an increase in non-utilityutility construction expenditures at($207 million) and higher cost of removal less salvage ($42 million). Pursuant to their rate plans, the Clean Energy Businesses ($80 million) dueUtilities recover the cost of utility construction expenditures from customers, including an approved rate of return (before and after being placed in service and or AFUDC before being placed in service). Increases in the amount of utility construction expenditures may temporarily increase the amount of short-term debt issued by the Utilities prior to constructionthe long-term financing of the CED Nevada Virginia projects being completed during the first half of 2021.such amounts.
Cash Flows fromFrom (Used In) Financing Activities
Net cash flows used in financing activities for Con Edison were $2,340 million higher for the nine months ended September 30, 2023 compared with the 2022 period. Net cash flows from financing activities for Con Edison and CECONY were $319$1,078 million higher and $639 million lower, respectively, infor the nine months ended September 30, 20222023 compared with the 20212022 period.
In March 2023, Con Edison entered into accelerated share repurchase agreements (ASR Contracts) with two dealers to repurchase $1,000 million in aggregate of Con Edison’s Common Shares ($.10 par value) (Common Shares). Pursuant to the ASR Contracts, Con Edison made payments of $1,000 million in aggregate to the dealers. Con Edison's share repurchase was completed in the second quarter of 2023. See Note C to the Third Quarter Financial Statements.
In February 2023, CECONY issued $500 million aggregate principal amount of 5.20 percent debentures, due 2033. See Note C to the Third Quarter Financial Statements.
In June 2022, Con Edison redeemed at maturity $293 million of 8.71 percent senior unsecured notes. See Note C to the Third Quarter Financial Statements.
In June 2022, Con Edison entered into and borrowed $400 million under a 364-Day Senior Unsecured Term Loan Credit Agreement under which a bank is committed, until November 30,(the June 2022 to provide toTerm Loan Credit Agreement). In January 2023, Con Edison one or more tranches of incremental term loans inborrowed an aggregate amount not to exceedadditional $200 million under the June 2022 Credit Agreement and in addition toMarch 2023, repaid all amounts borrowed under the $400 million borrowed on June 30, 2022. See Note D to the Third Quarter Financial Statements.
In June 2021, Con Edison issued 10,100,000 shares of its common stock resulting in net proceeds of approximately
$775 million, after issuance expenses. The net proceeds from the sale of the common shares were invested by Con
Edison in CECONY, for funding of its construction expenditures and for its other general corporate purposes.
In May 2021, Con Edison redeemed at maturity $500 million of 2.00 percent five-year debentures.
During the first quarter of 2021, Con Edison optionally prepaid the remaining $675 million outstanding under a
February 2019 term loan prior to its maturity in June 2021.
In June 2021, CECONY redeemed at maturity $640 million of floating rate three-year debentures.
In June 2021, CECONY issued $750 million aggregate principal amount of 2.40 percent debentures, due 2031, the
net proceeds from the sale of which were used to redeem at maturity its $640 million floating rate three-year debentures and for other general corporate purposes. In June 2021 CECONY also issued $750 million aggregate principal amount of 3.60 percent debentures, due 2061, the net proceeds from the sale of which will be used to pay or reimburse the payment of, in whole or in part, existing and new qualifying eligible green expenditures, such as
energy efficiency and clean transportation expenditures, that include those funded on or after January 1, 2021 until
the maturity date of the debentures. CECONY used the net proceeds for repayment of short-term debt and temporarily placed the remaining net proceeds in short-term interest-bearing instruments.2022 Term Loan Credit Agreement.
In November 2022, O&R issued $100 million aggregate principal amount of 5.70 percent debentures, due 2032, the net proceeds from the sale of which were used to repay short-term borrowings and for other general corporate purposes. See Note C to the Third Quarter Financial Statements.
In December 2021, O&R issued $45the nine months ended September 30, 2023 and 2022, Con Edison contributed $1,720 million aggregate principal amount of 2.31 percent debentures, due 2031 and $30 million aggregate principal amount of 3.17 percent debentures, due 2051, the net proceeds from the sales of which were used to repay short-term borrowings and for other general corporate purposes.
In August 2022, the Clean Energy Businesses entered into and borrowed $150 million under a 364-Day Senior Unsecured Term Loan Credit Agreement guaranteed by Con Edison, the proceeds from which were used for general corporate purposes. See Note D and Note Hof equity, respectively, to the Third Quarter Financial Statements.
In March 2021, a subsidiary of the Clean Energy Businesses agreed to issue $229 million aggregate principal amount of 3.77 percent senior notes, due 2046. In June 2021, July 2021, and August 2021 CED Nevada Virginia issued $38 million, $61 million and $130 million, respectively, of the $229 million senior notes, which are secured by equity interests in CED Nevada and the proceeds from the sale of which repaid a portion of the borrowings outstanding under a construction loan facility.
In February 2021, a subsidiary of 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 which was swapped to a fixed rate of 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 2021, 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 Third Quarter Financial Statements.CECONY.
Con Edison’s cash flows from financing activities for the nine months ended September 30, 2022 and 20212023 also reflect the proceeds, and reduction in cash used for reinvested dividends, resulting from thea retirement of short-term debt of $1,160 million compared with a net issuance of common shares under$1,003 million in the company’s dividend reinvestment, stock purchase and long-term incentive plans2022 period.
CECONY’s cash flows from financing activities for the nine months ended September 30, 2023 also reflect a retirement of $71short-term debt of $502 million and $82compared with a net issuance of $428 million respectively.in the 2022 period.
Cash flows from financing activities of the Companies also reflect commercial paper issuances and repayments. The commercial paper amounts outstanding at September 30, 20222023 and 20212022 and the average daily balances for the nine months ended September 30, 20222023 and 20212022 for Con Edison and CECONY were as follows:
| | | 2022 | 2021 | | 2023 | 2022 |
(Millions of Dollars, except Weighted Average Yield) | (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 September 30, | Daily average | Outstanding at September 30, | Daily average |
Con Edison | Con Edison | $1,941 | $1,368 | $1,036 | $1,294 | Con Edison | $1,880 | $1,351 | $1,941 | $1,368 |
CECONY | CECONY | $1,789 | $1,191 | $942 | $1,194 | CECONY | $1,798 | $1,313 | $1,789 | $1,191 |
Weighted average yield | Weighted average yield | 3.4 | % | 1.5 | % | 0.1 | % | 0.2 | % | Weighted average yield | 5.5 | % | 5.2 | % | 3.4 | % | 1.5 | % |
Capital Requirements and Resources
During 2023, Con Edison changed its estimate for capital requirements for 2024 and 2025 to $5,109 million and $4,962 million, respectively. The changes include decreases in CECONY’s capital requirements of $11 million and $25 million in 2024 and 2025, respectively, to reflect capital expenditures included in the September 2023 steam joint proposal that is subject to approval by the NYSPSC and increases to Con Edison’s capital requirements of $24 million in each of 2024 and 2025 to reflect additional investments by Con Edison Transmission associated with the Propel NY Energy transmission project. See “Rate Plans – CECONY – Steam” in Note B to the Third Quarter Financial Statements and “Con Edison Transmission,” above.
In October 2023, Con Edison increased the amount of long-term debt it plans to issue at the Utilities from up to $1,400 million to up to $2,100 million, of which $500 million was issued in the first nine months of 2023. The increase is primarily due to higher than anticipated accounts receivable balances and the timing of the approval of the CECONY electric and gas rate plans. See “Aged Accounts Receivable Balances” and “Liquidity and Capital Resources,” above and "Regulatory Matters – Rate Plans – CECONY Electric and Gas” in Note B to the Third Quarter Financial Statements.
Capital Requirements
Contractual Obligations
Con Edison’s material obligations to make payments pursuant to contracts totaled $52,606 million and Resources$57,931 million at September 30, 2023 and December 31, 2022, respectively. The decrease at September 30, 2023 is due primarily to Con Edison completing the sale of substantially all of the assets of the Clean Energy Businesses on March 1, 2023. See Note S and Note T to the Third Quarter Financial Statements.
Capital Resources
For each of the Companies, the common equity ratio at September 30, 20222023 and December 31, 20212022 was:
| | | Common Equity Ratio (Percent of total capitalization) | | Common Equity Ratio (Percent of total capitalization) |
| | September 30, 2022 | December 31, 2021 | | September 30, 2023 | December 31, 2022 |
Con Edison | Con Edison | 48.4 | 47.4 | Con Edison | 50.5 | 50.9 |
CECONY | CECONY | 47.8 | 47.0 | CECONY | 49.4 | 46.9 |
Assets, Liabilities and Equity
The Companies' assets, liabilities, and equity at September 30, 20222023 and December 31, 20212022 are summarized as follows.
| | | CECONY | O&R | Clean Energy Businesses (c) | Con Edison Transmission | Other (a) | Con Edison (b) | | CECONY | O&R | Clean Energy Businesses (c) | Con Edison Transmission | Other (a) | Con Edison (b) |
(Millions of Dollars) | (Millions of Dollars) | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | (Millions of Dollars) | 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | 2023 | 2022 |
ASSETS | ASSETS | | | | | | | | | | | | ASSETS | | | | | | | | | | | |
Current assets | Current assets | $4,667 | $4,703 | $332 | $290 | $775 | $542 | $7 | $2 | $(48) | $14 | $5,733 | $5,551 | Current assets | $5,166 | $5,247 | $355 | $332 | $— | $879 | $19 | $4 | $399 | $6,510 | $5,939 | $12,972 |
Investments | Investments | 518 | 608 | 21 | 26 | — | | — | | 271 | 223 | (5) | (4) | 805 | 853 | Investments | 571 | 539 | 19 | 20 | — | | — | | 334 | 286 | 9 | (4) | 933 | 841 |
Net plant | Net plant | 43,208 | 41,613 | 2,668 | 2,599 | 4,499 | 4,367 | 17 | 17 | — | | — | 50,392 | 48,596 | Net plant | 45,658 | 44,011 | 2,860 | 2,738 | — | 4,718 | 17 | 17 | — | | (4,718) | 48,535 | 46,766 |
Other noncurrent assets | Other noncurrent assets | 6,419 | 5,731 | 403 | 377 | 1,649 | 1,645 | 7 | 7 | 355 | 356 | 8,833 | 8,116 | Other noncurrent assets | 8,192 | 7,648 | 388 | 421 | — | 1,627 | 7 | 7 | 411 | (1,217) | 8,998 | 8,486 |
Total Assets | Total Assets | $54,812 | $52,655 | $3,424 | $3,292 | $6,923 | $6,554 | $302 | $249 | $302 | $366 | $65,763 | $63,116 | Total Assets | $59,587 | $57,445 | $3,622 | $3,511 | $— | $7,224 | $377 | $314 | $819 | $571 | $64,405 | $69,065 |
| LIABILITIES AND SHAREHOLDERS' EQUITY | LIABILITIES AND SHAREHOLDERS' EQUITY | | | | | | | | | | | LIABILITIES AND SHAREHOLDERS' EQUITY | | | | | | | | | | |
Current liabilities | Current liabilities | $5,207 | $4,321 | $434 | $372 | $1,383 | $1,011 | $148 | $100 | $(282) | $(377) | $6,890 | $5,427 | Current liabilities | $4,940 | $6,036 | $362 | $409 | $— | $1,596 | $3 | $163 | $745 | $3,132 | $6,050 | $11,336 |
Noncurrent liabilities | Noncurrent liabilities | 14,349 | 13,640 | 1,099 | 1,064 | 233 | 121 | (87) | (90) | (47) | 14 | 15,547 | 14,749 | Noncurrent liabilities | 15,951 | 15,451 | 1,135 | 1,103 | — | 338 | (85) | (86) | (374) | (113) | 16,627 | 16,693 |
Long-term debt | Long-term debt | 18,389 | 18,382 | 968 | 968 | 2,344 | 2,607 | — | — | 649 | 647 | 22,350 | 22,604 | Long-term debt | 19,583 | 19,080 | 1,068 | 1,068 | — | 2,292 | — | — | (1) | (2,293) | 20,650 | 20,147 |
Equity | Equity | 16,867 | 16,312 | 923 | 888 | 2,963 | 2,815 | 241 | 239 | (18) | 82 | 20,976 | 20,336 | Equity | 19,113 | 16,878 | 1,057 | 931 | — | 2,998 | 459 | 237 | 449 | (155) | 21,078 | 20,889 |
Total Liabilities and Equity | Total Liabilities and Equity | $54,812 | $52,655 | $3,424 | $3,292 | $6,923 | $6,554 | $302 | $249 | $302 | $366 | $65,763 | $63,116 | Total Liabilities and Equity | $59,587 | $57,445 | $3,622 | $3,511 | $— | $7,224 | $377 | $314 | $819 | $571 | $64,405 | $69,065 |
(a) IncludesOther includes the parent company, Con Edison’s tax equity investments, the deferred project held for sale and consolidation adjustments. See Note T to the Third Quarter Financial Statements.
(b) Represents the consolidated results of operations of Con Edison and its businesses.
(c) On OctoberMarch 1, 2022,2023, Con Edison entered into a purchase andcompleted the sale agreement pursuant to which Con Edison agreed to sellof substantially all of the assets of the Clean Energy
Businesses. See Note S and Note T to the Third Quarter Financial Statements.
CECONY
Current assets at September 30, 20222023 were $36$81 million lower than at December 31, 2021.2022. The change in current assets primarily reflects a decrease in cash and temporary cash investments ($8951,036 million), a decrease to accrued unbilled revenues ($99 million), offset in part by an increase in prepayments ($559 million), an increase and in accounts receivables, net of allowance for uncollectible accounts ($141140 million) (see “COVID-19 Regulatory Matters” in Note B to the Third Quarter Financial Statements, and “Coronavirus Disease 2019 (COVID-19) Impacts - Accounting Considerations” and “Liquidity and Financing,"Aged Accounts Receivable Balances,” above), offset in part by an increase in the fair value of short-term derivative assetsprepayments ($119 million), higher fuel oil, gas in storage, materials and supplies, at average cost ($71699 million) and an increase in accounts receivable from affiliated companies ($66400 million).
Investments at September 30, 2022 were $90 million lower than at December 31, 2021. The change in investments primarily reflects a decrease in supplemental retirement income plan assets ($80 million) and deferred income plan assets ($10 million). See Note E to the Third Quarter Financial Statements.
Net plant at September 30, 20222023 was $1,595$1,647 million higher than at December 31, 2021.2022. The change in net plant primarily reflects an increase in electric ($1,3311,393 million), gas ($723570 million), and steam ($6795 million) and general ($173 million) plant balances and an increase in construction work in progress ($81233 million), offset in part by an increase in accumulated depreciation ($595817 million).
Other noncurrent assets at September 30, 20222023 were $688$544 million higher than at December 31, 2021.2022. The change in other noncurrent assets primarily reflects an increase in the regulatory asset for COVID - 19 arrears relief
deferrals programs ($314 million), an increase in pension and retiree benefits ($501115 million), and an increase in the regulatory asset for system peak reduction and energy efficiency programs ($26280 million), deferred storm costs ($10 million) and partially. The increase is offset in part by deferred derivative losses ($18 million) and thea decrease in deferrals for increased costs related to the COVID-19 pandemic ($5 million). An increase in the fair value of deferred assets ($80 million), and, operating lease right-of-use asset ($3224 million). See Notes B and I to the Third Quarter Financial Statements.
Current liabilities at September 30, 2023 were $1,096 million lower than at December 31, 2022. The change in current liabilities primarily reflects a decrease in accounts payable ($569 million) and a decrease in notes payable ($502 million).
Other noncurrent liabilities at September 30, 2023 were $500 million higher than at December 31, 2022. The change in other noncurrent assets primarily reflects an increase in the deferred income taxes and unamortized investment tax credits ($916 million) and an increase in the asset retirement obligations ($13 million). The increase is offset in part by a decrease in the deferred pension and other postretirement benefits ($110 million), and a decrease in the regulatory asset for unrecognized pension and other postretirement costs to reflect the final actuarial valuation, as measured at December 31, 2021, of the pension($339 million), a decrease in future income tax ($166 million) and other retiree benefit plans in accordance with the accounting rules for retirement benefits ($100 million). The changea decrease in the regulatory asset also reflects the period's amortization of accounting costs.deferred derivative gains - long term ($113 million). See NotesNote B E and F to the Third Quarter Financial Statements.
Current liabilitiesLong-term debt at September 30, 2022 were $8862023 was $503 million higher than at December 31, 2021.2022. The change in long-term debt primarily reflects CECONY's issuance of $500 million aggregate principal amount of 5.20 percent debentures, due 2033, offset in part by, the amortization of unamortized debt expense over the nine-month period. See Note C to the Third Quarter Financial Statements.
Equity at September 30, 2023 was $2,235 million higher than at December 31, 2022. The change in equity primarily reflects capital contributions from Con Edison ($1,720 million) in 2023, net income for the nine months ended September 30, 2023 ($1,308 million), offset in part by common stock dividends to Con Edison ($792 million) in 2023.
O&R
Current assets at September 30, 2023 were $23 million higher than at December 31, 2022. The change in current liabilitiesassets primarily reflects an increase in notes payableprepayments ($42820 million), and the revenue decoupling mechanism receivable ($2 million).
Net plant at September 30, 2023 was $122 million higher than at December 31, 2022. The change in net plant primarily reflects an increase in the regulatory liability for deferred derivative gainselectric ($35070 million) and increasesgas ($35 million) plant balances, an increase in system benefits charges ($8construction work in progress ($32 million) and accrued interesta decrease in accumulated depreciation ($10923 million), offset in part by a decrease in general ($38 million) plant balances.
Other noncurrent assets at September 30, 2023 were $33 million lower than at December 31, 2022. The change in
other noncurrent assets primarily reflects a decrease in regulatory assets ($27 million) and a decrease in the fair value of derivative assets ($6 million).
Current liabilities at September 30, 2023 were $47 million lower than at December 31, 2022. The change in current liabilities primarily reflects a decrease in the regulatory liabilities ($30 million), a decrease in accounts payable ($25 million) and a decrease in accounts payable to affiliated companies ($18 million), offset in part by an increase in notes payable ($23 million) and accrued interest ($3 million).
Noncurrent liabilities at September 30, 20222023 were $709$32 million higher than at December 31, 2021.2022. The change in noncurrent liabilities primarily reflects an increase in deferred income taxes and unamortized investment tax credits ($427 million) primarily due to accelerated tax depreciation, repair deductions and the amortization of excess deferred federal income taxes due to the TCJA. See Note J to the Third Quarter Financial Statements. The change also reflects an increase in regulatory liabilities for unrecognized other postretirement costs ($368 million), and pension and other postretirement benefit deferrals ($30 million), offset in part by a decrease in the regulatory liability for net unbilled revenue deferrals ($83 million), TCJA net benefits ($94 million) and a decrease in pension and retiree benefits liability ($29 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 Third Quarter Financial Statements.
Long-term debt at September 30, 2022 was $7 million higher than at December 31, 2021. The change in long-term
debt primarily reflects the amortization of unamortized debt expense over the nine month period.
Equity at September 30, 2022 was $555 million higher than at December 31, 2021. The change in equity primarily reflects net income for the nine months ended September 30, 2022 ($1,138 million), capital contributions from parent ($150 million) in 2022, an increase in other comprehensive income ($1 million), offset in part by common stock dividends to parent ($734 million) in 2022.
O&R
Current assets at September 30, 2022 were $42 million higher than at December 31, 2021. The change in current assets primarily reflects higher prepayments ($19 million), an increase in accounts receivables, net of allowance for uncollectible accounts ($10 million) (see “COVID-19 Regulatory Matters” in Note B to the Third Quarter Financial Statements and “Coronavirus Disease 2019 (COVID-19) Impacts - Accounting Considerations” and “Liquidity and Financing,” above), an increase in gas in storage, at average cost ($12 million) and an increase in the fair value of short-term derivative assets ($1 million).
Investments at September 30, 2022 was $5 million lower than at December 31, 2021. The change in investments primarily reflects unrealized losses ($2 million) and benefit payout to retirees ($2 million) related to the supplemental pension plan.
Net plant at September 30, 2022 was $69 million higher than at December 31, 2021. The change in net plant primarily reflects an increase in electric ($76 million), gas ($42 million), and general ($9 million) plant balances, offset in part by an increase in accumulated depreciation ($59 million).
Other noncurrent assets at September 30, 2022 were $26 million higher than at December 31, 2021. The change in
other noncurrent assets primarily reflects an increase in pension and retiree benefits ($37 million), offset in part by a decrease in regulatory assets ($14 million).
Current liabilities at September 30, 2022 were $62 million higher than at December 31, 2021. The change in current liabilities primarily reflects an increase in the regulatory liability for deferred derivative gains ($29 million) and an increase in notes payable ($40 million), offset in part by a decrease in system benefit charges ($8 million).
Noncurrent liabilities at September 30, 2022 were $35 million higher than at December 31, 2021. The change in noncurrent liabilities primarily reflects an increase in the regulatory liabilities for unrecognized pension and other postretirement costs ($29 million), long-term deferred derivative gains ($11 million) and allowance for cost of removal less salvage ($97 million).
Equity at September 30, 20222023 was $35$126 million higher than at December 31, 2021.2022. The change in equity primarily reflects capital contributions from Con Edison ($100 million) in 2023, net income for the nine months ended September 30, 20222023 ($72 million) and, an increase in other comprehensive income ($575 million), offset in part by common stock dividends to parentCon Edison ($4248 million) in 2022.2023.
CleanEnergyBusinesses
On March 1, 2023, Con Edison completed the sale of substantially all of the assets of the Clean Energy BusinessesBusinesses. See Note S and Note T to the Third Quarter Financial Statements.
Current
Con Edison Transmission
Currents assets at September 30, 20222023 were $233$15 million higher than at December 31, 2021.2022. The changeincrease in current assets primarily reflects increasesan increase in other currents assetscash and temporary investments ($118 million), prepayments ($21 million), accrued unbilled revenue ($56 million), restricted cash ($9 million) and other receivables ($2818 million).
Net plantInvestments at September 30, 2022 was $1322023 were $48 million higher than at December 31, 2021.2022. The changeincrease in net plant primarilyinvestments reflects additional capital expenditures.
Other noncurrent assets at September 30, 2022 were $4 million higher than at December 31, 2021. The changeinvestment in other noncurrent assets primarily reflects decreases in intangible assetsNew York Transco ($71 million) and other noncurrent assets ($14 million), offset in part by an increase in long-term fair value of derivative assets ($8848 million).
Current liabilities at September 30, 20222023 were $372$160 million higherlower than at December 31, 2021.2022. The change in current liabilities primarily reflects increases in current long term debt ($176 million), termrepayment of an intercompany loan ($150 million) and accounts payable ($80 million), offset in part by a decrease in the fair value of derivative liabilities ($42154 million).
Noncurrent liabilitiesEquity at September 30, 2022 were $1122023 was $222 million higher than at December 31, 2021. The change in noncurrent liabilities primarily reflects an increase in deferred taxes ($143 million), offset in part by a decrease in the fair value of derivative liabilities ($30 million).
Long-term debt at September 30, 2022 was $263 million lower than at December 31, 2021. The change in long-term debt primarily reflects the timing of principal loan repayments.
Equity at September 30, 2022 was $148 million higher than at December 31, 2021.2022. The change in equity primarily reflects an increase in net income for the nine months ended September 30, 2022 ($293 million), offset in part by a decrease in noncontrolling tax equity interest ($72 million) (see Note P to the Third Quarter Financial Statements) and common stock dividends to parent ($74 million) in 2022.
contribution from Con Edison, Transmission
Currents assets at September 30, 2022the proceeds of which were $5 million higher than at December 31, 2021. The increase in current assets primarily reflectsa receivable forused to repay an intercompany tax settlement.
Investments at September 30, 2022 were $48 million higher than at December 31, 2021. The increaseloan and invest in investments reflects additional investment in NY Transco ($48 million).See "Investments" in Note A to the Third Quarter Financial Statements.
Current liabilities at September 30, 2022 were $48 million higher than at December 31, 2021. The change in current liabilities primarily reflects an increase in short-term borrowings under an intercompany capital funding facility.
Noncurrent liabilities at September 30, 2022 were $3 million higher than at December 31, 2021. The change in noncurrent liabilities primarily reflect an increase to deferred income taxes.
Equity at September 30, 2022 was $2 million higher than at December 31, 2021. The change in equity primarily reflects an increase in net income for the nine months ended September 30, 2022.New York Transco.
Utility
Regulatory Matters
Liability for Service Interruptions
In December 2021,March 2023, the New York State legislature amended the New York State Public Service Law, effective April 2022,directing the NYSPSC to require NYdevelop rules to direct electric and gas utilities, among other things, to: (i) take necessary measures to monitor and protect customer privacy, including, CECONYbut not limited to, customer electric and O&R,gas consumption data, from unauthorized disclosure or unconsented sharing, (ii) develop and implement tools to provide compensationmonitor operational control networks to residentialdetect unauthorized network behavior, including the utilities' industrial control systems that support distribution, transmission and small business customersadvanced metering infrastructure control centers and (iii) mandate that experience widespread prolonged outages lasting more than seventy-two consecutive hours, subject to certain exceptions, including: a bill credit of $25 for each twenty-four hour period of service outage beyond the first seventy-two consecutive hour outage; reimbursement to customers for food spoilage up to $540;utilities’ emergency response plans include cyber-attack response plans. The law also states that customer electric and reimbursement of affected residential customers for prescription medicine spoilage losses without limitation. Any such costs incurred by utilities are not recoverable from customers. Utilities may petition the NYSPSC to request a waiver of the requirements of this section of the New York State Public Service Law. In July 2022, the NYSPSC issued an order that promulgated rules and definitions for the law’s implementation and determined that while a utility could seek a waiver of the requirement to provide compensation, it could not seek a waiver of the requirement that the costs of outage credits notgas consumption data should be recovered from customers if it provided compensation.considered confidential.
For additional information about the Utilities’ regulatory matters, see Note B to the Third Quarter Financial Statements.
Environmental Matters
Clean Energy Future
Clean Energy Goals
In May 2023, New York State approved the 2023 - 2024 state budget, including provisions that prohibit the installation of fossil-fuel equipment and building systems beginning in 2026 for affected new buildings with not more than seven stories and beginning in 2029 for all other new affected buildings. The law includes exemptions for, among other things, emergency backup generators, hospitals, laundromats and commercial kitchens.
Also in May 2023, CECONY and O&R filed proposals for thermal energy network pilots pursuant to a September 2022 NYSPSC proceeding to implement the Utility Thermal Energy Network and Jobs Act. CECONY proposed three pilots totaling approximately $262.7 million and O&R proposed two pilots totaling approximately $45.5 million. The Utilities proposed recovery of pilot costs via a surcharge mechanism. In September 2023, the NYSPSC issued an order providing guidance on the development of utility thermal energy network pilot projects. The order provides structure in the development of thermal network pilot projects previously proposed by the state’s utilities and directs utilities to file monthly progress and expenditure reports starting November 15, 2023, and thermal network pilot project proposals by December 15, 2023. The proposed pilots are subject to approval by the NYSPSC.
In June 2023, the NYSPSC issued an order identifying the Climate Leadership and Community Protection Act (CLCPA) as a public policy requirement driving the need for additional transmission facilities to deliver at least 4,770 MW of electricity from offshore wind projects into CECONY’s electric grid. The order refers the need to the NYISO to conduct a solicitation and evaluation of transmission solutions for this need. As directed by the order, after consultation with NYSDPS, CECONY established a process to make information available to transmission proposers concerning existing or potential interconnection points that CECONY would construct and own. The required in-service date for projects responsive to the transmission need is January 1, 2033.
In June 2023, the NYISO selected the Propel NY Energy transmission project that was jointly proposed by New York Transco and the New York Power Authority (NYPA). Con Edison Transmission has a 41.7 percent interest in New York Transco’s share of the Propel NY Energy project, a 90-mile electric transmission project with an in-service date of 2030. The project is expected to enable delivery of a minimum of 3,000 MW of offshore wind electricity, increase high voltage transmission connections between Long Island and the rest of New York State and provide New Yorkers with greater access to diverse energy resources. See "Con Edison Transmission," below.
Also in June 2023, CECONY filed a petition with FERC to add a formula rate to the NYISO tariff to enable CECONY to recover the costs of, and a return on investment for, two types of projects: (1) local transmission upgrades determined by the NYSPSC to be necessary or appropriate to meet the CLCPA goals of New York State and (2) any regulated transmission projects (or portions thereof) eligible for recovery under the NYISO’s public policy
transmission planning process. For local transmission upgrades, CECONY proposed the return on equity to be the lower of the NYSPSC-determined rates or 10.87 percent. For NYISO projects, CECONY proposed a return on equity of 11.10 percent. CECONY anticipates that the formula rate, once in place, will be applied to recover the costs of the upgrades associated with the Propel NY Energy offshore wind project.
In July 2023, the NYSPSC issued an order implementing the next phase in the state’s energy efficiency portfolio process to assist with meeting CLCPA goals. On November 1, 2023, CECONY and O&R filed preliminary energy efficiency and electrification program proposals for the years 2026 - 2030.
In September 2023, CECONY updated its 2019 climate change vulnerability study and O&R published its initial climate change vulnerability study. The studies evaluated present-day infrastructure, design specifications, procedures under a range of potential climate futures and a suite of adaptation investments for consideration. The Utilities’ studies identified rising temperature, flooding, wind and ice and extreme and compound weather events, including, but not limited to, hurricanes, heat waves, Nor’easters, cold snaps and deluge rain to be the risks to their systems resulting from the impact of climate change as manifested in increased system load, asset degradation, equipment damage, accessibility and worker safety. The Utilities' studies were developed pursuant to a New York State Public Service law that requires all New York electric utilities to conduct a climate change vulnerability study by September 2023 and develop and file for approval by the NYSPSC a climate resilience investment plan by November 2023 that proposes storm hardening and resilience measures for the next ten years and twenty years. The law authorizes utilities to recover costs through a climate resilience cost recovery surcharge for costs incurred outside of rate proceedings and roll any unrecovered costs into base rates when base rates are next reset. The New York utilities are required to file an updated climate resilience investment plan with the NYSPSC for approval at least every five years.
Also in September 2023, CECONY and O&R filed an update to their May 2023 combined gas system long-term plan for their gas distribution systems. The Utilities’ plan has a 20-year horizon to achieve the greenhouse gas emissions reduction targets of the CLCPA and includes three pathways: (1) a reference pathway based on investments approved by the NYSPSC, (2) an alternate hybrid electric generation and low-carbon fuels pathway and (3) an alternate deep electrification pathway. The September 2023 update concludes that gas sales and emissions in their service territories are projected to decline under all three pathways. However, the reference pathway’s substantial reliance on conventional fossil natural gas will prevent achievement of sufficient GHG emissions reductions to meet the CLCPA targets. Ambitious decarbonization strategies that include energy efficiency, electrification and procurement of low‐carbon gaseous fuels will enable more meaningful emissions reductions. The Utilities expect to file the final plan by the end of 2023 that will be subject to NYSPSC approval.
In October 2023, NYSERDA announced that it selected three new offshore wind projects for contract negotiations, representing 4,032 MW of energy by 2030. One of the conditional awards, the Community Offshore Wind project, is expected to connect 1,314 MW of offshore wind electricity through CECONY’s Brooklyn Clean Energy Hub by 2030 (see “Electric Reliability Needs,” below) and another conditional award, the Excelsior Wind project, is expected to connect 1,314 MW of offshore wind electricity using the capability of the Propel NY Energy project discussed above.
Other Environmental Matters
Following media reports, in July 2023, the Environmental Protection Agency, New York State Department of Environmental Conservation, New York State Department of Health and NYSDPS began investigating the potential public health risks associated with lead-jacketed cables in the fixed-line telecommunications industry. The use of lead-jacketed electric cables began in the 1880s to protect conducting wires from exposure to the elements. All of the Utilities’ transmission cables that are in service and lead-jacketed are covered with an outer plastic layer and comprise less than 2 percent of CECONY’s transmission system and less than 5 percent of O&R’s transmission system. CECONY installed lead-jacketed cables without an outer plastic layer in its distribution system until the 1980’s. CECONY’s distribution cables that are in service and lead-jacketed may or may not have an outer plastic layer and may be located within a conduit and manhole system, directly buried or strung in the air between poles and comprise less than 14 percent of its distribution system. O&R’s distribution cables are not lead-jacketed. CECONY’s transmission and distribution systems also contain lead-jacketed cables that were retired in place. CECONY continues to replace lead-jacketed distribution cables, as needed, and recover the costs for cable replacements, pursuant to its electric rate plan. The Companies are unable to predict the impact on them, if any, resulting from potential developments to legal or public policy doctrines regarding cable that contains lead.
In July 2021, a CECONY feeder failure led to the discharge of thousands of gallons of dielectric fluid from a street manhole in New Rochelle, NY.New York. Dielectric fluid reached nearby streets, properties and the New Rochelle Harbor. CECONY, the U.S. Coast Guard, the NYSDEC and other agencies responded to the incident. CECONY stopped the feeder leak on the same day the discharge occurred and has completed the spill recovery and associated cleanup operations. In addition,As a result of the company hasdischarge, CECONY received third-party damage claims. The costs associated with this matter are not expected to have a material adverse effect on the company’sCECONY’s financial condition, results of operations orand liquidity. In connection with the incident, the companyCECONY may incur monetary sanctions of more than $0.3 million for violations of certain provisions regulating the discharge of materials into, and for the protection of, the environment.
In August 2019, following the enactment of the Climate Leadership and Community Protection Act (CLCPA), the NYSPSC initiated a proceeding 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 CECONY and O&R) 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 the CLCPA and setting out policy recommendations for how they will identify, prioritize and allocate costs of these and future such projects going forward. CECONY and O&R identified approximately $4,500 million and $400 million, respectively, in local transmission investment. In January 2022, the NYSPSC issued its order on power grid study recommendations that authorized CECONY to file a comprehensive petition addressing a proposed clean energy hub in Brooklyn, NY (Brooklyn Clean Energy Hub) that could accommodate offshore wind generation. In April 2022, CECONY filed the petition, seeking cost recovery approval for the proposed Brooklyn Clean Energy Hub at an estimated cost of $1,000 million and an estimated in-service date of 2027. The proposed Brooklyn Clean Energy Hub would create interconnection points to connect up to 6,000 MW of offshore wind energy into the New York City grid. In May 2022, the NYSPSC issued an order that initiates a proceeding to measure and track compliance with, and develop and consider proposals to implement, the provisions of the CLCPA. The order requires, among other things, that NY’s investor-owned utilities (including CECONY and O&R) propose a methodology by December 1, 2022 to calculate total gas system-wide GHG emissions and develop a proposal by March 31, 2023 that analyzes the scale, timing, costs, risks, uncertainties and customer bill impacts of achieving significant and quantifiable reductions in carbon emissions from the use of delivered gas. The order further states that investments required to implement the CLCPA are becoming a significant driver of utility rate increases and instructs the NYSDPS to provide the NYSPSC and the public with specific cost-based information on the impact of these CLCPA investments on customers.
In February 2022, Governor Hochul signed into law an amendment to the Public Service Law that requires all NY utilities, including CECONY and O&R, to conduct a climate change vulnerability study by September 2023 and develop and file for approval by the NYSPSC a climate vulnerability and resiliency plan by November 2023 that includes 10- and 20-year outlooks for resiliency. The law authorizes utilities to recover costs through a climate resiliency cost recovery surcharge for costs incurred outside of rate proceedings and include any unrecovered costs in base rates when base rates are reset. The NY utilities are required to file an updated climate vulnerability and resiliency plan with the NYSPSC for approval at least every five years. In June 2022, the NYSPSC initiated a proceeding to implement the requirements of the legislation.
Federal and local municipal laws and agencies also regulate emissions levels and impact the CLCPA’s decarbonization pathways. In June 2022, the U.S. Supreme Court issued a decision that restricts the authority of the United States Environmental Protection Agency (EPA) to establish greenhouse gas emission reduction measures under the federal Clean Air Act to technology that reduces greenhouse gas emissions from fossil fuel combustion sources. Con Edison, as part of a coalition of public and private utilities, was a party in the case and had argued that the U.S. Supreme Court should not adopt this restrictive statutory reading of the Clean Air Act. The U.S. Supreme Court's decision could have potential cost implications for CECONY because it could limit its flexibility to use measures such as emissions trading and averaging to cost-effectively meet federal greenhouse gas emissions limits for its limited portfolio of steam and electric generating assets. The decision could also indirectly impact CECONY's, O&R's and the Clean Energy Businesses' initiatives to develop renewable energy sources. The Companies are unable to predict the impact on them as a result of the decision or any regulations that may be promulgated by the EPA in light of this U.S. Supreme Court decision.
CleanEnergyFuture
In January 2020, the NYSPSC issued an order directing energy efficiency targets and budgets for NY utilities. The order approved $2,000 million statewide for electric and gas energy efficiency programs and heat pump budgets, and associated targets, for the years 2021 through 2025 to meet the NYSPSC’s goal of reducing electric use by 3 percent annually and gas use by 1.3 percent annually by 2025. The order authorized budgets for the years 2021 through 2025 for: electric energy efficiency programs of $593 million and $13 million for CECONY and O&R, respectively; gas energy efficiency programs of $235 million and $12 million for CECONY and O&R, respectively; and heat pump programs of $227 million and $15 million for CECONY and O&R, respectively. In August 2022, the NYSPSC approved CECONY’s February 2022 petition to provide $518 million of additional funding for its heat pump program by transferring previously collected but unspent funds from other budgets as follows: (i) $472 million of funds in total from the electric energy efficiency portfolio and (ii) $46 million of previously collected, unspent legacy program funds such as the Energy Efficiency Portfolio Standard and accrued interest. The order also established a budget of up to $10 million monthly of spending commitments to relaunch the heat pump program.
In July 2022, the NYSPSC issued an order directing New York utilities, including CECONY and O&R, to implement managed electric vehicle charging programs and prescribing program and funding requirements. The order provides CECONY and O&R with up to a total of $31 million and $5.8 million, respectively, through 2025, for program implementation and administration costs. The NYSPSC authorized both CECONY and O&R to recover these costs via surcharge or other mechanisms. The order also provides CECONY and O&R with authorization to offer incentives to encourage electric vehicle charging to occur overnight and during off-peak times totaling approximately $71.8 million and $8.2 million, respectively, through 2025, that would be recovered through the respective company’s revenue reconciliation mechanisms. In October 2022, the NJBPU approved RECO’s electric vehicle make-ready program that includes a budget of $7.6 million through 2026 for electric vehicle infrastructure and related program costs. The NJBPU authorized RECO to recover these costs, including a full rate of return, in rates from customers
For additional information about the Companies’ environmental matters, see Note G to the Third Quarter Financial Statements.
Electric Reliability Needs
In 2019, the New York State Department of Environmental Conservation (NYSDEC) issued regulations (Peaker Rule) that may require the retirement or seasonal unavailability of fossil-fueled electric generating units owned by CECONY and others in New York City. The Peaker Rule limits nitrous oxides emissions during the ozone season from May through September and affects older peaking units that are generally located downstate and needed during periods of high electric demand or for local reliability purposes. Compliance with the Peaker Rule requires affected units (approximately 1,400 MW in CECONY's service territory, of which 79 MW is owned by CECONY) to cease operation during the ozone season, install emission controls, repower, or retire by 2023 or 2025. The NYISO, in its 2020 Reliability Needs Assessment study that was approved by the NYISO board, reported local and bulk transmission system reliability needs that are expected to be caused by the retirement or unavailability of some of the impacted units.
In January 2021, CECONY updated its Local Transmission Plan to address identified reliability needs on its local system resulting from the Peaker Rule through the construction of three transmission projects, the Reliable Clean City (RCC) projects. In April 2021, the NYSPSC approved CECONY’s December 2020 petition to recover $780 million of costs to construct the RCC projects. In May 2023, the first of the three RCC projects was completed and the remaining two are expected to be completed in 2025.
In April 2023, the NYSPSC approved CECONY’s December 2022 petition seeking cost recovery approval for a proposed clean energy hub in Brooklyn, New York (Brooklyn Clean Energy Hub) at an estimated cost of $810 million and an estimated in-service date of December 2027, that is in addition to the capital expenditures approved in CECONY's 2023 electric rate plan. See "Rate Plans - CECONY - Electric and Gas" in Note B to the Third Quarter Financial Statements. The Brooklyn Clean Energy Hub primarily addresses an identified reliability need in 2028 due to a forecasted increase in electric demand. The Brooklyn Clean Energy Hub is also identified as an interconnection hub that can support injection of offshore wind or other resources.
In July 2023, the NYISO issued its Short-Term Assessment of Reliability report that finds an electric reliability need beginning in the summer of 2025 in CECONY’s New York City territory primarily driven by forecasted increases in peak demand and the assumed unavailability of certain generation affected by the Peaker Rule and a solicitation for market-based solutions from developers. In October 2023, CECONY, as the Responsible Transmission Owner, submitted its response to the NYISO. The NYISO will evaluate all proposals by November 2023 and determine if any combination of proposed solutions will meet the reliability need. NYISO stated that it would only temporarily retain peakers as a last step approach if it does not expect that other solutions will be in place by the time the identified reliability need is expected in 2025.
Separately, CECONY’s 2023 electric rate plan includes approvals and cost recovery for capital projects to meet reliability needs in New York City. CECONY’s project to transfer electric customers from its Brownsville substation to its Glendale substation is expected to be completed in 2026 at an estimated cost of $115 million. CECONY’s projects to build a transmission feeder between Vernon and Newtown and the Gateway Park area substation are expected to be completed in 2026 and 2028, respectively, at estimated costs of $125.4 million and $1,100 million, respectively.
In August 2023, CECONY filed a petition with the NYSPSC requesting authorization and cost recovery to construct two new substations in Jamaica, Queens (the Reliable Clean City - Idlewild Project) by May 2028 to meet anticipated reliability needs and to support New York State’s electrification and CLCPA goals. CECONY estimates
Clean Energy Businesses
The following table provides information about the Clean Energy Businesses' renewable electric projects that are in operation and/or in construction at September 30, 2022:
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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) | 51 | Various | Various | Various | Various |
Total Wind | 329 | | | | |
Total MW (AC) in Operation | 3,005 | | | | |
Total MW (AC) in Construction (c) | 293 | | | | |
Total MW (AC) Utility Scale | 3,298 | | | | |
Behind the Meter | | | | | |
Total MW (AC) in Operation (c) | 66 | | | | |
Total MW (AC) in Construction (c) | 3 | | | | |
Total MW Behind the Meter | 69 | | | | |
(a)Represents PPA contractual term or remaining term from the date of acquisition.
(b)Solar renewable energy credit hedges are in place, in lieu of PPAs, through 2025.
(c)Projects have generally not been pledged as security for project debt financing.
(d)Projects are financed with tax equity. See Note P to the Third Quarter Financial Statements
that construction will cost $1,200 million. CECONY proposed cost recovery through a surcharge or base rates, depending on the in-service date and the timing of future rate filings. CECONY's petition is subject to approval by the NYSPSC.
Renewable Electric Generation
Renewable electric production volumes from utility scale assets for the three and nine months ended September 30, 2022 compared with the 2021 period were:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| Millions of kWh |
| For the Three Months Ended | For the Nine Months Ended |
Description | September 30, 2022 | September 30, 2021 | Variation | Percent Variation | September 30, 2022 | September 30, 2021 | Variation | Percent Variation |
Renewable electric projects | | | | | | | | |
Solar | 1,966 | 1,932 | 34 | 1.8 | % | 5,671 | 4,998 | 673 | 13.5 | % |
Wind | 250 | 257 | (7) | (2.7 | %) | 948 | 978 | (30) | (3.1 | %) |
Total | 2,216 | 2,189 | 27 | 1.2 | % | 6,619 | 5,976 | 643 | 10.8 | % |
Con Edison Transmission
CET Gas
In May 2022,June 2023, the operatorNYISO selected the Propel NY Energy transmission project that was jointly proposed by New York Transco and the New York Power Authority (NYPA). Propel NY Energy is a 90-mile electric transmission project with an in-service date of 2030 that is expected to enable delivery of a minimum of 3,000 MW of offshore wind electricity, increase high voltage transmission connections between Long Island and the rest of New York State and provide New Yorkers with greater access to diverse energy resources. New York Transco’s share of the project cost is expected to be approximately $2,200 million, excluding its interconnection costs and the cost of projects expected to be built by local transmission owners, including CECONY. Con Edison Transmission has a 41.7 percent interest in New York Transco’s share of the Propel NY Energy project. The siting, construction and operation of the project will require approvals and permits from appropriate governmental agencies and authorities, including the NYSPSC. In October 2023, NYSERDA announced that it selected three new offshore wind projects for contract negotiations, one of which is expected to connect 1,314 MW of offshore wind electricity using the capability of the Propel NY Energy project. See "Environmental Matters - Clean Energy Future - Clean Energy Goals," above.
In April 2019, the NYISO selected New York Transco’s New York Energy Solution (NYES) project, of which Con Edison Transmission owns a 45.7 percent interest, to relieve transmission congestion between upstate and downstate ($600 million estimated cost, excluding certain interconnection costs). Construction has been completed for the NYES project and the associated Rock Tavern to Sugarloaf segment, and a majority of the assets were placed in service during the second quarter of 2023. Construction of the associated Dover Station, an additional network upgrade to support the NYES project, has not been completed and its permits are the subject of litigation in New York State. In November 2017, FERC approved a settlement agreement with respect to the NYES project that provides for a 10.65 percent return on common equity (which is comprised of a 9.65 percent base ROE, with 100 basis points added for congestion reduction and a cost containment mechanism applicable to certain capital costs) and a maximum actual common equity ratio of 53 percent. The interconnection costs of the awarded project segment include network upgrades identified by the NYISO and NYSPSC that earn the same base ROE, with a 50-basis point adder. Revenues for the NYES project, including the Dover Station, are collected by the NYISO including 100 percent of construction work-in-progress, and are allocated across NYISO transmission customers in New York State with 84 percent allocated to load serving entities in the CECONY and O&R service areas.
The Mountain Valley Pipeline which is being constructed by a joint venture in which CET GasCon Edison Transmission owns a 9.7an 8.8 percent interest (whichthat is expected to be reduced to 8.0as low as 7.3 percent based on the latest project cost estimate and CET Gas’Con Edison Transmission’s previous capping of its cash contributions to the joint venture),venture. In mid-August 2023, construction of the Mountain Valley Pipeline resumed after resolution of certain legal challenges. In October 2023, the operator of the Mountain Valley Pipeline indicated that it plans to pursue new permits and is now targeting a fullan in-service date duringfor the second halfproject in the first quarter of 20232024 at a totalan overall project cost of approximately $6,600$7,200 million excluding allowance for funds used during construction. In June 2022, the Mountain Valley Pipeline joint venture filed a request with the FERC for, and in August 2022, the FERC granted, a four-year extension of time to complete the project by October 2026. At SeptemberSeptember 30, 2022, CET Gas’2023, Con Edison Transmission’s carrying value of its investment in MVPthe Mountain Valley Pipeline was $111 million and CET Gas’its cash contributions to the joint venture amounted to $530 million. See "Investments - Investment in Mountain Valley Pipeline, LLC (MVP)" in Note A.
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 and investment risk.
Interest Rate Risk
The Companies' interest rate risk primarily relates to new debt financing needed to fund capital requirements, including the construction expenditures of the Utilities and maturing debt securities, and variable-rate debt. Con Edison and its subsidiaries 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 Third Quarter Financial Statements. Con Edison and CECONY estimate that at September 30, 2022,2023, a 10 percent increase in interest rates applicable to its variable rate debt would result in an increase in annual interest expense of $10 million and $7
million, respectively.$12 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.
Inflationary pressure has prompted the Federal Reserve to increase interest rates. Higher interest rates have resulted in, and are expected to continue to result in, increased interest expense on commercial paper, and variable-rate debt. Higher interest rates are also expected to increase interest expense on futuredebt and long-term debt issuances.
Commodity Price Risk
Con Edison’s commodity price risk primarily relates to the purchase and sale of electricity, gas and related derivative instruments. The Utilities apply, and the Clean Energy Businesses applyapplied risk management strategies to mitigate their related exposures. See Note N to the Third Quarter Financial Statements.
Con Edison estimates that, as of September 30, 2022,2023, a 10 percent decline in market prices would result in a decline in fair value of $230$177 million for the derivative instruments used by the Utilities to hedge purchases of electricity and gas, of which $213$165 million is for CECONY and $17$12 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 those 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.
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 August 2022, the NYSPSC approved CECONY's March 2022 request to amend 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. CECONY has also committed to provide notice to customers in cases where supply price increases could result in significantly higher bills.
In September 2022, in anticipation of commodity price volatility and potential oil supply disruption during the upcoming winter heating season, the NYSPSC requested, and CECONY and O&R have since taken, the following measures: advise their dual-fuel customers and power operators to fill their alternate fuel tanks; inspect by November 1, 2022 the alternate fuel tanks of interruptible gas customers where human needs are served to ensure they have adequate alternate supply; review their emergency plans to address alternate fuel supply disruptions of interruptible gas customers during peak gas demand; and promote bill payment assistance and energy use reduction programs.
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, compare the measured VaR results against performance due to actual prices and stress test the portfolio each quarter using an assumed 30 percent price change from forecast. Since the VaR calculation involves complex methodologies and estimates and assumptions that are based on past experience, it is not necessarily indicative of future results. VaR for the portfolio, assuming a one-day holding period, for the nine months ended September 30, 2022 and the year ended December 31, 2021, respectively, was as follows:
| | | | | | | | |
95% Confidence Level, One-Day Holding Period | September 30, 2022 | December 31, 2021 |
| (Millions of Dollars) |
Average for the period | $1 | | $1 | |
High | 2 | | 3 | |
Low | — | | — | |
Investment Risk
The Companies’ investment risk relates to the investment of plan assets for their pension and other postretirement benefit plans. Con Edison's investment risk also relates to the investments of Con Edison Transmission that are accounted for under the equity method. See "Investments" in Note A to the Third Quarter Financial Statements.
The Companies’ current investment policy for pension plan assets includes investment targets of 4528 to 5538 percent equity securities, 3342 to 4360 percent debt securities and 1012 to 1422 percent real estate.alternatives. At September 30, 2022,2023, the pension plan investments consisted of 4732 percent equity securities, 3649 percent debt securities and 1719 percent real estate.alternatives.
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. O&R also defers such difference pursuant to its NYNew York rate plans.
Material Contingencies
For information concerning potential liabilities arising from the Companies’ material contingencies, see “COVID-19 Regulatory Matters” and "Other Regulatory Matters" in Note B and Notes G and H to the Third Quarter Financial Statements.
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 informationthat 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.
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 - Other Environmental Matters" in Part I, Item 2 of this report, which informationthat 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 5: Other Information
During the three months ended September 30, 2023, no director or officer (as defined in Rule 16a-1(f) of the Securities Exchange Act of 1934, as amended) adopted, terminated or modified any Rule 10b5-1 or non-Rule 10b5-1 trading arrangement (as defined in Item 408(a) of Regulation S-K).
Item 6: Exhibits
Con Edison
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Exhibit 10 | |
Exhibit 31.1.1 | |
Exhibit 31.1.2 | |
Exhibit 32.1.1 | |
Exhibit 32.1.2 | |
Exhibit 101.INS | XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. |
Exhibit 101.SCH | XBRL Taxonomy Extension Schema. |
Exhibit 101.CAL | XBRL Taxonomy Extension Calculation Linkbase. |
Exhibit 101.DEF | XBRL Taxonomy Extension Definition Linkbase. |
Exhibit 101.LAB | XBRL Taxonomy Extension Label Linkbase. |
Exhibit 101.PRE | XBRL Taxonomy Extension Presentation Linkbase. |
Exhibit 104 | Cover Page Interactive Data File - the cover page XBRL tags are embedded within the Inline XBRL document. |
CECONY
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Exhibit 3.2 | |
Exhibit 31.2.1 | |
Exhibit 31.2.2 | |
Exhibit 32.2.1 | |
Exhibit 32.2.2 | |
Exhibit 101.INS | XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. |
Exhibit 101.SCH | XBRL Taxonomy Extension Schema. |
Exhibit 101.CAL | XBRL Taxonomy Extension Calculation Linkbase. |
Exhibit 101.DEF | XBRL Taxonomy Extension Definition Linkbase. |
Exhibit 101.LAB | XBRL Taxonomy Extension Label Linkbase. |
Exhibit 101.PRE | XBRL Taxonomy Extension Presentation Linkbase. |
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.
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.
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| Consolidated Edison, Inc. |
| Consolidated Edison Company of New York, Inc. |
| | |
Date: November 3, 20222, 2023 | By | /s/ Robert Hoglund |
| | Robert Hoglund Senior Vice President, Chief Financial Officer and Duly Authorized Officer |