~~United States~~UNITED STATES

~~Securities And Exchange Commission~~SECURITIES AND EXCHANGE COMMISSION

~~Washington,~~WASHINGTON, D.C. 20549

FORM 10-Q

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

~~For The Quarterly Period Ended September 30, 2010~~FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2011

orOR

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

For the transition period from to


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

1-1217	Consolidated Edison Company of New York, Inc.	New York	13-5009340
	4 Irving Place, New York, New York 10003
	(212) 460-4600

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


Consolidated Edison, Inc. (Con Edison)	Yes x	No ¨

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

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


Con Edison	Yes x	No ¨

CECONY	Yes x	No ¨

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

Con Edison

Large accelerated filer x

Accelerated filer ¨

Non-accelerated filer ¨

Smaller reporting company ¨

CECONY

Large accelerated filer¨

Accelerated filer¨

Non-accelerated filerx

Smaller reporting company¨

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


Con Edison	Yes ¨	No x

CECONY	Yes ¨	No x

As of ~~October 27, 2010,~~April 29, 2011, Con Edison had outstanding ~~290,536,094~~292,577,516 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 subsidiary of Con Edison and, as such, the information in this report about CECONY also applies to Con Edison. As used in this report, the term the “Companies” refers to Con Edison and CECONY. However, CECONY makes no representation as to the information contained in this report relating to Con Edison or the subsidiaries of Con Edison other than itself.

Table of Contents


		PAGE
~~Glossary of Terms~~			3
PART I—Financial Information
ITEM 1	Financial Statements (Unaudited)
	Con Edison
	Consolidated Income Statement		6
	Consolidated Statement of Cash Flows		7
	Consolidated Balance Sheet		8
	Consolidated Statement of Comprehensive Income		10
	Consolidated Statement of Common Shareholders’ Equity		11
	CECONY
	Consolidated Income Statement		12
	Consolidated Statement of Cash Flows		13
	Consolidated Balance Sheet		14
	Consolidated Statement of ~~Comprehensive Income~~		16
	~~Consolidated Statement of~~ Common Shareholder’s Equity		1716
	Notes to Financial Statements (Unaudited)		1817
ITEM 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations		3832
ITEM 3	Quantitative and Qualitative Disclosures About Market Risk		6147
ITEM 4	Controls and Procedures		6147
PART II—Other Information
ITEM 1	Legal Proceedings		6248
ITEM 1A	Risk Factors		6248
ITEM 6	Exhibits		6349
	Signatures		6450


2

Glossary of Terms

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


Con Edison Companies
Con Edison		Consolidated Edison, Inc.
CECONY		Consolidated Edison Company of New York, ~~Inc.~~
~~Con Edison~~		~~Consolidated Edison,~~ Inc.
Con Edison Development		Consolidated Edison Development, Inc.
Con Edison Energy		Consolidated Edison Energy, Inc.
Con Edison Solutions		Consolidated Edison Solutions, Inc.
O&R		Orange and Rockland Utilities, Inc.
Pike		Pike County Light & Power Company
RECO		Rockland Electric Company
The Companies		Con Edison and CECONY
The Utilities		CECONY and O&R
Regulatory Agencies, Government Agencies, and Quasi-governmental Not-for-Profits
EPA		U. S. Environmental Protection Agency
FERC		Federal Energy Regulatory Commission
IRS		Internal Revenue Service
ISO-NE		ISO New England Inc.
NJBPU		New Jersey Board of Public Utilities
NJDEP		New Jersey Department of Environmental Protection
NYAG		New York State Attorney General
NYISO		New York Independent System Operator
NYPA		New York Power Authority
NYSDEC		New York State Department of Environmental Conservation
~~NYSPSC~~		~~New York State Public Service Commission~~
NYSERDA		New York State Energy Research and Development Authority
NYSPSC		New York State Public Service Commission
NYSRC		New York State Reliability Council, ~~LLC~~
~~PJM~~		~~PJM Interconnection~~ LLC
PAPUC		Pennsylvania Public Utility Commission
PJM		PJM Interconnection LLC
SEC		~~U. S.~~U.S. Securities and Exchange Commission
Accounting
ABO		Accumulated Benefit Obligation
ASU		Accounting Standards Update
FASB		Financial Accounting Standards Board
LILO		Lease In/Lease Out
OCI		Other Comprehensive Income
SFAS		Statement of Financial Accounting Standards
SSCM		Simplified service cost method
VIE		Variable interest entity
Environmental
CO₂		Carbon dioxide
GHG		Greenhouse gases
MGP Sites		Manufactured gas plant sites
PCBs		Polychlorinated biphenyls
PRP		Potentially responsible party
SO₂		Sulfur dioxide
Superfund		Federal Comprehensive Environmental Response, Compensation and Liability Act of 1980 and similar state statutes


					3


Units of Measure
dths		Dekatherms
kV		Kilovolts
kWh		Kilowatt-hour
mdths		Thousand dekatherms
MMlbs		Million pounds
MVA		Megavolt amperes
MW		Megawatts or thousand kilowatts
MWH		Megawatt hour
Other
AFDC		Allowance for funds used during construction
COSO		Committee of Sponsoring Organizations of the Treadway Commission
EMF		Electric and magnetic fields
ERRP		East River Repowering Project
Fitch		Fitch Ratings
First Quarter Form 10-Q		The Companies’ combined Quarterly Report on Form 10-Q for the quarterly period ended March 31, ~~2010~~2011
Form 10-K		The Companies’ combined Annual Report on Form 10-K for the year ended December 31, ~~2009~~2010
LTIP		Long Term Incentive Plan
Moody’s		Moody’s Investors Service
S&P		Standard & Poor’s Rating Services
~~Second Quarter Form 10-Q~~		~~The Companies’ combined Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2010~~
~~Third Quarter Form 10-Q~~		~~The Companies’ combined Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2010~~
VaR		Value-at-Risk


4

Forward-Looking Statements

This report includes forward-looking statements intended to qualify for the safe-harbor provisions of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are statements of future expectation and not facts. Words such as “expects,” “estimates,” “anticipates,” “intends,” “believes,” “plans,” “will” and similar expressions identify forward-looking statements. Forward-looking statements are based on information available at the time the statements are made, and accordingly speak only as of that time. Actual results or developments might differ materially from those included in the forward-looking statements because of various factors such as those discussed under “Risk Factors” in Item 1A of the Form 10-K.


					5


Consolidated Edison, Inc.

~~Consolidated Income Statement (Unaudited)~~CONSOLIDATED INCOME STATEMENT (UNAUDITED)


	For the Three Months Ended September 30,						For the Nine Months Ended September 30,						For the Three Months Ended March 31,
	2010			2009			2010			2009			2011			2010
	*(Millions of Dollars/Except Share Data)*												(Millions of Dollars/ Except Share Data)
OPERATING REVENUES
Electric	$	2,814		$	2,604		$	6,959		$	6,362		$	1,869		$	1,889
Gas		229			208			1,276			1,430			755			773
Steam		91			77			487			521			325			307
Non-utility		573			600			1,463			1,445			400			493
TOTAL OPERATING REVENUES		3,707			3,489			10,185			9,758			3,349			3,462
OPERATING EXPENSES
Purchased power		1,425			1,338			3,708			3,543			865			1,143
Fuel		106			83			342			403			176			150
Gas purchased for resale		73			89			482			723			308			343
Other operations and maintenance		738			676			2,117			1,879			698			702
Depreciation and amortization		211			200			626			589			218			204
Taxes, other than income taxes		449			418			1,283			1,145			458			428
TOTAL OPERATING EXPENSES		3,002			2,804			8,558			8,282			2,723			2,970
OPERATING INCOME		705			685			1,627			1,476			626			492
OTHER INCOME (DEDUCTIONS)
Investment and other income		9			3			29			25			9			6
Allowance for equity funds used during construction		4			4			13			9			4			5
Other deductions		(3	)		(3	)		(12	)		(11	)		(4	)		(3	)
TOTAL OTHER INCOME (DEDUCTIONS)		10			4			30			23			9			8
INCOME BEFORE INTEREST AND INCOME TAX EXPENSE		715			689			1,657			1,499			635			500
INTEREST EXPENSE
Interest on long-term debt		152			148			450			441			147			150
Other interest		7			10			13			20			7			2
Allowance for borrowed funds used during construction		(2	)		(3	)		(7	)		(6	)		(2	)		(3	)
NET INTEREST EXPENSE		157			155			456			455			152			149
INCOME BEFORE INCOME TAX EXPENSE		558			534			1,201			1,044			483			351
INCOME TAX EXPENSE		205			195			433			369			169			122
NET INCOME		353			339			768			675			314			229
Preferred stock dividend requirements of subsidiary		(3	)		(3	)		(9	)		(9	)		(3	)		(3	)
NET INCOME FOR COMMON STOCK	$	350		$	336		$	759		$	666		$	311		$	226
Net income for common stock per common share – basic	$	1.24		$	1.22		$	2.69		$	2.43
Net income for common stock per common share – diluted	$	1.23		$	1.22		$	2.68		$	2.42
EARNINGS PER COMMON SHARE—BASIC
Net income for common stock													$	1.07		$	0.80
EARNINGS PER COMMON SHARE—DILUTED
Net income for common stock													$	1.06		$	0.80
DIVIDENDS DECLARED PER SHARE OF COMMON STOCK	$	0.595		$	0.590		$	1.785		$	1.770		$	0.600		$	0.595
AVERAGE NUMBER OF SHARES OUTSTANDING – BASIC (IN MILLIONS)		283.0			275.1			282.2			274.5
AVERAGE NUMBER OF SHARES OUTSTANDING – DILUTED (IN MILLIONS)		284.6			276.0			283.7			275.4
AVERAGE NUMBER OF SHARES OUTSTANDING—BASIC (IN MILLIONS)														292.0			281.4
AVERAGE NUMBER OF SHARES OUTSTANDING—DILUTED (IN MILLIONS)														293.6			282.7

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


6

Consolidated Edison, Inc.

CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)

~~Consolidated Statement of Cash Flows (Unaudited)~~


	For the Nine Months Ended September 30,						For the Three Months Ended March 31,
	2010			2009			2011			2010
	*(Millions of Dollars)*						*(Millions of Dollars)*
OPERATING ACTIVITIES
Net Income	$	768		$	675		$	314		$	229
PRINCIPAL NON-CASH CHARGES/(CREDITS) TO INCOME
Depreciation and amortization		626			589			218			204
Deferred income taxes		562			255			232			37
Rate case amortization and accruals		8			(38	)
Common equity component of allowance for funds used during construction		(13	)		(9	)		(4	)		(5	)
Net derivative (gains)/losses		35			(2	)		(37	)		64
Other non-cash items (net)		(19	)		(39	)		2			104
CHANGES IN ASSETS AND LIABILITIES
Accounts receivable – customers, less allowance for uncollectibles		(114	)		55			(5	)		(139	)
Materials and supplies, including fuel oil and gas in storage		(9	)		118			103			52
Other receivables and other current assets		(114	)		(171	)		66			8
Prepayments		(473	)		257			(217	)		(289	)
Recoverable energy costs		—			102
Refundable energy costs								—			(69	)
Accounts payable		(105	)		(168	)		(154	)		(100	)
Pensions and retiree benefits		(33	)		(35	)		(232	)		58
Accrued taxes		63			(9	)		(20	)		70
Accrued interest		45			53			51			44
Deferred charges, deferred derivative losses, noncurrent assets and other regulatory assets		(472	)		(9	)		(19	)		(502	)
Deferred credits and other regulatory liabilities		142			(118	)		67			178
Other assets		(8	)		(4	)		(1	)		(3	)
Other liabilities		82			(33	)		(2	)		60
NET CASH FLOWS FROM OPERATING ACTIVITIES		971			1,469			362			1
INVESTING ACTIVITIES
Utility construction expenditures		(1,455	)		(1,524	)		(398	)		(430	)
Cost of removal less salvage		(103	)		(126	)		(39	)		(34	)
Non-utility construction expenditures		(6	)		(5	)		(23	)		(1	)
Loan to affiliate								(40	)
Common equity component of allowance for funds used during construction		13			9			4			5
Purchase of additional ownership interest in Honeoye Storage Corporation		(12	)		—
NET CASH FLOWS USED IN INVESTING ACTIVITIES		(1,563	)		(1,646	)		(496	)		(460	)
FINANCING ACTIVITIES
Net proceeds from short-term debt		846			146			464			475
Retirement of long-term debt		(781	)		(279	)		(1	)		(45	)
Issuance of long-term debt		870			750
Issuance of common stock		78			25			25			14
Debt issuance costs		(6	)		(5	)
Common stock dividends		(468	)		(450	)		(173	)		(155	)
Preferred stock dividends		(9	)		(9	)		(3	)		(3	)
NET CASH FLOWS FROM FINANCING ACTIVITIES		530			178			312			286
CASH AND TEMPORARY CASH INVESTMENTS:
NET CHANGE FOR THE PERIOD		(62	)		1			178			(173	)
BALANCE AT BEGINNING OF PERIOD		260			74			338			260
BALANCE AT END OF PERIOD	$	198		$	75		$	516		$	87
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the period for:
Cash paid/(refunded) during the period for:
Interest	$	394		$	377		$	90		$	103
Income taxes	$	284		$	4		$	(172	)		—

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


					7

Consolidated Edison, Inc.

CONSOLIDATED BALANCE SHEET

~~Consolidated Balance Sheet (Unaudited)~~


	September 30, 2010		December 31, 2009		March 31, 2011		December 31, 2010
	*(Millions of Dollars)*				*(Millions of Dollars)*
ASSETS
CURRENT ASSETS
Cash and temporary cash investments	$	198	$	260	$	516	$	338
Accounts receivable – customers, less allowance for uncollectible accounts of $72 in 2010 and $70 in 2009, respectively		1,161		1,047
Accounts receivable – customers, less allowance for uncollectible accounts of $81 and $76 in 2011 and 2010, respectively						1,178		1,173
Accrued unbilled revenue		547		579		413		633
Other receivables, less allowance for uncollectible accounts of $8 and $5 in 2010 and 2009, respectively		503		379
Other receivables, less allowance for uncollectible accounts of $9 and $8 in 2011 and 2010, respectively						331		300
Fuel oil, gas in storage, materials and supplies, at average cost		364		355		245		348
Prepayments		604		131		558		341
Regulatory assets		276		172		147		203
Revenue decoupling mechanism receivable		5		117
Other current assets		232		174		202		171
TOTAL CURRENT ASSETS		3,890		3,214		3,590		3,507
INVESTMENTS		391		385		413		403
UTILITY PLANT, AT ORIGINAL COST
Electric		19,793		18,645		20,273		19,851
Gas		4,180		3,983		4,392		4,344
Steam		2,027		1,935		2,055		2,038
General		1,904		1,866		1,899		1,911
TOTAL		27,904		26,429		28,619		28,144
Less: Accumulated depreciation		5,707		5,412		5,891		5,808
Net		22,197		21,017		22,728		22,336
Construction work in progress		1,223		1,422		1,253		1,458
NET UTILITY PLANT		23,420		22,439		23,981		23,794
NON-UTILITY PLANT
Non-utility property, less accumulated depreciation of $50 and $45 in 2010 and 2009, respectively		46		19
Non-utility property, less accumulated depreciation of $53 and $51 in 2011 and 2010, respectively						50		46
Construction work in progress		3		6		37		23
NET PLANT		23,469		22,464		24,068		23,863
OTHER NONCURRENT ASSETS
Goodwill		429		416		429		429
Intangible assets, less accumulated amortization of $3 and $2 in 2010 and 2009, respectively		3		4
Intangible assets, less accumulated amortization $3 in 2011 and 2010						3		3
Regulatory assets		6,981		7,103		7,374		7,643
Other deferred charges and noncurrent assets		289		258		309		298
TOTAL OTHER NONCURRENT ASSETS		7,702		7,781		8,115		8,373
TOTAL ASSETS	$	35,452	$	33,844	$	36,186	$	36,146

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


8

Consolidated Edison, Inc.

CONSOLIDATED BALANCE SHEET

~~Consolidated Balance Sheet (Unaudited)~~


	September 30, 2010		December 31, 2009		March 31, 2011		December 31, 2010
	*(Millions of Dollars)*				*(Millions of Dollars)*
LIABILITIES AND SHAREHOLDERS’ EQUITY
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Long-term debt due within one year	$	5	$	731	$	5	$	5
Notes payable		846		—		464		—
Accounts payable		1,068		1,173		967		1,151
Customer deposits		283		274		296		289
Accrued taxes		115		51		70		90
Accrued interest		201		156		206		155
Accrued wages		89		91		94		102
Fair value of derivative liabilities		159		114		117		125
Other current liabilities		381		350		457		449
TOTAL CURRENT LIABILITIES		3,147		2,940		2,676		2,366
NONCURRENT LIABILITIES
Obligations under capital leases		8		14		5		7
Provision for injuries and damages		172		168		167		165
Pensions and retiree benefits		2,826		3,363		2,659		3,287
Superfund and other environmental costs		239		212		511		512
Asset retirement obligations		127		122		111		109
Fair value of derivative liabilities		127		131		52		77
Other noncurrent liabilities		112		108		121		126
TOTAL NONCURRENT LIABILITIES		3,611		4,118		3,626		4,283
DEFERRED CREDITS AND REGULATORY LIABILITIES
Deferred income taxes and investment tax credits		6,229		5,609		6,871		6,602
Regulatory liabilities		931		829		865		915
Other deferred credits		24		32		34		35
TOTAL DEFERRED CREDITS AND REGULATORY LIABILITIES		7,184		6,470		7,770		7,552
LONG-TERM DEBT		10,667		9,854		10,670		10,671
SHAREHOLDERS’ EQUITY
Common shareholders’ equity (See Statement of Shareholders’ Equity)		10,630		10,249
SHAREHOLDERS' EQUITY
Common shareholders' equity (See Statement of Common Shareholders' Equity)						11,231		11,061
Preferred stock of subsidiary		213		213		213		213
TOTAL SHAREHOLDERS’ EQUITY		10,843		10,462
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	35,452	$	33,844
TOTAL SHAREHOLDERS' EQUITY						11,444		11,274
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY					$	36,186	$	36,146

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


					9


Consolidated Edison, Inc.

~~Consolidated Statement of Comprehensive Income (Unaudited)~~CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED)


	For the Three Months Ended September 30,						For the Nine Months Ended September 30,						For the Three Months Ended March 31,
	2010			2009			2010			2009			2011			2010
	*(Millions of Dollars)*												*(Millions of Dollars)*
NET INCOME	$	353		$	339		$	768		$	675		$	314		$	229
OTHER COMPREHENSIVE INCOME/(LOSS), NET OF TAXES
Pension plan liability adjustments, net of taxes of $1 and $4 in 2010 and $1 and $3 in 2009, respectively		1			2			5			5
Less: Reclassification adjustment for losses included in net income, net of taxes of $0 in 2010 and $1 and $1 in 2009, respectively		—			1			—			1
OTHER COMPREHENSIVE INCOME, NET OF TAXES
Pension plan liability adjustments, net of taxes of $2 in 2011 and 2010														3			3
TOTAL OTHER COMPREHENSIVE INCOME, NET OF TAXES		1			1			5			4			3			3
COMPREHENSIVE INCOME	$	354		$	340		$	773		$	679		$	317		$	232
Preferred stock dividend requirements of subsidiary		(3	)		(3	)		(9	)		(9	)		(3	)		(3	)
COMPREHENSIVE INCOME FOR COMMON STOCK	$	351		$	337		$	764		$	670		$	314		$	229

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


10


Consolidated Edison, Inc.

~~Consolidated Statement of Common Shareholders’ Equity (Unaudited)~~CONSOLIDATED STATEMENT OF COMMON SHAREHOLDERS' EQUITY (UNAUDITED)


	Common Stock				Additional Paid-In Capital				Retained Earnings				Treasury Stock						Capital Stock Expense				Accumulated Other Comprehensive Income/(Loss)				Total
*(Millions of Dollars/Except Share Data)*	Shares		Amount					Shares						Amount					Capital Stock Expense			Common Stock										Additional Paid- In Capital		Retained Earnings		Treasury Stock							Capital Stock Expense			Accumulated Other Comprehensive Income/(Loss)
BALANCE AS OF DECEMBER 31, 2008		273,721,686	$	29	Additional Paid-In Capital		$	4,112	Retained Earnings			$	6,685		23,210,700			$	(1,001	)		$	Accumulated Other Comprehensive Income/(Loss)			(60	Total	)		$	(67	Additional Paid- In Capital	)	Retained Earnings		$	9,698
Net income for common stock										180																		180
Common stock dividends										(162	)																	(162	)
Issuance of common shares – dividend reinvestment and employee stock plans		532,533				20																						20
Other comprehensive income																								1				1
BALANCE AS OF MARCH 31, 2009		274,254,219	$	29	$	4,132			$	6,703				23,210,700	$	(1,001	)		$	(60	)		$	(66	)		$	9,737
Net income for common stock										150																		150
Common stock dividends										(162	)																	(162	)
Issuance of common shares – dividend reinvestment and employee stock plans		584,916				21																						21
Other comprehensive income																								2				2
BALANCE AS OF JUNE 30, 2009		274,839,135	$	29	$	4,153			$	6,691				23,210,700	$	(1,001	)		$	(60	)		$	(64	)		$	9,748
Net income for common stock										336																		336
Common stock dividends										(162	)																	(162	)
Issuance of common shares – dividend reinvestment and employee stock plans		520,041				20																						20
Other comprehensive income																								1				1
BALANCE AS OF SEPTEMBER 30, 2009		275,359,176	$	29	$	4,173			$	6,865				23,210,700	$	(1,001	)		$	(60	)		$	(63	)		$	9,943
(Millions of Dollars/Except Share Data)																															Shares		Amount		Additional Paid- In Capital			Retained Earnings				Shares						Amount				Capital Stock Expense			Accumulated Other Comprehensive Income/(Loss)				Total
(Millions of Dollars/Except Share Data)		281,123,741	$	30	$	4,420			$	6,904				23,210,700	$	(1,001	)		$	(62	)		$	(42	)		$	10,249				281,123,741	$	30				Retained Earnings			23,210,700		Capital Stock Expense	$	(1,001	Accumulated Other Comprehensive Income/(Loss)	)			$	10,249	Capital Stock Expense			Accumulated Other Comprehensive Income/(Loss)
Net income for common stock										226																		226							Additional Paid- In Capital						226																	226
Common stock dividends										(167	)																	(167	)										(167	)																(167	)
Issuance of common shares – dividend reinvestment and employee stock plans		647,731				28																						28				647,731				28																				28
Other comprehensive income																								3				3																									3			3
BALANCE AS OF MARCH 31, 2010		281,771,472	$	30	$	4,448			$	6,963				23,210,700	$	(1,001	)		$	(62	)		$	(39	)		$	10,339				281,771,472	$	30	$	4,448		$	6,963				23,210,700		$	(1,001	)	$	(62	)		$	(39	)	$	10,339
BALANCE AS OF DECEMBER 31, 2010																																291,616,334	$	31	$	4,915		$	7,220				23,210,700		$	(1,001	)	$	(64	)		$	(40	)	$	11,061
Net income for common stock										183																		183											311																	311
Common stock dividends										(168	)																	(168	)										(175	)																(175	)
Issuance of common shares – dividend reinvestment and employee stock plans		555,964				25																						25				656,049		1		30																				31
Other comprehensive income																								1				1																									3			3
BALANCE AS OF JUNE 30, 2010		282,327,436	$	30	$	4,473			$	6,978				23,210,700	$	(1,001	)		$	(62	)		$	(38	)		$	10,380
Net income for common stock										350																		350
Common stock dividends										(168	)																	(168	)
Issuance of common shares – dividend reinvestment and employee stock plans		1,487,598		1		66																						67
Other comprehensive income																								1				1
BALANCE AS OF SEPTEMBER 30, 2010		283,815,034	$	31	$	4,539			$	7,160				23,210,700	$	(1,001	)		$	(62	)		$	(37	)		$	10,630
BALANCE AS OF MARCH 31, 2011																																292,272,383	$	32	$	4,945		$	7,356				23,210,700		$	(1,001	)	$	(64	)		$	(37	)	$	11,231

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


					11

Consolidated Edison Company of New York, Inc.

CONSOLIDATED INCOME STATEMENT (UNAUDITED)

~~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 March 31,
	2010			2009			2010			2009			2011			2010
	*(Millions of Dollars)*												*(Millions of Dollars)*
OPERATING REVENUES
Electric	$	2,570		$	2,395		$	6,402		$	5,865		$	1,721		$	1,728
Gas		204			183			1,126			1,259			663			683
Steam		91			77			487			521			325			307
TOTAL OPERATING REVENUES		2,865			2,655			8,015			7,645			2,709			2,718
OPERATING EXPENSES
Purchased power		764			753			2,102			2,009			483			552
Fuel		105			83			343			404			176			150
Gas purchased for resale		63			76			408			618			263			294
Other operations and maintenance		637			573			1,832			1,606			597			608
Depreciation and amortization		198			188			586			554			204			191
Taxes, other than income taxes		432			403			1,232			1,101			440			411
TOTAL OPERATING EXPENSES		2,199			2,076			6,503			6,292			2,163			2,206
OPERATING INCOME		666			579			1,512			1,353			546			512
OTHER INCOME (DEDUCTIONS)
Investment and other income		5			8			23			23			5			3
Allowance for equity funds used during construction		3			3			10			8			3			4
Other deductions		(2	)		(3	)		(11	)		(10	)		(3	)		(2	)
TOTAL OTHER INCOME (DEDUCTIONS)		6			8			22			21			5			5
INCOME BEFORE INTEREST AND INCOME TAX EXPENSE		672			587			1,534			1,374			551			517
INTEREST EXPENSE
Interest on long-term debt		137			134			406			399			132			135
Other interest		5			11			13			19			5			3
Allowance for borrowed funds used during construction		(1	)		(2	)		(6	)		(6	)		(2	)		(2	)
NET INTEREST EXPENSE		141			143			413			412			135			136
INCOME BEFORE INCOME TAX EXPENSE		531			444			1,121			962			416			381
INCOME TAX EXPENSE		196			159			404			339			145			135
NET INCOME		335			285			717			623			271			246
Preferred stock dividend requirements		(3	)		(3	)		(8	)		(8	)		(3	)		(3	)
NET INCOME FOR COMMON STOCK	$	332		$	282		$	709		$	615		$	268		$	243

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


12


Consolidated Edison Company of New York, Inc.

~~Consolidated Edison Company of New York, Inc.~~CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)

~~Consolidated Statement of Cash Flows (Unaudited)~~


	For the Nine Months Ended September 30,						For the Three Months Ended March 31,
	2010			2009			2011			2010
	*(Millions of Dollars)*						*(Millions of Dollars)*
OPERATING ACTIVITIES
Net income	$	717		$	623		$	271		$	246
PRINCIPAL NON-CASH CHARGES/(CREDITS) TO INCOME
Depreciation and amortization		586			554			204			191
Deferred income taxes		562			222			207			64
Rate case amortization and accruals		8			(38	)
Common equity component of allowance for funds used during construction		(10	)		(8	)		(3	)		(4	)
Other non-cash items (net)		(96	)		(46	)		29			29
CHANGES IN ASSETS AND LIABILITIES
Accounts receivable – customers, less allowance for uncollectibles		(84	)		39			22			(110	)
Materials and supplies, including fuel oil and gas in storage		(9	)		99			84			38
Other receivables and other current assets		(208	)		(49	)		(77	)		99
Prepayments		(309	)		177			(291	)		(284	)
Recoverable energy costs		—			127
Refundable energy costs								—			(77	)
Accounts payable		(96	)		(245	)		(119	)		(77	)
Pensions and retiree benefits		(30	)		(22	)		(255	)		39
Accrued taxes		20			(3	)		(37	)		(4	)
Accrued interest		37			31			44			35
Deferred charges, deferred derivative losses, noncurrent assets and other regulatory assets		(374	)		2			(63	)		(346	)
Deferred credits and other regulatory liabilities		131			(90	)		52			134
Other liabilities		93			(47	)		4			49
NET CASH FLOWS FROM OPERATING ACTIVITIES		938			1,326			72			22
INVESTING ACTIVITIES
Utility construction expenditures		(1,371	)		(1,454	)		(379	)		(412	)
Cost of removal less salvage		(100	)		(123	)		(37	)		(33	)
Common equity component of allowance for funds used during construction		10			8			3			4
Loan to affiliate		—			113
NET CASH FLOWS USED IN INVESTING ACTIVITIES		(1,461	)		(1,456	)		(413	)		(441	)
FINANCING ACTIVITIES
Net proceeds from short-term debt		832			174			464			475
Issuance of long-term debt		700			750
Retirement of long-term debt		(625	)		(275	)
Debt issuance costs		(6	)		(5	)
Capital contribution by parent		36			—			—			12
Dividend to parent		(502	)		(489	)		(170	)		(167	)
Preferred stock dividends		(8	)		(8	)		(3	)		(3	)
NET CASH FLOWS (USED IN)/FROM FINANCING ACTIVITIES		427			147
NET CASH FLOWS FROM FINANCING ACTIVITIES								291			317
CASH AND TEMPORARY CASH INVESTMENTS:
NET CHANGE FOR THE PERIOD		(96	)		17			(50	)		(102	)
BALANCE AT BEGINNING OF PERIOD		131			37	��		78			131
BALANCE AT END OF PERIOD	$	35		$	54		$	28		$	29
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the period for:
Interest	$	357		$	356		$	82		$	96
Income taxes	$	263		$	17		$	35			—

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


					13


Consolidated Edison Company of New York, Inc.

~~Consolidated Edison Company of New York, Inc.~~CONSOLIDATED BALANCE SHEET

~~Consolidated Balance Sheet (Unaudited)~~


	September 30, 2010		December 31, 2009		March 31, 2011		December 31, 2010
	*(Millions of Dollars)*				*(Millions of Dollars)*
ASSETS
CURRENT ASSETS
Cash and temporary cash investments	$	35	$	131	$	28	$	78
Accounts receivable – customers, less allowance for uncollectible accounts of $65 in 2010 and $63 in 2009, respectively		988		904
Other receivables, less allowance for uncollectible accounts of $7 and $4 in 2010 and 2009, respectively		77		134
Accounts receivable – customers, less allowance for uncollectible accounts of $73 and $68 in 2011 and 2010, respectively						1,003		1,025
Other receivables, less allowance for uncollectible accounts of $8 and $7 in 2011 and 2010, respectively						122		103
Accrued unbilled revenue		384		413		288		473
Accounts receivable from affiliated companies		482		124		310		249
Fuel oil, gas in storage, materials and supplies, at average cost		319		310		222		306
Prepayments		391		82		373		82
Regulatory assets		218		104		116		151
Revenue decoupling mechanism receivable		4		107
Other current assets		94		89		108		98
TOTAL CURRENT ASSETS		2,992		2,398		2,570		2,565
INVESTMENTS		156		126		177		167
UTILITY PLANT AT ORIGINAL COST
Electric		18,685		17,570		19,140		18,735
Gas		3,708		3,537		3,891		3,844
Steam		2,027		1,935		2,055		2,038
General		1,741		1,708		1,731		1,746
TOTAL		26,161		24,750		26,817		26,363
Less: Accumulated depreciation		5,220		4,947		5,389		5,314
Net		20,941		19,803		21,428		21,049
Construction work in progress		1,118		1,334		1,143		1,345
NET UTILITY PLANT		22,059		21,137		22,571		22,394
NON-UTILITY PLANT
Non-utility property, less accumulated depreciation of $21 and $20 in 2010 and 2009, respectively		8		9
NON-UTILITY PROPERTY
Non-utility property, less accumulated depreciation of $22 in 2011 and 2010						7		7
NET PLANT		22,067		21,146		22,578		22,401
OTHER NONCURRENT ASSETS
Regulatory assets		6,450		6,590		6,813		7,058
Other deferred charges and noncurrent assets		231		201		258		244
TOTAL OTHER NONCURRENT ASSETS		6,681		6,791		7,071		7,302
TOTAL ASSETS	$	31,896	$	30,461	$	32,396	$	32,435

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


14


Consolidated Edison Company of New York, Inc.

CONSOLIDATED BALANCE SHEET

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

~~Consolidated Balance Sheet (Unaudited)~~


	September 30, 2010		December 31, 2009		March 31, 2011		December 31, 2010
	*(Millions of Dollars)*				*(Millions of Dollars)*
LIABILITIES AND SHAREHOLDER’S EQUITY
LIABILITIES AND SHAREHOLDER'S EQUITY
CURRENT LIABILITIES
Long-term debt due within one year	$	—	$	625
Notes payable		832		—	$	464	$	—
Accounts payable		846		937		771		924
Accounts payable to affiliated companies		12		17		15		13
Customer deposits		270		259		283		276
Accrued taxes		29		41		17		34
Accrued taxes to affiliated companies		41		9		9		29
Accrued interest		174		137		174		130
Accrued wages		86		89		87		93
Other current liabilities		427		333		452		460
TOTAL CURRENT LIABILITIES		2,717		2,447		2,272		1,959
NONCURRENT LIABILITIES
Obligations under capital leases		8		14		5		7
Provision for injuries and damages		166		160		160		159
Pensions and retiree benefits		2,485		2,978		2,280		2,900
Superfund and other environmental costs		154		159		392		392
Asset Retirement Obligations		127		122
Asset retirement obligations						111		109
Fair value of derivative liabilities		40		44		22		29
Other noncurrent liabilities		103		68		113		116
TOTAL NONCURRENT LIABILITIES		3,083		3,545		3,083		3,712
DEFERRED CREDITS AND REGULATORY LIABILITIES
Deferred income taxes and investment tax credits		5,724		5,139		6,309		6,071
Regulatory Liabilities		810		703
Regulatory liabilities						724		783
Other deferred credits		21		29		31		31
TOTAL DEFERRED CREDITS AND REGULATORY LIABILITIES		6,555		5,871		7,064		6,885
LONG-TERM DEBT		9,737		9,038		9,743		9,743
SHAREHOLDER’S EQUITY
Common shareholder’s equity (See Statement of Shareholder’s Equity)		9,591		9,347
SHAREHOLDER'S EQUITY
Common shareholder's equity (See Statement of Common Shareholder's Equity)						10,021		9,923
Preferred stock		213		213		213		213
TOTAL SHAREHOLDER’S EQUITY		9,804		9,560
TOTAL LIABILITIES AND SHAREHOLDER’S EQUITY	$	31,896	$	30,461
TOTAL SHAREHOLDER'S EQUITY						10,234		10,136
TOTAL LIABILITIES AND SHAREHOLDER'S EQUITY					$	32,396	$	32,435

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


					15


Consolidated Edison Company of New York, Inc.

~~Consolidated Edison Company of New York, Inc.~~CONSOLIDATED STATEMENT OF COMMON SHAREHOLDER'S EQUITY (UNAUDITED)

~~Consolidated Statement of Comprehensive Income (Unaudited)~~

   For the Three Months
Ended September 30, For the Nine Months
Ended September 30,
      2010       2009       2010       2009
(Millions of Dollars)
NET INCOME
$ 335    $ 285    $ 717    $ 623
OTHER COMPREHENSIVE INCOME, NET OF TAXES

Pension plan liability adjustments, net of taxes of $1 in 2009
—    —    —    1
TOTAL OTHER COMPREHENSIVE INCOME, NET OF TAXES
—    —    —    1
COMPREHENSIVE INCOME
$ 335    $ 285    $ 717    $ 624


	Common Stock				Additional Paid-In Capital		Retained Earnings			Repurchased Con Edison Stock			Capital Stock Expense			Accumulated Other Comprehensive Income/(Loss)
*(Millions of Dollars/Except Share Data)*	Shares		Amount		Additional Paid-In Capital		Retained Earnings			Repurchased Con Edison Stock			Capital Stock Expense			Accumulated Other Comprehensive Income/(Loss)			Total
BALANCE AS OF DECEMBER 31, 2009		235,488,094	$	589	$	3,877	$	5,909		$	(962	)	$	(62	)	$	(4	)	$	9,347
Net income								246												246
Capital contribution from parent						12														12
Common stock dividend to parent								(167	)											(167	)
Cumulative preferred dividends								(3	)											(3	)
BALANCE AS OF MARCH 31, 2010		235,488,094	$	589	$	3,889	$	5,985		$	(962	)	$	(62	)	$	(4	)	$	9,435
BALANCE AS OF DECEMBER 31, 2010		235,488,094	$	589	$	4,234	$	6,132		$	(962	)	$	(64	)	$	(6	)	$	9,923
Net income								271												271
Common stock dividend to parent								(170	)											(170	)
Cumulative preferred dividends								(3	)											(3	)
BALANCE AS OF MARCH 31, 2011		235,488,094	$	589	$	4,234	$	6,230		$	(962	)	$	(64	)	$	(6	)	$	10,021

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


16

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

~~Consolidated Statement of Common Shareholder’s Equity (Unaudited)~~

Common Stock Additional
Paid-In
Capital Retained
Earnings Repurchased
Con Edison
Stock Capital
Stock
Expense Accumulated
Other
Comprehensive
Income/(Loss) Total
(Millions of Dollars/Except Share Data) Shares Amount
BALANCE AS OF DECEMBER 31, 2008
235,488,094    $ 589    $ 3,664    $ 5,780    $ (962 ) $ (60 ) $ (20 ) $ 8,991
Net income
200    200
Common stock dividend to parent
(163 ) (163 )
Cumulative preferred dividends
(3 ) (3 )
BALANCE AS OF MARCH 31, 2009
235,488,094    $ 589    $ 3,664    $ 5,814    $ (962 ) $ (60 ) $ (20 ) $ 9,025
Net income
139    139
Common stock dividend to parent
(163 ) (163 )
Cumulative preferred dividends
(3 ) (3 )
BALANCE AS OF JUNE 30, 2009
235,488,094    $ 589    $ 3,664    $ 5,787    $ (962 ) $ (60 ) $ (20 ) $ 8,998
Net income
285    285
Common stock dividend to parent
(163 ) (163 )
Cumulative preferred dividends
(3 ) (3 )
Other comprehensive income
1    1
BALANCE AS OF SEPTEMBER 30, 2009
235,488,094    $ 589    $ 3,664    $ 5,906    $ (962 ) $ (60 ) $ (19 ) $ 9,118
BALANCE AS OF DECEMBER 31, 2009
235,488,094    $ 589    $ 3,877    $ 5,909    $ (962 ) $ (62 ) $ (4 ) $ 9,347
Net income
246    246
Capital contribution from parent
12    12
Common stock dividend to parent
(167 ) (167 )
Cumulative preferred dividends
(3 ) (3 )
BALANCE AS OF MARCH 31, 2010
235,488,094    $ 589    $ 3,889    $ 5,985    $ (962 ) $ (62 ) $ (4 ) $ 9,435
Net income
138    138
Capital contribution from parent
12    12
Common stock dividend to parent
�� (168 ) (168 )
Cumulative preferred dividends
(3 ) (3 )
BALANCE AS OF JUNE 30, 2010
235,488,094    $ 589    $ 3,901    $ 5,952    $ (962 ) $ (62 ) $ (4 ) $ 9,414
Net income
335    335
Capital contribution from parent
12    12
Common stock dividend to parent
(167 ) (167 )
Cumulative preferred dividends
(3 ) (3 )
BALANCE AS OF SEPTEMBER 30, 2010
235,488,094    $ 589    $ 3,913    $ 6,117    $ (962 ) $ (62 ) $ (4 ) $ 9,591

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


					17

~~Notes to the Financial Statements~~NOTES TO THE FINANCIAL STATEMENTS (UNAUDITED)

General

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

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

The separate interim consolidated financial statements of each of the Companies are unaudited but, in the opinion of their respective managements, reflect all adjustments (which include only normally recurring adjustments) necessary for a fair presentation of the results for the interim periods presented. The Companies’ separate interim consolidated financial statements should be read together with their separate audited financial statements (including the combined notes thereto) included in Item 8 of their combined Annual Report on Form 10-K for the year ended December 31, ~~2009~~2010 (the Form 10-K) and their separate unaudited financial statements (including the combined notes thereto) included in Part I, Item 1 of their combined Quarterly Reports on Form 10-Q for the quarterly periods ended March 31, 2010 (the First Quarter Form 10-Q) and June 30, 2010 (the Second Quarter Form 10-Q). Information in the notes to the consolidated financial statements in the Form 10-K ~~the First Quarter Form 10-Q and the Second Quarter Form 10-Q~~ referred to in these notes is incorporated by reference herein. The use of terms such as “see” or “refer to” shall be deemed to incorporate by reference into these notes the information to which reference is made.

Certain prior year amounts have been reclassified to conform with the current year presentation. Consistent with current industry practice, the Companies are presenting income tax expense as one item on their consolidated income statements (instead of separate items in the operating income and other income sections of the consolidated income statements).

Con Edison has two regulated utility subsidiaries: CECONY and O&R. CECONY provides electric service and gas service in New York City and Westchester County. The company also provides steam service in parts of Manhattan. O&R, along with its regulated utility subsidiaries, provides electric service in southeastern New York and adjacent areas of northern New Jersey and eastern Pennsylvania and gas service in southeastern New York and adjacent areas of eastern Pennsylvania. Con Edison has the following competitive energy businesses: Consolidated Edison Solutions, Inc. (Con Edison Solutions), a retail energy services company that sells electricity and also offers energy-related services; Consolidated Edison Energy, Inc. (Con Edison Energy), a wholesale energy supply and services company; and Consolidated Edison Development, Inc. (Con Edison Development), a company that develops and participates in infrastructure projects.


18					17

Note A — Summary of Significant Accounting Policies

Earnings Per Common Share

Reference is made to “Earnings Per Common Share” in Note A to the financial statements included in Item 8 of the Form 10-K. For the three ~~and nine~~ months ended ~~September 30,~~March 31, 2011 and 2010, ~~and 2009,~~ Con Edison’s 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)*	2010		2009		2010		2009		2011		2010
Net income for common stock	$	350	$	336	$	759	$	666	$	311	$	226
Weighted average common shares outstanding – Basic		283.0		275.1		282.2		274.5		292.0		281.4
Add: Incremental shares attributable to effect of potentially dilutive securities		1.6		0.9		1.5		0.9		1.6		1.3
Adjusted weighted average common shares outstanding – Diluted		284.6		276.0		283.7		275.4		293.6		282.7
Net income for common stock per common share – basic	$	1.24	$	1.22	$	2.69	$	2.43
Net income for common stock per common share – diluted	$	1.23	$	1.22	$	2.68	$	2.42
Earnings per Common Share – Basic
Net income for common stock									$	1.07	$	0.80
Earnings per Common Share – Diluted
Net income for common stock									$	1.06	$	0.80

Note B — Regulatory Matters

Reference is made to “Accounting Policies” in Note A and “Rate Agreements” in Note B to the financial statements included in Item 8 of the Form ~~10-K and Note B to the financial statements in Part I, Item 1 of the First Quarter Form 10-Q and Second Quarter Form 10-Q.~~10-K.

Rate Agreements

~~CECONY~~O&R — ~~Gas~~Electric

In ~~September~~April 2011, NYSPSC administrative law judges (ALJ) issued a recommended decision with respect to O&R’s July 2010 electric rate filing recommending that the NYSPSC ~~issued an order approving~~grant the May 2010 Joint Proposal covering the rates CECONY can charge its customers for gas delivery service during the three-year period October 2010 through September 2013. Among other things, the Joint Proposal provides for gas basecompany a $26.6 million rate ~~increases~~increase, effective July 2011. The ALJ’s recommended decision reflects a return on common equity of ~~$47.1 million, $47.9 million~~9.2 percent and ~~$46.7 million, effective October 2010, 2011 and 2012, respectively. For additional information about the Joint Proposal, see “Rate Agreements”~~a common equity ratio of 49 percent. See “Regulatory Matters – O&R – Electric” in Note B to the financial statements in ~~Part I,~~ Item 18 of the ~~Second Quarter~~ Form ~~10-Q.~~

~~CECONY — Steam~~

In September 2010, the NYSPSC issued an order approving the May 2010 Joint Proposal covering the rates CECONY can charge its customers for steam delivery service during the three-year period October 2010 through September 2013. Among other things, the Joint Proposal provides for steam base rate increases of $49.5 million, effective October 2010 and 2011, and $17.8 million, effective October 2012, with an additional $31.7 million to be collected through a surcharge in the rate year ending September 2013. The NYSPSC order requires CECONY, in its next steam rate case filing, to propose a phase-in over a period of not more than seven years of an increase in the allocation to steam customers of the fuel costs for the company’s East River Repowering Project (ERRP, which cogenerates electricity and steam) that are above the market value of the electric energy generated by ERRP. For additional information about the Joint Proposal, see “Rate Agreements” in Note B to the financial statements in Part I, Item 1 of the Second Quarter Form 10-Q.10-K.

Other Regulatory Matters

In February 2009, the NYSPSC commenced a proceeding to examine the prudence of certain CECONY expenditures (see “Investigations of Vendor Payments” in Note H)G). Pursuant to NYSPSC orders, a portion of the company’s revenues ~~(effective April 2010,~~(currently, $249 million, $32 million and $6 million on an annual basis for electric, gas and steam service, respectively) is being collected subject to potential refund to customers. At ~~September 30, 2010,~~March 31, 2011, the company had collected an estimated ~~$464~~$605 million from customers subject to potential refund in connection with this proceeding. In October 2010, a NYSPSC consultant reported its $21 million provisional assessment, which the company has disputed, of potential overcharges for construction work. The


					19

potential overcharges related to transactions that involved certain employees who were arrested and a contractor that performed work for the company. The NYSPSC’s consultant is expected to continue to review the company’s expenditures. The company is unable to estimate the amount, if any, of any such refund ~~that may be required in connection with this proceeding~~ and, accordingly, has not established a regulatory liability for a refund.

~~Regulatory Assets~~In February 2011, the NYSPSC initiated a proceeding to examine the existing mechanisms pursuant to which utilities recover site investigation and ~~Liabilities~~

~~Regulatory assets~~remediation costs and ~~liabilities at September 30, 2010 and December 31, 2009 were comprised of the following items:~~

   Con Edison CECONY
(Millions of Dollars) 2010 2009 2010 2009
Regulatory assets

Unrecognized pension and other postretirement costs
$ 4,001    $ 4,472    $ 3,819    $ 4,259
Future federal income tax
1,411    1,316    1,337    1,249
Environmental remediation costs
421    388    333    329
Surcharge for New York State Assessment
185    138    171    126
Net electric deferrals
161    82    161    82
Pension and other postretirement benefits deferrals
158    101    106    49
Revenue taxes
139    119    135    116
Deferred derivative losses – long-term
125    106    85    75
Deferred storm costs
58    5    43    —
Property tax reconciliation
52    85    47    85
O&R transition bond charges
49    55    —    —
World Trade Center restoration costs
44    41    44    41
Workers’ compensation
34    37    34    37
Other
143    158    135    142
Regulatory assets – long-term
6,981    7,103    6,450    6,590
Deferred derivative losses – current
268    141    218    104
Recoverable energy costs – current
8    31    —    —
Regulatory assets – current
276    172    218    104
Total Regulatory Assets
$ 7,257    $ 7,275    $ 6,668    $ 6,694
Regulatory liabilities

Allowance for cost of removal less salvage
$ 405    $ 371    $ 334    $ 303
Net unbilled revenue deferrals
126    91    126    91
Refundable energy costs
78    118    53    77
Revenue decoupling mechanism
55    —    55    —
New York State tax refund
29    —    29    —
Gain on sale of First Avenue properties
23    23    23    23
Gain on sale of 125th Street Property
12    —    12    —
Rate case amortizations
5    21    5    21
Electric rate case deferral
—    19    —    19
2005-2008 capital expenditure reserve
—    24    —    24
Other
198    162    173    145
Regulatory liabilities
931    829    810    703
Deferred derivative gains – current
—    9    —    8
Total Regulatory Liabilities
$ 931    $ 838    $ 810    $ 711

“Net electric deferrals” at September 30, 2010 represent the remaining unamortized balance of certain regulatory assets and liabilities of CECONY that were combined effective April 1, 2010 and are being amortized to income, in accordance with CECONY’s April 2010 rate plan. At December 2009, “net electric deferrals” represented the remaining unamortized balance of certain regulatory assets and liabilities of CECONY that were combined effective April 1, 2005 and were amortized to income in accordance with CECONY’s April 2009 rate plan through March 2010.

possible alternatives. See Note ~~C — Capitalization~~

~~Reference is made to Note C~~G to the financial statements in Item 8 of the Form 10-K and Note CF to ~~the financial statements in Part I, Item 1 of~~ the First Quarter ~~Form 10-Q and Second Quarter Form 10-Q.~~Financial Statements.


2018

Regulatory Assets and Liabilities

Regulatory assets and liabilities at March 31, 2011 and December 31, 2010 were comprised of the following items:


	Con Edison				CECONY
*(Millions of Dollars)*	2011		2010		2011		2010
Regulatory assets
Unrecognized pension and other postretirement costs	$	4,074	$	4,371	$	3,873	$	4,152
Future federal income tax		1,622		1,593		1,542		1,515
Environmental remediation costs		693		695		573		574
Surcharge for New York State Assessment		159		121		148		112
Net electric deferrals		134		156		134		156
Pension and other post retirement benefits deferrals		183		138		138		90
Revenue taxes		152		145		147		140
Deferred derivative losses – long-term		57		74		37		48
Deferred storm costs		55		57		42		43
Property tax reconciliation		32		34		23		27
O&R transition bond charges		48		48		—		—
World Trade Center restoration costs		—		45		—		45
Workers’ compensation		33		31		33		31
Other		132		135		123		125
Regulatory assets – long-term		7,374		7,643		6,813		7,058
Deferred derivative losses – current		146		190		116		151
Recoverable energy costs – current		1		13		—		—
Regulatory assets – current		147		203		116		151
Total Regulatory Assets	$	7,521	$	7,846	$	6,929	$	7,209
Regulatory liabilities
Allowance for cost of removal less salvage	$	422	$	422	$	349	$	350
Refundable energy costs		91		78		61		50
Revenue decoupling mechanism		54		38		54		38
Net unbilled revenue deferrals		33		136		33		136
New York State tax refund		30		30		30		30
Gain on sale of properties		15		31		15		31
Other		220		180		182		148
Regulatory liabilities		865		915		724		783
Deferred derivative gains – current		10		4		8		3
Total Regulatory Liabilities	$	875	$	919	$	732	$	786

In August 2010, O&R issued $55 million aggregate principal amount of 2.50 percent debentures, Series 2010 A, due 2015 and $115 million aggregate principal amount of 5.50 percent debentures, Series 2010 B, due 2040. In addition, O&R purchased, and had cancelled, its $55 million aggregate principal amount of Series 1994 A variable-rate, tax-exempt debt due 2014.

~~In October 2010, Con Edison issued 6.3 million common shares resulting in net proceeds of $305 million, the proceeds of which were invested by Con Edison in CECONY.~~

Note DC — Short-Term Borrowing

Reference is made to Note D to the financial statements in Item 8 of the Form ~~10-K and Note D to the financial statements in Part I, Item 1 of the First Quarter Form 10-Q and Second Quarter Form 10-Q.~~

10-K.

At ~~September 30, 2010,~~March 31, 2011, Con Edison had ~~$846~~$464 million of commercial paper outstanding, ~~$832 million~~all of which was outstanding under CECONY’s program. The weighted average interest rate was ~~0.4 percent for each of Con Edison and CECONY.~~0.3 percent. At December 31, ~~2009,~~2010, Con Edison and CECONY had no commercial paper outstanding.

At ~~September 30, 2010~~March 31, 2011 and December 31, ~~2009,~~2010, no loans were outstanding under the Companies’ Credit Agreement and ~~$220~~$192 million (including ~~$151~~$142 million for CECONY) and ~~$193~~$197 million (including ~~$135~~$145 million for CECONY) of letters of credit were outstanding under the Credit Agreement, respectively.

Note ED — Pension Benefits

Reference is made to Note E to the financial statements in Item 8 of the Form ~~10-K and Note E to the financial statement in Part I, Item 1 of the First Quarter Form 10-Q and Second Quarter Form 10-Q.~~10-K.


					19

Net Periodic Benefit Cost

The components of the Companies’ net periodic benefit costs for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2011 and 2010 ~~and 2009~~ were as follows:

   For the Three Months Ended September 30,
   Con Edison CECONY
(Millions of Dollars) 2010 2009 2010 2009
Service cost – including administrative expenses
$ 42    $ 40    $ 39    $ 37
Interest cost on projected benefit obligation
139    131    130    123
Expected return on plan assets
(175 ) (173 ) (167 ) (165 )
Amortization of net actuarial loss
106    75    100    68
Amortization of prior service costs
2    2    2    2
NET PERIODIC BENEFIT COST
$ 114    $ 75    $ 104    $ 65
Amortization of regulatory asset*
—    1    —    1
TOTAL PERIODIC BENEFIT COST
$ 114    $ 76    $ 104    $ 66
Cost capitalized
(40 ) (28 ) (36 ) (25 )
Cost deferred
(29 ) (4 ) (29 ) (3 )
Cost charged to operating expenses
$ 45    $ 44    $ 39    $ 38

*	~~Relates to increases in CECONY’s pension obligations of $45 million from a 1999 special retirement program.~~

   For the Nine Months Ended September 30,
   Con Edison CECONY
(Millions of Dollars) 2010 2009 2010 2009
Service cost – including administrative expenses
$ 126    $ 120    $ 117    $ 111
Interest cost on projected benefit obligation
417    393    390    369
Expected return on plan assets
(527 ) (519 ) (501 ) (495 )
Amortization of net actuarial loss
318    225    300    204
Amortization of prior service costs
6    6    6    6
NET PERIODIC BENEFIT COST
$ 340    $ 225    $ 312    $ 195
Amortization of regulatory asset*
1    3    1    3
TOTAL PERIODIC BENEFIT COST
$ 341    $ 228    $ 313    $ 198
Cost capitalized
(118 ) (82 ) (109 ) (75 )
Cost deferred
(85 ) (40 ) (82 ) (34 )
Cost charged to operating expenses
$ 138    $ 106    $ 122    $ 89

*	Relates to increases in CECONY’s pension obligations of $33 million from a 1993 special retirement program (which was fully amortized in March 2009) and $45 million from a 1999 special retirement program.


					21


	Con Edison						CECONY
*(Millions of Dollars)*	2011			2010			2011			2010
Service cost – including administrative expenses	$	47		$	42		$	44		$	39
Interest cost on projected benefit obligation		140			139			131			130
Expected return on plan assets		(183	)		(176	)		(175	)		(167	)
Amortization of net actuarial loss		132			106			125			100
Amortization of prior service costs		2			2			2			2
NET PERIODIC BENEFIT COST	$	138		$	113		$	127		$	104
TOTAL PERIODIC BENEFIT COST	$	138		$	113		$	127		$	104
Cost capitalized		(48	)		(41	)		(45	)		(39	)
Cost deferred		(51	)		(23	)		(52	)		(21	)
Cost charged to operating expenses	$	39		$	49		$	30		$	44

Expected Contributions

Based on estimates as of ~~December~~March 31, ~~2009,~~2011, the Companies are not required under funding regulations and laws to make any contributions to the pension plan during ~~2010.~~2011. The Companies’ policy is to fund their accounting cost to the extent tax deductible. ~~During the first nine months of 2010, the Companies contributed $434 million~~In 2011, Con Edison expects to make discretionary contributions to the pension plan ~~(of~~of $533 million, of which ~~$397~~CECONY contributed $491 million ~~was contributed by CECONY). During~~during the first ~~nine months of 2009, the~~quarter. The Companies ~~contributed $282 million~~also expect to ~~the pension plan (of which $244 million was contributed by CECONY). During the second quarter of 2010, the Companies funded $25~~fund $11 million for ~~the~~their non-qualified supplemental pension ~~plans. The Companies are continuing to monitor changes to funding and tax laws that may impact future pension plan funding requirements.~~plans in 2011.

Note FE — Other Postretirement Benefits

Reference is made to Note F to the financial statements in Item 8 of the Form ~~10-K and Note F to the financial statements in Part I, Item 1 of the First Quarter Form 10-Q and Second Quarter Form 10-Q.~~

10-K.

Net Periodic Benefit Cost

The components of the Companies’ net periodic postretirement benefit costs for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2011 and 2010 ~~and 2009~~ were as follows:


	For the Three Months Ended September 30,
	Con Edison						CECONY						Con Edison						CECONY
*(Millions of Dollars)*	2010			2009			2010			2009			2011			2010			2011			2010
Service cost	$	6		$	5		$	5		$	4		$	6		$	6		$	5		$	5
Interest cost on accumulated other postretirement benefit obligation		23			24			20			21			21			23			18			20
Expected return on plan assets		(22	)		(21	)		(19	)		(20	)		(22	)		(22	)		(19	)		(19	)
Amortization of net actuarial loss		23			18			21			16			22			23			20			21
Amortization of prior service cost		(3	)		(3	)		(4	)		(3	)		(2	)		(3	)		(3	)		(4	)
Amortization of transition obligation		1			1			1			1			1			1			1			1
NET PERIODIC POSTRETIREMENT BENEFIT COST	$	28		$	24		$	24		$	19		$	26		$	28		$	22		$	24
Cost capitalized		(10	)		(9	)		(8	)		(7	)		(9	)		(10	)		(8	)		(9	)
Cost deferred		2			1			1			—			4			(1	)		3			(2	)
Cost charged to operating expenses	$	20		$	16		$	17		$	12		$	21		$	17		$	17		$	13

   For the Nine Months Ended September 30,
   Con Edison CECONY
(Millions of Dollars) 2010 2009 2010 2009
Service cost
$ 18    $ 15    $ 15    $ 12
Interest cost on accumulated other postretirement benefit obligation
69    72    60    63
Expected return on plan assets
(66 ) (63 ) (57 ) (60 )
Amortization of net actuarial loss
69    54    63    48
Amortization of prior service cost
(9 ) (9 ) (12 ) (9 )
Amortization of transition obligation
3    3    3    3
NET PERIODIC POSTRETIREMENT BENEFIT COST
$ 84    $ 72    $ 72    $ 57
Cost capitalized
(30 ) (27 ) (25 ) (22 )
Cost deferred
2    —    (1 ) (2 )
Cost charged to operating expenses
$ 56    $ 45    $ 46    $ 33


20

Expected Contributions

Based on estimates as of March 31, 2011, Con Edison expects to make a contribution of $84 million, including $74 million for CECONY, to the other postretirement benefit plans in 2011.

Note GF — 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


22

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 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, 2010~~March 31, 2011 and December 31, ~~2009~~2010 were as follows:


	Con Edison				CECONY				Con Edison				CECONY
*(Millions of Dollars)*	2010		2009		2010		2009		2011		2010		2011		2010
Accrued Liabilities:
Manufactured gas plant sites	$	193	$	164	$	109	$	112	$	441	$	446	$	323	$	327
Other Superfund Sites		46		48		45		47		70		66		69		65
Total	$	239	$	212	$	154	$	159	$	511	$	512	$	392	$	392
Regulatory assets	$	421	$	388	$	333	$	329	$	691	$	692	$	571	$	571

Most of the accrued Superfund Site liability relates to sites that have been investigated, in whole or in part. However, for ~~many~~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 ~~will~~may be accrued, the amount of which is not presently determinable but may be material. Under their current rate agreements, the Utilities are permitted to recover or defer as regulatory assets (for subsequent recovery through rates) certain site investigation and remediation costs. In February 2011, the NYSPSC initiated a proceeding to examine the existing mechanisms pursuant to which utilities recover such costs and possible alternatives.

Environmental remediation costs incurred related to Superfund Sites for the three months ended March 31, 2011 and 2010, were as follows:


	Con Edison				CECONY
*(Millions of Dollars)*	2011		2010		2011		2010
Remediation costs incurred	$	6	$	9	$	5	$	8

There were no insurance recoveries received related to Superfund Sites ~~during~~for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2011. Insurance recoveries related to Superfund Sites for the three months ended March 31, 2010 ~~and 2009~~ were ~~as follows:~~immaterial.

   For the Three Months Ended September 30,
   Con Edison CECONY
(Millions of Dollars) 2010 2009 2010 2009
Remediation costs incurred
$ 9    $ 20    $ 8    $ 20
Insurance recoveries received
$ —    $ 3    $ —    $ 3


					21

   For the Nine Months Ended September 30,
   Con Edison CECONY
(Millions of Dollars) 2010 2009 2010 2009
Remediation costs incurred
$ 32    $ 60    $ 30    $ 59
Insurance recoveries received
$ —    $ 3    $ —    $ 3

In ~~2006,~~2010, CECONY estimated that for its manufactured gas plant sites, its aggregate undiscounted potential liability for the investigation and remediation of coal tar and/or other manufactured gas plant-related environmental contaminants could range up to ~~$1.1~~$1.9 billion. In ~~2007,~~2010, O&R estimated that for its manufactured gas plant sites, each of which has been investigated, the aggregate undiscounted potential liability for the remediation of such contaminants could range up to ~~$115~~$200 million. These estimates were based on the assumption that there is contamination at ~~the~~all sites, including those that have not yet been fully investigated and additional assumptions about ~~these and the other sites regarding~~ the extent of the contamination and the type and extent of the remediation that may be required. Actual experience may be materially different.


					23

Asbestos Proceedings

Suits have been brought in New York State and federal courts against the Utilities and many other defendants, wherein a large number of plaintiffs sought large amounts of compensatory and punitive damages for deaths and injuries allegedly caused by exposure to asbestos at various premises of the Utilities. The suits that have been resolved, which are many, have been resolved without any payment by the Utilities, or for amounts that were not, in the aggregate, material to them. The amounts specified in all the remaining thousands of suits total billions of dollars; however, the Utilities believe that these amounts are greatly exaggerated, based on the disposition of previous claims. In ~~2008,~~2010, CECONY estimated that its aggregate undiscounted potential liability for these suits and additional suits that may be brought over the next 15 years is $9$10 million. The estimate was based upon a combination of modeling, historical data analysis and risk factor assessment. Actual experience may be materially different. In addition, certain current and former employees have claimed or are claiming workers’ compensation benefits based on alleged disability from exposure to asbestos. Under its current rate agreements, CECONY is permitted to defer as regulatory assets (for subsequent recovery through rates) costs incurred for its asbestos lawsuits and workers’ compensation claims. The accrued liability for asbestos suits and workers’ compensation proceedings (including those related to asbestos exposure) and the amounts deferred as regulatory assets for the Companies at ~~September 30, 2010~~March 31, 2011 and December 31, ~~2009~~2010 were as follows:


	Con Edison				CECONY				Con Edison				CECONY
*(Millions of Dollars)*	2010		2009		2010		2009		2011		2010		2011		2010
Accrued liability – asbestos suits	$	10	$	10	$	9	$	9	$	10	$	10	$	10	$	10
Regulatory assets – asbestos suits	$	10	$	10	$	9	$	9	$	10	$	10	$	10	$	10
Accrued liability – workers’ compensation	$	109	$	113	$	104	$	108	$	108	$	106	$	103	$	101
Regulatory assets – workers’ compensation	$	34	$	37	$	34	$	37	$	33	$	31	$	33	$	31

Note HG – Other Material Contingencies

Manhattan Steam Main Rupture

In July 2007, a CECONY steam main located in midtown Manhattan ruptured. It has been reported that one person died and others were injured as a result of the incident. Several buildings in the area were damaged. Debris from the incident included dirt and mud containing asbestos. The response to the incident required the closing of several buildings and streets for various periods. Approximately 100 suits are pending against the company seeking generally unspecified compensatory and, in some cases, punitive damages, for personal injury, property damage and business interruption. The company has not accrued a liability for the suits. The company has notified its insurers of the incident and believes that the policies in force at the time of the incident will cover most of the company’s costs, which the company is unable to estimate, but which could be substantial, to satisfy its liability to others in connection with the incident.

Investigations of Vendor Payments

In January 2009, CECONY commenced an internal investigation relating to the arrests of certain employees and retired employees (all of whom have since pleaded guilty) for accepting kickbacks from contractors that performed construction work for the company. The company has retained a law firm, which has retained an accounting firm, to assist in the company’s investigation. The company is providing information

to governmental authorities, which consider the company to be a victim of unlawful conduct, in connection with their investigation of the arrested


22

employees and contractors. The company has terminated its employment of the arrested employees and its contracts with the ~~contractors (one of which is suing the company for substantial damages claiming wrongful termination).~~contractors. In February 2009, the NYSPSC commenced a proceeding that, among other things, will examine the prudence of certain of the ~~company’s~~company's expenditures relating to the arrests and consider whether additional expenditures should also be examined (see “Other Regulatory Matters” in Note B).

InCECONY is also investigating the September 2010 ~~CECONY commenced an internal investigation relating to the~~ arrest of a retired employee ~~for~~(who has since pleaded guilty to participating in a bribery scheme in which the employee received payments from ~~a bidder~~two companies that ~~was selected to supply~~supplied materials to the ~~company.~~


24

company) and the January 2011 arrest of an employee (for accepting kickbacks from an engineering firm that performed work for the company). CECONY has provided information to governmental authorities in connection with their ongoing ~~investigation~~investigations of ~~this conspiracy to defraud the company.~~these matters.

The company, based upon its evaluation of its internal controls for ~~2009~~2010 and previous years, believes that the controls were effective to provide reasonable assurance that its financial statements have been fairly presented, in all material respects, in conformity with generally accepted accounting principles. Because the company’s investigations are ongoing, the company is unable to predict the impact of any of the employees’ unlawful conduct on the company’s internal controls, business, results of operations or financial position.

~~Permit Non-Compliance and Pollution Discharges~~

In March 2009, the New York State Department of Environmental Conservation (NYSDEC) issued a proposed administrative Order on Consent to CECONY with respect to non-compliance with certain laws, regulations and permit conditions and discharges of pollutants at the company’s steam generating facilities. The proposed order effectively instituted a civil enforcement proceeding against the company. In the proposed order, the NYSDEC is seeking, among other things, the company’s agreement to pay a penalty in an amount the NYSDEC did not specify, retain an independent consultant to conduct a comprehensive audit of the company’s generating facilities to determine compliance with federal and New York State environmental laws and regulations and recommend best practices, remove all equipment containing polychlorinated biphenyls from the company’s steam and electric facilities, remediate polychlorinated biphenyl contamination, install certain wastewater treatment facilities, and comply with additional sampling, monitoring, and training requirements. In March 2010, the NYSDEC issued a revised proposed consent order specifying the amount of penalty the NYSDEC is seeking at $10.8 million. The company will seek to resolve this matter through negotiations with the NYSDEC. It is unable to predict the impact of this matter on the company’s operations or the additional costs, which could be substantial, to comply with the requirements resulting from this matter.

In January 2010, the NYSDEC issued a proposed administrative Order on Consent to CECONY relating to discharges of pollutants, reported by the company to the NYSDEC from 2002 through 2009, into the storm sewer system at a property the company owns in the Astoria section of New York on which the company is permitted by the NYSDEC to operate a hazardous waste storage facility. In April 2010, the NYSDEC issued an order, to which CECONY consented, pursuant to which CECONY paid a $1.1 million penalty and is undertaking a corrective action plan that will require the company to incur an estimated $32 million of capital expenditures.

In June 2010, the NYSDEC issued a proposed consent order relating to the release of oil into the Bronx River resulting from a November 2009 transformer fire at the company’s Dunwoodie electric substation. In July 2010, the NYSDEC issued an order, to which CECONY consented, pursuant to which CECONY paid a penalty and other amounts totaling $0.7 million.

Lease In/Lease Out Transactions

In each of 1997 and 1999, Con Edison Development entered into a transaction in which it leased property and then immediately subleased it back to the lessor (termed “Lease In/Lease Out,” or LILO transactions). The transactions respectively involve electric generating and gas distribution facilities in the Netherlands, with a total investment of $259 million. The transactions were financed with $93 million of equity and $166 million of non-recourse, long-term debt secured by the underlying assets. In accordance with the accounting rules for leases, Con Edison is accounting for the two LILO transactions as leveraged leases. Accordingly, the company’s investment in these leases, net of non-recourse debt, is carried as a single amount in Con Edison’s consolidated balance sheet and income is recognized pursuant to a method that incorporates a level rate of return for those years when net investment in the lease is positive, based upon the after-tax cash flows projected at the inception of the leveraged leases. The ~~company’s~~company's investment in these leveraged leases was ~~$(36)~~$(45) million at ~~September 30, 2010~~March 31, 2011 and ~~$(24)~~$(41) million at December 31, ~~2009~~2010 and is comprised of a ~~$235~~$234 million gross investment less ~~$271~~$279 million deferred tax liabilities at ~~September 30, 2010~~


					25

March 31, 2011 and $235 million gross investment less ~~$259~~$276 million of deferred tax liabilities at December 31, ~~2009.~~2010.

On audit of Con Edison’s tax return for 1997, the IRS disallowed the tax losses in connection with the 1997 LILO transaction. In December 2005, Con Edison paid a $0.3 million income tax deficiency asserted by the IRS for the tax year 1997 with respect to the 1997 LILO transaction. In April 2006, the company paid interest of $0.2 million associated with the deficiency and commenced an action in the United States Court of Federal Claims, entitled Consolidated Edison Company of New York, Inc. v. United States, to obtain a refund of this tax payment and interest. A trial was completed in November 2007. In October 2009, the court issued a decision in favor of the company concluding that the 1997 LILO transaction was, in substance, a true lease that possessed economic substance, the loans relating to the lease constituted bona fide indebtedness, and the deductions for the 1997 LILO transactions claimed by the company in its 1997 federal income tax return are allowable. The IRS is entitled to appeal the decision.

In connection with its audit of Con Edison’s federal income tax returns for 1998 through 2007, the IRS disallowed $416 million of net tax deductions taken with respect to both of the LILO transactions for the tax years. Con Edison is pursuing administrative appeals of these audit level disallowances. In connection with its audit of Con Edison’s federal income tax returns for 2009 and 2008, the IRS has disallowed $41 million and $42 million, respectively, of net tax deductions taken with respect to both of the LILO transactions. When


					23

these audit level disallowances become appealable, Con Edison intends to file an appeal of the disallowances.

Con Edison believes that its LILO transactions have been correctly reported, and has not recorded any reserve with respect to the disallowance of tax losses, or related interest, in connection with its LILO transactions. Con Edison’s estimated tax savings, reflected in its financial statements, from the two LILO transactions through ~~September 30, 2010,~~March 31, 2011, in the aggregate, was ~~$217~~$225 million. If Con Edison were required to repay all or a portion of these amounts, it would also be required to pay interest of up to ~~$73~~$79 million net of tax at ~~September 30, 2010.~~

March 31, 2011.

Pursuant to the accounting rules for leveraged lease transactions, the expected timing of income tax cash flows generated by Con Edison’s LILO transactions are required to be reviewed at least annually. If the expected timing of the cash flows is revised, the rate of return and the allocation of income would be recalculated from the inception of the LILO transactions, and the company would be required to recalculate the accounting effect of the LILO transactions, which would result in a charge to earnings that could have a material adverse effect on the company’s results of operations.

Guarantees

Con Edison and its subsidiaries enter into various agreements providing financial or performance assurance primarily to third parties on behalf of their subsidiaries. Maximum amounts guaranteed by Con Edison totaled ~~$873~~$897 million and ~~$929~~$859 million at ~~September 30, 2010~~March 31, 2011 and December 31, ~~2009,~~2010, respectively.

A summary, by type (described in Note H to the financial statements in Item 8 of the Form 10-K) and term, of Con Edison’s total guarantees at ~~September 30, 2010~~March 31, 2011 is as follows:


Guarantee Type	0 – 3 years		4 –10 years		> 10 years		Total		0 –3 years		4 –10 years		> 10 years		Total
	*(Millions of Dollars)*								*(Millions of Dollars)*
Commodity transactions	$	618	$	9	$	128	$	755	$	645	$	29	$	131	$	805
Affordable housing program		4		—		—		4	$	1		—		—	$	1
Intra-company guarantees		30		—		1		31	$	30		—	$	1	$	31
Other guarantees		63		20		—		83	$	47	$	13		—	$	60
TOTAL	$	715	$	29	$	129	$	873	$	723	$	42	$	132	$	897

Note ~~I Income Tax~~

~~Reference is made to Note L to the financial statements in Item 8 of the Form 10-K.~~

In August 2010, the IRS entered into a closing agreement with Con Edison, covering the Companies’ use of certain methods to determine the extent to which construction-related costs could be deducted in 2005 through 2008 (the last year for which deduction of construction-related costs was an uncertain tax position), and instructed the IRS to apply the remainder of a June 2007 deposit to pay the tax for


26

2005 through 2008 determined to be due relating to the closing agreement. At September 30, 2010, the remaining deposit was $51 million (including $47 million attributable to CECONY), which is included in other current assets in the Companies’ consolidated balance sheets, and the tax due relating to the closing agreement was $53 million (including $55 million attributable to CECONY), which is included in other current liabilities in the Companies’ consolidated balance sheets. In October 2010, the IRS indicated that it applied most of the remaining deposit towards payment of the tax due relating to the closing agreement.

At September 30, 2010, the liability for uncertain tax positions (which is included in other current liabilities in the Companies’ consolidated balance sheets) included $8 million (including $8 million attributable to CECONY) relating to the deduction of construction-related costs for New York State income tax purposes in 2005 through 2008.

Settlement of the Companies’ uncertain tax position regarding the timing of the deduction of construction-related costs has had, and will have, no effect (except for interest on amounts owed, which is not expected to be significant) on the Companies’ results of operations because deferred taxes had previously been provided for the related temporary differences between the deductions taken for income tax purposes and the corresponding amounts charged to expense for financial reporting purposes.

In September 2010, Con Edison filed the Companies’ federal income tax return for 2009 reflecting, among other things, the deduction of the costs of certain repairs to utility plant as an operating expense (the “repair allowance deductions”). Previously, the Companies capitalized such costs and reported their depreciation in their tax returns. Taking the repair allowance deductions accelerated the timing of the deduction of the cost of the repairs. The Companies had a net operating loss for federal income tax purposes in 2009 reflecting, among other things, the repair allowance deductions and the bonus depreciation provisions of the American Recovery and Reinvestment Act of 2009.At September 30, 2010, with respect to the repair allowance deductions, Con Edison accrued a liability for uncertain tax positions of $54 million (including $52 million attributable to CECONY), which is included in other current liabilities in the Companies’ consolidated balance sheets.

In September 2010, the Companies applied for a refund of certain prior years’ federal tax payments based upon the carry-back of the 2009 net operating loss. At September 30, 2010, Con Edison’s estimated refunds receivable from the IRS amounted to $297 million, which is included in other accounts receivable in Con Edison’s consolidated balance sheet (including $281 million attributable to CECONY, which is included in accounts receivable from affiliated companies in CECONY’s consolidated balance sheet).

The Companies also estimate that they had a net operating loss for state income tax purposes for 2009 (reflecting, among other things, the repair allowance expense deductions), which is being carried forward and as to which, at September 30, 2010, Con Edison has included a $64 million other current asset in its consolidated balance sheet (including $35 million attributable to CECONY, which is included in accounts receivable from affiliated companies in CECONY’s consolidated balance sheet).


					27

~~Note J~~H — Financial Information by Business Segment

Reference is made to Note N to the financial statements in Item 8 of the Form 10-K.

The financial data for the business segments are as follows:


	For the Three Months Ended September 30,																						For the Three Months Ended March 31,
	Operating revenues						Inter-segment revenues						Depreciation and amortization				Operating income						Operating revenues						Inter-segment revenues						Depreciation and amortization				Operating income
*(Millions of Dollars)*	2010			2009			2010			2009			2010		2009		2010			2009			2011			2010			2011			2010			2011		2010		2011			2010
Con Edison of New York
CECONY
Electric	$	2,570		$	2,395		$	3		$	3		$	156	$	149	$	715		$	641		$	1,721		$	1,728		$	3		$	3		$	161	$	151	$	217		$	195
Gas		204			183			1			1			26		24		(16	)		(28	)		663			683			1			1			27		25		204			215
Steam		91			77			18			18			16		15		(33	)		(34	)		325			307			20			18			16		15		125			102
Consolidation adjustments		—			—			(22	)		(22	)		—		—		—			—			—			—			(24	)		(22	)		—		—		—			—
Total Con Edison of New York	$	2,865		$	2,655		$	—		$	—		$	198	$	188	$	666		$	579
Total CECONY																							$	2,709		$	2,718		$	—		$	—		$	204	$	191	$	546		$	512
O&R
Electric	$	245		$	209		$	—		$	—		$	8	$	7	$	52		$	40		$	149		$	161		$	—		$	—		$	9	$	8	$	10		$	5
Gas		25			26			—			—			3		3		(4	)		(5	)		92			90			—			—			3		3		28			23
Total O&R	$	270		$	235		$	—		$	—		$	11	$	10	$	48		$	35		$	241		$	251		$	—		$	—		$	12	$	11	$	38		$	28
Competitive energy businesses	$	584		$	610		$	—		$	2		$	2	$	2	$	(8	)	$	70		$	408		$	500		$	3		$	2		$	2	$	2	$	44		$	(48	)
Other*		(12	)		(11	)		—			(2	)		—		—		(1	)		1			(9	)		(7	)		(3	)		(2	)		—		—		(2	)		—
Total Con Edison	$	3,707		$	3,489		$	—		$	—		$	211	$	200	$	705		$	685		$	3,349		$	3,462		$	—		$	—		$	218	$	204	$	626		$	492

*	Parent company expenses, primarily interest, and consolidation adjustments. Other does not represent a business segment.

   For the Nine Months Ended September 30,
   Operating
revenues Inter-segment
revenues Depreciation and
amortization Operating
Income
(Millions of Dollars) 2010 2009 2010 2009 2010 2009 2010 2009
Con Edison of New York

Electric
$ 6,402    $ 5,865    $ 9    $ 9    $ 464    $ 437    $ 1,228    $ 1,090
Gas
1,126    1,259    4    4    76    73    243    223
Steam
487    521    55    54    46    44    41    40
Consolidation adjustments
—    —    (68 ) (67 ) —    —    —    —
Total Con Edison of New York
$ 8,015    $ 7,645    $ —    $ —    $ 586    $ 554    $ 1,512    $ 1,353
O&R

Electric
$ 559    $ 499    $ —    $ —    $ 24    $ 22    $ 71    $ 57
Gas
150    171    —    —    9    9    20    16
Total O&R
$ 709    $ 670    $ —    $ —    $ 33    $ 31    $ 91    $ 73
Competitive energy businesses
$ 1,491    $ 1,477    $ —    $ (1 ) $ 6    $ 4    $ 25    $ 52
Other*
(30 ) (34 ) —    1    —    —    (1 ) (2 )
Total Con Edison
$ 10,185    $ 9,758    $ —    $ —    $ 626    $ 589    $ 1,627    $ 1,476

*	~~Parent company expenses, primarily interest, and consolidation adjustments. Other does not represent a business segment.~~
24

Note KI — Derivative Instruments and Hedging Activities

Under the accounting rules for derivatives and hedging, derivatives are recognized on the balance sheet at fair value, unless an exception is available under the accounting rules. Certain qualifying derivative contracts have been designated as normal purchases or normal sales contracts. These contracts are not reported at fair value under the accounting rules.


28

Energy Price Hedging

Con Edison’s subsidiaries hedge market price fluctuations associated with physical purchases and sales of electricity, natural gas, and steam by using derivative instruments including futures, forwards, basis swaps, options, transmission congestion contracts and financial transmission rights contracts. The fair values of these hedges at ~~September 30, 2010~~March 31, 2011 and December 31, ~~2009~~2010 were as follows:


	Con Edison						CECONY						Con Edison						CECONY
*(Millions of Dollars)*	2010			2009			2010			2009			2011			2010			2011			2010
Fair value of net derivative (liabilities) – gross	$	(436	)	$	(266	)	$	(248	)	$	(137	)
Fair value of net derivative assets/(liabilities) - gross													$	(150	)	$	(261	)	$	(94	)	$	(156	)
Impact of netting of cash collateral		282			162			143			87			137			176			85			104
Fair value of net derivative (liabilities) – net	$	(154	)	$	(104	)	$	(105	)	$	(50	)
Fair value of net derivative assets/(liabilities) - net													$	(13	)	$	(85	)	$	(9	)	$	(52	)

Credit Exposure

The Companies are exposed to credit risk related to transactions entered into primarily for the various energy supply and hedging activities by the Utilities and the competitive energy businesses. 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.

At ~~September 30, 2010,~~March 31, 2011, Con Edison and CECONY had ~~$172~~

$178 million and ~~$24~~$44 million of credit exposure in connection with energy supply and hedging activities, net of collateral, respectively. Con Edison’s net credit exposure consisted of ~~$107~~$66 million with investment-grade counterparties, $65 million with commodity exchange brokers, $45 million with independent system operators and $2 million with non-investment grade counterparties. CECONY’s net credit exposure consisted of $2 million with investment-grade counterparties and ~~$65~~$42 million ~~primarily with commodity exchange brokers or independent system operators. CECONY’s entire net credit exposure was~~ with commodity exchange brokers.

Economic Hedges

The Companies enter into certain derivative instruments that do not qualify or are not designated as hedges under the accounting rules for derivatives and hedging. However, management believes these instruments represent economic hedges that mitigate exposure to fluctuations in commodity prices.


					25

The fair values of the Companies’ commodity derivatives at ~~September 30, 2010~~March 31, 2011 were:

(Millions of Dollars) Fair Value of Commodity Derivatives(a)
Balance Sheet Location Con
Edison CECONY
Asset Derivatives
Current
Other current assets $ 234    $ 18
Long term
Other deferred charges and non-current assets 67    12
Total asset derivatives
$ 301    $ 30
Impact of netting
(181 ) 6
Net asset derivatives
$ 120    $ 36
Liability Derivatives
Current
Fair value of derivative liabilities $ 538    $ —
Current
Other current liabilities —    192
Long term
Fair value of derivative liabilities 199    86
Total liability derivatives
$ 737    $ 278
Impact of netting
(463 ) (137 )
Net liability derivatives
$ 274    $ 141


*(Millions of Dollars)*	Fair Value of Commodity Derivatives(a) Balance Sheet Location	Con Edison			CECONY
Derivative Assets
Current	Other current assets	$	173		$	46
Long-term	Other deferred charges and non-current assets		49			21
Total derivative assets		$	222		$	67
Impact of netting			(75	)		(2	)
Net derivative assets		$	147		$	65
Derivative Liabilities
Current	Fair value of derivative liabilities	$	287		$	—
Current	Other current liabilities		—			115
Long-term	Fair value of derivative liabilities		85			46
Total derivative liabilities		$	372		$	161
Impact of netting			(212	)		(87	)
Net derivative liabilities		$	160		$	74

(a)	Qualifying derivative contracts, which have been designated as normal purchases or normal sales contracts, are not reported at fair value under the accounting rules for derivatives and hedging and, therefore, are excluded from the table.


					29

The fair ~~value~~values of the Companies’ commodity derivatives at December 31, ~~2009~~2010 were:

(Millions of Dollars) Fair Value of Commodity Derivatives(a)
Balance Sheet Location Con
Edison CECONY
Asset Derivatives
Current
Fair value of derivative assets $ 213    $ 40
Long term
Other deferred charges and non-current assets 148    19
Total asset derivatives
$ 361    $ 59
Impact of netting
(231 ) (20 )
Net asset derivatives
$ 130    $ 39
Liability Derivatives
Current
Fair value of derivative liabilities $ 401    $ 110
Long term
Fair value of derivative liabilities 226    86
Total liability derivatives
$ 627    $ 196
Impact of netting
(393 ) (107 )
Net liability derivatives
$ 234    $ 89


*(Millions of Dollars)*	Fair Value of Commodity Derivatives(a) Balance Sheet Location	Con Edison			CECONY
Derivative Assets
Current	Other current assets	$	184		$	29
Long-term	Other deferred charges and non-current assets		51			19
Total derivative assets		$	235		$	48
Impact of netting			(129	)		—
Net derivative assets		$	106		$	48
Derivative Liabilities
Current	Fair value of derivative liabilities	$	385		$	—
Current	Other current liabilities		—			148
Long-term	Fair value of derivative liabilities		111			56
Total derivative liabilities		$	496		$	204
Impact of netting			(305	)		(104	)
Net derivative liabilities		$	191		$	100

(a)	Qualifying derivative contracts, which have been designated as normal purchases or normal sales contracts, are not reported at fair value under the accounting rules for derivatives and hedging and, therefore, are excluded from the table.

The Utilities generally recover all of their prudently incurred fuel, purchased power and gas ~~costs,~~cost, including hedging gains and losses, in accordance with rate provisions approved by the applicable state utility commissions. See “Recoverable Energy Costs” in Note A to the financial statements in Item 8 of the Form 10-K. In accordance with the accounting rules for regulated operations, the Utilities record a regulatory asset or liability to defer recognition of unrealized gains and losses on their electric and gas derivatives. As gains and losses are realized in future periods, they will be recognized as purchased power, gas and fuel costs in the Companies’ consolidated income statements. Con Edison’s competitive energy businesses record realized and unrealized gains and losses on their derivative contracts in earnings in the reporting period in which they occur.


26

The following table presents the changes in the fair values of commodity derivatives that have been deferred or recognized in earnings for the three ~~and nine~~ months ended ~~September 30, 2010:~~March 31, 2011:


Realized and Unrealized Gains/(Losses) on Commodity Derivatives(a) Deferred or Recognized in Income for the Three Months Ended September 30, 2010
Realized and Unrealized Gains/(Losses) on Commodity Derivatives(a) Deferred or Recognized in Income for the three months ended March 31, 2011									Realized and Unrealized Gains/(Losses) on Commodity Derivatives(a) Deferred or Recognized in Income for the three months ended March 31, 2011
*(Millions of Dollars)*		Balance Sheet Location	Con Edison			CECONY				Balance Sheet Location	Con Edison			CECONY
Pre-tax gains/(losses) deferred in accordance with accounting rules for regulated operations:	Pre-tax gains/(losses) deferred in accordance with accounting rules for regulated operations:								Pre-tax gains/(losses) deferred in accordance with accounting rules for regulated operations:
Current		Other current liabilities	$	(3	)	$	(3	)		Deferred derivative gains	$	6		$	5
Total deferred losses			$	(3	)	$	(3	)
Long-term										Regulatory liabilities		3			3
Total deferred gains											$	9		$	8
Current		Other current assets	$	(61	)	$	(54	)		Deferred derivative losses	$	17		$	11
Current		Recoverable energy costs		(70	)		(63	)		Recoverable energy costs		(49	)		(42	)
Long term		Regulatory assets		4			7
Long-term										Regulatory assets		44			35
Total deferred losses			$	(127	)	$	(110	)			$	12		$	4
Net deferred losses			$	(130	)	$	(113	)			$	21		$	12
		Income Statement Location								Income Statement Location
Pre-tax gain/(loss) recognized in income	Pre-tax gain/(loss) recognized in income								Pre-tax gain/(loss) recognized in income
		Purchased power expense	$	(26	)(b)	$	—			Purchased power expense	$	(21	)(b)	$	—
		Gas purchased for resale		(1	)		—			Gas purchased for resale		(6	)		—
		Non-utility revenue		4	(b)		—			Non-utility revenue		10	(b)		—
Total pre-tax gain/(loss) recognized in income			$	(23	)	$	—				$	(17	)	$	—

(a)	Qualifying derivative contracts, which have been designated as normal purchases or normal sales contracts, are not reported at fair value under the accounting rules for derivatives and hedging and, therefore, are excluded from the table.

(b)	For the three months ended ~~September 30, 2010,~~March 31, 2011 Con Edison recorded in non-utility operating revenues and purchased power expense an unrealized pre-tax ~~gain/~~(loss)/gain of ~~$(3)~~$(13) million and ~~$(34) million, respectively.~~


30

Realized and Unrealized Gains/(Losses) on Commodity Derivatives(a)
Deferred or Recognized in Income for the Nine Months Ended September 30, 2010
(Millions of Dollars) Balance Sheet Location Con
Edison CECONY
Pre-tax gains/(losses) deferred in accordance with accounting rules for regulated operations:

Current
Other current liabilities $ (8 ) $ (8 )
Total deferred losses
$ (8 ) $ (8 )
Current
Other current assets $ (127 ) $ (114 )
Current
Recoverable energy costs $ (205 ) $ (172 )
Long term
Regulatory assets $ (19 ) $ (11 )
Total deferred losses
$ (351 ) $ (297 )
Net deferred losses
$ (359 ) $ (305 )
Income Statement Location
Pre-tax gain/(loss) recognized in income

Purchased power expense $ (132 ) $ —
Gas purchased for resale (7 ) —
Non-utility revenue 21 (b) —
Total pre-tax gain/(loss) recognized in income
$ (118 ) $ —

~~(a)~~

Qualifying derivative contracts, which have been designated as normal purchases or normal sales contracts, are not reported at fair value under the accounting rules for derivatives and hedging and, therefore, are excluded from the table.

~~(b)~~

~~For the nine months ended September 30, 2010, Con Edison recorded in non-utility operating revenues and purchased power expense an unrealized pre-tax gain/(loss) of $(1) million and $(34)~~$50 million, respectively.


Realized and Unrealized Gains/(Losses) on Commodity Derivatives(a) Deferred or Recognized in Income for the Three Months Ended September 30, 2009
Realized and Unrealized Gains/(Losses) on Commodity Derivatives(a) Deferred or Recognized in Income for the Three Months Ended March 31, 2010									Realized and Unrealized Gains/(Losses) on Commodity Derivatives(a) Deferred or Recognized in Income for the Three Months Ended March 31, 2010
*(Millions of Dollars)*		Balance Sheet Location	Con Edison			Con Edison of New York				Balance Sheet Location	Con Edison			CECONY
Pre-tax gains/(losses) deferred in accordance with accounting rules for regulated operations:	Pre-tax gains/(losses) deferred in accordance with accounting rules for regulated operations:								Pre-tax gains/(losses) deferred in accordance with accounting rules for regulated operations:
Current		Deferred derivative gains	$	4		$	4			Deferred derivative gains	$	(6	)	$	(6	)
Long term		Regulatory liabilities		2			—
Total deferred gains			$	6		$	4				$	(6	)	$	(6	)
Current		Deferred derivative losses	$	111		$	97			Deferred derivative losses	$	(161	)	$	(138	)
Current		Recoverable energy costs	$	(158	)	$	(134	)		Recoverable energy costs	$	(55	)	$	(42	)
Long term		Regulatory assets	$	29		$	21
Long-term										Regulatory assets	$	(74	)	$	(56	)
Total deferred losses			$	(18	)	$	(16	)			$	(290	)	$	(236	)
Net deferred losses			$	(12	)	$	(12	)			$	(296	)	$	(242	)
		Income Statement Location								Income Statement Location
Pre-tax gain/(loss) recognized in income	Pre-tax gain/(loss) recognized in income								Pre-tax gain/(loss) recognized in income
		Purchased power expense	$	(176	)	$	—			Purchased power expense	$	(70	)(b)	$	—
		Gas purchased for resale		(9	)		—			Gas purchased for resale		5			—
		Non-utility revenue		27	(b)		—			Non-utility revenue		14	(b)		—
Total pre-tax gain/(loss) recognized in income			$	(158	)	$	—				$	(51	)	$	—

(a)	Qualifying derivative contracts, which have been designated as normal purchases or normal sales contracts, are not reported at fair value under the accounting rules for derivatives and hedging and, therefore, are excluded from the table.

(b)	For the three months ended ~~September 30, 2009,~~March 31, 2010, Con Edison recorded in non-utility operating revenues and purchased power expense an unrealized pre-tax ~~gain~~gain/(loss) of ~~$28 million.~~$46 million and $(110) million, respectively.


					3127

Realized and Unrealized Gains/(Losses) on Commodity Derivatives(a)
Deferred or Recognized in Income for the Nine Months Ended September 30, 2009

(Millions of Dollars) Balance Sheet Location Con
Edison Con Edison
of New York
Pre-tax gains/(losses) deferred in accordance with accounting rules for regulated operations:

Current
Deferred derivative gains $ (9 ) $ (9 )
Long term
Regulatory liabilities 3    —
Total deferred gains
$ (6 ) $ (9 )
Current
Deferred derivative losses $ 136    $ 136
Current
Recoverable energy costs $ (462 ) $ (394 )
Long term
Regulatory assets $ 8    $ 4
Total deferred losses
$ (318 ) $ (254 )
Net deferred losses
$ (324 ) $ (263 )
Income Statement Location
Pre-tax gain/(loss) recognized in income

Purchased power expense $ (432 ) $ —
Gas purchased for resale (7 ) —
Non-utility revenue (5 )(b)�� —
Total pre-tax gain/(loss) recognized in income
$ (444 ) $ —

~~(a)~~

~~(b)~~

~~For the nine months ended September 30, 2009, Con Edison recorded in non-utility operating revenues an unrealized pre-tax gain of $2 million.~~

As of ~~September 30, 2010,~~March 31, 2011, Con Edison had ~~1,475~~1,664 contracts, including ~~693~~686 CECONY contracts, which were considered to be derivatives under the accounting rules for derivatives and hedging (excluding qualifying derivative contracts, which have been designated as normal purchases or normal sales contracts). The following table presents the number of contracts by commodity type:


	Electric Derivatives								Gas Derivatives						Electric Derivatives								Gas Derivatives
	Number of Energy Contracts(a)		MWhs(b)		Number of Capacity Contracts(a)		MWs(b)		Number of Contracts(a)		Dths(b)		Total Number of Contracts(a)		Number of Energy Contracts^(a)		MWhs^(b)		Number of Capacity Contracts^(a)		MWs^(b)		Number of Contracts^(a)		Dths^(b)		Total Number Of Contracts^(a)
Con Edison		690		18,268,063		63		9,075		722		141,570,000		1,475		915		20,692,742		63		10,164		686		118,524,450		1,664
CECONY		137		3,738,600		—		—		556		131,790,000		693		183		5,332,425		—		—		503		109,330,000		686

(a)	Qualifying derivative contracts, which have been designated as normal purchases or normal sales contracts, are not reported at fair value under the accounting rules for derivatives and hedging and, therefore, are excluded from the table.

(b)	Volumes are reported net of long and short positions.

The Companies also enter into electric congestion and gas basis swap contracts to hedge the congestion and transportation charges which are associated with electric and gas contracts and hedged volumes.

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 the Companies to provide collateral on derivative instruments in net liability positions. The amount of collateral to be provided will depend on the fair value of the derivative instruments and the Companies’ credit ratings.


32

The aggregate fair value of all derivative instruments with credit-risk-related contingent features that are in a net liability position and collateral posted at ~~September 30, 2010,~~March 31, 2011, 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 were:


*(Millions of Dollars)*	Con Edison(a)			CECONY(a)			Con Edison^(a)			CECONY^(a)
Aggregate fair value – net liabilities	$	443		$	180		$	172		$	92
Collateral posted	$	240		$	92	(b)	$	68		$	51	^(b)
Additional collateral(c) (downgrade one level from current ratings(d))	$	53		$	35
Additional collateral(c) (downgrade to below investment grade from current ratings(d))	$	324	(e)	$	103
Additional collateral^(c) (downgrade one level from current ratings(d))							$	11		$	6
Additional collateral^(c) (downgrade to below investment grade from current ratings(d))							$	140	^(e)	$	52	^(e)

(a)

Non-derivative transactions for the purchase and sale of electricity and gas and qualifying derivative instruments, which have been designated as normal purchases or normal sales, are excluded from the table. These transactions primarily include purchases of electricity from independent system operators. In the event the Utilities and Con Edison’s competitive energy businesses were no longer extended unsecured credit for such purchases, the Companies would be required to post collateral, which at ~~September 30, 2010,~~March 31, 2011, would have amounted to an estimated ~~$191~~$127 million for Con Edison, including ~~$50~~$33 million for CECONY. For certain other such non-derivative transactions, the Companies could be required to post collateral under certain circumstances, including in the event counterparties had reasonable grounds for insecurity.

(b)	Across the Utilities’ energy derivative positions, credit limits for the same counterparties are generally integrated. At ~~September 30, 2010,~~March 31, 2011, the Utilities posted combined collateral of ~~$126~~$68 million, including an estimated ~~$34~~$17 million attributable to O&R.

(c)

The Companies measure the collateral requirements by taking into consideration the fair value amounts of derivative instruments that contain credit-risk-related contingent features that are in a net liabilities 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 of setoff.

(d)

The current ratings are Moody’s, S&P and Fitch long-term credit rating of, as applicable, Con Edison (Baa1/BBB+/BBB+), CECONY (A3/A-/A-) or O&R (Baa1/A-/A-). Credit ratings assigned by rating agencies are expressions of opinions that are subject to revision or withdrawal at any time by the assigning rating agency.

(e)

Derivative instruments that are net assets have been excluded from the table. At ~~September 30, 2010,~~March 31, 2011, if Con Edison had been downgraded to below investment grade, it would have been required to post additional collateral for such derivative instruments of not more than ~~$20~~$24 million.


28

Interest Rate ~~Swaps~~Swap

O&R has an interest rate swap ~~related~~pursuant to ~~its Series 1994A Debt (which debt was cancelled in August 2010, see Note C). O&R~~which it pays a fixed-rate of 6.09 percent and receives a LIBOR-based variable rate. The fair value of this interest rate swap at ~~September 30, 2010~~March 31, 2011 was an unrealized loss of ~~$12~~$10 million, which has been included in Con Edison’s consolidated balance sheet as a noncurrent liability/fair value of derivative liabilities and a regulatory asset. ~~There was no material~~The change in the fair value of the swap for the three ~~and nine~~ months ended ~~September 30, 2010.~~March 31, 2011 was not material. In the event O&R’s credit rating was downgraded to BBB- or lower by ~~Standard & Poor’s Rating Services~~S&P or Baa3 or lower by Moody’s, ~~Investors Service,~~ the swap counterparty could elect to terminate the agreement and, if it did so, the parties would then be required to settle the transaction.

Note LJ — Fair Value Measurements

Effective January 1, 2010, the Companies adopted Accounting Standards Update (ASU) No. 2010-06, “Fair Value Measurements and Disclosures (Topic 820): Improving Disclosures about Fair Value Measurements,” except as discussed below. This update requires the CompaniesReference is made to disclose significant transfers in and out of Level 1 and Level 2 fair value measurements and describe the reasons for the transfers. The guidance also clarifies level of disaggregation and disclosure requirements about inputs and valuation techniques used to measure fair value for both recurring and nonrecurring fair value measurements and the meaning of a class of assets and liabilities. In addition, the update requires the Companies to present information about purchases, sales, issuances, and settlements on a gross basis in the reconciliation for fair value measurements using significant unobservable inputs (Level 3). This disclosure is effective for fiscal years beginning after December 15, 2010 and for interim periods within those fiscal years.

The accounting rules for fair value measurements and disclosures established a fair value hierarchy, which prioritizes the inputs to valuation techniques used to measure fair value in three broad levels. The rules require that assets and liabilities be classified in their entirety based on the level of input that is significant to the fair value measurement. Assessing the significance of a particular input may require judgment considering factors specific to the asset or liability, and may affect the valuation of the asset or liability and their placement within the fair value hierarchy. See Note P to the financial statements in Item 8 of the Form ~~10-K for how the Companies classify fair value balances based on the fair value hierarchy.~~


					33

The valuation technique used by the Companies with regard to commodity derivatives and other assets that fall into either Level 2 or Level 3 is the market approach, which uses prices and other relevant information generated by market transactions involving identical or comparable assets and liabilities. The valuation technique used by the Companies with regard to the interest rate contract that falls into Level 3 is the income approach which uses valuation techniques to convert future income stream amounts to a single amount in present value terms.

10-K.

Assets and liabilities measured at fair value on a recurring basis as of ~~September 30, 2010~~March 31, 2011 are summarized below.


	Level 1				Level 2						Level 3						Netting Adjustments(4)						Total						Level 1				Level 2				Level 3						Netting Adjustments (4)						Total
*(Millions of Dollars)*	Con Edison		CECONY		Con Edison			CECONY			Con Edison			CECONY			Con Edison			CECONY			Con Edison			CECONY			Con Edison		CECONY		Con Edison		CECONY		Con Edison			CECONY			Con Edison			CECONY			Con Edison			CECONY
Derivative assets:
Commodity(1)	$	1	$	—	$	75		$	8		$	212		$	12		$	(167	)	$	16		$	121		$	36		$	2	$	1	$	71	$	27	$	140		$	23		$	(67	)	$	14		$	146		$	65
Commodity(1)	$	1	$	—	$	75		$	8		$	212		$	12		$	(167	)	$	16		$	121		$	36
Other assets(3)		57		57		—			—			96			87			—			—			153			144
Other assets (3)																														68		68		—		—		105			95			—			—			173			163
Total	$	58	$	57	$	75		$	8		$	308		$	99		$	(167	)	$	16		$	274		$	180		$	70	$	69	$	71	$	27	$	245		$	118		$	(67	)	$	14		$	319		$	228
Derivative liabilities:
Commodity	$	10	$	8	$	356		$	209		$	358		$	51		$	(449	)	$	(127	)	$	275		$	141		$	3	$	1	$	184	$	118	$	176		$	26		$	(204	)	$	(71	)	$	159		$	74
Transfers in(5) (7)		—		—		(9	)		(9	)		(11	)		(11	)		—			—			(20	)		(20	)
Transfers out(5) (7)		—		—		11			11			9			9			—			—			20			20
Commodity(1)	$	10	$	8	$	358		$	211		$	356		$	49		$	(449	)	$	(127	)	$	275		$	141
Interest rate contract(2)		—		—		—			—			12			—			—			—			12			—
Transfer in (5) (6)																														—		—		5		5		—			—			—			—			5			5
Transfer out (5) (6)																														—		—		—		—		(5	)		(5	)		—			—			(5	)		(5	)
Commodity (1)																													$	3	$	1	$	189	$	123	$	171		$	21		$	(204	)	$	(71	)	$	159		$	74
Interest rate contract (2)																														—		—		—		—		10			—			—			—			10			—
Total	$	10	$	8	$	358		$	211		$	368		$	49		$	(449	)	$	(127	)	$	287		$	141		$	3	$	1	$	189	$	123	$	181		$	21		$	(204	)	$	(71	)	$	169		$	74

(1)

A significant portion of the commodity derivative contracts categorized in Level 3 is valued using either an industry acceptable model or an internally developed model with observable inputs. The models also include some less readily observable inputs resulting in the classification of the entire contract as Level 3. See Note K.I.

(2)	See Note K.I.

(3)	Other assets are comprised of assets such as life insurance contracts within the Deferred Income Plan and Supplemental Retirement Income Plans, held in rabbi trusts.

(4)	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.

(5)	The Companies’ policy is to recognize transfers into and transfers out of the levels at the end of the reporting period.

(6)	Transferred from Level 3 to Level 2 because of availability of observable market data due to decrease in the terms of certain contracts from beyond one year as of December 31, 2010 to less than one year as of March 31, 2011.


					29

Assets and liabilities measured at fair value on a recurring basis as of December 31, 2010 are summarized below.


	Level 1					Level 2						Level 3						Netting Adjustments (4)						Total
*(Millions of Dollars)*	Con Edison			CECONY		Con Edison			CECONY			Con Edison			CECONY			Con Edison			CECONY			Con Edison			CECONY
Derivative assets:
Commodity (1)	$	2	��	$	1	$	72		$	21		$	144		$	13		$	(112	)	$	13		$	106		$	48
Other assets (3)		65			64		—			—			101			92			—			—			166			156
Total	$	67		$	65	$	72		$	21		$	245		$	105		$	(112	)	$	13		$	272		$	204
Derivative liabilities:
Commodity	$	4		$	2	$	270		$	177		$	205		$	12		$	(288	)	$	(91	)	$	191		$	100
Transfer in (5) (6) (7)		—			—		(36	)		(36	)		(9	)		(9	)		—			—			(45	)		(45	)
Transfer out (5) (6) (7)		—			—		9			9			36			36			—			—			45			45
Commodity (1)	$	4		$	2	$	243		$	150		$	232		$	39		$	(288	)	$	(91	)	$	191		$	100
Interest rate contract (2)		—			—		—			—			10			—			—			—			10			—
Total	$	4		$	2	$	243		$	150		$	242		$	39		$	(288	)	$	(91	)	$	201		$	100

(1)

(2)	See Note O to the financial statements in Item 8 of the Form 10-K.

(3)	Other assets are comprised of assets such as life insurance contracts within the Deferred Income Plan and Supplemental Retirement Income Plans, held in rabbi trusts.

(4)	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.

(5)	The Companies’ policy is to recognize transfers into and transfers out of the levels at the end of the reporting period.

(6)	Transferred from Level 2 to Level 3 because of reassessment of the levels in the fair value hierarchy within which certain inputs fall.

(7)	Transferred from Level 3 to Level 2 because of availability of observable market data due to decrease in the terms of certain contracts from beyond one year as of ~~June 30, 2010~~December 31, 2009 to less than one year as of ~~September 30,~~December 31, 2010.

~~Assets and liabilities measured at fair value on a recurring basis as of December 31, 2009 are summarized below.~~

   Level 1 Level 2 Level 3 Netting
Adjustments(4) Total
(Millions of Dollars) Con
Edison CECONY Con
Edison CECONY Con
Edison CECONY Con
Edison CECONY Con
Edison CECONY
Derivative assets:

Commodity(1)
$ 3    $ 3    $ 92    $ 21    $ 201    $ 17    $ (166 ) $ (2 ) $ 130    $ 39
Other assets(3)
36    36    —    —    92    83    —    —    128    119
Total
$ 39    $ 39    $ 92    $ 21    $ 293    $ 100    $ (166 ) $ (2 ) $ 258    $ 158
Derivative liabilities:

Commodity(1)
$ 6    $ 1    $ 296    $ 155    $ 260    $ 22    $ (328 ) $ (89 ) $ 234    $ 89
Interest rate contract(2)
—    —    —    —    11    —    —    —    11    —
Total
$ 6    $ 1    $ 296    $ 155    $ 271    $ 22    $ (328 ) $ (89 ) $ 245    $ 89

~~(1)~~

~~(2)~~

~~See Note O to the financial statements in Item 8 of the Form 10-K.~~

~~(3)~~

~~Other assets are comprised of assets such as life insurance contracts within the Deferred Income Plan and Supplemental Retirement Income Plans, held in rabbi trusts.~~

~~(4)~~

~~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.~~


34

The table listed below provides a reconciliation of the beginning and ending net balances for assets and liabilities measured at fair value ~~for the three~~as of March 31, 2011 and ~~nine months ended September 30,~~ 2010 and classified as Level 3 in the fair value ~~hierarchy:~~hierarchy below.


	For the Three Months Ended September 30, 2010																	For the Three Months Ended March 31, 2011
				Total Gains/(Losses)— Realized and Unrealized																	Total Gains/(Losses) – Realized and Unrealized
*(Millions of Dollars)*	Beginning Balance as of July 1, 2010			Included in Earnings			Included in Regulatory Assets and Liabilities			Purchases, Issuances, Sales and Settlements		Transfer In/Out of Level 3			Ending Balance as of September 30, 2010			Beginning Balance as of January 1, 2011			Included in Earnings			Included in Regulatory Assets and Liabilities		Purchases		Issuances		Sales		Settlements			Transfer In/Out of Level 3			Ending Balance as of March 31, 2011
Con Edison
Derivatives:
Commodity	$	(101	)	$	(45	)	$	(12	)	$	16	$	(2	)	$	(144	)	$	(88	)	$	33		$	40	$	10	$	—	$	—	$	(21	)	$	(5	)	$	(31	)
Interest rate contract		(12	)		—			—			—		—			(12	)		(10	)		(1	)		—		—		—		—		1			—			(10	)
Other(1)		94			—			2			—		—			96
Other assets (1)																			101			2			2		—		—		—		—			—			105
Total	$	(19	)	$	(45	)	$	(10	)	$	16	$	(2	)	$	(60	)	$	3		$	34		$	42	$	10	$	—	$	—	$	(20	)	$	(5	)	$	64
CECONY
Derivatives:
Commodity	$	(30	)	$	(7	)	$	(3	)	$	5	$	(2	)	$	(37	)	$	(26	)	$	(1	)	$	27	$	10	$	—	$	—	$	(3	)	$	(5	)	$	2
Other(1)		85			—			2			—		—			87
Other assets(1)																			92			2			1		—		—		—		—			—			95
Total	$	55		$	(7	)	$	(1	)	$	5	$	(2	)	$	50		$	66		$	1		$	28	$	10	$	—	$	—	$	(3	)	$	(5	)	$	97

(1)	Amounts included in earnings are reported in investment and other income on the consolidated income statement.

   For the Nine Months Ended September 30, 2010
      Total Gains/(Losses)—
Realized and Unrealized
(Millions of Dollars) Beginning
Balance as of
January 1, 2010 Included in
Earnings Included in Regulatory
Assets and Liabilities Purchases,
Issuances, Sales
and Settlements Transfer
In/Out of
Level 3 Ending
Balance as of
September 30, 2010
Con Edison

Derivatives:

Commodity
$ (59 ) $ (95 ) $ (55 ) $ 44    $ 21    $ (144 )
Interest rate contract
(11 ) (2 ) (1 ) 2    —    (12 )
Other(1)
92    —    4    —    —    96
Total
$ 22    $ (97 ) $ (52 ) $ 46    $ 21    $ (60 )
CECONY

Derivatives:

Commodity
$ (5 ) $ (14 ) $ (37 ) $ (2 ) $ 21    $ (37 )
Other(1)
83    —    4    —    —    87
Total
$ 78    $ (14 ) $ (33 ) $ (2 ) $ 21    $ (50 )


30


	For the Three Months Ended March 31, 2010
				Total Gains/(Losses) – Realized and Unrealized
*(Millions of Dollars)*	Beginning Balance as of January 1, 2010			Included in Earnings			Included in Regulatory Assets and Liabilities			Purchases		Issuances		Sales		Settlements			Transfer In/Out of Level 3		Ending Balance as of March 31, 2010
Con Edison
Derivatives:
Commodity	$	(59	)	$	(44	)	$	(72	)	$	—	$	—	$	—	$	7		$	—	$	(168	)
Interest rate contract		(11	)		(1	)		—			—		—		—		1			—		(11	)
Other assets (1)		92			—			1			—		—		—		—			—		93
Total	$	22		$	(45	)	$	(71	)	$	—	$	—	$	—	$	8		$	—	$	(86	)
CECONY
Derivatives:
Commodity	$	(5	)	$	(5	)	$	(33	)	$	—	$	—	$	—	$	(5	)	$	—	$	(48	)
Other assets(1)		83			—			1			—		—		—		—			—		84
Total	$	78		$	(5	)	$	(32	)	$	—	$	—	$	—	$	(5	)	$	—	$	36

(1)	Amounts included in earnings are reported in investment and other income on the consolidated income statement.


					35

The table listed below provides a reconciliation of the beginning and ending net balances for assets and liabilities measured at fair value for the three and nine months ended September 30, 2009 and classified as Level 3 in the fair value hierarchy:

   For the Three Months Ended September 30, 2009
      Total Gains/(Losses)—
Realized and Unrealized
(Millions of Dollars) Beginning
Balance as of
July 1, 2009 Included in
Earnings Included in Regulatory
Assets and Liabilities Purchases,
Issuances, Sales
and Settlements Transfer
In/Out of
Level 3
Ending
Balance as of
September 30, 2009

Con Edison

Derivatives:

Energy
$ (85 ) $ (108 ) $ 56    $ 81    $ (1 ) $ (57 )
Financial & other
(12 ) —    —    —    —    (12 )
Other
82    3    3    —    —    88
Total
$ (15 ) $ (105 ) $ 59    $ 81    $ (1 ) $ 19
Con Edison of New York

Derivatives:

Energy
$ 2    $ (11 ) $ 28    $ 2    $ (1 ) $ 20
Other
74    3    2    —    —    79
Total
$ 76    $ (8 ) $ 30    $ 2    $ (1 ) $ 99

   For the Nine Months Ended September 30, 2009
      Total Gains/(Losses)—
Realized and Unrealized
(Millions of Dollars) Beginning
Balance as of
January 1, 2009 Included in
Earnings Included in Regulatory
Assets and Liabilities Purchases,
Issuances, Sales
and Settlements Transfer
In/Out of
Level 3 Ending
Balance as of
September 30, 2009
Con Edison

Derivatives:

Energy
$ (50 ) $ (213 ) $ 5    $ 202    $ (1 ) $ (57 )
Financial & other
(15 ) —    3    —    —    (12 )
Other
73    6    9    —    —    88
Total
$ 8    $ (207 ) $ 17    $ 202    $ (1 ) $ 19
Con Edison of New York

Derivatives:

Energy
$ 1    $ (17 ) $ 13    $ 24    $ (1 ) $ 20
Other
65    6    8    —    —    79
Total
$ 66    $ (11 ) $ 21    $ 24    $ (1 ) $ 99

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 commissions. See Note A to the financial statements in Item 8 of the Form 10-K. Unrealized gains and losses for commodity derivatives are generally deferred on the consolidated balance sheet in accordance with the accounting rules for regulated operations.

For the competitive energy businesses, realized and unrealized gains and losses on Level 3 commodity derivative assets and liabilities are reported in non-utility revenues ($142 million ~~gain~~loss and ~~$68~~$60 million ~~loss)~~gain) and purchased power costs ($33 million loss and immaterial) on the consolidated income statement for the three months ended September 30, 2010 and 2009, respectively. Realized and unrealized gains and losses on Level 3 commodity derivative assets and liabilities are reported in non-utility revenues ($4741 million gain and ~~$121 million loss) and purchased power costs ($73 million loss and $2 million loss) on the consolidated income statement for the nine months ended September 30, 2010 and 2009, respectively. The~~


36

~~change in fair value relating to Level 3 commodity derivative assets and liabilities held at September 30, 2010 is included in non-utility revenues ($3 million loss) and purchased power costs ($22~~$89 million loss) on the consolidated income statement for the three months ended ~~September 30, 2010. For the three months ended September 30, 2009, the change in fair value relating to Level 3 commodity derivative assets~~March 31, 2011 and ~~liabilities included in non-utility revenues was a $15 million loss and was immaterial in purchased power costs.~~2010, respectively. The change in fair value relating to Level 3 commodity derivative assets ~~and liabilities~~ held at ~~September 30,~~March 31, 2011 and 2010 is included in non-utility revenues ($212 million ~~loss)~~loss and $46 million gain), and purchased power costs ($29 million loss) on the consolidated income statement for the nine months ended September 30, 2010. For the nine months ended September 30, 2009, the change in fair value relating to Level 3 commodity derivative assetsgain and ~~liabilities included in non-utility revenues was a $15~~$71 million ~~loss and was immaterial in purchased power costs.~~

For the Utilities, realized and unrealized gains and losses on Level 3 other assets and liabilities were immaterial for the three months ended September 30, 2010 and a $3 million gain, which is reported in investment and other incomeloss) on the consolidated income statement for the three months ended ~~September 30, 2009. Realized~~March 31, 2011 and ~~unrealized gains~~2010, respectively.

The accounting rules for fair value measurements and ~~losses on Level 3 other~~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 were immaterial for~~liabilities. At March 31, 2011, the ~~nine months ended September 30, 2010~~Companies determined that nonperformance risk would have no material impact on their financial position or results of operations. To assess nonperformance risk, the Companies considered information such as collateral requirements, master netting arrangements, letters of credit and parent company guarantees, and applied a ~~$6 million gain, which is reported in investment and other income on~~market-based method by using the ~~consolidated income statement for~~counterparty’s (for an asset) or the ~~nine months ended September 30, 2009.~~Companies’ (for a liability) credit default swaps rates.

~~Note M — Variable Interest Entities~~

Reference is made to Notes Q and T to the financial statements in Item 8 of the Form 10-K and Note L to the financial statements in Part I, Item 1 of the First Quarter Form 10-Q and Second Quarter Form 10-Q.

~~Note N — New Financial Accounting Standards~~

Reference is made to Note T to the financial statements in Item 8 of the Form 10-K and Note M to the financial statements in Part I, Item 1 of the First Quarter Form 10-Q and Second Quarter Form 10-Q.


					3731

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~~First 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) and should be read in conjunction with the financial statements and the notes thereto. 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 MD&A about CECONY applies to Con Edison.

This MD&A should be read in conjunction with the ~~Third~~First 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, ~~2009~~2010 (File Nos. 1-14514 and 1-1217, the Form 10-K) and the MD&A in Part 1, Item 2 of the Companies’ combined Quarterly Reports on Form 10-Q for the quarterly periods ended March 31, 2010 and June 30, 2010 (File Nos. 1-14514 and 1-1217, the First Quarter Form 10-Q and the Second Quarter Form 10-Q, respectively).

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.

~~Overview~~

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

LOGO

CECONY’s principal business operations are its regulated electric, gas and steam delivery businesses. O&R’s principal business operations are its regulated electric and gas delivery businesses. The competitive energy businesses sell electricity to wholesale and retail customers, provide certain energy-related services, and participate in energy infrastructure projects. Con Edison is evaluating additional opportunities to invest in electric and gas-related businesses.

Con Edison’s strategy is to provide reliable energy services, maintain public and employee safety, promote energy efficiency, and develop cost-effective ways of performing its business. Con Edison seeks to be a responsible steward of the environment and enhance its relationships with customers, regulators and members of the communities it serves.


3832

CECONY

Electric

CECONY provides electric service to approximately 3.3 million customers in all of New York City (except part of Queens) and most of Westchester County, an approximately 660 square mile service area with a population of more than nine million.

Gas

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

Steam

CECONY operates the largest steam distribution system in the United States by producing ~~purchasing~~ and delivering more than 23,000 MMlbs of steam annually to approximately 1,760 customers in parts of Manhattan.

~~Orange and Rockland~~O&R

Electric

O&R and its utility subsidiaries, Rockland Electric Company (RECO) and Pike County Power & Light Company (Pike) (together referred to herein as O&R) provide electric service to approximately 0.3 million customers in southeastern New York and in adjacent areas of northern New Jersey and northeastern Pennsylvania, an approximately 1,350 square mile service area.

Gas

O&R delivers gas to over 0.1 million customers in southeastern New York and adjacent areas of northeastern Pennsylvania.

Competitive Energy Businesses

Con Edison pursues competitive energy opportunities through three wholly-owned subsidiaries: Con Edison Solutions, Con Edison Energy and Con Edison Development. These businesses include the sales and related hedging of electricity to wholesale and retail customers, sales of certain energy-related products and services, and participation in energy infrastructure projects. At ~~September 30, 2010,~~March 31, 2011, Con Edison’s equity investment in its competitive energy businesses was ~~$290~~$361 million and their assets amounted to ~~$880~~$841 million.

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


	Three Months Ended September 30, 2010										Nine Months Ended September 30, 2010										At September 30, 2010				Three months ended March 31, 2011										At March 31, 2011
*(Millions of Dollars)*	Operating Revenues					Net Income for Common Stock					Operating Revenues					Net Income for Common Stock					Assets
Con Edison of New York	$	2,865		78	%	$	332		95	%	$	8,015		79	%	$	709		93	%	$	31,896	90	%
*(Millions of Dollars, except percentages)*																									Operating Revenues					Net Income for Common Stock					Assets
CECONY																									$	2,709		81	%	$	268		86	%	$	32,396	90	%
O&R		270		7	%		25		7	%		709		7	%		42		6	%		2,247	6	%		241		7	%		19		6	%		2,318	6	%
Total Utilities		3,135		85	%		357		102	%		8,724		86	%		751		99	%		34,143	96	%		2,950		88	%		287		92	%		34,714	96	%
Con Edison Solutions (a)																										344		10	%		27		9	%		280	1	%
Con Edison Energy (a)																										66		2	%		—		—	%		77	—	%
Con Edison Development		1		—	%		1		—	%		1		—	%		—		—	%		462	1	%		1		—	%		—		—	%		484	1	%
Con Edison Energy(a)		122		3	%		3		1	%		332		3	%		10		1	%		138	1	%
Con Edison Solutions(a)		464		13	%		(7	)	(2	)%		1,164		11	%		8		1	%		280	1	%
Other(b)		(15	)	(1	)%		(4	)	(1	)%		(36	)	—	%		(10	)	(1	)%		429	1	%		(12	)	—	%		(3	)	(1	)%		631	2	%
Total Con Edison	$	3,707		100	%	$	350		100	%	$	10,185		100	%	$	759		100	%	$	35,452	100	%	$	3,349		100	%	$	311		100	%	$	36,186	100	%

(a)

Net income from the competitive energy businesses for the three months ended ~~September 30, 2010~~March 31, 2011 includes ~~$(22)~~$22 million of net after-tax mark-to-market ~~gains/(losses)~~gains (Con Edison ~~Energy, $1~~Solutions, $20 million and Con Edison Solutions, $(23) million). Net income from the competitive energy businesses for the nine months ended September 30, 2010 includes $(21) million of net after-tax mark-to-market gains/(losses) (Con Edison Energy, ~~$12 million and Con Edison Solutions, $(33)~~$2 million).

(b)	Represents inter-company and parent company accounting. See “Results of Operations,” below.

Con Edison’s net income for common stock for the three months ended ~~September 30, 2010~~March 31, 2011 was ~~$350~~$311 million or ~~$1.24~~$1.07 a share ($1.06 on a diluted basis) compared with ~~earnings of $336~~$226 million or ~~$1.22~~$0.80 a share (basic and diluted basis) for the three months ended September 30, 2009. Con Edison’s net income for common stock for the nine months ended September 30, 2010 was $759 million or $2.69 a share compared with earnings of $666 million or $2.43 a share for the nine months ended September 30, 2009.March 31, 2010. See “Results of Operations – Summary,” below. For segment financial information, see Note H to the First Quarter Financial Statements and “Results of Operations,” below.


					3933

Results of Operations — Summary

Net income for common stock for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2011 and 2010 ~~and 2009~~ was as follows:


	Three Months Ended September 30,						Nine Months Ended September 30,
*(Millions of Dollars)*	2010			2009			2010			2009			2011			2010
Con Edison of New York	$	332		$	282		$	709		$	615
CECONY													$	268		$	243
O&R		25			19			42			34			19			13
Competitive energy businesses(a)		(3	)		38			18			27			27			(28	)
Other(b)		(4	)		(3	)		(10	)		(10	)		(3	)		(2	)
CON EDISON	$	350		$	336		$	759		$	666
Con Edison													$	311		$	226

(a)

Includes ~~$(22)~~$22 million and ~~$17~~$(38) million of net after-tax mark-to-market gains/(losses) ~~for~~in the three months ended ~~September 30,~~March 31, 2011 and 2010, ~~and 2009, respectively. Includes $(21) million and $1 million of net after-tax mark-to-market gains/(losses) for the nine months ended September 30, 2010 and 2009,~~ respectively.

(b)	~~Represents~~Consists of inter-company and parent company accounting. ~~See “Results of Operations,” below.~~

The Companies’ results of operations for the three ~~and nine~~ months ended ~~September 30, 2010,~~March 31, 2011, as compared with the ~~2009~~2010 period, reflect changes in the Utilities’ rate plans. These rate plans ~~include an increase in the allowed electric return on common equity for CECONY. The rate plans~~ provide for additional revenues to cover expected increases ~~discussed below,~~ in certain operations and maintenance expenses and depreciation and property ~~taxes and interest charges.~~taxes. The results of operations include the operating results of the competitive energy businesses, including net mark-to-market effects.

~~The increases in operations~~Operations and maintenance expenses ~~reflect higher~~were lower in the three months ended March 31, 2011 compared with the 2010 period reflecting lower costs for employee health insurance, demand ~~side~~ management programs ~~in the 2010 periods,~~and savings from cost control efforts, offset in part by ~~savings~~winter storm related emergency response costs and higher regulatory assessments in ~~certain operating expenses through cost control efforts. The increase in operations and maintenance expense for~~ the nine months ended September 30, 2010 also reflects higher costs for pension and other post-retirement benefits. The increases also reflect higher New York State assessments that are collected from customers.2011 period. Depreciation and property taxes were higher in the ~~2010 periods~~2011 period reflecting primarily the impact from higher utility plant balances.

The following table presents the estimated effect on earnings per share and net income for common stock for the ~~2010 period~~three months ended March 31, 2011 as compared with the ~~2009~~2010 period, resulting from these and other major factors:

Three Months Ended Variation
2010 vs. 2009

Nine Months Ended Variation
2010 vs. 2009


Earnings
per Share
Variation

Net Income for
Common Stock
Variation
(Millions of Dollars)

Earnings
per Share
Variation

Net Income for
Common Stock
Variation
(Millions of Dollars)

CECONY(a)

Rate plans, primarily to recover increases in certain costs
$ 0.39    $ 108    $ 1.12    $ 311
Operations and maintenance expense
(0.14 ) (38 ) (0.49 ) (135 )
Depreciation and property taxes
(0.05 ) (13 ) (0.30 ) (83 )
Net interest expense
0.01    3    —    —
Other (includes dilutive effect of new stock issuances)
(0.07 ) (10 ) (0.06 ) 1
Total CECONY
0.14    50    0.27    94
Orange and Rockland Utilities (O&R)
0.02    5    0.03    9
Competitive energy businesses

Earnings excluding net mark-to-market effects
—    (2 ) 0.04    12
Net mark-to-market effects(b)
(0.14 ) (39 ) (0.08 ) (22 )
Total competitive energy businesses
(0.14 ) (41 ) (0.04 ) (10 )
Other, including parent company expenses
—    —    —    —
Total variation
$ 0.02    $ 14    $ 0.26    $ 93

~~(a)~~

Under the revenue decoupling mechanisms in CECONY’s electric and gas rate plans and the weather-normalization clause applicable to the gas business, revenues are generally not affected by changes in delivery volumes from levels assumed when rates were approved. Under CECONY’s rate plans, pension and other postretirement costs and certain other costs are reconciled to amounts reflected in rates for such costs.

~~(b)~~

For the three months ended September 30th, these variations reflect after-tax net mark-to-market losses of $(22) million or $(0.08) a share in 2010 and after-tax net mark-to-market gains of $17 million or $0.06 a share in 2009. For the nine months ended September 30th, the variations reflect after-tax net mark-to-market losses of $(21) million in 2010 or $(0.08) a share, and after-tax net mark-to-market gain of $1 million or $0.00 a share in 2009.


40


	Earnings per Share			Net Income for Common Stock (Millions of Dollars)
CECONY
Rate plans, primarily to recover increases in certain costs	$	0.18		$	51
Operations and maintenance expense		0.02			7
Depreciation, property taxes and other tax matters		(0.10	)		(29	)
Net interest expense		0.01			4
Other (includes dilutive effect of new stock issuances)		(0.05	)		(8	)
Total CECONY		0.06			25
O&R		0.02			6
Competitive energy businesses
Earnings excluding net mark-to-market effects		(0.02	)		(5	)
Net mark-to-market effects		0.21			60
Total competitive energy businesses		0.19			55
Other, including parent company expenses		—			(1	)
Total variations	$	0.27		$	85

See “Results of Operations” below for further discussion and analysis of results of operations.

Risk Factors

The Companies’ businesses are influenced by many factors that are difficult to predict, and that involve uncertainties that may materially affect actual operating results, cash flows and financial condition. ~~The factors include those described under~~See “Risk Factors” in Item 1A of the Form 10-K.


34

Application of Critical Accounting Policies

The Companies’ financial statements reflect the application of their accounting policies, which conform to accounting principles generally accepted in the United States of America. The Companies’ critical accounting policies include industry-specific accounting applicable to regulated public utilities and accounting for pensions and other postretirement benefits, contingencies, long-lived assets, derivative instruments,

goodwill and leases. See “Application of Critical Accounting Policies” in Item 7 of the Form 10-K.

Liquidity and Capital Resources

The Companies’ liquidity reflects cash flows from operating, investing and financing activities, as shown on their respective consolidated statement of cash flows and as discussed below. See “Liquidity and Capital Resources” in Item 7 of the Form 10-K.

Changes in the Companies’ cash and temporary cash investments resulting from operating, investing and financing activities for the ~~nine~~three months ended ~~September 30,~~March 31, 2011 and 2010 ~~and 2009~~ are summarized as follows:

Con Edison

   Con Edison CECONY
(Millions of Dollars) 2010 2009 Variance 2010 2009 Variance
Operating activities
$ 971    $ 1,469    $ (498 ) $ 938    $ 1,326    $ (388 )
Investing activities
(1,563 ) (1,646 ) 83    (1,461 ) (1,456 ) (5 )
Financing activities
530    178    352    427    147    280
Net change
(62 ) 1    (63 ) (96 ) 17    (113 )
Balance at beginning of period
260    74    186    131    37    94
Balance at end of period
$ 198    $ 75    $ 123    $ 35    $ 54    $ (19 )


*(Millions of Dollars)*	2011			2010			Variance
Operating activities	$	362		$	1		$	361
Investing activities		(496	)		(460	)		(36	)
Financing activities		312			286			26
Net change		178			(173	)		351
Balance at beginning of period		338			260			78
Balance at end of period	$	516		$	87		$	429

CECONY


*(Millions of Dollars)*	2011			2010			Variance
Operating activities	$	72		$	22		$	50
Investing activities		(413	)		(441	)		28
Financing activities		291			317			(26	)
Net change		(50	)		(102	)		52
Balance at beginning of period		78			131			(53	)
Balance at end of period	$	28		$	29		$	(1	)

Cash Flows from Operating Activities

The Utilities’ cash flows from operating activities reflect principally their energy sales and deliveries and cost of operations. The volume of energy sales and deliveries is dependent primarily on factors external to the Utilities, such as growth of customer demand, weather, market prices for energy, economic conditions and ~~economic conditions.~~measures that promote energy efficiency. Under the revenue decoupling mechanisms in ~~the Utilities’~~CECONY’s electric and gas rate plans inand O&R’s New York electric and gas rate plans, changes in delivery volumes from levels assumed when rates were approved may affect the timing of cash flows but not net income. See Note B to the financial statements in Item 8 of the Form 10-K. The prices at which the Utilities provide energy to their customers are determined in accordance with their rate agreements. 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 agreements. See “Recoverable Energy Costs” in Note A to the financial statements in Item 8 of the Form 10-K.

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 include depreciation, deferred income tax expense and net derivative losses. ~~Principal non-cash credits include amortizations of certain net regulatory liabilities and net derivative gains.~~ Non-cash charges or credits may also be accrued under the revenue decoupling and cost reconciliation mechanisms in the Utilities’ electric and gas rate plans in New York. See “Rate Agreements” in Note B to the financial statements in Item 8 of the Form 10-K.

Net cash flows from operating activities for the nine months ended September 30, 2010 for Con Edison and CECONY were $498 million and $388 million lower, respectively, than in the 2009 period. The decreases in


					4135

net cash flows reflect the January 2010 semi-annual payment of CECONY’s New York City property taxes. A comparable semi-annual payment was not made in January 2009 because the company paid its 2008-2009New York Cityfiscal yearproperty taxes in July 2008. Net cash flows from operating activities for the ~~2010 period, compared to the 2009 period, included increased estimated income tax payments by~~three months ended March 31, 2011 for Con Edison and CECONY ~~of $280~~were $361 million and ~~$246~~$50 million higher, respectively, ~~reflecting, among other things,~~than in the ~~expiration~~2010 period. For Con Edison, this increase reflects primarily the receipt of refunds in 2011, at the ~~bonus depreciation provisions of the American Recovery and Reinvestment Act of 2009. The Companies’ 2010~~parent company, for estimated federal income tax payments ~~do notreflect~~made in 2010 by the ~~acceleration in~~company prior to the ~~timing of deduction of certain repairs~~determination that the company had no current federal income tax liability for 2010. For Con Edison, this increase also reflects lower cash collateral paid to ~~utility plant or the bonus depreciation provisions of the Small Business Jobs Act of 2010 (which was signed into law in September 2010). See “Other Changes in Assets~~brokers and ~~Liabilities – Other Receivables, Prepayments and Deferred Income Taxes” below).~~counterparties generally reflecting higher commodity prices for derivative transactions.

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

Cash Flows Used in Investing Activities

Net cash flows used in investing activities for ~~the nine months ended September 30, 2010 for~~ Con Edison and CECONY were ~~$83~~$36 million higher and $28 million lower, ~~and $5 million higher,~~ respectively, ~~than in~~for the ~~2009~~three months ended March 31, 2011 compared with the 2010 period. The ~~change~~increase for Con Edison reflects primarily ~~decreased construction expenditures in 2010. The lower net cash flows used in investing activities~~a loan to an affiliate for ~~CECONY were~~a solar project offset in part by ~~the repayment of loans by O&R to CECONY~~lower construction expenditures in the ~~2009~~2011 period. ~~See Note S to~~The decrease for CECONY reflects primarily lower construction expenditures in the ~~financial statements in Item 8 of the Form 10-K.~~2011 period.

Cash Flows from Financing Activities

Net cash flows from financing activities for Con Edison increased $26 million in the ~~nine~~three months ended ~~September 30,~~March 31, 2011 compared with the 2010 ~~for Con Edison and CECONY were $352 million and $280 million higher, respectively, than in the 2009~~ period.

Net cash flows from financing activities ~~during~~for CECONY decreased $26 million in the ~~nine~~three months ended ~~September 30,~~March 31, 2011 compared with the 2010 ~~and 2009 reflect the following CECONY transactions:~~period.

~~2010~~

~~Issued $350 million 4.45 percent 10-year debentures and $350 million 5.70 percent 30-year debentures; and~~

~~Redeemed at maturity $325 million 8.125 percent 10-year debentures and $300 million 7.50 percent 10-year debentures.~~

~~2009~~

~~Issued $275 million 5.55 percent 5-year debentures and $475 million 6.65 percent 10-year debentures; and~~

~~Redeemed at maturity $275 million 4.70 percent 5-year debentures.~~

~~Con Edison’s net cash~~Cash flows from financing activities for the ~~nine~~three months ended ~~September 30,~~March 31, 2011 and 2010 ~~also~~ reflect the ~~following O&R transactions:~~

~~Issued $55~~issuance of Con Edison common shares through its dividend reinvestment and employee stock plans (2011: 0.7 million ~~2.50 percent 5-year debentures~~shares for $25 million, 2010: 0.6 million shares for $14 million). In addition, as a result of the stock plan issuances, cash used to pay common stock dividends was reduced by $3 million and ~~$115~~$12 million ~~5.50 percent 30-year debentures;~~

~~Redeemed~~ in ~~advance of maturity $45 million 7.00 percent 30-year debentures that were due in 2029;~~

~~Purchased~~the 2011 and ~~cancelled $55 million variable rate, tax-exempt debt that was due in 2014; and~~2010 periods, respectively.

~~Redeemed at maturity $55 million 7.50 percent 10-year debentures.~~

Cash flows from financing activities of the Companies also reflect commercial paper issuance (included on the consolidated balance sheets as “Notes payable”). The commercial paper amounts outstanding at ~~September 30,~~March 31, 2011 and March 31, 2010 ~~and September 30, 2009~~ and the average daily balances for the ~~nine~~three months ended ~~September 30,~~March 31, 2011 and 2010 ~~and 2009~~ for Con Edison and CECONY were as follows:

   2010 2009
(Millions of Dollars, except
Weighted Average Yield) Outstanding at
September 30 YTD
average Outstanding at
September 30 YTD
average
Con Edison
$ 846    $ 429    $ 509    $ 276
CECONY
$ 832    $ 408    $ 427    $ 150
Weighted average yield
0.4 % 0.4 % 0.3 % 0.4 %


42

Cash flows from financing activities for the nine months ended September 30, 2010 and 2009 also reflect the issuance of Con Edison common shares through its dividend reinvestment and employee stock plans (2010: 2,691,293 shares for $78 million, 2009: 1,637,490 shares for $25 million). In addition, as a result of the stock plan issuances, cash used to pay common stock dividends was reduced by $36 million in both periods.

~~In October 2010, Con Edison issued 6.3 million common shares resulting in net proceeds of $305 million, the proceeds of which were invested by Con Edison in CECONY.~~


	2011						2010
(Millions of Dollars, except Weighted Average Yield)	Outstanding at March 31			Daily average			Outstanding at March 31			Daily average
Con Edison	$	464		$	140		$	475		$	297
CECONY	$	464		$	140		$	475		$	296
Weighted average yield		0.3	%		0.3	%		0.3	%		0.3	%

Common stock issuances and external borrowings are sources of liquidity that could be affected by changes in credit ratings, financial performance and capital market conditions. ~~For information about the Companies’ credit ratings and certain financial ratios, see “Capital Requirements and Resources – Capital Resources” in Item 1 of the Form 10-K.~~


36

Other Changes in Assets and Liabilities

The following table shows changes in certain assets and liabilities at ~~September 30, 2010,~~March 31, 2011, compared with December 31, ~~2009.~~2010.


	Con Edison			CECONY			Con Edison			CECONY
*(Millions of Dollars)*	2010 vs. 2009 Variance			2010 vs. 2009 Variance			2011 vs. 2010 Variance			2011 vs. 2010 Variance
Assets
Other receivables	$	124		$	(57	)
Accounts receivable from affiliated companies		—			358
Prepayments		473			309		$	217		$	291
Regulatory assets – current		104			114
Regulatory asset – unrecognized pension and other post-retirement benefit costs		(471	)		(440	)
Regulatory asset – Unrecognized pension and other postretirement costs								(297	)		(279	)
Accrued unbilled revenue								(220	)		(185	)

Liabilities
Deferred income taxes and investment tax credits								269			238
Pension and retiree benefits		(537	)		(493	)		(628	)		(620	)
Deferred income tax and investment tax credits		620			585
Regulatory liability – Net unbilled revenue								(103	)		(103	)

~~Other Receivables,~~ Prepayments and Deferred Income Taxes

The increase in other receivables (for CECONY, accounts receivable from affiliated companies) reflects an increase in estimated federal income tax refunds receivable, reflecting among other things, the acceleration in the timing of deduction of certain repairs to utility plant and ~~the bonus depreciation provisions of the American Recovery and Reinvestment Act of 2009. See Note I to the Third Quarter Financial Statements.~~Investment Tax Credits

The increase in prepayments for Con Edison and CECONY, reflects ~~the portion allocable to the 2010 fourth quarter of the $597 million July 2010 semi-annual~~primarily CECONY’s January 2011 payment of its New York City semi-annual property ~~taxes. The~~taxes, offset by three months of amortization, while the December 2010 balance reflects a full amortization of the previous semi-annual prepayment. For Con Edison, this increase ~~also reflects $183 million~~is offset by the receipt of refunds in 2011 for estimated federal income tax payments made in 2010 by the company prior to the determination that the ~~Companies made which are~~company had no ~~longer expected to be required for payment of the Companies’ 2010 federal income tax liability. The Companies expect a lower than previously forecasted 2010~~current federal income tax liability as a result of the bonus depreciation provisions of the Small Business Jobs Act of 2010 (which was signed into law in September 2010) that permit the deduction of an incremental 50 percent of qualifying 2010 capital expenditures.for 2010. See “Cash Flows from Operating Activities,” above.

The increase in the liability for deferred income taxes ~~reflects these federal income~~and investment tax ~~developments.~~

~~Regulatory Assets – Current~~

~~The increase in regulatory assets – current~~credits reflects an increase in deferred derivative losses – current ($127 million for Con Edison and $114 million for CECONY) reflecting primarily the impact of the maturity of certain contract positions, which were outstanding at December 31, 2009 and the timing of ~~entering into new positions~~the deduction of expenditures for utility plant which resulted in ~~2010, offset~~amounts being collected from customers to pay income taxes in ~~part by a~~advance of when the income tax payments will be required. See “Cash Flows from Operating Activities,” above.


					43Accrued Unbilled Revenues/Net Unbilled Revenues

The decrease in accrued unbilled revenues and the ~~recoverable energy costs – current~~regulatory liability for ~~O&R. See “Regulatory Assets and Liabilities”~~net unbilled revenues reflects primarily the colder weather in ~~Note B to the Third Quarter Financial Statements.~~December 2010 compared with March 2011.

Regulatory Asset for Unrecognized Pension and Other ~~Post-Retirement Benefit~~Postretirement Costs and ~~Non-Current~~Noncurrent Liability for Pension and Retiree Benefits

The decreases in the regulatory asset for unrecognized pension and other ~~post-retirement~~postretirement benefit costs and the ~~non-current~~noncurrent liability for pension and retiree benefits ~~reflects~~reflect the final actuarial valuation of the underfunding of the pension and other retiree benefit plans as measured at December 31, ~~2009~~2010, in accordance with the accounting rules for pensions and the ~~year-to-date~~year’s amortization of accounting costs. The decrease in the ~~non-current~~noncurrent liability for pension and retiree benefits also reflects the contributions to the pension plan made by CECONY in ~~the first nine months of the year.~~2011. See Notes B, E and F to the ~~financial statements in Item 8 of the Form 10-K and Note E to the Third~~First Quarter Financial Statements.

Capital Requirements and Resources

At ~~September 30, 2010,~~March 31, 2011, there was no material change in the Companies’ capital requirements and resources compared to those disclosed under “Capital Requirements and Resources – Capital ~~Requirements” and “Capital Requirement and Resources – Capital~~ Resources” in Item 1 of the Form 10-K, other than as described ~~below and in Note C to the Third Quarter Financial Statements.~~below.

Con Edison expects that its actual construction expenditures for 2010 will be approximately $160 million (including $85 million for CECONY) less than estimated under “Capital Requirements” in Item 1 of the Form 10-K. The Companies expect to realize tax benefits of approximately $500 million over the next few months that will result in more than previously anticipated cash flows from operating activities. These tax benefits reflect, among other things, theacceleration of the timing of the deduction for income tax purposes of certain repairs to utility plant and bonus depreciation provisions of both the American Recovery and Reinvestment Act of 2009 and the Small Business Jobs Act of 2010 (see “Other Changes in Assets and Liabilities – Other Receivables, Prepayments and Deferred Income Taxes,” above). The Utilities do not anticipate the need to issue any additional long-term debt to fund their capital requirements for the remainder of 2010. CECONY is considering issuing additional long-term debt to refund certain outstanding securities.

CECONY is in the process of reviewing its capital requirements for 2011 and 2012 and expects to defer certain projects which had estimated construction expenditures of $75 million and $200 million in 2011 and 2012, respectively. CECONY expects that its construction expenditures for 2011 and 2012 will decrease from the amounts estimated under “Capital Requirements” in Item 1 of the Form 10-K.

~~In October 2010, Fitch reduced its rating of O&R’s senior unsecured debt from A to A-. See “Capital Requirements and Resources – Capital Resources” in Item 1 of the Form 10-K.~~


					37

For each of the Companies, the ratio of earnings to fixed charges (Securities and Exchange Commission basis) for the ~~nine~~three months ended ~~September 30,~~March 31, 2011 and 2010 and ~~2009 and~~ the 12twelve months ended December 31, ~~2009~~2010 was:

   Earnings to Fixed Charges (Times)
   For the Nine Months
Ended September 30, 2010 For the Nine Months
Ended September 30, 2009 For the Twelve Months
Ended December 31, 2009
Con Edison
3.4    3.1    3.0
CECONY
3.6    3.2    3.1


	Earnings to Fixed Charges (Times)
	For the Three Months Ended March 31, 2011		For the Three Months Ended March 31, 2010		For the Twelve Months Ended December 31, 2010
Con Edison		3.9		3.1		3.3
CECONY		3.9		3.7		3.4

For each of the Companies, the common equity ratio at ~~September 30, 2010~~March 31, 2011 and December 31, ~~2009~~2010 was:

Common Equity Ratio
(Percent of total capitalization)

   September 30,
2010 December 31,
2009
Con Edison
49.4    50.5
CECONY
49.1    50.3


	Common Equity Ratio (Percent of total capitalization)
	March 31, 2011		December 31, 2010
Con Edison		50.8		50.4
CECONY		50.2		49.9

Contractual Obligations

At ~~September 30, 2010,~~March 31, 2011, there were no material changes in the Companies’ aggregate obligation to make payments pursuant to contracts compared to those discussed under “Capital Requirements and Resources ~~– Contractual~~–Contractual Obligations” ~~in Item 1 of the Form 10-K.~~


44

~~Electric Power Requirements~~

~~At September 30, 2010, there were no material changes in the Companies’ electric power requirements compared to those disclosed under “Electric Operations – Electric Supply”~~ in Item 1 of the Form 10-K.

Regulatory Matters

~~At September 30, 2010, there were no material changes in~~For Information about the ~~Companies’~~Utilities’ rate plans and other regulatory matters ~~compared to those disclosed under~~affecting the Companies, see “Utility Regulation” in Item 1 of the Form 10-K and “Rate Agreements” in Note B to the financial statements in Item 8 of the Form 10-K ~~other than as described in~~and Note B to the ~~Third~~First Quarter Financial Statements.

Financial and Commodity Market Risks

The Companies are subject to various risks and uncertainties associated with financial and commodity markets. The most significant market risks include interest rate risk, commodity price risk, credit risk and investment risk. At ~~September 30, 2010,~~March 31, 2011, there were no material changes in the Companies’ financial and commodity market risks compared to those discussed under “Financial and Commodity Market Risks” in Item 7 of the Form 10-K, other than as described below and in Note KI to the ~~Third~~First Quarter Financial Statements.

Commodity Price Risk

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

Con Edison estimates that, as of ~~September 30, 2010,~~March 31, 2011, a 10 percent decline in market prices would result in a decline in fair value of ~~$96~~$107 million for the derivative instruments used by the Utilities to hedge purchases of electricity and gas, of which ~~$74~~$88 million is for CECONY and ~~$22~~$19 million is for O&R. Con Edison expects that any such change in fair value would be largely offset by directionally opposite changes in the cost of the electricity and gas purchased. In accordance with provisions approved by state regulators, the Utilities generally recover from customers the costs they incur for energy purchased for their customers, including gains and losses on certain derivative instruments used to hedge energy purchased and related costs. See “Recoverable Energy Costs” in Note A to the financial statements in Item 8 of the Form 10-K.

Con Edison’s competitive energy businesses use a value-at-risk (VaR) model to assess the market risk of their electricity and gas commodity fixed-price purchase and sales commitments, physical forward contracts and commodity derivative instruments. VaR represents the potential change in fair value of instruments or the portfolio due to changes in market factors, for a specified time period and confidence level. These businesses estimate VaR across their electricity and natural gas commodity businesses using a delta-normal variance/covariance model with a 95 percent confidence level. 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 transactions associated with hedges on generating assets and commodity contracts, assuming a one-day holding


38

period, for the ~~nine~~three months ended ~~September 30, 2010~~March 31, 2011 and the year ended December 31, ~~2009,~~2010 was as follows:


	September 30, 2010		December 31, 2009		March 31, 2011		December 31, 2010
	*(Millions of Dollars)*				*(Millions of Dollars)*
95% Confidence Level, One-Day Holding Period
Average for the period		1		1	$	1	$	1
High		1		2		1		1
Low		—		—		—		—

Credit Risk

The Companies are exposed to credit risk related to transactions entered into primarily for the various energy supply and hedging activities by the Utilities and the competitive energy businesses. 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 and 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


					45

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 of setoff. See “Credit Exposure” in Note KI to the ~~Third~~First Quarter Financial Statements.

Environmental Matters

For information concerning climate change, environmental sustainability, potential liabilities arising from laws and regulations protecting the environment and other environmental matters, see “Environmental Matters” in Item 1 of the Form 10-K and Notes GF and HG to the ~~Third~~First Quarter Financial Statements.

Impact of Inflation

The Companies are affected by the decline in the purchasing power of the dollar caused by inflation. Regulation permits the Utilities to recover through depreciation only the historical cost of their plant assets even though in an inflationary economy the cost to replace the assets upon their retirement will substantially exceed historical costs. The impact is, however, partially offset by the repayment of the Companies’ long-term debt in dollars of lesser value than the dollars originally borrowed.

Material Contingencies

For information concerning potential liabilities arising from the Companies’ material contingencies, see “Application of Critical Accounting Policies – Accounting for Contingencies,” in Item 7 of the Form 10-K and Notes B, G and H to the ~~Third~~First Quarter Financial Statements.

Results of Operations

See “Results of Operations – Summary,” above.

Results of operations reflect, among other things, the Companies’ accounting policies (see “Application of Critical Accounting ~~Policies”~~Policies,” in Item 7 of the Form 10-K) and rate plans that ~~cover~~limit the rates the Utilities can charge their customers (see “Utility Regulation” in Item 1 of the Form 10-K). Under the revenue decoupling mechanisms currently applicable to ~~the Utilities’~~CECONY’s electric and gas businesses and O&R’s electric and gas businesses in New York, the Utilities’ delivery revenues generally will ~~generally~~ not be affected by changes in delivery volumes from levels assumed when rates were approved. Revenues for CECONY’s steam business and O&R’s ~~other utility~~ businesses in New Jersey and Pennsylvania are affected by changes in delivery volumes resulting from weather, economic conditions and other factors. See Note B to the ~~Third~~First Quarter Financial Statements.

The results of operations for the three and nine months ended September 30, 2010, as compared with the 2009 period, reflect changes in the Utilities’ rate plans. These rate plans include an increase in the allowed electric return on common equity for CECONY. The rate plans provide for additional revenues to cover expected increases, discussed below, in certain operations and maintenance expenses, depreciation and property taxes and interest charges. The results of operations include the operating results of the competitive energy businesses, including net mark-to-market effects.

The increases in operations and maintenance expenses reflect higher costs for demand side management programs in the 2010 periods, offset in part by savings in certain operating expenses through cost control efforts. The increase in operations and maintenance expense for the nine months ended September 30, 2010 also reflects higher costs for pension and other post-retirement benefits. The increases also reflect higher New York State assessments that are collected from customers. Depreciation and property taxes were higher in the 2010 periods reflecting primarily the impact from higher utility plant balances. For additional information about major factors affecting earnings, see “Results of Operations – Summary,” above.

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 (see “Recoverable Energy Costs” in Note A and “Regulatory Matters” in Note B to the financial statements in Item 8 of the Form 10-K). Accordingly, such costs do not generally affect the Companies’ results of operations. Management uses the term “net revenues” (operating revenues less such costs) to identify changes in operating revenues that may affect the Companies’ results of operations. Management believes that, although “net revenues” may not be a measure determined in accordance with accounting ~~principles generally accepted in the United States of~~


46					39

principles generally accepted in the United States of America, the measure facilitates the analysis by management and investors of the Companies’ results of operations.

Con Edison’s principal business segments are CECONY’s regulated electric, gas and steam utility activities, O&R’s regulated electric and gas utility activities and Con Edison’s competitive energy businesses. CECONY’s principal business segments are its regulated electric, gas and steam utility activities. A discussion of the results of operations by principal business segment for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2011 and 2010 ~~and 2009~~ follows. For additional business segment financial information, see Note JH to the ~~Third~~First Quarter Financial Statements.

Three Months Ended ~~September 30, 2010~~March 31, 2011 Compared with Three Months Ended ~~September 30, 2009~~March 31, 2010

The Companies’ results of operations ~~(which were discussed above under “Results of Operations – Summary”)~~ in ~~2010~~2011 compared with ~~2009~~2010 were:


	CECONY						O&R						Competitive Energy Businesses and Other**						Con Edison*						CECONY						O&R						Competitive Energy Businesses and Other (a)						Con Edison (b)
*(Millions of Dollars)*	Increases (Decreases) Amount			Increases (Decreases) Percent			Increases (Decreases) Amount			Increases (Decreases) Percent			Increases (Decreases) Amount			Increases (Decreases) Percent			Increases (Decreases) Amount			Increases (Decreases) Percent			Increases (Decreases) Amount			Increases (Decreases) Percent			Increases (Decreases) Amount			Increases (Decreases) Percent			Increases (Decreases) Amount			Increases (Decreases) Percent			Increases (Decreases) Amount			Increases (Decreases) Percent
Operating revenues	$	210			7.9	%	$	35			14.9	%	$	(27	)		(4.5	)%	$	218			6.2	%	$	(9	)		(0.3	)%	$	(10	)		(4.0	)%	$	(94	)		(19.1	)%	$	(113	)		(3.3	)%
Purchased power		11			1.5			20			19.6			56			11.6			87			6.5			(69	)		(12.5	)		(18	)		(20.9	)		(191	)		(37.8	)		(278	)		(24.3	)
Fuel		22			26.5			N/A			N/A			1			Large			23			27.7			26			17.3			N/A			N/A			—			—			26			17.3
Gas purchased for resale		(13	)		(17.1	)		(3	)		(23.1	)		—			—			(16	)		(18.0	)		(31	)		(10.5	)		(5	)		(11.4	)		1			20.0			(35	)		(10.2	)
Operating revenues less purchased power, fuel and gas purchased for resale (net revenues)		190			10.9			18			15.0			(84	)		(72.4	)		124			6.3			65			3.8			13			10.7			96			Large			174			9.5
Other operations and maintenance		64			11.2			3			4.7			(5	)		(12.8	)		62			9.2			(11	)		(1.8	)		2			2.9			5			20.0			(4	)		(0.6	)
Depreciation and amortization		10			5.3			1			10.0			—			—			11			5.5			13			6.8			1			9.1			—			—			14			6.9
Taxes, other than income taxes		29			7.2			1			9.1			1			25.0			31			7.4			29			7.1			—			—			1			25.0			30			7.0
Operating income		87			15.0			13			37.1			(80	)		Large			20			2.9			34			6.6			10			35.7			90			Large			134			27.2
Other income less deductions		(2	)		(25.0	)		—			—			8			Large			6			Large			—			—			1			Large			—			—			1			12.5
Net interest expense		(2	)		(1.4	)		4			80.0			—			—			2			1.3			(1	)		(0.7	)		2			25.0			2			40.0			3			2.0
Income before income tax expense		87			19.6			9			29.0			(72	)		Large			24			4.5			35			9.2			9			45.0			88			Large			132			37.6
Income tax expense		37			23.3			3			25.0			(30	)		Large			10			5.1			10			7.4			3			42.9			34			Large			47			38.5
Net income for common stock	$	50			17.7	%	$	6			31.6	%	$	(42	)		Large		$	14			4.2	%	$	25			10.3	%	$	6			46.2	%	$	54			Large		$	85			37.6	%

*(a)	Includes inter-company and parent company accounting.

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

**	~~Includes inter-company and parent company accounting.~~

CECONY


	Three Months Ended September 30, 2010										Three Months Ended September 30, 2009													Three Months Ended March 31, 2011								Three Months Ended March 31, 2010
*(Millions of Dollars)*	Electric		Gas			Steam			2010 Total		Electric		Gas			Steam			2009 Total		2010-2009 Variation			Electric		Gas		Steam		2011 Total		Electric		Gas		Steam		2010 Total		2011-2010 Variation
Operating revenues	$	2,570	$	204		$	91		$	2,865	$	2,395	$	183		$	77		$	2,655	$	210		$	1,721	$	663	$	325	$	2,709	$	1,728	$	683	$	307	$	2,718	$	(9	)
Purchased power		753		—			11			764		744		—			9			753		11			464		—		19		483		529		—		23		552		(69	)
Fuel		75		—			30			105		57		—			26			83		22			76		—		100		176		60		—		90		150		26
Gas purchased for resale		—		63			—			63		—		76			—			76		(13	)		—		263		—		263		—		294		—		294		(31	)
Net revenues		1,742		141			50			1,933		1,594		107			42			1,743		190			1,181		400		206		1,787		1,139		389		194		1,722		65
Operations and maintenance		506		85			46			637		462		68			43			573		64			459		103		35		597		468		88		52		608		(11	)
Depreciation and amortization		156		26			16			198		149		24			15			188		10			161		27		16		204		151		25		15		191		13
Taxes, other than income taxes		365		46			21			432		342		43			18			403		29			344		66		30		440		325		61		25		411		29
Operating income	$	715	$	(16	)	$	(33	)	$	666	$	641	$	(28	)	$	(34	)	$	579	$	87		$	217	$	204	$	125	$	546	$	195	$	215	$	102	$	512	$	34


40					47

Electric

CECONY’s results of electric operations for the three months ended ~~September 30, 2010~~March 31, 2011 compared with the ~~2009~~2010 period ~~are~~is as follows:


	Three Months Ended						Three Months Ended
*(Millions of Dollars)*	September 30, 2010		September 30, 2009		Variation		March 31, 2011		March 31, 2010		Variation
Operating revenues	$	2,570	$	2,395	$	175	$	1,721	$	1,728	$	(7	)
Purchased power		753		744		9		464		529		(65	)
Fuel		75		57		18		76		60		16
Net revenues		1,742		1,594		148		1,181		1,139		42
Operations and maintenance		506		462		44		459		468		(9	)
Depreciation and amortization		156		149		7		161		151		10
Taxes, other than income taxes		365		342		23		344		325		19
Electric operating income	$	715	$	641	$	74	$	217	$	195	$	22

CECONY’s electric sales and deliveries, excluding off-system sales, for the three months ended ~~September 30, 2010~~March 31, 2011 compared with the ~~2009~~2010 period were:


	Millions of kWhs Delivered										Revenues in Millions											Millions of kWhs Delivered										Revenues in Millions
	Three Months Ended										Three Months Ended											Three Months Ended										Three Months Ended
Description	September 30, 2010		September 30, 2009		Variation			Percent Variation			September 30, 2010			September 30, 2009		Variation			Percent Variation			March 31, 2011		March 31, 2010		Variation			Percent Variation			March 31, 2011			March 31, 2010			Variation			Percent Variation
Residential/Religious*		3,774		3,356		418			12.5	%	$	1,020		$	818	$	202			24.7	%
Residential/Religious (a)																							2,664		2,671		(7	)		(0.3	)%	$	648		$	633		$	15			2.4	%
Commercial/Industrial		4,007		3,466		541			15.6			789			733		56			7.6			2,860		2,994		(134	)		(4.5	)		561			554			7			1.3
Retail access customers		6,822		6,162		660			10.7			652			592		60			10.1			5,558		5,385		173			3.2			474			468			6			1.3
NYPA, Municipal Agency and other sales		2,997		3,113		(116	)		(3.7	)		167			151		16			10.6			2,774		2,898		(124	)		(4.3	)		117			120			(3	)		(2.5	)
Other operating revenues		—		—		—			—			(58	)		101		(159	)		Large			—		—		—			—			(79	)		(47	)		(32	)		(68.1	)
Total		17,600		16,097		1,503			9.3	%	$	2,570		$	2,395	$	175			7.3	%		13,856		13,948		(92	)		(0.7	)%	$	1,721		$	1,728		$	(7	)		(0.4	)%

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

CECONY’s electric operating revenues ~~increased $175~~decreased $7 million ~~for~~in the three months ended ~~September 30, 2010~~March 31, 2011 compared with the ~~2009~~2010 period due primarily to ~~CECONY’s electric rate plan ($288 million), increased~~lower purchased power costs ($~~9 million) and fuel ($18~~65 million), offset in part by higher revenues from the electric rate plan ($50 million). The change in rate plan revenues reflects, among other things, reductions in revenues pursuant to the rate plan’s revenue decoupling mechanism ~~(reduction~~($28 million) and reconciliations of ~~$77 million of revenues in the 2010 period compared with increased revenues of $63 million in the 2009 period)~~costs for municipal infrastructure support and capital expenditures ($5 million). CECONY’s 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. Other electric operating revenues generally reflect changes in regulatory assets and liabilities in accordance with the revenue decoupling mechanism and other provisions of the company’s rate plans. See “Rate Agreements – CECONY – Electric” in Note B to the financial statements in Item 8 of the Form 10-K.

Electric delivery volumes in CECONY’s service area ~~increased 9.3~~decreased 0.7 percent ~~for~~in the three months ended ~~September 30, 2010~~March 31, 2011 compared with the ~~2009~~2010 period. After adjusting for variations, principally weather and billing days, electric delivery volumes in CECONY’s service area decreased ~~0.2~~1.3 percent ~~for~~in the three months ended ~~September 30, 2010~~March 31, 2011 compared with the ~~2009~~2010 period.

CECONY’s electric ~~purchased power~~fuel costs increased $9$16 million ~~for~~in the three months ended ~~September 30, 2010~~March 31, 2011 compared with the ~~2009~~2010 period due to ~~an increase in purchased~~higher sendout volumes from the company’s electric generating facilities ($1211 million)~~, offset by lower~~ and unit costs ($35 million). Electric ~~fuel~~purchased power costs ~~increased $18~~decreased $65 million ~~for~~in the three months ended ~~September 30, 2010~~March 31, 2011 compared with the ~~2009~~2010 period due to ~~higher send out volumes from the company’s generating facilities~~a decrease in unit costs ($1642 million) and ~~higher unit costs~~purchased volumes ($223 million).

CECONY’s electric operating income increased ~~$74~~$22 million ~~for~~in the three months ended ~~September 30,~~March 31, 2011 compared with the 2010 period. The increase reflects


48					41

~~2010 compared with the 2009 period. The increase reflects~~ primarily higher net revenues ($~~148 million)~~42 million, due primarily to the electric rate ~~plans,~~plan, including the collection of a surcharge for a New York State ~~assessment~~assessment) and ~~the recovery of higher demand side management expenses. The higher net revenues were offset by higher~~lower operations and maintenance costs ($~~44 million, due~~9 million). The lower operations and maintenance costs reflect primarily ~~to higher demand side management expenses~~lower costs for injuries and damages ($316 million), employees’ health and group life insurance ($6 million), pension ($3 million) and cost control efforts, offset in part by an increase in the surcharge for a ~~higher~~ New York State assessment ($115 million)), and winter storm related emergency response costs ($5 million). The increase in electric operating income was offset by higher depreciation and amortization ($10 million) and taxes, other than income taxes ($~~23 million)~~19 million, principally property taxes). See “Regulatory Assets and ~~depreciation and amortization ($7 million).~~

Liabilities” in Note B to the First Quarter Financial Statements.

Gas

CECONY’s results of gas operations for the three months ended ~~September 30, 2010~~March 31, 2011 compared with the ~~2009~~2010 period ~~are~~is as follows:


	Three Months Ended									Three Months Ended
*(Millions of Dollars)*	September 30, 2010			September 30, 2009			Variation			March 31, 2011		March 31, 2010		Variation
Operating revenues	$	204		$	183		$	21		$	663	$	683	$	(20	)
Gas purchased for resale		63			76			(13	)		263		294		(31	)
Net revenues		141			107			34			400		389		11
Operations and maintenance		85			68			17			103		88		15
Depreciation and amortization		26			24			2			27		25		2
Taxes, other than income taxes		46			43			3			66		61		5
Gas operating income	$	(16	)	$	(28	)	$	12		$	204	$	215	$	(11	)

CECONY’s gas sales and deliveries, excluding off-system sales, for the three months ended ~~September 30, 2010~~March 31, 2011 compared with the ~~2009~~2010 period were:


	Thousands of dths Delivered										Revenues in Millions										Thousands of dths Delivered										Revenues in Millions
	Three Months Ended										Three Months Ended										Three Months Ended										Three Months Ended
Description	September 30, 2010		September 30, 2009		Variation			Percent Variation			September 30, 2010		September 30, 2009		Variation			Percent Variation			March 31, 2011		March 31, 2010		Variation			Percent Variation			March 31, 2011			March 31, 2010			Variation			Percent Variation
Residential		3,267		3,209		58			1.8	%	$	85	$	83	$	2			2.4	%		18,783		19,345		(562	)		(2.9	)%	$	326		$	346		$	(20	)		(5.8	)%
General		2,912		3,514		(602	)		(17.1	)		44		47		(3	)		(6.4	)		13,250		11,482		1,768			15.4			152			163			(11	)		(6.7	)
Firm transportation		6,312		6,279		33			0.5			45		35		10			28.6			24,096		22,941		1,155			5.0			144			148			(4	)		(2.7	)
Total firm sales and transportation		12,491		13,002		(511	)		(3.9	)		174		165		9			5.5			56,129		53,768		2,361			4.4			622			657			(35	)		(5.3	)
Interruptible sales*		1,795		1,159		636			54.9			8		2		6			Large
Interruptible sales (a)																						3,562		3,167		395			12.5			36			30			6			20.0
NYPA		6,795		13,024		(6,229	)		(47.8	)		1		1		—			—			5,820		6,042		(222	)		(3.7	)		1			1			—			—
Generation plants		33,268		23,868		9,400			39.4			10		8		2			25.0			12,359		12,265		94			0.8			7			8			(1	)		(12.5	)
Other		4,382		3,268		1,114			34.1			7		6		1			16.7			7,687		7,814		(127	)		(1.6	)		19			22			(3	)		(13.6	)
Other operating revenues		—		—		—			—			4		1		3			Large			—		—		—			—			(22	)		(35	)		13			37.1
Total		58,731		54,321		4,410			8.1	%	$	204	$	183	$	21			11.5	%		85,557		83,056		2,501			3.0	%	$	663		$	683		$	(20	)		(2.9	)%

*(a)	Includes ~~781~~984 and ~~(107)~~986 thousands of dths for the ~~3 months ended September 30,~~2011 and 2010 ~~and 2009,~~period, respectively, ~~that~~which are also reflected in firm transportation and other.

CECONY’s gas operating revenues ~~increased $21~~decreased $20 million ~~for~~in the three months ended ~~September 30, 2010~~March 31, 2011 compared with the ~~2009~~2010 period due primarily to ~~CECONY’s gas rate plan ($28 million), offset in part by~~ a decrease in gas purchased for resale costs ($1331 million), offset in part by higher revenues from the gas rate plans ($24 million). CECONY’s 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. Other gas operating revenues generally reflect changes in regulatory assets and liabilities in accordance with the company’s rate plans.

See “Rate Agreements – CECONY – Gas” in Note B to the financial statements in Item 8 of the Form 10-K.

CECONY’s sales and transportation volumes for firm customers ~~decreased 3.9~~increased 4.4 percent ~~for~~in the three months ended ~~September 30, 2010~~March 31, 2011 compared with the ~~2009~~2010 period. After adjusting for variations, principally weather and billing days, firm gas sales and transportation volumes in the company’s service area ~~decreased 4.0~~increased 1.2 percent ~~for~~in the three months ended ~~September 30, 2010 as compared with~~March 31, 2011 reflecting an increase in the ~~2009 period.~~

~~CECONY’s purchased gas cost decreased~~number of customers, offset in part by ~~$13 million for the three months ended September 30, 2010 compared with the 2009 period due~~net transfers from firm service to ~~lower send out volumes ($11 million) and lower unit costs ($2 million).~~interruptible service.


42					49

CECONY’s purchased gas cost decreased $31 million in the three months ended March 31, 2011 compared with the 2010 period due to lower unit costs ($50 million), offset by higher sendout volumes ($19 million).

CECONY’s gas operating income ~~increased $12~~decreased $11 million ~~for~~in the three months ended ~~September 30, 2010~~March 31, 2011 compared with the ~~2009~~2010 period. The ~~increase~~decrease reflects primarily higher net revenues ($34 million) due primarily to the gas rate plans, including the collection of a surcharge for a New York State assessment and the recovery of higher demand side management expenses. The higher net revenues were offset by higher operations and maintenance costs ($1715 million, due primarily to ~~higher demand side management expenses ($11 million) and~~an increase in the surcharge for a New York State assessment ($23 million) and pension expense ($7 million)), taxes, other than income taxes ($35 million, principally property taxes) and depreciation and amortization ($2 million), offset by higher net revenues ($11 million).

Steam

CECONY’s results of steam operations for the three months ended ~~September 30, 2010~~March 31, 2011 compared with the ~~2009~~2010 period ~~are~~is as follows:


	Three Months Ended								Three Months Ended
*(Millions of Dollars)*	September 30, 2010			September 30, 2009			Variation		March 31, 2011		March 31, 2010		Variation
Operating revenues	$	91		$	77		$	14	$	325	$	307	$	18
Purchased power		11			9			2		19		23		(4	)
Fuel		30			26			4		100		90		10
Net revenues		50			42			8		206		194		12
Operations and maintenance		46			43			3		35		52		(17	)
Depreciation and amortization		16			15			1		16		15		1
Taxes, other than income taxes		21			18			3		30		25		5
Steam operating income	$	(33	)	$	(34	)	$	1	$	125	$	102	$	23

CECONY’s steam sales and deliveries for the three months ended ~~September 30, 2010~~March 31, 2011 compared with the ~~2009~~2010 period were:


	Millions of Pounds Delivered										Revenues in Millions									Millions of Pounds Delivered										Revenues in Millions
	Three Months Ended										Three Months Ended									Three Months Ended										Three Months Ended
Description	September 30, 2010		September 30, 2009		Variation			Percent Variation			September 30, 2010		September 30, 2009		Variation		Percent Variation			March 31, 2011		March 31, 2010		Variation			Percent Variation			March 31, 2011			March 31, 2010			Variation			Percent Variation
General		14		32		(18	)		(56.3	)%	$	2	$	2	$	—		—	%		334		61		273			Large		$	15		$	10		$	5			50.0	%
Apartment house		788		794		(6	)		(0.8	)		16		15		1		6.7			2,593		2,631		(38	)		(1.4	)		83			80			3			3.8
Annual power		3,967		3,591		376			10.5			70		58		12		20.7			6,541		6,523		18			0.3			234			218			16			7.3
Other operating revenues		—		—		—			—			3		2		1		50.0			—		—		—			—			(7	)		(1	)		(6	)		Large
Total		4,769		4,417		352			8.0	%	$	91	$	77	$	14		18.2	%		9,468		9,215		253			2.7	%	$	325		$	307		$	18			5.9	%

CECONY’s steam operating revenues increased ~~$14~~$18 million ~~for~~in the three months ended ~~September 30, 2010~~March 31, 2011 compared with the ~~2009~~2010 period due primarily to higher fuel costs ($410 million), ~~higher~~the net change in rates under the steam rate plans ($6 million) and colder winter weather in 2011 compared with the 2010 period ($8 million), offset in part by lower purchased power costs ($~~2 million) and CECONY’s steam rate plan ($8~~4 million). Other steam operating revenues generally reflect changes in regulatory assets and liabilities in accordance with the company’s rate plans. See “Rate Agreements – CECONY – Steam” in Note B to the financial statements in Item 8 of the Form 10-K.

Steam sales and delivery volumes increased ~~8.0~~2.7 percent ~~for~~in the three months ended ~~September 30, 2010~~March 31, 2011 compared with the ~~2009~~2010 period. After adjusting for variations, principally weather and billing days, steam sales and deliveries decreased ~~4.1~~2.4 percent ~~for~~in the three months ended ~~September 30, 2010 compared with the 2009 period,~~March 31, 2011 reflecting ~~primarily~~ lower average normalized use per customer.

CECONY’s steam purchased ~~power~~fuel costs increased $2$10 million ~~for~~in the three months ended ~~September 30, 2010~~March 31, 2011 compared with the ~~2009 period due to higher purchased volumes ($1 million) and higher unit costs ($1 million). Steam fuel costs increased $4 million for the three months ended September 30,~~ 2010 ~~compared with the 2009~~ period due to higher unit costs ($25 million) and ~~higher send out~~sendout volumes ($25 million). Steam purchased power costs decreased $4 million in the three months ended March 31, 2011 compared with the 2010 period due to a decrease in unit costs ($5 million), offset by an increase in purchased volumes ($1 million).

Steam operating income increased $1$23 million ~~for~~in the three months ended ~~September 30, 2010~~March 31, 2011 compared with the ~~2009~~2010 period. The increase reflects primarily higher net revenues ($12 million) and lower operations and maintenance costs ($17 million, due primarily to lower pension expense ($13 million)), offset by higher taxes, other than income taxes ($5 million, principally property taxes) and depreciation and amortization ($1 million).


50					43

O&R


	Three Months Ended September 30, 2010							Three Months Ended September 30, 2009										Three Months Ended March 31, 2011						Three Months Ended March 31, 2010
*(Millions of Dollars)*	Electric		Gas			2010 Total		Electric		Gas			2009 Total		2010-2009 Variation			Electric		Gas		2011 Total		Electric		Gas		2010 Total		2011-2010 Variation
Operating revenues	$	245	$	25		$	270	$	209	$	26		$	235	$	35		$	149	$	92	$	241	$	161	$	90	$	251	$	(10	)
Purchased power		122		—			122		102		—			102		20			68		—		68		86		—		86		(18	)
Gas purchased for resale		—		10			10		—		12			12		(2	)		—		39		39		—		44		44		(5	)
Net revenues		123		15			138		107		14			121		17			81		53		134		75		46		121		13
Operations and maintenance		54		13			67		51		13			64		3			53		18		71		53		16		69		2
Depreciation and amortization		8		3			11		7		3			10		1			9		3		12		8		3		11		1
Taxes, other than income taxes		9		3			12		8		3			11		1			9		4		13		9		4		13		—
Operating income	$	52	$	(4	)	$	48	$	41	$	(5	)	$	36	$	12		$	10	$	28	$	38	$	5	$	23	$	28	$	10

Electric

O&R’s results of electric operations for the three months ended ~~September 30, 2010~~March 31, 2011 compared with the ~~2009~~2010 period ~~are~~is as follows:


	Three Months Ended						Three Months Ended
*(Millions of Dollars)*	September 30, 2010		September 30, 2009		Variation		March 31, 2011		March 31, 2010		Variation
Operating revenues	$	245	$	209	$	36	$	149	$	161	$	(12	)
Purchased power		122		102		20		68		86		(18	)
Net revenues		123		107		16		81		75		6
Operations and maintenance		54		51		3		53		53		—
Depreciation and amortization		8		7		1		9		8		1
Taxes, other than income taxes		9		8		1		9		9		—
Electric operating income	$	52	$	41	$	11	$	10	$	5	$	5

O&R’s electric sales and deliveries, excluding off-system sales, for the three months ended ~~September 30, 2010~~March 31, 2011 compared with the ~~2009~~2010 period were:


	Millions of kWhs Delivered										Revenues in Millions											Millions of kWhs Delivered										Revenues in Millions
	Three Months Ended										Three Months Ended											Three Months Ended										Three Months Ended
Description	September 30, 2010		September 30, 2009		Variation			Percent Variation			September 30, 2010			September 30, 2009		Variation			Percent Variation			March 31, 2011		March 31, 2010		Variation			Percent Variation			March 31, 2011			March 31, 2010			Variation			Percent Variation
Residential/Religious*		655		567		88			15.5	%	$	130		$	108	$	22			20.4	%
Residential/Religious(a)																							429		448		(19	)		(4.2	)%	$	74		$	80		$	(6	)		(7.5	)%
Commercial/Industrial		420		464		(44	)		(9.5	)		66			66		—			—			316		382		(66	)		(17.3	)		41			54			(13	)		(24.1	)
Retail access customers		717		544		173			31.8			47			33		14			42.4			625		507		118			23.3			33			26			7			26.9
Public authorities		31		30		1			3.3			3			2		1			50.0			24		27		(3	)		(11.1	)		3			3			—			—
Other operating revenues		—		—		—			—			(1	)		—		(1	)		Large			—		—		—			—			(2	)		(2	)		—			—
Total		1,823		1,605		218			13.6	%	$	245		$	209	$	36			17.2	%		1,394		1,364		30			2.2	%	$	149		$	161		$	(12	)		(7.5	)%

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

O&R’s electric operating revenues ~~increased $36~~decreased $12 million ~~for~~in the three months ended ~~September 30, 2010~~March 31, 2011 compared with the ~~2009~~2010 period due primarily to ~~the electric rate plan and~~lower costs for ~~O&R’s New Jersey and Pennsylvania operations, the warmer summer weather in the 2010 period.~~purchased power ($18 million). O&R’s New York electric delivery revenues are subject to a revenue decoupling mechanism, as a result of which, delivery revenues are generally not affected by changes in delivery volumes from levels assumed when rates were approved. O&R’s electric sales in New Jersey and Pennsylvania are not subject to a decoupling mechanism, and as a result, changes in such volumes do impact revenues. Other electric operating revenues generally reflect changes in regulatory assets and liabilities in accordance with the company’s electric rate plan. See Note B to the First Quarter Financial Statements and “Rate Agreements – O&R – Electric” in Note B to the financial statements in Item 8 of the Form 10-K.


44					51

Electric delivery volumes in O&R’s service area increased ~~13.6~~2.2 percent ~~for~~in the three months ended ~~September 30, 2010~~March 31, 2011 compared with the ~~2009~~2010 period. After adjusting for weather variations, electric delivery volumes in O&R’s service area increased ~~4.6~~1.0 percent ~~for~~in the three months ended ~~September 30, 2010~~March 31, 2011 compared with the ~~2009 period.~~2010 period reflecting higher average normalized use per customer.

Electric operating income increased ~~$11~~$5 million ~~for~~in the three months ended ~~September 30, 2010~~March 31, 2011 compared with the ~~2009~~2010 period. The increase reflects primarily higher net revenues ($166 million), offset ~~in part~~ by higher ~~operations~~depreciation and ~~maintenance expense ($3 million), due primarily to a surcharge for a New York State assessment ($1 million) and higher demand side management expenses~~amortization ($1 million). ~~See “Regulatory Assets and Liabilities” in Note B to the Third Quarter Financial Statements.~~

Gas

O&R’s results of gas operations for the three months ended ~~September 30, 2010~~March 31, 2011 compared with the ~~2009~~2010 period ~~are~~is as follows:


	Three Months Ended									Three Months Ended
*(Millions of Dollars)*	September 30, 2010			September 30, 2009			Variation			March 31, 2011		March 31, 2010		Variation
Operating revenues	$	25		$	26		$	(1	)	$	92	$	90	$	2
Gas purchased for resale		10			12			(2	)		39		44		(5	)
Net revenues		15			14			1			53		46		7
Operations and maintenance		13			13			—			18		16		2
Depreciation and amortization		3			3			—			3		3		—
Taxes, other than income taxes		3			3			—			4		4		—
Gas operating income	$	(4	)	$	(5	)	$	1		$	28	$	23	$	5

O&R’s gas sales and deliveries, excluding off-system sales, for the three months ended ~~September 30, 2010~~March 31, 2011 compared with the ~~2009~~2010 period were:


	Thousands of dths Delivered										Revenues in Millions										Thousands of dths Delivered											Revenues in Millions
	Three Months Ended										Three Months Ended										Three Months Ended											Three Months Ended
Description	September 30, 2010		September 30, 2009		Variation			Percent Variation			September 30, 2010		September 30, 2009		Variation			Percent Variation			March 31, 2011		March 31, 2010			Variation			Percent Variation			March 31, 2011			March 31, 2010		Variation			Percent Variation
Residential		491		561		(70	)		(12.5	)%	$	10	$	9	$	1			11.1	%		3,774		3,525			249			7.1	%	$	53		$	50	$	3			6.0	%
General		108		146		(38	)		(26.0	)		1		1		—			—			737		710			27			3.8			9			9		—			—
Firm transportation		922		973		(51	)		(5.2	)		7		7		—			—			5,296		4,678			618			13.2			31			25		6			24.0
Total firm sales and transportation		1,521		1,680		(159	)		(9.5	)		18		17		1			5.9			9,807		8,913	��		894			10.0			93			84		9			10.7
Interruptible sales		953		926		27			2.9			1		5		(4	)		(80.0	)		1,311		1,411			(100	)		(7.1	)		1			6		(5	)		(83.3	)
Generation plants		286		1,080		(794	)		(73.5	)		—		—		—			—			98		140			(42	)		(30.0	)		—			—		—			—
Other		74		90		(16	)		(17.8	)		—		—		—			—			399		369			30			8.1			—			—		—			—
Other gas revenues		—		—		—			—			6		4		2			50.0			—		—			—			—			(2	)		—		(2	)		Large
Total		2,834		3,776		(942	)		(24.9	)%	$	25	$	26	$	(1	)		(3.8	)%		11,615		10,833			782			7.2	%	$	92		$	90	$	2			2.2	%

O&R’s gas operating revenues ~~decreased $1~~increased $2 million ~~for~~in the three months ended ~~September 30, 2010~~March 31, 2011 compared with the ~~2009~~2010 period due primarily to the gas rate plan, offset in part by the decrease in gas purchased for resale ~~in 2010~~ ($25 million). O&R’s New York gas 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.

Sales and transportation volumes for firm customers ~~decreased 9.5~~increased 10.0 percent ~~for~~in the three months ended ~~September 30, 2010~~March 31, 2011 compared with the ~~2009~~2010 period. After adjusting for weather and other variations, total firm sales and transportation volumes decreased ~~8.5~~0.4 percent ~~for~~in the three months ended ~~September 30, 2010~~March 31, 2011 compared with the ~~2009~~2010 period. O&R’s New York ~~revenues from gas sales are subject to a weather~~


52

~~normalization clause that moderates, but does not eliminate, the effect of weather-related changes on net income.~~

~~Gas operating income increased $1 million for the three months ended September 30, 2010 compared with the 2009 period.~~

~~Competitive Energy Businesses~~

The competitive energy businesses’ earnings decreased $40 million for the three months ended September 30, 2010 compared with the 2009 period due primarily to net mark-to-market effects and lower electric retail margins in the 2010 period compared with the 2009 period.

Operating revenues decreased $26 million for the three months ended September 30, 2010 compared with the 2009 period due primarily to changes in net mark-to-market effects and decreased electric wholesale revenues, offset in part by increased electric retail revenues. Electric wholesale revenues decreased $52 million for the three months ended September 30, 2010 compared with the 2009 period due to lower sales volumes ($20 million) and unit prices ($32 million). Electric retail revenues increased $65 million due to higher sales volumes ($72 million), offset by lower unit prices ($7 million). Gross margins on electric retail revenues decreased due primarily to lower unit gross margins. Net mark-to-market values decreased $64 million for the three months ended September 30, 2010 compared with the 2009 period, of which $30 million in losses are reflected in revenues and $34 million in losses are reflected in purchased power costs. Other revenues decreased $9 million for the three months ended September 30, 2010 compared with the 2009 period due primarily to lower sales of energy efficiency services.

Operating expenses increased $52 million for the three months ended September 30, 2010 compared with the 2009 period due primarily to increased purchased power costs ($56 million) and taxes other than federal income taxes ($2 million), offset by decreased other operations expenses ($6 million).

~~Nine Months Ended September 30, 2010 Compared with Nine Months Ended September 30, 2009~~

~~The Companies’ results of operations (which were discussed above under “Results of Operations – Summary”) in 2010 compared with 2009 were:~~

   CECONY O&R Competitive Energy
Businesses and Other** Con Edison*
(Millions of Dollars) Increases
(Decreases)
Amount Increases
(Decreases)
Percent Increases
(Decreases)
Amount Increases
(Decreases)
Percent Increases
(Decreases)
Amount Increases
(Decreases)
Percent Increases
(Decreases)
Amount Increases
(Decreases)
Percent
Operating revenues
$ 370    4.8 % $ 39    5.8 % $ 18    1.2 % $ 427    4.4 %
Purchased power
93    4.6    27    10.7    45    3.5    165    4.7
Fuel
(61 ) (15.1 ) N/A    N/A    —    —    (61 ) (15.1 )
Gas purchased for resale
(210 ) (34.0 ) (30 ) (30.6 ) (1 ) (14.3 ) (241 ) (33.3 )
Operating revenues less purchased power, fuel and gas purchased for resale (net revenues)
548    11.9    42    13.2    (26 ) (16.7 ) 564    11.1
Other operations and maintenance
226    14.1    19    10.5    (7 ) (7.6 ) 238    12.7
Depreciation and amortization
32    5.8    2    6.5    3    75.0    37    6.3
Taxes, other than income taxes
131    11.9    3    8.8    4    40.0    138    12.1
Operating income
159    11.8    18    24.7    (26 ) (52.0 ) 151    10.2
Other income less deductions
1    4.8    (2 ) Large    7    Large    7    30.4
Net interest expense
1    0.2    4    19.0    (4 ) (18.2 ) 1    0.2
Income before income tax expense
159    16.5    12    22.2    (15 ) (53.6 ) 157    15.0
Income tax expense
65    19.2    4    20.0    (5 ) (50.0 ) 64    17.3
Net income for common stock
$ 94    15.3 % $ 8    23.5 % $ (10 ) (55.6 ) $ 93    14.0 %

*	~~Represents the consolidated financial results of Con Edison and its businesses.~~

**	~~Includes inter-company and parent company accounting.~~


					53

~~CECONY~~

   Nine Months Ended
September 30, 2010    Nine Months Ended
September 30, 2009
(Millions of Dollars) Electric Gas Steam
2010
Total
Electric Gas Steam 2009
Total 2010-2009
Variation
Operating revenues
$ 6,402    $ 1,126    $ 487    $ 8,015    $ 5,865    $ 1,259    $ 521    $ 7,645    $ 370
Purchased power
2,060    —    42    2,102    1,967    —    42    2,009    93
Fuel
192    —    151    343    193    —    211    404    (61 )
Gas purchased for resale
—    408    —    408    —    618    —    618    (210 )
Net revenues
4,150    718    294    5,162    3,705    641    268    4,614    548
Operations and maintenance
1,443    247    142    1,832    1,284    200    122    1,606    226
Depreciation and amortization
464    76    46    586    437    73    44    554    32
Taxes, other than income taxes
1,015    152    65    1,232    893    145    63    1,101    131
Operating income
$ 1,228    $ 243    $ 41    $ 1,512    $ 1,091    $ 223    $ 39    $ 1,353    $ 159

~~Electric~~

~~CECONY’s results of electric operations for the nine months ended September 30, 2010 compared with the 2009 period are as follows:~~

   Nine Months Ended
(Millions of Dollars) September 30,
2010 September 30,
2009 Variation
Operating revenues
$ 6,402    $ 5,865    $ 537
Purchased power
2,060    1,967    93
Fuel
192    193    (1 )
Net revenues
4,150    3,705    445
Operations and maintenance
1,443    1,284    159
Depreciation and amortization
464    437    27
Taxes, other than income taxes
1,015    893    122
Electric operating income
$ 1,228    $ 1,091    $ 137

~~CECONY’s electric sales and deliveries, excluding off-system sales, for the nine months ended September 30, 2010 compared with the 2009 period were:~~

   Millions of kWhs Delivered Revenues in Millions
   Nine Months Ended       Nine Months Ended
Description September 30,
2010 September 30,
2009 Variation Percent
Variation September 30,
2010 September 30,
2009 Variation Percent
Variation
Residential/Religious*
8,937    8,442    495    5.9 % $ 2,333    $ 1,972    $ 361    18.3 %
Commercial/Industrial
9,822    9,598    224    2.3    1,986    1,882    104    5.5
Retail access customers
17,533    16,506    1,027    6.2    1,620    1,382    238    17.2
NYPA, Municipal Agency
and other sales
8,544    8,690    (146 ) (1.7 ) 411    343    68    19.8
Other operating revenues
—    —    —    —    52    286    (234 ) (81.8 )
Total
44,836    43,236    1,600    3.7 % $ 6,402    $ 5,865    $ 537    9.2 %

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

CECONY’s electric operating revenues increased $537 million for the nine months ended September 30, 2010 compared with the 2009 period due primarily to CECONY’s electric rate plans ($614 million, which among other things, reflected a 10.15 percent return on common equity, effective April 2010, a 10.0 percent return, effective April 2009 and a 9.1 percent return, effective April 2008), and higher purchased power costs ($93 million), offset in part by the revenue decoupling mechanism (a reduction of $108 million of revenues in


54

the 2010 period compared with increased revenues of $87 million in the 2009 period). CECONY’s 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. Other electric operating revenues generally reflect changes in regulatory assets and liabilities in accordance with the revenue decoupling mechanism and other provisions of the company’s rate plans.

Electric delivery volumes in CECONY’s service area increased 3.7 percent for the nine months ended September 30, 2010 compared with the 2009 period. After adjusting for variations, principally weather and billing days, electric delivery volumes in CECONY’s service area increased 0.2 percent for the nine months ended September 30, 2010 compared with the 2009 period, reflecting the impact of lower average normalized use per customer.

CECONY’s electric purchased power costs increased $93 million for the nine months ended September 30, 2010 compared with the 2009 period due to higher unit costs ($129 million) offset by lower purchased volumes ($36 million). Electric fuel costs decreased $1 million for the nine months ended September 30, 2010 compared with the 2009 period.

CECONY’s electric operating income increased $137 million for the nine months ended September 30, 2010 compared with the 2009 period. The increase reflects primarily higher net revenues ($445 million, due primarily to the electric rate plan, including the collection of a surcharge for a New York State assessment and the recovery of higher pension expense). The higher net revenues were offset by higher operations and maintenance costs ($159 million, due primarily to higher demand side management expenses ($78 million), the surcharge for a New York State assessment ($62 million) and higher pension expense ($24 million), offset in part by reduced operating expenses due to cost control efforts), taxes other than income taxes ($122 million, principally property taxes) and depreciation and amortization ($27 million). The increased operating expenses in the first quarter of 2010 resulting from two severe winter storms were deferred as a regulatory asset, and did not affect electric operating income. See “Regulatory Assets and Liabilities” in Note B to the Third Quarter Financial Statements.

~~Gas~~

~~CECONY’s results of gas operations for the nine months ended September 30, 2010 compared with the 2009 period are as follows:~~

   Nine Months Ended
(Millions of Dollars) September 30,
2010 September 30,
2009 Variation
Operating revenues
$ 1,126    $ 1,259    $ (133 )
Gas purchased for resale
408    618    (210 )
Net revenues
718    641    77
Operations and maintenance
247    200    47
Depreciation and amortization
76    73    3
Taxes, other than income taxes
152    145    7
Gas operating income
$ 243    $ 223    $ 20


					55

~~CECONY’s gas sales and deliveries, excluding off-system sales, for the nine months ended September 30, 2010 compared with the 2009 period were:~~

   Thousands of dths Delivered Revenues in Millions
   Nine Months Ended       Nine Months Ended
Description September 30,
2010 September 30,
2009 Variation Percent
Variation September 30,
2010 September 30,
2009 Variation Percent
Variation
Residential
28,609    30,678    (2,069 ) (6.7 )% $ 563    $ 626    $ (63 ) (10.1 )%
General
18,956    22,076    (3,120 ) (14.1 ) 275    333    (58 ) (17.4 )
Firm transportation
38,600    36,167    2,433    6.7    260    186    74    39.8
Total firm sales and transportation
86,165    88,921    (2,756 ) (3.1 ) 1,098    1,145    (47 ) (4.1 )
Interruptible sales*
6,367    6,497    (130 ) (2.0 ) 41    63    (22 ) (34.9 )
NYPA
18,917    29,647    (10,730 ) (36.2 ) 2    3    (1 ) (33.3 )
Generation plants
65,483    53,379    12,104    22.7    27    25    2    8.0
Other
16,369    13,680    2,689    19.7    40    27    13    48.1
Other operating revenues
—    —    —    —    (82 ) (4 ) (78 ) Large
Total
193,301    192,124    1,177    0.6 % $ 1,126    $ 1,259    $ (133 ) (10.6 )%

*	~~Includes 2,230 and 1,767 thousands of dths for the nine months ended September 30, 2010 and 2009, respectively, that are also reflected in firm transportation and other.~~

CECONY’s gas operating revenues decreased $133 million for the nine months ended September 30, 2010 compared with the 2009 period due primarily to a decrease in gas purchased for resale costs ($210 million), offset in part by the 2009 gas rate plan ($78 million). CECONY’s 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. ~~Other gas~~

Gas operating ~~revenues generally reflect changes~~income increased $5 million in ~~regulatory assets and liabilities in accordance with~~ the ~~company’s rate plans.~~

~~CECONY’s sales and transportation volumes for firm customers decreased 3.1 percent for the nine~~three months ended ~~September 30, 2010~~March 31, 2011 compared with the 2009 period. After adjusting for variations, principally weather and billing days, firm gas sales and transportation volumes in the company’s service area increased 2.1 percent in the nine months ended September 30, 2010 ~~as compared with the 2009 period, reflecting primarily new business and transfers of interruptible customers to firm service.~~

CECONY’s purchased gas cost decreased by $210 million for the nine months ended September 30, 2010 compared with the 2009 period due to lower unit costs ($170 million) and lower send out volumes ($40 million).

~~CECONY’s gas operating income increased $20 million for the nine months ended September 30, 2010 compared with the 2009~~ period. The increase reflects primarily higher net revenues ($777 million), offset by higher operations and maintenance expense ($47 million, due primarily to a surcharge for a New York State assessment ($29 million), demand side management programs ($7 million) and higher pension expense ($4 million)), and taxes other than income taxes ($7 million).


56

~~Steam~~

~~CECONY’s results of steam operations for the nine months ended September 30, 2010 compared with the 2009 period are as follows:~~

   Nine Months Ended
(Millions of Dollars) September 30,
2010 September 30,
2009 Variation
Operating revenues
$ 487    $ 521    $ (34 )
Purchased power
42    42    —
Fuel
151    211    (60 )
Net revenues
294    268    26
Operations and maintenance
142    122    20
Depreciation and amortization
46    44    2
Taxes, other than income taxes
65    63    2
Steam operating income
$ 41    $ 39    $ 2

~~CECONY’s steam sales and deliveries for the nine months ended September 30, 2010 compared with the 2009 period were:~~

   Millions of Pounds Delivered Revenues in Millions
   Nine Months Ended       Nine Months Ended
Description September 30,
2010 September 30,
2009 Variation Percent
Variation September 30,
2010 September 30,
2009 Variation Percent
Variation
General
125    429    (304 ) (70.9 )% $ 15    $ 19    $ (4 ) (21.1 )%
Apartment house
4,375    4,614    (239 ) (5.2 ) 118    132    (14 ) (10.6 )
Annual power
13,171    12,995    176    1.4    349    359    (10 ) (2.8 )
Other operating revenues
—    —    —    —    5    11    (6 ) (54.5 )
Total
17,671    18,038    (367 ) (2.0 )% $ 487    $ 521    $ (34 ) (6.5 )%

~~CECONY’s steam operating revenues decreased $34 million for the nine months ended September 30, 2010 compared with the 2009 period due primarily to lower fuel~~ costs ($60 million), offset in part by the steam rate plan ($29 million). Other steam operating revenues generally reflect changes in regulatory assets and liabilities in accordance with the company’s rate plans.

Steam sales and delivery volumes decreased 2.0 percent for the nine months ended September 30, 2010 compared with the 2009 period. After adjusting for variations, principally weather and billing days, steam sales and deliveries decreased 1.4 percent in the nine months ended September 30, 2010 as compared with the 2009 period.

CECONY’s steam purchased power costs remained steady for the nine months ended September 30, 2010 compared with the 2009 period. Steam fuel costs decreased $60 million for the nine months ended September 30, 2010 compared with the 2009 period due to lower unit costs ($62 million), offset by higher send out volumes ($2 million).

~~Steam operating income increased $2 million for the nine months ended September 30, 2010 compared with the 2009 period.~~


					5745

~~O&R~~Competitive Energy Businesses

   Nine Months Ended
September 30, 2010    Nine Months Ended
September 30, 2009
(Millions of Dollars) Electric Gas 2010
Total Electric Gas 2009
Total
2010-2009
Variation

Operating revenues
$ 559    $ 150    $ 709    $ 499    $ 171    $ 670    $ 39
Purchased power
280    —    280    253    —    253    27
Gas purchased for resale
—    68    68    —    98    98    (30 )
Net revenues
279    82    361    246    73    319    42
Operations and maintenance
157    43    200    143    38    181    19
Depreciation and amortization
24    9    33    22    9    31    2
Taxes, other than income taxes
27    10    37    25    9    34    3
Operating income
$ 71    $ 20    $ 91    $ 56    $ 17    $ 73    $ 18

~~Electric~~

~~O&R’s~~The competitive energy business’s results of ~~electric~~ operations for the ~~nine~~three months ended ~~September 30, 2010~~March 31, 2011 compared with the ~~2009~~2010 period ~~are~~is as follows:


	Nine Months Ended						Three Months Ended
*(Millions of Dollars)*	September 30, 2010		September 30, 2009		Variation		March 31, 2011		March 31, 2010			Variation
Operating revenues	$	559	$	499	$	60	$	408	$	500		$	(92	)
Purchased power		280		253		27		321		513			(192	)
Gas purchased for resale								6		5			1
Net revenues		279		246		33		81		(18	)		99
Operations and maintenance		157		143		14		30		24			6
Depreciation and amortization		24		22		2		2		2			—
Taxes, other than income taxes		27		25		2		5		4			1
Electric operating income	$	71	$	56	$	15
Operating income							$	44	$	(48	)	$	92

~~O&R’s electric sales and deliveries, excluding off-system sales, for~~

The competitive energy businesses’ operating revenues decreased $92 million in the ~~nine~~three months ended ~~September 30, 2010~~March 31, 2011 compared with the ~~2009 period were:~~

   Millions of kWhs Delivered Revenues in Millions
   Nine Months Ended       Nine Months Ended
Description September 30,
2010 September 30,
2009 Variation Percent
Variation September 30,
2010 September 30,
2009 Variation Percent
Variation
Residential/Religious*
1,522    1,406 �� 116    8.3 % $ 283    $ 239    $ 44    18.4 %
Commercial/Industrial
1,168    1,368    (200 ) (14.6 ) 169    178    (9 ) (5.1 )
Retail access customers
1,770    1,419    351    24.7    102    72    30    41.7
Public authorities
85    84    1    1.2    9    8    1    12.5
Other operating revenues
—    —    —    —    (4 ) 2    (6 ) Large
Total
4,545    4,277    268    6.3 % $ 559    $ 499    $ 60    12.0 %

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

~~O&R’s electric operating revenues increased $60 million for the nine months ended September 30,~~ 2010 ~~compared with the 2009~~ period due primarily to net mark-to-market effects ($60 million) and a decrease in electric wholesale revenues ($29 million). Electric wholesale revenues decreased $29 million in the ~~electric rate plan~~three months ended March 31, 2011 compared with the 2010 period due to lower sales volume ($3331 million), offset by higher unit prices ($2 million). Electric retail revenues decreased $7 million in the three months ended March 31, 2011 compared with the 2010 period due to lower unit prices ($12 million), offset by higher sales volume ($5 million). Gross margins on electric retail revenues decreased in the three months ended March 31, 2011 compared with the 2010 period due primarily to lower unit gross margins. Net mark-to-market values increased ~~recoverable~~$101 million in the three months ended March 31, 2011 as compared with the 2010 period, of which $161 million in gains are reflected in purchased power costs and $60 million in losses are reflected in revenues. Other revenues increased $4 million in the three months ended March 31, 2011 as compared with the 2010 period due primarily to higher sales of energy efficiency services ($275 million).

Purchased power costs decreased $192 million in the three months ended March 31, 2011 compared with the 2010 period due primarily to changes in mark-to-market values ($161 million) and ~~for O&R’s New Jersey~~lower purchased power costs ($31 million). Purchased power costs decreased $31 million due to lower unit prices ($9 million) and ~~Pennsylvania operations, the warmer summer weather~~volumes ($22 million). Operating income increased $92 million in the three months ended March 31, 2011 compared with the 2010 ~~period. O&R’s New York electric delivery revenues are subject~~period due primarily to a revenue decoupling mechanism, as a result of which, delivery revenues are generally not affected by changes in delivery volumes from levels assumed when rates were approved. O&R’s electric sales in New Jersey and Pennsylvania are not subjectnet mark-to-market effects ($101 million).

Other

For Con Edison, “Other” also includes inter-company eliminations relating to ~~a decoupling mechanism, and as a result, changes in such volumes do impact revenues. Other electric~~ operating revenues ~~generally reflect changes in regulatory assets~~ and ~~liabilities in accordance with the company’s electric rate plan.~~operating expenses.


5846

Electric delivery volumes in O&R’s service area increased 6.3 percent for the nine months ended September 30, 2010 compared with the 2009 period. After adjusting for weather variations, electric delivery volumes in O&R’s service area increased 1.7 percent for the nine months ended September 30, 2010 compared with the 2009 period.

Electric operating income increased $15 million for the nine months ended September 30, 2010 compared with the 2009 period. The increase reflects primarily higher net revenues ($33 million) offset, in part by higher operations and maintenance expenses ($14 million, reflecting primarily the collection of a surcharge for a New York State assessment ($6 million) and the recovery of higher demand side management expenses ($3 million)). The increased operating expenses in the first quarter of 2010 resulting from two severe winter storms were deferred as a regulatory asset, and did not affect electric operating income. See “Regulatory Assets and Liabilities” in Note B to the Third Quarter Financial Statements.

~~Gas~~

~~O&R’s results of gas operations for the nine months ended September 30, 2010 compared with the 2009 period are as follows:~~

   Nine Months Ended
(Millions of Dollars) September 30,
2010 September 30,
2009 Variation
Operating revenues
$ 150    $ 171    $ (21 )
Gas purchased for resale
68    98    (30 )
Net revenues
82    73    9
Operations and maintenance
43    38    5
Depreciation and amortization
9    9    —
Taxes, other than income taxes
10    9    1
Gas operating income
$ 20    $ 17    $ 3

~~O&R’s gas sales and deliveries, excluding off-system sales, for the nine months ended September 30, 2010 compared with the 2009 period were:~~

   Thousands of dths Delivered Revenues in Millions
   Nine Months Ended       Nine Months Ended
Description September 30,
2010 September 30,
2009 Variation Percent
Variation September 30,
2010 September 30,
2009 Variation Percent
Variation
Residential
4,843    5,473    (630 ) (11.5 )% $ 75    $ 94    $ (19 ) (20.2 )%
General
971    1,229    (258 ) (21.0 ) 13    19    (6 ) (31.6 )
Firm transportation
6,968    7,472    (504 ) (6.7 ) 44    35    9    25.7
Total firm sales and transportation
12,782    14,174    (1,392 ) (9.8 ) 132    148    (16 ) (10.8 )
Interruptible sales
3,418    3,382    36    1.1    8    16    (8 ) (50.0 )
Generation plants
688    1,346    (658 ) (48.9 ) —    1    (1 ) Large
Other
550    680    (130 ) (19.1 ) —    —    —    —
Other gas revenues
—    —    —    —    10    6    4    66.7
Total
17,438    19,582    (2,144 ) (10.9 )% $ 150    $ 171    $ (21 ) (12.3 )%

O&R’s gas operating revenues decreased $21 million for the nine months ended September 30, 2010 compared with the 2009 period due primarily to the decrease in gas purchased for resale in 2010 ($30 million), offset in part by the 2009 gas rate plan ($9 million). O&R’s New York gas 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.

~~Sales and transportation volumes for firm customers decreased 9.8 percent for the nine months ended September 30, 2010 compared with the 2009 period.~~


					59

After adjusting for weather and other variations, total firm sales and transportation volumes decreased 1.2 percent for the nine months ended September 30, 2010 compared with the 2009 period. O&R’s New York revenues from gas sales are subject to a weather normalization clause that moderates, but does not eliminate, the effect of weather-related changes on net income.

Gas operating income increased $3 million for the nine months ended September 30, 2010 compared with the 2009 period. The increase reflects primarily higher net revenues ($9 million), offset by higher operations and maintenance costs ($5 million, due primarily to the collection of a surcharge for a New York State assessment ($5 million)).

~~Competitive Energy Businesses~~

The competitive energy businesses’ earnings decreased $10 million for the nine months ended September 30, 2010 compared with the 2009 period due primarily to net mark-to-market effects, offset in part by higher electric retail margins in the 2010 period compared with the 2009 period.

Operating revenues increased $14 million for the nine months ended September 30, 2010 compared with the 2009 period due primarily to increased electric retail revenues, offset in part by decreased energy efficiency services and electric wholesale revenues. Electric retail revenues increased $178 million due to higher sales volume ($231 million), offset by lower unit prices ($53 million). Gross margins on electric retail revenues increased significantly due primarily to higher volumes. Net mark-to-market values decreased $37 million for the nine months ended September 30, 2010 compared with the 2009 period, of which $3 million in losses are reflected in revenues and $34 million in losses are reflected in purchased power costs. Electric wholesale revenues decreased $145 million for the nine months ended September 30, 2010 compared with the 2009 period due to lower sales volumes ($116 million) and unit prices ($29 million). Other revenues decreased $16 million for the nine months ended September 30, 2010 compared with the 2009 period due primarily to lower sales of energy efficiency services.

~~Operating expenses increased $40 million for the nine months ended September 30, 2010 compared with the 2009 period due primarily to increased purchased power costs.~~


60

Item 3: Quantitative and Qualitative Disclosures ~~about~~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 1,I, Item 2 of this report, which information is incorporated herein by reference. Also, see Item 7A of the Form 10-K.

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.

In January 2011, the Companies implemented a consolidation, reporting, and analysis system as part of a large ongoing project to implement a new financial and supply-chain enterprise resource planning information system. See Item 9A of the Form 10-K (which information is incorporated herein by reference). The project is reasonably likely to materially affect the Companies’ internal control over financial reporting. There was no other 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.


					6147

Part II Other Information

Item 1: Legal Proceedings

~~CECONY~~

~~Superfund~~

For information about ~~CECONY’s Superfund sites,~~certain legal proceedings affecting the Companies, see ~~“Environmental Matters – CECONY — Superfund” in Item 1 of the Form 10-K~~Notes B, F and ~~in Part II, Item 1 of the First Quarter Form 10-Q, the Second Quarter Form 10-Q and Note~~ G to the financial statements in Part I, Item 1 of this report, ~~(which~~which information is incorporated herein by ~~reference).~~reference.

~~Permit Non-Compliance and Pollution Discharges~~

For information about the company’s permit non-compliance and pollution discharges, see “Permit Non-Compliance and Pollution Discharges” in Part II, Item 1 of the First Quarter Form 10-Q, the Second Quarter Form 10-Q and in Note H to the financial statements in Item 8 of the Form 10-K and Note H to the financial statements in Part I, Item 1 of this report (which information is incorporated herein by reference).

~~Investigations of Vendor Payments~~

For information about alleged unlawful conduct in connection with vendor payments, see “Investigations of Vendor Payments” in Note H to the financial statements in Part I, Item 1 of this report (which information is incorporated herein by reference).

Item 1A: Risk Factors

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


6248

Item 6: Exhibits

CON EDISON



Exhibit 10.1		Form of Restricted Stock Unit Award for Officers under the Con Edison Long-Term Incentive Plan.

Exhibit 12.1		Statement of computation of Con Edison’s ratio of earnings to fixed charges for the ~~nine-month~~three-month periods ended ~~September 30,~~March 31, 2011 and 2010, ~~and 2009,~~ and the 12-month period ended December 31, ~~2009.~~2010.

Exhibit 31.1.1		Rule 13a-14(a)/15d-14(a) Certifications – Chief Executive Officer.

Exhibit 31.1.2		Rule 13a-14(a)/15d-14(a) Certifications – Chief Financial Officer.

Exhibit 32.1.1		Section 1350 Certifications – Chief Executive Officer.

Exhibit 32.1.2		Section 1350 Certifications – Chief Financial Officer.

Exhibit 101.INS		XBRL Instance Document.

Exhibit 101.SCH		XBRL Taxonomy Extension Schema.

Exhibit 101.CAL		XBRL Taxonomy Extension Calculation Linkbase.

Exhibit 101.DEF		XBRL Taxonomy Extension Definition Linkbase.

Exhibit 101.LAB		XBRL Taxonomy Extension Label Linkbase.

Exhibit 101.PRE		XBRL Taxonomy Extension Presentation Linkbase.

CECONY



Exhibit 12.2		Statement of computation of CECONY’s ratio of earnings to fixed charges for the ~~nine-month~~three-month periods ended ~~September 30,~~March 31, 2011 and 2010, ~~and 2009,~~ and the 12-month period ended December 31, ~~2009.~~2010.

Exhibit 31.2.1		Rule 13a-14(a)/15d-14(a) Certifications – Chief Executive Officer.

Exhibit 31.2.2		Rule 13a-14(a)/15d-14(a) Certifications – Chief Financial Officer.

Exhibit 32.2.1		Section 1350 Certifications – Chief Executive Officer.

Exhibit 32.2.2		Section 1350 Certifications – Chief Financial Officer.

Exhibit 101.INS		XBRL Instance Document.

Exhibit 101.SCH		XBRL Taxonomy Extension Schema.

Exhibit 101.CAL		XBRL Taxonomy Extension Calculation Linkbase.

Exhibit 101.DEF		XBRL Taxonomy Extension Definition Linkbase.

Exhibit 101.LAB		XBRL Taxonomy Extension Label Linkbase.

Exhibit 101.PRE		XBRL Taxonomy Extension Presentation Linkbase.


					6349

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.


6450


	For the Nine Months Ended September 30,
	Con Edison						CECONY
*(Millions of Dollars)*	2010			2009			2010			2009
Service cost – including administrative expenses	$	126		$	120		$	117		$	111
Interest cost on projected benefit obligation		417			393			390			369
Expected return on plan assets		(527	)		(519	)		(501	)		(495	)
Amortization of net actuarial loss		318			225			300			204
Amortization of prior service costs		6			6			6			6
NET PERIODIC BENEFIT COST	$	340		$	225		$	312		$	195
Amortization of regulatory asset*		1			3			1			3
TOTAL PERIODIC BENEFIT COST	$	341		$	228		$	313		$	198
Cost capitalized		(118	)		(82	)		(109	)		(75	)
Cost deferred		(85	)		(40	)		(82	)		(34	)
Cost charged to operating expenses	$	138		$	106		$	122		$	89


	Three Months Ended Variation 2010 vs. 2009						Nine Months Ended Variation 2010 vs. 2009
	Earnings per Share Variation			Net Income for Common Stock Variation (Millions of Dollars)			Earnings per Share Variation			Net Income for Common Stock Variation (Millions of Dollars)
CECONY(a)
Rate plans, primarily to recover increases in certain costs	$	0.39		$	108		$	1.12		$	311
Operations and maintenance expense		(0.14	)		(38	)		(0.49	)		(135	)
Depreciation and property taxes		(0.05	)		(13	)		(0.30	)		(83	)
Net interest expense		0.01			3			—			—
Other (includes dilutive effect of new stock issuances)		(0.07	)		(10	)		(0.06	)		1
Total CECONY		0.14			50			0.27			94
Orange and Rockland Utilities (O&R)		0.02			5			0.03			9
Competitive energy businesses
Earnings excluding net mark-to-market effects		—			(2	)		0.04			12
Net mark-to-market effects(b)		(0.14	)		(39	)		(0.08	)		(22	)
Total competitive energy businesses		(0.14	)		(41	)		(0.04	)		(10	)
Other, including parent company expenses		—			—			—			—
Total variation	$	0.02		$	14		$	0.26		$	93


	Earnings to Fixed Charges (Times)
	For the Nine Months Ended September 30, 2010		For the Nine Months Ended September 30, 2009		For the Twelve Months Ended December 31, 2009
Con Edison		3.4		3.1		3.0
CECONY		3.6		3.2		3.1


	Nine Months Ended September 30, 2010								Nine Months Ended September 30, 2009
*(Millions of Dollars)*	Electric		Gas		Steam		2010 Total		Electric		Gas		Steam		2009 Total		2010-2009 Variation
Operating revenues	$	6,402	$	1,126	$	487	$	8,015	$	5,865	$	1,259	$	521	$	7,645	$	370
Purchased power		2,060		—		42		2,102		1,967		—		42		2,009		93
Fuel		192		—		151		343		193		—		211		404		(61	)
Gas purchased for resale		—		408		—		408		—		618		—		618		(210	)
Net revenues		4,150		718		294		5,162		3,705		641		268		4,614		548
Operations and maintenance		1,443		247		142		1,832		1,284		200		122		1,606		226
Depreciation and amortization		464		76		46		586		437		73		44		554		32
Taxes, other than income taxes		1,015		152		65		1,232		893		145		63		1,101		131
Operating income	$	1,228	$	243	$	41	$	1,512	$	1,091	$	223	$	39	$	1,353	$	159

~~Consolidated Edison, Inc.~~CONSOLIDATED EDISON, INC.

~~Consolidated Edison Company of New York, Inc.~~CONSOLIDATED EDISON COMPANY OF NEW YORK, INC.

DATE: ~~November 1, 2010~~May 5, 2011

/S/ ROBERT HOGLUND

Robert Hoglund
Senior Vice President, Chief
Financial Officer and Duly
Authorized Officer