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ED Consolidated Edison

Filed: 18 Feb 21, 4:43pm
0001047862ed:ConsolidatedEdisonCompanyofNewYorkInc.Membered:SystemBenefitChargeCarryingChargeMember2019-12-31

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
___________________________________________________ 
FORM 10-K
___________________________________________________  
    Annual Report Pursuant To Section 13 or 15(d) of the Securities Exchange Act of 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2020
OR
    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 1-14514
Consolidated Edison, Inc.
Exact name of registrant as specified in its charter
and principal office address and telephone number
New York 13-3965100
State of Incorporation 
I.R.S. Employer
ID. Number
4 Irving Place,
New York,New York10003
(212)460-4600
 ___________________________________________________  
Commission File Number 1-1217
Consolidated Edison Company of New York, Inc.
Exact name of registrant as specified in its charter
and principal office address and telephone number
New York 13-5009340
State of Incorporation 
I.R.S. Employer
ID. Number
4 Irving Place,
New York,New York10003
(212)460-4600
 ___________________________________________________  




                                                                                                                         CON EDISON ANNUAL REPORT 20201



Securities Registered Pursuant to Section 12(b) of the Act:
Title of each class  Trading Symbol
Name of each exchange
on which registered
Consolidated Edison, Inc.,  EDNew York Stock Exchange
Common Shares ($.10 par value)  
Securities Registered Pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Consolidated Edison, Inc. (Con Edison)YesxNo ¨
Consolidated Edison Company of New York, Inc. (CECONY)YesxNo ¨
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
Con EdisonYes ¨Nox
CECONYYes ¨Nox
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.
Con EdisonYesxNo ¨
CECONYYesxNo ¨
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Con EdisonYes xNo¨
CECONYYes xNo¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Con Edison
Large accelerated filerAccelerated filerNon-accelerated filer
Smaller reporting companyEmerging growth company
CECONY
Large accelerated filerAccelerated filerNon-accelerated Filer
Smaller reporting companyEmerging growth company

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

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).
Con EdisonYes No x
CECONYYes No x
The aggregate market value of the common equity of Con Edison held by non-affiliates of Con Edison, as of June 30, 2020, was approximately $24.0 billion.
As of January 31, 2021, Con Edison had outstanding 342,419,162 Common Shares ($.10 par value).
2CON EDISON ANNUAL REPORT 2020


All of the outstanding common equity of CECONY is held by Con Edison.

Documents Incorporated By Reference
Portions of Con Edison’s definitive proxy statement for its Annual Meeting of Stockholders to be held on May 17, 2021, to be filed with the Commission pursuant to Regulation 14A, not later than 120 days after December 31, 2020, is incorporated in Part III of this report.
Filing Format
This Annual Report on Form 10-K is a combined report being filed separately by two different registrants: Consolidated Edison, Inc. (Con Edison) and Consolidated Edison Company of New York, Inc. (CECONY). CECONY is a wholly-owned subsidiary of Con Edison and, as such, the information in this report about CECONY also applies to Con Edison. CECONY meets the conditions set forth in General Instruction (I)(1)(a) and (b) of Form 10-K and is therefore filing this Form 10-K with the reduced disclosure format.
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.

                                                                                                                         CON EDISON ANNUAL REPORT 20203



Glossary of Terms
The following is a glossary of abbreviations or acronyms that are used in the Companies’ SEC reports:
Con Edison Companies
Con EdisonConsolidated Edison, Inc.
CECONYConsolidated Edison Company of New York, Inc.
Clean Energy BusinessesCon Edison Clean Energy Businesses, Inc., together with its subsidiaries, including Consolidated Edison Development, Inc., Consolidated Edison Energy, Inc. and Consolidated Edison Solutions, Inc.
Con Edison TransmissionCon Edison Transmission, Inc., together with its subsidiaries
CET ElectricConsolidated Edison Transmission, LLC
CET GasCon Edison Gas Pipeline and Storage, LLC
O&ROrange and Rockland Utilities, Inc.
RECORockland Electric Company
The CompaniesCon Edison and CECONY
The UtilitiesCECONY and O&R
Regulatory Agencies, Government Agencies and Other Organizations
EPAU.S. Environmental Protection Agency
FASBFinancial Accounting Standards Board
FERCFederal Energy Regulatory Commission
IASBInternational Accounting Standards Board
IRSInternal Revenue Service
NJBPUNew Jersey Board of Public Utilities
NJDEPNew Jersey Department of Environmental Protection
NYISONew York Independent System Operator
NYPANew York Power Authority
NYSDECNew York State Department of Environmental Conservation
NYSERDANew York State Energy Research and Development Authority
NYSPSCNew York State Public Service Commission
NYSRCNew York State Reliability Council, LLC
PJMPJM Interconnection LLC
SECU.S. Securities and Exchange Commission
Accounting
AFUDCAllowance for funds used during construction
ASUAccounting Standards Update
GAAPGenerally Accepted Accounting Principles in the United States of America
HLBVHypothetical Liquidation at Book Value
OCIOther Comprehensive Income
VIEVariable Interest Entity
4CON EDISON ANNUAL REPORT 2020


 
Environmental
CO2Carbon dioxide
GHGGreenhouse gases
MGP SitesManufactured gas plant sites
PCBsPolychlorinated biphenyls
PRPPotentially responsible party
RGGIRegional Greenhouse Gas Initiative
SuperfundFederal Comprehensive Environmental Response, Compensation and Liability Act of 1980 and similar state statutes
Units of Measure
ACAlternating current
BcfBillion cubic feet
DtDekatherms
kVKilovolt
kWhKilowatt-hour
MDtThousand dekatherms
MlbThousands of pounds
MMlbMillion pounds
MVAMegavolt ampere
MWMegawatt or thousand kilowatts
MWhMegawatt hour
Other
AMIAdvanced Metering Infrastructure
CLCPAClimate Leadership and Community Protection Act
COSOCommittee of Sponsoring Organizations of the Treadway Commission
COVID-19Coronavirus Disease 2019
DERDistributed energy resources
FitchFitch Ratings
LTIPLong Term Incentive Plan
Moody’sMoody’s Investors Service
REVReforming the Energy Vision
S&PS&P Global Ratings
TCJAThe federal Tax Cuts and Jobs Act of 2017, as enacted on December 22, 2017
VaRValue-at-Risk
                                                                                                                         CON EDISON ANNUAL REPORT 20205



TABLE OF CONTENTS

6CON EDISON ANNUAL REPORT 2020


Introduction
This introduction contains certain information about Con Edison and its subsidiaries, including CECONY. This introduction is not a summary and should be read together with, and is qualified in its entirety by reference to, the more detailed information appearing elsewhere or incorporated by reference in this report.
Con Edison’s mission is to provide energy services to our customers safely, reliably, efficiently and in keeping with our vision for a clean energy future; to provide a workplace that embraces diversity and inclusion and allows employees to realize their full potential; to provide a fair return to our investors; and to improve the quality of life in the communities we serve. The company has ongoing programs designed to support each component of its mission, including initiatives focused on safety, operational excellence and the customer experience.
Con Edison is a holding company that owns:

Consolidated Edison Company of New York, Inc. (CECONY), which provides electric service and gas service in New York City and Westchester County and steam service in parts of Manhattan;
Orange & Rockland Utilities, Inc., which along with its utility subsidiary, Rockland Electric Company (together referred to herein as O&R), provides electric service in southeastern New York and northern New Jersey and gas service in southeastern New York (O&R, together with CECONY referred to as the Utilities);
Con Edison Clean Energy Businesses, Inc., which through its subsidiaries, develops, owns and operates renewable and sustainable energy infrastructure projects and provides energy-related products and services to wholesale and retail customers (Con Edison Clean Energy Businesses, Inc., together with its subsidiaries referred to as the Clean Energy Businesses); and
Con Edison Transmission, Inc., which through its subsidiaries, invests in electric transmission facilities and holds investments in gas pipeline and storage facilities (Con Edison Transmission, Inc., together with its subsidiaries referred to as Con Edison Transmission).
Con Edison anticipates that the Utilities, which are subject to extensive regulation, will continue to provide substantially all of its earnings over the next few years. The Utilities have approved rate plans that are generally designed to cover each company’s cost of service, including capital and other costs of each company’s energy delivery systems. The Utilities recover from their full-service customers (who purchase energy from them), generally on a current basis, the cost the Utilities pay for energy and charge all of their customers the cost of delivery service. See "Utility Regulation" in Item 1, "Risk Factors" in Item 1A and "Rate Plans" in Note B to the financial statements in Item 8.
 
Selected Financial Data
Con Edison
  For the Year Ended December 31,
(Millions of Dollars, except per share amounts)20162017201820192020
Operating revenues$12,075$12,03312,337 12,574 12,246 
Energy costs3,0882,6252,948 2,633 2,283 
Operating income (f)2,7802,7742,664 2,676 2,654 
Net income for common stock1,2451,525(e)1,382 (e)1,343 1,101 
Total assets48,25548,111(a)53,920 (b)58,079 (c)62,895 (d)
Long-term debt14,73514,73117,495 18,527 20,382 
Total equity14,30615,42516,839 18,213 19,065 
Net Income per common share – basic$4.15$4.97$4.43$4.09$3.29
Net Income per common share – diluted$4.12$4.94$4.42$4.08$3.28
Dividends declared per common share$2.68$2.76$2.86$2.96$3.06
Book value per share$46.91$49.72$52.46$54.75$55.70
Average common shares outstanding (millions)
300307312329335
(a)Reflects a $2,384 million increase in net plant, offset by decreases in regulatory assets resulting from the enactment of the federal Tax Cuts and Jobs Act of 2017, as enacted on December 22, 2017 (TCJA) of $2,418 million (including the netting of $1,168 million against the regulatory liability for future income tax) and unrecognized pension and other postretirement costs of $348 million. See Notes B, E, F and L to the financial statements in Item 8.
                                                                                                                         CON EDISON ANNUAL REPORT 20207



(b)Reflects a $4,149 million increase in net plant, offset by a $288 million decrease in regulatory assets for unrecognized pension and other postretirement costs. See Notes B, E, and F to the financial statements in Item 8.
(c)Reflects a $2,140 million increase in net plant and a $303 increase in regulatory assets for unrecognized pension and other postretirement costs. See Notes B, E, and F to the financial statements in Item 8.
(d)Reflects a $2,666 million increase in net plant and a $700 million increase in regulatory assets for unrecognized pension and other postretirement costs. See Notes B, E, and F to the financial statements in Item 8.
(e)In 2017, upon enactment of the TCJA, Con Edison re-measured its deferred tax assets and liabilities based upon the 21 percent corporate income tax rate under the TCJA. As a result, Con Edison decreased its net deferred tax liabilities by $5,312 million, recognized $259 million (or $0.85 per share) in net income, decreased its regulatory asset for future income tax by $1,250 million, decreased its regulatory asset for revenue taxes by $90 million, and accrued a regulatory liability for federal income tax rate change of $3,713 million. In 2018, Con Edison recognized $42 million of income tax expense resulting from a re-measurement of its deferred tax assets and liabilities following the issuance of proposed TCJA regulations. See “Other Regulatory Matters” in Note B and Note L to the financial statements in Item 8.
(f)Excludes the non-service components of pension and other postretirement benefits. See Notes E and F to the financial statements in Item 8.

CECONY 
  
For the Year Ended December 31,

(Millions of Dollars)20162017201820192020
Operating revenues$10,165$10,468$10,680$10,821$10,647
Energy costs2,0592,1412,3392,1702,014
Operating income (e)2,4512,5492,3542,3482,310
Net income1,0561,1041,1961,2501,185
Total assets40,85640,451(a)43,108(b)46,557(c)50,967(d)
Long-term debt12,07312,06513,67614,61416,149
Shareholder’s equity11,82912,43912,91014,14714,849
(a)Reflects a $2,090 million increase in net plant, offset by decreases in regulatory assets resulting from the enactment of the TCJA of $2,305 million (including the netting of $1,123 million against the regulatory liability for future income tax) and unrecognized pension and other postretirement costs of $354 million. See Notes B, E and F to the financial statements in Item 8.
(b)Reflects a $2,165 million increase in net plant and a $265 million decrease in regulatory assets for unrecognized pension and other postretirement costs. See Notes B, E and F to the financial statements in Item 8.
(c)Reflects a $2,040 million increase in net plant and a $292 million increase in regulatory assets for unrecognized pension and other postretirement costs. See Notes B, E and F to the financial statements in Item 8.
(d)Reflects a $2,140 million increase in net plant and a $662 million increase in regulatory assets for unrecognized pension and other postretirement costs. See Notes B, E and F to the financial statements in Item 8.
(e)Excludes the non-service components of pension and other postretirement benefits. See Notes E and F to the financial statements in Item 8.

Significant Developments and Outlook
Con Edison reported 2020 net income of $1,101 million or $3.29 a share compared with $1,343 million or $4.09 a share in 2019. Adjusted earnings were $1,399 million or $4.18 a share in 2020 compared with $1,438 million or $4.38 a share in 2019. See “Results of Operations” in Item 7 and “Non-GAAP Financial Measures” below.
In 2020, the Utilities invested $3,466 million to upgrade and reinforce their energy delivery systems, the Clean Energy Businesses invested $616 million in renewable electric production projects and Con Edison Transmission invested $3 million primarily in the electric transmission business. For 2021, 2022 and 2023 the Utilities expect to invest $3,721 million, $3,478 million and $3,724 million, respectively, for their energy delivery systems, the Clean Energy Businesses expect to invest $250 million, $400 million and $400 million, respectively, in renewable electric production projects and Con Edison Transmission expects to invest $47 million, $65 million and $47 million, respectively, primarily in the electric transmission business. See "Capital Requirements and Resources - Capital Requirements" in Item 1.
Con Edison plans to meet its capital requirements for 2021 through 2023, through internally-generated funds and the issuance of long-term debt and common equity. See “Capital Requirements and Resources - Capital Requirements” in Item 1. The company's plans include the issuance of between $1,900 million and $2,600 million of long-term debt, including for maturing securities, primarily at the Utilities, in 2021 and approximately $1,400 million in aggregate of long-term debt at the Utilities during 2022 and 2023. The planned debt issuance is in addition to the issuance of long-term debt secured by the Clean Energy Businesses’ renewable electric production projects. The company's plans also include the issuance of up to $800 million of common equity in 2021 and approximately $700 million in aggregate of common equity during 2022 and 2023, in addition to equity under its dividend reinvestment, employee stock purchase and long-term incentive plans.
8CON EDISON ANNUAL REPORT 2020


CECONY forecasts average annual growth in peak demand in its service area at design conditions over the next five years for electricity and gas to be approximately 0.8 percent and 1.4 percent, respectively, and an average annual decrease in steam peak demand in its service area at design conditions over the next five years to be approximately 0.4 percent. O&R forecasts an average annual decrease in electric peak demand in its service area at design conditions over the next five years to be approximately 0.5 percent and average annual growth in gas peak demand in its service area over the next five years at design conditions to be approximately 0.2 percent. See “The Utilities” in Item 1.
CECONY established a gas moratorium in March 2019 on new gas service in most of Westchester County. CECONY filed a gas planning analysis with the NYSPSC in July 2020 stating the moratorium could be lifted when increased pipeline capacity is achieved or peak demand is reduced to a level that would enable the company to lift the moratorium and that it is monitoring gas supply constraint in the New York City portion of its service territory. See "The Utilities" in Item 1.

In 2020, due to the COVID-19 pandemic, the Utilities began suspending service disconnections, certain collection notices, final bill collection agency activity, new late payment charges and certain other fees for all customers and the State of New York enacted a law prohibiting New York utilities, including CECONY and O&R, from disconnecting residential customers during the COVID-19 state of emergency. For the year ended 2020, the reserve increases to the allowance for uncollectible accounts associated with the COVID-19 pandemic for CECONY electric and gas operations and O&R electric operations were $73 million and $2 million, respectively, and were deferred pursuant to the legislative, regulatory and related actions provisions of the rate plans as a result of the New York State on "PAUSE" and related executive orders. See "COVID-19 Regulatory Matters" in Note B to the financial statements in Item 8.

In November 2020, the New York State Public Service Commission (NYSPSC) issued two separate show cause orders in its proceedings investigating: (1) the New York utilities’ preparation for and response to Tropical Storm Isaias and the resulting power outages in August 2020 and (2) the July 2019 power outages on the west side of Manhattan and in the Flatbush area of Brooklyn. See "Other Regulatory Matters" in Note B to the financial statements in Item 8.

The NYSPSC also continued its proceedings related to income tax accounting and a July 2018 CECONY steam rupture and concluded its investigations into the Utilities' preparation and response to the March 2018 Winter Storms Riley and Quinn and its proceeding against CECONY for alleged violations of gas operator qualification, performance, and inspection requirements. See "Other Regulatory Matters" in Note B to the financial statements in Item 8.

In 2020, the NYSPSC continued its Reforming the Energy Vision (REV) and related proceedings. See "Environmental Matters - Clean Energy Future - Reforming the Energy Vision" in Item 1. In July 2020, the NYSPSC established a light-duty electric vehicle make-ready program that includes budgets of $290 million and $24 million for CECONY and O&R, respectively, through 2025 for electric vehicle infrastructure for fast charger stations, fleet assessment services for customers interested in fleet electrification and future-proofing so that components can accommodate updates to the quantity or charging capacity of the station. See "Environmental Matters - Clean Energy Future" in Item 1.

The Clean Energy Businesses increased their renewable energy portfolio by 186 MW AC, resulting in a year-end installed capacity of 2,868 MW AC, bringing the annual renewable energy production for 2020 to over 7 terawatt hours. See "Clean Energy Businesses" in Item 1.

In January 2019, Pacific Gas and Electric Company (PG&E) filed for reorganization under Chapter 11 of the U.S. Bankruptcy Code. The output of certain of the Clean Energy Businesses' renewable electric production projects is sold to PG&E under long-term power purchase agreements. As a result of the PG&E bankruptcy, distributions from the related projects to the Clean Energy Businesses were restricted and PG&E-related project debt was reclassified on Con Edison's consolidated balance sheet from long-term debt to long-term debt due within one year. In July 2020, PG&E’s plan of reorganization became effective and the Clean Energy Businesses began receiving previously restricted distributions and all related project debt with a maturity longer than one year was reclassified to long-term debt. See "Clean Energy Businesses - Renewable Electric Production" in Item 1 and "Long-Lived and Intangible Assets" in Note A.

Con Edison Gas Pipeline and Storage, LLC (CET Gas) recorded a pre-tax impairment loss of $320 million ($223 million after-tax) for the year ended December 31, 2020 that reduced the carrying value of its investment
                                                                                                                         CON EDISON ANNUAL REPORT 20209



in Mountain Valley Pipeline LLC (MVP), a joint venture developing a proposed 300-mile gas transmission project in West Virginia and Virginia from $662 million to $342 million. See “Investments” in Note A to the financial statements in Item 8.

CET Gas is considering strategic alternatives with respect to its 50 percent interest in Stagecoach Gas Services, LLC, a joint venture that owns and operates an existing gas pipeline and storage business located in northeastern Pennsylvania and the southern tier of New York. See “Con Edison Transmission,” in Item 1.
10CON EDISON ANNUAL REPORT 2020


Available Information
Con Edison and CECONY file annual, quarterly and current reports and other information, and Con Edison files proxy statements, with the Securities and Exchange Commission (SEC). The SEC maintains an Internet site at www.sec.gov that contains reports, proxy statements, and other information regarding issuers (including Con Edison and CECONY) that file electronically with the SEC.
This information the Companies file with the SEC is also available free of charge on or through the investor information section of their websites as soon as reasonably practicable after the reports are electronically filed with, or furnished to, the SEC. Con Edison’s internet website is at: www.conedison.com; and CECONY’s is at: www.coned.com.
The "About Us - Corporate Governance" section of Con Edison’s website includes the company’s Standards of Business Conduct (its code of ethics) and amendments or waivers of the standards for executive officers or directors, corporate governance guidelines and the charters of the following committees of the company’s Board of Directors: Audit Committee, Corporate Governance and Nominating Committee, Management Development and Compensation Committee, and Safety, Environment, Operations, and Sustainability Committee. This information is available in print to any shareholder who requests it. Requests should be directed to: Corporate Secretary, Consolidated Edison, Inc., 4 Irving Place, New York, NY 10003.
The "About Us - Sustainability Report” section of Con Edison’s website includes “Our Sustainable Future,” the company’s 2019 sustainability report.
Information on the Companies’ websites is not incorporated herein.
Forward-Looking Statements
This report contains forward-looking statements that are intended to qualify for the safe-harbor provisions of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are statements of future expectations and not facts. Words such as "forecasts," "expects," "estimates," "anticipates," "intends," "believes," "plans," "will," "target," and similar expressions identify forward-looking statements. The forward-looking statements reflect information available and assumptions at the time the statements are made, and speak only as of that time. Actual results or developments might differ materially from those included in the forward-looking statements because of various factors including, but not limited to, those discussed under “Risk Factors,” in Item 1A.

Non-GAAP Financial Measures
Adjusted earnings and adjusted earnings per share are financial measures that are not determined in accordance with generally accepted accounting principles in the United States of America (GAAP). These non-GAAP financial measures should not be considered as an alternative to net income for common stock or net income per share, respectively, each of which is an indicator of financial performance determined in accordance with GAAP. Adjusted earnings and adjusted earnings per share exclude from net income and net income per share, respectively, certain other items that the company does not consider indicative of its ongoing financial performance. Management uses these non-GAAP financial measures to facilitate the analysis of the company's financial performance as compared to its internal budgets and previous financial results. Management also uses these non-GAAP financial measures to communicate to investors and others the company’s expectations regarding its future earnings and dividends on its common stock. Management believes that these non-GAAP financial measures also are useful and meaningful to investors to facilitate their analysis of the company's financial performance. The following table is a reconciliation of Con Edison’s reported net income for common stock to adjusted earnings and reported earnings per share to adjusted earnings per share. 
                                                                                                                         CON EDISON ANNUAL REPORT 202011



(Millions of Dollars, except per share amounts)20162017201820192020
Reported net income for common stock – GAAP basis$1,245$1,525$1,382$1,343$1,101
Income tax effect of the Tax Cuts and Jobs Act (a)— (259)42—  
Gain on sale of solar electric production projects (pre-tax)— (2)— —  
Income taxes (b)— — —  
Gain on sale of solar electric production projects (net of tax)
— (1)—  
Gain on sale of the Clean Energy Businesses' retail electric supply business (pre-tax)(104)— — —  
Income taxes (b)48 — — —  
Gain on sale of the Clean Energy Businesses' retail electric supply business (net of tax)(56)— — —  
Goodwill impairment related to the Clean Energy Businesses' energy service business (pre-tax)15 — — —  
Income taxes (b)(3)— — —  
Goodwill impairment related to the Clean Energy Businesses' energy service business (net of tax)12 — — —  
Gain on acquisition of Sempra Solar Holdings, LLC, net of transaction costs (pre-tax) (c)
— — (114)—  
Income taxes (b)— — 33 —  
Gain on acquisition of Sempra Solar Holdings, LLC, net of transaction costs (net of tax) (c)— — (81)—  
Impairment loss related to investment in Mountain Valley Pipeline, LLC (pre-tax) (d)— — — — 320
Income taxes (b)— — — — (97)
Impairment loss related to investment in Mountain Valley Pipeline, LLC (net of tax) (d)— — — 223
HLBV effects of the Clean Energy Businesses (pre-tax) (e)
— — — 98 44
Income taxes (b)— — — (24)(12)
HLBV effects of the Clean Energy Businesses (net of tax) (e)— — — 74 32
Net mark-to-market effects of the Clean Energy Businesses (pre-tax)(5)(1)82757
Income taxes (b)— (2)(6)(14)
Net mark-to-market effects of the Clean Energy Businesses (net of tax)(3)(1)62143
Adjusted earnings (Non-GAAP)$1,198$1,264$1,349$1,438$1,399
Reported earnings per share – GAAP basis (basic)$4.15$4.97$4.43$4.09$3.29
Income tax effect of the Tax Cuts and Jobs Act (a)— (0.85)0.14—  
Gain on sale of solar electric production projects (pre-tax)— — — —  
Income taxes (b)— — — —  
Gain on sale of solar electric production projects (net of tax)
— — — —  
Gain on sale of the Clean Energy Businesses' retail electric supply business (pre-tax)(0.35)— — —  
Income taxes (b)0.16 — — —  
Gain on sale of the Clean Energy Businesses' retail electric supply business (net of tax)(0.19)— — —  
Goodwill impairment related to the Clean Energy Businesses' energy service business (pre-tax)0.07 — — —  
Income taxes (b)(0.03)— — —  
Goodwill impairment related to the Clean Energy Businesses' energy service business (net of tax)0.04 — — —  
Gain on acquisition of Sempra Solar Holdings, LLC, net of transaction costs (pre-tax) (c)
— — (0.36)—  
Income taxes (b)— — 0.10 —  
Gain on acquisition of Sempra Solar Holdings, LLC, net of transaction costs (net of tax) (c)— — (0.26)— — 
Impairment loss related to investment in Mountain Valley Pipeline, LLC (pre-tax) (d)— — — — 0.95 
Income taxes (b)— — — — (0.29)
Impairment loss related to investment in Mountain Valley Pipeline, LLC (net of tax) (d)— — — 0.66 
HLBV effects of the Clean Energy Businesses (pre-tax) (e)
— — — 0.31 0.14 
Income taxes (b)— — — (0.09)(0.04)
HLBV effects of the Clean Energy Businesses (net of tax) (e)— — — 0.22 0.10 
Net mark-to-market effects of the Clean Energy Businesses (pre-tax)(0.02)— 0.03 0.10 0.18 
Income taxes (b)0.01 — (0.01)(0.03)(0.05)
Net mark-to-market effects of the Clean Energy Businesses(0.01)— 0.02 0.070.13
Adjusted earnings per share (Non-GAAP)$3.99$4.12$4.33$4.38$4.18
12CON EDISON ANNUAL REPORT 2020


(a)In 2017, upon enactment of the TCJA, Con Edison re-measured its deferred tax assets and liabilities based upon the 21 percent corporate income tax rate under the TCJA. As a result, Con Edison decreased its net deferred tax liabilities by $5,312 million, recognized $259 million (or $0.85 per share) in net income, decreased its regulatory asset for future income tax by $1,250 million, decreased its regulatory asset for revenue taxes by $90 million, and accrued a regulatory liability for federal income tax rate change of $3,713 million. In 2018, Con Edison recognized $42 million of income tax expense resulting from a re-measurement of its deferred tax assets and liabilities following the issuance of the proposed TCJA regulations. See “Other Regulatory Matters” in Note B and Note L to the financial statements in Item 8.
(b)The amount of income taxes was calculated using a combined federal and state income tax rate between 25-27% for the year ended December 31, 2020, a combined federal and state income tax rate between 22-24% for the year ended December 31, 2019, a combined federal and state income tax rate of 28% for the year ended December 31, 2018 and a combined federal and state income tax rate of 40% for the years ended December 31, 2016-2017.
(c)Gain recognized with respect to jointly-owned renewable energy production projects upon completion of the acquisition of Sempra Solar Holdings, LLC, net of transaction costs for the acquisition. See Note V to the financial statements in Item 8.
(d)Loss recognized with respect to the partial impairment of CET Gas' investment in MVP. See "Investments" in Note A to the financial statements in Item 8.
(e)Income attributable to the non-controlling interest of a tax-equity investor in renewable electric production projects accounted for under the hypothetical liquidation at book value (HLBV) method of accounting. See Note R to the financial statements in Item 8.

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Item 1:    Business

 

14CON EDISON ANNUAL REPORT 2020


Incorporation By Reference
Information in any item of this report as to which reference is made in this Item 1 is hereby incorporated by reference in this Item 1. The use of terms such as “see” or “refer to” shall be deemed to incorporate into Item 1 at the place such term is used the information to which such reference is made.
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PART I
 
Item 1:    Business

Overview
Consolidated Edison, Inc. (Con Edison), incorporated in New York State in 1997, is a holding company that owns all of the outstanding common stock of Consolidated Edison Company of New York, Inc. (CECONY), Orange and Rockland Utilities, Inc. (O&R), Con Edison Clean Energy Businesses, Inc. and Con Edison Transmission, Inc. As used in this report, the term the “Companies” refers to Con Edison and CECONY.
Con Edison
CECONYO&RClean Energy BusinessesCon Edison Transmission
RECO

CET Electric
CET Gas
Con Edison’s principal business operations are those of CECONY, O&R, the Clean Energy Businesses and Con Edison Transmission. CECONY’s principal business operations are its regulated electric, gas and steam delivery businesses. O&R’s principal business operations are its regulated electric and gas delivery businesses. The Clean Energy Businesses develop, own and operate renewable and sustainable energy infrastructure projects and provide energy-related products and services to wholesale and retail customers. Con Edison Transmission invests in electric transmission facilities and holds investments in gas pipeline and storage facilities. Con Edison recorded a pre-tax impairment loss of $320 million for the year ended December 31, 2020 that reduced the carrying value of its investment in Mountain Valley Pipeline LLC and is considering strategic alternatives with respect to its 50 percent interest in Stagecoach Gas Services, LLC. See "Investments" in Note A to the financial statements in Item 8.

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

CECONY
Electric
CECONY provides electric service to approximately 3.5 million customers in all of New York City (except a part of Queens) and most of Westchester County, an approximately 660 square mile service area with a population of more than nine million.

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

Steam
CECONY operates the largest steam distribution system in the United States by producing and delivering approximately 16,554 MMlb of steam annually to approximately 1,576 customers in parts of Manhattan.

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

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

Clean Energy Businesses
Con Edison Clean Energy Businesses, Inc., together with its subsidiaries, are referred to in this report as the Clean Energy Businesses. The Clean Energy Businesses develop, own and operate renewable and sustainable energy infrastructure projects and provide energy-related products and services to wholesale and retail customers.

Con Edison Transmission
Con Edison Transmission, Inc. invests in electric transmission facilities and holds investments in gas pipeline and storage facilities through its wholly-owned subsidiaries, Consolidated Edison Transmission, LLC (CET Electric) and Con Edison Gas Pipeline and Storage, LLC (CET Gas). CET Electric owns a 45.7 percent interest in New York Transco LLC, which owns and has been selected to build additional electric transmission assets in New York. CET Gas owns, through subsidiaries, a 50 percent interest in Stagecoach Gas Services, LLC, a joint venture that owns and operates an existing gas pipeline and storage business located in northeastern Pennsylvania and the southern tier of New York. Con Edison is considering strategic alternatives with respect to its 50 percent interest in Stagecoach Gas Services, LLC. Also, CET Gas and CECONY own 71.2 percent and 28.8 percent interests, respectively, in Honeoye Storage Corporation, which operates a gas storage facility in upstate New York. In addition, CET Gas owns an 11.3 percent interest (that is expected to be reduced to 8.8 percent based on the current project cost estimate and CET Gas’ previous capping of its cash contributions to the joint venture) in Mountain Valley Pipeline LLC, a joint venture developing a proposed 300-mile gas transmission project in West Virginia and Virginia. CET Gas recorded a pre-tax impairment loss of $320 million ($223 million after-tax) for the year ended December 31, 2020 that reduced the carrying value of its investment in Mountain Valley Pipeline LLC from $662 million to $342 million. See "Investments" in Note A to the financial statements in Item 8 and “Con Edison Transmission,” below. Con Edison Transmission, Inc., together with CET Electric and CET Gas, are referred to in this report as Con Edison Transmission.

Utility Regulation
State Utility Regulation

Regulators
The Utilities are subject to regulation by the NYSPSC, that under the New York Public Service Law, is authorized to set the terms of service and the rates the Utilities charge for providing service in New York. See “Rate Plans,” below and in Note B to the financial statements in Item 8. The NYSPSC also approves the issuance of the Utilities’ securities and transactions between the Utilities and Con Edison and its other subsidiaries. See “Capital Resources,” below and Note T to the financial statements in Item 8. The NYSPSC exercises jurisdiction over the siting of electric transmission lines in New York State (see “Con Edison Transmission,” below) and approves mergers or other business combinations involving New York utilities.
In addition, under the New York Public Service Law, the NYSPSC has the authority to (i) impose penalties on New York utilities, which could be material, for violating state utility laws and regulations and its orders; (ii) review, at least every five years, an electric utility’s capability to provide safe, adequate and reliable service, order the utility to comply with additional and more stringent terms of service than existed prior to the review, assess the continued operation of the utility as the provider of electric service in its service territory and propose, and act upon, such measures as are necessary to ensure safe and adequate service; and (iii) based on findings of repeated violations of the New York Public Service Law or rules or regulations adopted thereto that demonstrate a failure of a combination gas and electric utility to continue to provide safe and adequate service, revoke or modify an operating certificate issued to the utility by the NYSPSC (following consideration of certain factors, including public interest and standards deemed necessary by the NYSPSC to ensure continuity of service, and due process). See "Risk Factors" in Item 1A and “Other Regulatory Matters” and "COVID-19 Regulatory Matters" in Note B to the financial statements in Item 8.
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In January 2021, Governor Cuomo proposed legislation that, if enacted, would impact New York utilities, including CECONY and O&R, and that would establish an automatic moratorium on utility disconnections for residential and small business customers during certain states of emergency. See "Risk Factors" in Item 1A and “Other Regulatory Matters” in Note B to the financial statements in Item 8. O&R’s New Jersey subsidiary, RECO, is subject to regulation by the New Jersey Board of Public Utilities (NJBPU). The NYSPSC, together with the NJBPU, are referred to herein as state utility regulators.

New York Utility Industry
Restructuring in the 1990s
In the 1990s, the NYSPSC restructured the electric utility industry in the state. In accordance with NYSPSC orders, the Utilities sold all of their electric generating facilities other than those that also produce steam for CECONY’s steam business (see "Electric Operations – Electric Facilities," below) and provided all of their customers the choice to buy electricity or gas from the Utilities or other suppliers (see "Electric Operations – Electric Sales and Deliveries" and "Gas Operations – Gas Sales and Deliveries," below). In 2020, 60 percent of the electricity and 35 percent of the gas CECONY delivered to its customers, and 52 percent of the electricity and 34 percent of the gas O&R delivered to its customers, was purchased by the customers from other suppliers. In addition, the Utilities no longer control and operate their bulk power electric transmission facilities. See “New York Independent System Operator (NYISO),” below.
Following industry restructuring, there were several utility mergers as a result of which substantially all of the electric and gas delivery service in New York State is now provided by one of five investor-owned utility companies – Con Edison, National Grid plc, Avangrid, Inc. (an affiliate of Iberdrola, S.A.), National Fuel Gas Company or CH Energy Group, Inc. (a subsidiary of Fortis Inc.) – or one of two state authorities – New York Power Authority (NYPA) or Long Island Power Authority.

Rate Plans
Investor-owned utilities in the United States provide delivery service to customers according to the terms of tariffs approved by the appropriate state utility regulator. The tariffs include schedules of rates for service that limit the rates charged by the utilities to amounts that the utilities recover from their customers costs approved by the regulator, including capital costs, of providing service to customers as defined by the tariff. The tariffs implement rate plans adopted by state utility regulators in rate orders issued at the conclusion of rate proceedings. The utilities’ earnings depend on the limits on rates authorized in, and the other provisions of, their rate plans and their ability to operate their businesses in a manner consistent with such rate plans.
The utilities’ rate plans cover specified periods, but rates determined pursuant to a plan generally continue in effect until a new rate plan is approved by the state utility regulator. In New York, either the utility or the NYSPSC can commence a proceeding for a new rate plan, and a new rate plan filed by the utility will generally take effect automatically in approximately 11 months unless prior to such time the NYSPSC approves a rate plan.
In each rate proceeding, rates are determined by the state utility regulator following the submission by the utility of testimony and supporting information, which are subject to review by the staff of the regulator. Other parties with an interest in the proceeding can also review the utility’s proposal and become involved in the rate proceeding. In New York State, the review process is overseen by an administrative law judge who is employed by the NYSPSC. After an administrative law judge issues a recommended decision that generally considers the interests of the utility, the regulatory staff, other parties and legal requisites, the regulator will issue a rate order. The utility and the regulator’s staff and interested parties may enter jointly into a proposed settlement agreement prior to the completion of this administrative process, in which case the agreement could be approved by the regulator with or without modification.
For each rate plan, the revenues needed to provide the utility a return on invested capital is determined by multiplying the utilities’ rate base by the pre-tax weighted average cost of capital determined in the rate plan. In general, rate base, as reflected in a utility's rate plans, is the sum of the utility’s net plant, working capital and certain regulatory assets less deferred taxes and certain regulatory liabilities. The NYSPSC uses a forecast of the average rate base for the year that new rates would be in effect (rate year). The NJBPU uses the rate base balances that exist at the end of the historical 12-month period on which base rates are set. The capital structure used in the weighted average cost of capital is determined using actual and forecast data for the same time periods as rate base. The costs of long-term debt, customer deposits and the allowed return on common equity represent a combination of actual and forecast financing information. The allowed return on common equity is determined by each state’s respective utility regulator. The NYSPSC’s current methodology for determining the allowed return on common equity assigns a one-third weight to an estimate determined from a capital asset pricing model applied to a peer group of utility companies and a two-thirds weight to an estimate determined from a dividend discount model
18CON EDISON ANNUAL REPORT 2020


using stock prices and dividend forecasts for a peer group of utility companies. Both methodologies employ market measurements of equity capital to estimate returns rather than the accounting measurements to which such estimates are applied in setting rates.
Pursuant to the Utilities’ rate plans, there generally can be no change to the rates charged to customers during the respective terms of the rate plans other than specified adjustments provided for in the rate plans.
For information about the Utilities’ rate plans, see Note B to the financial statements in Item 8.

Liability for Service Interruptions
The tariff provisions under which CECONY provides electric, gas and steam service, and O&R provides electric and gas service, limit each company’s liability to pay for damages resulting from service interruptions to circumstances resulting from its gross negligence or willful misconduct. Under RECO's tariff provisions for electric service, the company is not liable for interruptions that are due to causes beyond its control.
CECONY’s tariff for electric service also provides for reimbursement to electric customers for spoilage losses resulting from service interruptions in certain circumstances. In general, the company is obligated to reimburse affected residential and commercial customers for food spoilage of up to approximately $500 and $10,000, respectively, and reimburse affected residential customers for prescription medicine spoilage losses without limitation on amount per claim. The company’s maximum aggregate liability for such reimbursement for an incident is $15 million. The company is not required to provide reimbursement to electric customers for outages attributable to generation or transmission system facilities or events beyond its control, such as storms, provided the company makes reasonable efforts to restore service as soon as practicable.
New York electric utilities are required to provide credits to customers who are without electric service for more than three days. The credit to a customer would equal the portion of the monthly customer charge attributable to the period the customer was without service. If an extraordinary event occurs, the NYSPSC may direct New York gas utilities to implement the same policies.

The NYSPSC has approved a scorecard for use as a guide to assess electric utility performance in restoring electric service during outages that result from a major storm. The scorecard could also be applied by the NYSPSC for other outages or actions. The scorecard includes performance metrics in categories for preparation, operations response, and communications.
Each New York electric utility is required to submit to the NYSPSC annually an emergency response plan for the reasonably prompt restoration of service in the case of widespread outages in the utility’s service territory due to storms or other events beyond the control of the utility. If, after evidentiary hearings or other investigatory proceedings, the NYSPSC finds that the utility failed to implement its plan reasonably, the NYSPSC may deny recovery of any part of the service restoration costs caused by such failure. In May 2020, the NYSPSC approved emergency response plans for CECONY and O&R. In December 2020, CECONY and O&R each submitted updated plans for 2021.

Generic Proceedings
The NYSPSC from time to time conducts “generic” proceedings to consider issues relating to all electric and gas utilities operating in New York State. Proceedings include the REV proceeding and related implementation proceedings, and proceedings relating to data access, retail access, gas planning, energy efficiency and renewable energy programs and climate change risk disclosure. The Utilities are typically active participants in such proceedings.

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Federal Utility Regulation
The Federal Energy Regulatory Commission (FERC), among other things, regulates the transmission and wholesale sales of electricity in interstate commerce and the transmission and sale of natural gas for resale in interstate commerce. In addition, the FERC has the authority to impose penalties, which could be substantial, including penalties for the violation of reliability and cyber security rules. Certain activities of the Utilities, the Clean Energy Businesses and Con Edison Transmission are subject to the jurisdiction of the FERC. The Utilities are subject to regulation by the FERC with respect to electric transmission rates and to regulation by the NYSPSC with respect to electric and gas retail commodity sales and local delivery service. As a matter of practice, the NYSPSC has approved delivery service rates for the Utilities that include both transmission and distribution costs. Wholesale energy and capacity products sold by the Clean Energy Businesses to the regional electric markets are subject to FERC jurisdiction as defined by the independent system operator tariffs. The electric and gas transmission projects in which CET Electric and CET Gas invest are also subject to regulation by the FERC. See “Con Edison Transmission,” below.

New York Independent System Operator (NYISO)
The NYISO is a not-for-profit organization that controls and directs the operation of most of the electric transmission facilities in New York State, including those of the Utilities, as an integrated system. It also administers wholesale markets for electricity in New York State and facilitates the construction of new transmission it considers necessary to meet identified reliability, economic or public policy needs. The New York State Reliability Council (NYSRC) promulgates reliability standards subject to FERC oversight, and the NYISO has agreed to comply with those standards. Pursuant to a requirement that is set annually by the NYSRC, the NYISO requires that entities supplying electricity to customers in New York State have generating capacity (owned, procured through the NYISO capacity markets or contracted for) in an amount equal to the peak demand of their customers plus the applicable reserve margin. In addition, the NYISO has determined that entities that serve customers in New York City must procure sufficient capacity from resources that are electrically located in New York City to cover a substantial percentage of the peak demands of their New York City customers. The NYISO also requires entities that serve customers in the Lower Hudson Valley and New York City customers that are served through the Lower Hudson Valley to procure sufficient capacity from resources electrically located in the Lower Hudson Valley. These requirements apply both to regulated utilities such as CECONY and O&R for the customers they supply under regulated tariffs and to other load serving entities that supply customers on market terms. RECO, O&R’s New Jersey subsidiary, provides electric service in a portion of its service territory that has a different independent system operator – PJM Interconnection LLC (PJM). See “CECONY – Electric Operations – Electric Supply” and “O&R – Electric Operations – Electric Supply,” below.

Competition
The subset of distributed energy resources (DER) that produce electricity are collectively referred to as distributed generation (DG). DG includes solar energy production facilities, fuel cells, and micro-turbines, and provides an alternative source of electricity for the Utilities’ electric delivery customers. Energy storage, though not a form of DG, is also a source of electricity for the Utilities’ electric delivery customers. Typically, customers with DG remain connected to the utility’s delivery system and pay a different rate. Gas delivery customers have electricity, oil and propane as alternatives, and steam customers have electricity, oil and natural gas as alternative sources for heating and cooling their buildings. Micro-grids and community-based micro-grids enable DG to serve multiple locations and multiple customers. Demand reduction and energy efficiency investments provide ways for energy consumers within the Utilities’ service areas to lower their energy usage. The Companies expect DERs and electric alternatives to gas and steam, to increase, and for gas and steam usage to decrease, as the Climate Leadership and Community Protection Act enacted by New York State and the Climate Mobilization Act enacted by New York City in 2019 continue to be implemented. See “Environmental Matters – Clean Energy Future,” below. CECONY’s smart solutions for gas customers include energy efficiency and heating electrification programs. See “CECONY- Gas Operations - Gas Peak Demand,” below. The following table shows the aggregate capacities of the DG projects connected to the Utilities’ distribution systems at the end of the last five years:


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TechnologyCECONYO&R
Total MW, except project number2016201720182019202020162017201820192020
Internal-combustion engines104 108 110 114 129 
Photovoltaic solar135 178 226 276 323 63 75 96 121 154 
Battery energy storage— — — 13 — — — 
Gas turbines40 48 48 48 53 20 20 20 20 20 
Micro turbines10 14 17 18 21 
Fuel cells12 13 20 30 — — — — — 
Steam turbines— — — — — 
Landfill— — — — — 
Total distribution-level DG302 366 420 490 575 88 100 121 148 186 
Number of DG projects12,928 18,090 23,942 30,539 36,194 5,409 6,537 7,566 8,687 9,643 
The Clean Energy Businesses participate in competitive renewable and sustainable energy infrastructure projects and provide energy-related products and services that are subject to different risks than those found in the businesses of the Utilities. See "Clean Energy Businesses," below. Con Edison Transmission invests in electric transmission facilities and holds investments in gas pipeline and storage facilities, the current and prospective customers of which may have competitive alternatives. See "Con Edison Transmission," below.

The Utilities do not consider it reasonably likely that another company would be authorized to provide utility delivery service of electricity, natural gas or steam where the company already provides service. Any such other company would need to obtain NYSPSC consent, satisfy applicable local requirements, install facilities to provide the service, meet applicable services standards and charge customers comparable taxes and other fees and costs imposed on the service. A new delivery company would also be subject to extensive ongoing regulation by the NYSPSC. See “Utility Regulation – State Utility Regulation – Regulators,” above, "The Companies Are Extensively Regulated And Are Subject To Substantial Penalties" in Item 1A and “Other Regulatory Matters” in Note B to the financial statements in Item 8.


The Utilities
CECONY
CECONY, incorporated in New York State in 1884, is a subsidiary of Con Edison and has no significant subsidiaries of its own. Its principal business segments are its regulated electric, gas and steam businesses.

For a discussion of the company’s operating revenues and operating income for each segment, see “Results of Operations” in Item 7. For additional information about the segments, see Note O to the financial statements in Item 8.

Electric Operations
Electric Facilities
CECONY’s capitalized costs for utility plant, net of accumulated depreciation, for distribution facilities were $20,366 million and $19,602 million at December 31, 2020 and 2019, respectively. For its transmission facilities, the costs for utility plant, net of accumulated depreciation, were $3,496 million and $3,380 million at December 31, 2020 and 2019, respectively, and for its portion of the steam-electric generation facilities, the costs for utility plant, net of accumulated depreciation, were $572 million and $591 million, at December 31, 2020 and 2019, respectively. See "CECONY – Steam Operations – Steam Facilities," below.

Distribution Facilities
CECONY owns 62 area distribution substations and various distribution facilities located throughout New York City and Westchester County. At December 31, 2020, the company’s distribution system had a transformer capacity of 33,027 MVA, with 37,119 miles of overhead distribution lines and 98,404 miles of underground distribution lines. The underground distribution lines represent the single longest underground electric delivery system in the United States.

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Transmission Facilities
CECONY’s transmission facilities are located in New York City and Westchester, Orange, Rockland, Putnam and Dutchess counties in New York State. At December 31, 2020, the company owned or jointly owned 569 miles of overhead circuits operating at 138, 230, 345 and 500 kV and 755 miles of underground circuits operating at 69, 138 and 345 kV. The company’s 40 transmission substations and 62 area stations are supplied by circuits operated at 69 kV and above. For information about transmission projects to address, among other things, reliability concerns associated with the scheduled closure of the Indian Point Energy Center (which is owned by Entergy Corporation subsidiaries) see “CECONY – Electric Operations – Electric Supply” and “Con Edison Transmission,” below. CECONY’s transmission facilities interconnect with those of National Grid, Central Hudson Gas & Electric Corporation, O&R, New York State Electric & Gas, Connecticut Light & Power Company, Long Island Power Authority, NYPA and Public Service Electric and Gas Company.

Generating Facilities 
CECONY’s electric generating facilities consist of plants located in Manhattan whose primary purpose is to produce steam for the company's steam business. The facilities have an aggregate capacity of 679 MW. The company expects to have sufficient amounts of gas and fuel oil available in 2021 for use in these facilities.

Electric Sales and Deliveries
CECONY delivers electricity to its full-service customers who purchase electricity from the company. The company also delivers electricity to its customers who choose to purchase electricity from other suppliers (retail choice program). In addition, the company delivers electricity to state and municipal customers of NYPA.
The company charges all customers in its service area for the delivery of electricity. The company generally recovers, on a current basis, the cost of the electricity that it buys and then sells to its full-service customers. It does not make any margin or profit on the electricity it sells. CECONY’s electric revenues are subject to a revenue decoupling mechanism. As a result, its electric delivery revenues are generally not affected by changes in delivery volumes from levels assumed when rates were approved. CECONY’s electric sales and deliveries for the last five years were:
  Year Ended December 31,
  20162017201820192020
Electric Energy Delivered (millions of kWh)
CECONY full service customers19,88619,22720,45220,57920,544
Delivery service for retail choice customers26,81326,13626,26624,75422,000
Delivery service to NYPA customers and others10,0469,95510,1199,8219,027
Total Deliveries in Franchise Area56,74555,31856,83755,15451,571
Electric Energy Delivered ($ in millions)
CECONY full service customers$4,404$4,348$4,706$4,535$4,804
Delivery service for retail choice customers2,7682,7122,6242,4702,391
Delivery service to NYPA customers and others610623652644638
Other operating revenues324289(11)413270
Total Deliveries in Franchise Area$8,106$7,972$7,971$8,062$8,103
Average Revenue per kWh Sold (Cents)
Residential24.925.326.425.326.1
Commercial and industrial19.119.719.318.620.2

For further discussion of the company’s electric operating revenues and its electric results, see “Results of Operations” in Item 7. For additional segment information, see Note O to the financial statements in Item 8.

Electric Peak Demand
The electric peak demand in CECONY’s service area occurs during the summer air conditioning season. The weather during the summer of 2020 was cooler than design weather conditions. CECONY’s 2020 service area actual hourly peak demand was 11,740 MW, which occurred on July 28, 2020. “Design weather conditions” for the electric system is a standard to which the actual hourly peak demand is adjusted for evaluation and planning purposes. Since NYISO-invoked demand reduction programs can only be called upon under specific circumstances, design weather conditions do not include these programs’ potential impact. However, the CECONY forecasted hourly peak demand at design conditions does include the impact of certain demand reduction programs. The
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company estimates that, under design weather conditions, the 2021 service area hourly peak demand will be 12,880 MW. As of January 2021, the company forecasts an average annual increase in hourly electric peak demand in its service area at design weather conditions over the next five years to be approximately 0.8 percent per year, including the effect of certain electric energy efficiency programs. The five-year forecast in peak demand is used by the company for electric supply planning purposes.

Electric Supply
Most of the electricity sold by CECONY to its full-service customers in 2020 was purchased under firm power contracts or through the wholesale electricity market administered by the NYISO. The company expects that these resources will again be adequate to meet the requirements of its customers in 2021. The company plans to meet its continuing obligation to supply electricity to its customers through a combination of electricity purchased under contracts, purchased through the NYISO’s wholesale electricity market, or generated from its electricity generating facilities. For information about the company’s contracts for electric generating capacity, see Notes I and P to the financial statements in Item 8. To reduce the volatility of its customers’ electric energy costs, the company has contracts to purchase electric energy and enters into derivative transactions to hedge the costs of a portion of its expected purchases under these contracts and through the NYISO’s wholesale electricity market.
CECONY owns generating stations in New York City associated primarily with its steam system. As of December 31, 2020, the generating stations had a combined electric capacity of approximately 679 MW, based on 2020 summer test ratings. For information about electric generating capacity owned by the company, see “Electric Operations – Electric Facilities – Generating Facilities,” above.
In general, the Utilities recover their costs of purchasing power for full service customers, including the cost of hedging purchase prices, pursuant to rate provisions approved by the state public utility regulatory authority having jurisdiction. See “Financial and Commodity Market Risks – Commodity Price Risk” in Item 7 and “Recoverable Energy Costs” in Note A to the financial statements in Item 8.
CECONY monitors the adequacy of the electric capacity resources and related developments in its service area, and works with other parties on long-term resource adequacy within the framework of the NYISO reliability planning process. The NYISO process includes obligations on transmission owners (such as CECONY) to construct facilities that may be needed for system reliability if the market does not solve a reliability need identified by the NYISO. See “New York Independent System Operator,” above. In a July 1998 order, the NYSPSC indicated that it “agree(s) generally that CECONY need not plan on constructing new generation as the competitive market develops,” but considers “overly broad” and did not adopt CECONY’s request for a declaration that, solely with respect to providing generating capacity, it will no longer be required to engage in long-range planning to meet potential demand and, in particular, that it will no longer have the obligation to construct new generating facilities, regardless of the market price of capacity.
In April 2020, one of the two nuclear reactors at the Indian Point Energy Center (which is owned by Entergy Corporation subsidiaries) was shut down, while the other is scheduled to be closed in April 2021. The NYISO indicated that these retirements would not cause a reliability need if three units finalize construction and enter service. All three of the units have been placed into service. Two of the units, Bayonne Energy Center II Uprate (Zone J, 120 MW) and CPV Valley Energy Center (Zone G, 678 MW) entered service in 2018 (with the latter in litigation regarding its air permit) and the third unit, Cricket Valley Energy Center (Zone G, 1,020 MW), fully entered service in early 2020 before the retirement of the Indian Point unit.

In 2019, the New York State Department of Environmental Conservation (NYSDEC) issued regulations that may require the retirement or seasonal unavailability of fossil-fueled electric generating units owned by CECONY and others in New York City. The NYSDEC rule limits nitrous oxides (NOx) emissions during the ozone season from May through September and affects older peaking units that are generally located downstate and needed during periods of high electric demand or for local reliability purposes. Compliance with the rule will require affected units (approximately 1,400 MW in CECONY's service territory, of which 65 MW is owned by CECONY) to cease operation during the ozone season, install emission controls, repower, or retire by 2023 or 2025. The NYISO, in its 2020 Reliability Needs Assessment study that was approved by the NYISO board, reported local and bulk transmission system reliability needs that are expected to be caused by the retirement or unavailability of some of the impacted units. In January 2021, CECONY updated its local transmission plan to address the local transmission system reliability needs and expects to submit a plan to the NYISO to address the bulk transmission system reliability needs in the first half of 2021. The local transmission projects were also submitted to the NYSPSC in November 2020 as part of the New York utilities’ Transmission and Distribution Investment Working Group Report, due to the benefits they provide towards meeting New York State’s clean energy goals. CECONY’s implementation of all or part of its plans will be dependent upon the availability of market solutions and/or NYISO’s selection of
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regulated solutions proposed by others. CECONY estimates that the costs of implementing plans to solve the local reliability needs, if required, to be approximately $780 million over 4 years and is unable to estimate the amount to implement plans to solve the bulk reliability needs, if required. In December 2020, CECONY filed a petition with the NYSPSC to recover the potential costs to solve both requirements and expect such costs to be recovered, including a full rate of return, in rates from customers.

Gas Operations
Gas Facilities
CECONY’s capitalized costs for utility plant, net of accumulated depreciation, for gas facilities, which are primarily distribution facilities, were $8,522 million and $7,961 million at December 31, 2020 and 2019, respectively.

Natural gas is delivered by pipeline to CECONY at various points in or near its service territory and is distributed to customers by the company through an estimated 4,341 miles of mains and 377,490 service lines. The company owns a natural gas liquefaction facility and storage tank at its Astoria property in Queens, New York. The plant can store 1,062 MDt of which a maximum of about 240 MDt can be withdrawn per day. The company has about 1,226 MDt of additional natural gas storage capacity at a field in upstate New York, owned and operated by Honeoye Storage Corporation, a corporation 71.2 percent owned by CET Gas and 28.8 percent owned by CECONY.

Gas Sales and Deliveries
The company generally recovers the cost of the gas that it buys and then sells to its full-service customers. It does not make any margin or profit on the gas it sells. CECONY’s gas revenues are subject to a weather normalization clause and a revenue decoupling mechanism. As a result, its gas delivery revenues are generally not affected by changes in delivery volumes from levels assumed when rates were approved. CECONY’s gas sales and deliveries for the last five years were:
Year Ended December 31,
20162017201820192020
Gas Delivered (MDt)
Firm sales
Full service75,89283,00592,30587,63778,515
Firm transportation of customer-owned gas68,44271,35382,47281,71076,614
Total Firm Sales144,334154,358174,777169,347155,129
Interruptible sales (a)8,9577,5537,3519,9038,482
Total Gas Delivered to CECONY Customers153,291161,911182,128179,250163,611
Transportation of customer-owned gas
NYPA43,10137,03334,07939,64341,577
Other (mainly generating plants and interruptible transportation)109,00083,11793,34672,71270,537
Off-system sales— 551951212
Total Sales305,392282,116309,748291,617275,737
Gas Delivered ($ in millions)
Firm sales
Full service$933$1,136$1,356$1,327$1,229
Firm transportation of customer-owned gas426524595593649
Total Firm Sales1,3591,6601,9511,9201,878
Interruptible sales3435404227
Total Gas Delivered to CECONY Customers1,3931,6951,9911,9621,905
Transportation of customer-owned gas
NYPA22222
Other (mainly generating plants and interruptible transportation)5756575455
Off-system sales— — — —  
Other operating revenues (mainly regulatory amortizations)561482811474
Total Sales$1,508$1,901$2,078$2,132$2,036
Average Revenue per Dt Sold
Residential$13.96$15.35$16.71$17.33$18.59
General$9.47$10.86$11.31$11.55$10.77
(a)Includes 4,708, 3,816, 3,326, 5,484 and 3,510 MDt for 2016, 2017, 2018, 2019 and 2020, respectively, which are also reflected in firm transportation and other.
24CON EDISON ANNUAL REPORT 2020


For further discussion of the company’s gas operating revenues and its gas results, see “Results of Operations” in Item 7. For additional segment information, see Note O to the financial statements in Item 8.

Gas Peak Demand
The gas actual peak day demand for firm sales customers in CECONY’s service area occurs during the winter heating season and during the winter of 2020/2021 (through January 31, 2021) occurred on January 29, 2021 when the firm sales customers' demand reached approximately 1,209 MDt. “Design weather conditions” for the gas system is a standard to which the actual peak demand is adjusted for evaluation and planning purposes. The company estimates that, under design weather conditions, the 2021/2022 service area peak day demand for firm sales customers will be 1,692 MDt. The forecasted peak day demand for firm sales customers at design conditions does not include gas used by interruptible gas customers including electric and steam generating stations. As of January 2021, the company forecasts an average annual growth of the gas peak day demand for firm sales customers over the next five years at design conditions to be approximately 1.4 percent in its service area, including the effect of certain gas energy efficiency programs and the temporary moratorium described below. The five-year forecast in peak demand is used by the company for gas supply planning purposes.

In March 2019, due to gas supply constraints, CECONY established a temporary moratorium on new applications for firm gas service in most of Westchester County. In July 2020, CECONY filed a gas planning analysis with the NYSPSC that stated the moratorium could be lifted when increased pipeline capacity is achieved upon completion of the Tennessee pipeline’s 300L East project or peak demand is reduced through efficiency and other demand side reductions to a level that would enable the company to lift the moratorium. Assuming timely regulatory approvals, the Tennessee pipeline project is expected to be completed by November 2023. CECONY's gas planning analysis also stated that the company is monitoring gas supply constraint in the New York City portion of its service territory.
Gas Supply
CECONY and O&R have combined their gas requirements, and contracts to meet those requirements, into a single portfolio. The combined portfolio is administered by, and related management services are provided by, CECONY (for itself and as agent for O&R) and costs are allocated between the Utilities in accordance with provisions approved by the NYSPSC. See Note T to the financial statements in Item 8.
Charges from suppliers for the firm purchase of gas, which are based on formulas or indexes or are subject to negotiation, are generally designed to approximate market prices. The Utilities have contracts with interstate pipeline companies for the purchase of firm transportation from upstream points where gas has been purchased to the Utilities’ distribution systems, and for upstream storage services. Charges under these transportation and storage contracts are approved by the FERC. The Utilities are required to pay certain fixed charges under the supply, transportation and storage contracts whether or not the contracted capacity is actually used. These fixed charges amounted to approximately $347 million in 2020, including $307 million for CECONY. See “Contractual Obligations,” below. At December 31, 2020, the contracts were for various terms extending to 2025 for supply and 2043 for transportation and storage. During 2020, CECONY entered into three new transportation and storage contracts. In addition, the Utilities purchase gas on the spot market and contract for interruptible gas transportation. See “Recoverable Energy Costs” in Note A, Note Q and Note T to the financial statements in Item 8.

Steam Operations
Steam Facilities
CECONY’s capitalized costs for utility plant, net of accumulated depreciation, for steam facilities, including steam's portion of the steam-electric generation facilities, were $1,854 million and $1,813 million at December 31, 2020 and 2019, respectively. See "CECONY – Electric Operations – Electric Facilities," above.
CECONY generates steam at one steam-electric generating station and four steam-only generating stations and distributes steam to its customers through approximately 104 miles of transmission, distribution and service piping.

Steam Sales and Deliveries
                                                                                                                         CON EDISON ANNUAL REPORT 202025



CECONY’s steam sales and deliveries for the last five years were:
Year Ended December 31,
20162017201820192020
Steam Sold (MMlb)
General465490593536445
Apartment house5,7925,7546,3585,9195,131
Annual power13,72213,16614,81113,34010,977
Total Steam Delivered to CECONY Customers19,97919,41021,76219,79516,553
Steam Sold ($ in millions)
General$23$26$30$27$23
Apartment house148158174160136
Annual power378392441395321
Other operating revenues219(14)4528
Total Steam Delivered to CECONY Customers$551$595$631$627$508
Average Revenue per Mlb Sold$27.48$29.68$29.64$29.40$29.00
For further discussion of the company’s steam operating revenues and its steam results, see “Results of Operations” in Item 7. For additional segment information, see Note O to the financial statements in Item 8.

Steam Peak Demand and Capacity
The steam actual hourly peak demand in CECONY’s service area occurs during the winter heating season and during the winter of 2020/2021 (through January 31, 2021) occurred on January 29, 2021 when the actual hourly demand reached approximately 7.0 MMlb per hour. “Design weather conditions” for the steam system is a standard to which the actual hourly peak demand is adjusted for evaluation and planning purposes. The company’s estimate for the winter of 2021/2022 hourly peak demand of its steam customers is about 8.4 MMlb per hour under design weather conditions. As of January 2021, the company forecasts an average annual decrease in steam hourly peak demand in its service area at design weather conditions over the next five years to be approximately 0.4 percent. The five year forecast in peak demand is used by the company for steam asset management purposes.
On December 31, 2020, the steam system was capable of delivering approximately 11.4 MMlb of steam per hour, and CECONY estimates that the system will have the same capability in the 2021/2022 winter.

Steam Supply
27 percent of the steam produced by CECONY in 2020 was supplied by the company’s steam-only generating assets; 53 percent was produced by the company’s steam-electric generating assets, where steam and electricity are primarily cogenerated; and 20 percent was purchased under an agreement with Brooklyn Navy Yard Cogeneration Partners L.P.

O&R
Electric Operations
Electric Facilities
O&R’s capitalized costs for utility plant, net of accumulated depreciation, for distribution facilities were $1,115 million and $1,074 million at December 31, 2020 and 2019, respectively. For its transmission facilities, the costs for utility plant, net of accumulated depreciation, were $290 million and $254 million at December 31, 2020 and 2019, respectively.
O&R and RECO own, in whole or in part, transmission and distribution facilities which include 533 circuit miles of transmission lines, 15 transmission substations, 64 distribution substations, 89,673 in-service line transformers, 3,729 pole miles of overhead distribution lines and 2,210 miles of underground distribution lines. O&R’s transmission system is part of the NYISO system except that portions of RECO’s system are located within the transmission area controlled by PJM.

Electric Sales and Deliveries
O&R delivers electricity to its full-service customers who purchase electricity from the company. The company also delivers electricity to its customers who purchase electricity from other suppliers through the company’s retail choice program.
The company charges all customers in its service area for the delivery of electricity. O&R generally recovers, on a current basis, the cost of the electricity that it buys and then sells to its full-service customers. It does not make any
26CON EDISON ANNUAL REPORT 2020


margin or profit on the electricity it sells. O&R’s New York electric revenues (which accounted for 75 percent of O&R’s electric revenues in 2020) are subject to a revenue decoupling mechanism. As a result, O&R’s New York electric 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 are not subject to a decoupling mechanism. O&R’s electric sales and deliveries for the last five years were:
Year Ended December 31,
20162017201820192020
Electric Energy Delivered (millions of kWh)
Total deliveries to O&R full service customers2,5552,4352,6432,6172,712
Delivery service for retail choice customers3,1802,9762,9742,8852,622
Total Deliveries in Franchise Area5,7355,4115,6175,5025,334
Electric Energy Delivered ($ in millions)
Total deliveries to O&R full service customers$426$433$453$429$442
Delivery service for retail choice customers213201201191186
Other operating revenues(2)8(12)141
Total Deliveries in Franchise Area$637$642$642$634$629
Average Revenue Per kWh Sold (Cents)
Residential18.419.819.118.217.8
Commercial and Industrial14.315.014.413.914.2
For further discussion of the company’s electric operating revenues and its electric results, see “Results of Operations” in Item 7. For additional segment information, see Note O to the financial statements in Item 8.

Electric Peak Demand
The electric peak demand in O&R’s service area occurs during the summer air conditioning season. The weather during the summer of 2020 was cooler than design conditions. O&R’s 2020 service area actual hourly peak demand was 1,430 MW, which occurred on July 27, 2020. “Design weather” for the electric system is a standard to which the actual hourly peak demand is adjusted for evaluation and planning purposes. Since NYISO-invoked demand reduction programs can only be called upon under specific circumstances, design weather conditions do not include these programs’ potential impact. However, the O&R forecasted hourly peak demand at design conditions does include the impact of certain demand reduction programs. The company estimates that, under design weather conditions, the 2021 service area peak demand will be 1,530 MW. The company forecasts an average annual decrease in hourly electric peak demand in its service area at design conditions over the next five years to be approximately 0.5 percent, including the effect of certain electric energy efficiency programs. The five-year forecast in peak demand is used by the company for electric supply planning purposes.

Electric Supply
The electricity O&R sold to its full-service customers in 2020 was purchased under firm power contracts or through the wholesale electricity market. The company expects that these resources will again be adequate to meet the requirements of its customers in 2021. O&R does not own any electric generating capacity. The company plans to meet its continuing obligation to supply electricity to its customers through a combination of electricity purchased under contracts or purchased through the wholesale electricity market. To reduce the volatility of its customers’ electric energy costs, the company has contracts to purchase electric energy and enters into derivative transactions to hedge the costs of a portion of its expected purchases. For information about the company’s contracts, see Note P to the financial statements in Item 8.
In general, the Utilities recover their costs of purchasing power for full service customers, including the cost of hedging purchase prices, pursuant to rate provisions approved by the state public utility regulatory authority having jurisdiction. See “Financial and Commodity Market Risks – Commodity Price Risk,” in Item 7 and “Recoverable Energy Costs” in Note A to the financial statements in Item 8. From time to time, certain parties have petitioned the NYSPSC to review these provisions, the elimination of which could have a material adverse effect on the Companies’ financial position, results of operations or liquidity.

Gas Operations
Gas Facilities
O&R’s capitalized costs for utility plant, net of accumulated depreciation for gas facilities, which are primarily distribution facilities, were $684 million and $656 million at December 31, 2020 and 2019, respectively. Natural gas
                                                                                                                         CON EDISON ANNUAL REPORT 202027



is delivered by pipeline to O&R at various points in or near its service territory and is distributed to customers by the company through an estimated 1,879 miles of mains and 106,701 service lines.

Gas Sales and Deliveries
O&R generally recovers the cost of the gas that it buys and then sells to its full-service customers. It does not make any margin or profit on the gas it sells. O&R’s gas revenues are subject to a weather normalization clause and to a revenue decoupling mechanism. As a result, its gas delivery revenues are generally not affected by changes in delivery volumes from levels assumed when rates were approved. O&R’s gas sales and deliveries for the last five years were:
Year Ended December 31,
20162017201820192020
Gas Delivered (MDt)
Firm sales
Full service9,72310,48012,05012,53711,877
Firm transportation10,3819,8739,9509,4598,271
Total Firm Sales20,10420,35322,00021,99620,148
Interruptible sales3,8533,7713,7463,6683,633
Total Gas Delivered to O&R Customers23,95724,12425,74625,66423,781
Transportation of customer-owned gas
Sales for resale867896959914658
Sales to electric generating stations1891459
Off-system sales16615119
Total Sales24,85825,03526,72126,58324,517
Year Ended December 31,
20162017201820192020
Gas Delivered ($ in millions)
Firm sales
Full service$99$139$166$161$141
Firm transportation7074786362
Total Firm Sales169213244224203
Interruptible Sales37666
Total Gas Delivered to O&R Customers172220250230209
Transportation of customer-owned gas
Sales to electric generating stations— — — —  
Other operating revenues1212(1)2924
Total Sales$184$232$249$259$233
Average Revenue Per Dt Sold
Residential$10.71$13.86$14.22$13.32$12.40
General$8.17$11.08$11.80$10.68$9.51
For further discussion of the company’s gas operating revenues and its gas results, see “Results of Operations” in Item 7. For additional segment information, see Note O to the financial statements in Item 8.

Gas Peak Demand
The gas actual peak day demand for firm sales customers in O&R’s service area occurs during the winter heating season and during the winter of 2020/2021 (through January 31, 2021) occurred on January 29, 2021 when the firm sales customers' demand reached approximately 181 MDt. “Design Weather” for the gas system is a standard to which the actual peak demand is adjusted for evaluation and planning purposes. The company estimates that, under design weather conditions, the 2021/2022 service area peak day demand for firm sales customers will be 232 MDt. The forecasted peak day demand at design conditions does not include gas used by interruptible gas customers including electric generating stations. The company forecasts an average annual growth of the gas peak day demand for firm sales customers over the next five years at design conditions to be approximately 0.2 percent in its service area, including the effect of certain gas energy efficiency programs. The five-year forecast in peak demand is used by the company for gas supply planning purposes.

28CON EDISON ANNUAL REPORT 2020


Gas Supply
O&R and CECONY have combined their gas requirements and purchase contracts to meet those requirements into a single portfolio. See “CECONY – Gas Operations – Gas Supply” above.

                                                                                                                         CON EDISON ANNUAL REPORT 202029



Clean Energy Businesses

The following table provides information about the Clean Energy Businesses' renewable electric production projects that are in operation and/or in construction at December 31, 2020:
Project Name
Generating
Capacity
(MW AC)

Power Purchase Agreement (PPA) Term (In Years) (a)Actual/Expected
In-Service Date (b)
StatePPA Counterparty (c)
Utility Scale
Solar
 PJM assets73(d)2011/2013New Jersey/PennsylvaniaVarious
 New England assets24Various2011/2017Massachusetts/Rhode IslandVarious
 California Solar (e)110252012/2013CaliforniaPG&E
 Mesquite Solar 1 (e)165202013ArizonaPG&E
 Copper Mountain Solar 2 (e)150252013/2015NevadaPG&E
 Copper Mountain Solar 3 (e)255202014/2015NevadaSCPPA
 California Solar 2 (e)80202014/2016CaliforniaSCE/PG&E
 Texas Solar 4 (e)40252014TexasCity of San Antonio
 Texas Solar 5 (e)100252015TexasCity of San Antonio
 Texas Solar 7 (e)112252016TexasCity of San Antonio
 California Solar 3 (e)110202016/2017CaliforniaSCE/PG&E
 Upton Solar (e)158252017TexasCity of Austin
 California Solar 4 (e)240202017/2018CaliforniaSCE
 Copper Mountain Solar 1 (e)58122018NevadaPG&E
 Copper Mountain Solar 4 (e) (f)94202018NevadaSCE
 Mesquite Solar 2 (e) (f)100182018ArizonaSCE
 Mesquite Solar 3 (e) (f)150232018ArizonaWAPA (U.S. Navy)
 Great Valley Solar (e) (f)200172018CaliforniaMCE/SMUD/PG&E/SCE
Crane Solar150122020TexasVistra
 Other26VariousVariousVariousVarious
Total Solar2,395
Wind
 Broken Bow II (e)75252014NebraskaNPPD
 Wind Holdings (e)180VariousVariousSouth Dakota/ MontanaNWE/Basin Electric
 Adams Rose Wind (e)2372016MinnesotaDairyland
 Coram Wind (e)102162016CaliforniaPG&E
 Other34VariousVariousVariousVarious
Total Wind414
Total MW (AC) in Operation2,809
Total MW (AC) in Construction (g)431
Total MW (AC) Utility Scale3,240
Behind the Meter
Total MW (AC) in Operation59
Total MW (AC) in Construction11
Total MW Behind the Meter70
(a)Represents PPA contractual term or remaining term from the date of acquisition.
(b)Represents Actual/Expected In-Service Date or date of acquisition.
(c)PPA Counterparties include: PG&E, Southern California Public Power Authority (SCPPA), Southern California Edison Company (SCE), Western Area Power Administration (WAPA), Marin Clean Energy (MCE), Sacramento Municipal Utility District (SMUD), Nebraska Public Power District (NPPD) and NorthWestern Energy (NWE). For information about PG&E’s bankruptcy, see “Long-Lived and Intangible Assets” in Note A to the financial statements in Item 8.
(d)Solar renewable energy credit hedges are in place, in lieu of power purchase agreements, through 2024.
(e)Project has been pledged as security for project debt financing. See Con Edison's Consolidated Statement of Capitalization in Item 8.
(f)Projects are financed with tax equity. See Note R to the financial statements in Item 8.
(g)Projects in construction are being financed under a variable-rate construction loan facility that matures no later than November 2021. See Note D to the financial statements in Item 8.


30CON EDISON ANNUAL REPORT 2020


Renewable Electric Generation
The Clean Energy Businesses develop, own and operate renewable and sustainable energy infrastructure projects. In December 2018, the Clean Energy Businesses acquired Sempra Solar Holdings, LLC to expand the company's renewable energy asset portfolio. See Note V to the financial statements in Item 8. The Clean Energy Businesses focus their efforts on utility scale renewable electric production projects. The output of most of the projects is sold under long-term power purchase agreements (PPA) with utilities and municipalities. The following table shows the generating capacity (MW AC) of the Clean Energy Businesses' utility scale renewable electric production projects in operation at the end of the last five years:
Generating Capacity (MW AC)20162017201820192020
Renewable electric production projects1,0981,3582,5882,6282,809

Renewable electric volumes produced by utility scale assets for the years ended December 31, 2017, 2018, 2019, and 2020 were:
  Millions of kWh Produced
For the Years Ended December 31,
Description2017201820192020
Renewable electric production projects
Solar2,1582,6805,5065,699
Wind9881,0741,3331,425
Total3,1463,7546,8397,124


                                                                                                                         CON EDISON ANNUAL REPORT 202031



Energy-Related Products and Services
The Clean Energy Businesses provide services to manage the dispatch, fuel requirements and risk management activities for 11,114 MW of generating plants and merchant transmission in the northeastern United States owned by unrelated parties, manage energy supply assets leased from others and provide wholesale hedging and risk management services to renewable electric production projects owned by their subsidiaries.

The Clean Energy Businesses also provide energy-efficiency services to government and commercial customers. The services include the design and installation of lighting retrofits, high-efficiency heating, ventilating and air conditioning equipment and other energy saving technologies.
For information about the Clean Energy Businesses' results, see "Results of Operations" in Item 7 and Note O to the financial statements in Item 8.

Con Edison Transmission
CET Electric
CET Electric owns a 45.7 percent interest in New York Transco LLC (NY Transco). Affiliates of certain other New York transmission owners own the remaining interests.
NY Transco's Transmission Owner Transmission Solutions (TOTS) projects were approved by the NYSPSC in October 2013 in its proceeding to address potential needs that could arise should the Indian Point Energy Center (which is owned by Entergy Corporation subsidiaries) no longer operate. See “CECONY - Electric Operations - Electric Supply,” above.

In April 2015, the FERC issued an order granting certain transmission incentives for the NY Transco TOTS projects. In March 2016, the FERC approved a November 2015 settlement agreement that provides, in relation to the TOTS projects described above, a 10 percent return on common equity (which is comprised of 9.5 percent base return on equity plus an additional 50 basis points) and a maximum actual common equity ratio of 53 percent. The revenues for these TOTS projects costs are collected by the NYISO and allocated across New York State, with 63 percent allocated to load serving entities in the CECONY and O&R service areas.

In December 2015, the NYSPSC issued an order in its competitive proceeding to select AC transmission projects that would relieve transmission congestion between upstate and downstate. The NYSPSC determined that there was a public policy need for new transmission to address congestion and directed the NYISO, under its FERC-approved public policy planning process, to request developers to submit transmission project proposals for two segments of the transmission system. In April 2019, the New York Independent System Operator (NYISO) selected a project that was jointly proposed by National Grid and NY Transco ($600 million estimated cost, excluding certain interconnection costs that are not yet determined) that would increase transmission capacity by 1,850 MW between upstate and downstate when combined with another developer’s project that was also selected by the NYISO. The siting, construction and operation of the projects will require approvals and permits from appropriate governmental agencies and authorities, including the NYSPSC. The NYISO and National Grid/NY Transco entered into an agreement for the development and operation of the project, referred to as the New York Energy Solution (NYES) project, that is scheduled for entry into service by December 2023.  In November 2017, FERC approved a settlement agreement with respect to the National Grid/NY Transco project that provides for a 10.65 percent return on common equity (which is comprised of a 9.65 percent base ROE, with 100 basis points added for congestion reduction and a cost containment mechanism applicable to certain capital costs) and a maximum actual common equity ratio of 53 percent. Revenues for the NYES project are collected by the NYISO including 100 percent of construction work-in-progress, and are allocated across New York State with 84 percent allocated to load serving entities in the CECONY and O&R service areas.

CET Gas
CET Gas, through its subsidiaries, owns a 50 percent interest in Stagecoach Gas Services LLC (Stagecoach), a 71.2 percent interest in Honeoye Storage Corporation (Honeoye) and an interest, described below, in Mountain Valley Pipeline LLC (MVP).

Stagecoach is a joint venture with a subsidiary of Crestwood Equity Partners LP (Crestwood) to own, operate and further develop a gas pipeline and storage business located in northern Pennsylvania and southern New York. Stagecoach provides services to its customers (including CECONY, see Note T to the financial statements in Item 8) through its 181 miles of pipe and 41 Bcf of storage capacity. Con Edison is considering strategic alternatives with respect to its 50 percent interest in Stagecoach Gas Services, LLC. Honeoye, in which CECONY owns the remaining interest, operates a gas storage facility in upstate New York.

32CON EDISON ANNUAL REPORT 2020


MVP is a joint venture with four other partners to construct and operate a proposed 300-mile gas transmission project in West Virginia and Virginia. CET Gas owns an 11.3 percent interest in the joint venture, that is expected to be reduced to 8.8 percent based on the current project cost estimate and CET Gas’ previous capping of its cash contributions to the joint venture. CET Gas recorded a pre-tax impairment loss of $320 million ($223 million after-tax) for the year ended December 31, 2020 that reduced the carrying value of its investment in MVP from $662 million to $342 million. See "Investments - Partial Impairment of Investment in Mountain Valley Pipeline" in Note A to the financial statements in Item 8

For information about Con Edison Transmission's results, see "Results of Operations" in Item 7 and Note O to the financial statements in Item 8.

Capital Requirements and Resources
Capital Requirements
The following table contains the Companies’ capital requirements for the years 2018 through 2020 and their current estimate of amounts for 2021 through 2023:
 ActualEstimate
(Millions of Dollars)201820192020202120222023
CECONY (a)(b)
Electric$1,861$1,851$2,080$2,284$2,106$2,307
Gas1,0501,0781,0441,1261,0141,056
Steam94911221009194
Sub-total3,0053,0203,2463,5103,2113,457
O&R
Electric138142159150184187
Gas676161618380
Sub-total205203220211267267
Con Edison Transmission
CET Electric— 2466547
CET Gas24819711— — 
Sub-total24820534765 47 
Clean Energy Businesses1,791248616250400400
Total capital expenditures5,2493,6764,0854,0183,9434,171
Retirement of long-term securities  
Con Edison – parent company255331,178293650
CECONY1,836 475 350640— — 
O&R5562— — — — 
Clean Energy Businesses45105165149144316
Total retirement of long-term securities1,9381,1955181,967437966
Total capital requirements$7,187$4,871$4,603$5,985$4,380$5,137
(a)CECONY’s capital expenditures for environmental protection facilities and related studies were $490 million, $507 million and $491 million in 2018, 2019 and 2020, respectively, and are estimated to be $674 million in 2021.
(b)Amounts shown do not include amounts for the energy efficiency, demand reduction and combined heat and power programs.

The Utilities have an ongoing need to make substantial capital investments primarily to maintain the reliability of their electric, gas and steam delivery systems. Their estimated construction expenditures also reflect programs that will give customers greater control over their energy usage and bills, help integrate customers' new clean energy technologies into the Utilities’ electric delivery systems and accelerate the replacement of leak-prone gas distribution mains and service lines.

Estimated capital expenditures for Con Edison Transmission primarily reflect planned investments in electric transmission projects. Estimated capital expenditures for the Clean Energy Businesses primarily reflect planned investments in renewable electric production projects. Actual capital expenditures for Con Edison Transmission and the Clean Energy Businesses could increase or decrease significantly from the amounts estimated depending on opportunities.

Contractual Obligations
The following table summarizes the Companies’ material obligations at December 31, 2020 to make payments pursuant to contracts. Long-term debt, capital lease obligations and other noncurrent liabilities are included on their
                                                                                                                         CON EDISON ANNUAL REPORT 202033



balance sheets. Operating leases and electricity purchase agreements (for which undiscounted future annual payments are shown) are described in the notes to the financial statements.
  Payments Due by Period
(Millions of Dollars)Total1 year
or less
Years
2 & 3
Years
4 & 5
After 5
years
Long-term debt (Statement of Capitalization)
CECONY$16,965$640— $250$16,075
O&R900— — — 900
Clean Energy Businesses2,5781494604501,519
Parent2,1211,178943— — 
Interest on long-term debt (a)17,8268791,6931,62913,625
Total long-term debt, including interest40,3902,8463,0962,32932,119
Finance lease obligations (Note J)
CECONY2— — 
O&R1— — — 
Total capital lease obligations3— 
Operating leases (Note J)
CECONY74362115115451
O&R211— — 
Clean Energy Businesses573163535487
Total operating leases1,31879151150938
Purchase obligations
Electricity power purchase agreements – Utilities (Note I)
CECONY
Energy1,609921841861,147
Capacity (b)906138174107487
Total CECONY2,5152303582931,634
O&R
Energy and Capacity (b)1196356— — 
Total electricity and power purchase agreements – Utilities2,6342934142931,634
Natural gas supply, transportation, and storage contracts – Utilities (c)
CECONY
Natural gas supply210144642— 
Transportation and storage4,5563997595422,856
Total CECONY4,7665438235442,856
O&R
Natural gas supply261610— — 
Transportation and storage6835911280432
Total O&R7097512280432
Total natural gas supply, transportation and storage contracts5,4756189456243,288
Other purchase obligations
CECONY (d)6,2241,1091,8961,3321,887
O&R (d)24643145517
Clean Energy Businesses (e)164106351211
Total other purchase obligations6,6341,2582,0761,3951,905
Total$56,454$5,095$6,683$4,791$39,885
(a)Includes interest on variable rate debt calculated at rates in effect at December 31, 2020.
(b)Included in these amounts is the cost of minimum quantities of energy that the Utilities are obligated to purchase at both fixed and variable prices.
(c)Included in these amounts is the cost of minimum quantities of natural gas supply, transportation and storage that the Utilities are obligated to purchase at both fixed and variable prices.
(d)Amounts shown for other purchase obligations, which reflect capital and operations and maintenance costs incurred by the Utilities in running their day-to-day operations, were derived from the Utilities’ purchasing system as the difference between the amounts authorized and the amounts paid (or vouchered to be paid) for each obligation. For many of these obligations, the Utilities are committed to purchase less than the amount authorized. Payments for the “Other Purchase Obligations” are generally assumed to be made ratably over the term of the obligations. Long-term Purchase Obligations, which comprises $5,741 million of "Other Purchase Obligations," were derived from the Utilities' purchasing system by using a method that identifies the remaining purchase obligations. The Utilities believe that unreasonable effort and expense would be involved to enable them to report their “Other Purchase Obligations” in a different manner.
(e)Amounts represent commitments by the Clean Energy Businesses to purchase minimum quantities of electric energy and capacity, renewable energy certificates, natural gas, natural gas pipeline capacity, energy efficiency services and construction services. The Clean
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Energy Businesses have also entered into power purchase agreements for the sale of power from their renewable electric production projects, provisions of which provide for penalties to be paid by the Clean Energy Businesses in the event certain minimum production quantities are not met. The future minimum production quantities and the amount of the penalties, if any, are not estimable and are not included in the amounts shown on the table.

The Companies’ commitments to make payments in addition to these contractual commitments include their other liabilities reflected on their balance sheets, any funding obligations for their pension and other postretirement benefit plans, financial hedging activities, their collective bargaining agreements and Con Edison’s and the Clean Energy Business' guarantees of certain obligations. See Notes E, F, P and “Guarantees” in Note H to the financial statements in Item 8.
Capital Resources
Con Edison is a holding company that operates only through its subsidiaries and has no material assets other than its interests in its subsidiaries. Con Edison finances its capital requirements primarily through internally-generated funds, the sale of its common shares or external borrowings. Con Edison’s ability to make payments on external borrowings and dividends on its common shares depends on receipt of dividends from its subsidiaries, proceeds from the sale of additional common shares or its interests in its subsidiaries or additional external borrowings. See "Con Edison's Ability To Pay Dividends Or Interest Depends On Dividends From Its Subsidiaries" in Item 1A and Note T to the financial statements in Item 8.
For information about restrictions on the payment of dividends by the Utilities and significant debt covenants, see Note C to the financial statements in Item 8.
For information on the Companies’ commercial paper program, revolving credit agreements with banks and on Con Edison's term loan and the construction loan of a subsidiary of the Clean Energy Businesses, see Note D to the financial statements in Item 8.
The Companies require access to the capital markets to fund capital requirements that are substantially in excess of available internally-generated funds. See “Capital Requirements,” above and "The Companies Require Access To Capital Markets to Satisfy Funding Requirements” in Item 1A. Each of the Companies believes that it will continue to be able to access capital, although capital market conditions may affect the timing and cost of the Companies’ financing activities. The Companies monitor the availability and costs of various forms of capital, and will seek to issue Con Edison common stock and other securities when it is necessary or advantageous to do so. See “Coronavirus Disease 2019 (COVID-19) Impacts – Liquidity and Financing” in Item 7. For information about the Companies’ long-term debt and short-term borrowing, see Notes C and D to the financial statements in Item 8.

The Utilities finance their operations, capital requirements and payment of dividends to Con Edison from internally-generated funds, contributions of equity capital from Con Edison, if any, and external borrowings. See "Liquidity and Capital Resources" in Item 7.
Con Edison plans to meet its capital requirements for 2021 through 2023, through internally-generated funds and the issuance of long-term debt and common equity. See “Capital Requirements," above in Item 1. The company's plans include the issuance of between $1,900 million and $2,600 million of long-term debt, including for maturing securities, primarily at the Utilities, in 2021 and approximately $1,400 million in aggregate of long-term debt at the Utilities during 2022 and 2023. The planned debt issuance is in addition to the issuance of long-term debt secured by the Clean Energy Businesses’ renewable electric production projects. The company's plans also include the issuance of up to $800 million of common equity in 2021 and approximately $700 million in aggregate of common equity during 2022 and 2023, in addition to equity under its dividend reinvestment, employee stock purchase and long-term incentive plans.
In 2019, the NYSPSC authorized CECONY, through 2022, to issue up to $5,600 million of debt securities ($3,500 million of which the company had issued as of December 31, 2020). In 2020, the NYSPSC authorized O&R, through 2023, to issue up to $165 million of debt securities ($75 million of which the company had issued as of December 31, 2020). The NYSPSC also authorized CECONY and O&R for such periods to issue debt securities to refund existing debt securities of up to $2,500 million and $125 million, respectively. As of December 31, 2020, the Utilities had not refunded any securities pursuant to these authorizations.

The Clean Energy Businesses have financed their operations and capital requirements primarily with capital contributions and borrowings from Con Edison, internally-generated funds and external borrowings. See Con Edison's Consolidated Statement of Capitalization in Item 8 and Note P to the financial statements in Item 8. In February 2021, a subsidiary of the Clean Energy Businesses borrowed $250 million at a variable-rate, due 2028,
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secured by equity interests in solar electric production projects. The company has entered into fixed-rate interest rate swaps in connection with this borrowing.

Con Edison Transmission has financed its operations and capital requirements primarily with capital contributions and borrowings from Con Edison and internally-generated funds. See "Liquidity and Capital Resources" in Item 7.

For each of the Companies, the common equity ratio for the last five years was:
Common Equity Ratio
(Percent of total capitalization)
20162017201820192020
Con Edison49.3 51.1 49.0 49.6 48.3 
CECONY49.5 50.8 48.6 49.2 47.9 
The credit ratings assigned by Moody’s, S&P and Fitch to the senior unsecured debt and commercial paper of Con Edison, CECONY and O&R are as follows:

Moody'sS&PFitch
Con Edison
Senior Unsecured DebtBaa2BBB+BBB+
Commercial PaperP-2A-2F2
CECONY
Senior Unsecured DebtBaa1A-A-
Commercial PaperP-2A-2F2
O&R
Senior Unsecured DebtBaa2A-A-
Commercial PaperP-2A-2F2

Credit ratings assigned by rating organizations are expressions of opinion and are not recommendations to buy, sell or hold securities. A credit rating is subject to revision or withdrawal at any time by the assigning rating organization. Each rating should be evaluated independently of any other rating. See “The Companies Require Access To Capital Markets To Satisfy Funding Requirements” and “Changes To Tax Laws Could Adversely Affect the Companies” in Item 1A.
In 2017, the United Kingdom’s Financial Conduct Authority announced that it intends to stop persuading or compelling banks to submit London Interbank Offered Rates (LIBOR) after 2021. In November 2020, LIBOR’s administrator announced it plans to consult on its intention to cease publication of one-week and two-month U.S. Dollar LIBOR immediately after the LIBOR publication on December 31, 2021, and the remaining U.S. Dollar LIBOR tenors immediately after publication on June 30, 2023.The Companies have been and are continuing to monitor LIBOR-related market, regulatory and accounting developments. The Companies’ material contracts that reference LIBOR and currently extend beyond 2021 include their $2,250 million credit agreement (see Note D to the financial statements in Item 8). Pursuant to the credit agreement, the Companies may borrow at interest rates determined with reference to a prime rate, the federal funds rate or LIBOR. The credit agreement may be amended by the Companies and the administrative agent to provide for a LIBOR successor rate unless a majority of the lenders do not accept the amendment. In addition, the Clean Energy Businesses have $999 million of variable rate project debt that reference LIBOR and currently extends beyond 2021 and that allows for an alternate reference rate and associated interest rate swaps with a notional amount of $863 million (see Note P to the financial statements in Item 8). Con Edison expects that, prior to the discontinuation of LIBOR, the Clean Energy Businesses will be able to agree with project lenders and swap counterparties on the use of an alternate reference rate as needed. The Companies do not expect that a discontinuation of LIBOR would have a material impact on their financial position, results of operations or liquidity. 









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Environmental Matters

Clean Energy Future
Climate Leadership and Community Protection Act
In 2019, New York State enacted the Climate Leadership and Community Protection Act (CLCPA) that established a goal of 70 percent of the electricity procured by load serving entities regulated by the NYSPSC to be produced by renewable energy systems by 2030 and requires the statewide electrical demand system to have zero emissions by 2040. The law also codified state targets for energy efficiency (end-use energy savings of 185 trillion British thermal units below 2025 energy-use forecast), offshore wind (9,000 megawatts (MW) by 2035), solar (6,000 MW by 2025) and energy storage (3,000 MW by 2030). In addition, the law established a climate action council to recommend measures to attain the law’s greenhouse gases (GHG) limits, including measures to reduce emissions by displacing fossil-fuel fired electricity with renewable electricity or by implementing energy efficiency measures. The climate action council is expected to release draft recommendations for public comment in 2022. The law also requires the consideration of electric transportation and electric heating to achieve its goals. As required by the law, the NYSDEC adopted regulations establishing statewide GHG emissions limits that are 60 percent of 1990 emissions levels by 2030 and 15 percent of 1990 emissions by 2050. The Utilities are unable to predict the impact on them of the implementation of this law.

In October 2020, the NYSPSC, in response to the CLCPA, modified its clean energy standard to establish a new renewable energy credits (RECs) program to support increased renewable energy availability in New York City for which the costs would be socialized statewide. CECONY and O&R have been required to obtain RECs and zero-emissions credits (ZECs) for their full service customers since 2017. Load serving entities may satisfy their RECs obligation by either purchasing RECs acquired through central procurement by the New York State Energy Research and Development Authority (NYSERDA), by self-supply through direct purchase of tradable RECs, or by making alternative compliance payments. Load serving entities purchase ZECs from NYSERDA at prices determined by the NYSPSC.

Prior to enactment of the CLCPA and its expansion of offshore wind goals, in July 2018, the NYSPSC established a goal of 2,400 MW of new offshore wind facilities by 2030. As a result of this goal, load-serving entities, such as CECONY and O&R, will be required to purchase offshore wind renewable energy credits (ORECs) from NYSERDA beginning in 2025 when projects are expected to begin operation. In October 2019, NYSERDA entered into a 25-year power purchase agreement (PPA) with Equinor Wind US LLC for its 816 MW Empire Wind Project, and a 25-year PPA with Sunrise Wind LLC for its 880 MW Sunrise Wind Project. In 2020, NYSERDA issued a new solicitation and provisionally awarded two contracts - one that would expand the Empire Wind Project to 1,260 MW and another to Equinor Wind US LLC for its 1,230 MW Beacon Wind Project.

In August 2019, following the enactment of the CLCPA, the NYSPSC initiated a proceeding to “reconcile resource adequacy programs with New York State’s renewable energy and environmental emission reduction goals.” See “New York Independent System Operator (NYISO),” above and “Climate Change,” below. In May 2020, the NYSPSC initiated a proceeding implementing the Accelerated Renewable Energy Growth and Community Benefit Act to align New York State’s electric system with CLCPA goals. In November 2020, New York’s investor-owned utilities (including the Utilities) and LIPA filed a comprehensive report in this proceeding, identifying proactive local transmission and distribution investments in their systems to achieve the goals of the CLCPA and setting out policy recommendations for how they will identify, prioritize and allocate costs of these and future such projects going forward. CECONY and O&R have identified approximately $4,500 million and $400 million, respectively, in local transmission investment.

Federal and local municipal laws and agencies also regulate emissions levels and impact the CLCPA’s decarbonization pathways. In 2015, the United States Environmental Protection Agency (EPA) issued its Clean Power Plan, which was repealed by the EPA in June 2019, and would have required states to reduce carbon dioxide emissions from existing power plants 32 percent from 2005 levels by 2030. Under the Clean Power Plan, each state would have been required to submit for EPA approval a plan to reduce its emissions to specified rate-based or equivalent mass-based target levels (as determined in accordance with the Clean Power Plan) applicable to the state. For New York State, the emissions rate-based target level for 2030 would have been approximately 20 percent below its 2012 emissions rate. State plans may, among other things, include participation in regional cap-and-trade programs. In June 2019, the EPA issued its Affordable Clean Energy (ACE) rule. The ACE rule establishes guidelines for states to use when developing plans to limit carbon dioxide emissions at coal-fired power plants and includes implementing regulations for future existing-source rules under the Clean Air Act. In September 2019, Con Edison, as part of a coalition of public and private electric utilities, filed a petition in the United States Court of Appeals for the District of Columbia Circuit to challenge the ACE rule and the repeal of the Clean Power Plan. The ACE rule could have potential cost implications for utilities because it has the effect of limiting flexibility to
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use measures such as emissions trading and averaging to cost-effectively meet emissions limits. The ACE rule could also adversely impact initiatives to develop renewable energy sources and promote the use of electric vehicles. In January 2021, the Court of Appeals vacated and remanded the ACE rule to the EPA on the grounds that the ACE Rule was based on a critically mistaken reading of the Clean Air Act. In its ruling, the court adopted the argument advanced by the utilities coalition that the Clean Air Act did not foreclose EPA flexibility to consider other measures, such as emissions trading, to reduce carbon dioxide emissions.

In 2014, New York City announced a goal to reduce GHG emissions 80 percent below 2005 levels by 2050. In May 2019, New York City enacted a package of legislation known as the Climate Mobilization Act, that includes provisions intended to reduce GHG emissions from large buildings by 40 percent from 2005 levels by 2030. Building owners may achieve compliance through operational changes, building retrofits, the purchase of greenhouse gas offsets, the purchase of renewable energy credits and the use of clean distributed energy resources. CECONY is unable to predict the impact on it of the implementation of this law.

Reforming the Energy Vision
In April 2014, the NYSPSC began a multi-year process --Reforming the Energy Vision (REV)-- to improve electric system efficiency and reliability, encourage renewable energy resources, support distributed energy resources (DER), and enable more customer choice. DER includes distributed generation (such as solar electric production facilities, fuel cells and micro-turbines), energy storage, demand reduction and energy efficiency programs. Following a broad assortment of early REV proceedings, implementation of REV has shifted to focus on integrating distributed generation and modifying ratemaking designs.

The NYSPSC is directing development by New York electric utilities of a distributed system platform to manage and coordinate DER in their service areas under NYSPSC regulation and to provide customers, together with third parties, with data and tools to better manage their energy use. The NYSPSC has required the Utilities to file distributed system implementation plans and ordered the Utilities to develop demonstration projects to inform distributed system platform business models. Through December 31, 2020, the NYSPSC staff has approved nine CECONY, three O&R, and one joint CECONY-O&R demonstration projects.

The NYSPSC approved CECONY’s advanced metering infrastructure (AMI) installation plan for its electric and gas delivery businesses, subject to a cap on capital expenditures of $1,285 million. AMI components such as smart meters, a communication network, information technology systems and business applications, will facilitate REV initiatives. The plan provides for full deployment of AMI to CECONY’s customers by 2022. The NYSPSC also authorized O&R to expend $98.5 million to install AMI for its New York customers, which work was complete as of December 31, 2020.

The NYSPSC began to change compensation for DER and phase out net energy metering (NEM) in 2015. In New York, NEM compensates kilowatt-hours exported to the electric distribution system at the full-service rate for production, delivery, taxes and fees. NYSPSC’s policy is to phase in changes to limit annual bill increases to two percent, reducing the impact of this policy on non-participating residential customers that would have occurred under NEM, but the NYSPSC have permitted exceptions to this policy.

Energy Efficiency, Electric Vehicles and Energy Storage
In January 2020, the NYSPSC issued an order directing energy efficiency targets and budgets for New York utilities. The order approved $2,000 million statewide for electric and gas energy efficiency programs and heat pump budgets, and associated targets, for the years 2021 through 2025 to meet the NYSPSC’s goal of reducing electric use by 3 percent annually and gas use by 1.3 percent annually by 2025. The order authorized budgets for the years 2021 through 2025 for: electric energy efficiency programs of $593 million and $13 million for CECONY and O&R, respectively; gas energy efficiency programs of $235 million and $12 million for CECONY and O&R, respectively; and heat pump programs of $227 million and $15 million for CECONY and O&R, respectively. CECONY’s current electric and gas rate plans allow it to recover the costs of energy efficiency expenditures, including a full rate of return, in rates from customers. Previously, CECONY recovered the costs of its energy efficiency programs from its customers primarily through energy efficiency tracker surcharge mechanisms approved by the NYSPSC. CECONY billed customers approximately $100 million annually between 2016 and 2019, through these mechanisms. Pursuant to CECONY's previous electric rate plan, the company supplemented its energy efficiency transition implementation plan with new energy efficiency, electric vehicle and system peak reduction programs, at a total cost of $177 million from 2017 through 2019, that has been reflected in base rates. See Note B to the financial statements in Item 8.

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In May 2018, the NYSPSC initiated a proceeding on the role of electric utilities in providing needed infrastructure and rate options to advance adoption of electric vehicles. In July 2020, the NYSPSC established a light-duty electric vehicle make-ready program that includes budgets of $290 million and $24 million for CECONY and O&R, respectively, through 2025 for electric vehicle infrastructure and related program costs. CECONY’s current electric rate plan also includes funding to offer up to $22 million in incentives for off-peak charging and electric vehicle infrastructure. The NYSPSC authorized both CECONY and O&R to recover these costs, including a full rate of return, in rates from customers.

In December 2018, the NYSPSC issued an order establishing an energy storage goal of up to 3,000 MW of energy storage by 2030 with an interim objective of 1,500 MW by 2025. The order also required CECONY to file an implementation plan for a competitive procurement process to deploy 300 MW of energy storage while O&R and the other New York electric utilities must plan to deploy 10 MW each. CECONY and O&R filed their implementation plans in February 2019. In December 2020, CECONY entered into a contract with a storage developer for energy storage services to provide power capacity of up to 100 MW. The Utilities expect to recover the cost of energy storage services, including a full rate of return, in rates from customers.

Climate Change
As indicated by the Intergovernmental Panel on Climate Change, emissions of greenhouse gases (GHG), including carbon dioxide, are very likely changing the world’s climate.
Climate change could affect customer demand for the Companies’ energy services. It might also cause physical damage to the Companies’ facilities and disruption of their operations due to more frequent and more extreme weather. In August 2020, Tropical Storm Isaias caused significant damage to the Utilities’ electric distribution systems and interrupted service to approximately 530,000 of the Utilities’ customers and caused the second-largest power outage in the Utilities’ history (Superstorm Sandy interrupted service to 1.4 million of the Utilities’ customers’ in October 2012) and resulted in the Utilities incurring substantial response and restoration costs. After Superstorm Sandy, CECONY invested $1,000 million in its infrastructure in order to improve its resilience against storms. In December 2019, CECONY completed a study of climate change vulnerability. The study evaluated present-day infrastructure, design specifications and procedures under a range of potential climate futures. The study identified sea level rise, coastal storm surge, inland flooding from intense rainfall, hurricane-strength winds and extreme heat to be CECONY’s most significant climate-driven risks to its electric, gas and steam systems. The study estimated that CECONY might need to invest between $1,800 million and $5,200 million by 2050 on targeted programs in order to adapt to potential impacts from climate change. During 2020, CECONY further evaluated its future climate change adaptation strategies and developed a climate change implementation plan that it filed with the NYSPSC in December 2020. The climate change implementation plan explains how CECONY will incorporate climate change projections for heat, precipitation, and sea level rise from the 2019 Climate Change Vulnerability Study into its operations to mitigate climate change risks to its assets and operations and establishes an ongoing process to reflect the latest science in the company’s planning. With respect to governance, CECONY is adopting a climate change planning and design guideline, creating an executive committee to oversee implementation of the plan, and is establishing a climate risk and resilience team to execute the day-to-day activities required by the plan.
Based on the most recent data (2018) published by the U.S. Environmental Protection Agency (EPA), Con Edison estimates that its direct GHG emissions constitute less than 0.1 percent of the nation’s GHG emissions. Transportation is the largest source of GHG emissions in New York State. Con Edison’s estimated emissions of GHG during the past five years were:
(Metric tons, in millions (a))
20162017201820192020
CO2 equivalent emissions3.1 3.0 3.1 2.9 2.7 
(a)Estimated emissions for 2020 are based on preliminary data and are subject to third-party verification.
Con Edison’s more than 50 percent decrease in direct GHG emissions (carbon dioxide, methane and sulfur hexafluoride) from the 2005 baseline (6.0 million metric tons) reflects the emission reductions resulting from equipment and repair projects, reduced steam demand, the increased use of natural gas in lieu of fuel oil at CECONY’s steam production facilities as well as projects to reduce sulfur hexafluoride emissions and to replace gas distribution pipes.
CECONY has participated for several years in voluntary initiatives with the EPA to reduce its methane and sulfur hexafluoride emissions. The Utilities reduce methane emissions from the operation of their gas distribution systems through pipe maintenance and replacement programs and by introducing new technologies to reduce fugitive emissions from leaks or when work is performed on operating assets. The Utilities reduce emissions of sulfur hexafluoride, which is used for arc suppression in substation circuit breakers and switches, by using improved
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technologies to locate and repair leaks and by replacing older equipment. The Utilities also actively promote energy efficiency and the use of renewable generation to help their customers reduce their GHG emissions.
Emissions are also avoided by renewable electric production facilities replacing fossil-fueled electric production facilities and the continued operation of upstate nuclear power plants. See – “Clean Energy Future,” above. NYSERDA has been responsible for implementing the renewable portfolio standard (RPS) and Clean Energy Standard (CES) established by the NYSPSC. NYSERDA has entered into agreements with developers of large renewable electric production facilities and the owners of upstate nuclear power plants and pays them premiums based on the facilities’ electric output. These facilities sell their energy output in the wholesale energy and capacity markets administered by the NYISO. As a result of the Utilities’ participation in the NYISO wholesale markets, a portion of the Utilities’ NYISO energy purchases are sourced from renewable electric production facilities. NYSERDA also has provided rebates to customers who installed eligible renewable electric production technologies. The electricity produced by such customer-sited renewables generation offsets the energy that the Utilities would otherwise have procured, thereby reducing the amount of electricity produced by non-renewable production facilities.

In 2019, NYSERDA and the New York State Department of Environmental Conservation (NYSDEC) published the New York State Greenhouse Gas Inventory, which reported that emissions from electricity generated in-state decreased 56 percent between 1990 and 2016 due, in part, to the decrease in the burning of coal and petroleum products in the electricity generation sector in New York and the increase in renewables generation in New York.
In January 2016, the NYSPSC approved a 10-year $5,300 million clean energy fund to be managed by NYSERDA under the NYSPSC's supervision. The clean energy fund has four portfolios: market development; innovation and research; NY Green Bank and NY Sun. The Utilities collect all clean energy fund surcharges through the system benefit charge (including previously authorized RPS, EEPS, Technology and Market Development collections and incremental clean energy fund collections to be collected from electric customers only). The Utilities billed customers clean energy fund surcharges of $212 million, $305 million and $311 million in 2020, 2019, and 2018 respectively. For information about NYSPSC proceedings considering renewable generation see “Clean Energy Future," above.

CECONY is subject to carbon dioxide emissions regulations established by New York State under the Regional Greenhouse Gas Initiative (RGGI). The initiative, a cooperative effort by Northeastern and Mid-Atlantic states, established a decreasing cap on carbon dioxide emissions resulting from the generation of electricity. Under RGGI, affected electric generators are required to obtain emission allowances to cover their carbon dioxide emissions, available primarily through auctions administered by participating states or a secondary market. For the fourth RGGI control period (2018-2020), CECONY purchased allowances for 7.4 million short tons to meet its control period obligation, which is expected to be 6.4 million short tons. Due to changes in the New York State CO2 Budget Trading Program, for the fifth RGGI control period (2021 - 2023) CECONY expects two additional company facilities will be added to the RGGI program. However, since the affected units at these facilities are used only for peaking generation and when needed to restore power to the electric grid, these changes are not expected to materially impact the company’s RGGI obligations. CECONY will purchase RGGI allowances for the fifth control period based on anticipated emissions, which are expected to be similar to past compliance periods.
The cost to the Companies to comply with legislation, regulations or initiatives limiting GHG emissions could be substantial.

Environmental Sustainability
Con Edison’s sustainability strategy, as it relates to the environment, provides that the company is dedicated to making a transformational impact on the environment, our region, and the lives of the people we serve. As part of its strategy, the company seeks, among other things, to reduce direct and indirect emissions; enhance the efficiency of its water use; minimize its impact to natural ecosystems; focus on reducing, reusing and recycling to minimize consumption; and design its work in consideration of climate forecasts. Con Edison has adopted a clean energy commitment to further implement its sustainability strategy. The company’s clean energy commitment seeks to triple energy efficiency investments by 2030; achieve 100 percent clean electricity in New York State by 2040; transition the Utilities’ fleet of light-duty vehicles to electric vehicles; provide all-in support for electric vehicles across the Utilities’ service area; and accelerate the reduction of fossil fuels for building heating.

CECONY
Superfund
The Federal Comprehensive Environmental Response, Compensation and Liability Act of 1980 and similar state statutes (Superfund) impose joint and several liability, regardless of fault, upon generators of hazardous substances
40CON EDISON ANNUAL REPORT 2020


for investigation costs, remediation costs and environmental damages. The sites as to which CECONY has been asserted to have liability under Superfund include its and its predecessor companies’ former manufactured gas sites, its multi-purpose Astoria site, the Gowanus Canal site, the Newtown Creek site and other Superfund sites discussed below. There may be additional sites as to which assertions will be made that the company has liability. For a further discussion of claims and possible claims against the company under Superfund, estimated liability accrued for Superfund claims and recovery from customers of site investigation and remediation costs, see Note G to the financial statements in Item 8.
Manufactured Gas Sites
CECONY and its predecessors formerly owned and operated manufactured gas plants at 51 sites (MGP Sites) in New York City and Westchester County. Many of these sites have been subdivided and are now owned by parties other than CECONY and have been redeveloped for other uses, including schools, residential and commercial developments and hospitals. The NYSDEC is requiring CECONY to investigate, and if necessary, develop and implement remediation programs for the sites, including any neighboring areas to which contamination may have migrated.
CECONY has started remedial investigations at all 51 MGP Sites. After investigations, no MGP impacts have been detected at all or portions of 15 sites, and the NYSDEC has issued No Further Action (NFA) letters for these sites.
Coal tar or other MGP-related contaminants have been detected at the remaining 36 sites. Remedial actions have been completed at all or portions of 14 sites and the NYSDEC has issued NFA letters for these sites. In addition, remedial actions have been completed by property owners at all or portions of four sites under the NYS Brownfield Cleanup Program and Certificates of Completion have been issued by the NYSDEC for these sites. Remedial design, planning or action is ongoing for the remaining sites or portions of sites; however, the information as to the extent of contamination and scope of the remediation likely to be required for many of these sites is incomplete. The company estimates that its undiscounted potential liability for the completion of the site investigation and cleanup of the known contamination on MGP sites (other than the Astoria site, which is discussed below) could range from $576 million to $2,194 million.
Astoria Site
CECONY is permitted by the NYSDEC to operate a hazardous waste storage facility on property owned by it in the Astoria section of Queens, New York. Portions of the property were formerly the location of a manufactured gas plant and also have been used or are being used for, among other things, electric generation operations, electric substation operations, the storage of fuel oil and liquefied natural gas and the maintenance and storage of electric equipment. As a condition of its NYSDEC permit, the company is required to investigate the property and, where environmental contamination is found and action is necessary, to remediate the contamination. The company’s investigations are ongoing. The company has submitted reports to the NYSDEC and the New York State Department of Health and in the future will be submitting additional reports identifying the known areas of contamination. The company estimates that its undiscounted potential liability for the completion of the site investigation and cleanup of the known contamination on the property could range from $177 million to $537 million.
Gowanus Canal
In August 2009, CECONY received a notice of potential liability and request for information from the EPA about the operations of the company and its predecessors at sites adjacent to or near the 1.8 mile Gowanus Canal in Brooklyn, New York. In March 2010, the EPA added the Gowanus Canal to its National Priorities List of Superfund sites. The canal’s adjacent waterfront is primarily commercial and industrial, currently consisting of concrete plants, warehouses and parking lots. The canal is near several residential neighborhoods. In September 2013, the EPA issued its record of decision for the site. The EPA concluded that there was significant contamination at the site, including polycyclic aromatic hydrocarbons, polychlorinated biphenyls (PCBs), pesticides, metals and volatile organic compounds. The EPA selected a remedy for the site that includes dredging and disposal of some contaminated sediments and stabilization and capping of contamination that will not be removed. The EPA estimated the cost of the selected remedy to be $506 million (and has indicated the actual cost could be significantly higher). The EPA has identified 39 potentially responsible parties (PRPs) with respect to the site, including CECONY (which the EPA indicated has facilities that may be a source of PCBs at the site). The EPA ordered the PRPs, including CECONY, to coordinate and cooperate with each other to perform and/or fund the remedial design for the selected remedy, which current estimates indicate could cost approximately $103 million. CECONY is funding its allocated share of the remedial design costs along with the other PRPs. In April 2019, the EPA issued an order that requires the PRPs, including CECONY, to: (1) design and perform bulkhead structural support work, including associated access dredging, along certain portions of the upper reaches of the canal, and (2) complete the design work for bulkhead structural support along certain portions of the middle part of the canal. The PRPs and CECONY are coordinating the implementation of this new order. In January 2020, the EPA issued an order that requires six
                                                                                                                         CON EDISON ANNUAL REPORT 202041



PRPs, including CECONY, to initiate the remedial action work in the upper reaches of the canal following the completion of the bulkhead upgrades. The EPA estimated that this work would cost approximately $125 million and require about 30 months to complete. In November 2020, the PRPs began implementation of the work required under this order. Cleanup in other areas of the canal is not addressed by this order. In addition, other Federal agencies and the NYSDEC have previously notified the PRPs of their intent to perform a natural resource damage assessment for the site. CECONY is unable to estimate its exposure to liability for the Gowanus Canal site.

Newtown Creek
In June 2017, CECONY received a notice of potential liability from the EPA with respect to the Newtown Creek site that was listed in 2010 on the EPA’s National Priorities List of Superfund sites. The EPA has identified 18 potentially responsible parties (PRPs) with respect to the site, including CECONY, and has indicated that it will notify the company as additional PRPs are identified and notified by the EPA. Newtown Creek and its tributaries (collectively, Newtown Creek) form a 3.8 mile border between Brooklyn and Queens, New York. Currently, the predominant land use around Newtown Creek includes industrial, petroleum, recycling, manufacturing and distribution facilities and warehouses. Other uses include trucking, concrete manufacture, transportation infrastructure and a wastewater treatment plant. Newtown Creek is near several residential neighborhoods. Six PRPs, not including CECONY, pursuant to an administrative settlement agreement and order on consent the EPA issued to them in 2011, have been performing a remedial investigation of the site. The EPA indicated that sampling events have shown the sediments in Newtown Creek to be contaminated with a wide variety of hazardous substances including PCBs, metals, pesticides, polycyclic aromatic hydrocarbons and volatile organic compounds. The EPA also indicated that it has reason to believe that hazardous substances have come to be released from CECONY facilities into Newtown Creek. The current schedule anticipates completion of a feasibility study for the site during 2022 and issuance of the EPA's record of decision selecting a remedy for the site shortly thereafter. CECONY is unable to estimate its exposure to liability for the Newtown Creek site.
Other Superfund Sites
In 2016, CECONY and another utility responded to a reported dielectric fluid leak at a New Jersey marina on the Hudson River associated with one or two underwater transmission lines, the New Jersey portion of which is owned and operated by the other utility and the New York portion of which is owned and operated by CECONY. In 2017, after the marina owner had cleared substantial debris from its collapsed pier and rip rap material that it had previously placed over and in the vicinity of the underwater transmission lines in an attempt to shore up its failing pier, a dielectric fluid leak was found and repaired on one of the underwater transmission lines. In August 2018, the EPA declared the leak response complete. CECONY, the other utility and the marina owner are involved in litigation in federal court regarding response and repair costs, related damages, and the future of the lines. In August 2020, CECONY and the other utility entered into a settlement with the United States, under which the utilities settled the federal government’s claims for outstanding response costs, without admitting fault and while preserving the utilities’ rights to pursue recovery from the marina owner. CECONY expects that, consistent with the cost allocation provisions of its prior arrangements with the other utility for the transmission lines, the response and repair costs incurred by CECONY, the other utility and government agencies, net of any recovery from the marina owner, will be shared by CECONY and the other utility and that CECONY's share is not reasonably likely to have a material adverse effect on its financial position, results of operations or liquidity.
CECONY is a PRP at additional Superfund sites involving other PRPs and participates in PRP groups at those sites. The company generally is not managing the site investigation and remediation at these multiparty sites. Work at these sites is in various stages, and investigation, remediation and monitoring activities at some of these sites can be expected to continue over extended periods of time. The company believes that it is unlikely that monetary sanctions, such as penalties, will be imposed by any governmental authority with respect to these sites.
The following table lists each of the additional Superfund sites for which the company anticipates it may have liability. The table also shows for each such site its location, the year in which the company was designated or alleged to be a PRP or to otherwise have responsibilities for the site (shown in the table under “Start”), the name of the court or agency in which proceedings for the site are pending and CECONY’s estimated percentage of the total liability for each site. The company currently estimates that its potential liability for investigation, remediation, monitoring and environmental damages in aggregate for the sites below is less than $2 million. Superfund liability is joint and several. The company’s estimate of its liability for each site was determined pursuant to consent decrees, settlement agreements or otherwise and in light of the financial condition of other PRPs. The company’s actual liability could differ substantially from amounts estimated.
42CON EDISON ANNUAL REPORT 2020


SiteLocationStart
Court or
Agency
% of Total
Liability
Cortese LandfillNarrowsburg, NY1987EPA6.0%
Curcio Scrap MetalSaddle Brook, NJ1987EPA100.0%
Metal Bank of AmericaPhiladelphia, PA1987EPA1.0%
Global LandfillOld Bridge, NJ1988EPA0.4%
Borne ChemicalElizabeth, NJ1997NJDEP0.7%
Pure EarthVineland, NJ2018EPAto be determined

O&R
Superfund
The sites at which O&R has been asserted to have liability under Superfund include its manufactured gas sites and the Superfund sites discussed below. There may be additional sites as to which assertions will be made that O&R has liability. For a further discussion of claims and possible claims against O&R under Superfund, see Note G to the financial statements in Item 8.
Manufactured Gas Sites
O&R and its predecessors formerly owned and operated manufactured gas plants at seven sites (O&R MGP Sites) in Orange County and Rockland County, New York. Three of these sites are now owned by parties other than O&R, and have been redeveloped by them for residential, commercial or industrial uses. The NYSDEC is requiring O&R to develop and implement remediation programs for the O&R MGP Sites including any neighboring areas to which contamination may have migrated.
O&R has completed remedial investigations at all seven of its MGP sites and has received the NYSDEC’s decision regarding the remedial work to be performed at six of the sites. Of the six sites, O&R has completed remediation at four sites. Remedial construction was conducted on a portion of one of the remaining sites in 2019 and remedial design is ongoing for the other remaining sites. The company estimates that its undiscounted potential liability for the completion of the site investigation and cleanup of the known contamination on MGP sites could range from $77 million to $127 million.
Superfund Sites
O&R is a PRP at Superfund sites involving other PRPs and participates in PRP groups at those sites. The company is not managing the site investigation and remediation at these multiparty Superfund sites. Work at these sites is in various stages, and investigation, remediation and monitoring activities at some of these sites is expected to continue over extended periods of time. The company believes that it is unlikely that monetary sanctions, such as penalties, will be imposed by any governmental authority with respect to these sites.
The following table lists each of the Superfund sites for which the company anticipates it may have liability. The table also shows for each such site its location, the year in which the company was designated or alleged to be a PRP or to otherwise have responsibilities for the site (shown in the table under “Start”), the name of the court or agency in which proceedings for the site are pending and O&R’s estimated percentage of the total liability for each site. The company currently estimates that its potential liability for investigation, remediation, monitoring and environmental damages in aggregate for the sites below is less than $1 million. Superfund liability is joint and several. The company’s estimate of its liability for each site was determined pursuant to consent decrees, settlement agreements or otherwise and in light of the financial condition of other PRPs. The company’s actual liability could differ substantially from amounts estimated.
SiteLocationStart
Court or
Agency
% of Total
Liability
Metal Bank of AmericaPhiladelphia, PA1993EPA4.6%
Borne ChemicalElizabeth, NJ1997NJDEP2.3%
Ellis RoadJacksonville, FL2011EPA0.2%

Other Federal, State and Local Environmental Provisions
Toxic Substances Control Act
Virtually all electric utilities, including CECONY and O&R, own equipment containing PCBs. PCBs are regulated under the Federal Toxic Substances Control Act of 1976. The Utilities have procedures in place to manage and dispose of oil and equipment containing PCBs properly when they are removed from service.
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Water Quality
Under NYSDEC regulations, the operation of CECONY’s generating facilities requires permits for water discharges and water withdrawals. Conditions to the renewal of such permits may include limitations on the operations of the permitted facility or requirements to install certain equipment, the cost of which could be substantial. For information about the company’s generating facilities, see “CECONY – Electric Operations – Electric Facilities” and “Steam Operations – Steam Facilities” above in this Item 1.
Certain governmental authorities are investigating contamination in the Hudson River and the New York Harbor. These waters run through portions of CECONY’s service area. Governmental authorities could require entities that released hazardous substances that contaminated these waters to bear the cost of investigation and remediation, which could be substantial.
Air Quality
Under new source review regulations, an owner of a large generating facility, including CECONY’s steam and steam-electric generating facilities, is required to obtain a permit before making modifications to the facility, other than routine maintenance, repair, or replacement, that increase emissions of pollutants from the facility above specified thresholds. To obtain a permit, the facility owner could be required to install additional pollution controls or otherwise limit emissions from the facility. The company reviews on an on-going basis its planned modifications to its facilities to determine the potential applicability of new source review and similar regulations.
The EPA's Transport Rule (also referred to as the Cross-State Air Pollution Rule), which was implemented in January 2015, established a new cap-and-trade program requiring further reductions in air emissions than the Clean Air Intrastate Rule (CAIR) that it replaced. Under the Transport Rule, utilities are to be allocated emissions allowances and may sell the allowances or buy additional allowances. CECONY requested and received NYSPSC approval to change the provisions under which the company recovers its purchased power costs to provide for costs incurred to purchase emissions allowances and revenues received from the sale of allowances. CECONY complied with the Transport Rule in 2020 and expects to comply with the rule in 2021. In 2020, the EPA proposed changes to the Transport Rule in response to a court decision. The EPA is under a court order to finalize this proposed action by March 15, 2021. If the changes to the Transport Rule are adopted as proposed, the number of allowances allocated to CECONY would decrease and the company would be required to purchase allowances to offset the decreased allocation.

The New York State Department of Environmental Conservation issued regulations in 2019 that limits nitrous oxides (NOx) emissions during the ozone season from May through September and affects older peaking units that are generally located downstate and needed during periods of high electric demand or for local reliability purposes. See “CECONY – Electric Operations – Electric Supply,” above.

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, "Air Quality," above and Note G to the financial statements in Item 8.

State Anti-Takeover Law
New York State law provides that a “domestic corporation,” such as Con Edison, may not consummate a merger, consolidation or similar transaction with the beneficial owner of a 20 percent or greater voting stock interest in the corporation, or with an affiliate of the owner, for five years after the acquisition of the voting stock interest, unless the transaction or the acquisition of the voting stock interest was approved by the corporation’s board of directors prior to the acquisition of the voting stock interest. After the expiration of the five-year period, the transaction may be consummated only pursuant to a stringent “fair price” formula or with the approval of a majority of the disinterested stockholders.
Human Capital
Con Edison is committed to attracting, developing, and retaining a talented, diverse workforce. It values and supports a wide range of employee needs and interests. The company’s skilled and experienced workforce enables the company to maintain best-in-class reliability and progress towards achieving a clean energy future. Human capital measures focus on employee safety, hiring the right talent, employee development and retention, diversity and inclusion, emergency response and providing essential services to customers while protecting employees during the COVID-19 pandemic.

On December 31, 2020, Con Edison and its subsidiaries had 14,071 employees, based entirely in the United States including 12,477 at CECONY; 1,118 at O&R, 468 at the Clean Energy Businesses and 8 at Con Edison
44CON EDISON ANNUAL REPORT 2020


Transmission. Of the total CECONY and O&R employees, 7,174 and 574 employees, respectively, were represented by a collective bargaining unit. The collective bargaining agreement covering most of the CECONY employees expires in June 2024. Agreements covering other CECONY employees and O&R employees expire in June 2021 and May 2023, respectively.

Con Edison measures the voluntary attrition rate of its employees in assessing the company’s overall human capital. The company has a low annual turnover rate of approximately 6.5 percent, half of which is attributed to retirements. The average length of service is 14 years. Con Edison strives to have a diverse and inclusive workforce. A comprehensive diversity and inclusion strategy underlies the corporate culture; informing how its employees engage with one another, and setting the foundation for a respectful and inclusive environment. On December 31, 2020, women represented 21.9 percent of the total workforce and people of color represented 49 percent of the workforce, with ethnicity breaking down as follows: 51.0 percent White, 20.8 percent Black, 18.1 percent Hispanic, 8.8 percent Asian and 1.3 percent other.

In managing the business, the company focuses heavily on creating a strong safety culture. Continuous focus on safety while performing work is paramount, and leaders and managers are committed to implementing programs and practices that promote the right knowledge, skills, and attitudes to successfully undertake the responsibilities of safety, including required training for both field and office employees. To that end, the company has a dedicated facility, the Learning Center, that offers classes to employees covering technical courses, skills enhancement, safety, and leadership development. During 2020, employees spent almost 500,000 hours in instructor-led training. Further, the company maintains a career development and succession planning program that is committed to helping employees grow their careers, talents, skills and abilities. In addition to their daily job functions, employees of the Utilities are assigned to and trained on a position for emergency response that is mobilized in the event of a weather event or emergency.

As a result of the COVID-19 pandemic, 60 percent of the total workforce was working remotely as of December 31, 2020. The viability of a mobile workforce was made possible by digital software and smart device capabilities that helped employees to collaborate with each other and remain productive while complying with health requirements. Even as the company continues to respond to the pandemic, the entire CECONY and O&R workforce is available in the event of an emergency that requires on-site presence. During 2020, Con Edison and its subsidiaries managed their operations and resources while avoiding lay-offs and furloughs and continued to recruit, interview, and hire internal and external applicants to fill critical positions. Con Edison, and its subsidiaries support employee health through mandatory pre-entry symptom surveys for employees arriving at all company locations, regular cleaning and disinfecting of all work and common areas, promoting social distancing, requiring face coverings, and directing employees to work remotely whenever possible.

Available Information
For the sources of information about the Companies, see “Available Information” in the “Introduction” appearing before this Item 1.
Item 1A: Risk Factors
Information in any item of this report as to which reference is made in this Item 1A is incorporated by reference herein. The use of such terms as “see” or “refer to” shall be deemed to incorporate at the place such term is used the information to which such reference is made.
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 Companies have established an enterprise risk management program to identify, assess, manage and monitor its major business risks based on established criteria for the severity of an event, the likelihood of its occurrence, and the programs in place to control the event or reduce the impact. The Companies’ major risks include:
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Regulatory/Compliance Risks:
The Companies Are Extensively Regulated And Are Subject To Substantial Penalties.    The Companies’ operations require numerous permits, approvals and certificates from various federal, state and local governmental agencies. State utility regulators may seek to impose substantial penalties on the Utilities for violations of state utility laws, regulations or orders. In addition, the Utilities' rate plans usually include negative revenue adjustments for failing to meet certain operating and customer satisfaction standards. In January 2021, Governor Cuomo proposed legislation that, if enacted, would establish an automatic moratorium on disconnections of residential and small business customers by the Utilities during certain states of emergency. In November 2020, the NYSPSC issued orders to show cause why substantial penalties should not be imposed on the Utilities regarding their preparation for and response to Tropical Storm Isaias and on CECONY regarding its actions and/or omissions prior to, during, and after the July 2019 power outages on the west side of Manhattan and in the Flatbush area of Brooklyn. The orders further indicated that should the NYSPSC confirm that certain alleged violations demonstrate a failure by the Utilities to continue to provide safe and adequate service, the NYSPSC would be authorized to commence a proceeding to revoke or modify the Utilities’ operating certificates. See Note B to the financial statements in Item 8. FERC has the authority to impose penalties on the Utilities, the Clean Energy Businesses and the projects that Con Edison Transmission invests in, which could be substantial, for violations of the Federal Power Act, the Natural Gas Act or related rules, including reliability and cyber security rules. Environmental agencies may seek penalties for failure to comply with laws, regulations or permits. The Companies may also be subject to penalties from other regulatory agencies. The Companies may be subject to new laws, regulations or other requirements or the revision or reinterpretation of such requirements, which could adversely affect them. See “Utility Regulation", "Competition" and “Environmental Matters – Climate Change" and "Environmental Matters - Other Federal, State and Local Environmental Provisions” in Item 1, “Application of Critical Accounting Policies” in Item 7 and “COVID-19 Regulatory Matters” and “Other Regulatory Matters” in Note B to the financial statements in Item 8.

The Utilities’ Rate Plans May Not Provide A Reasonable Return.    The Utilities have rate plans approved by state utility regulators that limit the rates they can charge their customers. The rates are generally designed for, but do not guarantee, the recovery of the Utilities’ cost of service (including a return on equity). See “Utility Regulation – State Utility Regulation – Rate Plans” in Item 1 and “Rate Plans” in Note B to the financial statements in Item 8. Rates usually may not be changed during the specified terms of the rate plans other than to recover energy costs and limited other exceptions. The Utilities’ actual costs may exceed levels provided for such costs in the rate plans (see “COVID-19 Regulatory Matters” in Note B to the financial statements in Item 8). State utility regulators can initiate proceedings to prohibit the Utilities from recovering from their customers the cost of service (including energy costs and storm restoration costs) that the regulators determine to have been imprudently incurred (see "Other Regulatory Matters" in Note B to the financial statements in Item 8). The Utilities have from time to time entered into settlement agreements to resolve various prudence proceedings.

The Companies May Be Adversely Affected By Changes To The Utilities’ Rate Plans.    The Utilities’ rate plans typically require action by regulators at their expiration dates, which may include approval of new plans with different provisions. The need to recover from customers increasing costs, taxes or state-mandated assessments or surcharges could adversely affect the Utilities’ opportunity to obtain new rate plans that provide a reasonable rate of return and continue important provisions of current rate plans. The Utilities’ current New York electric and gas rate plans include revenue decoupling mechanisms and their New York electric, gas and steam rate plans include provisions for the recovery of energy costs and reconciliation of the actual amount of pension and other postretirement, environmental and certain other costs to amounts reflected in rates. See “Rate Plans” in Note B to the financial statements in Item 8.
46CON EDISON ANNUAL REPORT 2020


Operations Risks:
The Failure Of, Or Damage To, The Companies’ Facilities Could Adversely Affect The Companies.    The Utilities provide electricity, gas and steam service using energy facilities, many of which are located either in, or close to, densely populated public places. See the description of the Utilities’ facilities in Item 1. A failure of, or damage to, these facilities, or an error in the operation or maintenance of these facilities, could result in bodily injury or death, property damage, the release of hazardous substances or extended service interruptions. Impacts of climate change, such as sea level rise, coastal storm surge, inland flooding from intense rainfall, hurricane-strength winds and extreme heat could damage facilities and the Utilities may experience more severe consequences from attempting to operate during and after such events. The Utilities’ response to such events may be perceived to be below customer expectations. The Utilities could be required to pay substantial amounts that may not be covered by the Utilities’ insurance policies to repair or replace their facilities, compensate others for injury or death or other damage and settle any proceedings initiated by state utility regulators or other regulatory agencies. The occurrence of such events could also adversely affect the cost and availability of insurance. See “Other Regulatory Matters” in Note B and “Manhattan Explosion and Fire” in Note H to the financial statements in Item 8. Changes to laws, regulations or judicial doctrines could further expand the Utilities’ liability for service interruptions. See “Utility Regulation – State Utility Regulation” and "Environmental Matters – Climate Change" in Item 1.
A Cyber Attack Could Adversely Affect The Companies.    The Companies and other operators of critical energy infrastructure and energy market participants face a heightened risk of cyber attack and the Companies’ businesses require the continued operation of information systems and network infrastructure. See Item 1 for a description of the businesses of the Utilities, the Clean Energy Businesses and Con Edison Transmission. Cyber attacks may include hacking, viruses, malware, denial of service attacks, ransomware or other security breaches, including loss of data. Cyber threats to the electric and gas systems are increasing in sophistication, magnitude and frequency. There has been a growing use of COVID-19 related themes by malicious cyber actors and the significant increase in employees working remotely has increased the attack surface area for the Companies as well as their contractors and vendors.Interconnectivity with customers through advanced metering infrastructure, independent system operators, energy traders and other energy market participants, suppliers, contractors and others also exposes the Companies’ information systems and network infrastructure to an increased risk of cyber incidents, including attacks, and increases the risk that a cyber incident or attack on the Companies could affect others. In the event of a cyber incident or attack that the Companies were unable to defend against or mitigate, the Companies could have their operations and the operations of their customers and others disrupted. The Companies could also have their financial and other information systems and network infrastructure impaired, property damaged, and customer and employee information stolen; experience substantial loss of revenues, response costs and other financial loss; and be subject to increased regulation, litigation, penalties and damage to their reputation. In December 2020, it was announced that updates from SolarWinds, a network monitoring tool used by CECONY, O&R and the Clean Energy Businesses, was compromised and facilitated a cyberattack against multiple private and public sector entities. The Companies have experienced cyber incidents and attacks, including the recent SolarWinds attack, although none of the incidents or attacks had a material impact.

The Failure Of Processes and Systems And The Performance Of Employees And Contractors Could Adversely Affect The Companies.    The Companies have developed business processes and use information and communication systems for operations, customer service, legal compliance, personnel, accounting, planning and other matters. The Companies have completed a multi-year, phased transition of information technology services, including application maintenance and support and infrastructure and operations services, to a contractor. The failure of the Companies’ or its contractors' business processes or information and communication systems or the failure by the Companies’ employees or contractors to follow procedures, their unsafe actions, errors or intentional misconduct, cyber incidents or attacks, or work stoppages could adversely affect the Companies’ operations and liquidity and result in substantial liability, higher costs and increased regulatory requirements. The violation of laws or regulations by employees or contractors for personal gain may result from contract and procurement fraud, extortion, bribe acceptance, fraudulent related-party transactions and serious breaches of corporate policy or standards of business conduct. See “Human Capital” in Item 1.
Environmental Risks:
The Companies Are Exposed To Risks From The Environmental Consequences Of Their Operations.    The Companies are exposed to risks relating to climate change and related matters. In 2019, CECONY completed a climate change vulnerability study and during 2020, CECONY further evaluated its future climate change adaptation strategies and developed a climate change implementation plan. New York State enacted the Climate Leadership and Community Protection Act and New York City enacted the Climate Mobilization Act. See “Environmental Matters – Clean Energy Future” in Item 1. CECONY may also be impacted by regulations requiring reductions in air emissions. See “Environmental Matters – Other Federal, State and Local Environmental Provisions – Air Quality” in Item 1. In addition, the Utilities are responsible for hazardous substances, such as asbestos, PCBs and coal tar, that
                                                                                                                         CON EDISON ANNUAL REPORT 202047



have been used or produced in the course of the Utilities’ operations and are present on properties or in facilities and equipment currently or previously owned by them. See “Environmental Matters” in Item 1 and Note G to the financial statements in Item 8. The Companies could be adversely affected if a causal relationship between electric and magnetic fields and adverse health effects were to be established.

Financial and Market Risks:
A Disruption In The Wholesale Energy Markets Or Failure By An Energy Supplier or Customer Could Adversely Affect The Companies.     Almost all the electricity and gas the Utilities sell to their full-service customers is purchased through the wholesale energy markets or pursuant to contracts with energy suppliers. See the description of the Utilities’ energy supply in Item 1. A disruption in the wholesale energy markets or a failure on the part of the Utilities’ energy suppliers or operators of energy delivery systems that connect to the Utilities’ energy facilities could adversely affect their ability to meet their customers’ energy needs and adversely affect the Companies. The Utilities' ability to gain access to additional energy supplies, if needed, depends on effective markets and siting approvals for developer projects, which the Utilities do not control. See “CECONY - Gas Peak Demand” in Item 1. The Clean Energy Businesses sell the output of their renewable electric production projects under long-term power purchase agreements with utilities and municipalities, and a failure of the production projects could adversely affect Con Edison.
The Companies Have Substantial Unfunded Pension And Other Postretirement Benefit Liabilities.    The Utilities have substantial unfunded pension and other postretirement benefit liabilities. The Utilities expect to make substantial contributions to their pension and other postretirement benefit plans. Significant declines in the market values of the investments held to fund pension and other postretirement benefits could trigger substantial funding requirements under governmental regulations. See “Application of Critical Accounting Policies – Accounting for Pensions and Other Postretirement Benefits” and “Financial and Commodity Market Risks” in Item 7 and Notes E and F to the financial statements in Item 8.
Con Edison’s Ability To Pay Dividends Or Interest Depends On Dividends From Its Subsidiaries.    Con Edison’s ability to pay dividends on its common stock or interest on its external borrowings depends primarily on the dividends and other distributions it receives from its subsidiaries. The dividends that the Utilities may pay to Con Edison are limited by the NYSPSC to not more than 100 percent of their respective income available for dividends calculated on a two-year rolling average basis, with certain exceptions. See “Dividends” in Note C and Note T to the financial statements in Item 8.
The Companies Require Access To Capital Markets To Satisfy Funding Requirements.    The Utilities estimate that their construction expenditures will exceed $10,800 million over the next three years. The Utilities use internally-generated funds, equity contributions from Con Edison, if any, and external borrowings to fund the construction expenditures. The Clean Energy Businesses are investing in renewable generation and sustainable energy infrastructure projects that require funds in excess of those produced in the businesses. Con Edison expects to finance its capital requirements primarily through internally generated funds, the sale of its common shares or external borrowings. Changes in financial market conditions or in the Companies’ credit ratings could adversely affect their ability to raise new capital and the cost thereof. See “Capital Requirements and Resources” in Item 1.
Changes To Tax Laws Could Adversely Affect the Companies.  Changes to tax laws, regulations or interpretations thereof could have a material adverse impact on the Companies. Depending on the extent of these changes, the changes could also adversely impact the Companies’ credit ratings and liquidity. The reduction in the federal corporate income tax rate to 21 percent under the TCJA resulted in decreased cash flows from operating activities, and requires increased cash flows from financing activities, for the Utilities. See “Capital Requirements and Resources – Capital Resources” in Item 1, “Liquidity and Capital Resources – Cash Flows from Operating Activities” in Item 7, "Rate Plans" and "Other Regulatory Matters" in Note B and Note L to the financial statements in Item 8.

48CON EDISON ANNUAL REPORT 2020


Other Risks:
The Companies Face Risks Related To Health Epidemics And Other Outbreaks, Including The COVID-19 Pandemic.    The COVID-19 pandemic has impacted, and continues to impact, countries, communities, supply chains and markets. During 2020, the Companies’ service territories included some of the most severely impacted counties in the United States. As a result of the COVID-19 pandemic, there has been an economic slowdown in the Companies’ service territories, decreased demand for the services that they provide and changes in governmental and regulatory policy. The decline in business activity in the Companies’ service territories has resulted in lower billed sales revenues and increased difficulty of customers to pay bills. Although the Utilities’ New York electric and gas businesses have largely effective revenue decoupling mechanisms in place, lower billed sales revenues and higher uncollectible accounts have impacted and could continue to impact the Companies’ liquidity. The Utilities have also suspended service disconnections, new late payment charges and certain other fees for customers, which may result in a further increase to bad debt expense. The Companies will continue to monitor developments relating to the COVID-19 pandemic; however, the Companies cannot predict the extent to which, COVID-19 may have a material impact on liquidity, financial condition, and results of operations. The situation is changing rapidly and future impacts may materialize that are not yet known. Accordingly, the extent to which COVID-19 may impact these matters will depend on future developments that are highly uncertain and cannot be predicted, including the success of vaccination efforts, actions that federal, state and local governmental or regulatory agencies may continue to take in response to the COVID-19 pandemic, and other actions taken to contain it or treat its impact, among others. See “Coronavirus Disease 2019 (COVID-19) Impacts” in Item 7 and “COVID-19 Regulatory Matters” in Note B.

The Companies’ Strategies May Not Be Effective To Address Changes In The External Business Environment.    The failure to identify, plan and execute strategies to address changes in the external business environment could have a material adverse impact on the Companies. Con Edison seeks to provide shareholder value through continued dividend growth, supported by earnings growth in regulated utilities and contracted electric and gas assets. Changes to public policy, laws or regulations (or interpretations thereof), customer behavior or technology could significantly impact the value of the Utilities’ energy delivery facilities, the Clean Energy Businesses’ renewable and sustainable energy infrastructure projects and Con Edison Transmission's investment in electric and gas transmission projects. Such changes could also affect the Companies’ opportunities to make additional investments in such assets and the potential return on the investments. The Utilities' gas delivery customers and CECONY's steam delivery customers have alternatives, such as electricity and oil. Distributed energy resources, and demand reduction and energy efficiency investments, provide ways for the energy consumers within the Utilities’ service areas to manage their energy usage. The Companies expect distributed energy resources and electric alternatives to gas and steam to increase, and for gas and steam usage to decrease, as the CLCPA and the Climate Mobilization Act continue to be implemented. CECONY established a gas moratorium in March 2019 on new gas service in most of Westchester County. CECONY filed a gas planning analysis with the NYSPSC in July 2020 stating the moratorium could be lifted when increased pipeline capacity is achieved or peak demand is reduced to a level that would enable the company to lift the moratorium and that it is monitoring gas supply constraint in the New York City portion of its service territory. See "Clean Energy Businesses," "Con Edison Transmission," "Environmental Matters - Clean Energy Future" and "Environmental Matters - Climate Change," “Competition” and "CECONY - Gas Peak Demand" in Item 1.

The Companies Also Face Other Risks That Are Beyond Their Control.    The Companies’ results of operations can be affected by circumstances or events that are beyond their control. Weather and energy efficiency efforts directly influence the demand for electricity, gas and steam service, and can affect the price of energy commodities. Terrorist or other physical attacks or acts of war could damage the Companies' facilities. Economic conditions can affect customers’ demand and ability to pay for service, which could adversely affect the Companies.

Item 1B: Unresolved Staff Comments
Con Edison
Con Edison has no unresolved comments from the SEC staff.
CECONY
CECONY has no unresolved comments from the SEC staff.

Item 2:    Properties
Con Edison
Con Edison has no significant properties other than those of the Utilities and the Clean Energy Businesses.
                                                                                                                         CON EDISON ANNUAL REPORT 202049



For information about the capitalized cost of the Companies’ utility plant, net of accumulated depreciation, see “Plant and Depreciation” in Note A to the financial statements in Item 8 (which information is incorporated herein by reference).
CECONY
For a discussion of CECONY’s electric, gas and steam facilities, see “CECONY – Electric Operations – Electric Facilities,” “CECONY – Gas Operations – Gas Facilities” and “CECONY – Steam Operations – Steam Facilities” in Item 1 (which information is incorporated herein by reference).
O&R
For a discussion of O&R’s electric and gas facilities, see “O&R – Electric Operations – Electric Facilities” and “O&R – Gas Operations – Gas Facilities” in Item 1 (which information is incorporated herein by reference).
Clean Energy Businesses
For a discussion of the Clean Energy Businesses’ facilities, see “Clean Energy Businesses” in Item 1 (which information is incorporated herein by reference).

Con Edison Transmission
Con Edison Transmission has no properties. Con Edison Transmission has ownership interests in electric and gas transmission companies. For information about these companies, see "Con Edison Transmission" in Item 1 (which information is incorporated herein by reference).

Item 3:    Legal Proceedings
For information about certain legal proceedings affecting the Companies, see “Other Regulatory Matters” in Note B, and “Superfund Sites” and “Asbestos Proceedings” in Note G and “Manhattan Explosion and Fire” in Note H to the financial statements in Item 8 and “Environmental Matters – CECONY – Superfund” and “Environmental Matters – O&R – Superfund” in Item 1 of this report, which information is incorporated herein by reference.

Item 4:    Mine Safety Disclosures
Not applicable.
50CON EDISON ANNUAL REPORT 2020


Information about our Executive Officers
The following table sets forth certain information about the executive officers of Con Edison as of February 18, 2021. The term of office of each officer, is until the next election of directors (trustees) of their company and until his or her successor is chosen and qualifies. Officers are subject to removal at any time by the board of directors (trustees) of their company.
NameAgeOffices and Positions During Past Five Years
Timothy P. Cawley56
12/20 to present – President and Chief Executive Officer and Director of Con Edison and Chief Executive Officer and Trustee of CECONY

1/18 to 12/20 – President of CECONY
12/13 to 12/17 – President and Chief Executive Officer of O&R
Robert Hoglund599/05 to present – Senior Vice President and Chief Financial Officer of Con Edison and CECONY
Matthew Ketschke491/21 to present – President of CECONY
11/17 to 12/20 – Senior Vice President – Customer Energy Solutions
7/15 to 10/17 – Vice President – Distributed Resource Integration
Robert Sanchez5512/17 to present – President and Chief Executive Officer of O&R
11/17 – Senior Vice President of CECONY
9/16 to 10/17 – Senior Vice President – Corporate Shared Services of CECONY
9/14 to 8/16 – Vice President – Brooklyn & Queens Electric Operations of CECONY
Mark Noyes5612/16 to present – President and Chief Executive Officer of Con Edison Clean Energy Businesses, Inc.
5/16 to present – President and Chief Executive Officer of Consolidated Edison Solutions, Inc.
10/15 to present – President and Chief Executive Officer of Consolidated Edison Development, Inc. and Consolidated Edison Energy, Inc.
Stuart Nachmias561/20 to present – President and Chief Executive Officer of Con Edison Transmission, Inc.
05/08 to 12/19 – Vice President of Energy Policy and Regulatory Affairs of CECONY
Deneen L. Donnley561/20 to present – Senior Vice President and General Counsel of Con Edison and CECONY
10/19 to 12/19 – Senior Vice President of Con Edison and CECONY
9/15 to 10/19 – Executive Vice President, Chief Legal Officer and Corporate Secretary – USAA
Frances A. Resheske602/02 to present – Senior Vice President – Corporate Affairs of CECONY
Mary E. Kelly5211/17 to present – Senior Vice President – Corporate Shared Services of CECONY
1/16 to 10/17 – Vice President – Gas Engineering
1/14 to 12/15 – Vice President – Construction
Lore de la Bastide597/19 to present – Senior Vice President – Utility Shared Services of CECONY
6/19 – Senior Vice President of CECONY
11/14 to 5/19 – Vice President and General Auditor of CECONY
Joseph Miller581/21 to present – Vice President and Controller of Con Edison and CECONY
1/21 to present – Chief Financial Officer and Controller of O&R
8/06 to 12/20 – Assistant Controller of Corporate Accounting of CECONY
Yukari Saegusa539/16 to present – Treasurer of Con Edison and CECONY
8/16 to present – Vice President of Con Edison and CECONY
8/13 to present – Treasurer of O&R
3/13 to 7/16 – Director of Corporate Finance of CECONY
Gurudatta Nadkarni551/08 to present – Vice President of Strategic Planning of CECONY

                                                                                                                         CON EDISON ANNUAL REPORT 202051



Part II
Item 5:    Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Con Edison
Con Edison’s Common Shares ($.10 par value), the only class of common equity of Con Edison, are traded on the New York Stock Exchange under the trading symbol "ED." As of January 31, 2021, there were 40,198 holders of record of Con Edison’s Common Shares. Con Edison paid quarterly dividends of 74 cents per Common Share in 2019 and quarterly dividends of 76.5 cents per Common Share in 2020. On January 21, 2021, Con Edison declared a quarterly dividend of 77.5 cents per Common Share that is payable on March 15, 2021. Con Edison expects to pay dividends to its shareholders primarily from dividends and other distributions it receives from its subsidiaries. The payment of future dividends is subject to approval and declaration by Con Edison’s Board of Directors and will depend on a variety of factors including business, financial and regulatory considerations. For additional information about the payment of dividends by the Utilities to Con Edison, and restrictions thereon, see “Dividends” in Note C to the financial statements in Item 8 (which information is incorporated herein by reference).
During 2020, the market price of Con Edison’s Common Shares decreased by 20.1 percent (from $90.47 at year-end 2019 to $72.27 at year-end 2020). By comparison, the S&P 500 Index increased 16.3 percent and the S&P 500 Utilities Index decreased 2.8 percent. The total return to Con Edison’s common shareholders during 2020, including both price depreciation and investment of dividends, was (17) percent. By comparison, the total returns for the S&P 500 Index and the S&P 500 Utilities Index were 18.4 percent and 0.5 percent, respectively. For the five-year period 2016 through 2020 inclusive, Con Edison’s shareholders’ total return was 34.7 percent, compared with total returns for the S&P 500 Index and the S&P 500 Utilities Index of 103.0 percent and 72.3 percent, respectively.

ed-20201231_g1.jpg

Years Ended December 31,
Company / Index201520162017201820192020
Consolidated Edison, Inc.100.00118.90141.84132.45162.31134.73
S&P 500 Index100.00111.96136.40130.42171.49203.04
S&P Utilities100.00116.29130.36135.72171.48172.31
Based on $100 invested at December 31, 2015, reinvestment of all dividends in equivalent shares of stock and market price changes on all such shares.
52CON EDISON ANNUAL REPORT 2020


CECONY
The outstanding shares of CECONY’s Common Stock ($2.50 par value) are the only class of common equity of CECONY. They are held by Con Edison and are not traded.
The dividends declared by CECONY in 2019 and 2020 are shown in its Consolidated Statement of Shareholder’s Equity included in Item 8 (which information is incorporated herein by reference). For additional information about the payment of dividends by CECONY, and restrictions thereon, see “Dividends” in Note C to the financial statements in Item 8 (which information is incorporated herein by reference).

Item 6:    Selected Financial Data
For selected financial data of Con Edison and CECONY, see “Introduction” appearing before Item 1 (which selected financial data is incorporated herein by reference).

                                                                                                                         CON EDISON ANNUAL REPORT 202053




Item 7:    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 relates to the consolidated financial statements included in this report of two separate registrants: Con Edison and 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 management’s discussion and analysis about CECONY applies to Con Edison.
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.

Corporate Overview
Con Edison’s principal business operations are those of the Utilities. Con Edison's business operations also include those of the Clean Energy Businesses and Con Edison Transmission. See “Significant Developments and Outlook” in the Introduction to this report, “The Utilities,” “Clean Energy Businesses” and "Con Edison Transmission" in Item 1, and segment financial information in Note O to the financial statements in Item 8. Certain financial data of Con Edison’s businesses are presented below:
For the Year Ended December 31, 2020At December 31, 2020
(Millions of Dollars,
except percentages)
Operating
Revenues
Net Income for
Common Stock
Assets
CECONY$10,64787 %$1,185108 %$50,96781 %
O&R862%71%3,247%
Total Utilities11,50994 %1,256114 %54,21486 %
Clean Energy Businesses (a)736%24%6,84811 %
Con Edison Transmission (b)4— %(175)(16)%1,348%
Other (c)(3)— %(4)— %485%
Total Con Edison$12,246100 %$1,101100 %$62,895100 %
(a)Net income for common stock from the Clean Energy Businesses for the year ended December 31, 2020 includes $(43) million of net after-tax mark-to-market losses and reflects $32 million (after-tax) of income attributable to the non-controlling interest of a tax equity investor in renewable electric production projects accounted for under the HLBV method of accounting. See Note R to the financial statements in Item 8.
(b)Net income for common stock from Con Edison Transmission for the year ended December 31, 2020 includes $(232) million of a net after-tax impairment loss related to its investment in Mountain Valley Pipeline, LLC. See "Application of Critical Accounting Policies - Investments" in Item 7 and "Investments" in Note A to the financial statements in Item 8.
(c)Other includes parent company and consolidation adjustments. Net income for common stock includes $9 million of income tax impact for the impairment loss related to investment in Mountain Valley Pipeline, LLC.


Coronavirus Disease 2019 (COVID-19) Impacts
The Companies continue to respond to the Coronavirus Disease 2019 (COVID-19) global pandemic by working to reduce the potential risks posed by its spread to employees, customers and other stakeholders. The Companies continue to employ an incident command structure led by a pandemic planning team. The Companies support employee health and facility hygiene through mandatory pre-entry symptom surveys for employees arriving at all company locations, regular cleaning and disinfecting of all work and common areas, promoting social distancing and directing employees to work remotely whenever possible. Employees who test positive for COVID-19 are directed to quarantine at home and are evaluated for close, prolonged contact with other employees that would require those employees to quarantine at home. Following the Centers for Disease Control and Prevention guidelines, sick or quarantined employees return to work when they can safely do so. The Utilities continue to provide critical electric, gas and steam service to customers during the pandemic. Additional safety protocols have been implemented to protect employees, customers and the public, when work at customer premises is required. As a result of COVID-19 clusters that have arisen in various areas of New York within the Utilities’ service territory, the Utilities have limited their work in customer premises in the impacted areas to only address emergency, safety-related and selected service connections requested by customers. The Companies have procured an inventory of pandemic-related materials to address anticipated future needs and maintain regular communications with key suppliers.

Below is additional information related to the effects of the COVID-19 pandemic and the Companies’ actions. Also, see “COVID-19 Regulatory Matters” in Note B to the financial statements in Item 8, which information is incorporated herein by reference.

54CON EDISON ANNUAL REPORT 2020


Impact of CARES Act and 2021 Appropriations Act on Accounting for Income Taxes
In response to the economic impacts of the COVID-19 pandemic, the Coronavirus Aid, Relief, and Economic Security (CARES) Act became law on March 27, 2020. The CARES Act has several key business tax relief measures that may present potential cash benefits and/or refund opportunities for Con Edison and its subsidiaries, including permitting a five-year carryback of a net operating loss (NOL) for tax years 2018, 2019 and 2020, temporary removal of the 80 percent limitation of NOL carryforwards against taxable income for tax years before 2021, temporary relaxation of the limitations on interest deductions, Employee Retention Tax Credit and deferral of payments of employer payroll taxes.

Con Edison carried back its NOL of $29 million from tax year 2018 to tax year 2013. This allowed Con Edison, mostly at the Clean Energy Businesses, to receive a $2.5 million net tax refund and to recognize a discrete income tax benefit of $4 million in 2020, due to the higher federal statutory tax rate in 2013. See "Income Tax" in Note L. Con Edison and its subsidiaries did not have a federal NOL in tax years 2019 or 2020.

Con Edison and its subsidiaries benefited by the increase in the percentage for calculating the limitation on the interest expense deduction from 30 percent of Adjusted Taxable Income (ATI) to 50 percent of ATI in 2019 and 2020, which allowed the Companies to deduct 100 percent of their interest expense.

The Companies qualify for an employee retention tax credit created under the CARES Act for "eligible employers" related to governmental authorities imposing restrictions that partially suspended their operations for a portion of their workforce due to the COVID-19 pandemic and the Companies continued to pay them. For the year ended December 31, 2020, Con Edison and CECONY recognized a tax benefit to Taxes, other than income taxes of $10 million and $7 million, respectively.

The CARES Act also allows employers to defer payments of the employer share of Social Security payroll taxes that would have otherwise been owed from March 27, 2020 through December 31, 2020. The Companies deferred the payment of employer payroll taxes for the period April 1, 2020 through December 31, 2020 of approximately $71 million ($63 million of which is for CECONY). The Companies will repay half of this liability by December 31, 2021 and the other half by December 31, 2022.

In December 2020, the Consolidated Appropriations Act, 2021 (the 2021 Appropriations Act) was signed into law. The 2021 Appropriations Act, among other things, extends the expiring employee retention tax credit to include qualified wages paid in the first two quarters of 2021, increases the qualified wages paid to an employee from 50 percent up to $10,000 annually in 2020 to 70 percent up to $10,000 per quarter in 2021 and increases the maximum employee retention tax credit amount an employer can take per employee from $5,000 in 2020 to $14,000 in the first two quarters of 2021.

Accounting Considerations
Due to the COVID-19 pandemic and subsequent New York State on PAUSE and related executive orders, decline in business, bankruptcies, layoffs and furloughs, among other factors, both commercial and residential customers may have increased difficulty paying their utility bills. CECONY and O&R have existing allowances for uncollectible accounts established against their customer accounts receivable balances that are reevaluated each quarter and updated accordingly. Changes to the Utilities’ reserve balances that result in write-offs of customer accounts receivable balances are not reflected in rates during the term of the current rate plans. During 2020, the potential economic impact of the COVID-19 pandemic was also considered in forward-looking projections related to write-off and recovery rates, resulting in increases to the customer allowance for uncollectible accounts as detailed herein. CECONY’s and O&R’s allowances for uncollectible customer accounts reserve increased from $65 million and $4.6 million at December 31, 2019 to $138 million and $8.7 million at December 31, 2020, respectively. See Note A and "COVID-19 Regulatory Matters" in Note B to the Financial Statements in Item 8.

The Companies test goodwill for impairment at least annually or whenever there is a triggering event, and test long-lived and intangible assets for recoverability when events or changes in circumstances indicate that the carrying value of long-lived or intangible assets may not be recoverable. The Companies identified no triggering events or changes in circumstances related to the COVID-19 pandemic that would indicate that the carrying value of goodwill, long-lived or intangible assets may not be recoverable at December 31, 2020. See Notes A and K to the financial statements in Item 8.

Liquidity and Financing
The Companies continue to monitor the impacts of the COVID-19 pandemic on the financial markets closely, including borrowing rates and daily cash collections. The Companies have been able to access the capital markets as needed since the start of the COVID-19 pandemic in March 2020. See Notes C and D to the financial statements
                                                                                                                         CON EDISON ANNUAL REPORT 202055



in Item 8. However, a continued economic downturn as a result of the COVID-19 pandemic could increase the amount of capital needed by the Utilities and the costs of such capital.

The decline in business activity in the Utilities’ service territory as a result of the COVID-19 pandemic resulted in lower billed sales revenues in 2020 and a slower recovery in cash of outstanding customer accounts receivable balances and is expected to continue to do so in 2021. The Utilities’ rate plans have revenue decoupling mechanisms in their New York electric and gas businesses that largely reconcile actual energy delivery revenues to the authorized delivery revenues approved by the NYSPSC per month and accumulate the deferred balances semi-annually under CECONY's electric rate plan (January through June and July through December, respectively) and annually under CECONY's gas rate plan and O&R New York's electric and gas rate plans (January through December). Differences are accrued with interest each month for CECONY's and O&R New York’s electric customers and after the annual deferral period ends for CECONY's and O&R New York’s gas customers for refund to, or recovery from customers, as applicable. Generally, the refund to or recovery from customers begins August and February of each year over an ensuing six-month period for CECONY's electric customers and February of each year over an ensuing twelve-month period for CECONY's gas and O&R New York's electric and gas customers. Although these revenue decoupling mechanisms are in place, lower billed sales revenues and higher uncollectible accounts have reduced and is expected to continue to reduce liquidity at the Utilities. Also, in March 2020, the Utilities began suspending service disconnections, certain collection notices, final bill collection agency activity, new late payment charges and certain other fees for all customers and such suspensions may continue through 2021 or later. For the year ended December 31, 2020, the estimated foregone revenues that were not collected by the Utilities were approximately $61 million for CECONY and $3 million for O&R. These foregone revenues have reduced and may continue to reduce liquidity at the Utilities. See Note A and "COVID-19 Regulatory Matters" in Note B to the financial statements in Item 8.

Con Edison and the Utilities also have a $2,250 million credit agreement (Credit Agreement) in place under which banks are committed to provide loans on a revolving credit basis until December 2023 ($2,200 million of commitments from December 2022). Con Edison and the Utilities have not entered into any loans under the Credit Agreement. See Note D to the financial statements in Item 8.

Results of Operations
Net income for common stock and earnings per share for the years ended December 31, 2020, 2019 and 2018 were as follows:
(Millions of Dollars,
except per share amounts)
Net Income for
Common Stock
Earnings per Share
  202020192018202020192018
CECONY$1,185$1,250$1,196$3.54 $3.80 $3.84 
O&R7170590.21 0.21 0.19 
Clean Energy Businesses (a)(b)24(18)1450.07 (0.06)0.46 
Con Edison Transmission (c)(175)5247(0.52)0.16 0.15 
Other (d)(4)(11)(65)(0.01)(0.02)(0.21)
Con Edison (e)$1,101$1,343$1,382$3.29 $4.09 $4.43 
(a)Net income for common stock from the Clean Energy Businesses for the year ended December 31, 2020 and 2019 reflects $32 million or $0.10 a share (after-tax) and $74 million or $0.22 a share (after-tax) of income attributable to the non-controlling interest of a tax equity investor in renewable electric production projects accounted for under the HLBV method of accounting. See Note R to the financial statements in Item 8. Net income for common stock from the Clean Energy Businesses also includes $(43) million or $(0.13) a share, $(21) million or $(0.07) a share and $(6) million or $(0.02) a share of net after-tax mark-to-market losses in 2020, 2019 and 2018, respectively.
(b)In December 2018, the Clean Energy Businesses acquired Sempra Solar Holdings, LLC. Upon completion of the acquisition, the Clean Energy Businesses recognized an after-tax gain of $89 million or $0.28 per share with respect to jointly-owned renewable energy production projects. See Note V to the financial statements in Item 8.
(c)Net income for common stock from Con Edison Transmission for the year ended December 31, 2020 includes $(232) million or $(0.69) a share of net after-tax impairment loss related to its investment in Mountain Valley Pipeline, LLC. See "Application of Critical Accounting Policies - Investments" in Item 7 and “Investments” in Note A to the financial statements in Item 8.
(d)Other includes parent company and consolidation adjustments. Net income for common stock includes $9 million or $0.03 a share of income tax impact for the impairment loss related to Con Edison Transmission’s investment in Mountain Valley Pipeline, LLC. See “Investments” in Note A to the financial statements in Item 8. Net income for common stock includes $(42) million or $(0.14) a share of income tax expense resulting from a re-measurement of the company's deferred tax assets and liabilities following the issuance of proposed regulations relating to the TCJA for the year ended December 31, 2018. See Note L to the financial statements in Item 8. Net income for common stock for the year ended December 31, 2018 also includes $(8) million or $(0.02) a share of the after-tax transaction costs related to the Clean Energy Businesses' purchase of Sempra Solar Holdings, LLC. See Note V to the financial statements in Item 8.
(e)Earnings per share on a diluted basis were $3.28 a share, $4.08 a share and $4.42 a share in 2020, 2019 and 2018, respectively. See "Earnings Per Common Share" in Note A to the financial statements in Item 8.

56CON EDISON ANNUAL REPORT 2020


The following tables present the estimated effect of major factors on earnings per share and net income for common stock for the years ended December 31, 2020 as compared with 2019, and 2019 as compared with 2018.


                                                                                                                         CON EDISON ANNUAL REPORT 202057



Variation for the Year Ended December 31, 2020 vs. 2019
Earnings
per Share
Net Income
for
Common
Stock
(Millions of Dollars)
CECONY (a)
Changes in rate plans$0.12$41Primarily reflects higher gas net base revenues due to the base rate increase in January 2020 under the company's gas rate plan of $0.20 a share, offset in part by lower steam net revenues of $(0.04) a share due to the impact of the Coronavirus Disease 2019 (COVID-19) pandemic.
Weather impact on steam revenues(0.10)(32)Reflects the impact of warmer winter weather in the 2020 period.
Operations and maintenance expenses0.82270Reflects lower costs for pension and other postretirement benefits of $0.53 a share, which are reconciled under the rate plans, lower regulatory assessments and fees that are collected in revenues from customers of $0.30 a share and lower stock-based compensation of $0.06 a share, offset in part by incremental costs associated with the COVID-19 pandemic of $(0.03) a share and food and medicine spoilage claims related to electric outages caused by Tropical Storm Isaias of $(0.02) a share.
Depreciation, property taxes and other tax matters(0.88)(284)Reflects higher depreciation and amortization expense of $(0.51) a share and higher property taxes of $(0.37) a share, both of which are recoverable under the rate plans, and the absence in 2020 of a reduction in the sales and use tax reserve upon conclusion of the audit assessment of $(0.02) a share, offset in part by, the employee retention tax credit under the CARES Act of $0.02 a share.
Other(0.22)(60)Primarily reflects foregone revenues from the suspension of customers' late payment charges and certain other fees associated with the COVID-19 pandemic of $(0.14) a share and the dilutive effect of Con Edison's stock issuances of $(0.07) a share.
Total CECONY(0.26)(65)
O&R (a)
Changes in rate plans0.0514Reflects electric and gas base rate increases of $0.04 a share and $0.01 a share, respectively, under the company's rate plans.
Operations and maintenance expenses(1)Primarily reflects food and medicine spoilage claims related to electric outages caused by Tropical Storm Isaias.
Depreciation, property taxes and other tax matters(0.03)(8)Reflects higher depreciation and amortization expense and higher property taxes, offset in part, by the employee retention tax credit under the CARES Act.
Other(0.02)(4)Primarily reflects higher costs associated with components of pension and other postretirement benefits other than service cost.
Total O&R1
Clean Energy Businesses
Operating revenues less energy costs0.0616Reflects higher revenues from renewable electric production projects of $0.08 a share, offset in part by lower energy services revenues due to timing of executed contracts of $(0.04) a share.
Operations and maintenance expenses(0.01)(3)Primarily reflects an increase in general operating expenses.
Depreciation and amortization(0.01)(3)Reflects an increase in renewable electric production projects in operation during 2020.
Net interest expense(0.02)(8)Primarily reflects higher unrealized losses on interest rate swaps in the 2020 period.
HLBV effects0.1242Primarily reflects lower losses from tax equity projects in the 2020 period.
Other(0.01)(2)Primarily reflects the absence of a prior period adjustment related to research and development credits recorded in 2019.
Total Clean Energy Businesses0.1342
Con Edison Transmission(0.68)(227)Primarily reflects impairment loss related to the investment in Mountain Valley Pipeline, LLC.
Other, including parent company expenses0.017Primarily reflects lower income tax expense due to impairment loss related to the investment in Mountain Valley Pipeline, LLC.
Total Reported (GAAP basis)$(0.80)$(242)
a.Under the revenue decoupling mechanisms in the Utilities’ New York electric and gas rate plans and the weather-normalization clause applicable to their gas businesses, revenues are generally not affected by changes in delivery volumes from levels assumed when rates were approved. In general, the Utilities recover on a current basis the fuel, gas purchased for resale and purchased power costs they incur in supplying energy to their full-service customers. Accordingly, such costs do not generally affect Con Edison’s results of operations.

58CON EDISON ANNUAL REPORT 2020


Variation for the Years Ended December 31, 2019 vs. 2018
Earnings per Share
Net Income
for
Common
Stock (Millions of Dollars)
CECONY (a)
Changes in rate plans$0.76$240Reflects higher electric and gas net base revenues of $0.53 a share and $0.16 a share, respectively, primarily due to electric and gas base rate increases in January 2019 under the company's rate plans, higher incentives earned under the electric earnings adjustment mechanisms and positive incentives of $0.06 a share, and growth in the number of gas customers of $0.03 a share, offset in part by electric negative revenue adjustments of $(0.03) a share.
Weather impact on steam revenues(0.06)(19)Reflects the impact of warmer winter weather in 2019.
Operations and maintenance expenses(0.19)(58)Reflects higher costs for pension and other postretirement benefits of $(0.15) a share, which are recoverable under the rate plans, and higher stock-based compensation of $(0.07) a share, offset in part by lower consultant costs of $0.04 a share.
Depreciation, property taxes and other tax matters(0.54)(168)Reflects higher property taxes of $(0.26) a share and higher depreciation and amortization expense of $(0.23) a share, both of which are recoverable under the rate plans, and the absence of New York State sales and use tax refunds received in 2018 of $(0.07) a share, offset in part by lower sales and use tax of $0.02 a share, upon conclusion of the audit assessment.
Other(0.01)59Reflects the dilutive effect of Con Edison's stock issuances of $(0.21) a share, offset in part by lower costs associated with components of pension and other postretirement benefits other than service cost of $0.19 a share.
Total CECONY(0.04)54
O&R (a)
Changes in rate plans0.0824Reflects an electric base rate increase, offset in part by a gas base rate decrease under the company's rate plans, effective January 1, 2019.
Operations and maintenance expenses(0.01)(3)Reflects higher stock-based compensation.
Depreciation, property taxes and other tax matters(0.02)(6)Reflects higher depreciation and amortization expense.
Other(0.03)(4)Includes the dilutive effect of Con Edison's stock issuances of $(0.01) a share.
Total O&R0.0211
Clean Energy Businesses
Operating revenues less energy costs0.53167Reflects higher revenues from renewable electric production projects resulting from the December 2018 acquisition of Sempra Solar Holdings, LLC, including the consolidation of certain jointly-owned projects that were previously accounted for as equity investments of $0.81 a share, offset in part by lower engineering, procurement and construction services revenues of $(0.34) a share.
Operations and maintenance expenses0.1547Reflects lower engineering, procurement and construction costs of $0.19 a share and lower energy services costs of $0.04 a share, offset in part by higher costs associated with additional renewable electric production projects in operation resulting from the December 2018 acquisition of Sempra Solar Holdings, LLC. of $(0.06) a share.
Depreciation and amortization(0.34)(105)Reflects an increase in renewable electric production projects resulting from the December 2018 acquisition of Sempra Solar Holdings, LLC.
Net interest expense(0.29)(90)Reflects an increase in debt resulting from the December 2018 acquisition of Sempra Solar Holdings, LLC.
HLBV effects(0.22)(74)
Gain on acquisition of Sempra Solar Holdings, LLC, net of transaction costs in 2018(0.28)(89)
Other(0.07)(19)Reflects the absence in 2019 of equity income from certain jointly-owned projects that were accounted for as equity investments in 2018 but consolidated after the December 2018 acquisition of Sempra Solar Holdings, LLC.
Total Clean Energy Businesses(0.52)(163)
Con Edison Transmission0.015Reflects higher allowance for funds used during construction from the Mountain Valley Pipeline project.
Other, including parent company expenses0.1954Reflects lower New York State capital tax of $0.02 a share. Also reflects 2018 TCJA re-measurement of $0.14 a share and transaction costs related to the acquisition of Sempra Solar Holdings, LLC of $0.02 a share.
Total Reported (GAAP basis)$(0.34)$(39)
a.Under the revenue decoupling mechanisms in the Utilities’ New York electric and gas rate plans and the weather-normalization clause applicable to their gas businesses, revenues are generally not affected by changes in delivery volumes from levels assumed when rates were approved. In general, the Utilities recover on a current basis the fuel, gas purchased for resale and purchased power costs they incur in supplying energy to their full-service customers. Accordingly, such costs do not generally affect Con Edison’s results of operations.
                                                                                                                         CON EDISON ANNUAL REPORT 202059



The Companies’ other operations and maintenance expenses for the years ended December 31, 2020, 2019 and 2018 were as follows:
(Millions of Dollars)202020192018
CECONY
Operations$1,606$1,563$1,553
Pensions and other postretirement benefits(103)13471
Health care and other benefits151170166
Regulatory fees and assessments (a)330464444
Other285304321
Total CECONY2,2692,6352,555
O&R310308305
Clean Energy Businesses228223287
Con Edison Transmission11910
Other (b)(4)— (5)
Total other operations and maintenance expenses$2,814$3,175$3,152
(a)Includes Demand Side Management, System Benefit Charges and Public Service Law 18A assessments which are collected in revenues.
(b)Includes parent company and consolidation adjustments.

Con Edison’s principal business segments are CECONY’s regulated utility activities, O&R’s regulated utility activities, the Clean Energy Businesses and Con Edison Transmission. CECONY’s principal business segments are its regulated electric, gas and steam utility activities. A discussion of the results of operations by principal business segment for the years ended December 31, 2020, 2019 and 2018 follows. For additional business segment financial information, see Note O to the financial statements in Item 8.

60CON EDISON ANNUAL REPORT 2020


The Companies’ results of operations for the years ended December 31, 2020, 2019 and 2018 were:
  CECONYO&RClean Energy
Businesses
Con Edison
Transmission
Other (a)Con Edison (b)
(Millions of Dollars)202020192018202020192018202020192018202020192018202020192018202020192018
Operating revenues$10,647$10,821$10,680$862$893$891$736$857$763$4$4$4$(3)$(1)$(1)$12,246$12,574$12,337
Purchased power1,4321,3571,433169188208— 2— — — (1)111,6001,5461,644
Fuel156207263— — — — — — — — — — — — 156207263
Gas purchased for resale42660664361908641185313— — — (1)(1)(1)5278801,041
Other operations and maintenance2,2692,6352,55531030830522822328711910(4)(5)2,8143,1753,152
Depreciation and amortization1,5981,3731,27690847723122685111— (1)1,9201,6841,438
Taxes, other than income taxes2,4562,2952,156858483212113— — — 13614 2,5752,4062,266
Gain on acquisition of Sempra Solar Holdings, LLC (c)— — — — — — — 131 — — — — — — — 131 
Operating income2,3102,3482,354147139132215202194(8)(6)(7)(10)(7)(9)2,6542,6762,664
Other income less deductions (d)(171)(35)(143)(14)(11)(19)4533(215)10491(5)(12)(24)(401)51(62)
Net interest expense73972868941413919618663182520251181,019991819
Income before income tax expense1,4001,5851,5229287742321164(241)7364(40)(30)(41)1,2341,7361,783
Income tax expense215335326211715(44)(58)19(66)2117(36)(19)2490296401
Net income$1,185$1,250$1,196$71$70$59$67$79$145$(175)$52$47$(4)$(11)$(65)$1,144$1,440$1,382
Income attributable to non-controlling interest— — — — — — 4397 — — — — — — — 4397 — 
Net income from common stock$1,185$1,250$1,196$71$70$59$24$(18)$145$(175)$52$47$(4)$(11)$(65)$1,101$1,343$1,382
(a) Includes parent company and consolidation adjustments.
(b) Represents the consolidated results of operations of Con Edison and its businesses.
(c) See Note V to the financial statements in Item 8.
(d) For the year ended December 31, 2020, Con Edison Transmission recorded a pre-tax impairment loss of $320 million ($223 million, after tax), to reduce the carrying value of its investment in MVP from $662 million to $342 million. See “Investments” in Note A to the financial statements in Item 8.
                                                                                                                         CON EDISON ANNUAL REPORT 202061



Year Ended December 31, 2020 Compared with Year Ended December 31, 2019

CECONY
  For the Year Ended December 31, 2020  For the Year Ended December 31, 2019    
(Millions of Dollars)ElectricGasSteam2020 TotalElectricGasSteam2019 Total2020-2019 Variation
Operating revenues$8,103$2,036$508$10,647$8,062$2,132$627$10,821$(174)
Purchased power1,405— 271,4321,324— 331,35775
Fuel75— 8115699— 108207(51)
Gas purchased for resale— 426— 426— 606— 606(180)
Other operations and maintenance1,7533551612,2692,0593991772,635(366)
Depreciation and amortization1,214294901,5981,053231891,373225
Taxes, other than income taxes1,9253871442,4561,7693681582,295161
Operating income$1,731$574$5$2,310$1,758$528$62$2,348$(38)
Electric
CECONY’s results of electric operations for the year ended December 31, 2020 compared with the year ended December 31, 2019 were as follows:
  For the Years Ended December 31,
(Millions of Dollars)20202019Variation
Operating revenues$8,103$8,062$41
Purchased power1,4051,32481
Fuel7599(24)
Other operations and maintenance1,7532,059(306)
Depreciation and amortization1,2141,053161
Taxes, other than income taxes1,9251,769156
Electric operating income$1,731$1,758$(27)
CECONY’s electric sales and deliveries in 2020 compared with 2019 were:
  Millions of kWh DeliveredRevenues in Millions (a)
  For the Years Ended  For the Years Ended  
DescriptionDecember 31, 2020December 31, 2019Variation
Percent
Variation
December 31, 2020December 31, 2019Variation
Percent
Variation
Residential/Religious (b)11,107 10,560 547 5.2 %$2,901$2,671$2308.6 %
Commercial/Industrial9,280 9,908 (628)(6.3)1,8761,845311.7 
Retail choice customers22,000 24,754 (2,754)(11.1)2,3912,470(79)(3.2)
NYPA, Municipal Agency and other sales9,184 9,932 (748)(7.5)66566320.3 
Other operating revenues (c)— — — 270413(143)(34.6)
Total51,571 55,154 (3,583)(6.5)%(d)$8,103$8,062$410.5 %
(a)Revenues from electric sales 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.
(b)“Residential/Religious” generally includes single-family dwellings, individual apartments in multi-family dwellings, religious organizations and certain other not-for-profit organizations.
(c)Other electric operating revenues generally reflect changes in the revenue decoupling mechanism current asset or regulatory liability and changes in regulatory assets and liabilities in accordance with other provisions of the company’s rate plan.
(d)After adjusting for variations, primarily weather and billing days, electric delivery volumes in the company’s service area decreased 6.1 percent in 2020 compared with 2019. See “Coronavirus Disease 2019 (COVID-19) Impacts,” above.
Operating revenues increased $41 million in 2020 compared with 2019 primarily due to higher purchased power expenses ($81 million), offset in part by lower fuel expenses ($24 million) and lower revenues from the electric rate plan ($16 million).
Purchased power expenses increased $81 million in 2020 compared with 2019 due to higher unit costs ($158 million), offset in part by lower purchased volumes ($77 million).
62CON EDISON ANNUAL REPORT 2020


Fuel expenses decreased $24 million in 2020 compared with 2019 due to lower unit costs ($31 million), offset in part by higher purchased volumes from the company’s electric generating facilities ($7 million).
Other operations and maintenance expenses decreased $306 million in 2020 compared with 2019 primarily due to lower costs for pension and other postretirement benefits ($195 million), lower surcharges for assessments and fees that are collected in revenues from customers ($110 million), lower stock-based compensation ($25 million) and lower healthcare costs ($16 million), offset in part by incremental costs associated with the COVID-19 pandemic ($14 million), higher municipal infrastructure support costs ($9 million) and food and medicine spoilage claims related to outages caused by Tropical Storm Isaias ($7 million).
Depreciation and amortization increased $161 million in 2020 compared with 2019 primarily due to higher electric utility plant balances and higher depreciation rates.
Taxes, other than income taxes increased $156 million in 2020 compared with 2019 primarily due to higher property taxes ($105 million), lower deferral of under-collected property taxes ($38 million), higher state and local taxes ($11 million) and the absence in 2020 of a reduction in the sales and use tax reserve upon conclusion of the audit assessment ($5 million), offset in part by lower payroll taxes ($3 million) due to the Employee Retention Tax Credit created under the CARES Act. See “Coronavirus Disease 2019 (COVID-19) Impacts - Impact of CARES Act and 2021 Appropriations Act on Accounting for Income Taxes,” above.
Gas
CECONY’s results of gas operations for the year ended December 31, 2020 compared with the year ended December 31, 2019 were as follows:
  For the Years Ended December 31,
(Millions of Dollars)20202019Variation
Operating revenues$2,036$2,132$(96)
Gas purchased for resale426606(180)
Other operations and maintenance355399(44)
Depreciation and amortization29423163
Taxes, other than income taxes38736819
Gas operating income$574$528$46
CECONY’s gas sales and deliveries, excluding off-system sales, in 2020 compared with 2019 were:
  Thousands of Dt Delivered Revenues in Millions (a)
  For the Years Ended   For the Years Ended  
DescriptionDecember 31, 2020December 31, 2019Variation
Percent
Variation
 December 31, 2020December 31, 2019Variation
Percent
Variation
Residential48,999 54,402 (5,403)(9.9)%$911$943$(32)(3.4)%
General29,516 33,235 (3,719)(11.2)318384(66)(17.2)
Firm transportation76,614 81,710 (5,096)(6.2)649593569.4 
Total firm sales and transportation155,129 169,347 (14,218)(8.4)(b) 1,8781,920(42)(2.2)
Interruptible sales (c)8,482 9,903 (1,421)(14.3)2742(15)(35.7)
NYPA41,577 39,643 1,934 4.9 22— 
Generation plants49,723 52,011 (2,288)(4.4)2223(1)(4.3)
Other20,814 20,701 113 0.5 33316.5 
Other operating revenues (d)— — — 74114(40)(35.1)
Total275,725 291,605 (15,880)(5.4)%$2,036$2,132$(96)(4.5)%
(a)Revenues from gas sales are subject to a weather normalization clause and a revenue decoupling mechanism, as a result of which, delivery revenues are generally not affected by changes in delivery volumes from levels assumed when rates were approved.
(b)After adjusting for variations, primarily billing days, firm gas sales and transportation volumes in the company’s service area decreased 0.7 percent in 2020 compared with 2019. See “Coronavirus Disease 2019 (COVID-19) Impacts,” above.
(c)Includes 3,510 thousands and 5,484 thousands of Dt for 2020 and 2019, respectively, which are also reflected in firm transportation and other.
(d)Other gas operating revenues generally reflect changes in the revenue decoupling mechanism and weather normalization clause current asset or regulatory liability and changes in regulatory assets and liabilities in accordance with other provisions of the company’s rate plans. See Note B to the financial statements in Item 8.

                                                                                                                         CON EDISON ANNUAL REPORT 202063



Operating revenues decreased $96 million in 2020 compared with 2019 primarily due to lower gas purchased for resale expense ($180 million) and certain rate plan reconciliations ($6 million), offset in part by higher gas revenues due to the gas base rates increase in January 2020 under the company's gas rate plan ($91 million).
Gas purchased for resale decreased $180 million in 2020 compared with 2019 due to lower unit costs ($110 million) and lower purchased volumes ($70 million).
Other operations and maintenance expenses decreased $44 million in 2020 compared with 2019 primarily due to lower costs for pension and other postretirement benefits ($31 million), lower stock-based compensation ($5 million), lower municipal infrastructure support costs ($5 million) and lower reserve for injuries and damages ($4 million).
Depreciation and amortization increased $63 million in 2020 compared with 2019 primarily due to higher gas utility plant balances and higher depreciation rates.
Taxes, other than income taxes increased $19 million in 2020 compared with 2019 primarily due to higher property taxes ($37 million), higher state and local taxes ($1 million) and the absence in 2020 of a reduction in the sales and use tax reserve upon conclusion of the audit assessment ($1 million), offset in part by higher deferral of under-collected property taxes ($19 million) and lower payroll taxes ($1 million) due to the Employee Retention Tax Credit created under the CARES Act. See “Coronavirus Disease 2019 (COVID-19) Impacts - Impact of CARES Act and 2021 Appropriations Act on Accounting for Income Taxes,” above.
Steam
CECONY’s results of steam operations for the year ended December 31, 2020 compared with the year ended December 31, 2019 were as follows:
  For the Years Ended December 31,
(Millions of Dollars)20202019Variation
Operating revenues$508$627$(119)
Purchased power2733(6)
Fuel81108(27)
Other operations and maintenance161177(16)
Depreciation and amortization90891
Taxes, other than income taxes144158(14)
Steam operating income$5$62$(57)
CECONY’s steam sales and deliveries in 2020 compared with 2019 were:
  Millions of Pounds DeliveredRevenues in Millions
  For the Years Ended  For the Years Ended  
DescriptionDecember 31, 2020December 31, 2019Variation
Percent
Variation
December 31, 2020December 31, 2019Variation
Percent
Variation
General445 536 (91)(17.0)%$23$27$(4)(14.8)%
Apartment house5,131 5,919 (788)(13.3)136160(24)(15.0)
Annual power10,977 13,340 (2,363)(17.7)321395(74)(18.7)
Other operating revenues (a)— — — 2845(17)(37.8)
Total16,553 19,795 (3,242)(16.4)%(b) $508$627$(119)(19.0)%
(a)Other steam operating revenues generally reflect changes in regulatory assets and liabilities in accordance with the company’s rate plan. See Note B to the financial statements in Item 8.
(b)After adjusting for variations, primarily weather and billing days, steam sales and deliveries in the company’s service area decreased 6.7 percent in 2020 compared with 2019. See “Coronavirus Disease 2019 (COVID-19) Impacts,” above.
Operating revenues decreased $119 million in 2020 compared with 2019 primarily due to the impact of warmer winter weather ($43 million), lower fuel expenses ($27 million), lower usage by customers due to the impact of the COVID-19 pandemic ($19 million), certain rate plan reconciliations ($15 million) and lower purchased power expenses ($6 million).
Purchased power expenses decreased $6 million in 2020 compared with 2019 due to lower unit costs ($3 million) and purchased volumes ($3 million).
64CON EDISON ANNUAL REPORT 2020


Fuel expenses decreased $27 million in 2020 compared with 2019 due to lower unit costs ($14 million) and lower purchased volumes from the company’s steam generating facilities ($13 million).
Other operations and maintenance expenses decreased $16 million in 2020 compared with 2019 primarily due to lower costs for pension and other postretirement benefits ($7 million) and lower municipal infrastructure support costs ($7 million).
Depreciation and amortization increased $1 million in 2020 compared with 2019 primarily due to higher steam utility plant balances.
Taxes, other than income taxes decreased $14 million in 2020 compared with 2019 primarily due to higher deferral of under-collected property taxes ($20 million) and lower state and local taxes ($2 million), offset in part by higher property taxes ($8 million).
Taxes, Other Than Income Taxes
At $2,456 million, taxes other than income taxes remain one of CECONY’s largest operating expenses. The principal components of, and variations in, taxes other than income taxes were:
For the Years Ended December 31,
(Millions of Dollars)20202019Variation
Property taxes$2,129$1,979$150
State and local taxes related to revenue receipts33832810
Payroll taxes6469(5)
Other taxes(75)(81)6
Total$2,456(a)$2,295(a)$161
(a)Including sales tax on customers’ bills, total taxes other than income taxes in 2020 and 2019 were $2,989 and $2,807 million, respectively.

Other Income (Deductions)
Other income (deductions) decreased $136 million in 2020 compared with 2019 primarily due to higher costs associated with components of pension and other postretirement benefits other than service cost ($117 million) and the absence of the company’s share of gain on sale of properties in 2019 ($14 million).
Net Interest Expense
Net interest expense increased $11 million in 2020 compared with 2019 primarily due to higher interest on long-term debt ($46 million), offset in part by a decrease in interest accrued on the TCJA related regulatory liability ($13 million), lower interest expense for short-term debt ($12 million) and lower interest accrued on the system benefit charge liability ($8 million).
Income Tax Expense
Income taxes decreased $120 million in 2020 compared with 2019 primarily due to lower income before income tax expense ($39 million), an increase in the amortization of excess deferred federal income taxes due to CECONY’s electric and gas rate plans that went into effect in January 2020 ($103 million) and lower state income taxes ($13 million), offset in part by the absence of the amortization of excess deferred state income taxes in 2020 ($24 million), lower research and development credits in 2020 ($5 million) and lower flow-through tax benefits in 2020 for plant-related items ($4 million).

O&R
  For the Year Ended December 31, 2020  For the Year Ended December 31, 2019    
(Millions of Dollars)ElectricGas2020 TotalElectricGas2019 Total2020-2019
Variation
Operating revenues$629$233$862$634$259$893$(31)
Purchased power169— 169188— 188(19)
Gas purchased for resale— 6161— 9090(29)
Other operations and maintenance24268310235733082
Depreciation and amortization6525906024846
Taxes, other than income taxes5431855331841
Operating income$99$48$147$98$41$139$8
                                                                                                                         CON EDISON ANNUAL REPORT 202065



Electric
O&R’s results of electric operations for the year ended December 31, 2020 compared with the year ended December 31, 2019 were as follows:
  For the Years Ended December 31,
(Millions of Dollars)20202019Variation
Operating revenues$629$634$(5)
Purchased power169188(19)
Other operations and maintenance2422357
Depreciation and amortization65605
Taxes, other than income taxes54531
Electric operating income$99$98$1
O&R’s electric sales and deliveries in 2020 compared with 2019 were:
  Millions of kWh Delivered Revenues in Millions (a)
  For the Years Ended   For the Years Ended  
DescriptionDecember 31, 2020December 31, 2019Variation
Percent
Variation
 December 31, 2020December 31, 2019Variation
Percent
Variation
Residential/Religious (b)1,786 1,703 83 4.9 %$318$309$92.9 %
Commercial/Industrial820 808 12 1.5 11711254.5 
Retail choice customers2,621 2,885 (264)(9.2)186191(5)(2.6)
Public authorities107 106 0.9 78(1)(12.5)
Other operating revenues (c)— — — 114(13)(92.9)
Total5,334 5,502 (168)(3.1)%(d)$629$634$(5)(0.8)%
(a)Revenues from New York electric delivery sales 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 are not subject to a decoupling mechanism, and as a result, changes in such volumes do impact revenues.
(b)“Residential/Religious” generally includes single-family dwellings, individual apartments in multi-family dwellings, religious organizations and certain other not-for-profit organizations.
(c)Other electric operating revenues generally reflect changes in the revenue decoupling mechanism current asset or regulatory liability in accordance with the company’s New York electric rate plan and changes in regulatory assets and liabilities in accordance with the company’s electric rate plans. See Note B to the financial statements in Item 8.
(d)After adjusting for weather and other variations, electric delivery volumes in company’s service area decreased 0.7 percent in 2020 compared with 2019. See “Coronavirus Disease 2019 (COVID-19) Impacts,” above.
Operating revenues decreased $5 million in 2020 compared with 2019 primarily due to lower purchased power expenses ($19 million), offset in part by higher revenues from the New York electric rate plan ($16 million).

Purchased power expenses decreased $19 million in 2020 compared with 2019 due to lower unit costs.

Other operations and maintenance expenses increased $7 million in 2020 compared with 2019 primarily due to the amortization of prior deferred storm costs ($3 million) and food and medicine spoilage claims related to outages caused by Tropical Storm Isaias ($3 million).

Depreciation and amortization increased $5 million in 2020 compared with 2019 primarily due to higher electric utility plant balances.
Taxes, other than income taxes increased $1 million in 2020 compared with 2019 primarily due to higher property taxes ($2 million), offset in part by lower payroll taxes ($1 million).
Gas
O&R’s results of gas operations for the year ended December 31, 2020 compared with the year ended December 31, 2019 were as follows:
66CON EDISON ANNUAL REPORT 2020


  For the Years Ended December 31,
(Millions of Dollars)20202019Variation
Operating revenues$233$259$(26)
Gas purchased for resale6190(29)
Other operations and maintenance6873(5)
Depreciation and amortization25241
Taxes, other than income taxes3131— 
Gas operating income$48$41$7
O&R’s gas sales and deliveries, excluding off-system sales, in 2020 compared with 2019 were:
  Thousands of Dt Delivered Revenues in Millions (a)
  For the Years Ended  For the Years Ended  
DescriptionDecember 31, 2020December 31, 2019VariationPercent
Variation
December 31, 2020December 31, 2019Variation
Percent
Variation
Residential9,736 10,209 (473)(4.6)%$121$136$(15)(11.0)%
General2,142 2,328 (186)(8.0)2025(5)(20.0)
Firm transportation8,271 9,459 (1,188)(12.6)6263(1)(1.6)
Total firm sales and transportation20,149 21,996 (1,847)(8.4)(b) 203224(21)(9.4)
Interruptible sales3,632 3,668 (36)(1.0)66— — 
Generation plants59 55 Large— — — — 
Other658 914 (256)(28.0)11— — 
Other gas revenues— — — 2328(5)(17.9)
Total24,498 26,582 (2,084)(7.8)%$233$259$(26)(10.0)%
(a)Revenues from New York gas sales are subject to a weather normalization clause and a revenue decoupling mechanism, as a result of which, delivery revenues are generally not affected by changes in delivery volumes from levels assumed when rates were approved.
(b)After adjusting for weather and other variations, firm sales and transportation volumes in the company’s service area increased 0.6 percent in 2020 compared with 2019. See “Coronavirus Disease 2019 (COVID-19) Impacts,” above.
Operating revenues decreased $26 million in 2020 compared with 2019 primarily due to lower gas purchased for resale expense.
Gas purchased for resale decreased $29 million in 2020 compared with 2019 due to lower unit costs ($24 million) and purchased volumes ($5 million).

Other operations and maintenance expenses decreased $5 million in 2020 compared with 2019 primarily due to lower pension costs.
Depreciation and amortization increased $1 million in 2020 compared with 2019 primarily due to higher gas utility plant balances.
Taxes, Other Than Income Taxes
Taxes, other than income taxes, increased $1 million in 2020 compared with 2019. The principal components of taxes, other than income taxes, were:
For the Years Ended December 31,
(Millions of Dollars)20202019Variation
Property taxes$69$66$3
State and local taxes related to revenue receipts1010— 
Payroll taxes68(2)
Total$85(a) $84(a) $1 
(a)Including sales tax on customers’ bills, total taxes other than income taxes in 2020 and 2019 were $121 million and $116 million, respectively.

Income Tax Expense
Income taxes increased $4 million in 2020 compared with 2019 primarily due to higher income before income tax expense ($1 million), higher state income taxes ($1 million), lower flow-through tax benefits on plant-related items in 2020 ($1 million), and an increase in flow-through income tax expense on higher bad debt reserves in 2020 as compared with 2019 ($1 million).
                                                                                                                         CON EDISON ANNUAL REPORT 202067




Clean Energy Businesses
The Clean Energy Businesses’ results of operations for the year ended December 31, 2020 compared with the year ended December 31, 2019 were as follows:
  For the Years Ended December 31,
(Millions of Dollars)20202019Variation
Operating revenues$736$857$(121)
Gas purchased for resale41185(144)
Other operations and maintenance2282235
Depreciation and amortization2312265
Taxes, other than income taxes2121
Operating income$215$202$13

Operating revenues decreased $121 million in 2020 compared with 2019 primarily due to lower wholesale revenues ($136 million) and lower energy services revenues ($19 million), offset in part by higher renewable electric production revenues ($34 million).

Gas purchased for resale decreased $144 million in 2020 compared with 2019 primarily due to lower purchased volumes.
Other operations and maintenance expenses increased $5 million in 2020 compared with 2019 primarily due to an increase in general operating expenses.

Depreciation and amortization increased $5 million in 2020 compared with 2019 primarily due to an increase in renewable electric production projects in operation during 2020.
Net Interest Expense
Net interest expense increased $10 million in 2020 compared with 2019 primarily due to higher unrealized losses on interest rate swaps in the 2020 period.
Income Tax Expense
Income taxes increased $14 million in 2020 compared with 2019 primarily due to higher income before income tax expense ($1 million), lower income attributable to non-controlling interest ($13 million), and the absence of the adjustment for prior period federal income tax returns primarily due to higher research and development credits in 2019 ($13 million), offset in part by a tax benefit due to the change in the federal corporate income tax rate recognized for a loss carryback from the 2018 tax year to the 2013 tax year as allowed under the CARES Act ($4 million), a lower increase in uncertain tax position ($7 million) and higher renewable energy credits ($2 million).

Income Attributable to Non-Controlling Interest
Income attributable to non-controlling interest increased $54 million in 2020 compared with 2019 primarily due to lower losses attributable in the 2020 period to a tax equity investor in renewable electric production projects accounted for under the HLBV method of accounting. See Note R to the financial statements in Item 8.

Con Edison Transmission
Net Interest Expense
Net interest expense decreased $7 million in 2020 compared with 2019 primarily due to a reduction to short-term borrowings and rates charged under an intercompany capital funding facility.

Other Income (Deductions)
Other income (deductions) decreased $319 million in 2020 compared with 2019 primarily due to an impairment loss related to Con Edison Transmission's investment in Mountain Valley Pipeline, LLC. See "Application of Critical Account Policies - Investments" in Item 7 and "Investments" in Note A to the financial statement in Item 8.

Income Tax Expense
Income taxes decreased $87 million in 2020 compared with 2019 primarily due to the MVP impairment loss recorded in 2020 ($88 million).


68CON EDISON ANNUAL REPORT 2020


Other
Taxes, Other Than Income Taxes
Taxes, other than income taxes increased $7 million in 2020 compared with 2019 primarily due to adjustments made to the New York City capital tax for prior periods in the 2020 period.

Other Income (Deductions)
Other income (deductions) increased $7 million in 2020 compared with 2019 primarily due to the absence in 2020 of an elimination related to interest income under the intercompany capital funding facility.

Income Tax Expense
Income taxes decreased $17 million in 2020 compared with 2019 primarily due to lower income before income tax expense ($3 million), the reversal of a portion of a New York City valuation allowance ($9 million), and the MVP impairment loss recorded in 2020 ($9 million), offset in part by lower consolidated state income tax benefits ($4 million).

During the fourth quarter of 2020, Con Edison reversed a portion of its valuation allowance that was recorded against the deferred tax asset established for the New York City NOL. Management has reassessed its ability to realize a portion of the deferred tax benefits generated primarily by its renewable energy projects due to the future reversal of temporary differences associated with the accelerated tax depreciation and by implementing its strategy to secure tax equity financing from third parties for which certain tax deductions and amortization will be specifically allocated to members outside of the consolidated group.


                                                                                                                         CON EDISON ANNUAL REPORT 202069



Year Ended December 31, 2019 Compared with Year Ended December 31, 2018

CECONY
  For the Year Ended December 31, 2019  For the Year Ended December 31, 2018    
(Millions of Dollars)ElectricGasSteam2019 TotalElectricGasSteam2018 Total2019-2018 Variation
Operating revenues$8,062$2,132$627$10,821$7,971$2,078$631$10,680$141
Purchased power1,324— 331,3571,393— 401,433(76)
Fuel99— 108207158— 105263(56)
Gas purchased for resale— 606— 606— 643— 643(37)
Other operations and maintenance2,0593991772,6351,9614201742,55580
Depreciation and amortization1,053231891,373984205871,27697
Taxes, other than income taxes1,7693681582,2951,6763321482,156139
Operating income$1,758$528$62$2,348$1,799$478$77$2,354$(6)
Electric
CECONY’s results of electric operations for the year ended December 31, 2019 compared with the year ended December 31, 2018 were as follows:
  For the Years Ended December 31,
(Millions of Dollars)20192018Variation
Operating revenues$8,062$7,971$91
Purchased power1,3241,393(69)
Fuel99158(59)
Other operations and maintenance2,0591,96198
Depreciation and amortization1,05398469
Taxes, other than income taxes1,7691,67693
Electric operating income$1,758$1,799$(41)
CECONY’s electric sales and deliveries in 2019 compared with 2018 were:
  Millions of kWh DeliveredRevenues in Millions (a)
  For the Years Ended  For the Years Ended  
DescriptionDecember 31, 2019December 31, 2018Variation
Percent
Variation
December 31, 2019December 31, 2018Variation
Percent
Variation
Residential/Religious (b)10,560 10,797 (237)(2.2)%$2,671$2,846$(175)(6.1)%
Commercial/Industrial9,908 9,588 320 3.3 1,8451,850(5)(0.3)
Retail choice customers24,754 26,266 (1,512)(5.8)2,4702,624(154)(5.9)
NYPA, Municipal Agency and other sales9,932 10,186 (254)(2.5)66366210.2 
Other operating revenues (c)— — — 413(11)424Large
Total55,154 56,837 (1,683)(3.0)%(d)$8,062$7,971$911.1 %
(a)Revenues from electric sales 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.
(b)“Residential/Religious” generally includes single-family dwellings, individual apartments in multi-family dwellings, religious organizations and certain other not-for-profit organizations.
(c)Other electric operating revenues generally reflect changes in the revenue decoupling mechanism current asset or regulatory liability and changes in regulatory assets and liabilities in accordance with other provisions of the company’s rate plan.
(d)After adjusting for variations, primarily weather and billing days, electric delivery volumes in the company’s service area decreased 1.1 percent in 2019 compared with 2018.
Operating revenues increased $91 million in 2019 compared with 2018 primarily due to an increase in revenues from the rate plan ($215 million), including earnings adjustment mechanism incentives for energy efficiency ($22 million), offset in part by lower purchased power expenses ($69 million) and fuel expenses ($59 million).

Purchased power expenses decreased $69 million in 2019 compared with 2018 due to lower unit costs ($199 million), offset in part by higher purchased volumes ($130 million).
70CON EDISON ANNUAL REPORT 2020



Fuel expenses decreased $59 million in 2019 compared with 2018 due to lower unit costs ($54 million) and purchased volumes from the company’s electric generating facilities ($5 million).

Other operations and maintenance expenses increased $98 million in 2019 compared with 2018 primarily due to higher costs for pension and other postretirement benefits ($91 million), surcharges for assessments and fees that are collected in revenues from customers ($40 million) and higher stock-based compensation ($23 million), offset in part by lower other employee benefits ($41 million) and municipal infrastructure support costs ($12 million).

Depreciation and amortization increased $69 million in 2019 compared with 2018 primarily due to higher electric utility plant balances.

Taxes, other than income taxes increased $93 million in 2019 compared with 2018 primarily due to higher property taxes ($86 million) and the absence of a New York State sales and use tax refund received in 2018 ($26 million), offset in part by higher deferral of under-collected property taxes ($11 million), the reduction in the sales and use tax reserve upon conclusion of an audit assessment ($6 million) and lower state and local taxes ($2 million).

Gas
CECONY’s results of gas operations for the year ended December 31, 2019 compared with the year ended December 31, 2018 were as follows:
  For the Years Ended December 31,
(Millions of Dollars)20192018Variation
Operating revenues$2,132$2,078$54
Gas purchased for resale606643(37)
Other operations and maintenance399420(21)
Depreciation and amortization23120526
Taxes, other than income taxes36833236
Gas operating income$528$478$50
CECONY’s gas sales and deliveries, excluding off-system sales, in 2019 compared with 2018 were:
  Thousands of Dt Delivered Revenues in Millions (a)
  For the Years Ended   For the Years Ended  
DescriptionDecember 31, 2019December 31, 2018Variation
Percent
Variation
 December 31, 2019December 31, 2018Variation
Percent
Variation
Residential54,402 57,815 (3,413)(5.9)%$943$966$(23)(2.4)%
General33,235 34,490 (1,255)(3.6)384390(6)(1.5)
Firm transportation81,710 82,472 (762)(0.9)593595(2)(0.3)
Total firm sales and transportation169,347 174,777 (5,430)(3.1)(b)1,9201,951(31)(1.6)
Interruptible sales (c)9,903 7,351 2,552 34.7 424025.0 
NYPA39,643 34,079 5,564 16.3 22— 
Generation plants52,011 72,524 (20,513)(28.3)2326(3)(11.5)
Other20,701 20,822 (121)(0.6)3131— 
Other operating revenues (d)— — — 1142886Large
Total291,605 309,553 (17,948)(5.8)%$2,132$2,078$542.6 %
(a)Revenues from gas sales are subject to a weather normalization clause and a revenue decoupling mechanism, as a result of which, delivery revenues are generally not affected by changes in delivery volumes from levels assumed when rates were approved.
(b)After adjusting for variations, primarily billing days, firm gas sales and transportation volumes in the company’s service area increased 1.8 percent in 2019 compared with 2018, reflecting primarily increased volumes attributable to the growth in the number of gas customers.
(c)Includes 5,484 thousands and 3,326 thousands of Dt for 2019 and 2018, respectively, which are also reflected in firm transportation and other.
(d)Other gas operating revenues generally reflect changes in the revenue decoupling mechanism and weather normalization clause current asset or regulatory liability and changes in regulatory assets and liabilities in accordance with other provisions of the company’s rate plans. See Note B to the financial statements in Item 8.

Operating revenues increased $54 million in 2019 compared with 2018 primarily due to an increase in revenues from the rate plan ($99 million), offset in part by lower gas purchased for resale expense ($37 million).
                                                                                                                         CON EDISON ANNUAL REPORT 202071




Gas purchased for resale decreased $37 million in 2019 compared with 2018 due to lower unit costs ($34 million) and purchased volumes ($3 million).

Other operations and maintenance expenses decreased $21 million in 2019 compared with 2018 primarily due to lower surcharges for assessments and fees that are collected in revenues from customers.

Depreciation and amortization increased $26 million in 2019 compared with 2018 primarily due to higher gas utility plant balances.

Taxes, other than income taxes increased $36 million in 2019 compared with 2018 primarily due to higher property taxes ($37 million), the absence of a New York State sales and use tax refund received in 2018 ($3 million) and higher state and local taxes ($2 million), offset in part by higher deferral of under-collected property taxes ($4 million) and the reduction in the sales and use tax reserve upon conclusion of an audit assessment ($1 million).

Steam
CECONY’s results of steam operations for the year ended December 31, 2019 compared with the year ended December 31, 2018 were as follows:
  For the Years Ended December 31,
(Millions of Dollars)20192018Variation
Operating revenues$627$631$(4)
Purchased power3340(7)
Fuel1081053
Other operations and maintenance1771743
Depreciation and amortization89872
Taxes, other than income taxes15814810
Steam operating income$62$77$(15)
CECONY’s steam sales and deliveries in 2019 compared with 2018 were:
  Millions of Pounds DeliveredRevenues in Millions
  For the Years Ended  For the Years Ended  
DescriptionDecember 31, 2019December 31, 2018Variation
Percent
Variation
December 31, 2019December 31, 2018Variation
Percent
Variation
General536 593 (57)(9.6)%$27$30$(3)(10.0)%
Apartment house5,919 6,358 (439)(6.9)160174(14)(8.0)
Annual power13,340 14,811 (1,471)(9.9)395441(46)(10.4)
Other operating revenues (a)— — — 45(14)59Large
Total19,795 21,762 (1,967)(9.0)%(b)$627$631$(4)(0.6)%
(a)Other steam operating revenues generally reflect changes in regulatory assets and liabilities in accordance with the company’s rate plan. See Note B to the financial statements in Item 8.
(b)After adjusting for variations, primarily weather and billing days, steam sales and deliveries in the company’s service area decreased 4.4 percent in 2019 compared with 2018.
Operating revenues decreased $4 million in 2019 compared with 2018 primarily due to the impact of warmer winter weather ($26 million) and lower purchased power expenses ($7 million), offset by certain rate plan reconciliations ($16 million), lower reserve related to steam earnings sharing ($14 million) and higher fuel expenses ($3 million).

Purchased power expenses decreased $7 million in 2019 compared with 2018 due to lower unit costs ($6 million) and purchased volumes ($1 million).

Fuel expenses increased $3 million in 2019 compared with 2018 due to higher unit costs ($7 million), offset in part by lower purchased volumes from the company’s steam generating facilities ($4 million).

Other operations and maintenance expenses increased $3 million in 2019 compared with 2018 primarily due to higher municipal infrastructure support costs ($7 million), higher costs for pension and other postretirement benefits ($8 million) and stock-based compensation ($2 million), offset in part by the absence in 2019 of property damage, clean-up and other response costs related to a steam main rupture in 2018 ($11 million).
72CON EDISON ANNUAL REPORT 2020



Depreciation and amortization increased $2 million in 2019 compared with 2018 primarily due to higher steam utility plant balances.

Taxes, other than income taxes increased $10 million in 2019 compared with 2018 primarily due to higher property taxes ($12 million) and the absence of a New York State sales and use tax refund received in 2018 ($1 million), offset in part by lower state and local taxes ($1 million), higher deferral of under-collected property taxes ($1 million) and the reduction in the sales and use tax reserve upon conclusion of an audit assessment ($1 million).

Taxes, Other Than Income Taxes
At $2,295 million, taxes other than income taxes remain one of CECONY’s largest operating expenses. The principal components of, and variations in, taxes other than income taxes were:
For the Years Ended December 31,
(Millions of Dollars)20192018Variation
Property taxes$1,979$1,845$134
State and local taxes related to revenue receipts328330(2)
Payroll taxes6969
Other taxes(81)(88)7
Total$2,295(a)$2,156(a)$139
(a)Including sales tax on customers’ bills, total taxes other than income taxes in 2019 and 2018 were $2,807 and $2,628 million, respectively.

Other Income (Deductions)
Other income (deductions) increased $108 million in 2019 compared with 2018 primarily due to lower costs associated with components of pension and other postretirement benefits other than service cost.

Net Interest Expense
Net interest expense increased $39 million in 2019 compared with 2018 primarily due to higher interest expense for long-term ($10 million) and short-term ($6 million) debt, an increase in interest accrued on the TCJA related regulatory liability ($9 million) and interest accrued on the system benefit charge liability ($8 million).

Income Tax Expense
Income taxes increased $9 million in 2019 compared with 2018 primarily due to higher income before income tax expense ($13 million) and lower tax benefits in 2019 for plant-related flow through items ($7 million), offset in part by an increase in the amortization of excess deferred federal income taxes due to the TCJA ($11 million).

O&R
  For the Year Ended December 31, 2019  For the Year Ended December 31, 2018    
(Millions of Dollars)ElectricGas2019 TotalElectricGas2018 Total2019-2018
Variation
Operating revenues$634$259$893$642$249$891$2
Purchased power188— 188208— 208(20)
Gas purchased for resale— 9090— 86864
Other operations and maintenance23573308233723053
Depreciation and amortization6024845621777
Taxes, other than income taxes5331845231831
Operating income$98$41$139$93$39$132$7
                                                                                                                         CON EDISON ANNUAL REPORT 202073



Electric
O&R’s results of electric operations for the year ended December 31, 2019 compared with the year ended December 31, 2018 were as follows:
  For the Years Ended December 31,
(Millions of Dollars)20192018Variation
Operating revenues$634$642$(8)
Purchased power188208(20)
Other operations and maintenance2352332
Depreciation and amortization60564
Taxes, other than income taxes53521
Electric operating income$98$93$5
O&R’s electric sales and deliveries in 2019 compared with 2018 were:
  Millions of kWh Delivered Revenues in Millions (a)
  For the Years Ended   For the Years Ended  
DescriptionDecember 31, 2019December 31, 2018Variation
Percent
Variation
 December 31, 2019December 31, 2018Variation
Percent
Variation
Residential/Religious (b)1,703 1,713 (10)(0.6)%$309$326$(17)(5.2)%
Commercial/Industrial808 799 1.1 112115(3)(2.6)
Retail choice customers2,885 2,974 (89)(3.0)191201(10)(5.0)
Public authorities106 131 (25)(19.1)812(4)(33.3)
Other operating revenues (c)— — — 14(12)26Large
Total5,502 5,617 (115)(2.0)%(d)$634$642$(8)(1.2)%
(a)Revenues from New York electric delivery sales 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 are not subject to a decoupling mechanism, and as a result, changes in such volumes do impact revenues.
(b)“Residential/Religious” generally includes single-family dwellings, individual apartments in multi-family dwellings, religious organizations and certain other not-for-profit organizations.
(c)Other electric operating revenues generally reflect changes in the revenue decoupling mechanism current asset or regulatory liability in accordance with the company’s New York electric rate plan and changes in regulatory assets and liabilities in accordance with the company’s electric rate plans. See Note B to the financial statements in Item 8.
(d)After adjusting for weather and other variations, electric delivery volumes in company’s service area decreased 1.1 percent in 2019 compared with 2018.
Operating revenues decreased $8 million in 2019 compared with 2018 primarily due to lower purchased power expenses.

Purchased power expenses decreased $20 million in 2019 compared with 2018 due to lower unit costs ($21 million), offset in part by higher purchased volumes ($1 million).

Other operations and maintenance expenses increased $2 million in 2019 compared with 2018 primarily due to a regulatory change in accounting for manufactured gas plant spending ($5 million) and higher stock-based compensation ($2 million), offset in part by the reduction of a regulatory asset associated with certain site investigation and remediation costs in 2018 ($6 million).

Depreciation and amortization increased $4 million in 2019 compared with 2018 primarily due to higher electric utility plant balances.

Taxes, other than income taxes increased $1 million in 2019 compared with 2018 primarily due to higher property taxes.

Gas
O&R’s results of gas operations for the year ended December 31, 2019 compared with the year ended December 31, 2018 were as follows:
74CON EDISON ANNUAL REPORT 2020


  For the Years Ended December 31,
(Millions of Dollars)20192018Variation
Operating revenues$259$249$10
Gas purchased for resale90864
Other operations and maintenance73721
Depreciation and amortization24213
Taxes, other than income taxes3131
Gas operating income$41$39$2
O&R’s gas sales and deliveries, excluding off-system sales, in 2019 compared with 2018 were:
  Thousands of Dt Delivered Revenues in Millions (a)
  For the Years Ended  For the Years Ended  
DescriptionDecember 31, 2019December 31, 2018VariationPercent
Variation
December 31, 2019December 31, 2018Variation
Percent
Variation
Residential10,209 9,860 349 3.5 %$136$140$(4)(2.9)%
General2,328 2,190 138 6.3 2526(1)(3.8)
Firm transportation9,459 9,950 (491)(4.9)6378(15)(19.2)
Total firm sales and transportation21,996 22,000 (4) (b)224244(20)(8.2)
Interruptible sales3,668 3,746 (78)(2.1)66— — 
Generation plantsLarge— — — — 
Other914 959 (45)(4.7)11— — 
Other gas revenues— — — 28(2)30Large
Total26,582 26,706 (124)(0.5)%$259$249$104.0 %
(a)Revenues from New York gas sales are subject to a weather normalization clause and a revenue decoupling mechanism, as a result of which, delivery revenues are generally not affected by changes in delivery volumes from levels assumed when rates were approved.
(b)After adjusting for weather and other variations, firm sales and transportation volumes in the company’s service area increased 0.9 percent in 2019 compared with 2018.
Operating revenues increased $10 million in 2019 compared with 2018 primarily due to higher revenues from the New York gas rate plan ($8 million) and an increase in gas purchased for resale ($4 million).

Gas purchased for resale increased $4 million in 2019 compared with 2018 due to higher unit costs ($3 million) and purchased volumes ($1 million).

Other operations and maintenance expenses increased $1 million in 2019 compared with 2018 primarily due to a regulatory change in accounting for manufactured gas plant spending ($3 million) and higher stock-based compensation ($1 million), offset in part by the reduction of a regulatory asset associated with certain site investigation and remediation costs in 2018 ($3 million).

Depreciation and amortization increased $3 million in 2019 compared with 2018 primarily due to higher gas utility plant balances.
Taxes, Other Than Income Taxes
Taxes, other than income taxes, increased $1 million in 2019 compared with 2018. The principal components of taxes, other than income taxes, were:
For the Years Ended December 31,
(Millions of Dollars)20192018Variation
Property taxes$66$65$1
State and local taxes related to revenue receipts1010
Payroll taxes88
Total$84(a)$83(a)$1
(a)Including sales tax on customers’ bills, total taxes other than income taxes in 2019 and 2018 were $116 million and $112 million, respectively.

Other Income (Deductions)
                                                                                                                         CON EDISON ANNUAL REPORT 202075



Other income (deductions) increased $8 million in 2019 compared with 2018 primarily due to lower costs associated with components of pension and other postretirement benefits other than service cost.

Income Tax Expense
Income taxes increased $2 million in 2019 compared with 2018 primarily due to higher income before income tax expense ($3 million), offset in part by an increase in amortization of excess deferred federal income taxes due to the TCJA ($1 million).

Clean Energy Businesses
The Clean Energy Businesses’ results of operations for the year ended December 31, 2019 compared with the year ended December 31, 2018 were as follows:
  For the Years Ended December 31,
(Millions of Dollars)20192018Variation
Operating revenues$857$763$94
Purchased power2(2)
Gas purchased for resale185313(128)
Other operations and maintenance223287(64)
Depreciation and amortization22685141
Taxes, other than income taxes21138
Gain on acquisition of Sempra Solar Holdings, LLC (a)131 (131)
Operating income$202$194$8
(a) See Note V to the financial statements in Item 8.

Operating revenues increased $94 million in 2019 compared with 2018 primarily due to higher revenues from renewable electric production projects resulting from the December 2018 acquisition of Sempra Solar Holdings, LLC, including the consolidation of certain jointly-owned projects that were previously accounted for as equity investments ($340 million), offset in part by lower wholesale revenues ($144 million), lower engineering, procurement and construction services revenues due to the completion in 2018 of a solar electric production project developed for another company ($92 million) and lower energy services revenues ($24 million). Net mark-to-market values increased ($14 million).

Purchased power expenses decreased $2 million in 2019 compared with 2018 primarily due to the absence in the 2019 period of the true-ups relating to the retail electric supply business sold in 2016.

Gas purchased for resale decreased $128 million in 2019 compared with 2018 due to lower purchased volumes.

Other operations and maintenance expenses decreased $64 million in 2019 compared with 2018 primarily due to lower engineering, procurement and construction costs ($82 million) and lower energy services costs ($18 million), offset in part by higher costs associated with additional renewable electric production projects in operation resulting from the December 2018 acquisition of Sempra Solar Holdings, LLC ($26 million).

Depreciation and amortization increased $141 million in 2019 compared with 2018 primarily due to an increase in renewable electric production projects resulting from the December 2018 acquisition of Sempra Solar Holdings, LLC (including the consolidation of certain jointly-owned projects that the Clean Energy Businesses previously accounted for as equity method investments).

Taxes, other than income taxes increased $8 million in 2019 compared with 2018 primarily due to higher property taxes associated with additional renewable electric production projects in operation resulting from the December 2018 acquisition of Sempra Solar Holdings, LLC.

Gain on acquisition of Sempra Solar Holdings, LLC decreased $131 million in 2019 compared with 2018 due to the absence in 2019 of the gain recognized in 2018 with respect to jointly-owned renewable energy production projects upon completion of the acquisition of Sempra Solar Holdings, LLC. See Note V to the financial statements in Item 8.

Other Income (Deductions)
Other income (deductions) decreased $28 million in 2019 compared with 2018 primarily due to the absence in 2019 of equity income from certain jointly-owned projects that were accounted for as equity investments in 2018 but consolidated after the December 2018 acquisition of Sempra Solar Holdings, LLC.
76CON EDISON ANNUAL REPORT 2020



Net Interest Expense
Net interest expense increased $123 million in 2019 compared with 2018 primarily due to an increase in debt resulting from the December 2018 acquisition of Sempra Solar Holdings, LLC, including $825 million that was borrowed to fund a portion of the purchase price, $576 million of Sempra Solar Holdings, LLC subsidiaries' project debt that was outstanding at the time of the acquisition and the consolidation of $506 million of project debt of certain jointly-owned projects that the Clean Energy Businesses previously accounted for as equity method investments.

Income Tax Expense
Income taxes decreased $77 million in 2019 compared with 2018 primarily due to lower income before income tax expense (excluding income attributable to non-controlling interest) ($50 million), higher renewable energy credits ($7 million), lower state income taxes ($11 million), adjustments for prior period federal income tax returns primarily due to increased research and development credits ($11 million) and lower valuation allowances on state net operating losses ($6 million), offset in part by an increase in uncertain tax positions ($9 million).

Income Attributable to Non-Controlling Interest
Income attributable to non-controlling interest increased $97 million in 2019 compared with 2018 primarily due to the income attributable in the 2019 period to a tax equity investor in renewable electric production projects accounted for under the HLBV method of accounting. See Note R to the financial statements in Item 8.

Con Edison Transmission
Other Income (Deductions)
Other income (deductions) increased $13 million in 2019 compared with 2018 primarily due to higher allowance for funds used during construction from the Mountain Valley Pipeline, LLC ($27 million), offset in part by lower contract renewal rates at Stagecoach Gas Services, LLC ($17 million). See “Con Edison Transmission - CET Gas” in Item 1.

Net Interest Expense
Net interest expense increased $5 million in 2019 compared with 2018 primarily due to funding of increased investment in Mountain Valley Pipeline, LLC.

Income Tax Expense
Income taxes increased $4 million in 2019 compared with 2018 primarily due to higher income before income tax expense ($2 million) and a decrease in the amortization of excess deferred federal income taxes due to the TCJA ($1 million).

Other
Taxes, Other Than Income Taxes
Taxes, other than income taxes decreased $8 million in 2019 compared with 2018 primarily due to lower New York State capital tax.

Other Income (Deductions)
Other income (deductions) increased $12 million in 2019 compared with 2018 primarily due to the absence in 2019 of transaction costs related to the acquisition of Sempra Solar Holdings, LLC in 2018. See Note V to the financial statements in Item 8.

Income Tax Expense
Income taxes decreased $43 million in 2019 compared with 2018 primarily due to the absence of the TCJA re-measurement of deferred tax assets associated with Con Edison’s 2017 net operating loss carryforward into 2018.

                                                                                                                         CON EDISON ANNUAL REPORT 202077



Liquidity and Capital Resources
The Companies’ liquidity reflects cash flows from operating, investing and financing activities, as shown on their respective consolidated statements of cash flows and as discussed below.
The principal factors affecting Con Edison’s liquidity are its investments in the Utilities, the Clean Energy Businesses and Con Edison Transmission, the dividends it pays to its shareholders and the dividends it receives from the Utilities and cash flows from financing activities discussed below.
The principal factors affecting CECONY’s liquidity are its cash flows from operating activities, cash used in investing activities (including construction expenditures), the dividends it pays to Con Edison and cash flows from financing activities discussed below.
The Companies generally maintain minimal cash balances and use short-term borrowings to meet their working capital needs and other cash requirements. The Companies repay their short-term borrowings using funds from long-term financings and operating activities. The Utilities’ cost of capital, including working capital, is reflected in the rates they charge to their customers.
Each of the Companies believes that it will be able to meet its reasonably likely short-term and long-term cash requirements. See “The Companies Require Access To Capital Markets To Satisfy Funding Requirements,” "Changes To Tax Laws Could Adversely Affect the Companies," “The Companies Face Risks Related to Health Epidemics And Other Outbreaks, Including The COVID-19 Pandemic,” and “The Companies Also Face Other Risks That Are Beyond Their Control” in Item 1A, and “Capital Requirements and Resources” in Item 1.




78CON EDISON ANNUAL REPORT 2020



The Companies’ cash, temporary cash investments and restricted cash resulting from operating, investing and financing activities for the years ended December 31, 2020, 2019 and 2018 are summarized as follows:
  CECONYO&RClean Energy
Businesses
Con Edison
Transmission
Other (a)Con Edison (b)
(Millions of Dollars)202020192018202020192018202020192018202020192018202020192018202020192018
Operating activities$1,693$2,502$2,204$146$190$172$887$199$220$(7)$194$87$(521)$49$12$2,198$3,134$2,695
Investing activities(3,416)(3,124)(3,306)(220)(218)(198)(606)(258)(1,740)18(184)(227)— — (4,224)(3,782)(5,471)
Financing activities1,8577371,19079831(345)1841,590(11)(12)140665(58)(13)2,2458592,938
Net change for the period134115885(20)5(64)12570— (2)— 144(7)(1)219211162
Balance at beginning of period933818730325247 25112656— 21891,2171,006844
Balance at end of period (c)$1,067$933$818$37$32$52$187$251$126$— $— $2$145$1$8$1,436$1,217$1,006
(a) Includes parent company and consolidation adjustments.
(b) Represents the consolidated results of operations of Con Edison and its businesses.
(c) See "Reconciliation of Cash, Temporary Cash Investments and Restricted Cash" in Note A to the financial statements in Item 8.



                                                                                                                         CON EDISON ANNUAL REPORT 202079



Cash Flows from Operating Activities
The Utilities’ cash flows from operating activities primarily reflect their energy sales and deliveries and cost of operations. The volume of energy sales and deliveries is primarily affected by factors external to the Utilities, such as growth of customer demand, weather, market prices for energy and economic conditions. Measures that promote distributed energy resources, such as distributed generation, demand reduction and energy efficiency, also affect the volume of energy sales and deliveries. See "Competition" and "Environmental Matters – Clean Energy Future – Reforming the Energy Vision" and “Environmental Matters – Climate Change” in Item 1. During 2020, the decline in business activity in the Utilities’ service territory due to the COVID-19 pandemic resulted and may continue in 2021 to result in lower billed sales revenues, a slower recovery of cash from outstanding customer accounts receivable balances and increases to the allowance for uncollectible accounts, that may further result in increases to write-offs of customer accounts. Under the revenue decoupling mechanisms in the Utilities’ New York electric and gas rate plans, changes in delivery volumes from levels assumed when rates were approved may affect the timing of cash flows, but generally not net income. The prices at which the Utilities provide energy to their customers are determined in accordance with their rate plans. In general, changes in the Utilities’ cost of purchased power, fuel and gas may affect the timing of cash flows, but not net income, because the costs are recovered in accordance with rate plans. See “Recoverable Energy Costs” in Note A to the financial statements in Item 8. The Utilities’ New York rate plans allow them to defer costs resulting from a change in legislation, regulation and related actions that have taken effect during the term of the rate plans once the costs exceed a specified threshold. Increases to the allowance for uncollectible accounts related to the COVID-19 pandemic have been deferred pursuant to the legislative, regulatory and related actions provisions of their rate plans. Pursuant to their rate plans, the Utilities have recovered from customers a portion of the tax liability they will pay in the future as a result of temporary differences between the book and tax basis of assets and liabilities. These temporary differences affect the timing of cash flows, but not net income, as the Companies are required to record deferred tax assets and liabilities at the current corporate tax rate for the temporary differences. For the Utilities, credits to their customers of the net benefits of the TCJA, including the reduction of the corporate tax rate to 21 percent, decrease cash flows from operating activities. See “Changes To Tax Laws Could Adversely Affect the Companies,” in Item 1A, “Federal Income Tax” in Note A, “Rate Plans” in Note B, "COVID-19 Regulatory Matters" in Note B, “Other Regulatory Matters” in Note B and Note L to the financial statements in Item 8 and "Coronavirus Disease 2019 (COVID-19) Impacts - Liquidity and Financing," above.

Net income is the result of cash and non-cash (or accrual) transactions. Only cash transactions affect the Companies’ cash flows from operating activities. Principal non-cash charges or credits include depreciation, deferred income tax expense, amortizations of certain regulatory assets and liabilities and accrued unbilled revenue. Non-cash charges or credits may also be accrued under the revenue decoupling and cost reconciliation mechanisms in the Utilities’ New York electric and gas rate plans. See “Rate Plans – CECONY– Electric and Gas" and "Rate Plans – O&R New York – Electric and Gas” in Note B to the financial statements in Item 8. For Con Edison, 2020 net income also included a non-cash loss recognized with respect to a partial impairment of Con Edison Transmission’s investment in Mountain Valley Pipeline, LLC. See “Investments” in Note A to the financial statements in Item 8. For Con Edison, 2018 net income included a non-cash gain recognized with respect to jointly-owned renewable energy production projects upon completion of the acquisition of Sempra Solar Holdings, LLC at the Clean Energy Businesses ($131 million). See Note V to the financial statements in Item 8.

Net cash flows from operating activities in 2020 for Con Edison and CECONY were $936 million and $809 million lower, respectively, than in 2019. The changes in net cash flows for Con Edison and CECONY primarily reflects higher accounts receivable balances from customers ($566 million and $519 million, respectively) (see “COVID-19 Regulatory Matters” in Note B to the financial statements in Item 8 and “Coronavirus Disease 2019 (COVID-19) Impacts - Accounting Considerations” and “Liquidity and Financing,” above) and higher other receivables and other current assets ($188 million and $103 million, respectively) primarily due to lower reimbursement received for restoration costs related to the restoration of power in Puerto Rico in the aftermath of the September 2017 hurricanes in the 2020 period ($94 million and $88 million, respectively), higher system benefit charge ($139 million and $130 million, respectively), higher pension and retiree benefit contributions ($121 million and $113 million, respectively), deferrals for increased costs related to the COVID-19 pandemic ($115 million and $113 million, respectively), and a change in pension and retiree benefit obligations ($72 million and $77 million, respectively), offset in part by lower TCJA net benefits provided to customers in the 2020 period ($263 million and $263 million, respectively).

Net cash flows from operating activities in 2019 for Con Edison and CECONY were $439 million and $298 million higher, respectively, than in 2018. The changes in net cash flows for Con Edison and CECONY primarily reflects lower pension and retiree benefit contributions ($122 million and $115 million, respectively), lower storm restoration costs ($192 million and $132 million, respectively), lower MTA power reliability costs ($160 million and $160 million, respectively), reimbursement received for restoration costs related to the restoration of power in Puerto Rico in the aftermath of the September 2017 hurricanes ($95 million and $89 million, respectively), and for CECONY, lower net
80CON EDISON ANNUAL REPORT 2020


payments of income tax to affiliated companies ($122 million), offset in part by higher TCJA net benefits provided to customers in the 2019 period ($379 million and $376 million, respectively).
The change in net cash flows also reflects the timing of payments for and recovery of energy costs. This timing is reflected within changes to accounts receivable – customers, recoverable and refundable energy costs within other regulatory assets and liabilities and accounts payable balances.
Cash Flows Used in Investing Activities
Net cash flows used in investing activities for Con Edison and CECONY were $442 million and $292 million higher, respectively, in 2020 than in 2019. The change for Con Edison primarily reflects an increase in non-utility construction expenditures at the Clean Energy Businesses ($335 million), the absence in 2020 of proceeds from the sale of properties formerly used by CECONY in its operations ($192 million), an increase in utility construction expenditures at CECONY ($84 million) and O&R ($4 million) and higher cost of removal less salvage at CECONY ($16 million), offset in part by lower investments in electric and gas transmission projects at Con Edison Transmission in the 2020 period ($202 million).
Net cash flows used in investing activities for Con Edison and CECONY were $1,689 million and $182 million lower, respectively, in 2019 than in 2018. The change for Con Edison primarily reflects the acquisition of Sempra Solar Holdings, LLC, net of cash acquired, at the Clean Energy Businesses in 2018 ($1,488 million) (see Note V to the financial statements in Item 8) and proceeds received in 2019 from the sale of properties formerly used by CECONY in its operations ($187 million).
Cash Flows From Financing Activities
Net cash flows from financing activities in 2020 for Con Edison and CECONY were $1,386 million and $1,120 million higher, respectively, than in 2019. Net cash flows from financing activities in 2019 for Con Edison and CECONY were $2,079 million and $453 million lower, respectively, than in 2018.
Net cash flows from financing activities during the years ended December 31, 2020, 2019 and 2018 reflect the following Con Edison transactions:
2020
Issued 1,050,000 shares of its common shares for $88 million upon physical settlement of the remaining shares subject to its May 2019 forward sale agreement. Con Edison used the proceeds to invest in CECONY for funding of its capital requirements and other general corporate purposes. See Note C to the financial statements in Item 8;
Borrowed $820 million pursuant to a credit agreement that was converted to a term loan (the “July 2020 Term Loan”). Con Edison used the proceeds from the borrowing for general corporate purposes, including repayment of short-term debt bearing interest at variable rates. The July 2020 Term Loan was prepaid in full in December 2020;
Issued 7,200,000 common shares resulting in net proceeds of $553 million, after issuance expenses. The net proceeds from the sale of the common shares, together with the net proceeds from the sale of $650 million aggregate principal amount of 0.65 percent debentures due 2023, were used to prepay in full the July 2020 Term Loan. The remaining net proceeds from the sale of the common shares were invested by Con Edison in its subsidiaries, principally CECONY and O&R, and for other general corporate purposes; and
Issued $650 million aggregate principal amount of 0.65 percent debentures, due 2023, with an option to redeem at par, in whole or in part, on or after December 1, 2021. The proceeds from the $650 million refinancing, together with a portion of the proceeds from the sale of common shares, were used to prepay in full the July 2020 Term Loan. See Note C to the financial statements in Item 8.

2019
Redeemed in advance of maturity $400 million of 2.00 percent 3-year debentures;
Entered into a forward sale agreement relating to 5,800,000 shares of its common stock. In June 2019, the company issued 4,750,000 shares for $400 million upon physical settlement of shares subject to the forward sale agreement. Con Edison used the proceeds to invest in CECONY for funding of its capital requirements and other general corporate purposes. See Note C to the financial statements in Item 8;
Issued 5,649,369 common shares for $425 million upon physical settlement of the remaining shares subject to its November 2018 forward sale agreements. Con Edison used the proceeds to invest in its subsidiaries for funding of their capital requirements and to repay short-term debt incurred for that purpose; and
Borrowed $825 million under a variable-rate term loan that matures in June 2021 to fund the repayment of a six-month variable-rate term loan. In June 2019 and January 2021, Con Edison optionally pre-paid $150 million and $275 million, respectively, of the amount borrowed. See Note C to the financial statements in Item 8.

                                                                                                                         CON EDISON ANNUAL REPORT 202081






2018
Issued 9,324,123 common shares for $705 million pursuant to forward sale agreements and borrowed $825 million under a 6-month variable rate term loan, which amounts, along with $79 million of other company funds, were used to pay the purchase price for the acquisition by the Clean Energy Businesses of Sempra Solar Holdings, LLC. In February 2019, the company repaid the $825 million term loan with borrowings under a variable-rate term loan that matures in June 2021. See Notes C and V to the financial statements in Item 8.

Con Edison’s cash flows from financing activities in 2020, 2019 and 2018 also reflect the proceeds, and reduction in cash used for reinvested dividends, resulting from the issuance of common shares under the company’s dividend reinvestment, stock purchase and long-term incentive plans of $106 million, $101 million and $100 million, respectively.
Net cash flows from financing activities during the years ended December 31, 2020, 2019 and 2018 reflect the following CECONY transactions:
2020
Issued $600 million aggregate principal amount of 3.00 percent debentures, due 2060, the net proceeds from the sale of which were used to repay short-term borrowings and for other general corporate purposes;
Redeemed at maturity $350 million of 4.45 percent 10-year debentures; and
Issued $600 million aggregate principal amount of 3.35 percent debentures, due 2030 and $1,000 million aggregate principal amount of 3.95 percent debentures, due 2050, the net proceeds from the sale of which will be used to pay or reimburse the payment of, in whole or in part, existing and new qualifying eligible green expenditures, such as energy efficiency and clean transportation expenditures, that include those funded on or after January 1, 2018 until the maturity date of each series of the debentures. Pending the allocation of the net proceeds to finance or refinance eligible green expenditures, CECONY used a portion of the net proceeds for repayment of short-term debt and temporarily placed the remaining net proceeds in short-term interest-bearing instruments.
2019
Issued $600 million aggregate principal amount of 3.70 percent debentures, due 2059, and $700 million aggregate principal amount of 4.125 percent debentures, due 2049, the net proceeds from the sale of which were used to repay short-term borrowings and for other general corporate purposes; and
Redeemed at maturity $475 million of 6.65 percent 10-year debentures.

2018
Issued $500 million aggregate principal amount of 4.00 percent debentures, due 2028, and $600 million aggregate principal amount of 4.65 percent debentures, due 2048, the net proceeds from the sale of which were used to redeem at maturity $600 million of 7.125 percent 10-year debentures and other general corporate purposes, including repayment of short-term debt;
Issued $640 million aggregate principal amount of debentures, due 2021, at a variable interest rate of 0.40 percent above three-month LIBOR and redeemed $636 million of its tax-exempt debt for which the interest rates were to be determined pursuant to periodic auctions;
Issued $700 million aggregate principal amount of 4.50 percent debentures, due 2058, and $300 million aggregate principal amount of 3.80 percent debentures, due 2028, the net proceeds from the sale of which were used to repay short-term borrowings and for other general corporate purposes; and
Redeemed at maturity $600 million of 5.85 percent 10-year debentures.

Net cash flows from financing activities during the years ended December 31, 2020, 2019 and 2018 also reflect the following O&R transactions:

2020
Issued $35 million aggregate principal amount of 2.02 percent debentures, due 2030, and $40 million aggregate principal amount of 3.24 percent debentures, due 2050, the net proceeds from the sales of which were used to repay short-term borrowings and for other general corporate purposes.




82CON EDISON ANNUAL REPORT 2020





2019
Issued $43 million aggregate principal amount of 3.73 percent debentures, due 2049, $44 million aggregate principal amount of 2.94 percent debentures, due 2029, and $38 million aggregate principal amount of 3.46 percent debentures, due 2039, the net proceeds from the sales of which were used to repay short-term borrowings and for other general corporate purposes; and
Redeemed at maturity $60 million of 4.96 percent 10-year debentures.

2018
Redeemed at maturity $50 million of 6.15 percent 10-year debentures; and
Issued $150 million aggregate principal amount of 4.35 percent debentures, due 2048, the net proceeds from the sale of which were used to repay short-term borrowings and for other general corporate purposes.

Net cash flows from financing activities during the years ended December 31, 2020, 2019 and 2018 also reflect the following Clean Energy Businesses transactions:

2020
Borrowed $165 million under a $613 million variable-rate construction loan facility that matures no later than November 2021, secured by three of the company’s solar electric production projects. See Note D to the financial statements in Item 8.

2019
Issued $303 million aggregate principal amount of 3.82 percent senior notes, due 2038, secured by the company's California Solar 4 renewable electric production projects; and
Borrowed $464 million at a variable-rate, due 2026, secured by equity interests in solar electric production projects, the net proceeds from the sale of which were used to repay borrowings from Con Edison and for other general corporate purposes. Con Edison used a portion of the repayment to pre-pay $150 million of an $825 million variable-rate term loan that matures in June 2021 (see Note C to the financial statements in Item 8) and the remainder to repay short-term borrowings and for other general corporate purposes. The company has entered into fixed-rate interest rate swaps in connection with this borrowing. See Note P to the financial statements in Item 8.

2018
Issued $140 million aggregate principal amount of 4.41 percent senior notes, due 2028, secured by the company’s Wind Holdings renewable electric production projects.

Cash flows from financing activities of the Companies also reflect commercial paper issuance. The commercial paper amounts outstanding at December 31, 2020, 2019 and 2018 and the average daily balances for 2020, 2019 and 2018 for Con Edison and CECONY were as follows:
  202020192018
(Millions of Dollars, except
Weighted Average Yield)
Outstanding at
December 31
Daily
average
Outstanding at
December 31
Daily
average
Outstanding at
December 31
Daily
average
Con Edison$1,705$980$1,692$1,074$1,741$889
CECONY$1,660$678$1,137$734$1,192$532
Weighted average yield0.3 %1.0 %2.0 %2.5 %3.0 %2.3 %
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” in Item 1.

Capital Requirements and Resources
For information about capital requirements, contractual obligations and capital resources, see “Capital Requirements and Resources” in Item 1.

                                                                                                                         CON EDISON ANNUAL REPORT 202083



Assets, Liabilities and Equity
The Companies’ assets, liabilities and equity at December 31, 2020 and 2019 are summarized as follows:
  CECONYO&RClean Energy
Businesses
Con Edison
Transmission
Other (a)Con Edison (b)
(Millions of Dollars)202020192020201920202019202020192020201920202019
ASSETS
Current assets$4,407$3,543$277$243$485$511$42$2$90$(27)$5,301$4,272
Investments5414612626— — 1,2561,585(7)(7)1,8162,065
Net plant39,55437,4142,4692,3364,5154,121171746,55543,889
Other noncurrent assets6,4655,1394754011,8481,89633144024039,2237,853
Total Assets$50,967$46,557$3,247$3,006$6,848$6,528$1,348$1,618$485$370$62,895$58,079
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities$5,247$4,131$356$311$1,330$1,525$111$135$310$185$7,354$6,287
Noncurrent liabilities14,72213,6651,1911,1152112012888(58)(17)16,09415,052
Long-term debt16,14914,6148938182,7762,4005005006419520,38218,527
Equity14,84914,1478077622,5312,402709895169719,06518,213
Total Liabilities and Equity$50,967$46,557$3,247$3,006$6,848$6,528$1,348$1,618$485$370$62,895$58,079
(a) Includes parent company and consolidation adjustments.
(b) Represents the consolidated results of operations of Con Edison and its businesses.

CECONY
Current assets at December 31, 2020 were $864 million higher than at December 31, 2019. The change in current assets primarily reflects increases in accounts receivables, less allowance for uncollectible accounts ($442 million) (see “COVID-19 Regulatory Matters” in Note B to the financial statements in Item 8 and “Coronavirus Disease 2019 (COVID-19) Impacts - Accounting Considerations” and “Liquidity and Financing,” above), cash and temporary cash investments ($134 million), regulatory assets ($131 million), revenue decoupling mechanism receivable ($53 million), accrued unbilled revenue ($46 million) and accounts receivables from affiliated companies ($61 million).

Investments at December 31, 2020 were $80 million higher than at December 31, 2019. The change in investments primarily reflects increases in supplemental retirement income plan assets ($68 million) and deferred income plan assets ($11 million). See "Investments" in Note A and Note E to the financial statements in Item 8.

Net plant at December 31, 2020 was $2,140 million higher than at December 31, 2019. The change in net plant primarily reflects an increase in electric ($1,338 million), gas ($692 million), steam ($95 million) and general ($314 million) plant balances and an increase in construction work in progress ($508 million), offset in part by an increase in accumulated depreciation ($807 million).

Other noncurrent assets at December 31, 2020 were $1,326 million higher than at December 31, 2019. The change in other noncurrent assets primarily reflects an increase in the regulatory asset for unrecognized pension and other postretirement costs to reflect the final actuarial valuation, as measured at December 31, 2020, of the pension and other retiree benefit plans in accordance with the accounting rules for retirement benefits ($662 million). The change in the regulatory asset also reflects increases in the regulatory assets for deferred pension and other postretirement benefits ($225 million), environmental remediation costs ($144 million), deferrals for increased costs related to the COVID-19 pandemic ($113 million), deferred storm costs ($83 million) and the year's amortization of accounting costs. See Notes B, E, F and G to the financial statements in Item 8.

Current liabilities at December 31, 2020 were $1,116 million higher than at December 31, 2019. The change in current liabilities primarily reflects increases in notes payable ($523 million), debt due within one year as of December 31, 2020 ($290 million) and accounts payable ($276 million).
84CON EDISON ANNUAL REPORT 2020



Noncurrent liabilities at December 31, 2020 were $1,057 million higher than at December 31, 2019. The change in noncurrent liabilities primarily reflects an increase in the liability for pension and retiree benefits ($702 million) as a result of the final actuarial valuation of the pension and other retiree benefit plans, as measured at December 31, 2020, in accordance with the accounting rules for retirement benefits. The change also reflects an increase in deferred income taxes and unamortized investment tax credits ($411 million), primarily due to accelerated tax depreciation and repair deductions. See Notes E, F, and L to the financial statements in Item 8.

Long-term debt at December 31, 2020 was $1,535 million higher than at December 31, 2019. The change in long-term debt primarily reflects the March and November 2020 issuance of $2,200 million of debentures, offset in part by the reclassification of $640 million of long-term debt to long-term debt due within one year. See "Liquidity and Capital Resources - Cash Flows From Financing Activities" above and Note C to the financial statements in Item 8.

Equity at December 31, 2020 was $702 million higher than at December 31, 2019. The change in equity reflects net income for the year ($1,185 million) and capital contributions from parent ($500 million) in 2020, offset in part by common stock dividends to parent ($982 million) in 2020.

O&R
Current assets at December 31, 2020 were $34 million higher than at December 31, 2019. The change in current assets primarily reflects increases in accounts receivables, less allowance for uncollectible accounts ($16 million), revenue decoupling mechanism receivable ($8 million), regulatory assets ($8 million) and cash and temporary cash investments ($5 million).

Net plant at December 31, 2020 was $133 million higher than at December 31, 2019. The change in net plant primarily reflects an increase in electric ($111 million) and gas ($46 million) plant balances and an increase in construction work in progress ($31 million), offset in part by an increase in accumulated depreciation ($59 million).

Other noncurrent assets at December 31, 2020 were $74 million higher than at December 31, 2019. The change in other noncurrent assets primarily reflects an increase in the regulatory asset for unrecognized pension and other postretirement costs as a result of the final actuarial valuation, as measured at December 31, 2020, of the pension and other retiree benefit plans in accordance with the accounting rules for retirement benefits ($38 million) and an increase in the regulatory asset for deferred storm costs ($35 million). See Notes B, E and F to the financial statements in Item 8. The change in the regulatory asset also reflects the year's amortization of accounting costs.

Current liabilities at December 31, 2020 were $45 million higher than at December 31, 2019. The change in current liabilities primarily reflects higher accounts payable.

Noncurrent liabilities at December 31, 2020 were $76 million higher than at December 31, 2019. The change in noncurrent liabilities primarily reflects an increase in the liability for pension and retiree benefits ($37 million), as a result of the final actuarial valuation of the pension and other retiree benefit plans, as measured at December 31, 2020 in accordance with the accounting rules for retirement benefits and an increase in the regulatory liability for deferred other retiree benefit plans rate ($9 million). It also reflects an increase in deferred income taxes and unamortized investment tax credits ($24 million), primarily due to accelerated tax depreciation and repair deductions. See Notes E, F, and L to the financial statements in Item 8.

Long-term debt at December 31, 2020 was $75 million higher than at December 31, 2019. The change in long-term debt reflects the September 2020 issuance of $75 million of debentures. See "Liquidity and Capital Resources - Cash Flows From Financing Activities" above.

Equity at December 31, 2020 was $45 million higher than at December 31, 2019. The change in equity reflects net income for the year ($71 million) and capital contributions from parent ($25 million) in 2020, offset by common stock dividends to parent ($49 million) in 2020 and a decrease in other comprehensive income ($2 million).

Clean Energy Businesses
Current assets at December 31, 2020 were $26 million lower than at December 31, 2019. The change in current assets primarily reflects a decrease in restricted cash.

Net plant at December 31, 2020 was $394 million higher than at December 31, 2019. The change in net plant primarily reflects additional capital expenditures, offset in part by an increase in accumulated depreciation.

                                                                                                                         CON EDISON ANNUAL REPORT 202085



Other noncurrent assets at December 31, 2020 were $48 million lower than at December 31, 2019. The change in other noncurrent assets primarily reflects the amortization of the purchase power agreement intangible assets.

Current liabilities at December 31, 2020 were $195 million lower than at December 31, 2019. The change in current liabilities primarily reflects the reclassification of the company’s PG&E-related non-recourse project debt with a maturity longer than one year from long-term debt due within one year to long-term debt ($898 million), offset in part by the reclassification of an intercompany loan agreement from the parent company from long-term debt to current liabilities ($400 million) and a borrowing under a short-term construction loan facility ($165 million) (see Note D to the financial statements in Item 8) and additional working capital requirements.

Noncurrent liabilities at December 31, 2020 were $10 million higher than at December 31, 2019. The change in noncurrent liabilities primarily reflects the change in the fair value of derivative liabilities and asset retirement obligations for new projects placed in service, offset in part by the change in deferred taxes and the reduction of lease liability associated with the adoption of ASU No. 2016-02 “Leases (Topic 842)."

Long-term debt at December 31, 2020 was $376 million higher than at December 31, 2019. The change in long-term debt primarily reflects the reclassification of the company’s PG&E-related non-recourse project debt with a maturity longer than one year from long-term debt due within one year to long-term debt ($898 million), offset in part by the reclassification of an intercompany loan agreement from the parent company from long-term debt to current liabilities ($400 million).

Equity at December 31, 2020 was $129 million higher than at December 31, 2019. The change in equity primarily reflects capital contributions from parent ($100 million) in 2020, an increase in noncontrolling interest ($27 million) in 2020 and net income for common stock for the year ($24 million), offset in part by common stock dividends to parent ($21 million) in 2020.

Con Edison Transmission
Current assets at December 31, 2020 were $40 million higher than at December 31, 2019. The change in current assets primarily reflects a receivable of $38 million from Crestwood Pipeline and Storage Northeast LLC (Crestwood), the joint venture partner in Stagecoach Gas Services, LLC. The agreement between Crestwood and Con Edison Gas Pipeline and Storage, LLC (CET Gas) provides for payments from Crestwood to CET Gas for shortfalls in meeting certain earnings growth performance targets. The payment is expected to total $57 million ($19 million of which is due in March 2021 and an additional $19 million plus interest due in each of January 2022 and January 2023. The payments were recorded as a receivable by CET Gas as of December 31, 2020). See "Con Edison Transmission - CET Gas" in Item 1.

Investments at December 31, 2020 were $329 million lower than at December 31, 2019. The change in investments primarily reflects the impairment loss related to Con Edison Transmission's investment in Mountain Valley Pipeline, LLC ($320 million), the decrease in CET Gas' investment in Stagecoach Gas Services, LLC due to the receivable from Crestwood described above ($57 million) and investment income less partnership distribution from Stagecoach Services ($22 million), offset in part by investment income from Mountain Valley Pipeline, LLC ($60 million) and from NY Transco ($8 million), respectively. See "Investments" in Note A to the financial statements in Item 8.

Noncurrent assets at December 31, 2020 were $19 million higher than at December 31, 2019. The change in noncurrent assets reflects a receivable of $19 million related to the receivable from Crestwood described above.

Current liabilities at December 31, 2020 were $24 million lower than at December 31, 2019. The change in current liabilities primarily reflects a reduction in short-term borrowings under an intercompany capital funding facility.

Noncurrent liabilities at December 31, 2020 was $60 million lower than at December 31, 2019. The change in noncurrent liabilities primarily reflects a change in deferred income taxes and unamortized investment tax credits that primarily reflects timing differences associated with investments in partnerships.

Equity at December 31, 2020 was $186 million lower than at December 31, 2019. The change in equity reflects net loss for the year ($175 million) and common stock dividends to parent ($11 million) in 2020.

86CON EDISON ANNUAL REPORT 2020


Off-Balance Sheet Arrangements
At December 31, 2020, none of the Companies’ transactions, agreements or other contractual arrangements meet the SEC definition of off-balance sheet arrangements.

Regulatory Matters
For information about the Utilities’ rate plans and other regulatory matters affecting the Companies, see “Utility Regulation” in Item 1 and Note B to the financial statements in Item 8.
 
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. See “Risk Factors” in Item 1A.

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, cloud computing implementation costs, derivative instruments and investments.
Accounting for Regulated Public Utilities
The Utilities are subject to the accounting rules for regulated operations and the accounting requirements of the FERC and the state public utility regulatory commissions having jurisdiction.
The accounting rules for regulated operations specify the economic effects that result from the causal relationship of costs and revenues in the rate-regulated environment and how these effects are to be accounted for by a regulated enterprise. Revenues intended to cover some costs may be recorded either before or after the costs are incurred. If regulation provides assurance that incurred costs will be recovered in the future, these costs would be recorded as deferred charges, or “regulatory assets,” under the accounting rules for regulated operations. If revenues are recorded for costs that are expected to be incurred in the future, these revenues would be recorded as deferred credits, or “regulatory liabilities,” under the accounting rules for regulated operations.
The Utilities’ principal regulatory assets and liabilities are listed in Note B to the financial statements in Item 8. The Utilities are receiving or being credited with a return on all of their regulatory assets for which a cash outflow has been made. The Utilities are paying or being charged with a return on all of their regulatory liabilities for which a cash inflow has been received. The Utilities' regulatory assets and liabilities at December 31, 2020 are recoverable from customers, or to be applied for customer benefit, in accordance with rate provisions that have been approved by the applicable public utility regulatory commission.
In the event that regulatory assets of the Utilities were no longer probable of recovery, as required by the accounting rules for regulated operations, these regulatory assets would be charged to earnings. At December 31, 2020, the regulatory assets for Con Edison and CECONY were $6,461 million and $5,989 million, respectively.
Accounting for Pensions and Other Postretirement Benefits
The Utilities provide pensions and other postretirement benefits to substantially all of their employees and retirees. The Clean Energy Businesses and Con Edison Transmission also provide such benefits to transferred employees who previously worked for the Utilities. The Companies account for these benefits in accordance with the accounting rules for retirement benefits. In addition, the Utilities apply the accounting rules for regulated operations to account for the regulatory treatment of these obligations (which, as described in Note B to the financial statements in Item 8, reconciles the amounts reflected in rates for the costs of the benefit to the costs actually incurred). In applying these accounting policies, the Companies have made critical estimates related to actuarial assumptions, including assumptions of expected returns on plan assets, discount rates, health care cost trends and future compensation. See Notes A, E and F to the financial statements in Item 8 for information about the Companies’ pension and other postretirement benefits, the actuarial assumptions, actual performance, amortization of investment and other actuarial gains and losses and calculated plan costs for 2020, 2019 and 2018.

                                                                                                                         CON EDISON ANNUAL REPORT 202087



The discount rate for determining the present value of future period benefit payments is determined using a model to match the durations of highly-rated (Aa or higher by either Moody’s or S&P) corporate bonds with the projected stream of benefit payments.

In determining the health care cost trend rate, the Companies review actual recent cost trends and projected future trends.
The cost of pension and other postretirement benefits in future periods will depend on actual returns on plan assets, assumptions for future periods, contributions and benefit experience. Con Edison’s and CECONY’s current estimates for 2021 are increases, compared with 2020, in their pension and other postretirement benefits costs of $15 million and $13 million, respectively.
 
The following table illustrates the effect on 2021 pension and other postretirement costs of changing the critical actuarial assumptions, while holding all other actuarial assumptions constant:
Actuarial AssumptionChange in
Assumption
PensionOther
Postretirement
Benefits
Total
  (Millions of Dollars)
Increase in accounting cost:
Discount rate
Con Edison(0.25)%$72$4$76
CECONY(0.25)%$69$3$72
Expected return on plan assets
Con Edison(0.25)%$38$2$40
CECONY(0.25)%$36$2$38
Health care trend rate
Con Edison1.00 %$— $16$16
CECONY1.00 %$— $11$11
Increase in projected benefit obligation:
Discount rate
Con Edison(0.25)%$801$45$846
CECONY(0.25)%$761$36$797
Health care trend rate
Con Edison1.00 %$— $108$108
CECONY1.00 %$— $79$79
A 5.0 percentage point variation in the actual annual return in 2021, as compared with the expected annual asset return of 7.00 percent, would change pension and other postretirement benefit costs for Con Edison and CECONY by approximately $29 million and $27 million, respectively, in 2022.
Pension benefits are provided through a pension plan maintained by Con Edison to which CECONY, O&R, the Clean Energy Businesses and Con Edison Transmission make contributions for their participating employees. Pension accounting by the Utilities includes an allocation of plan assets.
The Companies’ policy is to fund their pension and other postretirement benefit accounting costs to the extent tax deductible, and for the Utilities, to the extent these costs are recovered under their rate plans. The Companies were not required to make cash contributions to the pension plan in 2020 under funding regulations and tax laws. However, CECONY and O&R made discretionary contributions to the pension plan in 2020 of $435 million and $40 million, respectively. In 2021, CECONY and O&R expect to make contributions to the pension plan of $441 million and $39 million, respectively. See “Expected Contributions” in Notes E and F to the financial statements in Item 8.
Accounting for Contingencies
The accounting rules for contingencies apply to an existing condition, situation or set of circumstances involving uncertainty as to possible loss that will ultimately be resolved when one or more future events occur or fail to occur. Known material contingencies, which are described in the notes to the financial statements, include certain regulatory matters (Note B), the Utilities’ responsibility for hazardous substances, such as asbestos, PCBs and coal
88CON EDISON ANNUAL REPORT 2020


tar that have been used or generated in the course of operations (Note G) and other contingencies (Note H). In accordance with the accounting rules, the Companies have accrued estimates of losses relating to the contingencies as to which loss is probable and can be reasonably estimated, and no liability has been accrued for contingencies as to which loss is not probable or cannot be reasonably estimated.

The Utilities recover costs for asbestos lawsuits, workers’ compensation and environmental remediation pursuant to their current rate plans. Generally, changes during the terms of the rate plans to the amounts accrued for these contingencies would not impact earnings.
Accounting for Long-Lived and Intangible Assets
The accounting rules for certain long-lived assets and intangible assets with definite lives require testing for recoverability whenever events or changes in circumstances indicate their carrying amounts may not be recoverable. The carrying amount of a long-lived asset or intangible asset with a definite life is deemed not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset. Under the accounting rules, an impairment loss is recognized if the carrying amount is not recoverable from such cash flows, and exceeds its fair value, which approximates market value.

In January 2019, Pacific Gas and Electric Company (PG&E) filed for reorganization under Chapter 11 of the U.S. Bankruptcy Code. The output of certain of the Clean Energy Businesses' renewable electric production projects is sold to PG&E under long-term power purchase agreements. As a result of the PG&E bankruptcy, distributions from the related projects to the Clean Energy Businesses were restricted and PG&E-related project debt was reclassified on Con Edison’s consolidated balance sheet from long-term debt to long-term debt due within one year. In July 2020, PG&E’s plan of reorganization became effective and the Clean Energy Businesses began receiving previously restricted distributions and all related project debt with a maturity longer than one year was reclassified to long-term debt. See “Long-Lived and Intangible Assets” in Note A to the financial statements in Item 8.
Accounting for Cloud Computing Implementation Costs
The accounting rules for costs incurred in implementing cloud computing arrangements allow for capitalization of such costs in the same manner as prepaid assets are recorded. Depreciation on the assets is recorded as other operations and maintenance expense. See "Other Deferred Charges and Noncurrent Assets and Prepayments" in Note A to the financial statements in Item 8.
Accounting for Derivative Instruments
The Companies apply the accounting rules for derivatives and hedging to their derivative financial instruments. The Companies use derivative financial instruments to hedge market price fluctuations in related underlying transactions for the physical purchase and sale of electricity and gas. The Utilities are permitted by their respective regulators to reflect in rates all reasonably incurred gains and losses on these instruments. The Clean Energy Businesses have also hedged interest rate risk on certain debt securities. See “Financial and Commodity Market Risks,” below and Note P to the financial statements in Item 8.

Where the Companies are required to make mark-to-market estimates pursuant to the accounting rules, the estimates of gains and losses at a particular period end do not reflect the end results of particular transactions, and will most likely not reflect the actual gain or loss at the conclusion of a transaction. Substantially all of the estimated gains or losses are based on prices supplied by external sources such as the fair value of exchange-traded futures and options and the fair value of positions for which price quotations are available through or derived from brokers or other market sources.
Investments
The accounting rules require Con Edison to periodically evaluate its equity method investments, to determine whether they are impaired. The standard for determining whether an impairment exists and must be recorded is whether an other-than-temporary decline in carrying value has occurred. The evaluation and measurement of impairments involve uncertainties. The estimates that Con Edison makes with respect to its equity method investments are based on assumptions that management believes are reasonable, and variations in these estimates or the underlying assumptions could have a material impact on whether a triggering event is determined to exist or the amount of any such impairment. Additionally, if the projects in which Con Edison holds these investments recognize an impairment, Con Edison may record its proportionate share of that impairment loss and would evaluate its investment for an other-than-temporary decline in value.

                                                                                                                         CON EDISON ANNUAL REPORT 202089



Con Edison evaluated its equity method investments as of December 31, 2020 and concluded that the fair value of its investment in Mountain Valley Pipeline LLC (MVP) declined below its carrying value and the decline is other-than-temporary. Accordingly, Con Edison recorded a pre-tax impairment loss of $320 million ($223 million after tax) for the year ended December 31, 2020 that reduced the carrying value of its investment in MVP from $662 million to $342 million. See “Investments” in Note A to the financial statements in Item 8.

There is risk that the carrying value of Con Edison’s investments in MVP may be further or fully impaired in the future. There are ongoing legal and regulatory matters that must be resolved favorably before the Mountain Valley Pipeline can be completed. Assumptions and estimates used to test Con Edison’s investments in MVP for impairment may change if adverse or delayed resolutions to these matters were to occur, which could have a material adverse effect on the fair value of Con Edison’s investment in MVP. Also, Con Edison is considering strategic alternatives with respect to its 50 percent interest in Stagecoach Gas Services, LLC. As such strategic alternatives are evaluated, Con Edison may be required to determine whether an other-than-temporary decline in value has occurred for its Stagecoach investment.

At December 31, 2020, Con Edison’s consolidated balance sheet included investments of $1,816 million. See “Investments” in Note A to the financial statements in Item 8.

Financial and Commodity Market Risks
The Companies are subject to various risks and uncertainties associated with financial and commodity markets. The most significant market risks include interest rate risk, commodity price risk and investment risk.
Interest Rate Risk
The Companies' interest rate risk primarily relates to new debt financing needed to fund capital requirements, including the construction expenditures of the Utilities and maturing debt securities, and variabl