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Table of Contents

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
x
Quarterly Report Pursuant To Section 13 or 15(d) of the Securities Exchange Act of 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2016
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
 
Exact name of registrant as specified in its charter
and principal executive office address and telephone number
 
State of
Incorporation
  
I.R.S. Employer
ID. Number
1-14514
 
Consolidated Edison, Inc.
 
New York
  
13-3965100
 
 
4 Irving Place, New York, New York 10003
 
 
  
 
 
 
(212) 460-4600
 
 
  
 
1-1217
 
Consolidated Edison Company of New York, Inc.
New York
  
13-5009340
 
 
4 Irving Place, New York, New York 10003
 
 
  
 
 
 
(212) 460-4600
 
 
  
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Consolidated Edison, Inc. (Con Edison)
Yes x
No ¨
Consolidated Edison Company of New York, Inc. (CECONY)
Yes x
No ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Con Edison
Yes x
No ¨
CECONY
Yes x
No ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Con Edison
Large accelerated filer x
Accelerated filer ¨
Non-accelerated filer ¨
Smaller reporting company ¨
 
 
 
 
CECONY
Large accelerated filer ¨
Accelerated filer ¨
Non-accelerated filer x
Smaller reporting company ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Con Edison
Yes ¨
No x
CECONY
Yes ¨
No x
As of October 28, 2016, Con Edison had outstanding 304,727,523 Common Shares ($.10 par value). All of the outstanding common equity of CECONY is held by Con Edison.
Filing Format
This Quarterly Report on Form 10-Q is a combined report being filed separately by two different registrants: Consolidated Edison, Inc. (Con Edison) and Consolidated Edison Company of New York, Inc. (CECONY). CECONY is a wholly-owned subsidiary of Con Edison and, as such, the information in this report about CECONY also applies to Con Edison. As used in this report, the term the “Companies” refers to Con Edison and CECONY. However, CECONY makes no representation as to the information contained in this report relating to Con Edison or the subsidiaries of Con Edison other than itself.

 


Table of Contents

Glossary of Terms
 
The following is a glossary of abbreviations or acronyms that are used in the Companies’ SEC reports:
 
Con Edison Companies
Con Edison
 
Consolidated Edison, Inc.
CECONY
 
Consolidated Edison Company of New York, Inc.
Con Edison Development
 
Consolidated Edison Development, Inc.
Con Edison Energy
 
Consolidated Edison Energy, Inc.
Con Edison Solutions
 
Consolidated Edison Solutions, Inc.
Con Edison Transmission
 
Con Edison Transmission, Inc.
CET Electric
 
Consolidated Edison Transmission, LLC
CET Gas
 
Con Edison Gas Pipeline and Storage, LLC
O&R
 
Orange and Rockland Utilities, Inc.
Pike
 
Pike County Light & Power Company
RECO
 
Rockland Electric Company
The Companies
 
Con Edison and CECONY
The Utilities
 
CECONY and O&R
 
Regulatory Agencies, Government Agencies and Other Organizations
EPA
 
U.S. Environmental Protection Agency
FASB
 
Financial Accounting Standards Board
FERC
 
Federal Energy Regulatory Commission
IASB
 
International Accounting Standards Board
IRS
 
Internal Revenue Service
NJBPU
 
New Jersey Board of Public Utilities
NJDEP
 
New Jersey Department of Environmental Protection
NYISO
 
New York Independent System Operator
NYPA
 
New York Power Authority
NYSDEC
 
New York State Department of Environmental Conservation
NYSERDA
 
New York State Energy Research and Development Authority
NYSPSC
 
New York State Public Service Commission
NYSRC
 
New York State Reliability Council, LLC
PAPUC
 
Pennsylvania Public Utility Commission
PJM
 
PJM Interconnection LLC
SEC
 
U.S. Securities and Exchange Commission
 
 
Accounting
 
 
ASU
 
Accounting Standards Update
GAAP
 
Generally Accepted Accounting Principles in the United States of America
OCI
 
Other Comprehensive Income
VIE
 
Variable interest entity


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Environmental
 
 
CO2
 
Carbon dioxide
GHG
 
Greenhouse gases
MGP Sites
 
Manufactured gas plant sites
PCBs
 
Polychlorinated biphenyls
PRP
 
Potentially responsible party
RGGI
 
Regional Greenhouse Gas Initiative
Superfund
 
Federal Comprehensive Environmental Response, Compensation and Liability Act of 1980 and similar state statutes
 
 
 
Units of Measure
 
 
AC
 
Alternating current
Dt
 
Dekatherms
kV
 
Kilovolt
kWh
 
Kilowatt-hour
MDt
 
Thousand dekatherms
MMlb
 
Million pounds
MVA
 
Megavolt ampere
MW
 
Megawatt or thousand kilowatts
MWh
 
Megawatt hour
 
 
 
Other
 
 
AFUDC
 
Allowance for funds used during construction
AMI
 
Advanced metering infrastructure
COSO
 
Committee of Sponsoring Organizations of the Treadway Commission
DER
 
Distributed energy resources
EGWP
 
Employer Group Waiver Plan
Fitch
 
Fitch Ratings
First Quarter Form 10-Q
 
The Companies' combined Quarterly Report on Form 10-Q for the quarterly period ended March 31 of the current year
Second Quarter Form 10-Q
 
The Companies' combined Quarterly Report on Form 10-Q for the quarterly period ended June 30 of the current year
Third Quarter Form 10-Q
 
The Companies' combined Quarterly Report on Form 10-Q for the quarterly period ended September 30 of the current year
Form 10-K
 
The Companies’ combined Annual Report on Form 10-K for the year ended December 31, 2015
LTIP
 
Long Term Incentive Plan
Moody’s
 
Moody’s Investors Service
REV
 
Reforming the Energy Vision
S&P
 
Standard & Poor’s Financial Services LLC
VaR
 
Value-at-Risk



 
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PAGE
 
ITEM 1
Financial Statements (Unaudited)
 
 
Con Edison
 
 
 
 
 
 
 
CECONY
 
 
 
 
 
 
 
ITEM 2
ITEM 3
ITEM 4
ITEM 1
ITEM 1A
ITEM 6
 
 


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FORWARD-LOOKING STATEMENTS
 
This report includes forward-looking statements intended to qualify for the safe-harbor provisions of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are statements of future expectation and not facts. Words such as “forecasts,” “expects,” “estimates,” “anticipates,” “intends,” “believes,” “plans,” “will” and similar expressions identify forward-looking statements. Forward-looking statements are based on information available at the time the statements are made, and accordingly speak only as of that time. Actual results or developments might differ materially from those included in the forward-looking statements because of various factors including:
the Companies are extensively regulated and are subject to penalties;
the Utilities’ rate plans may not provide a reasonable return;
the Companies may be adversely affected by changes to the Utilities’ rate plans;
the intentional misconduct of employees or contractors could adversely affect the Companies;
the failure of, or damage to, the Companies’ facilities could adversely affect the Companies;
a cyber attack could adversely affect the Companies;
the Companies are exposed to risks from the environmental consequences of their operations;
a disruption in the wholesale energy markets or failure by an energy supplier could adversely affect the Companies;
the Companies have substantial unfunded pension and other postretirement benefit liabilities;
Con Edison’s ability to pay dividends or interest depends on dividends from its subsidiaries;
the Companies require access to capital markets to satisfy funding requirements;
the Companies’ strategies may not be effective to address changes in the external business environment; and
the Companies also face other risks that are beyond their control.




 
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Consolidated Edison, Inc.
CONSOLIDATED INCOME STATEMENT (UNAUDITED)
  
For the Three Months Ended September 30,
For the Nine Months Ended September 30,
  
2016
2015
2016
2015
 
(Millions of Dollars/ Except Share Data)
OPERATING REVENUES
 
 
 
 
Electric
$2,769
$2,762
$6,717
$6,937
Gas
235
237
1,246
1,293
Steam
63
58
406
529
Non-utility
350
386
999
1,088
TOTAL OPERATING REVENUES
3,417
3,443
9,368
9,847
OPERATING EXPENSES
 
 
 
 
Purchased power
798
860
2,047
2,404
Fuel
29
31
133
216
Gas purchased for resale
81
64
320
415
Other operations and maintenance
840
869
2,447
2,485
Depreciation and amortization
305
285
905
840
Taxes, other than income taxes
528
504
1,523
1,459
TOTAL OPERATING EXPENSES
2,581
2,613
7,375
7,819
Gain on sale of retail electric supply business
104

104

OPERATING INCOME
940
830
2,097
2,028
OTHER INCOME (DEDUCTIONS)
 
 
 
 
Investment and other income
51
12
70
31
Allowance for equity funds used during construction
3
1
7
3
Other deductions
(5)
(4)
(16)
(11)
TOTAL OTHER INCOME
49
9
61
23
INCOME BEFORE INTEREST AND INCOME TAX EXPENSE
989
839
2,158
2,051
INTEREST EXPENSE
 
 
 
 
Interest on long-term debt
174
157
504
469
Other interest
5
6
17
19
Allowance for borrowed funds used during construction
(1)
(1)
(4)
(2)
NET INTEREST EXPENSE
178
162
517
486
INCOME BEFORE INCOME TAX EXPENSE
811
677
1,641
1,565
INCOME TAX EXPENSE
314
249
602
548
NET INCOME
$497
$428
$1,039
$1,017
Net income per common share—basic
$1.63
$1.46
$3.47
$3.47
Net income per common share—diluted
$1.62
$1.45
$3.46
$3.46
DIVIDENDS DECLARED PER COMMON SHARE
$0.67
$0.65
$2.01
$1.95
AVERAGE NUMBER OF SHARES OUTSTANDING—BASIC (IN MILLIONS)
304.5
292.9
299.1
292.9
AVERAGE NUMBER OF SHARES OUTSTANDING—DILUTED (IN MILLIONS)
305.9
294.2
300.5
294.2
The accompanying notes are an integral part of these financial statements.


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Consolidated Edison, Inc.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED)
  
For the Three Months Ended September 30,
For the Nine Months Ended September 30,
  
2016
2015
2016
2015
 
(Millions of Dollars)
NET INCOME
$497
$428
$1,039
$1,017
OTHER COMPREHENSIVE INCOME, NET OF TAXES
 
 
 
 
Pension and other postretirement benefit plan liability adjustments, net of taxes
1
1
2
7
TOTAL OTHER COMPREHENSIVE INCOME, NET OF TAXES
1
1
2
7
COMPREHENSIVE INCOME
$498
$429
$1,041
$1,024
The accompanying notes are an integral part of these financial statements.


 
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Consolidated Edison, Inc.
CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
  
For the Nine Months Ended September 30,
  
2016
2015
 
(Millions of Dollars)
OPERATING ACTIVITIES
 
 
Net income
$1,039
$1,017
PRINCIPAL NON-CASH CHARGES/(CREDITS) TO INCOME
 
 
Depreciation and amortization
905
840
Deferred income taxes
524
466
Rate case amortization and accruals
(157)
(38)
Common equity component of allowance for funds used during construction
(7)
(3)
Net derivative (gains)/losses
(7)
(4)
Pre-tax gain on sale of retail electric supply business
(104)

Other non-cash items, net
99
73
CHANGES IN ASSETS AND LIABILITIES
 
 
Accounts receivable – customers
(138)
(82)
Materials and supplies, including fuel oil and gas in storage
15
32
Other receivables and other current assets
90
44
Income taxes receivable
100
194
Prepayments
(403)
(568)
Accounts payable
142
83
Pensions and retiree benefits obligations, net
464
566
Pensions and retiree benefits contributions
(510)
(753)
Accrued taxes
(21)
(19)
Accrued interest
66
48
Superfund and environmental remediation costs, net
68
23
Distributions from equity investments
45
29
Deferred charges, noncurrent assets and other regulatory assets
(104)
(17)
Deferred credits and other regulatory liabilities
116
220
Other current and noncurrent liabilities
114
48
NET CASH FLOWS FROM OPERATING ACTIVITIES
2,336
2,199
INVESTING ACTIVITIES
 
 
Utility construction expenditures
(2,057)
(1,838)
Cost of removal less salvage
(149)
(156)
Non-utility construction expenditures
(436)
(366)
Investments in/acquisitions of renewable electric production and electric and gas transmission projects
(1,281)
(286)
Proceeds from sale of assets
250

Proceeds from the transfer of assets to NY Transco
122

Restricted cash
(21)
(23)
Other investing activities
(145)
(18)
NET CASH FLOWS USED IN INVESTING ACTIVITIES
(3,717)
(2,687)
FINANCING ACTIVITIES
 
 
Net (payment)/issuance of short-term debt
(928)
360
Issuance of long-term debt
1,765
238
Retirement of long-term debt
(407)
(145)
Debt issuance costs
(16)
(2)
Common stock dividends
(570)
(560)
Issuance of common shares - public offering
702

Issuance of common shares for stock plans, net of repurchases
38
(9
)
Distribution to noncontrolling interest
(1)

NET CASH FLOWS FROM/(USED IN) FINANCING ACTIVITIES
583
(118)
CASH AND TEMPORARY CASH INVESTMENTS:
 
 
NET CHANGE FOR THE PERIOD
(798)
(606)
BALANCE AT BEGINNING OF PERIOD
944
699
BALANCE AT END OF PERIOD
146
93
LESS: CHANGE IN CASH BALANCES HELD FOR SALE
(4
)
2
BALANCE AT END OF PERIOD EXCLUDING HELD FOR SALE
$150
$91
SUPPLEMENTAL DISCLOSURE OF CASH INFORMATION
 
 
Cash paid/(received) during the period for:
 
 
Interest
$437
$411
Income taxes
$(144)
$(7)
SUPPLEMENTAL DISCLOSURE OF NON-CASH INFORMATION
 
 
Construction expenditures in accounts payable
$242
$204
Issuance of common shares for dividend reinvestment
$35
$11
The accompanying notes are an integral part of these financial statements. 


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Consolidated Edison, Inc.
CONSOLIDATED BALANCE SHEET (UNAUDITED)
 
September 30,
2016
December 31,
2015
 
(Millions of Dollars)
ASSETS
 
 
CURRENT ASSETS
 
 
Cash and temporary cash investments
$150
$944
Special deposits
3
3
Accounts receivable – customers, less allowance for uncollectible accounts of $75 and $85 in 2016 and 2015, respectively
1,157
1,052
Other receivables, less allowance for uncollectible accounts of $13 and $11 in 2016 and 2015, respectively
165
304
Income taxes receivable
66
166
Accrued unbilled revenue
373
360
Fuel oil, gas in storage, materials and supplies, at average cost
335
350
Prepayments
580
177
Regulatory assets
119
132
Assets held for sale

157
Other current assets
206
191
TOTAL CURRENT ASSETS
3,154
3,836
INVESTMENTS
1,931
884
UTILITY PLANT, AT ORIGINAL COST
 
 
Electric
27,239
26,358
Gas
7,253
6,858
Steam
2,374
2,336
General
2,657
2,622
TOTAL
39,523
38,174
Less: Accumulated depreciation
8,451
8,044
Net
31,072
30,130
Construction work in progress
1,286
1,003
NET UTILITY PLANT
32,358
31,133
NON-UTILITY PLANT
 
 
Non-utility property, less accumulated depreciation of $122 and $95 in 2016 and 2015, respectively
1,127
832
Construction work in progress
421
244
NET PLANT
33,906
32,209
OTHER NONCURRENT ASSETS
 
 
Goodwill
429
429
Intangible assets, less accumulated amortization of $5 and $4 in 2016 and 2015, respectively

2
Regulatory assets
7,544
8,096
Other deferred charges and noncurrent assets
352
186
TOTAL OTHER NONCURRENT ASSETS
8,325
8,713
TOTAL ASSETS
$47,316
$45,642
The accompanying notes are an integral part of these financial statements.
 


 
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Consolidated Edison, Inc.
CONSOLIDATED BALANCE SHEET (UNAUDITED)
 
 
 
September 30,
2016
December 31,
2015
 
(Millions of Dollars)
LIABILITIES AND SHAREHOLDERS’ EQUITY
 
 
CURRENT LIABILITIES
 
 
Long-term debt due within one year
$346
$739
Notes payable
601
1,529
Accounts payable
1,113
1,008
Customer deposits
356
354
Accrued taxes
41
62
Accrued interest
202
136
Accrued wages
101
97
Fair value of derivative liabilities
70
66
Regulatory liabilities
123
115
Liabilities held for sale

89
Other current liabilities
638
525
TOTAL CURRENT LIABILITIES
3,591
4,720
NONCURRENT LIABILITIES
 
 
Provision for injuries and damages
170
185
Pensions and retiree benefits
2,197
2,911
Superfund and other environmental costs
752
765
Asset retirement obligations
254
242
Fair value of derivative liabilities
52
39
Deferred income taxes and unamortized investment tax credits
10,155
9,537
Regulatory liabilities
1,920
1,977
Other deferred credits and noncurrent liabilities
203
199
TOTAL NONCURRENT LIABILITIES
15,703
15,855
LONG-TERM DEBT
13,747
12,006
EQUITY
 
 
Common shareholders’ equity
14,267
13,052
Noncontrolling interest
8
9
TOTAL EQUITY (See Statement of Equity)
14,275
13,061
TOTAL LIABILITIES AND EQUITY
$47,316
$45,642
The accompanying notes are an integral part of these financial statements.



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Consolidated Edison, Inc.
CONSOLIDATED STATEMENT OF EQUITY (UNAUDITED)
 
(In Millions)
Common Stock
Additional
Paid-In
Capital
Retained
Earnings
Treasury Stock
Capital
Stock
Expense
Accumulated
Other
Comprehensive
Income/(Loss)
Noncontrolling
Interest
Total
Shares
Amount
Shares
Amount
BALANCE AS OF
DECEMBER 31, 2014
293
$32
$4,991
$8,691
23
$(1,032)
$(61)
$(45)
$9
$12,585
Net income
 
 
 
370
 
 
 
 
 
370
Common stock dividends
 
 
 
(190)
 
 
 
 
 
(190)
Issuance of common shares for stock plans, net of repurchases


2
 

(2)

 
 

Other comprehensive income
 
 
 
 
 
 
 
5
 
5
BALANCE AS OF
MARCH 31, 2015
293
$32
$4,993
$8,871
23
$(1,034)
$(61)
$(40)
$9
$12,770
Net income
 
 
 
219
 
 
 
 
 
219
Common stock dividends
 
 
 
(190)
 
 
 
 
 
(190)
Issuance of common shares for stock plans, net of repurchases



 

(3)
 
 
 
(3)
Other comprehensive income
 
 
 
 
 
 
 
1
 
1
BALANCE AS OF
JUNE 30, 2015
293
$32
$4,993
$8,900
23
$(1,037)
$(61)
$(39)
$9
$12,797
Net income
 
 
 
428
 
 
 
 
 
428
Common stock dividends
 
 
 
(191)
 
 
 
 
 
(191)
Issuance of common shares for stock plans, net of repurchases

 
15
 

(1)
 
 
 
14
Other comprehensive income
 
 
 
 
 
 
 
1
 
1
BALANCE AS OF
SEPTEMBER 30, 2015
293
$32
$5,008
$9,137
23
$(1,038)
$(61)
$(38)
$9
$13,049
BALANCE AS OF DECEMBER 31, 2015
293
$32
$5,030
$9,123
23
$(1,038)
$(61)
$(34)
$9
$13,061
Net income
 
 
 
310
 
 
 
 
 
310
Common stock dividends
 
 
 
(197)
 
 
 
 
 
(197)
Issuance of common shares for stock plans
1

28





 
 
28
Other comprehensive income
 
 
 
 
 
 
 

 

Noncontrolling interest
 
 
 
 
 
 
 
 
(1)
(1)
BALANCE AS OF
MARCH 31, 2016
294
$32
$5,058
$9,236
23
$(1,038)
$(61)
$(34)
$8
$13,201
Net income
 
 
 
232
 
 
 
 
 
232
Common stock dividends
 
 
 
(204)
 
 
 
 
 
(204)
Issuance of common shares - public offering
10
1
723
 
 
 
(22)
 
 
702
Issuance of common shares for stock plans

 
26
 
 
 
 
 
 
26
Other comprehensive income
 
 
 
 
 
 
 
1
 
1
BALANCE AS OF
JUNE 30, 2016
304
$33
$5,807
$9,264
23
$(1,038)
$(83)
$(33)
$8
$13,958
Net income
 
 
 
497
 
 
 
 
 
497
Common stock dividends
 
 
 
(204)
 
 
 
 
 
(204)
Issuance of common shares for stock plans
1

23
 
 
 
 
 
 
23
Other comprehensive income
 
 
 
 
 
 
 
1
 
1
BALANCE AS OF
SEPTEMBER 30, 2016
305
$33
$5,830
$9,557
23
$(1,038)
$(83)
$(32)
$8
$14,275
The accompanying notes are an integral part of these financial statements.

 
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Consolidated Edison Company of New York, Inc.
CONSOLIDATED INCOME STATEMENT (UNAUDITED)
  
For the Three Months Ended September 30,
For the Nine Months Ended September 30,
  
2016
2015
2016
2015
 
(Millions of Dollars)
OPERATING REVENUES
 
 
 
 
Electric
$2,557
$2,558
$6,222
$6,416
Gas
208
213
1,113
1,177
Steam
63
58
406
529
TOTAL OPERATING REVENUES
2,828
2,829
7,741
8,122
OPERATING EXPENSES
 
 
 
 
Purchased power
495
526
1,216
1,423
Fuel
29
31
133
216
Gas purchased for resale
34
30
217
282
Other operations and maintenance
724
750
2,105
2,140
Depreciation and amortization
278
262
825
773
Taxes, other than income taxes
502
485
1,446
1,399
TOTAL OPERATING EXPENSES
2,062
2,084
5,942
6,233
OPERATING INCOME
766
745
1,799
1,889
OTHER INCOME (DEDUCTIONS)
 
 
 
 
Investment and other income
4
(1)
6
3
Allowance for equity funds used during construction
2
1
6
3
Other deductions
(4)
(3)
(10)
(10)
TOTAL OTHER INCOME (DEDUCTIONS)
2
(3)
2
(4)
INCOME BEFORE INTEREST AND INCOME TAX EXPENSE
768
742
1,801
1,885
INTEREST EXPENSE
 
 
 
 
Interest on long-term debt
150
141
440
423
Other interest
5
5
14
14
Allowance for borrowed funds used during construction
(1)
(1)
(3)
(2)
NET INTEREST EXPENSE
154
145
451
435
INCOME BEFORE INCOME TAX EXPENSE
614
597
1,350
1,450
INCOME TAX EXPENSE
226
222
491
515
NET INCOME
$388
$375
$859
$935
The accompanying notes are an integral part of these financial statements.
 



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Consolidated Edison Company of New York, Inc.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED)
 
  
For the Three Months Ended September 30,
For the Nine Months Ended September 30,
  
2016
2015
2016
2015
 
(Millions of Dollars)
NET INCOME
$388
$375
$859
$935
OTHER COMPREHENSIVE INCOME, NET OF TAXES
 
 
 
 
Pension and other postretirement benefit plan liability adjustments, net of taxes

1
1
2
TOTAL OTHER COMPREHENSIVE INCOME, NET OF TAXES

1
1
2
COMPREHENSIVE INCOME
$388
$376
$860
$937
The accompanying notes are an integral part of these financial statements.
 


 
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Consolidated Edison Company of New York, Inc.
CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
 
  
For the Nine Months Ended September 30,
  
2016
2015
 
(Millions of Dollars)
OPERATING ACTIVITIES
 
 
Net income
$859
$935
PRINCIPAL NON-CASH CHARGES/(CREDITS) TO INCOME
 
 
Depreciation and amortization
825
773
Deferred income taxes
569
391
Rate case amortization and accruals
(170)
(57)
Common equity component of allowance for funds used during construction
(6)
(3)
Other non-cash items, net
7
13
CHANGES IN ASSETS AND LIABILITIES
 
 
Accounts receivable – customers
(79)
(51)
Materials and supplies, including fuel oil and gas in storage
15
34
Other receivables and other current assets
18
60
Accounts receivable from affiliated companies
38
(32)
Prepayments
(351)
(336)
Accounts payable
82
18
Accounts payable to affiliated companies
8
5
Pensions and retiree benefits obligations, net
439
530
Pensions and retiree benefits contributions
(472)
(700)
Superfund and environmental remediation costs, net
76
21
Accrued taxes
(17)
(1)
Accrued taxes to affiliated companies
(2)
(8)
Accrued interest
43
37
Deferred charges, noncurrent assets and other regulatory assets
(153)
(49)
Deferred credits and other regulatory liabilities
165
222
Other current and noncurrent liabilities
123

NET CASH FLOWS FROM OPERATING ACTIVITIES
2,017
1,802
INVESTING ACTIVITIES
 
 
Utility construction expenditures
(1,932)
(1,732)
Cost of removal less salvage
(146)
(149)
Proceeds from the transfer of assets to NY Transco
122

Restricted cash
13
(19)
NET CASH FLOWS USED IN INVESTING ACTIVITIES
(1,943)
(1,900)
FINANCING ACTIVITIES
 
 
Net (payment)/issuance of short-term debt
(553)
199
Issuance of long-term debt
550

Retirement of long-term debt
(400)

Debt issuance costs
(6)
(1)
Capital contribution by parent
76

Dividend to parent
(558)
(694)
NET CASH FLOWS USED IN FINANCING ACTIVITIES
(891)
(496)
CASH AND TEMPORARY CASH INVESTMENTS:
 
 
NET CHANGE FOR THE PERIOD
(817)
(594)
BALANCE AT BEGINNING OF PERIOD
843
645
BALANCE AT END OF PERIOD
$26
$51
SUPPLEMENTAL DISCLOSURE OF CASH INFORMATION
 
 
Cash paid/(received) during the period for:
 
 
Interest
$386
$376
Income taxes
$(130)
$143
SUPPLEMENTAL DISCLOSURE OF NON-CASH INFORMATION
 
 
Construction expenditures in accounts payable
$195
$152
The accompanying notes are an integral part of these financial statements. 


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Consolidated Edison Company of New York, Inc.
CONSOLIDATED BALANCE SHEET (UNAUDITED)
 
 
September 30,
2016
December 31,
2015
 
(Millions of Dollars)
ASSETS
 
 
CURRENT ASSETS
 
 
Cash and temporary cash investments
$26
$843
Special deposits
2
2
Accounts receivable – customers, less allowance for uncollectible accounts of $70 and $80 in 2016 and 2015, respectively
1,076
987
Other receivables, less allowance for uncollectible accounts of $12 and $11 in 2016 and 2015, respectively
55
70
Accrued unbilled revenue
330
327
Accounts receivable from affiliated companies
152
190
Fuel oil, gas in storage, materials and supplies, at average cost
273
288
Prepayments
464
113
Regulatory assets
111
121
Other current assets
98
131
TOTAL CURRENT ASSETS
2,587
3,072
INVESTMENTS
318
286
UTILITY PLANT, AT ORIGINAL COST
 
 
Electric
25,648
24,828
Gas
6,564
6,191
Steam
2,374
2,336
General
2,437
2,411
TOTAL
37,023
35,766
Less: Accumulated depreciation
7,750
7,378
Net
29,273
28,388
Construction work in progress
1,200
922
NET UTILITY PLANT
30,473
29,310
NON-UTILITY PROPERTY
 
 
Non-utility property, less accumulated depreciation of $25 in 2016 and 2015
4
5
NET PLANT
30,477
29,315
OTHER NONCURRENT ASSETS
 
 
Regulatory assets
6,986
7,482
Other deferred charges and noncurrent assets
68
75
TOTAL OTHER NONCURRENT ASSETS
7,054
7,557
TOTAL ASSETS
$40,436
$40,230
The accompanying notes are an integral part of these financial statements.
 


 
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Consolidated Edison Company of New York, Inc.
CONSOLIDATED BALANCE SHEET (UNAUDITED)
 

 
September 30,
2016
December 31,
2015
 
(Millions of Dollars)
LIABILITIES AND SHAREHOLDER’S EQUITY
 
 
CURRENT LIABILITIES
 
 
Long-term debt due within one year
$250
$650
Notes payable
480
1,033
Accounts payable
838
771
Accounts payable to affiliated companies
20
12
Customer deposits
341
339
Accrued taxes
32
49
Accrued taxes to affiliated companies

2
Accrued interest
161
118
Accrued wages
92
88
Fair value of derivative liabilities
61
50
Regulatory liabilities
96
84
Other current liabilities
558
443
TOTAL CURRENT LIABILITIES
2,929
3,639
NONCURRENT LIABILITIES
 
 
Provision for injuries and damages
164
178
Pensions and retiree benefits
1,895
2,565
Superfund and other environmental costs
661
665
Asset retirement obligations
241
234
Fair value of derivative liabilities
45
36
Deferred income taxes and unamortized investment tax credits
9,472
8,755
Regulatory liabilities
1,725
1,789
Other deferred credits and noncurrent liabilities
177
167
TOTAL NONCURRENT LIABILITIES
14,380
14,389
LONG-TERM DEBT
11,334
10,787
SHAREHOLDER’S EQUITY (See Statement of Shareholder’s Equity)
11,793
11,415
TOTAL LIABILITIES AND SHAREHOLDER’S EQUITY
$40,436
$40,230
The accompanying notes are an integral part of these financial statements.
 


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Consolidated Edison Company of New York, Inc.
CONSOLIDATED STATEMENT OF SHAREHOLDER’S EQUITY (UNAUDITED)
 
Common Stock
Additional
Paid-In
Capital
Retained
Earnings
Repurchased
Con Edison
Stock
Capital
Stock
Expense
Accumulated
Other
Comprehensive
Income/(Loss)
Total
(In Millions)
Shares
Amount
BALANCE AS OF DECEMBER 31, 2014
235
$589
$4,234
$7,399
$(962)
$(61)
$(11)
$11,188
Net income
 
 
 
348
 
 
 
348
Common stock dividend to parent
 
 
 
(338)
 
 
 
(338)
Other comprehensive income
 
 
 
 
 
 


BALANCE AS OF MARCH 31, 2015
235
$589
$4,234
$7,409
$(962)
$(61)
$(11)
$11,198
Net income
 
 
 
211
 
 
 
211
Common stock dividend to parent
 
 
 
(178)
 
 
 
(178)
Other comprehensive income
 
 
 
 
 
 
1
1
BALANCE AS OF JUNE 30, 2015
235
$589
$4,234
$7,442
$(962)
$(61)
$(10)
$11,232
Net income
 
 
 
375
 
 
 
375
Common stock dividend to parent
 
 
 
(178)
 
 
 
(178)
Other comprehensive income
 
 
 
 
 
 
1
1
BALANCE AS OF SEPTEMBER 30, 2015
235
$589
$4,234
$7,639
$(962)
$(61)
$(9)
$11,430
 
 
 
 
 
 
 
 
 
BALANCE AS OF DECEMBER 31, 2015
235
$589
$4,247
$7,611
$(962)
$(61)
$(9)
$11,415
Net income
 
 
 
310
 
 
 
310
Common stock dividend to parent
 
 
 
(186)
 
 
 
(186)
Capital contribution by parent
 
 
23
 
 
 
 
23
Other comprehensive income
 
 
 
 
 
 


BALANCE AS OF MARCH 31, 2016
235
$589
$4,270
$7,735
$(962)
$(61)
$(9)
$11,562
Net income
 
 
 
161
 
 
 
161
Common stock dividend to parent
 
 
 
(186)
 
 
 
(186)
Capital contribution by parent
 
 
28

 
 
 
28
Other comprehensive income
 
 
 
 
 
 
1
1
BALANCE AS OF JUNE 30, 2016
235
$589
$4,298
$7,710
$(962)
$(61)
$(8)
$11,566
Net income
 
 
 
388
 
 
 
388
Common stock dividend to parent
 
 
 
(186)
 
 
 
(186)
Capital contribution by parent
 
 
25

 
 
 
25
Other comprehensive income
 
 
 
 
 
 


BALANCE AS OF SEPTEMBER 30, 2016
235
$589
$4,323
$7,912
$(962)
$(61)
$(8)
$11,793
The accompanying notes are an integral part of these financial statements.

 
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Table of Contents

NOTES TO THE FINANCIAL STATEMENTS (UNAUDITED)
 
General
These combined notes accompany and form an integral part of the separate consolidated financial statements of each of the two separate registrants: Consolidated Edison, Inc. and its subsidiaries (Con Edison) and Consolidated Edison Company of New York, Inc. and its subsidiaries (CECONY). CECONY is a subsidiary of Con Edison and as such its financial condition and results of operations and cash flows, which are presented separately in the CECONY consolidated financial statements, are also consolidated, along with those of Con Edison’s other utility subsidiary, Orange and Rockland Utilities, Inc. (O&R), Con Edison Transmission, Inc. (Con Edison Transmission) and Con Edison’s competitive energy businesses in Con Edison’s consolidated financial statements. The term “Utilities” is used in these notes to refer to CECONY and O&R.
As used in these notes, the term “Companies” refers to Con Edison and CECONY and, except as otherwise noted, the information in these combined notes relates to each of the Companies. However, CECONY makes no representation as to information relating to Con Edison or the subsidiaries of Con Edison other than itself.
The separate interim consolidated financial statements of each of the Companies are unaudited but, in the opinion of their respective managements, reflect all adjustments (which include only normally recurring adjustments) necessary for a fair presentation of the results for the interim periods presented. The Companies’ separate interim consolidated financial statements should be read together with their separate audited financial statements (including the combined notes thereto) included in Item 8 of their combined Annual Report on Form 10-K for the year ended December 31, 2015 and their separate unaudited financial statements (including the combined notes thereto) included in Part I, Item 1 of their combined Quarterly Report on Form 10-Q for the quarterly periods ended March 31, 2016 and June 30, 2016. Certain prior period amounts have been reclassified to conform to the current period presentation.
Con Edison has two regulated utility subsidiaries: CECONY and O&R. CECONY provides electric service and gas service in New York City and Westchester County. The company also provides steam service in parts of Manhattan. O&R, along with its regulated utility subsidiary, provides electric service in southeastern New York and northern New Jersey and gas service in southeastern New York. Con Edison has the following competitive energy businesses: Consolidated Edison Solutions, Inc. (Con Edison Solutions), a company which provides energy-related products and services to retail customers; Consolidated Edison Energy, Inc. (Con Edison Energy), a company that provides energy-related products and services to wholesale customers; and Consolidated Edison Development, Inc. (Con Edison Development), a company that develops, owns and operates renewable and energy infrastructure projects. In addition, Con Edison has a subsidiary, Con Edison Transmission, that invests in electric transmission facilities through its subsidiary, Consolidated Edison Transmission, LLC (CET Electric), and invests in gas pipeline and storage facilities through its subsidiary Con Edison Gas Pipeline and Storage, LLC (CET Gas). See Note P.

Note A – Summary of Significant Accounting Policies
Earnings Per Common Share
For the three and nine months ended September 30, 2016 and 2015, basic and diluted earnings per share (EPS) for Con Edison are calculated as follows:
 
 
For the Three Months Ended September 30,
For the Nine Months Ended September 30,
(Millions of Dollars, except per share amounts/Shares in Millions)
2016
2015
2016
2015
Net income
$497
$428
$1,039
$1,017
Weighted average common shares outstanding – basic
304.5
292.9
299.1
292.9
Add: Incremental shares attributable to effect of potentially dilutive securities
1.4
1.3
1.4
1.3
Adjusted weighted average common shares outstanding – diluted
305.9
294.2
300.5
294.2
Net income per common share – basic
$1.63
$1.46
$3.47
$3.47
Net income per common share – diluted
$1.62
$1.45
$3.46
$3.46



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Table of Contents

Changes in Accumulated Other Comprehensive Income/(Loss) by Component
For the three and nine months ended September 30, 2016 and 2015, changes to accumulated other comprehensive income/(loss) (OCI) for Con Edison and CECONY are as follows:
 
 
For the Three Months Ended September 30,
 
        Con Edison
        CECONY
(Millions of Dollars)
2016
2015
2016

2015
Beginning balance, accumulated OCI, net of taxes (a)
$(33)
$(39)
$(8)
$(10)
Amounts reclassified from accumulated OCI related to pension plan liabilities, net of tax of $(1) for Con Edison in 2016 and 2015 (a)(b)
1
1

1
Current period OCI, net of taxes
1
1

1
Ending balance, accumulated OCI, net of taxes
$(32)
$(38)
$(8)
$(9)

 
For the Nine Months Ended September 30,
 
        Con Edison
        CECONY
(Millions of Dollars)
2016
2015
2016

2015

Beginning balance, accumulated OCI, net of taxes (a)
$(34)
$(45)
$(9)
$(11)
OCI before reclassifications, net of tax of $1 and $(2) for Con Edison in 2016 and 2015, respectively
(1)
3


Amounts reclassified from accumulated OCI related to pension plan liabilities, net of tax of $(2) and $(3) for Con Edison in 2016 and 2015 (a)(b)
3
4
1
2
Current period OCI, net of taxes
2
7
1
2
Ending balance, accumulated OCI, net of taxes
$(32)
$(38)
$(8)
$(9)
(a)
Tax reclassified from accumulated OCI is reported in the income tax expense line item of the consolidated income statement.
(b)
For the portion of unrecognized pension and other postretirement benefit costs relating to the Utilities, costs are recorded into, and amortized out of, regulatory assets instead of OCI. The net actuarial losses and prior service costs recognized during the period are included in the computation of total periodic pension and other postretirement benefit cost. See Notes E and F.

Note B — Regulatory Matters
Rate Plans
CECONY - Electric
In September 2016, CECONY, the staff of the New York State Public Service Commission (NYSPSC) and other parties entered into a Joint Proposal for a CECONY electric rate plan for the three-year period January 2017 through December 2019. The Joint Proposal is subject to NYSPSC approval. The following table contains a summary of the electric rate plan.


 
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Effective period
 
January 2017 - December 2019
Base rate changes (a)
 
Yr. 1 - $195 million
Yr. 2 - $155 million
Yr. 3 - $155 million
Amortizations to income of net regulatory (assets) liabilities
 
Yr. 1 - $84 million
Yr. 2 - $83 million
Yr. 3 - $69 million
Other revenue sources
 
Retention of $75 million of annual transmission congestion revenues.

Potential earnings adjustment mechanism incentives for energy efficiency and other potential incentives of up to: Yr. 1 - $28 million; Yr. 2 - $47 million; and Yr. 3 - $64 million.
Revenue decoupling mechanism
 
Continuation of reconciliation of actual to authorized electric delivery revenues.
Recoverable energy costs
 
Continuation of current rate recovery of purchased power and fuel costs.
Negative revenue adjustments
 
Potential penalties if certain performance targets relating to service, reliability, safety and other matters are not met: Yr. 1 - $376 million; Yr. 2 - $383 million; and Yr. 3 - $395 million.
Cost reconciliations
 
Continuation of reconciliation of expenses for pension and other postretirement benefits, variable-rate tax-exempt debt, major storms, property taxes(b), municipal infrastructure support costs(c), the impact of new laws and environmental site investigation and remediation to amounts reflected in rates.(d)
Net utility plant reconciliations
 
Target levels reflected in rates:
Electric average net plant target excluding advanced metering infrastructure (AMI): Yr. 1 - $21,689 million; Yr. 2 - $22,338 million; Yr. 3 - $23,002 million
AMI: Yr. 1 - $126 million; Yr. 2 - $257 million; Yr. 3 - $415 million
Average rate base
 
Yr. 1 - $18,902 million
Yr. 2 - $19,530 million
Yr. 3 - $20,277 million
Weighted average cost of capital (after-tax)
 
Yr. 1 - 6.82 percent
Yr. 2 - 6.80 percent
Yr. 3 - 6.73 percent
Authorized return on common equity
 
9.00 percent
Earnings sharing
 
Most earnings above an annual earnings threshold of 9.5 percent are to be applied to reduce regulatory assets for environmental remediation and other costs accumulated in the rate year.
Cost of long-term debt
 
Yr. 1 - 4.93 percent
Yr. 2 - 4.88 percent
Yr. 3 - 4.74 percent
Common equity ratio
 
48 percent
(a)
The electric base rate increases shown above are in addition to a $48 million increase resulting from the December 2016 expiration of a temporary credit under the current rate plan. At the NYSPSC’s option, these increases may be implemented with increases of $199 million in each rate year.
(b)
Deferrals for property taxes are limited to 90 percent of the difference from amounts reflected in rates, subject to an annual maximum for the remaining difference of not more than a maximum number of basis points impact on return on common equity: Yr. 1 - 10.0 basis points; Yr. 2 - 7.5 basis points; and Yr. 3 - 5.0 basis points.
(c)
In general, if actual expenses for municipal infrastructure support (other than company labor) are below the amounts reflected in rates the company will defer the difference for credit to customers, and if the actual expenses are above the amount reflected in rates the company will defer for recovery from customers 80 percent of the difference subject to a maximum deferral of 30 percent of the amount reflected in rates.
(d)
In addition, amounts reflected in rates relating to the regulatory asset for future income tax and the excess deferred federal income tax liability are subject to reconciliation. The NYSPSC staff is to audit the regulatory asset and the tax liability. Differences resulting from the NYSPSC staff review will be deferred for NYSPSC determination of any amounts to be refunded or collected from customers.

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

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


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Effective period
 
January 2017 - December 2019
Base rate changes
 
Yr. 1 - $(5) million(a)
Yr. 2 - $92 million
Yr. 3 - $90 million
Amortizations to income of net regulatory (assets) liabilities
 
Yr. 1 - $39 million
Yr. 2 - $37 million
Yr. 3 - $36 million
Other revenue sources
 
Retention of annual revenues from non-firm customers of up to $65 million and 15 percent of any such revenues above $65 million.

Potential incentives if performance targets related to gas leak backlog, leak prone pipe and service terminations are met: Yr. 1 - $7 million; Yr. 2 - $8 million; and Yr. 3 - $8 million.
Revenue decoupling mechanism
 
Continuation of reconciliation of actual to authorized gas delivery revenues.
Recoverable energy costs
 
Continuation of current rate recovery of purchased gas costs.
Negative revenue adjustments
 
Potential penalties if performance targets relating to service, safety and other matters are not met: Yr. 1 - $68 million; Yr. 2 - $75 million; and Yr. 3 - $83 million.
Cost reconciliations
 
Continuation of reconciliation of expenses for pension and other postretirement benefits, variable-rate tax-exempt debt, major storms, property taxes, municipal infrastructure support costs, the impact of new laws and environmental site investigation and remediation to amounts reflected in rates.(b)
Net utility plant reconciliations
 
Target levels reflected in rates:
Gas average net plant target excluding AMI: Yr. 1 - $5,844 million; Yr. 2 - $6,512 million; Yr. 3 - $7,177 million
AMI: Yr. 1 - $27 million; Yr. 2 - $57 million; Yr. 3 - $100 million
Average rate base
 
Yr. 1 - $4,841 million
Yr. 2 - $5,395 million
Yr. 3 - $6,005 million
Weighted average cost of capital (after-tax)
 
Yr. 1 - 6.82 percent
Yr. 2 - 6.80 percent
Yr. 3 - 6.73 percent
Authorized return on common equity
 
9.00 percent
Earnings sharing
 
Most earnings above an annual earnings threshold of 9.5 percent are to be applied to reduce regulatory assets for environmental remediation and other costs accumulated in the rate year.
Cost of long-term debt
 
Yr. 1 - 4.93 percent
Yr. 2 - 4.88 percent
Yr. 3 - 4.74 percent
Common equity ratio
 
48 percent
(a)
The base rate decrease is offset by a $41 million increase resulting from the December 2016 expiration of a temporary credit under the current rate plan.
(b)
See footnotes (b), (c) and (d) to the table under “CECONY-Electric,” above.

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


 
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Table of Contents

Other Regulatory Matters
In April 2016, the NYSPSC approved the September 2015 Joint Proposal among CECONY, the NYSPSC staff and others with respect to the prudence proceeding the NYSPSC commenced in February 2009 and related matters. Pursuant to the Joint Proposal, the company is required to credit $116 million to customers and, for the period 2017 through 2044, to not seek to recover from customers an aggregate $55 million relating to return on its capital expenditures. In addition, the company’s revenues that were made subject to potential refund in this proceeding are no longer subject to refund. At September 30, 2016, the company had a $96 million regulatory liability for the remaining amount to be credited to customers related to this matter.
In June 2014, the NYSPSC initiated a proceeding to investigate the practices of qualifying persons to perform plastic fusions on gas facilities. New York State regulations require gas utilities to qualify and, except in certain circumstances, annually requalify workers that perform fusion to join plastic pipe. The NYSPSC directed the New York gas utilities to provide information in this proceeding about their compliance with the qualification and requalification requirements and related matters; their procedures for compliance with all gas safety regulations; and their annual chief executive officer certifications regarding these and other procedures. CECONY’s qualification and requalification procedures had not included certain required testing to evaluate specimen fuses. In addition, CECONY and O&R had not timely requalified certain workers that had been qualified under their respective procedures to perform fusion to join plastic pipe. CECONY and O&R have requalified their workers who perform plastic pipe fusions. In May 2015, the NYSPSC, which indicated that it would address enforcement at a later date, ordered CECONY, O&R and other gas utilities to perform risk assessment and remediation plans, additional leakage surveying and reporting; CECONY to hire an independent statistician to develop a risk assessment and remediation plan; and the gas utilities to implement certain new plastic fusion requirements. In December 2015, the NYSPSC staff informed O&R that the company had satisfactorily completed its risk assessment and remediation plan. CECONY submitted its risk assessment and remediation plan to the NYSPSC staff in October 2016.
In November 2015, the NYSPSC ordered CECONY to show cause why the NYSPSC should not commence proceedings to penalize the company for alleged violations of gas safety regulations identified by the NYSPSC staff in its investigation of a March 2014 explosion and fire and to review the prudence of the company's conduct associated with the incident. See "Manhattan Explosion and Fire" in Note H. In December 2015, the company responded that the NYSPSC should not institute the proceedings and disputed the alleged violations.
At September 30, 2016, CECONY had a $28 million regulatory liability related to the June 2014 plastic fusion proceeding and the November 2015 order to show cause. The company is unable to estimate the amount or range of its possible loss related to these matters in excess of this regulatory liability.
CECONY has incurred costs for gas emergency response activities in 2014, 2015 and 2016 in excess of amounts reflected in the company’s gas rate plan. The company has requested NYSPSC authorization to defer as a regulatory asset $29 million and $35 million of such incremental costs incurred in 2014 and 2015, respectively. The company estimates that it will incur $37 million of such incremental costs in 2016. At September 30, 2016, the company had not deferred any such incremental costs.
 


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Table of Contents

Regulatory Assets and Liabilities
Regulatory assets and liabilities at September 30, 2016 and December 31, 2015 were comprised of the following items:
 
  
         Con Edison
 
        CECONY
(Millions of Dollars)
2016
2015
 
2016

2015

Regulatory assets
 
 
 
 
 
Unrecognized pension and other postretirement costs
$3,369
$3,876

$3,220
$3,697
Future income tax
2,429
2,350

2,312
2,232
Environmental remediation costs
823
904

720
800
Revenue taxes
298
253

283
240
Deferred storm costs
89
185

30
110
Deferred derivative losses
55
50

49
46
Unamortized loss on reacquired debt
45
50

43
48
Surcharge for New York State assessment
43
44

40
40
O&R property tax reconciliation
39
46



Pension and other postretirement benefits deferrals
34
45

3
16
Net electric deferrals
29
44

29
44
Preferred stock redemption
25
26

25
26
O&R transition bond charges
16
21



Workers’ compensation
15
11

15
11
Recoverable energy costs
7
16

5
15
Other
228
175

212
157
Regulatory assets – noncurrent
7,544
8,096

6,986
7,482
Deferred derivative losses
94
113

87
103
Recoverable energy costs
25
19

24
18
Regulatory assets – current
119
132

111
121
Total Regulatory Assets
$7,663
$8,228

$7,097
$7,603
Regulatory liabilities





Allowance for cost of removal less salvage
$713
$676

$602
$570
Property tax reconciliation
205
303

205
303
Pension and other postretirement benefit deferrals
163
76

130
46
Net unbilled revenue deferrals
121
109

121
109
Prudence proceeding
96
99

96
99
Unrecognized other postretirement costs
91
28

91
28
New York State income tax rate change
66
75

64
72
Base rate change deferrals
62
128

62
128
Variable-rate tax-exempt debt – cost rate reconciliation
60
70

52
60
Carrying charges on repair allowance and bonus depreciation
57
49

56
48
Earnings sharing - electric, gas and steam
34
80

26
80
Net utility plant reconciliations
27
32

27
31
Property tax refunds
12
44

12
44
World Trade Center settlement proceeds
5
21

5
21
Other
208
187

176
150
Regulatory liabilities – noncurrent
1,920
1,977

1,725
1,789
Revenue decoupling mechanism
74
45

70
45
Refundable energy costs
37
64

18
33
Deferred derivative gains
12
6

8
6
Regulatory liabilities – current
123
115

96
84
Total Regulatory Liabilities
$2,043
$2,092

$1,821
$1,873
 


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

In May 2016, Con Edison issued approximately 10 million common shares resulting in net proceeds, after issuance expenses, of $702 million, and $500 million aggregate principal amount of 2.00 percent debentures, due 2021. Also, in May 2016, a Con Edison Development subsidiary issued $95 million aggregate principal amount of 4.07 percent senior notes, due 2036, secured by the company's California Holding 3 solar projects. In June 2016, Con Edison borrowed $400 million pursuant to a credit agreement with a syndicate of banks. The borrowing matures in 2018 and bears interest at a LIBOR plus margin of 1.00 percent. Also in June 2016, CECONY issued $550 million aggregate principal amount of 3.85 percent debentures, due 2046. Also, in June 2016, a Con Edison Solutions subsidiary borrowed $2 million pursuant to a loan agreement with a New Jersey utility. The borrowing matures in 2026, bears interest of 11.18 percent and may be repaid in cash or project Solar Renewable Energy Certificates.

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

The carrying amounts and fair values of long-term debt at September 30, 2016 and December 31, 2015 were:
 
(Millions of Dollars)
2016
2015
Long-Term Debt (including current portion)
Carrying
Amount
Fair
Value
Carrying
Amount
Fair
Value
Con Edison
$14,093
$16,325
$12,745
$13,856
CECONY
$11,584
$13,564
$11,437
$12,427
 
Fair values of long-term debt have been estimated primarily using available market information. For Con Edison, $15,689 million and $636 million of the fair value of long-term debt at September 30, 2016 are classified as Level 2 and Level 3, respectively. For CECONY, $12,928 million and $636 million of the fair value of long-term debt at September 30, 2016 are classified as Level 2 and Level 3, respectively (see Note L). The $636 million of long-term debt classified as Level 3 is CECONY’s tax-exempt, auction-rate securities for which the market is highly illiquid and there is a lack of observable inputs.

Note D — Short-Term Borrowing
At September 30, 2016, Con Edison had $601 million of commercial paper outstanding of which $480 million was outstanding under CECONY’s program. The weighted average interest rate at September 30, 2016 was 0.7 percent for both Con Edison and CECONY. At December 31, 2015, Con Edison had $1,529 million of commercial paper outstanding of which $1,033 million was outstanding under CECONY’s program. The weighted average interest rate at December 31, 2015 was 0.7 percent for both Con Edison and CECONY.
At September 30, 2016 and December 31, 2015, no loans were outstanding under the credit agreement (Credit Agreement) and $2 million (including $2 million for CECONY) and $15 million of letters of credit were outstanding under the Credit Agreement, respectively.

Note E — Pension Benefits
Total Periodic Benefit Cost
The components of the Companies’ total periodic benefit costs for the three and nine months ended September 30, 2016 and 2015 were as follows:
 


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For the Three Months Ended September 30,
  
           Con Edison
         CECONY
(Millions of Dollars)
2016

2015
2016

2015

Service cost – including administrative expenses
$69
$74
$65
$70
Interest cost on projected benefit obligation
149
144
140
135
Expected return on plan assets
(237)
(222)
(225)
(210)
Recognition of net actuarial loss
149
194
141
183
Recognition of prior service costs
1
1


NET PERIODIC BENEFIT COST
$131
$191
$121
$178
Amortization of regulatory asset

1

1
TOTAL PERIODIC BENEFIT COST
$131
$192
$121
$179
Cost capitalized
(51)
(80)
(49)
(76)
Reconciliation to rate level
10
(14)
13
(14)
Cost charged to operating expenses
$90
$98
$85
$89

 
For the Nine Months Ended September 30,
 
           Con Edison
         CECONY
(Millions of Dollars)
2016

2015
2016

2015
Service cost – including administrative expenses
$207
$223
$194
$209
Interest cost on projected benefit obligation
447
431
419
404
Expected return on plan assets
(711)
(664)
(674)
(630)
Recognition of net actuarial loss
447
581
424
550
Recognition of prior service costs
3
3
1
1
NET PERIODIC BENEFIT COST
$393
$574
$364
$534
Amortization of regulatory asset

2

2
TOTAL PERIODIC BENEFIT COST
$393
$576
$364
$536
Cost capitalized
(157)
(224)
(148)
(214)
Reconciliation to rate level
35
(56)
39
(56)
Cost charged to operating expenses
$271
$296
$255
$266

Expected Contributions
Based on estimates as of September 30, 2016, the Companies expect to make contributions to the pension plans during 2016 of $508 million (of which $469 million is to be contributed by CECONY). The Companies’ policy is to fund the total periodic benefit cost of the qualified plan to the extent tax deductible and to also contribute to the non-qualified supplemental plans. During the first nine months of 2016, the Companies contributed $504 million (of which $466 million was contributed by CECONY) to the pension plans. CECONY also contributed $17 million to its external trust for supplemental plans.
 
Note F — Other Postretirement Benefits
Total Periodic Benefit Cost
The components of the Companies’ total periodic other postretirement benefit costs for the three and nine months ended September 30, 2016 and 2015 were as follows:
 
 
For the Three Months Ended September 30,
  
          Con Edison
          CECONY
(Millions of Dollars)
2016
2015
2016
2015
Service cost
$4
$5
$3
$4
Interest cost on accumulated other postretirement benefit obligation
12
13
10
11
Expected return on plan assets
(19)
(20)
(17)
(17)
Recognition of net actuarial loss
1
8
1
7
Recognition of prior service cost
(5)
(5)
(3)
(4)
TOTAL PERIODIC OTHER POSTRETIREMENT BENEFIT COST
$(7)
$1
$(6)
$1
Cost capitalized
2
(1)
2
(1)
Reconciliation to rate level
7
4
6
2
Cost charged to operating expenses
$2
$4
$2
$2


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

Contributions
During the first nine months of 2016, the Companies contributed $6 million, nearly all of which was contributed by CECONY, to the other postretirement benefit plans. The Companies' policy is to fund the total periodic benefit cost of the plans to the extent tax deductible.

Note G — Environmental Matters
Superfund Sites
Hazardous substances, such as asbestos, polychlorinated biphenyls (PCBs) and coal tar, have been used or generated in the course of operations of the Utilities and their predecessors and are present at sites and in facilities and equipment they currently or previously owned, including sites at which gas was manufactured or stored.
The Federal Comprehensive Environmental Response, Compensation and Liability Act of 1980 and similar state statutes (Superfund) impose joint and several liability, regardless of fault, upon generators of hazardous substances for investigation and remediation costs (which include costs of demolition, removal, disposal, storage, replacement, containment and monitoring) and natural resource damages. Liability under these laws can be material and may be imposed for contamination from past acts, even though such past acts may have been lawful at the time they occurred. The sites at which the Utilities have been asserted to have liability under these laws, including their manufactured gas plant sites and any neighboring areas to which contamination may have migrated, are referred to herein as “Superfund Sites.”
For Superfund Sites where there are other potentially responsible parties and the Utilities are not managing the site investigation and remediation, the accrued liability represents an estimate of the amount the Utilities will need to pay to investigate and, where determinable, discharge their related obligations. For Superfund Sites (including the manufactured gas plant sites) for which one of the Utilities is managing the investigation and remediation, the accrued liability represents an estimate of the company’s share of the undiscounted cost to investigate the sites and, for sites that have been investigated in whole or in part, the cost to remediate the sites, if remediation is necessary and if a reasonable estimate of such cost can be made. Remediation costs are estimated in light of the information available, applicable remediation standards and experience with similar sites.
The accrued liabilities and regulatory assets related to Superfund Sites at September 30, 2016 and December 31, 2015 were as follows:
 
        Con Edison
        CECONY
(Millions of Dollars)
2016
2015
2016
2015
Accrued Liabilities:
 
 
 
 
Manufactured gas plant sites
$664
$679
$574
$579
Other Superfund Sites
88
86
87
86
Total
$752
$765
$661
$665
Regulatory assets
$823
$904
$720
$800
Most of the accrued Superfund Site liability relates to sites that have been investigated, in whole or in part. However, for some of the sites, the extent and associated cost of the required remediation has not yet been determined. As investigations progress and information pertaining to the required remediation becomes available,


26

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the Utilities expect that additional liability may be accrued, the amount of which is not presently determinable but may be material. The Companies are unable to estimate the time period over which the remaining accrued liability will be incurred because, among other things, the required remediation has not been determined for some of the sites. Under their current rate plans, the Utilities are permitted to recover or defer as regulatory assets (for subsequent recovery through rates) certain site investigation and remediation costs.
Environmental remediation costs incurred related to Superfund Sites for the three and nine months ended September 30, 2016 and 2015 were as follows: 
 
For the Three Months Ended September 30,
 
          Con Edison
     CECONY
(Millions of Dollars)
2016
2015
2016
2015
Remediation costs incurred
$8
$6
$5
$6


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

Con Edison and CECONY received $1 million in insurance recoveries for the three and nine months ended September 30, 2016. No insurance recoveries were received by Con Edison or CECONY for the three and nine months ended September 30, 2015.
In 2015, Con Edison and CECONY estimated that for their manufactured gas plant sites (including CECONY’s Astoria site), the aggregate undiscounted potential liability for the investigation and remediation of coal tar and/or other environmental contaminants could range up to $2.8 billion and $2.7 billion, respectively. These estimates were based on the assumption that there is contamination at all sites, including those that have not yet been fully investigated and additional assumptions about the extent of the contamination and the type and extent of the remediation that may be required. Actual experience may be materially different.
Asbestos Proceedings
Suits have been brought in New York State and federal courts against the Utilities and many other defendants, wherein a large number of plaintiffs sought large amounts of compensatory and punitive damages for deaths and injuries allegedly caused by exposure to asbestos at various premises of the Utilities. The suits that have been resolved, which are many, have been resolved without any payment by the Utilities, or for amounts that were not, in the aggregate, material to them. The amounts specified in all the remaining thousands of suits total billions of dollars; however, the Utilities believe that these amounts are greatly exaggerated, based on the disposition of previous claims. At September 30, 2016, Con Edison and CECONY had accrued their estimated aggregate undiscounted potential liabilities for these suits and additional suits that may be brought over the next 15 years as shown in the following table. The estimates were based upon a combination of modeling, historical data analysis and risk factor assessment. Trial courts have begun, and unless otherwise determined by an appellate court may continue, to apply a different standard for determining liability in asbestos suits than the standard that applied historically. As a result, the Companies currently believe that there is a reasonable possibility of an exposure to loss in excess of the liability accrued for the suits. The Companies are unable to estimate the amount or range of such loss. In addition, certain current and former employees have claimed or are claiming workers’ compensation benefits based on alleged disability from exposure to asbestos. Under its current rate plans, CECONY is permitted to defer as regulatory assets (for subsequent recovery through rates) costs incurred for its asbestos lawsuits and workers’ compensation claims.
The accrued liability for asbestos suits and workers’ compensation proceedings (including those related to asbestos exposure) and the amounts deferred as regulatory assets for the Companies at September 30, 2016 and December 31, 2015 were as follows:

 
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Table of Contents

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

Note H — Other Material Contingencies
Manhattan Steam Main Rupture
In July 2007, a CECONY steam main located in midtown Manhattan ruptured. It has been reported that one person died and others were injured as a result of the incident. Several buildings in the area were damaged. Debris from the incident included dirt and mud containing asbestos. The response to the incident required the closing of several buildings and streets for various periods. Approximately sixty suits are pending against the company seeking generally unspecified compensatory and, in some cases, punitive damages, for wrongful death, personal injury, property damage and business interruption. The company has notified its insurers of the incident and believes that the policies in force at the time of the incident will cover the company’s costs to satisfy its liability to others in connection with the suits. In the company’s estimation, there is not a reasonable possibility that an exposure to loss exists for the suits that is materially in excess of the estimated liability accrued. At September 30, 2016, the company has accrued its estimated liability for the suits of $30 million and an insurance receivable of $39 million.
Manhattan Explosion and Fire
On March 12, 2014, two multi-use five-story tall buildings located on Park Avenue between 116th and 117th Street in Manhattan were destroyed by an explosion and fire. CECONY had delivered gas to the buildings through service lines from a distribution main located below ground on Park Avenue. Eight people died and more than 50 people were injured. Additional buildings were also damaged. The National Transportation Safety Board (NTSB) investigated. The parties to the investigation included the company, the City of New York, the Pipeline and Hazardous Materials Safety Administration and the NYSPSC (which also conducted an investigation). In June 2015, the NTSB issued a final report concerning the incident, its probable cause and safety recommendations. The NTSB determined that the probable cause of the incident was (1) the failure of a defective fusion joint at a service tee (which joined a plastic service line to a plastic distribution main) installed by the company that allowed gas to leak from the distribution main and migrate into a building where it ignited and (2) a breach in a City sewer line that allowed groundwater and soil to flow into the sewer, resulting in a loss of support for the distribution main, which caused it to sag and overstressed the defective fusion joint. The NTSB also made safety recommendations, including recommendations to the company that addressed its procedures for the preparation and examination of plastic fusions, training of its staff on conditions for notifications to the City’s Fire Department and extension of its gas main isolation valve installation program. Approximately seventy suits are pending against the company seeking generally unspecified damages and, in some cases, punitive damages, for wrongful death, personal injury, property damage and business interruption. The company has notified its insurers of the incident and believes that the policies in force at the time of the incident will cover the company’s costs, in excess of a required retention (the amount of which is not material), to satisfy any liability it may have for damages in connection with the incident. The company is unable to estimate the amount or range of its possible loss for damages related to the incident. At September 30, 2016, the company had not accrued a liability for damages related to the incident.
Other Contingencies
See “Other Regulatory Matters” in Note B and “Uncertain Tax Positions” in Note I.
Guarantees
Con Edison and its subsidiaries enter into various agreements providing financial or performance assurance primarily to third parties on behalf of their subsidiaries. Maximum amounts guaranteed by Con Edison totaled $2,422 million and $2,856 million at September 30, 2016 and December 31, 2015, respectively.


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Table of Contents

A summary, by type and term, of Con Edison’s total guarantees at September 30, 2016 is as follows:
 
Guarantee Type
0 – 3 years
4 – 10 years

> 10 years

Total
 
(Millions of Dollars)
Con Edison Transmission
$618
$430

$—

$1,048
Energy transactions
635
57
91
783
Renewable electric production projects
445

18
463
Other
128


128
Total
$1,826
$487
$109
$2,422
Con Edison Transmission — Con Edison has guaranteed payment by CET Electric of the contributions CET Electric agreed to make to New York Transco LLC (NY Transco). CET Electric acquired a 45.7 percent interest in NY Transco when it was formed in 2014. NY Transco’s transmission projects are expected to be initially developed by CECONY and other New York transmission owners and then transferred to NY Transco. In May 2016, the transmission owners transferred certain projects to NY Transco, as to which CET Electric made its required contributions. The other projects that were proposed when NY Transco was formed remain subject to certain authorizations from the NYSPSC, the FERC and, as applicable, other federal, state and local agencies. Guarantee amount shown is for the maximum possible required amount of CET Electric’s contributions for these other projects as calculated based on the assumptions that the projects are completed at 175 percent of their estimated costs and NY Transco does not use any debt financing for the projects. Guarantee term shown is assumed as the timing of the contributions is not certain. Also included within the table above is a guarantee for $25 million from Con Edison on behalf of CET Gas in relation to a proposed gas transmission project in West Virginia and Virginia. See Note P.
Energy Transactions — Con Edison guarantees payments on behalf of its competitive energy businesses in order to facilitate physical and financial transactions in electricity, gas, pipeline capacity, transportation, oil, renewable energy credits and energy services. To the extent that liabilities exist under the contracts subject to these guarantees, such liabilities are included in Con Edison’s consolidated balance sheet. Guarantee amounts shown above include $123 million of guarantees or other credit support provided by Con Edison on behalf of Con Edison Solutions that may continue in effect during the period in which Con Edison Solutions provides transition services in connection with the retail electric supply business it sold in September 2016. See Note P. As part of the sale agreement, the purchaser has agreed to pay Con Edison Solutions for draws on such guarantees or other credit support.
Renewable Electric Production Projects — Con Edison, Con Edison Development, and Con Edison Solutions guarantee payments associated with the investment in solar and wind energy facilities on behalf of their wholly-owned subsidiaries.
Other — Other guarantees include $70 million in guarantees provided by Con Edison to Travelers Insurance Company for indemnity agreements for surety bonds in connection with energy service projects and operation of solar energy facilities of Con Edison Solutions and Con Edison Development, respectively. Other guarantees also includes Con Edison's guarantee (subject to a $53 million maximum amount) of certain obligations of Con Edison Solutions under its agreement to sell its retail electric supply business. See Note P. In addition, Con Edison issued a guarantee estimated at $5 million to the Public Utility Commission of Texas covering obligations of Con Edison Solutions as a retail electric provider. As part of the sale agreement for the retail electric supply business discussed above, the purchaser has agreed to pay Con Edison Solutions for draws on the guarantee to the Public Utility Commission of Texas.
Note I — Income Tax
Con Edison’s income tax expense increased to $314 million for the three months ended September 30, 2016 from $249 million for the three months ended September 30, 2015. Con Edison's effective tax rate for the three months ended September 30, 2016 and 2015 was 39 percent and 37 percent, respectively. The increase in Con Edison's effective tax rate is primarily due to higher state income taxes and a decrease in tax benefits for plant-related flow through items, offset in part by higher tax benefits for injuries and damages payments, research and development tax credits and renewable energy tax credits.

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

 
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Table of Contents


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

CECONY’s income tax expense decreased to $491 million for the nine months ended September 30, 2016 from $515 million for the nine months ended September 30, 2015. CECONY's effective tax rate for the nine months ended September 30, 2016 and 2015 was 36 percent and 35 percent, respectively. The increase in CECONY's effective tax rate is primarily related to a decrease in tax benefits for plant-related flow through items, offset in part by lower state income taxes and increased research and development tax credits.

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

Uncertain Tax Positions
At September 30, 2016, the estimated liability for uncertain tax positions for Con Edison was $37 million ($5 million for CECONY). Con Edison reasonably expects to resolve approximately $29 million ($20 million, net of federal taxes) of its uncertain tax positions within the next twelve months, of which the entire amount, if recognized, would reduce Con Edison’s effective tax rate. The amount related to CECONY is approximately $5 million ($4 million, net of federal taxes), of which the entire amount, if recognized, would reduce CECONY’s effective tax rate. The total amount of unrecognized tax benefits, if recognized, that would reduce Con Edison’s effective tax rate is $37 million ($25 million, net of federal taxes).
The Companies recognize interest on liabilities for uncertain tax positions in interest expense and would recognize penalties, if any, in operating expenses in the Companies’ consolidated income statements. In the three and nine months ended September 30, 2016, the Companies recognized an immaterial amount of interest expense and no penalties for uncertain tax positions in their consolidated income statements. At September 30, 2016 and December 31, 2015, the Companies recognized an immaterial amount of accrued interest on their consolidated balance sheets.


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Table of Contents

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

The financial data for the business segments are as follows:
 
 
As of and for the Three Months Ended September 30,
 
Operating
revenues
Inter-segment
revenues
Depreciation and
amortization
Operating
income
Other income (deductions)
Interest charges
Income taxes on operating income
Total assets
Construction expenditures
(Millions of Dollars)
2016
2015
2016
2015
2016
2015
2016
2015
2016
2015
2016
2015
2016
2015
2016
2015
2016
2015
CECONY
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Electric
$2,557
$2,558
$5
$4
$217
$207
$841
$811
$2
$(2)
$117
$111
$275
$260
$30,580
$30,369
$411
$419
Gas
208
213
1
1
41
35
(28)
(17)

(1)
27
24
(24)
(17)
7,300
6,687
224
178
Steam
63
58
22
22
20
20
(47)
(49)


10
10
(17)
(18)
2,556
2,614
24
27
Consolidation adjustments


(28)
(27)














Total CECONY
$2,828
$2,829

$—


$—

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

$—


$—

$12
$13
$55
$51
$1
$(4)
$6
$6
$20
$17
$1,985
$1,959
$24
$26
Gas
27
24


5
4
(7)
(9)

(1)
3
3
(4)
(5)
799
754
14
12
Total O&R
$240
$229

$—


$—

$17
$17
$48
$42
$1
$(5)
$9
$9
$16
$12
$2,784
$2,713
$38
$38
Competitive energy businesses
$350
$386
$(2)
$(2)
$11
$6
$125
$43
$27
$17
$7
$2
$67
$21
$2,394
$1,547
$121
$212
Con Edison Transmission






(1)

20

3



1,072
2


Other (a)
(1)
(1)
2
2
(1)

2

(1)

5
6
4
2
630
1,039


Total Con Edison
$3,417
$3,443

$—


$—

$305
$285
$940
$830
$49
$9
$178
$162
$321
$260
$47,316
$44,971
$818
$874
(a)
Parent company and consolidation adjustments. Other does not represent a business segment.



 
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As of and for the Nine Months Ended September 30,
 
Operating
revenues
Inter-segment
revenues
Depreciation and
amortization
Operating
income
Other income (deductions)
Interest charges
Income taxes on operating income
Total assets
Construction expenditures
(Millions of Dollars)
2016
2015
2016
2015
2016
2015
2016
2015
2016
2015