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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, 2019

☐ 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 York	10003

(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 York	10003

(212)	460-4600



CON EDISON ANNUAL REPORT 2019	1

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

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 Edison	Yes	¨	No	x
CECONY	Yes	¨	No	x

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 Edison	Yes	x	No	¨
CECONY	Yes	x	No	¨

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



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, 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 filer	☒	Accelerated filer	☐	Non-accelerated filer	☐
Smaller reporting company	☐	Emerging growth company	☐
CECONY
Large accelerated filer	☐	Accelerated filer	☐	Non-accelerated Filer	☒
Smaller reporting company	☐	Emerging growth company	☐

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

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



Con Edison	Yes	☐	No	x
CECONY	Yes	☐	No	x

The aggregate market value of the common equity of Con Edison held by non-affiliates of Con Edison, as of June 30, 2019, was approximately $29.1 billion.

As of January 31, 2020, Con Edison had outstanding 333,775,472 Common Shares ($.10 par value).

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



2	CON EDISON ANNUAL REPORT 2019

Documents Incorporated By Reference

Portions of Con Edison’s definitive proxy statement for its Annual Meeting of Stockholders to be held on May 18, 2020, to be filed with the Commission pursuant to Regulation 14A, not later than 120 days after December 31, 2019, 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 2019	3

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.
Clean Energy Businesses		Con Edison Clean Energy Businesses, Inc., together with its subsidiaries, including Consolidated Edison Development, Inc., Consolidated Edison Energy, Inc. and Consolidated Edison Solutions, Inc.
Con Edison Transmission		Con Edison Transmission, Inc., together with its subsidiaries
CET Electric		Consolidated Edison Transmission, LLC
CET Gas		Con Edison Gas Pipeline and Storage, LLC
O&R		Orange and Rockland Utilities, Inc.
RECO		Rockland Electric Company
The Companies		Con Edison and CECONY
The Utilities		CECONY and O&R

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
PJM		PJM Interconnection LLC
SEC		U.S. Securities and Exchange Commission

Accounting
AFUDC		Allowance for funds used during construction
ASU		Accounting Standards Update
GAAP		Generally Accepted Accounting Principles in the United States of America
HLBV		Hypothetical Liquidation at Book Value
OCI		Other Comprehensive Income
VIE		Variable Interest Entity



4	CON EDISON ANNUAL REPORT 2019



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
Bcf		Billion cubic feet
Dt		Dekatherms
kV		Kilovolt
kWh		Kilowatt-hour
MDt		Thousand dekatherms
Mlb		Thousands of pounds
MMlb		Million pounds
MVA		Megavolt ampere
MW		Megawatt or thousand kilowatts
MWh		Megawatt hour

Other
AMI		Advanced metering infrastructure
CLCPA		Climate Leadership and Community Protection Act
COSO		Committee of Sponsoring Organizations of the Treadway Commission
DER		Distributed energy resources
Fitch		Fitch Ratings
LTIP		Long Term Incentive Plan
Moody’s		Moody’s Investors Service
REV		Reforming the Energy Vision
S&P		S&P Global Ratings
TCJA		The federal Tax Cuts and Jobs Act of 2017, as enacted on December 22, 2017
VaR		Value-at-Risk



CON EDISON ANNUAL REPORT 2019	5

TABLE OF CONTENTS



		PAGE
Introduction		7
Available Information		9
Forward-Looking Statements		10
Non-GAAP Financial Measure		10
Part I
Item 1:	Business	14
Item 1A:	Risk Factors	42
Item 1B:	Unresolved Staff Comments	45
Item 2:	Properties	45
Item 3:	Legal Proceedings	45
Item 4:	Mine Safety Disclosures	46
	Information about our Executive Officers	47
Part II
Item 5:	Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	48
Item 6:	Selected Financial Data	49
Item 7:	Management’s Discussion and Analysis of Financial Condition and Results of Operations	50
Item 7A:	Quantitative and Qualitative Disclosures about Market Risk	84
Item 8:	Financial Statements and Supplementary Data	85
Item 9:	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	176
Item 9A:	Controls and Procedures	176
Item 9B:	Other Information	176
Part III
Item 10:	Directors, Executive Officers and Corporate Governance	177
Item 11:	Executive Compensation	177
Item 12:	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	177
Item 13:	Certain Relationships and Related Transactions, and Director Independence	177
Item 14:	Principal Accounting Fees and Services	177
Part IV
Item 15:	Exhibits and Financial Statement Schedules	179
Item 16:	Form 10-K Summary	184
	Signatures	186



6	CON EDISON ANNUAL REPORT 2019

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 an environmentally sound manner; to provide a workplace that 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 its mission, including initiatives focused on safety, operational excellence, the customer experience and cost optimization.

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 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 and gas transmission projects (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)	2015	2016		2017		2018		2019
Operating revenues	$12,554	$12,075		$12,033		12,337		12,574
Energy costs	3,716	3,088		2,625		2,948		2,633
Operating income (f)	2,879	2,780		2,774		2,664		2,676
Net income for common stock	1,193	1,245		1,525	(e)	1,382	(e)	1,343
Total assets	45,642	48,255	(a)	48,111	(b)	53,920	(c)	58,079	(d)
Long-term debt	12,006	14,735		14,731		17,495		18,527
Total equity	13,061	14,306		15,425		16,839		18,213
Net Income per common share – basic	$4.07	$4.15		$4.97		$4.43		$4.09
Net Income per common share – diluted	$4.05	$4.12		$4.94		$4.42		$4.08
Dividends declared per common share	$2.60	$2.68		$2.76		$2.86		$2.96
Book value per share	$44.50	$46.91		$49.72		$52.46		$54.75
Average common shares outstanding (millions)	293	300		307		312		329


(a)	Reflects a $3,007 million increase in net plant offset by a $1,002 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.


(b)	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.

(b)

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 2019	7


(c)	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.


(d)	Reflects a $2,140 million increase in net plant and a $303 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.

(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)	2015	2016		2017		2018		2019
Operating revenues	$10,328	$10,165		$10,468		$10,680		$10,821
Energy costs	2,304	2,059		2,141		2,339		2,170
Operating income (e)	2,670	2,451		2,549		2,354		2,348
Net income	1,084	1,056		1,104		1,196		1,250
Total assets	40,230	40,856	(a)	40,451	(b)	43,108	(c)	46,557	(d)
Long-term debt	10,787	12,073		12,065		13,676		14,614
Shareholder’s equity	11,415	11,829		12,439		12,910		14,147


(a)	Reflects a $1,804 million increase in net plant and a $967 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.


(b)	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, F and L to the financial statements in Item 8.


(c)	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, F and L to the financial statements in Item 8.


(d)	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, F and L 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 2019 net income of $1,343 million or $4.09 a share compared with $1,382 million or $4.43 a share in 2018. Adjusted earnings were $1,438 million or $4.38 a share in 2019 compared with $1,349 million or $4.33 a share in 2018. See “Results of Operations” in Item 7 and “Non-GAAP Financial Measure” below.


•	In 2019, the Utilities invested $3,223 million to upgrade and reinforce their energy delivery systems, Con Edison Transmission invested $205 million in electric transmission and gas pipeline and storage businesses and the Clean Energy Businesses invested $248 million primarily in renewable electric production projects. For 2020, 2021 and 2022, the Utilities expect to invest $3,533 million, $3,513 million and $3,316 million, respectively, for their energy delivery systems, Con Edison Transmission expects to invest $11 million, $24 million and $76 million, respectively, primarily in the electric transmission business and the Clean Energy Businesses expect to invest $400 million, $400 million and $400 million, respectively, in renewable electric production projects. See "Capital Requirements and Resources - Capital Requirements" in Item 1.

•

In 2019, the Utilities invested $3,223 million to upgrade and reinforce their energy delivery systems, Con Edison Transmission invested $205 million in electric transmission and gas pipeline and storage businesses and the Clean Energy Businesses invested $248 million primarily in renewable electric production projects. For 2020, 2021 and 2022, the Utilities expect to invest $3,533 million, $3,513 million and $3,316 million, respectively, for their energy delivery systems, Con Edison Transmission expects to invest $11 million, $24 million and $76 million, respectively, primarily in the electric transmission business and the Clean Energy Businesses expect to invest $400 million, $400 million and $400 million, respectively, in renewable electric production projects. See "Capital Requirements and Resources - Capital Requirements" in Item 1.


•	Con Edison plans to meet its capital requirements for 2020 through 2022, including for maturing securities, 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 $1,500 million and $2,000 million of long-term debt, primarily at the Utilities, in 2020 and approximately $1,800 million in aggregate of long-term debt at the Utilities during 2021 and 2022. The planned debt issuance is in addition to the issuance of long-term debt to refinance maturities at the Utilities and debt secured by the Clean Energy Businesses’ renewable electric production projects and by Con Edison Transmission’s investments. The company's plans also include the issuance of up to $600 million of common equity in 2020 and approximately $1,100 million in aggregate of common equity during 2021 and 2022, in addition to equity under its dividend reinvestment, employee stock purchase and long-term incentive plans. The planned equity issuance is in addition to $88 million of equity issued in January 2020 to settle the remainder of a May 2019 equity forward transaction.

•

Con Edison plans to meet its capital requirements for 2020 through 2022, including for maturing securities, 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 $1,500 million and $2,000 million of long-term debt, primarily at the Utilities, in 2020 and approximately $1,800 million in aggregate of long-term debt at the Utilities during 2021 and 2022. The planned debt issuance is in addition to the issuance of long-term debt to refinance maturities at the Utilities and debt secured by the Clean Energy Businesses’ renewable electric production projects and by Con Edison Transmission’s investments. The company's plans also include the issuance of up to $600 million of common equity in 2020 and approximately $1,100 million in aggregate of common equity during 2021 and 2022, in addition to equity under its dividend reinvestment, employee stock purchase and long-term incentive plans. The planned equity issuance is in addition to $88 million of equity issued in January 2020 to settle the remainder of a May 2019 equity forward transaction.



8	CON EDISON ANNUAL REPORT 2019


•	CECONY forecasts average annual growth in peak demand in its service area at design conditions over the next five years for gas to be approximately 1.5 percent, and an average annual decrease in electricity and steam peak demand in its service area at design conditions over the next five years to be approximately 0.1 percent and 0.4 percent, respectively. 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. O&R forecasts average annual decrease in electric peak demand in its service area at design conditions over the next five years to be approximately 0.2 percent and average annual growth in gas peak demand in its service area over the next five years at design conditions to be approximately 0.7 percent. See “The Utilities” in Item 1.

•

CECONY forecasts average annual growth in peak demand in its service area at design conditions over the next five years for gas to be approximately 1.5 percent, and an average annual decrease in electricity and steam peak demand in its service area at design conditions over the next five years to be approximately 0.1 percent and 0.4 percent, respectively. 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. O&R forecasts average annual decrease in electric peak demand in its service area at design conditions over the next five years to be approximately 0.2 percent and average annual growth in gas peak demand in its service area over the next five years at design conditions to be approximately 0.7 percent. See “The Utilities” in Item 1.


•	In January 2020, the New York State Public Service Commission (NYSPSC) approved an October 2019 Joint Proposal among CECONY, the NYSPSC staff and other parties for CECONY electric and gas rate plans for the three-year period January 2020 through December 2022. See “Rate Plans” in Note B to the financial statements in Item 8.


•	In 2019, the NYSPSC continued its Reforming the Energy Vision (REV) and related proceedings. See “Utility Regulation - State Utility Regulation - Reforming the Energy Vision” in Item 1. The NYSPSC also continued its proceedings related to the federal Tax Cuts and Jobs Act of 2017, as enacted on December 22, 2017 (TCJA); income tax accounting; investigations into the Utilities' preparation and response to the March 2018 Winter Storms Riley and Quinn and a July 2018 CECONY steam main rupture. In addition, the NYSPSC commenced an investigation of CECONY's July 2019 power outages. See "Other Regulatory Matters" in Note B, Note H and Note L to the financial statements in Item 8.

•

In 2019, the NYSPSC continued its Reforming the Energy Vision (REV) and related proceedings. See “Utility Regulation - State Utility Regulation - Reforming the Energy Vision” in Item 1. The NYSPSC also continued its proceedings related to the federal Tax Cuts and Jobs Act of 2017, as enacted on December 22, 2017 (TCJA); income tax accounting; investigations into the Utilities' preparation and response to the March 2018 Winter Storms Riley and Quinn and a July 2018 CECONY steam main rupture. In addition, the NYSPSC commenced an investigation of CECONY's July 2019 power outages. See "Other Regulatory Matters" in Note B, Note H and Note L to the financial statements in Item 8.


•	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 with an aggregate of 680 MW (AC) of generating capacity (PG&E Projects) is sold to PG&E under long-term power purchase agreements (PG&E PPAs). At December 31, 2019, Con Edison’s consolidated balance sheet included $819 million of net non-utility plant relating to the PG&E Projects, $1,057 million of intangible assets relating to the PG&E PPAs, $282 million of net non-utility plant of additional projects that secure the related project debt, and $1,001 million of non-recourse related project debt. The PG&E bankruptcy is an event of default under the PG&E PPAs. If, in the future, one or more of the PG&E PPAs is rejected or any such rejection becomes likely, there will be an impairment of the related intangible assets and could be an impairment of the related non-utility plant. During the pendency of the PG&E bankruptcy, unless the lenders for the related project debt otherwise agree, cash may not be distributed from the related projects to the Clean Energy Businesses. As a result of the PG&E bankruptcy, the lenders may, upon written notice, declare principal and interest on the related project debt to be due and payable immediately and, if such amounts are not timely paid, foreclose on the related projects. See “Clean Energy Businesses - Renewable Electric Production” in Item 1 and “Long-Lived and Intangible Assets” in Note A and "Long-term Debt" in Note C to the financial statements in Item 8.

•

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 with an aggregate of 680 MW (AC) of generating capacity (PG&E Projects) is sold to PG&E under long-term power purchase agreements (PG&E PPAs). At December 31, 2019, Con Edison’s consolidated balance sheet included $819 million of net non-utility plant relating to the PG&E Projects, $1,057 million of intangible assets relating to the PG&E PPAs, $282 million of net non-utility plant of additional projects that secure the related project debt, and $1,001 million of non-recourse related project debt. The PG&E bankruptcy is an event of default under the PG&E PPAs. If, in the future, one or more of the PG&E PPAs is rejected or any such rejection becomes likely, there will be an impairment of the related intangible assets and could be an impairment of the related non-utility plant. During the pendency of the PG&E bankruptcy, unless the lenders for the related project debt otherwise agree, cash may not be distributed from the related projects to the Clean Energy Businesses. As a result of the PG&E bankruptcy, the lenders may, upon written notice, declare principal and interest on the related project debt to be due and payable immediately and, if such amounts are not timely paid, foreclose on the related projects. See “Clean Energy Businesses - Renewable Electric Production” in Item 1 and “Long-Lived and Intangible Assets” in Note A and "Long-term Debt" in Note C to the financial statements in Item 8.

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, Management Development and Compensation Committee, and Corporate Governance and Nominating 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 2018 sustainability report.

Information on the Companies’ websites is not incorporated herein.



CON EDISON ANNUAL REPORT 2019	9

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" 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 Measure

Adjusted earnings is a financial measure that is not determined in accordance with generally accepted accounting principles in the United States of America (GAAP). This non-GAAP financial measure should not be considered as an alternative to net income, which is an indicator of financial performance determined in accordance with GAAP. Adjusted earnings excludes from net income certain other items that the company does not consider indicative of its ongoing financial performance. Management uses this non-GAAP financial measure to facilitate the analysis of the company's financial performance as compared to its internal budgets and previous financial results. Management also uses this non-GAAP financial measure to communicate to investors and others the company’s expectations regarding its future earnings and dividends on its common stock. Management believes that this non-GAAP financial measure also is 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 to adjusted earnings and reported earnings per share to adjusted earnings per share.



(Millions of Dollars, except per share amounts)	2015	2016	2017	2018	2019
Reported net income for common stock – GAAP basis	$1,193	$1,245	$1,525	$1,382	$1,343

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)	—	—	1	—	—
Gain on sale of solar electric production projects (net of tax)	—	—	(1)	—	—
Impairment of assets held for sale (pre-tax)	5	—	—	—	—
Income taxes (b)	(2)	—	—	—	—
Impairment of assets held for sale (net of tax)	3	—	—	—	—
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)	—
HLBV effects of the Clean Energy Businesses (pre-tax) (d)	—	—	—	—	98
Income taxes (b)	—	—	—	—	(24)
HLBV effects of the Clean Energy Businesses (net of tax) (d)	—	—	—	—	74
Net mark-to-market effects of the Clean Energy Businesses (pre-tax)	—	(5)	(1)	8	27
Income taxes (b)	—	2	—	(2)	(6)
Net mark-to-market effects of the Clean Energy Businesses (net of tax)	—	(3)	(1)	6	21

Adjusted earnings	$1,196	$1,198	$1,264	$1,349	$1,438

Reported earnings per share – GAAP basis (basic)	$4.07	$4.15	$4.97	$4.43	$4.09

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)	—	—	—	—	—



10	CON EDISON ANNUAL REPORT 2019



Impairment of assets held for sale (pre-tax)	0.02	—	—	—	—
Income taxes (b)	(0.01)	—	—	—	—
Impairment of assets held for sale (net of tax)	0.01	—	—	—	—
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)	—
HLBV effects of the Clean Energy Businesses (pre-tax) (d)	—	—	—	—	0.31
Income taxes (b)	—	—	—	—	(0.09)
HLBV effects of the Clean Energy Businesses (net of tax) (d)	—	—	—	—	0.22
Net mark-to-market effects of the Clean Energy Businesses (pre-tax)	—	(0.02)	—	0.03	0.10
Income taxes (b)	—	(0.01)	—	(0.01)	(0.03)
Net mark-to-market effects of the Clean Energy Businesses	—	(0.01)	—	0.02	0.07

Adjusted earnings per share	$4.08	$3.99	$4.12	$4.33	$4.38

(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 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, 2015-2017.


(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 U to the financial statements in Item 8.


(d)	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 Q to the financial statements in Item 8.



CON EDISON ANNUAL REPORT 2019	11

Item 1: Business



Contents of Item 1	Page
Overview	14
CECONY	14
Electric	14
Gas	14
Steam	14
O&R	15
Electric	15
Gas	15
Clean Energy Businesses	15
Con Edison Transmission	15
Utility Regulation	15
State Utility Regulation	15
Regulators	15
New York Utility Industry	16
Rate Plans	18
Liability for Service Interruptions	19
Generic Proceedings	19
Federal Utility Regulation	19
New York Independent System Operator (NYISO)	19
Competition	20
The Utilities	20
CECONY	21
Electric Operations	21
Electric Facilities	21
Electric Sales and Deliveries	21
Electric Peak Demand	22
Electric Supply	22
Gas Operations	23
Gas Facilities	23
Gas Sales and Deliveries	23
Gas Peak Demand	24
Gas Supply	25
Steam Operations	25
Steam Facilities	25
Steam Sales and Deliveries	25
Steam Peak Demand and Capacity	25
Steam Supply	26
O&R	26
Electric Operations	26
Electric Facilities	26
Electric Sales and Deliveries	26
Electric Peak Demand	26
Electric Supply	27
Gas Operations	27
Gas Facilities	27
Gas Sales and Deliveries	27
Gas Peak Demand	28
Gas Supply	28



12	CON EDISON ANNUAL REPORT 2019



Contents of Item 1	Page
Clean Energy Businesses	29
Renewable Electric Generation	29
Energy-Related Products and Services	30
Con Edison Transmission	30
CET Electric	30
CET Gas	31
Capital Requirements and Resources	32
Environmental Matters	35
Climate Change	35
Environmental Sustainability	38
CECONY	38
O&R	40
Other Federal, State and Local Environmental Provisions	41
State Anti-Takeover Law	42
Employees	42

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.



CON EDISON ANNUAL REPORT 2019	13

PART I

Next: Item 1. Business