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Cover and table of contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

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

FOR THE FISCAL YEAR ENDED DECEMBER 31, 2020

☐ 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 2020			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 has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒

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


Con 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, 2020, was approximately $24.0 billion.

As of January 31, 2021, Con Edison had outstanding 342,419,162 Common Shares ($.10 par value).


2			CON EDISON ANNUAL REPORT 2020

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

Documents Incorporated By Reference

Portions of Con Edison’s definitive proxy statement for its Annual Meeting of Stockholders to be held on May 17, 2021, to be filed with the Commission pursuant to Regulation 14A, not later than 120 days after December 31, 2020, is incorporated in Part III of this report.

Filing Format

This Annual Report on Form 10-K is a combined report being filed separately by two different registrants: Consolidated Edison, Inc. (Con Edison) and Consolidated Edison Company of New York, Inc. (CECONY). CECONY is a wholly-owned subsidiary of Con Edison and, as such, the information in this report about CECONY also applies to Con Edison. CECONY meets the conditions set forth in General Instruction (I)(1)(a) and (b) of Form 10-K and is therefore filing this Form 10-K with the reduced disclosure format.

As used in this report, the term the “Companies” refers to Con Edison and CECONY. However, CECONY makes no representation as to the information contained in this report relating to Con Edison or the subsidiaries of Con Edison other than itself.


CON EDISON ANNUAL REPORT 2020			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 2020


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
COVID-19						Coronavirus Disease 2019
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 2020			5

TABLE OF CONTENTS


		PAGE
Introduction		7
Available Information		11
Forward-Looking Statements		11
Non-GAAP Financial Measur es		11
Part I
Item 1:	Business	16
Item 1A:	Risk Factors	45
Item 1B:	Unresolved Staff Comments	49
Item 2:	Properties	49
Item 3:	Legal Proceedings	50
Item 4:	Mine Safety Disclosures	50
	Information about our Executive Officers	51
Part II
Item 5:	Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	52
Item 6:	Selected Financial Data	53
Item 7:	Management’s Discussion and Analysis of Financial Condition and Results of Operations	54
Item 7A:	Quantitative and Qualitative Disclosures about Market Risk	92
Item 8:	Financial Statements and Supplementary Data	93
Item 9:	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	191
Item 9A:	Controls and Procedures	191
Item 9B:	Other Information	191
Part III
Item 10:	Directors, Executive Officers and Corporate Governance	192
Item 11:	Executive Compensation	192
Item 12:	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	192
Item 13:	Certain Relationships and Related Transactions, and Director Independence	192
Item 14:	Principal Accounting Fees and Services	192
Part IV
Item 15:	Exhibits and Financial Statement Schedules	194
Item 16:	Form 10-K Summary	199
	Signatures	201


6			CON EDISON ANNUAL REPORT 2020

Introduction

This introduction contains certain information about Con Edison and its subsidiaries, including CECONY. This introduction is not a summary and should be read together with, and is qualified in its entirety by reference to, the more detailed information appearing elsewhere or incorporated by reference in this report.

Con Edison’s mission is to provide energy services to our customers safely, reliably, efficiently and in keeping with our vision for a clean energy future; to provide a workplace that embraces diversity and inclusion and allows employees to realize their full potential; to provide a fair return to our investors; and to improve the quality of life in the communities we serve. The company has ongoing programs designed to support each component of its mission, including initiatives focused on safety, operational excellence and the customer experience.

Con Edison is a holding company that owns:

Consolidated Edison Company of New York, Inc. (CECONY), which provides electric service and gas service in New York City and Westchester County and steam service in parts of Manhattan;
Orange & Rockland Utilities, Inc., which along with its utility subsidiary, Rockland Electric Company (together referred to herein as O&R), provides electric service in southeastern New York and northern New Jersey and gas service in southeastern New York (O&R, together with CECONY referred to as the Utilities);
Con Edison Clean Energy Businesses, Inc., which through its subsidiaries, develops, owns and operates renewable and sustainable energy infrastructure projects and provides energy-related products and services to wholesale and retail customers (Con Edison Clean Energy Businesses, Inc., together with its subsidiaries referred to as the Clean Energy Businesses); and
Con Edison Transmission, Inc., which through its subsidiaries, invests in electric transmission facilities and holds investments in gas pipeline and storage facilities (Con Edison Transmission, Inc., together with its subsidiaries referred to as Con Edison Transmission).

Con Edison anticipates that the Utilities, which are subject to extensive regulation, will continue to provide substantially all of its earnings over the next few years. The Utilities have approved rate plans that are generally designed to cover each company’s cost of service, including capital and other costs of each company’s energy delivery systems. The Utilities recover from their full-service customers (who purchase energy from them), generally on a current basis, the cost the Utilities pay for energy and charge all of their customers the cost of delivery service. See "Utility Regulation" in Item 1, "Risk Factors" in Item 1A and "Rate Plans" in Note B to the financial statements in Item 8.

Selected Financial Data

Con Edison


	For the Year Ended December 31,
(Millions of Dollars, except per share amounts)	2016	2017		2018		2019		2020
Operating revenues	$12,075	$12,033		12,337		12,574		12,246
Energy costs	3,088	2,625		2,948		2,633		2,283
Operating income (f)	2,780	2,774		2,664		2,676		2,654
Net income for common stock	1,245	1,525	(e)	1,382	(e)	1,343		1,101
Total assets	48,255	48,111	(a)	53,920	(b)	58,079	(c)	62,895	(d)
Long-term debt	14,735	14,731		17,495		18,527		20,382
Total equity	14,306	15,425		16,839		18,213		19,065
Net Income per common share – basic	$4.15	$4.97		$4.43		$4.09		$3.29
Net Income per common share – diluted	$4.12	$4.94		$4.42		$4.08		$3.28
Dividends declared per common share	$2.68	$2.76		$2.86		$2.96		$3.06
Book value per share	$46.91	$49.72		$52.46		$54.75		$55.70
Average common shares outstanding (millions)	300	307		312		329		335

(a)Reflects a $2,384 million increase in net plant, offset by decreases in regulatory assets resulting from the enactment of the federal Tax Cuts and Jobs Act of 2017, as enacted on December 22, 2017 (TCJA) of $2,418 million (including the netting of $1,168 million against the regulatory liability for future income tax) and unrecognized pension and other postretirement costs of $348 million. See Notes B, E, F and L to the financial statements in Item 8.


CON EDISON ANNUAL REPORT 2020			7

(b)Reflects a $4,149 million increase in net plant, offset by a $288 million decrease in regulatory assets for unrecognized pension and other postretirement costs. See Notes B, E, and F to the financial statements in Item 8.

(c)Reflects a $2,140 million increase in net plant and a $303 increase in regulatory assets for unrecognized pension and other postretirement costs. See Notes B, E, and F to the financial statements in Item 8.

(d)Reflects a $2,666 million increase in net plant and a $700 million increase in regulatory assets for unrecognized pension and other postretirement costs. See Notes B, E, and F to the financial statements in Item 8.

(e)In 2017, upon enactment of the TCJA, Con Edison re-measured its deferred tax assets and liabilities based upon the 21 percent corporate income tax rate under the TCJA. As a result, Con Edison decreased its net deferred tax liabilities by $5,312 million, recognized $259 million (or $0.85 per share) in net income, decreased its regulatory asset for future income tax by $1,250 million, decreased its regulatory asset for revenue taxes by $90 million, and accrued a regulatory liability for federal income tax rate change of $3,713 million. In 2018, Con Edison recognized $42 million of income tax expense resulting from a re-measurement of its deferred tax assets and liabilities following the issuance of proposed TCJA regulations. See “Other Regulatory Matters” in Note B and Note L to the financial statements in Item 8.

(f)Excludes the non-service components of pension and other postretirement benefits. See Notes E and F to the financial statements in Item 8.

CECONY


	For the Year Ended December 31,
(Millions of Dollars)	2016	2017		2018		2019		2020
Operating revenues	$10,165	$10,468		$10,680		$10,821		$10,647
Energy costs	2,059	2,141		2,339		2,170		2,014
Operating income (e)	2,451	2,549		2,354		2,348		2,310
Net income	1,056	1,104		1,196		1,250		1,185
Total assets	40,856	40,451	(a)	43,108	(b)	46,557	(c)	50,967	(d)
Long-term debt	12,073	12,065		13,676		14,614		16,149
Shareholder’s equity	11,829	12,439		12,910		14,147		14,849

(a)Reflects a $2,090 million increase in net plant, offset by decreases in regulatory assets resulting from the enactment of the TCJA of $2,305 million (including the netting of $1,123 million against the regulatory liability for future income tax) and unrecognized pension and other postretirement costs of $354 million. See Notes B, E and F to the financial statements in Item 8.

(b)Reflects a $2,165 million increase in net plant and a $265 million decrease in regulatory assets for unrecognized pension and other postretirement costs. See Notes B, E and F to the financial statements in Item 8.

(c)Reflects a $2,040 million increase in net plant and a $292 million increase in regulatory assets for unrecognized pension and other postretirement costs. See Notes B, E and F to the financial statements in Item 8.

(d)Reflects a $2,140 million increase in net plant and a $662 million increase in regulatory assets for unrecognized pension and other postretirement costs. See Notes B, E and F to the financial statements in Item 8.

(e)Excludes the non-service components of pension and other postretirement benefits. See Notes E and F to the financial statements in Item 8.

Significant Developments and Outlook

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


8			CON EDISON ANNUAL REPORT 2020

CECONY forecasts average annual growth in peak demand in its service area at design conditions over the next five years for electricity and gas to be approximately 0.8 percent and 1.4 percent, respectively, and an average annual decrease in steam peak demand in its service area at design conditions over the next five years to be approximately 0.4 percent. O&R forecasts an average annual decrease in electric peak demand in its service area at design conditions over the next five years to be approximately 0.5 percent and average annual growth in gas peak demand in its service area over the next five years at design conditions to be approximately 0.2 percent. See “The Utilities” in Item 1.
CECONY established a gas moratorium in March 2019 on new gas service in most of Westchester County. CECONY filed a gas planning analysis with the NYSPSC in July 2020 stating the moratorium could be lifted when increased pipeline capacity is achieved or peak demand is reduced to a level that would enable the company to lift the moratorium and that it is monitoring gas supply constraint in the New York City portion of its service territory. See "The Utilities" in Item 1.
In 2020, due to the COVID-19 pandemic, the Utilities began suspending service disconnections, certain collection notices, final bill collection agency activity, new late payment charges and certain other fees for all customers and the State of New York enacted a law prohibiting New York utilities, including CECONY and O&R, from disconnecting residential customers during the COVID-19 state of emergency. For the year ended 2020, the reserve increases to the allowance for uncollectible accounts associated with the COVID-19 pandemic for CECONY electric and gas operations and O&R electric operations were $73 million and $2 million, respectively, and were deferred pursuant to the legislative, regulatory and related actions provisions of the rate plans as a result of the New York State on "PAUSE" and related executive orders. See "COVID-19 Regulatory Matters" in Note B to the financial statements in Item 8.
In November 2020, the New York State Public Service Commission (NYSPSC) issued two separate show cause orders in its proceedings investigating: (1) the New York utilities’ preparation for and response to Tropical Storm Isaias and the resulting power outages in August 2020 and (2) the July 2019 power outages on the west side of Manhattan and in the Flatbush area of Brooklyn. See "Other Regulatory Matters" in Note B to the financial statements in Item 8.
The NYSPSC also continued its proceedings related to income tax accounting and a July 2018 CECONY steam rupture and concluded its investigations into the Utilities' preparation and response to the March 2018 Winter Storms Riley and Quinn and its proceeding against CECONY for alleged violations of gas operator qualification, performance, and inspection requirements. See "Other Regulatory Matters" in Note B to the financial statements in Item 8.
In 2020, the NYSPSC continued its Reforming the Energy Vision (REV) and related proceedings. See "Environmental Matters - Clean Energy Future - Reforming the Energy Vision" in Item 1. In July 2020, the NYSPSC established a light-duty electric vehicle make-ready program that includes budgets of $290 million and $24 million for CECONY and O&R, respectively, through 2025 for electric vehicle infrastructure for fast charger stations, fleet assessment services for customers interested in fleet electrification and future-proofing so that components can accommodate updates to the quantity or charging capacity of the station. See "Environmental Matters - Clean Energy Future" in Item 1.
The Clean Energy Businesses increased their renewable energy portfolio by 186 MW AC, resulting in a year-end installed capacity of 2,868 MW AC, bringing the annual renewable energy production for 2020 to over 7 terawatt hours. See "Clean Energy Businesses" in Item 1.
In January 2019, Pacific Gas and Electric Company (PG&E) filed for reorganization under Chapter 11 of the U.S. Bankruptcy Code. The output of certain of the Clean Energy Businesses' renewable electric production projects is sold to PG&E under long-term power purchase agreements. As a result of the PG&E bankruptcy, distributions from the related projects to the Clean Energy Businesses were restricted and PG&E-related project debt was reclassified on Con Edison's consolidated balance sheet from long-term debt to long-term debt due within one year. In July 2020, PG&E’s plan of reorganization became effective and the Clean Energy Businesses began receiving previously restricted distributions and all related project debt with a maturity longer than one year was reclassified to long-term debt. See "Clean Energy Businesses - Renewable Electric Production" in Item 1 and "Long-Lived and Intangible Assets" in Note A.
Con Edison Gas Pipeline and Storage, LLC (CET Gas) recorded a pre-tax impairment loss of $320 million ($223 million after-tax) for the year ended December 31, 2020 that reduced the carrying value of its investment


CON EDISON ANNUAL REPORT 2020			9

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

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


10			CON EDISON ANNUAL REPORT 2020

Available Information

Con Edison and CECONY file annual, quarterly and current reports and other information, and Con Edison files proxy statements, with the Securities and Exchange Commission (SEC). The SEC maintains an Internet site at www.sec.gov that contains reports, proxy statements, and other information regarding issuers (including Con Edison and CECONY) that file electronically with the SEC.

This information the Companies file with the SEC is also available free of charge on or through the investor information section of their websites as soon as reasonably practicable after the reports are electronically filed with, or furnished to, the SEC. Con Edison’s internet website is at: www.conedison.com; and CECONY’s is at: www.coned.com.

The "About Us - Corporate Governance" section of Con Edison’s website includes the company’s Standards of Business Conduct (its code of ethics) and amendments or waivers of the standards for executive officers or directors, corporate governance guidelines and the charters of the following committees of the company’s Board of Directors: Audit Committee, Corporate Governance and Nominating Committee, Management Development and Compensation Committee, and Safety, Environment, Operations, and Sustainability Committee. This information is available in print to any shareholder who requests it. Requests should be directed to: Corporate Secretary, Consolidated Edison, Inc., 4 Irving Place, New York, NY 10003.

The "About Us - Sustainability Report” section of Con Edison’s website includes “Our Sustainable Future,” the company’s 2019 sustainability report.

Information on the Companies’ websites is not incorporated herein.

Forward-Looking Statements

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

Non-GAAP Financial Measures

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


CON EDISON ANNUAL REPORT 2020			11


(Millions of Dollars, except per share amounts)	2016	2017	2018	2019	2020
Reported net income for common stock – GAAP basis	$1,245	$1,525	$1,382	$1,343	$1,101

Income tax effect of the Tax Cuts and Jobs Act (a)	—	(259)	42	—	—
Gain on sale of solar electric production projects (pre-tax)	—	(2)	—	—	—
Income taxes (b)	—	1	—	—	—
Gain on sale of solar electric production projects (net of tax)	—	(1)		—	—



Gain on sale of the Clean Energy Businesses' retail electric supply business (pre-tax)	(104)	—	—	—	—
Income taxes (b)	48	—	—	—	—
Gain on sale of the Clean Energy Businesses' retail electric supply business (net of tax)	(56)	—	—	—	—
Goodwill impairment related to the Clean Energy Businesses' energy service business (pre-tax)	15	—	—	—	—
Income taxes (b)	(3)	—	—	—	—
Goodwill impairment related to the Clean Energy Businesses' energy service business (net of tax)	12	—	—	—	—
Gain on acquisition of Sempra Solar Holdings, LLC, net of transaction costs (pre-tax) (c)	—	—	(114)	—	—
Income taxes (b)	—	—	33	—	—
Gain on acquisition of Sempra Solar Holdings, LLC, net of transaction costs (net of tax) (c)	—	—	(81)	—	—
Impairment loss related to investment in Mountain Valley Pipeline, LLC (pre-tax) (d)	—	—	—	—	320
Income taxes (b)	—	—	—	—	(97)
Impairment loss related to investment in Mountain Valley Pipeline, LLC (net of tax) (d)	—	—	—		223
HLBV effects of the Clean Energy Businesses (pre-tax) (e)	—	—	—	98	44
Income taxes (b)	—	—	—	(24)	(12)
HLBV effects of the Clean Energy Businesses (net of tax) (e)	—	—	—	74	32
Net mark-to-market effects of the Clean Energy Businesses (pre-tax)	(5)	(1)	8	27	57
Income taxes (b)	2	—	(2)	(6)	(14)
Net mark-to-market effects of the Clean Energy Businesses (net of tax)	(3)	(1)	6	21	43

Adjusted earnings (Non-GAAP)	$1,198	$1,264	$1,349	$1,438	$1,399

Reported earnings per share – GAAP basis (basic)	$4.15	$4.97	$4.43	$4.09	$3.29

Income tax effect of the Tax Cuts and Jobs Act (a)	—	(0.85)	0.14	—	—
Gain on sale of solar electric production projects (pre-tax)	—	—	—	—	—
Income taxes (b)	—	—	—	—	—
Gain on sale of solar electric production projects (net of tax)	—	—	—	—	—



Gain on sale of the Clean Energy Businesses' retail electric supply business (pre-tax)	(0.35)	—	—	—	—
Income taxes (b)	0.16	—	—	—	—
Gain on sale of the Clean Energy Businesses' retail electric supply business (net of tax)	(0.19)	—	—	—	—
Goodwill impairment related to the Clean Energy Businesses' energy service business (pre-tax)	0.07	—	—	—	—
Income taxes (b)	(0.03)	—	—	—	—
Goodwill impairment related to the Clean Energy Businesses' energy service business (net of tax)	0.04	—	—	—	—
Gain on acquisition of Sempra Solar Holdings, LLC, net of transaction costs (pre-tax) (c)	—	—	(0.36)	—	—
Income taxes (b)	—	—	0.10	—	—
Gain on acquisition of Sempra Solar Holdings, LLC, net of transaction costs (net of tax) (c)	—	—	(0.26)	—	—
Impairment loss related to investment in Mountain Valley Pipeline, LLC (pre-tax) (d)	—	—	—	—	0.95
Income taxes (b)	—	—	—	—	(0.29)
Impairment loss related to investment in Mountain Valley Pipeline, LLC (net of tax) (d)	—	—		—	0.66
HLBV effects of the Clean Energy Businesses (pre-tax) (e)	—	—	—	0.31	0.14
Income taxes (b)	—	—	—	(0.09)	(0.04)
HLBV effects of the Clean Energy Businesses (net of tax) (e)	—	—	—	0.22	0.10
Net mark-to-market effects of the Clean Energy Businesses (pre-tax)	(0.02)	—	0.03	0.10	0.18
Income taxes (b)	0.01	—	(0.01)	(0.03)	(0.05)
Net mark-to-market effects of the Clean Energy Businesses	(0.01)	—	0.02	0.07	0.13

Adjusted earnings per share (Non-GAAP)	$3.99	$4.12	$4.33	$4.38	$4.18


12			CON EDISON ANNUAL REPORT 2020

(a)In 2017, upon enactment of the TCJA, Con Edison re-measured its deferred tax assets and liabilities based upon the 21 percent corporate income tax rate under the TCJA. As a result, Con Edison decreased its net deferred tax liabilities by $5,312 million, recognized $259 million (or $0.85 per share) in net income, decreased its regulatory asset for future income tax by $1,250 million, decreased its regulatory asset for revenue taxes by $90 million, and accrued a regulatory liability for federal income tax rate change of $3,713 million. In 2018, Con Edison recognized $42 million of income tax expense resulting from a re-measurement of its deferred tax assets and liabilities following the issuance of the proposed TCJA regulations. See “Other Regulatory Matters” in Note B and Note L to the financial statements in Item 8.

(b)The amount of income taxes was calculated using a combined federal and state income tax rate between 25-27% for the year ended December 31, 2020, a combined federal and state income tax rate between 22-24% for the year ended December 31, 2019, a combined federal and state income tax rate of 28% for the year ended December 31, 2018 and a combined federal and state income tax rate of 40% for the years ended December 31, 2016-2017.

(c)Gain recognized with respect to jointly-owned renewable energy production projects upon completion of the acquisition of Sempra Solar Holdings, LLC, net of transaction costs for the acquisition. See Note V to the financial statements in Item 8.

(d)Loss recognized with respect to the partial impairment of CET Gas' investment in MVP. See "Investments" in Note A to the financial statements in Item 8.

(e)Income attributable to the non-controlling interest of a tax-equity investor in renewable electric production projects accounted for under the hypothetical liquidation at book value (HLBV) method of accounting. See Note R to the financial statements in Item 8.


CON EDISON ANNUAL REPORT 2020			13

Item 1: Business


Contents of Item 1			Page
Overview			16
CECONY			16
Electric			16
Gas			16
Steam			16
O&R			17
Electric			17
Gas			17
Clean Energy Businesses			17
Con Edison Transmission			17
Utility Regulation			17
State Utility Regulation			17
Regulators			17
New York Utility Industry			18
Rate Plans			18
Liability for Service Interruptions			19
Generic Proceedings			19
Federal Utility Regulation			20
New York Independent System Operator (NYISO)			20
Competition			20
The Utilities			21
CECONY			21
Electric Operations			21
Electric Facilities			21
Electric Sales and Deliveries			22
Electric Peak Demand			22
Electric Supply			23
Gas Operations			24
Gas Facilities			24
Gas Sales and Deliveries			24
Gas Peak Demand			25
Gas Supply			25
Steam Operations			25
Steam Facilities			25
Steam Sales and Deliveries			25
Steam Peak Demand and Capacity			26
Steam Supply			26
O&R			26
Electric Operations			26
Electric Facilities			26
Electric Sales and Deliveries			26
Electric Peak Demand			27
Electric Supply			27
Gas Operations			27
Gas Facilities			27
Gas Sales and Deliveries			28
Gas Peak Demand			28
Gas Supply			29


14			CON EDISON ANNUAL REPORT 2020


Contents of Item 1			Page
Clean Energy Businesses			30
Renewable Electric Generation			31
Energy-Related Products and Services			32
Con Edison Transmission			32
CET Electric			32
CET Gas			32
Capital Requirements and Resources			33
Environmental Matters			36
Clean Energy Future			36
Climate Change			39
Environmental Sustainability			40
CECONY			40
O&R			43
Other Federal, State and Local Environmental Provisions			43
State Anti-Takeover Law			44
H uman Capital			44

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 2020			15

PART I

Next: Item 1. Business