Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

This combined management’s discussion and analysis of financial condition and results of operations (MD&A) relates to the consolidated financial statements (the First Quarter Financial Statements) included in this report of two separate registrants: Consolidated Edison, Inc. (Con Edison) and Consolidated Edison Company of New York, Inc. (CECONY). As used in this report, the term the “Companies” refers to Con Edison and CECONY. CECONY is a subsidiary of Con Edison and, as such, information in this management’s discussion and analysis about CECONY applies to Con Edison.

This MD&A should be read in conjunction with the First Quarter Financial Statements and the notes thereto and the MD&A in Item 7 of the Companies’ combined Annual Report on Form 10-K for the year ended December 31, 2021 (File Nos.1-14514 and 1-1217, the Form 10-K).

Information in any item of this report referred to in this discussion and analysis is incorporated by reference herein. The use of terms such as “see” or “refer to” shall be deemed to incorporate by reference into this discussion and analysis the information to which reference is made.

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

Con Edison
CECONYO&RClean Energy BusinessesCon Edison Transmission
•RECO•CET Electric
•CET Gas

Con Edison’s principal business operations are those of CECONY, O&R, the Clean Energy Businesses and Con Edison Transmission. CECONY’s principal business operations are its regulated electric, gas and steam delivery businesses. O&R’s principal business operations are its regulated electric and gas delivery businesses. The Clean Energy Businesses develop, own and operate renewable and sustainable energy infrastructure projects and provide energy-related products and services to wholesale and retail customers. Con Edison is considering strategic alternatives with respect to the Clean Energy Businesses. Con Edison Transmission invests in electric transmission projects and manages both electric and gas assets while seeking to develop electric transmission projects. See "Investments" in Note A to the First Quarter Financial Statements.

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

In addition to the Companies’ material contingencies described in Notes B, G and H to the First Quarter Financial Statements, the Companies’ management considers the following events, trends, and uncertainties to be important to understanding the Companies’ current and future financial condition.

CECONY Electric and Gas Rate Plans

In January 2022, CECONY filed a request with the NYSPSC for electric and gas rate increases of $1,199 million and $503 million, respectively, effective January 2023. In April 2022, CECONY updated its January 2022 request

and decreased its requested January 2023 increase for electric and gas rate increases to $1,038 million and $402 million, respectively. CECONY’s future earnings will depend on the rates authorized in, and the other provisions of, its January 2023 rate plans and CECONY’s ability to operate its businesses in a manner consistent with such rate plans. Therefore, the outcome of CECONY’s rate request, which requires approval by the NYSPSC, will impact the Companies’ future financial condition, results of operations and liquidity. See “Rate Plans” in Note B to the First Quarter Financial Statements.

Pursuant to its electric and gas rate plans, CECONY recorded $92 million of earnings for the year ended December 31, 2021 of earnings adjustment mechanisms and positive incentives, primarily reflecting the achievement of certain energy efficiency measures. For the three months ended March 31, 2022, CECONY recorded a reduction in the amount of previously recorded earnings adjustment mechanisms of $4.5 million. The amount of earnings or losses CECONY records pursuant to the earnings adjustment mechanisms and positive incentives will also impact the Companies’ future financial condition, results of operations and liquidity. See “Rate Plans” in Note B to the First Quarter Financial Statements.

Clean Energy Goals

The success of the Companies’ efforts to meet federal, state and city clean energy policy goals and the impact of such goals on CECONY’s electric, gas and steam businesses and O&R’s electric and gas businesses may impact the Companies’ future financial condition. The Utilities expect electric demand to increase and gas and steam usage to decrease in their service territories as federal, state and local laws and policies are enacted and implemented that continue to promote renewable electric energy. In particular, the long-term future of the Utilities’ gas businesses depends upon the role that natural gas or other gaseous fuels will play in facilitating New York State’s and New York City’s climate goals. In addition, the impact and costs of climate change on the Utilities’ systems and the success of the Utilities’ efforts to increase system reliability and manage service interruptions resulting from severe weather may impact the Companies’ future financial condition, results of operations and liquidity.

Clean Energy Businesses

The Clean Energy Businesses develop, own and operate renewable and sustainable energy infrastructure projects. The success of the Clean Energy Businesses’ strategy to increase earnings is dependent upon the expansion of their renewable energy portfolio and successful execution of develop/transfer opportunities. Con Edison is considering strategic alternatives with respect to the Clean Energy Businesses. The outcome of such evaluation may impact Con Edison’s future financial condition, results of operations and liquidity.

Con Edison Transmission

Con Edison Transmission has taken steps to realign its portfolio to focus on electric transmission rather than gas by completing the sale of its 50 percent interest in Stagecoach in 2021. During 2020 and 2021, Con Edison Transmission recorded impairments on its investment in Mountain Valley Pipeline, LLC and during 2021, Con Edison Transmission recorded impairments on its previously held interest in Stagecoach and its interest in Honeoye Storage Corporation (Honeoye). Any future impairments of Con Edison Transmission’s investments may impact Con Edison’s future financial condition and results of operations. Con Edison Transmission is pursuing opportunities and participating in competitive solicitations to develop electric transmission projects that will deliver offshore wind energy to high voltage electric grids in NY, through its NY Transco partnership, and in NJ, and to deliver renewable energy from northern ME to the New England transmission system within southern ME. The success of Con Edison Transmission’s efforts in these competitive solicitations and to grow its electric transmission portfolio may impact Con Edison’s future capital requirements. See “Investments” in Note A to the First Quarter Financial Statements.

COVID-19

The Coronavirus Disease 2019 (COVID-19) pandemic has impacted, and continues to impact, countries, communities, supply chains and markets. As a result of the COVID-19 pandemic, there has been an economic slowdown in the Companies’ service territories and changes in governmental and regulatory policy. The decline in business activity in the Companies’ service territories has resulted in a slower recovery of cash from outstanding customer accounts receivable balances, material increases in customer accounts receivable balances, increases to the allowance for uncollectible accounts, and may result in increases to write-offs and recoveries of customer accounts. The extent to which COVID-19 will continue to impact the Companies, in particular, the Companies’ ability to recover cash from outstanding customer accounts receivable balances and the amount of write-offs of customer accounts, may impact Con Edison’s future financial condition, results of operations and liquidity. See “Coronavirus Disease 2019 (COVID-19) Impacts” below and “COVID-19 Regulatory Matters” in Note B to the First Quarter Financial Statements.

CECONY

Electric

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

Gas

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

Steam

CECONY operates the largest steam distribution system in the United States by producing and delivering approximately 16,727 MMlb of steam annually to approximately 1,545 customers in parts of Manhattan.

O&R

Electric

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

Gas

O&R delivers gas to over 0.1 million customers in southeastern NY.

Clean Energy Businesses

Con Edison Clean Energy Businesses, Inc., together with its subsidiaries, are referred to in this report as the Clean Energy Businesses. The Clean Energy Businesses develop, own and operate renewable and sustainable energy infrastructure projects and provide energy-related products and services to wholesale and retail customers. The Clean Energy Businesses have approximately 3,000 megawatts (AC) of renewable energy projects in the U.S. Con Edison is considering strategic alternatives with respect to the Clean Energy Businesses.

Con Edison Transmission

Con Edison Transmission, Inc. invests in electric transmission projects and manages both electric and gas assets through its wholly-owned subsidiaries, Consolidated Edison Transmission, LLC (CET Electric) and Con Edison Gas Pipeline and Storage, LLC (CET Gas). CET Electric owns a 45.7 percent interest in New York Transco LLC, which owns and has been selected to build additional electric transmission assets in NY. CET Gas and CECONY own 71.2 percent and 28.8 percent interests, respectively, in Honeoye, which operates a gas storage facility in upstate NY. In addition, CET Gas owns a 10.0 percent interest (that is expected to be reduced to 8.0 percent based on the current project cost estimate and CET Gas’ previous capping of its cash contributions to the joint venture) in Mountain Valley Pipeline LLC (MVP), a joint venture developing a proposed 300-mile gas transmission project in WV and VA. Con Edison Transmission, Inc., together with CET Electric and CET Gas, are referred to in this report as Con Edison Transmission.

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

For the Three Months Ended March 31, 2022At March 31, 2022
(Millions of Dollars, except percentages)Operating RevenuesNet Income for Common StockAssets
CECONY$3,51787%$47579%$53,21384%
O&R28573053,3595
Total Utilities3,802945058456,57289
Clean Energy Businesses (a)2606107186,55410
Con Edison Transmission1———260—
Other (b)(3)—(10)(2)3511
Total Con Edison$4,060100%$602100%$63,737100%

(a)Net income for common stock from the Clean Energy Businesses for the three months ended March 31, 2022 reflects $51 million of net after-tax mark-to-market effects and $36 million (after-tax) of the effects of HLBV accounting for tax equity investments in certain renewable and sustainable electric projects.

(b)Other includes parent company and consolidation adjustments. Net income for common stock for the three months ended March 31, 2022 includes $(4) million of income tax impact on the net after-tax mark-to-market effect and $(3) million (after-tax) of income tax impact on the effects of HLBV accounting for tax equity investments in certain renewable and sustainable projects.

Coronavirus Disease 2019 (COVID-19) Impacts

The Companies continue to respond to the COVID-19 global pandemic by working to reduce the potential risks posed by its spread to employees, customers and other stakeholders. The Companies continue to employ an incident command structure led by a pandemic planning team. The Companies support employee health and facility hygiene through regular cleaning and disinfecting of all work and common areas, promoting social distancing, allowing employees to work remotely and directing employees to stay at home if they are experiencing COVID or flu-like symptoms. Employees who test positive for COVID-19 are directed to quarantine at home and are evaluated for close, prolonged contact with other employees that would require those employees to quarantine at home. Following the Centers for Disease Control and Prevention guidelines, sick or quarantined employees return to work when they can safely do so. The Utilities continue to provide critical electric, gas and steam service to customers during the pandemic. Additional safety protocols have been implemented to protect employees, customers and the public, when work at customer premises is required.

In October 2021, in response to President Biden's Executive Order 14042, the Companies announced that they are committed to complying with the mandate for employees of federal contractors and subcontractors to be fully vaccinated against COVID-19 by the federally-required deadline, unless employees are legally entitled to an accommodation. In December 2021, an injunction was issued in the United States District Court for the Southern District of Georgia which currently prevents the U.S. government from enforcing this federal contractor vaccine mandate nationwide. The Eleventh Circuit of the U.S. Court of Appeals heard oral arguments in April 2022.

In December 2021, New York City instituted a vaccination mandate that requires employees of private businesses located in New York City who perform in-person work or interact with the public to be vaccinated against COVID-19. In furtherance of the mandate, in December 2021, the New York City Commissioner of Health and Mental Hygiene issued an order that requires workers entering workplaces within New York City to provide proof of COVID-19 vaccination, except in cases of a medical or religious exemption. This order is applicable to the Companies’ employees and contractors who report in-person to a company workplace located in New York City and the Companies are complying with its requirements.

The Companies are continuing to monitor the vaccination mandates closely and are implementing appropriate measures to mitigate any workforce and cost impacts that may occur.

Below is additional information related to the effects of the COVID-19 pandemic and the Companies’ actions. Also, see “COVID-19 Regulatory Matters” in Note B to the First Quarter Financial Statements.

Impact of CARES Act and 2021 Appropriations Act on Accounting for Income Taxes

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

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

Under the CARES Act, the Companies qualified for an employee retention tax credit for “eligible employers” related to governmental authorities imposing restrictions that partially suspended their operation for a portion of their workforce due to the COVID-19 pandemic. In December 2020, the Consolidated Appropriations Act, 2021 (the 2021 Appropriations Act) was signed into law. The 2021 Appropriations Act, among other things, extended the expiring employee retention tax credit to include qualified wages paid in the first two quarters of 2021, increased the qualified wages paid to an employee from 50 percent up to $10,000 annually in 2020 to 70 percent up to $10,000 per quarter in 2021 and increased the maximum employee retention tax credit amount an employer could take per employee from $5,000 in 2020 to $14,000 in the first two quarters of 2021. In March 2021, the American Rescue Plan Act was signed into law that expanded the 2021 Appropriations Act to extend the period for eligible employers to receive the employer retention credit from June 30, 2021 to December 31, 2021. In November 2021, the Infrastructure and Investment and Jobs Act was signed into law and accelerated the end of the employee retention tax credit retroactive to October 1, 2021, rather than December 31, 2021. This effectively reduced the maximum credit available from $28,000 to $21,000 per employee. For the three months ended March 31, 2021, Con Edison recognized an immaterial tax benefit to Taxes, other than income taxes.

Accounting Considerations

Due to the COVID-19 pandemic and subsequent New York State on PAUSE and related executive orders (that have since been lifted), decline in business, bankruptcies, layoffs and furloughs, among other factors, both commercial and residential customers have had and may continue to have increased difficulty paying their utility bills. In June 2020, the state of NY enacted a law prohibiting NY utilities, including CECONY and O&R, from disconnecting residential customers, and starting in May 2021 small business customers, during the COVID-19 state of emergency, which ended in June 2021. In addition, such prohibitions were in effect until December 21, 2021 for residential and small business customers who have experienced a change in financial circumstances due to the COVID-19 pandemic.

CECONY and O&R have existing allowances for uncollectible accounts established against their customer accounts receivable balances that are reevaluated each quarter and updated accordingly. Changes to the Utilities’ reserve balances that result in write-offs of customer accounts receivable balances are not reflected in rates during the term of the current rate plans. CECONY’s and O&R’s "accounts receivable – customers" balance (net allowance for uncollectible accounts) changed from $1,841 million and $91 million at December 31, 2021 to $2,026 million and $107 million at March 31, 2022, respectively. The amount of the customer accounts receivable balances that are over 60 days in arrears for CECONY and O&R are $1,348 million and $29 million, respectively, as of March 31, 2022, and $1,272 million and $29 million, respectively, as of December 31, 2021. CECONY’s and O&R’s allowances for uncollectible customer accounts reserve changed from $304 million and $12.3 million at December 31, 2021 to $324 million and $11.4 million at March 31, 2022 respectively. In April 2021 and April 2022, NY passed laws to create programs to address statewide utility arrears, the amount of which may be allocated to address CECONY’s and O&R’s customer arrearages is not yet known. In addition, the NYSPSC may consider programs to address utility arrearages as part of a utility arrearage program. CECONY and O&R expect to reduce customer accounts receivables balances commensurate with amounts authorized to be recovered under customer arrearage programs, the amount of which is unknown. See "COVID-19 Regulatory Matters" in Note B and Note L to the First Quarter Financial Statements.

During the first quarter of 2022, the potential economic impact of the COVID-19 pandemic was also considered in forward-looking projections related to write-off and recovery rates, resulting in increases to the customer allowance for uncollectible accounts as detailed herein. The Companies test goodwill for impairment at least annually or whenever there is a triggering event, and test long-lived and intangible assets for recoverability when events or changes in circumstances indicate that the carrying value of long-lived or intangible assets may not be recoverable. The Companies identified no triggering events or changes in circumstances related to the COVID-19 pandemic that would indicate that the carrying value of goodwill, long-lived or intangible assets may not be recoverable at March 31, 2022.

NY Legislation

In April 2021, NY passed a law that increases the corporate franchise tax rate on business income from 6.5% to 7.25%, retroactive to January 1, 2021, for taxpayers with taxable income greater than $5 million. The law also reinstates the business capital tax at 0.1875%, not to exceed a maximum tax liability of $5 million per taxpayer. NY

requires a corporate franchise taxpayer to calculate and pay the highest amount of tax under the three alternative methods: a tax on business income; a tax on business capital; or a fixed dollar minimum. The provisions to increase the corporate franchise tax rate and reinstate a capital tax are scheduled to expire after 2023 and are not expected to have a material impact on the Companies’ financial position, results of operations or liquidity.

In addition, the new law created a program that allows eligible residential renters in NY who require assistance with rent and utility bills to have up to twelve months of electric and gas utility bill arrears forgiven, provided that such arrears were accrued on or after March 13, 2020. The program will be administered by the State Office of Temporary and Disability Assistance in coordination with the NYSDPS and the NYSPSC. Under the program, CECONY and O&R would qualify for a refundable tax credit for NY gross-receipts tax equal to the amount of arrears waived by the Utilities in the year that the arrears are waived and certified by the NYSPSC. See "COVID-19 Regulatory Matters” in Note B to the First Quarter Financial Statements.

In April 2022, NY approved the 2022-2023 state budget, which includes $250 million for addressing residential statewide utility arrears accrued from March 7, 2020 through March 1, 2022. Funds are expected to be distributed by the NYSDPS to NY utilities on behalf of customers. The allocation of funds to NY utilities, including CECONY and O&R, is to be based on their share of statewide eligible utility arrears of customers participating in energy affordability programs, and funds are expected to be disbursed no later than August 1, 2022.

Liquidity and Financing

The Companies continue to monitor the impacts of the COVID-19 pandemic on the financial markets closely, including borrowing rates and daily cash collections. The Companies have been able to access the capital markets as needed since the start of the COVID-19 pandemic in March 2020. See Notes C and D to the First Quarter Financial Statements. However, a continued economic downturn as a result of the COVID-19 pandemic has increased the amount of capital needed by the Utilities and could impact the costs of such capital.

The decline in business activity in the Utilities’ service territory as a result of the COVID-19 pandemic and subsequent New York State on PAUSE and related executive orders (that have since been lifted), resulted in a slower recovery in cash of outstanding customer accounts receivable balances in 2020, 2021 and for the three months ended March 31, 2022. In addition, increases in electric and gas commodity prices during the first quarter of 2022, coupled with the decline in business activity due to the COVID-19 pandemic, may further contribute to a slower recovery of cash from outstanding customer accounts receivable balances. These trends will likely continue through the remainder of 2022. See "COVID-19 Regulatory Matters" in Note B to the First Quarter Financial Statements and “Financial and Commodity Market Risks – Commodity Price Risk,” below.

Con Edison and the Utilities have a $2,250 million credit agreement (Credit Agreement) in place under which banks are committed to provide loans on a revolving credit basis until December 2023 ($2,200 million of commitments from December 2022), subject to certain conditions. In March 2022, CECONY entered into a 364-Day Revolving Credit Agreement (CECONY Credit Agreement) under which banks are committed to provide loans up to $750 million on a revolving credit basis until March 30, 2023, subject to certain conditions. In April 2022, FERC issued an order that increases CECONY's authorization to issue short-term debt from $2,250 million to $3,000 million effective May 2022. Con Edison and the Utilities have not entered into any loans under the Credit Agreement and CECONY has not entered into any loans under the CECONY Credit Agreement. See Note D to the First Quarter Financial Statements.

Results of Operations

Net income for common stock and earnings per share for the three months ended March 31, 2022 and 2021 were as follows:

For the Three Months Ended March 31,
2022202120222021
(Millions of Dollars, except per share amounts)Net Income for Common StockEarnings per Share
CECONY$475$465$1.34$1.36
O&R30270.090.08
Clean Energy Businesses (a)107490.300.14
Con Edison Transmission (b)—(122)—(0.35)
Other (c)(10)—(0.03)—
Con Edison (d)$602$419$1.70$1.23

(a)Net income for common stock and earnings per share from the Clean Energy Businesses for the three months ended March 31, 2022 and 2021 includes $51 million or $0.15 a share and $49 million or $0.14 a share of net after-tax mark-to-market effects, respectively. Net income for common stock and earnings per share from the Clean Energy Businesses for the three months ended March 31, 2022 and 2021 also includes $36 million or $0.10 a share (after-tax) and ($1) million or $0.00 a share (after-tax), respectively, of the effects of HLBV accounting for tax equity investments in certain renewable and sustainable electric projects.

(b)Net income for common stock from Con Edison Transmission for the three months ended March 31, 2021 includes $(125) million or $(0.36)

a share of net after-tax goodwill impairment loss related to its investment in Stagecoach. See "Investments - 2021 Partial Impairment of Investment in Stagecoach Gas Services LLC (Stagecoach) in Note A to the First Quarter Financial Statements.

(c)Other includes parent company and consolidation adjustments. Net income for common stock and earnings per share for the three months ended March 31, 2022 and 2021 includes ($4) million or ($0.01) a share and ($4) million or ($0.01) a share, respectively, of income tax impact on the net after-tax mark-to-market effects. Net income for common stock and earnings per share for the three months ended March 31, 2022 and 2021 also includes ($3) million or ($0.01) a share (after-tax) and an immaterial amount, respectively, of income tax impact on the effects of HLBV accounting for tax equity investments in certain renewable and sustainable electric projects.

Net income for common stock and earnings per share for the three months ended March 31, 2021 includes $5 million or $0.01 a share of income tax impact for the impairment loss related to Con Edison Transmission’s investment in Stagecoach. See "Investments - 2021 Partial Impairment of Investment in Stagecoach Gas Services LLC (Stagecoach)" in Note A to the First Quarter Financial Statements.

(d) Earnings per share on a diluted basis were $1.70 a share and $1.22 a share for the three months ended March 31, 2022 and 2021,

respectively.

The following table present the estimated effect of major factors on earnings per share and net income for common stock for the three months ended March 31, 2022 as compared with the 2021 period.

Variation for the Three Months Ended March 31, 2022 vs. 2021
Net Income for Common Stock (Millions of Dollars)Earnings per Share
CECONY (a)
Higher gas rate base$29$0.08
Resumption of the billing of late payment charges and other fees to allowed rate plan levels140.04
Higher electric rate base60.02
Higher interest expense(10)(0.03)
Lower incentives earned under the electric and gas earnings adjustment mechanisms (EAMs)(9)(0.03)
Higher stock based compensation costs(6)(0.02)
Higher payroll taxes(4)(0.01)
Weather impact on steam revenues(3)(0.01)
Dilutive effect of stock issuances—(0.05)
Other(7)(0.01)
Total CECONY10(0.02)
O&R (a)
Electric base rate increase20.01
Gas base rate increase20.01
Other(1)(0.01)
Total O&R30.01
Clean Energy Businesses
HLBV effects370.10
Higher operating revenue260.08
Lower operation and maintenance expense170.05
Net mark-to-market effects20.01
Higher gas purchased for resale(29)(0.09)
Other50.01
Total Clean Energy Businesses580.16
Con Edison Transmission
Impairment loss related to investment in Stagecoach in 20211250.36
Other(3)(0.01)
Total Con Edison Transmission1220.35
Other, including parent company expenses
Impairment tax benefits related to investment in Stagecoach in 2021(5)(0.01)
HLBV effects(3)(0.01)
Other(2)(0.01)
Total Other, including parent company expenses(10)(0.03)
Total Reported (GAAP basis)$183$0.47
a.Under the revenue decoupling mechanisms in the Utilities’ NY electric and gas rate plans and the weather-normalization clause applicable to their gas businesses, revenues are generally not affected by changes in delivery volumes from levels assumed when rates were approved. In general, the Utilities recover on a current basis the fuel, gas purchased for resale and purchased power costs they incur in supplying energy to their full-service customers. Accordingly, such costs do not generally affect Con Edison’s results of operations.

The Companies’ other operations and maintenance expenses for the three months ended March 31, 2022 and 2021 were as follows:

For the Three Months Ended March 31,
(Millions of Dollars)20222021
CECONY
Operations$437$428
Pensions and other postretirement benefits102(10)
Health care and other benefits3537
Regulatory fees and assessments (a)8778
Other8075
Total CECONY741608
O&R8680
Clean Energy Businesses7699
Con Edison Transmission44
Other (b)(2)(1)
Total other operations and maintenance expenses$905$790

(a)Includes Demand Side Management, System Benefit Charges and Public Service Law 18A assessments which are collected in revenues.

(b)Includes parent company and consolidation adjustments.

A discussion of the results of operations by principal business segment for the three months ended March 31, 2022 and 2021 follows. For additional business segment financial information, see Note M to the First Quarter Financial Statements.

The Companies’ results of operations for the three months ended March 31, 2022 and 2021 were as follows:

CECONYO&RClean Energy BusinessesCon Edison TransmissionOther (a)Con Edison (b)
(Millions of Dollars)202220212022202120222021202220212022202120222021
Operating revenues$3,517$3,205$285$248$260$224$1$1$(3)$(1)$4,060$3,677
Purchased power4303965941————(2)—487437
Fuel14493————————14493
Gas purchased for resale32423347317232————443296
Other operations and maintenance7416088680769944(2)(1)905790
Depreciation and amortization44641524245958————529497
Taxes, other than income taxes721674232377——2—753704
Operating income71178646494628(3)(3)(1)—799860
Other income (deductions) (c)81(23)5(3)——4(159)—(1)90(186)
Net interest expense2001841111(37)(28)1574182176
Income before income tax expense59257940358356—(167)(8)(5)707498
Income tax expense117114108246—(45)2(5)15378
Net income$475$465$30$27$59$50$—($122)$(10)$—$554$420
Income (loss) attributable to non-controlling interest————(48)1————(48)1
Net income for common stock$475$465$30$27$107$49$—($122)$(10)$—$602$419

(a)Includes parent company and consolidation adjustments.

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

(c)For the three months ended March 31, 2021, Con Edison Transmission recorded a pre-tax goodwill impairment loss of $172 million ($120 million after-tax) that reduced the carrying value of

its investment in Stagecoach from $839 million to $667 million. See “Investments” in Note A to the First Quarter Financial Statements.

CECONY

For the Three Months Ended March 31, 2022For the Three Months Ended March 31, 2021
(Millions of Dollars)ElectricGasSteam2022 TotalElectricGasSteam2021 Total2022-2021 Variation
Operating revenues$2,084$1,131$302$3,517$1,968$973$264$3,205$312
Purchased power411—20431383—1339635
Fuel66—7814445—489351
Gas purchased for resale—323—323—233—23390
Other operations and maintenance573118507414759241608133
Depreciation and amortization3329024446315772341531
Taxes, other than income taxes532149407215031323967447
Operating income$170$451$90$711$247$439$100$786$(75)

Electric

CECONY’s results of electric operations for the three months ended March 31, 2022 compared with the 2021 period were as follows:

For the Three Months Ended
(Millions of Dollars)March 31, 2022March 31, 2021Variation
Operating revenues$2,084$1,968$116
Purchased power41138328
Fuel664521
Other operations and maintenance57347598
Depreciation and amortization33231517
Taxes, other than income taxes53250329
Electric operating income$170$247$(77)

CECONY’s electric sales and deliveries for the three months ended March 31, 2022 compared with the 2021 period were:

Millions of kWh DeliveredRevenues in Millions (a)
For the Three Months EndedFor the Three Months Ended
DescriptionMarch 31, 2022March 31, 2021VariationPercent VariationMarch 31, 2022March 31, 2021VariationPercent Variation
Residential/Religious (b)2,6412,606351.3%$783$753$304.0%
Commercial/Industrial2,5152,3541616.86145288616.3
Retail choice customers5,1445,229(85)(1.6)537581(44)(7.6)
NYPA, Municipal Agency and other sales2,3982,2881104.8162148149.5
Other operating revenues (c)————(12)(42)30(71.4)
Total12,69812,4772211.8%(d)$2,084$1,968$1165.9%

(a)Revenues from electric sales are subject to a revenue decoupling mechanism, as a result of which delivery revenues generally are not affected by changes in delivery volumes from levels assumed when rates were approved.

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

(c)Other electric operating revenues generally reflect changes in the revenue decoupling mechanism current asset or regulatory liability and changes in regulatory assets and liabilities in accordance with other provisions of the company’s rate plans.

(d)After adjusting for variations, primarily weather and billing days, electric delivery volumes in CECONY’s service area increased 2.6 percent in the three months ended March 31, 2022 compared with the 2021 period.

Operating revenues increased $116 million in the three months ended March 31, 2022 compared with the 2021 period primarily due to an increase in revenues from the electric rate plan ($56 million), higher purchased power expenses ($28 million) and higher fuel expenses ($21 million).

Purchased power expenses increased $28 million in the three months ended March 31, 2022 compared with the 2021 period due to higher unit costs ($53 million), offset in part by lower purchased volumes ($25 million).

Fuel expenses increased $21 million in the three months ended March 31, 2022 compared with the 2021 period due to higher unit costs ($19 million) and purchased volumes from the company's electric generating facilities ($2 million).

Other operations and maintenance expenses increased $98 million in the three months ended March 31, 2022 compared with the 2021 period primarily due to higher costs for pensions and other postretirement benefit, reflecting reconciliation to the rate plan level ($81 million), higher surcharges for assessments and fees that are collected in revenues from customers ($8 million) and higher healthcare costs ($4 million).

Depreciation and amortization increased $17 million in the three months ended March 31, 2022 compared with the 2021 period primarily due to higher electric utility plant balances.

Taxes, other than income taxes increased $29 million in the three months ended March 31, 2022 compared with the 2021 period due to a higher deferral of over-collected property taxes ($23 million), higher payroll taxes ($4 million) and higher state and local taxes ($2 million).

Gas

CECONY’s results of gas operations for the three months ended March 31, 2022 compared with the 2021 period were as follows:

For the Three Months Ended
(Millions of Dollars)March 31, 2022March 31, 2021Variation
Operating revenues$1,131$973$158
Gas purchased for resale32323390
Other operations and maintenance1189226
Depreciation and amortization907713
Taxes, other than income taxes14913217
Gas operating income$451$439$12

CECONY’s gas sales and deliveries, excluding off-system sales, for the three months ended March 31, 2022 compared with the 2021 period were:

Thousands of Dt DeliveredRevenues in Millions (a)
For the Three Months EndedFor the Three Months Ended
DescriptionMarch 31, 2022March 31, 2021VariationPercent VariationMarch 31, 2022March 31, 2021VariationPercent Variation
Residential25,05826,221(1,163)(4.4%)$522$455$6714.7%
General13,96012,9121,0488.12101684225.0
Firm transportation32,84734,846(1,999)(5.7)3483054314.1
Total firm sales and transportation71,86573,979(2,114)(2.9)(b)1,08092815216.4
Interruptible sales (c)2,6971,85384445.520911Large
NYPA7,7859,378(1,593)(17.0)11——
Generation plants9,9525,9743,97866.655——
Other5,9796,920(941)(13.6)1213(1)(7.7)
Other operating revenues (d)————1317(4)(23.5)
Total98,27898,1041740.2%$1,131$973$15816.2%

(a)Revenues from gas sales are subject to a weather normalization clause and a revenue decoupling mechanism, as a result of which delivery revenues are generally not affected by changes in delivery volumes from levels assumed when rates were approved.

(b)After adjusting for variations, primarily billing days, firm gas sales and transportation volumes in the company’s service area increased 8.6 percent in the three months ended March 31, 2022 compared with the 2021 period.

(c)Includes 1,391 thousand and 448 thousand of Dt for the 2022 and 2021 periods, respectively, which are also reflected in firm transportation and other.

(d)Other gas operating revenues generally reflect changes in the revenue decoupling mechanism and weather normalization clause current asset or regulatory liability and changes in regulatory assets and liabilities in accordance with other provisions of the company’s rate plans.

Operating revenues increased $158 million in the three months ended March 31, 2022 compared with the 2021 period primarily due to an increase in revenues from the gas rate plan ($72 million) and higher gas purchased for resale ($90 million).

Gas purchased for resale increased $90 million in the three months ended March 31, 2022 compared with the 2021 period due to higher unit costs ($56 million) and higher purchased volumes ($34 million).

Other operations and maintenance expenses increased $26 million in the three months ended March 31, 2022 compared with the 2021 period primarily due to higher costs for pensions and other postretirement benefits, reflecting reconciliation to the rate plan level ($17 million), higher healthcare costs ($1 million), higher uncollectible expense ($1 million) and higher municipal infrastructure support costs ($1 million).

Depreciation and amortization increased $13 million in the three months ended March 31, 2022 compared with the 2021 period primarily due to higher gas utility plant balances.

Taxes, other than income taxes increased $17 million in the three months ended March 31, 2022 compared with the 2021 period primarily due to a higher deferral of over-collected property taxes ($6 million), higher property taxes ($5 million) and higher state and local taxes ($5 million).

Steam

CECONY’s results of steam operations for the three months ended March 31, 2022 compared with the 2021 period were as follows:

For the Three Months Ended
(Millions of Dollars)March 31, 2022March 31, 2021Variation
Operating revenues$302$264$38
Purchased power20137
Fuel784830
Other operations and maintenance50419
Depreciation and amortization24231
Taxes, other than income taxes40391
Steam operating income$90$100$(10)

CECONY’s steam sales and deliveries for the three months ended March 31, 2022 compared with the 2021 period were:

Millions of Pounds DeliveredRevenues in Millions
For the Three Months EndedFor the Three Months Ended
DescriptionMarch 31, 2022March 31, 2021VariationPercent VariationMarch 31, 2022March 31, 2021VariationPercent Variation
General315334(19)(5.7%)$15$14$17.1%
Apartment house2,2522,313(61)(2.6)76661015.2
Annual power5,0835,161(78)(1.5)2021752715.4
Other operating revenues (a)————99——
Total7,6507,808(158)(2.0)%(b)$302$264$3814.4%

(a)Other steam operating revenues generally reflect changes in regulatory assets and liabilities in accordance with the company’s rate plan.

(b)After adjusting for variations, primarily weather and billing days, steam sales and deliveries increased 1.0 percent in the three months ended March 31, 2022 compared with the 2021 period.

Operating revenues increased $38 million in the three months ended March 31, 2022 compared with the 2021 period primarily due to higher fuel expenses ($30 million), higher purchased power expenses ($7 million) and higher tax law surcharge ($7 million), offset in part by the impact of warmer winter weather ($5 million).

Purchased power increased $7 million in the three months ended March 31, 2022 compared with the 2021 period due to higher unit costs ($9 million), offset, in part by lower purchased volumes ($2 million)

Fuel increased $30 million in the three months ended March 31, 2022 compared with the 2021 period due to higher unit costs ($22 million) and higher purchased volumes from the company's steam generating facilities ($8 million).

Other operations and maintenance expenses increased $9 million in the three months ended March 31, 2022 compared with the 2021 period primarily due to higher costs for pension and other postretirement benefits, reflecting reconciliation to the rate plan level ($7 million).

Depreciation and amortization increased $1 million in the three months ended March 31, 2022 compared with the 2021 period primarily due to higher steam utility plant balances.

Other Income (Deductions)

Other income increased $104 million in the three months ended March 31, 2022 compared with the 2021 period primarily due to lower costs associated with components of pension and other postretirement benefits other than service cost.

Net Interest Expense

Net Interest Expense increased $16 million in the three months ended March 31, 2022 compared with the 2021 period primarily due to higher interest on long-term debt.

Income Tax Expense

Income taxes increased $3 million in the three months ended March 31, 2022 compared with the 2021 period primarily due to higher income before income tax expense ($3 million) and lower flow-through tax benefits in 2022 for plant-related items ($2 million), offset in part by a higher general business tax credit ($1 million).

O&R

For the Three Months Ended March 31, 2022For the Three Months Ended March 31, 2021
(Millions of Dollars)ElectricGas2022 TotalElectricGas2021 Total2022-2021 Variation
Operating revenues$166$119$285$145$103$248$37
Purchased power59—5941—4118
Gas purchased for resale—4747—313116
Other operations and maintenance6719866416806
Depreciation and amortization1772417724—
Taxes, other than income taxes1582314923—
Operating income$8$38$46$9$40$49$(3)

Electric

O&R’s results of electric operations for the three months ended March 31, 2022 compared with the 2021 period were as follows:

For the Three Months Ended
(Millions of Dollars)March 31, 2022March 31, 2021Variation
Operating revenues$166$145$21
Purchased power594118
Other operations and maintenance67643
Depreciation and amortization1717—
Taxes, other than income taxes15141
Electric operating income$8$9$(1)

O&R’s electric sales and deliveries for the three months ended March 31, 2022 compared with the 2021 period were:

Millions of kWh DeliveredRevenues in Millions (a)
For the Three Months EndedFor the Three Months Ended
DescriptionMarch 31, 2022March 31, 2021VariationPercent VariationMarch 31, 2022March 31, 2021VariationPercent Variation
Residential/Religious (b)417381369.4%$85$70$1521.4%
Commercial/Industrial2272002713.53325832.0
Retail choice customers629673(44)(6.5)4448(4)(8.3)
Public authorities2525——422Large
Other operating revenues (c)————————
Total1,2981,279191.5%(d)$166$145$2114.5%

(a)O&R’s NY electric delivery revenues are subject to a revenue decoupling mechanism, as a result of which delivery revenues are generally not affected by changes in delivery volumes from levels assumed when rates were approved. Effective July 2021, the majority of O&R’s electric distribution revenues in NJ are subject to a conservation incentive program, as a result of which distribution revenues are generally not affected by changes in delivery volumes from levels assumed when rates were approved. O&R’s electric transmission revenues in NJ are not subject to a conservation incentive program, and as a result, changes in such volumes do impact revenues.

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

(c)Other electric operating revenues generally reflect changes in regulatory assets and liabilities in accordance with the company’s electric rate plan.

(d)After adjusting for weather and other variations, electric delivery volumes in O&R’s service area increased 2.6 percent in the three months ended March 31, 2022 compared with the 2021 period.

Operating revenues increased $21 million in the three months ended March 31, 2022 compared with the 2021 period primarily due to higher purchased power expenses ($18 million) and higher revenues from the NY electric rate plan ($2 million).

Purchased power expenses increased $18 million in the three months ended March 31, 2022 compared with the 2021 period due to higher unit costs ($16 million) and higher purchased volumes ($2 million).

Other operations and maintenance expenses increased $3 million in the three months ended March 31, 2022 compared with the 2021 period primarily due to higher pension costs, reflecting reconciliation to the rate plan level.

Gas

O&R’s results of gas operations for the three months ended March 31, 2022 compared with the 2021 period were as follows:

For the Three Months Ended
(Millions of Dollars)March 31, 2022March 31, 2021Variation
Operating revenues$119$103$16
Gas purchased for resale473116
Other operations and maintenance19163
Depreciation and amortization77—
Taxes, other than income taxes89(1)
Gas operating income$38$40($2)

O&R’s gas sales and deliveries, excluding off-system sales, for the three months ended March 31, 2022 compared with the 2021 period were:

Thousands of Dt DeliveredRevenues in Millions (a)
For the Three Months EndedFor the Three Months Ended
DescriptionMarch 31, 2022March 31, 2021VariationPercent VariationMarch 31, 2022March 31, 2021VariationPercent Variation
Residential6,1655,26090517.2%$84$66$1827.3%
General1,3501,10824221.81612433.3
Firm transportation3,0743,582(508)(14.2)2025(5)(20.0)
Total firm sales and transportation10,5899,9506396.4(b)1201031716.5
Interruptible sales1,2141,217(3)(0.2)22——
Generation plants54125.0————
Other28518110457.5————
Other gas revenues————(3)(2)(1)50.0
Total12,09311,3527416.5%$119$103$1615.5%

(a)Revenues from NY gas sales are subject to a weather normalization clause and a revenue decoupling mechanism as a result of which delivery revenues are generally not affected by changes in delivery volumes from levels assumed when rates were approved.

(b)After adjusting for weather and other variations, total firm sales and transportation volumes increased 1.7 percent in the three months ended March 31, 2022 compared with the 2021 period.

Operating revenues increased $16 million in the three months ended March 31, 2022 compared with the 2021 period primarily due to higher gas purchased for resale ($16 million).

Gas purchased for resale increased $16 million in the three months ended March 31, 2022 compared with the 2021 period due to higher unit costs ($12 million) and higher purchased volumes ($4 million).

Other operations and maintenance expenses increased $3 million in the three months ended March 31, 2022 compared with the 2021 period primarily due to higher pension costs, reflecting reconciliation to the rate plan level.

Income Tax Expense

Income taxes increased $2 million in the three months ended March 31, 2022 compared with the 2021 period

primarily due to higher income before income tax expense ($1 million) and higher state income taxes ($1 million).

Clean Energy Businesses

The Clean Energy Businesses’ results of operations for the three months ended March 31, 2022 compared with the 2021 period were as follows:

For the Three Months Ended
(Millions of Dollars)March 31, 2022March 31, 2021Variation
Operating revenues$260$224$36
Gas purchased for resale723240
Other operations and maintenance7699(23)
Depreciation and amortization59581
Taxes, other than income taxes77—
Operating income$46$28$18

Operating revenues increased $36 million in the three months ended March 31, 2022 compared with the 2021 period primarily due to higher wholesale revenues ($56 million), offset in part by lower revenue from renewable electric projects ($11 million), lower energy services revenues ($6 million) and lower net mark-to-market values ($3 million).

Gas purchased for resale increased $40 million in the three months ended March 31, 2022 compared with the 2021 period due to higher purchased volumes and prices.

Other operations and maintenance expenses decreased $23 million in the three months ended March 31, 2022 compared with the 2021 period primarily due to lower costs from renewable electric projects.

Net Interest Expense

Net interest expense decreased $9 million in the three months ended March 31, 2022 compared with the 2021 period primarily due to lower unrealized gains on interest rate derivatives.

Income Tax Expense

Income taxes increased $18 million in the three months ended March 31, 2022 compared with the 2021 period primarily due to higher income before income tax expense ($6 million), lower income attributable to non-controlling interest ($12 million) and higher state income taxes ($1 million), offset in part by higher renewable energy credits ($2 million).

Income (Loss) Attributable to Non-Controlling Interest

Income attributable to non-controlling interest decreased $49 million in the three months ended March 31, 2022 compared with the 2021 period primarily due to lower income in the 2022 period attributable to a tax equity investor in renewable electric projects accounted for under the HLBV method of accounting. See Note P to the First Quarter Financial Statements.

Con Edison Transmission

Other Income (Deductions)

Other income increased $163 million in the three months ended March 31, 2022 compared with the 2021 period primarily due to losses in 2021 from CET Gas’ pre-tax impairment loss of $172 million on its investment in Stagecoach (See "Investments" in Note A to the First Quarter Financial Statements) offset in part by investment income from Stagecoach ($8 million) and NY Transco ($4 million), compared to 2022 investment income from NY Transco ($4 million).

Net Interest Expense

Net interest expense decreased $4 million in the three months ended March 31, 2022 compared with the 2021 period primarily due to the repayment of an intercompany loan from the parent company from a portion of the proceeds from the sale of Stagecoach.

Income Tax Expense

Income taxes increased $45 million in the three months ended March 31, 2022 compared with the 2021 period primarily due to higher income before income tax expense ($35 million) and higher state income taxes ($11 million).

Other

Income Tax Expense

Income taxes increased $7 million in the three months ended March 31, 2022 compared with the 2021 period primarily due to the absence of the consolidated New York State income tax benefit related to the Stagecoach impairment in 2021 ($5 million). See "Investments – 2021 Partial Impairment of Investment in Stagecoach Gas Services LLC (Stagecoach)" in Note A to the First Quarter Financial Statements.

Liquidity and Capital Resources

The Companies’ liquidity reflects cash flows from operating, investing and financing activities, as shown on their respective consolidated statement of cash flows and as discussed below.

The Companies’ cash, temporary cash investments and restricted cash resulting from operating, investing and financing activities for the three months ended March 31, 2022 and 2021 are summarized as follows:

For the Three Months Ended March 31,
CECONYO&RClean Energy BusinessesCon Edison TransmissionOther (a)Con Edison (b)
(Millions of Dollars)202220212022202120222021202220212022202120222021
Operating activities$477$220$47$15$13$(124)$10$—$(74)$178$473$289
Investing activities(873)(902)(44)(52)(25)(141)(10)——(1)(952)(1,096)
Financing activities(471)(355)(1)24(56)175——58(316)(470)(472)
Net change for the period(867)(1,037)2(13)(68)(90)——(16)(139)(949)(1,279)
Balance at beginning of period9201,0672937178187——191451,1461,436
Balance at end of period (c)$53$30$31$24$110$97$—$—$3$6$197$157

(a) Includes parent company and consolidation adjustments.

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

(c) See "Reconciliation of Cash, Temporary Cash Investments and Restricted Cash" in Note A to the First Quarter Financial Statements.

Cash Flows from Operating Activities

The Utilities’ cash flows from operating activities primarily reflect their energy sales and deliveries and cost of operations. The volume of energy sales and deliveries is primarily affected by factors external to the Utilities, such as growth of customer demand, weather, market prices for energy and economic conditions. Measures that promote distributed energy resources, such as distributed generation, demand reduction and energy efficiency, also affect the volume of energy sales and deliveries.

During 2020 and 2021, the decline in business activity in the Utilities’ service territory due to the COVID-19 pandemic resulted in a slower recovery of cash from outstanding customer accounts receivable balances, material increases in customer accounts receivable balances, increases to the allowance for uncollectible accounts, and may result in increases to write-offs of customer accounts, as compared to prior to the COVID-19 pandemic. These trends may continue through 2022. Under the revenue decoupling mechanisms in the Utilities’ NY electric and gas rate plans, changes in delivery volumes from levels assumed when rates were approved may affect the timing of cash flows, but largely not net income. The prices at which the Utilities provide energy to their customers are determined in accordance with their rate plans. However, increases in electric and gas commodity prices, coupled with the decline in business activity due to the COVID-19 pandemic, may further contribute to a slower recovery of cash from outstanding customer accounts receivable balances, increases to the allowance for uncollectible accounts, and increases to write-offs of customer accounts receivable balances. In general, changes in the Utilities’ cost of purchased power, fuel and gas may affect the timing of cash flows, but not net income, because the costs are recovered in accordance with rate plans.

The Utilities’ NY rate plans allow them to defer costs resulting from a change in legislation, regulation and related actions that have taken effect during the term of the rate plans once the costs exceed a specified threshold. Increases to the allowance for uncollectible accounts related to the COVID-19 pandemic have been deferred pursuant to the legislative, regulatory and related actions provisions of their rate plans. In November 2021, the NYSPSC issued an order establishing a surcharge recovery mechanism commencing December 1, 2021 through December 31, 2022 for CECONY to collect late payment charges and fees that were not billed for the year ended December 31, 2020 due to the COVID-19 pandemic. The order also established a surcharge recovery or surcredit mechanism for any fee deferrals for 2021 and 2022. In April 2022, the NYSPSC approved the October 2021 joint proposal for new electric and gas rates for O&R for the three-year period January 2022 through December 2024 (the Joint Proposal) that includes certain COVID-19 provisions, such as: recovery of 2020 late payment charges over three years; reconciliation of late payment charges to amounts reflected in rates for years 2021 through 2024; and reconciliation of write-offs of customer accounts receivable balances to amounts reflected in rates from January 1, 2020 through December 31, 2024. See “COVID-19 Regulatory Matters” and “Other Regulatory Matters” in Note B to the First Quarter Financial Statements and “Coronavirus Disease 2019 (COVID-19) Impacts - Liquidity and Financing,” above.

Pursuant to their rate plans, the Utilities have recovered from customers a portion of the tax liability they will pay in the future as a result of temporary differences between the book and tax basis of assets and liabilities. These temporary differences affect the timing of cash flows, but not net income, as the Companies are required to record deferred tax assets and liabilities at the current corporate tax rate for the temporary differences. For the Utilities, credits to their customers of the net benefits of the TCJA, including the reduction of the corporate tax rate to 21 percent, decrease cash flows from operating activities. Pursuant to their rate plans, the Utilities also recover from customers the amount of property taxes they will pay. The payment of property taxes by the Utilities affects the timing of cash flows and increases the amount of short-term borrowings issued by the Utilities when property taxes are due and as property taxes increase, but generally does not impact net income. See “Rate Plans” in Note B, "COVID-19 Regulatory Matters" in Note B, “Other Regulatory Matters” in Note B and Note J to the First Quarter Financial Statements and "Coronavirus Disease 2019 (COVID-19) Impacts - Liquidity and Financing," above.

Net income is the result of cash and non-cash (or accrual) transactions. Only cash transactions affect the Companies’ cash flows from operating activities. Principal non-cash charges or credits include depreciation, deferred income tax expense, amortizations of certain regulatory assets and liabilities and accrued unbilled revenue. Non-cash charges or credits may also be accrued under the revenue decoupling and cost reconciliation mechanisms in the Utilities’ NY electric and gas rate plans. For Con Edison, net income for the three months ended March 31, 2021 included a non-cash loss recognized with respect to a partial goodwill impairment of Con Edison Transmission’s investment in Stagecoach. See “Investments” in Note A to the First Quarter Financial Statements.

Net cash flows from operating activities for the three months ended March 31, 2022 for Con Edison and CECONY were $184 million higher and $257 million higher, respectively, than in the 2021 period. The changes in net cash flows for Con Edison and CECONY primarily reflect net higher deferred credits and other regulatory liabilities balances ($218 million and $191 million, respectively), higher deferred income taxes ($90 million and $5 million,

respectively), higher recoveries of depreciation ($32 million and $31 million, respectively), lower prepayments ($29 million and $29 million, respectively), higher rate case amortizations and accruals ($25 million and $23 million, respectively), higher accrued interest ($13 million and $18 million, respectively) and lower revenue decoupling mechanism receivable balances ($14 million and $13 million, respectively), offset in part by higher other receivables and other current asset balances ($241 million and $178 million, respectively). For CECONY, the changes also reflect a lower increase of accounts receivables balances from customers, net of allowance for uncollectible accounts ($51 million) (see “COVID-19 Regulatory Matters” in Note B to the First Quarter Financial Statements and “Coronavirus Disease 2019 (COVID-19) Impacts", "Accounting Considerations” and “Liquidity and Financing,” above) and higher accrued taxes ($29 million).

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

Cash Flows Used in Investing Activities

Net cash flows used in investing activities for Con Edison and CECONY were $144 million lower and $29 million lower, respectively, for the three months ended March 31, 2022 compared with the 2021 period. The change for Con Edison primarily reflects a decrease in non-utility construction expenditures at the Clean Energy Businesses ($116 million) due to construction of the CED Nevada Virginia projects being completed during the first half of 2021 and a decrease in utility construction expenditures at CECONY ($24 million) and O&R ($7 million).

Cash Flows from Financing Activities

Net cash flows from financing activities for Con Edison and CECONY were $2 million lower and $116 million higher, respectively, in the three months ended March 31, 2022 compared with the 2021 period.

In February 2021, a subsidiary of the Clean Energy Businesses borrowed $250 million at a variable rate, due 2028, secured by equity interests in four of the company’s solar electric projects, the interest rate for which was swapped to a fixed rate of 3.39 percent.

In February 2021, a subsidiary of the Clean Energy Businesses entered into an agreement with a tax equity investor for the financing of a portfolio of three of the Clean Energy Businesses’ solar electric projects (CED Nevada Virginia). Under the financing, the tax equity investor acquired a noncontrolling interest in the portfolio and will receive a percentage of earnings, tax attributes and cash flows. In March 2021, May 2021, June 2021, July 2021, and August 2021, the tax equity investor funded $39 million, $13 million, $47 million, $53 million and $111 million, respectively. The Clean Energy Businesses will continue to consolidate this entity and will report the noncontrolling tax equity investor’s interest in the tax equity arrangement. See Note P to the First Quarter Financial Statements.

In March 2021, a subsidiary of the Clean Energy Businesses agreed to issue $229 million aggregate principal amount of 3.77 percent senior notes, due 2046. In June 2021, July 2021, and August 2021 CED Nevada Virginia issued $38 million, $61 million and $130 million, respectively, of the $229 million senior notes, which are secured by equity interests in CED Nevada and the proceeds from the sale of which repaid a portion of the borrowings outstanding under a construction loan facility.

During the first quarter of 2021, Con Edison optionally prepaid the remaining $675 million outstanding under a February 2019 term loan prior to its maturity in June 2021.

Con Edison’s cash flows from financing for the three months ended March 31, 2022 and 2021 also reflect the proceeds, and reduction in cash used for reinvested dividends, resulting from the issuance of common shares under the company’s dividend reinvestment, stock purchase and long-term incentive plans of $18 million and $28 million, respectively.

Cash flows used in financing activities of the Companies also reflect commercial paper issuances and repayments. The commercial paper amounts outstanding at March 31, 2022 and 2021 and the average daily balances for the three months ended March 31, 2022 and 2021 for Con Edison and CECONY were as follows:

20222021
(Millions of Dollars, except Weighted Average Yield)Outstanding at March 31,Daily averageOutstanding at March 31,Daily average
Con Edison$1,313$1,275$1,581$1,547
CECONY$1,061$1,089$1,427$1,492
Weighted average yield0.8%0.4%0.2%0.2%

Capital Requirements and Resources

Capital Resources

For each of the Companies, the common equity ratio at March 31, 2022 and December 31, 2021 was:

Common Equity Ratio (Percent of total capitalization)
March 31, 2022December 31, 2021
Con Edison47.747.4
CECONY47.547.0

Assets, Liabilities and Equity

The Companies' assets, liabilities, and equity at March 31, 2022 and December 31, 2021 are summarized as follows.

CECONYO&RClean Energy BusinessesCon Edison TransmissionOther (a)Con Edison (b)
(Millions of Dollars)202220212022202120222021202220212022202120222021
ASSETS
Current assets$4,582$4,703$328$290$545$542$3$2$4$14$5,462$5,551
Investments5796082426——233223(3)(4)833853
Net plant42,01541,6132,6162,5994,3704,3671717——49,01848,596
Other noncurrent assets6,0375,7313913771,6391,645773503568,4248,116
Total Assets$53,213$52,655$3,359$3,292$6,554$6,554$260$249$351$366$63,737$63,116
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities$4,238$4,321$401$372$966$1,011$110$100$(300)$(377)$5,415$5,427
Noncurrent liabilities13,97313,6401,0871,064162121(89)(90)(17)1415,11614,749
Long-term debt18,38418,3829689682,5832,607——64864722,58322,604
Equity16,61816,3129038882,8432,815239239208220,62320,336
Total Liabilities and Equity$53,213$52,655$3,359$3,292$6,554$6,554$260$249$351$366$63,737$63,116

(a) Includes parent company and consolidation adjustments.

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

CECONY

Current assets at March 31, 2022 were $121 million lower than at December 31, 2021. The change in current assets primarily reflects a decrease in cash and temporary cash investments ($871 million), primarily due to the January 2022 payment of New York City semi-annual property taxes and a decrease to deferral of unbilled late payment charges over the rate allowance that are being recovered through a surcharge mechanism established by the New York Public Service Commission in its November 2021 order ($44 million). The decrease is offset in part by an increase in prepayments reflecting primarily the January 2022 payment of New York City semi-annual property taxes, offset in part by three months of amortization, while the December 2021 balance reflects the amortization of the entire previous semi-annual payment made in July 2021 ($468 million), an increase in accounts receivables, net of allowance for uncollectible accounts ($185 million) (see “COVID-19 Regulatory Matters” in Note B to the First Quarter Financial Statements and “Coronavirus Disease 2019 (COVID-19) Impacts - Accounting Considerations” and “Liquidity and Financing,” above) and an increase in the fair value of short-term derivative assets ($157 million).

Investments at March 31, 2022 were $29 million lower than at December 31, 2021. The change in investments primarily reflects a decrease in supplemental retirement income plan assets ($26 million) and deferred income plan assets ($3 million). See Note E to the First Quarter Financial Statements.

Net plant at March 31, 2022 was $402 million higher than at December 31, 2021. The change in net plant primarily reflects an increase in electric ($331 million), gas ($265 million), general ($68 million) and steam ($20 million) plant balances, offset in part by an increase in accumulated depreciation ($230 million) and a decrease in construction work in progress ($52 million).

Other noncurrent assets at March 31, 2022 were $306 million higher than at December 31, 2021. The change in other noncurrent assets primarily reflects an increase in pension and retiree benefits ($255 million), an increase in the regulatory asset for system peak reduction and energy efficiency programs ($45 million), deferred derivative losses ($35 million), deferred storm costs ($20 million) and deferrals for increased costs related to the COVID-19 pandemic ($20 million). The increase is offset in part by a decrease in the regulatory asset for deferred pension and other postretirement benefits ($43 million), unrecognized pension and other postretirement costs to reflect the final actuarial valuation, as measured at December 31, 2021, of the pension and other retiree benefit plans in accordance with the accounting rules for retirement benefits ($21 million). The change in the regulatory asset also reflects the period's amortization of accounting costs. See Notes B, E and F to the First Quarter Financial Statements.

Current liabilities at March 31, 2022 were $83 million lower than at December 31, 2021. The change in current liabilities primarily reflects decreases in notes payable ($300 million), accounts payable ($169 million) and accrued benefits for management incentive awards ($55 million), offset in part by increases in the regulatory liability for deferred derivative gains ($311 million), accrued interest ($108 million), increases in the regulatory liability for refundable energy costs ($17 million) and customer deposits ($13 million).

Noncurrent liabilities at March 31, 2022 were $333 million higher than at December 31, 2021. The change in noncurrent liabilities primarily reflects an increase in deferred income taxes and unamortized investment tax credits ($181 million) primarily due to accelerated tax depreciation, repair deductions and the prepayment of New York City property taxes. See Note J to the First Quarter Financial Statements. The change also reflects an increase in regulatory liabilities for unrecognized other postretirement costs ($199 million) and an increase in the liability for pension and retiree benefits ($23 million) that primarily reflects the final actuarial valuation, as measured at December 31, 2021, of the plans in accordance with the accounting rules for retirement benefits. See Notes E and F to the First Quarter Financial Statements. These increases are offset in part by a decrease in the regulatory liability for net unbilled revenue deferrals ($78 million).

Equity at March 31, 2022 was $306 million higher than at December 31, 2021. The change in equity primarily reflects net income for the three months ended March 31, 2022 ($475 million), capital contributions from parent ($75 million) in 2022, offset in part by common stock dividends to parent ($245 million) in 2022.

O&R

Current assets at March 31, 2022 were $38 million higher than at December 31, 2021. The change in current assets primarily reflects increases in the fair value of short-term derivative assets ($18 million), accounts receivables, net of allowance for uncollectible accounts ($16 million) and other receivables, net of allowance for uncollectible accounts ($5 million).

Net plant at March 31, 2022 was $17 million higher than at December 31, 2021. The change in net plant primarily reflects an increase in electric ($55 million), gas ($11 million), and general ($2 million) plant balances, offset in part by a decrease in construction work in progress ($40 million) and an increase in accumulated depreciation ($11 million).

Other noncurrent assets at March 31, 2022 were $14 million higher than at December 31, 2021. The change in

other noncurrent assets primarily reflects an increase in the regulatory asset for recoverable energy costs ($6 million), regulatory asset for unrecognized pension and other postretirement costs to reflect the final actuarial valuation, as measured at December 31, 2021, of the pension and other retiree benefit plans in accordance with the accounting rules for retirement benefits ($5 million), the fair value of long-term derivative assets ($4 million), pension and retiree benefits ($2 million), and operating lease right-of-use asset ($2 million). This increase is offset in part by a decrease in the regulatory asset for deferred pension and other postretirement benefits ($6 million). The change in

the regulatory asset also reflects the period's amortization of accounting costs. See Notes B, E and F to the First Quarter Financial Statements.

Current liabilities at March 31, 2022 were $29 million higher than at December 31, 2021. The change in current liabilities primarily reflects an increase in the regulatory liability for deferred derivative gains ($27 million).

Noncurrent liabilities at March 31, 2022 were $23 million higher than at December 31, 2021. The change in noncurrent liabilities primarily reflects an increase in the liability for pension and retiree benefits ($9 million), long-term operating lease liabilities ($3 million), regulatory liabilities for allowance for cost of removal less salvage ($3 million), long-term deferred derivative gains ($3 million), and an increase in other deferred credits ($2 million).

Equity at March 31, 2022 was $15 million higher than at December 31, 2021. The change in equity primarily reflects net income for the three months ended March 31, 2022 ($30 million), offset in part by common stock dividends to parent ($14 million) in 2022.

Clean Energy Businesses

Current assets at March 31, 2022 were $3 million higher than at December 31, 2021. The change in current assets primarily reflects an increase in other currents assets ($60 million), accrued unbilled revenue ($7 million) and fair value of short-term derivative assets ($7 million), offset in part by a decrease in restricted cash ($69 million).

Net plant at March 31, 2022 was $3 million higher than at December 31, 2021. The change in net plant primarily reflects additional capital expenditures.

Other noncurrent assets at March 31, 2022 were $6 million lower than at December 31, 2021. The change in other noncurrent assets primarily reflects the divestiture of renewable electric projects.

Current liabilities at March 31, 2022 were $45 million lower than at December 31, 2021. The change in current liabilities primarily reflects a decrease in the fair value of derivative liabilities ($26 million) and a decrease in accounts payable ($18 million).

Noncurrent liabilities at March 31, 2022 were $41 million higher than at December 31, 2021. The change in noncurrent liabilities primarily reflects the increase of deferred taxes ($80 million), offset in part by the change in the fair value of derivative liabilities ($33 million).

Long-term debt at March 31, 2022 was $24 million lower than at December 31, 2021. The change in long-term debt primarily reflects the timing of principal loan repayment.

Equity at March 31, 2022 was $28 million higher than at December 31, 2021. The change in equity primarily reflects an increase in net income for the three months ended March 31, 2022 ($107 million), offset in part by a decrease in noncontrolling tax equity interest ($54 million) (see Note P to the First Quarter Financial Statements) and common stock dividends to parent ($24 million) in 2021**.**

Con Edison Transmission

Investments at March 31, 2022 were $10 million higher than at December 31, 2021. The increase in investments primarily reflects additional investment in NY Transco ($10 million). See "Investments" in Note A to the First Quarter Financial Statements.

Current liabilities at March 31, 2022 were $10 million higher than at December 31, 2021. The change in current liabilities primarily reflects an increase in short-term borrowings under an intercompany capital funding facility.

Off-Balance Sheet Arrangements

At March 31, 2022, none of the Companies’ transactions, agreements or other contractual arrangements met the SEC definition of off-balance sheet arrangements.

Regulatory Matters

For information about the Utilities’ regulatory matters, see Note B to the First Quarter Financial Statements.

Environmental Matters

In July 2021, a CECONY feeder failure led to the discharge of thousands of gallons of dielectric fluid from a street manhole in New Rochelle, NY. Dielectric fluid reached nearby streets, properties and the New Rochelle Harbor. CECONY, the U.S. Coast Guard, the NYSDEC and other agencies responded to the incident. CECONY stopped the feeder leak on the same day the discharge occurred and has completed the spill recovery operations. In coordination with federal and state regulators, CECONY is evaluating certain shoreline areas for the potential presence of residual dielectric fluid and the extent to which additional cleaning in such areas may be necessary. In addition, the company has received third-party damage claims. The costs associated with this matter are not expected to have a material adverse effect on the company’s financial condition, results of operations or liquidity. In connection with the incident, the company may incur monetary sanctions of more than $0.3 million for violations of certain provisions regulating the discharge of materials into, and for the protection of, the environment.

In August 2019, following the enactment of the Climate Leadership and Community Protection Act (CLCPA), the NYSPSC initiated a proceeding to “reconcile resource adequacy programs with New York State’s renewable energy and environmental emission reduction goals.” In May 2020, the NYSPSC initiated a proceeding implementing the Accelerated Renewable Energy Growth and Community Benefit Act to align New York State’s electric system with CLCPA goals. In November 2020, NY’s investor-owned utilities (including the Utilities) and the Long Island Power Authority filed a comprehensive report in this proceeding, identifying proactive local transmission and distribution investments in their systems to facilitate achieving the goals of the CLCPA and setting out policy recommendations for how they will identify, prioritize and allocate costs of these and future such projects going forward. CECONY and O&R identified approximately $4,500 million and $400 million, respectively, in local transmission investment. In January 2022, the NYSPSC issued its order on power grid study recommendations that authorized CECONY to file a comprehensive petition addressing a proposed “Con Edison Hub” in Brooklyn, NY that could accommodate offshore wind generation. In April 2022, CECONY filed the petition, seeking cost recovery approval for the proposed Con Edison Hub at an estimated cost of $1,000 million and an estimated in-service date of 2027. The proposed Con Edison Hub would create interconnection points to connect up to 6,000 MW of offshore wind energy into the New York City grid.

For additional information about the Companies’ environmental matters, see Note G to the First Quarter Financial Statements.

Clean Energy Businesses

The following table provides information about the Clean Energy Businesses' renewable electric projects that are in operation and/or in construction at March 31, 2022:

Project NameGenerating Capacity (MW AC)Power Purchase Agreement (PPA) Term (In Years) (a)Actual In-Service/Acquisition DateStatePPA Counterparty
Utility Scale
Solar
PJM assets (c)73(b)2011/2013NJ/PAVarious
New England assets (c)24Various2011/2017MA/RIVarious
California Solar110252012/2013CAPG&E
Mesquite Solar 1165202013AZPG&E
Copper Mountain Solar 2150252013/2015NVPG&E
Copper Mountain Solar 3255202014/2015NVSCPPA
California Solar 280202014/2016CASCE/PG&E
Texas Solar 440252014TXCity of San Antonio
Texas Solar 5100252015TXCity of San Antonio
Texas Solar 7112252016TXCity of San Antonio
California Solar 3110202016/2017CASCE/PG&E
Upton Solar158252017TXCity of Austin
California Solar 4240202017/2018CASCE
Copper Mountain Solar 158122018NVPG&E
Copper Mountain Solar 4 (d)94202018NVSCE
Mesquite Solar 2 (d)100182018AZSCE
Mesquite Solar 3 (d)150232018AZWAPA (U.S. Navy)
Great Valley Solar (d)200172018CAMCE/SMUD/PG&E/SCE
Water Strider Solar (d)80202021VAVEPCO
Battle Mountain Solar/Battery Energy Storage System (d)101252021NVSPP
Copper Mountain Solar 5 (d)250252021NVNPC
Other (c)26VariousVariousVariousVarious
Total Solar2,676
Wind
Broken Bow II75252014NENPPD
Wind Holdings180VariousVariousSD/MTNWE/Basin Electric
Adams Rose Wind2372016MNDairyland
Other (c)42VariousVariousVariousVarious
Total Wind320
Total MW (AC) in Operation2,996
Total MW (AC) in Construction (c)48
Total MW (AC) Utility Scale3,044
Behind the Meter
Total MW (AC) in Operation (c)66
Total MW (AC) in Construction (c)3
Total MW Behind the Meter69

(a)Represents PPA contractual term or remaining term from the date of acquisition.

(b)Solar renewable energy credit hedges are in place, in lieu of PPAs, through 2025.

(c)Projects have generally not been pledged as security for project debt financing.

(d)Projects are financed with tax equity. See Note P to the First Quarter Financial Statements

Renewable Electric Generation

Renewable electric production volumes from utility scale assets for the three months ended March 31, 2022 compared with the 2021 period were:

Millions of kWh
For the Three Months Ended
DescriptionMarch 31, 2022March 31, 2021VariationPercent Variation
Renewable electric projects
Solar1,5051,21129424.3%
Wind371342298.5%
Total1,8761,55332320.8%

Con Edison Transmission

CET Gas

In May 2022, the operator of the Mountain Valley Pipeline, which is being constructed by a joint venture in which CET Gas owns a 10.0 percent interest (which is expected to be reduced to 8.0 percent based on the latest project cost estimate and CET Gas’ previous capping of its cash contributions to the joint venture), indicated it plans to pursue new permits and is now targeting a full in-service date during the second half of 2023 at a total project cost of approximately $6,600 million, excluding allowance for funds used during construction. At March 31, 2022, CET Gas’ carrying value of its investment in MVP was $111 million and CET Gas’ cash contributions to the joint venture amounted to $530 million.

Financial and Commodity Market Risks

The Companies are subject to various risks and uncertainties associated with financial and commodity markets. The most significant market risks include interest rate risk, commodity price risk and investment risk.

Interest Rate Risk

The Companies' interest rate risk primarily relates to new debt financing needed to fund capital requirements, including the construction expenditures of the Utilities and maturing debt securities, and variable-rate debt. Con Edison and its subsidiaries manage interest rate risk through the issuance of mostly fixed-rate debt with varying maturities and through opportunistic refinancing of debt. The Clean Energy Businesses use interest rate swaps to exchange variable-rate project financed debt for a fixed interest rate. See Note N to the First Quarter Financial Statements. Con Edison and CECONY estimate that at March 31, 2022, a 10 percent increase in interest rates applicable to its variable rate debt would result in an increase in annual interest expense of $1 million. Under CECONY’s current electric, gas and steam rate plans, variations in actual variable rate tax-exempt debt interest expense, including costs associated with the refinancing of the variable rate tax-exempt debt, are reconciled to levels reflected in rates.

Commodity Price Risk

Con Edison’s commodity price risk primarily relates to the purchase and sale of electricity, gas and related derivative instruments. The Utilities and the Clean Energy Businesses apply risk management strategies to mitigate their related exposures. See Note N to the First Quarter Financial Statements.

Con Edison estimates that, as of March 31, 2022, a 10 percent decline in market prices would result in a decline in fair value of $152 million for the derivative instruments used by the Utilities to hedge purchases of electricity and gas, of which $135 million is for CECONY and $17 million is for O&R. Con Edison expects that any such change in fair value would be largely offset by directionally opposite changes in the cost of the electricity and gas purchased.

The Utilities do not make any margin or profit on the electricity or gas they sell. In accordance with provisions

approved by state regulators, the Utilities generally recover from full-service customers the costs they incur for energy purchased for those customers, including gains and losses on certain derivative instruments used to hedge energy purchased and related costs. However, increases in electric and gas commodity prices may contribute to a slower recovery of cash from outstanding customer accounts receivable balances and increases to the allowance for uncollectible accounts, and may result in increases to write-offs of customer accounts receivable balances.

In February 2022, the NYSPSC, in response to higher customer bills, requested that CECONY enhance its efforts to mitigate customer bill volatility due to commodity price increases by reassessing its power supply billing practices and improve communications to customers regarding forecasted significant bill increases resulting from commodity price increases. In March 2022, CECONY filed with the NYSPSC a proposed amendment to its electric tariff, effective June 1, 2022, to change how CECONY recovers the cost of electricity supplied to its full-service electric customers to reduce the likelihood of customer bill volatility by more closely aligning supply prices with CECONY's electric supply hedging positions. The proposed amendment is subject to NYSPSC approval. CECONY also committed to provide notice to customers in cases where supply price increases could result in significantly higher bills.

The Clean Energy Businesses use a value-at-risk (VaR) model to assess the market price risk of their portfolio of electricity and gas commodity fixed-price purchase and sales commitments, physical forward contracts, generating assets and commodity derivative instruments. VaR represents the potential change in fair value of the portfolio due to changes in market prices for a specified time period and confidence level. These businesses estimate VaR across their portfolio using a delta-normal variance/covariance model with a 95 percent confidence level, compare the measured VaR results against performance due to actual prices and stress test the portfolio each quarter using an assumed 30 percent price change from forecast. Since the VaR calculation involves complex methodologies and estimates and assumptions that are based on past experience, it is not necessarily indicative of future results. VaR for the portfolio, assuming a one-day holding period, for the three months ended March 31, 2022 and the year ended December 31, 2021, respectively, was as follows:

95% Confidence Level, One-Day Holding PeriodMarch 31, 2022December 31, 2021
(Millions of Dollars)
Average for the period$1$1
High23
Low1—

Investment Risk

The Companies’ investment risk relates to the investment of plan assets for their pension and other postretirement benefit plans. Con Edison's investment risk also relates to the investments of Con Edison Transmission that are accounted for under the equity method. See "Investments" in Note A to the First Quarter Financial Statements.

The Companies’ current investment policy for pension plan assets includes investment targets of 45 to 55 percent equity securities, 33 to 43 percent debt securities and 10 to 14 percent real estate. At March 31, 2022, the pension plan investments consisted of 49 percent equity securities, 38 percent debt securities and 13 percent real estate.

For the Utilities’ pension and other postretirement benefit plans, regulatory accounting treatment is generally applied in accordance with the accounting rules for regulated operations. In accordance with the Statement of Policy issued by the NYSPSC and its current electric, gas and steam rate plans, CECONY defers for payment to or recovery from customers the difference between the pension and other postretirement benefit expenses and the amounts for such expenses reflected in rates. O&R also defers such difference pursuant to its NY rate plans.

Material Contingencies

For information concerning potential liabilities arising from the Companies’ material contingencies, see "Other Regulatory Matters" in Note B and Notes G and H to the First Quarter Financial Statements.

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