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Cover and table of contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q


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

FOR THE QUARTERLY PERIOD ENDED June 30, 2022


☐			Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from to


Commission File Number	Exact name of registrant as specified in its charter and principal executive office address and telephone number					State of Incorporation	I.R.S. Employer ID. Number
1-14514	Consolidated Edison, Inc.					New York	13-3965100
	4 Irving Place,		New York,	New York	10003
	(212)	460-4600
1-01217	Consolidated Edison Company of New York, Inc.					New York	13-5009340
	4 Irving Place,		New York,	New York	10003
	(212)	460-4600

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)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.


Consolidated Edison, Inc. (Con Edison)			Yes			☒			No ☐
Consolidated Edison Company of New York, Inc. (CECONY)			Yes			☒			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			☒			No ☐
CECONY			Yes			☒			No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.


Con Edison
Large accelerated filer	☒		Accelerated filer ☐		Non-accelerated filer	☐
Smaller reporting company		☐	Emerging growth company	☐
CECONY
Large accelerated filer	☐		Accelerated filer ☐		Non-accelerated filer	☒
Smaller reporting company		☐	Emerging growth company	☐

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

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


Con Edison			Yes			☐			No			☒
CECONY			Yes			☐			No			☒

As of July 31, 2022, Con Edison had outstanding 354,582,086 Common Shares ($.10 par value). All of the outstanding common equity of CECONY is held by Con Edison.

Filing Format

This Quarterly Report on Form 10-Q is a combined report being filed separately by two different registrants: Consolidated Edison, Inc. (Con Edison) and Consolidated Edison Company of New York, Inc. (CECONY). CECONY is a wholly-owned subsidiary of Con Edison and, as such, the information in this report about CECONY also applies to Con Edison. As used in this report, the term the “Companies” refers to Con Edison and CECONY. However, CECONY makes no representation as to the information contained in this report relating to Con Edison or the subsidiaries of Con Edison other than itself.

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
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
NYSDPS						New York State Department of Public Service
NYSERDA						New York State Energy Research and Development Authority
NYSPSC						New York State Public Service Commission
NYSRC						New York State Reliability Council, LLC
OTDA						Office of Temporary Disability Assistance
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
NOL						Net Operating Loss
OCI						Other Comprehensive Income
VIE						Variable Interest Entity


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
MMlb						Million pounds
MVA						Megavolt ampere
MW						Megawatt or thousand kilowatts
MWh						Megawatt hour

Other
AMI						Advanced Metering Infrastructure
CARES Act						Coronavirus Aid, Relief, and Economic Security Act, as enacted on March 27, 2020
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
First Quarter Form 10-Q						The Companies' combined Quarterly Report on Form 10-Q for the quarterly period ended March 31 of the current year
Second Quarter Form 10-Q						The Companies' combined Quarterly Report on Form 10-Q for the quarterly period ended June 30 of the current year

Form 10-K						The Companies’ combined Annual Report on Form 10-K for the year ended December 31, 2021
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

TABLE OF CONTENTS


		PAGE
PART I—Financial Information
ITEM 1	Financial Statements (Unaudited)
	Con Edison
	Consolidated Income Statement	7
	Consolidated Statement of Comprehensive Income	8
	Consolidated Statement of Cash Flows	9
	Consolidated Balance Sheet	10
	Consolidated Statement of Equity	12
	CECONY
	Consolidated Income Statement	13
	Consolidated Statement of Comprehensive Income	14
	Consolidated Statement of Cash Flows	15
	Consolidated Balance Sheet	16
	Consolidated Statement of Shareholder’s Equity	18
	Notes to the Financial Statements (Unaudited)	19
ITEM 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	54
ITEM 3	Quantitative and Qualitative Disclosures About Market Risk	92
ITEM 4	Controls and Procedures	92
PART II—Other Information		93
ITEM 1	Legal Proceedings	93
ITEM 1A	Risk Factors	93
ITEM 6	Exhibits	93
	Signatures	94

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,” “guidance,” “potential,” “consider” and similar expressions identify forward-looking statements. The forward-looking statements reflect information available and assumptions at the time the statements are made, and accordingly speak only as of that time. Actual results or developments might differ materially from those included in the forward-looking statements because of various factors such as those identified in reports the Companies have filed with the Securities and Exchange Commission, including, but not limited to:

the Companies are extensively regulated and are subject to substantial penalties;
the Utilities’ rate plans may not provide a reasonable return;
the Companies may be adversely affected by changes to the Utilities’ rate plans;
the failure of, or damage to, the Companies’ facilities could adversely affect the Companies;
a cyber attack could adversely affect the Companies;
the failure of processes and systems and the performance of employees and contractors could adversely affect the Companies;
the Companies are exposed to risks from the environmental consequences of their operations, including increased costs related to climate change;
Con Edison’s ability to pay dividends or interest depends on dividends from its subsidiaries;
changes to tax laws could adversely affect the Companies;
the Companies require access to capital markets to satisfy funding requirements;
a disruption in the wholesale energy markets or failure by an energy supplier or customer could adversely affect the Companies;
the Companies have substantial unfunded pension and other postretirement benefit liabilities;
the Companies face risks related to health epidemics and other outbreaks, including the COVID-19 pandemic;
the Companies’ strategies may not be effective to address changes in the external business environment; and
the Companies also face other risks that are beyond their control, including inflation and supply chain disruptions.

The Companies assume no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

Consolidated Edison, Inc.

CONSOLIDATED INCOME STATEMENT (UNAUDITED)


	For the Three Months Ended June 30,		For the Six Months Ended June 30,
(Millions of Dollars/Except Share Data)	2022	2021	2022	2021
OPERATING REVENUES
Electric	$2,416	$2,115	$4,666	$4,228
Gas	643	490	1,893	1,566
Steam	84	74	386	338
Non-utility	272	292	530	516
TOTAL OPERATING REVENUES	3,415	2,971	7,475	6,648
OPERATING EXPENSES
Purchased power	633	463	1,120	900
Fuel	52	29	196	122
Gas purchased for resale	205	83	649	379
Other operations and maintenance	881	804	1,786	1,593
Depreciation and amortization	539	502	1,068	1,000
Taxes, other than income taxes	718	672	1,471	1,375
TOTAL OPERATING EXPENSES	3,028	2,553	6,290	5,369


OPERATING INCOME	387	418	1,185	1,279
OTHER INCOME (DEDUCTIONS)
Investment income (loss)	5	(24)	10	(185)
Other income	113	7	196	14
Allowance for equity funds used during construction	5	5	10	10
Other deductions	(34)	(38)	(35)	(76)
TOTAL OTHER INCOME (DEDUCTIONS)	89	(50)	181	(237)
INCOME BEFORE INTEREST AND INCOME TAX EXPENSE	476	368	1,366	1,042
INTEREST EXPENSE (INCOME)
Interest on long-term debt	242	230	482	458
Other interest expense (income)	(32)	35	(87)	(14)
Allowance for borrowed funds used during construction	(5)	(4)	(8)	(8)
NET INTEREST EXPENSE	205	261	387	436
INCOME BEFORE INCOME TAX EXPENSE	271	107	979	606
INCOME TAX EXPENSE (BENEFIT)	17	(11)	171	68
NET INCOME	254	118	808	538
Loss attributable to non-controlling interest	(1)	(47)	(49)	(46)
NET INCOME FOR COMMON STOCK	$255	$165	$857	$584
Net income per common share—basic	$0.72	$0.48	$2.42	$1.70
Net income per common share—diluted	$0.72	$0.48	$2.41	$1.70
AVERAGE NUMBER OF SHARES OUTSTANDING—BASIC (IN MILLIONS)	354.3	345.4	354.2	344.0
AVERAGE NUMBER OF SHARES OUTSTANDING—DILUTED (IN MILLIONS)	355.5	346.2	355.3	344.8

The accompanying notes are an integral part of these financial statements.

Consolidated Edison, Inc.

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED)


	Three Months Ended June 30,		Six Months Ended June 30,
(Millions of Dollars)	2022	2021	2022	2021
NET INCOME	$254	$118	$808	$538
LOSS ATTRIBUTABLE TO NON-CONTROLLING INTEREST	1	47	49	46
OTHER COMPREHENSIVE INCOME, NET OF TAXES
Pension and other postretirement benefit plan liability adjustments, net of taxes	5	2	5	6
TOTAL OTHER COMPREHENSIVE INCOME, NET OF TAXES	5	2	5	6
COMPREHENSIVE INCOME	$260	$167	$862	$590

The accompanying notes are an integral part of these financial statements.

Consolidated Edison, Inc.

CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)


	For the Six Months Ended June 30,
(Millions of Dollars)	2022	2021
OPERATING ACTIVITIES
Net income	$808	$538
PRINCIPAL NON-CASH CHARGES/(CREDITS) TO INCOME
Depreciation and amortization	1,068	1,000
Investment loss/impairment	—	211
Deferred income taxes	150	30
Rate case amortization and accruals	36	(11)
Common equity component of allowance for funds used during construction	(10)	(10)
Net derivative gains	(106)	(39)
Unbilled revenue and net unbilled revenue deferrals	(53)	(64)


Other non-cash items, net	153	132
CHANGES IN ASSETS AND LIABILITIES
Accounts receivable – customers	(118)	(135)
Allowance for uncollectible accounts – customers	19	127
Materials and supplies, including fuel oil and gas in storage	(12)	(5)
Revenue decoupling mechanism receivable	(55)	(62)
Other receivables and other current assets	(143)	(85)
Taxes receivable	4	14
Prepayments	(31)	16
Accounts payable	44	(145)
Pensions and retiree benefits obligations, net	55	169
Pensions and retiree benefits contributions	(10)	(81)
Accrued taxes	(5)	(29)
Accrued interest	(1)	4
Superfund and environmental remediation costs	(14)	(7)
Distributions from equity investments	9	18
System benefit charge	(1)	(22)
Deferred charges, noncurrent assets, leases, net and other regulatory assets	(264)	(204)
Deferred credits and other regulatory liabilities	482	165
Other current and noncurrent liabilities	(48)	(132)
NET CASH FLOWS FROM OPERATING ACTIVITIES	1,957	1,393
INVESTING ACTIVITIES
Utility construction expenditures	(1,828)	(1,781)
Cost of removal less salvage	(159)	(166)
Non-utility construction expenditures	(108)	(230)
Investments in electric and gas transmission projects	(25)	(16)


Divestiture of renewable electric projects, net	—	183
Other investing activities	2	10
NET CASH FLOWS USED IN INVESTING ACTIVITIES	(2,118)	(2,000)
FINANCING ACTIVITIES
Net issuance of short-term debt	1,156	86
Issuance of long-term debt	—	1,788
Retirement of long-term debt	(369)	(1,882)
Debt issuance costs	(1)	(26)
Common stock dividends	(544)	(507)
Issuance of common shares - public offering	—	775
Issuance of common shares for stock plans	29	30
Distribution to noncontrolling interest	(16)	(7)
Sale of equity interest	—	92

NET CASH FLOWS FROM FINANCING ACTIVITIES	255	349
CASH, TEMPORARY CASH INVESTMENTS, AND RESTRICTED CASH:
NET CHANGE FOR THE PERIOD	94	(258)
BALANCE AT BEGINNING OF PERIOD	1,146	1,436
BALANCE AT END OF PERIOD	$1,240	$1,178


SUPPLEMENTAL DISCLOSURE OF CASH INFORMATION
Cash paid/(received) during the period for:
Interest	$479	$453
Income taxes	$19	$(13)
SUPPLEMENTAL DISCLOSURE OF NON-CASH INFORMATION
Construction expenditures in accounts payable	$457	$365
Issuance of common shares for dividend reinvestment	$16	$24
Software licenses acquired but unpaid as of end of period	$2	$24
Equipment acquired but unpaid as of end of period	$22	$22

The accompanying notes are an integral part of these financial statements.

Consolidated Edison, Inc.

CONSOLIDATED BALANCE SHEET (UNAUDITED)


(Millions of Dollars)	June 30, 2022	December 31, 2021
ASSETS
CURRENT ASSETS
Cash and temporary cash investments	$1,127	$992
Accounts receivable – customers, net allowance for uncollectible accounts of $336 and $317 in 2022 and 2021, respectively	2,042	1,943
Other receivables, net allowance for uncollectible accounts of $9 and $22 in 2022 and 2021, respectively	323	298
Taxes receivable	9	13
Accrued unbilled revenue	663	662
Fuel oil, gas in storage, materials and supplies, at average cost	449	437
Prepayments	356	295
Regulatory assets	221	206
Restricted cash	113	154
Revenue decoupling mechanism receivable	245	190
Fair value of derivatives assets	260	128
Other current assets	208	233
TOTAL CURRENT ASSETS	6,016	5,551
INVESTMENTS	794	853
UTILITY PLANT, AT ORIGINAL COST
Electric	35,932	34,938
Gas	12,819	12,303
Steam	2,884	2,828
General	4,263	4,170
TOTAL	55,898	54,239
Less: Accumulated depreciation	12,704	12,177
Net	43,194	42,062
Construction work in progress	2,029	2,152
NET UTILITY PLANT	45,223	44,214
NON-UTILITY PLANT
Non-utility property, net accumulated depreciation of $696 and $626 in 2022 and 2021, respectively	4,151	4,194
Construction work in progress	286	188
NET PLANT	49,660	48,596
OTHER NONCURRENT ASSETS
Goodwill	439	439
Intangible assets, net accumulated amortization of $344 and $297 in 2022 and 2021, respectively	1,244	1,293
Regulatory assets	3,659	3,639
Pension and retiree benefits	2,086	1,654
Operating lease right-of-use asset	853	809
Fair value of derivatives assets	143	77
Other deferred charges and noncurrent assets	178	205
TOTAL OTHER NONCURRENT ASSETS	8,602	8,116
TOTAL ASSETS	$65,072	$63,116

The accompanying notes are an integral part of these financial statements.

Consolidated Edison, Inc.

CONSOLIDATED BALANCE SHEET (UNAUDITED)


(Millions of Dollars)	June 30, 2022	December 31, 2021
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES
Long-term debt due within one year	$322	$440
Term loan	400	—
Notes payable	2,244	1,488
Accounts payable	1,547	1,497
Customer deposits	330	300
Accrued taxes	99	104
Accrued interest	150	151
Accrued wages	114	113
Fair value of derivative liabilities	110	152
Regulatory liabilities	555	185
System benefit charge	430	423
Operating lease liabilities	127	113
Other current liabilities	395	461
TOTAL CURRENT LIABILITIES	6,823	5,427
NONCURRENT LIABILITIES
Provision for injuries and damages	183	183
Pensions and retiree benefits	704	737
Superfund and other environmental costs	927	940
Asset retirement obligations	587	577
Fair value of derivative liabilities	62	84
Deferred income taxes and unamortized investment tax credits	7,156	6,873
Operating lease liabilities	774	717
Regulatory liabilities	4,608	4,381
Other deferred credits and noncurrent liabilities	266	257
TOTAL NONCURRENT LIABILITIES	15,267	14,749
LONG-TERM DEBT	22,361	22,604
COMMITMENTS, CONTINGENCIES, AND GUARANTEES (Note B, Note G, and Note H)
EQUITY
Common shareholders’ equity	20,387	20,037
Noncontrolling interest	234	299
TOTAL EQUITY (See Statement of Equity)	20,621	20,336
TOTAL LIABILITIES AND EQUITY	$65,072	$63,116

The accompanying notes are an integral part of these financial statements.

Consolidated Edison, Inc.

CONSOLIDATED STATEMENT OF EQUITY (UNAUDITED)


(In Millions, except for dividends per share)	Common Stock		Additional Paid-In Capital	Retained Earnings	Treasury Stock		Capital Stock Expense	Accumulated Other Comprehensive Income/(Loss)	Non- controlling Interest	Total
Shares	Amount	Shares	Amount






















































































BALANCE AS OF DECEMBER 31, 2020	342	$36	$8,808	$11,178	23	$(1,038)	$(112)	$(25)	$218	$19,065
Net income				419					1	420
Common stock dividends ($0.775 per share)				(265)						(265)

Issuance of common shares for stock plans			28							28
Other comprehensive income								4		4
Distributions to noncontrolling interests									(3)	(3)
Net proceeds from sale of equity interest									33	33
BALANCE AS OF MARCH 31, 2021	342	$36	$8,836	$11,332	23	$(1,038)	$(112)	$(21)	$249	$19,282
Net income (loss)				165					(47)	118
Common stock dividends ($0.775 per share)				(266)						(266)
Issuance of common shares - public offering	11	1	785				(11)			775
Issuance of common shares for stock plans			34							34
Other comprehensive income								2		2
Distributions to noncontrolling interests									(4)	(4)
Net proceeds from sale of equity interest									112	112
BALANCE AS OF JUNE 30, 2021	353	$37	$9,655	$11,231	23	$(1,038)	$(123)	$(19)	$310	$20,053

BALANCE AS OF DECEMBER 31, 2021	354	$37	$9,710	$11,445	23	$(1,038)	$(122)	$5	$299	$20,336
Net income (loss)				602					(48)	554
Common stock dividends ($0.79 per share)				(280)						(280)
Issuance of common shares - public offering							1			1
Issuance of common shares for stock plans			18							18

Distributions to noncontrolling interests									(6)	(6)

BALANCE AS OF MARCH 31, 2022	354	$37	$9,728	$11,767	23	$(1,038)	$(121)	$5	$245	$20,623
Net income (loss)				255					(1)	254
Common stock dividends ($0.79 per share)				(280)						(280)

Issuance of common shares for stock plans			29							29
Other comprehensive income								5		5
Distributions to noncontrolling interests									(10)	(10)

BALANCE AS OF JUNE 30, 2022	354	$37	$9,757	$11,742	23	$(1,038)	$(121)	$10	$234	$20,621

The accompanying notes are an integral part of these financial statements.

Consolidated Edison Company of New York, Inc.

CONSOLIDATED INCOME STATEMENT (UNAUDITED)


	For the Three Months Ended June 30,		For the Six Months Ended June 30,
(Millions of Dollars)	2022	2021	2022	2021
OPERATING REVENUES
Electric	$2,240	$1,963	$4,324	$3,931
Gas	582	449	1,713	1,423
Steam	84	74	386	338
TOTAL OPERATING REVENUES	2,906	2,486	6,423	5,692
OPERATING EXPENSES
Purchased power	566	417	996	813
Fuel	52	29	196	122
Gas purchased for resale	145	63	469	296
Other operations and maintenance	718	590	1,460	1,198
Depreciation and amortization	455	423	900	838
Taxes, other than income taxes	690	643	1,411	1,317
TOTAL OPERATING EXPENSES	2,626	2,165	5,432	4,584
OPERATING INCOME	280	321	991	1,108
OTHER INCOME (DEDUCTIONS)
Investment and other income	103	5	186	11
Allowance for equity funds used during construction	5	5	9	9
Other deductions	(26)	(33)	(31)	(66)
TOTAL OTHER INCOME (DEDUCTIONS)	82	(23)	164	(46)
INCOME BEFORE INTEREST AND INCOME TAX EXPENSE	362	298	1,155	1,062
INTEREST EXPENSE (INCOME)
Interest on long-term debt	200	186	399	370
Other interest expense	6	4	10	8
Allowance for borrowed funds used during construction	(4)	(4)	(7)	(7)
NET INTEREST EXPENSE	202	186	402	371
INCOME BEFORE INCOME TAX EXPENSE	160	112	753	691
INCOME TAX EXPENSE (BENEFIT)	(10)	(16)	108	98
NET INCOME	$170	$128	$645	$593

The accompanying notes are an integral part of these financial statements.

Consolidated Edison Company of New York, Inc.

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED)


	Three Months Ended June 30,		Six Months Ended June 30,
(Millions of Dollars)	2022	2021	2022	2021
NET INCOME	$170	$128	$645	$593

Pension and other postretirement benefit plan liability adjustments, net of taxes	—	—	1	—
TOTAL OTHER COMPREHENSIVE INCOME, NET OF TAXES	—	—	1	—
COMPREHENSIVE INCOME	$170	$128	$646	$593

The accompanying notes are an integral part of these financial statements.

Consolidated Edison Company of New York, Inc.

CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)


	For the Six Months Ended June 30,
(Millions of Dollars)	2022	2021
OPERATING ACTIVITIES
Net income	$645	$593
PRINCIPAL NON-CASH CHARGES/(CREDITS) TO INCOME
Depreciation and amortization	900	838
Deferred income taxes	65	7
Rate case amortization and accruals	28	(11)
Common equity component of allowance for funds used during construction	(9)	(9)
Unbilled revenue and net unbilled revenue deferrals	(8)	(3)

Other non-cash items, net	150	27
CHANGES IN ASSETS AND LIABILITIES
Accounts receivable – customers	(111)	(139)
Allowance for uncollectible accounts – customers	20	124
Materials and supplies, including fuel oil and gas in storage	(12)	(8)
Revenue decoupling mechanism receivable	(55)	(69)
Other receivables and other current assets	(17)	(48)
Accounts receivable from affiliated companies	3	93
Prepayments	(22)	(18)
Accounts payable	(37)	(147)
Accounts payable to affiliated companies	(2)	(3)
Pensions and retiree benefits obligations, net	54	162
Pensions and retiree benefits contributions	(9)	(80)
Superfund and environmental remediation costs	(14)	(12)
Accrued taxes	(3)	(31)
Accrued taxes to affiliated companies	2	—
Accrued interest	1	1
System benefit charge	6	(20)
Deferred charges, noncurrent assets, leases, net and other regulatory assets	(270)	(188)
Deferred credits and other regulatory liabilities	426	125
Other current and noncurrent liabilities	(4)	(88)
NET CASH FLOWS FROM OPERATING ACTIVITIES	1,727	1,096
INVESTING ACTIVITIES
Utility construction expenditures	(1,727)	(1,679)
Cost of removal less salvage	(156)	(162)




NET CASH FLOWS USED IN INVESTING ACTIVITIES	(1,883)	(1,841)
FINANCING ACTIVITIES
Net issuance (repayment) of short-term debt	699	(660)
Issuance of long-term debt	—	1,500
Retirement of long-term debt	—	(640)
Debt issuance costs	(1)	(19)
Capital contribution by parent	100	976
Dividend to parent	(490)	(494)
NET CASH FLOWS FROM FINANCING ACTIVITIES	308	663
CASH AND TEMPORARY CASH INVESTMENTS
NET CHANGE FOR THE PERIOD	152	(82)
BALANCE AT BEGINNING OF PERIOD	920	1,067
BALANCE AT END OF PERIOD	$1,072	$985
SUPPLEMENTAL DISCLOSURE OF CASH INFORMATION
Cash paid/(received) during the period for:
Interest	$388	$359
Income taxes	$41	$(3)
SUPPLEMENTAL DISCLOSURE OF NON-CASH INFORMATION
Construction expenditures in accounts payable	$403	$314
Software licenses acquired but unpaid as of end of period	$2	$22
Equipment acquired but unpaid as of end of period	$22	$22

The accompanying notes are an integral part of these financial statements.

Consolidated Edison Company of New York, Inc.

CONSOLIDATED BALANCE SHEET (UNAUDITED)


(Millions of Dollars)	June 30, 2022	December 31, 2021
ASSETS
CURRENT ASSETS
Cash and temporary cash investments	$1,072	$920
Accounts receivable – customers, net allowance for uncollectible accounts of $324 and $304 in 2022 and 2021, respectively	1,932	1,841
Other receivables, net allowance for uncollectible accounts of $7 and $19 in 2022 and 2021, respectively	120	121
Taxes receivable	5	5
Accrued unbilled revenue	505	549
Accounts receivable from affiliated companies	35	38
Fuel oil, gas in storage, materials and supplies, at average cost	381	369
Prepayments	234	212
Regulatory assets	205	188

Revenue decoupling mechanism receivable	246	191
Fair value of derivatives assets	196	71
Other current assets	103	198
TOTAL CURRENT ASSETS	5,034	4,703
INVESTMENTS	527	608
UTILITY PLANT, AT ORIGINAL COST
Electric	33,770	32,846
Gas	11,814	11,321
Steam	2,884	2,828
General	3,943	3,854
TOTAL	52,411	50,849
Less: Accumulated depreciation	11,704	11,223
Net	40,707	39,626
Construction work in progress	1,882	1,985
NET UTILITY PLANT	42,589	41,611
NON-UTILITY PROPERTY
Non-utility property, net accumulated depreciation of $25 in 2022 and 2021	2	2
NET PLANT	42,591	41,613
OTHER NONCURRENT ASSETS
Regulatory assets	3,336	3,316
Operating lease right-of-use asset	585	545
Pension and retiree benefits	2,080	1,677
Fair value of derivatives assets	68	56
Other deferred charges and noncurrent assets	123	137
TOTAL OTHER NONCURRENT ASSETS	6,192	5,731
TOTAL ASSETS	$54,344	$52,655

The accompanying notes are an integral part of these financial statements.

Consolidated Edison Company of New York, Inc.

CONSOLIDATED BALANCE SHEET (UNAUDITED)


(Millions of Dollars)	June 30, 2022	December 31, 2021
LIABILITIES AND SHAREHOLDER’S EQUITY
CURRENT LIABILITIES


Notes payable	$2,060	$1,361
Accounts payable	1,251	1,285
Accounts payable to affiliated companies	16	18
Customer deposits	314	285
Accrued taxes	75	78
Accrued taxes to affiliated companies	12	10
Accrued interest	128	127
Accrued wages	104	103
Fair value of derivative liabilities	94	88
Regulatory liabilities	463	134
System benefit charge	390	372
Operating lease liabilities	96	90
Other current liabilities	327	370
TOTAL CURRENT LIABILITIES	5,330	4,321
NONCURRENT LIABILITIES
Provision for injuries and damages	178	178
Pensions and retiree benefits	644	669
Superfund and other environmental costs	837	850
Asset retirement obligations	511	504
Fair value of derivative liabilities	46	40
Deferred income taxes and unamortized investment tax credits	6,990	6,796
Operating lease liabilities	522	462
Regulatory liabilities	4,110	3,921
Other deferred credits and noncurrent liabilities	222	220
TOTAL NONCURRENT LIABILITIES	14,060	13,640
LONG-TERM DEBT	18,386	18,382
COMMITMENTS AND CONTINGENCIES (Note B and Note G)
SHAREHOLDER’S EQUITY (See Statement of Shareholder’s Equity)	16,568	16,312
TOTAL LIABILITIES AND SHAREHOLDER’S EQUITY	$54,344	$52,655

The accompanying notes are an integral part of these financial statements.

Consolidated Edison Company of New York, Inc.

CONSOLIDATED STATEMENT OF SHAREHOLDER’S EQUITY (UNAUDITED)


	Common Stock		Additional Paid-In Capital	Retained Earnings	Repurchased Con Edison Stock	Capital Stock Expense	Accumulated Other Comprehensive Income/(Loss)	Total
(In Millions)	Shares	Amount
































































BALANCE AS OF DECEMBER 31, 2020	235	$589	$6,169	$9,122	$(962)	$(62)	$(7)	$14,849
Net income				465				465
Common stock dividend to parent				(247)				(247)
Capital contribution by parent			125					125

BALANCE AS OF MARCH 31, 2021	235	$589	$6,294	$9,340	$(962)	$(62)	$(7)	$15,192
Net income				128				128
Common stock dividend to parent				(247)				(247)
Capital contribution by parent			851					851

BALANCE AS OF JUNE 30, 2021	235	$589	$7,145	$9,221	$(962)	$(62)	$(7)	$15,924










BALANCE AS OF DECEMBER 31, 2021	235	$589	$7,269	$9,478	$(962)	$(62)	$—	$16,312
Net income				475				475
Common stock dividend to parent				(245)				(245)
Capital contribution by parent			75					75
Other comprehensive income							1	1
BALANCE AS OF MARCH 31, 2022	235	$589	$7,344	$9,708	$(962)	$(62)	$1	$16,618
Net income				170				170
Common stock dividend to parent				(245)				(245)
Capital contribution by parent			25					25

BALANCE AS OF JUNE 30, 2022	235	$589	$7,369	$9,633	$(962)	$(62)	$1	$16,568

The accompanying notes are an integral part of these financial statements.

NOTES TO THE FINANCIAL STATEMENTS (UNAUDITED)

General

These combined notes accompany and form an integral part of the separate interim consolidated financial statements of each of the two separate registrants: Consolidated Edison, Inc. and its subsidiaries (Con Edison) and Consolidated Edison Company of New York, Inc. and its subsidiaries (CECONY). CECONY is a subsidiary of Con Edison and as such its financial condition and results of operations and cash flows, which are presented separately in the CECONY consolidated financial statements, are also consolidated, along with those of Orange and Rockland Utilities, Inc. (O&R), Con Edison Clean Energy Businesses, Inc. (together with its subsidiaries, the Clean Energy Businesses) and Con Edison Transmission, Inc. (together with its subsidiaries, Con Edison Transmission) in Con Edison’s consolidated financial statements. The term “Utilities” is used in these notes to refer to CECONY and O&R.

As used in these notes, the term “Companies” refers to Con Edison and CECONY and, except as otherwise noted, the information in these combined notes relates to each of the Companies. However, CECONY makes no representation as to information relating to Con Edison or the subsidiaries of Con Edison other than itself.

The separate interim consolidated financial statements of each of the Companies are unaudited but, in the opinion of their respective managements, reflect all adjustments (which include only normally recurring adjustments) necessary for a fair statement of the results for the interim periods presented. The Companies’ separate interim consolidated financial statements should be read together with their separate audited financial statements (including the combined notes thereto) included in Item 8 of their combined Annual Report on Form 10-K for the year ended December 31, 2021 and their separate unaudited financial statements (including the combined notes thereto)

included in Part 1, Item 1 of their combined Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2022.

Con Edison has two regulated utility subsidiaries: CECONY and O&R. CECONY provides electric service and gas service in New York City and Westchester County. The company also provides steam service in parts of Manhattan. O&R, along with its regulated utility subsidiary, provides electric service in southeastern NY and northern NJ and gas service in southeastern NY. Con Edison Clean Energy Businesses, Inc., 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 Transmission, Inc. invests in and seeks to develop electric transmission projects through its subsidiary, Consolidated Edison Transmission, LLC (CET Electric), and manages, through joint ventures, investments in gas pipeline and storage facilities through its subsidiary Con Edison Gas Pipeline and Storage, LLC (CET Gas). See “Investments” in Note A.

Note A – Summary of Significant Accounting Policies and Other Matters

Accounting Policies

The accounting policies of Con Edison and its subsidiaries conform to generally accepted accounting principles in the United States of America (GAAP). For the Utilities, these accounting principles include the accounting rules for regulated operations and the accounting requirements of the Federal Energy Regulatory Commission (FERC) and the state regulators having jurisdiction.

Investments

Con Edison's investments consist primarily of the investments of Con Edison Transmission that are accounted for under the equity method and the fair value of the Utilities' supplemental retirement income plan and deferred income plan assets.

2021 Partial Impairment of Investment in Stagecoach Gas Services LLC (Stagecoach)

In May 2021, a subsidiary of Con Edison Gas Pipeline and Storage, LLC (CET Gas) entered into a purchase and sale agreement pursuant to which the subsidiary and its joint venture partner agreed to sell their combined interests in Stagecoach Gas Services LLC (Stagecoach) for a total of $1,225 million, of which $629 million was attributed to CET Gas for its 50 percent interest. The purchase and sale agreement contemplated a two-stage closing, the first of which was completed in July 2021 and the second of which was completed in November 2021.

As a result of information made available to Stagecoach as part of the sale process, Stagecoach performed impairment tests that resulted in Stagecoach recording impairment charges of $71 million and $414 million for the three and six months ended June 30, 2021, respectively. Accordingly, Con Edison recorded pre-tax impairment losses on its 50 percent interest in Stagecoach of $39 million ($27 million after-tax) and $211 million ($147 million after-tax), including working capital and transaction cost adjustments, within "Investment income/(loss)" on Con

Edison's consolidated income statements for the three and six months ended June 30, 2021, respectively. These charges reduced the carrying value of its investment in Stagecoach to $630 million at June 30, 2021.

Stagecoach's impairment charges and information obtained from the sales processes constituted triggering events for Con Edison's investment in Stagecoach as of March 31, 2021 and June 30, 2021. Con Edison evaluated the carrying value of its investment in Stagecoach for other-than-temporary declines in value using income and market-based approaches. Con Edison determined that the carrying value of its investment in Stagecoach of $667 million and $630 million as of March 31, 2021 and June 30, 2021, respectively, was not impaired. The carrying value of $630 million at June 30, 2021 reflected the final sales price received in July and the remaining amount received in November 2021, including closing adjustments. CET Gas had no remaining investment in Stagecoach as of December 31, 2021 and June 30, 2022.

2021 and 2020 Partial Impairments of Investment in Mountain Valley Pipeline, LLC (MVP)

In January 2016, Con Edison Gas Pipeline and Storage, LLC (CET Gas), an indirect subsidiary of Con Edison, acquired a 12.5 percent equity interest in MVP, a company developing a proposed 300-mile gas transmission project (the Project) in WV and VA. During 2019, Con Edison exercised its right to limit, and did limit, its cash contributions to the joint venture to approximately $530 million, which reduced CET Gas' interest in MVP to 11.3 percent and 10.2 percent as of December 31, 2020 and 2021, respectively. As of June 30, 2022 CET Gas' interest in MVP is 9.9 percent and is expected to be reduced to 8.0 percent based on the Project's current cost estimate and CET Gas' previous capping of its cash contributions. As of December 31, 2020 and 2021, the Project was approximately 92 percent and 94 percent complete, respectively.

During 2020, progress was made on the construction of the Project, and the U.S. Supreme Court issued favorable decisions in cases unrelated to MVP regarding the permitting process for pipeline construction and water crossings. In November 2020, the U.S. Court of Appeals for the Fourth Circuit issued a stay on the Nationwide Permit 12, effectively blocking the Project’s ability to pursue water crossings under that permit. As a result, in November 2020 the Project applied to the FERC for a certificate amendment to bore under water bodies in a portion of the Project in WV, allowing this portion of the pipe to be completed and placed in-service while a plan for the remaining water crossings was pursued. If approved, this certificate amendment would have led to additional Project costs and would have extended the anticipated in-service date. In January 2021, the FERC did not approve the requested certificate amendment. Later in January 2021, the Project indicated its plans to apply for U.S. Army Corps of Engineers individual permits for certain water crossings and a new certificate amendment application to the FERC to bore under other water crossings that, in total, would cover the entire Project length.

The uncertainty related to obtaining necessary water crossing permits, the resulting Project costs and the likelihood of the Project not reaching eventual completion increased as a result of actions taken by the U.S. Court of Appeals for the Fourth Circuit. This action and associated delays constituted a triggering event (the "2020 triggering event") that required Con Edison to test its investment in MVP for an other-than-temporary impairment as of December 31, 2020.

In December 2021, the Virginia Department of Environmental Quality and the West Virginia Department of Environmental Protection both issued water quality certification permits which are required in order for the U.S. Army Corps of Engineers to proceed with the permitting process for construction of certain Project water crossings. In January 2022, the U.S. Court of Appeals for the Fourth Circuit rejected permits for crossings through the Jefferson National Forest issued by the U.S. Forest Service and Bureau of Land Management. In February 2022, the U.S. Court of Appeals for the Fourth Circuit vacated a biological opinion from the U.S. Fish and Wildlife Service, applicable to all remaining construction. The biological opinion had been issued and was the subject of litigation prior to December 31, 2021. Con Edison believed that the February 2022 action by the U.S. Court of Appeals for the Fourth Circuit, along with the potential outcome of other matters pending before that Court, may lead to further delays and increased Project costs, which constituted a triggering event (the “2021 triggering event”) that required Con Edison to test its investment in MVP for an other-than-temporary impairment as of December 31, 2021.

In response to the 2020 triggering event and 2021 triggering event, Con Edison assessed the value of its equity investment in the Project to determine whether the fair value of its investment in MVP had declined below its carrying value on an other-than-temporary basis as of December 31, 2020 and 2021, respectively. The estimated fair value of the investment was determined using a discounted cash flow analysis, which is a level 3 fair value measurement. The analysis discounted probability-weighted future cash flows, including revenues based on long-term firm transportation contracts, that are secured for the first 20 years following completion of the Project. See Note Q. Con Edison has also assumed cash flows extending beyond this period. All cash flows were discounted at a pre-tax discount rate of 8.3 percent and then weighted based on Con Edison’s estimate of the likelihood that the Project will be completed. For the 2020 triggering event, Con Edison estimated that the likelihood of Project

completion was in the upper end of a reasonably possible range. For the 2021 triggering event, Con Edison anticipated that the Project faces legal and regulatory challenges that make construction completion increasingly remote. The Project faces additional delays and increased costs that could further reduce CET Gas' interest in MVP to below 8.0 percent based on CET Gas' previous capping of its cash contributions. The likelihood that the Project will be completed and, for 2020, the discount rate, are the most significant and sensitive assumptions; changes in these assumptions may materially change the results of the impairment calculation.

Based on the discounted cash flow analyses, Con Edison concluded as of December 31, 2020 and 2021 that the fair value of its investment in MVP declined below its carrying value and the declines were other-than-temporary. Accordingly, Con Edison recorded a pre-tax impairment loss of $320 million ($223 million, after tax) for the year ended December 31, 2020 that reduced the carrying value of its investment in MVP from $662 million to $342 million, with an associated deferred tax asset of $53 million. Additionally, Con Edison recorded a pre-tax impairment loss of $231 million ($162 million, after tax) for the year ended December 31, 2021 that reduced the carrying value of its investment in MVP from $342 million to $111 million with an additional $77 million associated deferred tax asset, totaling a deferred tax asset of $130 million at December 31, 2021 and June 30, 2022. The impairments were recorded within “Investment income (loss)” on Con Edison’s Consolidated Income Statement. In addition, Con Edison did not record non-cash equity in earnings from allowance for funds used during construction from MVP beginning in January 2021 and will continue to refrain from recording such amounts until such time as substantial construction activities resume, which would be indicative of probable Project completion. There were no impairments or substantial changes in the carrying value of Con Edison's investment in MVP for the six months ended June 30, 2022.

There is risk that the fair value of Con Edison’s investment in MVP may be further or fully impaired in the future. There are ongoing legal and regulatory matters that must be resolved favorably before the Project can be completed. Assumptions and estimates used to test Con Edison’s investment in MVP for impairment may change if adverse or delayed resolutions to the Project’s pending legal and regulatory challenges were to occur, which could have a material adverse effect on the fair value of Con Edison’s investment in MVP.

Reclassification

Certain prior period amounts have been reclassified within the Companies' Consolidated Statements of Cash Flows and Consolidated Balance Sheets to conform with current period presentation.

Earnings Per Common Share

Con Edison presents basic and diluted earnings per share (EPS) on the face of its consolidated income statement. Basic EPS is calculated by dividing earnings available to common shareholders (“Net income for common stock” on Con Edison’s consolidated income statement) by the weighted average number of Con Edison common shares outstanding during the period. In the calculation of diluted EPS, weighted average shares outstanding are increased for additional shares that would be outstanding if potentially dilutive securities were converted to common stock.

Potentially dilutive securities for Con Edison consist of restricted stock units and deferred stock units for which the average market price of the common shares for the period was greater than the estimated vesting price.

For the three and six months ended June 30, 2022 and 2021, basic and diluted EPS for Con Edison are calculated as follows:


	For the Three Months Ended June 30,		For the Six Months Ended June 30,
(Millions of Dollars, except per share amounts/Shares in Millions)	2022	2021	2022	2021
Net income for common stock	$255	$165	$857	$584
Weighted average common shares outstanding – basic	354.3	345.4	354.2	344.0
Add: Incremental shares attributable to effect of potentially dilutive securities	1.2	0.8	1.1	0.8
Adjusted weighted average common shares outstanding – diluted	355.5	346.2	355.3	344.8
Net Income per common share – basic	$0.72	$0.48	$2.42	$1.70
Net Income per common share – diluted	$0.72	$0.48	$2.41	$1.70

The computation of diluted EPS for the three and six months ended June 30, 2021 excludes immaterial amounts of performance share awards that were not included because of their anti-dilutive effect.

Changes in Accumulated Other Comprehensive Income/(Loss) by Component

For the three and six months ended June 30, 2022 and 2021, changes to accumulated other comprehensive income/(loss) (OCI) for Con Edison and CECONY are as follows:


	For the Three Months Ended June 30,
	Con Edison		CECONY
(Millions of Dollars)	2022	2021	2022	2021
Beginning balance, accumulated OCI, net of taxes (a)	$5	$(21)	$1	$(7)
OCI before reclassifications, net of tax of $(1) for Con Edison in 2022	5	—	—	—
Amounts reclassified from accumulated OCI related to pension plan liabilities, net of tax of $(1) for Con Edison in 2021 (a)(b)	—	2	—	—
Current period OCI, net of taxes	5	2	—	—
Ending balance, accumulated OCI, net of taxes (a)	$10	$(19)	$1	$(7)

(a) Tax reclassified from accumulated OCI is reported in the income tax expense line item of the consolidated income statement.

(b)For the portion of unrecognized pension and other postretirement benefit costs relating to the Utilities, costs are recorded into, and amortized out of, regulatory assets and liabilities instead of OCI. The net actuarial losses and prior service costs recognized during the period are included in the computation of total periodic pension and other postretirement benefit costs. See Notes E and F.


	For the Six Months Ended June 30,
	Con Edison		CECONY
(Millions of Dollars)	2022	2021	2022	2021
Beginning balance, accumulated OCI, net of taxes (a)	$5	$(25)	$—	$(7)
OCI before reclassifications, net of tax of $(1) for Con Edison in 2022 and 2021	4	2	—	—
Amounts reclassified from accumulated OCI related to pension plan liabilities, net of tax of $(1) for Con Edison in 2022 and 2021 (a)(b)	1	4	1	—
Current period OCI, net of taxes	5	6	1	—
Ending balance, accumulated OCI, net of taxes (a)	$10	$(19)	$1	$(7)

(a) Tax reclassified from accumulated OCI is reported in the income tax expense line item of the consolidated income statement.

Reconciliation of Cash, Temporary Cash Investments and Restricted Cash

Cash, temporary cash investments and restricted cash are presented on a combined basis in the Companies’ consolidated statements of cash flows. At June 30, 2022 and 2021, cash, temporary cash investments and restricted cash for Con Edison and CECONY were as follows:


	At June 30,
	Con Edison		CECONY
(Millions of Dollars)	2022	2021	2022	2021
Cash and temporary cash investments	$1,127	$1,067	$1,072	$985
Restricted cash (a)	113	111	—	—
Total cash, temporary cash investments and restricted cash	$1,240	$1,178	$1,072	$985

(a)Restricted cash included cash of the Clean Energy Businesses' renewable electric project subsidiaries ($113 million and $111 million at June 30, 2022 and 2021, respectively) that, under the related project debt agreements, is restricted to being used for normal operating expenditures, debt service, and required reserves until the various maturity dates of the project debt.

Note B – Regulatory Matters

Rate Plans

CECONY – Electric

In April 2022, CECONY updated its January 2022 request to the New York State Public Service Commission (NYSPSC) for an electric rate increase effective January 2023. The company decreased its requested January 2023 rate increase by $161 million to $1,038 million, decreased its illustrated January 2024 rate increase by $109 million to $744 million and increased its illustrated January 2025 rate increase by $7 million to $615 million. In May 2022, the New York State Department of Public Service (NYSDPS) submitted testimony in the NYSPSC proceeding in which CECONY requested an electric rate increase, effective January 2023. The NYSDPS testimony supports an electric rate increase of $278 million reflecting, among other things, an 8.80 percent return on common equity and a common equity ratio of 48 percent.

CECONY – Gas

In April 2022, CECONY updated its January 2022 request to the NYSPSC for a gas rate increase effective January 2023. The company decreased its requested January 2023 rate increase by $101 million to $402 million, decreased its illustrated January 2024 rate increase by $29 million to $205 million and decreased its illustrated January 2025 rate increase by $42 million to $176 million. In May 2022, the NYSDPS submitted testimony in the NYSPSC proceeding in which CECONY requested a gas rate increase, effective January 2023. The NYSDPS testimony supports a gas rate increase of $164 million reflecting, among other things, an 8.80 percent return on common equity and a common equity ratio of 48 percent.

CECONY - Electric and Gas

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 six months ended June 30, 2022, CECONY recorded a reduction in the amount of previously recorded earnings adjustment mechanisms of $4.5 million.

O&R NY - Electric and Gas

In April 2022, the NYSPSC approved the October 2021 joint proposal for new electric and gas rates. The joint proposal provides for electric rate increases of $4.9 million, $16.2 million and $23.1 million, effective January 1, 2022, 2023 and 2024, or $11.7 million on a levelized annual billed basis, respectively. The joint proposal provides for gas rate increases of $0.7 million, $7.4 million and $9.9 million, effective January 1, 2022, 2023 and 2024, or $4.4 million on a levelized annual billed basis, respectively. The joint proposal also includes certain COVID-19 provisions, such as: recovery of 2020 late payment charges over three years ($2.8 million); reconciliation of late payment charges to amounts reflected in rates for years 2021 through 2024, with full recovery/refund via surcharge/sur-credit once the annual variance equals or exceeds 5 basis points of return on equity; and reconciliation of write-offs of customer accounts receivable balances to amounts reflected in rates from January 1, 2020 through December 31, 2024, with full recovery/refund via surcharge/sur-credit once the annual variance equals or exceeds 5 basis points of return on equity.

Rockland Electric Company (RECO)

Effective July 2021, the New Jersey Board of Public Utilities (NJBPU) authorized a conservation incentive program for RECO, that covers all residential and most commercial customers, under which RECO’s actual electric distribution revenues are compared with the authorized distribution revenues and the difference accrued, with interest, for refund to, or recovery from, customers, as applicable. The conservation incentive program is not permitted if RECO’s actual return on equity exceeds the approved base rate filing return on equity by 50 basis points or more.

In January 2022, RECO filed a request with FERC for an increase to its annual transmission revenue requirement from $16.9 million to $20.4 million. The revenue requirement reflects a return on common equity of 11.04 percent and a common equity ratio of 47 percent.

In March 2022, RECO filed a request with the NJBPU to implement a $209 million Infrastructure Investment Program (IIP) over a five-year period (2023 – 2027). RECO’s IIP proposes accelerated infrastructure investments to enhance safety, reliability, and/or resiliency.

COVID-19 Regulatory Matters

Governors, public utility commissions and other regulatory agencies in the states in which the Utilities operate have issued orders related to the COVID-19 pandemic that impact the Utilities as described below.

NY Regulation

In March 2020, a former New York State governor declared a State Disaster Emergency for the State of NY due to the COVID-19 pandemic and signed the "New York State on PAUSE" executive order that temporarily closed all non-essential businesses statewide. The former governor then lifted these closures over time and ended the emergency declaration in June 2021. As a result of the emergency declaration, and due to economic conditions, the NYSPSC and the Utilities have worked to mitigate the potential impact of the COVID-19 pandemic on the Utilities, their customers and other stakeholders.

In March 2020, the Utilities began suspending service disconnections, certain collection notices, final bill collection agency activity, new late payment charges and certain other fees for all customers. The Utilities also began providing payment extensions for all customers that were scheduled to be disconnected prior to the start of the COVID-19 pandemic. 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 experienced a change in financial circumstances due to the COVID-19 pandemic.

In November 2021, the NYSPSC issued an order establishing a surcharge recovery mechanism for CECONY to collect, commencing December 1, 2021 through December 31, 2022, $43 million and $7 million for electric and gas, respectively, of late payment charges and fees that were not billed for the year ended December 31, 2020. The company recorded such amounts as revenue for the year ended December 31, 2021, as permitted under the accounting rules for regulated utilities, and also accrued such amounts as a current asset at December 31, 2021. Pursuant to the November 2021 order, the company also established a recovery mechanism for CECONY to collect, commencing January 2023 through December 2023, $19 million and $4 million for electric and gas, respectively, of late payment charges and fees that were not billed for the year ended December 31, 2021 and the company recorded such amounts as revenue for the year ended December 31, 2021, as permitted under the accounting rules for regulated utilities, and also accrued such amounts as a current asset at December 31, 2021. In addition, pursuant to the November 2021 order, CECONY established a reserve of $7 million toward addressing customer arrearages for the year ended December 31, 2021 that, pursuant to a June 2022 NYSPSC order discussed below, will be used to fund a portion of the COVID-19 arrears assistance program for low-income customers. The order also established a surcharge recovery or surcredit mechanism for any late payment charges and fee deferrals, subject to offsetting related savings resulting from the COVID-19 pandemic, for 2022 starting in January 2024 over a twelve-month period. CECONY resumed late payment charges for commercial and residential customers who have not experienced a change in financial circumstances due to the COVID-19 pandemic on September 3, 2021 and October 1, 2021, respectively. Pursuant to the October 2021 joint proposal for new electric and gas rates for O&R that was approved by the NYSPSC in April 2022. O&R recorded late payment charges and fees that were not billed for the years ended December 31, 2020 and December 31, 2021 of $1.7 million and $2.4 million, respectively, as revenue for the year ended December 31, 2021, as permitted under the accounting rules for regulated utilities, and also accrued such amounts as a current asset at December 31, 2021. See “Rate Plans,” above. O&R resumed late payment charges for commercial and residential customers who have not experienced a change in financial circumstances due to the COVID-19 pandemic on October 1, 2021.

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. The total reserve increases to the allowance for uncollectible accounts from January 1, 2020 through June 30, 2022 reflecting the impact of the COVID-19 pandemic for CECONY electric and gas operations and O&R electric and gas operations were $259 million and $7 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, that have since been lifted, as described above. The Utilities’ NY rate plans also provide for an allowance for write-offs of customer accounts receivable balances. The above amounts deferred pursuant to the legislative, regulatory and related actions provisions were increased/(reduced) by the amount that the actual write-offs of customer accounts receivable balances were above/(below) the allowance reflected in rates which differences were $7 million and $(2) million for CECONY and O&R, respectively, from March 1, 2020 through June 30, 2022.

In June 2020, the NYSPSC directed CECONY to implement a summer cooling credit program to help mitigate the cost of staying home and operating air conditioning for health-vulnerable low-income customers due to the limited availability of public cooling facilities as a result of the COVID-19 social distancing measures. The $63.4 million cost of the program is being recovered over a five-year period that began January 2021.

In April 2021, NY passed a law that 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 is administered by the State Office of Temporary Disability Assistance (OTDA) in coordination with the NYSDPS (the OTDA Program). Under the OTDA Program, CECONY and O&R 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. OTDA may also use the program funds to provide additional Home Energy Assistance Program payments to the Utilities on behalf of low-income customers. For the three and six months ended June 30, 2022, CECONY received $43.4 million and $49.3 million, respectively, in qualified tax credits and payments under the OTDA Program that were applied to reduce customer accounts receivable balances. For the three and six months ended June 30, 2022, O&R received $0.8 million in qualified tax credits and payments under the OTDA Program that were applied to reduce customer accounts receivable balances. The total amount that may be allocated to CECONY and O&R under this program to address customer arrearages is not yet known.

In April 2022, NY approved the 2022-2023 state budget, which includes $250 million for addressing statewide residential utility customers' arrears balances accrued from March 7, 2020 through March 1, 2022. In June 2022, the NYSPSC issued an order implementing a COVID-19 arrears assistance program that provides credits towards reducing the arrears balances of low-income electric and gas customers of CECONY and O&R. At the time the order was issued, the Utilities’ eligible arrears balances were estimated to be $340 million, which includes: (1) $164.5 million and $1.6 million of the $250 million in state funding allocated to CECONY and O&R, respectively, and (2) a surcharge mechanism for recovery of the remaining eligible credit amounts over a four year period commencing after credits are issued for CECONY and over a one year period commencing after credits are issued for O&R. Pursuant to the order, CECONY and O&R agreed not to seek recovery of incremental financing costs incurred associated with low-income customers' arrears from March 2020 through March 2022 of $11 million, most of which is attributable to CECONY, in addition to the $7 million reserve established by CECONY for the year ended December 31, 2021, as described above. At June 30, 2022, the customer accounts receivable balances at CECONY and O&R were $2,256 million and $102 million, respectively. The amounts available to credit the arrears balances of low-income CECONY and O&R customers pursuant to the June 2022 order may be reduced by amounts credited pursuant to the OTDA Program.

In May 2021, CECONY and O&R, along with other large NY utilities, submitted joint comments to the NYSDPS' February 2021 report on New York State’s Energy Affordability Policy. The report recommends, among other things, that residential and commercial customers’ late payment fees and interest on deferred payment agreements be waived until two years after the expiration of the New York State moratorium on utility terminations (the moratorium expired on December 21, 2021) and each utility develop an arrears management program to mitigate the financial burdens of the COVID-19 pandemic on NY households and that program costs be shared, perhaps equally, between shareholders and customers. The May 2021 joint comments stated that it is not necessary for the NYSPSC to adopt the report’s COVID-19 related recommendations because New York State already passed laws that address the issues in the report. In June 2022, the NYSPSC issued an order in this proceeding establishing a COVID-19 arrears assistance program for low-income customers, as described above.

The Utilities’ rate plans have revenue decoupling mechanisms in their NY electric and gas businesses that largely reconcile actual energy delivery revenues to the authorized delivery revenues approved by the NYSPSC per month and reconcile the deferred balances semi-annually under CECONY's electric rate plan (January through June and July through December, respectively) and annually under CECONY's gas rate plan and O&R's NY electric and gas rate plans (January through December). Differences are accrued with interest each month for CECONY's and O&R's NY electric customers and after the annual deferral period ends for CECONY's and O&R's NY gas customers for refund to, or recovery from customers, as applicable. Generally, the refund to or recovery from customers begins August and February of each year over an ensuing six-month period for CECONY's electric customers and February of each year over an ensuing twelve-month period for CECONY's gas and O&R's NY electric and gas customers.

NJ Regulation

In March 2020, NJ Governor Murphy declared a Public Health Emergency and State of Emergency for the State of NJ. In June 2021, the Governor ended the emergency declaration. As a result of the emergency declaration, and due to economic conditions, the NJBPU and RECO have worked to mitigate the potential impact of the COVID-19 pandemic on RECO, its customers and other stakeholders. In March 2020, RECO began suspending late payment charges, terminations for non-payment, and no access fees during the COVID-19 pandemic. The suspension of these fees continued through July 31, 2021 and were not material.

In July 2020, the NJBPU authorized RECO and other NJ utilities to create a COVID-19-related regulatory asset by deferring prudently incurred incremental costs related to the COVID-19 pandemic beginning on March 9, 2020, and has extended such deferrals through December 31, 2022. RECO is required to file its verified COVID-19 cost recovery petition by no later than March 2, 2023. RECO deferred net incremental COVID-19 related costs of $0.9 million through June 30, 2022.

Gas Safety

In April 2020, the NYSPSC issued an order that extended the deadlines to complete certain gas inspections by all New York gas utilities, including CECONY and O&R, from April 1, 2020 to August 1, 2020. The deadlines were subsequently extended to September 2, 2020 and June 1, 2022. CECONY and O&R have taken all reasonable measures to complete such inspections. As of June 1, 2022, O&R completed all of its required inspections and CECONY substantially completed its required inspections. CECONY is unable to estimate the amount or range of its possible loss, if any, related to this matter. At June 30, 2022, CECONY had not accrued a liability related to this matter.

Other Regulatory Matters

In August 2018, the NYSPSC ordered CECONY to begin on January 1, 2019 to credit the company's electric and gas customers, and to begin on October 1, 2018 to credit its steam customers, with the net benefits of the federal Tax Cuts and Jobs Act of 2017 (TCJA) as measured based on amounts reflected in its rate plans prior to the enactment of the TCJA in December 2017. The net benefits include the revenue requirement impact of the reduction in the corporate federal income tax rate to 21 percent, the elimination for utilities of bonus depreciation and the amortization of excess deferred federal income taxes.

CECONY, under its electric rate plan that was approved in January 2020, is amortizing its TCJA net benefits prior to January 1, 2019 allocable to its electric customers ($377 million) over a three-year period, the IRS “protected” portion of its net regulatory liability for future income taxes related to certain accelerated tax depreciation benefits allocable to its electric customers ($1,663 million) over the remaining lives of the related assets and the remainder, or “unprotected” portion of the net regulatory liability allocable to its electric customers ($784 million) over a five-year period. CECONY, under its gas rate plan that was approved in January 2020, amortized TCJA net benefits prior to January 1, 2019 allocable to its gas customers ($63 million) over a two-year period, The protected portion of its net regulatory liability for future income taxes allocable to its gas customers ($725 million) is being amortized over the remaining lives of the related assets and the unprotected portion of the net regulatory liability allocable to its gas customers ($107 million) over a five-year period.

CECONY’s net regulatory liability for future income taxes, including both the protected and unprotected portions, allocable to the company’s steam customers ($185 million) is being amortized over the remaining lives of the related assets (with the amortization period for the unprotected portion subject to review in its next steam rate proceeding).

O&R, under its current electric and gas rate plans, has reflected its TCJA net benefits in its electric and gas rates beginning as of January 1, 2019. Under the rate plans, O&R amortized its net benefits prior to January 1, 2019 ($22 million) over a three-year period. The protected portion of its net regulatory liability for future income taxes ($123 million) is being amortized over the remaining lives of the related assets). Pursuant to the October 2021 Joint Proposal, O&R will amortize the remaining unprotected portion of its net regulatory liability for future income taxes ($34 million) over a six-year period that began January 1, 2022.

In January 2018, the NYSPSC issued an order initiating a focused operations audit of the Utilities’ financial accounting for income taxes. The audit is investigating the Utilities’ inadvertent understatement of a portion, the amount of which may be material, of their calculation of total federal income tax expense for ratemaking purposes. The understatement was related to the calculation of plant retirement-related cost of removal. As a result of such understatement, the Utilities accumulated significant income tax regulatory assets that were not reflected in O&R’s rate plans prior to 2014, CECONY’s electric and gas rate plans prior to 2015 and 2016, respectively, and is currently not reflected in CECONY’s steam rate plan. This understatement of historical income tax expense materially reduced the amount of revenue collected from the Utilities' customers in the past. As part of the audit, the Utilities plan to pursue a private letter ruling from the Internal Revenue Service (IRS) that is expected to confirm, among other things, that in order to comply with IRS normalization rules, such understatement may not be corrected through a write-down of a portion of the regulatory asset and must be corrected through an increase in future years’ revenue requirements. The regulatory asset ($1,157 million and $24 million for CECONY and O&R, respectively, as of June 30, 2022) and ($1,176 million and $26 million for CECONY and O&R, respectively, as of December 31, 2021) is netted against the future income tax regulatory liability on the Companies’ consolidated balance sheet. The Utilities are unable to estimate the amount or range of their possible loss, if any, related to this matter. At June 30, 2022, the Utilities had not accrued a liability related to this matter.

In October 2020, the NYSPSC issued an order instituting a proceeding to consider requiring NY’s large, investor-owned utilities, including CECONY and O&R, to annually disclose what risks climate change poses to their companies, investors and customers going forward. The order notes that some holding companies, including Con Edison, already disclose climate change risks at the holding company level, but states that the NYSPSC believes that climate-related risk disclosures should be issued specific to the operating companies in NY, such as CECONY and O&R, and that such climate-related risk disclosures should be included annually with the utilities’ financial reports. In December 2020, CECONY and O&R, along with other large NY utilities, filed comments supporting climate change risk disclosures in annual reports filed with the NYSPSC and recommended the use of an industry-specific template.

In May 2020, the president of the United States issued the "Securing the United States Bulk-Power System" executive order, which has since expired. The executive order declared threats to the bulk-power system by foreign adversaries constitute a national emergency and prohibits the acquisition, importation, transfer or installation of certain bulk-power system electric equipment that is sourced from foreign adversaries. In April 2021, the Department of Energy (DOE) issued a request for information to assist the DOE in developing additional orders and/or regulations to secure the United States’ critical electric infrastructure. In September 2021, the Cybersecurity and Infrastructure Security Agency and the National Institute of Standards and Technology issued preliminary cybersecurity goals for critical infrastructure control systems, with final goals to be issued by September 2022. The Companies are unable to predict the impact on them of any orders or regulations that may be adopted regarding critical infrastructure.

In July 2021, the NYSPSC approved a settlement agreement among CECONY, O&R and the NYSDPS that fully resolves all issues and allegations that have been raised or could have been raised by the NYSPSC against CECONY and O&R with respect to: (1) the July 2018 rupture of a CECONY steam main located on Fifth Avenue and 21st Street in Manhattan (the “2018 Steam Incident”); (2) the July 2019 electric service interruptions to approximately 72,000 CECONY customers on the west side of Manhattan and to approximately 30,000 CECONY customers primarily in the Flatbush area of Brooklyn (the “2019 Manhattan and Brooklyn Outages”); (3) the August 2020 electric service interruptions to approximately 330,000 CECONY customers and approximately 200,000 O&R customers following Tropical Storm Isaias (the “Tropical Storm Isaias Outages”) and (4) the August 2020 electric service interruptions to approximately 190,000 customers resulting from faults at CECONY’s Rainey substation following Tropical Storm Isaias (the “Rainey Outages”). Pursuant to the settlement agreement, CECONY and O&R agreed to a total settlement amount of $75.1 million and $7.0 million, respectively. CECONY and O&R agreed to forgo recovery from customers of $25 million and $2.5 million, respectively, associated with the return on existing storm hardening assets beginning with the next rate plan for each utility (over a period of 35 years). CECONY and O&R also agreed to incur ongoing operations and maintenance costs of up to $15.8 million and $2.9 million, respectively, for, among other things, costs to maintain a certain level of contractor and vehicle storm emergency support and storm preparation audits. For CECONY, the settlement agreement included previously incurred or accrued costs of $34.3 million, including negative revenue adjustments of $5 million for the Rainey Outages and $15 million for the 2019 Manhattan and Brooklyn Outages and $14.3 million in costs to reimburse customers for food and medicine spoilage and other previously incurred expenses related to Tropical Storm Isaias and the 2018 Steam Incident. For O&R, the settlement agreement included previously incurred costs of $1.6 million to reimburse customers for food and medicine spoilage and other expenses related to the Tropical Storm Isaias Outages.

Regulatory Assets and Liabilities

Regulatory assets and liabilities at June 30, 2022 and December 31, 2021 were comprised of the following items:


	Con Edison		CECONY
(Millions of Dollars)	2022	2021	2022	2021
Regulatory assets
Environmental remediation costs	$926	$938	$847	$860
System peak reduction and energy efficiency programs	426	285	431	284
Pension and other postretirement benefits deferrals	417	496	368	435
Revenue taxes	414	395	396	378
COVID-19 pandemic deferrals	313	282	305	277
Deferred storm costs	279	276	172	158
Property tax reconciliation	154	202	154	202
MTA power reliability deferral	116	140	116	140
Gas Service Line Deferred Costs	108	100	108	100
Deferred derivative losses - long term	81	51	73	45
Municipal infrastructure support costs	37	44	37	44
Brooklyn Queens demand management program	34	36	34	36
Meadowlands heater odorization project	28	29	28	29
Unrecognized pension and other postretirement costs	27	128	8	110
Non-wire alternative projects	23	23	23	23
Preferred stock redemption	20	20	20	20
Legacy meters	20	2	—	—
Recoverable REV demonstration project costs	19	16	18	15
Unamortized loss on reacquired debt	13	16	12	14
Gate station upgrade project	13	14	13	14
Other	191	146	173	132
Regulatory assets – noncurrent	3,659	3,639	3,336	3,316
Deferred derivative losses - short term	131	141	125	133
Recoverable energy costs	90	65	80	55
Regulatory assets – current	221	206	205	188
Total Regulatory Assets	$3,880	$3,845	$3,541	$3,504
Regulatory liabilities
Future income tax	$1,868	$1,984	$1,729	$1,840
Allowance for cost of removal less salvage	1,223	1,199	1,051	1,033
Unrecognized pension and other postretirement costs	346	32	283	—
Net unbilled revenue deferrals	157	209	157	209
Deferred derivative gains - long term	129	61	117	55
Pension and other postretirement benefit deferrals	120	102	75	55
Net proceeds from sale of property	86	103	86	103
System benefit charge carrying charge	69	70	66	63
TCJA net benefits*	62	125	60	123
Property tax refunds	35	35	35	35
Sales and use tax refunds	29	17	28	16
BQDM and REV Demo reconciliations	24	25	21	22
Earnings sharing - electric, gas and steam	13	13	10	10
Workers' compensation	10	8	10	8
Settlement of gas proceedings	9	12	9	12
Settlement of prudence proceeding	6	6	6	6
Energy efficiency portfolio standard unencumbered funds	5	15	7	19
Other	417	365	360	312
Regulatory liabilities – noncurrent	4,608	4,381	4,110	3,921
Deferred derivative gains - short term	491	142	451	132
Refundable energy costs	46	32	12	2
Revenue decoupling mechanism	18	11	—	—
Regulatory liabilities – current	555	185	463	134
Total Regulatory Liabilities	$5,163	$4,566	$4,573	$4,055

See "Other Regulatory Matters," above.

In general, the Utilities receive or are being credited with a return at the Other Customer-Provided Capital rate for regulatory assets that have not been included in rate base, and receive or are being credited with a return at the pre-tax weighted average cost of capital once the asset is included in rate base. Similarly, the Utilities pay to or credit customers with a return at the Other Customer-Provided Capital rate for regulatory liabilities that have not been included in rate base, and pay to or credit customers with a return at the pre-tax weighted average cost of capital once the liability is included in rate base. The Other Customer-Provided Capital rate for the six months ended June 30, 2022 and 2021 was 1.75 percent and 1.80 percent, respectively.

In general, the Utilities are receiving or being credited with a return on their regulatory assets for which a cash outflow has been made ($2,008 million and $1,962 million for Con Edison, and $1,806 million and $1,751 million for CECONY at June 30, 2022 and December 31, 2021, respectively). Regulatory assets of RECO for which a cash outflow has been made ($21 million and $25 million at June 30, 2022 and December 31, 2021, respectively) are not receiving or being credited with a return. RECO recovers regulatory assets over a period of up to four years or until they are addressed in its next base rate case in accordance with the rate provisions approved by the NJBPU. Regulatory liabilities are treated in a consistent manner.

Regulatory assets that represent future financial obligations and were deferred in accordance with the Utilities’ rate plans or orders issued by state regulators do not earn a return until such time as a cash outlay has been made. Regulatory liabilities are treated in a consistent manner. At June 30, 2022 and December 31, 2021, regulatory assets for Con Edison and CECONY that did not earn a return consisted of the following items:

Regulatory Assets Not Earning a Return*****


	Con Edison		CECONY
(Millions of Dollars)	2022	2021	2022	2021
Unrecognized pension and other postretirement costs	$27	$128	$8	$110
Environmental remediation costs	916	928	837	850
Revenue taxes	393	375	377	359
COVID-19 Deferral for Uncollectible Accounts Receivable	274	236	266	231
Deferred derivative losses - current	131	141	125	134
Deferred derivative losses - long term	81	51	73	45
Other	50	24	49	24
Total	$1,872	$1,883	$1,735	$1,753

*This table presents regulatory assets not earning a return for which no cash outlay has been made.

The recovery periods for regulatory assets for which a cash outflow has not been made and that do not earn a return have not yet been determined, except as noted below, and are expected to be determined pursuant to the Utilities’ future rate plans to be filed or orders issued by the state regulators in connection therewith.

The Utilities recover unrecognized pension and other postretirement costs over 10 years, and the portion of investment gains or losses recognized in expense over 15 years, pursuant to NYSPSC policy.

The deferral for revenue taxes represents the New York State metropolitan transportation business tax surcharge on the cumulative temporary differences between the book and tax basis of assets and liabilities of the Utilities, as well as the difference between taxes collected and paid by the Utilities to fund mass transportation. The Utilities recover the majority of the revenue taxes over the remaining book lives of the electric and gas plant assets, as well as the steam plant assets for CECONY.

The Utilities recover deferred derivative losses – current within one year, and noncurrent generally within three years.

Note C – Capitalization

In June 2022, Con Edison redeemed at maturity $293 million of 8.71 percent senior unsecured notes.

The carrying amounts and fair values of long-term debt at June 30, 2022 and December 31, 2021 were:


(Millions of Dollars)	2022		2021
Long-Term Debt (including current portion) (a)	Carrying Amount	Fair Value	Carrying Amount	Fair Value
Con Edison	$22,683	$21,125	$23,044	$26,287
CECONY	$18,386	$17,018	$18,382	$21,382

(a)Amounts shown are net of unamortized debt expense and unamortized debt discount of $219 million and $188 million for Con Edison and CECONY, respectively, as of June 30, 2022 and $226 million and $193 million for Con Edison and CECONY, respectively, as of December 31, 2021.

The fair values of the Companies' long-term debt have been estimated primarily using available market information and at June 30, 2022 are classified as Level 2 liabilities (see Note O).

Note D – Short-Term Borrowing

At June 30, 2022, Con Edison had $2,244 million of commercial paper outstanding of which $2,060 million was outstanding under CECONY’s program. The weighted average interest rate at June 30, 2022 was 2.0 percent for both Con Edison and CECONY. At December 31, 2021, Con Edison had $1,488 million of commercial paper outstanding of which $1,361 million was outstanding under CECONY’s program. The weighted average interest rate at December 31, 2021 was 0.3 percent for both Con Edison and CECONY.

At June 30, 2022 and December 31, 2021, no loans were outstanding under the Companies' December 2016 credit agreement (Credit Agreement). An immaterial amount of letters of credit were outstanding under the Credit Agreement as of June 30, 2022 and December 31, 2021.

In March 2022, CECONY entered into a 364-Day Revolving Credit Agreement (the CECONY Credit Agreement) under which banks are committed to provide loans up to $750 million on a revolving credit basis. The CECONY Credit Agreement expires on March 30, 2023 and supports CECONY’s commercial paper program. Loans issued under the CECONY Credit Agreement may also be used for other general corporate purposes. The banks’ commitments under the CECONY Credit Agreement are subject to certain conditions, including that there be no event of default and that CECONY shall have received the required regulatory approval. The commitments are not subject to maintenance of credit rating levels or the absence of a material adverse change. Upon a change of control of, or upon an event of default by CECONY, the banks may terminate their commitments and declare the loans, accrued interest and any other amounts due by CECONY immediately due and payable. Events of default include CECONY exceeding at any time a ratio of consolidated debt to consolidated total capital of 0.65 to 1; having liens on its assets in an aggregate amount exceeding five percent of its consolidated total capital, subject to certain exceptions; CECONY failing to make one or more payments in respect of material financial obligations (in excess of an aggregate $150 million of debt); cross default to other financial obligations of $150 million or more of CECONY which would permit the holder to accelerate the obligations; and other customary events of default.

In June 2022, Con Edison entered into and borrowed $400 million under a 364-Day Senior Unsecured Term Loan Credit Agreement dated June 30,2022 (the June 2022 Term Loan Credit Agreement) under which a bank is committed, until November 30, 2022, to provide to Con Edison one or more tranches of incremental term loans in an aggregate amount not to exceed $200 million, in addition to the $400 million borrowed on June 30, 2022. The bank’s commitments under the agreement are subject to certain conditions, including that there be no event of default. The commitments are not subject to maintenance of credit rating levels or the absence of a material adverse change. Upon a change of control of, or upon an event of default by Con Edison, the bank may terminate its commitments and declare the loans, accrued interest and any other amounts due by Con Edison immediately due and payable. Events of default include Con Edison exceeding at any time a ratio of consolidated debt to consolidated total capital of 0.65 to 1; Con Edison or its subsidiaries having liens on its or their assets in an aggregate amount exceeding 5 percent of Con Edison’s consolidated total capital, subject to certain exceptions; Con Edison or its material subsidiaries failing to make one or more payments in respect of material financial obligations (in excess of an aggregate $150 million of debt or derivative obligations other than non-recourse debt); the occurrence of an event or condition which results in the acceleration of the maturity of any material debt (in

excess of an aggregate $150 million of debt other than non-recourse debt) or enables the holders of such debt to accelerate the maturity thereof; and other customary events of default. Subject to certain exceptions, the commitments and any term loans issued under the June 2022 Term Loan Credit Agreement are subject to mandatory termination and prepayment with the net cash proceeds of certain equity issuances or asset sales by Con Edison.

Note E – Pension Benefits

Total Periodic Benefit Cost

The components of the Companies’ total periodic benefit cost for the three and six months ended June 30, 2022 and 2021 were as follows:


	For the Three Months Ended June 30,
	Con Edison		CECONY
(Millions of Dollars)	2022	2021	2022	2021
Service cost – including administrative expenses	$72	$85	$67	$80
Interest cost on projected benefit obligation	126	118	119	111
Expected return on plan assets	(292)	(274)	(277)	(260)
Recognition of net actuarial loss	94	197	89	187
Recognition of prior service credit	(4)	(4)	(5)	(5)
TOTAL PERIODIC BENEFIT COST/(CREDIT)	$(4)	$122	$(7)	$113
Cost capitalized	(35)	(41)	(33)	(39)
Reconciliation to rate level	66	(54)	62	(52)
Total expense recognized	$27	$27	$22	$22


	For the Six Months Ended June 30,
	Con Edison		CECONY
(Millions of Dollars)	2022	2021	2022	2021
Service cost – including administrative expenses	$144	$171	$135	$160
Interest cost on projected benefit obligation	252	236	237	222
Expected return on plan assets	(585)	(548)	(554)	(520)
Recognition of net actuarial loss	189	393	179	373
Recognition of prior service credit	(8)	(8)	(10)	(10)
TOTAL PERIODIC BENEFIT COST/(CREDIT)	($8)	$244	($13)	$225
Cost capitalized	(68)	(79)	(65)	(75)
Reconciliation to rate level	130	(111)	123	(106)
Total expense recognized	$54	$54	$45	$44

Components of net periodic benefit cost other than service cost are presented outside of operating income on the Companies' consolidated income statements, and only the service cost component is eligible for capitalization. Accordingly, the service cost component is included in the line "Other operations and maintenance" and the non-service cost components are included in the lines "Investment and other income" and "Other deductions" in the Companies' consolidated income statements. The increase in the "Pension and retiree benefits" asset on the Companies' consolidated balance sheets from December 31, 2021 to June 30, 2022 is primarily due to favorable plan liability experience.

Expected Contributions

Based on estimates as of June 30, 2022, the Companies expect to make contributions to the pension plans during 2022 of $31 million (of which $18 million is to be made by CECONY). The Companies’ policy is to fund the total periodic benefit cost of the qualified plan to the extent tax deductible and to also contribute to the non-qualified supplemental plans. During the first six months of 2022, the Companies contributed $10 million to the pension plans, $9 million of which was contributed by CECONY.

Note F – Other Postretirement Benefits

Total Periodic Benefit Cost

The components of the Companies’ total periodic other postretirement benefit cost/(credit) for the three and six months ended June 30, 2022 and 2021 were as follows:


	For the Three Months Ended June 30,
	Con Edison		CECONY
(Millions of Dollars)	2022	2021	2022	2021
Service cost - including administrative expenses	$4	$7	$3	$5
Interest cost on projected other postretirement benefit obligation	9	8	7	7
Expected return on plan assets	(18)	(17)	(15)	(14)
Recognition of net actuarial loss/(gain)	(6)	6	(3)	5
Recognition of prior service credit	(1)	(1)	—	—
TOTAL PERIODIC OTHER POSTRETIREMENT BENEFIT COST/(CREDIT)	$(12)	$3	$(8)	$3
Cost capitalized	(2)	(3)	(1)	(3)
Reconciliation to rate level	11	—	8	(1)
Total credit recognized	($3)	$—	$(1)	$(1)


	For the Six Months Ended June 30,
	Con Edison		CECONY
(Millions of Dollars)	2022	2021	2022	2021
Service cost - including administrative expenses	$9	$13	$7	$10
Interest cost on projected other postretirement benefit obligation	18	16	15	13
Expected return on plan assets	(36)	(34)	(29)	(27)
Recognition of net actuarial loss/(gain)	(7)	12	(4)	10
Recognition of prior service credit	(1)	(1)	—	(1)
TOTAL PERIODIC OTHER POSTRETIREMENT BENEFIT COST/(CREDIT)	$(17)	$6	$(11)	$5
Cost capitalized	(4)	(6)	(3)	(5)
Reconciliation to rate level	15	—	12	(3)
Total credit recognized	($6)	$—	$(2)	$(3)

For information about the presentation of the components of other postretirement benefit costs, see Note E.

Expected Contributions

Based on estimates as of June 30, 2022, the Companies expect to make a contribution of $9 million (all of which is to be made by CECONY) to the other postretirement benefit plans in 2022. The Companies' policy is to fund the total periodic benefit cost of the plans to the extent tax deductible.

Note G – Environmental Matters

Superfund Sites

Hazardous substances, such as asbestos, polychlorinated biphenyls (PCBs) and coal tar, have been used or generated in the course of operations of the Utilities and their predecessors and are present at sites and in facilities and equipment they currently or previously owned, including sites at which gas was manufactured or stored.

The Federal Comprehensive Environmental Response, Compensation and Liability Act of 1980 and similar state statutes (Superfund) impose joint and several liability, regardless of fault, upon generators of hazardous substances for investigation and remediation costs (which include costs of demolition, removal, disposal, storage, replacement, containment and monitoring) and natural resource damages. Liability under these laws can be material and may be imposed for contamination from past acts, even though such past acts may have been lawful at the time they occurred. The sites at which the Utilities have been asserted to have liability under these laws, including their manufactured gas plant sites and any neighboring areas to which contamination may have migrated, are referred to herein as “Superfund Sites.”

For Superfund Sites where there are other potentially responsible parties and the Utilities are not managing the site investigation and remediation, the accrued liability represents an estimate of the amount the Utilities will need to pay to investigate and, where determinable, discharge their related obligations. For Superfund Sites (including the manufactured gas plant sites) for which one of the Utilities is managing the investigation and remediation, the accrued liability represents an estimate of the company's share of the undiscounted cost to investigate the sites and, for sites that have been investigated in whole or in part, the cost to remediate the sites, if remediation is necessary and if a reasonable estimate of such cost can be made. Remediation costs are estimated in light of the information available, applicable remediation standards and experience with similar sites.

The accrued liabilities and regulatory assets related to Superfund Sites at June 30, 2022 and December 31, 2021 were as follows:


	Con Edison		CECONY
(Millions of Dollars)	2022	2021	2022	2021
Accrued Liabilities:
Manufactured gas plant sites	$835	$845	$745	$755
Other Superfund Sites	92	95	92	95
Total	$927	$940	$837	$850
Regulatory assets	$926	$938	$847	$860

Most of the accrued Superfund Site liability relates to sites that have been investigated, in whole or in part. However, for some of the sites, the extent and associated cost of the required remediation has not yet been determined. As investigations progress and information pertaining to the required remediation becomes available, the Utilities expect that additional liability may be accrued, the amount of which is not presently determinable but may be material. The Utilities are permitted to recover or defer as regulatory assets (for subsequent recovery through rates) prudently incurred site investigation and remediation costs.

Environmental remediation costs incurred related to Superfund Sites for the three and six months ended June 30, 2022 and 2021 were as follows:


	For the Three Months Ended June 30,
	Con Edison		CECONY
(Millions of Dollars)	2022	2021	2022	2021
Remediation costs incurred	$6	$5	$6	$5


	For the Six Months Ended June 30,
	Con Edison		CECONY
(Millions of Dollars)	2022	2021	2022	2021
Remediation costs incurred	$14	$13	$13	$13

Insurance and other third-party recoveries received by Con Edison or CECONY were immaterial for the three and six months ended June 30, 2022 and 2021.

In 2021, Con Edison and CECONY estimated that for their manufactured gas plant sites (including CECONY’s Astoria site), the aggregate undiscounted potential liability for the investigation and remediation of coal tar and/or other environmental contaminants could range up to $2,980 million and $2,840 million, respectively. These estimates were based on the assumption that there is contamination at all sites, including those that have not yet been fully investigated and additional assumptions about the extent of the contamination and the type and extent of the remediation that may be required. Actual experience may be materially different.

Asbestos Proceedings

Suits have been brought in New York State and federal courts against the Utilities and many other defendants, wherein a large number of plaintiffs sought large amounts of compensatory and punitive damages for deaths and injuries allegedly caused by exposure to asbestos at various premises of the Utilities. The suits that have been resolved, which are many, have been resolved without any payment by the Utilities, or for amounts that were not, in the aggregate, material to them. The amounts specified in all the remaining thousands of suits total billions of dollars; however, the Utilities believe that these amounts are greatly exaggerated, based on the disposition of previous claims. At June 30, 2022, Con Edison and CECONY have accrued their estimated aggregate undiscounted potential liabilities for these suits and additional suits that may be brought over the next 15 years as shown in the following table. These estimates were based upon a combination of modeling, historical data analysis and risk factor assessment. Courts have begun, and unless otherwise determined on appeal may continue, to apply different standards for determining liability in asbestos suits than the standard that applied historically. As a result, the Companies currently believe that there is a reasonable possibility of an exposure to loss in excess of the liability accrued for the suits. The Companies are unable to estimate the amount or range of such loss. In addition, certain current and former employees have claimed or are claiming workers’ compensation benefits based on alleged disability from exposure to asbestos. CECONY is permitted to defer as regulatory assets (for subsequent recovery through rates) costs incurred for its asbestos lawsuits and workers’ compensation claims.

The accrued liability for asbestos suits and workers’ compensation proceedings (including those related to asbestos exposure) and the amounts deferred as regulatory assets or liabilities for the Companies at June 30, 2022 and December 31, 2021 were as follows:


	Con Edison		CECONY
(Millions of Dollars)	2022	2021	2022	2021
Accrued liability – asbestos suits	$8	$8	$7	$7
Regulatory assets – asbestos suits	$8	$8	$7	$7
Accrued liability – workers’ compensation	$63	$65	$60	$62
Regulatory liabilities – workers’ compensation	$10	$8	$10	$8

Note H – Material Contingencies

Manhattan Explosion and Fire

On March 12, 2014, two multi-use five-story tall buildings located on Park Avenue between 116th and 117th Streets in Manhattan were destroyed by an explosion and fire. CECONY had delivered gas to the buildings through service lines from a distribution main located below ground on Park Avenue. Eight people died and more than 50 people were injured. Additional buildings were also damaged. The National Transportation Safety Board (NTSB) investigated. The parties to the investigation included the company, the City of New York, the Pipeline and Hazardous Materials Safety Administration and the NYSPSC. In June 2015, the NTSB issued a final report concerning the incident, its probable cause and safety recommendations. The NTSB determined that the probable cause of the incident was (1) the failure of a defective fusion joint at a service tee (which joined a plastic service line to a plastic distribution main) installed by the company that allowed gas to leak from the distribution main and migrate into a building where it ignited and (2) a breach in a city sewer line that allowed groundwater and soil to flow into the sewer, resulting in a loss of support for the distribution main, which caused it to sag and overstressed the defective fusion joint. The NTSB also made safety recommendations, including recommendations to the company that addressed its procedures for the preparation and examination of plastic fusions, training of its staff on conditions for notifications to the city’s Fire Department and extension of its gas main isolation valve installation program. In February 2017, the NYSPSC approved a settlement agreement with the company related to the NYSPSC's investigations of the incident and the practices of qualifying persons to perform plastic fusions. Pursuant to the agreement, the company is providing $27 million of future benefits to customers (for which it has accrued a regulatory liability) and will not recover from customers $126 million of costs for gas emergency response activities that it had previously incurred and expensed. Approximately eighty suits are pending against the company seeking generally unspecified damages and, in some cases, punitive damages, for wrongful death, personal injury, property damage and business interruption. The company notified its insurers of the incident and believes that the policies in force at the time of the incident will cover the company’s costs, in excess of a required retention (the amount of which is not material), to satisfy any liability it may have for damages in connection with the incident. During 2020, the company accrued its estimated liability for the suits of $40 million and an insurance receivable in the same amount, which estimated liability did not change as of June 30, 2022.

Other Contingencies

For additional contingencies, see "COVID-19 Regulatory Matters" and "Other Regulatory Matters" in Note B, Note G and “Uncertain Tax Positions” in Note J.

Guarantees

Con Edison and its subsidiaries have entered into various agreements providing financial or performance assurance primarily to third parties on behalf of their subsidiaries. Maximum amounts guaranteed by Con Edison and its subsidiaries under these agreements totaled $2,076 million and $2,157 million at June 30, 2022 and December 31, 2021, respectively.

A summary, by type and term, of Con Edison's total guarantees under these agreements at June 30, 2022 is as follows:


Guarantee Type	0 – 3 years	4 – 10 years	> 10 years	Total
	(Millions of Dollars)
Con Edison Transmission	$465	$—	$—	$465
Energy transactions	478	30	294	802
Renewable electric projects	315	48	376	739
Other	70	—	—	70
Total	$1,328	$78	$670	$2,076

Con Edison Transmission — Con Edison has guaranteed payment by CET Electric of the contributions CET Electric agreed to make to New York Transco LLC (NY Transco). CET Electric owns a 45.7 percent interest in NY Transco. In April 2019, the New York Independent System Operator (NYISO) selected a transmission project that was jointly proposed by National Grid and NY Transco. The siting, construction and operation of the project will require approvals and permits from appropriate governmental agencies and authorities, including the NYSPSC. The NYISO indicated it will work with the developers to enter into agreements for the development and operation of the projects, including a schedule for entry into service by December 2023. Guarantee amount shown includes the maximum possible required amount of CET Electric’s contributions for this project as calculated based on the assumptions that the project is completed at 175 percent of its estimated costs and NY Transco does not use any debt financing for the project.

Energy Transactions — Con Edison and the Clean Energy Businesses guarantee payments on behalf of their subsidiaries in order to facilitate physical and financial transactions in electricity, gas, pipeline capacity, transportation, oil, renewable energy credits and energy services. To the extent that liabilities exist under the contracts subject to these guarantees, such liabilities are included in Con Edison’s consolidated balance sheet.

Renewable Electric Projects — Con Edison and the Clean Energy Businesses guarantee payments on behalf of their wholly-owned subsidiaries associated with their investment in, or development for others of, solar and wind energy facilities.

Other — Other guarantees consist of a $70 million guarantee provided by Con Edison to Travelers Insurance Company for indemnity agreements for surety bonds in connection with the operation of solar energy facilities and energy service projects of the Clean Energy Businesses.

Note I – Leases

Operating lease cost and cash paid for amounts included in the measurement of lease liabilities for the three and six months ended June 30, 2022 and 2021 were as follows:


	For the Three Months Ended June 30,
	Con Edison		CECONY
(Millions of Dollars)	2022	2021	2022	2021
Operating lease cost	$22	$22	$17	$16
Operating lease cash flows	$8	$8	$4	$4


	For the Six Months Ended June 30,
	Con Edison		CECONY
(Millions of Dollars)	2022	2021	2022	2021
Operating lease cost	$44	$43	$33	$33
Operating lease cash flows	$17	$16	$8	$9

As of June 30, 2022 and December 31, 2021, assets recorded as finance leases were $2 million for Con Edison and $1 million for CECONY, and the accumulated amortization associated with finance leases for Con Edison and CECONY were $4 million and $2 million, respectively.

For the three and six months ended June 30, 2022 and 2021, finance lease costs and cash flows for Con Edison and CECONY were immaterial.

Right-of-use assets obtained in exchange for operating lease obligations for Con Edison and CECONY were $2 million and $1 million, respectively, for the three months ended June 30, 2022 and $46 million and $1 million, respectively, for the six months ended June 30, 2022. Right-of-use assets obtained in exchange for operating lease obligations for Con Edison and CECONY were $1 million and immaterial, respectively, for the three months ended June 30, 2021 and $18 million and $1 million, respectively, for the six months ended June 30, 2021.

Other information related to leases for Con Edison and CECONY at June 30, 2022 and December 31, 2021 were as follows:


	Con Edison		CECONY
	2022	2021	2022	2021
Weighted Average Remaining Lease Term:
Operating leases	18.4 years	18.5 years	12.8 years	12.1 years
Finance leases	7.2 years	7.1 years	2.8 years	3.1 years
Weighted Average Discount Rate:
Operating leases	4.3%	4.3%	3.7%	3.5%
Finance leases	1.8%	1.8%	1.0%	1.1%

Future minimum lease payments under non-cancellable leases at June 30, 2022 were as follows:


(Millions of Dollars)	Con Edison		CECONY
Year Ending June 30,	Operating Leases	Finance Leases	Operating Leases	Finance Leases
2023	$86	$—	$63	$—
2024	81	1	62	1
2025	82	—	63	—
2026	82	—	64	—
2027	80	—	63	—
All years thereafter	964	1	476	—
Total future minimum lease payments	$1,375	$2	$791	$1
Less: imputed interest	(474)	—	(173)	—
Total	$901	$2	$618	$1
Reported as of June 30, 2022
Operating lease liabilities (current)	$127	$—	$96	$—
Operating lease liabilities (noncurrent)	774	—	522	—
Other noncurrent liabilities	—	2	—	1
Total	$901	$2	$618	$1

At June 30, 2022, the Companies had an additional operating lease agreement that had not yet commenced, for a solar electric facility under construction by the Clean Energy Businesses, for which the present value of the lease payments is $3 million. This lease is expected to commence within one year, with a lease term of approximately 40 years.

The Companies are lessors under certain leases whereby the Companies own real estate and distribution poles and lease portions of them to others. Revenue under such leases was immaterial for Con Edison and CECONY for the three and six months ended June 30, 2022 and 2021.

Note J – Income Tax

Con Edison’s income tax expense increased to $17 million for the three months ended June 30, 2022 from an $11 million income tax benefit for the three months ended June 30, 2021. The increase in income tax expense is primarily due to higher income before income tax expense, higher state income taxes, lower flow-through tax benefits in 2022 for plant related items and an increase in the reserve for uncertain tax positions for prior years at the Clean Energy Businesses, offset in part by lower income attributable to non-controlling interest, an increase in research and development credits from prior years at the Utilities and lower allowance for uncollectible accounts.

CECONY’s income tax benefit decreased to $10 million for the three months ended June 30, 2022 from a $16 million income tax benefit for the three months ended June 30, 2021. The decrease in income tax benefit is primarily due to higher income before income tax expense, higher state income taxes and lower flow-through tax benefits in 2022 for plant related items, offset in part by an increase in research and development credits from prior years and lower allowance for uncollectible accounts.

Reconciliation of the difference between income tax expense and the amount computed by applying the prevailing statutory income tax rate to income before income taxes for the three months ended June 30, 2022 and 2021 is as follows:


	Con Edison				CECONY
(% of Pre-tax income)	2022		2021		2022		2021
STATUTORY TAX RATE
Federal	21	%	21	%	21	%	21	%
Changes in computed taxes resulting from:
State income tax, net of federal income tax benefit	7		5		5		5
Amortization of excess deferred federal income taxes	(17)		(41)		(27)		(38)
Taxes attributable to non-controlling interest	—		14		—		—
Cost of removal	3		5		4		5
Other plant-related items	(1)		(3)		(2)		(3)
Renewable energy credits	(4)		(8)		—		—
Allowance for uncollectible accounts	(2)		(1)		(3)		(1)
Injuries and damages reserve	—		(2)		1		(2)

Reserve for uncertain tax positions	2		—		—		—


Research and development credits	(3)		—		(4)		—
Other	—		—		(1)		(1)
Effective tax rate	6	%	(10)	%	(6)	%	(14)	%

Con Edison’s income tax expense increased to $171 million for the six months ended June 30, 2022 from $68 million for the six months ended June 30, 2021. The increase in income tax expense is primarily due to higher income before income tax expense, higher state income taxes, lower flow-through tax benefits in 2022 for plant related items and an increase in the reserve for uncertain tax positions for prior years at the Clean Energy Businesses, offset in part by an increase in research and development credits from prior years at the Utilities, higher renewable energy credits and lower allowance for uncollectible accounts.

CECONY’s income tax expense increased to $108 million for the six months ended June 30, 2022 from $98 million for the six months ended June 30, 2021. The increase in income tax expense is primarily due to higher income before income tax expense, higher state income taxes, and lower flow-through tax benefits in 2022 for plant related items, offset in part by an increase in research and development credits from prior years and lower allowance for uncollectible accounts.

Reconciliation of the difference between income tax expense and the amount computed by applying the prevailing statutory income tax rate to income before income taxes for the six months ended June 30, 2022 and 2021 is as follows:


	Con Edison				CECONY
(% of Pre-tax income)	2022		2021		2022		2021
STATUTORY TAX RATE
Federal	21	%	21	%	21	%	21	%
Changes in computed taxes resulting from:
State income tax, net of federal income tax benefit	6		4		5		5
Amortization of excess deferred federal income taxes	(9)		(14)		(12)		(13)
Taxes attributable to non-controlling interest	1		2		—		—
Cost of removal	1		2		2		2
Other plant-related items	(1)		(1)		(1)		(1)
Renewable energy credits	(2)		(3)		—		—






Reserve for uncertain tax positions	1		—		—		—
Research and development credits	(1)		—		(1)

Effective tax rate	17	%	11	%	14	%	14	%

In April 2021, New York State passed a law that increased 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 reinstated the business capital tax at 0.1875%, not to exceed an annual maximum tax liability of $5 million per taxpayer. New York State 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 business 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.

Uncertain Tax Positions

As a result of an unfavorable settlement reached at appeals with the IRS in the second quarter of 2022, the Clean Energy Businesses increased its reserve for uncertain tax positions for prior years by $5 million. At June 30, 2022, the estimated liability for uncertain tax positions for Con Edison was $22 million ($6 million for CECONY). Con Edison reasonably expects to resolve within the next twelve months approximately $18 million of various federal and state uncertainties due to the expected completion of ongoing tax examinations, of which the entire amount, if recognized, would reduce Con Edison's effective tax rate. The amount related to CECONY is $4 million, which, if recognized, would reduce CECONY’s effective tax rate. The total amount of unrecognized tax benefits, if recognized, that would reduce Con Edison’s effective tax rate is $22 million, with $6 million attributable to CECONY.

The Companies recognize interest on liabilities for uncertain tax positions in interest expense and would recognize penalties, if any, in operating expenses in the Companies’ consolidated income statements. For the six months ended June 30, 2022 and 2021, the Companies recognized an immaterial amount of interest expense and no penalties for uncertain tax positions in their consolidated income statements. At June 30, 2022 and December 31, 2021, the Companies recognized an immaterial amount of accrued interest on their consolidated balance sheets.

Note K – Revenue Recognition

The following table presents, for the three and six months ended June 30, 2022 and 2021, revenue from contracts with customers as defined in Accounting Standards Codification Topic 606, "Revenue from Contracts with Customers," as well as additional revenue from sources other than contracts with customers, disaggregated by major source.


	For the Three Months Ended June 30, 2022			For the Three Months Ended June 30, 2021
(Millions of Dollars)	Revenues from contracts with customers	Other revenues (a)	Total operating revenues	Revenues from contracts with customers	Other revenues (a)	Total operating revenues
CECONY
Electric	$2,255	$(15)	$2,240	$1,953	$10	$1,963
Gas	571	11	582	447	2	449
Steam	82	2	84	71	3	74
Total CECONY	$2,908	$(2)	$2,906	$2,471	$15	$2,486
O&R
Electric	175	2	177	161	(8)	153
Gas	65	(4)	61	44	(3)	41
Total O&R	$240	$(2)	$238	$205	$(11)	$194
Clean Energy Businesses
Renewables	199	—	199	183	—	183
Energy services	25	—	25	81	—	81
Develop/Transfer Projects	8	—	8	9	—	9
Other	—	40	40	—	18	18
Total Clean Energy Businesses	$232	$40	$272	$273	$18	$291
Con Edison Transmission	1	—	1	1	—	1
Other (b)	—	(2)	(2)	—	(1)	$(1)
Total Con Edison	$3,381	$34	$3,415	$2,950	$21	$2,971

(a) For the Utilities, this includes primarily revenue or negative revenue adjustments from alternative revenue programs, such as the revenue decoupling mechanisms under their NY electric and gas rate plans (see "Rate Plans" in Note B). For the Clean Energy Businesses, this includes revenue from wholesale services.

(b) Parent company and consolidation adjustments.


	For the Six Months Ended June 30, 2022			For the Six Months Ended June 30, 2021
(Millions of Dollars)	Revenues from contracts with customers	Other revenues (a)	Total operating revenues	Revenues from contracts with customers	Other revenues (a)	Total operating revenues
CECONY
Electric	$4,360	$(36)	$4,324	$3,919	$12	$3,931
Gas	1,681	32	1,713	1,394	29	1,423
Steam	381	5	386	331	7	338
Total CECONY	$6,422	$1	$6,423	$5,644	$48	$5,692
O&R
Electric	339	3	342	305	(6)	299
Gas	188	(8)	180	152	(9)	143
Total O&R	$527	$(5)	$522	$457	$(15)	$442
Clean Energy Businesses
Renewables	327	—	327	334	—	334
Energy services	44	—	44	103	—	103
Develop/Transfer Projects	19	—	19	12	—	12
Other	—	142	142	—	66	66
Total Clean Energy Businesses	$390	$142	$532	$449	$66	$515
Con Edison Transmission	2	—	2	2	—	2
Other (b)	—	(4)	(4)	—	(3)	(3)
Total Con Edison	$7,341	$134	$7,475	$6,552	$96	$6,648

(b) Parent company and consolidation adjustments.


	2022			2021
(Millions of Dollars)	Unbilled contract revenue (a)	Unearned revenue (b)		Unbilled contract revenue (a)	Unearned revenue (b)
Beginning balance as of January 1,	$35	$7		$11	$41
Additions (c)	48	—		107	—
Subtractions (c)	62	4	(d)	78	29	(d)
Ending balance as of June 30,	$21	$3		$40	$12

(a)Unbilled contract revenue represents accumulated incurred costs and earned profits on contracts (revenue arrangements), which have been recorded as revenue, but have not yet been billed to customers, and which represent contract assets as defined in Topic 606. Substantially all accrued unbilled contract revenue is expected to be collected within one year. Unbilled contract revenue arises from the cost-to-cost method of revenue recognition. Unbilled contract revenue from fixed-price type contracts is converted to billed receivables when amounts are invoiced to customers according to contractual billing terms, which generally occur when deliveries or other performance milestones are completed.

(b)Unearned revenue represents a liability for billings to customers in excess of earned revenue, which are contract liabilities as defined in Topic 606.

(c)Additions for unbilled contract revenue and subtractions for unearned revenue represent additional revenue earned. Additions for unearned revenue and subtractions for unbilled contract revenue represent billings. Activity also includes appropriate balance sheet classification for the period.

(d)Of the subtractions from unearned revenue, $4 million and $29 million were included in the balances as of January 1, 2022 and 2021, respectively.

As of June 30, 2022, the aggregate amount of the remaining fixed performance obligations of the Clean Energy Businesses under contracts with customers for energy services was $100 million, of which $61 million will be recognized within the next two years, and the remaining $39 million will be recognized pursuant to long-term service and maintenance agreements.

Utilities' Assessment of Late Payment Charges

In March 2020, the Utilities began suspending new late payment charges and certain other fees for all customers.

For the three months ended June 30, 2021, the estimated amount of these revenues was $19 million and $18 million for Con Edison and CECONY, respectively. For the six months ended June 30, 2021, the estimated amount of these revenues was $37 million and $35 million for Con Edison and CECONY, respectively. The Utilities also began providing payment extensions for all customers that were scheduled to be disconnected prior to the start of the COVID-19 pandemic. In November 2021, the NYSPSC issued an order establishing a surcharge recovery mechanism for CECONY to collect, commencing December 1, 2021 through December 31, 2022, $43 million and $7 million for electric and gas, respectively, of late payment charges and fees that were not billed for the year ended December 31, 2020. In April 2022, the NYSPSC approved the October 2021 O&R NY joint proposal for new electric and gas rate plans for the three-year period January 2022 through December 2024 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. CECONY resumed late payment charges for commercial and residential customers who have not experienced a change in financial circumstances due to the COVID-19 pandemic in September 2021 and October 2021, respectively. O&R resumed late payment charges for commercial and residential customers who have not experienced a change in financial circumstances due to the COVID-19 pandemic in October 2021. See "COVID-19 Regulatory Matters" in Note B.

Note L – Current Expected Credit Losses

Allowance for Uncollectible Accounts

The Utilities’ “Account receivable – customers” balance consists of utility bills due (bills are generally due the month following billing) from customers who have energy delivered, generated, or services provided by the Utilities. The balance also reflects the Utilities’ purchase of receivables from energy service companies to support the retail choice programs.

“Other receivables” balance generally reflects costs billed by the Utilities for goods and services provided to external parties, such as accommodation work for private parties and certain governmental entities, real estate rental and pole attachments.

The Clean Energy Businesses’ customer accounts receivable balance generally reflects the management of energy supply assets, energy-efficiency services to government and commercial customers, and the engineering, procurement, and construction services of renewable energy projects. The Clean Energy Businesses calculate an

allowance for uncollectible accounts related to their energy services customers based on an aging and customer-specific analysis. The amount of such reserves was not material at June 30, 2022 and December 31, 2021.

The Companies develop expected loss estimates using past events data and consider current conditions and future reasonable and supportable forecasts. Changes to the Utilities’ reserve balances that result in write-offs of customer accounts receivable balances above existing rate allowances are not reflected in rates during the term of the current rate plans. For the Utilities’ customer accounts receivable allowance for uncollectible accounts, past events considered include write-offs relative to customer accounts receivable; current conditions include macro-and micro-economic conditions related to trends in the local economy, bankruptcy rates and aged customer accounts receivable balances, among other factors; and forecasts about the future include assumptions related to the level of write-offs and recoveries. Generally, the Utilities write off customer accounts receivable as uncollectible 90 days after the account is turned off for non-payment, or the account is closed during the collection process. See "COVID-19 Regulatory Matters" in Note B.

Other receivables allowance for uncollectible accounts is calculated based on a historical average of collections relative to total other receivables, including current receivables. Current macro- and micro-economic conditions are also considered when calculating the current reserve. Probable outcomes of pending litigation, whether favorable or unfavorable to the Companies, are also included in the consideration.

Starting in 2020, the potential economic impact of the COVID-19 pandemic was also considered in forward-looking projections related to write-off and recovery rates and resulted in increases to the allowance for uncollectible accounts. The increases/(decreases) to the allowance for customer uncollectible accounts for Con Edison and CECONY were immaterial and $(1) million, respectively for the three months ended June 30, 2022 and $19 million and $20 million, respectively, for the six months ended June 30, 2022. The increases to the allowance for uncollectible accounts for Con Edison and CECONY were $94 million and $91 million, respectively, for the three months ended June 30, 2021 and $127 million and $124 million, respectively, for the six months ended June 30, 2021.

Customer accounts receivable and the associated allowance for uncollectible accounts are included in the line “Accounts receivable – customers” on the Companies’ consolidated balance sheets. Other receivables and the associated allowance for uncollectible accounts are included in “Other receivables” on the consolidated balance sheets.

The table below presents a rollforward by major portfolio segment type for the three and six months ended June 30, 2022 and 2021:


	For the Three Months Ended June 30,
	Con Edison				CECONY
	Accounts receivable - customers		Other receivables		Accounts receivable - customers		Other receivables
(Millions of Dollars)	2022	2021	2022	2021	2022	2021	2022	2021
Allowance for credit losses
Beginning Balance at April 1,	$336	$181	$25	$7	$324	$171	$23	$5
Recoveries	5	3	—	—	5	2	—	—
Write-offs	(34)	(21)	—	—	(32)	(19)	—	—
Reserve adjustments	29	112	(16)	—	27	108	(16)	(1)
Ending Balance June 30,	$336	$275	$9	$7	$324	$262	$7	$4


	For the Six Months Ended June 30,
	Con Edison				CECONY
	Accounts receivable - customers		Other receivables		Accounts receivable - customers		Other receivables
(Millions of Dollars)	2022	2021	2022	2021	2022	2021	2022	2021
Allowance for credit losses
Beginning Balance at January 1,	$317	$148	$22	$7	$304	$138	$19	$4
Recoveries	10	6	—	—	9	5	—	—
Write-offs	(63)	(41)	(4)	(1)	(60)	(39)	(3)	—
Reserve adjustments	72	162	(9)	1	71	158	(9)	—
Ending Balance June 30,	$336	$275	$9	$7	$324	$262	$7	$4

Note M – Financial Information by Business Segment

Con Edison’s principal business segments are CECONY’s regulated utility activities, O&R’s regulated utility activities, the Clean Energy Businesses and Con Edison Transmission. CECONY’s principal business segments are its regulated electric, gas and steam utility activities. The financial data for the business segments for the three and six months ended June 30, 2022 and 2021 were as follows:


	For the Three Months Ended June 30,
	Operating revenues		Inter-segment revenues		Depreciation and amortization		Operating income/(loss)
(Millions of Dollars)	2022	2021	2022	2021	2022	2021	2022	2021
CECONY
Electric	$2,240	$1,963	$5	$5	$338	$320	$220	$255
Gas	582	449	2	2	93	80	100	99
Steam	84	74	18	18	24	23	(40)	(33)
Consolidation adjustments	—	—	(25)	(25)	—	—	—	—
Total CECONY	$2,906	$2,486	$—	$—	$455	$423	$280	$321
O&R
Electric	$177	$153	$—	$—	$18	$17	$16	$14
Gas	61	41	—	—	7	7	(2)	(3)
Total O&R	$238	$194	$—	$—	$25	$24	$14	$11
Clean Energy Businesses	$272	$291	$—	$—	$59	$55	$97	$89
Con Edison Transmission	1	1	—	—	—	—	(2)	(1)
Other (a)	(2)	(1)	—	—	—	—	(2)	(2)
Total Con Edison	$3,415	$2,971	$—	$—	$539	$502	$387	$418

(a) Parent company and consolidation adjustments. Other does not represent a business segment.


	For the Six Months Ended June 30,
	Operating revenues		Inter-segment revenues		Depreciation and amortization		Operating income/(loss)
(Millions of Dollars)	2022	2021	2022	2021	2022	2021	2022	2021
CECONY
Electric	$4,324	$3,931	$9	$9	$670	$635	$390	$501
Gas	1,713	1,423	4	4	183	157	550	538
Steam	386	338	37	37	47	46	51	69
Consolidation adjustments	—	—	(50)	(50)	—	—	—	—
Total CECONY	$6,423	$5,692	$—	$—	$900	$838	$991	$1,108
O&R
Electric	$342	$299	$—	$—	$35	$34	$23	$22
Gas	180	143	—	—	13	13	36	39
Total O&R	$522	$442	$—	$—	$48	$47	$59	$61
Clean Energy Businesses	$532	$515	$—	$—	$119	$114	$143	$117
Con Edison Transmission	2	2	—	—	—	1	(5)	(4)
Other (a)	(4)	(3)	—	—	1	—	(3)	(3)
Total Con Edison	$7,475	$6,648	$—	$—	$1,068	$1,000	$1,185	$1,279

(a) Parent company and consolidation adjustments. Other does not represent a business segment.

Note N – Derivative Instruments and Hedging Activities

Con Edison’s subsidiaries hedge market price fluctuations associated with physical purchases and sales of electricity, natural gas, steam and, to a lesser extent, refined fuels by using derivative instruments including futures, forwards, basis swaps, options, transmission congestion contracts and financial transmission rights contracts. These are economic hedges, for which the Utilities and the Clean Energy Business do not elect hedge accounting. The Clean Energy Businesses use interest rate swaps to manage the risks associated with interest rates related to outstanding and expected future debt issuances and borrowings. Derivatives are recognized on the consolidated balance sheet at fair value (see Note O), unless an exception is available under the accounting rules for derivatives and hedging. Qualifying derivative contracts that have been designated as normal purchases or normal sales contracts are not reported at fair value under the accounting rules.

The fair values of the Companies’ derivatives including the offsetting of assets and liabilities on the consolidated balance sheet at June 30, 2022 and December 31, 2021 were:


(Millions of Dollars)	2022				2021
Balance Sheet Location	Gross Amounts of Recognized Assets/(Liabilities)	Gross Amounts Offset	Net Amounts of Assets/ (Liabilities) (a)		Gross Amounts of Recognized Assets/(Liabilities)	Gross Amounts Offset	Net Amounts of Assets/ (Liabilities) (a)
Con Edison
Fair value of derivative assets
Current	$631	$(376)	$255	(b)	$285	$(158)	$127	(b)
Noncurrent	211	(68)	143	(c)	90	(13)	77	(d)
Total fair value of derivative assets	$842	$(444)	$398		$375	$(171)	$204
Fair value of derivative liabilities
Current	$(280)	$186	$(94)	(b)	$(289)	$137	$(152)	(d)
Noncurrent	(91)	29	(62)		(94)	10	(84)	(d)
Total fair value of derivative liabilities	$(371)	$215	$(156)		$(383)	$147	$(236)
Net fair value derivative assets/(liabilities)	$471	($229)	$242		$(8)	$(24)	$(32)
CECONY
Fair value of derivative assets
Current	$456	$(265)	$191	(b)	$135	$(64)	$71	(b)
Noncurrent	140	(72)	68		71	(15)	56
Total fair value of derivative assets	$596	$(337)	$259		$206	$(79)	$127
Fair value of derivative liabilities
Current	$(148)	$68	$(80)	(b)	$(131)	$43	$(88)
Noncurrent	(80)	34	(46)		(50)	10	(40)
Total fair value of derivative liabilities	$(228)	$102	$(126)		$(181)	$53	$(128)
Net fair value derivative assets/(liabilities)	$368	$(235)	$133		$25	$(26)	$(1)

(a)Derivative instruments and collateral were offset on the consolidated balance sheet as applicable under the accounting rules. The Companies enter into master agreements for their commodity derivatives. These agreements typically provide offset in the event of contract termination. In such case, generally the non-defaulting party’s payable will be offset by the defaulting party’s payable. The non-defaulting party will customarily notify the defaulting party within a specific time period and come to an agreement on the early termination amount.

(b)At June 30, 2022, margin deposits for Con Edison ($5 million and $16 million) and for CECONY ($5 million and $14 million) were classified as derivative assets and derivative liabilities, respectively, on the consolidated balance sheet, but not included in the table. At December 31, 2021 margin deposits for Con Edison and CECONY of $1 million and an immaterial amount, respectively, were classified as derivative assets on the consolidated balance sheet, but not included in the table. Margin is collateral, typically cash, that the holder of a derivative instrument is required to deposit in order to transact on an exchange and to cover its potential losses with its broker or the exchange.

(c)Includes amounts for interest rate swaps of $6 million in current assets and $50 million in noncurrent assets. At June 30, 2022, the Clean Energy Businesses had interest rate swaps with notional amounts of $1,002 million. The expiration dates of the swaps range from 2025-2041.

(d)Includes amounts for interest rate swaps of $4 million in noncurrent assets, $(20) million in current liabilities and $(38) million in noncurrent liabilities. At December 31, 2021, the Clean Energy Businesses had interest rate swaps with notional amounts of $1,031 million. The expiration dates of the swaps ranged from 2025-2041. In 2021, as part of the Clean Energy Businesses sale of a renewable electric project, interest rate swaps terminating in 2024 were assumed by the buyer.

The Utilities generally recover their prudently incurred fuel, purchased power and gas costs, including hedging gains and losses, in accordance with rate provisions approved by the applicable state utility regulators. In accordance with the accounting rules for regulated operations, the Utilities record a regulatory asset or regulatory liability to defer recognition of unrealized gains and losses on their electric and gas derivatives. As gains and losses are realized in future periods, they will be recognized as purchased power, gas and fuel costs in the Companies’ consolidated income statements.

The Clean Energy Businesses record realized and unrealized gains and losses on their derivative contracts in gas purchased for resale and non-utility revenue in the reporting period in which they occur. The Clean Energy Businesses record changes in the fair value of their interest rate swaps in other interest expense at the end of each reporting period. Management believes that these derivative instruments represent economic hedges that mitigate exposure to fluctuations in commodity prices and interest rates.

The following table presents the realized and unrealized gains or losses on derivatives that have been deferred or recognized in earnings for the three and six months ended June 30, 2022 and 2021:


		For the Three Months Ended June 30,
		Con Edison		CECONY
(Millions of Dollars)	Balance Sheet Location	2022	2021	2022	2021
Pre-tax gains/(losses) deferred in accordance with accounting rules for regulated operations:
Current	Deferred derivative gains	$10	$128	$8	$119
Noncurrent	Deferred derivative gains	23	38	20	34
Total deferred gains/(losses)		$33	$166	$28	$153
Current	Deferred derivative losses	$46	$24	$40	$22
Current	Recoverable energy costs	32	(47)	30	(45)
Noncurrent	Deferred derivative losses	4	23	7	22
Total deferred gains/(losses)		$82	$—	$77	$(1)
Net deferred gains/(losses)		$115	$166	$105	$152
	Income Statement Location
Pre-tax gains/(losses) recognized in income
	Gas purchased for resale	$(3)	$1	$—	$—
	Non-utility revenue	(6)	(2)	—	—
	Other operations and maintenance expense	2	2	2	2
	Other interest expense (a)	44	(25)	—	—
Total pre-tax gains/(losses) recognized in income		$37	$(24)	$2	$2

(a)See (b) below.


		For the Six Months Ended June 30,
		Con Edison		CECONY
(Millions of Dollars)	Balance Sheet Location	2022	2021	2022	2021
Pre-tax gains/(losses) deferred in accordance with accounting rules for regulated operations:
Current	Deferred derivative gains	$348	$147	$319	$136
Noncurrent	Deferred derivative gains	67	35	62	32
Total deferred gains/(losses)		$415	$182	$381	$168
Current	Deferred derivative losses	$10	$29	$9	$25
Current	Recoverable energy costs	190	(47)	172	(43)
Noncurrent	Deferred derivative losses	(30)	45	(27)	42
Total deferred gains/(losses)		$170	$27	$154	$24
Net deferred gains/(losses) (a)		$585	$209	$535	$192
	Income Statement Location
Pre-tax gains/(losses) recognized in income
	Gas purchased for resale	$3	$2	$—	$—
	Non-utility revenue	(22)	1	—	—
	Other operations and maintenance expense	5	4	5	4
	Other interest expense (b)	109	34	—	—
Total pre-tax gains/(losses) recognized in income		$95	$41	$5	$4

(a)Unrealized net deferred gains on electric and gas derivatives for the Utilities increased as a result of higher electric and gas commodity prices during the six months ended June 30, 2022. Upon settlement, short-term deferred derivative gains generally reduce the recoverable costs of electric and gas purchases.

(b)Gains recognized in other interest expense relate to interest rate swaps at the Clean Energy Businesses. The gains recognized are consistent with the increasing interest rate environment in 2022.

The following table presents the hedged volume of Con Edison’s and CECONY’s commodity derivative transactions at June 30, 2022:


	Electric Energy (MWh) (a)(b)	Capacity (MW) (a)	Natural Gas (Dt) (a)(b)	Refined Fuels (gallons)
Con Edison	25,403,485	36,075	251,449,055	1,680,000
CECONY	23,023,275	23,025	234,190,000	1,680,000

(a)Volumes are reported net of long and short positions, except natural gas collars where the volumes of long positions are reported.

(b)Excludes electric congestion and gas basis swap contracts, which are associated with electric and gas contracts and hedged volumes.

The Companies are exposed to credit risk related to transactions entered into primarily for the various energy supply and hedging activities by the Utilities and the Clean Energy Businesses. Credit risk relates to the loss that may result from a counterparty’s nonperformance. The Companies use credit policies to manage this risk, including an established credit approval process, monitoring of counterparty limits, netting provisions within agreements, collateral or prepayment arrangements, credit insurance and credit default swaps. The Companies measure credit risk exposure as the replacement cost for open energy commodity and derivative positions plus amounts owed from counterparties for settled transactions. The replacement cost of open positions represents unrealized gains, net of any unrealized losses where the Companies have a legally enforceable right to offset.

At June 30, 2022, Con Edison and CECONY had $741 million and $415 million of credit exposure in connection with open energy supply net receivables and hedging activities, net of collateral, respectively. Con Edison’s net credit exposure consisted of $114 million with independent system operators, $77 million with non-investment grade/non-rated counterparties, $188 million with commodity exchange brokers, and $362 million with investment-grade counterparties. CECONY’s net credit exposure consisted of $134 million with commodity exchange brokers, $280 million with investment-grade counterparties, and $1 million with non-investment grade/non-rated counterparties.

The collateral requirements associated with, and settlement of, derivative transactions are included in net cash flows from operating activities in the Companies’ consolidated statement of cash flows. Most derivative instrument contracts contain provisions that may require a party to provide collateral on its derivative instruments that are in a net liability position. The amount of collateral to be provided will depend on the fair value of the derivative instruments and the party’s credit ratings.

The following table presents the aggregate fair value of the Companies’ derivative instruments with credit-risk-related contingent features that are in a net liability position, the collateral posted for such positions and the additional collateral that would have been required to be posted had the lowest applicable credit rating been reduced one level and to below investment grade at June 30, 2022:


(Millions of Dollars)	Con Edison (a)	CECONY (a)
Aggregate fair value – net liabilities	$128	$85
Collateral posted	100	100
Additional collateral (b) (downgrade one level from current ratings)	41	7
Additional collateral (b)(c) (downgrade to below investment grade from current ratings)	87	35

(a)Non-derivative transactions for the purchase and sale of electricity and gas and qualifying derivative instruments, which have been designated as normal purchases or normal sales, are excluded from the table. These transactions primarily include purchases of electricity from independent system operators. In the event the Utilities and the Clean Energy Businesses were no longer extended unsecured credit for such purchases, the Companies would be required to post $6 million of additional collateral at June 30, 2022. For certain other such non-derivative transactions, the Companies could be required to post collateral under certain circumstances, including in the event counterparties had reasonable grounds for insecurity.

(b)The Companies measure the collateral requirements by taking into consideration the fair value amounts of derivative instruments that contain credit-risk-related contingent features that are in a net liability position plus amounts owed to counterparties for settled transactions and amounts required by counterparties for minimum financial security. The fair value amounts represent unrealized losses, net of any unrealized gains where the Companies have a legally enforceable right to offset.

(c)Derivative instruments that are net assets have been excluded from the table. At June 30, 2022, if Con Edison had been downgraded to below investment grade, it would have been required to post additional collateral for such derivative instruments of $70 million.

Note O – Fair Value Measurements

The accounting rules for fair value measurements and disclosures define fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date in a principal or most advantageous market. Fair value is a market-based measurement that is determined based on inputs, which refer broadly to assumptions that market participants use in pricing assets or liabilities. These inputs can be readily observable, market corroborated, or generally unobservable firm inputs. The Companies often make certain assumptions that market participants would use in pricing the asset or liability, including assumptions about risk, and the risks inherent in the inputs to valuation techniques. The Companies use valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs.

The accounting rules for fair value measurements and disclosures established a fair value hierarchy, which prioritizes the inputs to valuation techniques used to measure fair value in three broad levels. The rules require that assets and liabilities be classified in their entirety based on the level of input that is significant to the fair value measurement. Assessing the significance of a particular input may require judgment considering factors specific to

the asset or liability and may affect the valuation of the asset or liability and their placement within the fair value hierarchy. The Companies classify fair value balances based on the fair value hierarchy defined by the accounting rules for fair value measurements and disclosures as follows:

Level 1 – Consists of assets or liabilities whose value is based on unadjusted quoted prices in active markets at the measurement date. An active market is one in which transactions for assets or liabilities occur with sufficient frequency and volume to provide pricing information on an ongoing basis. This category includes contracts traded on active exchange markets valued using unadjusted prices quoted directly from the exchange.
Level 2 – Consists of assets or liabilities valued using industry standard models and based on prices, other than quoted prices within Level 1, that are either directly or indirectly observable as of the measurement date. The industry standard models consider observable assumptions including time value, volatility factors and current market and contractual prices for the underlying commodities, in addition to other economic measures. This category includes contracts traded on active exchanges or in over-the-counter markets priced with industry standard models.
Level 3 – Consists of assets or liabilities whose fair value is estimated based on internally developed models or methodologies using inputs that are generally less readily observable and supported by little, if any, market activity at the measurement date. Unobservable inputs are developed based on the best available information and subject to cost benefit constraints. This category includes contracts priced using models that are internally developed and contracts placed in illiquid markets. It also includes contracts that expire after the period of time for which quoted prices are available and internal models are used to determine a significant portion of the value.

For information on the measurement of Con Edison's investment in MVP, which was measured at fair value on a

non-recurring basis, see Note A. Assets and liabilities measured at fair value on a recurring basis as of June 30, 2022 and December 31, 2021 are summarized below.


	2022					2021
(Millions of Dollars)	Level 1	Level 2	Level 3	Netting Adjustment (e)	Total	Level 1	Level 2	Level 3	Netting Adjustment (e)	Total
Con Edison
Derivative assets:
Commodity (a)(b)(c)	$165	$532	$41	$(390)	$348	$95	$260	$17	$(171)	$201
Interest rate swaps (a)(b)(c)	—	56	—	—	56	—	4	—	—	4
Other (a)(b)(d)	422	120	—	—	542	492	135	—	—	627
Total assets	$587	$708	$41	$(390)	$946	$587	$399	$17	$(171)	$832
Derivative liabilities:
Commodity (a)(b)(c)	$30	$262	$32	$(153)	$171	$33	$266	$28	$(148)	$179
Interest rate swaps (a)(b)(c)	—	—	—	—	—	—	57	—	—	57
Total liabilities	$30	$262	$32	$(153)	$171	$33	$323	$28	$(148)	$236
CECONY
Derivative assets:
Commodity (a)(b)(c)	$144	$408	$1	$(288)	$265	$67	$138	$1	$(79)	$127
Other (a)(b)(d)	406	114	—	—	520	474	127	—	—	601
Total assets	$550	$522	$1	$(288)	$785	$541	$265	$1	$(79)	$728
Derivative liabilities:
Commodity (a)(b)(c)	$12	$161	$12	$(44)	$141	$1	$172	$8	$(53)	$128
Total liabilities	$12	$161	$12	$(44)	$141	$1	$172	$8	$(53)	$128

(a)The Companies’ policy is to review the fair value hierarchy and recognize transfers into and transfers out of the levels at the end of each reporting period. Con Edison and CECONY had an immaterial amount of commodity derivative liabilities transfers between levels 1, 2, and 3 during the six months ended June 30, 2022. Con Edison and CECONY had $1 million of commodity derivative assets and $4 million and $3 million of commodity derivative liabilities, respectively, transferred from level 3 to level 2 during the year ended December 31, 2021 because of availability of observable market data due to the decrease in the terms of certain contracts from beyond three years as of September 30, 2021 to less than three years as of December 31, 2021.

(b)Level 2 assets and liabilities include investments held in the deferred compensation plan and/or non-qualified retirement plans, exchange-traded contracts where there is insufficient market liquidity to warrant inclusion in Level 1, and certain over-the-counter derivative instruments for electricity, refined products and natural gas. Derivative instruments classified as Level 2 are valued using industry standard

models that incorporate corroborated observable inputs, such as pricing services or prices from similar instruments that trade in liquid markets, time value and volatility factors.

(c)The accounting rules for fair value measurements and disclosures require consideration of the impact of nonperformance risk (including credit risk) from a market participant perspective in the measurement of the fair value of assets and liabilities. At June 30, 2022 and December 31, 2021, the Companies determined that nonperformance risk would have no material impact on their financial position or results of operations.

(d)Other assets are comprised of assets such as life insurance contracts within the deferred compensation plan and non-qualified retirement plans.

(e)Amounts represent the impact of legally-enforceable master netting agreements that allow the Companies to net gain and loss positions and cash collateral held or placed with the same counterparties.

The employees in the Companies’ risk management group develop and maintain the Companies’ valuation policies and procedures for, and verify pricing and fair value valuation of, commodity derivatives and interest rate swaps. Under the Companies’ policies and procedures, multiple independent sources of information are obtained for forward price curves used to value commodity derivatives and interest rate swaps. Fair value and changes in fair value of commodity derivatives and interest rate swaps are reported monthly to the Companies’ risk committees, comprised of officers and employees of the Companies that oversee energy hedging at the Utilities and the Clean Energy Businesses. The risk management group reports to the Companies’ Vice President and Treasurer.


	Fair Value of Level 3 at June 30, 2022	Valuation Techniques	Unobservable Inputs	Range
	(Millions of Dollars)
Con Edison – Commodity
Electricity	$16	Discounted Cash Flow	Forward energy prices (a)	$18.25-$161.00 per MWh
	(9)	Discounted Cash Flow	Forward capacity prices (a)	$0.45-$7.10 per kW-month
Transmission Congestion Contracts/Financial Transmission Rights	2	Discounted Cash Flow	Inter-zonal forward price curves adjusted for historical zonal losses (b)	$(9.33)-$18.85 per MWh
Total Con Edison—Commodity	$9
CECONY – Commodity
Electricity	$(4)	Discounted Cash Flow	Forward energy prices (a)	$26.51-$161.00 per MWh
Electricity	$(8)	Discounted Cash Flow	Forward capacity prices (a)	$1.19-$7.10 per kW-month
Transmission Congestion Contracts	1	Discounted Cash Flow	Inter-zonal forward price curves adjusted for historical zonal losses (b)	$0.48-$3.01 per MWh
Total CECONY—Commodity	$(11)

(a)Generally, increases/(decreases) in this input in isolation would result in a higher/(lower) fair value measurement.

(b)Generally, increases/(decreases) in this input in isolation would result in a lower/(higher) fair value measurement.

The table listed below provides a reconciliation of the beginning and ending net balances for assets and liabilities measured at fair value as of June 30, 2022 and 2021 and classified as Level 3 in the fair value hierarchy:


	For the Three Months Ended June 30,
	Con Edison		CECONY
(Millions of Dollars)	2022	2021	2022	2021
Beginning balance as of April 1,	$14	$(12)	$(6)	$(7)
Included in earnings	(3)	1	(2)	(1)
Included in regulatory assets and liabilities	(7)	1	(5)	—
Purchases	2	—	—	—
Settlements	3	1	2	1
Ending balance as of June 30,	$9	$(9)	$(11)	$(7)


	For the Six Months Ended June 30,
	Con Edison		CECONY
(Millions of Dollars)	2022	2021	2022	2021
Beginning balance as of January 1,	$(11)	$(19)	$(7)	$(10)
Included in earnings	22	(2)	(3)	(3)
Included in regulatory assets and liabilities	(5)	8	(4)	3
Purchases	2	—	—	—
Settlements	1	4	3	3
Ending balance as of June 30,	$9	$(9)	$(11)	$(7)

For the Utilities, realized gains and losses on Level 3 commodity derivative assets and liabilities are reported as part of purchased power, gas and fuel costs. The Utilities generally recover these costs in accordance with rate provisions approved by the applicable state public utilities regulators. Unrealized gains and losses for commodity derivatives are generally deferred on the consolidated balance sheet in accordance with the accounting rules for regulated operations.

For the Clean Energy Businesses, realized and unrealized gains and losses on Level 3 commodity derivative assets and liabilities are reported in non-utility revenues ($1 million gain and $2 million gain) on the consolidated income statement for the three months ended June 30, 2022 and 2021, respectively, and ($28 million gain and $4 million gain) for the six months ended June 30, 2022 and 2021, respectively.

Note P – Variable Interest Entities

The accounting rules for consolidation address the consolidation of a variable interest entity (VIE) by a business enterprise that is the primary beneficiary. A VIE is an entity that does not have a sufficient equity investment at risk to permit it to finance its activities without additional subordinated financial support, or whose equity investors lack the characteristics of a controlling financial interest. The primary beneficiary is the business enterprise that has the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance and either absorbs a significant amount of the VIE’s losses or has the right to receive benefits that could be significant to the VIE.

The Companies enter into arrangements including leases, partnerships and electricity purchase agreements, with various entities. As a result of these arrangements, the Companies retain or may retain a variable interest in these entities.

CECONY

CECONY has an ongoing long-term electricity purchase agreement with Brooklyn Navy Yard Cogeneration Partners, LP, a potential VIE. In 2021, a request was made of this counterparty for information necessary to determine whether the entity was a VIE and whether CECONY is the primary beneficiary; however, the information was not made available. The payments for this contract constitute CECONY’s maximum exposure to loss with respect to the potential VIE.

Clean Energy Businesses

In June 2021, a subsidiary of the Clean Energy Businesses sold substantially all of its membership interest in a renewable electric project, and retained an equity interest of $11 million in the project which is accounted for as an equity method investment. See Note S. The earnings of the project are determined using the hypothetical liquidation at book value (HLBV) method of accounting, and such earnings were not material for the three and six months ended June 30, 2022 and 2021. Con Edison is not the primary beneficiary since the power to direct the activities that most significantly impact the economics of the renewable electric project is not held by the Clean Energy Businesses.

HLBV Accounting

Con Edison has determined that the use of HLBV accounting is reasonable and appropriate to attribute income and loss to the tax equity investors. Using the HLBV method, the company's earnings from the projects are adjusted to reflect the income or loss allocable to the tax equity investors calculated based on how the project would allocate and distribute its cash if it were to sell all of its assets for their carrying amounts and liquidate at a particular point in time. Under the HLBV method, the company calculates the liquidation value allocable to the tax equity investors at

the beginning and end of each period based on the contractual liquidation waterfall and adjusts its income for the period to reflect the change in the liquidation value allocable to the tax equity investors.

CED Nevada Virginia

In February 2021, a subsidiary of the Clean Energy Businesses entered into an agreement relating to certain projects (CED Nevada Virginia) with a noncontrolling tax equity investor to which a percentage of earnings, tax attributes and cash flows will be allocated. CED Nevada Virginia is a consolidated entity in which Con Edison has less than a 100 percent membership interest. Con Edison is the primary beneficiary since the power to direct the activities that most significantly impact the economics of CED Nevada Virginia is held by the Clean Energy Businesses.

For the three months ended June 30, 2022, the HLBV method of accounting for CED Nevada Virginia resulted in an immaterial amount of income for the tax equity investor and an immaterial loss for Con Edison. For the three months ended June 30, 2021, the HLBV method of accounting for CED Nevada Virginia resulted in a $53 million loss ($40 million, after-tax) for the tax equity investor and an equivalent amount of income for Con Edison.

For the six months ended June 30, 2022, the HLBV method of accounting for CED Nevada Virginia resulted in a $42 million loss ($32 million, after-tax) for the tax equity investor and $39 million of income ($29 million, after-tax) for Con Edison. For the six months ended June 30, 2021, the HLBV method of accounting for CED Nevada Virginia resulted in a $53 million loss ($40 million, after-tax) for the tax equity investor and an equivalent amount of income for Con Edison.

Tax Equity Projects

In 2018, the Clean Energy Businesses completed its acquisition of Sempra Solar Holdings, LLC. Included in the acquisition were certain operating projects (Tax Equity Projects) with a noncontrolling tax equity investor to which a percentage of earnings, tax attributes and cash flows are allocated. The Tax Equity Projects are consolidated entities in which Con Edison has less than a 100 percent membership interest. Con Edison is the primary beneficiary since the power to direct the activities that most significantly impact the economics of the Tax Equity Projects is held by the Clean Energy Businesses. Electricity generated by the Tax Equity Projects is sold to utilities and municipalities pursuant to long-term power purchase agreements.

For the three months ended June 30, 2022, the HLBV method of accounting for the Tax Equity Projects resulted in a $1 million loss ($1 million, after tax) for the tax equity investor and $18 million of income ($13 million, after-tax) for Con Edison. For the three months ended June 30, 2021, the HLBV method of accounting for the Tax Equity Projects resulted in $6 million of income ($5 million, after-tax) for the tax equity investor and $10 million of income ($7 million, after-tax) for Con Edison.

For the six months ended June 30, 2022, the HLBV method of accounting for the Tax Equity Projects resulted in a $7 million loss ($5 million, after tax) for the tax equity investor and $28 million of income ($21 million, after-tax) for Con Edison. For the six months ended June 30, 2021, the HLBV method of accounting for the Tax Equity Projects resulted in $8 million of income ($6 million, after-tax) for the tax equity investor and $13 million of income ($10 million, after-tax) for Con Edison.

At June 30, 2022 and December 31, 2021, Con Edison’s consolidated balance sheet included the following amounts associated with its VIEs:


	Tax Equity Projects
	Great Valley Solar (c)(d)		Copper Mountain - Mesquite Solar (c)(e)		CED Nevada Virginia (c)(h)
(Millions of Dollars)	2022	2021	2022	2021	2022	2021
Non-utility property, less accumulated depreciation (f)(g)	$271	$275	$424	$431	$632	$643
Other assets	41	37	170	167	59	55
Total assets (a)	$312	$312	$594	$598	$691	$698

Other liabilities	17	14	80	74	326	315
Total liabilities (b)	$17	$14	$80	$74	$326	$315

(a)The assets of the Tax Equity Projects and CED Nevada Virginia represent assets of a consolidated VIE that can be used only to settle obligations of the consolidated VIE.

(b)The liabilities of the Tax Equity Projects and CED Nevada Virginia represent liabilities of a consolidated VIE for which creditors do not have recourse to the general credit of the primary beneficiary.

(c)Con Edison did not provide any financial or other support during the year that was not previously contractually required.

(d)Great Valley Solar consists of the Great Valley Solar 1, Great Valley Solar 2, Great Valley Solar 3 and Great Valley Solar 4 projects, for which the noncontrolling interest of the tax equity investor was $76 million and $84 million at June 30, 2022 and December 31, 2021, respectively.

(e)Copper Mountain - Mesquite Solar consists of the Copper Mountain Solar 4, Mesquite Solar 2 and Mesquite Solar 3 projects for which the noncontrolling interest of the tax equity investor was $106 million and $118 million at June 30, 2022 and December 31, 2021, respectively.

(f)Non-utility property is reduced by accumulated depreciation of $31 million for Great Valley Solar, $51 million for Copper Mountain - Mesquite Solar, and $20 million for CED Nevada Virginia at June 30, 2022.

(g)Non-utility property is reduced by accumulated depreciation of $26 million for Great Valley Solar, $44 million for Copper Mountain - Mesquite Solar, and $10 million for CED Nevada Virginia at December 31, 2021.

(h)CED Nevada Virginia consists of the Copper Mountain Solar 5, Battle Mountain Solar and Water Strider Solar projects for which the noncontrolling interest of the tax equity investor was $50 million and $95 million at June 30, 2022 and December 31, 2021, respectively.

Note Q – Related Party Transactions

The NYSPSC generally requires that the Utilities and Con Edison’s other subsidiaries be operated as separate entities. The Utilities and the other subsidiaries are required to have separate operating employees and operating officers of the Utilities may not be operating officers of the other subsidiaries. The Utilities may provide administrative and other services to, and receive such services from, Con Edison and its other subsidiaries only pursuant to cost allocation procedures approved by the NYSPSC. Transfers of assets between the Utilities and Con Edison or its other subsidiaries may be made only as approved by the NYSPSC. The debt of the Utilities is to be raised directly by the Utilities and not derived from Con Edison. Without the prior permission of the NYSPSC, the Utilities may not make loans to, guarantee the obligations of, or pledge assets as security for the indebtedness of Con Edison or its other subsidiaries. The NYSPSC limits the dividends that the Utilities may pay Con Edison to not more than 100 percent of their respective income available for dividends calculated on a two–year rolling average basis. Excluded from the calculation of “income available for dividends” are non-cash charges to income resulting from accounting changes or charges to income resulting from significant unanticipated events. The restriction also does not apply to dividends paid in order to transfer to Con Edison proceeds from major transactions, such as asset sales, or to dividends reducing each utility subsidiary’s equity ratio to a level appropriate to its business risk. As a result, substantially all of the net assets of CECONY and O&R ($16,568 million and $903 million, respectively), at June 30, 2022, are considered restricted net assets. The NYSPSC may impose additional measures to separate, or “ring fence,” the Utilities from Con Edison and its other subsidiaries.

The costs of administrative and other services provided by CECONY to, and received by it from, Con Edison and its other subsidiaries for the three months ended June 30, 2022 and 2021 were as follows:


	For the Three Months Ended June 30,
	CECONY
(Millions of Dollars)	2022	2021
Cost of services provided	$33	$35
Cost of services received	20	16


	For the Six Months Ended June 30,
	CECONY
(Millions of Dollars)	2022	2021
Cost of services provided	$66	$66
Cost of services received	37	33

In addition, CECONY and O&R have joint gas supply arrangements in connection with which CECONY sold to O&R, $26 million and $15 million of natural gas for the three months ended June 30, 2022 and 2021, respectively and $71 million and $42 million for the six months ended June 30, 2022 and 2021, respectively. These amounts are net of the effect of related hedging transactions.

At June 30, 2022 and December 31, 2021, CECONY's net payable to Con Edison for income taxes was $12 million and $10 million, respectively.

The Utilities perform work and incur expenses on behalf of NY Transco, a company in which CET Electric has a 45.7 percent equity interest. The Utilities bill NY Transco for such work and expenses in accordance with established policies. For the three months ended June 30, 2022 and 2021, the amounts billed by the Utilities to NY

Transco were $3 million and an immaterial amount, respectively, and $4 million and an immaterial amount for the six months ended June 30, 2022 and 2021, respectively.

CECONY has storage and wheeling service contracts with Stagecoach Gas Services LLC (Stagecoach), a joint venture formerly owned by a subsidiary of CET Gas and a subsidiary of Crestwood Equity Partners LP (Crestwood). In addition, CECONY is the replacement shipper on one of Crestwood’s firm transportation agreements with Tennessee Gas Pipeline Company LLC. CECONY incurred costs for storage and wheeling services from Stagecoach of $8 million and $15 million for the three and six months ended June 30, 2021, respectively. During 2021, a subsidiary of CET Gas completed the sale of its 50 percent interest in Stagecoach.

CECONY has a 20-year transportation contract with Mountain Valley Pipeline, LLC (MVP) for 250,000 dekatherms per day of capacity. CET Gas owns a 9.9 percent equity interest in MVP (that is expected to be reduced to 8.0 percent). See "Investments - 2020 and 2021 Partial Impairments of Investment in Mountain Valley Pipeline, LLC (MVP) in Note A. In October 2017, the Environmental Defense Fund and the Natural Resource Defense Council requested the NYSPSC to prohibit CECONY from recovering costs under its MVP contract unless CECONY can demonstrate that the contract is in the public interest. CECONY advised the NYSPSC that it would respond to the request if the NYSPSC opened a proceeding to consider this request. For the three and six months ended June 30, 2022 and 2021, CECONY incurred no costs under the contract.

FERC has authorized CECONY to lend funds to O&R for a period of not more than 12 months, in an amount not to exceed $250 million, at prevailing market rates. At June 30, 2022 and December 31, 2021 there were no outstanding loans to O&R.

The Clean Energy Businesses had financial electric capacity contracts with CECONY and O&R. For the three months ended June 30, 2022 and 2021, the Clean Energy Businesses realized a $1 million gain and an immaterial gain, respectively, and $3 million and $1 million for the six months ended June 30, 2022 and 2021, respectively, under these contracts.

Note R – New Financial Accounting Standards

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting (ASU 2020-04). In 2017, the United Kingdom’s Financial Conduct Authority announced that it intends to stop persuading or compelling banks to submit the London Interbank Offered Rate (LIBOR), a benchmark interest rate referenced in a variety of agreements, after 2021. The United Kingdom's Financial Conduct Authority ceased publication of U.S. Dollar LIBOR after December 31, 2021 for one-week and two-month U.S. Dollar LIBOR tenors, and expects to cease publishing after June 30, 2023 for all other U.S. Dollar LIBOR tenors. ASU 2020-04 provides entities with optional expedients and exceptions for applying generally accepted accounting principles to contract modifications and hedging relationships, subject to meeting certain criteria, that reference LIBOR or another reference rate expected to be discontinued. In January 2021, the FASB issued amendments to the guidance through ASU 2021-01 to include all contract modifications and hedging relationships affected by reference rate reform, including those that do not directly reference LIBOR or another reference rate expected to be discontinued, and clarify which optional expedients may be applied to them. The guidance can be applied prospectively. The optional relief is temporary and generally cannot be applied to contract modifications and hedging relationships entered into or evaluated after December 31, 2022. The Companies do not expect the new guidance to have a material impact on their financial position, results of operations or liquidity.

In December 2021, the FASB issued amendments to the guidance on accounting for government assistance through ASU 2021-10, Government Assistance (Topic 832): Disclosures by Business Entities about Government Assistance. The amendments require that business entities disclose 1) the types of assistance, 2) an entity’s

accounting for the assistance, and 3) the effect of the assistance on an entity’s financial statements. For public entities, the amendments are effective for reporting periods beginning after December 15, 2021. Early adoption is permitted. The Companies have concluded the new guidance will not have a material impact on the Companies’ financial position, results of operations and liquidity.

Note S – Dispositions

In April 2021, a subsidiary of the Clean Energy Businesses entered into an agreement to sell substantially all of its membership interests in a renewable electric project that it developed and also all of its membership interests in a renewable electric project that it acquired in 2016. The sales were completed in June 2021. The combined carrying value of both projects was approximately $192 million in June 2021. The net pre-tax gain on the sales was $3 million ($2 million after-tax) and was included within "Other operations and maintenance" on Con Edison's consolidated income statement for the year ended December 31, 2021. The retained portion of the membership interest in the renewable electric project, of $11 million, was calculated based on a discounted cash flow of future projected earnings, and the retained portion is accounted for as an equity method investment. The portion of the gain attributable to the retained portion of the membership interest was not material for the year ended December 31, 2021. See Note P.

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