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

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

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

This MD&A should be read in conjunction with the Second Quarter Financial Statements and the notes thereto and the MD&A in Item 7 of the Companies’ combined Annual Report on Form 10-K for the year ended December 31, 2022 (File Nos.1-14514 and 1-01217, the Form 10-K) and the MD&A in Part 1, Item 2 of the Companies' combined

Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2023 (File Nos. 1-14514 and 1-01217).

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

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


	Con Edison


CECONY	O&R	Con Edison Transmission
	•RECO

Con Edison’s principal business operations are those of CECONY, O&R and Con Edison Transmission. CECONY’s principal business operations are its regulated electric, gas and steam delivery businesses. O&R’s principal business operations are its regulated electric and gas delivery businesses. Con Edison Transmission invests in electric transmission projects and manages both electric and gas assets while seeking to develop electric transmission projects. See "Investments" in Note A to the Second Quarter Financial Statements. On March 1, 2023, Con Edison completed the sale of substantially all of the assets of the Clean Energy Businesses. See Note S and Note T to the Second Quarter Financial Statements.

Con Edison seeks to provide shareholder value through continued dividend growth, supported by earnings growth in regulated utilities and contracted electric and gas assets. The company invests to provide reliable, resilient, safe and clean energy critical for its NY customers. Con Edison is a responsible neighbor, helping the communities it serves become more sustainable.

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

Clean Energy Goals

The success of the Companies’ efforts to meet federal, state and city clean energy policy goals and the impact of energy consumers' efforts to meet such goals on CECONY’s electric, gas and steam businesses and O&R’s electric and gas businesses may impact the Companies’ future financial condition. The Utilities expect electric usage to

increase and gas and steam usage to decrease in their service territories as federal, state and local laws and policies are enacted and implemented that aim to reduce the carbon intensity of the energy that is consumed. The Utilities’ and their regulators’ efforts to maintain electric reliability in their service territories as electric usage increases may also impact the Companies’ future financial condition. The long-term future of the Utilities’ gas businesses depends upon the role that natural gas or other gaseous fuels will play in facilitating New York State’s and New York City’s climate goals. In addition, the impact and costs of climate change on the Utilities’ systems and the success of the Utilities’ efforts to maintain system reliability and manage service interruptions resulting from severe weather may impact the Companies’ future financial condition, results of operations and liquidity.

Aged Accounts Receivable Balances

At June 30, 2023, CECONY’s and O&R’s customer accounts receivables balances of $1,875 million and $83 million, respectively, included aged accounts receivables (balances outstanding in excess of 60 days) of $1,031 million and $22 million, respectively. In comparison, CECONY’s and O&R’s customer accounts receivable balances at February 28, 2020 were $1,322 million and $89 million, respectively, including aged accounts receivables (balances outstanding in excess of 60 days) of $408 million and $15 million, respectively. Prior to the start of the COVID-19 pandemic, the Utilities’ practice was to write off customer accounts receivables as uncollectible 90 days after the account is disconnected for non-payment or the account is closed during the collection process. In general, the Utilities suspended service disconnections during the COVID-19 pandemic. CECONY’s electric and gas rate plans include reconciliation of late payment charges (from January 1, 2023 through December 31, 2025) and write-offs of customer accounts receivable balances (from January 1, 2020 through December 31, 2025) to amounts reflected in rates, with recovery/refund from or to customers via surcharge/sur-credit. Surcharge recoveries for late payment charges and write-offs of accounts receivable balances will, collectively, be subject to separate annual caps for electric and gas that produce no more than a half percent (0.5 percent) total customer bill impact per commodity (estimated for electric to be $57.3 million, $60.3 million, $62.6 million for 2023, 2024 and 2025, respectively, and for gas to be $14.8 million, $15.9 million and $16.8 million for 2023, 2024 and 2025, respectively). Amounts in excess of the surcharge caps will be deferred as a regulatory asset for recovery in CECONY’s next base rate cases. O&R’s 2022 - 2024 rate plans include reconciliation of late payment charges to amounts reflected in rates for years 2022 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. Although these regulatory mechanisms are in place, a continued slower recovery in cash of outstanding customer accounts receivable balances may impact the Companies’ liquidity. The Utilities have resumed collection activities, including write-offs of uncollectible customer accounts receivable balances and are evaluating strategies to increase recovery of aged accounts receivable balances.

CECONY Steam Rate Plan

In November 2022, as updated in February 2023, CECONY filed a request with the NYSPSC for a steam rate increase of $141 million, effective November 2023. The filing reflects a return on common equity of 10 percent and a common equity ratio of 50 percent and requests a new mechanism for decoupling revenues from steam consumption. In March 2023, the NYSDPS submitted testimony in the NYSPSC proceeding that supports a steam rate increase of $94 million reflecting, among other things, a 9.0 percent return on common equity and a common equity ratio of 48 percent. The NYSDPS testimony does not support CECONY’s request for a new mechanism for decoupling revenues from steam consumption. CECONY’s future earnings will depend on the rates authorized in, and the other provisions of, its November 2023 steam rate plan and CECONY’s ability to operate its businesses in a manner consistent with such rate plan. Therefore, the outcome of CECONY’s rate request that requires approval by the NYSPSC will impact the Companies’ future financial condition, results of operations and liquidity. See “Utility Regulation – State Utility Regulation – Rate Plans” and “Rate Plans” in Note B to the Second Quarter Financial Statements.

Con Edison Transmission

Con Edison Transmission, through its NY Transco partnership and jointly with the New York Power Authority, is developing the Propel NY Energy transmission project that will deliver offshore wind energy from Long Island to New York City, Westchester County and the rest of the state's high voltage power grid. Con Edison Transmission expects to continue to participate in competitive solicitations to develop additional electric projects. The success of Con Edison Transmission’s efforts in these competitive solicitations and to grow its electric transmission portfolio may impact Con Edison’s future capital requirements. During 2020 and 2021, Con Edison Transmission recorded impairments on its investment in the Mountain Valley Pipeline, LLC (MVP). Any future impairments of Con Edison Transmission’s investment in MVP may impact Con Edison’s future financial condition and results of operations. See "Investments" in Note A to the Second Quarter Financial Statements and “Con Edison Transmission,” below.

CECONY

Electric

CECONY provides electric service to approximately 3.6 million customers in all of New York City (except a part of Queens) and most of Westchester County, an approximately 660 square mile service area with a population of more than nine million.

Gas

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

In June 2023, CECONY decreased its five-year forecast of average annual growth of the firm peak gas demand in its service area at design conditions from 1.0 percent (for 2023 to 2027) to 0.8 percent (for 2024 to 2028). The decrease primarily reflects customers’ energy efficiency measures and electrification of space heating plus New York State’s prohibition on the installation of fossil-fuel equipment in certain new buildings within the next five years.

Steam

CECONY operates the largest steam distribution system in the United States by producing and delivering approximately 16,017 MMlb of steam annually to approximately 1,521 customers in parts of Manhattan.

In June 2023, CECONY decreased its five-year forecast of the average annual peak steam demand in its service area at design conditions from a 0.1 percent decrease (for 2023 to 2027) to a 0.5 percent decrease (for 2024 to 2028). The decrease reflects continued lower commercial building occupancy levels in the aftermath of the COVID-19 pandemic and expected steam customer conversions to natural gas heating.

O&R

Electric

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

Gas

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

In June 2023, O&R decreased its five-year forecast of the average annual firm peak gas demand in its service area at design conditions from a 0.1 percent decrease (for 2023 to 2027) to a 0.2 percent decrease (for 2024 to 2028). The decrease primarily reflects customers’ energy efficiency measures and electrification of space heating plus New York State’s prohibition on the installation of fossil-fuel equipment in certain new buildings within the next five years.

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


	For the Three Months Ended June 30, 2023						For the Six Months Ended June 30, 2023						At June 30, 2023
(Millions of Dollars, except percentages)	Operating Revenues			Net Income for Common Stock			Operating Revenues			Net Income for Common Stock			Assets
CECONY	$2,744	93	%	$189	84	%	$6,697	91	%	$793	48	%	$58,739	92	%
O&R	200	7		8	4		521	7		39	2		3,466	5
Total Utilities	$2,944	100	%	$197	88	%	$7,218	98	%	$832	50	%	$62,205	97	%
Clean Energy Businesses (a)(c)	—	—		—	—		129	2		22	1		—	—
Con Edison Transmission	1	—		4	2		2	—		6	—		371	1
Other (b)(c)	(1)	—		25	10		(2)	—		798	49		1,195	2
Total Con Edison	$2,944	100	%	$226	100	%	$7,347	100	%	$1,658	100	%	$63,771	100	%

(a)Net income for common stock from the Clean Energy Businesses for the six months ended June 30, 2023 includes $(9) million net after-tax mark-to-market effects. Net income for common stock from the Clean Energy Businesses for the six months ended June 30, 2023 also includes $2 million (after-tax) net of the effects of HLBV accounting for tax equity investments in certain renewable electric projects. Depreciation and amortization expenses on their assets of $31 million (after-tax) were not recorded for the six months ended June 30, 2023. See "Assets Held for Sale" in Note A, Note S and Note T to the Second Quarter Financial Statements.

(b)Other includes the parent company, Con Edison’s tax equity investments, the deferred project held for sale and consolidation adjustments. Net income for common stock for the six months ended June 30, 2023 includes an immaterial amount of income tax impact on the net after-tax mark-to-market effects. Net income for common stock for the three and six months ended June 30, 2023 also includes $(3) million net of income tax impact on the effects of HLBV accounting for tax equity investments in certain renewable electric projects. Net income for common stock for the three and six months ended June 30, 2023 also includes $(1) million net of tax and $(8) million net of tax, respectively, of transaction costs and other accruals related to the sale of the Clean Energy Businesses. Impact of the sale of the Clean Energy Businesses on the changes in state apportionments (net of federal taxes) for the three and six months ended June 30, 2023 includes $6 million and $(10) million, respectively. Depreciation and amortization expenses on the assets of the Clean Energy Businesses of $(3) million (after-tax) were not recorded for the six months ended June 30, 2023. Net income for common stock for the three and six months ended June 30, 2023 includes $13 million (after-tax) and $804 million (after-tax) for the gain on the sale of substantially all of the assets of the Clean Energy Businesses. See Note S and Note T to the Second Quarter Financial Statements.

(c)On March 1, 2023, Con Edison completed the sale of substantially all of the assets of the Clean Energy Businesses. See Note S and Note T to the Second Quarter Financial Statements.

Inflation Reduction Act

On August 16, 2022, the Inflation Reduction Act of 2022 (the Act) was signed into law and included a new 15 percent Corporate Alternative Minimum Tax (CAMT). Under the Act, a corporation will be subject to the CAMT if its average annual Adjusted Financial Statement Income (AFSI) for the three taxable year period ending prior to the taxable year exceeds $1,000 million, and will apply to tax years beginning after December 31, 2022. Based on management’s preliminary calculations, Con Edison and CECONY do not expect to be subject to the CAMT in 2023 and 2024 but are expected to be subject to the CAMT in subsequent years. However, the provisions of the CAMT are not expected to have a material impact on the Companies’ financial position, results of operations and liquidity.

NY Legislation

In April 2021, NY passed a law that increased the corporate franchise tax rate on business income from 6.5 percent to 7.25 percent, 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 percent, not to exceed a maximum tax liability of $5 million per taxpayer. NY requires a corporate franchise taxpayer to calculate and pay the highest amount of tax under the three alternative methods: a tax on business income; a tax on business capital; or a fixed dollar minimum. The provisions to increase the corporate franchise tax rate and reinstate a capital tax were scheduled to expire after 2023. In May 2023, NY passed a law that extended the increase in the corporate franchise tax rate from 6.5 percent to 7.25 percent for another 3-year period, through tax year 2026 and extended the business capital tax through tax year 2026. NY also passed a law establishing a permanent rate of 30 percent for the metropolitan transportation business tax surcharge. As a result of the sale of the Clean Energy Businesses in 2023, Con Edison has NY State taxable income in excess of $5 million after using its entire NY state NOL carryforward, and therefore, the group is subject to the higher 7.25 percent rate (9.425 percent with the surcharge rate) on its taxable income for tax year 2023. As a result of this legislation, CECONY remeasured its deferred tax assets and liabilities that would reverse before 2027 and recorded state deferred income tax expense (net of federal benefit) and an increase in accumulated deferred tax liabilities of $10 million in the three months ended June 30, 2023.

Results of Operations

Net income for common stock and earnings per share for the three and six months ended June 30, 2023 and 2022 were as follows:


	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2023	2022	2023	2022	2023	2022	2023	2022
(Millions of Dollars, except per share amounts)	Net Income for Common Stock		Earnings per Share		Net Income for Common Stock		Earnings per Share
CECONY	$189	$170	$0.55	$0.48	$793	$645	$2.27	$1.82
O&R	8	9	0.02	0.02	39	39	0.11	0.11
Clean Energy Businesses (a) (d)	—	90	—	0.25	22	196	0.06	0.56
Con Edison Transmission	4	1	0.01	—	6	1	0.02	—
Other (b)	25	(15)	0.07	(0.03)	798	(24)	2.28	(0.07)
Con Edison (c)	$226	$255	$0.65	$0.72	$1,658	$857	$4.74	$2.42

(a)Net income for common stock and earnings per share from the Clean Energy Businesses for the six months ended June 30, 2023 includes $(9) million or $(0.03) a share net after-tax mark-to-market effects. Net income for common stock and earnings per share from the Clean Energy Businesses for the six months ended June 30, 2023 also includes $2 million or $0.01 a share (after-tax) net of the effects of HLBV accounting for tax equity investments in certain renewable electric projects. Depreciation and amortization expenses on their assets of $31 million or $0.09 a share (after-tax) were not recorded for the six months ended June 30, 2023. See "Assets Held for Sale" in Note A, Note S and Note T to the Second Quarter Financial Statements.

Net income for common stock and earnings per share from the Clean Energy Businesses for the three and six months ended June 30, 2022 includes $29 million or $0.08 a share and $79 million or $0.23 a share, respectively, of net after-tax mark-to-market effects. Net income for common stock and earnings per share from the Clean Energy Businesses for the three and six months ended June 30, 2022 also includes $1 million or $0.00 a share (after-tax) and $37 million or $0.10 a share (after-tax), respectively, of the effects of HLBV accounting for tax equity investments in certain renewable electric projects.

(b) Other includes the parent company, Con Edison’s tax equity investments, the deferred project held for sale and consolidation adjustments. Net income for common stock and earnings per share for the six months ended June 30, 2023 includes an immaterial amount or $0.00 a share net of income tax impact on the net after-tax mark-to-market effects. Net income for common stock and earnings per share for the three and six months ended June 30, 2023 also includes $(3) million or $(0.01) a share net of income tax impact on the effects of HLBV accounting for tax equity investments in certain renewable electric projects. Net income for common stock for the three and six months ended June 30, 2023 also includes $(1) million or $0.00 a share and $(8) million and $(0.02) a share of transaction costs and other accruals, respectively, related to the sale of the Clean Energy Businesses (net of tax). Impact of the sale of the Clean Energy Businesses on the changes in state apportionments (net of federal taxes) is $6 million or $0.02 per share and $(10) million or $(0.03) per share for the three and six months ended June 30, 2023, respectively. Depreciation and amortization expenses on the assets of the Clean Energy Businesses of $(3) million or $(0.01) a share (after-tax) were not recorded for the six months ended June 30, 2023. Net income for common stock and earnings per share for the six months ended June 30, 2023 includes $13 million or $0.03 a share and $804 million (after-tax) or $2.30 a share (after-tax) for the gain on the sale of substantially all of the assets of the Clean Energy Businesses. See Note S and Note T to the Second Quarter Financial Statements.

Other includes parent company and consolidation adjustments. Net income for common stock and earnings per share for the three and six months ended June 30, 2022 includes $(3) million or $(0.00) a share and $(6) million or $(0.02) a share, respectively, of income tax impact on the net after-tax mark-to-market effects. Net income for common stock and earnings per share for the three and six months ended June 30, 2022 also includes an immaterial amount or $(0.00) a share (after-tax) and $(3) million or $(0.01) a share (after-tax) respectively, of income tax impact on the effects of HLBV accounting for tax equity investments in certain renewable electric projects.

(c) Earnings per share on a diluted basis were $0.65 a share and $0.72 a share for the three months ended June 30, 2023 and 2022, respectively, and $4.72 a share and $2.41 a share for the six months ended June 30, 2023 and 2022, respectively. In March 2023, Con Edison entered into ASR Contracts with two dealers to repurchase $1,000 million in aggregate of Common Shares. Con Edison’s share repurchase was completed in the second quarter of 2023. See Note C to the Second Quarter Financial Statements.

(d) On March 1, 2023, Con Edison completed the sale of substantially all of the assets of the Clean Energy Businesses. See Note S and Note T to the Second Quarter Financial Statements.

The following tables present the estimated effect of major factors on earnings per share and net income for common stock for the three and six months ended June 30, 2023 as compared with the 2022 period.


Variation for the Three Months Ended June 30, 2023 vs. 2022
	Net Income for Common Stock (Millions of Dollars)	Earnings per Share
CECONY (a)
Electric base rate increase	$25	$0.07

Lower operation and maintenance expense for stock-based compensation, health care costs and injuries and damages	11	0.03
Higher income from allowance for funds used during construction	5	0.01
Change in incentives earned under the electric and gas earnings adjustment mechanisms (EAMs)	4	0.01
Higher electric operations maintenance activities	(7)	(0.02)
Gas base rate change	(7)	(0.02)

Weather impact on steam revenue	(4)	(0.01)

Accretive effect of share repurchase	—	0.01





Other	(8)	(0.01)
Total CECONY	19	0.07
O&R (a)
Electric base rate increase	1	—
Gas base rate increase	1	—


Other	(2)	—
Total O&R	—	—
Clean Energy Businesses (b)











Total Clean Energy Businesses	(90)	(0.25)
Con Edison Transmission
Higher investment income	2	0.01




Other	1	—

Total Con Edison Transmission	3	0.01
Other, including parent company expenses
Gain and other impacts related to the sale of the Clean Energy Businesses	18	0.05
Lower interest expense	5	0.01
Higher interest income	5	0.01

Net mark-to-market effects	3	0.01
HLBV effects	(2)	(0.01)


Other	10	0.03
Total Other, including parent company expenses	39	0.10
Total Reported (GAAP basis)	$(29)	$(0.07)

a.Under the revenue decoupling mechanisms in the Utilities’ NY electric and gas rate plans and the weather-normalization clause applicable to their gas businesses, revenues are generally not affected by changes in delivery volumes from levels assumed when rates were approved. In general, the Utilities recover on a current basis the fuel, gas purchased for resale and purchased power costs they incur in supplying energy to their full-service customers. Accordingly, such costs do not generally affect Con Edison’s results of operations.
b. On March 1, 2023, Con Edison completed the sale of substantially all of the assets of the Clean Energy Businesses.


Variation for the Six Months Ended June 30, 2023 vs. 2022
	Net Income for Common Stock (Millions of Dollars)	Earnings per Share
CECONY (a)
Electric base rate increase	$71	$0.20
Gas base rate increase	61	0.17
Lower operation and maintenance expense from stock based compensation, health care costs and injuries and damages	17	0.05
Higher income from allowance for funds used during construction	12	0.03
Change in incentives earned under the electric and gas earnings adjustment mechanisms (EAMs)	7	0.02
Weather impact on steam revenues	(25)	(0.07)
Accretive effect of share repurchase	—	0.03







Other	5	0.02
Total CECONY	148	0.45
O&R (a)
Electric base rate increase	3	0.01
Gas base rate increase	3	0.01
Higher storm-related costs	(2)	(0.01)
Other	(4)	(0.01)
Total O&R	—	—
Clean Energy Businesses (b)












Total Clean Energy Businesses	(174)	(0.50)
Con Edison Transmission
Higher investment income	4	0.01


Other	1	0.01
Total Con Edison Transmission	5	0.02
Other, including parent company expenses
Gain and other impacts related to the sale of the Clean Energy Businesses	783	2.24
Higher interest income	12	0.03
Lower interest expense	9	0.02
Net mark-to-market effects	7	0.02
HLBV effects	(1)	—
Accretive effect of share repurchase	—	0.03
Other	12	0.01
Total Other, including parent company expenses	822	2.35
Total Reported (GAAP basis)	$801	$2.32

a.Under the revenue decoupling mechanisms in the Utilities’ NY electric and gas rate plans and the weather-normalization clause applicable to their gas businesses, revenues are generally not affected by changes in delivery volumes from levels assumed when rates were approved. In general, the Utilities recover on a current basis the fuel, gas purchased for resale and purchased power costs they incur in supplying energy to their full-service customers. Accordingly, such costs do not generally affect Con Edison’s results of operations.
b. On March 1, 2023, Con Edison completed the sale of substantially all of the assets of the Clean Energy Businesses.

The Companies’ other operations and maintenance expenses for the three and six months ended June 30, 2023 and 2022 were as follows:


	For the Three Months Ended June 30,		For the Six Months Ended June 30,
(Millions of Dollars)	2023	2022	2023	2022
CECONY
Operations	$447	$419	$870	$856
Pensions and other postretirement benefits	87	106	173	208
Health care and other benefits	35	35	72	70
Regulatory fees and assessments (a)	83	80	172	167
Other	105	78	220	159
Total CECONY	$757	$718	$1,507	$1,460
O&R	90	84	187	170
Clean Energy Businesses (b)	—	76	47	151
Con Edison Transmission	3	3	6	7
Other (c)	(1)	—	(3)	(2)
Total other operations and maintenance expenses	$849	$881	$1,744	$1,786

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

(b)On March 1, 2023, Con Edison completed the sale of substantially all of the assets of the Clean Energy Businesses. See Note S and Note T to the Second Quarter Financial Statements.

(c)Other includes the parent company, Con Edison’s tax equity investments, the deferred project held for sale and consolidation adjustments. See Note T.

A discussion of the results of operations by principal business segment for the three and six months ended June 30, 2023 and 2022 follows. For additional business segment financial information, see Note M to the Second Quarter Financial Statements.

The Companies’ results of operations for the three months ended June 30, 2023 and 2022 were as follows:


	CECONY		O&R		Clean Energy Businesses (a)		Con Edison Transmission		Other (b)		Con Edison (c)
(Millions of Dollars)	2023	2022	2023	2022	2023	2022	2023	2022	2023	2022	2023	2022
Operating revenues	$2,744	$2,906	$200	$238	$—	$272	$1	$1	$(1)	$(2)	$2,944	$3,415
Purchased power	452	566	43	63	—	5	—	—	—	(1)	495	633
Fuel	18	52	—	—	—	—	—	—	—	—	18	52
Gas purchased for resale	91	145	8	30	—	30	—	—	—	—	99	205
Other operations and maintenance	757	718	90	84	—	76	3	3	(1)	—	849	881
Depreciation and amortization	470	455	26	25	—	59	—	—	—	—	496	539
Taxes, other than income taxes	694	690	22	22	—	5	—	—	—	1	716	718
Gain on sale of the Clean Energy Businesses	—	—	—	—	—	—	—	—	13	—	13	—



Operating income (loss)	262	280	11	14	—	97	(2)	(2)	13	(2)	284	387
Other income (deductions)	184	82	12	6	—	1	8	4	3	(4)	207	89
Net interest expense	223	202	13	11	—	(14)	—	—	—	6	236	205
Income (loss) before income tax expense	223	160	10	9	—	112	6	2	16	(12)	255	271
Income tax expense	34	(10)	2	—	—	23	2	1	(9)	3	29	17
Net income (loss)	$189	$170	$8	$9	$—	$89	$4	$1	$25	$(15)	$226	$254
Income (loss) attributable to non-controlling interest	—	—	—	—	—	(1)	—	—	—	—	—	(1)
Net income (loss) for common stock	$189	$170	$8	$9	$—	$90	$4	$1	$25	$(15)	$226	$255

(a)On March 1, 2023, Con Edison completed the sale of substantially all of the assets of the Clean Energy Businesses. See Note S and Note T to the Second Quarter Financial Statements.

(b)Other includes the parent company, Con Edison’s tax equity investments, the deferred project held for sale and consolidation adjustments. See Note T to the Second Quarter Financial Statements.

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

CECONY


	For the Three Months Ended June 30, 2023				For the Three Months Ended June 30, 2022
(Millions of Dollars)	Electric	Gas	Steam	2023 Total	Electric	Gas	Steam	2022 Total	2023-2022 Variation
Operating revenues	$2,144	$531	$69	$2,744	$2,240	$582	$84	$2,906	$(162)
Purchased power	445	—	7	452	554	—	12	566	(114)
Fuel	18	—	—	18	46	—	6	52	(34)
Gas purchased for resale	—	91	—	91	—	145	—	145	(54)
Other operations and maintenance	569	132	56	757	556	114	48	718	39
Depreciation and amortization	339	106	25	470	338	93	24	455	15
Taxes, other than income taxes	541	119	34	694	526	130	34	690	4
Operating income	$232	$83	$(53)	$262	$220	$100	$(40)	$280	$(18)

Electric

CECONY’s results of electric operations for the three months ended June 30, 2023 compared with the 2022 period were as follows:


	For the Three Months Ended
(Millions of Dollars)	June 30, 2023	June 30, 2022	Variation
Operating revenues	$2,144	$2,240	$(96)
Purchased power	445	554	(109)
Fuel	18	46	(28)
Other operations and maintenance	569	556	13
Depreciation and amortization	339	338	1
Taxes, other than income taxes	541	526	15
Electric operating income	$232	$220	$12

CECONY’s electric sales and deliveries for the three months ended June 30, 2023 compared with the 2022 period were:


	Millions of kWh Delivered						Revenues in Millions (a)
	For the Three Months Ended						For the Three Months Ended
Description	June 30, 2023	June 30, 2022	Variation	Percent Variation			June 30, 2023	June 30, 2022	Variation	Percent Variation
Residential/Religious (b)	2,280	2,339	(59)	(2.5)	%		$669	$748	$(79)	(10.6)	%
Commercial/Industrial	2,340	2,338	2	0.1			568	603	(35)	(5.8)
Retail choice customers	4,644	4,952	(308)	(6.2)			501	587	(86)	(14.7)
NYPA, Municipal Agency and other sales	2,126	2,176	(50)	(2.3)			166	176	(10)	(5.7)
Other operating revenues (c)	—	—	—	—			240	126	114	90.5
Total	11,390	11,805	(415)	(3.5)	%	(d)	$2,144	$2,240	$(96)	(4.3	%)

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

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

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

(d)After adjusting for variations, primarily weather and billing days, electric delivery volumes in CECONY’s service area increased 0.2 percent in the three months ended June 30, 2023 compared with the 2022 period.

Operating revenues decreased $96 million in the three months ended June 30, 2023 compared with the 2022 period primarily due to lower purchased power expenses ($109 million) and higher fuel expenses ($28 million), offset in part by an increase in revenues from the electric rate plan ($34 million).

Purchased power expenses decreased $109 million in the three months ended June 30, 2023 compared with the 2022 period primarily due to lower unit costs ($111 million), offset in part by higher purchased volumes ($2 million).

Fuel expenses decreased $28 million in the three months ended June 30, 2023 compared with the 2022 period due to lower unit costs ($30 million), offset by higher purchased volumes from CECONY's electric generating facilities ($2 million).

Other operations and maintenance expenses increased $13 million in the three months ended June 30, 2023 compared with the 2022 period primarily due to higher electric operations maintenance activities ($9 million) and higher municipal infrastructure support ($3 million).

Taxes, other than income taxes increased $15 million in the three months ended June 30, 2023 compared with the 2022 period due to higher property taxes ($38 million), offset in part by lower deferral of over-collected property taxes ($14 million) and lower state and local revenue taxes ($9 million).

Gas

CECONY’s results of gas operations for the three months ended June 30, 2023 compared with the 2022 period were as follows:


	For the Three Months Ended
(Millions of Dollars)	June 30, 2023	June 30, 2022	Variation
Operating revenues	$531	$582	$(51)
Gas purchased for resale	91	145	(54)
Other operations and maintenance	132	114	18
Depreciation and amortization	106	93	13
Taxes, other than income taxes	119	130	(11)
Gas operating income	$83	$100	$(17)

CECONY’s gas sales and deliveries, excluding off-system sales, for the three months ended June 30, 2023 compared with the 2022 period were:


	Thousands of Dt Delivered						Revenues in Millions (a)
	For the Three Months Ended						For the Three Months Ended
Description	June 30, 2023	June 30, 2022	Variation	Percent Variation			June 30, 2023	June 30, 2022	Variation	Percent Variation
Residential	8,508	9,647	(1,139)	(11.8)	%		$235	$270	$(35)	(13.0)	%
General	6,136	6,789	(653)	(9.6)			98	123	(25)	(20.3)
Firm transportation	14,198	15,639	(1,441)	(9.2)			155	155	—	—
Total firm sales and transportation	28,842	32,075	(3,233)	(10.1)	%	(b)	$488	$548	$(60)	(10.9)	%
Interruptible sales (c)	1,581	956	625	65.4			8	10	(2)	(20.0)
NYPA	14,119	12,700	1,419	11.2			1	1	—	—
Generation plants	11,453	12,744	(1,291)	(10.1)			6	8	(2)	(25.0)
Other	4,571	4,835	(264)	(5.5)			9	9	—	—
Other operating revenues (d)	—	—	—	—			19	6	13	Large
Total	60,566	63,310	(2,744)	(4.3)	%		$531	$582	$(51)	(8.8)	%

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

(b)After adjusting for variations, primarily billing days, firm gas sales and transportation volumes in CECONY’s service area decreased 7.3 percent in the three months ended June 30, 2023 compared with the 2022 period.

(c)Includes 91 thousand and 4 thousand of Dt for the 2023 and 2022 periods, respectively, that are also reflected in firm transportation and other.

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

Operating revenues decreased $51 million in the three months ended June 30, 2023 compared with the 2022 period primarily due to lower gas purchased for resale ($54 million), offset in part by change in incentives earned under the earnings adjustment mechanisms (EAMs) ($5 million).

Gas purchased for resale decreased $54 million in the three months ended June 30, 2023 compared with the 2022 period due to lower unit costs ($37 million) and lower purchased volumes ($17 million).

Other operations and maintenance expenses increased $18 million in the three months ended June 30, 2023 compared with the 2022 period primarily due to higher gas operations department costs ($14 million) and higher surcharges for assessments and fees that are collected in revenues from customers ($3 million).

Depreciation and amortization expenses increased $13 million in the three months ended June 30, 2023 compared with the 2022 period primarily due to higher gas utility plant balances.

Taxes, other than income taxes decreased $11 million in the three months ended June 30, 2023 compared with the 2022 period primarily due to a lower deferral of over-collected property taxes ($17 million), offset in part by higher property taxes ($7 million).

Steam

CECONY’s results of steam operations for the three months ended June 30, 2023 compared with the 2022 period were as follows:


	For the Three Months Ended
(Millions of Dollars)	June 30, 2023	June 30, 2022	Variation
Operating revenues	$69	$84	$(15)
Purchased power	7	12	(5)
Fuel	—	6	(6)
Other operations and maintenance	56	48	8
Depreciation and amortization	25	24	1
Taxes, other than income taxes	34	34	—
Steam operating income	$(53)	$(40)	$(13)

CECONY’s steam sales and deliveries for the three months ended June 30, 2023 compared with the 2022 period were:


	Millions of Pounds Delivered						Revenues in Millions
	For the Three Months Ended						For the Three Months Ended
Description	June 30, 2023	June 30, 2022	Variation	Percent Variation			June 30, 2023	June 30, 2022	Variation	Percent Variation
General	47	67	(20)	(29.9)	%		$3	$4	$(1)	(25.0)	%
Apartment house	828	947	(119)	(12.6)			22	25	(3)	(12.0)
Annual power	1,769	2,021	(252)	(12.5)			50	58	(8)	(13.8)
Other operating revenues (a)	—	—	—	—			(6)	(3)	(3)	Large
Total	2,644	3,035	(391)	(12.9)	%	(b)	$69	$84	$(15)	(17.9)	%

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

(b)After adjusting for variations, primarily weather and billing days, steam sales and deliveries decreased 2.6 percent in the three months ended June 30, 2023 compared with the 2022 period.

Operating revenues decreased $15 million in the three months ended June 30, 2023 compared with the 2022 period primarily due to the impact of warmer winter weather ($6 million) and lower fuel expenses ($6 million) and lower revenues from the decrease in average normalized use per customer ($2 million).

Purchased power decreased $5 million in the three months ended June 30, 2023 compared with the 2022 period due to lower unit costs ($7 million), offset by higher purchased volumes ($2 million).

Fuel expenses decreased $6 million in the three months ended June 30, 2023 compared with the 2022 period due to lower unit costs ($5 million).

Other operations and maintenance expenses increased $8 million in the three months ended June 30, 2023 compared with the 2022 period primarily due to higher costs for pension and other postretirement benefits, reflecting reconciliation to the rate plan level ($6 million).

Taxes, Other Than Income Taxes

At $694 million, taxes other than income taxes remain one of CECONY’s largest operating expenses for the three months ended June 30, 2023. The principal components of, and variations in, taxes other than income taxes were:


	For the Three Months Ended June 30,
(Millions of Dollars)	2023		2022		Variation
Property taxes	$604		$557		$47
State and local taxes related to revenue receipts	78		88		(10)
Payroll taxes	19		19		—
Other taxes	(7)		26		(33)
Total	$694	(a)	$690	(a)	$4

(a)Including sales tax on customers’ bills, total taxes other than income taxes in 2023 and 2022 were $854 million and $834 million, respectively.

Other Income (Deductions)

Other income increased $102 million in the three months ended June 30, 2023 compared with the 2022 period primarily due to lower costs associated with components of pension and other postretirement benefits other than service cost ($80 million), higher interest accrual ($4 million) and lower expenses resulting from investment performance in a deferred income plan ($1 million).

Net Interest Expense

Net Interest Expense increased $21 million in the three months ended June 30, 2023 compared with the 2022 period primarily due to higher interest on long-term debt ($20 million).

Income Tax Expense

Income taxes increased $44 million in the three months ended June 30, 2023 compared with the 2022 period primarily due to higher income before income tax expense ($13 million), higher state income taxes ($4 million), remeasurement of deferred state taxes as a result of enacted higher New York State income tax rates ($10 million), higher allowance for uncollectible accounts ($5 million), lower research and development credits from prior years ($4 million) and lower flow-through tax benefits in 2023 for plant related items ($3 million).

O&R


	For the Three Months Ended June 30, 2023			For the Three Months Ended June 30, 2022
(Millions of Dollars)	Electric	Gas	2023 Total	Electric	Gas	2022 Total	2023-2022 Variation
Operating revenues	$159	$41	$200	$177	$61	$238	$(38)
Purchased power	43	—	43	63	—	63	(20)
Gas purchased for resale	—	8	8	—	30	30	(22)
Other operations and maintenance	71	19	90	66	18	84	6
Depreciation and amortization	18	8	26	18	7	25	1
Taxes, other than income taxes	14	8	22	14	8	22	—
Operating income	$13	$(2)	$11	$16	$(2)	$14	$(3)

Electric

O&R’s results of electric operations for the three months ended June 30, 2023 compared with the 2022 period were as follows:


	For the Three Months Ended
(Millions of Dollars)	June 30, 2023	June 30, 2022	Variation
Operating revenues	$159	$177	$(18)
Purchased power	43	63	(20)
Other operations and maintenance	71	66	5
Depreciation and amortization	18	18	—
Taxes, other than income taxes	14	14	—
Electric operating income	$13	$16	$(3)

O&R’s electric sales and deliveries for the three months ended June 30, 2023 compared with the 2022 period were:


	Millions of kWh Delivered						Revenues in Millions (a)
	For the Three Months Ended						For the Three Months Ended
Description	June 30, 2023	June 30, 2022	Variation	Percent Variation			June 30, 2023	June 30, 2022	Variation	Percent Variation
Residential/Religious (b)	416	411	5	1.2	%		$82	$89	$(7)	(7.9)	%
Commercial/Industrial	231	214	17	7.9			30	33	(3)	(9.1)
Retail choice customers	563	639	(76)	(11.9)			40	48	(8)	(16.7)
Public authorities	26	25	1	4.0			3	3	—	—
Other operating revenues (c)	—	—	—	—			4	4	—	—
Total	1,236	1,289	(53)	(4.1)	%	(d)	$159	$177	$(18)	(10.2)	%

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

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

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

(d)After adjusting for weather and other variations, electric delivery volumes in O&R’s service area increased 3.9 percent in the three months ended June 30, 2023 compared with the 2022 period.

Operating revenues decreased $18 million in the three months ended June 30, 2023 compared with the 2022 period primarily due to lower purchased power expenses ($20 million), offset in part by higher revenues from the NY electric rate plan ($3 million).

Purchased power expenses decreased $20 million in the three months ended June 30, 2023 compared with the 2022 period due to lower unit costs ($16 million), and lower purchased volumes ($4 million).

Other operations and maintenance expenses increased $5 million in the three months ended June 30, 2023 compared with the 2022 period primarily due to higher tree trimming expenses ($2 million), higher office supplies expenses ($1 million) and higher pension costs, reflecting reconciliation to the rate plan level ($1 million).

Gas

O&R’s results of gas operations for the three months ended June 30, 2023 compared with the 2022 period were as follows:


	For the Three Months Ended
(Millions of Dollars)	June 30, 2023	June 30, 2022	Variation
Operating revenues	$41	$61	$(20)
Gas purchased for resale	8	30	(22)
Other operations and maintenance	19	18	1
Depreciation and amortization	8	7	1
Taxes, other than income taxes	8	8	—
Gas operating income	$(2)	$(2)	$—

O&R’s gas sales and deliveries, excluding off-system sales, for the three months ended June 30, 2023 compared with the 2022 period were:


	Thousands of Dt Delivered						Revenues in Millions (a)
	For the Three Months Ended						For the Three Months Ended
Description	June 30, 2023	June 30, 2022	Variation	Percent Variation			June 30, 2023	June 30, 2022	Variation	Percent Variation
Residential	1,524	1,720	(196)	(11.4)	%		$24	$44	$(20)	(45.5)	%
General	314	456	(142)	(31.1)			3	8	(5)	(62.5)
Firm transportation	1,028	1,080	(52)	(4.8)			8	9	(1)	(11.1)
Total firm sales and transportation	2,866	3,256	(390)	(12.0)	%	(b)	$35	$61	$(26)	(42.6)	%
Interruptible sales	803	892	(89)	(10.0)			1	1	—	—

Other	11	96	(85)	(88.5)			1	—	1	—
Other gas revenues	—	—	—	—			4	(1)	5	Large
Total	3,680	4,244	(564)	(13.3)	%		$41	$61	$(20)	(32.8)	%

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

(b)After adjusting for weather and other variations, total firm sales and transportation volumes decreased 0.6 percent in the three months ended June 30, 2023 compared with the 2022 period.

Operating revenues decreased $20 million in the three months ended June 30, 2023 compared with the 2022 period primarily due to lower gas purchased for resale ($22 million), offset in part by higher revenues from the NY gas rate plan ($1 million).

Gas purchased for resale decreased $22 million in the three months ended June 30, 2023 compared with the 2022 period due to lower unit costs ($21 million) and lower purchased volumes ($1 million).

Taxes, Other Than Income Taxes

Taxes, other than income taxes, remained consistent in 2023 compared with 2022 for the three months ended June 30, 2023. The principal components of taxes, other than income taxes, were:


	For the Three Months Ended June 30,
(Millions of Dollars)	2023		2022		Variation
Property taxes	$18		$17		$1
State and local taxes related to revenue receipts	2		3		(1)
Payroll taxes	2		2		—
Total	$22	(a)	$22	(a)	$—

(a)Including sales tax on customers’ bills, total taxes other than income taxes in 2023 and 2022 were $28 million and $31 million, respectively.

Clean Energy Businesses

On March 1, 2023, Con Edison completed the sale of substantially all of the assets of the Clean Energy Businesses. See Note S and Note T to the Second Quarter Financial Statements. The Clean Energy Businesses’ results of operations for the three months ended June 30, 2023 compared with the 2022 period were as follows:


	For the Three Months Ended
(Millions of Dollars)	June 30, 2023	June 30, 2022	Variation
Operating revenues	$—	$272	$(272)

Purchased power	—	5	(5)
Gas purchased for resale	—	30	(30)
Other operations and maintenance	—	76	(76)
Depreciation and amortization	—	59	(59)
Taxes, other than income taxes	—	5	(5)



Operating income	$—	$97	$(97)

Operating revenues decreased $272 million in the three months ended June 30, 2023 compared with the 2022 period due to the sale of the Clean Energy Businesses.

Gas purchased for resale decreased $30 million in the three months ended June 30, 2023 compared with the 2022 period due to the sale of the Clean Energy Businesses.

Other operations and maintenance expenses decreased $76 million in the three months ended June 30, 2023 compared with the 2022 period due to the sale of the Clean Energy Businesses.

Depreciation and amortization expenses decreased $59 million in the three months ended June 30, 2023 compared with the 2022 period due to the sale of the Clean Energy Businesses.

Net Interest Income (Expense)

Net interest income decreased $14 million in the three months ended June 30, 2023 compared with the 2022 period due to the sale of the Clean Energy Businesses.

Income Tax Expense

Income taxes decreased $23 million in the three months ended June 30, 2023 compared with the 2022 period due to the sale of the Clean Energy Businesses.

Income (Loss) Attributable to Non-Controlling Interest

Loss attributable to non-controlling interest decreased $1 million in the three months ended June 30, 2023 compared with the 2022 period due to the sale of the Clean Energy Businesses.

Con Edison Transmission

Other Income (Deductions)

Other income increased $4 million in the three months ended June 30, 2023 compared with the 2022 period primarily due to higher investment income from NY Transco ($3 million).

Other

Income Tax Expense

Income taxes decreased $12 million in the three months ended June 30, 2023 compared with the 2022 period primarily due to higher renewable energy credits ($3 million), lower state income taxes ($6 million) and reduction in the year-to-date unitary tax adjustment recorded as a result of change in state apportionment factors due to the sale of the Clean Energy Businesses ($7 million), offset in part by higher income before income tax expense ($3 million).

The Companies’ results of operations for the six months ended June 30, 2023 and 2022 were as follows:


	CECONY		O&R		Clean Energy Businesses (d)		Con Edison Transmission (c)		Other (b)		Con Edison (c)
(Millions of Dollars)	2023	2022	2023	2022	2023	2022	2023	2022	2023	2022	2023	2022
Operating revenues	$6,697	$6,423	$521	$522	$129	$532	$2	$2	$(2)	$(4)	$7,347	$7,475
Purchased power	1,083	996	114	122	—	6	—	—	1	(4)	1,198	1,120
Fuel	207	196	—	—	—	—	—	—	—	—	207	196
Gas purchased for resale	456	469	71	78	41	102	—	—	(1)	—	567	649
Other operations and maintenance	1,507	1,460	187	170	47	151	6	7	(3)	(2)	1,744	1,786
Depreciation and amortization	943	900	51	48	—	119	—	—	—	1	994	1,068
Taxes, other than income taxes	1,430	1,411	46	45	4	11	—	—	2	4	1,482	1,471


Gain on sale of the Clean Energy Businesses	—	—	—	—	—	—	—	—	867	—	867	—
Operating income	1,071	991	52	59	37	143	(4)	(5)	866	(3)	2,022	1,185
Other income (deductions) (c)	367	164	24	12	1	—	15	9	(3)	(4)	404	181
Net interest expense	456	402	25	22	16	(50)	2	2	—	11	499	387
Income before income tax expense	982	753	51	49	22	193	9	2	863	(18)	1,927	979
Income tax expense	189	108	12	10	3	46	3	1	65	6	272	171
Net income	$793	$645	$39	$39	$19	$147	$6	$1	$798	$(24)	$1,655	$808
Loss attributable to non-controlling interest	—	—	—	—	(3)	(49)	—	—	—	—	(3)	(49)
Net income for common stock	$793	$645	$39	$39	$22	$196	$6	$1	$798	$(24)	$1,658	$857

(a)On March 1, 2023, Con Edison completed the sale of substantially all of the assets of the Clean Energy Businesses. See Note S and Note T to the Second Quarter Financial Statements.

(b)Other includes the parent company, Con Edison’s tax equity investments, the deferred project held for sale and consolidation adjustments. See Note T to the Second Quarter Financial Statements.

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

CECONY


	For the Six Months Ended June 30, 2023				For the Six Months Ended June 30, 2022
(Millions of Dollars)	Electric	Gas	Steam	2023 Total	Electric	Gas	Steam	2022 Total	2023-2022 Variation
Operating revenues	$4,500	$1,822	$375	$6,697	$4,324	$1,713	$386	$6,423	$274
Purchased power	1,058	—	25	1,083	965	—	31	996	87
Fuel	97	—	110	207	112	—	84	196	11
Gas purchased for resale	—	456	—	456	—	469	—	469	(13)
Other operations and maintenance	1,138	257	112	1,507	1,129	232	99	1,460	47
Depreciation and amortization	683	211	49	943	670	183	47	900	43
Taxes, other than income taxes	1,100	256	74	1,430	1,058	279	74	1,411	19
Operating income	$424	$642	$5	$1,071	$390	$550	$51	$991	$80

Electric

CECONY’s results of electric operations for the six months ended June 30, 2023 compared with the 2022 period were as follows:


	For the Six Months Ended
(Millions of Dollars)	June 30, 2023	June 30, 2022	Variation
Operating revenues	$4,500	$4,324	$176
Purchased power	1,058	965	93
Fuel	97	112	(15)
Other operations and maintenance	1,138	1,129	9
Depreciation and amortization	683	670	13
Taxes, other than income taxes	1,100	1,058	42
Electric operating income	$424	$390	$34

CECONY’s electric sales and deliveries for the six months ended June 30, 2023 compared with the 2022 period were:


	Millions of kWh Delivered						Revenues in Millions (a)
	For the Six Months Ended						For the Six Months Ended
Description	June 30, 2023	June 30, 2022	Variation	Percent Variation			June 30, 2023	June 30, 2022	Variation	Percent Variation
Residential/Religious (b)	4,894	4,980	(86)	(1.7)	%		$1,381	$1,531	$(150)	(9.8)	%
Commercial/Industrial	5,127	4,854	273	5.6			1,244	1,218	26	2.1
Retail choice customers	9,449	10,096	(647)	(6.4)			964	1,125	(161)	(14.3)
NYPA, Municipal Agency and other sales	4,456	4,574	(118)	(2.6)			325	337	(12)	(3.6)
Other operating revenues (c)	—	—	—	—			586	113	473	Large
Total	23,926	24,504	(578)	(2.4)	%	(d)	$4,500	$4,324	$176	4.1	%

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

(d)After adjusting for variations, primarily weather and billing days, electric delivery volumes in CECONY’s service area increased 0.5 percent in the six months ended June 30, 2023 compared with the 2022 period.

Operating revenues increased $176 million in the six months ended June 30, 2023 compared with the 2022 period primarily due to an increase in revenues from the electric rate plan ($95 million) and higher purchased power expenses ($93 million), offset in part by lower fuel expenses ($15 million).

Purchased power expenses increased $93 million in the six months ended June 30, 2023 compared with the 2022 period due to higher unit costs ($79 million), and higher purchased volumes ($14 million).

Fuel expenses decreased $15 million in the six months ended June 30, 2023 compared with the 2022 period due to lower unit costs ($18 million), offset in part by higher purchased volumes from CECONY's electric generating facilities ($3 million).

Other operations and maintenance expenses increased $9 million in the six months ended June 30, 2023 compared with the 2022 period primarily due to higher energy efficiency costs ($4 million), higher municipal infrastructure support costs ($2 million) and higher uncollectible expense ($2 million).

Depreciation and amortization expenses increased $13 million in the six months ended June 30, 2023 compared with the 2022 period primarily due to higher electric utility plant balances.

Taxes, other than income taxes increased $42 million in the six months ended June 30, 2023 compared with the 2022 period primarily due to higher property taxes ($76 million), offset in part by a lower deferral of over-collected property taxes ($28 million), lower state and local taxes ($7 million) and lower payroll taxes ($1 million).

Gas

CECONY’s results of gas operations for the six months ended June 30, 2023 compared with the 2022 period were as follows:


	For the Six Months Ended
(Millions of Dollars)	June 30, 2023	June 30, 2022	Variation
Operating revenues	$1,822	$1,713	$109
Gas purchased for resale	456	469	(13)
Other operations and maintenance	257	232	25
Depreciation and amortization	211	183	28
Taxes, other than income taxes	256	279	(23)
Gas operating income	$642	$550	$92

CECONY’s gas sales and deliveries, excluding off-system sales, for the six months ended June 30, 2023 compared with the 2022 period were:


	Thousands of Dt Delivered						Revenues in Millions (a)
	For the Six Months Ended						For the Six Months Ended
Description	June 30, 2023	June 30, 2022	Variation	Percent Variation			June 30, 2023	June 30, 2022	Variation	Percent Variation
Residential	31,016	34,705	(3,689)	(10.6)	%		$793	$792	$1	0.1	%
General	18,662	20,748	(2,086)	(10.1)			353	333	20	6.0
Firm transportation	45,855	48,486	(2,631)	(5.4)			558	502	56	11.2
Total firm sales and transportation	95,533	103,939	(8,406)	(8.1)		(b)	1,704	1,627	77	4.7
Interruptible sales (c)	3,443	3,653	(210)	(5.7)			29	30	(1)	(3.3)
NYPA	24,092	20,485	3,607	17.6			1	1	—	—
Generation plants	23,234	22,696	538	2.4			14	13	1	7.7
Other	10,744	10,815	(71)	(0.7)			21	21	—	—
Other operating revenues (d)	—	—	—	—			53	21	32	Large
Total	157,046	161,588	(4,542)	(2.8)	%		$1,822	$1,713	$109	6.4	%

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

(b)After adjusting for variations, primarily billing days, firm gas sales and transportation volumes in CECONY’s service area increased 2.8 percent in the six months ended June 30, 2023 compared with the 2022 period.

(c)Includes 745 thousand and 1,429 thousand of Dt for the 2023 and 2022 periods, respectively, that are also reflected in firm transportation and other.

Operating revenues increased $109 million in the six months ended June 30, 2023 compared with the 2022 period primarily due to an increase in revenues from the gas rate plan ($82 million), an increase in the amortization of regulatory liabilities ($20 million) and a change in incentives earned under the earnings adjustment mechanisms (EAMs) ($7 million), offset in part by a decrease in gas purchased for resale ($13 million).

Gas purchased for resale decreased $13 million in the six months ended June 30, 2023 compared with the 2022 period due to lower purchased volumes ($154 million), offset in part by higher unit costs ($141 million).

Other operations and maintenance expenses increased $25 million in the six months ended June 30, 2023 compared with the 2022 period primarily due to higher departmental gas operations cost ($21 million) and higher surcharges for assessments and fees that are collected in revenues from customers ($4 million).

Depreciation and amortization expenses increased $28 million in the six months ended June 30, 2023 compared with the 2022 period primarily due to higher gas utility plant balances.

Taxes, other than income taxes decreased $23 million in the six months ended June 30, 2023 compared with the 2022 period primarily due to a lower deferral of over-collected property taxes ($41 million), offset in part by higher property taxes ($14 million) and higher state and local taxes ($6 million).

Steam

CECONY’s results of steam operations for the six months ended June 30, 2023 compared with the 2022 period were as follows:


	For the Six Months Ended
(Millions of Dollars)	June 30, 2023	June 30, 2022	Variation
Operating revenues	$375	$386	$(11)
Purchased power	25	31	(6)
Fuel	110	84	26
Other operations and maintenance	112	99	13
Depreciation and amortization	49	47	2
Taxes, other than income taxes	74	74	—
Steam operating income	$5	$51	$(46)

CECONY’s steam sales and deliveries for the six months ended June 30, 2023 compared with the 2022 period were:


	Millions of Pounds Delivered						Revenues in Millions
	For the Six Months Ended						For the Six Months Ended
Description	June 30, 2023	June 30, 2022	Variation	Percent Variation			June 30, 2023	June 30, 2022	Variation	Percent Variation
General	308	383	(75)	(19.6)	%		$17	$19	$(2)	(10.5)	%
Apartment house	2,840	3,200	(360)	(11.3)			102	102	—	—
Annual power	6,127	7,104	(977)	(13.8)			248	259	(11)	(4.2)
Other operating revenues (a)	—	—	—	—			8	6	2	33.3
Total	9,275	10,687	(1,412)	(13.2)	%	(b)	$375	$386	$(11)	(2.8)	%

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

(b)After adjusting for variations, primarily weather and billing days, steam sales and deliveries increased 2.5 percent in the six months ended June 30, 2023 compared with the 2022 period.

Operating revenues decreased $11 million in the six months ended June 30, 2023 compared with the 2022 period primarily due to the impact of milder than normal weather in the 2022 period ($34 million), lower purchased power expenses ($6 million), offset in part by higher fuel expenses ($26 million) and higher revenues from the increase in average normalized use per customer ($3 million).

Purchased power expenses decreased $6 million in the six months ended June 30, 2023 compared with the 2022 period due to lower unit costs ($10 million), offset in part by higher purchased volumes ($4 million).

Fuel expenses increased $26 million in the six months ended June 30, 2023 compared with the 2022 period due to higher unit costs ($59 million), offset in part by lower purchased volumes from CECONY’s steam generating facilities ($33 million).

Other operations and maintenance expenses increased $13 million in the six months ended June 30, 2023 compared with the 2022 period primarily due to higher costs for pension and other postretirement benefits, reflecting reconciliation to the rate plan level ($12 million).

Taxes, Other Than Income Taxes

At $1,430, taxes other than income taxes remain one of CECONY’s largest operating expenses for the six months ended June 30, 2023. The principal components of, and variations in, taxes other than income taxes were:


	For the Six Months Ended June 30,
(Millions of Dollars)	2023		2022		Variation
Property taxes	$1,206		$1,114		$92
State and local taxes related to revenue receipts	197		198		(1)
Payroll taxes	47		48		(1)
Other taxes	(20)		51		(71)
Total	$1,430	(a)	$1,411	(a)	$19

(a)Including sales tax on customers’ bills, total taxes other than income taxes in 2023 and 2022 were $1,756 million and $1,737 million, respectively.

Other Income (Deductions)

Other income increased $203 million in the six months ended June 30, 2023 compared with the 2022 period primarily due to lower costs associated with components of pension and other postretirement benefits other than service cost ($180 million) and higher hedging program interest accrual ($4 million).

Net Interest Expense

Net interest expense increased $54 million in the six months ended June 30, 2023 compared with the 2022 period primarily due to higher interest expense for long-term debt ($37 million), short-term debt ($24 million) and deposits ($6 million), offset in part by an increase in allowance for borrowed funds used during construction ($16 million).

Income Tax Expense

Income taxes increased $81 million in the six months ended June 30, 2023 compared with the 2022 period primarily due to higher income before income tax expense ($48 million), higher state income taxes ($12 million), remeasurement of deferred state taxes as a result of enacted higher New York State income tax rates ($10 million), lower flow-through tax benefits in 2023 for plant-related items ($3 million), lower research and development credits from prior years ($5 million) and a decrease in the amortization of excess deferred federal income taxes due to the TCJA ($4 million).

O&R


	For the Six Months Ended June 30, 2023			For the Six Months Ended June 30, 2022
(Millions of Dollars)	Electric	Gas	2023 Total	Electric	Gas	2022 Total	2023-2022 Variation
Operating revenues	$341	$180	$521	$342	$180	$522	$(1)
Purchased power	114	—	114	122	—	122	(8)
Gas purchased for resale	—	71	71	—	78	78	(7)
Other operations and maintenance	147	40	187	133	37	170	17
Depreciation and amortization	36	15	51	35	13	48	3
Taxes, other than income taxes	30	16	46	29	16	45	1
Operating income	$14	$38	$52	$23	$36	$59	$(7)

Electric

O&R’s results of electric operations for the six months ended June 30, 2023 compared with the 2022 period were as follows:


	For the Six Months Ended
(Millions of Dollars)	June 30, 2023	June 30, 2022	Variation
Operating revenues	$341	$342	$(1)
Purchased power	114	122	(8)
Other operations and maintenance	147	133	14
Depreciation and amortization	36	35	1
Taxes, other than income taxes	30	29	1
Electric operating income	$14	$23	$(9)

O&R’s electric sales and deliveries for the six months ended June 30, 2023 compared with the 2022 period were:


	Millions of kWh Delivered						Revenues in Millions (a)
	For the Six Months Ended						For the Six Months Ended
Description	June 30, 2023	June 30, 2022	Variation	Percent Variation			June 30, 2023	June 30, 2022	Variation	Percent Variation
Residential/Religious (b)	883	828	55	6.6	%		$189	$174	$15	8.6	%
Commercial/Industrial	493	441	52	11.8			71	66	5	7.6
Retail choice customers	1,058	1,268	(210)	(16.6)			70	92	(22)	(23.9)
Public authorities	53	50	3	6.0			6	7	(1)	(14.3)
Other operating revenues (c)	—	—	—	—			5	3	2	—
Total	2,487	2,587	(100)	(3.9)	%	(d)	$341	$342	$(1)	(0.3)	%

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

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

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

(d)After adjusting for weather and other variations, electric delivery volumes in O&R’s service area increased 0.8 percent in the six months ended June 30, 2023 compared with the 2022 period.

Operating revenues decreased $1 million in the six months ended June 30, 2023 compared with the 2022 period primarily due to lower purchased power expenses ($8 million), offset in part by higher revenues from the New York electric rate plan ($7 million).

Purchased power expenses decreased $8 million in the six months ended June 30, 2023 compared with the 2022 period primarily due to lower unit costs ($5 million) and lower purchased volumes ($3 million).

Other operations and maintenance expenses increased $14 million in the six months ended June 30, 2023 compared with the 2022 period primarily due to higher non-deferred storm costs ($3 million), higher tree trimming expenses ($3 million), higher pension costs, reflecting reconciliation to the rate plan level ($1 million), higher office supplies expenses ($1 million), higher regulatory debits ($1 million), higher customer assistance expenses ($1 million) and higher uncollectible expenses ($1 million).

Gas

O&R’s results of gas operations for the six months ended June 30, 2023 compared with the 2022 period were as follows:


	For the Six Months Ended
(Millions of Dollars)	June 30, 2023	June 30, 2022	Variation
Operating revenues	$180	$180	$—
Gas purchased for resale	71	78	(7)
Other operations and maintenance	40	37	3
Depreciation and amortization	15	13	2
Taxes, other than income taxes	16	16	—
Gas operating income	$38	$36	$2

O&R’s gas sales and deliveries, excluding off-system sales, for the six months ended June 30, 2023 compared with the 2022 period were:


	Thousands of Dt Delivered						Revenues in Millions (a)
	For the Six Months Ended						For the Six Months Ended
Description	June 30, 2023	June 30, 2022	Variation	Percent Variation			June 30, 2023	June 30, 2022	Variation	Percent Variation
Residential	6,732	7,886	(1,154)	(14.6)	%		$124	$128	$(4)	(3.1)	%
General	1,408	1,806	(398)	(22.0)			21	24	(3)	(12.5)
Firm transportation	3,208	4,153	(945)	(22.8)			25	29	(4)	(13.8)
Total firm sales and transportation	11,348	13,845	(2,497)	(18.0)		(b)	$170	$181	$(11)	(6.1)
Interruptible sales	1,760	2,106	(346)	(16.4)			3	3	—	—
Generation plants	1	5	(4)	(80.0)			—	—	—	—
Other	305	381	(76)	(19.9)			1	—	1	—
Other gas revenues	—	—	—	—			6	(4)	10	Large
Total	13,414	16,337	(2,923)	(17.9)	%		$180	$180	$—	—	%

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

(b)After adjusting for weather and other variations, total firm sales and transportation volumes decreased 0.4 percent in the six months ended June 30, 2023 compared with 2022 period.

Operating revenues remained constant in the six months ended June 30, 2023 compared with the 2022 period primarily due to a decrease in gas purchased for resale ($7 million), offset in part by higher revenues from the NY gas rate plan ($5 million).

Gas purchased for resale decreased $7 million in the six months ended June 30, 2023 compared with the 2022 period primarily due to lower purchased volumes ($19 million), offset in part by higher unit costs ($12 million).

Other operations and maintenance expenses increased $3 million in the six months ended June 30, 2023 compared with the 2022 period primarily due to higher pension costs, reflecting reconciliation to the rate plan level.

Taxes, Other Than Income Taxes

Taxes, other than income taxes, increased by $1 million in 2023 compared with 2022 for the six months ended June 30, 2023. The principal components of taxes, other than income taxes, were:


	For the Six Months Ended June 30,
(Millions of Dollars)	2023		2022		Variation
Property taxes	$35		$34		$1
State and local taxes related to revenue receipts	6		6		—
Payroll taxes	5		5		—
Total	$46	(a)	$45	(a)	$1

(a)Including sales tax on customers’ bills, total taxes other than income taxes in 2023 and 2022 were $61 million and $66 million, respectively.

Clean Energy Businesses

The Clean Energy Businesses’ results of operations for the six months ended June 30, 2023 compared with the 2022 period were as follows:


	For the Six Months Ended
(Millions of Dollars)	June 30, 2023	June 30, 2022	Variation
Operating revenues	$129	$532	$(403)
Purchased power	—	6	(6)
Gas purchased for resale	41	102	(61)
Other operations and maintenance	47	151	(104)
Depreciation and amortization	—	119	(119)
Taxes, other than income taxes	4	11	(7)




Operating income	$37	$143	$(106)

Operating revenues decreased $403 million in the six months ended June 30, 2023 compared with the 2022 period primarily due to the sale of the Clean Energy Businesses.

Purchased power decreased $6 million in the six months ended June 30, 2023 compared with the 2022 period due to the sale of the Clean Energy Businesses.

Gas purchased for resale decreased $61 million in the six months ended June 30, 2023 compared with the 2022 period primarily due to the sale of the Clean Energy Businesses.

Other operations and maintenance expenses decreased $104 million in the six months ended June 30, 2023 compared with the 2022 period primarily due to the sale of the Clean Energy Businesses.

Depreciation and amortization expenses decreased $(119) million in the six months ended June 30, 2023 compared with the 2022 period due to the sale of the Clean Energy Businesses.

Net Interest Expense

Net interest expense increased $66 million in the six months ended June 30, 2023 compared with the 2022 period primarily due to lower unrealized gains on interest rate swaps in the 2023 period. On March 1, 2023, Con Edison completed the sale of substantially all of the assets of the Clean Energy Businesses and the impact on the 2023 period is shown through the date of sale. See Note S and Note T to the Second Quarter Financial Statements.

Income Tax Expense

Income taxes decreased $43 million in the six months ended June 30, 2023 compared with the 2022 period primarily due to lower income before income tax expense ($36 million), lower income attributable to non-controlling interest ($11 million), lower state income taxes ($7 million), offset in part by lower renewable energy tax credit ($13 million). On March 1, 2023, Con Edison completed the sale of substantially all of the assets of the Clean Energy Businesses and the impact for the six months ended June 30, 2023 is shown through the date of the sale. See Note S and Note T to the Second Quarter Financial Statements.

Income (Loss) Attributable to Non-Controlling Interest

Income attributable to non-controlling interest increased $46 million to a loss of $3 million in the six months ended June 30, 2023 compared with the 2022 period primarily due to the sale of the Clean Energy Businesses.

Con Edison Transmission

Other Income (Deductions)

Other income (deductions) increased $6 million in the six months ended June 30, 2023 compared with the 2022 period primarily due to higher investment income from NY Transco ($6 million).

Other

Income Tax Expense

Income taxes increased $59 million in the six months ended June 30, 2023 compared with the 2022 period primarily due to higher income before income tax expense due to the sale of the Clean Energy Businesses ($185 million), higher state income taxes ($13 million), higher state income taxes due to unitary tax adjustment ($10 million), offset

in part by the recognition of unamortized investment tax credits ($107 million) and lower state tax income expense due to changes in state apportionments, net of federal income taxes ($44 million).

Liquidity and Capital Resources

The Companies monitor the financial markets closely, including borrowing rates and daily cash collections. Inflationary pressure and higher interest rates have increased the amount of capital needed by the Utilities and the costs of such capital. See Note C and Note D to the Second Quarter Financial Statements and "Interest Rate Risk," below. The decline in business activity in the Utilities’ service territory due to the COVID-19 pandemic and subsequent New York State on PAUSE and related executive orders (that have since been lifted) resulted in a slower recovery in cash of outstanding customer accounts receivable balances and have also increased the amount of capital needed by the Utilities. See "COVID-19 Regulatory Matters" in Note B to the Second Quarter Financial Statements.

In 2022 and 2023, New York State and the NYSPSC implemented COVID-19 arrears assistance programs that provided credits and established surcharge recovery mechanisms towards reducing the arrears balances of low-income electric and gas customers of CECONY and O&R. Also, CECONY’s and O&R’s electric and gas rate plans have COVID-19 provisions that reconcile write-offs of customer accounts receivable balances to amounts reflected in rates. See "COVID-19 Regulatory Matters" in Note B and Note L to the Second Quarter Financial Statements.

Con Edison and the Utilities have a $2,500 million revolving credit agreement in place under which banks are committed to provide loans on a revolving credit basis until March 2028, subject to certain conditions. CECONY has a $500 million 364-day revolving credit agreement in place under which banks are committed to provide loans on a revolving credit basis until March 2024, subject to certain conditions. Con Edison and the Utilities have not entered into any loans under the Credit Agreement and CECONY has not entered into any loans under the CECONY Credit Agreement. See Note D to the Second Quarter Financial Statements.

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

The Companies’ cash, temporary cash investments and restricted cash resulting from operating, investing and financing activities for the six months ended June 30, 2023 and 2022 are summarized as follows:


	For the Six Months Ended June 30,
	CECONY		O&R		Clean Energy Businesses (d)		Con Edison Transmission		Other (a)(b)		Con Edison (c)
(Millions of Dollars)	2023	2022	2023	2022	2023	2022	2023	2022	2023	2022	2023	2022
Operating activities	$1,140	$1,727	$108	$109	$—	$208	$(150)	$25	$66	$(112)	$1,164	$1,957
Investing activities	(2,162)	(1,883)	(131)	(104)	(248)	(106)	(42)	(25)	4,035	—	1,452	(2,118)
Financing activities	1,314	308	6	(7)	—	(140)	206	—	(3,716)	94	(2,190)	255
Net change for the period	292	152	(17)	(2)	(248)	(38)	14	—	385	(18)	426	94
Balance at beginning of period	1,056	920	35	29	248	178	—	—	191	19	1,530	1,146
Balance at end of period (c)	$1,348	$1,072	$18	$27	$—	$140	$14	$—	$576	$1	$1,956	$1,240
Less: Cash balances held for sale (d)	—	—	—	—	—	—	—	—	1	—	1	—
Balance at end of period excluding held for sale	$1,348	$1,072	$18	$27	$—	$140	$14	$—	$575	$1	$1,955	$1,240

(a) Other includes the parent company, Con Edison’s tax equity investments, the deferred project held for sale and consolidation adjustments. See Note T to the Second Quarter Financial Statements.

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

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

(d) On March 1, 2023, Con Edison sold substantially all of the assets of the Clean Energy Businesses. See Note S and Note T to the Second Quarter Financial Statements.

Cash Flows from Operating Activities

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

The decline in business activity in the Utilities’ service territory from 2020 through 2022 due to the COVID-19 pandemic and the Utilities' suspension of service disconnections, bill collection activities and certain charges and fees resulted in a slower recovery of cash from outstanding customer accounts receivable balances, material increases in customer accounts receivable balances, increases to the allowance for uncollectible accounts, and may result in increases to write-offs of customer accounts, as compared to prior to the COVID-19 pandemic. Under the revenue decoupling mechanisms in the Utilities’ NY electric and gas rate plans, changes in delivery volumes from levels assumed when rates were approved may affect the timing of cash flows, but largely not net income. The Utilities’ NY electric and gas rate plans also include COVID-19 provisions for the reconciliation of write-offs of customer accounts receivable balances to amounts reflected in rates that may affect the timing of cash flows, but largely not net income. The prices at which the Utilities provide energy to their customers are determined in accordance with their rate plans. During 2022, increases in electric and gas commodity prices further contributed to a slower recovery of cash from outstanding customer accounts receivable balances, increases to the allowance for uncollectible accounts, and increases to write-offs of customer accounts receivable balances. In general, changes in the Utilities’ cost of purchased power, fuel and gas may affect the timing of cash flows, but not net income, because the costs are recovered in accordance with rate plans. See “COVID-19 Regulatory Matters” in Note B to the Second Quarter Financial Statements, "Aged Accounts Receivable Balances," above and “Financial and Commodity Market Risks – Commodity Price Risk,” below.

Net income is the result of cash and non-cash (or accrual) transactions. Only cash transactions affect the Companies’ cash flows from operating activities. Principal non-cash charges or credits include depreciation, deferred income tax expense, amortizations of certain regulatory assets and liabilities and accrued unbilled revenue. Non-cash charges or credits may also be accrued under the revenue decoupling and cost reconciliation mechanisms in the Utilities’ NY electric and gas rate plans.

Net cash flows from operating activities for the six months ended June 30, 2023 for Con Edison and CECONY were $793 million lower and $587 million lower, respectively, than in the 2022 period. The change in net cash flows for Con Edison primarily reflects lower net deferred credits, noncurrent liabilities and other regulatory liabilities balances ($721 million), a decrease in accounts payable ($609 million) and lower recoveries of depreciation and amortization ($74 million), offset in part by a lower increase of accounts receivable balances from customers net of allowance for uncollectible accounts ($596 million) (see “COVID-19 Regulatory Matters” in Note B to the Second Quarter Financial Statements and “Aged Accounts Receivable Balances” and “Liquidity and Financing,” above) and an increase in the distribution from equity investments ($6 million). For CECONY, changes in net cash flows primarily reflects lower net deferred credits, noncurrent liabilities and other regulatory liabilities balances ($600 million), a decrease in accounts payable ($356 million), a decrease in the pension and retiree benefits obligations, net ($143 million), a decrease in accrued taxes to affiliated companies ($91 million) and an increase in prepayments ($34 million), offset in part by a lower increase of accounts receivable balances from customers net of allowance for uncollectible accounts ($581 million) (see “COVID-19 Regulatory Matters” in Note B to the Second Quarter Financial Statements and "Aged Accounts Receivable Balances” and “Liquidity and Financing,” above) and a decrease in materials and supplies, including fuel oil and gas in storage ($61 million).

Cash Flows From (Used in) Investing Activities

Net cash flows from investing activities for Con Edison were $3,570 million higher for the six months ended June 30, 2023 compared with the 2022 period. Net cash flows used in investing activities for CECONY were $279 million higher for the six months ended June 30, 2023 compared with the 2022 period. The change for Con Edison primarily reflects the proceeds from substantially all of the assets of the Clean Energy Businesses, net of cash and cash equivalents sold ($3,927 million), offset in part by an increase in utility construction expenditures ($269 million), higher cost of removal less salvage ($37 million), an increase in non-utility construction expenditures ($32 million), and higher investments ($17 million). The change for CECONY primarily reflects an increase in utility construction expenditures ($242 million) and higher cost of removal less salvage ($37 million). Pursuant to their rate plans, the Utilities recover the cost of utility construction expenditures from customers, including an approved rate of return (before and after being placed in service and or AFUDC before being placed in service). Increases in the amount of utility construction expenditures may temporarily increase the amount of short-term debt issued by the Utilities prior to the long-term financing of such amounts.

Cash Flows From (Used In) Financing Activities

Net cash flows used in financing activities for Con Edison were $2,445 million higher for the six months ended June 30, 2023 compared with the 2022 period. Net cash flows from financing activities for CECONY were $1,006 million higher for the six months ended June 30, 2023 compared with the 2022 period.

In March 2023, Con Edison entered into accelerated share repurchase agreements (ASR Contracts) with two dealers to repurchase $1,000 million in aggregate of Con Edison’s Common Shares ($.10 par value) (Common Shares). Pursuant to the ASR Contracts, Con Edison made payments of $1,000 million in aggregate to the dealers. Con Edison's share repurchase was completed in the second quarter of 2023. See Note C to the Second Quarter Financial Statements.

In February 2023, CECONY issued $500 million aggregate principal amount of 5.20 percent debentures, due 2033. See Note C to the Second Quarter Financial Statements.

In the six months ended June 30, 2023, Con Edison contributed $1,701 million of equity to CECONY.

Con Edison’s cash flows from financing activities for the six months ended June 30, 2023 and 2022 also reflect a retirement of short-term debt of $1,087 million compared with a net issuance of $1,156 million in the 2022 period.

Cash flows from financing activities of the Companies also reflect commercial paper issuances and repayments. The commercial paper amounts outstanding at June 30, 2023 and 2022 and the average daily balances for the six months ended June 30, 2023 and 2022 for Con Edison and CECONY were as follows:


	2023				2022
(Millions of Dollars, except Weighted Average Yield)	Outstanding at June 30,		Daily average		Outstanding at June 30,		Daily average
Con Edison	$1,953		$1,172		$2,244		$1,168
CECONY	$1,946		$1,128		$2,060		$957
Weighted average yield	5.4	%	4.9	%	2.0	%	0.8	%

Capital Requirements and Resources

During the second quarter of 2023, Con Edison increased its estimate for capital requirements in 2024 from $5,096 million to $5,120 million and in 2025 from $4,963 million to $4,987 million. The increase reflects additional investments by Con Edison Transmission associated with the Propel NY Energy transmission project. See “Con Edison Transmission,” above. Con Edison plans to meet its capital requirements for 2023 through 2025 through internally-generated funds, the net proceeds from the sale of the Clean Energy Businesses and the issuance of long-term debt and common equity. During 2023, Con Edison used a portion of the proceeds from the sale of the Clean Energy Businesses to repurchase $1,000 million of its common stock, invest in the Utilities and repay $600 million of parent company debt. Proceeds from the sale of the Clean Energy Businesses are also expected to be used to repay $650 million of parent company debt in 2023. Con Edison intends to forego common equity issuances in 2023 and 2024 and plans on issuing up to $900 million of common equity in 2025 in addition to common equity issued under its stock plans in 2023 through 2025. Con Edison's plans also include the issuance of up to $1,400 million of long-term debt at the Utilities in 2023, of which $500 million was issued in the first six months of 2023, and approximately $2,600 million in aggregate, including for maturing securities, at the Utilities during 2024 and 2025. See Note C to the Second Quarter Financial Statements and “Liquidity and Capital Resources - Cash Flows from Financing Activities,” above.

Contractual Obligations

Con Edison’s material obligations to make payments pursuant to contracts totaled $52,833 million and $57,931 million at June 30, 2023 and December 31, 2022, respectively. The decrease at June 30, 2023 is due primarily to Con Edison completing the sale of substantially all of the assets of the Clean Energy Businesses on March 1, 2023. See Note S and Note T to the Second Quarter Financial Statements.

Capital Resources

For each of the Companies, the common equity ratio at June 30, 2023 and December 31, 2022 was:


	Common Equity Ratio (Percent of total capitalization)
	June 30, 2023	December 31, 2022
Con Edison	50.2	50.9
CECONY	49.0	46.9

Assets, Liabilities and Equity

The Companies' assets, liabilities, and equity at June 30, 2023 and December 31, 2022 are summarized as follows.


	CECONY		O&R		Clean Energy Businesses (c)		Con Edison Transmission		Other (a)		Con Edison (b)
(Millions of Dollars)	2023	2022	2023	2022	2023	2022	2023	2022	2023	2022	2023	2022
ASSETS
Current assets	$5,156	$5,247	$257	$332	$—	$879	$18	$4	$772	$6,510	$6,203	$12,972
Investments	582	539	20	20	—	—	329	286	11	(4)	942	841
Net plant	45,107	44,011	2,802	2,738	—	4,718	17	17	1	(4,718)	47,927	46,766
Other noncurrent assets	7,894	7,648	387	421	—	1,627	7	7	411	(1,217)	8,699	8,486
Total Assets	$58,739	$57,445	$3,466	$3,511	$—	$7,224	$371	$314	$1,195	$571	$63,771	$69,065

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities	$4,897	$6,036	$292	$409	$—	$1,596	$5	$163	$878	$3,132	$6,072	$11,336
Noncurrent liabilities	15,419	15,451	1,078	1,103	—	338	(83)	(86)	(168)	(113)	16,246	16,693
Long-term debt	19,580	19,080	1,068	1,068	—	2,292	—	—	—	(2,293)	20,648	20,147
Equity	18,843	16,878	1,028	931	—	2,998	449	237	485	(155)	20,805	20,889
Total Liabilities and Equity	$58,739	$57,445	$3,466	$3,511	$—	$7,224	$371	$314	$1,195	$571	$63,771	$69,065

(a) Other includes the parent company, Con Edison’s tax equity investments, the deferred project held for sale and consolidation adjustments. See Note T to the Second Quarter Financial Statements.

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

(c) On March 1, 2023, Con Edison completed the sale of substantially all of the assets of the Clean Energy Businesses. See Note S and Note T to the Second Quarter Financial Statements.

CECONY

Current assets at June 30, 2023 were $91 million lower than at December 31, 2022. The change in current assets primarily reflects a decrease in accounts receivables, net of allowance for uncollectible accounts ($490 million) (see “COVID-19 Regulatory Matters” in Note B to the Second Quarter Financial Statements, "Aged Accounts Receivable Balances" and “Liquidity and Financing,” above), a decrease to accrued unbilled revenue ($123 million), a decrease in the regulatory assets ($113 million), offset in part by an increase in cash and temporary cash investments ($292 million) and establishment of a receivable related to the make-whole provisions of the electric and gas rate plans (see "CECONY - Electric and Gas" in Note B to the Second Quarter Financial Statements) ($245 million) and an increase in the revenue decoupling mechanism receivable ($102 million).

Net plant at June 30, 2023 was $1,096 million higher than at December 31, 2022. The change in net plant primarily reflects an increase in electric ($1,049 million), gas ($370 million), steam ($50 million) and general ($134 million) plant balances and an increase in construction work in progress ($33 million), offset in part by an increase in accumulated depreciation ($540 million).

Other noncurrent assets at June 30, 2023 were $246 million higher than at December 31, 2022. The change in other noncurrent assets primarily reflects an increase in the regulatory asset for COVID - 19 arrears relief deferrals programs ($329 million). The increase is offset in part by a decrease in the fair value of deferred assets ($52 million) and a decrease in operating lease right-of-use asset ($21 million). See Notes B and I to the Second Quarter Financial Statements.

Current liabilities at June 30, 2023 were $1,139 million lower than at December 31, 2022. The change in current liabilities primarily reflects a decrease in accounts payable ($544 million), a decrease in notes payable ($354 million), a decrease in accrued taxes to affiliated companies ($89 million) and a decrease in accrued taxes ($54 million).

Long-term debt at June 30, 2023 was $500 million higher than at December 31, 2022. The change in long-term

debt primarily reflects CECONY's issuance of $500 million aggregate principal amount of 5.20 percent debentures, due 2033, offset in part by, the amortization of unamortized debt expense over the six-month period. See Note C to the Second Quarter Financial Statements.

Equity at June 30, 2023 was $1,965 million higher than at December 31, 2022. The change in equity primarily reflects capital contributions from Con Edison ($1,701 million) in 2023, net income for the six months ended June 30, 2023 ($793 million), offset in part by common stock dividends to Con Edison ($528 million) in 2023.

O&R

Current assets at June 30, 2023 were $75 million lower than at December 31, 2022. The change in current assets primarily reflects a decrease in accrued unbilled revenue ($30 million), a decrease in accounts receivables, net of allowance for uncollectible accounts ($18 million) (see “COVID-19 Regulatory Matters” in Note B to the Second Quarter Financial Statements and “Liquidity and Financing,” above), a decrease in cash and temporary cash investments ($17 million) and a decrease in gas storage, at average cost ($13 million), offset in part by an increase in revenue decoupling mechanism receivable ($4 million).

Net plant at June 30, 2023 was $64 million higher than at December 31, 2022. The change in net plant primarily reflects an increase in electric ($44 million), gas ($28 million), and general ($10 million) plant balances and an increase in construction work in progress ($15 million), offset in part by an increase in accumulated depreciation ($33 million).

Other noncurrent assets at June 30, 2023 were $34 million lower than at December 31, 2022. The change in

other noncurrent assets primarily reflects a decrease in regulatory assets ($25 million), a decrease in the fair value of derivative assets ($4 million) and a decrease in pension and retiree benefits ($4 million).

Current liabilities at June 30, 2023 were $117 million lower than at December 31, 2022. The change in current liabilities primarily reflects a decrease in notes payable ($52 million), a decrease in the regulatory liabilities ($24 million), a decrease in accounts payable ($21 million) and a decrease in accounts payable to affiliated companies ($18 million).

Noncurrent liabilities at June 30, 2023 were $25 million lower than at December 31, 2022. The change in noncurrent liabilities primarily reflects a decrease in long-term deferred derivative gains ($14 million), a decrease in low income aggregation program ($6 million) and a decrease in the regulatory liabilities for unrecognized pension and other postretirement costs ($5 million).

Equity at June 30, 2023 was $97 million higher than at December 31, 2022. The change in equity primarily reflects capital contributions from Con Edison ($90 million) in 2023, net income for the six months ended June 30, 2023 ($39 million), offset in part by common stock dividends to Con Edison ($32 million) in 2023.

Clean Energy Businesses

On March 1, 2023, Con Edison completed the sale of substantially all of the assets of the Clean Energy Businesses. See Note S and Note T to the Second Quarter Financial Statements.

Con Edison Transmission

Currents assets at June 30, 2023 were $14 million higher than at December 31, 2022. The increase in current assets primarily reflects an increase in cash and temporary investments ($14 million).

Investments at June 30, 2023 were $43 million higher than at December 31, 2022. The increase in investments reflects additional investment in NY Transco ($42 million).

Current liabilities at June 30, 2023 were $158 million lower than at December 31, 2022. The change in current liabilities primarily reflects repayment of an intercompany loan ($154 million).

Equity at June 30, 2023 was $212 million higher than at December 31, 2022. The change in equity primarily reflects an equity contribution from Con Edison, the proceeds of which were primarily used to repay an intercompany loan.

Utility Regulation

Cyber Regulation

In March 2023, the NY State legislature amended the NY State Public Service Law, directing the NYSPSC to develop rules to direct electric and gas utilities, among other things, to: (i) take necessary measures to monitor and protect customer privacy, including, but not limited to, customer electric and gas consumption data, from unauthorized disclosure or unconsented sharing, (ii) develop and implement tools to monitor operational control networks to detect unauthorized network behavior, including the utilities' industrial control systems that support distribution, transmission and advanced metering infrastructure control centers and (iii) mandate that utilities’ emergency response plans include cyber-attack response plans. The law also states that customer electric and gas consumption data should be considered confidential.

Environmental Matters

Clean Energy Future

Clean Energy Goals

In March and April of 2023, CECONY and O&R applied for federal grants of $177 million and $125 million, respectively, to be appropriated under the Infrastructure Investment and Jobs Act (IIJA). In addition, seven states, including NY State, submitted a proposal for a Northeast Regional Clean Hydrogen Hub (the Hydrogen Hub) to the U.S. Department of Energy for funding under the IIJA. CECONY is seeking up to $116 million of funding to use carbon-free hydrogen to produce steam at its East River steam generating station as part of the Hydrogen Hub proposal. Federal grants obtained pursuant to the IIJA are expected to be used to reduce customers’ costs for investments in CECONY’s electric and steam systems and O&R's electric system.

In April 2023, the NYSPSC approved CECONY’s December 2022 petition seeking cost recovery approval for a proposed clean energy hub in Brooklyn, NY (Brooklyn Clean Energy Hub) at an estimated cost of $810 million, that is in addition to the capital expenditures approved in CECONY's 2023 electric and gas rate plans. See "Rate Plans - CECONY - Electric and Gas" in Note B to the Second Quarter Financial Statements. The Brooklyn Clean Energy Hub has an estimated in-service date of December 2027 and addresses a 2028 reliability need. The Brooklyn Clean Energy Hub provides the flexibility for offshore wind resources to interconnect during construction and after it commences operation.

In May 2023, NYS approved the 2023 - 2024 state budget, including provisions that prohibit the installation of fossil-fuel equipment and building systems beginning in 2026 for affected new buildings with not more than seven stories and beginning in 2029 for all other new affected buildings. The law includes exemptions for, among other things, emergency backup generators, hospitals, laundromats and commercial kitchens.

In May 2023, CECONY and O&R filed a combined initial gas system long-term plan for their gas distribution systems, as required by a May 2022 NYSPSC order. The Utilities’ plan has a 20-year horizon to achieve the greenhouse gas emissions reduction targets of the Climate Leadership and Community Protection Act (CLCPA) and includes three pathways: (1) a reference pathway based on investments approved by the NYSPSC, (2) an alternate hybrid electric generation and low-carbon fuels pathway and (3) an alternate deep electrification pathway. The Utilities expect to file an update to the plan in September 2023 and the final plan by the end of 2023. The final plan will be subject to NYSPSC approval.

Also in May 2023, CECONY and O&R filed proposals for thermal energy network pilots pursuant to a September 2022 NYSPSC proceeding to implement the Utility Thermal Energy Network and Jobs Act. CECONY proposed three pilots totaling approximately $262.7 million and O&R proposed two pilots totaling approximately $45.5 million. The Utilities proposed recovery of pilot costs via a surcharge mechanism. The proposed pilots are subject to approval by the NYSPSC.

In June 2023, the NYSPSC issued an order identifying the CLCPA as a public policy requirement resulting from the need for additional transmission facilities to deliver at least 4,770 MW of electricity from offshore wind projects into CECONY’s electric grid. The order refers the need to the NYISO to conduct a solicitation and evaluation of transmission solutions for this need. The order directs CECONY to establish a process, after consultation with NYSDPS, to make information available to transmission proposers concerning existing or potential interconnection

points that CECONY would construct and own. The required in-service date for projects responsive to the transmission need is January 1, 2033.

In June 2023, the NYISO selected the Propel NY Energy transmission project that was jointly proposed by NY Transco and the New York Power Authority (NYPA). Con Edison Transmission has a 41.7 percent equity interest in NY Transco’s share of the Propel NY Energy project, a 108-mile electric transmission project with an in-service date of 2030 that is expected to enable delivery of a minimum of 3,000 MW of offshore wind energy in New York State. See "Con Edison Transmission," below.

Also in June 2023, CECONY filed a petition with FERC to add a formula rate to the NYISO tariff to enable CECONY to recover the costs of, and a return on investment for two types of projects: (1) local transmission upgrades determined by the NYSPSC to be necessary or appropriate to meet the CLCPA goals of NYS and (2) any regulated transmission projects (or portions thereof) eligible for recovery under the NYISO’s public policy process. For local transmission upgrades, CECONY proposed the return on equity to be the lower of the NYSPSC-determined rates or 10.87 percent. For NYISO projects, CECONY proposed a return on equity of 11.10 percent. CECONY anticipates that the formula rate, once in place, will be applied to recover the costs of the upgrades associated with the Propel NY Energy offshore wind project.

Other Environmental Matters

Following media reports, in July 2023, the Environmental Protection Agency, NYS Department of Environmental Conservation, NYS Department of Health and NYSDPS began investigating the potential public health risks associated with lead-jacketed cables in the fixed-line telecommunications industry. The use of lead-jacketed electric cables began in the 1880s to protect conducting wires from exposure to the elements. All of the Utilities’ transmission cables that are in service and lead-jacketed are covered with an outer plastic layer and are generally located within a conduit and manhole system and comprise less than 2 percent of CECONY’s transmission system and less than 5 percent of O&R’s transmission system. CECONY installed lead-jacketed cables without an outer plastic layer in its distribution system until the 1980’s. CECONY’s distribution cables that are in service and lead-jacketed may or may not have an outer plastic layer and may be located within a conduit and manhole system, directly buried or strung in the air between poles and comprise less than 14 percent of its distribution system. O&R’s distribution cables are not lead-jacketed. CECONY’s transmission and distribution systems also contain lead-jacketed cables that were retired in place. CECONY continues to replace lead-jacketed distribution cables, as needed, and recover the costs for cable replacements, pursuant to its electric rate plan. The Companies are unable to predict the impact on them, if any, resulting from potential developments to legal or public policy doctrines regarding cable that contains lead.

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

Electric Reliability Needs

In 2019, the New York State Department of Environmental Conservation (NYSDEC) issued regulations (Peaker Rule) that may require the retirement or seasonal unavailability of fossil-fueled electric generating units owned by CECONY and others in New York City. The Peaker Rule limits nitrous oxides (NOx) emissions during the ozone season from May through September and affects older peaking units that are generally located downstate and needed during periods of high electric demand or for local reliability purposes. Compliance with the Peaker Rule requires affected units (approximately 1,400 MW in CECONY's service territory, of which 79 MW is owned by CECONY) to cease operation during the ozone season, install emission controls, repower, or retire by 2023 or 2025. The NYISO, in its 2020 Reliability Needs Assessment study that was approved by the NYISO board, reported local and bulk transmission system reliability needs that are expected to be caused by the retirement or unavailability of some of the impacted units.

In January 2021, CECONY updated its Local Transmission Plan to address identified reliability needs on its local system resulting from the Peaker Rule through the construction of three transmission projects, the Reliable Clean City (RCC) projects. In April 2021, the NYSPSC approved CECONY’s December 2020 petition to recover $780 million of costs to construct the RCC projects. In May 2023, the first of the three RCC projects was completed and the remaining two are expected to be completed in 2025.

In July 2023, the NYISO issued its Short-Term Assessment of Reliability report that finds an electric reliability need beginning in the summer of 2025 in CECONY’s New York City territory primarily driven by forecasted increases in peak demand and the assumed unavailability of certain generation affected by the Peaker Rule. CECONY, as the Responsible Transmission Owner, will consider and submit possible solutions to the NYISO no later than November 2023. Concurrently, NYISO will solicit and evaluate market-based solutions by November 2023. The NYISO states that it “would only temporarily retain peakers as a last step approach if it does not expect solutions to be in place by the time the identified reliability need is expected in 2025.”

Separately, CECONY’s 2023 electric rate plan includes approvals and cost recovery for capital projects to meet reliability needs in New York City. CECONY’s project to transfer electric customers from its Brownsville substation to its Glendale substation is expected to be completed in 2026 at an estimated cost of $115 million. CECONY’s projects to build the Vernon to Newtown transmission feeder and the Gateway Park area substation are expected to be completed in 2026 and 2028, respectively, at estimated costs of $125.4 million and $1,100 million, respectively.

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

Con Edison Transmission

In June 2023, the NYISO selected the Propel NY Energy transmission project that was jointly proposed by NY Transco and the New York Power Authority (NYPA). Propel NY Energy is a 108-mile electric transmission project with an in-service date of 2030 that is expected to enable delivery of a minimum of 3,000 MW of offshore wind energy in New York State. NY Transco’s share of the project cost is expected to be approximately $2,200 million, excluding its interconnection costs and the cost of projects expected to be built by local transmission owners, including CECONY. Con Edison Transmission has a 41.7 percent equity interest in NY Transco’s share of the Propel NY Energy project. The siting, construction and operation of the project will require approvals and permits from appropriate governmental agencies and authorities, including the NYSPSC. See "Environmental Matters - Clean Energy Future - Clean Energy Goals," above.

Also in June 2023, the President of the United States signed the Fiscal Responsibility Act of 2023. Section 324 of the legislation approved all permits and authorizations necessary for the construction and initial operation of the Mountain Valley Pipeline, that is being constructed by a joint venture in which Con Edison Transmission owns a 9.4 percent interest (which is expected to be reduced to 8.0 percent based on the latest project cost estimate and Con Edison Transmission’s previous capping of its cash contributions to the joint venture). Following the signing of the legislation, on June 5, 2023, the operator of the Mountain Valley Pipeline submitted a request to the U.S. Court of Appeals for the Fourth Circuit to dismiss any pending cases before the court since the newly enacted legislation grants sole jurisdiction to the U.S. Court of Appeals for the District of Columbia on issues relating to the validity of the provisions in Section 324. In early July 2023, the U.S. Court of Appeals for the Fourth Circuit granted a temporary stay of the construction of the Mountain Valley Pipeline on two appeals pending prior to the enactment of the legislation. On July 14, 2023, the operator of the Mountain Valley Pipeline filed an appeal with the United States Supreme Court indicating that the stay is not consistent with the legislation and, if left in place, it would jeopardize the goal of completing construction by the end of 2023. On July 27, 2023, the United States Supreme Court vacated that temporary stay. The underlying request for dismissal of the pending cases remains before the U.S. Court of Appeals for the Fourth Circuit. At June 30, 2023, Con Edison Transmission’s carrying value of its investment in the Mountain Valley Pipeline was $111 million and its cash contributions to the joint venture amounted to $530 million.

In April 2019, the NYISO selected NY Transco’s New York Energy Solution (NYES) project, of which Con Edison Transmission owns a 45.7 percent interest, to relieve transmission congestion between upstate and downstate ($600 million estimated cost, excluding certain interconnection costs). Construction has been completed for the NYES project and the associated Rock Tavern to Sugarloaf segment, and as of June 2023 a majority of the assets are in service. Construction of the associated Dover Station, an additional network upgrade to support the NYES project, has not been completed and its permits are the subject of litigation in New York State. In November 2017, FERC approved a settlement agreement with respect to the NYES project that provides for a 10.65 percent return on common equity (which is comprised of a 9.65 percent base ROE, with 100 basis points added for congestion

reduction and a cost containment mechanism applicable to certain capital costs) and a maximum actual common equity ratio of 53 percent. The interconnection costs of the awarded project segment include network upgrades identified by the NYISO and NYSPSC that earn the same base ROE, with a 50-basis point adder. Revenues for the NYES project, including the Dover Station, are collected by the NYISO including 100 percent of construction work-in-progress, and are allocated across NYISO transmission customers in NY State with 84 percent allocated to load serving entities in the CECONY and O&R service areas.

Financial and Commodity Market Risks

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

Interest Rate Risk

The Companies' interest rate risk primarily relates to new debt financing needed to fund capital requirements, including the construction expenditures of the Utilities and maturing debt securities, and variable-rate debt. Con Edison and its subsidiaries manage interest rate risk through the issuance of mostly fixed-rate debt with varying maturities and through opportunistic refinancing of debt. Con Edison and CECONY estimate that at June 30, 2023, a 10 percent increase in interest rates applicable to its variable rate debt would result in an increase in annual interest expense of $12 million. Under CECONY’s current electric, gas and steam rate plans, variations in actual variable rate tax-exempt debt interest expense, including costs associated with the refinancing of the variable rate tax-exempt debt, are reconciled to levels reflected in rates.

Inflationary pressure has prompted the Federal Reserve to increase interest rates. Higher interest rates have resulted in, and are expected to continue to result in, increased interest expense on commercial paper, variable-rate debt and long-term debt issuances.

Commodity Price Risk

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

Con Edison estimates that, as of June 30, 2023, a 10 percent decline in market prices would result in a decline in fair value of $172 million for the derivative instruments used by the Utilities to hedge purchases of electricity and gas, of which $162 million is for CECONY and $10 million is for O&R. Con Edison expects that any such change in fair value would be largely offset by directionally opposite changes in the cost of the electricity and gas purchased.

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

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

Investment Risk

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

The Companies’ current investment policy for pension plan assets includes investment targets of 28 to 38 percent equity securities, 42 to 60 percent debt securities and 12 to 22 percent alternatives. At June 30, 2023, the pension plan investments consisted of 33.0 percent equity securities, 48.1 percent debt securities and 18.9 percent alternatives.

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

Material Contingencies

For information concerning potential liabilities arising from the Companies’ material contingencies, see “COVID-19 Regulatory Matters” and "Other Regulatory Matters" in Note B and Notes G and H to the Second Quarter Financial Statements.

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