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

164K characters. Original on sec.gov · Markdown

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 Third 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 Third 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 Reports on Form 10-Q for the quarterly periods ended March 31, 2023 and June 30, 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 Third 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 Third 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. Con Edison invests to provide reliable, resilient, safe and clean energy critical for its New York 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 Third 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 September 30, 2023, CECONY’s and O&R’s customer accounts receivables balances of $2,228 million and $96 million, respectively, included aged accounts receivables (balances outstanding in excess of 60 days) of $1,041 million and $15 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 has impacted the Companies’ liquidity and may continue to impact liquidity. The Utilities resumed collection activities, including write-offs of uncollectible customer accounts receivable balances. See “Liquidity and Capital Resources” and “Capital Requirements and Resources,” below and "Regulatory Matters – Rate Plans – CECONY Electric and Gas” in Note B to the Third Quarter Financial Statements.

Con Edison Transmission

Con Edison Transmission, through its New York 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 Third 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.

During the summer (June-August) of 2023, electric peak demand in CECONY's service area was 11,464 MW (which occurred on July 27, 2023). At design conditions, electric peak demand in CECONY's service area would have been approximately 12,567 MW in 2023 compared to CECONY's forecast of 12,990 MW. The lower peak demand at design conditions as compared to the forecast reflects lower than anticipated new business, higher than anticipated energy efficiency measures by customers and variability in customers’ hybrid work schedules. CECONY increased its five-year forecast of average annual growth in electric peak demand in its service area at design conditions from approximately 0.6 percent (for 2023 to 2027) to approximately 0.7 percent (for 2024 to 2028).

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 combustion 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 15,794 MMlb of steam annually to approximately 1,520 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 customer migration to other heating sources.

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 and northern New Jersey an approximately 1,300 square mile service area.

During the summer (June-August) of 2023, electric peak demand in O&R's service area was 1,336 MW (which occurred on July 28, 2023). At design conditions, electric peak demand in O&R's service area would have been approximately 1,493 MW in 2023 compared to O&R's forecast of 1,545 MW. The lower peak demand at design conditions as compared to the forecast primarily reflects lower than anticipated new business, higher than anticipated solar energy contributions from customers and variability in customers’ hybrid work schedules. O&R increased its five-year forecast of average annual growth in electric peak demand in its service area at design conditions from approximately 0.4 percent (for 2023 to 2027) to approximately 2.0 percent (for 2024 to 2028).

Gas

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

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 combustion 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 September 30, 2023						For the Nine Months Ended September 30, 2023						At September 30, 2023
(Millions of Dollars, except percentages)	Operating Revenues			Net Income for Common Stock			Operating Revenues			Net Income for Common Stock			Assets
CECONY	$3,590	93	%	$515	98	%	$10,287	92	%	$1,308	60	%	$59,587	92	%
O&R	281	7		36	7		803	7		75	3		3,622	6
Total Utilities	$3,871	100	%	$551	105	%	$11,090	99	%	$1,383	63	%	$63,209	98	%
Clean Energy Businesses (a)(c)	—	—		—	—		129	1		22	1		—	—
Con Edison Transmission	1	—		4	1		3	—		10	—		377	1
Other (b)(c)	—	—		(29)	(6)		(3)	—		770	36		819	1
Total Con Edison	$3,872	100	%	$526	100	%	$11,219	100	%	$2,185	100	%	$64,405	100	%

(a)Net income for common stock from the Clean Energy Businesses for the nine months ended September 30, 2023 includes $(9) million net after-tax mark-to-market effects. Net income for common stock from the Clean Energy Businesses for the nine months ended September 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 nine months ended September 30, 2023. See "Assets Held for Sale" in Note A, Note S and Note T to the Third 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 nine months ended September 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 nine months ended September 30, 2023 also includes $(3) million net of tax and $(7) million net of tax, respectively, on the effects of HLBV accounting for tax equity investments in certain renewable electric projects. Net income for common stock for the three and nine months ended September 30, 2023 also includes $(5) million net of tax and $(13) 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 unitary tax apportionments (net of federal taxes) for the three and nine months ended September 30, 2023 includes $(7) million and $(17) million, respectively. Depreciation and amortization expenses on the assets of the Clean Energy Businesses of $(3) million (after-tax) were not recorded for the nine months ended September 30, 2023. Net income for common stock for the three months ended September 30, 2023 includes an increase in state taxes on sale of $(19) million (after-tax). Net income for common stock for the nine months ended September 30, 2023 includes $784 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 Third 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 Third 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 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 or liquidity.

New York Legislation

In April 2021, New York 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. New York 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, New York passed a law that extended the increase in the corporate franchise tax rate from 6.5 percent to 7.25 percent for an additional three years, through tax year 2026 and extended the business capital tax through tax year 2026. New York 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 New York State taxable income in excess of $5 million after using its entire New York 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 tax benefit) and an increase in accumulated deferred tax liabilities of $10 million for the nine months ended September 30, 2023, all of which was recorded in the second quarter of 2023.

Results of Operations

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


	For the Three Months Ended September 30,				For the Nine Months Ended September 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	$515	$493	$1.49	$1.39	$1,308	$1,138	$3.75	$3.21
O&R	36	33	0.10	0.09	75	72	0.21	0.20
Clean Energy Businesses (a) (d)	—	97	—	0.28	22	293	0.06	0.83
Con Edison Transmission	4	1	0.01	—	10	2	0.03	0.01
Other (b)	(29)	(11)	(0.07)	(0.03)	770	(35)	2.22	(0.10)
Con Edison (c)	$526	$613	$1.53	$1.73	$2,185	$1,470	$6.27	$4.15

(a)Net income for common stock and earnings per share from the Clean Energy Businesses for the nine months ended September 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 nine months ended September 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 nine months ended September 30, 2023. See "Assets Held for Sale" in Note A, Note S and Note T to the Third Quarter Financial Statements.

Net income for common stock and earnings per share from the Clean Energy Businesses for the three and nine months ended September 30, 2022 includes $41 million or $0.12 a share and $121 million or $0.35 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 nine months ended September 30, 2022 also includes ($4) million or ($0.01) a share (after-tax) and $33 million or $0.09 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 nine months ended September 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 nine months ended September 30, 2023 also includes $(3) million or $(0.01) a share and $(7) million or $(0.02), a share net of income tax impact on the effects of HLBV accounting, respectively, for tax equity investments in certain renewable electric projects. Net income for common stock for the three and nine months ended September 30, 2023 also includes $(5) million or $(0.01) a share and $(13) million and $(0.04) 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 unitary tax apportionments (net of federal taxes) is $(7) million or $(0.02) per share and $(17) million or $(0.05) per share for the three and nine months ended September 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 nine months ended September 30, 2023. Net income for common stock and earnings per share for the three months ended September 30, 2023 includes an increase in the state taxes on sale of $(19) million or $(0.05) a share. Net income for common stock and earnings per share for the nine months ended September 30, 2023 includes $784 million (after-tax) or $2.25 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 Third Quarter Financial Statements.

Other includes parent company and consolidation adjustments. Net income for common stock and earnings per share for the three and nine months ended September 30, 2022 includes $(3) million or $(0.01) a share and $(10) million or $(0.03) 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 nine months ended September 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 $1.52 a share and $1.72 a share for the three months ended September 30, 2023 and 2022, respectively, and $6.24 a share and $4.13 a share for the nine months ended September 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 Third 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 Third 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 nine months ended September 30, 2023 as compared with the 2022 period.


Variation for the Three Months Ended September 30, 2023 vs. 2022
	Net Income for Common Stock (Net of Tax) (Millions of Dollars)	Earnings per Share
CECONY (a)
Electric base rate increase	$123	$0.35
Higher operations maintenance activities	(40)	(0.11)
Higher interest expense	(28)	(0.08)
Higher operation and maintenance expense for stock-based compensation, health care costs and injuries and damages	(15)	(0.04)
Change in incentives earned under the electric and gas earnings adjustment mechanisms (EAMs)	(10)	(0.03)

Gas base rate change	(6)	(0.02)
Higher payroll taxes	(4)	(0.01)

Accretive effect of share repurchase	—	0.04





Other	2	—
Total CECONY	22	0.10
O&R (a)
Electric base rate increase	3	0.01
Gas base rate increase	1	—


Other	(2)	—
Total O&R	2	0.01
Clean Energy Businesses (b)











Total Clean Energy Businesses	(97)	(0.28)
Con Edison Transmission
Higher investment income	2	0.01




Other	1	—

Total Con Edison Transmission	3	0.01
Other, including parent company expenses
Higher interest income primarily related to the proceeds from sale of the Clean Energy Businesses	5	0.01
Lower interest expense	4	0.01
Net mark-to-market effects	4	0.01

Gain and other impacts related to the sale of the Clean Energy Businesses	(31)	(0.08)
HLBV effects	(4)	(0.01)


Other	5	0.02
Total Other, including parent company expenses	(17)	(0.04)
Total Reported (GAAP basis)	$(87)	$(0.20)

a.Under the revenue decoupling mechanisms in the Utilities’ New York 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 Nine Months Ended September 30, 2023 vs. 2022
	Net Income for Common Stock (Net of Tax) (Millions of Dollars)	Earnings per Share
CECONY (a)
Electric base rate increase	$193	$0.55
Gas base rate increase	55	0.16
Higher interest income	7	0.02
Lower operation and maintenance expense from stock-based compensation, health care costs and injuries and damages	2	0.01
Higher income from allowance for equity funds used during construction	2	0.01
Higher interest expense	(68)	(0.19)
Weather impact on steam revenues	(25)	(0.07)







Higher electric operations maintenance activities	(6)	(0.02)
Change in incentives earned under the electric and gas earnings adjustment mechanisms (EAMs)	(3)	(0.01)
Accretive effect of share repurchase	—	0.06
Other	13	0.02
Total CECONY	170	0.54
O&R (a)
Electric base rate increase	5	0.01
Gas base rate increase	4	0.01
Higher storm-related costs	(3)	(0.01)
Other	(3)	—
Total O&R	3	0.01
Clean Energy Businesses (b)












Total Clean Energy Businesses	(271)	(0.77)
Con Edison Transmission
Higher investment income	6	0.02


Other	2	—
Total Con Edison Transmission	8	0.02
Other, including parent company expenses
Gain and other impacts related to the sale of the Clean Energy Businesses	753	2.16
Higher interest income primarily related to proceeds from sale of the Clean Energy Businesses	15	0.04
Lower interest expense	12	0.03
Net mark-to-market effects	10	0.03
Production tax credit from deferred project	4	0.01
Lower New York state capital taxes	4	0.01
Lower expenses related to the capital funding facility	4	0.01
HLBV effects	(4)	(0.01)
Accretive effect of share repurchase	—	0.04
Other	7	—
Total Other, including parent company expenses	805	2.32
Total Reported (GAAP basis)	$715	$2.12

a.Under the revenue decoupling mechanisms in the Utilities’ New York 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 nine months ended September 30, 2023 and 2022 were as follows:


	For the Three Months Ended September 30,		For the Nine Months Ended September 30,
(Millions of Dollars)	2023	2022	2023	2022
CECONY
Operations	$513	$420	$1,383	$1,276
Pensions and other postretirement benefits	87	104	259	312
Health care and other benefits	52	39	124	109
Regulatory fees and assessments (a)	111	104	283	271
Other	71	140	292	299
Total CECONY	$834	$807	$2,341	$2,267
O&R	96	88	283	259
Clean Energy Businesses (b)	—	101	47	252
Con Edison Transmission	2	3	8	10
Other (c)	1	—	(1)	(3)
Total other operations and maintenance expenses	$933	$999	$2,678	$2,785

(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 Third 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 nine months ended September 30, 2023 and 2022 follows. For additional business segment financial information, see Note M to the Third Quarter Financial Statements.

The Companies’ results of operations for the three months ended September 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	$3,590	$3,549	$281	$291	$—	$325	$1	$1	$—	$(1)	$3,872	$4,165
Purchased power	719	643	77	89	—	—	—	—	—	(1)	796	731
Fuel	34	59	—	—	—	—	—	—	—	—	34	59
Gas purchased for resale	62	113	11	16	—	55	—	—	—	1	73	185
Other operations and maintenance	834	807	96	88	—	101	2	3	1	—	933	999
Depreciation and amortization	485	441	26	25	—	60	1	—	—	(1)	512	525
Taxes, other than income taxes	777	748	23	22	—	5	—	—	1	2	801	777
Gain on sale of the Clean Energy Businesses	—	—	—	—	—	—	—	—	(1)	—	(1)	—



Operating income (loss)	679	738	48	51	—	104	(2)	(2)	(3)	(2)	722	889
Other income (deductions)	184	81	12	5	—	1	8	5	3	(3)	207	89
Net interest expense	239	202	13	11	—	(19)	—	2	7	3	259	199
Income (loss) before income tax expense	624	617	47	45	—	124	6	1	(7)	(8)	670	779
Income tax expense	109	124	11	12	—	21	2	—	22	3	144	160
Net income (loss)	$515	$493	$36	$33	$—	$103	$4	$1	$(29)	$(11)	$526	$619
Income (loss) attributable to non-controlling interest	—	—	—	—	—	6	—	—	—	—	—	6
Net income (loss) for common stock	$515	$493	$36	$33	$—	$97	$4	$1	$(29)	$(11)	$526	$613

(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 Third 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 Third Quarter Financial Statements.

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

CECONY


	For the Three Months Ended September 30, 2023				For the Three Months Ended September 30, 2022
(Millions of Dollars)	Electric	Gas	Steam	2023 Total	Electric	Gas	Steam	2022 Total	2023-2022 Variation
Operating revenues	$3,223	$318	$49	$3,590	$3,077	$414	$58	$3,549	$41
Purchased power	713	—	6	719	628	—	15	643	76
Fuel	33	—	1	34	58	—	1	59	(25)
Gas purchased for resale	—	62	—	62	—	113	—	113	(51)
Other operations and maintenance	644	129	61	834	645	114	48	807	27
Depreciation and amortization	352	108	25	485	324	93	24	441	44
Taxes, other than income taxes	614	127	36	777	579	134	35	748	29
Operating income	$867	$(108)	$(80)	$679	$843	$(40)	$(65)	$738	$(59)

Electric

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


	For the Three Months Ended
(Millions of Dollars)	September 30, 2023	September 30, 2022	Variation
Operating revenues	$3,223	$3,077	$146
Purchased power	713	628	85
Fuel	33	58	(25)
Other operations and maintenance	644	645	(1)
Depreciation and amortization	352	324	28
Taxes, other than income taxes	614	579	35
Electric operating income	$867	$843	$24

CECONY’s electric sales and deliveries for the three months ended September 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	September 30, 2023	September 30, 2022	Variation	Percent Variation			September 30, 2023	September 30, 2022	Variation	Percent Variation
Residential/Religious (b)	3,960	4,303	(343)	(8.0)	%		$1,233	$1,069	$164	15.3	%
Commercial/Industrial	3,052	3,003	49	1.6			840	808	32	4.0
Retail choice customers	5,914	6,107	(193)	(3.2)			817	825	(8)	(1.0)
NYPA, Municipal Agency and other sales	2,657	2,611	46	1.8			284	240	44	18.3
Other operating revenues (c)	—	—	—	—			49	135	(86)	(63.7)
Total	15,583	16,024	(441)	(2.8)	%	(d)	$3,223	$3,077	$146	4.7	%

(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 September 30, 2023 compared with the 2022 period.

Operating revenues increased $146 million in the three months ended September 30, 2023 compared with the 2022 period primarily due to an increase in revenues from the electric rate plan ($166 million) and higher purchased power expenses ($85 million), offset in part by lower unbilled revenue accrual ($71 million), lower fuel expenses ($25 million) and a change in incentives earned under the earnings adjustment mechanisms (EAMs) ($10 million).

Purchased power expenses increased $85 million in the three months ended September 30, 2023 compared with the 2022 period primarily due to higher unit costs ($187 million), offset in part by lower purchased volumes ($102 million).

Fuel expenses decreased $25 million in the three months ended September 30, 2023 compared with the 2022 period due to lower unit costs ($28 million), offset by higher purchased volumes from CECONY's electric generating facilities ($3 million).

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

Taxes, other than income taxes increased $35 million in the three months ended September 30, 2023 compared with the 2022 period due to higher property taxes ($54 million) and payroll taxes ($4 million), offset in part by lower deferral of over-collected property taxes ($26 million).

Gas

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


	For the Three Months Ended
(Millions of Dollars)	September 30, 2023	September 30, 2022	Variation
Operating revenues	$318	$414	$(96)
Gas purchased for resale	62	113	(51)
Other operations and maintenance	129	114	15
Depreciation and amortization	108	93	15
Taxes, other than income taxes	127	134	(7)
Gas operating income	$(108)	$(40)	$(68)

CECONY’s gas sales and deliveries, excluding off-system sales, for the three months ended September 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	September 30, 2023	September 30, 2022	Variation	Percent Variation			September 30, 2023	September 30, 2022	Variation	Percent Variation
Residential	3,884	4,467	(583)	(13.1)	%		$131	$150	$(19)	(12.7)	%
General	4,094	4,759	(665)	(14.0)			58	94	(36)	(38.3)
Firm transportation	9,953	8,821	1,132	12.8			85	88	(3)	(3.4)
Total firm sales and transportation	17,931	18,047	(116)	(0.6)	%	(b)	$274	$332	$(58)	(17.5)	%
Interruptible sales (c)	2,693	1,222	1,471	Large			13	10	3	30.0
NYPA	15,214	14,381	833	5.8			1	1	—	—
Generation plants	23,215	19,633	3,582	18.2			6	11	(5)	(45.5)
Other	4,023	4,141	(118)	(2.8)			6	6	—	—
Other operating revenues (d)	—	—	—	—			18	54	(36)	(66.7)
Total	63,076	57,424	5,652	9.8	%		$318	$414	$(96)	(23.2)	%

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

(b)After adjusting for variations, primarily billing days, firm gas sales and transportation volumes in CECONY’s service area decreased 2.3 percent in the three months ended September 30, 2023 compared with the 2022 period.

(c)Includes 1,819 thousand and 273 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 $96 million in the three months ended September 30, 2023 compared with the 2022 period primarily due to lower gas purchased for resale ($51 million), lower unbilled revenue accrual ($16 million), a certain rate plan reconciliation ($13 million), a decrease in revenues from the gas rate plan ($8 million) and a change in incentives earned under the earnings adjustment mechanisms (EAMs) ($4 million).

Gas purchased for resale decreased $51 million in the three months ended September 30, 2023 compared with the 2022 period due to lower unit costs ($40 million) and lower purchased volumes ($11 million).

Other operations and maintenance expenses increased $15 million in the three months ended September 30, 2023 compared with the 2022 period primarily due to higher gas operations costs ($15 million).

Depreciation and amortization expenses increased $15 million in the three months ended September 30, 2023 compared with the 2022 period primarily due to higher gas utility plant balances.

Taxes, other than income taxes decreased $7 million in the three months ended September 30, 2023 compared with the 2022 period primarily due to a lower deferral of over-collected property taxes ($25 million), offset in part by higher property taxes ($19 million).

Steam

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


	For the Three Months Ended
(Millions of Dollars)	September 30, 2023	September 30, 2022	Variation
Operating revenues	$49	$58	$(9)
Purchased power	6	15	(9)
Fuel	1	1	—
Other operations and maintenance	61	48	13
Depreciation and amortization	25	24	1
Taxes, other than income taxes	36	35	1
Steam operating income	$(80)	$(65)	$(15)

CECONY’s steam sales and deliveries for the three months ended September 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	September 30, 2023	September 30, 2022	Variation	Percent Variation			September 30, 2023	September 30, 2022	Variation	Percent Variation
General	7	7	—	—	%		$2	$2	$—	—	%
Apartment house	568	582	(14)	(2.4)			12	13	(1)	(7.7)
Annual power	1,796	2,006	(210)	(10.5)			30	38	(8)	(21.1)
Other operating revenues (a)	—	—	—	—			5	5	—	—
Total	2,371	2,595	(224)	(8.6)	%	(b)	$49	$58	$(9)	(15.5)	%

(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 8.0 percent in the three months ended September 30, 2023 compared with the 2022 period.

Operating revenues decreased $9 million in the three months ended September 30, 2023 compared with the 2022 period primarily due to lower purchased power ($9 million).

Purchased power decreased $9 million in the three months ended September 30, 2023 compared with the 2022 period due to lower unit costs ($8 million) and lower purchased volumes ($1 million).

Other operations and maintenance expenses increased $13 million in the three months ended September 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) and an increase in municipal infrastructure support ($4 million).

Taxes, Other Than Income Taxes

At $777 million, taxes other than income taxes remain one of CECONY’s largest operating expenses for the three months ended September 30, 2023. The principal components of, and variations in, taxes other than income taxes were:


	For the Three Months Ended September 30,
(Millions of Dollars)	2023		2022		Variation
Property taxes	$681		$604		$77
State and local taxes related to revenue receipts	115		114		1
Payroll taxes	19		14		5
Other taxes	(38)		16		(54)
Total	$777	(a)	$748	(a)	$29

(a)Including sales tax on customers’ bills, total taxes other than income taxes in 2023 and 2022 were $990 million and $913 million, respectively.

Other Income (Deductions)

Other income increased $103 million in the three months ended September 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 ($91 million) and higher interest accrual ($1 million).

Net Interest Expense

Net Interest Expense increased $37 million in the three months ended September 30, 2023 compared with the 2022 period primarily due to higher interest on long-term debt ($20 million) and short-term debt ($18 million).

Income Tax Expense

Income taxes decreased $15 million in the three months ended September 30, 2023 compared with the 2022 period primarily due to higher flow-through of COVID-19 assistance benefits for uncollectible accounts ($24 million) and a favorable tax adjustment from a prior year tax return primarily due to an increase in general business tax credits ($4 million), offset in part by an increase in allowance for uncollectible accounts ($7 million), higher reserve for injuries and damages ($3 million) and higher income before income tax expense ($1 million).

O&R


	For the Three Months Ended September 30, 2023			For the Three Months Ended September 30, 2022
(Millions of Dollars)	Electric	Gas	2023 Total	Electric	Gas	2022 Total	2023-2022 Variation
Operating revenues	$246	$35	$281	$252	$39	$291	$(10)
Purchased power	77	—	77	89	—	89	(12)
Gas purchased for resale	—	11	11	—	16	16	(5)
Other operations and maintenance	76	20	96	69	19	88	8
Depreciation and amortization	19	7	26	18	7	25	1
Taxes, other than income taxes	15	8	23	15	7	22	1
Operating income (loss)	$59	$(11)	$48	$61	$(10)	$51	$(3)

Electric

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


	For the Three Months Ended
(Millions of Dollars)	September 30, 2023	September 30, 2022	Variation
Operating revenues	$246	$252	$(6)
Purchased power	77	89	(12)
Other operations and maintenance	76	69	7
Depreciation and amortization	19	18	1
Taxes, other than income taxes	15	15	—
Electric operating income	$59	$61	$(2)

O&R’s electric sales and deliveries for the three months ended September 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	September 30, 2023	September 30, 2022	Variation	Percent Variation			September 30, 2023	September 30, 2022	Variation	Percent Variation
Residential/Religious (b)	627	654	(27)	(4.1)	%		$140	$141	$(1)	(0.7)	%
Commercial/Industrial	252	265	(13)	(4.9)			41	45	(4)	(8.9)
Retail choice customers	703	747	(44)	(5.9)			62	67	(5)	(7.5)
Public authorities	34	36	(2)	(5.6)			3	5	(2)	(40.0)
Other operating revenues (c)	—	—	—	—			—	(6)	6	Large
Total	1,616	1,702	(86)	(5.1)	%	(d)	$246	$252	$(6)	(2.4)	%

(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 New Jersey 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 New Jersey 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 decreased 2.7 percent in the three months ended September 30, 2023 compared with the 2022 period.

Operating revenues decreased $6 million in the three months ended September 30, 2023 compared with the 2022 period primarily due to lower purchased power expenses ($12 million), offset in part by higher revenues from the New York electric rate plan ($7 million).

Purchased power expenses decreased $12 million in the three months ended September 30, 2023 compared with the 2022 period due to lower purchased volumes ($8 million) and lower unit costs ($4 million).

Other operations and maintenance expenses increased $7 million in the three months ended September 30, 2023 compared with the 2022 period primarily due to higher customer assistance costs ($2 million), higher administrative and general expenses ($2 million), higher non-deferred storm costs ($1 million) and higher tree trimming expenses ($1 million).

Gas

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


	For the Three Months Ended
(Millions of Dollars)	September 30, 2023	September 30, 2022	Variation
Operating revenues	$35	$39	$(4)
Gas purchased for resale	11	16	(5)
Other operations and maintenance	20	19	1
Depreciation and amortization	7	7	—
Taxes, other than income taxes	8	7	1
Gas operating income	$(11)	$(10)	($1)

O&R’s gas sales and deliveries, excluding off-system sales, for the three months ended September 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	September 30, 2023	September 30, 2022	Variation	Percent Variation			September 30, 2023	September 30, 2022	Variation	Percent Variation
Residential	908	548	360	65.7	%		$18	$16	$2	12.5	%
General	262	139	123	88.5			3	3	—	—
Firm transportation	575	548	27	4.9			4	4	—	—
Total firm sales and transportation	1,745	1,235	510	41.3	%	(b)	$25	$23	$2	8.7	%
Interruptible sales	896	830	66	8.0			1	1	—	—
Generation plants	3	6	(3)	(50.0)			—	—	—	—
Other	7	56	(49)	(87.5)			—	1	(1)	—
Other gas revenues	—	—	—	—			9	14	(5)	(35.7)
Total	2,651	2,127	524	24.6	%		$35	$39	$(4)	(10.3)	%

(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 increased 7.9 percent in the three months ended September 30, 2023 compared with the 2022 period.

Operating revenues decreased $4 million in the three months ended September 30, 2023 compared with the 2022 period primarily due to lower gas purchased for resale ($5 million), offset in part by higher revenues from the New York gas rate plan ($1 million).

Gas purchased for resale decreased $5 million in the three months ended September 30, 2023 compared with the 2022 period due to lower unit costs ($5 million).

Taxes, Other Than Income Taxes

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


	For the Three Months Ended September 30,
(Millions of Dollars)	2023		2022		Variation
Property taxes	$18		$17		$1
State and local taxes related to revenue receipts	3		3		—
Payroll taxes	2		2		—
Total	$23	(a)	$22	(a)	$1

(a)Including sales tax on customers’ bills, total taxes other than income taxes in 2023 and 2022 were $32 million and $35 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 Third Quarter Financial Statements. The Clean Energy Businesses’ results of operations for the three months ended September 30, 2023 compared with the 2022 period were as follows:


	For the Three Months Ended
(Millions of Dollars)	September 30, 2023	September 30, 2022	Variation
Operating revenues	$—	$325	$(325)


Gas purchased for resale	—	55	(55)
Other operations and maintenance	—	101	(101)
Depreciation and amortization	—	60	(60)
Taxes, other than income taxes	—	5	(5)



Operating income	$—	$104	$(104)

Con Edison Transmission

Other Income (Deductions)

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

Income Tax Expense

Income taxes increased $2 million in the three months ended September 30, 2023 compared with the 2022 period primarily due to higher income before income tax expense.

Other

Income Tax Expense

Income taxes increased $19 million in the three months ended September 30, 2023 compared with the 2022 period primarily due to a higher unitary state tax adjustment, net of federal benefit ($7 million), changes in valuation allowance and state apportionments as a result of the sale of the Clean Energy Businesses ($14 million), offset in part by an increase in renewable energy tax credits ($2 million).

The Companies’ results of operations for the nine months ended September 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	$10,287	$9,972	$803	$813	$129	$857	$3	$3	$(3)	$(6)	$11,219	$11,639
Purchased power	1,802	1,639	191	210	—	6	—	—	—	(4)	1,993	1,851
Fuel	241	255	—	—	—	—	—	—	—	—	241	255
Gas purchased for resale	518	582	82	94	41	157	—	—	(1)	—	640	833
Other operations and maintenance	2,341	2,267	283	259	47	252	8	10	(1)	(3)	2,678	2,785
Depreciation and amortization	1,428	1,341	78	73	—	178	1	1	(1)	—	1,506	1,593
Taxes, other than income taxes	2,207	2,159	69	67	4	16	—	—	2	6	2,282	2,248


Gain on sale of the Clean Energy Businesses	—	—	—	—	—	—	—	—	866	—	866	—
Operating income	1,750	1,729	100	110	37	248	(6)	(8)	864	(5)	2,745	2,074
Other income (deductions)	550	245	36	16	1	2	22	14	2	(8)	611	269
Net interest expense	695	604	38	33	16	(68)	2	3	7	14	758	586
Income before income tax expense	1,605	1,370	98	93	22	318	14	3	859	(27)	2,598	1,757
Income tax expense	297	232	23	21	3	68	4	1	89	8	416	330
Net income	$1,308	$1,138	$75	$72	$19	$250	$10	$2	$770	$(35)	$2,182	$1,427
Loss attributable to non-controlling interest	—	—	—	—	(3)	(43)	—	—	—	—	(3)	(43)
Net income for common stock	$1,308	$1,138	$75	$72	$22	$293	$10	$2	$770	$(35)	$2,185	$1,470

(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 Third 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 Third Quarter Financial Statements.

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

CECONY


	For the Nine Months Ended September 30, 2023				For the Nine Months Ended September 30, 2022
(Millions of Dollars)	Electric	Gas	Steam	2023 Total	Electric	Gas	Steam	2022 Total	2023-2022 Variation
Operating revenues	$7,722	$2,140	$425	$10,287	$7,401	$2,127	$444	$9,972	$315
Purchased power	1,771	—	31	1,802	1,593	—	46	1,639	163
Fuel	129	—	112	241	170	—	85	255	(14)
Gas purchased for resale	—	518	—	518	—	582	—	582	(64)
Other operations and maintenance	1,781	386	174	2,341	1,774	346	147	2,267	74
Depreciation and amortization	1,035	319	74	1,428	994	275	72	1,341	87
Taxes, other than income taxes	1,714	384	109	2,207	1,637	413	109	2,159	48
Operating income	$1,292	$533	$(75)	$1,750	$1,233	$511	$(15)	$1,729	$21

Electric

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


	For the Nine Months Ended
(Millions of Dollars)	September 30, 2023	September 30, 2022	Variation
Operating revenues	$7,722	$7,401	$321
Purchased power	1,771	1,593	178
Fuel	129	170	(41)
Other operations and maintenance	1,781	1,774	7
Depreciation and amortization	1,035	994	41
Taxes, other than income taxes	1,714	1,637	77
Electric operating income	$1,292	$1,233	$59

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


	Millions of kWh Delivered						Revenues in Millions (a)
	For the Nine Months Ended						For the Nine Months Ended
Description	September 30, 2023	September 30, 2022	Variation	Percent Variation			September 30, 2023	September 30, 2022	Variation	Percent Variation
Residential/Religious (b)	8,854	9,283	(429)	(4.6)	%		$2,614	$2,600	$14	0.5	%
Commercial/Industrial	8,179	7,857	322	4.1			2,083	2,026	57	2.8
Retail choice customers	15,363	16,204	(841)	(5.2)			1,781	1,950	(169)	(8.7)
NYPA, Municipal Agency and other sales	7,113	7,185	(72)	(1.0)			609	576	33	5.7
Other operating revenues (c)	—	—	—	—			635	249	386	Large
Total	39,509	40,529	(1,020)	(2.5)	%	(d)	$7,722	$7,401	$321	4.3	%

(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 decreased 0.4 percent in the nine months ended September 30, 2023 compared with the 2022 period.

Operating revenues increased $321 million in the nine months ended September 30, 2023 compared with the 2022 period primarily due to an increase in revenues from the electric rate plan ($261 million) and higher purchased power expenses ($178 million), offset in part by lower unbilled revenue accrual ($102 million), lower fuel expenses ($41 million) and a change in incentives earned under the earnings adjustment mechanisms (EAMs) ($6 million).

Purchased power expenses increased $178 million in the nine months ended September 30, 2023 compared with the 2022 period due to higher unit costs ($259 million) offset in part by lower purchased volumes ($81 million).

Fuel expenses decreased $41 million in the nine months ended September 30, 2023 compared with the 2022 period due to lower unit costs ($49 million), offset in part by higher purchased volumes from CECONY's electric generating facilities ($8 million).

Other operations and maintenance expenses increased $7 million in the nine months ended September 30, 2023 compared with the 2022 period primarily due to higher electric operations maintenance activities ($8 million).

Depreciation and amortization expenses increased $41 million in the nine months ended September 30, 2023 compared with the 2022 period primarily due to higher electric utility plant balances.

Taxes, other than income taxes increased $77 million in the nine months ended September 30, 2023 compared with the 2022 period primarily due to higher property taxes ($130 million), offset in part by a lower deferral of over-collected property taxes ($54 million).

Gas

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


	For the Nine Months Ended
(Millions of Dollars)	September 30, 2023	September 30, 2022	Variation
Operating revenues	$2,140	$2,127	$13
Gas purchased for resale	518	582	(64)
Other operations and maintenance	386	346	40
Depreciation and amortization	319	275	44
Taxes, other than income taxes	384	413	(29)
Gas operating income	$533	$511	$22

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


	Thousands of Dt Delivered						Revenues in Millions (a)
	For the Nine Months Ended						For the Nine Months Ended
Description	September 30, 2023	September 30, 2022	Variation	Percent Variation			September 30, 2023	September 30, 2022	Variation	Percent Variation
Residential	34,900	39,172	(4,272)	(10.9)	%		$925	$942	$(17)	(1.8)	%
General	22,756	25,507	(2,751)	(10.8)			410	428	(18)	(4.2)
Firm transportation	55,808	57,307	(1,499)	(2.6)			643	590	53	9.0
Total firm sales and transportation	113,464	121,986	(8,522)	(7.0)		(b)	1,978	1,960	18	0.9
Interruptible sales (c)	6,136	4,875	1,261	25.9			43	40	3	7.5
NYPA	39,306	34,867	4,439	12.7			2	2	—	—
Generation plants	46,449	42,329	4,120	9.7			20	24	(4)	(16.7)
Other	14,767	14,956	(189)	(1.3)			27	27	—	—
Other operating revenues (d)	—	—	—	—			70	74	(4)	(5.4)
Total	220,122	219,013	1,109	0.5	%		$2,140	$2,127	$13	0.6	%

(b)After adjusting for variations, primarily billing days, firm gas sales and transportation volumes in CECONY’s service area increased 2.1 percent in the nine months ended September 30, 2023 compared with the 2022 period.

(c)Includes 2,564 thousand and 1,702 thousand of Dt for the 2023 and 2022 periods, respectively, that are also reflected in firm transportation and other.

Operating revenues increased $13 million in the nine months ended September 30, 2023 compared with the 2022 period primarily due to an increase in revenues from the gas rate plan ($73 million) and a change in incentives earned under the earnings adjustment mechanisms (EAMs) ($3 million), offset in part by a decrease in gas purchased for resale ($64 million).

Gas purchased for resale decreased $64 million in the nine months ended September 30, 2023 compared with the 2022 period due to lower purchased volumes ($163 million), offset in part by higher unit costs ($99 million).

Other operations and maintenance expenses increased $40 million in the nine months ended September 30, 2023 compared with the 2022 period primarily due to higher gas operations cost ($36 million) and an increase in municipal infrastructure support ($3 million).

Depreciation and amortization expenses increased $44 million in the nine months ended September 30, 2023 compared with the 2022 period primarily due to higher gas utility plant balances.

Taxes, other than income taxes decreased $29 million in the nine months ended September 30, 2023 compared with the 2022 period primarily due to a lower deferral of over-collected property taxes ($66 million), offset in part by higher property taxes ($32 million) and higher state and local taxes ($4 million).

Steam

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


	For the Nine Months Ended
(Millions of Dollars)	September 30, 2023	September 30, 2022	Variation
Operating revenues	$425	$444	$(19)
Purchased power	31	46	(15)
Fuel	112	85	27
Other operations and maintenance	174	147	27
Depreciation and amortization	74	72	2
Taxes, other than income taxes	109	109	—
Steam operating income	$(75)	$(15)	$(60)

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


	Millions of Pounds Delivered						Revenues in Millions
	For the Nine Months Ended						For the Nine Months Ended
Description	September 30, 2023	September 30, 2022	Variation	Percent Variation			September 30, 2023	September 30, 2022	Variation	Percent Variation
General	315	390	(75)	(19.2)	%		$19	$21	$(2)	(9.5)	%
Apartment house	3,408	3,781	(373)	(9.9)			114	115	(1)	(0.9)
Annual power	7,924	9,109	(1,185)	(13.0)			278	297	(19)	(6.4)
Other operating revenues (a)	—	—	—	—			14	11	3	27.3
Total	11,647	13,280	(1,633)	(12.3)	%	(b)	$425	$444	$(19)	(4.3)	%

(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 0.6 percent in the nine months ended September 30, 2023 compared with the 2022 period.

Operating revenues decreased $19 million in the nine months ended September 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 ($15 million), offset in part by higher fuel expenses ($27 million) and higher revenues from the increase in average normalized use per customer ($7 million).

Purchased power expenses decreased $15 million in the nine months ended September 30, 2023 compared with the 2022 period due to lower unit costs ($18 million), offset in part by higher purchased volumes ($3 million).

Fuel expenses increased $27 million in the nine months ended September 30, 2023 compared with the 2022 period due to higher unit costs ($52 million), offset in part by lower purchased volumes from CECONY’s steam generating facilities ($25 million).

Other operations and maintenance expenses increased $27 million in the nine months ended September 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 ($18 million) and an increase in municipal infrastructure support ($4 million).

Taxes, Other Than Income Taxes

At $2,207 million, taxes other than income taxes remain one of CECONY’s largest operating expenses for the nine months ended September 30, 2023. The principal components of, and variations in, taxes other than income taxes were:


	For the Nine Months Ended September 30,
(Millions of Dollars)	2023		2022		Variation
Property taxes	$1,887		$1,718		$169
State and local taxes related to revenue receipts	312		312		—
Payroll taxes	66		62		4
Other taxes	(58)		67		(125)
Total	$2,207	(a)	$2,159	(a)	$48

(a)Including sales tax on customers’ bills, total taxes other than income taxes in 2023 and 2022 were $2,747 million and $2,650 million, respectively.

Other Income (Deductions)

Other income increased $305 million in the nine months ended September 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 ($272 million) and higher hedging program interest accrual ($5 million).

Net Interest Expense

Net interest expense increased $91 million in the nine months ended September 30, 2023 compared with the 2022 period primarily due to higher interest expense for long-term debt ($56 million) and short-term debt ($45 million), offset in part by an increase in allowance for borrowed funds used during construction ($15 million).

Income Tax Expense

Income taxes increased $65 million in the nine months ended September 30, 2023 compared with the 2022 period primarily due to higher income before income tax expense ($61 million), a remeasurement of state deferred tax assets and liabilities as a result of the enacted New York State legislation ($10 million), a decrease in the amortization of excess deferred federal income taxes due to the TCJA ($6 million), higher reserve for injuries and damages ($5 million), lower flow-through tax benefits in 2023 for plant-related items ($4 million) and lower research and development credits from prior years net of uncertain tax positions ($2 million), offset in part by higher flow-through of COVID-19 assistance benefits for uncollectible accounts ($15 million), a favorable tax adjustment from a prior year tax return ($4 million) and lower allowance for uncollectible accounts ($4 million).

O&R


	For the Nine Months Ended September 30, 2023			For the Nine Months Ended September 30, 2022
(Millions of Dollars)	Electric	Gas	2023 Total	Electric	Gas	2022 Total	2023-2022 Variation
Operating revenues	$588	$215	$803	$594	$219	$813	$(10)
Purchased power	191	—	191	210	—	210	(19)
Gas purchased for resale	—	82	82	—	94	94	(12)
Other operations and maintenance	223	60	283	203	56	259	24
Depreciation and amortization	56	22	78	53	20	73	5
Taxes, other than income taxes	45	24	69	43	24	67	2
Operating income	$73	$27	$100	$85	$25	$110	$(10)

Electric

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


	For the Nine Months Ended
(Millions of Dollars)	September 30, 2023	September 30, 2022	Variation
Operating revenues	$588	$594	$(6)
Purchased power	191	210	(19)
Other operations and maintenance	223	203	20
Depreciation and amortization	56	53	3
Taxes, other than income taxes	45	43	2
Electric operating income	$73	$85	$(12)

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


	Millions of kWh Delivered						Revenues in Millions (a)
	For the Nine Months Ended						For the Nine Months Ended
Description	September 30, 2023	September 30, 2022	Variation	Percent Variation			September 30, 2023	September 30, 2022	Variation	Percent Variation
Residential/Religious (b)	1,510	1,482	28	1.9	%		$329	$315	$14	4.4	%
Commercial/Industrial	745	706	39	5.5			112	111	1	0.9
Retail choice customers	1,761	2,015	(254)	(12.6)			132	159	(27)	(17.0)
Public authorities	87	86	1	1.2			9	12	(3)	(25.0)
Other operating revenues (c)	—	—	—	—			6	(3)	9	—
Total	4,103	4,289	(186)	(4.3)	%	(d)	$588	$594	$(6)	(1.0)	%

(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 decreased 0.6 percent in the nine months ended September 30, 2023 compared with the 2022 period.

Operating revenues decreased $6 million in the nine months ended September 30, 2023 compared with the 2022 period primarily due to lower purchased power expenses ($19 million), offset in part by higher revenues from the New York electric rate plan ($14 million).

Purchased power expenses decreased $19 million in the nine months ended September 30, 2023 compared with the 2022 period primarily due to lower purchased volumes ($10 million) and lower unit costs ($9 million).

Other operations and maintenance expenses increased $20 million in the nine months ended September 30, 2023 compared with the 2022 period primarily due to higher non-deferred storm costs ($4 million), higher tree trimming

expenses ($3 million), higher uncollectible expenses ($2 million), higher shared services costs ($2 million), higher administrative and general expenses ($2 million), higher customer assistance costs ($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 nine months ended September 30, 2023 compared with the 2022 period were as follows:


	For the Nine Months Ended
(Millions of Dollars)	September 30, 2023	September 30, 2022	Variation
Operating revenues	$215	$219	$(4)
Gas purchased for resale	82	94	(12)
Other operations and maintenance	60	56	4
Depreciation and amortization	22	20	2
Taxes, other than income taxes	24	24	—
Gas operating income	$27	$25	$2

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


	Thousands of Dt Delivered						Revenues in Millions (a)
	For the Nine Months Ended						For the Nine Months Ended
Description	September 30, 2023	September 30, 2022	Variation	Percent Variation			September 30, 2023	September 30, 2022	Variation	Percent Variation
Residential	7,640	8,433	(793)	(9.4)	%		$142	$144	$(2)	(1.4)	%
General	1,669	1,945	(276)	(14.2)			24	27	(3)	(11.1)
Firm transportation	3,783	4,702	(919)	(19.5)			29	33	(4)	(12.1)
Total firm sales and transportation	13,092	15,080	(1,988)	(13.2)		(b)	$195	$204	$(9)	(4.4)
Interruptible sales	2,656	2,936	(280)	(9.5)			4	4	—	—
Generation plants	4	11	(7)	(63.6)			—	—	—	—
Other	312	437	(125)	(28.6)			1	1	—	—
Other gas revenues	—	—	—	—			15	10	5	50.0
Total	16,064	18,464	(2,400)	(13.0)	%		$215	$219	$(4)	(1.8)	%

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

Operating revenues decreased $4 million in the nine months ended September 30, 2023 compared with the 2022 period primarily due to a decrease in gas purchased for resale ($12 million), offset in part by higher revenues from the New York gas rate plan ($5 million).

Gas purchased for resale decreased $12 million in the nine months ended September 30, 2023 compared with the 2022 period primarily due to lower purchased volumes ($17 million), offset in part by higher unit costs ($5 million).

Other operations and maintenance expenses increased $4 million in the nine months ended September 30, 2023 compared with the 2022 period primarily due to higher pension costs, reflecting reconciliation to the rate plan level ($1 million) and higher uncollectible expenses ($1 million).

Taxes, Other Than Income Taxes

Taxes, other than income taxes, increased by $2 million in 2023 compared with 2022 for the nine months ended September 30, 2023. The principal components of taxes, other than income taxes, were:


	For the Nine Months Ended September 30,
(Millions of Dollars)	2023		2022		Variation
Property taxes	$53		$52		$1
State and local taxes related to revenue receipts	9		9		—
Payroll taxes	7		6		1
Total	$69	(a)	$67	(a)	$2

(a)Including sales tax on customers’ bills, total taxes other than income taxes in 2023 and 2022 were $93 million and $101 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 Third Quarter Financial Statements. The Clean Energy Businesses’ results of operations for the nine months ended September 30, 2023 compared with the 2022 period were as follows:


	For the Nine Months Ended
(Millions of Dollars)	September 30, 2023	September 30, 2022	Variation
Operating revenues	$129	$857	$(728)
Purchased power	—	6	(6)
Gas purchased for resale	41	157	(116)
Other operations and maintenance	47	252	(205)
Depreciation and amortization	—	178	(178)
Taxes, other than income taxes	4	16	(12)




Operating income	$37	$248	$(211)

Net Interest Expense

Net interest expense increased $84 million in the nine months ended September 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 Third Quarter Financial Statements.

Income Tax Expense

Income taxes decreased $65 million in the nine months ended September 30, 2023 compared with the 2022 period primarily due to lower income before income tax expense ($74 million), lower income attributable to non-controlling interest ($12 million) and a lower reserve for uncertain tax positions ($5 million) offset in part by lower renewable energy tax credits ($20 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 nine months ended September 30, 2023 is shown through the date of the sale. See Note S and Note T to the Third Quarter Financial Statements.

Income (Loss) Attributable to Non-Controlling Interest

Income attributable to non-controlling interest increased $40 million to a loss of $3 million in the nine months ended September 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 $8 million in the nine months ended September 30, 2023 compared with the 2022 period primarily due to higher investment income from New York Transco ($8 million).

Income Tax Expense

Income taxes increased $3 million in the nine months ended September 30, 2023 compared with the 2022 period primarily due to higher income before income tax expense.

Other

Income Tax Expense

Income taxes increased $81 million in the nine months ended September 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 ($207

million) and a higher unitary state tax adjustment, net of federal benefit ($17 million), offset in part by the recognition of unamortized investment tax credits ($108 million) and lower state taxes due to change in state apportionments, net of federal income taxes ($27 million), both related to the sale of the Clean Energy Businesses and an increase in renewable energy tax credits ($5 million).

Liquidity and Capital Resources

The Companies monitor the financial markets closely, including borrowing rates and daily cash collections. Increases in aged accounts receivable balances, 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 Third Quarter Financial Statements and "Interest Rate Risk," below, "Aged Accounts Receivable Balances," above, "Capital Requirements and Resources," below and "Regulatory Matters - Rate Plans - CECONY Electric and Gas" and "COVID-19 Regulatory Matters" in Note B to the Third Quarter Financial Statements.

Con Edison and the Utilities have a $2,500 million revolving credit agreement (the Credit Agreement) in place under which banks are committed to provide loans on a revolving credit basis until March 2028, unless extended for up to two additional one-year terms, subject to certain conditions. CECONY has a $500 million 364-day revolving credit agreement (the CECONY 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 Third 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 nine months ended September 30, 2023 and 2022 are summarized as follows:


	For the Nine Months Ended September 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	$1,221	$2,191	$127	$165	$—	$251	$(145)	$49	$(22)	$(38)	$1,181	$2,618
Investing activities	(3,178)	(2,929)	(208)	(162)	(248)	(206)	(49)	(49)	4,035	—	352	(3,346)
Financing activities	921	(157)	75	(2)	—	(42)	212	—	(3,725)	24	(2,517)	(177)
Net change for the period	(1,036)	(895)	(6)	1	(248)	3	18	—	288	(14)	(984)	(905)
Balance at beginning of period	1,056	920	35	29	248	178	—	—	191	19	1,530	1,146
Balance at end of period (c)	$20	$25	$29	$30	$—	$181	$18	$—	$479	$5	$546	$241
Less: Cash balances held for sale (d)	—	—	—	—	—	—	—	—	6	—	6	—
Balance at end of period excluding held for sale	$20	$25	$29	$30	$—	$181	$18	$—	$473	$5	$540	$241

(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 Third 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 Third 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 Third 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’ New York 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’ New York 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 Third 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’ New York electric and gas rate plans.

Net cash flows from operating activities for the nine months ended September 30, 2023 for Con Edison and CECONY were $1,437 million lower and $970 million lower, respectively, than in the 2022 period. The change in net cash flows for Con Edison primarily reflects a decrease in accounts payable ($634 million), lower net deferred credits, noncurrent liabilities and other regulatory liabilities balances ($562 million) and an increase in prepayments ($253 million). For CECONY, changes in net cash flows primarily reflects lower net deferred credits, noncurrent liabilities and other regulatory liabilities balances ($469 million), a decrease in accounts payable ($396 million), a decrease in the pension and retiree benefits obligations, net ($262 million), an increase in the revenue decoupling mechanism receivable ($152 million), and an increase in prepayments ($140 million), offset in part by a lower increase of accounts receivable balances from customers net of allowance for uncollectible accounts ($281 million) (see “COVID-19 Regulatory Matters” in Note B to the Third Quarter Financial Statements and "Aged Accounts Receivable Balances,” above), a decrease in materials and supplies, including fuel oil and gas in storage ($107 million) and an increase in the system benefit charge ($52 million).

Cash Flows From (Used in) Investing Activities

Net cash flows from investing activities for Con Edison were $3,698 million higher for the nine months ended September 30, 2023 compared with the 2022 period. Net cash flows used in investing activities for CECONY were $249 million higher for the nine months ended September 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) and a decrease in non-utility construction expenditures ($69 million), offset in part by an increase in utility construction expenditures ($253 million) and higher cost of removal less salvage ($42 million). The change for CECONY primarily reflects an increase in utility construction expenditures ($207 million) and higher cost of removal less salvage ($42 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 $2,340 million higher for the nine months ended September 30, 2023 compared with the 2022 period. Net cash flows from financing activities for CECONY were $1,078 million higher for the nine months ended September 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 Third 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 Third Quarter Financial Statements.

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

In June 2022, Con Edison entered into and borrowed $400 million under a 364-Day Senior Unsecured Term Loan Credit Agreement (the June 2022 Term Loan Credit Agreement). In January 2023, Con Edison borrowed an additional $200 million under the June 2022 Credit Agreement and in March 2023, repaid all amounts borrowed under the June 2022 Term Loan Credit Agreement.

In November 2022, O&R issued $100 million aggregate principal amount of 5.70 percent debentures, due 2032, the net proceeds from the sale of which were used to repay short-term borrowings and for other general corporate purposes.

In the nine months ended September 30, 2023 and 2022, Con Edison contributed $1,720 million and $150 million of equity, respectively, to CECONY.

Con Edison’s cash flows from financing activities for the nine months ended September 30, 2023 also reflect a retirement of short-term debt of $1,160 million compared with a net issuance of $1,003 million in the 2022 period.

CECONY’s cash flows from financing activities for the nine months ended September 30, 2023 also reflect a retirement of short-term debt of $502 million compared with a net issuance of $428 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 September 30, 2023 and 2022 and the average daily balances for the nine months ended September 30, 2023 and 2022 for Con Edison and CECONY were as follows:


	2023				2022
(Millions of Dollars, except Weighted Average Yield)	Outstanding at September 30,		Daily average		Outstanding at September 30,		Daily average
Con Edison	$1,880		$1,351		$1,941		$1,368
CECONY	$1,798		$1,313		$1,789		$1,191
Weighted average yield	5.5	%	5.2	%	3.4	%	1.5	%

Capital Requirements and Resources

During 2023, Con Edison changed its estimate for capital requirements for 2024 and 2025 to $5,109 million and $4,962 million, respectively. The changes include decreases in CECONY’s capital requirements of $11 million and $25 million in 2024 and 2025, respectively, to reflect capital expenditures included in the September 2023 steam joint proposal that is subject to approval by the NYSPSC and increases to Con Edison’s capital requirements of $24 million in each of 2024 and 2025 to reflect additional investments by Con Edison Transmission associated with the Propel NY Energy transmission project. See “Rate Plans – CECONY – Steam” in Note B to the Third Quarter Financial Statements and “Con Edison Transmission,” above.

In October 2023, Con Edison increased the amount of long-term debt it plans to issue at the Utilities from up to $1,400 million to up to $2,100 million, of which $500 million was issued in the first nine months of 2023. The increase is primarily due to higher than anticipated accounts receivable balances and the timing of the approval of the CECONY electric and gas rate plans. See “Aged Accounts Receivable Balances” and “Liquidity and Capital Resources,” above and "Regulatory Matters – Rate Plans – CECONY Electric and Gas” in Note B to the Third Quarter Financial Statements.

Contractual Obligations

Con Edison’s material obligations to make payments pursuant to contracts totaled $52,606 million and $57,931 million at September 30, 2023 and December 31, 2022, respectively. The decrease at September 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 Third Quarter Financial Statements.

Capital Resources

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


	Common Equity Ratio (Percent of total capitalization)
	September 30, 2023	December 31, 2022
Con Edison	50.5	50.9
CECONY	49.4	46.9

Assets, Liabilities and Equity

The Companies' assets, liabilities, and equity at September 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	$5,166	$5,247	$355	$332	$—	$879	$19	$4	$399	$6,510	$5,939	$12,972
Investments	571	539	19	20	—	—	334	286	9	(4)	933	841
Net plant	45,658	44,011	2,860	2,738	—	4,718	17	17	—	(4,718)	48,535	46,766
Other noncurrent assets	8,192	7,648	388	421	—	1,627	7	7	411	(1,217)	8,998	8,486
Total Assets	$59,587	$57,445	$3,622	$3,511	$—	$7,224	$377	$314	$819	$571	$64,405	$69,065

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities	$4,940	$6,036	$362	$409	$—	$1,596	$3	$163	$745	$3,132	$6,050	$11,336
Noncurrent liabilities	15,951	15,451	1,135	1,103	—	338	(85)	(86)	(374)	(113)	16,627	16,693
Long-term debt	19,583	19,080	1,068	1,068	—	2,292	—	—	(1)	(2,293)	20,650	20,147
Equity	19,113	16,878	1,057	931	—	2,998	459	237	449	(155)	21,078	20,889
Total Liabilities and Equity	$59,587	$57,445	$3,622	$3,511	$—	$7,224	$377	$314	$819	$571	$64,405	$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 Third 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 Third Quarter Financial Statements.

CECONY

Current assets at September 30, 2023 were $81 million lower than at December 31, 2022. The change in current assets primarily reflects a decrease in cash and temporary cash investments ($1,036 million) and in accounts receivables, net of allowance for uncollectible accounts ($140 million) (see “COVID-19 Regulatory Matters” in Note B to the Third Quarter Financial Statements, "Aged Accounts Receivable Balances,” above), offset in part by an increase in prepayments ($699 million) and accounts receivable from affiliated companies ($400 million).

Net plant at September 30, 2023 was $1,647 million higher than at December 31, 2022. The change in net plant primarily reflects an increase in electric ($1,393 million), gas ($570 million), steam ($95 million) and general ($173 million) plant balances and an increase in construction work in progress ($233 million), offset in part by an increase in accumulated depreciation ($817 million).

Other noncurrent assets at September 30, 2023 were $544 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 ($314 million), an increase in pension and retiree benefits ($115 million) and an increase in system peak reduction and energy efficiency programs ($80 million). The increase is offset in part by a decrease in operating lease right-of-use asset ($24 million). See Notes B and I to the Third Quarter Financial Statements.

Current liabilities at September 30, 2023 were $1,096 million lower than at December 31, 2022. The change in current liabilities primarily reflects a decrease in accounts payable ($569 million) and a decrease in notes payable ($502 million).

Other noncurrent liabilities at September 30, 2023 were $500 million higher than at December 31, 2022. The change in other noncurrent assets primarily reflects an increase in the deferred income taxes and unamortized investment tax credits ($916 million) and an increase in the asset retirement obligations ($13 million). The increase is offset in part by a decrease in the unrecognized pension and other postretirement costs ($339 million), a decrease in future income tax ($166 million) and a decrease in the deferred derivative gains - long term ($113 million). See Note B to the Third Quarter Financial Statements.

Long-term debt at September 30, 2023 was $503 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 nine-month period. See Note C to the Third Quarter Financial Statements.

Equity at September 30, 2023 was $2,235 million higher than at December 31, 2022. The change in equity primarily reflects capital contributions from Con Edison ($1,720 million) in 2023, net income for the nine months ended September 30, 2023 ($1,308 million), offset in part by common stock dividends to Con Edison ($792 million) in 2023.

O&R

Current assets at September 30, 2023 were $23 million higher than at December 31, 2022. The change in current assets primarily reflects an increase in prepayments ($20 million) and the revenue decoupling mechanism receivable ($2 million).

Net plant at September 30, 2023 was $122 million higher than at December 31, 2022. The change in net plant primarily reflects an increase in electric ($70 million) and gas ($35 million) plant balances, an increase in construction work in progress ($32 million) and a decrease in accumulated depreciation ($23 million), offset in part by a decrease in general ($38 million) plant balances.

Other noncurrent assets at September 30, 2023 were $33 million lower than at December 31, 2022. The change in

other noncurrent assets primarily reflects a decrease in regulatory assets ($27 million) and a decrease in the fair value of derivative assets ($6 million).

Current liabilities at September 30, 2023 were $47 million lower than at December 31, 2022. The change in current liabilities primarily reflects a decrease in the regulatory liabilities ($30 million), a decrease in accounts payable ($25 million) and a decrease in accounts payable to affiliated companies ($18 million), offset in part by an increase in notes payable ($23 million) and accrued interest ($3 million).

Noncurrent liabilities at September 30, 2023 were $32 million higher than at December 31, 2022. The change in noncurrent liabilities primarily reflects an increase in deferred income taxes and investment tax credits ($40 million), offset in part by a decrease in the regulatory liabilities for unrecognized pension and other postretirement costs ($7 million).

Equity at September 30, 2023 was $126 million higher than at December 31, 2022. The change in equity primarily reflects capital contributions from Con Edison ($100 million) in 2023, net income for the nine months ended September 30, 2023 ($75 million), offset in part by common stock dividends to Con Edison ($48 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 Third Quarter Financial Statements.

Con Edison Transmission

Currents assets at September 30, 2023 were $15 million higher than at December 31, 2022. The increase in current assets primarily reflects an increase in cash and temporary investments ($18 million).

Investments at September 30, 2023 were $48 million higher than at December 31, 2022. The increase in investments reflects additional investment in New York Transco ($48 million).

Current liabilities at September 30, 2023 were $160 million lower than at December 31, 2022. The change in current liabilities primarily reflects repayment of an intercompany loan ($154 million).

Equity at September 30, 2023 was $222 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 and invest in New York Transco.

Utility Regulation

Cyber Regulation

In March 2023, the New York State legislature amended the New York 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 May 2023, New York State 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.

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. In September 2023, the NYSPSC issued an order providing guidance on the development of utility thermal energy network pilot projects. The order provides structure in the development of thermal network pilot projects previously proposed by the state’s utilities and directs utilities to file monthly progress and expenditure reports starting November 15, 2023, and thermal network pilot project proposals by December 15, 2023. The proposed pilots are subject to approval by the NYSPSC.

In June 2023, the NYSPSC issued an order identifying the Climate Leadership and Community Protection Act (CLCPA) as a public policy requirement driving 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. As directed by the order, after consultation with NYSDPS, CECONY established a process 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 New York Transco and the New York Power Authority (NYPA). Con Edison Transmission has a 41.7 percent interest in New York Transco’s share of the Propel NY Energy project, a 90-mile electric transmission project with an in-service date of 2030. The project is expected to enable delivery of a minimum of 3,000 MW of offshore wind electricity, increase high voltage transmission connections between Long Island and the rest of New York State and provide New Yorkers with greater access to diverse energy resources. 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 New York State and (2) any regulated transmission projects (or portions thereof) eligible for recovery under the NYISO’s public policy

transmission planning 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.

In July 2023, the NYSPSC issued an order implementing the next phase in the state’s energy efficiency portfolio process to assist with meeting CLCPA goals. On November 1, 2023, CECONY and O&R filed preliminary energy efficiency and electrification program proposals for the years 2026 - 2030.

In September 2023, CECONY updated its 2019 climate change vulnerability study and O&R published its initial climate change vulnerability study. The studies evaluated present-day infrastructure, design specifications, procedures under a range of potential climate futures and a suite of adaptation investments for consideration. The Utilities’ studies identified rising temperature, flooding, wind and ice and extreme and compound weather events, including, but not limited to, hurricanes, heat waves, Nor’easters, cold snaps and deluge rain to be the risks to their systems resulting from the impact of climate change as manifested in increased system load, asset degradation, equipment damage, accessibility and worker safety. The Utilities' studies were developed pursuant to a New York State Public Service law that requires all New York electric utilities to conduct a climate change vulnerability study by September 2023 and develop and file for approval by the NYSPSC a climate resilience investment plan by November 2023 that proposes storm hardening and resilience measures for the next ten years and twenty years. The law authorizes utilities to recover costs through a climate resilience cost recovery surcharge for costs incurred outside of rate proceedings and roll any unrecovered costs into base rates when base rates are next reset. The New York utilities are required to file an updated climate resilience investment plan with the NYSPSC for approval at least every five years.

Also in September 2023, CECONY and O&R filed an update to their May 2023 combined gas system long-term plan for their gas distribution systems. The Utilities’ plan has a 20-year horizon to achieve the greenhouse gas emissions reduction targets of the 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 September 2023 update concludes that gas sales and emissions in their service territories are projected to decline under all three pathways. However, the reference pathway’s substantial reliance on conventional fossil natural gas will prevent achievement of sufficient GHG emissions reductions to meet the CLCPA targets. Ambitious decarbonization strategies that include energy efficiency, electrification and procurement of low‐carbon gaseous fuels will enable more meaningful emissions reductions. The Utilities expect to file the final plan by the end of 2023 that will be subject to NYSPSC approval.

In October 2023, NYSERDA announced that it selected three new offshore wind projects for contract negotiations, representing 4,032 MW of energy by 2030. One of the conditional awards, the Community Offshore Wind project, is expected to connect 1,314 MW of offshore wind electricity through CECONY’s Brooklyn Clean Energy Hub by 2030 (see “Electric Reliability Needs,” below) and another conditional award, the Excelsior Wind project, is expected to connect 1,314 MW of offshore wind electricity using the capability of the Propel NY Energy project discussed above.

Other Environmental Matters

Following media reports, in July 2023, the Environmental Protection Agency, New York State Department of Environmental Conservation, New York State 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 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, New York. 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, CECONY 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.

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

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 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 April 2023, the NYSPSC approved CECONY’s December 2022 petition seeking cost recovery approval for a proposed clean energy hub in Brooklyn, New York (Brooklyn Clean Energy Hub) at an estimated cost of $810 million and an estimated in-service date of December 2027, that is in addition to the capital expenditures approved in CECONY's 2023 electric rate plan. See "Rate Plans - CECONY - Electric and Gas" in Note B to the Third Quarter Financial Statements. The Brooklyn Clean Energy Hub primarily addresses an identified reliability need in 2028 due to a forecasted increase in electric demand. The Brooklyn Clean Energy Hub is also identified as an interconnection hub that can support injection of offshore wind or other resources.

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 and a solicitation for market-based solutions from developers. In October 2023, CECONY, as the Responsible Transmission Owner, submitted its response to the NYISO. The NYISO will evaluate all proposals by November 2023 and determine if any combination of proposed solutions will meet the reliability need. NYISO stated that it would only temporarily retain peakers as a last step approach if it does not expect that other solutions will 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 a transmission feeder between Vernon and Newtown 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.

In August 2023, CECONY filed a petition with the NYSPSC requesting authorization and cost recovery to construct two new substations in Jamaica, Queens (the Reliable Clean City - Idlewild Project) by May 2028 to meet anticipated reliability needs and to support New York State’s electrification and CLCPA goals. CECONY estimates

that construction will cost $1,200 million. CECONY proposed cost recovery through a surcharge or base rates, depending on the in-service date and the timing of future rate filings. CECONY's petition is subject to approval by the NYSPSC.

Con Edison Transmission

In June 2023, the NYISO selected the Propel NY Energy transmission project that was jointly proposed by New York Transco and the New York Power Authority (NYPA). Propel NY Energy is a 90-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 electricity, increase high voltage transmission connections between Long Island and the rest of New York State and provide New Yorkers with greater access to diverse energy resources. New York 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 interest in New York 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. In October 2023, NYSERDA announced that it selected three new offshore wind projects for contract negotiations, one of which is expected to connect 1,314 MW of offshore wind electricity using the capability of the Propel NY Energy project. See "Environmental Matters - Clean Energy Future - Clean Energy Goals," above.

In April 2019, the NYISO selected New York 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 a majority of the assets were placed in service during the second quarter of 2023. 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 New York State with 84 percent allocated to load serving entities in the CECONY and O&R service areas.

The Mountain Valley Pipeline is being constructed by a joint venture in which Con Edison Transmission owns an 8.8 percent interest that is expected to be reduced to as low as 7.3 percent based on the latest project cost estimate and Con Edison Transmission’s previous capping of its cash contributions to the joint venture. In mid-August 2023, construction of the Mountain Valley Pipeline resumed after resolution of certain legal challenges. In October 2023, the operator of the Mountain Valley Pipeline indicated that it is now targeting an in-service date for the project in the first quarter of 2024 at an overall project cost of approximately $7,200 million excluding allowance for funds used during construction. At September 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. See "Investments - Investment in Mountain Valley Pipeline, LLC (MVP)" in Note A.

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 September 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 Third Quarter Financial Statements.

Con Edison estimates that, as of September 30, 2023, a 10 percent decline in market prices would result in a decline in fair value of $177 million for the derivative instruments used by the Utilities to hedge purchases of electricity and gas, of which $165 million is for CECONY and $12 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 Third 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 September 30, 2023, the pension plan investments consisted of 32 percent equity securities, 49 percent debt securities and 19 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 New York 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 Third Quarter Financial Statements.

Previous: Cover and table of contents · Next: Item 3. Quantitative and Qualitative Disclosures About Market Risk