This combined management's discussion and analysis of financial condition and
results of operations relates to the consolidated financial statements included
in this report of two separate registrants: Con Edison and CECONY, and should be
read in conjunction with the financial statements and the notes thereto. 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.
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.

Corporate Overview
Con Edison's principal business operations are those of the Utilities. Con
Edison's business operations also include those of the Clean Energy Businesses
and Con Edison Transmission. See "Significant Developments and Outlook" in the
Introduction to this report, "The Utilities," "Clean Energy Businesses" and "Con
Edison Transmission" in Item 1, and segment financial information in Note N to
the financial statements in Item 8. Certain financial data of Con Edison's
businesses are presented below:
                                 For the Year Ended December 31, 2019         At December 31, 2019
(Millions of Dollars,                   Operating         Net Income for
except percentages)                      Revenues           Common Stock                    Assets
CECONY                           $10,821       86 %     $1,250        93 %        $46,557       80 %
O&R                                  893        7 %         70         5 %          3,006        5 %
Total Utilities                   11,714       93 %      1,320        98 %         49,563       85 %
Clean Energy Businesses (a)          857        7 %       (18)        (1 )%         6,528       11 %
Con Edison Transmission                4        - %         52         4 %          1,618        3 %
Other (b)                            (1)        - %       (11)        (1 )%           370        1 %
Total Con Edison                 $12,574      100 %     $1,343       100 %        $58,079      100 %

(a) Net income for common stock from the Clean Energy Businesses for the year


    ended December 31, 2019 includes $(21) million of net after-tax
    mark-to-market losses and reflects $74 million (after-tax) of income
    attributable to the non-controlling interest of a tax equity investor in

renewable electric production projects accounted for under the HLBV method of

accounting. See Note Q to the financial statements in Item 8.

(b) Other includes parent company and consolidation adjustments.






Results of Operations
Net income for common stock and earnings per share for the years ended
December 31, 2019, 2018 and 2017 were as follows:
(Millions of Dollars,             Net Income for
except per share amounts)         Common Stock         Earnings per Share
                                    2019   2018   2017   2019     2018     2017
CECONY                            $1,250 $1,196 $1,104  $3.80    $3.84    $3.59
O&R                                   70     59     64   0.21     0.19     0.21
Clean Energy Businesses (a)(b)(c)   (18)    145    332  (0.06 )   0.46     1.08
Con Edison Transmission (c)           52     47     44   0.16     0.15     0.15
Other (c)(d)                        (11)   (65)   (19)  (0.02 )  (0.21 )  (0.06 )
Con Edison (e)                    $1,343 $1,382 $1,525  $4.09    $4.43    $4.97

(a) Net income for common stock from the Clean Energy Businesses for the year

ended December 31, 2019 reflects $74 million or $0.22 a share (after-tax) of

income attributable to the non-controlling interest of a tax equity investor

in renewable electric production projects accounted for under the HLBV method

of accounting. See Note Q to the financial statements in Item 8. Net income

for common stock from the Clean Energy Businesses for the year ended

December 31, 2017 includes $1 million or $0.00 a share of net after-tax gain

on the sale of a solar electric production project in 2017. See Note U to the

financial statements in Item 8. Net income for common stock from the Clean

Energy Businesses also includes $(21) million or $(0.07) a share, $(6)

million or $(0.02) a share and $1 million or $0.00 a share of net after-tax

mark-to-market gains/(losses) in 2019, 2018 and 2017, respectively.

(b) In December 2018, the Clean Energy Businesses acquired Sempra Solar Holdings,

LLC. Upon completion of the acquisition, the Clean Energy Businesses

recognized an after-tax gain of $89 million or $0.28 per share with respect

to jointly-owned renewable energy production projects. See Note U to the

financial statements in Item 8.

(c) Upon enactment of the TCJA in December 2017, Con Edison re-measured its

deferred tax assets and liabilities based upon the 21 percent corporate

income tax rate under the TCJA. As a result, the Clean Energy Businesses, Con

Edison Transmission and the parent company recognized in net income for

common stock for the year ended December 31, 2017 $269 million, $11 million

and $(21) million, respectively. See Note L to the financial statements in


    Item 8.



50 CON EDISON ANNUAL REPORT 2019

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(d) Other includes parent company and consolidation adjustments. Net income for

common stock includes $(42) million or $(0.14) a share of income tax expense

resulting from a re-measurement of the company's deferred tax assets and

liabilities following the issuance of proposed regulations relating to the

TCJA for the year ended December 31, 2018. See Note L to the financial

statements in Item 8. Net income for common stock for the year ended December

31, 2018 also includes $(8) million or $(0.02) a share of the after-tax

transaction costs related to the Clean Energy Businesses' purchase of Sempra

Solar Holdings, LLC. See Note U to the financial statements in Item 8.

(e) Earnings per share on a diluted basis were $4.08 a share, $4.42 a share and

$4.94 a share in 2019, 2018 and 2017, respectively. See "Earnings Per Common

Share" in Note A to the financial statements in Item 8.





The following tables present the estimated effect of major factors on earnings
per share and net income for common stock for the years ended December 31, 2019
as compared with 2018, and 2018 as compared with 2017.




CON EDISON ANNUAL REPORT 2019 51

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                          Variation for the Years Ended December 31, 2019 vs. 2018
                                       Net
                                     Income
                                       for
                                     Common
                                      Stock
                                    (Millions
                          Earnings     of
                          per Share Dollars)
CECONY (a)
Changes in rate plans         $0.76      $240 Reflects higher electric and gas net base
                                              revenues of $0.53 a share and $0.16 a
                                              share, respectively, due primarily to
                                              electric and gas base rate increases in
                                              January 2019 under the company's rate
                                              plans, higher incentives earned under the
                                              electric earnings adjustment mechanisms and
                                              positive incentives of $0.06 a share, and
                                              growth in the number of gas customers of
                                              $0.03 a share, offset, in part, by electric
                                              negative revenue adjustments of $(0.03) a
                                              share.
Weather impact on steam      (0.06)      (19) Reflects the impact of warmer winter
revenues                                      weather in 2019.
Operations and               (0.19)      (58) Reflects higher costs for pension and other
maintenance expenses                          postretirement benefits of $(0.15) a share,
                                              which are recoverable under the rate plans,
                                              and higher stock-based compensation of
                                              $(0.07) a share, offset, in part, by lower
                                              consultant costs of $0.04 a share.
Depreciation, property       (0.54)     (168) Reflects higher property taxes of $(0.26) a
taxes and other tax                           share and higher depreciation and
matters                                       amortization expense of $(0.23) a share,
                                              both of which are recoverable under the
                                              rate plans, and the absence of New York
                                              State sales and use tax refunds received in
                                              2018 of $(0.07) a share, offset, in part,
                                              by lower sales and use tax of $0.02 a
                                              share, upon conclusion of the audit
                                              assessment.
Other                        (0.01)        59 Reflects the dilutive effect of Con
                                              Edison's stock issuances of $(0.21) a
                                              share, offset, in part, by lower costs
                                              associated with components of pension and
                                              other postretirement benefits other than
                                              service cost of $0.19 a share.
Total CECONY                 (0.04)        54
O&R (a)
Changes in rate plans          0.08        24 Reflects an electric base rate increase,
                                              offset, in part, by a gas base rate
                                              decrease under the company's rate plans,
                                              effective January 1, 2019.
Operations and               (0.01)       (3) Reflects higher stock-based compensation.
maintenance expenses
Depreciation, property       (0.02)       (6) Reflects higher depreciation and
taxes and other tax                           amortization expense.
matters
Other                        (0.03)       (4) Includes the dilutive effect of Con
                                              Edison's stock issuances of $(0.01) a
                                              share.
Total O&R                      0.02        11
Clean Energy Businesses
Operating revenues less        0.53       167 Reflects higher revenues from renewable
energy costs                                  electric production projects resulting from
                                              the December 2018 acquisition of Sempra
                                              Solar Holdings, LLC, including the
                                              consolidation of certain jointly-owned
                                              projects that were previously accounted for
                                              as equity investments of $0.81 a share,
                                              offset, in part, by lower engineering,
                                              procurement and construction services
                                              revenues of $(0.34) a share.
Operations and                 0.15        47 Reflects lower engineering, procurement and
maintenance expenses                          construction costs of $0.19 a share and
                                              lower energy services costs of $0.04 a
                                              share, offset, in part, by higher costs
                                              associated with additional renewable
                                              electric production projects in operation
                                              resulting from the December 2018
                                              acquisition of Sempra Solar Holdings, LLC.
                                              of $(0.06) a share.
Depreciation and             (0.34)     (105) Reflects an increase in renewable electric
amortization                                  production projects resulting from the
                                              December 2018 acquisition of Sempra Solar
                                              Holdings, LLC.
Net interest expense         (0.29)      (90) Reflects an increase in debt resulting from
                                              the December 2018 acquisition of Sempra
                                              Solar Holdings, LLC.
HLBV effects                 (0.22)      (74)
Gain on acquisition of       (0.28)      (89)
Sempra Solar Holdings,
LLC, net of transaction
costs in 2018
Other                        (0.07)      (19) Reflects the absence in 2019 of equity
                                              income from certain jointly-owned projects
                                              that were accounted for as equity
                                              investments in 2018 but consolidated after
                                              the December 2018 acquisition of Sempra
                                              Solar Holdings, LLC.
Total Clean Energy           (0.52)     (163)
Businesses
Con Edison Transmission        0.01         5 Reflects higher allowance for funds used
                                              during construction from the Mountain
                                              Valley Pipeline project.
Other, including parent        0.19        54 Reflects lower New York State capital tax
company expenses                              of $0.02 a share. Also reflects 2018 TCJA
                                              re-measurement of $0.14 a share and
                                              transaction costs related to the
                                              acquisition of Sempra Solar Holdings, LLC
                                              of $0.02 a share.
Total Reported (GAAP        $(0.34)     $(39)
basis)

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.


52 CON EDISON ANNUAL REPORT 2019

--------------------------------------------------------------------------------




                          Variation for the Years Ended December 31, 2018 vs. 2017
                                        Net
                                      Income
                                        for
                                      Common
                                       Stock
                                     (Millions
                           Earnings     of
                          per Share  Dollars)
CECONY (a)
Changes in rate plans          $0.84      $258 Reflects primarily higher electric and gas
                                               net base revenues of $0.59 a share and
                                               $0.16 a share, respectively, and growth in
                                               the number of gas customers of $0.06 a
                                               share. Electric and gas base rates
                                               increased in January 2018 in accordance
                                               with the company's rate plans.
Weather impact on steam         0.10        31 Steam revenues were $0.06 a share higher in
revenues                                       2018 due to the estimated impact of colder
                                               winter weather in 2018. Steam revenues were
                                               $(0.05) a share lower in 2017 due to the
                                               estimated impact of warmer than normal
                                               winter weather.
Operations and                (0.08)      (25) Reflects primarily higher consultant costs
maintenance expenses                           of $(0.05) a share and storm-related costs
                                               of $(0.04) a share.
Depreciation, property        (0.37)     (115) Reflects higher net property taxes of
taxes and other tax                            $(0.25) a share and depreciation and
matters                                        amortization expense of $(0.19) a share,
                                               offset, in part, by New York State sales
                                               and use tax refunds of $0.07 a share.
Other                         (0.24)      (57) Reflects primarily higher interest expense
                                               on long-term debt of $(0.16) a share,
                                               regulatory reserve related to steam
                                               earnings sharing of $(0.05) a share, and
                                               the dilutive effect of Con Edison's stock
                                               issuances of $(0.06) a share.
Total CECONY                    0.25        92
O&R (a)
Changes in rate plans           0.02         6 Reflects primarily higher gas net base
                                               revenues. Gas base rates increased in
                                               November 2017 in accordance with the
                                               company's gas rate plan.
Operations and                (0.02)       (6) Reflects primarily reduction of a
maintenance expenses                           regulatory asset associated with certain
                                               site investigation and environmental
                                               remediation costs.
Depreciation, property        (0.01)       (4) Reflects higher depreciation and
taxes and other tax                            amortization expense.
matters
Other                         (0.01)       (1)
Total O&R                     (0.02)       (5)
Clean Energy Businesses
Operating revenues less       (0.05)      (16) Reflects primarily lower renewable
energy costs                                   revenues, including engineering,
                                               procurement and construction services,
                                               offset, in part, by an increase in
                                               renewable electric production projects in
                                               operation and an increase in energy
                                               services revenue.
Operations and                  0.06        19 Reflects primarily lower engineering,
maintenance expenses                           procurement and construction costs.
Depreciation                  (0.03)       (9)
Net interest expense          (0.05)      (15)
Gain on sale of solar            -         (1)
electric production
project
Income tax effect of the      (0.88)     (269)
TCJA
Gain on acquisition of          0.42       131
Sempra Solar Holdings,
LLC
Other                         (0.09)      (27)
Total Clean Energy            (0.62)     (187)
Businesses
Con Edison Transmission          -           3 Includes the effect of the TCJA of $0.04 a
                                               share in December 2017. Reflects income
                                               from equity investments.
Other, including parent       (0.15)      (46) Includes TCJA re-measurement of $(0.14) a
company expenses                               share, New York State capital tax of
                                               $(0.03) a share and transaction costs
                                               related to acquisition of Sempra Solar
                                               Holdings, LLC of $(0.02) a share. Also
                                               includes the effect of the TCJA of $(0.07)
                                               a share in December 2017.
Total Reported (GAAP         $(0.54)    $(143)
basis)

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.


CON EDISON ANNUAL REPORT 2019 53

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The Companies' other operations and maintenance expenses for the years ended
December 31, 2019, 2018 and 2017 were as follows:
(Millions of Dollars)                             2019    2018   2017

CECONY


Operations                                       $1,563 $1,553 $1,528

Pensions and other postretirement benefits 134 71 58 Health care and other benefits

                      170    166    170
Regulatory fees and assessments (a)                 464    444    476
Other                                               304    321    294
Total CECONY                                      2,635  2,555  2,526
O&R                                                 308    305    296
Clean Energy Businesses (b)                         223    287    313
Con Edison Transmission                               9     10      9
Other (c)                                            -     (5)    (5)

Total other operations and maintenance expenses $3,175 $3,152 $3,139

(a) Includes Demand Side Management, System Benefit Charges and Public Service

Law 18A assessments which are collected in revenues.

(b) The decrease in other operations and maintenance expenses for the year ended

December 31, 2019 compared with the 2018 and 2017 periods is due primarily to

lower engineering, procurement and construction costs.

(c) Includes parent company and consolidation adjustments.

Con Edison's principal business segments are CECONY's regulated utility
activities, O&R's regulated utility activities, the Clean Energy Businesses and
Con Edison Transmission. CECONY's principal business segments are its regulated
electric, gas and steam utility activities. A discussion of the results of
operations by principal business segment for the years ended December 31, 2019,
2018 and 2017 follows. For additional business segment financial information,
see Note N to the financial statements in Item 8.


54 CON EDISON ANNUAL REPORT 2019

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The Companies' results of operations for the years ended December 31, 2019, 2018
and 2017 were:
                                                                                 Clean Energy           Con Edison
                                    CECONY                     O&R                Businesses           Transmission            Other (a)                Con Edison (b)
(Millions of Dollars)       2019      2018      2017   2019   2018   2017  

2019 2018 2017 2019 2018 2017 2019 2018 2017 2019

       2018      2017
Operating revenues         $10,821   $10,680   $10,468   $893   $891   $874    $857   $763    $694     $4     $4     $2    $(1)    $(1)    $(5)    $12,574   $12,337   $12,033
Purchased power              1,357     1,433     1,415    188    208    191     -        2     (3)    -      -      -         1       1     (2)      1,546     1,644     1,601
Fuel                           207       263       216    -      -      -       -      -       -      -      -      -       -       -       -          207       263       216
Gas purchased for resale       606       643       510     90     86     73     185    313     226    -      -      -       (1)     (1)     (1)        880     1,041       808
Other operations and
maintenance                  2,635     2,555     2,526    308    305    296     223    287     313      9     10      9     -       (5)     (5)      3,175     3,152     3,139
Depreciation and
amortization                 1,373     1,276     1,195     84     77     71     226     85      74      1      1      1     -       (1)     -        1,684     1,438     1,341
Taxes, other than income
taxes                        2,295     2,156     2,057     84     83     82      21     13      16    -      -      -         6      14     -        2,406     2,266     2,155
Gain on sale of solar
electric production
project (c)                    -         -         -      -      -      -       -      -         1    -      -      -       -       -       -         -          -           1
Gain on acquisition of
Sempra Solar Holdings,
LLC (c)                        -         -         -      -      -      -       -      131     -      -      -      -       -       -       -         -          131       -
Operating income             2,348     2,354     2,549    139    132    161     202    194      69    (6)    (7)    (8)     (7)     (9)       3      2,676     2,664     2,774
Other income less
deductions                    (35)     (143)     (137)   (11)   (19)   (19) 

5 33 33 104 91 80 (12) (24) (5) 51 (62) (48) Net interest expense

           728       689       623     41     39     36     186     63      43     25     20     16      11       8      11        991       819       729
Income before income tax
expense                      1,585     1,522     1,789     87     74    106      21    164      59     73     64     56    (30)    (41)    (13)      1,736     1,783     1,997
Income tax expense             335       326       685     17     15     42    (58)     19   (273)     21     17     12    (19)      24       6        296       401       472
Net income                  $1,250    $1,196    $1,104    $70    $59    $64     $79   $145    $332    $52    $47    $44   $(11)   $(65)   $(19)     $1,440    $1,382    $1,525
Income attributable to
non-controlling interest       -         -         -      -      -      -        97    -       -      -      -      -       -       -       -           97       -         -
Net income from common
stock                       $1,250    $1,196    $1,104    $70    $59    $64   $(18)   $145    $332    $52    $47    $44   $(11)   $(65)   $(19)     $1,343    $1,382    $1,525

(a) Includes parent company and consolidation adjustments. (b) Represents the consolidated results of operations of Con Edison and its businesses. (c) See Note U to the financial statements in Item 8.

CON EDISON ANNUAL REPORT 2019 55

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Year Ended December 31, 2019 Compared with Year Ended December 31, 2018



CECONY
                         For the Year Ended                     For the Year Ended
                          December 31, 2019                      December 31, 2018
(Millions of                                                                                       2019-2018
Dollars)             Electric      Gas   Steam   2019 Total Electric      Gas   Steam   2018 Total Variation
Operating revenues       $8,062   $2,132    $627    $10,821     $7,971   $2,078    $631    $10,680      $141
Purchased power           1,324      -        33      1,357      1,393      -        40      1,433      (76)
Fuel                         99      -       108        207        158      -       105        263      (56)
Gas purchased for
resale                      -        606     -          606        -        643     -          643      (37)
Other operations and
maintenance               2,059      399     177      2,635      1,961      420     174      2,555        80
Depreciation and
amortization              1,053      231      89      1,373        984      205      87      1,276        97
Taxes, other than
income taxes              1,769      368     158      2,295      1,676      332     148      2,156       139
Operating income         $1,758     $528     $62     $2,348     $1,799     $478     $77     $2,354      $(6)


Electric

CECONY's results of electric operations for the year ended December 31, 2019 compared with the year ended December 31, 2018 were as follows:


                                 For the Years Ended December 31,
(Millions of Dollars)                  2019       2018      Variation
Operating revenues                   $8,062     $7,971            $91
Purchased power                       1,324      1,393           (69)
Fuel                                     99        158           (59)
Other operations and maintenance      2,059      1,961             98
Depreciation and amortization         1,053        984             69
Taxes, other than income taxes        1,769      1,676             93
Electric operating income            $1,758     $1,799          $(41)

CECONY's electric sales and deliveries in 2019 compared with 2018 were:


                                Millions of kWh Delivered                   

Revenues in Millions (a)


                       For the Years Ended                               For the Years Ended
                      December   December                 Percent         December  December             Percent
Description           31, 2019   31, 2018   Variation   Variation         31, 2019  31, 2018 Variation Variation
Residential/Religious
(b)                     10,560     10,797        (237 )      (2.2 )%        $2,671    $2,846    $(175)      (6.1 )%
Commercial/Industrial    9,908      9,588         320         3.3            1,845     1,850       (5)      (0.3 )
Retail choice
customers               24,754     26,266      (1,512 )      (5.8 )          2,470     2,624     (154)      (5.9 )
NYPA, Municipal
Agency and other
sales                    9,932     10,186        (254 )      (2.5 )            663       662         1       0.2
Other operating
revenues (c)                 -          -           -           -              413      (11)       424     Large
Total                   55,154     56,837      (1,683 )      (3.0 )% (d)    $8,062    $7,971       $91       1.1 %

(a) Revenues from electric sales 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.

(b) "Residential/Religious" generally includes single-family dwellings,

individual apartments in multi-family dwellings, religious organizations and

certain other not-for-profit organizations.

(c) Other electric operating revenues generally reflect changes in the revenue

decoupling mechanism current asset or regulatory liability and changes in

regulatory assets and liabilities in accordance with other provisions of the

company's rate plan.

(d) After adjusting for variations, primarily weather and billing days, electric

delivery volumes in the company's service area decreased 1.1 percent in 2019

compared with 2018.




Operating revenues increased $91 million in 2019 compared with 2018 due
primarily to an increase in revenues from the rate plan ($215 million),
including earnings adjustment mechanism incentives for energy efficiency ($22
million), offset, in part, by lower purchased power expenses ($69 million) and
fuel expenses ($59 million).
Purchased power expenses decreased $69 million in 2019 compared with 2018 due to
lower unit costs ($199 million), offset, in part, by higher purchased volumes
($130 million).

56 CON EDISON ANNUAL REPORT 2019

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Fuel expenses decreased $59 million in 2019 compared with 2018 due to lower unit
costs ($54 million) and purchased volumes from the company's electric generating
facilities ($5 million).
Other operations and maintenance expenses increased $98 million in 2019 compared
with 2018 due primarily to higher costs for pension and other postretirement
benefits ($91 million), surcharges for assessments and fees that are collected
in revenues from customers ($40 million) and higher stock-based compensation
($23 million), offset, in part, by lower other employee benefits ($41 million)
and municipal infrastructure support costs ($12 million).
Depreciation and amortization increased $69 million in 2019 compared with 2018
due primarily to higher electric utility plant balances.
Taxes, other than income taxes increased $93 million in 2019 compared with 2018
due primarily to higher property taxes ($86 million) and the absence of a New
York State sales and use tax refund received in 2018 ($26 million), offset, in
part, by higher deferral of under-collected property taxes ($11 million), the
reduction in the sales and use tax reserve upon conclusion of an audit
assessment ($6 million) and lower state and local taxes ($2 million).
Gas
CECONY's results of gas operations for the year ended December 31, 2019 compared
with the year ended December 31, 2018 were as follows:
                                 For the Years Ended December 31,
(Millions of Dollars)                  2019       2018      Variation
Operating revenues                   $2,132     $2,078            $54
Gas purchased for resale                606        643           (37)
Other operations and maintenance        399        420           (21)
Depreciation and amortization           231        205             26
Taxes, other than income taxes          368        332             36
Gas operating income                   $528       $478            $50

CECONY's gas sales and deliveries, excluding off-system sales, in 2019 compared with 2018 were:


                               Thousands of Dt Delivered                    

Revenues in Millions (a)


                      For the Years Ended                                For the Years Ended
                     December   December                 Percent          December  December               Percent

Description 31, 2019 31, 2018 Variation Variation 31, 2019 31, 2018 Variation Variation Residential

            54,402     57,815      (3,413 )      (5.9 )%           $943      $966       $(23)      (2.4 )%
General                33,235     34,490      (1,255 )      (3.6 )             384       390         (6)      (1.5 )
Firm transportation    81,710     82,472        (762 )      (0.9 )             593       595         (2)      (0.3 )
Total firm sales and
transportation        169,347    174,777      (5,430 )      (3.1 )  (b)      1,920     1,951        (31)      (1.6 )
Interruptible sales
(c)                     9,903      7,351       2,552        34.7                42        40           2       5.0
NYPA                   39,643     34,079       5,564        16.3                 2         2         -           -

Generation plants 52,011 72,524 (20,513 ) (28.3 )

     23        26         (3)     (11.5 )
Other                  20,701     20,822        (121 )      (0.6 )              31        31         -           -
Other operating
revenues (d)                -          -           -           -               114        28          86     Large
Total                 291,605    309,553     (17,948 )      (5.8 )%         $2,132    $2,078         $54       2.6 %

(a) Revenues from gas sales are subject to a weather normalization clause and a

revenue decoupling mechanism, as a result of which, delivery revenues are

generally not affected by changes in delivery volumes from levels assumed

when rates were approved.

(b) After adjusting for variations, primarily billing days, firm gas sales and

transportation volumes in the company's service area increased 1.8 percent in

2019 compared with 2018, reflecting primarily increased volumes attributable

to the growth in the number of gas customers.

(c) Includes 5,484 thousands and 3,326 thousands of Dt for 2019 and 2018,

respectively, which are also reflected in firm transportation and other.

(d) Other gas operating revenues generally reflect changes in the revenue

decoupling mechanism and weather normalization clause current asset or

regulatory liability and changes in regulatory assets and liabilities in

accordance with other provisions of the company's rate plans. See Note B to

the financial statements in Item 8.

Operating revenues increased $54 million in 2019 compared with 2018 due primarily to an increase in revenues from the rate plan ($99 million), offset, in part, by lower gas purchased for resale expense ($37 million).

CON EDISON ANNUAL REPORT 2019 57

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Gas purchased for resale decreased $37 million in 2019 compared with 2018 due to
lower unit costs ($34 million) and purchased volumes ($3 million).
Other operations and maintenance expenses decreased $21 million in 2019 compared
with 2018 due primarily to lower surcharges for assessments and fees that are
collected in revenues from customers.
Depreciation and amortization increased $26 million in 2019 compared with 2018
due primarily to higher gas utility plant balances.
Taxes, other than income taxes increased $36 million in 2019 compared with 2018
due primarily to higher property taxes ($37 million), the absence of a New York
State sales and use tax refund received in 2018 ($3 million) and higher state
and local taxes ($2 million), offset, in part, by higher deferral of
under-collected property taxes ($4 million) and the reduction in the sales and
use tax reserve upon conclusion of an audit assessment ($1 million).
Steam
CECONY's results of steam operations for the year ended December 31, 2019
compared with the year ended December 31, 2018 were as follows:
                                 For the Years Ended December 31,
(Millions of Dollars)                2019     2018         Variation
Operating revenues                   $627     $631              $(4)
Purchased power                        33       40               (7)
Fuel                                  108      105                 3
Other operations and maintenance      177      174                 3
Depreciation and amortization          89       87                 2
Taxes, other than income taxes        158      148                10
Steam operating income                $62      $77             $(15)

CECONY's steam sales and deliveries in 2019 compared with 2018 were:


                             Millions of Pounds Delivered                   

Revenues in Millions


                                                                          For the Years
                     For the Years Ended                                      Ended
                    December   December                 Percent         December December             Percent
Description         31, 2019   31, 2018   Variation   Variation         31, 2019 31, 2018 Variation Variation
General                  536        593         (57 )      (9.6 )%           $27      $30      $(3)     (10.0 )%
Apartment house        5,919      6,358        (439 )      (6.9 )            160      174      (14)      (8.0 )
Annual power          13,340     14,811      (1,471 )      (9.9 )            395      441      (46)     (10.4 )
Other operating
revenues (a)               -          -           -           -               45     (14)        59     Large
Total                 19,795     21,762      (1,967 )      (9.0 )% (b)      $627     $631      $(4)      (0.6 )%

(a) Other steam operating revenues generally reflect changes in regulatory assets

and liabilities in accordance with the company's rate plan. See Note B to the

financial statements in Item 8.

(b) After adjusting for variations, primarily weather and billing days, steam

sales and deliveries in the company's service area decreased 4.4 percent in

2019 compared with 2018.




Operating revenues decreased $4 million in 2019 compared with 2018 due primarily
to the impact of warmer winter weather ($26 million) and lower purchased power
expenses ($7 million), offset by certain rate plan reconciliations ($16
million), lower reserve related to steam earnings sharing ($14 million) and
higher fuel expenses ($3 million).
Purchased power expenses decreased $7 million in 2019 compared with 2018 due to
lower unit costs ($6 million) and purchased volumes ($1 million).
Fuel expenses increased $3 million in 2019 compared with 2018 due to higher unit
costs ($7 million), offset, in part, by lower purchased volumes from the
company's steam generating facilities ($4 million).
Other operations and maintenance expenses increased $3 million in 2019 compared
with 2018 due primarily to higher municipal infrastructure support costs ($7
million), higher costs for pension and other postretirement benefits ($8
million) and stock-based compensation ($2 million), offset, in part, by the
absence in 2019 of property damage, clean-up and other response costs related to
a steam main rupture in 2018 ($11 million).

58 CON EDISON ANNUAL REPORT 2019

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Depreciation and amortization increased $2 million in 2019 compared with 2018
due primarily to higher steam utility plant balances.
Taxes, other than income taxes increased $10 million in 2019 compared with 2018
due primarily to higher property taxes ($12 million) and the absence of a New
York State sales and use tax refund received in 2018 ($1 million), offset, in
part, by lower state and local taxes ($1 million), higher deferral of
under-collected property taxes ($1 million) and the reduction in the sales and
use tax reserve upon conclusion of an audit assessment ($1 million).
Taxes, Other Than Income Taxes
At $2,295 million, taxes other than income taxes remain one of CECONY's largest
operating expenses. The principal components of, and variations in, taxes other
than income taxes were:
                                         For the Years Ended December 31,
(Millions of Dollars)                           2019               2018         Variation
Property taxes                                $1,979             $1,845                $134
State and local taxes related to revenue
receipts                                         328                330                 (2)
Payroll taxes                                     69                 69                 -
Other taxes                                     (81)               (88)                   7
Total                                         $2,295    (a)      $2,156    (a)         $139

(a) Including sales tax on customers' bills, total taxes other than income taxes

in 2019 and 2018 were $2,807 and $2,628 million, respectively.





Other Income (Deductions)
Other income (deductions) increased $108 million in 2019 compared with 2018 due
primarily to lower costs associated with components of pension and other
postretirement benefits other than service cost.
Net Interest Expense
Net interest expense increased $39 million in 2019 compared with 2018 due
primarily to higher interest expense for long-term ($10 million) and short-term
($6 million) debt, an increase in interest accrued on the TCJA related
regulatory liability ($9 million) and interest accrued on the system benefit
charge liability ($8 million).
Income Tax Expense
Income taxes increased $9 million in 2019 compared with 2018 due primarily to
higher income before income tax expense ($13 million) and lower tax benefits in
2019 for plant-related flow through items ($7 million), offset, in part, by an
increase in the amortization of excess deferred federal income taxes due to the
TCJA ($11 million).
O&R
                                  For the Year Ended               For the Year Ended
                                   December 31, 2019                December 31, 2018
                                                                                                   2019-2018
(Millions of Dollars)             Electric       Gas   2019 Total  Electric       Gas   2018 Total Variation
Operating revenues                      $634      $259       $893        $642      $249       $891        $2
Purchased power                          188       -          188         208       -          208      (20)
Gas purchased for resale                 -          90         90         -          86         86         4
Other operations and maintenance         235        73        308         233        72        305         3
Depreciation and amortization             60        24         84          56        21         77         7
Taxes, other than income taxes            53        31         84          52        31         83         1
Operating income                         $98       $41       $139         $93       $39       $132        $7

CON EDISON ANNUAL REPORT 2019 59

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Electric

O&R's results of electric operations for the year ended December 31, 2019 compared with the year ended December 31, 2018 were as follows:


                                 For the Years Ended December 31,
(Millions of Dollars)                2019     2018         Variation
Operating revenues                   $634     $642              $(8)
Purchased power                       188      208              (20)
Other operations and maintenance      235      233                 2
Depreciation and amortization          60       56                 4
Taxes, other than income taxes         53       52                 1
Electric operating income             $98      $93                $5

O&R's electric sales and deliveries in 2019 compared with 2018 were:


                                        Millions of kWh Delivered                            Revenues in Millions (a)
                               For the Years Ended                                  For the Years Ended
                              December    December                 Percent           December   December             Percent
Description                   31, 2019    31, 2018   Variation   Variation           31, 2019   31, 2018 Variation Variation
Residential/Religious (b)        1,703       1,713         (10 )      (0.6 )%            $309       $326     $(17)      (5.2 )%
Commercial/Industrial              808         799           9         1.1                112        115       (3)      (2.6 )
Retail choice customers          2,885       2,974         (89 )      (3.0 )              191        201      (10)      (5.0 )
Public authorities                 106         131         (25 )     (19.1 )                8         12       (4)     (33.3 )
Other operating revenues (c)         -           -           -           -                 14       (12)        26     Large
Total                            5,502       5,617        (115 )      (2.0 )% (d)        $634       $642      $(8)      (1.2 )%

(a) Revenues from New York electric delivery sales 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. O&R's electric sales in New Jersey are not subject to a

decoupling mechanism, 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 the revenue

decoupling mechanism current asset or regulatory liability in accordance with

the company's New York electric rate plan and changes in regulatory assets

and liabilities in accordance with the company's electric rate plans. See

Note B to the financial statements in Item 8.

(d) After adjusting for weather and other variations, electric delivery volumes

in company's service area decreased 1.1 percent in 2019 compared with 2018.

Operating revenues decreased $8 million in 2019 compared with 2018 due primarily to lower purchased power expenses.



Purchased power expenses decreased $20 million in 2019 compared with 2018 due to
lower unit costs ($21 million), offset, in part, by higher purchased volumes ($1
million).
Other operations and maintenance expenses increased $2 million in 2019 compared
with 2018 due primarily to a regulatory change in accounting for manufactured
gas plant spending ($5 million) and higher stock-based compensation ($2
million), offset, in part, by the reduction of a regulatory asset associated
with certain site investigation and remediation costs in 2018 ($6 million).
Depreciation and amortization increased $4 million in 2019 compared with 2018
due primarily to higher electric utility plant balances.
Taxes, other than income taxes increased $1 million in 2019 compared with 2018
due primarily to higher property taxes.
Gas
O&R's results of gas operations for the year ended December 31, 2019 compared
with the year ended December 31, 2018 were as follows:

60 CON EDISON ANNUAL REPORT 2019

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                                 For the Years Ended December 31,
(Millions of Dollars)                2019     2018         Variation
Operating revenues                   $259     $249                $10
Gas purchased for resale               90       86                  4
Other operations and maintenance       73       72                  1
Depreciation and amortization          24       21                  3
Taxes, other than income taxes         31       31                 -
Gas operating income                  $41      $39                 $2

O&R's gas sales and deliveries, excluding off-system sales, in 2019 compared with 2018 were:


                         Thousands of Dt Delivered                          

Revenues in Millions (a)


                For the Years Ended                                 For the Years Ended
               December   December                 Percent         December   December                 Percent
Description    31, 2019   31, 2018   Variation   Variation         31, 2019   31, 2018   Variation   Variation
Residential      10,209      9,860         349         3.5 %             $136       $140        $(4)      (2.9 )%
General           2,328      2,190         138         6.3                 25         26         (1)      (3.8 )
Firm
transportation    9,459      9,950        (491 )      (4.9 )               63         78        (15)     (19.2 )
Total firm
sales and
transportation   21,996     22,000          (4 )         -    (b)         224        244        (20)      (8.2 )
Interruptible
sales             3,668      3,746         (78 )      (2.1 )                6          6         -           -
Generation
plants                4          1           3       Large                -          -           -           -
Other               914        959         (45 )      (4.7 )                1          1         -           -
Other gas
revenues              -          -           -           -                 28        (2)          30     Large
Total            26,582     26,706        (124 )      (0.5 )%            $259       $249         $10       4.0 %

(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, firm sales and

transportation volumes in the company's service area increased 0.9 percent in

2019 compared with 2018.




Operating revenues increased $10 million in 2019 compared with 2018 due
primarily to higher revenues from the New York gas rate plan ($8 million) and an
increase in gas purchased for resale ($4 million).
Gas purchased for resale increased $4 million in 2019 compared with 2018 due to
higher unit costs ($3 million) and purchased volumes ($1 million).
Other operations and maintenance expenses increased $1 million in 2019 compared
with 2018 due primarily to a regulatory change in accounting for manufactured
gas plant spending ($3 million) and higher stock-based compensation ($1
million), offset, in part, by the reduction of a regulatory asset associated
with certain site investigation and remediation costs in 2018 ($3 million).
Depreciation and amortization increased $3 million in 2019 compared with 2018
due primarily to higher gas utility plant balances.
Taxes, Other Than Income Taxes
Taxes, other than income taxes, increased $1 million in 2019 compared with 2018.
The principal components of taxes, other than income taxes, were:
                                         For the Years Ended December 31,
(Millions of Dollars)                           2019                 2018                  Variation
Property taxes                                   $66                  $65                           $1
State and local taxes related to revenue
receipts                                          10                   10                          -
Payroll taxes                                      8                    8                          -
Total                                            $84     (a)          $83     (a)                 $1

(a) Including sales tax on customers' bills, total taxes other than income taxes


    in 2019 and 2018 were $116 million and $112 million, respectively.





CON EDISON ANNUAL REPORT 2019 61

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Other Income (Deductions)
Other income (deductions) increased $8 million in 2019 compared with 2018 due
primarily to lower costs associated with components of pension and other
postretirement benefits other than service cost.
Income Tax Expense
Income taxes increased $2 million in 2019 compared with 2018 due primarily to
higher income before income tax expense ($3 million), offset, in part, by an
increase in amortization of excess deferred federal income taxes due to the TCJA
($1 million).
Clean Energy Businesses
The Clean Energy Businesses' results of operations for the year ended
December 31, 2019 compared with the year ended December 31, 2018 were as
follows:
                                               For the Years Ended December 31,
(Millions of Dollars)                                2019          2018   Variation
Operating revenues                                     $857        $763         $94
Purchased power                                         -             2         (2)
Gas purchased for resale                                185         313       (128)
Other operations and maintenance                        223         287     

(64)


Depreciation and amortization                           226          85     

141


Taxes, other than income taxes                           21          13     

8


Gain on acquisition of Sempra Solar Holdings,
LLC (a)                                                 -           131       (131)
Operating income                                       $202        $194          $8

(a) See Note U to the financial statements in Item 8.



Operating revenues increased $94 million in 2019 compared with 2018 due
primarily to higher revenues from renewable electric production projects
resulting from the December 2018 acquisition of Sempra Solar Holdings, LLC,
including the consolidation of certain jointly-owned projects that were
previously accounted for as equity investments ($340 million), offset, in part,
by lower wholesale revenues ($144 million), lower engineering, procurement and
construction services revenues due to the completion in 2018 of a solar electric
production project developed for another company ($92 million) and lower energy
services revenues ($24 million). Net mark-to-market values increased ($14
million).
Purchased power expenses decreased $2 million in 2019 compared with 2018 due
primarily to the absence in the 2019 period of the true-ups relating to the
retail electric supply business sold in 2016.
Gas purchased for resale decreased $128 million in 2019 compared with 2018 due
to lower purchased volumes.
Other operations and maintenance expenses decreased $64 million in 2019 compared
with 2018 due primarily to lower engineering, procurement and construction costs
($82 million) and lower energy services costs ($18 million), offset, in part, by
higher costs associated with additional renewable electric production projects
in operation resulting from the December 2018 acquisition of Sempra Solar
Holdings, LLC ($26 million).
Depreciation and amortization increased $141 million in 2019 compared with 2018
due primarily to an increase in renewable electric production projects resulting
from the December 2018 acquisition of Sempra Solar Holdings, LLC (including the
consolidation of certain jointly-owned projects that the Clean Energy Businesses
previously accounted for as equity method investments).
Taxes, other than income taxes increased $8 million in 2019 compared with 2018
due primarily to higher property taxes associated with additional renewable
electric production projects in operation resulting from the December 2018
acquisition of Sempra Solar Holdings, LLC.
Gain on acquisition of Sempra Solar Holdings, LLC decreased $131 million in 2019
compared with 2018 due to the absence in 2019 of the gain recognized in 2018
with respect to jointly-owned renewable energy production projects upon
completion of the acquisition of Sempra Solar Holdings, LLC. See Note U to the
financial statements in Item 8.
Other Income (Deductions)
Other income (deductions) decreased $28 million in 2019 compared with 2018 due
primarily to the absence in 2019 of equity income from certain jointly-owned
projects that were accounted for as equity investments in 2018 but consolidated
after the December 2018 acquisition of Sempra Solar Holdings, LLC.

62 CON EDISON ANNUAL REPORT 2019

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Net Interest Expense
Net interest expense increased $123 million in 2019 compared with 2018 due
primarily to an increase in debt resulting from the December 2018 acquisition of
Sempra Solar Holdings, LLC, including $825 million that was borrowed to fund a
portion of the purchase price, $576 million of Sempra Solar Holdings, LLC
subsidiaries' project debt that was outstanding at the time of the acquisition
and the consolidation of $506 million of project debt of certain jointly-owned
projects that the Clean Energy Businesses previously accounted for as equity
method investments.
Income Tax Expense
Income taxes decreased $77 million in 2019 compared with 2018 due primarily to
lower income before income tax expense (excluding income attributable to
non-controlling interest) ($50 million), higher renewable energy credits ($7
million), lower state income taxes ($11 million), adjustments for prior period
federal income tax returns primarily due to increased research and development
credits ($11 million) and lower valuation allowances on state net operating
losses ($6 million), offset, in part, by an increase in uncertain tax positions
($9 million).
Income Attributable to Non-Controlling Interest
Income attributable to non-controlling interest increased $97 million in 2019
compared with 2018 due primarily to the income attributable in the 2019 period
to a tax equity investor in renewable electric production projects accounted for
under the HLBV method of accounting. See Note Q to the financial statements in
Item 8.

Con Edison Transmission
Other Income (Deductions)
Other income (deductions) increased $13 million in 2019 compared with 2018 due
primarily to higher allowance for funds used during construction from the
Mountain Valley Pipeline, LLC ($27 million), offset, in part, by lower contract
renewal rates at Stagecoach Gas Services ($17 million). See "Con Edison
Transmission - CET Gas" in Item 1 and Note U to the financial statements in Item
8.

Net Interest Expense Net interest expense increased $5 million in 2019 compared with 2018 due primarily to funding of increased investment in Mountain Valley Pipeline, LLC.



Income Tax Expense
Income taxes increased $4 million in 2019 compared with 2018 due primarily to
higher income before income tax expense ($2 million) and a decrease in the
amortization of excess deferred federal income taxes due to the TCJA ($1
million).
Other
Taxes, Other Than Income Taxes
Taxes, other than income taxes decreased $8 million in 2019 compared with 2018
due primarily to lower New York State capital tax.

Other Income (Deductions)
Other income (deductions) increased $12 million in 2019 compared with 2018 due
primarily to the absence in 2019 of transaction costs related to the acquisition
of Sempra Solar Holdings, LLC in 2018. See Note U to the financial statements in
Item 8.

Income Tax Expense
Income taxes decreased $43 million in 2019 compared with 2018 primarily due to
the absence of the TCJA re-measurement of deferred tax assets associated with
Con Edison's 2017 net operating loss carryforward into 2018.


CON EDISON ANNUAL REPORT 2019 63

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Year Ended December 31, 2018 Compared with Year Ended December 31, 2017



CECONY
                         For the Year Ended                     For the Year Ended
                          December 31, 2018                      December 31, 2017
(Millions of                                                                                       2018-2017
Dollars)             Electric      Gas   Steam   2018 Total Electric      Gas   Steam   2017 Total Variation
Operating revenues       $7,971   $2,078    $631    $10,680     $7,972   $1,901    $595    $10,468      $212
Purchased power           1,393      -        40      1,433      1,379      -        36      1,415        18
Fuel                        158      -       105        263        127      -        89        216        47
Gas purchased for
resale                      -        643     -          643        -        510     -          510       133
Other operations and
maintenance               1,961      420     174      2,555      1,942      413     171      2,526        29
Depreciation and
amortization                984      205      87      1,276        925      185      85      1,195        81
Taxes, other than
income taxes              1,676      332     148      2,156      1,625      298     134      2,057        99
Operating income         $1,799     $478     $77     $2,354     $1,974     $495     $80     $2,549    $(195)


Electric

CECONY's results of electric operations for the year ended December 31, 2018 compared with the year ended December 31, 2017 were as follows:


                                 For the Years Ended December 31,
(Millions of Dollars)                  2018       2017      Variation
Operating revenues                   $7,971     $7,972           $(1)
Purchased power                       1,393      1,379             14
Fuel                                    158        127             31
Other operations and maintenance      1,961      1,942             19
Depreciation and amortization           984        925             59
Taxes, other than income taxes        1,676      1,625             51
Electric operating income            $1,799     $1,974         $(175)

CECONY's electric sales and deliveries in 2018 compared with 2017 were:


                                Millions of kWh Delivered                   

Revenues in Millions (a)


                       For the Years Ended                              For the Years Ended
                      December   December                 Percent        December  December             Percent
Description           31, 2018   31, 2017   Variation   Variation        31, 2018  31, 2017 Variation Variation
Residential/Religious
(b)                     10,797      9,924         873         8.8 %        $2,846    $2,515      $331      13.2 %
Commercial/Industrial    9,588      9,246         342         3.7           1,850     1,823        27       1.5
Retail choice
customers               26,266     26,136         130         0.5           2,624     2,712      (88)      (3.2 )
NYPA, Municipal
Agency and other
sales                   10,186     10,012         174         1.7             662       633        29       4.6
Other operating
revenues (c)                 -          -           -           -            (11)       289     (300)     Large
Total                   56,837     55,318       1,519         2.7 % (d)    $7,971    $7,972      $(1)         -  %

(a) Revenues from electric sales 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.

(b) "Residential/Religious" generally includes single-family dwellings,

individual apartments in multi-family dwellings, religious organizations and

certain other not-for-profit organizations.

(c) Other electric operating revenues generally reflect changes in the revenue

decoupling mechanism current asset or regulatory liability and changes in

regulatory assets and liabilities in accordance with other provisions of the

company's rate plan. See Note B to the financial statements in Item 8.

(d) After adjusting for variations, primarily weather and billing days, electric

delivery volumes in the company's service area remained flat in 2018 compared

with 2017.




Operating revenues decreased $1 million in 2018 compared with 2017 due primarily
to the reduction in other operating revenues resulting from the deferral as a
regulatory liability of estimated net benefits for the 2018 period under the
TCJA ($308 million), offset in part by higher revenues from the electric rate
plan ($244 million), fuel expenses ($31 million) and purchased power expenses
($14 million).

64 CON EDISON ANNUAL REPORT 2019

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Purchased power expenses increased $14 million in 2018 compared with 2017 due to
higher purchased volumes ($27 million), offset by lower unit costs ($13
million).
Fuel expenses increased $31 million in 2018 compared with 2017 due to higher
unit costs ($38 million), offset by lower purchased volumes ($7 million).
Other operations and maintenance expenses increased $19 million in 2018 compared
with 2017 due primarily to higher other employee benefits ($34 million),
consultant costs ($27 million) and storm related costs ($16 million), offset in
part by lower stock based compensation ($36 million) and surcharges for
assessments and fees that are collected in revenues from customers ($23
million).
Depreciation and amortization increased $59 million in 2018 compared with 2017
due primarily to higher electric utility plant balances.
Taxes, other than income taxes increased $51 million in 2018 compared with 2017
due primarily to higher property taxes ($100 million) and state and local taxes
($3 million), offset in part by deferral of under-collected property taxes due
to new property tax rates for fiscal year 2017 - 2018 ($26 million) and a sales
and use tax refund ($26 million).
Gas
CECONY's results of gas operations for the year ended December 31, 2018 compared
with the year ended December 31, 2017 were as follows:
                                 For the Years Ended December 31,
(Millions of Dollars)                  2018       2017      Variation
Operating revenues                   $2,078     $1,901           $177
Gas purchased for resale                643        510            133
Other operations and maintenance        420        413              7
Depreciation and amortization           205        185             20
Taxes, other than income taxes          332        298             34
Gas operating income                   $478       $495          $(17)

CECONY's gas sales and deliveries, excluding off-system sales, in 2018 compared with 2017 were:


                               Thousands of Dt Delivered                    

Revenues in Millions (a)


                      For the Years Ended                                For the Years Ended
                     December   December                 Percent          December  December               Percent

Description 31, 2018 31, 2017 Variation Variation 31, 2018 31, 2017 Variation Variation Residential

            57,815     52,244       5,571        10.7 %            $966      $802        $164      20.4  %
General                34,490     30,761       3,729        12.1               390       334          56      16.8
Firm transportation    82,472     71,353      11,119        15.6               595       524          71      13.5
Total firm sales and
transportation        174,777    154,358      20,419        13.2    (b)      1,951     1,660         291      17.5
Interruptible sales
(c)                     7,351      7,553        (202 )      (2.7 )              40        35           5      14.3
NYPA                   34,079     37,033      (2,954 )      (8.0 )               2         2         -           -
Generation plants      72,524     61,800      10,724        17.4                26        25           1       4.0
Other                  20,822     21,317        (495 )      (2.3 )              31        31         -           -
Other operating
revenues (d)                -          -           -           -                28       148       (120)     (81.1 )
Total                 309,553    282,061      27,492         9.7  %         $2,078    $1,901        $177       9.3  %

(a) Revenues from gas sales are subject to a weather normalization clause and a

revenue decoupling mechanism, as a result of which, delivery revenues are

generally not affected by changes in delivery volumes from levels assumed

when rates were approved.

(b) After adjusting for variations, primarily billing days, firm gas sales and

transportation volumes in the company's service area increased 5.1 percent in

2018 compared with 2017, reflecting primarily increased volumes attributable

to the growth in the number of gas customers.

(c) Includes 3,326 thousands and 3,816 thousands of Dt for 2018 and 2017,

respectively, which are also reflected in firm transportation and other.

(d) Other gas operating revenues generally reflect changes in the revenue

decoupling mechanism and weather normalization clause current asset or

regulatory liability and changes in regulatory assets and liabilities in

accordance with other provisions of the company's rate plan. See Note B to

the financial statements in Item 8.

Operating revenues increased $177 million in 2018 compared with 2017 due primarily to higher revenues from the gas rate plan and growth in the number of customers ($104 million) and increased gas purchased for resale

CON EDISON ANNUAL REPORT 2019 65

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expense ($133 million), offset in part by the reduction in other operating
revenues resulting from the deferral as a regulatory liability of estimated net
benefits for the 2018 period under the TCJA ($85 million).
Gas purchased for resale increased $133 million in 2018 compared with 2017 due
to higher unit costs ($84 million) and purchased volumes ($49 million).
Other operations and maintenance expenses increased $7 million in 2018 compared
with 2017 due primarily to higher consultant costs.
Depreciation and amortization increased $20 million in 2018 compared with 2017
due primarily to higher gas utility plant balances.
Taxes, other than income taxes increased $34 million in 2018 compared with 2017
due primarily to higher property taxes ($40 million) and state and local taxes
($6 million), offset in part by deferral of under-collected property taxes due
to new property tax rates for fiscal year 2017 - 2018 ($10 million) and a sales
and use tax refund ($3 million).
Steam
CECONY's results of steam operations for the year ended December 31, 2018
compared with the year ended December 31, 2017 were as follows:
                                 For the Years Ended December 31,
(Millions of Dollars)                2018     2017         Variation
Operating revenues                   $631     $595               $36
Purchased power                        40       36                 4
Fuel                                  105       89                16
Other operations and maintenance      174      171                 3
Depreciation and amortization          87       85                 2
Taxes, other than income taxes        148      134                14
Steam operating income                $77      $80              $(3)

CECONY's steam sales and deliveries in 2018 compared with 2017 were:


                           Millions of Pounds Delivered                     

Revenues in Millions


                                                                        For the Years
                    For the Years Ended                                     Ended
                   December   December                 Percent        December December             Percent
Description        31, 2018   31, 2017   Variation   Variation        31, 2018 31, 2017 Variation Variation
General                 593        490         103        21.0 %           $30      $26        $4      15.4 %
Apartment house       6,358      5,754         604        10.5             174      158        16      10.1
Annual power         14,811     13,166       1,645        12.5             441      392        49      12.5
Other operating
revenues (a)              -          -           -           -            (14)       19      (33)     Large
Total                21,762     19,410       2,352        12.1 % (b)      $631     $595       $36       6.1 %

(a) Other steam operating revenues generally reflect changes in regulatory assets

and liabilities in accordance with the company's rate plan. See Note B to the

financial statements in Item 8.

(b) After adjusting for variations, primarily weather and billing days, steam

sales and deliveries in the company's service area increased 0.6 percent in

2018 compared with 2017.




Operating revenues increased $36 million in 2018 compared with 2017 due
primarily to the weather impact on revenues ($43 million), higher fuel expenses
($16 million) and purchased power ($4 million), offset in part by the reduction
in other operating revenues resulting from the deferral as a regulatory
liability of estimated net benefits for the 2018 period under the TCJA ($15
million) and higher regulatory reserve related to steam earnings sharing ($13
million).
Purchased power expenses increased $4 million in 2018 compared with 2017 due to
higher purchased volumes ($6 million), offset by lower unit costs ($2 million).
Fuel expenses increased $16 million in 2018 compared with 2017 due to higher
unit costs ($12 million) and purchased volumes ($4 million).
Other operations and maintenance expenses increased $3 million in 2018 compared
with 2017 due primarily to property damage, clean-up and other response costs
related to a steam main rupture in July 2018 ($14 million),

66 CON EDISON ANNUAL REPORT 2019

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offset in part by surcharges for assessments and fees that are collected in
revenues from customers ($4 million) and lower municipal infrastructure support
costs ($2 million).
Depreciation and amortization increased $2 million in 2018 compared with 2017
due primarily to higher steam utility plant balances.
Taxes, other than income taxes increased $14 million in 2018 compared with 2017
due primarily to higher property taxes ($13 million) and state and local taxes
($2 million), offset in part by a sales and use tax refund ($1 million).
Taxes, Other Than Income Taxes
At $2,156 million, taxes other than income taxes remain one of CECONY's largest
operating expenses. The principal components of, and variations in, taxes other
than income taxes were:
                                         For the Years Ended December 31,
(Millions of Dollars)                           2018               2017          Variation
Property taxes                                $1,845             $1,692               $153
State and local taxes related to revenue
receipts                                         330                319                 11
Payroll taxes                                     69                 67                  2
Other taxes                                     (88)               (21)               (67)
Total                                         $2,156    (a)      $2,057    (a)         $99

(a) Including sales tax on customers' bills, total taxes other than income taxes

in 2018 and 2017 were $2,628 and $2,495 million, respectively.





Other Income (Deductions)
Other income (deductions) decreased $6 million in 2018 compared with 2017 due
primarily to an increase in non-service costs related to pension and other
postretirement benefits.
Net Interest Expense
Net interest expense increased $66 million in 2018 compared with 2017 due
primarily to higher debt balances in 2018.
Income Tax Expense
Income taxes decreased $359 million in 2018 compared with 2017 due primarily to
lower income before income tax expense ($56 million), a decrease in the
corporate federal income tax rate due to the TCJA ($250 million), a decrease in
tax benefits for plant-related flow items ($9 million) and an increase in the
amortization of excess deferred federal income taxes due to the TCJA ($52
million), offset in part by non-deductible business expenses ($3 million) and a
decrease in bad debt write-offs ($4 million).
O&R
                                  For the Year Ended               For the Year Ended
                                   December 31, 2018                December 31, 2017
                                                                                                   2018-2017
(Millions of Dollars)             Electric       Gas   2018 Total  Electric       Gas   2017 Total Variation
Operating revenues                      $642      $249       $891        $642      $232       $874       $17
Purchased power                          208       -          208         191       -          191        17
Gas purchased for resale                 -          86         86         -          73         73        13
Other operations and maintenance         233        72        305         232        64        296         9
Depreciation and amortization             56        21         77          51        20         71         6
Taxes, other than income taxes            52        31         83          53        29         82         1
Operating income                         $93       $39       $132        $115       $46       $161     $(29)

CON EDISON ANNUAL REPORT 2019 67

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Electric

O&R's results of electric operations for the year ended December 31, 2018 compared with the year ended December 31, 2017 were as follows:


                                               For the Years Ended December 31,
(Millions of Dollars)                                   2018          2017         Variation
Operating revenues                                      $642          $642                $-
Purchased power                                          208           191                  17
Other operations and maintenance                         233           232                   1
Depreciation and amortization                             56            51                   5
Taxes, other than income taxes                            52            53                 (1)
Electric operating income                                $93          $115               $(22)

O&R's electric sales and deliveries in 2018 compared with 2017 were:


                                       Millions of kWh Delivered                           Revenues in Millions (a)
                              For the Years Ended                               For the Years Ended
                             December   December                 Percent         December  December                   Percent
Description                  31, 2018   31, 2017   Variation   Variation         31, 2018  31, 2017     Variation   Variation
Residential/Religious (b)       1,713      1,567         146         9.3  %          $326      $311             $15       4.8 %
Commercial/Industrial             799        763          36         4.7              115       113               2       1.8
Retail choice customers         2,974      2,976          (2 )      (0.1 )            201       201             -           -
Public authorities                131        105          26        24.8               12         9               3      33.3
Other operating revenues (c)        -          -           -           -             (12)         8            (20)     Large
Total                           5,617      5,411         206         3.8  % (d)      $642      $642            $-           -

(a) Revenues from New York electric delivery sales 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. O&R's electric sales in New Jersey are not subject to a

decoupling mechanism, 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 the revenue

decoupling mechanism current asset or regulatory liability in accordance with

the company's New York electric rate plan and changes in regulatory assets

and liabilities in accordance with the company's electric rate plans. See

Note B to the financial statements in Item 8.

(d) After adjusting for weather and other variations, electric delivery volumes

in company's service area increased 0.3 percent in 2018 compared with 2017.




Purchased power expenses increased $17 million in 2018 compared with 2017 due to
higher purchased volumes ($15 million) and unit costs ($3 million).
Other operations and maintenance expenses increased $1 million in 2018 compared
with 2017 due primarily to the reduction of a regulatory asset associated with
certain site investigation and environmental remediation costs ($6 million),
offset in part by lower surcharges for assessments and fees that are collected
in revenues from customers ($3 million) and lower healthcare costs ($2 million).
Depreciation and amortization increased $5 million in 2018 compared with 2017
due primarily to higher electric utility plant balances.
Taxes, other than income taxes decreased $1 million in 2018 compared with 2017
due primarily to lower property taxes.
Gas
O&R's results of gas operations for the year ended December 31, 2018 compared
with the year ended December 31, 2017 were as follows:

68 CON EDISON ANNUAL REPORT 2019

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                                 For the Years Ended December 31,
(Millions of Dollars)                2018     2017         Variation
Operating revenues                   $249     $232               $17
Gas purchased for resale               86       73                13
Other operations and maintenance       72       64                 8
Depreciation and amortization          21       20                 1
Taxes, other than income taxes         31       29                 2
Gas operating income                  $39      $46              $(7)

O&R's gas sales and deliveries, excluding off-system sales, in 2018 compared with 2017 were:


                         Thousands of Dt Delivered                          

Revenues in Millions (a)


                For the Years Ended                                 For the Years Ended
               December   December                 Percent         December   December                 Percent
Description    31, 2018   31, 2017   Variation   Variation         31, 2018   31, 2017   Variation   Variation
Residential       9,860      8,296       1,564        18.9  %            $140       $115         $25      21.7  %
General           2,190      2,184           6         0.3                 26         24           2       8.3
Firm
transportation    9,950      9,873          77         0.8                 78         74           4       5.4
Total firm
sales and
transportation   22,000     20,353       1,647         8.1    (b)         244        213          31      14.6
Interruptible
sales             3,746      3,771         (25 )      (0.7 )                6          7         (1)     (14.3 )
Generation
plants                1          9          (8 )     (88.9 )              -          -           -           -
Other               959        896          63         7.0                  1          1         -           -
Other gas
revenues              -          -           -           -                (2)         11        (13)     Large
Total            26,706     25,029       1,677         6.7  %            $249       $232         $17       7.3  %

(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, firm sales and

transportation volumes in the company's service area increased 2.4 percent in

2018 compared with 2017.




Operating revenues increased $17 million in 2018 compared with 2017 due
primarily to the increase in gas purchased for resale ($13 million) and higher
revenues from the New York gas rate plan ($12 million), offset in part by the
reduction in other operating revenues resulting from the deferral as a
regulatory liability of estimated net benefits for the 2018 period under the
TCJA ($8 million).
Gas purchased for resale increased $13 million in 2018 compared with 2017 due to
higher purchased volumes ($11 million) and unit costs ($2 million).
Other operations and maintenance expenses increased $8 million in 2018 compared
with 2017 due primarily to higher pension costs ($6 million) and the reduction
of a regulatory asset associated with certain site investigation and
environmental remediation costs ($3 million), offset in part by lower healthcare
costs ($1 million).
Depreciation and amortization increased $1 million in 2018 compared with 2017
due primarily to higher gas utility plant balances.
Taxes, other than income taxes increased $2 million in 2018 compared with 2017
due primarily to higher property taxes ($1 million) and state and local taxes
($1 million).
Taxes, Other Than Income Taxes
Taxes, other than income taxes, increased $1 million in 2018 compared with 2017.
The principal components of taxes, other than income taxes, were:
                                         For the Years Ended December 31,
(Millions of Dollars)                           2018               2017          Variation
Property taxes                                   $65                $66               $(1)
State and local taxes related to revenue
receipts                                          10                  9                  1
Payroll taxes                                      8                  7                  1
Total                                            $83   (a)          $82   (a)           $1

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(a) Including sales tax on customers' bills, total taxes other than income taxes

in 2018 and 2017 were $112 million and $109 million, respectively.





Income Tax Expense
Income taxes decreased $27 million in 2018 compared with 2017 due primarily to
lower income before income tax expense ($7 million), a decrease in the corporate
federal income tax rate due to the TCJA ($15 million) and an increase in the
amortization of excess deferred federal income taxes due to the TCJA ($5
million).
Clean Energy Businesses
The Clean Energy Businesses' results of operations for the year ended
December 31, 2018 compared with the year ended December 31, 2017 were as
follows:
                                               For the Years Ended December 31,
(Millions of Dollars)                                2018         2017     Variation
Operating revenues                                     $763         $694         $69
Purchased power                                           2          (3)           5
Gas purchased for resale                                313          226          87
Other operations and maintenance                        287          313    

(26)


Depreciation and amortization                            85           74    

11


Taxes, other than income taxes                           13           16    

(3)


Gain on sale of solar electric production
project (a)                                             -              1    

(1)


Gain on acquisition of Sempra Solar Holdings,
LLC (a)                                                 131          -           131
Operating income                                       $194          $69        $125

(a) See Note U to the financial statements in Item 8.



Operating revenues increased $69 million in 2018 compared with 2017 due
primarily to an increase in wholesale revenues ($89 million) due to higher sales
volumes and revenue from projects in operation ($28 million), offset in part by
a decrease in renewable revenues ($9 million) from engineering, procurement and
construction services revenues ($38 million) and energy services revenues ($7
million) and a decrease in net mark-to-market values ($5 million).
Purchased power expenses increased $5 million in 2018 compared with 2017 due
primarily to true-ups relating to the sale of the retail electric supply
business.
Gas purchased for resale increased $87 million in 2018 compared with 2017 due to
higher purchased volumes.
Other operations and maintenance expenses decreased $26 million in 2018 compared
with 2017 due primarily to decreased engineering, procurement and construction
costs.
Depreciation and amortization increased $11 million in 2018 compared with 2017
due to an increase in renewable electric production projects in operation during
2018.
Taxes, other than income taxes decreased $3 million in 2018 compared with 2017
due to lower property taxes.
Gain on sale of solar electric production project decreased $1 million in 2018
compared with 2017 due to the absence of gain on sale in 2018 of Upton 2. See
Note U to the financial statements in Item 8.
Gain on acquisition of Sempra Solar Holdings, LLC increased $131 million in 2018
compared with 2017 due to the gain recognized with respect to jointly-owned
renewable energy production projects upon completion of the acquisition of
Sempra Solar Holdings, LLC. See Note U to the financial statements in Item 8.
Net Interest Expense
Net interest expense increased $20 million in 2018 compared with 2017 due
primarily to the reversal of interest on uncertain tax positions in the 2017
period and higher interest rates in the 2018 period.

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Income Tax Expense
Income taxes increased $292 million in 2018 compared with 2017 due primarily to
the absence of the 2017 federal income tax benefit related to the re-measurement
of the Clean Energy Businesses' deferred tax assets and liabilities based upon
the 21 percent corporate income tax rate under the TCJA ($269 million), higher
income before income tax expense ($22 million), higher state income taxes ($6
million), a lower favorable state return-to-provision adjustment recorded in
2018 ($3 million), a reduction in the reversal of uncertain tax positions in
2018 ($3 million) and an increase in valuation allowances against state net
operating loss carryforwards ($1 million), offset in part by a decrease in the
corporate federal income tax rate due to the TCJA ($8 million) and an income tax
benefit in 2018 related to the extension of energy efficiency programs ($3
million).
Con Edison Transmission
Net Interest Expense
Net interest expense increased $4 million in 2018 compared with 2017 due
primarily to funding of increased investment in Mountain Valley Pipeline, LLC.

Other Income (Deductions)
Other income (deductions) increased $11 million in 2018 compared with 2017 due
primarily to increased earnings from equity investments in Mountain Valley
Pipeline, LLC.

Income Tax Expense
Income taxes increased $5 million in 2018 compared with 2017 due primarily to
the absence of the 2017 federal income tax benefit related to the re-measurement
of Con Edison Transmission's deferred tax assets and liabilities based upon the
21 percent corporate income tax rate under the TCJA ($11 million) and the higher
income before income tax expense in 2018 ($2 million), offset in part by the
decrease in the corporate federal income tax rate in 2018 due to the TCJA ($8
million).
Other
Taxes, Other Than Income Taxes
Taxes, other than income taxes increased $14 million in 2018 compared with 2017
due primarily to the New York State capital tax in 2018.

Other Income (Deductions)
Other income (deductions) decreased $19 million in 2018 compared with 2017 due
primarily to the transaction costs related to the acquisition of Sempra Solar
Holdings, LLC. See Note U to the financial statements in Item 8.

Income Tax Expense
Income taxes increased $18 million in 2018 compared with 2017 due primarily to
Con Edison's higher 2017 federal net operating loss carryover into 2018 on the
federal tax return ($42 million), the non-recurring deferred state income tax
adjustment recorded in 2017 ($7 million) and a decrease in the corporate federal
tax rate in 2018 due to TCJA ($2 million), offset in part by the absence of the
2017 federal income tax expense related to the re-measurement of Clean Energy
Businesses' deferred tax assets and liabilities based upon the 21 percent
corporate income tax rate under the TCJA ($21 million), lower income before
income tax expense ($6 million) and lower state income taxes ($6 million). See
Note L to the financial statements in Item 8.

Liquidity and Capital Resources
The Companies' liquidity reflects cash flows from operating, investing and
financing activities, as shown on their respective consolidated statements of
cash flows and as discussed below.
The principal factors affecting Con Edison's liquidity are its investments in
the Utilities, the Clean Energy Businesses and Con Edison Transmission, the
dividends it pays to its shareholders and the dividends it receives from the
Utilities and cash flows from financing activities discussed below.
The principal factors affecting CECONY's liquidity are its cash flows from
operating activities, cash used in investing activities (including construction
expenditures), the dividends it pays to Con Edison and cash flows from financing
activities discussed below.
The Companies generally maintain minimal cash balances and use short-term
borrowings to meet their working capital needs and other cash requirements. The
Companies repay their short-term borrowings using funds from long-term
financings and operating activities. The Utilities' cost of capital, including
working capital, is reflected in the rates they charge to their customers.

CON EDISON ANNUAL REPORT 2019 71

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Each of the Companies believes that it will be able to meet its reasonably
likely short-term and long-term cash requirements. See "The Companies Require
Access to Capital Markets to Satisfy Funding Requirements," "Changes To Tax Laws
Could Adversely Affect the Companies" and "The Companies Also Face Other Risks
That Are Beyond Their Control" in Item 1A, and "Capital Requirements and
Resources" in Item 1.




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The Companies' cash, temporary cash investments and restricted cash resulting from operating, investing and financing activities for the years ended December 31, 2019, 2018 and 2017 are summarized as follows:


                                                         Clean Energy            Con Edison
                    CECONY                 O&R            Businesses            Transmission           Other (a)          Con Edison (b)
(Millions
of Dollars)    2019    2018    2017  2019  2018  2017  2019    2018  2017    2019    2018   2017    2019 2018    2017    2019    2018    2017
Operating
activities   $2,502  $2,204  $2,866  $190  $172  $216  $199    $220  $253      $194     $87   $(4)   $49    $12   $36  $3,134  $2,695  $3,367
Investing
activities  (3,124) (3,306) (3,080) (218) (198) (196) (258) (1,740) (410)  

  (184)   (227)   (23)     2    -     (1) (3,782) (5,471) (3,710)
Financing
activities      737   1,190     240     8    31  (22)   184   1,590   149      (12)     140     29  (58)   (13)  (39)     859   2,938     357
Net change
for the
period          115      88      26  (20)     5   (2)   125      70   (8)       (2)     -        2   (7)    (1)   (4)     211     162      14
Balance at
beginning
of period       818     730     704    52    47    49   126      56    64         2       2    -       8      9    13   1,006     844     830
Balance at
end of
period (c)     $933    $818    $730   $32   $52   $47  $251    $126   $56      $-        $2     $2    $1     $8    $9  $1,217  $1,006    $844


(a) Includes parent company and consolidation adjustments.
(b) Represents the consolidated results of operations of Con Edison and its
businesses.
(c) See "Reconciliation of Cash, Temporary Cash Investments and Restricted Cash"
in Note A to the financial statements in Item 8.




CON EDISON ANNUAL REPORT 2019 73

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Cash Flows from Operating Activities
The Utilities' cash flows from operating activities reflect primarily their
energy sales and deliveries and cost of operations. The volume of energy sales
and deliveries is affected primarily by factors external to the Utilities, such
as growth of customer demand, weather, market prices for energy and economic
conditions. Measures that promote distributed energy resources, such as
distributed generation, demand reduction and energy efficiency, also affect the
volume of energy sales and deliveries. See "Utility Regulation - State Utility
Regulation - New York Utility Industry - Reforming the Energy Vision,"
"Competition" and "Environmental Matters - Climate Change" in Item 1. 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 generally not net income. The prices at
which the Utilities provide energy to their customers are determined in
accordance with their rate plans. 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
"Recoverable Energy Costs" in Note A to the financial statements in Item 8.
Pursuant to their rate plans, the Utilities have recovered from customers a
portion of the tax liability they will pay in the future as a result of
temporary differences between the book and tax basis of assets and liabilities.
These temporary differences affect the timing of cash flows, but not net income,
as the Companies are required to record deferred tax assets and liabilities at
the current corporate tax rate for the temporary differences. For the Utilities,
credits to their customers of the net benefits of the TCJA, including the
reduction of the corporate tax rate to 21 percent, decrease cash flows from
operating activities. See "Changes To Tax Laws Could Adversely Affect the
Companies," in Item 1A, "Federal Income Tax" in Note A, "Rate Plans" in Note B,
"Other Regulatory Matters" in Note B and Note L to the financial statements in
Item 8.
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. See "Rate Plans - CECONY- Electric and Gas" and
"Rate Plans - O&R New York - Electric and Gas" in Note B to the financial
statements in Item 8. For Con Edison, 2018 net income also included a non-cash
gain recognized with respect to jointly-owned renewable energy production
projects upon completion of the acquisition of Sempra Solar Holdings, LLC at the
Clean Energy Businesses ($131 million). See Note U to the financial statements
in Item 8.
Net cash flows from operating activities in 2019 for Con Edison and CECONY were
$439 million and $298 million higher, respectively, than in 2018. The changes in
net cash flows for Con Edison and CECONY reflect primarily lower pension and
retiree benefit contributions ($122 million and $115 million, respectively),
lower storm restoration costs ($192 million and $132 million, respectively),
lower MTA power reliability costs ($160 million and $160 million, respectively),
reimbursement received for restoration costs related to the restoration of power
in Puerto Rico in the aftermath of the September 2017 hurricanes ($95 million
and $89 million, respectively), and for CECONY, lower net payments of income tax
to affiliated companies ($122 million), offset, in part, by higher TCJA net
benefits provided to customers in the 2019 period ($379 million and $376
million, respectively).
Net cash flows from operating activities in 2018 for Con Edison and CECONY were
$672 million and $662 million lower, respectively, than in 2017. The change in
net cash flows for Con Edison and CECONY reflects primarily cash payments for
MTA power reliability costs ($179 million and $179 million, respectively) and
Puerto Rico related restoration costs ($104 million and $98 million,
respectively), storm restoration costs ($193 million and $133 million,
respectively), higher accounts receivable from customers ($149 million and $168
million, respectively) primarily due to an increase in billed revenues for gas,
higher pension and retiree benefit obligations ($89 million and $77 million,
respectively), and lower income tax refunds received, net of income taxes paid
($29 million and $87 million, respectively). The change in net cash flows for
CECONY also reflects an increase in accounts receivables from affiliated
companies ($195 million) primarily related to estimated federal income tax
payments for 2018 exceeding the accrued income tax liability at year end and
CECONY's ability to use its 2017 net operating loss carryover in 2018. These
changes are offset in part by the cash impact of the Utilities' estimated net
benefits in the 2018 period under the TCJA ($434 million and $411 million,
respectively). See "Assets, Liabilities and Equity," below.
The change in net cash flows also reflects the timing of payments for and
recovery of energy costs. This timing is reflected within changes to accounts
receivable - customers, recoverable and refundable energy costs within other
regulatory assets and liabilities and accounts payable balances.
Cash Flows Used in Investing Activities
Net cash flows used in investing activities for Con Edison and CECONY were
$1,689 million and $182 million lower, respectively, in 2019 than in 2018. The
change for Con Edison reflects primarily the acquisition of Sempra Solar
Holdings, LLC, net of cash acquired, at the Clean Energy Businesses in 2018
($1,488 million) (see Note U to the

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financial statements in Item 8) and proceeds received in 2019 from the sale of
properties formerly used by CECONY in its operations ($187 million).
Net cash flows used in investing activities for Con Edison and CECONY were
$1,761 million and $226 million higher, respectively, in 2018 than in 2017. The
change for Con Edison reflects primarily the acquisition of Sempra Solar
Holdings, LLC, net of cash acquired, at the Clean Energy Businesses ($1,488
million) (see Note U to the financial statements in Item 8), higher new
investments in electric and gas transmission projects at Con Edison Transmission
($204 million) and increased utility construction expenditures at CECONY ($211
million) and O&R ($10 million), offset in part by lower non-utility construction
expenditures at the Clean Energy Businesses ($169 million).
Cash Flows From Financing Activities
Net cash flows from financing activities in 2019 for Con Edison and CECONY were
$2,079 million and $453 million lower, respectively, than in 2018. Net cash
flows from financing activities in 2018 for Con Edison and CECONY were $2,581
million and $950 million higher, respectively, than in 2017.
Net cash flows from financing activities during the years ended December 31,
2019, 2018 and 2017 reflect the following Con Edison transactions:
2019
•   Redeemed in advance of maturity $400 million of 2.00 percent 3-year

debentures;

• Entered into a forward sale agreement relating to 5,800,000 shares of its

common stock. In June 2019, the company issued 4,750,000 shares for $400


    million upon physical settlement of shares subject to the forward sale
    agreement. Con Edison used the proceeds to invest in CECONY for funding of
    its capital requirements and other general corporate purposes. At

December 31, 2019, 1,050,000 shares remained subject to the forward sale

agreement. In January 2020, the company issued 1,050,000 shares for $88

million upon physical settlement of the remaining shares subject to the

forward sale agreement. See Note C to the financial statements in Item 8;

• Issued 5,649,369 shares of its common stock for $425 million upon physical

settlement of the remaining shares subject to its November 2018 forward sale

agreements. Con Edison used the proceeds to invest in its subsidiaries for

funding of their capital requirements and to repay short-term debt incurred

for that purpose; and

• Borrowed $825 million under a two-year variable-rate term loan to fund the

repayment of a 6-month variable-rate term loan. In June 2019, Con Edison

pre-paid $150 million of the amount borrowed.





2018
•   Issued 9,324,123 common shares for $705 million pursuant to forward sale

agreements and borrowed $825 million under a 6-month variable rate term loan,

which amounts, along with $79 million of other company funds, were used to

pay the purchase price for the acquisition by the Clean Energy Businesses of

Sempra Solar Holdings, LLC. In February 2019, the company repaid the $825

million term loan with borrowings under a two-year term loan agreement. See

Notes D and U to the financial statements in Item 8.

2017

• Issued 4,100,000 common shares resulting in net proceeds of $343 million,

after issuance expenses, that were invested by Con Edison in its

subsidiaries, principally CECONY and the Clean Energy Businesses, for funding

of their construction expenditures and for other general corporate purposes;

and

• Issued $400 million aggregate principal amount of 2.00 percent debentures,

due 2020, and prepaid the June 2016 $400 million variable rate term loan that


    was to mature in 2018.



Con Edison's cash flows from financing activities in 2019, 2018 and 2017 also
reflect the proceeds, and reduction in cash used for reinvested dividends,
resulting from the issuance of common shares under the company's dividend
reinvestment, stock purchase and long-term incentive plans of $101 million, $100
million and $97 million, respectively.
Net cash flows from financing activities during the years ended December 31,
2019, 2018 and 2017 reflect the following CECONY transactions:
2019
•   Issued $600 million aggregate principal amount of 3.70 percent debentures,

due 2059, and $700 million aggregate principal amount of 4.125 percent

debentures, due 2049, the net proceeds from the sale of which were used to

repay short-term borrowings and for other general corporate purposes; and

• Redeemed at maturity $475 million of 6.65 percent 10-year debentures.

CON EDISON ANNUAL REPORT 2019 75

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2018

• Issued $500 million aggregate principal amount of 4.00 percent debentures,

due 2028, and $600 million aggregate principal amount of 4.65 percent

debentures, due 2048, the net proceeds from the sale of which were used to

redeem at maturity $600 million of 7.125 percent 10-year debentures and other

general corporate purposes, including repayment of short-term debt;

• Issued $640 million aggregate principal amount of debentures, due 2021, at a

variable interest rate of 0.40 percent above three-month LIBOR and redeemed

$636 million of its tax-exempt debt for which the interest rates were to be

determined pursuant to periodic auctions;

• Issued $700 million aggregate principal amount of 4.50 percent debentures,

due 2058, and $300 million aggregate principal amount of 3.80 percent

debentures, due 2028, the net proceeds from the sale of which were used to

repay short-term borrowings and for other general corporate purposes; and

• Redeemed at maturity $600 million of 5.85 percent 10-year debentures.

2017

• Issued $350 million aggregate principal amount of 3.125 percent debentures,

due 2027, $350 million aggregate principal amount of 4.00 percent debentures,

due 2057, and $500 million aggregate principal amount of 3.875 percent

debentures, due 2047, the net proceeds from the sales of which were used to

repay short-term borrowings and for other general corporate purposes.

Net cash flows from financing activities during the years ended December 31, 2019 and 2018 also reflect the following O&R transactions:

2019

• Issued $43 million aggregate principal amount of 3.73 percent debentures, due

2049, $44 million aggregate principal amount of 2.94 percent debentures, due

2029, and $38 million aggregate principal amount of 3.46 percent debentures,

due 2039, the net proceeds from the sales of which were used to repay

short-term borrowings and for other general corporate purposes; and

• Redeemed at maturity $60 million of 4.96 percent 10-year debentures.

2018

• Redeemed at maturity $50 million of 6.15 percent 10-year debentures; and

• Issued $150 million aggregate principal amount of 4.35 percent debentures,


    due 2048, the net proceeds from the sale of which were used to repay
    short-term borrowings and for other general corporate purposes.


O&R had no issuances of long-term debt in 2017.

Net cash flows from financing activities during the years ended December 31, 2019, 2018 and 2017 also reflect the following Clean Energy Businesses transactions:

2019

• Issued $303 million aggregate principal amount of 3.82 percent senior notes,

due 2038, secured by the company's California Solar 4 renewable electric

production projects; and

• Borrowed $464 million at a variable-rate, due 2026, secured by equity

interests in solar electric production projects, the net proceeds from the

sale of which were used to repay borrowings from Con Edison and for other

general corporate purposes. Con Edison used a portion of the repayment to

pre-pay $150 million of an $825 million two-year variable-rate term loan and

the remainder to repay short-term borrowings and for other general corporate


    purposes. The company has entered into fixed-rate interest rate swaps in
    connection with this borrowing. See Note O to the financial statements in
    Item 8.


2018

• Issued $140 million aggregate principal amount of 4.41 percent senior notes,


    due 2028, secured by the company's Wind Holdings renewable electric
    production projects.


2017

• Issued $97 million aggregate principal amount of 4.45 percent senior notes,

due 2042, secured by the company's Upton County Solar renewable electric


    production project.



76 CON EDISON ANNUAL REPORT 2019

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Cash flows from financing activities of the Companies also reflect commercial
paper issuance. The commercial paper amounts outstanding at December 31, 2019,
2018 and 2017 and the average daily balances for 2019, 2018 and 2017 for Con
Edison and CECONY were as follows:
                  2019                         2018                         

2017


(Millions of
Dollars, except
Weighted Average  Outstanding at       Daily   Outstanding at       Daily   Outstanding at       Daily
Yield)               December 31     average      December 31     average      December 31     average
Con Edison                  $1,692      $1,074           $1,741        $889             $577        $566
CECONY                      $1,137        $734           $1,192        $532             $150        $251
Weighted average
yield                        2.0 %       2.5 %            3.0 %       2.3 %            1.8 %       1.2 %


Common stock issuances and external borrowings are sources of liquidity that
could be affected by changes in credit ratings, financial performance and
capital market conditions. For information about the Companies' credit ratings
and certain financial ratios, see "Capital Requirements and Resources" in
Item 1.

Capital Requirements and Resources
For information about capital requirements, contractual obligations and capital
resources, see "Capital Requirements and Resources" in Item 1.

Assets, Liabilities and Equity
The Companies' assets, liabilities and equity at December 31, 2019 and 2018 are
summarized as follows:
                                                    Clean Energy      Con Edison
                      CECONY           O&R           Businesses      Transmission    Other (a)    Con Edison (b)
(Millions of
Dollars)             2019    2018   2019   2018   2019        2018     2019   2018  2019   2018      2019    2018
ASSETS
Current assets     $3,543  $3,357   $243   $263        $511     $372     $2    $32 $(27)   $(160)  $4,272  $3,864
Investments           461     385     26     25      -           -    1,585  1,362   (7)      (6)   2,065   1,766
Net plant          37,414  35,374  2,336  2,210       4,121    4,148     17     17     1      -    43,889  41,749
Other noncurrent
assets              5,139   3,992    401    394       1,896    1,736     14     14   403      405   7,853   6,541
Total Assets      $46,557 $43,108 $3,006 $2,892      $6,528   $6,256 $1,618 $1,425  $370     $239 $58,079 $53,920

LIABILITIES AND SHAREHOLDERS'
EQUITY
Current
liabilities        $4,131  $4,200   $311   $392      $1,525   $1,608   $135     $5  $185       $2  $6,287  $6,207
Noncurrent
liabilities        13,665  12,322  1,115  1,094         201     (32)     88     66  (17)     (71)  15,052  13,379
Long-term debt     14,614  13,676    818    694       2,400    2,330    500    500   195      295  18,527  17,495
Equity             14,147  12,910    762    712       2,402    2,350    895    854     7       13  18,213  16,839
Total Liabilities
and Equity        $46,557 $43,108 $3,006 $2,892      $6,528   $6,256 $1,618 $1,425  $370     $239 $58,079 $53,920

(a) Includes parent company and consolidation adjustments. (b) Represents the consolidated results of operations of Con Edison and its businesses.

CECONY


Current assets at December 31, 2019 were $186 million higher than at December
31, 2018. The change in current assets reflects an increase in cash and
temporary cash investments ($115 million), accrued unbilled revenue ($85
million) and revenue decoupling mechanism receivable ($76 million), offset, in
part, by a decrease in other receivables ($91 million). The decrease in other
receivables reflects primarily the receipt of payments related to costs for aid
provided by CECONY for the restoration of power in Puerto Rico in the aftermath
of the September 2017 hurricanes ($89 million).

Investments at December 31, 2019 were $76 million higher than at December 31,
2018. The change in investments reflects primarily an increase in supplemental
retirement income plan assets. See "Investments" in Note A and Note E to the
financial statements in Item 8.

Net plant at December 31, 2019 was $2,040 million higher than at December 31,
2018. The change in net plant reflects primarily an increase in electric ($1,394
million) and gas ($934 million) plant balances, offset, in part, by an increase
in accumulated depreciation ($502 million).


CON EDISON ANNUAL REPORT 2019 77

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Other noncurrent assets at December 31, 2019 were $1,147 million higher than at
December 31, 2018. The change in other noncurrent assets reflects primarily the
adoption of ASU No. 2016-02, "Leases (Topic 842)" ($601 million). See Note J to
the financial statements in Item 8. The change also reflects primarily an
increase in the regulatory asset for property tax reconciliation ($124 million),
deferred derivative losses ($65 million) and MTA power reliability deferral ($19
million) which reflects costs incurred and deferred as a regulatory asset in the
2019 period. See "Regulatory Assets and Liabilities" in Note B to the financial
statements in Item 8. It also reflects an increase in the regulatory asset for
unrecognized pension and other postretirement costs to reflect the final
actuarial valuation, as measured at December 31, 2019, of the pension and other
retiree benefit plans in accordance with the accounting rules for retirement
benefits ($292 million). See Notes B, E and F to the financial statements in
Item 8. The change in the regulatory asset also reflects the year's amortization
of accounting costs.

Current liabilities at December 31, 2019 were $69 million lower than at December
31, 2018. The change in current liabilities reflects primarily lower debt due
within one year as of December 31, 2019 ($125 million), offset, in part, by an
increase in the fair value of derivative liabilities ($56 million).

Noncurrent liabilities at December 31, 2019 were $1,343 million higher than at
December 31, 2018. The change in noncurrent liabilities reflects primarily the
adoption of ASU No. 2016-02, "Leases (Topic 842)" ($551 million). See Note J to
the financial statements in Item 8. The change also reflects an increase in
deferred income taxes and unamortized investment tax credits ($261 million),
which reflects primarily accelerated tax depreciation and repair deductions. See
Note L to the financial statements in Item 8. It also reflects an increase in
the liability for pension and retiree benefits ($289 million), which primarily
reflects contributions to the pension and other retiree benefit plans made by
the Utilities in 2019 and the final actuarial valuation, as measured at December
31, 2019 of the plans in accordance with the accounting rules for retirement
benefits. See Notes E and F to the financial statements in Item 8.

Long-term debt at December 31, 2019 was $938 million higher than at December 31,
2018. The change in long-term debt reflects primarily the May 2019 issuance of
$700 million and November 2019 issuance of $600 million of debentures offset, in
part, by the reclassification of $350 million of long-term debt due June 2020 to
long-term debt due within one year. See "Liquidity and Capital Resources - Cash
Flows From Financing Activities" above and Note C to the financial statements in
Item 8.

Equity at December 31, 2019 was $1,237 million higher than at December 31, 2018.
The change in equity reflects net income for the year ($1,250 million) and
capital contributions from parent ($900 million) in 2019, offset, in part, by
common stock dividends to parent ($912 million) in 2019.

O&R


Current assets at December 31, 2019 were $20 million lower than at December 31,
2018. The change in current assets reflects primarily a decrease in cash and
temporary cash investments ($18 million) and customer accounts receivables, less
allowance for uncollectible accounts ($15 million). These decreases are offset,
in part, by an increase in accrued unbilled revenue ($8 million).

Net plant at December 31, 2019 was $126 million higher than at December 31,
2018. The change in net plant reflects primarily an increase in electric ($94
million) and gas ($59 million) plant balances, offset, in part, by an increase
in accumulated depreciation ($37 million).

Current liabilities at December 31, 2019 were $81 million lower than at December
31, 2018. The change in current liabilities reflects primarily lower debt due
within one year as of December 31, 2019.

Long-term debt at December 31, 2019 was $124 million higher than at December 31,
2018. The change in long-term debt reflects primarily the November 2019 issuance
of $43 million and December 2019 issuances of $82 million of debentures. See
"Liquidity and Capital Resources - Cash Flows From Financing Activities" above.

Equity at December 31, 2019 was $50 million higher than at December 31, 2018.
The change in equity reflects net income for the year ($70 million) and a
capital contribution from parent ($30 million) in 2019, offset, in part, by
common stock dividends to parent ($47 million) in 2019 and a decrease in other
comprehensive income ($4 million).

Clean Energy Businesses
Current assets at December 31, 2019 were $139 million higher than at December
31, 2018. The change in current assets reflects primarily increases in
restricted cash.


78 CON EDISON ANNUAL REPORT 2019

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Net plant at December 31, 2019 was $27 million lower than at December 31, 2018.
The change in net plant reflects primarily depreciation for the year ended
December 31, 2019, investment tax credits and the reduction in the capitalized
asset and related liability for asset retirement obligations for certain
property leased by renewable electric production projects, offset, in part, by
additional capital expenditures.

Other noncurrent assets at December 31, 2019 were $160 million higher than at
December 31, 2018. The change in other noncurrent assets reflects primarily the
adoption of ASU No. 2016-02, "Leases (Topic 842)." See Note J to the to the
financial statements in Item 8.

Current liabilities at December 31, 2019 were $83 million lower than at December
31, 2018. The change in current liabilities reflects primarily the repayment of
a borrowing under a 6-month term loan agreement with the proceeds of a 2-year
term loan agreement ($825 million) and a decrease in working capital
requirements primarily due to the funding of the California Holdings 4 project
debt ($187 million), offset, in part, by the reclassification of the
PG&E-related project debt from long-term debt to long-term debt due within one
year ($990 million). See "Long-Term Debt" in Note C to the financial statements
in Item 8.

Noncurrent liabilities at December 31, 2019 were $233 million higher than at
December 31, 2018. The change in noncurrent liabilities reflects primarily the
adoption of ASU No. 2016-02 "Leases (Topic 842)" and a decrease in deferred
income taxes and unamortized investment tax credits, which reflects primarily
accelerated depreciation on renewable energy projects and the utilization of
federal net operating loss carryforwards, offset, in part, by the reduction in
the capitalized asset and related liability for asset retirement obligations for
certain property leased by renewable electric production projects and See Note J
to the financial statements in Item 8.

Long-term debt at December 31, 2019 was $70 million higher than at December 31,
2018. The change in long-term debt primarily reflects a May 2019 borrowing of
$464 million, due 2026, secured by equity interests in solar electric production
projects, and an October 2019 issuance of $303 million, due 2038, secured by the
company's California Solar 4 renewable electric production projects, offset, in
part, by the reclassification of the PG&E-related project debt to long-term debt
due within one year ($990 million) and the repayment to parent of $450 million
of an $825 million borrowing. See "Long-Lived and Intangible Assets" in Note A
and "Long-Term Debt" in Note C to the financial statements in Item 8.

Equity at December 31, 2019 was $52 million higher than at December 31, 2018.
The change in equity reflects primarily an increase in noncontrolling interest
($78 million), offset, in part, by a net loss for the for the year ($18 million)
and common stock dividends to parent ($3 million) in 2019.

CET


Current assets at December 31, 2019 were $30 million lower than at December 31,
2018. The change in current assets reflects an increased investment in Mountain
Valley Pipeline, LLC and a NY Transco electric transmission project. See "Con
Edison Transmission - CET Gas" in Item 1.

Investments at December 31, 2019 were $223 million higher than at December 31,
2018. The change in investments reflects primarily increased investment in
Mountain Valley Pipeline, LLC and a NY Transco electric transmission project.
See "Investments" in Note A and Note U to the financial statements in Item 8.

Current liabilities at December 31, 2019 were $130 million higher than at December 31, 2018. The change in current liabilities reflects primarily an increase in payables to associate companies related to increased investment in Mountain Valley Pipeline, LLC.



Noncurrent liabilities at December 31, 2019 was $22 million higher than at
December 31, 2018. The change in noncurrent liabilities reflects primarily an
increase in deferred income taxes and unamortized investment tax credits, which
reflects primarily accelerated tax depreciation and repair deductions.

Equity at December 31, 2019 was $41 million higher than at December 31, 2018.
The change in equity reflects net income for the year ($52 million), offset, in
part, by common stock dividends to parent ($12 million) in 2019.

Off-Balance Sheet Arrangements
In May 2019, Con Edison entered into a forward sale agreement which met the SEC
definition of an off-balance sheet arrangement, which the company physically
settled by issuing 4,750,000 shares of its common stock in June 2019 and
1,050,000 shares in January 2020. See Note C to the financial statements in Item
8 for more information

CON EDISON ANNUAL REPORT 2019 79

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on this agreement. None of the Companies' other transactions, agreements or other contractual arrangements meet the SEC definition of off-balance sheet arrangements.



Regulatory Matters
For information about the Utilities' rate plans and other regulatory matters
affecting the Companies, see "Utility Regulation" in Item 1 and Note B to the
financial statements in Item 8.

Risk Factors
The Companies' businesses are influenced by many factors that are difficult to
predict, and that involve uncertainties that may materially affect actual
operating results, cash flows and financial condition. See "Risk Factors" in
Item 1A.

Application of Critical Accounting Policies
The Companies' financial statements reflect the application of their accounting
policies, which conform to accounting principles generally accepted in the
United States of America. The Companies' critical accounting policies include
industry-specific accounting applicable to regulated public utilities and
accounting for pensions and other postretirement benefits, contingencies,
long-lived assets, goodwill and derivative instruments.
Accounting for Regulated Public Utilities
The Utilities are subject to the accounting rules for regulated operations and
the accounting requirements of the FERC and the state public utility regulatory
commissions having jurisdiction.
The accounting rules for regulated operations specify the economic effects that
result from the causal relationship of costs and revenues in the rate-regulated
environment and how these effects are to be accounted for by a regulated
enterprise. Revenues intended to cover some costs may be recorded either before
or after the costs are incurred. If regulation provides assurance that incurred
costs will be recovered in the future, these costs would be recorded as deferred
charges, or "regulatory assets," under the accounting rules for regulated
operations. If revenues are recorded for costs that are expected to be incurred
in the future, these revenues would be recorded as deferred credits, or
"regulatory liabilities," under the accounting rules for regulated operations.
The Utilities' principal regulatory assets and liabilities are listed in Note B
to the financial statements in Item 8. The Utilities are receiving or being
credited with a return on all of their regulatory assets for which a cash
outflow has been made. The Utilities are paying or being charged with a return
on all of their regulatory liabilities for which a cash inflow has been
received. The Utilities' regulatory assets and liabilities at December 31, 2019
are recoverable from customers, or to be applied for customer benefit, in
accordance with rate provisions that have been approved by the applicable public
utility regulatory commission.
In the event that regulatory assets of the Utilities were no longer probable of
recovery, as required by the accounting rules for regulated operations, these
regulatory assets would be charged to earnings. At December 31, 2019, the
regulatory assets for Con Edison and CECONY were $4,987 million and $4,600
million, respectively.
Accounting for Pensions and Other Postretirement Benefits
The Utilities provide pensions and other postretirement benefits to
substantially all of their employees and retirees. The Clean Energy Businesses
and Con Edison Transmission also provide such benefits to transferred employees
who previously worked for the Utilities. The Companies account for these
benefits in accordance with the accounting rules for retirement benefits. In
addition, the Utilities apply the accounting rules for regulated operations to
account for the regulatory treatment of these obligations (which, as described
in Note B to the financial statements in Item 8, reconciles the amounts
reflected in rates for the costs of the benefit to the costs actually incurred).
In applying these accounting policies, the Companies have made critical
estimates related to actuarial assumptions, including assumptions of expected
returns on plan assets, discount rates, health care cost trends and future
compensation. See Notes A, E and F to the financial statements in Item 8 for
information about the Companies' pension and other postretirement benefits, the
actuarial assumptions, actual performance, amortization of investment and other
actuarial gains and losses and calculated plan costs for 2019, 2018 and 2017.

The discount rate for determining the present value of future period benefit
payments is determined using a model to match the durations of highly-rated (Aa
or higher by either Moody's or S&P) corporate bonds with the projected stream of
benefit payments.

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In determining the health care cost trend rate, the Companies review actual
recent cost trends and projected future trends.
The cost of pension and other postretirement benefits in future periods will
depend on actual returns on plan assets, assumptions for future periods,
contributions and benefit experience. Con Edison's and CECONY's current
estimates for 2020 are increases, compared with 2019, in their pension and other
postretirement benefits costs of $160 million and $151 million, respectively.

The following table illustrates the effect on 2020 pension and other postretirement costs of changing the critical actuarial assumptions, while holding all other actuarial assumptions constant:


                                                                           Other
                                           Change in              Postretirement
Actuarial Assumption                      Assumption     Pension        Benefits Total
                                                            (Millions of Dollars)
Increase in accounting cost:
Discount rate
Con Edison                                     (0.25 )%       $62             $3   $65
CECONY                                         (0.25 )%       $59             $2   $61
Expected return on plan assets
Con Edison                                     (0.25 )%       $35             $2   $37
CECONY                                         (0.25 )%       $34             $2   $36
Health care trend rate
Con Edison                                      1.00 %        $-              $9    $9
CECONY                                          1.00 %        $-              $4    $4
Increase in projected benefit obligation:
Discount rate
Con Edison                                     (0.25 )%      $666            $39  $705
CECONY                                         (0.25 )%      $631            $31  $662
Health care trend rate
Con Edison                                      1.00 %        $-             $61   $61
CECONY                                          1.00 %        $-             $34   $34


A 5.0 percentage point variation in the actual annual return in 2020, as
compared with the expected annual asset return of 7.00 percent, would change
pension and other postretirement benefit costs for Con Edison and CECONY by
approximately $27 million and $25 million, respectively, in 2021.
Pension benefits are provided through a pension plan maintained by Con Edison to
which CECONY, O&R, the Clean Energy Businesses and Con Edison Transmission make
contributions for their participating employees. Pension accounting by the
Utilities includes an allocation of plan assets.
The Companies' policy is to fund their pension and other postretirement benefit
accounting costs to the extent tax deductible, and for the Utilities, to the
extent these costs are recovered under their rate plans. The Companies were not
required to make cash contributions to the pension plan in 2019 under funding
regulations and tax laws. However, CECONY and O&R made discretionary
contributions to the pension plan in 2019 of $318 million and $32 million,
respectively. In 2020, CECONY and O&R expect to make contributions to the
pension plan of $433 million and $39 million, respectively. See "Expected
Contributions" in Notes E and F to the financial statements in Item 8.
Accounting for Contingencies
The accounting rules for contingencies apply to an existing condition, situation
or set of circumstances involving uncertainty as to possible loss that will
ultimately be resolved when one or more future events occur or fail to occur.
Known material contingencies, which are described in the notes to the financial
statements, include certain regulatory matters (Note B), the Utilities'
responsibility for hazardous substances, such as asbestos, PCBs and coal tar
that have been used or generated in the course of operations (Note G) and other
contingencies (Note H). In accordance with the accounting rules, the Companies
have accrued estimates of losses relating to the

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contingencies as to which loss is probable and can be reasonably estimated, and
no liability has been accrued for contingencies as to which loss is not probable
or cannot be reasonably estimated.

The Utilities recover costs for asbestos lawsuits, workers' compensation and
environmental remediation pursuant to their current rate plans. Generally,
changes during the terms of the rate plans to the amounts accrued for these
contingencies would not impact earnings.
Accounting for Long-Lived and Intangible Assets
The accounting rules for certain long-lived assets and intangible assets with
definite lives require testing for recoverability whenever events or changes in
circumstances indicate their carrying amounts may not be recoverable. The
carrying amount of a long-lived asset or intangible asset with a definite life
is deemed not recoverable if it exceeds the sum of the undiscounted cash flows
expected to result from the use and eventual disposition of the asset. Under the
accounting rules, an impairment loss is recognized if the carrying amount is not
recoverable from such cash flows, and exceeds its fair value, which approximates
market value.

In January 2019, PG&E filed for reorganization under Chapter 11 of the U.S.
Bankruptcy Code. The output of certain of the Clean Energy Businesses' PG&E
Projects is sold under PG&E PPAs. At December 31, 2019, Con Edison's
consolidated balance sheet included $819 million of net non-utility plant
relating to the PG&E Projects, $1,057 million of intangible assets relating to
the PG&E PPAs, $282 million of net non-utility plant of additional projects that
secure the related project debt and $1,001 million of related project debt. Con
Edison has tested whether its net non-utility plant relating to the PG&E
Projects and intangible assets relating to the PG&E PPAs have been impaired.
Based on the test, Con Edison has determined that there was no impairment. For
other long-lived assets or intangible assets with definite lives, Con Edison
recorded $2 million of impairment charges in 2018, and no impairment charges
were recorded in 2019 or 2017. See "Clean Energy Businesses - Renewable Electric
Production," in Item 1 and "Long-Lived and Intangible Assets" in Note A and
"Long-term Debt" in Note C to the financial statements in Item 8.
Accounting for Goodwill
In accordance with the accounting rules for goodwill and intangible assets, Con
Edison is required to test goodwill for impairment annually or whenever there is
a triggering event. The company has an option to first make a qualitative
assessment that evaluates relevant events and circumstances, such as industry
and market conditions, regulatory environment and financial performance. If,
after applying the optional qualitative assessment, it is more likely than not
that the fair value of a reporting unit is less than its carrying amount, the
company then applies a two-step, quantitative goodwill impairment test. At
December 31, 2019, Con Edison's consolidated balance sheet included goodwill of
$446 million. No material impairment charges on goodwill were recognized in
2019, 2018 or 2017. See "Goodwill" in Note A and Note K to the financial
statements in Item 8.
Accounting for Derivative Instruments
The Companies apply the accounting rules for derivatives and hedging to their
derivative financial instruments. The Companies use derivative financial
instruments to hedge market price fluctuations in related underlying
transactions for the physical purchase and sale of electricity and gas. The
Utilities are permitted by their respective regulators to reflect in rates all
reasonably incurred gains and losses on these instruments. The Clean Energy
Businesses have also hedged interest rate risk on certain debt securities. See
"Financial and Commodity Market Risks," below and Note O to the financial
statements in Item 8.

Where the Companies are required to make mark-to-market estimates pursuant to
the accounting rules, the estimates of gains and losses at a particular period
end do not reflect the end results of particular transactions, and will most
likely not reflect the actual gain or loss at the conclusion of a transaction.
Substantially all of the estimated gains or losses are based on prices supplied
by external sources such as the fair value of exchange-traded futures and
options and the fair value of positions for which price quotations are available
through or derived from brokers or other market sources.

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.

82 CON EDISON ANNUAL REPORT 2019

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Interest Rate Risk
The Companies' interest rate risk relates primarily to new debt financing needed
to fund capital requirements, including the construction expenditures of the
Utilities and maturing debt securities, and variable-rate debt. Con Edison and
its subsidiaries manage interest rate risk through the issuance of mostly
fixed-rate debt with varying maturities and through opportunistic refinancing of
debt. The Clean Energy Businesses also use interest rate swaps. See Note O to
the financial statements in Item 8. Con Edison and CECONY estimate that at
December 31, 2019, a 10 percent increase in interest rates applicable to its
variable rate debt would result in an increase in annual interest expense of $7
million and $4 million, respectively. Under CECONY's current electric, gas and
steam rate plans, variations in actual variable rate tax-exempt debt interest
expense, including costs associated with the refinancing of the variable-rate
tax-exempt debt, are reconciled to levels reflected in rates.
Commodity Price Risk
Con Edison's commodity price risk relates primarily to the purchase and sale of
electricity, gas and related derivative instruments. The Utilities and the Clean
Energy Businesses apply risk management strategies to mitigate their related
exposures. See Note O to the financial statements in Item 8.
Con Edison estimates that, as of December 31, 2019, a 10 percent decline in
market prices would result in a decline in fair value of $81 million for the
derivative instruments used by the Utilities to hedge purchases of electricity
and gas, of which $76 million is for CECONY and $5 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.
In accordance with provisions approved by state regulators, the Utilities
generally recover from customers the costs they incur for energy purchased for
their customers, including gains and losses on certain derivative instruments
used to hedge energy purchased and related costs. See "Recoverable Energy Costs"
in Note A to the financial statements in Item 8.
The Clean Energy Businesses use a value-at-risk (VaR) model to assess the market
price risk of their portfolio of electricity and gas commodity fixed-price
purchase and sales commitments, physical forward contracts, generating assets
and commodity derivative instruments. VaR represents the potential change in
fair value of the portfolio due to changes in market prices for a specified time
period and confidence level. These businesses estimate VaR across their
portfolio using a delta-normal variance/covariance model with a 95 percent
confidence level, compare the measured VaR results against performance due to
actual prices and stress test the portfolio each quarter using an assumed 30
percent price change from forecast. Since the VaR calculation involves complex
methodologies and estimates and assumptions that are based on past experience,
it is not necessarily indicative of future results. VaR for the portfolio,
assuming a one-day holding period, for the years ended December 31, 2019 and
2018, respectively, was as follows:
95% Confidence Level, One-Day Holding Period          2019                2018
                                             (Millions of Dollars)
Average for the period                                  $-                  $-
High                                                     1                   1
Low                                                      -                   -


Investment Risk
The Companies' investment risk relates to the investment of plan assets for
their pension and other postretirement benefit plans and to the investments of
Con Edison Transmission that are accounted for under the equity method. See
"Application of Critical Accounting Policies - Accounting for Pensions and Other
Postretirement Benefits," above and Notes A, E and F to the financial statements
in Item 8.
The Companies' current investment policy for pension plan assets includes
investment targets of 45 to 55 percent equity securities, 33 to 43 percent debt
securities and 10 to 14 percent real estate. At December 31, 2019, the pension
plan investments consisted of 51 percent equity securities, 38 percent debt
securities and 11 percent real estate.
For the Utilities' pension and other postretirement benefit plans, regulatory
accounting treatment is generally applied in accordance with the accounting
rules for regulated operations. In accordance with the Statement of Policy
issued by the NYSPSC and its current electric, gas and steam rate plans, CECONY
defers for payment to or recovery from

CON EDISON ANNUAL REPORT 2019 83

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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.

Environmental Matters
For information concerning climate change, environmental sustainability,
potential liabilities arising from laws and regulations protecting the
environment and other environmental matters, see "Environmental Matters" in
Item 1 and Note G to the financial statements in Item 8.
Impact of Inflation
The Companies are affected by the decline in the purchasing power of the dollar
caused by inflation. Regulation permits the Utilities to recover through
depreciation only the historical cost of their plant assets even though in an
inflationary economy the cost to replace the assets upon their retirement will
substantially exceed historical costs. The impact is, however, partially offset
by the repayment of the Companies' long-term debt in dollars of lesser value
than the dollars originally borrowed.
Material Contingencies
For information concerning potential liabilities arising from the Companies'
material contingencies, see "Application of Critical Accounting Policies -
Accounting for Contingencies," above, and Notes B, G and H to the financial
statements in Item 8.
Item 7A: Quantitative and Qualitative Disclosures about Market Risk
Con Edison
For information about Con Edison's primary market risks associated with
activities in derivative financial instruments, other financial instruments and
derivative commodity instruments, see "Financial and Commodity Market Risks," in
Item 7 (which information is incorporated herein by reference). See also "The
Companies Require Access To Capital Markets to Satisfy Funding Requirements," in
Item 1A.
CECONY
For information about CECONY's primary market risks associated with activities
in derivative financial instruments, other financial instruments and derivative
commodity instruments, see "Financial and Commodity Market Risks" in Item 7
(which information is incorporated herein by reference). See also "The Companies
Require Access To Capital Markets to Satisfy Funding Requirements," in Item 1A.


84 CON EDISON ANNUAL REPORT 2019

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Item 8: Financial Statements and Supplementary Data Financial Statements

Page

Supplementary Financial Information

Con Edison

Report of Management on Internal Control Over Financial Reporting 87


  Report of Independent Registered Public Accounting Firm                   

88

Consolidated Income Statement for the years ended December 31, 2019, 2018 and 2017

91

Consolidated Statement of Comprehensive Income for the years ended December 31, 2019, 2018 and 2017

92

Consolidated Statement of Cash Flows for the years ended December 31, 2019, 2018 and 2017

93


  Consolidated Balance Sheet at December 31, 2019 and 2018                  

94

Consolidated Statement of Equity for the years ended December 31, 2019, 2018 and 2017

96

Consolidated Statement of Capitalization at December 31, 2019 and 2018

97

CECONY

Report of Management on Internal Control Over Financial Reporting 100


  Report of Independent Registered Public Accounting Firm                  

101

Consolidated Income Statement for the years ended December 31, 2019, 2018 and 2017

103

Consolidated Statement of Comprehensive Income for the years ended December 31, 2019, 2018 and 2017

104

Consolidated Statement of Cash Flows for the years ended December 31, 2019, 2018 and 2017

105


  Consolidated Balance Sheet at December 31, 2019 and 2018                 

106

Consolidated Statement of Shareholder's Equity for the years ended December 31, 2019, 2018 and 2017

108

Consolidated Statement of Capitalization at December 31, 2019 and 2018

109



  Notes to the Financial Statements                                        

111



  Financial Statement Schedules
Con Edison

Schedule I - Condensed Financial Information of Consolidated Edison, Inc. at December 31, 2019 and 2018 and for the years ended December 31, 2019, 2018 and 2017

172

Schedule II - Valuation and Qualifying Accounts for the years ended December 31, 2019, 2018 and 2017

175

CECONY

Schedule II - Valuation and Qualifying Accounts for the years ended December 31, 2019, 2018 and 2017

175

All other schedules are omitted because they are not applicable or the required information is shown in financial statements or notes thereto.

CON EDISON ANNUAL REPORT 2019 85

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Supplementary Financial Information
Selected Quarterly Financial Data for the years ended December 31, 2019 and 2018
(Unaudited)
                           2019
                                  First       Second        Third       Fourth
Con Edison                      Quarter      Quarter      Quarter      Quarter
                             (Millions of Dollars, except per share amounts)
Operating revenues               $3,514       $2,744       $3,365       $2,951
Operating income                    786          458          867          565
Net income                          424          152          473          295
Basic earnings per share          $1.31        $0.46        $1.42        $0.89
Diluted earnings per share        $1.31        $0.46        $1.42        $0.88


.
                           2018
                                  First       Second        Third       Fourth
Con Edison                      Quarter      Quarter      Quarter      Quarter
                             (Millions of Dollars, except per share amounts)
Operating revenues               $3,364       $2,696       $3,328       $2,949
Operating income                    755          426          826          657
Net income                          428          188          435          331
Basic earnings per share          $1.38        $0.60        $1.40        $1.06
Diluted earnings per share        $1.37        $0.60        $1.39        $1.05



In the opinion of Con Edison, these quarterly amounts include all adjustments,
consisting only of normal recurring accruals, necessary for a fair presentation.
The sum of the quarterly financial information may vary from the annual data due
to rounding.
                   2019
                     First  Second   Third  Fourth
CECONY             Quarter Quarter Quarter Quarter
                        (Millions of Dollars)
Operating revenues  $3,039  $2,331  $2,877  $2,573
Operating income       726     376     723     524
Net income             412     152     414     272



                   2018
                     First  Second   Third  Fourth
CECONY             Quarter Quarter Quarter Quarter
                        (Millions of Dollars)

Operating revenues  $2,884  $2,338  $2,899  $2,558
Operating income       705     382     764     504
Net income             389     149     431     227


In the opinion of CECONY, these quarterly amounts include all adjustments,
consisting only of normal recurring accruals, necessary for a fair presentation.
The sum of the quarterly financial information may vary from the annual data due
to rounding.

86 CON EDISON ANNUAL REPORT 2019

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Report of Management on Internal Control Over Financial Reporting
Management of Consolidated Edison, Inc. and its subsidiaries (the Company) is
responsible for establishing and maintaining adequate internal control over
financial reporting. Internal control over financial reporting is a process
designed to provide reasonable, but not absolute, assurance regarding the
reliability of financial reporting and the preparation of financial statements
for external purposes in accordance with accounting principles generally
accepted in the United States of America.
Because of its inherent limitations, internal control over financial reporting
may not prevent or detect misstatements. Also, projections of the effectiveness
of controls to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance
with policies or procedures may deteriorate.
Management of the Company assessed the effectiveness of internal control over
financial reporting as of December 31, 2019, using the criteria established by
the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in
Internal Control - Integrated Framework (2013). Based on that assessment,
management has concluded that the Company had effective internal control over
financial reporting as of December 31, 2019.
The effectiveness of the Company's internal control over financial reporting as
of December 31, 2019, has been audited by PricewaterhouseCoopers LLP, the
Company's independent registered public accounting firm, as stated in their
report which appears on the following page of this Annual Report on Form 10-K.

  /s/ John McAvoy
  John McAvoy
  Chairman, President and Chief Executive Officer

  /s/ Robert Hoglund
  Robert Hoglund
  Senior Vice President and Chief Financial Officer

February 20, 2020

CON EDISON ANNUAL REPORT 2019 87

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Report of Independent Registered Public Accounting Firm To the Board of Directors and Shareholders of Consolidated Edison, Inc.:

Opinions on the Financial Statements and Internal Control over Financial Reporting



We have audited the consolidated financial statements, including the related
notes and financial statement schedules, of Consolidated Edison, Inc. and its
subsidiaries (the "Company") as listed in the accompanying index (collectively
referred to as the "consolidated financial statements"). We also have audited
the Company's internal control over financial reporting as of December 31, 2019,
based on criteria established in Internal Control - Integrated Framework (2013)
issued by the Committee of Sponsoring Organizations of the Treadway Commission
(COSO).

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of the Company as of
December 31, 2019 and 2018, and the results of its operations and its cash flows
for each of the three years in the period ended December 31, 2019 in conformity
with accounting principles generally accepted in the United States of America.
Also in our opinion, the Company maintained, in all material respects, effective
internal control over financial reporting as of December 31, 2019, based on
criteria established in Internal Control - Integrated Framework (2013) issued by
the COSO.

Change in Accounting Principle

As discussed in Note J to the consolidated financial statements, the Company changed the manner in which it accounts for leases in 2019.

Basis for Opinions



The Company's management is responsible for these consolidated financial
statements, for maintaining effective internal control over financial reporting,
and for its assessment of the effectiveness of internal control over financial
reporting, included in the accompanying Report of Management on Internal Control
Over Financial Reporting. Our responsibility is to express opinions on the
Company's consolidated financial statements and on the Company's internal
control over financial reporting based on our audits. We are a public accounting
firm registered with the Public Company Accounting Oversight Board (United
States) ("PCAOB") and are required to be independent with respect to the Company
in accordance with the U.S. federal securities laws and the applicable rules and
regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.



Our audits of the consolidated financial statements included performing
procedures to assess the risks of material misstatement of the consolidated
financial statements, whether due to error or fraud, and performing procedures
that respond to those risks. Such procedures included examining, on a test
basis, evidence regarding the amounts and disclosures in the consolidated
financial statements. Our audits also included evaluating the accounting
principles used and significant estimates made by management, as well as
evaluating the overall presentation of the consolidated financial statements.
Our audit of internal control over financial reporting included obtaining an
understanding of internal control over financial reporting, assessing the risk
that a material weakness exists, and testing and evaluating the design and
operating effectiveness of internal control based on the assessed risk. Our
audits also included performing such other procedures as we considered necessary
in the circumstances. We believe that our audits provide a reasonable basis for
our opinions.

Definition and Limitations of Internal Control over Financial Reporting



A company's internal control over financial reporting is a process designed to
provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles. A company's internal control over
financial reporting includes those policies and procedures that (i) pertain to
the maintenance of records that, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of the assets of the company;
(ii) provide reasonable assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with generally accepted
accounting principles, and that receipts and expenditures of the company are
being made

88 CON EDISON ANNUAL REPORT 2019

--------------------------------------------------------------------------------

only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.



Because of its inherent limitations, internal control over financial reporting
may not prevent or detect misstatements. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.

Critical Audit Matters



The critical audit matters communicated below are matters arising from the
current period audit of the consolidated financial statements that were
communicated or required to be communicated to the audit committee and that (i)
relate to accounts or disclosures that are material to the consolidated
financial statements and (ii) involved our especially challenging, subjective,
or complex judgments. The communication of critical audit matters does not alter
in any way our opinion on the consolidated financial statements, taken as a
whole, and we are not, by communicating the critical audit matters below,
providing separate opinions on the critical audit matters or on the accounts or
disclosures to which they relate.

Accounting for the Effects of Regulatory Matters



As described in Notes A and B to the consolidated financial statements, the
Company applies the authoritative guidance for regulated operations, which
specifies the economic effects that result from the causal relationship of costs
and revenues in the rate-regulated environment and how these effects are to be
accounted for by a regulated enterprise. As of December 31, 2019, there were
$4,987 million of deferred costs included in regulatory assets and $4,929
million of regulatory liabilities awaiting potential refund or future rate
reductions. Under regulatory accounting guidance, if it is probable that costs
will be recovered in the future, those costs would be recorded as deferred
charges or "regulatory assets." Similarly, if revenues are recorded for costs
expected to be incurred in the future, these revenues would be recorded as
deferred credits or "regulatory liabilities." The Company's regulatory assets
and liabilities will be recovered from customers, or applied for customer
benefit, in accordance with rate provisions approved by the applicable state and
federal regulators.

The principal considerations for our determination that performing procedures
relating to the accounting for the effects of regulatory matters is a critical
audit matter are there was significant auditor judgment and subjectivity in
performing procedures and in evaluating audit evidence relating to the
computation of regulatory assets and regulatory liabilities.

Addressing the matter involved performing procedures and evaluating audit
evidence in connection with forming our overall opinion on the consolidated
financial statements. These procedures included testing the effectiveness of
controls relating to management's assessment of regulatory proceedings,
including the implementation of new regulatory orders or changes to existing
regulatory balances. These procedures also included, among others, evaluating
the reasonableness of management's assessment of impacts arising from
correspondence with regulators and changes in laws and regulations; evaluating
management's judgments related to the recoverability of regulatory assets and
the establishment of regulatory liabilities; and recalculating regulatory assets
and liabilities based on provisions and formulas outlined in rate orders and
other correspondence with regulators.

Recoverability of Long-lived and Intangible Assets - Solar Plants with Pacific Gas & Electric ("PG&E") as the Long-Term Power Purchase Agreement Off-taker (hereafter "PG&E Impacted Plants")



As described in Notes A and C to the consolidated financial statements, on
January 29, 2019, PG&E filed for bankruptcy causing an event of default under
the PG&E power purchase agreements ("PPAs") and associated project debt
agreements. The Company had long-lived assets of $1,101 million and intangible
assets of $1,057 million as of December 31, 2019, related to PG&E Impacted
Plants. Management tests long-lived and intangible assets for recoverability
when events or changes in circumstances indicate that the carrying value of
long-lived or intangible assets may not be recoverable ("triggering events
assessment"). The carrying amount of a long-lived or intangible asset with a
definite life is deemed not recoverable if it exceeds the sum of the
undiscounted cash flows expected to result from the use and eventual disposition
of the assets. The Company tested the related long-lived and intangible assets
for the PG&E Impacted Plants for recoverability. Management's cash flow
projections for the recoverability of long-lived and intangible assets for the
PG&E Impacted Plants included significant assumptions relating to the likelihood
of PG&E's assuming or rejecting the PPAs in bankruptcy.

CON EDISON ANNUAL REPORT 2019 89

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The principal considerations for our determination that performing procedures
relating to the recoverability of long-lived and intangible assets for PG&E
Impacted Plants is a critical audit matter are that there was significant
judgment by management when developing the undiscounted cash flows, including
the assumption related to the PG&E PPAs. This in turn led to a high degree of
auditor judgment, subjectivity, and effort in performing procedures and in
evaluating audit evidence relating to management's cash flow projections and
significant assumptions, most notably the likelihood of PG&E's assuming or
rejecting the PPAs in bankruptcy.

Addressing the matter involved performing procedures and evaluating audit
evidence in connection with forming our overall opinion on the consolidated
financial statements. These procedures included testing the effectiveness of
controls relating to management's triggering events assessment and
recoverability tests for the PG&E Impacted Plants' long-lived and intangible
assets. These procedures also included, among others, testing management's
process for developing the undiscounted cash flows used in the recoverability
test. This included evaluating the appropriateness of the undiscounted cash flow
model; testing the completeness, accuracy, and relevance of underlying data used
in the model; and evaluating the reasonableness of management's significant
assumptions, most notably the likelihood of PG&E's assuming or rejecting the
PPAs in bankruptcy.


/s/ PricewaterhouseCoopers LLP
New York, New York
February 20, 2020
We have served as the Company's or its predecessors' auditor since 1938.

90 CON EDISON ANNUAL REPORT 2019

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Consolidated Edison, Inc.
Consolidated Income Statement

                                                   For the Years Ended December 31,
(Millions of Dollars/Except Share Data)                     2019                                 2018             2017
OPERATING REVENUES
Electric                                                                         $8,694          $8,612           $8,612
Gas                                                                               2,391           2,327            2,133
Steam                                                                               627             631              595
Non-utility                                                                         862             767              693
TOTAL OPERATING REVENUES                                                         12,574          12,337           12,033
OPERATING EXPENSES
Purchased power                                                                   1,546           1,644            1,601
Fuel                                                                                207             263              216
Gas purchased for resale                                                            880           1,041              808
Other operations and maintenance                                                  3,175           3,152            3,139
Depreciation and amortization                                                     1,684           1,438            1,341
Taxes, other than income taxes                                                    2,406           2,266            2,155
TOTAL OPERATING EXPENSES                                                          9,898           9,804            9,260
Gain on sale of solar electric production project
in 2017                                                        -                                    -                  1
Gain on acquisition of Sempra Solar Holdings, LLC              -                                    131              -
OPERATING INCOME                                                                  2,676           2,664            2,774
OTHER INCOME (DEDUCTIONS)
Investment income                                                                    96             119              111
Other income                                                                         45              17               15
Allowance for equity funds used during
construction                                                                         14              12               11
Other deductions                                                                  (104)           (210)            (185)
TOTAL OTHER INCOME (DEDUCTIONS)                                                      51            (62)             (48)
INCOME BEFORE INTEREST AND INCOME TAX EXPENSE                                     2,727           2,602            2,726
INTEREST EXPENSE
Interest on long-term debt                                                          888             780              726
Other interest                                                                      116              49               11
Allowance for borrowed funds used during
construction                                                                       (13)            (10)              (8)
NET INTEREST EXPENSE                                                                991             819              729
INCOME BEFORE INCOME TAX EXPENSE                                                  1,736           1,783            1,997
INCOME TAX EXPENSE                                                                  296             401              472
NET INCOME                                                                       $1,440          $1,382           $1,525
Income attributable to non-controlling interest                                     $97            $-               $-
NET INCOME FOR COMMON STOCK                                                      $1,343          $1,382           $1,525
Net income per common share - basic                                               $4.09           $4.43            $4.97
Net income per common share - diluted                                             $4.08           $4.42            $4.94
AVERAGE NUMBER OF SHARES OUTSTANDING - BASIC (IN
MILLIONS)                                                                         328.5           311.7            307.1

AVERAGE NUMBER OF SHARES OUTSTANDING - DILUTED (IN MILLIONS)

                                                                         329.5           312.9            308.8


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

CON EDISON ANNUAL REPORT 2019 91

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Consolidated Edison, Inc.
Consolidated Statement of Comprehensive Income

                                                  For the Years Ended December 31,
(Millions of Dollars)                                     2019        2018                        2017
NET INCOME                                              $1,440                       $1,382       $1,525
INCOME ATTRIBUTABLE TO NON-CONTROLLING INTEREST           (97)           -                           -
OTHER COMPREHENSIVE INCOME, NET OF TAXES
Pension and other postretirement benefit plan
liability adjustments, net of taxes                        (5)                           10            1
Other income, net of taxes                                   2           -                           -
TOTAL OTHER COMPREHENSIVE INCOME, NET OF TAXES             (3)                           10            1
COMPREHENSIVE INCOME                                    $1,340                       $1,392       $1,526

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

92 CON EDISON ANNUAL REPORT 2019

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Consolidated Edison, Inc.
Consolidated Statement of Cash Flows
                                                      For the Years Ended December 31,
(Millions of Dollars)                                          2019                            2018           2017
OPERATING ACTIVITIES
Net Income                                                                          $1,440     $1,382         $1,525
PRINCIPAL NON-CASH CHARGES/(CREDITS) TO INCOME
Depreciation and amortization                                                        1,684      1,438          1,341
Deferred income taxes                                                                  308        408            485
Rate case amortization and accruals                                                  (116)      (117)          (124)
Common equity component of allowance for funds used
during construction                                                                   (14)       (12)           (11)
Net derivative (gains)/losses                                                           27          8            (4)
(Gain) on Sale of Assets                                                              (14)        -              -
Unbilled revenue and net unbilled revenue deferrals                                    (3)         18          (113)

(Gain) on sale of retail electric supply business and solar electric production projects

                                -                               -              (1)
(Gain) on existing project interests due to
acquisition of Sempra Solar Holdings, LLC                         -                             (131)            -
Other non-cash items, net                                                             (18)        115              5
CHANGES IN ASSETS AND LIABILITIES
Accounts receivable - customers                                                         23      (140)              9

Materials and supplies, including fuel oil and gas in storage

                                                                                  6       (20)              5
Revenue decoupling mechanism receivable                                               (76)        -              -
Other receivables and other current assets                                              54       (62)            -
Taxes receivable                                                                        29         27             15
Prepayments                                                                           (73)        (7)           (19)
Accounts payable                                                                        10       (46)             95
Pensions and retiree benefits obligations, net                                         357        325            414
Pensions and retiree benefits contributions                                          (357)      (479)          (467)
Accrued taxes                                                                           10       (49)             44
Accrued interest                                                                        24       (35)            (7)
Superfund and environmental remediation costs, net                                     (9)       (19)           (14)
Distributions from equity investments                                                   57        107            108
System benefit charge                                                                   20         92            101
Deferred charges, noncurrent assets and other
regulatory assets                                                                    (492)      (393)          2,376
Deferred credits and other regulatory liabilities                                      278        436        (2,524)
Other current and noncurrent liabilities                                              (21)      (151)            128
NET CASH FLOWS FROM OPERATING ACTIVITIES                                             3,134      2,695          3,367
INVESTING ACTIVITIES
Utility construction expenditures                                                  (3,238)    (3,251)        (3,028)
Cost of removal less salvage                                                         (295)      (258)          (248)
Non-utility construction expenditures                                                (248)      (246)          (415)
Investments in electric and gas transmission projects                                (205)      (248)           (45)
Investments in/acquisitions of renewable electric
production projects                                                                   (10)       (19)           (45)
Acquisition of Sempra Solar Holdings, LLC, net of
cash acquired                                                     -                           (1,488)            -
Proceeds from sale of assets                                                           192        5               34
Other investing activities                                                              22       34               37
NET CASH FLOWS USED IN INVESTING ACTIVITIES                                        (3,782)    (5,471)        (3,710)
FINANCING ACTIVITIES
Net (payment)/issuance of short-term debt                                            (874)      1,989          (477)
Issuance of long-term debt                                                           3,017      3,030          1,697
Retirement of long-term debt                                                       (1,195)    (1,938)          (434)
Debt issuance costs                                                                   (32)       (61)           (19)
Common stock dividends                                                               (924)      (842)          (803)
Issuance of common shares - public offering                                            825        705            343
Issuance of common shares for stock plans                                               54         53             51
Distribution to noncontrolling interest                                               (12)          2            (1)
NET CASH FLOWS FROM FINANCING ACTIVITIES                                               859      2,938            357

CASH, TEMPORARY CASH INVESTMENTS AND RESTRICTED CASH: NET CHANGE FOR THE PERIOD

                                                              211        162             14
BALANCE AT BEGINNING OF PERIOD                                                       1,006        844            830
BALANCE AT END OF PERIOD                                                            $1,217     $1,006           $844

SUPPLEMENTAL DISCLOSURE OF CASH INFORMATION
Cash paid/(received) during the period for:
Interest                                                                              $876       $805           $725
Income taxes                                                                         $(26)        -            $(29)
SUPPLEMENTAL DISCLOSURE OF NON-CASH INFORMATION
Construction expenditures in accounts payable                                         $336       $369           $432
Issuance of common shares for dividend reinvestment                                    $47        $47            $46

Software licenses acquired but unpaid as of end of period

$80       $100           $-
Equipment acquired but unpaid as of end of period                                      $33        -              -


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

CON EDISON ANNUAL REPORT 2019 93

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Consolidated Edison, Inc.
Consolidated Balance Sheet

                                                             December    December
(Millions of Dollars)                                        31, 2019    31, 2018
ASSETS
CURRENT ASSETS
Cash and temporary cash investments                              $981

$895

Accounts receivable - customers, less allowance for uncollectible accounts of $70 and $62 in 2019 and 2018, respectively

                                                    1,236       

1,267

Other receivables, less allowance for uncollectible accounts of $4 and $5 in 2019 and 2018, respectively

              184           285
Taxes receivable                                                   20            49
Accrued unbilled revenue                                          599           514
Fuel oil, gas in storage, materials and supplies, at
average cost                                                      352           358
Prepayments                                                       260           187
Regulatory assets                                                 128            76
Restricted cash                                                   236           111
Revenue decoupling mechanism receivable                            76           -
Other current assets                                              200           122
TOTAL CURRENT ASSETS                                            4,272         3,864
INVESTMENTS                                                     2,065         1,766
UTILITY PLANT, AT ORIGINAL COST
Electric                                                       31,866        30,378
Gas                                                            10,107         9,100
Steam                                                           2,601         2,562
General                                                         3,562         3,331
TOTAL                                                          48,136        45,371
Less: Accumulated depreciation                                 10,322       

9,769


Net                                                            37,814       

35,602


Construction work in progress                                   1,937       

1,978


NET UTILITY PLANT                                              39,751       

37,580

NON-UTILITY PLANT Non-utility property, less accumulated depreciation of $391 and $275 in 2019 and 2018, respectively

                    3,829         4,000
Construction work in progress                                     309           169
NET PLANT                                                      43,889        41,749
OTHER NONCURRENT ASSETS
Goodwill                                                          446           440

Intangible assets, less accumulated amortization of $126 and $29 in 2019 and 2018, respectively

                          1,557       

1,654


Operating lease right-of-use-asset                                857       

-


Regulatory assets                                               4,859       

4,294


Other deferred charges and noncurrent assets                      134       

153


TOTAL OTHER NONCURRENT ASSETS                                   7,853         6,541
TOTAL ASSETS                                                  $58,079       $53,920

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

94 CON EDISON ANNUAL REPORT 2019

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Consolidated Edison, Inc.
Consolidated Balance Sheet
                                                              December      December
(Millions of Dollars)                                         31, 2019      31, 2018
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Long-term debt due within one year                                $1,446          $650
Term Loan                                                            -             825
Notes payable                                                      1,692         1,741
Accounts payable                                                   1,164         1,187
Customer deposits                                                    346           351
Accrued taxes                                                         76            61
Accrued interest                                                     153           129
Accrued wages                                                        102           109
Fair value of derivative liabilities                                 123            50
Regulatory liabilities                                               102           114
System benefit charge                                                647           627
Operating lease liabilities                                           65           -
Other current liabilities                                            371           363
TOTAL CURRENT LIABILITIES                                          6,287         6,207
NONCURRENT LIABILITIES
Provision for injuries and damages                                   130    

146


Pensions and retiree benefits                                      1,516    

1,228


Superfund and other environmental costs                              734    

779


Asset retirement obligations                                         425    

450


Fair value of derivative liabilities                                 105    

16

Deferred income taxes and unamortized investment tax credits 6,227


     5,820
Operating lease liabilities                                          809           -
Regulatory liabilities                                             4,827         4,641
Other deferred credits and noncurrent liabilities                    279           299
TOTAL NONCURRENT LIABILITIES                                      15,052        13,379
LONG-TERM DEBT                                                    18,527        17,495
EQUITY
Common shareholders' equity                                       18,022        16,726
Noncontrolling interest                                              191           113
TOTAL EQUITY (See Statement of Equity)                            18,213    

16,839


TOTAL LIABILITIES AND EQUITY                                     $58,079

$53,920

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

CON EDISON ANNUAL REPORT 2019 95

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Consolidated Edison, Inc.
Consolidated Statement of Equity

                                                                            

Accumulated


(In                 Common Stock  Additional             Treasury Stock    Capital     Other
Millions/Except                    Paid-In   Retained                       Stock  Comprehensive Noncontrolling
Share Data)        Shares Amount   Capital   Earnings   Shares     Amount  Expense Income/(Loss)    Interest     Total
BALANCE AS OF
DECEMBER 31, 2016     305     $33     $5,854   $9,559     23      $(1,038)   $(83)         $(27)             $8 $14,306
Net income                                      1,525                                                             1,525
Common stock
dividends ($2.76
per share)                                      (849)                                                             (849)
Issuance of common
shares - public
offering                5       1        344                                   (2)                                  343
Issuance of common
shares for stock
plans                                    100                                                                        100
Other
comprehensive
income                                                                                         1                      1
Noncontrolling
interest                                                                                                    (1)     (1)
BALANCE AS OF
DECEMBER 31, 2017     310     $34     $6,298  $10,235     23      $(1,038)   $(85)         $(26)             $7 $15,425
Net income                                      1,382                                                            $1,382
Common stock
dividends ($2.86
per share)                                      (889)                                                             (889)
Issuance of common
shares - public
offering               11                719                                  (14)                                  705
Issuance of common
shares for stock
plans                                    100                                                                        100
Other
comprehensive
income                                                                                        10                     10
Noncontrolling
interest                                                                                                    106     106
BALANCE AS OF
DECEMBER 31, 2018     321     $34     $7,117  $10,728     23      $(1,038)   $(99)         $(16)           $113 $16,839
Net income                                      1,343                                                        97  $1,440
Common stock
dividends ($2.96
per share)                                      (971)                                                             (971)
Issuance of common
shares - public
offering               12       1        835                                  (11)                                  825
Issuance of common
shares for stock
plans                                    102                                                                        102
Other
comprehensive
income                                                                                       (3)                    (3)
Noncontrolling
interest                                                                                                   (19)    (19)
BALANCE AS OF
DECEMBER 31, 2019     333     $35     $8,054  $11,100     23      $(1,038)  $(110)         $(19)           $191 $18,213

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

96 CON EDISON ANNUAL REPORT 2019

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Consolidated Edison, Inc.
Consolidated Statement of Capitalization

                                         Shares outstanding
                                            December 31,           At December 31,
(In Millions)                             2019            2018           2019         2018
TOTAL EQUITY BEFORE ACCUMULATED
OTHER COMPREHENSIVE LOSS                   333             321        $18,041      $16,742
Pension plan liability adjustments,
net of taxes                                                             (17)         (12)
Unrealized losses on derivatives
qualified as cash flow hedges, less
reclassification adjustment for
gains/(losses) included in net
income and reclassification
adjustment for unrealized losses
included in regulatory assets, net
of taxes                                                                  (2)          (4)
TOTAL ACCUMULATED OTHER
COMPREHENSIVE LOSS, NET OF TAXES                                         (19)         (16)
Equity                                                                 18,022       16,726
Noncontrolling interest                                                   191          113
TOTAL EQUITY (See Statement of
Equity)                                                               

$18,213 $16,839

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

CON EDISON ANNUAL REPORT 2019 97

--------------------------------------------------------------------------------

Consolidated Edison, Inc.
Consolidated Statement of Capitalization
LONG-TERM DEBT (Millions of Dollars)                At December 31,
Maturity          Interest Rate            Series          2019      2018
DEBENTURES:
2019              4.96%                    2009A             $-         60
2019              6.65                     2009B              -        475
2019              2.00                     2017A              -        400
2020              4.45                     2010A             350       350
2021              2.00                     2016A             500       500
2021              2.35                 (a) 2018C             640       640
2024              3.30                     2014B             250       250
2026              2.90                     2016B             250       250
2027              6.50                     1997F              80        80
2027              3.125                    2017B             350       350
2028              3.80                     2018A             300       300
2028              4.00                     2018D             500       500
2029              2.94                     2019B              44        -
2033              5.875                    2003A             175       175
2033              5.10                     2003C             200       200
2034              5.70                     2004B             200       200
2035              5.30                     2005A             350       350
2035              5.25                     2005B             125       125
2036              5.85                     2006A             400       400
2036              6.20                     2006B             400       400
2036              5.70                     2006E             250       250
2037              6.30                     2007A             525       525
2038              6.75                     2008B             600       600
2039              6.00                     2009B              60        60
2039              5.50                     2009C             600       600
2039              3.46                     2019C              38        -
2040              5.70                     2010B             350       350
2040              5.50                     2010B             115       115
2042              4.20                     2012A             400       400
2043              3.95                     2013A             700       700
2044              4.45                     2014A             850       850
2045              4.50                     2015A             650       650
2045              4.95                     2015A             120       120
2045              4.69                     2015B             100       100
2046              3.85                     2016A             550       550
2046              3.88                     2016A              75        75
2047              3.875                    2017A             500       500
2048              4.65                     2018E             600       600
2048              4.35                     2018A             125       125
2048              4.35                     2018B              25        25
2049              4.125                    2019A             700        -
2049              3.73                     2019A              43        -
2054              4.625                    2014C             750       750
2056              4.30                     2016C             500       500
2057              4.00                     2017C             350       350
2058              4.50                     2018B             700       700
2059              3.70                     2019B             600        -
TOTAL DEBENTURES                                          15,990    15,500



98 CON EDISON ANNUAL REPORT 2019

--------------------------------------------------------------------------------

Consolidated Edison, Inc.
Consolidated Statement of Capitalization

LONG-TERM DEBT (Millions of Dollars)                               At December 31,
Maturity     Interest Rate               Series                          2019           2018
TAX-EXEMPT DEBT - Notes issued to New
York State Energy Research and
Development Authority for Facilities
Revenue Bonds:
2036         1.63%        (a)            2010A                            225              225
2039         1.63         (a)            2004C                             99               99
2039         1.59         (a)            2005A                            126              126
TOTAL TAX-EXEMPT DEBT                                                     450              450
PROJECT DEBT:
2023         4.52         (b)            Copper Mountain Solar 2          224              230
2024-2032    5.96 - 4.52  (b)            Coram                            150              160
2025         4.61         (b)            Copper Mountain Solar 3          289              298
2026         3.72         (b)            CED Southwest                    456              -
2028         4.41                        Wind Holdings                    123              137
2028         3.81         (b)            Copper Mountain Solar 1           67               70
2031         2.24 - 3.03                 Mesquite Solar 1                 193              208
2031-2038    5.25 - 4.95                 Texas Solar 4                     56               58
2036         3.94                        California Solar 2                98              103
2036         4.07                        California Solar 3                86               89
2037         4.78                        California Solar                 184  -           190
2038         3.82                        California Solar 4               297              -
2039         4.82                        Broken Bow II                     68               69
2040         4.53                        Texas Solar 5                    145              150
2041         4.21                        Texas Solar 7                    199              206
2042         4.45                        Upton County Solar                90               94
Other
project debt                                                               12               14
TOTAL PROJECT DEBT                                                      2,737            2,076
Other long-term debt                                                      974              304
Unamortized debt expense                                                (141)            (152)
Unamortized debt discount                                                (37)             (33)
TOTAL                                                                  19,973           18,145
Less: Long-term debt due
within one year                                                         1,446              650
TOTAL LONG-TERM DEBT                                                   18,527           17,495
TOTAL CAPITALIZATION                                                  $36,549          $34,221

(a) Rates reset weekly or quarterly; December 31, 2019 rates shown. (b) December 31, 2019 effective rates shown, reflecting variable interest rates on the debt that are reset quarterly or semi-annually and the effect of applicable interest rate swaps, if any.

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

CON EDISON ANNUAL REPORT 2019 99

--------------------------------------------------------------------------------




Report of Management on Internal Control Over Financial Reporting
Management of Consolidated Edison Company of New York, Inc. and its subsidiaries
(the Company) is responsible for establishing and maintaining adequate internal
control over financial reporting. Internal control over financial reporting is a
process designed to provide reasonable, but not absolute, assurance regarding
the reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with accounting principles
generally accepted in the United States of America.
Because of its inherent limitations, internal control over financial reporting
may not prevent or detect misstatements. Also, projections of the effectiveness
of controls to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance
with policies or procedures may deteriorate.
Management of the Company assessed the effectiveness of internal control over
financial reporting as of December 31, 2019, using the criteria established by
the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in
Internal Control - Integrated Framework (2013). Based on that assessment,
management has concluded that the Company had effective internal control over
financial reporting as of December 31, 2019.
The effectiveness of the Company's internal control over financial reporting as
of December 31, 2019, has been audited by PricewaterhouseCoopers LLP, the
Company's independent registered public accounting firm, as stated in their
report which appears on the following page of this Annual Report on Form 10-K.

  /s/ John McAvoy
  John McAvoy
  Chairman and Chief Executive Officer

  /s/ Robert Hoglund
  Robert Hoglund
  Senior Vice President and Chief Financial Officer


February 20, 2020

100 CON EDISON ANNUAL REPORT 2019

--------------------------------------------------------------------------------

Report of Independent Registered Public Accounting Firm To the Board of Trustees and Shareholder of Consolidated Edison Company of New York, Inc.:

Opinions on the Financial Statements and Internal Control over Financial Reporting



We have audited the consolidated financial statements, including the related
notes and financial statement schedule, of Consolidated Edison Company of New
York, Inc. and its subsidiaries (the "Company") as listed in the accompanying
index (collectively referred to as the "consolidated financial statements"). We
also have audited the Company's internal control over financial reporting as of
December 31, 2019, based on criteria established in Internal Control -
Integrated Framework (2013) issued by the Committee of Sponsoring Organizations
of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of the Company as of
December 31, 2019 and 2018, and the results of its operations and its cash flows
for each of the three years in the period ended December 31, 2019 in conformity
with accounting principles generally accepted in the United States of America.
Also in our opinion, the Company maintained, in all material respects, effective
internal control over financial reporting as of December 31, 2019, based on
criteria established in Internal Control - Integrated Framework (2013) issued by
the COSO.

Change in Accounting Principle

As discussed in Note J to the consolidated financial statements, the Company changed the manner in which it accounts for leases in 2019.

Basis for Opinions



The Company's management is responsible for these consolidated financial
statements, for maintaining effective internal control over financial reporting
and for its assessment of the effectiveness of internal control over financial
reporting, included in the accompanying Report of Management on Internal Control
Over Financial Reporting. Our responsibility is to express opinions on the
Company's consolidated financial statements, and on the Company's internal
control over financial reporting based on our audits. We are a public accounting
firm registered with the Public Company Accounting Oversight Board (United
States) (PCAOB) and are required to be independent with respect to the Company
in accordance with the U.S. federal securities laws and the applicable rules and
regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.



Our audits of the consolidated financial statements included performing
procedures to assess the risks of material misstatement of the consolidated
financial statements, whether due to error or fraud, and performing procedures
that respond to those risks. Such procedures included examining, on a test
basis, evidence regarding the amounts and disclosures in the consolidated
financial statements. Our audits also included evaluating the accounting
principles used and significant estimates made by management, as well as
evaluating the overall presentation of the consolidated financial statements.
Our audit of internal control over financial reporting included obtaining an
understanding of internal control over financial reporting, assessing the risk
that a material weakness exists, and testing and evaluating the design and
operating effectiveness of internal control based on the assessed risk. Our
audits also included performing such other procedures as we considered necessary
in the circumstances. We believe that our audits provide a reasonable basis for
our opinions.

Definition and Limitations of Internal Control over Financial Reporting



A company's internal control over financial reporting is a process designed to
provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles. A company's internal control over
financial reporting includes those policies and procedures that (i) pertain to
the maintenance of records that, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of the assets of the company;
(ii) provide reasonable assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with generally accepted
accounting principles, and that receipts and expenditures of the company are
being made

CON EDISON ANNUAL REPORT 2019 101

--------------------------------------------------------------------------------

only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.



Because of its inherent limitations, internal control over financial reporting
may not prevent or detect misstatements. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.


/s/ PricewaterhouseCoopers LLP
New York, New York
February 20, 2020
We have served as the Company's auditor since 1938.


102 CON EDISON ANNUAL REPORT 2019

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Consolidated Edison Company of New York, Inc.
Consolidated Income Statement

                                                For the Years Ended December 31,
(Millions of Dollars)                                 2019          2018          2017
OPERATING REVENUES
Electric                                            $8,062        $7,971        $7,972
Gas                                                  2,132         2,078         1,901
Steam                                                  627           631           595
TOTAL OPERATING REVENUES                            10,821        10,680        10,468
OPERATING EXPENSES
Purchased power                                      1,357         1,433         1,415
Fuel                                                   207           263           216
Gas purchased for resale                               606           643           510
Other operations and maintenance                     2,635         2,555    

2,526


Depreciation and amortization                        1,373         1,276    

1,195


Taxes, other than income taxes                       2,295         2,156         2,057
TOTAL OPERATING EXPENSES                             8,473         8,326         7,919
OPERATING INCOME                                     2,348         2,354         2,549
OTHER INCOME (DEDUCTIONS)
Investment and other income                             40            13            14
Allowance for equity funds used during
construction                                            12            11    

10


Other deductions                                      (87)         (167)    

(161)


TOTAL OTHER INCOME (DEDUCTIONS)                       (35)         (143)    

(137)

INCOME BEFORE INTEREST AND INCOME TAX EXPENSE 2,313 2,211


     2,412
INTEREST EXPENSE
Interest on long-term debt                             672           662           615
Other interest                                          67            36            14
Allowance for borrowed funds used during
construction                                          (11)           (9)    

(6)


NET INTEREST EXPENSE                                   728           689    

623


INCOME BEFORE INCOME TAX EXPENSE                     1,585         1,522         1,789
INCOME TAX EXPENSE                                     335           326           685
NET INCOME                                          $1,250        $1,196        $1,104

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

CON EDISON ANNUAL REPORT 2019 103

--------------------------------------------------------------------------------

Consolidated Edison Company of New York, Inc.
Consolidated Statement of Comprehensive Income

                                                    For the Years Ended December 31,
(Millions of Dollars)                                    2019              2018                         2017
NET INCOME                                                 $1,250                          $1,196       $1,104
OTHER COMPREHENSIVE INCOME, NET OF TAXES
Pension and other postretirement benefit plan
liability adjustments, net of taxes                        (3 )                                 1            1
Other income, net of taxes                                  2                 -                            -
TOTAL OTHER COMPREHENSIVE INCOME, NET OF TAXES             (1 )                                 1            1
COMPREHENSIVE INCOME                                       $1,249                          $1,197       $1,105

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

104 CON EDISON ANNUAL REPORT 2019

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Consolidated Edison Company of New York, Inc.
Consolidated Statement of Cash Flows
                                                     For the Years Ended December 31,
(Millions of Dollars)                                       2019                          2018       2017
OPERATING ACTIVITIES
Net income                                                                     $1,250     $1,196     $1,104
PRINCIPAL NON-CASH CHARGES/(CREDITS) TO INCOME
Depreciation and amortization                                                   1,373      1,276      1,195
Deferred income taxes                                                             128        354        575
Rate case amortization and accruals                                         

(117) (133) (142) Common equity component of allowance for funds used during construction

                                                              (12)       (11)       (10)
(Gain)/Loss on Sale of Assets                                                    (14)        -          -
Unbilled revenue and net unbilled revenue deferrals                               (3)        (4)       (17)
Other non-cash items, net                                                           7         13       (59)
CHANGES IN ASSETS AND LIABILITIES
Accounts receivable - customers                                             

3 (153) 15 Materials and supplies, including fuel oil and gas in storage

                                                                         11       (17)       (17)
Revenue decoupling mechanism receivable                                          (76)        -          -
Other receivables and other current assets                                         54       (96)         23
Accounts receivables from affiliated companies                                    141      (150)         45
Prepayments                                                                      (61)        (9)        (8)
Accounts payable                                                                  (7)       (27)        125
Accounts payable to affiliated companies                                          (4)          7        -
Pensions and retiree benefits obligations, net                                    330        293        370
Pensions and retiree benefits contributions                                     (325)      (440)      (420)
Superfund and environmental remediation costs, net                               (12)       (18)       (12)
Accrued taxes                                                                      11       (47)         52
Accrued taxes to affiliated companies                          -                            (72)       (47)
Accrued interest                                                                    1        (1)          2
System benefit charge                                                              18         86         85
Deferred charges, noncurrent assets and other
regulatory assets                                                               (486)      (314)      2,212
Deferred credits and other regulatory liabilities                                 306        549    (2,242)
Other current and noncurrent liabilities                                         (14)       (78)         37
NET CASH FLOWS FROM OPERATING ACTIVITIES                                        2,502      2,204      2,866
INVESTING ACTIVITIES
Utility construction expenditures                                             (3,028)    (3,051)    (2,840)
Cost of removal less salvage                                                    (288)      (255)      (240)
Proceeds from sale of assets                                                      192        -          -
NET CASH FLOWS USED IN INVESTING ACTIVITIES                                   (3,124)    (3,306)    (3,080)
FINANCING ACTIVITIES
Net (payment)/issuance of short-term debt                                        (55)      1,042      (450)
Issuance of long-term debt                                                      1,300      2,740      1,200
Retirement of long-term debt                                                    (475)    (1,836)        -
Debt issuance costs                                                              (21)       (30)       (15)
Capital contribution by parent                                                    900        120        301
Dividend to parent                                                              (912)      (846)      (796)
NET CASH FLOWS FROM FINANCING ACTIVITIES                                          737      1,190        240
CASH, TEMPORARY CASH INVESTMENTS AND RESTRICTED
CASH:
NET CHANGE FOR THE PERIOD                                                         115         88         26
BALANCE AT BEGINNING OF PERIOD                                                    818        730        704
BALANCE AT END OF PERIOD                                                    

$933 $818 $730



SUPPLEMENTAL DISCLOSURE OF CASH INFORMATION
Cash paid/(received) during the period for:
Interest                                                                         $676       $662       $602
Income taxes                                                                      $73       $195       $108
SUPPLEMENTAL DISCLOSURE OF NON-CASH INFORMATION
Construction expenditures in accounts payable                               

$285 $299 $351 Software licenses acquired but unpaid as of end of period

$76        $95        -
Equipment acquired but unpaid as of end of period                                 $33        -          -


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

CON EDISON ANNUAL REPORT 2019 105

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Consolidated Edison Company of New York, Inc.
Consolidated Balance Sheet

                                                            December      December
(Millions of Dollars)                                       31, 2019      31, 2018
ASSETS
CURRENT ASSETS
Cash and temporary cash investments                               $933

$818

Accounts receivable - customers, less allowance for uncollectible accounts of $65 and $57 in 2019 and 2018, respectively

                                                     1,153      

1,163

Other receivables, less allowance for uncollectible accounts of $3 in 2019 and 2018, respectively

                      120           211
Taxes receivable                                                   -               5
Accrued unbilled revenue                                           477           392
Accounts receivable from affiliated companies                       73      

214


Fuel oil, gas in storage, materials and supplies, at
average cost                                                       293           304
Prepayments                                                        178           117
Regulatory assets                                                  113            64
Revenue decoupling mechanism receivable                             76           -
Other current assets                                               127            69
TOTAL CURRENT ASSETS                                             3,543         3,357
INVESTMENTS                                                        461           385
UTILITY PLANT AT ORIGINAL COST
Electric                                                        29,989        28,595
Gas                                                              9,229         8,295
Steam                                                            2,601         2,562
General                                                          3,271         3,056
TOTAL                                                           45,090        42,508
Less: Accumulated depreciation                                   9,490      

8,988


Net                                                             35,600      

33,520


Construction work in progress                                    1,812      

1,850


NET UTILITY PLANT                                               37,412      

35,370


NON-UTILITY PROPERTY
Non-utility property, less accumulated depreciation of $25
in 2019 and 2018                                                     2             4
NET PLANT                                                       37,414        35,374
OTHER NONCURRENT ASSETS
Regulatory assets                                                4,487         3,923
Operating lease right-of-use asset                                 601      

-


Other deferred charges and noncurrent assets                        51      

69


TOTAL OTHER NONCURRENT ASSETS                                    5,139         3,992
TOTAL ASSETS                                                   $46,557       $43,108

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

106 CON EDISON ANNUAL REPORT 2019

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Consolidated Edison Company of New York, Inc.
Consolidated Balance Sheet

                                                             December    

December


(Millions of Dollars)                                        31, 2019    31, 2018
LIABILITIES AND SHAREHOLDER'S EQUITY
CURRENT LIABILITIES
Long-term debt due within one year                               $350          $475
Notes payable                                                   1,137         1,192
Accounts payable                                                  956           977
Accounts payable to affiliated companies                           13            17
Customer deposits                                                 334           339
Accrued taxes                                                      71            55
Accrued interest                                                  113           112
Accrued wages                                                      92            99
Fair value of derivative liabilities                               81            25
Regulatory liabilities                                             63            73
System benefit charge                                             587           569
Operating lease liabilities                                        54           -
Other current liabilities                                         280           267
TOTAL CURRENT LIABILITIES                                       4,131         4,200
NONCURRENT LIABILITIES
Provision for injuries and damages                                125       

141


Pensions and retiree benefits                                   1,241       

952


Superfund and other environmental costs                           654       

693


Asset retirement obligations                                      362       

292


Fair value of derivative liabilities                               65       

6


Deferred income taxes and unamortized investment tax
credits                                                         6,000         5,739
Operating lease liabilities                                       551           -
Regulatory liabilities                                          4,427         4,258
Other deferred credits and noncurrent liabilities                 240           241
TOTAL NONCURRENT LIABILITIES                                   13,665        12,322
LONG-TERM DEBT                                                 14,614        13,676
COMMON SHAREHOLDER'S EQUITY (See Statement of
Shareholder's Equity)                                          14,147       

12,910


TOTAL LIABILITIES AND SHAREHOLDER'S EQUITY                    $46,557

$43,108

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

CON EDISON ANNUAL REPORT 2019 107

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Consolidated Edison Company of New York, Inc.
Consolidated Statement of Shareholder's Equity
                                                                                   Accumulated
                           Common Stock   Additional          Repurchased Capital     Other
                                           Paid-In   Retained Con Edison   Stock  Comprehensive
(In Millions)              Shares  Amount  Capital   Earnings    Stock    Expense Income/(Loss)  Total
BALANCE AS OF DECEMBER
31, 2016                   235       $589     $4,347   $7,923      $(962)   $(61)          $(7)  $11,829
Net income                                             $1,104                                      1,104
Common stock dividend to
parent                                                  (796)                                      (796)
Capital contribution by
parent                                           302                          (1)                    301
Other comprehensive
income                                                                                        1        1
BALANCE AS OF DECEMBER
31, 2017                   235       $589     $4,649   $8,231      $(962)   $(62)          $(6)  $12,439
Net income                                              1,196                                      1,196
Common stock dividend to
parent                                                  (846)                                      (846)
Capital contribution by
parent                                           120                                                 120
Other comprehensive
income                                                                                        1        1
BALANCE AS OF
DECEMBER 31, 2018          235       $589     $4,769   $8,581      $(962)   $(62)          $(5)  $12,910
Net income                                              1,250                                      1,250
Common stock dividend to
parent                                                  (912)                                      (912)
Capital contribution by
parent                                           900                                                 900
Other comprehensive
income                                                                                      (1)     (1 )

BALANCE AS OF DECEMBER 31, 2019 235 $589 $5,669 $8,919 $(962) $(62) $(6) $14,147

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

108 CON EDISON ANNUAL REPORT 2019

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Consolidated Edison Company of New York, Inc.
Consolidated Statement of Capitalization

                                     Shares outstanding
                                     December 31,                 At December 31,
(In Millions)                             2019           2018           2019         2018
TOTAL SHAREHOLDER'S EQUITY BEFORE
ACCUMULATED OTHER COMPREHENSIVE LOSS       235            235        $14,153      $12,915
Unrealized losses on derivatives
qualified as cash flow hedges, less
reclassification adjustment for
losses included in net income and
reclassification adjustment for
unrealized losses included in
regulatory assets, net of taxes                                          (6)          (5)
TOTAL ACCUMULATED OTHER
COMPREHENSIVE LOSS, NET OF TAXES                                         (6)          (5)
TOTAL SHAREHOLDER'S EQUITY (See
Statement of Shareholder's Equity)                                   

$14,147 $12,910

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

CON EDISON ANNUAL REPORT 2019 109

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Consolidated Edison Company of New York, Inc.
Consolidated Statement of Capitalization
LONG-TERM DEBT (Millions of Dollars)                           At December 31,
Maturity    Interest Rate                        Series              2019                2018
DEBENTURES:
2019        6.65                                 2009B                  -                   475
2020        4.45                                 2010A                       350            350
2021        2.35     (a)                         2018C                       640            640
2024        3.30                                 2014B                       250            250
2026        2.90                                 2016B                       250            250
2027        3.125                                2017B                       350            350
2028        3.80                                 2018A                       300            300
2028        4.00                                 2018D                       500            500
2033        5.875                                2003A                       175            175
2033        5.10                                 2003C                       200            200
2034        5.70                                 2004B                       200            200
2035        5.30                                 2005A                       350            350
2035        5.25                                 2005B                       125            125
2036        5.85                                 2006A                       400            400
2036        6.20                                 2006B                       400            400
2036        5.70                                 2006E                       250            250
2037        6.30                                 2007A                       525            525
2038        6.75                                 2008B                       600            600
2039        5.50                                 2009C                       600            600
2040        5.70                                 2010B                       350            350
2042        4.20                                 2012A                       400            400
2043        3.95                                 2013A                       700            700
2044        4.45                                 2014A                       850            850
2045        4.50                                 2015A                       650            650
2046        3.85                                 2016A                       550            550
2047        3.875                                2017A                       500            500
2048        4.65                                 2018E                       600            600
2049        4.125                                2019A                       700            -
2054        4.625                                2014C                       750            750
2056        4.30                                 2016C                       500            500
2057        4.00                                 2017C                       350            350
2058        4.50                                 2018B                       700            700
2059        3.70                                 2019B                       600            -
TOTAL DEBENTURES                                                          14,665         13,840
TAX-EXEMPT DEBT - Notes issued to New York
State Energy Research and Development
Authority for Facilities Revenue Bonds:
2036        1.63     (a)                         2010A                       225            225
2039        1.63     (a)                         2004C                        99             99
2039        1.59     (a)                         2005A                       126            126
TOTAL TAX-EXEMPT DEBT                                                        450            450
Unamortized debt
expense                                                                    (115)          (107)
Unamortized debt
discount                                                                    (36)           (32)
TOTAL                                                                     14,964         14,151
Less: Long-term debt due within one year                                     350            475
TOTAL LONG-TERM DEBT                                                      14,614         13,676
TOTAL CAPITALIZATION                                                     $28,761        $26,586

(a) Rates reset weekly or quarterly; December 31, 2019 rates shown.

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

110 CON EDISON ANNUAL REPORT 2019

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Notes to the Financial Statements
General
These combined notes accompany and form an integral part of the separate
consolidated financial statements of each of the two separate registrants:
Consolidated Edison, Inc. and its subsidiaries (Con Edison) and Consolidated
Edison Company of New York, Inc. and its subsidiaries (CECONY). CECONY is a
subsidiary of Con Edison and as such its financial condition and results of
operations and cash flows, which are presented separately in the CECONY
consolidated financial statements, are also consolidated, along with those of
Orange and Rockland Utilities, Inc. (O&R), Con Edison Clean Energy Businesses,
Inc. (together with its subsidiaries, the Clean Energy Businesses) and Con
Edison Transmission, Inc. (together with its subsidiaries, Con Edison
Transmission) in Con Edison's consolidated financial statements. The term
"Utilities" is used in these notes to refer to CECONY and O&R.
As used in these notes, the term "Companies" refers to Con Edison and CECONY
and, except as otherwise noted, the information in these combined notes relates
to each of the Companies. However, CECONY makes no representation as to
information relating to Con Edison or the subsidiaries of Con Edison other than
itself.
Con Edison has two regulated utility subsidiaries: CECONY and O&R. CECONY
provides electric service and gas service in New York City and Westchester
County. The company also provides steam service in parts of Manhattan. O&R,
along with its regulated utility subsidiary, provides electric service in
southeastern New York and northern New Jersey and gas service in southeastern
New York. Con Edison Clean Energy Businesses, Inc., which through its
subsidiaries develop, own and operate renewable and energy infrastructure
projects and provide energy-related products and services to wholesale and
retail customers. In December 2018, the Clean Energy Businesses acquired Sempra
Solar Holdings, LLC. Con Edison Transmission, Inc. invests in electric
transmission facilities through its subsidiary, Consolidated Edison
Transmission, LLC (CET Electric), and invests in gas pipeline and storage
facilities through its subsidiary Con Edison Gas Pipeline and Storage, LLC (CET
Gas). See Note U.
Note A - Summary of Significant Accounting Policies and Other Matters
Principles of Consolidation
The Companies' consolidated financial statements include the accounts of their
respective majority-owned subsidiaries, and variable interest entities (see Note
Q), as required. All intercompany balances and intercompany transactions have
been eliminated.

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

The accounting rules for regulated operations specify the economic effects that
result from the causal relationship of costs and revenues in the rate-regulated
environment and how these effects are to be accounted for by a regulated
enterprise. Revenues intended to cover some costs may be recorded either before
or after the costs are incurred. If regulation provides assurance that incurred
costs will be recovered in the future, these costs would be recorded as deferred
charges or "regulatory assets" under the accounting rules for regulated
operations. If revenues are recorded for costs that are expected to be incurred
in the future, these revenues would be recorded as deferred credits or
"regulatory liabilities" under the accounting rules for regulated operations.

The Utilities' principal regulatory assets and liabilities are detailed in Note
B. The Utilities are receiving or being credited with a return on all of their
regulatory assets for which a cash outflow has been made, and are paying or
being charged with a return on all of their regulatory liabilities for which a
cash inflow has been received. The Utilities' regulatory assets and liabilities
at December 31, 2019 are recoverable from customers, or to be applied for
customer benefit, in accordance with rate provisions that have been approved by
state regulators.

Other significant accounting policies of the Companies are referenced below in this Note A and in the notes that follow.

CON EDISON ANNUAL REPORT 2019 111

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Revenue Recognition
The following table presents, for the years ended December 31, 2019 and 2018,
revenue from contracts with customers as defined in Accounting Standards
Codification (ASC) Topic 606, "Revenue from Contracts with Customers," as well
as additional revenue from sources other than contracts with customers,
disaggregated by major source. Revenue was recognized for the year ended
December 31, 2017 under ASC Topic 605, "Revenue Recognition," and was materially
consistent with revenue that would have been recognized under Topic 606.
                                       2019                                 2018
                        Revenues                             Revenues
                          from                                 from
                        contracts        Other      Total    contracts        Other      Total
                          with          revenues  operating    with          revenues  operating
(Millions of Dollars)   customers         (a)     revenues   customers         (a)     revenues
CECONY
Electric                    $7,913           $149    $8,062      $7,920            $51    $7,971
Gas                          2,097             35     2,132       2,052             26     2,078
Steam                          610             17       627         625              6       631
Total CECONY               $10,620           $201   $10,821     $10,597            $83   $10,680
O&R
Electric                       627              7       634         647            (5)       642
Gas                            247             12       259         256            (7)       249
Total O&R                     $874            $19      $893        $903          $(12)      $891
Clean Energy
Businesses
Renewables                     575 (b)        -         575         329 (b)        -         329
Energy services                 71            -          71          95            -          95
Other                          -              211       211         -              339       339
Total Clean Energy
Businesses                    $646           $211      $857        $424           $339      $763
Con Edison
Transmission                     4            -           4           4            -           4
Other (c)                      -              (1)       (1)         -              (1)       (1)
Total Con Edison           $12,144           $430   $12,574     $11,928           $409   $12,337


(a) For the Utilities, this includes revenue from alternative revenue programs,
such as the revenue decoupling mechanisms under their New York electric and gas
rate plans. For the Clean Energy Businesses, this includes revenue from
wholesale services.
(b) Included within the total for Renewables revenue at the Clean Energy
Businesses is $14 million and $103 million for the years ended December 31, 2019
and 2018, respectively, of revenue related to engineering, procurement and
construction services.
(c) Parent company and consolidation adjustments.

Revenues are recorded as energy is delivered, generated or services are provided
and billed to customers, except for services under percentage-of-completion
contracts. Amounts billed are recorded in accounts receivable - customers, with
payment generally due the following month. Con Edison's and the Utilities'
accounts receivable - customers balance also reflects the Utilities' purchase of
receivables from energy service companies to support retail choice programs.
Accrued revenues not yet billed to customers are recorded as accrued unbilled
revenues.

The Utilities have the obligation to deliver electricity, gas and steam energy
to their customers. As the energy is immediately available for use upon delivery
to the customer, the energy and its delivery are identifiable as a single
performance obligation. The Utilities recognize revenues as this performance
obligation is satisfied over time as the Utilities deliver, and the customers
simultaneously receive and consume, the energy. The amount of revenues
recognized reflects the consideration the Utilities expect to receive in
exchange for delivering the energy. Under their tariffs, the transaction price
for full-service customers includes the Utilities' energy cost and for all
customers includes delivery charges determined based on customer class and in
accordance with established tariffs and guidelines of the New York State Public
Service Commission (NYSPSC) or the New Jersey Board of Public Utilities (NJBPU),
as applicable. Accordingly, there is no unsatisfied performance obligation
associated with these customers. The transaction price is applied to the
Utilities' revenue generating activities through the customer billing process.
Because energy is delivered over time, the Utilities use output methods that
recognize revenue based on direct measurement of the value transferred, such as
units delivered, which provides an accurate measure of value for the energy
delivered. The Utilities accrue revenues at the end of each month for estimated
energy delivered but not yet billed to customers. The Utilities defer over a
12-month period net interruptible gas revenues, other than those authorized by
the NYSPSC to be retained by the Utilities, for refund to firm gas sales and
transportation customers.

112 CON EDISON ANNUAL REPORT 2019

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The Clean Energy Businesses recognize revenue for the sale of energy from
renewable electric production projects as energy is generated and billed to
counterparties; accrue revenues at the end of each month for energy generated
but not yet billed to counterparties; and recognize revenue as energy is
delivered and services are provided for managing energy supply assets leased
from others and managing the dispatch, fuel requirements and risk management
activities for generating plants and merchant transmission in the northeastern
United States. The Clean Energy Businesses also recognize revenue for providing
energy-efficiency services to government and commercial customers, and recognize
revenue for engineering, procurement and construction services, under the
percentage-of-completion method of revenue recognition.

Sales and profits on each percentage-of-completion contract are recorded each
month based on the ratio of actual cumulative costs incurred to the total
estimated costs at completion of the contract, multiplied by the total estimated
contract revenue, less cumulative revenues recognized in prior periods (the
''cost-to-cost'' method). The impact of revisions of contract estimates, which
may result from contract modifications, performance or other reasons, are
recognized on a cumulative catch-up basis in the period in which the revisions
are made.
                                       2019                         2018
                            Unbilled                     Unbilled
                            contract      Unearned       contract       Unearned
                            revenue       revenue        revenue        revenue
(Millions of Dollars)         (a)           (b)            (a)            (b)
Beginning balance as of
January 1,                        $29           $20            $58            $87
Additions (c)                      86             1            144             38
Subtractions (c)                   86             4 (d)        173            105 (d)
Ending balance as of
December 31,                      $29           $17            $29            $20

(a) Unbilled contract revenue represents accumulated incurred costs and earned

profits on contracts (revenue arrangements), which have been recorded as

revenue, but have not yet been billed to customers, and which represent

contract assets as defined in Topic 606. Substantially all accrued unbilled

contract revenue is expected to be collected within one year. Unbilled

contract revenue arises from the cost-to-cost method of revenue recognition.

Unbilled contract revenue from fixed-price type contracts is converted to

billed receivables when amounts are invoiced to customers according to

contractual billing terms, which generally occur when deliveries or other

performance milestones are completed.

(b) Unearned revenue represents a liability for billings to customers in excess

of earned revenue, which are contract liabilities as defined in Topic 606.

(c) Additions for unbilled contract revenue and subtractions for unearned revenue

represent additional revenue earned. Additions for unearned revenue and

subtractions for unbilled contract revenue represent billings. Activity also

includes appropriate balance sheet classification for the period.

(d) Of the subtractions from unearned revenue, $4 million and $50 million was

included in the balance as of January 1, 2019 and 2018, respectively.





As of December 31, 2019, the aggregate amount of the remaining fixed performance
obligations of the Clean Energy Businesses, under contracts with customers for
energy services is $82 million, of which $46 million will be recognized within
the next two years, and the remaining $36 million will be recognized pursuant to
long-term service and maintenance agreements.

CECONY's electric and gas rate plans and O&R's New York electric and gas rate
plans each contain a revenue decoupling mechanism under which the company's
actual energy delivery revenues are compared with the authorized delivery
revenues and the difference accrued, with interest, for refund to, or recovery
from, customers, as applicable. See "Rate Plans" in Note B.

The NYSPSC requires utilities to record gross receipts tax revenues and expenses
on a gross income statement presentation basis (i.e., included in both revenue
and expense). The recovery of these taxes is generally provided for in the
revenue requirement within each of the respective NYSPSC approved rate plans.
Total excise taxes (inclusive of gross receipts taxes) recorded in operating
revenues were as follows:
                              For the Years Ended December 31,
(Millions of Dollars)        2019            2018            2017
Con Edison                   $323            $330            $302
CECONY                        312             318             292




CON EDISON ANNUAL REPORT 2019 113

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Other Receivables
Other Receivables includes costs related to aid provided by the Utilities in the
restoration of power in Puerto Rico in the aftermath of September 2017
hurricanes. Such costs have fully been billed to the appropriate authorities. As
of December 31, 2019, Con Edison and CECONY other receivables' balances related
to such costs were $8 million.

Plant and Depreciation
Utility Plant
Utility plant is stated at original cost. The cost of repairs and maintenance is
charged to expense and the cost of betterments is capitalized. The capitalized
cost of additions to utility plant includes indirect costs such as engineering,
supervision, payroll taxes, pensions, other benefits and an allowance for funds
used during construction (AFUDC). The original cost of property is charged to
expense over the estimated useful lives of the assets. Upon retirement, the
original cost of property is charged to accumulated depreciation. See Note R.

Rates used for AFUDC include the cost of borrowed funds and a reasonable rate of
return on the Utilities' own funds when so used, determined in accordance with
regulations of the FERC or the state public utility regulatory authority having
jurisdiction. The rate is compounded semiannually, and the amounts applicable to
borrowed funds are treated as a reduction of interest charges, while the amounts
applicable to the Utilities' own funds are credited to other income
(deductions). The AFUDC rates for CECONY were 5.1 percent, 5.4 percent and 5.5
percent for 2019, 2018 and 2017, respectively. The AFUDC rates for O&R were 5.3
percent, 2.2 percent and 2.5 percent for 2019, 2018 and 2017, respectively.

The Utilities generally compute annual charges for depreciation using the
straight-line method for financial statement purposes, with rates based on
average service lives and net salvage factors. The average depreciation rates
for CECONY were 3.2 percent for 2019 and 3.1 percent for 2018 and 2017. The
average depreciation rates for O&R were 3.0 percent for 2019 and 2.9 percent for
2018 and 2017.

The estimated lives for utility plant for CECONY range from 5 to 95 years for
electric, 5 to 90 years for gas, 5 to 80 years for steam and 5 to 55 years for
general plant. For O&R, the estimated lives for utility plant range from 5 to 75
years for electric and gas and 5 to 50 years for general plant.

At December 31, 2019 and 2018, the capitalized cost of the Companies' utility plant, net of accumulated depreciation, was as follows:


                                         Con Edison                 CECONY
(Millions of Dollars)                 2019       2018         2019      2018
Electric
Generation                            $591        $593        $591       $592
Transmission                         3,634       3,333       3,380      3,106
Distribution                        20,676      19,750      19,602     18,716
General                                 43          -           43         -
Gas (a)                              8,617       7,714       7,961      7,107
Steam                                1,813       1,830       1,813      1,830
General                              2,365       2,306       2,143      2,102
Held for future use                     75          76          67         67
Construction work in progress        1,937       1,978       1,812      1,850
Net Utility Plant                  $39,751     $37,580     $37,412    $35,370


(a) Primarily distribution.
General utility plant of Con Edison and CECONY included $93 million and $88
million, respectively, at December 31, 2019, and $100 million and $95 million,
respectively at December 31, 2018, related to a May 2018 acquisition of software
licenses. The estimated aggregate annual amortization expense for Con Edison and
CECONY is $7 million. The accumulated amortization for Con Edison and CECONY was
$10 million at December 31, 2019 and was $3 million at December 31, 2018.


114 CON EDISON ANNUAL REPORT 2019

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Under the Utilities' rate plans, the aggregate annual depreciation allowance for
the period ended December 31, 2019 was $1,417 million, including $1,332 million
under CECONY's electric, gas and steam rate plans that have been approved by the
NYSPSC.
Non-Utility Plant
Non-utility plant is stated at original cost. For Con Edison, non-utility plant
consists primarily of the Clean Energy Businesses' renewable electric production
projects. For the Utilities, non-utility plant consists of land and conduit for
telecommunication use. Depreciation on these assets is computed using the
straight-line method for financial statement purposes over their estimated
useful lives, which is 10 years.

Goodwill

Con Edison tests goodwill for impairment at least annually or whenever there is
a triggering event. There is an option to first make a qualitative assessment of
whether it is more likely than not that the fair value of a reporting unit is
less than its carrying amount before applying a two-step, quantitative goodwill
impairment test. Con Edison has elected to perform the qualitative assessment
for substantially all of its goodwill and, if needed, applies the two-step
quantitative approach. The first step of the quantitative goodwill impairment
test compares the estimated fair value of a reporting unit with its carrying
value, including goodwill. If the estimated fair value of a reporting unit
exceeds its carrying value, goodwill of the reporting unit is considered not
impaired. If the carrying value exceeds the estimated fair value of the
reporting unit, the second step is performed to measure the amount of impairment
loss, if any. The second step requires a calculation of the implied fair value
of goodwill. In 2019, Con Edison recorded no impairment charge on goodwill. See
Note K.

Long-Lived and Intangible Assets
The Companies test long-lived and intangible assets for recoverability when
events or changes in circumstances indicate that the carrying value of
long-lived or intangible assets may not be recoverable. The carrying amount of a
long-lived asset or intangible asset with a definite life is deemed not
recoverable if it exceeds the sum of the undiscounted cash flows expected to
result from the use and eventual disposition of the assets. In the event a test
indicates that such cash flows cannot be expected to be sufficient to fully
recover the assets, the assets are considered impaired and written down to their
estimated fair value.

Con Edison's intangible assets with definite lives consist primarily of power
purchase agreements, which were identified as part of purchase price allocations
associated with acquisitions made by the Clean Energy Businesses in 2016 and
2018. At December 31, 2019 and 2018, intangible assets arising from power
purchase agreements, including the PG&E PPAs (discussed below), were $1,554
million and $1,651 million, net of accumulated amortization of $119 million and
$22 million, respectively, and are being amortized over the life of each
agreement. Excluding power purchase agreements, Con Edison's other intangible
assets were $3 million, net of accumulated amortization of $7 million, at
December 31, 2019 and 2018. CECONY's other intangible assets were immaterial at
December 31, 2019 and 2018. Con Edison recorded amortization expense related to
its intangible assets of $99 million in 2019, $14 million in 2018 and $9 million
in 2017. Con Edison expects amortization expense to be $100 million per year
over the next five years. Con Edison recorded $2 million of impairment charges
in 2018. No impairment charges were recorded on Con Edison's long-lived assets
or intangible assets with definite lives in 2019 or 2017.
In January 2019, Pacific Gas and Electric Company (PG&E) filed in the United
States Bankruptcy Court for the Northern District of California for
reorganization under Chapter 11 of the U.S. Bankruptcy Code. The output of
certain of the Clean Energy Businesses' renewable electric production projects
with an aggregate generating capacity of 680 MW (AC) (PG&E Projects) is sold to
PG&E under long-term power purchase agreements (PG&E PPAs). Most of the PG&E
PPAs have contract prices that are higher than estimated market prices. PG&E, as
a debtor in possession, may assume or reject the PG&E PPAs, subject to review by
the bankruptcy court.
In January 2020, PG&E and certain PG&E shareholders submitted a plan of
reorganization to the bankruptcy court. The plan includes the assumption by PG&E
of all of its power purchase agreements. The plan is subject to, among other
things: confirmation by the bankruptcy court by June 30, 2020 (or any extension
of the date by which PG&E's bankruptcy must be resolved for PG&E to participate
in the insurance fund described below); approval by the California Public
Utilities Commission (CPUC) of PG&E's implementation of the plan and
participation in the insurance fund; PG&E obtaining funding for distributions
under the plan; and the continuation in full force and effect of the September
2019 subrogation claims restructuring support agreement, the December 2019 tort
claimants restructuring support agreement and the January 2020 noteholder
restructuring support agreement. The plan is

CON EDISON ANNUAL REPORT 2019 115

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supported by the parties to these restructuring support agreements, subject to
their terms, and includes the assumption by PG&E of all of its power purchase
agreements. A plan of reorganization can be revoked, amended, withdrawn or
delayed prior to its confirmation by the bankruptcy court. Bankruptcy court
approval is required for a plan of reorganization to be sent to creditors for
consideration.
In January and May 2019, FERC issued orders (which PG&E is challenging)
affirming its jurisdiction to review and approve the modification or abrogation
of wholesale power contracts that are the subject of rejection in bankruptcy. In
June 2019, the bankruptcy court ruled that FERC does not have concurrent
jurisdiction with it and that FERC's January and May 2019 orders are of no force
and effect in the bankruptcy proceeding. FERC and additional parties, including
the Clean Energy Businesses, are challenging the bankruptcy court's June 2019
ruling in appeals that are pending in the United States Court of Appeals for the
Ninth Circuit.

In July 2019, California enacted a law addressing future California wildfires.
The law includes provisions for the establishment of wildfire liquidity and
insurance funds and possible limitation of future wildfire liabilities for
California utilities. PG&E, Southern California Edison Company and San Diego Gas
& Electric Company have agreed to participate in the insurance fund. PG&E's
participation will require bankruptcy court approval and is conditioned on,
among other things, resolution of PG&E's bankruptcy by June 30, 2020, and a
determination by the CPUC that PG&E's bankruptcy reorganization plan is
consistent with the state's climate goals as required under the California
Renewables Portfolio Standard Program and related procurement requirements of
the state.

The PG&E bankruptcy is an event of default under the PG&E PPAs. Unless the lenders for the related project debt otherwise agree, distributions from the related projects to the Clean Energy Businesses will not be made during the pendency of the bankruptcy. See "Reconciliation of Cash, Temporary Cash Investments and Restricted Cash," below.



At December 31, 2019 and 2018, Con Edison's consolidated balance sheet included
$819 million and $885 million of net non-utility plant relating to the PG&E
Projects, $1,057 million and $1,125 million of intangible assets relating to the
PG&E PPAs, $282 million and $292 million of net non-utility plant of additional
projects that secure the related project debt and $1,001 million and $1,050
million of non-recourse related project debt, respectively. See "Long-term Debt"
in Note C. Con Edison has tested whether its net non-utility plant relating to
the PG&E Projects and intangible assets relating to the PG&E PPAs have been
impaired. The projected future cash flows used in the test reflected Con
Edison's expectation that the PG&E PPAs are not likely to be rejected. Based on
the test, Con Edison has determined that there was no impairment. If, in the
future, one or more of the PG&E PPAs is rejected or any such rejection becomes
likely, there will be an impairment of the related intangible assets and could
be an impairment of the related non-utility plant. The amount of any such
impairment could be material.

Recoverable Energy Costs
The Utilities generally recover all of their prudently incurred fuel, purchased
power and gas costs, including hedging gains and losses, in accordance with rate
provisions approved by the applicable state public utility regulators. If the
actual energy supply costs for a given month are more or less than the amounts
billed to customers for that month, the difference in most cases is recoverable
from or refundable to customers. Differences between actual and billed electric
and steam supply costs and costs of its electric demand management programs are
generally deferred for charge or refund to customers during the next billing
cycle (normally within one or two months). For the Utilities' gas costs,
differences between actual and billed gas costs during the 12-month period
ending each August are charged or refunded to customers during a subsequent
12-month period.
New York Independent System Operator (NYISO)
The Utilities purchase electricity through the wholesale electricity market
administered by the NYISO. The difference between purchased power and related
costs initially billed to the Utilities by the NYISO and the actual cost of
power subsequently calculated by the NYISO is refunded by the NYISO to the
Utilities, or paid to the NYISO by the Utilities. The reconciliation payments or
receipts are recoverable from or refundable to the Utilities' customers.
Certain other payments to or receipts from the NYISO are also subject to
reconciliation, with shortfalls or amounts in excess of specified rate
allowances recoverable from or refundable to customers. These include proceeds
from the sale through the NYISO of transmission rights on CECONY's transmission
system (transmission congestion contracts or TCCs).

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Temporary Cash Investments
Temporary cash investments are short-term, highly-liquid investments that
generally have maturities of three months or less at the date of purchase. They
are stated at cost, which approximates market. The Companies consider temporary
cash investments to be cash equivalents.
Investments
Investments consist primarily of the investments of Con Edison Transmission that
are accounted for under the equity method, and the fair value of the Utilities'
supplemental retirement income plan and deferred income plan assets. Equity
method investments are subject to the accounting rules which would require the
recognition of a decrease in value other than for a temporary decline. The
following investment assets are included in the Companies' consolidated balance
sheets at December 31, 2019 and 2018:

                                                        Con Edison

CECONY


(Millions of Dollars)                                     2019     2018    2019     2018
CET Gas investment in Stagecoach Gas Services, LLC        $924     $948      $-       $-
CET Gas investment in Mountain Valley Pipeline, LLC (a)    602      363       -        -
Supplemental retirement income plan assets (b)             397      326      371      301
Deferred income plan assets                                 81       75       81       75
CET Electric investment in New York Transco, LLC            59       52       -        -
Other                                                        2        2        9        9
Total investments                                       $2,065   $1,766     $461     $385


(a) See Note U.


(b) See Note E.



Pension and Other Postretirement Benefits
The accounting rules for retirement benefits require an employer to recognize an
asset or liability for the overfunded or underfunded status of its pension and
other postretirement benefit plans. For a pension plan, the asset or liability
is the difference between the fair value of the plan's assets and the projected
benefit obligation. For any other postretirement benefit plan, the asset or
liability is the difference between the fair value of the plan's assets and the
accumulated postretirement benefit obligation. The accounting rules generally
require employers to recognize all unrecognized prior service costs and credits
and unrecognized actuarial gains and losses in accumulated other comprehensive
income/(loss) (OCI), net of tax. Such amounts will be adjusted as they are
subsequently recognized as components of total periodic benefit cost or income
pursuant to the current recognition and amortization provisions.
For the Utilities' pension and other postretirement benefit plans, regulatory
accounting treatment is generally applied in accordance with the accounting
rules for regulated operations. Unrecognized prior service costs or credits and
unrecognized actuarial gains and losses are recorded to regulatory assets or
liabilities, rather than OCI. See Notes E and F.
The total periodic benefit costs are recognized in accordance with the
accounting rules for retirement benefits. Investment gains and losses are
recognized in expense over a 15-year period and other actuarial gains and losses
are recognized in expense over a 10-year period, subject to the deferral
provisions in the rate plans.
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 such expenses and the amounts for such
expenses reflected in rates. O&R also defers such difference pursuant to its New
York rate plans. See Note B.
The Companies calculate the expected return on pension and other postretirement
benefit plan assets by multiplying the expected rate of return on plan assets by
the market-related value (MRV) of plan assets at the beginning of the year,
taking into consideration anticipated contributions and benefit payments that
are to be made during the year. The accounting rules allow the MRV of plan
assets to be either fair value or a calculated value that recognizes changes in
fair value in a systematic and rational manner over not more than five years.
The Companies use a calculated value when determining the MRV of the plan assets
that adjusts for 20 percent of the difference

CON EDISON ANNUAL REPORT 2019 117

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between fair value and expected MRV of plan assets. This calculated value has
the effect of stabilizing variability in assets to which the Companies apply the
expected return.
Federal Income Tax
In accordance with accounting rules for income taxes, the Companies have
recorded an accumulated deferred federal income tax liability at current tax
rates for temporary differences between the book and tax basis of assets and
liabilities. In accordance with rate plans, the Utilities have recovered amounts
from customers for a portion of the tax liability they will pay in the future as
a result of the reversal or "turn-around" of these temporary differences. As to
the remaining deferred tax liability, the Utilities had established regulatory
assets for the net revenue requirements to be recovered from customers for the
related future tax expense pursuant to the NYSPSC's 1993 Policy Statement
approving accounting procedures consistent with accounting rules for income
taxes and providing assurances that these future increases in taxes will be
recoverable in rates.

Upon enactment of the Tax Cuts and Jobs Act of 2017 on December 22, 2017 (the
TCJA), the Companies re-measured their deferred tax assets and liabilities based
upon the 21 percent corporate income tax rate under the TCJA. The tax effects of
changes in tax laws are to be recognized in the period in which the law is
enacted and deferred tax assets and liabilities are to be re-measured at the
enacted tax rate expected to apply when temporary differences are to be realized
or settled. For the Utilities, in accordance with their New York rate plans and
the accounting rules for regulated operations, the change in deferred taxes was
recorded as either an offset to a regulatory asset or a regulatory liability.
For Con Edison's other businesses, the change in deferred taxes was reflected as
a decrease in income tax expense, which increased Con Edison's net income. See
"Other Regulatory Matters" and "Regulatory Assets and Liabilities" in Note B and
Note L.

Accumulated deferred investment tax credits are amortized ratably over the lives
of the related properties and applied as a reduction to future federal income
tax expense.

Con Edison and its subsidiaries file a consolidated federal income tax return.
The consolidated income tax liability is allocated to each member of the
consolidated group using the separate return method. Each member pays or
receives an amount based on its own taxable income or loss in accordance with a
consolidated tax allocation agreement. Tax loss and tax credit carryforwards are
allocated among members in accordance with consolidated tax return regulations.

State Income Tax
Con Edison and its subsidiaries file a combined New York State Corporation
Business Franchise Tax Return. Similar to a federal consolidated income tax
return, the income of all entities in the combined group is subject to New York
State taxation, after adjustments for differences between federal and New York
law and apportionment of income among the states in which the company does
business. Each member's share of the New York State tax is based on its own New
York State taxable income or loss.

Research and Development Costs
Research and development costs are charged to operating expenses as incurred.
Research and development costs were as follows:
                                 For the Years Ended December 31,
(Millions of Dollars)         2019             2018             2017
Con Edison                     $24              $24              $24
CECONY                          23               23               23




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


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Potentially dilutive securities for Con Edison consist of restricted stock units
and deferred stock units for which the average market price of the common shares
for the period was greater than the exercise price (see Note M) and its common
shares that are subject to forward sale agreements (see Note C). Before the
issuance of common shares upon settlement of the forward sale agreements, the
shares will be reflected in the company's diluted earnings per share
calculations using the treasury stock method. Under this method, the number of
common shares used in calculating diluted earnings per share is deemed to be
increased by the excess, if any, of the number of shares that would be issued
upon physical settlement of the forward sale agreements over the number of
shares that could be purchased by the company in the market (based on the
average market price during the period) using the proceeds due upon physical
settlement (based on the adjusted forward sale price at the end of the reporting
period).
Basic and diluted EPS for Con Edison are calculated as follows:
                                                          For the Years Ended December 31,
(Millions of Dollars, except per share
amounts/Shares in Millions)                             2019            2018            2017
Net income for common stock                           $1,343          $1,382          $1,525
Weighted average common shares outstanding -
basic                                                  328.5           311.7           307.1
Add: Incremental shares attributable to effect
of potentially dilutive securities                       1.0             1.2             1.7
Adjusted weighted average common shares
outstanding - diluted                                  329.5           312.9           308.8
Net Income per common share - basic                    $4.09           $4.43           $4.97
Net Income per common share - diluted                  $4.08           $4.42           $4.94




The computation of diluted EPS for the years ended December 31, 2019 and 2018
excludes immaterial amounts of performance share awards that were not included
because of their anti-dilutive effect.

Estimates


The preparation of financial statements in conformity with GAAP requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates.

Changes in Accumulated Other Comprehensive Income/(Loss) by Component
Changes to accumulated other comprehensive income/(loss) (OCI) for Con Edison
and CECONY are as follows:
(Millions of Dollars)                                     Con Edison

CECONY

Accumulated OCI, net of taxes, at December 31, 2016 (a) $(27)

$(7)

OCI before reclassifications, net of tax of $3 and $1 for Con Edison and CECONY, respectively

                          (4)        

-

Amounts reclassified from accumulated OCI related to pension plan liabilities, net of tax of $(3) and $(1) for Con Edison and CECONY, respectively (a)(b)

                     5        

1


Total OCI, net of taxes, at December 31, 2017                      1        

1

Accumulated OCI, net of taxes, at December 31, 2017 (a) $(26)

$(6)

OCI before reclassifications, net of tax of $3 for Con Edison

                                                             4        

-

Amounts reclassified from accumulated OCI related to pension plan liabilities, net of tax of $(2) for Con Edison (a)(b)

                                                      6        

1


Total OCI, net of taxes, at December 31, 2018                     10        

1

Accumulated OCI, net of taxes, at December 31, 2018 (a) $(16)

$(5)

OCI before reclassifications, net of tax of $(6) and $(1) for Con Edison and CECONY, respectively

                    (10)        

(3)

Amounts reclassified from accumulated OCI related to pension plan liabilities, net of tax of $(2) for Con Edison (a)(b)

                                                      7        

2


Total OCI, net of taxes, at December 31, 2019                    (3)        

(1)

Accumulated OCI, net of taxes, at December 31, 2019 (a) $(19)

$(6)




(a) Tax reclassified from accumulated OCI is reported in the income tax expense
line item of the consolidated income statement.
(b) For the portion of unrecognized pension and other postretirement benefit
costs relating to the Utilities, costs are recorded into, and amortized out of,
regulatory assets and liabilities instead of OCI. The net actuarial losses and
prior service costs recognized during the period are included in the computation
of total periodic pension and other postretirement benefit cost. See Notes E and
F.


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Reconciliation of Cash, Temporary Cash Investments and Restricted Cash
Cash, temporary cash investments and restricted cash are presented on a combined
basis in the Companies' consolidated statements of cash flows. At December 31,
2019 and 2018, cash, temporary cash investments and restricted cash for Con
Edison and CECONY were as follows:

                                                        At December 31,
                                        Con Edison              CECONY
(Millions of Dollars)                        2019        2018       2019    

2018

Cash and temporary cash investments $981 $895 $933

$818


Restricted cash (a)                           236         111          -    

-


Total cash, temporary cash investments
and restricted cash                        $1,217      $1,006         $933  

$818

(a) Restricted cash included cash of the Clean Energy Businesses' renewable

electric production project subsidiaries ($236 million and $109 million at

December 31, 2019 and 2018, respectively) that, under the related project

debt agreements, is either restricted until the various maturity dates of the

project debt to being used for normal operating expenses and capital

expenditures, debt service, and required reserves or restricted as a result

of the PG&E bankruptcy. During the pendency of the PG&E bankruptcy, unless

the lenders for the related project debt otherwise agree, cash may not be

distributed from the related projects to the Clean Energy Businesses. See

"Long-Lived and Intangible Assets," above and "Long-term Debt" in Note C. In

addition, restricted cash included O&R's New Jersey utility subsidiary,

Rockland Electric Company transition bond charge collections, net of

principal, interest, trustee and service fees ($2 million at December 31,


    2018).



Note B - Regulatory Matters
Rate Plans
The Utilities provide service to New York customers according to the terms of
tariffs approved by the NYSPSC. Tariffs for service to customers of Rockland
Electric Company (RECO), O&R's New Jersey regulated utility subsidiary, are
approved by the NJBPU. The tariffs include schedules of rates for service that
limit the rates charged by the Utilities to amounts that recover from their
customers costs approved by the regulator, including capital costs, of providing
service to customers as defined by the tariff. The tariffs implement rate plans
adopted by state utility regulators in rate orders issued at the conclusion of
rate proceedings. Pursuant to the Utilities' rate plans, there generally can be
no change to the charges to customers during the respective terms of the rate
plans other than specified adjustments provided for in the rate plans. The
Utilities' rate plans each cover specified periods, but rates determined
pursuant to a plan generally continue in effect until a new rate plan is
approved by the state utility regulator.
Common provisions of the Utilities' New York rate plans include:
Recoverable energy costs that allow the Utilities to recover on a current basis
the costs for the energy they supply with no mark-up to their full-service
customers.
Cost reconciliations that reconcile pension and other postretirement benefit
costs, environmental remediation costs, property taxes, variable rate tax-exempt
debt and certain other costs to amounts reflected in delivery rates for such
costs. In addition, changes in the Utilities' costs not reflected in rates, in
excess of certain amounts, resulting from changes in tax or other law, rule,
regulation, order, or other requirement or interpretation are deferred as a
regulatory asset or regulatory liability to be reflected in the Utilities' next
rate plan or in a manner to be determined by the NYSPSC. Also, the Utilities
generally retain the right to petition for recovery or accounting deferral of
extraordinary and material cost increases and provision is sometimes made for
the utility to retain a share of cost reductions, for example, property tax
refunds.
Revenue decoupling mechanisms that reconcile actual energy delivery revenues to
the authorized delivery revenues approved by the NYSPSC. The difference is
accrued with interest for refund to, or recovery from customers, as applicable.
Earnings sharing that require the Utilities to defer for customer benefit a
portion of earnings over specified rates of return on common equity. There is no
symmetric mechanism for earnings below specified rates of return on common
equity.

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Negative revenue adjustments for failure to meet certain performance standards
relating to service, reliability, safety and other matters.
Positive revenue adjustments for achievement of performance standards related to
achievement of clean energy goals, safety and other matters.
Net utility plant reconciliations that require deferral as a regulatory
liability of the revenue requirement impact of the amount, if any, by which
actual average net utility plant balances are less than amounts reflected in
rates. There is generally no symmetric mechanism if actual average net utility
plant balances are more than amounts reflected in rates.
Rate base, as reflected in the rate plans, is, in general, the sum of the
Utilities' net plant, working capital and certain regulatory assets less
deferred taxes and certain regulatory liabilities. For each rate plan, the
NYSPSC uses a forecast of the average rate base for each year that new rates
would be in effect ("rate year").
Weighted average cost of capital is determined based on the authorized common
equity ratio, return on common equity, cost of long-term debt and cost of
customer deposits reflected in each rate plan. For each rate plan, the revenues
designed to provide the utility a return on invested capital for each rate year
are determined by multiplying each utility rate base by its pre-tax weighted
average cost of capital. The Utilities' actual return on common equity will
reflect their actual operations for each rate year, and may be more or less than
the authorized return on equity reflected in their rate plans (and if more, may
be subject to earnings sharing).
The following tables contain a summary of the Utilities' rate plans:
CECONY - Electric
Effective period         January 2017 - December 2019   January 2020 - December 2022
                                                        (a)
Base rate changes        Yr. 1 - $195 million (b)       Yr. 1 - $113 million (c)
                         Yr. 2 - $155 million (b)       Yr. 2 - $370 million (c)
                         Yr. 3 - $155 million (b)       Yr. 3 - $326 million (c)
Amortizations to         Yr. 1 - $84 million            Yr. 1 - $267 million (d)
income of net            Yr. 2 - $83 million            Yr. 2 - $269 million (d)
regulatory (assets)      Yr. 3 - $69 million            Yr. 3 - $272 million (d)
and liabilities
Other revenue sources    Retention of $75 million of    Retention of $75 million of
                         annual transmission            annual transmission
                         congestion revenues.           congestion revenues.

                         Potential earnings             Potential earnings
                         adjustment mechanism           adjustment mechanism
                         incentives for energy          incentives for energy
                         efficiency and other           efficiency and other
                         potential incentives of up     potential incentives of up
                         to:                            to:
                         Yr. 1 - $28 million            Yr. 1 - $69 million
                         Yr. 2 - $47 million            Yr. 2 - $74 million
                         Yr. 3 - $64 million            Yr. 3 - $79 million
                         In 2017, 2018 and 2019, the
                         company recorded $13
                         million, $25 million and $43
                         million of earnings
                         adjustment mechanism
                         incentives for energy
                         efficiency, respectively.
                         The company also achieved $5
                         million of incentives for
                         service terminations in
                         2017, 2018 and 2019 that,
                         pursuant to the rate plan,
                         is being recorded ratably in
                         earnings from 2018 to 2020.
                         In 2018 and 2019, the
                         company recorded $3 million
                         and $7 million of incentives
                         for service terminations,
                         respectively.
Revenue decoupling       Continuation of                Continuation of
mechanisms               reconciliation of actual to    reconciliation of actual to
                         authorized electric delivery   authorized electric delivery
                         revenues.                      revenues.
                         In 2017, 2018 and 2019, the
                         company deferred for
                         customer benefit $45
                         million, $(6) million and
                         $169 million of revenues,
                         respectively.
Recoverable energy       Continuation of current rate   Continuation of current rate
costs                    recovery of purchased power    recovery of purchased power
                         and fuel costs.                and fuel costs.
Negative revenue         Potential charges if certain   Potential charges if certain
adjustments              performance targets relating   performance targets relating
                         to service, reliability,       to service, reliability,
                         safety and other matters are   safety and other matters are
                         not met:                       not met:
                         Yr. 1 - $376 million           Yr. 1 - $450 million
                         Yr. 2 - $341 million           Yr. 2 - $461 million
                         Yr. 3 - $352 million           Yr. 3 - $476 million
                         In 2017 and 2018, the
                         company did not record any
                         negative revenue
                         adjustments. In 2019, the
                         company recorded negative
                         revenue adjustments of $15
                         million.


CON EDISON ANNUAL REPORT 2019 121

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Cost reconciliations     Continuation of                Continuation of
                         reconciliation of expenses     reconciliation of expenses
                         for pension and other          for pension and other
                         postretirement benefits,       postretirement benefits,
                         variable-rate tax-exempt       variable-rate debt, major
                         debt, major storms, property   storms, property taxes (e),
                         taxes (e), municipal           municipal infrastructure
                         infrastructure support costs   support costs (f), the
                         (f), the impact of new laws    impact of new laws and
                         and environmental site         environmental site
                         investigation and              investigation and
                         remediation to amounts         remediation to amounts
                         reflected in rates (g).        reflected in rates. (g)
                         In 2017, 2018 and 2019, the
                         company deferred $35
                         million, $189 million and
                         $10 million of net
                         regulatory assets,
                         respectively.
Net utility plant        Target levels reflected in     Target levels reflected in
reconciliations          rates:                         rates:
                         Electric average net plant     Electric average net plant
                         target excluding advanced      target excluding advanced
                         metering infrastructure        metering infrastructure
                         (AMI):                         (AMI):
                         Yr. 1 - $21,689 million        Yr. 1 - $24,491 million
                         Yr. 2 - $22,338 million        Yr. 2 - $25,092 million
                         Yr. 3 - $23,002 million        Yr. 3 - $25,708 million
                         AMI:                           AMI:
                         Yr. 1 - $126 million           Yr. 1 - $572 million
                         Yr. 2 - $257 million           Yr. 2 - $740 million
                         Yr. 3 - $415 million           Yr. 3 - $806 million (h)
                         The company deferred $0.4
                         million as a regulatory
                         asset in 2017. In 2018 and
                         2019, $0.4 and $11.8 million
                         was deferred as a regulatory
                         liability, respectively.
Average rate base        Yr. 1 - $18,902 million        Yr. 1 - $21,660 million
                         Yr. 2 - $19,530 million        Yr. 2 - $22,783 million
                         Yr. 3 - $20,277 million        Yr. 3 - $23,926 million
Weighted average cost    Yr. 1 - 6.82 percent           6.61 percent
of capital (after-tax)   Yr. 2 - 6.80 percent
                         Yr. 3 - 6.73 percent
Authorized return on     9.0 percent                    8.80 percent
common equity
Actual return on         Yr. 1 - 9.30 percent
common equity (i)        Yr. 2 - 9.36 percent
                         Yr. 3 - 8.82 percent
Earnings sharing         Most earnings above an         Most earnings above an
                         annual earnings threshold of   annual earnings threshold of
                         9.5 percent are to be          9.3 percent are to be
                         applied to reduce regulatory   applied to reduce regulatory
                         assets for environmental       assets for environmental
                         remediation and other costs    remediation and other costs
                         accumulated in the rate        accumulated in the rate
                         year.                          year.

                         In 2017, the company had no
                         earnings above the threshold
                         but recorded a positive
                         adjustment related to 2016
                         of $5.7 million in earnings.

                         In 2018 and 2019, the
                         company had no earnings
                         sharing above the threshold.
Cost of long-term debt   Yr. 1 - 4.93 percent           4.63 percent
                         Yr. 2 - 4.88 percent
                         Yr. 3 - 4.74 percent
Common equity ratio      48 percent                     48 percent

(a) In January 2020, the NYSPSC approved the October 2019 Joint Proposal for

CECONY's electric rate plan for January 2020 through December 2022. If at the

end of any semi-annual period ending June 30 and December 31, Con Edison's

investments in its non-utility businesses exceed 15 percent of its total

consolidated revenues, assets or cash flow, or if the ratio of holding

company debt to total consolidated debt rises above 20 percent, CECONY is


    required to notify the NYSPSC and submit a ring-fencing plan or a
    demonstration why additional ring-fencing measures (see Note S) are not
    necessary.

(b) The electric base rate increases were in addition to a $48 million increase

resulting from the December 2016 expiration of a temporary credit under the

prior rate plan. At the NYSPSC's option, these increases were implemented

with increases of $199 million in each rate year. Base rates reflect recovery

by the company of certain costs of its energy efficiency, system peak

reduction and electric vehicle programs (Yr. 1 - $20.5 million; Yr. 2 - $49

million; and Yr. 3 - $107.5 million) over a 10-year period, including the

overall pre-tax rate of return on such costs.

(c) Base rates reflect recovery by the company of certain costs of its energy

efficiency, Reforming the Energy Vision demonstration projects, non-wire

alternative projects (including the Brooklyn Queens demand management

program), and off-peak electric vehicle charging programs (Yr. 1 - $206

million; Yr. 2 - $245 million; and Yr. 3 - $251 million) over a ten-year

period, including the overall pre-tax rate of return on such costs.

(d) Amounts reflect amortization of the 2018 tax savings under the federal Tax

Cuts and Jobs Act of 2017 (TCJA) allocable to CECONY's electric customers

($377 million) over a three-year period ($126 million annually), the

protected portion of the regulatory liability for excess deferred income

taxes allocable to CECONY's electric customers ($1,663 million) over the

remaining lives of the related assets ($49 million in Yr. 1, $50 million in

Yr. 2, and $53 million in Yr. 3) and the unprotected portion of the net

regulatory liability ($784 million) over five years ($157 million annually).

Amounts also reflect amortization of the regulatory asset for deferred MTA

power reliability costs ($238 million) over a five-year period ($48 million

annually).

(e) Deferrals for property taxes are limited to 90 percent of the difference from

amounts reflected in rates, subject to an annual maximum for the remaining

difference of not more than a maximum number of basis points impact on return

on common equity: Yr 1 - 10.0 basis points; Yr 2 - 7.5 basis points; and Yr 3

- 5.0 basis points.

(f) In general, if actual expenses for municipal infrastructure support (other

than company labor) are below the amounts reflected in rates the company will

defer the difference for credit to customers, and if the actual expenses are

above the amount reflected in rates the company will defer for recovery from

customers 80 percent of the difference subject to a maximum deferral, subject


    to certain conditions, of



122 CON EDISON ANNUAL REPORT 2019

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30 percent of the amount reflected in the January 2017-December 2019 rate plan
and 15 percent of the amount reflected in the January 2020-December 2022 rate
plan.
(g) In addition, the NYSPSC staff has commenced a focused operations audit to

investigate the income tax accounting of CECONY and other New York utilities.

Any NYSPSC-ordered adjustment to CECONY's income tax accounting will be

refunded to or collected from customers, as determined by the NYSPSC. See

"Other Regulatory Matters," below.

(h) Reconciliation of net utility plant for AMI will be done on a combined basis

for electric and gas.

(i) Calculated in accordance with the earnings calculation method prescribed in


    the rate order.




CON EDISON ANNUAL REPORT 2019 123

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CECONY - Gas
Effective period         January 2017 - December 2019   January 2020 - December 2022
                                                        (a)
Base rate changes        Yr. 1 - $(5) million (b)       Yr. 1 - $84 million (c)
                         Yr. 2 - $92 million            Yr. 2 - $122 million (c)
                         Yr. 3 - $90 million            Yr. 3 - $167 million (c)
Amortizations to         Yr. 1 - $39 million            Yr. 1 - $45 million (d)
income of net            Yr. 2 - $37 million            Yr. 2 - $43 million (d)
regulatory (assets)      Yr. 3 - $36 million            Yr. 3 - $10 million (d)
and liabilities
Other revenue sources    Retention of annual revenues   Retention of annual revenues
                         from non-firm customers of     from non-firm customers of
                         up to $65 million and 15       up to $65 million and 15
                         percent of any such revenues   percent of any such revenues
                         above $65 million.             above $65 million.

                         Potential incentives if        Potential earnings adjusted
                         performance targets related    mechanism incentives for
                         to gas leak backlog, leak      energy efficiency and other
                         prone pipe and service         potential incentives of up
                         terminations are met:          to:
                         Yr. 1 - $7 million             Yr. 1 - $20 million
                         Yr. 2 - $8 million             Yr. 2 - $22 million
                         Yr. 3 - $8 million             Yr. 3 - $25 million
                         In 2017, 2018 and 2019, the
                         company achieved incentives
                         of $7 million, $6 million
                         and $7 million,
                         respectively, that, pursuant
                         to the rate plan, is being
                         recorded ratably in earnings
                         from 2018 to 2020. In 2018
                         and 2019, the company
                         recorded incentives of $5
                         million and $9 million,
                         respectively, for gas leak
                         backlog, leak prone pipe and
                         service terminations.
Revenue decoupling       Continuation of                Continuation of
mechanisms               reconciliation of actual to    reconciliation of actual to
                         authorized gas delivery        authorized gas delivery
                         revenues.                      revenues, modified to be
                         In 2017, 2018 and 2019, the    calculated based upon
                         company deferred $3 million,   revenue per customer class
                         $12 million and $10 million    instead of revenue per
                         of regulatory liabilities,     customer.
                         respectively.
Recoverable energy       Continuation of current rate   Continuation of current rate
costs                    recovery of purchased gas      recovery of purchased gas
                         costs.                         costs.
Negative revenue         Potential charges if           Potential charges if
adjustments              performance targets relating   performance targets relating
                         to service, safety and other   to service, safety and other
                         matters are not met:           matters are not met:
                         Yr. 1 - $68 million            Yr. 1 - $81 million
                         Yr. 2 - $63 million            Yr. 2 - $88 million
                         Yr. 3 - $70 million            Yr. 3 - $96 million
                         In 2017 and 2018, the
                         company recorded negative
                         revenue adjustments of $5
                         million and $4 million,
                         respectively. In 2019, the
                         company did not record any
                         negative revenue
                         adjustments.
Cost reconciliations     Continuation of                Continuation of
                         reconciliation of expenses     reconciliation of expenses
                         for pension and other          for pension and other
                         postretirement benefits,       postretirement benefits,
                         variable-rate tax-exempt       variable-rate debt, major
                         debt, major storms, property   storms, property taxes (e),
                         taxes (e), municipal           municipal infrastructure
                         infrastructure support costs   support costs (f), the
                         (f), the impact of new laws    impact of new laws and
                         and environmental site         environmental site
                         investigation and              investigation and
                         remediation to amounts         remediation to amounts
                         reflected in rates. (g)        reflected in rates. (g)
                         In 2017, 2018 and 2019, the
                         company deferred $2 million
                         of net regulatory
                         liabilities, $44 million of
                         net regulatory assets and
                         $18 million of net
                         regulatory assets,
                         respectively.
Net utility plant        Target levels reflected in     Target levels reflected in
reconciliations          rates:                         rates:
                         Gas average net plant target   Gas average net plant target
                         excluding AMI:                 excluding AMI:
                         Yr. 1 - $5,844 million         Yr. 1 - $8,108 million
                         Yr. 2 - $6,512 million         Yr. 2 - $8,808 million
                         Yr. 3 - $7,177 million         Yr. 3 - $9,510 million
                         AMI:                           AMI:
                         Yr. 1 - $27 million            Yr. 1 - $142 million
                         Yr. 2 - $57 million            Yr. 2 - $183 million
                         Yr. 3 - $100 million           Yr. 3 - $211 million (h)
                         In 2017 and 2018 the company
                         deferred $2.2 million as
                         regulatory liabilities. In
                         2019, the company deferred
                         $1.7 million as a regulatory
                         liability.
Average rate base        Yr. 1 - $4,841 million         Yr. 1 - $7,171 million
                         Yr. 2 - $5,395 million         Yr. 2 - $7,911 million
                         Yr. 3 - $6,005 million         Yr. 3 - $8,622 million
Weighted average cost    Yr. 1 - 6.82 percent           6.61 percent
of capital               Yr. 2 - 6.80 percent
(after-tax)              Yr. 3 - 6.73 percent
Authorized return on     9.0 percent                    8.80 percent
common equity
Actual return on         Yr. 1 - 9.22 percent
common equity (i)        Yr. 2 - 9.04 percent
                         Yr. 3 - 8.72 percent



124 CON EDISON ANNUAL REPORT 2019

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Earnings sharing         Most earnings above an         Most earnings above an
                         annual earnings threshold of   annual earnings threshold of
                         9.5 percent are to be          9.3 percent are to be
                         applied to reduce regulatory   applied to reduce regulatory
                         assets for environmental       assets for environmental
                         remediation and other costs    remediation and other costs
                         accumulated in the rate        accumulated in the rate
                         year.                          year.

                         In 2017, 2018 and 2019, the
                         company had no earnings
                         above the threshold.
Cost of long-term debt   Yr. 1 - 4.93 percent           4.63 percent
                         Yr. 2 - 4.88 percent
                         Yr. 3 - 4.74 percent
Common equity ratio      48 percent                     48 percent


(a) In January 2020, the NYSPSC approved the October 2019 Joint Proposal for

CECONY's gas rate plan for January 2020 through December 2022. If at the end

of any semi-annual period ending June 30 and December 31, Con Edison's

investments in its non-utility businesses exceed 15 percent of its total


     consolidated revenues, assets or cash flow, or if the ratio of holding
     company debt to total consolidated debt rises above 20 percent, CECONY is
     required to notify the NYSPSC and submit a ring-fencing plan or a
     demonstration why additional ring-fencing measures (see Note S) are not
     necessary.

(b) The gas base rate decrease was offset by a $41 million increase resulting

from the December 2016 expiration of a temporary credit under the prior rate

plan.

(c) The gas base rate increases shown above will be implemented with increases

of $47 million in Yr. 1; $176 million in Yr. 2; and $170 million in Yr. 3 in

order to levelize customer bill impacts. Base rates reflect recovery by the


     company of certain costs of its energy efficiency program (Yr. 1 - $30
     million; Yr. 2 - $37 million; and Yr. 3 - $40 million) over a ten-year
     period, including the overall pre-tax rate of return on such costs.


(d)  Amounts reflect amortization of the remaining 2018 TCJA tax savings

allocable to CECONY's gas customers ($63 million) over a two year period

($32 annually), the protected portion of the regulatory liability for excess

deferred income taxes allocable to CECONY's gas customers ($725 million)

over the remaining lives of the related assets ($14 million in Yr. 1, $14

million in Yr. 2, and $12 million in Yr. 3) and the unprotected portion of

the net regulatory liability ($107 million) over five years ($21 million

annually)

(e)-(i) See footnotes (e) - (i) to the table under "CECONY Electric," above.

CON EDISON ANNUAL REPORT 2019 125

--------------------------------------------------------------------------------



CECONY - Steam
Effective period         January 2014 - December 2016
                         (a)
Base rate changes        Yr. 1 - $(22.4) million (b)
                         Yr. 2 - $19.8 million (b)
                         Yr. 3 - $20.3 million (b)
                         Yr. 4 - None
                         Yr. 5 - None
                         Yr. 6 - None
Amortizations to         $37 million over three years
income of net
regulatory (assets)
and liabilities
Recoverable energy       Current rate recovery of
costs                    purchased power and fuel
                         costs.
Negative revenue         Potential charges (up to $1
adjustments              million annually) if certain
                         steam performance targets
                         are not met. In years 2014
                         through 2019, the company
                         did not record any negative
                         revenue adjustments.
Cost reconciliations     In 2014, 2015, 2016, 2017,
(c)                      2018 and 2019, the company
                         deferred $42 million of net
                         regulatory liabilities, $17
                         million of net regulatory
                         assets, $8 million and $14
                         million of net regulatory
                         liabilities, $1 million of
                         net regulatory assets and $8
                         million of net regulatory
                         liabilities, respectively.
Net utility plant        Target levels reflected in
reconciliations          rates were:
                         Production:
                         Yr. 1 - $1,752 million
                         Yr. 2 - $1,732 million
                         Yr. 3 - $1,720 million
                         Distribution:
                         Yr. 1 - $6 million
                         Yr. 2 - $11 million
                         Yr. 3 - $25 million
                         The company reduced its
                         regulatory liability by $0.1
                         million in 2014 and
                         immaterial amounts in 2015
                         and 2016 and no deferrals
                         were recorded in 2017, 2018
                         and 2019.
Average rate base        Yr. 1 - $1,511 million
                         Yr. 2 - $1,547 million
                         Yr. 3 - $1,604 million
Weighted average cost    Yr. 1 - 7.10 percent
of capital (after-tax)   Yr. 2 - 7.13 percent
                         Yr. 3 - 7.21 percent
Authorized return on     9.3 percent
common equity
Actual return on         Yr. 1 - 9.82 percent
common equity (d)        Yr. 2 - 10.88 percent
                         Yr. 3 - 10.54 percent
                         Yr. 4 - 9.51 percent
                         Yr. 5 - 11.73 percent
                         Yr. 6 - 10.45 percent
Earnings sharing         Weather normalized earnings
                         above an annual earnings
                         threshold of 9.9 percent are
                         to be applied to reduce
                         regulatory assets for
                         environmental remediation
                         and other costs.
                         In 2014, the company had no
                         earnings above the
                         threshold. Actual earnings
                         were $11.5 million and $7.8
                         million above the threshold
                         in 2015 and 2016,
                         respectively. In 2017,
                         actual earnings were $8.5
                         million above the threshold,
                         offset in part by a positive
                         adjustment related to 2016
                         of $4 million. In 2018,
                         actual earnings were $16.5
                         million above the threshold,
                         and an additional $1.1
                         million related to 2017 was
                         recorded. In 2019 actual
                         earnings were $5 million
                         above the threshold, offset
                         in part by an adjustment
                         related to 2018 of $2.3
                         million.
Cost of long-term debt   Yr. 1 - 5.17 percent
                         Yr. 2 - 5.23 percent
                         Yr. 3 - 5.39 percent
Common equity ratio      48 percent

(a) Rates determined pursuant to this rate plan continue in effect until a new

rate plan is approved by the NYSPSC.

(b) The impact of these base rate changes was deferred which resulted in an $8

million regulatory liability at December 31, 2016.

(c) Deferrals for property taxes are limited to 90 percent of the difference from

amounts reflected in rates, subject to an annual maximum for the remaining

difference of not more than a 10 basis point impact on return on common

equity.

(d) Calculated in accordance with the earnings calculation method prescribed in


    the rate order.





126 CON EDISON ANNUAL REPORT 2019

--------------------------------------------------------------------------------




O&R New York -
Electric
Effective period         November 2015 - October 2017   January 2019 - December 2021
                         (a)                            (d)
Base rate changes        Yr. 1 - $9.3 million           Yr. 1 - $13.4 million (e)
                         Yr. 2 - $8.8 million           Yr. 2 - $8.0 million (e)
                         Yr. 3 - None                   Yr. 3 - $5.8 million (e)
Amortizations to         Yr. 1 - $(8.5) million (b)     Yr. 1 - $(1.5) million (f)
income of net            Yr. 2 - $(9.4) million (b)     Yr. 2 - $(1.5) million (f)
regulatory (assets)      Yr. 3 - None                   Yr. 3 - $(1.5) million (f)
and liabilities
Other revenue sources                                   Potential earnings
                                                        adjustment mechanism
                                                        incentives for peak
                                                        reduction, energy
                                                        efficiency, Distributed
                                                        Energy Resources utilization
                                                        and other potential
                                                        incentives of up to:
                                                        Yr. 1 - $3.6 million
                                                        Yr. 2 - $4.0 million
                                                        Yr. 3 - $4.2 million

                                                        Potential incentive if
                                                        performance target related
                                                        to service terminations is
                                                        met: $0.5 million annually.

                                                        In 2019, the company
                                                        recorded $2.6 million of
                                                        earnings adjustment
                                                        mechanism incentives for
                                                        energy efficiency and $0.2
                                                        million of incentives for
                                                        service terminations.
Revenue decoupling       In 2015, 2016, 2017 and        Continuation of
mechanisms               2018, the company deferred     reconciliation of actual to
                         for the customer's benefit     authorized electric delivery
                         an immaterial amount, $6.3     revenues.
                         million as regulatory
                         liabilities, $11.2 million     In 2019 the company deferred
                         as regulatory asset and $0.5   $0.1 million as a regulatory
                         million as regulatory asset,   asset.
                         respectively.
Recoverable energy       Continuation of current rate   Continuation of current rate
costs                    recovery of purchased power    recovery of purchased power
                         costs.                         costs.
Negative revenue         Potential charges (up to $4    Potential charges if certain
adjustments              million annually) if certain   performance targets relating
                         performance targets are not    to service, reliability and
                         met. In 2015 the company       other matters are not met:
                         recorded $1.25 million in      Yr. 1 - $4.4 million
                         negative revenue               Yr. 2 - $4.4 million
                         adjustments. In 2016, 2017     Yr. 3 - $4.5 million
                         and 2018, the company did
                         not record any negative        In 2019, the company did not
                         revenue adjustments.           record any negative revenue
                                                        adjustments.
Cost reconciliations     In 2015, 2016 and 2017, the    Reconciliation of expenses
                         company deferred $0.3          for pension and other
                         million, $7.4 million and      postretirement benefits,
                         $3.2 million as net            environmental remediation
                         decreases to regulatory        costs, property taxes (g),
                         assets, respectively. In       energy efficiency program
                         2018, the company deferred     (h), major storms, the
                         $5 million as a net            impact of new laws and
                         regulatory asset.              certain other costs to
                                                        amounts reflected in
                                                        rates.(i)

                                                        In 2019, the company
                                                        deferred $4.3 million as a
                                                        net regulatory asset.
Net utility plant        Target levels reflected in     Target levels reflected in
reconciliations          rates are:                     rates were:
                         Yr. 1 - $928 million (c)       Electric average net plant
                         Yr. 2 - $970 million (c)       target excluding advanced
                         The company                    metering infrastructure
                         increased/(reduced) its        (AMI):
                         regulatory asset by $2.2       Yr. 1 - $1,008 million
                         million, $(1.9) million,       Yr. 2 - $1,032 million
                         $(1.9) million and $1.4        Yr. 3 - $1,083 million
                         million in 2015, 2016, 2017    AMI (j):
                         and 2018, respectively.        Yr. 1 - $48 million
                                                        Yr. 2 - $58 million
                                                        Yr. 3 - $61 million

                                                        The company increased
                                                        regulatory asset by an
                                                        immaterial amount in 2019.
Average rate base        Yr. 1 - $763 million           Yr. 1 - $878 million
                         Yr. 2 - $805 million           Yr. 2 - $906 million
                         Yr. 3 - $805 million           Yr. 3 - $948 million
Weighted average cost    Yr. 1 - 7.10 percent           Yr. 1 - 6.97 percent
of capital (after-tax)   Yr. 2 - 7.06 percent           Yr. 2 - 6.96 percent
                         Yr. 3 - 7.06 percent           Yr. 3 - 6.96 percent
Authorized return on     9.0 percent                    9.0 percent
common equity
Actual return on         Yr. 1 - 10.8 percent           Yr. 1 - 9.6 percent
common equity (k)        Yr. 2 - 9.7 percent
                         Yr. 3 - 7.2 percent



CON EDISON ANNUAL REPORT 2019 127

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Earnings sharing         Most earnings above an         Most earnings above an
                         annual earnings threshold of   annual earnings threshold of
                         9.6 percent are to be          9.6 percent are to be
                         applied to reduce regulatory   applied to reduce regulatory
                         assets. In 2015, earnings      assets for environmental
                         did not exceed the earnings    remediation and other costs
                         threshold. Actual earnings     accumulated in the rate
                         were $6.1 million, $0.3        year.
                         million above the threshold
                         for 2016 and 2017,             In 2019, earnings did not
                         respectively. In 2018,         exceed the earnings
                         earnings did not exceed the    threshold.
                         earnings threshold.
Cost of long-term debt   Yr. 1 - 5.42 percent           Yr. 1 - 5.17 percent
                         Yr. 2 - 5.35 percent           Yr. 2 - 5.14 percent
                         Yr. 3 - 5.35 percent           Yr. 3 - 5.14 percent
Common equity ratio      48 percent                     48 percent


(a) Rates determined pursuant to this rate plan continued in effect until the

subsequent rate plan became effective.

(b) $59.3 million of the regulatory asset for deferred storm costs is to be

recovered from customers over a 5 year period, including $11.85 million in

each of years 1 and 2, $1 million of the regulatory asset for such costs will

not be recovered from customers, and all outstanding issues related to

Superstorm Sandy and other past major storms prior to November 2014 are

resolved. Approximately $4 million of regulatory assets for property tax and

interest rate reconciliations will not be recovered from customers. Amounts

that will not be recovered from customers were charged-off in June 2015.

(c) Excludes electric AMI as to which the company will be required to defer as a

regulatory liability the revenue requirement impact of the amount, if any, by

which actual average net utility plant balances are less than amounts

reflected in rates: $1 million in year 1 and $9 million in year 2.

(d) If at the end of any year, Con Edison's investments in its non-utility

businesses exceed 15 percent of Con Edison's total consolidated revenues,


    assets or cash flow, or if the ratio of holding company debt to total
    consolidated debt rises above 20 percent, O&R is required to notify the
    NYSPSC and submit a ring-fencing plan or a demonstration why additional
    ring-fencing measures (see Note S) are not necessary.

(e) The electric base rate increases shown above will be implemented with

increases of: Yr. 1 - $8.6 million; Yr. 2 - $12.1 million; and Yr. 3 - $12.2

million.

(f) Reflects amortization of, among other things, the company's net benefits

under the TCJA prior to January 1, 2019, amortization of net regulatory

liability for future income taxes and reduction of previously incurred

regulatory assets for environmental remediation costs. Also, for electric,

reflects amortization over a six year period of previously incurred

incremental major storm costs. See "Other Regulatory Matters," below.

(g) Deferrals for property taxes are limited to 90 percent of the difference from

amounts reflected in rates, subject to an annual maximum for the remaining

difference of not more than a maximum number of basis points impact on return

on common equity: Yr. 1 - 10.0 basis points; Yr. 2 - 7.5 basis points; and

Yr. 3 - 5.0 basis points.

(h) Energy efficiency costs are expensed as incurred. Such costs are subject to a

downward-only reconciliation over the terms of the electric and gas rate

plans. The company will defer for the benefit of customers any cumulative

shortfall over the terms of the electric and gas rate plans between actual

expenditures and the levels provided in rates.

(i) In addition, amounts reflected in rates relating to income taxes and excess

deferred federal income tax liability balances will be reconciled (i.e.,

refunded to or collected from customers) to any final, non-appealable

NYSPSC-ordered findings in its investigation of O&R's income tax accounting.

See "Other Regulatory Matters," in Note B.

(j) Net plant reconciliation for AMI expenditures will be implemented for a

single category of AMI capital expenditures that includes amounts allocated

to both electric and gas customers.

(k) Calculated in accordance with the earnings calculation method prescribed in


    the rate order.



128 CON EDISON ANNUAL REPORT 2019

--------------------------------------------------------------------------------



O&R New York - Gas
Effective period           November 2015 - October      January 2019 - December 2021
                           2018 (a)                     (d)
Base rate changes          Yr. 1 - $16.4 million        Yr. 1 - $(7.5) million (e)
                           Yr. 2 - $16.4 million        Yr. 2 - $3.6 million (e)
                           Yr. 3 - $5.8 million         Yr. 3 - $0.7 million (e)
                           Yr. 3 - $10.6 million
                           collected through a
                           surcharge
Amortization to income     Yr. 1 - $(1.7) million (b)   Yr. 1 - $1.8 million (f)
of net regulatory          Yr. 2 - $(2.1) million (b)   Yr. 2 - $1.8 million (f)
(assets) and liabilities   Yr. 3 - $(2.5) million (b)   Yr. 3 - $1.8 million (f)
Other revenue sources                                   Continuation of retention of
                                                        annual revenues from
                                                        non-firm customers of up to
                                                        $4.0 million, with variances
                                                        to be shared 80 percent by
                                                        customers and 20 percent by
                                                        company.

                                                        Potential earnings
                                                        adjustment mechanism
                                                        incentives of up to $0.3
                                                        million annually.

                                                        Potential incentives if
                                                        performance targets related
                                                        to gas leak backlog, leak
                                                        prone pipe, emergency
                                                        response, damage prevention
                                                        and service terminations are
                                                        met: Yr. 1 - $1.2 million;
                                                        Yr. 2 - $1.3 million; and
                                                        Yr. 3 - $1.3 million.

                                                        In 2019, the company
                                                        recorded $0.3 million of
                                                        earnings adjustment
                                                        mechanism incentives for
                                                        energy efficiency and $0.7
                                                        million of incentives for
                                                        gas leak backlog, leak prone
                                                        pipe and service
                                                        terminations.
Revenue decoupling         In 2015, 2016, 2017 and      Continuation of
mechanisms                 2018, the company deferred   reconciliation of actual to
                           $0.8 million of regulatory   authorized gas delivery
                           assets, $6.2 million of      revenues.
                           regulatory liabilities,
                           $1.7 million of regulatory   In 2019, the company
                           liabilities and $6.3         deferred $0.8 million of
                           million of regulatory        regulatory assets.
                           liabilities, respectively.
Recoverable energy costs   Current rate recovery of     Continuation of current rate
                           purchased gas costs.         recovery of purchased gas
                                                        costs.
Negative revenue           Potential charges (up to     Potential charges if
adjustments                $3.7 million in Yr. 1,       performance targets relating
                           $4.7 million in Yr. 2 and    to service, safety and other
                           $4.9 million in Yr. 3) if    matters are not met: Yr. 1 -
                           certain performance          $5.5 million; Yr. 2 - $5.7
                           targets are not met. In      million; and Yr. 3 - $6.0
                           2015, 2016 and 2017, the     million.
                           company did not record any
                           negative revenue             In 2019, the company
                           adjustments. In 2018, the    recorded a $0.2 million
                           company recorded a $0.1      negative revenue adjustment.
                           million negative revenue
                           adjustment.
Cost reconciliations       In 2015 and 2016, the        Reconciliation of expenses
                           company deferred $4.5        for pension and other
                           million and $6.6 million     postretirement benefits,
                           as net regulatory            environmental remediation
                           liabilities and assets,      costs, property taxes (g),
                           respectively. In 2017 and    energy efficiency program
                           2018, the company deferred   (h), the impact of new laws
                           $3.5 million and $7.4        and certain other costs to
                           million as net regulatory    amounts reflected in
                           liabilities, respectively.   rates.(i)

                                                        In 2019, the company
                                                        deferred $6 million as net
                                                        regulatory liabilities.
Net utility plant          Target levels reflected in   Target levels reflected in
reconciliations            rates are:                   rates were:
                           Yr. 1 - $492 million (c)     Gas average net plant target
                           Yr. 2 - $518 million (c)     excluding AMI:
                           Yr. 3 - $546 million (c)     Yr. 1 - $593 million
                           No deferral was recorded     Yr. 2 - $611 million
                           for 2015 and immaterial      Yr. 3 - $632 million
                           amounts were recorded as     AMI (j):
                           regulatory liabilities in    Yr. 1 - $20 million
                           2016 and 2017. In 2018,      Yr. 2 - $24 million
                           the company deferred $0.4    Yr. 3 - $25 million
                           million as regulatory
                           asset.                       In 2019, the company
                                                        deferred an immaterial
                                                        amount as regulatory asset.
Average rate base          Yr. 1 - $366 million         Yr. 1 - $454 million
                           Yr. 2 - $391 million         Yr. 2 - $476 million
                           Yr. 3 - $417 million         Yr. 3 - $498 million
Weighted average cost of   Yr. 1 - 7.10 percent         Yr. 1 - 6.97 percent
capital (after-tax)        Yr. 2 - 7.06 percent         Yr. 2 - 6.96 percent
                           Yr. 3 - 7.06 percent         Yr. 3 - 6.96 percent
Authorized return on       9.0 percent                  9.0 percent
common equity
Actual return on common    Yr. 1 - 11.2 percent         Yr. 1 - 8.9 percent
equity (k)                 Yr. 2 - 9.7 percent
                           Yr. 3 - 8.1 percent



CON EDISON ANNUAL REPORT 2019 129

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Earnings sharing           Most earnings above an       Most earnings above an
                           annual earnings threshold    annual earnings threshold of
                           of 9.6 percent are to be     9.6 percent are to be
                           applied to reduce            applied to reduce regulatory
                           regulatory assets. In        assets for environmental
                           2015, earnings did not       remediation and other costs
                           exceed the earnings          accumulated in the rate
                           threshold. Actual earnings   year. In 2019, earnings did
                           were $4 million, $0.2        not exceed the earnings
                           million above the            threshold.
                           threshold for 2016 and
                           2017, respectively. In
                           2018, earnings did not
                           exceed the earnings
                           threshold.
Cost of long-term debt     Yr. 1 - 5.42 percent         Yr. 1 - 5.17 percent
                           Yr. 2 - 5.35 percent         Yr. 2 - 5.14 percent
                           Yr. 3 - 5.35 percent         Yr. 3 - 5.14 percent
Common equity ratio        48 percent                   48 percent


(a) Rates pursuant to this rate plan continued in effect until the subsequent

rate plan became effective.

(b) Reflects that the company will not recover from customers a total of

approximately $14 million of regulatory assets for property tax and interest

rate reconciliations. Amounts that will not be recovered from customers were

charged-off in June 2015.

(c) Excludes gas AMI as to which the company will be required to defer as a

regulatory liability the revenue requirement impact of the amount, if any, by

which actual average net utility plant balances are less than amounts

reflected in rates: $0.5 million in year 1, $4.2 million in year 2 and $7.2

million in year 3.

(d) If at the end of any year, Con Edison's investments in its non-utility

businesses exceed 15 percent of Con Edison's total consolidated revenues,


    assets or cash flow, or if the ratio of holding company debt to total
    consolidated debt rises above 20 percent, O&R is required to notify the
    NYSPSC and submit a ring-fencing plan or a demonstration why additional
    ring-fencing measures (see Note S) are not necessary.

(e) The gas base rate changes shown above will be implemented with changes of:

Yr. 1 - $(5.9) million; Yr. 2 - $1.0 million; and Yr. 3 - $1.0 million.

(f)-(k) See footnotes (f) - (k) to the table under "O&R New York - Electric," above.

130 CON EDISON ANNUAL REPORT 2019

--------------------------------------------------------------------------------



In January 2020, the NJBPU approved an electric rate increase, effective
February 1, 2020, of $12 million for RECO. The following table contains a
summary of the terms of the distribution rate plans.
RECO
Effective period           March 2017 - January 2020     February 2020
Base rate changes          Yr. 1 - $1.7 million          Yr. 1 - $12 million
Amortization to income     $0.2 million over three       $4.8 million over four
of net                     years and continuation of     years.
regulatory (assets) and    $(25.6) million of deferred
liabilities                storm costs over four years
                           which expired on July 31,
                           2018 (a)
Recoverable energy costs   Current rate recovery of      Current rate recovery of
                           purchased power costs.        purchased power costs.
Cost reconciliations       None                          None
Average rate base          Yr. 1 - $178.7 million        Yr. 1 - $229.9 million
Weighted average cost of   7.47 percent                  7.11 percent
capital
(after-tax)
Authorized return on       9.6 percent                   9.5 percent
common equity
Actual return on common    Yr. 1 - 7.5 percent
equity                     Yr. 2 - 5.7 percent
Cost of long-term debt     5.37 percent                  4.88 percent
Common equity ratio        49.7 percent                  48.32 percent


(a) In January 2016, the NJBPU approved RECO's plan to spend $15.7 million in

capital over three years to harden its electric system against storms, the

costs of which RECO, beginning in 2017, is collecting through a customer


    surcharge.



In November 2017, FERC approved a September 2017 settlement agreement among
RECO, the New Jersey Division of Rate Counsel and the NJBPU that increases
RECO's annual transmission revenue requirement from $11.8 million to $17.7
million, effective April 2017. The revenue requirement reflects a return on
common equity of 10.0 percent.
Other Regulatory Matters
In August 2018, the NYSPSC ordered CECONY to begin on January 1, 2019 to credit
the company's electric and gas customers, and to begin on October 1, 2018 to
credit its steam customers, with the net benefits of the federal Tax Cuts and
Jobs Act of 2017 (TCJA) as measured based on amounts reflected in its rate plans
prior to the enactment of the TCJA in December 2017. The net benefits include
the revenue requirement impact of the reduction in the corporate federal income
tax rate to 21 percent, the elimination for utilities of bonus depreciation and
the amortization of excess deferred federal income taxes.

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

CECONY's net benefits prior to October 1, 2018 allocable to the company's steam
customers ($15 million) are being amortized over a three-year period. CECONY's
net regulatory liability for future income taxes, including both the protected
and unprotected portions, allocable to the company's steam customers ($185
million) is being amortized over the remaining lives of the related assets (with
the amortization period for the unprotected portion subject to review in its
next steam rate proceeding).

O&R, under its current electric and gas rate plans, has reflected its TCJA net
benefits in its electric and gas rates beginning as of January 1, 2019. Under
the rate plans, O&R is amortizing its net benefits prior to January 1, 2019 ($22
million) over a three-year period, the protected portion of its net regulatory
liability for future income taxes ($123 million) over the remaining lives of the
related assets and the unprotected portion ($30 million) over a fifteen-year
period. See "Rate Plans," above.

CON EDISON ANNUAL REPORT 2019 131

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In January 2018, the NYSPSC issued an order initiating a focused operations
audit of the income tax accounting of certain utilities, including CECONY and
O&R. The Utilities are unable to estimate the amount or range of their possible
loss related to this matter. At December 31, 2019, the Utilities had not accrued
a liability related to this matter.

In March 2018, Winter Storms Riley and Quinn caused damage to the Utilities'
electric distribution systems and interrupted service to approximately 209,000
CECONY customers, 93,000 O&R customers and 44,000 RECO customers. At
December 31, 2019, CECONY's costs related to March 2018 storms, including Riley
and Quinn, amounted to $134 million, including operation and maintenance
expenses reflected in its electric rate plan ($15 million), operation and
maintenance expenses charged against a storm reserve pursuant to its electric
rate plan ($84 million), capital expenditures ($29 million) and removal costs
($6 million). At December 31, 2019, O&R and RECO costs related to 2018 storms
amounted to $43 million and $17 million, respectively, most of which were
deferred as regulatory assets pursuant to their electric rate plans. In January
2019, O&R began recovering its deferred storm costs over a six-year period in
accordance with its New York electric rate plan. The NYSPSC investigated the
preparation and response to the storms by CECONY, O&R, and other New York
electric utilities, including all aspects of their emergency response plans. In
April 2019, following the issuance of a NYSPSC staff report on the
investigation, the NYSPSC ordered the utilities to show cause why the NYSPSC
should not commence a penalty action against them for violating their emergency
response plans. The Utilities are unable to estimate the amount or range of
their possible loss related to this matter. At December 31, 2019, the Utilities
had not accrued a liability related to this matter.

In July 2018, the NYSPSC commenced an investigation into the rupture of a CECONY
steam main located on Fifth Avenue and 21st Street in Manhattan. Debris from the
incident included dirt and mud containing asbestos. The response to the incident
required the closing of buildings and streets for various periods. The NYSPSC
has commenced an investigation. As of December 31, 2019, with respect to the
incident, the company incurred operating costs of $17 million for property
damage, clean-up and other response costs and invested $9 million in capital and
retirement costs. The company is unable to estimate the amount or range of its
possible loss related to the incident. At December 31, 2019, the company had not
accrued a liability related to the incident.

In March 2019, the NYSPSC ordered CECONY to show cause why the NYSPSC should not
commence a penalty action and prudence proceeding against CECONY for
alleged violations of gas operator qualification, performance, and inspection
requirements. At December 31, 2019, the company had accrued a $10 million
liability related to this matter.

On July 13, 2019, electric service was interrupted to approximately 72,000
CECONY customers on the west side of Manhattan. The NYSPSC and the Northeast
Power Coordinating Council, a regional reliability entity, are investigating the
July 13, 2019 power outage. Pursuant to the major outage reliability performance
provisions of its electric rate plan, as a result of the July 13, 2019 power
outage, the company recorded a $5 million negative revenue adjustment. The
NYSPSC is also investigating other CECONY power outages that occurred in July
2019, primarily in the Flatbush area of Brooklyn. Primarily due to these
outages, pursuant to the rate plan's annual non-network outage frequency and
non-network outage duration reliability performance provisions, the company
recorded a $10 million negative revenue adjustment. The company is unable to
estimate the amount or range of its possible additional loss related to these
power outages.

132 CON EDISON ANNUAL REPORT 2019

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Regulatory Assets and Liabilities
Regulatory assets and liabilities at December 31, 2019 and 2018 were comprised
of the following items:
                                                  Con Edison                  CECONY
(Millions of Dollars)                       2019          2018      2019             2018
Regulatory assets
Unrecognized pension and other
postretirement costs                         $2,541     $2,238           $2,403      $2,111
Environmental remediation costs                 732        810              647         716
Revenue taxes                                   321        291              308         278
MTA power reliability deferral                  248        229              248         229
Property tax reconciliation                     219        101              210          86
System peak reduction and energy
efficiency programs                             131         72              130          70
Deferred derivative losses                       83         17               76          11
Municipal infrastructure support costs           75         67               75          67
Pension and other postretirement
benefits deferrals                               71         73               47          56
Deferred storm costs                             77         76         -                -
Brooklyn Queens demand management
program                                          39         39               39          39
Meadowlands heater odorization project           35         36               35          36
Unamortized loss on reacquired debt              28         36               26          34
Preferred stock redemption                       22         23               22          23
Recoverable REV demonstration project
costs                                            21         20               19          18
Gate station upgrade project                     19         17               19          17
Non-wire alternative projects                    14          3               14           3
Workers' compensation                             3          5                3           5
O&R transition bond charges                    -             2         -                -
Other                                           180        139              166         124
Regulatory assets - noncurrent                4,859      4,294            4,487       3,923
Deferred derivative losses                      128         36              113          29
Recoverable energy costs                       -            40         -                 35
Regulatory assets - current                     128         76              113          64
Total Regulatory Assets                      $4,987     $4,370           $4,600      $3,987
Regulatory liabilities
Future income tax*                           $2,426     $2,515           $2,275      $2,363
Allowance for cost of removal less
salvage                                         989        928              843         790
TCJA net benefits                               471        434              454         411
Net unbilled revenue deferrals                  199        117              199         117
Net proceeds from sale of property              173          6              173           6
Energy efficiency portfolio standard
unencumbered funds                              122        127              118         122
Pension and other postretirement
benefit deferrals                                75         62               46          40
System benefit charge carrying charge            48         27               44          24
Property tax refunds                             45         45               45          45
BQDM and REV Demo reconciliations                27         18               26          18
Earnings sharing - electric, gas and
steam                                            22         36               15          27
Settlement of gas proceedings                    10         15               10          15
Unrecognized other postretirement
costs                                             9          7         -                  7
Settlement of prudence proceeding                 8         37                8          37
Property tax reconciliation                    -            36         -                 36
Other                                           203        231              171         200
Regulatory liabilities - noncurrent           4,827      4,641            4,427       4,258
Refundable energy costs                          44         31               12           8
Deferred derivative gains                        34         30               34          29
Revenue decoupling mechanism                     24         53               17          36
Regulatory liabilities-current                  102        114               63          73
Total Regulatory Liabilities                 $4,929     $4,755           

$4,490 $4,331

* See "Federal Income Tax" in Note A, "Other Regulatory Matters," above, and Note L.

Unrecognized pension and other postretirement costs represent the net regulatory asset associated with the accounting rules for retirement benefits. See Note A.

Revenue taxes represent the timing difference between taxes collected and paid by the Utilities to fund mass transportation.

CON EDISON ANNUAL REPORT 2019 133

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MTA power reliability deferral represents CECONY's costs in excess of those
reflected in its prior electric rate plan to take certain actions relating to
the electrical equipment that serves the Metropolitan Transportation Authority
(MTA) subway system. The company is recovering this regulatory asset pursuant to
its current electric rate plan. See footnote (d) to the CECONY - Electric table
under "Rate Plans," above.
Deferred storm costs represent response and restoration costs, other than
capital expenditures, in connection with Superstorm Sandy and other major storms
that were deferred by the O&R.

Settlement of prudence proceeding represents the remaining amount to be credited
to customers pursuant to a Joint Proposal, approved by the NYSPSC in April 2016,
with respect to the prudence of certain CECONY expenditures and related matters.

Settlement of gas proceedings represents the amount to be credited to customers
pursuant to a settlement agreement approved by the NYSPSC in February 2017
related to CECONY's practices of qualifying persons to perform plastic fusions
on gas facilities and alleged violations of gas safety violations identified by
the NYSPSC staff in its investigation of a March 2014 Manhattan explosion and
fire (see Note H).
The NYSPSC has authorized CECONY to accrue unbilled electric, gas and steam
revenues. CECONY has deferred the net margin on the unbilled revenues for the
future benefit of customers by recording a regulatory liability of $199 million
and $117 million at December 31, 2019 and 2018, respectively, for the difference
between the unbilled revenues and energy cost liabilities.
Note C - Capitalization
Common Stock
Con Edison is authorized to issue 500,000,000 shares of its common stock and
CECONY is authorized to issue 340,000,000 of its common stock. At December 31,
2019 and 2018, 332,629,597 and 320,960,396 shares, respectively, of Con Edison
common stock were outstanding. At December 31, 2019 and 2018, 235,488,094
million shares of CECONY common stock were outstanding, all of which were owned
by Con Edison. At December 31, 2019 and 2018, Con Edison had 23,210,700 treasury
shares, including 21,976,200 shares of Con Edison stock that CECONY purchased
prior to 2001 in connection with Con Edison's stock repurchase plan. CECONY
presents in the financial statements the cost of the Con Edison stock it owns as
a reduction of common shareholder's equity.

In November 2018, Con Edison entered into forward sale agreements relating to
14,973,492 shares of its common stock. In December 2018, the company issued
9,324,123 shares for $705 million upon physical settlement of shares subject to
the forward sale agreements. In March 2019, Con Edison issued 5,649,369 shares
of its common stock for $425 million upon physical settlement of the remaining
shares subject to the forward sale agreements.

In May 2019, Con Edison entered into a forward sale agreement relating to
5,800,000 shares of its common stock. In June 2019, the company issued 4,750,000
shares for $400 million upon physical settlement of shares subject to the
forward sale agreement. At December 31, 2019, 1,050,000 shares remained subject
to the forward sale agreement. In January 2020, the company issued 1,050,000
shares for $88 million upon physical settlement of the remaining shares subject
to the forward sale agreement.
Capitalization of Con Edison
Con Edison's capitalization shown on its Consolidated Statement of
Capitalization includes its outstanding common stock and long-term debt and the
outstanding long-term debt of the Utilities and the Clean Energy Businesses.
Dividends
In accordance with NYSPSC requirements, the dividends that the Utilities
generally pay are limited to not more than 100 percent of their respective
income available for dividends calculated on a two-year rolling average basis.
See Note S. Excluded from the calculation of "income available for dividends"
are non-cash charges to income resulting from accounting changes or charges to
income resulting from significant unanticipated events. The restriction also
does not apply to dividends paid in order to transfer to Con Edison proceeds
from major transactions, such as asset sales, or to dividends reducing each
utility subsidiary's equity ratio to a level appropriate to its business risk.
Long-term Debt
Long-term debt maturing in the period 2020-2024 is as follows:

134 CON EDISON ANNUAL REPORT 2019

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(Millions of Dollars) Con Edison       CECONY
2020                        $518 (a)      $350
2021                       1,967           640
2022                         437            -
2023                         316            -
2024                         385           250


(a) Amount shown includes $73 million of PG&E-related project debt that is

amortizing and scheduled to be repaid in 2020. Amount shown does not include

$928 million of PG&E-related project debt that, as a result of the PG&E

bankruptcy, was reclassified during the first quarter of 2019 on Con Edison's

consolidated balance sheet from long-term debt to long-term debt due within

one year. See "Long-Lived and Intangible Assets" in Note A.




CECONY has issued $450 million of tax-exempt debt through the New York State
Energy Research and Development Authority (NYSERDA) that currently bear interest
at a rate determined weekly and is subject to tender by bondholders for purchase
by the company.
The carrying amounts and fair values of long-term debt at December 31, 2019 and
2018 are:
(Millions of Dollars)                                 2019                 2018
                                               Carrying    Fair     Carrying    Fair
Long-Term Debt (including current portion) (a)  Amount     Value     Amount     Value
Con Edison                                     $19,973    $22,738   $18,145    $18,740
CECONY                                         $14,964    $17,505   $14,151    $14,685


(a) Amounts shown are net of unamortized debt expense and unamortized debt

discount of $178 million and $151 million for Con Edison and CECONY,

respectively, as of December 31, 2019 and $185 million and $139 million for

Con Edison and CECONY, respectively, as of December 31, 2018.




The fair values of the Companies' long-term debt have been estimated primarily
using available market information and at December 31, 2019 are classified as
Level 2 (see Note P).
At December 31, 2019, and 2018, the Clean Energy Businesses had $2,737 million
and $2,076 million, respectively of non-recourse debt secured by the pledge of
the applicable renewable energy production projects including $1,001 million and
$1,050 million, respectively, of PG&E-related project debt. As a result of the
January 2019 PG&E bankruptcy (see "Long-Lived and Intangible Assets" in Note A),
the lenders for the PG&E-related project debt may, upon written notice, declare
principal and interest on the PG&E-related project debt to be due and payable
immediately and, if such amounts are not timely paid, foreclose on the related
projects. The company is seeking to negotiate agreements with the PG&E-related
project debt lenders pursuant to which the lenders would defer exercising these
remedies.
Significant Debt Covenants
The significant debt covenants under the financing arrangements for the
Companies' debentures and Con Edison's notes and February 2019 $825 million,
two-year variable-rate term loan include obligations to pay principal and
interest when due and covenants not to consolidate with or merge into any other
entity unless certain conditions are met. In addition, the notes include a
covenant that the company shall continue its utility business in New York City,
the term loan includes a covenant that, subject to certain exceptions, the
company and its subsidiaries will not mortgage, lien, pledge or otherwise
encumber its assets, and the notes and term loan provide that the company shall
not permit its ratio of consolidated debt to consolidated total capital to
exceed certain amounts (0.675 to 1 for the notes and 0.65 for the term loan) and
include cross default provisions with respect to the failure by the company or
any material subsidiary to make one or more payments in respect of material
financial obligations (in excess of an aggregate $100 million of debt for the
notes and $150 million of debt or derivative obligations for the term loan,
excluding non-recourse debt) of the company (or any of its material
subsidiaries, in the case of the notes) and the occurrence of an event or
condition which results in the acceleration of the maturity of any material debt
(in excess of an aggregate $100 million for the notes and $150 million for the
term loan, not including non-recourse debt) of the company (or any of its
material subsidiaries, in the case of the notes) or enables the holders of such
debt to accelerate the maturity thereof. The Companies' debentures have no cross
default provisions. The tax-exempt financing arrangements of CECONY are subject
to covenants for the debentures discussed above and the covenants discussed
below. The Companies were in compliance with their significant debt covenants at
December 31, 2019.

CON EDISON ANNUAL REPORT 2019 135

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The tax-exempt financing arrangements involved the issuance of uncollateralized
promissory notes of CECONY to NYSERDA in exchange for the net proceeds of a like
amount of tax-exempt bonds with substantially the same terms sold to the public
by NYSERDA. The tax-exempt financing arrangements include covenants with respect
to the tax-exempt status of the financing, including covenants with respect to
the use of the facilities financed. The arrangements include provisions for the
maintenance of liquidity and credit facilities, the failure to comply with which
would, except as otherwise provided, constitute an event of default for the debt
to which such provisions applied.
The failure to comply with debt covenants would, except as otherwise provided,
constitute an event of default for the debt to which such provisions applied. If
an event of default were to occur, the principal and accrued interest on the
debt to which such event of default applied and, in the case of the Con Edison
notes, a make-whole premium might and, in the case of certain events of default
would, become due and payable immediately.
The liquidity and credit facilities currently in effect for the tax-exempt
financing include covenants that the ratio of debt to total capital of CECONY
will not at any time exceed 0.65 to 1 and that, subject to certain exceptions,
CECONY will not mortgage, lien, pledge or otherwise encumber its assets. Certain
of the facilities also include as events of default, defaults in payments of
other debt obligations in excess of specified levels ($150 million or $100
million, depending on the facility).
Note D - Short-Term Borrowing
In December 2016, Con Edison and the Utilities entered into a credit agreement
(Credit Agreement), under which banks are committed to provide loans and letters
of credit on a revolving credit basis. The Credit Agreement, as amended in 2019,
expires in December 2023. There is a maximum of $2,250 million of credit
available through December 2022 and $2,200 million of credit available from then
through December 2023. The full amount is available to CECONY and $1,000 million
(subject to increase up to $1,500 million) is available to Con Edison, including
up to $1,200 million of letters of credit. The Credit Agreement supports the
Companies' commercial paper programs. The Companies have not borrowed under the
Credit Agreement. At December 31, 2019, Con Edison had $1,692 million of
commercial paper outstanding, of which $1,137 million was outstanding under
CECONY's program. The weighted average interest rate at December 31, 2019 was
2.0 percent for both Con Edison and CECONY. At December 31, 2018, Con Edison had
$1,741 million of commercial paper outstanding of which $1,192 million was
outstanding under CECONY's program. The weighted average interest rate at
December 31, 2018 was 3.0 percent for both Con Edison and CECONY.

At December 31, 2019 and 2018, no loans were outstanding under the Credit Agreement. An immaterial amount of letters of credit were outstanding under the Credit Agreement as of December 31, 2019 and 2018.



The banks' commitments under the Credit Agreement are subject to certain
conditions, including that there be no event of default. The commitments are not
subject to maintenance of credit rating levels or the absence of a material
adverse change. Upon a change of control of, or upon an event of default by one
of the Companies, the banks may terminate their commitments with respect to that
company, declare any amounts owed by that company under the Credit Agreement
immediately due and payable and require that company to provide cash collateral
relating to the letters of credit issued for it under the Credit Agreement.
Events of default for a company include that company exceeding at any time of a
ratio of consolidated debt to consolidated total capital of 0.65 to 1 (at
December 31, 2019 this ratio was 0.51 to 1 for Con Edison and 0.53 to 1 for
CECONY); that company having liens on its assets in an aggregate amount
exceeding five percent of its consolidated total capital, subject to certain
exceptions; that company or any of its material subsidiaries failing to make one
or more payments in respect of material financial obligations (in excess of an
aggregate $150 million of debt or derivative obligations other than non-recourse
debt) of that company; the occurrence of an event or condition which results in
the acceleration of the maturity of any material debt (in excess of an aggregate
$150 million of debt other than non-recourse debt) of that company or enables
the holders of such debt to accelerate the maturity thereof; and other customary
events of default. Interest and fees charged for the revolving credit facilities
and any loans made or letters of credit issued under the Credit Agreement
reflect the Companies' respective credit ratings. The Companies were in
compliance with their covenants at December 31, 2019.

See Note S for information about short-term borrowing between related parties.

136 CON EDISON ANNUAL REPORT 2019

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Note E - Pension Benefits
Con Edison maintains a tax-qualified, non-contributory pension plan that covers
substantially all employees of CECONY, O&R and Con Edison Transmission and
certain employees of the Clean Energy Businesses. The plan is designed to comply
with the Internal Revenue Code and the Employee Retirement Income Security Act
of 1974. Con Edison also maintains additional non-qualified supplemental pension
plans.
Total Periodic Benefit Cost
The components of the Companies' total periodic benefit costs for 2019, 2018 and
2017 were as follows:
                            Con Edison                 CECONY
(Millions of Dollars)           2019     2018     2017     2019     2018     2017
Service cost - including
administrative expenses         $250     $290     $263     $232     $272     $246
Interest cost on projected
benefit obligation               601      561      591      564      525      554
Expected return on plan
assets                         (988)  (1,033)    (968)    (936)    (979)    (917)
Recognition of net
actuarial loss                   518      688      595      492      651      563
Recognition of prior
service cost/(credit)           (17)     (17)     (17)     (19)     (19)     (19)
TOTAL PERIODIC BENEFIT COST     $364     $489     $464     $333     $450     $427
Cost capitalized               (108)    (127)    (181)    (102)    (119)    (169)
Reconciliation to rate
level                           (15)     (92)     (34)     (12)    (100)     (41)
Total expense recognized        $241     $270     $249     $219     $231     $217



In March 2017, the FASB issued amendments to the guidance for retirement
benefits through ASU 2017-07, "Compensation-Retirement Benefits (Topic 715):
Improving the Presentation of Net Periodic Pension Cost and Net Periodic
Postretirement Benefit Cost." The Companies adopted ASU 2017-07 beginning on
January 1, 2018. The guidance requires that components of net periodic benefit
cost other than service cost be presented outside of operating income on
consolidated income statements, and that only the service cost component is
eligible for capitalization. Accordingly, the service cost components are
included in the line "Other operations and maintenance" and the non-service cost
components are included in the line "Other deductions" in the Companies'
consolidated income statements. As permitted by a practical expedient under ASU
2017-07, the Companies applied the presentation requirements retrospectively for
both pension and other postretirement benefit costs using amounts disclosed in
prior-period financial statements as appropriate estimates.
Funded Status
The funded status at December 31, 2019, 2018 and 2017 was as follows:

CON EDISON ANNUAL REPORT 2019 137

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                                 Con Edison                  CECONY
(Millions of Dollars)                2019    2018       2017    2019      2018       2017
CHANGE IN PROJECTED BENEFIT
OBLIGATION
Projected benefit obligation at
beginning of year                 $14,449   $15,536  $14,095   $13,542   $14,567    $13,203
Service cost - excluding
administrative expenses               245       286      259       228       267        241
Interest cost on projected
benefit obligation                    601       561      591       564       525        554
Net actuarial loss/(gain)           2,191   (1,219)    1,231     2,076   (1,159)      1,171
Plan amendments                        15       -          6       -         -          -
Benefits paid                       (709)     (715)    (646)     (660)     (658)      (602)
PROJECTED BENEFIT OBLIGATION AT
END OF YEAR                       $16,792   $14,449  $15,536   $15,750   $13,542    $14,567
CHANGE IN PLAN ASSETS
Fair value of plan assets at
beginning of year                 $13,450   $14,274  $12,472   $12,744   $13,519    $11,815
Actual return on plan assets        2,556     (536)    2,041     2,425     (507)      1,935
Employer contributions                350       473      450       318       434        412
Benefits paid                       (709)     (715)    (646)     (660)     (658)      (602)
Administrative expenses              (39)      (46)     (43)      (37)      (44)       (41)
FAIR VALUE OF PLAN ASSETS AT END
OF YEAR                           $15,608   $13,450  $14,274   $14,790   $12,744    $13,519
FUNDED STATUS                    $(1,184)    $(999) $(1,262)    $(960)    $(798)   $(1,048)
Unrecognized net loss              $2,604    $2,464   $2,760    $2,466    $2,338     $2,624
Unrecognized prior service costs    (173)     (205)    (223)     (202)     (222)      (242)
Accumulated benefit obligation     15,015    13,030   13,897    14,010    12,161     12,972



The increase in the pension liability at Con Edison and CECONY of $185 million
and $162 million, respectively, compared with December 31, 2018, was primarily
due to an increase in the plan's projected benefit obligation as a result of a
decrease in the discount rate, partially offset by an increase in plan assets as
a result of the actual return on plan assets. For Con Edison, this increase in
pension liability corresponds with an increase to regulatory assets of $167
million for unrecognized net losses and unrecognized prior service costs
associated with the Utilities consistent with the accounting rules for regulated
operations, a debit to OCI of $10 million (net of taxes) for the unrecognized
net losses, and an immaterial change to OCI (net of taxes) for the unrecognized
prior service costs associated with the Clean Energy Businesses, Con Edison
Transmission, and RECO.
For CECONY, the increase in pension liability corresponds with an increase to
regulatory assets of $147 million for unrecognized net losses and unrecognized
prior service costs consistent with the accounting rules for regulated
operations, and also a debit to OCI of $2 million (net of taxes) for
unrecognized net losses, and an immaterial change to OCI (net of taxes) for the
unrecognized prior service costs associated with certain employees of the Clean
Energy Businesses and Con Edison Transmission who previously worked for CECONY.
A portion of the unrecognized net loss and prior service cost for the pension
plan, equal to $701 million and $(16) million, respectively, will be recognized
from accumulated OCI and the regulatory asset into net periodic benefit cost
over the next year for Con Edison. Included in these amounts are $663 million
and $(20) million, respectively, for CECONY.
At December 31, 2019 and 2018, Con Edison's investments include $397 million and
$326 million, respectively, held in external trust accounts for benefit payments
pursuant to the supplemental retirement plans. Included in these amounts for
CECONY were $371 million and $301 million, respectively. See Note P. The
accumulated benefit obligations for the supplemental retirement plans for Con
Edison and CECONY were $395 million and $360 million as of December 31, 2019 and
$316 million and $285 million as of December 31, 2018, respectively.

138 CON EDISON ANNUAL REPORT 2019

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Assumptions

The actuarial assumptions were as follows:


                                                      2019        2018      

2017


Weighted-average assumptions used to determine
benefit obligations at December 31:
Discount rate                                         3.35 %      4.25 %      3.70 %
Rate of compensation increase
CECONY                                                3.80 %      4.25 %      4.25 %
O&R                                                   3.20 %      4.00 %      4.00 %
Weighted-average assumptions used to determine
net periodic benefit cost for the years ended
December 31:
Discount rate                                         4.25 %      3.70 %      4.25 %
Expected return on plan assets                        7.00 %      7.50 %      7.50 %
Rate of compensation increase
CECONY                                                4.25 %      4.25 %      4.25 %
O&R                                                   4.00 %      4.00 %      4.00 %



The expected return assumption reflects anticipated returns on the plan's
current and future assets. The Companies' expected return was based on an
evaluation of the current environment, market and economic outlook,
relationships between the economy and asset class performance patterns, and
recent and long-term trends in asset class performance. The projections were
based on the plan's target asset allocation.
Discount Rate Assumption
To determine the assumed discount rate, the Companies use a model that produces
a yield curve based on yields on selected highly rated (Aa or higher by either
Moody's or Standard & Poor's) corporate bonds. Bonds with insufficient
liquidity, bonds with questionable pricing information and bonds that are not
representative of the overall market are excluded from consideration. For
example, the bonds used in the model cannot be callable (with the exception of
"make whole" callable bonds), and the amount of the bond issue outstanding must
be in excess of $50 million. The spot rates defined by the yield curve and the
plan's projected benefit payments are used to develop a weighted average
discount rate.
Expected Benefit Payments
Based on current assumptions, the Companies expect to make the following benefit
payments over the next ten years:
(Millions of Dollars) 2020 2021 2022 2023 2024 2025-2029
Con Edison            $744 $756 $770 $788 $801    $4,181
CECONY                 688  699  713  728  741     3,883



Expected Contributions
Based on estimates as of December 31, 2019, the Companies expect to make
contributions to the pension plans during 2020 of $472 million (of which $433
million is to be made by CECONY). The Companies' policy is to fund the total
periodic benefit cost of the qualified plan to the extent tax deductible and to
also contribute to the non-qualified supplemental plans.
Plan Assets
The asset allocations for the pension plan at the end of 2019, 2018 and 2017,
and the target allocation for 2020 are as follows:

CON EDISON ANNUAL REPORT 2019 139

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                       Target
                  Allocation Range         Plan Assets at December 31,
Asset Category          2020             2019           2018           2017
Equity Securities    45% - 55%             51 %           51 %           58 %
Debt Securities      33% - 43%             38 %           39 %           33 %
Real Estate          10% - 14%             11 %           10 %            9 %
Total                   100%              100 %          100 %          100 %



Con Edison has established a pension trust for the investment of assets to be
used for the exclusive purpose of providing retirement benefits to participants
and beneficiaries and payment of plan expenses.
Pursuant to resolutions adopted by Con Edison's Board of Directors, the
Management Development and Compensation Committee of the Board of Directors (the
Committee) has general oversight responsibility for Con Edison's pension and
other employee benefit plans. The pension plan's named fiduciaries have been
granted the authority to control and manage the operation and administration of
the plans, including overall responsibility for the investment of assets in the
trust and the power to appoint and terminate investment managers.
The investment objectives of the Con Edison pension plan are to maintain a level
and form of assets adequate to meet benefit obligations to participants, to
achieve the expected long-term total return on the trust assets within a prudent
level of risk and maintain a level of volatility that is not expected to have a
material impact on the company's expected contribution and expense or the
company's ability to meet plan obligations. The assets of the plan have no
significant concentration of risk in one country (other than the United States),
industry or entity.
The strategic asset allocation is intended to meet the objectives of the pension
plan by diversifying its funds across asset classes, investment styles and fund
managers. An asset/liability study typically is conducted every few years to
determine whether the current strategic asset allocation continues to represent
the appropriate balance of expected risk and reward for the plan to meet
expected liabilities. Each study considers the investment risk of the asset
allocation and determines the optimal asset allocation for the plan. The target
asset allocation for 2020 reflects the results of such a study conducted in
2018.
Individual fund managers operate under written guidelines provided by Con
Edison, which cover such areas as investment objectives, performance
measurement, permissible investments, investment restrictions, trading and
execution, and communication and reporting requirements. Con Edison management
regularly monitors, and the named fiduciaries review and report to the Committee
regarding, asset class performance, total fund performance, and compliance with
asset allocation guidelines. Management changes fund managers and rebalances the
portfolio as appropriate. At the direction of the named fiduciaries, such
changes are reported to the Committee.
Assets measured at fair value on a recurring basis are summarized below as
defined by the accounting rules for fair value measurements (see Note P).

140 CON EDISON ANNUAL REPORT 2019

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The fair values of the pension plan assets at December 31, 2019 by asset category are as follows: (Millions of Dollars)

                          Level 1              Level 2 

Total


Investments within the fair value
hierarchy
U.S. Equity (a)                                   $3,652                 $-            $3,652
International Equity (b)                           3,354                  -             3,354
U.S. Government Issued Debt (c)                      -                  1,496           1,496
Corporate Bonds Debt (d)                             -                  3,260           3,260
Structured Assets Debt (e)                           -                    173             173
Other Fixed Income Debt (f)                          -                    955             955
Cash and Cash Equivalents (g)                        -                    326             326
Futures (h)                                          -                    -               -
Total investments within the fair value
hierarchy                                         $7,006               $6,210         $13,216
Investments measured at NAV per share (n)
Private Equity (i)                                                                        555
Real Estate (j)                                                                         1,806
Hedge Funds (k)                                                                           270
Total investments valued using NAV per
share                                                                                  $2,631
Funds for retiree health benefits (l)              (110)                 (98)           (208)
Funds for retiree health benefits measured
at NAV per share (l)(n)                                                                  (42)
Total funds for retiree health benefits                                                $(250)
Investments (excluding funds for retiree
health benefits)                                  $6,896               $6,112         $15,597
Pending activities (m)                                                                     11
Total fair value of plan net assets                                         

$15,608

(a) U.S. Equity includes both actively- and passively-managed assets with

investments in domestic equity index funds and actively-managed

small-capitalization equities.

(b) International Equity includes international equity index funds and

actively-managed international equities.

(c) U.S. Government Issued Debt includes agency and treasury securities.

(d) Corporate Bonds Debt consists of debt issued by various corporations.

(e) Structured Assets Debt includes commercial-mortgage-backed securities and

collateralized mortgage obligations.

(f) Other Fixed Income Debt includes municipal bonds, sovereign debt and regional

governments.

(g) Cash and Cash Equivalents include short term investments, money markets,

foreign currency and cash collateral.

(h) Futures consist of exchange-traded financial contracts encompassing U.S.

Equity, International Equity and U.S. Government indices.

(i) Private Equity consists of global equity funds that are not exchange-traded.

(j) Real Estate investments include real estate funds based on appraised values

that are broadly diversified by geography and property type.

(k) Hedge Funds are within a commingled structure which invests in various hedge

fund managers who can invest in all financial instruments.

(l) The Companies set aside funds for retiree health benefits through a separate

account within the pension trust, as permitted under Section 401(h) of the

Internal Revenue Code of 1986, as amended. In accordance with the Code, the

plan's investments in the 401(h) account may not be used for, or diverted to,

any purpose other than providing health benefits for retirees. The net assets

held in the 401(h) account are calculated based on a pro-rata percentage

allocation of the net assets in the pension plan. The related obligations for

health benefits are not included in the pension plan's obligations and are

included in the Companies' other postretirement benefit obligation. See Note

F.

(m) Pending activities include security purchases and sales that have not

settled, interest and dividends that have not been received and reflects

adjustments for available estimates at year end.

(n) In accordance with ASU 2015-07, Fair Value Measurements (Topic 820):

Disclosures for Investments in Certain Entities That Calculate Net Asset

Value per Share (or its equivalent), certain investments that are measured at

fair value using the net asset value per share (or its equivalent) practical

expedient have not been classified in the fair value hierarchy.

CON EDISON ANNUAL REPORT 2019 141

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The fair values of the pension plan assets at December 31, 2018 by asset category are as follows: (Millions of Dollars)

                          Level 1         Level 2      

Total


Investments within the fair value
hierarchy
U.S. Equity (a)                                   $3,515             $10         $3,525
International Equity (b)                           2,896             -            2,896
U.S. Government Issued Debt (c)                      -             1,886          1,886
Corporate Bonds Debt (d)                             -             2,619          2,619
Structured Assets Debt (e)                           -                 6              6
Other Fixed Income Debt (f)                          -               121            121
Cash and Cash Equivalents (g)                        160             556            716
Futures (h)                                          568             -              568
Total investments within the fair value
hierarchy                                         $7,139          $5,198    

$12,337


Investments measured at NAV per share (n)
Private Equity (i)                                                                  440
Real Estate (j)                                                                   1,310
Hedge Funds (k)                                                                     255
Total investments valued using NAV per
share                                                                       

$2,005


Funds for retiree health benefits (l)              (118)            (86)    

(204)


Funds for retiree health benefits measured
at NAV per share (l)(n)                                                     

(33)


Total funds for retiree health benefits                                     

$(237)


Investments (excluding funds for retiree
health benefits)                                  $7,021          $5,112    

$14,105


Pending activities (m)                                                      

(655)


Total fair value of plan net assets                                         

$13,450

(a) - (n) Reference is made to footnotes (a) through (n) in the above table of pension plan assets at December 31, 2019 by asset category. The Companies also offer a defined contribution savings plan that covers substantially all employees and made contributions to the plan as follows:


                             For the Years Ended December 31,
(Millions of Dollars)         2019             2018             2017
Con Edison                     $49              $45              $40
CECONY                          42               39               35



Note F - Other Postretirement Benefits
The Utilities and Con Edison Transmission currently have contributory
comprehensive hospital, medical and prescription drug programs for eligible
retirees, their dependents and surviving spouses.
CECONY also has a contributory life insurance program for bargaining unit
employees and provides basic life insurance benefits up to a specified maximum
at no cost to certain retired management employees. O&R has a non-contributory
life insurance program for retirees. Certain employees of the Clean Energy
Businesses and Con Edison Transmission are eligible to receive benefits under
these programs.
Total Periodic Benefit Cost
The components of the Companies' total periodic postretirement benefit costs for
2019, 2018 and 2017 were as follows:

142 CON EDISON ANNUAL REPORT 2019

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                                 Con Edison                 CECONY
(Millions of Dollars)                2019     2018     2017     2019     2018     2017
Service cost                          $18      $20      $20      $13      $14      $13
Interest cost on accumulated
other postretirement benefit
obligation                             44       42       46       36       34       38
Expected return on plan assets       (66)     (73)     (69)     (54)     (63)     (61)
Recognition of net actuarial
loss/(gain)                           (9)        8        2     (10)        3      (3)
Recognition of prior service
credit                                (2)      (6)     (17)      (2)      (2)     (11)
TOTAL PERIODIC POSTRETIREMENT
BENEFIT CREDIT                      $(15)     $(9)    $(18)    $(17)    $(14)    $(24)
Cost capitalized                      (7)      (8)        8      (5)      (6)       10
Reconciliation to rate level           12        8      (4)        7        9      (2)
Total credit recognized             $(10)     $(9)    ($14)    $(15)    $(11)    ($16)




For information about the adoption of ASU 2017-07, "Compensation-Retirement
Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost
and Net Periodic Postretirement Benefit Cost," see Note E.
Funded Status
The funded status of the programs at December 31, 2019, 2018 and 2017 were as
follows:
                             Con Edison                    CECONY
(Millions of Dollars)            2019    2018       2017       2019       2018       2017
CHANGE IN BENEFIT OBLIGATION
Benefit obligation at
beginning of year              $1,114    $1,219     $1,198       $913       $985     $1,007
Service cost                       18        20         20         13         14         13
Interest cost on accumulated
postretirement benefit
obligation                         44        42         46         36         34         38
Amendments                       (14)       -          -          -          -          -
Net actuarial loss/(gain)         264      (70)         53        252       (32)         16
Benefits paid and
administrative expenses, net
of subsidies                    (110)     (135)      (134)      (100)      (125)      (124)
Participant contributions          41        38         36         40         37         35
BENEFIT OBLIGATION AT END OF
YEAR                           $1,357    $1,114     $1,219     $1,154       $913       $985
CHANGE IN PLAN ASSETS
Fair value of plan assets at
beginning of year                $885    $1,039       $975       $759       $893       $851
Actual return on plan assets      198      (66)        150        165       (54)        130
Employer contributions              7         6         17          6          6          8
Employer group waiver plan
subsidies                          23        34         34         22         32         30
Participant contributions          40        37         35         40         37         35
Benefits paid                   (127)     (165)      (172)      (120)      (155)      (161)
FAIR VALUE OF PLAN ASSETS AT
END OF YEAR                    $1,026      $885     $1,039       $872       $759       $893
FUNDED STATUS                  $(331)    $(229)     $(180)     $(282)     $(154)      $(92)
Unrecognized net loss/(gain)     $155       $14      $(47)       $149       $(2)      $(85)
Unrecognized prior service
costs                            (19)       (8)       (14)        (3)        (5)        (7)



The increase in the other postretirement benefits liability at Con Edison and
CECONY of $102 million and $128 million, respectively, compared with
December 31, 2018, was primarily due to an increase in the plans' projected
benefit obligation as a result of an increase in net actuarial loss, partially
offset by an increase in plan assets as a result of the actual return on plan
assets. For Con Edison, this increased liability corresponds with an increase to
regulatory assets of $134 million for unrecognized net losses and unrecognized
prior service costs associated with the Utilities consistent with the accounting
rules for regulated operations, a credit to OCI of $6 million (net of taxes) for
the unrecognized net losses and a debit to OCI of $1 million (net of taxes) for
the unrecognized prior service costs associated with the Clean Energy
Businesses, Con Edison Transmission, and RECO.

CON EDISON ANNUAL REPORT 2019 143

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For CECONY, the increase in liability corresponds with an increase to regulatory
assets of $153 million for unrecognized net losses and the unrecognized prior
service costs associated with the company consistent with the accounting rules
for regulated operations, and also immaterial changes to OCI for the
unrecognized net losses and the unrecognized prior service costs associated with
eligible employees of the Clean Energy Businesses and Con Edison Transmission
who previously worked for CECONY.
A portion of the unrecognized net losses and prior service costs for the other
postretirement benefits, equal to $27 million and $(3) million, respectively,
will be recognized from accumulated OCI and the regulatory asset into net
periodic benefit cost over the next year for Con Edison. Included in these
amounts are $22 million and $(2) million, respectively, for CECONY.
Assumptions
The actuarial assumptions were as follows:
                                                      2019        2018      

2017


Weighted-average assumptions used to determine
benefit obligations at December 31:
Discount Rate
CECONY                                                3.10 %      4.15 %      3.55 %
O&R                                                   3.35 %      4.30 %      3.70 %
Weighted-average assumptions used to determine
net periodic benefit cost for the years ended
December 31:
Discount Rate
CECONY                                                4.15 %      3.55 %      4.00 %
O&R                                                   4.30 %      3.70 %      4.20 %
Expected Return on Plan Assets                        6.80 %      7.50 %    

7.50 %





Refer to Note E for descriptions of the basis for determining the expected
return on assets, investment policies and strategies and the assumed discount
rate.
The health care cost trend rate used to determine net periodic benefit cost for
the years ended December 31, 2019, 2018 and 2017 was 5.40 percent, 5.60 percent
and 5.80 percent, respectively, which is assumed to decrease gradually to 4.50
percent by 2024 and remain at that level thereafter. The health care cost trend
rate used to determine benefit obligations as of December 31, 2019, 2018 and
2017 was 5.20 percent, 5.40 percent and 5.60 percent, respectively, which is
assumed to decrease gradually to 4.50 percent by 2024 and remain at that level
thereafter.
A one-percentage point change in the assumed health care cost trend rate would
have the following effects at December 31, 2019:
                                       Con Edison             CECONY
                                                   One-Percentage-Point
(Millions of Dollars)                    Increase  Decrease     Increase   Decrease
Effect on accumulated other
postretirement benefit obligation             $60       $(17)        $33    

$3


Effect on service cost and interest
cost components for 2019                        1         -          (1)          2




Expected Benefit Payments
Based on current assumptions, the Companies expect to make the following benefit
payments over the next ten years, net of receipt of governmental subsidies and
participant contributions:
(Millions of Dollars) 2020 2021 2022 2023 2024 2025-2029
Con Edison             $96  $95  $93  $92  $91      $422
CECONY                  87   85   83   82   80       368



144 CON EDISON ANNUAL REPORT 2019

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Expected Contributions
Based on estimates as of December 31, 2019, Con Edison and CECONY expect to make
a contribution of $6 million (substantially all of which is to be made by
CECONY) to the other postretirement benefit plans in 2020. The Companies' policy
is to fund the total periodic benefit cost of the plans to the extent tax
deductible.
Plan Assets
The asset allocations for CECONY's other postretirement benefit plans at the end
of 2019, 2018 and 2017, and the target allocation for 2020 are as follows:
                  Target Allocation Range   Plan Assets at December 31,
Asset Category             2020                2019          2018       2017
Equity Securities         42%-80%                54 %          52 %       60 %
Debt Securities           20%-58%                46 %          48 %       40 %
Total                      100%                 100 %         100 %      100 %



Con Edison has established postretirement health and life insurance benefit plan
trusts for the investment of assets to be used for the exclusive purpose of
providing other postretirement benefits to participants and beneficiaries.
Refer to Note E for a discussion of Con Edison's investment policy for its
benefit plans.
The fair values of the plans' assets at December 31, 2019 by asset category as
defined by the accounting rules for fair value measurements (see Note P) are as
follows:
(Millions of Dollars)                             Level 1          Level 2          Total
Equity (a)                                             $-             $404           $404
Other Fixed Income Debt (b)                             -              331            331
Cash and Cash Equivalents (c)                           -               23             23
Total investments                                      $-             $758           $758
Funds for retiree health benefits (d)                 110               98  

208


Investments (including funds for retiree
health benefits)                                     $110             $856  

$966


Funds for retiree health benefits measured
at net asset value (d)(e)                                                              42
Pending activities (f)                                                                 18
Total fair value of plan net assets                                         

$1,026

(a) Equity includes a passively managed commingled index fund benchmarked to the

MSCI All Country World Index.

(b) Other Fixed Income Debt includes a passively managed commingled index fund

benchmarked to the Bloomberg Barclays U.S. Long Credit Index and an active

separately managed fund indexed to the Bloomberg Barclays U.S. Long Credit

Index.

(c) Cash and Cash Equivalents include short-term investments and money markets.

(d) The Companies set aside funds for retiree health benefits through a separate

account within the pension trust, as permitted under Section 401(h) of the

Internal Revenue Code of 1986, as amended. In accordance with the Code, the

plan's investments in the 401(h) account may not be used for, or diverted to,

any purpose other than providing health benefits for retirees. The net assets

held in the 401(h) account are calculated based on a pro-rata percentage

allocation of the net assets in the pension plan. The related obligations for

health benefits are not included in the pension plan's obligations and are

included in the Companies' other postretirement benefit obligation. See Note

E.

(e) In accordance with ASU 2015-07, Fair Value Measurements (Topic 820):

Disclosures for Investments in Certain Entities That Calculate Net Asset

Value per Share (or its equivalent), certain investments that are measured at

fair value using the net asset value per share (or its equivalent) practical

expedient have not been classified in the fair value hierarchy.

(f) Pending activities include security purchases and sales that have not

settled, interest and dividends that have not been received, and reflects


    adjustments for available estimates at year-end.



CON EDISON ANNUAL REPORT 2019 145

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The fair values of the plans' assets at December 31, 2018 by asset category (see
Note P) are as follows:
(Millions of Dollars)                             Level 1          Level 2          Total
Equity (a)                                             $-             $322           $322
Other Fixed Income Debt (b)                             -              289            289
Cash and Cash Equivalents (c)                           -               14             14
Total investments                                      $-             $625  

$625


Funds for retiree health benefits (d)                 118               86  

204


Investments (including funds for retiree
health benefits)                                     $118             $711  

$829


Funds for retiree health benefits measured
at net asset value (d)(e)                                                              33
Pending activities (f)                                                                 23
Total fair value of plan net assets                                         

$885




(a) - (f) Reference is made to footnotes (a) through (f) in the above table of
other postretirement benefit plan assets at December 31, 2019 by asset category.
Note G - Environmental Matters
Superfund Sites
Hazardous substances, such as asbestos, polychlorinated biphenyls (PCBs) and
coal tar, have been used or generated in the course of operations of the
Utilities and their predecessors and are present at sites and in facilities and
equipment they currently or previously owned, including sites at which gas was
manufactured or stored.
The Federal Comprehensive Environmental Response, Compensation and Liability Act
of 1980 and similar state statutes (Superfund) impose joint and several
liability, regardless of fault, upon generators of hazardous substances for
investigation and remediation costs (which include costs of demolition, removal,
disposal, storage, replacement, containment and monitoring) and natural resource
damages. Liability under these laws can be material and may be imposed for
contamination from past acts, even though such past acts may have been lawful at
the time they occurred. The sites at which the Utilities have been asserted to
have liability under these laws, including their manufactured gas plant sites
and any neighboring areas to which contamination may have migrated, are referred
to herein as "Superfund Sites."
For Superfund Sites where there are other potentially responsible parties and
the Utilities are not managing the site investigation and remediation, the
accrued liability represents an estimate of the amount the Utilities will need
to pay to investigate and, where determinable, discharge their related
obligations. For Superfund Sites (including the manufactured gas plant sites)
for which one of the Utilities is managing the investigation and remediation,
the accrued liability represents an estimate of the company's share of the
undiscounted cost to investigate the sites and, for sites that have been
investigated in whole or in part, the cost to remediate the sites, if
remediation is necessary and if a reasonable estimate of such cost can be made.
Remediation costs are estimated in light of the information available,
applicable remediation standards and experience with similar sites.
The accrued liabilities and regulatory assets related to Superfund Sites at
December 31, 2019 and 2018 were as follows:
                                        Con Edison               CECONY
(Millions of Dollars)             2019          2018      2019       2018
Accrued Liabilities:
Manufactured gas plant sites      $640          $689      $561       $603
Other Superfund Sites               94            90        93         90
Total                             $734          $779      $654       $693
Regulatory assets                 $732          $810      $647       $716



Most of the accrued Superfund Site liability relates to sites that have been
investigated, in whole or in part. However, for some of the sites, the extent
and associated cost of the required remediation has not yet been determined. As
investigations progress and information pertaining to the required remediation
becomes available,

146 CON EDISON ANNUAL REPORT 2019

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the Utilities expect that additional liability may be accrued, the amount of which is not presently determinable but may be material. The Utilities are permitted to recover or defer as regulatory assets (for subsequent recovery through rates) prudently incurred site investigation and remediation costs. Environmental remediation costs incurred related to Superfund Sites at December 31, 2019 and 2018 were as follows:


                                      Con Edison               CECONY
(Millions of Dollars)           2019          2018      2019       2018
Remediation costs incurred       $19           $25       $13        $18



Insurance and other third party recoveries received by Con Edison or CECONY were
immaterial in 2019 and 2018.
Con Edison and CECONY estimate that in 2020 they will incur costs for
remediation of approximately $46 million and $43 million, respectively. The
Companies are unable to estimate the time period over which the remaining
accrued liability will be incurred because, among other things, the required
remediation has not been determined for some of the sites.
In 2019, Con Edison and CECONY estimated that for their manufactured gas plant
sites (including CECONY's Astoria site), the aggregate undiscounted potential
liability for the investigation and remediation of coal tar and/or other
environmental contaminants could range up to $2.8 billion and $2.6 billion,
respectively. These estimates were based on the assumption that there is
contamination at all sites, including those that have not yet been fully
investigated and additional assumptions about the extent of the contamination
and the type and extent of the remediation that may be required. Actual
experience may be materially different.
Asbestos Proceedings
Suits have been brought in New York State and federal courts against the
Utilities and many other defendants, wherein a large number of plaintiffs sought
large amounts of compensatory and punitive damages for deaths and injuries
allegedly caused by exposure to asbestos at various premises of the Utilities.
The suits that have been resolved, which are many, have been resolved without
any payment by the Utilities, or for amounts that were not, in the aggregate,
material to them. The amounts specified in all the remaining thousands of suits
total billions of dollars; however, the Utilities believe that these amounts are
greatly exaggerated, based on the disposition of previous claims. At
December 31, 2019, Con Edison and CECONY have accrued their estimated aggregate
undiscounted potential liabilities for these suits and additional suits that may
be brought over the next 15 years as shown in the following table. These
estimates were based upon a combination of modeling, historical data analysis
and risk factor assessment. Courts have begun, and unless otherwise determined
on appeal may continue, to apply different standards for determining liability
in asbestos suits than the standard that applied historically. As a result, the
Companies currently believe that there is a reasonable possibility of an
exposure to loss in excess of the liability accrued for the suits. The Companies
are unable to estimate the amount or range of such loss. In addition, certain
current and former employees have claimed or are claiming workers' compensation
benefits based on alleged disability from exposure to asbestos. CECONY is
permitted to defer as regulatory assets (for subsequent recovery through rates)
costs incurred for its asbestos lawsuits and workers' compensation claims.
The accrued liability for asbestos suits and workers' compensation proceedings
(including those related to asbestos exposure) and the amounts deferred as
regulatory assets for the Companies at December 31, 2019 and 2018 were as
follows:
                                                   Con Edison              CECONY
(Millions of Dollars)                         2019        2018      2019       2018
Accrued liability - asbestos suits              $8          $8        $7    

$7


Regulatory assets - asbestos suits              $8          $8        $7    

$7

Accrued liability - workers' compensation $78 $79 $73

$75

Regulatory assets - workers' compensation $3 $5 $3


     $5




CON EDISON ANNUAL REPORT 2019 147

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Note H - Other Material Contingencies
Manhattan Explosion and Fire
On March 12, 2014, two multi-use five-story tall buildings located on Park
Avenue between 116th and 117th Streets in Manhattan were destroyed by an
explosion and fire. CECONY had delivered gas to the buildings through service
lines from a distribution main located below ground on Park Avenue. Eight people
died and more than 50 people were injured. Additional buildings were also
damaged. The National Transportation Safety Board (NTSB) investigated. The
parties to the investigation included the company, the City of New York, the
Pipeline and Hazardous Materials Safety Administration and the NYSPSC. In June
2015, the NTSB issued a final report concerning the incident, its probable cause
and safety recommendations. The NTSB determined that the probable cause of the
incident was (1) the failure of a defective fusion joint at a service tee (which
joined a plastic service line to a plastic distribution main) installed by the
company that allowed gas to leak from the distribution main and migrate into a
building where it ignited and (2) a breach in a City sewer line that allowed
groundwater and soil to flow into the sewer, resulting in a loss of support for
the distribution main, which caused it to sag and overstressed the defective
fusion joint. The NTSB also made safety recommendations, including
recommendations to the company that addressed its procedures for the preparation
and examination of plastic fusions, training of its staff on conditions for
notifications to the City's Fire Department and extension of its gas main
isolation valve installation program. In February 2017, the NYSPSC approved a
settlement agreement with the company related to the NYSPSC's investigations of
the incident and the practices of qualifying persons to perform plastic fusions.
Pursuant to the agreement, the company is providing $27 million of future
benefits to customers (for which it has accrued a regulatory liability) and will
not recover from customers $126 million of costs for gas emergency response
activities that it had previously incurred and expensed. Approximately eighty
suits are pending against the company seeking generally unspecified damages and,
in some cases, punitive damages, for wrongful death, personal injury, property
damage and business interruption. The company has notified its insurers of the
incident and believes that the policies in force at the time of the incident
will cover the company's costs, in excess of a required retention (the amount of
which is not material), to satisfy any liability it may have for damages in
connection with the incident. The company is unable to estimate the amount or
range of its possible loss for damages related to the incident. At December 31,
2019, the company had not accrued a liability for damages related to the
incident.
Other Contingencies
For information about the PG&E bankruptcy, see "Long-Lived and Intangible
Assets" in Note A. Also, for additional contingencies, see "Other Regulatory
Matters" in Note B and "Uncertain Tax Positions" in Note L.
Guarantees
Con Edison and its subsidiaries have entered into various agreements providing
financial or performance assurance primarily to third parties on behalf of their
subsidiaries. Maximum amounts guaranteed by Con Edison under these agreements
totaled $1,831 million and $2,439 million at December 31, 2019 and 2018,
respectively.
A summary, by type and term, of Con Edison's total guarantees under these other
agreements at December 31, 2019 is as follows:
Guarantee Type                         0 - 3 years   4 - 10 years            > 10 years          Total
                                       (Millions of Dollars)
Con Edison Transmission                       $387             $186                  $-           $573
Energy transactions                            419               51                   209          679
Renewable electric production projects          70                9                   431          510
Other                                           69              -                     -             69
Total                                         $945             $246                  $640       $1,831



Con Edison Transmission - Con Edison has guaranteed payment by CET Electric of
the contributions CET Electric agreed to make to New York Transco LLC (NY
Transco). CET Electric owns a 45.7 percent interest in NY Transco. In April
2019, the New York Independent System Operator (NYISO) selected a transmission
project that was jointly proposed by National Grid and NY Transco. The siting,
construction and operation of the project will require approvals and permits
from appropriate governmental agencies and authorities, including the NYSPSC.
The NYISO indicated it will work with the developers to enter into agreements
for the development and operation of the projects, including a schedule for
entry into service by December 2023. Guarantee amount shown includes the maximum
possible required amount of CET Electric's contributions for this project as
calculated based on the

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assumptions that the project is completed at 175 percent of its estimated costs
and NY Transco does not use any debt financing for the project. Also included
within the table above are guarantees for $25 million from Con Edison on behalf
of CET Gas in relation to Mountain Valley Pipeline (MVP), LLC, a company
developing a proposed gas transmission project in West Virginia and Virginia.
See Note U.
Energy Transactions - Con Edison guarantees payments on behalf of the Clean
Energy Businesses in order to facilitate physical and financial transactions in
electricity, gas, pipeline capacity, transportation, oil, renewable energy
credits and energy services. To the extent that liabilities exist under the
contracts subject to these guarantees, such liabilities are included in Con
Edison's consolidated balance sheet.
Renewable Electric Production Projects - Con Edison and the Clean Energy
Businesses guarantee payments on behalf of their wholly-owned subsidiaries
associated with their investment in, or development for others of, solar and
wind energy facilities. See Note U.
Other - Other guarantees include $70 million in guarantees provided by Con
Edison to Travelers Insurance Company for indemnity agreements for surety bonds
in connection with operation of solar energy facilities and energy service
projects of the Clean Energy Businesses.
Note I - Electricity Purchase Agreements
The Utilities have electricity purchase agreements with non-utility generators
and others for generating capacity. The Utilities recover their purchased power
costs in accordance with provisions approved by the applicable state public
utility regulators. See "Recoverable Energy Costs" in Note A. The Utilities also
conducted auctions and have entered into various other electricity purchase
agreements. Assuming performance by the parties to the electricity purchase
agreements, the Utilities are obligated over the terms of the agreements to make
capacity and other fixed payments.
The future capacity and other fixed payments under the electricity purchase
agreements are estimated to be as follows:
                                                          All Years
(Millions of Dollars) 2020   2021   2022   2023   2024   Thereafter
Con Edison            $172   $101    $62    $57    $55         $546
CECONY                 169     99     62     57     55          546



For energy delivered under most of the electricity purchase agreements, CECONY
is obligated to pay variable prices. The company's payments under its agreements
for capacity, energy and other fixed payments in 2019, 2018 and 2017 were as
follows:
                                       For the Years Ended December 31,
(Millions of Dollars)                                     2019    2018    2017
Indian Point (a)                                            $-       $6   $211
Linden Cogeneration (b)                                      -       -     114
Astoria Generating Company (c)                              116     179     92
Brooklyn Navy Yard (d)                                      115     124    117
Cogen Technologies                                           -        9     18
Total                                                      $231    $318   $552


(a) Contract term ended in 2018.
(b) Contract term ended in 2017.
(c) Capacity purchase agreements with terms ending in 2020 and 2021.
(d) Contract for plant output, which started in 1996 and ends in 2036.

Note J - Leases
In January 2019, the Companies adopted Accounting Standards Update (ASU) No.
2016-02, "Leases (Topic 842)," including the amendments thereto, using a
modified retrospective transition method of adoption that required no prior
period adjustments or charges to retained earnings for cumulative impact. The
standard supersedes the lease requirements within ASC Topic 840, "Leases."

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The Companies lease land, office buildings, equipment and access rights to
support electric transmission facilities. Upon adoption of Topic 842, the
Companies recognized lease right-of-use assets and lease liabilities on their
consolidated balance sheets for virtually all of their leases (other than leases
that meet the definition of a short-term lease, the expense for which was
immaterial). A lease right-of-use asset represents a right to use an
identifiable underlying asset and obtain substantially all of the economic
benefits from the use of that asset for the lease term. A lease liability
represents an obligation to make lease payments arising from the lease. Leases
are classified as either operating leases or finance leases. Operating leases
are included in operating lease right-of-use asset and operating lease
liabilities on the Companies' consolidated balance sheets. Finance leases are
included in other noncurrent assets, other current liabilities and other
noncurrent liabilities. The Utilities, as regulated entities, are permitted to
continue to recognize expense for operating leases using the timing that
conforms to the regulatory rate treatment as rental payments are recovered from
our customers and to account the same way for finance leases. Lessor accounting
is similar to the previous model, but updated to align with ASC Topic 606
"Revenue from Contracts with Customers."

The Companies elected the following practical expedients: (1) a package of
practical expedients that allows the Companies to not reassess: (a) whether
expired or existing contracts contained leases; (b) the lease classification for
expired or existing leases and (c) the initial direct costs for existing leases;
(2) for all underlying asset classes, an expedient that allows the Companies to
not apply the recognition requirements to short-term leases and an expedient
that allows the Companies to account for lease and associated non-lease
components as a single lease component; (3) an expedient that allows the use of
hindsight to determine lease term; and (4) an expedient that allows the
Companies to not evaluate under Topic 842 land easements that exist or expired
before the entity's adoption of Topic 842 and that were not previously accounted
for as leases under Topic 840.

The Companies, upon adoption of Topic 842 recognized, and for new operating
leases at commencement date recognize, operating lease right-of-use assets and
operating lease liabilities based on the present value of the future minimum
lease payments over the lease term. As most of the Companies' leases do not
provide an implicit rate, the Companies used their collateralized incremental
borrowing rate based on the information available at the commencement date to
determine the present value of future payments. Most of the Companies' leases
have remaining lease terms of one year to 40 years, and may include options to
renew or extend the leases for up to five years at the fair rental value. The
Companies' lease terms include options to renew, extend or terminate the lease
when it is reasonably certain that the Companies will exercise that option.
There were no leases with material variable lease payments or residual value
guarantees.

Operating lease cost and cash paid for amounts included in the measurement of lease liabilities for the twelve months ended December 31, 2019, were as follows:



(Millions of Dollars)       Con Edison   CECONY
Operating lease cost               $83      $64
Operating lease cash flows         $75      $60




As of December 31, 2019, assets recorded as finance leases were $1 million for
Con Edison and an immaterial amount for CECONY, and the accumulated amortization
associated with finance leases for Con Edison and CECONY were $5 million and $3
million, respectively. For the twelve months ended December 31, 2019, finance
lease costs and cash flows for Con Edison and CECONY were immaterial.

Right-of-use assets obtained in exchange for lease obligations for Con Edison
and CECONY were $39 million and $4 million, respectively, for the twelve months
ended December 31, 2019.

Other information related to leases for Con Edison and CECONY at December 31, 2019 was as follows:

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                                       Con Edison   CECONY
Weighted Average Remaining Lease Term:
Operating leases                       19.8 years 14.0 years
Finance leases                         12.2 years 2.4 years
Weighted Average Discount Rate:
Operating leases                          4.3%       3.6%
Finance leases                            3.5%       4.1%



Future minimum lease payments under non-cancellable leases at December 31, 2019
were as follows:
(Millions of Dollars)                                      Con Edison                          CECONY
Year Ending December 31,                                                              Operating
                                                Operating Leases   Finance Leases      Leases      Finance Leases
2020                                                         $78              $-             $60              $-
2021                                                          75               -              57               -
2022                                                          73               -              55               -
2023                                                          72               -              54               -
2024                                                          72               -              55               -
All years thereafter                                         992               1             501               -
Total future minimum lease payments                       $1,362              $1            $782              $-
Less: imputed interest                                       (488)             -             (177)             -
Total                                                       $874              $1            $605              $-
Reported as of December 31, 2019
Operating lease liabilities (current)                        $65              $-             $54              $-
Operating lease liabilities (noncurrent)                     809               -             551               -
Other noncurrent liabilities                                   -               1               -               -
Total                                                       $874              $1            $605              $-


At December 31, 2019, the Companies did not have material obligations under operating or finance leases that had not yet commenced.



Disclosures related to the twelve months ended December 31, 2019 are presented
as required under Topic 842. Prior period disclosures for the year ended
December 31, 2018 are presented under Topic 840. The Companies have elected to
use a practical expedient provided by Topic 842 whereby comparative disclosures
for prior periods are allowed to be presented under Topic 840. The disclosures
presented under Topic 842 and Topic 840 will not be fully comparable in specific
disclosure requirements.

The future minimum lease commitments at December 31, 2018, accounted for under Topic 840, for the Companies' operating lease agreements that are not cancellable by the Companies were as follows:



(Millions of Dollars) Con Edison CECONY
2019                     $72      $56
2020                      72       56
2021                      71       54
2022                      68       53
2023                      68       53
All years thereafter     890      592
Total                   $1,241    $864



The Companies are lessors under certain leases whereby the Companies own real
estate and distribution poles and lease portions of them to others. Revenue
under such leases was immaterial for Con Edison and CECONY for the twelve months
ended December 31, 2019.

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Note K - Goodwill
In 2019 and 2018, Con Edison elected to perform the optional qualitative
assessment for goodwill related to the 1999 O&R merger and the acquisition of a
gas storage company, and the first step of the quantitative test for the
acquisition of a residential solar company. In 2019 and 2018, Con Edison
completed impairment tests for its goodwill of $406 million related to the O&R
merger, and determined that it was not impaired. For the impairment test, $245
million and $161 million of goodwill were allocated to CECONY and O&R,
respectively. In 2019 and 2018, Con Edison completed impairment tests for
goodwill of $8 million related to a gas storage company acquired by CET Gas from
the Clean Energy Businesses and determined that it was not impaired. In 2019 and
2018, Con Edison determined that goodwill of $14 million related to the
residential solar company acquired by the Clean Energy Businesses in 2016 was
not impaired. In 2018, Con Edison recorded $12 million of goodwill related to a
battery storage company acquired by the Clean Energy Businesses, and, in 2019,
the amount was increased to $18 million, reflecting final purchase price
adjustments. In 2019, Con Edison elected to perform the first step of the
quantitative test for goodwill related to the battery storage company
acquisition and determined that it was not impaired. Estimates of future cash
flows, projected growth rates, and discount rates inherent in the cash flow
estimates for Con Edison subsidiaries other than the Utilities may vary
significantly from actual results, which could result in a future impairment of
goodwill.

Note L - Income Tax
The components of income tax are as follows:
                                       Con Edison              CECONY
(Millions of Dollars)                   2019     2018   2017   2019   2018   2017
State
Current                                 $(12)   $(10)   $(2)    $22     $6    $37
Deferred                                   96     107    103     68     82     75
Federal
Current                                    -        3   (11)    185   (34)     73
Deferred                                  219     310    391     63    275    504

Amortization of investment tax credits (7) (9) (9) (3) (3)


  (4)
Total income tax expense                 $296    $401   $472   $335   $326   $685



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The tax effects of temporary differences, which gave rise to deferred tax assets and liabilities, are as follows:


                                                 Con Edison                   CECONY
(Millions of Dollars)                         2019      2018        2019             2018
Deferred tax liabilities:
Property basis differences                  $7,699      $7,402           $6,640      $6,446
Regulatory assets:
Unrecognized pension and other
postretirement costs                           712         627              674         591
Environmental remediation costs                205         227              181         200
Deferred storm costs                            22          21         -                -
Other regulatory assets                        376         273              355         252
Operating lease right-of-use asset             231         -                

169 -


  Equity investments                           104         102         -                -
Total deferred tax liabilities              $9,349      $8,652           $8,019      $7,489
Deferred tax assets:
  Accrued pension and other
postretirement costs                          $291        $248             $222        $180
  Regulatory liabilities:
  Future income tax                            678         702              638         662
  Other regulatory liabilities                 702         632              622         554
Superfund and other environmental
costs                                          206         218              183         194
Asset retirement obligations                   135         114              102          82
Operating lease liabilities                    231         -                170         -
Loss carryforwards                             108         229         -                -
Tax credits carryforward                       896         817         -                -
Valuation allowance                           (40)        (33)         -                -
Other                                           56          53              103         102
Total deferred tax assets                    3,263       2,980            2,040       1,774
Net deferred tax liabilities                $6,086      $5,672           $5,979      $5,715
Unamortized investment tax credits             141         148               21          24
Net deferred tax liabilities and
unamortized investment tax credits          $6,227      $5,820           $6,000      $5,739




Upon enactment of the TCJA in December 2017, the Companies re-measured their
deferred tax assets and liabilities based upon the TCJA's 21 percent corporate
federal income tax rate. As a result, Con Edison, decreased its net deferred tax
liabilities by $5,312 million (including $4,781 million for CECONY), recognized
$259 million in net income, decreased its regulatory asset for future income tax
by $1,250 million (including $1,182 million for CECONY), decreased the
regulatory asset for revenue taxes by $90 million (including $86 million for
CECONY), and accrued a regulatory liability for future income tax of $3,713
million (including $3,513 million for CECONY). Since the Companies were in a net
regulatory liability position with respect to these income tax matters, the
Companies netted the regulatory asset for future income tax against the
regulatory liability for future income tax. Under the rate normalization
requirements continued by the TCJA, $2,684 million of the net regulatory
liability (including $2,542 million for CECONY) related to certain accelerated
tax depreciation benefits is to be amortized over the remaining lives of the
related assets. The remainder of the net regulatory liability is to be refunded
(or credited) to customers as determined by the NYSPSC or NJBPU, as applicable.
See "Other Regulatory Matters" in Note B. The amount recognized in net income
included $269 million for the Clean Energy Businesses, $11 million for Con
Edison Transmission and $(21) million for the parent company. The re-measurement
had no impact on the Companies' cash flows for 2017.

At December 31, 2017, the Companies recorded provisional income tax amounts in
its accounting for certain effects of the provisions of the TCJA as allowed
under SEC Staff Accounting Bulletin 118 (SAB 118). SAB 118 allowed a one year
period for companies to finalize the provisional amounts recorded as of December
31, 2017. In August 2018, the Internal Revenue Service (IRS) and U.S. Department
of Treasury issued proposed regulations (which were finalized in December 2019),
that clarified provisions in the TCJA on the allowance for additional first-year
depreciation for qualified property of regulated public utilities placed in
service in the fourth quarter of 2017. Under this guidance, which Con Edison
elected to adopt the Utilities deducted $477 million in additional depreciation
in

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Con Edison's 2017 federal income tax return. The additional depreciation
increased Con Edison's 2017 federal net operating loss (NOL) carryover to $563
million (CECONY's 2017 federal NOL carryover of $153 million was applied in full
to CECONY's 2018 tax liability), which required a re-measurement of deferred tax
assets and liabilities associated with the filing of its 2017 federal income tax
return. As a result, Con Edison decreased its net deferred tax liabilities by
$13 million (including $50 million for CECONY), recognized $42 million in income
tax expense at the parent company related to re-measuring the 2017 federal NOL
carryover to 2018, decreased the regulatory asset for revenue taxes by $1
million (entirely attributable to CECONY) and accrued a regulatory liability for
future income tax of $54 million (including $49 million for CECONY). The
Companies completed their assessment in the fourth quarter of 2018 and no
further adjustments to the provisional amounts were recorded.

Reconciliation of the difference between income tax expense and the amount
computed by applying the prevailing statutory income tax rate to income before
income taxes is as follows:
                                 Con Edison                       CECONY
(% of Pre-tax income)              2019       2018       2017       2019       2018       2017
STATUTORY TAX RATE
Federal                              21 %       21 %       35 %       21 %       21 %       35 %
Changes in computed taxes
resulting from:
State income tax                      4          4          4          5          5          4
Taxes attributable to
noncontrolling interests             (1 )        -          -          -          -          -
Cost of removal                       1          1          1          1          1          1
Other plant-related items            (1 )       (1 )       (1 )       (1 )       (1 )       (1 )
TCJA deferred tax re-measurement      -          2        (13 )        -          -          -
Amortization of excess deferred
federal income taxes                 (4 )       (3 )        -         (4 )       (3 )        -
Renewable energy credits             (2 )       (1 )       (1 )        -          -          -
Research and development credits     (1 )        -          -         (1 )       (1 )        -
Other                                 -          -         (2 )        -         (1 )       (1 )
Effective tax rate                   17 %       23 %       23 %       21 %       21 %       38 %




CECONY and O&R deferred as regulatory liabilities their estimated net benefits
under the TCJA for the year ended December 31, 2018. CECONY's net benefits prior
to January 1, 2019 for its electric service and amortization of excess deferred
federal income taxes for its electric service continued to be deferred. RECO
deferred as a regulatory liability its estimated net benefits under the TCJA for
the three months ended March 31, 2018. The net benefits include the revenue
requirement impact of the reduction in the corporate federal income tax rate to
21 percent, the elimination for utilities of bonus depreciation and the
amortization of excess deferred federal income taxes the utilities collected
from customers that will not be paid to the IRS under the TCJA. See "Other
Regulatory Matters" in Note B.

At December 31, 2019, Con Edison had a federal net operating loss carryover of
approximately $36 million from prior years, due primarily to accelerated
depreciation (including bonus depreciation), comprised of its remaining 2017
federal net operating loss carryover of $13 million (which, will expire, if
unused, in 2037) and its 2018 federal net operating loss carryover of $23
million (which can be carried forward indefinitely). Con Edison has $896 million
in general business tax credit carryovers (primarily renewable energy tax
credits), which if unused will begin to expire in 2032. A deferred tax asset for
these tax attribute carryforwards was recorded, and no valuation allowance has
been provided, as it is more likely than not that the deferred tax asset will be
realized.

At December 31, 2019, Con Edison had a 2018 New York State net operating loss of
approximately $272 million from 2018, primarily as a result of accelerated tax
deductions on renewable energy projects. Con Edison will carry back
approximately $100 million of its 2018 net operating loss to 2015 and 2016,
which will result in recovery of $9 million of income tax. The remaining 2018
New York State net operating loss of $172 million will be carried forward to
future years. At December 31, Con Edison had a 2019 New York State net operating
loss of approximately $453 million, primarily as a result of accelerated tax
deductions on renewable energy projects. This loss will be carried forward to
future years. A deferred tax asset has been recognized for these New York State
net operating loss carryforwards that will begin to expire, if unused, in 2038.
A valuation allowance has not been provided; as it is more likely than not that
the deferred tax asset will be realized. In addition, an $18 million valuation
allowance for the entire amount of its New York City net operating loss
carryforward and a $22 million valuation allowance for other

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state net operating loss carryforwards has been provided; as it is not more likely than not that the deferred tax asset will be realized.



At December 31, 2019, Con Edison had charitable contributions carryforwards of
$28 million ($5 million from 2015; $7 million from 2016; $5 million from 2017;
$5 million from 2018 and $6 million from 2019), if unused will begin to expire
in 2020. The tax effect of the carryforwards were recorded as a deferred tax
asset, and no valuation allowance has been provided, as it is more likely than
not that the deferred tax asset will be realized.

The Protecting Americans from Tax Hikes Act of 2015 extended bonus depreciation
applying a 50 percent rate for property acquired and placed in service for years
2015 through 2017 with reduced rates of 40 percent and 30 percent for years 2018
and 2019, respectively. The TCJA does not allow bonus depreciation after
December 31, 2017 (excluding certain transition rules) for Companies that
qualify as a utility company for the consolidated group under the de minimis
exception to Treasury regulations.

In December 2019, the Federal government issued final regulations providing
guidance on provisions in the TCJA allowing for full expensing of qualified
plant additions. These provisions, which Con Edison adopted under the proposed
regulations of August 2018, allowed the Utilities a full expense tax deduction
for plant additions in the fourth quarter of 2017, and the Utilities continue
additional first year depreciation transition rules for plant additions placed
in service in tax years beginning in 2018, under long-term construction
contracts entered into before September 28, 2017. The impact on the Utilities of
these regulations is discussed above.

In November 2018, the Federal government issued, and Con Edison adopted,
proposed regulations providing guidance on the tax deductibility of interest
expense under the TCJA. The TCJA generally provides for the continued
deductibility of interest expense by regulated public utilities and may limit
the deduction for interest expense by most non-utility businesses to 30 percent
of adjusted taxable income (which resembles earnings before interest, taxes,
depreciation and amortization).The regulations provide an annual safe harbor
test that if at least 90 percent of consolidated plant assets consist of utility
property, the entire consolidated group will be treated as a regulated public
utility, and all of the consolidated group's interest expense will be currently
tax deductible. For 2018, Con Edison met the 90 percent safe harbor test and its
deduction for interest expense was not limited. For 2019, Con Edison did not
meet the 90 percent safe harbor test and its deduction for interest expense will
be limited by an amount that is not material. Con Edison, as permitted, will
carry over the portion of its 2019 interest expense that it will not be able to
deduct for 2019 to future years when Con Edison expects it will be able to
deduct such interest expense. Qualifying consolidated groups would not be
entitled to the full expensing provisions in the TCJA noted above. The safe
harbor rules do not apply to partnerships in which Con Edison and its
subsidiaries are a partner.
Uncertain Tax Positions
Under the accounting rules for income taxes, the Companies are not permitted to
recognize the tax benefit attributable to a tax position unless such position is
more likely than not to be sustained upon examination by taxing authorities,
including resolution of any related appeals and litigation processes, based
solely on the technical merits of the position.
A reconciliation of the beginning and ending amounts of unrecognized tax
benefits for Con Edison and CECONY follows:
                                     Con Edison               CECONY
(Millions of Dollars)                  2019      2018    2017   2019     2018     2017
Balance at January 1,                      $6     $12     $42       $4       $5      $21
Additions based on tax positions
related to the current year                 1       2       1        1        2        1
Additions based on tax positions of
prior years                                10       1       1      -          1        1
Reductions for tax positions of
prior years                               (2)     (2)    (24)      (1)      (1)     (18)
Reductions from expiration of
statute of limitations                    -       (4)     (2)      -        -        -
Settlements                               (2)     (3)     (6)      (2)      (3)      -
Balance at December 31,                   $13      $6     $12       $2       $4       $5




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In 2019, Con Edison reached a settlement with the IRS on tax year 2017 and was
denied state refund claims in New Jersey, which resulted in Con Edison reversing
$4 million in uncertain tax positions. Of this amount, only an immaterial amount
reduced Con Edison's effective tax rate. The amount related to CECONY was $2
million, of which, only an immaterial amount reduced CECONY's effective tax
rate. Current and prior year additions in 2019 are for tax credits and a state
combined reporting issue, which increased Con Edison's effective tax rate.
As of December 31, 2019, Con Edison reasonably expects to resolve within the
next twelve months approximately $10 million of various federal and state
uncertainties due to the expected completion of ongoing tax examinations, of
which the entire amount, if recognized, would reduce Con Edison's effective tax
rate. The amount related to CECONY is approximately $1 million, of which the
entire amount, if recognized, would reduce CECONY's effective tax rate.
The Companies recognize interest on liabilities for uncertain tax positions in
interest expense and would recognize penalties, if any, in operating expenses in
the Companies' consolidated income statements. In 2019, 2018 and 2017, the
Companies recognized an immaterial amount of interest and no penalties for
uncertain tax positions in their consolidated income statements. At December 31,
2019 and 2018, the Companies reflected an immaterial amount of interest and no
penalties in their consolidated balance sheets.
At December 31, 2019, the total amount of unrecognized tax benefits that, if
recognized, would reduce the Companies' effective tax rate is $13 million ($12
million, net of federal taxes) with $2 million attributable to CECONY.
Con Edison's federal tax return for 2018 remains under examination. State income
tax returns remain open for examination in New York for tax years 2010 through
2018 and in New Jersey for tax years 2008 through 2018.
Note M - Stock-Based Compensation
The Companies may compensate employees and directors with, among other things,
stock options, stock units, restricted stock units and contributions to the
stock purchase plan. The Long Term Incentive Plan, which was approved by Con
Edison's shareholders in 2003 (2003 LTIP), and the Long Term Incentive Plan,
which was approved by Con Edison's shareholders in 2013 (2013 LTIP), are
collectively referred to herein as the LTIP. The LTIP provides for, among other
things, awards to employees of restricted stock units and stock options and, to
Con Edison's non-employee directors, stock units. Existing awards under the 2003
LTIP continue in effect, however no new awards may be issued under the 2003
LTIP. The 2013 LTIP provides for awards for up to five million shares of common
stock.
Shares of Con Edison common stock used to satisfy the Companies' obligations
with respect to stock-based compensation may be new (authorized, but unissued)
shares, treasury shares or shares purchased in the open market. The shares used
during the year ended December 31, 2019 were new shares. The Companies intend to
use new shares to fulfill their stock-based compensation obligations for 2020.
The Companies recognized stock-based compensation expense using a fair value
measurement method. The following table summarizes stock-based compensation
expense recognized by the Companies in the years ended December 31, 2019, 2018
and 2017:
                                                  Con Edison           CECONY
(Millions of Dollars)                             2019   2018   2017   2019   2018   2017
Performance-based restricted stock                 $36     $3    $53    $30     $3    $45
Time-based restricted stock                          2      2      2      2      1      2
Non-employee director deferred stock compensation    2      3      2      2      3      2
Stock purchase plan                                  7      6      6      6      6      6
Total                                              $47    $14    $63    $40    $13    $55
Income tax benefit                                 $13     $4    $25    $11     $4    $22



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Restricted Stock and Stock Units
Restricted stock and stock unit awards under the LTIP have been made as follows:
(i) awards that provide for adjustment of the number of units
(performance-restricted stock units or Performance RSUs) to certain officers and
employees; (ii) time-based awards to certain employees; and (iii) awards to
non-employee directors. Restricted stock and stock units awarded represent the
right to receive, upon vesting, shares of Con Edison common stock, or, except
for units awarded under the directors' plan, the cash value of shares or a
combination thereof.
The number of units in each annual Performance RSU award is subject to
adjustment as follows: (i) 50 percent of the units awarded will be multiplied by
a factor that may range from 0 to 200 percent, based on Con Edison's total
shareholder return relative to a specified peer group during a specified
performance period (the TSR portion); and (ii) 50 percent of the units awarded
will be multiplied by factors that may range from 0 to 200 percent, based on
determinations made in connection with the Companies' annual incentive plans or,
for certain executive officers, actual performance as compared to certain
performance measures during a specified performance period (the non-TSR
portion). Performance RSU awards generally vest upon completion of the
performance period.
Performance against the established targets is recomputed each reporting period
as of the earlier of the reporting date and the vesting date. The TSR portion
applies a Monte Carlo simulation model, and the non-TSR portion is the product
of the market price at the end of the period and the average non-TSR
determination over the vesting period. Performance RSUs are "liability awards"
because each Performance RSU represents the right to receive, upon vesting, one
share of Con Edison common stock, the cash value of a share or a combination
thereof. As such, changes in the fair value of the Performance RSUs are
reflected in net income. The assumptions used to calculate the fair value of the
awards were as follows:
                                                  2019              2018              2017
Risk-free interest rate (a)                   1.58% - 1.59%     2.48% - 2.63%     1.76% - 1.89%
Expected term (b)                                3 years           3 years 

3 years Expected share price volatility (c) 12.89% - 15.51% 14.76% - 17.71% 11.01% - 14.70%

(a) The risk-free rate is based on the U.S. Treasury zero-coupon yield curve.

(b) The expected term of the Performance RSUs equals the vesting period. The

Companies do not expect significant forfeitures to occur.

(c) Based on historical experience.

A summary of changes in the status of the Performance RSUs' TSR and non-TSR portions during the year ended December 31, 2019 is as follows:


                              Con Edison                        CECONY
                                Weighted Average                Weighted Average
                              Grant Date Fair Value           Grant Date Fair Value
                                       (a)                             (a)
                                 TSR      Non-TSR                TSR      Non-TSR
                               Portion    Portion              Portion    Portion
                      Units      (b)        (c)       Units      (b)        (c)
      Non-vested at
  December 31, 2018 1,005,836   $74.81     $74.27    761,906    $74.47     $74.42
Granted              389,600    64.37      80.03     284,516    64.82      80.31
Vested              (357,325)   83.17      72.09    (275,376)   82.77      72.32
Forfeited           (46,873)    65.08      78.03    (30,186)    65.20      78.10
Transferred (d)         -         -          -        1,344     70.04      75.65

Non-vested at

December 31, 2019 991,238 $68.15 $77.14 742,204 $68.06 $77.32

(a) The TSR and non-TSR Portions each account for 50 percent of the awards'

value.

(b) Fair value is determined using the Monte Carlo simulation described above.

Weighted average grant date fair value does not reflect any accrual or

payment of dividends prior to vesting.

(c) Fair value is determined using the market price of one share of Con Edison

common stock on the grant date. The market price has not been discounted to

reflect that dividends do not accrue and are not payable on Performance RSUs

until vesting.

(d) Represents allocation to another Con Edison subsidiary of a portion of the

Performance RSUs that had been awarded to a CECONY officer who transferred to

another subsidiary.




The total expense to be recognized by Con Edison in future periods for unvested
Performance RSUs outstanding at December 31, 2019 is $25 million, including $21
million for CECONY, and is expected to be recognized over a weighted average
period of one year for both Con Edison and CECONY. Con Edison and CECONY paid
cash of

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$24 million and $22 million in 2019, $29 million and $28 million in 2018, and
$22 million and $21 million in 2017, respectively, to settle vested Performance
RSUs.
In accordance with the accounting rules for stock compensation, for time-based
awards, the Companies are accruing a liability and recognizing compensation
expense based on the market value of a common share throughout the vesting
period. The vesting period for awards is three years and is based on the
employee's continuous service to Con Edison. Prior to vesting, the awards are
subject to forfeiture in whole or in part under certain circumstances. The
awards are "liability awards" because each restricted stock unit represents the
right to receive, upon vesting, one share of Con Edison common stock, the cash
value of a share or a combination thereof. As such, prior to vesting, changes in
the fair value of the units are reflected in net income.
A summary of changes in the status of time-based awards during the year ended
December 31, 2019 is as follows:
                                        Con Edison                    CECONY
                                                Weighted                    Weighted
                                                Average                     Average
                                               Grant Date                  Grant Date
                                   Units       Fair Value      Units       Fair Value
Non-vested at December 31, 2018    65,180        $77.42        61,380        $77.42
Granted                            24,850        84.81         23,350        84.81
Vested                            (20,980)       76.62        (19,830)       76.62
Forfeited                         (1,800)        79.12        (1,800)        79.12

Non-vested at December 31, 2019 67,250 $80.36 63,100

$80.36





The total expense to be recognized by Con Edison in future periods for unvested
time-based awards outstanding at December 31, 2019 for Con Edison and CECONY was
$3 million and $2 million, respectively, and is expected to be recognized over a
weighted average period of one year. Con Edison and CECONY paid cash of $1
million in 2019, 2018 and 2017, to settle vested time-based awards.
Under the LTIP, each non-employee director receives stock units, which are
deferred until the director's separation from service or another date specified
by the director. Each director may also elect to defer all or a portion of their
cash compensation into additional stock units, which are deferred until the
director's termination of service or another date specified by the director.
Non-employee directors' stock units issued under the LTIP are considered "equity
awards," because they may only be settled in shares. Directors immediately vest
in units issued to them. The fair value of the units is determined using the
closing price of Con Edison's common stock on the business day immediately
preceding the date of issue. In the year ended December 31, 2019, approximately
27,100 units were issued at a weighted average grant date price of $87.57.
Stock Purchase Plan
The Stock Purchase Plan, which was approved by shareholders in 2004 and 2014,
provides for the Companies to contribute up to $1 for each $9 invested by their
directors, officers or employees to purchase Con Edison common stock under the
plan. Eligible participants may invest up to $25,000 during any calendar year
(subject to an additional limitation for officers and employees of not more than
20 percent of their pay). Dividends paid on shares held under the plan are
reinvested in additional shares unless otherwise directed by the participant.
Participants in the plan immediately vest in shares purchased by them under the
plan. The fair value of the shares of Con Edison common stock purchased under
the plan was calculated using the average of the high and low composite sale
prices at which shares were traded at the New York Stock Exchange on the trading
day immediately preceding such purchase dates. During 2019, 2018 and 2017,
747,899, 786,385 and 719,125 shares were purchased under the Stock Purchase Plan
at a weighted average price of $85.45, $78.27 and $79.57 per share,
respectively.
Note N - Financial Information by Business Segment
The business segments of each of the Companies, which are its operating
segments, were determined based on management's reporting and decision-making
requirements in accordance with the accounting rules for segment reporting.

158 CON EDISON ANNUAL REPORT 2019

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Con Edison's principal business segments are CECONY's regulated utility
activities, O&R's regulated utility activities, the Clean Energy Businesses and
Con Edison Transmission. CECONY's principal business segments are its regulated
electric, gas and steam utility activities.
All revenues of these business segments are from customers located in the United
States of America. Also, all assets of the business segments are located in the
United States of America. The accounting policies of the segments are the same
as those described in Note A.
Common services shared by the business segments are assigned directly or
allocated based on various cost factors, depending on the nature of the service
provided.
The financial data for the business segments are as follows:
As of and for the
Year Ended                                                                                            Income
December 31, 2019                  Inter-      Depreciation                                          taxes on
(Millions of        Operating     segment          and        Operating   Other Income   Interest   operating     Total      Capital
Dollars)            revenues      revenues     amortization    income     (deductions)   charges    income (a)   assets    expenditures
CECONY
Electric                $8,062            $17         $1,053      $1,758          $(28)       $539         $239   $32,988         $1,851
Gas                      2,132              7            231         528            (4)        147           99    11,090          1,078
Steam                      627             70             89          62            (3)         42            4     2,479             91
Consolidation
adjustments                -             (94)            -           -              -          -            -         -              -
Total CECONY           $10,821           $-           $1,373      $2,348          ($35)       $728         $342   $46,557         $3,020
O&R
Electric                  $634           $-              $60         $98           $(7)        $27          $15    $2,130           $142
Gas                        259            -               24          41            (4)         14            6       876             61
Other                      -              -              -           -              -          -            -         -              -
Total O&R                 $893           $-              $84        $139          $(11)        $41          $21    $3,006           $203
Clean Energy
Businesses                $857           $-             $226        $202             $5       $186        $(58)    $6,528           $248
Con Edison
Transmission                 4            -                1         (6)            104         25            1     1,618            205
Other (b)                  (1)            -              -           (7)           (12)         11          (6)       370            -
Total Con Edison       $12,574           $-           $1,684      $2,676            $51       $991         $300   $58,079         $3,676


As of and for the
Year Ended December                                                                                    Income
31, 2018                            Inter-      Depreciation                                          taxes on
(Millions of         Operating     segment          and        Operating   Other Income   Interest   operating     Total      Capital
Dollars)             revenues      revenues     amortization    income     (deductions)   charges    income (a)   assets    expenditures
CECONY
Electric                 $7,971            $16           $984      $1,799         $(110)       $519         $233   $31,012         $1,861
Gas                       2,078              7            205         478           (23)        131           87     9,710          1,050
Steam                       631             75             87          77           (10)         39            8     2,386             94
Consolidation
adjustments                 -             (98)            -           -              -          -            -         -              -
Total CECONY            $10,680           $-           $1,276      $2,354         $(143)       $689         $328   $43,108         $3,005
O&R
Electric                   $642           $-              $56         $93          $(14)        $25          $14    $2,036           $138
Gas                         249            -               21          39            (5)         14            7       856             67
Other                       -              -              -           -              -          -            -         -              -
Total O&R                  $891           $-              $77        $132          $(19)        $39          $21    $2,892           $205
Clean Energy
Businesses                 $763           $-              $85        $194            $33        $63          $19    $5,821         $1,791
Con Edison
Transmission                  4            -                1         (7)             91         20          (1)     1,425            248
Other (b)                   (1)            -              (1)         (9)           (24)          8           39       674            -
Total Con Edison        $12,337           $-           $1,438      $2,664          $(62)       $819         $406   $53,920         $5,249




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As of and for the
Year Ended December                                                                                    Income
31, 2017                            Inter-      Depreciation                                          taxes on
(Millions of         Operating     segment          and        Operating   Other Income   Interest   operating     Total      Capital
Dollars)             revenues      revenues     amortization    income     (deductions)   charges    income (a)   assets    expenditures
CECONY
Electric                 $7,972            $16           $925      $1,974         $(105)       $472         $511   $29,661         $1,905
Gas                       1,901              6            185         495           (23)        113          152     8,387            909
Steam                       595             75             85          80            (9)         38           25     2,403             90
Consolidation
adjustments                 -             (97)            -           -              -          -            -         -              -
Total CECONY            $10,468           $-           $1,195      $2,549         $(137)       $623         $688   $40,451         $2,904
O&R
Electric                   $642           $-              $51        $115          $(14)        $24          $30    $1,949           $128
Gas                         232            -               20          46            (5)         12           12       824             61
Other                       -              -              -           -              -          -            -         -              -
Total O&R                  $874           $-              $71        $161          $(19)        $36          $42    $2,773           $189
Clean Energy
Businesses                 $694           $-              $74         $69            $33        $43       $(273)    $2,735           $447
Con Edison
Transmission                  2            -                1         (8)             80         16         (11)     1,222             66
Other (b)                   (5)            -              -             3            (5)         11           13       930            -
Total Con Edison        $12,033           $-           $1,341      $2,774          $(48)       $729         $459   $48,111         $3,606



(a) For Con Edison, the income tax expense/(benefit) on non-operating income was

$(4) million, $(5) million and $13 million in 2019, 2018 and 2017,

respectively. For CECONY, the income tax expense/(benefit) on non-operating

income was $(7) million, $(2) million and $(3) million in 2019, 2018 and

2017, respectively. At December 31, 2017, Con Edison re-measured its deferred

tax assets and liabilities based upon the 21 percent corporate income tax

rate under the TCJA. As a result, Con Edison, decreased its federal income

tax expense by $259 million ($269 million, $11 million and $(21) million,

respectively, for the Clean Energy Businesses, Con Edison Transmission and

the parent company). See Note L to the financial statements in Item 8.

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

business segment.




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

In August 2017, the FASB issued amendments to the guidance for derivatives and
hedging through ASU 2017-12, "Derivatives and Hedging (Topic 815): Targeted
Improvements to Accounting for Hedging Activities." The amendments in this
update provide greater clarification on hedge accounting for risk components,
presentation and disclosure of hedging instruments, and overall targeted
improvements to simplify hedge accounting. The amendments were effective for
reporting periods beginning after December 15, 2018. The application of the
guidance did not have a material impact on the Companies' financial position,
results of operations and liquidity because the Companies do not elect hedge
accounting for their derivative instruments and hedging activities.


160 CON EDISON ANNUAL REPORT 2019

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The fair values of the Companies' derivatives including the offsetting of assets
and liabilities on the consolidated balance sheet at December 31, 2019 and 2018
were:
(Millions of Dollars)                             2019                                              2018
                                   Gross                                             Gross
                                Amounts of                                        Amounts of
                                Recognized    Gross      Net Amounts of           Recognized    Gross      Net Amounts of
                                  Assets/    Amounts  Assets/(Liabilities)          Assets/    Amounts  Assets/(Liabilities)
Balance Sheet Location         (Liabilities)  Offset          (a)                (Liabilities)  Offset          (a)
Con Edison
Fair value of derivative
assets
Current                                  $60     $(3)                  $57 (b)             $43    $(14)                  $29 (b)
Noncurrent                                19     (13)                    6 (c)              16      (7)                    9 (d)
Total fair value of derivative
assets                                   $79    $(16)                  $63                 $59    $(21)                  $38
Fair value of derivative
liabilities
Current                               $(140)      $17               $(123)   (c)         $(61)      $11                $(50)
Noncurrent                             (122)       16                (106) (c)            (25)        9                 (16) (d)
Total fair value of derivative
liabilities                           $(262)      $33               $(229)               $(86)      $20                $(66)
Net fair value derivative
assets/(liabilities)                  $(183)      $17               $(166)               $(27)     $(1)                $(28)
CECONY
Fair value of derivative
assets
Current                                  $39     $(6)                  $33 (b)             $25     $(6)                  $19 (b)
Noncurrent                                17     (12)                    5                  11      (5)                    6
Total fair value of derivative
assets                                   $56    $(18)                  $38                 $36    $(11)                  $25
Fair value of derivative
liabilities
Current                               $(100)      $19                $(81)               $(31)       $6                $(25)
Noncurrent                              (80)       16                 (64)                (12)        6                  (6)
Total fair value of derivative
liabilities                           $(180)      $35               $(145)               $(43)      $12                $(31)
Net fair value derivative
assets/(liabilities)                  $(124)      $17               $(107)                $(7)       $1                 $(6)


(a) Derivative instruments and collateral were offset on the consolidated balance

sheet as applicable under the accounting rules. The Companies enter into

master agreements for their commodity derivatives. These agreements typically

provide offset in the event of contract termination. In such case, generally

the non-defaulting party's payable will be offset by the defaulting party's

payable. The non-defaulting party will customarily notify the defaulting

party within a specific time period and come to an agreement on the early

termination amount.

(b) At December 31, 2019 and 2018, margin deposits for Con Edison ($9 million and

$7 million, respectively) and CECONY ($8 million and $6 million,

respectively) were classified as derivative assets on the consolidated

balance sheet, but not included in the table. Margin is collateral, typically

cash, that the holder of a derivative instrument is required to deposit in

order to transact on an exchange and to cover its potential losses with its

broker or the exchange.

(c) Includes amounts for interest rate swaps of $1 million in noncurrent assets,

$(7) million in current liabilities and $(34) million in noncurrent

liabilities. At December 31, 2019, the Clean Energy Businesses had interest

rate swaps with notional amounts of $919 million. The expiration dates of the

swaps range from 2024-2041.

(d) Includes amounts for interest rate swaps of $2 million in noncurrent assets

and $(6) million in noncurrent liabilities. At December 31, 2018, the Clean


    Energy Businesses had interest rate swaps with notional amounts of $499
    million. The expiration dates of the swaps range from 2024-2035.



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

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

CON EDISON ANNUAL REPORT 2019 161

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The following table presents the realized and unrealized gains or losses on derivatives that have been deferred or recognized in earnings for the years ended December 31, 2019 and 2018:


                                                  Con Edison                

CECONY


(Millions of
Dollars)       Balance Sheet Location           2019        2018            

2019 2018 Pre-tax gains/(losses) deferred in accordance with accounting rules for regulated operations:


               Deferred derivative
Current        gains                              $4        $(1)                   $5            $1
               Deferred derivative
Noncurrent     gains                             (3)           4                  (1)             3
Total deferred gains/(losses)                     $1          $3                   $4            $4
               Deferred derivative
Current        losses                          $(91)          $4                $(83)            $8
Current        Recoverable energy costs        (142)        (26)                (124)          (26)
               Deferred derivative
Noncurrent     losses                           (67)          27                 (65)            26
Total deferred gains/(losses)                 $(300)          $5               $(272)            $8
Net deferred gains/(losses)                   $(299)          $8               $(268)           $12
               Income Statement
               Location
Pre-tax gain/(loss) recognized in
income
               Gas purchased for resale         $(2)        $(2)                 $-            $-
               Non-utility revenue                25           4                  -             -
               Other operations and
               maintenance expense                 1         (2)                    1           (2)
               Other interest expense           (36)         (4)                  -             -
Total pre-tax gain/(loss) recognized in
income                                         $(12)        $(4)                   $1          $(2)


The following table presents the hedged volume of Con Edison's and CECONY's commodity derivative transactions at December 31, 2019:


                                  Electric Energy (MWh)                   

Natural Gas (Dt) Refined Fuels


                                         (a)(b)         Capacity (MW) (a)      (a)(b)        (gallons)
Con Edison                             24,868,670            28,916         277,827,601      5,712,000
CECONY                                 22,487,800            19,950         258,080,000      5,712,000


(a) Volumes are reported net of long and short positions, except natural gas

collars where the volumes of long positions are reported.

(b) Excludes electric congestion and gas basis swap contracts which are

associated with electric and gas contracts and hedged volumes.




The Companies are exposed to credit risk related to transactions entered into
primarily for the various energy supply and hedging activities by the Utilities
and the Clean Energy Businesses. Credit risk relates to the loss that may result
from a counterparty's nonperformance. The Companies use credit policies to
manage this risk, including an established credit approval process, monitoring
of counterparty limits, netting provisions within agreements, collateral or
prepayment arrangements, credit insurance and credit default swaps. The
Companies measure credit risk exposure as the replacement cost for open energy
commodity and derivative positions plus amounts owed from counterparties for
settled transactions. The replacement cost of open positions represents
unrealized gains, net of any unrealized losses where the Companies have a
legally enforceable right to offset.
At December 31, 2019, Con Edison and CECONY had $128 million and $8 million of
credit exposure in connection with open energy supply net receivables and
hedging activities, net of collateral, respectively. Con Edison's net credit
exposure consisted of $62 million with independent system operators, $27 million
with non-investment grade/non-rated counterparties, $24 million with
investment-grade counterparties, and $15 million with commodity exchange
brokers. CECONY's net credit exposure consisted of $8 million with commodity
exchange brokers.
The collateral requirements associated with, and settlement of, derivative
transactions are included in net cash flows from operating activities in the
Companies' consolidated statement of cash flows. Most derivative instrument
contracts contain provisions that may require a party to provide collateral on
its derivative instruments that are in a net liability position. The amount of
collateral to be provided will depend on the fair value of the derivative
instruments and the party's credit ratings.

162 CON EDISON ANNUAL REPORT 2019

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The following table presents the aggregate fair value of the Companies'
derivative instruments with credit-risk-related contingent features that are in
a net liability position, the collateral posted for such positions and the
additional collateral that would have been required to be posted had the lowest
applicable credit rating been reduced one level and to below investment grade at
December 31, 2019:
(Millions of Dollars)                                     Con Edison (a)  CECONY (a)
Aggregate fair value - net liabilities                              $163    

$145


Collateral posted                                                     25    

25

Additional collateral (b) (downgrade one level from current ratings)

                                                      50    

41


Additional collateral (b)(c) (downgrade to below
investment grade from current ratings)                               159    

134

(a) Non-derivative transactions for the purchase and sale of electricity and gas

and qualifying derivative instruments, which have been designated as normal

purchases or normal sales, are excluded from the table. These transactions

primarily include purchases of electricity from independent system operators.

In the event the Utilities and the Clean Energy Businesses were no longer

extended unsecured credit for such purchases, the Companies would be required

to post additional collateral of $1 million at December 31, 2019. For certain

other such non-derivative transactions, the Companies could be required to

post collateral under certain circumstances, including in the event

counterparties had reasonable grounds for insecurity.

(b) The Companies measure the collateral requirements by taking into

consideration the fair value amounts of derivative instruments that contain

credit-risk-related contingent features that are in a net liabilities

position plus amounts owed to counterparties for settled transactions and

amounts required by counterparties for minimum financial security. The fair

value amounts represent unrealized losses, net of any unrealized gains where

the Companies have a legally enforceable right to offset.

(c) Derivative instruments that are net assets have been excluded from the table.

At December 31, 2019, if Con Edison had been downgraded to below investment

grade, it would have been required to post additional collateral for such

derivative instruments of $49 million.





Note P - Fair Value Measurements
The accounting rules for fair value measurements and disclosures define fair
value as the price that would be received to sell an asset or paid to transfer a
liability in an orderly transaction between market participants at the
measurement date in a principal or most advantageous market. Fair value is a
market-based measurement that is determined based on inputs, which refer broadly
to assumptions that market participants use in pricing assets or liabilities.
These inputs can be readily observable, market corroborated, or generally
unobservable firm inputs. The Companies often make certain assumptions that
market participants would use in pricing the asset or liability, including
assumptions about risk, and the risks inherent in the inputs to valuation
techniques. The Companies use valuation techniques that maximize the use of
observable inputs and minimize the use of unobservable inputs.
The accounting rules for fair value measurements and disclosures established a
fair value hierarchy, which prioritizes the inputs to valuation techniques used
to measure fair value in three broad levels. The rules require that assets and
liabilities be classified in their entirety based on the level of input that is
significant to the fair value measurement. Assessing the significance of a
particular input may require judgment considering factors specific to the asset
or liability, and may affect the valuation of the asset or liability and their
placement within the fair value hierarchy. The Companies classify fair value
balances based on the fair value hierarchy defined by the accounting rules for
fair value measurements and disclosures as follows:
•     Level 1 - Consists of assets or liabilities whose value is based on

unadjusted quoted prices in active markets at the measurement date. An

active market is one in which transactions for assets or liabilities occur

with sufficient frequency and volume to provide pricing information on an

ongoing basis. This category includes contracts traded on active exchange

markets valued using unadjusted prices quoted directly from the exchange.

• Level 2 - Consists of assets or liabilities valued using industry standard

models and based on prices, other than quoted prices within Level 1, that

are either directly or indirectly observable as of the measurement date.

The industry standard models consider observable assumptions including time

value, volatility factors and current market and contractual prices for the


      underlying commodities, in addition to other economic measures. This
      category includes contracts traded on active exchanges or in
      over-the-counter markets priced with industry standard models.

• Level 3 - Consists of assets or liabilities whose fair value is estimated

based on internally developed models or methodologies using inputs that are

generally less readily observable and supported by little, if any, market

activity at the measurement date. Unobservable inputs are developed based

on the best available information and subject to cost benefit constraints.

This category includes contracts priced using models that are internally


      developed and contracts placed in illiquid markets. It also includes
      contracts that expire after


CON EDISON ANNUAL REPORT 2019 163

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the period of time for which quoted prices are available and internal models are
used to determine a significant portion of the value.
Assets and liabilities measured at fair value on a recurring basis for the years
ended December 31, 2019 and 2018 are summarized below.
                                             2019                                                   2018
(Millions of                                           Netting                                               Netting
Dollars)            Level 1  Level 2  Level 3      Adjustment (e)      Total  Level 1  Level 2  Level 3   Adjustment (e)  Total
Con Edison
Derivative assets:
Commodity
(a)(b)(c)                 $4     $61        $2                      $4   $71        $6     $36        $7             $(6)   $43
Interest rate
swaps (a)(b)(c)(f)       -         1       -                       -       1       -         2       -                -       2
Other (a)(b)(d)          353     125       -                       -     478       287     114       -                -     401
Total assets            $357    $187        $2                      $4  $550      $293    $152        $7             $(6)  $446
Derivative
liabilities:
Commodity
(a)(b)(c)                $18    $174       $18                   $(22)  $188        $8     $43       $20            $(11)   $60
Interest rate
swaps (a)(b)(c)(f)       -        41       -                       -      41       -         6       -                -       6
Total liabilities        $18    $215       $18                   $(22)  $229        $8     $49       $20            $(11)   $66

CECONY


Derivative assets:
Commodity
(a)(b)(c)                 $3     $42        $1                    $-     $46        $3     $28        $1             $(1)   $31
Other (a)(b)(d)          333     119       -                       -     452       267     109       -                -     376
Total assets            $336    $161        $1                    $-    $498      $270    $137        $1             $(1)  $407
Derivative
liabilities:
Commodity
(a)(b)(c)                $15    $147        $7                   $(24)  $145        $5     $30         3             $(6)   $32


(a) The Companies' policy is to review the fair value hierarchy and recognize

transfers into and transfers out of the levels at the end of each reporting

period. Con Edison and CECONY had $24 million and $22 million of commodity

derivative liabilities transferred from level 3 to level 2 during the year

ended December 31, 2019 because of availability of observable market data due

to the decrease in the terms of certain contracts from beyond three years as

of September 30, 2019 to less than three years as of December 31, 2019. Con

Edison and CECONY had $2 million of commodity derivative liabilities

transferred from level 3 to level 2 during the year ended December 31, 2018

because of availability of observable market data due to the decrease in the

terms of certain contracts from beyond three years as of December 31, 2017 to

less than three years as of December 31, 2018.

(b) Level 2 assets and liabilities include investments held in the deferred

compensation plan and/or non-qualified retirement plans, exchange-traded

contracts where there is insufficient market liquidity to warrant inclusion

in Level 1, certain over-the-counter derivative instruments for electricity,

refined products and natural gas. Derivative instruments classified as Level

2 are valued using industry standard models that incorporate corroborated

observable inputs; such as pricing services or prices from similar

instruments that trade in liquid markets, time value and volatility factors.

(c) The accounting rules for fair value measurements and disclosures require

consideration of the impact of nonperformance risk (including credit risk)

from a market participant perspective in the measurement of the fair value of

assets and liabilities. At December 31, 2019 and 2018, the Companies

determined that nonperformance risk would have no material impact on their

financial position or results of operations.

(d) Other assets are comprised of assets such as life insurance contracts within

the deferred compensation plan and non-qualified retirement plans.

(e) Amounts represent the impact of legally-enforceable master netting agreements

that allow the Companies to net gain and loss positions and cash collateral

held or placed with the same counterparties.

(f) See Note O.




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

164 CON EDISON ANNUAL REPORT 2019

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                     Fair Value of Level 3
                     at December 31, 2019
                                            Valuation
                     (Millions of Dollars)  Techniques   Unobservable Inputs            Range
Con Edison - Commodity
                                           Discounted   Forward energy
Electricity                           $(1) Cash Flow    prices (a)             $25.50-$34.10 per MWh
                                           Discounted   Forward capacity
                                      (16) Cash Flow    prices (a)             $0.09-$8.90 per kW-month
                                                        Inter-zonal forward
                                                        price curves adjusted
Transmission                               Discounted   for historical zonal
Congestion Contracts                     1 Cash Flow    losses (b)             $(3.69)-$7.37 per MWh
 Total Con Edison -
     Commodity                       $(16)
CECONY - Commodity
                                           Discounted   Forward capacity
Electricity                           $(7) Cash Flow    prices (a)             $0.15-$8.90 per kW-month
                                                        Inter-zonal forward
                                                        price curves adjusted
Transmission                               Discounted   for historical zonal
Congestion Contracts                     1 Cash Flow    losses (b)             $0.36-$3.10 per MWh
   Total CECONY -
     Commodity                        $(6)


(a) Generally, increases (decreases) in this input in isolation would result in a

higher (lower) fair value measurement.

(b) Generally, increases (decreases) in this input in isolation would result in a

lower (higher) fair value measurement.




The table listed below provides a reconciliation of the beginning and ending net
balances for assets and liabilities measured at fair value for the years ended
December 31, 2019 and 2018 and classified as Level 3 in the fair value
hierarchy:

                                                 Con Edison                 CECONY
(Millions of Dollars)                        2019       2018      2019               2018
Beginning balance as of January 1,          $(13)         $1              $(2)         $4
Included in earnings                          (5)          4         -                  4
Included in regulatory assets and
liabilities                                    18       (10)                17        (4)
Settlements                                     8        (6)                 1        (4)
Transfer out of level 3                      (24)        (2)              (22)        (2)
Ending balance as of December 31,           $(16)      $(13)              

$(6) $(2)





For the Utilities, realized gains and losses on Level 3 commodity derivative
assets and liabilities are reported as part of purchased power, gas and fuel
costs. The Utilities generally recover these costs in accordance with rate
provisions approved by the applicable state public utilities regulators. See
Note A. Unrealized gains and losses for commodity derivatives are generally
deferred on the consolidated balance sheet in accordance with the accounting
rules for regulated operations.
For the Clean Energy Businesses, realized and unrealized gains and losses on
Level 3 commodity derivative assets and liabilities are reported in non-utility
revenues ($2 million gain and $3 million loss) and purchased power costs
(immaterial) on the consolidated income statement for the years ended
December 31, 2019 and 2018, respectively. The change in fair value relating to
Level 3 commodity derivative assets and liabilities held at December 31, 2019
and 2018 is included in non-utility revenues ($2 million gain and $3 million
loss) and purchased power costs (immaterial) on the consolidated income
statement for the years ended December 31, 2019 and 2018, respectively.
Note Q - Variable Interest Entities
The accounting rules for consolidation address the consolidation of a variable
interest entity (VIE) by a business enterprise that is the primary beneficiary.
A VIE is an entity that does not have a sufficient equity investment at risk to
permit it to finance its activities without additional subordinated financial
support, or whose equity investors lack the characteristics of a controlling
financial interest. The primary beneficiary is the business enterprise that has
the power to direct the activities of the VIE that most significantly impact the
VIE's economic performance and either absorbs a significant amount of the VIE's
losses or has the right to receive benefits that could be significant to the
VIE.
The Companies enter into arrangements including leases, partnerships and
electricity purchase agreements, with various entities. As a result of these
arrangements, the Companies retain or may retain a variable interest in these
entities.
CECONY

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CECONY has an ongoing long-term electricity purchase agreement with Brooklyn
Navy Yard Cogeneration Partners, LP, a potential VIE. In 2019, a request was
made of this counterparty for information necessary to determine whether the
entity was a VIE and whether CECONY is the primary beneficiary; however, the
information was not made available. In April 2017, CECONY's long-term
electricity purchase agreement with Cogen Technologies Linden Venture, LP
(Linden Cogeneration), another potential VIE, expired. See Note I for
information on these electricity purchase agreements, the payments pursuant to
which constitute CECONY's maximum exposure to loss with respect to the potential
VIEs.

Clean Energy Businesses
In September 2019, the Clean Energy Businesses, which previously owned an 80
percent membership interest in OCI Solar San Antonio 4 LLC (Texas Solar 4),
acquired the remaining 20 percent interest. As a result of the acquisition,
Texas Solar 4 is a consolidated entity. Prior to the acquisition, Con Edison had
a variable interest in Texas Solar 4, as to which Con Edison was the primary
beneficiary since the power to direct the activities that most significantly
impact the economics of Texas Solar 4 was held by the Clean Energy Businesses.
Texas Solar 4 owns a project company that developed a 40 MW (AC) solar electric
production project. Electricity generated by the project is sold pursuant to a
long-term power purchase agreement. Con Edison's earnings from Texas Solar 4 for
the years ended December 31, 2019 and 2018 were immaterial.

In December 2018, the Clean Energy Businesses completed its acquisition of
Sempra Solar Holdings, LLC. See Note U. Included in the acquisition were certain
operating projects (Tax Equity Projects) with a noncontrolling tax equity
investor to which a percentage of earnings, tax attributes and cash flows are
allocated. The Tax Equity Projects are consolidated entities in which Con Edison
has less than a 100 percent membership interest. Con Edison is the primary
beneficiary since the power to direct the activities that most significantly
impact the economics of the Tax Equity Projects is held by the Clean Energy
Businesses. Electricity generated by the Tax Equity Projects is sold to
utilities and municipalities pursuant to long-term power purchase agreements.
For the year ended December 31, 2019, the hypothetical liquidation at book value
(HLBV) method of accounting for the Tax Equity Projects resulted in $98 million
of income ($74 million, after tax) for the tax equity investor and a $64 million
loss ($48 million, after tax) for Con Edison, and earnings under the HLBV method
for the year ended December 31, 2018 were immaterial.

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


166 CON EDISON ANNUAL REPORT 2019

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At December 31, 2019 and 2018, Con Edison's consolidated balance sheet included the following amounts associated with its VIEs:


                                                        Tax Equity Projects
                                                                                            Texas
                                           Great Valley Solar        Copper Mountain -     Solar 4
                                                 (c)(d)            Mesquite Solar (c)(e)    (c)(f)
(Millions of Dollars)                         2019        2018          2019        2018       2018
Restricted cash                                 $-          $-            $-          $-         $4
Non-utility property, less accumulated
depreciation (g)(h)                              293         313           461         492       98
Other assets                                      40          18           128          97        9
Total assets (a)                                $333        $331          $589        $589     $111
Long-term debt due within one year              $-          $-            $-          $-         $2
Other liabilities                                 17          17            18          33       26
Long-term debt                                   -           -             -           -         56
Total liabilities (b)                            $17         $17           $18         $33      $84

(a) The assets of the Tax Equity Projects represent assets of a consolidated VIE

that can be used only to settle obligations of the consolidated VIE.

(b) The liabilities of the Tax Equity Projects represent liabilities of a

consolidated VIE for which creditors do not have recourse to the general

credit of the primary beneficiary.

(c) Con Edison did not provide any financial or other support during the year

that was not previously contractually required.

(d) Great Valley Solar consists of the Great Valley Solar 1, Great Valley Solar

2, Great Valley Solar 3 and Great Valley Solar 4 projects, for which the

noncontrolling interest of the tax equity investor was $62 million and $33

million at December 31, 2019 and 2018, respectively.

(e) Copper Mountain - Mesquite Solar consists of the Copper Mountain Solar 4,

Mesquite Solar 2 and Mesquite Solar 3 projects for which the noncontrolling

interest of the tax equity investor was $126 million and $71 million at

December 31, 2019 and 2018, respectively.

(f) Noncontrolling interest of the third party was $7 million at December 31,

2018.

(g) Non-utility property is reduced by accumulated depreciation of $9 million for

Great Valley Solar and $15 million for Copper Mountain - Mesquite Solar at

December 31, 2019.

(h) Non-utility property is reduced by accumulated depreciation of $1 million for

Great Valley Solar, $1 million for Copper Mountain - Mesquite Solar and $15

million for Texas Solar 4 at December 31, 2018.

The following table summarizes the VIEs into which the Clean Energy Businesses have entered as of December 31, 2019:


                                                                           Maximum
                                          Power                          Exposure to
                                        Purchase                             Loss
                          Generating    Agreement                         (Millions
                         Capacity (a)    Term in   Year of               of Dollars)
Project Name                (MW AC)       Years   Investment  Location       (b)
Great Valley Solar (c)        200         15-20      2018    California      $254
Copper Mountain -                                            Nevada and
Mesquite Solar (c)            344         20-25      2018     Arizona        445


(a) Represents ownership interest in the project.

(b) Maximum exposure is equal to the net assets of the project on the

consolidated balance sheet less any applicable noncontrolling interest ($62

million for Great Valley Solar and $126 million for Copper Mountain -

Mesquite Solar). Con Edison did not provide any financial or other support

during the year that was not previously contractually required.

(c) For the projects comprising Great Valley Solar and Copper Mountain Mesquite

Solar, refer to (d) and (e) in the table above.




Note R - Asset Retirement Obligations
The Companies recognize a liability at fair value for legal obligations
associated with the retirement of long-lived assets in the period in which they
are incurred, or when sufficient information becomes available to reasonably
estimate the fair value of such legal obligations. When the liability is
initially recorded, asset retirement costs are capitalized by increasing the
carrying amount of the related asset. The liability is accreted to its present
value each period and the capitalized cost is depreciated over the useful life
of the related asset. The fair value of the asset retirement obligation
liability is measured using expected future cash flows discounted at
credit-adjusted risk-free rates, historical information, and where available,
quoted prices from outside contractors. The Companies evaluate these assumptions
underlying the asset retirement obligation liability on an annual basis or as
frequently as needed.
The Companies recorded asset retirement obligations associated with the removal
of asbestos and asbestos-containing material in their buildings (other than the
structures enclosing generating stations and substations),

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electric equipment and steam and gas distribution systems. The Companies also
recorded asset retirement obligations relating to gas and oil pipelines
abandoned in place and municipal infrastructure support.
The Companies did not record an asset retirement obligation for the removal of
asbestos associated with the structures enclosing generating stations and
substations. For these building structures, the Companies were unable to
reasonably estimate their asset retirement obligations because the Companies
were unable to estimate the undiscounted retirement costs or the retirement
dates and settlement dates. The amount of the undiscounted retirement costs
could vary considerably depending on the disposition method for the building
structures, and the method has not been determined. The Companies anticipate
continuing to use these building structures in their businesses for an
indefinite period, and so the retirement dates and settlement dates are not
determinable.
Con Edison recorded asset retirement obligations for the removal of the Clean
Energy Businesses' solar and wind equipment related to projects located on
property that is not owned by them and the term of the arrangement is finite
including any renewal options. Con Edison did not record asset retirement
obligations for the Clean Energy Businesses' projects that are located on
property that is owned by them because they expect that the equipment will
continue to generate electricity at these facilities long past the
manufacturer's warranty at minimal operating expense. Therefore, Con Edison was
unable to reasonably estimate the retirement date of this equipment.
The Utilities include in depreciation rates the estimated removal costs, less
salvage, for utility plant assets. The amounts related to removal costs that are
associated with asset retirement obligations are classified as an asset
retirement liability. Pursuant to accounting rules for regulated operations,
future removal costs that do not represent legal asset retirement obligations
are recorded as regulatory liabilities. Accretion and depreciation expenses
related to removal costs that represent legal asset retirement obligations are
applied against the Companies' regulatory liabilities. Asset retirement costs
that are recoverable from customers are recorded as regulatory liabilities to
reflect the timing difference between costs recovered through the rate-making
process and recognition of costs.
At December 31, 2019, the liabilities for asset retirement obligations of Con
Edison and CECONY were $425 million and $362 million, respectively. At
December 31, 2018, the liabilities for asset retirement obligations of Con
Edison and CECONY were $450 million and $292 million, respectively. The change
in liabilities at December 31, 2019 was due to changes in estimated cash flows
of $(1) million and $96 million for Con Edison and CECONY, respectively, and
accretion expense of $14 million and $12 million for Con Edison and CECONY,
respectively. The changes were offset by liabilities settled of $38 million for
both Con Edison and CECONY. The change in liabilities at December 31, 2018 was
due to changes in estimated cash flows of $168 million and $39 million for Con
Edison and CECONY, respectively, and accretion expense of $13 million and $11
million for Con Edison and CECONY, respectively. The changes were offset by
liabilities settled of $45 million for both Con Edison and CECONY. Con Edison
and CECONY also recorded reductions of $44 million and $50 million during the
years ended December 31, 2019 and 2018, respectively, to the regulatory
liability associated with cost of removal to reflect depreciation and interest
expense.
Note S - Related Party Transactions
The NYSPSC generally requires that the Utilities and Con Edison's other
subsidiaries be operated as separate entities. The Utilities and the other
subsidiaries are required to have separate operating employees and operating
officers of the Utilities may not be operating officers of the other
subsidiaries. The Utilities may provide administrative and other services to,
and receive such services from, Con Edison and its other subsidiaries only
pursuant to cost allocation procedures approved by the NYSPSC. Transfers of
assets between the Utilities and Con Edison or its other subsidiaries may be
made only as approved by the NYSPSC. The debt of the Utilities is to be raised
directly by the Utilities and not derived from Con Edison. Without the prior
permission of the NYSPSC, the Utilities may not make loans to, guarantee the
obligations of, or pledge assets as security for the indebtedness of Con Edison
or its other subsidiaries. The NYSPSC limits the dividends that the Utilities
may pay Con Edison. See "Dividends" in Note C. As a result, substantially all of
the net assets of CECONY and O&R ($14,147 million and $762 million,
respectively), at December 31, 2019, are considered restricted net assets. The
NYSPSC may impose additional measures to separate, or "ring fence," the
Utilities from Con Edison and its other subsidiaries. See "Rate Plans" in Note
B.
The costs of administrative and other services provided by CECONY to, and
received by it from, Con Edison and its other subsidiaries for the years ended
December 31, 2019, 2018 and 2017 were as follows:

168 CON EDISON ANNUAL REPORT 2019

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                          CECONY
(Millions of Dollars)     2019 2018 2017
Cost of services provided $121 $115 $111
Cost of services received   64   73   64



In addition, CECONY and O&R have joint gas supply arrangements, in connection
with which CECONY sold to O&R $71 million, $83 million and $66 million of
natural gas for the years ended December 31, 2019, 2018 and 2017, respectively.
These amounts are net of the effect of related hedging transactions.

The Utilities perform work and incur expenses on behalf of NY Transco, a company
in which CET Electric has a 45.7 percent equity interest. The Utilities bill NY
Transco for such work and expenses in accordance with established policies. For
the years ended December 31, 2019 and 2018, the amounts billed by the Utilities
to NY Transco were immaterial. In May 2016, CECONY transferred certain electric
transmission projects to NY Transco.

CECONY has storage and wheeling service contracts with Stagecoach Gas Services
LLC (Stagecoach), a joint venture formed by a subsidiary of CET Gas and a
subsidiary of Crestwood Equity Partners LP (Crestwood). In addition, CECONY is
the replacement shipper on one of Crestwood's firm transportation agreements
with Tennessee Gas Pipeline Company LLC. CECONY incurred costs for storage and
wheeling services from Stagecoach of $33 million, $28 million and $31 million
for the years ended December 31, 2019, 2018 and 2017, respectively. In addition,
the Clean Energy Businesses entered into two electricity sales agreements with
Stagecoach under which the amounts received in 2019, 2018 and 2017 were
immaterial.
CECONY has a 20-year transportation contract with Mountain Valley Pipeline, LLC
(MVP) for 250,000 dekatherms per day of capacity. CET Gas holds a 12.5 percent
equity interest in MVP (that is expected to be reduced by approximately 10
percent based on the current project estimate). In October 2017, the
Environmental Defense Fund and the Natural Resource Defense Council requested
the NYSPSC to prohibit CECONY from recovering costs under its MVP contract
unless CECONY can demonstrate that the contract is in the public interest.
CECONY advised the NYSPSC that it would respond to the request if the NYSPSC
opened a proceeding to consider this request. For the years ended December 31,
2019 and 2018, CECONY incurred no costs under the contract.
FERC has authorized CECONY to lend funds to O&R for a period of not more than 12
months, in an amount not to exceed $250 million, at prevailing market rates. At
December 31, 2019 and 2018 there were no outstanding loans to O&R.
The Clean Energy Businesses had financial electric capacity contracts with
CECONY and O&R during 2019 and 2018. For the years ended December 31, 2019 and
2018, the Clean Energy Businesses realized $1 million loss under these
contracts.
Note T - New Financial Accounting Standards
In January 2020, the Companies adopted ASU 2016-13, "Financial
Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial
Instruments." The amendments replace the incurred loss impairment methodology
which involved delayed recognition of credit losses. The amendments introduce an
expected credit loss impairment model which requires immediate recognition of
anticipated losses over the instrument's life. A broader range of reasonable and
supportable information must be considered in developing the credit loss
estimates. The Companies' financial instruments subject to the amendments
include their accounts receivable - customers and other receivables. The
adoption of this guidance will not have a material impact on the Companies'
financial position, results of operations and liquidity. The Companies will
prepare additional disclosures as required by the amendments beginning in 2020.
The Companies implemented additional internal controls related to the
amendments, however the adoption of the amendments will not require a change
that will materially affect the Companies' internal control over financial
reporting.

In January 2020, the Companies adopted ASU 2017-04, "Intangibles-Goodwill and
Other (Topic 350): Simplifying the Test for Goodwill Impairment." The amendments
in this update simplify goodwill impairment testing by eliminating Step 2 of the
goodwill impairment test wherein an entity has to compute the implied fair value
of goodwill by performing procedures to determine the fair value of its assets
and liabilities. Under the new guidance, an entity will recognize an impairment
charge for the amount by which the carrying amount exceeds the reporting unit's
fair

CON EDISON ANNUAL REPORT 2019 169

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value up to the total amount of goodwill allocated to that reporting unit. The adoption of this guidance will not have a material impact on the Companies' financial position, results of operations and liquidity.



In December 2019, the FASB issued amendments to the guidance for income taxes
through ASU 2019-12, "Income Taxes (Topic 740): Simplifying the Accounting for
Income Taxes." The amendments in this update simplify the accounting for income
taxes by removing certain exceptions such as: 1) the incremental approach for
intraperiod tax allocation when there is a loss from continuing operations and
income or a gain from other items, 2) the requirement to recognize a deferred
tax liability for equity method investments when a foreign subsidiary becomes an
equity method investment, 3) the ability not to recognize a deferred tax
liability for a foreign subsidiary when a foreign equity method investment
becomes a subsidiary, and 4) the general methodology for calculating income
taxes in an interim period when a year-to-date loss exceeds the anticipated loss
for the year. For public entities, the amendments are effective for reporting
periods beginning after December 15, 2020. Early adoption is permitted. The
Companies are in the process of evaluating the potential impact of the new
guidance on the Companies' financial position, results of operations and
liquidity.

Note U - Acquisitions, Investments and Dispositions Acquisitions and Investments



Mountain Valley Pipeline
In January 2016, CET Gas acquired a 12.5 percent equity interest in MVP, a
company developing a proposed gas transmission project in West Virginia and
Virginia. The company's initial contribution to MVP was $18 million. At
December 31, 2019 and 2018, CET Gas' cash investment in MVP was $530 million and
$337 million, respectively. In October 2019, the operator of MVP indicated that
it expects a late 2020 full in-service date for the project at an overall
project cost of $5,300 million to $5,500 million, excluding allowance for funds
used during construction. MVP is currently defending certain agency actions and
judicial challenges that must be resolved favorably before the pipeline can be
completed. There are other proceedings that may affect MVP, including an
investigation of potential criminal and/or civil violations of the Clean Water
Act and other federal statutes as they relate to the construction of the
pipeline. CET Gas, as it was permitted to do under the joint venture agreement,
has limited its cash contributions to the joint venture to approximately $530
million, which will reduce its ownership interest in the joint venture to
approximately 10 percent based on the current project cost estimate. Con Edison
is accounting for its equity interest in MVP as an equity method investment.
Sempra Solar
In December 2018, the Clean Energy Businesses completed their acquisition of
Sempra Solar Holdings, LLC, a Sempra Energy subsidiary, for $1,609 million,
including working capital and other closing adjustments of $69 million. In 2019,
Con Edison finalized the purchase price allocation and reclassified
approximately $100 million which primarily decreased property, plant and
equipment and asset retirement obligations, the impact of which was not material
to earnings. The reclassification was recorded within the one year available to
finalize the purchase price allocation.

The acquired company has ownership interests in 981 megawatts (AC) of operating
renewable electric production projects, including its 379 megawatts (AC) share
of projects in which its subsidiaries had a 50 percent ownership interest
(Acquired JV Interests) and the Clean Energy Businesses had the remaining
ownership interests (Previously-Owned JV Interests), and certain development
rights with respect to solar electric production and energy storage projects.

At the acquisition date, the acquired company's subsidiaries had $1,354 million
of tangible assets consisting mostly of property, plant and equipment, $878
million of intangible assets mostly arising from power purchase agreements, $4
million of other noncurrent assets, $568 million of project debt (including, in
each case, amounts associated with the Acquired JV Interests) and $28 million of
asset retirement obligation liabilities. The weighted average amortization
period for these intangible assets is 16 years. At the acquisition date, the
fair value of the noncontrolling interest attributable to the tax equity
investors (see below) was $100 million. The acquisition date valuation was
performed using a discounted cash flow approach. The fair values of assets
acquired and liabilities assumed were determined based on significant estimates
and assumptions that are judgmental in nature, including projected amounts and
timing of future cash flows, discount rates reflecting risk inherent in the
future cash flows and future power prices.


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Upon completion of the acquisition, the acquisition date fair value of the
Previously-Owned JV Interests increased from $437 million to $568 million and
Con Edison recognized a pre-tax gain of $131 million ($89 million or $0.28 per
share net of taxes). Prior to the acquisition, Con Edison had been accounting
for the Previously-Owned JV Interests under the equity method. Upon completion
of the acquisition, Con Edison is accounting for Acquired JV Interests and the
Previously-Owned JV Interests on a consolidated basis.

Certain projects acquired have tax equity investors to which a percentage of earnings, tax attributes and cash flows are allocated. See Note Q.



Con Edison's revenues and net income for the years ended December 31, 2018 and
2017 as reported and pro forma to account on a consolidated basis for the
acquisition as if the acquisition had been completed on January 1, 2017 instead
of December 13, 2018 are as follows:

                                   Years ended December 31,
(Millions of Dollars)                      2018         2017
As Reported
Revenue                                 $12,337      $12,033
Net income                                1,382        1,525

PRO FORMA SUPPLEMENTAL INFORMATION
If Acquired January 1, 2017 (a)(b)
Revenue                                 $12,655      $12,331
Net income                                1,279        1,612


(a) Reflects the following material adjustments: • included additional interest expense of $37 million and $38 million in 2018

and 2017, respectively, that would have been incurred if $825 million that

was borrowed in December 2018 under a variable rate term loan agreement to


      fund a portion of the purchase price for the acquisition had instead been
      borrowed for such purpose on January 1, 2017 at a fixed rate of 4.64% per
      annum; and


•     with respect to the Previously-Owned JV Interests: eliminated the $131
      million purchase accounting gain (pre-tax) that Con Edison recognized upon

the completion of the acquisition in 2018 and reflected the $131 million


      purchase accounting gain in 2017; recorded the corresponding increase to
      the book value of the related net utility plant and power purchase
      agreement intangible asset as of January 1, 2017 instead of December 13,

2018, and included the increased depreciation and amortization expense in

2018 and 2017; and eliminated $33 million and $32 million of other income


      that Con Edison had recorded in 2018 and 2017, respectively, under the
      equity method of accounting.

(b) Recalculating each investor's claim on the investee's assets under the contractual liquidation waterfall as if the acquisition had been completed on January 1, 2017 is impracticable. Accordingly, no HLBV adjustments were made.



Dispositions

Upton 2
In May 2017, the Clean Energy Businesses sold Upton 2, a development stage solar
electric production project, for $11 million to Vistra Asset Co. and recorded a
$1 million gain on sale ($0.7 million, net of taxes). In addition, the Clean
Energy Businesses agreed to perform the engineering, procurement and
construction for the 180 MW (AC) project, which was completed in 2018.



CON EDISON ANNUAL REPORT 2019 171

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Schedule I Condensed Financial Information of Consolidated Edison, Inc. (a) Condensed Statement of Income and Comprehensive Income (Parent Company Only)



                                                   For the Years Ended December 31,
(Millions of Dollars, except per share amounts)       2019          2018    

2017


Equity in earnings of subsidiaries                  $1,354        $1,447    

$1,544


Other income (deductions), net of taxes                 76           (6)            31
Interest expense                                      (87)          (59)          (50)
Net Income                                          $1,343        $1,382        $1,525
Comprehensive Income                                $1,340        $1,392        $1,526
Net Income Per Share - Basic                         $4.09         $4.43         $4.97
Net Income Per Share - Diluted                       $4.08         $4.42    

$4.94


Dividends Declared Per Share                         $2.96         $2.86    

$2.76


Average Number Of Shares Outstanding-Basic (In
Millions)                                            328.5         311.1    

307.1


Average Number Of Shares Outstanding-Diluted
(In Millions)                                        329.5         312.9    

308.8

(a) These financial statements, in which Con Edison's subsidiaries have been

included using the equity method, should be read together with its

consolidated financial statements and the notes thereto appearing above.

172 CON EDISON ANNUAL REPORT 2019

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Condensed Financial Information of Consolidated Edison, Inc. (a)
Condensed Statement of Cash Flows
(Parent Company Only)

                                                For the Years Ended December 31,
(Millions of Dollars)                                2019              2018          2017
Net Income                                              1,343           1,382         1,525
Equity in earnings of subsidiaries                    (1,354)         (1,447)       (1,544)
Dividends received from:
CECONY                                                    912             846           796
O&R                                                        47              46            44
Clean Energy Businesses                                     3              15            12
Con Edison Transmission                                    12              10             8
Change in Assets:
Special deposits                                          (3)             (8)           -
Income taxes receivable                                    25               2            34
Other - net                                                44             187            21
Net Cash Flows from Operating Activities                1,029           1,033           896
Investing Activities
Contributions to subsidiaries                           (930)         (1,110)         (434)
Debt receivable from affiliated companies                 450           (825)           -
Net Cash Flows Used in Investing Activities             (480)         (1,935)         (434)
Financing Activities
Net proceeds of short-term debt                         (783)             164          (53)
Issuance of long-term debt                                825             825           400
Retirement of long-term debt                            (553)             (3)         (402)
Debt issuance costs                                     -                 -             (2)
Issuance of common shares for stock plans, net
of repurchases                                             54              53            51
Issuance of common shares - public offering               825             705           343
Common stock dividends                                  (924)           (842)         (803)
Net Cash Flows Used in Financing Activities             (556)             902         (466)
Net Change for the Period                              (7 )               -             (4)
Balance at Beginning of Period                              9               9            13
Balance at End of Period                                   $2              $9            $9

(a) These financial statements, in which Con Edison's subsidiaries have been

included using the equity method, should be read together with its

consolidated financial statements and the notes thereto appearing above.

CON EDISON ANNUAL REPORT 2019 173

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Condensed Financial Information of Consolidated Edison, Inc. (a)
Condensed Balance Sheet
(Parent Company Only)

                                                      December 31,
(Millions of Dollars)                                   2019          2018
Assets
Current Assets
Cash and temporary cash investments                           $2         $9
Income taxes receivable                                       18         43
Term loan receivable from affiliated companies             -            825
Accounts receivable from affiliated companies                870        536
Prepayments                                                   32         33
Other current assets                                          12         12
Total Current Assets                                         934      1,458
Investments in subsidiaries and others                    18,009     16,707
Goodwill                                                     406        406
Deferred income tax                                       14             69

Long-term debt receivable from affiliated companies 1,275 900 Other noncurrent assets

                                    -              2
Total Assets                                             $20,638    $19,542
Liabilities and Shareholders' Equity
Current Liabilities
Long-term debt due within one year                            $3         $3
Term loan                                                  -            825
Notes payable                                                537        495
Accounts payable                                           -              9
Accounts payable to affiliated companies                     595        274
Accrued taxes                                              2             2
Other current liabilities                                     10         13
Total Current Liabilities                                  1,147      1,621
Deferred income tax                                        -             -
Total Liabilities                                          1,147      1,621
Long-term debt                                             1,469      1,195

Shareholders' Equity Common stock, including additional paid-in capital 8,089 7,151 Retained earnings

                                          9,933      9,575
Total Shareholders' Equity                                18,022     16,726
Total Liabilities and Shareholders' Equity               $20,638    $19,542


(a) These financial statements, in which Con Edison's subsidiaries have been

included using the equity method, should be read together with its

consolidated financial statements and the notes thereto appearing above.

174 CON EDISON ANNUAL REPORT 2019

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