CONSOLIDATED EDISON, INC. This combined management's discussion and analysis of financial condition and results of operations (MD&A) relates to the consolidated financial statements (the Second Quarter Financial Statements) included in this report of two separate registrants:Consolidated Edison, Inc. (Con Edison ) andConsolidated Edison Company of New York, Inc. (CECONY). As used in this report, the term the "Companies" refers toCon Edison and CECONY. CECONY is a subsidiary ofCon Edison and, as such, information in this management's discussion and analysis about CECONY applies toCon Edison . This MD&A should be read in conjunction with the Second Quarter Financial Statements and the notes thereto and the MD&A in Item 7 of the Companies' combined Annual Report on Form 10-K for the year endedDecember 31, 2020 (File Nos. 1-14514 and 1-1217, the Form 10-K) and the MD&A in Part 1, Item 2 of the Companies' combined Quarterly Report on Form 10-Q for the quarterly period endedMarch 31, 2021 (File Nos. 1-14514 and 1-1217). Information in any item of this report referred to in this discussion and analysis is incorporated by reference herein. The use of terms such as "see" or "refer to" shall be deemed to incorporate by reference into this discussion and analysis the information to which reference is made.Con Edison , incorporated inNew York State in 1997, is a holding company that owns all of the outstanding common stock of CECONY,Orange and Rockland Utilities, Inc. (O&R),Con Edison Clean Energy Businesses, Inc. andCon Edison Transmission, Inc. As used in this report, the term the "Utilities" refers to CECONY and O&R. Con Edison CECONY O&R Clean Energy Businesses
Con Edison Transmission
•RECO •CET Electric
•CET Gas
Con Edison's principal business operations are those of CECONY, O&R, the Clean
Energy Businesses and Con Edison Transmission. CECONY's principal business
operations are its regulated electric, gas and steam delivery businesses. O&R's
principal business operations are its regulated electric and gas delivery
businesses. The Clean Energy Businesses develop, own and operate renewable and
sustainable energy infrastructure projects and provide energy-related products
and services to wholesale and retail customers. Con Edison Transmission invests
in and seeks to develop electric transmission projects and manages, through
joint ventures, both electric and gas assets.
Con Edison seeks to provide shareholder value through continued dividend growth,
supported by earnings growth in regulated utilities and contracted electric and
gas assets. The company invests to provide reliable, resilient, safe and clean
energy critical for its New York customers. The company is an industry leading
owner and operator of contracted, large-scale solar generation in the United
States . Con Edison is a responsible neighbor, helping the communities it serves
become more sustainable.
CECONY
Electric
CECONY provides electric service to approximately 3.5 million customers in all
of New York City (except a part of Queens ) and most of Westchester County , an
approximately 660 square mile service area with a population of more than nine
million.
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Electric Supply In 2019, theNew York State Department of Environmental Conservation (NYSDEC) issued regulations that may require the retirement or seasonal unavailability of fossil-fueled electric generating units owned by CECONY and others inNew York City . The NYSDEC rule limits nitrous oxides (NOx) emissions during the ozone season from May through September and affects older peaking units that are generally located downstate and needed during periods of high electric demand or for local reliability purposes. Compliance with the rule will require affected units (approximately 1,400 MW in CECONY's service territory, of which 65 MW is owned by CECONY) to cease operation during the ozone season, install emission controls, repower, or retire by 2023 or 2025. The NYISO, in its 2020 Reliability Needs Assessment study that was approved by the NYISO board, reported local and bulk transmission system reliability needs that are expected to be caused by the retirement or unavailability of some of the impacted units. InJanuary 2021 , CECONY updated its Local Transmission Plan (LTP) to address the identified reliability needs on its local system through the construction of three transmission projects, the Reliable Clean City (RCC) projects. In addition, CECONY continues to monitor forecasted system voltage performance and if a need for support persists in the forecast, CECONY will propose solutions in a subsequent LTP update. CECONY estimates that the costs of the RCC projects to solve the local reliability needs to be approximately$780 million over four years. InApril 2021 , the NYSPSC approved CECONY'sDecember 2020 petition to recover$780 million of costs to construct the RCC projects to solve the local reliability needs.
Gas
CECONY delivers gas to approximately 1.1 million customers in
InMay 2021 , CECONY decreased its five-year forecast of average annual growth of the firm peak gas demand in its service area at design conditions from approximately 1.4 percent (for 2021 to 2025) to approximately 1.3 percent (for 2022 to 2026). The slight decrease reflects the negative impact that the current economy and lingering effects of the COVID-19 pandemic is expected to have on large new construction, usage from existing large customers, as well as the projected number of applications for firm gas service in CECONY's service territory. The decrease also reflects an expected increase in customers' energy efficiency measures and electrification of space heating.
Steam
CECONY operates the largest steam distribution system in
InJune 2021 , CECONY changed its five-year forecast of average annual growth in the peak steam demand in its service area at design conditions from a 0.4 percent decrease to a 0.1 percent increase (for 2022 to 2026), as steam sales are expected to recover from the decrease in customer usage during the COVID-19 pandemic. O&R Electric O&R and its utility subsidiary,Rockland Electric Company (RECO) (together referred to herein as O&R) provide electric service to approximately 0.3 million customers in southeasternNew York and northernNew Jersey , an approximately 1,300 square mile service area.
Gas
O&R delivers gas to over 0.1 million customers in southeastern
InMay 2021 , O&R decreased its five-year forecast of average annual growth of the firm peak gas demand in its service area at design conditions from approximately 0.2 percent (for 2021 to 2025) to approximately 0.1 percent (for 2022 to 2026). The decrease reflects an expected increase in customers' energy efficiency measures and electrification of space heating. Clean Energy BusinessesCon Edison Clean Energy Businesses, Inc. , together with its subsidiaries, are referred to in this report as the Clean Energy Businesses. The Clean Energy Businesses develop, own and operate renewable and sustainable energy infrastructure projects and provide energy-related products and services to wholesale and retail customers.
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Con Edison TransmissionCon Edison Transmission, Inc. invests in electric transmission projects and manages, through joint ventures, both electric and gas assets while seeking to develop electric transmission projects through its wholly-owned subsidiaries,Consolidated Edison Transmission, LLC (CET Electric ) andCon Edison Gas Pipeline and Storage, LLC (CET Gas ).CET Electric owns a 45.7 percent interest inNew York Transco LLC , which owns and has been selected to build additional electric transmission assets inNew York . InMay 2021 , aCET Gas subsidiary entered into a purchase and sale agreement pursuant to which it agreed to sell its 50 percent interest inStagecoach Gas Services LLC (Stagecoach), a joint venture that owned and operated an existing gas pipeline and storage business located in northeasternPennsylvania and the southern tier ofNew York , and inJuly 2021 the transaction was substantially completed. See "Investments" in Note A and Note R to the Second Quarter Financial Statements. Also,CET Gas and CECONY own 71.2 percent and 28.8 percent interests, respectively, inHoneoye Storage Corporation , which operates a gas storage facility in upstateNew York . In addition,CET Gas owns a 10.9 percent interest (that is expected to be reduced to 8.5 percent based on the current project cost estimate andCET Gas' previous capping of its cash contributions to the joint venture) inMountain Valley Pipeline LLC (MVP), a joint venture developing a proposed 300-mile gas transmission project inWest Virginia andVirginia .Con Edison Transmission, Inc. , together withCET Electric andCET Gas , are referred to in this report as Con Edison Transmission.
Certain financial data of
For the Three Months Ended For the Six Months Ended
June 30, 2021 June 30, 2021 At June 30, 2021
(Millions of Dollars, except Operating Net Income for Operating Net Income for
percentages) Revenues Common Stock Revenues Common Stock Assets
CECONY $2,486 84 % $128 78 % $5,692 85 % $593 101 % $51,515 82 %
O&R 194 6 - - 442 7 27 5 3,257 5
Total Utilities 2,680 90 128 78 6,134 92 620 106 54,772 87
Clean Energy Businesses (a) 291 10 68 41 515 8 117 20 6,574 10
Con Edison Transmission (b) 1 - (21) (13) 2 - (142) (24) 1,136 2
Other (c) (1) - (10) (6) (3) - (11) (2) 437 1
Total Con Edison $2,971 100 % $165 100 % $6,648 100 % $584 100 % $62,919 100 %
(a)Net income for common stock from the Clean Energy Businesses for the three
and six months ended June 30, 2021 includes $(20) million and $29 million ,
respectively, of net after-tax mark-to-market income, reflects $36 million
(after-tax) and $34 million (after-tax), respectively, 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 and
includes $(3) million (after-tax) and $(3) million (after-tax), respectively,
for the loss from the sale of a renewable electric production project. See Note
P to the Second Quarter Financial Statements.
(b)Net income for common stock from Con Edison Transmission for the three and
six months ended June 30, 2021 includes $(28) million and $(153) million ,
respectively, of a net after-tax impairment loss related to its investment in
Stagecoach. See Note A to the Second Quarter Financial Statements.
(c)Other includes parent company and consolidation adjustments. Net income for
common stock for the three and six months ended June 30, 2021 includes $(3)
million (after-tax) and $(3) million (after-tax), respectively, 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 and $1 million and $6 million , respectively, of income tax impact for
the impairment loss related to its investment in Stagecoach.
Coronavirus Disease 2019 (COVID-19) Impacts
The Companies continue to respond to the Coronavirus Disease 2019 (COVID-19)
global pandemic by working to reduce the potential risks posed by its spread to
employees, customers and other stakeholders. The Companies continue to employ an
incident command structure led by a pandemic planning team. The Companies
support employee health and facility hygiene through regular cleaning and
disinfecting of all work and common areas, promoting social distancing, allowing
employees to work remotely and directing employees to stay at home if they are
experiencing COVID or flu-like symptoms. Employees who test positive for
COVID-19 are directed to quarantine at home and are evaluated for close,
prolonged contact with other employees that would require those employees to
quarantine at home. Following the Centers for Disease Control and Prevention
guidelines, sick or quarantined employees return to work when they can safely do
so. The Utilities continue to provide critical electric, gas and steam service
to customers during the pandemic. Additional safety protocols have been
implemented to protect employees, customers and the public, when work at
customer premises is required. The Companies have procured an inventory of
pandemic-related materials to address anticipated future needs and maintain
regular communications with key suppliers.
Below is additional information related to the effects of the COVID-19 pandemic
and the Companies' actions. Also, see "COVID-19 Regulatory Matters" in Note B to
the Second Quarter Financial Statements.
Impact of CARES Act and 2021 Appropriations Act on Accounting for Income Taxes
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In response to the economic impacts of the COVID-19 pandemic, the Coronavirus Aid, Relief, and Economic Security (CARES) Act became law onMarch 27, 2020 . The CARES Act has several key business tax relief measures that may present potential cash benefits and/or refund opportunities forCon Edison and its subsidiaries, including permitting a five-year carryback of a net operating loss (NOL) for tax years 2018, 2019 and 2020, temporary removal of the 80 percent limitation of NOL carryforwards against taxable income for tax years before 2021, temporary relaxation of the limitations on interest deductions, Employee Retention Tax Credit and deferral of payments of employer payroll taxes.Con Edison carried back its NOL of$29 million from tax year 2018 to tax year 2013. This allowedCon Edison , mostly at the Clean Energy Businesses, to receive a$2.5 million net tax refund and to recognize a discrete income tax benefit of$4 million in 2020, due to the higher federal statutory tax rate in 2013. See "Income Tax" in Note J.Con Edison and its subsidiaries did not have a federal NOL in tax years 2019 or 2020.Con Edison and its subsidiaries benefited by the increase in the percentage for calculating the limitation on the interest expense deduction from 30 percent of Adjusted Taxable Income (ATI) to 50 percent of ATI in 2019 and 2020, which allowed the Companies to deduct 100 percent of their interest expense. For 2021, the limitation on interest expense for computing ATI has reverted back to 30 percent. The Companies qualify for an employee retention tax credit created under the CARES Act for "eligible employers" related to governmental authorities imposing restrictions that partially suspended their operations for a portion of their workforce due to the COVID-19 pandemic and the Companies continued to pay them. For the year endedDecember 31, 2020 ,Con Edison and CECONY recognized a tax benefit to Taxes, other than income taxes of$10 million and$7 million , respectively. The CARES Act also allows employers to defer payments of the employer share ofSocial Security payroll taxes that would have otherwise been owed fromMarch 27, 2020 throughDecember 31, 2020 . The Companies deferred the payment of employer payroll taxes for the periodApril 1, 2020 throughDecember 31, 2020 of approximately$71 million ($63 million of which is for CECONY). The Companies will repay half of this liability byDecember 31, 2021 and the other half byDecember 31, 2022 . InDecember 2020 , the Consolidated Appropriations Act, 2021 (the 2021 Appropriations Act) was signed into law. The 2021 Appropriations Act, among other things, extends the expiring employee retention tax credit to include qualified wages paid in the first two quarters of 2021, increases the qualified wages paid to an employee from 50 percent up to$10,000 annually in 2020 to 70 percent up to$10,000 per quarter in 2021 and increases the maximum employee retention tax credit amount an employer can take per employee from$5,000 in 2020 to$14,000 in the first two quarters of 2021. InMarch 2021 , the American Rescue Plan Act was signed into law that expanded the 2021 Appropriations Act to extend the period for eligible employers to receive the employer retention credit fromJune 30, 2021 toDecember 31, 2021 . Accounting Considerations Due to the COVID-19 pandemic and subsequentNew York State on PAUSE and related executive orders (that have since been lifted), decline in business, bankruptcies, layoffs and furloughs, among other factors, both commercial and residential customers have had and may continue to have increased difficulty paying their utility bills. InJune 2020 , the state ofNew York enacted a law prohibitingNew York utilities, including CECONY and O&R, from disconnecting residential customers, and starting inMay 2021 small business customers, during the COVID-19 state of emergency, which ended inJune 2021 . In addition, such prohibitions will apply for an additional 180 days after the state of emergency ends (December 21, 2021 ) for residential and small business customers who have experienced a change in financial circumstances due to the COVID-19 pandemic. CECONY and O&R have existing allowances for uncollectible accounts established against their customer accounts receivable balances that are reevaluated each quarter and updated accordingly. Changes to the Utilities' reserve balances that result in write-offs of customer accounts receivable balances are not reflected in rates during the term of the current rate plans. During the second quarter of 2021, the potential economic impact of the COVID-19 pandemic was also considered in forward-looking projections related to write-off and recovery rates, resulting in increases to the customer allowance for uncollectible accounts as detailed herein. CECONY's and O&R's allowances for uncollectible customer accounts reserve increased from$138 million and$8.7 million atDecember 31, 2020 to$262 million and$12.5 million atJune 30, 2021 , respectively. See "COVID-19 Regulatory Matters" in Note B and Note L to the Second Quarter Financial Statements.
The Companies test goodwill for impairment at least annually or whenever there is a triggering event, and test long-lived and intangible assets for recoverability when events or changes in circumstances indicate that the carrying
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value of long-lived or intangible assets may not be recoverable. The Companies
identified no triggering events or changes in circumstances related to the
COVID-19 pandemic that would indicate that the carrying value of goodwill,
long-lived or intangible assets may not be recoverable at
New York State Legislation InApril 2021 ,New York State passed a law that increases the corporate franchise tax rate on business income from 6.5% to 7.25%, retroactive toJanuary 1, 2021 , for taxpayers with taxable income greater than$5 million . The law also reinstates the business capital tax at 0.1875%, not to exceed a maximum tax liability of$5 million per taxpayer.New York State requires a corporate franchise taxpayer to calculate and pay the highest amount of tax under the three alternative methods: a tax on business income; a tax on business capital; or a fixed dollar minimum. The provisions to increase the corporate franchise tax rate and reinstate a capital tax are scheduled to expire after 2023 and are not expected to have a material impact on the Companies' financial position, results of operations or liquidity. In addition, the new law created a program that allows eligible residential renters inNew York State who require assistance with rent and utility bills to have up to twelve months of electric and gas utility bill arrears forgiven, provided that such arrears were accrued on or afterMarch 13, 2020 . The program will be administered by theState Office of Temporary Disability Assistance in coordination with theNew York State Department of Public Service and the NYSPSC. Under the program, CECONY and O&R would qualify for a refundable tax credit forNew York State gross-receipts tax equal to the amount of arrears waived by the Utilities in the year that the arrears are waived and certified by the NYSPSC. See "COVID-19 Regulatory Matters" in Note B to the Second Quarter Financial Statements. Liquidity and Financing The Companies continue to monitor the impacts of the COVID-19 pandemic on the financial markets closely, including borrowing rates and daily cash collections. The Companies have been able to access the capital markets as needed since the start of the COVID-19 pandemic inMarch 2020 . See Notes C and D to the Second Quarter Financial Statements. However, a continued economic downturn as a result of the COVID-19 pandemic has increased the amount of capital needed by the Utilities and could impact the costs of such capital. The decline in business activity in the Utilities' service territory as a result of the COVID-19 pandemic resulted in lower billed sales revenues and a slower recovery in cash of outstanding customer accounts receivable balances in 2020 and the first half of 2021. These trends will likely continue through 2021. The Utilities' rate plans have revenue decoupling mechanisms in theirNew York electric and gas businesses that largely reconcile actual energy delivery revenues to the authorized delivery revenues approved by the NYSPSC per month and accumulate the deferred balances semi-annually under CECONY's electric rate plan (January through June and July through December, respectively) and annually under CECONY's gas rate plan and O&R New York's electric and gas rate plans (January through December). Differences are accrued with interest each month for CECONY's and O&R New York's electric customers and after the annual deferral period ends for CECONY's and O&R New York's gas customers for refund to, or recovery from customers, as applicable. Generally, the refund to or recovery from customers begins August and February of each year over an ensuing six-month period for CECONY's electric customers and February of each year over an ensuing twelve-month period for CECONY's gas and O&R New York's electric and gas customers. Although these revenue decoupling mechanisms are in place, lower billed sales revenues and higher uncollectible accounts have reduced and is expected to continue to reduce liquidity at the Utilities. Also, inMarch 2020 , the Utilities began suspending service disconnections, certain collection notices, final bill collection agency activity, new late payment charges and certain other fees for all customers and such suspensions may continue through 2021. For the six months endedJune 30, 2021 , the estimated late payment charges and fees that were not billed by CECONY and O&R were approximately$35 million and$2 million lower than the amounts that were approved to be collected pursuant to their rate plans, respectively. These unbilled amounts have reduced and may continue to reduce liquidity at the Utilities. See "COVID-19 Regulatory Matters" in Note B and Note K to the Second Quarter Financial Statements.Con Edison and the Utilities have a$2,250 million credit agreement (Credit Agreement) in place under which banks are committed to provide loans on a revolving credit basis untilDecember 2023 ($2,200 million of commitments fromDecember 2022 ).Con Edison and the Utilities have not entered into any loans under the Credit Agreement. See Note D to the Second Quarter Financial Statements. Results of Operations 56
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Net income for common stock and earnings per share for the three and six months
ended
For the Three Months Ended June 30, For the Six Months Ended June 30,
2021 2020 2021 2020 2021 2020 2021 2020
(Millions of Dollars, except per share Net Income for Common Stock Earnings Net Income for Common Stock Earnings
amounts) per Share per Share
CECONY $128 $152 $0.37 $0.45 $593 $558 $1.72 $1.67
O&R - (2) - - 27 29 0.08 0.09
Clean Energy Businesses (a) 68 34 0.19 0.10 117 (49) 0.34 (0.15)
Con Edison Transmission (b) (21) 14 (0.05) 0.04 (142) 28 (0.41) 0.08
Other (c) (10) (8) (0.03) (0.02) (11) (1) (0.03) -
Con Edison (d) $165 $190 $0.48 $0.57 $584 $565 $1.70 $1.69
(a)Net income for common stock from the Clean Energy Businesses for the three
and six months ended June 30, 2021 includes $(20) million or $(0.06) a share and
$29 million or $0.09 a share, respectively, of net after-tax mark-to-market
losses, reflects $36 million or $0.10 a share (after-tax) and $34 million or
$0.10 a share (after-tax), respectively, 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 and
includes $(3) million or $(0.01) a share (after-tax) and $(3) million or $(0.01)
a share (after-tax), respectively, for the loss from the sale of a renewable
electric production project. Net income for common stock from the Clean Energy
Businesses for the three and six months ended June 30, 2020 includes $(2)
million a share and $(65) million or $(0.19) a share, respectively, of net
after-tax mark-to-market losses and reflects $9 million or $0.03 a share
(after-tax) and $22 million or $0.07 a share (after-tax), respectively, 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 P to the Second Quarter Financial Statements.
(b)Net income for common stock from Con Edison Transmission for the three and
six months ended June 30, 2021 includes $(28) million or $(0.08) a share and
$(153) million or $(0.44) a share of net after-tax impairment loss related to
its investment in Stagecoach. See Note A to the Second Quarter Financial
Statements.
(c)Other includes parent company and consolidation adjustments. Net income for
common stock for the three and six months ended June 30, 2021 includes $(3)
million (after-tax) and $(3) million (after-tax), respectively, 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 and $1 million and $6 million or $0.01 a share, respectively, of
income tax impact for the impairment loss related to Con Edison Transmission's
investment in Stagecoach. See Note A to the Second Quarter Financial Statements.
(d)Earnings per share on a diluted basis were $0.48 a share and $0.57 a share
for the three months ended June 30, 2021 and 2020, respectively, and $1.70 a
share and $1.69 a share for the six months ended June 30, 2021 and 2020.
The following tables present the estimated effect of major factors on earnings
per share and net income for common stock for the three and six months ended
June 30, 2021 as compared with the 2020 period.
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Variation for the Three Months Ended June 30, 2021 vs. 2020
Net Income for
Common Stock
(Millions of Earnings per
Dollars) Share
CECONY (a)
Deferral of increases to reserve for uncollectibles associated with the
Coronavirus Disease (COVID-19) pandemic began in the third quarter of
2020 $11 $0.03
Higher electric rate base 8 0.02
Higher gas rate base 4 0.01
Higher healthcare costs (19) (0.06)
Higher costs related to heat events (7) (0.02)
Weather impact on steam revenues (6) (0.02)
Lower Employee Retention Tax Credit received under the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) in 2021
(3) (0.01)
Lower purchase of receivables discount revenue in 2021 (2) (0.01)
Lower Earnings Adjustment Mechanisms recorded in 2021 (2) (0.01)
Dilutive effect of stock issuances - (0.01)
Other (8) -
Total CECONY (24) (0.08)
O&R (a)
Other 2 -
Total O&R 2 -
Clean Energy Businesses
Higher revenues 68 0.20
HLBV effects 45 0.13
Gain on sale of a renewable electric project 4 0.01
Higher operations and maintenance expenses (62) (0.18)
Net mark-to-market effects of the Clean Energy Businesses (18) (0.06)
Loss from sale of a renewable electric production project (3) (0.01)
Total Clean Energy Businesses 34 0.09
Con Edison Transmission
Impairment loss on Stagecoach (28) (0.08)
Foregoing Allowance for
(11) (0.03)
in January 2021 until significant construction resumes on the Mountain
Valley Pipeline
Other 4 0.02
Total Con Edison Transmission (35) (0.09)
Other, including parent company expenses
HLBV tax effects (3) -
Impairment tax benefit on Stagecoach 1 -
Other - (0.01)
Total Other, including parent company expenses (2) (0.01)
Total Reported (GAAP 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 affectCon Edison's results of operations.
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Variation for the Six Months Ended June 30, 2021 vs. 2020
Net Income for
Common Stock
(Millions of Earnings per
Dollars) Share
CECONY (a)
Higher gas rate base $24 $0.07
Weather impact on steam revenues 15 0.05
Higher electric rate base 15 0.04
Deferral of increases to reserve for uncollectibles associated with
14 0.04
the COVID-19 pandemic began in the third quarter of 2020 Timing of compensation cost
9 0.03
Lower incremental costs associated with the COVID-19 pandemic 7 0.02
Higher costs related to winter storms and heat events (26) (0.08)
Higher healthcare costs (19) (0.06)
Uncollected late payment charges and certain other fees associated
(11) (0.03)
with the COVID-19 pandemic
Dilutive effect of stock issuances - (0.05) Other 7 0.02 Total CECONY 35 0.05 O&R (a) Higher storm-related costs (4) (0.01) Other 2 - Total O&R (2) (0.01) Clean Energy Businesses Higher revenues 125 0.37 Net mark-to-market effects of the Clean Energy Businesses 95 0.28 HLBV effects 56 0.17 Gain on sale of a renewable electric project 4 0.01 Higher operations and maintenance expenses (96) (0.29) Higher gas purchased for resale (17) (0.05) Loss from sale of a renewable electric production project (3) (0.01) Other 2 0.01 Total Clean Energy Businesses 166 0.49 Con Edison Transmission Impairment losses on Stagecoach (153) (0.44) Foregoing Allowance for Funds Used During Construction income (21) (0.06)
starting in
4 0.01
Total Con Edison Transmission (170) (0.49)
Other, including parent company expenses
Impairment tax benefits on Stagecoach 6 0.01
Lower consolidated state income tax benefit (12) (0.04)
HLBV tax effects (3) -
Other (1) -
Total Other, including parent company expenses (10) (0.03)
Total Reported (GAAP basis) $19 $0.01
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.
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The Companies' other operations and maintenance expenses for the three and six
months ended
For the Three Months Ended June 30, For the Six Months Ended June 30,
(Millions of Dollars) 2021 2020 2021 2020
CECONY
Operations $410 $383 $838 $787
Pensions and other postretirement benefits (8) (43) (17) (63)
Health care and other benefits 55 29 92 66
Regulatory fees and assessments (a) 75 75 153 160
Other 58 105 132 167
Total CECONY 590 549 1,198 1,117
O&R 77 77 157 152
Clean Energy Businesses 136 53 235 107
Con Edison Transmission 2 2 5 5
Other (b) (1) (1) (2) (1)
Total other operations and maintenance expenses $804 $680 $1,593 $1,380 (a)Includes Demand Side Management, System Benefit Charges and Public Service Law 18A assessments which are collected in revenues. (b)Includes parent company and consolidation adjustments.
A discussion of the results of operations by principal business segment for the
three and six months ended
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The Companies' results of operations for the three months endedJune 30, 2021 and 2020 were as follows: Con Edison CECONY O&R Clean Energy Businesses Transmission Other (a) Con Edison (b) (Millions of Dollars) 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 Operating revenues$2,486 $2,345 $194 $175 $291 $198 $1 $1 $(1) $-$2,971 $2,719 Purchased power 417 345 47 35 - - - - (1) - 463 380 Fuel 29 23 - - - - - - - - 29 23 Gas purchased for resale 63 64 13 10 7 3 - - - - 83 77 Other operations and maintenance 590 549 77 77 136 53 2 2 (1) (1) 804 680 Depreciation and amortization 423 396 24 23 55 57 - - - - 502 476 Taxes, other than income taxes 643 579 22 20 4 3 - - 3 2 672 604 Operating income 321 389 11 10 89 82 (1) (1) (2) (1) 418 479 Other income less deductions (c) (23) (40) (3) (3) 1 1 (23) 25 (2) (4) (50) (21) Net interest expense 186 190 10 11 56 37 4 4 5 5 261 247 Income before income tax expense 112 159 (2) (4) 34 46 (28) 20 (9) (10) 107 211 Income tax expense (16) 7 (2) (2) 13 - (7) 6 1 (2) (11) 9 Net income$128 $152 $-$(2) $21 $46 $(21) $14 $(10) $(8) $118 $202 Income (loss) attributable to non-controlling interest - - - - (47) 12 - - - - (47) 12 Net income for common stock$128 $152 $-$(2) $68 $34 $(21) $14 $(10) $(8) $165 $190 (a)Includes parent company and consolidation adjustments. (b)Represents the consolidated results of operations ofCon Edison and its businesses. (c)For the three months endedJune 30, 2021 , Con Edison Transmission recorded a pre-tax impairment loss of$39 million ($27 million , after-tax) in investment in Stagecoach. See "Investments" in Note A to the Second Quarter Financial Statements. 61
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CECONY
For the Three Months Ended For the Three Months Ended
June 30, 2021 June 30, 2020
2021-2020
(Millions of Dollars) Electric Gas Steam
2021 Total Electric Gas Steam 2020 Total Variation
Operating revenues $1,963 $449 $74 $2,486 $1,845 $416 $84 $2,345 $141
Purchased power 411 - 6 417 340 - 5 345 72
Fuel 23 - 6 29 7 - 16 23 6
Gas purchased for resale - 63 63 - 64 - 64 (1)
Other operations and
maintenance 460 91 39 590 422 87 40 549 41
Depreciation and
amortization 320 80 23 423 301 72 23 396 27
Taxes, other than income
taxes 494 116 33 643 457 88 34 579 64
Operating income $255 $99 $(33) $321 $318 $105 $(34) $389 $(68) Electric
CECONY's results of electric operations for the three months ended
For the Three Months Ended
(Millions of Dollars) June 30, 2021 June 30, 2020 Variation
Operating revenues $1,963 $1,845 $118
Purchased power 411 340 71
Fuel 23 7 16
Other operations and maintenance 460 422 38
Depreciation and amortization 320 301
19
Taxes, other than income taxes 494 457 37 Electric operating income$255 $318 $(63)
CECONY's electric sales and deliveries for the three months ended
Millions of kWh Delivered Revenues in Millions (a)
For the Three Months Ended For the Three Months Ended
Percent Percent
Description June 30, 2021 June 30, 2020 Variation Variation June 30, 2021 June 30, 2020 Variation Variation
Residential/Religious (b) 2,316 2,294 22 1.0 % $637 $616 $21 3.4 %
Commercial/Industrial 1,982 2,117 (135) (6.4) 477 414 63 15.2
Retail choice customers 4,807 5,007 (200) (4.0) 566 502 64 12.7
NYPA, Municipal Agency and other sales 2,099 2,066 33 1.6 160 145 15 10.3
Other operating revenues (c) - - - - 123 168 (45) (26.8)
Total 11,204 11,484 (280) (2.4) % (d) $1,963 $1,845 $118 6.4 %
(a)Revenues from electric sales are subject to a revenue decoupling mechanism,
as a result of which delivery revenues generally are not affected by changes in
delivery volumes from levels assumed when rates were approved.
(b)"Residential/Religious" generally includes single-family dwellings,
individual apartments in multi-family dwellings, religious organizations and
certain other not-for-profit organizations.
(c)Other electric operating revenues generally reflect changes in the revenue
decoupling mechanism current asset or regulatory liability and changes in
regulatory assets and liabilities in accordance with other provisions of the
company's rate plans.
(d)After adjusting for variations, primarily weather and billing days, electric
delivery volumes in CECONY's service area decreased by 1.3 percent in the three
months ended June 30, 2021 compared with the 2020 period. See "Coronavirus
Disease 2019 (COVID-19) Impacts," above.
Operating revenues increased $118 million in the three months ended June 30,
2021 compared with the 2020 period primarily due to higher purchased power
expenses ($71 million ), an increase in revenues from the electric rate plan ($29
million ), and higher fuel expenses ($16 million ).
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Purchased power expenses increased
Fuel expenses increased
Other operations and maintenance expenses increased$38 million in the three months endedJune 30, 2021 compared with the 2020 period primarily due to higher healthcare costs ($18 million ), higher costs for pensions and other postretirement benefits ($9 million ), higher costs related to heat events ($9 million ) and higher municipal infrastructure support ($1 million ). Depreciation and amortization increased$19 million in the three months endedJune 30, 2021 compared with the 2020 period primarily due to higher electric utility plant balances. Taxes, other than income taxes increased$37 million in the three months endedJune 30, 2021 compared with the 2020 period primarily due to higher property taxes ($26 million ), higher state and local taxes ($4 million ) and lower deferral of under-collected property taxes ($4 million ).
Gas
CECONY's results of gas operations for the three months ended
For the Three Months Ended
(Millions of Dollars) June 30, 2021 June 30, 2020 Variation
Operating revenues $449 $416 $33
Gas purchased for resale 63 64 (1)
Other operations and maintenance 91 87 4
Depreciation and amortization 80 72
8
Taxes, other than income taxes 116 88 28 Gas operating income$99 $105 $(6)
CECONY's gas sales and deliveries, excluding off-system sales, for the three
months ended
Thousands of Dt Delivered Revenues in Millions (a)
For the Three Months Ended For the Three Months Ended
Percent Percent
Description June 30, 2021 June 30, 2020 Variation Variation June 30, 2021 June 30, 2020 Variation Variation
Residential 8,852 10,602 (1,750) (16.5 %) $205 $192 $13 6.8 %
General 6,618 6,646 (28) (0.4) 87 63 24 38.1
Firm transportation 14,994 17,112 (2,118) (12.4) 139 124 15 12.1
Total firm sales and
transportation 30,464 34,360 (3,896) (11.3) (b) 431 379 52 13.7
Interruptible sales (c) 1,696 2,501 (805) (32.2) 7 7 - -
NYPA 12,036 7,664 4,372 57.0 1 1 - -
Generation plants 11,725 10,239 1,486 14.5 5 5 - -
Other 4,759 5,078 (319) (6.3) 7 8 (1) (12.5)
Other operating revenues (d) - - - - (2) 16 (18) Large
Total 60,680 59,842 838 1.4 % $449 $416 $33 7.9 %
(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 decreased 1.4 percent in
the three months ended June 30, 2021 compared with the 2020 period. See
"Coronavirus Disease 2019 (COVID-19) Impacts," above.
(c)Includes 680 thousand and 1,315 thousand of Dt for the 2021 and 2020 periods,
respectively, which are also reflected in firm transportation and other.
(d)Other gas operating revenues generally reflect changes in the revenue
decoupling mechanism and weather normalization clause current asset or
regulatory liability and changes in regulatory assets and liabilities in
accordance with other provisions of the company's rate plans.
63
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Operating revenues increased$33 million in the three months endedJune 30, 2021 compared with the 2020 period primarily due to an increase in revenues from the gas rate plan ($40 million ), offset in part by lower gas purchased for resale ($1 million ). Gas purchased for resale decreased$1 million in the three months endedJune 30, 2021 compared with the 2020 period due to lower purchased volumes ($2 million ), offset in part by higher unit costs ($1 million ).
Other operations and maintenance expenses increased
Depreciation and amortization increased$8 million in the three months endedJune 30, 2021 compared with the 2020 period primarily due to higher gas utility plant balances. Taxes, other than income taxes increased$28 million in the three months endedJune 30, 2021 compared with the 2020 period primarily due to lower deferral of under-collected property taxes ($15 million ), higher property taxes ($10 million ), and higher state and local taxes ($2 million ).
Steam
CECONY's results of steam operations for the three months ended
For the Three Months Ended
(Millions of Dollars) June 30, 2021 June 30, 2020 Variation
Operating revenues $74 $84 $(10)
Purchased power 6 5 1
Fuel 6 16 (10)
Other operations and maintenance 39 40 (1)
Depreciation and amortization 23 23
-
Taxes, other than income taxes 33 34 (1) Steam operating income$(33) $(34) $1
CECONY's steam sales and deliveries for the three months ended
Millions of Pounds Delivered Revenues in Millions
For the Three Months Ended For the Three Months Ended
Percent Percent
Description June 30, 2021 June 30, 2020 Variation Variation June 30, 2021 June 30, 2020 Variation Variation
General 58 65 (7) (10.8 %) $3 $4 $(1) (25.0) %
Apartment house 867 1,037 (170) (16.4) 21 26 (5) (19.2)
Annual power 1,823 1,920 (97) (5.1) 47 52 (5) (9.6)
Other operating revenues
(a) - - - - 3 2 1 50.0
Total 2,748 3,022 (274) (9.1) % (b) $74 $84 $(10) (11.9) %
(a)Other steam operating revenues generally reflect changes in regulatory assets
and liabilities in accordance with the company's rate plan.
(b)After adjusting for variations, primarily weather and billing days, steam
sales and deliveries increased 7.9 percent in the three months ended June 30,
2021 compared with the 2020 period. See "Coronavirus Disease 2019 (COVID-19)
Impacts," above.
Operating revenues decreased $10 million in the three months ended June 30, 2021
compared with the 2020 period primarily due to lower fuel expense ($10 million ),
the impact of the milder than normal weather ($8 million ), offset in part by
higher usage by steam customers ($5 million ) and higher purchased power expenses
($1 million ).
Purchased power increased
Fuel decreased
64
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Other operations and maintenance expenses decreased
Taxes, other than income taxes decreased$1 million in the three months endedJune 30, 2021 compared with the 2020 period primarily due to higher deferral of under-collected property taxes. Other Income (Deductions) Other income (deductions) increased$17 million in the three months endedJune 30, 2021 compared with the 2020 period primarily due to lower costs associated with components of pension and other postretirement benefits other than service cost. Net Interest Expense Net Interest Expense decreased$4 million in the three months endedJune 30, 2021 compared with the 2020 period primarily due to lower interest on allowance for borrowed funds used during construction ($2 million ) and lower interest accrued on the system benefit charge liability ($1 million ). Income Tax Expense Income taxes decreased$23 million in the three months endedJune 30, 2021 compared with the 2020 period primarily due to lower income before income tax expense ($10 million ), lower state income taxes ($3 million ), lower allowance for uncollectible accounts ($3 million ), higher settlement payments related to injuries and damages ($2 million ) and an increase in the amortization of excess deferred federal income taxes due to the TCJA ($4 million ). O&R For the Three Months Ended For the Three Months Ended June 30, 2021 June 30, 2020 (Millions of Dollars) Electric Gas 2021 Total Electric Gas 2020 Total 2021-2020 Variation Operating revenues$153 $41 $194 $138 $37 $175 $19 Purchased power 47 - 47 35 - 35 12 Gas purchased for resale - 13 13 - 10 10 3 Other operations and maintenance 61 16 77 61 16 77 - Depreciation and amortization 17 7 24 16 7 23 1 Taxes, other than income taxes 14 8 22 13 7 20 2 Operating income$14 $(3) $11 $13 $(3) $10 $1 Electric
O&R's results of electric operations for the three months ended
For the Three Months Ended
(Millions of Dollars) June 30, 2021 June 30, 2020 Variation
Operating revenues $153 $138 $15
Purchased power 47 35 12
Other operations and maintenance 61 61 -
Depreciation and amortization 17 16
1
Taxes, other than income taxes 14 13 1 Electric operating income$14 $13 $1 65
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O&R's electric sales and deliveries for the three months ended
Millions of kWh Delivered Revenues in Millions (a)
For the Three Months Ended For the Three Months Ended
Percent Percent
Description June 30, 2021 June 30, 2020 Variation Variation June 30, 2021 June 30, 2020 Variation Variation
Residential/Religious (b) 405 415 (10) (2.4 %) $72 $70 $2 2.9 %
Commercial/Industrial 204 174 30 17.2 26 26 - -
Retail choice customers 707 616 91 14.8 53 42 11 26.2
Public authorities 26 24 2 8.3 2 1 1 Large
Other operating revenues (c) - - - - - (1) 1 Large
Total 1,342 1,229 113 9.2 % (d) $153 $138 $15 10.9 %
(a)O&R's New York electric delivery revenues are subject to a revenue decoupling
mechanism, as a result of which delivery revenues are generally not affected by
changes in delivery volumes from levels assumed when rates were approved. 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 regulatory
assets and liabilities in accordance with the company's electric rate plan.
(d)After adjusting for weather and other variations, electric delivery volumes
in O&R's service area increased 5.9 percent in the three months ended June 30,
2021 compared with the 2020 period. See "Coronavirus Disease 2019 (COVID-19)
Impacts," above.
Operating revenues increased $15 million in the three months ended June 30, 2021
compared with the 2020 period primarily due to higher purchased power expenses
($12 million ) and higher revenues from the New York electric rate plan ($3
million ).
Purchased power expenses increased
Depreciation and amortization increased$1 million in the three months endedJune 30, 2021 compared with the 2020 period primarily due to higher electric utility plant balances.
Taxes, other than income taxes increased
Gas
O&R's results of gas operations for the three months ended
For the Three Months Ended
(Millions of Dollars) June 30, 2021 June 30, 2020 Variation
Operating revenues $41 $37 $4
Gas purchased for resale 13 10 3
Other operations and maintenance 16 16 -
Depreciation and amortization 7 7
-
Taxes, other than income taxes 8 7 1 Gas operating income$(3) $(3) $- 66
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O&R's gas sales and deliveries, excluding off-system sales, for the three months
ended
Thousands of Dt Delivered Revenues in Millions (a)
For the Three Months Ended For the Three Months Ended
Percent Percent
Description June 30, 2021 June 30, 2020 Variation Variation June 30, 2021 June 30, 2020 Variation Variation
Residential 1,618 1,686 (68) (4.0 %) $24 $19 $5 26.3 %
General 363 294 69 23.5 3 3 - -
Firm transportation 1,193 1,452 (259) (17.8) 10 11 (1) (9.1)
Total firm sales and
transportation 3,174 3,432 (258) (7.5) (b) 37 33 4 12.1
Interruptible sales 940 771 169 21.9 2 1 1 Large
Generation plants 8 3 5 Large - - - -
Other 64 127 (63) (49.6) 1 - 1 -
Other gas revenues - - - - 1 3 (2) (66.7)
Total 4,186 4,333 (147) (3.4 %) $41 $37 $4 10.8 %
(a)Revenues from New York gas sales are subject to a weather normalization
clause and a revenue decoupling mechanism as a result of which delivery revenues
are generally not affected by changes in delivery volumes from levels assumed
when rates were approved.
(b)After adjusting for weather and other variations, total firm sales and
transportation volumes increased 6.1 percent in the three months ended June 30,
2021 compared with the 2020 period. See "Coronavirus Disease 2019 (COVID-19)
Impacts," above.
Operating revenues increased
Gas purchased for resale increased$3 million in the three months endedJune 30, 2021 compared with the 2020 period due to higher unit costs ($4 million ), offset in part by lower purchased volumes ($1 million ). Taxes, other than income taxes increased$1 million in the three months endedJune 30, 2021 compared with the 2020 period primarily due to higher property taxes and payroll taxes. Clean Energy Businesses The Clean Energy Businesses' results of operations for the three months endedJune 30, 2021 compared with the 2020 period were as follows: For the Three Months Ended (Millions of Dollars) June 30, 2021 June 30, 2020 Variation Operating revenues$291 $198 $93 Gas purchased for resale 7 3 4 Other operations and maintenance 136 53
83
Depreciation and amortization 55 57
(2)
Taxes, other than income taxes 4 3 1 Operating income$89 $82 $7 Operating revenues increased$93 million in the three months endedJune 30, 2021 compared with the 2020 period primarily due to higher revenue from renewable electric production projects ($73 million ), higher wholesale revenues ($11 million ), higher energy services revenues ($10 million ), offset in part by net mark-to-market values ($1 million ).
Gas purchased for resale increased
Other operations and maintenance expenses increased$83 million in the three months endedJune 30, 2021 compared with the 2020 period primarily due to higher costs from engineering, procurement and construction of renewable electric projects for customers. Net Interest Expense Net interest expense increased$19 million in the three months endedJune 30, 2021 compared with the 2020 period due to higher unrealized losses on interest rate swaps in the 2021 period.
67
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Income Tax Expense Income taxes increased$13 million in the three months endedJune 30, 2021 compared with the 2020 period primarily due to lower income attributable to non-controlling interest ($15 million ), offset in part by lower income before income tax expense ($2 million ). Income (Loss) Attributable to Non-Controlling Interest Income attributable to non-controlling interest decreased$59 million to a loss of$47 million in the three months endedJune 30, 2021 compared with the 2020 period primarily due to lower income attributable in the 2021 period to a tax equity investor in renewable electric projects accounted for under the HLBV method of accounting. See Note P to the Second Quarter Financial Statements. Con Edison Transmission Other Income (Deductions) Other income (deductions) decreased$48 million in the three months endedJune 30, 2021 compared with the 2020 period primarily due to a pre-tax impairment loss related to Con Edison Transmission's investment in Stagecoach and MVP foregoing AFUDC income startingJanuary 2021 until significant construction resumes. Income Tax Expense Income taxes decreased$13 million in the three months endedJune 30, 2021 compared with the 2020 period primarily due to lower income before income tax expense ($10 million ) and lower state income taxes ($3 million ).
Other
Income Tax Expense
Income taxes increased
68
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The Companies' results of operations for the six months endedJune 30, 2021 and 2020 were as follows: Con Edison CECONY O&R Clean Energy Businesses Transmission Other (a) Con Edison (b) (Millions of Dollars) 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 Operating revenues$5,692 $5,200 $442 $408 $515 $344 $2 $2 $(3) $(1) $6,648 $5,953 Purchased power 813 618 88 71 - - - - (1) (1) 900 688 Fuel 122 101 - - - - - - - - 122 101 Gas purchased for resale 296 260 44 33 39 16 - - - - 379 309 Other operations and maintenance 1,198 1,117 157 152 235 107 5 5 (2) (1) 1,593 1,380 Depreciation and amortization 838 786 47 45 114 115 1 - - - 1,000 946 Taxes, other than income taxes 1,317 1,186 45 42 10 10 - - 3 4 1,375 1,242 Operating income 1,108 1,132 61 65 117 96 (4) (3) (3) (3) 1,279 1,287 Other income less deductions (c) (46) (100) (6) (8) - 1 (183) 51 (2) (3) (237) (59) Net interest expense 371 372 21 20 26 160 7 9 11 9 436 570 Income before income tax expense 691 660 34 37 91 (63) (194) 39 (16) (15) 606 658 Income tax expense 98 102 7 8 20 (43) (52) 11 (5) (14) 68 64 Net income$593 $558 $27 $29 $71 $(20) $(142) $28 $(11) $(1) $538 $594 Income (loss) attributable to non-controlling interest - - - - (46) 29 - - - - (46) 29 Net income for common stock$593 $558 $27 $29 $117 $(49) $(142) $28 $(11) $(1) $584 $565
(a)Includes parent company and consolidation adjustments.
(b)Represents the consolidated results of operations of
69
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CECONY
For the Six Months Ended For the Six Months Ended
June 30, 2021 June 30, 2020
2021-2020
(Millions of Dollars) Electric Gas Steam 2021 Total Electric Gas Steam 2020 Total Variation
Operating revenues $3,931 $1,423 $338 $5,692 $3,616 $1,250 $334 $5,200 $492
Purchased power 795 - 18 813 604 - 14 618 195
Fuel 69 - 53 122 38 - 63 101 21
Gas purchased for resale - 296 - 296 - 260 - 260 36
Other operations and
maintenance 934 184 80 1,198 853 182 82 1,117 81
Depreciation and
amortization 635 157 46 838 598 143 45 786 52
Taxes, other than income
taxes 997 248 72 1,317 923 191 72 1,186 131
Operating income $501 $538 $69 $1,108 $600 $474 $58 $1,132 $(24) Electric
CECONY's results of electric operations for the six months ended
For the Six Months Ended
(Millions of Dollars) June 30, 2021 June 30, 2020 Variation
Operating revenues $3,931 $3,616 $315
Purchased power 795 604 191
Fuel 69 38 31
Other operations and maintenance 934 853 81
Depreciation and amortization 635 598
37
Taxes, other than income taxes 997 923 74 Electric operating income$501 $600 $(99)
CECONY's electric sales and deliveries for the six months ended
Millions of kWh Delivered Revenues in Millions (a)
For the Six Months Ended For the Six Months Ended
Percent Percent
Description June 30, 2021 June 30, 2020 Variation Variation June 30, 2021 June 30, 2020 Variation Variation
Residential/Religious (b) 4,922 4,637 285 6.1 % $1,390 $1,225 $165 13.5 %
Commercial/Industrial 4,336 4,518 (182) (4.0) 1,005 848 157 18.5
Retail choice customers 10,036 10,720 (684) (6.4) 1,147 1,057 90 8.5
NYPA, Municipal Agency and other sales 4,387 4,440 (53) (1.2) 308 289 19 6.6
Other operating revenues (c) - - - - 81 197 (116) (58.9)
Total 23,681 24,315 (634) (2.6) % (d) $3,931 $3,616 $315 8.7 %
(a)Revenues from electric sales are subject to a revenue decoupling mechanism,
as a result of which delivery revenues generally are not affected by changes in
delivery volumes from levels assumed when rates were approved.
(b)"Residential/Religious" generally includes single-family dwellings,
individual apartments in multi-family dwellings, religious organizations and
certain other not-for-profit organizations.
(c)Other electric operating revenues generally reflect changes in the revenue
decoupling mechanism current asset or regulatory liability and changes in
regulatory assets and liabilities in accordance with other provisions of the
company's rate plans.
(d)After adjusting for variations, primarily weather and billing days, electric
delivery volumes in CECONY's service area decreased 3.5 percent in the six
months ended June 30, 2021 compared with the 2020 period. See "Coronavirus
Disease 2019 (COVID-19) Impacts," above.
Operating revenues increased $315 million in the six months ended June 30, 2021
compared with the 2020 period primarily due to higher purchased power expenses
($191 million ), an increase in revenues from the electric rate plan ($83
million ) and higher fuel expenses ($31 million ).
70
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Purchased power expenses increased
Fuel expenses increased
Other operations and maintenance expenses increased$81 million in the six months endedJune 30, 2021 compared with the 2020 period primarily due to higher costs for pension and other postretirement benefits ($36 million ), higher costs related to winter storms and heat events ($34 million ), higher healthcare costs ($14 million ), offset in part by surcharges for assessments and fees that are collected in revenues from customers ($7 million ).
Depreciation and amortization increased
Taxes, other than income taxes increased$74 million in the six months endedJune 30, 2021 compared with the 2020 period primarily due to higher property taxes ($52 million ), lower deferral of under-collected property taxes ($8 million ) and higher state and local taxes ($11 million ).
Gas
CECONY's results of gas operations for the six months ended
For the Six Months Ended
(Millions of Dollars) June 30, 2021 June 30, 2020 Variation
Operating revenues $1,423 $1,250 $173
Gas purchased for resale 296 260 36
Other operations and maintenance 184 182 2
Depreciation and amortization 157 143
14
Taxes, other than income taxes 248 191 57 Gas operating income$538 $474 $64
CECONY's gas sales and deliveries, excluding off-system sales, for the six
months ended
Thousands of Dt Delivered Revenues in Millions (a)
For the Six Months Ended For the Six Months Ended
Percent Percent
Description June 30, 2021 June 30, 2020 Variation Variation June 30, 2021 June 30, 2020 Variation Variation
Residential 35,073 32,846 2,227 6.8 % $660 $575 $85 14.8 %
General 19,530 19,048 482 2.5 254 201 53 26.4
Firm transportation 49,840 50,029 (189) (0.4) 455 428 27 6.3
Total firm sales and
transportation 104,443 101,923 2,520 2.5 (b) 1,369 1,204 165 13.7
Interruptible sales (c) 3,549 4,987 (1,438) (28.8) 16 18 (2) (11.1)
NYPA 21,415 15,744 5,671 36.0 1 1 - -
Generation plants 17,698 20,414 (2,716) (13.3) 10 10 - -
Other 11,679 12,024 (345) (2.9) 22 21 1 4.8
Other operating revenues (d) - - - - 5 (4) 9 Large
Total 158,784 155,092 3,692 2.4 % $1,423 $1,250 $173 13.8 %
(a)Revenues from gas sales are subject to a weather normalization clause and a
revenue decoupling mechanism as a result of which delivery revenues are
generally not affected by changes in delivery volumes from levels assumed when
rates were approved.
(b)After adjusting for variations, primarily billing days, firm gas sales and
transportation volumes in the company's service area decreased 0.6 percent in
the six months ended June 30, 2021 compared with the 2020 period. See
"Coronavirus Disease 2019 (COVID-19) Impacts," above.
(c)Includes 1,128 thousand and 2,285 thousand of Dt for the 2021 and 2020
periods, respectively, which are also reflected in firm transportation and
other.
(d)Other gas operating revenues generally reflect changes in the revenue
decoupling mechanism and weather normalization clause current asset or
regulatory liability and changes in regulatory assets and liabilities in
accordance with other provisions of the company's rate plans.
71
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Operating revenues increased$173 million in the six months endedJune 30, 2021 compared with the 2020 period primarily due to an increase in revenues from the gas rate plan ($131 million ) and higher gas purchased for resale expense ($36 million ). Gas purchased for resale increased$36 million in the six months endedJune 30, 2021 compared with the 2020 period due to higher purchased volumes ($19 million ) and higher unit costs ($17 million ). Other operations and maintenance expenses increased$2 million in the six months endedJune 30, 2021 compared with the 2020 period primarily due to higher costs for pension and other postretirement benefits ($7 million ), higher healthcare costs ($3 million ), offset in part by municipal infrastructure support ($8 million ).
Depreciation and amortization increased
Taxes, other than income taxes increased$57 million in the six months endedJune 30, 2021 compared with the 2020 period primarily due to lower deferral of under-collected property taxes ($31 million ), higher property taxes ($20 million ) and higher state and local taxes ($5 million ).
Steam
CECONY's results of steam operations for the six months ended
For the Six Months Ended
(Millions of Dollars) June 30, 2021 June 30, 2020 Variation
Operating revenues $338 $334 $4
Purchased power 18 14 4
Fuel 53 63 (10)
Other operations and maintenance 80 82 (2)
Depreciation and amortization 46 45 1 Taxes, other than income taxes 72 72 - Steam operating income$69 $58 $11
CECONY's steam sales and deliveries for the six months ended
Millions of Pounds Delivered Revenues in Millions
For the Six Months Ended For the Six Months Ended
Percent Percent
Description June 30, 2021 June 30, 2020 Variation Variation June 30, 2021 June 30, 2020 Variation Variation
General 392 327 65 19.9 % $18 $16 $2 12.5 %
Apartment house 3,180 3,213 (33) (1.0) 87 91 (4) (4.4)
Annual power 6,984 6,438 546 8.5 222 213 9 4.2
Other operating revenues
(a) - - - - 11 14 (3) (21.4)
Total 10,556 9,978 578 5.8 % (b) $338 $334 $4 1.2 %
(a)Other steam operating revenues generally reflect changes in regulatory assets
and liabilities in accordance with the company's rate plan.
(b)After adjusting for variations, primarily weather and billing days, steam
sales and deliveries decreased 3.1 percent in the six months ended June 30, 2021
compared with the 2020 period. See "Coronavirus Disease 2019 (COVID-19)
Impacts," above.
Operating revenues increased $4 million in the six months ended June 30, 2021
compared with the 2020 period primarily due to the impact of colder weather ($21
million ), higher purchased power expenses ($4 million ), offset in part by lower
fuel expenses ($10 million ), lower usage by customers due to COVID-19 pandemic
($4 million ) and by a tax law surcharge ($6 million ).
Purchased power expenses increased
72
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Fuel expenses decreased$10 million in the six months endedJune 30, 2021 compared with the 2020 period due to lower unit costs ($14 million ), offset in part by higher purchased volumes from the company's steam generating facilities ($4 million ).
Other operations and maintenance expenses decreased
Depreciation and amortization increased
Other Income (Deductions) Other income (deductions) increased$54 million in the six months endedJune 30, 2021 compared with the 2020 period primarily due to lower costs associated with components of pension and other postretirement benefits other than service cost ($46 million ). Net Interest Expense Net interest expense decreased$1 million in the six months endedJune 30, 2021 compared with the 2020 period primarily due to lower interest expense for short-term debt ($5 million ), lower interest accrued on the system benefit charge liability ($3 million ), lower interest accrued on deferred storm costs ($1 million ), lower interest on deposits ($1 million ), offset in part by higher interest on long-term debt ($13 million ). Income Tax Expense Income taxes decreased$4 million in the six months endedJune 30, 2021 compared with the 2020 period primarily due to an increase in the amortization of excess deferred federal income taxes due to CECONY's electric and gas rate plans that went into effect inJanuary 2020 ($8 million ), lower allowance for uncollectible accounts ($4 million ), higher settlement payments related to injuries and damages ($1 million ), an increase in the research and development credit ($1 million ), offset in part by higher income before income tax expense ($7 million ), higher state income taxes ($2 million ), and higher plant related items ($2 million ). O&R For the Six Months Ended For the Six Months Ended June 30, 2021 June 30, 2020 (Millions of Dollars) Electric Gas 2021 Total Electric Gas 2020 Total 2021-2020 Variation Operating revenues$299 $143 $442 $274 $134 $408 $34 Purchased power 88 - 88 71 - 71 17 Gas purchased for resale - 44 44 - 33 33 11 Other operations and maintenance 126 31 157 118 34 152
5
Depreciation and amortization 34 13 47 32 13 45
2
Taxes, other than income taxes 29 16 45 26 16 42 3 Operating income$22 $39 $61 $27 $38 $65 $(4) Electric
O&R's results of electric operations for the six months ended
For the Six Months Ended
(Millions of Dollars) June 30, 2021 June 30, 2020 Variation
Operating revenues $299 $274 $25
Purchased power 88 71 17
Other operations and maintenance 126 118 8
Depreciation and amortization 34 32
2
Taxes, other than income taxes 29 26 3 Electric operating income$22 $27 $(5) 73
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O&R's electric sales and deliveries for the six months ended
Millions of kWh Delivered Revenues in Millions (a)
For the Six Months Ended For the Six Months Ended
Percent Percent
Description June 30, 2021 June 30, 2020 Variation Variation June 30, 2021 June 30, 2020 Variation Variation
Residential/Religious (b) 786 767 19 2.5 % $143 $137 $6 4.4 %
Commercial/Industrial 404 382 22 5.8 51 53 (2) (3.8)
Retail choice customers 1,380 1,254 126 10.0 101 82 19 23.2
Public authorities 51 50 1 2.0 4 3 1 33.3
Other operating revenues (c) - - - - - (1) 1 Large
Total 2,621 2,453 168 6.8 % (d) $299 $274 $25 9.1 %
(a)O&R's New York electric delivery revenues are subject to a revenue decoupling
mechanism, as a result of which delivery revenues are generally not affected by
changes in delivery volumes from levels assumed when rates were approved. 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 regulatory
assets and liabilities in accordance with the company's electric rate plan.
(d)After adjusting for weather and other variations, electric delivery volumes
in O&R's service area increased 2.1 percent in the six months ended June 30,
2021 compared with the 2020 period. See "Coronavirus Disease 2019 (COVID-19)
Impacts," above.
Operating revenues increased $25 million in the six months ended June 30, 2021
compared with the 2020 period primarily due to higher purchased power expenses
($17 million ) and higher revenues from the New York electric rate plan ($6
million ).
Purchased power expenses increased $17 million in the six months ended June 30,
2021 compared with the 2020 period primarily due to higher purchased volumes
($10 million ) and higher unit costs ($8 million ).
Other operations and maintenance expenses increased $8 million in the six months
ended June 30, 2021 compared with the 2020 period primarily due to higher
storm-related costs ($5 million ), higher tree trimming expenses ($1 million ),
and higher pension costs ($1 million ).
Depreciation and amortization increased
Taxes, other than income taxes increased
Gas
O&R's results of gas operations for the six months ended
For the Six Months Ended
(Millions of Dollars) June 30, 2021 June 30, 2020 Variation
Operating revenues $143 $134 $9
Gas purchased for resale 44 33 11
Other operations and maintenance 31 34 (3)
Depreciation and amortization 13 13
-
Taxes, other than income taxes 16 16 - Gas operating income$39 $38 $1 74
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O&R's gas sales and deliveries, excluding off-system sales, for the six months
ended
Thousands of Dt Delivered Revenues in Millions (a)
For the Six Months Ended For the Six Months Ended
Percent Percent
Description June 30, 2021 June 30, 2020 Variation Variation June 30, 2021 June 30, 2020 Variation Variation
Residential 6,883 5,761 1,122 19.5 % $90 $70 $20 28.6 %
General 1,472 1,225 247 20.2 15 12 3 25.0
Firm transportation 4,778 4,995 (217) (4.3) 35 38 (3) (7.9)
Total firm sales and
transportation 13,133 11,981 1,152 9.6 (b) 140 120 20 16.7
Interruptible sales 2,158 1,936 222 11.5 4 3 1 33.3
Generation plants 11 3 8 Large - - - -
Other 245 499 (254) (50.9) - - - -
Other gas revenues - - - - (1) 11 (12) Large
Total 15,547 14,419 1,128 7.8 % $143 $134 $9 6.7 %
(a)Revenues from New York gas sales are subject to a weather normalization
clause and a revenue decoupling mechanism as a result of which delivery revenues
are generally not affected by changes in delivery volumes from levels assumed
when rates were approved.
(b)After adjusting for weather and other variations, total firm sales and
transportation volumes increased 0.4 percent in the six months ended June 30,
2021 compared with 2020 period. See "Coronavirus Disease 2019 (COVID-19)
Impacts," above.
Operating revenues increased $9 million in the six months ended June 30, 2021
compared with the 2020 period primarily due to an increase in gas purchased for
resale ($11 million ), higher revenues from the New York gas rate plan ($1
million ), offset in part by certain rate plan reconciliations ($2 million ).
Gas purchased for resale increased $11 million in the six months ended June 30,
2021 compared with the 2020 period primarily due to higher purchased volumes ($9
million ) and unit costs ($1 million ).
Other operations and maintenance expenses decreased $3 million in the six months
ended June 30, 2021 compared with the 2020 period primarily due to lower pension
costs ($1 million ) and lower spending on leak repairs ($1 million ).
Income Tax Expense
Income taxes decreased $1 million in the six months ended June 30, 2021 compared
with the 2020 period primarily due to lower income before income tax expense.
Clean Energy Businesses
The Clean Energy Businesses' results of operations for the six months ended
For the Six Months Ended
(Millions of Dollars) June 30, 2021 June 30, 2020 Variation
Operating revenues $515 $344 $171
Gas purchased for resale 39 16 23
Other operations and maintenance 235 107 128
Depreciation and amortization 114 115
(1)
Taxes, other than income taxes 10 10 - Operating income$117 $96 $21 Operating revenues increased$171 million in the six months endedJune 30, 2021 compared with the 2020 period primarily due to higher revenue from renewable electric production projects ($109 million ), higher wholesale revenues ($34 million ), higher energy services revenues ($26 million ) and net mark-to-market values ($2 million ).
Gas purchased for resale increased
Other operations and maintenance expenses increased
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Net Interest Expense Net interest expense decreased$134 million in the six months endedJune 30, 2021 compared with the 2020 period primarily due to lower unrealized losses on interest rate swaps in the 2021 period. Income Tax Expense Income taxes increased$63 million in the six months endedJune 30, 2021 compared with the 2020 period primarily due to higher income before income tax expense ($32 million ), lower income attributable to non-controlling interests ($18 million ), higher state income taxes ($6 million ), and the absence of a tax benefit due to the change in the federal corporate income tax rate recognized for a loss carryback from the 2018 tax year to the 2013 tax year as allowed under the CARES Act signed into law during the first quarter of 2020 ($4 million ). Income (Loss) Attributable to Non-Controlling Interest Income attributable to non-controlling interest decreased$75 million to a loss of$46 million in the six months endedJune 30, 2021 compared with the 2020 period primarily due to lower income attributable in the 2021 period to a tax equity investor in renewable electric projects accounted for under the HLBV method of accounting. See Note P to the Second Quarter Financial Statements. Con Edison Transmission Other Income (Deductions) Other income (deductions) decreased$234 million in the six months endedJune 30, 2021 compared with the 2020 period primarily due to pre-tax impairment losses of$211 million related to Con Edison Transmission's investment in Stagecoach and MVP foregoing AFUDC income startingJanuary 2021 until significant construction resumes. See "Investments" in Note A to the Second Quarter Financial Statements. Income Tax Expense Income taxes decreased$63 million in the six months endedJune 30, 2021 compared with the 2020 period primarily due to lower income before income tax expense ($49 million ) and lower state income taxes ($15 million ).
Other
Income Tax Expense Income taxes increased$9 million in the six months endedJune 30, 2021 compared with the 2020 period primarily due to lower consolidated state income tax benefit. Liquidity and Capital Resources The Companies' liquidity reflects cash flows from operating, investing and financing activities, as shown on their respective consolidated statement of cash flows and as discussed below.
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The Companies' cash, temporary cash investments and restricted cash resulting
from operating, investing and financing activities for the six months ended
For the Six Months Ended June 30,
Con Edison
CECONY O&R Clean Energy Businesses Transmission Other (a) Con Edison (b)
(Millions of Dollars) 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020
Operating activities $1,096 $975 $72 $74 $(142) $653 $507 $(4) $(140) $(518) $1,393 $1,180
Investing activities (1,841) (1,574) (106) (95) (47) (273) (6) 10 - - (2,000) (1,932)
Financing activities 663 762 16 8 131 (405) (501) (6) 40 521 349 880
Net change for the
period (82) 163 (18) (13) (58) (25) - - (100) 3 (258) 128
Balance at beginning of
period 1,067 933 37 32 187 251 - - 145 1 1,436 1,217
Balance at end of period
(c) $985 $1,096 $19 $19 $129 $226 $- $- $45 $4 (a) Includes parent company and consolidation adjustments. (b) Represents the consolidated results of operations ofCon Edison and its businesses. (c) See "Reconciliation of Cash, Temporary Cash Investments and Restricted Cash" in Note A to the Second Quarter Financial Statements.
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Cash Flows from Operating Activities The Utilities' cash flows from operating activities primarily reflect their energy sales and deliveries and cost of operations. The volume of energy sales and deliveries is primarily affected by factors external to the Utilities, such as growth of customer demand, weather, market prices for energy and economic conditions. Measures that promote distributed energy resources, such as distributed generation, demand reduction and energy efficiency, also affect the volume of energy sales and deliveries. In addition, the decline in business activity in the Utilities' service territory due to the COVID-19 pandemic resulted and may continue to result in lower billed sales revenues, a slower recovery of cash from outstanding customer accounts receivable balances and increases to the allowance for uncollectible accounts, that may further result in increases to write-offs of customer accounts. Under the revenue decoupling mechanisms in the Utilities'New York electric and gas rate plans, changes in delivery volumes from levels assumed when rates were approved may affect the timing of cash flows, but largely not net income. The 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. The Utilities'New York rate plans allow them to defer costs resulting from a change in legislation, regulation and related actions that have taken effect during the term of the rate plans once the costs exceed a specified threshold. Increases to the allowance for uncollectible accounts related to the COVID-19 pandemic have been deferred pursuant to the legislative, regulatory and related actions provisions of their rate plans. 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 "COVID-19 Regulatory Matters" and "Other Regulatory Matters" in Note B to the Second Quarter Financial Statements and "Coronavirus Disease 2019 (COVID-19) Impacts - Liquidity and Financing," above. Net income is the result of cash and non-cash (or accrual) transactions. Only cash transactions affect the Companies' cash flows from operating activities. Principal non-cash charges or credits include depreciation, deferred income tax expense, amortizations of certain regulatory assets and liabilities, and accrued unbilled revenue. Non-cash charges or credits may also be accrued under the revenue decoupling and cost reconciliation mechanisms in the Utilities'New York electric and gas rate plans. ForCon Edison , net income for the six months endedJune 30, 2021 also included non-cash losses recognized with respect to an impairment of Con Edison Transmission's investment in Stagecoach. See "Investments" in Note A to the Second Quarter Financial Statements. Net cash flows from operating activities for the six months endedJune 30, 2021 forCon Edison and CECONY were$213 million and$121 million higher, respectively, than in the 2020 period. The changes in net cash flows forCon Edison and CECONY primarily reflect a change in pension and retiree benefit obligations ($69 million and$68 million , respectively), forCon Edison , lower prepayments ($47 million ), lower other receivables and other current assets ($43 million and$46 million , respectively), lower system benefit charge ($24 million and$24 million , respectively), and forCon Edison , lower taxes receivable ($15 million ). The change in net cash flows also reflects the timing of payments for and recovery of energy costs. This timing is reflected within changes to accounts receivable - customers and 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 forCon Edison and CECONY were$68 million and$267 million higher, respectively, for the six months endedJune 30, 2021 compared with the 2020 period. The change forCon Edison primarily reflects an increase in utility construction expenditures at CECONY ($244 million ) and O&R ($9 million ), offset in part by the proceeds from the divestiture of renewable electric projects at the Clean Energy Businesses ($183 million ). Cash Flows from Financing Activities Net cash flows from financing activities forCon Edison and CECONY were$531 million and$99 million lower, respectively, in the six months endedJune 30, 2021 compared with the 2020 period. InJune 2021 ,Con Edison issued 10,100,000 shares of its common stock resulting in net proceeds of approximately$775 million , after issuance expenses. The net proceeds from the sale of the common shares were invested byCon Edison in CECONY, for funding of its construction expenditures and for its other general corporate purposes. See Note C to the Second Quarter Financial Statements.
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In
During the first quarter of 2021,Con Edison optionally prepaid the remaining$675 million outstanding under aFebruary 2019 term loan prior to its maturity inJune 2021 . InJuly 2020 ,Con Edison borrowed$820 million pursuant to anApril 2020 credit agreement that was amended inJune 2020 (as amended, the Supplemental Credit Agreement).Con Edison used the proceeds from the borrowing for general corporate purposes, including repayment of short-term debt bearing interest at variable rates. InJanuary 2020 ,Con Edison issued 1,050,000 shares of its common stock for$88 million upon physical settlement of the remaining shares subject to itsMay 2019 forward sale agreement.
In
InJune 2021 , CECONY issued$750 million aggregate principal amount of 2.40 percent debentures, due 2031, the net proceeds from the sale of which were used to redeem at maturity its$640 million floating rate 3-year debentures and for other general corporate purposes. InJune 2021 CECONY also issued$750 million aggregate principal amount of 3.60 percent debentures, due 2061, the net proceeds from the sale of which will be used to pay or reimburse the payment of, in whole or in part, existing and new qualifying eligible green expenditures, such as energy efficiency and clean transportation expenditures, that include those funded on or afterJanuary 1, 2021 until the maturity date of the debentures. Pending the allocation of the net proceeds to finance or refinance eligible green expenditures, CECONY used the net proceeds for repayment of short-term debt and temporarily placed the remaining net proceeds in short-term interest-bearing instruments. See Note C to the Second Quarter Financial Statements.
In
InMarch 2020 , CECONY issued$600 million aggregate principal amount of 3.35 percent debentures, due 2030 and$1,000 million aggregate principal amount of 3.95 percent debentures, due 2050, the net proceeds from the sale of which will be used to pay or reimburse the payment of, in whole or in part, existing and new qualifying eligible green expenditures, such as energy efficiency and clean transportation expenditures, that include those funded on or afterJanuary 1, 2018 until the maturity date of each series of the debentures. Pending the allocation of the net proceeds to finance or refinance eligible green expenditures, CECONY used the net proceeds for repayment of short-term debt and temporarily placed the remaining net proceeds in short-term interest-bearing instruments. InMarch 2021 , a subsidiary of the Clean Energy Businesses agreed to issue$229 million aggregate principal amount of 3.77 percent senior notes, due 2046, that will be secured by equity interests in CED Nevada Virginia. The senior notes will be issued when each project reaches commercial operation, the proceeds from the sale of which will repay a portion of the borrowings outstanding under a construction loan facility. InJune 2021 andJuly 2021 , CED Nevada Virginia issued$38 million and$61 million , respectively, of the$229 million senior notes, the proceeds from the sale of which repaid portion of the borrowings outstanding under the construction loan facility. The remaining$130 million of senior notes are expected to be issued when the last of the three projects reaches commercial operation during the third quarter of 2021. See Notes C and D to the Second Quarter Financial Statements. InFebruary 2021 , a subsidiary of the Clean Energy Businesses borrowed$250 million at a variable rate, due 2028, secured by equity interests in four of the company's solar electric production projects, the interest rate for which was swapped to a fixed rate of 3.39 percent. See Note C to the Second Quarter Financial Statements. InFebruary 2021 , a subsidiary of the Clean Energy Businesses entered into an agreement with a tax equity investor for the financing of a portfolio of three of the Clean Energy Businesses' solar electric production projects (CED NevadaVirginia ). Under the financing, the tax equity investor acquired a noncontrolling interest in the portfolio and will receive a percentage of earnings, tax attributes and cash flows. The tax equity investor's funding obligation is subject to certain conditions precedent and a maximum funding obligation of$270 million . As ofJune 30, 2021 ,$99 million had been funded, with an additional$53 million funded inJuly 2021 . The remaining amount is expected to be
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funded upon the satisfaction of the remaining conditions precedent, including the last of the three projects reaching commercial operation, which is expected to occur during the third quarter of 2021. The Clean Energy Businesses will continue to consolidate this entity and will report the noncontrolling tax equity investor's interest in the tax equity arrangement. See Notes C and P to the Second Quarter Financial Statements.Con Edison's cash flows from financing for the six months endedJune 30, 2021 and 2020 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$54 million and$52 million , respectively. Cash flows used in financing activities of the Companies also reflect commercial paper issuances and repayments. The commercial paper amounts outstanding atJune 30, 2021 and 2020 and the average daily balances for the six months endedJune 30, 2021 and 2020 forCon Edison and CECONY were as follows: 2021 2020
(Millions of Dollars, except Weighted Average Outstanding at June
Daily Outstanding at June Daily
Yield) 30, average 30, average
Con Edison $1,052 $1,435 $1,813 $1,117
CECONY $1,000 $1,317 $1,115 $547
Weighted average yield 0.2 % 0.2 % 0.2 % 1.6 %
Capital Requirements and Resources
During the first quarter of 2021, Con Edison increased its estimates for capital
requirements for 2021, 2022 and 2023 from $5,985 million to $6,015 million ,
$4,380 million to $4,644 million and $5,137 million to $5,385 million ,
respectively. The increase reflects additional investments for the Reliable
Clean City (RCC) projects approved by the NYSPSC in April 2021 . See "CECONY" -
"Electric" - "Electric Supply," above. The company plans to meet its capital
requirements for 2021 through 2023, through internally-generated funds and the
issuance of long-term debt and common equity. The company's plans include the
issuance of between $1,900 million and $2,600 million of long-term debt,
including for maturing securities, primarily at the Utilities, in 2021 and
approximately $1,400 million in aggregate of long-term debt at the Utilities
during 2022 and 2023. The planned debt issuance is in addition to the issuance
of long-term debt secured by the Clean Energy Businesses' renewable electric
production projects. The company's plans also include the issuance of up to $800
million of common equity in 2021 and approximately $700 million in aggregate of
common equity during 2022 and 2023, in addition to equity under its dividend
reinvestment, employee stock purchase and long-term incentive plans. See Note C
to the Second Quarter Financial Statements and "Liquidity and Capital Resources
- Cash Flows from Financing Activities," above.
Capital Resources
For each of the Companies, the common equity ratio at
Common Equity Ratio
(Percent of total capitalization)
June 30, 2021 December 31, 2020
Con Edison 48.1 48.3
CECONY 47.5 47.9
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Assets, Liabilities and Equity The Companies' assets, liabilities, and equity atJune 30, 2021 andDecember 31, 2020 are summarized as follows. Clean Energy Con Edison CECONY O&R Businesses Transmission Other (a) Con Edison (b) (Millions of Dollars) 2021 2020 2021
2020 2021 2020 2021 2020 2021 2020 2021 2020 ASSETS Current assets$4,293 $4,407 $268 $277 $489 $485 $22 $42 $38 $90 $5,110 $5,301 Investments 594 541 27 26 11 - 1,064 1,256 (8) (7) 1,688 1,816 Net plant 40,434 39,554 2,517 2,469 4,370 4,515 16 17 2 -
47,339 46,555
Other noncurrent assets 6,194 6,465 445 475 1,704 1,848 34 33 405 402 8,782 9,223
Total Assets $51,515 $50,967 $3,257 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities$3,644 $5,247 $310
$5,557 $7,354 Noncurrent liabilities 14,312 14,722 1,206
1,191 105 211 (22) 28 42 (58)
15,643 16,094
Long-term debt 17,635 16,149 893 893 2,491 2,776 - 500 647 64 21,666 20,382
Equity 15,924 14,849 848 807 2,709 2,531 566 709 6 169
20,053 19,065
Total Liabilities and Equity
(a) Includes parent company and consolidation adjustments.
(b) Represents the consolidated results of operations of
CECONY
Current assets atJune 30, 2021 were$114 million lower than atDecember 31, 2020 . The change in current assets primarily reflects a decrease in accounts receivables from affiliated companies ($93 million ), a decrease in cash and temporary cash investments ($82 million ), offset in part by an increase in revenue decoupling mechanism receivable ($69 million ). See "COVID-19 Regulatory Matters" in Note B to the Second Quarter Financial Statements and "Coronavirus Disease 2019 (COVID-19) Impacts - Accounting Considerations" and "Liquidity and Financing," above.
Investments at
Net plant atJune 30, 2021 was$880 million higher than atDecember 31, 2020 . The change in net plant primarily reflects an increase in electric ($744 million ), gas ($538 million ), steam ($45 million ) and general ($121 million ) plant balances, offset in part by an increase in accumulated depreciation ($466 million ) and a decrease in construction work in progress ($102 million ). Other noncurrent assets atJune 30, 2021 were$271 million lower than atDecember 31, 2020 . The change in other noncurrent assets primarily reflects a decrease in the regulatory asset for unrecognized pension and other postretirement costs to reflect the final actuarial valuation, as measured atDecember 31, 2020 , of the pension and other retiree benefit plans in accordance with the accounting rules for retirement benefits ($458 million ) and deferred derivative losses ($42 million ). See Notes B, E and F to the Second Quarter Financial Statements. The change in the regulatory asset also reflects the year's amortization of accounting costs. This decrease is offset in part by an increase in the regulatory assets for deferrals for increased costs related to the COVID-19 pandemic ($121 million ), deferred pension and other postretirement benefits ($72 million ) and deferred storm costs ($29 million ). See "Other Regulatory Matters" in Note B and Note G to the Second Quarter Financial Statements.
Current liabilities at
Noncurrent liabilities atJune 30, 2021 were$410 million lower than atDecember 31, 2020 . The change in noncurrent liabilities primarily reflects a decrease in the liability for pension and retiree benefits ($309 million ) that primarily reflects the final actuarial valuation, as measured atDecember 31, 2020 , of the plans in accordance with
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the accounting rules for retirement benefits. See Notes E and F to the Second
Quarter Financial Statements. The change also reflects a decrease in the
regulatory liability for future income tax (
Long-term debt atJune 30, 2021 was$1,486 million higher than atDecember 31, 2020 . The change in long-term debt primarily reflects theJune 2021 issuance of$1,500 million of debentures. See "Liquidity and Capital Resources - Cash Flows From Financing Activities" above and Note C to the Second Quarter Financial Statements. Equity atJune 30, 2021 was$1,075 million higher than atDecember 31, 2020 . The change in equity primarily reflects net income for the six months endedJune 30, 2021 ($593 million ) and capital contributions from parent ($976 million ) in 2021, offset in part by common stock dividends to parent ($494 million ) in 2021.
O&R
Net plant atJune 30, 2021 was$48 million higher than atDecember 31, 2020 . The change in net plant primarily reflects an increase in electric ($67 million ), gas ($23 million ), and general ($17 million ) plant balances, offset in part by an increase in accumulated depreciation ($36 million ) and a decrease in construction work in progress ($23 million ). Other noncurrent assets atJune 30, 2021 were$30 million lower than atDecember 31, 2020 . The change in other noncurrent assets primarily reflects a decrease in the regulatory asset for unrecognized pension and other postretirement costs to reflect the final actuarial valuation, as measured atDecember 31, 2020 , of the pension and other retiree benefit plans in accordance with the accounting rules for retirement benefits ($33 million ). See Notes B, E and F to the Second Quarter Financial Statements. The change in the regulatory asset also reflects the year's amortization of accounting costs. This decrease is offset in part by an increase in the deferred storm costs ($1 million ).
Current liabilities at
Noncurrent liabilities atJune 30, 2021 were$15 million higher than atDecember 31, 2020 . The change in noncurrent liabilities primarily reflects increases in regulatory liabilities ($9 million ) and deferred income taxes and unamortized investment tax credits ($8 million ), primarily due to accelerated tax depreciation and repair deductions. Equity atJune 30, 2021 was$41 million higher than atDecember 31, 2020 . The change in equity primarily reflects net income for the six months endedJune 30, 2021 ($27 million ), capital contributions from parent ($35 million ) in 2021 and an increase in other comprehensive income ($5 million ), offset in part by common stock dividends to parent ($26 million ) in 2021. Clean Energy Businesses Investments atJune 30, 2021 were$11 million higher than atDecember 31, 2020 . The change in investments primarily reflects a tax equity investment. Net plant atJune 30, 2021 was$145 million lower than atDecember 31, 2020 . The change in net plant primarily reflects the divestiture of renewable electric projects. See Note R to the Second Quarter Financial Statements. Other noncurrent assets atJune 30, 2021 were$144 million lower than atDecember 31, 2020 . The change in other noncurrent assets primarily reflects the divestiture of renewable electric projects. See Note R to the Second Quarter Financial Statements. Current liabilities atJune 30, 2021 were$61 million lower than atDecember 31, 2020 . The change in current liabilities primarily reflects new borrowing offset in part by a decrease in receivable from associated companies. See Note C to the Second Quarter Financial Statements. Noncurrent liabilities atJune 30, 2021 were$106 million lower than atDecember 31, 2020 . The change in noncurrent liabilities primarily reflects the change in the fair value of derivative liabilities and the change in deferred taxes. Long-term debt atJune 30, 2021 was$285 million lower than atDecember 31, 2020 . The change in long-term debt primarily reflects the repayment of an intercompany loan from the parent company ($375 million ), offset in part by a net increase in project debt ($90 million ). See Note C to the Second Quarter Financial Statements.
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Equity atJune 30, 2021 was$178 million higher than atDecember 31, 2020 . The change in equity primarily reflects an increase in net income for the six months endedJune 30, 2021 ($117 million ) and a noncontrolling tax equity interest ($92 million ) (see Note P to the Second Quarter Financial Statements), offset in part by common stock dividends to parent ($32 million ) in 2021. Con Edison Transmission Current assets atJune 30, 2021 were$20 million lower than atDecember 31, 2020 . The change in current assets primarily reflects a reduction in receivables due to receipt of a$19 million payment fromCrestwood Pipeline and Storage Northeast LLC (Crestwood), the joint venture partner in Stagecoach, the proceeds of which were used to repay short-term borrowings under an intercompany capital funding facility. The agreement between Crestwood and a subsidiary ofCET Gas provides for payments from Crestwood to the subsidiary ofCET Gas for shortfalls in meeting certain earnings growth performance targets. Payments totaled$57 million ($19 million of which was paid in the first quarter 2021 and was recorded as a receivable byCET Gas inMarch 2020 , and the remainder of which, plus interest was paid by Crestwood onJuly 9, 2021 ). See "Con Edison Transmission" below. Investments atJune 30, 2021 were$192 million lower than atDecember 31, 2020 . The decrease in investments primarily reflects the losses related toCon Edison Transmission's investment in Stagecoach ($211 million ), less partnership distribution net of investment income from Stagecoach ($5 million ), offset in part by additional investment in and income from NY Transco ($23 million ). See "Investments" in Note A to the Second Quarter Financial Statements. Current liabilities atJune 30, 2021 were$481 million higher than atDecember 31, 2020 . The change in current liabilities primarily reflects the use of short-term borrowings to repay$500 million of long-term debt inMay 2021 , less receipt of the$19 million from Crestwood and cash distributions from Stagecoach ($27 million ), offset in part by a cash contribution to NY Transco ($16 million ) and other intercompany payables. Noncurrent liabilities atJune 30, 2021 were$50 million lower than atDecember 31, 2020 . The change in noncurrent liabilities reflects primarily an increase in deferred income taxes and unamortized investment tax credits that reflects primarily timing differences associated with investments in partnerships.
Long-term debt at
Equity atJune 30, 2021 was$143 million lower than atDecember 31, 2020 . The change in equity primarily reflects net loss for the six months endedJune 30, 2021 ($142 million ).
Off-Balance Sheet Arrangements
At
Regulatory Matters For information about the Utilities' regulatory matters, see Note B to the Second Quarter Financial Statements.
Environmental Matters InJuly 2021 , a feeder failure led to the discharge of thousands of gallons of dielectric fluid from a street manhole inNew Rochelle, New York . Dielectric fluid reached nearby streets, properties and theNew Rochelle Harbor . CECONY, theU.S. Coast Guard , theNew York State Department of Environmental Conservation and other agencies responded to the incident. The company stopped the feeder leak on the same day that the discharge occurred and is continuing to remediate and monitor the affected areas, the costs of which are not expected to have a material adverse effect on its financial condition, results of operations or liquidity. In connection with the incident, the company may incur monetary sanctions of more than$0.3 million for violations of certain provisions regulating the discharge of materials into, and for the protection of, the environment.
For additional information about the Companies' environmental matters, see Note G to the Second Quarter Financial Statements.
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Clean Energy Businesses
The following table provides information about the Clean Energy Businesses'
renewable electric production projects that are in operation and/or in
construction at
Power Purchase
Generating Agreement (PPA)
Capacity Term (In Years) Actual/Expected
Project Name (MW AC) (a) In-Service Date (b) State PPA Counterparty (c)
Utility Scale
Solar
PJM assets 73 (d) 2011/2013 New Jersey/Pennsylvania Various
New England assets 24 Various 2011/2017 Massachusetts/Rhode Island Various
California Solar (e) 110 25 2012/2013 California PG&E
Mesquite Solar 1 (e) 165 20 2013 Arizona PG&E
Copper Mountain Solar 2 (e) 150 25 2013/2015 Nevada PG&E
Copper Mountain Solar 3 (e) 255 20 2014/2015 Nevada SCPPA
California Solar 2 (e) 80 20 2014/2016 California SCE/PG&E
Texas Solar 4 (e) 40 25 2014 Texas City of San Antonio
Texas Solar 5 (e) 100 25 2015 Texas City of San Antonio
Texas Solar 7 (e) 112 25 2016 Texas City of San Antonio
California Solar 3 (e) 110 20 2016/2017 California SCE/PG&E
Upton Solar (e) 158 25 2017 Texas City of Austin
California Solar 4 (e) 240 20 2017/2018 California SCE
Copper Mountain Solar 1 (e) 58 12 2018 Nevada PG&E
Copper Mountain Solar 4 (e) (f) 94 20 2018 Nevada SCE
Mesquite Solar 2 (e) (f) 100 18 2018 Arizona SCE
Mesquite Solar 3 (e) (f) 150 23 2018 Arizona WAPA (U.S. Navy)
Great Valley Solar (e) (f) 200 17 2018 California MCE/SMUD/PG&E/SCE
Water Strider Solar (e) (f) 80 20 2021 Virginia
VEPCO
Battle Mountain Solar/Battery Energy Storage System (f) (g) 101 25 2021 Nevada SPP Other 26 Various Various Various Various Total Solar 2,426 Wind Broken Bow II (e) 75 25 2014 Nebraska NPPD Wind Holdings (e) 180 Various Various South Dakota/ Montana NWE/Basin Electric Adams Rose Wind (e) 23 7 2016 Minnesota Dairyland Other 34 Various Various Various Various Total Wind 312 Total MW (AC) in Operation 2,738 Total MW (AC) in Construction (f) (g) 250 Total MW (AC) Utility Scale 2,988 Behind the Meter Total MW (AC) in Operation 62 Total MW (AC) in Construction 10 Total MW Behind the Meter 72 (a)Represents PPA contractual term or remaining term from the date of acquisition. (b)Represents Actual/Expected In-Service Date or date of acquisition. (c)PPA Counterparties include: Pacific Gas and Electric Company (PG&E),Southern California Public Power Authority (SCPPA),Southern California Edison Company (SCE),Western Area Power Administration (WAPA),Marin Clean Energy (MCE),Sacramento Municipal Utility District (SMUD),Nebraska Public Power District (NPPD),NorthWestern Energy (NWE),Virginia Electric Power Company (VEPCO), andSierra Pacific Power (SPP). (d)Solar renewable energy credit hedges are in place, in lieu of PPAs, through 2025. (e)Project has been pledged as security for project debt financing. (f)Projects are financed with tax equity. See Note P to the Second Quarter Financial Statements. (g)Projects in construction are being financed under a variable-rate construction loan facility that matures no later thanNovember 2021 . See Note D to the Second Quarter Financial Statements.
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Renewable Electric Generation Renewable electric production volumes from utility scale assets for the three and six months endedJune 30, 2021 compared with the 2020 period were: Millions of kWh For the Three Months Ended For the Six Months Ended Description June 30, 2021 June 30, 2020 Variation Percent Variation June 30, 2021 June 30, 2020 Variation Percent Variation Renewable electric production projects Solar 1,855 1,784 71 4.0% 3,066 2,939 127 4.3% Wind 380 388 (8) (2.1)% 721 738 (17) (2.3%) Total 2,235 2,172 63 2.9% 3,787 3,677 110 3.0% Con Edison Transmission CET Gas InMay 2021 , a subsidiary ofCET Gas entered into a purchase and sale agreement pursuant to whichCET Gas and Crestwood agreed to sell their combined interests in Stagecoach to a subsidiary of Kinder Morgan Inc. for a total of$1,225 million , subject to certain adjustments, of which$612.5 million will beCon Edison's portion for its 50 percent interest, subject to closing adjustments. The purchase and sale agreement contemplates a two-stage closing, the first of which was completed inJuly 2021 for a sale price of$1,195 million , of which$614 million , including working capital, was attributed toCET Gas . The second closing for the remaining$30 million , of which$15 million will be attributed toCET Gas , subject to closing adjustments, is to occur following approval by theNew York State Public Service Commission , which is expected during the first quarter of 2022, subject to customary closing conditions. See Note R to the Second Quarter Financial Statements. As a result of information made available to Stagecoach as part of the sale process, Stagecoach performed impairment tests that resulted in Stagecoach recording impairment charges of$343 million and$71 million atMarch 31, 2021 andJune 30, 2021 , respectively. Accordingly,Con Edison recorded pre-tax impairment losses on its interest in Stagecoach of$172 million and$39 million , including working capital and transaction cost adjustments, within "Investment income/(loss)" onCon Edison's consolidated income statements atMarch 31, 2021 andJune 30, 2021 , respectively. These charges reduced the carrying value ofCon Edison's investment in Stagecoach to$630 million atJune 30, 2021 . See "Investments" in Note A to the Second Quarter Financial Statements. InMay 2021 , the operator of the Mountain Valley Pipeline, which is being constructed by a joint venture in whichCET Gas owns a 10.9 percent interest (that is expected to be reduced to 8.5 percent based on the current project cost estimate andCET Gas' previous capping of its cash contributions to the joint venture) indicated that, subject to receipt of certain authorizations and resolution of certain challenges, it is now targeting an in-service date for the project of summer 2022 at an overall project cost of approximately$6,200 million excluding allowance for funds used during construction. For the year endedDecember 31, 2020, CET Gas recorded a pre-tax impairment loss of$320 million ($223 million after-tax) that reduced the carrying value of its investment inMountain Valley Pipeline LLC from$662 million to$342 million . AtJune 30, 2021, CET Gas' cash contributions to the joint venture amounted to$530 million . Financial and Commodity Market Risks The Companies are subject to various risks and uncertainties associated with financial and commodity markets. The most significant market risks include interest rate risk, commodity price risk and investment risk. Interest Rate Risk The Companies' interest rate risk primarily relates to new debt financing needed to fund capital requirements, including the construction expenditures of the Utilities and maturing debt securities, and variable-rate debt.Con Edison and its subsidiaries manage interest rate risk through the issuance of mostly fixed-rate debt with varying maturities and through opportunistic refinancing of debt. The Clean Energy Businesses use interest rate swaps to exchange variable-rate project financed debt for a fixed interest rate. See Note N to the Second Quarter Financial Statements.Con Edison and CECONY estimate that atJune 30, 2021 , a 10 percent increase in interest rates applicable to its variable rate debt would result in an immaterial increase in annual interest expense. Under 85
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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 RiskCon Edison's commodity price risk primarily relates to the purchase and sale of electricity, gas and related derivative instruments. The Utilities and the Clean Energy Businesses apply risk management strategies to mitigate their related exposures. See Note N to the Second Quarter Financial Statements.Con Edison estimates that, as ofJune 30, 2021 , a 10 percent decline in market prices would result in a decline in fair value of$111 million for the derivative instruments used by the Utilities to hedge purchases of electricity and gas, of which$102 million is for CECONY and$9 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. 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 six months endedJune 30, 2021 and the year endedDecember 31, 2020 , respectively, was as follows: 95% Confidence Level, One-Day Holding Period June 30, 2021 December 31, 2020 (Millions of Dollars) Average for the period $- $- High 1 - Low - - Investment Risk The Companies' investment risk relates to the investment of plan assets for their pension and other postretirement benefit plans.Con Edison's investment risk also relates to the investments of Con Edison Transmission that are accounted for under the equity method. See "Investments" in Note A to the Second Quarter Financial Statements. The Companies' current investment policy for pension plan assets includes investment targets of 45 to 55 percent equity securities, 33 to 43 percent debt securities and 10 to 14 percent real estate. AtJune 30, 2021 , 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 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 itsNew York rate plans. Material Contingencies For information concerning potential liabilities arising from the Companies' material contingencies, see "Other Regulatory Matters" in Note B and Notes G and H to the Second Quarter Financial Statements.
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