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 First 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 First Quarter Financial
Statements and the notes thereto and the MD&A in Item 7 of the Companies'
combined Annual Report on Form 10-K for the year ended
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 is considering
strategic alternatives with respect to the Clean Energy Businesses. Con Edison
Transmission invests in electric transmission projects and manages both electric
and gas assets while seeking to develop electric transmission projects. See
"Investments" in Note A to the First Quarter Financial Statements.
Con Edison seeks to provide shareholder value through continued dividend growth,
supported by earnings growth in regulated utilities and contracted electric and
gas assets. The company invests to provide reliable, resilient, safe and clean
energy critical for its NY customers. 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.
In addition to the Companies' material contingencies described in Notes B, G and
H to the First Quarter Financial Statements, the Companies' management considers
the following events, trends, and uncertainties to be important to understanding
the Companies' current and future financial condition.
CECONY Electric and Gas Rate Plans
In January 2022 , CECONY filed a request with the NYSPSC for electric and gas
rate increases of $1,199 million and $503 million , respectively, effective
January 2023 . In April 2022 , CECONY updated its January 2022 request
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and decreased its requested January 2023 increase for electric and gas rate
increases to $1,038 million and $402 million , respectively. CECONY's future
earnings will depend on the rates authorized in, and the other provisions of,
its January 2023 rate plans and CECONY's ability to operate its businesses in a
manner consistent with such rate plans. Therefore, the outcome of CECONY's rate
request, which requires approval by the NYSPSC, will impact the Companies'
future financial condition, results of operations and liquidity. See "Rate
Plans" in Note B to the First Quarter Financial Statements.
Pursuant to its electric and gas rate plans, CECONY recorded $92 million of
earnings for the year ended December 31, 2021 of earnings adjustment mechanisms
and positive incentives, primarily reflecting the achievement of certain energy
efficiency measures. For the three months ended March 31, 2022 , CECONY recorded
a reduction in the amount of previously recorded earnings adjustment mechanisms
of $4.5 million . The amount of earnings or losses CECONY records pursuant to the
earnings adjustment mechanisms and positive incentives will also impact the
Companies' future financial condition, results of operations and liquidity. See
"Rate Plans" in Note B to the First Quarter Financial Statements.
Clean Energy Goals
The success of the Companies' efforts to meet federal, state and city clean
energy policy goals and the impact of such goals on CECONY's electric, gas and
steam businesses and O&R's electric and gas businesses may impact the Companies'
future financial condition. The Utilities expect electric demand to increase and
gas and steam usage to decrease in their service territories as federal, state
and local laws and policies are enacted and implemented that continue to promote
renewable electric energy. In particular, the long-term future of the Utilities'
gas businesses depends upon the role that natural gas or other gaseous fuels
will play in facilitating New York State's and New York City's climate goals. In
addition, the impact and costs of climate change on the Utilities' systems and
the success of the Utilities' efforts to increase system reliability and manage
service interruptions resulting from severe weather may impact the Companies'
future financial condition, results of operations and liquidity.
Clean Energy Businesses
The Clean Energy Businesses develop, own and operate renewable and sustainable
energy infrastructure projects. The success of the Clean Energy Businesses'
strategy to increase earnings is dependent upon the expansion of their renewable
energy portfolio and successful execution of develop/transfer opportunities. Con
Edison is considering strategic alternatives with respect to the Clean Energy
Businesses. The outcome of such evaluation may impact Con Edison's future
financial condition, results of operations and liquidity.
Con Edison Transmission
Con Edison Transmission has taken steps to realign its portfolio to focus on
electric transmission rather than gas by completing the sale of its 50 percent
interest in Stagecoach in 2021. During 2020 and 2021, Con Edison Transmission
recorded impairments on its investment in Mountain Valley Pipeline, LLC and
during 2021, Con Edison Transmission recorded impairments on its previously held
interest in Stagecoach and its interest in Honeoye Storage Corporation
(Honeoye). Any future impairments of Con Edison Transmission's investments may
impact Con Edison's future financial condition and results of operations. Con
Edison Transmission is pursuing opportunities and participating in competitive
solicitations to develop electric transmission projects that will deliver
offshore wind energy to high voltage electric grids in NY, through its NY
Transco partnership, and in NJ, and to deliver renewable energy from northern ME
to the New England transmission system within southern ME. The success of Con
Edison Transmission's efforts in these competitive solicitations and to grow its
electric transmission portfolio may impact Con Edison's future capital
requirements. See "Investments" in Note A to the First Quarter Financial
Statements.
COVID-19
The Coronavirus Disease 2019 (COVID-19) pandemic has impacted, and continues to impact, countries, communities, supply chains and markets. As a result of the COVID-19 pandemic, there has been an economic slowdown in the Companies' service territories and changes in governmental and regulatory policy. The decline in business activity in the Companies' service territories has resulted in a slower recovery of cash from outstanding customer accounts receivable balances, material increases in customer accounts receivable balances, increases to the allowance for uncollectible accounts, and may result in increases to write-offs and recoveries of customer accounts. The extent to which COVID-19 will continue to impact the Companies, in particular, the Companies' ability to recover cash from outstanding customer accounts receivable balances and the amount of write-offs of customer accounts, may impactCon Edison's future financial condition, results of operations and liquidity. See "Coronavirus Disease 2019 (COVID-19) Impacts" below and "COVID-19 Regulatory Matters" in Note B to the First Quarter Financial Statements. 50
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CECONY
Electric
CECONY provides electric service to approximately 3.5 million customers in all ofNew York City (except a part ofQueens ) and most ofWestchester County , an approximately 660 square mile service area with a population of more than nine million. Gas
CECONY delivers gas to approximately 1.1 million customers in
Steam
CECONY operates the largest steam distribution system in
O&R Electric O&R and its utility subsidiary,Rockland Electric Company (RECO) (together referred to herein as O&R) provide electric service to approximately 0.3 million customers in southeastern NY and northern NJ, an approximately 1,300 square mile service area. Gas
O&R delivers gas to over 0.1 million customers in southeastern NY.
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. The Clean Energy Businesses have approximately 3,000 megawatts (AC) of renewable energy projects in theU.S. Con Edison is considering strategic alternatives with respect to the Clean Energy Businesses. Con Edison TransmissionCon Edison Transmission, Inc. invests in electric transmission projects and manages both electric and gas assets 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 in NY.CET Gas and CECONY own 71.2 percent and 28.8 percent interests, respectively, in Honeoye, which operates a gas storage facility in upstate NY. In addition,CET Gas owns a 10.0 percent interest (that is expected to be reduced to 8.0 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 in WV andVA .Con Edison Transmission, Inc. , together withCET Electric andCET Gas , are referred to in this report as Con Edison Transmission.
Certain financial data of
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For the Three Months Ended
March 31, 2022 At March 31, 2022
Operating Net Income for
(Millions of Dollars, except percentages) Revenues Common Stock Assets
CECONY $3,517 87 % $475 79 % $53,213 84 %
O&R 285 7 30 5 3,359 5
Total Utilities 3,802 94 505 84 56,572 89
Clean Energy Businesses (a) 260 6 107 18 6,554 10
Con Edison Transmission 1 - - - 260 -
Other (b) (3) - (10) (2) 351 1
Total Con Edison $4,060 100 % $602 100 % $63,737 100 %
(a)Net income for common stock from the Clean Energy Businesses for the three
months ended March 31, 2022 reflects $51 million of net after-tax mark-to-market
effects and $36 million (after-tax) of the effects of HLBV accounting for tax
equity investments in certain renewable and sustainable electric projects.
(b)Other includes parent company and consolidation adjustments. Net income for
common stock for the three months ended March 31, 2022 includes $(4) million of
income tax impact on the net after-tax mark-to-market effect and $(3) million
(after-tax) of income tax impact on the effects of HLBV accounting for tax
equity investments in certain renewable and sustainable projects.
Coronavirus Disease 2019 (COVID-19) Impacts
The Companies continue to respond to the 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.
In October 2021 , in response to President Biden's Executive Order 14042, the
Companies announced that they are committed to complying with the mandate for
employees of federal contractors and subcontractors to be fully vaccinated
against COVID-19 by the federally-required deadline, unless employees are
legally entitled to an accommodation. In December 2021 , an injunction was issued
in the United States District Court for the Southern District of Georgia which
currently prevents the U.S. government from enforcing this federal contractor
vaccine mandate nationwide. The Eleventh Circuit of the U.S. Court of Appeals
heard oral arguments in April 2022 .
In December 2021 , New York City instituted a vaccination mandate that requires
employees of private businesses located in New York City who perform in-person
work or interact with the public to be vaccinated against COVID-19. In
furtherance of the mandate, in December 2021 , the New York City Commissioner of
Health and Mental Hygiene issued an order that requires workers entering
workplaces within New York City to provide proof of COVID-19 vaccination, except
in cases of a medical or religious exemption. This order is applicable to the
Companies' employees and contractors who report in-person to a company workplace
located in New York City and the Companies are complying with its requirements.
The Companies are continuing to monitor the vaccination mandates closely and are
implementing appropriate measures to mitigate any workforce and cost impacts
that may occur.
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 First Quarter Financial Statements.
Impact of CARES Act and 2021 Appropriations Act on Accounting for Income Taxes
In response to the economic impacts of the COVID-19 pandemic, the Coronavirus
Aid, Relief, and Economic Security (CARES) Act became law on March 27, 2020 . The
CARES Act has several key business tax relief measures that may present
potential cash benefits and/or refund opportunities for Con Edison and its
subsidiaries, including permitting a five-year carryback of a 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.
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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 paid half of this liability during 2021 and will repay the other half byDecember 31, 2022 . Under the CARES Act, the Companies qualified for an employee retention tax credit for "eligible employers" related to governmental authorities imposing restrictions that partially suspended their operation for a portion of their workforce due to the COVID-19 pandemic. InDecember 2020 , the Consolidated Appropriations Act, 2021 (the 2021 Appropriations Act) was signed into law. The 2021 Appropriations Act, among other things, extended the expiring employee retention tax credit to include qualified wages paid in the first two quarters of 2021, increased 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 increased the maximum employee retention tax credit amount an employer could 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 . InNovember 2021 , the Infrastructure and Investment and Jobs Act was signed into law and accelerated the end of the employee retention tax credit retroactive toOctober 1, 2021 , rather thanDecember 31, 2021 . This effectively reduced the maximum credit available from$28,000 to$21,000 per employee. For the three months endedMarch 31, 2021 ,Con Edison recognized an immaterial tax benefit to Taxes, other than income taxes. 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 of NY enacted a law prohibiting NY 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 were in effect untilDecember 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. CECONY's and O&R's "accounts receivable - customers" balance (net allowance for uncollectible accounts) changed from$1,841 million and$91 million atDecember 31, 2021 to$2,026 million and$107 million atMarch 31, 2022 , respectively. The amount of the customer accounts receivable balances that are over 60 days in arrears for CECONY and O&R are$1,348 million and$29 million , respectively, as ofMarch 31, 2022 , and$1,272 million and$29 million , respectively, as ofDecember 31, 2021 . CECONY's and O&R's allowances for uncollectible customer accounts reserve changed from$304 million and$12.3 million atDecember 31, 2021 to$324 million and$11.4 million atMarch 31, 2022 respectively. InApril 2021 andApril 2022 , NY passed laws to create programs to address statewide utility arrears, the amount of which may be allocated to address CECONY's and O&R's customer arrearages is not yet known. In addition, the NYSPSC may consider programs to address utility arrearages as part of a utility arrearage program. CECONY and O&R expect to reduce customer accounts receivables balances commensurate with amounts authorized to be recovered under customer arrearage programs, the amount of which is unknown. See "COVID-19 Regulatory Matters" in Note B and Note L to the First Quarter Financial Statements. During the first quarter of 2022, 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. 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 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 atMarch 31, 2022 . NY Legislation InApril 2021 , NY 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. NY 53 -------------------------------------------------------------------------------- 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 in NY who require assistance with rent and utility bills to have up to twelve months of electric and gas utility bill arrears forgiven, provided that such arrears were accrued on or afterMarch 13, 2020 . The program will be administered by theState Office of Temporary and Disability Assistance in coordination with the NYSDPS and the NYSPSC. Under the program, CECONY and O&R would qualify for a refundable tax credit for NY gross-receipts tax equal to the amount of arrears waived by the Utilities in the year that the arrears are waived and certified by the NYSPSC. See "COVID-19 Regulatory Matters" in Note B to the First Quarter Financial Statements. InApril 2022 , NY approved the 2022-2023 state budget, which includes$250 million for addressing residential statewide utility arrears accrued fromMarch 7, 2020 throughMarch 1, 2022 . Funds are expected to be distributed by the NYSDPS to NY utilities on behalf of customers. The allocation of funds to NY utilities, including CECONY and O&R, is to be based on their share of statewide eligible utility arrears of customers participating in energy affordability programs, and funds are expected to be disbursed no later thanAugust 1, 2022 . 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 First 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 and subsequentNew York State on PAUSE and related executive orders (that have since been lifted), resulted in a slower recovery in cash of outstanding customer accounts receivable balances in 2020, 2021 and for the three months endedMarch 31, 2022 . In addition, increases in electric and gas commodity prices during the first quarter of 2022, coupled with the decline in business activity due to the COVID-19 pandemic, may further contribute to a slower recovery of cash from outstanding customer accounts receivable balances. These trends will likely continue through the remainder of 2022. See "COVID-19 Regulatory Matters" in Note B to the First Quarter Financial Statements and "Financial and Commodity Market Risks - Commodity Price Risk," below.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 ), subject to certain conditions. InMarch 2022 , CECONY entered into a 364-Day Revolving Credit Agreement (CECONY Credit Agreement) under which banks are committed to provide loans up to$750 million on a revolving credit basis untilMarch 30, 2023 , subject to certain conditions. InApril 2022 ,FERC issued an order that increases CECONY's authorization to issue short-term debt from$2,250 million to$3,000 million effectiveMay 2022 .Con Edison and the Utilities have not entered into any loans under the Credit Agreement and CECONY has not entered into any loans under the CECONY Credit Agreement. See Note D to the First Quarter Financial Statements.
Results of Operations
Net income for common stock and earnings per share for the three months ended
54
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For the Three Months Ended March 31,
2022 2021 2022 2021
Net Income for Common Stock Earnings
(Millions of Dollars, except per share amounts) per Share
CECONY $475 $465 $1.34 $1.36
O&R 30 27 0.09 0.08
Clean Energy Businesses (a) 107 49 0.30 0.14
Con Edison Transmission (b) - (122) - (0.35)
Other (c) (10) - (0.03) -
Con Edison (d) $602 $419 $1.70 $1.23
(a)Net income for common stock and earnings per share from the Clean Energy
Businesses for the three months ended March 31, 2022 and 2021 includes $51
million or $0.15 a share and $49 million or $0.14 a share of net after-tax
mark-to-market effects, respectively. Net income for common stock and earnings
per share from the Clean Energy Businesses for the three months ended March 31,
2022 and 2021 also includes $36 million or $0.10 a share (after-tax) and ($1)
million or $0.00 a share (after-tax), respectively, of the effects of HLBV
accounting for tax equity investments in certain renewable and sustainable
electric projects.
(b)Net income for common stock from Con Edison Transmission for the three months
ended March 31, 2021 includes $(125) million or $(0.36)
a share of net after-tax goodwill impairment loss related to its investment in
Stagecoach. See "Investments - 2021 Partial Impairment of Investment in
Stagecoach Gas Services LLC (Stagecoach) in Note A to the First Quarter
Financial Statements.
(c)Other includes parent company and consolidation adjustments. Net income for
common stock and earnings per share for the three months ended March 31, 2022
and 2021 includes ($4) million or ($0.01 ) a share and ($4) million or ($0.01 ) a
share, respectively, of income tax impact on the net after-tax mark-to-market
effects. Net income for common stock and earnings per share for the three months
ended March 31, 2022 and 2021 also includes ($3) million or ($0.01 ) a share
(after-tax) and an immaterial amount, respectively, of income tax impact on the
effects of HLBV accounting for tax equity investments in certain renewable and
sustainable electric projects.
Net income for common stock and earnings per share for the three months ended
March 31, 2021 includes $5 million or $0.01 a share of income tax impact for the
impairment loss related to Con Edison Transmission's investment in Stagecoach.
See "Investments - 2021 Partial Impairment of Investment in Stagecoach Gas
Services LLC (Stagecoach)" in Note A to the First Quarter Financial Statements.
(d) Earnings per share on a diluted basis were
respectively.
The following table present the estimated effect of major factors on earnings per share and net income for common stock for the three months endedMarch 31, 2022 as compared with the 2021 period.
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Variation for the Three Months Ended March 31, 2022 vs. 2021
Net Income for
Common Stock
(Millions of Earnings per
Dollars) Share
CECONY (a)
Higher gas rate base $29 $0.08 Resumption of the billing of late payment charges and other fees to allowed rate plan levels
14 0.04
Higher electric rate base 6 0.02
Higher interest expense (10) (0.03)
Lower incentives earned under the electric and gas earnings adjustment mechanisms (EAMs)
(9) (0.03)
Higher stock based compensation costs (6) (0.02)
Higher payroll taxes (4) (0.01)
Weather impact on steam revenues (3) (0.01)
Dilutive effect of stock issuances - (0.05)
Other (7) (0.01)
Total CECONY 10 (0.02)
O&R (a)
Electric base rate increase 2 0.01
Gas base rate increase 2 0.01
Other (1) (0.01)
Total O&R 3 0.01
Clean Energy Businesses
HLBV effects 37 0.10
Higher operating revenue 26 0.08
Lower operation and maintenance expense 17 0.05
Net mark-to-market effects 2 0.01
Higher gas purchased for resale (29) (0.09)
Other 5 0.01
Total Clean Energy Businesses 58 0.16
Con Edison Transmission
Impairment loss related to investment in Stagecoach in 2021 125 0.36
Other (3) (0.01)
Total Con Edison Transmission 122 0.35
Other, including parent company expenses
Impairment tax benefits related to investment in Stagecoach in 2021 (5) (0.01)
HLBV effects (3) (0.01)
Other (2) (0.01)
Total Other, including parent company expenses (10) (0.03)
Total Reported (GAAP basis) $183 $0.47
a.Under the revenue decoupling mechanisms in the Utilities' NY electric and gas rate plans and the
weather-normalization clause applicable to their gas businesses, revenues are generally not affected by
changes in delivery volumes from levels assumed when rates were approved. In general, the Utilities
recover on a current basis the fuel, gas purchased for resale and purchased power costs they incur in
supplying energy to their full-service customers. Accordingly, such costs do not generally affect Con
Edison's results of operations.
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The Companies' other operations and maintenance expenses for the three months
ended
For the Three Months Ended March 31,
(Millions of Dollars) 2022 2021
CECONY
Operations $437 $428
Pensions and other postretirement benefits 102 (10)
Health care and other benefits 35 37
Regulatory fees and assessments (a) 87 78
Other 80 75
Total CECONY 741 608
O&R 86 80
Clean Energy Businesses 76 99
Con Edison Transmission 4 4
Other (b) (2) (1)
Total other operations and maintenance expenses $905 $790 (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 months ended
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The Companies' results of operations for the three months endedMarch 31, 2022 and 2021 were as follows: Con Edison CECONY O&R Clean Energy Businesses Transmission Other (a) Con Edison (b) (Millions of Dollars) 2022 2021 2022 2021 2022 2021 2022 2021 2022 2021 2022 2021 Operating revenues$3,517 $3,205 $285 $248 $260 $224 $1 $1 $(3) $(1) $4,060 $3,677 Purchased power 430 396 59 41 - - - - (2) - 487 437 Fuel 144 93 - - - - - - - - 144 93 Gas purchased for resale 324 233 47 31 72 32 - - - - 443 296 Other operations and maintenance 741 608 86 80 76 99 4 4 (2) (1) 905 790 Depreciation and amortization 446 415 24 24 59 58 - - - - 529 497 Taxes, other than income taxes 721 674 23 23 7 7 - - 2 - 753 704 Operating income 711 786 46 49 46 28 (3) (3) (1) - 799 860 Other income (deductions) (c) 81 (23) 5 (3) - - 4 (159) - (1) 90 (186) Net interest expense 200 184 11 11 (37) (28) 1 5 7 4 182 176 Income before income tax expense 592 579 40 35 83 56 - (167) (8) (5) 707 498 Income tax expense 117 114 10 8 24 6 - (45) 2 (5) 153 78 Net income$475 $465 $30 $27 $59 $50 $- ($122 )$(10) $-$554 $420 Income (loss) attributable to non-controlling interest - - - - (48) 1 - - - - (48) 1 Net income for common stock$475 $465 $30 $27 $107 $49 $- ($122 )$(10) $-$602 $419 (a)Includes parent company and consolidation adjustments. (b)Represents the consolidated results of operations ofCon Edison and its businesses. (c)For the three months endedMarch 31, 2021 , Con Edison Transmission recorded a pre-tax goodwill impairment loss of$172 million ($120 million after-tax) that reduced the carrying value of its investment in Stagecoach from$839 million to$667 million . See "Investments" in Note A to the First Quarter Financial Statements. 58
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CECONY
For the Three Months Ended For the Three Months Ended
March 31, 2022 March 31, 2021
2022-2021
(Millions of Dollars) Electric Gas Steam
2022 Total Electric Gas Steam 2021 Total Variation
Operating revenues $2,084 $1,131 $302 $3,517 $1,968 $973 $264 $3,205 $312
Purchased power 411 - 20 431 383 - 13 396 35
Fuel 66 - 78 144 45 - 48 93 51
Gas purchased for resale - 323 - 323 - 233 - 233 90
Other operations and
maintenance 573 118 50 741 475 92 41 608 133
Depreciation and
amortization 332 90 24 446 315 77 23 415 31
Taxes, other than income
taxes 532 149 40 721 503 132 39 674 47
Operating income $170 $451 $90 $711 $247 $439 $100 $786 $(75) Electric
CECONY's results of electric operations for the three months ended
For the Three Months Ended
(Millions of Dollars) March 31, 2022 March 31, 2021 Variation
Operating revenues $2,084 $1,968 $116
Purchased power 411 383 28
Fuel 66 45 21
Other operations and maintenance 573 475 98
Depreciation and amortization 332 315
17
Taxes, other than income taxes 532 503 29 Electric operating income$170 $247 $(77)
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 March 31, 2022 March 31, 2021 Variation Variation March 31, 2022 March 31, 2021 Variation Variation
Residential/Religious (b) 2,641 2,606 35 1.3 % $783 $753 $30 4.0 %
Commercial/Industrial 2,515 2,354 161 6.8 614 528 86 16.3
Retail choice customers 5,144 5,229 (85) (1.6) 537 581 (44) (7.6)
NYPA, Municipal Agency and other sales 2,398 2,288 110 4.8 162 148 14 9.5
Other operating revenues (c) - - - - (12) (42) 30 (71.4)
Total 12,698 12,477 221 1.8 % (d) $2,084 $1,968 $116 5.9 %
(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 increased 2.6 percent in the three
months ended March 31, 2022 compared with the 2021 period.
Operating revenues increased $116 million in the three months ended March 31,
2022 compared with the 2021 period primarily due to an increase in revenues from
the electric rate plan ($56 million ), higher purchased power expenses ($28
million ) and higher fuel expenses ($21 million ).
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Purchased power expenses increased
Fuel expenses increased
Other operations and maintenance expenses increased$98 million in the three months endedMarch 31, 2022 compared with the 2021 period primarily due to higher costs for pensions and other postretirement benefit, reflecting reconciliation to the rate plan level ($81 million ), higher surcharges for assessments and fees that are collected in revenues from customers ($8 million ) and higher healthcare costs ($4 million ). Depreciation and amortization increased$17 million in the three months endedMarch 31, 2022 compared with the 2021 period primarily due to higher electric utility plant balances. Taxes, other than income taxes increased$29 million in the three months endedMarch 31, 2022 compared with the 2021 period due to a higher deferral of over-collected property taxes ($23 million ), higher payroll taxes ($4 million ) and higher state and local taxes ($2 million ).
Gas
CECONY's results of gas operations for the three months ended
For the Three Months Ended
(Millions of Dollars) March 31, 2022 March 31, 2021 Variation
Operating revenues $1,131 $973 $158
Gas purchased for resale 323 233 90
Other operations and maintenance 118 92 26
Depreciation and amortization 90 77
13
Taxes, other than income taxes 149 132 17 Gas operating income$451 $439 $12
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 March 31, 2022 March 31, 2021 Variation Variation March 31, 2022 March 31, 2021 Variation Variation
Residential 25,058 26,221 (1,163) (4.4 %) $522 $455 $67 14.7 %
General 13,960 12,912 1,048 8.1 210 168 42 25.0
Firm transportation 32,847 34,846 (1,999) (5.7) 348 305 43 14.1
Total firm sales and
transportation 71,865 73,979 (2,114) (2.9) (b) 1,080 928 152 16.4
Interruptible sales (c) 2,697 1,853 844 45.5 20 9 11 Large
NYPA 7,785 9,378 (1,593) (17.0) 1 1 - -
Generation plants 9,952 5,974 3,978 66.6 5 5 - -
Other 5,979 6,920 (941) (13.6) 12 13 (1) (7.7)
Other operating revenues (d) - - - - 13 17 (4) (23.5)
Total 98,278 98,104 174 0.2 % $1,131 $973 $158 16.2 %
(a)Revenues from gas sales are subject to a weather normalization clause and a
revenue decoupling mechanism, as a result of which delivery revenues are
generally not affected by changes in delivery volumes from levels assumed when
rates were approved.
(b)After adjusting for variations, primarily billing days, firm gas sales and
transportation volumes in the company's service area increased 8.6 percent in
the three months ended March 31, 2022 compared with the 2021 period.
(c)Includes 1,391 thousand and 448 thousand of Dt for the 2022 and 2021 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.
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Operating revenues increased$158 million in the three months endedMarch 31, 2022 compared with the 2021 period primarily due to an increase in revenues from the gas rate plan ($72 million ) and higher gas purchased for resale ($90 million ).
Gas purchased for resale increased
Other operations and maintenance expenses increased$26 million in the three months endedMarch 31, 2022 compared with the 2021 period primarily due to higher costs for pensions and other postretirement benefits, reflecting reconciliation to the rate plan level ($17 million ), higher healthcare costs ($1 million ), higher uncollectible expense ($1 million ) and higher municipal infrastructure support costs ($1 million ). Depreciation and amortization increased$13 million in the three months endedMarch 31, 2022 compared with the 2021 period primarily due to higher gas utility plant balances. Taxes, other than income taxes increased$17 million in the three months endedMarch 31, 2022 compared with the 2021 period primarily due to a higher deferral of over-collected property taxes ($6 million ), higher property taxes ($5 million ) and higher state and local taxes ($5 million ).
Steam
CECONY's results of steam operations for the three months ended
For the Three Months Ended
(Millions of Dollars) March 31, 2022 March 31, 2021 Variation
Operating revenues $302 $264 $38
Purchased power 20 13 7
Fuel 78 48 30
Other operations and maintenance 50 41 9
Depreciation and amortization 24 23
1
Taxes, other than income taxes 40 39 1 Steam operating income$90 $100 $(10)
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 March 31, 2022 March 31, 2021 Variation Variation March 31, 2022 March 31, 2021 Variation Variation
General 315 334 (19) (5.7 %) $15 $14 $1 7.1 %
Apartment house 2,252 2,313 (61) (2.6) 76 66 10 15.2
Annual power 5,083 5,161 (78) (1.5) 202 175 27 15.4
Other operating revenues
(a) - - - - 9 9 - -
Total 7,650 7,808 (158) (2.0) % (b) $302 $264 $38 14.4 %
(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 1.0 percent in the three months ended March 31,
2022 compared with the 2021 period.
Operating revenues increased $38 million in the three months ended March 31,
2022 compared with the 2021 period primarily due to higher fuel expenses ($30
million ), higher purchased power expenses ($7 million ) and higher tax law
surcharge ($7 million ), offset in part by the impact of warmer winter weather
($5 million ).
Purchased power increased $7 million in the three months ended March 31, 2022
compared with the 2021 period due to higher unit costs ($9 million ), offset, in
part by lower purchased volumes ($2 million )
Fuel increased $30 million in the three months ended March 31, 2022 compared
with the 2021 period due to higher unit costs ($22 million ) and higher purchased
volumes from the company's steam generating facilities ($8 million ).
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Other operations and maintenance expenses increased
Depreciation and amortization increased
Other Income (Deductions)
Other income increased
Net Interest Expense Net Interest Expense increased$16 million in the three months endedMarch 31, 2022 compared with the 2021 period primarily due to higher interest on long-term debt. Income Tax Expense Income taxes increased$3 million in the three months endedMarch 31, 2022 compared with the 2021 period primarily due to higher income before income tax expense ($3 million ) and lower flow-through tax benefits in 2022 for plant-related items ($2 million ), offset in part by a higher general business tax credit ($1 million ). O&R For the Three Months Ended For the Three Months Ended March 31, 2022 March 31, 2021 (Millions of Dollars) Electric Gas 2022 Total Electric Gas 2021 Total 2022-2021 Variation Operating revenues$166 $119 $285 $145 $103 $248 $37 Purchased power 59 - 59 41 - 41 18 Gas purchased for resale - 47 47 - 31 31 16 Other operations and maintenance 67 19 86 64 16 80 6 Depreciation and amortization 17 7 24 17 7 24 - Taxes, other than income taxes 15 8 23 14 9 23 - Operating income$8 $38 $46 $9 $40 $49 $(3) Electric
O&R's results of electric operations for the three months ended
For the Three Months Ended
(Millions of Dollars) March 31, 2022 March 31, 2021 Variation
Operating revenues $166 $145 $21
Purchased power 59 41 18
Other operations and maintenance 67 64 3
Depreciation and amortization 17 17
-
Taxes, other than income taxes 15 14 1 Electric operating income$8 $9 $(1) 62
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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 March 31, 2022 March 31, 2021 Variation Variation March 31, 2022 March 31, 2021 Variation Variation
Residential/Religious (b) 417 381 36 9.4 % $85 $70 $15 21.4 %
Commercial/Industrial 227 200 27 13.5 33 25 8 32.0
Retail choice customers 629 673 (44) (6.5) 44 48 (4) (8.3)
Public authorities 25 25 - - 4 2 2 Large
Other operating revenues (c) - - - - - - - -
Total 1,298 1,279 19 1.5 % (d) $166 $145 $21 14.5 %
(a)O&R's NY electric delivery revenues are subject to a revenue decoupling
mechanism, as a result of which delivery revenues are generally not affected by
changes in delivery volumes from levels assumed when rates were approved.
Effective July 2021 , the majority of O&R's electric distribution revenues in NJ
are subject to a conservation incentive program, as a result of which
distribution revenues are generally not affected by changes in delivery volumes
from levels assumed when rates were approved. O&R's electric transmission
revenues in NJ are not subject to a conservation incentive program, and as a
result, changes in such volumes do impact revenues.
(b)"Residential/Religious" generally includes single-family dwellings,
individual apartments in multi-family dwellings, religious organizations and
certain other not-for-profit organizations.
(c)Other electric operating revenues generally reflect changes in regulatory
assets and liabilities in accordance with the company's electric rate plan.
(d)After adjusting for weather and other variations, electric delivery volumes
in O&R's service area increased 2.6 percent in the three months ended March 31,
2022 compared with the 2021 period.
Operating revenues increased $21 million in the three months ended March 31,
2022 compared with the 2021 period primarily due to higher purchased power
expenses ($18 million ) and higher revenues from the NY electric rate plan ($2
million ).
Purchased power expenses increased
Other operations and maintenance expenses increased
Gas
O&R's results of gas operations for the three months ended
For the Three Months Ended
(Millions of Dollars) March 31, 2022 March 31, 2021 Variation
Operating revenues $119 $103 $16
Gas purchased for resale 47 31 16
Other operations and maintenance 19 16 3
Depreciation and amortization 7 7
-
Taxes, other than income taxes 8 9 (1) Gas operating income$38 $40 ($2 ) 63
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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 March 31, 2022 March 31, 2021 Variation Variation March 31, 2022 March 31, 2021 Variation Variation
Residential 6,165 5,260 905 17.2 % $84 $66 $18 27.3 %
General 1,350 1,108 242 21.8 16 12 4 33.3
Firm transportation 3,074 3,582 (508) (14.2) 20 25 (5) (20.0)
Total firm sales and
transportation 10,589 9,950 639 6.4 (b) 120 103 17 16.5
Interruptible sales 1,214 1,217 (3) (0.2) 2 2 - -
Generation plants 5 4 1 25.0 - - - -
Other 285 181 104 57.5 - - - -
Other gas revenues - - - - (3) (2) (1) 50.0
Total 12,093 11,352 741 6.5 % $119 $103 $16 15.5 %
(a)Revenues from NY gas sales are subject to a weather normalization clause and
a revenue decoupling mechanism as a result of which delivery revenues are
generally not affected by changes in delivery volumes from levels assumed when
rates were approved.
(b)After adjusting for weather and other variations, total firm sales and
transportation volumes increased 1.7 percent in the three months ended March 31,
2022 compared with the 2021 period.
Operating revenues increased $16 million in the three months ended March 31,
2022 compared with the 2021 period primarily due to higher gas purchased for
resale ($16 million ).
Gas purchased for resale increased
Other operations and maintenance expenses increased
Income Tax Expense Income taxes increased$2 million in the three months endedMarch 31, 2022 compared with the 2021 period primarily due to higher income before income tax expense ($1 million ) and higher state income taxes ($1 million ).
Clean Energy Businesses
The Clean Energy Businesses' results of operations for the three months ended
For the Three Months Ended
(Millions of Dollars) March 31, 2022 March 31, 2021 Variation
Operating revenues $260 $224 $36
Gas purchased for resale 72 32 40
Other operations and maintenance 76 99 (23)
Depreciation and amortization 59 58
1
Taxes, other than income taxes 7 7 - Operating income$46 $28 $18 Operating revenues increased$36 million in the three months endedMarch 31, 2022 compared with the 2021 period primarily due to higher wholesale revenues ($56 million ), offset in part by lower revenue from renewable electric projects ($11 million ), lower energy services revenues ($6 million ) and lower net mark-to-market values ($3 million ).
Gas purchased for resale increased
Other operations and maintenance expenses decreased$23 million in the three months endedMarch 31, 2022 compared with the 2021 period primarily due to lower costs from renewable electric projects. Net Interest Expense 64
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Net interest expense decreased$9 million in the three months endedMarch 31, 2022 compared with the 2021 period primarily due to lower unrealized gains on interest rate derivatives. Income Tax Expense Income taxes increased$18 million in the three months endedMarch 31, 2022 compared with the 2021 period primarily due to higher income before income tax expense ($6 million ), lower income attributable to non-controlling interest ($12 million ) and higher state income taxes ($1 million ), offset in part by higher renewable energy credits ($2 million ). Income (Loss) Attributable to Non-Controlling Interest Income attributable to non-controlling interest decreased$49 million in the three months endedMarch 31, 2022 compared with the 2021 period primarily due to lower income in the 2022 period attributable to a tax equity investor in renewable electric projects accounted for under the HLBV method of accounting. See Note P to the First Quarter Financial Statements. Con Edison Transmission Other Income (Deductions) Other income increased$163 million in the three months endedMarch 31, 2022 compared with the 2021 period primarily due to losses in 2021 fromCET Gas' pre-tax impairment loss of$172 million on its investment in Stagecoach (See "Investments" in Note A to the First Quarter Financial Statements) offset in part by investment income from Stagecoach ($8 million ) and NY Transco ($4 million ), compared to 2022 investment income from NY Transco ($4 million ). Net Interest Expense Net interest expense decreased$4 million in the three months endedMarch 31, 2022 compared with the 2021 period primarily due to the repayment of an intercompany loan from the parent company from a portion of the proceeds from the sale of Stagecoach. Income Tax Expense Income taxes increased$45 million in the three months endedMarch 31, 2022 compared with the 2021 period primarily due to higher income before income tax expense ($35 million ) and higher state income taxes ($11 million ).
Other
Income Tax Expense Income taxes increased$7 million in the three months endedMarch 31, 2022 compared with the 2021 period primarily due to the absence of the consolidatedNew York State income tax benefit related to the Stagecoach impairment in 2021 ($5 million ). See "Investments - 2021 Partial Impairment of Investment inStagecoach Gas Services LLC (Stagecoach)" in Note A to the First Quarter Financial Statements. 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 three months endedMarch 31, 2022 and 2021 are summarized as follows: For the Three Months Ended March 31, Con Edison CECONY O&R Clean Energy Businesses Transmission Other (a) Con Edison (b) (Millions of Dollars) 2022 2021 2022 2021 2022 2021 2022 2021 2022 2021 2022 2021 Operating activities$477 $220 $47 $15 $13 $(124) $10 $-$(74) $178 $473 $289 Investing activities (873) (902) (44) (52) (25) (141) (10) - - (1) (952) (1,096) Financing activities (471) (355) (1) 24 (56) 175 - - 58 (316) (470) (472) Net change for the period (867) (1,037) 2 (13) (68) (90) - - (16) (139) (949) (1,279) Balance at beginning of period 920 1,067 29 37 178 187 - - 19 145 1,146 1,436 Balance at end of period (c)$53 $30 $31 $24 $110 $97 $- $-$3 $6 $197 $157 (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 First Quarter Financial Statements. + 66
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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. During 2020 and 2021, the decline in business activity in the Utilities' service territory due to the COVID-19 pandemic resulted in a slower recovery of cash from outstanding customer accounts receivable balances, material increases in customer accounts receivable balances, increases to the allowance for uncollectible accounts, and may result in increases to write-offs of customer accounts, as compared to prior to the COVID-19 pandemic. These trends may continue through 2022. Under the revenue decoupling mechanisms in the Utilities' NY electric and gas rate plans, changes in delivery volumes from levels assumed when rates were approved may affect the timing of cash flows, but largely not net income. The prices at which the Utilities provide energy to their customers are determined in accordance with their rate plans. However, increases in electric and gas commodity prices, coupled with the decline in business activity due to the COVID-19 pandemic, may further contribute to a slower recovery of cash from outstanding customer accounts receivable balances, increases to the allowance for uncollectible accounts, and increases to write-offs of customer accounts receivable balances. In general, changes in the Utilities' cost of purchased power, fuel and gas may affect the timing of cash flows, but not net income, because the costs are recovered in accordance with rate plans. The Utilities' NY rate plans allow them to defer costs resulting from a change in legislation, regulation and related actions that have taken effect during the term of the rate plans once the costs exceed a specified threshold. 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. InNovember 2021 , the NYSPSC issued an order establishing a surcharge recovery mechanism commencingDecember 1, 2021 throughDecember 31, 2022 for CECONY to collect late payment charges and fees that were not billed for the year endedDecember 31, 2020 due to the COVID-19 pandemic. The order also established a surcharge recovery or surcredit mechanism for any fee deferrals for 2021 and 2022. InApril 2022 , the NYSPSC approved theOctober 2021 joint proposal for new electric and gas rates for O&R for the three-year periodJanuary 2022 throughDecember 2024 (the Joint Proposal) that includes certain COVID-19 provisions, such as: recovery of 2020 late payment charges over three years; reconciliation of late payment charges to amounts reflected in rates for years 2021 through 2024; and reconciliation of write-offs of customer accounts receivable balances to amounts reflected in rates fromJanuary 1, 2020 throughDecember 31, 2024 . See "COVID-19 Regulatory Matters" and "Other Regulatory Matters" in Note B to the First Quarter Financial Statements and "Coronavirus Disease 2019 (COVID-19) Impacts - Liquidity and Financing," above. 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. Pursuant to their rate plans, the Utilities also recover from customers the amount of property taxes they will pay. The payment of property taxes by the Utilities affects the timing of cash flows and increases the amount of short-term borrowings issued by the Utilities when property taxes are due and as property taxes increase, but generally does not impact net income. See "Rate Plans" in Note B, "COVID-19 Regulatory Matters" in Note B, "Other Regulatory Matters" in Note B and Note J to the First 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' NY electric and gas rate plans. ForCon Edison , net income for the three months endedMarch 31, 2021 included a non-cash loss recognized with respect to a partial goodwill impairment of Con Edison Transmission's investment in Stagecoach. See "Investments" in Note A to the First Quarter Financial Statements. Net cash flows from operating activities for the three months endedMarch 31, 2022 forCon Edison and CECONY were$184 million higher and$257 million higher, respectively, than in the 2021 period. The changes in net cash flows forCon Edison and CECONY primarily reflect net higher deferred credits and other regulatory liabilities balances ($218 million and$191 million , respectively), higher deferred income taxes ($90 million and$5 million , 67 -------------------------------------------------------------------------------- respectively), higher recoveries of depreciation ($32 million and$31 million , respectively), lower prepayments ($29 million and$29 million , respectively), higher rate case amortizations and accruals ($25 million and$23 million , respectively), higher accrued interest ($13 million and$18 million , respectively) and lower revenue decoupling mechanism receivable balances ($14 million and$13 million , respectively), offset in part by higher other receivables and other current asset balances ($241 million and$178 million , respectively). For CECONY, the changes also reflect a lower increase of accounts receivables balances from customers, net of allowance for uncollectible accounts ($51 million ) (see "COVID-19 Regulatory Matters" in Note B to the First Quarter Financial Statements and "Coronavirus Disease 2019 (COVID-19) Impacts", "Accounting Considerations" and "Liquidity and Financing," above) and higher accrued taxes ($29 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, 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$144 million lower and$29 million lower, respectively, for the three months endedMarch 31, 2022 compared with the 2021 period. The change forCon Edison primarily reflects a decrease in non-utility construction expenditures at the Clean Energy Businesses ($116 million ) due to construction of the CED NevadaVirginia projects being completed during the first half of 2021 and a decrease in utility construction expenditures at CECONY ($24 million ) and O&R ($7 million ).
Cash Flows from Financing Activities
Net cash flows from financing activities for
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 projects, the interest rate for which was swapped to a fixed rate of 3.39 percent. 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 projects (CED Nevada Virginia). 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. InMarch 2021 ,May 2021 ,June 2021 ,July 2021 , andAugust 2021 , the tax equity investor funded$39 million ,$13 million ,$47 million ,$53 million and$111 million , respectively. 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 Note P to the First Quarter Financial Statements. 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. InJune 2021 ,July 2021 , andAugust 2021 CED Nevada Virginia issued$38 million ,$61 million and$130 million , respectively, of the$229 million senior notes, which are secured by equity interests in CED Nevada and the proceeds from the sale of which repaid a portion of the borrowings outstanding under a construction loan facility. 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 .Con Edison's cash flows from financing for the three months endedMarch 31, 2022 and 2021 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$18 million and$28 million , respectively.
Cash flows used in financing activities of the Companies also reflect commercial
paper issuances and repayments. The commercial paper amounts outstanding at
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2022 2021
(Millions of Dollars, except Weighted Average Outstanding at March
Daily Outstanding at March Daily
Yield) 31, average 31, average
Con Edison $1,313 $1,275 $1,581 $1,547
CECONY $1,061 $1,089 $1,427 $1,492
Weighted average yield 0.8 % 0.4 % 0.2 % 0.2 %
Capital Requirements and Resources
Capital Resources
For each of the Companies, the common equity ratio at
Common Equity Ratio
(Percent of total capitalization)
March 31, 2022 December 31, 2021
Con Edison 47.7 47.4
CECONY 47.5 47.0
Assets, Liabilities and Equity
The Companies' assets, liabilities, and equity at
Clean Energy Con Edison
CECONY O&R Businesses Transmission Other (a) Con Edison (b)
(Millions of Dollars) 2022 2021 2022 2021 2022 2021 2022 2021 2022 2021 2022 2021 ASSETS Current assets$4,582 $4,703 $328 $290 $545 $542 $3 $2 $4 $14
$5,462 $5,551 Investments 579 608 24 26 - - 233 223 (3) (4) 833 853 Net plant 42,015 41,613 2,616 2,599 4,370 4,367 17 17 - - 49,018 48,596 Other noncurrent assets 6,037 5,731 391 377 1,639 1,645 7 7 350 356 8,424 8,116 Total Assets$53,213 $52,655 $3,359
LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities$4,238 $4,321 $401
$5,415 $5,427 Noncurrent liabilities 13,973 13,640 1,087
1,064 162 121 (89) (90) (17) 14
15,116 14,749
Long-term debt 18,384 18,382 968 968 2,583 2,607 - - 648 647 22,583 22,604
Equity 16,618 16,312 903 888 2,843 2,815 239 239 20 82
20,623 20,336
Total Liabilities and Equity
(a) Includes parent company and consolidation adjustments.
(b) Represents the consolidated results of operations of
CECONY
Current assets atMarch 31, 2022 were$121 million lower than atDecember 31, 2021 . The change in current assets primarily reflects a decrease in cash and temporary cash investments ($871 million ), primarily due to theJanuary 2022 payment ofNew York City semi-annual property taxes and a decrease to deferral of unbilled late payment charges over the rate allowance that are being recovered through a surcharge mechanism established by theNew York Public Service Commission in itsNovember 2021 order ($44 million ). The decrease is offset in part by an increase in prepayments reflecting primarily theJanuary 2022 payment ofNew York City semi-annual property taxes, offset in part by three months of amortization, while theDecember 2021 balance reflects the amortization of the entire previous semi-annual payment made inJuly 2021 ($468 million ), an increase in accounts receivables, net of allowance for uncollectible accounts ($185 million ) (see "COVID-19 Regulatory Matters" in Note B to the First Quarter Financial Statements and "Coronavirus Disease 2019 (COVID-19) Impacts - Accounting Considerations" and "Liquidity and Financing," above) and an increase in the fair value of short-term derivative assets ($157 million ). 69 -------------------------------------------------------------------------------- Investments atMarch 31, 2022 were$29 million lower than atDecember 31, 2021 . The change in investments primarily reflects a decrease in supplemental retirement income plan assets ($26 million ) and deferred income plan assets ($3 million ). See Note E to the First Quarter Financial Statements. Net plant atMarch 31, 2022 was$402 million higher than atDecember 31, 2021 . The change in net plant primarily reflects an increase in electric ($331 million ), gas ($265 million ), general ($68 million ) and steam ($20 million ) plant balances, offset in part by an increase in accumulated depreciation ($230 million ) and a decrease in construction work in progress ($52 million ). Other noncurrent assets atMarch 31, 2022 were$306 million higher than atDecember 31, 2021 . The change in other noncurrent assets primarily reflects an increase in pension and retiree benefits ($255 million ), an increase in the regulatory asset for system peak reduction and energy efficiency programs ($45 million ), deferred derivative losses ($35 million ), deferred storm costs ($20 million ) and deferrals for increased costs related to the COVID-19 pandemic ($20 million ). The increase is offset in part by a decrease in the regulatory asset for deferred pension and other postretirement benefits ($43 million ), unrecognized pension and other postretirement costs to reflect the final actuarial valuation, as measured atDecember 31, 2021 , of the pension and other retiree benefit plans in accordance with the accounting rules for retirement benefits ($21 million ). The change in the regulatory asset also reflects the period's amortization of accounting costs. See Notes B, E and F to the First Quarter Financial Statements. Current liabilities atMarch 31, 2022 were$83 million lower than atDecember 31, 2021 . The change in current liabilities primarily reflects decreases in notes payable ($300 million ), accounts payable ($169 million ) and accrued benefits for management incentive awards ($55 million ), offset in part by increases in the regulatory liability for deferred derivative gains ($311 million ), accrued interest ($108 million ), increases in the regulatory liability for refundable energy costs ($17 million ) and customer deposits ($13 million ). Noncurrent liabilities atMarch 31, 2022 were$333 million higher than atDecember 31, 2021 . The change in noncurrent liabilities primarily reflects an increase in deferred income taxes and unamortized investment tax credits ($181 million ) primarily due to accelerated tax depreciation, repair deductions and the prepayment ofNew York City property taxes. See Note J to the First Quarter Financial Statements. The change also reflects an increase in regulatory liabilities for unrecognized other postretirement costs ($199 million ) and an increase in the liability for pension and retiree benefits ($23 million ) that primarily reflects the final actuarial valuation, as measured atDecember 31, 2021 , of the plans in accordance with the accounting rules for retirement benefits. See Notes E and F to the First Quarter Financial Statements. These increases are offset in part by a decrease in the regulatory liability for net unbilled revenue deferrals ($78 million ). Equity atMarch 31, 2022 was$306 million higher than atDecember 31, 2021 . The change in equity primarily reflects net income for the three months endedMarch 31, 2022 ($475 million ), capital contributions from parent ($75 million ) in 2022, offset in part by common stock dividends to parent ($245 million ) in 2022.
O&R
Current assets atMarch 31, 2022 were$38 million higher than atDecember 31, 2021 . The change in current assets primarily reflects increases in the fair value of short-term derivative assets ($18 million ), accounts receivables, net of allowance for uncollectible accounts ($16 million ) and other receivables, net of allowance for uncollectible accounts ($5 million ). Net plant atMarch 31, 2022 was$17 million higher than atDecember 31, 2021 . The change in net plant primarily reflects an increase in electric ($55 million ), gas ($11 million ), and general ($2 million ) plant balances, offset in part by a decrease in construction work in progress ($40 million ) and an increase in accumulated depreciation ($11 million ). Other noncurrent assets atMarch 31, 2022 were$14 million higher than atDecember 31, 2021 . The change in other noncurrent assets primarily reflects an increase in the regulatory asset for recoverable energy costs ($6 million ), regulatory asset for unrecognized pension and other postretirement costs to reflect the final actuarial valuation, as measured atDecember 31, 2021 , of the pension and other retiree benefit plans in accordance with the accounting rules for retirement benefits ($5 million ), the fair value of long-term derivative assets ($4 million ), pension and retiree benefits ($2 million ), and operating lease right-of-use asset ($2 million ). This increase is offset in part by a decrease in the regulatory asset for deferred pension and other postretirement benefits ($6 million ). The change in 70
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the regulatory asset also reflects the period's amortization of accounting costs. See Notes B, E and F to the First Quarter Financial Statements.
Current liabilities at
Noncurrent liabilities atMarch 31, 2022 were$23 million higher than atDecember 31, 2021 . The change in noncurrent liabilities primarily reflects an increase in the liability for pension and retiree benefits ($9 million ), long-term operating lease liabilities ($3 million ), regulatory liabilities for allowance for cost of removal less salvage ($3 million ), long-term deferred derivative gains ($3 million ), and an increase in other deferred credits ($2 million ). Equity atMarch 31, 2022 was$15 million higher than atDecember 31, 2021 . The change in equity primarily reflects net income for the three months endedMarch 31, 2022 ($30 million ), offset in part by common stock dividends to parent ($14 million ) in 2022. Clean Energy Businesses Current assets atMarch 31, 2022 were$3 million higher than atDecember 31, 2021 . The change in current assets primarily reflects an increase in other currents assets ($60 million ), accrued unbilled revenue ($7 million ) and fair value of short-term derivative assets ($7 million ), offset in part by a decrease in restricted cash ($69 million ).
Net plant at
Other noncurrent assets at
Current liabilities at
Noncurrent liabilities atMarch 31, 2022 were$41 million higher than atDecember 31, 2021 . The change in noncurrent liabilities primarily reflects the increase of deferred taxes ($80 million ), offset in part by the change in the fair value of derivative liabilities ($33 million ).
Long-term debt at
Equity atMarch 31, 2022 was$28 million higher than atDecember 31, 2021 . The change in equity primarily reflects an increase in net income for the three months endedMarch 31, 2022 ($107 million ), offset in part by a decrease in noncontrolling tax equity interest ($54 million ) (see Note P to the First Quarter Financial Statements) and common stock dividends to parent ($24 million ) in 2021. Con Edison Transmission Investments atMarch 31, 2022 were$10 million higher than atDecember 31, 2021 . The increase in investments primarily reflects additional investment in NYTransco ($10 million ). See "Investments" in Note A to the First Quarter Financial Statements.
Current liabilities at
Off-Balance Sheet Arrangements
At
Regulatory Matters For information about the Utilities' regulatory matters, see Note B to the First
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