UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

x	Quarterly Report Pursuant To Section 13 or 15(d) of the Securities Exchange Act of 1934

FOR THE QUARTERLY PERIOD ENDED ~~MARCH~~SEPTEMBER 3130, 2013

¨	Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from to

CommissionFile Number	Exact name of registrant as specified in its charter and principal office address and telephone number	State ofIncorporation	I.R.S. EmployerID. Number
Commission File Number	Exact name of registrant as specified in its charter and principal office address and telephone number	State ofIncorporation	I.R.S. EmployerID. Number
1-14514	Consolidated Edison, Inc.	New York	13-3965100
	4 Irving Place, New York, New York 10003
	(212) 460-4600
1-1217	Consolidated Edison Company of New York, Inc.	New York	13-5009340
	4 Irving Place, New York, New York 10003
	(212) 460-4600

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.


Consolidated Edison, Inc. (Con Edison)	Yes x	No ¨

Consolidated Edison of New York, Inc. (CECONY)	Yes x	No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post ~~such~~ such files).


Con Edison	Yes x	No ¨

CECONY	Yes x	No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.


Con Edison

Large accelerated filer x	Accelerated filer ¨	Non-accelerated filer ¨	Smaller reporting company ¨

CECONY
Large accelerated filer ¨	Accelerated filer ¨	Non-accelerated filer x	Smaller reporting company ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).


Con Edison	Yes ¨	No x

CECONY	Yes ¨	No x

As of ~~April 26~~October 30, 2013, Con Edison had outstanding 292,~~894~~888,~~443~~192 Common Shares ($.10 par value). All of the outstanding common equity of CECONY is held by Con Edison.

Filing Format

This Quarterly Report on Form 10-Q is a combined report being filed separately by two different registrants: Consolidated Edison, Inc. (Con Edison) and Consolidated Edison Company of New York, Inc. (CECONY). CECONY is a subsidiary of Con Edison and, as such, the information in this report about CECONY also applies to Con Edison. As used in this report, the term the “Companies” refers to Con Edison and CECONY. However, CECONY makes no representation as to the information contained in this report relating to Con Edison or the subsidiaries of Con Edison other than itself.

Glossary of Terms

The following is a glossary of frequently used abbreviations or acronyms that are used in the Companies’ SEC reports:


Con Edison Companies
Con Edison		Consolidated Edison, Inc.
CECONY		Consolidated Edison Company of New York, Inc.
Con Edison Development		Consolidated Edison Development, Inc.
Con Edison Energy		Consolidated Edison Energy, Inc.
Con Edison Solutions		Consolidated Edison Solutions, Inc.
O&R		Orange and Rockland Utilities, Inc.
Pike		Pike County Light & Power Company
RECO		Rockland Electric Company
The Companies		Con Edison and CECONY
The Utilities		CECONY and O&R
Regulatory Agencies, Government Agencies, and Quasi-governmental Not-for-Profits
EPA		U. S. Environmental Protection Agency
FERC		Federal Energy Regulatory Commission
IRS		Internal Revenue Service
ISO-NE		ISO New England Inc.
NJBPU		New Jersey Board of Public Utilities
NJDEP		New Jersey Department of Environmental Protection
NYISO		New York Independent System Operator
NYPA		New York Power Authority
NYSAG		New York State Attorney General
NYSDEC		New York State Department of Environmental Conservation
NYSERDA		New York State Energy Research and Development Authority
NYSPSC		New York State Public Service Commission
NYSRC		New York State Reliability Council, LLC
PAPUC		Pennsylvania Public Utility Commission
PJM		PJM Interconnection LLC
SEC		U.S. Securities and Exchange Commission
Accounting
ABO		Accumulated Benefit Obligation
ASU		Accounting Standards Update
FASB		Financial Accounting Standards Board
LILO		Lease In/Lease Out
OCI		Other Comprehensive Income
SFAS		Statement of Financial Accounting Standards
VIE		Variable interest entity
Environmental
CO₂		Carbon dioxide
GHG		Greenhouse gases
MGP Sites		Manufactured gas plant sites
PCBs		Polychlorinated biphenyls
PRP		Potentially responsible party
SO₂		Sulfur dioxide
Superfund		Federal Comprehensive Environmental Response, Compensation and Liability Act of 1980 and similar state statutes


2

Units of Measure
AC		Alternating current
dths		Dekatherms
kV		Kilovolt
kWh		Kilowatt-hour
mdths		Thousand dekatherms
MMlbs		Million pounds
MVA		Megavolt ampere
MW		Megawatt or thousand kilowatts
MWH		Megawatt hour
Other
AFDC		Allowance for funds used during construction
COSO		Committee of Sponsoring Organizations of the Treadway Commission
EMF		Electric and magnetic fields
ERRP		East River Repowering Project
Fitch		Fitch Ratings
First Quarter Form 10-Q		The Companies’ combined Quarterly Report on Form 10-Q for the quarterly period ended March 31, ~~2013~~of the current year
Form 10-K		The Companies’ combined Annual Report on Form 10-K for the year ended December 31, 2012
LTIP		Long Term Incentive Plan
Moody’s		Moody’s Investors Service
S&P		Standard & Poor’s Financial Services LLC
Second Quarter Form 10-Q		The Companies’ combined Quarterly Report on Form 10-Q for the quarterly period ended June 30 of the current year
Third Quarter Form 10-Q		The Companies’ combined Quarterly Report on Form 10-Q for the quarterly period ended September 30 of the current year
VaR		Value-at-Risk


					3

TABLE OF CONTENTS

		PAGE
PART I—Financial Information
ITEM 1	Financial Statements (Unaudited)
	Con Edison
	Consolidated Income Statement		6
	Consolidated Statement of Comprehensive Income		7
	Consolidated Statement of Cash Flows		8
	Consolidated Balance Sheet		9
	Consolidated Statement of Common Shareholders’ Equity		11
	CECONY
	Consolidated Income Statement		12
	Consolidated Statement of Comprehensive Income		13
	Consolidated Statement of Cash Flows		14
	Consolidated Balance Sheet		15
	Consolidated Statement of Common Shareholder’s Equity		17
	Notes to Financial Statements (Unaudited)		18
ITEM 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations		3848
ITEM 3	Quantitative and Qualitative Disclosures About Market Risk		5380
ITEM 4	Controls and Procedures		5380
PART II—Other Information
ITEM 1	Legal Proceedings		5481
ITEM 1A	Risk Factors		5481
ITEM 2	Unregistered Sales of Equity Securities and Use of Proceeds		5482
ITEM 6	Exhibits		5583
	Signatures		5685


4

FORWARD-LOOKING STATEMENTS

This report includes forward-looking statements intended to qualify for the safe-harbor provisions of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are statements of future expectation and not facts. Words such as “expects,” “estimates,” “anticipates,” “intends,” “believes,” “plans,” “will” and similar expressions identify forward-looking statements. Forward-looking statements are based on information available at the time the statements are made, and accordingly speak only as of that time. Actual results or developments might differ materially from those included in the forward-looking statements because of various risks, including:

•

the failure to operate energy facilities safely and reliably could adversely affect the Companies;

•

the failure to properly complete construction projects could adversely affect the Companies;

•

the failure of processes and systems and the performance of employees and contractors could adversely affect the Companies;

•

the Companies are extensively regulated and are subject to penalties;

•

the Utilities’ rate plans may not provide a reasonable return;

•

the Companies may be adversely affected by changes to the Utilities’ rate plans;

•

the Companies are exposed to risks from the environmental consequences of their operations;

•

a disruption in the wholesale energy markets or failure by an energy supplier could adversely affect the Companies;

•

the Companies have substantial unfunded pension and other postretirement benefit liabilities;

•

Con Edison’s ability to pay dividends or interest depends on dividends from its subsidiaries;

•

the Companies require access to capital markets to satisfy funding requirements;

• the Internal Revenue Service has disallowed substantial tax deductions taken by the company;

•

a cyber attack could adversely affect the Companies; and

•

the Companies also face other risks that are beyond their control.


					5

Consolidated Edison, Inc. CONSOLIDATED INCOME STATEMENT (UNAUDITED)

CONSOLIDATED INCOME STATEMENT (UNAUDITED)


	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2013			2012			2013			2012
	*(Millions of Dollars/Except Share Data)*
OPERATING REVENUES
Electric	$	2,822		$	2,810		$	6,799		$	6,762
Gas		225			216			1,333			1,161
Steam		72			68			522			414
Non-utility		365			344			833			950
TOTAL OPERATING REVENUES		3,484			3,438			9,487			9,287
OPERATING EXPENSES
Purchased power		946			930			2,421			2,440
Fuel		56			59			261			213
Gas purchased for resale		74			56			443			314
Other operations and maintenance		795			826			2,400			2,365
Depreciation and amortization		258			240			764			709
Taxes, other than income taxes		500			476			1,431			1,360
TOTAL OPERATING EXPENSES		2,629			2,587			7,720			7,401
OPERATING INCOME		855			851			1,767			1,886
OTHER INCOME (DEDUCTIONS)
Investment and other income		8			4			19			14
Allowance for equity funds used during construction		1			1			2			3
Other deductions		(4	)		(3	)		(12	)		(13	)
TOTAL OTHER INCOME (DEDUCTIONS)		5			2			9			4
INCOME BEFORE INTEREST AND INCOME TAX EXPENSE		860			853			1,776			1,890
INTEREST EXPENSE
Interest on long-term debt		145			146			433			440
Other interest		2			6			143			17
Allowance for borrowed funds used during construction		(1	)		—			(1	)		(2	)
NET INTEREST EXPENSE		146			152			575			455
INCOME BEFORE INCOME TAX EXPENSE		714			701			1,201			1,435
INCOME TAX EXPENSE		250			261			373			501
NET INCOME		464			440			828			934
Preferred stock dividend requirements of subsidiary		—			—			—			(3	)
NET INCOME FOR COMMON STOCK	$	464		$	440		$	828		$	931
Net income for common stock per common share—basic	$	1.58		$	1.50		$	2.83		$	3.18
Net income for common stock per common share—diluted	$	1.58		$	1.49		$	2.81		$	3.16
DIVIDENDS DECLARED PER SHARE OF COMMON STOCK	$	0.615		$	0.605		$	1.845		$	1.815
AVERAGE NUMBER OF SHARES OUTSTANDING—BASIC (IN MILLIONS)		292.9			292.9			292.9			292.9
AVERAGE NUMBER OF SHARES OUTSTANDING—DILUTED (IN MILLIONS)		294.3			294.6			294.3			294.6

	For the Three MonthsEnded March 31,
	2013			2012
	(Millions of Dollars/Except Share Data)
OPERATING REVENUES
Electric		$1,958			$1,862
Gas		742			645
Steam		332			263
Non-utility		152			308
TOTAL OPERATING REVENUES		3,184			3,078
OPERATING EXPENSES
Purchased power		707			781
Fuel		147			108
Gas purchased for resale		250			196
Other operations and maintenance		830			749
Depreciation and amortization		251			233
Taxes, other than income taxes		473			450
TOTAL OPERATING EXPENSES		2,658			2,517
OPERATING INCOME		526			561
OTHER INCOME (DEDUCTIONS)
Investment and other income		4			7
Allowance for equity funds used during construction		1			—
Other deductions		(3	)		(4	)
TOTAL OTHER INCOME (DEDUCTIONS)		2			3
INCOME BEFORE INTEREST AND INCOME TAX EXPENSE		528			564
INTEREST EXPENSE
Interest on long-term debt		143			145
Other interest		136			5
NET INTEREST EXPENSE		279			150
INCOME BEFORE INCOME TAX EXPENSE		249			414
INCOME TAX EXPENSE		57			134
NET INCOME		192			280
Preferred stock dividend requirements of subsidiary		—			(3	)
NET INCOME FOR COMMON STOCK		$192			$277
Net income for common stock per common share—basic		$0.66			$0.95
Net income for common stock per common share—diluted		$0.65			$0.94
DIVIDENDS DECLARED PER SHARE OF COMMON STOCK		$0.615			$0.605
AVERAGE NUMBER OF SHARES OUTSTANDING—BASIC (IN MILLIONS)		292.9			292.9
AVERAGE NUMBER OF SHARES OUTSTANDING—DILUTED (IN MILLIONS)		294.2			294.5

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


6

Consolidated Edison, Inc. CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED)

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED)


	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2013		2012		2013		2012
	*(Millions of Dollars)*
NET INCOME		$464		$440		$828		$934
OTHER COMPREHENSIVE INCOME/(LOSS), NET OF TAXES
Pension plan liability adjustments, net of $1 and $4 in 2013 and $1 and $5 taxes in 2012, respectively		2		2		7		8
TOTAL OTHER COMPREHENSIVE INCOME/(LOSS), NET OF TAXES		2		2		7		8
COMPREHENSIVE INCOME		466		442		835		942
Preferred stock dividend requirements of subsidiary		—		—		—		(3	)
COMPREHENSIVE INCOME FOR COMMON STOCK		$466		$442		$835		$939

	For the Three MonthsEnded March 31,
	2013		2012
	(Millions of Dollars)
NET INCOME		$192		$280
OTHER COMPREHENSIVE INCOME, NET OF TAXES
Pension plan liability adjustments, net of $2 and $5 taxes in 2013 and 2012, respectively		3		7
TOTAL OTHER COMPREHENSIVE INCOME, NET OF TAXES		3		7
COMPREHENSIVE INCOME		195		287
Preferred stock dividend requirements of subsidiary		—		(3	)
COMPREHENSIVE INCOME FOR COMMON STOCK		$195		$284

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


					7

Consolidated Edison, Inc.

CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)

	For the Three MonthsEnded March 31,
	For the Nine Months Ended September 30,
	2013			2012
	(Millions of Dollars)
OPERATING ACTIVITIES
Net Income	$	~~$ 192~~828		$	~~$ 280~~934
PRINCIPAL NON-CASH CHARGES/(CREDITS) TO INCOME
Depreciation and amortization		~~251~~764			~~233~~709
Deferred income taxes		~~(87~~116	)		68344
Rate case amortization and accruals		101			3132
Common equity component of allowance for funds used during construction		(12	)		—(3	)
Net derivative (gains)/losses		(456	)		31(61	)
Other non-cash items (net)		147			64
Pre-tax gains on the termination of LILO transactions		(95	)		—
Other non-cash items (net)		46			(53	)
CHANGES IN ASSETS AND LIABILITIES
Accounts receivable – customers, less allowance for uncollectibles		(~~135~~51	)		54(196	)
Special deposits		(~~438~~305	)		—
Materials and supplies, including fuel oil and gas in storage		60(38	)		311
Other receivables and other current assets		85(8	)		(254	)
Prepayments		(~~263~~362	)		(~~286~~288	)
Accounts payable		(84193	)		~~(78~~18	)
Pensions and retiree benefits obligations		~~270~~665			~~253~~713
Pensions and retiree benefits contributions		(~~235~~887	)		(~~184~~821	)
Accrued taxes		~~(18~~217	)		41(80	)
Accrued interest		~~174~~171			5246
Deferred charges, noncurrent assets and other regulatory assets		37			(255	)
Superfund and environmental remediation costs (net)		(6	)		7
Deferred credits and other regulatory liabilities		(5	)		117
Deferred charges, noncurrent assets and other regulatory assets		(6	)		183
Other assets		10			—
Deferred credits and other regulatory liabilities		291			83
Other liabilities		(9	)		(48	)
Other assets		51			—
NET CASH FLOWS (USED IN)/FROM OPERATING ACTIVITIES		(84	)		402
Other liabilities		47			16
NET CASH FLOWS FROM OPERATING ACTIVITIES		1,238			1,638
INVESTING ACTIVITIES
Utility construction expenditures		(~~538~~1,701	)		(~~471~~1,450	)
Cost of removal less salvage		(47144	)		(43118	)
Non-utility construction expenditures		(91149	)		(968	)
Proceeds from grants related to renewable energy investments		13			6
Investments in solar energy projects		(174	)		(258	)
Net investment in Pilesgrove solar project and other		—			27
Proceeds from grants related to solar energy projects		88			27
NET CASH FLOWS USED IN INVESTING ACTIVITIES		(663	)		(490	)
Increase in restricted cash		(15	)		—
Proceeds from the termination of LILO transactions		200			—
NET CASH FLOWS USED IN INVESTING ACTIVITIES		(1,895	)		(1,867	)
FINANCING ACTIVITIES
Net proceeds of short-term debt		~~482~~681			—340
Issuance of long-term debt		700			400
Preferred stock redemption		—			(239	)
Retirement of long-term debt		(509	)		(1	)
Issuance of long-term debt		919			400
Issuance of common shares for stock plans, net of repurchases		(1	)		(8	)
Retirement of long-term debt		(707	)		(304	)
Debt issuance costs		(7	)		(4	)
Issuance of common shares for stock plans, net of repurchases		(4	)		(16	)
Common stock dividends		(180	)		(175	)
Debt issuance costs		(12	)		(4	)
Common stock dividends		(540	)		(524	)
Preferred stock dividends		—			(3	)
NET CASH FLOWS FROM FINANCING ACTIVITIES		485			209
NET CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES		337			(350	)
CASH AND TEMPORARY CASH INVESTMENTS:
NET CHANGE FOR THE PERIOD		(~~262~~320	)		~~121~~(579	)
BALANCE AT BEGINNING OF PERIOD		394			648
BALANCE AT END OF PERIOD	$	~~$ 132~~74		$	~~$ 769~~69
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the period for:
Interest	$	~~$ 90~~372		$	~~$ 89~~379
Income taxes	$	~~$ 24~~27		$	—46

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


8

Consolidated Edison, Inc. CONSOLIDATED BALANCE SHEET (UNAUDITED)

CONSOLIDATED BALANCE SHEET (UNAUDITED)


	September 30, 2013		December 31, 2012
	*(Millions of Dollars)*
ASSETS
CURRENT ASSETS
Cash and temporary cash investments	$	74	$	394
Special deposits		375		70
Accounts receivable – customers, less allowance for uncollectible accounts of $95 and $94 in 2013 and 2012, respectively		1,273		1,222
Accrued unbilled revenue		425		516
Other receivables, less allowance for uncollectible accounts of $8 and $10 in 2013 and 2012, respectively		257		228
Fuel oil, gas in storage, materials and supplies, at average cost		368		330
Prepayments		521		159
Deferred tax assets – current		186		296
Regulatory assets		46		74
Other current assets		179		162
TOTAL CURRENT ASSETS		3,704		3,451
INVESTMENTS		444		467
UTILITY PLANT, AT ORIGINAL COST
Electric		23,041		22,376
Gas		5,388		5,120
Steam		2,117		2,049
General		2,301		2,302
TOTAL		32,847		31,847
Less: Accumulated depreciation		6,952		6,573
Net		25,895		25,274
Construction work in progress		1,450		1,027
NET UTILITY PLANT		27,345		26,301
NON-UTILITY PLANT
Non-utility property, less accumulated depreciation of $84 and $68 in 2013 and 2012, respectively		581		555
Construction work in progress		29		83
NET PLANT		27,955		26,939
OTHER NONCURRENT ASSETS
Goodwill		429		429
Intangible assets, less accumulated amortization of $4 in 2013 and 2012		4		2
Regulatory assets		9,190		9,705
Other deferred charges and noncurrent assets		238		216
TOTAL OTHER NONCURRENT ASSETS		9,861		10,352
TOTAL ASSETS	$	41,964	$	41,209

	March 31,2013		December 31,2012
	(Millions of Dollars)
ASSETS
CURRENT ASSETS
Cash and temporary cash investments		$ 132		$ 394
Special deposits		508		70
Accounts receivable – customers, less allowance for uncollectible accounts of $94 in 2013 and 2012		1,357		1,222
Accrued unbilled revenue		399		516
Other receivables, less allowance for uncollectible accounts of $10 in 2013 and 2012		213		228
Fuel oil, gas in storage, materials and supplies, at average cost		270		330
Prepayments		422		159
Deferred tax assets – current		440		296
Regulatory assets		32		74
Other current assets		161		162
TOTAL CURRENT ASSETS		3,934		3,451
INVESTMENTS		351		467
UTILITY PLANT, AT ORIGINAL COST
Electric		22,547		22,376
Gas		5,197		5,120
Steam		2,068		2,049
General		2,291		2,302
TOTAL		32,103		31,847
Less: Accumulated depreciation		6,716		6,573
Net		25,387		25,274
Construction work in progress		1,209		1,027
NET UTILITY PLANT		26,596		26,301
NON-UTILITY PLANT
Non-utility property, less accumulated depreciation of $73 and $68 in 2013 and 2012, respectively		527		555
Construction work in progress		160		83
NET PLANT		27,283		26,939
OTHER NONCURRENT ASSETS
Goodwill		429		429
Intangible assets, less accumulated amortization of $4 in 2013 and 2012		2		2
Regulatory assets		9,484		9,705
Other deferred charges and noncurrent assets		253		216
TOTAL OTHER NONCURRENT ASSETS		10,168		10,352
TOTAL ASSETS		$41,736		$41,209

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


					9

Consolidated Edison, Inc. CONSOLIDATED BALANCE SHEET (UNAUDITED)

CONSOLIDATED BALANCE SHEET (UNAUDITED)


	September 30, 2013		December 31, 2012
	*(Millions of Dollars)*
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES
Long-term debt due within one year	$	483	$	706
Notes payable		1,220		539
Accounts payable		925		1,215
Customer deposits		316		304
Accrued taxes		379		162
Accrued interest		324		153
Accrued wages		93		94
Fair value of derivative liabilities		25		47
Regulatory liabilities		117		183
Uncertain income tax liabilities		—		44
Other current liabilities		491		498
TOTAL CURRENT LIABILITIES		4,373		3,945
NONCURRENT LIABILITIES
Obligations under capital leases		2		2
Provision for injuries and damages		195		149
Pensions and retiree benefits		3,816		4,678
Superfund and other environmental costs		512		545
Asset retirement obligations		164		159
Fair value of derivative liabilities		29		31
Uncertain income tax liabilities		8		—
Other noncurrent liabilities		120		125
TOTAL NONCURRENT LIABILITIES		4,846		5,689
DEFERRED CREDITS AND REGULATORY LIABILITIES
Deferred income taxes and investment tax credits		8,481		8,372
Regulatory liabilities		1,557		1,202
Other deferred credits		48		70
TOTAL DEFERRED CREDITS AND REGULATORY LIABILITIES		10,086		9,644
LONG-TERM DEBT		10,493		10,062
COMMON SHAREHOLDERS’ EQUITY (See Statement of Common Shareholders’ Equity)		12,166		11,869
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	41,964	$	41,209

	March 31,2013		December 31,2012
	(Millions of Dollars)
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES
Long-term debt due within one year		$ 405		$ 706
Notes payable		1,021		539
Accounts payable		1,065		1,215
Customer deposits		307		304
Accrued taxes		144		162
Accrued interest		327		153
Accrued wages		93		94
Fair value of derivative liabilities		15		47
Regulatory liabilities		132		183
Uncertain income tax liabilities		251		44
Other current liabilities		483		498
TOTAL CURRENT LIABILITIES		4,243		3,945
NONCURRENT LIABILITIES
Obligations under capital leases		2		2
Provision for injuries and damages		152		149
Pensions and retiree benefits		4,438		4,678
Superfund and other environmental costs		536		545
Asset retirement obligations		160		159
Fair value of derivative liabilities		26		31
Other noncurrent liabilities		125		125
TOTAL NONCURRENT LIABILITIES		5,439		5,689
DEFERRED CREDITS AND REGULATORY LIABILITIES
Deferred income taxes and investment tax credits		8,316		8,372
Regulatory liabilities		1,234		1,202
Other deferred credits		61		70
TOTAL DEFERRED CREDITS AND REGULATORY LIABILITIES		9,611		9,644
LONG-TERM DEBT		10,554		10,062
COMMON SHAREHOLDERS’ EQUITY (See Statement of Common Shareholders’ Equity)		11,889		11,869
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY		$41,736		$41,209

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


10

Consolidated Edison, Inc. CONSOLIDATED STATEMENT OF COMMON SHAREHOLDERS’ EQUITY (UNAUDITED)

CONSOLIDATED STATEMENT OF COMMON SHAREHOLDERS’ EQUITY (UNAUDITED)


	Common Stock					Additional Paid-In Capital			Retained Earnings			Treasury Stock						Capital Stock Expense			Accumulated Other Comprehensive Income/(Loss)
*(Millions of Dollars/Except Share Data)*	Shares			Amount		Additional Paid-In Capital			Retained Earnings			Shares			Amount			Capital Stock Expense			Accumulated Other Comprehensive Income/(Loss)			Total
BALANCE AS OF DECEMBER 31, 2011		292,888,521		$	32	$	4,991		$	7,568			23,194,075			$(1,033	)		$(64	)		$(58	)		$11,436
Net income for common stock										277															277
Common stock dividends										(177	)														(177	)
Issuance of common shares for stock plans, net of repurchases		(7,225	)										7,225			(2	)								(2	)
Preferred stock redemption																			4						4
Other comprehensive income																						7			7
BALANCE AS OF MARCH 31, 2012		292,881,296		$	32	$	4,991		$	7,668			23,201,300			$(1,035	)		$(60	)		$(51	)		$11,545
Net income for common stock										214															214
Common stock dividends										(178	)														(178	)
Issuance of common shares for stock plans, net of repurchases		1,700											(1,700	)					(1	)					(1	)
Other comprehensive loss																						(1	)		(1	)
BALANCE AS OF JUNE 30, 2012		292,882,996		$	32	$	4,991		$	7,704			23,199,600			$(1,035	)		$(61	)		$(52	)		$11,579
Net income for common stock										440															440
Common stock dividends										(177	)														(177	)
Issuance of common shares for stock plans, net of repurchases		(11,100	)										11,100			(2	)								(2	)
Other comprehensive income																						2			2
BALANCE AS OF SEPTEMBER 30, 2012		292,871,896		$	32	$	4,991		$	7,967			23,210,700			$(1,037	)		$(61	)		$(50	)		$11,842
BALANCE AS OF DECEMBER 31, 2012		292,871,896		$	32	$	4,991		$	7,997			23,210,700			$(1,037	)		$(61	)		$(53	)		$11,869
Net income for common stock										192															192
Common stock dividends										(180	)														(180	)
Issuance of common shares for stock plans, net of repurchases		95,468					(2	)					(95,468	)		7									5
Other comprehensive income																						3			3
BALANCE AS OF MARCH 31, 2013		292,967,364		$	32	$	4,989		$	8,009			23,115,232			$(1,030	)		$(61	)		$(50	)		$11,889
Net income for common stock										172															172
Common stock dividends										(180	)														(180	)
Issuance of common shares for stock plans, net of repurchases		(4,078	)				1						4,078			(1	)								—
Other comprehensive income																						2			2
BALANCE AS OF JUNE 30, 2013		292,963,286		$	32	$	4,990		$	8,001			23,119,310			$(1,031	)		$(61	)		$(48	)		$11,883
Net income for common stock										464															464
Common stock dividends										(180	)														(180	)
Issuance of common shares for stock plans, net of repurchases		(34,931	)										34,931			(3	)								(3	)
Other comprehensive income																						2			2
BALANCE AS OF SEPTEMBER 30, 2013		292,928,355		$	32	$	4,990		$	8,285			23,154,241			$(1,034	)		$(61	)		$(46	)		$12,166

(Millions of Dollars/Except Share Data)	Common Stock					AdditionalPaid-InCapital			Retained Earnings			Treasury Stock						CapitalStock Expense			Accumulated Other Comprehensive Income/(Loss)
	Shares			Amount								Shares			Amount									Total
BALANCE AS OF DECEMBER 31, 2011		292,888,521			$32		$4,991			$7,568			23,194,075			$(1,033	)		$(64	)		$(58	)		$11,436
Net income for common stock										277															277
Common stock dividends										(177	)														(177	)
Issuance of common shares for stock plans, net of repurchases		(7,225	)										7,225			(2	)								(2	)
Preferred stock redemption																			4						4
Other comprehensive income																						7			7
BALANCE AS OF MARCH 31, 2012		292,881,296			$32		$4,991			$7,668			23,201,300			$(1,035	)		$(60	)		$(51	)		$11,545
BALANCE AS OF DECEMBER 31, 2012		292,871,896			$32		$4,991			$7,997			23,210,700			$(1,037	)		$(61	)		$(53	)		$11,869
Net income for common stock										192															192
Common stock dividends										(180	)														(180	)
Issuance of common shares for stock plans, net of repurchases		95,468					(2	)					(95,468	)		7									5
Other comprehensive income																						3			3
BALANCE AS OF MARCH 31, 2013		292,967,364			$32		$4,989			$8,009			23,115,232			$(1,030	)		$(61	)		$(50	)		$11,889

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


					11

Consolidated Edison Company of New York, Inc. CONSOLIDATED INCOME STATEMENT (UNAUDITED)

CONSOLIDATED INCOME STATEMENT (UNAUDITED)


	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2013			2012			2013			2012
	*(Millions of Dollars)*
OPERATING REVENUES
Electric	$	2,622		$	2,611		$	6,309		$	6,307
Gas		199			189			1,190			1,017
Steam		72			68			522			414
TOTAL OPERATING REVENUES		2,893			2,868			8,021			7,738
OPERATING EXPENSES
Purchased power		624			604			1,548			1,554
Fuel		56			59			261			213
Gas purchased for resale		58			45			376			264
Other operations and maintenance		686			725			2,102			2,065
Depreciation and amortization		237			225			705			664
Taxes, other than income taxes		480			456			1,370			1,300
TOTAL OPERATING EXPENSES		2,141			2,114			6,362			6,060
OPERATING INCOME		752			754			1,659			1,678
OTHER INCOME (DEDUCTIONS)
Investment and other income		1			2			7			6
Allowance for equity funds used during construction		1			—			1			2
Other deductions		(3	)		(2	)		(10	)		(10	)
TOTAL OTHER INCOME (DEDUCTIONS)		(1	)		—			(2	)		(2	)
INCOME BEFORE INTEREST AND INCOME TAX EXPENSE		751			754			1,657			1,676
INTEREST EXPENSE
Interest on long-term debt		127			130			384			395
Other interest		1			8			12			19
Allowance for borrowed funds used during construction		—			—			(1	)		(1	)
NET INTEREST EXPENSE		128			138			395			413
INCOME BEFORE INCOME TAX EXPENSE		623			616			1,262			1,263
INCOME TAX EXPENSE		222			227			431			436
NET INCOME		401			389			831			827
Preferred stock dividend requirements		—			—			—			(3	)
NET INCOME FOR COMMON STOCK	$	401		$	389		$	831		$	824

	For the Three MonthsEnded March 31,
	2013			2012
	(Millions of Dollars)
OPERATING REVENUES
Electric		$1,814			$1,735
Gas		660			563
Steam		332			263
TOTAL OPERATING REVENUES		2,806			2,561
OPERATING EXPENSES
Purchased power		455			447
Fuel		147			108
Gas purchased for resale		219			169
Other operations and maintenance		741			645
Depreciation and amortization		233			218
Taxes, other than income taxes		451			430
TOTAL OPERATING EXPENSES		2,246			2,017
OPERATING INCOME		560			544
OTHER INCOME (DEDUCTIONS)
Investment and other income		3			5
Other deductions		(2	)		(3	)
TOTAL OTHER INCOME (DEDUCTIONS)		1			2
INCOME BEFORE INTEREST AND INCOME TAX EXPENSE		561			546
INTEREST EXPENSE
Interest on long-term debt		127			131
Other interest		5			5
NET INTEREST EXPENSE		132			136
INCOME FROM CONTINUING OPERATIONS BEFORE TAXES		429			410
INCOME TAX EXPENSE		152			134
NET INCOME		277			276
Preferred stock dividend requirements		—			(3	)
NET INCOME FOR COMMON STOCK		$277			$273

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


12

Consolidated Edison Company of New York, Inc. CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED)

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED)


	For the Three Month Ended September 30,				For the Nine Months Ended September 30,
	2013		2012		2013		2012
	*(Millions of Dollars)*
NET INCOME	$	401	$	389	$	831	$	827
OTHER COMPREHENSIVE INCOME/(LOSS), NET OF TAXES
Pension plan liability adjustments, net of $(1) taxes in 2012		—		—		—		(2	)
TOTAL OTHER COMPREHENSIVE INCOME, NET OF TAXES		—		—		—		(2	)
COMPREHENSIVE INCOME	$	401	$	389	$	831	$	825

	For the Three MonthEnded March 31,
	2013		2012
	(Millions of Dollars)
NET INCOME		$277		$276
OTHER COMPREHENSIVE INCOME/(LOSS), NET OF TAXES
Pension plan liability adjustments, net of $- taxes in 2013 and 2012		—		—
TOTAL OTHER COMPREHENSIVE INCOME, NET OF TAXES		—		—
COMPREHENSIVE INCOME		$277		$276

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


					13

Consolidated Edison Company of New York, Inc.

CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)

	For the Three MonthsEnded March 31,
	For the Nine MonthsEnded September 30,
	2013			2012
	(Millions of Dollars)
OPERATING ACTIVITIES
Net income	$	~~$277~~831		$	~~$276~~827
PRINCIPAL NON-CASH CHARGES/(CREDITS) TO INCOME
Depreciation and amortization		~~233~~705			~~218~~664
Deferred income taxes		~~241~~364			66220
Rate case amortization and accruals		101			3132
Other non-cash items (net)		(10	)		15
Common equity component of allowance for funds used during construction		(1	)		(2	)
Other non-cash items (net)		(72	)		84
CHANGES IN ASSETS AND LIABILITIES
Accounts receivable—customers, less allowance for uncollectibles		(~~102~~39	)		43(197	)
Materials and supplies, including fuel oil and gas in storage		49(26	)		2212
Other receivables and other current assets		(1527	)		16(41	)
Prepayments		(~~310~~347	)		(~~287~~308	)
Accounts payable		(58180	)		~~(48~~50	)
Pensions and retiree benefits obligations		~~250~~616			~~209~~639
Pensions and retiree benefits contributions		(~~235~~830	)		(~~184~~761	)
Superfund and environmental remediation costs (net)		—(6	)		(17	)
Accrued taxes		(7992	)		5740
Accrued interest		4643			4246
Deferred charges, noncurrent assets and other regulatory assets		2863			~~(179~~84	)
Deferred credits and other regulatory liabilities		~~(14~~302	)		~~108~~88
Other liabilities		3964			(3621	)
NET CASH FLOWS FROM OPERATING ACTIVITIES		~~350~~1,369			~~368~~1,463
INVESTING ACTIVITIES
Utility construction expenditures		(~~515~~1,614	)		(~~446~~1,368	)
Cost of removal less salvage		(47139	)		(41115	)
NET CASH FLOWS USED IN INVESTING ACTIVITIES		(~~562~~1,753	)		(~~487~~1,483	)
FINANCING ACTIVITIES
Net payments of short-term debt		(108	)		—
Net proceeds of short-term debt		621			332
Preferred stock redemption		—			(239	)
Issuance of long-term debt		700			400
Retirement of long-term debt		(~~505~~700	)		—(300	)
Debt issuance costs		(7	)		(4	)
Dividend to parent		(~~182~~545	)		(~~171~~512	)
Preferred stock dividends		—			(3	)
NET CASH FLOWS (USED IN)/FROM FINANCING ACTIVITIES		(102	)		222
NET CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES		69			(326	)
CASH AND TEMPORARY CASH INVESTMENTS:
NET CHANGE FOR THE PERIOD		(~~314~~315	)		~~103~~(346	)
BALANCE AT BEGINNING OF PERIOD		353			372
BALANCE AT END OF PERIOD	$	~~$39~~38		$	~~$475~~26
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid/(refunded) during the period for:
Cash paid during the period for:
Interest	$	~~$84~~336		$	~~$83~~344
Income taxes	$	~~$45~~117		$	~~$(20~~50	)

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


14

Consolidated Edison Company of New York, Inc. CONSOLIDATED BALANCE SHEET (UNAUDITED)

CONSOLIDATED BALANCE SHEET (UNAUDITED)


	September 30, 2013		December 31, 2012
	*(Millions of Dollars)*

ASSETS
CURRENT ASSETS
Cash and temporary cash investments	$	38	$	353
Special deposits		86		65
Accounts receivable – customers, less allowance for uncollectible accounts of $89 and $87 in 2013 and 2012, respectively		1,147		1,108
Other receivables, less allowance for uncollectible accounts of $6 and $9 in 2013 and 2012, respectively		142		106
Accrued unbilled revenue		329		406
Accounts receivable from affiliated companies		35		61
Fuel oil, gas in storage, materials and supplies, at average cost		311		285
Prepayments		428		81
Regulatory assets		42		60
Deferred tax assets – current		123		193
Other current assets		60		69
TOTAL CURRENT ASSETS		2,741		2,787
INVESTMENTS		231		207
UTILITY PLANT AT ORIGINAL COST
Electric		21,680		21,079
Gas		4,794		4,547
Steam		2,117		2,049
General		2,123		2,126
TOTAL		30,714		29,801
Less: Accumulated depreciation		6,357		6,009
Net		24,357		23,792
Construction work in progress		1,373		947
NET UTILITY PLANT		25,730		24,739
NON-UTILITY PROPERTY
Non-utility property, less accumulated depreciation of $25 in 2013 and 2012		5		6
NET PLANT		25,735		24,745
OTHER NONCURRENT ASSETS
Regulatory assets		8,497		8,972
Other deferred charges and noncurrent assets		171		174
TOTAL OTHER NONCURRENT ASSETS		8,668		9,146
TOTAL ASSETS	$	37,375	$	36,885

	March 31,2013		December 31,2012
	(Millions of Dollars)
ASSETS
CURRENT ASSETS
Cash and temporary cash investments		$ 39		$ 353
Special deposits		57		65
Accounts receivable – customers, less allowance for uncollectible accounts of $87 in 2013 and 2012		1,210		1,108
Other receivables, less allowance for uncollectible accounts of $8 and $9 in 2013 and 2012, respectively		86		106
Accrued unbilled revenue		304		406
Accounts receivable from affiliated companies		143		61
Fuel oil, gas in storage, materials and supplies, at average cost		236		285
Prepayments		391		81
Regulatory assets		28		60
Deferred tax assets – current		176		193
Other current assets		35		69
TOTAL CURRENT ASSETS		2,705		2,787
INVESTMENTS		215		207
UTILITY PLANT AT ORIGINAL COST
Electric		21,240		21,079
Gas		4,619		4,547
Steam		2,068		2,049
General		2,115		2,126
TOTAL		30,042		29,801
Less: Accumulated depreciation		6,142		6,009
Net		23,900		23,792
Construction work in progress		1,127		947
NET UTILITY PLANT		25,027		24,739
NON-UTILITY PROPERTY
Non-utility property, less accumulated depreciation of $25 in 2013 and 2012		5		6
NET PLANT		25,032		24,745
OTHER NONCURRENT ASSETS
Regulatory assets		8,774		8,972
Other deferred charges and noncurrent assets		188		174
TOTAL OTHER NONCURRENT ASSETS		8,962		9,146
TOTAL ASSETS		$36,914		$36,885

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


					15

Consolidated Edison Company of New York, Inc.

CONSOLIDATED BALANCE SHEET (UNAUDITED)

	March 31,2013		December 31,2012
	September 30,2013		December 31,2012
	(Millions of Dollars)
LIABILITIES AND SHAREHOLDER’S EQUITY
CURRENT LIABILITIES
Long-term debt due within one year	$	~~$400~~475	$	$700
Notes payable		~~313~~1,042		421
Accounts payable		~~890~~737		989
Accounts payable to affiliated companies		16		22
Customer deposits		~~295~~304		292
Accrued taxes		2120		37
Accrued taxes to affiliated companies		~~152~~140		215
Accrued interest		~~179~~176		133
Accrued wages		8489		84
Fair value of derivative liabilities		919		28
Uncertain income tax liabilities		7—		36
Regulatory liabilities		9886		145
Other current liabilities		~~421~~419		410
TOTAL CURRENT LIABILITIES		23,~~885~~523		3,512
NONCURRENT LIABILITIES
Obligations under capital leases		2		2
Provision for injuries and damages		~~145~~188		141
Pensions and retiree benefits		3,~~985~~414		4,220
Superfund and other environmental costs		~~425~~403		433
Asset retirement obligations		~~160~~163		158
Fair value of derivative liabilities		87		11
Other noncurrent liabilities		~~116~~109		115
TOTAL NONCURRENT LIABILITIES		4,~~841~~286		5,080
DEFERRED CREDITS AND REGULATORY LIABILITIES
Deferred income taxes and investment tax credits		7,~~734~~888		7,452
Regulatory liabilities		1,~~110~~431		1,077
Other deferred credits		5743		67
TOTAL DEFERRED CREDITS AND REGULATORY LIABILITIES		89,~~901~~362		8,596
LONG-TERM DEBT		9,~~640~~366		9,145
COMMON SHAREHOLDER’S EQUITY (See Statement of Common Shareholder’s Equity)		10,~~647~~838		10,552
TOTAL LIABILITIES AND SHAREHOLDER’S EQUITY	$	~~$36~~37,~~914~~375	$	$36,885

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


16

Consolidated Edison Company of New York, Inc.

CONSOLIDATED STATEMENT OF COMMON SHAREHOLDER’S EQUITY (UNAUDITED)

	Common Stock				AdditionalPaid-InCapital		~~Retained Earnings~~RetainedEarnings			RepurchasedCon ~~Edison Stock~~EdisonStock			~~CapitalStock Expense~~CapitalStockExpense			~~AccumulatedOther Comprehensive Income~~AccumulatedOtherComprehensiveIncome/(Loss)			Total
(Millions of Dollars/Except Share Data)	Shares		Amount
BALANCE AS OF DECEMBER 31, 2011		235,488,094	$	$589	$	$4,234	$	$6,429		$	$(962)		$	$(64)	)	$	$ (8	)	$	$10,218
Net income								276												276
Common stock dividend to parent								(171	)											(171	)
Cumulative preferred dividends								(3	)											(3	)
Preferred stock redemption														4						4
Other comprehensive income																	—			—
BALANCE AS OF MARCH 31, 2012		235,488,094	$	$589	$	$4,234	$	$6,531		$	$(962)		$	$(60)	)	$	$ (8	)	$	$10,324
BALANCE AS OF DECEMBER 31, 2012		235,488,094		$589		$4,234		$6,761			$(962)			$(61	)		$ (9	)		$10,552
Net income								163												163
Common stock dividend to parent								(171	)											(171	)
Other comprehensive loss																	(2	)		(2	)
BALANCE AS OF JUNE 30, 2012		235,488,094	$	589	$	4,234	$	6,523		$	(962)		$	(60)		$	(10	)	$	10,314
Net income								389												389
Common stock dividend to parent								(171	)											(171	)
Cumulative preferred dividends								—												—
Other comprehensive loss																	—			—
BALANCE AS OF SEPTEMBER 30, 2012		235,488,094	$	589	$	4,234	$	6,741		$	(962)		$	(60)		$	(10	)	$	10,532
BALANCE AS OF DECEMBER 31, 2012		235,488,094	$	589	$	4,234	$	6,761		$	(962)		$	(61)		$	(9	)	$	10,552
Net income								277												277
Common stock dividend to parent								(182	)											(182	)
Other comprehensive income																	—			—
BALANCE AS OF MARCH 31, 2013		235,488,094	$	$589	$	$4,234	$	$6,856		$	$(962)	)	$	$(61	)	$	$ (9	)	$	$10,647
Net income								153												153
Common stock dividend to parent								(182	)											(182	)
Other comprehensive income																	—			—
BALANCE AS OF JUNE 30, 2013	$	235,488,094	$	589	$	4,234	$	6,827		$	(962	)	$	(61	)	$	(9	)	$	10,618
Net income								401												401
Common stock dividend to parent								(181	)											(181	)
Other comprehensive income																	—			—
BALANCE AS OF SEPTEMBER 30, 2013	$	235,488,094	$	589	$	4,234	$	7,047		$	(962	)	$	(61	)	$	(9	)	$	10,838

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


					17

NOTES TO THE FINANCIAL STATEMENTS (UNAUDITED)

General

These combined notes accompany and form an integral part of the separate consolidated financial statements of each of the two separate registrants: Consolidated Edison, Inc. and its subsidiaries (Con Edison) and Consolidated Edison Company of New York, Inc. and its subsidiaries (CECONY). CECONY is a subsidiary of Con Edison and as such its financial condition and results of operations and cash flows, which are presented separately in the CECONY consolidated financial statements, are also consolidated, along with those of Con Edison’s other utility subsidiary, Orange and Rockland Utilities, Inc. (O&R), and Con Edison’s competitive energy businesses (discussed below) in Con Edison’s consolidated financial statements. The term “Utilities” is used in these notes to refer to CECONY and O&R.

As used in these notes, the term “Companies” refers to Con Edison and CECONY and, except as otherwise noted, the information in these combined notes relates to each of the Companies. However, CECONY makes no representation as to information relating to Con Edison or the subsidiaries of Con Edison other than itself.

The separate interim consolidated financial statements of each of the Companies are unaudited but, in the opinion of their respective managements, reflect all adjustments (which include only normally recurring adjustments) necessary for a fair presentation of the results for the interim periods presented. The Companies’ separate interim consolidated financial statements should be read together with their separate audited financial statements (including the combined notes thereto) included in Item 8 of their combined Annual Report on Form 10-K for the year ended December 31, 2012. ~~Certain~~and ~~prior~~their ~~period~~separate ~~amounts~~unaudited ~~have~~financial ~~been~~statements ~~reclassified~~(including tothe ~~conform~~combined tonotes thereto) included in Part I, Item 1 of their combined Quarterly Reports on Form 10-Q for the ~~current~~quarterly ~~period~~periods ~~presentation~~ended March 31, 2013 and June 30, 2013.

Con Edison has two regulated utility subsidiaries: CECONY and O&R. CECONY provides electric service and gas service in New York City and Westchester County. The company also provides steam service in parts of Manhattan. O&R, along with its regulated utility subsidiaries, provides electric service in southeastern New York and adjacent areas of northern New Jersey and eastern Pennsylvania and gas service in southeastern New York and adjacent areas of eastern Pennsylvania. Con Edison has the following competitive energy businesses: Consolidated Edison Solutions, Inc. (Con Edison Solutions), a retail energy services company that sells electricity and also offers energy-related services; Consolidated Edison Energy, Inc. (Con Edison Energy), a wholesale energy ~~supply and~~ services company; and Consolidated Edison Development, Inc. (Con Edison Development), a company that develops and participates in infrastructure projects.


18

Note A — Summary of Significant Accounting Policies

Reclassifications and Revisions

Prior period amounts have been reclassified where necessary to conform to the current period presentation.

Con Edison’s consolidated statement of cash flows for the six months ended June 30, 2013, incorrectly reduced net cash flows from financing activities and increased net cash flows from operating activities by an amount equal to the $108 million of net cash proceeds from the termination of the 1999 LILO transaction. A revision will be made on Con Edison’s consolidated statement of cash flows for the six months ended June 30, 2013 when the company files its Form 10-Q for the quarterly period ended June 30, 2014. The company does not deem this revision material to its consolidated financial statements for the six months ended June 30, 2013.

Earnings Per Common Share

For the three and nine months ended ~~March~~September 3130, 2013 and 2012, basic and diluted earnings per share (EPS) for Con Edison are calculated as follows:

(Millions of Dollars, except per share amounts/Shares in Millions)	2013		2012
	For the Three MonthsEnded September 30,				For the Nine MonthsEnded September 30,
Net income for common stock		$ 192		$ 277
(Millions of Dollars, except per share amounts/Shares in Millions)	2013		2012		2013		2012
Weighted average common shares outstanding – basic		292.9		292.9
Net income for common stock	$	464	$	440	$	828	$	931
Add: Incremental shares attributable to effect of potentially dilutive securities		1.3		1.6
Weighted average common shares outstanding – basic		292.9		292.9		292.9		292.9
Adjusted weighted average common shares outstanding – diluted		294.2		294.5
Add: Incremental shares attributable to effect of potentially dilutive securities		1.4		1.7		1.4		1.7
Net Income for common stock per common share – basic		$0.66		$0.95
Adjusted weighted average common shares outstanding – diluted		294.3		294.6		294.3		294.6
Net Income for common stock per common share – diluted		$0.65		$0.94
Net income for common stock per common share – basic	$	1.58	$	1.50	$	2.83	$	3.18
Net income for common stock per common share – diluted	$	1.58	$	1.49	$	2.81	$	3.16

The computation of diluted EPS for the three and nine months ended September 30, 2013 and 2012 excludes immaterial amounts of performance share awards which were not included because of their anti-dilutive effect.

Changes in Accumulated Other Comprehensive Income by Component

For the three and nine months ended ~~March~~September 3130, 2013, changes to accumulated other comprehensive income (OCI) for Con Edison and CECONY are as follows:

(Millions of Dollars)	Con Edison			CECONY
Accumulated OCI at December 31, 2012		$(53	)		$ (9)
Accumulated OCI, net of taxes, at December 31, 2012	$	(53	)	$	(9	)
OCI before reclassifications		1			—
OCI before reclassifications, net of tax of $1 and $- for Con Edison and CECONY, respectively		1			—
Amounts reclassified from accumulated OCI related to pension plan liabilities, net of tax of $1 and $- for Con Edison and CECONY, respectively (a)(b)		2			—
Net OCI at March 31, 2013		$ 3			$ —
Total OCI, net of taxes, at March 31, 2013	$	3		$	—
Accumulated OCI, net of taxes, at March 31, 2013 (b)	$	$(50	)	$	$ (9	)
OCI before reclassifications		—			—
Amounts reclassified from accumulated OCI related to pension plan liabilities, net of tax of $1 and $- for Con Edison and CECONY, respectively (a)(b)		2			—
Total OCI, net of taxes, at June 30, 2013	$	2		$	—
Accumulated OCI, net of taxes, at June 30, 2013 (b)	$	(48	)	$	(9	)
OCI before reclassifications		—			—
Amounts reclassified from accumulated OCI related to pension plan liabilities, net of tax of $1 and $- for Con Edison and CECONY, respectively (a)(b)		2			—
Total OCI, net of taxes, at September 30, 2013	$	2		$	—
Accumulated OCI, net of taxes, at September 30, 2013 (b)	$	(46	)	$	(9	)

(a)

For the portion of unrecognized pension and other postretirement benefit costs relating to the regulated Utilities, costs are recorded into, and amortized out of, regulatory assets instead of OCI. The net actuarial losses and prior service costs recognized during the period are included in the computation of net periodic pension and other postretirement benefit cost. See Notes E and F.

(b)	Tax reclassified from accumulated OCI is reported in the income tax expense line item of the income statement.

Note B — Regulatory Matters

Other Regulatory Matters

In February 2009, the New York State Public Service Commission (NYSPSC) commenced a proceeding to examine the prudence of certain CECONY expenditures following the arrests of employees for accepting illegal payments from a construction contractor. Subsequently, additional employees were arrested for accepting illegal payments from materials suppliers and an engineering firm. The arrested employees were terminated by the company and have pled guilty or been convicted. Pursuant to NYSPSC orders, a portion of the company’s revenues (currently, $249 million, $32 million and $6 million on an annual basis for electric, gas and steam service, respectively) is being collected subject to potential refund to customers. The amount of electric revenues collected subject to refund, which was established in a different proceeding, and the amount of gas and steam revenues collected subject to refund were not established as indicative of the company’s potential liability in this proceeding. At March 31, 2013, the company had collected an estimated $1,174 million from customers subject to potential refund in connection with this proceeding. In January 2013, a NYSPSC consultant reported its estimate, with which the company does not agree, of $208 million of overcharges with respect to a substantial portion of the company’s construction expenditures from January 2000 to January 2009. The company is disputing the consultant’s estimate, including its determinations as to overcharges regarding specific construction expenditures it selected to review and its methodology of extrapolating such determinations over a substantial portion of the construction expenditures during this period. The NYSPSC’s consultant has not reviewed the company’s other expenditures. The company and NYSPSC staff anticipate exploring settlement negotiations in this proceeding, the schedule for which may be coordinated with the schedule for consideration of the


					19

~~company’s~~Note ~~January~~B ~~2013~~— ~~request~~Regulatory ~~for~~Matters new electric, gas and steam rate plans. At March 31, 2013, the company had a $15 million regulatory liability for refund to customers of amounts recovered from vendors, arrested employees and insurers relating to this matter. The company is unable to estimate the amount, if any, by which any refund required by the NYSPSC may exceed this regulatory liability.

InRate ~~late~~Agreements October 2012, Superstorm Sandy caused extensive damage to the Utilities’ electric distribution system and interrupted service to approximately 1.4 million customers. Superstorm Sandy also damaged CECONY’s steam system and interrupted service to many of its steam customers. As of March 31, 2013, CECONY and O&R incurred response and restoration costs for Superstorm Sandy of $431 million and $90 million, respectively (including capital expenditures of $113 million and $15 million, respectively). Most of the costs that were not capitalized were deferred for recovery as a regulatory asset under the Utilities’ electric rate plans. See “Regulatory Assets and Liabilities” below. The Utilities’ New York electric rate plans include provisions for revenue decoupling, as a result of which delivery revenues generally are not affected by changes in delivery volumes from levels assumed when rates were approved. The provisions of the Utilities’ New York electric plans that impose penalties for operating performance provide for exceptions for major storms and catastrophic events beyond the control of the companies, including natural disasters such as hurricanes and floods. The NYSPSC, the New York State Attorney General and a commission appointed by the Governor of New York are investigating the preparation and performance of the Utilities in connection with Superstorm Sandy and other major storms.

InCECONY ~~March~~– ~~2013, the New Jersey Board of Public Utilities established a proceeding to review the prudency of costs incurred by New Jersey utilities, including Rockland~~ Electric ~~Company (RECO~~, anGas ~~O&R subsidiary), in response to major storm events in 2011~~ and ~~2012.~~Steam ~~At March 31, 2013, RECO had $27 million of storm costs deferred for recovery as a regulatory asset and had incurred $6 million of capital expenditures related to the storms.~~

In January 2013, CECONY filed requests for electric, gas and steam rate changes, effective January 1, 2014. The company requested electric and gas rate increases of $375 million and $25 million, respectively, and a steam rate decrease of $5 million, reflecting, among other things, a return on common equity of 10.35 percent and a common equity ratio of approximately 50 percent. In August 2013, the New York State Public Service Commission (NYSPSC) staff submitted its initial briefs which support decreases in the company’s electric, gas and steam rates of $146 million, $95 million and $10 million, respectively, reflecting, among other things, a return on common equity of 8.7 percent and a common equity ratio of 48 percent. In September 2013, the company submitted its reply briefs supporting increases in its electric, gas and steam rates of $418 million, $27 million and $8 million, respectively, reflecting, among other things, a return on common equity of 10.1 percent and a common equity ratio of approximately 50 percent. In October 2013, the NYSPSC’s Chief Administrative Law Judge appointed a settlement judge to assist in settlement discussions among the parties in these rate proceedings. There is no assurance that there will be a settlement, and any settlement would be subject to NYSPSC approval. Also, in October 2013, the company agreed to extend by one month the date by which the NYSPSC is required to issue a decision on the company’s rate requests, subject to a “make whole” provision that would keep the company and its customers in the same position they would have been absent the extension.

Other Regulatory Matters

In February 2009, the NYSPSC commenced a proceeding to examine the prudence of certain CECONY expenditures following the arrests of employees for accepting illegal payments from a construction contractor. Subsequently, additional employees were arrested for accepting illegal payments from materials suppliers and an engineering firm. The arrested employees were terminated by the company and have pled guilty or been convicted. Pursuant to NYSPSC orders, a portion of the company’s revenues (currently, $249 million, $32 million and $6 million on an annual basis for electric, gas and steam service, respectively) is being collected subject to potential refund to customers. The amount of electric revenues collected subject to refund, which was established in a different proceeding, and the amount of gas and steam revenues collected subject to refund were not established as indicative of the company’s potential liability in this proceeding. At September 30, 2013, the company had collected an estimated $1,318 million from customers subject to potential refund in connection with this proceeding. In January 2013, a NYSPSC consultant reported its estimate, with which the company does not agree, of $208 million of overcharges with respect to a substantial portion of the company’s construction expenditures from January 2000 to January 2009. The company is disputing the consultant’s estimate, including its determinations as to overcharges regarding specific construction expenditures it selected to review and its methodology of extrapolating such determinations over a substantial portion of the construction expenditures


20

during this period. The NYSPSC’s consultant has not reviewed the company’s other expenditures. The company and NYSPSC staff are exploring a settlement in this proceeding. There is no assurance that there will be a settlement, and any settlement would be subject to NYSPSC approval. At September 30, 2013, the company had a $16 million regulatory liability for refund to customers of amounts recovered from vendors, arrested employees and insurers relating to this matter. The company is unable to estimate the amount, if any, by which any refund required by the NYSPSC may exceed this regulatory liability. The company currently estimates that any refund required by the NYSPSC could range in amount from the $16 million regulatory liability up to an amount based on the NYSPSC consultant’s $208 million estimate of overcharges.

In late October 2012, Superstorm Sandy caused extensive damage to the Utilities’ electric distribution system and interrupted service to approximately 1.4 million customers. Superstorm Sandy also damaged CECONY’s steam system and interrupted service to many of its steam customers. As of September 30, 2013, CECONY and O&R incurred response and restoration costs for Superstorm Sandy of $471 million and $92 million, respectively (including capital expenditures of $143 million and $15 million, respectively). Most of the costs that were not capitalized were deferred for recovery as a regulatory asset under the Utilities’ electric rate plans. See “Regulatory Assets and Liabilities,” below. The Utilities’ New York electric rate plans include provisions for revenue decoupling, as a result of which delivery revenues generally are not affected by changes in delivery volumes from levels assumed when rates were approved. The provisions of the Utilities’ New York electric plans that impose penalties for operating performance provide for exceptions for major storms and catastrophic events beyond the control of the companies, including natural disasters such as hurricanes and floods. The NYSPSC is investigating, and the New York State Attorney General investigated, the preparation and performance of the Utilities in connection with Superstorm Sandy and other major storms.

In June 2013, a commission appointed by the Governor of New York issued its final report on utility storm preparation and response. The commission identified deficiencies in the performance of the Utilities and other New York utilities and made recommendations regarding, among other things, preparation and response to flooding; estimation of customer restoration times; reliability of website outage maps; coordination with local governments and providers of other utility services; availability and allocation of staffing and other resources (including the utility industry’s mutual aid process); and communications with affected communities and local officials. The commission’s report also addressed the Long Island Power Authority, energy efficiency programs, utility infrastructure investment and regulatory deficiencies.

In March 2013, the New Jersey Board of Public Utilities established a proceeding to review the prudency of costs incurred by New Jersey utilities, including Rockland Electric Company (RECO, an O&R subsidiary), in response to major storm events in 2011 and 2012. At September 30, 2013, RECO had $28 million of storm costs deferred for recovery as a regulatory asset and had incurred $6 million of capital expenditures related to the storms.


					21

Regulatory Assets and Liabilities

Regulatory assets and liabilities at ~~March~~September 3130, 2013 and December 31, 2012 were comprised of the following items:

	Con Edison				CECONY
(Millions of Dollars)	2013		2012		2013		2012
Regulatory assets
Unrecognized pension and other postretirement costs		$5,~~443~~011		$5,677		$54,~~191~~779		$5,407
Future income tax		12,~~952~~035		1,922		1,~~851~~929		1,831
Environmental remediation costs		~~721~~704		730		~~607~~591		615
Deferred storm costs		~~443~~451		432		~~330~~340		309
Revenue taxes		179		176		172		170
Pension and other postretirement benefits deferrals		229		183		201		154
Pension and other postretirement benefits deferrals		161		183		131		154
Revenue taxes		191		176		182		170
Surcharge for New York State assessment		~~117~~119		73		~~111~~113		68
Net electric deferrals		9788		102		9788		102
Unamortized loss on reacquired debt		7167		74		6864		70
O&R transition bond charges		37		39		—		—
Deferred derivative losses – long-term		34		40		13		20
Deferred derivative losses – long-term		32		40		14		20
O&R transition bond charges		34		39		—		—
Preferred stock redemption		2928		29		2928		29
Workers’ compensation		20		19		20		19
Property tax reconciliation		20		16		—		—
Property tax reconciliation		16		16		—		—
Workers’ compensation		16		19		16		19
Recoverable energy costs – long-term		—		23		—		23
Other		163		193		153		178
Other		166		170		153		155
Regulatory assets – long-term		9,190		9,705		8,497		8,972
Regulatory assets – long-term		9,484		9,705		8,774		8,972
Deferred derivative losses – current		45		69		42		60
Deferred derivative losses – current		31		69		28		60
Recoverable energy costs – current		1		5		—		—
Regulatory assets – current		3246		74		2842		60
Total Regulatory Assets		$9,~~516~~236		$9,779		$8,~~802~~539		$9,032
Regulatory liabilities
Allowance for cost of removal less salvage		$ ~~508~~522		$ 503		$ ~~424~~436		$ 420
Property tax reconciliation		~~237~~290		187		~~237~~290		187
Long-term interest rate reconciliation		77		62		77		62
Property tax refunds		130		7		129		6
Net unbilled revenue deferrals		64104		136		64104		136
Long-term interest rate reconciliation		94		62		94		62
World Trade Center settlement proceeds		62		62		62		62
Carrying charges on T&D net plant – electric and steam		2530		31		1020		13
Expenditure prudence proceeding		1516		14		1516		14
Gas line losses		14		14		14		14
Other		309		200		280		177
Energy efficiency programs		6		5		6		6
Regulatory liabilities – long-term		1,557		1,202		1,431		1,077
Other		226		188		201		163
Refundable energy costs – current		64		82		36		48
Regulatory liabilities – long-term		1,234		1,202		1,110		1,077
Revenue decoupling mechanism		51		72		49		68
Refundable energy costs – current		100		82		70		48
Deferred derivative gains – current		2		—		1		—
Revenue decoupling mechanism		23		72		20		68
Deferred derivative gains – current		9		—		8		—
Electric surcharge offset		—		29		—		29
Regulatory liabilities – current		~~132~~117		183		9886		145
Total Regulatory Liabilities		$1,~~366~~674		$1,385		$1,~~208~~517		$1,222

“Deferred storm costs” represent response and restoration costs, other than capital expenditures, in connection with Superstorm Sandy and other major storms that were deferred by the Utilities. See “Other Regulatory Matters,” above.

~~Note C — Capitalization~~ 22

In February 2013, CECONY issued $700 million aggregate principal amount of 3.95 percent 30-year debentures and redeemed at maturity $500 million of 4.875 percent 10-year debentures. In April 2013, a Con Edison Development subsidiary issued $219 million aggregate principal amount of 4.78 percent senior notes secured by the company’s California solar projects. The notes have a weighted average life of 15 years and final maturity of 2037.

Note C — Capitalization

In February 2013, CECONY issued $700 million aggregate principal amount of 3.95 percent 30-year debentures and redeemed at maturity $500 million of 4.875 percent 10-year debentures. In June 2013, CECONY redeemed at maturity $200 million of 3.85 percent 10-year debentures. In April 2013, a Con Edison Development subsidiary issued $219 million aggregate principal amount of 4.78 percent senior notes secured by the company’s California solar energy projects. The notes have a weighted average life of 15 years and final maturity of 2037.

The carrying amounts and fair values of long-term debt are:

(Millions of Dollars)

~~March~~September 3130, 2013

December 31, 2012

Long-Term Debt (including current portion)

Carrying Amount

FairValue

Carrying Amount

FairValue

Con Edison

$10,~~959~~976

$12,~~963~~213

$10,768

$12,935

CECONY

$10 9,~~040~~841

$1110,~~792~~925

$ 9,845

$11,751

Fair values of long-term debt have been estimated primarily using available market information. For Con Edison, $1211,~~327~~577 million and $636 million of the fair value of long-term debt at ~~March~~September 3130, 2013 are classified as Level 2 and Level 3, respectively. For CECONY, $1110,~~156~~289 million and $636 million of the fair value of long-term debt at ~~March~~September 3130, 2013 are classified as Level 2 and Level 3, respectively (see Note L). The $636 million of long-term debt classified as Level 3 is CECONY’s tax-exempt, auction-rate securities for which the market is highly illiquid and there is a lack of observable inputs.

Note D — Short-Term Borrowing

At ~~March~~September 3130, 2013, Con Edison had $1,~~021~~220 million of commercial paper outstanding of which $~~313~~1,042 million was outstanding under CECONY’s program. The weighted average interest rate was 0.3 percent for both Con Edison and CECONY. At December 31, 2012, Con Edison had $539 million of commercial paper outstanding of which $421 million was outstanding under CECONY’s program. The weighted average interest rate was 0.3 percent for both Con Edison and CECONY. At ~~March~~September 3130, 2013 and December 31, 2012, no loans were outstanding under the Companies’ credit agreement and $~~186~~29 million (including $~~171~~11 million for CECONY) and $131 million (including $121 million for CECONY) of letters of credit were outstanding, respectively, under the credit agreement. In 2013, the termination date under the credit agreement was extended from October 2016 to October 2017 with respect to lenders with aggregate commitments under the credit agreement of approximately $2.1 billion.


					23

Note E — Pension Benefits

Net Periodic Benefit Cost

The components of the Companies’ net periodic benefit costs for the three and nine months ended ~~March~~September 3130, 2013 and 2012 were as follows:

	For the Three Months Ended September 30,
	Con Edison						CECONY
(Millions of Dollars)	2013			2012			2013			2012
Service cost – including administrative expenses		$ 67			$ 59			$ 62			$ 55
Interest cost on projected benefit obligation		134			137			126			128
Expected return on plan assets		(187	)		(176	)		(178	)		(168	)
Recognition of net actuarial loss		208			177			197			168
Recognition of prior service costs		1			2			1			2
NET PERIODIC BENEFIT COST		$ 223			$ 199			$ 208			$ 185
Cost capitalized		(82	)		(64	)		(79	)		(63	)
Amortization of regulatory asset		1			—			1			—
Reconciliation to rate level		11			(37	)		13			(38	)
TOTAL PERIODIC BENEFIT COST		$ 224			$ 199			$ 209			$ 185
Cost charged to operating expenses		$ 152			$ 98			$ 142			$ 84
Cost capitalized		(86	)		(64	)		(78	)		(60	)
Reconciliation to rate level		(31	)		—			(34	)		(1	)
Cost charged to operating expenses		$ 107			$ 135			$ 97			$ 124

Expected Contributions


	For the Nine Months Ended September 30,
	Con Edison						CECONY
*(Millions of Dollars)*	2013			2012			2013			2012
Service cost – including administrative expenses		$ 200			$ 177			$ 186			$ 165
Interest cost on projected benefit obligation		403			410			377			385
Expected return on plan assets		(563	)		(528	)		(534	)		(503	)
Recognition of net actuarial loss		624			531			591			503
Recognition of prior service costs		4			6			3			4
NET PERIODIC BENEFIT COST		$ 668			$ 596			$ 623			$ 554
Amortization of regulatory asset		2			1			2			1
TOTAL PERIODIC BENEFIT COST		$ 670			$ 597			$ 625			$ 555
Cost capitalized		(256	)		(200	)		(241	)		(186	)
Reconciliation to rate level		(55	)		(37	)		(56	)		(36	)
Cost charged to operating expenses		$ 359			$ 360			$ 328			$ 333

~~Based~~Contributions on estimates as of March 31, 2013, the Companies expect to make contributions to the pension plan during 2013 of $867 million (of which $810 million is to be contributed by CECONY). The Companies’ policy is to fund their accounting cost to the extent tax deductible. During the first quarter of 2013, CECONY contributed $235 million to the pension plan. The Companies expect to fund $11 million for the non-qualified supplemental plans in 2013.

22The Companies made contributions to the pension plan during 2013 of $867 million (of which $810 million was contributed by CECONY). The Companies’ policy is to fund their accounting cost to the extent tax deductible. During the first nine months of 2013, CECONY also funded $11 million for the non-qualified supplemental plans.

Note F — Other Postretirement Benefits

Net Periodic Benefit Cost

The components of the Companies’ net periodic postretirement benefit costs for the three and nine months ended ~~March~~September 3130, 2013 and 2012 were as follows:

	For the Three Months Ended September 30,
	Con Edison						CECONY
(Millions of Dollars)	2013			2012			2013			2012
Service cost		$ 6			$ 76			$ 5			$ 5
Interest cost on accumulated other postretirement benefit obligation		1413			18			12			16
Expected return on plan assets		(19	)		(21	)		(17	)		(1819	)
Recognition of net actuarial loss		16			2524			14			22
Recognition of prior service cost		(7	)		(5	)		(6	)		(4	)
NET PERIODIC POSTRETIREMENT BENEFIT COST		$ 109			$ 2422			$ 8			$ 2120
Cost capitalized		(3	)		(8	)		(23	)		(7	)
Reconciliation to rate level		1214			73			1112			43
Cost charged to operating expenses		$ 1920			$ 2317			$ 17			$ 1816

~~Expected Contributions~~ 24

BasedTable on estimates as of March 31, 2013, Con Edison expects to make a contribution of $9 million, nearly all of which is for CECONY, to the other postretirement benefit plans in 2013. Contents


	For the Nine Months Ended September 30,
	Con Edison						CECONY
*(Millions of Dollars)*	2013			2012			2013			2012
Service cost		$ 18			$ 20			$ 14			$ 15
Interest cost on accumulated other postretirement benefit obligation		40			55			34			48
Expected return on plan assets		(58	)		(64	)		(51	)		(56	)
Recognition of net actuarial loss		48			73			43			65
Recognition of prior service cost		(20	)		(16	)		(17	)		(13	)
Recognition of transition obligation		—			1			—			1
NET PERIODIC POSTRETIREMENT BENEFIT COST		$ 28			$ 69			$ 23			$ 60
Cost capitalized		(10	)		(24	)		(9	)		(20	)
Reconciliation to rate level		43			15			37			12
Cost charged to operating expenses		$ 61			$ 60			$ 51			$ 52

Contributions

Con Edison made a contribution of $9 million, nearly all of which is for CECONY, to the other postretirement benefit plans in 2013.

Note G — Environmental Matters

Superfund Sites

Hazardous substances, such as asbestos, polychlorinated biphenyls (PCBs) and coal tar, have been used or generated in the course of operations of the Utilities and their predecessors and are present at sites and in facilities and equipment they currently or previously owned, including sites at which gas was manufactured or stored.

The Federal Comprehensive Environmental Response, Compensation and Liability Act of 1980 and similar state statutes (Superfund) impose joint and several liability, regardless of fault, upon generators of hazardous substances for investigation and remediation costs (which include costs of demolition, removal, disposal, storage, replacement, containment, and monitoring) and natural resource damages. Liability under these laws can be material and may be imposed for contamination from past acts, even though such past acts may have been lawful at the time they occurred. The sites at which the Utilities have been asserted to have liability under these laws, including their manufactured gas plant sites and any neighboring areas to which contamination may have migrated, are referred to herein as “Superfund Sites.”

For Superfund Sites where there are other potentially responsible parties and the Utilities are not managing the ~~site~~ site investigation and remediation, the accrued liability represents an estimate of the amount the Utilities will need to pay to investigate and, where determinable, discharge their related obligations. For Superfund Sites (including the manufactured gas plant sites) for which one of the Utilities is managing the investigation and remediation, the accrued liability represents an estimate of the company’s share of undiscounted cost to investigate the sites and, for sites that have been investigated in whole or in part, the cost to remediate the sites, if remediation is necessary and if a reasonable estimate of such cost can be made. Remediation costs are estimated in light of the information available, applicable remediation standards, and experience with similar sites.

2325

~~The~~ determinable, ~~accrued~~discharge ~~liabilities~~their related obligations. For Superfund Sites (including the manufactured gas plant sites) for which one of the Utilities is managing the investigation and ~~regulatory~~remediation, the ~~assets~~accrued ~~related~~liability represents an estimate of the company’s share of undiscounted cost to ~~Superfund~~investigate ~~Sites~~the atsites ~~March 31~~and, ~~2013~~for sites that have been investigated in whole or in part, the cost to remediate the sites, if remediation is necessary and ~~December 31~~if a reasonable estimate of such cost can be made. Remediation costs are estimated in light of the information available, ~~2012~~applicable ~~were~~remediation asstandards, ~~follows:~~and experience with similar sites.

	Con Edison				CECONY
(Millions of Dollars)	2013		2012		2013		2012
Accrued Liabilities:
Manufactured gas plant sites		$457		$462		$348		$351
Other Superfund Sites		79		83		77		82
Total		$536		$545		$425		$433
Regulatory assets		$721		$730		$607		$615

The accrued liabilities and regulatory assets related to Superfund Sites at September 30, 2013 and December 31, 2012 were as follows:


	Con Edison				CECONY
*(Millions of Dollars)*	2013		2012		2013		2012
Accrued Liabilities:
Manufactured gas plant sites		$439		$462		$332		$351
Other Superfund Sites		73		83		71		82
Total		$512		$545		$403		$433
Regulatory assets		$704		$730		$591		$615

Most of the accrued Superfund Site liability relates to sites that have been investigated, in whole or in part. However, for some of the sites, the extent and associated cost of the required remediation has not yet been determined. As investigations progress and information pertaining to the required remediation becomes available, the Utilities expect that additional liability may be accrued, the amount of which is not presently determinable but may be material. Under their current rate agreements, the Utilities are permitted to recover or defer as regulatory assets (for subsequent recovery through rates) certain site investigation and remediation costs.

Environmental remediation costs incurred and insurance recoveries received related to Superfund Sites for the three and nine months ended ~~March~~September 3130, 2013 and 2012 were as follows:

	For the Three Months Ended September 30,
	Con Edison				CECONY
(Millions of Dollars)	2013		2012		2013		2012
Remediation costs incurred		$10		$73		$710		$71
Insurance recoveries received		—		—		—		—

In 2010, CECONY estimated that for its manufactured gas plant sites, its aggregate undiscounted potential liability for the investigation and remediation of coal tar and/or other manufactured gas plant-related environmental contaminants could range up to $1.9 billion. In 2010, O&R estimated that for its manufactured gas plant sites, each of which has been investigated, the aggregate undiscounted potential liability for the remediation of such contaminants could range up to $200 million. These estimates were based on the assumption that there is contamination at all sites, including those that have not yet been fully investigated and additional assumptions about the extent of the contamination and the type and extent of the remediation that may be required. Actual experience may be materially different.


	For the Nine Months Ended September 30,
	Con Edison				CECONY
*(Millions of Dollars)*	2013		2012		2013		2012
Remediation costs incurred		$35		$18		$30		$15
Insurance recoveries received		—		—		—		—

~~Asbestos~~In ~~Proceedings~~2010, CECONY estimated that for its manufactured gas plant sites, its aggregate undiscounted potential liability for the investigation and remediation of coal tar and/or other manufactured gas plant-related

Suits have been brought in New York State and federal courts against the Utilities and many other defendants, wherein a large number of plaintiffs sought large amounts of compensatory and punitive damages for deaths and injuries allegedly caused by exposure to asbestos at various premises of the Utilities. The suits that have been resolved, which are many, have been resolved without any payment by the Utilities, or for amounts that were not, in the aggregate, material to them. The amounts specified in all the remaining thousands of suits total billions of dollars; however, the Utilities believe that these amounts are greatly exaggerated, based on the disposition of previous claims. In 2010, CECONY estimated that its aggregate undiscounted potential liability for these suits and additional suits that may be brought over the next 15 years is $10 million. The estimate was based upon a combination of modeling, historical data analysis and risk factor assessment. Actual experience may be materially different. In addition, certain current and former employees have claimed or are claiming workers’ compensation benefits based on alleged disability from exposure to asbestos. Under its current rate agreements, CECONY is permitted to defer as regulatory assets (for subsequent recovery through rates) costs incurred for its asbestos lawsuits and workers’ compensation claims. The accrued liability for asbestos suits and workers’ compensation proceedings (including those related to asbestos exposure) and the amounts deferred as regulatory assets for the Companies at March 31, 2013 and December 31, 2012 were as follows: 26

	Con Edison				CECONY
(Millions of Dollars)	2013		2012		2013		2012
Accrued liability – asbestos suits		$10		$10		$10		$10
Regulatory assets – asbestos suits		$10		$10		$10		$10
Accrued liability – workers’ compensation		$95		$94		$90		$89
Regulatory assets – workers’ compensation		$20		$19		$20		$19

environmental contaminants could range up to $1.9 billion. In 2010, O&R estimated that for its manufactured gas plant sites, each of which has been investigated, the aggregate undiscounted potential liability for the remediation of such contaminants could range up to $200 million. These estimates were based on the assumption that there is contamination at all sites, including those that have not yet been fully investigated and additional assumptions about the extent of the contamination and the type and extent of the remediation that may be required. Actual experience may be materially different.

Asbestos Proceedings

Suits have been brought in New York State and federal courts against the Utilities and many other defendants, wherein a large number of plaintiffs sought large amounts of compensatory and punitive damages for deaths and injuries allegedly caused by exposure to asbestos at various premises of the Utilities. The suits that have been resolved, which are many, have been resolved without any payment by the Utilities, or for amounts that were not, in the aggregate, material to them. The amounts specified in all the remaining thousands of suits total billions of dollars; however, the Utilities believe that these amounts are greatly exaggerated, based on the disposition of previous claims. In 2010, CECONY estimated that its aggregate undiscounted potential liability for these suits and additional suits that may be brought over the next 15 years is $10 million. The estimate was based upon a combination of modeling, historical data analysis and risk factor assessment. Actual experience may be materially different. In addition, certain current and former employees have claimed or are claiming workers’ compensation benefits based on alleged disability from exposure to asbestos. Under its current rate agreements, CECONY is permitted to defer as regulatory assets (for subsequent recovery through rates) costs incurred for its asbestos lawsuits and workers’ compensation claims. The accrued liability for asbestos suits and workers’ compensation proceedings (including those related to asbestos exposure) and the amounts deferred as regulatory assets for the Companies at September 30, 2013 and December 31, 2012 were as follows:


	Con Edison				CECONY
*(Millions of Dollars)*	2013		2012		2013		2012
Accrued liability – asbestos suits		$10		$10		$10		$10
Regulatory assets – asbestos suits		$10		$10		$10		$10
Accrued liability – workers’ compensation		$91		$94		$86		$89
Regulatory assets – workers’ compensation		$16		$19		$16		$19

Note H — Other Material Contingencies

Manhattan Steam Main Rupture

In July 2007, a CECONY steam main located in midtown Manhattan ruptured. It has been reported that one person died and others were injured as a result of the incident. Several buildings in the area were damaged. Debris from the incident included dirt and mud containing asbestos. The response to the incident required the closing of several buildings and streets for various periods. Approximately 9390 suits are pending against the company seeking generally unspecified compensatory and, in some cases, punitive damages, for personal injury, property damage and business interruption. The company has not accrued a liability for the suits. The company has notified its insurers of the incident and believes that the policies in force at the time of the incident will cover most of the company’s costs, which the company is unable to estimate, but which could be substantial, to satisfy its liability to others in connection with the incident.


					27

interruption. The company has notified its insurers of the incident and believes that the policies in force at the time of the incident will cover the company’s costs to satisfy its liability to others in connection with the suits. At September 30, 2013, the company has accrued its estimated liability for the suits of $50 million and an insurance receivable in the same amount.

Lease In/Lease Out Transactions

In each of 1997 and 1999, Con Edison Development entered into transactions in which it leased property and then immediately subleased the properties back to the lessor (termed “Lease In/Lease Out,” or LILO transactions). The transactions respectively ~~involve~~involved electric generating and gas distribution facilities in the Netherlands, with a total investment of $259 million. The transactions were financed with $93 million of equity and $166 million of non-recourse, long-term debt secured by the underlying assets. In accordance with the accounting rules for leases, Con Edison isaccounted ~~accounting~~ for the two LILO transactions as leveraged leases. Accordingly, the company’s investment in these leases, net of non-recourse debt, iswas carried as a single amount in Con Edison’s consolidated balance sheet and income iswas recognized pursuant to a method that ~~incorporates~~incorporated a level rate of return for those years when net investment in the lease iswas positive.

On audit of Con Edison’s tax return for 1997, the Internal Revenue Service (IRS) disallowed tax losses in connection with the 1997 LILO transaction and assessed the company a $0.3 million income tax deficiency. On audits of Con Edison’s 1998 through 2011 tax returns, the IRS disallowed $574 million of tax losses taken with respect to both LILO transactions. In December 2005, ~~Con~~ Con Edison paid the $0.3 million deficiency asserted by the IRS for the tax year 1997 with respect to the 1997 LILO transaction. In April 2006, the company paid interest of $0.2 million associated with the deficiency and commenced an action in ~~the~~ the United States Court of Federal Claims, entitled Consolidated Edison Company of New York, Inc. v. United States, to obtain a refund of tax and interest. A trial was completed in November 2007. In October 2009, the court issued a decision in favor of of the company concluding that the 1997 LILO transaction was, in substance, a true lease that possessed economic substance, the loans relating to the lease constituted bona fide indebtedness, and the deductions for the 1997 LILO transactions claimed by by the company in its 1997 federal income tax return are allowable. In January 2013, the United States Court of Appeals for the Federal Circuit reversed the October 2009 trial court decision and disallowed the tax losses claimed by the company ~~relating~~ relating to the 1997 LILO transaction. In March 2013, the Court of Appeals denied the company’s request to grant rehearing en banc of the January 2013 decision. ToIn ~~appeal~~June ~~the January~~ 2013 ~~decision~~, ~~the~~Con ~~company~~Edison ~~would~~entered ~~need~~into ~~to file~~ a ~~petition~~ ~~for~~closing aagreement ~~writ of certiorari~~ with the ~~Supreme~~IRS ~~Court~~regarding of the 1997 ~~United~~and ~~States~~1999 byLILO ~~June 25, 2013~~transactions.

As a result of the January 2013 Court of Appeals decision, in the three months ended March 31, 2013, Con Edison recorded an after-tax charge of $150 million to reflect, as required by the accounting rules for leveraged lease transactions, the recalculation of the ~~accounting~~ effect of the LILO transactions based on the revised after-tax cash flows projected from the inception of the leveraged leases as well as the interest on the potential tax liability resulting from the disallowance of federal and state income tax losses with respect to the LILO transactions (see “Uncertain Tax Positions” in Note I). The effect on Con Edison’s

2528

~~consolidated~~accounting effect of the LILO transactions based on the revised after-tax cash flows projected from the inception of the leveraged leases as well as the interest on the potential tax liability resulting from the disallowance of federal and state income ~~statement~~tax ~~for~~losses with respect to the ~~three~~LILO ~~months~~transactions ~~ended~~(see ~~March 31~~“Uncertain Tax Positions” in Note I). In June 2013, the 1999 LILO transaction was terminated, as a result of which the company realized a $29 million gain (after-tax) and received net cash proceeds of $108 million. In August 2013, the 1997 LILO transaction was terminated, resulting in a $26 million gain (after-tax) and net cash proceeds of $92 million. The effect on Con Edison’s consolidated income statement is as follows:

(Millions of Dollars)	For the ThreeMonths EndedSeptember 30, 2013			For the Nine Months EndedSeptember 30, 2013
Reduction to non-utility operating revenues		$121
Increase/(decrease) to non-utility operating revenues	$	44		$	(27	)
Increase to other interest expense		131
(Increase)/decrease to other interest expense		—			(131	)
Income tax expense		(102	)
Income tax benefit/(expense)		(18	)		63
Total reduction in net income		$150
Total increase/(decrease) in net income	$	26		$	(95	)

The transactions did not impact earnings in 2012.

At ~~March 31~~September 30, 2013, the company’s ~~net~~had ~~investment~~terminated inits ~~these~~ LILO transactions ~~was~~and ~~$97~~no ~~million,~~longer ~~comprised~~had ofan ainvestment ~~$104~~recorded ~~million~~for ~~gross~~these ~~investment~~leases ~~less~~in $7its ~~million~~consolidated ofbalance ~~deferred tax liabilities~~sheet. At December 31, 2012, the company’s net investment in the LILO transactions was $(76) million, comprised of a $228 million gross investment less $304 million of deferred tax liabilities.

In January 2013, to defray interest charges, the company deposited $447 million with federal and state tax agencies relating primarily to the potential tax liability from these LILO transactions in past tax years and interest thereon. In ~~April~~June 2013, at the company’s ~~requested~~request, the IRS toreturned ~~return~~ $95 million of the deposit. ~~The~~In August 2013, an additional $30 million of the deposit was returned from the IRS at the company’s ~~estimates~~request. ~~that~~In ifthe itthird quarter ~~were~~of to2013, ~~negotiate~~the IRS completed its audits for the ~~termination~~tax years 1998 through 2011 and the company expects to apply a portion of the ~~transactions,~~remaining itdeposited ~~could~~amounts ~~receive~~against ~~cash~~its ~~proceeds~~federal tax liability during the fourth quarter of 2013. The company is ~~approximately~~currently ~~$205~~amending ~~million~~its ~~(pre-~~state tax) returns for all years covered by the LILOs, ~~which~~and ~~amount~~expects ~~could~~that the balance of the deposit will be ~~higher~~applied orto ~~lower~~satisfy ~~depending~~its onrelated ~~the~~state ~~negotiations~~tax liability.

Other Contingencies

See “Other Regulatory Matters” in Note B and “Uncertain Tax Positions” in Note I.

Guarantees

Con Edison and its subsidiaries enter into various agreements providing financial or performance assurance primarily to third parties on behalf of their subsidiaries. Maximum amounts guaranteed by Con Edison totaled $~~878~~1,272 million and $859 million at ~~March~~September 3130, 2013 and December 31, 2012, respectively.

~~A summary, by type and term, of Con Edison’s total guarantees at March 31, 2013 is as follows:~~ 29

Guarantee Type	0 – 3 years		4 – 10 years		> 10 years		Total
	(Millions of Dollars)
Energy transactions		$763		$31		$32		$826
Intra-company guarantees		16		—		—		16
Other guarantees		36		—		—		36
Total		$815		$31		$32		$878

A summary, by type and term, of Con Edison’s total guarantees at September 30, 2013 is as follows:


Guarantee Type	0 – 3 years		4 – 10 years		> 10 years		Total
	*(Millions of Dollars)*
Energy transactions	$	705	$	52	$	25	$	782
Solar energy projects		443		—		4		447
Intra-company guarantees		16		—		—		16
Other guarantees		27		—		—		27
Total	$	1,191	$	52	$	29	$	1,272

Energy Transactions — Con Edison guarantees payments on behalf of its competitive energy businesses in order to facilitate physical and financial transactions in gas, pipeline capacity, transportation, oil, electricity, renewable energy credits and energy services. To the extent that liabilities exist under the contracts subject to these guarantees, such liabilities are included in Con Edison’s consolidated balance sheet.

Solar Energy Projects — Con Edison and Con Edison Development guarantee payments associated with the investment in solar energy generation facilities on behalf of their wholly-owned subsidiaries. In addition, Con Edison Development has entered into a guarantee ($80 million maximum) on behalf of an entity in which it has a 50 percent interest (see Note M) in connection with the construction of solar energy generation facilities. Con Edison Development also provided $4 million in guarantees to Travelers Insurance Company for indemnity agreements for surety bonds in connection with the construction and operation of solar energy facilities performed by its subsidiaries.

Intra-company Guarantees — Con Edison guarantees electricity sales made by Con Edison Energy and Con Edison Solutions to O&R and CECONY.

Other Guarantees — Con Edison and Con Edison Development also guarantee the following:

•

$2 million relates to guarantees issued by Con Edison to CECONY covering a former Con Edison subsidiary’s lease payment to use CECONY’s conduit system in accordance with a tariff approved by the NYSPSC and a guarantee issued by Con Edison to a landlord to guarantee the former subsidiary’s obligations under a building lease. The former subsidiary is obligated to reimburse Con Edison for any payments made under these guarantees. This obligation is fully secured by letters of credit;

• $25 million for guarantees provided by Con Edison to Travelers Insurance Company for indemnity agreements for surety bonds in connection with energy service projects performed by Con Edison Solutions; and

• $9Con ~~million~~Edison, ~~for~~on ~~guarantees~~behalf ~~provided~~of by Con Edison ~~Development~~Solutions, toas ~~Travelers~~a ~~Insurance~~retail ~~Company~~electric ~~for~~provider, ~~indemnity~~issued ~~agreements~~a ~~for~~guarantee ~~surety~~to ~~bonds~~the inPublic ~~connection~~Utility Commission of Texas with no specified limitation on the ~~construction~~amount ~~and~~guaranteed, ~~operation~~covering the payment of ~~solar~~all ~~facilities~~obligations ~~performed~~of bya ~~its~~retail ~~subsidiaries;~~electric ~~and~~provider. Con Edison’s estimate of the maximum potential obligation is $5 million as of September 30, 2013.

• Con Edison, on behalf of Con Edison Solutions, as a retail electric provider, issued a guarantee to the Public Utility Commission of Texas with no specified limitation on the amount guaranteed, covering the payment of all obligations of a retail electric provider. Con Edison’s estimate of the maximum potential obligation is $5 million as of March 31, 2013.30

Note I — Income Tax

InCon Edison’s income tax expense decreased to $250 million for the ~~first~~three ~~quarter~~months ofended September 30, 2013, from $261 million for the ~~IRS~~three ~~accepted~~months onended ~~audit~~September 30, 2012. The effective tax rates for the three months ended September 30, 2013 and 2012 were 35 percent and 37 percent, respectively. The decrease in the effective tax rate in 2013 is due primarily to reductions in liabilities for uncertain tax positions related to the completion of the IRS audits in the third quarter of 2013 (see “Uncertain Tax Positions,” below) and favorable tax adjustments recorded in conjunction with filing Con Edison’s ~~claim~~2012 ~~for~~consolidated ~~manufacturing~~federal tax return in September. The favorable tax adjustments are primarily due to higher flow-through federal income tax benefits related to plant and higher renewable energy tax credits.

26Con Edison’s income tax expense decreased to $373 million for the nine months ended September 30, 2013, from $501 million for the nine months ended September 30, 2012. The effective tax rates for the nine months ended September 30, 2013 and 2012 were 31 percent and 35 percent, respectively. The decrease in the effective tax rate in 2013 is due primarily to the favorable tax adjustments discussed above and the impact of comparable favorable reconciling items on reduced income before income tax expense in the 2013 period compared with the 2012 period. Additionally, in the first quarter of 2013, the IRS accepted on audit the company’s claim for manufacturing tax deductions. This deduction, plus higher state income taxes in 2012, also resulted in a reduction in the 2013 effective tax rate.

CECONY’s income tax expense decreased to $222 million for the three months ended September 30, 2013, from $227 million for the three months ended September 30, 2012. The effective tax rates for the three months ended September 30, 2013 and 2012 were 36 percent and 37 percent, respectively. CECONY’s income tax expense decreased to $431 million for the nine months ended September 30, 2013, from $436 million for the nine months ended September 30, 2012. The effective tax rates for the nine months ended September 30, 2013 and 2012 were 34 percent and 35 percent, respectively. The decreases in the effective tax rates for the three and nine months ended September 30, 2013, are due primarily to higher flow-through federal income tax benefits ($7 million) reflected in CECONY’s federal tax return filed in September.

In September 2013, the IRS issued final regulations that provide guidance on the appropriate tax treatment of costs incurred to acquire, produce or improve tangible property. The new regulations, effective beginning in 2014, permit an acceleration of tax deductions for certain materials and supplies recorded as inventory for financial accounting purposes. The application of these regulations is not expected to have a material impact on the Companies’ financial position, results of operations or liquidity.


					31

deductions. Accordingly, this quarter, Con Edison’s effective tax rate was favorably impacted by $15 million. In addition, as a result of interest expense on the LILO disallowances and reduction to non-utility operating revenues (see “Lease In/Lease Out Transactions” in Note H), income before income tax expense for the first quarter of 2013 is significantly lower than the first quarter of 2012. Other recurring tax rate reconciling items in the first quarter of 2013 and 2012 are comparable; however, as a result of lower income before income tax expense in 2013, Con Edison’s effective tax rate was significantly lower than 2012.

Uncertain Tax Positions

During the first quarter of 2013, the IRS accepted Con Edison’s deductions for repair costs to utility plant (the “repair allowance deductions”). As a result of this settlement, Con Edison and CECONY reduced their estimated liabilities for prior year uncertain tax positions by $72 million and $66 million, respectively, with a corresponding increase to accumulated deferred income tax liabilities. In addition, as a result of the January 2013 Court of Appeals decision (see “Lease In/Lease Out Transactions” in Note H), Con Edison increased its estimated prior year liabilities for federal and state uncertain tax positions by $238 million in the first quarter of 2013, with a corresponding reduction to accumulated deferred income tax liabilities. ~~These~~In ~~changes~~June to2013, ~~the~~Con ~~Companies’~~Edison ~~estimated~~entered ~~liabilities~~into ~~for~~a ~~uncertain~~closing ~~tax~~agreement ~~positions~~with ~~had~~the noIRS ~~impact~~regarding onthe ~~income~~1997 ~~tax~~and ~~expense~~1999 inLILO ~~the~~transactions, ~~first~~as ~~quarter~~a result of ~~2013.~~which ~~There~~the ~~were~~company nodecreased ~~material~~its ~~changes~~estimated prior toyear ~~the~~liabilities ~~Companies’~~for ~~estimated~~federal ~~liabilities~~and ~~for~~ state uncertain tax positions ~~during~~by $238 million in the ~~first~~second quarter of ~~2012~~2013, with a corresponding increase to its current income tax liability. AtThese ~~March 31,~~changes ~~2013,~~to the Companies’ estimated liabilities for uncertain tax positions ~~for~~had ~~Con~~no ~~Edison~~impact ~~and~~on ~~CECONY~~income ~~were~~tax ~~$251~~expense ~~million~~for ~~and~~the $7nine ~~million~~months ended September 30, ~~respectively~~2013.

~~The~~In ~~Companies~~the ~~recognize~~third ~~interest~~quarter onof ~~liabilities~~2013, the ~~for~~IRS ~~uncertain~~completed ~~tax~~its ~~positions~~audits infor ~~interest~~the ~~expense~~tax ~~and~~years ~~would~~1998 ~~recognize~~through ~~penalties,~~2011 ifand ~~any, in operating expenses in~~ the Companies’ ~~consolidated~~recognized ~~income~~approximately ~~statements.~~$13 Inmillion ~~the first quarter~~ of ~~2013,~~income ~~Con~~tax ~~Edison~~benefits ~~recognized~~ ($~~126~~7 million offor ~~interest~~CECONY), ~~expense~~including ($~~131~~6 million ~~related~~that tofavorably ~~the~~affected ~~LILO~~Con ~~transactions,~~Edison’s ~~less~~effective atax ~~reduction~~rate for ofthe $5three ~~million~~and innine ~~accrued~~months ~~interest expense~~ended ~~primarily~~September 30, ~~associated~~2013. ~~with~~There ~~repair~~were ~~allowance~~no ~~deductions).~~material ~~Con~~changes ~~Edison~~to the Companies’s ~~accrued~~estimated ~~interest~~liabilities onfor uncertain tax positions atduring ~~March~~the nine months ended September 3130, ~~2013~~2012. ~~was~~At ~~$137~~September 30, ~~million~~2013, the ~~compared~~estimated ~~with~~liabilities ~~$11~~for ~~million~~uncertain attax ~~December 31,~~positions ~~2012.~~for ~~Accrued~~Con ~~interest~~Edison ~~on CECONY’s~~were ~~consolidated~~$8 ~~balance~~million ~~sheet~~and ~~was~~an immaterial amount for CECONY.

The Companies recognize ~~reasonably~~interest ~~expect~~on toliabilities ~~resolve~~for ~~their~~ uncertain tax positions ~~with~~in interest expense and would recognize penalties, if any, in operating expenses in the ~~IRS within~~Companies’ consolidated income statements. In the ~~next~~first ~~twelve~~quarter ~~months~~of 2013, ~~and~~Con ~~accordingly~~Edison ~~have~~recognized $126 ~~reflected~~million ~~their~~of ~~estimated~~interest ~~liability~~expense ~~for~~($131 ~~uncertain~~million ~~tax~~related ~~positions~~to asthe ~~current~~LILO ~~liabilities~~transactions, onless ~~their~~a ~~respective~~reduction ~~consolidated~~of ~~balance~~$5 ~~sheets~~million in accrued interest expense primarily associated with repair allowance deductions). AtIn ~~March 31,~~the third quarter of 2013, the ~~total~~Companies’ reversed ~~amount~~$5 ofmillion ~~unrecognized~~($3 ~~tax benefits~~million ~~that,~~for ifCECONY) ~~recognized,~~in ~~would~~accrued ~~affect~~interest expense associated with reducing the Companies’ ~~effective~~estimated liabilities for uncertain tax ~~rate~~positions. isThe $6Companies’ ~~million~~accrued ~~for~~interest ~~Con~~on ~~Edison~~uncertain tax positions at September 30, 2013 and noDecember 31, ~~impact~~2012 towas ~~CECONY~~immaterial.

The Companies reasonably expect to resolve an immaterial amount of their uncertain tax positions with the IRS within the next twelve months, and accordingly, Con Edison has reflected its estimated liability for uncertain tax positions as noncurrent liabilities on its consolidated balance sheet. At September 30, 2013, the total amount of unrecognized tax benefits that, if recognized, would affect the Companies’ effective tax rate is $5 million for Con Edison and an immaterial amount for CECONY.


32

Note J — Financial Information by Business Segment

The financial data for the business segments are as follows:

	For the Three Months Ended March 31,
	For the Three Months Ended September 30,
	Operating revenues						Inter-segmentrevenues						Depreciation andamortization				Operating income
(Millions of Dollars)	2013			2012			2013			2012			2013		2012		2013			2012
CECONY
Electric	$	$12,~~814~~622		$	$12,~~735~~611		$	$ 4		$	~~$ 3~~4		$	~~$185~~188	$	~~$173~~179	$	~~$189~~811		$	~~$224~~812
Gas		~~660~~199			~~563~~189			1			1			3233		2931		~~242~~(24	)		~~221~~(21	)
Steam		~~332~~72			~~263~~68			1922			1920			16		1615		~~129~~(35	)		99(37	)
Consolidation adjustments		—			—			(2427	)		(2325	)		—		—		—			—
Total CECONY	$	$2,~~806~~893		$	$2,~~561~~868		$	$—		$	$—		$	~~$233~~237	$	~~$218~~225	$	~~$560~~752		$	~~$544~~754
O&R
Electric	$	~~$ 145~~200		$	~~$ 128~~199		$	$—		$	$—		$	$ 10	$	~~$ 9~~10	$	~~$ 20~~46		$	~~$ 8~~50
Gas		8226			8227			—			—			4		43		27(7	)		30(6	)
Total O&R	$	~~$ 227~~226		$	~~$ 210~~226		$	$—		$	$—		$	$ 14	$	$ 13	$	~~$ 47~~39		$	~~$ 38~~44
Competitive energy businesses	$	~~$ 152~~365		$	~~$ 310~~344		$	~~$ 2~~—		$	$ 2		$	~~$ 4~~6	$	$ 2	$	~~$ (82~~63	)	$	~~$ (20~~53	)
Other*		(1—	)		(3—	)		(2—	)		(2	)		—1		—		1			(1—	)
Total Con Edison	$	$3,~~184~~484		$	$3,~~078~~438		$	$—		$	$—		$	~~$251~~258	$	~~$233~~240	$	~~$526~~855		$	~~$561~~851

*	Parent company expenses, primarily interest, and consolidation adjustments. Other does not represent a business segment.


	For the Nine Months Ended September 30,
	Operating revenues						Inter-segment revenues						Depreciation and amortization				Operating income
*(Millions of Dollars)*	2013			2012			2013			2012			2013		2012		2013		2012
CECONY
Electric	$	6,309		$	6,307		$	12		$	11		$	559	$	527	$	1,307	$	1,383
Gas		1,190			1,017			4			4			97		89		272		255
Steam		522			414			60			58			49		48		80		40
Consolidation adjustments		—			—			(76	)		(73	)		—		—		—		—
Total CECONY	$	8,021		$	7,738		$	—		$	—		$	705	$	664	$	1,659	$	1,678
O&R
Electric	$	492		$	457		$	—		$	—		$	31	$	28	$	81	$	74
Gas		143			144			—			—			11		11		20		26
Total O&R	$	635		$	601		$	—		$	—		$	42	$	39	$	101	$	100
Competitive energy businesses	$	834		$	954		$	4		$	6		$	16	$	6	$	7	$	111
Other*		(3	)		(6	)		(4	)		(6	)		1		—		—		(3	)
Total Con Edison	$	9,487		$	9,287		$	—		$	—		$	764	$	709	$	1,767	$	1,886

~~Table~~* ofParent ~~Contents~~company expenses, primarily interest, and consolidation adjustments. Other does not represent a business segment.

Note K —– Derivative Instruments and Hedging Activities

Under the accounting rules for derivatives and hedging, derivatives are recognized on the balance sheet at fair value, unless an exception is available under the accounting rules. Certain qualifying derivative contracts have been designated as normal purchases or normal sales contracts. These contracts are not reported at fair value under the accounting rules.

Energy Price Hedging

Con Edison’s subsidiaries hedge market price fluctuations associated with physical purchases and sales of electricity, natural gas, and steam by using derivative instruments including futures, forwards, basis swaps, options, transmission congestion contracts and financial transmission rights contracts.

Effective January 1, 2013, the Companies adopted Accounting Standards Updates (ASUs) No. 2011-11, “Balance Sheet (Topic 210): Disclosures about Offsetting Assets and Liabilities” and No. 2013-01, “Balance Sheet (Topic 210): Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities”. The amendments require the Companies to disclose certain quantitative information concerning financial and derivative instruments that are offset in the balance sheet and a description of the rights of setoff, including the nature of such rights, associated with recognized assets and liabilities that are subject to an enforceable master netting arrangement or similar agreement.

The Companies’ enter into master agreements for their commodity derivatives. These agreements typically provide setoff in the event of contract termination. In such case, generally the non-defaulting or non-affected party’s payable will be set-off by the other party’s payable. The non-defaulting party will customarily notify the defaulting party within a specific time period and come to an agreement on the early termination amount. 33

The fair values of the Companies commodity derivatives including the offsetting of assets and liabilities at March 31, 2013 were:

(Millions of Dollars)
Commodity Derivatives	Gross Amounts ofRecognizedAssets/(Liabilities)			GrossAmountsOffset in theStatement ofFinancialPosition			Net Amounts ofAssets/(Liabilities)Presented inthe Statementof FinancialPosition			Gross Amounts NotOffset in the Statementof Financial Position				NetAmount
										Financialinstruments		Cashcollateralreceived
Con Edison
Derivative assets		$ 121			$(64	)		$ 57	(a)		$—		$—		$57	(a)
Derivative liabilities		(114	)		78			(36	)		—		—		(36	)
Net derivative assets/(liabilities)		$ 7			$ 14			$ 21	(a)		$—		$—		$21	(a)
CECONY
Derivative assets		$ 40			$(19	)		$ 21	(a)		$—		$—		$21	(a)
Derivative liabilities		(51	)		34			(17	)		—		—		(17	)
Net derivative assets/(liabilities)		$ (11	)		$ 15			$ 4	(a)		$—		$—		$ 4	(a)

(a) On March 31, 2013, Con Edison and CECONY had margin deposits of $33 million and $14 million, respectively, classified as derivative assets in the balance sheet, but not included in the table. As required by an exchange, a margin is collateral, typically cash, that the holder of a derivative instrument has to deposit in order to transact on an exchange and to cover its potential losses with its broker or the exchange.

~~The~~ amendments ~~fair~~require ~~values~~the ofCompanies to disclose certain quantitative information concerning financial and derivative instruments that are offset in the ~~Companies~~balance ~~commodity~~sheet ~~derivatives~~and a description of the rights of setoff, including the ~~offsetting~~nature of such rights, associated with recognized assets and liabilities ~~at December 31,~~that ~~2012~~are ~~were:~~subject to an enforceable master netting arrangement or similar agreement.

(Millions of Dollars)
Commodity Derivatives	GrossAmounts ofRecognizedAssets/(Liabilities)			GrossAmountsOffset in theStatement ofFinancialPosition			Net Amountsof Assets/(Liabilities)Presented inthe Statementof FinancialPosition			Gross Amounts NotOffset in the Statementof Financial Position				NetAmount
										Financialinstruments		Cashcollateralreceived
Con Edison
Derivative assets		$ 86			$ (57	)		$ 29	(a)		$ —		$ —		$ 29	(a)
Derivative liabilities		(176	)		104			(72	)		—		—		(72	)
Net derivative assets/(liabilities)		$ (90	)		$ 47			$ (43	)(a)		$ —		$ —		$ (43	)(a)
CECONY
Derivative assets		$ 27			$ (15	)		$ 12	(a)		$ —		$ —		$ 12	(a)
Derivative liabilities		(83	)		44			(39	)		—		—		(39	)
Net derivative assets/(liabilities)		$ (56	)		$ 29			$ (27	)(a)		$ —		$ —		$ (27	)(a)

The Companies enter into master agreements for their commodity derivatives. These agreements typically provide setoff in the event of contract termination. In such case, generally the non-defaulting or non-affected party’s payable will be set-off by the other party’s payable. The non-defaulting party will customarily notify the defaulting party within a specific time period and come to an agreement on the early termination amount.

~~(a)~~The Onfair ~~December~~values ~~31, 2012, Con Edison and CECONY had margin deposits~~ of ~~$37 million and $18 million, respectively, classified as derivative assets in~~ the ~~balance~~Companies’ ~~sheet,~~commodity ~~but~~derivatives ~~not included in~~ including the ~~table.~~offsetting ~~As required by an exchange, a margin is collateral, typically cash, that the holder~~ of aassets ~~derivative instrument has to deposit in order to transact on an exchange~~ and toliabilities ~~cover~~at ~~its~~September 30, ~~potential~~2013 ~~losses~~were: ~~with its broker or the exchange.~~


*(Millions of Dollars)*
Commodity Derivatives	Gross Amounts of Recognized Assets/(Liabilities)			Gross Amounts Offset in the Statement of Financial Position			Net Amounts of Assets/(Liabilities) Presented in the Statement of Financial Position			Gross Amounts Not Offset in the Statement of Financial Position				Net Amount
										Financial instruments		Cash collateral received
Con Edison
Derivative assets	$	80		$	(52	)	$	28	(a)	$	—	$	—	$	28	(a)
Derivative liabilities		(124	)		74			(50	)		—		—		(50	)
Net derivative assets/(liabilities)	$	(44	)	$	22		$	(22	)(a)	$	—	$	—	$	(22	)(a)
CECONY
Derivative assets	$	27		$	(18	)	$	9	(a)	$	—	$	—	$	9	(a)
Derivative liabilities		(58	)		33			(25	)		—		—		(25	)
Net derivative assets/(liabilities)	$	(31	)	$	15		$	(16	)(a)	$	—	$	—	$	(16	)(a)

(a)

At September 30, 2013, Con Edison and CECONY had margin deposits of $34 million and $14 million, respectively, classified as derivative assets in the balance sheet, but not included in the table. As required by an exchange, a margin is collateral, typically cash, that the holder of a derivative instrument has to deposit in order to transact on an exchange and to cover its potential losses with its broker or the exchange.


34

The fair values of the Companies’ commodity derivatives including the offsetting of assets and liabilities at December 31, 2012 were:


*(Millions of Dollars)*
Commodity Derivatives	Gross Amounts of Recognized Assets/ (Liabilities)			Gross Amounts Offset in the Statement of Financial Position			Net Amounts of Assets/ (Liabilities) Presented in the Statement of Financial Position			Gross Amounts Not Offset in the Statement of Financial Position				Net Amount
										Financial instruments		Cash collateral received
Con Edison
Derivative assets	$	86		$	(57	)	$	29	(a)	$	—	$	—	$	29	(a)
Derivative liabilities		(176	)		104			(72	)		—		—		(72	)
Net derivative assets/(liabilities)	$	(90	)	$	47		$	(43	)(a)	$	—	$	—	$	(43	)(a)
CECONY
Derivative assets	$	27		$	(15	)	$	12	(a)	$	—	$	—	$	12	(a)
Derivative liabilities		(83	)		44			(39	)		—		—		(39	)
Net derivative assets/(liabilities)	$	(56	)	$	29		$	(27	)(a)	$	—	$	—	$	(27	)(a)

(a)

At December 31, 2012, Con Edison and CECONY had margin deposits of $37 million and $18 million, respectively, classified as derivative assets in the balance sheet, but not included in the table. As required by an exchange, a margin is collateral, typically cash, that the holder of a derivative instrument has to deposit in order to transact on an exchange and to cover its potential losses with its broker or the exchange.

Credit Exposure

The Companies are exposed to credit risk related to transactions entered into primarily for the various energy supply and hedging activities by the Utilities and the competitive energy businesses. The Companies use credit policies to manage this risk, including an established credit approval process, monitoring of counterparty limits, netting provisions within agreements, collateral or prepayment arrangements, credit insurance and credit default swaps.

At ~~March~~September 3130, 2013, Con Edison and CECONY had $~~157~~110 million and $2114 million of credit exposure in connection with energy supply and hedging activities, net of collateral, respectively. Con Edison’s net credit exposure consisted of $5542 million with ~~investment-grade~~independent ~~counterparties~~system operators, $4437 million with commodity exchange brokers, $5530 million with ~~independent~~investment-grade ~~system~~counterparties ~~operators~~ and $31 million with non-investment grade/ or non-rated counterparties. CECONY’s entire net credit exposure ~~consisted~~was ~~of $6 million~~ with ~~investment-grade counterparties and $15 million with~~ commodity exchange brokers.

Economic Hedges

The Companies enter into certain derivative instruments that do not qualify or are not designated as hedges under the accounting rules for derivatives and hedging. However, management believes these instruments represent economic hedges that mitigate exposure to fluctuations in commodity prices.

29The fair values of the Companies’ commodity derivatives at September 30, 2013 were:


*(Millions of Dollars)*	Fair Value of Commodity Derivatives(a) Balance Sheet Location	Con Edison			CECONY
Derivative Assets
Current	Other current assets	$	55		$	18
Long-term	Other deferred charges and noncurrent assets		25			9
Total derivative assets		$	80		$	27
Impact of netting			(18	)		(4	)
Net derivative assets		$	62		$	23
Derivative Liabilities
Current	Fair value of derivative liabilities	$	71		$	40
Long-term	Fair value of derivative liabilities		53			18
Total derivative liabilities		$	124		$	58
Impact of netting			(74	)		(33	)
Net derivative liabilities		$	50		$	25

The fair values of the Companies’ commodity derivatives at March 31, 2013 were:

(Millions of Dollars)	Fair Value of Commodity Derivatives(a) Balance Sheet Location	ConEdison			CECONY
Derivative Assets
Current	Other current assets		$ 92			$ 30
Long-term	Other deferred charges and noncurrent assets		29			10
Total derivative assets			$ 121			$ 40
Impact of netting			(31	)		(5	)
Net derivative assets			$ 90			$ 35
Derivative Liabilities
Current	Fair value of derivative liabilities		$ 71			$ 32
Long-term	Fair value of derivative liabilities		43			19
Total derivative liabilities			$ 114			$ 51
Impact of netting			(78	)		(34	)
Net derivative liabilities			$ 36			$ 17

(a)	Qualifying derivative contracts, which have been designated as normal purchases or normal sales contracts, are not reported at fair value under the accounting rules for derivatives and hedging and, therefore, are excluded from the table.


					35

The fair values of the Companies’ commodity derivatives at December 31, 2012 were:

(Millions of Dollars)	Fair Value of Commodity Derivatives(a) Balance Sheet Location	ConEdison			CECONY
Derivative Assets
Current	Other current assets	$	$ 64		$	$ 18
Long-term	Other deferred charges and noncurrent assets		22			9
Total derivative assets		$	$ 86		$	$ 27
Impact of netting			(20	)		3
Net derivative assets		$	$ 66		$	$ 30
Derivative Liabilities
Current	Fair value of derivative liabilities	$	$122		$	$ 58
Long-term	Fair value of derivative liabilities		54			25
Total derivative liabilities		$	$176		$	$ 83
Impact of netting			(104	)		(44	)
Net derivative liabilities		$	$ 72		$	$ 39

(a)	Qualifying derivative contracts, which have been designated as normal purchases or normal sales contracts, are not reported at fair value under the accounting rules for derivatives and hedging and, therefore, are excluded from the table.

The Utilities generally recover all of their prudently incurred fuel, purchased power and gas cost, including hedging gains and losses, in accordance with rate provisions approved by the applicable state utility commissions. In accordance with the accounting rules for regulated operations, the Utilities record a regulatory asset or liability to defer recognition of unrealized gains and losses on their electric and gas derivatives. As gains and losses are realized in future periods, they will be recognized as purchased power, gas and fuel costs in the Companies’ consolidated income statements. Con Edison’s competitive energy businesses record realized and unrealized gains and losses on their derivative contracts in earnings in the reporting period in which they occur.

The following tables present the changes in the fair values of commodity derivatives that have been deferred or recognized in earnings for the three and nine months ended September 30, 2013:


Realized and Unrealized Gains/(Losses) on Commodity Derivatives(a) Deferred or Recognized in Income for the Three Months Ended September 30, 2013
*(Millions of Dollars)*	Balance Sheet Location	Con Edison			CECONY
Pre-tax gains/(losses) deferred in accordance with accounting rules for regulated operations:
Current	Deferred derivative gains	$	—		$	—
Long-term	Deferred derivative gains		—			—
Total deferred gains/(losses)		$	—		$	—
Current	Deferred derivative losses	$	11		$	9
Current	Recoverable energy costs		(19	)		(17	)
Long-term	Deferred derivative losses		6			7
Total deferred gains/(losses)		$	(2	)	$	(1	)
Net deferred gains/(losses)		$	(2	)	$	(1	)
	Income Statement Location
Pre-tax gain/(loss) recognized in income
	Purchased power expense	$	3	(b)	$	—
	Gas purchased for resale		(6	)		—
	Non-utility revenue		7			—
Total pre-tax gain/(loss) recognized in income		$	4		$	—

(a)	Qualifying derivative contracts, which have been designated as normal purchases or normal sales contracts, are not reported at fair value under the accounting rules for derivatives and hedging and, therefore, are excluded from the table.

(b)	For the three months ended September 30, 2013, Con Edison recorded in purchased power expense an unrealized pre-tax gain of $6 million.


36

The following table presents the changes in the fair values of commodity derivatives that have been deferred or recognized in earnings for the three months ended March 31, 2013:


Realized and Unrealized Gains/(Losses) on Commodity Derivatives(a) Deferred or Recognized in Income for the Nine Months Ended September 30, 2013
*(Millions of Dollars)*	Balance Sheet Location	Con Edison			CECONY
Pre-tax gains/(losses) deferred in accordance with accounting rules for regulated operations:
Current	Deferred derivative gains		$ 1			$ 1
Long-term	Deferred derivative gains		—			—
Total deferred gains/(losses)			$ 1			$ 1
Current	Deferred derivative losses		$ 24			$ 19
Current	Recoverable energy costs		(22	)		(19	)
Long-term	Deferred derivative losses		3			7
Total deferred gains/(losses)			$ 5			$ 7
Net deferred gains/(losses)			$ 6			$ 8
	Income Statement Location
Pre-tax gain/(loss) recognized in income
	Purchased power expense		$ 32	(b)		$ —
	Gas purchased for resale		(17	)		—
	Non-utility revenue		8			—
Total pre-tax gain/(loss) recognized in income			$ 23			$ —

Realized and Unrealized Gains/(Losses) on Commodity Derivatives(a) Deferred or Recognized in Income for the Three Months Ended March 31, 2013
(Millions of Dollars)	Balance Sheet Location	ConEdison			CECONY
Pre-tax gains/(losses) deferred in accordance with accounting rules for regulated operations:
Current	Deferred derivative gains		$ 9			$ 8
Long-term	Regulatory liabilities		2			1
Total deferred gains/(losses)			$ 11			$ 9
Current	Deferred derivative losses		$ 38			$ 32
Current	Recoverable energy costs		11			10
Long-term	Deferred derivative losses		7			6
Total deferred gains/(losses)			$ 56			$ 48
Net deferred gains/(losses)			$ 67			$ 57
	Income Statement Location
Pre-tax gain/(loss) recognized in income
	Purchased power expense		$ 67	(b)		$ —
	Gas purchased for resale		(4	)		—
	Non-utility revenue		(1	)(b)		—
Total pre-tax gain/(loss) recognized in income			$ 62			$ —

(a)	Qualifying derivative contracts, which have been designated as normal purchases or normal sales contracts, are not reported at fair value under the accounting rules for derivatives and hedging and, therefore, are excluded from the table.

(b) For the ~~three~~nine months ended ~~March~~September 3130, 2013, Con Edison recorded in ~~non-utility operating revenues and~~ purchased power expense an unrealized pre-tax gain of $122 million ~~and $45 million, respectively~~.

The following ~~table~~tables ~~presents~~present the changes in the fair values of commodity derivatives that have been deferred or recognized in earnings for the three and nine months ended ~~March~~September 3130, 2012:

Realized and Unrealized Gains/(Losses) on Commodity Derivatives(a) Deferred or Recognized in Income for the Three Months Ended March 31, 2012
Realized and Unrealized Gains/(Losses) on Commodity Derivatives(a) Deferred or Recognized in Income for the Three Months Ended September 30, 2012
(Millions of Dollars)	Balance Sheet Location	ConEdison			CECONY
Pre-tax gains/(losses) deferred in accordance with accounting rules for regulated operations:
Current	Deferred derivative gains		$ 15			$ 15
Total deferred gains/(losses)			$ 1			$ 1
Long-term	Deferred derivative gains		1			1
Current	Deferred derivative losses		$ (28	)		$(19	)
Total deferred gains/(losses)			$ 6			$ 6
Current	~~Recoverable~~Deferred ~~energy~~derivative ~~costs~~losses		~~(74~~$ 51	)		~~(56~~$ 42	)
Long-term	Deferred derivative losses		(18	)		(17	)
Current	Recoverable energy costs		(60	)		(52	)
Total deferred gains/(losses)			$(120	)		$(92	)
Long-term	Deferred derivative losses		22			20
Net deferred gains/(losses)			$(119	)		$(91	)
Total deferred gains/(losses)			$ 13			$ 10
Net deferred gains/(losses)			$ 19			$ 16
	Income Statement Location
Pre-tax gain/(loss) recognized in income
	Purchased power expense		$ ~~(86~~9	)(b)		$ —
	Gas purchased for resale		(1—	)		—
	Non-utility revenue		(31	~~)(b)~~		—
Total pre-tax gain/(loss) recognized in income			$ ~~(90~~10	)		$ —

(a)	Qualifying derivative contracts, which have been designated as normal purchases or normal sales contracts, are not reported at fair value under the accounting rules for derivatives and hedging and, therefore, are excluded from the table.

(b) For the three months ended ~~March~~September 3130, 2012, Con Edison recorded in ~~non-utility operating revenues and~~ purchased power expense an unrealized pre-tax ~~loss~~gain of $~~(4)~~30 million ~~and $(27) million, respectively~~.

3137

As of March 31, 2013, Con Edison had 1,096 contracts, including 553 CECONY contracts, which were considered to be derivatives under the accounting rules for derivatives and hedging (excluding qualifying derivative contracts, which have been designated as normal purchases or normal sales contracts). The following table presents the number of contracts by commodity type:


Realized and Unrealized Gains/(Losses) on Commodity Derivatives(a) Deferred or Recognized in Income for the Nine Months Ended September 30, 2012
*(Millions of Dollars)*	Balance Sheet Location	Con Edison			CECONY
Pre-tax gains/(losses) deferred in accordance with accounting rules for regulated operations:
Current	Deferred derivative gains		$ 5			$ 5
Long-term	Deferred derivative gains		1			1
Total deferred gains/(losses)			$ 6			$ 6
Current	Deferred derivative losses		$ 89			$ 78
Current	Recoverable energy costs		(187	)		(164	)
Long-term	Deferred derivative losses		13			19
Total deferred gains/(losses)			$ (85	)		$ (67	)
Net deferred gains/(losses)			$ (79	)		$ (61	)
	Income Statement Location
Pre-tax gain/(loss) recognized in income
	Purchased power expense		$ (49	)(b)		$ —
	Gas purchased for resale		(2	)		—
	Non-utility revenue		(11	)(b)		—
Total pre-tax gain/(loss) recognized in income			$ (62	)		$ —

	Electric Derivatives								Gas Derivatives
	Number ofEnergyContracts (a)		MWHs (b)		Number ofCapacityContracts (a)		MWs (b)		Number ofContracts (a)		Dths (b)		TotalNumber OfContracts (a)
Con Edison		493		15,267,685		70		10,750		533		79,064,410		1,096
CECONY		101		3,844,000		—		—		452		74,340,000		553

(a)	Qualifying derivative contracts, which have been designated as normal purchases or normal sales contracts, are not reported at fair value under the accounting rules for derivatives and hedging and, therefore, are excluded from the table.

(b)	For the nine months ended September 30, 2012, Con Edison recorded in non-utility revenues and purchased power expense an unrealized pre-tax gain/(loss) of $(13) million and $75 million, respectively.

As of September 30, 2013, Con Edison had 1,187 contracts, including 628 CECONY contracts, which were considered to be derivatives under the accounting rules for derivatives and hedging (excluding qualifying derivative contracts, which have been designated as normal purchases or normal sales contracts). The following table presents the number of contracts by commodity type:


	Electric Derivatives								Gas Derivatives
	Number of Energy Contracts (a)		MWHs (b)		Number of Capacity Contracts (a)		MWs (b)		Number of Contracts (a)		Dths (b)		Total Number Of Contracts (a)
Con Edison		470		13,643,994		83		11,625		634		79,090,035		1,187
CECONY		82		3,127,600		4		1,200		542		75,470,000		628

(a)	Qualifying derivative contracts, which have been designated as normal purchases or normal sales contracts, are not reported at fair value under the accounting rules for derivatives and hedging and, therefore, are excluded from the table.

(b)	Volumes are reported net of long and short positions.

The Companies also enter into electric congestion and gas basis swap contracts to hedge the congestion and transportation charges which are associated with electric and gas contracts and hedged volumes.

The collateral requirements associated with, and settlement of, derivative transactions are included in net cash flows from operating activities in the Companies’ consolidated statement of cash flows. Most derivative instrument contracts contain provisions that may require the Companies to provide collateral on derivative instruments in net liability positions. The amount of collateral to be provided will depend on the fair value of the derivative instruments and the Companies’ credit ratings.

The aggregate fair value of all derivative instruments with credit-risk-related contingent features that are in a net liability position and collateral posted at March 31, 2013, and the additional collateral that would have been required to be posted had the lowest applicable credit rating been reduced one level and to below investment grade were: 38

(Millions of Dollars)	Con Edison (a)			CECONY (a)
Aggregate fair value – net liabilities		$19			$14
Collateral posted		$ —			$ —
Additional collateral (b) (downgrade one level from current ratings)		$ —			$ —
Additional collateral (b) (downgrade to below investment grade from current ratings)		$22	(c)		$15	(c)

~~(a)~~The ~~Non-derivative~~aggregate ~~transactions~~fair ~~for~~value ~~the purchase and sale~~ of ~~electricity~~all ~~and gas and qualifying~~ derivative instruments, ~~which~~with ~~have~~credit-risk-related ~~been~~contingent ~~designated~~features asthat ~~normal purchases or normal sales,~~ are in ~~excluded~~a ~~from~~net ~~the~~liability ~~table.~~position ~~These transactions primarily include purchases of electricity from independent system operators. In the event the Utilities~~ and ~~Con Edison’s competitive energy businesses were no longer extended unsecured credit for such purchases, the Companies would be required to post~~ collateral, ~~which~~posted at ~~March 31~~September 30, 2013, ~~would~~and ~~have~~the ~~amounted~~additional tocollateral anthat ~~estimated~~would ~~$32~~have ~~million~~been ~~for~~required ~~Con~~to ~~Edison,~~be ~~including~~posted ~~$15~~had ~~million~~the ~~for~~lowest ~~CECONY.~~applicable ~~For~~credit ~~certain~~rating ~~other~~been ~~such~~reduced ~~non-derivative~~one ~~transactions,~~level ~~the~~and ~~Companies could be required~~ to ~~post~~below ~~collateral~~investment ~~under~~grade ~~certain circumstances, including in the event counterparties had reasonable grounds for insecurity.~~were:


*(Millions of Dollars)*	Con Edison (a)			CECONY (a)
Aggregate fair value – net liabilities		$31			$25
Collateral posted		$ —			$ —
Additional collateral (b) (downgrade one level from current ratings)		$ —			$ —
Additional collateral (b) (downgrade to below investment grade from current ratings)		$42	(c)		$29	(c)

(a)

Non-derivative transactions for the purchase and sale of electricity and gas and qualifying derivative instruments, which have been designated as normal purchases or normal sales, are excluded from the table. These transactions primarily include purchases of electricity from independent system operators. In the event the Utilities and Con Edison’s competitive energy businesses were no longer extended unsecured credit for such purchases, the Companies would be required to post collateral, which at September 30, 2013, would have amounted to an estimated $35 million and $14 million for Con Edison and CECONY, respectively. For certain other such non-derivative transactions, the Companies could be required to post collateral under certain circumstances, including in the event counterparties had reasonable grounds for insecurity.

(b)

The Companies measure the collateral requirements by taking into consideration the fair value amounts of derivative instruments that contain credit-risk-related contingent features that are in a net liabilities position plus amounts owed to counterparties for settled transactions and amounts required by counterparties for minimum financial security. The fair value amounts represent unrealized losses, net of any unrealized gains where the Companies have a legally enforceable right of setoff.

(c) Derivative instruments that are net assets have been excluded from the table. At ~~March~~September 3130, 2013, if Con Edison had been downgraded to below investment grade, it would have been required to post additional collateral for such derivative instruments of $3837 million~~, including $1 million for CECONY~~.

Interest Rate Swap

O&R has an interest rate swap pursuant to which it pays a fixed-rate of 6.09 percent and receives a LIBOR-based variable rate. The fair value of this interest rate swap at ~~March~~September 3130, 2013 was an unrealized loss of $53 million, which has been included in Con Edison’s consolidated balance sheet as a noncurrent liability/fair value of derivative liabilities and a regulatory asset. The increase in the fair value of the swap for the three and nine months ended ~~March~~September 3130, 2013 was $1 million and $3 million, respectively. In the event O&R’s credit rating was downgraded to BBB- or lower by S&P or Baa3 or lower by Moody’s, the swap counterparty could elect to terminate the agreement and, if it did so, the parties would then be required to settle the transaction.

Note L — Fair Value Measurements

The accounting rules for fair value measurements and disclosures define fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date in a principal or most advantageous market. Fair value is a market-based measurement that is determined based on inputs, which refer broadly to assumptions that market participants use in pricing assets or liabilities. These inputs can be readily observable, market corroborated, or generally unobservable firm inputs. The Companies often make certain assumptions that market participants would use in pricing the asset or liability, including assumptions about risk, and the risks inherent in the inputs to valuation techniques. The Companies use valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs.


					39

The accounting rules for fair value measurements and disclosures established a fair value hierarchy, which prioritizes the inputs to valuation techniques used to measure fair value in three broad levels. The rules require that assets and liabilities be classified in their entirety based on the level of input that is significant to the fair value measurement. Assessing the significance of a particular input may require judgment considering factors specific to the asset or liability, and may affect the valuation of the asset or liability and their placement within the fair value hierarchy. The Companies classify fair value balances based on the fair value hierarchy defined by the accounting rules for fair value measurements and disclosures as follows:

•

Level 1 – Consists of assets or liabilities whose value is based on unadjusted quoted prices in active markets at the measurement date. An active market is one in which transactions for assets or liabilities occur with sufficient frequency and volume to provide pricing information on an ongoing basis. This category includes contracts traded on active exchange markets valued using unadjusted prices quoted directly from the exchange.

•

Level 2 – Consists of assets or liabilities valued using industry standard models and based on prices, other than quoted prices within Level 1, that are either directly or indirectly observable as of the measurement date. The industry standard models consider observable assumptions including time value, volatility factors, and current market and contractual prices for the underlying commodities, in addition to other economic measures. This category includes contracts traded on active exchanges or in over-the-counter markets priced with industry standard models.

•

Level 3 – Consists of assets or liabilities whose fair value is estimated based on internally developed models or methodologies using inputs that are generally less readily observable and supported by little, if any, market activity at the measurement date. Unobservable inputs are developed based on the best available information and subject to cost benefit constraints. This category includes contracts priced using models that are internally developed and contracts placed in illiquid markets. It also includes contracts that expire after the period of time for which quoted prices are available and internal models are used to determine a significant portion of the value.

3340

Assets and liabilities measured at fair value on a recurring basis as of ~~March~~September 3130, 2013 are ~~summarized~~ summarized below.

	Level 1				Level 2				Level 3				Netting Adjustments(d)						Total~~(e)~~
(Millions of Dollars)	ConEdison		CECONY		ConEdison		CECONY		ConEdison		CECONY		ConEdison			CECONY			ConEdison		CECONY
Derivative assets:
Commodity (a)(e)	$	~~$ 2~~1	$	~~$ 2~~1	$	~~$ 71~~52	$	~~$ 19~~6	$	~~$36~~9	$	~~$11~~8	$	~~$(20~~—	)	$	~~$ 2~~8		$	~~$ 89~~62	$	~~$ 34~~23
Other assets (c)(e)		~~109~~129		~~102~~122		~~112~~108		~~103~~98		—		—		—			—			~~221~~237		~~205~~220
Total	$	~~$111~~130	$	~~$104~~123	$	~~$183~~160	$	~~$122~~104	$	~~$36~~9	$	~~$11~~8	$	~~$(20~~—	)	$	~~$ 2~~8		$	~~$310~~299	$	~~$239~~243
Derivative liabilities:
Commodity (a)(e)	$	~~$ 8~~9	$	~~$ 8~~9	$	~~$ 72~~74	$	~~$ 35~~37	$	~~$22~~23	$	$ —	$	$(6756)	)	$	$(2721)	)	$	~~$ 35~~50	$	~~$ 16~~25
Interest rate contract (b)(e)		—		—		53		—		—		—		—			—			53		—
Total	$	~~$ 8~~9	$	~~$ 8~~9	$	$ 77	$	~~$ 35~~37	$	~~$22~~23	$	$ —	$	$(6756)	)	$	$(2721)	)	$	~~$ 40~~53	$	~~$ 16~~25

(a)	A portion of the commodity derivatives categorized in Level 3 is valued using an internally developed model with observable inputs. The models also include some less readily observable inputs resulting in the classification of the entire contract as Level 3. See Note K.

(b)	See Note K.

(c)	Other assets are comprised of assets such as life insurance contracts within the deferred compensation plan and non-qualified retirement plans.

(d)	Amounts represent the impact of legally-enforceable master netting agreements that allow the Companies to net gain and loss positions and cash collateral held or placed with the same counterparties.

(e) The Companies’ policy is to recognize transfers into and transfers out of the levels at the end of the reporting period. There were no transfers between levels 1, 2, and 3 for the ~~three~~nine months ended ~~March~~September 3130, 2013.

Assets and liabilities measured at fair value on a recurring basis as of December 31, 2012 are summarized below.

	Level 1				Level 2				Level 3				Netting Adjustments(d)						Total~~(e)~~
(Millions of Dollars)	ConEdison		CECONY		ConEdison		CECONY		ConEdison		CECONY		ConEdison			CECONY			ConEdison		CECONY
Derivative assets:
Commodity (a)(e)	$	$ —	$	$ —	$	$ 43	$	$ 8	$	$33	$	$10		$(10	)		$ 12		$	$ 66	$	$ 30
Other assets (c)(e)(f)		106		99		107		98		—		—		—			—			213		197
Total	$	$106	$	$99	$	$150	$	$106	$	$33	$	$10		$(10	)		$ 12		$	$279	$	$227
Derivative liabilities:
Commodity (a)(e)(h)	$	$ 12	$	$12	$	$116	$	$ 62	$	$38	$	$ —		$(94	)		$(35	)	$	$ 72	$	$ 39
Interest rate contract (b)(e)(g)		—		—		6		—		—		—		—			—			6		—
Total	$	$ 12	$	$12	$	$122	$	$ 62	$	$38	$	$ —		$(94	)		$(35	)	$	$ 78	$	$ 39

(a)

A significant portion of the commodity derivative contracts categorized in Level 3 is valued using either an industry acceptable model or an internally developed model with observable inputs. The models also include some less readily observable inputs resulting in the classification of the entire contract as Level 3. See Note K.

(b)	See Note K.

(c)	Other assets are comprised of assets such as life insurance contracts within the deferred compensation plan and non-qualified retirement plans.

(d)	Amounts represent the impact of legally-enforceable master netting agreements that allow the Companies to net gain and loss positions and cash collateral held or placed with the same counterparties.

(e)	The Companies’ policy is to recognize transfers into and transfers out of the levels at the end of the reporting period.

(f)	On March 31, 2012, other assets of $105 million for Con Edison and $95 million for CECONY were transferred from Level 3 to Level 2 because of reassessment of the levels in the fair value hierarchy within which certain inputs fall as of March 31, 2012.

(g)	On March 31, 2012, interest rate contract of $8 million was transferred from Level 3 to Level 2 because of reassessment of the levels in the fair value hierarchy within which certain inputs fall.

(h) During 2012, Con Edison transferred commodity ~~derivate~~derivative contract liabilities of $2 million from Level 1 to Level 2, $9 million from Level 2 to Level 1, $2 million from Level 2 to Level 3, and $11 million from Level 3 to Level 2 because of reassessment of the levels in the fair value hierarchy within which certain inputs fall.

The employees in the risk management groups of the Utilities and the competitive energy businesses develop and maintain the Companies’ valuation policies and procedures for, and verify pricing and fair value valuation of, commodity derivatives. Under the Companies’ policies and procedures, multiple independent sources of information are obtained for forward price curves used to value commodity derivatives. Fair value and changes in fair value of commodity derivatives are reported on a monthly basis to the Companies’ risk committees, comprised of officers and employees of the Companies that oversee energy hedging at the Utilities and the competitive energy businesses. The managers of the risk management groups report to the Companies’ Vice President and Treasurer.

Fair Value ofLevel 3 atMarch 31, 2013 (Millions of Dollars)

Valuation Techniques

Unobservable Inputs

Range

Con Edison—Commodity

Electricity

Discounted Cash Flow

Forward energy prices (a) Forward capacity prices

$28-$116 per MWH $1.50-$14.20 KW- month

Electricity Wholesale Contract

Discounted Cash Flow

Forward energy prices (b) New Jersey solar renewable energy credit (SREC) (b)

$33-$49 per MWH $2.50-$110 per SREC

Standard Offer Capacity Agreements

(12

)

Discounted Cash Flow

Forward capacity prices (a) Forward price escalator (a) Present value factor (a)

$166 MW-day 0%-3% 1.66%

Transmission Congestion Contracts / Financial

Discounted Cash Flow

Discount to adjust auction prices for inter-zonal forward price curves (b)

17.5%-38%

Transmission Rights

Discount to adjust auction prices for historical monthly realized settlements (b)

8.5%-49%

Inter-zonal forward price curves and for historical zonal losses (b)

$0.11-$5.74

Total Con Edison—Commodity

CECONY—Commodity

Transmission Congestion Contracts

Discounted Cash Flow

Discount to adjust auction prices for inter-zonal forward price curves (b)

17.5%-38%

Discount to adjust auction prices for historical monthly realized settlements (b)

8.5%-49%


					41


	Fair Value of Level 3 at September 30, 2013 *(Millions of Dollars)*				Valuation Techniques	Unobservable Inputs	Range
Con Edison—Commodity
Electricity		$	(6	)	Discounted Cash Flow	Forward energy prices (a)	$24-$99 per MWH
Standard Offer Capacity Agreements			(17	)	Discounted Cash Flow	Forward capacity prices (a) Present value factor (a)	$119-$248 MW -day 2.64%
Transmission Congestion Contracts / Financial Transmission Rights			9		Discounted Cash Flow	Discount to adjust auction prices for inter-zonal forward price curves (b)	(5.8)%-42.4%
						Discount to adjust auction prices for historical monthly realized settlements (b)	(102.4)%-49.2%
						Inter-zonal forward price curves adjusted for historical zonal losses (b)	$1.56-$2.16
Total Con Edison—Commodity		$	(14	)
CECONY— Commodity
Transmission Congestion Contracts		$	8		Discounted Cash Flow	Discount to adjust auction prices for inter-zonal forward price curves (b)	(5.8)%-42.4%
						Discount to adjust auction prices for historical monthly realized settlements (b)	(102.4)%-49.2%

(a)	Generally, increases/(decreases) in this input in isolation would result in a higher/(lower) fair value measurement.

(b)	Generally, increases/(decreases) in this input in isolation would result in a lower/(higher) fair value measurement.

The table listed below provides a reconciliation of the beginning and ending net balances for assets and liabilities measured at fair value as of ~~March~~September 3130, 2013 and 2012 and classified as Level 3 in the fair value hierarchy:

	For Three Months Ended March 31, 2013
	For Three Months Ended September 30, 2013
				Total Gains/(Losses)— Realized and Unrealized
(Millions of Dollars)	BeginningBalance as ~~ofJanuary~~ofJuly 1, 2013			Included inEarnings			Included inRegulatory Assetsand Liabilities		Purchases		Issuances		Sales		Settlements			TransferIn/Out ofLevel 3		Ending Balance as ~~ofMarch~~ofSeptember 3130, 2013
Con Edison
Derivatives:
Commodity	$	$ (56	)	$	~~$31~~(3	)	$	$5(2)	$	$45	$	$—	$	$—	$	$(218)	)	$	$—	$	$(14	)
CECONY
Derivatives:
Commodity	$	~~$10~~8		$	~~$10~~2		$	$(1)	$	$45	$	$—	$	$—	$	$(146)	)	$	$—	$	~~$11~~8

3542

	For Three Months Ended March 31, 2012
	For Nine Months Ended September 30, 2013
				Total Gains/(Losses)— Realized and Unrealized
(Millions of Dollars)	BeginningBalance as ofJanuary 1, ~~2012~~2013			Included inEarnings			Included inRegulatory Assetsand Liabilities			Purchases		Issuances		Sales		Settlements		TransferIn/Out ofLevel 3			Ending Balance as ~~ofMarch~~ofSeptember 3130, ~~2012~~2013
Con Edison
Derivatives:
Commodity	$	$(625	)	$	~~$(58~~5	)	$	~~$(17~~1	)	$	$612	$	$—	$	$—	$	~~$38~~(27)	$	$ —		$	$(9314	)
Interest rate contract		(8	)		(1	)		—			—		—		—		1		8			—
Other assets(a)		99			3			3			—		—		—		—		(105	)		—
Total		$ 29			$(56	)		$(14	)		$6		$—		$—		$39		$(97	)		$(93	)
CECONY
Derivatives:
Commodity	$	~~$ (7~~10	)	$	~~$ (5~~9	)	$	~~$ (7~~—	)	$	$610	$	$—	$	$—	$	~~$ —~~(21)	$	$ —		$	~~$(13~~8	)
Other assets(a)		90			3			2			—		—		—		—		(95	)		—
Total		$ 83			$ (2	)		$ (5	)		$6		$—		$—		$ —		$(95	)		$(13	)


	For the Three Months Ended September 30, 2012
			Total Gains/(Losses)— Realized and Unrealized
*(Millions of Dollars)*	Beginning Balance as of July 1, 2012		Included in Earnings		Included in Regulatory Assets and Liabilities		Purchases		Issuances		Sales		Settlements		Transfer In/Out of Level 3		Ending Balance as of September 30, 2012
Con Edison
Derivatives:
Commodity	$	(61)	$	(15)	$	19	$	7	$	—	$	—	$	25	$	22	$	(3	)
CECONY
Derivatives:
Commodity	$	(10)	$	(9)	$	8	$	7	$	—	$	—	$	5	$	11	$	12


	For the Nine Months Ended September 30, 2012
				Total Gains/(Losses)— Realized and Unrealized
*(Millions of Dollars)*	Beginning Balance as of January 1, 2012			Included in Earnings			Included in Regulatory Assets and Liabilities		Purchases		Issuances		Sales		Settlements		Transfer In/Out of Level 3			Ending Balance as of September 30, 2012
Con Edison
Derivatives:
Commodity	$	(62	)	$	(97	)	$	11	$	18	$	—	$	—	$	106	$	21		$	(3	)
Interest rate contract		(8	)		(1	)		—		—		—		—		1		8	(b)		—
Other assets(a)		99			3			3		—		—		—		—		(105	)(b)		—
Total	$	29		$	(95	)	$	14	$	18	$	—	$	—	$	107	$	(76	)	$	(3	)
CECONY
Derivatives:
Commodity	$	(7	)	$	(25	)	$	8	$	15	$	—	$	—	$	12	$	9	(b)	$	12
Other assets(a)		90			3			2		—		—		—		—		(95	)(b)		—
Total	$	83		$	(22	)	$	10	$	15	$	—	$	—	$	12	$	(86	)	$	12

(a)	Amounts included in earnings are reported in investment and other income on the consolidated income statement.

~~For~~(b) ~~the~~Other ~~Utilities,~~assets ~~realized gains~~ and ~~losses~~interest onrate ~~Level~~contract 3were ~~commodity~~transferred ~~derivative assets and liabilities are reported~~ as ~~part~~ of ~~purchased~~March ~~power~~31, ~~gas and fuel costs~~2012. The Utilities generally recover these costs in accordance with rate provisions approved by the applicable state public utilities commissions. See Note A. Unrealized gains and losses for commodity derivatives are generally deferred on the consolidated balance sheet in accordance with the accounting rules for regulated operations.

For the ~~competitive energy businesses~~Utilities, realized ~~and unrealized~~ gains and losses on Level 3 commodity derivative assets and liabilities are reported inas ~~non-utility~~part ~~revenues~~of ~~(immaterial and $3 million loss) and~~ purchased power ~~costs ($19 million gain and $43 million loss) on the consolidated income statement for the three months ended March 31~~, ~~2013~~gas and ~~2012, respectively~~fuel costs. The ~~change~~Utilities ingenerally ~~fair~~recover ~~value~~these ~~relating~~costs ~~to Level 3 commodity derivative assets held at March 31, 2013 and 2012 is included~~ in ~~non-utility~~accordance ~~revenues~~with ~~(immaterial~~rate ~~and~~provisions $3approved ~~million~~by ~~loss), and purchased power costs ($16 million gain and $7 million loss) on~~ the ~~consolidated~~applicable ~~income~~state ~~statement for the three months ended March 31, 2013 and 2012, respectively.~~

The accounting rules for fair value measurements and disclosures require consideration of the impact of nonperformance risk (including credit risk) from a market participant perspective in the measurement of the fair value of assets and liabilities. At March 31, 2013, the Companies determined that nonperformance risk would have no material impact on their financial position or results of operations. To assess nonperformance risk, the Companies considered information such as collateral requirements, master netting arrangements, letters of credit and parent company guarantees, and applied a market-based method by using the counterparty (for an asset) or the Companies’ (for a liability) credit default swaps rates. 43

Note M — New Financial Accounting Standards

In December 2011 and January 2013, the Financial Accounting Standards Board (FASB) issued amendments to address and clarify the scope of the balance sheet off-setting disclosure guidance within Accounting Standards Codification (ASC) 210, “Balance Sheet.” ASU No. 2011-11 and ASU No. 2013-01, “Balance Sheet (Topic 210): Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities,” provide guidance that requires a reporting entity to disclose certain quantitative information concerning financial and derivative instruments that are offset in the balance sheet and a description of the rights of setoff, including the nature of such rights, associated with recognized assets and liabilities that are subject to an enforceable master netting arrangement or similar agreement. ASU No. 2013-01 clarifies that financial instruments subject to the disclosure guidance are (1) derivatives accounted for in accordance with

~~ASC~~public ~~815,~~utilities ~~Derivatives~~commissions. ~~and~~Unrealized ~~Hedging,~~gains ~~(2) repurchase agreements~~ and ~~reverse~~losses ~~purchase~~for ~~agreements~~commodity ~~and~~derivatives ~~(3) securities borrowing and securities lending transactions that~~ are ~~either~~generally ~~offset~~deferred ~~in accordance~~on ~~with~~the ~~ASC~~consolidated Section 210-20-45 or Section 815-10-45 or subject to an enforceable master netting arrangement or similar agreement. A reporting entity electing gross presentation of such assets and liabilities in its balance sheet ~~will~~ ~~still~~in beaccordance ~~subject~~with to the ~~same~~accounting ~~disclosure~~rules ~~requirements. Both ASUs are applicable~~ for ~~fiscal years beginning on or after January 1, 2013, interim periods within those fiscal years, and retrospectively for all comparative periods presented.~~regulated ~~The application of this guidance does not have a material impact on the Companies’ financial position, results of~~ operations ~~and liquidity~~. ~~See Note K.~~

For the competitive energy businesses, realized and unrealized gains and losses on Level 3 commodity derivative assets and liabilities are reported in non-utility revenues (immaterial and $2 million loss) and purchased power costs ($4 million loss and $2 million gain) on the consolidated income statement for the three months ended September 30, 2013 and 2012, respectively. Realized and unrealized gains and losses on Level 3 commodity derivative assets and liabilities are reported in non-utility revenues ($2 million loss and $11 million loss) and purchased power costs (immaterial and $42 million loss) on the consolidated income statement for the nine months ended September 30, 2013 and 2012, respectively. The change in fair value relating to Level 3 commodity derivative assets and liabilities held at September 30, 2013 and 2012 is included in non-utility revenues (immaterial and $2 million loss) and purchased power costs ($5 million loss and $16 million gain) on the consolidated income statement for the three months ended September 30, 2013 and 2012, respectively. For the nine months ended September 30, 2013 and 2012, the change in fair value relating to Level 3 commodity derivative assets and liabilities is included in non-utility revenues ($2 million loss and $11 million loss) and purchased power costs ($3 million loss and $40 million gain) on the consolidated income statement, respectively.

The accounting rules for fair value measurements and disclosures require consideration of the impact of nonperformance risk (including credit risk) from a market participant perspective in the measurement of the fair value of assets and liabilities. At September 30, 2013, the Companies determined that nonperformance risk would have no material impact on their financial position or results of operations. To assess nonperformance risk, the Companies considered information such as collateral requirements, master netting arrangements, letters of credit and parent company guarantees, and applied a market-based method by using the counterparty (for an asset) or the Companies’ (for a liability) credit default swaps rates.

Note M — Variable Interest Entities

Con Edison has variable interests in Copper Mountain Solar 2 Holdings, LLC (CMS 2) and Mesquite Solar 1 Holdings, LLC (MS 1), non-consolidated entities in which Con Edison Development purchased a 50 percent membership interest in July and September 2013, respectively. CMS 2 owns a project company that is developing a 150 MW (AC) solar energy project (with 92 MW currently in service) in Nevada. MS 1 owns a project company that owns a 150 MW (AC) solar energy project in Arizona. Electricity generated by the projects is sold to Pacific Gas and Electric Company pursuant to long-term power purchase agreements. Con Edison is not the primary beneficiary of these variable interest entities since the power to direct the activities that most significantly impact the economics of CMS 2 and MS 1 is shared equally between Con Edison Development and a third party.


44

At September 30, 2013, Con Edison’s consolidated balance sheet includes $76 million and $104 million in investments (including earnings) related to CMS 2 and MS 1, respectively, which assessed in accordance with the accounting rules for variable interest entities, is Con Edison’s current maximum exposure to loss in the entities. In addition, Con Edison and Con Edison Development have issued certain guarantees to third parties in connection with the CMS 2 and MS 1 projects. See “Guarantees” in Note H.

Note N — Asset Retirement Obligations

The Companies account for retirement obligations on their assets in accordance with the accounting rules for asset retirement obligations.

The Companies recorded asset retirement obligations associated with the removal of asbestos and asbestos-containing material in their buildings (other than generating station and substation building structures themselves), electric equipment, and steam and gas distribution systems. The Companies also recorded asset retirement obligations relating to gas pipelines abandoned in place. The estimates of future liabilities were developed using historical information, and where available, quoted prices from outside contractors.

The Companies did not record an asset retirement obligation for the removal of asbestos associated with the generating station and substation building structures themselves. For these building structures, the Companies were unable to reasonably estimate their asset retirement obligations because the Companies were unable to estimate the undiscounted retirement costs or the retirement dates and settlement dates. The amount of the undiscounted retirement costs could vary considerably depending on the disposition method for the building structures, and the method has not been determined. The Companies anticipate continuing to use these building structures in their businesses for an indefinite period, and so the retirement dates and settlement dates are not determinable.

The accrued liability for asset retirement obligations and the regulatory liabilities for allowance for cost of removal less salvage for the Companies at September 30, 2013 and December 31, 2012 were as follows:


	Con Edison				CECONY
*(Millions of Dollars)*	2013		2012		2013		2012
Accrued liability — asset retirement obligations		$164		$159		$163		$158
Regulatory liabilities — allowance for cost of removal less salvage		$522		$503		$436		$420

Note O — New Financial Accounting Standards


					45

entity to disclose certain quantitative information concerning financial and derivative instruments that are offset in the balance sheet and a description of the rights of setoff, including the nature of such rights, associated with recognized assets and liabilities that are subject to an enforceable master netting arrangement or similar agreement. ASU No. 2013-01 clarifies that financial instruments subject to the disclosure guidance are (1) derivatives accounted for in accordance with ASC 815, Derivatives and Hedging, (2) repurchase agreements and reverse purchase agreements and (3) securities borrowing and securities lending transactions that are either offset in accordance with ASC Section 210-20-45 or Section 815-10-45 or subject to an enforceable master netting arrangement or similar agreement. A reporting entity electing gross presentation of such assets and liabilities in its balance sheet will still be subject to the same disclosure requirements. Both ASUs are applicable for fiscal years beginning on or after January 1, 2013, interim periods within those fiscal years, and retrospectively for all comparative periods presented. The application of this guidance does not have a material impact on the Companies’ financial position, results of operations and liquidity. See Note K.

In February 2013, the FASB issued amendments to improve the reporting of reclassifications out of accumulated OCI through ASU No. 2013-02, “Comprehensive Income (Topic 220): Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income.” The amendments require an entity to provide information either on the face of the financial statements or in a single footnote on significant amounts reclassified out of accumulated OCI and the related income statement line items to the extent an amount is reclassified in its entirety to net income under U.S. GAAP. For significant items not reclassified to net income in their entirety, an entity is required to cross-reference to other disclosures that provide additional information. For public entities, the amendments are effective prospectively for reporting periods beginning after December 15, 2012. The application of this guidance does not have a material impact on the Companies’ financial position, results of operations and liquidity. See Note A.

37In July 2013, the FASB issued ASU No. 2013-10, “Derivatives and Hedging (Topic 815): Inclusion of the Fed Funds Effective Swap Rate (or Overnight Index Swap Rate) as a Benchmark Interest Rate for Hedge Accounting Purposes (a consensus of the FASB Emerging Issues Task Force).” The new guidance permits designating the Federal Funds Effective Swap Rate as a benchmark interest rate for hedge accounting. Previously, only the U.S. Treasury and LIBOR rates were allowed under the hedge accounting rules in U.S. GAAP. The new guidance also eliminates the restriction on using different benchmark interest rates for similar hedges. The amendments are effective prospectively for qualifying new or redesignated hedging relationships entered into on or after July 17, 2013. The application of this guidance does not have a material impact on the Companies’ financial position, results of operations and liquidity.

In July 2013, the FASB issued ASU No. 2013-11, “Income Taxes (Topic 740): Presentation of an Unrecognized Tax Benefit when a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit


46

Carryforward Exists (a Consensus of the FASB Emerging Issues Task Force).” The amendments require a liability related to an unrecognized tax benefit to be presented on a net basis with its associated deferred tax asset when utilization of such deferred tax assets is required or expected in the event the uncertain tax position is disallowed. Otherwise, the unrecognized tax benefit will be presented as a liability and will not be netted against deferred tax assets. For public entities, the amendments are effective prospectively for fiscal years, and interim periods within those years, beginning after December 15, 2013. The application of this guidance is not expected to have a material impact on the Companies’ financial position, results of operations and liquidity. See Note I.


					47

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

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

This MD&A should be read in conjunction with the ~~First~~ Third Quarter Financial Statements and the notes thereto and the MD&A in Item 7 of the Companies’ combined Annual Report on Form 10-K for the year ended December 31, 2012 (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 periods ended March 31, 2013 and June 30, 2013 (File Nos. 1-14514 and 1-1217).

1-1217, the Form 10-K).

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

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

LOGO

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 competitive energy businesses sell electricity to retail and wholesale customers, provide certain energy-related services, and participate in energy infrastructure projects. Con Edison is evaluating additional opportunities to invest in electric and gas-related businesses. 48

Con Edison’s strategy is to provide reliable energy services, maintain public and employee safety, promote energy efficiency, and develop cost-effective ways of performing its business. Con Edison seeks to be a responsible steward of the environment and enhance its relationships with customers, regulators and members of the communities it serves.

CECONY

Electric

CECONY provides electric service to approximately 3.3 million customers in all of New York City (except part of Queens) and most of Westchester County, an approximately 660 square mile service area with a population of more than nine million.

On July 19, 2013, the electric peak demand in CECONY’s service area reached a new record of 13,322 MW, exceeding the previous record of 13,189 MW reached on July 22, 2011.

The company estimates that, under design weather conditions, the 2013 service area peak demand was 13,500 MW, whereas the forecasted service area peak demand for 2013 was 13,200 MW. In October 2013, the company estimated its forecast of average annual growth of the peak electric demand in the company’s service area over the next five years at design conditions to be approximately 1.4 percent above the 13,500 MW.

Gas

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

38In June 2013, the company decreased its five-year forecast of average annual growth of the peak gas demand in its service area at design conditions from approximately 4.3 percent (for 2013 to 2017) to 3.8 percent (for 2014 to 2018). The decrease reflects, among other things, that the new five-year forecast no longer covers 2013, the first year in which there was a significant increase in oil to gas conversions following changes to New York City regulations that will phase out the use of certain types of heating oil.

Steam

CECONY operates the largest steam distribution system in the United States by producing and delivering approximately 20,000 MMlbs of steam annually to approximately 1,717 customers in parts of Manhattan.


					49

O&R

Electric

O&R and its utility subsidiaries, Rockland Electric Company (RECO) and Pike County Light & Power Company (Pike) (together referred to herein as O&R) provide electric service to approximately 0.3 million customers in southeastern New York and in adjacent areas of northern New Jersey and northeastern Pennsylvania, an approximately 1,350 square mile service area.

Gas

O&R delivers gas to over 0.1 million customers in southeastern New York and adjacent areas of northeastern Pennsylvania.

Competitive Energy Businesses

Con Edison pursues competitive energy opportunities through three wholly-owned subsidiaries: Con Edison Solutions, Con Edison Energy and Con Edison Development. These businesses include the sales and related hedging of electricity to retail and wholesale customers, sales of certain energy-related products and services, and participation in energy infrastructure projects. At ~~March~~September 3130, 2013, Con Edison’s equity investment in its competitive energy businesses was $~~408~~466 million and their assets amounted to $~~975~~1,277 million.

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

	Three months ended March 31, 2013										At March 31, 2013
	Three Months Ended September 30, 2013										Nine Months Ended September 30, 2013										At September 30, 2013
(Millions of Dollars, except percentages)	Operating Revenues					Net Income forCommon Stock					Assets
(Millions of Dollars, exceptpercentages)	OperatingRevenues					Net Income forCommon Stock					OperatingRevenues					Net Income forCommon Stock					Assets
CECONY		$2,~~806~~893		8883	%		$~~277~~401		~~144~~87	%		$368,~~914~~021		8884	%		$831		100	%		$37,375	89	%
O&R		~~227~~226		7	%		3019		164	%		~~2,658~~635		67	%		56		7	%		2,613	6	%
Total Utilities		3,~~033~~119		9590	%		~~307~~420		~~160~~91	%		398,~~572~~656		9491	%		887		107	%		39,988	95	%
Con Edison Solutions (a)		~~247~~287		8	%		196		101	%		~~260~~769		18	%		7		1	%		282	1	%
Con Edison Energy		17		—	%		1		1	%		35		—	%
Con Edison Energy (a)		12		—	%		2		—	%		46		1	%		3		—	%		71	—	%
Con Edison Development (b)		~~(110~~67	)	(32	)%		~~(132~~32	)	~~(69~~7	)%		~~653~~23		2—	%		(65	)	(8	)%		919	2	%
Other (c)		(31	)	—	%		(34	)	(21	)%		~~1,216~~(7	)	3—	%		(4	)	—	%		704	2	%
Total Con Edison		$3,~~184~~484		100	%		$~~192~~464		100	%		$419,~~736~~487		100	%		$828		100	%		$41,964	100	%

(a) Net income from the competitive energy businesses for the three and nine months ended ~~March~~September 3130, 2013 includes $264 million and $12 million, respectively, of net after-tax mark-to-market gains/(losses) (Con Edison Solutions, $4 million and $13 million and Con Edison Energy, $0 million and $(1) million).

(b) Includes an after-tax gain/(charge) of $~~150~~26 million and $(95) million relating to the lease in/lease out (LILO) transactions for the three and nine months ended September 30, 2013, respectively, and a tax benefit of $15 million resulting from the acceptance by the Internal Revenue Service (IRS) of the company’s claim for manufacturing tax deductions for the nine months ended September 30, 2013 (see Notes H and I to the ~~First~~Third Quarter Financial Statements).

(c)	Represents inter-company and parent company accounting. See “Results of Operations,” below.

Con Edison’s net income for common stock for the three months ended ~~March~~September 3130, 2013 was $~~192~~464 million or $01.6658 a share ($01.6558 on a diluted basis) compared with $~~277~~440 million or $01.9550 a share ($01.9449 on a diluted basis) for the three months ended ~~March~~September 3130, 2012. Net income for common stock for the nine months ended September 30, 2013 was $828 million or $2.83 a share ($2.81 on a diluted basis) compared with earnings of $931 million or $3.18 a share ($3.16 on a diluted basis) for the nine months ended September 30, 2012. See “Results of Operations – Summary,” below. For segment financial information, see Note J to the ~~First~~Third Quarter Financial Statements and “Results of Operations,” below.


50

Results of Operations — Summary

Net income for common stock for the three and nine months ended ~~March~~September 3130, 2013 and 2012 was as follows:

(Millions of Dollars)	2013			2012
	Three MonthsEnded September 30,						Nine Months Ended September 30,
CECONY		$277			$273
(Millions of Dollars)	2013			2012			2013			2012
O&R		30			20
CECONY		$401			$389			$831			$824
Competitive energy businesses (a)		(112	)		(12	)
O&R		19			24			56			54
Other (b)		(3	)		(4	)
Competitive energy businesses (a)		40			31			(55	)		65
Con Edison		$192			$277
Other (b)		4			(4	)		(4	)		(12	)
Con Edison		$464			$440			$828			$931

(a) Includes an after-tax gain/(charge) of $~~150~~26 million and $(95) million relating to the ~~lease~~LILO ~~in/lease~~transactions ~~out~~for ~~(LILO)~~the ~~transactions~~three and nine months ended September 30, 2013, respectively, and a tax benefit of $15 million resulting from the acceptance by the IRS of the company’s claim for manufacturing tax deductions for the nine months ended September 30, 2013 (see Notes H and I to the ~~First~~Third Quarter Financial Statements). Also includes $264 million and $~~(18)~~17 million of net after-tax mark-to-market gains/ ~~(losses)~~for in the three months ended September 30, 2013 and 2012, respectively, and $12 million and $35 million of net after-tax mark-to-market gains for the nine months ended September 30, 2013 and 2012, respectively.

(b)	Consists of inter-company and parent company accounting.

39The Companies’ results of operations for three and nine months ended September 30, 2013, as compared with the 2012 periods, reflect changes in the rate plans of Con Edison’s utility subsidiaries, increases in certain operations and maintenance expenses, depreciation and property taxes and for the nine months ended September 30, 2013, the weather impact on steam revenues. The results of operations include the operating results of the competitive energy businesses, including net mark-to-market effects.

Operations and maintenance expenses reflect primarily higher surcharges for assessments and fees that are collected in revenues from customers and higher operating costs attributable to weather-related events, offset in part by healthcare costs in the 2013 periods, as compared to 2012. Depreciation and property taxes were higher in the 2013 periods reflecting primarily the impact from higher utility plant balances.


					51

The ~~Companies’~~following ~~results~~table ~~of operations~~presents ~~for~~the ~~three~~estimated ~~months~~effect ~~ended~~on ~~March 31,~~earnings ~~2013,~~per asshare ~~compared~~and ~~with~~net ~~2012~~income ~~period,~~for ~~reflect~~common ~~changes~~stock in for the ~~rate~~three ~~plans of Con Edison’s utility subsidiaries~~ and ~~the~~nine ~~effects~~months ofended ~~the~~2013 ~~normal~~as ~~winter weather~~ compared towith the ~~milder weather in~~ 2012 ~~on steam~~period, ~~revenues.~~resulting ~~The~~from ~~rate~~these ~~plans provide for additional revenues to cover expected increases in certain operations~~ and ~~maintenance~~other ~~expenses,~~major ~~and~~factors: ~~depreciation and property taxes. The results of operations include the operating results of the competitive energy businesses.~~

Operations and maintenance expenses were higher primarily due to pension costs, surcharges for assessments and fees that are collected in revenues from customers and higher operating costs attributable to winter storm related emergency response. Depreciation and property taxes were higher in 2013 period, reflecting primarily the impact from higher utility plant balances.


	Three Months Variation						Nine Months Variation
	Earnings per Share			Net Income for Common Stock (Millions of Dollars)			Earnings per Share			Net Income for Common Stock (Millions of Dollars)
CECONY (a)
Rate plans (b)	$	(0.02	)	$	(5	)	$	0.16		$	48
Weather impact on steam revenues		(0.01	)		(2	)		0.09			27
Operations and maintenance expenses (b)		0.08			24			(0.07	)		(23	)
Depreciation, property taxes and other tax matters (c)		(0.05	)		(16	)		(0.18	)		(53	)
Other		0.04			11			0.03			8
Total CECONY		0.04			12			0.03			7
O&R		(0.01	)		(5	)		—			2
Competitive energy businesses (d)		0.03			9			(0.41	)		(120	)
Other, including parent company expenses (c)		0.02			8			0.03			8
Total variations	$	0.08		$	24			$(0.35	)		$(103	)

The following table presents the estimated effect on earnings per share and net income for common stock for 2013 period compared with 2012 period, resulting from these and other major factors:

	Earnings per ShareVariation			Net Income for CommonStock Variation (Millions of Dollars)
Consolidated Edison Company of New York, Inc. (CECONY) (a)
Rate plans, primarily to recover increases in certain costs		$0.21			$61
Weather impact on steam revenues		0.07			22
Operations and maintenance expense		(0.20	)		(57	)
Depreciation and property taxes		(0.06	)		(19	)
Other		—			(3	)
Total CECONY		0.02			4
Orange and Rockland Utilities (O&R)		0.03			10
CEBs (b)		(0.34	)		(100	)
Other, including parent company expenses		—			1
Total variation		$(0.29	)		$(85	)

(a)

Under the revenue decoupling mechanisms in CECONY’s electric and gas rate plans and the weather-normalization clause applicable to the gas business, revenues are generally not affected by changes in delivery volumes from levels assumed when rates were approved. Under CECONY’s rate plans, pension and other postretirement costs and certain other costs are reconciled to amounts reflected in rates for such costs.

(b) ~~These~~The rate plan variations include, a decrease in revenues in the ~~first~~three ~~quarter~~and ofnine months ended September 30, 2013, anas ~~after-tax~~compared ~~charge~~to ofthe ~~$150~~2012 ~~million~~periods orwhen ~~$0.51~~revenues areflected ~~share~~the ~~relating~~use toof ~~the~~certain ~~LILO~~regulatory ~~transactions~~liabilities ~~and~~to offset a ~~tax~~temporary ~~benefit~~surcharge ofunder CECONY’s electric rate plan ($1527 million, after-tax, or $0.0509 a share). ~~resulting~~The ~~from~~variations ~~the~~in ~~acceptance~~operations byand ~~the~~maintenance ~~IRS~~expenses ofinclude ~~the~~a ~~company’s~~decrease ~~claim~~in ~~for~~pension ~~manufacturing~~costs ~~tax~~in ~~deductions~~the ~~(see~~three ~~Notes~~and Hnine ~~and~~months Iended toSeptember ~~the~~30, ~~First~~2013, ~~Quarter~~as ~~Financial~~compared ~~Statement).~~to ~~The~~the ~~variations~~2012 ~~also~~periods ~~include~~when ~~after-tax~~certain ~~net~~pension ~~mark-to-market~~costs ~~gains~~that ofwere ~~$26~~deferred ~~million~~from orearlier ~~$0.09~~periods awere ~~share~~recognized inunder ~~the~~CECONY’s ~~first~~electric ~~quarter~~rate ofplan ~~2013~~($20 ~~and~~million, after-tax, ~~net~~or ~~mark-to-market~~$0.07 ~~losses~~a ofshare and $18 million, after-tax, or $0.06 a share, ~~in the first quarter of 2012~~respectively).

(c)	Variations for the three and nine months ended September 30 reflect certain federal income tax benefits and related interest in the 2013 periods for Con Edison (parent company): $7 million or $0.02 a share; CECONY: $9 million or $0.03 a share. See Note I to the Third Quarter Financial Statements.

(d)

These variations include, for the three months ended September 30, an after-tax gain of $26 million or $0.09 a share in 2013 relating to the LILO transactions (see Notes H and I to the Third Quarter Financial Statements) and reflect after-tax net mark-to-market gains of $4 million or $0.01 a share in 2013 and after-tax net mark-to-market gains of $17 million or $0.06 a share in 2012. These variations include, for the nine months ended September 30, an after-tax charge of $95 million or $0.32 a share in 2013 relating to the LILO transactions, a tax benefit of $15 million or $0.05 a share in 2013 resulting from the acceptance by the IRS of the company’s claim for manufacturing tax deductions (see Notes H and I to the Third Quarter Financial Statements) and reflect after-tax net mark-to-market gains of $12 million or $0.04 a share in 2013 and after-tax net mark-to-market gains of $35 million or $0.12 a share in 2012.

See “Results of Operations” below for further discussion and analysis of results of operations.

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.

Changes in the Companies’ cash and temporary cash investments resulting from operating, investing and financing activities for the ~~three~~nine months ended ~~March~~September 3130, 2013 and 2012 are summarized as follows:

Con Edison

(Millions of Dollars)	2013			2012			Variance
	Con Edison									CECONY
Operating activities	$	(84	)	$	402		$	(486	)
(Millions of Dollars)	2013			2012			Variance			2013			2012			Variance
Investing activities		(663	)		(490	)		(173	)
Operating activities	$	1,238		$	1,638		$	(400	)	$	1,369		$	1,463		$	(94	)
Financing activities		485			209			276
Investing activities		(1,895	)		(1,867	)		(28	)		(1,753	)		(1,483	)		(270	)
Net change		(262	)		121			(383	)
Financing activities		337			(350	)		687			69			(326	)		395
Balance at beginning of period		394			648			(254	)
Net change		(320	)		(579	)		259			(315	)		(346	)		31
Balance at end of period	$	132		$	769		$	(637	)
Balance at beginning of period		394			648			(254	)		353			372			(19	)
Balance at end of period	$	74		$	69		$	5		$	38		$	26		$	12

4052

CECONY

(Millions of Dollars)	2013			2012			Variance
Operating activities		$ 350			$ 368			$ (18	)
Investing activities		(562	)		(487	)		(75	)
Financing activities		(102	)		222			(324	)
Net change		(314	)		103			(417	)
Balance at beginning of period		353			372			(19	)
Balance at end of period		$ 39			$ 475			$(436	)

Cash Flows from Operating Activities

The Utilities’ cash flows from operating activities reflect principally their energy sales and deliveries and cost of operations. The volume of energy sales and deliveries is dependent primarily on factors external to the Utilities, such as growth of customer demand, weather, market prices for energy, economic conditions and measures that promote energy efficiency. Under the revenue decoupling mechanisms in CECONY’s electric and gas rate plans and O&R’s 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 not net income. The prices at which the Utilities provide energy to their customers are determined in accordance with their rate agreements. 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

Table of Contents

BasedTable on estimates as of March 31, 2013, Con Edison expects to make a contribution of $9 million, nearly all of which is for CECONY, to the other postretirement benefit plans in 2013. Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Filing Compare · CONSOLIDATED EDISON CO OF NEW YORK INC