Document
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
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x | Quarterly Report Pursuant To Section 13 or 15(d) of the Securities Exchange Act of 1934 |
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2016
OR
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¨ | Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
For the transition period from to
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Commission File Number | | Exact name of registrant as specified in its charter and principal executive office address and telephone number | | State of Incorporation | | I.R.S. Employer ID. 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.
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Consolidated Edison, Inc. (Con Edison) | Yes x | No ¨ |
Consolidated Edison Company 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 files).
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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.
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Con Edison |
Large accelerated filer x | Accelerated filer ¨ | Non-accelerated filer ¨ | Smaller reporting company ¨ |
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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).
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Con Edison | Yes ¨ | No x |
CECONY | Yes ¨ | No x |
As of July 29, 2016, Con Edison had outstanding 304,414,974 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 wholly-owned 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 abbreviations or acronyms that are used in the Companies’ SEC reports:
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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. |
Con Edison Transmission | | Con Edison Transmission, Inc. |
CET Electric | | Consolidated Edison Transmission, LLC |
CET Gas | | Con Edison Gas Pipeline and Storage, LLC |
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 |
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Regulatory Agencies, Government Agencies and Other Organizations |
EPA | | U. S. Environmental Protection Agency |
FASB | | Financial Accounting Standards Board |
FERC | | Federal Energy Regulatory Commission |
IASB | | International Accounting Standards Board |
IRS | | Internal Revenue Service |
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 |
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 |
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Accounting | | |
ASU | | Accounting Standards Update |
GAAP | | Generally Accepted Accounting Principles in the United States of America |
OCI | | Other Comprehensive Income |
VIE | | Variable interest entity |
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Environmental | | |
CO2 | | Carbon dioxide |
GHG | | Greenhouse gases |
MGP Sites | | Manufactured gas plant sites |
PCBs | | Polychlorinated biphenyls |
PRP | | Potentially responsible party |
RGGI | | Regional Greenhouse Gas Initiative |
Superfund | | Federal Comprehensive Environmental Response, Compensation and Liability Act of 1980 and similar state statutes |
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Units of Measure | | |
AC | | Alternating current |
Dt | | Dekatherms |
kV | | Kilovolt |
kWh | | Kilowatt-hour |
MDt | | Thousand dekatherms |
MMlb | | Million pounds |
MVA | | Megavolt ampere |
MW | | Megawatt or thousand kilowatts |
MWh | | Megawatt hour |
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Other | | |
AFUDC | | Allowance for funds used during construction |
AMI | | Advanced metering infrastructure |
COSO | | Committee of Sponsoring Organizations of the Treadway Commission |
DER | | Distributed energy resources |
EGWP | | Employer Group Waiver Plan |
Fitch | | Fitch Ratings |
First Quarter Form 10-Q | | The Companies' combined Quarterly Report on Form 10-Q for the quarterly period ended March 31 of the current year |
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 |
Form 10-K | | The Companies’ combined Annual Report on Form 10-K for the year ended December 31, 2015 |
LTIP | | Long Term Incentive Plan |
Moody’s | | Moody’s Investors Service |
REV | | Reforming the Energy Vision |
S&P | | Standard & Poor’s Financial Services LLC |
VaR | | Value-at-Risk |
TABLE OF CONTENTS
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ITEM 1 | Financial Statements (Unaudited) | |
| Con Edison | |
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| CECONY | |
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ITEM 2 | | |
ITEM 3 | | |
ITEM 4 | | |
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ITEM 1 | | |
ITEM 1A | | |
ITEM 6 | | |
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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 “forecasts,” “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 factors including:
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• | the Companies are extensively regulated and are subject to penalties; |
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• | the Utilities’ rate plans may not provide a reasonable return; |
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• | the Companies may be adversely affected by changes to the Utilities’ rate plans; |
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• | the intentional misconduct of employees or contractors could adversely affect the Companies; |
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• | the failure of, or damage to, the Companies’ facilities could adversely affect the Companies; |
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• | a cyber attack could adversely affect the Companies; |
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• | the Companies are exposed to risks from the environmental consequences of their operations; |
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• | a disruption in the wholesale energy markets or failure by an energy supplier could adversely affect the Companies; |
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• | the Companies have substantial unfunded pension and other postretirement benefit liabilities; |
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• | Con Edison’s ability to pay dividends or interest depends on dividends from its subsidiaries; |
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• | the Companies require access to capital markets to satisfy funding requirements; |
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• | the Companies’ strategies may not be effective to address changes in the external business environment; and |
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• | the Companies also face other risks that are beyond their control. |
Consolidated Edison, Inc.
CONSOLIDATED INCOME STATEMENT (UNAUDITED)
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| For the Three Months Ended June 30, | For the Six Months Ended June 30, |
| 2016 | 2015 | 2016 | 2015 |
| (Millions of Dollars/ Except Share Data) |
OPERATING REVENUES | | | | |
Electric | $2,035 | $2,040 | $3,947 | $4,175 |
Gas | 336 | 324 | 1,012 | 1,056 |
Steam | 85 | 96 | 343 | 471 |
Non-utility | 338 | 328 | 648 | 702 |
TOTAL OPERATING REVENUES | 2,794 | 2,788 | 5,950 | 6,404 |
OPERATING EXPENSES | | | | |
Purchased power | 558 | 660 | 1,249 | 1,544 |
Fuel | 33 | 31 | 104 | 185 |
Gas purchased for resale | 81 | 89 | 239 | 351 |
Other operations and maintenance | 820 | 802 | 1,607 | 1,616 |
Depreciation and amortization | 302 | 276 | 599 | 555 |
Taxes, other than income taxes | 485 | 458 | 995 | 955 |
TOTAL OPERATING EXPENSES | 2,279 | 2,316 | 4,793 | 5,206 |
OPERATING INCOME | 515 | 472 | 1,157 | 1,198 |
OTHER INCOME (DEDUCTIONS) | | | | |
Investment and other income | 15 | 14 | 19 | 19 |
Allowance for equity funds used during construction | 2 | 1 | 4 | 2 |
Other deductions | (6) | (5) | (11) | (7) |
TOTAL OTHER INCOME | 11 | 10 | 12 | 14 |
INCOME BEFORE INTEREST AND INCOME TAX EXPENSE | 526 | 482 | 1,169 | 1,212 |
INTEREST EXPENSE | | | | |
Interest on long-term debt | 167 | 156 | 330 | 311 |
Other interest | 5 | 7 | 12 | 13 |
Allowance for borrowed funds used during construction | (2) | (1) | (3) | (1) |
NET INTEREST EXPENSE | 170 | 162 | 339 | 323 |
INCOME BEFORE INCOME TAX EXPENSE | 356 | 320 | 830 | 889 |
INCOME TAX EXPENSE | 124 | 101 | 288 | 300 |
NET INCOME | $232 | $219 | $542 | $589 |
Net income per common share—basic | $0.78 | $0.75 | $1.83 | $2.01 |
Net income per common share—diluted | $0.77 | $0.74 | $1.82 | $2.01 |
DIVIDENDS DECLARED PER COMMON SHARE | $0.67 | $0.65 | $1.34 | $1.30 |
AVERAGE NUMBER OF SHARES OUTSTANDING—BASIC (IN MILLIONS) | 299.1 | 292.9 | 296.7 | 292.9 |
AVERAGE NUMBER OF SHARES OUTSTANDING—DILUTED (IN MILLIONS) | 300.4 | 294.0 | 298.0 | 293.9 |
The accompanying notes are an integral part of these financial statements.
Consolidated Edison, Inc.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED)
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| For the Three Months Ended June 30, | For the Six Months Ended June 30, |
| 2016 | 2015 | 2016 | 2015 |
| (Millions of Dollars) |
NET INCOME | $232 | $219 | $542 | $589 |
OTHER COMPREHENSIVE INCOME, NET OF TAXES | | | | |
Pension and other postretirement benefit plan liability adjustments, net of taxes | 1 | 1 | 1 | 6 |
TOTAL OTHER COMPREHENSIVE INCOME, NET OF TAXES | 1 | 1 | 1 | 6 |
COMPREHENSIVE INCOME | $233 | $220 | $543 | $595 |
The accompanying notes are an integral part of these financial statements.
Consolidated Edison, Inc.
CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
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| For the Six Months Ended June 30, |
| 2016 | 2015 |
| (Millions of Dollars) |
OPERATING ACTIVITIES | | |
Net income | $542 | $589 |
PRINCIPAL NON-CASH CHARGES/(CREDITS) TO INCOME | | |
Depreciation and amortization | 599 | 555 |
Deferred income taxes | 268 | 202 |
Rate case amortization and accruals | (112) | (20) |
Common equity component of allowance for funds used during construction | (4) | (2) |
Net derivative (gains)/losses | (33) | 8 |
Other non-cash items, net | 42 | 18 |
CHANGES IN ASSETS AND LIABILITIES | | |
Accounts receivable – customers | 101 | 35 |
Materials and supplies, including fuel oil and gas in storage | 29 | 48 |
Other receivables and other current assets | (38) | (17) |
Income taxes receivable | 151 | 224 |
Prepayments | (15) | (144) |
Accounts payable | (21) | (158) |
Pensions and retiree benefits obligations, net | 302 | 379 |
Pensions and retiree benefits contributions | (307) | (407) |
Accrued taxes | (16) | (20) |
Accrued interest | 3 | (1) |
Superfund and environmental remediation costs, net | 60 | 15 |
Distributions from equity investments | 24 | 18 |
Deferred charges, noncurrent assets and other regulatory assets | (98) | (3) |
Deferred credits and other regulatory liabilities | 75 | 136 |
Other current and noncurrent liabilities | 79 | 31 |
NET CASH FLOWS FROM OPERATING ACTIVITIES | 1,631 | 1,486 |
INVESTING ACTIVITIES | | |
Utility construction expenditures | (1,344) | (1,174) |
Cost of removal less salvage | (95) | (105) |
Non-utility construction expenditures | (331) | (178) |
Investments in/acquisitions of renewable electric production and electric and gas transmission projects | (1,250) | (252) |
Proceeds from the transfer of assets to NY Transco | 122 | — |
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Restricted cash | (6) | (22) |
Other investing activities | (82) | 6 |
NET CASH FLOWS USED IN INVESTING ACTIVITIES | (2,986) | (1,725) |
FINANCING ACTIVITIES | | |
Net (payment)/issuance of short-term debt | (821) | 445 |
Issuance of long-term debt | 1,765 | 238 |
Retirement of long-term debt | (6) | (45) |
Debt issuance costs | (15) | (2) |
Common stock dividends | (378) | (380) |
Issuance of common shares - public offering | 702 | — |
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Issuance of common shares for stock plans, net of repurchases | 27 | (7) |
Distribution to noncontrolling interest | (1) | — |
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NET CASH FLOWS FROM FINANCING ACTIVITIES | 1,273 | 249 |
CASH AND TEMPORARY CASH INVESTMENTS: | | |
NET CHANGE FOR THE PERIOD | (82) | 10 |
BALANCE AT BEGINNING OF PERIOD | 944 | 699 |
BALANCE AT END OF PERIOD EXCLUDING HELD FOR SALE | $862 | $709 |
SUPPLEMENTAL DISCLOSURE OF CASH INFORMATION | | |
Cash paid/(received) during the period for: | | |
Interest | $318 | $305 |
Income taxes | $(142) | $(9) |
SUPPLEMENTAL DISCLOSURE OF NON-CASH INFORMATION | | |
Construction expenditures in accounts payable | $254 | $213 |
Issuance of common shares for dividend reinvestment | $23 | $5 |
The accompanying notes are an integral part of these financial statements.
Consolidated Edison, Inc.
CONSOLIDATED BALANCE SHEET (UNAUDITED)
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| June 30, 2016 | December 31, 2015 |
| (Millions of Dollars) |
ASSETS | | |
CURRENT ASSETS | | |
Cash and temporary cash investments | $862 | $944 |
Special deposits | 10 | 3 |
Accounts receivable – customers, less allowance for uncollectible accounts of $80 and $85 in 2016 and 2015, respectively | 951 | 1,052 |
Other receivables, less allowance for uncollectible accounts of $15 and $11 in 2016 and 2015, respectively | 247 | 304 |
Income taxes receivable | 15 | 166 |
Accrued unbilled revenue | 365 | 360 |
Fuel oil, gas in storage, materials and supplies, at average cost | 321 | 350 |
Prepayments | 192 | 177 |
Regulatory assets | 84 | 132 |
Assets held for sale | 183 | 157 |
Other current assets | 269 | 191 |
TOTAL CURRENT ASSETS | 3,499 | 3,836 |
INVESTMENTS | 1,913 | 884 |
UTILITY PLANT, AT ORIGINAL COST | | |
Electric | 26,961 | 26,358 |
Gas | 7,102 | 6,858 |
Steam | 2,368 | 2,336 |
General | 2,614 | 2,622 |
TOTAL | 39,045 | 38,174 |
Less: Accumulated depreciation | 8,305 | 8,044 |
Net | 30,740 | 30,130 |
Construction work in progress | 1,148 | 1,003 |
NET UTILITY PLANT | 31,888 | 31,133 |
NON-UTILITY PLANT | | |
Non-utility property, less accumulated depreciation of $114 and $95 in 2016 and 2015, respectively | 859 | 832 |
Construction work in progress | 712 | 244 |
NET PLANT | 33,459 | 32,209 |
OTHER NONCURRENT ASSETS | | |
Goodwill | 429 | 429 |
Intangible assets, less accumulated amortization of $5 and $4 in 2016 and 2015, respectively | 2 | 2 |
Regulatory assets | 7,680 | 8,096 |
Other deferred charges and noncurrent assets | 288 | 186 |
TOTAL OTHER NONCURRENT ASSETS | 8,399 | 8,713 |
TOTAL ASSETS | $47,270 | $45,642 |
The accompanying notes are an integral part of these financial statements.
Consolidated Edison, Inc.
CONSOLIDATED BALANCE SHEET (UNAUDITED)
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| June 30, 2016 | December 31, 2015 |
| (Millions of Dollars) |
LIABILITIES AND SHAREHOLDERS’ EQUITY | | |
CURRENT LIABILITIES | | |
Long-term debt due within one year | $746 | $739 |
Notes payable | 708 | 1,529 |
Accounts payable | 969 | 1,008 |
Customer deposits | 358 | 354 |
Accrued taxes | 46 | 62 |
Accrued interest | 139 | 136 |
Accrued wages | 99 | 97 |
Fair value of derivative liabilities | 62 | 66 |
Regulatory liabilities | 122 | 115 |
Liabilities held for sale | 60 | 89 |
Other current liabilities | 594 | 525 |
TOTAL CURRENT LIABILITIES | 3,903 | 4,720 |
NONCURRENT LIABILITIES | | |
Provision for injuries and damages | 188 | 185 |
Pensions and retiree benefits | 2,423 | 2,911 |
Superfund and other environmental costs | 758 | 765 |
Asset retirement obligations | 249 | 242 |
Fair value of derivative liabilities | 33 | 39 |
Deferred income taxes and unamortized investment tax credits | 9,878 | 9,537 |
Regulatory liabilities | 1,932 | 1,977 |
Other deferred credits and noncurrent liabilities | 201 | 199 |
TOTAL NONCURRENT LIABILITIES | 15,662 | 15,855 |
LONG-TERM DEBT | 13,747 | 12,006 |
EQUITY | | |
Common shareholders’ equity | 13,950 | 13,052 |
Noncontrolling interest | 8 | 9 |
TOTAL EQUITY (See Statement of Equity) | 13,958 | 13,061 |
TOTAL LIABILITIES AND EQUITY | $47,270 | $45,642 |
The accompanying notes are an integral part of these financial statements.
Consolidated Edison, Inc.
CONSOLIDATED STATEMENT OF EQUITY (UNAUDITED)
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(In Millions) | Common Stock | Additional Paid-In Capital | Retained Earnings | Treasury Stock | Capital Stock Expense | Accumulated Other Comprehensive Income/(Loss) | Noncontrolling Interest | Total |
Shares | Amount | Shares | Amount |
BALANCE AS OF DECEMBER 31, 2014 | 293 | $32 | $4,991 | $8,691 | 23 | $(1,032) | $(61) | $(45) | $9 | $12,585 |
Net income | | | | 370 | | | | | | 370 |
Common stock dividends | | | | (190) | | | | | | (190) |
Issuance of common shares for stock plans, net of repurchases | — |
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| 2 | | — |
| (2) |
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Other comprehensive income | | | | | | | | 5 | | 5 |
BALANCE AS OF MARCH 31, 2015 | 293 | $32 | $4,993 | $8,871 | 23 | $(1,034) | $(61) | $(40) | $9 | $12,770 |
Net income | | | | 219 | | | | | | 219 |
Common stock dividends | | | | (190) | | | | | | (190) |
Issuance of common shares for stock plans, net of repurchases | — |
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| — |
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| (3) | | | | (3) |
Other comprehensive income | | | | | | | | 1 | | 1 |
BALANCE AS OF JUNE 30, 2015 | 293 | $32 | $4,993 | $8,900 | 23 | $(1,037) | $(61) | $(39) | $9 | $12,797 |
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BALANCE AS OF DECEMBER 31, 2015 | 293 | $32 | $5,030 | $9,123 | 23 | $(1,038) | $(61) | $(34) | $9 | $13,061 |
Net income | | | | 310 | | | | | | 310 |
Common stock dividends | | | | (197) | | | | | | (197) |
Issuance of common shares for stock plans | 1 |
| 28 |
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Other comprehensive income | | | | | | | | — |
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Noncontrolling interest | | | | | | | | | (1) | (1) |
BALANCE AS OF MARCH 31, 2016 | 294 | $32 | $5,058 | $9,236 | 23 | $(1,038) | $(61) | $(34) | $8 | $13,201 |
Net income | | | | 232 | | | | | | 232 |
Common stock dividends | | | | (204) | | | | | | (204) |
Issuance of common shares - public offering | 10 | 1 | 723 |
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| (22) |
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| 702 |
Issuance of common shares for stock plans | — |
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| 26 |
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| | | 26 |
Other comprehensive income | | | | | | | | 1 | | 1 |
BALANCE AS OF JUNE 30, 2016 | 304 | $33 | $5,807 | $9,264 | 23 | $(1,038) | $(83) | $(33) | $8 | $13,958 |
The accompanying notes are an integral part of these financial statements.
Consolidated Edison Company of New York, Inc.
CONSOLIDATED INCOME STATEMENT (UNAUDITED)
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| For the Three Months Ended June 30, | For the Six Months Ended June 30, |
| 2016 | 2015 | 2016 | 2015 |
| (Millions of Dollars) |
OPERATING REVENUES | | | | |
Electric | $1,892 | $1,879 | $3,665 | $3,858 |
Gas | 304 | 308 | 905 | 963 |
Steam | 85 | 96 | 343 | 471 |
TOTAL OPERATING REVENUES | 2,281 | 2,283 | 4,913 | 5,292 |
OPERATING EXPENSES | | | | |
Purchased power | 369 | 358 | 721 | 897 |
Fuel | 33 | 31 | 104 | 185 |
Gas purchased for resale | 51 | 54 | 183 | 252 |
Other operations and maintenance | 701 | 687 | 1,381 | 1,390 |
Depreciation and amortization | 275 | 254 | 547 | 511 |
Taxes, other than income taxes | 460 | 439 | 944 | 914 |
TOTAL OPERATING EXPENSES | 1,889 | 1,823 | 3,880 | 4,149 |
OPERATING INCOME | 392 | 460 | 1,033 | 1,143 |
OTHER INCOME (DEDUCTIONS) | | | | |
Investment and other income | 1 | 2 | 2 | 3 |
Allowance for equity funds used during construction | 2 | 1 | 4 | 2 |
Other deductions | (1) | (5) | (6) | (6) |
TOTAL OTHER INCOME (DEDUCTIONS) | 2 | (2) | — |
| (1) |
INCOME BEFORE INTEREST AND INCOME TAX EXPENSE | 394 | 458 | 1,033 | 1,142 |
INTEREST EXPENSE | | | | |
Interest on long-term debt | 146 | 141 | 290 | 282 |
Other interest | 4 | 5 | 9 | 9 |
Allowance for borrowed funds used during construction | (1) | — |
| (2) | (1) |
NET INTEREST EXPENSE | 149 | 146 | 297 | 290 |
INCOME BEFORE INCOME TAX EXPENSE | 245 | 312 | 736 | 852 |
INCOME TAX EXPENSE | 84 | 101 | 264 | 293 |
NET INCOME | $161 | $211 | $472 | $559 |
The accompanying notes are an integral part of these financial statements.
Consolidated Edison Company of New York, Inc.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED)
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| For the Three Months Ended June 30, | For the Six Months Ended June 30, |
| 2016 | 2015 | 2016 | 2015 |
| (Millions of Dollars) |
NET INCOME | $161 | $211 | $472 | $559 |
OTHER COMPREHENSIVE INCOME, NET OF TAXES | | | | |
Pension and other postretirement benefit plan liability adjustments, net of taxes | 1 | 1 | 1 | 1 |
TOTAL OTHER COMPREHENSIVE INCOME, NET OF TAXES | 1 | 1 | 1 | 1 |
COMPREHENSIVE INCOME | $162 | $212 | $473 | $560 |
The accompanying notes are an integral part of these financial statements.
Consolidated Edison Company of New York, Inc.
CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
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| For the Six Months Ended June 30, |
| 2016 | 2015 |
| (Millions of Dollars) |
OPERATING ACTIVITIES | | |
Net income | $472 | $559 |
PRINCIPAL NON-CASH CHARGES/(CREDITS) TO INCOME | | |
Depreciation and amortization | 547 | 511 |
Deferred income taxes | 283 | 135 |
Rate case amortization and accruals | (120) | (32) |
Common equity component of allowance for funds used during construction | (4) | (2) |
Other non-cash items, net | 15 | (10) |
CHANGES IN ASSETS AND LIABILITIES | | |
Accounts receivable – customers | 102 | 53 |
Materials and supplies, including fuel oil and gas in storage | 18 | 42 |
Other receivables and other current assets | (64) | 11 |
Accounts receivable from affiliated companies | 92 | (4) |
Prepayments | 3 | 18 |
Accounts payable | (54) | (106) |
Accounts payable to affiliated companies | 5 | 5 |
Pensions and retiree benefits obligations, net | 287 | 360 |
Pensions and retiree benefits contributions | (306) | (406) |
Superfund and environmental remediation costs, net | 67 | 14 |
Accrued taxes | (15) | (1) |
Accrued taxes to affiliated companies | (2) | (10) |
Accrued interest | (3) | (1) |
Deferred charges, noncurrent assets and other regulatory assets | (100) | (22) |
Deferred credits and other regulatory liabilities | 89 | 119 |
Other current and noncurrent liabilities | 87 | (31) |
NET CASH FLOWS FROM OPERATING ACTIVITIES | 1,399 | 1,202 |
INVESTING ACTIVITIES | | |
Utility construction expenditures | (1,268) | (1,108) |
Cost of removal less salvage | (92) | (101) |
Proceeds from the transfer of assets to NY Transco | 122 | — |
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Restricted cash | 13 | — |
|
NET CASH FLOWS USED IN INVESTING ACTIVITIES | (1,225) | (1,209) |
FINANCING ACTIVITIES | | |
Net (payment)/issuance of short-term debt | (425) | 545 |
Issuance of long-term debt | 550 | — |
|
Debt issuance costs | (6) | (1) |
Capital contribution by parent | 51 | — |
|
Dividend to parent | (372) | (516) |
NET CASH FLOWS (USED IN)/FROM FINANCING ACTIVITIES | (202) | 28 |
CASH AND TEMPORARY CASH INVESTMENTS: | | |
NET CHANGE FOR THE PERIOD | (28) | 21 |
BALANCE AT BEGINNING OF PERIOD | 843 | 645 |
BALANCE AT END OF PERIOD | $815 | $666 |
SUPPLEMENTAL DISCLOSURE OF CASH INFORMATION | | |
Cash paid/(received) during the period for: | | |
Interest | $285 | $277 |
Income taxes | $(117) | $160 |
SUPPLEMENTAL DISCLOSURE OF NON-CASH INFORMATION | | |
Construction expenditures in accounts payable | $196 | $151 |
The accompanying notes are an integral part of these financial statements.
Consolidated Edison Company of New York, Inc.
CONSOLIDATED BALANCE SHEET (UNAUDITED)
|
| | |
| June 30, 2016 | December 31, 2015 |
| (Millions of Dollars) |
ASSETS | | |
CURRENT ASSETS | | |
Cash and temporary cash investments | $815 | $843 |
Special deposits | 2 | 2 |
Accounts receivable – customers, less allowance for uncollectible accounts of $75 and $80 in 2016 and 2015, respectively | 890 | 987 |
Other receivables, less allowance for uncollectible accounts of $14 and $11 in 2016 and 2015, respectively | 76 | 70 |
Accrued unbilled revenue | 328 | 327 |
Accounts receivable from affiliated companies | 98 | 190 |
Fuel oil, gas in storage, materials and supplies, at average cost | 270 | 288 |
Prepayments | 110 | 113 |
Regulatory assets | 77 | 121 |
Other current assets | 165 | 131 |
TOTAL CURRENT ASSETS | 2,831 | 3,072 |
INVESTMENTS | 307 | 286 |
UTILITY PLANT, AT ORIGINAL COST | | |
Electric | 25,398 | 24,828 |
Gas | 6,421 | 6,191 |
Steam | 2,368 | 2,336 |
General | 2,399 | 2,411 |
TOTAL | 36,586 | 35,766 |
Less: Accumulated depreciation | 7,615 | 7,378 |
Net | 28,971 | 28,388 |
Construction work in progress | 1,055 | 922 |
NET UTILITY PLANT | 30,026 | 29,310 |
NON-UTILITY PROPERTY | | |
Non-utility property, less accumulated depreciation of $25 in 2016 and 2015 | 4 | 5 |
NET PLANT | 30,030 | 29,315 |
OTHER NONCURRENT ASSETS | | |
Regulatory assets | 7,109 | 7,482 |
Other deferred charges and noncurrent assets | 76 | 75 |
TOTAL OTHER NONCURRENT ASSETS | 7,185 | 7,557 |
TOTAL ASSETS | $40,353 | $40,230 |
The accompanying notes are an integral part of these financial statements.
Consolidated Edison Company of New York, Inc.
CONSOLIDATED BALANCE SHEET (UNAUDITED)
|
| | | |
| June 30, 2016 | December 31, 2015 |
| (Millions of Dollars) |
LIABILITIES AND SHAREHOLDER’S EQUITY | | |
CURRENT LIABILITIES | | |
Long-term debt due within one year | $650 | $650 |
Notes payable | 608 | 1,033 |
Accounts payable | 703 | 771 |
Accounts payable to affiliated companies | 17 | 12 |
Customer deposits | 343 | 339 |
Accrued taxes | 34 | 49 |
Accrued taxes to affiliated companies | — |
| 2 |
Accrued interest | 115 | 118 |
Accrued wages | 90 | 88 |
Fair value of derivative liabilities | 44 | 50 |
Regulatory liabilities | 98 | 84 |
Other current liabilities | 516 | 443 |
TOTAL CURRENT LIABILITIES | 3,218 | 3,639 |
NONCURRENT LIABILITIES | | |
Provision for injuries and damages | 181 | 178 |
Pensions and retiree benefits | 2,085 | 2,565 |
Superfund and other environmental costs | 664 | 665 |
Asset retirement obligations | 238 | 234 |
Fair value of derivative liabilities | 30 | 36 |
Deferred income taxes and unamortized investment tax credits | 9,121 | 8,755 |
Regulatory liabilities | 1,743 | 1,789 |
Other deferred credits and noncurrent liabilities | 174 | 167 |
TOTAL NONCURRENT LIABILITIES | 14,236 | 14,389 |
LONG-TERM DEBT | 11,333 | 10,787 |
COMMON SHAREHOLDER’S EQUITY (See Statement of Shareholder’s Equity) | 11,566 | 11,415 |
TOTAL LIABILITIES AND SHAREHOLDER’S EQUITY | $40,353 | $40,230 |
The accompanying notes are an integral part of these financial statements.
Consolidated Edison Company of New York, Inc.
CONSOLIDATED STATEMENT OF SHAREHOLDER’S EQUITY (UNAUDITED) |
| | | | | | | | | | |
| Common Stock | Additional Paid-In Capital | Retained Earnings | Repurchased Con Edison Stock | Capital Stock Expense | Accumulated Other Comprehensive Income/(Loss) | Total |
(In Millions) | Shares | Amount |
BALANCE AS OF DECEMBER 31, 2014 | 235 | $589 | $4,234 | $7,399 | $(962) | $(61) | $(11) | $11,188 |
Net income | | | | 348 | | | | 348 |
Common stock dividend to parent | | | | (338) | | | | (338) |
Other comprehensive income | | | | | | | — |
| — |
|
BALANCE AS OF MARCH 31, 2015 | 235 | $589 | $4,234 | $7,409 | $(962) | $(61) | $(11) | $11,198 |
Net income | | | | 211 | | | | 211 |
Common stock dividend to parent | | | | (178) | | | | (178) |
Other comprehensive income | | | | | | | 1 | 1 |
BALANCE AS OF JUNE 30, 2015 | 235 | $589 | $4,234 | $7,442 | $(962) | $(61) | $(10) | $11,232 |
| | | | | | | | |
BALANCE AS OF DECEMBER 31, 2015 | 235 | $589 | $4,247 | $7,611 | $(962) | $(61) | $(9) | $11,415 |
Net income | | | | 310 | | | | 310 |
Common stock dividend to parent | | | | (186) | | | | (186) |
Capital contribution by parent | | | 23 | | | | | 23 |
Other comprehensive income | | | | | | | — |
| — |
|
BALANCE AS OF MARCH 31, 2016 | 235 | $589 | $4,270 | $7,735 | $(962) | $(61) | $(9) | $11,562 |
Net income | | | | 161 | | | | 161 |
Common stock dividend to parent | | | | (186) | | | | (186) |
Capital contribution by parent | | | 28 |
| | | | 28 |
Other comprehensive income | | | | | | | 1 | 1 |
BALANCE AS OF JUNE 30, 2016 | 235 | $589 | $4,298 | $7,710 | $(962) | $(61) | $(8) | $11,566 |
The accompanying notes are an integral part of these financial statements.
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), Con Edison Transmission, Inc. (Con Edison Transmission) and Con Edison’s competitive energy businesses 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, 2015 and their separate unaudited financial statements (including the combined notes thereto) included in Part I, Item 1 of their combined Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2016. Certain prior period amounts have been reclassified to conform to the current period presentation.
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 (see Note P) 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 company which sells to retail customers electricity purchased in wholesale markets (see Note P), enters into related hedging transactions and also provides energy-related products and services to retail customers; Consolidated Edison Energy, Inc. (Con Edison Energy), a company that provides energy-related products and services to wholesale customers; and Consolidated Edison Development, Inc. (Con Edison Development), a company that develops, owns and operates renewable and energy infrastructure projects. In addition, Con Edison has a subsidiary, Con Edison Transmission, that invests in electric transmission facilities through its subsidiary, Consolidated Edison Transmission, LLC (CET Electric), and invests in gas pipeline and storage facilities through its subsidiary Con Edison Gas Pipeline and Storage, LLC (CET Gas).
Note A – Summary of Significant Accounting Policies
Earnings Per Common Share
For the three and six months ended June 30, 2016 and 2015, basic and diluted earnings per share (EPS) for Con Edison are calculated as follows:
|
| | | | |
| For the Three Months Ended June 30, | For the Six Months Ended June 30, |
(Millions of Dollars, except per share amounts/Shares in Millions) | 2016 | 2015 | 2016 | 2015 |
Net income | $232 | $219 | $542 | $589 |
Weighted average common shares outstanding – basic | 299.1 | 292.9 | 296.7 | 292.9 |
Add: Incremental shares attributable to effect of potentially dilutive securities | 1.3 | 1.1 | 1.3 | 1.0 |
Adjusted weighted average common shares outstanding – diluted | 300.4 | 294.0 | 298.0 | 293.9 |
Net income per common share – basic | $0.78 | $0.75 | $1.83 | $2.01 |
Net income per common share – diluted | $0.77 | $0.74 | $1.82 | $2.01 |
The computation of diluted EPS for the six months ended June 30, 2016 and three and six months ended June 30, 2015 excludes immaterial amounts of stock-based compensation awards that were not included because of their anti-dilutive effect.
Changes in Accumulated Other Comprehensive Income/(Loss) by Component
For the three and six months ended June 30, 2016 and 2015, changes to accumulated other comprehensive income/(loss) (OCI) for Con Edison and CECONY are as follows:
|
| | | | |
| For the Three Months Ended June 30, |
| Con Edison | CECONY |
(Millions of Dollars) | 2016 | 2015 | 2016 | 2015 |
Beginning balance, accumulated OCI, net of taxes (a) | $(34) | $(40) | $(9) | $(11) |
Amounts reclassified from accumulated OCI related to pension plan liabilities, net of tax of $(1) for Con Edison in 2016 and 2015 (a)(b) | 1 | 1 | 1 | 1 |
Current period OCI, net of taxes | 1 | 1 | 1 | 1 |
Ending balance, accumulated OCI, net of taxes | $(33) | $(39) | $(8) | $(10) |
|
| | | | | | |
| For the Six Months Ended June 30, |
| Con Edison | CECONY |
(Millions of Dollars) | 2016 | 2015 | 2016 |
| 2015 |
|
Beginning balance, accumulated OCI, net of taxes (a) | $(34) | $(45) | $(9) | $(11) |
OCI before reclassifications, net of tax of $1 and $(2) for Con Edison in 2016 and 2015, respectively | (1) | 3 | — |
| — |
|
Amounts reclassified from accumulated OCI related to pension plan liabilities, net of tax of $(2) for Con Edison in 2016 and 2015 (a)(b) | 2 | 3 | 1 | 1 |
Current period OCI, net of taxes | 1 | 6 | 1 | 1 |
Ending balance, accumulated OCI, net of taxes | $(33) | $(39) | $(8) | $(10) |
| |
(a) | Tax reclassified from accumulated OCI is reported in the income tax expense line item of the consolidated income statement. |
| |
(b) | For the portion of unrecognized pension and other postretirement benefit costs relating to the Utilities, costs are recorded into, and amortized out of, regulatory assets instead of OCI. The net actuarial losses and prior service costs recognized during the period are included in the computation of total periodic pension and other postretirement benefit cost. See Notes E and F. |
Note B — Regulatory Matters
Rate Plans
CECONY - Electric
In May 2016, the New York State Public Service Commission (NYSPSC) staff submitted testimony in the NYSPSC January 2016 proceeding in which CECONY requested an electric rate increase, effective January 2017. The NYSPSC staff testimony supports an electric rate increase of $45 million reflecting, among other things, an 8.6 percent return on common equity. In June 2016, CECONY filed an update to its January 2016 request. The company increased its requested January 2017 rate increase by $16 million to $498 million, decreased its illustrated January 2018 rate increase by $11 million to $169 million and increased its illustrated January 2019 rate increase by $45 million to $186 million. This updated filing reflects a 9.75 percent return on common equity.
In April 2016, the Federal Energy Regulatory Commission (FERC) rejected CECONY’s challenge to FERC’s approval of substantially increased charges allocated to CECONY for transmission service provided pursuant to the open access tariff of PJM Interconnection LLC (PJM). CECONY will continue to challenge FERC’s approval of the increased charges that will be incurred over the remaining contract term, and in May 2016 filed an appeal of FERC's decision with the U.S. Court of Appeals. In April 2016, CECONY notified PJM that it will not be exercising its option to continue the service beyond April 2017.
CECONY - Gas
In May 2016, the NYSPSC staff submitted testimony in the NYSPSC January 2016 proceeding in which CECONY requested a gas rate increase, effective January 2017. The NYSPSC staff testimony supports a gas rate decrease of $25 million reflecting, among other things, an 8.6 percent return on common equity. In June 2016, CECONY filed an update to its January 2016 request. The company decreased its requested January 2017 rate increase by $29 million to $125 million, increased its illustrated January 2018 rate increase by $13 million to $110 million and decreased its illustrated January 2019 rate increase by $9 million to $100 million. This updated filing reflects a 9.75 percent return on common equity.
Rockland Electric Company (RECO)
In April 2016, RECO filed a request with the New Jersey Board of Public Utilities for an electric rate increase of $10 million, effective March 2017. The filing reflected a return on common equity of 10.20 percent and a common equity
ratio of 49.81 percent. In July 2016, RECO filed an update to its April 2016 request. The company decreased its requested March 2017 rate increase by $1 million to $9 million. The updated filing reflects a return on common equity of 10.20 percent and a common equity ratio of 49.71 percent. The filing reflects continuation of provisions pursuant to which the company recovers its purchased power and fuel costs from customers.
Other Regulatory Matters
In April 2016, the NYSPSC approved the September 2015 Joint Proposal among CECONY, the NYSPSC staff and others with respect to the prudence proceeding the NYSPSC commenced in February 2009 and related matters. Pursuant to the Joint Proposal, the company is required to credit $116 million to customers and, for the period 2017 through 2044, to not seek to recover from customers an aggregate $55 million relating to return on its capital expenditures. In addition, the company’s revenues that were made subject to potential refund in this proceeding are no longer subject to refund. At June 30, 2016, the company had a $97 million regulatory liability for the remaining amount to be credited to customers related to this matter.
In June 2014, the NYSPSC initiated a proceeding to investigate the practices of qualifying persons to perform plastic fusions on gas facilities. New York State regulations require gas utilities to qualify and, except in certain circumstances, annually requalify workers that perform fusion to join plastic pipe. The NYSPSC directed the New York gas utilities to provide information in this proceeding about their compliance with the qualification and requalification requirements and related matters; their procedures for compliance with all gas safety regulations; and their annual chief executive officer certifications regarding these and other procedures. CECONY’s qualification and requalification procedures had not included certain required testing to evaluate specimen fuses. In addition, CECONY and O&R had not timely requalified certain workers that had been qualified under their respective procedures to perform fusion to join plastic pipe. CECONY and O&R have requalified their workers who perform plastic pipe fusions. In May 2015, the NYSPSC, which indicated that it would address enforcement at a later date, ordered CECONY, O&R and other gas utilities to perform risk assessment and remediation plans, additional leakage surveying and reporting; CECONY to hire an independent statistician to develop a risk assessment and remediation plan; and the gas utilities to implement certain new plastic fusion requirements. In December 2015, the NYSPSC staff informed O&R that the company had satisfactorily completed its risk assessment and remediation plan. CECONY expects to submit its risk assessment and remediation plan to the NYSPSC staff in 2016.
In November 2015, the NYSPSC ordered CECONY to show cause why the NYSPSC should not commence proceedings to penalize the company for alleged violations of gas safety regulations identified by the NYSPSC staff in its investigation of a March 2014 explosion and fire and to review the prudence of the company's conduct associated with the incident. See "Manhattan Explosion and Fire" in Note H. In December 2015, the company responded that the NYSPSC should not institute the proceedings and disputed the alleged violations.
At June 30, 2016, CECONY had an $18 million regulatory liability related to the June 2014 plastic fusion proceeding and the November 2015 order to show cause. The company is unable to estimate the amount or range of its possible loss related to these matters in excess of this regulatory liability.
Regulatory Assets and Liabilities
Regulatory assets and liabilities at June 30, 2016 and December 31, 2015 were comprised of the following items:
|
| | | | | | | | |
| Con Edison | | CECONY |
(Millions of Dollars) | 2016 |
| 2015 | | 2016 |
| 2015 |
|
Regulatory assets | | | | | |
Unrecognized pension and other postretirement costs | $3,516 | $3,876 |
| $3,361 | $3,697 |
Future income tax | 2,379 | 2,350 |
| 2,262 | 2,232 |
Environmental remediation costs | 837 | 904 |
| 732 | 800 |
Revenue taxes | 295 | 253 |
| 281 | 240 |
Deferred storm costs | 122 | 185 |
| 57 | 110 |
Unamortized loss on reacquired debt | 47 | 50 |
| 44 | 48 |
O&R property tax reconciliation | 42 | 46 |
| — |
| — |
|
Deferred derivative losses | 38 | 50 |
| 35 | 46 |
Pension and other postretirement benefits deferrals | 35 | 45 |
| 6 | 16 |
Net electric deferrals | 34 | 44 |
| 34 | 44 |
Surcharge for New York State assessment | 32 | 44 |
| 29 | 40 |
Preferred stock redemption | 26 | 26 |
| 26 | 26 |
O&R transition bond charges | 18 | 21 |
| — |
| — |
|
Workers’ compensation | 16 | 11 |
| 16 | 11 |
Recoverable energy costs | — |
| 16 |
| — |
| 15 |
Other | 243 | 175 |
| 226 | 157 |
Regulatory assets – noncurrent | 7,680 | 8,096 |
| 7,109 | 7,482 |
Deferred derivative losses | 75 | 113 |
| 70 | 103 |
Recoverable energy costs | 9 | 19 |
| 7 | 18 |
Regulatory assets – current | 84 | 132 |
| 77 | 121 |
Total Regulatory Assets | $7,764 | $8,228 |
| $7,186 | $7,603 |
Regulatory liabilities |
|
|
|
|
|
Allowance for cost of removal less salvage | $708 | $676 |
| $599 | $570 |
Property tax reconciliation | 230 | 303 |
| 230 | 303 |
Pension and other postretirement benefit deferrals | 125 | 76 |
| 96 | 46 |
Net unbilled revenue deferrals | 117 | 109 |
| 117 | 109 |
Prudence proceeding | 97 | 99 |
| 97 | 99 |
Unrecognized other postretirement costs | 93 | 28 |
| 93 | 28 |
Base rate change deferrals | 77 | 128 |
| 77 | 128 |
New York State income tax rate change | 69 | 75 |
| 66 | 72 |
Variable-rate tax-exempt debt – cost rate reconciliation | 64 | 70 |
| 56 | 60 |
Carrying charges on repair allowance and bonus depreciation | 51 | 49 |
| 50 | 48 |
Earnings sharing - electric, gas and steam | 34 | 80 |
| 30 | 80 |
Net utility plant reconciliations | 28 | 32 |
| 28 | 31 |
Property tax refunds | 22 | 44 |
| 22 | 44 |
World Trade Center settlement proceeds | 10 | 21 |
| 10 | 21 |
Other | 207 | 187 |
| 172 | 150 |
Regulatory liabilities – noncurrent | 1,932 | 1,977 |
| 1,743 | 1,789 |
Revenue decoupling mechanism | 79 | 45 |
| 78 | 45 |
Refundable energy costs | 30 | 64 |
| 9 | 33 |
Deferred derivative gains | 13 | 6 |
| 11 | 6 |
Regulatory liabilities – current | 122 | 115 |
| 98 | 84 |
Total Regulatory Liabilities | $2,054 | $2,092 |
| $1,841 | $1,873 |
Note C — Capitalization
In February 2016, a Con Edison Development subsidiary issued $218 million aggregate principal amount of 4.21 percent senior notes, due 2041, secured by the company's Texas Solar 7 solar project.
In May 2016, Con Edison issued approximately 10 million common shares resulting in net proceeds, after issuance expenses, of $702 million, and $500 million aggregate principal amount of 2.00 percent debentures, due 2021. Also, in May 2016, a Con Edison Development subsidiary issued $95 million aggregate principal amount of 4.07 percent senior notes, due 2036, secured by the company's California Holding 3 solar projects. In June 2016, Con Edison borrowed $400 million pursuant to a credit agreement with a syndicate of banks. The borrowing matures in 2018 and bears interest at a LIBOR plus margin of 1.00 percent. In June 2016, CECONY issued $550 million aggregate principal amount of 3.85 percent debentures, due 2046. Also, in June 2016, a Con Edison Solutions subsidiary borrowed $2 million pursuant to a loan agreement with a New Jersey utility. The borrowing matures in 2026, bears interest of 11.18 percent and may be repaid in cash or project Solar Renewable Energy Certificates.
The carrying amounts and fair values of long-term debt at June 30, 2016 and December 31, 2015 were:
|
| | | | |
(Millions of Dollars) | 2016 | 2015 |
Long-Term Debt (including current portion) | Carrying Amount | Fair Value | Carrying Amount | Fair Value |
Con Edison | $14,493 | $16,681 | $12,745 | $13,856 |
CECONY | $11,983 | $13,917 | $11,437 | $12,427 |
Fair values of long-term debt have been estimated primarily using available market information. For Con Edison, $16,045 million and $636 million of the fair value of long-term debt at June 30, 2016 are classified as Level 2 and Level 3, respectively. For CECONY, $13,281 million and $636 million of the fair value of long-term debt at June 30, 2016 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 June 30, 2016, Con Edison had $708 million of commercial paper outstanding of which $608 million was outstanding under CECONY’s program. The weighted average interest rate at June 30, 2016 was 0.7 percent for both Con Edison and CECONY. At December 31, 2015, Con Edison had $1,529 million of commercial paper outstanding of which $1,033 million was outstanding under CECONY’s program. The weighted average interest rate at December 31, 2015 was 0.7 percent for both Con Edison and CECONY.
At June 30, 2016 and December 31, 2015, no loans were outstanding under the credit agreement (Credit Agreement) and $2 million (including $2 million for CECONY) and $15 million of letters of credit were outstanding under the Credit Agreement, respectively.
Note E — Pension Benefits
Total Periodic Benefit Cost
The components of the Companies’ total periodic benefit costs for the three and six months ended June 30, 2016 and 2015 were as follows:
|
| | | | | | | |
| For the Three Months Ended June 30, |
| Con Edison | CECONY |
(Millions of Dollars) | 2016 |
| 2015 | 2016 |
| 2015 |
|
Service cost – including administrative expenses | $69 | $74 | $65 | $70 |
Interest cost on projected benefit obligation | 149 | 144 | 140 | 135 |
Expected return on plan assets | (237) | (222) | (225) | (210) |
Recognition of net actuarial loss | 149 | 194 | 141 | 183 |
Recognition of prior service costs | 1 | 1 | — |
| — |
|
NET PERIODIC BENEFIT COST | $131 | $191 | $121 | $178 |
Amortization of regulatory asset | — |
| 1 | — |
| 1 |
TOTAL PERIODIC BENEFIT COST | $131 | $192 | $121 | $179 |
Cost capitalized | (53) | (76) | (50) | (72) |
Reconciliation to rate level | 13 | (17) | 14 | (18) |
Cost charged to operating expenses | $91 | $99 | $85 | $89 |
|
| | | | | | |
| For the Six Months Ended June 30, |
| Con Edison | CECONY |
(Millions of Dollars) | 2016 |
| 2015 | 2016 |
| 2015 |
Service cost – including administrative expenses | $138 | $149 | $129 | $139 |
Interest cost on projected benefit obligation | 298 | 287 | 280 | 269 |
Expected return on plan assets | (474) | (443) | (449) | (420) |
Recognition of net actuarial loss | 298 | 388 | 282 | 367 |
Recognition of prior service costs | 2 | 2 | 1 | 1 |
NET PERIODIC BENEFIT COST | $262 | $383 | $243 | $356 |
Amortization of regulatory asset | — |
| 1 | — |
| 1 |
TOTAL PERIODIC BENEFIT COST | $262 | $384 | $243 | $357 |
Cost capitalized | (106) | (144) | (99) | (137) |
Reconciliation to rate level | 26 | (42) | 26 | (42) |
Cost charged to operating expenses | $182 | $198 | $170 | $178 |
Expected Contributions
Based on estimates as of June 30, 2016, the Companies expect to make contributions to the pension plans during 2016 of $508 million (of which $469 million is to be contributed by CECONY). The Companies’ policy is to fund the total periodic benefit cost of the qualified plan to the extent tax deductible and to also contribute to the non-qualified supplemental plans. During the first six months of 2016, the Companies contributed $307 million to the pension plans, nearly all of which was contributed by CECONY. CECONY also contributed $17 million to its external trust for supplemental plans.
Note F — Other Postretirement Benefits
Total Periodic Benefit Cost
The components of the Companies’ total periodic other postretirement benefit costs for the three and six months ended June 30, 2016 and 2015 were as follows:
|
| | | | |
| For the Three Months Ended June 30, |
| Con Edison | CECONY |
(Millions of Dollars) | 2016 | 2015 | 2016 | 2015 |
Service cost | $4 | $5 | $3 | $4 |
Interest cost on accumulated other postretirement benefit obligation | 12 | 13 | 10 | 11 |
Expected return on plan assets | (19) | (20) | (17) | (17) |
Recognition of net actuarial loss | 1 | 8 | 1 | 7 |
Recognition of prior service cost | (5) | (5) | (3) | (4) |
TOTAL PERIODIC OTHER POSTRETIREMENT BENEFIT COST | $(7) | $1 | $(6) | $1 |
Cost capitalized | 2 | (1) | 2 | (1) |
Reconciliation to rate level | 7 | 4 | 6 | 2 |
Cost charged to operating expenses | $2 | $4 | $2 | $2 |
|
| | | | |
| For the Six Months Ended June 30, |
| Con Edison | CECONY |
(Millions of Dollars) | 2016 | 2015 | 2016 | 2015 |
Service cost | $9 | $10 | $7 | $7 |
Interest cost on accumulated other postretirement benefit obligation | 24 | 25 | 20 | 22 |
Expected return on plan assets | (38) | (39) | (34) | (34) |
Recognition of net actuarial loss | 2 | 16 | 1 | 14 |
Recognition of prior service cost | (10) | (10) | (7) | (7) |
TOTAL PERIODIC OTHER POSTRETIREMENT BENEFIT COST | $(13) | $2 | $(13) | $2 |
Cost capitalized | 3 | (1) | 3 | (1) |
Reconciliation to rate level | 14 | 8 | 14 | 3 |
Cost charged to operating expenses | $4 | $9 | $4 | $4 |
Expected Contributions
Based on estimates as of June 30, 2016, Con Edison expects to make a contribution of $6 million, nearly all of which is for CECONY, to the other postretirement benefit plans in 2016. The Companies' policy is to fund the total periodic benefit cost of the plans to the extent tax deductible.
Note G — Environmental Matters
Superfund Sites
Hazardous substances, such as asbestos, polychlorinated biphenyls (PCBs) and coal tar, have been used or generated in the course of operations of the Utilities and their predecessors and are present at sites and in facilities and equipment they currently or previously owned, including sites at which gas was manufactured or stored.
The Federal Comprehensive Environmental Response, Compensation and Liability Act of 1980 and similar state statutes (Superfund) impose joint and several liability, regardless of fault, upon generators of hazardous substances for investigation and remediation costs (which include costs of demolition, removal, disposal, storage, replacement, containment and monitoring) and natural resource damages. Liability under these laws can be material and may be imposed for contamination from past acts, even though such past acts may have been lawful at the time they occurred. The sites at which the Utilities have been asserted to have liability under these laws, including their manufactured gas plant sites and any neighboring areas to which contamination may have migrated, are referred to herein as “Superfund Sites.”
For Superfund Sites where there are other potentially responsible parties and the Utilities are not managing the site investigation and remediation, the accrued liability represents an estimate of the amount the Utilities will need to pay to investigate and, where determinable, discharge their related obligations. For Superfund Sites (including the manufactured gas plant sites) for which one of the Utilities is managing the investigation and remediation, the accrued liability represents an estimate of the company’s share of the undiscounted cost to investigate the sites and, for sites that have been investigated in whole or in part, the cost to remediate the sites, if remediation is necessary and if a reasonable estimate of such cost can be made. Remediation costs are estimated in light of the information available, applicable remediation standards and experience with similar sites.
The accrued liabilities and regulatory assets related to Superfund Sites at June 30, 2016 and December 31, 2015 were as follows:
|
| | | | |
| Con Edison | CECONY |
(Millions of Dollars) | 2016 | 2015 | 2016 | 2015 |
Accrued Liabilities: | | | | |
Manufactured gas plant sites | $670 | $679 | $576 | $579 |
Other Superfund Sites | 88 | 86 | 88 | 86 |
Total | $758 | $765 | $664 | $665 |
Regulatory assets | $837 | $904 | $732 | $800 |
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. The Companies are unable to estimate the time period over which the remaining accrued liability will be incurred because, among other things, the required remediation has not been determined for some of the sites. Under their current rate plans, 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 related to Superfund Sites for the three and six months ended June 30, 2016 and 2015 were as follows:
|
| | | | |
| For the Three Months Ended June 30, |
| Con Edison | CECONY |
(Millions of Dollars) | 2016 | 2015 | 2016 | 2015 |
Remediation costs incurred | $9 | $8 | $3 | $7 |
|
| | | | |
| For the Six Months Ended June 30, |
| Con Edison | CECONY |
(Millions of Dollars) | 2016 | 2015 | 2016 | 2015 |
Remediation costs incurred | $12 | $15 | $5 | $12 |
No insurance recoveries were received by Con Edison or CECONY for the three or six months ended June 30, 2016 and 2015.
In 2015, Con Edison and CECONY estimated that for their manufactured gas plant sites (including CECONY’s Astoria site), the aggregate undiscounted potential liability for the investigation and remediation of coal tar and/or other environmental contaminants could range up to $2.8 billion and $2.7 billion, respectively. These estimates were based on the assumption that there is contamination at all sites, including those that have not yet been fully investigated and additional assumptions about the extent of the contamination and the type and extent of the remediation that may be required. Actual experience may be materially different.
Asbestos Proceedings
Suits have been brought in New York State and federal courts against the Utilities and many other defendants, wherein a large number of plaintiffs sought large amounts of compensatory and punitive damages for deaths and injuries allegedly caused by exposure to asbestos at various premises of the Utilities. The suits that have been resolved, which are many, have been resolved without any payment by the Utilities, or for amounts that were not, in the aggregate, material to them. The amounts specified in all the remaining thousands of suits total billions of dollars; however, the Utilities believe that these amounts are greatly exaggerated, based on the disposition of previous claims. At June 30, 2016, Con Edison and CECONY had accrued their estimated aggregate undiscounted potential liabilities for these suits and additional suits that may be brought over the next 15 years as shown in the following table. The estimates were based upon a combination of modeling, historical data analysis and risk factor assessment. Trial courts have begun, and unless otherwise determined by an appellate court may continue, to apply a different standard for determining liability in asbestos suits than the standard that applied historically. As a result, the Companies currently believe that there is a reasonable possibility of an exposure to loss in excess of the liability accrued for the suits. The Companies are unable to estimate the amount or range of such loss. In addition, certain current and former employees have claimed or are claiming workers’ compensation benefits based on alleged disability from exposure to asbestos. Under its current rate plans, 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 June 30, 2016 and December 31, 2015 were as follows:
|
| | | | |
| Con Edison | CECONY |
(Millions of Dollars) | 2016 | 2015 | 2016 | 2015 |
Accrued liability – asbestos suits | $8 | $8 | $7 | $7 |
Regulatory assets – asbestos suits | $8 | $8 | $7 | $7 |
Accrued liability – workers’ compensation | $91 | $86 | $86 | $81 |
Regulatory assets – workers’ compensation | $16 | $11 | $16 | $11 |
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 eighty suits are pending against the company seeking generally unspecified compensatory and, in some cases, punitive damages, for wrongful death, personal injury, property damage and business interruption. The company has notified its insurers of the incident and believes that the policies in force at the time of the incident will cover the company’s costs to satisfy its liability to others in connection with the suits. In the company’s estimation, there is not a reasonable possibility that an exposure to loss exists for the suits that is materially in excess of the estimated liability accrued. At June 30, 2016, the company has accrued its estimated liability for the suits of $50 million and an insurance receivable in the same amount.
Manhattan Explosion and Fire
On March 12, 2014, two multi-use five-story tall buildings located on Park Avenue between 116th and 117th Street in Manhattan were destroyed by an explosion and fire. CECONY had delivered gas to the buildings through service lines from a distribution main located below ground on Park Avenue. Eight people died and more than 50 people were injured. Additional buildings were also damaged. The National Transportation Safety Board (NTSB) investigated. The parties to the investigation included the company, the City of New York, the Pipeline and Hazardous Materials Safety Administration and the NYSPSC (which also conducted an investigation). In June 2015, the NTSB issued a final report concerning the incident, its probable cause and safety recommendations. The NTSB determined that the probable cause of the incident was (1) the failure of a defective fusion joint at a service tee (which joined a plastic service line to a plastic distribution main) installed by the company that allowed gas to leak from the distribution main and migrate into a building where it ignited and (2) a breach in a City sewer line that allowed groundwater and soil to flow into the sewer, resulting in a loss of support for the distribution main, which caused it to sag and overstressed the defective fusion joint. The NTSB also made safety recommendations, including recommendations to the company that addressed its procedures for the preparation and examination of plastic fusions, training of its staff on conditions for notifications to the City’s Fire Department and extension of its gas main isolation valve installation program. Approximately 70 suits are pending against the company seeking generally unspecified damages and, in some cases, punitive damages, for wrongful death, personal injury, property damage and business interruption. The company has notified its insurers of the incident and believes that the policies in force at the time of the incident will cover the company’s costs, in excess of a required retention (the amount of which is not material), to satisfy any liability it may have for damages in connection with the incident. The company is unable to estimate the amount or range of its possible loss for damages related to the incident. At June 30, 2016, the company had not accrued a liability for damages related to the incident.
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 $2,544 million and $2,856 million at June 30, 2016 and December 31, 2015, respectively.
A summary, by type and term, of Con Edison’s total guarantees at June 30, 2016 is as follows:
|
| | | | | | | |
Guarantee Type | 0 – 3 years | 4 – 10 years |
| > 10 years |
| Total |
| (Millions of Dollars) |
Con Edison Transmission | $619 | $583 |
| $— |
| $1,202 |
Energy transactions | 672 | 41 | 91 | 804 |
Renewable electric production projects | 443 | — |
| 20 | 463 |
Other | 75 | — |
| — |
| 75 |
Total | $1,809 | $624 | $111 | $2,544 |
Con Edison Transmission — Con Edison has guaranteed payment by CET Electric of the contributions CET Electric agreed to make to New York Transco LLC (NY Transco). CET Electric acquired a 45.7 percent interest in NY Transco when it was formed in 2014. NY Transco’s transmission projects are expected to be initially developed by CECONY and other New York transmission owners and then transferred to NY Transco. In May 2016, the transmission owners transferred certain projects to NY Transco, as to which CET Electric made its required contributions. See Note Q. The other projects that were proposed when NY Transco was formed remain subject to certain authorizations from the NYSPSC, the FERC and, as applicable, other federal, state and local agencies. Guarantee amount shown is for the maximum possible required amount of CET Electric’s contributions for these other projects as calculated based on the assumptions that the projects are completed at 175 percent of their estimated costs and NY Transco does not use any debt financing for the projects. Guarantee term shown is assumed as the timing of the contributions is not certain. Also included within the table above is a guarantee for $25 million from Con Edison on behalf of CET Gas in relation to a proposed gas transmission project in West Virginia and Virginia (see Note Q).
Energy Transactions — Con Edison guarantees payments on behalf of its competitive energy businesses in order to facilitate physical and financial transactions in electricity, gas, pipeline capacity, transportation, oil, renewable energy credits and energy services. To the extent that liabilities exist under the contracts subject to these guarantees, such liabilities are included in Con Edison’s consolidated balance sheet.
Renewable Electric Production Projects — Con Edison, Con Edison Development, and Con Edison Solutions guarantee payments associated with the investment in solar and wind energy facilities on behalf of their wholly-owned subsidiaries.
Other — Other guarantees primarily relate to $70 million in guarantees provided by Con Edison to Travelers Insurance Company for indemnity agreements for surety bonds in connection with energy service projects and operation of solar energy facilities of Con Edison Solutions and Con Edison Development, respectively. In addition, Con Edison issued a guarantee estimated at $5 million to the Public Utility Commission of Texas covering obligations of Con Edison Solutions as a retail electric provider.
In addition to the guarantees included in the table above, in July 2016, Con Edison guaranteed (subject to a $53 million maximum amount) certain obligations of Con Edison Solutions under its agreement to sell the assets of its retail electric supply business to a subsidiary of Exelon Corporation. See Note P.
Note I — Income Tax
Con Edison’s income tax expense increased to $124 million for the three months ended June 30, 2016 from $101 million for the three months ended June 30, 2015. Con Edison's effective tax rate for the three months ended June 30, 2016 and 2015 was 35 percent and 32 percent, respectively. For the three months ended June 30, 2016, Con Edison recorded lower tax benefits for plant-related flow through items, partially offset by increased tax benefits as a result of higher injuries and damages payments and higher renewable energy tax credits.
CECONY’s income tax expense decreased to $84 million for the three months ended June 30, 2016 from $101 million for the three months ended June 30, 2015. CECONY's effective tax rate for the three months ended June 30, 2016 and 2015 was 34 percent and 32 percent, respectively. The increase in CECONY's effective tax rate is primarily related to a decrease in tax benefits for plant-related flow through items, partially offset by increased tax benefits as a result of higher injuries and damages payments.
Con Edison’s income tax expense decreased to $288 million for the six months ended June 30, 2016 from $300 million for the six months ended June 30, 2015. Con Edison's effective tax rate for the six months ended June 30, 2016 and 2015 was 35 percent and 34 percent, respectively. For the six months ended June 30, 2016, Con Edison recorded income tax benefits for research and development tax credits and higher renewable energy tax credits, which were primarily offset by a decrease in tax benefits for plant-related flow through items.
CECONY’s income tax expense decreased to $264 million for the six months ended June 30, 2016 from $293 million for the six months ended June 30, 2015. CECONY's effective tax rate for the six months ended June 30, 2016 and 2015 was 36 percent and 34 percent, respectively. The increase in CECONY's effective tax rate is primarily related to a decrease in tax benefits for plant-related flow through items, partially offset by research and development tax credits.
Con Edison anticipates a federal consolidated net operating loss for 2016, primarily due to bonus depreciation. Con Edison expects to carryback a portion of its 2016 net operating loss and recover $10 million of income tax. General business tax credits that became available as a result of the net operating loss carryback, as well as the remaining 2016 net operating loss will be carried forward to future tax years. A deferred tax asset for these tax attribute carryforwards was recorded, and no valuation allowance has been provided, as it is more likely than not that the deferred tax asset will be realized.
Uncertain Tax Positions
At June 30, 2016, the estimated liability for uncertain tax positions for Con Edison was $36 million ($4 million for CECONY). Con Edison reasonably expects to resolve approximately $27 million ($18 million, net of federal taxes) of its uncertain tax positions within the next twelve months, of which the entire amount, if recognized, would reduce Con Edison’s effective tax rate. The amount related to CECONY is approximately $4 million ($3 million, net of federal taxes), of which the entire amount, if recognized, would reduce CECONY’s effective tax rate. The total amount of unrecognized tax benefits, if recognized, that would reduce Con Edison’s effective tax rate is $36 million ($24 million, net of federal taxes).
The Companies recognize interest on liabilities for uncertain tax positions in interest expense and would recognize penalties, if any, in operating expenses in the Companies’ consolidated income statements. In the three and six months ended June 30, 2016, the Companies recognized an immaterial amount of interest expense and no penalties for uncertain tax positions in their consolidated income statements. At June 30, 2016 and December 31, 2015, the Companies recognized an immaterial amount of accrued interest on their consolidated balance sheets.
Note J — Financial Information by Business Segment
In 2016, Con Edison Transmission began investing, through CET Electric and CET Gas, in electric transmission and gas pipeline and storage assets (see Note Q). As a result of these investments, Con Edison has changed its business segments to add Con Edison Transmission as a separate reportable segment based on management’s reporting and decision-making, including performance evaluation and resource allocation. For comparison purposes, the previously reported financial information by business segments was reclassified to reflect the current business segment presentation.
The financial data for the business segments are as follows:
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| For the Three Months Ended June 30, |
| Operating revenues | Inter-segment revenues | Depreciation and amortization | Operating income | Other income (deductions) | Interest charges | Income taxes on operating income | Total assets | Construction expenditures |
(Millions of Dollars) | 2016 | 2015 | 2016 | 2015 | 2016 | 2015 | 2016 | 2015 | 2016 | 2015 | 2016 | 2015 | 2016 | 2015 | 2016 | 2015 | 2016 | 2015 |
CECONY | | | | | | | | | | | | | | | | | | |
Electric | $1,892 | $1,879 | $4 | $5 | $215 | $201 | $371 | $422 | $2 | $(1) | $113 | $113 | $88 | $99 | $30,632 | $30,474 | $338 | $409 |
Gas | 304 | 308 | 1 | 1 | 39 | 35 | 48 | 54 | — |
| (1) | 26 | 23 | 9 | 12 | 7,131 | 6,598 | 205 | 161 |
Steam | 85 | 96 | 21 | 21 | 21 | 18 | (27) | (16) | — |
| — |
| 10 | 10 | (10) | (6) | 2,590 | 2,629 | 28 | 21 |
Consolidation adjustments | — |
| — |
| (26) | (27) | — |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
|
Total CECONY | $2,281 | $2,283 |
| $— |
|
| $— |
| $275 | $254 | $392 | $460 | $2 | $(2) | $149 | $146 | $87 | $105 | $40,353 | $39,701 | $571 | $591 |
O&R | | | | | | | | | | | | | | | | | | |
Electric | $144 | $162 |
| $— |
|
| $— |
| $13 | $13 | $14 | $16 |
| $— |
|
| $— |
| $6 | $5 | $3 | $4 | $1,928 | $1,944 | $25 | $25 |
Gas | 31 | 16 | — |
| — |
| 4 | 4 | (1) | (18) | — |
| — |
| 3 | 4 | (1) | (8) | 761 | 739 | 12 | 11 |
Total O&R | $175 | $178 |
| $— |
|
| $— |
| $17 | $17 | $13 | $(2) |
| $— |
|
| $— |
| $9 | $9 | $2 | $(4) | $2,689 | $2,683 | $37 | $36 |
Competitive energy businesses | $338 | $328 | $3 | $(1) | $10 | $6 | $109 | $13 | $7 | $12 | $8 | $2 | $36 | $7 | $2,494 | $1,549 | $128 | $364 |
Con Edison Transmission | — |
| — |
| — |
| — |
| — |
| — |
| (1) | — |
| 3 | — |
| 1 | — |
| — |
| — |
| 1,043 | 2 | — |
| — |
|
Other (a) | — |
| (1) | (3) | 1 | — |
| (1) | 2 | 1 | (1) | — |
| 3 | 5 | 3 | — |
| 691 | 816 | — |
| — |
|
Total Con Edison | $2,794 | $2,788 |
| $— |
|
| $— |
| $302 | $276 | $515 | $472 | $11 | $10 | $170 | $162 | $128 | $108 | $47,270 | $44,751 | $736 | $991 |
| |
(a) | Parent company and consolidation adjustments. Other does not represent a business segment. |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| For the Six Months Ended June 30, |
| Operating revenues | Inter-segment revenues | Depreciation and amortization | Operating income | Other income (deductions) | Interest charges | Income taxes on operating income | Total assets | Construction expenditures |
(Millions of Dollars) | 2016 | 2015 | 2016 | 2015 | 2016 | 2015 | 2016 | 2015 | 2016 | 2015 | 2016 | 2015 | 2016 | 2015 | 2016 | 2015 | 2016 | 2015 |
CECONY | | | | | | | | | | | | | | | | | | |
Electric | $3,665 | $3,858 | $9 | $9 | $428 | $403 | $645 | $700 | $1 | $(1) | $225 | $223 | $137 | $142 | $30,632 | $30,474 | $720 | $744 |
Gas | 905 | 963 | 3 | 3 | 78 | 70 | 301 | 294 | (1) | — |
| 52 | 46 | 97 | 98 | 7,131 | 6,598 | 365 | 289 |
Steam | 343 | 471 | 44 | 43 | 41 | 38 | 87 | 149 | — |
| — |
| 20 | 21 | 35 | 60 | 2,590 | 2,629 | 51 | 38 |
Consolidation adjustments | — |
| — |
| (56) | (55) | — |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
|
Total CECONY | $4,913 | $5,292 |
| $— |
|
| $— |
| $547 | $511 | $1,033 | $1,143 |
| $— |
| $(1) | $297 | $290 | $269 | $300 | $40,353 | $39,701 | $1,136 | $1,071 |
O&R | | | | | | | | | | | | | | | | | | |
Electric | $284 | $318 |
| $— |
|
| $— |
| $24 | $25 | $32 | $34 |
| $— |
| $1 | $12 | $11 | $7 | $9 | $1,928 | $1,944 | $47 | $45 |
Gas | 106 | 93 | — |
| — |
| 9 | 9 | 34 | 9 | — |
| — |
| 6 | 6 | 12 | 1 | 761 | 739 | 21 | 17 |
Total O&R | $390 | $411 |
| $— |
|
| $— |
| $33 | $34 | $66 | $43 |
| $— |
| $1 | $18 | $17 | $19 | $10 | $2,689 | $2,683 | $68 | $62 |
Competitive energy businesses | $648 | $702 | $9 | $(4) | $19 | $11 | $58 | $10 | $9 | $15 | $16 | $3 | $9 | $4 | $2,494 | $1,549 | $556 | $464 |
Con Edison Transmission | — |
| — |
| — |
| — |
| — |
| — |
| (1) | — |
| 3 | — |
| 1 | — |
| — |
| — |
| 1,043 | 2 | — |
| — |
|
Other (a) | (1) | (1) | (9) | 4 | — |
| (1) | 1 | 2 | — |
| (1) | 7 | 13 | 2 | — |
| 691 | 816 | — |
| — |
|
Total Con Edison | $5,950 | $6,404 |
| $— |
|
| $— |
| $599 | $555 | $1,157 | $1,198 | $12 | $14 | $339 | $323 | $299 | $314 | $47,270 | $44,751 | $1,760 | $1,597 |
| |
(a) | Parent company and consolidation adjustments. Other does not represent a business segment. |
Note K — Derivative Instruments and Hedging Activities
Con Edison’s subsidiaries hedge market price fluctuations associated with physical purchases and sales of electricity, natural gas, steam and, to a lesser extent, refined fuels by using derivative instruments including futures, forwards, basis swaps, options, transmission congestion contracts and financial transmission rights contracts. Derivatives are recognized on the consolidated balance sheet at fair value (see Note L), unless an exception is available under the accounting rules for derivatives and hedging. Qualifying derivative contracts that have been designated as normal purchases or normal sales contracts are not reported at fair value under the accounting rules.
The fair values of the Companies’ commodity derivatives including the offsetting of assets and liabilities on the consolidated balance sheet at June 30, 2016 and December 31, 2015 were:
|
| | | | | | | | | | |
(Millions of Dollars) | 2016 | | 2015 | |
Balance Sheet Location | Gross Amounts of Recognized Assets/(Liabilities) | Gross Amounts Offset | Net Amounts of Assets/ (Liabilities) (a) | | Gross Amounts of Recognized Assets/(Liabilities) | Gross Amounts Offset | Net Amounts of Assets/ (Liabilities) (a) | |
Con Edison | | | |