Edgar Filing: CONSOLIDATED EDISON CO OF NEW YORK INC

Form 10-Q

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 September 30, 2010

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

For the transition period from to


Commission File Number	Exact name of registrant as specified in its charter and principal 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.


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 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 Act).


Con Edison	Yes ¨	No x

CECONY	Yes ¨	No x

As of October 27, 2010, Con Edison had outstanding 290,536,094 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.

Table of Contents


		PAGE
Glossary of Terms			3
PART I—Financial Information
ITEM 1	Financial Statements (Unaudited)
	Con Edison
	Consolidated Income Statement		6
	Consolidated Statement of Cash Flows		7
	Consolidated Balance Sheet		8
	Consolidated Statement of Comprehensive Income		10
	Consolidated Statement of Common Shareholders’ Equity		11
	CECONY
	Consolidated Income Statement		12
	Consolidated Statement of Cash Flows		13
	Consolidated Balance Sheet		14
	Consolidated Statement of Comprehensive Income		16
	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		38
ITEM 3	Quantitative and Qualitative Disclosures About Market Risk		61
ITEM 4	Controls and Procedures		61
PART II—Other Information
ITEM 1	Legal Proceedings		62
ITEM 1A	Risk Factors		62
ITEM 6	Exhibits		63
	Signatures		64


2

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
CECONY		Consolidated Edison Company of New York, Inc.
Con Edison		Consolidated Edison, 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
Companies		Con Edison and CECONY
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
NYAG		New York State Attorney General
NYISO		New York Independent System Operator
NYPA		New York Power Authority
NYSDEC		New York State Department of Environmental Conservation
NYSPSC		New York State Public Service Commission
NYSERDA		New York State Energy Research and Development Authority
NYSRC		New York State Reliability Council, LLC
PJM		PJM Interconnection LLC
PAPUC		Pennsylvania Public Utility Commission
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
SSCM		Simplified service cost method
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


					3


Units of Measure
dths		Dekatherms
kV		Kilovolts
kWh		Kilowatt-hour
mdths		Thousand dekatherms
MMlbs		Million pounds
MVA		Megavolt amperes
MW		Megawatts 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, 2010
Form 10-K		The Companies’ combined Annual Report on Form 10-K for the year ended December 31, 2009
LTIP		Long Term Incentive Plan
Moody’s		Moody’s Investors Service
S&P		Standard & Poor’s Rating Services
Second Quarter Form 10-Q		The Companies’ combined Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2010
Third Quarter Form 10-Q		The Companies’ combined Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2010
VaR		Value-at-Risk


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 factors such as those discussed under “Risk Factors” in Item 1A of the Form 10-K.


					5


Consolidated Edison, Inc.

Consolidated Income Statement (Unaudited)


	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2010			2009			2010			2009
	*(Millions of Dollars/Except Share Data)*
OPERATING REVENUES
Electric	$	2,814		$	2,604		$	6,959		$	6,362
Gas		229			208			1,276			1,430
Steam		91			77			487			521
Non-utility		573			600			1,463			1,445
TOTAL OPERATING REVENUES		3,707			3,489			10,185			9,758
OPERATING EXPENSES
Purchased power		1,425			1,338			3,708			3,543
Fuel		106			83			342			403
Gas purchased for resale		73			89			482			723
Other operations and maintenance		738			676			2,117			1,879
Depreciation and amortization		211			200			626			589
Taxes, other than income taxes		449			418			1,283			1,145
TOTAL OPERATING EXPENSES		3,002			2,804			8,558			8,282
OPERATING INCOME		705			685			1,627			1,476
OTHER INCOME (DEDUCTIONS)
Investment and other income		9			3			29			25
Allowance for equity funds used during construction		4			4			13			9
Other deductions		(3	)		(3	)		(12	)		(11	)
TOTAL OTHER INCOME (DEDUCTIONS)		10			4			30			23
INCOME BEFORE INTEREST AND INCOME TAX EXPENSE		715			689			1,657			1,499
INTEREST EXPENSE
Interest on long-term debt		152			148			450			441
Other interest		7			10			13			20
Allowance for borrowed funds used during construction		(2	)		(3	)		(7	)		(6	)
NET INTEREST EXPENSE		157			155			456			455
INCOME BEFORE INCOME TAX EXPENSE		558			534			1,201			1,044
INCOME TAX EXPENSE		205			195			433			369
NET INCOME		353			339			768			675
Preferred stock dividend requirements of subsidiary		(3	)		(3	)		(9	)		(9	)
NET INCOME FOR COMMON STOCK	$	350		$	336		$	759		$	666
Net income for common stock per common share – basic	$	1.24		$	1.22		$	2.69		$	2.43
Net income for common stock per common share – diluted	$	1.23		$	1.22		$	2.68		$	2.42
DIVIDENDS DECLARED PER SHARE OF COMMON STOCK	$	0.595		$	0.590		$	1.785		$	1.770
AVERAGE NUMBER OF SHARES OUTSTANDING – BASIC (IN MILLIONS)		283.0			275.1			282.2			274.5
AVERAGE NUMBER OF SHARES OUTSTANDING – DILUTED (IN MILLIONS)		284.6			276.0			283.7			275.4

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


6


Consolidated Edison, Inc.

Consolidated Statement of Cash Flows (Unaudited)


	For the Nine Months Ended September 30,
	2010			2009
	*(Millions of Dollars)*
OPERATING ACTIVITIES
Net Income	$	768		$	675
PRINCIPAL NON-CASH CHARGES/(CREDITS) TO INCOME
Depreciation and amortization		626			589
Deferred income taxes		562			255
Rate case amortization and accruals		8			(38	)
Common equity component of allowance for funds used during construction		(13	)		(9	)
Net derivative (gains)/losses		35			(2	)
Other non-cash items (net)		(19	)		(39	)
CHANGES IN ASSETS AND LIABILITIES
Accounts receivable – customers, less allowance for uncollectibles		(114	)		55
Materials and supplies, including fuel oil and gas in storage		(9	)		118
Other receivables and other current assets		(114	)		(171	)
Prepayments		(473	)		257
Recoverable energy costs		—			102
Accounts payable		(105	)		(168	)
Pensions and retiree benefits		(33	)		(35	)
Accrued taxes		63			(9	)
Accrued interest		45			53
Deferred charges, deferred derivative losses, noncurrent assets and other regulatory assets		(472	)		(9	)
Deferred credits and other regulatory liabilities		142			(118	)
Other assets		(8	)		(4	)
Other liabilities		82			(33	)
NET CASH FLOWS FROM OPERATING ACTIVITIES		971			1,469
INVESTING ACTIVITIES
Utility construction expenditures		(1,455	)		(1,524	)
Cost of removal less salvage		(103	)		(126	)
Non-utility construction expenditures		(6	)		(5	)
Common equity component of allowance for funds used during construction		13			9
Purchase of additional ownership interest in Honeoye Storage Corporation		(12	)		—
NET CASH FLOWS USED IN INVESTING ACTIVITIES		(1,563	)		(1,646	)
FINANCING ACTIVITIES
Net proceeds from short-term debt		846			146
Retirement of long-term debt		(781	)		(279	)
Issuance of long-term debt		870			750
Issuance of common stock		78			25
Debt issuance costs		(6	)		(5	)
Common stock dividends		(468	)		(450	)
Preferred stock dividends		(9	)		(9	)
NET CASH FLOWS FROM FINANCING ACTIVITIES		530			178
CASH AND TEMPORARY CASH INVESTMENTS:
NET CHANGE FOR THE PERIOD		(62	)		1
BALANCE AT BEGINNING OF PERIOD		260			74
BALANCE AT END OF PERIOD	$	198		$	75
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the period for:
Interest	$	394		$	377
Income taxes	$	284		$	4

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


					7


Consolidated Edison, Inc.

Consolidated Balance Sheet (Unaudited)


	September 30, 2010		December 31, 2009
	*(Millions of Dollars)*
ASSETS
CURRENT ASSETS
Cash and temporary cash investments	$	198	$	260
Accounts receivable – customers, less allowance for uncollectible accounts of $72 in 2010 and $70 in 2009, respectively		1,161		1,047
Accrued unbilled revenue		547		579
Other receivables, less allowance for uncollectible accounts of $8 and $5 in 2010 and 2009, respectively		503		379
Fuel oil, gas in storage, materials and supplies, at average cost		364		355
Prepayments		604		131
Regulatory assets		276		172
Revenue decoupling mechanism receivable		5		117
Other current assets		232		174
TOTAL CURRENT ASSETS		3,890		3,214
INVESTMENTS		391		385
UTILITY PLANT, AT ORIGINAL COST
Electric		19,793		18,645
Gas		4,180		3,983
Steam		2,027		1,935
General		1,904		1,866
TOTAL		27,904		26,429
Less: Accumulated depreciation		5,707		5,412
Net		22,197		21,017
Construction work in progress		1,223		1,422
NET UTILITY PLANT		23,420		22,439
NON-UTILITY PLANT
Non-utility property, less accumulated depreciation of $50 and $45 in 2010 and 2009, respectively		46		19
Construction work in progress		3		6
NET PLANT		23,469		22,464
OTHER NONCURRENT ASSETS
Goodwill		429		416
Intangible assets, less accumulated amortization of $3 and $2 in 2010 and 2009, respectively		3		4
Regulatory assets		6,981		7,103
Other deferred charges and noncurrent assets		289		258
TOTAL OTHER NONCURRENT ASSETS		7,702		7,781
TOTAL ASSETS	$	35,452	$	33,844

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


8


Consolidated Edison, Inc.

Consolidated Balance Sheet (Unaudited)


	September 30, 2010		December 31, 2009
	*(Millions of Dollars)*
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES
Long-term debt due within one year	$	5	$	731
Notes payable		846		—
Accounts payable		1,068		1,173
Customer deposits		283		274
Accrued taxes		115		51
Accrued interest		201		156
Accrued wages		89		91
Fair value of derivative liabilities		159		114
Other current liabilities		381		350
TOTAL CURRENT LIABILITIES		3,147		2,940
NONCURRENT LIABILITIES
Obligations under capital leases		8		14
Provision for injuries and damages		172		168
Pensions and retiree benefits		2,826		3,363
Superfund and other environmental costs		239		212
Asset retirement obligations		127		122
Fair value of derivative liabilities		127		131
Other noncurrent liabilities		112		108
TOTAL NONCURRENT LIABILITIES		3,611		4,118
DEFERRED CREDITS AND REGULATORY LIABILITIES
Deferred income taxes and investment tax credits		6,229		5,609
Regulatory liabilities		931		829
Other deferred credits		24		32
TOTAL DEFERRED CREDITS AND REGULATORY LIABILITIES		7,184		6,470
LONG-TERM DEBT		10,667		9,854
SHAREHOLDERS’ EQUITY
Common shareholders’ equity (See Statement of Shareholders’ Equity)		10,630		10,249
Preferred stock of subsidiary		213		213
TOTAL SHAREHOLDERS’ EQUITY		10,843		10,462
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	35,452	$	33,844

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


					9


Consolidated Edison, Inc.

Consolidated Statement of Comprehensive Income (Unaudited)


	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2010			2009			2010			2009
	*(Millions of Dollars)*
NET INCOME	$	353		$	339		$	768		$	675
OTHER COMPREHENSIVE INCOME/(LOSS), NET OF TAXES
Pension plan liability adjustments, net of taxes of $1 and $4 in 2010 and $1 and $3 in 2009, respectively		1			2			5			5
Less: Reclassification adjustment for losses included in net income, net of taxes of $0 in 2010 and $1 and $1 in 2009, respectively		—			1			—			1
TOTAL OTHER COMPREHENSIVE INCOME, NET OF TAXES		1			1			5			4
COMPREHENSIVE INCOME	$	354		$	340		$	773		$	679
Preferred stock dividend requirements of subsidiary		(3	)		(3	)		(9	)		(9	)
COMPREHENSIVE INCOME FOR COMMON STOCK	$	351		$	337		$	764		$	670

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


10


Consolidated Edison, Inc.

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)			Total
*(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, 2008		273,721,686	$	29	$	4,112	$	6,685			23,210,700	$	(1,001	)	$	(60	)	$	(67	)	$	9,698
Net income for common stock								180														180
Common stock dividends								(162	)													(162	)
Issuance of common shares – dividend reinvestment and employee stock plans		532,533				20																20
Other comprehensive income																			1			1
BALANCE AS OF MARCH 31, 2009		274,254,219	$	29	$	4,132	$	6,703			23,210,700	$	(1,001	)	$	(60	)	$	(66	)	$	9,737
Net income for common stock								150														150
Common stock dividends								(162	)													(162	)
Issuance of common shares – dividend reinvestment and employee stock plans		584,916				21																21
Other comprehensive income																			2			2
BALANCE AS OF JUNE 30, 2009		274,839,135	$	29	$	4,153	$	6,691			23,210,700	$	(1,001	)	$	(60	)	$	(64	)	$	9,748
Net income for common stock								336														336
Common stock dividends								(162	)													(162	)
Issuance of common shares – dividend reinvestment and employee stock plans		520,041				20																20
Other comprehensive income																			1			1
BALANCE AS OF SEPTEMBER 30, 2009		275,359,176	$	29	$	4,173	$	6,865			23,210,700	$	(1,001	)	$	(60	)	$	(63	)	$	9,943
BALANCE AS OF DECEMBER 31, 2009		281,123,741	$	30	$	4,420	$	6,904			23,210,700	$	(1,001	)	$	(62	)	$	(42	)	$	10,249
Net income for common stock								226														226
Common stock dividends								(167	)													(167	)
Issuance of common shares – dividend reinvestment and employee stock plans		647,731				28																28
Other comprehensive income																			3			3
BALANCE AS OF MARCH 31, 2010		281,771,472	$	30	$	4,448	$	6,963			23,210,700	$	(1,001	)	$	(62	)	$	(39	)	$	10,339
Net income for common stock								183														183
Common stock dividends								(168	)													(168	)
Issuance of common shares – dividend reinvestment and employee stock plans		555,964				25																25
Other comprehensive income																			1			1
BALANCE AS OF JUNE 30, 2010		282,327,436	$	30	$	4,473	$	6,978			23,210,700	$	(1,001	)	$	(62	)	$	(38	)	$	10,380
Net income for common stock								350														350
Common stock dividends								(168	)													(168	)
Issuance of common shares – dividend reinvestment and employee stock plans		1,487,598		1		66																67
Other comprehensive income																			1			1
BALANCE AS OF SEPTEMBER 30, 2010		283,815,034	$	31	$	4,539	$	7,160			23,210,700	$	(1,001	)	$	(62	)	$	(37	)	$	10,630

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


					11

Consolidated Edison Company of New York, Inc.

Consolidated Income Statement (Unaudited)


	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2010			2009			2010			2009
	*(Millions of Dollars)*
OPERATING REVENUES
Electric	$	2,570		$	2,395		$	6,402		$	5,865
Gas		204			183			1,126			1,259
Steam		91			77			487			521
TOTAL OPERATING REVENUES		2,865			2,655			8,015			7,645
OPERATING EXPENSES
Purchased power		764			753			2,102			2,009
Fuel		105			83			343			404
Gas purchased for resale		63			76			408			618
Other operations and maintenance		637			573			1,832			1,606
Depreciation and amortization		198			188			586			554
Taxes, other than income taxes		432			403			1,232			1,101
TOTAL OPERATING EXPENSES		2,199			2,076			6,503			6,292
OPERATING INCOME		666			579			1,512			1,353
OTHER INCOME (DEDUCTIONS)
Investment and other income		5			8			23			23
Allowance for equity funds used during construction		3			3			10			8
Other deductions		(2	)		(3	)		(11	)		(10	)
TOTAL OTHER INCOME (DEDUCTIONS)		6			8			22			21
INCOME BEFORE INTEREST AND INCOME TAX EXPENSE		672			587			1,534			1,374
INTEREST EXPENSE
Interest on long-term debt		137			134			406			399
Other interest		5			11			13			19
Allowance for borrowed funds used during construction		(1	)		(2	)		(6	)		(6	)
NET INTEREST EXPENSE		141			143			413			412
INCOME BEFORE INCOME TAX EXPENSE		531			444			1,121			962
INCOME TAX EXPENSE		196			159			404			339
NET INCOME		335			285			717			623
Preferred stock dividend requirements		(3	)		(3	)		(8	)		(8	)
NET INCOME FOR COMMON STOCK	$	332		$	282		$	709		$	615

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


12

Consolidated Edison Company of New York, Inc.

Consolidated Statement of Cash Flows (Unaudited)


	For the Nine Months Ended September 30,
	2010			2009
	*(Millions of Dollars)*
OPERATING ACTIVITIES
Net income	$	717		$	623
PRINCIPAL NON-CASH CHARGES/(CREDITS) TO INCOME
Depreciation and amortization		586			554
Deferred income taxes		562			222
Rate case amortization and accruals		8			(38	)
Common equity component of allowance for funds used during construction		(10	)		(8	)
Other non-cash items (net)		(96	)		(46	)
CHANGES IN ASSETS AND LIABILITIES
Accounts receivable – customers, less allowance for uncollectibles		(84	)		39
Materials and supplies, including fuel oil and gas in storage		(9	)		99
Other receivables and other current assets		(208	)		(49	)
Prepayments		(309	)		177
Recoverable energy costs		—			127
Accounts payable		(96	)		(245	)
Pensions and retiree benefits		(30	)		(22	)
Accrued taxes		20			(3	)
Accrued interest		37			31
Deferred charges, deferred derivative losses, noncurrent assets and other regulatory assets		(374	)		2
Deferred credits and other regulatory liabilities		131			(90	)
Other liabilities		93			(47	)
NET CASH FLOWS FROM OPERATING ACTIVITIES		938			1,326
INVESTING ACTIVITIES
Utility construction expenditures		(1,371	)		(1,454	)
Cost of removal less salvage		(100	)		(123	)
Common equity component of allowance for funds used during construction		10			8
Loan to affiliate		—			113
NET CASH FLOWS USED IN INVESTING ACTIVITIES		(1,461	)		(1,456	)
FINANCING ACTIVITIES
Net proceeds from short-term debt		832			174
Issuance of long-term debt		700			750
Retirement of long-term debt		(625	)		(275	)
Debt issuance costs		(6	)		(5	)
Capital contribution by parent		36			—
Dividend to parent		(502	)		(489	)
Preferred stock dividends		(8	)		(8	)
NET CASH FLOWS (USED IN)/FROM FINANCING ACTIVITIES		427			147
CASH AND TEMPORARY CASH INVESTMENTS:
NET CHANGE FOR THE PERIOD		(96	)		17
BALANCE AT BEGINNING OF PERIOD		131			37
BALANCE AT END OF PERIOD	$	35		$	54
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the period for:
Interest	$	357		$	356
Income taxes	$	263		$	17

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


					13

Consolidated Edison Company of New York, Inc.

Consolidated Balance Sheet (Unaudited)


	September 30, 2010		December 31, 2009
	*(Millions of Dollars)*
ASSETS
CURRENT ASSETS
Cash and temporary cash investments	$	35	$	131
Accounts receivable – customers, less allowance for uncollectible accounts of $65 in 2010 and $63 in 2009, respectively		988		904
Other receivables, less allowance for uncollectible accounts of $7 and $4 in 2010 and 2009, respectively		77		134
Accrued unbilled revenue		384		413
Accounts receivable from affiliated companies		482		124
Fuel oil, gas in storage, materials and supplies, at average cost		319		310
Prepayments		391		82
Regulatory assets		218		104
Revenue decoupling mechanism receivable		4		107
Other current assets		94		89
TOTAL CURRENT ASSETS		2,992		2,398
INVESTMENTS		156		126
UTILITY PLANT AT ORIGINAL COST
Electric		18,685		17,570
Gas		3,708		3,537
Steam		2,027		1,935
General		1,741		1,708
TOTAL		26,161		24,750
Less: Accumulated depreciation		5,220		4,947
Net		20,941		19,803
Construction work in progress		1,118		1,334
NET UTILITY PLANT		22,059		21,137
NON-UTILITY PLANT
Non-utility property, less accumulated depreciation of $21 and $20 in 2010 and 2009, respectively		8		9
NET PLANT		22,067		21,146
OTHER NONCURRENT ASSETS
Regulatory assets		6,450		6,590
Other deferred charges and noncurrent assets		231		201
TOTAL OTHER NONCURRENT ASSETS		6,681		6,791
TOTAL ASSETS	$	31,896	$	30,461

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


14

Consolidated Edison Company of New York, Inc.

Consolidated Balance Sheet (Unaudited)


	September 30, 2010		December 31, 2009
	*(Millions of Dollars)*
LIABILITIES AND SHAREHOLDER’S EQUITY
CURRENT LIABILITIES
Long-term debt due within one year	$	—	$	625
Notes payable		832		—
Accounts payable		846		937
Accounts payable to affiliated companies		12		17
Customer deposits		270		259
Accrued taxes		29		41
Accrued taxes to affiliated companies		41		9
Accrued interest		174		137
Accrued wages		86		89
Other current liabilities		427		333
TOTAL CURRENT LIABILITIES		2,717		2,447
NONCURRENT LIABILITIES
Obligations under capital leases		8		14
Provision for injuries and damages		166		160
Pensions and retiree benefits		2,485		2,978
Superfund and other environmental costs		154		159
Asset Retirement Obligations		127		122
Fair value of derivative liabilities		40		44
Other noncurrent liabilities		103		68
TOTAL NONCURRENT LIABILITIES		3,083		3,545
DEFERRED CREDITS AND REGULATORY LIABILITIES
Deferred income taxes and investment tax credits		5,724		5,139
Regulatory Liabilities		810		703
Other deferred credits		21		29
TOTAL DEFERRED CREDITS AND REGULATORY LIABILITIES		6,555		5,871
LONG-TERM DEBT		9,737		9,038
SHAREHOLDER’S EQUITY
Common shareholder’s equity (See Statement of Shareholder’s Equity)		9,591		9,347
Preferred stock		213		213
TOTAL SHAREHOLDER’S EQUITY		9,804		9,560
TOTAL LIABILITIES AND SHAREHOLDER’S EQUITY	$	31,896	$	30,461

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


					15

Consolidated Edison Company of New York, Inc.

Consolidated Statement of Comprehensive Income (Unaudited)


	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2010		2009		2010		2009
	*(Millions of Dollars)*
NET INCOME	$	335	$	285	$	717	$	623
OTHER COMPREHENSIVE INCOME, NET OF TAXES
Pension plan liability adjustments, net of taxes of $1 in 2009		—		—		—		1
TOTAL OTHER COMPREHENSIVE INCOME, NET OF TAXES		—		—		—		1
COMPREHENSIVE INCOME	$	335	$	285	$	717	$	624

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				Additional Paid-In Capital		Retained Earnings			Repurchased Con Edison Stock			Capital Stock Expense			Accumulated Other Comprehensive Income/(Loss)			Total
*(Millions of Dollars/Except Share Data)*	Shares		Amount		Additional Paid-In Capital		Retained Earnings			Repurchased Con Edison Stock			Capital Stock Expense			Accumulated Other Comprehensive Income/(Loss)			Total
BALANCE AS OF DECEMBER 31, 2008		235,488,094	$	589	$	3,664	$	5,780		$	(962	)	$	(60	)	$	(20	)	$	8,991
Net income								200												200
Common stock dividend to parent								(163	)											(163	)
Cumulative preferred dividends								(3	)											(3	)
BALANCE AS OF MARCH 31, 2009		235,488,094	$	589	$	3,664	$	5,814		$	(962	)	$	(60	)	$	(20	)	$	9,025
Net income								139												139
Common stock dividend to parent								(163	)											(163	)
Cumulative preferred dividends								(3	)											(3	)
BALANCE AS OF JUNE 30, 2009		235,488,094	$	589	$	3,664	$	5,787		$	(962	)	$	(60	)	$	(20	)	$	8,998
Net income								285												285
Common stock dividend to parent								(163	)											(163	)
Cumulative preferred dividends								(3	)											(3	)
Other comprehensive income																	1			1
BALANCE AS OF SEPTEMBER 30, 2009		235,488,094	$	589	$	3,664	$	5,906		$	(962	)	$	(60	)	$	(19	)	$	9,118
BALANCE AS OF DECEMBER 31, 2009		235,488,094	$	589	$	3,877	$	5,909		$	(962	)	$	(62	)	$	(4	)	$	9,347
Net income								246												246
Capital contribution from parent						12														12
Common stock dividend to parent								(167	)											(167	)
Cumulative preferred dividends								(3	)											(3	)
BALANCE AS OF MARCH 31, 2010		235,488,094	$	589	$	3,889	$	5,985		$	(962	)	$	(62	)	$	(4	)	$	9,435
Net income								138												138
Capital contribution from parent						12														12
Common stock dividend to parent								(168	)											(168	)
Cumulative preferred dividends								(3	)											(3	)
BALANCE AS OF JUNE 30, 2010		235,488,094	$	589	$	3,901	$	5,952		$	(962	)	$	(62	)	$	(4	)	$	9,414
Net income								335												335
Capital contribution from parent						12														12
Common stock dividend to parent								(167	)											(167	)
Cumulative preferred dividends								(3	)											(3	)
BALANCE AS OF SEPTEMBER 30, 2010		235,488,094	$	589	$	3,913	$	6,117		$	(962	)	$	(62	)	$	(4	)	$	9,591

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


					17

Notes to the Financial Statements

General

These combined notes accompany and form an integral part of the separate consolidated financial statements of each of the two separate registrants: Consolidated Edison, Inc. and its subsidiaries (Con Edison) and Consolidated Edison Company of New York, Inc. and its subsidiaries (CECONY). CECONY is a subsidiary of Con Edison and as such its financial condition and results of operations and cash flows, which are presented separately in the CECONY consolidated financial statements, are also consolidated, along with those of 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, 2009 (the Form 10-K) and their separate unaudited financial statements (including the combined notes thereto) included in Part I, Item 1 of their combined Quarterly Reports on Form 10-Q for the quarterly periods ended March 31, 2010 (the First Quarter Form 10-Q) and June 30, 2010 (the Second Quarter Form 10-Q). Information in the notes to the consolidated financial statements in the Form 10-K, the First Quarter Form 10-Q and the Second Quarter Form 10-Q referred to in these notes is incorporated by reference herein. The use of terms such as “see” or “refer to” shall be deemed to incorporate by reference into these notes the information to which reference is made.

Certain prior year amounts have been reclassified to conform with the current year presentation. Consistent with current industry practice, the Companies are presenting income tax expense as one item on their consolidated income statements (instead of separate items in the operating income and other income sections of the consolidated income statements).

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.


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Note A — Summary of Significant Accounting Policies

Earnings Per Common Share

Reference is made to “Earnings Per Common Share” in Note A to the financial statements included in Item 8 of the Form 10-K. For the three and nine months ended September 30, 2010 and 2009, Con Edison’s basic and diluted EPS are calculated as follows:


	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
*(Millions of Dollars, except per share amounts/Shares in Millions)*	2010		2009		2010		2009
Net income for common stock	$	350	$	336	$	759	$	666
Weighted average common shares outstanding – Basic		283.0		275.1		282.2		274.5
Add: Incremental shares attributable to effect of potentially dilutive securities		1.6		0.9		1.5		0.9
Adjusted weighted average common shares outstanding – Diluted		284.6		276.0		283.7		275.4
Net income for common stock per common share – basic	$	1.24	$	1.22	$	2.69	$	2.43
Net income for common stock per common share – diluted	$	1.23	$	1.22	$	2.68	$	2.42

Note B — Regulatory Matters

Reference is made to “Accounting Policies” in Note A and “Rate Agreements” in Note B to the financial statements included in Item 8 of the Form 10-K and Note B to the financial statements in Part I, Item 1 of the First Quarter Form 10-Q and Second Quarter Form 10-Q.

Rate Agreements

CECONY — Gas

In September 2010, the NYSPSC issued an order approving the May 2010 Joint Proposal covering the rates CECONY can charge its customers for gas delivery service during the three-year period October 2010 through September 2013. Among other things, the Joint Proposal provides for gas base rate increases of $47.1 million, $47.9 million and $46.7 million, effective October 2010, 2011 and 2012, respectively. For additional information about the Joint Proposal, see “Rate Agreements” in Note B to the financial statements in Part I, Item 1 of the Second Quarter Form 10-Q.

CECONY — Steam

In September 2010, the NYSPSC issued an order approving the May 2010 Joint Proposal covering the rates CECONY can charge its customers for steam delivery service during the three-year period October 2010 through September 2013. Among other things, the Joint Proposal provides for steam base rate increases of $49.5 million, effective October 2010 and 2011, and $17.8 million, effective October 2012, with an additional $31.7 million to be collected through a surcharge in the rate year ending September 2013. The NYSPSC order requires CECONY, in its next steam rate case filing, to propose a phase-in over a period of not more than seven years of an increase in the allocation to steam customers of the fuel costs for the company’s East River Repowering Project (ERRP, which cogenerates electricity and steam) that are above the market value of the electric energy generated by ERRP. For additional information about the Joint Proposal, see “Rate Agreements” in Note B to the financial statements in Part I, Item 1 of the Second Quarter Form 10-Q.

Other Regulatory Matters

In February 2009, the NYSPSC commenced a proceeding to examine the prudence of certain CECONY expenditures (see “Investigations of Vendor Payments” in Note H). Pursuant to NYSPSC orders, a portion of the company’s revenues (effective April 2010, $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. At September 30, 2010, the company had collected an estimated $464 million from customers subject to potential refund in connection with this proceeding. In October 2010, a NYSPSC consultant reported its $21 million provisional assessment, which the company has disputed, of potential overcharges for construction work. The


					19

potential overcharges related to transactions that involved certain employees who were arrested and a contractor that performed work for the company. The NYSPSC’s consultant is expected to continue to review the company’s expenditures. The company is unable to estimate the amount, if any, of any refund that may be required in connection with this proceeding and, accordingly, has not established a regulatory liability for a refund.

Regulatory Assets and Liabilities

Regulatory assets and liabilities at September 30, 2010 and December 31, 2009 were comprised of the following items:


	Con Edison				CECONY
*(Millions of Dollars)*	2010		2009		2010		2009
Regulatory assets
Unrecognized pension and other postretirement costs	$	4,001	$	4,472	$	3,819	$	4,259
Future federal income tax		1,411		1,316		1,337		1,249
Environmental remediation costs		421		388		333		329
Surcharge for New York State Assessment		185		138		171		126
Net electric deferrals		161		82		161		82
Pension and other postretirement benefits deferrals		158		101		106		49
Revenue taxes		139		119		135		116
Deferred derivative losses – long-term		125		106		85		75
Deferred storm costs		58		5		43		—
Property tax reconciliation		52		85		47		85
O&R transition bond charges		49		55		—		—
World Trade Center restoration costs		44		41		44		41
Workers’ compensation		34		37		34		37
Other		143		158		135		142
Regulatory assets – long-term		6,981		7,103		6,450		6,590
Deferred derivative losses – current		268		141		218		104
Recoverable energy costs – current		8		31		—		—
Regulatory assets – current		276		172		218		104
Total Regulatory Assets	$	7,257	$	7,275	$	6,668	$	6,694
Regulatory liabilities
Allowance for cost of removal less salvage	$	405	$	371	$	334	$	303
Net unbilled revenue deferrals		126		91		126		91
Refundable energy costs		78		118		53		77
Revenue decoupling mechanism		55		—		55		—
New York State tax refund		29		—		29		—
Gain on sale of First Avenue properties		23		23		23		23
Gain on sale of 125th Street Property		12		—		12		—
Rate case amortizations		5		21		5		21
Electric rate case deferral		—		19		—		19
2005-2008 capital expenditure reserve		—		24		—		24
Other		198		162		173		145
Regulatory liabilities		931		829		810		703
Deferred derivative gains – current		—		9		—		8
Total Regulatory Liabilities	$	931	$	838	$	810	$	711

“Net electric deferrals” at September 30, 2010 represent the remaining unamortized balance of certain regulatory assets and liabilities of CECONY that were combined effective April 1, 2010 and are being amortized to income, in accordance with CECONY’s April 2010 rate plan. At December 2009, “net electric deferrals” represented the remaining unamortized balance of certain regulatory assets and liabilities of CECONY that were combined effective April 1, 2005 and were amortized to income in accordance with CECONY’s April 2009 rate plan through March 2010.

Note C — Capitalization

Reference is made to Note C to the financial statements in Item 8 of the Form 10-K and Note C to the financial statements in Part I, Item 1 of the First Quarter Form 10-Q and Second Quarter Form 10-Q.


20

In August 2010, O&R issued $55 million aggregate principal amount of 2.50 percent debentures, Series 2010 A, due 2015 and $115 million aggregate principal amount of 5.50 percent debentures, Series 2010 B, due 2040. In addition, O&R purchased, and had cancelled, its $55 million aggregate principal amount of Series 1994 A variable-rate, tax-exempt debt due 2014.

In October 2010, Con Edison issued 6.3 million common shares resulting in net proceeds of $305 million, the proceeds of which were invested by Con Edison in CECONY.

Note D — Short-Term Borrowing

Reference is made to Note D to the financial statements in Item 8 of the Form 10-K and Note D to the financial statements in Part I, Item 1 of the First Quarter Form 10-Q and Second Quarter Form 10-Q.

At September 30, 2010, Con Edison had $846 million of commercial paper outstanding, $832 million of which was outstanding under CECONY’s program. The weighted average interest rate was 0.4 percent for each of Con Edison and CECONY. At December 31, 2009, Con Edison and CECONY had no commercial paper outstanding. At September 30, 2010 and December 31, 2009, no loans were outstanding under the Companies’ Credit Agreement and $220 million (including $151 million for CECONY) and $193 million (including $135 million for CECONY) of letters of credit were outstanding under the Credit Agreement, respectively.

Note E — Pension Benefits

Reference is made to Note E to the financial statements in Item 8 of the Form 10-K and Note E to the financial statement in Part I, Item 1 of the First Quarter Form 10-Q and Second Quarter Form 10-Q.

Net Periodic Benefit Cost

The components of the Companies’ net periodic benefit costs for the three and nine months ended September 30, 2010 and 2009 were as follows:


	For the Three Months Ended September 30,
	Con Edison						CECONY
*(Millions of Dollars)*	2010			2009			2010			2009
Service cost – including administrative expenses	$	42		$	40		$	39		$	37
Interest cost on projected benefit obligation		139			131			130			123
Expected return on plan assets		(175	)		(173	)		(167	)		(165	)
Amortization of net actuarial loss		106			75			100			68
Amortization of prior service costs		2			2			2			2
NET PERIODIC BENEFIT COST	$	114		$	75		$	104		$	65
Amortization of regulatory asset*		—			1			—			1
TOTAL PERIODIC BENEFIT COST	$	114		$	76		$	104		$	66
Cost capitalized		(40	)		(28	)		(36	)		(25	)
Cost deferred		(29	)		(4	)		(29	)		(3	)
Cost charged to operating expenses	$	45		$	44		$	39		$	38

*	Relates to increases in CECONY’s pension obligations of $45 million from a 1999 special retirement program.


	For the Nine Months Ended September 30,
	Con Edison						CECONY
*(Millions of Dollars)*	2010			2009			2010			2009
Service cost – including administrative expenses	$	126		$	120		$	117		$	111
Interest cost on projected benefit obligation		417			393			390			369
Expected return on plan assets		(527	)		(519	)		(501	)		(495	)
Amortization of net actuarial loss		318			225			300			204
Amortization of prior service costs		6			6			6			6
NET PERIODIC BENEFIT COST	$	340		$	225		$	312		$	195
Amortization of regulatory asset*		1			3			1			3
TOTAL PERIODIC BENEFIT COST	$	341		$	228		$	313		$	198
Cost capitalized		(118	)		(82	)		(109	)		(75	)
Cost deferred		(85	)		(40	)		(82	)		(34	)
Cost charged to operating expenses	$	138		$	106		$	122		$	89

*	Relates to increases in CECONY’s pension obligations of $33 million from a 1993 special retirement program (which was fully amortized in March 2009) and $45 million from a 1999 special retirement program.


					21

Expected Contributions

Based on estimates as of December 31, 2009, the Companies are not required under funding regulations and laws to make any contributions to the pension plan during 2010. The Companies’ policy is to fund their accounting cost to the extent tax deductible. During the first nine months of 2010, the Companies contributed $434 million to the pension plan (of which $397 million was contributed by CECONY). During the first nine months of 2009, the Companies contributed $282 million to the pension plan (of which $244 million was contributed by CECONY). During the second quarter of 2010, the Companies funded $25 million for the non-qualified supplemental pension plans. The Companies are continuing to monitor changes to funding and tax laws that may impact future pension plan funding requirements.

Note F — Other Postretirement Benefits

Reference is made to Note F to the financial statements in Item 8 of the Form 10-K and Note F to the financial statements in Part I, Item 1 of the First Quarter Form 10-Q and Second Quarter Form 10-Q.

Net Periodic Benefit Cost

The components of the Companies’ net periodic postretirement benefit costs for the three and nine months ended September 30, 2010 and 2009 were as follows:


	For the Three Months Ended September 30,
	Con Edison						CECONY
*(Millions of Dollars)*	2010			2009			2010			2009
Service cost	$	6		$	5		$	5		$	4
Interest cost on accumulated other postretirement benefit obligation		23			24			20			21
Expected return on plan assets		(22	)		(21	)		(19	)		(20	)
Amortization of net actuarial loss		23			18			21			16
Amortization of prior service cost		(3	)		(3	)		(4	)		(3	)
Amortization of transition obligation		1			1			1			1
NET PERIODIC POSTRETIREMENT BENEFIT COST	$	28		$	24		$	24		$	19
Cost capitalized		(10	)		(9	)		(8	)		(7	)
Cost deferred		2			1			1			—
Cost charged to operating expenses	$	20		$	16		$	17		$	12


	For the Nine Months Ended September 30,
	Con Edison						CECONY
*(Millions of Dollars)*	2010			2009			2010			2009
Service cost	$	18		$	15		$	15		$	12
Interest cost on accumulated other postretirement benefit obligation		69			72			60			63
Expected return on plan assets		(66	)		(63	)		(57	)		(60	)
Amortization of net actuarial loss		69			54			63			48
Amortization of prior service cost		(9	)		(9	)		(12	)		(9	)
Amortization of transition obligation		3			3			3			3
NET PERIODIC POSTRETIREMENT BENEFIT COST	$	84		$	72		$	72		$	57
Cost capitalized		(30	)		(27	)		(25	)		(22	)
Cost deferred		2			—			(1	)		(2	)
Cost charged to operating expenses	$	56		$	45		$	46		$	33

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


22

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 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.

The accrued liabilities and regulatory assets related to Superfund Sites at September 30, 2010 and December 31, 2009 were as follows:


	Con Edison				CECONY
*(Millions of Dollars)*	2010		2009		2010		2009
Accrued Liabilities:
Manufactured gas plant sites	$	193	$	164	$	109	$	112
Other Superfund Sites		46		48		45		47
Total	$	239	$	212	$	154	$	159
Regulatory assets	$	421	$	388	$	333	$	329

Most of the accrued Superfund Site liability relates to sites that have been investigated, in whole or in part. However, for many 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 will 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 during the three and nine months ended September 30, 2010 and 2009 were as follows:


	For the Three Months Ended September 30,
	Con Edison				CECONY
*(Millions of Dollars)*	2010		2009		2010		2009
Remediation costs incurred	$	9	$	20	$	8	$	20
Insurance recoveries received	$	—	$	3	$	—	$	3


	For the Nine Months Ended September 30,
	Con Edison				CECONY
*(Millions of Dollars)*	2010		2009		2010		2009
Remediation costs incurred	$	32	$	60	$	30	$	59
Insurance recoveries received	$	—	$	3	$	—	$	3

In 2006, 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 $1.1 billion. In 2007, 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 $115 million. These estimates were based on the assumption that there is contamination at the sites that have not yet been investigated and additional assumptions about these and the other sites regarding the extent of contamination and the type and extent of remediation that may be required. Actual experience may be materially different.


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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 2008, CECONY estimated that its aggregate undiscounted potential liability for these suits and additional suits that may be brought over the next 15 years is $9 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, 2010 and December 31, 2009 were as follows:


	Con Edison				CECONY
*(Millions of Dollars)*	2010		2009		2010		2009
Accrued liability – asbestos suits	$	10	$	10	$	9	$	9
Regulatory assets – asbestos suits	$	10	$	10	$	9	$	9
Accrued liability – workers’ compensation	$	109	$	113	$	104	$	108
Regulatory assets – workers’ compensation	$	34	$	37	$	34	$	37

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 100 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.

Investigations of Vendor Payments

In January 2009, CECONY commenced an internal investigation relating to the arrests of certain employees and retired employees (all of whom have since pleaded guilty) for accepting kickbacks from contractors that performed construction work for the company. The company has retained a law firm, which has retained an accounting firm, to assist in the company’s investigation. The company is providing information to governmental authorities, which consider the company to be a victim of unlawful conduct, in connection with their investigation of the arrested employees and contractors. The company has terminated its employment of the arrested employees and its contracts with the contractors (one of which is suing the company for substantial damages claiming wrongful termination). In February 2009, the NYSPSC commenced a proceeding that, among other things, will examine the prudence of certain of the company’s expenditures relating to the arrests and consider whether additional expenditures should also be examined (see “Other Regulatory Matters” in Note B).

In September 2010, CECONY commenced an internal investigation relating to the arrest of a retired employee for participating in a bribery scheme in which the employee received payments from a bidder that was selected to supply materials to the company.


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CECONY has provided information to governmental authorities in connection with their ongoing investigation of this conspiracy to defraud the company.

The company, based upon its evaluation of its internal controls for 2009 and previous years, believes that the controls were effective to provide reasonable assurance that its financial statements have been fairly presented, in all material respects, in conformity with generally accepted accounting principles. Because the company’s investigations are ongoing, the company is unable to predict the impact of any of the employees’ unlawful conduct on the company’s internal controls, business, results of operations or financial position.

Permit Non-Compliance and Pollution Discharges

In March 2009, the New York State Department of Environmental Conservation (NYSDEC) issued a proposed administrative Order on Consent to CECONY with respect to non-compliance with certain laws, regulations and permit conditions and discharges of pollutants at the company’s steam generating facilities. The proposed order effectively instituted a civil enforcement proceeding against the company. In the proposed order, the NYSDEC is seeking, among other things, the company’s agreement to pay a penalty in an amount the NYSDEC did not specify, retain an independent consultant to conduct a comprehensive audit of the company’s generating facilities to determine compliance with federal and New York State environmental laws and regulations and recommend best practices, remove all equipment containing polychlorinated biphenyls from the company’s steam and electric facilities, remediate polychlorinated biphenyl contamination, install certain wastewater treatment facilities, and comply with additional sampling, monitoring, and training requirements. In March 2010, the NYSDEC issued a revised proposed consent order specifying the amount of penalty the NYSDEC is seeking at $10.8 million. The company will seek to resolve this matter through negotiations with the NYSDEC. It is unable to predict the impact of this matter on the company’s operations or the additional costs, which could be substantial, to comply with the requirements resulting from this matter.

In January 2010, the NYSDEC issued a proposed administrative Order on Consent to CECONY relating to discharges of pollutants, reported by the company to the NYSDEC from 2002 through 2009, into the storm sewer system at a property the company owns in the Astoria section of New York on which the company is permitted by the NYSDEC to operate a hazardous waste storage facility. In April 2010, the NYSDEC issued an order, to which CECONY consented, pursuant to which CECONY paid a $1.1 million penalty and is undertaking a corrective action plan that will require the company to incur an estimated $32 million of capital expenditures.

In June 2010, the NYSDEC issued a proposed consent order relating to the release of oil into the Bronx River resulting from a November 2009 transformer fire at the company’s Dunwoodie electric substation. In July 2010, the NYSDEC issued an order, to which CECONY consented, pursuant to which CECONY paid a penalty and other amounts totaling $0.7 million.

Lease In/Lease Out Transactions

In each of 1997 and 1999, Con Edison Development entered into a transaction in which it leased property and then immediately subleased it back to the lessor (termed “Lease In/Lease Out,” or LILO transactions). The transactions respectively involve 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 is accounting for the two LILO transactions as leveraged leases. Accordingly, the company’s investment in these leases, net of non-recourse debt, is carried as a single amount in Con Edison’s consolidated balance sheet and income is recognized pursuant to a method that incorporates a level rate of return for those years when net investment in the lease is positive, based upon the after-tax cash flows projected at the inception of the leveraged leases. The company’s investment in these leveraged leases was $(36) million at September 30, 2010 and $(24) million at December 31, 2009 and is comprised of a $235 million gross investment less $271 million deferred tax liabilities at September 30, 2010


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and $235 million gross investment less $259 million of deferred tax liabilities at December 31, 2009.

On audit of Con Edison’s tax return for 1997, the IRS disallowed the tax losses in connection with the 1997 LILO transaction. In December 2005, Con Edison paid a $0.3 million income tax 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 United States Court of Federal Claims, entitled Consolidated Edison Company of New York, Inc. v. United States, to obtain a refund of this tax payment and interest. A trial was completed in November 2007. In October 2009, the court issued a decision in favor 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 the company in its 1997 federal income tax return are allowable. The IRS is entitled to appeal the decision.

In connection with its audit of Con Edison’s federal income tax returns for 1998 through 2007, the IRS disallowed $416 million of net tax deductions taken with respect to both of the LILO transactions for the tax years. Con Edison is pursuing administrative appeals of these audit level disallowances. In connection with its audit of Con Edison’s federal income tax returns for 2009 and 2008, the IRS has disallowed $41 million and $42 million, respectively, of net tax deductions taken with respect to both of the LILO transactions. When these audit level disallowances become appealable, Con Edison intends to file an appeal of the disallowances.

Con Edison believes that its LILO transactions have been correctly reported, and has not recorded any reserve with respect to the disallowance of tax losses, or related interest, in connection with its LILO transactions. Con Edison’s estimated tax savings, reflected in its financial statements, from the two LILO transactions through September 30, 2010, in the aggregate, was $217 million. If Con Edison were required to repay all or a portion of these amounts, it would also be required to pay interest of up to $73 million net of tax at September 30, 2010.

Pursuant to the accounting rules for leveraged lease transactions, the expected timing of income tax cash flows generated by Con Edison’s LILO transactions are required to be reviewed at least annually. If the expected timing of the cash flows is revised, the rate of return and the allocation of income would be recalculated from the inception of the LILO transactions, and the company would be required to recalculate the accounting effect of the LILO transactions, which would result in a charge to earnings that could have a material adverse effect on the company’s results of operations.

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 $873 million and $929 million at September 30, 2010 and December 31, 2009, respectively.

A summary, by type (described in Note H to the financial statements in Item 8 of the Form 10-K) and term, of Con Edison’s total guarantees at September 30, 2010 is as follows:


Guarantee Type	0 – 3 years		4 –10 years		> 10 years		Total
	*(Millions of Dollars)*
Commodity transactions	$	618	$	9	$	128	$	755
Affordable housing program		4		—		—		4
Intra-company guarantees		30		—		1		31
Other guarantees		63		20		—		83
TOTAL	$	715	$	29	$	129	$	873

Note I Income Tax

Reference is made to Note L to the financial statements in Item 8 of the Form 10-K.

In August 2010, the IRS entered into a closing agreement with Con Edison, covering the Companies’ use of certain methods to determine the extent to which construction-related costs could be deducted in 2005 through 2008 (the last year for which deduction of construction-related costs was an uncertain tax position), and instructed the IRS to apply the remainder of a June 2007 deposit to pay the tax for


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2005 through 2008 determined to be due relating to the closing agreement. At September 30, 2010, the remaining deposit was $51 million (including $47 million attributable to CECONY), which is included in other current assets in the Companies’ consolidated balance sheets, and the tax due relating to the closing agreement was $53 million (including $55 million attributable to CECONY), which is included in other current liabilities in the Companies’ consolidated balance sheets. In October 2010, the IRS indicated that it applied most of the remaining deposit towards payment of the tax due relating to the closing agreement.

At September 30, 2010, the liability for uncertain tax positions (which is included in other current liabilities in the Companies’ consolidated balance sheets) included $8 million (including $8 million attributable to CECONY) relating to the deduction of construction-related costs for New York State income tax purposes in 2005 through 2008.

Settlement of the Companies’ uncertain tax position regarding the timing of the deduction of construction-related costs has had, and will have, no effect (except for interest on amounts owed, which is not expected to be significant) on the Companies’ results of operations because deferred taxes had previously been provided for the related temporary differences between the deductions taken for income tax purposes and the corresponding amounts charged to expense for financial reporting purposes.

In September 2010, Con Edison filed the Companies’ federal income tax return for 2009 reflecting, among other things, the deduction of the costs of certain repairs to utility plant as an operating expense (the “repair allowance deductions”). Previously, the Companies capitalized such costs and reported their depreciation in their tax returns. Taking the repair allowance deductions accelerated the timing of the deduction of the cost of the repairs. The Companies had a net operating loss for federal income tax purposes in 2009 reflecting, among other things, the repair allowance deductions and the bonus depreciation provisions of the American Recovery and Reinvestment Act of 2009. At September 30, 2010, with respect to the repair allowance deductions, Con Edison accrued a liability for uncertain tax positions of $54 million (including $52 million attributable to CECONY), which is included in other current liabilities in the Companies’ consolidated balance sheets.

In September 2010, the Companies applied for a refund of certain prior years’ federal tax payments based upon the carry-back of the 2009 net operating loss. At September 30, 2010, Con Edison’s estimated refunds receivable from the IRS amounted to $297 million, which is included in other accounts receivable in Con Edison’s consolidated balance sheet (including $281 million attributable to CECONY, which is included in accounts receivable from affiliated companies in CECONY’s consolidated balance sheet).

The Companies also estimate that they had a net operating loss for state income tax purposes for 2009 (reflecting, among other things, the repair allowance expense deductions), which is being carried forward and as to which, at September 30, 2010, Con Edison has included a $64 million other current asset in its consolidated balance sheet (including $35 million attributable to CECONY, which is included in accounts receivable from affiliated companies in CECONY’s consolidated balance sheet).


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Note J — Financial Information by Business Segment

Reference is made to Note N to the financial statements in Item 8 of the Form 10-K.

The financial data for the business segments are as follows:


	For the Three Months Ended September 30,
	Operating revenues						Inter-segment revenues						Depreciation and amortization				Operating income
*(Millions of Dollars)*	2010			2009			2010			2009			2010		2009		2010			2009
Con Edison of New York
Electric	$	2,570		$	2,395		$	3		$	3		$	156	$	149	$	715		$	641
Gas		204			183			1			1			26		24		(16	)		(28	)
Steam		91			77			18			18			16		15		(33	)		(34	)
Consolidation adjustments		—			—			(22	)		(22	)		—		—		—			—
Total Con Edison of New York	$	2,865		$	2,655		$	—		$	—		$	198	$	188	$	666		$	579
O&R
Electric	$	245		$	209		$	—		$	—		$	8	$	7	$	52		$	40
Gas		25			26			—			—			3		3		(4	)		(5	)
Total O&R	$	270		$	235		$	—		$	—		$	11	$	10	$	48		$	35
Competitive energy businesses	$	584		$	610		$	—		$	2		$	2	$	2	$	(8	)	$	70
Other*		(12	)		(11	)		—			(2	)		—		—		(1	)		1
Total Con Edison	$	3,707		$	3,489		$	—		$	—		$	211	$	200	$	705		$	685

*	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)*	2010			2009			2010			2009			2010		2009		2010			2009
Con Edison of New York
Electric	$	6,402		$	5,865		$	9		$	9		$	464	$	437	$	1,228		$	1,090
Gas		1,126			1,259			4			4			76		73		243			223
Steam		487			521			55			54			46		44		41			40
Consolidation adjustments		—			—			(68	)		(67	)		—		—		—			—
Total Con Edison of New York	$	8,015		$	7,645		$	—		$	—		$	586	$	554	$	1,512		$	1,353
O&R
Electric	$	559		$	499		$	—		$	—		$	24	$	22	$	71		$	57
Gas		150			171			—			—			9		9		20			16
Total O&R	$	709		$	670		$	—		$	—		$	33	$	31	$	91		$	73
Competitive energy businesses	$	1,491		$	1,477		$	—		$	(1	)	$	6	$	4	$	25		$	52
Other*		(30	)		(34	)		—			1			—		—		(1	)		(2	)
Total Con Edison	$	10,185		$	9,758		$	—		$	—		$	626	$	589	$	1,627		$	1,476

*	Parent 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.


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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. The fair values of these hedges at September 30, 2010 and December 31, 2009 were as follows:


	Con Edison						CECONY
*(Millions of Dollars)*	2010			2009			2010			2009
Fair value of net derivative (liabilities) – gross	$	(436	)	$	(266	)	$	(248	)	$	(137	)
Impact of netting of cash collateral		282			162			143			87
Fair value of net derivative (liabilities) – net	$	(154	)	$	(104	)	$	(105	)	$	(50	)

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 September 30, 2010, Con Edison and CECONY had $172 million and $24 million of credit exposure in connection with energy supply and hedging activities, net of collateral, respectively. Con Edison’s net credit exposure consisted of $107 million with investment-grade counterparties, and $65 million primarily with commodity exchange brokers or independent system operators. CECONY’s entire net credit exposure was 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.

The fair values of the Companies’ commodity derivatives at September 30, 2010 were:


*(Millions of Dollars)*	Fair Value of Commodity Derivatives(a) Balance Sheet Location	Con Edison			CECONY
Asset Derivatives
Current	Other current assets	$	234		$	18
Long term	Other deferred charges and non-current assets		67			12
Total asset derivatives		$	301		$	30
Impact of netting			(181	)		6
Net asset derivatives		$	120		$	36
Liability Derivatives
Current	Fair value of derivative liabilities	$	538		$	—
Current	Other current liabilities		—			192
Long term	Fair value of derivative liabilities		199			86
Total liability derivatives		$	737		$	278
Impact of netting			(463	)		(137	)
Net liability derivatives		$	274		$	141

(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.


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The fair value of the Companies’ commodity derivatives at December 31, 2009 were:


*(Millions of Dollars)*	Fair Value of Commodity Derivatives(a) Balance Sheet Location	Con Edison			CECONY
Asset Derivatives
Current	Fair value of derivative assets	$	213		$	40
Long term	Other deferred charges and non-current assets		148			19
Total asset derivatives		$	361		$	59
Impact of netting			(231	)		(20	)
Net asset derivatives		$	130		$	39
Liability Derivatives
Current	Fair value of derivative liabilities	$	401		$	110
Long term	Fair value of derivative liabilities		226			86
Total liability derivatives		$	627		$	196
Impact of netting			(393	)		(107	)
Net liability derivatives		$	234		$	89

(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 costs, including hedging gains and losses, in accordance with rate provisions approved by the applicable state utility commissions. See “Recoverable Energy Costs” in Note A to the financial statements in Item 8 of the Form 10-K. 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 table presents 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, 2010:


Realized and Unrealized Gains/(Losses) on Commodity Derivatives(a) Deferred or Recognized in Income for the Three Months Ended September 30, 2010
*(Millions of Dollars)*	Balance Sheet Location	Con Edison			CECONY
Pre-tax gains/(losses) deferred in accordance with accounting rules for regulated operations:
Current	Other current liabilities	$	(3	)	$	(3	)
Total deferred losses		$	(3	)	$	(3	)
Current	Other current assets	$	(61	)	$	(54	)
Current	Recoverable energy costs		(70	)		(63	)
Long term	Regulatory assets		4			7
Total deferred losses		$	(127	)	$	(110	)
Net deferred losses		$	(130	)	$	(113	)
	Income Statement Location
Pre-tax gain/(loss) recognized in income
	Purchased power expense	$	(26	)(b)	$	—
	Gas purchased for resale		(1	)		—
	Non-utility revenue		4	(b)		—
Total pre-tax gain/(loss) recognized in income		$	(23	)	$	—

(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, 2010, Con Edison recorded in non-utility operating revenues and purchased power expense an unrealized pre-tax gain/(loss) of $(3)million and $(34) million, respectively.


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Realized and Unrealized Gains/(Losses) on Commodity Derivatives(a) Deferred or Recognized in Income for the Nine Months Ended September 30, 2010
*(Millions of Dollars)*	Balance Sheet Location	Con Edison			CECONY
Pre-tax gains/(losses) deferred in accordance with accounting rules for regulated operations:
Current	Other current liabilities	$	(8	)	$	(8	)
Total deferred losses		$	(8	)	$	(8	)
Current	Other current assets	$	(127	)	$	(114	)
Current	Recoverable energy costs	$	(205	)	$	(172	)
Long term	Regulatory assets	$	(19	)	$	(11	)
Total deferred losses		$	(351	)	$	(297	)
Net deferred losses		$	(359	)	$	(305	)
	Income Statement Location
Pre-tax gain/(loss) recognized in income
	Purchased power expense	$	(132	)	$	—
	Gas purchased for resale		(7	)		—
	Non-utility revenue		21	(b)		—
Total pre-tax gain/(loss) recognized in income		$	(118	)	$	—

(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, 2010, Con Edison recorded in non-utility operating revenues and purchased power expense an unrealized pre-tax gain/(loss) of $(1) million and $(34) million, respectively.

The following table presents 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, 2009:


Realized and Unrealized Gains/(Losses) on Commodity Derivatives(a) Deferred or Recognized in Income for the Three Months Ended September 30, 2009
*(Millions of Dollars)*	Balance Sheet Location	Con Edison			Con Edison of New York
Pre-tax gains/(losses) deferred in accordance with accounting rules for regulated operations:
Current	Deferred derivative gains	$	4		$	4
Long term	Regulatory liabilities		2			—
Total deferred gains		$	6		$	4
Current	Deferred derivative losses	$	111		$	97
Current	Recoverable energy costs	$	(158	)	$	(134	)
Long term	Regulatory assets	$	29		$	21
Total deferred losses		$	(18	)	$	(16	)
Net deferred losses		$	(12	)	$	(12	)
	Income Statement Location
Pre-tax gain/(loss) recognized in income
	Purchased power expense	$	(176	)	$	—
	Gas purchased for resale		(9	)		—
	Non-utility revenue		27	(b)		—
Total pre-tax gain/(loss) recognized in income		$	(158	)	$	—

(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, 2009, Con Edison recorded in non-utility operating revenues an unrealized pre-tax gain of $28 million.


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