Pension Benefits (Tables)

12 Months Ended

Dec. 31, 2017

The components of the Companies’ total periodic benefit costs for 2017, 2016 and 2015 were as follows:



	Con Edison			CECONY
(Millions of Dollars)	2017	2016	2015	2017	2016	2015
Service cost – including administrative expenses	$263	$275	$297	$246	$258	$279
Interest cost on projected benefit obligation	591	596	575	554	559	538
Expected return on plan assets	(968)	(947)	(886)	(917)	(898)	(840)
Recognition of net actuarial loss	595	596	775	563	565	734
Recognition of prior service costs	(17)	4	4	(19)	2	2
NET PERIODIC BENEFIT COST	$464	$524	$765	$427	$486	$713
Amortization of regulatory asset (a)	—	—	1	—	—	1
TOTAL PERIODIC BENEFIT COST	$464	$524	$766	$427	$486	$714
Cost capitalized	(181)	(214)	(301)	(169)	(203)	(285)
Reconciliation to rate level	(34)	54	(74)	(41)	58	(74)
Cost charged to operating expenses	$249	$364	$391	$217	$341	$355

(a) Relates to an increase in CECONY’s pension obligation of $45 million from a 1999 special retirement program.

The components of the Companies’ total periodic postretirement benefit costs for 2017, 2016 and 2015 were as follows:



	Con Edison			CECONY
(Millions of Dollars)	2017	2016	2015	2017	2016	2015
Service cost	$20	$18	$20	$13	$13	$15
Interest cost on accumulated other postretirement benefit obligation	46	48	51	38	40	43
Expected return on plan assets	(69)	(77)	(78)	(61)	(67)	(68)
Recognition of net actuarial loss	2	5	31	(3)	3	28
Recognition of prior service cost	(17)	(20)	(20)	(11)	(14)	(14)
TOTAL PERIODIC POSTRETIREMENT BENEFIT COST	$(18)	$(26)	$4	$(24)	$(25)	$4
Cost capitalized	8	11	(2)	10	10	(2)
Reconciliation to rate level	(4)	22	14	(2)	22	6
Cost charged to operating expenses	$(14)	$7	$16	$(16)	$7	$8

Schedule of Funded Status

The funded status at December 31, 2017, 2016 and 2015 was as follows:



	Con Edison			CECONY
(Millions of Dollars)	2017	2016	2015	2017	2016	2015
CHANGE IN PROJECTED BENEFIT OBLIGATION
Projected benefit obligation at beginning of year	$14,095	$14,377	$15,081	$13,203	$13,482	$14,137
Service cost – excluding administrative expenses	259	271	293	241	254	274
Interest cost on projected benefit obligation	591	596	575	554	559	538
Net actuarial loss/(gain)	1,231	(302)	(996)	1,171	(282)	(931)
Plan amendments	6	(256)	—	—	(259)	—
Benefits paid	(646)	(591)	(576)	(602)	(551)	(536)
PROJECTED BENEFIT OBLIGATION AT END OF YEAR	$15,536	$14,095	$14,377	$14,567	$13,203	$13,482
CHANGE IN PLAN ASSETS
Fair value of plan assets at beginning of year	$12,472	$11,759	$11,495	$11,815	$11,141	$10,897
Actual return on plan assets	2,041	829	126	1,935	787	118
Employer contributions	450	508	750	412	469	697
Benefits paid	(646)	(591)	(576)	(602)	(551)	(536)
Administrative expenses	(43)	(33)	(36)	(41)	(31)	(35)
FAIR VALUE OF PLAN ASSETS AT END OF YEAR	$14,274	$12,472	$11,759	$13,519	$11,815	$11,141
FUNDED STATUS	$(1,262)	$(1,623)	$(2,618)	$(1,048)	$(1,388)	$(2,341)
Unrecognized net loss	$2,760	$3,157	$3,909	$2,624	$2,995	$3,704
Unrecognized prior service costs	(223)	(244)	16	(242)	(258)	3
Accumulated benefit obligation	13,897	12,655	12,909	12,972	11,806	12,055

The funded status of the programs at December 31, 2017, 2016 and 2015 were as follows:



	Con Edison			CECONY
(Millions of Dollars)	2017	2016	2015	2017	2016	2015
CHANGE IN BENEFIT OBLIGATION
Benefit obligation at beginning of year	$1,198	$1,287	$1,411	$1,007	$1,093	$1,203
Service cost	20	18	20	13	13	15
Interest cost on accumulated postretirement benefit obligation	46	48	51	38	40	43
Amendments	—	—	—	—	—	—
Net actuarial loss/(gain)	53	(57)	(103)	16	(52)	(85)
Benefits paid and administrative expenses	(134)	(134)	(127)	(124)	(122)	(117)
Participant contributions	36	36	35	35	35	34
BENEFIT OBLIGATION AT END OF YEAR	$1,219	$1,198	$1,287	$985	$1,007	$1,093
CHANGE IN PLAN ASSETS
Fair value of plan assets at beginning of year	$975	$994	$1,084	$851	$870	$950
Actual return on plan assets	150	60	(6)	130	52	(4)
Employer contributions	17	7	6	8	7	6
EGWP payments	34	35	28	30	33	26
Participant contributions	35	36	35	35	35	34
Benefits paid	(172)	(157)	(153)	(161)	(146)	(142)
FAIR VALUE OF PLAN ASSETS AT END OF YEAR	$1,039	$975	$994	$893	$851	$870
FUNDED STATUS	$(180)	$(223)	$(293)	$(92)	$(156)	$(223)
Unrecognized net loss/(gain)	$(47)	$(24)	$28	$(85)	$(42)	$4
Unrecognized prior service costs	(14)	(31)	(51)	(7)	(18)	(32)

Schedule of Assumptions

The actuarial assumptions were as follows:



	2017		2016		2015
Weighted-average assumptions used to determine benefit obligations at December 31:
Discount rate	3.70	%	4.25	%	4.25	%
Rate of compensation increase
CECONY	4.25	%	4.25	%	4.25	%
O&R	4.00	%	4.00	%	4.00	%
Weighted-average assumptions used to determine net periodic benefit cost for the years ended December 31:
Discount rate	4.25	%	4.25	%	3.90	%
Expected return on plan assets	7.50	%	7.80	%	7.80	%
Rate of compensation increase
CECONY	4.25	%	4.25	%	4.25	%
O&R	4.00	%	4.00	%	4.00	%

The actuarial assumptions were as follows:



	2017		2016		2015
Weighted-average assumptions used to determine benefit obligations at December 31:
Discount Rate
CECONY	3.55	%	4.00	%	4.05	%
O&R	3.70	%	4.20	%	4.20	%
Weighted-average assumptions used to determine net periodic benefit cost for the years ended December 31:
Discount Rate
CECONY	4.00	%	4.05	%	3.75	%
O&R	4.20	%	4.20	%	3.85	%
Expected Return on Plan Assets	7.50	%	7.00	%	7.75	%

Schedule of Expected Benefit Payments

Based on current assumptions, the Companies expect to make the following benefit payments over the next ten years:



(Millions of Dollars)	2018	2019	2020	2021	2022	2023-2027
Con Edison	$728	$738	$753	$765	$778	$4,083
CECONY	677	686	700	712	724	3,804

Based on current assumptions, the Companies expect to make the following benefit payments over the next ten years, net of receipt of governmental subsidies:



(Millions of Dollars)	2018	2019	2020	2021	2022	2023-2027
Con Edison	$83	$81	$78	$76	$75	$363
CECONY	73	70	67	65	64	303

Schedule of Plan Assets Allocations

The asset allocations for the pension plan at the end of 2017, 2016 and 2015, and the target allocation for 2018 are as follows:



	Target Allocation Range	Plan Assets at December 31,
Asset Category	2018	2017		2016		2015
Equity Securities	53% - 63%	58	%	58	%	57	%
Debt Securities	28% - 38%	33	%	33	%	33	%
Real Estate	7% -11%	9	%	9	%	10	%
Total	100%	100	%	100	%	100	%

The asset allocations for CECONY’s other postretirement benefit plans at the end of 2017, 2016 and 2015, and the target allocation for 2018 are as follows:



	Target Allocation Range	Plan Assets at December 31,
Asset Category	2018	2017		2016		2015
Equity Securities	50%-80%	60	%	60	%	59	%
Debt Securities	20%-50%	40	%	40	%	41	%
Total	100%	100	%	100	%	100	%

Schedule of Fair Value of Plan Assets

The fair values of the pension plan assets at December 31, 2017 by asset category are as follows:



(Millions of Dollars)	Level 1	Level 2	Total
Investments within the fair value hierarchy
U.S. Equity (a)	$3,872	$28	$3,900
International Equity (b)	4,132	—	4,132
U.S. Government Issued Debt (c)	—	1,786	1,786
Corporate Bonds Debt (d)	—	2,450	2,450
Structured Assets Debt (e)	—	3	3
Other Fixed Income Debt (f)	—	125	125
Cash and Cash Equivalents (g)	124	352	476
Futures (h)	308	—	308
Total investments within the fair value hierarchy	$8,436	$4,744	$13,180
Investments measured at NAV per share (n)
Private Equity (i)			336
Real Estate (j)			1,214
Hedge Funds (k)			251
Total investments valued using NAV per share			$1,801
Funds for retiree health benefits (l)	(168)	(94)	(262)
Funds for retiree health benefits measured at NAV per share (l)(n)			(36)
Total funds for retiree health benefits			$(298)
Investments (excluding funds for retiree health benefits)	$8,268	$4,650	$14,683
Pending activities (m)			(409)
Total fair value of plan net assets			$14,274


(a)	U.S. Equity includes both actively- and passively-managed assets with investments in domestic equity index funds and actively-managed small-capitalization equities.


(b)	International Equity includes international equity index funds and actively-managed international equities.


(c)	U.S. Government Issued Debt includes agency and treasury securities.


(d)	Corporate Bonds Debt consists of debt issued by various corporations.


(e)	Structured Assets Debt includes commercial-mortgage-backed securities and collateralized mortgage obligations.


(f)	Other Fixed Income Debt includes municipal bonds, sovereign debt and regional governments.


(g)	Cash and Cash Equivalents include short term investments, money markets, foreign currency and cash collateral.


(h)	Futures consist of exchange-traded financial contracts encompassing U.S. Equity, International Equity and U.S. Government indices.


(i)	Private Equity consists of global equity funds that are not exchange-traded.


(j)	Real Estate investments include real estate funds based on appraised values that are broadly diversified by geography and property type.


(k)	Hedge Funds are within a commingled structure which invests in various hedge fund managers who can invest in all financial instruments.

(l)

The Companies set aside funds for retiree health benefits through a separate account within the pension trust, as permitted under Section 401(h) of the Internal Revenue Code of 1986, as amended. In accordance with the Code, the plan’s investments in the 401(h) account may not be used for, or diverted to, any purpose other than providing health benefits for retirees. The net assets held in the 401(h) account are calculated based on a pro-rata percentage allocation of the net assets in the pension plan. The related obligations for health benefits are not included in the pension plan’s obligations and are included in the Companies’ other postretirement benefit obligation. See Note F.


(m)	Pending activities include security purchases and sales that have not settled, interest and dividends that have not been received and reflects adjustments for available estimates at year end.


(n)	In accordance with ASU 2015-07, Fair Value Measurements (Topic 820): Disclosures for Investments in Certain Entities That Calculate Net Asset Value per Share (or its equivalent), certain investments that are measured at fair value using the net asset value per share (or its equivalent) practical expedient have not been classified in the fair value hierarchy.

The fair values of the pension plan assets at December 31, 2016 by asset category are as follows:



(Millions of Dollars)	Level 1	Level 2		Total
Investments within the fair value hierarchy
U.S. Equity (a)	$3,466		$—	$3,466
International Equity (b)	3,187	371		3,558
U.S. Government Issued Debt (c)	—	1,337		1,337
Corporate Bonds Debt (d)	—	2,140		2,140
Structured Assets Debt (e)	—	1		1
Other Fixed Income Debt (f)	—	200		200
Cash and Cash Equivalents (g)	147	389		536
Futures (h)	296	68		364
Total investments within the fair value hierarchy	$7,096	$4,506		$11,602
Investments measured at NAV per share (n)
Private Equity (i)				247
Real Estate (j)				1,139
Hedge Funds (k)				229
Total investments valued using NAV per share				$1,615
Funds for retiree health benefits (l)	(165)	(105)		(270)
Funds for retiree health benefits measured at NAV per share (l)(n)				(37)
Total funds for retiree health benefits				$(307)
Investments (excluding funds for retiree health benefits)	$6,931	$4,401		$12,910
Pending activities (m)				(438)
Total fair value of plan net assets				$12,472

(a) - (n) Reference is made to footnotes (a) through (n) in the above table of pension plan assets at December 31, 2017 by asset category.

The fair values of the plan assets at December 31, 2017 by asset category as defined by the accounting rules for fair value measurements (see Note P) are as follows:



(Millions of Dollars)	Level 1		Level 2	Total
Equity (a)		$—	$420	$420
Other Fixed Income Debt (b)	—		286	286
Cash and Cash Equivalents (c)	—		16	16
Total investments		$—	$722	$722
Funds for retiree health benefits (d)	168		94	262
Investments (including funds for retiree health benefits)		$168	$816	$984
Funds for retiree health benefits measured at net asset value (d)(e)				36
Pending activities (f)				19
Total fair value of plan net assets				$1,039


(a)	Equity includes a passively managed commingled index fund benchmarked to the MSCI All Country World Index.


(b)	Other Fixed Income Debt includes a passively managed commingled index fund benchmarked to the Barclays Capital Aggregate Index.


(c)	Cash and Cash Equivalents include short term investments and money markets.

(d)


(e)	In accordance with ASU 2015-07, Fair Value Measurements (Topic 820): Disclosures for Investments in Certain Entities That Calculate Net Asset Value per Share (or its equivalent), certain investments that are measured at fair value using the net asset value per share (or its equivalent) practical expedient have not been classified in the fair value hierarchy.


(f)	Pending activities include security purchases and sales that have not settled, interest and dividends that have not been received, and reflects adjustments for available estimates at year end.

The fair values of the plan assets at December 31, 2016 by asset category (see Note P) are as follows:



(Millions of Dollars)	Level 1		Level 2	Total
Equity (a)		$—	$391	$391
Other Fixed Income Debt (b)	—		250	250
Cash and Cash Equivalents (c)	—		13	13
Total investments		$—	$654	$654
Funds for retiree health benefits (d)	165		105	270
Investments (including funds for retiree health benefits)		$165	$759	$924
Funds for retiree health benefits measured at net asset value (d)(e)				37
Pending activities (f)				14
Total fair value of plan net assets				$975

(a) - (f) Reference is made to footnotes (a) through (f) in the above table of other postretirement benefit plan assets at December 31, 2017 by asset category.

Schedule of Employer Contribution to Defined Savings Plan

The Companies also offer a defined contribution savings plan that covers substantially all employees and made contributions to the plan as follows:



	For the Years Ended December 31,
(Millions of Dollars)	2017	2016	2015
Con Edison	$40	$36	$34
CECONY	35	32	29