Subsequent Events

9 Months Ended

Sep. 30, 2022

Held-for-Sale Treatment of the Clean Energy Businesses

On October 1, 2022, Con Edison entered into a purchase and sale agreement pursuant to which Con Edison agreed to sell the Clean Energy Businesses to RWE Renewables Americas, LLC, a subsidiary of RWE Aktiengesellschaft (RWE) for a total of $6,800 million, subject to closing adjustments. The purchase price will be adjusted (i) upward for certain cash and cash equivalents, (ii) downward for certain indebtedness and debt-like items, (iii) downward for certain transaction expenses, (iv) upward or downward to the extent that the net working capital varies from a set target, (v) upward or downward to the extent that capital expenditures incurred prior to the closing of the transaction vary from a set budget, and (vi) downward by the value allocated to certain assets and projects that are not able to be conveyed to RWE upon closing of the transaction. The purchase and sale agreement includes certain customary representations, warranties and covenants. The transaction is subject to customary closing conditions, including, among other things, expiration or early termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and approvals by the Committee on Foreign Investment in the United States and the FERC. The transaction is expected to close in the first half of 2023, subject to satisfaction of the foregoing conditions, among other things.

Concurrent with entering into the purchase and sale agreement, Con Edison incurred costs in the normal course of the sale process. Substantially all of the expected transaction costs of approximately $50 million to $60 million ($35 million to $45 million after-tax) are expected to be incurred in 2022. Also, as described in Note A, depreciation and amortization expense of approximately $60 million ($39 million after-tax) will not be recorded on the assets of the Clean Energy Businesses in the fourth quarter of 2022. Further, since the Clean Energy Businesses were designated as held for sale as of October 1, 2022 and the transaction is expected to close in the first half of 2023, Con Edison is analyzing the potential impact of the anticipated sale on its state apportionment factors. Based on current estimates, Con Edison expects to record an increase to its net deferred income tax liabilities and corresponding deferred income tax expense of approximately $100 million to $140 million (net of federal income taxes) in the fourth quarter of 2022.

The Clean Energy Business represent a reportable segment. See Note M. At September 30, 2022, the carrying amounts of the major classes of assets and liabilities of the Clean Energy Businesses, which subsequent to September 30, 2022 met the accounting criteria to be designated as held for sale, are presented as if on a held for sale basis, and accordingly exclude certain intercompany and net deferred tax liability balances, as follows:


(Millions of Dollars)			September 30, 2022
ASSETS
CURRENT ASSETS
Cash and temporary cash investments			$18
Accounts receivable and other receivables - net allowance for uncollectible accounts			204

Accrued unbilled revenue			120
Fuel oil, gas in storage, materials and supplies, at average cost			40
Restricted cash			163
Fair value of derivatives assets			58
Other current assets			173
TOTAL CURRENT ASSETS			776

NON-UTILITY PLANT
Non-utility property, net accumulated depreciation			4,114
Construction work in progress			385
NET PLANT			4,499
OTHER NONCURRENT ASSETS
Goodwill			31
Intangible assets, less accumulated amortization			1,222
Operating lease right-of-use asset			266
Fair value of derivatives assets			104
Other deferred charges and noncurrent assets			22
TOTAL OTHER NONCURRENT ASSETS			1,645
TOTAL ASSETS			$6,920


(Millions of Dollars)			September 30, 2022
LIABILITIES
CURRENT LIABILITIES
Long-term debt due within one year			$323
Term loan			150

Accounts payable			217

Operating lease liabilities			32
Other current liabilities			143
TOTAL CURRENT LIABILITIES			865
NONCURRENT LIABILITIES
Asset retirement obligations			76

Operating lease liabilities			248
Other deferred credits and noncurrent liabilities			20
TOTAL NONCURRENT LIABILITIES			344
LONG-TERM DEBT			2,344
TOTAL LIABILITIES			$3,553