Regulatory Matters

Rate Plans

Rockland Electric Company (RECO)

In February 2017, the New Jersey Board of Public Utilities (NJBPU) approved a stipulation of settlement for a RECO electric rate plan commencing March 2017. The following table contains a summary of the electric rate plan.



RECO
Effective period		March 2017 (a)
Base rate changes		Yr. 1 - $1.7 million
Amortization to income of net regulatory (assets) and liabilities		$0.2 million over three years and continuation of $(25.6) million of deferred storm costs over four years expiring July 31, 2018 (b)
Recoverable energy costs		Current rate recovery of purchased power costs.
Cost reconciliations		None
Average rate base		Yr. 1 - $178.7 million
Weighted average cost of capital (after-tax)		7.47 percent
Authorized return on common equity		9.6 percent
Cost of long-term debt		5.37 percent
Common equity ratio		49.7 percent


(a)	Effective until a new rate plan approved by the NJBPU goes into effect.


(b)	In January 2016, the NJBPU approved RECO’s plan to spend $15.7 million in capital over three years to harden its electric system against storms, the costs of which RECO, beginning in 2017, is collecting through a customer surcharge.

In January 2017, RECO filed a request with FERC for an increase to its annual transmission revenue requirement from $11.8 million to $19.7 million. The filing reflects a return on common equity of 10.7 percent and a common equity ratio of 48 percent.

Other Regulatory Matters

At its August 2, 2017 meeting, the New York State Public Service Commission (NYSPSC) voted to issue an order in its proceeding investigating an April 21, 2017 Metropolitan Transportation Authority (MTA) subway power outage. The NYSPSC indicated that the outage resulted from a failure of CECONY’s electricity supply to a subway station and led to a loss of the subway signals. The NYSPSC also indicated that the company’s failure to document the rerouting of secondary services to the MTA facility significantly delayed repair. The company anticipates that, pursuant to the NYSPSC order, it will be required to take certain actions, including performing inspections of electrical equipment that serves the MTA system, analyzing power supply and power quality events affecting the MTA’s signaling services, providing new monitoring and other equipment and filing monthly reports with the NYSPSC on all of the company's activities related to the MTA system. In July 2017, the Chairman of the NYSPSC notified the company that the April 21, 2017 subway power outage incident will likely result in a prudence review of the reasonableness of CECONY’s actions and conduct. The company does not anticipate that the NYSPSC order will commence a prudence review or address cost recovery. The company is unable to estimate the amount or range of its possible costs related to this matter.

Regulatory Assets and Liabilities

Regulatory assets and liabilities at June 30, 2017 and December 31, 2016 were comprised of the following items:



	Con Edison		CECONY
(Millions of Dollars)	2017	2016	2017	2016
Regulatory assets
Unrecognized pension and other postretirement costs	$2,768	$2,874	$2,612	$2,730
Future income tax	2,413	2,439	2,302	2,325
Environmental remediation costs	807	823	697	711
Revenue taxes	327	295	311	280
Deferred derivative losses	77	48	70	42
Pension and other postretirement benefits deferrals	59	38	32	7
Municipal infrastructure support costs	54	44	54	44
Deferred storm costs	44	56	—	3
Unamortized loss on reacquired debt	40	43	38	41
Indian Point Energy Center program costs	40	50	40	50
Surcharge for New York State assessment	32	28	30	26
O&R property tax reconciliation	32	37	—	—
Brooklyn Queens demand management program	26	29	26	29
Preferred stock redemption	25	25	25	25
Net electric deferrals	17	24	17	24
Recoverable energy costs	15	42	15	38
Workers’ compensation	14	13	14	13
O&R transition bond charges	12	15	—	—
Other	133	101	121	85
Regulatory assets – noncurrent	6,935	7,024	6,404	6,473
Deferred derivative losses	71	91	65	86
Recoverable energy costs	6	9	3	4
Regulatory assets – current	77	100	68	90
Total Regulatory Assets	$7,012	$7,124	$6,472	$6,563
Regulatory liabilities
Allowance for cost of removal less salvage	$786	$755	$661	$641
Pension and other postretirement benefit deferrals	206	193	177	162
Net unbilled revenue deferrals	164	145	164	145
Property tax reconciliation	148	178	148	178
Unrecognized other postretirement costs	88	60	88	60
Settlement of prudence proceeding	80	95	80	95
Carrying charges on repair allowance and bonus depreciation	55	68	54	67
New York State income tax rate change	53	61	52	60
Variable-rate tax-exempt debt – cost rate reconciliation	43	55	38	48
Base rate change deferrals	31	40	31	40
Settlement of gas proceedings	27	27	27	27
Earnings sharing - electric, gas and steam	22	39	13	28
Net utility plant reconciliations	12	16	10	15
Other	171	173	143	146
Regulatory liabilities – noncurrent	1,886	1,905	1,686	1,712
Refundable energy costs	29	29	10	5
Revenue decoupling mechanism	29	71	27	61
Deferred derivative gains	6	28	5	24
Regulatory liabilities – current	64	128	42	90
Total Regulatory Liabilities	$1,950	$2,033	$1,728	$1,802