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 September 2017, RECO, the New Jersey Division of Rate Counsel and the New Jersey Board of Public Utilities entered into a settlement agreement, which is subject to FERC approval, that increases RECO's annual transmission revenue requirement from $11.8 million to $17.7 million, effective April 2017. The revenue requirement reflects a return on common equity of 10.0 percent.

Other Regulatory Matters

On August 16, 2017, the New York State Public Service Commission (NYSPSC) issued an order in its proceeding investigating an April 21, 2017 Metropolitan Transportation Authority (MTA) subway power outage. The order indicated that the investigation determined that the outage was caused by a failure of CECONY’s electricity supply to a subway station, which led to a loss of the subway signals, and that one of the secondary services to the MTA facility had been improperly rerouted and was not properly documented by the company. The order also indicated that the loss of power to the subway station affected multiple subway lines and caused widespread delays across the subway system. Pursuant to the order, the company is 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 order did not commence a prudence review or address cost recovery. Under the New York State Administrative Procedure Act, the order could not remain in effect for more than 90 days without further action by the NYSPSC because it was adopted on an emergency basis. At its October 19, 2017 meeting, the NYSPSC approved another order in this proceeding. The NYSPSC has not yet issued this other order. 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 September 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	$2,626	$2,874	$2,476	$2,730
Future income tax	2,419	2,439	2,308	2,325
Environmental remediation costs	803	823	690	711
Revenue taxes	341	295	325	280
Deferred derivative losses	88	48	78	42
Pension and other postretirement benefits deferrals	70	38	45	7
Municipal infrastructure support costs	57	44	57	44
Deferred storm costs	43	56	—	3
Unamortized loss on reacquired debt	39	43	37	41
Indian Point Energy Center program costs	32	50	32	50
O&R property tax reconciliation	29	37	—	—
Brooklyn Queens demand management program	28	29	28	29
Preferred stock redemption	24	25	24	25
Surcharge for New York State assessment	18	28	16	26
Net electric deferrals	13	24	13	24
Workers’ compensation	12	13	12	13
O&R transition bond charges	10	15	—	—
Recoverable energy costs	4	42	4	38
Other	113	101	103	85
Regulatory assets – noncurrent	6,769	7,024	6,248	6,473
Deferred derivative losses	81	91	75	86
Recoverable energy costs	28	9	25	4
Regulatory assets – current	109	100	100	90
Total Regulatory Assets	$6,878	$7,124	$6,348	$6,563
Regulatory liabilities
Allowance for cost of removal less salvage	$798	$755	$671	$641
Pension and other postretirement benefit deferrals	202	193	174	162
Net unbilled revenue deferrals	166	145	166	145
Property tax reconciliation	140	178	140	178
Unrecognized other postretirement costs	84	60	84	60
Settlement of prudence proceeding	73	95	73	95
Carrying charges on repair allowance and bonus depreciation	49	68	48	67
New York State income tax rate change	48	61	48	60
Variable-rate tax-exempt debt – cost rate reconciliation	36	55	32	48
Property tax refunds	28	1	28	1
Settlement of gas proceedings	27	27	27	27
Base rate change deferrals	26	40	26	40
Earnings sharing - electric, gas and steam	24	39	15	28
Net utility plant reconciliations	11	16	8	15
Other	161	172	133	145
Regulatory liabilities – noncurrent	1,873	1,905	1,673	1,712
Refundable energy costs	29	29	9	5
Revenue decoupling mechanism	27	71	27	61
Deferred derivative gains	2	28	2	24
Regulatory liabilities – current	58	128	38	90
Total Regulatory Liabilities	$1,931	$2,033	$1,711	$1,802