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Fair Value Measurements (Tables)
 9 Months Ended
Sep. 30, 2017
Fair Value Disclosures [Abstract]  
Assets and Liabilities Measured at Fair Value on Recurring Basis
Assets and liabilities measured at fair value on a recurring basis as of September 30, 2017 and December 31, 2016 are summarized below.
 
  
2017
2016
(Millions of Dollars)
Level 1
Level 2
Level 3
Netting
Adjustment (e)
Total
Level 1
Level 2
Level 3
Netting
Adjustment (e)
Total
Con Edison
 
 
 
 
 
 
 
 
 
 
Derivative assets:
 
 
 
 
 
 
 
 
 
 
Commodity (a)(b)(c)
$6
$28
$2
$(18)
$18
$14
$33
$7
$(24)
$30
Other (a)(b)(d)
271
118
—

—

389
222
111
—

—

333
Total assets
$277
$146
$2
$(18)
$407
$236
$144
$7
$(24)
$363
Derivative liabilities:
 
 
 
 
 
 
 
 
 
 
Commodity (a)(b)(c)
$2
$155
$22
$(26)
$153
$4
$144
$6
$(38)
$116
Interest Rate Swap (a)(b)(c)
—

—

—

—

—

—

1
—

—

1
Total liabilities
$2
$155
$22
$(26)
$153
$4
$145
$6
$(38)
$117
CECONY
 
 
 
 
 
 
 
 
 
 
Derivative assets:
 
 
 
 
 
 
 
 
 
 
Commodity (a)(b)(c)
$5
$12
$1
$(9)
$9
$10
$19
$1
$(10)
$20
Other (a)(b)(d)
248
113
—

—

361
200
106
—

—

306
Total assets
$253
$125
$1
$(9)
$370
$210
$125
$1
$(10)
$326
Derivative liabilities:
 
 
 
 
 
 
 
 
 
 
Commodity (a)(b)(c)
$1
$133
$15
$(17)
$132
$1
$124

$—

$(26)
$99
(a)
The Companies’ policy is to review the fair value hierarchy and recognize transfers into and transfers out of the levels at the end of each reporting period. There were no transfers between levels 1, 2 and 3 for the nine months ended September 30, 2017 and for the year ended December 31, 2016.
(b)
Level 2 assets and liabilities include investments held in the deferred compensation plan and/or non-qualified retirement plans, exchange-traded contracts where there is insufficient market liquidity to warrant inclusion in Level 1, certain over-the-counter derivative instruments for electricity, refined products and natural gas. Derivative instruments classified as Level 2 are valued using industry standard models that incorporate corroborated observable inputs; such as pricing services or prices from similar instruments that trade in liquid markets, time value and volatility factors.
(c)
The accounting rules for fair value measurements and disclosures require consideration of the impact of nonperformance risk (including credit risk) from a market participant perspective in the measurement of the fair value of assets and liabilities. At September 30, 2017 and December 31, 2016, the Companies determined that nonperformance risk would have no material impact on their financial position or results of operations.
(d)
Other assets are comprised of assets such as life insurance contracts within the deferred compensation plan and non-qualified retirement plans.
(e)
Amounts represent the impact of legally-enforceable master netting agreements that allow the Companies to net gain and loss positions and cash collateral held or placed with the same counterparties.
Schedule of Commodity Derivatives
 
Fair Value of Level 3 at September 30, 2017
Valuation
Techniques
Unobservable Inputs
Range
 
(Millions of Dollars)
Con Edison – Commodity
Electricity
$(21)
Discounted Cash Flow
Forward energy prices (a)
$19.00-$76.25 per MWh
 

Discounted Cash Flow
Forward capacity prices (a)
$1.26-$9.47 per kW-month
Transmission Congestion Contracts/Financial Transmission Rights
1
Discounted Cash Flow
Discount to adjust auction prices for inter-zonal forward price curves (b)
50.0%
 
 
 
Inter-zonal forward price curves adjusted for historical zonal losses (b)
$0.50-$6.75 per MWh
Total Con Edison—Commodity
$(20)
 
 
 
CECONY – Commodity
Electricity
$(15)
Discounted Cash Flow
Forward energy prices (a)
$20.50-$76.25 per MWh
Transmission Congestion Contracts
1
Discounted Cash Flow
Discount to adjust auction prices for inter-zonal forward price curves (b)
50.0%
Total CECONY—Commodity
$(14)
 
 
 
(a)
Generally, increases/(decreases) in this input in isolation would result in a higher/(lower) fair value measurement.
(b)
Generally, increases/(decreases) in this input in isolation would result in a lower/(higher) fair value measurement.
Reconciliation of Beginning and Ending Net Balances for Assets and Liabilities Measured at Level 3 Fair Value
The table listed below provides a reconciliation of the beginning and ending net balances for assets and liabilities measured at fair value as of September 30, 2017 and 2016 and classified as Level 3 in the fair value hierarchy:
 
 
For the Three Months Ended September 30,
  
          Con Edison
          CECONY
(Millions of Dollars)
2017

2016
2017

2016

Beginning balance as of July 1,
$(10)
$5
$(6)
$2
Included in earnings
7
(4)
1
—

Included in regulatory assets and liabilities
(13)
(5)
(8)
(3)
Sales
—

4
—

—

Settlements
(4)
1
(1)
1
Ending balance as of September 30,
$(20)
$1
$(14)

$—



 
For the Nine Months Ended September 30,
  
          Con Edison
          CECONY
(Millions of Dollars)
2017

2016
2017

2016

Beginning balance as of January 1,
$1
$6
$1
$8
Included in earnings
8
(1)
1
(1)
Included in regulatory assets and liabilities
(21)
(11)
(14)
(6)
Purchases
1
2
1
1
Sales
—

4
—

—

Settlements
(9)
1
(3)
(2)
Ending balance as of September 30,
$(20)
$1
$(14)

$—