Regulatory Matters (Tables)

9 Months Ended

Sep. 30, 2019

Regulated Operations [Abstract]

Summary of Utilities Rate Plans

The following tables contain a summary of the rate plans.

CECONY Electric
Effective period	January 2020 – December 2022 (c)
Base rate changes (a)	Yr. 1 – $113 million Yr. 2 – $370 million Yr. 3 – $326 million
Amortizations to income of net regulatory liabilities (b)	Yr. 1 – $267 million Yr. 2 – $269 million Yr. 3 – $272 million
Other revenue sources	Retention of $75 million of annual transmission congestion revenues. Potential earnings adjustment mechanism incentives for energy efficiency and other potential incentives of up to: Yr. 1 - $69 million; Yr. 2 - $74 million; and Yr. 3 - $79 million.
Revenue decoupling mechanism	Continuation of reconciliation of actual to authorized electric delivery revenues.
Recoverable energy costs	Continuation of current rate recovery of purchased power and fuel costs.
Negative revenue adjustments	Potential charges if certain performance targets relating to service, reliability, safety and other matters are not met: Yr. 1 - $450 million; Yr. 2 - $461 million; and Yr. 3 - $476 million.
Cost reconciliations	Continuation of reconciliation of expenses for pension and other postretirement benefits, variable-rate debt, major storms, property taxes (d), municipal infrastructure support costs (e), the impact of new laws and environmental site investigation and remediation to amounts reflected in rates. (f)
Net utility plant reconciliations	Target levels reflected in rates: Electric average net plant target excluding advanced metering infrastructure (AMI): Yr. 1 - $24,572 million; Yr. 2 - $25,366 million; Yr. 3 - $26,197 million AMI: Yr. 1 - $572 million; Yr. 2 - $740 million; Yr. 3 - $806 million (g)
Average rate base	Yr. 1 - $21,660 million Yr. 2 - $22,783 million Yr. 3 - $23,926 million
Weighted average cost of capital (after-tax)	6.61 percent
Authorized return on common equity	8.80 percent
Earnings sharing	Most earnings above an annual earnings threshold of 9.3 percent are to be applied to reduce regulatory assets for environmental remediation and other costs accumulated in the rate year.
Cost of long-term debt	4.63 percent
Common equity ratio	48 percent

(a) Base rates reflect recovery by the company of certain costs of its energy efficiency, Reforming the Energy Vision demonstration projects, non-wire alternative projects (including the Brooklyn Queens demand management program), and off-peak electric vehicle charging programs (Yr. 1 - $206 million; Yr. 2 - $245 million; and Yr. 3 - $251 million) over a ten-year period, including the overall pre-tax rate of return on such costs.

(b) Amounts reflect amortization of the 2018 tax savings under the federal Tax Cuts and Jobs Act of 2017 (TCJA) allocable to CECONY’s electric customers ($377 million) over a three-year period ($126 million annually), the protected portion of the regulatory liability for excess deferred income taxes allocable to CECONY’s electric customers ($1,663 million) over the remaining lives of the related assets ($49 million in Yr. 1, $50 million in Yr. 2, and $53 million in Yr. 3) and the unprotected portion of the net regulatory liability ($784 million) over five years ($157 million annually). Amounts also reflect amortization of the regulatory asset for deferred MTA power reliability costs ($238 million) over a 5-year period ($48 million annually).

(c) If at the end of any semi-annual period ending June 30 and December 31, Consolidated Edison Inc.’s investments in its non-utility businesses exceed 15 percent of its total consolidated revenues, assets or cash flow, or if the ratio of holding company debt to total

consolidated debt rises above 20 percent, CECONY is required to notify the NYSPSC and submit a ring-fencing plan or a demonstration why additional ring-fencing measures are not necessary.

(d) Deferrals for property taxes are limited to 90 percent of the difference from amounts reflected in rates, subject to an annual maximum for the remaining difference of not more than a maximum number of basis points impact on return on common equity: Yr. 1 - 10.0 basis points; Yr. 2 - 7.5 basis points; and Yr. 3 - 5.0 basis points.

(e) In general, if actual expenses for municipal infrastructure support (other than company labor) are below the amounts reflected in rates the company will defer the difference for credit to customers, and if the actual expenses are above the amount reflected in rates the company will defer for recovery from customers 80 percent of the difference subject to a maximum deferral, subject to certain exceptions, of 15 percent of the amount reflected in rates.

(f) In addition, the NYSPSC staff has commenced a focused operations audit to investigate the income tax accounting of CECONY and other New York utilities. Any NYSPSC-ordered adjustment to CECONY’s income tax accounting will be refunded to or collected from customers, as determined by the NYSPSC.

(g) Reconciliation of net utility plant for AMI will be done on a combined basis for electric and gas.

CECONY Gas
Effective period	January 2020 – December 2022 (c)
Base rate changes (a)	Yr. 1 – $84 million Yr. 2 – $122 million Yr. 3 – $167 million
Amortizations to income of net regulatory liabilities (b)	Yr. 1 – $45 million Yr. 2 – $43 million Yr. 3 – $10 million
Other revenue sources	Retention of annual revenues from non-firm customers of up to $65 million and 15 percent of any such revenues above $65 million. Potential earnings adjusted mechanism incentives for energy efficiency and other potential incentives of up to Yr. 1 - $20 million; Yr. 2 - $22 million; and Yr. 3 - $25 million
Revenue decoupling mechanism	Continuation of reconciliation of actual to authorized gas delivery revenues, modified to be calculated based upon revenue per customer class instead of revenue per customer.
Recoverable energy costs	Continuation of current rate recovery of purchased gas costs.
Negative revenue adjustments	Potential charges if performance targets relating to service, safety and other matters are not met: Yr. 1 - $81 million; Yr. 2 - $88 million; and Yr. 3 - $96 million.
Cost reconciliations	Continuation of reconciliation of expenses for pension and other postretirement benefits, variable-rate debt, major storms, property taxes (d), municipal infrastructure support costs (e), the impact of new laws and environmental site investigation and remediation to amounts reflected in rates. (f)
Net utility plant reconciliations	Target levels reflected in rates: Gas average net plant target excluding AMI: Yr. 1 - $8,123 million; Yr. 2 - $8,861 million; Yr. 3 - $9,600 million AMI: Yr. 1 - $142 million; Yr. 2 - $183 million; Yr. 3 - $211 million (g)
Average rate base	Yr. 1 - $7,171 million Yr. 2 - $7,911 million Yr. 3 - $8,622 million
Weighted average cost of capital (after-tax)	6.61 percent
Authorized return on common equity	8.80 percent
Earnings sharing	Most earnings above an annual earnings threshold of 9.3 percent are to be applied to reduce regulatory assets for environmental remediation and other costs accumulated in the rate year.
Cost of long-term debt	4.63 percent
Common equity ratio	48 percent

(a) At the NYSPSC’s option, the gas base rate increases shown above may be implemented with increases of $47 million in Yr. 1; $176 million in Yr. 2; and $170 million in Yr. 3. Base rates reflect recovery by the company of certain costs of its energy efficiency program (Yr. 1 - $30 million; Yr. 2 - $37 million; and Yr. 3 - $40 million) over a ten-year period, including the overall pre-tax rate of return on such costs.

(b) Amounts reflect amortization of the remaining 2018 TCJA tax savings allocable to CECONY’s gas customers ($63 million) over a two year period ($32 annually), the protected portion of the regulatory liability for excess deferred income taxes allocable to CECONY’s gas customers ($725 million) over the remaining lives of the related assets ($14 million in Yr. 1, $14 million in Yr. 2, and $12 million in Yr. 3) and the unprotected portion of the net regulatory liability ($107 million) over five years ($21 million annually)

(c)-(g)

See footnotes (c), (d), (e), (f) and (g) to the table under “CECONY Electric,” above.

Schedule of Regulatory Assets

Regulatory assets and liabilities at September 30, 2019 and December 31, 2018 were comprised of the following items:

	Con Edison		CECONY
(Millions of Dollars)	2019	2018	2019	2018
Regulatory assets
Unrecognized pension and other postretirement costs	$1,919	$2,238	$1,816	$2,111
Environmental remediation costs	774	810	685	716
Revenue taxes	315	291	302	278
MTA power reliability deferral	245	229	245	229
Property tax reconciliation	160	101	150	86
Deferred derivative losses	99	17	90	11
Municipal infrastructure support costs	80	67	80	67
Pension and other postretirement benefits deferrals	77	73	55	56
Deferred storm costs	69	76	—	—
System peak reduction and energy efficiency programs	60	72	59	70
Meadowlands heater odorization project	35	36	35	36
Brooklyn Queens demand management program	35	39	35	39
Unamortized loss on reacquired debt	30	36	28	34
Preferred stock redemption	22	23	22	23
Recoverable REV demonstration project costs	21	20	18	18
Gate station upgrade project	19	17	19	17
Workers’ compensation	5	5	5	5
O&R transition bond charges	—	2	—	—
Other	194	142	187	127
Regulatory assets – noncurrent	4,159	4,294	3,831	3,923
Deferred derivative losses	68	36	57	29
Recoverable energy costs	15	40	12	35
Regulatory assets – current	83	76	69	64
Total Regulatory Assets	$4,242	$4,370	$3,900	$3,987
Regulatory liabilities
Future income tax	$2,448	$2,515	$2,302	$2,363
Allowance for cost of removal less salvage	952	928	808	790
TCJA net benefits*	462	434	444	411
Net unbilled revenue deferrals	145	117	145	117
Energy efficiency portfolio standard unencumbered funds	123	127	119	122
Pension and other postretirement benefit deferrals	67	62	41	40
Property tax refunds	45	45	45	45
Net proceeds from sale of property	44	6	44	6
System benefit charge carrying charge	43	27	38	24
Earnings sharing - electric, gas and steam	26	36	19	27
BQDM and REV Demo reconciliations	25	18	24	18
Settlement of prudence proceeding	15	37	15	37
Settlement of gas proceedings	11	15	11	15
Unrecognized other postretirement costs	5	7	—	7
Carrying charges on repair allowance and bonus depreciation	4	21	4	21
New York State income tax rate change	3	17	3	17
Base rate change deferrals	1	10	1	10
Property tax reconciliation	—	36	—	36
Other	171	183	137	152
Regulatory liabilities – noncurrent	4,590	4,641	4,200	4,258
Refundable energy costs	36	31	8	8
Deferred derivative gains	33	30	32	29
Revenue decoupling mechanism	24	53	16	36
Regulatory liabilities – current	93	114	56	73
Total Regulatory Liabilities	$4,683	$4,755	$4,256	$4,331

* See "Other Regulatory Matters," above.

Schedule of Regulatory Liabilities

Regulatory assets and liabilities at September 30, 2019 and December 31, 2018 were comprised of the following items:

	Con Edison		CECONY
(Millions of Dollars)	2019	2018	2019	2018
Regulatory assets
Unrecognized pension and other postretirement costs	$1,919	$2,238	$1,816	$2,111
Environmental remediation costs	774	810	685	716
Revenue taxes	315	291	302	278
MTA power reliability deferral	245	229	245	229
Property tax reconciliation	160	101	150	86
Deferred derivative losses	99	17	90	11
Municipal infrastructure support costs	80	67	80	67
Pension and other postretirement benefits deferrals	77	73	55	56
Deferred storm costs	69	76	—	—
System peak reduction and energy efficiency programs	60	72	59	70
Meadowlands heater odorization project	35	36	35	36
Brooklyn Queens demand management program	35	39	35	39
Unamortized loss on reacquired debt	30	36	28	34
Preferred stock redemption	22	23	22	23
Recoverable REV demonstration project costs	21	20	18	18
Gate station upgrade project	19	17	19	17
Workers’ compensation	5	5	5	5
O&R transition bond charges	—	2	—	—
Other	194	142	187	127
Regulatory assets – noncurrent	4,159	4,294	3,831	3,923
Deferred derivative losses	68	36	57	29
Recoverable energy costs	15	40	12	35
Regulatory assets – current	83	76	69	64
Total Regulatory Assets	$4,242	$4,370	$3,900	$3,987
Regulatory liabilities
Future income tax	$2,448	$2,515	$2,302	$2,363
Allowance for cost of removal less salvage	952	928	808	790
TCJA net benefits*	462	434	444	411
Net unbilled revenue deferrals	145	117	145	117
Energy efficiency portfolio standard unencumbered funds	123	127	119	122
Pension and other postretirement benefit deferrals	67	62	41	40
Property tax refunds	45	45	45	45
Net proceeds from sale of property	44	6	44	6
System benefit charge carrying charge	43	27	38	24
Earnings sharing - electric, gas and steam	26	36	19	27
BQDM and REV Demo reconciliations	25	18	24	18
Settlement of prudence proceeding	15	37	15	37
Settlement of gas proceedings	11	15	11	15
Unrecognized other postretirement costs	5	7	—	7
Carrying charges on repair allowance and bonus depreciation	4	21	4	21
New York State income tax rate change	3	17	3	17
Base rate change deferrals	1	10	1	10
Property tax reconciliation	—	36	—	36
Other	171	183	137	152
Regulatory liabilities – noncurrent	4,590	4,641	4,200	4,258
Refundable energy costs	36	31	8	8
Deferred derivative gains	33	30	32	29
Revenue decoupling mechanism	24	53	16	36
Regulatory liabilities – current	93	114	56	73
Total Regulatory Liabilities	$4,683	$4,755	$4,256	$4,331

* See "Other Regulatory Matters," above.