In March and April of 2023, CECONY and O&R applied for federal grants of $177 million and $125 million, respectively, appropriated under the Infrastructure Investment and Jobs Act (IIJA). In addition, seven states, including NY State, submitted a proposal for a Northeast Regional Clean Hydrogen Hub (the Hydrogen Hub) to the U.S. Department of Energy for funding under the IIJA. CECONY is seeking up to $116 million of funding to use carbon-free hydrogen to produce steam at its East River steam generating station as part of the Hydrogen Hub proposal. Federal grants obtained pursuant to the IIJA are expected to be used to reduce customers’ costs for investments in CECONY’s electric and steam systems and O&R's electric system.

In April 2023, the New York State Public Service Commission (NYSPSC) approved CECONY’s December 2022 petition seeking cost recovery approval for a proposed clean energy hub in Brooklyn, NY (Brooklyn Clean Energy Hub) at an estimated cost of $810 million, that is in addition to the capital expenditures approved in the CECONY joint proposal discussed below. The Brooklyn Clean Energy Hub has an estimated in-service date of December 2027 and addresses a 2028 reliability need. The Brooklyn Clean Energy Hub provides the flexibility for offshore wind resources to interconnect during construction and after it commences operation.

In February 2023, CECONY, the New York State Department of Public Service (NYSDPS) and other parties entered into a joint proposal for CECONY electric and gas rate plans for the three-year period January 2023 through December 2025 (Joint Proposal) reflecting a 9.25 percent return on common equity and a common equity ratio of 48 percent. The Joint Proposal is subject to the approval of the NYSPSC. The Joint Proposal provides for electric rate increases of $442 million, $518 million and $382 million, effective January 1, 2023, 2024 and 2025, respectively. The Joint Proposal provides for gas rate increases of $217 million, $173 million and $122 million, effective January 1, 2023, 2024 and 2025, respectively. The base rate increases will be implemented with increases of $457 million in each of the three rate years for electric and with increases of $187 million in each of the three rate years for gas in order to levelize the customer bill impact. The Joint Proposal provides for total capital expenditures over the three-year rate period of $8,500 million and $3,300 million for electric and gas, respectively. Pursuant to the Joint Proposal, new rates will be effective as of January 1, 2023. CECONY will begin billing customers at the new levelized rate once the Joint Proposal is approved by the NYSPSC. The shortfall in revenues due to the timing of billing to customers will be collected through a surcharge billed through 2024 for electric and through 2025 for gas, including a carrying charge on the outstanding balance. CECONY has reflected the provisions of the Joint Proposal in its financial statements beginning January 1, 2023, that includes the recording of revenues and expenses and making capital investments, based on CECONY's determination that NYSPSC approval is probable later in 2023. The ultimate outcome of this matter, including the impact on the Companies' financial statements, if any, cannot be fully determined until the NYSPSC issues its order on the Joint Proposal.

In November 2022, CECONY filed a request with the NYSPSC for an increase in the rates it charges for steam service rendered in New York, effective November 2023, of $137 million. The filing reflects a return on common equity of 10 percent and a common equity ratio of 50 percent. CECONY requested a new mechanism for decoupling revenues from steam consumption and the continuation of provisions for recovery from customers of the cost of fuel and purchased steam and the reconciliation of actual expenses allocable to the steam business to the amounts for such expenses reflected in steam rates for pension and other postretirement benefits, environmental remediation expenses and uncollectible costs. In addition, CECONY requested full reconciliation of property taxes, municipal infrastructure support costs and long-term debt costs. The filing requested symmetrical reconciliation of inflation for labor and non-labor rates to the extent that the actual inflation rate deviates from what is assumed in the revenue requirement by 50 basis points up or down. The filing included supplemental information regarding steam rate plans for November 2024 through October 2025 and November 2025 through October 2026, which CECONY did not request but would consider through settlement discussions. For purposes of illustration, rate increases of $54 million and $49 million effective November 2024 and 2025, respectively, were calculated based upon an assumed return on common equity of 10 percent and a common equity ratio of 50 percent.

In March 2020, a former New York State governor declared a State Disaster Emergency for the State of NY due to the COVID-19 pandemic and signed the "New York State on PAUSE" executive order that temporarily closed all non-essential businesses statewide. The former governor then lifted these closures over time and ended the emergency declaration in June 2021. As a result of the emergency declaration, and due to economic conditions, the NYSPSC and the Utilities have worked to mitigate the potential impact of the COVID-19 pandemic on the Utilities, their customers and other stakeholders.

In March 2020, the Utilities began suspending service disconnections, certain collection notices, final bill collection agency activity, new late payment charges and certain other fees for all customers. The Utilities also began providing payment extensions for all customers that were scheduled to be disconnected prior to the start of the COVID-19 pandemic. In June 2020, the state of NY enacted a law prohibiting NY utilities, including CECONY and O&R, from disconnecting residential customers, and starting in May 2021 small business customers, during the COVID-19 state of emergency, that ended in June 2021. In addition, such prohibitions were in effect until December 21, 2021 for residential and small business customers who experienced a change in financial circumstances due to the COVID-19 pandemic.

In November 2021, the NYSPSC issued an order establishing a surcharge recovery mechanism for CECONY to collect, commencing December 1, 2021 through December 31, 2022, $43 million and $7 million for electric and gas, respectively, of late payment charges and fees that were not billed for the year ended December 31, 2020. The company recorded such amounts as revenue for the year ended December 31, 2021, as permitted under the accounting rules for regulated utilities, and also accrued such amounts as a current asset at December 31, 2021. Pursuant to the November 2021 order, the company also established a recovery mechanism for CECONY to collect, commencing January 2023 through December 2023, $19 million and $4 million for electric and gas, respectively, of late payment charges and fees that were not billed for the year ended December 31, 2021 and the company recorded such amounts as revenue for the year ended December 31, 2021, as permitted under the accounting rules for regulated utilities, and also accrued such amounts as a current asset at December 31, 2021. In addition, pursuant to the November 2021 order, CECONY established a reserve of $7 million toward addressing customer arrearages for the year ended December 31, 2021 that, pursuant to the June 2022 NYSPSC Phase 1 Order (as discussed below), was used to fund a portion of the COVID-19 arrears assistance program for low-income customers. The November 2021 order also established a surcharge or surcredit mechanism for any late payment charges and fee deferrals, subject to offsetting related savings resulting from the COVID-19 pandemic, for 2022 starting in January 2024 over a twelve-month period. CECONY resumed late payment charges for commercial and residential customers who had not experienced a change in financial circumstances due to the COVID-19 pandemic on September 3, 2021 and October 1, 2021, respectively.

The Utilities’ NY rate plans allow them to defer costs resulting from a change in legislation, regulation and related actions that have taken effect during the term of the rate plans once the costs exceed a specified threshold. In addition, O&R’s current rate plans and CECONY’s Joint Proposal have deferral provisions related to uncollectible expenses. The total reserve increases to the allowance for uncollectible accounts from January 1, 2020 through March 31, 2023 reflecting the impact of the COVID-19 pandemic for CECONY electric and gas operations and O&R electric and gas operations were $172 million and $2 million, respectively. The Utilities’ NY rate plans and CECONY's Joint Proposal also provide for an allowance for write-offs of customer accounts receivable balances. The above amounts were increased by the amount that the actual write-offs of customer accounts receivable balances were above the allowance reflected in rates which differences were $19 million and $1 million for CECONY and O&R, respectively, from March 1, 2020 through March 31, 2023.

In April 2021, NY passed a law that created a program that allows eligible residential renters in NY who require assistance with rent and utility bills to have up to twelve months of electric and gas utility bill arrears forgiven, provided that such arrears were accrued on or after March 13, 2020. The program is administered by the State Office of Temporary and Disability Assistance (OTDA) in coordination with the NYSDPS (the OTDA Program). Under the OTDA Program, CECONY and O&R qualify for a refundable tax credit for NY gross-receipts tax equal to the amount of arrears waived by the Utilities in the year that the arrears are waived and certified by the NYSPSC. OTDA may also use the program funds to provide additional Home Energy Assistance Program payments to the Utilities on behalf of low-income customers.

In April 2022, NY approved the 2022-2023 state budget, that included $250 million for addressing statewide residential utility customers' arrears balances accrued from March 7, 2020 through March 1, 2022. In June 2022, the NYSPSC issued an order implementing a COVID-19 arrears assistance program that provides credits towards reducing the arrears balances of low-income electric and gas customers of CECONY and O&R (Phase 1 Order). Pursuant to the Phase 1 Order, CECONY and O&R agreed not to seek recovery of incremental financing costs incurred associated with low-income customers' arrears from March 2020 through March 2022 of $11 million, most of which is attributable to CECONY, in addition to the $7 million reserve established by CECONY for the year ended December 31, 2021, pursuant to the November 2021 order, described above.

For the year ended December 31, 2022, CECONY and O&R issued total credits of $359.9 million and $6.1 million, respectively, towards reducing customers’ accounts receivable balances. For the year ended December 31, 2022, the total credits for CECONY were comprised of: $164.5 million pursuant to the NY funding; $108.4 million pursuant to the Phase 1 Order, that will be recovered over a four-year period via a surcharge mechanism that began September 1, 2022; the $7 million reserve for CECONY described above; and $80.0 million in qualified tax credits and payments pursuant to the OTDA Program described above. For the year ended December 31, 2022, the total credits for O&R were comprised of: $1.6 million pursuant to the NY funding; $3.2 million pursuant to the Phase 1 Order, that will be recovered over a one-year period via a surcharge mechanism that began September 1, 2022; and $1.3 million in qualified tax credits and payments pursuant to the OTDA Program described above.

In January 2023, the NYSPSC issued an order implementing a COVID-19 arrears assistance program that provides credits towards reducing the arrears balances of residential and small commercial electric and gas customers of CECONY and O&R (Phase 2 Order). The Phase 2 Order authorizes a surcharge mechanism for recovery of the eligible credit amounts over a ten-year period commencing after credits are issued for CECONY and over a one-year period commencing after credits are issued for O&R. Pursuant to the Phase 2 Order, CECONY and O&R agreed not to seek recovery of incremental financing costs incurred associated with arrears from March 2020 through December 2022 estimated to be $46 million, most of which is attributable to CECONY. To facilitate implementation, CECONY and O&R agreed to suspend residential terminations for non-payment through March 1, 2023 or 30 days after credits have been applied, whichever is later.

For the three months ended March 31, 2023, CECONY and O&R issued total credits of $343.6 million and $2.2 million, respectively, towards reducing customers' account receivable balances. For the three months ended March 31, 2023, the total credits for CECONY were comprised of: $13.2 million pursuant to the Phase 1 Order, $327.6 million pursuant to the Phase 2 Order, and $2.8 million in qualified tax credits and payments pursuant to the OTDA Program. For the three months ended March 31, 2023, the total credits for O&R were comprised of: $0.1 million pursuant to the Phase 1 Order, $2.1 million pursuant to the Phase 2 Order, and an immaterial amount in qualified tax credits and payments pursuant to the OTDA Program.

The Utilities’ rate plans have revenue decoupling mechanisms in their NY electric and gas businesses that largely reconcile actual energy delivery revenues to the authorized delivery revenues approved by the NYSPSC per month and reconcile the deferred balances semi-annually under CECONY's electric rate plan (January through June and July through December, respectively) and annually under CECONY's gas rate plan and O&R's NY electric and gas rate plans (January through December). Differences are accrued with interest each month for CECONY's and O&R's NY electric customers and after the annual deferral period ends for CECONY's and O&R's NY gas customers for refund to, or recovery from customers, as applicable. Generally, the refund to or recovery from customers begins August and February of each year over an ensuing six-month period for CECONY's electric customers and February of each year over an ensuing twelve-month period for CECONY's gas and O&R's NY electric and gas customers.

In March 2020, NJ Governor Murphy declared a Public Health Emergency and State of Emergency for the State of NJ. In June 2021, the Governor ended the emergency declaration. As a result of the emergency declaration, and due to economic conditions, the NJBPU and RECO have worked to mitigate the potential impact of the COVID-19 pandemic on RECO, its customers and other stakeholders. In March 2020, RECO began suspending late payment charges, terminations for non-payment, and no access fees during the COVID-19 pandemic. The suspension of these fees continued through July 31, 2021 and were not material.

In April 2020, the NYSPSC issued an order that extended the deadlines to complete certain gas inspections by all NY gas utilities, including CECONY and O&R, from April 1, 2020 to August 1, 2020. The deadlines were subsequently extended to September 2, 2020 and June 1, 2022. CECONY and O&R have taken all reasonable measures to complete such inspections. As of June 1, 2022, O&R completed all of its required inspections. At June 1, 2022, CECONY substantially completed its required inspections and continues to make progress on completing such required inspections. CECONY is unable to estimate the amount or range of its possible loss, if any, related to this matter. At March 31, 2023, CECONY had not accrued a liability related to this matter.

CECONY and O&R are in the process of replacing their separate existing customer billing and information systems with a single new customer billing and information system. In April 2023, CECONY filed a petition with the NYSPSC for permission to capitalize incremental costs (estimated at $75 million) for the new system above a $421 million limit on capital expenditures included in CECONY’s 2020 – 2022 electric and gas rate plans, subject to NYSPSC review. O&R's 2022 - 2024 electric and gas rate plans do not include a limit on capitalization of new system costs.

In January 2018, the NYSPSC issued an order initiating a focused operations audit of the Utilities’ financial accounting for income taxes. The audit is investigating the Utilities’ inadvertent understatement of a portion, the amount of which may be material, of their calculation of total federal income tax expense for ratemaking purposes. The understatement was related to the calculation of plant retirement-related cost of removal. As a result of such understatement, the Utilities accumulated significant income tax regulatory assets that were not reflected in O&R’s rate plans prior to 2014, CECONY’s electric and gas rate plans prior to 2015 and 2016, respectively, and is currently not reflected in CECONY’s steam rate plan but a prospective correction was proposed in CECONY's November 2022 steam rate filing. This understatement of historical income tax expense materially reduced the amount of revenue collected from the Utilities' customers in the past. As part of the audit, the Utilities plan to pursue a private letter ruling from the Internal Revenue Service (IRS) that is expected to confirm, among other things, that in order to comply with IRS normalization rules, such understatement may not be corrected through a write-down of a portion of the regulatory asset and must be corrected through an increase in future years’ revenue requirements. The regulatory asset ($1,138 million and $21 million for CECONY and O&R, respectively, as of March 31, 2023) and ($1,150 million and $22 million for CECONY and O&R, respectively, as of December 31, 2022 and which is not earning a return) is netted against the future income tax regulatory liability on the Companies’ consolidated balance sheet. The Utilities are unable to estimate the amount or range of their possible loss, if any, related to this matter. At March 31, 2023, the Utilities had not accrued a liability related to this matter.


	Con Edison		CECONY
(Millions of Dollars)	2023	2022	2023	2022
Regulatory assets
Unrecognized pension and other postretirement costs	$123	$78	$121	$78

Environmental remediation costs	986	991	902	906
Revenue taxes	453	436	433	417
Deferred storm costs	262	270	158	173
Municipal infrastructure support costs	29	29	29	29

Brooklyn Queens demand management program	32	33	32	33
Meadowlands heater odorization project	26	27	26	27
Recoverable Demonstration project costs	17	17	17	16
Gate station upgrade project	14	14	14	14

System peak reduction and energy efficiency programs	802	783	796	780
Unamortized loss on reacquired debt	10	11	9	10
Deferred derivative losses - long term	165	31	156	26
Property tax reconciliation	132	121	132	121
Legacy meters	20	20	—	—
Gas service line deferred costs	66	99	66	99
COVID - 19 customer arrears relief programs	441	104	436	101
Pension and other postretirement benefits deferrals	196	279	166	240

Preferred stock redemption	19	19	19	19
MTA power reliability deferral	84	92	84	92
Non-wire alternative projects	21	22	21	22
COVID - 19 pandemic deferrals	211	292	208	288
Electric vehicle make ready	39	33	36	30
Other	202	173	186	148
Regulatory assets – noncurrent	4,350	3,974	4,047	3,669
Deferred derivative losses - short term	199	184	190	178
Recoverable energy costs	52	121	41	108
Regulatory assets – current	251	305	231	286
Total Regulatory Assets	$4,601	$4,279	$4,278	$3,955
Regulatory liabilities
Future income tax*	$1,694	$1,753	$1,559	$1,616
Allowance for cost of removal less salvage	1,335	1,315	1,153	1,137
Net unbilled revenue deferrals	108	204	108	204
Energy efficiency portfolio standard unencumbered funds	5	5	7	7
Settlement of prudence proceeding	9	10	9	10

Earnings sharing - electric, gas and steam	14	13	10	10
System benefit charge carrying charge	76	73	74	69
BQDM and Demonstration project reconciliations	21	23	19	21
Pension and other postretirement benefit deferrals	161	144	115	98
Property tax refunds	35	35	35	35

COVID - 19 pandemic uncollectible reconciliation deferral	10	12	10	12
Late payment charge deferral	142	127	137	123
Unrecognized pension and other postretirement costs	1,405	1,638	1,316	1,536
Net proceeds from sale of property	65	69	63	69
Sales and use tax refunds	35	37	33	36
Workers’ compensation	12	11	12	11
Deferred derivative gains - long term	19	145	19	130
Other	391	413	338	357
Regulatory liabilities – noncurrent	$5,537	$6,027	$5,017	$5,481
Refundable energy costs	111	34	61	—
Revenue decoupling mechanism	5	29	2	21
Deferred derivative gains - short term	162	311	150	287

Regulatory liabilities – current	$278	$374	$213	$308
Total Regulatory Liabilities	$5,815	$6,401	$5,230	$5,789

In general, the Utilities receive or are being credited with a return at the Other Customer-Provided Capital rate for regulatory assets that have not been included in rate base, and receive or are being credited with a return at the pre-tax weighted average cost of capital once the asset is included in rate base. Similarly, the Utilities pay to or credit customers with a return at the Other Customer-Provided Capital rate for regulatory liabilities that have not been included in rate base, and pay to or credit customers with a return at the pre-tax weighted average cost of capital once the liability is included in rate base. The Other Customer-Provided Capital rate for the three months ended March 31, 2023 and 2022 was 5.20 percent and 1.75 percent, respectively.

In general, the Utilities are receiving or being credited with a return on their regulatory assets for which a cash outflow has been made ($2,467 million and $2,304 million for Con Edison, and $2,268 million and $2,097 million for CECONY at March 31, 2023 and December 31, 2022, respectively). Regulatory assets of RECO for which a cash outflow has been made ($22 million and $21 million at March 31, 2023 and December 31, 2022, respectively) are not receiving or being credited with a return. RECO recovers regulatory assets over a period of up to four years or until they are addressed in its next base rate case in accordance with the rate provisions approved by the NJBPU. Regulatory liabilities are treated in a consistent manner.