UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
x | Quarterly Report Pursuant To Section 13 or 15(d) of the Securities Exchange Act of 1934 |
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2011
OR
¨ | Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
For the transition period from to
Commission |
Exact name of registrant as specified in its charter and principal office address and telephone number |
State of |
I.R.S. Employer | |||
1-14514 | Consolidated Edison, Inc. | New York | 13-3965100 | |||
4 Irving Place, New York, New York 10003 | ||||||
(212) 460-4600 | ||||||
1-1217 | Consolidated Edison Company of New York, Inc. | New York | 13-5009340 | |||
4 Irving Place, New York, New York 10003 | ||||||
(212) 460-4600 |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Consolidated Edison, Inc. (Con Edison) | Yes x | No ¨ | ||||||
Consolidated Edison of New York, Inc. (CECONY) | Yes x | No ¨ |
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Con Edison | Yes x | No ¨ | ||||||
CECONY | Yes x | No ¨ |
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act.
Con Edison | ||||||
Large accelerated filer x | Accelerated filer ¨ | Non-accelerated filer ¨ | Smaller reporting company ¨ | |||
CECONY | ||||||
Large accelerated filer ¨ | Accelerated filer ¨ | Non-accelerated filer x | Smaller reporting company ¨ |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Con Edison | Yes ¨ | No x | ||||||
CECONY | Yes ¨ | No x |
As of July 29, 2011, Con Edison had outstanding 292,875,896 Common Shares ($.10 par value). All of the outstanding common equity of CECONY is held by Con Edison.
Filing Format
This Quarterly Report on Form 10-Q is a combined report being filed separately by two different registrants: Consolidated Edison, Inc. (Con Edison) and Consolidated Edison Company of New York, Inc. (CECONY). CECONY is a subsidiary of Con Edison and, as such, the information in this report about CECONY also applies to Con Edison. As used in this report, the term the Companies refers to Con Edison and CECONY. However, CECONY makes no representation as to the information contained in this report relating to Con Edison or the subsidiaries of Con Edison other than itself.
Glossary of Terms
The following is a glossary of frequently used abbreviations or acronyms that are used in the Companies SEC reports:
Con Edison Companies | ||
Con Edison | Consolidated Edison, Inc. | |
CECONY | Consolidated Edison Company of New York, Inc. | |
Con Edison Development | Consolidated Edison Development, Inc. | |
Con Edison Energy | Consolidated Edison Energy, Inc. | |
Con Edison Solutions | Consolidated Edison Solutions, Inc. | |
O&R | Orange and Rockland Utilities, Inc. | |
Pike | Pike County Light & Power Company | |
RECO | Rockland Electric Company | |
The Companies | Con Edison and CECONY | |
The Utilities | CECONY and O&R | |
Regulatory Agencies, Government Agencies, and Quasi-governmental Not-for-Profits | ||
EPA | U. S. Environmental Protection Agency | |
FERC | Federal Energy Regulatory Commission | |
IRS | Internal Revenue Service | |
ISO-NE | ISO New England Inc. | |
NJBPU | New Jersey Board of Public Utilities | |
NJDEP | New Jersey Department of Environmental Protection | |
NYAG | New York State Attorney General | |
NYISO | New York Independent System Operator | |
NYPA | New York Power Authority | |
NYSDEC | New York State Department of Environmental Conservation | |
NYSERDA | New York State Energy Research and Development Authority | |
NYSPSC | New York State Public Service Commission | |
NYSRC | New York State Reliability Council, LLC | |
PAPUC | Pennsylvania Public Utility Commission | |
PJM | PJM Interconnection LLC | |
SEC | U.S. Securities and Exchange Commission | |
Accounting | ||
ABO | Accumulated Benefit Obligation | |
ASU | Accounting Standards Update | |
FASB | Financial Accounting Standards Board | |
LILO | Lease In/Lease Out | |
OCI | Other Comprehensive Income | |
SFAS | Statement of Financial Accounting Standards | |
SSCM | Simplified service cost method | |
VIE | Variable interest entity | |
Environmental | ||
CO2 | Carbon dioxide | |
GHG | Greenhouse gases | |
MGP Sites | Manufactured gas plant sites | |
PCBs | Polychlorinated biphenyls | |
PRP | Potentially responsible party | |
SO2 | Sulfur dioxide | |
Superfund | Federal Comprehensive Environmental Response, Compensation and Liability Act of 1980 and similar state statutes |
2 |
Units of Measure | ||
dths | Dekatherms | |
kV | Kilovolts | |
kWh | Kilowatt-hour | |
mdths | Thousand dekatherms | |
MMlbs | Million pounds | |
MVA | Megavolt amperes | |
MW | Megawatts or thousand kilowatts | |
MWH | Megawatt hour | |
Other | ||
AFDC | Allowance for funds used during construction | |
COSO | Committee of Sponsoring Organizations of the Treadway Commission | |
EMF | Electric and magnetic fields | |
ERRP | East River Repowering Project | |
Fitch | Fitch Ratings | |
First Quarter Form 10-Q | The Companies combined Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2011 | |
Form 10-K | The Companies combined Annual Report on Form 10-K for the year ended December 31, 2010 | |
LTIP | Long Term Incentive Plan | |
Moodys | Moodys Investors Service | |
S&P | Standard & Poors Rating Services | |
Second Quarter Form 10-Q | The Companies combined Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2011 | |
VaR | Value-at-Risk |
3 |
PAGE | ||||||
PART IFinancial Information | ||||||
ITEM 1 | Financial Statements (Unaudited) |
|||||
Con Edison |
||||||
6 | ||||||
7 | ||||||
8 | ||||||
10 | ||||||
11 | ||||||
CECONY |
||||||
12 | ||||||
13 | ||||||
14 | ||||||
16 | ||||||
17 | ||||||
ITEM 2 | Managements Discussion and Analysis of Financial Condition and Results of Operations |
36 | ||||
ITEM 3 | 58 | |||||
ITEM 4 | 58 | |||||
PART IIOther Information | ||||||
ITEM 1 | 59 | |||||
ITEM 1A | 59 | |||||
ITEM 2 | 59 | |||||
ITEM 6 | 60 | |||||
Signatures | 61 |
4 |
FORWARD-LOOKING STATEMENTS
This report includes forward-looking statements intended to qualify for the safe-harbor provisions of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are statements of future expectation and not facts. Words such as expects, estimates, anticipates, intends, believes, plans, will and similar expressions identify forward-looking statements. Forward-looking statements are based on information available at the time the statements are made, and accordingly speak only as of that time. Actual results or developments might differ materially from those included in the forward-looking statements because of various factors such as those discussed under Risk Factors in Item 1A of the Form 10-K.
5 |
Consolidated Edison, Inc. |
CONSOLIDATED INCOME STATEMENT (UNAUDITED)
For the Three Months Ended June 30, |
For the Six Months Ended June 30, |
|||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
(Millions of Dollars/Except Share Data) | ||||||||||||||||
OPERATING REVENUES |
||||||||||||||||
Electric |
$ | 2,153 | $ | 2,256 | $ | 4,022 | $ | 4,145 | ||||||||
Gas |
333 | 274 | 1,088 | 1,047 | ||||||||||||
Steam |
107 | 89 | 432 | 396 | ||||||||||||
Non-utility |
400 | 398 | 800 | 890 | ||||||||||||
TOTAL OPERATING REVENUES |
2,993 | 3,017 | 6,342 | 6,478 | ||||||||||||
OPERATING EXPENSES |
||||||||||||||||
Purchased power |
1,020 | 1,140 | 1,886 | 2,283 | ||||||||||||
Fuel |
68 | 87 | 244 | 237 | ||||||||||||
Gas purchased for resale |
111 | 67 | 418 | 410 | ||||||||||||
Other operations and maintenance |
732 | 678 | 1,429 | 1,379 | ||||||||||||
Depreciation and amortization |
219 | 211 | 437 | 415 | ||||||||||||
Taxes, other than income taxes |
445 | 405 | 904 | 833 | ||||||||||||
TOTAL OPERATING EXPENSES |
2,595 | 2,588 | 5,318 | 5,557 | ||||||||||||
OPERATING INCOME |
398 | 429 | 1,024 | 921 | ||||||||||||
OTHER INCOME (DEDUCTIONS) |
||||||||||||||||
Investment and other income |
10 | 14 | 19 | 21 | ||||||||||||
Allowance for equity funds used during construction |
2 | 4 | 6 | 9 | ||||||||||||
Other deductions |
(7 | ) | (6 | ) | (10 | ) | (9 | ) | ||||||||
TOTAL OTHER INCOME (DEDUCTIONS) |
5 | 12 | 15 | 21 | ||||||||||||
INCOME BEFORE INTEREST AND INCOME TAX EXPENSE |
403 | 441 | 1,039 | 942 | ||||||||||||
INTEREST EXPENSE |
||||||||||||||||
Interest on long-term debt |
146 | 148 | 293 | 298 | ||||||||||||
Other interest |
7 | 4 | 14 | 6 | ||||||||||||
Allowance for borrowed funds used during construction |
(1 | ) | (3 | ) | (3 | ) | (5 | ) | ||||||||
NET INTEREST EXPENSE |
152 | 149 | 304 | 299 | ||||||||||||
INCOME BEFORE INCOME TAX EXPENSE |
251 | 292 | 735 | 643 | ||||||||||||
INCOME TAX EXPENSE |
83 | 106 | 252 | 228 | ||||||||||||
NET INCOME |
168 | 186 | 483 | 415 | ||||||||||||
Preferred stock dividend requirements of subsidiary |
(3 | ) | (3 | ) | (6 | ) | (6 | ) | ||||||||
NET INCOME FOR COMMON STOCK |
$ | 165 | $ | 183 | $ | 477 | $ | 409 | ||||||||
Net income for common stock per common share basic |
$ | 0.57 | $ | 0.65 | $ | 1.63 | $ | 1.45 | ||||||||
Net income for common stock per common share diluted |
$ | 0.56 | $ | 0.64 | $ | 1.62 | $ | 1.44 | ||||||||
DIVIDENDS DECLARED PER SHARE OF COMMON STOCK |
$ | 0.600 | $ | 0.595 | $ | 1.200 | $ | 1.190 | ||||||||
AVERAGE NUMBER OF SHARES OUTSTANDING BASIC (IN MILLIONS) |
292.7 | 282.0 | 292.3 | 281.7 | ||||||||||||
AVERAGE NUMBER OF SHARES OUTSTANDING DILUTED (IN MILLIONS) |
294.3 | 283.5 | 293.9 | 283.2 |
The accompanying notes are an integral part of these financial statements.
6 |
Consolidated Edison, Inc. |
CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
For the Six Months Ended June 30, |
||||||||
2011 | 2010 | |||||||
(Millions of Dollars) | ||||||||
OPERATING ACTIVITIES |
||||||||
Net Income |
$ | 483 | $ | 415 | ||||
PRINCIPAL NON-CASH CHARGES/(CREDITS) TO INCOME |
||||||||
Depreciation and amortization |
437 | 415 | ||||||
Deferred income taxes |
181 | 46 | ||||||
Common equity component of allowance for funds used during construction |
(6 | ) | (9 | ) | ||||
Net derivative (gains)/losses |
(35 | ) | (2 | ) | ||||
Other non-cash items (net) |
(9 | ) | 41 | |||||
CHANGES IN ASSETS AND LIABILITIES |
||||||||
Accounts receivable customers, less allowance for uncollectibles |
72 | (28 | ) | |||||
Materials and supplies, including fuel oil and gas in storage |
38 | 27 | ||||||
Other receivables and other current assets |
69 | 79 | ||||||
Prepayments |
194 | | ||||||
Accounts payable |
(76 | ) | (79 | ) | ||||
Pensions and retiree benefits |
(72 | ) | 49 | |||||
Accrued taxes |
66 | (7 | ) | |||||
Accrued interest |
| (3 | ) | |||||
Deferred charges, deferred derivative losses, noncurrent assets and other regulatory assets |
125 | (319 | ) | |||||
Deferred credits and other regulatory liabilities |
140 | 111 | ||||||
Other assets |
| (7 | ) | |||||
Other liabilities |
(18 | ) | 66 | |||||
NET CASH FLOWS FROM OPERATING ACTIVITIES |
1,589 | 795 | ||||||
INVESTING ACTIVITIES |
||||||||
Utility construction expenditures |
(958 | ) | (946 | ) | ||||
Cost of removal less salvage |
(81 | ) | (66 | ) | ||||
Non-utility construction expenditures |
(50 | ) | (4 | ) | ||||
Proceeds from investment tax credits and grants related to renewable energy investments |
4 | | ||||||
Loan to Pilesgrove solar project |
(50 | ) | | |||||
Common equity component of allowance for funds used during construction |
6 | 9 | ||||||
NET CASH FLOWS USED IN INVESTING ACTIVITIES |
(1,129 | ) | (1,007 | ) | ||||
FINANCING ACTIVITIES |
||||||||
Net proceeds from short-term debt |
| 153 | ||||||
Retirement of long-term debt |
(3 | ) | (426 | ) | ||||
Issuance of long-term debt |
| 700 | ||||||
Issuance of common stock |
58 | 25 | ||||||
Repurchase of common stock |
(9 | ) | | |||||
Debt issuance costs |
| (5 | ) | |||||
Common stock dividends |
(346 | ) | (311 | ) | ||||
Preferred stock dividends |
(6 | ) | (6 | ) | ||||
NET CASH FLOWS (USED IN)/FROM FINANCING ACTIVITIES |
(306 | ) | 130 | |||||
CASH AND TEMPORARY CASH INVESTMENTS: |
||||||||
NET CHANGE FOR THE PERIOD |
154 | (82 | ) | |||||
BALANCE AT BEGINNING OF PERIOD |
338 | 260 | ||||||
BALANCE AT END OF PERIOD |
$ | 492 | $ | 178 | ||||
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION |
||||||||
Cash paid/(refunded) during the period for: |
||||||||
Interest |
$ | 282 | $ | 295 | ||||
Income taxes |
$ | (155 | ) | $ | 157 |
The accompanying notes are an integral part of these financial statements.
7 |
Consolidated Edison, Inc. |
CONSOLIDATED BALANCE SHEET (UNAUDITED)
June 30, 2011 |
December 31, 2010 |
|||||||
(Millions of Dollars) | ||||||||
ASSETS |
||||||||
CURRENT ASSETS |
||||||||
Cash and temporary cash investments |
$ | 492 | $ | 338 | ||||
Accounts receivable customers, less allowance for uncollectible accounts of $84 and $76 in 2011 and 2010, respectively |
1,101 | 1,173 | ||||||
Accrued unbilled revenue |
515 | 633 | ||||||
Other receivables, less allowance for uncollectible accounts of $9 and $8 in 2011 and 2010, respectively |
254 | 261 | ||||||
Loan receivable from Pilesgrove solar project |
84 | 32 | ||||||
Fuel oil, gas in storage, materials and supplies, at average cost |
310 | 348 | ||||||
Prepayments |
147 | 341 | ||||||
Regulatory assets |
130 | 203 | ||||||
Other current assets |
176 | 178 | ||||||
TOTAL CURRENT ASSETS |
3,209 | 3,507 | ||||||
INVESTMENTS |
426 | 403 | ||||||
UTILITY PLANT, AT ORIGINAL COST |
||||||||
Electric |
20,506 | 19,851 | ||||||
Gas |
4,506 | 4,344 | ||||||
Steam |
1,946 | 2,038 | ||||||
General |
1,917 | 1,911 | ||||||
TOTAL |
28,875 | 28,144 | ||||||
Less: Accumulated depreciation |
5,870 | 5,808 | ||||||
Net |
23,005 | 22,336 | ||||||
Construction work in progress |
1,299 | 1,458 | ||||||
NET UTILITY PLANT |
24,304 | 23,794 | ||||||
NON-UTILITY PLANT |
||||||||
Non-utility property, less accumulated depreciation of $55 and $51 in 2011 and 2010, respectively |
56 | 46 | ||||||
Construction work in progress |
54 | 23 | ||||||
NET PLANT |
24,414 | 23,863 | ||||||
OTHER NONCURRENT ASSETS |
||||||||
Goodwill |
429 | 429 | ||||||
Intangible assets, less accumulated amortization of $3 in 2011 and 2010 |
3 | 3 | ||||||
Regulatory assets |
7,261 | 7,683 | ||||||
Other deferred charges and noncurrent assets |
277 | 298 | ||||||
TOTAL OTHER NONCURRENT ASSETS |
7,970 | 8,413 | ||||||
TOTAL ASSETS |
$ | 36,019 | $ | 36,186 |
The accompanying notes are an integral part of these financial statements.
8 |
Consolidated Edison, Inc. |
CONSOLIDATED BALANCE SHEET (UNAUDITED)
June 30, 2011 |
December 31, 2010 |
|||||||
(Millions of Dollars) | ||||||||
LIABILITIES AND SHAREHOLDERS EQUITY |
||||||||
CURRENT LIABILITIES |
||||||||
Long-term debt due within one year |
$ | 5 | $ | 5 | ||||
Accounts payable |
1,033 | 1,151 | ||||||
Customer deposits |
299 | 289 | ||||||
Accrued taxes |
156 | 90 | ||||||
Accrued interest |
155 | 155 | ||||||
Accrued wages |
94 | 102 | ||||||
Fair value of derivative liabilities |
109 | 125 | ||||||
Other current liabilities |
622 | 703 | ||||||
TOTAL CURRENT LIABILITIES |
2,473 | 2,620 | ||||||
NONCURRENT LIABILITIES |
||||||||
Obligations under capital leases |
4 | 7 | ||||||
Provision for injuries and damages |
182 | 165 | ||||||
Pensions and retiree benefits |
2,666 | 3,287 | ||||||
Superfund and other environmental costs |
502 | 512 | ||||||
Asset retirement obligations |
112 | 109 | ||||||
Fair value of derivative liabilities |
35 | 77 | ||||||
Other noncurrent liabilities |
124 | 126 | ||||||
TOTAL NONCURRENT LIABILITIES |
3,625 | 4,283 | ||||||
DEFERRED CREDITS AND REGULATORY LIABILITIES |
||||||||
Deferred income taxes and investment tax credits |
6,853 | 6,602 | ||||||
Regulatory liabilities |
866 | 690 | ||||||
Other deferred credits |
69 | 46 | ||||||
TOTAL DEFERRED CREDITS AND REGULATORY LIABILITIES |
7,788 | 7,338 | ||||||
LONG-TERM DEBT |
10,669 | 10,671 | ||||||
SHAREHOLDERS EQUITY |
||||||||
Common shareholders equity (See Statement of Shareholders Equity) |
11,251 | 11,061 | ||||||
Preferred stock of subsidiary |
213 | 213 | ||||||
TOTAL SHAREHOLDERS EQUITY |
11,464 | 11,274 | ||||||
TOTAL LIABILITIES AND SHAREHOLDERS EQUITY |
$ | 36,019 | $ | 36,186 |
The accompanying notes are an integral part of these financial statements.
9 |
Consolidated Edison, Inc. |
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED)
For the Three Months Ended June 30, |
For the Six Months Ended June 30, |
|||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
(Millions of Dollars) | ||||||||||||||||
NET INCOME |
$ | 168 | $ | 186 | $ | 483 | $ | 415 | ||||||||
OTHER COMPREHENSIVE INCOME/(LOSS), NET OF TAXES |
||||||||||||||||
Pension plan liability adjustments, net of taxes of $1 and $3 in 2011 and $1 and $3 in 2010, respectively |
2 | 1 | 5 | 4 | ||||||||||||
TOTAL OTHER COMPREHENSIVE INCOME/(LOSS), NET OF TAXES |
2 | 1 | 5 | 4 | ||||||||||||
COMPREHENSIVE INCOME |
$ | 170 | $ | 187 | $ | 488 | $ | 419 | ||||||||
Preferred stock dividend requirements of subsidiary |
(3 | ) | (3 | ) | (6 | ) | (6 | ) | ||||||||
COMPREHENSIVE INCOME FOR COMMON STOCK |
$ | 167 | $ | 184 | $ | 482 | $ | 413 |
The accompanying notes are an integral part of these financial statements.
10 |
Consolidated Edison, Inc. |
CONSOLIDATED STATEMENT OF COMMON SHAREHOLDERS EQUITY (UNAUDITED)
Common Stock | Additional Paid-In Capital |
Retained Earnings |
Treasury Stock | Capital Expense |
Accumulated Other Comprehensive Income/(Loss) |
Total |
||||||||||||||||||||||||||||||
(Millions of Dollars/Except Share Data) | Shares | Amount | Shares | Amount | ||||||||||||||||||||||||||||||||
BALANCE AS OF DECEMBER 31, 2009 |
281,123,741 | $ | 30 | $ | 4,420 | $ | 6,904 | 23,210,700 | $ | (1,001 | ) | $ | (62 | ) | $ | (42 | ) | $ | 10,249 | |||||||||||||||||
Net income for common stock |
226 | 226 | ||||||||||||||||||||||||||||||||||
Common stock dividends |
(167 | ) | (167 | ) | ||||||||||||||||||||||||||||||||
Issuance of common shares dividend reinvestment and employee stock plans |
647,731 | 28 | 28 | |||||||||||||||||||||||||||||||||
Other comprehensive income |
3 | 3 | ||||||||||||||||||||||||||||||||||
BALANCE AS OF MARCH 31, 2010 |
281,771,472 | $ | 30 | $ | 4,448 | $ | 6,963 | 23,210,700 | $ | (1,001 | ) | $ | (62 | ) | $ | (39 | ) | $ | 10,339 | |||||||||||||||||
Net income for common stock |
183 | 183 | ||||||||||||||||||||||||||||||||||
Common stock dividends |
(168 | ) | (168 | ) | ||||||||||||||||||||||||||||||||
Issuance of common shares dividend reinvestment and employee stock plans |
555,964 | 25 | 25 | |||||||||||||||||||||||||||||||||
Other comprehensive income |
1 | 1 | ||||||||||||||||||||||||||||||||||
BALANCE AS OF JUNE 30, 2010 |
282,327,436 | $ | 30 | $ | 4,473 | $ | 6,978 | 23,210,700 | $ | (1,001 | ) | $ | (62 | ) | $ | (38 | ) | $ | 10,380 | |||||||||||||||||
BALANCE AS OF DECEMBER 31, 2010 |
291,616,334 | $ | 31 | $ | 4,915 | $ | 7,220 | 23,210,700 | $ | (1,001 | ) | $ | (64 | ) | $ | (40 | ) | $ | 11,061 | |||||||||||||||||
Net income for common stock |
311 | 311 | ||||||||||||||||||||||||||||||||||
Common stock dividends |
(175 | ) | (175 | ) | ||||||||||||||||||||||||||||||||
Issuance of common shares dividend reinvestment and employee stock plans |
656,049 | 1 | 30 | 31 | ||||||||||||||||||||||||||||||||
Other comprehensive income |
3 | 3 | ||||||||||||||||||||||||||||||||||
BALANCE AS OF MARCH 31, 2011 |
292,272,383 | $ | 32 | $ | 4,945 | $ | 7,356 | 23,210,700 | $ | (1,001 | ) | $ | (64 | ) | $ | (37 | ) | $ | 11,231 | |||||||||||||||||
Net income for common stock |
165 | 165 | ||||||||||||||||||||||||||||||||||
Common stock dividends |
(175 | ) | (175 | ) | ||||||||||||||||||||||||||||||||
Issuance of common shares dividend reinvestment and employee stock plans |
603,513 | 32 | (182,942 | ) | 5 | 37 | ||||||||||||||||||||||||||||||
Common stock repurchases |
178,942 | (9 | ) | (9 | ) | |||||||||||||||||||||||||||||||
Other comprehensive income |
2 | 2 | ||||||||||||||||||||||||||||||||||
BALANCE AS OF JUNE 30, 2011 |
292,875,896 | $ | 32 | $ | 4,977 | $ | 7,346 | 23,206,700 | $ | (1,005 | ) | $ | (64 | ) | $ | (35 | ) | $ | 11,251 |
The accompanying notes are an integral part of these financial statements.
11 |
Consolidated Edison Company of New York, Inc. |
CONSOLIDATED INCOME STATEMENT (UNAUDITED)
For the Three Months Ended June 30, |
For the Six Months Ended June 30, |
|||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
(Millions of Dollars) | ||||||||||||||||
OPERATING REVENUES |
||||||||||||||||
Electric |
$ | 2,013 | $ | 2,104 | $ | 3,734 | $ | 3,832 | ||||||||
Gas |
296 | 239 | 959 | 922 | ||||||||||||
Steam |
107 | 89 | 432 | 396 | ||||||||||||
TOTAL OPERATING REVENUES |
2,416 | 2,432 | 5,125 | 5,150 | ||||||||||||
OPERATING EXPENSES |
||||||||||||||||
Purchased power |
621 | 787 | 1,104 | 1,339 | ||||||||||||
Fuel |
68 | 87 | 244 | 237 | ||||||||||||
Gas purchased for resale |
92 | 51 | 355 | 345 | ||||||||||||
Other operations and maintenance |
631 | 588 | 1,227 | 1,195 | ||||||||||||
Depreciation and amortization |
205 | 196 | 410 | 388 | ||||||||||||
Taxes, other than income taxes |
429 | 389 | 868 | 800 | ||||||||||||
TOTAL OPERATING EXPENSES |
2,046 | 2,098 | 4,208 | 4,304 | ||||||||||||
OPERATING INCOME |
370 | 334 | 917 | 846 | ||||||||||||
OTHER INCOME (DEDUCTIONS) |
||||||||||||||||
Investment and other income |
4 | 14 | 9 | 18 | ||||||||||||
Allowance for equity funds used during construction |
2 | 4 | 5 | 8 | ||||||||||||
Other deductions |
(6 | ) | (6 | ) | (9 | ) | (9 | ) | ||||||||
TOTAL OTHER INCOME (DEDUCTIONS) |
| 12 | 5 | 17 | ||||||||||||
INCOME BEFORE INTEREST AND INCOME TAX EXPENSE |
370 | 346 | 922 | 863 | ||||||||||||
INTEREST EXPENSE |
||||||||||||||||
Interest on long-term debt |
131 | 133 | 263 | 268 | ||||||||||||
Other interest |
5 | 5 | 10 | 8 | ||||||||||||
Allowance for borrowed funds used during construction |
(1 | ) | (2 | ) | (3 | ) | (4 | ) | ||||||||
NET INTEREST EXPENSE |
135 | 136 | 270 | 272 | ||||||||||||
INCOME BEFORE INCOME TAX EXPENSE |
235 | 210 | 652 | 591 | ||||||||||||
INCOME TAX EXPENSE |
75 | 72 | 220 | 207 | ||||||||||||
NET INCOME |
160 | 138 | 432 | 384 | ||||||||||||
Preferred stock dividend requirements |
(3 | ) | (3 | ) | (6 | ) | (6 | ) | ||||||||
NET INCOME FOR COMMON STOCK |
$ | 157 | $ | 135 | $ | 426 | $ | 378 |
The accompanying notes are an integral part of these financial statements.
12 |
Consolidated Edison Company of New York, Inc. |
CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
For the Six Months Ended June 30, |
||||||||
2011 | 2010 | |||||||
(Millions of Dollars) | ||||||||
OPERATING ACTIVITIES |
||||||||
Net income |
$ | 432 | $ | 384 | ||||
PRINCIPAL NON-CASH CHARGES/(CREDITS) TO INCOME |
||||||||
Depreciation and amortization |
410 | 388 | ||||||
Deferred income taxes |
146 | 56 | ||||||
Common equity component of allowance for funds used during construction |
(5 | ) | (8 | ) | ||||
Other non-cash items (net) |
66 | 16 | ||||||
CHANGES IN ASSETS AND LIABILITIES |
||||||||
Accounts receivable customers, less allowance for uncollectibles |
74 | (21 | ) | |||||
Materials and supplies, including fuel oil and gas in storage |
36 | 14 | ||||||
Other receivables and other current assets |
207 | 58 | ||||||
Prepayments |
9 | 2 | ||||||
Accounts payable |
(56 | ) | (75 | ) | ||||
Pensions and retiree benefits |
(109 | ) | 22 | |||||
Accrued taxes |
21 | 2 | ||||||
Accrued interest |
| (4 | ) | |||||
Deferred charges, deferred derivative losses, noncurrent assets and other regulatory assets |
65 | (271 | ) | |||||
Deferred credits and other regulatory liabilities |
138 | 97 | ||||||
Other liabilities |
(9 | ) | 77 | |||||
NET CASH FLOWS FROM OPERATING ACTIVITIES |
1,425 | 737 | ||||||
INVESTING ACTIVITIES |
||||||||
Utility construction expenditures |
(910 | ) | (895 | ) | ||||
Cost of removal less salvage |
(78 | ) | (65 | ) | ||||
Common equity component of allowance for funds used during construction |
5 | 8 | ||||||
NET CASH FLOWS USED IN INVESTING ACTIVITIES |
(983 | ) | (952 | ) | ||||
FINANCING ACTIVITIES |
||||||||
Net proceeds from short-term debt |
| 66 | ||||||
Issuance of long-term debt |
| 700 | ||||||
Retirement of long-term debt |
| (325 | ) | |||||
Debt issuance costs |
| (5 | ) | |||||
Capital contribution by parent |
| 24 | ||||||
Dividend to parent |
(340 | ) | (335 | ) | ||||
Preferred stock dividends |
(6 | ) | (6 | ) | ||||
NET CASH FLOWS (USED IN)/FROM FINANCING ACTIVITIES |
(346 | ) | 119 | |||||
CASH AND TEMPORARY CASH INVESTMENTS: |
||||||||
NET CHANGE FOR THE PERIOD |
96 | (96 | ) | |||||
BALANCE AT BEGINNING OF PERIOD |
78 | 131 | ||||||
BALANCE AT END OF PERIOD |
$ | 174 | $ | 35 | ||||
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION |
||||||||
Cash paid/(refunded) during the period for: |
||||||||
Interest |
$ | 253 | $ | 265 | ||||
Income taxes |
$ | (128 | ) | $ | 137 |
The accompanying notes are an integral part of these financial statements.
13 |
Consolidated Edison Company of New York, Inc. |
CONSOLIDATED BALANCE SHEET (UNAUDITED)
June 30, 2011 |
December 31, 2010 |
|||||||
(Millions of Dollars) | ||||||||
ASSETS |
||||||||
CURRENT ASSETS |
||||||||
Cash and temporary cash investments |
$ | 174 | $ | 78 | ||||
Accounts receivable customers, less allowance for uncollectible accounts of $75 and $68 in 2011 and 2010, respectively |
951 | 1,025 | ||||||
Other receivables, less allowance for uncollectible accounts of $8 and $7 in 2011 and 2010, respectively |
88 | 73 | ||||||
Accrued unbilled revenue |
388 | 473 | ||||||
Accounts receivable from affiliated companies |
60 | 273 | ||||||
Fuel oil, gas in storage, materials and supplies, at average cost |
270 | 306 | ||||||
Prepayments |
73 | 82 | ||||||
Regulatory assets |
98 | 151 | ||||||
Other current assets |
91 | 104 | ||||||
TOTAL CURRENT ASSETS |
2,193 | 2,565 | ||||||
INVESTMENTS |
190 | 167 | ||||||
UTILITY PLANT, AT ORIGINAL COST |
||||||||
Electric |
19,311 | 18,735 | ||||||
Gas |
3,999 | 3,844 | ||||||
Steam |
1,946 | 2,038 | ||||||
General |
1,747 | 1,746 | ||||||
TOTAL |
27,003 | 26,363 | ||||||
Less: Accumulated depreciation |
5,360 | 5,314 | ||||||
Net |
21,643 | 21,049 | ||||||
Construction work in progress |
1,232 | 1,345 | ||||||
NET UTILITY PLANT |
22,875 | 22,394 | ||||||
NON-UTILITY PLANT |
||||||||
Non-utility property, less accumulated depreciation of $23 and $22 in 2011 and 2010, respectively |
7 | 7 | ||||||
NET PLANT |
22,882 | 22,401 | ||||||
OTHER NONCURRENT ASSETS |
||||||||
Regulatory assets |
6,727 | 7,097 | ||||||
Other deferred charges and noncurrent assets |
234 | 244 | ||||||
TOTAL OTHER NONCURRENT ASSETS |
6,961 | 7,341 | ||||||
TOTAL ASSETS |
$ | 32,226 | $ | 32,474 |
The accompanying notes are an integral part of these financial statements.
14 |
Consolidated Edison Company of New York, Inc. |
CONSOLIDATED BALANCE SHEET (UNAUDITED)
June 30, 2011 |
December 31, 2010 |
|||||||
(Millions of Dollars) | ||||||||
LIABILITIES AND SHAREHOLDERS EQUITY |
||||||||
CURRENT LIABILITIES |
||||||||
Accounts payable |
$ | 820 | $ | 924 | ||||
Accounts payable to affiliated companies |
17 | 13 | ||||||
Customer deposits |
285 | 276 | ||||||
Accrued taxes |
59 | 34 | ||||||
Accrued taxes to affiliated companies |
25 | 29 | ||||||
Accrued interest |
130 | 130 | ||||||
Accrued wages |
89 | 93 | ||||||
Other current liabilities |
590 | 686 | ||||||
TOTAL CURRENT LIABILITIES |
2,015 | 2,185 | ||||||
NONCURRENT LIABILITIES |
||||||||
Obligations under capital leases |
4 | 7 | ||||||
Provision for injuries and damages |
175 | 159 | ||||||
Pensions and retiree benefits |
2,283 | 2,900 | ||||||
Superfund and other environmental costs |
384 | 392 | ||||||
Asset retirement obligations |
112 | 109 | ||||||
Fair value of derivative liabilities |
13 | 29 | ||||||
Other noncurrent liabilities |
117 | 116 | ||||||
TOTAL NONCURRENT LIABILITIES |
3,088 | 3,712 | ||||||
DEFERRED CREDITS AND REGULATORY LIABILITIES |
||||||||
Deferred income taxes and investment tax credits |
6,342 | 6,071 | ||||||
Regulatory liabilities |
751 | 585 | ||||||
Other deferred credits |
65 | 42 | ||||||
TOTAL DEFERRED CREDITS AND REGULATORY LIABILITIES |
7,158 | 6,698 | ||||||
LONG-TERM DEBT |
9,744 | 9,743 | ||||||
SHAREHOLDERS EQUITY |
||||||||
Common shareholders equity (See Statement of Shareholders Equity) |
10,008 | 9,923 | ||||||
Preferred stock |
213 | 213 | ||||||
TOTAL SHAREHOLDERS EQUITY |
10,221 | 10,136 | ||||||
TOTAL LIABILITIES AND SHAREHOLDERS EQUITY |
$ | 32,226 | $ | 32,474 |
The accompanying notes are an integral part of these financial statements.
15 |
Consolidated Edison Company of New York, Inc. |
CONSOLIDATED STATEMENT OF COMMON SHAREHOLDERS EQUITY (UNAUDITED)
Common Stock | Additional Paid-In Capital |
Retained Earnings |
Repurchased Con Edison Stock |
Capital Expense |
Accumulated Other Comprehensive Income/(Loss) |
Total | ||||||||||||||||||||||||||
(Millions of Dollars/Except Share Data) | Shares | Amount | ||||||||||||||||||||||||||||||
BALANCE AS OF DECEMBER 31, 2009 |
235,488,094 | $ | 589 | $ | 3,877 | $ | 5,909 | $ | (962 | ) | $ | (62 | ) | $ | (4 | ) | $ | 9,347 | ||||||||||||||
Net income |
246 | 246 | ||||||||||||||||||||||||||||||
Capital contribution from parent |
12 | 12 | ||||||||||||||||||||||||||||||
Common stock dividend to parent |
(167 | ) | (167 | ) | ||||||||||||||||||||||||||||
Cumulative preferred dividends |
(3 | ) | (3 | ) | ||||||||||||||||||||||||||||
BALANCE AS OF MARCH 31, 2010 |
235,488,094 | $ | 589 | $ | 3,889 | $ | 5,985 | $ | (962 | ) | $ | (62 | ) | $ | (4 | ) | $ | 9,435 | ||||||||||||||
Net income |
138 | 138 | ||||||||||||||||||||||||||||||
Capital contribution from parent |
12 | 12 | ||||||||||||||||||||||||||||||
Common stock dividend to parent |
(168 | ) | (168 | ) | ||||||||||||||||||||||||||||
Cumulative preferred dividends |
(3 | ) | (3 | ) | ||||||||||||||||||||||||||||
BALANCE AS OF JUNE 30, 2010 |
235,488,094 | $ | 589 | $ | 3,901 | $ | 5,952 | $ | (962 | ) | $ | (62 | ) | $ | (4 | ) | $ | 9,414 | ||||||||||||||
BALANCE AS OF DECEMBER 31, 2010 |
235,488,094 | $ | 589 | $ | 4,234 | $ | 6,132 | $ | (962 | ) | $ | (64 | ) | $ | (6 | ) | $ | 9,923 | ||||||||||||||
Net income |
271 | 271 | ||||||||||||||||||||||||||||||
Common stock dividend to parent |
(170 | ) | (170 | ) | ||||||||||||||||||||||||||||
Cumulative preferred dividends |
(3 | ) | (3 | ) | ||||||||||||||||||||||||||||
BALANCE AS OF MARCH 31, 2011 |
235,488,094 | $ | 589 | $ | 4,234 | $ | 6,230 | $ | (962 | ) | $ | (64 | ) | $ | (6 | ) | $ | 10,021 | ||||||||||||||
Net income |
160 | 160 | ||||||||||||||||||||||||||||||
Common stock dividend to parent |
(170 | ) | (170 | ) | ||||||||||||||||||||||||||||
Cumulative preferred dividends |
(3 | ) | (3 | ) | ||||||||||||||||||||||||||||
BALANCE AS OF JUNE 30, 2011 |
235,488,094 | $ | 589 | $ | 4,234 | $ | 6,217 | $ | (962 | ) | $ | (64 | ) | $ | (6 | ) | $ | 10,008 |
The accompanying notes are an integral part of these financial statements.
16 |
NOTES TO THE FINANCIAL STATEMENTS (UNAUDITED)
General
These combined notes accompany and form an integral part of the separate consolidated financial statements of each of the two separate registrants: Consolidated Edison, Inc. and its subsidiaries (Con Edison) and Consolidated Edison Company of New York, Inc. and its subsidiaries (CECONY). CECONY is a subsidiary of Con Edison and as such its financial condition and results of operations and cash flows, which are presented separately in the CECONY consolidated financial statements, are also consolidated, along with those of Con Edisons other utility subsidiary, Orange and Rockland Utilities, Inc. (O&R), and Con Edisons competitive energy businesses (discussed below) in Con Edisons consolidated financial statements. The term Utilities is used in these notes to refer to CECONY and O&R.
As used in these notes, the term Companies refers to Con Edison and CECONY and, except as otherwise noted, the information in these combined notes relates to each of the Companies. However, CECONY makes no representation as to information relating to Con Edison or the subsidiaries of Con Edison other than itself.
The separate interim consolidated financial statements of each of the Companies are unaudited but, in the opinion of their respective managements, reflect all adjustments (which include only normally recurring adjustments) necessary for a fair presentation of the results for the interim periods presented. The Companies separate interim consolidated financial statements should be read together with their separate audited financial statements (including the combined notes thereto) included in Item 8 of their combined Annual Report on Form 10-K for the year ended December 31, 2010 (the Form 10-K) and their separate unaudited financial statements (including the combined notes thereto) included in Part I, Item 1 of their combined Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2011 (the First Quarter Form 10-Q). Information in the notes to the consolidated financial statements in the Form 10-K and the First Quarter Form 10-Q referred to in these notes is incorporated by reference herein. The use of terms such as see or refer to shall be deemed to incorporate by reference into these notes the information to which reference is made. Certain prior period amounts have been reclassified to conform to the current period presentation.
Con Edison has two regulated utility subsidiaries: CECONY and O&R. CECONY provides electric service and gas service in New York City and Westchester County. The company also provides steam service in parts of Manhattan. O&R, along with its regulated utility subsidiaries, provides electric service in southeastern New York and adjacent areas of northern New Jersey and eastern Pennsylvania and gas service in southeastern New York and adjacent areas of eastern Pennsylvania. Con Edison has the following competitive energy businesses: Consolidated Edison Solutions, Inc. (Con Edison Solutions), a retail energy services company that sells electricity and also offers energy-related services; Consolidated Edison Energy, Inc. (Con Edison Energy), a wholesale energy supply and services company; and Consolidated Edison Development, Inc. (Con Edison Development), a company that develops and participates in infrastructure projects.
17 |
Note A Summary of Significant Accounting Policies
Earnings Per Common Share
Reference is made to Earnings Per Common Share in Note A to the financial statements included in Item 8 of the Form 10-K. For the three and six months ended June 30, 2011 and 2010, Con Edisons basic and diluted EPS for Con Edison are calculated as follows:
For the Three Months Ended June 30, |
For the Six Months Ended June 30, |
|||||||||||||||
(Millions of Dollars, except per share amounts/Shares in Millions) | 2011 | 2010 | 2011 | 2010 | ||||||||||||
Net income for common stock |
$ | 165 | $ | 183 | $ | 477 | $ | 409 | ||||||||
Weighted average common shares outstanding Basic |
292.7 | 282.0 | 292.3 | 281.7 | ||||||||||||
Add: Incremental shares attributable to effect of potentially dilutive securities |
1.6 | 1.5 | 1.6 | 1.5 | ||||||||||||
Adjusted weighted average common shares outstanding Diluted |
294.3 | 283.5 | 293.9 | 283.2 | ||||||||||||
Net income for common stock per common share basic |
$ | 0.57 | $ | 0.65 | $ | 1.63 | $ | 1.45 | ||||||||
Net income for common stock per common share diluted |
$ | 0.56 | $ | 0.64 | $ | 1.62 | $ | 1.44 |
Note B Regulatory Matters
Reference is made to Accounting Policies in Note A and Rate Agreements in Note B to the financial statements included in Item 8 of the Form 10-K and Note B to the financial statements in Part I, Item 1 of the First Quarter Form 10-Q.
Rate Agreements
O&R Electric
In June 2011, the NYSPSC adopted an order granting O&R an electric rate increase, effective July 1, 2011, of $26.6 million. The NYSPSC ruling reflects the following major items:
| a weighted average cost of capital of 7.22 percent, reflecting: |
| a return on common equity of 9.2 percent, assuming achievement by the company of $825,000 of austerity measures; |
| cost of long-term debt of 5.50 percent; and |
| common equity ratio of 48 percent. |
| continuation of a revenue decoupling mechanism; |
| a provision for reconciliation of certain differences in actual average net utility plant to the amount reflected in rates ($718 million) and continuation of rate provisions under which pension and other post-retirement benefit expenses, environmental remediation expenses, tax-exempt debt costs and certain other expenses are reconciled to amounts for those expenses reflected in rates; |
| continuation of the rate provisions pursuant to which the company recovers its purchased power costs from customers; |
| discontinuation of the provisions under which property taxes were reconciled to amounts reflected in rates; |
| discontinuation of the inclusion in rates of funding for the companys annual incentive plan for non-officer management employees; |
| continuation of provisions for potential operations penalties of up to $3 million annually if certain customer service and system reliability performance targets are not met; and |
| O&R is directed to produce a report detailing its implementation plans for the recommendations made in connection with the NYSPSCs management audit of CECONY, with a forecast of costs to achieve and expected savings. (See Rate Agreements Other Regulatory Matters in Note B to the financial statements in Item 8 of the Form 10-K.) |
On July 29, 2011, O&R filed a request with the NYSPSC for an increase in the rates it charges for electric service rendered in New York, effective July 1, 2012, of $17.7 million. The filing reflects a return on common equity of 10.75 percent and a common equity ratio of 49.4 percent. Among other things, the filing proposes continuation of the current provisions with respect to recovery from customers of the cost of purchased power and with respect to the deferral of
18 |
differences between actual expenses allocable to the electric business for pensions and other postretirement benefits, environmental, and research and developmental costs to the amounts for such costs reflected in electric rates. The filing also includes an alternative proposal for a three-year electric rate plan with annual rate increases of $17.6 million effective July 2012, 2013 and 2014. The multi-year filing reflects a return on common equity of 11.25 percent.
Other Regulatory Matters
In February 2009, the NYSPSC commenced a proceeding to examine the prudence of certain CECONY expenditures (see Investigations of Vendor Payments in Note G). Pursuant to NYSPSC orders, a portion of the companys revenues (currently, $249 million, $32 million and $6 million on an annual basis for electric, gas and steam service, respectively) is being collected subject to potential refund to customers. At June 30, 2011, the company had collected an estimated $681 million from customers subject to potential refund in connection with this proceeding. In October 2010, a NYSPSC consultant reported its $21 million provisional assessment, which the company has disputed, of potential overcharges for construction work. The potential overcharges related to transactions that involved certain employees who were arrested and a contractor that performed work for the company. The NYSPSCs consultant is expected to continue to review the companys expenditures. At June 30, 2011, the company had a $10.5 million regulatory liability relating to this matter. The company is unable to estimate the amount, if any, by which any refund required by the NYSPSC may exceed this regulatory liability.
In February 2011, the NYSPSC initiated a proceeding to examine the existing mechanisms pursuant to which utilities recover site investigation and remediation costs and possible alternatives. See Note G to the financial statements in Item 8 of the Form 10-K and Note F to the Second Quarter Financial Statements.
19 |
Regulatory Assets and Liabilities
Regulatory assets and liabilities at June 30, 2011 and December 31, 2010 were comprised of the following items:
Con Edison | CECONY | |||||||||||||||
(Millions of Dollars) | 2011 | 2010 | 2011 | 2010 | ||||||||||||
Regulatory assets |
||||||||||||||||
Unrecognized pension and other postretirement costs |
$ | 3,921 | $ | 4,371 | $ | 3,728 | $ | 4,152 | ||||||||
Future federal income tax |
1,730 | 1,593 | 1,659 | 1,515 | ||||||||||||
Environmental remediation costs |
684 | 695 | 566 | 574 | ||||||||||||
Pension and other post retirement benefits deferrals |
183 | 138 | 140 | 90 | ||||||||||||
Revenue taxes |
155 | 145 | 150 | 140 | ||||||||||||
Net electric deferrals |
130 | 156 | 129 | 156 | ||||||||||||
Surcharge for New York State Assessment |
98 | 121 | 91 | 112 | ||||||||||||
Deferred storm costs |
53 | 57 | 41 | 43 | ||||||||||||
O&R transition bond charges |
47 | 48 | | | ||||||||||||
Deferred derivative losses long-term |
44 | 74 | 28 | 48 | ||||||||||||
Property tax reconciliation |
31 | 34 | 19 | 27 | ||||||||||||
Workers compensation |
28 | 31 | 28 | 31 | ||||||||||||
World Trade Center restoration costs |
13 | 45 | 13 | 45 | ||||||||||||
Recoverable energy |
| 42 | | 42 | ||||||||||||
Other |
144 | 133 | 135 | 122 | ||||||||||||
Regulatory assets long-term |
7,261 | 7,683 | 6,727 | 7,097 | ||||||||||||
Deferred derivative losses current |
121 | 190 | 98 | 151 | ||||||||||||
Recoverable energy costs current |
9 | 13 | | | ||||||||||||
Regulatory assets current |
130 | 203 | 98 | 151 | ||||||||||||
Total Regulatory Assets |
$ | 7,391 | $ | 7,886 | $ | 6,825 | $ | 7,248 | ||||||||
Regulatory liabilities |
||||||||||||||||
Allowance for cost of removal less salvage |
$ | 430 | $ | 422 | $ | 356 | $ | 350 | ||||||||
Revenue decoupling mechanism |
81 | 38 | 81 | 38 | ||||||||||||
World Trade Center settlement proceeds |
62 | | 62 | | ||||||||||||
Carrying charges on T&D net plant |
40 | 28 | 11 | 5 | ||||||||||||
Energy efficiency programs |
28 | 19 | 27 | 18 | ||||||||||||
New York State tax refund |
20 | 30 | 20 | 30 | ||||||||||||
Gain on sale of properties |
15 | 31 | 15 | 31 | ||||||||||||
Bonus depreciation |
13 | 1 | 12 | 1 | ||||||||||||
Expenditure prudence proceeding |
11 | | 11 | | ||||||||||||
Other |
166 | 121 | 156 | 112 | ||||||||||||
Regulatory liabilities |
866 | 690 | 751 | 585 | ||||||||||||
Net unbilled revenue deferrals current |
117 | 136 | 117 | 136 | ||||||||||||
Refundable energy cost current |
75 | 117 | 50 | 90 | ||||||||||||
Deferred derivative gains current |
6 | 4 | 4 | 3 | ||||||||||||
Regulatory liabilities current |
198 | 257 | 171 | 229 | ||||||||||||
Total Regulatory Liabilities |
$ | 1,064 | $ | 947 | $ | 922 | $ | 814 |
Note C Short-Term Borrowing
Reference is made to Note D to the financial statements in Item 8 of the Form 10-K and Note C to the financial statements in Part I, Item 1 of the First Quarter Form 10-Q.
At June 30, 2011 and December 31, 2010 Con Edison and CECONY had no commercial paper outstanding.
At June 30, 2011 and December 31, 2010, no loans were outstanding under the Companies Credit Agreement and $188 million (including $135 million for CECONY) and $197 million (including $145 million for CECONY) of letters of credit were outstanding under the Credit Agreement, respectively.
Note D Pension Benefits
Reference is made to Note E to the financial statements in Item 8 of the Form 10-K and Note D to the financial statement in Part I, Item 1 of the First Quarter Form 10-Q.
20 |
Net Periodic Benefit Cost
The components of the Companies net periodic benefit costs for the three and six months ended June 30, 2011 and 2010 were as follows:
For the Three Months Ended June 30, | ||||||||||||||||
Con Edison | CECONY | |||||||||||||||
(Millions of Dollars) | 2011 | 2010 | 2011 | 2010 | ||||||||||||
Service cost including administrative expenses |
$ | 47 | $ | 42 | $ | 44 | $ | 39 | ||||||||
Interest cost on projected benefit obligation |
140 | 139 | 131 | 130 | ||||||||||||
Expected return on plan assets |
(183 | ) | (176 | ) | (175 | ) | (167 | ) | ||||||||
Amortization of net actuarial loss |
132 | 106 | 125 | 100 | ||||||||||||
Amortization of prior service costs |
2 | 2 | 2 | 2 | ||||||||||||
NET PERIODIC BENEFIT COST |
$ | 138 | $ | 113 | $ | 127 | $ | 104 | ||||||||
Amortization of regulatory asset |
1 | 1 | 1 | 1 | ||||||||||||
TOTAL PERIODIC BENEFIT COST |
$ | 139 | $ | 114 | $ | 128 | $ | 105 | ||||||||
Cost capitalized |
(48 | ) | (37 | ) | (45 | ) | (34 | ) | ||||||||
Cost deferred |
(6 | ) | (33 | ) | (7 | ) | (32 | ) | ||||||||
Cost charged to operating expenses |
$ | 85 | $ | 44 | $ | 76 | $ | 39 |
For the Six Months Ended June 30, | ||||||||||||||||
Con Edison | CECONY | |||||||||||||||
(Millions of Dollars) | 2011 | 2010 | 2011 | 2010 | ||||||||||||
Service cost including administrative expenses |
$ | 94 | $ | 84 | $ | 88 | $ | 78 | ||||||||
Interest cost on projected benefit obligation |
280 | 278 | 262 | 260 | ||||||||||||
Expected return on plan assets |
(366 | ) | (352 | ) | (350 | ) | (334 | ) | ||||||||
Amortization of net actuarial loss |
264 | 212 | 250 | 200 | ||||||||||||
Amortization of prior service costs |
4 | 4 | 4 | 4 | ||||||||||||
NET PERIODIC BENEFIT COST |
$ | 276 | $ | 226 | $ | 254 | $ | 208 | ||||||||
Amortization of regulatory asset |
1 | 1 | 1 | 1 | ||||||||||||
TOTAL PERIODIC BENEFIT COST |
$ | 277 | $ | 227 | $ | 255 | $ | 209 | ||||||||
Cost capitalized |
(96 | ) | (78 | ) | (89 | ) | (73 | ) | ||||||||
Cost deferred |
(57 | ) | (56 | ) | (59 | ) | (53 | ) | ||||||||
Cost charged to operating expenses |
$ | 124 | $ | 93 | $ | 107 | $ | 83 |
Expected Contributions
Based on estimates as of March 31, 2011, the Companies are not required under funding regulations and laws to make any contributions to the pension plan during 2011. The Companies policy is to fund their accounting cost to the extent tax deductible. In 2011, Con Edison expects to make discretionary contributions to the pension plan of $533 million, of which CECONY contributed $491 million during the first six months of 2011. During the first six months of 2010, CECONY contributed $279 million to the pension plan. During the first six months of 2011, the Companies funded $11 million for the non-qualified supplemental pension plans.
Note E Other Postretirement Benefits
Reference is made to Note F to the financial statements in Item 8 of the Form 10-K and Note E to the financial statement in Part I, Item 1 of the First Quarter Form 10-Q.
21 |
Net Periodic Benefit Cost
The components of the Companies net periodic postretirement benefit costs for the three and six months ended June 30, 2011 and 2010 were as follows:
For the Three Months Ended June 30, | ||||||||||||||||
Con Edison | CECONY | |||||||||||||||
(Millions of Dollars) | 2011 | 2010 | 2011 | 2010 | ||||||||||||
Service cost |
$ | 6 | $ | 6 | $ | 5 | $ | 5 | ||||||||
Interest cost on accumulated other postretirement benefit obligation |
21 | 23 | 18 | 20 | ||||||||||||
Expected return on plan assets |
(22 | ) | (22 | ) | (19 | ) | (19 | ) | ||||||||
Amortization of net actuarial loss |
22 | 23 | 20 | 21 | ||||||||||||
Amortization of prior service cost |
(2 | ) | (3 | ) | (3 | ) | (4 | ) | ||||||||
Amortization of transition obligation |
1 | 1 | 1 | 1 | ||||||||||||
NET PERIODIC POSTRETIREMENT BENEFIT COST |
$ | 26 | $ | 28 | $ | 22 | $ | 24 | ||||||||
Cost capitalized |
(9 | ) | (10 | ) | (8 | ) | (8 | ) | ||||||||
Cost deferred |
4 | 1 | 4 | | ||||||||||||
Cost charged to operating expenses |
$ | 21 | $ | 19 | $ | 18 | $ | 16 |
For the Six Months Ended June 30, | ||||||||||||||||
Con Edison | CECONY | |||||||||||||||
(Millions of Dollars) | 2011 | 2010 | 2011 | 2010 | ||||||||||||
Service cost |
$ | 12 | $ | 12 | $ | 10 | $ | 10 | ||||||||
Interest cost on accumulated other postretirement benefit obligation |
42 | 46 | 36 | 40 | ||||||||||||
Expected return on plan assets |
(44 | ) | (44 | ) | (38 | ) | (38 | ) | ||||||||
Amortization of net actuarial loss |
44 | 46 | 40 | 42 | ||||||||||||
Amortization of prior service cost |
(4 | ) | (6 | ) | (6 | ) | (8 | ) | ||||||||
Amortization of transition obligation |
2 | 2 | 2 | 2 | ||||||||||||
NET PERIODIC POSTRETIREMENT BENEFIT COST |
$ | 52 | $ | 56 | $ | 44 | $ | 48 | ||||||||
Cost capitalized |
(18 | ) | (20 | ) | (15 | ) | (17 | ) | ||||||||
Cost deferred |
9 | | 7 | (2 | ) | |||||||||||
Cost charged to operating expenses |
$ | 43 | $ | 36 | $ | 36 | $ | 29 |
Expected Contributions
Based on estimates as of March 31, 2011, Con Edison expects to make a contribution of $84 million, including $74 million for CECONY, to the other postretirement benefit plans in 2011.
Note F Environmental Matters
Superfund Sites
Hazardous substances, such as asbestos, polychlorinated biphenyls (PCBs) and coal tar, have been used or generated in the course of operations of the Utilities and their predecessors and are present at sites and in facilities and equipment they currently or previously owned, including sites at which gas was manufactured or stored.
The Federal Comprehensive Environmental Response, Compensation and Liability Act of 1980 and similar state statutes (Superfund) impose joint and several liability, regardless of fault, upon generators of hazardous substances for investigation and remediation costs (which include costs of demolition, removal, disposal, storage, replacement, containment, and monitoring) and natural resource damages. Liability under these laws can be material and may be imposed for contamination from past acts, even though such past acts may have been lawful at the time they occurred. The sites at which the Utilities have been asserted to have liability under these laws, including their manufactured gas plant sites and any neighboring areas to which contamination may have migrated, are referred to herein as Superfund Sites.
For Superfund Sites where there are other potentially responsible parties and the Utilities are not managing the site investigation and remediation, the accrued liability represents an estimate of the amount the Utilities will need to pay to investigate and, where determinable, discharge their related obligations. For Superfund Sites (including the manufactured gas plant sites) for which one of the Utilities is managing the investigation and remediation, the accrued liability represents an estimate of the companys share of undiscounted cost to investigate the sites and, for sites
22 |
that have been investigated in whole or in part, the cost to remediate the sites, if remediation is necessary and if a reasonable estimate of such cost can be made. Remediation costs are estimated in light of the information available, applicable remediation standards, and experience with similar sites.
The accrued liabilities and regulatory assets related to Superfund Sites at June 30, 2011 and December 31, 2010 were as follows:
Con Edison | CECONY | |||||||||||||||
(Millions of Dollars) | 2011 | 2010 | 2011 | 2010 | ||||||||||||
Accrued Liabilities: |
||||||||||||||||
Manufactured gas plant sites |
$ | 434 | $ | 446 | $ | 317 | $ | 327 | ||||||||
Other Superfund Sites |
68 | 66 | 67 | 65 | ||||||||||||
Total |
$ | 502 | $ | 512 | $ | 384 | $ | 392 | ||||||||
Regulatory assets |
$ | 683 | $ | 692 | $ | 564 | $ | 571 |
Most of the accrued Superfund Site liability relates to sites that have been investigated, in whole or in part. However, for some of the sites, the extent and associated cost of the required remediation has not yet been determined. As investigations progress and information pertaining to the required remediation becomes available, the Utilities expect that additional liability may be accrued, the amount of which is not presently determinable, but may be material. Under their current rate agreements, the Utilities are permitted to recover or defer as regulatory assets (for subsequent recovery through rates) certain site investigation and remediation costs. In February 2011, the NYSPSC initiated a proceeding to examine the existing mechanisms pursuant to which utilities recover such costs and possible alternatives.
Environmental remediation costs incurred related to Superfund Sites for the three and six months ended June 30, 2011 and 2010, were as follows:
For the Three Months Ended June 30, | ||||||||||||||||
Con Edison | CECONY | |||||||||||||||
(Millions of Dollars) | 2011 | 2010 | 2011 | 2010 | ||||||||||||
Remediation costs incurred |
$ | 10 | $ | 14 | $ | 8 | $ | 13 |
For the Six Months Ended June 30, | ||||||||||||||||
Con Edison | CECONY | |||||||||||||||
(Millions of Dollars) | 2011 | 2010 | 2011 | 2010 | ||||||||||||
Remediation costs incurred |
$ | 16 | $ | 23 | $ | 14 | $ | 21 |
Insurance recoveries related to Superfund Sites for the three and six months ended June 30, 2011 and 2010 were immaterial.
In 2010, CECONY estimated that for its manufactured gas plant sites, its aggregate undiscounted potential liability for the investigation and remediation of coal tar and/or other manufactured gas plant-related environmental contaminants could range up to $1.9 billion. In 2010, O&R estimated that for its manufactured gas plant sites, each of which has been investigated, the aggregate undiscounted potential liability for the remediation of such contaminants could range up to $200 million. These estimates were based on the assumption that there is contamination at all sites, including those that have not yet been fully investigated and additional assumptions about the extent of the contamination and the type and extent of the remediation that may be required. Actual experience may be materially different.
Asbestos Proceedings
Suits have been brought in New York State and federal courts against the Utilities and many other defendants, wherein a large number of plaintiffs sought large amounts of compensatory and punitive damages for deaths and injuries allegedly caused by exposure to asbestos at various premises of the Utilities. The suits that have been resolved, which are many, have been resolved without any payment by the Utilities, or for amounts that were not, in the aggregate, material to them. The amounts specified in all the remaining thousands of suits total billions of dollars; however, the Utilities believe that these amounts are greatly exaggerated, based on the disposition of previous
23 |
claims. In 2010, CECONY estimated that its aggregate undiscounted potential liability for these suits and additional suits that may be brought over the next 15 years is $10 million. The estimate was based upon a combination of modeling, historical data analysis and risk factor assessment. Actual experience may be materially different. In addition, certain current and former employees have claimed or are claiming workers compensation benefits based on alleged disability from exposure to asbestos. Under its current rate agreements, CECONY is permitted to defer as regulatory assets (for subsequent recovery through rates) costs incurred for its asbestos lawsuits and workers compensation claims. The accrued liability for asbestos suits and workers compensation proceedings (including those related to asbestos exposure) and the amounts deferred as regulatory assets for the Companies at June 30, 2011 and December 31, 2010 were as follows:
Con Edison | CECONY | |||||||||||||||
(Millions of Dollars) | 2011 | 2010 | 2011 | 2010 | ||||||||||||
Accrued liability asbestos suits |
$ | 10 | $ | 10 | $ | 10 | $ | 10 | ||||||||
Regulatory assets asbestos suits |
$ | 10 | $ | 10 | $ | 10 | $ | 10 | ||||||||
Accrued liability |
$ | 103 | $ | 106 | $ | 98 | $ | 101 | ||||||||
Regulatory assets workers compensation |
$ | 28 | $ | 31 | $ | 28 | $ | 31 |
Note G Other Material Contingencies
Manhattan Steam Main Rupture
In July 2007, a CECONY steam main located in midtown Manhattan ruptured. It has been reported that one person died and others were injured as a result of the incident. Several buildings in the area were damaged. Debris from the incident included dirt and mud containing asbestos. The response to the incident required the closing of several buildings and streets for various periods. Approximately 100 suits are pending against the company seeking generally unspecified compensatory and, in some cases, punitive damages, for personal injury, property damage and business interruption. The company has not accrued a liability for the suits. The company has notified its insurers of the incident and believes that the policies in force at the time of the incident will cover most of the companys costs, which the company is unable to estimate, but which could be substantial, to satisfy its liability to others in connection with the incident.
Investigations of Vendor Payments
In January 2009, CECONY commenced an internal investigation relating to the arrests of certain employees
and retired employees (all of whom have since pleaded guilty) for accepting kickbacks from contractors that performed construction work for the company. The company has retained a law firm, which has retained an accounting firm, to assist in the companys investigation. The company is providing information to governmental authorities, which consider the company to be a victim of unlawful conduct, in connection with their investigation of the arrested employees and contractors. The company has terminated its employment of the arrested employees and its contracts with the contractors. In February 2009, the NYSPSC commenced a proceeding that, among other things, will examine the prudence of certain of the companys expenditures relating to the arrests and consider whether additional expenditures should also be examined (see Other Regulatory Matters in Note B).
CECONY is also investigating the September 2010 arrest of a retired employee (who has since pleaded guilty to participating in a bribery scheme in which the employee received payments from two companies that supplied materials to the company) and the January 2011 arrest of an employee (for accepting kickbacks from an engineering firm that performed work for the company). CECONY has provided information to governmental authorities in connection with their ongoing investigations of these matters.
The company, based upon its evaluation of its internal controls for 2010 and previous years, believes that the controls were effective to provide reasonable assurance that its financial statements have been fairly presented, in all material respects, in conformity with generally accepted accounting principles. Because the companys investigations are ongoing, the company is unable to predict the impact of any of the employees unlawful
24 |
conduct on the companys internal controls, business, results of operations or financial position.
Lease In/Lease Out Transactions
In each of 1997 and 1999, Con Edison Development entered into a transaction in which it leased property and then immediately subleased it back to the lessor (termed Lease In/Lease Out, or LILO transactions). The transactions respectively involve electric generating and gas distribution facilities in the Netherlands, with a total investment of $259 million. The transactions were financed with $93 million of equity and $166 million of non-recourse, long-term debt secured by the underlying assets. In accordance with the accounting rules for leases, Con Edison is accounting for the two LILO transactions as leveraged leases. Accordingly, the companys investment in these leases, net of non-recourse debt, is carried as a single amount in Con Edisons consolidated balance sheet and income is recognized pursuant to a method that incorporates a level rate of return for those years when net investment in the lease is positive, based upon the after-tax cash flows projected at the inception of the leveraged leases. The companys investment in these leveraged leases was $(48) million at June 30, 2011 and $(41) million at December 31, 2010 and is comprised of a $234 million gross investment less $282 million deferred tax liabilities at June 30, 2011 and $235 million gross investment less $276 million of deferred tax liabilities at December 31, 2010.
On audit of Con Edisons tax return for 1997, the IRS disallowed the tax losses in connection with the 1997 LILO transaction. In December 2005, Con Edison paid a $0.3 million income tax deficiency asserted by the IRS for the tax year 1997 with respect to the 1997 LILO transaction. In April 2006, the company paid interest of $0.2 million associated with the deficiency and commenced an action in the United States Court of Federal Claims, entitled Consolidated Edison Company of New York, Inc. v. United States, to obtain a refund of this tax payment and interest. A trial was completed in November 2007. In October 2009, the court issued a decision in favor of the company concluding that the 1997 LILO transaction was, in substance, a true lease that possessed economic substance, the loans relating to the lease constituted bona fide indebtedness, and the deductions for the 1997 LILO transactions claimed by the company in its 1997 federal income tax return are allowable. The IRS is entitled to appeal the decision.
In connection with its audit of Con Edisons federal income tax returns for 1998 through 2007, the IRS disallowed $416 million of net tax deductions taken with respect to both of the LILO transactions for the tax years. Con Edison is pursuing administrative appeals of these audit level disallowances. In connection with its audit of Con Edisons federal income tax returns for 2009 and 2008, the IRS has disallowed $41 million and $42 million, respectively, of net tax deductions taken with respect to both of the LILO transactions. When these audit level disallowances become appealable, Con Edison intends to file an appeal of the disallowances.
Con Edison believes that its LILO transactions have been correctly reported, and has not recorded any reserve with respect to the disallowance of tax losses, or related interest, in connection with its LILO transactions. Con Edisons estimated tax savings, reflected in its financial statements, from the two LILO transactions through June 30, 2011, in the aggregate, was $229 million. If Con Edison were required to repay all or a portion of these amounts, it would also be required to pay interest of up to $82 million net of tax at June 30, 2011.
Pursuant to the accounting rules for leveraged lease transactions, the expected timing of income tax cash flows generated by Con Edisons LILO transactions are required to be reviewed at least annually. If the expected timing of the cash flows is revised, the rate of return and the allocation of income would be recalculated from the inception of the LILO transactions, and the company would be required to recalculate the accounting effect of the LILO transactions, which would result in a charge to earnings that could have a material adverse effect on the companys results of operations.
25 |
Guarantees
Con Edison and its subsidiaries enter into various agreements providing financial or performance assurance primarily to third parties on behalf of their subsidiaries. Maximum amounts guaranteed by Con Edison totaled $834 million and $859 million at June 30, 2011 and December 31, 2010, respectively.
A summary, by type (described in Note H to the financial statements in Item 8 of the Form 10-K) and term, of Con Edisons total guarantees at June 30, 2011 is as follows:
Guarantee Type | 0 3 years | 4 10 years | > 10 years | Total | ||||||||||||
(Millions of Dollars) | ||||||||||||||||
Commodity transactions |
$ | 616 | 8 | 140 | $ | 764 | ||||||||||
Intra-company guarantees |
15 | | 1 | 16 | ||||||||||||
Other guarantees |
40 | 14 | | 54 | ||||||||||||
TOTAL |
$ | 671 | $ | 22 | $ | 141 | $ | 834 |
Note H Financial Information by Business Segment
Reference is made to Note N to the financial statements in Item 8 of the Form 10-K.
The financial data for the business segments are as follows:
For the Three Months Ended June 30, | ||||||||||||||||||||||||||||||||
Operating revenues |
Inter-segment revenues |
Depreciation and amortization |
Operating income |
|||||||||||||||||||||||||||||
(Millions of Dollars) | 2011 | 2010 | 2011 | 2010 | 2011 | 2010 | 2011 | 2010 | ||||||||||||||||||||||||
CECONY |
||||||||||||||||||||||||||||||||
Electric |
$ | 2,013 | $ | 2,104 | $ | 3 | $ | 2 | $ | 162 | $ | 156 | $ | 350 | $ | 319 | ||||||||||||||||
Gas |
296 | 239 | 1 | 1 | 27 | 25 | 31 | 44 | ||||||||||||||||||||||||
Steam |
107 | 89 | 20 | 18 | 16 | 15 | (11 | ) | (29 | ) | ||||||||||||||||||||||
Consolidation adjustments |
| | (24 | ) | (21 | ) | | | | | ||||||||||||||||||||||
Total CECONY |
$ | 2,416 | $ | 2,432 | $ | | $ | | $ | 205 | $ | 196 | $ | 370 | $ | 334 | ||||||||||||||||
O&R |
||||||||||||||||||||||||||||||||
Electric |
$ | 141 | $ | 153 | $ | | $ | | $ | 8 | $ | 8 | $ | 14 | $ | 15 | ||||||||||||||||
Gas |
37 | 35 | | | 4 | 3 | 1 | (1 | ) | |||||||||||||||||||||||
Total O&R |
$ | 178 | $ | 188 | $ | | $ | | $ | 12 | $ | 11 | $ | 15 | $ | 14 | ||||||||||||||||
Competitive energy businesses |
$ | 406 | $ | 406 | $ | 2 | $ | 2 | $ | 2 | $ | 4 | $ | 14 | $ | 81 | ||||||||||||||||
Other* |
(7 | ) | (9 | ) | (2 | ) | (2 | ) | | | (1 | ) | | |||||||||||||||||||
Total Con Edison |
$ | 2,993 | $ | 3,017 | $ | | $ | | $ | 219 | $ | 211 | $ | 398 | $ | 429 |
* | Parent company expenses, primarily interest, and consolidation adjustments. Other does not represent a business segment. |
For the Six Months Ended June 30, | ||||||||||||||||||||||||||||||||
Operating revenues |
Inter-segment revenues |
Depreciation and amortization |
Operating income |
|||||||||||||||||||||||||||||
(Millions of Dollars) | 2011 | 2010 | 2011 | 2010 | 2011 | 2010 | 2011 | 2010 | ||||||||||||||||||||||||
CECONY |
||||||||||||||||||||||||||||||||
Electric |
$ | 3,734 | $ | 3,832 | $ | 6 | $ | 6 | $ | 324 | $ | 307 | $ | 566 | $ | 514 | ||||||||||||||||
Gas |
959 | 922 | 2 | 2 | 54 | 50 | 237 | 259 | ||||||||||||||||||||||||
Steam |
432 | 396 | 40 | 36 | 32 | 31 | 114 | 73 | ||||||||||||||||||||||||
Consolidation adjustments |
| | (48 | ) | (44 | ) | | | | | ||||||||||||||||||||||
Total CECONY |
$ | 5,125 | $ | 5,150 | $ | | $ | | $ | 410 | $ | 388 | $ | 917 | $ | 846 | ||||||||||||||||
O&R |
||||||||||||||||||||||||||||||||
Electric |
$ | 289 | $ | 314 | $ | | $ | | $ | 17 | $ | 16 | $ | 25 | $ | 22 | ||||||||||||||||
Gas |
130 | 125 | | | 7 | 6 | 28 | 21 | ||||||||||||||||||||||||
Total O&R |
$ | 419 | $ | 439 | $ | | $ | | $ | 24 | $ | 22 | $ | 53 | $ | 43 | ||||||||||||||||
Competitive energy businesses |
$ | 814 | $ | 906 | $ | 5 | $ | 4 | $ | 3 | $ | 5 | $ | 58 | $ | 33 | ||||||||||||||||
Other* |
(16 | ) | (17 | ) | (5 | ) | (4 | ) | | | (4 | ) | (1 | ) | ||||||||||||||||||
Total Con Edison |
$ | 6,342 | $ | 6,478 | $ | | $ | | $ | 437 | $ | 415 | $ | 1,024 | $ | 921 |
* | Parent company expenses, primarily interest, and consolidation adjustments. Other does not represent a business segment. |
26 |
Note I Derivative Instruments and Hedging Activities
Under the accounting rules for derivatives and hedging, derivatives are recognized on the balance sheet at fair value, unless an exception is available under the accounting rules. Certain qualifying derivative contracts have been designated as normal purchases or normal sales contracts. These contracts are not reported at fair value under the accounting rules.
Energy Price Hedging
Con Edisons subsidiaries hedge market price fluctuations associated with physical purchases and sales of electricity, natural gas, and steam by using derivative instruments including futures, forwards, basis swaps, options, transmission congestion contracts and financial transmission rights contracts. The fair values of these hedges at June 30, 2011 and December 31, 2010 were as follows:
Con Edison | CECONY | |||||||||||||||
(Millions of Dollars) | 2011 | 2010 | 2011 | 2010 | ||||||||||||
Fair value of net derivative assets/(liabilities) - gross |
$ | (121 | ) | $ | (261 | ) | $ | (75 | ) | $ | (156 | ) | ||||
Impact of netting of cash collateral |
100 | 176 | 56 | 104 | ||||||||||||
Fair value of net derivative assets/(liabilities) - net |
$ | (21 | ) | $ | (85 | ) | $ | (19 | ) | $ | (52 | ) |
Credit Exposure
The Companies are exposed to credit risk related to transactions entered into primarily for the various energy supply and hedging activities by the Utilities and the competitive energy businesses. The Companies use credit policies to manage this risk, including an established credit approval process, monitoring of counterparty limits, netting provisions within agreements, collateral or prepayment arrangements, credit insurance and credit default swaps.
At June 30, 2011, Con Edison and CECONY had $152 million and $31 million of credit exposure in connection with energy supply and hedging activities, net of collateral, respectively. Con Edisons net credit exposure consisted of $58 million with investment-grade counterparties, $53 million with commodity exchange brokers, $39 million with independent system operators and $2 million with non-investment grade counterparties. CECONYs net credit exposure consisted of $3 million with investment-grade counterparties and $28 million with commodity exchange brokers.
Economic Hedges
The Companies enter into certain derivative instruments that do not qualify or are not designated as hedges under the accounting rules for derivatives and hedging. However, management believes these instruments represent economic hedges that mitigate exposure to fluctuations in commodity prices.
The fair values of the Companies commodity derivatives at June 30, 2011 were:
(Millions of Dollars) | Fair Value of Commodity Derivatives(a) Balance Sheet Location |
Con Edison |
CECONY | |||||||
Derivative Assets | ||||||||||
Current |
Other current assets | $ | 134 | $ | 38 | |||||
Long-term |
Other deferred charges and non-current assets | 42 | 22 | |||||||
Total derivative assets |
$ | 176 | $ | 60 | ||||||
Impact of netting |
(63 | ) | (14 | ) | ||||||
Net derivative assets |
$ | 113 | $ | 46 | ||||||
Derivative Liabilities | ||||||||||
Current |
Fair value of derivative liabilities | $ | 234 | $ | | |||||
Current |
Other current liabilities | | 98 | |||||||
Long-term |
Fair value of derivative liabilities | 63 | 37 | |||||||
Total derivative liabilities |
$ | 297 | $ | 135 | ||||||
Impact of netting |
(163 | ) | (70 | ) | ||||||
Net derivative liabilities |
$ | 134 | $ | 65 |
27 |
(a) | Qualifying derivative contracts, which have been designated as normal purchases or normal sales contracts, are not reported at fair value under the accounting rules for derivatives and hedging and, therefore, are excluded from the table. |
The fair values of the Companies commodity derivatives at December 31, 2010 were:
(Millions of Dollars) | Fair Value of Commodity Derivatives(a) Balance Sheet Location |
Con Edison |
CECONY | |||||||
Derivative Assets | ||||||||||
Current |
Other current assets | $ | 184 | $ | 29 | |||||
Long-term |
Other deferred charges and non-current assets | 51 | 19 | |||||||
Total derivative assets |
$ | 235 | $ | 48 | ||||||
Impact of netting |
(129 | ) | | |||||||
Net derivative assets |
$ | 106 | $ | 48 | ||||||
Derivative Liabilities | ||||||||||
Current |
Fair value of derivative liabilities | $ | 385 | $ | | |||||
Current |
Other current liabilities | | 148 | |||||||
Long-term |
Fair value of derivative liabilities | 111 | 56 | |||||||
Total derivative liabilities |
$ | 496 | $ | 204 | ||||||
Impact of netting |
(305 | ) | (104 | ) | ||||||
Net derivative liabilities |
$ | 191 | $ | 100 |
(a) | Qualifying derivative contracts, which have been designated as normal purchases or normal sales contracts, are not reported at fair value under the accounting rules for derivatives and hedging and, therefore, are excluded from the table. |
The Utilities generally recover all of their prudently incurred fuel, purchased power and gas cost, including hedging gains and losses, in accordance with rate provisions approved by the applicable state utility commissions. See Recoverable Energy Costs in Note A to the financial statements in Item 8 of the Form 10-K. In accordance with the accounting rules for regulated operations, the Utilities record a regulatory asset or liability to defer recognition of unrealized gains and losses on their electric and gas derivatives. As gains and losses are realized in future periods, they will be recognized as purchased power, gas and fuel costs in the Companies consolidated income statements. Con Edisons competitive energy businesses record realized and unrealized gains and losses on their derivative contracts in earnings in the reporting period in which they occur.
The following tables present the changes in the fair values of commodity derivatives that have been deferred or recognized in earnings for the three and six months ended June 30, 2011:
Realized and Unrealized Gains/(Losses) on Commodity Derivatives(a) Deferred or Recognized in Income for the three months ended June 30, 2011 |
||||||||||
(Millions of Dollars) | Balance Sheet Location | Con Edison |
CECONY | |||||||
Pre-tax gains/(losses) deferred in accordance with accounting rules for regulated operations: |
| |||||||||
Current |
Deferred derivative gains | $ | (4 | ) | $ | (4 | ) | |||
Long-term |
Regulatory liabilities | (1 | ) | | ||||||
Total deferred gains |
$ | (5 | ) | $ | (4 | ) | ||||
Current |
Deferred derivative losses | $ | 25 | $ | 18 | |||||
Current |
Recoverable energy costs | (53 | ) | (39 | ) | |||||
Long-term |
Regulatory assets | 12 | 9 | |||||||
Total deferred losses |
$ | (16 | ) | $ | (12 | ) | ||||
Net deferred losses |
$ | (21 | ) | $ | (16 | ) | ||||
Income Statement Location | ||||||||||
Pre-tax gain/(loss) recognized in income |
| |||||||||
Purchased power expense | $ | 73 | (b) | $ | | |||||
Gas purchased for resale | 17 | | ||||||||
Non-utility revenue | 7 | (b) | | |||||||
Total pre-tax gain/(loss) recognized in income |
$ | 97 | $ | |
(a) | Qualifying derivative contracts, which have been designated as normal purchases or normal sales contracts, are not reported at fair value under the accounting rules for derivatives and hedging and, therefore, are excluded from the table. |
28 |
(b) | For the three months ended June 30, 2011 Con Edison recorded in non-utility operating revenues and purchased power expense an unrealized pre-tax (loss)/gain of $(12) million and $10 million, respectively. |
Realized and Unrealized Gains/(Losses) on Commodity Derivatives(a) Deferred or Recognized in Income for the six months ended June 30, 2011 |
||||||||||
(Millions of Dollars) | Balance Sheet Location | Con Edison |
CECONY | |||||||
Pre-tax gains/(losses) deferred in accordance with accounting rules for regulated operations: |
| |||||||||
Current |
Deferred derivative gains | $ | 2 | $ | 1 | |||||
Long-term |
Regulatory liabilities | 2 | 2 | |||||||
Total deferred gains |
$ | 4 | $ | 3 | ||||||
Current |
Deferred derivative losses | $ | 69 | $ | 53 | |||||
Current |
Recoverable energy costs | (102 | ) | (81 | ) | |||||
Long-term |
Regulatory assets | 28 | 20 | |||||||
Total deferred losses |
$ | (5 | ) | $ | (8 | ) | ||||
Net deferred losses |
$ | (1 | ) | $ | (5 | ) | ||||
Income Statement Location | ||||||||||
Pre-tax gain/(loss) recognized in income |
| |||||||||
Purchased power expense | $ | 52 | (b) | $ | | |||||
Gas purchased for resale | 11 | | ||||||||
Non-utility revenue | 17 | (b) | | |||||||
Total pre-tax gain/(loss) recognized in income |
$ | 80 | $ | |
(a) | Qualifying derivative contracts, which have been designated as normal purchases or normal sales contracts, are not reported at fair value under the accounting rules for derivatives and hedging and, therefore, are excluded from the table. |
(b) | For the six months ended June 30, 2011, Con Edison recorded in non-utility operating revenues and purchased power expense an unrealized pre-tax (loss)/gain of $(25) million and $60 million, respectively. |
The following tables present the changes in the fair values of commodity derivatives that have been deferred or recognized in earnings for the three and six months ended June 30, 2010:
Realized and Unrealized Gains/(Losses) on Commodity Derivatives(a) Deferred or Recognized in Income for the Three Months Ended June 30, 2010 |
||||||||||
(Millions of Dollars) | Balance Sheet Location | Con Edison |
CECONY | |||||||
Pre-tax gains/(losses) deferred in accordance with accounting rules for regulated operations: |
| |||||||||
Current |
Other current liabilities | $ | 1 | $ | 1 | |||||
Total deferred gains |
$ | 1 | $ | 1 | ||||||
Current |
Other current assets | $ | 95 | $ | 78 | |||||
Current |
Recoverable energy costs | $ | (80 | ) | $ | (67 | ) | |||
Long term |
Regulatory assets | $ | 51 | $ | 38 | |||||
Total deferred losses |
$ | 66 | $ | 49 | ||||||
Net deferred losses |
$ | 67 | $ | 50 | ||||||
Income Statement Location | ||||||||||
Pre-tax gain/(loss) recognized in income |
| |||||||||
Purchased power expense | $ | (43 | )(b) | $ | | |||||
Gas purchased for resale | (11 | ) | | |||||||
Non-utility revenue | 2 | (b) | | |||||||
Total pre-tax gain/(loss) recognized in income |
$ | (52 | ) | $ | |
(a) | Qualifying derivative contracts, which have been designated as normal purchases or normal sales contracts, are not reported at fair value under the accounting rules for derivatives and hedging and, therefore, are excluded from the table. |
(b) | For the three months ended June 30, 2010, Con Edison recorded in non-utility operating revenues and purchased power expense an unrealized pre-tax gain/(loss) of $(45) million and $110 million, respectively. |
29 |
Realized and Unrealized Gains/(Losses) on Commodity Derivatives(a) Deferred or Recognized in Income for the Six Months Ended June 30, 2010 |
||||||||||
(Millions of Dollars) | Balance Sheet Location | Con Edison |
CECONY | |||||||
Pre-tax gains/(losses) deferred in accordance with accounting rules for regulated operations: |
| |||||||||
Current |
Other current liabilities | $ | (5 | ) | $ | (5 | ) | |||
Total deferred gains |
$ | (5 | ) | $ | (5 | ) | ||||
Current |
Other current assets | $ | (66 | ) | $ | (60 | ) | |||
Current |
Recoverable energy costs | $ | (135 | ) | $ | (109 | ) | |||
Long term |
Regulatory assets | $ | (23 | ) | $ | (18 | ) | |||
Total deferred losses |
$ | (224 | ) | $ | (187 | ) | ||||
Net deferred losses |
$ | (229 | ) | $ | (192 | ) | ||||
Income Statement Location | ||||||||||
Pre-tax gain/(loss) recognized in income |
| |||||||||
Purchased power expense | $ | (106 | ) | $ | | |||||
Gas purchased for resale | (6 | ) | | |||||||
Non-utility revenue | 17 | (b) | | |||||||
Total pre-tax gain/(loss) recognized in income |
$ | (95 | ) | $ | |
(a) | Qualifying derivative contracts, which have been designated as normal purchases or normal sales contracts, are not reported at fair value under the accounting rules for derivatives and hedging and, therefore, are excluded from the table. |
(b) | For the six months ended June 30, 2010, Con Edison recorded in non-utility operating revenues an unrealized pre-tax gain/(loss) of $2 million. |
As of June 30, 2011, Con Edison had 1,705 contracts, including 699 CECONY contracts, which were considered to be derivatives under the accounting rules for derivatives and hedging (excluding qualifying derivative contracts, which have been designated as normal purchases or normal sales contracts). The following table presents the number of contracts by commodity type:
Electric Derivatives | Gas Derivatives |
|||||||||||||||||||||||||||
Number of Energy Contracts(a) |
MWHs(b) | Number of Capacity Contracts(a) |
MWs(b) | Number of |
Dths(b) | Total Of Contracts(a) |
||||||||||||||||||||||
Con Edison |
882 | 20,318,546 | 56 | 9,161 | 767 | 106,730,705 | 1,705 | |||||||||||||||||||||
CECONY |
177 | 4,966,000 | | | 522 | 97,880,000 | 699 |
(a) | Qualifying derivative contracts, which have been designated as normal purchases or normal sales contracts, are not reported at fair value under the accounting rules for derivatives and hedging and, therefore, are excluded from the table. |
(b) | Volumes are reported net of long and short positions. |
The Companies also enter into electric congestion and gas basis swap contracts to hedge the congestion and transportation charges which are associated with electric and gas contracts and hedged volumes.
The collateral requirements associated with, and settlement of, derivative transactions are included in net cash flows from operating activities in the Companies consolidated statement of cash flows. Most derivative instrument contracts contain provisions that may require the Companies to provide collateral on derivative instruments in net liability positions. The amount of collateral to be provided will depend on the fair value of the derivative instruments and the Companies credit ratings.
30 |
The aggregate fair value of all derivative instruments with credit-risk-related contingent features that are in a net liability position and collateral posted at June 30, 2011, and the additional collateral that would have been required to be posted had the lowest applicable credit rating been reduced one level and to below investment grade were:
(Millions of Dollars) | Con Edison(a) | CECONY(a) | ||||||
Aggregate fair value net liabilities |
$ | 140 | $ | 77 | ||||
Collateral posted |
$ | 40 | $ | 31 | (b) | |||
Additional collateral(c) (downgrade one level from current ratings(d)) |
$ | 29 | $ | 25 | ||||
Additional collateral(c) (downgrade to below investment grade from current ratings(d)) |
$ | 149 | (e) | $ | 66 | (e) |
(a) | Non-derivative transactions for the purchase and sale of electricity and gas and qualifying derivative instruments, which have been designated as normal purchases or normal sales, are excluded from the table. These transactions primarily include purchases of electricity from independent system operators. In the event the Utilities and Con Edisons competitive energy businesses were no longer extended unsecured credit for such purchases, the Companies would be required to post collateral, which at June 30, 2011, would have amounted to an estimated $161 million for Con Edison, including $52 million for CECONY. For certain other such non-derivative transactions, the Companies could be required to post collateral under certain circumstances, including in the event counterparties had reasonable grounds for insecurity. |
(b) | Across the Utilities energy derivative positions, credit limits for the same counterparties are generally integrated. At June 30, 2011, the Utilities posted combined collateral of $39 million, including an estimated $8 million attributable to O&R. |
(c) | The Companies measure the collateral requirements by taking into consideration the fair value amounts of derivative instruments that contain credit-risk-related contingent features that are in a net liabilities position plus amounts owed to counterparties for settled transactions and amounts required by counterparties for minimum financial security. The fair value amounts represent unrealized losses, net of any unrealized gains where the Companies have a legally enforceable right of setoff. |
(d) | The current ratings are Moodys, S&P and Fitch long-term credit rating of, as applicable, Con Edison (Baa1/BBB+/BBB+), CECONY (A3/A-/A-) or O&R (Baa1/A-/A-). Credit ratings assigned by rating agencies are expressions of opinions that are subject to revision or withdrawal at any time by the assigning rating agency. |
(e) | Derivative instruments that are net assets have been excluded from the table. At June 30, 2011, if Con Edison had been downgraded to below investment grade, it would have been required to post additional collateral for such derivative instruments of an estimated $24 million. |
Interest Rate Swap
O&R has an interest rate swap pursuant to which it pays a fixed-rate of 6.09 percent and receives a LIBOR-based variable rate. The fair value of this interest rate swap at June 30, 2011 was an unrealized loss of $10 million, which has been included in Con Edisons consolidated balance sheet as a noncurrent liability/fair value of derivative liabilities and a regulatory asset. The change in the fair value of the swap for the three and six months ended June 30, 2011 was not material. In the event O&Rs credit rating was downgraded to BBB- or lower by S&P or Baa3 or lower by Moodys, the swap counterparty could elect to terminate the agreement and, if it did so, the parties would then be required to settle the transaction.
Note J Fair Value Measurements
Reference is made to Note P to the financial statements in Item 8 of the Form 10-K.
Assets and liabilities measured at fair value on a recurring basis as of June 30, 2011 are summarized below.
Level 1 | Level 2 | Level 3 | Netting Adjustments(4) |
Total | ||||||||||||||||||||||||||||||||||||
(Millions of Dollars) | Con Edison |
CECONY | Con Edison |
CECONY | Con Edison |
CECONY | Con Edison |
CECONY | Con Edison |
CECONY | ||||||||||||||||||||||||||||||
Derivative assets: |
||||||||||||||||||||||||||||||||||||||||
Commodity(1) |
$ | 1 | $ | | $ | 56 | $ | 24 | $ | 100 | $ | 18 | $ | (42 | ) | $ | 4 | $ | 115 | $ | 46 | |||||||||||||||||||
Other assets(3) |
72 | 72 | | | 106 | 96 | | | 178 | 168 | ||||||||||||||||||||||||||||||
Total |
$ | 73 | $ | 72 | $ | 56 | $ | 24 | $ | 206 | $ | 114 | $ | (42 | ) | $ | 4 | $ | 293 | $ | 214 | |||||||||||||||||||
Derivative liabilities: |
||||||||||||||||||||||||||||||||||||||||
Commodity |
$ | 4 | $ | 1 | $ | 144 | $ | 93 | $ | 130 | $ | 23 | $ | (142 | ) | $ | (52 | ) | $ | 136 | $ | 65 | ||||||||||||||||||
Transfer in(5)(6) |
| | 5 | 5 | | | | | 5 | 5 | ||||||||||||||||||||||||||||||
Transfer out(5)(6) |
| | | | (5 | ) | (5 | ) | | | (5 | ) | (5 | ) | ||||||||||||||||||||||||||
Commodity(1) |
$ | 4 | $ | 1 | $ | 149 | $ | 98 | $ | 125 | $ | 18 | $ | (142 | ) | $ | (52 | ) | $ | 136 | $ | 65 | ||||||||||||||||||
Interest rate contract(2) |
| | | | 10 | | | | 10 | | ||||||||||||||||||||||||||||||
Total |
$ | 4 | $ | 1 | $ | 149 | $ | 98 | $ | 135 | $ | 18 | $ | (142 | ) | $ | (52 | ) | $ | 146 | $ | 65 |
(1) | A significant portion of the commodity derivative contracts categorized in Level 3 is valued using either an industry acceptable model or an internally developed model with observable inputs. The models also include some less readily observable inputs resulting in the classification of the entire contract as Level 3. See Note I. |
(2) | See Note I. |
31 |
(3) | Other assets are comprised of assets such as life insurance contracts within the Deferred Income Plan and Supplemental Retirement Income Plans, held in rabbi trusts. |
(4) | 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. |
(5) | The Companies policy is to recognize transfers into and transfers out of the levels at the end of the reporting period. |
(6) | Transferred from Level 3 to Level 2 because of availability of observable market data due to decrease in the terms of certain contracts from beyond one year as of December 31, 2010 to less than one year as of June 30, 2011. |
Assets and liabilities measured at fair value on a recurring basis as of December 31, 2010 are summarized below.
Level 1 | Level 2 | Level 3 | Netting Adjustments(4) |
Total | ||||||||||||||||||||||||||||||||||||
(Millions of Dollars) | Con Edison |
CECONY | Con Edison |
CECONY | Con Edison |
CECONY | Con Edison |
CECONY | Con Edison |
CECONY | ||||||||||||||||||||||||||||||
Derivative assets: |
||||||||||||||||||||||||||||||||||||||||
Commodity(1) |
$ | 2 | $ | 1 | $ | 72 | $ | 21 | $ | 144 | $ | 13 | $ | (112 | ) | $ | 13 | $ | 106 | $ | 48 | |||||||||||||||||||
Other assets(3) |
65 | 64 | | | 101 | 92 | | | 166 | 156 | ||||||||||||||||||||||||||||||
Total |
$ | 67 | $ | 65 | $ | 72 | $ | 21 | $ | 245 | $ | 105 | $ | (112 | ) | $ | 13 | $ | 272 | $ | 204 | |||||||||||||||||||
Derivative liabilities: |
||||||||||||||||||||||||||||||||||||||||
Commodity |
$ | 4 | $ | 2 | $ | 270 | $ | 177 | $ | 205 | $ | 12 | $ | (288 | ) | $ | (91 | ) | $ | 191 | $ | 100 | ||||||||||||||||||
Transfer in(5)(6)(7) |
| | (36 | ) | (36 | ) | (9 | ) | (9 | ) | | | (45 | ) | (45 | ) | ||||||||||||||||||||||||
Transfer out(5)(6)(7) |
| | 9 | 9 | 36 | 36 | | | 45 | 45 | ||||||||||||||||||||||||||||||
Commodity(1) |
$ | 4 | $ | 2 | $ | 243 | $ | 150 | $ | 232 | $ | 39 | $ | (288 | ) | $ | (91 | ) | $ | 191 | $ | 100 | ||||||||||||||||||
Interest rate contract(2) |
| | | | 10 | | | | 10 | | ||||||||||||||||||||||||||||||
Total |
$ | 4 | $ | 2 | $ | 243 | $ | 150 | $ | 242 | $ | 39 | $ | (288 | ) | $ | (91 | ) | $ | 201 | $ | 100 |
(1) | A significant portion of the commodity derivative contracts categorized in Level 3 is valued using either an industry acceptable model or an internally developed model with observable inputs. The models also include some less readily observable inputs resulting in the classification of the entire contract as Level 3. See Note O to the financial statements in Item 8 of the Form 10-K. |
(2) | See Note O to the financial statements in Item 8 of the Form 10-K. |
(3) | Other assets are comprised of assets such as life insurance contracts within the Deferred Income Plan and Supplemental Retirement Income Plans, held in rabbi trusts. |
(4) | 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. |
(5) | The Companies policy is to recognize transfers into and transfers out of the levels at the end of the reporting period. |
(6) | Transferred from Level 2 to Level 3 because of reassessment of the levels in the fair value hierarchy within which certain inputs fall. |
(7) | Transferred from Level 3 to Level 2 because of availability of observable market data due to decrease in the terms of certain contracts from beyond one year as of December 31, 2009 to less than one year as of December 31, 2010. |
The table listed below provides a reconciliation of the beginning and ending net balances for assets and liabilities measured at fair value for the three and six months ended June 30, 2011 and classified as Level 3 in the fair value hierarchy below.
For the Three Months Ended June 30, 2011 | ||||||||||||||||||||||||||||||||||||
Total Gains/(Losses) Realized and Unrealized |
||||||||||||||||||||||||||||||||||||
(Millions of Dollars) | Beginning Balance as of April 1, 2011 |
Included in Earnings |
Included in Regulatory Assets |
Purchases | Issuances | Sales | Settlements | Transfer In/Out of Level 3 |
Ending Balance as of |
|||||||||||||||||||||||||||
Con Edison |
||||||||||||||||||||||||||||||||||||
Derivatives: |
||||||||||||||||||||||||||||||||||||
Commodity |
$ | (31 | ) | $ | (14 | ) | $ | 14 | $ | 5 | $ | | $ | (2 | ) | $ | 3 | $ | | $ | (25 | ) | ||||||||||||||
Interest rate contract |
(10 | ) | (1 | ) | | | | | 1 | | (10 | ) | ||||||||||||||||||||||||
Other assets(1) |
105 | 1 | | | | | | | 106 | |||||||||||||||||||||||||||
Total |
$ | 64 | $ | (14 | ) | $ | 14 | $ | 5 | $ | | $ | (2 | ) | $ | 4 | $ | | $ | 71 | ||||||||||||||||
CECONY |
||||||||||||||||||||||||||||||||||||
Derivatives: |
||||||||||||||||||||||||||||||||||||
Commodity |
$ | 2 | $ | (1 | ) | $ | 2 | $ | 1 | $ | | $ | | $ | (4 | ) | $ | | $ | | ||||||||||||||||
Other assets(1) |
95 | 1 | | | | | | | 96 | |||||||||||||||||||||||||||
Total |
$ | 97 | $ | | $ | 2 | $ | 1 | $ | | $ | | $ | (4 | ) | $ | | $ | 96 |
(1) | Amounts included in earnings are reported in investment and other income on the consolidated income statement. |
32 |
For the Six Months Ended June 30, 2011 | ||||||||||||||||||||||||||||||||||||
Total Gains/(Losses) Realized and Unrealized |
||||||||||||||||||||||||||||||||||||
(Millions of Dollars) | Beginning Balance as of January 1, 2011 |
Included in Earnings |
Included in Regulatory Assets |
Purchases | Issuances | Sales | Settlements | Transfer In/Out of Level 3 |
Ending Balance as of |
|||||||||||||||||||||||||||
Con Edison |
||||||||||||||||||||||||||||||||||||
Derivatives: |
||||||||||||||||||||||||||||||||||||
Commodity |
$ | (88 | ) | $ | 2 | $ | 45 | $ | 14 | $ | | $ | (4 | ) | $ | 1 | $ | 5 | $ | (25 | ) | |||||||||||||||
Interest rate contract |
(10 | ) | (2 | ) | | | | | 2 | | (10 | ) | ||||||||||||||||||||||||
Other assets(1) |
101 | 3 | 2 | | | | | | 106 | |||||||||||||||||||||||||||
Total |
$ | 3 | $ | 3 | $ | 47 | $ | 14 | $ | | $ | (4 | ) | $ | 3 | $ | 5 | $ | 71 | |||||||||||||||||
CECONY |
||||||||||||||||||||||||||||||||||||
Derivatives: |
||||||||||||||||||||||||||||||||||||
Commodity |
$ | (26 | ) | $ | (3 | ) | $ | 20 | $ | 11 | $ | | $ | | $ | (7 | ) | $ | 5 | $ | | |||||||||||||||
Other assets(1) |
92 | 3 | 1 | | | | | | 96 | |||||||||||||||||||||||||||
Total |
$ | 66 | $ | | $ | 21 | $ | 11 | $ | | $ | | $ | (7 | ) | $ | 5 | $ | 96 |
(1) | Amounts included in earnings are reported in investment and other income on the consolidated income statement. |
The table listed below provides a reconciliation of the beginning and ending net balances for assets and liabilities measured at fair value for the three and six months ended June 30, 2010 and classified as Level 3 in the fair value hierarchy below.
For the Three Months Ended June 30, 2010 | ||||||||||||||||||||||||||||||||||||
Total Gains/(Losses) Realized and Unrealized |
||||||||||||||||||||||||||||||||||||
(Millions of Dollars) | Beginning Balance as of April 1, 2010 |
Included in Earnings |
Included in Regulatory Assets |
Purchases | Issuances | Sales | Settlements | Transfer In/Out of Level 3 |
Ending Balance as of |
|||||||||||||||||||||||||||
Con Edison |
||||||||||||||||||||||||||||||||||||
Derivatives: |
||||||||||||||||||||||||||||||||||||
Commodity |
$ | (168 | ) | $ | 9 | $ | 33 | $ | 3 | $ | | $ | (2 | ) | $ | 6 | $ | 18 | $ | (101 | ) | |||||||||||||||
Interest rate contract |
(11 | ) | (1 | ) | (1 | ) | | | | 1 | | (12 | ) | |||||||||||||||||||||||
Other assets(1) |
93 | | 1 | | | | | | 94 | |||||||||||||||||||||||||||
Total |
$ | (86 | ) | $ | 8 | $ | 33 | $ | 3 | $ | | $ | (2 | ) | $ | 7 | $ | 18 | $ | (19 | ) | |||||||||||||||
CECONY |
||||||||||||||||||||||||||||||||||||
Derivatives: |
||||||||||||||||||||||||||||||||||||
Commodity |
$ | (48 | ) | $ | (2 | ) | $ | 3 | $ | 1 | $ | | $ | | $ | (2 | ) | $ | 18 | $ | (30 | ) | ||||||||||||||
Other assets(1) |
84 | | 1 | | | | | | 85 | |||||||||||||||||||||||||||
Total |
$ | 36 | $ | (2 | ) | $ | 4 | $ | 1 | $ | | $ | | $ | (2 | ) | $ | 18 | $ | 55 |
(1) | Amounts included in earnings are reported in investment and other income on the consolidated income statement. |
33 |
For the Six Months Ended June 30, 2010 | ||||||||||||||||||||||||||||||||||||
Total Gains/(Losses) Realized and Unrealized |
||||||||||||||||||||||||||||||||||||
(Millions of Dollars) | Beginning Balance as of January 1, 2010 |
Included in Earnings |
Included in Regulatory Assets |
Purchases | Issuances | Sales | Settlements | Transfer In/Out of Level 3 |
Ending Balance as of |
|||||||||||||||||||||||||||
Con Edison |
||||||||||||||||||||||||||||||||||||
Derivatives: |
||||||||||||||||||||||||||||||||||||
Commodity |
$ | (59 | ) | $ | (34 | ) | $ | (40 | ) | $ | 3 | $ | | $ | (3 | ) | $ | 14 | $ | 18 | $ | (101 | ) | |||||||||||||
Interest rate contract |
(11 | ) | (2 | ) | (1 | ) | | | | 2 | | (12 | ) | |||||||||||||||||||||||
Other assets(1) |
92 | | 2 | | | | | | 94 | |||||||||||||||||||||||||||
Total |
$ | 22 | $ | (36 | ) | $ | (39 | ) | $ | 3 | $ | | $ | (3 | ) | $ | 16 | $ | 18 | $ | (19 | ) | ||||||||||||||
CECONY |
||||||||||||||||||||||||||||||||||||
Derivatives: |
||||||||||||||||||||||||||||||||||||
Commodity |
$ | (5 | ) | $ | (7 | ) | $ | (30 | ) | $ | 1 | $ | | $ | | $ | (7 | ) | $ | 18 | $ | (30 | ) | |||||||||||||
Other assets(1) |
83 | | 2 | | | | | | 85 | |||||||||||||||||||||||||||
Total |
$ | 78 | $ | (7 | ) | $ | (28 | ) | $ | 1 | $ | | $ | | $ | (7 | ) | $ | 18 | $ | 55 |
(1) | Amounts included in earnings are reported in investment and other income on the consolidated income statement. |
For the Utilities, realized gains and losses on Level 3 commodity derivative assets and liabilities are reported as part of purchased power, gas and fuel costs. The Utilities generally recover these costs in accordance with rate provisions approved by the applicable state public utilities commissions. See Note A to the financial statements in Item 8 of the Form 10-K. Unrealized gains and losses for commodity derivatives are generally deferred on the consolidated balance sheet in accordance with the accounting rules for regulated operations.
For the competitive energy businesses, realized and unrealized gains and losses on Level 3 commodity derivative assets and liabilities are reported in non-utility revenues ($4 million loss and $27 million loss) and purchased power costs ($1 million loss and $49 million gain) on the consolidated income statement for the three months ended June 30, 2011 and 2010, respectively. Realized and unrealized gains and losses on Level 3 commodity derivative assets and liabilities are reported in non-utility revenues ($3 million loss and $33 million gain) and purchased power costs ($21 million gain and $40 million loss) on the consolidated income statement for the six months ended June 30, 2011 and 2010, respectively. The change in fair value relating to Level 3 commodity derivative assets held at June 30, 2011 and 2010 is included in non-utility revenues ($13 million loss and $45 million loss), and purchased power costs ($6 million gain and $64 million gain) on the consolidated income statement for the three months ended June 30, 2011 and 2010, respectively. For the six months ended June 30, 2011 and 2010, the change in fair value relating to Level 3 commodity derivative assets and liabilities included in non-utility revenues ($25 million loss and $1 million gain) and purchased power costs ($36 million gain and $7 million loss) on the consolidated income statement.
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 June 30, 2011, the Companies determined that nonperformance risk would have no material impact on their financial position or results of operations. To assess nonperformance risk, the Companies considered information such as collateral requirements, master netting arrangements, letters of credit and parent company guarantees, and applied a market-based method by using the counterpartys (for an asset) or the Companies (for a liability) credit default swaps rates.
Note K New Financial Accounting Standards
Reference is made to Note T to the financial statements in Item 8 of the Form 10-K.
In May 2011, the Financial Accounting Standards Board (FASB) issued amendments to the guidance for fair value measurement through Accounting Standards Update (ASU) No. 2011-04, Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair
34 |
Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs. The amendments expand Accounting Standards Codification 820s existing disclosure requirements for fair value measurements and makes other amendments. Many of these amendments were made to eliminate unnecessary wording differences between U.S. generally accepted accounting principles and International Financial Reporting Standards. For public entities, the amendments are effective prospectively during interim and annual periods beginning after December 15, 2011. The application of this guidance is not expected to have a material impact on the companies financial position, results of operations and liquidity.
In June 2011, the FASB issued new guidance for presentation of comprehensive income through ASU No. 2011-05, Comprehensive Income (Topic 220): Presentation of Comprehensive Income. The amendments require that the comprehensive income be presented either in a single continuous statement of comprehensive income or in two separate but consecutive statements. In the two-statement approach, the first statement should present total net income and its components followed consecutively by a second statement that should present total other comprehensive income, the components of other comprehensive income, and the total of comprehensive income. The amendments in this update are applicable retrospectively for public entities effective for fiscal years, and interim periods within those years, beginning after December 15, 2011. Early adoption is permitted. The application of this guidance does not have a material impact on the companies financial position, results of operations and liquidity.
35 |
Item 2: Managements Discussion and Analysis of Financial Condition and Results of Operations
This combined managements discussion and analysis of financial condition and results of operations (MD&A) relates to the consolidated financial statements (the Second Quarter Financial Statements) included in this report of two separate registrants: Consolidated Edison, Inc. (Con Edison) and Consolidated Edison Company of New York, Inc. (CECONY) and should be read in conjunction with the financial statements and the notes thereto. As used in this report, the term the Companies refers to Con Edison and CECONY. CECONY is a subsidiary of Con Edison and, as such, information in this MD&A about CECONY applies to Con Edison.
This MD&A should be read in conjunction with the Second Quarter Financial Statements and the notes thereto and the MD&A in Item 7 of the Companies combined Annual Report on Form 10-K for the year ended December 31, 2010 (File Nos. 1-14514 and 1-1217, the Form 10-K) and the MD&A in Part 1, Item 2 of the Companies combined Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2011 (File Nos. 1-14514 and 1-1217, the First Quarter Form 10-Q).
Information in any item of this report referred to in this discussion and analysis is incorporated by reference herein. The use of terms such as see or refer to shall be deemed to incorporate by reference into this discussion and analysis the information to which reference is made.
Con Edison, incorporated in New York State in 1997, is a holding company which owns all of the outstanding common stock of CECONY, Orange and Rockland Utilities, Inc. (O&R) and the competitive energy businesses. As used in this report, the term the Utilities refers to CECONY and O&R.
CECONYs principal business operations are its regulated electric, gas and steam delivery businesses. O&Rs principal business operations are its regulated electric and gas delivery businesses. The competitive energy businesses sell electricity to wholesale and retail customers, provide certain energy-related services, and participate in energy infrastructure projects. Con Edison is evaluating additional opportunities to invest in electric and gas-related businesses.
Con Edisons strategy is to provide reliable energy services, maintain public and employee safety, promote energy efficiency, and develop cost-effective ways of performing its business. Con Edison seeks to be a responsible steward of the environment and enhance its relationships with customers, regulators and members of the communities it serves.
36 |
CECONY
Electric
CECONY provides electric service to approximately 3.3 million customers in all of New York City (except part of Queens) and most of Westchester County, an approximately 660 square mile service area with a population of more than nine million.
Gas
CECONY delivers gas to approximately 1.1 million customers in Manhattan, the Bronx and parts of Queens and Westchester County.
Steam
CECONY operates the largest steam distribution system in the United States by producing and delivering more than 23,000 MMlbs of steam annually to approximately 1,760 customers in parts of Manhattan.
O&R
Electric
O&R and its utility subsidiaries, Rockland Electric Company (RECO) and Pike County Power & Light Company (Pike) (together referred to herein as O&R) provide electric service to approximately 0.3 million customers in southeastern New York and in adjacent areas of northern New Jersey and northeastern Pennsylvania, an approximately 1,350 square mile service area.
Gas
O&R delivers gas to over 0.1 million customers in southeastern New York and adjacent areas of northeastern Pennsylvania.
Competitive Energy Businesses
Con Edison pursues competitive energy opportunities through three wholly-owned subsidiaries: Con Edison Solutions, Con Edison Energy and Con Edison Development. These businesses include the sales and related hedging of electricity to wholesale and retail customers, sales of certain energy-related products and services, and participation in energy infrastructure projects. At June 30, 2011, Con Edisons equity investment in its competitive energy businesses was $367 million and their assets amounted to $852 million.
Certain financial data of Con Edisons businesses is presented below:
Three Months Ended June 30, 2011 | Six Months Ended June 30, 2011 | At June 30, 2011 | ||||||||||||||||||||||||||||||||||||||
(Millions of Dollars, except percentages) | Operating Revenues |
Net Income for Common Stock |
Operating Revenues |
Net Income for Common Stock |
Assets | |||||||||||||||||||||||||||||||||||
CECONY |
$ | 2,416 | 81 | % | $ | 157 | 95 | % | $ | 5,125 | 81 | % | $ | 426 | 89 | % | $ | 32,226 | 89 | % | ||||||||||||||||||||
O&R |
178 | 6 | % | 4 | 2 | % | 419 | 6 | % | 23 | 5 | % | 2,301 | 7 | % | |||||||||||||||||||||||||
Total Utilities |
2,594 | 87 | % | 161 | 97 | % | 5,544 | 87 | % | 449 | 94 | % | 34,527 | 96 | % | |||||||||||||||||||||||||
Con Edison Solutions (a) |
351 | 11 | % | 7 | 4 | % | 695 | 11 | % | 34 | 7 | % | 320 | 1 | % | |||||||||||||||||||||||||
Con Edison Energy (a) |
56 | 2 | % | 1 | 1 | % | 121 | 2 | % | 2 | 1 | % | 83 | | % | |||||||||||||||||||||||||
Con Edison Development |
1 | | % | 1 | 1 | % | 3 | | % | | | % | 474 | 1 | % | |||||||||||||||||||||||||
Other (b) |
(9 | ) | | % | (5 | ) | (3 | )% | (21 | ) | | % | (8 | ) | (2 | )% | 615 | 2 | % | |||||||||||||||||||||
Total Con Edison |
$ | 2,993 | 100 | % | $ | 165 | 100 | % | $ | 6,342 | 100 | % | $ | 477 | 100 | % | $ | 36,019 | 100 | % |
(a) | Net income from the competitive energy businesses for the three and six months ended June 30, 2011 includes $(1) million and $21 million, respectively, of net after-tax mark-to-market (losses)/gains (Con Edison Solutions, $(5) million and $14 million and Con Edison Energy, $4 million and $7 million). |
(b) | Represents inter-company and parent company accounting. See Results of Operations, below. |
Con Edisons net income for common stock for the three months ended June 30, 2011 was $165 million or $0.57 a share ($0.56 on a diluted basis) compared with earnings of $183 million or $0.65 a share ($0.64 on a diluted basis) for the three months ended June 30, 2010. Net income for common stock for the six months ended June 30, 2011 was $477 million or $1.63 a share ($1.62 on a diluted basis) compared with earnings of $409 million or $1.45 a share ($1.44 on a diluted basis) for the six months ended June 30, 2010. See Results of Operations Summary, below. For segment financial information, see Note H to the Second Quarter Financial Statements and Results of Operations, below.
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Results of OperationsSummary
Net income for common stock for the three and six months ended June 30, 2011 and 2010 was as follows:
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
(Millions of Dollars) | 2011 | 2010 | 2011 | 2010 | ||||||||||||
CECONY |
$ | 157 | $ | 135 | $ | 426 | $ | 378 | ||||||||
O&R |
4 | 4 | 23 | 18 | ||||||||||||
Competitive energy businesses (a) |
9 | 48 | 36 | 19 | ||||||||||||
Other (b) |
(5 | ) | (4 | ) | (8 | ) | (6 | ) | ||||||||
Con Edison |
$ | 165 | $ | 183 | $ | 477 | $ | 409 |
(a) | Includes $(1) million and $39 million of net after-tax mark-to-market (losses)/gains for the three months ended June 30, 2011 and 2010, respectively. Includes $21 million and $1 million of net after-tax mark-to-market gains for the six months ended June 30, 2011 and 2010, respectively. |
(b) | Consists of inter-company and parent company accounting. |
The Companies results of operations for the three and six months ended June 30, 2011, as compared with the 2010 period, reflect changes in the Utilities rate plans. These rate plans provide for additional revenues to cover expected increases in certain operations and maintenance expenses, and depreciation and property taxes. The results of operations include the operating results of the competitive energy businesses, including net mark-to-market effects.
Operations and maintenance expenses were higher in the three and six months ended June 30, 2011 compared with the 2010 period reflecting higher costs for pension and other postretirement benefits and employee health insurance, offset in part by savings from cost control efforts in the 2011 period. Depreciation and property taxes were higher in the 2011 period reflecting primarily higher utility plant balances.
The following table presents the estimated effect on earnings per share and net income for common stock for the three and six months ended June 30, 2011 as compared with the 2010 period, resulting from these and other major factors:
Three Months Variation | Six Months Variation | |||||||||||||||
Earnings per Share |
Net Income for Common Stock (Millions of Dollars) |
Earnings per Share |
Net Income for Common Stock (Millions of Dollars) |
|||||||||||||
CECONY |
||||||||||||||||
Rate plans, primarily to recover increases in certain costs |
$ | 0.25 | $ | 69 | $ | 0.43 | $ | 120 | ||||||||
Operations and maintenance expense |
(0.08 | ) | (24 | ) | (0.06 | ) | (17 | ) | ||||||||
Depreciation, property taxes and other tax matters |
(0.09 | ) | (27 | ) | (0.19 | ) | (56 | ) | ||||||||
Interest expense |
| 1 | 0.02 | 5 | ||||||||||||
Other (includes dilutive effect of new stock issuances) |
(0.02 | ) | 3 | (0.08 | ) | (4 | ) | |||||||||
Total CECONY |
0.06 | 22 | 0.12 | 48 | ||||||||||||
O&R |
| | 0.02 | 5 | ||||||||||||
Competitive energy businesses |
||||||||||||||||
Earnings excluding net mark-to-market effects |
| 1 | (0.02 | ) | (4 | ) | ||||||||||
Net mark-to-market effects |
(0.14 | ) | (40 | ) | 0.07 | 20 | ||||||||||
Total competitive energy businesses |
(0.14 | ) | (39 | ) | 0.05 | 16 | ||||||||||
Other, including parent company expenses |
| (1 | ) | (0.01 | ) | (1 | ) | |||||||||
Total |
$ | (0.08 | ) | $ | (18 | ) | $ | 0.18 | $ | 68 |
See Results of Operations below for further discussion and analysis of results of operations.
Risk Factors
The Companies businesses are influenced by many factors that are difficult to predict, and that involve uncertainties that may materially affect actual operating results, cash flows and financial condition. See Risk Factors in Item 1A of the Form 10-K.
38 |
Application of Critical Accounting Policies
The Companies financial statements reflect the application of their accounting policies, which conform to accounting principles generally accepted in the United States of America. The Companies critical accounting policies include industry-specific accounting applicable to regulated public utilities and accounting for pensions and other postretirement benefits, contingencies, long-lived assets, derivative instruments, goodwill and leases. See Application of Critical Accounting Policies in Item 7 of the Form 10-K.
Liquidity and Capital Resources
The Companies liquidity reflects cash flows from operating, investing and financing activities, as shown on their respective consolidated statement of cash flows and as discussed below. See Liquidity and Capital Resources in Item 7 of the Form 10-K. Changes in the Companies cash and temporary cash investments resulting from operating, investing and financing activities for the six months ended June 30, 2011 and 2010 are summarized as follows:
Con Edison | CECONY | |||||||||||||||||||||||
(Millions of Dollars) | 2011 | 2010 | Variance | 2011 | 2010 | Variance | ||||||||||||||||||
Operating activities |
$ | 1,589 | $ | 795 | $ | 794 | $ | 1,425 | $ | 737 | $ | 688 | ||||||||||||
Investing activities |
(1,129 | ) | (1,007 | ) | (122 | ) | (983 | ) | (952 | ) | (31 | ) | ||||||||||||
Financing activities |
(306 | ) | 130 | (436 | ) | (346 | ) | 119 | (465 | ) | ||||||||||||||
Net change |
154 | (82 | ) | 236 | 96 | (96 | ) | 192 | ||||||||||||||||
Balance at beginning of period |
338 | 260 | 78 | 78 | 131 | (53 | ) | |||||||||||||||||
Balance at end of period |
$ | 492 | $ | 178 | $ | 314 | $ | 174 | $ | 35 | $ | 139 |
Cash Flows from Operating Activities
The Utilities cash flows from operating activities reflect principally their energy sales and deliveries and cost of operations. The volume of energy sales and deliveries is dependent primarily on factors external to the Utilities, such as growth of customer demand, weather, market prices for energy, economic conditions and measures that promote energy efficiency. Under the revenue decoupling mechanisms in CECONYs electric and gas rate plans and O&Rs New York electric and gas rate plans, changes in delivery volumes from levels assumed when rates were approved may affect the timing of cash flows but not net income. See Note B to the financial statements in Item 8 of the Form 10-K. The prices at which the Utilities provide energy to their customers are determined in accordance with their rate agreements. In general, changes in the Utilities cost of purchased power, fuel and gas may affect the timing of cash flows but not net income because the costs are recovered in accordance with rate agreements. See Recoverable Energy Costs in Note A to the financial statements in Item 8 of the Form 10-K.
Net income is the result of cash and non-cash (or accrual) transactions. Only cash transactions affect the Companies cash flows from operating activities. Principal non-cash charges include depreciation, deferred income tax expense and net derivative losses. Non-cash charges or credits may also be accrued under the revenue decoupling and cost reconciliation mechanisms in the Utilities electric and gas rate plans in New York. See Rate Agreements in Note B to the financial statements in Item 8 of the Form 10-K.
Net cash flows from operating activities for the six months ended June 30, 2011 for Con Edison and CECONY were $794 million and $688 million higher, respectively, than in the 2010 period. The increases in net cash flows reflect primarily recoveries received in 2011 for costs incurred relating to the World Trade Center attack ($149 million), lower estimated income tax payments and refunds received in 2011 ($312 million for Con Edison and $265 million for CECONY), and lower cash collateral paid to brokers and counterparties in 2011 generally reflecting smaller decreases in hedged volume and in commodity prices for derivative transactions ($109 million for Con Edison and $73 million for CECONY), offset in part by increased pension contributions in 2011 ($198 million for Con Edison and CECONY).
39 |
The change in net cash flows also reflects the timing of payments for and recovery of energy costs. This timing is reflected within changes to accounts receivable customers, recoverable energy costs and accounts payable balances.
Cash Flows Used in Investing Activities
Net cash flows used in investing activities for Con Edison and CECONY were $122 million and $31 million higher, respectively, for the six months ended June 30, 2011 compared with the 2010 period. The increase for Con Edison reflects primarily a loan receivable for the Pilesgrove solar project and higher construction expenditures related to other solar projects. See Note Q to the financial statements in Item 8 of the Form 10-K.
Cash Flows from Financing Activities
Net cash flows from financing activities for Con Edison and CECONY decreased $436 million and $465 million, respectively, in the six months ended June 30, 2011 compared with the 2010 period, primarily due to higher net cash flows from operating activities in the 2011 period.
Cash flows from financing activities for the six months ended June 30, 2011 and 2010 also reflect the issuance of Con Edison common shares through its dividend reinvestment and employee stock plans (2011: 1.2 million shares for $49 million, 2010: 1.2 million shares for $25 million). In addition, as a result of the stock plan issuances, cash used to pay common stock dividends was reduced by $5 million and $24 million in the 2011 and 2010 periods, respectively. The number of shares issued through, and cash flows relating to, the plans in 2011, as compared with 2010, reflect the purchase in 2011 of shares in open-market transactions in connection with the plans.
The Companies had no issuances of long-term debt during the six months ended June 30, 2011. Net cash flows from financing activities during the six months ended June 30, 2010 also reflect the following CECONY transactions:
| Issued $350 million 4.45 percent 10-year debentures and $350 million 5.70 percent 30-year debentures; and |
| Redeemed at maturity $325 million 8.125 percent 10-year debentures. |
Con Edisons net cash flows from financing activities for the six months ended June 30, 2010 also reflect the following O&R transactions:
| Redeemed in advance of maturity $45 million 7.00 percent 30-year debentures that were due in 2029; and |
| Redeemed at maturity $55 million 7.50 percent 10-year debentures. |
Cash flows from financing activities of the Companies also reflect commercial paper issuance (included on the consolidated balance sheets as Notes payable). The commercial paper amounts outstanding at June 30, 2011 and December 31, 2010 and the average daily balances for 2011 and 2010 for Con Edison and CECONY were as follows:
2011 | 2010 | |||||||||||||||
(Millions of Dollars, except Weighted Average Yield) |
Outstanding at June 30 |
Daily average |
Outstanding at December 31 |
Daily average |
||||||||||||
Con Edison |
$ | | $ | 110 | $ | | $ | 370 | ||||||||
CECONY |
$ | | $ | 110 | $ | | $ | 352 | ||||||||
Weighted average yield |
| % | 0.3 | % | | % | 0.4 | % |
Common stock issuances and external borrowings are sources of liquidity that could be affected by changes in credit ratings, financial performance and capital market conditions.
40 |
Other Changes in Assets and Liabilities
The following table shows changes in certain assets and liabilities at June 30, 2011, compared with December 31, 2010.
Con Edison | CECONY | |||||||
(Millions of Dollars) | 2011 vs. 2010 Variance |
2011 vs. 2010 Variance |
||||||
Assets |
||||||||
Regulatory asset Unrecognized pension and other postretirement costs |
$ | (450 | ) | $ | (424 | ) | ||
Prepayments |
(194 | ) | (9 | ) | ||||
Accrued unbilled revenue |
(118 | ) | (85 | ) | ||||
Accounts receivable from affiliated companies |
| (213 | ) | |||||
Liabilities |
||||||||
Pension and retiree benefits |
(621 | ) | (617 | ) | ||||
Regulatory liability Net unbilled revenue deferrals current |
(19 | ) | (19 | ) | ||||
Deferred income taxes and investment tax credits |
251 | 271 |
Regulatory Asset for Unrecognized Pension and Other Postretirement Costs and Noncurrent Liability for Pension and Retiree Benefits
The decreases in the regulatory asset for unrecognized pension and other postretirement benefit costs and the noncurrent liability for pension and retiree benefits reflect the final actuarial valuation of the underfunding of the pension and other retiree benefit plans as measured at December 31, 2010, in accordance with the accounting rules for pensions. The decrease in the regulatory asset also reflects the years amortization of accounting costs. The decrease in the noncurrent liability for pension and retiree benefits also reflects the contributions to the pension plan made by CECONY in 2011. See Notes D and E to the Second Quarter Financial Statements.
Prepayments, Accounts Receivable from Affiliated Companies, Deferred Income Taxes and Investment Tax Credits
The decrease in prepayments for Con Edison and accounts receivable from affiliated companies for CECONY reflects primarily a federal tax refund received in the 2011 period. The increase in the liability for deferred income taxes and investment tax credits reflects the timing of the deduction of expenditures for utility plant which resulted in amounts being collected from customers to pay income taxes in advance of when the income tax payments will be required. See Cash Flows from Operating Activities, above, and Note L to the financial statements in Item 8 of the Form 10-K.
Accrued Unbilled Revenues and Regulatory Liability for Net Unbilled Revenues
The decrease in accrued unbilled revenues and the regulatory liability for net unbilled revenues reflects primarily the milder weather in June 2011 compared with December 2010.
Capital Requirements and Resources
At June 30, 2011, there was no material change in the Companies capital requirements and resources compared to those disclosed under Capital Requirements and Resources Capital Resources in Item 1 of the Form 10-K, other than as described below.
41 |
For each of the Companies, the ratio of earnings to fixed charges (Securities and Exchange Commission basis) for the six months ended June 30, 2011, the twelve months ended December 31, 2010 and the six months ended June 30, 2010 was:
Earnings to Fixed Charges (Times) | ||||||||||||
For the Six Months Ended June 30, 2011 |
For the Twelve Months Ended December 31, 2010 |
For the Six Months Ended June 30, 2010 |
||||||||||
Con Edison |
3.2 | 3.3 | 3.0 | |||||||||
CECONY |
3.3 | 3.4 | 3.1 |
For each of the Companies, the common equity ratio at June 30, 2011 and December 31, 2010 was:
Common Equity Ratio (Percent of total capitalization) |
||||||||
June 30, 2011 |
December 31, 2010 |
|||||||
Con Edison |
50.8 | 50.4 | ||||||
CECONY |
50.1 | 49.9 |
Contractual Obligations
At June 30, 2011, there were no material changes in the Companies aggregate obligation to make payments pursuant to contracts compared to those discussed under Capital Requirements and Resources Contractual Obligations in Item 1 of the Form 10-K. In August 2011, CECONY extended an existing power purchase agreement with Entergy Nuclear Power Marketing, LLC. See Note I to the financial statements in Item 8 of the Form 10-K. The contracted output for 2011 and 2012 remains 350 MW and increases to 500 MW for 2013 through 2017.
Electric Power Requirements
At June 30, 2011, there were no material changes in the Companies electric power requirements compared to those disclosed under Electric Operations Electric Supply in Item 1 of the Form 10-K. See Contractual Obligations, above.
Regulatory Matters
For Information about the Utilities rate plans and other regulatory matters affecting the Companies, see Utility Regulation in Item 1 of the Form 10-K and Rate Agreements in Note B to the financial statements in Item 8 of the Form 10-K and Note B to the Second Quarter Financial Statements.
Financial and Commodity Market Risks
The Companies are subject to various risks and uncertainties associated with financial and commodity markets. The most significant market risks include interest rate risk, commodity price risk, credit risk and investment risk. At June 30, 2011, there were no material changes in the Companies financial and commodity market risks compared to those discussed under Financial and Commodity Market Risks in Item 7 of the Form 10-K, other than as described below and in Note I to the Second Quarter Financial Statements.
Commodity Price Risk
Con Edisons commodity price risk relates primarily to the purchase and sale of electricity, gas and related derivative instruments. The Utilities and Con Edisons competitive energy businesses have risk management strategies to mitigate their related exposures. See Note I to the Second Quarter Financial Statements.
Con Edison estimates that, as of June 30, 2011, a 10 percent decline in market prices would result in a decline in fair value of $94 million for the derivative instruments used by the Utilities to hedge purchases of electricity and gas, of which $78 million is for CECONY and $16 million is for O&R. Con Edison expects that any such change in fair value would be largely offset by directionally opposite changes in the cost of the electricity and gas purchased. In accordance with provisions approved by state regulators, the Utilities generally recover from customers the costs they incur for energy purchased for their customers, including gains and losses on certain derivative instruments used to hedge energy purchased and related costs. See Recoverable Energy Costs in Note A to the financial statements in Item 8 of the Form 10-K.
42 |
Con Edisons competitive energy businesses use a value-at-risk (VaR) model to assess the market risk of their electricity and gas commodity fixed-price purchase and sales commitments, physical forward contracts and commodity derivative instruments. VaR represents the potential change in fair value of instruments or the portfolio due to changes in market factors, for a specified time period and confidence level. These businesses estimate VaR across their electricity and natural gas commodity businesses using a delta-normal variance/covariance model with a 95 percent confidence level. Since the VaR calculation involves complex methodologies and estimates and assumptions that are based on past experience, it is not necessarily indicative of future results. VaR for transactions associated with hedges on generating assets and commodity contracts, assuming a one-day holding period, for the six months ended June 30, 2011 and the year ended December 31, 2010 was as follows:
95% Confidence Level, One-Day Holding Period |
June 30, 2011 |
December 31, 2010 |
||||||
(Millions of Dollars) | ||||||||
Average for the period |
$ | 1 | $ | 1 | ||||
High |
1 | 1 | ||||||
Low |
| |
Credit Risk
The Companies are exposed to credit risk related to transactions entered into primarily for the various energy supply and hedging activities by the Utilities and the competitive energy businesses. Credit risk relates to the loss that may result from a counterpartys nonperformance. The Companies use credit policies to manage this risk, including an established credit approval process, monitoring of counterparty limits, netting provisions within agreements and collateral or prepayment arrangements, credit insurance and credit default swaps. The Companies measure credit risk exposure as the replacement cost for open energy commodity and derivative positions plus amounts owed from counterparties for settled transactions. The replacement cost of open positions represents unrealized gains, net of any unrealized losses where the Companies have a legally enforceable right of setoff. See Credit Exposure in Note I to the Second Quarter Financial Statements.
Environmental Matters
For information concerning climate change, environmental sustainability, potential liabilities arising from laws and regulations protecting the environment and other environmental matters, see Environmental Matters in Item 1 of the Form 10-K and Notes F and G to the Second Quarter Financial Statements.
Impact of Inflation
The Companies are affected by the decline in the purchasing power of the dollar caused by inflation. Regulation permits the Utilities to recover through depreciation only the historical cost of their plant assets even though in an inflationary economy the cost to replace the assets upon their retirement will substantially exceed historical costs. The impact is, however, partially offset by the repayment of the Companies long-term debt in dollars of lesser value than the dollars originally borrowed.
Material Contingencies
For information concerning potential liabilities arising from the Companies material contingencies, see Application of Critical Accounting Policies Accounting for Contingencies, in Item 7 of the Form 10-K and Notes B, F and G to the Second Quarter Financial Statements.
Results of Operations
See Results of Operations Summary, above.
Results of operations reflect, among other things, the Companies accounting policies (see Application of Critical Accounting Policies, in Item 7 of the Form 10-K) and rate plans that limit the rates the Utilities can charge their customers (see Utility Regulation in Item 1 of the Form 10-K). Under the revenue decoupling mechanisms currently applicable to CECONYs electric and gas businesses and O&Rs electric and gas businesses in New York, the Utilities delivery revenues generally will not be affected by changes in delivery volumes from levels assumed when rates were approved. Revenues for CECONYs steam business and O&Rs businesses in New Jersey and Pennsylvania are affected by changes in delivery volumes resulting from weather, economic conditions and other factors. See Note B to the Second Quarter Financial Statements.
43 |
In general, the Utilities recover on a current basis the fuel, gas purchased for resale and purchased power costs they incur in supplying energy to their full-service customers (see Recoverable Energy Costs in Note A and Regulatory Matters in Note B to the financial statements in Item 8 of the Form 10-K). Accordingly, such costs do not generally affect the Companies results of operations. Management uses the term net revenues (operating revenues less such costs) to identify changes in operating revenues that may affect the Companies results of operations. Management believes that, although net revenues may not be a measure determined in accordance with accounting principles generally accepted in the United States of America, the measure facilitates the analysis by management and investors of the Companies results of operations.
Con Edisons principal business segments are CECONYs regulated electric, gas and steam utility activities, O&Rs regulated electric and gas utility activities and Con Edisons competitive energy businesses. CECONYs principal business segments are its regulated electric, gas and steam utility activities. A discussion of the results of operations by principal business segment for the three and six months ended June 30, 2011 and 2010 follows. For additional business segment financial information, see Note H to the Second Quarter Financial Statements.
Three Months Ended June 30, 2011 Compared with Three Months Ended June 30, 2010
The Companies results of operations in 2011 compared with 2010 were:
CECONY | O&R | Competitive Energy |
Con Edison (b) | |||||||||||||||||||||||||||||
(Millions of Dollars) | Increases (Decreases) Amount |
Increases (Decreases) Percent |
Increases (Decreases) Amount |
Increases (Decreases) Percent |
Increases (Decreases) Amount |
Increases (Decreases) Percent |
Increases (Decreases) Amount |
Increases (Decreases) Percent |
||||||||||||||||||||||||
Operating revenues |
$ | (16 | ) | (0.7 | )% | $ | (10 | ) | (5.3 | )% | $ | 2 | 0.5 | % | $ | (24 | ) | (0.8 | )% | |||||||||||||
Purchased power |
(166 | ) | (21.1 | ) | (16 | ) | (22.2 | ) | 62 | 22.1 | (120 | ) | (10.5 | ) | ||||||||||||||||||
Fuel |
(19 | ) | (21.8 | ) | N/A | N/A | | | (19 | ) | (21.8 | ) | ||||||||||||||||||||
Gas purchased for resale |
41 | 80.4 | (2 | ) | (13.3 | ) | 5 | Large | 44 | 65.7 | ||||||||||||||||||||||
Operating revenues less purchased power, fuel and gas purchased for resale (net revenues) |
128 | 8.5 | 8 | 7.9 | (65 | ) | (56.5 | ) | 71 | 4.1 | ||||||||||||||||||||||
Other operations and maintenance |
43 | 7.3 | 6 | 9.4 | 5 | 19.2 | 54 | 8.0 | ||||||||||||||||||||||||
Depreciation and amortization |
9 | 4.6 | 1 | 9.1 | (2 | ) | (50.0 | ) | 8 | 3.8 | ||||||||||||||||||||||
Taxes, other than income taxes |
40 | 10.3 | | | | | 40 | 9.9 | ||||||||||||||||||||||||
Operating income |
36 | 10.8 | 1 | 7.1 | (68 | ) | (84.0 | ) | (31 | ) | (7.2 | ) | ||||||||||||||||||||
Other income less deductions |
(12 | ) | Large | 1 | Large | 4 | Large | (7 | ) | (58.3 | ) | |||||||||||||||||||||
Net interest expense |
(1 | ) | (0.7 | ) | 2 | 25.0 | 2 | 40.0 | 3 | 2.0 | ||||||||||||||||||||||
Income before income tax expense |
25 | 11.9 | | | (66 | ) | (86.8 | ) | (41 | ) | (14.0 | ) | ||||||||||||||||||||
Income tax expense |
3 | 4.2 | | | (26 | ) | (81.3 | ) | (23 | ) | (21.7 | ) | ||||||||||||||||||||
Net income for common stock |
$ | 22 | 16.3 | % | $ | | | % | $ | (40 | ) | (90.9 | )% | $ | (18 | ) | (9.8 | )% |
(a) | Includes inter-company and parent company accounting. |
(b) | Represents the consolidated financial results of Con Edison and its businesses. |
CECONY
Three Months Ended June 30, 2011 |
Three Months Ended June 30, 2010 |
|||||||||||||||||||||||||||||||||||
(Millions of Dollars) | Electric | Gas | Steam | 2011 Total |
Electric | Gas | Steam | 2010 Total |
2011-2010 Variation |
|||||||||||||||||||||||||||
Operating revenues |
$ | 2,013 | $ | 296 | $ | 107 | $ | 2,416 | $ | 2,104 | $ | 239 | $ | 89 | $ | 2,432 | $ | (16 | ) | |||||||||||||||||
Purchased power |
609 | | 12 | 621 | 777 | | 10 | 787 | (166 | ) | ||||||||||||||||||||||||||
Fuel |
40 | | 28 | 68 | 58 | | 29 | 87 | (19 | ) | ||||||||||||||||||||||||||
Gas purchased for resale |
| 92 | | 92 | | 51 | | 51 | 41 | |||||||||||||||||||||||||||
Net revenues |
1,364 | 204 | 67 | 1,635 | 1,269 | 188 | 50 | 1,507 | 128 | |||||||||||||||||||||||||||
Operations and maintenance |
504 | 90 | 37 | 631 | 469 | 74 | 45 | 588 | 43 | |||||||||||||||||||||||||||
Depreciation and amortization |
162 | 27 | 16 | 205 | 156 | 25 | 15 | 196 | 9 | |||||||||||||||||||||||||||
Taxes, other than income taxes |
348 | 56 | 25 | 429 | 325 | 45 | 19 | 389 | 40 | |||||||||||||||||||||||||||
Operating income |
$ | 350 | $ | 31 | $ | (11 | ) | $ | 370 | $ | 319 | $ | 44 | $ | (29 | ) | $ | 334 | $ | 36 |
44 |
Electric
CECONYs results of electric operations for the three months ended June 30, 2011 compared with the 2010 period is as follows:
Three Months Ended | ||||||||||||
(Millions of Dollars) | June 30, 2011 |
June 30, 2010 |
Variation | |||||||||
Operating revenues |
$ | 2,013 | $ | 2,104 | $ | (91 | ) | |||||
Purchased power |
609 | 777 | (168 | ) | ||||||||
Fuel |
40 | 58 | (18 | ) | ||||||||
Net revenues |
1,364 | 1,269 | 95 | |||||||||
Operations and maintenance |
504 | 469 | 35 | |||||||||
Depreciation and amortization |
162 | 156 | 6 | |||||||||
Taxes, other than income taxes |
348 | 325 | 23 | |||||||||
Electric operating income |
$ | 350 | $ | 319 | $ | 31 |
CECONYs electric sales and deliveries, excluding off-system sales, for the three months ended June 30, 2011 compared with the 2010 period were:
Millions of kWhs Delivered | Revenues in Millions | |||||||||||||||||||||||||||||||
Three Months Ended | Three Months Ended | |||||||||||||||||||||||||||||||
Description | June 30, 2011 |
June 30, 2010 |
Variation | Percent Variation |
June 30, 2011 |
June 30, 2010 |
Variation | Percent Variation |
||||||||||||||||||||||||
Residential/Religious (a) |
2,462 | 2,492 | (30 | ) | (1.2 | )% | $ | 652 | $ | 681 | $ | (29 | ) | (4.3 | )% | |||||||||||||||||
Commercial/Industrial |
2,614 | 2,816 | (202 | ) | (7.2 | ) | 556 | 642 | (86 | ) | (13.4 | ) | ||||||||||||||||||||
Retail access customers |
5,630 | 5,326 | 304 | 5.7 | 554 | 500 | 54 | 10.8 | ||||||||||||||||||||||||
NYPA, Municipal Agency and other sales |
2,530 | 2,654 | (124 | ) | (4.7 | ) | 140 | 124 | 16 | 12.9 | ||||||||||||||||||||||
Other operating revenues |
| | | | 111 | 157 | (46 | ) | (29.3 | ) | ||||||||||||||||||||||
Total |
13,236 | 13,288 | (52 | ) | (0.4 | )% | $ | 2,013 | $ | 2,104 | $ | (91 | ) | (4.3 | )% |
(a) | Residential/Religious generally includes single-family dwellings, individual apartments in multi-family dwellings, religious organizations and certain other not-for-profit organizations. |
CECONYs electric operating revenues decreased $91 million in the three months ended June 30, 2011 compared with the 2010 period due primarily to lower purchased power ($168 million) and fuel costs ($18 million), offset in part by higher revenues from the electric rate plan ($93 million, which includes $9 million accrued revenues pursuant to the rate plans revenue decoupling mechanism). CECONYs revenues from electric sales are subject to a revenue decoupling mechanism, as a result of which delivery revenues generally are not affected by changes in delivery volumes from levels assumed when rates were approved. Other electric operating revenues generally reflect changes in regulatory assets and liabilities in accordance with the revenue decoupling mechanism and other provisions of the companys rate plans. See Rate Agreements CECONY Electric in Note B to the financial statements in Item 8 of the Form 10-K.
Electric delivery volumes in CECONYs service area decreased 0.4 percent in the three months ended June 30, 2011 compared with the 2010 period. After adjusting for variations, principally weather and billing days, electric delivery volumes in CECONYs service area decreased 1.4 percent in the three months ended June 30, 2011 compared with the 2010 period.
CECONYs electric purchased power costs decreased $168 million in the three months ended June 30, 2011 compared with the 2010 period due to a decrease in unit costs ($124 million) and purchased volumes ($44 million). Electric fuel costs decreased $18 million in the three months ended June 30, 2011 compared with the 2010 period due to lower sendout volumes from the companys electric generating facilities ($10 million) and unit costs ($8 million).
45 |
CECONYs electric operating income increased $31 million in the three months ended June 30, 2011 compared with the 2010 period. The increase reflects primarily higher net revenues ($95 million, due primarily to the electric rate plan, including the collection of a surcharge for a New York State assessment). The increase in electric net revenues was offset by higher operations and maintenance costs ($35 million, due primarily to higher pension expense ($35 million) and employees health insurance costs ($16 million), offset by a decrease in the collection of surcharges from customers ($9 million) and cost control efforts), taxes, other than income taxes ($23 million, principally property taxes) and depreciation and amortization ($6 million). See Regulatory Assets and
Liabilities in Note B to the Second Quarter Financial Statements.
Gas
CECONYs results of gas operations for the three months ended June 30, 2011 compared with the 2010 period is as follows:
Three Months Ended |
||||||||||||
(Millions of Dollars) | June 30, 2011 |
June 30, 2010 |
Variation | |||||||||
Operating revenues |
$ | 296 | $ | 239 | $ | 57 | ||||||
Gas purchased for resale |
92 | 51 | 41 | |||||||||
Net revenues |
204 | 188 | 16 | |||||||||
Operations and maintenance |
90 | 74 | 16 | |||||||||
Depreciation and amortization |
27 | 25 | 2 | |||||||||
Taxes, other than income taxes |
56 | 45 | 11 | |||||||||
Gas operating income |
$ | 31 | $ | 44 | $ | (13 | ) |
CECONYs gas sales and deliveries, excluding off-system sales, for the three months ended June 30, 2011 compared with the 2010 period were:
Thousands of dths Delivered | Revenues in Millions | |||||||||||||||||||||||||||||||
Three Months Ended | Three Months Ended | |||||||||||||||||||||||||||||||
Description | June 30, 2011 |
June 30, 2010 |
Variation | Percent Variation |
June 30, 2011 |
June 30, 2010 |
Variation | Percent Variation |
||||||||||||||||||||||||
Residential |
7,373 | 5,877 | 1,496 | 25.5 | % | $ | 145 | $ | 130 | $ | 15 | 11.5 | % | |||||||||||||||||||
General |
5,175 | 4,677 | 498 | 10.6 | 72 | 72 | | | ||||||||||||||||||||||||
Firm transportation |
11,273 | 9,352 | 1,921 | 20.5 | 74 | 65 | 9 | 13.8 | ||||||||||||||||||||||||
Total firm sales and transportation |
23,821 | 19,906 | 3,915 | 19.7 | 291 | 267 | 24 | 9.0 | ||||||||||||||||||||||||
Interruptible sales (a) |
2,697 | 1,655 | 1,042 | 63.0 | 22 | 5 | 17 | Large | ||||||||||||||||||||||||
NYPA |
5,315 | 6,080 | (765 | ) | (12.6 | ) | 1 | 1 | | | ||||||||||||||||||||||
Generation plants |
21,847 | 19,950 | 1,897 | 9.5 | 9 | 9 | | | ||||||||||||||||||||||||
Other |
5,132 | 3,923 | 1,209 | 30.8 | 11 | 8 | 3 | 37.5 | ||||||||||||||||||||||||
Other operating revenues |
| | | | (38 | ) | (51 | ) | 13 | 25.5 | ||||||||||||||||||||||
Total |
58,812 | 51,514 | 7,298 | 14.2 | % | $ | 296 | $ | 239 | $ | 57 | 23.8 | % |
(a) | Includes 1,126 mdths and 462 mdths for the three months ended June 30, 2011 and 2010, respectively, which are also reflected in firm transportation and other. |
CECONYs gas operating revenues increased $57 million in the three months ended June 30, 2011 compared with the 2010 period due primarily to an increase in gas purchased for resale costs ($41 million). CECONYs revenues from gas sales are subject to a weather normalization clause and a revenue decoupling mechanism as a result of which delivery revenues are generally not affected by changes in delivery volumes from levels assumed when rates were approved. Other gas operating revenues generally reflect changes in regulatory assets and liabilities in accordance with the companys rate plans. See Rate Agreements CECONY Gas in Note B to the financial statements in Item 8 of the Form 10-K.
CECONYs sales and transportation volumes for firm customers increased 19.7 percent in the three months ended June 30, 2011 compared with the 2010 period. After adjusting for variations, principally weather and billing days, firm gas sales and transportation volumes in the companys service area increased 3.0 percent in the three months ended June 30, 2011 reflecting an increase in the number of customers.
46 |
CECONYs purchased gas cost increased $41 million in the three months ended June 30, 2011 compared with the 2010 period due to higher unit costs ($25 million) and sendout volumes ($16 million).
CECONYs gas operating income decreased $13 million in the three months ended June 30, 2011 compared with the 2010 period. The decrease reflects primarily higher operations and maintenance costs ($16 million, due primarily to an increase in pension expense ($6 million) and the surcharge for a New York State assessment ($5 million)), taxes, other than income taxes ($11 million, principally property taxes) and depreciation and amortization ($2 million), offset by higher net revenues ($16 million).
Steam
CECONYs results of steam operations for the three months ended June 30, 2011 compared with the 2010 period is as follows:
Three Months Ended | ||||||||||||
(Millions of Dollars) | June 30, 2011 |
June 30, 2010 |
Variation | |||||||||
Operating revenues |
$ | 107 | $ | 89 | $ | 18 | ||||||
Purchased power |
12 | 10 | 2 | |||||||||
Fuel |
28 | 29 | (1 | ) | ||||||||
Net revenues |
67 | 50 | 17 | |||||||||
Operations and maintenance |
37 | 45 | (8 | ) | ||||||||
Depreciation and amortization |
16 | 15 | 1 | |||||||||
Taxes, other than income taxes |
25 | 19 | 6 | |||||||||
Steam operating income |
$ | (11 | ) | $ | (29 | ) | $ | 18 |
CECONYs steam sales and deliveries for the three months ended June 30, 2011 compared with the 2010 period were:
Millions of Pounds Delivered | Revenues in Millions | |||||||||||||||||||||||||||||||
Three Months Ended | Three Months Ended | |||||||||||||||||||||||||||||||
Description | June 30, 2011 |
June 30, 2010 |
Variation | Percent Variation |
June 30, 2011 |
June 30, 2010 |
Variation | Percent Variation |
||||||||||||||||||||||||
General |
73 | 48 | 25 | 52.1 | % | $ | 4 | $ | 3 | $ | 1 | 33.3 | % | |||||||||||||||||||
Apartment house |
1,124 | 957 | 167 | 17.5 | 30 | 23 | 7 | 30.4 | ||||||||||||||||||||||||
Annual power |
3,059 | 2,682 | 377 | 14.1 | 81 | 61 | 20 | 32.8 | ||||||||||||||||||||||||
Other operating revenues |
| | | | (8 | ) | 2 | (10 | ) | Large | ||||||||||||||||||||||
Total |
4,256 | 3,687 | 569 | 15.4 | % | $ | 107 | $ | 89 | $ | 18 | 20.2 | % |
CECONYs steam operating revenues increased $18 million in the three months ended June 30, 2011 compared with the 2010 period due primarily to the net change in rates under the steam rate plans ($6 million), the colder weather in 2011 compared with the 2010 period ($10 million) and higher purchased power costs ($2 million). Other steam operating revenues generally reflect changes in regulatory assets and liabilities in accordance with the companys rate plans. See Rate Agreements CECONY Steam in Note B to the financial statements in Item 8 of the Form 10-K.
Steam sales and delivery volumes increased 15.4 percent in the three months ended June 30, 2011 compared with the 2010 period. After adjusting for variations, principally weather and billing days, steam sales and deliveries decreased 0.3 percent in the three months ended June 30, 2011.
CECONYs steam purchased power costs increased $2 million in the three months ended June 30, 2011 compared with the 2010 period due to an increase in unit costs ($8 million), offset by a decrease in purchased volumes ($6 million). Steam purchased fuel costs decreased $1 million in the three months ended June 30, 2011 compared with the 2010 period due to lower sendout volumes ($1 million).
Steam operating income increased $18 million in the three months ended June 30, 2011 compared with the 2010 period. The increase reflects primarily higher net revenues ($17 million) and lower operations and maintenance costs ($8 million, due primarily to lower pension expense ($6 million)), offset by higher taxes, other than income taxes ($6 million, principally property taxes) and depreciation and amortization ($1 million).
47 |
Other Income (Deductions)
Other income (deductions) decreased $12 million in the three months ended June 30, 2011 compared with the 2010 period primarily reflecting lower financing charges on changes in World Trade Center regulatory assets and liabilities. See Cash Flows from Operating Activities, above and Regulatory Assets and Liabilities in Note B to the Second Quarter Financial Statements.
O&R
Three Months Ended June 30, 2011 |
Three Months Ended June 30, 2010 |
|||||||||||||||||||||||||||
(Millions of Dollars) | Electric | Gas | 2011 Total |
Electric | Gas | 2010 Total |
2011-2010 Variation |
|||||||||||||||||||||
Operating revenues |
$ | 141 | $ | 37 | $ | 178 | $ | 153 | $ | 35 | $ | 188 | $ | (10 | ) | |||||||||||||
Purchased power |
56 | | 56 | 72 | | 72 | (16 | ) | ||||||||||||||||||||
Gas purchased for resale |
| 13 | 13 | | 15 | 15 | (2 | ) | ||||||||||||||||||||
Net revenues |
85 | 24 | 109 | 81 | 20 | 101 | 8 | |||||||||||||||||||||
Operations and maintenance |
54 | 16 | 70 | 49 | 15 | 64 | 6 | |||||||||||||||||||||
Depreciation and amortization |
8 | 4 | 12 | 8 | 3 | 11 | 1 | |||||||||||||||||||||
Taxes, other than income taxes |
9 | 3 | 12 | 9 | 3 | 12 | | |||||||||||||||||||||
Operating income |
$ | 14 | $ | 1 | $ | 15 | $ | 15 | $ | (1 | ) | $ | 14 | $ | 1 |
Electric
O&Rs results of electric operations for the three months ended June 30, 2011 compared with the 2010 period is as follows:
Three Months Ended | ||||||||||||
(Millions of Dollars) | June 30, 2011 |
June 30, 2010 |
Variation | |||||||||
Operating revenues |
$ | 141 | $ | 153 | $ | (12 | ) | |||||
Purchased power |
56 | 72 | (16 | ) | ||||||||
Net revenues |
85 | 81 | 4 | |||||||||
Operations and maintenance |
54 | 49 | 5 | |||||||||
Depreciation and amortization |
8 | 8 | | |||||||||
Taxes, other than income taxes |
9 | 9 | | |||||||||
Electric operating income |
$ | 14 | $ | 15 | $ | (1 | ) |
O&Rs electric sales and deliveries, excluding off-system sales, for the three months ended June 30, 2011 compared with the 2010 period were:
Millions of kWhs Delivered | Revenues in Millions | |||||||||||||||||||||||||||||||
Three Months Ended | Three Months Ended | |||||||||||||||||||||||||||||||
Description | June 30, 2011 |
June 30, 2010 |
Variation | Percent Variation |
June 30, 2011 |
June 30, 2010 |
Variation | Percent Variation |
||||||||||||||||||||||||
Residential/Religious (a) |
381 | 419 | (38 | ) | (9.1 | )% | $ | 66 | $ | 73 | $ | (7 | ) | (9.6 | )% | |||||||||||||||||
Commercial/Industrial |
281 | 366 | (85 | ) | (23.2 | ) | 38 | 49 | (11 | ) | (22.4 | ) | ||||||||||||||||||||
Retail access customers |
664 | 546 | 118 | 21.6 | 36 | 29 | 7 | 24.1 | ||||||||||||||||||||||||
Public authorities |
26 | 27 | (1 | ) | (3.7 | ) | 2 | 3 | (1 | ) | (33.3 | ) | ||||||||||||||||||||
Other operating revenues |
| | | | (1 | ) | (1 | ) | | | ||||||||||||||||||||||
Total |
1,352 | 1,358 | (6 | ) | (0.4 | )% | $ | 141 | $ | 153 | $ | (12 | ) | (7.8 | )% |
(a) | Residential/Religious generally includes single-family dwellings, individual apartments in multi-family dwellings, religious organizations and certain other not-for-profit organizations. |
O&Rs electric operating revenues decreased $12 million in the three months ended June 30, 2011 compared with the 2010 period due primarily to lower costs for purchased power ($16 million). O&Rs New York electric delivery revenues are subject to a revenue decoupling mechanism, as a result of which, delivery
48 |
revenues are generally not affected by changes in delivery volumes from levels assumed when rates were approved. O&Rs electric sales in New Jersey and Pennsylvania are not subject to a revenue decoupling mechanism, and as a result, changes in such volumes do impact revenues. Other electric operating revenues generally reflect changes in regulatory assets and liabilities in accordance with the companys electric rate plan. See Rate Agreements O&R Electric in Note B to the Second Quarter Financial Statements and Note B to the financial statements in Item 8 of the Form 10-K.
Electric delivery volumes in O&Rs service area decreased 0.4 percent in the three months ended June 30, 2011 compared with the 2010 period. After adjusting for weather variations, electric delivery volumes in O&Rs service area increased 1.4 percent in the three months ended June 30, 2011 compared with the 2010 period reflecting higher average normalized use per customer.
Electric operating income decreased $1 million in the three months ended June 30, 2011 compared with the 2010 period. The decrease reflects primarily higher operations and maintenance costs ($5 million, due primarily to higher pension expense ($3 million)), offset by higher net revenues ($4 million).
Gas
O&Rs results of gas operations for the three months ended June 30, 2011 compared with the 2010 period is as follows:
Three Months Ended | ||||||||||||
(Millions of Dollars) | June 30, 2011 |
June 30, 2010 |
Variation | |||||||||
Operating revenues |
$ | 37 | $ | 35 | $ | 2 | ||||||
Gas purchased for resale |
13 | 15 | (2 | ) | ||||||||
Net revenues |
24 | 20 | 4 | |||||||||
Operations and maintenance |
16 | 15 | 1 | |||||||||
Depreciation and amortization |
4 | 3 | 1 | |||||||||
Taxes, other than income taxes |
3 | 3 | | |||||||||
Gas operating income |
$ | 1 | $ | (1 | ) | $ | 2 |
O&Rs gas sales and deliveries, excluding off-system sales, for the three months ended June 30, 2011 compared with the 2010 period were:
Thousands of dths Delivered | Revenues in Millions | |||||||||||||||||||||||||||||||
Three Months Ended | Three Months Ended | |||||||||||||||||||||||||||||||
Description | June 30, 2011 |
June 30, 2010 |
Variation | Percent Variation |
June 30, 2011 |
June 30, 2010 |
Variation | Percent Variation |
||||||||||||||||||||||||
Residential |
965 | 835 | 130 | 15.6 | % | $ | 15 | $ | 15 | $ | | | % | |||||||||||||||||||
General |
191 | 155 | 36 | 23.2 | 3 | 3 | | | ||||||||||||||||||||||||
Firm transportation |
1,649 | 1,379 | 270 | 19.6 | 13 | 12 | 1 | 8.3 | ||||||||||||||||||||||||
Total firm sales and transportation |
2,805 | 2,369 | 436 | 18.4 | 31 | 30 | 1 | 3.3 | ||||||||||||||||||||||||
Interruptible sales |
991 | 1,057 | (66 | ) | (6.2 | ) | 1 | 1 | | | ||||||||||||||||||||||
Generation plants |
652 | 263 | 389 | Large | | | | | ||||||||||||||||||||||||
Other |
136 | 107 | 29 | 27.1 | | | | | ||||||||||||||||||||||||
Other gas revenues |
| | | | 5 | 4 | 1 | 25.0 | ||||||||||||||||||||||||
Total |
4,584 | 3,796 | 788 | 20.8 | % | $ | 37 | $ | 35 | $ | 2 | 5.7 | % |
O&Rs gas operating revenues increased $2 million in the three months ended June 30, 2011 compared with the 2010 period due primarily to the gas rate plan, offset in part by the decrease in gas purchased for resale ($2 million).
49 |
Sales and transportation volumes for firm customers increased 18.4 percent in the three months ended June 30, 2011 compared with the 2010 period. After adjusting for weather and other variations, total firm sales and transportation volumes increased 1.1 percent in the three months ended June 30, 2011 compared with the 2010 period. O&Rs New York revenues from gas sales are subject to a weather normalization clause and a revenue decoupling mechanism, as a result of which delivery revenues are generally not affected
by changes in delivery volumes from levels assumed when rates were approved.
Gas operating income increased $2 million in the three months ended June 30, 2011 compared with the 2010 period. The increase reflects primarily higher net revenues ($4 million), offset by higher operations and maintenance costs ($1 million) and depreciation and amortization ($1 million).
Competitive Energy Businesses
The competitive energy businesss results of operations for the three months ended June 30, 2011 compared with the 2010 period is as follows:
Three Months Ended | ||||||||||||
(Millions of Dollars) | June 30, 2011 |
June 30, 2010 |
Variation | |||||||||
Operating revenues |
$ | 406 | $ | 406 | $ | | ||||||
Purchased power |
348 | 289 | 59 | |||||||||
Gas purchased for resale |
5 | 1 | 4 | |||||||||
Net revenues |
53 | 116 | (63 | ) | ||||||||
Operations and maintenance |
32 | 27 | 5 | |||||||||
Depreciation and amortization |
2 | 4 | (2 | ) | ||||||||
Taxes, other than income taxes |
5 | 4 | 1 | |||||||||
Operating income |
$ | 14 | $ | 81 | $ | (67 | ) |
The competitive energy businesses operating revenues were the same in the three months ended June 30, 2011 compared with the 2010 period. Electric wholesale revenues decreased $35 million in the three months ended June 30, 2011 compared with the 2010 period due to lower sales volume ($26 million) and unit prices ($9 million). Electric retail revenues decreased $7 million in the three months ended June 30, 2011 compared with the 2010 period due to lower unit prices ($15 million), offset by higher sales volume ($8 million). Gross margins on electric retail revenues increased in the three months ended June 30, 2011 compared with the 2010 period due primarily to higher unit gross margins. Net mark-to-market values decreased $67 million in the three months ended June 30, 2011 as compared with the 2010 period, of which $100 million in losses are reflected in purchased power costs and $33 million in gains are reflected in revenues. Other revenues increased $9 million in the three months ended June 30, 2011 as compared with the 2010 period due primarily to higher sales of energy efficiency services ($3 million).
Purchased power costs increased $59 million in the three months ended June 30, 2011 compared with the 2010 period due primarily to changes in mark-to-market values ($100 million) and lower purchased power costs ($42 million, due to lower unit prices ($27 million) and volumes ($15 million)). Operating income decreased $67 million in the three months ended June 30, 2011 compared with the 2010 period due primarily to net mark-to-market effects ($67 million).
Other
For Con Edison, Other also includes inter-company eliminations relating to operating revenues and operating expenses.
50 |
Six Months Ended June 30, 2011 Compared with Six Months Ended June 30, 2010
The Companies results of operations in 2011 compared with 2010 were:
CECONY | O&R | Competitive Energy |
Con Edison (b) | |||||||||||||||||||||||||||||
(Millions of Dollars) | Increases (Decreases) Amount |
Increases (Decreases) Percent |
Increases (Decreases) Amount |
Increases (Decreases) Percent |
Increases (Decreases) Amount |
Increases (Decreases) Percent |
Increases (Decreases) Amount |
Increases (Decreases) Percent |
||||||||||||||||||||||||
Operating revenues |
$ | (25 | ) | (0.5 | )% | $ | (20 | ) | (4.6 | )% | $ | (91 | ) | (10.2 | )% | $ | (136 | ) | (2.1 | )% | ||||||||||||
Purchased power |
(235 | ) | (17.6 | ) | (35 | ) | (22.2 | ) | (127 | ) | (16.2 | ) | (397 | ) | (17.4 | ) | ||||||||||||||||
Fuel |
7 | 3.0 | N/A | N/A | | | 7 | 3.0 | ||||||||||||||||||||||||
Gas purchased for resale |
10 | 2.9 | (5 | ) | (8.6 | ) | 3 | 42.9 | 8 | 2.0 | ||||||||||||||||||||||
Operating revenues less purchased power, fuel and gas purchased for resale (net revenues) |
193 | 6.0 | 20 | 9.0 | 33 | 34.4 | 246 | 6.9 | ||||||||||||||||||||||||
Other operations and maintenance |
32 | 2.7 | 8 | 6.0 | 10 | 19.6 | 50 | 3.6 | ||||||||||||||||||||||||
Depreciation and amortization |
22 | 5.7 | 2 | 9.1 | (2 | ) | (40.0 | ) | 22 | 5.3 | ||||||||||||||||||||||
Taxes, other than income taxes |
68 | 8.5 | | | 3 | 37.5 | 71 | 8.5 | ||||||||||||||||||||||||
Operating income |
71 | 8.4 | 10 | 23.3 | 22 | 68.8 | 103 | 11.2 | ||||||||||||||||||||||||
Other income less deductions |
(12 | ) | (70.6 | ) | 1 | Large | 5 | Large | (6 | ) | (28.6 | ) | ||||||||||||||||||||
Net interest expense |
(2 | ) | (0.7 | ) | 4 | 25.0 | 3 | 27.3 | 5 | 1.7 | ||||||||||||||||||||||
Income before income tax expense |
61 | 10.3 | 7 | 25.9 | 24 | 96.0 | 92 | 14.3 | ||||||||||||||||||||||||
Income tax expense |
13 | 6.3 | 2 | 22.2 | 9 | 75.0 | 24 | 10.5 | ||||||||||||||||||||||||
Net income for common stock |
$ | 48 | 12.7 | % | $ | 5 | 27.8 | % | $ | 15 | Large | $ | 68 | 16.6 | % |
(a) | Includes inter-company and parent company accounting. |
(b) | Represents the consolidated financial results of Con Edison and its businesses. |
CECONY
Six Months Ended June 30, 2011 |
Six Months Ended June 30, 2010 |
|||||||||||||||||||||||||||||||||||
(Millions of Dollars) | Electric | Gas | Steam | 2011 Total |
Electric | Gas | Steam | 2010 Total |
2011- 2010 Variation |
|||||||||||||||||||||||||||
Operating revenues |
$ | 3,734 | $ | 959 | $ | 432 | $ | 5,125 | $ | 3,832 | $ | 922 | $ | 396 | $ | 5,150 | $ | (25 | ) | |||||||||||||||||
Purchased power |
1,073 | | 31 | 1,104 | 1,307 | | 32 | 1,339 | (235 | ) | ||||||||||||||||||||||||||
Fuel |
116 | | 128 | 244 | 117 | | 120 | 237 | 7 | |||||||||||||||||||||||||||
Gas purchased for resale |
| 355 | | 355 | | 345 | | 345 | 10 | |||||||||||||||||||||||||||
Net revenues |
2,545 | 604 | 273 | 3,422 | 2,408 | 577 | 244 | 3,229 | 193 | |||||||||||||||||||||||||||
Operations and maintenance |
963 | 192 | 72 | 1,227 | 937 | 162 | 96 | 1,195 | 32 | |||||||||||||||||||||||||||
Depreciation and amortization |
324 | 54 | 32 | 410 | 307 | 50 | 31 | 388 | 22 | |||||||||||||||||||||||||||
Taxes, other than income taxes |
692 | 121 | 55 | 868 | 650 | 106 | 44 | 800 | 68 | |||||||||||||||||||||||||||
Operating income |
$ | 566 | $ | 237 | $ | 114 | $ | 917 | $ | 514 | $ | 259 | $ | 73 | $ | 846 | $ | 71 |
51 |
Electric
CECONYs results of electric operations for the six months ended June 30, 2011 compared with the 2010 period is as follows:
Six Months Ended | ||||||||||||
(Millions of Dollars) | June 30, 2011 |
June 30, 2010 |
Variation | |||||||||
Operating revenues |
$ | 3,734 | $ | 3,832 | $ | (98 | ) | |||||
Purchased power |
1,073 | 1,307 | (234 | ) | ||||||||
Fuel |
116 | 117 | (1 | ) | ||||||||
Net revenues |
2,545 | 2,408 | 137 | |||||||||
Operations and maintenance |
963 | 937 | 26 | |||||||||
Depreciation and amortization |
324 | 307 | 17 | |||||||||
Taxes, other than income taxes |
692 | 650 | 42 | |||||||||
Electric operating income |
$ | 566 | $ | 514 | $ | 52 |
CECONYs electric sales and deliveries, excluding off-system sales, for the six months ended June 30, 2011 compared with the 2010 period were:
Millions of kWhs Delivered | Revenues in Millions | |||||||||||||||||||||||||||||||
Six Months Ended | Six Months Ended | |||||||||||||||||||||||||||||||
Description | June 30, 2011 |
June 30, 2010 |
Variation | Percent Variation |
June 30, 2011 |
June 30, 2010 |
Variation | Percent Variation |
||||||||||||||||||||||||
Residential/Religious (a) |
5,126 | 5,163 | (37 | ) | (0.7 | )% | $ | 1,300 | $ | 1,313 | $ | (13 | ) | (1.0 | )% | |||||||||||||||||
Commercial/Industrial |
5,474 | 5,809 | (335 | ) | (5.8 | ) | 1,118 | 1,196 | (78 | ) | (6.5 | ) | ||||||||||||||||||||
Retail access customers |
11,188 | 10,710 | 478 | 4.5 | 1,027 | 968 | 59 | 6.1 | ||||||||||||||||||||||||
NYPA, Municipal Agency and other sales |
5,304 | 5,553 | (249 | ) | (4.5 | ) | 257 | 246 | 11 | 4.5 | ||||||||||||||||||||||
Other operating revenues |
| | | | 32 | 109 | (77 | ) | (70.6 | ) | ||||||||||||||||||||||
Total |
27,092 | 27,235 | (143 | ) | (0.5 | )% | $ | 3,734 | $ | 3,832 | $ | (98 | ) | (2.6 | )% |
(a) | Residential/Religious generally includes single-family dwellings, individual apartments in multi-family dwellings, religious organizations and certain other not-for-profit organizations. |
CECONYs electric operating revenues decreased $98 million in the six months ended June 30, 2011 compared with the 2010 period due primarily to lower purchased power costs ($234 million), offset in part by higher revenues from the electric rate plan ($143 million, which reflects among other things, reductions in revenues pursuant to the rate plans revenue decoupling mechanism ($19 million) and reconciliations of costs for municipal infrastructure support and capital expenditures ($11 million). CECONYs revenues from electric sales are subject to a revenue decoupling mechanism, as a result of which delivery revenues generally are not affected by changes in delivery volumes from levels assumed when rates were approved. Other electric operating revenues generally reflect changes in regulatory assets and liabilities in accordance with the revenue decoupling mechanism and other provisions of the companys rate plans. See Rate Agreements CECONY Electric in Note B to the financial statements in Item 8 of the Form 10-K.
Electric delivery volumes in CECONYs service area decreased 0.5 percent in the six months ended June 30, 2011 compared with the 2010 period. After adjusting for variations, principally weather and billing days, electric delivery volumes in CECONYs service area decreased 1.3 percent in the six months ended June 30, 2011 compared with the 2010 period.
CECONYs electric purchased power costs decreased $234 million in the six months ended June 30, 2011 compared with the 2010 period due to a decrease in unit costs ($167 million) and purchased volumes ($67 million). Electric fuel costs decreased $1 million in the six months ended June 30, 2011 compared with the 2010 period due to lower sendout volumes from the companys electric generating facilities ($2 million), offset by higher unit costs ($1 million).
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CECONYs electric operating income increased $52 million in the six months ended June 30, 2011 compared with the 2010 period. The increase reflects primarily higher net revenues ($137 million, due primarily to the electric rate plan), offset by higher taxes, other than income taxes ($42 million, principally property taxes), operations and maintenance costs ($26 million, due primarily to higher pension expense ($29 million) and employees health insurance costs ($10 million), offset in part by lower costs for injuries and damages ($7 million) and cost control efforts) and depreciation and amortization ($17 million). See Regulatory Assets and Liabilities in Note B to the Second Quarter Financial Statements.
Gas
CECONYs results of gas operations for the six months ended June 30, 2011 compared with the 2010 period is as follows:
Six Months Ended | ||||||||||||
(Millions of Dollars) | June 30, 2011 |
June 30, 2010 |
Variation | |||||||||
Operating revenues |
$ | 959 | $ | 922 | $ | 37 | ||||||
Gas purchased for resale |
355 | 345 | 10 | |||||||||
Net revenues |
604 | 577 | 27 | |||||||||
Operations and maintenance |
192 | 162 | 30 | |||||||||
Depreciation and amortization |
54 | 50 | 4 | |||||||||
Taxes, other than income taxes |
121 | 106 | 15 | |||||||||
Gas operating income |
$ | 237 | $ | 259 | $ | (22 | ) |
CECONYs gas sales and deliveries, excluding off-system sales, for the six months ended June 30, 2011 compared with the 2010 period were:
Thousands of dths Delivered | Revenues in Millions | |||||||||||||||||||||||||||||||
Six Months Ended | Six Months Ended | |||||||||||||||||||||||||||||||
Description | June 30, 2011 |
June 30, 2010 |
Variation | Percent Variation |
June 30, 2011 |
June 30, 2010 |
Variation | Percent Variation |
||||||||||||||||||||||||
Residential |
26,156 | 25,223 | 933 | 3.7 | % | $ | 471 | $ | 476 | $ | (5 | ) | (1.1 | )% | ||||||||||||||||||
General |
18,686 | 16,165 | 2,521 | 15.6 | 224 | 229 | (5 | ) | (2.2 | ) | ||||||||||||||||||||||
Firm transportation |
35,108 | 32,287 | 2,821 | 8.7 | 218 | 218 | | | ||||||||||||||||||||||||
Total firm sales and transportation |
79,950 | 73,675 | 6,275 | 8.5 | 913 | 923 | (10 | ) | (1.1 | ) | ||||||||||||||||||||||
Interruptible sales (a) |
6,259 | 4,572 | 1,687 | 36.9 | 55 | 34 | 21 | 61.8 | ||||||||||||||||||||||||
NYPA |
11,135 | 12,122 | (987 | ) | (8.1 | ) | 1 | 1 | | | ||||||||||||||||||||||
Generation plants |
34,206 | 32,215 | 1,991 | 6.2 | 16 | 17 | (1 | ) | (5.9 | ) | ||||||||||||||||||||||
Other |
12,819 | 11,985 | 834 | 7.0 | 34 | 33 | 1 | 3.0 | ||||||||||||||||||||||||
Other operating revenues |
| | | | (60 | ) | (86 | ) | 26 | (30.2 | ) | |||||||||||||||||||||
Total |
144,369 | 134,569 | 9,8 | 7.3 | % | $ | 959 | $ | 922 | $ | 37 | 4.0 | % |
(a) | Includes 2,075 mdths and 1,448 mdths for the six months ended June 30, 2011 and 2010, respectively, which are also reflected in firm transportation and other. |
CECONYs gas operating revenues increased $37 million in the six months ended June 30, 2011 compared with the 2010 period due primarily to higher revenues from the gas rate plans ($54 million). CECONYs revenues from gas sales are subject to a weather normalization clause and a revenue decoupling mechanism as a result of which delivery revenues are generally not affected by changes in delivery volumes from levels assumed when rates were approved. Other gas operating revenues generally reflect changes in regulatory assets and liabilities in accordance with the companys rate plans. See Rate Agreements CECONY Gas in Note B to the financial statements in Item 8 of the Form 10-K.
CECONYs sales and transportation volumes for firm customers increased 8.5 percent in the six months ended June 30, 2011 compared with the 2010 period. After adjusting for variations, principally weather and billing days, firm gas sales and transportation volumes in the companys service area increased 1.8 percent in the six months ended June 30, 2011 reflecting an increase in the number of customers, offset in part by net transfers from firm service to interruptible service.
CECONYs purchased gas cost increased $10 million in the six months ended June 30, 2011 compared with the 2010 period due to higher sendout volumes ($35 million), offset by lower unit costs ($25 million).
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CECONYs gas operating income decreased $22 million in the six months ended June 30, 2011 compared with the 2010 period. The decrease reflects primarily higher operations and maintenance costs ($30 million, due primarily to an increase in the surcharge for a New York State assessment ($8 million), pension expense ($12 million) and employees health insurance costs ($2 million)), taxes, other than income taxes ($15 million, principally property taxes) and depreciation and amortization ($4 million), offset by higher net revenues ($27 million).
Steam
CECONYs results of steam operations for the six months ended June 30, 2011 compared with the 2010 period is as follows:
Six Months Ended | ||||||||||||
(Millions of Dollars) | June 30, 2011 |
June 30, 2010 |
Variation | |||||||||
Operating revenues |
$ | 432 | $ | 396 | $ | 36 | ||||||
Purchased power |
31 | 32 | (1 | ) | ||||||||
Fuel |
128 | 120 | 8 | |||||||||
Net revenues |
273 | 244 | 29 | |||||||||
Operations and maintenance |
72 | 96 | (24 | ) | ||||||||
Depreciation and amortization |
32 | 31 | 1 | |||||||||
Taxes, other than income taxes |
55 | 44 | 11 | |||||||||
Steam operating income |
$ | 114 | $ | 73 | $ | 41 |
CECONYs steam sales and deliveries for the six months ended June 30, 2011 compared with the 2010 period were:
Millions of Pounds Delivered | Revenues in Millions | |||||||||||||||||||||||||||||||
Six Months Ended | Six Months Ended | |||||||||||||||||||||||||||||||
Description | June 30, 2011 |
June 30, 2010 |
Variation | Percent Variation |
June 30, 2011 |
June 30, 2010 |
Variation | Percent Variation |
||||||||||||||||||||||||
General |
408 | 366 | 42 | 11.5 | % | $ | 20 | $ | 17 | $ | 3 | 17.6 | % | |||||||||||||||||||
Apartment house |
3,716 | 3,467 | 249 | 7.2 | 114 | 101 | 13 | 12.9 | ||||||||||||||||||||||||
Annual power |
9,600 | 9,069 | 531 | 5.9 | 315 | 276 | 39 | 14.1 | ||||||||||||||||||||||||
Other operating revenues |
| | | | (17 | ) | 2 | (19 | ) | Large | ||||||||||||||||||||||
Total |
13,724 | 12,902 | 822 | 6.4 | % | $ | 432 | $ | 396 | $ | 36 | 9.1 | % |
CECONYs steam operating revenues increased $36 million in the six months ended June 30, 2011 compared with the 2010 period due primarily to higher fuel costs ($8 million), the net change in rates under the steam rate plan ($12 million) and colder winter weather in 2011 compared with the 2010 period ($18 million), offset in part by lower purchased power costs ($1 million). Other steam operating revenues generally reflect changes in regulatory assets and liabilities in accordance with the companys rate plans. See Rate Agreements CECONY Steam in Note B to the financial statements in Item 8 of the Form 10-K.
Steam sales and delivery volumes increased 6.4 percent in the six months ended June 30, 2011 compared with the 2010 period. After adjusting for variations, principally weather and billing days, steam sales and deliveries decreased 1.7 percent in the six months ended June 30, 2011 reflecting lower average normalized use per customer.
CECONYs steam purchased fuel costs increased $8 million in the six months ended June 30, 2011 compared with the 2010 period due to higher unit costs ($5 million) and sendout volumes ($3 million). Steam purchased power costs decreased $1 million in the six months ended June 30, 2011 compared with the 2010 period due to a decrease in unit costs ($6 million), offset by an increase in purchased volumes ($5 million).
Steam operating income increased $41 million in the six months ended June 30, 2011 compared with the 2010 period. The increase reflects primarily higher net revenues ($29 million) and lower operations and maintenance costs ($24 million, due primarily to lower pension expense ($19 million)), offset by higher taxes, other than income taxes ($11 million, principally property taxes) and depreciation and amortization ($1 million).
54 |
Other Income (Deductions)
Other income (deductions) decreased $12 million in the six months ended June 30, 2011 compared with the 2010 period primarily reflecting lower financing charges on changes in World Trade Center regulatory assets and liabilities. See Cash Flows from Operating Activities, above and Regulatory Assets and Liabilities in Note B to the Second Quarter Financial Statements.
O&R
Six Months Ended June 30, 2011 |
Six Months Ended June 30, 2010 |
|||||||||||||||||||||||||||
(Millions of Dollars) | Electric | Gas | 2011 Total |
Electric | Gas | 2010 Total |
2011-2010 Variation |
|||||||||||||||||||||
Operating revenues |
$ | 289 | $ | 130 | $ | 419 | $ | 314 | $ | 125 | $ | 439 | $ | (20 | ) | |||||||||||||
Purchased power |
123 | | 123 | 158 | | 158 | (35 | ) | ||||||||||||||||||||
Gas purchased for resale |
| 53 | 53 | | 58 | 58 | (5 | ) | ||||||||||||||||||||
Net revenues |
166 | 77 | 243 | 156 | 67 | 223 | 20 | |||||||||||||||||||||
Operations and maintenance |
107 | 34 | 141 | 100 | 33 | 133 | 8 | |||||||||||||||||||||
Depreciation and amortization |
17 | 7 | 24 | 16 | 6 | 22 | 2 | |||||||||||||||||||||
Taxes, other than income taxes |
17 | 8 | 25 | 18 | 7 | 25 | | |||||||||||||||||||||
Operating income |
$ | 25 | $ | 28 | $ | 53 | $ | 22 | $ | 21 | $ | 43 | $ | 10 |
Electric
O&Rs results of electric operations for the six months ended June 30, 2011 compared with the 2010 period is as follows:
Six Months Ended | ||||||||||||
(Millions of Dollars) | June 30, 2011 |
June 30, 2010 |
Variation | |||||||||
Operating revenues |
$ | 289 | $ | 314 | $ | (25 | ) | |||||
Purchased power |
123 | 158 | (35 | ) | ||||||||
Net revenues |
166 | 156 | 10 | |||||||||
Operations and maintenance |
107 | 100 | 7 | |||||||||
Depreciation and amortization |
17 | 16 | 1 | |||||||||
Taxes, other than income taxes |
17 | 18 | (1 | ) | ||||||||
Electric operating income |
$ | 25 | $ | 22 | $ | 3 |
O&Rs electric sales and deliveries, excluding off-system sales, for the six months ended June 30, 2011 compared with the 2010 period were:
Millions of kWhs Delivered | Revenues in Millions | |||||||||||||||||||||||||||||||
Six Months Ended | Six Months Ended | |||||||||||||||||||||||||||||||
Description | June 30, 2011 |
June 30, 2010 |
Variation | Percent Variation |
June 30, 2011 |
June 30, 2010 |
Variation | Percent Variation |
||||||||||||||||||||||||
Residential/Religious (a) |
810 | 867 | (57 | ) | (6.6 | )% | $ | 140 | $ | 153 | $ | (13 | ) | (8.5 | )% | |||||||||||||||||
Commercial/Industrial |
597 | 748 | (151 | ) | (20.2 | ) | 79 | 103 | (24 | ) | (23.3 | ) | ||||||||||||||||||||
Retail access customers |
1,290 | 1,053 | 237 | 22.5 | 68 | 55 | 13 | 23.6 | ||||||||||||||||||||||||
Public authorities |
50 | 54 | (4 | ) | (7.4 | ) | 5 | 6 | (1 | ) | (16.7 | ) | ||||||||||||||||||||
Other operating revenues |
| | | | (3 | ) | (3 | ) | | | ||||||||||||||||||||||
Total |
2,747 | 2,722 | 25 | 0.9 | % | $ | 289 | $ | 314 | $ | (25 | ) | (8.0 | )% |
(a) | Residential/Religious generally includes single-family dwellings, individual apartments in multi-family dwellings, religious organizations and certain other not-for-profit organizations. |
O&Rs electric operating revenues decreased $25 million in the six months ended June 30, 2011 compared with the 2010 period due primarily to lower costs for purchased power ($35 million). O&Rs New York electric delivery revenues are subject to a revenue decoupling mechanism, as a result of which, delivery
55 |
revenues are generally not affected by changes in delivery volumes from levels assumed when rates were approved. O&Rs electric sales in New Jersey and Pennsylvania are not subject to a revenue decoupling mechanism, and as a result, changes in such volumes do impact revenues. Other electric operating revenues generally reflect changes in regulatory assets and liabilities in accordance with the companys electric rate plan. See Rate Agreements O&R Electric in Note B to the Second Quarter Financial Statements and Note B to the financial statements in Item 8 of the Form 10-K.
Electric delivery volumes in O&Rs service area increased 0.9 percent in the six months ended June 30, 2011 compared with the 2010 period. After adjusting for weather variations, electric delivery volumes in O&Rs service area increased 1.2 percent in the six months ended June 30, 2011 compared with the 2010 period reflecting higher average normalized use per customer.
Electric operating income increased $3 million in the six months ended June 30, 2011 compared with the 2010 period. The increase reflects primarily higher net revenues ($10 million) and lower taxes, other than income taxes ($1 million, principally payroll taxes), offset by higher operations and maintenance costs ($7 million, due primarily to higher pension expense ($5 million)) and depreciation and amortization ($1 million).
Gas
O&Rs results of gas operations for the six months ended June 30, 2011 compared with the 2010 period is as follows:
Six Months Ended | ||||||||||||
(Millions of Dollars) | June 30, 2011 |
June 30, 2010 |
Variation | |||||||||
Operating revenues |
$ | 130 | $ | 125 | $ | 5 | ||||||
Gas purchased for resale |
53 | 58 | (5 | ) | ||||||||
Net revenues |
77 | 67 | 10 | |||||||||
Operations and maintenance |
34 | 33 | 1 | |||||||||
Depreciation and amortization |
7 | 6 | 1 | |||||||||
Taxes, other than income taxes |
8 | 7 | 1 | |||||||||
Gas operating income |
$ | 28 | $ | 21 | $ | 7 |
O&Rs gas sales and deliveries, excluding off-system sales, for the six months ended June 30, 2011 compared with the 2010 period were:
Thousands of dths Delivered | Revenues in Millions | |||||||||||||||||||||||||||||||
Six Months Ended | Six Months Ended | |||||||||||||||||||||||||||||||
Description | June 30, 2011 |
June 30, 2010 |
Variation | Percent Variation |
June 30, 2011 |
June 30, 2010 |
Variation | Percent Variation |
||||||||||||||||||||||||
Residential |
4,742 | 4,357 | 385 | 8.8 | % | $ | 68 | $ | 65 | $ | 3 | 4.6 | % | |||||||||||||||||||
General |
928 | 864 | 64 | 7.4 | 12 | 12 | | | ||||||||||||||||||||||||
Firm transportation |
6,952 | 6,052 | 900 | 14.9 | 45 | 37 | 8 | 21.6 | ||||||||||||||||||||||||
Total firm sales and transportation |
12,622 | 11,273 | 1,349 | 12.0 | 125 | 114 | 11 | 9.6 | ||||||||||||||||||||||||
Interruptible sales |
2,304 | 2,467 | (163 | ) | (6.6 | ) | 2 | 7 | (5 | ) | (71.4 | ) | ||||||||||||||||||||
Generation plants |
750 | 402 | 348 | 86.6 | | | | | ||||||||||||||||||||||||
Other |
534 | 476 | 58 | 12.2 | | | | | ||||||||||||||||||||||||
Other gas revenues |
| | | | 3 | 4 | (1 | ) | (25.0 | ) | ||||||||||||||||||||||
Total |
16,210 | 14,618 | 1,592 | 10.9 | % | $ | 130 | $ | 125 | $ | 5 | 4.0 | % |
O&Rs gas operating revenues increased $5 million in the six months ended June 30, 2011 compared with the 2010 period due primarily to the gas rate plan, offset in part by the decrease in gas purchased for resale ($5 million).
56 |
Sales and transportation volumes for firm customers increased 12.0 percent in the six months ended June 30, 2011 compared with the 2010 period. After adjusting for weather and other variations, total firm sales and transportation volumes increased 0.1 percent in the six months ended June 30, 2011 compared with the 2010 period. O&Rs New York revenues from gas sales are subject to a weather normalization clause and a revenue decoupling mechanism, as a result of which delivery revenues are generally not affected by changes in delivery volumes from levels assumed when rates were approved.
Gas operating income increased $7 million in the six months ended June 30, 2011 compared with the 2010 period. The increase reflects primarily higher net revenues ($10 million), offset by higher operations and maintenance costs ($1 million), depreciation and amortization ($1 million) and taxes, other than income taxes ($1 million, principally state taxes).
Competitive Energy Businesses
The competitive energy businesss results of operations for the six months ended June 30, 2011 compared with the 2010 period is as follows:
Six Months Ended | ||||||||||||
(Millions of Dollars) | June 30, 2011 |
June 30, 2010 |
Variation | |||||||||
Operating revenues |
$ | 814 | $ | 906 | $ | (92 | ) | |||||
Purchased power |
669 | 802 | (133 | ) | ||||||||
Gas purchased for resale |
11 | 6 | 5 | |||||||||
Net revenues |
134 | 98 | 36 | |||||||||
Operations and maintenance |
63 | 51 | 12 | |||||||||
Depreciation and amortization |
3 | 6 | (3 | ) | ||||||||
Taxes, other than income taxes |
10 | 8 | 2 | |||||||||
Operating income |
$ | 58 | $ | 33 | $ | 25 |
The competitive energy businesses operating revenues decreased $92 million in the six months ended June 30, 2011 compared with the 2010 period due primarily to a decrease in electric revenues ($78 million) and net mark-to-market effects ($27 million), offset in part by an increase in other revenues ($13 million). Electric wholesale revenues decreased $64 million in the six months ended June 30, 2011 compared with the 2010 period due to lower sales volume ($57 million) and unit prices ($7 million). Electric retail revenues decreased $14 million in the six months ended June 30, 2011 compared with the 2010 period due to lower unit prices ($26 million), offset by higher sales volume ($12 million). Gross margins on electric retail revenues decreased in the six months ended June 30, 2011 compared with the 2010 period due primarily to lower unit gross margins. Net mark-to-market values increased $34 million in the six months ended June 30, 2011 as compared with the 2010 period, of which $61 million in gains are reflected in purchased power costs and $27 million in losses are reflected in revenues. Other revenues increased $13 million in the six months ended June 30, 2011 as compared with the 2010 period due primarily to higher sales of energy efficiency services ($8 million).
Purchased power costs decreased $133 million in the six months ended June 30, 2011 compared with the 2010 period due primarily to changes in mark-to-market values ($61 million) and lower purchased power costs ($73 million, due to lower unit prices ($37 million) and volumes ($36 million)). Operating income increased $25 million in the six months ended June 30, 2011 compared with the 2010 period due primarily to net mark-to-market effects ($34 million), offset by lower electric wholesale and retail gross margins ($9 million).
Other
For Con Edison, Other also includes inter-company eliminations relating to operating revenues and operating expenses.
57 |
Item 3: Quantitative and Qualitative Disclosures About Market Risk
For information about the Companies primary market risks associated with activities in derivative financial instruments, other financial instruments and derivative commodity instruments, see Financial and Commodity Market Risks, in Part I, Item 2 of this report, which information is incorporated herein by reference. Also, see Item 7A of the Form 10-K.
Item 4: Controls and Procedures
The Companies maintain disclosure controls and procedures designed to provide reasonable assurance that the information required to be disclosed in the reports that they submit to the Securities and Exchange Commission (SEC) is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Securities Exchange Act of 1934, as amended, is accumulated and communicated to the issuers management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. For each of the Companies, its management, with the participation of its principal executive officer and principal financial officer, has evaluated its disclosure controls and procedures as of the end of the period covered by this report and, based on such evaluation, has concluded that the controls and procedures are effective to provide such reasonable assurance. Reasonable assurance is not absolute assurance, however, and there can be no assurance that any design of controls or procedures would be effective under all potential future conditions, regardless of how remote.
In January 2011, the Companies implemented a consolidation, reporting, and analysis system as part of a large ongoing project to implement a new financial and supply-chain enterprise resource planning information system. See Item 9A of the Form 10-K and Item 4 of the First Quarter Form 10-Q (which information is incorporated herein by reference). The project is reasonably likely to materially affect the Companies internal control over financial reporting.
There was no change in the Companies internal control over financial reporting that occurred during the Companies most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Companies internal control over financial reporting.
58 |
Part II Other Information
For information about certain legal proceedings affecting the Companies, see Notes B, F and G to the financial statements in Part I, Item 1 of this report, which information is incorporated herein by reference.
There were no material changes in the Companies risk factors compared to those disclosed in Item 1A of the Form 10-K.
Item 2: Unregistered Sales of Equity Securities and Use of Proceeds
ISSUER PURCHASES OF EQUITY SECURITIES
Period | Total |
Average |
Total |
Maximum |
||||||||||||
April 1, 2011 to April 30, 2011 |
| | | | ||||||||||||
May 1, 2011 to May 31, 2011 |
107,921 | $ | 53.83 | | | |||||||||||
June 1, 2011 to June 30, 2011 |
71,021 | 52.40 | | | ||||||||||||
Total |
178,942 | $ | 53.26 | | |
* | Represents Con Edison common shares purchased in open-market transactions. The number of shares purchased approximated the number of treasury shares used for the companys employee stock plans. |
59 |
CON EDISON
Exhibit 4.1 | Amendment, dated as of June 22, 2011, to the Amended and Restated Credit Agreement, dated as of June 22, 2006 among CECONY, Con Edison, O&R, the banks party thereto and JPMorgan Chase Bank, N.A., as Administrative Agent. | |
Exhibit 12.1 | Statement of computation of Con Edisons ratio of earnings to fixed charges for the six-month periods ended June 30, 2011 and 2010, and the 12-month period ended December 31, 2010. | |
Exhibit 31.1.1 | Rule 13a-14(a)/15d-14(a) Certifications Chief Executive Officer. | |
Exhibit 31.1.2 | Rule 13a-14(a)/15d-14(a) Certifications Chief Financial Officer. | |
Exhibit 32.1.1 | Section 1350 Certifications Chief Executive Officer. | |
Exhibit 32.1.2 | Section 1350 Certifications Chief Financial Officer. | |
Exhibit 101.INS | XBRL Instance Document. | |
Exhibit 101.SCH | XBRL Taxonomy Extension Schema. | |
Exhibit 101.CAL | XBRL Taxonomy Extension Calculation Linkbase. | |
Exhibit 101.DEF | XBRL Taxonomy Extension Definition Linkbase. | |
Exhibit 101.LAB | XBRL Taxonomy Extension Label Linkbase. | |
Exhibit 101.PRE | XBRL Taxonomy Extension Presentation Linkbase. |
CECONY
Exhibit 12.2 | Statement of computation of CECONYs ratio of earnings to fixed charges for the six-month periods ended June 30, 2011 and 2010, and the 12-month period ended December 31, 2010. | |
Exhibit 31.2.1 | Rule 13a-14(a)/15d-14(a) Certifications Chief Executive Officer. | |
Exhibit 31.2.2 | Rule 13a-14(a)/15d-14(a) Certifications Chief Financial Officer. | |
Exhibit 32.2.1 | Section 1350 Certifications Chief Executive Officer. | |
Exhibit 32.2.2 | Section 1350 Certifications Chief Financial Officer. | |
Exhibit 101.INS | XBRL Instance Document. | |
Exhibit 101.SCH | XBRL Taxonomy Extension Schema. | |
Exhibit 101.CAL | XBRL Taxonomy Extension Calculation Linkbase. | |
Exhibit 101.DEF | XBRL Taxonomy Extension Definition Linkbase. | |
Exhibit 101.LAB | XBRL Taxonomy Extension Label Linkbase. | |
Exhibit 101.PRE | XBRL Taxonomy Extension Presentation Linkbase. |
60 |
Pursuant to the requirements of the Securities Exchange Act of 1934, each Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
CONSOLIDATED EDISON, INC. | ||||||
CONSOLIDATED EDISON COMPANY OF NEW YORK, INC. | ||||||
DATE: August 4, 2011 | By | /S/ ROBERT HOGLUND | ||||
Robert Hoglund Senior Vice President, Chief Financial Officer and Duly Authorized Officer |
61 |
Exhibit 4.1
AMENDMENT NO. 1
AMENDMENT dated as of June 22, 2011 to the Amended and Restated Credit Agreement dated as of June 22, 2006 (the Credit Agreement) among CONSOLIDATED EDISON COMPANY OF NEW YORK, INC., CONSOLIDATED EDISON, INC., ORANGE AND ROCKLAND UTILITIES, INC., the BANKS party thereto and JPMORGAN CHASE BANK, N.A., as Administrative Agent.
The parties hereto agree as follows:
SECTION 1. Defined Terms; References. Unless otherwise specifically defined herein, each term used herein that is defined in the Credit Agreement has the meaning assigned to such term in the Credit Agreement. Each reference to hereof, hereunder, herein and hereby and each other similar reference and each reference to this Agreement and each other similar reference contained in the Credit Agreement shall, after this Amendment becomes effective, refer to the Credit Agreement as amended hereby.
SECTION 2. Amendments. (a) The definition of Letter of Credit Termination Date in Section 1.01 of the Credit Agreement is amended to read as follows:
Letter of Credit Termination Date means the first anniversary of the Termination Date (or if such date is not a Domestic Business Day, the next succeeding Domestic Business Day).
(b) The following new definition is added to Section 1.01 of the Credit Agreement:
Long-Dated Letter of Credit means any Letter of Credit having an expiry date later than the fifth Domestic Business Day prior to the Termination Date.
(c) Section 2.18 of the Credit Agreement is amended by the addition of the following new subsection (h):
(h) Cash Cover For Long-Dated Letters of Credit. Each Borrower shall on the fifth Domestic Business Day prior to the Termination Date pay to the Administrative Agent an amount in immediately available funds (which funds shall be held as collateral for the benefit of the Banks pursuant to arrangements satisfactory to the Administrative Agent) equal to the aggregate amount available for drawing under all of its respective Long-Dated Letters of Credit, if any; provided, however, that such payment shall not be required if and to the extent the Administrative Agent is holding funds as collateral pursuant to Section 6.03 with respect to such Long-Dated Letters of Credit. The Administrative Agent shall have exclusive dominion and control, including exclusive right of withdrawal, over the account in which such payment is deposited. Following the subsequent expiration, or surrender to the Issuing Bank, of any of a Borrowers Long-Dated Letters of Credit, so long as no Event of Default then exists with respect to such Borrower, the Administrative Agent shall promptly return to such Borrower any funds the Administrative Agent is holding pursuant to this Section 2.18(h) for such Long-Dated Letter of Credit.
1
SECTION 3. Representations of Borrowers. Each Borrower represents and warrants that (i) the representations and warranties of such Borrower set forth in Article 4 of the Credit Agreement are true on the date hereof and (ii) no Default with respect to such Borrower has occurred and is continuing on the date hereof.
SECTION 4. Governing Law. This Amendment shall be governed by and construed in accordance with the laws of the State of New York.
SECTION 5. Counterparts. This Amendment may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument.
SECTION 6. Effectiveness. This Amendment shall become effective as of the date hereof when the Administrative Agent shall have received from each of the Borrowers, the Banks, the Issuing Bank and the Administrative Agent a counterpart hereof signed by such party or facsimile or other written confirmation (in form satisfactory to the Administrative Agent) that such party has signed a counterpart hereof.
2
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed as of the date first above written.
CONSOLIDATED EDISON COMPANY OF NEW YORK, INC. | ||
By: | /s/ Scott Sanders | |
Name: Scott Sanders | ||
Title: Vice President and Treasurer |
CONSOLIDATED EDISON, INC. | ||
By: | /s/ Scott Sanders | |
Name: Scott Sanders | ||
Title: Vice President and Treasurer |
ORANGE AND ROCKLAND UTILITIES, INC. | ||
By: | /s/ John E. Perkins | |
Name: John E. Perkins | ||
Title: Treasurer |
3
JPMORGAN CHASE BANK, N.A., as Bank, Issuing Bank and Administrative Agent | ||
By: | /s/ Peter Christensen | |
Name: Peter Christensen | ||
Title: Vice President |
4
Bank: UBS Loan Finance LLC | ||
By: | /s/ Mary E. Evans | |
Name: Mary E. Evans | ||
Title: Associate Director | ||
By: | /s/ Irja R. Otsa | |
Name: Irja R. Otsa | ||
Title: Associate Director |
[Amendment to the Credit Agreement]
Bank: TD Bank, N.A. | ||
By: | /s/ Daniel Csillay | |
Name: Daniel Csillay | ||
Title: Vice President |
[Amendment to the Credit Agreement]
Bank: State Street Bank and Trust Company | ||
By: | /s/ Mary H. Carey | |
Name: Mary H. Carey | ||
Title: Vice President |
[Amendment to the Credit Agreement]
Bank: The Royal Bank of Scotland PLC | ||
By: | /s/ Tyler J. McCarthy | |
Name: Tyler J. McCarthy | ||
Title: Director |
[Amendment to the Credit Agreement]
Bank: THE NORTHERN TRUST COMPANY | ||
By: | /s/ Daniel J. Boote | |
Name: Daniel J. Boote | ||
Title: Senior Vice President |
[Amendment to the Credit Agreement]
Bank: Morgan Stanley Bank, N.A. | ||
By: | /s/ Scott Taylor | |
Name: Scott Taylor | ||
Title: Authorized Signatory |
[Amendment to the Credit Agreement]
Bank: Mizuho Corporate Bank, Ltd. | ||
By: | /s/ Raymond Ventura | |
Name: Raymond Ventura | ||
Title: Deputy General Manager |
[Amendment to the Credit Agreement]
Bank: KeyBank National Association | ||
By: | /s/ Sherrie I. Manson | |
Name: Sherrie I. Manson | ||
Title: Senior Vice President |
[Amendment to the Credit Agreement]
Bank: HSBC Bank USA, N.A. | ||
By: | /s/ Alexandra Barrows | |
Name: Alexandra Barrows | ||
Title: Associate |
[Amendment to the Credit Agreement]
Bank: Goldman Sachs Bank USA | ||
By: | /s/ Lauren Day | |
Name: Lauren Day | ||
Title: Authorized Signatory |
[Amendment to the Credit Agreement]
Bank: William Street LLC | ||
By: | /s/ Mark Walton | |
Name: Mark Walton | ||
Title: Authorized Signatory |
[Amendment to the Credit Agreement]
Bank: Commerzbank AG New York and Grand Cayman Branches | ||
By: | /s/ Claudia Rost | |
Name: Claudia Rost | ||
Title: Director | ||
By: | /s/ Svenja Freckmann | |
Name: Svenja Freckmann | ||
Title: Associate |
[Amendment to the Credit Agreement]
Bank: Citibank, N.A. | ||
By: | /s/ J. Nicholas McKee | |
Name: J. Nicholas McKee | ||
Title: Managing Director |
[Amendment to the Credit Agreement]
Bank: The Bank of Tokyo-Mitsubishi UFJ, Ltd. | ||
By: | /s/ Chi-Cheng Chen | |
Name: Chi-Cheng Chen | ||
Title: Vice President |
[Amendment to the Credit Agreement]
Bank: The Bank of New York Mellon | ||
By: | /s/ John Watt | |
Name: John Watt | ||
Title: Vice President |
[Amendment to the Credit Agreement]
Bank: Barclays Bank PLC | ||
By: | /s/ May Huang | |
Name: May Huang | ||
Title: Assistant Vice President |
[Amendment to the Credit Agreement]
Bank: Bank of America, N.A. | ||
By: | /s/ Mike Mason | |
Name: Mike Mason | ||
Title: Director |
[Amendment to the Credit Agreement]
Bank: Wells Fargo Bank, N.A. | ||
By: | /s/ Keith Luettel | |
Name: Keith Luettel | ||
Title: Vice President |
[Amendment to the Credit Agreement]
Exhibit 12.1
Consolidated Edison, Inc.
Ratio of Earnings to Fixed Charges
(Millions of Dollars)
For the Six Months Ended June 30, 2011 |
For the Twelve Months Ended December 31, 2010 |
For the Six Months Ended June 30, 2010 |
||||||||||
Earnings |
||||||||||||
Net income from continuing operations |
$ | 477 | $ | 992 | $ | 409 | ||||||
Preferred stock dividend |
6 | 11 | 6 | |||||||||
(Income) or loss from equity investees |
| 2 | (1 | ) | ||||||||
Minority interest loss |
| | | |||||||||
Income tax |
252 | 548 | 228 | |||||||||
|
|
|
|
|
|
|||||||
Pre-tax income from continuing operations |
$ | 735 | $ | 1,553 | $ | 642 | ||||||
Add: Fixed charges* |
328 | 660 | 324 | |||||||||
Add: Distributed income of equity investees |
| | | |||||||||
Subtract: Interest capitalized |
| | | |||||||||
Subtract: Pre-tax preferred stock dividend requirement |
9 | 19 | 9 | |||||||||
|
|
|
|
|
|
|||||||
Earnings |
$ | 1,054 | $ | 2,194 | $ | 957 | ||||||
|
|
|
|
|
|
|||||||
* Fixed charges |
||||||||||||
Interest on long-term debt |
$ | 282 | $ | 580 | $ | 290 | ||||||
Amortization of debt discount, premium and expense |
11 | 17 | 8 | |||||||||
Interest capitalized |
| | | |||||||||
Other interest |
14 | 21 | 6 | |||||||||
Interest component of rentals |
12 | 23 | 11 | |||||||||
Pre-tax preferred stock dividend requirement |
9 | 19 | 9 | |||||||||
|
|
|
|
|
|
|||||||
Fixed charges |
$ | 328 | $ | 660 | $ | 324 | ||||||
|
|
|
|
|
|
|||||||
Ratio of Earnings to Fixed Charges |
3.2 | 3.3 | 3.0 | |||||||||
|
|
|
|
|
|
Exhibit 31.1.1
CERTIFICATIONS
CON EDISONPrincipal Executive Officer
I, Kevin Burke, the principal executive officer of Consolidated Edison, Inc., certify that:
1. I have reviewed this Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2011 of Consolidated Edison, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrants other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and
5. The registrants other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent function):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting.
Date: August 4, 2011
/s/ Kevin Burke |
Kevin Burke |
Chairman, President and Chief Executive Officer |
Exhibit 31.1.2
CERTIFICATIONS
CON EDISONPrincipal Financial Officer
I, Robert Hoglund, the principal financial officer of Consolidated Edison, Inc., certify that:
1. I have reviewed this Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2011 of Consolidated Edison, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrants other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and
5. The registrants other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent function):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting.
Date: August 4, 2011
/s/ Robert Hoglund |
Robert Hoglund |
Senior Vice President and Chief Financial Officer |
Exhibit 32.1.1
Certification Required Under Section 906 of the Sarbanes-Oxley Act of 2002
I, Kevin Burke, the Chief Executive Officer of Consolidated Edison, Inc. (the Company) certify that the Companys Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2011, which this statement accompanies, (the Form 10-Q) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)) and that the information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.
/s/ Kevin Burke |
Kevin Burke |
Dated: August 4, 2011
Exhibit 32.1.2
Certification Required Under Section 906 of the Sarbanes-Oxley Act of 2002
I, Robert Hoglund, the Chief Financial Officer of Consolidated Edison, Inc. (the Company) certify that the Companys Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2011, which this statement accompanies, (the Form 10-Q) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)) and that the information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.
/s/ Robert Hoglund |
Robert Hoglund |
Dated: August 4, 2011
Exhibit 12.2
Con Edison Company of New York, Inc.
Ratio of Earnings to Fixed Charges
(Millions of Dollars)
For the Six Months Ended June 30, 2011 |
For the Twelve Months Ended December 31, 2010 |
For the Six Months Ended June 30, 2010 |
||||||||||
Earnings |
||||||||||||
Net income for common stock |
$ | 426 | $ | 893 | $ | 378 | ||||||
Preferred stock dividend |
6 | 11 | 6 | |||||||||
(Income) or loss from equity investees |
| 2 | | |||||||||
Minority interest loss |
| | (1 | ) | ||||||||
Income tax |
220 | 495 | 207 | |||||||||
|
|
|
|
|
|
|||||||
Pre-tax income for common stock |
$ | 652 | $ | 1,401 | $ | 590 | ||||||
Add: Fixed charges* |
284 | 578 | 287 | |||||||||
Add: Distributed income of equity investees |
| | | |||||||||
Subtract: Interest capitalized |
| | | |||||||||
Subtract: Pre-tax preferred stock dividend requirement |
| | | |||||||||
|
|
|
|
|
|
|||||||
Earnings |
$ | 936 | $ | 1,979 | $ | 877 | ||||||
|
|
|
|
|
|
|||||||
* Fixed charges |
||||||||||||
Interest on long-term debt |
$ | 253 | $ | 520 | $ | 261 | ||||||
Amortization of debt discount, premium and expense |
10 | 17 | 8 | |||||||||
Interest capitalized |
| | | |||||||||
Other interest |
10 | 19 | 8 | |||||||||
Interest component of rentals |
11 | 22 | 10 | |||||||||
Pre-tax preferred stock dividend requirement |
| | | |||||||||
|
|
|
|
|
|
|||||||
Fixed charges |
$ | 284 | $ | 578 | $ | 287 | ||||||
|
|
|
|
|
|
|||||||
Ratio of Earnings to Fixed Charges |
3.3 | 3.4 | 3.1 | |||||||||
|
|
|
|
|
|
Exhibit 31.2.1
CERTIFICATIONS
CECONYPrincipal Executive Officer
I, Kevin Burke, the principal executive officer of Consolidated Edison Company of New York, Inc., certify that:
1. I have reviewed this Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2011 of Consolidated Edison Company of New York, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrants other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and
5. The registrants other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent function):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting.
Date: August 4, 2011
/s/ Kevin Burke |
Kevin Burke |
Chairman and Chief Executive Officer |
Exhibit 31.2.2
CERTIFICATIONS
CECONYPrincipal Financial Officer
I, Robert Hoglund, the principal financial officer of Consolidated Edison Company of New York, Inc., certify that:
1. I have reviewed this Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2011 of Consolidated Edison Company of New York, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrants other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and
5. The registrants other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent function):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting.
Date: August 4, 2011
/s/ Robert Hoglund |
Robert Hoglund |
Senior Vice President and Chief |
Financial Officer |
Exhibit 32.2.1
Certification Required Under Section 906 of the Sarbanes-Oxley Act of 2002
I, Kevin Burke, the Chief Executive Officer of Consolidated Edison Company of New York, Inc. (the Company) certify that the Companys Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2011, which this statement accompanies, (the Form 10-Q) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)) and that the information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.
/s/ Kevin Burke |
Kevin Burke |
Dated: August 4, 2011
Exhibit 32.2.2
Certification Required Under Section 906 of the Sarbanes-Oxley Act of 2002
I, Robert Hoglund, the Chief Financial Officer of Consolidated Edison Company of New York, Inc. (the Company) certify that the Companys Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2011, which this statement accompanies, (the Form 10-Q) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)) and that the information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.
/s/ Robert Hoglund |
Robert Hoglund |
Dated: August 4, 2011
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Fair Value Measurements (Reconciliation Of The Beginning And Ending Net Balances For Assets And Liabilities Measured At Level 3 Fair Value) (Details) (USD $)
In Millions |
3 Months Ended | 6 Months Ended | ||||||||
---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2011
|
Jun. 30, 2010
|
Jun. 30, 2011
|
Jun. 30, 2010
|
|||||||
Beginning Balance | $ 64 | $ (86) | $ 3 | $ 22 | ||||||
Included in Earnings | (14) | 8 | 3 | (36) | ||||||
Included in Regulatory Assets and Liabilities | 14 | 33 | 47 | (39) | ||||||
Purchases | 5 | 3 | 14 | 3 | ||||||
Sales | (2) | (2) | (4) | (3) | ||||||
Settlements | 4 | 7 | 3 | 16 | ||||||
Transfers In/Out of Level 3 | 18 | 5 | 18 | |||||||
Ending Balance | 71 | (19) | 71 | (19) | ||||||
Commodity [Member]
|
||||||||||
Beginning Balance | (31) | (168) | (88) | (59) | ||||||
Included in Earnings | (14) | 9 | 2 | (34) | ||||||
Included in Regulatory Assets and Liabilities | 14 | 33 | 45 | (40) | ||||||
Purchases | 5 | 3 | 14 | 3 | ||||||
Sales | (2) | (2) | (4) | (3) | ||||||
Settlements | 3 | 6 | 1 | 14 | ||||||
Transfers In/Out of Level 3 | 18 | 5 | 18 | |||||||
Ending Balance | (25) | (101) | (25) | (101) | ||||||
Fair Value Interest Rate Contract [Member]
|
||||||||||
Beginning Balance | (10) | (11) | (10) | (11) | ||||||
Included in Earnings | (1) | (1) | (2) | (2) | ||||||
Included in Regulatory Assets and Liabilities | (1) | (1) | ||||||||
Settlements | 1 | 1 | 2 | 2 | ||||||
Transfers In/Out of Level 3 | ||||||||||
Ending Balance | (10) | (12) | (10) | (12) | ||||||
Fair Value Other Assets [Member]
|
||||||||||
Beginning Balance | 105 | [1] | 93 | [1] | 101 | [1] | 92 | [1] | ||
Included in Earnings | 1 | [1] | [1] | 3 | [1] | [1] | ||||
Included in Regulatory Assets and Liabilities | [1] | 1 | [1] | 2 | [1] | 2 | [1] | |||
Transfers In/Out of Level 3 | [1] | [1] | [1] | [1] | ||||||
Ending Balance | $ 106 | [1] | $ 94 | [1] | $ 106 | [1] | $ 94 | [1] | ||
|
Regulatory Matters (Tables)
|
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2011
|
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Regulatory Matters | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Regulatory Assets and Liabilities |
|
Document And Entity Information
|
6 Months Ended | |
---|---|---|
Jun. 30, 2011
|
Jul. 29, 2011
|
|
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Jun. 30, 2011 | |
Document Fiscal Year Focus | 2011 | |
Document Fiscal Period Focus | Q2 | |
Trading Symbol | ED | |
Entity Registrant Name | CONSOLIDATED EDISON INC | |
Entity Central Index Key | 0001047862 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 292,875,896 | |
Consolidated Edison Co Of New York Inc [Member]
|
||
Entity Registrant Name | CONSOLIDATED EDISON CO OF NEW YORK INC | |
Entity Central Index Key | 0000023632 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Non-accelerated Filer |
Fair Value Measurements (Narrative) (Details) (USD $)
In Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2011
|
Jun. 30, 2010
|
Jun. 30, 2011
|
Jun. 30, 2010
|
|
Fair Value Measurements | ||||
Gain (loss) on Level 3 energy derivative assets | $ (4) | $ (3) | ||
Gains (loss) on Level 3 energy derivative liabilities | (27) | 33 | ||
Loss on Level 3 energy derivative assets for purchased power costs | 1 | 21 | ||
Gain on Level 3 energy derivative liabilities for purchased power costs | 49 | (40) | ||
Fair value, assets measured on recurring basis, change in unrealized gain (loss) included in other income | (13) | (45) | (25) | 1 |
Fair value, assets measured on recurring basis, change in unrealized gain (loss) included in purchased power costs | $ 6 | $ 64 | $ 36 | $ (7) |
Environmental Matters (Tables)
|
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2011
|
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Environmental Matters | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accrued Liabilities And Regulatory Assets |
|
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Environmental Remediation Costs |
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accrued Liabilities For Asbestos Suits And Workers' Compensation Proceedings |
|
Derivative Instruments And Hedging Activities (Aggregate Fair Value Of All Derivative Instruments With Credit Risk Related Contingent Features) (Details) (USD $)
In Millions |
Jun. 30, 2011
|
|||||||||
---|---|---|---|---|---|---|---|---|---|---|
Aggregate fair value - net liabilities | $ 140 | [1] | ||||||||
Collateral posted | 40 | [1] | ||||||||
Additional Collateral Required Due to Loss of Unsecured Credit [Member]
|
||||||||||
Collateral posted | 161 | |||||||||
Additional Collateral Aggregate Fair Value Down One Level [Member]
|
||||||||||
Additional collateral | 29 | [1],[2],[3] | ||||||||
Additional Collateral Aggregate Fair Value Down Below Investment Grade [Member]
|
||||||||||
Collateral posted | 24 | |||||||||
Additional collateral | $ 149 | [1],[2],[3],[4] | ||||||||
|
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Short-Term Borrowing
|
6 Months Ended |
---|---|
Jun. 30, 2011
|
|
Short-Term Borrowing | Note C — Short-Term Borrowing Reference is made to Note D to the financial statements in Item 8 of the Form 10-K and Note C to the financial statements in Part I, Item 1 of the First Quarter Form 10-Q. At June 30, 2011 and December 31, 2010 Con Edison and CECONY had no commercial paper outstanding. At June 30, 2011 and December 31, 2010, no loans were outstanding under the Companies' Credit Agreement and $188 million (including $135 million for CECONY) and $197 million (including $145 million for CECONY) of letters of credit were outstanding under the Credit Agreement, respectively. |
CECONY [Member]
|
|
Short-Term Borrowing | Note C — Short-Term Borrowing Reference is made to Note D to the financial statements in Item 8 of the Form 10-K and Note C to the financial statements in Part I, Item 1 of the First Quarter Form 10-Q. At June 30, 2011 and December 31, 2010 Con Edison and CECONY had no commercial paper outstanding. At June 30, 2011 and December 31, 2010, no loans were outstanding under the Companies' Credit Agreement and $188 million (including $135 million for CECONY) and $197 million (including $145 million for CECONY) of letters of credit were outstanding under the Credit Agreement, respectively. |
Other Material Contingencies (Tables)
|
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2011
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Other Material Contingencies | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total Guarantees |
|
Derivative Instruments And Hedging Activities (Energy Price Hedging Fair Values) (Details) (USD $)
In Millions |
Jun. 30, 2011
|
Dec. 31, 2010
|
---|---|---|
Derivative Instruments And Hedging Activities | ||
Fair value of net derivative assets/(liabilities) - gross | $ (121) | $ (261) |
Impact of netting of cash collateral | 100 | 176 |
Fair value of net derivative assets/(liabilities) - net | $ (21) | $ (85) |
Environmental Matters (Accrued Liability For Asbestos Suits And Workers' Compensation Proceedings) (Details) (USD $)
In Millions |
Jun. 30, 2011
|
Dec. 31, 2010
|
---|---|---|
Regulatory assets | $ 7,391 | $ 7,886 |
Asbestos Suits [Member]
|
||
Accrued liability | 10 | 10 |
Regulatory assets | 10 | 10 |
Workers' Compensation [Member]
|
||
Accrued liability | 103 | 106 |
Regulatory assets | $ 28 | $ 31 |
Other Postretirement Benefits (Tables) (Other Postretirement Benefits [Member])
|
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2011
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Other Postretirement Benefits [Member]
|
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Net Periodic Postretirement Benefit Costs |
|
Financial Information By Business Segment
|
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2011
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Financial Information By Business Segment | Note H — Financial Information by Business Segment Reference is made to Note N to the financial statements in Item 8 of the Form 10-K. The financial data for the business segments are as follows:
|
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CECONY [Member]
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Financial Information By Business Segment | Note H — Financial Information by Business Segment Reference is made to Note N to the financial statements in Item 8 of the Form 10-K. The financial data for the business segments are as follows:
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Other Postretirement Benefits (Net Periodic Postretirement Benefit Costs) (Details) (Other Postretirement Benefits [Member], USD $)
In Millions |
3 Months Ended | 6 Months Ended | |||
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Jun. 30, 2011
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Jun. 30, 2010
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Jun. 30, 2011
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Jun. 30, 2010
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Mar. 31, 2011
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Other Postretirement Benefits [Member]
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Service cost | $ 6 | $ 6 | $ 12 | $ 12 | |
Interest cost on accumulated other postretirement benefit obligation | 21 | 23 | 42 | 46 | |
Expected return on plan assets | (22) | (22) | (44) | (44) | |
Amortization of net actuarial loss | 22 | 23 | 44 | 46 | |
Amortization of prior service cost | (2) | (3) | (4) | (6) | |
Amortization of transition obligation | 1 | 1 | 2 | 2 | |
NET PERIODIC POSTRETIREMENT BENEFIT COST | 26 | 28 | 52 | 56 | |
Cost capitalized | (9) | (10) | (18) | (20) | |
Cost deferred | 4 | 1 | 9 | ||
Cost charged to operating expenses | 21 | 19 | 43 | 36 | |
Expected contributions | $ 84 |
Other Postretirement Benefits
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6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2011
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Other Postretirement Benefits | Note E — Other Postretirement Benefits Reference is made to Note F to the financial statements in Item 8 of the Form 10-K and Note E to the financial statement in Part I, Item 1 of the First Quarter Form 10-Q.
Net Periodic Benefit Cost The components of the Companies' net periodic postretirement benefit costs for the three and six months ended June 30, 2011 and 2010 were as follows:
Expected Contributions Based on estimates as of March 31, 2011, Con Edison expects to make a contribution of $84 million, including $74 million for CECONY, to the other postretirement benefit plans in 2011. |
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CECONY [Member]
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Other Postretirement Benefits | Note E — Other Postretirement Benefits Reference is made to Note F to the financial statements in Item 8 of the Form 10-K and Note E to the financial statement in Part I, Item 1 of the First Quarter Form 10-Q.
Net Periodic Benefit Cost The components of the Companies' net periodic postretirement benefit costs for the three and six months ended June 30, 2011 and 2010 were as follows:
Expected Contributions Based on estimates as of March 31, 2011, Con Edison expects to make a contribution of $84 million, including $74 million for CECONY, to the other postretirement benefit plans in 2011. |
Fair Value Measurements
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6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2011
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Fair Value Measurements | Note J — Fair Value Measurements Reference is made to Note P to the financial statements in Item 8 of the Form 10-K.
Assets and liabilities measured at fair value on a recurring basis as of June 30, 2011 are summarized below.
Assets and liabilities measured at fair value on a recurring basis as of December 31, 2010 are summarized below.
The table listed below provides a reconciliation of the beginning and ending net balances for assets and liabilities measured at fair value for the three and six months ended June 30, 2011 and classified as Level 3 in the fair value hierarchy below.
The table listed below provides a reconciliation of the beginning and ending net balances for assets and liabilities measured at fair value for the three and six months ended June 30, 2010 and classified as Level 3 in the fair value hierarchy below.
For the Utilities, realized gains and losses on Level 3 commodity derivative assets and liabilities are reported as part of purchased power, gas and fuel costs. The Utilities generally recover these costs in accordance with rate provisions approved by the applicable state public utilities commissions. See Note A to the financial statements in Item 8 of the Form 10-K. Unrealized gains and losses for commodity derivatives are generally deferred on the consolidated balance sheet in accordance with the accounting rules for regulated operations. For the competitive energy businesses, realized and unrealized gains and losses on Level 3 commodity derivative assets and liabilities are reported in non-utility revenues ($4 million loss and $27 million loss) and purchased power costs ($1 million loss and $49 million gain) on the consolidated income statement for the three months ended June 30, 2011 and 2010, respectively. Realized and unrealized gains and losses on Level 3 commodity derivative assets and liabilities are reported in non-utility revenues ($3 million loss and $33 million gain) and purchased power costs ($21 million gain and $40 million loss) on the consolidated income statement for the six months ended June 30, 2011 and 2010, respectively. The change in fair value relating to Level 3 commodity derivative assets held at June 30, 2011 and 2010 is included in non-utility revenues ($13 million loss and $45 million loss), and purchased power costs ($6 million gain and $64 million gain) on the consolidated income statement for the three months ended June 30, 2011 and 2010, respectively. For the six months ended June 30, 2011 and 2010, the change in fair value relating to Level 3 commodity derivative assets and liabilities included in non-utility revenues ($25 million loss and $1 million gain) and purchased power costs ($36 million gain and $7 million loss) on the consolidated income statement. 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 June 30, 2011, the Companies determined that nonperformance risk would have no material impact on their financial position or results of operations. To assess nonperformance risk, the Companies considered information such as collateral requirements, master netting arrangements, letters of credit and parent company guarantees, and applied a market-based method by using the counterparty's (for an asset) or the Companies' (for a liability) credit default swaps rates. |
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CECONY [Member]
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Fair Value Measurements | Note J — Fair Value Measurements Reference is made to Note P to the financial statements in Item 8 of the Form 10-K.
Assets and liabilities measured at fair value on a recurring basis as of June 30, 2011 are summarized below.
Assets and liabilities measured at fair value on a recurring basis as of December 31, 2010 are summarized below.
The table listed below provides a reconciliation of the beginning and ending net balances for assets and liabilities measured at fair value for the three and six months ended June 30, 2011 and classified as Level 3 in the fair value hierarchy below.
The table listed below provides a reconciliation of the beginning and ending net balances for assets and liabilities measured at fair value for the three and six months ended June 30, 2010 and classified as Level 3 in the fair value hierarchy below.
For the Utilities, realized gains and losses on Level 3 commodity derivative assets and liabilities are reported as part of purchased power, gas and fuel costs. The Utilities generally recover these costs in accordance with rate provisions approved by the applicable state public utilities commissions. See Note A to the financial statements in Item 8 of the Form 10-K. Unrealized gains and losses for commodity derivatives are generally deferred on the consolidated balance sheet in accordance with the accounting rules for regulated operations. For the competitive energy businesses, realized and unrealized gains and losses on Level 3 commodity derivative assets and liabilities are reported in non-utility revenues ($4 million loss and $27 million loss) and purchased power costs ($1 million loss and $49 million gain) on the consolidated income statement for the three months ended June 30, 2011 and 2010, respectively. Realized and unrealized gains and losses on Level 3 commodity derivative assets and liabilities are reported in non-utility revenues ($3 million loss and $33 million gain) and purchased power costs ($21 million gain and $40 million loss) on the consolidated income statement for the six months ended June 30, 2011 and 2010, respectively. The change in fair value relating to Level 3 commodity derivative assets held at June 30, 2011 and 2010 is included in non-utility revenues ($13 million loss and $45 million loss), and purchased power costs ($6 million gain and $64 million gain) on the consolidated income statement for the three months ended June 30, 2011 and 2010, respectively. For the six months ended June 30, 2011 and 2010, the change in fair value relating to Level 3 commodity derivative assets and liabilities included in non-utility revenues ($25 million loss and $1 million gain) and purchased power costs ($36 million gain and $7 million loss) on the consolidated income statement. 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 June 30, 2011, the Companies determined that nonperformance risk would have no material impact on their financial position or results of operations. To assess nonperformance risk, the Companies considered information such as collateral requirements, master netting arrangements, letters of credit and parent company guarantees, and applied a market-based method by using the counterparty's (for an asset) or the Companies' (for a liability) credit default swaps rates. |
Environmental Matters
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6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2011
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Environmental Matters | Note F — Environmental Matters Superfund Sites Hazardous substances, such as asbestos, polychlorinated biphenyls (PCBs) and coal tar, have been used or generated in the course of operations of the Utilities and their predecessors and are present at sites and in facilities and equipment they currently or previously owned, including sites at which gas was manufactured or stored. The Federal Comprehensive Environmental Response, Compensation and Liability Act of 1980 and similar state statutes (Superfund) impose joint and several liability, regardless of fault, upon generators of hazardous substances for investigation and remediation costs (which include costs of demolition, removal, disposal, storage, replacement, containment, and monitoring) and natural resource damages. Liability under these laws can be material and may be imposed for contamination from past acts, even though such past acts may have been lawful at the time they occurred. The sites at which the Utilities have been asserted to have liability under these laws, including their manufactured gas plant sites and any neighboring areas to which contamination may have migrated, are referred to herein as "Superfund Sites." For Superfund Sites where there are other potentially responsible parties and the Utilities are not managing the site investigation and remediation, the accrued liability represents an estimate of the amount the Utilities will need to pay to investigate and, where determinable, discharge their related obligations. For Superfund Sites (including the manufactured gas plant sites) for which one of the Utilities is managing the investigation and remediation, the accrued liability represents an estimate of the company's share of undiscounted cost to investigate the sites and, for sites that have been investigated in whole or in part, the cost to remediate the sites, if remediation is necessary and if a reasonable estimate of such cost can be made. Remediation costs are estimated in light of the information available, applicable remediation standards, and experience with similar sites. The accrued liabilities and regulatory assets related to Superfund Sites at June 30, 2011 and December 31, 2010 were as follows:
Most of the accrued Superfund Site liability relates to sites that have been investigated, in whole or in part. However, for some of the sites, the extent and associated cost of the required remediation has not yet been determined. As investigations progress and information pertaining to the required remediation becomes available, the Utilities expect that additional liability may be accrued, the amount of which is not presently determinable, but may be material. Under their current rate agreements, the Utilities are permitted to recover or defer as regulatory assets (for subsequent recovery through rates) certain site investigation and remediation costs. In February 2011, the NYSPSC initiated a proceeding to examine the existing mechanisms pursuant to which utilities recover such costs and possible alternatives. Environmental remediation costs incurred related to Superfund Sites for the three and six months ended June 30, 2011 and 2010, were as follows:
Insurance recoveries related to Superfund Sites for the three and six months ended June 30, 2011 and 2010 were immaterial. In 2010, CECONY estimated that for its manufactured gas plant sites, its aggregate undiscounted potential liability for the investigation and remediation of coal tar and/or other manufactured gas plant-related environmental contaminants could range up to $1.9 billion. In 2010, O&R estimated that for its manufactured gas plant sites, each of which has been investigated, the aggregate undiscounted potential liability for the remediation of such contaminants could range up to $200 million. These estimates were based on the assumption that there is contamination at all sites, including those that have not yet been fully investigated and additional assumptions about the extent of the contamination and the type and extent of the remediation that may be required. Actual experience may be materially different. Asbestos Proceedings Suits have been brought in New York State and federal courts against the Utilities and many other defendants, wherein a large number of plaintiffs sought large amounts of compensatory and punitive damages for deaths and injuries allegedly caused by exposure to asbestos at various premises of the Utilities. The suits that have been resolved, which are many, have been resolved without any payment by the Utilities, or for amounts that were not, in the aggregate, material to them. The amounts specified in all the remaining thousands of suits total billions of dollars; however, the Utilities believe that these amounts are greatly exaggerated, based on the disposition of previous claims. In 2010, CECONY estimated that its aggregate undiscounted potential liability for these suits and additional suits that may be brought over the next 15 years is $10 million. The estimate was based upon a combination of modeling, historical data analysis and risk factor assessment. Actual experience may be materially different. In addition, certain current and former employees have claimed or are claiming workers' compensation benefits based on alleged disability from exposure to asbestos. Under its current rate agreements, CECONY is permitted to defer as regulatory assets (for subsequent recovery through rates) costs incurred for its asbestos lawsuits and workers' compensation claims. The accrued liability for asbestos suits and workers' compensation proceedings (including those related to asbestos exposure) and the amounts deferred as regulatory assets for the Companies at June 30, 2011 and December 31, 2010 were as follows:
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CECONY [Member]
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Environmental Matters | Note F — Environmental Matters Superfund Sites Hazardous substances, such as asbestos, polychlorinated biphenyls (PCBs) and coal tar, have been used or generated in the course of operations of the Utilities and their predecessors and are present at sites and in facilities and equipment they currently or previously owned, including sites at which gas was manufactured or stored. The Federal Comprehensive Environmental Response, Compensation and Liability Act of 1980 and similar state statutes (Superfund) impose joint and several liability, regardless of fault, upon generators of hazardous substances for investigation and remediation costs (which include costs of demolition, removal, disposal, storage, replacement, containment, and monitoring) and natural resource damages. Liability under these laws can be material and may be imposed for contamination from past acts, even though such past acts may have been lawful at the time they occurred. The sites at which the Utilities have been asserted to have liability under these laws, including their manufactured gas plant sites and any neighboring areas to which contamination may have migrated, are referred to herein as "Superfund Sites." For Superfund Sites where there are other potentially responsible parties and the Utilities are not managing the site investigation and remediation, the accrued liability represents an estimate of the amount the Utilities will need to pay to investigate and, where determinable, discharge their related obligations. For Superfund Sites (including the manufactured gas plant sites) for which one of the Utilities is managing the investigation and remediation, the accrued liability represents an estimate of the company's share of undiscounted cost to investigate the sites and, for sites that have been investigated in whole or in part, the cost to remediate the sites, if remediation is necessary and if a reasonable estimate of such cost can be made. Remediation costs are estimated in light of the information available, applicable remediation standards, and experience with similar sites. The accrued liabilities and regulatory assets related to Superfund Sites at June 30, 2011 and December 31, 2010 were as follows:
Most of the accrued Superfund Site liability relates to sites that have been investigated, in whole or in part. However, for some of the sites, the extent and associated cost of the required remediation has not yet been determined. As investigations progress and information pertaining to the required remediation becomes available, the Utilities expect that additional liability may be accrued, the amount of which is not presently determinable, but may be material. Under their current rate agreements, the Utilities are permitted to recover or defer as regulatory assets (for subsequent recovery through rates) certain site investigation and remediation costs. In February 2011, the NYSPSC initiated a proceeding to examine the existing mechanisms pursuant to which utilities recover such costs and possible alternatives. Environmental remediation costs incurred related to Superfund Sites for the three and six months ended June 30, 2011 and 2010, were as follows:
Insurance recoveries related to Superfund Sites for the three and six months ended June 30, 2011 and 2010 were immaterial. In 2010, CECONY estimated that for its manufactured gas plant sites, its aggregate undiscounted potential liability for the investigation and remediation of coal tar and/or other manufactured gas plant-related environmental contaminants could range up to $1.9 billion. In 2010, O&R estimated that for its manufactured gas plant sites, each of which has been investigated, the aggregate undiscounted potential liability for the remediation of such contaminants could range up to $200 million. These estimates were based on the assumption that there is contamination at all sites, including those that have not yet been fully investigated and additional assumptions about the extent of the contamination and the type and extent of the remediation that may be required. Actual experience may be materially different. Asbestos Proceedings Suits have been brought in New York State and federal courts against the Utilities and many other defendants, wherein a large number of plaintiffs sought large amounts of compensatory and punitive damages for deaths and injuries allegedly caused by exposure to asbestos at various premises of the Utilities. The suits that have been resolved, which are many, have been resolved without any payment by the Utilities, or for amounts that were not, in the aggregate, material to them. The amounts specified in all the remaining thousands of suits total billions of dollars; however, the Utilities believe that these amounts are greatly exaggerated, based on the disposition of previous claims. In 2010, CECONY estimated that its aggregate undiscounted potential liability for these suits and additional suits that may be brought over the next 15 years is $10 million. The estimate was based upon a combination of modeling, historical data analysis and risk factor assessment. Actual experience may be materially different. In addition, certain current and former employees have claimed or are claiming workers' compensation benefits based on alleged disability from exposure to asbestos. Under its current rate agreements, CECONY is permitted to defer as regulatory assets (for subsequent recovery through rates) costs incurred for its asbestos lawsuits and workers' compensation claims. The accrued liability for asbestos suits and workers' compensation proceedings (including those related to asbestos exposure) and the amounts deferred as regulatory assets for the Companies at June 30, 2011 and December 31, 2010 were as follows:
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Regulatory Matters (Regulatory Assets And Liabilities) (Details) (USD $)
In Millions |
Jun. 30, 2011
|
Dec. 31, 2010
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Regulatory assets | $ 7,261 | $ 7,683 |
Regulatory assets - current | 130 | 203 |
Total Regulatory Assets | 7,391 | 7,886 |
Regulatory liabilities | 866 | 690 |
Regulatory liabilities - current | 198 | 257 |
Total Regulatory Liabilities | 1,064 | 947 |
Unrecognized Pension and Other Postretirement Costs [Member]
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Regulatory assets | 3,921 | 4,371 |
Future Federal Income Tax [Member]
|
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Regulatory assets | 1,730 | 1,593 |
Environmental Remediation Costs [Member]
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||
Regulatory assets | 684 | 695 |
Pension and Other Post Retirement Benefits Deferrals [Member]
|
||
Regulatory assets | 183 | 138 |
Revenue Taxes [Member]
|
||
Regulatory assets | 155 | 145 |
Net Electric Deferrals [Member]
|
||
Regulatory assets | 130 | 156 |
Surcharge for New York State Assessment [Member]
|
||
Regulatory assets | 98 | 121 |
Deferred Storm Costs [Member]
|
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Regulatory assets | 53 | 57 |
O & R Transition Bond Charges [Member]
|
||
Regulatory assets | 47 | 48 |
Deferred Derivative Losses - Long-Term [Member]
|
||
Regulatory assets | 44 | 74 |
Property Tax Reconciliation [Member]
|
||
Regulatory assets | 31 | 34 |
Workers' Compensation [Member]
|
||
Regulatory assets | 28 | 31 |
World Trade Center Restoration Costs [Member]
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||
Regulatory assets | 13 | 45 |
Recoverable Energy [Member]
|
||
Regulatory assets | 42 | |
Other [Member]
|
||
Regulatory assets | 144 | 133 |
Deferred Derivative Losses - Current [Member]
|
||
Regulatory assets - current | 121 | 190 |
Recoverable Energy Costs - Current [Member]
|
||
Regulatory assets - current | 9 | 13 |
Allowance for Cost of Removal Less Salvage [Member]
|
||
Regulatory liabilities | 430 | 422 |
Revenue Decoupling Mechanism [Member]
|
||
Regulatory liabilities | 81 | 38 |
World Trade Center Settlement Proceeds [Member]
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||
Regulatory liabilities | 62 | |
Carrying Changes On T&D Net Plant [Member]
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Regulatory liabilities | 40 | 28 |
Energy Efficiency Programs [Member]
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||
Regulatory liabilities | 28 | 19 |
New York State Tax Refund [Member]
|
||
Regulatory liabilities | 20 | 30 |
Gain on Sale of Properties [Member]
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||
Regulatory liabilities | 15 | 31 |
Bonus Depreciation [Member]
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||
Regulatory liabilities | 13 | 1 |
Expenditure Prudence Proceeding [Member]
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||
Regulatory liabilities | 11 | |
Other Liabilities [Member]
|
||
Regulatory liabilities | 166 | 121 |
Net Unbilled Revenue Deferrals - Current [Member]
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||
Regulatory liabilities - current | 117 | 136 |
Refundable Energy Cost - Current [Member]
|
||
Regulatory liabilities - current | 75 | 117 |
Deferred Derivative Gains - Current [Member]
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||
Regulatory liabilities - current | $ 6 | $ 4 |
Pension Benefits
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6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2011
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Pension Benefits | Note D — Pension Benefits Reference is made to Note E to the financial statements in Item 8 of the Form 10-K and Note D to the financial statement in Part I, Item 1 of the First Quarter Form 10-Q.
Net Periodic Benefit Cost The components of the Companies' net periodic benefit costs for the three and six months ended June 30, 2011 and 2010 were as follows:
Expected Contributions Based on estimates as of March 31, 2011, the Companies are not required under funding regulations and laws to make any contributions to the pension plan during 2011. The Companies' policy is to fund their accounting cost to the extent tax deductible. In 2011, Con Edison expects to make discretionary contributions to the pension plan of $533 million, of which CECONY contributed $491 million during the first six months of 2011. During the first six months of 2010, CECONY contributed $279 million to the pension plan. During the first six months of 2011, the Companies funded $11 million for the non-qualified supplemental pension plans. |
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CECONY [Member]
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Pension Benefits | Note D — Pension Benefits Reference is made to Note E to the financial statements in Item 8 of the Form 10-K and Note D to the financial statement in Part I, Item 1 of the First Quarter Form 10-Q.
Net Periodic Benefit Cost The components of the Companies' net periodic benefit costs for the three and six months ended June 30, 2011 and 2010 were as follows:
Expected Contributions Based on estimates as of March 31, 2011, the Companies are not required under funding regulations and laws to make any contributions to the pension plan during 2011. The Companies' policy is to fund their accounting cost to the extent tax deductible. In 2011, Con Edison expects to make discretionary contributions to the pension plan of $533 million, of which CECONY contributed $491 million during the first six months of 2011. During the first six months of 2010, CECONY contributed $279 million to the pension plan. During the first six months of 2011, the Companies funded $11 million for the non-qualified supplemental pension plans. |
Consolidated Statement Of Comprehensive Income (USD $)
In Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2011
|
Jun. 30, 2010
|
Jun. 30, 2011
|
Jun. 30, 2010
|
|
Consolidated Statement Of Comprehensive Income | ||||
NET INCOME | $ 168 | $ 186 | $ 483 | $ 415 |
OTHER COMPREHENSIVE INCOME/(LOSS), NET OF TAXES | ||||
Pension plan liability adjustments, net of taxes of $1 and $3 in 2011 and $1 and $3 in 2010, respectively | 2 | 1 | 5 | 4 |
TOTAL OTHER COMPREHENSIVE INCOME/(LOSS), NET OF TAXES | 2 | 1 | 5 | 4 |
COMPREHENSIVE INCOME | 170 | 187 | 488 | 419 |
Preferred stock dividend requirements of subsidiary | (3) | (3) | (6) | (6) |
COMPREHENSIVE INCOME FOR COMMON STOCK | $ 167 | $ 184 | $ 482 | $ 413 |
General
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6 Months Ended |
---|---|
Jun. 30, 2011
|
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General | NOTES TO THE FINANCIAL STATEMENTS (UNAUDITED)
General These combined notes accompany and form an integral part of the separate consolidated financial statements of each of the two separate registrants: Consolidated Edison, Inc. and its subsidiaries (Con Edison) and Consolidated Edison Company of New York, Inc. and its subsidiaries (CECONY). CECONY is a subsidiary of Con Edison and as such its financial condition and results of operations and cash flows, which are presented separately in the CECONY consolidated financial statements, are also consolidated, along with those of Con Edison's other utility subsidiary, Orange and Rockland Utilities, Inc. (O&R), and Con Edison's competitive energy businesses (discussed below) in Con Edison's consolidated financial statements. The term "Utilities" is used in these notes to refer to CECONY and O&R. As used in these notes, the term "Companies" refers to Con Edison and CECONY and, except as otherwise noted, the information in these combined notes relates to each of the Companies. However, CECONY makes no representation as to information relating to Con Edison or the subsidiaries of Con Edison other than itself. The separate interim consolidated financial statements of each of the Companies are unaudited but, in the opinion of their respective managements, reflect all adjustments (which include only normally recurring adjustments) necessary for a fair presentation of the results for the interim periods presented. The Companies' separate interim consolidated financial statements should be read together with their separate audited financial statements (including the combined notes thereto) included in Item 8 of their combined Annual Report on Form 10-K for the year ended December 31, 2010 (the Form 10-K) and their separate unaudited financial statements (including the combined notes thereto) included in Part I, Item 1 of their combined Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2011 (the First Quarter Form 10-Q). Information in the notes to the consolidated financial statements in the Form 10-K and the First Quarter Form 10-Q referred to in these notes is incorporated by reference herein. The use of terms such as "see" or "refer to" shall be deemed to incorporate by reference into these notes the information to which reference is made. Certain prior period amounts have been reclassified to conform to the current period presentation. Con Edison has two regulated utility subsidiaries: CECONY and O&R. CECONY provides electric service and gas service in New York City and Westchester County. The company also provides steam service in parts of Manhattan. O&R, along with its regulated utility subsidiaries, provides electric service in southeastern New York and adjacent areas of northern New Jersey and eastern Pennsylvania and gas service in southeastern New York and adjacent areas of eastern Pennsylvania. Con Edison has the following competitive energy businesses: Consolidated Edison Solutions, Inc. (Con Edison Solutions), a retail energy services company that sells electricity and also offers energy-related services; Consolidated Edison Energy, Inc. (Con Edison Energy), a wholesale energy supply and services company; and Consolidated Edison Development, Inc. (Con Edison Development), a company that develops and participates in infrastructure projects. |
CECONY [Member]
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General | General These combined notes accompany and form an integral part of the separate consolidated financial statements of each of the two separate registrants: Consolidated Edison, Inc. and its subsidiaries (Con Edison) and Consolidated Edison Company of New York, Inc. and its subsidiaries (CECONY). CECONY is a subsidiary of Con Edison and as such its financial condition and results of operations and cash flows, which are presented separately in the CECONY consolidated financial statements, are also consolidated, along with those of Con Edison's other utility subsidiary, Orange and Rockland Utilities, Inc. (O&R), and Con Edison's competitive energy businesses (discussed below) in Con Edison's consolidated financial statements. The term "Utilities" is used in these notes to refer to CECONY and O&R. As used in these notes, the term "Companies" refers to Con Edison and CECONY and, except as otherwise noted, the information in these combined notes relates to each of the Companies. However, CECONY makes no representation as to information relating to Con Edison or the subsidiaries of Con Edison other than itself. The separate interim consolidated financial statements of each of the Companies are unaudited but, in the opinion of their respective managements, reflect all adjustments (which include only normally recurring adjustments) necessary for a fair presentation of the results for the interim periods presented. The Companies' separate interim consolidated financial statements should be read together with their separate audited financial statements (including the combined notes thereto) included in Item 8 of their combined Annual Report on Form 10-K for the year ended December 31, 2010 (the Form 10-K) and their separate unaudited financial statements (including the combined notes thereto) included in Part I, Item 1 of their combined Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2011 (the First Quarter Form 10-Q). Information in the notes to the consolidated financial statements in the Form 10-K and the First Quarter Form 10-Q referred to in these notes is incorporated by reference herein. The use of terms such as "see" or "refer to" shall be deemed to incorporate by reference into these notes the information to which reference is made. Certain prior period amounts have been reclassified to conform to the current period presentation. Con Edison has two regulated utility subsidiaries: CECONY and O&R. CECONY provides electric service and gas service in New York City and Westchester County. The company also provides steam service in parts of Manhattan. O&R, along with its regulated utility subsidiaries, provides electric service in southeastern New York and adjacent areas of northern New Jersey and eastern Pennsylvania and gas service in southeastern New York and adjacent areas of eastern Pennsylvania. Con Edison has the following competitive energy businesses: Consolidated Edison Solutions, Inc. (Con Edison Solutions), a retail energy services company that sells electricity and also offers energy-related services; Consolidated Edison Energy, Inc. (Con Edison Energy), a wholesale energy supply and services company; and Consolidated Edison Development, Inc. (Con Edison Development), a company that develops and participates in infrastructure projects. |
Other Material Contingencies (Total Guarantees) (Details) (USD $)
In Millions |
Jun. 30, 2011
|
Dec. 31, 2010
|
---|---|---|
Guarantee obligations maximum exposure | $ 834 | $ 859 |
Guarantee Duration, 0-3 Years [Member]
|
||
Guarantee obligations maximum exposure | 671 | |
Guarantee Duration, 0-3 Years [Member] | Financial and Performance Guarantee for Commodity Transactions [Member]
|
||
Guarantee obligations maximum exposure | 616 | |
Guarantee Duration, 0-3 Years [Member] | Financial and Performance Guarantee for Intra-Company [Member]
|
||
Guarantee obligations maximum exposure | 15 | |
Guarantee Duration, 0-3 Years [Member] | Financial and Performance Guarantee Other [Member]
|
||
Guarantee obligations maximum exposure | 40 | |
Guarantee Duration, 4-10 Years [Member]
|
||
Guarantee obligations maximum exposure | 22 | |
Guarantee Duration, 4-10 Years [Member] | Financial and Performance Guarantee for Commodity Transactions [Member]
|
||
Guarantee obligations maximum exposure | 8 | |
Guarantee Duration, 4-10 Years [Member] | Financial and Performance Guarantee Other [Member]
|
||
Guarantee obligations maximum exposure | 14 | |
Guarantee Duration, Greater than 10 Years [Member]
|
||
Guarantee obligations maximum exposure | 141 | |
Guarantee Duration, Greater than 10 Years [Member] | Financial and Performance Guarantee for Commodity Transactions [Member]
|
||
Guarantee obligations maximum exposure | 140 | |
Guarantee Duration, Greater than 10 Years [Member] | Financial and Performance Guarantee for Intra-Company [Member]
|
||
Guarantee obligations maximum exposure | 1 | |
Financial and Performance Guarantee for Commodity Transactions [Member]
|
||
Guarantee obligations maximum exposure | 764 | |
Financial and Performance Guarantee for Intra-Company [Member]
|
||
Guarantee obligations maximum exposure | 16 | |
Financial and Performance Guarantee Other [Member]
|
||
Guarantee obligations maximum exposure | $ 54 |
Summary Of Significant Accounting Policies (Earnings Per Common Share) (Details) (USD $)
In Millions, except Per Share data |
3 Months Ended | 6 Months Ended | ||||
---|---|---|---|---|---|---|
Jun. 30, 2011
|
Mar. 31, 2011
|
Jun. 30, 2010
|
Mar. 31, 2010
|
Jun. 30, 2011
|
Jun. 30, 2010
|
|
Summary Of Significant Accounting Policies | ||||||
Net income for common stock | $ 165 | $ 311 | $ 183 | $ 226 | $ 477 | $ 409 |
Weighted average common shares outstanding - Basic | 292.7 | 282.0 | 292.3 | 281.7 | ||
Add: Incremental shares attributable to effect of potentially dilutive securities | 1.6 | 1.5 | 1.6 | 1.5 | ||
Adjusted weighted average common shares outstanding - Diluted | 294.3 | 283.5 | 293.9 | 283.2 | ||
Net income for common stock per common share - basic | $ 0.57 | $ 0.65 | $ 1.63 | $ 1.45 | ||
Net income for common stock per common share - diluted | $ 0.56 | $ 0.64 | $ 1.62 | $ 1.44 |
Summary Of Significant Accounting Policies
|
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2011
|
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Summary Of Significant Accounting Policies | Note A — Summary of Significant Accounting Policies Earnings Per Common Share Reference is made to "Earnings Per Common Share" in Note A to the financial statements included in Item 8 of the Form 10-K. For the three and six months ended June 30, 2011 and 2010, Con Edison's basic and diluted EPS for Con Edison are calculated as follows:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
CECONY [Member]
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary Of Significant Accounting Policies | Note A — Summary of Significant Accounting Policies Earnings Per Common Share Reference is made to "Earnings Per Common Share" in Note A to the financial statements included in Item 8 of the Form 10-K. For the three and six months ended June 30, 2011 and 2010, Con Edison's basic and diluted EPS for Con Edison are calculated as follows:
|
Derivative Instruments And Hedging Activities (Narrative) (Details) (USD $)
In Millions |
6 Months Ended |
---|---|
Jun. 30, 2011
|
|
Energy supply and hedging activities credit exposure total | $ 152 |
Makeup of net credit exposure counterparties | 58 |
Makeup of net credit exposure primarily with commodity exchange | 53 |
Independent system operators | 39 |
Number of contracts considered derivatives | 1,705 |
Non-Investment Grade Counterparties [Member]
|
|
Makeup of net credit exposure primarily with commodity exchange | $ 2 |
Financial Information By Business Segment (Tables)
|
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2011
|
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Financial Information By Business Segment | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financial Data For The Business Segments |
|
Short-Term Borrowing (Details) (USD $)
|
Jun. 30, 2011
|
Dec. 31, 2010
|
---|---|---|
Short-Term Borrowing | ||
Commercial paper outstanding | $ 0 | $ 0 |
Letters of credit outstanding under the credit agreement | $ 188,000,000 | $ 197,000,000 |
Financial Information By Business Segment (Financial Data For The Business Segments) (Details) (USD $)
In Millions |
3 Months Ended | 6 Months Ended | ||||||||
---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2011
|
Jun. 30, 2010
|
Jun. 30, 2011
|
Jun. 30, 2010
|
|||||||
Operating revenues | $ 2,993 | $ 3,017 | $ 6,342 | $ 6,478 | ||||||
Depreciation and amortization | 219 | 211 | 437 | 415 | ||||||
Operating income | 398 | 429 | 1,024 | 921 | ||||||
CECONY - Electric [Member]
|
||||||||||
Operating revenues | 2,013 | 2,104 | 3,734 | 3,832 | ||||||
Inter-segment revenues | 3 | 2 | 6 | 6 | ||||||
Depreciation and amortization | 162 | 156 | 324 | 307 | ||||||
Operating income | 350 | 319 | 566 | 514 | ||||||
CECONY - Gas [Member]
|
||||||||||
Operating revenues | 296 | 239 | 959 | 922 | ||||||
Inter-segment revenues | 1 | 1 | 2 | 2 | ||||||
Depreciation and amortization | 27 | 25 | 54 | 50 | ||||||
Operating income | 31 | 44 | 237 | 259 | ||||||
CECONY - Steam [Member]
|
||||||||||
Operating revenues | 107 | 89 | 432 | 396 | ||||||
Inter-segment revenues | 20 | 18 | 40 | 36 | ||||||
Depreciation and amortization | 16 | 15 | 32 | 31 | ||||||
Operating income | (11) | (29) | 114 | 73 | ||||||
O&R - Electric [Member]
|
||||||||||
Operating revenues | 141 | 153 | 289 | 314 | ||||||
Depreciation and amortization | 8 | 8 | 17 | 16 | ||||||
Operating income | 14 | 15 | 25 | 22 | ||||||
O&R - Gas [Member]
|
||||||||||
Operating revenues | 37 | 35 | 130 | 125 | ||||||
Depreciation and amortization | 4 | 3 | 7 | 6 | ||||||
Operating income | 1 | (1) | 28 | 21 | ||||||
Competitive Energy Businesses [Member]
|
||||||||||
Operating revenues | 406 | 406 | 814 | 906 | ||||||
Inter-segment revenues | 2 | 2 | 5 | 4 | ||||||
Depreciation and amortization | 2 | 4 | 3 | 5 | ||||||
Operating income | 14 | 81 | 58 | 33 | ||||||
Other Revenues and Eliminations in Segment Information [Member]
|
||||||||||
Operating revenues | (7) | [1] | (9) | [1] | (16) | [1] | (17) | [1] | ||
Inter-segment revenues | (2) | [1] | (2) | [1] | (5) | [1] | (4) | [1] | ||
Operating income | (1) | [1] | (4) | [1] | (1) | [1] | ||||
CECONY [Member]
|
||||||||||
Operating revenues | 2,416 | 2,432 | 5,125 | 5,150 | ||||||
Depreciation and amortization | 205 | 196 | 410 | 388 | ||||||
Operating income | 370 | 334 | 917 | 846 | ||||||
Consolidation Adjustments [Member]
|
||||||||||
Inter-segment revenues | (24) | (21) | (48) | (44) | ||||||
O&R [Member]
|
||||||||||
Operating revenues | 178 | 188 | 419 | 439 | ||||||
Depreciation and amortization | 12 | 11 | 24 | 22 | ||||||
Operating income | $ 15 | $ 14 | $ 53 | $ 43 | ||||||
|
Fair Value Measurements (Tables)
|
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2011
|
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Fair Value Measurements | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Assets And Liabilities Measured At Fair Value On A Recurring Basis | Assets and liabilities measured at fair value on a recurring basis as of June 30, 2011 are summarized below.
Assets and liabilities measured at fair value on a recurring basis as of December 31, 2010 are summarized below.
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Reconciliation Of The 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 for the three and six months ended June 30, 2010 and classified as Level 3 in the fair value hierarchy below.
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Derivative Instruments And Hedging Activities
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6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2011
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Derivative Instruments And Hedging Activities | Note I — Derivative Instruments and Hedging Activities Under the accounting rules for derivatives and hedging, derivatives are recognized on the balance sheet at fair value, unless an exception is available under the accounting rules. Certain qualifying derivative contracts have been designated as normal purchases or normal sales contracts. These contracts are not reported at fair value under the accounting rules. Energy Price Hedging Con Edison's subsidiaries hedge market price fluctuations associated with physical purchases and sales of electricity, natural gas, and steam by using derivative instruments including futures, forwards, basis swaps, options, transmission congestion contracts and financial transmission rights contracts. The fair values of these hedges at June 30, 2011 and December 31, 2010 were as follows:
Credit Exposure The Companies are exposed to credit risk related to transactions entered into primarily for the various energy supply and hedging activities by the Utilities and the competitive energy businesses. The Companies use credit policies to manage this risk, including an established credit approval process, monitoring of counterparty limits, netting provisions within agreements, collateral or prepayment arrangements, credit insurance and credit default swaps. At June 30, 2011, Con Edison and CECONY had $152 million and $31 million of credit exposure in connection with energy supply and hedging activities, net of collateral, respectively. Con Edison's net credit exposure consisted of $58 million with investment-grade counterparties, $53 million with commodity exchange brokers, $39 million with independent system operators and $2 million with non-investment grade counterparties. CECONY's net credit exposure consisted of $3 million with investment-grade counterparties and $28 million with commodity exchange brokers. Economic Hedges The Companies enter into certain derivative instruments that do not qualify or are not designated as hedges under the accounting rules for derivatives and hedging. However, management believes these instruments represent economic hedges that mitigate exposure to fluctuations in commodity prices.
The fair values of the Companies' commodity derivatives at June 30, 2011 were:
The fair values of the Companies' commodity derivatives at December 31, 2010 were:
The Utilities generally recover all of their prudently incurred fuel, purchased power and gas cost, including hedging gains and losses, in accordance with rate provisions approved by the applicable state utility commissions. See "Recoverable Energy Costs" in Note A to the financial statements in Item 8 of the Form 10-K. In accordance with the accounting rules for regulated operations, the Utilities record a regulatory asset or liability to defer recognition of unrealized gains and losses on their electric and gas derivatives. As gains and losses are realized in future periods, they will be recognized as purchased power, gas and fuel costs in the Companies' consolidated income statements. Con Edison's competitive energy businesses record realized and unrealized gains and losses on their derivative contracts in earnings in the reporting period in which they occur.
The following tables present the changes in the fair values of commodity derivatives that have been deferred or recognized in earnings for the three and six months ended June 30, 2011:
The following tables present the changes in the fair values of commodity derivatives that have been deferred or recognized in earnings for the three and six months ended June 30, 2010:
As of June 30, 2011, Con Edison had 1,705 contracts, including 699 CECONY contracts, which were considered to be derivatives under the accounting rules for derivatives and hedging (excluding qualifying derivative contracts, which have been designated as normal purchases or normal sales contracts). The following table presents the number of contracts by commodity type:
The Companies also enter into electric congestion and gas basis swap contracts to hedge the congestion and transportation charges which are associated with electric and gas contracts and hedged volumes. The collateral requirements associated with, and settlement of, derivative transactions are included in net cash flows from operating activities in the Companies' consolidated statement of cash flows. Most derivative instrument contracts contain provisions that may require the Companies to provide collateral on derivative instruments in net liability positions. The amount of collateral to be provided will depend on the fair value of the derivative instruments and the Companies' credit ratings.
The aggregate fair value of all derivative instruments with credit-risk-related contingent features that are in a net liability position and collateral posted at June 30, 2011, and the additional collateral that would have been required to be posted had the lowest applicable credit rating been reduced one level and to below investment grade were:
Interest Rate Swap O&R has an interest rate swap pursuant to which it pays a fixed-rate of 6.09 percent and receives a LIBOR-based variable rate. The fair value of this interest rate swap at June 30, 2011 was an unrealized loss of $10 million, which has been included in Con Edison's consolidated balance sheet as a noncurrent liability/fair value of derivative liabilities and a regulatory asset. The change in the fair value of the swap for the three and six months ended June 30, 2011 was not material. In the event O&R's credit rating was downgraded to BBB- or lower by S&P or Baa3 or lower by Moody's, the swap counterparty could elect to terminate the agreement and, if it did so, the parties would then be required to settle the transaction. |
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CECONY [Member]
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Derivative Instruments And Hedging Activities | Note I — Derivative Instruments and Hedging Activities Under the accounting rules for derivatives and hedging, derivatives are recognized on the balance sheet at fair value, unless an exception is available under the accounting rules. Certain qualifying derivative contracts have been designated as normal purchases or normal sales contracts. These contracts are not reported at fair value under the accounting rules. Energy Price Hedging Con Edison's subsidiaries hedge market price fluctuations associated with physical purchases and sales of electricity, natural gas, and steam by using derivative instruments including futures, forwards, basis swaps, options, transmission congestion contracts and financial transmission rights contracts. The fair values of these hedges at June 30, 2011 and December 31, 2010 were as follows:
Credit Exposure The Companies are exposed to credit risk related to transactions entered into primarily for the various energy supply and hedging activities by the Utilities and the competitive energy businesses. The Companies use credit policies to manage this risk, including an established credit approval process, monitoring of counterparty limits, netting provisions within agreements, collateral or prepayment arrangements, credit insurance and credit default swaps. At June 30, 2011, Con Edison and CECONY had $152 million and $31 million of credit exposure in connection with energy supply and hedging activities, net of collateral, respectively. Con Edison's net credit exposure consisted of $58 million with investment-grade counterparties, $53 million with commodity exchange brokers, $39 million with independent system operators and $2 million with non-investment grade counterparties. CECONY's net credit exposure consisted of $3 million with investment-grade counterparties and $28 million with commodity exchange brokers. Economic Hedges The Companies enter into certain derivative instruments that do not qualify or are not designated as hedges under the accounting rules for derivatives and hedging. However, management believes these instruments represent economic hedges that mitigate exposure to fluctuations in commodity prices.
The fair values of the Companies' commodity derivatives at June 30, 2011 were:
The fair values of the Companies' commodity derivatives at December 31, 2010 were:
The Utilities generally recover all of their prudently incurred fuel, purchased power and gas cost, including hedging gains and losses, in accordance with rate provisions approved by the applicable state utility commissions. See "Recoverable Energy Costs" in Note A to the financial statements in Item 8 of the Form 10-K. In accordance with the accounting rules for regulated operations, the Utilities record a regulatory asset or liability to defer recognition of unrealized gains and losses on their electric and gas derivatives. As gains and losses are realized in future periods, they will be recognized as purchased power, gas and fuel costs in the Companies' consolidated income statements. Con Edison's competitive energy businesses record realized and unrealized gains and losses on their derivative contracts in earnings in the reporting period in which they occur.
The following tables present the changes in the fair values of commodity derivatives that have been deferred or recognized in earnings for the three and six months ended June 30, 2011:
The following tables present the changes in the fair values of commodity derivatives that have been deferred or recognized in earnings for the three and six months ended June 30, 2010:
As of June 30, 2011, Con Edison had 1,705 contracts, including 699 CECONY contracts, which were considered to be derivatives under the accounting rules for derivatives and hedging (excluding qualifying derivative contracts, which have been designated as normal purchases or normal sales contracts). The following table presents the number of contracts by commodity type:
The Companies also enter into electric congestion and gas basis swap contracts to hedge the congestion and transportation charges which are associated with electric and gas contracts and hedged volumes. The collateral requirements associated with, and settlement of, derivative transactions are included in net cash flows from operating activities in the Companies' consolidated statement of cash flows. Most derivative instrument contracts contain provisions that may require the Companies to provide collateral on derivative instruments in net liability positions. The amount of collateral to be provided will depend on the fair value of the derivative instruments and the Companies' credit ratings.
The aggregate fair value of all derivative instruments with credit-risk-related contingent features that are in a net liability position and collateral posted at June 30, 2011, and the additional collateral that would have been required to be posted had the lowest applicable credit rating been reduced one level and to below investment grade were:
Interest Rate Swap O&R has an interest rate swap pursuant to which it pays a fixed-rate of 6.09 percent and receives a LIBOR-based variable rate. The fair value of this interest rate swap at June 30, 2011 was an unrealized loss of $10 million, which has been included in Con Edison's consolidated balance sheet as a noncurrent liability/fair value of derivative liabilities and a regulatory asset. The change in the fair value of the swap for the three and six months ended June 30, 2011 was not material. In the event O&R's credit rating was downgraded to BBB- or lower by S&P or Baa3 or lower by Moody's, the swap counterparty could elect to terminate the agreement and, if it did so, the parties would then be required to settle the transaction. |
Regulatory Matters
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Jun. 30, 2011
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Regulatory Matters | Note B — Regulatory Matters Reference is made to "Accounting Policies" in Note A and "Rate Agreements" in Note B to the financial statements included in Item 8 of the Form 10-K and Note B to the financial statements in Part I, Item 1 of the First Quarter Form 10-Q. Rate Agreements O&R — Electric In June 2011, the NYSPSC adopted an order granting O&R an electric rate increase, effective July 1, 2011, of $26.6 million. The NYSPSC ruling reflects the following major items:
On July 29, 2011, O&R filed a request with the NYSPSC for an increase in the rates it charges for electric service rendered in New York, effective July 1, 2012, of $17.7 million. The filing reflects a return on common equity of 10.75 percent and a common equity ratio of 49.4 percent. Among other things, the filing proposes continuation of the current provisions with respect to recovery from customers of the cost of purchased power and with respect to the deferral of differences between actual expenses allocable to the electric business for pensions and other postretirement benefits, environmental, and research and developmental costs to the amounts for such costs reflected in electric rates. The filing also includes an alternative proposal for a three-year electric rate plan with annual rate increases of $17.6 million effective July 2012, 2013 and 2014. The multi-year filing reflects a return on common equity of 11.25 percent. Other Regulatory Matters In February 2009, the NYSPSC commenced a proceeding to examine the prudence of certain CECONY expenditures (see "Investigations of Vendor Payments" in Note G). Pursuant to NYSPSC orders, a portion of the company's revenues (currently, $249 million, $32 million and $6 million on an annual basis for electric, gas and steam service, respectively) is being collected subject to potential refund to customers. At June 30, 2011, the company had collected an estimated $681 million from customers subject to potential refund in connection with this proceeding. In October 2010, a NYSPSC consultant reported its $21 million provisional assessment, which the company has disputed, of potential overcharges for construction work. The potential overcharges related to transactions that involved certain employees who were arrested and a contractor that performed work for the company. The NYSPSC's consultant is expected to continue to review the company's expenditures. At June 30, 2011, the company had a $10.5 million regulatory liability relating to this matter. The company is unable to estimate the amount, if any, by which any refund required by the NYSPSC may exceed this regulatory liability. In February 2011, the NYSPSC initiated a proceeding to examine the existing mechanisms pursuant to which utilities recover site investigation and remediation costs and possible alternatives. See Note G to the financial statements in Item 8 of the Form 10-K and Note F to the Second Quarter Financial Statements.
Regulatory Assets and Liabilities Regulatory assets and liabilities at June 30, 2011 and December 31, 2010 were comprised of the following items:
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CECONY [Member]
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Regulatory Matters | Note B — Regulatory Matters Reference is made to "Accounting Policies" in Note A and "Rate Agreements" in Note B to the financial statements included in Item 8 of the Form 10-K and Note B to the financial statements in Part I, Item 1 of the First Quarter Form 10-Q. Rate Agreements O&R — Electric In June 2011, the NYSPSC adopted an order granting O&R an electric rate increase, effective July 1, 2011, of $26.6 million. The NYSPSC ruling reflects the following major items:
On July 29, 2011, O&R filed a request with the NYSPSC for an increase in the rates it charges for electric service rendered in New York, effective July 1, 2012, of $17.7 million. The filing reflects a return on common equity of 10.75 percent and a common equity ratio of 49.4 percent. Among other things, the filing proposes continuation of the current provisions with respect to recovery from customers of the cost of purchased power and with respect to the deferral of differences between actual expenses allocable to the electric business for pensions and other postretirement benefits, environmental, and research and developmental costs to the amounts for such costs reflected in electric rates. The filing also includes an alternative proposal for a three-year electric rate plan with annual rate increases of $17.6 million effective July 2012, 2013 and 2014. The multi-year filing reflects a return on common equity of 11.25 percent. Other Regulatory Matters In February 2009, the NYSPSC commenced a proceeding to examine the prudence of certain CECONY expenditures (see "Investigations of Vendor Payments" in Note G). Pursuant to NYSPSC orders, a portion of the company's revenues (currently, $249 million, $32 million and $6 million on an annual basis for electric, gas and steam service, respectively) is being collected subject to potential refund to customers. At June 30, 2011, the company had collected an estimated $681 million from customers subject to potential refund in connection with this proceeding. In October 2010, a NYSPSC consultant reported its $21 million provisional assessment, which the company has disputed, of potential overcharges for construction work. The potential overcharges related to transactions that involved certain employees who were arrested and a contractor that performed work for the company. The NYSPSC's consultant is expected to continue to review the company's expenditures. At June 30, 2011, the company had a $10.5 million regulatory liability relating to this matter. The company is unable to estimate the amount, if any, by which any refund required by the NYSPSC may exceed this regulatory liability. In February 2011, the NYSPSC initiated a proceeding to examine the existing mechanisms pursuant to which utilities recover site investigation and remediation costs and possible alternatives. See Note G to the financial statements in Item 8 of the Form 10-K and Note F to the Second Quarter Financial Statements.
Regulatory Assets and Liabilities Regulatory assets and liabilities at June 30, 2011 and December 31, 2010 were comprised of the following items:
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Summary Of Significant Accounting Policies (Policy)
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Jun. 30, 2011
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Summary Of Significant Accounting Policies | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Common Share | Earnings Per Common Share Reference is made to "Earnings Per Common Share" in Note A to the financial statements included in Item 8 of the Form 10-K. For the three and six months ended June 30, 2011 and 2010, Con Edison's basic and diluted EPS for Con Edison are calculated as follows:
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Other Material Contingencies (Narrative) (Details) (USD $)
In Millions |
6 Months Ended | |
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Jun. 30, 2011
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Dec. 31, 2010
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Lease in lease out total investment | $ 259 | |
Lease in lease out total financed by equity | 93 | |
Lease in lease out total financed by long-term debt | 166 | |
The company's investment in leverage leases | (48) | (41) |
Gross investment in leverage leases | 234 | 235 |
Deferred tax liabilities | 282 | 276 |
Tax savings from lease in lease out transactions | 229 | |
Guarantee obligations maximum exposure | 834 | 859 |
Tax Deficiency Paid in December 2005 [Member]
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Tax deficiency paid to IRS | 0.3 | |
Interest in April 2006 [Member]
|
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Interest paid related to tax deficiency | 0.2 | |
Interest up to March 2011 [Member]
|
||
Interest paid related to tax deficiency | 82.0 | |
Disallowance of Tax 1998-2007 [Member]
|
||
Disallowed deduction | 416 | |
Disallowance of Tax 2009 [Member]
|
||
Disallowed deduction | 41 | |
Disallowance of Tax 2008 [Member]
|
||
Disallowed deduction | $ 42 |
Derivative Instruments And Hedging Activities (Tables)
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Jun. 30, 2011
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Derivative Instruments And Hedging Activities | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Energy Price Hedging Fair Values |
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Fair Values Of The Companies' Commodity Derivatives | The fair values of the Companies' commodity derivatives at June 30, 2011 were:
The fair values of the Companies' commodity derivatives at December 31, 2010 were:
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Changes In The Fair Values Of Commodity Derivatives | The following tables present the changes in the fair values of commodity derivatives that have been deferred or recognized in earnings for the three and six months ended June 30, 2011:
The following tables present the changes in the fair values of commodity derivatives that have been deferred or recognized in earnings for the three and six months ended June 30, 2010:
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Number Of Derivative Contracts By Commodity Type |
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Aggregate Fair Value Of All Derivative Instruments With Credit Risk Related Contingent Features |
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Consolidated Balance Sheet (Parenthetical) (USD $)
In Millions |
Jun. 30, 2011
|
Dec. 31, 2010
|
---|---|---|
Accounts receivable-customers, allowance for uncollectible accounts | $ 84 | $ 76 |
Other receivables, allowance for uncollectible accounts | 9 | 8 |
Non-utility property, accumulated depreciation | 55 | 51 |
Intangible assets, accumulated amortization | 3 | 3 |
CECONY [Member]
|
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Accounts receivable-customers, allowance for uncollectible accounts | 75 | 68 |
Other receivables, allowance for uncollectible accounts | 8 | 7 |
Non-utility property, accumulated depreciation | $ 23 | $ 22 |
Summary Of Significant Accounting Policies (Tables)
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6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2011
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Summary Of Significant Accounting Policies | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Common Share |
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Derivative Instruments And Hedging Activities (Fair Values Of The Companies' Commodity Derivatives) (Details) (USD $)
In Millions |
Jun. 30, 2011
|
Dec. 31, 2010
|
---|---|---|
Fair value of derivative assets | $ 176 | $ 235 |
Net derivatives asset | 113 | 106 |
Fair value of derivative liabilities | 297 | 496 |
Net derivatives liability | 134 | 191 |
Derivative Asset [Member]
|
||
Impact of netting | (63) | (129) |
Derivative Asset [Member] | Other Current Assets [Member]
|
||
Fair value of derivative assets | 134 | 184 |
Derivative Asset [Member] | Other Deferred Charges and Non-Current Assets [Member]
|
||
Fair value of derivative assets | 42 | 51 |
Derivative Liability [Member]
|
||
Impact of netting | (163) | (305) |
Derivative Liability [Member] | Fair Value of Derivative Liabilities, Current [Member]
|
||
Fair value of derivative liabilities | 234 | 385 |
Derivative Liability [Member] | Fair Value of Derivative Liabilities, Long Term [Member]
|
||
Fair value of derivative liabilities | $ 63 | $ 111 |
Consolidated Statement Of Comprehensive Income (Parenthetical) (USD $)
In Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2011
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Jun. 30, 2010
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Jun. 30, 2011
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Jun. 30, 2010
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Consolidated Statement Of Comprehensive Income | ||||
Pension plan liability adjustments, net of taxes of $1 and $3 in 2011 and $1 and $3 in 2010, respectively | $ 1 | $ 1 | $ 3 | $ 3 |
Other Material Contingencies
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6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2011
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Other Material Contingencies | Note G — Other Material Contingencies Manhattan Steam Main Rupture In July 2007, a CECONY steam main located in midtown Manhattan ruptured. It has been reported that one person died and others were injured as a result of the incident. Several buildings in the area were damaged. Debris from the incident included dirt and mud containing asbestos. The response to the incident required the closing of several buildings and streets for various periods. Approximately 100 suits are pending against the company seeking generally unspecified compensatory and, in some cases, punitive damages, for personal injury, property damage and business interruption. The company has not accrued a liability for the suits. The company has notified its insurers of the incident and believes that the policies in force at the time of the incident will cover most of the company's costs, which the company is unable to estimate, but which could be substantial, to satisfy its liability to others in connection with the incident. Investigations of Vendor Payments In January 2009, CECONY commenced an internal investigation relating to the arrests of certain employees and retired employees (all of whom have since pleaded guilty) for accepting kickbacks from contractors that performed construction work for the company. The company has retained a law firm, which has retained an accounting firm, to assist in the company's investigation. The company is providing information to governmental authorities, which consider the company to be a victim of unlawful conduct, in connection with their investigation of the arrested employees and contractors. The company has terminated its employment of the arrested employees and its contracts with the contractors. In February 2009, the NYSPSC commenced a proceeding that, among other things, will examine the prudence of certain of the company's expenditures relating to the arrests and consider whether additional expenditures should also be examined (see "Other Regulatory Matters" in Note B). CECONY is also investigating the September 2010 arrest of a retired employee (who has since pleaded guilty to participating in a bribery scheme in which the employee received payments from two companies that supplied materials to the company) and the January 2011 arrest of an employee (for accepting kickbacks from an engineering firm that performed work for the company). CECONY has provided information to governmental authorities in connection with their ongoing investigations of these matters. The company, based upon its evaluation of its internal controls for 2010 and previous years, believes that the controls were effective to provide reasonable assurance that its financial statements have been fairly presented, in all material respects, in conformity with generally accepted accounting principles. Because the company's investigations are ongoing, the company is unable to predict the impact of any of the employees' unlawful conduct on the company's internal controls, business, results of operations or financial position. Lease In/Lease Out Transactions In each of 1997 and 1999, Con Edison Development entered into a transaction in which it leased property and then immediately subleased it back to the lessor (termed "Lease In/Lease Out," or LILO transactions). The transactions respectively involve electric generating and gas distribution facilities in the Netherlands, with a total investment of $259 million. The transactions were financed with $93 million of equity and $166 million of non-recourse, long-term debt secured by the underlying assets. In accordance with the accounting rules for leases, Con Edison is accounting for the two LILO transactions as leveraged leases. Accordingly, the company's investment in these leases, net of non-recourse debt, is carried as a single amount in Con Edison's consolidated balance sheet and income is recognized pursuant to a method that incorporates a level rate of return for those years when net investment in the lease is positive, based upon the after-tax cash flows projected at the inception of the leveraged leases. The company's investment in these leveraged leases was $(48) million at June 30, 2011 and $(41) million at December 31, 2010 and is comprised of a $234 million gross investment less $282 million deferred tax liabilities at June 30, 2011 and $235 million gross investment less $276 million of deferred tax liabilities at December 31, 2010. On audit of Con Edison's tax return for 1997, the IRS disallowed the tax losses in connection with the 1997 LILO transaction. In December 2005, Con Edison paid a $0.3 million income tax deficiency asserted by the IRS for the tax year 1997 with respect to the 1997 LILO transaction. In April 2006, the company paid interest of $0.2 million associated with the deficiency and commenced an action in the United States Court of Federal Claims, entitled Consolidated Edison Company of New York, Inc. v. United States, to obtain a refund of this tax payment and interest. A trial was completed in November 2007. In October 2009, the court issued a decision in favor of the company concluding that the 1997 LILO transaction was, in substance, a true lease that possessed economic substance, the loans relating to the lease constituted bona fide indebtedness, and the deductions for the 1997 LILO transactions claimed by the company in its 1997 federal income tax return are allowable. The IRS is entitled to appeal the decision. In connection with its audit of Con Edison's federal income tax returns for 1998 through 2007, the IRS disallowed $416 million of net tax deductions taken with respect to both of the LILO transactions for the tax years. Con Edison is pursuing administrative appeals of these audit level disallowances. In connection with its audit of Con Edison's federal income tax returns for 2009 and 2008, the IRS has disallowed $41 million and $42 million, respectively, of net tax deductions taken with respect to both of the LILO transactions. When these audit level disallowances become appealable, Con Edison intends to file an appeal of the disallowances. Con Edison believes that its LILO transactions have been correctly reported, and has not recorded any reserve with respect to the disallowance of tax losses, or related interest, in connection with its LILO transactions. Con Edison's estimated tax savings, reflected in its financial statements, from the two LILO transactions through June 30, 2011, in the aggregate, was $229 million. If Con Edison were required to repay all or a portion of these amounts, it would also be required to pay interest of up to $82 million net of tax at June 30, 2011. Pursuant to the accounting rules for leveraged lease transactions, the expected timing of income tax cash flows generated by Con Edison's LILO transactions are required to be reviewed at least annually. If the expected timing of the cash flows is revised, the rate of return and the allocation of income would be recalculated from the inception of the LILO transactions, and the company would be required to recalculate the accounting effect of the LILO transactions, which would result in a charge to earnings that could have a material adverse effect on the company's results of operations.
Guarantees Con Edison and its subsidiaries enter into various agreements providing financial or performance assurance primarily to third parties on behalf of their subsidiaries. Maximum amounts guaranteed by Con Edison totaled $834 million and $859 million at June 30, 2011 and December 31, 2010, respectively. A summary, by type (described in Note H to the financial statements in Item 8 of the Form 10-K) and term, of Con Edison's total guarantees at June 30, 2011 is as follows:
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CECONY [Member]
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Other Material Contingencies | Note G — Other Material Contingencies Manhattan Steam Main Rupture In July 2007, a CECONY steam main located in midtown Manhattan ruptured. It has been reported that one person died and others were injured as a result of the incident. Several buildings in the area were damaged. Debris from the incident included dirt and mud containing asbestos. The response to the incident required the closing of several buildings and streets for various periods. Approximately 100 suits are pending against the company seeking generally unspecified compensatory and, in some cases, punitive damages, for personal injury, property damage and business interruption. The company has not accrued a liability for the suits. The company has notified its insurers of the incident and believes that the policies in force at the time of the incident will cover most of the company's costs, which the company is unable to estimate, but which could be substantial, to satisfy its liability to others in connection with the incident. Investigations of Vendor Payments In January 2009, CECONY commenced an internal investigation relating to the arrests of certain employees and retired employees (all of whom have since pleaded guilty) for accepting kickbacks from contractors that performed construction work for the company. The company has retained a law firm, which has retained an accounting firm, to assist in the company's investigation. The company is providing information to governmental authorities, which consider the company to be a victim of unlawful conduct, in connection with their investigation of the arrested employees and contractors. The company has terminated its employment of the arrested employees and its contracts with the contractors. In February 2009, the NYSPSC commenced a proceeding that, among other things, will examine the prudence of certain of the company's expenditures relating to the arrests and consider whether additional expenditures should also be examined (see "Other Regulatory Matters" in Note B). CECONY is also investigating the September 2010 arrest of a retired employee (who has since pleaded guilty to participating in a bribery scheme in which the employee received payments from two companies that supplied materials to the company) and the January 2011 arrest of an employee (for accepting kickbacks from an engineering firm that performed work for the company). CECONY has provided information to governmental authorities in connection with their ongoing investigations of these matters. The company, based upon its evaluation of its internal controls for 2010 and previous years, believes that the controls were effective to provide reasonable assurance that its financial statements have been fairly presented, in all material respects, in conformity with generally accepted accounting principles. Because the company's investigations are ongoing, the company is unable to predict the impact of any of the employees' unlawful conduct on the company's internal controls, business, results of operations or financial position. Lease In/Lease Out Transactions In each of 1997 and 1999, Con Edison Development entered into a transaction in which it leased property and then immediately subleased it back to the lessor (termed "Lease In/Lease Out," or LILO transactions). The transactions respectively involve electric generating and gas distribution facilities in the Netherlands, with a total investment of $259 million. The transactions were financed with $93 million of equity and $166 million of non-recourse, long-term debt secured by the underlying assets. In accordance with the accounting rules for leases, Con Edison is accounting for the two LILO transactions as leveraged leases. Accordingly, the company's investment in these leases, net of non-recourse debt, is carried as a single amount in Con Edison's consolidated balance sheet and income is recognized pursuant to a method that incorporates a level rate of return for those years when net investment in the lease is positive, based upon the after-tax cash flows projected at the inception of the leveraged leases. The company's investment in these leveraged leases was $(48) million at June 30, 2011 and $(41) million at December 31, 2010 and is comprised of a $234 million gross investment less $282 million deferred tax liabilities at June 30, 2011 and $235 million gross investment less $276 million of deferred tax liabilities at December 31, 2010. On audit of Con Edison's tax return for 1997, the IRS disallowed the tax losses in connection with the 1997 LILO transaction. In December 2005, Con Edison paid a $0.3 million income tax deficiency asserted by the IRS for the tax year 1997 with respect to the 1997 LILO transaction. In April 2006, the company paid interest of $0.2 million associated with the deficiency and commenced an action in the United States Court of Federal Claims, entitled Consolidated Edison Company of New York, Inc. v. United States, to obtain a refund of this tax payment and interest. A trial was completed in November 2007. In October 2009, the court issued a decision in favor of the company concluding that the 1997 LILO transaction was, in substance, a true lease that possessed economic substance, the loans relating to the lease constituted bona fide indebtedness, and the deductions for the 1997 LILO transactions claimed by the company in its 1997 federal income tax return are allowable. The IRS is entitled to appeal the decision. In connection with its audit of Con Edison's federal income tax returns for 1998 through 2007, the IRS disallowed $416 million of net tax deductions taken with respect to both of the LILO transactions for the tax years. Con Edison is pursuing administrative appeals of these audit level disallowances. In connection with its audit of Con Edison's federal income tax returns for 2009 and 2008, the IRS has disallowed $41 million and $42 million, respectively, of net tax deductions taken with respect to both of the LILO transactions. When these audit level disallowances become appealable, Con Edison intends to file an appeal of the disallowances. Con Edison believes that its LILO transactions have been correctly reported, and has not recorded any reserve with respect to the disallowance of tax losses, or related interest, in connection with its LILO transactions. Con Edison's estimated tax savings, reflected in its financial statements, from the two LILO transactions through June 30, 2011, in the aggregate, was $229 million. If Con Edison were required to repay all or a portion of these amounts, it would also be required to pay interest of up to $82 million net of tax at June 30, 2011. Pursuant to the accounting rules for leveraged lease transactions, the expected timing of income tax cash flows generated by Con Edison's LILO transactions are required to be reviewed at least annually. If the expected timing of the cash flows is revised, the rate of return and the allocation of income would be recalculated from the inception of the LILO transactions, and the company would be required to recalculate the accounting effect of the LILO transactions, which would result in a charge to earnings that could have a material adverse effect on the company's results of operations.
Guarantees Con Edison and its subsidiaries enter into various agreements providing financial or performance assurance primarily to third parties on behalf of their subsidiaries. Maximum amounts guaranteed by Con Edison totaled $834 million and $859 million at June 30, 2011 and December 31, 2010, respectively. A summary, by type (described in Note H to the financial statements in Item 8 of the Form 10-K) and term, of Con Edison's total guarantees at June 30, 2011 is as follows:
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Pension Benefits (Net Periodic Pension Benefit Costs) (Details) (USD $)
In Millions |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Jun. 30, 2011
|
Jun. 30, 2010
|
Jun. 30, 2011
|
Jun. 30, 2010
|
Dec. 31, 2011
|
|
Companies [Member] | Non-Qualified Supplemental Pension Plans [Member]
|
|||||
Non-qualified supplement pension plan, funded | $ 11 | $ 11 | |||
Pension Benefits [Member]
|
|||||
Service cost - including administrative expenses | 47 | 42 | 94 | 84 | |
Interest cost on projected benefit obligation | 140 | 139 | 280 | 278 | |
Expected return on plan assets | (183) | (176) | (366) | (352) | |
Amortization of net actuarial loss | 132 | 106 | 264 | 212 | |
Amortization of prior service cost | 2 | 2 | 4 | 4 | |
NET PERIODIC BENEFIT COST | 138 | 113 | 276 | 226 | |
Amortization of regulatory asset | 1 | 1 | 1 | 1 | |
TOTAL PERIODIC BENEFIT COST | 139 | 114 | 277 | 227 | |
Cost capitalized | (48) | (37) | (96) | (78) | |
Cost deferred | (6) | (33) | (57) | (56) | |
Cost charged to operating expenses | 85 | 44 | 124 | 93 | |
Estimated future employer contributions | $ 533 |
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