Derivative Instruments and Hedging Activities (Tables)

12 Months Ended

Dec. 31, 2012

Energy Price Hedging Fair Values

The fair values of these hedges at December 31, 2012 and 2011 were as follows:

	Con Edison				CECONY
(Millions of Dollars)	2012		2011		2012		2011
Fair value of net derivative assets/(liabilities) – gross	$	(90)	$	(249)	$	(56)	$	(144)
Impact of netting of cash collateral		84		110		47		46
Fair value of net derivative assets/(liabilities) – net	$	(6)	$	(139)	$	(9)	$	(98)

Fair Values of Companies' Commodity Derivatives

The fair values of the Companies’ commodity derivatives at December 31, 2012 were:

	Fair Value of Commodity Derivatives(a)
(Millions of Dollars)	Balance Sheet Location	Con Edison			CECONY
	Derivative Assets
Current	Other current assets	$	64		$	18
Long-term	Other deferred charges and noncurrent assets		22			9
Total derivative assets		$	86		$	27
Impact of netting			(20	)		3
Net derivative assets		$	66		$	30
	Derivative Liabilities
Current	Fair value of derivative liabilities	$	122		$	58
Long-term	Fair value of derivative liabilities		54			25
Total derivative liabilities		$	176		$	83
Impact of netting			(104	)		(44	)
Net derivative liabilities		$	72		$	39

(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, 2011 were:

	Fair Value of Commodity Derivatives(a)
(Millions of Dollars)	Balance Sheet Location	Con Edison			CECONY
	Derivative Assets
Current	Other current assets	$	139		$	16
Long-term	Other deferred charges and noncurrent assets		26			14
Total derivative assets		$	165		$	30
Impact of netting			(95	)		(6	)
Net derivative assets		$	70		$	24
	Derivative Liabilities
Current	Fair value of derivative liabilities	$	331		$	127
Long-term	Fair value of derivative liabilities		83			48
Total derivative liabilities		$	414		$	175
Impact of netting			(205	)		(53	)
Net derivative liabilities		$	209		$	122

(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.

Changes in Fair Values of Commodity Derivatives

The following table presents the changes in the fair values of commodity derivatives that have been deferred or recognized in earnings for the year ended December 31, 2012:

Realized and Unrealized Gains/(Losses) on Commodity Derivatives(a) Deferred or Recognized in Income for the Year Ended December 31, 2012
(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	$	(1	)	$	(1	)
Long-term	Regulatory liabilities		-			-
Total deferred gains/(losses)		$	(1	)	$	(1	)
Current	Deferred derivative losses	$	95		$	80
Current	Recoverable energy costs		(220	)		(192	)
Long-term	Deferred derivative losses		17			24
Total deferred gains/(losses)		$	(108	)	$	(88	)
Net deferred gains/(losses)		$	(109	)	$	(89	)
	Income Statement Location
Pre-tax gain/(loss) recognized in income
	Purchased power expense	$	(54	)(b)	$	-
	Gas purchased for resale		(5	)		-
	Non-utility revenue		(11	)(b)		-
Total pre-tax gain/(loss) recognized in income		$	(70	)	$	-

(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 year ended December 31, 2012, Con Edison recorded in non-utility operating revenues and purchased power expense an unrealized pre-tax gain/(loss) of $(14) million and $82 million, respectively.

The following table presents the changes in the fair values of commodity derivatives that have been deferred or recognized in earnings for the year ended December 31, 2011:

Realized and Unrealized Gains/(Losses) on Commodity Derivatives(a) Deferred or Recognized in Income for the Year Ended December 31, 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	$	(3	)	$	(2	)
Long-term	Regulatory liabilities		(1	)		(1	)
Total deferred gains/(losses)		$	(4	)	$	(3	)
Current	Deferred derivative losses	$	26		$	11
Current	Recoverable energy costs		(247	)		(185	)
Long-term	Deferred derivative losses		11			4
Total deferred gains/(losses)		$	(210	)	$	(170	)
Net deferred gains/(losses)		$	(214	)	$	(173	)
	Income Statement Location
Pre-tax gain/(loss) recognized in income
	Purchased power expense	$	(78	)(b)	$	-
	Gas purchased for resale		(18	)		-
	Non-utility revenue		(30	)(b)		-
Total pre-tax gain/(loss) recognized in income		$	(126	)	$	-

(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 year ended December 31, 2011, Con Edison recorded in non-utility operating revenues and purchased power expense an unrealized pre-tax gain/(loss) of $(34) million and $11 million, respectively.

Number of Derivative Contracts by Commodity Type

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 Contracts(a)		Dths(b)		Total Number Of Contracts(a)
Con Edison		496		15,761,464		59		11,668		592		84,706,809		1,147
CECONY		97		3,565,325		-		-		484		79,460,000		581

(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.

Aggregate Fair Value of All Derivative Instruments with Credit-Risk-Related Contingent Features

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 December 31, 2012, 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	$	52		$	39
Collateral posted	$	-		$	-
Additional collateral(b) (downgrade one level from current ratings)	$	4		$	4
Additional collateral(b) (downgrade to below investment grade from current ratings)	$	77	(c)	$	43	(c)

(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 Edison’s competitive energy businesses were no longer extended unsecured credit for such purchases, the Companies would be required to post collateral, which at December 31, 2012, would have amounted to an estimated $24 million for Con Edison, including $10 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) 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.

(c) Derivative instruments that are net assets have been excluded from the table. At December 31, 2012, if Con Edison had been downgraded to below investment grade, it would have been required to post additional collateral for such derivative instruments of $24 million, including $1 million for CECONY.