Regulatory Matters

12 Months Ended

Dec. 31, 2013

Note B – Regulatory Matters

Rate Plans

CECONY — Electric

In March 2010, the NYSPSC adopted a November 2009 Joint Proposal among CECONY, NYSPSC staff and other parties, with respect to the company’s May 2009 request to the NYSPSC for an increase in the rates the company charged its customers for electric delivery service. The Joint Proposal included a rate plan that provided for electric base rate increases of $420 million, effective April 2010 and 2011, and $287 million, effective April 2012, with an additional $134 million to be collected through a surcharge in the rate year ending March 2013. In March 2012, the NYSPSC issued an order requiring that the $134 million surcharge that was to have been collected from customers during the rate year ending March 2013 instead be offset using certain CECONY regulatory liabilities that would have otherwise been refundable to or applied for the benefit of customers after the rate year.

The rate plan reflected the following major items:

•

A weighted average cost of capital of 7.76 percent, reflecting:

•

return on common equity of 10.15 percent, assuming achievement by the company of unspecified austerity measures that would result in reductions in operations and maintenance expenses of $27 million, $20 million and $13 million in the rate years ending March 2011, 2012 and 2013, respectively (the company did not achieve the unspecified austerity measures in the rate years ending March 2011, 2012 and 2013);

•

cost of long-term debt of 5.65 percent;

•

common equity ratio of 48 percent; and

•

average rate base of $14,887 million, $15,987 million and $16,826 million for the rate years ending March 2011, 2012 and 2013, respectively.

•

Deferral as a regulatory liability of the revenue requirement impact (i.e., return on investment, depreciation and income taxes) of the amount, if any, by which (A) actual average net plant balances allocable to the company’s electric business for (i) transmission and distribution, excluding municipal infrastructure support (T&D), (ii) generation, shared services and, subject to certain adjustments, municipal infrastructure support (Other) and (iii) a finance and supply chain enterprise resource project (ERP) are less than (B) amounts reflected in rates for the respective category for each rate year. The amounts reflected in rates were:


	Rate Year Ending March 31,
(Millions of Dollars)	2011		2012		2013
T&D	$	13,818	$	14,742	$	15,414
Other		1,487		1,565		1,650
ERP		-		25		115

•

Any deferral for T&D and Other for the rate year ending March 2011 was to be based on average net plant balances for the year and for the rate years ending March 2012 and 2013 was to be based on average net plant balances over the term of the rate plan. Any deferral for ERP was to be based on average net plant balances for ERP over the term of the rate plan. The company deferred $8 million, an immaterial amount and $7 million as a regulatory liability pursuant to this provision in 2011, 2012 and 2013, respectively.

•

During the term of the rate plan, the company was not to accrue any additional revenue for carrying charges on any capital expenditures allocable to its electric business in excess of specified limits (which limits excluded certain expenditures, including expenditures for projects for which the company had been selected to receive grants under the American Recovery and Reinvestment Act of 2009):

•

T&D capital expenditures—$1,200 million for the rate year ending March 2011 and an aggregate $2,300 million for the period from April 2011 through March 2013 (such capital expenditures for such periods were not in excess of such limits);

•

Other capital expenditures—$220 million for the rate year ending March 2011 and an aggregate $402 million for the period from April 2011 through March 2013 (such capital expenditures for such periods were not in excess of such limits); and

•

ERP capital expenditures—$125 million (such capital expenditures for the term of the rate plan were less than $125 million).

•

Most of any actual earnings, excluding the effects of certain items, above a 11.15 percent return on equity for the rate year ended March 2011 and a 10.65 percent return on equity for the rate years ended March 2012 and 2013 (based on actual average common equity ratio, subject to a 50 percent maximum) were to be applied to reduce regulatory assets for pensions and other postretirement benefits and other costs. The rate plan’s earnings sharing provisions continued in effect up to January 2014 when the company’s new electric rate plan (see below) became effective. Actual earnings under the rate plan were $17.5 million above the threshold for earnings sharing for the period from April 1, 2013 to December 31, 2013.

•

Deferral as a regulatory asset or liability, as the case may be, of differences between the actual level of certain expenses, including, among others, expenses for pension and other postretirement benefits, environmental remediation, relocation of facilities to accommodate government projects, property taxes and (for the rate years ending March 2012 and 2013) long-term debt, and amounts for those expenses reflected in rates (with deferral for the difference in property taxes limited to 80 percent of the difference, subject to annual maximum for the remaining 20 percent of the difference of not more than a 10 basis point impact on return on common equity and deferral of facility relocation expenses in excess of amounts reflected in rates subject to certain limitations). In 2011, 2012 and 2013, the company deferred $39 million of net regulatory liabilities, $153 million of net regulatory liabilities and $42 million of net regulatory assets, respectively, under these provisions.

•

Continuation of the provisions relating to revenues from the sale of transmission rights on the company’s transmission system pursuant to which it was assumed the company will receive and retain $120 million annually from the sale of such rights with the difference between such actual revenues for the rate year and $120 million to be recoverable from or refundable to customers, as the case may be. In 2011, 2012 and 2013, the company accrued $26 million, $45 million and $27 million of revenues, respectively, under this provision.

•

Continuation of the revenue decoupling mechanism under which the company’s actual electric delivery revenues were to be compared with the delivery revenues reflected in rates, and the difference accrued as a regulatory liability (for refund to electric customers) or a regulatory asset (for recovery from electric customers), as the case may be. In 2011, 2012 and 2013, the company deferred for customer benefit $90 million, $59 million and $34 million of revenues, respectively, under this provision.

•

Continuation of the rate provisions pursuant to which the company recovered its purchased power and fuel costs from electric customers.

•

Continuation of provisions for potential operations penalties of up to $152 million annually if certain electric customer service and system reliability performance targets are not met. In 2011, the company recognized a $5 million system reliability penalty. In 2012 and 2013, the company did not recognize any penalties under these provisions.

•

Collection from electric customers of $249 million on an annual basis subject to potential refund following an NYSPSC review of the company’s capital expenditures during the April 2005 through March 2008 period for transmission and distribution utility plant (as to which, in March 2010, the NYSPSC approved a February 2010 Joint Proposal by the company and the NYSPSC staff pursuant to which the company, among other things, provided a $36 million credit to customers in 2010). The amount collected would also be subject to refund in the event the NYSPSC determined that some disallowance of costs the company has recovered is warranted to address potential impacts of alleged unlawful conduct by arrested employees and contractors (see “Other Regulatory Matters” below in this Note B).

In February 2014, the NYSPSC adopted a December 2013 Joint Proposal among CECONY, NYSPSC staff and other parties. The Joint Proposal includes an electric rate plan that covers the two-year period January 2014 through December 2015 and is designed to produce a reduction in annual revenues of $76 million in the rate year ending December 2014 and an increase in annual revenues of $124 million in the rate year ending December 2015. The impact of these base rate changes is being deferred which will result in a $30 million regulatory liability at December 31, 2015. The rate plan reflects the following major items with respect to CECONY’s rates for electric delivery service:

•

A weighted average cost of capital of 7.05 percent and 7.08 percent for the rate years ending December 31, 2014 and 2015, respectively, reflecting:

•

return on common equity of 9.2 percent;

•

cost of long-term debt of 5.17 percent and 5.23 percent for the rate years ending December 31, 2014 and 2015, respectively;

•

common equity ratio of 48 percent; and

•

average rate base of $17,323 million and $18,113 million for the rate years ending December 2014 and 2015, respectively.

•

Capital expenditures of $1,487 million (including $180 million for storm hardening) and $1,708 million (including $278 million for storm hardening) in the rate years ending December 31, 2014 and 2015, respectively. These expenditures do not include expenditures for certain transmission projects (the Indian Point Contingency Plan projects) approved by the NYSPSC in October 2013 for which the NYSPSC endorsed the method by which the costs and benefits associated with the projects will be allocated among load serving entities and a cost recovery mechanism will be filed with the FERC.

•

Deferral as a regulatory liability of the revenue requirement impact (i.e., return on investment, depreciation and income taxes) of the amount, if any, by which (A) actual average net plant balances for the 24 months ending December 2015 allocable to the company’s electric business for (i) transmission and distribution, including municipal infrastructure support and excluding the Indian Point Contingency Plan projects (T&D), (ii) storm hardening, and (iii) generation and shared services (Other) are less than (B) amounts reflected in rates for the respective category for such period, provided that deferral is not required with respect to storm hardening or the reliability component of T&D if, among other things, the sum of the average net plant balances for these categories is at least equal to the sum of the amounts reflected in rates for the categories. The amounts reflected in rates are:


	Rate Year Ending December 31,
(Millions of Dollars)	2014		2015
T&D	$	16,869	$	17,401
Storm hardening		89		177
Other		2,034		2,102

•

Deferral as a regulatory asset or liability, as the case may be, of the related revenue requirement impact if, for the rate year ending December 2015, the NYSPSC determines that planned capital expenditures for storm hardening should be more or less than the amount reflected in rates.

•

Revenues for each of the rate years ending December 2014 and 2015 include $21 million as funding for a major storm reserve. For each major storm, the company will be able to charge against the reserve 98 percent of its incremental costs, other than capital expenditures, that are incurred not later than 30 days following the date on which the company is able to serve all customers. If major storm costs chargeable to the reserve are more or less than $21 million in either rate year, the company will defer the difference as a regulatory asset or liability, as the case may be. For incremental major storm costs incurred later than 30 days after the date the company is able to serve all customers, the company may file a petition with the NYSPSC for authorization to defer such costs as a regulatory asset.

•

Revenues for each of the rate years ending December 2014 and 2015 include $107 million with respect to major storm costs the company previously deferred (including for Superstorm Sandy) reflecting a three-year amortization of the deferred costs. The company’s collection from customers of amounts with respect to deferred major storm costs is subject to potential refund following NYSPSC staff review of the costs. See “Other Regulatory Matters,” below in this Note B.

•

Most of any actual earnings, excluding the effects of certain items, above a 9.8 percent annual return on equity (based on actual average common equity ratio, subject to a 50 percent maximum) would be applied to reduce regulatory assets for environmental remediation costs and other costs. In the event the company does not file for a rate increase to take effect in January 2016, the rate plan’s earnings sharing provisions will continue in effect until base rates are reset by the NYSPSC.

•

Deferral as a regulatory asset or liability, as the case may be, of differences between the actual level of certain expenses, including, among others, expenses for pension and other postretirement benefits, environmental remediation, property taxes and variable rate tax-exempt debt, and amounts for those expenses reflected in rates (with deferral for the difference in property taxes limited to 90 percent of the difference, subject to annual maximum for the remaining 10 percent of the difference of not more than a 10 basis point impact on return on common equity).

•

Continuation of a revenue decoupling mechanism under which the company’s actual electric delivery revenues would be compared with the delivery revenues reflected in rates, with the difference accrued as a regulatory liability or a regulatory asset, as the case may be.

•

Continuation of the rate provisions pursuant to which the company recovers its purchased power and fuel costs from electric customers. With respect to certain transmission service that commenced in May 2012 pursuant to the open access transmission tariff of PJM Interconnection L.L.C. (PJM), the company in 2014 will recover charges incurred from April 2013 to December 2013 in excess of amounts that were reflected in rates (approximately $20 million) and, commencing in January 2014 and unless and until changed by the NYSPSC, the company will recover all charges incurred associated with the transmission service. In January 2014, PJM submitted to FERC a request, which CECONY is opposing, that would substantially increase the charges for the transmission service.

•

Continuation of provisions for potential operations penalties of up to approximately $176 million annually if certain electric performance targets are not met.

•

Continuation of collection from electric customers of $249 million on an annual basis subject to potential refund in the NYSPSC proceeding commenced in February 2009 to examine the prudence of certain company expenditures following the arrests of certain employees (see “Other Regulatory Matters” below in this Note B).

O&R — Electric

In July 2008, the NYSPSC adopted a Joint Proposal among O&R, the NYSPSC staff and other parties for the rates O&R charged its New York customers for electric service from July 2008 through June 2011. The rate plan approved by the NYSPSC provided for electric rate increases of $15.6 million, $15.6 million and $5.7 million effective July 1, 2008, 2009 and 2010, respectively, and the collection of an additional $9.9 million during the 12-month period beginning July 1, 2010.

The rate plan reflected the following major items:

•

An annual return on common equity of 9.4 percent;

•

Most of any actual earnings, excluding the effects of certain items, above a 10.2 percent return on equity (based on actual average common equity ratio, subject to a 50 percent maximum) were to be applied to reduce regulatory assets for pension and other postretirement benefit expenses (the company did not reduce regulatory assets under this provision in 2009, 2010 or 2011);

•

Deferral as a regulatory asset or regulatory liability, as the case may be, of differences between the actual level of certain expenses, including, among others, expenses for pension and other postretirement benefits, environmental remediation, property taxes and tax-exempt debt costs, and amounts for those expenses reflected in rates (the company deferred recognition of $3 million of expenses, $0.7 million of revenue and $0.3 million of expenses under this provision in 2009, 2010, and 2011, respectively);

•

Deferral as a regulatory liability of the revenue requirement impact (i.e., return on investment, depreciation and income taxes) of the amount, if any, by which actual transmission and distribution related capital expenditures are less than amounts reflected in rates (the company deferred $8 million, $12 million, and $7 million of revenues under this provision in 2009, 2010, and 2011, respectively);

•

Deferral as a regulatory asset of increases, if any, in certain expenses above a 4 percent annual inflation rate, but only if the actual annual return on common equity is less than 9.4 percent (the company did not defer any expenses under this provision in 2009, 2010 or 2011);

•

Potential negative earnings adjustments of up to $3 million annually if certain customer service and system reliability performance targets were not met (the company met the performance targets in 2009 and 2011; the company reduced revenues by $1 million under this provision in 2010);

•

Implementation of a revenue decoupling mechanism under which actual energy delivery revenues were to be compared with the authorized delivery revenues with the difference accrued, with interest, for refund to, or recovery from, customers, as applicable (the company accrued $12.5 million, $5.1 million, and $3.3 million of revenues pursuant to this provision in 2009, 2010, and 2011, respectively);

•

Continuation of the rate provisions pursuant to which the company recovers its purchased power costs from customers; and

•

Withdrawal of the litigation O&R commenced seeking to annul the NYSPSC’s March and October 2007 orders relating to O&R’s electric rates.

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 reflected 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 differences between the actual level of certain expenses, including, among others, expenses for pension and other postretirement benefits, environmental remediation and tax-exempt debt costs 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 company’s 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 (in 2011, O&R did not recognize any operations penalties under these provisions or the corresponding provisions of the O&R rate plan discussed above); and

•

O&R was directed to produce a report detailing its implementation plans for the recommendations made in connection with the NYSPSC’s management audit of CECONY, with a forecast of costs to achieve and expected savings.

In June 2012, the NYSPSC adopted a February 2012 Joint Proposal among O&R, NYSPSC staff and the Utility Intervention Unit of the New York State Department of State Division of Consumer Protection with respect to the company’s rates for electric delivery service rendered in New York. The Joint Proposal includes a rate plan that covers the three-year period from July 2012 through June 2015. The rate plan provides for electric base rate increases of $19.4 million, $8.8 million and $15.2 million, effective July 2012, 2013 and 2014, respectively, which is being implemented, at the NYSPSC’s option, with increases of $15.2 million effective July 2012 and 2013 and an increase of $13.1 million, together with a surcharge of $2.1 million, effective July 2014. The rate plan reflects the following major items:

•

A weighted average cost of capital of 7.61 percent, 7.65 percent and 7.48 percent for the rate years ending June 30, 2013, 2014 and 2015, respectively, reflecting:

•

a return on common equity of 9.4 percent, 9.5 percent and 9.6 percent for the rate years ending June 30, 2013, 2014 and 2015, respectively;

•

cost of long-term debt of 6.07 percent for each of the rate years ending June 30, 2013 and 2014 and 5.64 percent for the rate year ending June 30, 2015;

•

common equity ratio of 48 percent for each of the rate years ending June 30, 2013, 2014 and 2015; and

•

average rate base of $671 million, $708 million and $759 million for the rate years ending June 30, 2013, 2014 and 2015, respectively;

•

Sharing with electric customers of any actual earnings, excluding the effects of certain items, above specified percentage returns on common equity (based on the actual average common equity ratio, subject to a 50 percent maximum):

•

the company will allocate to customers the revenue requirement equivalent of 50 percent, 75 percent and 90 percent of any such earnings for each rate year in excess of 80 basis points, 180 basis points and 280 basis points, respectively, above the return on common equity for that rate year indicated above; and

•

the earnings sharing allocation between the company and customers will be on a cumulative basis at the end of rate year three;

•

Continuation of a revenue decoupling mechanism;

•

Continuation of a provision which defers as a regulatory liability for the benefit of customers or, subject to certain limitations, a regulatory asset for recovery from customers, as the case may be, the revenue requirement impact of the amount by which actual average net utility plant for each rate year is different than the average net utility plant reflected in rates ($678 million, $704 million and $753 million for the rate years ending June 30, 2013, 2014 and 2015, respectively) (the company deferred $1.1 million as a regulatory asset pursuant to this provision in 2013);

•

Continuation of the rate provisions pursuant to which the company recovers its purchased power costs from customers;

•

Deferral as a regulatory asset or regulatory liability, as the case may be, of differences between the actual level of certain expenses, including among others, pension and other postretirement benefits, environmental remediation, tax-exempt debt costs and property taxes and amounts for those expenses reflected in rates (the company deferred recognition of $4.1 million of expenses under this provision in 2013); and

•

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 (in 2012 and 2013, O&R did not recognize any operations penalties).

In May 2010, O&R’s New Jersey regulated utility subsidiary, Rockland Electric Company (RECO), the Division of Rate Counsel, staff of the New Jersey Board of Public Utilities (NJBPU) and certain other parties entered into a stipulation of settlement with respect to the company’s August 2009 request to increase the rates that it can charge its customers for electric delivery service. The stipulation, which was approved by the Board of the NJBPU, provided for an electric rate increase, effective May 17, 2010, of $9.8 million. The stipulation reflected a return on common equity of 10.3 percent and a common equity ratio of approximately 50 percent. The stipulation continued current provisions with respect to recovery from customers of the cost of purchased power and did not provide for reconciliation of actual expenses to amounts reflected in electric rates for pension and other postretirement benefit costs. The stipulation required RECO to file a base rate case by December 1, 2013.

In November 2013, RECO filed a request with the NJBPU for a net increase in the rates it charges for electric service, effective September 2014, of $19.3 million. The filing reflects a return on common equity of 10.25 percent and a common equity ratio of 52.2 percent. The filing proposes the recovery over a three-year period of $25.4 million of costs incurred in response to major storm events in 2011 and 2012 that had been deferred for recovery and the continuation of the current provisions with respect to recovery from customers of the cost of purchased power.

CECONY — Gas

In September 2010, the NYSPSC adopted a May 2010 Joint Proposal among CECONY, the staff of the NYSPSC and other parties, with respect to the company’s rates for gas delivery service. The Joint Proposal included a gas rate plan that provided for base rate increases of $47.1 million, $47.9 million and $46.7 million, effective October 2010, 2011 and 2012, respectively. The rate plan reflected the following major items:

•

A weighted average cost of capital of 7.46 percent, reflecting:

•

return on common equity of 9.6 percent, assuming achievement by the company of cost avoidance for productivity and “austerity”. The unspecified austerity measures assume reductions in costs of $6 million, $4 million and $2 million in the rate years ending September 2011, 2012 and 2013, respectively;

•

cost of long-term debt of 5.57 percent;

•

common equity ratio of 48 percent; and

•

average rate base of $3,027 million, $3,245 million and $3,434 million for the rate years ending September 2011, 2012 and 2013, respectively.

•

Deferral as a regulatory liability of the revenue requirement impact (i.e., return on investment, depreciation and income taxes) of the amount, if any, by which actual average net plant balances allocable to the company’s gas business are less than the amounts reflected in rates: $2,934 million, $3,148 million and $3,346 million for the rate years ending September 2011, 2012 and 2013, respectively. For the rate years ending September 2012 and 2013, $2.9 million and $9.5 million were deferred, respectively. No such deferral was required for the rate year ended September 2011.

•

Most of any actual earnings, excluding the effects of certain items, above a 10.35 percent return for the rate year ended September 2011 and a 10.15 percent for the rate years ended September 2012 and 2013 (based on actual average common equity ratio, subject to a 50 percent maximum) were to be applied to reduce regulatory assets for pensions and other postretirement benefits and other costs. The specified annual returns were to be calculated on a cumulative basis over the term of the rate plan. The rate plan’s earnings sharing provisions continued in effect up to January 2014 when the company’s new gas rate plan (see below) became effective. Actual earnings under the rate plan were not above the earnings sharing levels.

•

Deferral as a regulatory asset or liability, as the case may be, of differences between the actual level of certain expenses, including, among others, expenses for pension and other postretirement benefits, environmental remediation, property taxes and long-term debt, and amounts for those expenses reflected in rates (with deferral for the difference in property taxes limited to 80 percent of the difference, subject to an annual maximum for the remaining 20 percent of the difference of not more than the equivalent in revenue requirement of a 10 basis point impact on return on common equity). In 2011, 2012 and 2013, the company deferred $0.3 million of net regulatory liabilities, $38 million of net regulatory assets and $26 million of net regulatory assets, respectively, under these provisions.

•

Continuation of provisions pursuant to which the company was to retain net revenues from non-firm customer transactions. In each year of the rate plan, the company was to retain up to $58 million of any such revenues and 25 percent of any such revenues above $58 million. If such revenues were below $58 million in a rate year, the company was to accrue a regulatory asset equal to (A) the amount by which such revenues were less than $33 million plus (B) 80 percent of the difference between $58 million and the level of such revenues at or above $33 million. The company retained $70 million, $57 million and $64 million of such net revenues in 2011, 2012 and 2013, respectively, under these provisions.

•

Continuation of the provisions pursuant to which the effects of weather on gas delivery revenues during each billing cycle are reflected in customer bills for that billing cycle, and a revenue decoupling mechanism under which the company’s actual gas delivery revenues, inclusive of any such weather adjustment, would be compared with the delivery revenues reflected in rates, with the difference accrued as a regulatory liability (for refund to gas customers) or a regulatory asset (for recovery from gas customers), as the case may be. In 2011, 2012 and 2013, the company deferred $20 million of regulatory liabilities, $22 million of regulatory liabilities and $36 million of regulatory liabilities, respectively, under this provision.

•

Continuation of the rate provisions pursuant to which the company recovers its costs of purchased gas from gas customers.

•

Continuation of provisions for potential penalties (up to $12.6 million annually) if certain gas customer service and system performance targets are not met. In 2011, 2012 and 2013, the company did not recognize any expenses under these provisions.

•

Continued collection from gas customers of $32 million on an annual basis subject to potential refund (see “Other Regulatory Matters” below in this Note B).

In February 2014, the NYSPSC adopted a December 2013 Joint Proposal among CECONY, NYSPSC staff and other parties. The Joint Proposal includes a gas rate plan that covers the three-year period January 2014 through December 2016 and is designed to produce a reduction in annual revenues of $55 million in the rate year ending December 2014 and increases in annual revenues of $39 million and $57 million in the rate years ending December 2015 and 2016, respectively. The impact of these base rate changes is being deferred which will result in a $32 million regulatory liability at December 31, 2016. The rate plan reflects the following major items with respect to CECONY’s rates for gas delivery service:

•

A weighted average cost of capital of 7.10 percent, 7.13 percent and 7.21 percent for the rate years ending December 2014, 2015 and 2016, respectively, reflecting:

•

return on common equity of 9.3 percent;

•

cost of long-term debt of 5.17 percent, 5.23 percent and 5.39 percent for the rate years ending December 2014, 2015 and 2016, respectively;

•

common equity ratio of 48 percent; and

•

average rate base of $3,521 million, $3,863 million and $4,236 million for the rate years ending December 2014, 2015 and 2016, respectively.

•

Capital expenditures of $524 million (including $5 million for storm hardening), $586 million (including $36 million for storm hardening), and $627 million (including $57 million for storm hardening) in the rate years ending December 31, 2014, 2015 and 2016, respectively.

•

Deferral as a regulatory liability of the revenue requirement impact of the amounts, if any, by which actual average net plant balances for the 36 months ending December 2016 allocable to the company’s gas business for gas delivery (including municipal infrastructure support) and storm hardening are less than the amounts reflected in rates for the respective category for such period. The amounts reflected in rates are:


	Rate Year Ending December 31,
(Millions of Dollars)	2014		2015		2016
Gas delivery	$	3,899	$	4,258	$	4,698
Storm hardening		3		8		30

•

Most of any actual earnings, excluding the effects of certain items, above a 9.9 percent annual return on equity (based on actual average common equity ratio, subject to a 50 percent maximum) would be applied to reduce regulatory assets for environmental remediation costs and other costs. In the event the company does not file for a rate increase to take effect in January 2017, the rate plan’s earnings sharing provisions will continue in effect until base rates are reset by the NYSPSC.

•

Deferral as a regulatory asset or liability, as the case may be, of differences between the actual level of certain expenses, including, among others, expenses for pension and other postretirement benefits, environmental remediation, property taxes and variable rate tax-exempt debt, and amounts for those expenses reflected in rates (with deferral for the difference in property taxes limited to 90 percent of the difference, subject to annual maximum for the remaining 10 percent of the difference of not more than a 10 basis point impact on return on common equity).

•

Provisions pursuant to which the company will retain net revenues from non-firm customer transactions. In each year of the rate plan, the company will retain up to $65 million of any such revenues and 15 percent of any such revenues above $65 million. If such revenues are below $65 million in a rate year, the company will accrue as a current asset the amount by which such revenues are less than $65 million.

•

Continuation of the provisions pursuant to which the effects of weather on gas delivery revenues are reflected in customer bills, and a revenue decoupling mechanism under which the company’s actual gas delivery revenues, inclusive of any such weather adjustment, would be compared with the delivery revenues reflected in rates, with the difference accrued as a regulatory liability or a regulatory asset, as the case may be.

•

Continuation of the rate provisions pursuant to which the company recovers its costs of purchased gas from gas customers.

•

Provisions for potential penalties (up to $33 million in 2014, $44 million in 2015, and $56 million in 2016) if certain gas performance targets are not met.

•

Continued collection from gas customers of $32 million on an annual basis subject to potential refund in the February 2009 NYSPSC prudence proceeding (see “Other Regulatory Matters” below in this Note B).

O&R — Gas

In October 2009, the NYSPSC adopted a June 2009 Joint Proposal among O&R, NYSPSC staff and other parties. As approved, the Joint Proposal established a gas rate plan that increased base rates $9 million in each of the rate years ended October 2010 and 2011 and $4.6 million in rate year ended October 2012, with an additional $4.3 million to be collected through a surcharge in the rate year ended October 2012. The rate plan reflected the following major items:

•

An annual return on common equity of 10.4 percent;

•

Most of any actual earnings above an 11.4 percent annual return on common equity (based upon the actual average common equity ratio, subject to a maximum 50 percent of capitalization) were to be applied to reduce regulatory assets (in 2010, 2011, 2012 and 2013, the company did not defer any revenues under this provision);

•

Deferral as a regulatory asset or liability, as the case may be, of differences between the actual level of certain expenses, including expenses for pension and other postretirement benefits, environmental remediation, property taxes and taxable and tax-exempt long-term debt, and amounts for those expenses reflected in rates (in 2010, 2011, 2012 and 2013, the company deferred $3.1 million, $2.9 million, $0.7 million and $8.3 million, respectively, of expenses under this provision);

•

Deferral as a regulatory liability of the revenue requirement impact (i.e., return on investment, depreciation and income taxes) of the amount, if any, by which average gas net plant balances are less than balances reflected in rates (in 2010, 2011 and 2012, the company deferred $1.5 million of revenues, and $1 million and $0.7 million of expenses, respectively, and no deferral was made in 2013 under this provision);

•

Deferral as a regulatory asset of increases, if any over the course of the rate plan, in certain expenses above a 4 percent annual inflation rate, but only if the actual annual return on common equity is less than 10.4 percent (in 2010, 2011, 2012 and 2013, the company did not defer any revenues under this provision);

•

Implementation of a revenue decoupling mechanism (in 2010, 2011, 2012 and 2013, the company accrued $0.8 million, $2.8 million, $4.7 million and $0.7 million, respectively, of revenues under this provision);

•

Continuation of the provisions pursuant to which the company recovers its cost of purchasing gas and the provisions pursuant to which the effects of weather on gas income are moderated; and

•

Potential negative earnings adjustments of up to $1.4 million annually if certain operations and customer service requirements are not met (in 2010, 2011, 2012 and 2013, the company did not have any negative earnings adjustments under this provision).

•

Because the company did not file for a rate increase to take effect in November 2012, the earnings sharing levels for the rate year ending October 2012 will continue in effect until base rates are reset by the NYSPSC.

CECONY — Steam

In September 2010 the NYSPSC adopted a May 2010 Joint Proposal among CECONY, NYSPSC staff and other parties, with respect to the company’s rates for steam service. The Joint Proposal included a steam rate plan that provided for rate increases of $49.5 million, effective October 2010 and 2011, and $17.8 million, effective October 2012, with an additional $31.7 million to be collected through a surcharge in the rate year ending September 2013. The rate plan reflected the following major items:

•

The same weighted average cost of capital, return on common equity (assuming, for the steam business, achievement of unspecified reductions in costs of $4.5 million, $3 million and $1.5 million in the rate years ending September 2011, 2012 and 2013, respectively), cost of long-term debt and common equity ratio provided for in the September 2010 rate plan for CECONY’s gas business (discussed above) and average steam rate base of $1,589 million, $1,603 million and $1,613 million for the rate years ending September 2011, 2012 and 2013, respectively.

•

Deferral as a regulatory liability of the revenue requirement impact of the amount, if any, by which actual average net plant balances allocable to the company’s steam business were less than the amounts reflected in rates for the respective category for each rate year. The company deferred $0.3 million in 2011, reduced its liability by $0.2 million in 2012, and made no deferral in 2013. The amounts reflected in rates are:


	Rate Year Ending September 30,
(Millions of Dollars)	2011		2012		2013
Steam production	$	415	$	426	$	433
Steam distribution		521		534		543

•

Earnings sharing, expense deferral and potential refund ($6 million annually for steam) provisions substantially the same as discussed above for the May 2010 Joint Proposal with respect to CECONY’s gas business. In 2011 and 2012, the company did not recognize any such earnings sharing, expense deferral or potential refund. In 2013, earnings were $0.5 million above the threshold for earnings sharing.

•

Continuation of the rate provisions pursuant to which the company recovers its cost of fuel and purchased steam from its steam customers.

•

Continuation of provisions for potential penalties (up to approximately $1 million annually) if certain steam customer service and system performance targets are not met. In 2011, 2012 and 2013, the company did not recognize any expense under these provisions.

In 2013 the NYSPSC approved the phase-in, over a period of seven years, of an increase in the allocation to steam customers of the fuel costs for the company’s East River Repowering Project (ERRP, which cogenerates electricity and steam) that are above the market value of the electric energy generated by ERRP.

In February 2014, the NYSPSC adopted a December 2013 Joint Proposal among CECONY, NYSPSC staff and other parties. The Joint Proposal includes a steam rate plan that covers the three-year period January 2014 through December 2016 and is designed to produce a reduction in annual revenues of $22 million in the rate year ending December 2014 and increases in annual revenues of $20 million in each of the rate years ending December 2015 and 2016. The impact of these base rate changes is being deferred which will result in an $8 million regulatory liability at December 31, 2016. The rate plan reflects the following major items with respect to CECONY’s rates for steam service:

•

The same weighted average cost of capital, return on common equity, cost of long-term debt and common equity ratio as discussed above for the December 2013 Joint Proposal with respect to CECONY’s gas business and average steam rate base of $1,511 million, $1,547 million and $1,604 million for the rate years ending December 2014, 2015 and 2016, respectively.

•

Capital expenditures of $82 million (including $27 million for storm hardening), $94 million (including $31 million for storm hardening), and $98 million (including $35 million for storm hardening) in the rate years ending December 31, 2014, 2015 and 2016, respectively.

•

Deferral as a regulatory liability of the revenue requirement impact of the amounts, if any, by which actual average net plant balances for the 36 months ending December 2016 allocable to the company’s steam business for steam production and distribution and storm hardening are less than the amounts reflected in rates for the respective category for such period. The amounts reflected in rates are:


	Rate Year Ending December 31,
(Millions of Dollars)	2014		2015		2016
Steam production	$	1,752	$	1,732	$	1,720
Steam distribution		6		11		25

•

Deferral as a regulatory asset or liability, as the case may be, of the related revenue requirement impact if, for the rate years ending December 2015 and 2016, the NYSPSC determines that planned capital expenditures for storm hardening should be more or less than the amount reflected in rates. Earnings sharing, expense deferral and potential refund ($6 million annually for steam) provisions substantially as discussed above for the December 2013 Joint Proposal with respect to CECONY’s gas business.

•

Continuation of the rate provisions pursuant to which the company recovers its cost of fuel and purchased steam from its steam customers.

•

Continuation of provisions for potential penalties (up to approximately $1 million annually) if certain steam performance targets are not met.

Other Regulatory Matters

In February 2009, the NYSPSC commenced a proceeding to examine the prudence of certain CECONY expenditures following the arrests of employees for accepting illegal payments from a construction contractor. Subsequently, additional employees were arrested for accepting illegal payments from materials suppliers and an engineering firm. The arrested employees were terminated by the company and have pled guilty or been convicted. 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. The amount of electric revenues collected subject to refund, which was established in a different proceeding, and the amount of gas and steam revenues collected subject to refund were not established as indicative of the company’s potential liability in this proceeding. At December 31, 2013, the company had collected an estimated $1,389 million from customers subject to potential refund in connection with this proceeding. In January 2013, a NYSPSC consultant reported its estimate, with which the company does not agree, of $208 million of overcharges with respect to a substantial portion of the company’s construction expenditures from January 2000 to January 2009. The company is disputing the consultant’s estimate, including its determinations as to overcharges regarding specific construction expenditures it selected to review and its methodology of extrapolating such determinations over a substantial portion of the construction expenditures during this period. The NYSPSC’s consultant has not reviewed the company’s other expenditures. The company and NYSPSC staff are exploring a settlement in this proceeding. There is no assurance that there will be a settlement, and any settlement would be subject to NYSPSC approval. At December 31, 2013, the company had a $40 million regulatory liability relating to this matter. Included in the $40 million regulatory liability is $16 million the company recovered from vendors, arrested employees and insurers relating to this matter. Pursuant to the December 2013 Joint Proposal (discussed above in this Note B), the company will apply $15 million of these recovered amounts for the benefit of customers to offset a like amount of regulatory assets. The company currently estimates that any additional amount the NYSPSC requires the company to refund to customers could range in amount from $25 million up to an amount based on the NYSPSC consultant’s $208 million estimate of overcharges.

In late October 2012, Superstorm Sandy caused extensive damage to the Utilities’ electric distribution system and interrupted service to approximately 1.4 million customers. Superstorm Sandy also damaged CECONY’s steam system and interrupted service to many of its steam customers. As of December 31, 2013, CECONY and O&R incurred response and restoration costs for Superstorm Sandy of $483 million and $91 million, respectively (including capital expenditures of $147 million and $15 million, respectively). Most of the costs that were not capitalized were deferred for recovery as a regulatory asset under the Utilities’ electric rate plans. See “Regulatory Assets and Liabilities” below. CECONY’s current electric rate plan includes collection from customers of deferred storm costs (including for Superstorm Sandy), subject to refund following NYSPSC review of the costs. O&R expects to request recovery of deferred storm costs for its New York electric operations, which are also subject to NYSPSC review, when it next files with the NYSPSC for a new electric rate plan. The November 2013 electric rate request RECO filed with the NJBPU includes a proposal for recovery over a three-year period of its deferred storm costs of $27 million. In March 2013, the NJBPU established a proceeding to review the prudency of costs incurred by New Jersey utilities in response to major storm events in 2011 and 2012. See “Rate Plans — CECONY-Electric and O&R-Electric,” above.

Regulatory Assets and Liabilities

Regulatory assets and liabilities at December 31, 2013 and 2012 were comprised of the following items:


	Con Edison				CECONY
(Millions of Dollars)	2013		2012		2013		2012
Regulatory assets
Unrecognized pension and other postretirement costs	$	2,730	$	5,677	$	2,610	$	5,407
Future income tax		2,145		1,922		2,030		1,831
Environmental remediation costs		938		730		830		615
Deferred storm costs		441		432		334		309
Pension and other postretirement benefits deferrals		237		183		211		154
Revenue taxes		207		176		196		170
Net electric deferrals		83		102		83		102
Surcharge for New York State assessment		78		73		74		68
Unamortized loss on reacquired debt		65		74		62		70
O&R transition bond charges		33		39		-		-
Preferred stock redemption		28		29		28		29
Property tax reconciliation		22		16		-		-
Workers’ compensation		12		19		12		19
Deferred derivative losses – long-term		8		40		7		20
Other		174		193		162		178
Regulatory assets – long-term		7,201		9,705		6,639		8,972
Deferred derivative losses – current		25		69		22		60
Recoverable energy costs – current		4		5		4		-
Regulatory assets – current		29		74		26		60
Total Regulatory Assets	$	7,230	$	9,779	$	6,665	$	9,032
Regulatory liabilities
Allowance for cost of removal less salvage	$	540	$	503	$	453	$	420
Property tax reconciliation		322		187		322		187
Net unbilled revenue deferrals		133		136		133		136
Property tax refunds		130		7		130		6
Long-term interest rate reconciliation		105		62		105		62
Carrying charges on repair allowance and bonus depreciation		88		11		87		10
World Trade Center settlement proceeds		62		62		62		62
Other postretirement benefit deferrals		50		-		50		-
Expenditure prudence proceeding		40		14		40		14
Carrying charges on T&D net plant – electric and steam		28		31		20		13
Electric excess earnings		22		-		18		-
Other		208		189		178		167
Regulatory liabilities – long-term		1,728		1,202		1,598		1,077
Refundable energy costs – current		100		82		66		48
Revenue decoupling mechanism		34		72		30		68
Deferred derivative gains – current		14		-		11		-
Electric surcharge offset		-		29		-		29
Regulatory liabilities—current		148		183		107		145
Total Regulatory Liabilities	$	1,876	$	1,385	$	1,705	$	1,222

“Unrecognized pension and other postretirement costs” represents the net regulatory asset associated with the accounting rules for retirement benefits. See Note A.

“Deferred storm costs” represent response and restoration costs, other than capital expenditures, in connection with Superstorm Sandy and other major storms that were deferred by the Utilities. See “Other Regulatory Matters,” above.

“Net electric deferrals” represents the remaining unamortized balance of certain regulatory assets and liabilities of CECONY that were combined effective April 1, 2010 and are being amortized to income over a ten year period, in accordance with CECONY’s March 2010 rate plan.

“Revenue taxes” represents the timing difference between taxes collected and paid by the Utilities to fund mass transportation.

Effective March 31, 2009, the NYSPSC authorized CECONY to accrue unbilled electric, gas and steam revenues. At December 31, 2013, CECONY has deferred the net margin on the unbilled revenues for the future benefit of customers by recording a regulatory liability of $133 million for the difference between the unbilled revenues and energy cost liabilities.

CECONY [Member]

Regulatory Matters

Note B – Regulatory Matters

Rate Plans

CECONY — Electric

The rate plan reflected the following major items:

•

A weighted average cost of capital of 7.76 percent, reflecting:

•

cost of long-term debt of 5.65 percent;

•

common equity ratio of 48 percent; and

•

average rate base of $14,887 million, $15,987 million and $16,826 million for the rate years ending March 2011, 2012 and 2013, respectively.

•


	Rate Year Ending March 31,
(Millions of Dollars)	2011		2012		2013
T&D	$	13,818	$	14,742	$	15,414
Other		1,487		1,565		1,650
ERP		-		25		115

•

ERP capital expenditures—$125 million (such capital expenditures for the term of the rate plan were less than $125 million).

•

Continuation of the rate provisions pursuant to which the company recovered its purchased power and fuel costs from electric customers.

•

A weighted average cost of capital of 7.05 percent and 7.08 percent for the rate years ending December 31, 2014 and 2015, respectively, reflecting:

•

return on common equity of 9.2 percent;

•

cost of long-term debt of 5.17 percent and 5.23 percent for the rate years ending December 31, 2014 and 2015, respectively;

•

common equity ratio of 48 percent; and

•

average rate base of $17,323 million and $18,113 million for the rate years ending December 2014 and 2015, respectively.

•

Deferral as a regulatory liability of the revenue requirement impact (i.e., return on investment, depreciation and income taxes) of the amount, if any, by which (A) actual average net plant balances for the 24 months ending December 2015 allocable to the company’s electric business for (i) transmission and distribution, including municipal infrastructure support and excluding the Indian Point Contingency Plan projects (T&D), (ii) storm hardening, and (iii) generation and shared services (Other) are less than (B) amounts reflected in rates for the respective category for such period, provided that deferral is not required with respect to storm hardening or the reliability component of T&D if, among other things, the sum of the average net plant balances for these categories is at least equal to the sum of the amounts reflected in rates for the categories. The amounts reflected in rates are:


	Rate Year Ending December 31,
(Millions of Dollars)	2014		2015
T&D	$	16,869	$	17,401
Storm hardening		89		177
Other		2,034		2,102

•

Deferral as a regulatory asset or liability, as the case may be, of differences between the actual level of certain expenses, including, among others, expenses for pension and other postretirement benefits, environmental remediation, property taxes and variable rate tax-exempt debt, and amounts for those expenses reflected in rates (with deferral for the difference in property taxes limited to 90 percent of the difference, subject to annual maximum for the remaining 10 percent of the difference of not more than a 10 basis point impact on return on common equity).

•

Continuation of provisions for potential operations penalties of up to approximately $176 million annually if certain electric performance targets are not met.

•

O&R — Electric

The rate plan reflected the following major items:

•

An annual return on common equity of 9.4 percent;

•

Continuation of the rate provisions pursuant to which the company recovers its purchased power costs from customers; and

•

Withdrawal of the litigation O&R commenced seeking to annul the NYSPSC’s March and October 2007 orders relating to O&R’s electric rates.

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 reflected 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;

•

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 company’s annual incentive plan for non-officer management employees;

•

A weighted average cost of capital of 7.61 percent, 7.65 percent and 7.48 percent for the rate years ending June 30, 2013, 2014 and 2015, respectively, reflecting:

•

a return on common equity of 9.4 percent, 9.5 percent and 9.6 percent for the rate years ending June 30, 2013, 2014 and 2015, respectively;

•

cost of long-term debt of 6.07 percent for each of the rate years ending June 30, 2013 and 2014 and 5.64 percent for the rate year ending June 30, 2015;

•

common equity ratio of 48 percent for each of the rate years ending June 30, 2013, 2014 and 2015; and

•

average rate base of $671 million, $708 million and $759 million for the rate years ending June 30, 2013, 2014 and 2015, respectively;

•

the earnings sharing allocation between the company and customers will be on a cumulative basis at the end of rate year three;

•

Continuation of a revenue decoupling mechanism;

•

Continuation of the rate provisions pursuant to which the company recovers its purchased power costs from customers;

•

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 (in 2012 and 2013, O&R did not recognize any operations penalties).

CECONY — Gas

•

A weighted average cost of capital of 7.46 percent, reflecting:

•

cost of long-term debt of 5.57 percent;

•

common equity ratio of 48 percent; and

•

average rate base of $3,027 million, $3,245 million and $3,434 million for the rate years ending September 2011, 2012 and 2013, respectively.

•

Deferral as a regulatory asset or liability, as the case may be, of differences between the actual level of certain expenses, including, among others, expenses for pension and other postretirement benefits, environmental remediation, property taxes and long-term debt, and amounts for those expenses reflected in rates (with deferral for the difference in property taxes limited to 80 percent of the difference, subject to an annual maximum for the remaining 20 percent of the difference of not more than the equivalent in revenue requirement of a 10 basis point impact on return on common equity). In 2011, 2012 and 2013, the company deferred $0.3 million of net regulatory liabilities, $38 million of net regulatory assets and $26 million of net regulatory assets, respectively, under these provisions.

•

Continuation of the rate provisions pursuant to which the company recovers its costs of purchased gas from gas customers.

•

Continued collection from gas customers of $32 million on an annual basis subject to potential refund (see “Other Regulatory Matters” below in this Note B).

•

A weighted average cost of capital of 7.10 percent, 7.13 percent and 7.21 percent for the rate years ending December 2014, 2015 and 2016, respectively, reflecting:

•

return on common equity of 9.3 percent;

•

cost of long-term debt of 5.17 percent, 5.23 percent and 5.39 percent for the rate years ending December 2014, 2015 and 2016, respectively;

•

common equity ratio of 48 percent; and

•

average rate base of $3,521 million, $3,863 million and $4,236 million for the rate years ending December 2014, 2015 and 2016, respectively.

•


	Rate Year Ending December 31,
(Millions of Dollars)	2014		2015		2016
Gas delivery	$	3,899	$	4,258	$	4,698
Storm hardening		3		8		30

•

Deferral as a regulatory asset or liability, as the case may be, of differences between the actual level of certain expenses, including, among others, expenses for pension and other postretirement benefits, environmental remediation, property taxes and variable rate tax-exempt debt, and amounts for those expenses reflected in rates (with deferral for the difference in property taxes limited to 90 percent of the difference, subject to annual maximum for the remaining 10 percent of the difference of not more than a 10 basis point impact on return on common equity).

•

Continuation of the rate provisions pursuant to which the company recovers its costs of purchased gas from gas customers.

•

Provisions for potential penalties (up to $33 million in 2014, $44 million in 2015, and $56 million in 2016) if certain gas performance targets are not met.

•

O&R — Gas

•

An annual return on common equity of 10.4 percent;

•

Continuation of the provisions pursuant to which the company recovers its cost of purchasing gas and the provisions pursuant to which the effects of weather on gas income are moderated; and

•

CECONY — Steam

•


	Rate Year Ending September 30,
(Millions of Dollars)	2011		2012		2013
Steam production	$	415	$	426	$	433
Steam distribution		521		534		543

•

Continuation of the rate provisions pursuant to which the company recovers its cost of fuel and purchased steam from its steam customers.

•

Deferral as a regulatory liability of the revenue requirement impact of the amounts, if any, by which actual average net plant balances for the 36 months ending December 2016 allocable to the company’s steam business for steam production and distribution and storm hardening are less than the amounts reflected in rates for the respective category for such period. The amounts reflected in rates are:


	Rate Year Ending December 31,
(Millions of Dollars)	2014		2015		2016
Steam production	$	1,752	$	1,732	$	1,720
Steam distribution		6		11		25

•

Continuation of the rate provisions pursuant to which the company recovers its cost of fuel and purchased steam from its steam customers.

•

Continuation of provisions for potential penalties (up to approximately $1 million annually) if certain steam performance targets are not met.

Other Regulatory Matters

Regulatory Assets and Liabilities

Regulatory assets and liabilities at December 31, 2013 and 2012 were comprised of the following items:


	Con Edison				CECONY
(Millions of Dollars)	2013		2012		2013		2012
Regulatory assets
Unrecognized pension and other postretirement costs	$	2,730	$	5,677	$	2,610	$	5,407
Future income tax		2,145		1,922		2,030		1,831
Environmental remediation costs		938		730		830		615
Deferred storm costs		441		432		334		309
Pension and other postretirement benefits deferrals		237		183		211		154
Revenue taxes		207		176		196		170
Net electric deferrals		83		102		83		102
Surcharge for New York State assessment		78		73		74		68
Unamortized loss on reacquired debt		65		74		62		70
O&R transition bond charges		33		39		-		-
Preferred stock redemption		28		29		28		29
Property tax reconciliation		22		16		-		-
Workers’ compensation		12		19		12		19
Deferred derivative losses – long-term		8		40		7		20
Other		174		193		162		178
Regulatory assets – long-term		7,201		9,705		6,639		8,972
Deferred derivative losses – current		25		69		22		60
Recoverable energy costs – current		4		5		4		-
Regulatory assets – current		29		74		26		60
Total Regulatory Assets	$	7,230	$	9,779	$	6,665	$	9,032
Regulatory liabilities
Allowance for cost of removal less salvage	$	540	$	503	$	453	$	420
Property tax reconciliation		322		187		322		187
Net unbilled revenue deferrals		133		136		133		136
Property tax refunds		130		7		130		6
Long-term interest rate reconciliation		105		62		105		62
Carrying charges on repair allowance and bonus depreciation		88		11		87		10
World Trade Center settlement proceeds		62		62		62		62
Other postretirement benefit deferrals		50		-		50		-
Expenditure prudence proceeding		40		14		40		14
Carrying charges on T&D net plant – electric and steam		28		31		20		13
Electric excess earnings		22		-		18		-
Other		208		189		178		167
Regulatory liabilities – long-term		1,728		1,202		1,598		1,077
Refundable energy costs – current		100		82		66		48
Revenue decoupling mechanism		34		72		30		68
Deferred derivative gains – current		14		-		11		-
Electric surcharge offset		-		29		-		29
Regulatory liabilities—current		148		183		107		145
Total Regulatory Liabilities	$	1,876	$	1,385	$	1,705	$	1,222

“Unrecognized pension and other postretirement costs” represents the net regulatory asset associated with the accounting rules for retirement benefits. See Note A.

“Revenue taxes” represents the timing difference between taxes collected and paid by the Utilities to fund mass transportation.