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Fair Value Measurements (Tables)
 12 Months Ended
Dec. 31, 2013
Fair Value Disclosures [Abstract]  
Assets and Liabilities Measured at Fair Value on Recurring Basis

Assets and liabilities measured at fair value on a recurring basis as of December 31, 2013 are summarized below.

 

     Level 1     Level 2     Level 3    

Netting

Adjustments(d)

     Total  
(Millions of Dollars)   Con
Edison		     CECONY     Con
Edison		     CECONY     Con
Edison		     CECONY     Con
Edison		     CECONY     Con
Edison		     CECONY  

Derivative assets:

                    

Commodity(a)(e)(f)

   $ 3      $ 3      $ 130      $ 13      $ 11      $ 6      $ (62 )    $ 3      $ 82      $ 25   

Other assets(c)(e)(f)

     141        134        113        103        -        -        -        -        254        237   

Total

   $ 144      $ 137      $ 243      $ 116      $ 11      $ 6      $ (62 )    $ 3      $ 336      $ 262   

Derivative liabilities:

                    

Commodity(a)(e)(f)

   $ 5      $ 5      $ 84      $ 27      $ 2      $ -      $ (76 )    $ (18 )    $ 15      $ 14   

Interest rate contract(b)(e)(f)

     -        -        2        -        -        -        -        -        2        -   

Total

   $ 5      $ 5      $ 86      $ 27      $ 2      $ -      $ (76 )    $ (18 )    $ 17      $ 14   

 

(a) A portion of the commodity derivatives categorized in Level 3 is valued using 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.
(b) See Note O.
(c) Other assets are comprised of assets such as life insurance contracts within the deferred compensation plan and non-qualified retirement plans.
(d) 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.
(e) The Companies’ policy is to recognize transfers into and transfers out of the levels at the end of the reporting period. There were no transfers between levels 1, 2, and 3 for the year ended December 31, 2013.
(f) Level 2 assets and liabilities include investments held in the deferred compensation plan and/or non-qualified retirement plans, interest rate swap, or exchange-traded contracts where there is insufficient market liquidity to warrant inclusion in Level 1, and certain over-the-counter derivative instruments for electricity and natural gas. Derivative instruments classified as Level 2 are valued using industry standard models that incorporate corroborated observable inputs; such as pricing services or prices from similar instruments that trade in liquid markets, time value, and volatility factors.

Assets and liabilities measured at fair value on a recurring basis as of December 31, 2012 are summarized below.

 

     Level 1     Level 2     Level 3    

Netting

Adjustments(d)

     Total  
(Millions of Dollars)  

Con

Edison

     CECONY     Con
Edison		     CECONY     Con
Edison		     CECONY     Con
Edison		     CECONY     Con
Edison		     CECONY  

Derivative assets:

                    

Commodity(a)(e)(i)

   $ -      $ -      $ 43      $ 8      $ 33      $ 10      $ (10 )    $ 12      $ 66      $ 30   

Other assets(c)(e)(f)(i)

     106        99        107        98        -        -        -        -        213        197   

Total

   $ 106      $ 99      $ 150      $ 106      $ 33      $ 10      $ (10 )    $ 12      $ 279      $ 227   

Derivative liabilities:

                    

Commodity(a)(e)(h)(i)

   $ 12      $ 12      $ 116      $ 62      $ 38      $ -      $ (94 )    $ (35 )    $ 72      $ 39   

Interest rate contract(b)(e)(g)(i)

     -        -        6        -        -        -        -        -        6        -   

Total

   $ 12      $ 12      $ 122      $ 62      $ 38      $ -      $ (94 )    $ (35 )    $ 78      $ 39   

 

(a) 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.
(b) See Note O.
(c) Other assets are comprised of assets such as life insurance contracts within the deferred compensation plan and non-qualified retirement plans.
(d) 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.
(e) The Companies’ policy is to recognize transfers into and transfers out of the levels at the end of the reporting period.
(f) On March 31, 2012, other assets of $105 million for Con Edison and $95 million for CECONY were transferred from Level 3 to Level 2 because of reassessment of the levels in the fair value hierarchy within which certain inputs fall as of March 31, 2012.
(g) On March 31, 2012, interest rate contract of $8 million was transferred from Level 3 to Level 2 because of reassessment of the levels in the fair value hierarchy within which certain inputs fall.
(h) During 2012, Con Edison transferred commodity derivative contract liabilities of $2 million from Level 1 to Level 2, $9 million from Level 2 to Level 1, $2 million from Level 2 to Level 3, and $11 million from Level 3 to Level 2 because of reassessment of the levels in the fair value hierarchy within which certain inputs fall.
(i) Level 2 assets and liabilities include investments held in the deferred compensation plan and/or non-qualified retirement plans, interest rate swap, or exchange-traded contracts where there is insufficient market liquidity to warrant inclusion in Level 1, and certain over-the-counter derivative instruments for electricity and natural gas. Derivative instruments classified as Level 2 are valued using industry standard models that incorporate corroborated observable inputs; such as pricing services or prices from similar instruments that trade in liquid markets, time value, and volatility factors.
Schedule of Commodity Derivatives

The managers of the risk management groups report to the Companies’ Vice President and Treasurer.

 

    

Fair Value of Level 3 at
December 31, 2013

(Millions of Dollars)

     Valuation
Techniques		   Unobservable Inputs   Range

Con Edison – Commodity

        

Electricity

   $ 0.1      Discounted Cash Flow

Discounted Cash Flow

  

Forward energy prices(a)

Forward capacity prices(a)

  

$27.75 - $124.75 per MWH

$9.50 per kW - month

Transmission Congestion Contracts / Financial Transmission Rights

     9.0      Discounted Cash Flow  

Discount to adjust auction prices for inter-zonal forward price curves(b)

Discount to adjust auction prices for historical monthly realized settlements(b)

Inter-zonal forward price curves adjusted for historical zonal losses(b)

  


(5.8)% - 36.5%


(102.4)% - 49.1%


$(0.31) - $10.25

Total Con Edison—Commodity

   $ 9.1               

CECONY – Commodity

        

Transmission Congestion Contracts

   $ 6.5      Discounted Cash Flow  

Discount to adjust auction prices for inter-zonal forward price curves(b)

Discount to adjust auction prices for historical monthly realized settlements(b)

  


(5.8)% - 36.5%


(102.4)% - 49.1%

 

(a) Generally, increases/(decreases) in this input in isolation would result in a higher/(lower) fair value measurement.
(b) Generally, increases/(decreases) in this input in isolation would result in a lower/(higher) fair value measurement.
Reconciliation of 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 years ended December 31, 2013 and 2012 and classified as Level 3 in the fair value hierarchy:

 

    

For Year Ended December 31, 2013

  
           

Total Gains/(Losses) –

Realized and Unrealized

                                            
(Millions of Dollars)   Beginning
Balance as of
January 1, 2013		     Included in
Earnings		     Included in
Regulatory
Assets and
Liabilities		     Purchases     Issuances     Sales     Settlements     Transfer
In/Out of
Level 3		    

Ending

Balance as of

December 31, 2013

  

Con Edison

                  

Derivatives:

                  

Commodity

   $ (5 )    $ 7      $ 18      $ 17      $ -      $ -      $ (28 )    $ -      $ 9   

CECONY

                  

Derivatives:

                  

Commodity

   $ 10      $ 7      $ (1 )    $ 13      $ -      $ -      $ (23 )    $ -      $ 6   

 

    

For the Year Ended December 31, 2012

  
         

Total Gains/(Losses) –

Realized and Unrealized

                                      
(Millions of Dollars)   Beginning
Balance as of
January 1, 2012		     Included in
Earnings		     Included in
Regulatory
Assets and
Liabilities		     Purchases     Issuances     Sales     Settlements     Transfer
In/Out of
Level 3		    

Ending

Balance as of

December 31, 2012

  

Con Edison

                  

Derivatives:

                  

Commodity

   $ (62 )    $ (112 )    $ 16      $ 22      $ -      $ -      $ 122      $ 9      $ (5 ) 

Interest rate contract

     (8 )      (1 )      -        -        -        -        1        8 (b)      -   

Other assets(a)

     99        3        3        -        -        -        -        (105 )(b)      -   

Total

   $ 29      $ (110 )    $ 19      $ 22      $ -      $ -      $ 123      $ (88 )    $ (5 ) 

CECONY

                  

Derivatives:

                  

Commodity

   $ (7 )    $ (32 )    $ 8      $ 18      $ -      $ -      $ 14      $ 9      $ 10   

Other assets(a)

     90        3        2        -        -        -        -        (95 )(b)      -   

Total

   $ 83      $ (29 )    $ 10      $ 18      $ -      $ -      $ 14      $ (86 )    $ 10   

 

(a) Amounts included in earnings are reported in investment and other income on the consolidated income statement.
(b) Other assets and interest rate contract were transferred as of March 31, 2012.