Derivative Instruments and Hedging Activities (Tables)

9 Months Ended

Sep. 30, 2014

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Fair Values of Commodity Derivatives Including Offsetting of Assets and Liabilities

The fair values of the Companies’ commodity derivatives including the offsetting of assets and liabilities at September 30, 2014 were:

(Millions of Dollars)
Commodity Derivatives	Gross Amounts of Recognized Assets/(Liabilities)			Gross Amounts Offset in the Statement of Financial Position			Net Amounts of Assets/(Liabilities) Presented in the Statement of Financial Position			Gross Amounts Not Offset in the Statement of Financial Position				Net Amount
										Financial instruments		Cash collateral received
Con Edison
Derivative assets	$	240		$	(138	)	$	102	(a)	$	—	$	—	$	102	(a)
Derivative liabilities		(124	)		114			(10	)		—		—		(10	)
Net derivative assets/(liabilities)	$	116		$	(24	)	$	92	(a)	$	—	$	—	$	92	(a)
CECONY
Derivative assets	$	103		$	(63	)	$	40	(a)	$	—	$	—	$	40	(a)
Derivative liabilities		(69	)		65			(4)			—		—		(4)
Net derivative assets/(liabilities)	$	34		$	2		$	36	(a)	$	—	$	—	$	36	(a)

(a) At September 30, 2014, Con Edison and CECONY had margin deposits of $8 million classified as derivative assets in the balance sheet, but not included in the table. As required by an exchange, a margin is collateral, typically cash, that the holder of a derivative instrument has to deposit in order to transact on an exchange and to cover its potential losses with its broker or the exchange.

The fair values of the Companies’ commodity derivatives including the offsetting of assets and liabilities at December 31, 2013 were:

(Millions of Dollars)
Commodity Derivatives	Gross Amounts of Recognized Assets/(Liabilities)			Gross Amounts Offset in the Statement of Financial Position			Net Amounts of Assets/(Liabilities) Presented in the Statement of Financial Position			Gross Amounts Not Offset in the Statement of Financial Position				Net Amount
										Financial instruments		Cash collateral received
Con Edison
Derivative assets	$	166		$	(101	)	$	65	(a)	$	—	$	—	$	65	(a)
Derivative liabilities		(113	)		98			(15	)		—		—		(15	)
Net derivative assets/(liabilities)	$	53		$	(3	)	$	50	(a)	$	—	$	—	$	50	(a)
CECONY
Derivative assets	$	41		$	(32	)	$	9	(a)	$	—	$	—	$	9	(a)
Derivative liabilities		(51	)		37			(14	)		—		—		(14	)
Net derivative assets/(liabilities)	$	(10	)	$	5		$	(5	)(a)	$	—	$	—	$	(5	)(a)

(a) At December 31, 2013, Con Edison and CECONY had margin deposits of $17 million and $16 million, respectively, classified as derivative assets in the balance sheet, but not included in the table. As required by an exchange, a margin is collateral, typically cash, that the holder of a derivative instrument has to deposit in order to transact on an exchange and to cover its potential losses with its broker or the exchange.

Fair Values of Companies' Commodity Derivatives

The fair values of the Companies’ commodity derivatives at September 30, 2014 were:

(Millions of Dollars)	Fair Value of Commodity Derivatives(a) Balance Sheet Location	Con Edison			CECONY
Derivative Assets
Current	Other current assets	$	192		$	75
Noncurrent	Other deferred charges and noncurrent assets		48			28
Total derivative assets		$	240		$	103
Impact of netting			(130	)		(55	)
Net derivative assets		$	110		$	48
Derivative Liabilities
Current	Fair value of derivative liabilities	$	82		$	40
Noncurrent	Fair value of derivative liabilities		42			29
Total derivative liabilities		$	124		$	69
Impact of netting			(114	)		(65	)
Net derivative liabilities		$	10		$	4

(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, 2013 were:

(Millions of Dollars)	Fair Value of Commodity Derivatives(a) Balance Sheet Location	Con Edison			CECONY
Derivative Assets
Current	Other current assets	$	134		$	27
Noncurrent	Other deferred charges and noncurrent assets		32			14
Total derivative assets		$	166		$	41
Impact of netting			(84	)		(16	)
Net derivative assets		$	82		$	25
Derivative Liabilities
Current	Fair value of derivative liabilities	$	82		$	32
Noncurrent	Fair value of derivative liabilities		31			19
Total derivative liabilities		$	113		$	51
Impact of netting			(98	)		(37	)
Net derivative liabilities		$	15		$	14

(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 three and nine months ended September 30, 2014:

Realized and Unrealized Gains/(Losses) on Commodity Derivatives(a) Deferred or Recognized in Income for the Three Months Ended September 30, 2014
(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	$	(6	)	$	(5	)
Noncurrent	Deferred derivative gains		(5	)		(5	)
Total deferred gains/(losses)		$	(11	)	$	(10	)
Current	Deferred derivative losses	$	(6	)	$	(5	)
Current	Recoverable energy costs		(33	)		(29	)
Noncurrent	Deferred derivative losses		3			3
Total deferred gains/(losses)		$	(36	)	$	(31	)
Net deferred gains/(losses)		$	(47	)	$	(41	)
	Income Statement Location
Pre-tax gain/(loss) recognized in income
	Purchased power expense	$	(28	)(b)	$	—
	Gas purchased for resale		(29	)		—
	Non-utility revenue		20	(b)		—
Total pre-tax gain/(loss) recognized in income		$	(37	)	$	—

(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 September 30, 2014, Con Edison recorded in purchased power expense an unrealized pre-tax loss of $1 million.

Realized and Unrealized Gains/(Losses) on Commodity Derivatives(a) Deferred or Recognized in Income for the Nine Months Ended September 30, 2014
(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	$	25		$	20
Noncurrent	Deferred derivative gains		1			1
Total deferred gains/(losses)		$	26		$	21
Current	Deferred derivative losses	$	10		$	10
Current	Recoverable energy costs		54			41
Noncurrent	Deferred derivative losses		3			2
Total deferred gains/(losses)		$	67		$	53
Net deferred gains/(losses)		$	93		$	74
	Income Statement Location
Pre-tax gain/(loss) recognized in income
	Purchased power expense	$	134	(b)	$	—
	Gas purchased for resale		(75	)		—
	Non-utility revenue		10	(b)		—
Total pre-tax gain/(loss) recognized in income		$	69		$	—

(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 nine months ended September 30, 2014, Con Edison recorded in purchased power expense an unrealized pre-tax gain of $14 million.

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 nine months ended September 30, 2013:

Realized and Unrealized Gains/(Losses) on Commodity Derivatives(a) Deferred or Recognized in Income for the Three Months Ended September 30, 2013
(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	$	—		$	—
Noncurrent	Regulatory liabilities		—			—
Total deferred gains/(losses)		$	—		$
Current	Deferred derivative losses	$	11		$	9
Current	Recoverable energy costs		(19	)		(17	)
Noncurrent	Deferred derivative losses		6			7
Total deferred gains/(losses)		$	(2	)	$	(1	)
Net deferred gains/(losses)		$	(2	)	$	(1	)
	Income Statement Location
Pre-tax gain/(loss) recognized in income
	Purchased power expense	$	3	(b)	$	—
	Gas purchased for resale		(6	)		—
	Non-utility revenue		7			—
Total pre-tax gain/(loss) recognized in income		$	4		$	—

(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 September 30, 2013, Con Edison recorded in purchased power expense an unrealized pre-tax gain of $6 million.

Realized and Unrealized Gains/(Losses) on Commodity Derivatives(a) Deferred or Recognized in Income for the Nine Months Ended September 30, 2013
(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
Noncurrent	Regulatory liabilities		—			—
Total deferred gains/(losses)		$	1		$	1
Current	Deferred derivative losses	$	24		$	19
Current	Recoverable energy costs		(22	)		(19	)
Noncurrent	Deferred derivative losses		3			7
Total deferred gains/(losses)		$	5		$	7
Net deferred gains/(losses)		$	6		$	8
	Income Statement Location
Pre-tax gain/(loss) recognized in income
	Purchased power expense	$	32	(b)	$	—
	Gas purchased for resale		(17	)		—
	Non-utility revenue		8	(b)		—
Total pre-tax gain/(loss) recognized in income		$	23		$	—

(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 nine months ended September 30, 2013, Con Edison recorded in purchased power expense an unrealized pre-tax gain of $22 million.

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		561		13,588,195		79		5,758		695		75,092,291		1,335
CECONY		75		3,612,475		6		1,500		484		69,880,000		565

(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 September 30, 2014, 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	$	3		$	2
Collateral posted	$	1		$	—
Additional collateral(b) (downgrade one level from current ratings)	$	—		$	—
Additional collateral(b) (downgrade to below investment grade from current ratings)	$	19	(c)	$	2	(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 September 30, 2014, would have amounted to an estimated $17 million for Con Edison, including $5 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 September 30, 2014, if Con Edison had been downgraded to below investment grade, it would have been required to post additional collateral for such derivative instruments of $28 million, including $1 million for CECONY.