Fair Value Measurements (Tables)

12 Months Ended

Dec. 31, 2014

Assets and Liabilities Measured at Fair Value on Recurring Basis

Assets and liabilities measured at fair value on a recurring basis for the years ended December 31, 2014 and 2013 are summarized below.


	2014											2013
(Millions of Dollars)	Level 1		Level 2		Level 3		Netting Adjustment(e)			Total		Level 1		Level 2		Level 3		Netting Adjustment(e)			Total
Con Edison
Derivative assets:
Commodity(a)(b)(c)	$	3	$	78	$	28	$	(27	)	$	82	$	3	$	130	$	11	$	(62	)	$	82
Other(a)(b)(d)		163		116		-		-			279		141		113		-		-			254
Total assets	$	166	$	194	$	28	$	(27	)	$	361	$	144	$	243	$	11	$	(62	)	$	336
Derivative liabilities:
Commodity(a)(b)(c)	$	18	$	246	$	8	$	(194	)	$	78	$	5	$	84	$	2	$	(76	)	$	15
Interest rate contract(a)(b)		-		-		-		-			-		-		2		-		-			2
Total liabilities	$	18	$	246	$	8	$	(194	)	$	78	$	5	$	86	$	2	$	(76	)	$	17
CECONY
Derivative assets
Commodity(a)(b)(c)	$	1	$	3	$	13	$	21		$	38	$	3	$	13	$	6	$	3		$	25
Other(a)(b)(d)		155		106		-		-			261		134		103		-		-			237
Total assets	$	156	$	109	$	13	$	21		$	299	$	137	$	116	$	6	$	3		$	262
Derivative liabilities:
Commodity(a)(b)(c)	$	16	$	91	$	-	$	(49	)	$	58	$	5	$	27	$	-	$	(18	)	$	14
Total Liabilities	$	16	$	91	$	-	$	(49	)	$	58	$	5	$	27	$	-	$	(18	)	$	14

(a)	The Companies’ policy is to review the fair value hierarchy and recognize transfers into and transfers out of the levels at the end of each reporting period. There were no transfers between levels 1, 2 and 3 for the years ended December 31, 2014 and 2013.

(b)

Level 2 assets and liabilities include investments held in the deferred compensation plan and/or non-qualified retirement plans, interest rate swap, 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.

(c)

The accounting rules for fair value measurements and disclosures require consideration of the impact of nonperformance risk (including credit risk) from a market participant perspective in the measurement of the fair value of assets and liabilities. At December 31, 2014 and 2013, the Companies determined that nonperformance risk would have no material impact on their financial position or results of operations.

(d)	Other assets are comprised of assets such as life insurance contracts within the deferred compensation plan and non-qualified retirement plans.

(e)	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.

Schedule of Commodity Derivatives

The risk management group reports to the Companies’ Vice President and Treasurer.


	Fair Value of Level 3 at December 31, 2014 (Millions of Dollars)		Valuation Techniques	Unobservable Inputs	Range
Con Edison – Commodity
Electricity	$	1	Discounted Cash Flow Discounted Cash Flow	Forward energy prices(a) Forward capacity prices(a)	$22.59 - $119.75 per MWH $1.00 - $8.80 per kW - month
Natural Gas		2	Discounted Cash Flow	Forward gas prices(a)	$(1.64) - $5.00 per Dt
Transmission Congestion Contracts / Financial Transmission Rights		17	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)	9.6% - 57.9% 32.3% - 56.1% $(2.66) - $16.49
Total Con Edison—Commodity	$	20
CECONY – Commodity
Transmission Congestion Contracts	$	13	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)	9.6% - 57.9% 32.3% - 56.1%

(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, 2014 and 2013 and classified as Level 3 in the fair value hierarchy:


	Con Edison						CECONY
(Millions of Dollars)	2014			2013			2014			2013
Beginning Balance as of January 1,	$	9		$	(5	)	$	6		$	10
Included in Earnings		30			7			2			7
Included in Regulatory Assets and Liabilities		7			18			7			(1	)
Purchases		22			17			16			13
Settlements		(48	)		(28	)		(18	)		(23	)
Ending Balance as of December 31,	$	20		$	9		$	13		$	6