Item 2: Management’s Discussion and Analysis of Financial Condition and Results of Operations
This combined management’s discussion and analysis of financial condition and results of operations (MD&A) relates to the consolidated financial statements (the
Third
Quarter Financial Statements) included in this report of two separate registrants: Consolidated Edison, Inc. (Con Edison) and Consolidated Edison Company of New York, Inc. (CECONY). As used in this report, the term the “Companies” refers to Con Edison and CECONY. CECONY is a subsidiary of Con Edison and, as such, information in this management’s discussion and analysis about CECONY applies to Con Edison.
This MD&A should be read in conjunction with the
Third
Quarter Financial Statements and the notes thereto, the MD&A in Item 7 of the Companies’ combined Annual Report on Form 10-K for the year ended
December 31, 2015
(File Nos. 1-14514 and 1-1217, the Form 10-K) and the MD&A in Part 1, Item 2 of the Companies’ combined Quarterly Reports on Form 10-Q for the quarterly periods ended
March 31,
2016
and
June 30
,
2016
(File Nos. 1-14514 and 1-1217).
Information in any item of this report referred to in this discussion and analysis is incorporated by reference herein. The use of terms such as “see” or “refer to” shall be deemed to incorporate by reference into this discussion and analysis the information to which reference is made.
Con Edison, incorporated in New York State in 1997, is a holding company that owns all of the outstanding common stock of CECONY, Orange and Rockland Utilities, Inc. (O&R), the competitive energy businesses and Con Edison Transmission, Inc. (Con Edison Transmission). As used in this report, the term the “Utilities” refers to CECONY and O&R.
Con Edison’s principal business operations are those of CECONY, O&R, the competitive energy businesses and Con Edison Transmission. CECONY’s principal business operations are its regulated electric, gas and steam delivery businesses. O&R’s principal business operations are its regulated electric and gas delivery businesses. The competitive energy businesses provide energy-related products and services, and develop, own and operate renewable and energy infrastructure projects. Con Edison Transmission invests in electric transmission facilities and gas pipeline and storage facilities.
Con Edison seeks to provide shareholder value through continued dividend growth, supported by earnings growth in regulated utilities and contracted assets. The company invests to provide reliable, resilient, safe and clean energy critical for New York City’s growing economy. The company is an industry leading owner and operator of contracted, large-scale solar generation in the United States. Con Edison is a responsible neighbor, helping the communities it serves become more sustainable.
CECONY
Electric
CECONY provides electric service to approximately 3.4 million customers in all of New York City (except a part of Queens) and most of Westchester County, an approximately 660 square mile service area with a population of more than nine million.
During the summer of 2016, electric peak demand in the company's service area was 12,652 MW (which occurred on August 11, 2016). At design conditions, electric peak demand in the company's service area would have been approximately 13,450 MW in 2016 compared to the company's forecast of 13,650 MW. The company's five-year forecast of average annual growth of the electric peak demand in its service area at design conditions is approximately 0.2 percent for 2017 to 2021 (the same as its forecast for 2016 to 2020).
Gas
CECONY delivers gas to approximately 1.1 million customers in Manhattan, the Bronx, parts of Queens and most of Westchester County.
Steam
CECONY operates the largest steam distribution system in the United States by producing and delivering approximately 22,000 MMlb of steam annually to approximately 1,700 customers in parts of Manhattan.
Collective Bargaining Agreement
In June 2016, CECONY reached a four-year collective bargaining agreement with its largest union covering approximately 8,000 employees, effective June 26, 2016.
O&R
Electric
O&R and its utility subsidiary, Rockland Electric Company (RECO) (together referred to herein as O&R) provide electric service to approximately 0.3 million customers in southeastern New York and in northern New Jersey, an approximately 1,300 square mile service area.
During the summer of 2016, electric peak demand in the company's service area was 1,435 MW (which occurred on July 22, 2016). At design conditions, electric peak demand in the company's service area would have been approximately 1,615 MW in 2016 compared to the company's forecast of 1,632 MW. The company decreased its five-year forecast of average annual growth of the electric peak demand in its service area at design conditions from approximately 0.3 percent (for 2016 to 2020) to (0.1) percent (for 2017 to 2021) primarily due to a forecasted increase in distributed generation (photovoltaic) as well as lower growth in demand from customers.
Gas
O&R delivers gas to over 0.1 million customers in southeastern New York.
Sale of Pike County Light & Power Company (Pike)
In August 2016, O&R sold its Pennsylvania subsidiary, Pike, to Corning Natural Gas Holding Corporation (see
Note P
to the
Third
Quarter Financial Statements).
Competitive Energy Businesses
Con Edison pursues competitive energy opportunities through three wholly-owned subsidiaries: Con Edison Solutions, Con Edison Energy and Con Edison Development. These businesses provide energy-related products and services to wholesale and retail customers, and develop, own and operate renewable and energy infrastructure projects.
Sale of the Retail Electric Supply Business
In September 2016, Con Edison sold the retail electric supply business of its competitive energy businesses to a subsidiary of Exelon Corporation (see
Note P
to the
Third
Quarter Financial Statements).
Con Edison Transmission
Con Edison Transmission invests in electric and gas transmission projects through its wholly-owned subsidiaries, Consolidated Edison Transmission, LLC (CET Electric) and Con Edison Gas Pipeline and Storage, LLC (formerly known as Con Edison Gas Midstream, LLC, CET Gas). CET Electric, which was formed in 2014, is investing in a company that owns electric transmission assets in New York. CET Gas, which was formed in 2016, owns, through a subsidiary, a 50 percent equity interest in a joint venture that owns, operates and will further develop an existing gas pipeline and storage business located in northern Pennsylvania and southern New York. In addition, CET Gas owns a 12.5 percent equity interest in a company developing a proposed gas transmission project in West Virginia and Virginia. See “Con Edison Transmission,” below.
Certain financial data of Con Edison’s businesses are presented below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended
September 30, 2016
|
For the Nine Months Ended
September 30, 2016
|
At September 30, 2016
|
(Millions of Dollars, except
percentages)
|
Operating
Revenues
|
Net Income
|
Operating
Revenues
|
Net Income
|
Assets
|
CECONY
|
$2,828
|
83
|
%
|
$388
|
78
|
%
|
$7,741
|
82
|
%
|
$859
|
83
|
%
|
$40,436
|
85
|
%
|
O&R
|
240
|
7
|
|
27
|
5
|
|
630
|
7
|
|
55
|
5
|
|
2,784
|
6
|
|
Total Utilities
|
3,068
|
90
|
|
415
|
83
|
|
8,371
|
89
|
|
914
|
88
|
|
43,220
|
91
|
|
Competitive energy businesses (a)
|
350
|
10
|
|
78
|
16
|
|
998
|
11
|
|
120
|
12
|
|
2,394
|
5
|
|
Con Edison Transmission
|
—
|
|
—
|
|
10
|
2
|
|
—
|
|
—
|
|
11
|
1
|
|
1,072
|
2
|
|
Other (b)
|
(1)
|
—
|
|
(6)
|
(1
|
)
|
(1)
|
—
|
|
(6)
|
(1
|
)
|
630
|
2
|
|
Total Con Edison
|
$3,417
|
100
|
%
|
$497
|
100
|
%
|
$9,368
|
100
|
%
|
$1,039
|
100
|
%
|
$47,316
|
100
|
%
|
|
|
(a)
|
Net income from the competitive energy businesses for the
three and nine
months ended
September 30, 2016
includes $47 million of net gain related to the sale of the retail electric supply business, $5 million of net gain related to the acquisition of a solar electric production investment and for the
nine
months ended
September 30, 2016
includes $5 million of net loss related to the
impairment of a solar electric production investment
(see
Note P
to the
Third
Quarter Financial Statements). Also includes for the
three and nine
months ended
September 30, 2016
$(15) million
and
$5 million
, respectively, of net after-tax mark-to-market gains/(losses).
|
|
|
(b)
|
Other includes parent company and consolidation adjustments.
|
Results of Operations
Net income and earnings per share for the
three and nine
months ended
September 30, 2016
and
2015
were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended September 30,
|
For the Nine Months Ended September 30,
|
|
2016
|
2015
|
2016
|
2015
|
2016
|
2015
|
2016
|
2015
|
(Millions of Dollars, except per share amounts)
|
Net Income
|
Earnings
per Share
|
Net Income
|
Earnings
per Share
|
CECONY
|
$388
|
$375
|
|
$1.27
|
|
|
$1.28
|
|
$859
|
$935
|
|
$2.87
|
|
|
$3.19
|
|
O&R (a)
|
27
|
20
|
0.09
|
|
0.07
|
|
55
|
35
|
0.18
|
|
0.12
|
|
Competitive energy businesses (b)
|
78
|
37
|
0.26
|
|
0.12
|
|
120
|
55
|
0.40
|
|
0.19
|
|
Con Edison Transmission
|
10
|
—
|
|
0.03
|
|
—
|
|
11
|
—
|
|
0.04
|
|
—
|
|
Other (c)
|
(6)
|
(4)
|
(0.02
|
)
|
(0.01
|
)
|
(6)
|
(8)
|
(0.02
|
)
|
(0.03
|
)
|
Con Edison (d)
|
$497
|
$428
|
|
$1.63
|
|
|
$1.46
|
|
$1,039
|
$1,017
|
|
$3.47
|
|
|
$3.47
|
|
|
|
(a)
|
Includes $3 million or $0.01 a share of net loss for the three and
nine
months ended
September 30, 2015
related to the impairment of certain assets held for sale (see
Note P
to the
Third
Quarter Financial Statements).
|
|
|
(b)
|
Includes
$47 million
or
$0.15
a share of net gain related to the sale of the retail electric supply business,
$5 million
or
$0.02
a share of net gain related to the acquisition of a solar electric production investment for the three and
nine
months ended
September 30, 2016
and $5 million and or $0.02 a share of net loss related to the
impairment of a solar electric production investment
for the
nine
months ended
September 30, 2016
(see
Note P
to the
Third
Quarter Financial Statements). Also includes
$(15) million
or
$(0.05)
a share and
$7 million
or
$0.02
a share of net after-tax mark-to-market gains/(losses) for the three months ended
September 30, 2016
and
2015
, respectively, and
$5 million
or
$0.02
a share and
$2 million
or
$0.01
a share of net after-tax mark-to-market gains for the
nine
months ended
September 30, 2016
and
2015
, respectively.
|
|
|
(c)
|
Other includes parent company and consolidation adjustments.
|
|
|
(d)
|
Earnings per share on a diluted basis were
$1.62
a share and
$1.45
a share for the three months ended
September 30, 2016
and
2015
, respectively, and
$3.46
a share for the
nine
months ended
September 30, 2016
and
2015
.
|
The Companies’ results of operations for the
three and nine
months ended
September 30, 2016
, as compared with the
2015
periods, reflect changes in rate plans and regulatory charges and, in the
nine
month period, the impact of warmer than normal weather on steam revenues. Other lower operations and maintenance expenses reflect lower surcharges for assessments and fees that are collected in revenues from customers at the Utilities. In the
nine
month period, these expenses also reflect higher expenses for emergency response, municipal infrastructure support and stock-based compensation at CECONY. In addition, the Utilities' rate plans provide for revenues to cover expected changes in certain operating costs including depreciation, property taxes and other tax matters. The results of operations also include higher electric retail gross profit and income from renewable investments, the gain on sale of retail electric supply business, the gain and impairment related to a solar electric production investment, and the impact of the net mark-to-market effects of the competitive energy businesses.
The following table presents the estimated effect on earnings per share and net income for the
three and nine
months ended
September 30, 2016
period as compared with
2015
periods, resulting from these and other major factors:
|
|
|
|
|
|
|
|
|
|
Three Months Variation
|
Nine Months Variation
|
(Millions of Dollars, except per share amounts)
|
Earnings
per Share
Variation
|
Net Income
Variation
|
Earnings
per Share
Variation
|
Net Income
Variation
|
CECONY (a)
|
|
|
|
|
Changes in rate plans and regulatory charges
|
$0.05
|
$16
|
$0.14
|
$40
|
Weather impact on steam revenues
|
—
|
|
1
|
(0.12)
|
(36)
|
Other operations and maintenance expenses
|
0.05
|
16
|
0.07
|
21
|
Depreciation, property taxes and other tax matters
|
(0.06)
|
(18)
|
(0.30)
|
(88)
|
Other (b)
|
(0.05)
|
(2)
|
(0.11)
|
(13)
|
Total CECONY
|
(0.01)
|
13
|
(0.32)
|
(76)
|
O&R (a)
|
|
|
|
|
Changes in rate plans and regulatory charges
|
0.02
|
5
|
0.02
|
7
|
Other operations and maintenance expenses
|
0.01
|
3
|
0.06
|
17
|
Depreciation and property taxes
|
(0.01)
|
(3)
|
(0.03)
|
(8)
|
Other (c)
|
—
|
|
2
|
0.01
|
4
|
Total O&R
|
0.02
|
7
|
0.06
|
20
|
Competitive energy businesses
|
|
|
|
|
Operating revenues less energy costs
|
(0.02)
|
(7)
|
0.14
|
41
|
Other operations and maintenance expenses
|
—
|
|
(2)
|
(0.05)
|
(16)
|
Gain on sale of retail electric supply business
|
0.15
|
47
|
0.15
|
47
|
Other (b)
|
0.01
|
3
|
(0.03)
|
(7)
|
Total competitive energy businesses (c)
|
0.14
|
41
|
0.21
|
65
|
Con Edison Transmission
|
0.03
|
10
|
0.04
|
11
|
Other, including parent company expenses
|
(0.01)
|
(2)
|
0.01
|
2
|
Total variations
|
$0.17
|
$69
|
|
$—
|
|
$22
|
|
|
(a)
|
Under the revenue decoupling mechanisms in the Utilities’ New York electric and gas rate plans and the weather-normalization clause applicable to their gas businesses, revenues are generally not affected by changes in delivery volumes from levels assumed when rates were approved. In general, the Utilities recover on a current basis the fuel, gas purchased for resale and purchased power costs they incur in supplying energy to their full-service customers. Accordingly, such costs do not generally affect the Companies’ results of operations.
|
|
|
(b)
|
Includes the impact of the dilutive effect of Con Edison's stock issuances.
|
|
|
(c)
|
These variations include the impairment of certain assets held for sale in 2015, the gain and impairment related to a solar electric production investment and net mark-to-market effects shown in notes (a) and (b) in the Results of Operations table above.
|
The Companies’ other operations and maintenance expenses for the
three and nine
months ended
September 30, 2016
and
2015
were as follows:
|
|
|
|
|
|
|
|
|
For the Three Months Ended September 30,
|
For the Nine Months Ended September 30,
|
(Millions of Dollars)
|
2016
|
2015
|
2016
|
2015
|
CECONY
|
|
|
|
|
Operations
|
$381
|
$383
|
$1,109
|
$1,074
|
Pensions and other postretirement benefits
|
87
|
91
|
261
|
273
|
Health care and other benefits
|
44
|
38
|
122
|
116
|
Regulatory fees and assessments (a)
|
129
|
153
|
346
|
433
|
Other
|
83
|
85
|
267
|
244
|
Total CECONY
|
724
|
750
|
2,105
|
2,140
|
O&R
|
77
|
82
|
220
|
249
|
Competitive energy businesses
|
40
|
37
|
124
|
98
|
Con Edison Transmission
|
1
|
—
|
|
1
|
—
|
|
Other (b)
|
(2)
|
—
|
|
(3)
|
(2)
|
Total other operations and maintenance expenses
|
$840
|
$869
|
$2,447
|
$2,485
|
|
|
(a)
|
Includes Demand Side Management, System Benefit Charges and Public Service Law 18A assessments which are collected in revenues.
|
|
|
(b)
|
Includes parent company and consolidation adjustments.
|
Con Edison’s principal business segments are CECONY’s regulated utility activities, O&R’s regulated utility activities, Con Edison’s competitive energy businesses and Con Edison Transmission. CECONY’s principal business segments are its regulated electric, gas and steam utility activities. A discussion of the results of operations by principal business segment for the
three and nine
months ended
September 30, 2016
and
2015
follows. For additional business segment financial information, see
Note J
to the
Third
Quarter Financial Statements.
Three Months Ended September 30, 2016
Compared with
Three Months Ended September 30, 2015
The Companies’ results of operations in
2016
compared with
2015
were:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CECONY
|
O&R
|
Competitive Energy Businesses
|
Con Edison
Transmission
|
Other (a)
|
Con Edison (b)
|
(Millions of Dollars)
|
Increases
(Decreases)
Amount
|
Increases
(Decreases)
Percent
|
Increases
(Decreases)
Amount
|
Increases
(Decreases)
Percent
|
Increases
(Decreases)
Amount
|
Increases
(Decreases)
Percent
|
Increases
(Decreases)
Amount
|
Increases
(Decreases)
Percent
|
Increases
(Decreases)
Amount
|
Increases
(Decreases)
Percent
|
Increases
(Decreases)
Amount
|
Increases
(Decreases)
Percent
|
Operating revenues
|
$(1)
|
—
|
%
|
$11
|
4.8
|
%
|
$(36)
|
(9.3
|
)%
|
|
$—
|
|
—
|
%
|
|
$—
|
|
—%
|
|
$(26)
|
(0.8
|
)%
|
Purchased power
|
(31)
|
(5.9
|
)
|
5
|
7.8
|
|
(36)
|
(13.3
|
)
|
—
|
|
—
|
|
—
|
|
—
|
|
(62)
|
(7.2
|
)
|
Fuel
|
(2)
|
(6.5
|
)
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(2)
|
(6.5
|
)
|
Gas purchased for resale
|
4
|
13.3
|
|
(1)
|
(11.1
|
)
|
14
|
56.0
|
|
—
|
|
—
|
|
—
|
|
—
|
|
17
|
26.6
|
|
Other operations and maintenance
|
(26)
|
(3.5
|
)
|
(5)
|
(6.1
|
)
|
3
|
8.1
|
|
1
|
—
|
|
(2)
|
—
|
|
(29)
|
(3.3
|
)
|
Depreciation and amortization
|
16
|
6.1
|
|
—
|
|
—
|
|
5
|
83.3
|
|
—
|
|
—
|
|
(1)
|
—
|
|
20
|
7.0
|
|
Taxes, other than income taxes
|
17
|
3.5
|
|
6
|
40.0
|
|
—
|
|
—
|
|
—
|
|
—
|
|
1
|
Large
|
|
24
|
4.8
|
|
Gain on sale of retail electric supply business
|
—
|
|
—
|
|
—
|
|
—
|
|
104
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
104
|
—
|
|
Operating income
|
21
|
2.8
|
|
6
|
14.3
|
|
82
|
Large
|
|
(1)
|
—
|
|
2
|
—
|
|
110
|
13.3
|
|
Other income less deductions
|
5
|
Large
|
|
6
|
Large
|
|
10
|
58.8
|
|
20
|
—
|
|
(1)
|
—
|
|
40
|
Large
|
|
Net interest expense
|
9
|
6.2
|
|
—
|
|
—
|
|
5
|
Large
|
|
3
|
—
|
|
(1)
|
(16.7
|
)
|
16
|
9.9
|
|
Income before income tax expense
|
17
|
2.8
|
|
12
|
42.9
|
|
87
|
Large
|
|
16
|
—
|
|
2
|
33.3
|
|
134
|
19.8
|
|
Income tax expense
|
4
|
1.8
|
|
5
|
62.5
|
|
46
|
Large
|
|
6
|
—
|
|
4
|
Large
|
|
65
|
26.1
|
|
Net income
|
$13
|
3.5
|
%
|
$7
|
35.0
|
%
|
$41
|
Large
|
|
$10
|
—
|
%
|
$(2)
|
(50.0
|
)%
|
$69
|
16.1
|
%
|
|
|
(a)
|
Includes parent company and consolidation adjustments.
|
|
|
(b)
|
Represents the consolidated financial results of Con Edison and its businesses.
|
CECONY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended
September 30, 2016
|
|
For the Three Months Ended
September 30, 2015
|
|
|
(Millions of Dollars)
|
Electric
|
Gas
|
Steam
|
2016 Total
|
Electric
|
Gas
|
Steam
|
2015 Total
|
2016-2015
Variation
|
Operating revenues
|
$2,557
|
$208
|
$63
|
$2,828
|
$2,558
|
$213
|
$58
|
$2,829
|
$(1)
|
Purchased power
|
486
|
—
|
|
9
|
495
|
519
|
—
|
|
7
|
526
|
(31)
|
Fuel
|
21
|
—
|
|
8
|
29
|
24
|
—
|
|
7
|
31
|
(2)
|
Gas purchased for resale
|
—
|
|
34
|
—
|
|
34
|
—
|
|
30
|
—
|
|
30
|
4
|
Other operations and maintenance
|
578
|
102
|
44
|
724
|
598
|
106
|
46
|
750
|
(26)
|
Depreciation and amortization
|
217
|
41
|
20
|
278
|
207
|
35
|
20
|
262
|
16
|
Taxes, other than income taxes
|
414
|
59
|
29
|
502
|
399
|
59
|
27
|
485
|
17
|
Operating income
|
$841
|
$(28)
|
$(47)
|
$766
|
$811
|
$(17)
|
$(49)
|
$745
|
$21
|
Electric
CECONY’s results of electric operations for the three months ended
September 30, 2016
compared with the
2015
period is as follows:
|
|
|
|
|
|
For the Three Months Ended
|
|
(Millions of Dollars)
|
September 30, 2016
|
September 30, 2015
|
Variation
|
Operating revenues
|
$2,557
|
$2,558
|
$(1)
|
Purchased power
|
486
|
519
|
(33)
|
Fuel
|
21
|
24
|
(3)
|
Other operations and maintenance
|
578
|
598
|
(20)
|
Depreciation and amortization
|
217
|
207
|
10
|
Taxes, other than income taxes
|
414
|
399
|
15
|
Electric operating income
|
$841
|
$811
|
$30
|
CECONY’s electric sales and deliveries for the three months ended
September 30, 2016
compared with the
2015
period were:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Millions of kWh Delivered
|
|
Revenues in Millions (a)
|
|
For the Three Months Ended
|
|
|
For the Three Months Ended
|
|
Description
|
September 30, 2016
|
September 30, 2015
|
Variation
|
Percent
Variation
|
|
September 30, 2016
|
September 30, 2015
|
Variation
|
Percent
Variation
|
Residential/Religious (b)
|
3,653
|
|
3,577
|
|
76
|
|
2.1
|
%
|
|
$883
|
$903
|
$(20)
|
(2.2
|
)%
|
Commercial/Industrial
|
2,749
|
|
2,692
|
|
57
|
|
2.1
|
|
|
551
|
574
|
(23)
|
(4.0
|
)
|
Retail choice customers
|
8,136
|
|
7,822
|
|
314
|
|
4.0
|
|
|
918
|
888
|
30
|
3.4
|
|
NYPA, Municipal Agency and other sales
|
2,764
|
|
2,731
|
|
33
|
|
1.2
|
|
|
204
|
198
|
6
|
3.0
|
|
Other operating revenues (c)
|
—
|
|
—
|
|
—
|
|
—
|
|
|
1
|
(5)
|
6
|
Large
|
|
Total
|
17,302
|
|
16,822
|
|
480
|
|
2.9
|
%
|
(d)
|
$2,557
|
$2,558
|
$(1)
|
—
|
%
|
|
|
(a)
|
Revenues from electric sales are subject to a revenue decoupling mechanism, as a result of which delivery revenues generally are not affected by changes in delivery volumes from levels assumed when rates were approved.
|
|
|
(b)
|
“Residential/Religious” generally includes single-family dwellings, individual apartments in multi-family dwellings, religious organizations and certain other not-for-profit organizations.
|
|
|
(c)
|
Other electric operating revenues generally reflect changes in regulatory assets and liabilities in accordance with the revenue decoupling mechanism and other provisions of the company’s rate plans.
|
|
|
(d)
|
After adjusting for variations, principally weather and billing days, electric delivery volumes in CECONY’s service area increased
1.0
percent in the three months ended
September 30, 2016
compared with the
2015
period.
|
Operating revenues
decreased
$1 million
in the three months ended
September 30, 2016
compared with the
2015
period due primarily to lower purchased power costs (
$33 million
) and fuel expenses (
$3 million
), offset in part by higher revenues from the electric rate plan ($35 million).
Purchased power
expenses
decreased
$33 million
in the three months ended
September 30, 2016
compared with the
2015
period due to lower unit costs ($39 million), offset by higher purchased volumes ($6 million).
Fuel
expenses
decreased
$3 million
in the three months ended
September 30, 2016
compared with the
2015
period due to lower unit costs.
Other operations and maintenance
expenses
decreased
$20 million
in the three months ended
September 30, 2016
compared with the
2015
period due primarily to a decrease in the surcharges for assessments and fees that are collected in revenues from customers.
Depreciation and amortization
increased
$10 million
in the three months ended
September 30, 2016
compared with the
2015
period due primarily to higher electric utility plant balances.
Taxes, other than income taxes
increased
$15 million
in the three months ended
September 30, 2016
compared with the
2015
period principally due to higher property taxes ($13 million) and state and local taxes ($2 million).
Gas
CECONY’s results of gas operations for the three months ended
September 30, 2016
compared with the
2015
period is as follows:
|
|
|
|
|
|
|
For the Three Months Ended
|
|
(Millions of Dollars)
|
September 30, 2016
|
September 30, 2015
|
Variation
|
Operating revenues
|
$208
|
$213
|
$(5)
|
Gas purchased for resale
|
34
|
30
|
4
|
Other operations and maintenance
|
102
|
106
|
(4)
|
Depreciation and amortization
|
41
|
35
|
6
|
Taxes, other than income taxes
|
59
|
59
|
—
|
|
Gas operating income
|
$(28)
|
$(17)
|
$(11)
|
CECONY’s gas sales and deliveries, excluding off-system sales, for the three months ended
September 30, 2016
compared with the
2015
period were:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thousands of Dt Delivered
|
|
Revenues in Millions (a)
|
|
For the Three Months Ended
|
|
|
For the Three Months Ended
|
|
Description
|
September 30, 2016
|
September 30, 2015
|
Variation
|
Percent
Variation
|
|
September 30, 2016
|
September 30, 2015
|
Variation
|
Percent
Variation
|
Residential
|
4,335
|
|
4,118
|
|
217
|
|
5.3
|
%
|
|
$88
|
$83
|
$5
|
6.0
|
%
|
General
|
3,963
|
|
3,226
|
|
737
|
|
22.8
|
|
|
41
|
35
|
6
|
17.1
|
|
Firm transportation
|
8,305
|
|
8,185
|
|
120
|
|
1.5
|
|
|
53
|
58
|
(5)
|
(8.6
|
)
|
Total firm sales and transportation
|
16,603
|
|
15,529
|
|
1,074
|
|
6.9
|
|
(b)
|
182
|
176
|
6
|
3.4
|
|
Interruptible sales (c)
|
1,664
|
|
1,772
|
|
(108
|
)
|
(6.1
|
)
|
|
4
|
6
|
(2)
|
(33.3
|
)
|
NYPA
|
12,800
|
|
14,023
|
|
(1,223
|
)
|
(8.7
|
)
|
|
1
|
1
|
—
|
|
—
|
|
Generation plants
|
35,745
|
|
30,610
|
|
5,135
|
|
16.8
|
|
|
7
|
7
|
—
|
|
—
|
|
Other
|
4,975
|
|
4,512
|
|
463
|
|
10.3
|
|
|
6
|
6
|
—
|
|
—
|
|
Other operating revenues (d)
|
—
|
|
—
|
|
—
|
|
—
|
|
|
8
|
|
17
|
(9)
|
(52.9
|
)
|
Total
|
71,787
|
|
66,446
|
|
5,341
|
|
8.0
|
%
|
|
$208
|
$213
|
$(5)
|
(2.3
|
)%
|
|
|
(a)
|
Revenues from gas sales are subject to a weather normalization clause and a revenue decoupling mechanism as a result of which delivery revenues are generally not affected by changes in delivery volumes from levels assumed when rates were approved.
|
|
|
(b)
|
After adjusting for variations, principally billing days, firm gas sales and transportation volumes in the company’s service area increased
7.8
percent in the three months ended
September 30, 2016
compared with the
2015
period, reflecting primarily increased volumes attributable to additional customers that have converted from oil-to-gas as heating fuel for their buildings.
|
|
|
(c)
|
Includes 915 thousands and 765 thousands of Dt for the
2016
and
2015
periods, respectively, which are also reflected in firm transportation and other.
|
|
|
(d)
|
Other gas operating revenues generally reflect changes in regulatory assets and liabilities in accordance with the company’s rate plans.
|
Operating revenues
decreased
$5 million
in the three months ended
September 30, 2016
compared with the
2015
period due primarily to changes in regulatory charges ($12 million), offset in part by higher gas purchased for resale expense (
$4 million
).
Gas purchased for resale
increased
$4 million
in the three months ended
September 30, 2016
compared with the
2015
period due to higher unit costs ($7 million), offset by lower sendout volumes ($3 million).
Other operations and maintenance
expenses
decreased
$4 million
in the three months ended
September 30, 2016
compared with the
2015
period due primarily to a decrease in the surcharges for assessments and fees that are collected in revenues from customers ($2 million) and lower stock-based compensation costs ($2 million).
Depreciation and amortization
increased
$6 million
in the three months ended
September 30, 2016
compared with the
2015
period due primarily to higher gas utility plant balances.
Steam
CECONY’s results of steam operations for the three months ended
September 30, 2016
compared with the
2015
period is as follows:
|
|
|
|
|
|
|
For the Three Months Ended
|
|
(Millions of Dollars)
|
September 30, 2016
|
September 30, 2015
|
Variation
|
Operating revenues
|
$63
|
$58
|
$5
|
Purchased power
|
9
|
7
|
2
|
Fuel
|
8
|
7
|
1
|
Other operations and maintenance
|
44
|
46
|
(2)
|
Depreciation and amortization
|
20
|
20
|
—
|
|
Taxes, other than income taxes
|
29
|
27
|
2
|
Steam operating income
|
$(47)
|
$(49)
|
$2
|
CECONY’s steam sales and deliveries for the three months ended
September 30, 2016
compared with the
2015
period were:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Millions of Pounds Delivered
|
|
Revenues in Millions
|
|
For the Three Months Ended
|
|
|
For the Three Months Ended
|
|
Description
|
September 30, 2016
|
September 30, 2015
|
Variation
|
Percent
Variation
|
|
September 30, 2016
|
September 30, 2015
|
Variation
|
Percent
Variation
|
General
|
10
|
|
19
|
|
(9
|
)
|
(47.4
|
)%
|
|
$2
|
$2
|
|
$—
|
|
—
|
%
|
Apartment house
|
776
|
|
816
|
|
(40
|
)
|
(4.9
|
)
|
|
15
|
16
|
(1)
|
(6.3
|
)
|
Annual power
|
2,950
|
|
2,961
|
|
(11
|
)
|
(0.4
|
)
|
|
49
|
46
|
3
|
6.5
|
|
Other operating revenues (a)
|
—
|
|
—
|
|
—
|
|
—
|
|
|
(3)
|
(6)
|
3
|
50.0
|
|
Total
|
3,736
|
|
3,796
|
|
(60
|
)
|
(1.6
|
)%
|
(b)
|
$63
|
$58
|
$5
|
8.6
|
%
|
|
|
(a)
|
Other steam operating revenues generally reflect changes in regulatory assets and liabilities in accordance with the company’s rate plan.
|
|
|
(b)
|
After adjusting for variations, principally weather and billing days, steam sales and deliveries decreased
3.4
percent in three months ended
September 30, 2016
compared with the
2015
period.
|
Operating revenues
increased
$5 million
in the three months ended
September 30, 2016
compared with the
2015
period due primarily to higher revenues from the steam rate plan ($3 million), purchased power costs (
$2 million
) and fuel expenses (
$1 million
).
Purchased power
expenses
increased
$2 million
in the three months ended
September 30, 2016
compared with the
2015
period due to higher unit costs.
Fuel
expenses
increased
$1 million
in the three months ended
September 30, 2016
compared with the
2015
period due to higher unit costs.
Other operations and maintenance
expenses
decreased
$2 million
in the three months ended
September 30, 2016
compared with the
2015
period due primarily to lower stock-based compensation costs.
Taxes, other than income taxes
increased
$2 million
in the three months ended
September 30, 2016
compared with the
2015
period principally due to higher property taxes.
Net Interest Expense
Net interest expense increased
$9 million
in the three months ended
September 30, 2016
compared with the
2015
period due primarily higher long-term debt balances in the 2016 period.
Income Tax Expense
Income taxes increased
$4 million
in the three months ended
September 30, 2016
compared with the
2015
period due primarily to higher income before income tax expense ($7 million) and plant-related flow through items ($13 million), offset in part by lower state income taxes ($8 million), a research and development tax credit ($5 million) and higher settlement payments related to injuries and damages ($2 million).
O&R
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended
September 30, 2016
|
|
For the Three Months Ended
September 30, 2015
|
|
|
(Millions of Dollars)
|
Electric
|
Gas
|
2016 Total
|
Electric
|
Gas
|
2015 Total
|
2016-2015
Variation
|
Operating revenues
|
$213
|
$27
|
$240
|
$205
|
$24
|
$229
|
$11
|
Purchased power
|
69
|
—
|
|
69
|
64
|
—
|
|
64
|
5
|
Gas purchased for resale
|
—
|
|
8
|
8
|
—
|
|
9
|
9
|
(1)
|
Other operations and maintenance
|
63
|
14
|
77
|
66
|
16
|
82
|
(5)
|
Depreciation and amortization
|
12
|
5
|
17
|
13
|
4
|
17
|
—
|
|
Taxes, other than income taxes
|
14
|
7
|
21
|
11
|
4
|
15
|
6
|
Operating income
|
$55
|
$(7)
|
$48
|
$51
|
$(9)
|
$42
|
$6
|
Electric
O&R’s results of electric operations for the three months ended
September 30, 2016
compared with the
2015
period is as follows:
|
|
|
|
|
|
For the Three Months Ended
|
|
(Millions of Dollars)
|
September 30, 2016
|
September 30, 2015
|
Variation
|
Operating revenues
|
$213
|
$205
|
$8
|
Purchased power
|
69
|
64
|
5
|
Other operations and maintenance
|
63
|
66
|
(3)
|
Depreciation and amortization
|
12
|
13
|
(1)
|
Taxes, other than income taxes
|
14
|
11
|
3
|
Electric operating income
|
$55
|
$51
|
$4
|
O&R’s electric sales and deliveries for the three months ended
September 30, 2016
compared with the
2015
period were:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Millions of kWh Delivered
|
|
Revenues in Millions (a)
|
|
For the Three Months Ended
|
|
|
For the Three Months Ended
|
|
Description
|
September 30, 2016
|
September 30, 2015
|
Variation
|
Percent
Variation
|
|
September 30, 2016
|
September 30, 2015
|
Variation
|
Percent
Variation
|
Residential/Religious (b)
|
585
|
|
533
|
|
52
|
|
9.8
|
%
|
|
$109
|
$99
|
$10
|
10.1
|
%
|
Commercial/Industrial
|
216
|
|
220
|
|
(4
|
)
|
(1.8
|
)
|
|
35
|
35
|
—
|
|
—
|
|
Retail choice customers
|
925
|
|
926
|
|
(1
|
)
|
(0.1
|
)
|
|
70
|
69
|
1
|
|
1.4
|
|
Public authorities
|
31
|
|
28
|
|
3
|
|
10.7
|
|
|
2
|
3
|
(1
|
)
|
(33.3
|
)
|
Other operating revenues (c)
|
—
|
|
—
|
|
—
|
|
—
|
|
|
(3)
|
(1)
|
(2)
|
Large
|
|
Total
|
1,757
|
|
1,707
|
|
50
|
|
2.9
|
%
|
(d)
|
$213
|
$205
|
$8
|
3.9
|
%
|
|
|
(a)
|
O&R’s New York electric delivery revenues are subject to a revenue decoupling mechanism, as a result of which delivery revenues are generally not affected by changes in delivery volumes from levels assumed when rates were approved. O&R’s electric sales in New Jersey and Pennsylvania are not subject to a decoupling mechanism, and as a result, changes in such volumes do impact revenues.
|
|
|
(b)
|
“Residential/Religious” generally includes single-family dwellings, individual apartments in multi-family dwellings, religious organizations and certain other not-for-profit organizations.
|
|
|
(c)
|
Other electric operating revenues generally reflect changes in regulatory assets and liabilities in accordance with the company’s electric rate plans.
|
|
|
(d)
|
After adjusting for weather and other variations, electric delivery volumes in O&R’s service area decreased
0.9
percent in the three months ended
September 30, 2016
compared with the
2015
period.
|
Operating revenues
increased
$8 million
in the three months ended
September 30, 2016
compared with the
2015
period due primarily to higher revenues from the electric rate plans ($6 million) and purchased power costs (
$5 million
).
Purchased power
expenses
increased
$5 million
in the three months ended
September 30, 2016
compared with the
2015
period due to higher purchased volumes ($6 million), offset by lower unit costs ($1 million).
Other operations and maintenance
expenses
decreased
$3 million
in the three months ended
September 30, 2016
compared with the
2015
period due primarily to regulatory accounting effects of pension costs.
Depreciation and amortization
decreased
$1 million
in the three months ended
September 30, 2016
compared with the
2015
period due primarily to lower average depreciation rates.
Taxes, other than income taxes
increased
$3 million
in the three months ended
September 30, 2016
compared with the
2015
period principally due to higher property taxes.
Gas
O&R’s results of gas operations for the three months ended
September 30, 2016
compared with the
2015
period is as follows:
|
|
|
|
|
|
For the Three Months Ended
|
|
(Millions of Dollars)
|
September 30, 2016
|
September 30, 2015
|
Variation
|
Operating revenues
|
$27
|
$24
|
$3
|
Gas purchased for resale
|
8
|
9
|
(1)
|
Other operations and maintenance
|
14
|
16
|
(2)
|
Depreciation and amortization
|
5
|
4
|
1
|
Taxes, other than income taxes
|
7
|
4
|
3
|
Gas operating income
|
$(7)
|
$(9)
|
$2
|
O&R’s gas sales and deliveries, excluding off-system sales, for the three months ended
September 30, 2016
compared with the
2015
period were:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thousands of Dt Delivered
|
|
Revenues in Millions (a)
|
|
For the Three Months Ended
|
|
|
For the Three Months Ended
|
|
Description
|
September 30, 2016
|
September 30, 2015
|
Variation
|
Percent
Variation
|
|
September 30, 2016
|
September 30, 2015
|
Variation
|
Percent
Variation
|
Residential
|
550
|
|
481
|
|
69
|
|
14.3
|
%
|
|
$9
|
$7
|
$2
|
28.6
|
%
|
General
|
177
|
|
120
|
|
57
|
|
47.5
|
|
|
2
|
1
|
1
|
Large
|
|
Firm transportation
|
884
|
|
980
|
|
(96
|
)
|
(9.8
|
)
|
|
8
|
8
|
—
|
|
—
|
|
Total firm sales and transportation
|
1,611
|
|
1,581
|
|
30
|
|
1.9
|
|
(b)
|
19
|
16
|
3
|
18.8
|
|
Interruptible sales
|
893
|
|
938
|
|
(45
|
)
|
(4.8
|
)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
Generation plants
|
3
|
|
10
|
|
(7
|
)
|
(70.0
|
)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
Other
|
70
|
|
70
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
Other gas revenues
|
—
|
|
—
|
|
—
|
|
—
|
|
|
8
|
8
|
—
|
|
—
|
|
Total
|
2,577
|
|
2,599
|
|
(22
|
)
|
(0.8
|
)%
|
|
$27
|
$24
|
$3
|
12.5
|
%
|
|
|
(a)
|
Revenues from New York gas sales are subject to a weather normalization clause and a revenue decoupling mechanism as a result of which delivery revenues are generally not affected by changes in delivery volumes from levels assumed when rates were approved.
|
|
|
(b)
|
After adjusting for weather and other variations, total firm sales and transportation volumes decreased
1.7
percent in the three months ended
September 30, 2016
compared with
2015
period.
|
Operating revenues
increased
$3 million
in the three months ended
September 30, 2016
compared with the
2015
period due primarily to higher revenues from the New York gas rate plan ($4 million), offset by a decrease in gas purchased for resale (
$1 million
).
Gas purchased for resale
decreased
$1 million
in the three months ended
September 30, 2016
compared with the
2015
period due to lower purchased volumes ($2 million), offset by higher unit costs ($1 million).
Other operations and maintenance
expenses
decreased
$2 million
in the three months ended
September 30, 2016
compared with the
2015
period due primarily to regulatory accounting effects of pension costs.
Depreciation and amortization
increased
$1 million
in the three months ended
September 30, 2016
compared with the
2015
period due primarily to higher gas utility plant balances.
Taxes, other than income taxes
increased
$3 million
in the three months ended
September 30, 2016
compared with the
2015
period principally due to higher property taxes.
Other Income (Deductions)
Other income (deductions)
increased
$6 million
in the three months ended
September 30, 2016
compared with the
2015
period due primarily to
the impairment of certain assets held for sale
in 2015 (see
Note P
to the Third Quarter Financial Statements).
Income Tax Expense
Income taxes increased
$5 million
in the three months ended
September 30, 2016
compared with the
2015
period due primarily to higher income before income tax expense.
Competitive Energy Businesses
The competitive energy businesses’ results of operations for the three months ended
September 30, 2016
compared with the
2015
period is as follows:
|
|
|
|
|
|
|
|
For the Three Months Ended
|
|
(Millions of Dollars)
|
September 30, 2016
|
September 30, 2015
|
Variation
|
Operating revenues
|
$350
|
$386
|
$(36)
|
Purchased power
|
234
|
270
|
(36)
|
Gas purchased for resale
|
39
|
25
|
14
|
Other operations and maintenance
|
40
|
37
|
3
|
Depreciation and amortization
|
11
|
6
|
5
|
Taxes, other than income taxes
|
5
|
5
|
—
|
|
Gain on sale of retail electric supply business
|
(104)
|
—
|
|
(104)
|
Operating income
|
$125
|
$43
|
$82
|
Operating revenues
decreased
$36 million
in the three months ended
September 30, 2016
compared with the
2015
period, due primarily to lower electric retail revenues due in part to the sale of the retail electric supply business (see
Note P
to the Third Quarter Financial Statements). Electric retail revenues decreased $71 million due to lower sales volume ($57 million) and unit prices ($14 million). Renewable revenues increased $15 million primarily due to an increase in renewable electric production projects in operation. Energy services revenues increased $9 million. Wholesale revenues increased $12 million due to higher sales volumes. Net mark-to-market values decreased $36 million, of which $35 million in losses are reflected in purchased power costs and $1 million in losses are reflected in revenues.
Purchased power
expenses
decreased
$36 million
in the three months ended
September 30, 2016
compared with the
2015
period due primarily to lower volumes ($51 million) and lower unit prices ($20 million), offset by changes in mark-to-market losses ($35 million).
Gas purchased for resale
increased
$14 million
in the three months ended
September 30, 2016
compared with the
2015
period due to higher sale volumes.
Other operations and maintenance
expenses
increased
$3 million
in the three months ended
September 30, 2016
compared with the
2015
period due primarily to an increase in energy services costs.
Depreciation and amortization
increased
$5 million
in the three months ended
September 30, 2016
compared with the
2015
period due an increase in solar electric production projects in operation during 2016.
Gain on sale of retail electric supply business
was
$104 million
in the three months ended
September 30, 2016
reflecting the sale of the competitive energy businesses' retail electric supply business (see
Note P
to the
Third
Quarter Financial Statements).
Other Income (Deductions)
Other income (deductions)
increased
$10 million
in the three months ended
September 30, 2016
compared with the
2015
period due primarily to the gain related to the acquisition of a solar electric production investment (see
Note P
to the Third Quarter Financial Statements).
Net Interest Expense
Net interest expense
increased
$5 million
in the three months ended
September 30, 2016
compared with the
2015
period due primarily to increased debt on solar projects.
Income Tax Expense
Income taxes
increased
$46 million
in the three months ended
September 30, 2016
compared with the
2015
period due primarily to higher income before income tax expense ($35 million) and an adjustment to deferred state income taxes as a result of the sale of the retail electric supply business that increased the competitive energy businesses'
state apportionment factors on its cumulative temporary differences ($13 million), offset in part by higher renewable energy tax credits ($2 million).
Con Edison Transmission
Other Income (Deductions)
Other income (deductions) increased
$20 million
in the three months ended
September 30, 2016
compared with the
2015
period due primarily to earnings from equity investments in 2016 (see Note P).
Other
For Con Edison, “Other” includes parent company and consolidation adjustments.
Nine Months Ended September 30, 2016
Compared with
Nine Months Ended September 30, 2015
The Companies’ results of operations in
2016
compared with
2015
were:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CECONY
|
O&R
|
Competitive Energy
Businesses
|
Con Edison
Transmission
|
Other (a)
|
Con Edison (b)
|
(Millions of Dollars)
|
Increases
(Decreases)
Amount
|
Increases
(Decreases)
Percent
|
Increases
(Decreases)
Amount
|
Increases
(Decreases)
Percent
|
Increases
(Decreases)
Amount
|
Increases
(Decreases)
Percent
|
Increases
(Decreases)
Amount
|
Increases
(Decreases)
Percent
|
Increases
(Decreases)
Amount
|
Increases
(Decreases)
Percent
|
Increases
(Decreases)
Amount
|
Increases
(Decreases)
Percent
|
Operating revenues
|
$(381)
|
(4.7
|
)%
|
$(10)
|
(1.6
|
)%
|
$(89)
|
(8.2
|
)%
|
|
$—
|
|
—
|
%
|
$1
|
50.0
|
%
|
$(479)
|
(4.9
|
)%
|
Purchased power
|
(207)
|
(14.5
|
)
|
(15)
|
(8.9
|
)
|
(136)
|
(16.7
|
)
|
—
|
|
—
|
|
1
|
—
|
|
(357)
|
(14.9
|
)
|
Fuel
|
(83)
|
(38.4
|
)
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(83)
|
(38.4
|
)
|
Gas purchased for resale
|
(65)
|
(23.0
|
)
|
(8)
|
(20.0
|
)
|
(22)
|
(23.4
|
)
|
—
|
|
—
|
|
—
|
|
—
|
|
(95)
|
(22.9
|
)
|
Other operations and maintenance
|
(35)
|
(1.6
|
)
|
(29)
|
(11.6
|
)
|
26
|
26.5
|
|
1
|
—
|
|
(1)
|
(50.0
|
)
|
(38)
|
(1.5
|
)
|
Depreciation and amortization
|
52
|
6.7
|
|
(1)
|
(2.0
|
)
|
14
|
87.5
|
|
—
|
|
—
|
|
—
|
|
—
|
|
65
|
7.7
|
|
Taxes, other than income taxes
|
47
|
3.4
|
|
14
|
30.4
|
|
2
|
14.3
|
|
—
|
|
—
|
|
1
|
—
|
|
64
|
4.4
|
|
Gain on sale of retail electric supply business
|
—
|
|
—
|
|
—
|
|
—
|
|
104
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
104
|
—
|
|
Operating income
|
(90)
|
(4.8
|
)
|
29
|
34.1
|
|
131
|
Large
|
|
(1)
|
—
|
|
—
|
|
—
|
|
69
|
3.4
|
|
Other income less deductions
|
6
|
Large
|
|
5
|
Large
|
|
3
|
9.4
|
|
23
|
—
|
|
1
|
Large
|
|
38
|
Large
|
|
Net interest expense
|
16
|
3.7
|
|
1
|
3.7
|
|
18
|
Large
|
|
4
|
—
|
|
(8)
|
(42.1
|
)
|
31
|
6.4
|
|
Income before income tax expense
|
(100)
|
(6.9
|
)
|
33
|
61.1
|
|
116
|
Large
|
|
18
|
—
|
|
9
|
47.4
|
|
76
|
4.9
|
|
Income tax expense
|
(24)
|
(4.7
|
)
|
13
|
68.4
|
|
51
|
Large
|
|
7
|
—
|
|
7
|
63.6
|
|
54
|
9.9
|
|
Net income
|
$(76)
|
(8.1
|
)%
|
$20
|
57.1
|
%
|
$65
|
Large
|
|
$11
|
—
|
%
|
$2
|
25.0
|
%
|
$22
|
2.2
|
%
|
|
|
(a)
|
Includes parent company and consolidation adjustments.
|
|
|
(b)
|
Represents the consolidated financial results of Con Edison and its businesses.
|
CECONY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Nine Months Ended
September 30, 2016
|
|
For the Nine Months Ended
September 30, 2015
|
|
|
(Millions of Dollars)
|
Electric
|
Gas
|
Steam
|
2016 Total
|
Electric
|
Gas
|
Steam
|
2015 Total
|
2016-2015
Variation
|
Operating revenues
|
$6,222
|
$1,113
|
$406
|
$7,741
|
$6,416
|
$1,177
|
$529
|
$8,122
|
$(381)
|
Purchased power
|
1,191
|
—
|
|
25
|
1,216
|
1,395
|
—
|
|
28
|
1,423
|
(207)
|
Fuel
|
81
|
—
|
|
52
|
133
|
96
|
—
|
|
120
|
216
|
(83)
|
Gas purchased for resale
|
—
|
|
217
|
—
|
|
217
|
—
|
|
282
|
—
|
|
282
|
(65)
|
Other operations and maintenance
|
1,659
|
307
|
139
|
2,105
|
1,677
|
323
|
140
|
2,140
|
(35)
|
Depreciation and amortization
|
645
|
118
|
62
|
825
|
610
|
105
|
58
|
773
|
52
|
Taxes, other than income taxes
|
1,159
|
198
|
89
|
1,446
|
1,127
|
189
|
83
|
1,399
|
47
|
Operating income
|
$1,487
|
$273
|
$39
|
$1,799
|
$1,511
|
$278
|
$100
|
$1,889
|
$(90)
|
Electric
CECONY’s results of electric operations for the
nine
months ended
September 30, 2016
compared with the
2015
period is as follows:
|
|
|
|
|
|
For the Nine Months Ended
|
|
(Millions of Dollars)
|
September 30, 2016
|
September 30, 2015
|
Variation
|
Operating revenues
|
$6,222
|
$6,416
|
$(194)
|
Purchased power
|
1,191
|
1,395
|
(204)
|
Fuel
|
81
|
96
|
(15)
|
Other operations and maintenance
|
1,659
|
1,677
|
(18)
|
Depreciation and amortization
|
645
|
610
|
35
|
Taxes, other than income taxes
|
1,159
|
1,127
|
32
|
Electric operating income
|
$1,487
|
$1,511
|
$(24)
|
CECONY’s electric sales and deliveries for the
nine
months ended
September 30, 2016
compared with the
2015
period were:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Millions of kWh Delivered
|
|
Revenues in Millions (a)
|
|
For the Nine Months Ended
|
|
|
For the Nine Months Ended
|
|
Description
|
September 30, 2016
|
September 30, 2015
|
Variation
|
Percent
Variation
|
|
September 30, 2016
|
September 30, 2015
|
Variation
|
Percent
Variation
|
Residential/Religious (b)
|
8,130
|
|
8,247
|
|
(117
|
)
|
(1.4
|
)%
|
|
$2,017
|
$2,198
|
$(181)
|
(8.2
|
)%
|
Commercial/Industrial
|
7,220
|
|
7,375
|
|
(155
|
)
|
(2.1
|
)
|
|
1,381
|
1,549
|
(168)
|
(10.8
|
)
|
Retail choice customers
|
20,404
|
|
20,339
|
|
65
|
|
0.3
|
|
|
2,114
|
2,102
|
12
|
0.6
|
|
NYPA, Municipal Agency and other sales
|
7,641
|
|
7,687
|
|
(46
|
)
|
(0.6
|
)
|
|
474
|
467
|
7
|
1.5
|
|
Other operating revenues (c)
|
—
|
|
—
|
|
—
|
|
—
|
|
|
236
|
100
|
136
|
Large
|
|
Total
|
43,395
|
|
43,648
|
|
(253
|
)
|
(0.6
|
)%
|
(d)
|
$6,222
|
$6,416
|
$(194)
|
(3.0
|
)%
|
|
|
(a)
|
Revenues from electric sales are subject to a revenue decoupling mechanism, as a result of which delivery revenues generally are not affected by changes in delivery volumes from levels assumed when rates were approved.
|
|
|
(b)
|
“Residential/Religious” generally includes single-family dwellings, individual apartments in multi-family dwellings, religious organizations and certain other not-for-profit organizations.
|
|
|
(c)
|
Other electric operating revenues generally reflect changes in regulatory assets and liabilities in accordance with the revenue decoupling mechanism and other provisions of the company’s rate plans.
|
|
|
(d)
|
After adjusting for variations, principally weather and billing days, electric delivery volumes in CECONY’s service area increased
0.5
percent in the
nine
months ended
September 30, 2016
compared with the
2015
period.
|
Operating revenues
decreased
$194 million
in the
nine
months ended
September 30, 2016
compared with the
2015
period due primarily to lower purchased power costs (
$204 million
) and fuel expenses (
$15 million
), offset in part by changes in regulatory charges ($20 million).
Purchased power
expenses
decreased
$204 million
in the
nine
months ended
September 30, 2016
compared with the
2015
period due to lower unit costs ($169 million) and purchased volumes ($35 million).
Fuel
expenses
decreased
$15 million
in the
nine
months ended
September 30, 2016
compared with the
2015
period due to lower unit costs ($20 million), offset by higher sendout volumes from the company’s electric generating facilities ($5 million).
Other operations and maintenance
expenses
decreased
$18 million
in the
nine
months ended
September 30, 2016
compared with the
2015
period due primarily to a decrease in the surcharges for assessments and fees that are collected in revenues from customers ($62 million), offset in part by higher costs for municipal infrastructure support ($15 million), emergency response ($13 million), stock-based compensation ($7 million) and injuries and damages ($6 million).
Depreciation and amortization
increased
$35 million
in the
nine
months ended
September 30, 2016
compared with the
2015
period due primarily to higher electric utility plant balances.
Taxes, other than income taxes
increased
$32 million
in the
nine
months ended
September 30, 2016
compared with the
2015
period principally due to higher property taxes ($47 million), offset in part by lower state and local taxes ($6 million), a favorable state audit settlement ($4 million) and lower sales and use tax reserve based on a favorable audit settlement ($3 million).
Gas
CECONY’s results of gas operations for the
nine
months ended
September 30, 2016
compared with the
2015
period is as follows:
|
|
|
|
|
|
For the Nine Months Ended
|
|
(Millions of Dollars)
|
September 30, 2016
|
September 30, 2015
|
Variation
|
Operating revenues
|
$1,113
|
$1,177
|
$(64)
|
Gas purchased for resale
|
217
|
282
|
(65)
|
Other operations and maintenance
|
307
|
323
|
(16)
|
Depreciation and amortization
|
118
|
105
|
13
|
Taxes, other than income taxes
|
198
|
189
|
9
|
Gas operating income
|
$273
|
$278
|
$(5)
|
CECONY’s gas sales and deliveries, excluding off-system sales, for the
nine
months ended
September 30, 2016
compared with the
2015
period were:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thousands of Dt Delivered
|
|
Revenues in Millions (a)
|
|
For the Nine Months Ended
|
|
|
For the Nine Months Ended
|
|
Description
|
September 30, 2016
|
September 30, 2015
|
Variation
|
Percent
Variation
|
|
September 30, 2016
|
September 30, 2015
|
Variation
|
Percent
Variation
|
Residential
|
35,565
|
|
39,010
|
|
(3,445
|
)
|
(8.8
|
)%
|
|
$506
|
$532
|
$(26)
|
(4.9
|
)%
|
General
|
20,962
|
|
22,641
|
|
(1,679
|
)
|
(7.4
|
)
|
|
200
|
217
|
(17)
|
(7.8
|
)
|
Firm transportation
|
51,333
|
|
57,578
|
|
(6,245
|
)
|
(10.8
|
)
|
|
332
|
342
|
(10)
|
(2.9
|
)
|
Total firm sales and transportation
|
107,860
|
|
119,229
|
|
(11,369
|
)
|
(9.5
|
)
|
(b)
|
1,038
|
1,091
|
(53)
|
(4.9
|
)
|
Interruptible sales (c)
|
7,587
|
|
5,933
|
|
1,654
|
|
27.9
|
|
|
29
|
45
|
(16)
|
(35.6
|
)
|
NYPA
|
31,970
|
|
33,825
|
|
(1,855
|
)
|
(5.5
|
)
|
|
2
|
2
|
—
|
|
—
|
|
Generation plants
|
70,895
|
|
62,650
|
|
8,245
|
|
13.2
|
|
|
19
|
20
|
(1)
|
(5.0
|
)
|
Other
|
16,442
|
|
16,285
|
|
157
|
|
1.0
|
|
|
25
|
21
|
4
|
19.0
|
|
Other operating revenues (d)
|
—
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
(2)
|
2
|
Large
|
|
Total
|
234,754
|
|
237,922
|
|
(3,168
|
)
|
(1.3
|
)%
|
|
$1,113
|
$1,177
|
$(64)
|
(5.4
|
)%
|
|
|
(a)
|
Revenues from gas sales are subject to a weather normalization clause and a revenue decoupling mechanism as a result of which delivery revenues are generally not affected by changes in delivery volumes from levels assumed when rates were approved.
|
|
|
(b)
|
After adjusting for variations, principally billing days, firm gas sales and transportation volumes in the company’s service area increased
4.1
percent in the
nine
months ended
September 30, 2016
compared with the
2015
period, reflecting primarily increased volumes attributable to additional customers that have converted from oil-to-gas as heating fuel for their buildings.
|
|
|
(c)
|
Includes 3,940 thousands and 1,809 thousands of Dt for the
2016
and
2015
periods, respectively, which are also reflected in firm transportation and other.
|
|
|
(d)
|
Other gas operating revenues generally reflect changes in regulatory assets and liabilities in accordance with the company’s rate plans.
|
Operating revenues
decreased
$64 million
in the
nine
months ended
September 30, 2016
compared with the
2015
period due primarily to lower gas purchased for resale expense (
$65 million
) and changes in regulatory charges ($17 million), offset in part by higher revenues from the gas rate plan ($26 million) reflecting primarily higher delivery volumes attributable to oil-to-gas conversions.
Gas purchased for resale
decreased
$65 million
in the
nine
months ended
September 30, 2016
compared with the
2015
period due to lower unit costs ($48 million) and sendout volumes ($17 million).
Other operations and maintenance
expenses
decreased
$16 million
in the
nine
months ended
September 30, 2016
compared with the
2015
period due primarily to a decrease in the surcharges for assessments and fees that are collected in revenues from customers ($19 million), offset in part by higher costs for municipal infrastructure support ($5 million).
Depreciation and amortization
increased
$13 million
in the
nine
months ended
September 30, 2016
compared with the
2015
period due primarily to higher gas utility plant balances.
Taxes, other than income taxes
increased
$9 million
in the
nine
months ended
September 30, 2016
compared with the
2015
period principally due to higher property taxes ($12 million), offset in part by lower state and local taxes ($1 million).
Steam
CECONY’s results of steam operations for the
nine
months ended
September 30, 2016
compared with the
2015
period is as follows:
|
|
|
|
|
|
For the Nine Months Ended
|
|
(Millions of Dollars)
|
September 30, 2016
|
September 30, 2015
|
Variation
|
Operating revenues
|
$406
|
$529
|
$(123)
|
Purchased power
|
25
|
28
|
(3)
|
Fuel
|
52
|
120
|
(68)
|
Other operations and maintenance
|
139
|
140
|
(1)
|
Depreciation and amortization
|
62
|
58
|
4
|
Taxes, other than income taxes
|
89
|
83
|
6
|
Steam operating income
|
$39
|
$100
|
$(61)
|
CECONY’s steam sales and deliveries for the
nine
months ended
September 30, 2016
compared with the
2015
period were:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Millions of Pounds Delivered
|
|
Revenues in Millions
|
|
For the Nine Months Ended
|
|
|
For the Nine Months Ended
|
|
Description
|
September 30, 2016
|
September 30, 2015
|
Variation
|
Percent
Variation
|
|
September 30, 2016
|
September 30, 2015
|
Variation
|
Percent
Variation
|
General
|
345
|
|
460
|
|
(115
|
)
|
(25.0
|
)%
|
|
$18
|
$24
|
$(6)
|
(25.0
|
)%
|
Apartment house
|
4,251
|
|
5,056
|
|
(805
|
)
|
(15.9
|
)
|
|
107
|
145
|
(38)
|
(26.2
|
)
|
Annual power
|
10,640
|
|
12,593
|
|
(1,953
|
)
|
(15.5
|
)
|
|
284
|
379
|
(95)
|
(25.1
|
)
|
Other operating revenues (a)
|
—
|
|
—
|
|
—
|
|
—
|
|
|
(3
|
)
|
(19)
|
16
|
84.2
|
%
|
Total
|
15,236
|
|
18,109
|
|
(2,873
|
)
|
(15.9
|
)%
|
(b)
|
$406
|
$529
|
$(123)
|
(23.3
|
)%
|
|
|
(a)
|
Other steam operating revenues generally reflect changes in regulatory assets and liabilities in accordance with the company’s rate plan.
|
|
|
(b)
|
After adjusting for variations, principally weather and billing days, steam sales and deliveries decreased
0.5
percent in
nine
months ended
September 30, 2016
compared with the
2015
period.
|
Operating revenues
decreased
$123 million
in the
nine
months ended
September 30, 2016
compared with the
2015
period due primarily to lower fuel expenses (
$68 million
), the weather impact on revenues ($59 million) and lower purchased power costs (
$3 million
), offset in part by higher revenues from the steam rate plan ($12 million).
Purchased power
expenses
decreased
$3 million
in the
nine
months ended
September 30, 2016
compared with the
2015
period due to lower unit costs ($2 million) and purchased volumes ($1 million).
Fuel
expenses
decreased
$68 million
in the
nine
months ended
September 30, 2016
compared with the
2015
period due to lower unit costs ($59 million) and sendout volumes from the company’s steam generating facilities ($9 million).
Other operations and maintenance
expenses
decreased
$1 million
in the
nine
months ended
September 30, 2016
compared with the
2015
period due primarily to a decrease in the surcharges for assessments and fees that are collected in revenues from customers ($6 million), offset in part by higher costs for municipal infrastructure support ($6 million).
Depreciation and amortization
increased
$4 million
in the
nine
months ended
September 30, 2016
compared with the
2015
period due primarily to higher steam utility plant balances.
Taxes, other than income taxes
increased
$6 million
in the
nine
months ended
September 30, 2016
compared with the
2015
period principally due to higher property taxes ($9 million), offset in part by lower state and local taxes ($3 million).
Net Interest Expense
Net interest expense increased
$16 million
in the
nine
months ended
September 30, 2016
compared with the
2015
period due primarily higher long-term debt balances in the 2016 period.
Income Tax Expense
Income taxes decreased
$24 million
in the
nine
months ended
September 30, 2016
compared with the
2015
period due primarily to lower income before income tax expense ($40 million), lower state income taxes ($10 million), a research and development tax credit ($14 million) and higher settlement payments related to injuries and damages ($4 million), offset in part by plant-related flow through items ($41 million) and an increase in uncertain tax positions ($3 million).
O&R
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Nine Months Ended
September 30, 2016
|
|
For the Nine Months Ended
September 30, 2015
|
|
|
(Millions of Dollars)
|
Electric
|
Gas
|
2016 Total
|
Electric
|
Gas
|
2015 Total
|
2016-2015
Variation
|
Operating revenues
|
$497
|
$133
|
$630
|
$523
|
$117
|
$640
|
$(10)
|
Purchased power
|
154
|
—
|
|
154
|
169
|
—
|
|
169
|
(15)
|
Gas purchased for resale
|
—
|
|
32
|
32
|
—
|
|
40
|
40
|
(8)
|
Other operations and maintenance
|
180
|
40
|
220
|
198
|
51
|
249
|
(29)
|
Depreciation and amortization
|
37
|
13
|
50
|
38
|
13
|
51
|
(1)
|
Taxes, other than income taxes
|
40
|
20
|
60
|
33
|
13
|
46
|
14
|
Operating income
|
$86
|
$28
|
$114
|
$85
|
$0
|
$85
|
$29
|
Electric
O&R’s results of electric operations for the
nine
months ended
September 30, 2016
compared with the
2015
period is as follows:
|
|
|
|
|
|
For the Nine Months Ended
|
|
(Millions of Dollars)
|
September 30, 2016
|
September 30, 2015
|
Variation
|
Operating revenues
|
$497
|
$523
|
$(26)
|
Purchased power
|
154
|
169
|
(15)
|
Other operations and maintenance
|
180
|
198
|
(18)
|
Depreciation and amortization
|
37
|
38
|
(1)
|
Taxes, other than income taxes
|
40
|
33
|
7
|
Electric operating income
|
$86
|
$85
|
$1
|
O&R’s electric sales and deliveries for the
nine
months ended
September 30, 2016
compared with the
2015
period were:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Millions of kWh Delivered
|
|
Revenues in Millions (a)
|
|
For the Nine Months Ended
|
|
|
For the Nine Months Ended
|
|
Description
|
September 30, 2016
|
September 30, 2015
|
Variation
|
Percent
Variation
|
|
September 30, 2016
|
September 30, 2015
|
Variation
|
Percent
Variation
|
Residential/Religious (b)
|
1,307
|
|
1,278
|
|
29
|
|
2.3
|
%
|
|
$240
|
$246
|
$(6)
|
(2.4
|
)%
|
Commercial/Industrial
|
607
|
|
611
|
|
(4
|
)
|
(0.7
|
)
|
|
89
|
98
|
(9)
|
(9.2
|
)
|
Retail choice customers
|
2,434
|
|
2,504
|
|
(70
|
)
|
(2.8
|
)
|
|
166
|
168
|
(2)
|
(1.2
|
)
|
Public authorities
|
76
|
|
78
|
|
(2
|
)
|
(2.6
|
)
|
|
6
|
8
|
(2)
|
(25.0
|
)
|
Other operating revenues (c)
|
—
|
|
—
|
|
—
|
|
—
|
|
|
(4)
|
3
|
(7)
|
Large
|
|
Total
|
4,424
|
|
4,471
|
|
(47
|
)
|
(1.1
|
)%
|
(d)
|
$497
|
$523
|
$(26)
|
(5.0
|
)%
|
|
|
(a)
|
O&R’s New York electric delivery revenues are subject to a revenue decoupling mechanism, as a result of which delivery revenues are generally not affected by changes in delivery volumes from levels assumed when rates were approved. O&R’s electric sales in New Jersey and Pennsylvania are not subject to a decoupling mechanism, and as a result, changes in such volumes do impact revenues.
|
|
|
(b)
|
“Residential/Religious” generally includes single-family dwellings, individual apartments in multi-family dwellings, religious organizations and certain other not-for-profit organizations.
|
|
|
(c)
|
Other electric operating revenues generally reflect changes in regulatory assets and liabilities in accordance with the company’s electric rate plans.
|
|
|
(d)
|
After adjusting for weather and other variations, electric delivery volumes in O&R’s service area decreased
1.1
percent in the
nine
months ended
September 30, 2016
compared with the
2015
period.
|
Operating revenues
decreased
$26 million
in the
nine
months ended
September 30, 2016
compared with the
2015
period due primarily to lower purchased power costs (
$15 million
) and revenues from the electric rate plans ($2 million).
Purchased power
expenses
decreased
$15 million
in the
nine
months ended
September 30, 2016
compared with the
2015
period due to lower unit costs ($16 million), offset by lower purchased volumes ($1 million).
Other operations and maintenance
expenses
decreased
$18 million
in the
nine
months ended
September 30, 2016
compared with the
2015
period due primarily to regulatory accounting effects of pension costs ($9 million), lower surcharges for assessments and fees that are collected in revenues from customers ($7 million) and operating costs ($3 million).
Depreciation and amortization
decreased
$1 million
in the
nine
months ended
September 30, 2016
compared with the
2015
period due primarily to lower average depreciation rates.
Taxes, other than income taxes
increased
$7 million
in the
nine
months ended
September 30, 2016
compared with the
2015
period principally due to higher property taxes.
Gas
O&R’s results of gas operations for the
nine
months ended
September 30, 2016
compared with the
2015
period is as follows:
|
|
|
|
|
|
|
For the Nine Months Ended
|
|
(Millions of Dollars)
|
September 30, 2016
|
September 30, 2015
|
Variation
|
Operating revenues
|
$133
|
$117
|
$16
|
Gas purchased for resale
|
32
|
40
|
(8)
|
Other operations and maintenance
|
40
|
51
|
(11)
|
Depreciation and amortization
|
13
|
13
|
—
|
|
Taxes, other than income taxes
|
20
|
13
|
7
|
Gas operating income
|
$28
|
$0
|
$28
|
O&R’s gas sales and deliveries, excluding off-system sales, for the
nine
months ended
September 30, 2016
compared with the
2015
period were:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thousands of Dt Delivered
|
|
Revenues in Millions (a)
|
|
For the Nine Months Ended
|
|
|
For the Nine Months Ended
|
|
Description
|
September 30, 2016
|
September 30, 2015
|
Variation
|
Percent
Variation
|
|
September 30, 2016
|
September 30, 2015
|
Variation
|
Percent
Variation
|
Residential
|
5,266
|
|
5,789
|
|
(523
|
)
|
(9.0
|
)%
|
|
$55
|
$55
|
|
$—
|
|
—
|
%
|
General
|
1,224
|
|
1,294
|
|
(70
|
)
|
(5.4
|
)
|
|
10
|
10
|
—
|
|
—
|
|
Firm transportation
|
7,188
|
|
9,012
|
|
(1,824
|
)
|
(20.2
|
)
|
|
49
|
51
|
(2)
|
(3.9
|
)
|
Total firm sales and transportation
|
13,678
|
|
16,095
|
|
(2,417
|
)
|
(15.0
|
)
|
(b)
|
114
|
116
|
(2)
|
(1.7
|
)
|
Interruptible sales
|
3,020
|
|
3,237
|
|
(217
|
)
|
(6.7
|
)
|
|
2
|
2
|
—
|
|
—
|
|
Generation plants
|
15
|
|
25
|
|
(10
|
)
|
(40.0
|
)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
Other
|
583
|
|
674
|
|
(91
|
)
|
(13.5
|
)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
Other gas revenues
|
—
|
|
—
|
|
—
|
|
—
|
|
|
17
|
(1)
|
18
|
Large
|
|
Total
|
17,296
|
|
20,031
|
|
(2,735
|
)
|
(13.7
|
)%
|
|
$133
|
$117
|
$16
|
13.7
|
%
|
|
|
(a)
|
Revenues from New York gas sales are subject to a weather normalization clause and a revenue decoupling mechanism as a result of which delivery revenues are generally not affected by changes in delivery volumes from levels assumed when rates were approved.
|
|
|
(b)
|
After adjusting for weather and other variations, total firm sales and transportation volumes increased
2.3
percent in the
nine
months ended
September 30, 2016
compared with
2015
period.
|
Operating r
evenues
increased
$16 million
in the
nine
months ended
September 30, 2016
compared with the
2015
period due primarily to the charge-off of certain regulatory assets in 2015 ($14 million) and higher revenues from the New York gas rate plan ($13 million), offset in part by a decrease in gas purchased for resale (
$8 million
).
Gas purchased for resale
decreased
$8 million
in the
nine
months ended
September 30, 2016
compared with the
2015
period due to lower purchased volumes ($11 million), offset by higher unit costs ($3 million).
Other operations and maintenance
expenses
decreased
$11 million
in the
nine
months ended
September 30, 2016
compared with the
2015
period due primarily to regulatory accounting effects of pension costs ($10 million) and lower surcharges for assessments and fees that are collected in revenues from customers ($2 million).
Taxes, other than income taxes
increased
$7 million
in the
nine
months ended
September 30, 2016
compared with the
2015
period principally due to higher property taxes.
Other Income (Deductions)
Other income (deductions)
increased
$5 million
in the
nine
months ended
September 30, 2016
compared with the
2015
period due primarily to
the impairment of certain assets held for sale
in 2015 (see
Note P
to the Third Quarter Financial Statements).
Income Tax Expense
Income taxes
increased
$13 million
in the
nine
months ended
September 30, 2016
compared with the
2015
period due primarily to higher income before income tax expense ($13 million) and plant-related flow through items ($3 million), offset in part by lower state income taxes ($1 million) and lower reimbursement in insurance claims ($1 million).
Competitive Energy Businesses
The competitive energy businesses’ results of operations for the
nine
months ended
September 30, 2016
compared with the
2015
period is as follows:
|
|
|
|
|
|
|
For the Nine Months Ended
|
|
(Millions of Dollars)
|
September 30, 2016
|
September 30, 2015
|
Variation
|
Operating revenues
|
$998
|
$1,087
|
$(89)
|
Purchased power
|
676
|
812
|
(136)
|
Gas purchased for resale
|
72
|
94
|
(22)
|
Other operations and maintenance
|
124
|
98
|
26
|
Depreciation and amortization
|
30
|
16
|
14
|
Taxes, other than income taxes
|
16
|
14
|
2
|
Gain on sale of retail electric supply business
|
(104)
|
—
|
|
(104)
|
Operating income
|
$184
|
$53
|
$131
|
Operating revenues
decreased
$89 million
in the
nine
months ended
September 30, 2016
compared with the
2015
period, due primarily to lower electric retail revenues due in part to the sale of the retail electric supply business (see
Note P
to the
Third
Quarter Financial Statements). Electric retail revenues decreased $135 million due to lower unit prices ($98 million) and lower sales volume ($37 million). Wholesale revenues decreased $25 million due to lower sales volumes. Renewable revenues increased $40 million primarily due to an increase in renewable electric production projects in operation. Energy services revenues increased $31 million.
Purchased power
expenses
decreased
$136 million
in the
nine
months ended
September 30, 2016
compared with the
2015
period due primarily to lower unit prices ($85 million), lower volumes ($46 million) and changes in mark-to-market gains ($5 million).
Gas purchased for resale
decreased
$22 million
in the
nine
months ended
September 30, 2016
compared with the
2015
period due to lower sales volumes.
Other operations and maintenance
expenses
increased
$26 million
in the
nine
months ended
September 30, 2016
compared with the
2015
period due primarily to an increase in energy services costs.
Depreciation and amortization
increased
$14 million
in the
nine
months ended
September 30, 2016
compared with the
2015
period due an increase in solar electric production projects in operation during 2016.
Gain on sale of retail electric supply business
was
$104 million
in the
nine
months ended
September 30, 2016
reflecting the sale of the competitive energy businesses' retail electric supply business (see
Note P
to the
Third
Quarter Financial Statements).
Other Income (Deductions)
Other income (deductions)
increased
$3 million
in the
nine
months ended
September 30, 2016
compared with the
2015
period due primarily to the earnings from equity investments.
Net Interest Expense
Net interest expense
increased
$18 million
in the
nine
months ended
September 30, 2016
compared with the
2015
period due primarily to increased debt on solar electric production projects.
Income Tax Expense
Income taxes
increased
$51 million
in the
nine
months ended
September 30, 2016
compared with the
2015
period due primarily to higher income before income tax expense ($46 million) and an adjustment to deferred state income taxes as a result of the sale of the retail electric supply business that increased the competitive energy businesses' state apportionment factors on its cumulative temporary differences ($13 million), offset in part by higher renewable energy tax credits ($7 million).
Con Edison Transmission
Other Income (Deductions)
Other income (deductions) increased
$23 million
in the
nine
months ended
September 30, 2016
compared with the
2015
period due primarily to earnings from the equity investments in 2016 (see Note P).
Other
For Con Edison, “Other” includes parent company and consolidation adjustments.
Liquidity and Capital Resources
The Companies’ liquidity reflects cash flows from operating, investing and financing activities, as shown on their respective consolidated statement of cash flows and as discussed below.
Changes in the Companies’ cash and temporary cash investments resulting from operating, investing and financing activities for the
nine
months ended
September 30, 2016
and
2015
are summarized as follows:
|
|
|
|
|
|
|
|
|
|
|
|
For the Nine Months Ended September 30,
|
|
Con Edison
|
CECONY
|
(Millions of Dollars)
|
2016
|
2015
|
Variation
|
2016
|
2015
|
Variation
|
Operating activities
|
$2,336
|
$2,199
|
$137
|
$2,017
|
$1,802
|
$215
|
Investing activities
|
(3,717)
|
(2,687)
|
(1,030)
|
(1,943)
|
(1,900)
|
(43)
|
Financing activities
|
583
|
(118)
|
701
|
(891)
|
(496)
|
(395)
|
Net change for the period
|
(798)
|
(606)
|
(192)
|
(817)
|
(594)
|
(223)
|
Balance at beginning of period
|
944
|
699
|
245
|
843
|
645
|
198
|
Balance at end of period
|
146
|
93
|
53
|
26
|
51
|
(25)
|
Less: Change in cash balances held for sale
|
(4)
|
2
|
(6)
|
—
|
|
—
|
|
—
|
|
Balance at end of period excluding held for sale
|
$150
|
$91
|
$59
|
$26
|
$51
|
$(25)
|
Cash Flows From Operating Activities
The Utilities’ cash flows from operating activities reflect principally their energy sales and deliveries and cost of operations. The volume of energy sales and deliveries is affected primarily by factors external to the Utilities, such as growth of customer demand, weather, market prices for energy, economic conditions and measures that promote energy efficiency. Under the revenue decoupling mechanisms in the Utilities’ New York electric and gas rate plans, changes in delivery volumes from levels assumed when rates were approved may affect the timing of cash flows but generally not net income. The prices at which the Utilities provide energy to their customers are determined in accordance with their rate plans. In general, changes in the Utilities’ cost of purchased power, fuel and gas may affect the timing of cash flows but not net income because the costs are recovered in accordance with rate plans.
Net income is the result of cash and non-cash (or accrual) transactions. Only cash transactions affect the Companies’ cash flows from operating activities. Principal non-cash charges or credits include depreciation, deferred income tax expense and amortizations of certain regulatory assets and liabilities. Non-cash charges or credits may also be accrued under the revenue decoupling and cost reconciliation mechanisms in the Utilities’ New York electric and gas rate plans.
Net cash flows from operating activities for the
nine
months ended
September 30, 2016
for Con Edison and CECONY were $
137 million
and $
215 million
higher, respectively, than in the
2015
period. The change in net cash flows for Con Edison and CECONY reflects primarily the income taxes paid, net of refunds received in the 2016 period as compared with the 2015 period (
$137 million
and
$273 million
, respectively). The amount and timing of income tax payments and refunds reflect, among other things, the extension of bonus depreciation tax provisions.
The change in net cash flows also reflects the timing of payments for and recovery of energy costs. This timing is reflected within changes to accounts receivable – customers, recoverable energy costs and accounts payable balances.
Cash Flows Used in Investing Activities
Net cash flows used in investing activities for Con Edison and CECONY were $
1,030 million
and $
43 million
higher, respectively, for the
nine
months ended
September 30, 2016
compared with the
2015
period. The change for Con Edison reflects primarily increased
investments in/acquisitions of renewable electric production and electric and gas
transmission projects
(
$995 million
), increased utility construction expenditures in 2016 (
$219 million
) and increased non-utility construction expenditures related to development of renewable electric production projects (
$70 million
), offset in part by the proceeds from the sale of assets (
$250 million
). In addition, the change for CECONY reflects primarily increased utility construction expenditures in 2016 (
$200 million
), offset in part by the proceeds from the transfer of assets to NY Transco (
$122 million
).
Cash Flows From/(Used In) Financing Activities
Net cash flows from financing activities for Con Edison and CECONY were $
701 million
higher and $
395 million
lower, respectively, in the
nine
months ended
September 30, 2016
compared with the
2015
period.
In June 2016, Con Edison borrowed $400 million pursuant to a credit agreement with a syndicate of banks. The borrowing matures in 2018 and bears interest at a LIBOR plus margin of 1.00 percent.
In May 2016, Con Edison issued approximately
10 million
common shares resulting in net proceeds, after issuance expenses, of
$702 million
and $500 million aggregate principal amount of 2.00 percent debentures, due 2021, the net proceeds from the sale of which were used in connection with the acquisition by a CET Gas subsidiary of a 50 percent equity interest in a gas pipeline and storage joint venture (see "Con Edison Transmission", below) and for general corporate purposes.
In June 2016,
CECONY issued $550 million of 3.85 percent 30-year debentures, the net proceeds from the sale of which were used to repay short-term borrowings and for other general corporate purposes. In September 2016, CECONY redeemed at maturity $400 million of 5.50 percent 10-year debentures.
In June 2016, a Con Edison Solutions subsidiary borrowed $2 million pursuant to a loan agreement with a New Jersey utility. The borrowing matures in 2026, bears interest of 11.18 percent and may be repaid in cash or project Solar Renewable Energy Certificates.
In May 2016, a Con Edison Development subsidiary issued $95 million aggregate principal amount of 4.07 percent senior notes, due 2036, secured by the company's California Holdings 3 solar project. I
n February 2016, a Con Edison Development subsidiary issued $218 million aggregate principal amount of 4.21 per
cent senior notes, due 2041, secured by the company's Texas Solar 7 solar project.
In June 2015, a Con Edison Development subsidiary issued $118 million aggregate principal amount of 3.94 percent senior notes, due 2036, secured by four of the company's solar projects.
In June 2015, O&R issued $120 million of 4.95 percent 30-year debentures, the net proceeds from the sale of which were used to repay short-term borrowings and for other general corporate purposes. In April 2015, O&R redeemed at maturity $40 million of 5.30 percent 10-year debentures. In August 2015, O&R redeemed at maturity $55 million of 2.50 percent 5-year debentures and $44 million of variable rate tax-exempt 20-year debt.
Cash flows used in financing activities of the Companies also reflect commercial paper issuance. The commercial paper amounts outstanding at
September 30, 2016
and
2015
and the average daily balances for the
nine
months ended
September 30, 2016
and
2015
for Con Edison and CECONY were as follows:
|
|
|
|
|
|
|
2016
|
2015
|
(Millions of Dollars, except Weighted Average Yield)
|
Outstanding at September 30,
|
Daily
average
|
Outstanding at September 30,
|
Daily
average
|
Con Edison
|
$601
|
$813
|
$1,160
|
$765
|
CECONY
|
$480
|
$385
|
$649
|
$367
|
Weighted average yield
|
0.7%
|
0.6%
|
0.3%
|
0.4%
|
Capital Requirements and Resources
Con Edison has increased its estimates for capital requirements for 2016 from $4,892 million to $6,117 million. The increase reflects the $975 million purchase of a 50 percent equity interest in a gas pipeline and storage joint venture. See “Con Edison Transmission,” below. The increase also reflects increased estimates of capital expenditures by its competitive energy businesses from $985 million to $1,235 million to reflect additional renewable energy project development. See "Con Edison Development," below. The company plans to meet its 2016 capital requirements, including for maturing securities, through internally-generated funds and the issuance of securities. See "
Cash Flows From/(Used In) Financing Activities
,"
above. In September 2016, O&R agreed to issue
and sell for delivery in December 2016 $75 million aggregate principal amount of 3.88 percent debentures, due 2046. CECONY plans to issue up to $750 million of long-term debt later in 2016.
Con Edison has also increased its estimates of capital expenditures by its competitive energy businesses from $360 million to $400 million for both 2017 and 2018 to reflect additional renewable energy project development.
For each of the Companies, the ratio of earnings to fixed charges (Securities and Exchange Commission basis) for the
nine
months ended
September 30, 2016
and
2015
and the twelve months ended
December 31, 2015
was:
|
|
|
|
|
|
Ratio of Earnings to Fixed Charges
|
|
For the Nine Months Ended September 30, 2016
|
For the Nine Months Ended September 30, 2015
|
For the Twelve Months Ended December 31, 2015
|
Con Edison
|
4.0
|
3.9
|
3.5
|
CECONY
|
3.8
|
4.1
|
3.6
|
For each of the Companies, the common equity ratio at
September 30, 2016
and
December 31, 2015
was:
|
|
|
|
|
Common Equity Ratio
(Percent of total capitalization)
|
|
September 30, 2016
|
December 31, 2015
|
Con Edison
|
50.9
|
52.1
|
CECONY
|
51.0
|
51.4
|
Contractual Obligations
Con Edison’s obligations to make payments pursuant to contracts increased to $38,611 million at
September 30, 2016
from $34,884 million at
December 31, 2015
due primarily to increases in the company’s long-term debt ($1,358 million, including $150 million for CECONY, see "
Cash Flows From/(Used In) Financing Activities
," above) and interest on long-term debt ($891 million, including $704 million for CECONY). The change also reflects increases in obligations under natural gas supply, transportation and storage contracts ($1,862 million, including $1,577 million for CECONY). In addition, in October 2016, CECONY's obligations increased by $878 million reflecting the estimated aggregate annual amounts payable under the twenty-year renewal of the New York City revocable consent for the use of streets and public places for installation and operation of transformers and associated vaults and equipment.
Other Changes in Assets and Liabilities
The following table shows changes in certain assets and liabilities at
September 30, 2016
, compared with
December 31, 2015
.
|
|
|
|
|
|
Con Edison
|
CECONY
|
(Millions of Dollars)
|
2016 vs. 2015
Variation
|
2016 vs. 2015
Variation
|
Assets
|
|
|
Investments
|
$1,047
|
$32
|
Prepayments
|
403
|
351
|
Regulatory asset — Unrecognized pension and other postretirement costs
|
(507)
|
(477)
|
Income taxes receivable
|
(100)
|
—
|
|
Liabilities
|
|
|
Deferred income taxes and investment tax credits
|
$618
|
$717
|
Pension and retiree benefits
|
(714)
|
(670)
|
Investments
The increase in investments for Con Edison reflects the purchase of a 50 percent equity interest in a natural gas pipeline and storage joint venture. See “Con Edison Transmission,” below and
Note P
to the
Third
Quarter Financial Statements.
Prepayments
The increase in prepayments for Con Edison and CECONY reflects primarily the portion allocable to the 2016 fourth quarter of CECONY's July 2016 payment of its New York City semi-annual property taxes.
Regulatory Asset for Unrecognized Pension and Other Postretirement Costs and Liability for Pension and Retiree Benefits
The decrease in the regulatory asset for unrecognized pension and other postretirement costs and the liability for pension and retiree benefits reflects the final actuarial valuation of the pension and other retiree benefit plans as measured at
December 31, 2015
, in accordance with the accounting rules for retirement benefits. The change in the regulatory asset also reflects the year’s amortization of accounting costs. The change in the liability for pension and retiree benefits reflects in part contributions to the plans made by the Utilities in 2016. See Notes
B
,
E
and
F
to the
Third
Quarter Financial Statements.
Income Taxes Receivable
The decrease in income taxes receivable for Con Edison reflects primarily the refund received in February 2016 from the Internal Revenue Service as a result of the extension of bonus depreciation in December 2015.
Deferred Income Taxes and Investment Tax Credits
The increase in the liability for deferred income taxes and investment tax credits for Con Edison and CECONY reflects primarily bonus depreciation in 2016, partially offset by the increase in deferred income tax assets associated with the federal tax attribute carryforwards related to the net operating loss and general business tax credits.
Off-Balance Sheet Arrangements
None of the Companies’ interests in variable interest entities (VIEs) meet the Securities and Exchange Commission definition of off-balance sheet arrangements. For information regarding the Companies’ VIEs, see
Note M
to the
Third
Quarter Financial Statements.
Regulatory Matters
In March 2016, the New York State Public Service Commission (NYSPSC) issued an order in which it approved CECONY’s advanced metering infrastructure (AMI) plan for the company’s electric and gas delivery businesses, subject to a cap on capital expenditures of $1,285 million. AMI components include smart meters, a communication network, information technology systems and business applications. The plan provides for full deployment of AMI to the company’s customers to be implemented over a six-year period. The NYSPSC directed CECONY to submit a customer engagement plan, an update to the company’s benefit cost analysis and metrics that the NYSPSC can use to monitor the success of the project.
In May 2016, the NYSPSC issued an order in its Reforming the Energy Vision (REV) proceeding adopting a ratemaking and utility revenue framework. The order indicated that utilities will have four ways of achieving earnings: traditional cost-of-service earnings; earnings tied to achievement of alternatives that reduce utility capital spending and provide definitive consumer benefit; earnings from market-facing platform activities; and transitional outcome-based performance measures. The order also indicated, among other things, that existing measures for negative revenue adjustments for utility failure to meet basic service standards should generally be retained and net utility plant reconciliations should be modified to encourage cost-effective distributed energy resources (DER) as an alternative to utility capital investment. The order directs each utility to file a system efficiency proposal; an interconnection survey process and proposed earnings adjustment mechanism; a progress report on aggregated data reporting automation; an aggregated data privacy policy statement; revisions to standby service tariffs and cost allocation matrix; one or more smart home rate demonstration proposals; and revisions to voluntary time of use rates and promotion and education tools.
In June 2016, CECONY and O&R each filed initial distributed system implementation plans with the NYSPSC, pursuant to which the companies provide additional system and planning information for third-party developers to facilitate the integration of DER in the distributed system platform.
In August 2016, the NYSPSC issued an order adopting the New York State Energy Plan’s goal of 50 percent of the State’s electricity to be generated by renewable sources by 2030 as part of a strategy to reduce statewide greenhouse gas emissions 40 percent by 2030. The NYSPSC also adopted a Clean Energy Standard (CES) that
includes renewable energy credit (REC) and zero-emissions credit (ZEC) requirements. Beginning in 2017, load serving entities (LSEs), including CECONY and O&R for their full-service customers, will be required to obtain RECs and ZECs in amounts determined by the NYSPSC. LSEs may satisfy their REC obligation by either purchasing RECs acquired through central procurement by the New York State Energy Research and Development Authority (NYSERDA), by self-supply through direct purchase of tradable RECs, or by making alternative compliance payments. LSEs will purchase ZECs from NYSERDA at prices determined by the NYSPSC. The order establishes an annual NYSPSC staff review and triennial NYSPSC review of the CES.
For certain information about the Utilities' rate plans and other regulatory matters affecting the Companies, see Note
B
to the
Third
Quarter Financial Statements.
Con Edison Development
The following table provides information about the renewable electric production projects Con Edison Development owned at
September 30, 2016
:
|
|
|
|
|
|
|
Project Name
|
Production
Technology
|
Generating
Capacity (a)
(MW AC)
|
Power
Purchase
Agreement
Term (in Years)
|
Actual/Expected
In-Service Date
|
Location
|
Wholly owned projects
|
|
|
|
|
|
Pilesgrove (c)
|
Solar
|
18
|
n/a (b)
|
2011
|
New Jersey
|
Flemington Solar
|
Solar
|
8
|
n/a (b)
|
2011
|
New Jersey
|
Frenchtown I, II and III
|
Solar
|
14
|
n/a (b)
|
2011-13
|
New Jersey
|
PA Solar
|
Solar
|
10
|
n/a (b)
|
2012
|
Pennsylvania
|
California Solar 2
|
Solar
|
80
|
20
|
2014-16
|
California
|
Oak Tree Wind
|
Wind
|
20
|
20
|
2014
|
South Dakota
|
Texas Solar 3
|
Solar
|
6
|
25
|
2015
|
Texas
|
Texas Solar 5
|
Solar
|
95
|
25
|
2015
|
Texas
|
Campbell County Wind
|
Wind
|
95
|
30
|
2015
|
South Dakota
|
Texas Solar 7 (c)
|
Solar
|
106
|
25
|
2016
|
Texas
|
Projects of less than 5 MW
|
Solar
|
20
|
Various (b)
|
Various
|
Various
|
Jointly owned projects
(d)
|
|
|
|
|
|
California Solar
|
Solar
|
55
|
25
|
2012-13
|
California
|
Mesquite Solar 1
|
Solar
|
83
|
20
|
2013
|
Arizona
|
Copper Mountain Solar 2
|
Solar
|
75
|
25
|
2013-15
|
Nevada
|
Copper Mountain Solar 3
|
Solar
|
128
|
20
|
2014-15
|
Nevada
|
Broken Bow II
|
Wind
|
38
|
25
|
2014
|
Nebraska
|
Texas Solar 4
|
Solar
|
32
|
25
|
2014
|
Texas
|
Total MW (AC) in Operation
|
|
883
|
|
|
|
California Solar 3
|
Solar
|
110
|
20
|
2016
|
California
|
Upton County
|
Solar
|
150
|
25
|
2017
|
Texas
|
Panoche Valley (d)
|
Solar
|
120
|
20
|
2019
|
California
|
Total MW (AC) in Construction
|
|
380
|
|
|
|
Total MW (AC), All Projects
|
|
1,263 (e)
|
|
|
|
|
|
(a)
|
Represents Con Edison Development’s ownership interest in the project.
|
|
|
(b)
|
New Jersey, Pennsylvania and Massachusetts assets have 3-4 year Solar Renewable Energy Credit hedges in place.
|
|
|
(c)
|
See Note P to the Third Quarter Financial Statements.
|
|
|
(d)
|
See Note M to the Third Quarter Financial Statements.
|
|
|
(e)
|
Additionally, in October 2015, Con Edison Development purchased Lost Hills, which is developing but has not started constructing, a 20 MW (AC) solar electric production project in California.
|
Con Edison Transmission
CET Electric
In March 2016, the Federal Energy Regulatory Commission approved a November 2015 settlement agreement applicable to three transmission projects that the NYSPSC approved in October 2013 in its proceeding to address potential needs that could arise should the Indian Point Energy Center (which is owned by Entergy Corporation subsidiaries) no longer be able to operate. CECONY developed and, in May 2016, transferred two of the projects to New York Transco LLC. See
Note P
to the
Third
Quarter Financial Statements. The settlement agreement, among other things, provides for a 10 percent return on common equity (and/or 9.5 percent for capital costs in excess of $228 million incurred for initial commercial operation), a maximum common equity ratio of 53 percent and allocation of 63 percent of the costs of the projects to load serving entities in the CECONY and O&R service areas.
CET Gas
In April 2016, a CET Gas subsidiary agreed with a subsidiary of Crestwood Equity Partners LP to form a joint venture to own, operate and further develop a gas pipeline and storage business located in northern Pennsylvania and southern New York. In June 2016, the transaction was substantially completed. See
Note P
to the
Third
Quarter Financial Statements.
Financial and Commodity Market Risks
The Companies are subject to various risks and uncertainties associated with financial and commodity markets. The most significant market risks include interest rate risk, commodity price risk, credit risk and investment risk.
Interest Rate Risk
The Companies’ interest rate risk relates primarily to variable rate debt and to new debt financing needed to fund capital requirements, including the construction expenditures of the Utilities and maturing debt securities. Con Edison and its businesses manage interest rate risk through the issuance of mostly fixed-rate debt with varying maturities and through opportunistic refinancing of debt. Con Edison and CECONY estimate that at
September 30, 2016
, a 10 percent increase in interest rates applicable to its variable rate debt would result in an increase in annual interest expense of $2 million. Under CECONY’s current gas, steam and electric rate plans, variations in actual variable rate tax-exempt debt interest expense are reconciled to levels reflected in rates.
Commodity Price Risk
Con Edison’s commodity price risk relates primarily to the purchase and sale of electricity, gas and related derivative instruments. The Utilities and Con Edison’s competitive energy businesses apply risk management strategies to mitigate their related exposures. See
Note K
to the
Third
Quarter Financial Statements.
Con Edison estimates that, as of
September 30, 2016
, a 10 percent decline in market prices would result in a decline in fair value of $61 million for the derivative instruments used by the Utilities to hedge purchases of electricity and gas, of which $54 million is for CECONY and $7 million is for O&R. Con Edison expects that any such change in fair value would be largely offset by directionally opposite changes in the cost of the electricity and gas purchased. In accordance with provisions approved by state regulators, the Utilities generally recover from customers the costs they incur for energy purchased for their customers, including gains and losses on certain derivative instruments used to hedge energy purchased and related costs.
Con Edison’s competitive energy businesses use a value-at-risk (VaR) model to assess the market price risk of their portfolio of electricity and gas commodity fixed-price purchase and sales commitments, physical forward contracts, generating assets and commodity derivative instruments. VaR represents the potential change in fair value of the portfolio due to changes in market prices, for a specified time period and confidence level. These businesses estimate VaR across their portfolio using a delta-normal variance/covariance model with a 95 percent confidence level and compare the measured VaR results against performance due to actual prices and stress test the portfolio each quarter using an assumed 30 percent price change from forecast. Since the VaR calculation involves complex methodologies and estimates and assumptions that are based on past experience, it is not necessarily indicative of future results. VaR for the portfolio, assuming a one-day holding period, for the
nine
months ended
September 30, 2016
and the year ended
December 31, 2015
, respectively, was as follows:
|
|
|
|
|
95% Confidence Level, One-Day Holding Period
|
September 30, 2016
|
December 31, 2015
|
|
(Millions of Dollars)
|
Average for the period
|
$2
|
$1
|
High
|
4
|
2
|
Low
|
1
|
—
|
|
Credit Risk
The Companies are exposed to credit risk related to transactions entered into primarily for the various energy supply and hedging activities by the Utilities and the competitive energy businesses. See
Note K
to the
Third
Quarter Financial Statements.
Investment Risk
The Companies’ investment risk relates to the investment of plan assets for their pension and other postretirement benefit plans. The Companies’ current investment policy for pension plan assets includes investment targets of 55 to 65 percent equities and 35 to 45 percent fixed income and other securities. At
September 30, 2016
, the pension plan investments consisted of 58 percent equity and 42 percent fixed income and other securities.
For the Utilities’ pension and other postretirement benefit plans, regulatory accounting treatment is generally applied in accordance with the accounting rules for regulated operations. In accordance with the Statement of Policy issued by the NYSPSC and its current electric, gas and steam rate plans, CECONY defers for payment to or recovery from customers the difference between the pension and other postretirement benefit expenses and the amounts for such expenses reflected in rates. Generally, O&R also defers such difference pursuant to its rate plans.
Material Contingencies
For information concerning potential liabilities arising from the Companies’ material contingencies, see Notes
B
,
G
and
H
to the
Third
Quarter Financial Statements.