Consolidated Edison, Inc.

Consolidated Edison, Inc.

Consolidated Edison Company of New York, Inc.

DATE: November 13, 2002

/s/ JOAN S. FREILICH
Joan S. Freilich
Executive Vice President, Chief Financial Officer
and Duly Authorized Officer

Orange and Rockland Utilities, Inc.

DATE: November 13, 2002

/s/ EDWARD J. RASMUSSEN
Edward J. Rasmussen
Vice President, Chief Financial Officer
and Duly Authorized Officer

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Form 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

/x/	Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the quarterly period ended SEPTEMBER 30, 2002
or
/ /	Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Commission File Number	Exact name of registrant as specified in its charter and principal office address and telephone number	State of Incorporation	I.R.S. Employer ID. Number
1-14514	Consolidated Edison, Inc. 4 Irving Place, New York, New York 10003 (212) 460-4600	New York	13-3965100
1-1217	Consolidated Edison Company of New York, Inc. 4 Irving Place, New York, New York 10003 (212) 460-4600	New York	13-5009340
1-4315	Orange and Rockland Utilities, Inc. One Blue Hill Plaza, Pearl River, New York 10965 (914) 352-6000	New York	13-1727729

Indicate by check mark whether each Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days. Yes /x/ No / /

As of the close of business on October 31, 2002, Consolidated Edison, Inc. ("Con Edison") had outstanding 213,622,478 Common Shares ($.10 par value). Con Edison owns all of the outstanding common equity of Consolidated Edison Company of New York, Inc. ("Con Edison of New York") and Orange and Rockland Utilities, Inc. ("O&R").

O&R meets the conditions specified in general instruction H (1) (a) and (b) of Form 10-Q and is therefore filing this form with the reduced disclosure format.

TABLE OF CONTENTS

				PAGE
Filing Format				3
Part I.—Financial Information
Item 1.	Financial Statements
		Con Edison
			Consolidated Balance Sheet	4
			Consolidated Income Statements	6
			Consolidated Statement of Retained Earnings	8
			Consolidated Statements of Comprehensive Income	8
			Consolidated Statement of Cash Flows	10
			Notes to Financial Statements	11
		Con Edison of New York
			Consolidated Balance Sheet	24
			Consolidated Income Statements	26
			Consolidated Statement of Retained Earnings	28
			Consolidated Statements of Comprehensive Income	28
			Consolidated Statement of Cash Flows	30
			Notes to Financial Statements	31
		O&R
			Consolidated Balance Sheet	38
			Consolidated Income Statements	40
			Consolidated Statement of Retained Earnings	42
			Consolidated Statements of Comprehensive Income	42
			Consolidated Statement of Cash Flows	44
			Notes to Financial Statements	45
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations
		Con Edison		51
		Con Edison of New York		68
		O&R		*
	O&R Management's Narrative Analysis of the Results of Operations			83
Item 3.	Quantitative and Qualitative Disclosures About Market Risk
		Con Edison		89
		Con Edison of New York		89
		O&R		*
Item 4.	Controls and Procedures			89
	Forward-Looking Statements			91
Part II.—Other Information
Item 1.	Legal Proceedings			93
Item 5.	Other Information			94
Item 6.	Exhibits and Reports on Form 8-K			94
Signatures				96
Certifications				97

*: O&R is omitting this information pursuant to General Instruction H of Form 10-Q.

Filing Format

This Quarterly Report on Form 10-Q is a combined report being filed separately by three different registrants: Consolidated Edison, Inc. ("Con Edison"), Consolidated Edison Company of New York, Inc. ("Con Edison of New York") and Orange and Rockland Utilities, Inc. ("O&R"). Neither Con Edison of New York nor O&R makes any representation as to the information contained in this report relating to Con Edison or the subsidiaries of Con Edison other than itself.

O&R, a wholly-owned subsidiary of Con Edison, meets the conditions specified in General Instruction H of Form 10-Q and is permitted to use the reduced disclosure format for wholly-owned subsidiaries of companies, such as Con Edison, that are reporting companies under the Securities Exchange Act of 1934. Accordingly, O&R has omitted from this report the information called for by Part 1, Item 2, Management's Discussion and Analysis of Financial Condition and Results of Operations and has included in this report its Management's Narrative Analysis of the Results of Operations. In accordance with general instruction H, O&R has also omitted from this report the information, if any, called for by Part 1, Item 3, Quantitative and Qualitative Disclosure About Market Risk; Part II, Item 2, Changes in Securities and Use of Proceeds; Part II, Item 3, Defaults Upon Senior Securities; and Part II, Item 4, Submission of Matters to a Vote of Security Holders.

Consolidated Edison, Inc.

CONSOLIDATED BALANCE SHEET
(UNAUDITED)

			As at
			September 30, 2002		December 31, 2001

			(Thousands of Dollars)
ASSETS
UTILITY PLANT, AT ORIGINAL COST
	Electric		$	11,444,028	$	11,145,400
	Gas			2,488,260		2,405,730
	Steam			764,376		758,600
	General			1,407,143		1,354,099

	TOTAL			16,103,807		15,663,829
	Less: Accumulated depreciation			4,629,181		4,472,994

	NET			11,474,626		11,190,835
	Construction work in progress			815,200		654,107

NET UTILITY PLANT				12,289,826		11,844,942

NON-UTILITY PLANT
	Unregulated generating assets, less accumulated depreciation of $26,937 and $21,289 in 2002 and 2001, respectively			165,449		131,654
	Non-utility property, less accumulated depreciation of $15,970 and $11,235 in 2002 and 2001 respectively			80,948		53,915
	Construction work in progress			383,533		217,864

NET PLANT				12,919,756		12,248,375

CURRENT ASSETS
	Unrestricted cash and temporary cash investments			83,401		271,356
	Restricted cash			18,761		69,823
	Accounts receivable - customer, less allowance for uncollectible accounts of $33,183 and $34,775 in 2002 and 2001, respectively			733,199		613,733
	Accrued unbilled revenue			46,456		47,654
	Other receivables			241,889		97,344
	Fuel, at average cost			16,791		18,216
	Gas in storage, at average cost			98,030		111,507
	Materials and supplies, at average cost			90,815		90,976
	Prepayments			208,105		79,687
	Other current assets			114,909		50,454

TOTAL CURRENT ASSETS				1,652,356		1,450,750

INVESTMENTS - OTHER				232,717		216,979

DEFERRED CHARGES, REGULATORY ASSETS AND NONCURRENT ASSETS
	Goodwill			405,802		439,944
	Intangible assets			82,963		85,783
	Accrued pension credits			946,504		697,807
	Regulatory assets
		Future federal income tax		605,290		659,891
		Recoverable energy costs		293,975		210,264
		Sale of nuclear generating plant		129,894		174,804
		Real estate sale costs - First Avenue properties		135,189		105,407
		Deferred retirement program costs		84,089		81,796
		Deferred unbilled gas revenue		43,594		43,594
		Deferred environmental remediation costs		72,011		62,559
		Workers' compensation		56,757		62,109
		Divestiture - capacity replacement reconciliation		53,850		58,850
		Deferred revenue taxes		79,830		41,256
		World Trade Center restoration costs		45,516		32,933
		Other		133,725		83,697

	TOTAL REGULATORY ASSETS			1,733,720		1,617,160

	Other deferred charges and noncurrent assets			229,850		239,313

TOTAL DEFERRED CHARGES, REGULATORY ASSETS AND NONCURRENT ASSETS				3,398,839		3,080,007

TOTAL			$	18,203,668	$	16,996,111

The accompanying notes are an integral part of these financial statements.

Consolidated Edison, Inc.

CONSOLIDATED BALANCE SHEET
(UNAUDITED)

			As at
			September 30, 2002			December 31, 2001
			(Thousands of Dollars)
CAPITALIZATION AND LIABILITIES
CAPITALIZATION
	Common stock, authorized 500,000,000 shares; outstanding 213,485,279 shares and 212,206,394 shares		$	1,532,172		$	1,482,341
	Retained earnings			5,420,676			5,251,017
	Treasury stock, at cost; 23,210,700 shares and 23,281,700 shares			(1,001,241	)		(1,002,107	)
	Capital stock expense			(35,374	)		(35,547	)
	Accumulated other comprehensive income			(18,232	)		(29,436	)

		TOTAL COMMON SHAREHOLDERS' EQUITY		5,898,001			5,666,268

	Preferred stock			212,563			212,563
	Long-term debt			5,945,622			5,501,217

TOTAL CAPITALIZATION				12,056,186			11,380,048

MINORITY INTERESTS				8,562			9,522
NONCURRENT LIABILITIES
	Obligations under capital leases			39,149			41,088
	Accumulated provision for injuries and damages			176,374			175,665
	Pension and benefits reserve			222,331			187,739
	Superfund and other environmental costs			142,713			132,254
	Other noncurrent liabilities			41,420			30,159

TOTAL NONCURRENT LIABILITIES				621,987			566,905

CURRENT LIABILITIES
	Long-term debt due within one year			196,630			310,950
	Preferred stock to be redeemed in one year			—			37,050
	Notes payable			402,846			343,722
	Accounts payable			781,737			665,342
	Customer deposits			217,440			214,121
	Accrued taxes			138,281			146,657
	Accrued interest			98,150			80,238
	System Benefit Charge			26,987			30,024
	Independent Power Producer buyout			32,700			33,750
	Accrued wages			74,101			77,131
	Other current liabilities			183,286			176,376

TOTAL CURRENT LIABILITIES				2,152,158			2,115,361

DEFERRED CREDITS AND REGULATORY LIABILITIES
	Accumulated deferred income tax			2,479,211			2,235,295
	Accumulated deferred investment tax credits			113,406			118,350
	Regulatory liabilities
		NYISO reconciliation		99,635			92,504
		World Trade Center casualty loss		78,787			81,483
		Gain on divestiture		42,670			59,030
		Deposit from sale of First Avenue properties		50,000			50,000
		Refundable energy costs		47,618			45,008
		Accrued electric rate reduction		38,018			38,018
		Transmission Congestion Contracts		79,119			4,896
		Gas Rate Plan — World Trade Center Recovery		36,388			—
		Electric excess earnings		20,000			—
		Other		258,797			185,188

	TOTAL REGULATORY LIABILITIES			751,032			556,127

	Other deferred credits			21,126			14,503

TOTAL DEFERRED CREDITS AND REGULATORY LIABILITIES				3,364,775			2,924,275

TOTAL			$	18,203,668		$	16,996,111

The accompanying notes are an integral part of these financial statements.

Consolidated Edison, Inc.

CONSOLIDATED INCOME STATEMENT
(UNAUDITED)

		For the Three Months Ended September 30,
		2002			2001

		(Thousands of Dollars)
OPERATING REVENUES
	Electric	$	2,127,038		$	2,247,336
	Gas		156,029			166,601
	Steam		76,662			78,703
	Non-utility		179,761			134,916

TOTAL OPERATING REVENUES			2,539,490			2,627,556

OPERATING EXPENSES
	Purchased power		1,063,917			1,072,042
	Fuel		83,462			99,845
	Gas purchased for resale		74,537			86,868
	Other operations		224,195			258,599
	Maintenance		98,757			101,128
	Depreciation and amortization		126,162			133,011
	Taxes, other than income taxes		301,163			313,583
	Income taxes		181,202			176,069

TOTAL OPERATING EXPENSES			2,153,395			2,241,145

OPERATING INCOME			386,095			386,411

OTHER INCOME (DEDUCTIONS)
	Investment income		426			2,309
	Allowance for equity funds used during construction		1,983			286
	Other income		1,780			1,548
	Other income deductions		(4,363	)		(7,421	)
	Income taxes		9,703			5,490

TOTAL OTHER INCOME (DEDUCTIONS)			9,529			2,212

INCOME BEFORE INTEREST CHARGES			395,624			388,623
	Interest on long-term debt		102,619			100,587
	Other interest		8,160			9,230
	Allowance for borrowed funds used during construction		(1,697	)		(1,934	)

NET INTEREST CHARGES			109,082			107,883

NET INCOME			286,542			280,740

PREFERRED STOCK DIVIDEND REQUIREMENTS			2,831			3,398

INCOME BEFORE CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE			283,711			277,342

CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE			—			—

NET INCOME FOR COMMON STOCK		$	283,711		$	277,342

EARNINGS PER COMMON SHARE - BASIC
	Before cumulative effect of change in accounting principle	$	1.34		$	1.31

	Cumulative effect of change in accounting principle	$	—		$	—

	After cumulative effect of change in accounting principle	$	1.34		$	1.31

EARNINGS PER COMMON SHARE - DILUTED
	Before cumulative effect of change in accounting principle	$	1.33		$	1.30

	Cumulative effect of change in accounting principle	$	—		$	—

	After cumulative effect of change in accounting principle	$	1.33		$	1.30

DIVIDENDS DECLARED PER SHARE OF COMMON STOCK		$	0.555		$	0.550

AVERAGE NUMBER OF SHARES OUTSTANDING - BASIC			213,219,441			212,206,033

AVERAGE NUMBER OF SHARES OUTSTANDING - DILUTED			214,220,069			213,170,793

The accompanying notes are an integral part of these financial statements.

Consolidated Edison, Inc.

CONSOLIDATED INCOME STATEMENT
(UNAUDITED)

		For the Nine Months Ended September 30,
		2002			2001

		(Thousands of Dollars)
OPERATING REVENUES
	Electric	$	4,826,870		$	5,486,659
	Gas		872,248			1,173,813
	Steam		288,616			426,621
	Non-utility		437,099			414,584

TOTAL OPERATING REVENUES			6,424,833			7,501,677

OPERATING EXPENSES
	Purchased power		2,413,054			2,739,562
	Fuel		194,754			341,133
	Gas purchased for resale		425,836			723,990
	Other operations		691,865			799,583
	Maintenance		297,327			345,914
	Depreciation and amortization		368,731			404,877
	Taxes, other than income taxes		837,648			878,052
	Income taxes		351,673			379,841

TOTAL OPERATING EXPENSES			5,580,888			6,612,952

OPERATING INCOME			843,945			888,725

OTHER INCOME (DEDUCTIONS)
	Investment income		1,548			4,533
	Allowance for equity funds used during construction		8,103			787
	Other income		17,067			1,399
	Other income deductions		(19,252	)		(18,500	)
	Income taxes		25,771			12,629

TOTAL OTHER INCOME (DEDUCTIONS)			33,237			848

INCOME BEFORE INTEREST CHARGES			877,182			889,573
	Interest on long-term debt		295,810			298,149
	Other interest		27,252			29,254
	Allowance for borrowed funds used during construction		(3,404	)		(5,156	)

NET INTEREST CHARGES			319,658			322,247

INCOME BEFORE CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE			557,524			567,326

PREFERRED STOCK DIVIDEND REQUIREMENTS			9,627			10,194

NET INCOME			547,897			557,132

CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE (NET OF INCOME TAXES OF $13.961 MILLION)			20,182			—

NET INCOME FOR COMMON STOCK		$	527,715		$	557,132

EARNINGS PER COMMON SHARE - BASIC
	Before cumulative effect of change in accounting principle	$	2.58		$	2.63

	Cumulative effect of change in accounting principle	$	0.10		$	—

	After cumulative effect of change in accounting principle	$	2.48		$	2.63

EARNINGS PER COMMON SHARE - DILUTED
	Before cumulative effect of change in accounting principle	$	2.57		$	2.62

	Cumulative effect of change in accounting principle	$	0.10		$	—

	After cumulative effect of change in accounting principle	$	2.47		$	2.62

DIVIDENDS DECLARED PER SHARE OF COMMON STOCK		$	1.665		$	1.650

AVERAGE NUMBER OF SHARES OUTSTANDING - BASIC			212,765,813			212,118,972

AVERAGE NUMBER OF SHARES OUTSTANDING - DILUTED			213,849,866			212,869,724

The accompanying notes are an integral part of these financial statements.

Consolidated Edison, Inc.

CONSOLIDATED STATEMENT OF RETAINED EARNINGS
(UNAUDITED)

		As at
		September 30, 2002		December 31, 2001

		(Thousands of Dollars)
BALANCE, START OF PERIOD		$	5,251,017	$	5,040,931
	LESS: STOCK OPTIONS EXERCISED		3,299		5,430
NET INCOME FOR THE PERIOD			557,524		695,835

	LESS: CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE		20,182		—

NET INCOME AFTER CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE			537,342		695,835

TOTAL			5,785,060		5,731,336

DIVIDENDS DECLARED ON CAPITAL STOCK
	CUMULATIVE PREFERRED, AT REQUIRED ANNUAL RATES		9,627		13,593
	COMMON, $1.665 AND $2.20 PER SHARE, RESPECTIVELY		354,757		466,726

TOTAL DIVIDEND DECLARED			364,384		480,319

BALANCE, END OF PERIOD		$	5,420,676	$	5,251,017

Consolidated Edison, Inc.

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
(UNAUDITED)

		For the Three Months Ended September 30,
		2002			2001

		(Thousands of Dollars)
NET INCOME FOR COMMON STOCK		$	283,711		$	277,342
OTHER COMPREHENSIVE INCOME/(LOSS), NET OF TAXES
	INVESTMENT IN MARKETABLE EQUITY SECURITIES, NET OF ($358) AND ($273) TAXES		(511	)		(387	)
	UNREALIZED GAINS/(LOSSES) ON DERIVATIVES QUALIFIED AS HEDGES, NET OF $130 AND ($8,704) TAXES		322			(11,923	)
	LESS: RECLASSIFICATION ADJUSTMENT FOR GAINS/(LOSSES) INCLUDED IN NET INCOME, NET OF $2,076 AND ($6,900) TAXES		2,959			(9,571	)

TOTAL OTHER COMPREHENSIVE INCOME/(LOSS), NET OF TAXES			(3,148	)		(2,739	)

COMPREHENSIVE INCOME		$	280,563		$	274,603

The accompanying notes are an integral part of these financial statements.

Consolidated Edison, Inc.

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
(UNAUDITED)

		For the Nine Months Ended September 30,
		2002			2001

		(Thousands of Dollars)
NET INCOME FOR COMMON STOCK		$	527,715		$	557,132
OTHER COMPREHENSIVE INCOME/(LOSS), NET OF TAXES
	INVESTMENT IN MARKETABLE EQUITY SECURITIES, NET OF ($603) AND ($552) TAXES		(859	)		(576	)
	MINIMUM PENSION LIABILITY ADJUSTMENTS, NET OF ($2,049) AND ($1,656) TAXES		(2,959	)		(2,055	)
	UNREALIZED (LOSSES) ON DERIVATIVES QUALIFIED AS HEDGES DUE TO CUMULATIVE EFFECT OF A CHANGE IN ACCOUNTING PRINCIPLE, NET OF $0 AND ($5,587) TAXES		—			(8,050	)
	UNREALIZED GAINS/(LOSSES) ON DERIVATIVES QUALIFIED AS HEDGES, NET OF $7,120 AND ($17,363) TAXES		10,293			(24,375	)
	LESS: RECLASSIFICATION ADJUSTMENT FOR (LOSSES) INCLUDED IN NET INCOME, NET OF ($3,337) AND ($7,278) TAXES		(4,729	)		(10,284	)

TOTAL OTHER COMPREHENSIVE INCOME/(LOSS), NET OF TAXES			11,204			(24,772	)

COMPREHENSIVE INCOME		$	538,919		$	532,360

The accompanying notes are an integral part of these financial statements.

Consolidated Edison, Inc.

CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)

			For the Nine Months Ended September 30,
			2002			2001

			(Thousands of Dollars)
OPERATING ACTIVITIES
	Net income		$	557,524		$	567,326
	PRINCIPAL NON-CASH CHARGES (CREDITS) TO INCOME
		Depreciation and amortization		368,731			404,653
		Income tax deferred (excluding taxes resulting from divestiture of plant)		235,227			46,692
		Common equity component of allowance for funds used during construction		(8,103	)		(787	)
		Prepayments—accrued pension credits		(248,697	)		(248,779	)
		Other non-cash charges		81,090			35,230
		Capitalized administrative expenses		47,175			72,607
	CHANGES IN ASSETS AND LIABILITIES
		Accounts receivable—customer, less allowance for uncollectibles		(119,466	)		46,707
		Materials and supplies, including fuel and gas in storage		15,063			(18,664	)
		Prepayments (other than pensions), other receivables and other current assets		(336,220	)		12,931
		Deferred recoverable energy costs		(83,711	)		146,421
		Cost of removal less salvage		(59,407	)		(71,680	)
		Accounts payable		116,395			(282,448	)
		Pension and benefits reserve		34,592			31,818
		Accrued taxes		(8,376	)		62,171
		Accrued interest		17,912			11,815
		Deferred charges and regulatory assets		(116,024	)		(91,855	)
		Deferred credits and regualtory liabilities		125,760			93,376
		Transmission Congestion Contracts		74,223			14,087
		Unregulated subsidiaries non-current assets		43,103			(59,295	)
		Other assets		9,026			(3,019	)
		Other liabilities		24,016			14,413

NET CASH FLOWS FROM OPERATING ACTIVITIES				769,833			783,720

INVESTING ACTIVITIES INCLUDING CONSTRUCTION
		Utility construction expenditures		(786,151	)		(750,559	)
		Nuclear fuel expenditures		—			(6,111	)
		Contributions to nuclear decommissioning trust		—			(89,185	)
		Common equity component of allowance for funds used during construction		8,103			787
		Divestiture of utility plant (net of federal income tax)		—			653,694
		Investments by unregulated subsidiaries		(16,324	)		(17,062	)
		Non-utility construction expenditure		(236,880	)		(51,042	)

NET CASH FLOWS USED IN INVESTING ACTIVITIES INCLUDING CONSTRUCTION				(1,031,252	)		(259,478	)

FINANCING ACTIVITIES INCLUDING DIVIDENDS
		Net proceeds from short-term debt		59,125			(52,932	)
		Additions to long-term debt		625,000			624,600
		Retirement of long-term debt		(300,000	)		(378,150	)
		Preferred stock		(37,050	)		—
		Issuance and refunding costs		(10,686	)		(20,254	)
		Common stock dividends		(354,191	)		(349,997	)
		Issuance of common stock		49,831			—
		Preferred stock dividends		(9,627	)		(10,194	)

NET CASH FLOWS FROM/(USED) IN FINANCING ACTIVITIES INCLUDING DIVIDENDS				22,402			(186,927	)

CASH AND TEMPORARY CASH INVESTMENTS:
NET CHANGE FOR THE PERIOD				(239,017	)		337,315
BALANCE AT BEGINNING OF PERIOD				341,179			94,828

BALANCE AT END OF PERIOD			$	102,162		$	432,143

LESS: RESTRICTED CASH			$	18,761		$	—

BALANCE: UNRESTRICTED CASH AND TEMPORARY CASH INVESTMENTS			$	83,401		$	432,143

The accompanying notes are an integral part of these financial statements.

NOTES TO FINANCIAL STATEMENTS (UNAUDITED) - CONSOLIDATED EDISON, INC.

Note A - General

These notes accompany and form an integral part of the interim consolidated financial statements of Consolidated Edison, Inc. and its subsidiaries (Con Edison), including the regulated utility Consolidated Edison Company of New York, Inc. (Con Edison of New York), the regulated utility Orange and Rockland Utilities, Inc. (O&R) and several unregulated subsidiaries. These financial statements are unaudited but, in the opinion of Con Edison's management, reflect all adjustments (which include only normally recurring adjustments with the exception of the cumulative effect of a change in accounting principle) necessary for a fair presentation of the results for the interim periods presented. These financial statements should be read together with the audited Con Edison financial statements (including the notes thereto) included in the combined Con Edison, Con Edison of New York and O&R Annual Reports on Form 10-K for the year ended December 31, 2001 (the Form 10-K). Results for interim periods are not necessarily indicative of results for the entire fiscal year.

Earnings Per Common Share

In accordance with Statement of Financial Accounting Standards (SFAS) No. 128, "Earnings per Share," Con Edison presents basic and diluted earnings per share on the face of the Consolidated Income Statement. Basic earnings per share (EPS) is calculated by dividing earnings available to common shareholders ("Net income for common stock" on the Consolidated Income Statement) by the weighted average number of common shares outstanding during the period. In the calculation of diluted EPS, weighted average shares outstanding are increased for additional shares that would be outstanding if potentially dilutive securities were converted to common stock.

Potentially dilutive securities for Con Edison consist of restricted stock and stock options whose exercise price is less than the average market price of the common shares during the reporting period. These options were granted under the company's Stock Option Plan (see Note M to the Con Edison financial statements included in Item 8 of the Form 10-K).

Basic and diluted EPS are calculated as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2002		2001		2002		2001

	(Millions of Dollars/Share data in Thousands)
Income before cumulative effect of change in accounting principle	$	286.5	$	280.7	$	557.5	$	567.3
Less: Preferred stock dividend requirements		2.8		3.4		9.6		10.2

Income available to common shareholders		283.7		277.3		547.9		557.1
Less: Cumulative effect of change in accounting principle, net of tax		-		-		20.2		-

Net income applicable to common stock	$	283.7	$	277.3	$	527.7	$	557.1

Number of shares on which basic EPS is calculated		213,219		212,206		212,766		212,119
Add - Incremental shares attributable to effect of dilutive securities:		1,001		965		1,084		751

Number of shares on which diluted EPS is calculated		214,220		213,171		213,850		212,870

EARNINGS PER COMMON SHARE - BASIC
Before cumulative effect of change in accounting principle	$	1.34	$	1.31	$	2.58	$	2.63
Cumulative effect of change in accounting principle		-		-		.10		-

After cumulative effect of change in accounting principle	$	1.34	$	1.31	$	2.48	$	2.63

EARNINGS PER COMMON SHARE - DILUTED
Before cumulative effect of change in accounting principle	$	1.33	$	1.30	$	2.57	$	2.62
Cumulative effect of change in accounting Principle		-		-		.10		-

After cumulative effect of change in accounting principle	$	1.33	$	1.30	$	2.47	$	2.62

Stock options to purchase 6.43 million and 5.01 million common shares for the three months ended September 30, 2002 and 2001, and 6.35 million and 5.21 million common shares for the nine months ending September 30, 2002 and 2001, were not included in the respective period's computation of diluted earnings per share because the exercise prices of the options were greater than the average market price of the common shares.

Note B - Environmental Matters

Hazardous substances such as asbestos, polychlorinated biphenyls (PCBs) and coal tar have been used or generated in the course of operations of Con Edison's utility subsidiaries and may be present in facilities and equipment currently or previously owned by the utility subsidiaries.

The Federal Comprehensive Environmental Response, Compensation and Liability Act of 1980 (Superfund) and similar state statutes impose joint and several strict liabilities upon generators of hazardous substances for resulting removal and remedial costs and environmental damages. Liabilities under these laws can be material and in some instances may be imposed without regard to fault, or may be imposed for past acts, even though such past acts may have been lawful at the time they occurred.

The nature of the environmental remediation costs for the sites at which Con Edison has been asserted to have liability for remediation under Superfund or similar state statutes, including its manufactured gas sites (Con Edison's Superfund Sites), include investigation, demolition, removal, storage, replacement,

containment and monitoring costs. The liability accrued for Con Edison's Superfund Sites has been developed on a site-by-site basis without separate accounting for the specific components of the costs. For sites where there are other potentially responsible parties and the company is not managing the site investigation and remediation, the liability accrued represents the company's best estimate of what it will need to pay to settle its obligations with respect to the site. For other sites, the liability accrued represents the company's best estimate of its investigation and remediation costs for the site. In either case, the company makes its best estimate of its undiscounted liability for each site in light of the applicable remediation standards, experience with similar sites, the information it has available to it at the time about the site and site-specific assumptions about such matters as the extent of contamination and remediation and monitoring methods to be used. For some of the sites, the available information includes consultant reports that provide a probabilistic range of potential exposure. The liability accrued for Con Edison's Superfund Sites is reviewed at least quarterly and adjusted as determined to be necessary.

At September 30, 2002, Con Edison had accrued $142.7 million as its best estimate of its liability for Con Edison's Superfund Sites. There will be additional liability relating to these sites and other sites. The amount of the additional liability is not presently determinable but may be material to Con Edison's financial position, results of operations or liquidity.

Con Edison's utility subsidiaries are permitted under current rate agreements to defer for subsequent recovery through rates certain site investigation and remediation costs with respect to hazardous waste. At September 30, 2002, $72.0 million of such costs had been deferred as regulatory assets.

Suits have been brought in New York State and federal courts against Con Edison's utility subsidiaries and many other defendants, wherein a large number of plaintiffs sought large amounts of compensatory and punitive damages for deaths and injuries allegedly caused by exposure to asbestos at various premises of the utility subsidiaries. The suits that have been resolved, which are many, have been resolved without any payment by the utility subsidiaries, or for amounts that were not, in the aggregate, material to the company. The amounts specified in all the remaining suits total billions of dollars. However, Con Edison believes that these amounts are greatly exaggerated, as experienced through the disposition of previous claims. Based on the information and relevant circumstances known to Con Edison at this time, these suits are not expected to have a material adverse effect on Con Edison's financial position, results of operations or liquidity.

Workers' compensation administrative proceedings have been commenced, wherein current and former employees claim benefits based upon alleged disability from exposure to asbestos. Based on the information and relevant circumstances known to Con Edison at this time, these claims are not expected to have a material adverse effect on Con Edison's financial position, results of operations or liquidity. At September 30, 2002, Con Edison had accrued a $129.8 million provision as its best estimate of the utility subsidiaries' liability for workers' compensation claims, including those related to asbestos exposure. Of this amount $58.4 million was deferred as a regulatory asset.

Note C - Nuclear Generation

The New York State Public Service Commission (PSC) is investigating the February 2000 to January 2001 outage of the nuclear generating unit sold by Con Edison of New York in September 2001, its causes and the prudence of the company's actions regarding the operation and maintenance of the generating unit. The proceeding covers, among other things, Con Edison of New York's inspection practices, the circumstances surrounding prior outages, the basis for postponement of the unit's steam generator replacement and whether, and to what extent, increased replacement power costs and repair and replacement costs should be borne by Con Edison's shareholders.

Con Edison of New York has billed to customers replacement power costs for the outage incurred prior to August 2000 and after October 2000, but not approximately $90 million of replacement power costs incurred in August through October 2000. Con Edison of New York has also accrued a $40 million liability for the possible disallowance of replacement power costs that it had previously recovered from customers.

In June 2002, the United States Court of Appeals for the Second Circuit unanimously affirmed the October 2000 decision by the United States District Court for the Northern District of New York, in an action entitled Consolidated Edison Company of New York, Inc. v. Pataki, et al., in which the district court had determined that the New York State law that directed the PSC to prohibit Con Edison of New York from recovering replacement power costs for the outage from customers was unconstitutional and granted the company's motion for a permanent injunction to prevent its implementation. The defendants are seeking to have the decision reviewed by the United States Supreme Court.

The company is unable to predict whether or not any proceedings, lawsuits, legislation or other actions relating to the nuclear generating unit will have a material adverse effect on its financial position, results of operations or liquidity.

Note D - Northeast Utilities

In March 2001, Con Edison commenced an action in the United States District Court for the Southern District of New York, entitled Consolidated Edison, Inc. v. Northeast Utilities, seeking a declaratory judgment that Northeast Utilities has failed to meet certain conditions precedent to Con Edison's obligation to complete its acquisition of Northeast Utilities pursuant to their agreement and plan of merger, dated October 13, 1999, as amended and restated as of January 11, 2000 (the merger agreement). In May 2001 Con Edison amended its complaint. As amended, Con Edison's complaint seeks, among other things, recovery of damages sustained by it as a result of the material breach of the merger agreement by Northeast Utilities and the court's declaration that under the merger agreement Con Edison has no further or continuing obligations to Northeast Utilities, and that Northeast Utilities has no further or continuing rights against Con Edison.

In June 2001, Northeast Utilities withdrew the separate action it commenced in March 2001 in the same court and filed as a counter-claim to Con Edison's amended complaint its claim that Con Edison materially breached the merger agreement and that as a result Northeast Utilities and its shareholders have suffered substantial damages, including the difference between the consideration to be paid to

Northeast Utilities shareholders pursuant to the merger agreement and the market value of Northeast Utilities common stock, expenditures in connection with regulatory approvals and lost business opportunities. Pursuant to the merger agreement, Con Edison had agreed to acquire Northeast Utilities for $26.00 per share (an estimated aggregate of not more than $3.9 billion) plus $0.0034 per share for each day after August 5, 2000 through the day prior to the completion of the transaction, payable 50 percent in cash and 50 percent in stock.

Con Edison believes that Northeast Utilities has materially breached the merger agreement, and that Con Edison has not materially breached the merger agreement. Con Edison believes it is not obligated to acquire Northeast Utilities because Northeast Utilities does not meet the merger agreement's conditions that Northeast Utilities perform all of its obligations under the merger agreement. Those obligations include the obligation that it carry on its businesses in the ordinary course consistent with past practice; that the representations and warranties made by it in the merger agreement were true and correct when made and remain true and correct; and that there be no material adverse change with respect to Northeast Utilities.

Both parties have filed motions for summary judgment. Con Edison is unable to predict whether or not any Northeast Utilities related lawsuits or other actions will have a material adverse effect on Con Edison's financial position, results of operations or liquidity.

Note E - Leases

Con Edison accounts for a 525 MW electric generating facility in Newington, New Hampshire that is subject to an operating lease arrangement to which a Con Edison unregulated subsidiary is a party (the Newington Project) in accordance with SFAS No. 13, "Accounting for Leases" and related Financial Accounting Standards Board's (FASB) Emerging Issues Task Force (EITF) issue statements. Con Edison has not included the Newington Project or the related lease obligations on its consolidated balance sheet.

In June 2002, the FASB issued an exposure draft of a proposed interpretation on "Consolidation of Certain Special Purpose Entities" (SPEs). If the exposure draft were adopted in its current form, Con Edison would be required to include the Newington Project assets and the related debt issued by the SPE on its consolidated balance sheet. Con Edison estimates that this would result in a decrease in annual after tax net income of approximately $4 million and increases of approximately $350 million in non-utility plant and long-term debt.

Substantial completion under the Newington contract is now scheduled for the fourth quarter of 2002. The company's unregulated subsidiary and the construction contractor for this plant have initiated arbitration and state court proceedings regarding whether the subsidiary is entitled to damages for a delay in completion of this plant and whether the contractor is entitled to additional project costs. Con Edison does not expect that this dispute will have a material adverse effect on its financial position, results of operations or liquidity.

As part of a broad initiative, the Internal Revenue Service is reviewing certain categories of transactions. Among these are transactions in which a taxpayer leases property and then immediately subleases it back

to the lessor (termed "Lease In/Lease Out," or LILO transactions). In 1997 and 1999, Con Edison's unregulated subsidiaries invested $93 million in two LILO transactions, involving gas distribution and electric generating facilities in the Netherlands.

For additional information, see Note J to financial statements included in the Form 10-K.

Note F - Investments

For 2002 and 2001, investments consisted primarily of the investments of Con Edison's unregulated subsidiaries, which are recorded at cost, accounted for under the equity method, or accounted for as leveraged leases in accordance with SFAS No. 13. See Note A and Note J to the Con Edison financial statements in Item 8 of the 2001 Form 10-K and Note E to the Con Edison financial statements included in Part I, Item 1 of this report.

Note G - Derivative Instruments and Hedging Activities

As of January 2001 Con Edison adopted SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities," as amended by SFAS No. 137, "Deferral of the Effective Date of FASB Statement No. 133," and SFAS No. 138, "Accounting for Certain Derivative Instruments and Certain Hedging Activities—an amendment of FASB Statement No. 133" (collectively, SFAS No. 133).

Energy Price Hedging

Con Edison's subsidiaries use derivative financial instruments to hedge market price fluctuations in related underlying transactions for the physical purchase or sale of electricity and gas (hedges). As of September 30, 2002, the fair value of the derivatives for such use was $27.5 million, comprised of $15.5 million at the regulated utility subsidiaries and $12.0 million at the unregulated subsidiaries.

Con Edison's utility subsidiaries, pursuant to SFAS No. 71, "Accounting for the Effects of Certain Types of Regulation," defer recognition in income of gains and losses on hedges until the underlying transactions are completed. In accordance with rate provisions that permit the recovery of the cost of purchased power and gas purchased for resale, Con Edison's utility subsidiaries credit or charge to their customers gains or losses on hedges and related transaction costs. See "Recoverable Energy Costs" in Note A to the company's financial statements included in Item 8 of the Form 10-K.

To the extent SFAS No. 71 does not allow deferred recognition in income, Con Edison's utility subsidiaries have elected hedge accounting pursuant to SFAS No. 133 (cash flow hedge accounting). Con Edison Solutions (which provides competitive gas and electric supply and energy-related products and services) has also elected cash flow hedge accounting.

Pursuant to cash flow hedge accounting, except as described below, the mark-to-market unrealized gain or loss on each hedge is recorded in other comprehensive income and reclassified to income at the time the underlying transaction is completed.

Cash flow hedge gains and losses for energy transactions, net of tax, included in accumulated other comprehensive income for the three months ended September 30, 2002 and 2001 were as follows:

	Three Months Ended
	September 30, 2002		September 30, 2001

	(Millions of Dollars)
Unrealized gains/(losses) on derivatives qualified as hedges, net of $3.7 and ($4.7) taxes	$	5.4	$	(6.3	)
Less: Reclassification adjustment for gains/(losses) included in net income, net of $2.8 and ($6.0) taxes		4.0		(8.4	)

Unrealized gains on derivatives qualified as hedges for the period	$	1.4	$	2.1

Cash flow hedge gains and losses for energy transactions, net of tax, included in accumulated other comprehensive income for the nine months ended September 30, 2002 and 2001 were as follows:

	Nine Months Ended
	September 30, 2002			September 30, 2001

	(Millions of Dollars)
Unrealized gains on derivatives qualified as hedges due to cumulative effect of a change in accounting principle, net of $0 and $1.3 taxes	$	-		$	1.6
Unrealized gains/(losses) on derivatives qualified as hedges, net of $13.2 and ($13.2) taxes		18.6			(18.6	)
Less: Reclassification adjustment for (losses) included in net income, net of ($1.3) and ($6.2) taxes		(1.8	)		(8.9	)

Unrealized gains/(losses) on derivatives qualified as hedges for the period	$	20.4		$	(8.1	)

As of September 30, 2002, the subsidiaries' hedges for which cash flow hedge accounting was used were for a term of less than two years and $7.8 million of after-tax net gains relating to such hedges were expected to be reclassified from accumulated other comprehensive income to income within the next 12 months.

Under cash flow hedge accounting, any gain or loss relating to any portion of a hedge determined to be "ineffective" is recognized in income in the period in which such determination is made. As a result, changes in the value of a hedge may be recognized in income in an earlier period than the period in which the underlying transaction is recognized in income. The company expects, however, that these changes in values will be offset, at least in part, when the underlying transactions are recognized in income. For the third quarter of 2002, the company recognized in income mark-to-market unrealized pre-tax net losses of $1.7 million, compared with unrealized pre-tax net losses of $1.1 million for the third quarter of 2001, relating to derivative transactions at Con Edison Solutions. For the nine months ended September 30, 2002 and 2001, with respect to such hedges, the company recognized in income mark-to-market unrealized pre-tax net gains of $4.8 million and pre-tax net losses of $10.3 million, respectively.

Con Edison Energy markets energy through specialized products and provides wholesale capacity, risk management and load forecasting and scheduling services to wholesale and retail energy providers and asset optimization services for the electric generating plants of Con Edison Development. Con Edison

Energy procures and markets energy for other Con Edison subsidiaries and utilizes energy commodity contracts such as two-party forward contracts for the purchase or sale of electricity and capacity, over-the-counter swap contracts, exchange-traded natural gas and crude oil futures and options, transmission congestion contracts, natural gas transportation contracts, and other physical and financial contracts. See Note I below for a discussion of the accounting for Con Edison Energy trading activities.

Interest Rate Hedging

O&R and Con Edison Development (which invests in and manages energy infrastructure projects) use cash flow hedge accounting for their interest rate swap agreements as described below. As of September 30, 2002, the fair value of the O&R interest rate swap was a loss of $19.1 million, and the fair value of the Con Edison Development interest rate swap was a loss of $10.0 million.

In connection with its $55 million promissory note issued to the New York State Energy Research and Development Authority (the Authority) for the net proceeds of the Authority's variable rate Pollution Control Refunding Revenue Bonds, 1994 Series A (the 1994 Bonds), O&R has a swap agreement pursuant to which it pays interest at a fixed rate of 6.09 percent and is paid interest at the same variable rate as is paid on the 1994 Bonds.

In connection with $90 million of variable rate loans relating to the Lakewood electric generating plant, Con Edison Development has swap agreements pursuant to which it pays interest at a fixed rate of 6.68 percent and is paid interest at a variable rate equal to the one, two, or three-month London Interbank Offered Rate (LIBOR).

Cash flow hedges for interest rate hedging, net of tax, included in accumulated other comprehensive income for the three months ended September 30, 2002 and 2001 were as follows:

	Three Months Ended
	September 30, 2002			September 30, 2001

	(Millions of Dollars)
Unrealized (losses) on derivatives qualified as hedges, net of ($3.6) and ($4.0) taxes	$	(5.1	)	$	(5.6	)
Less: Reclassification adjustment for (losses) included in net income, net of ($0.7) and ($0.9) taxes		(1.0	)		(1.2	)

Unrealized (losses) on derivatives qualified as hedges for the period	$	(4.1	)	$	(4.4	)

Cash flow hedges for interest rate hedging, net of tax, included in accumulated other comprehensive income for the nine months ended September 30, 2002 and 2001 were as follows:

	Nine Months Ended
	September 30, 2002			September 30, 2001

	(Millions of Dollars)
Unrealized (losses) on derivatives qualified as hedges due to cumulative effect of a change in accounting principle, net of $0 and ($6.9) taxes	$	-		$	(9.7	)
Unrealized (losses) on derivatives qualified as hedges, net of ($6.1) and ($4.2) taxes		(8.3	)		(5.8	)
Less: Reclassification adjustment for (losses) included in net income, net of ($2.0) and ($1.1) taxes		(2.9	)		(1.4	)

Unrealized (losses) on derivatives qualified as hedges for the period	$	(5.4	)	$	(14.1	)

As of September 30, 2002, $3.4 million of after-tax loss relating to the interest rate swap agreements were expected to be reclassified from accumulated other comprehensive income to income within the next 12 months.

In October 2002, Con Edison of New York entered into a swap agreement in connection with its $224.6 million Facilities Revenue Bonds, Series 2001A. Pursuant to the swap agreement provisions, Con Edison of New York pays interest at a variable rate equal to the three-month LIBOR and is paid interest at a fixed rate of 5.375 percent. The swap has a term of 10 years callable at par after three years.

Note H - Financial Information by Business Segment

Con Edison's business segments were determined based on similarities in economic characteristics, the regulatory environment, and management's reporting requirements. Con Edison's principal business segments are:

•: Regulated Electric - consists of regulated utility activities of Con Edison of New York and O&R relating to the generation, transmission and distribution and sale of electricity in New York, New Jersey and Pennsylvania.
•: Regulated Gas - consists of regulated utility activities of Con Edison of New York and O&R relating to the transportation, storage, distribution and sale of natural gas in New York and Pennsylvania.
•: Regulated Steam - consists of regulated utility activities of Con Edison of New York relating to the generation, distribution and sale of steam in New York.
•: Unregulated subsidiaries - represents the operations of the competitive electric and gas supply and energy-related products and services businesses and the operations of the affiliates that invest in energy infrastructure and telecommunications projects.
•: Other - - includes the operations of the parent company and consolidation adjustments.

All revenues of Con Edison's business segments, excluding revenues earned by an unregulated subsidiary on certain energy infrastructure projects, which are deemed to be immaterial, are from customers located in the United States of America. Also, all assets, excluding certain investments in energy infrastructure projects by an unregulated subsidiary are located in the United States of America and are materially

consistent with segment assets as disclosed in the Form 10-K. The accounting policies of the segments are the same as those described in the summary of significant accounting policies. See Note A to the Con Edison's financial statements included in Item 8 in the Form 10-K.

Common services shared by the business segments are assigned directly or allocated based on various cost factors, depending on the nature of the service provided.

The financial data for business segments are as follows:

CONSOLIDATED EDISON, INC.
SEGMENT FINANCIAL INFORMATION
$000'S

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2002 AND 2001

	Regulated Electric				Regulated Steam
	2002		2001		2002			2001

Operating revenues	$	2,127,038	$	2,247,336	$	76,662		$	78,703
Intersegment revenues		1,716		2,929		452			476
Depreciation and amortization		95,637		103,493		4,584			4,521
Operating income	$	370,822	$	395,897	$	(2,013	)	$	(6,479	)

	Regulated Gas					Unregulated Subsidiaries & Other
	2002		2001			2002		2001

Operating revenues	$	156,029	$	166,601		$	179,761	$	134,916
Intersegment revenues		520		795			31,114		1,630
Depreciation and amortization		18,770		17,973			7,171		7,024
Operating income	$	7,487	$	(1,276	)	$	9,799	$	(1,731	)

	Total
	2002		2001

Operating revenues	$	2,539,490	$	2,627,556
Intersegment revenues		33,802		5,830
Depreciation and amortization		126,162		133,011
Operating income	$	386,095	$	386,411

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2002 AND 2001

	Regulated Electric				Regulated Steam
	2002		2001		2002		2001

Operating revenues	$	4,826,870	$	5,486,659	$	288,616	$	426,621
Intersegment revenues		7,227		9,670		1,357		1,427
Depreciation and amortization		281,705		316,744		13,719		13,357
Operating income	$	678,335	$	728,992	$	20,428	$	27,973

	Regulated Gas				Unregulated Subsidiaries & Other
	2002		2001		2002		2001

Operating revenues	$	872,248	$	1,173,813	$	437,099	$	414,584
Intersegment revenues		2,155		2,386		49,126		6,796
Depreciation and amortization		56,693		53,730		16,614		21,046
Operating income	$	124,266	$	126,933	$	20,916	$	4,827

	Total
	2002		2001

Operating revenues	$	6,424,833	$	7,501,677
Intersegment revenues		59,865		20,279
Depreciation and amortization		368,731		404,877
Operating income	$	843,945	$	888,725

Note I - New Financial Accounting Standards

On January 1, 2002, Con Edison adopted SFAS No. 142, "Goodwill and Other Intangible Assets." SFAS No. 142 provides that goodwill (i.e., the excess of cost over fair value of the net assets of a business acquired) and intangible assets with indefinite useful lives will no longer be amortized, but instead be tested for impairment at least annually. Other intangible assets will continue to be amortized over their finite useful lives. The goodwill impairment test is a two-step process. The first step identifies potential impairment by comparing the estimated fair value of a reporting unit to its carrying amount, including goodwill. If the fair value is less than the carrying amount, the second step of the impairment test is performed. The second step compares the implied fair value of goodwill, determined in the same manner as the amount of goodwill recognized in a business combination under SFAS No. 141, "Business Combinations," to its carrying amount to determine the amount of the impairment loss, if any.

Con Edison completed the goodwill impairment test and recorded a loss of $34.1 million ($20.2 million after tax) as an offset to goodwill recorded in Con Edison's "Unregulated Subsidiaries and Other" business segment relating to certain generation assets owned by Con Edison Development. The fair values of the reporting units were estimated using the expected present value of future cash flows. The impairment loss reflects changes in forecast market prices of energy, capacity and in changes in risk-adjusted discount rates. The impairment loss is recognized net of taxes as a cumulative effect of a change in accounting principle at January 1, 2002.

The change in the carrying amount of goodwill for the nine months ended September 30, 2002 is as follows:

	(Millions of dollars)

Balance at the beginning of the period (January 1, 2002)	$	439.9
Impairment loss recognized		(34.1	)

Balance at the end of the period (September 30, 2002)	$	405.8

Had Con Edison been accounting for goodwill under SFAS No. 142 for all periods presented, its income and earnings per share would have been as follows:

	Three months ended September 30,				Nine months ended September 30,
	2002		2001		2002		2001

	(Millions of dollars, except per share data)
Income before cumulative effect of change in accounting principle
As reported	$	283.7	$	277.3	$	547.9	$	557.1
Add back: goodwill amortization (net of tax)		-		2.3		-		8.1

Adjusted	$	283.7	$	279.6	$	547.9	$	565.2

Basic earnings per share before cumulative effect of change in accounting principle
As reported	$	1.34	$	1.31	$	2.58	$	2.63
Add back: goodwill amortization (net of tax)		-		0.01		-		0.04

Adjusted	$	1.34	$	1.32	$	2.58	$	2.67

Diluted earnings per share before cumulative effect of change in accounting principle
As reported	$	1.33	$	1.30	$	2.57	$	2.62
Add back: goodwill amortization (net of tax)		-		0.01		-		0.04

Adjusted	$	1.33	$	1.31	$	2.57	$	2.66

Con Edison's finite life intangible asset relates to a power purchase agreement of an unregulated subsidiary and is being amortized on a straight-line basis over an approximately 25-year contract period. At September 30, 2002, the gross carrying amount and accumulated amortization were $91.7 million and $8.8 million respectively. Amortization expense was $2.8 million for the nine months ended September 30, 2002 and is estimated to be $3.8 million per year from 2002 to 2006.

In June 2002, the EITF reached a consensus on EITF Issue No. 02-3, "Accounting for Contracts Involved in Energy Trading and Risk Management Activities" (EITF Issue No. 02-3), that revenue resulting from energy trading contracts, whether realized or unrealized and whether financially or physically settled, should be shown net in the income statement. This new ruling is effective for periods ending after July 2002, with reclassification of prior period amounts required. The consensus also expanded disclosure requirements for energy trading activities.

Con Edison Energy is subject to the provisions of EITF Issue No. 98-10, "Accounting for Contracts Involved in Energy Trading and Risk Management Activities." EITF Issue No. 98-10 requires an entity to record its energy trading contracts at fair value and recognize the changes in fair value in current earnings. In accordance with EITF Issue No. 02-3, Con Edison Energy has reclassified certain prior period amounts. The reclassification reduced Con Edison's non-utility revenues and energy costs by $245 million in 2001 and $114 million in 2000 (about 2.5 percent and 1.2 percent, respectively, of Con Edison's total operating revenues in those years). For the six month period ended June 30, 2002, revenues and costs were reduced by $104 million (2.6 percent of Con Edison's total operating revenues for that period).

On October 25, 2002, the EITF reached a consensus to rescind EITF Issue No. 98-10. Beginning on October 25, new contracts that would otherwise have been accounted for under Issue No. 98-10 and that do not fall within the scope of SFAS No. 133 will not be marked-to-market through earnings. The impact of the transition to this revised accounting is to be recorded as the cumulative effect of a change in

accounting principle, effective the first fiscal quarter beginning after December 15, 2002. The impact of this consensus on the consolidated financial position, results of operations, or liquidity of Con Edison is not expected to be material.

SFAS No. 143, "Accounting for Asset Retirement Obligations," which Con Edison is required to adopt on January 1, 2003, requires entities to record the fair value of a liability associated with an asset retirement obligation in the period incurred. When the liability is initially recorded, the entity will capitalize the cost by increasing the amount of the related asset. The liability will be increased to its present value each period and the capitalized cost will be depreciated over the useful life of the related asset. Upon retirement of the asset, the entity will settle the obligation for the amount recorded or incur a gain or loss. Con Edison has not yet determined the impact of this standard on its consolidated financial position, results of operations, or liquidity.

SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets," which Con Edison adopted on January 1, 2002, replaces SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of." SFAS No. 144 requires that all long-lived assets held for sale or meeting other specified criteria be measured at the lower of book value or fair value less cost to sell. SFAS No. 144 also broadens the reporting of discontinued operations. The adoption of SFAS No. 144 had no impact on Con Edison's consolidated financial position, results of operations or liquidity.

SFAS No. 145, "Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections," which was issued in April 2002, rescinds SFAS No. 4, "Reporting Gains and Losses from Extinguishment of Debt," and SFAS No. 64, "Extinguishment of Debt Made to Satisfy Sinking-Fund Requirements." The provisions of this statement are effective January 1, 2003. Con Edison does not expect the adoption of this standard to have a material effect on its consolidated financial position, results of operations or liquidity.

This Statement also amends SFAS No. 13, "Accounting for Leases," to require sale-leaseback accounting for certain lease modifications that have economic impact similar to sale-leaseback transactions and amends certain other authoritative pronouncements. These provisions of SFAS No. 145, adopted in May 2002, had no impact on Con Edison's consolidated financial position, results of operations, or liquidity.

SFAS No. 146, "Accounting for Costs Associated with Exit or Disposal Activities," which Con Edison will adopt on January 1, 2003, requires companies to recognize costs associated with exit or disposal activities when they are incurred rather than at the date of a commitment to an exit or disposal plan. SFAS No. 147, "Acquisitions of Certain Financial Institutions," effective October 1, 2002, provides guidance on the accounting for the acquisition of a financial institution. Con Edison does not expect the adoption of these standards to have a material effect on its consolidated financial position, results of operations or liquidity.

Consolidated Edison Company of New York, Inc.

CONSOLIDATED BALANCE SHEET
(UNAUDITED)

			As at
			September 30, 2002		December 31, 2001

			(Thousands of Dollars)
ASSETS
UTILITY PLANT, AT ORIGINAL COST
	Electric		$	10,719,595	$	10,441,779
	Gas			2,192,649		2,113,664
	Steam			764,375		758,600
	General			1,293,504		1,241,746

	Total			14,970,123		14,555,789
	Less: Accumulated depreciation			4,229,138		4,083,760

	Net			10,740,985		10,472,029
	Construction work in progress			793,421		626,835

NET UTILITY PLANT				11,534,406		11,098,864

NON-UTILITY PLANT
	Non-utility property			26,944		29,408

NET PLANT				11,561,350		11,128,272

CURRENT ASSETS
	Cash and temporary cash investments			42,752		264,776
	Accounts receivable - customer, less allowance for uncollectible accounts of $28,170 and $29,400 in 2002 and 2001, respectively			651,366		527,635
	Other receivables			180,801		63,885
	Accounts receivable - from affiliated companies			24,508		27,929
	Fuel, at average cost			13,950		16,719
	Gas in storage, at average cost			76,523		85,534
	Materials and supplies, at average cost			82,028		82,301
	Prepayments			182,909		58,628
	Other current assets			33,660		33,247

TOTAL CURRENT ASSETS				1,288,497		1,160,654

INVESTMENTS - OTHER				5,124		4,950

DEFERRED CHARGES, REGULATORY ASSETS AND NONCURRENT ASSETS
	Accrued pension credits			946,504		697,807
	Regulatory assets
		Future federal income tax		567,977		624,625
		Sale of nuclear generating unit		129,894		174,804
		Recoverable energy costs		201,392		121,748
		Real estate sale costs - First Avenue properties		135,189		105,407
		Workers' compensation		56,757		60,466
		Divestiture - capacity replacement reconciliation		53,850		58,850
		Deferred unbilled gas revenue		43,594		43,594
		Deferred environmental remediation costs		41,234		22,085
		Deferred special retirement program costs		38,781		42,197
		Deferred revenue taxes		73,061		34,404
		World Trade Center restoration costs		45,516		32,933
		Other		101,512		56,532

	TOTAL REGULATORY ASSETS			1,488,757		1,377,645

	Other deferred charges and noncurrent assets			176,645		149,490

TOTAL DEFERRED CHARGES, REGULATORY ASSETS AND NONCURRENT ASSETS				2,611,906		2,224,942

TOTAL			$	15,466,877	$	14,518,818

The accompanying notes are an integral part of these financial statements.

Consolidated Edison Company of New York, Inc.

CONSOLIDATED BALANCE SHEET
(UNAUDITED)

			As at
			September 30, 2002			December 31, 2001

			(Thousands of Dollars)
CAPITALIZATION AND LIABILITIES
CAPITALIZATION
	Common stock			1,482,341			1,482,341
	Repurchased Consolidated Edison, Inc. common stock			(962,092	)		(962,092	)
	Retained earnings			4,406,064			4,185,575
	Capital stock expense			(35,374	)		(35,547	)
	Accumulated other comprehensive income			(4,994	)		(4,472	)

		TOTAL COMMON SHAREHOLDERS' EQUITY		4,885,945			4,665,805

	Preferred stock
		$5 Cumulative Preferred		175,000			175,000
		4.65% Series C		15,330			15,330
		4.65% Series D		22,233			22,233

		TOTAL PREFERRED STOCK		212,563			212,563

	Long-term debt			5,161,817			5,011,752

TOTAL CAPITALIZATION				10,260,325			9,890,120

NONCURRENT LIABILITIES
	Obligations under capital leases			39,149			41,088
	Accumulated provision for injuries and damages			165,831			163,632
	Retiree benefit reserve			124,774			101,759
	Superfund and other environmental costs			106,410			93,837
	Other noncurrent liabilities			12,187			12,187

TOTAL NONCURRENT LIABILITIES				448,351			412,503

CURRENT LIABILITIES
	Long-term debt due within one year			150,000			300,000
	Preferred stock to be redeemed in one year			—			37,050
	Notes payable			283,482			—
	Accounts payable			629,460			589,696
	Accounts payable to affiliated companies			14,953			8,441
	Customer deposits			206,751			204,873
	Accrued taxes			132,536			141,259
	Accrued interest			83,878			73,311
	System Benefit Charge			26,987			30,024
	Independent Power Producer buyout			32,700			33,750
	Accrued wages			71,394			71,177
	Other current liabilities			103,464			112,498

TOTAL CURRENT LIABILITIES				1,735,605			1,602,079

DEFERRED CREDITS AND REGULATORY LIABILITIES
	Accumulated deferred federal income tax			2,239,094			2,022,638
	Accumulated deferred investment tax credits			107,337			111,925
	Regulatory liabilities
		NYISO reconciliation		99,635			92,504
		World Trade Center casualty loss		78,787			81,483
		Gain on divestiture		37,877			52,784
		Deposit from sale of First Avenue properties		50,000			50,000
		Accrued electric rate reduction		38,018			38,018
		DC service incentive		34,604			28,455
		Transmission Congestion Contracts		79,119			4,896
		Gas Rate Plan - World Trade Center Recovery		36,388			—
		Electric excess earnings		20,000			—
		Other		201,737			131,413

	TOTAL REGULATORY LIABILITIES			676,165			479,553

TOTAL DEFERRED CREDITS AND REGULATORY LIABILITIES				3,022,596			2,614,116

TOTAL			$	15,466,877		$	14,518,818

The accompanying notes are an integral part of these financial statements.

Consolidated Edison Company of New York, Inc.

CONSOLIDATED INCOME STATEMENT
(UNAUDITED)

		For the Three Months Ended September 30,
		2002			2001

		(Thousands of Dollars)
OPERATING REVENUES
	Electric	$	1,963,979		$	2,069,424
	Gas		139,526			148,891
	Steam		76,662			78,703

TOTAL OPERATING REVENUES			2,180,167			2,297,018

OPERATING EXPENSES
	Purchased power		878,256			892,012
	Fuel		65,882			88,207
	Gas purchased for resale		56,510			65,490
	Other operations		176,909			210,439
	Maintenance		91,089			94,564
	Depreciation and amortization		110,488			117,727
	Taxes, other than income taxes		282,797			294,617
	Income taxes		166,265			167,500

TOTAL OPERATING EXPENSES			1,828,196			1,930,556

OPERATING INCOME			351,971			366,462

OTHER INCOME (DEDUCTIONS)
	Investment income		31			1,033
	Allowance for equity funds used during construction		1,983			286
	Other income		3,146			2,096
	Other income deductions		(3,297	)		(2,317	)
	Income taxes		912			1,721

TOTAL OTHER INCOME (DEDUCTIONS)			2,775			2,819

INCOME BEFORE INTEREST CHARGES			354,746			369,281
	Interest on long-term debt		87,680			91,693
	Other interest		7,183			6,700
	Allowance for borrowed funds used during construction		(1,630	)		(1,540	)

NET INTEREST CHARGES			93,233			96,853

NET INCOME			261,513			272,428

PREFERRED STOCK DIVIDEND REQUIREMENTS			2,831			3,398

NET INCOME FOR COMMON STOCK		$	258,682		$	269,030

The accompanying notes are an integral part of these financial statements.

Consolidated Edison Company of New York, Inc.

CONSOLIDATED INCOME STATEMENT
(UNAUDITED)

		For the Nine Months Ended September 30,
		2002			2001

		(Thousands of Dollars)
OPERATING REVENUES
	Electric	$	4,455,363		$	5,049,033
	Gas		763,476			1,015,659
	Steam		288,616			426,621

TOTAL OPERATING REVENUES			5,507,455			6,491,313

OPERATING EXPENSES
	Purchased power		1,994,120			2,267,955
	Fuel		167,418			304,543
	Gas purchased for resale		333,603			563,994
	Other operations		541,421			654,625
	Maintenance		277,502			325,738
	Depreciation and amortization		326,663			359,254
	Taxes, other than income taxes		783,022			821,548
	Income taxes		316,218			360,426

TOTAL OPERATING EXPENSES			4,739,967			5,658,083

OPERATING INCOME			767,488			833,230

OTHER INCOME (DEDUCTIONS)
	Investment income		132			1,307
	Allowance for equity funds used during construction		8,103			787
	Other income		11,758			9,164
	Other income deductions		(8,642	)		(8,761	)
	Income taxes		14,045			5,842

TOTAL OTHER INCOME (DEDUCTIONS)			25,396			8,339

INCOME BEFORE INTEREST CHARGES			792,884			841,569
	Interest on long-term debt		257,035			270,187
	Other interest		22,900			21,679
	Allowance for borrowed funds used during construction		(3,214	)		(4,235	)

NET INTEREST CHARGES			276,721			287,631

NET INCOME			516,163			553,938

PREFERRED STOCK DIVIDEND REQUIREMENTS			9,627			10,194

NET INCOME FOR COMMON STOCK		$	506,536		$	543,744

The accompanying notes are an integral part of these financial statements.

Consolidated Edison Company of New York, Inc.

CONSOLIDATED STATEMENT OF RETAINED EARNINGS
(UNAUDITED)

		As at
		September 30, 2002		December 31, 2001

		(Thousands of Dollars)
BALANCE, START OF PERIOD		$	4,185,575	$	3,995,825
	Net income for the period		516,163		663,061

TOTAL			4,701,738		4,658,886

DIVIDENDS DECLARED ON CAPITAL STOCK
	Cumulative Preferred, at required annual rates		9,627		13,593
	Common		286,047		459,718

TOTAL DIVIDENDS DECLARED			295,674		473,311

BALANCE, END OF PERIOD		$	4,406,064	$	4,185,575

Consolidated Edison Company of New York, Inc.

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
(UNAUDITED)

		For the Three Months Ended September 30,
		2002			2001

		(Thousands of Dollars)
NET INCOME FOR COMMON STOCK		$	258,682		$	269,030
OTHER COMPREHENSIVE INCOME/(LOSS), NET OF TAXES
	Unrealized gains/(losses) on derivatives qualified as hedges, net of $139 and ($434) taxes		191			(474	)
	Less: Reclassification adjustment for gains/(losses) included in net income, net of $435 and ($1,575) taxes		619			(2,251	)

TOTAL OTHER COMPREHENSIVE INCOME/(LOSS), NET OF TAXES			(428	)		1,777

COMPREHENSIVE INCOME		$	258,254		$	270,807

Consolidated Edison Company of New York, Inc.

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
(UNAUDITED)

		For the Nine Months Ended September 30,
		2002			2001

		(Thousands of Dollars)
NET INCOME FOR COMMON STOCK		$	506,536		$	543,744
OTHER COMPREHENSIVE INCOME/(LOSS), NET OF TAXES
	Minimum pension liability adjustments, net of ($1,882) and ($1,593) taxes		(2,721	)		(2,118	)
	Unrealized gains/(losses) on derivatives qualified as hedges, net of $2,038 and ($2,191) taxes		2,915			(2,983	)
	Less: Reclassification adjustment for gains/(losses) included in net income, net of $501 and ($1,863) taxes		716			(2,663	)

TOTAL OTHER COMPREHENSIVE (LOSS), NET OF TAXES			(522	)		(2,438	)

COMPREHENSIVE INCOME		$	506,014		$	541,306

The accompanying notes are an integral part of these financial statements.

Consolidated Edison Company of New York, Inc.

CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)

			For the Nine Months Ended September 30,
			2002			2001

			(Thousands of Dollars)
OPERATING ACTIVITIES
	Net income		$	516,163		$	553,938
	PRINCIPAL NON-CASH CHARGES (CREDITS) TO INCOME
		Depreciation and amortization		326,663			359,254
		Income tax deferred (excluding taxes resulting from divestiture of plant)		202,805			10,883
		Common equity component of allowance for funds used during construction		(8,103	)		(787	)
		Prepayments - accrued pension credits		(248,697	)		(248,779	)
		Other non-cash charges		59,203			57,790
		Capitalized administrative expenses		47,175			72,607
	CHANGES IN ASSETS AND LIABILITIES
		Accounts receivable - customer, less allowance for uncollectibles		(123,731	)		11,763
		Materials and supplies, including fuel and gas in storage		12,053			(14,028	)
		Prepayments (other than pensions), other receivables and other current assets		(238,189	)		(207	)
		Deferred recoverable energy costs		(79,644	)		165,528
		Cost of removal less salvage		(58,109	)		(69,818	)
		Accounts payable		46,276			(255,927	)
		Pension and benefits reserve		23,015			19,932
		Accrued taxes		(8,724	)		87,682
		Accrued interest		10,567			7,694
		Deferred charges and regulatory assets		(121,494	)		(35,626	)
		Deferred credits and regulatory liabilities		131,018			41,013
		Transmission Congestion Contracts		74,223			14,087
		Other assets		6,479			6,064
		Other liabilities		(362	)		(5,178	)

NET CASH FLOWS FROM OPERATING ACTIVITIES				568,587			777,885

INVESTING ACTIVITIES INCLUDING CONSTRUCTION
		Construction expenditures		(749,077	)		(715,469	)
		Nuclear fuel expenditures		—			(6,111	)
		Contributions to nuclear decommissioning trust		—			(89,185	)
		Divestiture of utility plant (net of federal income tax)		—			653,694
		Common equity component of allowance for funds used during construction		8,103			787

NET CASH FLOWS USED IN INVESTING ACTIVITIES INCLUDING CONSTRUCTION				(740,974	)		(156,284	)

FINANCING ACTIVITIES INCLUDING DIVIDENDS
		Net proceeds from short-term debt		283,482			(139,969	)
		Additions to long-term debt		300,000			624,600
		Retirement of long-term debt		(300,000	)		(378,150	)
		Preferred stock		(37,050	)		—
		Funds held for refunding for NYSERDA Notes		—			(20,254	)
		Issuance and refunding costs		(431	)		—
		Common stock dividends		(286,011	)		(349,997	)
		Preferred stock dividends		(9,627	)		(10,194	)

NET CASH FLOWS USED IN FINANCING ACTIVITIES INCLUDING DIVIDENDS				(49,637	)		(273,964	)

NET DECREASE IN CASH AND TEMPORARY CASH INVESTMENTS				(222,024	)		347,637
CASH AND TEMPORARY CASH INVESTMENTS AT JANUARY 1				264,776			70,273

CASH AND TEMPORARY CASH INVESTMENTS AT SEPTEMBER 30			$	42,752		$	417,910

The accompanying notes are an integral part of these financial statements.

NOTES TO FINANCIAL STATEMENTS (UNAUDITED) -
CONSOLIDATED EDISON COMPANY OF NEW YORK

Note A - General

These notes accompany and form an integral part of the interim consolidated financial statements of Consolidated Edison Company of New York, Inc. (Con Edison of New York) and its subsidiaries. Consolidated Edison, Inc. (Con Edison) owns all of the outstanding common stock of Con Edison of New York. These financial statements are unaudited but, in the opinion of Con Edison of New York's management, reflect all adjustments (which include only normally recurring adjustments) necessary for a fair statement of the results for the interim periods presented. These financial statements should be read together with the audited Con Edison of New York financial statements (including the notes thereto) included in the combined Con Edison, Con Edison of New York and Orange and Rockland Utilities, Inc. Annual Reports on Form 10-K for the year ended December 31, 2001 (the Form 10-K). Results for interim periods are not necessarily indicative of results for the entire fiscal year.

Note B - Environmental Matters

Hazardous substances such as asbestos, polychlorinated biphenyls (PCBs) and coal tar have been used or generated in the course of operations of Con Edison of New York and may be present in its facilities and equipment currently or previously owned.

The nature of the environmental remediation costs for the sites at which Con Edison of New York has been asserted to have liability for remediation under Superfund or similar state statutes, including its manufactured gas sites (Con Edison of New York's Superfund Sites), include investigation, demolition, removal, storage, replacement, containment and monitoring costs. The liability accrued for Con Edison of New York's Superfund Sites has been developed on a site-by-site basis without separate accounting for the specific components of the costs. For sites where there are other potentially responsible parties and the company is not managing the site investigation and remediation, the liability accrued represents the company's best estimate of what it will need to pay to settle its obligations with respect to the site. For other sites, the liability accrued represents the company's best estimate of its investigation and remediation costs for the site. In either case, the company makes its best estimate of its undiscounted liability for each site in light of the applicable remediation standards, experience with similar sites, the information it has available to it at the time about the site and site-specific assumptions about such matters as the extent of contamination and remediation and monitoring methods to be used. For some of the sites, the available information includes consultant reports that provide a probabilistic range of potential exposure. The liability accrued for Con Edison of New York's Superfund Sites is reviewed at least quarterly and adjusted as determined to be necessary.

At September 30, 2002, Con Edison of New York had accrued $106.4 million as its best estimate of its liability for Con Edison of New York's Superfund Sites. There will be additional liability relating to these sites and other sites. The amount of liability is not presently determinable but may be material to Con Edison of New York's financial position, results of operations or liquidity.

Under Con Edison of New York's current electric, gas and steam rate agreements, site investigation and remediation costs in excess of $5 million annually incurred with respect to hazardous waste for which it is responsible are to be deferred and subsequently reflected in rates. At September 30, 2002, $41.2 million of such costs had been deferred as regulatory assets.

Suits have been brought in New York State and federal courts against Con Edison of New York and many other defendants, wherein a large number of plaintiffs sought large amounts of compensatory and punitive damages for deaths and injuries allegedly caused by exposure to asbestos at various premises of Con Edison of New York. The suits that have been resolved, which are many, have been resolved without any payment by Con Edison of New York, or for amounts that were not, in the aggregate, material to the company. The amounts specified in all the remaining suits total billions of dollars. However, Con Edison of New York believes that these amounts are greatly exaggerated, as experienced through the disposition of previous claims. Based on the information and relevant circumstances known to Con Edison of New York at this time, these suits are not expected to have a material adverse effect on its financial position, results of operations or liquidity.

Workers' compensation administrative proceedings have been commenced, wherein current and former employees claim benefits based upon alleged disability from exposure to asbestos. Based on the information and relevant circumstances known to Con Edison of New York at this time, these claims are not expected to have a material adverse effect on its financial position, results of operations or liquidity. At September 30, 2002, Con Edison of New York had accrued a $128.2 million provision as its best estimate of its liability for workers' compensation claims, including those related to asbestos exposure. Of this amount, $56.8 million was deferred as a regulatory asset.

Note C - Nuclear Generation

On June 5, 2002, the United States Court of Appeals for the Second Circuit unanimously affirmed the October 2000 decision by the United States District Court for the Northern District of New York, in an action entitled Consolidated Edison Company of New York, Inc. v. Pataki, et al., in which the district court had determined that the New York State law that directed the PSC to prohibit Con Edison of New York from recovering replacement power costs for the outage from customers was unconstitutional and granted the company's motion for a permanent injunction to prevent its implementation. The defendants are seeking to have the decision reviewed by the United States Supreme Court.

Note D - Derivative Instruments and Hedging Activities

As of January 2001 Con Edison of New York adopted Statement of Financial Accounting Standards (SFAS) No. 133, "Accounting for Derivative Instruments and Hedging Activities," as amended by SFAS No. 137, "Deferral of the Effective Date of FASB Statement No. 133," and SFAS No. 138, "Accounting for Certain Derivative Instruments and Certain Hedging Activities—an amendment of FASB Statement No. 133" (collectively, SFAS No. 133).

Energy Price Hedging

Con Edison of New York uses derivative financial instruments to hedge market price fluctuations in related underlying transactions for the physical purchase or sale of electricity and gas (hedges). As of September 30, 2002, the fair value of the derivatives for such use was $15.4 million.

Pursuant to SFAS No. 71, "Accounting for the Effects of Certain Types of Regulation," Con Edison of New York defers recognition in income of gains and losses on a hedge until the underlying transaction is completed. In accordance with rate provisions that permit the recovery of the cost of purchased power and gas purchased for resale, Con Edison of New York credits or charges to its customers gains or losses on hedges and related transaction costs. See "Recoverable Energy Costs" in Note A to the company's financial statements included in Item 8 of the Form 10-K. To the extent SFAS No. 71 does not allow deferred recognition in income, Con Edison of New York has elected hedge accounting under SFAS No. 133 (cash flow hedge accounting).

Pursuant to cash flow hedge accounting, the mark-to-market unrealized gain or loss on each hedge is recorded in other comprehensive income and reclassified to income at the time the underlying transaction is completed (except that any gain or loss relating to any portion of a hedge determined to be "ineffective" is recognized in income in the period in which such determination is made).

Cash flow hedge gains and losses for energy transactions, net of tax, included in accumulated other comprehensive income for the three months ended September 30, 2002 and 2001 were as follows:

	Three Months Ended
	September 30, 2002			September 30, 2001
	(Millions of Dollars)
Unrealized gains/(losses) on derivatives qualified as hedges, net of $0.1 and ($0.4) taxes	$	0.2		$	(0.5	)
Less: Reclassification adjustment for gains/(losses) included in net income, net of $0.4 and ($1.6) taxes		0.6			(2.3	)

Unrealized gains/(losses) on derivatives qualified as hedges for the period	$	(0.4	)	$	1.8

Cash flow hedge gains and losses for energy transactions, net of tax, included in accumulated other comprehensive income for the nine months ended September 30, 2002 and 2001 were as follows:

	Nine Months Ended
	September 30, 2002		September 30, 2001
	(Millions of Dollars)
Unrealized gains/(losses) on derivatives qualified as hedges, net of $2.0 and ($2.1) taxes	$	2.9	$	(3.0	)
Less: Reclassification adjustment for gains/(losses) included in net income, net of $0.5 and ($1.9) taxes		0.7		(2.7	)

Unrealized gains/(losses) on derivatives qualified as hedges for the period	$	2.2	$	(0.3	)

As of September 30, 2002, $0.3 million of after-tax net gains relating to hedges were expected to be reclassified from accumulated other comprehensive income to income within the next 12 months.

Interest Rate Hedging

In October 2002, Con Edison of New York entered into a swap agreement in connection with its $224.6 million Facilities Revenue Bonds, Series 2001A. Pursuant to the swap agreement provisions, Con Edison of New York pays interest at a variable rate equal to the three-month London Interbank Offered Rate (LIBOR) and is paid interest at a fixed rate of 5.375 percent. The swap has a term of 10 years callable at par after three years.

Note E - Financial Information by Business Segment

Con Edison of New York's business segments were determined based on similarities in economic characteristics, the regulatory environment, and management's reporting requirements. Con Edison of New York's principal business segments are:

•: Regulated Electric - consists of regulated utility activities relating to the generation, transmission and distribution and sale of electricity in New York.
•: Regulated Gas - consists of regulated utility activities relating to the transportation, storage, distribution and sale of natural gas in New York.

•: Regulated Steam - consists of regulated utility activities relating to the generation, distribution and sale of steam in New York.

All revenues of Con Edison of New York's business segments are from customers located in the United States of America. Also, all assets are located in the United States of America and are materially consistent with segment assets as disclosed in the Form 10-K.

Common services shared by the business segments are assigned directly or allocated based on various cost factors, depending on the nature of the service provided.

The financial data for business segments are as follows:

CONSOLIDATED EDISON COMPANY OF NEW YORK
SEGMENT FINANCIAL INFORMATION
$000'S

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2002 AND 2001

	Regulated Electric				Regulated Steam
	2002		2001		2002			2001

Operating revenues	$	1,963,979	$	2,069,424	$	76,662		$	78,703
Intersegment revenues		1,632		2,929		452			476
Depreciation and amortization		89,165		97,005		4,584			4,521
Operating income	$	343,827	$	373,186	$	(2,013	)	$	(6,479	)

	Regulated Gas					Total
	2002		2001			2002		2001

Operating revenues	$	139,526	$	148,891		$	2,180,167	$	2,297,018
Intersegment revenues		520		795			2,604		4,200
Depreciation and amortization		16,739		16,201			110,488		117,727
Operating income	$	10,157	$	(245	)	$	351,971	$	366,462

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2002 AND 2001

	Regulated Electric				Regulated Steam
	2002		2001		2002		2001

Operating revenues	$	4,455,363	$	5,049,033	$	288,616	$	426,621
Intersegment revenues		7,209		8,787		1,357		1,427
Depreciation and amortization		262,349		298,070		13,719		13,357
Operating income	$	630,551	$	686,792	$	20,428	$	27,973

	Regulated Gas				Total
	2002		2001		2002		2001

Operating revenues	$	763,476	$	1,015,659	$	5,507,455	$	6,491,313
Intersegment revenues		2,155		2,386		10,721		12,600
Depreciation and amortization		50,595		47,827		326,663		359,254
Operating income	$	116,509	$	118,465	$	767,488	$	833,230

Note F - New Financial Accounting Standards

On January 1, 2002, Con Edison of New York adopted SFAS No. 142, "Goodwill and Other Intangible Assets." SFAS No. 142 provides that goodwill (i.e., the excess of cost over fair value of assets of business acquired) and intangible assets with indefinite useful lives shall no longer be amortized, but instead be tested for impairment at least annually. Other intangible assets will continue to be amortized over their finite useful lives. The adoption of SFAS No. 142 had no impact on Con Edison of New York's consolidated financial position or results of operations.

In June 2002, The EITF reached a consensus on EITF Issue No. 02-3, "Accounting for Contracts Involved in Energy Trading and Risk Management Activities," that the revenue resulting from energy trading contracts, whether realized or unrealized and whether financially or physically settled, should be shown net in the income statement. The consensus also expanded disclosure requirements for energy trading activities. The new ruling is effective for the period ending after July 2002 with reclassification of prior period amounts required. The adoption of EITF Issue No. 02-3 had no impact on Con Edison of New York's consolidated financial position, results of operations or liquidity.

SFAS No. 143, "Accounting for Asset Retirement Obligations," which Con Edison of New York is required to adopt on January 1, 2003, requires entities to record the fair value of a liability associated with an asset retirement obligation in the period incurred. When the liability is initially recorded, the entity will capitalize the cost by increasing the carrying amount of the related asset. The liability is increased to its present value each period and the capitalized cost is depreciated over the useful life of the related asset. Upon retirement of the asset, the entity settles the obligation for the amount recorded or incurs a gain or loss. Con Edison of New York has not yet determined the impact of this standard on its consolidated financial position, results of operations or liquidity.

SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets," which Con Edison of New York adopted on January 1, 2002, replaces SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of." SFAS No. 144 requires that all long-lived assets held for sale or meeting other specified criteria be measured at the lower of book value or fair value less cost to sell. SFAS No. 144 also broadens the reporting of discontinued operations. The adoption of SFAS No. 144 had no impact on Con Edison of New York's consolidated financial position, results of operations or liquidity.

SFAS No. 145, "Rescission of FASB Statements No. 4, 44 and 64, Amendment of FASB Statement No. 13, and Technical Corrections," which was issued in April 2002, rescinds SFAS No. 4, "Reporting Gains and Losses from Extinguishment of Debt," and SFAS No. 64, "Extinguishment of Debt Made to Satisfy Sinking-Fund Requirements." SFAS No. 145 is effective January 1, 2003. Con Edison of New York does not expect the adoption of this standard to have a material effect on its consolidated financial position, results of operations or liquidity.

May 2002, had no impact on Con Edison of New York's consolidated financial position, results of operations or liquidity.

SFAS No. 146, "Accounting for Costs Associated with Exit or Disposal Activities," which Con Edison of New York will adopt on January 1, 2003, requires companies to recognize costs associated with exit or disposal activities when they are incurred rather than at the date of a commitment to an exit or disposal plan. SFAS No. 147, "Acquisitions of Certain Financial Institutions," effective October 1, 2002, provides guidance on the accounting for the acquisition of a financial institution. Con Edison of New York does not expect the adoption of these standards to have a material effect on its consolidated financial position, results of operations or liquidity.

Orange and Rockland Utilities, Inc.

CONSOLIDATED BALANCE SHEET
(UNAUDITED)

			As At
			September 30, 2002		December 31, 2001

			(Thousands of Dollars)
ASSETS
UTILITY PLANT, AT ORIGINAL COST
	Electric		$	724,433	$	703,621
	Gas			295,612		292,066
	Common			113,639		112,353

	TOTAL			1,133,684		1,108,040
	Less: accumulated depreciation			400,042		389,234

	Net			733,642		718,806
	Construction work in progress			21,779		27,271

NET UTILITY PLANT				755,421		746,077

NON-UTILITY PLANT
	Non-utility property, less accumulated depreciation of $2,055 and $2,399 in 2002 and 2001 respectively			2,542		2,621

NET PLANT				757,963		748,698

CURRENT ASSETS
	Cash and cash equivalents			20,515		1,785
	Customer accounts receivable, less allowance for uncollectable accounts of $2,000 and $2,625			47,058		44,371
	Other accounts receivable			3,727		5,166
	Accrued utility revenue			16,013		20,655
	Gas in storage, at average cost			19,125		21,227
	Materials and supplies, at average cost			5,676		5,563
	Prepayments			20,692		17,776
	Other current assets			9,464		11,532

TOTAL CURRENT ASSETS				142,270		128,075

DEFERRED CHARGES, REGULATORY ASSETS AND NONCURRENT ASSETS
	Regulatory assets
		Recoverable fuel costs		92,583		87,514
		Deferred pension and other postretirement benefits		45,308		39,599
		Deferred environmental remediation costs		30,776		40,474
		Future federal income tax		37,313		35,266
		Other regulatory assets		32,213		28,808
		Deferred revenue taxes		6,769		6,852
		Hedges on energy trading		—		1,002

	TOTAL REGULATORY ASSETS			244,962		239,515
	Other deferred charges and noncurrent assets			14,379		19,052

TOTAL DEFERRED CHARGES, REGULATORY ASSETS AND NONCURRENT ASSETS				259,341		258,567

TOTAL			$	1,159,574	$	1,135,340

The accompanying notes are an integral part of these financial statements.

Orange and Rockland Utilities, Inc.

CONSOLIDATED BALANCE SHEET
(UNAUDITED)

			As At
			September 30, 2002			December 31, 2001

			(Thousands of Dollars)
CAPITALIZATION AND LIABILITIES
CAPITALIZATION
	Common stock		$	5		$	5
	Additional paid in capital			194,499			194,499
	Retained earnings			169,169			151,792
	Accumulated comprehensive income			(14,887	)		(10,905	)

		TOTAL COMMON SHAREHOLDERS' EQUITY		348,786			335,391

	Long-term debt			300,860			335,771

TOTAL CAPITALIZATION				649,646			671,162

NONCURRENT LIABILITIES
	Pension and benefits reserve			97,558			85,607
	Accrued environmental costs			36,303			38,417
	Other noncurrent liabilities			18,670			18,619

TOTAL NONCURRENT LIABILITIES				152,531			142,643

CURRENT LIABILITIES
	Long term debt due within one year			35,000			-
	Notes payable			-			16,600
	Accounts payable			61,854			52,818
	Accounts payable to affiliated companies			4,693			3,113
	Accrued federal income and other taxes			1,411			3,302
	Customer deposits			10,689			9,248
	Accrued interest			8,447			6,968
	Other current liabilities			3,375			6,878

TOTAL CURRENT LIABILITIES				125,469			98,927

DEFERRED CREDITS AND REGULATORY LIABILITIES
ACCUMULATED DEFERRED FEDERAL INCOME TAX				130,934			125,108
DEFERRED INVESTMENT TAX CREDITS				6,069			6,425
	Regulatory liabilities
		Pension and other benefits		2,583			6,173
		Recoverable energy costs		47,618			45,008
		Competition enhancement fund		10,084			10,149
		Gain on divestiture		4,793			6,246
		Other regulatory liabilities		9,789			8,998

	TOTAL REGULATORY LIABILITIES			74,867			76,574
	Deferred credits
		Hedges on energy trading		64			-
		Other deferred credits		19,994			14,501

	TOTAL DEFERRED CREDITS			20,058			14,501

TOTAL DEFERRED CREDITS AND REGULATORY LIABILITIES				231,928			222,608

TOTAL			$	1,159,574		$	1,135,340

The accompanying notes are an integral part of these financial statements.

Orange and Rockland Utilities, Inc.

CONSOLIDATED INCOME STATEMENT
(UNAUDITED)

		For the Three Months Ended September 30,
		2002			2001

		(Thousands of Dollars)
OPERATING REVENUES
	Electric	$	163,161		$	177,912
	Gas		16,024			17,710
	Non-utility		—			28

TOTAL OPERATING REVENUES			179,185			195,650

OPERATING EXPENSES
	Purchased power		74,937			97,855
	Gas purchased for resale		9,518			10,302
	Other operations		28,676			26,596
	Maintenance		7,668			6,564
	Depreciation and amortization		8,503			8,260
	Taxes, other than income tax		13,930			14,117
	Income taxes		11,671			10,465

TOTAL OPERATING EXPENSES			154,903			174,159

OPERATING INCOME			24,282			21,491

OTHER INCOME (DEDUCTIONS)
	Investment income		417			340
	Other income		(29	)		(54	)
	Other income deductions		(159	)		(183	)
	Income taxes		27			779

TOTAL OTHER INCOME (DEDUCTIONS)			256			882

INCOME BEFORE INTEREST CHARGES			24,538			22,373

	Interest on long-term debt		5,320			5,463
	Other interest		428			483
	Allowance for borrowed funds used during construction		(67	)		(394	)

NET INTEREST CHARGES			5,681			5,552

NET INCOME FOR COMMON STOCK		$	18,857		$	16,821

The accompanying notes are an integral part of these financial statements.

Orange and Rockland Utilities, Inc.

CONSOLIDATED INCOME STATEMENT
(UNAUDITED)

		For the Nine Months Ended September 30,
		2002			2001

		(Thousands of Dollars)
OPERATING REVENUES
	Electric	$	371,526		$	438,497
	Gas		108,293			158,154
	Non-utility		-			62

TOTAL OPERATING REVENUES			479,819			596,713

OPERATING EXPENSES
	Purchased power		168,728			242,825
	Gas purchased for resale		61,533			107,368
	Other operations		84,909			84,681
	Maintenance		19,825			20,176
	Depreciation and amortization		25,454			24,578
	Taxes, other than income tax		39,356			42,382
	Income taxes		24,750			24,635

TOTAL OPERATING EXPENSES			424,555			546,645

OPERATING INCOME			55,264			50,068

OTHER INCOME (DEDUCTIONS)
	Investment income		414			1,549
	Other income		175			124
	Other income deductions		(554	)		(702	)
	Income taxes		416			648

TOTAL OTHER INCOME (DEDUCTIONS)			451			1,619

INCOME BEFORE INTEREST CHARGES			55,715			51,687

	Interest on long-term debt		15,885			16,483
	Other interest		1,644			2,378
	Allowance for borrowed funds used during construction		(191	)		(923	)

NET INTEREST CHARGES			17,338			17,938

NET INCOME FOR COMMON STOCK		$	38,377		$	33,749

The accompanying notes are an integral part of these financial statements.

Orange and Rockland Utilities, Inc.

CONSOLIDATED STATEMENT OF RETAINED EARNINGS
(UNAUDITED)

		As at
		September 30, 2002			December 31, 2001

		(Thousands of Dollars)
BALANCE, START OF PERIOD		$	151,792		$	139,610
	Net income for the period		38,377			40,182

TOTAL			190,169			179,792

DIVIDENDS DECLARED ON CAPITAL STOCK			(21,000	)		(28,000	)

BALANCE, END OF PERIOD		$	169,169		$	151,792

Orange and Rockland Utilities, Inc.

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
(UNAUDITED)

		For the Three Months Ended September 30,
		2002			2001

		(Thousands of Dollars)
NET INCOME FOR COMMON STOCK		$	18,857		$	16,821
OTHER COMPREHENSIVE INCOME/(LOSS), NET OF TAXES
	Investment in marketable equity securities, net of ($359), and ($273) taxes, respectively		(511	)		(387	)
	Unrealized (losses) on derivatives qualified as hedges, net of ($1,837) and ($1,595) taxes, respectively		(2,623	)		(2,248	)
	Less: Reclassification adjustment for (losses) included in net income, net of ($276) and ($270) taxes, respectively		(394	)		(289	)

TOTAL OTHER COMPREHENSIVE INCOME/(LOSS), NET OF TAXES			(2,740	)		(2,346	)

COMPREHENSIVE INCOME		$	16,117		$	14,475

The accompanying notes are an integral part of these financial statements.

Orange and Rockland Utilities, Inc.

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
(UNAUDITED)

			For the Nine Months Ended September 30,
			2002			2001

			(Thousands of Dollars)
NET INCOME FOR COMMON STOCK			$	38,377		$	33,749
OTHER COMPREHENSIVE INCOME/(LOSS), NET OF TAXES
	Investment in marketable equity securities, net of ($603), and ($552) taxes, respectively			(859	)		(576	)
	Minimum pension liability adjustments, net of ($166) and $63 taxes, respectively			(238	)		63
	Unrealized (losses) on derivatives qualified as hedges due to cumulative effect of a
		effect of a change in accounting principle, net of $0 and ($5,709) taxes, respectively		-			(8,107	)
	Unrealized (losses) on derivatives qualified as hedges, net of ($2,849) and ($1,580) taxes, respectively			(4,068	)		(2,227	)
	Less: Reclassification adjustment for (losses) included in net income net of ($828) and ($626) taxes, respectively			(1,182	)		(791	)

TOTAL OTHER COMPREHENSIVE INCOME/(LOSS), NET OF TAXES				(3,983	)		(10,056	)

COMPREHENSIVE INCOME			$	34,394		$	23,693

The accompanying notes are an integral part of these financial statements.

Orange and Rockland Utilities, Inc.

CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)

			For the Nine Months Ended September 30,
			2002			2001

			(Thousands of Dollars)
OPERATING ACTIVITIES
	Net income		$	38,377		$	33,749
	PRINCIPAL NON-CASH CHARGES (CREDITS) TO INCOME
		Depreciation and amortization		25,182			24,341
		Amortization of investment tax credit		(356	)		(354	)
		Federal and state income tax deferred		3,779			(4,980	)
		Other non-cash changes (debits)		2,164			(333	)
	CHANGES IN ASSETS AND LIABILITIES
		Accounts receivable - net, and accrued utility revenue		1,955			4,919
		Materials and supplies, including fuel and gas in storage		1,989			(4,376	)
		Prepayments, other receivables and other current assets		591			3,823
		Deferred recoverable fuel costs		(2,460	)		(14,323	)
		Accounts payable		10,615			(1,680	)
		Refunds to customers		1,441			(1,318	)
		Pension and benefits reserve		11,951			11,586
		Deferred environmental costs		9,697			(6,073	)
		Other deferred credits		5,493			16,105
		Other deferred debits		3,248			(6	)
		Accrued interest		1,479			4,121
		Hedge on energy trading		1,066			(3,004	)
		Other accrued taxes		(1,882	)		7,168
		Accrued environmental costs		(2,114	)		5,691
		Other regulatory assets		(3,404	)		37
		Other current liabilities		(3,503	)		(2,361	)
		Other comprehensive income		(3,983	)		(10,055	)
		Regulatory liabilities		(4,316	)		(10,836	)
		Other long-term debt		—			1,344
		Deferred Pension and OPEB		(5,709	)		1,495
		Other - Assets		898			2,359
		Other - Liabilities		42			(528	)

NET CASH FLOWS FROM OPERATING ACTIVITIES				92,240			56,511

INVESTING ACTIVITIES INCLUDING CONSTRUCTION
		Construction expenditures		(36,351	)		(37,071	)
		Proceeds from disposition of property		441			120

NET CASH FLOWS USED IN INVESTING ACTIVITIES INCLUDING CONSTRUCTION				(35,910	)		(36,951	)

FINANCING ACTIVITIES INCLUDING DIVIDENDS
		Short-term debt arrangements		(16,600	)		(2,970	)
		Dividend to parent		(21,000	)		(21,000	)

NET CASH FLOWS USED IN FINANCING ACTIVITIES
	INCLUDING DIVIDENDS			(37,600	)		(23,970	)

CASH AND TEMPORARY INVESTMENTS
NET CHANGE FOR THE PERIOD				18,730			(4,410	)
BALANCE AT BEGINNING OF PERIOD				1,785			8,483

BALANCE AT END OF PERIOD			$	20,515		$	4,073

The accompanying notes are an integral part of these financial statements.

NOTES TO FINANCIAL STATEMENT (UNAUDITED) - ORANGE & ROCKLAND UTILITIES, INC.

Note A - General

These notes accompany and form an integral part of the interim consolidated financial statements of Orange and Rockland Utilities, Inc. (O&R), a wholly owned subsidiary of Consolidated Edison, Inc. (Con Edison). These financial statements are unaudited but, in the opinion of O&R's management, reflect all adjustments (which include only normally recurring adjustments) necessary for a fair statement of the results for the interim periods presented. These financial statements should be read together with the audited O&R financial statements (including the notes thereto) included in the combined Con Edison, Consolidated Edison Company of New York, Inc. (Con Edison of New York) and O&R's Annual Reports on Form 10-K for the year ended December 31, 2001 (the Form 10-K). Results for interim periods are not necessarily indicative of results for the entire fiscal year.

Note B - Environmental Matters

Hazardous substances such as asbestos, polychlorinated biphenyls (PCBs) and coal tar have been used or generated in the course of operations of O&R and may be present in its facilities and equipment currently or previously owned.

The nature of the environmental remediation costs for the sites at which O&R has been asserted to have liability for remediation under Superfund or similar state statutes, including its manufactured gas sites (O&R's Superfund Sites), include investigation, demolition, removal, storage, replacement, containment and monitoring costs. The liability accrued for O&R's Superfund Sites has been developed on a site-by-site basis without separate accounting for the specific components of the costs. For sites where there are other potentially responsible parties and the company is not managing the site investigation and remediation, the liability accrued represents the company's best estimate of what it will need to pay to settle its obligations with respect to the site. For other sites, the liability accrued represents the company's best estimate of its investigation and remediation costs for the site. In either case, the company makes its best estimate of its undiscounted liability for each site in light of the applicable remediation standards, experience with similar sites, the information it has available to it at the time about the site and site-specific assumptions about such matters as the extent of contamination and remediation and monitoring methods to be used. For some of the sites, the available information includes consultant reports that provide a probabilistic range of potential exposure. The liability accrued for O&R's Superfund Sites is reviewed at least quarterly and adjusted as determined to be necessary.

At September 30, 2002, O&R had accrued $36.3 million as its best estimate of its liability for O&R's Superfund Sites. There will be additional liability relating to these sites and other sites. The amount of

the additional liability is not presently determinable but may be material to O&R's financial position, results of operations or liquidity.

O&R is permitted under current rate agreements to defer for subsequent recovery through rates certain site investigation and remediation costs with respect to hazardous waste. At September 30, 2002, $30.8 million of such costs had been deferred as a regulatory asset.

Suits have been brought in New York State and federal courts against O&R and many other defendants, wherein a large number of plaintiffs sought large amounts of compensatory and punitive damages for deaths and injuries allegedly caused by exposure to asbestos at various premises of O&R. The suits that have been resolved, which are many, have been resolved without any payment by O&R, or for amounts that were not, in the aggregate, material to the company. The amounts specified in all the remaining suits total billions of dollars. However, O&R believes that these amounts are greatly exaggerated, as experienced through the disposition of previous claims. Based on the information and relevant circumstances known to O&R at this time, these suits are not expected to have a material adverse effect on O&R's financial position, results of operations or liquidity.

Workers' compensation administrative proceedings have been commenced, wherein current and former employees claim benefits upon alleged disability from exposure to asbestos. Based on the information and relevant circumstances known to O&R at this time, these claims are not expected to have a material adverse effect on O&R's financial position, results of operations or liquidity. At September 30, 2002, O&R had accrued a $1.6 million provision as its best estimate of its liability for these workers' compensation claims, including those related to asbestos exposure, and deferred a like amount as a regulatory asset.

In May 2000, the New York State Department of Environmental Conservation issued notices of violation to O&R and four other companies that have operated coal-fired electric generating facilities in New York State. The notices allege violations of the Federal Clean Air Act and the New York State Environmental Conservation Law resulting from the alleged failure to install pollution control equipment that would have reduced emissions of certain chemicals deemed potentially hazardous. The notice of violations received by O&R relates to the Lovett Generating Station that it sold in June 1999. O&R is unable to predict whether or not alleged violations will have a material adverse effect on its financial position, results of operations or liquidity.

Note C - Related Party Transactions

Each month O&R is invoiced by Con Edison and its affiliates for the cost of any services rendered to O&R by Con Edison and its affiliates. These services, provided primarily by Con Edison's other regulated subsidiary, Con Edison of New York, include substantially all administrative support operations, such as corporate directorship and associated ministerial duties, accounting, treasury, investor relations, information resources, legal, human resources, fuel supply and energy management services. The cost of these services totaled $10.7 million and $10.4 million for the nine months ended September 30, 2002 and 2001, respectively. In addition, O&R purchased $71.8 million of natural gas and $22.5 million of electricity from Con Edison of New York during the 2002 period and $114.8 million of natural gas from Con Edison of New York during the 2001 period.

O&R provides certain recurring services to Con Edison of New York on a monthly basis, including cash receipts processing and certain administrative services. The cost of these services, which are invoiced to Con Edison of New York, totaled $8.7 million and $8.2 million during the first nine months of 2002 and 2001, respectively.

In February 2002, the FERC authorized Con Edison of New York to lend funds to O&R, for periods of not more than 12 months, in the amounts not to exceed $150 million at any time outstanding, at prevailing market rates. Through September 30, 2002, O&R has not borrowed any funds from Con Edison of New York.

Note D - Derivative Instrument and Hedging Activities

As of January 2001, O&R adopted Statement of Financial Accounting Standards (SFAS) No. 133, "Accounting for Derivative Instruments and Hedging Activities," as amended by SFAS No. 137, "Deferral of the Effective Date of FASB Statement No. 133," and SFAS No. 138, "Accounting for Certain Derivative Instruments and Certain Hedging Activities - an amendment of FASB Statement No. 133" (collectively, SFAS No. 133).

Energy Price Hedging

O&R uses derivative financial instruments to hedge market price fluctuations in related underlying transactions for the physical purchase or sale of electricity (hedges). As of September 30, 2002, the fair value of the derivatives for such use was $0.1 million.

Pursuant to SFAS No. 71, "Accounting for the Effects of Certain Types of Regulation," O&R defers recognition in income of gains and losses on a hedge until the underlying transactions are completed. In accordance with rate provisions that permit the recovery of the cost of purchased power, O&R credits or charges to its customers gains and losses on hedges and related transaction costs. See "Recoverable Energy Costs" in Note A to the company's financial statements included in Item 8 of the Form 10-K. Upon adoption of SFAS No. 133, O&R had no transition adjustments relating to hedges to recognize in other comprehensive income.

Interest Rate Hedging

O&R uses cash flow hedge accounting for its interest rate swap agreement. As of September 30, 2002, the fair value of the O&R interest rate swap was a loss of $19.1 million. In connection with its $55 million promissory note issued to the New York State Energy Research and Development Authority (the Authority) for the net proceeds of the Authority's variable rate Pollution Control Refunding Revenue Bonds, 1994 Series A (the 1994 Bonds), O&R has a swap agreement pursuant to which it pays interest at a fixed rate of 6.09 percent and is paid interest at the same variable rate as is paid on the 1994 Bonds.

Cash flow hedges for interest rate hedging, net of tax, included in accumulated other comprehensive income for the three months ended September 30, 2002 and 2001 were as follows:

	Three Months Ended
	September 30, 2002			September 30, 2001
	(Millions of Dollars)
Unrealized (losses) on derivatives qualified as hedges, net of ($1.8) and $(1.6) taxes	$	(2.6	)	$	(2.2	)
Less: Reclassification adjustment for (losses) included in net income, net of ($0.3) and ($0.2) taxes		(0.4	)		(0.3	)

Unrealized (losses) on derivatives qualified as hedges for the period	$	(2.2	)	$	(1.9	)

Cash flow hedges for interest rate hedging, net of tax, included in accumulated other comprehensive income for the nine months ended September 30, 2002 and 2001 were as follows:

	Nine Months Ended
	September 30, 2002			September 30, 2001
	(Millions of Dollars)
Unrealized (losses) on derivatives qualified as hedges due to cumulative effect of a change in accounting principle, net of $0 and ($5.7) taxes	$	—		$	(8.1	)
Unrealized (losses) on derivatives qualified as hedges, net of ($2.9) and $(1.6) taxes		(4.1	)		(2.2	)
Less: Reclassification adjustment for (losses) included in net income, net of ($0.8) and ($0.6) taxes		(1.2	)		(0.8	)

Unrealized (losses) on derivatives qualified as hedges for the period	$	(2.9	)	$	(9.5	)

As of September 30, 2002, $1.1 million of after-tax losses relating to the swap agreement were expected to be reclassified from accumulated other comprehensive income to income within the next 12 months.

Note E - Financial Information by Business Segment

O&R's business segments were determined based on similarities in economic characteristics, the regulatory environment and management's reporting requirement. O&R's business segments are:

•: Regulated Electric - consists of regulated utility activities relating to the transmission and distribution and sale of electricity in New York, New Jersey and Pennsylvania.
•: Regulated Gas - consists of regulated utility activities relating to the transportation, distribution and sale of natural gas in New York and Pennsylvania.
•: Unregulated Subsidiary - represents the operations of O&R's unregulated subsidiary in a land development business. The company is pursuing the closure of its real estate operations and is in the process of selling off remaining land holdings.

All revenues of O&R's business segments are from customers located in the United States of America. Also, all assets are located in the United States of America and are materially consistent with segment assets as disclosed in the Form 10-K.

Common services shared by the business segments are assigned directly or allocated based on various cost factors, depending on the nature of the service provided.

The financial data for business segments are as follows:

ORANGE AND ROCKLAND UTILITIES, INC.
SEGMENT FINANCIAL INFORMATION
$000'S

	Regulated Electric
	Three Months Ended				Nine Months Ended
	September 30, 2002		September 30, 2001		September 30, 2002		September 30, 2001

Operating revenue	$	163,161	$	177,912	$	371,526	$	438,497
Intersegment revenues		-		-		-		12
Depreciation and amortization		6,472		6,488		19,356		18,674
Operating income	$	26,995	$	22,711	$	47,784	$	42,200

	Regulated Gas
	Three Months Ended						Nine Months Ended
	September 30, 2002			September 30, 2001			September 30, 2002		September 30, 2001

Operating revenue	$	16,024		$	17,710		$	108,293	$	158,154
Intersegment revenues		-			-			-		-
Depreciation and amortization		2,031			1,772			6,098		5,903
Operating income	$	(2,670	)	$	(1,031	)	$	7,757	$	8,468

	Unregulated Subsidiaries
	Three Months Ended						Nine Months Ended
	September 30, 2002			September 30, 2001			September 30, 2002			September 30, 2001

Operating revenue	$	-		$	28		$	-		$	62
Intersegment revenues		-			-			-			-
Depreciation and amortization		-			-			-			1
Operating income	$	(43	)	$	(103	)	$	(277	)	$	(496	)

	Total
	Three Months Ended				Nine Months Ended
	September 30, 2002		September 30, 2001		September 30, 2002		September 30, 2001

Operating revenue	$	179,185	$	195,650	$	479,819	$	596,713
Intersegment revenues		-		-		-		12
Depreciation and amortization		8,503		8,260		25,454		24,578
Operating income	$	24,282	$	21,491	$	55,264	$	50,068

Note F - New Financial Accounting Standards

On January 1, 2002, O&R adopted SFAS No. 142, "Goodwill and Other Intangible Assets." SFAS No. 142 provides that goodwill (i.e., the excess of cost over fair value of the assets of a business acquired) and intangible assets with indefinite useful lives will no longer be amortized, but instead be tested for impairment at least annually. Other intangible assets will continue to be amortized over their finite useful lives. The adoption of SFAS No. 142 had no impact on O&R's consolidated financial position, results of operations or liquidity.

In June 2002, EITF reached a consensus on EITF Issue No. 02-3, "Accounting for Contracts Involved in Energy Trading and Risk Management Activities," that revenue resulting from energy trading contracts, whether realized or unrealized and whether financially or physically settled, should be shown net in the income statement. The consensus also expanded the disclosure requirements for energy trading activities. The new ruling is effective for periods ending after July 2002 with reclassification of prior period amounts required. The adoption of EITF Issue No. 02-3 had no impact on O&R's consolidated financial position, results of operations or liquidity.

SFAS No. 143, "Accounting for Asset Retirement Obligations," which O&R is required to adopt on January 1, 2003, requires entities to record the fair value of a liability associated with an asset retirement obligation in the period in which it is incurred. When the liability is initially recorded, the entity will capitalize the cost by increasing the carrying amount of the related asset. The liability is increased to its present value each period and the capitalized cost is depreciated over the useful life of the related asset. Upon retirement of the asset, the entity settles the obligation for the amount recorded or incurs a gain or loss. O&R has not yet determined the impact of this standard on its consolidated financial position, results of operations, or liquidity.

SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets," which O&R adopted on January 1, 2002, replaces SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of." SFAS No. 144 requires that all long-lived assets held for sale or meeting other specified criteria be measured at the lower of book value or fair value less cost to sell. SFAS No. 144 also broadens the reporting of discontinued operations. The adoption of SFAS No. 144 had no impact on O&R's financial position, results of operations or liquidity.

SFAS No. 145, "Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections," which was issued in April 2002, rescinds SFAS No. 4, "Reporting Gains and Losses from Extinguishment of Debt," and SFAS No. 64, "Extinguishments of Debt Made to Satisfy Sinking-Fund Requirements." SFAS No. 145 is effective January 1, 2003. O&R does not expect the adoption of this standard to have a material effect on its consolidated financial position, results of operations or liquidity.

This Statement also amends SFAS No. 13, "Accounting for Leases," to require sale-leaseback accounting for certain lease modifications that have economic impacts similar to sale-leaseback transactions and amends certain other authoritative accounting pronouncement. These provisions of SFAS No. 145, adopted in May 2002, had no impact on O&R's consolidated financial position, results of operations or liquidity.

SFAS No. 146, "Accounting for Costs Associated with Exit or Disposal Activities," which O&R will adopt on January 1, 2003, requires companies to recognize costs associated with exit or disposal activities when they are incurred rather than at the date of a commitment to an exit or disposal plan. SFAS No. 147, "Acquisitions of Certain Financial Institutions," effective October 1, 2002, provides guidance on the accounting for the acquisition of a financial institution. O&R does not expect the adoption of these standards to have a material effect on its consolidated financial position, results of operations or liquidity.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

CONSOLIDATED EDISON, INC.

Consolidated Edison, Inc. (Con Edison) is a holding company that operates only through its subsidiaries and has no material assets other than the stock of its subsidiaries. Con Edison's subsidiaries include two regulated utilities: Consolidated Edison Company of New York, Inc. (Con Edison of New York) and Orange and Rockland Utilities, Inc. (O&R). Con Edison also has several unregulated subsidiaries, which accounted for 1.7 percent of consolidated net income for the nine months ended September 30, 2002 before the cumulative effect of a change in accounting principle and 7.0 percent of consolidated total assets at September 30, 2002.

The following discussion and analysis, which relates to the interim consolidated financial statements of Con Edison and its subsidiaries (including Con Edison of New York and O&R) included in Part I, Item 1 of this report, should be read in conjunction with Con Edison's Management's Discussion and Analysis of Financial Condition and Results of Operations (Con Edison's Form 10-K MD&A) in Item 7 of the combined Con Edison, Con Edison of New York and O&R Annual Reports on Form 10-K for the year ended December 31, 2001 (File Nos. 1-14514, 1-1217 and 1-4315, the Form 10-K) and Con Edison's Management's Discussion and Analysis of Financial Condition and Results of Operations in Part I, Item 2 of the combined Con Edison, Con Edison of New York and O&R Quarterly Reports on Form 10-Q for the quarterly periods ended March 31, 2002 and June 30, 2002. Reference is also made to the notes to the Con Edison financial statements in Part I, Item 1 of this report, which are incorporated herein by reference.

APPLICATION OF CRITICAL ACCOUNTING POLICIES

Con Edison's financial statements reflect the application of its accounting policies, which conform to accounting principles generally accepted in the United States of America. The company's critical accounting policies include industry-specific accounting applicable to its regulated public utility subsidiaries, and accounting for pensions and other postretirement benefits, contingencies, derivative instruments, goodwill and leases.

The application of certain of these accounting policies requires the company to use estimates. These estimates require the company to make assumptions about matters that are highly uncertain and for which different estimates that could reasonably have been used could have resulted in material differences in its financial statements.

Accounting for Regulated Public Utilities - SFAS No. 71

Con Edison's principal subsidiaries, Con Edison of New York and O&R, are regulated public utilities subject to Statement of Financial Accounting Standards (SFAS) No. 71, "Accounting for the Effects of Certain Types of Regulation," and, in accordance with SFAS No. 71, are subject to the accounting requirements and rate making practices of the Federal Energy Regulatory Commission (FERC) and state public utility regulatory authorities.

SFAS No. 71 specifies the economic effects that result from the cause and effect relationship of costs and revenues in the rate-regulated environment and how these effects are to be accounted for by a regulated enterprise. Revenues intended to cover some costs may be recorded either before or after the costs are incurred. If regulation provides assurance that incurred costs will be recovered in the future, these costs would be recorded as deferred charges or "regulatory assets" under SFAS No. 71. If revenues are recorded for costs that are expected to be incurred in the future, these revenues would be recorded as deferred credits or "regulatory liabilities" under SFAS No. 71.

Con Edison's principal regulatory assets and liabilities are detailed on the company's consolidated balance sheet. The company is receiving or being credited with a return on all of its regulatory assets for which a cash outflow has been made. The company is paying or being charged with a return on all of its regulatory liabilities for which a cash inflow has been received. The company's regulatory assets and liabilities will be recovered from customers, or applied for customer benefit, in accordance with rate provisions approved by the applicable public utility regulatory commission.

Accounting for Pensions and Other Postretirement Benefits

Con Edison provides pensions and other postretirement benefits to substantially all employees and retirees of its utility subsidiaries and certain employees of its unregulated subsidiaries. Effective January 1, 2001, the Consolidated Edison Retirement Plan for Management Employees and the Employees' Retirement Plan of Orange and Rockland Utilities, Inc. were merged into the Consolidated Edison Pension and Benefits Plan, which is treated as a single plan. Con Edison accounts for these plans in accordance with SFAS No. 87, "Employers' Accounting for Pensions" and SFAS No. 106, "Employers' Accounting for Postretirement Benefits other than Pensions." In applying these accounting policies, the company has made critical estimates related to actuarial assumptions, including assumptions of expected returns on plan assets, future compensation and health care cost trends, and appropriate discount rates. See Notes D and E to the Con Edison financial statements included in Item 8 of the Form 10-K for information about these assumptions, actual performance, amortization of investment and other actuarial gains and losses and calculated plan costs for 2001, 2000 and 1999.

Con Edison's pension expense for these periods was negative, resulting in a credit to and increase in net income primarily because of the amortization of previous years' net investment gains. Investment gains and losses on plan assets are fully recognized in expense over a 15-year period (20 percent of the gains and losses for each year begin to amortize in each of the following five years and the amortization period for each 20 percent portion of the gains and losses is ten years).

the company's pension and other postretirement benefit costs, would change net income by approximately $9.0 million in 2003, as compared to 2002. The actual return on plan assets for the first nine months of 2002 was significantly lower than the 9.2 percent expected annual rate of return, reflecting prevailing market conditions. Con Edison is currently reviewing its assumptions for future periods. The company is considering reducing its assumptions regarding the expected return on plan assets and discount rates, which would result in additional pension expense and an increased accumulated benefit obligation (ABO) in 2003. Any resulting changes in expense would affect only Con Edison of New York and not O&R, since under the terms of its current regulatory agreements, O&R would defer as a regulatory asset any difference between expenses recognized under SFAS No. 87 and the amounts reflected in rates for such expenses.

An actuarial valuation of the plans' funded status will be performed as of December 31, 2002. The company currently expects that the fair value of its pension plan assets will continue to exceed its ABO at December 31, 2002. However, if the equity markets deteriorate further during the remainder of 2002, this expectation may not be met. In the event that the fair market value of Con Edison's pension plan assets were less than the plan's ABO, Con Edison would be required, under SFAS No. 87 and SFAS No. 132 "Employers' Disclosures about Pension and Postretirement Benefits," to accrue a liability equal in amount to the difference between the fair value of the plan assets and the ABO, plus its total accrued pension credits, through a charge to other comprehensive income (OCI). The charge to OCI, which would be net of taxes, would not affect the company's net income for common stock.

In addition, Con Edison expects that it will not be required under ERISA to make cash contributions to its pension plan during the remainder of 2002 or 2003.

Accounting for Contingencies

SFAS No. 5, "Accounting for Contingencies," applies to an existing condition, situation, or set of circumstances involving uncertainty as to possible loss that will ultimately be resolved when one or more future events occur or fail to occur. The company's known material contingencies include litigation relating to its October 1999 merger agreement with Northeast Utilities, proceedings relating to outages at the nuclear generating unit the company sold in 2001, workers' compensation claims, and its responsibility for hazardous substances, such as asbestos, polychlorinated biphenyls (PCBs) and coal tar, that have been used or generated in the course of the operations of its subsidiaries. See Notes B, C and D to the Con Edison financial statements included in Part I, Item 1 of this report. In accordance with SFAS No. 5, the company has accrued its best estimate of probable losses relating to these contingencies and no liability has been accrued where the loss is not probable or the amount of the loss cannot be reasonably estimated.

Accounting For Derivative Instruments

Con Edison's subsidiaries use derivative financial instruments to hedge market price fluctuations in related underlying transactions for the physical purchase or sale of electricity or gas and interest rate risk on certain debt securities. See "Financial Market Risks" below and Note G to the Con Edison financial statements included in Part I, Item 1 of this report.

Accounting for Goodwill

Con Edison adopted SFAS No. 142, "Goodwill and Other Intangible Assets" on January 1, 2002. In accordance with this standard, Con Edison ceased amortizing goodwill and will test remaining goodwill balances for impairment at least annually. Con Edison completed initial goodwill impairment tests and recorded a loss of $34.1 million ($20.2 million after tax) as of January 1, 2002, relating to certain generation assets owned by Con Edison Development. See "New Financial Accounting Standards" in Note A to the Con Edison financial statements included in Item 8 of the Form 10-K and Note I to the Con Edison financial statements included in Part I, Item 1 of this report. In determining whether or not its goodwill was impaired, the company was required to make certain assumptions, including those related to future cash flows and discount rates.

Accounting for Leases

Con Edison applies SFAS No. 13, "Accounting for Leases" and other related accounting pronouncements to its leasing transactions. See Note J to the Con Edison financial statements included in Item 8 of the Form 10-K and Note E to the Con Edison financial statements included in Part I, Item 1 of this report.

LIQUIDITY AND CAPITAL RESOURCES

Con Edison's liquidity reflects cash flows from operating, investing and financing activities, as shown on the accompanying consolidated statement of cash flows and discussed below. As a result of these activities, unrestricted cash and temporary cash investments decreased $188.0 million during the first nine months of 2002. In addition, $51.0 million of the restricted cash in an escrow account was used during this period to retire short-term financing related to the company's unregulated electric generating projects.

Cash Flows from Operating Activities

Net cash flows from operating activities during the first nine months of 2002 were $769.8 million, $13.9 million less than the first nine months of 2001. This decrease reflects principally a change in accounts receivable, higher recoverable energy costs and reduced net income, offset in part by increased accounts payable.

The decrease in cash flow from the change in accounts receivable is due primarily to the amount of customer billings and the timing of customer payments.

Con Edison of New York's equivalent number of days of revenue outstanding (ENDRO) was 27.3 days for the 12 months ended September 30, 2002 compared with 28.9 days for the 12 months ended September 30, 2001. The decrease in ENDRO for Con Edison of New York is due to the decreases in receivables under payment agreements and on level billing accounts.

The decrease in cash flow from the change in deferred recoverable energy costs for the nine months ended September 30, 2002 as compared to the nine months ended September 30, 2001 is due primarily to a relatively high recoverable energy cost balance at December 31, 2000, reflecting high energy costs in the proceeding months. The decrease is also due to increase in electric prices and volumes in the period immediately proceeding September 30, 2002, which raised the balance deferred for future recovery as of

that date. See "Recoverable Energy Costs" in Note A to the Con Edison of New York financial statements included in Item 8 of the Form 10-K.

The increase in cash flow from the change in accounts payable for the nine months ended September 30, 2002 as compared to the nine months ended September 30, 2001 is due primarily to a relatively high accounts payable balance that existed at December 31, 2000, reflecting the high fuel and purchased power costs that occurred at year end 2000. In addition, during the 2002 period, fuel and purchased power costs have increased when compared to the year-end 2001 level. The increase is also due to increased hedging activities at the unregulated companies. See discussion of electric power costs in "Results of Operations," below.

For a discussion of the decrease in net income see "Results of Operations," below.

Cash Flows Used in Investing and Financing Activities

Cash flows used in investing activity were $771.8 million higher in the first nine months of 2002, as compared with the 2001 period, due primarily to the receipt of proceeds from generation divestiture in the 2001 period. See "Generation Divestiture" in Note I to Con Edison's financial statements included in Item 8 in the Form 10-K. In addition, utility construction expenditures increased $35.6 million in the first nine months of 2002, compared with the first nine months of 2001, principally to meet load growth on the company's electric distribution system and to effect permanent restoration of portions of the electric, gas and steam systems in lower Manhattan following the World Trade Center attack.

Con Edison's investments in non-utility plant increased $185.8 million during the first nine months of 2002 compared with the first nine months of 2001, principally for unregulated generation projects and fiber-optic network build-out costs.

Net cash flows from financing activities during the first nine months of 2002 increased $209.3 million compared with the first nine months of 2001. The increase is due primarily to an increase in short-term borrowing of $112.1 million and the issuance of $49.8 million of common stock. The increase in short-term borrowings is due primarily to increased financing needs for Con Edison of New York's construction expenditures and increased investments in non-utility plant. During the 2002 period, Con Edison issued 1,207,885 shares of its common stock under its dividend reinvestment and employee stock plans.

In February 2002, Con Edison of New York redeemed at maturity $150 million of 6.6 percent 9-year debentures. In April 2002, Con Edison issued long-term debt for the first time consisting of $325 million of 7.25 percent Public Income Notes (PINES) with a 40 year maturity, callable at par after five years. In June 2002, Con Edison of New York redeemed at maturity $150 million of variable rate 5-year debentures and issued $300 million of non-callable 5.625 percent 10-year debentures.

In October 2002, Con Edison of New York changed the interest rate method applicable to $224.6 million aggregate principal amount of its Facilities Revenue Bonds, Series 2001A from a variable weekly rate mode to a 10-year term mode, callable at par after three years with a 4.70 percent annual interest rate. See "Long-term Debt" in Note B to the financial statements included in Item 8 of the Form 10-K.

In October 2002, Con Edison of New York entered into a swap agreement in connection with these bonds pursuant to which the company pays interest at a variable rate equal to the three-month LIBOR and is paid interest at a fixed rate of 5.375 percent. The swap has a term of 10 years callable at par after three years.

Capital Resources and Requirements

There have been no material changes in the company's capital resources or capital requirements from those reflected in the Form 10-K. See Note E to the Con Edison financial statements included in Part I, Item 1 of this report for a discussion of the accounting for Con Edison Development's Newington Project.

In August 2002, President Bush signed into law an appropriations bill that authorizes funds for which the company is eligible to apply to recover costs it incurred in connection with the World Trade Center attack. For additional information, see "Cash Flows Used in Investing and Financing Activities," above, "Capital Resources" and "Capital Requirements" in Con Edison's Form 10-K MD&A and Note Q to the Con Edison's financial statements included in Item 8 of the Form 10-K.

Con Edison's ratio of earnings to fixed charges (for the periods ended on the date indicated) and common equity ratio (as of the date indicated) were:

		Twelve months ended
	Nine months ended September 30, 2002	September 30, 2002	December 31, 2001

Earnings to fixed charges	3.59	3.38	3.49
Common equity ratio*	48.9	48.9	49.8

* Common shareholders' equity as a percentage of total capitalization.

Con Edison's ratio of earnings to fixed charges decreased for the 12 month period ending September 30, 2002 compared to the 12 month period ending December 31, 2001 primarily as a result of decreased earnings. Excluding the goodwill impairment charge, due to a change in accounting principle, the ratio of earnings to fixed charges for the nine months ended September 30, 2002 would have been 3.65 and for the 12 months ended September 30, 2002 would have been 3.43.

The commercial paper of Con Edison and its utility subsidiaries is rated P-1, A-1 and F-1, respectively, by Moody's Investors Service, Inc. (Moody's), Standard & Poor's Rating Services (S&P) and Fitch Ratings (Fitch). Con Edison's unsecured debt is rated A2, A and A-, respectively, by Moody's, S&P and Fitch. The senior unsecured debt of Con Edison's subsidiaries, Con Edison of New York and O&R, is rated A1, A+ and A+, respectively, by Moody's, S&P and Fitch. These ratings remain unchanged from those reported in the Form 10-K.

Contractual Obligations and Commercial Commitments

At September 30, 2002 there was no material change in the company's contractual obligations and commercial commitments compared to those at December 31, 2001, other than the long-term debt transactions described under "Cash Flows Used in Investing and Financing Activities" above. Reference is made to "Contractual Obligations and Commercial Commitments" in Con Edison's Form 10-K MD&A.

REGULATORY MATTERS

In April 2002, the PSC approved a three-year Con Edison of New York gas rate agreement that reduces retail sales and transportation rates by approximately $25 million, on an annual basis. Reference is made to "Regulatory Matters" in Con Edison's Form 10-K MD&A.

In July 2002, FERC issued a notice of proposed rulemaking on a standard market design for the wholesale electricity industry, with the goal of creating more efficient competitive electric markets. The notice proposes to establish a single open access transmission tariff that would apply to all transmission customers: wholesale, unbundled retail and bundled retail service. Other pricing, monitoring, operational and governance matters are also addressed in the notice, which the company is in the process of reviewing. For information about the company's transmission facilities, see "Con Edison of New York—Electric Supply" in Item 1 of the Form 10-K, "Regulatory Matters—Electric Supply" in Con Edison of New York's 10-K MD&A and Item 2 of the Form 10-K.

In August 2002, O&R's New Jersey utility subsidiary submitted a petition to the New Jersey Board of Public Utilities (NJBPU) requesting recovery under New Jersey's 1999 Electric Discount and Energy Competition Act (EDECA) of $110 million of electric purchased power costs in excess of amounts previously billed to customers, associated interest, and other deferred charges. See "Recoverable Energy Costs" in Note A to the Con Edison financial statements included in Item 8 of the Form 10-K. Recovery of these costs from customers is requested over a four-year period or pursuant to a plan to "securitize" the costs (under which O&R's subsidiary would be reimbursed these costs with the proceeds of a financing that would be repaid over time by its customers). In addition, in October 2002, the O&R subsidiary filed a request with the NJBPU seeking an increase in electric rates of $7.3 million (5.5 percent) annually, to take effect on August 1, 2003, principally to reflect the cost of electric system infrastructure improvements required for service reliability and security.

FINANCIAL MARKET RISKS

Con Edison's primary financial market risks are interest rate risk, commodity price risk, and credit risk.

Interest Rate Risk

The interest rate risk relates primarily to variable rate debt and to new debt financing needed to fund capital requirements, including utility construction expenditures and maturing debt securities. Con Edison and its subsidiaries manage interest rate risk through the issuance of mostly fixed-rate debt with varying maturities and through opportunistic refinancing of debt. The company estimates that, as of September 30, 2002, a 10 percent variation in interest rates applicable to its variable rate debt of

approximately $1.0 billion, would result in a change in annual interest expense of approximately $1.8 million.

In addition, Con Edison and its subsidiaries, from time to time, enter into derivative financial instruments to hedge interest rate risk on certain debt securities. See "Interest Rate Hedging" in Note F to the Con Edison financial statements included in Part I, Item 1 of this report.

Commodity Price Risk

Con Edison's commodity price risk relates primarily to the purchase and sale of electricity, gas and related derivative instruments. The regulated and unregulated subsidiaries have risk management strategies to mitigate their related exposures. See "Energy Price Hedging" in Note F to the Con Edison financial statements included in Part I, Item 1 of this report. Also, see Item 2 in Con Edison's Form 10-K for a discussion of the Company's generating capacity.

In general, the rates the utility subsidiaries charge customers for electric, gas and steam service fluctuate with the cost of purchased power, gas purchased for resale and fuel used in the generation of steam and electricity, including gains or losses on certain derivative instruments used to hedge energy purchases and related transaction costs. See "Recoverable Energy Costs" in Note A to the Con Edison financial statements included in Item 8 of the Form 10-K. Con Edison estimates that, as of September 30, 2002, a 10 percent change in market prices would result in a change in fair value of approximately $11.8 million for the derivative instruments used by its utility subsidiaries to hedge purchases of electricity and gas. The company 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.

Con Edison's unregulated subsidiaries use a value-at-risk model to assess the market risk of their electricity and gas commodity fixed price purchase and sales commitments, physical forward contracts, and commodity derivative instruments. Value-at-risk represents the potential change in the fair value of instruments or portfolios due to changes in market factors, for a specified time period and confidence level. The unregulated subsidiaries estimate value-at-risk across their electricity and natural gas commodity businesses using a delta-normal variance/covariance model with a 95 percent confidence level. Since the value-at-risk calculation involves complex calculation methodologies, estimates and assumptions that are based on past experience, it is not necessarily indicative of future results. The calculated value-at-risk with respect to commodity price exposure associated with contractual arrangements of the unregulated subsidiaries, assuming a one-day holding period, was approximately $1.7 million as of September 30, 2002. The average and high values-at-risk for the nine months ended September 30, 2002 were approximately $1.4 million and $3.1 million respectively.

Credit Risk

Con Edison is exposed to credit risk related to over-the-counter transactions entered into primarily for the various energy supply and hedging activities for our regulated and unregulated subsidiaries. Credit risk is the loss that may result from a counterparty's nonperformance. Con Edison uses credit policies to manage its credit risk, including an established credit approval process, monitoring of counterparty

limits, master netting agreements, and credit mitigation measures such as margin, collateral, or prepayment arrangements. Con Edison measures credit risk exposure as the replacement cost for open energy commodity and derivative positions plus amounts owed from counterparties for settled transactions. The replacement cost of open positions represents unrealized gains, net of any unrealized losses where the company has a legally enforceable right of setoff.

Con Edison's unregulated energy subsidiaries had $94.8 million of credit exposure, net of collateral, at September 30, 2002, of which $72.7 million is with investment grade counterparties and $18.0 million is with the New York Mercantile Exchange or independent system operators.

Energy Trading Activities Accounted for at Fair Value

Unregulated subsidiaries of Con Edison engage in energy trading activities that are accounted for at fair value pursuant to Emerging Issues Task Force No. 98-10, "Accounting for Contracts Involved in Energy Trading and Risk Management Activities." See Note G and I to the Con Edison financial statements included in Part 1, Item 1 of this report and Note O to the Con Edison financial statements included in Item 8 of the Form 10-K. Con Edison recognized in income unrealized mark-to-market pre-tax net losses of $3.1 million and $4.2 million for the third quarters of 2002 and 2001, respectively, relating to these activities. For the nine months ended September 30, 2002 and 2001, Con Edison recognized in income unrealized mark-to-market pre-tax net gains of $0.7 million and $5.0 million, respectively, relating to these activities. The change in fair value of energy trading net assets for the three months and nine months ended September 30, 2002 were as follows:

		Three Months Ended September 30, 2002			Nine Months Ended September 30, 2002

		(Millions of dollars)
Fair value of net assets outstanding - beginning of period		$	15.0		$	11.2
Change in fair value during the period:
	Unrealized gain at inception		0.0			6.1
	Changes in fair value prior to settlement		5.1			6.3
	Fair value realized at settlement of contracts		(8.2	)		(11.7	)

Total change in fair value during the period			(3.1	)		0.7

Fair value of net assets outstanding — end of period		$	11.9		$	11.9

As of September 30, 2002, the sources of fair value of the energy trading net assets were as follows:

	Fair Value of Net Assets at Period-End (Millions of Dollars)
	Maturity less than 1 year			Maturity 1 - 3 years			Maturity 4 - 5 years		Maturity in excess of 5 years
											Total Fair Value
Source of Fair Value											Total Fair Value

Prices provided by external sources	$	10.9		$	(0.6	)	$	—	$	—	$	10.3
Prices based on models and other valuation methods		(0.2	)		0.3			0.7		0.8		1.6

Total	$	10.7		$	(0.3	)	$	0.7	$	0.8	$	11.9

"Prices provided by external sources" represents the fair value of exchange-traded futures and options and the fair value of positions for which price quotations are available through or derived from brokers or other market sources.

"Prices based on models and other valuation methods" represents the fair value of positions calculated using internal models when directly and indirectly quoted external prices or prices derived from external sources are not available. Internal models incorporate the use of options pricing and estimates of the present value of cash flows based upon underlying contractual terms. The models reflect management's best estimates, taking into account observable market prices, estimated market prices in the absence of quoted market prices, the risk-free market discount rate, volatility factors, estimated correlation of energy commodity prices and contractual volumes. Counterparty specific credit quality, market price uncertainty and other risks are also factored into the models.

ENVIRONMENTAL MATTERS

For information concerning potential liabilities of Con Edison arising from laws and regulations protecting the environment, including the Federal Comprehensive Environmental Response, Compensation and Liability Act of 1980 (Superfund), see Note B to the Con Edison financial statements included in Part I, Item 1 of this report.

RESULTS OF OPERATIONS

Third Quarter of 2002 Compared with Third Quarter of 2001

Con Edison's net income for common stock for the third quarter of 2002 was $283.7 million or $1.34 a share (based upon an average of 213.2 million common shares outstanding) compared with $277.3 million or $1.31 a share (based upon an average of 212.2 million common shares outstanding) for the third quarter of 2001. The company's net income in the 2002 period reflects the effects of increased electric sales and deliveries due to the hot summer weather, increased earnings from the unregulated subsidiaries and reduced expenses at the parent company due to the cessation of goodwill amortization, offset in part by a charge for electric excess earnings of $20.0 million in accordance with the Con Edison of New York's 2000 Electric Rate Agreement.

Earnings for the quarters ended September 30, 2002 and 2001 were as follows:

	2002		2001

	(Millions of Dollars)
Con Edison of New York	$	258.7	$	269.0
O&R		18.9		16.8
Unregulated subsidiaries		4.3		(2.1	)
Other*		1.8		(6.4	)

Con Edison	$	283.7	$	277.3

*: Includes parent company expenses and goodwill amortization for the 2001 period.

A comparison of the results of operations of Con Edison for the third quarter of 2002 with those of the third quarter of 2001 follows:

THREE MONTHS ENDED SEPTEMBER 30, 2002 COMPARED WITH
THREE MONTHS ENDED SEPTEMBER 30, 2001

	Increases (Decreases) Amount			Increases (Decreases) Percent

	(Millions of Dollars)
Operating revenues	$	(88.0	)	(3.4	)%
Purchased power - electric and steam		(8.1	)	(0.8	)
Fuel - electric and steam		(16.4	)	(16.4	)
Gas purchased for resale		(12.3	)	(14.2	)
Operating revenues less purchased power, fuel and gas purchased for resale (net revenues)		(51.2	)	(3.7	)
Other operations and maintenance		(36.8	)	(10.2	)
Depreciation and amortization		(6.8	)	(5.1	)
Taxes, other than income tax		(12.4	)	(4.0	)
Income tax		5.1		2.9
Operating income		(0.3	)	(0.1	)
Other income less deductions and related federal income tax		7.3		Large
Net interest charges		1.2		1.1
Preferred stock dividends		(0.6	)	(16.7	)
Net income for common stock	$	6.4		2.3	%

A discussion of Con Edison's operating revenues and operating income by business segment follows. Con Edison's principal business segments are the electric, gas and steam utility businesses of its regulated subsidiaries and the businesses of its unregulated subsidiaries. For additional information about the segments, see Note H to the Con Edison financial statements included in Part I, Item 1 of this report.

Electric

Con Edison's electric operating revenues in the third quarter of 2002 decreased $120.3 million compared with the third quarter of 2001. The decrease reflects net revenue reductions of approximately $57.6 million related to the sale of Con Edison of New York's nuclear generating unit in September 2001 and lower fuel and purchased power costs of $55.9 million (discussed below). The decrease also reflects the completion on March 31, 2002 of amortization of a previously deferred gain on the sale of divested plants, a New York Power Authority (NYPA) revenue increase ($21.7 million in total) and a charge for electric excess earnings of $20.0 million in September 2002 in accordance with the 2000 Electric Rate Agreement. These items are offset, in part, by an increase in net electric sales and deliveries of $22.3 million in the 2002 period due to the impact of the hot summer weather, offset in part by the impact of the softer economy. See "Recoverable Energy Costs" and "Rate and Restructuring Agreements" in Notes A and I to the Con Edison financial statements included in Item 8 of the Form 10-K.

Electricity delivery volumes for Con Edison's utility subsidiaries increased 5.0 percent in the third quarter of 2002 compared with the third quarter of 2001. After adjusting for variations, principally weather and billing days in each period, electricity delivery volumes for Con Edison of New York and O&R increased 1.1 percent and 7.7 percent, respectively, in the third quarter of 2002. Weather-adjusted

deliveries represent an estimate of the deliveries that would have been made if historical average weather conditions had prevailed.

Con Edison's electric purchased power costs decreased $35.4 million in the third quarter of 2002 compared with the third quarter of 2001, due to a decrease in the unit price of purchased power and an increase in volumes of electricity purchased from other suppliers by participants in the company's Retail Choice programs, offset in part by the increased purchased volumes resulting from the sale of Con Edison of New York's nuclear generating unit in September 2001. Fuel costs decreased $20.4 million, reflecting decreased generation at company-owned power plants, offset in part by an increase in the unit price of fuel. In general, Con Edison's utility subsidiaries recover prudently incurred fuel and purchased power costs pursuant to rate provisions approved by the applicable state public utility commissions. See "Recoverable Energy Costs" in Note A to the Con Edison financial statements included in Item 8 of the Form 10-K.

Con Edison's electric operating income decreased $25.1 million in the third quarter of 2002 compared with the third quarter of 2001. The principal component of the decrease was a decrease in net revenues (operating revenues less fuel and purchased power costs) of $64.4 million. The decrease in net revenues reflects the aforementioned completion of the amortization of the gain on divested plants, NYPA revenue increase, sale of the nuclear generating unit and an electric excess earnings charge in September 2002, offset in part by an increase in net deliveries in the 2002 period due to the impact of the hot summer weather offset by the impact of the soft economy. The decrease in net revenues was offset in part by reduced other operations and maintenance expenses of $23.6 million and decreased depreciation expense of $7.9 million, resulting primarily from the nuclear generating unit sale.

Gas

Con Edison's gas operating revenues decreased $10.6 million and gas operating income increased $8.8 million in the third quarter of 2002 compared with the third quarter of 2001. The lower revenues reflect reduced sales and transportation to gas customers, resulting primarily from revenue reductions implemented in accordance with the gas rate agreement approved by the PSC in April 2002. The increase in operating income reflects reduced property tax expenses of $10.0 million and reduced operations and maintenance expenses of $6.0 million, offset in part by a decrease in net revenues (operating revenues less gas purchased for resale) of $1.3 million.

Gas sales and transportation volumes for firm customers for Con Edison's utility subsidiaries decreased 2.8 percent in the third quarter of 2002 compared with the third quarter of 2001. After adjusting for variations, principally billing days in each period, firm gas sales and transportation volumes in the 2002 period decreased 2.5 percent for Con Edison of New York and decreased 4.3 percent for O&R.

Steam

Form 10-K. The increase in operating income reflects an increase in net revenues (operating revenues less fuel and purchased power costs) of $1.1 million and reduced operations and maintenance expenses of $5.9 million, offset in part by an increase in income taxes of $0.4 million.

Steam sales volume decreased 0.8 percent in the third quarter of 2002 compared with the 2001 period, primarily as a result of the soft economy, offset, in part, by increased sales due to the hot summer weather, as compared to the 2001 period. After adjusting for variations, principally weather and billing days in each period, steam sales volume decreased 5.4 percent.

Unregulated Businesses

Earnings for the unregulated subsidiaries increased $6.4 million in the third quarter of 2002 compared with the third quarter of 2001. The increase is due principally to the capitalization of previously expensed project development costs on generation assets ($4.2 million after tax) and higher electric retail sales volumes.

Other Income

Investment income decreased $1.9 million in the third quarter of 2002 compared to the third quarter of 2001 principally due to reduced interest income earned on short-term cash investments in the 2002 period as compared to the 2001 period. For the 2001 period, Con Edison of New York had more cash on hand than the 2002 period, due primarily to the sale of its nuclear generating unit. Allowance for equity funds used during construction increased $1.7 million in the third quarter of 2002 compared to the third quarter of 2001 as a result of the East River Re-Powering Project. Other income deductions decreased $3.1 million principally due to reduced litigation expenses in the 2002 period as compared to the 2001 period.

Nine Months Ended September 30, 2002 Compared With Nine Months Ended September 30, 2001

Con Edison's net income for common stock for the nine months ended September 30, 2002 was $527.7 million or $2.48 a share (based upon an average of 212.8 million common shares outstanding) compared with $557.1 million or $2.63 a share (based upon an average of 212.1 million common shares outstanding) for the nine months ended September 30, 2001. Excluding the impact of a cumulative effect of a change in accounting principle, earnings for the nine months ended September 30, 2002 would have been $547.9 or $2.58 a share. The company's net income in the 2002 period reflects the impact of the mild winter weather and soft economy, offset in part by the hot summer weather, reduced operations and maintenance expenses, increased earnings for the unregulated subsidiaries and reduced expenses for the parent company due to the cessation of goodwill amortization.

Earnings for the nine months ended September 30, 2002 and 2001 were as follows:

	2002			2001

	(Millions of Dollars)
Con Edison of New York	$	506.5		$	543.7
O&R		38.4			33.7
Unregulated subsidiaries		9.3			(4.4	)
Other*		(6.3	)		(15.9	)
Con Edison excluding cumulative effect of change in accounting principle	$	547.9		$	557.1
Cumulative effect of change in accounting principle	$	20.2			-
Con Edison including cumulative effect of change in accounting principle	$	527.7		$	557.1

*: Includes parent company expenses and goodwill amortization for the 2001 period.

A comparison of the results of operations of Con Edison for the first nine months of 2002 with those of first nine months of 2001 follows:

	Increases (Decreases) Amount			Increases (Decreases) Percent

	(Millions of dollars)
Operating revenues	$	(1,076.8	)	(14.4	)%
Purchased power – electric and steam		(326.5	)	(11.9	)
Fuel – electric and steam		(146.4	)	(42.9	)
Gas purchased for resale		(298.1	)	(41.2	)
Operating revenues less purchased power, fuel and gas purchased for resale (net revenues)		(305.8	)	(8.3	)
Other operations and maintenance		(156.3	)	(13.6	)
Depreciation and amortization		(36.1	)	(8.9	)
Taxes, other than income tax		(40.4	)	(4.6	)
Income tax		(28.2	)	(7.4	)
Operating income		(44.8	)	(5.0	)
Other income less deductions and related federal income tax		32.4		Large
Net interest charges		(2.6	)	(0.8	)
Preferred stock dividends		(0.6	)	(5.6	)
Cumulative effect of change in accounting principle		20.2		100
Net income for common stock	$	(29.4	)	(5.3	)%

Electric

Con Edison's electric operating revenues in the nine months ended September 30, 2002 decreased $659.8 million compared with the nine months ended September 30, 2001. The decrease reflects lower fuel and purchased power costs of $378.1 million (discussed below). The decrease also reflects the completion on March 31, 2002, of amortizations of a previously deferred gain on the sale of divested plants and a NYPA revenue increase ($21.7 million), a charge for electric excess earnings of $20.0 million in September 2002, and a reserve related to the sale of Con Edison of New York's nuclear generating unit ($16.1 million), along with the amortization of the loss ($25.9 million) related to the sale of the

company's nuclear generating unit. The balance of the decrease represents rate reductions and amortizations in accordance with our rate agreements. See "Recoverable Energy Costs" and "Rate and Restructuring Agreements" in Note A to the Con Edison of New York financial statements included in Item 8 of the Form 10-K.

Electricity delivery volumes for Con Edison's utility subsidiaries increased 1.4 percent in the nine months ended September 30, 2002 compared with the nine months ended September 30, 2001. After adjusting for variations, principally weather and billing days in each period, electricity delivery volumes for Con Edison of New York and O&R increased 0.3 percent and 5.6 percent, respectively, in the 2002 period.

Electric purchased power costs decreased $323.7 million in the nine months ended September 30, 2002 compared with the nine months ended September 30, 2001, due to a decrease in the price of purchased power and an increase in volumes of electricity purchased from other suppliers by participants in the company's Retail Choice programs, offset in part by the company's increased purchased volumes resulting from Con Edison of New York's sale of its nuclear generating unit in September 2001. Fuel costs decreased $54.4 million as a result of decreased generation at company-owned plants, offset in part by an increase in the unit price of fuel. In general, Con Edison's utility subsidiaries recover prudently incurred fuel and purchased power costs pursuant to rate provisions approved by the applicable state public utility commission. See "Recoverable Energy Costs" in Note A to the Con Edison financial statements included in Item 8 of the Form 10-K.

Con Edison's electric operating income decreased $50.7 million in the nine months ended September 30, 2002 compared with the nine months ended September 30, 2001. The principal component of the decrease was lower net revenues (operating revenues less fuel and purchased power costs) of $282.5 million. The decrease in net revenues reflects the aforementioned completion of the amortization of the gain on divested plants, NYPA revenue increase, sale of the nuclear generating unit, an electric excess earnings charge, a reserve related to the sale of Con Edison of New York's nuclear generating unit and the amortization of the loss related to the sale of the nuclear generating unit. The decrease in net revenues is offset in part by reduced other operations and maintenance expenses ($139.5 million), lower depreciation expense ($35.0 million) and lower property taxes ($4.8 million) resulting primarily from the sale in September 2001 of the company's nuclear generating unit. The decrease also reflects lower revenue taxes of $27.3 million.

Gas

Con Edison's gas operating revenues decreased $301.6 million, while the cost of purchased gas decreased by $276.2 million in the nine months ended September 30, 2002 compared with the nine months ended September 30, 2001. The lower revenues reflect reduced sales and transportation to gas customers as discussed below. Gas operating income decreased $2.7 million in the nine months ended September 30, 2002, reflecting a $25.4 million decrease in net revenues (operating revenues less gas purchased for resale), and increased property tax expense ($5.5 million), offset in part by reduced operations and maintenance expenses ($14.8 million), and reduced revenue taxes ($9.6 million).

Gas sales and transportation volumes for firm customers for Con Edison's utility subsidiaries decreased 11.7 percent in the nine months ended September 30, 2002 compared with the nine months ended September 30, 2001, reflecting primarily the mild winter weather and an increase in volumes of gas purchased from other suppliers by participants in the company's Retail Choice programs. After adjusting for variations, principally weather and billing days in each period, firm gas sales and transportation volumes for Con Edison of New York and O&R decreased 0.4 percent and 7.8 percent, respectively, in the 2002 period.

A weather-normalization provision that applies to the gas business of Con Edison's utility subsidiaries moderates, but does not eliminate, the effect of weather-related changes on gas operating income.

Steam

Con Edison of New York's steam operating revenues decreased $138.0 million and steam operating income decreased $7.5 million for the nine months ended September 30, 2002 compared with the nine months ended September 30, 2001. The lower revenues reflect reduced sales volumes and lower fuel and purchased steam power costs. See "Recoverable Energy Costs" in Note A to the Con Edison of New York financial statements included in Item 8 of the Form 10-K. The decrease in operating income reflects primarily a decrease in net revenues (operating revenues less fuel and purchased power costs) of $31.0 million, offset in part by reduced operations and maintenance expenses of $8.8 million and lower income taxes of $16.1 million.

Steam sales volume decreased 13.4 percent in the nine months ended September 30, 2002 compared with the nine months ended September 30, 2001, reflecting primarily the mild winter weather and soft economy. After adjusting for variations, principally weather and billing days in each period, steam sales volume decreased 4.6 percent.

Unregulated Businesses

Earnings for the unregulated subsidiaries, before the cumulative effect of a change in accounting principle for the goodwill impairment charge, increased $13.8 million in the nine months ended September 30, 2002, compared with the nine months ended September 30, 2001. The increase is due principally to the capitalization of previously expensed project development costs on generation assets ($4.2 million after tax), higher electric retail sales volumes, higher retail gross margins and unrealized mark-to-market gains discussed below in Other Income, offset in part by the write-down of an unregulated subsidiary's investment in Neon Communications, Inc. (NEON) of $5.2 million after tax. Earnings for the nine months ended September 30, 2002 decreased $6.4 million compared with the 2001 period after the cumulative effect of a change in accounting principle. The change in accounting principle reflected a $20.2 million after tax goodwill impairment charge associated with certain generating assets owned by Con Edison Development.

Other Income

Investment income decreased $3.0 million in the nine months ended September 30, 2002 compared to the nine months ended September 30, 2001 due principally to reduced interest income earned on short-term cash investments in the 2002 period as compared to the 2001 period. For the 2001 period, Con Edison of New York had more cash on hand than the 2002 period, due primarily to the sale of its

nuclear generating unit. Allowance for equity funds used during construction increased $7.3 million in the nine months ended September 30, 2002 compared to the nine months ended September 30, 2001 as a result of the East River Re-Powering Project. Other income increased $15.7 million due principally to unrealized mark-to-market gains on commodity purchase and sale transactions of $4.8 million for Con Edison Solutions, compared to an unrealized loss of $10.3 million for Con Edison Solutions for the nine months ended September 30, 2001. Other income deductions increased $0.8 million due principally to the write-down of an unregulated subsidiary's investment in NEON, offset in part by reduced litigation expenses. Income tax expense decreased $13.1 million due primarily to the recognition of tax benefits relating to the September 2001 sale of Con Edison of New York's nuclear generating unit and the write-down of the NEON investment.

Net Interest Charges

Net interest charges decreased $2.6 million in the nine months ended September 30, 2002 compared to the 2001 period, reflecting principally decreased interest expense on long-term debt of $13.8 million for the regulated utilities, offset in part by increased interest expense for the parent company of $11.5 million.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

CONSOLIDATED EDISON COMPANY OF NEW YORK

Consolidated Edison Company of New York, Inc. (Con Edison of New York) is a regulated utility that provides electric service to over 3.1 million customers and gas service to over 1.1 million customers in New York City and Westchester County. It also provides steam service in parts of Manhattan. All of the common stock of Con Edison of New York is owned by Consolidated Edison, Inc. (Con Edison).

This discussion and analysis should be read in conjunction with Con Edison of New York's Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) in Item 7 of the combined Con Edison, Con Edison of New York and Orange and Rockland Utilities, Inc. (O&R) Annual Reports on Form 10-K for the year ended December 31, 2001 (File Nos. 1-14514, 1-1217 and 1-4315, the Form 10-K) and Con Edison of New York's MD&A in Part I, Item 2 of the combined Con Edison, Con Edison of New York and O&R Quarterly Reports on Form 10-Q for the quarterly periods ended March 31, 2002 and June 30, 2002. Reference is also made to the notes to the Con Edison of New York financial statements in Part I, Item 1 of this report, which are incorporated herein by reference.

APPLICATION OF CRITICAL ACCOUNTING POLICIES

Con Edison of New York's financial statements reflect the application of its accounting policies, which conform to accounting principles generally accepted in the United States of America. The company's critical accounting policies include industry-specific accounting applicable to regulated public utilities and accounting for pensions and other postretirement benefits and contingencies.

Accounting for Regulated Public Utilities—SFAS No. 71

Con Edison of New York is a regulated public utility subject to Statement of Financial Accounting Standards (SFAS) No. 71, "Accounting for the Effects of Certain Types of Regulation," and, in accordance with SFAS No. 71, are subject to the accounting requirements and rate making practices of the Federal Energy Regulatory Commission (FERC) and the New York State Public Service Commission (PSC).

Con Edison of New York's principal regulatory assets and liabilities are detailed on the company's consolidated balance sheet. The company is receiving or being credited with a return on all of its regulatory assets for which a cash outflow has been made. The company is paying or being charged with a return on all of its regulatory liabilities for which a cash inflow has been received. The company's regulatory assets and liabilities will be recovered from customers, or applied for customer benefit, in accordance with rate provisions approved by the PSC.

Accounting for Pensions and Other Postretirement Benefits

Con Edison of New York provides pension and other postretirement benefits to substantially all employees and retirees. The company accounts for these plans in accordance with SFAS No. 87, "Employers' Accounting for Pensions" and SFAS No. 106, "Employers' Accounting for Postretirement Benefits other than Pensions." In applying these accounting policies, the company has made critical estimates related to actuarial assumptions, including assumptions of expected returns on plan assets, future compensation and health care cost trends, and appropriate discount rates. See Notes D and E to the Con Edison of New York financial statements included in Item 8 of the Form 10-K for information about these assumptions, actual performance, amortization of investment and other actuarial gains and losses and calculated plan costs for 2001, 2000 and 1999.

Con Edison of New York's pension expense for these periods was negative, resulting in a credit to and increase in net income, primarily because of the amortization of previous years' net investment gains. Investment gains and losses on plan assets are fully recognized in expense over a 15-year period. (20 percent of the gains and losses for each year begin to amortize in each of the following five years and the amortization period for each 20 percent portion of the gains and losses is ten years).

Expense or credit for actual pension and other postretirement benefits in future periods will depend upon actual performance and the assumptions the company makes for future periods. For example, the company estimates that a 5.0 percentage point variation in the actual annual return on pension and other postretirement benefit plan assets for 2002 would change net income by approximately $6.0 million in 2003 (the first year of the 15-year recognition period) as compared to 2002. In addition, the company estimates that a 0.25 percentage point change in the expected annual asset return for the plans, as compared with the 9.2 percent expected return on plan assets assumed for purposes of calculating the company's pension and other postretirement benefit costs, would change net income by approximately $9.0 million in 2003, as compared to 2002. The actual return on plan assets for the first nine months of 2002 was significantly lower than the 9.2 percent expected annual rate of return, reflecting prevailing market conditions. Con Edison of New York is currently reviewing its assumptions for future periods. The company is considering reducing its assumptions regarding the expected return on plan assets and discount rates, which would result in additional pension expense and an increased accumulated benefit obligation (ABO) in 2003.

An actuarial valuation of the plans' funded status will be performed as of December 31, 2002. The company expects that the fair value of its pension plan assets will continue to exceed its ABO at December 31, 2002. However, if the equity markets deteriorate further during the remainder of 2002, this expectation may not be met. In the event that the fair market value of Con Edison's pension plan

assets, both Con Edison of New York and O&R, are less than the combined plan's ABO, Con Edison of New York would be required, under SFAS No. 87 and SFAS No. 132 "Employers' Disclosures about Pension and Postretirement Benefits," to accrue a liability equal in amount to the difference between the fair value of the plan assets and the ABO, plus its total accrued pension credits through a charge to other comprehensive income (OCI). The charge to OCI, which would be net of taxes, would not affect Con Edison of New York's net income.

In addition, Con Edison of New York expects that it will not be required under ERISA to make cash contributions to its pension plan during the remainder of 2002 or 2003.

Accounting for Contingencies

SFAS No. 5, "Accounting for Contingencies," applies to an existing condition, situation, or set of circumstances involving uncertainty as to possible loss that will ultimately be resolved when one or more future events occur or fail to occur. The company's known material contingencies include proceedings relating to outages at the nuclear generating unit the company sold in 2001, workers' compensation claims, and its responsibility for hazardous substances, such as asbestos, polychlorinated biphenyls (PCBs), and coal tar, that have been used or generated in the course of its operations. See Notes B and C to the Con Edison of New York financial statements included in Part I, Item 1 of this report. In accordance with SFAS No. 5, the company has accrued its best estimate of its probable losses relating to these contingencies and no liability has been accrued where the loss is not probable or the amount of the loss cannot be reasonably estimated.

LIQUIDITY AND CAPITAL RESOURCES

Con Edison of New York's liquidity reflects cash flows from operating, investing and financing activities, as shown on the accompanying consolidated statement of cash flows and discussed below. As a result of these activities, cash and temporary cash investments decreased $222.0 million during the first nine months of 2002.

Cash Flows from Operating Activities

Net cash flows from operating activities during the first nine months of 2002 were $568.6 million, $209.3 million less than the first nine months of 2001. This decrease reflects principally a change in accounts receivable, higher recoverable energy costs and reduced net income offset in part, by increased accounts payable.

The decrease in cash flow from the change in accounts receivable is due primarily to the amount of customer billings and the timing of customer payments.

The company's equivalent number of days of revenue outstanding (ENDRO) was 27.3 days for the 12 months ended September 30, 2002 compared with 28.9 days for the 12 months ended September 30, 2001. The decrease in ENDRO is due to the decreases in receivables under payment agreements and level billing accounts.

energy costs in the proceeding months. The decrease is also due to increase in electric prices and volumes in the period immediately proceeding September 30, 2002, which raised the balance deferred for future recovery as of that date. See "Recoverable Energy Costs" in Note A to the Con Edison of New York financial statements included in Item 8 of the Form 10-K.

The increase in cash flow from the change in accounts payable for the nine months ended September 30, 2002 as compared to the nine months ended September 30, 2001 is due primarily to a relatively high accounts payable balance that existed at December 31, 2000, reflecting the high fuel and purchased power costs that occurred at year end 2000. During the 2002 period, fuel and purchased power costs have increased when compared to the year-end 2001 level. See discussion of electric power costs in "Results of Operations," below.

For a discussion of the decrease in net income see "Results of Operations," below.

Cash Flows Used in Investing and Financing Activities

Cash flows used in investing activity were $584.7 million higher in the first nine months of 2002, as compared with the 2001 period, due primarily to the receipt of proceeds from generation divestiture in the 2001 period. See "Generation Divestiture" in Note I to Con Edison's financial statements included in item 8 in the Form 10-K. In addition, utility construction expenditures increased $33.6 million in the first nine months of 2002 compared with the first nine months of 2001, principally to meet load growth on the company's electric distribution system and to effect permanent restoration of portions of the electric, gas and steam systems in lower Manhattan following the World Trade Center attack.

Net cash flows used in financing activities during the first nine months of 2002 decreased $224.3 million compared with the first nine months of 2001, reflecting principally higher financing needs for construction expenditures at Con Edison of New York, and reduced dividend payments to the parent versus the earlier period. In September 2001 the company used the proceeds from the sale of its nuclear plant to repay all outstanding short-term borrowing. Short-term debt increased $423.5 million for the first nine months of 2002 compared with the first nine months of 2001. The common stock dividend decreased $64.0 million for the nine months of 2002 compared with the nine months of 2001.

In February 2002, Con Edison of New York redeemed at maturity $150 million of 6.6 percent 9-year debentures. In June 2002, Con Edison of New York redeemed at maturity $150 million of variable rate 5-year debentures and issued $300 million of non-callable 5.625 percent 10-year debentures.

In October 2002, Con Edison of New York changed the interest rate method applicable to $224.6 million aggregate principal amount of its Facilities Revenue Bonds, Series 2001A from a variable weekly rate mode to a 10-year term mode, callable at par after three years with a 4.70 percent annual interest rate. See "Long-term Debt" in Note B to the Con Edison of New York financial statements included in Item 8 of the Form 10-K.

Capital Resources and Requirements

There have been no material changes in the company's capital resources or capital requirements from those reflected in the Form 10-K. In August 2002, President Bush signed into law an appropriations bill that authorizes funds for which the company is eligible to apply to recover costs it incurred in connection with the World Trade Center attack. For additional information, see "Cash Flows Used in Investing and Financing Activities," above, "Capital Resources" and "Capital Requirements" in Con Edison of New York's Form 10-K MD&A and Note P to the Con Edison of New York financial statements included in Item 8 of the Form 10-K.

Con Edison of New York's ratio of earnings to fixed charges (for the periods ended on the date indicated) and common equity ratio (as of the date indicated) were:

		Twelve Months Ended
	Nine Months ended September 30, 2002	September 30, 2002	December 31, 2001

Earnings to fixed charges	3.83	3.55	3.66
Common equity ratio*	47.6	47.6	47.2

*: Common shareholders' equity as a percentage of total capitalization

Con Edison of New York's ratio of earnings to fixed charges decreased for the 12 month period ending September 30, 2002 compared to the 12 month period ending December 31, 2001 primarily as a result of decreased earnings.

The commercial paper of Con Edison of New York is rated P-1, A-1 and F-1, respectively, by Moody's Investors Service, Inc. (Moody's), Standard & Poor's Rating Services (S&P) and Fitch Ratings (Fitch). The senior unsecured debt of Con Edison of New York is rated A1, A+ and A+, respectively, by Moody's, S&P, and Fitch. These ratings remain unchanged from those reported in the Form 10-K.

Contractual Obligations and Commercial Commitments

At September 30, 2002 there was no material change in the company's contractual obligations and commercial commitments compared to those at December 31, 2001, other than the long-term debt transactions described under "Cash Flows Used in Investing and Financing Activities," above. Reference is made to "Contractual Obligations and Commercial Commitments" in Con Edison of New York's Form 10-K MD&A.

REGULATORY MATTERS

In April 2002, the PSC approved a three-year gas rate agreement that reduces retail sales and transportation rates by approximately $25 million, on an annual basis. Reference is made to "Regulatory Matters" in Con Edison of New York's Form 10-K MD&A.

Electric Supply" in Item 1 of the Form 10-K, "Regulatory Matters—Electric Supply" in Con Edison of New York's 10-K MD&A and Item 2 of the Form 10-K.

FINANCIAL MARKET RISKS

Con Edison of New York's primary financial market risks are interest rate risk, commodity price risk and credit risk.

Interest Rate Risk

The interest rate risk relates primarily to variable rate debt and to new debt financing needed to fund capital requirements, including utility construction expenditures and maturing debt securities. Con Edison of New York manages interest rates risk through the issuance of mostly fixed-rate debt with varying maturities and through opportunistic refinancing of debt. The company estimates that, as of September 30, 2002, a 10 percent variation in interest rates applicable to its variable rate debt of approximately $899.0 million, would result in a change in annual interest expense of approximately $1.5 million.

In addition, Con Edison of New York, from time to time, enters into derivative financial instruments to hedge interest rate risk on certain debt securities. See "Interest Rate Hedging" in Note D to the Con Edison of New York financial statements included in Part I, Item 1 of this report.

Commodity Price Risk

Con Edison of New York's commodity price risk relates primarily to the purchase and sale of electricity and gas that the company delivers to its customers. Con Edison of New York has risk management strategies to mitigate its related exposure and uses derivative instruments to hedge this price risk. See "Energy Price Hedging" in Note D to the Con Edison of New York financial statements included in Part I, Item 1 of this report. Also, see Item 2 in Con Edison's Form 10-K for a discussion of the Con Edison of New York's generating capacity.

In general, the rates Con Edison of New York charges customers for electric, gas and steam service fluctuate with the cost of purchased power, gas purchased for resale and fuel used in the generation of steam and electricity, including gains or losses on certain derivative instruments and related transaction costs. See "Recoverable Energy Costs" in Note A to the Con Edison of New York financial statements included in Item 8 of the Form 10-K.

Con Edison of New York estimates that, as of September 30, 2002, a 10 percent change in market prices would result in a change in fair value of approximately $9.5 million for the derivative instruments used by it to hedge purchases of electricity and gas. The company 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.

Credit Risk

Con Edison of New York is exposed to credit risk related to over-the-counter transactions entered into primarily for the various energy supply and hedging activities. Credit risk is the loss that may result from a counterparty's nonperformance. Con Edison of New York uses credit policies to manage its credit risk, including an established credit approval process, monitoring of counterparty limits, master netting agreements, and credit mitigation measures such as margin, collateral, or prepayment arrangements.

ENERGY TRADING ACTIVITIES ACCOUNTED FOR AT FAIR VALUE

Con Edison of New York has not engaged to a material extent in trading activities that are accounted for at fair value. See "Financial Market Risks," in Note O to the Con Edison of New York financial statements included in Item 8 of the Form 10-K.

ENVIRONMENTAL MATTERS

For information concerning potential liabilities of Con Edison of New York arising from laws and regulations protecting the environment, including the Federal Comprehensive Environmental Response, Compensation and Liability Act of 1980 (Superfund), see Note B to the Con Edison of New York financial statements included in Part I, Item 1 of this report.

RESULTS OF OPERATIONS

Third Quarter of 2002 Compared with Third Quarter of 2001

Con Edison of New York's net income for common stock for the third quarter of 2002 was $258.7 million compared with $269.0 million for the third quarter of 2001. The company's net income in the 2002 period reflects the effects of increased electric sales and deliveries due to the hot summer weather, offset by the recording of electric excess earnings of $20.0 million in accordance with the company's 2000 Electric Rate Agreement. A comparison of the results of operations of Con Edison of New York for the third quarter of 2002 with those of the third quarter of 2001 follows:

THREE MONTHS ENDED SEPTEMBER 30, 2002 COMPARED WITH
THREE MONTHS ENDED SEPTEMBER 30, 2001

	Increases (Decreases) Amount			Increases (Decreases) Percent

	(Millions of dollars)
Operating revenues	$	(116.9	)	(5.1	)%
Purchased power - electric and steam		(13.8	)	(1.5	)
Fuel - electric and steam		(22.3	)	(25.3	)
Gas purchased for resale		(9.0	)	(13.7	)
Operating revenues less purchased power, fuel and gas purchased for resale (net revenues)		(71.8	)	(5.7	)
Other operations and maintenance		(37.0	)	(12.1	)
Depreciation and amortization		(7.2	)	(6.1	)
Taxes, other than income tax		(11.8	)	(4.0	)
Income tax		(1.2	)	(0.7	)
Operating income		(14.6	)	(4.0	)
Other income less deductions and related income tax		(0.1	)	(1.6	)
Net interest charges		(3.6	)	(3.7	)
Preferred stock dividend requirements		(0.6	)	(16.7	)
Net income for common stock	$	(10.3	)	(3.8	)%

A discussion of Con Edison of New York's operating revenues and operating income by business segment follows. Con Edison of New York's principal business segments are its regulated electric, gas and steam utility businesses. For additional information about the segments, see Note E to the Con Edison of New York financial statements included in Part I, Item 1 of this report.

Electric

Con Edison of New York's electric operating revenues in the third quarter of 2002 decreased $105.4 million compared with the third quarter of 2001. The decrease reflects net revenue reductions of approximately $57.6 million related to the sale of the company's nuclear generating unit in September 2001 and lower fuel and purchased power costs of $32.9 million (discussed below). The decrease also reflects the completion on March 31, 2002 of amortization of a previously deferred gain on the sale of divested plants, a New York Power Authority (NYPA) revenue increase ($21.7 million) and a charge for electric excess earnings of $20.0 million in September 2002 in accordance with the 2000 Electric Rate Agreement. These items are offset, in part, by an increase in sales and deliveries of $25.3 million in the 2002 period due to the impact of the hot summer weather, offset in part by the impact of the softer economy. See "Recoverable Energy Costs" and "Rate and Restructuring Agreements" in Notes A and I to the Con Edison of New York financial statements included in Item 8 of the Form 10-K.

Con Edison of New York's electric sales and deliveries, excluding off-system sales, for the third quarter of 2002 compared with the third quarter of 2001 were:

MILLIONS OF KWHRS.

Description		Three Months Ended September 30, 2002	Three Months Ended September 30, 2001	Variation		Percent Variation

Residential/Religious		4,218	3,871	347		9.0	%
Commercial/Industrial		5,557	5,648	(91	)	(1.6	)
Other		64	39	25		64.1

	Total Full Service Customers	9,839	9,558	281		2.9
Retail Choice Customers		3,487	3,063	424		13.8

	Sub-total	13,326	12,621	705		5.6
NYPA, Municipal Agency and Other Sales		2,834	2,856	(22	)	(0.8	)

	Total Service Area	16,160	15,477	683		4.4	%

Electricity delivery volumes in Con Edison of New York's service territory increased 4.4 percent in the third quarter of 2002 compared with the third quarter of 2001. The increase in delivery volumes reflects primarily the warmer weather compared to the 2001 period. After adjusting for variations, principally weather and billing days in each period, electricity delivery volumes in the service territory increased 1.1 percent in the third quarter of 2002 compared with the third quarter of 2001. Weather-adjusted sales represent an estimate of the sales that would have been made if historical average weather conditions had prevailed.

Con Edison of New York's electric purchased power costs decreased $12.5 million in the third quarter of 2002 compared with the third quarter of 2001, due to a decrease in the unit price of purchased power and an increase in volumes of electricity purchased from other suppliers by participants in the company's Retail Choice programs, offset in part by increased purchased volumes resulting from the sale of the company's nuclear generating unit in September 2001. Fuel costs decreased $20.4 million reflecting decreased generation at company-owned power plants, offset in part by an increase in the unit price of

fuel. In general, Con Edison of New York recovers prudently incurred fuel and purchased power costs pursuant to rate provisions approved by the PSC. See "Recoverable Energy Costs" in Note A to the Con Edison of New York financial statements included in Item 8 of the Form 10-K.

Con Edison of New York's electric operating income decreased $29.3 million in the third quarter of 2002 compared with the third quarter of 2001. The principal component of the decrease was a decrease in net revenues (operating revenues less fuel and purchased power costs) of $72.5 million. The decrease in net revenues reflects the aforementioned completion of the amortization of the gain on divested plants, NYPA revenue increase, sale of the nuclear generating unit and an electric excess earnings charge in September 2002, offset in part by an increase in net deliveries in the 2002 period due to the impact of the hot summer weather offset in part by the softness of the economy. The decrease in net revenues was offset in part by reduced other operations and maintenance expense of $25.8 million and decreased depreciation expense of $7.8 million, resulting primarily from the nuclear generating unit sale.

Gas

Con Edison of New York's gas operating revenues decreased $9.4 million, while the cost of purchased gas decreased by $9.0 million in the third quarter of 2002 compared with the 2001 period. The lower revenues reflect reduced sales and transportation to gas customers, resulting primarily from revenue reductions implemented in accordance with the gas rate agreement approved by the PSC in April 2002.

Gas operating income increased $10.4 million in the third quarter of 2002, reflecting reduced property tax expenses of $10.4 million and reduced operations and maintenance expenses of $6.9 million, offset in part, by a decrease in net revenues (operating revenues less gas purchased for resale) of $0.4 million.

Con Edison of New York's gas sales and deliveries, excluding off-system sales, for the third quarter of 2002 compared with the third quarter of 2001 were:

THOUSANDS OF DKTHS.

Description		Three Months Ended September 30, 2002	Three Months Ended September 30, 2001	Variation		Percent Variation

Firm Sales
Residential		3,762	3,915	(153	)	(3.9	)%
General		4,449	4,890	(441	)	(9.0	)
Firm Transportation		2,156	1,822	334		18.3

	Total Firm Sales and Transportation	10,367	10,627	(260	)	(2.4	)
Off Peak/Interruptible Sales		2,420	2,631	(211	)	(8.0	)
Transportation of Customer Owned Gas
NYPA		9,164	6,234	2,930		47.0
Divested Plants		32,609	32,239	370		1.1
Other		4,192	4,131	61		1.5

	Total Sales and Transportation	58,752	55,862	2,890		5.2	%

Con Edison of New York's gas sales and transportation volumes for firm customers decreased 2.4 percent in the third quarter of 2002 compared with the third quarter of 2001. After adjusting for variations,

principally billing days in each period, firm gas sales and transportation volumes in the company's service territory decreased 2.5 percent in the 2002 period.

The increase in non-firm transportation of customer-owned gas is attributable primarily to reduced gas prices as compared to oil prices.

Steam

Con Edison of New York's steam operating revenues decreased $2.0 million and steam operating income increased $4.5 million for the third quarter of 2002 compared with the third quarter of 2001. The lower revenues reflect reduced sales volumes and lower fuel and purchased power costs. See "Recoverable Energy Costs" in Note A to the Con Edison of New York financial statements included in Item 8 of the Form 10-K. The increase in operating income reflects an increase in net revenues (operating revenues less fuel and purchased power costs) of $1.1 million and reduced operations and maintenance expenses of $5.9 million, offset in part by an increase in income taxes of $0.4 million.

Con Edison of New York's steam sales and deliveries for the third quarter of 2002 compared with the third quarter of 2001 were:

MILLIONS OF POUNDS

Description		Three Months Ended September 30, 2002	Three Months Ended September 30, 2001	Variation		Percent Variation

General		26	21	5		23.8	%
Apartment house		1,058	1,127	(69	)	(6.1	)
Annual power		4,717	4,698	19		0.4

	Total Sales	5,801	5,846	(45	)	(0.8	)%

Steam sales volume decreased 0.8 percent in the third quarter of 2002 compared with the 2001 period, primarily as a result of the soft economy, offset, in part, by increased sales due to the warmer weather, as compared to the 2001 period. After adjusting for variations, principally weather and billing days in each period, steam sales volume decreased 5.4 percent.

Other Income

Investment income decreased $1.0 million in the third quarter of 2002 compared to the 2001 period principally due to reduced interest income earned on short-term cash investments in the 2002 period as compared to the 2001 period. For the 2001 period, the company had more cash on hand than the 2002 period, due primarily to the sale of its nuclear generating unit. Allowance for equity funds used during construction increased $1.7 million in the third quarter of 2002 compared to the 2001 period, as a result of the East River Re-Powering Project. Other income increased $1.1 million in the third quarter of 2002 compared to the 2001 period due primarily to increased interest earned on regulatory assets. See "Application of Critical Accounting Policies - Accounting for Regulated Public Utilities - SFAS No. 71," above.

Net Interest Charges

Net interest charges decreased $3.6 million in the third quarter of 2002 compared to the 2001 period, reflecting principally decreased interest on long-term debt of $4.0 million.

Nine Months Ended September 30, 2002 Compared with Nine Months Ended September 30, 2001

Con Edison of New York's net income for common stock for the nine months ended September 30, 2002 was $506.5 million compared with $543.7 million for the nine months ended September 30, 2001. The company's net income in the 2002 period reflects the impact of the mild winter and soft economy, partially offset by lower operating expenses and the hot summer weather.

A comparison of the results of operations of Con Edison of New York for the nine months ended September 30, 2002 with those of the first nine months of 2001 follows:

	Increases (Decreases) Amount			Increases (Decreases) Percent
	(Millions of dollars)
Operating revenues	$	(983.8	)	(15.2	)%
Purchased power - electric and steam		(273.8	)	(12.1	)
Fuel - electric and steam		(137.1	)	(45.0	)
Gas purchased for resale		(230.4	)	(40.8	)
Operating revenues less purchased power, fuel and gas purchased for resale (net revenues)		(342.5	)	(10.2	)
Other operations and maintenance		(161.4	)	(16.5	)
Depreciation and amortization		(32.6	)	(9.1	)
Taxes, other than income tax		(38.5	)	(4.7	)
Income tax		(44.2	)	(12.3	)
Operating income		(65.7	)	(7.9	)
Other income less deductions and related income tax		17.1		204.5
Net interest charges		(10.9	)	(3.8	)
Preferred stock dividend requirement		(0.6	)	(5.6	)
Net income for common stock	$	(37.2	)	(6.8	)%

Electric

Con Edison of New York's electric operating revenues in the nine months ended September 30, 2002 decreased $593.7 million compared with the nine months ended September 30, 2001. The decrease reflects lower fuel and purchased power costs of $304.0 million (discussed below). The decrease also reflects the completion on March 31, 2002 of amortizations of a previously deferred gain on the sale of divested plants and the NYPA revenue increase ($21.7 million), a charge for electric excess earnings of $20.0 million in September 2002 and a reserve related to the sale of the company's nuclear generating unit ($16.1 million), along with the amortization of the loss ($25.9 million) related to the sale of the

Con Edison of New York's electric sales and deliveries, excluding off-system sales, for the nine months ended September 30, 2002 compared with the nine months ended September 30, 2001 were:

MILLIONS OF KWHRS.

Description		Nine Months Ended September 30, 2002	Nine Months Ended September 30, 2001	Variation		Percent Variation

Residential/Religious		9,615	9,318	297		3.2
Commercial/Industrial		14,518	15,212	(694	)	(4.6	)
Other		145	131	14		10.7

	Total Full Service Customers	24,278	24,661	(383	)	(1.6	)
Retail Choice Customers		8,825	7,928	897		11.3

	Sub-total	33,103	32,589	514		1.6
NYPA, Municipal Agency and Other Sales		7,730	7,846	(116	)	(1.5	)

	Total Service Area	40,833	40,435	398		1.0	%

Electricity delivery volume in Con Edison of New York's service territory increased 1.0 percent in the nine months ended September 30, 2002 compared with the nine months ended September 30, 2001. The increase reflects the impact of the summer heat wave, offset in part, by the mild winter weather and soft economy. After adjusting for variations, principally weather and billing days in each period, electricity sales volume in the service territory increased 0.3 percent in the 2002 period.

Con Edison of New York's electric purchased power costs decreased $249.6 million in the nine months ended September 30, 2002 compared with the nine months ended September 30, 2001, due to a decrease in the price of purchased power and an increase in volumes of electricity purchased from other suppliers by participants in the company's Retail Choice programs, offset in part by the company's increased purchased volumes resulting from the sale of the company's nuclear generating unit in September 2001. Fuel costs decreased $54.4 million as a result of decreased generation at company-owned power plants, offset in part by an increase in the unit price of fuel. In general, Con Edison of New York recovers prudently incurred fuel and purchased power costs pursuant to rate provisions approved by the PSC. See "Recoverable Energy Costs" in Note A to the Con Edison of New York financial statements included in Item 8 of the Form 10-K.

Con Edison of New York's electric operating income decreased $56.2 million in the nine months ended September 30, 2002 compared with the nine months ended September 30, 2001. The principal component of the decrease was lower net revenues (operating revenues less fuel and purchased power costs) of $289.7 million. The decrease in net revenues reflects the aforementioned completion of the amortization of the gain on divested plants, NYPA revenue increase, sale of the nuclear generating unit, an electric excess earnings charge, a reserve related to the sale of the company's nuclear generating unit and the

amortization of the loss related to the sale of the nuclear generating unit. The decrease in net revenues is offset in part by reduced other operations and maintenance expenses ($140.9 million), lower depreciation expense ($35.7 million) and lower property taxes ($5.1 million) resulting primarily from the sale in September 2001 of the company's nuclear generating unit. The decrease also reflects lower revenue taxes of $25.7 million.

Gas

Con Edison of New York's gas operating revenues decreased $252.2 million, while the cost of purchased gas decreased by $230.4 million in the nine months ended September 30, 2002 compared with the nine months ended September 30, 2001. The lower revenues reflect reduced sales and transportation to gas customers, resulting primarily from the mild winter and revenue reductions implemented in accordance with the gas rate agreement approved by the PSC in April 2002. Gas operating income decreased $2.0 million in the nine months ended September 30, 2002, reflecting a $21.8 million decrease in net revenues (operating revenues less gas purchased for resale), and increased property tax expense ($5.2 million), offset in part by reduced operations and maintenance expenses ($13.5 million), and reduced revenue taxes ($11.5 million).

Con Edison of New York's gas sales and deliveries, excluding off-system sales, for the nine months ended September 30, 2002 compared with the nine months end September 30, 2001 were:

THOUSANDS OF DKTHS

Description		Nine Months Ended September 30, 2002	Nine Months Ended September 30, 2001	Variation		Percent Variation

Firm Sales
Residential		31,762	37,354	(5,592	)	(15.0	)%
General		23,934	27,762	(3,828	)	(13.8	)
Firm Transportation		11,593	10,950	643		5.9

	Total Firm Sales and Transportation	67,289	76,066	(8,777	)	(11.5	)
Off-Peak/Interruptible Sales		9,376	11,261	(1,885	)	(16.7	)
Transportation of Customer Owned Gas
NYPA		17,927	7,810	10,117		129.5
Divested Plants		66,836	50,882	15,954		31.4
Other		17,717	10,965	6,752		61.6

	Total Sales and Transportation	179,145	156,984	22,161		14.1	%

Con Edison of New York's gas sales and transportation volumes for firm customers decreased 11.5 percent in the nine months ended September 30, 2002 compared with the nine months ended September 30, 2001. After adjusting for variations, principally weather and billing days in each period, firm gas sales and transportation volumes in the company's service territory decreased 0.4 percent in the 2002 period.

The decrease in Off-Peak/Interruptible sales is due primarily to the mild winter of 2002. The increase in non-firm transportation is attributable primarily to reduced gas prices as compared to oil prices.

A weather-normalization provision that applies to Con Edison of New York's gas business moderates, but does not completely eliminate, the effect of weather-related changes on gas operating income.

Steam

Con Edison of New York's steam operating revenues decreased $138.0 million and steam operating income decreased $7.5 million for the nine months ended September 30, 2002 compared with the nine months ended September 30, 2001. The lower revenues reflect reduced sales volumes and lower fuel and purchased power costs. See "Recoverable Energy Costs" in Note A to the Con Edison of New York financial statements included in Item 8 of the Form 10-K. The decrease in operating income reflects primarily a decrease in net revenues (operating revenues less fuel and purchased power costs) of $31.0 million offset in part by reduced operations and maintenance expenses of $8.8 million and lower income taxes of $16.1 million.

Con Edison of New York's steam sales and deliveries for the nine months ended September 30, 2002 compared with the nine months ended September 30, 2001 were:

MILLIONS OF POUNDS

Description		Nine Months Ended September 30, 2002	Nine Months Ended September 30, 2001	Variation		Percent Variation

General		414	522	(108	)	(20.7	)%
Apartment house		4,983	5,730	(747	)	(13.0	)
Annual power		12,822	14,785	(1,963	)	(13.3	)

	Total Sales	18,219	21,037	(2,818	)	(13.4	)%

Steam sales volume decreased 13.4 percent in the nine months ended September 30, 2002 compared with the nine months ended September 30, 2001, reflecting primarily the mild winter and soft economy. After adjusting for variations, principally weather and billing days in each period, steam sales volume decreased 4.6 percent.

Other Income

Investment income decreased $1.2 million in the nine months ended September 30, 2002 compared to the 2001 period, due principally to reduced interest income earned on short-term cash investments in the 2002 period as compared to the 2001 period. For the 2001 period, the company had more cash on hand than the 2002 period, due primarily to the sale of its nuclear generating unit. Allowance for equity funds used during construction increased $7.3 million in the nine months ended September 30, 2002 compared to the nine months ended September 30, 2001 as a result of the East River Re-Powering Project. Other income increased $2.6 million in the nine months ended September 30, 2002 compared to the nine months ended September 30 2001 due primarily to a $5.3 million increase in interest earned on regulatory assets ("Application of Critical Accounting Policies - Accounting for Regulated Public Utilities - SFAS No. 71," above), offset in part, by reduced non-utility operation (joint trenching, manhole inspection, etc.) income of $2.0 million. Income tax expense decreased $8.2 million in the nine months ended September 30, 2002 compared to the nine months ended September 30, 2001 due

primarily to the recognition of tax benefits relating to the September 2001 sale of the company's nuclear generating unit.

Net Interest Charges

Net interest charges decreased $10.9 million in the nine months ended September 30, 2002 compared to the nine months ended September 30, 2001, reflecting principally decreased interest expense on long-term debt of $13.2 million.

ORANGE & ROCKLAND UTILITIES, INC. MANAGEMENT'S NARRATIVE ANALYSIS OF THE RESULTS OF OPERATIONS

Orange and Rockland Utilities, Inc. (O&R), is a wholly owned subsidiary of Consolidated Edison, Inc. (Con Edison) and meets the conditions specified in General Instruction H to Form 10-Q, which allows it to use the reduced disclosure format for wholly owned subsidiaries of companies, such as Con Edison, that are reporting companies under the Securities Exchange Act of 1934. Accordingly, this O&R Management's Narrative Analysis of the Results of Operations is included in this report, and O&R has omitted from this report the information called for by Part I, Item 2 (Management's Discussion and Analysis of Financial Condition and Results of Operations). Results for interim periods are not necessarily indicative of results for the entire fiscal year.

APPLICATION OF CRITICAL ACCOUNTING POLICIES

O&R's financial statements reflect the application of its accounting policies, which conform to accounting principles generally accepted in the United States of America. The company's critical accounting policies include industry-specific accounting applicable to regulated public utilities, and accounting for pensions and other postretirement benefits and contingencies.

Accounting for Regulated Public Utilities – SFAS No. 71

O&R is a regulated public utility subject to Statement of Financial Accounting Standards (SFAS) No. 71, "Accounting for the Effects of Certain Types of Regulation," and, in accordance with SFAS No. 71, are subject to the accounting requirements and rate making practices of the Federal Energy Regulatory Commission (FERC) and state public utility regulatory authorities.

O&R's principal regulatory assets and liabilities are detailed on the company's consolidated balance sheet. The company is receiving or being credited with a return on all of its regulatory assets for which a cash outflow has been made. The company is paying or being charged with a return on all of its regulatory liabilities for which a cash inflow has been received. The company's regulatory assets and liabilities will be recovered from customers, or applied for customer benefit, in accordance with rate provisions approved by the applicable public utility regulatory commission.

Accounting for Pensions and Other Postretirement Benefits

O&R and its subsidiaries provide pension and other postretirement benefits to substantially all employees and retirees. The company accounts for these plans in accordance with SFAS No. 87, "Employers' Accounting for Pensions" and SFAS No. 106, "Employers' Accounting for Postretirement Benefits other than Pensions." In applying these accounting policies, the company has made critical estimates related to actuarial assumptions, including assumptions of expected returns on plan assets, future compensation and health care cost trends, and appropriate discount rates. See Notes D and E to the O&R financial statements included in Item 8 of the Form 10-K for information about these assumptions, actual performance, amortization of investment and other actuarial gains and losses and calculated plan costs for 2001, 2000 and 1999. Plan expense or credit in future periods will depend on the assumptions the company makes and actual performance.

In accordance with SFAS No. 71 and consistent with rate provisions approved by the applicable state public utility authorities, O&R would defer as a regulatory asset any difference between expenses recognized under SFAS No. 87 and the amounts reflected in rates for such expenses.

In the event that the fair market value of Con Edison's pension plan assets, both Con Edison of New York and O&R, are less than the combined plan's accumulated benefit obligation (ABO), O&R would be required under SFAS No. 87 and SFAS No. 132 "Employers' Disclosures about Pension and Postretirement Benefits," to accrue a liability equal in the amount to the difference between the fair value of the plan assets and the ABO, less its accrued pension liability through a charge to the other comprehensive income (OCI). The charge to OCI, which would be net of taxes, would not affect O&R's net income.

Accounting for Contingencies

SFAS No. 5, "Accounting for Contingencies," applies to an existing condition, situation, or set of circumstances involving uncertainty as to possible loss that will ultimately be resolved when one or more future events occur or fail to occur. The company's known material contingencies include workers' compensation claims, and its responsibility for hazardous substances, such as asbestos, polychlorinated biphenyls (PCBs) and coal tar, that have been used or generated in the course of its operations. See Note B to the O&R financial statements included in Part I, Item 1 of this report. In accordance with SFAS No. 5, the company has accrued its best estimate of probable losses relating to these contingencies and no liability has been accrued where the loss is not probable or the amount of the loss cannot be reasonably estimated.

REGULATORY MATTERS

that would be repaid over time by its customers). In addition, in October 2002, the O&R subsidiary filed a request with the NJBPU seeking an increase in electric rates of $7.3 million (5.5 percent) annually, to take effect on August 1, 2003, principally to reflect the cost of electric system infrastructure improvements required for service reliability and security.

In August 2002, the Pennsylvania Public Utility Commission (PPUC) approved a settlement agreement covering the rates O&R's wholly owned Pennsylvania utility subsidiary charges for energy cost recoveries. As part of this settlement, this subsidiary has agreed to terminate its Competitive Transition Charge (CTC) and not to file for an increase in delivery rates that would be effective prior to December 31, 2004. The settlement provides for an increase in the subsidiary's Provider of Last Resort (POLR) energy rates of .577 cents per kwh, inclusive of gross receipts tax, retroactive to July 1, 2002. This represents approximately a 6.0 percent increase in the subsidiary's overall rates. A potential further increase of 5.0 percent of the POLR energy rate or an addition of approximately .28 cents per kwh effective January 2005 is contingent on the actual and projected reasonable cost of energy. The settlement is estimated to increase revenues by a net $1.4 million between September 2002 and December 2005. See Note A to the O&R financial statements included in the Form 10-K, under "Recoverable Energy Costs."

RESULTS OF OPERATIONS

O&R's net income for common stock for the nine-month period ended September 30, 2002, was $38.4 million, $4.6 million higher than the corresponding 2001 period. The increase in the company's net income was attributable primarily to higher electric sales volumes, which produced an additional $11.9 million of net electric revenues and savings in financing costs of $0.6 million. Partially offsetting these items were lower gas sales resulting in lower net gas revenues of $1.0 million, reduced customer late payment charge revenues of $1.5 million, higher depreciation charges related to plant additions of $0.8 million, lower investment income of $1.1 million and higher other taxes of $0.5 million. Customer late payment charge revenues decreased by 45.0 percent, primarily as a result of a decrease in the cost of energy billed to customers.

A comparison of the results of operations of O&R for the nine months ended September 30, 2002, to the nine months end September 30, 2001 follows:

(Millions of Dollars)	Increases (Decreases) Amount			Increases (Decreases) Percent

Operating revenues	$	(116.9	)	(19.6	)%
Purchased power – electric		(74.1	)	(30.5	)
Gas purchased for resale		(45.8	)	(42.7	)

Operating revenues less purchased power, fuel and gas purchased for resale (net revenues)		3.0		1.2
Other operation and maintenance expenses		(0.1	)	(0.1	)
Depreciation and amortization		0.8		3.6
Taxes, other than income tax		(3.0	)	(7.1	)
Income tax		0.1		0.5

Operating income		5.2		10.4
Other income less deductions and related income tax		(1.2	)	(72.1	)
Net interest charges		(0.6	)	(3.3	)

Net income for common stock	$	4.6		13.7	%

A discussion of O&R's operating revenues by business segment follows. O&R's principal business segments are its electric and gas utility businesses. For additional information about O&R's business segments, see Note E to the O&R financial statements included in Part I, Item 1 of this report.

Electric

Electric operating revenues decreased $67.0 million during the nine months ended September 30, 2002, compared to the 2001 period. This decrease was primarily the result of lower purchased power and tax revenue recoveries in the 2002 period. See "Recoverable Energy Costs" in Note A to the O&R financial statements in Item 8 of the combined O&R, Con Edison and Consolidated Edison Company of New York, Inc. Annual Reports on Form 10-K for the year ended December 31, 2001 (file Nos. 1-4315, 1-14514 and 1-1217, the Form 10-K).

O&R's electric sales and deliveries, excluding off-system sales, for the nine months ended September 30, 2002 compared with the nine months ended September 30, 2001 are shown on the table below:

MILLIONS OF KWHRS

Description		Nine Months Ended September 30, 2002	Nine Months Ended September 30, 2001	Variation		Percent Variation

Residential/Religious		1,418	1,405	13		0.9	%
Commercial/Industrial		1,817	1,956	(139	)	(7.1	)
Other		82	81	1		1.2

	Total Full Service Customers	3,317	3,442	(125	)	(3.6	)
Retail Choice Customers		912	560	352		62.9

	Total Service Area	4,229	4,002	227		5.7	%

Electric sales volumes in the nine months ended September 30, 2002, increased 5.7 percent compared to the 2001 period due to customer growth and higher average usage. After adjusting for weather variations,

total electricity sales volumes were 5.6 percent higher in the current year. Weather-adjusted sales represent an estimate of the sales that would have been made if historical average weather conditions had prevailed. Net electric revenues (operating revenues less purchased power and associated tax recoveries) were $11.9 million higher in the current period.

Purchased power costs decreased $74.1 million during the first nine months of 2002 compared to the 2001 period, reflecting decreases in the unit cost of purchased power, partially offset by higher energy requirements.

Decreased electric revenues and purchased power costs also reflect increased purchases of electricity by customers from other suppliers.

Electric operating income increased $5.6 million during the nine months ended September 30, 2002, as compared to the 2001 period. This increase reflects the impact of higher net electric revenues reduced by lower late payment charge revenues, higher depreciation costs, and taxes.

Gas

Gas operating revenues decreased $49.9 million during the nine months ended September 30, 2002, as compared to the 2001 period. This decrease was primarily the result of lower gas costs and sales to firm customers in the 2002 period. See "Recoverable Energy Costs" in Note A to the O&R financial statements in Item 8 of the Form 10-K.

O&R gas sales and deliveries, excluding off-system sales, for the nine months ended September 30, 2002, compared with the nine months ended September 30, 2001, are shown in the table below:

THOUSANDS OF DKTHS.

Description		Nine Months Ended September 30, 2002	Nine Months Ended September 30, 2001	Variation		Percent Variation

Firm Sales
	Residential	6,803	8,993	(2,190	)	(24.4	)%
	General	2,251	2,909	(658	)	(22.6	)
	Firm Transportation	3,980	2,991	989		33.1

Total Full Sales and Transportation		13,034	14,893	(1,859	)	(12.5	)

	Off Peak/Interruptible Sales	5,418	5,194	224		4.3
Transportation of Customer Owned Gas
	Divested Plants	11,400	9,270	2,130		23.0
	Other	708	740	(32	)	(4.3	)

	Total Sales and Transportation	30,560	30,097	463		1.5	%

Total firm gas sales volumes in the nine months ended September 30, 2002 decreased 12.5 percent compared to the 2001 period. O&R's revenues from gas sales in New York are subject to a weather normalization clause that moderates, but does not eliminate, the effect of weather-related changes on net income. After adjusting for weather variations in each period, total firm sales and transportation volumes were 7.8 percent lower for the 2002 period compared to the 2001 period.

The cost of gas purchased for resale decreased $45.8 million in the 2002 period compared to the 2001 period, due to the lower sales volumes and unit costs.

Decreased gas revenues and cost of gas purchased for resale in the 2002 period, compared to the 2001 period, also reflect purchases of gas by customers from other suppliers.

Gas operating income decreased by $0.7 million for the nine months ended September 30, 2002, compared to the 2001 period, due primarily to lower net revenues and higher depreciation charges.

Taxes Other Than Income Taxes

Taxes other than income taxes decreased by $3.0 million in the 2002 period compared to the 2001 period. The decrease was primarily the result of lower New York State revenue taxes, which resulted from reduced tax rates and lower energy costs billed to customers of $3.5 million. Partially offsetting this decrease were higher property taxes of $0.5 million.

Other Income

Other income decreased $1.2 million in the 2002 period compared to the 2001 period, due primarily to lower earnings on short-term investments during the current year.

Net Interest Charges

Interest charges decreased by $0.6 million in the 2002 period compared to the 2001 period reflecting lower average debt balances and interest rates in the 2002 period, offset in part by lower allowance for borrowed funds used during construction.

Income Taxes

Income taxes increased by a net of $0.1 million in the 2002 period compared to the 2001 period, due to higher income in the current period. Higher federal income taxes were partially offset by lower state income taxes. State income taxes decreased primarily as a result of a 0.5 percent drop in the tax rate.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

Con Edison

For information about Con Edison's primary market risks associated with activities in derivative financial instruments, other financial instruments and derivative commodity instruments, see "Financial Market Risks" in Con Edison's Management's Discussion and Analysis of Financial Condition and Results of Operations in Part 1, Item 2 of this report and Item 7A of the combined Con Edison, Con Edison of New York and O&R Annual Report on Form 10-K for the year ended December 31, 2001 (the Form 10-K), which information is incorporated herein by reference.

Con Edison of New York

For information about Con Edison of New York's primary market risks associated with activities in derivative financial instruments, other financial instruments and derivative commodity instruments, see "Financial Market Risks" in Con Edison of New York's Management's Discussion and Analysis of Financial Condition and Results of Operations in Part 1, Item 2 of this report and Item 7A of the Form 10-K, which information is incorporated herein by reference.

ITEM 4. CONTROLS AND PROCEDURES

Con Edison

Based upon their evaluation of Con Edison's disclosure controls and procedures (as defined in Rule 13a-14(c) under the Securities Exchange Act of 1934, as amended) within 90 days of the filing date of this report, Con Edison's principal executive officer and principal financial officer have concluded that these controls and other procedures are effective to provide reasonable assurance that the information required to be disclosed by the company in the reports that it files or submits under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission. There have been no significant changes in Con Edison's internal controls or in other factors that could significantly affect these controls subsequent to the date of their evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Con Edison of New York

Based upon their evaluation of Con Edison of New York's disclosure controls and procedures (as defined in Rule 13a-14(c) under the Securities Exchange Act of 1934, as amended) within 90 days of the filing date of this report, Con Edison of New York's principal executive officer and principal financial officer have concluded that these controls and other procedures are effective to provide reasonable assurance that the information required to be disclosed by the company in the reports that it files or submits under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission. There have been no significant changes in Con Edison of New York's internal controls or in other factors that could significantly affect these controls subsequent to the date of their evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

O&R

Based upon their evaluation of O&R's disclosure controls and procedures (as defined in Rule 13a-14(c) under the Securities Exchange Act of 1934, as amended) within 90 days of the filing date of this report, O&R's principal executive officer and principal financial officer have concluded that these controls and other procedures are effective to provide reasonable assurance that the information required to be disclosed by the company in the reports that it files or submits under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission. There have been no significant changes in O&R's internal controls or in other factors that could significantly affect these controls subsequent to the date of their evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Forward-Looking Statements

This Quarterly Report on Form 10-Q includes forward-looking statements, intended to qualify for the safe-harbor provisions of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are statements of future expectation and not facts. Words such as "expects," "estimates," "anticipates," "intends," "plans," "will" and similar expressions identify forward-looking statements.

Actual results or developments might differ materially from those included in the forward-looking statements because of various factors such as:

•: continued restructuring of the regulated public utility, unregulated energy and telecommunications industries;
•: competition, including competition in the energy supply, trading and services businesses;
•: operating performance and condition of the company's energy delivery systems, generating assets and fiber optic communications network;
•: success of completion of ongoing construction projects;
•: legal proceedings relating to hazardous substances, the nuclear generating plant that the company sold in 2001 and Northeast Utilities (see Notes B, C and D to the Con Edison financial statements in Part 1, Item 1 of this report);
•: wholesale energy markets, including availability, sufficiency and cost of energy and capacity and the effectiveness of the company's efforts to manage its risks in these markets;
•: capital markets, including availability, sufficiency and cost of liquidity and credit facilities and the effectiveness of the company's efforts to manage its risks in these markets;
•: availability, sufficiency and cost of other services and goods used in Con Edison's business, including insurance coverage;
•: investment returns on the assets of the company's pension and other post-employment benefit plans and actual experience regarding the plans' other actuarial assumptions (see Notes D and E to the Con Edison financial statements in Item 8 of the Form 10-K);
•: employee matters, including changes in key executives and collective bargaining with union employees;
•: economic conditions, including recession, inflation or deflation;
•: technological developments;
•: weather, including its effects on the company's sales and facilities;
•: laws, regulations or regulatory policies, including those relating to taxes or fees, the environment and any that would adversely effect the ability of the company's regulated utility subsidiaries to operate or recover costs from their customers;

•: public policy doctrines;
•: accounting matters, including changes in policies, principles and interpretations thereof generally accepted in the United States of America;
•: acts of war or terrorism; and
•: other presently unknown or unforeseen factors.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

Con Edison

Northeast Utilities

For information about legal proceedings relating to Con Edison's October 1999 agreement to acquire Northeast Utilities, see Note D to the Con Edison financial statements included in Part 1, Item 1 of this report (which information is incorporated herein by reference).

Newington Project

For a description of the Newington Project, see Note E to the Con Edison financial statements included in Part 1, Item 1 of this report and Note J to the Con Edison financial statements included in Item 8 of the Form 10-K (which information is incorporated herein by reference). In September 2002, Duke/Fluor Daniel, the general contractor for the Newington Project, initiated an arbitration proceeding with respect to its contract claims for an additional payment to it of approximately $89 million for alleged project costs and a 176 day extension of the project's scheduled substantial completion date. In September 2002, the unregulated subsidiary of Con Edison developing the project commenced an action in the Supreme Court of the State of New York (County of New York; I.A.S. Part) entitled Hawkeye Funding, Limited Partnership v. Duke/Fluor Daniel, seeking to adjudicate certain contract disputes with the general contractor. In September 2002, the general contractor commenced an action in Superior Court in the State of New Hampshire (Rockingham County), entitled Duke/Fluor Daniel v. Hawkeye Funding, Limited Partnership, seeking to obtain a lien on the project as security for the payment of its claim for additional project costs.

Con Edison of New York

Nuclear Generation

For information about legal proceedings relating to the nuclear generating unit that Con Edison of New York sold in 2001, see Note C to the Con Edison of New York financial statements included in Part 1, Item 1 of this report (which information is incorporated herein by reference).

Manufactured Gas Sites

Reference is made to "Con Edison of New York—Superfund—Manufactured Gas Sites" in Item 3 of the Form 10-K. In August 2002, Con Edison of New York entered into a voluntary cleanup agreement with the New York State Department of Environmental Conservation providing for the investigation and cleanup of the manufactured gas sites.

Employees' Class Action

Reference is made to "Con Edison of New York—Employees' Class Action" in Item 3 of the Form 10-K and Part II, Item 1 of the combined Con Edison, Con Edison of New York and O&R Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2002.

ITEM 5. OTHER INFORMATION

In October 2002, the Audit Committee of the Board of Directors of Con Edison approved the appointment of PricewaterhouseCoopers, LLP (PwC) as independent accountants for the company for 2003 (subject to Board and shareholder approval) and the proposed PwC services and fees for 2003. The services approved, included non-audit services for which PwC was originally engaged in 1999, consisting of assistance in review, and claim for refund, of state use taxes paid by O&R on purchases of goods and services. The fee for such services will be based upon tax refunds actually received by O&R and is not expected to exceed $90,000. This information has been included in this report in accordance with Section 10A(i)(2) of the Securities Exchange Act of 1934, as amended.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a): EXHIBITS

Con Edison

Exhibit 10.1.1		Consolidated Edison, Inc. Deferred Stock Compensation Plan for Non-Officer Directors, effective July 1, 2002.
Exhibit 10.1.2.1		The Consolidated Edison Retirement Plan, effective January 1, 2001.
Exhibit 10.1.2.2		Amendment No. 1 to the Consolidated Edison Retirement Plan.
Exhibit 10.1.3		The Consolidated Edison Thrift Savings Plan, as amended effective May 8, 2002.
Exhibit 12.1		Statement of computation of Con Edison's ratio of earnings to fixed charges for the nine and twelve-month periods ended September 30, 2002 and the year ended December 2001.
Exhibit 99.1.1		Certification of chief executive officer required under Section 906 of the Sarbanes-Oxley Act of 2002.
Exhibit 99.1.2		Certification of chief financial officer required under Section 906 of the Sarbanes-Oxley Act of 2002.

Con Edison of New York

Exhibit 4.2.1		Supplemental Indenture of Trust, dated as of October 1, 2002, to Indenture of Trust, dated as of June 1, 2002, between New York State Energy Research and Development Authority (NYSERDA) and The Bank of New York, as trustee.
Exhibit 4.2.2		Supplemental Participation Agreement, dated as of October 1, 2002, to Participation Agreement, dated as of June 1, 2001 between NYSERDA and Con Edison of New York.
Exhibit 12.2		Statement of computation of Con Edison of New York's ratio of earnings to fixed charges for the nine and twelve-month periods ended September 30, 2002 and the year ended December 2001.
Exhibit 99.2.1		Certification of chief executive officer required under Section 906 of the Sarbanes-Oxley Act of 2002.
Exhibit 99.2.2		Certification of chief financial officer required under Section 906 of the Sarbanes-Oxley Act of 2002.

O&R

Exhibit 99.3.1		Certification of chief executive officer required under Section 906 of the Sarbanes-Oxley Act of 2002.
Exhibit 99.3.2		Certification of chief financial officer required under Section 906 of the Sarbanes-Oxley Act of 2002.

(b): REPORTS ON FORM 8-K

Con Edison

Con Edison filed a Current Report on Form 8-K, dated August 12, 2002, reporting (under Item 9), that its principal executive officer and principal financial officer each delivered to the Securities and Exchange Commission a statement in writing, under oath, in the form of Exhibit A to the Commission's Order No. 4-460.

Con Edison of New York

Con Edison of New York filed no Current Reports on Form 8-K during the quarter ended September 30, 2002.

O&R

O&R filed no Current Reports on Form 8-K during the quarter ended September 30, 2002.

Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, each Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Certifications

CON EDISON—Principal Executive Officer

I, Eugene R. McGrath, the principal executive officer of Consolidated Edison, Inc., certify that:

1.

I have reviewed this quarterly report on Form 10-Q of Consolidated Edison, Inc.;

2.

Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3.

Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4.

The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a): designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;
b): evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and
c): presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

5.

The registrant's other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function):

a): all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and
b): any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and

6.: The registrant's other certifying officer and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

DATE: November 13, 2002

		/s/ EUGENE R. MCGRATH Eugene R. McGrath
		Chairman, President and Chief Executive Officer

CON EDISON—Principal Financial Officer

I, Joan S. Freilich, the principal financial officer of Consolidated Edison, Inc., certify that:

1.

I have reviewed this quarterly report on Form 10-Q of Consolidated Edison, Inc.;

2.

3.

4.

a): designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;
b): evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and
c): presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

5.

a): all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and
b): any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and

6.: The registrant's other certifying officer and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

DATE: November 13, 2002

		/s/ JOAN S. FREILICH Joan S. Freilich
		Executive Vice President and Chief Financial Officer

CON EDISON OF NEW YORK—Principal Executive Officer

I, Eugene R. McGrath, the principal executive officer of Consolidated Edison Company of New York, Inc., certify that:

1.

I have reviewed this quarterly report on Form 10-Q of Consolidated Edison Company of New York, Inc.;

2.

3.

4.

a): designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;
b): evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and
c): presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

5.

a): all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and
b): any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and

6.: The registrant's other certifying officer and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

DATE: November 13, 2002

		/s/ EUGENE R. MCGRATH Eugene R. McGrath
		Chairman and Chief Executive Officer

CON EDISON OF NEW YORK—Principal Financial Officer

I, Joan S. Freilich, the principal financial officer of Consolidated Edison Company of New York, Inc., certify that:

1.

I have reviewed this quarterly report on Form 10-Q of Consolidated Edison Company of New York, Inc.;

2.

3.

4.

a): designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;
b): evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and
c): presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

5.

a): all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and
b): any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and

6.: The registrant's other certifying officer and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

DATE: November 13, 2002

		/s/ JOAN S. FREILICH Joan S. Freilich
		Executive Vice President and Chief Financial Officer

100

O&R—Principal Executive Officer

I, Stephen B. Bram, the principal executive officer of Orange and Rockland Utilities, Inc., certify that:

1.

I have reviewed this quarterly report on Form 10-Q of Orange and Rockland Utilities, Inc.;

2.

3.

4.

a): designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;
b): evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and
c): presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

5.

a): all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and
b): any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and

6.: The registrant's other certifying officer and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

DATE: November 13, 2002

		/s/ STEPHEN B. BRAM Stephen B. Bram
		President and Chief Executive Officer

101

O&R—Principal Financial Officer

I, Edward J. Rasmussen, the principal financial officer of Orange and Rockland Utilities, Inc., certify that:

1.

I have reviewed this quarterly report on Form 10-Q of Orange and Rockland Utilities, Inc.;

2.

3.

4.

a): designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;
b): evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and
c): presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

5.

a): all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and
b): any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and

6.: The registrant's other certifying officer and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

DATE: November 13, 2002

		/s/ EDWARD J. RASMUSSEN Edward J. Rasmussen
		Vice President and Chief Financial Officer

102

QuickLinks

EXHIBIT 10.1.1

CONSOLIDATED EDISON INC.

DEFERRED STOCK COMPENSATION PLAN

FOR NON-OFFICER DIRECTORS

EFFECTIVE JULY 1, 2002

TABLE OF CONTENTS

Page
----

ARTICLE 1. INTRODUCTION.......................................................1
ARTICLE 2. DEFINITIONS........................................................1
ARTICLE 3. ADMINISTRATION.....................................................3
ARTICLE 4. SHARES SUBJECT TO PLAN.............................................3
ARTICLE 5. ELIGIBILITY........................................................3
ARTICLE 6. STOCK UNIT GRANTS..................................................3
ARTICLE 7. STOCK UNITS AND ACCOUNTS...........................................4
ARTICLE 8. VOLUNTARY DEFERRALS................................................6
ARTICLE 9. BENEFICIARY DESIGNATION............................................7
ARTICLE 10. TAX WITHHOLDING....................................................7
ARTICLE 11. AMENDMENT, MODIFICATIONS, AND TERMINATION..........................7
ARTICLE 12. NOT A CONTRACT FOR CONTINUED SERVICE...............................8
ARTICLE 13. NONALIENABILITY....................................................8
ARTICLE 14. SUCCESSORS.........................................................8
ARTICLE 15. UNFUNDED STATUS....................................................8
ARTICLE 16. ACCOUNT STATEMENTS.................................................8
ARTICLE 17. GENERAL............................................................8

APPENDIX A - Deferral Election Form

B - Distribution Election Form

C - Beneficiary Designation Form

- i -

CONSOLIDATED EDISON INC.

DEFERRED STOCK COMPENSATION PLAN

FOR NON-OFFICER DIRECTORS

ARTICLE 1. INTRODUCTION

1.1 Establishment. Consolidated Edison Inc. (the "Company") terminated the
Consolidated Edison Company of New York, Inc. Retirement Plan for
Trustees ("Retirement Plan") and the Consolidated Edison, Inc. Restricted
Stock Plan for Non-Employee Directors effective June 30, 2002, and hereby
establishes the Consolidated Edison Inc. Deferred Stock Compensation Plan
for Non-Officer Directors (the "Plan") for those Directors of the Company
who are not employees or officers of the Company. The Plan allows
Non-Officer Directors to defer receipt of cash compensation and to
receive such deferred compensation in the form of Shares of Common Stock
of the Company.

1.2 Purpose. The Plan is intended to advance the interests of the Company and
its stockholders by providing a means to attract and retain qualified
persons of superior talent, ability and achievement to serve as
Non-Officer Directors, and to promote their ownership of a greater
proprietary interest in the Company, thereby aligning such Directors'
interests more closely with the interests of the Company's stockholders.

1.3 Effective Date. The Plan is effective as of July 1, 2002.

ARTICLE 2. DEFINITIONS

2.1 "Affiliate" means any company which is a member of a controlled group of
corporations (as defined in Code Section 414(b)) which also includes as a
member the Company; any trade or business under common control (as
defined in Code Section 414(c)) with the Company; any organization
(whether or not incorporated) which is a member of an affiliated service
group (as defined in Code Section 414(m)) which includes the Company; and
any other entity required to be aggregated with the Company pursuant to
regulations under Code Section 414(o).

2.2 "Annual Meeting" means the annual meeting of the stockholders of the
Company.

2.3 "Board" means the Board of Directors of the Company.

2.4 "Code" means the Internal Revenue Code of 1986, as amended from time to
time.

2.5 "Committee" means the Nominating Committee of the Board, unless the Board
designates another committee of the Board to administer the Plan.

2.6 "Company" means Consolidated Edison, Inc., its successors or assigns.

2.7 "Compensation" means all or part of any board and committee chair
retainer, and board and committee meeting fees payable to a Non-Officer
Director in his or her capacity as a Non-Officer Director. Compensation
shall not include any expenses paid directly through reimbursement.

2.8 "Common Stock" means the Company's common stock, $.10 par value.

2.9 "Deferral Election Form" means a written election to defer cash
distribution of dividend equivalents, and/or to defer Compensation
pursuant to the terms of the Plan (APPENDIX A).

2.10 "Director" means any member of the Board.

2.11 "Distribution Election Form" means a written election to distribute Stock
Units pursuant to the terms of the Plan (APPENDIX B).

2.12 "Effective Date" means July 1, 2002.

2.13 "Fair Market Value" means, as of any specified date, the closing price of
a Share in the Consolidated Reporting System as reported in the Wall
Street Journal or in a similar readily available public source for the
trading day immediately prior to the applicable transaction date. If no
trading of Shares occurred on such date the closing price of a Share in
such system as reported for the preceding day on which sales of Shares
occurred shall be used.

2.14 "Grant" means a grant of Stock Units under this Plan.

2.15 "Non-Officer Director" means a Director of the Company who is not also an
officer or employee of the Company or any of its subsidiaries or
affiliates.

2.16 "Plan Participant" means a person who was a Non-Officer Director on July
1, 2002 or who becomes a Non-Officer Director thereafter, until his or
her Termination of Service.

2.17 "Plan" means the Consolidated Edison, Inc. Deferred Stock Compensation
Plan for Non-Officer Directors, as it may be amended from time to time.

2.18 "Service" means a Non-Officer Director's service on the Board.

2.19 "Shares" means shares of Common Stock.

2.20 "Stock Units" means the units in which a Non-Officer Director's Account
is denominated. A Stock Unit is an unsecured obligation of the Company
that is intended to represent the economic equivalent of one Share.

2.21 "Stock Unit Account" means the bookkeeping account established by the
Company pursuant to Article 7 (Stock Units and Accounts).

2.22 "Subsidiary" means any corporation, partnership, joint venture, limited
liability company, or other entity in which the Company owns securities
or interests representing a majority of the aggregate voting power.

2.23 "Termination of Service" means termination of Service as a Director.

ARTICLE 3. ADMINISTRATION

3.1 GENERAL. The Nominating Committee of the Board shall administer the Plan,
unless the Board designates itself or another committee to administer the
Plan. Except as may be limited by law, the articles of incorporation or
by-laws of the Company, or the Plan, the Committee shall have full and
final authority, power, and discretion to construe and interpret the Plan
and any Grant, to make all rules, regulations and other determinations
which may be necessary or advisable for the administration of the Plan.
To the extent permitted by law, the Committee shall have the authority to
delegate administrative duties to officers or Directors of the Company.

3.2 DECISIONS BINDING. All determinations and decisions made by the Committee
under the Plan shall be final, conclusive, and binding on all persons,
including the Company, its stockholders, Plan Participants, and their
respective estates and beneficiaries.

ARTICLE 4. SHARES SUBJECT TO PLAN

4.1 Shares delivered pursuant to the Plan may include authorized but unissued
shares, treasury shares, or shares that the Company may cause to be
purchased on the market to satisfy its obligations under the Plan.

4.2 In the event of any stock split, re-capitalization, merger,
consolidation, reorganization, or similar corporate transaction or event
that affects Shares such that an adjustment is determined by the Board or
Committee to be appropriate to prevent dilution or enlargement of Plan
Participants' rights under the Plan, then the Board or Committee shall,
in a manner that is proportionate to the change to the Share and is
otherwise equitable, adjust the number or kind of Shares to be delivered
upon settlement of Stock Unit Accounts under Article 7 (Stock Units and
Accounts). Such decision made by the Board or Committee shall be
conclusive and binding for all purposes of the Plan.

ARTICLE 5. ELIGIBILITY

5.1 Any person who is or who becomes a Non-Officer Director of the Company on
or after the Effective Date shall be eligible to receive a benefit under
the Plan.

ARTICLE 6. STOCK UNIT GRANTS

6.1 INITIAL ACCOUNT BALANCE. The Retirement Plan was terminated effective
June 30, 2002. Each Non-Officer Director who was a participant in the
Retirement Plan prior to June 30, 2002 and who became a Participant in
this Plan on July 1, 2002, shall be granted Stock Units equal to the net
accrued value of his or her benefit under the Retirement Plan as of June
30, 2002 as determined by the Company. The value of the accrued benefit
is calculated using the actuarial present value of the accrued benefit
under the Retirement Plan using an annual discount rate of five percent
and using the 1983 Group Annuity Mortality Unisex Table. These Plan
Participants no longer have a right to any benefits under the Retirement
Plan.

6.2 ADJUSTMENT GRANT. Each Non-Officer Director who became a Plan Participant
in this Plan on July 1, 2002, shall be granted 400 Stock Units on July 1,
2002. These units represent the approximate value the Plan Participant
would have accrued under the Retirement Plan from the date of conversion
(June 30, 2002) through the end of 2002.

6.3 ANNUAL GRANTS. Commencing in calendar year 2003, each Plan Participant
shall be granted 1,300 Stock Units on the first business day after each
Annual Meeting. If a Non-Officer Director is first appointed as a member
of the Board after the Annual Meeting, his or her first Annual Grant of
Stock Units (rounded to the nearest one hundred Stock Units) shall be
determined by multiplying 1,300 by the result from dividing the number of
months before the next Annual Meeting by twelve. The Board upon
recommendation of the Committee may change the Annual Grant.

6.4 AUTOMATIC DEFERRAL. The Stock Units granted pursuant to this Article 6
(Stock Unit Grants) shall be automatically deferred until the Plan
Participant's Termination of Service.

ARTICLE 7. STOCK UNITS AND ACCOUNTS

7.1 ACCOUNTS. The Company shall create and maintain on its books one or more
Stock Unit Accounts for each Plan Participant to which shall be credited
all Stock Units that may be attributed to such Plan Participant from time
to time in connection with (i) Grants of Stock Units pursuant to Article
6 (Stock Unit Grants), (ii) deferrals of Compensation by such Plan
Participant pursuant to Article 8 (Voluntary Deferrals), or (iii)
dividend equivalents pursuant to Section 7.3 of this Article. Accounts
shall be maintained solely for accounting purposes and shall not require
a segregation of any assets of the Company.

7.2 VESTING. Stock Units granted pursuant to Sections 6.1, 6.2, and 6.3,
shall become vested upon the date of the Grant. Stock Units credited to a
Plan Participant's Account by reason of his or her election to defer
Compensation pursuant to Article 8 (Voluntary Deferrals) shall be vested
as of the date the Compensation would have been paid. Stock Units
resulting from the crediting of dividend equivalents to a Plan
Participant's Account(s) pursuant to Section 7.3 shall be vested on the
Dividend Payment Date.

7.3 DIVIDEND EQUIVALENTS. A. Dividend equivalents shall be earned on Stock
Units and credited to a Plan Participant's Account as of any date (a
"Dividend Payment Date") on which the Company pays any dividend on
outstanding Shares (a "Dividend"). Such dividend equivalents shall be
expressed as a number of Stock Units equal to:

(i) The number of Stock Units credited to a Plan Participant's Account
as of the record date for such Dividend multiplied by the value of
the per share cash amount of the Dividend (or as determined by the
Committee in the case of Dividends paid other than in cash),

DIVIDED BY:

(ii) The Fair Market Value of a Share as of the Dividend Payment Date.

B. All dividend equivalents earned on Stock Units whether
resulting from Stock Unit Grants pursuant to Article 6 (Stock Unit
Grants) or resulting from Voluntary Deferrals of

Compensation pursuant to Article 8 (Voluntary Deferrals) shall be
automatically deferred until the Plan Participant's Termination of
Service to the Company, unless an election pursuant to Section 7.3C is
timely made to receive some or all of the dividend equivalents in cash
payments.

C. An election to receive some or all of the dividend equivalents
in cash payments must be made by December 31 of a calendar year by
written notice filed with the Secretary of the Company on a form
("Deferral Election Form") furnished by the Company. (APPENDIX A - Part
I). The election is valid for the following calendar year and remains in
effect until modified or revoked by a new Deferral Election Form filed
with the Secretary of the Company, which new Deferral Election Form shall
take effect in the year following the year of receipt.

D. An election to receive cash payments on dividend equivalents
that may become payable to the Plan Participant on Stock Units prior to
December 31, 2002 must be made before September 1, 2002 and such election
remains in effect for dividends declared in subsequent calendar years
until revoked or until a new Deferral Election Form is filed with the
Secretary of the Company in accordance with Section 7.3C.

7.4 TIMING AND METHOD OF PAYMENT.

A. All payments on account of Stock Units shall be made in Shares.

B. The Stock Units granted pursuant to Article 6 (Stock Unit
Grants) shall be paid in Shares to a Plan Participant in a single
one-time payment of Shares (rounded to the whole Share) as soon as
practicable following his or her Termination of Service, except that the
Plan Participant may elect to be paid his or her Shares in equal
quarterly distributions for up to 10 years following the termination of
his or her Service by filing with the Secretary of the Company a form
("Distribution Election Form") as set forth in APPENDIX B no later than
December 31 of the year preceding such Plan Participant's Termination of
Service. If this election is made, dividend equivalents shall continue to
be earned on the remaining Stock Units in the Participant's Account until
all Shares have been distributed. The dividend equivalents that are
earned during this payment period shall be distributed as cash payments,
regardless of any prior election to have dividend equivalents deferred
and reinvested in Stock Units.

C. The Stock Units resulting from deferrals of Compensation
pursuant to Article 8 (Voluntary Deferrals) shall be deferred until
Termination of Service except that the Plan Participant may elect to
defer receipt of his or her Shares to the January 1 that is at least five
years from the date on which the Stock Units were deferred by filing a
Deferral Election Form (APPENDIX A - Part II) in accordance with the
procedures set forth in Section 8.4. However, no deferral can extend
longer than the Plan Participant's date of Termination of Service. Stock
Units resulting from deferrals pursuant to Article 8 (Voluntary
Deferrals) will be paid in Shares to a Plan Participant in a single
one-time payment of Shares (rounded to the whole Share) as soon as
practicable following the date specified in the Deferral Election Form or
the date of his or her Termination of Service. If, however, a Plan
Participant has elected to defer receipt until his or her Termination of
Service, he or she may elect to be paid his or her Shares in equal
quarterly distributions for up to 10 years following the termination of
his or her Service by filing with the Secretary of the Company a form
("Distribution Election Form") as set forth in APPENDIX B no later than
December 31 of the year preceding such Plan Participant's

Termination of Service. If this election is made, dividend equivalents
shall continue to be earned on the remaining Stock Units in the
Participant's Account until all Shares have been distributed. The
dividend equivalents that are earned during this payment period shall be
distributed as cash payments regardless of any prior election to have
dividend equivalents deferred and reinvested in Stock Units.

D. The Stock Units resulting from dividend equivalent deferrals
pursuant to Section 7.3 shall be paid in Shares (rounded to the whole
Share) to a Plan Participant in accordance with Section 7.4B. above.

E. The Committee may, in its discretion and to the extent
consistent with laws and regulations, give effect to a Deferral Election
Form or a Distribution Election Form that is not timely made.

ARTICLE 8. VOLUNTARY DEFERRALS

8.1 DEFERRAL ELECTION. A Plan Participant may elect to defer receipt of all
or any specified portion of any Compensation that may become payable to
him or her and to have such amounts credited to his or her Stock Unit
Account in accordance with Section 7.1 of this Plan. In addition, Plan
Participants retain the right to at any time defer receipt of all or any
specified portion of any Compensation that may become payable to him or
her into an interest-bearing account pursuant to the terms of the
Deferred Compensation Plan for Members of the Board of Trustees of
Consolidated Edison Company of New York, Inc. If no election to defer
receipt of Compensation is made, Compensation will be paid currently and
will be taxable.

8.2 DEFERRALS CREDITED TO ACCOUNT. Any Compensation deferred by a Plan
Participant pursuant to this Article 8 (Voluntary Deferrals) shall be
allocated to his or her Stock Unit Account and deemed to be invested in a
number of Stock Units equal to (i) the amount of such Compensation
DIVIDED BY (ii) the Fair Market Value of a Share on the date Compensation
would otherwise have been paid.

8.3 PAYMENT AND DISTRIBUTION OF DEFERRALS. The timing and method of payment
and distribution the Stock Units resulting from the voluntary deferral of
compensation will be in accordance with Section 7.4C.

8.4 TIMING OF DEFERRAL ELECTION.

A. A deferral election may be made by written notice filed with
the Secretary of the Company on a Deferral Election Form (APPENDIX A -
Part II):

(i) on or before the September 1, 2002 (covering Compensation to
be earned before the end of 2002);

(ii) no more than 30 days after a Plan Participant is first elected
or appointed to the Board (covering Compensation to be earned
for the remainder of the year);

(iii) on or before the end of any calendar year (covering
Compensation to be earned the following calendar year);

(iv) on or before such other date or dates as may be approved in
advance by the Committee (covering Compensation earned for
such period or periods commencing after such other date as may
be specified by the Committee).

B. Any deferral election shall continue in effect until revoked or
modified by a new Deferral Election Form filed with the Secretary of the
Company. A Plan Participant who has revoked a deferral election may file
a new Deferral Election Form to defer Compensation but it shall only
relate to Compensation for Service to be rendered during the calendar
year following the year in which such new Deferral Election Form is filed
with the Secretary of the Company. Amounts credited to a Plan
Participant's Account prior to the effective date of any revocation or
modification of a deferral election shall not be affected by such
revocation or modification.

ARTICLE 9. BENEFICIARY DESIGNATION

9.1 Each Plan Participant may from time to time name any beneficiary or
beneficiaries (who may be named contingently or successively) to whom any
benefit under the Plan is to be paid in the event of such Plan
Participant's death before he or she receives any or all of such benefit.
Each such designation shall revoke all prior designations by such Plan
Participant, shall be in a form (APPENDIX C) prescribed by the Company,
and will be effective only when filed by the Plan Participant in writing
with the Secretary of the Company during the Plan Participant's lifetime.
In the absence of any such designation, or if such designated beneficiary
or beneficiaries do not survive the Plan Participant, benefits remaining
unpaid at the Plan Participant's death shall be paid to his or her
estate.

ARTICLE 10. TAX WITHHOLDING

10.1 The Committee may make such provisions and take such steps as it may deem
necessary or appropriate for the withholding of any taxes that the
Company is required by any law or regulation of any governmental
authority, whether federal, state or local, domestic or foreign, to
withhold in connection with the Grant of any Stock Units, including, but
not limited to (i) the withholding of delivery of certificates for Shares
of Common Stock until the Plan Participant reimburses the Company for the
amount the Company is required to withhold with respect to such taxes,
(ii) the canceling of any number of Shares of Common Stock issuable in an
amount sufficient to reimburse the Company for the amount it is required
to so withhold or (iii) withholding the amount due from any such Plan
Participant's other compensation.

ARTICLE 11. AMENDMENT, MODIFICATIONS, AND TERMINATION

11.1 AMENDMENT, MODIFICATION, AND TERMINATION. Subject to the terms of the
Plan, the Board may at any time, including retroactively, and from time
to time, alter, amend, modify, suspend or terminate the Plan in whole or
in part as it may deem advisable.

11.2 PRIOR GRANTS OF STOCK UNITS. Other than due to fluctuation in share
price, no termination, amendment, or modification of the Plan shall
adversely affect in any material way any prior Grant of Stock Units or
any outstanding Stock Units or reduce the benefits of any Plan
Participant who has previously terminated Service hereunder.

ARTICLE 12. NOT A CONTRACT FOR CONTINUED SERVICE

12.1 Nothing contained in the Plan shall be deemed to confer upon any Plan
Participant to whom Stock Units are or may be granted hereunder any right
to remain a member of the Board or in any way limit the right of the
Company's stockholders to terminate or fail to re-nominate or reelect any
Plan Participant as a member of the Board.

ARTICLE 13. NONALIENABILITY

13.1 No Stock Unit Grant, nor any right to a payment of Stock Units under this
Plan shall be subject in any manner to anticipation, alienation, sale,
transfer, assignment, pledge, encumbrance, attachment, execution, levy or
garnishment by creditors of the Plan Participant or the Plan
Participant's beneficiary, other than (i) by will, (ii) by the laws of
descent and distribution, or (iii) pursuant to a beneficiary designation
in accordance with Article 9 (Beneficiary Designation).

ARTICLE 14. SUCCESSORS

14.1 All obligations of the Company under the Plan shall be binding on any
successor to the Company, whether the existence of such successor is the
result of a direct or indirect purchase, merger, consolidation, or
otherwise, of all or substantially all of the business and/or assets of
the Company. The Company and such successor shall be jointly and
severally liable for all of the Company's obligations under the Plan.

ARTICLE 15. UNFUNDED STATUS

15.1 The interest of each Plan Participant in any Grant or Compensation under
the Plan (and any Stock Units or Stock Unit Accounts relating thereto)
shall be that of a general creditor of the Company. The Company shall at
all times maintain Stock Unit Accounts, and Stock Units credited thereto
as bookkeeping entries evidencing unfunded and unsecured general
obligations of the Company.

ARTICLE 16. ACCOUNT STATEMENTS

16.1 At least once a year the Secretary of the Company will send the Plan
Participant a statement of his or her account(s). This statement will
include the account(s) balance and all activity since the last statement.

ARTICLE 17. GENERAL

17.1 NO STOCKHOLDER RIGHTS CONFERRED. Nothing contained in the Plan will
confer upon a Plan Participant or beneficiary any rights of a stockholder
of the Company, unless and until Shares are in fact issued or transferred
to such Plan Participant or beneficiary in accordance with Article 6
(Stock Unit Grants).

17.2 GENDER AND NUMBER. Except where otherwise indicated by the context, any
masculine term used herein also shall include the feminine; the plural
shall include the singular and the singular shall include the plural.

17.3 ARTICLES AND SECTIONS. Except where otherwise indicated by the context,
any reference to an "Article" or "Section" shall be to an Article or
Section of this Plan.

17.4 SEVERABILITY. If any part of the Plan is declared to be unlawful or
invalid, such unlawfulness or invalidity shall not invalidate any other
part of the Plan. Any part of the Plan so declared to be unlawful or
invalid shall, if possible, be construed in a manner that will give
effect to the terms of such part of the fullest extent possible while
remaining lawful and valid.

17.5 LEGAL COMPLIANCE. If the Company determines that the exercise or
nonforfeitability of, or delivery of benefits pursuant to, any Grant of
Stock Units or Deferral Election would violate any applicable provision
of (i) federal or state securities laws or (ii) the listing requirements
of any national securities exchange or national market system on which
are then listed any of the Company's equity securities, then the Company
may postpone any such exercise, nonforfeitability or delivery, as
applicable, but the Company shall use all reasonable efforts to cause
such exercise, nonforfeitability or delivery to comply with all such
provisions at the earliest practicable date. If the Company deems
necessary to comply with any applicable securities law, the Company may
require a written investment intent representation by a Plan Participant
and may require that a restrictive legend be affixed to certificates for
Shares delivered pursuant to the Plan.

17.6 GOVERNING LAW. The Plan shall be construed in accordance with and
governed by the laws of the State of New York.

17.7 The costs and expenses of administering the Plan shall be borne by the
Company and shall not be charged against any Grant or to any Plan
Participant or Beneficiary receiving a Grant.

APPENDIX

A - Deferral Election Form

B - Distribution Election Form

C - Beneficiary Designation Form

APPENDIX A

DEFERRAL ELECTION FORM

Name:_______________________________________

Part I

FORM OF DIVIDEND PAYMENT FOR STOCK UNITS

To be completed by all Directors:

You may elect to receive the dividend equivalents on the stock units credited to
you (either from grants of stock units or from your deferral of Compensation)
pursuant to terms of the Consolidated Edison Inc. Deferred Stock Compensation
Plan for Non-Officer Directors ("Plan") in cash or have them converted to
additional stock units.

____ I elect to have _____%* of the dividend equivalents on my Deferred
Stock Units paid in cash on the dates dividends are paid on the
Company's common stock.

____ I elect to have _____%* of the dividend equivalents on my Deferred
Stock Units re-invested as additional stock units. For each
dividend, the number of additional stock units will be determined by
dividing the re-invested dividend by the closing price of a share of
common stock on the trading day immediately preceding the date that
the dividend is payable. All dividend equivalent stock units will be
deferred automatically until you terminate your Board service.

*These percentages must total 100%.

Part II

CASH COMPENSATION DEFERRAL ELECTION

To be completed only by Directors opting to defer all or part of their cash
compensation (retainer and meeting fees):

You may elect to defer receipt of all or a portion of your Board cash
compensation (board and committee chair retainer, and board meeting and
committee meeting fees) and to have the amount credited either to your stock
units account under the Plan or to an interest-bearing account under the
Deferred Compensation Plan for Members of the Board of Trustees of Consolidated
Edison Company of New York, Inc. ("Deferred Compensation Plan"). All deferred
compensation will be deferred until the date specified in your distribution
election contained in the next section of this form.

____ I elect to defer receipt of _____% of my board and committee chair
retainer and to have such amount credited as follows:

/ / ____%** to my Stock Units Account

/ / ____%** to an Interest Account

**These percentages must total 100%.

____ I elect to defer receipt of _____% of my board meeting and committee
meeting fees and to have such amount credited as follows:

/ / ____%*** to my Stock Units Account

/ / ____%*** to an Interest Account

***These percentages must total 100%.

The number of stock units will be determined by dividing the amount of the
compensation deferred by the closing price of a share of common stock on the
trading day immediately preceding the date that the compensation is payable.

CASH COMPENSATION DEFERRAL DISTRIBUTION ELECTION*

To be completed only by Directors opting to defer all or part of their cash
compensation (retainer and meeting fees):

Stock Units Account

The distribution of the cash compensation stock units account will be deferred
in accordance with the following election:

____ I elect to have cash compensation stock units distributed on the
termination of my Board service.

____ I elect to have cash compensation stock units distributed on January
1, 20__
(A date that is at least 5 years from the date this form is signed or on
the termination of my Board service, if earlier.)

Interest Account

The distribution of the cash compensation interest account will be deferred in
accordance with the following election:

____ I elect to have cash compensation interest account distributed on
the termination of my Board service.

____ I elect to have cash compensation interest account distributed on
_________ ___, 20____
(Month) (Day) (Year)
(A date that is at least 1 year from the date this form is signed).

----------------------------------- ------------------
SIGNATURE DATE

NOTE: YOU MAY CHANGE YOUR ELECTION WITH RESPECT TO FUTURE DIVIDEND EQUIVALENTS
AND COMPENSATION DEFERRAL. YOU WILL BE PROVIDED WITH A NEW ELECTION FORM PRIOR
TO THE START OF EACH CALENDAR YEAR TO ALLOW YOU TO MAKE SUCH CHANGES.

*PRIOR TO THE DISTRIBUTION DATE YOU HAVE ELECTED, OR THE TERMINATION OF
YOUR BOARD SERVICE, YOU WILL BE PROVIDED AN OPPORTUNITY TO DESIGNATE HOW YOU
WANT YOUR ACCOUNTS THAT ARE DEFERRED TO BE DISTRIBUTED.

APPENDIX B

DISTRIBUTION ELECTION FORM

Name:______________________________________

Pursuant to the terms of The Consolidated Edison, Inc. Deferred Compensation
Plan for Non-Officer Directors ("Plan") Stock Units granted to you have been
automatically deferred until the termination of your Board service. In addition,
you may have elected to defer receipt of dividend equivalents related to your
Stock Units and to have such amounts credited to your Stock Units account. You
also may have elected to defer all or part of your cash compensation (retainer
and meeting fees) and to have such amounts credited to your Stock Units account
and deferred until your termination of Board service. Your account will be
distributed in whole Shares of Company Common Stock. You must now elect how you
want your Stock Unit account distributed.

If you do not make an election, your account will be distributed to you in a
single one-time distribution of whole Share as soon as practicable following the
termination of your Board service. If you want to receive your distributions in
equal quarterly payments for up to ten years, then you must elect the specific
time period over which you want to receive your distribution. The dividend
equivalents that you continue to earn on the Stock Units in your account will be
distributed in cash.

This form must be filed with the Secretary of the Company no later than the
December 31 of the year prior to the year of your termination of Board service.

DISTRIBUTION OF STOCK UNITS ACCOUNT

____ I elect to receive my Stock Units Account in a single one-time
distribution as soon as practicable after my Board service
termination date.

____ I elect to receive my Stock Unit Account in equal quarterly
distributions over ____ years (a number no greater than ten) from my
service termination date. Quarterly payments will be made on March
1, June 1, September 1, and December 1 of each year.

- -------------------------------------- ----------------------------
Signature Date

APPENDIX C

BENEFICIARY DESIGNATION FORM

Name:_________________________________

In accordance with the provisions of the Consolidated Edison Inc., Deferred
Stock Plan for Non-Officer Directors, I hereby revoke any previous designations
of primary beneficiary(ies) and contingent beneficiary(ies) (if any) and
designate as primary beneficiary(ies) in the event of my death, the following:

PRIMARY BENEFICIARY DESIGNATION

DATE OF SHARE
NAME RELATIONSHIP BIRTH ADDRESS %
- --------------------------------------- ----------------- ---------------- --------------------------------- -----------

- --------------------------------------- ----------------- ---------------- --------------------------------- -----------

- --------------------------------------- ----------------- ---------------- --------------------------------- -----------
TOTAL 100%
- --------------------------------------- ----------------- ---------------- --------------------------------- -----------

Payment will be made in a one-time distribution of equal shares or all to the
survivor unless otherwise indicated. In the event said primary beneficiary(ies)
predecease(s) me, I designate as contingent beneficiary(ies) the following:

CONTINGENT BENEFICIARY DESIGNATION

DATE OF SHARE
NAME RELATIONSHIP BIRTH ADDRESS %
- --------------------------------------- ----------------- ---------------- --------------------------------- -----------

- --------------------------------------- ----------------- ---------------- --------------------------------- -----------

Payment will be made in a one-time distribution of equal shares or all to the
survivor unless otherwise indicated. If no beneficiary survives, the benefit
will be paid to my estate.

Dated this ____ day of _________________ 20__

________________________________________________________________________________
Name - Please Print (Address) (City) (State) (Zip)

- --------------------------------------------------
(Signature)

SEND COMPLETED FORM TO:
DO NOT ATTEMPT TO ERASE OR Office of the Secretary
Consolidated Edison, Inc.
MAKE ANY CORRECTIONS; USE A NEW FORM 4 Irving Place, Room 1618-S
New York, NY 10003



                                                                EXHIBIT 10.1.2.1

                             THE CONSOLIDATED EDISON


                                 RETIREMENT PLAN


                         EFFECTIVE AS OF JANUARY 1, 2001



                     THE CONSOLIDATED EDISON RETIREMENT PLAN

                                  INTRODUCTION

        Effective August 1, 1975, Consolidated Edison Company of New York, Inc.
("CECONY") adopted The Consolidated Edison Pension and Benefits Plan (the
"Weekly Plan") to provide retirement benefits to its employees and their
eligible surviving spouses. Effective January 1, 1983, CECONY adopted The
Consolidated Edison Retirement Plan for Management Employees (the "Management
Plan"), which established the bases upon which certain benefits, including
benefits for service prior to January 1, 1983, would be provided to employees of
CECONY on the management payroll of CECONY on or after December 31, 1982, to
employees who retired prior to that date as management employees and to eligible
surviving spouses of such management employees. Effective January 1, 1983,
CECONY amended the Weekly Plan, which had theretofore included as participants
the employees to be covered by the Management Plan, to avoid duplication of
benefits and coverage. The Management Plan and the Weekly Plan, as amended, made
provision for employees who transferred from the management to the weekly
payroll, and vice versa.

        The Management Plan and the Weekly Plan were subsequently amended and/or
restated from time to time.

        Effective January 1, 1998, Consolidated Edison, Inc. ("CEI"), a holding
company, was formed, and CECONY became its wholly-owned subsidiary. From time to
time, wholly-owned affiliates were formed, which became members of the same

                                                                               1


controlled group of which CEI is a member. In July 1999, CEI acquired Orange and
Rockland Utilities, Inc. ("O&R"), which became a wholly-owned subsidiary of CEI.

        Effective January 1, 2001, the Weekly Plan is being amended and renamed
the Consolidated Edison Retirement Plan (the "Plan") to take into account, among
other things, the impact the formation of the new controlled group has on the
Plan; namely, that CEI is referred to throughout and serves as the Company,
CECONY is the Plan Sponsor and an Employer and certain affiliates are, or will
become, Participating Employers. Furthermore, effective January 1, 2001, the
Management Plan and the Employees' Retirement Plan of Orange and Rockland
Utilities, Inc. are being merged into the Plan as a single plan, as that term is
defined in the Internal Revenue Code of 1986, as amended, (the "Code")
Section 414(l).

        The Plan takes into account:

   (a)  the transfers, from time to time, of CECONY employees to O&R and vice
versa;

   (b)  the acquisition of certain power generation facilities of Western
Massachusetts Electric Company by Consolidated Edison Energy Massachusetts, Inc.
and the participation of certain employees of Consolidated Edison Energy
Massachusetts, Inc. in the Plan;

   (c)  the divestiture of CECONY's fossil fueled electricity generation
facilities in New York City and certain rights and entitlements afforded those
employees who transferred directly to the buyers of the divested generation
facilities;

   (d)  benefit formulas of the merged plans that take into account the
provision of the collective bargaining agreements effective June 25, 2000,
between CECONY and Local 1-2, Utility Workers Union of America, AFL-CIO,
effective June 1, 2000, between O&R

                                                                               2


and Local 503, International Brotherhood of Electrical Workers, AFL-CIO, and
effective June 24, 2001, between CECONY and Local 3, International Brotherhood
of Electrical Workers, AFL-CIO; and

   (e)  a special increase in Pension Allowance, effective April 1, 2001, for
certain CECONY Participants and their surviving spouses.
Each provision has its own effective date that is stated in the Plan.

        Except as otherwise specifically provided herein, the rights and
benefits of any Participant who retires or whose employment is terminated are
determined in accordance with the provisions of the Plan as in effect and
operative at the time of such retirement or termination.

                                                                               3


                                    ARTICLE I

                                   DEFINITIONS

1.01    ACCREDITED SERVICE means service recognized for purposes of computing
the amount of any Pension Allowance and is determined as provided in Section
3.02. Effective January 1, 2001, wherever the term "Accredited Service" appears,
"Accredited Service" also means "Credited Service" as that term is applied to
determine a benefit for an O&R Participant. For an O&R Participant, a Year of
Credited Service is a Year of Vesting Service during the period of Plan
participation.

1.02    ACCUMULATED CONTRIBUTIONS means the sum of an O&R Participant's
contributions to the O&R Plan plus interest at the rate per annum, compounded
annually, of 2 1/2 per centum prior to January 1, 1963; 3 per centum after
December 31, 1962, and prior to January 1, 1976; 5 per centum after December 31,
1975, and prior to January 1, 1981; 6 per centum after December 31, 1980, and
prior to January 1, 1986; 7 per centum after December 31, 1985, and prior to
January 1, 1988, and after December 31, 1987, the interest rate determined
pursuant to the provisions of Code Section 411(c)(2)(C) as in effect from time
to time thereafter.

1.03    ACTUARIAL EQUIVALENT means equivalent value determined on the basis of
the applicable factors set forth in Appendix A, Section A-1 for CECONY
Participants, in Appendix A, Section A-2 for O&R Participants, and in Appendix
A, Section A-3 for CEI Participants, except as otherwise specified in the Plan.

1.04    ADJUSTED IRS INTEREST RATE means, for a CECONY Participant, the rate of
interest used in conjunction with the IRS Interest Rate in the calculation of
the present

                                                                               4


value of benefits, to take account of prospective cost of living adjustments,
pursuant to Section 11.02, which shall be determined by:

   (a)  dividing the IRS Interest Rate, as determined for a Participant's
Annuity Starting Date, by 100;

   (b)  adding 1.0000 to the amount determined under (a);

   (c)  dividing the amount determined in (b) by the lesser of (x) the sum of
(A) 0.9694, plus (B) the product of 0.7194 and the amount determined in (a), or
(y) 1.0300;

   (d)  subtracting 1.0000 from the amount determined in (c); and

   (e)  multiplying the amount determined in (d) by 100, provided, however, that
in no event shall the Adjusted IRS Interest Rate exceed the IRS Interest Rate as
of any date of determination.

1.05    AFFILIATE means any company which is a member of a controlled group of
corporations (as defined in Code Section 414(b)), which also includes as a
member the Company, any trade or business under common control (as defined in
Code Section 414(c)), with the Company, any organization (whether or not
incorporated) which is a member of an affiliated service group (as defined in
Code Section 414(m)), which includes the Company, and any other entity required
to be aggregated with the Company pursuant to regulations under Code Section
414(o). Notwithstanding the foregoing sentence, for purposes of determining the
Maximum Benefit Limitation, as provided in Section 4.09 of the Plan, the
definitions in Code Sections 414(b) and (c) shall be modified as provided in
Code Section 415(h).

                                                                               5


1.06    ANNUAL BASIC STRAIGHT-TIME COMPENSATION means:

   (a)  for a CECONY Weekly Employee, his or her regular stated rate of pay in
his or her last pay period in each calendar year, determined prior to any
Pre-Tax Contributions, on which overtime and other premium payments are based,
and, except as set forth in the definition of Final Average Pay, shall not
include premium, overtime payments, or similar payments. In the case of an
hourly-paid CECONY Weekly Employee, Annual Basic Straight-Time Compensation will
be determined by multiplying the CECONY Weekly Employee's hourly rate by his or
her regular weekly schedule of hours multiplied by fifty-two (52); and

   (b)  for a CECONY Management Participant and a CECONY Transferred
Participant, his or her regular stated annual rate of salary in his or her last
pay period in each calendar year, determined prior to any Pre-Tax Contributions,
excluding premium pay, overtime pay, payments under deferred compensation,
incentive, or other Employer benefit or compensation plans, and all other forms
of special pay.

1.07    ANNUAL COMPENSATION means:

   (a)  for a CECONY Weekly Employee, his or her Annual Basic Straight-Time
Compensation;

   (b)  for a CECONY Management Participant and a CECONY Transferred
Participant, for Plan Years commencing prior to January 1, 1999, his or her
Annual Basic Straight-Time Compensation;

   (c)  for a CECONY Management Participant, a CECONY Transferred Participant,
and a CEI Participant, for Plan Years commencing on and after January 1, 1999,
the sum of his or her Annual Basic Straight-Time Compensation and Annual
Variable Pay Award;

                                                                               6


   (d)  for an O&R Management Employee, his or her Annual O&R Management
Compensation; and

   (e)  for an O&R Hourly Employee, his or her Annual Rate of Compensation.

        Commencing with the Plan Year beginning in 1994, Annual Compensation
taken into account for any purpose under the Plan, including the determination
of Final Average Salary and Final Average Pay, shall not exceed $150,000, or for
Plan Years on and after 2002, $200,000 (as adjusted from time to time by the
Secretary of the Treasury in accordance with Code Section 401(a)(17)(B)).
Effective January 1, 1997, the compensation limit shall be applied without
regard to the family aggregation provisions of Code Section 414(q)(6), as in
effect prior to amendment by the Small Business Job Protection Act of 1996, in
determining benefit accruals for Plan Years beginning on and after January 1,
1997, and, to the extent permissible under the IRS rules or regulations, for any
earlier Plan Year.

1.08    ANNUAL O&R MANAGEMENT COMPENSATION means the regular remuneration paid
to an O&R Management Employee on the basis of his or her regular workweek,
determined prior to any Pre-Tax Contributions, and any awards paid to such O&R
Management Employee after January 1, 1997, under the Orange and Rockland
Utilities, Inc. Annual Team Incentive Plan ("ATIP") (such ATIP awards shall be
credited to Annual O&R Management Compensation in the year in which paid).
Annual O&R Management Compensation excludes any bonuses (other than ATIP
awards), overtime, or other special pay and O&R's cost for any public or private
employee benefit plan including the Plan. An O&R Management Employee receiving
credit for Vesting Service and Credited Service on the basis of receipt of
long-term disability benefits under the

                                                                               7


plan of such benefits sponsored by O&R shall be credited with Annual O&R
Management Compensation for that period at the same rate he or she had been
receiving when last actively at work. Notwithstanding anything to the contrary
in this definition: (i) ATIP awards will only be considered as Annual O&R
Management Compensation if paid in a year in which the O&R Management Employee
is on the active payroll of the Company or an Affiliate; (ii) if the final day
on which an O&R Management Employee is on such active payroll is prior to the
ATIP award payment date in the year which contains such final day on the active
payroll, the ATIP award paid to such O&R Management Employee in such year shall
be deemed to have been received during his or her Credited Service for the
purpose of determining his or her Pension Allowance; and (iii) when determining
an O&R Management Employee's rate of Annual O&R Management Compensation as of a
particular date for the purpose of determining his or her deemed Annual O&R
Management Compensation during a period of deemed Credited Service, the ATIP
component of that Annual O&R Management Compensation rate shall be based upon
the ATIP award paid to the O&R Management Employee in the year which contains
the last date on which such O&R Management Employee is on the active payroll of
the Company or an Affiliate.

1.09    ANNUAL RATE OF COMPENSATION means, for an O&R Hourly Employee paid at an
hourly or weekly rate, the regular remuneration paid to an O&R Hourly Employee
on the basis of his or her regular workweek, determined prior to any Pre-Tax
Contributions, and excluding any bonuses, overtime, or special pay, O&R's cost
for any public or private employee benefit plan including the Plan, for the last
regular work week immediately preceding the date the Annual Rate of Compensation
is being computed multiplied by 52.

                                                                               8


An O&R Hourly Employee receiving credit for Vesting Service and Credited Service
on the basis of receipt of long-term disability benefits under the plan of such
benefits sponsored by O&R shall be credited with Annual O&R Hourly Compensation
for that period at the same rate he or she had been receiving when last actively
at work.

1.10    ANNUAL VARIABLE PAY AWARD means the amount awarded, if any, to a
Participant in a Plan Year under CECONY's variable pay compensation plan or
O&R's ATIP. For an Employer other than CECONY or O&R, Annual Variable Pay Award
means the amount awarded, if any, to a Participant in a Plan Year under the
Employer's short-term incentive compensation plan that has been approved by the
Plan Administrator. Effective November 15, 2001, the amount of any award to be
counted under this Plan for a CECONY Transferred Participant or a CEI
Participant shall not exceed 25% of the Participant's rate of base annual salary
or pay in effect as of January 1 of the Plan Year in which the award is made.
Any awards under a long-term incentive compensation plan shall not be includible
in any "Annual Variable Pay Award." Commissions paid by an Employer also shall
be considered to have been awarded pursuant to a short-term incentive
compensation plan and shall be subject to the overall aggregate limit of 25% of
base annual salary (exclusive of commissions).

1.11    ANNUITY STARTING DATE means, unless the Plan expressly provides
otherwise, the first day of the first period in or for which an amount is due as
an annuity or any other form.

1.12    APPROVED LEAVE OF ABSENCE means, for an O&R Employee, an absence from
employment, granted to and approved by O&R in a uniform and non-discriminatory

                                                                               9


manner; it also means an absence for service in the Armed Forces or other
governmental agency, provided that, and only so long as, reemployment rights are
protected by law.

1.13    BENEFICIARY means the person, persons, or entity named by a Participant
by written designation filed with the Plan Administrator to receive payments
after the Participant's death.

1.14    BOARD means the Board of Trustees of CECONY, as from time to time
constituted, or its delegate.

1.15    BREAK IN SERVICE means a Plan Year in which an Employee completes 500 or
fewer Hours of Service.

1.16    CASH BALANCE ACCOUNT means a hypothetical bookkeeping account to which
is credited the allocations and interest credits on behalf of a CEI Participant
pursuant to Article IV. The benefit attributable to a CEI Participant's Cash
Balance Account payable upon an Annuity Starting Date shall be equal to the Cash
Balance Account at such Annuity Starting Date projected to Normal Retirement
Date at the IRS Interest Rate and discounted back to the Annuity Starting Date
at the IRS Interest Rate and assuming no mortality factor.

1.17    CASH BALANCE SINGLE SUM PAYMENT means a lump sum payment in the amount
of the Participant's Cash Balance Account at the Participant's Annuity Starting
Date.

1.18    CASH OUT means a lump sum distribution of the Actuarial Equivalent of
100% of the Participant's nonforfeitable accrued Pension Allowance, as more
fully described in Section 5.02(b)(4).

1.19    CECONY means the Consolidated Edison Company of New York, Inc., and any
successor by merger, purchase or otherwise.

                                                                              10


1.20    CECONY MANAGEMENT PARTICIPANT means a participant in the CECONY
Management Plan on or before December 31, 2000, a transferred O&R Management
Participant, who by the terms and operation of Appendix C, becomes a CECONY
Management Participant, and an Affected IP Employee (as defined in Appendix J)
hired on or after January 1, 2001, on the management payroll of CECONY and who,
but for this provision, would have been a CEI Participant.

1.21    CECONY MANAGEMENT PLAN means the Consolidated Edison Retirement Plan for
Management Employees, as in effect on December 31, 2000.

1.22    CECONY PARTICIPANT means a CECONY Weekly Participant, a CECONY
Management Participant and a CECONY Transferred Participant. CECONY Participant
also means a former employee and/or retiree of CECONY who, as of December 31,
2000, had a vested right to a Pension Allowance from the CECONY Management Plan
or the CECONY Weekly Plan.

1.23    CECONY RETIREE HEALTH PROGRAM means The Consolidated Edison Retiree
Health Program as from time to time in effect.

1.24    CECONY TRANSFERRED PARTICIPANT means a CECONY Management Participant who
transfers directly, without a break in employment, from the payroll of CECONY to
the payroll of O&R, a CEI Affiliate or another Employer.

1.25    CECONY WEEKLY EMPLOYEE means an Eligible Employee employed by and on the
weekly payroll of CECONY who is a member of the collective bargaining unit
represented by Local 1-2 of the Utility Workers' Union of America, AFL-CIO, or a
member of the collective bargaining unit represented by Local 3 of the
International Brotherhood of Electrical Workers, AFL-CIO.

                                                                              11


1.26    CECONY WEEKLY PARTICIPANT means a CECONY Weekly Employee who was a
participant in the CECONY Weekly Plan or becomes a Participant in this Plan.

1.27    CECONY WEEKLY PLAN means the Consolidated Edison Pension and Benefits
Plan as in effect on December 31, 2000.

1.28    CEI PARTICIPANT means an Eligible Employee of CECONY or O&R, hired on or
after January 1, 2001, who is neither a CECONY Weekly Employee nor an O&R Hourly
Employee nor an Affected IP Employee (as defined in Appendix J). CEI Participant
also means an Eligible Employee of a CEI Affiliate, other than a CECONY
Transferred Participant (without regard to his or her hire date), for whom the
CEI Affiliate has elected to extend participation in the Plan, as set forth in
Appendix B. CEI Participant also means an Eligible Employee of an Affiliate that
becomes an Employer on or after January 1, 2001, and for whom such Employer,
with the consent of CECONY, extends participation.

1.29    CEI AFFILIATE OR CEI AFFILIATES means one, more than one, or all, as the
context indicates, of Consolidated Edison Communications, Inc. ("CEC");
Consolidated Edison Solutions, Inc. ("CES"); Consolidated Edison Energy, Inc.
("CEE"); Consolidated Edison Development, Inc. ("CED") Consolidated Edison
Energy Massachusetts, Inc. ("CEEM"), and CED Operating Company, L.P. ("CEDOC").

1.30    CODE means the Internal Revenue Code of 1986, as amended from time to
time.

1.31    COMPANY means Consolidated Edison, Inc. or any successor by merger,
purchase or otherwise.

1.32    CONSOLIDATED RPA '94 LUMP SUM CONVERSION FACTORS means, effective
January 1, 1997, the table of actuarial factors used to convert an immediate or
deferred

                                                                              12


annuity, determined in accordance with or by reference to Section 4.02, into an
actuarially equivalent lump sum. Such factors shall be based on the IRS
Mortality Table and shall take into account the IRS Interest Rate for the period
prior to a Participant's Normal Retirement Date and the Adjusted IRS Interest
Rate for the period subsequent to the Participant's Normal Retirement Date. The
enrolled actuary shall provide to the Plan Administrator tables of Consolidated
RPA '94 Lump Sum Conversion Factors determined on the basis of the IRS Interest
Rate in effect in each "lookback month" as that term is defined in the
definition of IRS Interest Rate.

1.33    CREDITED SERVICE means each Plan Year in which the O&R Participant has
earned or is credited with a Year of Vesting Service during Plan participation.
Effective on and after January 1, 2001, in this Plan, Credited Service means
Accredited Service.

1.34    DISABILITY means a total and permanent disability, which qualifies the
Participant to receive Social Security disability benefits.

1.35    EFFECTIVE DATE means (i) August 1, 1975, for the CECONY Weekly Plan;
(ii) January 1, 1983, for the CECONY Management Plan; (iii) February 1, 1954,
for the O&R Plan; and (iv) January 1, 2001, for this Plan.

1.36    ELIGIBLE EMPLOYEE means, in the case of CECONY and O&R, an Employee. In
the case of each CEI Affiliate, an Eligible Employee is a CECONY Transferred
Participant and any other Employee to whom such CEI Affiliate has elected or
elects, with the approval of CECONY, to extend participation in the Plan, as set
forth in Appendix B. In the case of any other Employer, an Eligible Employee is
only the person(s) to whom such Employer specifically elects or elected, with
the approval of CECONY, to extend participation in this Plan, as set forth in
Appendix B. An Eligible

                                                                              13


Employee does not mean a person working on a temporary or seasonal basis. An
Eligible Employee is not a Leased Employee or a person who has entered into a
written contract that provides he or she (a) is an independent contractor and
not an Employee and/or (b) waives participation in the Plan. An independent
contractor shall not be eligible to participate in the Plan during the period
the written contract is in effect without regard to whether such person is
reclassified as an Employee for such period by the Internal Revenue Service for
tax withholding purposes.

1.37    EMPLOYEE means any individual who is employed by and a common law
employee of the Company, an Employer, or an Affiliate or who is a Leased
Employee. An Employee means a person who is receiving compensation other than a
pension, severance pay, a retainer, or fee under contract.

1.38    EMPLOYER OR EMPLOYERS means one, more than one, or all, as the context
so indicates, of CECONY, O&R, each CEI Affiliate, and each Affiliate to the
extent that it has elected or elects, in the future, to participate in the Plan
with the consent of CECONY as provided in Section 10.03.

1.39    ERISA means the Employee Retirement Income Security Act of 1974, as
amended from time to time.

1.40    FINAL AVERAGE PAY means, for purposes of a CECONY Weekly Employee, the
average of Annual Basic Straight-Time Compensation, calculated to the nearest
whole dollar, for the sixty (60) consecutive calendar months out of the last one
hundred twenty (120) months of his or her Accredited Service which produce the
highest average. If he or she has less than sixty (60) consecutive calendar
months, Final Average Pay means the highest average of his or her Annual Basic
Straight-Time Compensation during all

                                                                              14


months of Accredited Service. For a Local 3 Weekly Employee who has an effective
retirement date after August 31, 1997 and before December 1, 2001, fifty percent
(50%), and for a Local 1-2 Weekly Employee who has an effective retirement date
after November 30, 2000 and for a Local 3 Weekly Employee who has an effective
retirement date after November 30, 2001, one hundred percent (100%), of the
aggregate amount of such CECONY Weekly Employee's pay attributable exclusively
to Sunday premium pay and night shift and midnight shift differential premium
pay during a calendar year shall be added to such Employee's Annual Basic
Straight-Time Compensation for such calendar year for purposes of determining
such Employee's Final Average Pay under the Final Average Pay pension benefit
formula only. Solely for purposes of this Section, months of Accredited Service
separated by a Break in Service shall be deemed consecutive.

1.41    FINAL AVERAGE SALARY means, for purposes of a CECONY Management
Participant, the sum of (i) the average of Annual Basic Straight-Time
Compensation calculated to the nearest whole dollar, during the sixty (60)
consecutive calendar months in the last one hundred twenty (120) months of his
or her Accredited Service which produce the highest average, or during all of
the months of his or her Accredited Service if less than sixty (60) consecutive
calendar months and (ii) the average of the five consecutive Annual Variable Pay
Awards, calculated to the nearest whole dollar, in the ten-year period ending on
the CECONY Management Participant's termination of employment during which such
average is the highest. In calculating such average, the sum of the applicable
Annual Variable Pay Awards shall always be divided by five, regardless of the
number of awards actually paid to the CECONY Management

                                                                              15


Participant. Solely for the purpose of this Section, months of Accredited
Service separated by a Break in Service shall be deemed consecutive. The
determination of Final Average Salary shall be subject to the provisions of Code
Section 401(a)(17).

1.42    FMLA means the Family and Medical Leave Act of 1993, as amended from
time to time.

1.43    HIGHLY COMPENSATED EMPLOYEE means any Employee, who, during the
preceding Plan Year received compensation, as defined in Code Section 415(c), in
excess of $80,000, adjusted by the cost-of-living adjustment, as defined in Code
Section 415, and was in the "top paid group." An Employee will be in the
"top-paid group" if he or she is one of the 20% highest paid Employees.

1.44    HOUR OF SERVICE  means:

   (a)  Each hour for which the Employee is paid or entitled to payment for the
performance of duties for the Company or an Affiliate.

   (b)  An Hour of Service also is each hour for which an Employee is paid, or
entitled to payment, by the Company or an Affiliate on account of a period of
time during which no duties are performed (irrespective of whether the
employment relationship has terminated) due to vacation, holiday, illness,
incapacity (including disability), layoff, jury duty, military duty or leave of
absence.

   (c)  Notwithstanding subsection (b), no more than 501 Hours of Service are
required to be credited to an Employee on account of any single continuous
period during which the Employee performs no duties (whether or not such period
occurs in a single computation period).

                                                                              16


   (d)  An hour for which an Employee is directly or indirectly paid, or
entitled to payment, on account of a period during which no duties are performed
is not required to be credited to the Employee if such payment is made or due
under a plan maintained solely for the purpose of complying with applicable
workers' compensation, or unemployment compensation or disability insurance
laws.

   (e)  Hours of Service are not required to be credited for a payment which
solely reimburses an Employee for medical or medically related expenses incurred
by the Employee.

   (f)  A payment shall be deemed to be made by or due from the Company or an
Affiliate regardless of whether such payment is made by or due from the Company
or an Affiliate directly, or indirectly through, among others, a trust fund, or
insurer, to which the Company or an Affiliate contributes or pays premiums and
regardless of whether contributions made or due to the trust fund, insurer or
other entity are for the benefit of particular Employees or are on behalf of a
group of Employees in the aggregate.

   (g)  An Hour of Service is each hour for which back pay, irrespective of
mitigation of damages, is either awarded or agreed to by the Company or an
Affiliate. The same Hours of Service shall not be credited both under subsection
(a) or subsection (b), as the case may be, and under this subsection (g).
Crediting of Hours of Service for back pay awarded or agreed to with respect to
periods described in subsection (b) shall be subject to the limitations set
forth in that paragraph.

   (h)  With regard to an Employee for whom a record of his or her Hours of
Service is not maintained, (i) one day of employment equals 10 Hours of Service,
(ii) one week of

                                                                              17


employment equals 45 Hours of Service, and (iii) one month of employment equals
190 Hours of Service.

   (i)  Hours of Service shall be determined and calculated in accordance and
compliance with the Department of Labor Regulations set forth in 29 CFR 2530.
200b-2.

1.45    IRS INTEREST RATE means, effective January 1, 1997, the annual rate of
interest on 30-year Treasury Securities as specified by the Commissioner of
Internal Revenue for the second full calendar month preceding the applicable
Stability Period. Such second full calendar month preceding the applicable
Stability Period shall be deemed the "Lookback Month." For purposes of a Cash
Balance Account, the IRS Interest Rate means the annual rate of interest on
30-year Treasury Securities as specified by the Commissioner of Internal Revenue
for the second full calendar month immediately preceding the calendar quarter in
which the Interest Rate is credited.

1.46    IRS MORTALITY TABLE means, effective January 1, 1997, the mortality
table prescribed by Secretary of the Treasury under Code Section
417(e)(3)(A)(ii)(I) as in effect on the first day of the applicable Stability
Period.

1.47    LAYOFF means an Employee's separation from the active payroll of an
Employer for lack of work or such other reason, in no way the fault of the
Employee, as may be determined by the Employer.

1.48    LEASED EMPLOYEE means any person as so defined in Code Section 414(n).

                                                                              18


1.49    LIMITATION YEAR means the calendar year.

1.50    NAMED FIDUCIARY means the person or persons designated in accordance
with Section 7.01 to serve as named fiduciaries, within the meaning of ERISA
Section 4.02(a), with respect to the Plan.

1.51    NON-SUSPENDIBLE MONTH means a calendar month beginning either on or
after (i) a Participant's Normal Retirement Date or (ii) a Participant has begun
receiving a Pension Allowance during which the Participant does not complete at
least 40 Hours of Service, as the term "Hours of Service" is defined in 29 CFR
2530.200b-2(a)(1) and (2).

1.52    NORMAL RETIREMENT AGE means an Eligible Employee's 65th birthday or, if
later, the fifth anniversary of the date he or she becomes a Participant. Normal
Retirement Age, for an O&R Management Employee who was hired on or before
December 31, 2000, or for an O&R Hourly Employee, means his or her 65th
birthday.

1.53    NORMAL RETIREMENT DATE means the first day of the calendar month
immediately following an Employee's Normal Retirement Age.

1.54    O&R means Orange and Rockland Utilities, Inc. and its affiliates,
Rockland Electric Company and Pike County Light and Power Company.

1.55    O&R EARLY RETIREMENT DATE means, the date of an O&R Participant's
termination of employment from the Company or an Affiliate after the Participant
attains his or her 55th birthday and completes ten (10) years of Vesting
Service.

1.56    O&R EMPLOYEE means an Employee employed by and on the active payroll of
O&R.

                                                                              19


1.57    O&R HOURLY EMPLOYEE means an Employee who is employed by and on the
active payroll of O&R and a member of the collective bargaining unit represented
by Local Union 503, International Brotherhood of Electrical Workers, AFL-CIO.

1.58    O&R MANAGEMENT EMPLOYEE means an O&R Employee on the management payroll
of O&R as of December 31, 2000.

1.59    O&R PARTICIPANT means an O&R Management Employee and an O&R Hourly
Employee who have met the participation requirements of Section 2.01, and any
former O&R Employee who, as of December 31, 2000, has a vested Pension Allowance
in the O&R Plan.

1.60    O&R PLAN means the Employees' Retirement Plan of Orange and Rockland
Utilities, Inc. as in effect on December 31, 2000.

1.61    PARENTAL LEAVE means a period in which the Employee is absent from work
immediately following his or her active employment because of the Employee's
pregnancy, the birth of the Employee's child, the placement of a child with the
Employee in connection with the adoption of that child by the Employee, or for
purposes of caring for that child for a period beginning immediately following
birth or placement.

1.62    PARTICIPANT means a CECONY Participant, O&R Participant, CEI Participant
and any other person included in the participation of the Plan.

1.63    PENSION ALLOWANCE means a Participant's accrued benefit payable in the
form of monthly payments as provided in Article 5. A Pension Allowance may be
payable as a Normal Retirement Pension Allowance, an Early Retirement Pension
Allowance, a Disability Pension Allowance or a Vested Pension Allowance. Pension
Allowance also means a Cash-Out or a Cash Balance Single Sum Payment in those
instances in which a

                                                                              20


Participant elects or is deemed to elect his or her Pension Allowance in the
form of a lump-sum payment.

1.64    PLAN means The Consolidated Edison Retirement Plan, as set forth in this
document, and as amended from time to time. The Consolidated Edison Retirement
Plan is the renamed and amended CECONY Weekly Plan into which the CECONY
Management Plan and the O&R Plan were merged.

1.65    PLAN ADMINISTRATOR means the person or persons designated by the Named
Fiduciaries to administer and supervise the Plan as provided in Article 7.

1.66    PLAN YEAR means the calendar year.

1.67    PRE-TAX CONTRIBUTION means any pre-tax contributions to (a) a qualified
"cash or deferred arrangement," as defined in Code Section 401(k), (b) a
"cafeteria plan," as defined in Code Section 125, or (c) a "transportation
reimbursement plan," as defined in Code Section 132.

1.68    PRIOR PLAN OR PRIOR PLANS mean one or more, as the context indicates, of
the CECONY Weekly Plan, the CECONY Management Plan and the O&R Plan, as in
effect on December 31, 2000.

1.69    RULE OF 75 PARTICIPANT means a CECONY Participant whose years of age and
Accredited Service (each rounded to the nearest whole number) total at least 75
("75 points") on the Annuity Starting Date.

                                                                              21


1.70    RULE OF 85 PARTICIPANT means an O&R Participant whose years of age and
Vesting Service (on the Plan Year measurement basis only) total at least 85 on
the O&R Participant's Early Retirement Date.

1.71    SOCIAL SECURITY RETIREMENT AGE means age 65 with respect to a
Participant who was born before January 1, 1938; age 66 with respect to a
Participant who was born after December 31, 1937, and before January 1, 1955;
and age 67 with respect to a Participant who was born after December 31, 1954.

1.72    SOCIAL SECURITY TAXABLE WAGE BASE means the taxable wage base in effect
under Section 230 of the Social Security Act at the beginning of the Plan Year
in which occurs the Participant's termination of employment from the Company or
an Affiliate.

1.73    SPOUSAL CONSENT means written consent given by a Participant's spouse to
an election made by the Participant of a specified optional form of Pension
Allowance or a designation of a specified Beneficiary as provided in Article 5.
Spousal Consent shall be duly witnessed by a Plan representative or notary
public and shall acknowledge the effect on the spouse of the Participant's
election. The requirement for Spousal Consent may be waived by the Plan
Administrator in the event that the Participant establishes to the Plan
Administrator's satisfaction that he or she has no spouse, that such spouse
cannot be located, or under such other circumstances as may be permitted under
applicable Treasury Department regulations. Spousal Consent shall be applicable
only to the particular spouse who provides such consent. Spousal Consent shall
be applicable only to the specific optional form of Pension Allowance elected or
the specific Beneficiary designated pursuant thereto, unless the spouse
expressly waives the right to consent to future changes.

                                                                              22


1.74    STABILITY PERIOD means the calendar month in which occurs the Annuity
Starting Date for the distribution.

1.75    SURVIVING SPOUSE means, for a CECONY Participant or a CEI Participant,
the lawful spouse married to the Participant on the Participant's Annuity
Starting Date. Surviving Spouse means, for an O&R Participant, the lawful spouse
who has been married to the Participant throughout the one-year period ending on
the Annuity Starting Date and surviving at the Participant's date of death.

1.76    TOTAL SALARY means the total Annual Basic Straight-Time Compensation, of
a CECONY Participant for his or her years of Accredited Service, calculated to
the nearest whole dollar, not to exceed the last 30 years of Accredited Service.
The Annual Basic Straight-Time Compensation for any period of Accredited Service
shall be deemed to be no less than such compensation as was applicable to the
CECONY Participant for the 14th calendar year prior to the calendar year of his
or her retirement, but in no event less than $3,000. For a CECONY Participant
whose Annual Basic Straight-Time Compensation at the time of retirement is at a
rate of $3,000 or less, the Annual Basic Straight-Time Compensation for any
period of Accredited Service shall be deemed to be no less than an annual amount
determined at the rate of his or her Annual Basic Straight-Time Compensation at
the time of retirement.

1.77    TRUSTEE means the trustee or trustees by whom the funds of the Plan are
held, as provided in Article 8.

1.78    TRANSFERRED O&R MANAGEMENT PARTICIPANT means an Employee described in
Appendix C of the Plan.

                                                                              23


1.79    VESTING SERVICE means service recognized for purposes of determining a
Participant's non-forfeitable right to a Pension Allowance under the Plan.
Vesting Service is computed based on the Plan Year.

1.80    YEAR OF ACCREDITED SERVICE means 12 months of consecutive or
non-consecutive Accredited Service.

                                                                              24


                                   ARTICLE II

                                  PARTICIPATION

2.01    PARTICIPATION REQUIREMENTS

   (a)  Each person who, on December 31, 2000, was a participant in a Prior Plan
shall continue to be a Participant in the Plan.

   (b)  An Eligible Employee, other than an O&R Hourly Employee, who is hired on
or after December 31, 2000, becomes either a CEI Participant, or in the case of
a CECONY Weekly Employee, a CECONY Weekly Participant, as of the date he or she
first completes an Hour of Service.

   (c)  An O&R Management Employee and an O&R Hourly Employee shall become a
Participant on the first day of the month following the earlier of:

        (1)  the first anniversary date of his or her employment if he or she
             completes 1,000 Hours of Service within the 12-month period
             measured from the date on which he or she first completes an Hour
             of Service; or

        (2)  the end of the first Plan Year occurring immediately subsequent to
             the Plan Year in which he or she first completes an Hour of Service
             during which he or she completes 1,000 Hours of Service.

2.02    EVENTS AFFECTING PARTICIPATION

        A Participant's participation in the Plan shall end when he or she is no
longer employed by an Employer, the Company or an Affiliate and not entitled to
a vested Pension Allowance. Participation shall continue while on an approved
leave of absence or during a period while he or she is not an Eligible Employee
but is in the employ of the Company or an Affiliate. Such Employee's benefit
shall be determined in accordance

                                                                              25


with the provisions of the Plan in effect on the date he or she ceases to be an
Eligible Employee.

2.03    PARTICIPATION UPON REEMPLOYMENT

        If the participation of a CECONY Participant or a CEI Participant ends
and he or she again becomes an Eligible Employee without incurring a Break in
Service, he or she shall again become a Participant as of his or her date of
restoration to service as an Eligible Employee. If an O&R Participant's
participation ends, and he or she again becomes an Eligible Employee, her or she
shall not forfeit any benefits in which he or she was previously vested and he
or she again becomes a Participant as of his or her date of restoration to
service as an Eligible Employee once he or she has again met the participation
requirements set forth in Section 2.01.

                                                                              26


                                   ARTICLE III

                                     SERVICE

3.01    VESTING SERVICE

   (a)  SPECIAL VESTING RULES

        (1)  Vesting Service credited to an Employee under a Prior Plan as of
             December 31, 2000, shall be credited as Vesting Service under this
             Plan. Vesting Service shall not include any service that would have
             been disregarded under the break in service provisions of the
             Employee's Prior Plan.

        (2)  Effective on the specific date set forth below, each of the
             following Participants shall be 100% vested in and have a
             nonforfeitable right to his or her Pension Allowance:

           (i)   pursuant to the "change in control" provision in the O&R Plan,
                 only each O&R Participant who was on the payroll of O&R on
                 August 20, 1998, (the date the shareholders of O&R approved the
                 acquisition of O&R by the Company) shall be 100% vested as of
                 August 20, 1998;

           (ii)  each "WMECO Participant," as defined in Appendix D, who was
                 employed at the WMECO Facilities on July 19, 1999 shall be 100%
                 vested as of July 19, 1999;

           (iii) each "CECONY Participant at Divested Operations," as defined in
                 Appendix H, shall be 100% vested as described in Appendix H;
                 and

           (iv)  each "Affected IP Employee," as defined in Appendix J, shall be
                 100% vested on the date of the closing of the sale of Indian
                 Point.

                                                                              27


   (b)  GENERAL VESTING RULES

        (1)  Effective on and after January 1, 2001, except as otherwise
             provided in the Plan, Vesting Service begins on the date the
             Employee first completes an Hour of Service and ends on the
             Employee's termination of employment from the Company or an
             Affiliate.

        (2)  A Participant, other than an O&R Participant, will be credited with
             a Year of Vesting Service in each Plan Year in which he or she is
             credited with 1000 Hours of Service or six months of service. An
             O&R Participant shall be credited with a year of Vesting Service in
             each Plan Year in which he or she is credited with 1000 Hours of
             Service. In determining an Employee's years of Vesting Service, if
             it should result in a grant of Vesting Service more favorable to
             the Employee, the equivalencies for determining Hours of Service
             shall be used, provided that such equivalencies are consistently
             applied.

        (3)  An O&R Management Employee hired on or after August 20, 1998 and an
             O&R Hourly Employee who completes 1000 Hours of Service during the
             12 months commencing with the month in which he or she first
             completes an Hour of Service and also during the Plan Year
             following the Plan Year in which he or she completed his or her
             first Hour of Service, shall be credited with two years of Vesting
             Service as of the end of the Plan Year following the Plan Year in
             which he or she completed his or her first Hour of Service.

   (c)  BREAK IN SERVICE RULES. Solely for purposes of determining if a Break in
Service for participation and vesting purposes has occurred, an Employee who is
absent from

                                                                              28


work because of Parental Leave or a leave under the FMLA shall receive credit
for the number of Hours of Service that the Employee would normally have
received but for such absence, or where such Hours cannot be determined, eight
(8) Hours of Service for each day of absence, subject to a maximum of 501 Hours
of Service for any one such absence. The Hours of Service will be credited to
the Plan Year in which the absence began if the Employee would otherwise incur a
Break in Service in such Plan Year, or if not, in the immediately following Plan
Year. In order to receive Hours of Service credit for such absence, the Employee
shall be required to provide such information or certification as to the nature
of the absence as may be required by the Plan Administrator.

   (d)  Notwithstanding any provision of this Plan to the contrary,
contributions, benefits, and service credit with respect to qualified military
service will be provided in accordance with Code Section 414(u). If an Employee
is absent because of service in the uniformed services of the United States and
if he or she has returned to the service of the Company or an Affiliate or
applied to return while his or her reemployment rights were protected by law,
then, in that event, that absence shall not count as a Break in Service, but
instead shall be counted as Vesting Service to the extent required by law.

   (e)  A period of absence due to a paid sick leave granted by the Company or
an Affiliate, other than O&R, and one period up to a maximum of six months
during a Participant's aggregate period of employment with the Company or an
Affiliate, during which a Participant is on an approved leave of absence granted
for any other reason will be considered Vesting Service.

   (f)  The first six months of a Parental Leave or an FMLA Leave for maternity
or paternity reasons will constitute Vesting Service if the Participant returns
to active

                                                                              29


employment for a period equal to the lesser of (i) the Parental Leave or FMLA
Leave or (ii) six months.

   (g)  O&R shall credit an Approved Leave of Absence as Vesting Service,
provided that upon conclusion of such "Approved Leave of Absence," the O&R
Participant returns to employment with O&R or an Affiliate or is eligible to
retire on a Normal Retirement Date or an Early Retirement Date.

3.02    ACCREDITED SERVICE

   (a)  Accredited Service and Credited Service credited to a Participant under
a Prior Plan as of December 31, 2000, shall be treated as Accredited Service
under this Plan. Accredited Service shall not include any service that would
have been disregarded under the provisions of the applicable Prior Plan.

   (b)  Except as provided below, only active service with and on the payroll of
an Employer as an Eligible Employee shall be Accredited Service under the Plan.
Subject to the provisions below, a period between a Break in Service and a
reemployment date, whether or not counted as Vesting Service, shall not be
counted as Accredited Service. A Participant who has five years of Vesting
Service or who becomes 100% vested, on account of operation of another provision
in the Plan, will receive Accredited Service for all of his or her years and
months of active service after becoming fully vested regardless of a subsequent
Break in Service.

   (c)  Accredited Service shall include, to the extent required by law, any
period of absence from service with the Company or an Affiliate due to a period
of service in the uniformed services of the United States which is counted in a
Participant's Vesting Service as provided in Section 3.01(b). The Participant
shall be deemed to have earned Annual Compensation during the period of absence
at the rate he or she would have

                                                                              30


received had he or she remained employed as an Eligible Employee for that period
or, if such rate is not reasonably certain, on the basis of the Participant's
rate of compensation during the 12-month period immediately preceding such
period of absence (or if shorter, the period of employment immediately preceding
such period).

   (d)  Accredited Service for a CECONY Participant shall include a period of
absence due to a paid sick leave granted by CECONY. Effective July 1, 1996,
Accredited Service for a CECONY Participant and a CEI Participant shall include
one period, of up to a maximum of six months, during which a CECONY Participant
or a CEI Participant is on an approved leave of absence granted for any reason
other than sick leave. The first six months of such a Parental Leave or an FMLA
leave granted for maternity or paternity reasons shall constitute Accredited
Service, if the Participant returns to active employment for a period equal to
the lesser of (i) the Parental Leave or FMLA Leave or (ii) six months.

   (e)  Unless otherwise explicitly set forth in the Plan, Accredited Service
shall not be credited for any period in which a Participant is not actively
employed as an Eligible Employee. Any person, who enters into a written
contract, that provides that he or she is an independent contractor and not an
Employee, and waives participation in the Plan, shall not receive any Accredited
Service for the period such written contract is in effect.

   (f)  An O&R Participant who has less than the normal number of Hours of
Service for full-time employment in the first Plan Year of participation and in
the Plan Year in which employment terminates, the fraction of each such Plan
Year that will be recognized for Accredited Service shall not be less than the
fraction, the numerator of what is the

                                                                              31


number of Hours of Service as a Participant and the denominator of which is the
normal number of Hours of Service in a Plan Year for normal employment.

   (g)  Union Officer Service for O&R Hourly Participant. To the extent not
already counted as Vesting Service and Accredited Service above--

        (1)  The local union President of the union at O&R who on or after
             January 1, 1983 is absent from work at O&R without pay for proper
             union business, who would otherwise have been scheduled to work,
             with proper notification to O&R, shall be entitled to both Vesting
             Service and Accredited Service at the rate of eight (8) hours per
             day or 40 hours per week, not to exceed 100 days per calendar year
             for such periods of absence.

        (2)  The local union Vice Presidents, Recording Secretaries, Financial
             Secretaries, Treasurers and the Unit Chairman, Unit Vice Chairman
             and Unit Recorder at O&R who on or after January 1, 1983 are absent
             from work, without pay for proper union business, who would
             otherwise have been scheduled to work, with proper notification to
             O&R, shall be entitled to both Vesting Service and Accredited
             Service at the rate of eight (8) hours per day or 40 hours per
             week, not to exceed 40 days per calendar year for such periods of
             absence.

        (3)  Any other bargaining unit member at O&R who on or after January 1,
             1983 is absent from work without pay and who is participating in a
             recognized O&R-union activity, with proper notification to O&R,
             shall be entitled to both Vesting Service and Accredited Service at
             the rate of eight (8) hours per day or 40 hours per week, not to
             exceed five (5) days per calendar year for such periods of absence.

                                                                              32


3.03    RE-EMPLOYMENT OF PARTICIPANT-
        SUSPENSION OF BENEFITS AND BREAK IN SERVICE RULES

   (a)  SUSPENSION OF BENEFITS. Effective January 1, 2001, any Participant who
is receiving a Pension Allowance and restored to service with the Company or an
Affiliate as an Employee, shall have the following apply:

        (1)  The Participant's Pension Allowance shall be suspended for each
             month in which the Participant completes at least 40 Hours of
             Service.

        (2)  Any Vesting Service to which the Participant was entitled when he
             or she retired or terminated service shall be restored to him or
             her.

        (3)  If the Participant is employed by an Employer as an Eligible
             Employee, upon later retirement or termination, he or she shall be
             entitled to an additional Pension Allowance based on his or her
             initial benefit formula applicable to the Participant prior to
             re-employment and his or her Annual Compensation and Accredited
             Service credited to the person beginning after his or her
             re-employment date. The additional Pension Allowance shall be equal
             to the greater of:

           (i)   an amount determined in accordance with the benefit formula
                 applicable to the re-employed Participant as if the
                 Participant's date of re-employment were his or her first day
                 of employment as an Eligible Employee. (His or her Accredited
                 Service prior to the date of re-employment shall not be taken
                 into account in determining his or her number of Years of
                 Accredited Service but shall be taken into account in
                 determining the applicable percentage of the Participant's
                 Final Average Salary or the Participant's Annual Compensation);
                 or

                                                                              33


           (ii)  an amount equal to the excess of (I) the present value of a
                 Pension Allowance determined in accordance with the applicable
                 benefit formula on the basis of his or her Accredited Service
                 and Final Average Salary or Annual Compensation, each
                 aggregated to include the periods before and after the date of
                 restoration to service, over (II) the present value of the
                 Pension Allowance payments received prior to his or her
                 re-employment and, if applicable, during the period of
                 reemployment. Any such amount shall be converted into an
                 annuity. For the purpose of item (ii)(II) of the foregoing
                 sentence, the present value of Pension Allowance payments shall
                 be determined on the basis of the IRS Mortality Table and the
                 Adjusted IRS Interest Rate applicable to the Participant.

        (4)  The additional Pension Allowance shall be payable under any of the
             optional forms described in Section 5.02, as elected by the
             Participant in accordance with Section 5.03, regardless of the
             optional form in which the Pension Allowance that commenced prior
             to his or her reemployment is payable.

        (5)  A Participant whose Pension Allowance is suspended in accordance
             with this Section 3.03 shall be provided with notice that his or
             her Pension Allowance is being suspended in accordance with the
             provisions of the Department of Labor Regulations Section
             2530.203-3.

   (b)  RE-EMPLOYMENT WITHOUT BREAK IN SERVICE. If either a Participant with a
deferred vested Pension Allowance, a former non-vested Participant, or an
Employee who was never a Participant, is re-employed without having a Break in
Service, his or her participation date, Vesting Service and Accredited Service
shall be determined as

                                                                              34


provided in Sections 2.01, 3.01 and 3.02, respectively. If a former Participant
received a Cash Out, the Accredited Service to which he or she was entitled at
the time of his or her termination of service shall be restored to him or her
only in accordance with the provisions of Section 3.03(c). Upon subsequent
retirement, the Pension Allowance of a Participant whose Accredited Service has
been restored pursuant to this subparagraph shall never be less than that which
was accrued under the Plan through the date of prior termination.

   (c)  RE-EMPLOYMENT AFTER BREAK IN SERVICE. If a Participant with a deferred
vested Pension Allowance or a former Participant who received a Cash Out, is
restored to service as an Eligible Employee, after having had a Break in
Service, the following shall apply:

        (1)  The Vesting Service to which he or she was previously entitled
             shall be restored to him or her.

        (2)  Any Accredited Service to which the Participant was entitled at the
             time of his or her termination of service shall be restored to him
             or her; provided, however, that in the case of a Participant who
             received a Cash Out, the Participant repays the amount of the Cash
             Out, if any, received upon his or her initial termination of
             service, together with interest on that amount at the rate
             prescribed by Code Section 411(a)(7)(C), to the date of repayment.

        (3)  Upon later termination or retirement of a Participant whose
             previous Accredited Service has been restored under this Section
             3.03(c), his or her Pension Allowance shall be based on the
             applicable benefit formula for the

                                                                              35


             re-employed Participant and his or her total Annual Compensation
             and Accredited Service while an Eligible Employee.

   (d)  RE-EMPLOYMENT OF NON-VESTED PARTICIPANT AFTER BREAK IN SERVICE. If a
former non-vested Participant is restored to service as an Eligible Employee or
an Employee, after having had a Break in Service, the following shall apply:

        (1)  If he or she is re-employed as an Eligible Employee, he or she
             shall again become a Participant as of his or her date of
             restoration to service as an Eligible Employee.

        (2)  Upon his or her restoration to participation, the Vesting Service
             to which he or she was previously entitled shall be restored to him
             or her, if his or her period of Break in Service does not exceed
             five years, determined at the time of the Break in Service,
             excluding any Vesting Service disregarded by reason of any earlier
             Break in Service.

        (3)  Any Accredited Service to which the Participant was entitled at the
             time of his or her termination of service which is included in the
             Vesting Service, so restored, shall be restored to him or her.

        (4)  Upon later termination or retirement of a Participant whose
             previous Accredited Service has been restored, his or her Pension
             Allowance, if any, shall be based on the applicable benefit formula
             in effect at such later termination or retirement and his or her
             total Annual Compensation and Accredited Service while in the
             service of an Employer as an Eligible Employee.

                                                                              36


   (e)  RE-EMPLOYMENT OF FORMER EMPLOYEE AFTER BREAK IN SERVICE. If an Employee
who was never a Participant is restored to service with the Company or an
Affiliate, after having had a Break in Service, the Vesting Service to which he
or she was previously entitled shall be restored to him or her, if his or her
period of Break in Service does not exceed five years, excluding any Vesting
Service disregarded by reason of any earlier Break in Service.

                                                                              37


                                   ARTICLE IV

                     ELIGIBILITY FOR AND AMOUNT OF BENEFITS

4.01    NORMAL RETIREMENT

        The right of a Participant to a normal retirement Pension Allowance
shall be non-forfeitable as of his or her Normal Retirement Age. A Participant
who has attained Normal Retirement Age may retire from service and receive a
normal retirement Pension Allowance beginning on his or her Normal Retirement
Date. An O&R Participant whose Normal Retirement Age is coincident with the
first day of a calendar month may retire from service and receive a Normal
Retirement Pension Allowance on the first day of the calendar month in which his
or her Normal Retirement Age occurs. A Participant who postpones retirement
shall be provided with notice that his or her Pension Allowance is being
suspended in accordance with the provisions of Department of Labor Regulation
Section 2530.203-3.

4.02    NORMAL RETIREMENT PENSION ALLOWANCE

   (a)  NORMAL RETIREMENT PENSION ALLOWANCE FOR A CECONY PARTICIPANT OR AN O&R
PARTICIPANT. The annual normal retirement Pension Allowance payable on the
Normal Retirement Date of each CECONY Participant and O&R Participant shall be
determined in accordance with his or her applicable benefit formula, as set
forth in Appendix F.

   (b)  NORMAL RETIREMENT PENSION ALLOWANCE FOR A CEI PARTICIPANT A CEI
Participant shall have his or her Pension Allowance determined as a Cash Balance
Account. Under the Cash Balance Account, the CEI Participant's Pension Allowance
at Normal Retirement Date shall be equal to his or her Cash Balance Account as
of the date

                                                                              38


of determination converted into a single life annuity using the IRS Interest
Rate and IRS Mortality Table.

        (1)  Compensation Credits to Cash Balance Account.

           (i)   Allocation Date shall mean the last day of each calendar
                 quarter in each Plan Year. As of the Allocation Date, a CEI
                 Participant shall receive an allocation to his or her Cash
                 Balance Account in an amount determined in accordance with the
                 following schedule:



                                                    PERCENTAGE OF     EXCESS ANNUAL ALLOCATION -
                                                    ANNUAL            PERCENTAGE OF ANNUAL COM-
        SUM OF AGE AND YEARS OF ACCREDITED          COMPENSATION      PENSATION IN CALENDAR
        SERVICE (EACH ROUNDED TO NEAREST WHOLE      IN CALENDAR       QUARTER IN EXCESS OF SOCIAL
        NUMBER) AS OF ALLOCATION DATE               QUARTER.          SECURITY TAXABLE WAGE BASE
        --------------------------------------      -------------     ---------------------------
                                                                             
        Less than 35                                      4%                       4%

        At least 35 but less than 50                      5%                       4%

        At least 50 but less than 65                      6%                       4%

        65 and over                                       7%                       4%


           (ii)  The entire amount, if any, of a CEI Participant's Annual
                 Variable Pay Award shall be included in the CEI Participant's
                 Annual Compensation in the calendar quarter in which the Award
                 is paid. Annual Compensation is determined based on the CEI
                 Participant's rate of pay in the last pay period in each
                 Calendar quarter.

           (iii) A CEI Participant whose termination of employment occurs in the
                 first or second month of a calendar quarter shall receive an
                 allocation for such calendar quarter equal to a pro rata
                 quarterly allocation based on age and years of Accredited
                 Service at his or her termination of employment and

                                                                              39


                 the Annual Compensation he or she received in such calendar
                 quarter multiplied by a fraction, the numerator of which is the
                 number of months in the calendar quarter through the
                 termination of employment and the denominator of which is
                 three.

           (iv)  For any period of an authorized, unpaid leave of absence for
                 which the Participant receives Accredited Service, the
                 Participant shall receive compensation credits to his or her
                 Cash Balance Account. The compensation credits shall be
                 determined on the assumption that the Participant continued to
                 receive during the leave period the Annual Compensation
                 (excluding any Annual Variable Pay Award) in effect for such
                 Participant immediately prior to such leave of absence.

        (2)  Interest Credits to Cash Balance Account. As of the last day of
             each calendar quarter of each Plan Year, the Cash Balance Account
             shall be increased by an amount equal to one-fourth of the
             applicable IRS Interest Rate multiplied by the CEI Participant's
             Cash Balance Account as of the first day of such calendar quarter.
             Notwithstanding the foregoing, the interest rate taken into account
             as of the last day of any calendar quarter coinciding with or
             preceding the CEI Participant's Annuity Starting Date shall not be
             less than 0.75% or greater than 2.25%. In the event a CEI
             Participant terminates employment prior to the last day of a
             calendar quarter, he or she will receive a pro rata interest credit
             based on the number of months in that quarter prior to the Annuity
             Starting Date.

                                                                              40


        (3)  Limitation on Credits. Notwithstanding the foregoing, in no event
             shall any interest credits be made to the account of any CEI
             Participant for any period on and after his or her Annuity Starting
             Date.

        (4)  Death Benefit. For a CEI Participant who is entitled to a vested
             Pension Allowance, a death benefit equal to the Cash Balance
             Account shall be payable to the CEI Participant's Beneficiary upon
             the CEI Participant's death prior to the Annuity Starting Date. If
             the Beneficiary is the CEI Participant's Surviving Spouse, the
             immediately payable Cash Balance Account shall be converted into a
             life annuity, in accordance with Section 4.02 (b), payable to the
             Surviving Spouse. The Surviving Spouse may, in lieu of an immediate
             life annuity, elect a Cash Balance Single Sum Payment payable as
             soon as practicable after the CEI Participant's date of death, or a
             life annuity commencing at any time prior to what would have been
             the CEI Participant's Normal Retirement Date. If the Beneficiary is
             not the Surviving Spouse, a Cash Balance Single Sum Payment shall
             be paid as soon as practicable following the CEI Participant's date
             of death. If the CEI Participant is married, no designation of a
             Beneficiary, other than the CEI Participant's Spouse, shall be
             valid.

        (5)  If the vested CEI Participant is not married at his or her death
             and there is no surviving Beneficiary or a Beneficiary has not been
             designated, the death benefit shall be payable to the CEI
             Participant's estate or legal representative.

4.03    LATE RETIREMENT

   (a)  If a Participant postpones his or her retirement beyond his or her
Normal Retirement Date, upon his or her termination of employment, the
Participant shall be

                                                                              41


entitled to a late retirement Pension Allowance beginning on the first day of
the calendar month after the Plan Administrator receives his or her written
application to retire. A Participant who has served a minimum of two years in a
high-level executive or policymaking position immediately preceding retirement
and who is entitled to a non-forfeitable, immediate, Company-provided annual
retirement Pension Allowance from any source or combination of sources which is
at least equal to a single life annuity of $44,000 per year may be retired at
the election of the Company at any time on or after his or her attainment of age
65.

   (b)  A Participant who remains in service after his or her Normal Retirement
Date shall be entitled to a monthly retirement Pension Allowance for each month
during the postponement period which is a Non-Suspendible Month. Upon
retirement, the Participant shall be entitled to an immediate late retirement
Pension Allowance beginning on the Participant's late retirement date. Subject
to the provisions of Section 5.01, his or her late retirement Pension Allowance
shall be equal to the amount determined in accordance with the applicable
benefit formula for a CEI Participant set forth in Section 4.02, or for a CECONY
Participant or an O&R Participant, as set forth in Appendix F, as of his or her
late retirement date, reduced by an amount that is the Actuarial Equivalent of
any Pension Allowance he or she previously received in any Non-Suspendible
Month. If the Participant's actual late retirement date is later than the first
day of the first Plan Year following his or her Normal Retirement Date, his or
her late retirement Pension Allowance shall be recomputed as of the first day of
each subsequent Plan Year before the Participant's actual late retirement date
(and as of his or her actual late retirement date) as if each such date were
Participant's late retirement date. No reduction hereunder

                                                                              42


as of the date of any such re-computation shall reduce the Participant's late
retirement Pension Allowance below the amount of late retirement Pension
Allowance payable to the Participant prior to such re-computation. If the
Participant's actual distribution date is later than the April 1st following the
Plan Year in which the Participant attains age 70 1/2, the Participant's Pension
Allowance will be actuarially adjusted to reflect the delay in distribution from
that April 1st until her or her Annuity Starting Date.

   (c)  In the event a Participant commences receipt of his or her Pension
Allowance while in active service in accordance with Code Section 401(a)(9)'s
minimum distribution rules, after his or her Normal Retirement Date, such
commencement date shall not be the Participant's Annuity Starting Date for
purposes of Article 5 and the Participant shall receive a late retirement
Pension Allowance commencing at late retirement in an amount determined as if he
or she had retired on such date. As of each succeeding December 31 prior to the
Participant's actual late retirement date, and as of his or her actual late
retirement date, the Participant's Pension Allowance shall be recomputed to
reflect additional accruals. The Participant's recomputed Pension Allowance
shall then be reduced by the Actuarial Equivalent of the total payments of his
or her late retirement Pension Allowance made with respect to monthly payments,
other than payments for Non-Suspendible Months of continued employment, which
were paid prior to each such re-computation to arrive at the Participant's late
retirement Pension Allowance. No such reduction shall reduce the Participant's
late retirement Pension Allowance below the amount of late retirement Pension
Allowance payable to the Participant prior to the re-computation of such
Pension.

                                                                              43


4.04    EARLY RETIREMENT

   (a)  CEI PARTICIPANTS A CEI Participant who is entitled to a vested Pension
Allowance may elect to commence receipt of his or her vested Pension Allowance
prior to his or her Normal Retirement Date. The vested Pension Allowance payable
before Normal Retirement Date will equal his or her Cash Balance Account as of
the CEI Participant's Annuity Starting Date projected to the CEI Participant's
Normal Retirement Date at the IRS Interest Rate and discounted back to the
Annuity Starting Date at the IRS Interest Rate and assuming no mortality factor.

   (b)  CECONY PARTICIPANTS A Rule of 75 Participant may retire and elect to
commence receiving his or her Pension Allowance prior to his or her Normal
Retirement Date. The amount of the early retirement Pension Allowance shall be
determined below.

        (1)  Attainment of Age 55 and 30 Years of Accredited Service. If the
             CECONY Participant has attained age 55 and completed at least 30
             years of Accredited Service as of the Annuity Starting Date, the
             early retirement Pension Allowance shall equal the Normal
             Retirement Pension Allowance determined under the applicable
             benefit formula set forth in Appendix F, Section F.1 or F.2, as
             applicable; provided, however, that the portion of the Pension
             Allowance, if any, attributable to Appendix F, Section
             F.2(A)(a)(iii), shall be reduced by the appropriate discount factor
             in Table E of Section A.1 of Appendix A, based on the Participant's
             age as of his or her Annuity Starting Date.

        (2)  Attainment of Age 60. If the Participant has attained age 60 as of
             the Annuity Starting Date, the early retirement Pension Allowance
             shall be

                                                                              44


             calculated using the same methodology as if he or she had attained
             age 55 and completed 30 years of Accredited Service.

        (3)  If the Participant has 75 points but does not meet either of the
             criteria set forth in (1) or (2) above as of the Annuity Starting
             Date, the early retirement Pension Allowance shall equal the normal
             retirement Pension Allowance determined under the applicable
             benefit formula set forth in Appendix F (other than the portion of
             the Pension Allowance, if any, for a CECONY Management Participant
             attributable to Appendix F Section F.2 A(a)(iii)), multiplied by
             the appropriate discount factor in Appendix A, Section A.1, Table A
             based on the Participant's age as of the Annuity Starting Date. The
             portion of the normal retirement Pension Allowance, if any, for a
             CECONY Management Participant, attributable to Appendix F, Section
             F.2A(a)(iii) shall be reduced by the appropriate discount factor in
             Appendix A, Section A.1, Table E based on the Participant's age as
             of the Annuity Starting Date.

   (c)  O&R PARTICIPANTS.

        (1)  Upon written application filed with the Plan Administrator prior to
             the commencement date, an O&R Participant who has not reached his
             or her Normal Retirement Date but who at the time of termination of
             employment has reached his or her Early Retirement Date shall be
             eligible to commence the receipt of benefits as of the later of:
             (1) the first day of the calendar month which immediately follows
             his or her Early Retirement Date, or (2) subject to Section 5.03,
             the first day of the calendar month which is at least 30 days

                                                                              45


             after the O&R Participant has received the information referred to
             in Section 5.03.

        (2)  Subject to Section 4.04(c)(3), Section 4.09 and Article 5, the
             early retirement Pension Allowance shall be a benefit commencing
             immediately, computed in accordance with Appendix F, Section
             F.3A(a) without regard to when the Pension Allowance actually
             commences. The early retirement Pension Allowance, computed in
             accordance with Appendix F, Section F.3A(a) shall be a normal
             retirement Pension Allowance, with the amount computed in
             accordance with Appendix F, Section F.3A(a)(i) on the basis of the
             O&R Participant's Annual Compensation and Accredited Service to the
             time of his or her Early Retirement Date and the additional benefit
             for two (2) years of Accredited Service computed on the basis of
             his or her Annual Compensation at the rate being paid to him or her
             immediately prior to his or her Early Retirement Date, reduced by
             1/3 of 1% for each complete calendar month by which the
             commencement date of his or her Pension Allowance precedes the date
             which is five (5) years prior to his or her Normal Retirement Date.
             The foregoing reduction for a commencement date preceding the date
             which is five (5) years prior to his or her Normal Retirement Date
             shall not be made if, at the O&R Participant's Early Retirement
             Date, the Participant is a Rule of 85 Participant. The early
             retirement Pension Allowance computed in accordance with Section
             5.01(c)(2) shall be the Actuarial Equivalent of the early
             retirement Pension Allowance computed in accordance with the
             immediately preceding sentence.

                                                                              46


        (3)  At the time of early retirement, an O&R Participant may elect in
             writing, filed with and acknowledged by the Plan Administrator, to
             defer receipt of an early retirement Pension Allowance. An election
             to defer will be deemed to have been made by an O&R Participant if
             a written deferral election is not received and written consent to
             receipt of an early retirement Pension Allowance is not filed with
             and acknowledged by the Plan Administrator within the 90-day period
             prior to the date as of which payments could otherwise begin under
             Section 4.04(c)(1). An O&R Participant whose early retirement
             Pension Allowance is deferred as provided above shall have his
             early retirement Pension Allowance commence as of his Normal
             Retirement Date. Subject to Section 4.09 and Article 5, the
             deferred early retirement Pension Allowance shall be computed in
             accordance with Appendix F, Section F.3A, on the basis of the
             Participant's Annual Compensation and Accredited Service to his or
             her Early Retirement Date and the additional benefit for two (2)
             years of Accredited Service computed on the basis of his or her
             Annual Compensation at the rate being paid to him or her
             immediately prior to his or her Early Retirement Date.
             Notwithstanding Section 4.05(c), an O&R Participant who defers
             commencement of an early retirement Pension Allowance may elect to
             receive a vested Pension Allowance under Section 4.05(c) commencing
             at any time prior to his Normal Retirement Date in lieu of any
             early retirement Pension Allowance under this Section 4.04(c).

        (4)  A supplemental payment of six hundred dollars ($600) a month shall
             be paid to a retired O&R Participant whose early retirement Pension
             Allowance

                                                                              47


             commencement date occurs on or after the date on which the O&R
             Participant attains age sixty (60) but prior to the Participant's
             attaining age sixty-two (62). The monthly supplemental payments
             will cease with the payment made on the earlier of the first day of
             the month in which occurs the retired Participant's death or
             attainment of age sixty-two (62). The monthly supplemental payments
             will be paid only to a retired O&R Participant who is eligible as
             set forth herein and shall not be subject to optional forms of
             payment or Spouse's or vested O&R Participant Spouse's Allowances.
             The monthly supplemental payments are not part of the retired
             Participant's monthly Pension Allowance and are not subject to the
             pension benefit adjustments, but are subject to cessation in the
             event of re-employment which results in cessation of the retired
             Participant's monthly Pension Allowance.

4.05    VESTING

   (a)  Each Participant shall be 100% vested in, and have a nonforfeitable
right to, his or her Pension Allowance upon completion of five Years of Vesting
Service. If the Participant's employment with the Company or an Affiliate is
subsequently terminated for reasons other than retirement, death, or Disability,
he or she shall be eligible for a deferred vested Pension Allowance payable on
the Participant's Normal Retirement Date.

   (b)  A CECONY Participant who is not a Rule of 75 Participant, but who is
entitled to a deferred vested Pension Allowance, may elect to commence receipt
of his or her vested Pension Allowance prior to his or her Normal Retirement
Date. The vested Pension Allowance shall equal the Actuarial Equivalent of his
or her normal retirement Pension Allowance, based on the Adjusted IRS Interest
Rate and the IRS Mortality Table in effect as of the Participant's Annuity
Starting Date.

                                                                              48


   (c)  An O&R Participant who has not satisfied the requirements for an early
retirement Pension Allowance but has earned a vested Pension Allowance may elect
to receive a vested Pension Allowance on or after attainment of age 55 and
completion of 10 years of Vesting Service, as set forth below.

        (1)  An O&R Participant who ceases to be employed by the Company or an
             Affiliate for reasons other than death, retirement or Approved
             Leave of Absence, and before he or she has completed at least five
             years of Vesting Service, will be entitled only to receive his or
             her Accumulated Contributions.

        (2)  Subject to Section 4.09 and Article 5, the vested Pension Allowance
             shall be a deferred Pension Allowance commencing on the vested
             Participant's Normal Retirement Date and shall be computed in
             accordance with Appendix F, Section F.3A(a), as in effect on his or
             her date of termination, with the amount determined under Appendix
             F, Section F.3A(a)(i) computed on the basis of the Participant's
             Annual Compensation and Accredited Service immediately prior to his
             or her date of termination and the additional benefit for two (2)
             years of Accredited Service computed on the basis of his or her
             Annual Compensation at the rate being paid to him or her
             immediately prior to his or her date of termination.

        (3)  Except as provided in Section 4.05(c)(4) if, on the date of
             termination, the vested O&R Participant has completed at least 10
             years of Vesting Service but has not reached his or her 55th
             birthday, he or she shall be eligible to receive, commencing as of
             the first day of any calendar month following his

                                                                              49


             or her 55th birthday but not later than his Normal Retirement Date,
             as specified in an election in writing filed with and acknowledged
             by the Plan Administrator no more than 90 days prior to his or her
             Annuity Starting Date, a vested Pension Allowance which shall be an
             Allowance equal to the vested Pension Allowance computed in
             accordance with Section 4.05(c)(2) above reduced by 1/2 of 1% for
             each complete calendar month by which the date of commencement of
             the vested Participant's Pension Allowance precedes such
             Participant's Normal Retirement Date.

        (4)  A vested O&R Participant who elects to receive his or her
             Accumulated Contributions will have his or her vested Pension
             Allowance reduced in accordance with Section 4.05(c)(5).

        (5)  The vested Pension Allowance of an O&R Participant who has received
             his or her Accumulated Contributions will be reduced (but not below
             zero) by that portion of his or her accrued Pension Allowance which
             is attributable to such Participant's Accumulated Contributions.
             With respect to a Pension Allowance payable for life and computed
             in accordance with Appendix F, Section F.3A(a), the portion of such
             Participant's Pension Allowance attributable to his or her
             Accumulated Contributions shall be equal to his Accumulated
             Contributions which were withdrawn, plus hypothetical interest at
             the rate determined in accordance with the definition of
             Accumulated Contributions, in Section 1.02, at the date of
             withdrawal to the Participant's Normal Retirement Date, multiplied
             by a conversion factor. The conversion factor for a Pension
             Allowance commencing at Normal Retirement Date shall

                                                                              50


             be determined pursuant to the provisions of Code Section 411(c)(2)
             and any related regulations as then in effect. With respect to a
             Pension Allowance payable and computed in accordance with Appendix
             F, Section F.3A(a), of Appendix F and Section 5.01(c)(2), the
             portion attributable to the Participant's Accumulated Contributions
             shall be the Actuarial Equivalent of the amount determined above.

4.06    DISABILITY PENSION ALLOWANCE - CECONY PARTICIPANTS

   (a)  Social Security Disability. If a CECONY Participant terminates active
employment because of a Disability and has at least five Years of Vesting
Service, he or she may elect to be treated as if he or she remained in active
employment until the earliest of: the end of his or her Disability, date of
commencement of any gainful employment or any self-employment or any activity of
like nature in which the Participant receives wages or earned income, date of
death, or Normal Retirement Date. The Pension Allowance of such CECONY
Participant shall be determined as if his or her Annual Basic Straight Time
Compensation at the point of his or her actual termination of active employment
was his or her Annual Compensation for all future years. For that period of
"deemed employment," Annual Compensation shall not include an Annual Variable
Pay Award.

   (b)  Social Security Disability or Total and Permanent Disabilities Without
Eligibility for Social Security Disability Benefits. A CECONY Participant who
incurs a Disability while actively employed and a CECONY Participant who
terminates employment due to a total and permanent disability, as determined by
the Employer in accordance with its established procedures, may elect to
commence benefits under the Plan at a date earlier than his or her Normal
Retirement Date. If at the date of termination of employment or

                                                                              51


disability, whichever is earlier, the CECONY Participant has attained age 50 and
completed at least 20 Years of Accredited Service, the Pension Allowance shall
be determined in accordance with the applicable Normal Retirement Pension
Allowance as set forth in Appendix F, Section F.1 or F.2. If he or she is a
CECONY Management Participant, the portion of the Pension Allowance attributable
to Section F.2A(a)(iii) of Appendix F shall be reduced by the discount factor in
Table E, Section A.1 of Appendix A, based on the Participant's age as of the
Annuity Starting Date. The portion of the Pension Allowance attributable to
Section F1 or F.2A(i),(ii) and (iv) of Appendix F is not reduced for early
commencement. If such CECONY Participant is a Rule of 75 CECONY Participant as
of the Annuity Starting Date but has not attained age 50 and completed at least
20 years of Accredited Service as of termination of employment or Disability,
whichever is earlier, the accrued Pension Allowance commencing at Normal
Retirement Date shall be reduced by 1.5% for each year (prorated for months)
that benefit commencement precedes attainment of age 60. If such CECONY
Participant is not a Rule of 75 Participant as of the Annuity Starting Date, the
benefit, if any, payable to such CECONY Participant shall be determined in
accordance with Section 4.05(b).

4.07    DISABILITY - O&R PARTICIPANT

   (a)  Upon written application to the Plan Administrator, an O&R Participant
who is disabled while in active service, has not reached his or her Normal
Retirement Date, and has completed at least 10 years of Accredited Service will
be retired on a Disability Pension Allowance. The Disability Pension Allowance
is in lieu of retirement under any other provision of the Plan and will be
effective as of the first day of a calendar month not less than 30 nor more than
90 days next following the receipt by the Plan Administrator of such written
application provided the Plan Administrator finds the

                                                                              52


Participant is disabled, as set forth herein ("Disability Retirement Date"). The
Plan Administrator must find to his or her satisfaction either (i) that a
physician designated by the O&R Participant and a physician designated by O&R
have each certified an opinion that such O&R Participant is totally
incapacitated, mentally or physically, from the further performance of his or
her regular duties or duties comparable thereto, and that such incapacity
occurred while the O&R Participant was in active service with the Company or an
Affiliate, resulted in termination of employment with the Company or an
Affiliate, and is likely to be permanent; or (ii) that such O&R Participant is
eligible for and in receipt of a disability benefit under the Social Security
Act, as amended from time to time, with respect to a disability within the
meaning of subparagraph (i) above which occurred while in active service with
the Company or an Affiliate and resulted in termination of employment with the
Company or an Affiliate. If the opinions of the physicians designated above
differ as to whether the O&R Participant is totally incapacitated as set forth
therein, the certified opinion of a third physician, rendered after examination
of the O&R Participant and, to the extent deemed appropriate by the third
physician, consultation with the other two physicians, will determine whether
the O&R Participant is totally incapacitated. The third physician will be
selected by the O&R Participant from a list of three names of independent
physicians provided by O&R. The fees and expenses of the third physician will be
paid by O&R.

   (b)  The Disability Pension Allowance will be payable as of the Participant's
Disability Retirement Date and thereafter subject to continuance of his or her
disability as provided in Section 4.07(c) and will be equal to a Pension
Allowance computed in accordance with Appendix F, Section F.3A(a) and
Section 5.01(c), with the amount

                                                                              53


determined under Appendix F, Section F.3A.(a)(i) computed on the basis of the
Participant's Annual Compensation and Accredited Service immediately prior to
his or her date of termination and the additional benefit for two (2) years of
Accredited Service computed on the basis of the Participant's Annual
Compensation at the last regular rate being paid to him or her immediately prior
to his or her date of termination.

   (c)  Once each year, the Plan Administrator may require an O&R Participant
receiving a Disability Pension Allowance who has not reached his or her Normal
Retirement Date to undergo a medical examination by a physician or physicians
designated by the Plan Administrator, such examination to be made at the place
of residence of such O&R Participant or other place mutually agreed upon. Should
any such O&R Participant refuse to submit to such medical examination, the part
of his or her Disability Pension Allowance provided by Employer contributions
shall be discontinued until his or her withdrawal of such refusal, and should
his or her refusal continue for a year, all rights in and to the Disability
Pension Allowance shall cease and the election of an optional benefit, if one
has been elected, shall be of no further effect. If the Plan Administrator finds
from such medical examination or otherwise that the disability of an O&R
Participant receiving a Disability Pension Allowance who has not reached his
Normal Retirement Date has been removed and that he or she has regained his or
her earning capacity, in whole or in part, or that he or she is no longer in
receipt of a disability benefit under the Social Security Act, the part of his
or her Disability Pension Allowance provided by Employer contributions shall be
discontinued or reduced proportionately; provided that he or she shall be
entitled to have his or her original Disability Pension Allowance restored in
whole or in part prior to his or her Normal Retirement Date upon

                                                                              54


the Participant's again, or initially, receiving a disability benefit under the
Social Security Act with respect to the total incapacity which originally
entitled the O&R Participant to the Disability Pension Allowance, or if on the
basis of the certified opinions of a physician designated by the O&R Participant
and a physician designated by O&R, (with any difference in opinion as to whether
the O&R Participant is totally incapacitated to be resolved by the opinion of
the third physician selected as set forth in Section 4.07(a)), the Plan
Administrator finds that the O&R Participant again meets the requirements for
Disability Pension Allowance. In the event that such Participant's Disability
Pension Allowance is discontinued as herein provided and he or she is not
restored to service as an Employee, he or she shall be entitled to receive a
vested Retirement Allowance computed in accordance with Section 4.05(c)(2) or
(3) or, if such O&R Participant was at least age 55 at the time of his or her
Disability Retirement, an Early Retirement Pension Allowance computed in
accordance with Section 4.04(c)(2) or (3), whichever applies.

4.08    SPOUSE'S PENSION

   (a)  If a married Participant:

        (1)  dies vested and in active service; or

        (2)  dies after retiring on any Pension Allowance, or after terminating
             service with entitlement to a vested Pension Allowance but before
             his or her Annuity Starting Date; or

        (3)  terminates employment with entitlement to a vested Pension
             Allowance, and then dies before his or her Annuity Starting Date,
             then a spouse's Pension Allowance shall be payable to his or her
             Surviving Spouse for life.

   (b)  CECONY PARTICIPANTS.

                                                                              55


        (1)  This Section 4.08(b)(1) applies to a Participant who, as of his or
             her date of death, was a Rule of 75 CECONY Participant and is
             survived by a spouse. The Surviving Spouse shall be entitled to
             receive a Pension Allowance in the form of a pre-retirement
             survivor annuity payable following the death of the Rule of 75
             CECONY Participant. The pre-retirement survivor annuity shall be
             equal to 50% of the Pension Allowance which the deceased Rule of 75
             CECONY Participant would have begun receiving if he or she had
             terminated employment on the date of death and had applied for a
             Pension Allowance commencing on the first day of the month
             immediately following his or her death. Payment of the annuity
             shall commence on the first day of the month following the Rule of
             75 CECONY Participant's death unless the Surviving Spouse elects a
             later commencement date. Notwithstanding the foregoing, no
             Accredited Service shall be granted for any period following a Rule
             of 75 CECONY Participant's termination of employment.

        (2)  This Section 4.08(b)(2) applies to a Participant who, as of date of
             death, was a CECONY Participant who was not a Rule of 75
             Participant, was eligible for a Pension Allowance, and is survived
             by a spouse. The Surviving Spouse shall receive a pre-retirement
             survivor benefit of an immediate lump sum payment equal to 50% of
             the Cash Out, determined in accordance with Section 5.02(c), that
             the deceased Participant would have received if he or she had
             terminated employment and elected a Cash Out on his or her date of
             death ("Lump Sum PRSB"). If the Lump Sum PRSB amount exceeds
             $5,000, it shall not be paid unless the Surviving Spouse consents
             to such

                                                                              56


             payment in writing on a form provided by the Plan Administrator. If
             consent is required but not provided, the Surviving Spouse will
             receive an annuity. Unless the Surviving Spouse elects otherwise,
             such annuity will begin on the first day of the month following the
             Participant's death. The amount payable shall be the greater of (1)
             or (2) where (1) is determined by dividing the Lump Sum PRSB
             payable to the Surviving Spouse by an annuity conversion factor
             determined on the basis of the IRS Mortality Table, the Adjusted
             IRS Interest Rate and the Surviving Spouse's age as of the month of
             determination and (2) is determined by converting 50% of the
             Participant's normal retirement Pension Allowance into an annuity
             on the basis of the IRS Mortality Table, the Adjusted IRS Interest
             Rate and the Surviving Spouse's age as of the month of
             determination. If the Surviving Spouse elects to defer the
             commencement of such annuity, the amount thereof shall be increased
             so that the deferred annuity commencing on the date elected by the
             Surviving Spouse is the Actuarial Equivalent of the immediate
             annuity otherwise payable, on the basis of the IRS Mortality Table
             and the IRS Interest Rate. Notwithstanding the foregoing, no
             Accredited Service shall be granted for any period following a
             Participant's termination of employment.

        (3)  For purposes of calculating the pre-retirement Surviving Spouse
             benefits provided under Section 4.08(b)(1) or (2), there shall be
             no reduction in the amount of the deceased Participant's Pension
             Allowance as determined in accordance with the applicable benefit
             formula. An election by the Surviving Spouse to commence receiving
             payments prior to what would have been the

                                                                              57


             Participant's Normal Retirement Date may be made during the 90-day
             period ending on the date the payments to the Surviving Spouse
             commence.

   (c)  O&R PARTICIPANTS.

        (1)  Spousal Benefit for O&R Participant. In the case of the death of a
             married O&R Participant in active service prior to the O&R
             Participant's Normal Retirement Date and after completing five
             years of Vesting Service, or, regardless of the number of years of
             Vesting Service, after the Participant's Normal Retirement Date or
             after becoming fully vested, there shall be payable to the
             Participant's Surviving Spouse, a Spouse's Allowance ("O&R
             Surviving Spouse's Allowance").

        (2)  The O&R Surviving Spouse's Allowance is equal to one-half of the
             benefit which would have been payable to the deceased O&R
             Participant on retirement under the provisions of Appendix F,
             Section F.3A (including the additional benefit for two years) as of
             the first day of the month coincident with or next following the
             Participant's date of death; provided that such amount shall be
             reduced by one per centum for each full year in excess of two years
             by which the deceased Participant's age exceeds the age of the
             Surviving Spouse and shall be adjusted to the Actuarial Equivalent
             thereof in the event the commencement of the O&R Surviving Spouse's
             Allowance is deferred.

        (3)  Unless the election provided in Section 4.08 (c)(6) is in effect,
             upon the death of a married vested O&R Participant prior to his or
             her Annuity Starting Date, there shall be payable to the vested O&R
             Participant's Surviving

                                                                              58


             Spouse a death benefit. This death benefit ("O&R Spouse's Death
             Benefit"), is calculated differently from the way in which the O&R
             Surviving Spouse's Allowance is calculated. The O&R Spouse's Death
             Benefit will be payable beginning as of the first day of the
             calendar month coincident with or next following the later of the
             Participant's death or the 65th anniversary of the Participant's
             birth; provided, however, that in the event of the death of a O&R
             Participant with at least 10 Years of Vesting Service, his or her
             Surviving Spouse may elect to begin receiving his or her O&R
             Spouse's Death Benefit as of the first day of the calendar month
             coincident with or next following the later of the O&R
             Participant's death or the O&R Participant's 55th birthday. The O&R
             Spouse's Death Benefit shall be paid monthly until the last monthly
             payment prior to his or her death. The death benefit is computed in
             accordance with Section 4.08 (c)(4).

        (4)  The O&R Spouse's Death Benefit will be equal to the contingent
             annuitant's portion of the joint and 50% survivor annuity, as in
             Section 5.02 (c)(2) computed as a vested Pension Allowance, as
             provided in Section 4.05(c), with such amount being further reduced
             for each year from termination of employment to the date of death
             during which the O&R Participant is covered by the spouse's
             allowance protection determined on the same basis as in Section
             4.08 (c)(6). The amount of reduction for each year's coverage is
             set forth in Appendix A.

        (5)  Upon commencement of payment, the vested Pension Allowance payable
             to a vested O&R Participant under Section 4.05 (c)(2) or (3) shall
             also be reduced

                                                                              59


             for each year the vested O&R Participant is covered by the vested
             O&R Spouse's Death Benefit protection during the period from
             termination of employment (or, if later, from the time that the
             vested O&R Participant has been given notice of his or her right to
             waive the vested O&R Spouse's Death Benefit), to the date the
             vested Pension Allowance payments commence to the Participant. The
             amount of reduction for each year's coverage is set forth in
             Appendix A attached hereto.

        (6)  An O&R Participant may elect at any time on or after termination of
             employment to waive coverage of the O&R Spouse's Death Benefit and
             avoid the reductions imposed for coverage for the O&R Spouse's
             Death Benefit protection. The election to waive coverage must be
             made by delivery of a properly completed written notice of such
             election to the Plan Administrator. Such election must be in the
             form prescribed by or acceptable to the Plan Administrator, and
             will be effective only upon filing with and acknowledgment of
             receipt by the Plan Administrator. Unless it is established to the
             satisfaction of the Plan Administrator that such consent cannot be
             obtained because there is no spouse, the spouse cannot be located,
             or there exist other reasons as may be prescribed in regulations of
             the Secretary of the Treasury, such election, in order to be valid,
             must have the signed written consent of the Participant's spouse to
             the waiver of the O&R Spouse's Death Benefit coverage, and such
             consent must specifically acknowledge the effect of the waiver
             election as well as the designation of someone other than his or
             her spouse as Beneficiary. The spouse's signature

                                                                              60


             to such consent and acknowledgment must be witnessed by the Plan
             Administrator or a Plan Administrator's delegate, or must be
             notarized by a notary public. Any consent by a spouse (or
             establishment that the spouse's consent cannot be obtained) shall
             be effective only with respect to such spouse.

        Any such waiver election may be revoked by written notice of the O&R
Participant delivered to the Plan Administrator prior to the Participant's
death. In such case, the coverage for the O&R Spouse's Death Benefit protection
will again be effective upon filing of the written revocation notice with and
acknowledgment of receipt by the Plan Administrator. Thereafter, additional
elections to waive coverage may be made as described above, and similar
revocations of such elections may be made.

        In all cases, the elections to waive coverage and the revocations of
such elections shall be prospective only, effective upon filing with and
acknowledgement of receipt by the Plan Administrator.

        The Plan Administrator shall give each O&R Participant a written notice
explaining (i) the O&R Spouse's Death Benefit provisions, (ii) the financial
effect thereof and the Participant's right to elect to waive such coverage,
(iii) the necessity of the spouse's consent and acknowledgment in order to
validate the Participant's election, and (iv) the right of the O&R Participant
to make, and the effect of, a revocation of the waiver of the O&R Spouse's Death
Benefit. The required notice, if not provided to the O&R Participant within the
one-year period prior to the vested Participant's date of termination of
employment, shall be provided to the vested O&R Participant during the one (1)
year period following such date of termination.

                                                                              61


        (7)  In the event of the death of an O&R Participant while coverage for
             the O&R Spouse's Death Benefit is not in effect, no Death Benefit
             will be payable with respect to such Participant. In the event of
             the death of a vested O&R Participant prior to the Annuity Starting
             Date with respect to the vested Pension Allowance and while
             coverage for the O&R Spouse's Death Benefit is not in effect or is
             waived, no Pension Allowance will be payable with respect to such
             vested Participant. If applicable, however, the provisions of
             Article XIII will apply.

        (8)  In the event a married retired O&R Participant who has elected to
             defer commencement of the early retirement Pension Allowance dies
             before the Annuity Starting Date, there will be payable to the
             Participant's Surviving Spouse an O&R Surviving Spouse's Allowance.
             Such O&R Surviving Spouse's Allowance shall be equal to the
             contingent annuitant's portion of Section 5.02 (c)(2) computed as
             though the early retirement Pension Allowance had commenced in such
             optional form as of the first day of the month coincident with or
             next following the Participant's death. In the event a married
             retired O&R Participant who has elected to defer commencement of
             the early retirement Pension Allowance dies before the Annuity
             Starting Date with respect to such Allowance and the Spouse's
             Allowance is not in effect or payable, no Spouse's Allowance shall
             be payable with respect to such Participant, but, if applicable,
             the provisions of Article XIII shall apply.

   (d)  CEI PARTICIPANTS. A married CEI Participant cannot designate someone
other than the Spouse to receive this death benefit in the event the CEI
Participant dies before

                                                                              62


his or her Annuity Date. In the case of the death of a married, vested CEI
Participant prior to his or her Annuity Starting Date, there shall be payable to
the CEI Participant's Surviving Spouse a death benefit equal to the CEI
Participant's Cash Balance Account.

4.09    MAXIMUM BENEFIT LIMITATION

        Notwithstanding any provision of the Plan to the contrary, the maximum
annual Pension Allowance payable to a Participant under the Plan shall be
subject to the limitations set forth in Code Section 415 and any regulations or
rulings issued there under. If a Pension Allowance begins after January 1, 2002
and before the Participant's 62nd birthday, the dollar limitation described in
Code Section 415(b)(1)(A) shall be the Actuarial Equivalent of the maximum
benefit payable at age 62. If the Pension Allowance begins after the
Participant's Social Security Retirement Age, or, beginning on January 1, 2002,
after the Participant attains age 65, such dollar limitation shall be the
Actuarial Equivalent, based on an interest rate of 5% per annum in lieu of the
interest rate otherwise used in the determination of Actuarial Equivalent, to
the maximum benefit payable at the Participant's Social Security Retirement Age,
or payable at age 65, as the case may be. If the Pension Allowance is payable
neither as a life annuity nor as a qualified joint and survivor annuity with the
Participant's spouse as contingent annuitant, the maximum limitation shall be
the Actuarial Equivalent of the maximum limitation otherwise applicable.
Actuarial Equivalent for purposes of this Section 4.09 shall be determined in
accordance with Code Section 415(b) and the regulations or rulings issued there
under and using the IRS Mortality Table and an interest rate of 5%, except that
the Actuarial Equivalent of a Pension Allowance payable in the form of a lump
sum shall be determined on the basis of the IRS Mortality Table and the IRS
Interest Rate.

4.10    TRANSFERS AND EMPLOYMENT WITH AN AFFILIATE

                                                                              63


   (a)  If a Participant becomes (i) employed by an Employer in any capacity
other than as an Eligible Employee; (ii) employed by the Company or an Affiliate
who is not an Employer; or (iii) a Leased Employee, he or she will retain any
Accredited Service he or she has under this Plan but will not accrue additional
Accredited Service. Upon his or her later retirement or termination of
employment with the Company or an Affiliate (or upon benefit commencement in the
case of a Leased Employee), any benefits to which the Participant is entitled
under the Plan shall be determined under the Plan provisions in effect on the
date he or she ceased to be on the active payroll of an Employer and an Eligible
Employee and only on the basis of his or her Accredited Service accrued while he
or she was an Eligible Employee.

   (b)  Subject to the Break in Service provisions of Article 3, and except as
provided in an Appendix to the Plan, in the case of a person who was originally
employed by or providing services to the Company or an Affiliate as a Leased
Employee or in any capacity other than as an Eligible Employee and thereafter
becomes a Participant, upon his or her later retirement or termination of
employment, the benefits payable under the Plan shall be computed under the Plan
provisions in effect at that time, and only on the basis of the Accredited
Service accrued while he or she is an Eligible Employee.

   (c)  If a CECONY Participant's Accredited Service consists of Accredited
Service as a CECONY Management Participant and as a CECONY Weekly Participant
prior to January 1, 2001, his or her Pension Allowance shall be calculated as if
he or she were credited with Accredited Service under one Prior Plan. The
Pension Allowance of such Participant shall be calculated under the benefit
formula applicable to such Participant as of his or her termination of
employment with the Company or an Affiliate.

                                                                              64


4.11    MINIMUM BENEFITS

        In no event shall the benefit payable to a Participant who was an
Eligible Employee on the Effective Date of this amendment and restatement of the
Plan be less than the amount, if any, payable under the minimum benefit
provisions in effect immediately prior thereto.

4.12    ADDITIONAL PROVISIONS

        For additional provisions applicable to certain Participants, see the
following Appendices:

        (a)  Appendix C- For provisions applicable to O&R Participants
                         transferred to or hired by CECONY or a CEI Affiliate.

        (b)  Appendix D- For provisions applicable to Participants employed at
                         facilities purchased from Western Massachusetts
                         Electric Company.

        (c)  Appendix G- For provisions applicable to a special adjustment in
                         the Pension Allowance of certain Participants.

        (d)  Appendix H- For provisions applicable to certain CECONY
                         Participants at fossil-fueled divested operations.

        (e)  Appendix I- For provisions applicable to O&R Participants under
                         O&R's Pension Protection Program.

        (f)  Appendix J- For provisions applicable to certain CECONY
                         Participants and CEI Participants at divested nuclear
                         operations.

        (g)  Appendix K- For provisions applicable to CECONY Support Employees
                         Re: Voluntary Retirement Incentive - Support
                         Organizations.

                                                                              65


        (h)  Appendix L  For provisions showing illustrative calculations of the
                         pension benefit adjustment for O&R Participants.

        (i)  Appendix M  For provisions applicable to certain Participants
                         employed at the Lakewood facilities.

                                                                              66


                                    ARTICLE V

                            AUTOMATIC FORM OF PAYMENT

5.01    AUTOMATIC FORM OF PAYMENT

   (a)  CEI PARTICIPANTS

        (1)  If a CEI Participant is not married on his or her Annuity Starting
             Date, his or her Pension Allowance will be payable in monthly
             installments ending with the monthly payment for the month in which
             the CEI Participant dies. An unmarried CEI Participant may also
             elect an optional form of benefit as provided in Section 5.02.

        (2)  If a CEI Participant is married on his or her Annuity Starting
             Date, and if he or she has not elected an optional form of benefit
             as provided in Section 5.02, the Pension Allowance shall be the
             Actuarial Equivalent of the Pension Allowance payable under Section
             5.01(a)(1) above to an unmarried CEI Participant and shall be
             payable in the form of a qualified joint and survivor annuity,
             providing for a Pension Allowance payable during the life of the
             Participant and, after his or her death, one-half of that Pension
             Allowance payable during the life of, and to, his or her Surviving
             Spouse.

        (3)  The CEI Participant's Cash Balance Account will be converted into
             either a single life annuity or qualified joint and survivor
             annuity, as applicable, based on the IRS Interest Rate and IRS
             Mortality Table in effect as of the Annuity Starting Date.

        (4)  In the event the Cash Balance Account immediately payable to a CEI
             Participant or his or her Surviving Spouse or Beneficiary has a
             value of

                                                                              67


             $5,000 or less, such value shall be paid in a single lump sum to
             the CEI Participant, Surviving Spouse or Beneficiary in lieu of any
             other benefit under the Plan.

   (b)  CECONY PARTICIPANTS

        (1)  If a CECONY Participant is not married on his or her Annuity
             Starting Date, his or her Pension Allowance will be payable in
             monthly installments ending with the last monthly payment for the
             month in which the CECONY Participant dies. An unmarried CECONY
             Participant may elect an optional form of benefit as provided in
             Section 5.02.

        (2)  If a CECONY Participant is married on his or her Annuity Starting
             Date, and if he or she has not elected an optional form of benefit
             as provided in Section 5.02, the Pension Allowance payable shall be
             in the form of a qualified joint and survivor annuity, providing
             for a Pension Allowance during the life of the Participant and
             after his or her death, one half of that Pension Allowance payable
             during the life of, and to, the Participant's Surviving Spouse.

        (3)  In the event that a Pension Allowance payable to a CECONY
             Participant or his or her Surviving Spouse has a present value of
             $5,000 or less, such present value shall be paid in a single lump
             sum to the CECONY Participant or Surviving Spouse, in lieu of the
             Pension Allowance or annuity otherwise payable. The calculation of
             the present value of a Pension Allowance, for the purpose of the
             foregoing sentence, shall be made on the basis of the Consolidated
             RPA '94 Lump Sum Conversion Factor for the Participant's age, as in
             effect for the month in which payment is to be made; provided,

                                                                              68


             however, that the resulting amount shall not be less than the
             present value of the annual Pension Allowance determined in
             accordance with the applicable benefit formula set forth in
             Appendix F, Section F.1 or F.2 taking into account only the
             Participant's employment and Annual Compensation prior to January
             1, 1997, calculated on the basis of the lump sum factors set forth
             in Table B of Appendix A and the Participant's age as of the date
             of determination.

   (c)  O&R PARTICIPANTS

        (1)  If an O&R Participant is not married on his or her Annuity Starting
             Date, his or her Pension Allowance shall be payable in monthly
             installments ending with the monthly payment for the month in which
             the O&R Participant dies. An unmarried O&R Participant may elect an
             optional form of benefit as provided in Section 5.02.

        (2)  If an O&R Participant is married on his or her Annuity Starting
             Date, and if he or she has not elected an optional form of benefit
             as provided in Section 5.02, his or her Pension Allowance shall be
             the Actuarial Equivalent to such Pension Allowance payable in the
             form of a single life annuity, and shall be payable in the form of
             a qualified joint and survivor annuity, providing for a Pension
             Allowance payable to the O&R Participant during his or her life,
             and providing after his or her death, one-half of that Pension
             Allowance payable during the life of, and to, his or her Surviving
             Spouse.

        (3)  In the event that a Pension Allowance payable to an O&R Participant
             or his or her Surviving Spouse shall have a present value of $5,000
             or less, such

                                                                              69


             present value shall be paid in a single lump sum to the O&R
             Participant or Surviving Spouse, in lieu of the Pension Allowance
             or annuity otherwise payable. The calculation of the present value
             of a Pension Allowance, for the purpose of the foregoing sentence,
             will be the mortality table prescribed by the Secretary of the
             Treasury in accordance with Code Section 417(e)(3)(A)(ii)(I) in
             effect on the date of distribution and the interest rate will be
             the lesser of five percent (5%) or the annual rate of interest on
             thirty-year Treasury securities determined in accordance with Code
             Section 417(e)(3)(A)(ii)(II) for the second full calendar month
             preceding the first day of the Plan Year which contains the
             distribution date.

   (d)  Special Rules Regarding Pension Allowances of Less Than $5,000 The
determination as to whether a lump sum payment is less than $5,000 and
immediately payable shall be made as soon as practicable following a
Participant's termination of employment or death. To the extent permitted by
law, in the event the present value of a Pension Allowance exceeds $5,000 upon
an initial determination as to its present value, the present value of the
Pension Allowance shall be re-determined annually as of the first day of each
subsequent Plan Year. Any lump sum benefit payable shall be made as soon as
practicable following the determination that the amount qualifies for
distribution under the provisions of this paragraph (d). In the event a
Participant is not entitled to any Pension Allowance upon his or her termination
of employment, he or she shall be deemed cashed-out as of the date he or she
terminated service. If a non-vested Participant who is deemed cashed-out is
subsequently re-employed under circumstances

                                                                              70


where the Participant's prior service is restored, he or she shall be deemed to
have repaid such amount together with interest as described in Section 3.03.

5.02    OPTIONAL FORMS OF PAYMENT

   (a)  CEI PARTICIPANT. A CEI Participant may, subject to the provisions of
Section 5.03, elect to receive his or her benefit in the form of a Cash Balance
Single Sum Payment in lieu of any other benefit under the Plan.

   (b)  CECONY PARTICIPANT AND CEI PARTICIPANT. Unless specifically stated
otherwise, effective as of December 1, 1996, a CECONY Participant and a CEI
Participant may, subject to the provisions of Section 5.03, elect to convert the
Pension Allowance otherwise payable to him or her as a single life annuity in
the case of an unmarried CECONY Participant or unmarried CEI Participant, and a
qualified joint and 50% surviving spouse annuity, in the case of a married
CECONY Participant or married CEI Participant, into an optional benefit that is
the Actuarial Equivalent, as provided in one of the options named below and the
applicable factors set forth in Appendix A.

        (1)  TWELVE YEAR CERTAIN AND LIFE ANNUITY OPTION. A modified Pension
             Allowance payable during the Participant's life, reduced by the
             appropriate factor in Appendix A, Section A-1, Table C, for an
             unmarried CECONY Participant or Table D for a married CECONY
             Participant, and in Appendix A, Section A-3, TABLE A, for a CEI
             Participant. If the Participant dies within 144 months after his or
             her Annuity Starting Date, the balance of those 144 monthly
             payments will be paid: (A) in the case of an unmarried Participant,
             to one or more Beneficiaries named by him or her when he or she
             elected the option, or to the Participant's estate if the
             Participant failed to designate a Beneficiary, or failed to
             designate a new Beneficiary if the designated

                                                                              71


             Beneficiary predeceases the Participant and (B) in the case of a
             married Participant, to the Surviving Spouse, or if the Surviving
             Spouse does not survive the full 144 months following the
             Participant's Annuity Starting Date, to one or more Beneficiaries
             named by such Participant. The Participant's estate shall also
             receive any of the 144 guaranteed payments which remain to be paid
             following the death of the designated Beneficiary, provided that
             the Plan may, upon the request of the legal representative of the
             estate, pay to the estate the present value of all remaining
             payments, discounted by the rate utilized to calculate the
             appropriate factors set forth in Appendix A, Section A-1, Table C
             for an unmarried CECONY Participant and Table D for a married
             CECONY Participant or Appendix A, Section A-3, TABLE A for a CEI
             Participant, as in effect on the date of the Participant's death.
             If the Surviving Spouse is the Beneficiary, the Surviving Spouse
             will receive a surviving spouse annuity equal to 50% of the amount
             of the reduced twelve year certain annuity, commencing on the later
             of the expiration of the 144-month period or the Participant's
             death.

        (2)  JOINT AND 100% SURVIVING SPOUSE ANNUITY. A modified Pension
             Allowance payable during the Participant's life, and after his or
             her death, payable during the life of, and to, his or her Surviving
             Spouse. At the election of the Participant, the option may include
             a pop-up feature, as described below:

           (i)   If the Participant does not elect the pop-up feature, then the
                 amount payable for the life of the Participant shall be equal
                 to the Pension

                                                                              72


                 Allowance otherwise payable to the Participant, reduced by the
                 appropriate factor in Appendix A, Section A-1, Table G, for a
                 CECONY Participant or in Appendix A, Section A-3, Table B, for
                 a CEI Participant and the Surviving Spouse shall receive for
                 his or her life an annuity equal to the amount payable to the
                 Participant (before giving effect to any option elected under
                 Section 5.02(b)(3) below).

           (ii)  If the Participant elects the pop-up feature, then the amount
                 payable to the Participant during the period that both the
                 Participant and his or her spouse are alive shall be the
                 Pension Allowance otherwise payable to the Participant, reduced
                 by the appropriate factor in Appendix A, Section A-1, Table H,
                 for a CECONY Participant, or in Appendix A, Section A-3, Table
                 C, for a CEI Participant. The amount payable to the Participant
                 during any period subsequent to the death of his or her spouse
                 shall be equal to the Pension Allowance otherwise payable to
                 the Participant in the absence of an election under this
                 paragraph, and the Participant's Surviving Spouse shall receive
                 for his or her life an annuity equal to the amount payable to
                 the Participant during the period that the Participant and his
                 or her spouse were both alive. In the event the Participant
                 elects the option under Section 5.02(b)(3) below, the amount
                 payable to the Participant's Surviving Spouse shall be
                 determined assuming the Participant had not made any election
                 under Section 5.02(b)(3).

        (3)  LEVEL INCOME OPTION.

                                                                              73


           (i)   A Participant who is eligible to commence a Pension Allowance
                 and whose Annuity Starting Date precedes his or her attainment
                 of the age at which he or she is eligible to receive unreduced
                 Social Security benefits may elect to receive his or her
                 Pension Allowance under the Level Income Option. He or she may
                 further elect as a leveling month, for purposes of (ii) below,
                 either the month following the month in which he or she reaches
                 age 62 or the earliest month for which he or she is eligible to
                 receive unreduced Social Security benefits. The election of
                 this option may be made in addition to an election for a Twelve
                 Year Certain and Life Option or a Joint and 100% Surviving
                 Spouse Annuity, as referred to above.

           (ii)  If a Participant elects this option, the amount payable to him
                 or her during the period commencing with his or her Annuity
                 Starting Date and ending with the month prior to the leveling
                 month shall be increased and the amount payable during the
                 period commencing with the leveling month and ending in the
                 month of the Participant's death shall be decreased from the
                 Pension Allowance otherwise payable to the Participant, based
                 on factors specified in Appendix A, Section A-1, Table I, for a
                 CECONY Participant or in Appendix A, Section A-3, Table D, for
                 a CEI Participant. The present value of the benefit payable
                 under this option shall be equal to the present value of the
                 Pension Allowance otherwise payable to the Participant,
                 determined on the actuarial bases specified in Appendix A,

                                                                              74


                 Section A-1, Table I, for a CECONY Participant, or in Appendix
                 A, Section A-3, Table D, for a CEI Participant.

           (iii) The amounts payable under this option shall be determined on
                 the basis of an estimate of the Social Security benefit that
                 the Participant would be eligible to commence to receive in the
                 leveling month so that the amount payable for the month next
                 preceding the leveling month shall be approximately equal to
                 the sum of the amount payable for the leveling month plus the
                 estimated Social Security benefit commencing in the leveling
                 month, without taking into account any prospective cost of
                 living adjustment pursuant to Section 11.02 of the Plan.

           (iv)  The amount payable to the Participant under this option shall
                 not be adjusted after the Participant's Annuity Starting Date,
                 and prior to the leveling month, regardless of any difference
                 between the estimate taken into account in the determination
                 thereof and the Social Security benefits actually paid or
                 payable to the Participant, and regardless of whether the
                 Participant elects to commence receipt of Social Security
                 benefits in any month other than the leveling month. Commencing
                 in the leveling month, the amount payable to a Participant
                 shall be reduced by an amount equal to the product of (I) the
                 estimated Social Security benefit taken into account for
                 purposes of subparagraph (iii) and (II) a fraction, the
                 numerator of which shall be the amount payable to the
                 Participant in the month next preceding the leveling month,
                 taking into account any cost of living adjustments pursuant to
                 Section 11.02, and the denominator of

                                                                              75


                 which shall be the amount determined to be payable as of the
                 Participant's Annuity Starting Date, in accordance with
                 subparagraph (ii) above.

           (v)   In the event that a Participant who elects to receive his or
                 her Pension Allowance under this option has also made an
                 election to receive either a Twelve Year Certain and Life
                 Option or a Joint and 100% Surviving Spouse Annuity Option,
                 then the amount of Pension Allowance taken into account in the
                 determination under subparagraph (iii) above shall be the
                 amount payable to the Participant after giving effect to his or
                 her election for a Twelve Year Certain and Life Option or a
                 Joint and 100% Surviving Spouse Annuity Option. In such event,
                 the Participant's election to receive his or her Pension
                 Allowance under this option shall have no effect on the amount
                 payable to his or her Surviving Spouse or Beneficiary under any
                 other election he or she has made. In the event that the amount
                 payable to a Participant who has elected to receive his or her
                 Pension Allowance under this option and also made an election
                 to receive a Joint and 100% Surviving Spouse Annuity with a
                 Pop-Up Feature is increased on account of the death of his or
                 her spouse, the amount of such increase shall be disregarded
                 for purposes of subparagraph (iv).

        If a Participant dies after Pension Allowance payments have commenced,
any payments continuing on to his or her Surviving Spouse or Beneficiary shall
be distributed at least as rapidly as under the method of distribution being
used as of the Participant's date of death.

        (4)  CASH OUT OPTION

                                                                              76


           (i)   A CECONY Participant who is not a Rule of 75 Participant may
                 elect to receive the Pension Allowance otherwise payable to him
                 or her in the form of a Cash Out. The election to receive a
                 Cash Out may be made at any time subsequent to the
                 Participant's termination of employment and prior to the date
                 on which the Participant becomes a Rule of 75 Participant and
                 will be subject to the provisions of Section 5.03. A
                 Participant will not be eligible to receive a Cash Out after he
                 or she has become a Rule of 75 Participant, regardless of
                 whether he or she was a Rule of 75 Participant at the time of
                 his or her termination of employment from the Company or an
                 Affiliate.

           (ii)  The Cash Out is a lump sum payment representing the present
                 value of the deferred vested Pension Allowance payable to the
                 Participant at Normal Retirement Date. Effective January 1,
                 1997, the amount of a Cash Out will be the greater of (A) the
                 product of the deferred vested Pension Allowance amount
                 determined in accordance with Section 4.05(a) and the
                 Consolidated RPA '94 Lump Sum Conversion Factor, as in effect
                 for the Participant's Annuity Starting Date, for the
                 Participant's age in such month, or (B) the product of the
                 deferred vested Pension Allowance amount determined in
                 accordance with Section 4.05(a), taking into account only the
                 Participant's employment and Annual Basic Straight-Time
                 Compensation prior to January 1, 1997, and the factor in
                 Appendix A, Section A-1, Table B for the Participant's age as
                 of his or her Annuity Starting Date. For the purpose of the
                 foregoing sentence, a Participant's

                                                                              77


                 age in any month shall be his or her age on the birthday nearer
                 in time to the first of such month.

           (iii) In lieu of the Cash Out, a Participant who is eligible to elect
                 to receive a Cash Out may receive an immediate annuity,
                 commencing in the month in which the Cash Out would otherwise
                 have been payable, in accordance with the provisions of Section
                 5.03. The amount of such immediate annuity shall be the greater
                 of (A) the amount determined by dividing the Cash Out, computed
                 in accordance with paragraph (i)(A) above, by an annuity
                 conversion factor determined on the basis of the IRS Mortality
                 Table, the Adjusted IRS Interest Rate, and the Participant's
                 age as of the month of determination; or (B) the product of the
                 deferred vested Pension Allowance amount determined in
                 accordance with paragraph (i)(B) above and a reduction factor
                 for early commencement based on the same mortality and interest
                 assumptions used in Appendix A, Section A-1, Table B, and the
                 Participant's age as of the month of determination.

   (c)  O&R PARTICIPANT. An O&R Participant may, subject to Section 5.03, elect
to convert his or her Pension Allowance otherwise payable into an Actuarial
Equivalent optional form of benefit, in accordance with one of the options
described below. If a person other than the spouse of the O&R Participant is
named as the contingent annuitant under an option, the value of the Pension
Allowance payable to the O&R Participant under the option will in no event be
less than fifty-one percent of the total value of the benefits payable to the
O&R Participant and contingent annuitant.

                                                                              78


        (1)  JOINT AND 100% SURVIVOR ANNUITY. A modified Pension Allowance
             payable during the O&R Participant's life, with the provision that,
             on his or her death, the modified Pension Allowance shall be paid
             during the life of, and to, the surviving contingent annuitant who
             was nominated by the Participant by written designation duly filed
             with, and receipt acknowledged by, the Plan Administrator when the
             O&R Participant elected the option.

        (2)  JOINT AND 50% SURVIVOR ANNUITY. A modified Pension Allowance
             payable during the O&R Participant's life, with the provision that,
             after his or her death, a Pension Allowance at one half the rate of
             his or her modified Pension Allowance shall be paid during the life
             of, and to, the surviving contingent annuitant who was nominated by
             him or her by written designation duly filed with, and receipt
             acknowledged by, the Plan Administrator when he or she elected the
             option. This is the normal form of payment of the Normal Retirement
             Allowance for an O&R Participant who is married on his or her
             Annuity Starting Date, with the Participant's spouse as contingent
             annuitant, as provided in Section 5.01(c).

        (3)  JOINT AND 100% SURVIVOR ANNUITY WITH POP-UP FEATURE. A modified
             Pension Allowance payable during the O&R Participant's life, with
             the provision that, on his or her death, it shall be paid during
             the life of, and to, the contingent annuitant nominated by him or
             her by written designation duly filed with, and receipt
             acknowledged by, the Plan Administrator when he or she elected the
             option, if the contingent annuitant is surviving at the time of the
             O&R Participant's death. If the designated contingent annuitant

                                                                              79


             predeceases the O&R Participant, the Pension Allowance payable to
             the O&R Participant for months following the death of the
             contingent annuitant will increase to the Pension Allowance payable
             for the O&R Participant's life with no further benefits payable
             following the O&R Participant's death; or

        (4)  JOINT AND 50% SURVIVOR ANNUITY WITH POP-UP FEATURE. A modified
             Pension Allowance payable during the O&R Participant's life, with
             the provision that after his or her death a Pension Allowance at
             one-half the rate of his or her modified Pension Allowance will be
             paid during the life of, and to, the contingent annuitant nominated
             by him or her by written designation duly filed with, and receipt
             acknowledged by, the Plan Administrator when he or she elected the
             option, if the contingent annuitant is surviving at the time of the
             O&R Participant's death. If the designated contingent annuitant
             predeceases the O&R Participant, the Pension Allowance payable to
             the O&R Participant for months following the death of the
             contingent annuitant will increase to the Pension Allowance payable
             for the O&R Participant's life with no further benefits payable
             following the O&R Participant's death.

        (5)  The optional forms of benefit amounts set forth for an O&R
             Participant will be calculated in accordance with the actuarial
             tables in Appendix A, Section A-2, Tables A through F.

5.03    ELECTION OF OPTIONS

   (a)  A married Participant's election of any option is effective only if
Spousal Consent to the election is received by the Plan Administrator, unless:

                                                                              80


        (1)  the option provides for monthly payments to his or her spouse for
             life after the Participant's death, in an amount equal to at least
             50% but not more than 100% of the monthly amount payable under the
             option to the Participant, and

        (2)  the option is no greater than the Actuarial Equivalent of the
             qualified joint and survivor annuity.

   (b)  An Employer shall furnish to each Participant a written explanation in
non-technical language of the terms and conditions of the Pension Allowance
payable to the Participant in the applicable normal and optional forms of
Pension Allowance to the Participant. Such explanation shall include a general
description of the eligibility conditions for, and the material features and
amounts payable under, the optional forms of Pension Allowance under the Plan,
any rights the Participant may have to defer commencement of his or her Pension
Allowance, the requirement for Spousal Consent as provided in paragraph (a)
above, and the right of the Participant to make, and to revoke, elections.

   (c)  Each Employer shall provide the written explanation required by Section
5.03(b) no more than 90 days and no less than 30 days prior to the Participant's
Annuity Starting Date. A Participant's Annuity Starting Date may not occur less
than 30 days after receipt of the notice. An election for an optional form shall
be made on a form provided by the Plan Administrator and may be made during the
90-day period ending on the Participant's Annuity Starting Date, but not prior
to the date the Participant receives such written explanation.

   (d)  Notwithstanding the provisions of paragraph (c) above, a CECONY
Participant, other than a Rule of 75 CECONY Participant, may, after having
received the written

                                                                              81


explanation, affirmatively elect to have his or her benefit commence, or to
receive his or her benefit in the form of a Cash Out, as applicable, sooner than
30 days following his or her receipt of the written explanation provided all of
the following requirements are met:

        (1)  the Plan Administrator clearly informs the Participant that he or
             she has a period of at least 30 days after receiving the
             explanation to decide when to have his or her benefits begin and,
             if applicable, to choose a particular optional form of payment;

        (2)  the Participant affirmatively elects a date for his or her benefits
             to begin and, if applicable, an optional form of payment, after
             receiving the explanation;

        (3)  the Participant is permitted to revoke his or her election until
             the later of his or her Annuity Starting Date or seven days
             following the day he or she received the explanation;

        (4)  payment does not commence less than seven days following the day
             after the explanation is received by the Participant; and

        (5)  the Participant's Annuity Starting Date is after the date the
             explanation is provided.

   (e)  An election of an option may be revoked on a form provided by the Plan
Administrator, and subsequent elections and revocations may be made at any time
and from time to time during the election period specified in paragraph (c) or
(d) above, whichever is applicable. An election of an optional form of benefit
shall be effective on the Participant's Annuity Starting Date and may not be
modified or revoked after his or her Annuity Starting Date unless otherwise
provided under paragraph (d). A revocation of any election shall be effective
when the completed form is filed with the Plan

                                                                              82


Administrator. If a Participant who has elected an optional form of benefit dies
before the date the election of the option becomes effective, the election shall
be given effect. If the Beneficiary designated under an option dies before the
date the election of the option becomes effective, the election shall be
revoked.

5.04    COMMENCEMENT OF PAYMENTS

   (a)  Except as otherwise provided in Article 4 or this Article 5, payment of
a Participant's Pension Allowance will begin as soon as administratively
practicable following the latest of (i) the Participant's 65th birthday, (ii)
the fifth anniversary of the date on which he or she became a Participant, or
(iii) the date he or she terminates service with the Company or an Affiliate,
(but not more than 60 days after the close of the Plan Year in which the latest
of (i), (ii) or (iii) occurs).

   (b)  Notwithstanding the preceding paragraph, payment of any Participant's
Pension Allowance will begin not later than April 1 of the calendar year
following the later of the calendar year in which he or she attains age 70 1/2
or terminates employment.

5.05    DISTRIBUTION LIMITATION

        Notwithstanding any other provision of this Article 5, all distributions
from this Plan will conform to the regulations issued under Code Section
401(a)(9), including the incidental death benefit provisions of Code Section
401(a)(9)(G). Further, such regulations shall override any plan provision that
is inconsistent with Code Section 401(a)(9). The life expectancies of
Participants and their spouses shall not be recalculated.

5.06    DIRECT ROLLOVER OF CERTAIN DISTRIBUTIONS

   (a)  Notwithstanding any provision of the Plan to the contrary that would
otherwise limit a distributee's election under this Article, a distributee may
elect, at the time and in

                                                                              83


the manner prescribed by the Plan Administrator, to have any portion of an
eligible rollover distribution paid directly to an eligible retirement plan
specified by the distributee in a direct rollover.

   (b)  The following definitions apply to the terms used in this Section:

        (1)  An "eligible rollover distribution" is any distribution of all or
             any portion of the balance to the credit of the distributee, except
             that an eligible rollover distribution does not include: any
             distribution that is one of a series of substantially equal
             periodic payments (not less frequently than annually) made for the
             life (or life expectancy) of the distributee or the joint lives (or
             joint life expectancies) of the distributee and the distributee's
             designated beneficiary, or for a specified period of ten years or
             more; any distribution to the extent such distribution is required
             under Code Section 401(a)(9); the portion of any distribution that
             is not includible in gross income (determined without regard to the
             exclusion for net unrealized appreciation with respect to employer
             securities); and any distribution where all otherwise eligible
             distributions are expected to total less than $200;

        (2)  An "eligible retirement plan" is an individual retirement account
             described in Code Section 408(a), an individual retirement annuity
             described in Code Section 408(b), an annuity plan described in Code
             Section 403(a), or a qualified trust described in Code Section
             401(a), that accepts the distributee's eligible rollover
             distribution. However, in the case of an eligible rollover
             distribution to the Surviving Spouse, an eligible retirement plan
             is an individual retirement account or individual retirement
             annuity;

                                                                              84


        (3)  A "distributee" includes an Employee or former Employee. In
             addition, the Employee's or former Employee's Surviving Spouse and
             the Employee's or former Employee's spouse or former spouse who is
             the alternate payee under a qualified domestic relations order, as
             defined in Code Section 414(p), are distributees with regard to the
             interest of the spouse or former spouse; and

        (4)  A "direct rollover" is a payment by the Plan to the eligible
             retirement plan specified by the distributee.

        In the event that the provisions of this Section 5.06 or any part
thereof cease to be required by law as a result of subsequent legislation or
otherwise, this Section or any applicable part thereof shall be ineffective
without the necessity of further amendments to the Plan.

                                                                              85


                                   ARTICLE VI

                                  CONTRIBUTIONS

6.01    EMPLOYERS' CONTRIBUTIONS

        It is the intention of the Company and the Employers to continue the
Plan, make the contributions that are necessary to maintain the Plan on a sound
actuarial basis and to meet the minimum funding standards prescribed by law.
However, subject to the provisions of Article X, an Employer may discontinue its
contributions for any reason at any time. Any forfeitures shall be used to
reduce the Employers' contributions otherwise payable.

6.02    RETURN OF CONTRIBUTIONS

   (a)  The contributions of the Employers to the Plan are conditioned upon
their deductibility under Code Section 404. If all or part of the deductions of
the Employers are disallowed by the Internal Revenue Service, the portion of the
contributions to which that disallowance applies will be returned to the
Employers without interest, but reduced by any investment loss attributable to
those contributions. The return shall be made within one year after the date of
the disallowance of the deduction.

   (b)  The Employers may recover without interest the amount of their
contributions to the Plan made on account of a mistake in fact, reduced by any
investment loss attributable to those contributions, if recovery is made within
one year after the date of those contributions.

                                                                              86


6.03    NON-CONTRIBUTORY NATURE

        No contributions by any Employee or Participant to the Plan shall be
required or permitted hereunder.

                                                                              87


                                   ARTICLE VII

                             ADMINISTRATION OF PLAN

7.01    NAMED FIDUCIARIES

   (a)  The Board has appointed those persons who occupy the positions of Chief
Executive Officer, Chief Financial Officer and Chief Accounting Officer of
CECONY as the Named Fiduciaries of the Plan. The Named Fiduciaries shall have
the joint authority to control and manage the operation and administration of
the Plan, including the appointment of the Plan Administrator. The Named
Fiduciaries may, in their sole and absolute discretion, designate one or more
committees or individuals to serve as the Plan Administrator, or in other
fiduciary capacities responsible for the management, operation and
administration of the Plan and/or investment of the trust and the plan assets.
CECONY also may designate other persons who, upon acceptance of such
designation, shall serve as Named Fiduciaries either instead of or in addition
to those holding the aforementioned offices. Any such designation and acceptance
shall be in writing and retained by the Plan Administrator.

   (b)  The Named Fiduciaries may allocate fiduciary responsibilities among
themselves, and may designate other persons to carry out fiduciary
responsibilities, other than those granted to the Trustee under the trust
agreement adopted for use in implementing the Plan, in accordance with the
following procedure:

        (1)  The Chief Executive Officer of CECONY shall allocate fiduciary
             responsibilities among the Named Fiduciaries in writing, and the
             acceptance of such responsibilities by the Named Fiduciaries shall
             be in writing. Any designation by a Named Fiduciary of persons to
             carry out fiduciary

                                                                              88


             responsibilities, other than those granted to the Trustee under the
             trust agreement adopted for use in implementing the Plan, shall be
             in writing, a copy of which shall be delivered to the designee, and
             shall specify the fiduciary responsibilities to be carried out by
             the designee. Written notice of any such designation shall be given
             to all other Named Fiduciaries by the Named Fiduciary making the
             designation. Any such allocations, acceptances and designations
             shall be retained by the Plan Administrator.

        (2)  A Named Fiduciary, or a fiduciary designated by a Named Fiduciary,
             may employ one or more persons to render advice with regard to any
             responsibility such fiduciary has under the Plan.

        (3)  One or more of the Named Fiduciaries may direct the Trustee to
             invest all or any part of the trust fund held by the Trustee in
             investments consistent and in accordance with the Plan's investment
             policy, including but not limited to, investments in insurance
             policies and contracts, including group annuity contracts, and in
             tax-exempt group trusts, and from time to time to liquidate any
             such investment in whole or in part.

        (4)  The Named Fiduciaries shall have the powers granted to them under
             the trust agreement adopted for use in implementing the Plan.

7.02    DUTIES OF PLAN ADMINISTRATOR

   (a)  The Plan Administrator shall have such duties and powers as may be
necessary to discharge its duties hereunder, including but not by way of
limitation, the following:

        (1)  to authorize any agent to execute or deliver any instrument or make
             any payment on its behalf;

                                                                              89


        (2)  to retain counsel, employ agents and provide for such clerical,
             accounting, actuarial and consulting services as it may require in
             carrying out the provisions of the Plan;

        (3)  to delegate to other persons all or such portion of its duties
             under the Plan, other than those granted to the Trustee under the
             trust agreement adopted for use in implementing the Plan, as the
             Plan Administrator, in his or her sole discretion, shall decide and
             in accordance with ERISA Section 405;

        (4)  to decide all claims and questions of eligibility, and determine
             the amount, manner and time of payment of any benefit hereunder,
             and to construe and interpret the Plan or other plans as may be
             necessary in conjunction herewith;

        (5)  to make and enforce such rules and regulations as the Plan
             Administrator deems necessary or proper for the efficient
             administration and operation of the Plan;

        (6)  to prescribe procedures to be followed by Participants or
             Beneficiaries filing applications for benefits;

        (7)  to exercise such authority and responsibility, and perform such
             duties, as may be required in order to comply with ERISA and
             governmental regulations issued there under regarding records of
             Participants' service, accrued benefits, and non-forfeitable
             benefits under the Plan;

        (8)  to provide notifications to Participants, and file such annual
             reports as shall be required with the Internal Revenue Service, the
             Department of Labor and the Pension Benefit Guaranty Corporation;

                                                                              90


        (9)  to receive and review the annual actuarial valuation of the Plan
             made by the actuary, and the regular reports of the Trustee
             regarding the financial condition, receipts and disbursements of
             the trust fund;

        (10) to furnish to the Employers, upon request, such annual reports with
             respect to the administration of the Plan as are reasonable and
             appropriate;

        (11) to receive service of legal process, as agent for the Plan; and

        (12) to authorize the payment of reasonable and necessary expenses for
             the administration and operation of the Plan.

   (b)  The Plan Administrator shall have the authority to amend the Plan as
follows:

        (1)  in accordance with action by the Board, to amend Appendix B to
             specify that an Affiliate will become an Employer and to provide
             for any special terms and conditions applicable to Participants
             employed by the Employer;

        (2)  to amend Appendix E to specify the method for determining and to
             determine the amount payable from the 401(h) Account for benefits
             under the Retiree Health Plan, pursuant to and for purposes of
             Section 12.06; and

        (3)  to adopt certain amendments to the Plan, which are (a) required or
             desirable in order to implement corporate transactions such as
             mergers, acquisitions and divestitures; (b) required, necessary or
             recommended for compliance with ERISA, the Code or other laws; or
             (c) necessary or desirable for uniform or efficient administration.
             In all cases, any amendment(s) adopted by the Plan Administrator
             shall neither materially nor significantly increase the Employers'
             or the Company's obligations or adversely affect or reduce the
             accrued benefits of Participants.

                                                                              91


        Any amendment adopted by the Plan Administrator pursuant to this Section
shall be in writing and shall be effective as of the date specified by the Plan
Administrator.

7.03    MEETINGS

        The Plan Administrator will hold meetings upon such notice, at such
place or places, and at such time or times as the Plan Administrator may from
time to time determine.

7.04    COMPENSATION AND BONDING

        The Named Fiduciaries and the Plan Administrator will not receive any
compensation from the Plan for their services as such, and no bond or other
security need be required of them in those capacities in any jurisdiction.

7.05    ESTABLISHMENT OF RULES

        Subject to the limitations of the Plan, the Plan Administrator from time
to time will establish rules for the administration of the Plan and the
transaction of business. The Plan Administrator has discretionary authority to
interpret the Plan and to make factual determinations including but not limited
to, determination of an individual's eligibility for Plan participation, the
right and amount of any benefit payable under the Plan and the date on which any
individual ceases to be a Participant. The determination of the Plan
Administrator as to the interpretation of the Plan or any disputed question
shall be conclusive and final to the extent permitted by applicable law.

7.06    PRUDENT CONDUCT

        The Named Fiduciaries and Plan Administrator will use that degree of
care, skill, prudence and diligence that a prudent person acting in a like
capacity and familiar with such matters would use in a similar situation.

7.07    ACTUARY

                                                                              92


        As an aid to the Employers in determining the amount of contributions
payable to the Plan, the actuary designated by the Named Fiduciaries or the Plan
Administrator will make annual actuarial valuations of the assets and
liabilities of the Plan, and will submit to the Plan Administrator the rates of
contribution which it recommends for use.

7.08    MAINTENANCE OF ACCOUNTS

        The Plan Administrator will maintain accounts showing the fiscal
transactions of the Plan and will keep in convenient form such data as may be
necessary for actuarial valuations of the Plan.

7.09    SERVICE IN MORE THAN ONE FIDUCIARY CAPACITY

        Any individual, entity or group of persons may serve in more than one
fiduciary capacity with respect to the Plan and/or the funds of the Plan.

7.10    LIMITATION OF LIABILITY

        The Company, the members of its board of directors, the Employers and
the members of their board of trustees or directors, the Named Fiduciaries, the
Plan Administrator, and any officer, employee or agent of the Company or an
Affiliate shall not incur any liability individually or on behalf of any other
individuals for any act, or failure to act, made in good faith in relation to
the Plan or the funds of the Plan. However, this limitation does not act to
relieve any such individual or the Company or any Affiliate from a
responsibility or liability for any fiduciary responsibility, obligation or duty
under Part 4, Title I of ERISA.

7.11    INDEMNIFICATION

        The Company, the members of its board of directors, the Employers and
the members of their board of trustees or directors, the Named Fiduciaries, the
Plan Administrator, and any officer, employee or agent of the Company or an
Affiliate are

                                                                              93


indemnified against any and all liabilities arising by reason of any act, or
failure to act, in relation to the Plan or the funds of the Plan, including,
without limitation, expenses reasonably incurred in the defense of any claim
relating to the Plan or the funds of the Plan, and amounts paid in any
compromise or settlement relating to the Plan or the funds of the Plan, except
for actions or failures to act made in bad faith or which constitute a breach of
fiduciary duty. The foregoing indemnification is from the funds of the Plan to
the extent of those funds and to the extent permitted under applicable law;
otherwise from the general assets of the Employers. The provisions are in
addition to any other indemnification provision otherwise provided to any such
individual by the Company or an Affiliate, provided that there is no duplication
of benefits under this Section 7.11 and any such other provision.

7.12    APPOINTMENT OF INVESTMENT MANAGER

        The Board of Trustees, in its sole discretion, determines the investment
policy for the Plan. However, a Named Fiduciary may, in its sole discretion, and
in accordance with the investment policy, appoint one or more investment
managers to manage the assets of the Plan (including the power to acquire and
dispose of all or part of such assets) as the Named Fiduciary designates. In
that event, the authority over and responsibility for the management of the
assets so designated is the sole responsibility of that investment manager.

        For purposes of this Article, the term "investment manager" means an
individual firm, or entity who:

   (a)  has the power to manage, acquire or dispose of any asset of the Plan;

                                                                              94


   (b)  is (i) registered as an investment advisor under the Investment Advisors
Act of 1940, (ii) a bank, as defined in that Act, or (iii) an insurance company
qualified to perform services described in paragraph (a) above; and

   (c)  has acknowledged in writing that he, she or it is a fiduciary with
respect to the Plan.

7.13    EXPENSES OF ADMINISTRATION

        All reasonable expenses that arise in connection with the administration
of the Plan, including but not limited to the compensation of the Trustee,
administrative expenses and proper charges and disbursements of the Trustee and
reasonable compensation and other expenses and charges of any enrolled actuary,
counsel, accountant, specialist, or other person who has been retained by the
Employers, Named Fiduciaries or Plan Administrator in connection with the
administration thereof, will be paid from the funds of the Plan held by the
Trustee under the trust agreement adopted for use in implementing the Plan, to
the extent not paid by the Employers. So long as such reimbursement is in
accordance with Department of Labor Regulation 29 CFR 2550.408c-2(b)(3), the
funds of the Plan may also reimburse the Employers for compensation paid by the
Employers to employees of the Employers who perform services to the Plan.

7.14    CLAIMS AND REVIEW PROCEDURES

   (a)  Applications for benefits and inquiries concerning the Plan (or
concerning present or future rights to benefits under the Plan) must be
submitted in writing to the Plan Administrator. An application for benefits must
be submitted on the prescribed form and signed by the Participant or, in the
case of a benefit payable after his or her death, by his or her Beneficiary, or
a duly authorized legal representative.

                                                                              95


   (b)  In the event that an application for benefits is denied in whole or in
part, the Plan Administrator will notify the applicant in writing of the denial
and of the right to review of the denial. The written notice will set forth, in
a manner calculated to be understood by the applicant, specific reasons for the
denial, specific references to the provisions of the Plan on which the denial is
based, a description of any information or material necessary for the applicant
to perfect the application, an explanation of why the material is necessary, and
an explanation of the review procedure under the Plan. The written notice from
the Plan Administrator will be given to the applicant within a reasonable period
of time, not more than 90 days, after the Plan Administrator received the
initial application, unless special circumstances require further time for
processing and the applicant is advised of the need and reason for the extension
within the first 90-day period. The applicant will also be informed of the date
by which the Plan Administrator expects to render the decision. In no event will
the initial decision be given more than 180 days after the Plan Administrator
received the application. The Plan Administrator has the authority to act with
respect to any appeal from a denial of benefits or a determination of benefit
rights.

   (c)  An applicant whose application for benefits was denied in whole or part,
or the applicant's duly authorized representative, may appeal the denial by
submitting to the Plan Administrator a request for a review of the application
within 60 days after receiving written notice of the denial from the Plan
Administrator. The Plan Administrator will give the applicant or his or her
representative an opportunity to review pertinent materials, other than legally
privileged documents, in preparing the request for a review. The request for a
review must be in writing and addressed to the Plan Administrator. The

                                                                              96


request for a review shall set forth all of the grounds on which it is based,
all facts in support of the request and any other matters that the applicant
deems pertinent. The Plan Administrator may require the applicant to submit such
additional facts, documents or other materials as it may deem necessary or
appropriate in making its review.

   (d)  The Plan Administrator will act on each request for a review within 60
days after receipt, unless special circumstances require further time for
processing by the Plan Administrator and the applicant is advised of the need
and reason for the extension. In no event will the decision on review be
rendered more than 120 days after the Plan Administrator received the request
for a review. The Plan Administrator will give prompt written notice of its
decision to the applicant. In the event that the Plan Administrator confirms the
denial of the application for benefits in whole or in part, the notice will set
forth, in a manner calculated to be understood by the applicant, the specific
reasons for the decision and specific references to the provisions of the Plan
on which the decision is based. The Plan Administrator has discretionary
authority to administer the plan, including interpreting the terms, determining
eligibility for, entitlement to and amount of benefits under the Plan,
determining any facts and resolving any questions relevant to administration of
the Plan and remedying and correcting any ambiguities, inconsistencies or
omissions in the Plan. Any action taken by the Plan administrator pursuant to
such discretionary authority shall be conclusive and binding on all
participants, beneficiaries and others.

   (e)  The Plan Administrator shall adopt such rules, procedures and
interpretations of the Plan as deemed necessary or appropriate in carrying out
the Plan Administrator responsibilities under this Section 7.14.

                                                                              97


   (f)  No legal action for benefits under the Plan may be brought unless and
until the claimant:

           (i)   has submitted a written application for benefits in accordance
                 with paragraph (a),

           (ii)  has been notified by the Plan Administrator that the
                 application is denied,

           (iii) has filed a written request for a review of the application in
                 accordance with paragraph (c), and

           (iv)  has been notified in writing that the Plan Administrator has
                 affirmed the denial of the application;

provided, however, that legal action may be brought after the Plan Administrator
has failed to take any action on the claim within the time prescribed by
paragraphs (b) and (d) above.

                                                                              98


                                  ARTICLE VIII

                               MANAGEMENT OF FUNDS

8.01    TRUSTEE

        All the funds of the Plan shall be held by a Trustee appointed from time
to time by the Board under a trust instrument adopted, or as amended, by CECONY
for use in providing the benefits of the Plan and paying its expenses not paid
directly by the Employers. The assets of the Plan may be commingled by the
Trustee with the assets of another qualified defined benefit plan maintained by
an Affiliate; provided, however, that there shall be separate accounting for the
beneficial interest of each such plan in the commingled assets. The beneficial
interest of the trust fund under the Plan will be applied solely in accordance
with the Plan and shall not be available to provide benefits under any other
qualified defined benefit plan or for any other purpose. Expenses and taxes, to
the extent paid from the commingled trust assets, will be equitably divided
between the trust fund under the Plan and the trust fund under any other
qualified defined benefit plan.

8.02    EXCLUSIVE BENEFIT RULE

        Except as otherwise provided in the Plan, no part of the corpus or
income of the funds of the Plan shall be used for, or diverted to, purposes
other than for the exclusive benefit of Participants and other persons entitled
to benefits under the Plan and paying Plan expenses not otherwise paid by the
Employers, before the satisfaction of all liabilities with respect to them. No
person has any interest in or right to any part of the earnings of the funds of
the Plan, or any right in, or to, any part of the assets held under the Plan,
except as and to the extent expressly provided in the Plan.

                                                                              99


                                   ARTICLE IX

                               GENERAL PROVISIONS

9.01    NONALIENATION

   (a)  Except as required by any applicable law, or by paragraph (c), no
benefit under the Plan shall in any manner be anticipated, assigned or
alienated, and any attempt to do so shall be void. However, payment may be made
in accordance with the provisions of any judgment, decree, or order which
creates for, or assigns to, a spouse, former spouse, child or other dependent of
a Participant the right to receive all or a portion of the Participant's
benefits under the Plan for the purpose of providing child support, alimony
payments or marital property rights to that spouse, child or dependent, and:

        (1)  is made pursuant to a State domestic relations law,

        (2)  does not require the Plan to provide any type of benefit, or any
             option, not otherwise provided under the Plan, and

        (3)  otherwise meets the requirements of Section 206(d) of ERISA, as
             amended, as a qualified domestic relations order ("QDRO"), as
             determined by the Plan Administrator. The Plan shall have written
             procedures in effect for determining whether an order is a QDRO
             and, if so, for administering distributions under QDROs. The
             procedures shall notify each person, specified in the order who is
             entitled to payment of benefits under the Plan, of such procedures.

        Notwithstanding the foregoing, a Participant whose benefit is in current
pay status may elect to make a voluntary and revocable assignment of such
benefit, not to exceed

                                                                             100


10% of any benefit payment, provided the assignment is not for the purpose of
defraying administrative costs.

   (b)  If the present value of any series of payments under a QDRO amounts to
$5,000 or less, a lump sum payment that is the Actuarial Equivalent, determined
in the manner described in Section 5.01, shall be made in lieu of the series of
payments.

   (c)  A Participant's benefits under the Plan will be offset by the amount the
Participant is required to pay to the Plan under the circumstances set forth in
Code Section 401(a)(13)(C).

9.02    CONDITIONS OF EMPLOYMENT NOT AFFECTED BY PLAN

        The establishment of the Plan does not confer any legal rights upon any
Employee or other person for a continuation of employment, nor does it interfere
with the right of the Employers (which right is hereby reserved) to discharge
any Employee and to treat him or her without regard to the effect which that
treatment might have upon him or her as a Participant or potential Participant
in the Plan.

9.03    FACILITY OF PAYMENT

        If the Plan Administrator finds that a Participant or other person
entitled to a benefit is unable to care for his or her affairs because of
illness or accident or because he or she is a minor, the Plan Administrator may
direct, in his or her sole discretion, that any benefit due him or her, unless
claim has been made for the benefit of the Participant by a duly appointed legal
representative, be paid to his or her spouse, a child, a parent or other blood
relative, or to a person with whom he or she resides. Any payment so made shall
be a complete discharge of the liabilities of the Plan for that benefit.
Furthermore, if the Plan Administrator receives from a Participant a power of
attorney valid under state law, the Plan Administrator will comply with the
instructions of the named attorney to the

                                                                             101


extent that the Plan Administrator would comply with such instructions if given
by the Participant and such instructions are consistent with the power of
attorney.

9.04    INFORMATION

        Each Participant or other person entitled to a benefit, before any
benefit will be payable to him or her or on his or her account under the Plan,
must file with the Plan Administrator information that the Plan Administrator
requires to establish the Participant's or other person's rights and benefits
under the Plan.

9.05    TOP-HEAVY PROVISIONS

   (a)  The following definitions apply to the terms used in this Section:

        (1)  "applicable determination date" means the last day of the preceding
             Plan Year;

        (2)  "top-heavy ratio" means the ratio of (A) the present value of the
             cumulative accrued benefits under the Plan for key employees to (B)
             the present value of the cumulative accrued benefits under the Plan
             for all key employees and non-key employees; provided, however,
             that if an individual has not performed services for the Company or
             Affiliate at any time during the 5-year period ending on the
             applicable determination date, any accrued benefit for such
             individual (and the account of such individual) shall not be taken
             into account;

        (3)  "applicable valuation date" means the date within the preceding
             Plan Year as of which annual Plan costs are or would be computed
             for minimum funding purposes;

        (4)  "key employee" means an employee who is in a category of employees
             determined in accordance with the provisions Code Section 416(i)(1)
             and (5)

                                                                             102


             and any regulations there under, and, where applicable, on the
             basis of the Employee's remuneration which, with respect to any
             Employee, shall mean the wages, salaries and other amounts paid in
             respect of such Employee by the Company or an Affiliate for
             personal services actually rendered, determined before any pre-tax
             contributions under a "qualified cash or deferred arrangement" (as
             defined under Code Section 401(k) and its applicable regulations)
             or under a "cafeteria plan" (as defined under Code Section 125 and
             its applicable regulations), and shall include, but not by way of
             limitation, bonuses, overtime payments and commissions; and shall
             exclude deferred compensation, stock options and other
             distributions which receive special tax benefits under the Code;

        (5)  "non-key employee" means any employee who is not a key employee;

        (6)  "average remuneration" means the average annual remuneration of a
             Participant for the five consecutive years of his or her Vesting
             Service during which he or she received the greatest aggregate
             remuneration, as limited by Code Section 401(a)(17), from the
             Company or an Affiliate, excluding any remuneration for service
             after the last Plan Year with respect to which the Plan is
             top-heavy;

        (7)  "required aggregation group" means each other qualified plan of the
             Company or an Affiliate (including plans that terminated within the
             five-year period ending on the determination date) in which there
             are members who are key employees or which enables the Plan to meet
             the requirements of Code Section 401(a)(4) or 410; and

                                                                             103


        (8)  "permissive aggregation group" means each plan in the required
             aggregation group and any other qualified plan(s) of the Company or
             an Affiliate in which all members are non-key employees, if the
             resulting aggregation group continues to meet the requirements of
             Code Sections 401(a)(4) and 410.

   (b)  For purposes of this Section, the Plan shall be "top-heavy" with respect
to any Plan Year beginning on or after January 1, 1984, if as of the applicable
determination date the top-heavy ratio exceeds 60%. The top-heavy ratio shall be
determined as of the applicable valuation date in accordance with Code Section
416(g)(3) and (4)(B) on the basis of the 1983 Group Annuity Mortality Table and
an interest rate of 5 1/2% per year compounded annually. For purposes of
determining whether the Plan is top-heavy, the present value of accrued benefits
under the Plan will be combined with the present value of accrued benefits or
account balances under each other plan in the required aggregation group, and,
in the Employer's discretion, may be combined with the present value of accrued
benefits or account balances under any other qualified plan(s) in the permissive
aggregation group. The accrued benefit of a non-key employee under the Plan or
any other defined benefit plan in the aggregation group shall be (i) determined
under the method, if any, that uniformly applies for accrual purposes under all
plans maintained by the Company or an Affiliate, or (ii) if there is no such
method, as if such benefit accrued not more rapidly than the slowest accrual
rate permitted under the fractional rule described in Code Section 411(b)(1)(C).

   (c)  The following provisions shall be applicable to Participants for any
Plan Year with respect to which the Plan is top-heavy:

                                                                             104


        (1)  In lieu of the vesting requirements specified in Section 4.05, a
             Participant shall be vested in, and have a non-forfeitable right
             to, a percentage of his or her accrued benefit, as set forth in the
             following vesting schedule:



                     YEARS OF VESTING SERVICE        PERCENTAGE VESTED
                                                       
                     Less than 2 years                      0%
                     2 years                               20%
                     3 years                               40%
                     4 years                               60%
                     5 years                              100%


        (2)  The accrued benefit of a Participant who is a non-key employee
             shall not be less than 2% of his or her average remuneration
             multiplied by the number of years of his or her Vesting Service,
             not in excess of 10, during the Plan Years for which the Plan is
             top-heavy. That minimum benefit shall be payable at a Participant's
             Normal Retirement Date. If payments commence at a time other than
             the Participant's Normal Retirement Date, the minimum accrued
             benefit shall be the Actuarial Equivalent of that minimum benefit.

        (3)  The multiplier "1.25" in Code Sections 415(e)(2)(B)(i) and
             (3)(B)(i) shall be reduced to "1.0", and the dollar amount
             "$51,875" in Code Section 415(e)(6)(B)(i)(I) shall be reduced to
             "$41,500".

   (d)  If the Plan is top-heavy with respect to a Plan Year and ceases to be
top-heavy for a subsequent Plan Year, the following provisions shall be
applicable:

        (1)  The accrued benefit in any such subsequent Plan Year shall not be
             less than the minimum accrued benefit provided in paragraph (c)(ii)
             above, computed as of the end of the most recent Plan Year for
             which the Plan was top-heavy.

                                                                             105


        (2)  If a Participant has completed three years of Vesting Service on or
             before the last day of the most recent Plan Year for which the Plan
             was top-heavy, the vesting schedule set forth in paragraph (c)(i)
             above shall continue to be applicable.

        (3)  If a Participant has completed at least two, but less than three,
             years of Vesting Service on or before the last day of the most
             recent Plan Year for which the Plan was top-heavy, the vesting
             provisions of Section 4.05 shall again be applicable; provided,
             however, that in no event shall the vested percentage of a
             Participant's accrued benefit be less than the percentage
             determined under paragraph (c)(i) above as of the last day of the
             most recent Plan Year for which the Plan was top-heavy.

9.06    CONSTRUCTION

   (a)  The Plan shall be construed, regulated and administered under ERISA as
in effect from time to time, and the laws of the State of New York, except where
ERISA controls.

   (b)  The titles and headings of the Articles and Sections in this Plan are
for convenience only. In case of ambiguity or inconsistency, the text rather
than the titles or headings shall control.

9.07    PREVENTION OF ESCHEAT

        If the Plan Administrator cannot ascertain the whereabouts of any person
to whom a payment is due under the Plan, the Plan Administrator may, no earlier
than three years from the date such payment is due, mail a notice of such due
and owing payment to the last known address of such person as shown on the
records of the Plan Administrator or the Employer. If such person has not made
written claim therefore within three months of the date of the mailing, the Plan
Administrator may, if it so elects and upon receiving

                                                                             106


advice from counsel to the Plan, direct that such payment and all remaining
payments otherwise due such person be cancelled on the records of the Plan and
the amount thereof applied to reduce the contributions of the Employer. Upon
such cancellation, the Plan has no further liability therefore except that, in
the event such person or his or her Beneficiary later notifies the Plan
Administrator of his or her whereabouts and requests the payment or payments due
to him or her under the Plan, the amount so applied will be paid to him or her
in accordance with the provisions of the Plan, without interest.

                                                                             107


                                    ARTICLE X

                        AMENDMENT, MERGER AND TERMINATION

10.01   AMENDMENT OF PLAN

   (a)  CECONY, by action of its Board, or pursuant to authority granted by its
Board, reserves the right at any time and from time to time, and retroactively
if deemed necessary or appropriate, to amend in whole or in part any or all of
the provisions of the Plan. However, no amendment shall make it possible for any
part of the funds of the Plan to be used for, or diverted to, purposes other
than for the exclusive benefit of persons entitled to benefits under the Plan,
before the satisfaction of all liabilities with respect to them. No amendment
will be made which has the effect of decreasing the accrued benefit or reducing
the nonforfeitable percentage of the accrued benefit of a Participant below the
nonforfeitable percentage computed under the Plan as in effect on the date on
which the amendment is adopted or, if later, the date on which the amendment
becomes effective.

   (b)  The Plan Administrator has the authority to amend the Plan to the extent
and in the manner described in Section 7.02(b).

10.02   MERGER, CONSOLIDATION, OR TRANSFER

        The Board may, in its sole discretion, merge this Plan with another
qualified plan, subject to any applicable legal requirements. However, the Plan
may not be merged or consolidated with, and its assets or liabilities may not be
transferred to, any other plan unless each person entitled to benefits under the
Plan would, if the resulting plan were then terminated, receive a benefit
immediately after the merger, consolidation, or transfer

                                                                             108


which is equal to or greater than the benefit he or she would have been entitled
to receive immediately before the merger, consolidation, or transfer if the Plan
had then terminated.

10.03   ADDITIONAL PARTICIPATING COMPANIES

   (a)  With the consent of CECONY, an Affiliate may adopt this Plan for some or
all of its Employees. Upon the effective date of the adoption of the Plan by an
Affiliate, the Affiliate shall be an Employer and shall delegate all fiduciary
and administrative responsibilities (including the appointment and removal of
fiduciaries) under the Plan to the Named Fiduciaries and the Plan Administrator
of the Plan. An Employer may adopt the Plan for some or all of its employees
upon appropriate action by such Employer, and with the consent of CECONY, and
the employees for whom the Plan is adopted shall be described in Appendix B to
the Plan.

   (b)  An Employer may terminate its participation in the Plan upon appropriate
action. The funds of the Plan held on account of Participants in the employ of
that Employer will be determined by the Plan Administrator and will be applied
as provided in Section 10.04 if the Plan should be terminated, or will be
segregated by the Trustee as a separate trust, pursuant to certification to the
Trustee by the Plan Administrator, continuing the Plan as a separate plan for
the employees of that company under which the board of directors of that company
will succeed to all the powers and duties of the board of trustees, including
the appointment of named fiduciaries.

                                                                             109


10.04   TERMINATION OF PLAN

        CECONY, by action of its Board, may terminate the Plan for any reason at
any time. In case of termination of the Plan, the rights of Participants to
their benefits accrued under the Plan as of the date of the termination, to the
extent then funded or protected by law, if greater, shall be nonforfeitable. The
funds of the Plan shall be used for the exclusive benefit of persons entitled to
benefits under the Plan as of the date of termination, except as provided in
Section 6.02. However, any funds not required to satisfy all liabilities of the
Plan for benefits because of erroneous actuarial computation will be returned to
the Employers. In addition, after the satisfaction of all liabilities for
benefits to which Participants and other persons may be entitled under the Plan,
and satisfaction of all liabilities for expenses under by the Plan, in the event
there are remaining plan assets, upon termination of the Plan, such excess
assets shall revert to the Employers. The Plan Administrator will determine on
the basis of actuarial valuation the share of the funds of the Plan allocable to
each person entitled to benefits under the Plan in accordance with Section 4044
of ERISA, or corresponding provision of any applicable law in effect at the
time. In the event of a partial termination of the Plan, the provisions of this
Section will be applicable to the Participants affected by that partial
termination.

10.05   LIMITATION CONCERNING HIGHLY-COMPENSATED EMPLOYEES AND
        HIGHLY-COMPENSATED FORMER EMPLOYEES

   (a)  The provisions of this Section shall apply (i) in the event the Plan is
terminated, to any Participant who is a highly-compensated employee or
highly-compensated former employee (as those terms are defined in Code Section
414(q)) of the Company or an Affiliate and (ii) in any other event, to any
Participant who is one of the 25 highly-compensated employees or
highly-compensated former employees of the Company or

                                                                             110


Affiliate with the greatest compensation in any Plan Year. The amount of the
annual payments to any one of the Participants to whom this Section applies will
not be greater than an amount equal to the annual payments that would be made on
behalf of the Participant during the year under a single life annuity that is
the Actuarial Equivalent of the sum of the Participant's accrued benefit and the
Participant's other benefits under the Plan.

   (b)  If, (i) after payment of Pension Allowance or other benefits to any one
of the Participants to whom this Section applies, the value of Plan assets
equals or exceeds 110% of the value of current liabilities (as that term is
defined in Code Section 412(l)(7)) of the Plan, (ii) the value of the accrued
benefit and other benefits of any one of the Participants to whom this Section
applies is less than 1% of the value of current liabilities of the Plan, or
(iii) the value of the benefits payable to a Participant to whom this Section
applies does not exceed the amount described in Code Section 411(a)(11)(A), the
provisions of paragraph (a) above will not be applicable to the payment of
benefits to such Participant.

   (c)  If any Participant to whom this Section applies elects to receive a lump
sum payment in lieu of his or her Pension Allowance and the provisions of
paragraph (b) above are not met with respect to such Participant, the
Participant will be entitled to receive his or her benefit in full provided he
or she agrees to repay to the Plan any portion of the lump sum payment which
would be restricted by operation of the provisions of paragraph (a), and shall
provide adequate security to guarantee that repayment.

   (d)  Notwithstanding paragraph (a) of this Section, in the event the Plan is
terminated, the restriction of this Section is not applicable if the benefit
payable to any highly-compensated

                                                                             111


employee and any highly-compensated former employee is limited to a benefit that
is nondiscriminatory under Code Section 401(a)(4).

   (e)  If it should subsequently be determined by statute, court decision
acquiesced in by the Commissioner of Internal Revenue, or ruling by the
Commissioner of Internal Revenue, that the provisions of this Section are no
longer necessary to qualify the Plan under the Code, this Section shall be
ineffective without the necessity of further amendment to the Plan.

                                                                             112


                                   ARTICLE XI

                           COST-OF-LIVING ADJUSTMENTS

11.01   ELIGIBILITY-CECONY PARTICIPANTS

        All Pension Allowances payable to CECONY Participants under the Plan for
the month of April in a calendar year which commenced prior to December 31 of
the prior calendar year shall be eligible for an adjustment hereunder. In the
case of an annuity payable to a Surviving Spouse of a retired CECONY
Participant, the Surviving Spouse's annuity shall be deemed to have commenced on
the date the retired CECONY Participant's Pension Allowance commenced. No CEI
Participant or the Surviving Spouse or Beneficiary of a CEI Participant is
eligible for a cost-of-living adjustment to his or her Cash Balance Account
Pension Allowance.

11.02   ANNUAL ADJUSTMENT-CECONY PARTICIPANTS

        All eligible Pension Allowances of CECONY Participants being paid from
time to time under the Plan shall be increased annually by the percentage
determined under Section 11.03. Such adjustment shall be made for the month of
April each year and for each month thereafter, until further changed or
terminated in accordance with provisions of this Plan.

11.03   PERCENTAGE OF ADJUSTMENT-CECONY PARTICIPANTS

        Each annual adjustment shall equal 75% of the percentage increase,
rounded to the nearest 1/10 of one percent (0.001), in the Index specified in
Section 11.05 for the preceding December over the Index for the next-preceding
December; provided, however, that such annual adjustment shall not:

   (a)  exceed 3%, or

   (b)  be less than 0% of the eligible Pension Allowance.

                                                                             113


11.04   LIMITATION ON ADJUSTMENTS-CECONY PARTICIPANTS

        No adjustment in a Pension Allowance provided under this Article XI may
cause such Pension Allowance, as adjusted, to be greater than the product of (a)
the amount of such Pension Allowance paid for the month of December 1986 or the
later month in which the Pension Allowance commenced ("Commencement Month"),
multiplied by (b) a fraction, the numerator of which shall be the Index for the
December immediately preceding the month of April in which the adjustment is to
be made, and the denominator of which shall be the Index for the December
immediately preceding the Commencement Month. Any increase pursuant to this
Article XI shall be reduced to the extent required to satisfy the limitation set
forth in this Section 11.04.

11.05   INDEX-CECONY PARTICIPANTS

        The Index to be used for purposes of this Article XI shall be the
Consumer Price Index, All Urban Consumers - US City Average ("CPI-U"), as
published by the United States Department of Labor. If at any time such Index is
revised or discontinued, or if the Named Fiduciaries determine that a different
index, device, or other form of measurement more accurately measures the impact
of inflation on the purchasing power of retirees, the Named Fiduciaries may
substitute such other index, device, or other form of measurement as they, in
their discretion, determine to be appropriate.

11.06   ELIGIBILITY AND ADJUSTMENT-O&R PARTICIPANTS

        Beginning as of July 1 of the year for which the cumulative percentage
change in the CPI-U, defined below, exceeds 20%, but not earlier than July 1,
1993, and as of each July 1 thereafter, the monthly Pension Allowance then being
received by a retired O&R Participant, or a vested O&R Participant whose
employment terminates after January 1, 1993,

                                                                             114


shall be increased by a pension benefit adjustment ("PBA"), not less than zero,
determined by multiplying:

   (a)  the gross monthly Pension Allowance as of the Annuity Starting Date, or
as of June 1, 1993 for a retired O&R Participant whose Annuity Starting Date
occurred prior to January 1, 1989, or in both cases such other gross monthly
Pension Allowance, then being paid to the extent it is not a PBA under this
Section 11.06, by

   (b)  a percentage (rounded to the nearest 100th of a percent) equal to 75% of
the "cumulative percentage change" in the CPI-U for the year in excess of 20%,
but not more than the applicable "cumulative maximum percentage," as defined
below.

11.07   ELIGIBLE SPOUSE OR CONTINGENT ANNUITANT OF O&R PARTICIPANT

        The monthly Pension Allowance being received by a Surviving Spouse,
including a former spouse treated as the spouse under a QDRO, unless the QDRO
provides otherwise, or a contingent annuitant under a joint and survivor annuity
or contingent annuitant option with respect to a retired O&R Participant or
vested O&R Participant whose employment terminates on or after January 1, 1993,
shall be increased by a PBA, not less than zero, on July 1 of each year,
beginning:

   (a)  as of the July 1 coincident with or next following the spouse's or
contingent annuitant's Annuity Starting Date if the retired O&R Participant or
vested O&R Participant had previously received one or more PBAs under Section
11.06 above, or

   (b)  as of the July 1, on or after July 1, 1993, of the year for which the
"cumulative percentage change in the CPI-U" first exceeds 20%.

11.08   PENSION BENEFIT ADJUSTMENT AMOUNT FOR SPOUSE OR
        CONTINGENT ANNUITANT OF O&R PARTICIPANT

                                                                             115


   (a)  The PBA for the spouse or contingent annuitant shall be calculated by
multiplying the percentage in Section 11.06(ii) above, determined using the
deceased Participant's Annuity Starting Date, by the spouse's or contingent
annuitant's gross monthly Pension Allowance as of the spouse's or contingent
annuitant's Annuity Starting Date, or as of June 1, 1993 for a spouse or
contingent annuitant whose Annuity Starting Date occurred prior to January 1,
1989, excluding any portion of such Pension Allowance which represents PBAs to
the retired Participant's or vested Participant's Pension Allowance pursuant to
Section 11.06 above.

   (b)  The monthly O&R Surviving Spouse's Pension Allowance, or O&R Spouse's
Death Benefit Allowance with respect to a vested O&R Participant whose
employment terminates after January 1, 1993, then being received by a spouse,
including a former spouse treated as the spouse under a QDRO unless the QDRO
provides otherwise, shall be increased by a PBA, not less than zero, on July 1
of the year for which the "cumulative percentage change in the CPI-U" exceeds
20%, but not earlier than July 1, 1993, and as of each July 1 thereafter. The
PBA shall be calculated by multiplying the percentage in Section 11.06(ii)
above, determined using the spouse's Annuity Starting Date, by the spouse's
gross monthly Pension Allowance, as of the spouse's Annuity Starting Date, or
June 1, 1993 for a spouse whose Annuity Starting Date occurred prior to January
1, 1989.

11.09   PENSION BENEFIT ADJUSTMENT FOR
        ALTERNATE PAYEE OF AN O&R PARTICIPANT

   (a)  The monthly Pension Allowance then being received by an alternate payee,
within the meaning of ERISA Section 206(d) and Code Section 414(p), under a QDRO
who does not otherwise share in an increase by reason of Section 11.06, Section
11.07 or

                                                                             116


Section 11.08 above, and is not subject to the exception in the last sentence
hereof, shall be increased by a PBA, not less than zero, on each July 1
beginning

        (1)  as of the July 1 coincident with or next following the alternate
             payee's Annuity Starting Date if the QDRO is effective after the
             O&R Participant's Annuity Starting Date and the O&R Participant had
             previously received one or more PBAs under Section 11.06 above, or

        (2)  as of the first July 1, on or after July 1, 1993, of the year for
             which the "cumulative percentage change in the CPI-U" first exceeds
             20%.

   (b)  The PBA shall be calculated by multiplying the percentage in Section
11.06(ii) above, determined using the alternate payee's Annuity Starting Date if
the QDRO is effective on or before the O&R Participant's Annuity Starting Date
and using the O&R Participant's Annuity Starting Date if the QDRO is effective
after the O&R Participant's Annuity Starting Date, by the alternate payee's
gross monthly Pension Allowance as of the alternate payee's Annuity Starting
Date, or as of June 1, 1993 for an alternate payee whose Annuity Starting Date
occurred prior to January 1, 1989, excluding any portion of such Pension
Allowance which represents PBAs to the O&R Participant's Pension Allowance
pursuant to Section 11.06 above. This paragraph shall not apply if the QDRO
states that the PBA shall not apply and further shall not apply in any event to
any Pension Allowance paid with respect to a Vested O&R Participant whose
employment terminated prior to January 1, 1993. For purposes of applying the
provisions of Section 5.02(c)(3) and (4) which provide for the monthly Pension
Allowance of a retired O&R Participant or vested O&R Participant to be increased
after the death of the contingent annuitant, such increase, if made on a date
other than a July 1, shall include the PBA which would

                                                                             117


have applied under paragraph (a) above if the retired O&R Participant or vested
O&R Participant had been receiving the Pension Allowance as a single life
annuity as of the immediately preceding July 1. A retired O&R Participant
(including a O&R Participant who remains in service but has commenced his or her
Allowance because of attainment of age 70-1/2) or a vested O&R Participant will
be considered, for purposes of this Section only, to have multiple Annuity
Starting Dates if the Pension Allowance as of the Annuity Starting Date is
adjusted thereafter as a result of future Annual Compensation and Accredited
Service. The initial Annuity Starting Date, which is the date as of which a
Pension Allowance first begins to the retired or vested O&R Participant from the
Plan, applies to the portion of the Pension Allowance attributable to Annual
Compensation and Accredited Service prior to such initial Annuity Starting Date.
Thereafter, each subsequent date as of which an Pension Allowance is adjusted
after the initial Annuity Starting Date by reason of Annual Compensation or
Accredited Service thereafter shall be considered, for purposes of this Section
only, as the Annuity Starting Date with respect to the portion of the Pension
Allowance attributable to Annual Compensation and Accredited Service since the
previous Annuity Starting Date.

   (c)  The terms specified below which are used in Sections 11.06, 11.07, 11.08
and 11.09 shall have the meanings set forth below, unless the context clearly
dictates another meaning.

        (1)  CPI-U means the annual average figure under the Consumer Price
             Index for All Urban Consumers, U.S. City Average of All Items
             (1982-1984=100), or its successor, as published by the United
             States Bureau of Labor Statistics.

                                                                             118


        (2)  Cumulative Percentage Change in the CPI-U for a year is calculated
             by dividing the difference between the CPI-U for the prior year and
             the CPI-U for the year prior to the year in which the applicable
             Annuity Starting Date occurred by the CPI-U for the year prior to
             the year in which the Annuity Starting Date occurred, and rounding
             to the nearest 100th of a percent (e.g., for purposes of
             determining the cumulative percentage change in the CPI-U for 1993
             for a retired O&R Participant whose Annuity Starting Date occurred
             in 1990, subtract the CPI-U for 1989 from the CPI-U for 1992, then
             divide the result by the CPI-U for 1989 and round to the nearest
             100th of a percent). Notwithstanding any provisions of Sections
             11.06, 11.07, 11.08 and 11.09 to the contrary, in all cases when
             the Annuity Starting Date occurred before January 1, 1989, the
             cumulative percentage change in the CPI-U for a year shall be
             calculated by dividing the difference between the CPI-U for the
             prior year and the CPI-U for 1991 by the CPI-U for 1991, rounding
             to the nearest 100th of a percent, and adding 20%.

        (3)  Cumulative Maximum Percentage. For purposes of Section 11.06,
             Section 11.08 and, Section 11.07, if the O&R Participant had not
             previously received any PBA under Section 11.06, and Section 11.09,
             if the alternate payee's Annuity Starting Date is used to determine
             the PBA, cumulative maximum percentage is 3% for the first year in
             which a PBA is made and for each succeeding year is 3% plus 103% of
             the prior year's cumulative maximum percentage, rounded to the
             nearest 100th of a percent (e.g., 3% for the first year, 6.09% for
             the second year, 9.27% for the third year). For purposes of

                                                                             119


             Section 11.06, if the O&R Participant had previously received a PBA
             under Section 11.06, and Section 11.09, if the Member's Annuity
             Starting Date is used to determine the PBA, the maximum for the
             first year is 3% plus 103% of the prior year's cumulative maximum
             percentage applicable to the Participant, rounded to the nearest
             100th of a percent, and for each succeeding year is 3% plus 103% of
             the prior year's cumulative maximum percentage, rounded to the
             nearest 100th of a percent.

   (d)  Appendix L attached hereto contains sample illustrations which are
intended solely to aid in the interpretation and application of the provisions
of Sections 11.06, 11.07, 11.08 and 11.09.

                                                                             120


                                   ARTICLE XII

                                 401(h) ACCOUNT

12.01   ESTABLISHMENT

        Effective January 1, 1986, a "401(h) Account" was established in the
CECONY Management Plan and the CECONY Weekly Plan in order to fund
post-retirement medical benefits to CECONY Management Participants and CECONY
Weekly Participants who meet certain criteria (and the spouses/dependents of
such CECONY Participants) and who retire under the terms of this Plan, pursuant
to the Retiree Health Plan. The provisions of the Retiree Health Plan previously
were set forth in the CECONY Management Plan and the CECONY Weekly Plan.
Effective January 1, 2001, the provisions of the Retiree Health Plan are set
forth in a separate document. CECONY Participants who are or were in any prior
Plan Year "key employees" (as that term is defined in Code Section 416(i)),
their spouses and dependents shall not be eligible for the payment of any
Retiree Health Plan benefits from the 401(h) Account.

12.02   TERMS AND CONDITIONS

        Effective January 1, 2001, a "401(h) Account" is established under this
Plan, and the Retiree Health Plan is maintained by CECONY to provide
post-retirement medical, hospital, vision care, and prescription drug benefits
to certain retired CECONY Management Participants, CECONY Weekly Participants
and CEI Participants who retired from CECONY (and the spouses/dependents of such
Participants).

12.03   CONTRIBUTIONS

        The 401(h) Account shall be funded by the contributions of CECONY, in
its sole discretion, which shall be deposited with the Trustee. CECONY may also
require that Participants make contributions to the Retiree Health Plan and
CECONY shall determine

                                                                             121


whether such contributions shall be deposited in the 401(h) Account or any other
funding vehicle which CECONY may sponsor to fund benefits provided by the
Retiree Health Plan. All such contributions to the 401(h) Account may be
commingled with Plan assets for investment and custody purposes, but all
contributions to the 401(h) Account and earnings thereon, if any, together with
all disbursements from the 401(h) Account, shall be recorded and accounted for
in one or more separate accounts relating solely to the Retiree Health Plan. If
CECONY makes a contribution to the trust fund which includes amounts allocable
both to the Plan and to the 401(h) Account, CECONY shall clearly specify the
portion of such contribution allocable to the Plan and the portion allocable to
the 401(h) Account. In the event that a Participant's interest in the 401(h)
Account is forfeited prior to termination of the Plan, an amount equal to the
amount of the forfeiture shall be applied as soon as possible to reduce any
contributions by CECONY to the 401(h) Account.

12.04   USE OF ASSETS

        Assets in this 401(h) Account shall be used solely for the purpose of
providing retiree health benefits, in accordance with Section 12.06, for those
individuals who are determined to be entitled thereto in accordance with the
terms of the Retiree Health Plan and to pay any necessary or appropriate
expenses attributable to the administration of the 401(h) Account. The benefits
provided by the 401(h) Account shall be subordinate to the pension benefits
provided by the Plan. No part of the corpus or income of the 401(h) Account
shall be used for, or diverted to, any purposes other than the provision of
health coverage at any time prior to the satisfaction of all liabilities for
health coverage hereunder. Upon the satisfaction of all liabilities incurred
pursuant to the Retiree Health

                                                                             122


Plan any amount which may remain in the 401(h) Account shall be returned to
CECONY by the Trustee.

12.05   MODIFICATION, AMENDMENT, AND TERMINATION

        CECONY reserves the right to modify, amend, or terminate the Retiree
Health Plan at any time. The establishment and operation of the 401(h) Account
does not obligate CECONY in any way to continue to maintain any health care
plans of any nature or to provide post-retirement health care coverage of any
kind. In the event that CECONY terminates health coverage for retirees, this
Plan shall have no liability to provide further health coverage for current or
future retirees, for purposes of determining the amount to be returned to CECONY
under Section 12.04. No amendment, modification, or termination of the Retiree
Health Plan, nor change in CECONY contributions thereunder, shall retroactively,
adversely affect any Participant's benefit under the Retiree Health Plan.

12.06   ALLOCATION OF RESPONSIBILITY FOR PAYMENT

        Benefits under the Retiree Health Plan are provided through the 401(h)
Account, through other funding mechanisms, and through contributions by covered
retirees and Surviving Spouses. The amount payable from the 401(h) Account shall
be determined in accordance with the provisions of Appendix E, as in effect from
time to time.

                                                                             123


                                  ARTICLE XIII

                  RETURN OF CONTRIBUTIONS TO AN O&R PARTICIPANT

13.01   VESTED O&R PARTICIPANT

        An O&R Participant who is entitled to a vested Pension Allowance, upon
ceasing to be employed by the Company or an Affiliate for any cause other than
death, Approved Leave of Absence, or retirement, may elect to receive in one sum
within six months thereafter the amount of his or her Accumulated Contributions,
if any, at the time he or she ceased to be so employed. If the present value of
his or her Accumulated Contributions exceeds $5,000 the O&R Participant must
consent and if married, his or her spouse must provide Spousal Consent to a
distribution. The consent and Spousal Consent must apply to the form and the
timing of the distribution.

13.02   AN O&R PARTICIPANT NOT VESTED

        An O&R Participant who is not entitled to a Pension Allowance shall,
upon ceasing to be employed by the Company or an Affiliate for any cause other
than death, Approved Leave of Absence, or retirement under the Plan, be paid his
or her Accumulated Contributions, if any, within six months after the date he or
she ceases to be so employed. If the present value of his or her Accumulated
Contributions exceeds $5,000 the O&R Participant must consent and if married,
his or her spouse must provide Spousal Consent to a distribution. The consent
and Spousal Consent must apply to the form and the timing of the distribution.

13.03   DEATH OF O&R PARTICIPANT

        Upon receipt of proof, satisfactory to the Plan Administrator, of the
death of an O&R Participant prior to his or her Annuity Starting Date, provided
no other benefit is

                                                                             124


payable on his or her account, the amount of his or her Accumulated
Contributions at the time of his or her death shall be payable in one sum to his
or her designated beneficiary, if living, otherwise to such Participant's legal
representatives.

13.04   CESSATION OF PENSION ALLOWANCE

        Upon the cessation of payments of the Pension Allowance or other benefit
payable to or on account of an O&R Participant or the Surviving Spouse of an O&R
Participant, the excess, if any, of an O&R Participant's Accumulated
Contributions at retirement or prior to death over the total benefit payments
made to him or her or on his or her account shall be paid in one sum to the O&R
Participant's beneficiary, if living, otherwise to the legal representatives of
the person last in receipt of such Pension Allowance or other benefit.

                                                                             125


                                TABLE OF CONTENTS



                                                                                                     PAGE
                                                                                                     ----
                                                                                                    
ARTICLE I DEFINITIONS...................................................................................4
  1.01   Accredited Service.............................................................................4
  1.02   Accumulated Contributions......................................................................4
  1.03   Actuarial Equivalent...........................................................................4
  1.04   Adjusted IRS Interest Rate.....................................................................4
  1.05   Affiliate......................................................................................5
  1.06   Annual Basic Straight-Time Compensation........................................................6
  1.07   Annual Compensation............................................................................6
  1.08   Annual O&R Management Compensation.............................................................7
  1.09   Annual Rate of Compensation....................................................................8
  1.10   Annual Variable Pay Award......................................................................9
  1.11   Annuity Starting Date..........................................................................9
  1.12   Approved Leave of Absence......................................................................9
  1.13   Beneficiary...................................................................................10
  1.14   Board.........................................................................................10
  1.15   Break in Service..............................................................................10
  1.16   Cash Balance Account..........................................................................10
  1.17   Cash Balance Single Sum Payment...............................................................10
  1.18   Cash Out......................................................................................10
  1.19   CECONY........................................................................................10
  1.20   CECONY Management Participant.................................................................11
  1.21   CECONY Management Plan........................................................................11
  1.22   CECONY Participant............................................................................11
  1.23   CECONY Retiree Health Program.................................................................11
  1.24   CECONY Transferred Participant................................................................11
  1.25   CECONY Weekly Employee........................................................................11
  1.26   CECONY Weekly Participant.....................................................................12
  1.27   CECONY Weekly Plan............................................................................12
  1.28   CEI Participant...............................................................................12
  1.29   CEI Affiliate or CEI Affiliates...............................................................12
  1.30   Code..........................................................................................12
  1.31   Company.......................................................................................12
  1.32   Consolidated RPA '94 Lump Sum Conversion Factors..............................................12
  1.33   Credited Service..............................................................................13
  1.34   Disability....................................................................................13
  1.35   Effective Date................................................................................13
  1.36   Eligible Employee.............................................................................13
  1.37   Employee......................................................................................14
  1.38   Employer or Employers.........................................................................14
  1.39   ERISA.........................................................................................14
  1.40   Final Average Pay.............................................................................14
  1.41   Final Average Salary..........................................................................15


                                                                             (i)


                                                                                                    
  1.42   FMLA..........................................................................................16
  1.43   Highly Compensated Employee...................................................................16
  1.44   Hour of Service...............................................................................16
  1.45   IRS Interest Rate.............................................................................18
  1.46   IRS Mortality Table...........................................................................18
  1.47   Layoff........................................................................................18
  1.48   Leased Employee...............................................................................18
  1.49   Limitation Year...............................................................................19
  1.50   Named Fiduciary...............................................................................19
  1.51   Non-Suspendible Month.........................................................................19
  1.52   Normal Retirement Age.........................................................................19
  1.53   Normal Retirement Date........................................................................19
  1.54   O&R...........................................................................................19
  1.55   O&R Early Retirement Date.....................................................................19
  1.56   O&R Employee..................................................................................19
  1.57   O&R Hourly Employee...........................................................................20
  1.58   O&R Management Employee.......................................................................20
  1.59   O&R Participant...............................................................................20
  1.60   O&R Plan......................................................................................20
  1.61   Parental Leave................................................................................20
  1.62   Participant...................................................................................20
  1.63   Pension Allowance.............................................................................20
  1.64   Plan..........................................................................................21
  1.65   Plan Administrator............................................................................21
  1.66   Plan Year.....................................................................................21
  1.67   Pre-Tax Contribution..........................................................................21
  1.68   Prior Plan or Prior Plans.....................................................................21
  1.69   Rule of 75 Participant........................................................................21
  1.70   Rule of 85 Participant........................................................................22
  1.71   Social Security Retirement Age................................................................22
  1.72   Social Security Taxable Wage Base.............................................................22
  1.73   Spousal Consent...............................................................................22
  1.74   Stability Period..............................................................................23
  1.75   Surviving Spouse..............................................................................23
  1.76   Total Salary..................................................................................23
  1.77   Trustee.......................................................................................23
  1.78   Transferred O&R Management Participant........................................................23
  1.79   Vesting Service...............................................................................24
  1.80   Year of Accredited Service....................................................................24

ARTICLE II PARTICIPATION...............................................................................25
  2.01   Participation Requirements....................................................................25
  2.02   Events Affecting Participation................................................................25
  2.03   Participation Upon Reemployment...............................................................26

ARTICLE III SERVICE....................................................................................27
  3.01   Vesting Service...............................................................................27



                                                                            (ii)


                                                                                                    
  3.02   Accredited Service............................................................................30
  3.03   Re-employment of Participant-
         Suspension of Benefits and Break in Service Rules.............................................33

ARTICLE IV ELIGIBILITY FOR AND AMOUNT OF BENEFITS......................................................38
  4.01   Normal Retirement.............................................................................38
  4.02   Normal Retirement Pension Allowance...........................................................38
  4.03   Late Retirement...............................................................................41
  4.04   Early Retirement..............................................................................44
  4.05   Vesting.......................................................................................48
  4.06   Disability Pension Allowance - CECONY Participants............................................51
  4.07   Disability - O&R Participant..................................................................52
  4.08   Spouse's Pension..............................................................................55
  4.09   Maximum Benefit Limitation....................................................................63
  4.10   Transfers and Employment With an Affiliate....................................................63
  4.11   Minimum Benefits..............................................................................65
  4.12   Additional Provisions.........................................................................65

ARTICLE V AUTOMATIC FORM OF PAYMENT....................................................................67
  5.01   Automatic Form of Payment.....................................................................67
  5.02   Optional Forms of Payment.....................................................................71
  5.03   Election of Options...........................................................................80
  5.04   Commencement of Payments......................................................................83
  5.05   Distribution Limitation.......................................................................83
  5.06   Direct Rollover of Certain Distributions......................................................83

ARTICLE VI CONTRIBUTIONS...............................................................................86
  6.01   Employers' Contributions......................................................................86
  6.02   Return of Contributions.......................................................................86
  6.03   Non-Contributory Nature.......................................................................87

ARTICLE VII ADMINISTRATION OF PLAN.....................................................................88
  7.01   Named Fiduciaries.............................................................................88
  7.02   Duties of Plan Administrator..................................................................89
  7.03   Meetings......................................................................................92
  7.04   Compensation and Bonding......................................................................92
  7.05   Establishment of Rules........................................................................92
  7.06   Prudent Conduct...............................................................................92
  7.07   Actuary.......................................................................................92
  7.08   Maintenance of Accounts.......................................................................93
  7.09   Service in More Than One Fiduciary Capacity...................................................93
  7.10   Limitation of Liability.......................................................................93
  7.11   Indemnification...............................................................................93
  7.12   Appointment of Investment Manager.............................................................94
  7.13   Expenses of Administration....................................................................95
  7.14   Claims and Review Procedures..................................................................95



                                                                           (iii)


                                                                                                   
ARTICLE VIII MANAGEMENT OF FUNDS.......................................................................99
  8.01   Trustee.......................................................................................99
  8.02   Exclusive Benefit Rule........................................................................99

ARTICLE IX GENERAL PROVISIONS.........................................................................100
  9.01   Nonalienation................................................................................100
  9.02   Conditions of Employment Not Affected by Plan................................................101
  9.03   Facility of Payment..........................................................................101
  9.04   Information..................................................................................102
  9.05   Top-Heavy Provisions.........................................................................102
  9.06   Construction.................................................................................106
  9.07   Prevention of Escheat........................................................................106

ARTICLE X AMENDMENT, MERGER AND TERMINATION...........................................................108
  10.01  Amendment of Plan............................................................................108
  10.02  Merger, Consolidation, or Transfer...........................................................108
  10.03  Additional Participating Companies...........................................................109
  10.04  Termination of Plan..........................................................................110
  10.05  Limitation Concerning Highly-Compensated Employees
         and Highly-Compensated Former Employees......................................................110

ARTICLE XI COST-OF-LIVING ADJUSTMENTS.................................................................113
  11.01  Eligibility-CECONY Participants..............................................................113
  11.02  Annual Adjustment-CECONY Participants........................................................113
  11.03  Percentage of Adjustment-CECONY Participants.................................................113
  11.04  Limitation on Adjustments-CECONY Participants................................................114
  11.05  Index-CECONY Participants....................................................................114
  11.06  Eligibility and Adjustment-O&R Participants..................................................114
  11.07  Eligible Spouse or Contingent Annuitant of O&R Participant...................................115
  11.08  Pension Benefit Adjustment Amount for Spouse or
         Contingent Annuitant of O&R Participant......................................................115
  11.09  Pension Benefit Adjustment for  Alternate Payee of an O&R Participant........................116

ARTICLE XII 401(h) ACCOUNT............................................................................121
  12.01  Establishment................................................................................121
  12.02  Terms and Conditions.........................................................................121
  12.03  Contributions................................................................................121
  12.04  Use of Assets................................................................................122
  12.05  Modification, Amendment, and Termination.....................................................123
  12.06  Allocation of Responsibility for Payment.....................................................123

ARTICLE XIII RETURN OF CONTRIBUTIONS TO AN O&R PARTICIPANT............................................124
  13.01  Vested O&R Participant.......................................................................124
  13.02  An O&R Participant Not Vested................................................................124
  13.03  Death of O&R Participant.....................................................................124
  13.04  Cessation of Pension Allowance...............................................................125



                                                                            (iv)



                                                                EXHIBIT 10.1.2.2

                                 AMENDMENT NO.1

                                     TO THE

                       CONSOLIDATED EDISON RETIREMENT PLAN


                             DATED: DECEMBER  , 2001

                                                                               1


     Pursuant to the authority delegated by the Board of Trustees to the Plan
Administrator, as set forth in Article VII, ADMINISTRATION OF THE PLAN, Section
7.02, AUTHORITY OF PLAN ADMINISTRATOR, the undersigned hereby approves, the
following administrative amendments to the Consolidated Edison Retirement Plan:

     1.   Article IV, ELIGIBILITY FOR AND AMOUNT OF BENEFITS, Section 4.09,
MAXIMUM BENEFIT LIMITATION, is amended, effective January 1, 1988, by adding at
the end of such Section the following sentence:

          As of January 1 of each calendar year on or after January 1, 1988, the
          dollar limitation as determined by the Commissioner of Internal
          Revenue for that calendar year shall become effective as the maximum
          permissible dollar amount of benefits payable under the Plan during
          that calendar year, including benefits payable to Participants who
          retired prior to that calendar year, in lieu of the otherwise previous
          maximum permissible amount.

     2.   Article V, AUTOMATIC FORM OF PAYMENT, Section 5.02, OPTIONAL FORMS OF
PAYMENT, Subsection (b), CECONY PARTICIPANT AND CEI PARTICIPANT, Sub subsection
(1), TWELVE YEAR CERTAIN AND LIFE ANNUITY OPTION, is amended, effective November
15, 2001, by changing the second sentence to read as follows:

          If the Participant dies within 144 months after his or her Annuity
          Starting Date, the balance of those 144 monthly payments will be paid:
          (A) in the case of an unmarried Participant, to one or more primary
          Beneficiaries

                                                                               2


          named by him or her when he or she elected the option, or to the
          Participant's estate if the Participant failed to designate a
          Beneficiary, or failed to designate a contingent Beneficiary if the
          designated primary Beneficiary predeceases the Participant or if the
          designated primary Beneficiary does not survive the full 144 months
          following the Participant's Annuity Starting Date and (B) in the case
          of a married Participant, to the Surviving Spouse, or if the Surviving
          Spouse does not survive the full 144 months following the
          Participant's Annuity Starting Date, to one or more Beneficiaries
          named by such Participant.

     IN WITNESS WHEREOF, the undersigned has executed this instrument this
_________day of December, 2001.

                                           -------------------------------------
                                           Richard P. Cowie
                                           Vice President, Human Resources
                                           Consolidated Edison Company of
                                           New York, Inc. and Plan Administrator

                                                                               3



                                                                  EXHIBIT 10.1.3


                             THE CONSOLIDATED EDISON


                              THRIFT SAVINGS PLAN*


                         EFFECTIVE AS OF JANUARY 1, 2001
                            AMENDED AS OF MAY 8, 2002
                              FOR INCLUSION OF THE
                          EMPLOYEE STOCK OWNERSHIP PLAN


                                    *INCLUDES
                    THE CONSOLIDATED EDISON OF NEW YORK, INC.
                     TAX REDUCTION ACT STOCK OWNERSHIP PLAN



                   THE CONSOLIDATED EDISON THRIFT SAVINGS PLAN

                                  INTRODUCTION

     The purpose of the Consolidated Edison Thrift Savings Plan (the "Plan") is
to establish a convenient way for each eligible employee of the parent company,
Consolidated Edison, Inc. (the "Company" and/or "CEI") and of certain of the
controlled group affiliates of CEI, to supplement his or her retirement income
by saving on a regular and long-term basis, while concurrently offering each
employee an additional incentive to continue his or her career with the Company.
The Plan is intended to satisfy the requirements of the Internal Revenue Code of
1986, as amended (the "Code"), Sections 401(k) and 401(m) and to qualify under
Section 401(a). The trust established under and as a part of the Plan is
intended to qualify under Code Section 501(a). The Plan and its trust provide
each Participant with an opportunity to defer a portion of his or her
compensation and to invest and reinvest that deferred savings under the Plan on
a tax-deferred basis. It is intended that a Participant's Pre-Tax contributions,
as defined in the Plan, shall constitute payments by each Employer as
contributions to the trust fund on behalf of the Participant, within the meaning
of Code Section 401(k).

     The Plan was originally established and made effective on January 1, 1987,
by the Consolidated Edison Company of New York, Inc. ("CECONY") as the
Consolidated Edison Retirement Income Savings Plan for Weekly Employees ("CECONY
Weekly Plan"). Thereafter, the CECONY Weekly Plan was amended from time to time.
On December 1, 1996, the CECONY Weekly Plan was amended and restated in its
entirety, among other

                                                                               1


reasons, to make a transition from Bankers Trust Company as trustee and record
keeper to Vanguard Fiduciary Trust Company.

     Effective January 1, 1998, CEI was formed and CECONY became a subsidiary
corporation of CEI. From time to time thereafter, wholly-owned affiliates of CEI
were formed and together with CEI create a controlled group, as defined in Code
Section 414(b), in which CEI is the parent corporation. In July 1999, CEI
acquired Orange and Rockland Utilities, Inc. ("O&R").

     On July 20, 2000, for administrative ease, to facilitate the transfer of
employees from one affiliate to another, and to reduce the cost of operational
expenses, the Board of Trustees of CECONY and the Board of Directors of O&R
approved the merger ("Merger"), effective January 1, 2001, of the following
plans into the CECONY Weekly Plan:

            (i)   the Consolidated Edison Thrift Savings Plan for Management
                  Employees (the "CECONY Management Plan");

            (ii)  the Orange and Rockland Utilities, Inc. Management Employees
                  Savings Plan (the "O&R Management Plan") and

            (iii) the Orange and Rockland Utilities, Inc. Hourly Group Savings
                  Plan (the "O&R Hourly Plan".

     The CECONY Weekly Plan, the CECONY Management Plan, the O&R Management Plan
and the O&R Hourly Plan are called the Prior Plans.

     The CECONY Weekly Plan, renamed the Consolidated Edison Thrift Savings
Plan, was also amended, effective January 1, 2001, to take into account the
Merger, among other things, and restated constitutes the single plan and a
continuation of each one of the Prior Plans.

                                                                               2


     In the Plan, CEI is the Company, CECONY is the Plan Sponsor and an
Employer, O&R is an Employer, and certain existing and future affiliates are, or
will become, Employers.

     The Plan is amended for the Family and Medical Leave Act of 1993, the
Uniformed Services Employment and Reemployment Rights Act of 1993, the
Retirement Protection Act of 1994, as enacted under the Uruguay Round Agreements
Act (General Agreement on Tariffs and Trade), the Small Business Job Protection
Act of 1996, and the Taxpayer Relief Act of 1997, and certain provisions of the
Economic Growth and Tax Relief Reconciliation Act of 2001 ("EGTRRA"). This
amended Plan is intended as god faith compliance with the requirements of EGTRRA
and is to be construed in accordance with EGTRRA and guidance issued thereunder.
Except as otherwise provided, the provisions effectuating EGTRRA will be
effective beginning January 1, 2002. The EGTRRA amendments supersede the
provisions of the Plan to the extent those provisions are inconsistent with the
provisions of the EGTRRA amendments.

     Additionally, the Plan document serves as the official plan document for
the Consolidated Edison Company of New York, Inc. Tax Reduction Act Stock
Ownership Plan ("TRASOP"). The TRASOP is a plan separate from the Plan. CECONY
has entered into a separate trust agreement with Vanguard Financing Trust
Company under the TRASOP. Participation in the TRASOP is frozen.

     The Plan is amended to take into account the changes made by the collective
bargaining agreement covering employees who are members of Local 1-2 of the
Utility Workers Union of America, AFL-CIO, as effective June 24, 2000, Local 3
of the International Brotherhood of Electrical Workers, AFL-CIO, as effective
June 24, 2001, and

                                                                               3


the collective bargaining agreement for Local 503 of the International
Brotherhood of Electrical Workers, AFL-CIO, as effective June 20, 2000.

     Except as otherwise specifically provided herein, the rights and benefits
of any Participant who retires or whose employment is terminated are determined
in accordance with the provisions of the Plan as in effect and operative at the
time of such retirement or termination.

     Effective May 8, 2002, the Company amended the Plan to incorporate, as a
separate part, an employee stock ownership plan ("ESOP"). All Participants are
eligible to participate in the ESOP. Any Participant who elects as an Investment
Fund, the Company Stock Fund for his or her Employer Contributions, will be
deemed to be an ESOP Participant. Only Employer Contributions will be
contributed to the ESOP.

                                                                               4


                                    ARTICLE I

                                   DEFINITIONS

     The following words and phrases have the following meanings in the Plan
unless a different meaning is plainly required by the context:

     1.01   ACCOUNT BALANCE means the amount credited to a Participant
consisting of one or more of his or her Subaccounts, as the case may be,
including his or her Pre-Tax Contributions Subaccount, After-Tax Contributions
Subaccount, Rollover Contributions Subaccount, Employer Contributions
Subaccount, TRASOP, Transferred Employer and Employee PAYSOP Contributions
Subaccount, ESOP Account and other amounts transferred to the Plan which are
accounted for under the Plan under such classification.

     1.02   ACTUAL DEFERRAL PERCENTAGE means, for each Highly Compensated
Employee who is a Participant, the ratio, expressed as a percentage, of (1) the
amount of Pre-Tax Contributions (including Excess Pre-Tax Contributions) for the
current Plan Year to (2) the Highly Compensated Participant's Statutory
Compensation for the entire Plan Year (whether or not the Eligible Employee was
a Participant for the entire Plan Year). The Actual Deferral Percentage of each
Non-highly Compensated Employee who is a Participant is the ratio, expressed as
a percentage, of (1) the amount of Pre-Tax Contributions (excluding Excess
Pre-Tax Contributions) for the prior Plan Year to (2) the Non-Highly Compensated
Employee's Statutory Compensation for the portion of the prior Plan Year in
which the Participant was an Eligible Employee. For purposes of computing the
Actual Deferral Percentage, an Eligible Employee who would be a Participant but
for the failure to make Pre-Tax Contributions shall be treated as a Participant
on whose behalf no Pre-Tax Contributions are made. The Actual Deferral
Percentage of each Eligible Employee shall be rounded to the

                                                                               5


nearest 100th of 1% of each such Eligible Employee's Statutory Compensation. For
purposes of determining the Actual Deferral Percentage for a Plan Year, Pre-Tax
Contributions may be taken into account for a Plan Year only if they:

     (a) relate to compensation that either would have been received by the
Eligible Employee in the Plan Year but for the deferral election, or are
attributable to services performed by the Eligible Employee in the Plan Year and
would have been received by the Eligible Employee within 2 1/2 months after the
close of the Plan Year but for the deferral election;

     (b) are allocated to the Eligible Employee as of a date within that Plan
Year and the allocation is not contingent on the participation or performance of
service after such date; and (c) are actually paid to the Trustee no later than
12 months after the end of the Plan Year to which the contributions relate.

     1.03   AFFILIATE means any company that is a member of a controlled group
of corporations (as defined in Code Section 414(b)) that also includes as a
member the Company; any trade or business under common control (as defined in
Code Section 414(c)) with the Company; any organization (whether or not
incorporated) that is a member of an affiliated service group (as defined in
Code Section 414(m)) that includes the Company; and any other entity required to
be aggregated with the Company pursuant to regulations under Code Section
414(o). Notwithstanding the foregoing, the definitions in Code Sections 414(b)
and (c) shall be modified as provided in Code Section 415(h).

     1.04   AFTER-TAX CONTRIBUTION means a contribution made by a Participant of
amounts after income taxes have been withheld on the amount and all dividends,
income, gains and losses attributable thereto. After-Tax Contributions include
Participating

                                                                               6


Contributions and Non-participating Contributions. In the case of an O&R
Participant, After-Tax Contributions include Transferred Employee PAYSOP
Contributions.

     1.05   AFTER-TAX CONTRIBUTIONS SUBACCOUNT means the account into which is
credited all of a Participant's After-Tax Contributions within which shall be
separately accounted, if applicable, a Participant's Participating Contributions
and Non-Participating Contributions.

     1.06   ANNUAL DOLLAR LIMIT means, effective January 1, 1994, in accordance
with Code Section 401(a)(17), $150,000, except that, if for any calendar year
from 1994 to 2001 the Cost-of-Living Adjustment is equal to or greater than
$10,000, then the Annual Dollar Limit for any Plan Year beginning January 1,
1995, shall be increased by the amount of such Cost-of-Living Adjustment,
rounded to the next lowest multiple of $10,000. Effective January 1, 2002, the
Annual Dollar Limit is increased to $200,000 and increased each subsequent Plan
Year by the Cost-of-Living Adjustment equal to or greater than $5,000.

     1.07   ANNUITY STARTING DATE means the first day of the first period for
which an amount is paid following a Participant's retirement or other
termination from employment.

     1.08   AVERAGE CONTRIBUTION PERCENTAGE means, with respect to a specified
group of Eligible Employees for a Plan Year, the average of the actual
Contribution Percentages (calculated separately for each Participant in each
specified group). The Contribution Percentage for each group of Eligible
Employees will be calculated to the nearest on one-hundredth of one percent.

     1.09   AVERAGE ACTUAL DEFERRAL PERCENTAGE means, with respect to a
specified group of Eligible Employees, the average of the Actual Deferral
Percentages (calculated separately for each Participant in each specified
group). The Actual Deferral Percentage for

                                                                               7


each group of Eligible Employees will be calculated to the nearest one
one-hundredth of one percent.

     1.10   BENEFICIARY means the person or persons, trust or other recipient
determined in accordance with the provisions of Section 11.03 to succeed to a
Participant's Account Balance under the Plan in the event of the death of such
Participant prior to the entire distribution of such Account Balance.

     1.11   BOARD means the Board of Trustees of CECONY.

     1.12   BREAK IN SERVICE means a Plan Year in which an Employee completes
500 or fewer Hours of Service. Solely for purposes of determining whether a
Break-in-Service has occurred, an Employee who is absent from work on account of
the Employee's pregnancy, the birth of the Employee's child, the placement of a
child with the Employee in connection with the adoption of that child by the
Employee, for purposes of caring for that child or for a Family and Medical
Leave Act ("FMLA"), shall be deemed to have earned at least 501 Hours of Service
in the Plan Year in which he or she is absent from work or the immediately
following Plan Year, whichever Plan Year is necessary to first avoiding a Break
in Service.

     1.13   CECONY means the Consolidated Edison Company of New York, Inc., and
any successor by merger, purchase or otherwise.

     1.14   CECONY MANAGEMENT EMPLOYEE means an Employee employed by and on the
management payroll of CECONY.

     1.15   CECONY MANAGEMENT PARTICIPANT means a CECONY Management Employee who
is a Participant.

                                                                               8


     1.16   CECONY MANAGEMENT PLAN means the Con Edison Thrift Savings Plan for
Management Employees, as in effect and prior to January 1, 2001.

     1.17   CECONY PARTICIPANT means a CECONY Management Participant and/or a
CECONY Weekly Participant.

     1.18   CECONY WEEKLY EMPLOYEE means an Employee employed by and on the
payroll of CECONY who is (a) a member of the collective bargaining unit
represented by Local 1-2 of the Utility Workers' Union of America, AFL-CIO or
(b) a member of the collective bargaining unit represented by Local 3 of the
International Brotherhood of Electrical Workers, AFL-CIO.

     1.19   CECONY WEEKLY PARTICIPANT means a CECONY Weekly Employee who is a
Participant.

     1.20   CECONY WEEKLY PLAN means the Con Edison Retirement Income Savings
Plan for Weekly Employees, as in effect on December 31, 2000.

     1.21   CEI means Consolidated Edison, Inc.

     1.22   CEI AFFILIATE OR CEI AFFILIATES means one, more than one or all, as
the context indicates, of Consolidated Edison Communications, Inc. (CEC);
Consolidated Edison Solutions, Inc. (CES); Consolidated Edison Energy, Inc.
(CEE); Consolidated Edison Development, Inc. (CED); Consolidated Edison Energy
Massachusetts, Inc. (CEEM); CED Operating Company, L.P. ("CEDOC") and any future
Affiliate who becomes an Employer.

     1.23   CEI EMPLOYEE means an Employee of a CEI Affiliate.

     1.24   CEI PARTICIPANT means a CEI Employee who is a Participant in the
Plan.

     1.25   CODE means the Internal Revenue Code of 1986, as amended from time
to time.

                                                                               9


     1.26   COMPANY means Consolidated Edison, Inc. or any successor by merger,
purchase or otherwise, that assumes the obligations of this Plan with respect to
its Eligible Employees.

     1.27   COMPANY STOCK FUND shall have the meaning set forth in Plan Section
5.03.

     1.28   COMPENSATION means

     (a)    for a CECONY Weekly Employee, straight time wages, paid for a
Payroll Period and determined prior to any reduction for --

            (i)   Pre-Tax Contributions,

            (ii)  Section 125 Contributions, and

            (iii) Section 132 Contributions.

     Compensation is determined by excluding bonuses, overtime pay, premium pay,
incentive compensation, severance pay, deferred compensation and all other forms
of special pay;

     (b)    for a CECONY Management Employee, a CEI Participant or an O&R
Management Employee, base salary in a payroll period, determined prior to any
reduction for:

            (i)   Pre-Tax Contributions,

            (ii)  Section 125 Contributions, or

            (iii) Section 132 Contributions.

     Compensation is determined by excluding bonuses, overtime pay, incentive
compensation, commissions, severance pay, deferred compensation and all other
forms of special pay; and

                                                                              10


     (c)    for an O&R Hourly Employee who is not a part-time Employee, forty
times the base hourly wage to an Eligible Employee in a week determined prior to
any reduction for Pre-Tax Contributions and Section 125 Contributions.
Compensation shall not include bonus, overtime, severance pay or other special
pay, or any other employer contributions to another deferred compensation plan
or employee welfare benefit plan. In the case of an O&R Participant who is a
part-time Eligible Employee, twenty shall be substituted for forty in the
preceding sentence.

     (d)    Compensation for a Plan Year in excess of the Annual Dollar Limit
for such Plan Year shall be disregarded.

     1.29   CONTRIBUTION PERCENTAGE for a Highly Compensated Employee is the
ratio, expressed as a percentage, of After-Tax Contributions and Employer
Contributions on behalf of the Highly Compensated Employee for the current Plan
Year to the Highly Compensated Employee's Statutory Compensation for such Plan
Year (whether or not the Employee was a Participant for the entire Plan Year).
Contribution Percentage for a Non-Highly Compensated Employee is the ratio,
expressed as a percentage, of After-Tax Contributions and Employer Contributions
on behalf of the Non-Highly Compensated Employee for the prior Plan Year to the
Non-Highly Compensated Employee's Statutory Compensation for the portion of such
Plan Year in which the Participant was an Eligible Employee. However, Employer
Contributions shall not be taken into account to the extent they are forfeited
either to correct Excess Aggregate Contributions or because the contributions to
which they relate are Excess Pre-Tax Contributions, Excess Contributions, or
Excess Aggregate Contributions. The Contribution Percentage of each Eligible
Employee shall be rounded to the nearest one-hundredth of one percent of such
Employee's Statutory Compensation.

                                                                              11


     1.30   COST-OF-LIVING ADJUSTMENT means the cost of living adjustment
prescribed by the Secretary of the Treasury under Code Section 415(d) and
applied to such items and in such manner as the Secretary shall provide.

     1.31   DISABILITY means total and permanent physical or mental disability,
as evidenced by (a) receipt of a Social Security disability pension or (b)
waiver of premium under an Employer's group term life insurance plan.

     1.32   EARNINGS means the amount of income, if any, to be returned to an
affected Participant with any Excess Pre-Tax Contributions, Excess Contributions
or Excess Aggregate Contributions. Earnings on Excess Pre-Tax Contributions and
Excess Contributions shall be determined by multiplying the income earned on the
Subaccount of the Participant for the Plan Year by a fraction, the numerator of
which is the Excess Pre-Tax Contributions or Excess Contributions, as the case
may be, for the Plan Year and the denominator of which is the Subaccount balance
at the end of the Plan Year, disregarding any income or loss occurring during
the Plan Year. Earnings on Excess Aggregate Contributions shall be determined in
a similar manner by substituting the sum of the Employer Contributions
Subaccount and After-Tax Contributions Subaccount for the Pre-Tax Subaccount,
and the Excess Aggregate Contributions for the Excess Pre-Tax Contributions and
Excess Contributions in the preceding sentence.

     1.33   ELIGIBLE EMPLOYEE means a CECONY Weekly Employee, CECONY Management
Employee, an O&R Hourly Employee, an O&R Management Employee, and a CEI
Employee.

     1.34   EMPLOYEE means an individual who is employed by and a common law
employee of the Company or an Affiliate and receives Compensation other than a
pension,

                                                                              12


severance pay, retainer or fee under contract. The term Employee excludes any
Leased Employee.

     1.35   EMPLOYER means one, more than one, or all, as the context requires
of CECONY, O&R, and each CEI Affiliate. Employer also means each newly created,
future established or acquired Affiliate to the extent that such Affiliate
elects to participate and CECONY approves its participation in the Plan.

     1.36   EMPLOYER CONTRIBUTION means a contribution to the Trust Fund made by
an Employer on behalf of a Participant.

     1.37   EMPLOYER CONTRIBUTIONS SUBACCOUNT means the Subaccount into which is
credited a Participant's Employer Contributions.

     1.38   ERISA  means the Employee Retirement Income Security Act of 1974, as
amended from time to time.

     1.39   ESOP means, effective on the ESOP Effective Date, the Consolidated
Edison Employee Stock Ownership Plan ("ESOP"), which is incorporated into and
becomes a separate plan within this Plan.

     1.40   ESOP EFFECTIVE DATE means May 8, 2002.

     1.41   ESOP TRUST FUND means that part of the Trust Fund held exclusively
for the ESOP Accounts of the ESOP Participants.

     1.42   EXCESS AGGREGATE CONTRIBUTIONS  means with respect to any Plan Year,
the excess of:

     (a)    The actual Contribution Percentage(s) taken into account in
computing the numerator of the Average Contribution Percentage actually made on
behalf of Highly Compensated Employees for such Plan Year, over

                                                                              13


     (b)    The maximum actual Contribution Percentages permitted by the Average
Contribution Percentage test determined by reducing contributions made on behalf
of Highly Compensated Employees in order of their Contribution Percentage
beginning with the highest of such percentage.

     Such determination shall be made after first determining Excess Pre-Tax
Contributions and then Excess Contributions. In no case shall the amount of
Excess Aggregate Contributions with respect to any Highly Compensated Employee
exceed the amount of After-Tax Contributions and Employer Contributions made on
behalf of such Highly Compensated Employee for the Plan Year.

     1.43   EXCESS CONTRIBUTIONS means, with respect to any Plan Year, the
excess of:

     (a)    the aggregate amount of Employer Contributions actually taken into
account in computing the Average Actual Deferral Percentage of Highly
Compensated Employees for such Plan Year, over

     (b)    the maximum amount of Employer's contributions permitted by the
Average Actual Deferral Percentage test (determined by reducing contributions
made on behalf of Highly Compensated Employees in order of the Actual average
Deferral Percentages, beginning with the highest of such percentages).

     In no case shall the amount of Excess Contributions for a Plan Year with
respect to any Highly Compensated Employee exceed the amount of Pre-Tax
Contributions made on behalf of such Highly Compensated Employee for the Plan
Year.

     1.44   EXCESS DEFERRAL PERCENTAGE means the excess of:

     (a)    the Average Deferral Percentage for the group of eligible Highly
Compensated Employees, over

                                                                              14


     (b)    the Average Deferral Percentage limit permissible to such group of
Highly Compensated Employees.

     1.45   EXCESS PRE-TAX CONTRIBUTIONS means those Pre-Tax Contributions that
are includible in a Participant's gross income under Code Section 402(g) to the
extent the Participant's Pre-Tax Contributions exceed the dollar limitation
under Code Section 402(g).

     1.46   HIGHLY COMPENSATED EMPLOYEE means any Employee of the Company or an
Affiliate (whether or not an Eligible Employee) who during the look-back year
received Statutory Compensation in excess of $80,000, adjusted by the
Cost-of-Living Adjustment and, at the election of the Company or CECONY, was in
the "Top Paid Group." The term "Top Paid Group" includes all Employees who are
among the 20% highest paid. A Highly Compensated Management Employee means a
Highly Compensated Employee who is a CECONY Management Employee, an O&R
Management Employee, or a CEI Employee who is not covered by a collective
bargaining agreement. A Highly Compensated Union Employee is a Highly
Compensated Employee who is a Local 1-2 Employee, Local 3 Employee, and an O&R
Hourly Employee who is covered by a collective bargaining agreement.

     1.47   HOUR OF SERVICE means, with respect to any applicable computation
period,

     (a)    each hour for which:

            (i)   the Employee is paid or entitled to payment for the
                  performance of duties for the Company or an Affiliate;

            (ii)  the Employee is paid or entitled to payment by the Company or
                  an Affiliate on account of a period during which no duties are
                  performed, whether or not the employment relationship has
                  terminated, due to

                                                                              15


                  vacation, holiday, illness, incapacity (including disability),
                  layoff, jury duty, military duty or leave of absence; and

            (iii) back pay, irrespective of mitigation of damages, is either
                  awarded or agreed to by the Company or an Affiliate,
                  excluding any hour credited under (a)(i) or (ii), which
                  shall be credited to the computation period or periods to
                  which the award, agreement or payment pertains rather than
                  to the computation period in which the award, agreement or
                  payment is made.

     (b)    No hours shall be credited on account of any period during which the
Employee performs no duties and receives payment solely for the purpose of
complying with unemployment compensation, workers' compensation or disability
insurance laws. Hours of Service are not required to be credited for a payment
which solely reimburses an Employee for medical or medically-related expenses
incurred by the employee. The Hours of Service credited shall be determined as
required by Title 29 of the Code of Federal Regulations, Sections 2530.200b-2(b)
and (c).

     (c)    With regard to an Employee for whom a record of his or her Hours of
Service is not maintained,

            (i)   One day of employment equals 10 Hours of Service;

            (ii)  One week of employment equals 45 Hours of Service; and

            (iii) One month of employment equals 190 Hours of Service.

     1.48   INVESTMENT FUND means an investment fund available under the Plan
for investment of assets held in the Trust Fund or the ESOP Trust Fund.

                                                                              16


     1.49   INVESTMENT MANAGER means an investment manager as defined in ERISA
Section 3(38), which is appointed by the Named Fiduciaries.

     1.50   LEASED EMPLOYEE means any person performing services for the Company
or an Affiliate as a leased employee as defined in Code Section 414(n). In the
case of any person who is a Leased Employee before or after a period of service
as an Employee, the entire period during which he or she has performed services
as a Leased Employee shall be counted as service as an Employee for all purposes
of the Plan, except that he or she shall not, by reason of that status, become a
Participant of the Plan.

     1.51   LOAN RESERVE shall have the meaning set forth in Section 9.08.

     1.52   LOCAL 1-2 EMPLOYEE means an Employee represented by Local 1-2,
Utility Workers' Union of America, AFL-CIO.

     1.53   LOCAL 3 EMPLOYEE means an Employee represented by Local 3,
International Brotherhood of Electrical Workers, AFL-CIO.

     1.54   NAMED FIDUCIARIES means the persons designated as named fiduciaries
of the Plan pursuant to Section 10.01.

     1.55   NON-HIGHLY COMPENSATED MANAGEMENT EMPLOYEE means any CECONY
Management Employee, O&R Management Employee or CEI Employee who is not covered
by a collective bargaining agreement and not a Highly Compensated Employee.

     1.56   NON-PARTICIPATING CONTRIBUTION means the portion of a CECONY
Participant's or CEI Participant's Pre-Tax Contributions or After-Tax
Contributions that is not matched by Employer Contributions.

     1.57   O&R means Orange and Rockland Utilities, Inc.

                                                                              17


     1.58   O&R EMPLOYEE means an Employee employed by and on the active payroll
of O&R. A person designated by O&R as a co-op employee or employed in a co-op
capacity, as such term is defined by O&R, and any employee employed on a
temporary or seasonal basis shall not be considered an O&R Employee or an
Eligible Employee.

     1.59   O&R HOURLY EMPLOYEE means an Employee employed by and on the active
payroll of O&R who is a member of the collective bargaining unit represented by
Local 503 of the International Brotherhood of Electrical Workers, AFL-CIO.

     1.60   O&R HOURLY PLAN means the Orange and Rockland Utilities, Inc. Hourly
Group Savings Plan, as in effect on December 31, 2000.

     1.61   O&R MANAGEMENT EMPLOYEE means an Employee employed by and on the
active management payroll of O&R and is not an O&R Hourly Employee.

     1.62   O&R MANAGEMENT PLAN means the Orange and Rockland Utilities, Inc.
Management Employees' Savings Plan, as in effect on December 31, 2000.

     1.63   O&R PARTICIPANT means an O&R Hourly Employee and an O&R Management
Employee who is participating in the Plan.

     1.64   PARTICIPANT means any person who has an Account Balance in the Plan.

     1.65   PARTICIPATING CONTRIBUTION means the portion of the Participant's
Pre-tax Contributions or After-Tax Contributions for which there is a matching
Employer Contribution.

     1.66   PAYROLL PERIOD means

     (a)    for a CECONY Weekly Employee, a one week period commencing on a
Sunday and ending on the next following Saturday;

                                                                              18


     (b)    for a CECONY Management Employee, a one month period commencing on
the first and ending on the last day of the month;

     (c)    for an O&R Participant, the dates that O&R provides payroll
information to the Trustees in order to determine the amounts that should be
withheld from an O&R Participant's pay as Pre-Tax Contributions and/or After-Tax
Contributions and the amounts that should be rendered by O&R to the Trustee on
behalf of an O&R Participant as an Employer Contribution; and

     (d)    for a CEI Participant, the prevailing payroll period for that CEI
Affiliate.

     1.67   PLAN means the Consolidated Edison Thrift Savings Plan, as amended
from time to time, as set forth herein.

     1.68   PLAN ADMINISTRATOR means the Plan Administrator appointed pursuant
to Section 10.01 to administer the Plan and the ESOP.

     1.69   PLAN YEAR means the calendar year.

     1.70   PRE-TAX CONTRIBUTION means an Employer's contributions made to the
Plan at the election of the Participant, in lieu of cash compensation and before
income taxes have been withheld on the amount, and includes contributions made
pursuant to a salary reduction agreement. In the case of an O&R Participant,
Pre-Tax Contributions include those Transferred Employer PAYSOP-Contributions
that were transferred to the O&R Plan. Pre-Tax Contributions includes amounts
deemed as Pre-Tax Contributions pursuant to an election under a cafeteria plan
maintained by CECONY.

     1.71   PRE-TAX CONTRIBUTIONS SUBACCOUNT means the Subaccount into which is
credited all of a Participant's Pre-Tax Contributions and within which are
separately accounted for as Participating Contributions and Non-Participating
Contributions.

                                                                              19


     1.72   PRIOR PLAN OR PRIOR PLANS means one, more than one, or all, as the
context requires, of the CECONY Management Plan, the CECONY Weekly Plan, the O&R
Hourly Plan and the O&R Management Plan.

     1.73   RECORD KEEPER means the individual(s) or firm selected by the Plan
Administrator to provide record keeping and Participant accounting services for
the Plan, including maintenance of separate accounts for Participants in
accordance with the provisions of Section 5.04.

     1.74   RETIREMENT means termination of employment by a Participant under
circumstances in which he or she is entitled to receive an early retirement
pension allowance, normal retirement pension allowance or late retirement
pension allowance under any Employer defined benefit plan. Retirement means
termination from employment on or after his or her sixty-fifth birthday.

     1.75   ROLLOVER CONTRIBUTIONS means amounts contributed pursuant to Plan
Section 3.08.

     1.76   ROLLOVER CONTRIBUTIONS SUBACCOUNT means the account credited with a
Participant's Rollover Contributions and earnings on those contributions.
Effective for Rollover Contributions received on or after January 1, 2002, a
Rollover Contributions Subaccount may include a separately accounted for
after-tax rollover Subaccount attributable to after-tax rollover contributions
directly transferred to this Plan.

     1.77   SECTION 125 CONTRIBUTIONS means Employee contributions made pursuant
to a salary reduction agreement under a cafeteria plan as that term is defined
in Code Section 125.

                                                                              20


     1.78   SECTION 132 CONTRIBUTIONS means Employee contributions made for
qualified transportation expenses under a transportation reimbursement account.

     1.79   SHARES means issued and outstanding shares of common stock of the
Company and shall include fractional shares of such common stock.

     1.80   STATUTORY COMPENSATION means the wages, salaries, and other amounts
paid in respect of an Employee for services actually rendered to the Company or
an Affiliate, including by way of example, shift premiums, bonuses, overtime
payments and similar payments, but excluding non-taxable contributions to
deferred compensation plans, taxable non-qualified stock options and other
distributions which receive special tax benefits under the Code. Statutory
Compensation includes Pre-Tax Contributions, Section 125 Contributions and
Section 132 Contributions. Statutory Compensation may not exceed the Annual
Dollar Limit. To the extent that the above definition does not satisfy the
non-discrimination requirements, Statutory Compensation may be redefined, by the
Plan Administrator, to meet an alternative definition of compensation, including
within Code Section 415(c)(3).

     1.81   TOP HEAVY GROUP means any required aggregation group (as defined in
Section 12.03) or any permissive aggregation group (as defined in Section 12.03)
in which more than 60% of the sum of (a) the aggregate account balances under
all plans in the group and (b) the aggregate present value of accrued benefits
under all plans in the group is allocated to key employees. For the purpose of
this definition, present value shall be determined on basis of the applicable
interest rate and applicable mortality table as set forth in the Company's
defined benefit plan.

                                                                              21


     1.82   TOP-HEAVY PLAN means any defined contribution plan or defined
benefit plan of an Employer or the Company under which more that 60% of the sum
of (a) its aggregate account balances and (b) the present value of its aggregate
accrued benefits is allocated to key employees. For the purposes of this
definition present value shall be determined on the basis of the applicable
interest rate and applicable mortality table as set forth in the Company's
defined benefit plan.

     1.83   TRANSFERRED EMPLOYER AND EMPLOYEE PAYSOP CONTRIBUTIONS means those
amounts transferred to the O&R Management Plan or the O&R Hourly Plan on behalf
of an O&R Employee from the terminated Orange and Rockland Utilities, Inc.
Payroll-Based Employee Stock Ownership Plan.

     1.84   TRASOP means the Tax Reduction Act Stock Ownership Plan of
Consolidated Edison Company of New York, Inc., as included within this plan
document, effective as of July 1, 1988.

     1.85   TRASOP ACCOUNT means an account maintained under the TRASOP by the
Trustee of the TRASOP Trust Fund for an Employee.

     1.86   TRASOP TRUST FUND means the Trust Fund established solely for the
TRASOP Accounts.

     1.87   TRUST FUND means the trust fund described in Article 5.

     1.88   TRUSTEE means the trustee appointed and acting as trustee of the
Trust Fund, the TRASOP Trust Fund and the ESOP Trust Fund.

     1.89   VESTED PORTION means the portion of an Account Balance in which the
Participant has a nonforfeitable interest as provided in Article 6.

                                                                              22


     1.90   YEAR OF SERVICE  means each Plan Year in which an Employee is
credited with at least 1000 Hours of Service. An Employee is credited with a
Year of Service in the month in which he or she completes 1000 Hours of Service.
An Employee will be credited with a Year of Service in each Plan Year in which
the Employee is absent on account of qualified military service, in accordance
with Code Section 414(u).

                                                                              23


                                   ARTICLE II

                          ELIGIBILITY AND PARTICIPATION

     2.01   ELIGIBILITY

     (a)    Any person who was a Participant in a Prior Plan will continue to
be a Participant in this Plan.

     (b)    Each Eligible Employee is eligible to participate in the Plan.

     (c)    Each Eligible Employee who was a Participant in, and had an account
under the TRASOP on December 31, 2000, will continue to participate in the
TRASOP and have a TRASOP Account. As of July 1, 1988, the TRASOP was closed to
new Eligible Employees.

     2.02   PARTICIPATION

     (a)    An Eligible Employee becomes a Participant by satisfying the service
requirements, if any, as described herein, and by completing the enrollment
process described below or such other enrollment process as may be prescribed by
the Plan Administrator. An Eligible Employee must elect to make contributions to
the Trust Fund in an amount or percentage as permitted by Section 3.01. In
general, a Participant's contributions are made by regular payroll deductions
authorized from time to time by such Participant in such manner and on such
conditions as may be prescribed by the Plan Administrator.

       (1)  CECONY Weekly Employee. A CECONY Weekly Employee may become a
            Participant after completing 3 months of service. Participation may
            begin with the next immediately following Payroll Period by making
            an enrollment election not later than the day specified by the Plan
            Administrator.

                                                                              24


       (2)  CECONY Management Employee or CEI Employee. A CECONY Management
            Employee or a CEI Employee may become a Participant in a calendar
            month following his or her date of hire by making an enrollment
            election on or before the 20th day of the first calendar month of
            hire or any subsequent calendar month.

       (3)  O&R Hourly Employee. An O&R Hourly Employee may become a Participant
            in any month following the completion of one Year of Service.
            Thereafter, an O&R Hourly Employee may participate by making an
            election on or before the 24th day of any month. Participation will
            become effective on the first day of the first Payroll Period in the
            month following the month in which the election is made.

       (4)  O&R Management Employee. An O&R Management Employee may become a
            Participant in any month upon the completion of six months of
            service and making an election on or before the 24th day of that
            sixth month or any month thereafter. Participation will become
            effective on the first day of the first Payroll Period in the month
            immediately following the month in which the election is made. Six
            months of participation means a six-month period in which an O&R
            Management Employee is credited with at least five hundred Hours of
            Service. Such six-month period will commence on the date the O&R
            Management Employee first completes an Hour of Service.

       (5)  Other Eligible Employees. To the extent that a person becomes an
            Eligible Employee and is not otherwise covered by a designated
            classification, he or she may become a Participant in the month in
            which his or her Employer

                                                                              25


            adopts the Plan as provided in the Plan Section 11.05 and satisfies
            whatever eligibility requirements, if any, his or her Employer
            selects.

     2.03   REEMPLOYMENT OF FORMER EMPLOYEES AND FORMER PARTICIPANTS

     Any person reemployed as an Eligible Employee, who previously was eligible
to become a Participant, will become a Participant upon making an effective
enrollment election as may be prescribed by the Plan Administrator.

     2.04   TRANSFERRED PARTICIPANTS

     A Participant who remains in the employ of the Company or an Affiliate but
ceases to be an Eligible Employee will continue to be a Participant in the Plan
but will not be eligible to make After-Tax Contributions or Pre-Tax
Contributions or have Employer Contributions made on his or her behalf while his
or her employment status is other than as an Eligible Employee.

     2.05   TERMINATION OF PARTICIPATION

     A Participant's participation terminates on the date he or she is no longer
employed by the Company or Affiliate and no longer has an Account Balance.

     2.06   PARTICIPATION IN ESOP

     In accordance with Article XIV, and effective on the ESOP Effective Date,
each Participant who receives an Employer Contribution is eligible to
participate in the ESOP.

                                                                              26


                                   ARTICLE III

                                  CONTRIBUTIONS

     3.01   CONTRIBUTION ELECTION

     (a)    CECONY WEEKLY PARTICIPANT. A CECONY Weekly Participant may elect to
contribute for each of his or her basic straight-time Hours of Service not in
excess of 40 in a Payroll Period, in one cent multiples or in the maximum
permissible amount if such maximum is not a multiple of one cent, as follows:
(i) for a Local 3 Employee for any Payroll Period beginning on or after: (x)
January 1, 2000, and before January 1, 2001, not in excess of $3.52 per hour;
(y) January 1, 2001, and before January 1, 2002, not in excess of $3.72 per
hour; and (z) January 1, 2002, not in excess of $20.00 per hour; and (ii) for a
Local 1-2 Employee for any Payroll Period beginning on or after: (x) January 1,
2000, and before January 1, 2001, not in excess of $3.52 per hour; (y) January
1, 2001, not in excess of $6.75 per hour; and (z) January 1, 2002, not in excess
of $20.00 per hour. In any case, effective January 1, 2002, a CECONY Weekly
Participant may contribute up to but no more than the lesser of $20.00 per hour
or 50% of basic straight-time pay. Such maximum amount of contributions shall be
subject to limitations imposed under the Code. At the time a CECONY Weekly
Participant elects a contribution amount, he or she shall, in such manner and on
such conditions as may be prescribed by the Plan Administrator, designate which
portion is to be Pre-Tax Contributions and which is to be After-Tax
Contributions. A CECONY Weekly Participant may elect to make Pre-Tax
Contributions whether or not he or she elects to make After-Tax Contributions
and may elect to make After-Tax Contributions whether or not he or she elects to
make Pre-Tax Contributions. Pre-Tax Contributions and After-Tax Contributions
are further limited as provided below and in Article 8.

                                                                              27


     (b)    CECONY MANAGEMENT AND A CEI PARTICIPANT. For Plan Years beginning
before January 1, 2002, a CECONY Management Participant and a CEI Participant
may elect to reduce his or her Compensation payable while a Participant by at
least 1% and not more than 18%, in multiples of 1%, and have that amount
contributed to the Plan as Pre-Tax Contributions and/or After-Tax Contributions.
A CECONY Management Participant or CEI Participant may elect to make Pre-Tax
Contributions whether or not he or she elects to make After-Tax Contributions
and may elect to make After-Tax Contributions whether or not he or she has
elected to make Pre-Tax Contributions. An amount contributed to the Plan
pursuant to the election of a CECONY Management Participant under a cafeteria
plan under Code Section 125 may be designated as a Pre-Tax Contribution or an
After-Tax Contribution. The maximum total percentage of Compensation which the
CECONY Management Participant and CEI Participant may elect to contribute in the
aggregate as Pre-Tax Contributions and After-Tax Contributions is 18%. Pre-Tax
Contributions and After-Tax Contributions are further limited as provided below
and in Article 8. For Plan Years beginning on and after January 1, 2002, a
CECONY Management Participant and a CEI Participant may elect to contribute up
to 50% of his or her Compensation as Pre-Tax Contributions and/or After-Tax
Contributions, subject to the maximum annual addition limit set forth in Section
8.03 of the Plan.

     (c)    O&R HOURLY PARTICIPANT. An O&R Hourly Participant may elect to
reduce his or her Compensation by at least 2% and not more than 20%, in
multiples of 1%, and have that amount contributed to the Plan as Pre-Tax
Contributions. Pre-Tax Contributions are further limited as provided below and
in Article 8.

                                                                              28


     (d)    O&R MANAGEMENT PARTICIPANT. For Plan Years beginning before
January 1, 2002, an O&R Management Participant may elect to reduce his or her
Compensation payable while a Participant by at least 2% and not more than 15%,
in multiples of 1%, and have that amount contributed to the Plan. Effective
January 1, 2002, an O&R Management Participant may contribute up to 50% of his
or her Compensation. At the time an O&R Management Participant elects a
contribution amount, he or she will designate which portion is to be Pre-Tax
Contributions and which is to be After-Tax Contributions. An O&R Management
Participant may elect to make Pre-Tax Contributions whether or not he or she
elects to make After-Tax Contributions and may elect to make After-Tax
Contributions whether or not he or she elects to make Pre-Tax Contributions.
Pre-Tax Contributions and After-Tax Contributions are to be further limited as
provided below and in Article 8.

     3.02   PRE-TAX CONTRIBUTION DOLLAR LIMITATION AND RE-CHARACTERIZATION

     In no event will a Participant's Pre-Tax Contributions made on his or her
behalf by the Company or an Affiliate to all plans, contracts or arrangements,
subject to the provisions of Code Section 402(g), in any calendar year exceed
$7,000 multiplied by the Cost-of-Living Adjustment. The Pre-Tax Contribution
limit will be increased for calendar year 2002 to $11,000; for calendar year
2003 to $12,000; for calendar year 2004 to $13,000; for calendar year 2005 to
$14,000; and for calendar year 2006 to $15,000. Beginning in calendar year 2006,
the $15,000 limit will be multiplied by the Cost-of-Living Adjustment,
increasing in $500 increments. Once a Participant's Pre-Tax Contributions in a
calendar year reach the applicable dollar limitation, his or her election of
Pre-Tax Contributions for the remainder of the calendar year will be canceled.
If so elected by a Participant, other than for an O&R Hourly Participant, excess
Pre-Tax Contributions will be re-characterized as After-Tax Contributions at the
same rate as was previously in effect for Pre-Tax Contributions. Each

                                                                              29


Participant affected by this Section 3.02 may elect to change or suspend the
rate at which he or she makes After-Tax Contributions. As of the first Payroll
Period of the calendar year following such cancellation, the Participant's
election of Pre-Tax Contributions will again become effective at the rate in
accordance with his or her most recent election.

     3.03   RETURN OF EXCESS PRE-TAX CONTRIBUTIONS

     In the event that the sum of the Pre-Tax Contributions and similar
contributions to any other qualified defined contribution plan maintained by the
Company or an Affiliate exceed the dollar limitation in Code Section 402(g) for
any calendar year, the Participant will be deemed to have elected a return of
Pre-Tax Contributions in excess of such limit ("Excess Pre-Tax Contributions")
from this Plan. Unless Excess Pre-Tax Contributions are characterized as
After-Tax Contributions, Excess Pre-Tax Contributions, together with Earnings,
will be returned to the Participant no later than the April 15th following the
end of the calendar year in which the Excess Pre-Tax Contributions were made.
The amount of Excess Pre-Tax Contributions to be returned for any calendar year
will be reduced by any Pre-Tax Contributions previously returned to the
Participant under Section 8.01 for that calendar year. In the event any Pre-Tax
Contributions returned under this Section 3.03 were matched by Employer
Contributions, those Employer Contributions, together with Earnings, will be
forfeited and used to reduce future Employer Contributions. In the event any
Pre-Tax Contributions returned under this Section 3.03 were matched by Employer
Contributions, those Employer Contributions, together with Earnings, will be
forfeited and used to reduce future Employer Contributions.

     3.04   EXCESS DEFERRALS TO OTHER PLANS

     If a Participant makes tax-deferred contributions under another qualified
defined contribution plan maintained by an employer other than the Company or an
Affiliate for any

                                                                              30


calendar year and those contributions when added to his or her Pre-Tax
Contributions result if Excess Pre-Tax Contributions, the Participant may
allocate all or a portion of the Excess Pre-Tax Contributions to this Plan. In
that event, the Excess Pre-Tax Contributions, together with Earnings, will be
returned to the Participant no later than the April 15th following the end of
the calendar year in which the Excess Pre-Tax Contributions were made. The Plan
is not required to return Excess Pre-Tax Contributions unless the Participant
notifies the Plan Administrator, in writing, by March 1st of the following
calendar year of the amount of the Excess Pre-Tax Contributions allocated to
this Plan. The amount of Excess Pre-Tax Contributions to be returned for any
calendar year will be reduced by any Pre-Tax Contributions previously returned
to the Participant under Section 8.01 for that calendar year. In the event any
Pre-Tax Contributions returned under this Section 3.04 were matched by Employer
Contributions, those Employer Contributions, together with Earnings, will be
forfeited and used to reduce future Employer Contributions.

     3.05   PARTICIPATING CONTRIBUTIONS ELIGIBLE FOR EMPLOYER CONTRIBUTIONS

     (a)    CECONY WEEKLY PARTICIPANT A Participating Contribution means that
amount of a Participant's contribution which is matched by an Employer
Contribution. In the instance of a CECONY Weekly Participant who is a Local 1-2
Employee, his or her contribution may not exceed: (1) 97 cents per hour for any
Payroll Period beginning on or after January 1, 2000, (2) $1.02 per hour for any
Payroll Period beginning on or after January 1, 2001, (3) $1.07 per hour for any
Payroll Period beginning on or after January 1, 2002, (4) $1.12 per hour for any
Payroll Period beginning on or after January 1, 2003, or (5) $1.17 per hour for
any Payroll Period beginning on or after January 1, 2004. Such contribution will
be the Local 1-2 Employee's Participating Contribution for such Payroll Period.
A Local 3 Employee's contribution may not exceed (1) $1.02 per hour for any

                                                                              31


Payroll Period beginning on or after January 1, 2001, (2) $1.07 per hour for any
Payroll Period beginning on or after January 1, 2002, (3) $1.12 per hour for any
Payroll Period beginning on or after January 1, 2003, (4) $1.17 per hour for any
Payroll Period beginning on or after January 1, 2004, or (5) $1.22 per hour for
any Payroll Period beginning on or after January 1, 2005. Such contributions
shall be the Local 3 Employee's Participating Contribution for such Payroll
Period. The amount, if any, by which a CECONY Weekly Participant's contribution
for a Payroll Period exceeds his or her Participating Contribution will be his
or her Non-Participating Contribution for such Payroll Period.

     CECONY will contribute on behalf of a CECONY Weekly Participant who elects
to make Pre-Tax Contributions or After-Tax Contributions for a Payroll Period an
amount equal to 50% of the aggregate Participating Contributions made by the
CECONY Weekly Participant for such Payroll Period matching first Pre-Tax
Contributions and then After-Tax Contributions. Employer Contributions are made
expressly conditional on the Plan satisfying the provisions of Article VIII. If
any portion of the Pre-Tax Contribution or After-Tax Contribution to which the
Employer Contribution relates is returned to the CECONY Weekly Participant under
Section 3.01, 8.01, 8.02 or 8.03, the corresponding Employer Contribution will
be forfeited, and if any amount of the Employer Contribution is deemed an Excess
Aggregate Contribution under Section 8.03, such amount will be forfeited in
accordance with the provisions of that Section.

     (b)    CECONY MANAGEMENT PARTICIPANT AND CEI PARTICIPANT CECONY and each
CEI Affiliate will contribute on behalf of each CECONY Management Participant or
CEI Participant, as the case may be, who elects to make Pre-Tax Contributions or
After-Tax Contributions an amount equal to 50% of the sum of the Pre-Tax
Contributions and After-Tax

                                                                              32


Contributions made on behalf of or by the CECONY Management Participant or the
CEI Participant to the Plan during each month, not to exceed 6% of Compensation
for such month, to be matched first on Pre-Tax Contributions, and then on
After-Tax Contributions. Employer Contributions for a month will not exceed 3%
of the Participant's Compensation for such month. Employer Contributions are
made expressly conditional on the Plan satisfying the provisions of Article
VIII. If any portion of the Pre-Tax Contribution or After-Tax Contribution to
which an Employer Contribution relates is returned to the CECONY Management
Participant or CEI Participant under Section 3.01, 8.01, 8.02 or 8.03, the
corresponding Employer Contribution will be forfeited, and if any amount of the
Employer Contribution is deemed an Excess Aggregate Contribution under Section
8.03, the Excess Aggregate Contribution will be forfeited in accordance with the
provisions of Section 8.03. In the event a CECONY Management Participant or CEI
Participant elects to make Pre-Tax Contributions and/or After-Tax Contributions
in an amount which, when taking into account his or her Employer Contributions,
exceeds the maximum annual additions, as defined and determined in Section 8.03
of the Plan, the Employer will contribute an additional Employer contribution on
behalf of such Participant ("CECONY/CEI True- Up Contribution"). The CECONY/CEI
True- Up Contribution, will be made as soon as administratively possible after
the end of the Plan Year, for each such CECONY Management Participant and CEI
Participant who is employed at year end. The CECONY/CEI True-Up Contribution
will equal the difference between 3% of such Participant's Compensation on an
annual basis minus his or her total Employer Contributions made during the year.

     (c)    O&R HOURLY PARTICIPANT O&R will contribute on behalf of each O&R
Hourly Participant who elects to make Pre-Tax Contributions an amount equal to
50% of

                                                                              33


Pre-Tax Contributions up to the first "x" percent of Compensation of the
O&R Hourly Participant during each month, where beginning: (1) January 1, 2000,
"x" equals 3; (2) January 1, 2003, "x" equals 4; and (3) January 1, 2004, "x"
equals 5 of the O&R Hourly Participant's Compensation for such month. In
addition, as soon as administratively possible after the end of the Plan Year,
O&R will contribute, as of the end of the Plan Year, for each O&R Hourly
Participant who is employed at year end and who in the prior Payroll Periods
during that Plan Year had made Pre-Tax Contributions at a rate in excess of,
beginning (1) January 1, 2000, 3%; (2) January 1, 2003, 4%; or (3) January 1,
2004, 5%; of the O&R Hourly Participant's Compensation, an Employer Contribution
equal to 50% of the O&R Hourly Participant's Pre-Tax Contributions that were not
previously matched ("True-Up Contributions"). True-Up Contributions will not
exceed such amount as will result in the total O&R Employer Contributions, both
those made previously during the year and those as of year end, exceeding 50% of
a O&R Hourly Participant's Pre-Tax Contributions that do not exceed, beginning:
(1) January 1, 2000, 3%; (2) January 1, 2003, 4%; or (3) January 1, 2004, 5%, of
the O&R Hourly Participant's Compensation on an annual basis.

     (d)    O&R MANAGEMENT PARTICIPANT O&R will contribute on behalf of each O&R
Management Participant who elects to make Pre-Tax Contributions an amount equal
to 50% of the Pre-Tax Contributions made on behalf of or by the O&R Management
Participant to the Plan during each month not to exceed 3% of his or her
Compensation for the month. In addition, as soon as administratively possible
after the end of the Plan Year, O&R will contribute, as of the end of the Plan
Year, for each O&R Management Participant who is employed at year end and who in
the prior Payroll Periods during that Plan Year had made Pre-Tax Contributions
at a rate in excess of 3% of his or her Compensation, a True-Up

                                                                              34


Contribution equal to 50% of his or her Pre-Tax Contributions. True-Up
Contributions will not exceed such amount as will result in the total O&R
Employer Contributions, both those made previously during the year and those as
of year end, exceeding 50% of a O&R Management Participant's Pre-Tax
Contributions that do not exceed 3% of his or her Compensation on an annual
basis.

     3.06   ROLLOVER CONTRIBUTIONS

     (a)    Subject to such terms and conditions as the Plan Administrator may
determine to be appropriate, applied in a uniform and non-discriminatory manner
to all Eligible Employees, and without regard to any limitations on
contributions set forth in this Article 3, the Plan may receive from an Eligible
Employee for credit to his or her Rollover Contributions Subaccount, in cash,
any amount previously distributed (or deemed to have been distributed) to him or
her from a qualified plan or, beginning January 1, 2002, a traditional
individual retirement account ("IRA"), a government plan subject to Code Section
457 or a Code Section 403(b) tax sheltered annuity. The Plan may receive such
amount either from the Eligible Employee or in the form of a direct rollover.
Notwithstanding the foregoing, the Plan shall not accept any amount unless such
amount is eligible to be rolled over in accordance with applicable law and the
Eligible Employee provides evidence satisfactory to the Plan Administrator that
such amount qualifies for rollover treatment. Unless received by the Plan in the
form of a direct rollover, the rollover contribution must be paid to the Trustee
on or before the 60th day after the day it was received by the Eligible Employee
or be rolled over from an IRA. Effective January 1, 2002, an eligible rollover
distribution from an IRA is the amount of a distribution from an IRA that is
includible in gross income, including amounts attributable to an Employee's
personal IRA contributions made outside of a qualified plan. At the time
received by the Plan, the Eligible Employee

                                                                              35


shall, in such manner and on such conditions as may be prescribed by the Plan
Administrator, elect to invest the Rollover Contribution in the investment funds
then available under the Plan to a Participant. If the Eligible Employee fails
to make an investment election, 100% of the Rollover Contribution shall be
invested in the Fixed Income Fund.

     (b)    The Plan may also accept from a former Employee who is a Participant
a rollover or a direct rollover of an amount received from a defined benefit
plan sponsored by an Employer or from the TRASOP.

     (c)    Subject to terms and conditions as the Plan Administrator may
determine to be appropriate, applied and non-discriminatory manner to all
Participants, the Plan may receive on behalf of Participant a trust-to-trust
transfer from another qualified plan. Any Participant whose benefits are the
subject of a trust-to-trust transfer from another qualified plan to this Plan
will be entitled to receive benefits, rights and features from the Plan that are
no less than the benefits, rights and features he would be entitled to receive
from the other qualified plan immediately preceding the transfer. To the extent
feasible, such transfer shall be made on an in-kind basis. To the extent such
transfer is made in the form of cash, at the time received by the Plan the
Participant shall, in such manner and on such terms as may be prescribed by the
Plan Administrator, elect to invest the cash in the Investment Funds then
available under the Plan other than the Company Stock fund.

     3.07   CHANGES IN CONTRIBUTIONS

     A Participant may increase, reduce, suspend or resume his or her
contributions within the limits prescribed by Sections 3.01 and/or 3.02,
effective as of the next first Payroll Period, by making a new election, on or
before the date set by the Plan Administrator, in such manner and on such
conditions as may be prescribed by the Plan Administrator. A Participant may
make changes in contribution levels once a month.

                                                                              36


     3.08   PAYMENT TO TRUST

     Amounts contributed by Participants will be paid by each Employer to the
Trustee promptly and credited by the Trustee to their Accounts in accordance
with the certification of each Employer as to the names of the contributing
Participants and the respective amounts contributed by each Participant as
Participating Contributions, Non-Participating Contributions, Pre-Tax
Contributions, After-Tax Contributions and Rollover Contributions.

     3.09   NO CONTRIBUTIONS TO TRASOP

     No contributions to the TRASOP by any Employer or by Participants are
permitted.

     3.10   CATCH-UP CONTRIBUTIONS

     (a) Effective January 1, 2002, or at such later time as the Plan
Administrator may determine to implement, each "Catch-Up Participant," as
defined below, may contribute for each "Catch-Up Year," as defined below, an
amount not to exceed the lesser of the "Catch-Up Contribution," as defined
below, or the Catch-Up Participant's compensation reduced by any other Pre-Tax
Contributions for that Catch-Up Year.

     (b) Definitions:

            (i)   CATCH-UP  PARTICIPANT means a Participant who has attained
                  age 50 by the  last  day of a  Catch-Up  Year  and for whom no
                  additional Pre-Tax Contributions can be made for that Catch-Up
                  Year because of the  application  of the calendar  year annual
                  dollar  limit  set forth in Code  Section  402(g) or any other
                  limitations in the Plan.

            (ii)  CATCH-UP YEAR means Plan Year  beginning  January 2, 2002
                  ("CUY 2002"),  January 1, 2003 ("CUY  2003"),  January 1, 2004
                  ("CUY 2004"), January 1, 2005 ("CUY 2005"), or January 1, 2006
                  ("CUY 2006").

                                                                              37


            (iii) CATCH-UP  CONTRIBUTION  means a Pre-Tax  Contribution in the
                  amount of $1,000 for CUY 2002, $2,000 for CUY 2003, $3,000
                  for CUY 2004,  $4,000  for CUY 2005,  and $5,000 for CUY 2006.
                  For Plan Years  beginning  after CUY 2006, the $5,000 Catch-Up
                  Contribution  is  adjusted  by the Cost of Living  Adjustment,
                  increasing,  when  applicable,  in $500  increments.  Catch-Up
                  Contributions  are not taken  into  account  for  purposes  of
                  determining the Actual  Deferral  Percentage or Average Actual
                  Deferral Percentage.

     3.11   EMPLOYER CONTRIBUTIONS TO ESOP

     Employer Contributions made on behalf of an ESOP Participant are
automatically contributed to the ESOP.

                                                                              38


                                   ARTICLE IV

                   INVESTMENT ELECTIONS - TIMING AND FREQUENCY

     4.01   EMPLOYER CONTRIBUTIONS ELECTION

     A Participant may elect to have Employer Contributions allocated to his or
her Employer Contributions Subaccount invested, in multiples of 1%, in one or
more of the Investment Funds, including the Company Stock Fund. Effective May 8,
2002, Employer Contributions allocated to the Company Stock Fund are made to the
ESOP. If the Participant fails to make an election as to the Investment Fund(s)
for his or her Employer Contributions, 100% of such Contributions shall be
invested in the Fixed Income Fund. Any such election shall be made in such
manner and on such conditions as may be prescribed by the Plan Administrator.

     4.02   PARTICIPANT PRE-TAX CONTRIBUTIONS, AFTER-TAX CONTRIBUTIONS AND
            ROLLOVER CONTRIBUTIONS

     A Participant may elect to have his or her Pre-Tax Contributions, After-Tax
Contributions, and Rollover Contributions invested, in multiples of 1%, in any
Investment Fund other than the Company Stock Fund. If the Participant fails to
make an election as to the Investment Fund(s) for his or her contributions, 100%
of such contributions will be invested in the Fixed Income Fund.

     4.03   CHANGE OF ELECTION

     Subject to possible restrictions imposed on certain Funds by the Trustee or
an Investment Fund Manager, a Participant may change his or her investment
election regarding future contributions once a month and his or her existing
Account Balance once a day. Any

                                                                              39


election will be made in such manner and on such conditions as may be prescribed
by the Plan Administrator and subject to any restrictions imposed on an
Investment Fund.

     4.04   CERTIFICATION TO COMPANY

     For each Payroll Period, the Recordkeeper will certify to each Employer the
amount of Employer Contributions to be made on behalf of each Participant.

     4.05   FORFEITURES

     The total amount of the Trust Fund forfeited by Participants pursuant to
Section 7.02 or otherwise, will be invested in such Investment Fund as may be
specified by the Plan Administrator and will be applied to reduce future
Employer Contributions due under the Plan. The Trustee will promptly advise the
Employers of any such forfeiture and the amount thereof.

                                                                              40


                                   ARTICLE V

                          THE TRUST FUND - INVESTMENTS

     5.01   TRUST AGREEMENT

     Contributions are held in a Trust Fund by the Trustee under a written trust
agreement between CECONY and the Trustee. TRASOP Accounts are held in a TRASOP
Trust Fund under a written trust agreement between CECONY and the Trustee. ESOP
Accounts are held in the ESOP Trust Fund which is included in, but a separate
part of the Trust Fund. No person has any rights to or interest in the Trust
Fund except as provided in the Plan. The provisions of the trust agreement
between CECONY and the Trustee shall be considered an integral part of the Plan
as if fully set forth herein.

     5.02   INVESTMENT OF TRUST FUND

     (a)    The Trust Fund shall be invested and reinvested in Investment Funds
in accordance with the Participant's investment directions. The Plan is intended
to be an ERISA Section 404(c) plan within the meaning of regulations issued
pursuant to such section. Each Participant shall have the opportunity, on a
daily basis, to give investment instructions to the Trustee, or other fiduciary
who is appointed and assumes such fiduciary responsibility, with an opportunity
to obtain written confirmation of such instructions as to his or her existing
Account Balance among the Investment Funds. The Plan Administrator, the Trustee
and the Record keeper or their delegate, will comply with such instructions
except as otherwise provided in the ERISA Section 404(c) regulations. The Plan
Administrator will prescribe the form and manner in which such directions will
be made, as well as the frequency with which such directions may be made or
changed, and the dates as of which they will be effective, in a manner
consistent with the foregoing. Transfers to or

                                                                              41


from an Investment Fund may be restricted or limited by the manager of such
Investment Fund or by the terms of the Trust Agreement.

     (b)    The Named Fiduciaries shall select a range of Investment Funds as
described by ERISA Section 404(c) and applicable regulations. The Investment
Fund categories shall give each Participant a reasonable opportunity to:

            (i)   Materially  affect the potential  return on and the degree
                  of  risk  of  assets  over  which  the  Participant  exercises
                  investment control;

            (ii)  Choose from at least three investment alternatives,  each
                  of which is diversified and has materially  different risk and
                  return characteristics;

            (iii) Enable a  Participant  to achieve a portfolio  with risk
                  and  return  characteristics  at any  point  within  the range
                  normally  appropriate by choosing among the core alternatives;
                  and

            (iv)  Diversify investments so as to minimize the risk of large
                  losses.

     (c)    The Named Fiduciaries may establish new Investment Funds without the
necessity of an amendment to the Plan and shall have the objectives prescribed
by the Named Fiduciaries. The Named Fiduciaries may eliminate one or more
Investment Fund existing at any time without the necessity of an amendment to
the Plan. The Named Fiduciaries may establish rules and procedures governing the
transfer of portions of Participant's Account Balance in the event that existing
Investment Funds are changed or new Investment Funds added. The Named
Fiduciaries may appoint an Investment Manager to manage an Investment Fund.

     5.03   COMPANY STOCK FUND

     For Plan Years beginning before January 1, 2002 and for Plan Year 2002
until May 8, 2002, all funds invested in the Company Stock Fund, are invested as
a Participant's

                                                                              42


Employer Contributions Subaccount, and subject to this Section 5.03(a), (b) and
(c). Effective as of the ESOP Effective Date, a Participant who invests some,
all, or any part of his or her Employer Contributions in the Company Stock Fund
will be an ESOP Participant subject to Article XIV.

     (a)    INVESTMENTS IN FUND The Trustee shall regularly purchase Shares for
the Company Stock Fund in accordance with a non-discretionary purchasing
program. Such purchases may be made on any securities exchange where Shares are
traded, in the over-the-counter market, or in negotiated transactions, and may
be on such terms as to price, delivery and otherwise as the Trustee may
determine to be in the best interests of the Participants. Dividends, interest
and other income received on assets held in the Company Stock Fund shall be
reinvested in the Company Stock Fund. All funds to be invested in the Company
Stock Fund shall be invested by the Trustee in one or more transactions promptly
after receipt by the Trustee, subject to any applicable requirement of law
affecting the timing or manner of such transactions. All brokerage commissions
and other direct expenses incurred by the Trustee in the purchase or sale of
Shares under the Plan will be borne by the Account investing and/or trading in
the Company Stock Fund.

     (b)    UNITS The interests of Participants in the Company Stock Fund shall
be measured in Units, the number and value of which shall be determined daily.

     (c)    VOTING OF SHARES Each Participant shall be entitled to direct the
Trustee as to the manner in which any Shares or fractional Share allocated to
the Participant's Account Balance are to be voted. Any such Shares or fractional
Share for which the Participant does not give voting directions shall be voted
by the Trustee in the same manner and proportions as all other Shares held by
the Trustee for which voting directions are given by Participants.

                                                                              43


The Trustee shall keep confidential a Participant's voting instructions and
information regarding a Participant's purchases, holdings and sales of Shares.
The Plan Administrator shall be responsible for monitoring the Trustee's
performance of its confidentiality obligations.

     5.04   ACCOUNTS AND SUBACCOUNTS

     The Recordkeeper will maintain a daily evaluation at current market values,
as determined by the Trustee. The Recordkeeper will also maintain a separate
TRASOP Account for each eligible Participant and a separate Account Balance for
each Participant, and within each such Account Balance, as applicable, a Pre-Tax
Contributions Subaccount, an After-Tax Contributions Subaccount, a Rollover
Contributions Subaccount, an ESOP Account and an Employer Contributions
Subaccount. The Recordkeeper will keep a separate record of the respective
amounts of each Participant in the Trust Fund, including each Investment Fund
and the Loan Reserve, attributable to amounts credited to a Participant's
Pre-Tax Contributions Subaccount, After-Tax Contributions Subaccount, Rollover
Contributions Subaccount, ESOP Account, and Employer Contributions Subaccount.

     5.05   STATEMENTS OF ACCOUNT

     As soon as practicable after each calendar quarter, the Recordkeeper will
cause to be sent to each Participant a written statement showing, as of such
date, the respective amounts of the Participant's Account Balance, including
each Investment Fund and the Loan Reserve, attributable to the Participant's
Pre-Tax Contributions Subaccount, After-Tax Contributions Subaccount, Rollover
Contributions Subaccount, Employer Contributions Subaccount and TRASOP Account,
if any. With respect to the Participant's After-Tax Contributions Subaccount,
the statement will show separately the amount of the Participant's own
contributions (less any withdrawal) credited to his or her After-Tax Subaccount.
The Plan

                                                                              44


Administrator may direct the Recordkeeper from time to time to issue
comparable statements to Participants as of other dates during the calendar
year.

     5.06   RESPONSIBILITY FOR INVESTMENT

     Each Participant is solely responsible for the selection of his or her
Investment Funds. The Trustee, the Recordkeeper, any Investment Manager, the
Named Fiduciaries, the Plan Administrator, the Company, each Employer and the
trustees, officers and other Employees of each entity are not empowered to
advise a Participant as to the decision in which his or her Account Balance is
invested. The fact that an Investment Fund is available to Participants for
investment under the Plan is not to be construed as a recommendation for a
particular Participant to invest in the Investment Fund.

                                                                              45


                                   ARTICLE VI

                                     VESTING

     6.01   PARTICIPANT CONTRIBUTIONS

     The amount to the credit of a Participant's Account Balance attributable to
his or her Pre-Tax Contributions, After-Tax Contributions, Rollover
Contributions and TRASOP Account is 100% vested at all times.

     6.02   EMPLOYER CONTRIBUTIONS

     (a)    CECONY WEEKLY PARTICIPANT The amount to the credit of a CECONY
Weekly Participant's Account Balance attributable to Employer Contributions,
including those allocated to his or her ESOP Account, if applicable, made with
respect to any Payroll Period ending in a calendar year (the Contribution Year)
shall become 100% vested, subject to Article 8, on the earlier of the last day
of the third calendar year following the close of the Contribution Year or the
first day of the month in which the CECONY Weekly Participant completes five
Years of Service. Once a CECONY Weekly Participant completes five years of
Vesting Service, each Employer Contribution made on behalf of the CECONY Weekly
Participant becomes 100% vested. Effective January 1, 2002, each CECONY Weekly
Participant shall be 100% fully vested on the first day of the month in which he
or she completes three Years of Vesting service. All amounts to the credit of a
CECONY Weekly Participant's Account Balance attributable to Employer
Contributions, including those allocated to his or her ESOP Account, not yet
vested will become 100% vested upon attainment of age 65, death, Disability,
Retirement or termination of employment by the

                                                                              46


Company for reasons other than cause. Employer Contributions not yet vested are
subject to forfeiture as provided in Section 7.01.

     (b)    CECONY MANAGEMENT OR CEI PARTICIPANT The amount to the credit of a
CECONY Management or CEI Participant's Account Balance attributable to Employer
Contributions, including those allocated to his or her ESOP Account, if
applicable, shall become 100% vested, subject to Article 8, on the first day of
the calendar month in which the CECONY Management or CEI Participant completes
three years of Vesting Service. Once a CECONY Management or CEI Participant
completes three years of Vesting Service, each Employer Contribution made on
behalf of the CECONY Management Participant or CEI shall be 100% vested. All
amounts to the credit of a CECONY Management or CEI Participant's Account
Balance attributable to Employer Contributions, including those allocated to his
or her ESOP Account, if applicable, not yet vested will become 100% vested upon
attainment of age 65, Disability, death, retirement or termination of employment
by the Company for reasons other than cause. Employer Contributions otherwise
are subject to forfeiture as provided in Section 7.01.

     (c)    O&R HOURLY PARTICIPANT An O&R Hourly Participant's Account Balance
is 100% vested at all times.

     (d)    O&R MANAGEMENT PARTICIPANT An O&R Management Participant's Account
Balance is 100% vested at all times.

     6.03   SPECIAL VESTING RULES

     (a)    Each person employed at the electric power generating facilities
purchased from Western Massachusetts Electric Company ("WMECO Facilities") on
July 19, 1999, the date of the Closing of the purchase of the WMECO Facilities
by a CEI Affiliate, was 100% vested as of July 19, 1999, in his or her Account
Balance.

                                                                              47


     (b)    Each CECONY Participant at the fossil-fueled electricity generating
facilities in New York City or at the nuclear-fueled electricity generating
facilities at Indian Point divested by CECONY ("Divested Operations") who became
employed by the respective buyers of the Divested Operations were 100% vested as
of the Date of the Closing of each Divested Operation.

     (c)    Each person employed at the natural gas fueled electricity
generating facility known as the Lakewood Cogeneration Facility ("Lakewood
Plant") purchased by a CEI Affiliate and who became an Employee of such CEI
Affiliate, was 100% vested in his or her Account Balance as of June 1, 2000.

                                                                              48


                                   ARTICLE VII

                   DISTRIBUTIONS, WITHDRAWALS AND FORFEITURES

     7.01   VOLUNTARY TERMINATION OR TERMINATION BY THE COMPANY - FORFEITURES

     (a)    If a CECONY or CEI Participant's service is terminated by the
Company for cause or if the CECONY or CEI Participant voluntarily terminates his
or her service other than by reason of Retirement, at on or after attainment of
age 65, or Disability the non-vested portion of the CECONY or CEI Participant's
Employer Contributions Subaccount and ESOP Account shall not be forfeited until
the CECONY or CEI Participant incurs a five-year Break in Service. The vested
portion of such CECONY or CEI Participant's Account Balance (including any
amount due under any outstanding loan pursuant to Article 9) will be distributed
to such CECONY or CEI Participant in accordance with Section 7.08. Termination
of service for cause shall be determined by the Plan Administrator under rules
uniformly applied to all CECONY or CEI Participants. If the CECONY Participant
is not reemployed by the Company or an Affiliate before he or she incurs five
one-year Breaks in Service or receives a distribution, the non-vested portion of
his or her Employer Contributions Subaccount and ESOP Account will then be
forfeited.

     (b)    If an amount to the credit of a Participant's Employer Contributions
Subaccount and ESOP Account has been forfeited in accordance with paragraph (a)
above, such amount shall subsequently be restored to his or her Employer
Contributions Subaccount and ESOP Account by the Company provided; however, that
within five years after his or her reemployment date if he or she makes a lump
sum payment to the Trust Fund in cash in an amount equal to that portion of the
distribution received which represents the Participant's

                                                                              49


Participating Contributions relating directly to Employer Contributions which
were forfeited at the time of distribution. The amount restored will vest in
accordance with Section 6.02 as an Employer Contribution and shall be credited
to the Participant's Employer Contributions Subaccount and ESOP Account. The
lump sum payment by the Participant is immediately 100% vested and will be
credited to the Participant's Account Balance and ESOP Account.

     (c)    If any amounts to be restored to a Participant's Employer
Contributions Subaccount and ESOP Account have been forfeited under paragraph
(a) above, those amounts will be taken first from any forfeitures which have not
as yet been applied against Employer Contributions and if any amounts remain to
be restored, the Employer will make a special Employer Contribution equal to
those amounts.

     (d)    A Participant shall elect how to invest the repayment at the time of
the repayment.

     7.02   DEATH

     Upon the death of a Participant, the entire amount to the credit of his or
her Account Balance (including any amount due under any outstanding loan
pursuant to Article 9) will be distributed to his or her Beneficiary in
accordance with Section 11.03 as soon as practicable after the calendar month in
which his or her death occurs.

     7.03   WITHDRAWALS

     (a)    A CECONY OR CEI PARTICIPANT may request an in-service cash
withdrawal from his or her vested Account Balance of amounts other than Pre-Tax
Contributions, by making a withdrawal application in such manner and on such
conditions as may be prescribed by the Plan Administrator. In-service
withdrawals of Pre-Tax Contributions are restricted, as described herein.
Payment of the amount withdrawn will be made as soon as practicable after such
application has been completed and processed. Withdrawal requests

                                                                              50


by CECONY or CEI Participants are permitted up to four times in any calendar
year and only in accordance with the following terms: Withdrawals will be made
on an average cost basis within each category below and pro rata from the CECONY
or CEI Participant's Account Balance available for withdrawal. A CECONY or CEI
Participant may at any time withdraw an amount up to the entire vested amount to
the credit of his or her After-Tax and Employer Contribution Subaccounts, and
ESOP Account except that a CECONY Weekly Participant may not withdraw an amount
attributable to an Employer Contribution until December 31st, of the third
calendar year - and a CECONY Management Participant or CEI Participant, of the
second calendar year - beginning after the calendar month for which the Employer
Contribution was made. A CECONY or CEI Participant will not be permitted to make
any such withdrawal amounting to less than $300 unless the maximum amount
available under this paragraph is less than $300 in which case the CECONY or CEI
Participant will only be permitted to withdraw such maximum amount. Withdrawals
will be made in the following order from a CECONY or CEI Participant's Account
Balance:

       (1)  If the CECONY or CEI Participant requests a nontaxable withdrawal:

            (i)   Non-Participating After-Tax Contributions made before January
                  1, 1987, excluding any earnings thereon, and

            (ii)  Participating After-Tax Contributions made before January 1,
                  1987, excluding any earnings thereon.

       (2)  If the CECONY or CEI Participant requests a taxable withdrawal,
            without incurring a suspension as provided below:

            (i)   Non-Participating After-Tax Contributions made before January
                  1, 1987, excluding any earnings thereon;

                                                                              51


            (ii)  Participating After-Tax Contributions made before January 1,
                  1987, excluding any earnings thereon;

            (iii) Non-Participating After-Tax Contributions made on or after
                  January 1, 1987, including any earnings thereon;

            (iv)  Participating After-Tax Contributions made on or after January
                  1, 1987, that have been in the Account for two full calendar
                  years after the year contributed for a CECONY Management or
                  CEI Participant and three full calendar years after the year
                  contributed for a CECONY Weekly Participant, including any
                  earnings thereon;

            (v)   Any earnings attributable to Non-Participating After-Tax
                  Contributions made before January 1, 1987;

            (vi)  Any earnings attributable to Participating After-Tax
                  Contributions made before January 1, 1987; and

            (vii) Employer Contributions that have not been in the CECONY Weekly
                  Participant's Account for three, or in a CECONY Management or
                  CEI Participant's Account for two, full calendar years after
                  the contribution year, including any earnings thereon.

       (3)  If the CECONY or CEI Participant requests a taxable withdrawal
            resulting in a suspension as provided below:

            (i)   Non-Participating After-Tax Contributions made before January
                  1, 1987, excluding any earnings thereon;

            (ii)  Participating After-Tax Contributions made before January 1,
                  1987, excluding any earnings thereon;

                                                                              52


            (iii) Non-Participating After-Tax Contributions made on or after
                  January 1, 1987, including any earnings thereon;

            (iv)  Participating After-Tax Contributions made on or after January
                  1, 1987, including any earnings thereon;

            (v)   Any earnings attributable to Non-Participating After-Tax
                  Contributions made before January 1, 1987;

            (vi)  Any earnings attributable to Participating After-Tax
                  Contributions made before January 1, 1987; and

            (vii) Employer Contributions that have not been in the Account for
                  three full calendar years for a CECONY Weekly Participant and
                  two full calendar years for a CECONY Management or CEI
                  Participant, after the contribution year, including any
                  earnings thereon.

     A CECONY or CEI Participant who has withdrawn at least the entire amount
available in his or her After-Tax, Employer Contribution Subaccount and ESOP
Account without incurring a suspension may at any time withdraw an amount up to
the entire amount to the credit of his or her Rollover Contribution Subaccount.

     A CECONY or CEI Participant who has attained the age of fifty-nine and
one-half and who has withdrawn at least the entire vested amount available for
withdrawal in his or her After-Tax Contribution Subaccount, Employer
Contribution Subaccount, ESOP Account and Rollover Contribution Subaccount
without incurring a suspension, may withdraw an amount up to the entire amount
to the credit of his or her Pre-tax Contribution Subaccount in the following
order:

                                                                              53


       (4)  If the CECONY or CEI Participant requests a withdrawal, without
            resulting in a suspension:

            (i)   Non-Participating Pre-Tax Contributions, including any
                  earnings thereon, and

            (ii)  Participating Pre-Tax Contributions that have been in the
                  Account for three full calendar years for a CECONY Weekly
                  Participant and two full calendar years for a CECONY or CEI
                  Management Participant after the year contributed, including
                  any earnings thereon.

       (5)  If the CECONY or CEI Participant requests a withdrawal resulting in
            a suspension:

            (i)   Participating After-Tax Contributions, made on or after
                  January 1, 1987 that have been in the Account for less than
                  three full calendar years for a CECONY Weekly Participant and
                  two full calendar years for a CECONY or CEI Management
                  Participant after the contribution year, including any earning
                  thereon;

            (ii)  Non-Participating Pre-Tax Contributions, including any
                  earnings thereon; and

            (iii) Participating Pre-Tax Contributions including any earnings
                  thereon.

     A CECONY or CEI Participant shall not be permitted to make any such
withdrawal amounting to less than $300 unless the maximum amount available is
less than $300 in which case the CECONY or CEI Participant shall only be
permitted to withdraw such maximum amount.

                                                                              54


     Notwithstanding the preceding subparagraphs, a CECONY or CEI Participant
may not withdraw any amount that would cause his or her Account Balance to be
less than the minimum amount required under Section 9.12.

     In the event a CECONY or CEI Participant withdraws any amounts which
represent After-Tax Participating Contributions made at any time during the
three full calendar years for a CECONY Weekly Participant and two full calendar
years for a CECONY or CEI Management Participant, preceding the calendar year in
which the withdrawal is made, the CECONY or CEI Participant's right to make any
contributions to the Plan shall be suspended throughout all Payroll Periods
commencing during the six full calendar months as soon as practicable following
the withdrawal. To resume contributions following such suspension, the CECONY or
CEI Participant must elect on or before such day, in such manner and on such
conditions as may be prescribed by the Plan Administrator, to resume making
contributions.

     (b)    AN O&R HOURLY PARTICIPANT who has attained the age of fifty-nine
and one-half may request an in-service cash withdrawal. He or she may withdraw
all or a portion of his or her Account Balance attributable to Pre-Tax
Contributions and Rollover Contributions and income credited thereon (other than
any portion of his or her Account Balance attributable to an outstanding loan
balance), except that he or she may not withdraw such amount to the extent that
under applicable state law such contributions and/or earnings, whether or not
withdrawn, would be subject to state income tax if such O&R Hourly Participant
had the right to withdraw it from his or her Account Balance. Such request may
be made only once each twelve-month period and may not be for an amount of less
than $500 or the entire amount available for withdrawal. Effective January 1,
2002, withdrawals

                                                                              55


may be made up to four times in a year and the minimum amount that may be
withdrawn is reduced to $300.

     (c)    AN O&R MANAGEMENT PARTICIPANT may request a withdrawal from his or
her Account Balance which is attributable to After-Tax Contributions in such
manner and on such conditions as may be prescribed by the Plan Administrator.
Additionally, an O&R Management Participant who is at least age fifty-nine and
one-half may withdraw during employment all or a portion of his or her Account
Balance which is attributable to Pre-Tax Contributions and Rollover
Contributions and income credited thereon (except for any portion of his or her
Account Balance attributable to an outstanding loan balance), except that he or
she may not withdraw such amount to the extent that under applicable state law
such contributions and/or earnings, whether or not withdrawn, would be subject
to state income tax if such O&R Management Participant had the right to withdraw
it from his or her Account Balance. Such requests may be made only once each
twelve month period and may not be for an amount of less than $500 or the entire
amount available for withdrawal. Effective January 1, 2002, withdrawals, when
available, may be made up to four times in a year and the minimum amount that
may be withdrawn is reduced to $300.

     7.04   HARDSHIP WITHDRAWALS

     A Participant may, in the event of hardship, withdraw all or any part of
the amount of Pre-Tax Contributions to the credit of the Account Balance of the
Participant (excluding any earnings after December 31, 1998, attributable to
Pre-Tax Contributions) in excess of any minimum Account Balance required under
Section 9.09. An O&R Participant may also withdraw the income credited after
December 31, 1988, attributable to Transferred Employer PAYSOP Contributions and
Rollover Contributions and income attributable to After-Tax Contributions if
such income is subject to the restrictions on withdrawal pursuant to Section
7.03.

                                                                              56


A Participant may apply for a hardship withdrawal in such manner and on
such conditions as may be prescribed by the Plan Administrator. A Participant
shall be deemed to have a hardship if the Participant has an immediate and heavy
financial need and if the withdrawal is necessary to satisfy such financial need
as set forth below. The Plan Administrator or his or her delegate shall
determine whether the Participant satisfies the requirements for a hardship and
the amount of any hardship withdrawal. Any withdrawal under this Section shall
be made pro-rata from the Participant's balances in the Investment Funds from
which withdrawal may be made as provided in Section 7.03. A withdrawal pursuant
to this Section 7.04 shall not be subject to the limitations on number of
withdrawals permitted under Section 7.03.

     (a)    IMMEDIATE AND HEAVY FINANCIAL NEED. A Participant will be deemed to
have an immediate and heavy financial need if the withdrawal is to made on
account of any of the following:

       (1)  Medical expenses described in Code Section 213(d) previously
            incurred by the Participant, the Participant's spouse or any
            dependent, (as defined in Code Section 152), of the Participant, or
            expenses necessary for those persons to obtain medical care
            described in Code Section 213(d);

       (2)  Costs directly related to the purchase, excluding mortgage payments,
            of a principal residence for the Participant;

       (3)  Payment of tuition, related educational fees, and room and board
            expenses for the next twelve-months of post- secondary education for
            the Participant, or the Participant's spouse, children or
            dependents;

                                                                              57


       (4)  Payment of amounts necessary to prevent the eviction of the
            Participant from his or her principal residence or to avoid
            foreclosure on the mortgage of the Participant's principal
            residence;

       (5)  Payment of funeral expenses for a family member;

       (6)  Any other need added to the foregoing items of deemed immediate and
            heavy financial needs by the Commissioner of the Internal Revenue
            Service through the publication of revenue rulings, notices and
            other documents of general availability, rather than on an
            individual basis.

       (7)  A Participant shall not be permitted to make a withdrawal in the
            event of a hardship on account of any reason other than as set forth
            above.

     (b)    NECESSARY TO SATISFY SUCH NEED. The requested withdrawal will not
be treated as necessary to satisfy the Participant's immediate and heavy
financial need to the extent that the amount of the requested withdrawal is in
excess of the amount required to relieve the financial need or to the extent
such need may be satisfied from other sources that are reasonably available to
the Participant. The amount of an immediate and heavy financial need may include
any amounts necessary to pay any federal, state or local income taxes or
penalties reasonably anticipated to result from the hardship withdrawal. The
Participant must request, on such form or otherwise as the Plan Administrator or
his or her delegate may prescribe, that the Plan Administrator or his or her
delegate made its determination of the necessity for the withdrawal solely on
the basis of the Participant/s certification, without any supporting documents.
In the event the Plan Administrator or his or her delegate shall make such
determination provided all of the following requirements are met: (1) the
Participant has obtained all distributions and withdrawals, other than
distributions available only on account

                                                                              58


of hardship, and all nontaxable loans currently available under all plans of the
Company and Affiliates, (2) the Participant is prohibited from making Pre-Tax
Contributions and After-Tax Contributions to the Plan and all other plans of the
Company and Affiliates under the terms of such plans or by means of an otherwise
legally enforceable agreement for at least 12 months, or beginning on or after
January 1, 2002, six months, after receipt of the distribution, and (3) the
limitation described in Section 3.02 under all plans of the Company and
Affiliates for the calendar year following the year in which the distribution is
made must be reduced by the Participant's Pre-Tax Contributions made prior to
such distribution in the calendar year of the distribution for hardship. All
other plans of the Company and Affiliates means all qualified and non-qualified
plans of deferred compensation maintained by the Company and Affiliates and
includes a stock option, stock purchase (including the Company's Discount Stock
Purchase Plan), qualified and non-qualified deferred compensation plans and such
other plans as may be designated under regulations issued under Code Section
401(k), but shall not include health and welfare benefit plans.

     7.05   DISTRIBUTION FROM COMPANY STOCK FUND

     Where an amount to be distributed pursuant to Section 7.02, 7.03 or 14.10
is represented in part by Units, the distributee may elect, in such manner and
on such conditions as may be prescribed by the Plan Administrator, to have
distributed the number of whole Shares represented by such Units, together with
an amount of dollars representing the balance of the current value of such
Units. In the absence of such an election, the distribution shall be made
entirely in cash. Withdrawals for hardships or loans to be made from the Company
Stock Fund shall be made entirely in cash.

     7.06   LEAVES OF ABSENCE

                                                                              59


     If a Participant is granted an unpaid leave of absence by an Employer, such
event will not be deemed a termination of service, but such Participant's
Pre-Tax Contributions and After-Tax Contributions under this Plan will be
suspended as of the last day of the Payroll Period in which such leave
commences. Such Participant may resume making Pre-Tax Contributions and
After-Tax Contributions, as of a Payroll Period following the termination of
such leave of absence, by making a new payroll deduction authorization in such
manner and on such conditions as may be prescribed by the Plan Administrator.
Notwithstanding the preceding sentence, and the provisions of Section 7.04, if a
Participant makes a hardship withdrawal while on a leave of absence, any
suspension of such Participant's right to make Pre-Tax or After-Tax
Contributions which shall result from such withdrawal shall begin with the first
Payroll Period beginning after such leave of absence.

     7.07   AGE 70 1/2 REQUIRED DISTRIBUTION

     (a)    A Participant who attains age 70 1/2 on or after January 1, 2000,
shall begin his or her distribution of his or her Account Balance no later than
the April 1st following the later of the calendar year in which he or she
attains age 70 1/2 or the calendar year in which the Participant terminates
employment.

     (b)    In the event a Participant in active service was required prior to
January 1, 2000 to begin receiving payments while in service under the
provisions of a Prior Plan, the Plan shall distribute to the Participant in each
distribution calendar year the minimum amount required to satisfy the provisions
of Code Section 401(a)(9) provided; however, that the payment for the first
distribution calendar year shall be made on or before April 1 of the following
calendar year. Such minimum amount will be determined on the basis of the joint
life expectancy of the Participant and his or her Beneficiary. Such life
expectancy will be recalculated once each year; however, the life expectancy of
the Beneficiary will not be

                                                                              60


recalculated if the Beneficiary is not the Participant's spouse. The amount of
the withdrawal shall be allocated among the Investment Funds in proportion to
the value of the Account Balance as of the date of each withdrawal. The
commencement of payments under this Section shall not constitute an Annuity
Starting Date for purposes of Code Sections 72, 401(a)(11) and 417. Upon the
Participant's subsequent termination of employment, payment of the Participant's
Account Balance shall be made in accordance with the provisions of Section 7.08.

     (c)    With respect to distributions under the Plan made in calendar years
beginning on or after January 1, 2000, the Plan will apply the minimum
distribution requirements of Code Section 401(a)(9) that were proposed in
January 2001, notwithstanding any provision of the Plan to the contrary. This
amendment shall continue in effect until the end of the last calendar year
beginning before the effective date of final regulations under Code Section
401(a)(9) or such other date specified in guidance published by the Internal
Revenue Service.

     7.08   FORM AND TIMING OF DISTRIBUTIONS

     (a)    TIMING OF DISTRIBUTIONS. Upon termination from employment with the
Company and any Affiliate service, distributions will be made as follows:

       (1)  if the vested portion of the Participant's Account Balance equals
            $5000 or less, his or her Account Balance will be distributed in a
            single lump sum as soon as practicable but not later than 60 days
            after the end of the calendar year in which the Participant's
            termination from employment occurs; or

       (2)  unless the Participant consents to a distribution upon termination
            from employment, if the vested portion of the Participant's Account
            Balance exceeds $5000, distribution will be deferred until April 1
            of the calendar year

                                                                              61


            following the calendar year in which the Participant attains age 70
            1/2 unless, and until, the Participant elects an earlier
            distribution under Section 7.08(b).

       (3)  Termination of employment entitling a Participant to a distribution
            does not occur in the event of a corporate transaction in which
            there is a transfer of the Account Balances of Participants affected
            by the corporate transaction to a plan maintained or created by the
            affected Participant's new employer.

     (b)    The Participant may elect an immediate or deferred distribution,
subject to Code Section 401 (a)(9), Article XIV, if applicable, and, in such
manner and on such conditions as may be prescribed by the Plan Administrator,
any of the following:

       (1)  a distribution of the Participant's Vested Account Balance in a
            single lump sum;

       (2)  monthly, quarterly or annual periodic installment payments in a
            fixed dollar amount or fixed percentage amount, up to a 15-year
            period; or

       (3)  a distribution of all or part of the Participant's Vested Account
            Balance.

     (c)    If a Participant's distribution is deferred until April 1 of the
calendar year following the calendar year in which the Participant attains again
70 1/2, the Participant may elect, in such manner and on such condition s as may
be presented by the Plan administrator;

       (1)  a distribution in a single lump sum, or

       (2)  a distribution in the required minimum amounts and over the
            applicable distribution period prescribed under the Code's minimum
            distribution rules. If the Participant fails to make an election,
            the distribution shall be made in a single lump sum;

                                                                              62


     (d)    Any distribution of less than all of a Participant's Vested Account
Balance shall be made pro-rata from the Investment Funds in which the Account
Balance in invested.

     7.09   PROOF OF DEATH AND RIGHT OF BENEFICIARY OR OTHER PERSON

     The Plan Administrator may require and rely upon such proof of death and
such evidence of the right of any Beneficiary or other person to receive the
value of the vested Account Balance of a deceased Participant as the Plan
Administrator may deem proper, and his or her determination of the right of that
Beneficiary or other person to receive payment will be conclusive.

     7.10   DISTRIBUTION LIMITATION

     Notwithstanding any other provision of this Article 7, all distributions
from this Plan shall conform to the regulations issued under Code Section
401(a)(9), including the incidental death benefit provisions of Code Section
401(a)(9)(G). Such regulations override any Plan provision that is inconsistent
with Code Section 401(a)(9).

     7.11   DIRECT ROLLOVER OF CERTAIN DISTRIBUTIONS

     Notwithstanding any provision of the Plan to the contrary that would
otherwise limit a Distributee's election under this Section, a Distributee may
elect, in such manner and on such conditions as may be prescribed by the Plan
Administrator, to have any portion of an Eligible Rollover Distribution paid
directly to an Eligible Retirement Plan specified by the Distributee in a direct
rollover. The following definitions apply to the terms used in this Section:

     (a)    ELIGIBLE ROLLOVER DISTRIBUTION means any distribution of all or any
portion of the balance to the credit of the Distributee. An Eligible Rollover
Distribution does not include any distribution that is one of a series of
substantially equal periodic payments (not less frequently than annually) made
for the life (or life expectancy) of the Distributee or the

                                                                              63


joint lives (or joint life expectancies) of the Distributee and the
Distributee's designated beneficiary, or for a specified period of ten years or
more or any distribution to the extent such distribution is required under Code
Section 401(a)(9). Any amount that is distributed on account of hardship is not
an Eligible Rollover Distribution. The Distributee may not elect to have any
portion of a hardship distribution paid directly to an Eligible Retirement Plan.
Effective beginning January 1, 2002, a distribution does not fail to be an
Eligible Rollover Distribution solely because it includes after-tax employee
contributions that are not includible in gross income. The portion attributable
to after-tax contributions may be transferred only to an individual retirement
account or annuity described in Code Section 408(a) or (b), or to a qualified
defined contribution plan described in Code Section 401(a) or 403(a) that agrees
to separately account for amounts so transferred, including separately
accounting for the portion of such distribution which is includible in gross
income and the portion of such distribution which is not so includible.

     (b)    ELIGIBLE RETIREMENT PLAN means an individual retirement account
described in Code Section 408(a), an individual retirement annuity described in
Code Section 408(b), an annuity plan described in Code Section 403(a), or a
qualified trust described in Code Section 401(a) that is a defined contribution
plan, that accepts the Distributee's Eligible Rollover Distribution. However, in
the case of an Eligible Rollover Distribution to the surviving spouse, an
Eligible Retirement Plan is an individual retirement account or individual
retirement annuity. Effective January 1, 2002, Eligible Retirement Plan also
means an annuity plan described in Code Section 403(b), and an eligible plan
under Code Section 457(b) maintained by a political subdivision of a state, or
any agency or instrumentality of a state or political subdivision of a state and
which agrees to separately

                                                                              64


account for amounts transferred into such plan from this Plan, including
separately accounting for the portion of such distribution that is includible in
gross income and the portion of such distribution that is not so includible.

     (c)    DISTRIBUTEE means an Employee, former employee, the surviving
spouse of the Employee or Former Employee, spouse or former spouse of an
Employee or Former Employee who is the alternate payee under a qualified
domestic relations order as defined in Code Section 414(p), are Distributees.

     (d)    DIRECT ROLLOVER means a payment by the Plan to the Eligible
Retirement Plan specified by the Distributee.

                                                                              65


                                  ARTICLE VIII

                        NON-DISCRIMINATION AND LIMITATION

     8.01   ACTUAL DEFERRAL PERCENTAGE TEST

     (a)    Separate Testing Groups. Solely for purposes of determining whether
the Plan satisfies the Average Actual Deferral Percentage tests, the Plan will
be tested as if it were four separate plans ("Testing Plan"): (1) a Plan
covering CECONY Management Employees, O&R Management Employees and CEI Employees
("Management Employees"), (2) a Testing Plan covering O&R Hourly
Employees("O&RU"), (3) a plan covering Local 1-2 Employees ("Local 1-2U") and,
(4) a plan covering Local 3 Employees ("Local 3U"). Each employee in the O&RU,
Local 1-2U, and Local 3U is referred to as a "Union Employee." Solely for
purposes of determining whether a Testing Plan satisfies the Actual Deferral
Percentage Test, an Employee who is under age 21 or has less than one Year of
Service is not taken into account as an Eligible Employee.

     (b)    The Average Actual Deferral Percentage for both Highly Compensated
Management Employees ("HCMEs") and for Highly Compensated Union Employees
("HCUEs"), respectively, who are, or are eligible to become, Participants may
not exceed the greater of:

            (i)   the Average Actual Deferral Percentage for Non-Highly
                  Compensated Management Employees ("NHCMEs") or Non-Highly
                  Compensation Union Employees ("NHCUEs"), respectively, who
                  are, or eligible to become, Participants multiplied by 1.25;
                  or

            (ii)  the Average Actual Deferral Percentage for HCMEs or HCUEs,
                  respectively, multiplied by 2.0, but not more than 2
                  percentage points in

                                                                              66


                  excess of the Average Actual Deferral Percentage for the
                  NHCMEs or NHCUEs, respectively.

     (c)    During a Plan Year, the Plan Administrator may implement rules
limiting the Pre-Tax Contributions which may be made on behalf of some or all of
either the HCMEs or HCUEs so that this limitation is satisfied. If the Plan
Administrator determines that the limitation has been exceeded in any Plan Year,
the following provisions apply:

       (1)  The amount of Pre-Tax Contributions made by either the HCMEs or
            HCUEs, as applicable, will be reduced by a leveling process under
            which the Pre-Tax Contributions of the HCME or HCUE, as applicable,
            with the highest dollar amount of Pre-Tax Contributions shall be
            reduced to the extent necessary to completely eliminate the excess
            Pre-Tax Contribution or cause such Pre-Tax Contributions to equal
            the amount of such contributions of the HCME or HCUE, as applicable,
            with the next highest dollar amount of Pre-Tax Contribution. This
            process will be repeated until the excess Pre-Tax Contribution is
            eliminated.

       (2)  Excess Pre-Tax Contributions, together with Earnings, will be paid
            to the Participant before the close of the Plan Year following the
            Plan Year in which the excess Pre-Tax Contributions were made and,
            to the extent practicable, within 21/2months of the close of the
            Plan Year in which the Excess Pre-Tax Contributions were made.
            However, any Excess Pre-Tax Contributions for any Plan Year will be
            reduced by any Pre-Tax Contributions previously returned to the
            Participant for that Plan Year. If any returned Excess Pre-Tax
            Contributions were matched by Employer Contributions, such
            corresponding

                                                                              67


            Employer Contributions, with Earnings will be forfeited and used to
            reduce Employer Contributions. The Participant, other than an O&R
            HCUE, may elect, in lieu of a return of the Excess Pre-Tax
            Contributions to have the Plan treat all or a portion of the Excess
            Pre-Tax Contributions to the Plan as After-Tax Contributions for the
            Plan Year in which the Excess Pre-Tax Contributions were made,
            subject to the limitations of Section 3.01. Re-characterized Excess
            Pre-Tax Contributions shall be considered After-Tax Contributions
            made in the Plan Year to which the Excess Pre-Tax Contributions
            relate for purposes of Section 8.02 and shall be subject to the
            withdrawal provisions applicable to After-Tax Contributions under
            Article 7. The Participant's election to re-characterize Excess
            Pre-Tax Contributions shall be made within 2 1/2 months of the close
            of the Plan Year in which the Excess Pre-Tax Contributions were made
            or within such shorter period as the Plan Administrator may
            prescribe. In the absence of a timely election by the Participant,
            the Plan shall return Excess Pre-Tax Contributions.

     8.02   ACTUAL CONTRIBUTION PERCENTAGE TEST

     (a)    Solely for purposes of determining whether the Plan satisfies the
Average Contribution Percentage test, the Plan will not test Union Employees.
The Plan will test only the Management Employees.

     (b)    The Average Contribution Percentage for HCMEs who are, or eligible
to become, Participants may not exceed the Average Contribution Percentage of
NHCMEs who are, or are eligible to become, Participants multiplied by 1.25. If
the Average Contribution Percentage for the HCMEs does not meet the foregoing
test, the Average Contribution Percentage for HCMEs may not exceed the Average
Actual Contribution Percentage of

                                                                              68


NHCMEs who are, or eligible to become, Participants by more than two percentage
points, and the Average Contribution Percentage for HCMEs may not be more than
2.0 times the Average Contribution Percentage for NHCMEs (or such lesser amount
as the Plan Administrator shall determine to satisfy the provisions of Section
8.03). During a Plan Year, the Plan Administrator may implement rules limiting
the After-Tax Contributions which may be made by some or all HCMEs so that this
limitation is satisfied. If the Plan Administrator determines that the
limitation under this Section 8.02 has been exceeded in any Plan Year, the
following provisions shall apply:

       (1)  The amount of After-Tax Contributions and Employer Contributions
            made by or on behalf of some or all HCMEs in the Plan Year shall be
            reduced in the same leveling manner as Excess Pre-Tax Contributions
            are reduced.

       (2)  Any Excess Aggregate Contributions will be reduced and allocated in
            the following order:

            (i)   Non-Participating After-Tax Contributions, to the extent of
                  the Excess Aggregate Contributions, will be paid to the
                  Participant; and then, if necessary,

            (ii)  so much of the Participating After-Tax Contributions and
                  corresponding Employer Contributions, as is necessary to meet
                  the test will be reduced, with the After-Tax Contributions,
                  together with Earnings, being paid to the Participant and the
                  Employer Contributions, together with Earnings, being reduced,
                  with vested Employer Contributions being paid to the
                  Participant and Employer Contributions which are forfeitable
                  under the

                                                                              69


                  Plan being forfeited and applied to reduce Employer
                  Contributions; then if necessary,

            (iii) so much of the Employer Contributions, together with Earnings,
                  as is necessary to equal the balance of the Excess Aggregate
                  Contributions will be reduced, with vested Employer
                  Contributions being paid to the Participant and Employer
                  Contributions which are forfeitable under the Plan being
                  forfeited and applied to reduce Employer Contributions.

     (c)    Any repayment or forfeiture of Excess Aggregate Contributions will
be made before the close of the Plan Year following the Plan Year for which the
Excess Aggregate Contributions were made and, to the extent practicable, any
repayments or forfeiture will be made within 2 1/2 months of the close of the
Plan Year in which the Excess Aggregate Contributions were made.

     8.03   SEPARATE NON-DISCRIMINATION TESTING

     Effective for Plan Years beginning on and after January 1, 2002, solely for
purposes of determining whether the Thrift Plan and the ESOP satisfy the Average
Actual Deferral Percentage Test and the Average Contribution Percentage all
Employer Contributions allocated to the Company Stock Fund are treated as
contributions to the ESOP and tested separately.

     8.04   MAXIMUM ANNUAL ADDITIONS

     (a)    Except to the extent permitting Catch-Up Contributions in accordance
with Code Section 414(v), the annual addition to a Participant's Account Balance
for any Plan Year, (the "Limitation Year") when added to the Participant's
annual addition for the Limitation Year under any other qualified defined
contribution plan of the Company or an Affiliate, may not exceed the lesser of
(1) 25% or, for Plan Years beginning on January 1, 2002,

                                                                              70


100%, of his or her Compensation for the Plan Year or (2) the greater of $30,000
or, for Plan Years beginning on January 1, 2002, $40,000, as adjusted for
increases in the Cost-Of-Living Adjustment.

     (b)    For purposes of this Section, the annual addition to a
Participant's Account Balance under this Plan or any other qualified defined
contribution plan maintained by the Company or an Affiliate will be the sum of:


       (1)  the total contributions, including Pre-Tax Contributions, made on
            the Participant's behalf by each Employer and all Affiliates,

       (2)  all After-Tax Contributions, exclusive of any Rollover
            Contributions,

       (3)  all Employer Contributions; and

       (4)  forfeitures, if applicable, that have been allocated to the
            Participant's Account Balance under this Plan or his or her accounts
            under any other such qualified defined contribution plan. Any
            Pre-Tax Contributions distributed under Section 8.01 and any
            Employer Contributions or After-Tax Contributions distributed or
            forfeited under the provisions of Section 3.01, 8.01, 8.02 or 8.03
            shall be included in the annual addition for the year allocated.

     (c)    If the annual addition to a Participant's Account Balance for any
Plan Year, prior to the application of the limitation set forth in paragraph (a)
above, exceeds that limitation due to a reasonable error in estimating a
Participant's Compensation or in determining the amount of Pre-Tax Contributions
that may be made with respect to a Participant under Code Section 415, or as the
result of the allocation of forfeitures, the amount of contributions credited to
the Participant's Account Balance in that Plan Year shall

                                                                              71


be adjusted to the extent necessary to satisfy that limitation in accordance
with the following order of priority:

       (1)  The Participant's Non-Participating After-Tax Contributions shall be
            reduced to the extent necessary. The amount of the reduction shall
            be returned to the Participant, together with any earnings on the
            contributions to be returned.

       (2)  The Participant's Non-Participating Pre-Tax Contributions shall be
            reduced to the extent necessary. The amount of the reduction shall
            be returned to the Participant, together with any earnings on the
            contributions to be returned.

       (3)  The Participant's Participating After-Tax Contributions and
            corresponding Employer Contributions shall be reduced to the extent
            necessary. The amount of the reduction attributable to the
            Participant's Participating After-Tax Contributions shall be
            returned to the Participant, together with any earnings on those
            contributions to be returned, and the amount attributable to the
            Employer Contributions shall be forfeited and used to reduce
            subsequent contributions payable by the affected Employer.

       (4)  The Participant's Participating Pre-Tax Contributions and
            corresponding Employer Contributions shall be reduced to the extent
            necessary. The amount of the reduction attributable to the
            Participant's Participating Pre-Tax Contributions shall be returned
            to the Participant, together with any earnings on those
            contributions to be returned, and the amount attributable to the
            Employer Contributions shall be forfeited and used to reduce
            subsequent contributions payable by the affected Employer.

                                                                              72


     (d)    Any Pre-Tax Contributions returned to a Participant under this
paragraph (d) shall be disregarded in applying the dollar limitation of Pre-Tax
Contributions under Section 3.01(b), and in performing the Actual Deferral
Percentage Test under Section 8.01. Any After-Tax Contributions returned shall
be disregarded in performing the Actual Contribution Percentage Test under
Section 8.02.

                                                                              73


                                   ARTICLE IX

                                      LOANS

     9.01   LOANS PERMITTED

     Upon terms and conditions set forth in this Article 9, and in accordance
with such uniform rules as the Plan Administrator may adopt, a Participant who
is not on a leave of absence and remains on the active payroll may borrow from
his or her Account Balance. The Plan Administrator or his or her delegate is
authorized to administer the loan program under this Article 9. Any Participant
who is an Employee, a former Employee, or a Beneficiary of an O&R Participant,
and who is also a "party-in-interest" (as defined in Section 3(14) of ERISA) to
the Plan, may borrow from his or her Account Balance.

     9.02   AMOUNT OF LOANS

     The minimum amount of any loan is $1,000 for a CECONY or CEI Participant
and $500 for an O&R Participant. Effective January 1, 2002, the minimum amount
of a loan for a CECONY or CEI Participant will be $500. The amount of any loan
to a Participant may not exceed the lesser of (a) or (b), where (a) is $50,000
reduced by the excess (if any) of (i) the highest outstanding balance of loans
to the Participant from the Plan during the one-year period ending on the day
before the date on which such loan is made, over (ii) the outstanding balance of
loans to the Participant from the Plan on the date on which such loan is made,
and (b) is one-half of the vested portion of the Participant's Account Balance.
Outstanding balance of loans means the outstanding amount of all loans from the
Plan and any other qualified plans of the Company or an Affiliate.

     9.03   SOURCE OF LOANS

                                                                              74


     (a)    Funds for loans from a Participant's Account Balance shall be taken
from the Participant's Subaccounts in the following order:

       (1)  For a CECONY Participant:

            (i)   Non-Participating Pre-Tax Contributions and Earnings;

            (ii)  Participating Pre-Tax Contributions and Earnings;

            (iii) Rollover Contributions and Earnings;

            (iv)  Vested Employer Contributions and Earnings that have been in
                  the Account Balance for three full calendar years for a CECONY
                  Weekly Participant and two full calendar years for a CECONY or
                  CEI Management Participant after the contribution year and
                  Earnings;

            (v)   Non-Participating After-Tax Contributions and Earnings; and

            (vi)  Participating After-Tax Contributions and Earnings.

       (2)  For an O&R Participant:

            (i)   Pre-Tax Contributions and Earnings;

            (ii)  Rollover Contributions and Earnings; and

            (iii) After-tax Contributions and Earnings.


     (b)    No loan will be made from a Subaccount or a part of a Subaccount
until the entire balance in the Subaccount or part of the Subaccount preceding
it on the above list has been exhausted. Within each Subaccount or part thereof,
funds for loans will be taken on an average cost basis and pro-rata from each
Investment Fund within the Subaccount or part of the Subaccount, and such
pro-rata portion of each Investment Fund will be converted to cash for the loan
based upon the market value of the investment on the date of conversion.

     9.04   INTEREST RATE

                                                                              75


     The interest rate to be charged on loans will be a reasonable rate of
interest determined from time to time by the Plan Administrator. In determining
such rate the Plan Administrator seeks to provide to the Plan a rate of return
commensurate with the interest rates charged by persons in the business of
lending money for loans that would be made under similar circumstances on the
date the loan is approved. The interest rate will be fixed for the entire term
of the loan.

     Effective for loans originating before January 1, 2001, the interest rate
to be charged to an O&R Participant is the effective interest rate charged by
the Orange and Rockland Employees' Federal Credit Union for a 48 month
share-secured loan. The interest rate to be charged for a principal residence
loan to an O&R Management Participant will be based upon Federal National
Mortgage Association mortgage rates. Effective for loans originating after
January 1, 2001, the interest rate to be charged to an O&R Participant will be
the same interest rate applicable to a CECONY Participant.

     9.05   REPAYMENT

     The Participant may select a period of one, two, three, four or five years
for repayment of a loan, except that the Participant may, at his or her option,
select a longer period of whole years, not exceeding ten, (20 in the case of an
O&R Management Participant) for repayment of a loan for the purpose of
purchasing his or her principal residence. Repayment will be made by level
payments, not less frequently than quarterly, in such amount as shall be
sufficient to pay the principal and interest thereon over the period for
repayment. Repayment shall be made by payroll deductions, except that in the
case of a Participant who is not on the active payroll, repayments may continue
to be made by check or other similar means as the Plan Administrator shall
determine. Prepayment by a CECONY Weekly Participant of a loan in full, without
penalty, may be made only after 52

                                                                              76


weekly payments have been made. Prepayment by an O&R Participant of a loan in
full, without penalty, and prepayment by a CECONY Management or CEI Participant
of a loan in full or in part, without penalty, may be made at any time by
personal check or money order. The amount of each loan payment shall be placed
into the Investment Funds, except the Company Stock Fund, in accordance with the
most recent investment election made by the Participant with respect to the
Participant's Contributions. Notwithstanding the foregoing, a loan which is made
to a Participant who is an Employee shall become due and payable in full upon
the Employee's termination of employment; provided, however, that if a
Participant becomes an employee of a buyer or one of its affiliates following
the sale of the Company's or an Affiliate's assets, and if the Participant's
Account is transferred to a qualified plan maintained by the buyer or one of its
affiliates (the "Buyer's Plan"), any outstanding loan at his or her termination
of employment with the Company will not be due and payable in full at
termination but will instead be transferred to the Buyer's Plan.

     9.06   MULTIPLE LOANS

     A CECONY Weekly Participant may not have more than one loan outstanding at
a time. A CECONY Management or CEI Participant may not have more than one loan
granted in a calendar year unless all earlier loans made in the same calendar
year to the Participant shall have been repaid in full. An O&R Participant may
not have more than one loan outstanding at any time and may make a request for a
loan only once in a twelve month period.

     9.07   PLEDGE

     The vested portion of the Participant's Account Balance shall be pledged as
security for all loans to the Participant. The amount pledged shall not be
greater than fifty percent of the Participant's vested portion. If a default
occurs in the repayment of a loan, the entire

                                                                              77


unpaid principal balance plus accrued interest, if any: (i) will be charged,
when the Participant becomes eligible to receive a distribution, against that
portion of the Participant's vested portion which serves as security for the
loan; (ii) will be deducted, if a distribution is to made, from the amount
payable to the Participant or the Participant's Beneficiary; or (iii) if neither
(i) nor (ii) applies, will continue to encumber that portion of the
Participant's vested portion that serves as security for the loan.

     9.08   LOAN RESERVE

     The amount of each loan to a Participant will be transferred from the
portion of the Trust Fund held for the Participant's Account Balance and
invested pursuant to Section 5.02 to a special Loan Reserve maintained for such
Participant's Account Balance. Such Loan Reserve will be invested solely in the
loan or loans made to the Participant. Payments on any such loan will reduce the
Participant's Loan Reserve and will be reinvested for the Participant's Account
Balance in accordance with Section 9.05.

     9.09   MINIMUM ACCOUNT BALANCE

     So long as any amount of a loan remains outstanding to a Participant, the
Participant may not make any withdrawal from his or her Account Balance that
would reduce the value of his or her vested portion to less than his or her Loan
Reserve.

     9.10   OTHER TERMS

     Each loan will be evidenced by a promissory note payable to the Trustee.
The terms and conditions of any loan may be adjusted at any time, to the extent
determined by the Plan Administrator, to be necessary for compliance with law or
to maintain the qualification of the Plan under the Code.

                                                                              78


                                    ARTICLE X

                   ADMINISTRATION OF THE PLAN, ESOP AND TRASOP

     10.01  NAMED FIDUCIARIES AND PLAN ADMINISTRATOR OF PLAN ESOP AND TRASOP

     The following persons from time to time occupying the following offices of
CECONY are hereby designated as Named Fiduciaries: Chief Executive Officer,
Chief Financial Officer, and Chief Accounting Officer. CECONY may designate
other persons who, upon acceptance of such designation, shall serve as Named
Fiduciaries either instead of or in addition to those named above. Any such
designation and acceptance shall be in writing and retained by the Plan
Administrator. The Named Fiduciaries shall act by majority rule. The Named
Fiduciaries shall appoint from among the officers of CECONY a Plan Administrator
who shall serve at the discretion of the Named Fiduciaries. The Plan
Administrator shall serve without compensation for his or her services as such
and shall act solely in the interest of the Participants and their
Beneficiaries.

     Solely in this Article X, the term Plan includes the Thrift Savings Plan,
the ESOP and the TRASOP unless the context clearly designates otherwise.

     10.02  AUTHORITY OF PLAN ADMINISTRATOR

     The Plan Administrator has the discretionary authority to control and
manage the operation and administration of the Plan ESOP and, without limiting
the generality of the foregoing, shall interpret the Plan, ESOP,, determine
eligibility for benefits under the Plan, determine any facts or resolve any
questions relevant to the administration of the Plan, ESOP, and TRASOP and, in
connection therewith, may remedy and correct any ambiguities, inconsistencies,
or omissions in the Plan, ESOP and TRASOP. Any such action taken by the

                                                                              79


Plan Administrator shall be conclusive and binding on all Participants, ESOP
Participant, Beneficiaries and other persons. The Plan Administrator is
authorized to make any changes to the Plan, ESOP and TRASOP that he or she, in
his or her sole discretion, determines are necessary or desirable to carry out
(a) the transition to Vanguard Fiduciary Trust Company as Trustee, record keeper
and Investment Manager for the O&R Hourly Plan and the O&R Management Plan, (b)
the addition of new Investment Funds, (c) the merger of the CECONY Management
Plan, the O&R Hourly Plan and O&R Management Plan into this Plan, ESOP and
TRASOP, and (d) to make any other changes to facilitate administration of the
Plan, ESOP and TRASOP.

     The Plan Administrator also has the authority to adopt certain amendments
to the Plan, ESOP and TRASOP, which are (a) required or desirable in order to
implement corporate transactions such as mergers, acquisitions and divestitures;
(b) required, necessary or recommended for compliance with ERISA, the Code or
other laws; or (c) necessary or desirable for uniform or efficient
administration. In all cases, any amendment(s) adopted by the Plan Administrator
shall neither materially nor significantly increase the Employers' or the
Company's obligations or adversely affect or reduce the Account Balance of any
Participant.

     10.03  RELIANCE ON REPORTS

     The Named Fiduciaries and the Plan Administrator are entitled to rely upon
any opinions, reports, or other advice that will be furnished by specialists,
subject to fiduciary responsibilities imposed by ERISA.

     10.04  DELEGATION OF AUTHORITY

     With approval of the Named Fiduciaries, the Plan Administrator may
designate one or more persons to exercise any power, or perform any duty, of the
Plan Administrator. Any

                                                                              80


such designation will be in writing and signed by the Plan Administrator and the
Named Fiduciaries and a copy thereof will be delivered to the Trustee.

     10.05  ADMINISTRATION EXPENSES

     All expenses arising in connection with the operation and administration of
the Plan will be paid by the Plan, ESOP or TRASOP, as applicable.

     The expenses of administration of the TRASOP shall include, without
limitation, transfer taxes, postage, brokerage commissions and other direct
selling expenses incurred by the Trustee in the sale of Shares pursuant to
Article XIII, losses incurred by the Trustee on funds invested pursuant to
Article XIII, and fees of the Trustee in connection with the administration of
TRASOP, including fees for legal services rendered to the Trustee (whether or
not rendered in connection with a judicial or administrative proceeding and
whether or not incurred while it is acting as Trustee), but shall excludes
brokerage fees and commissions for purchases of Shares pursuant to Section
13.02, which brokerage fees and commissions shall be paid out of the dividends
being reinvested thereby. Such expenses of administration of TRASOP will, to the
extent permitted by law, be paid:

            (i)   first, out of any available income of TRASOP;

            (ii)  second, out of any available dividends received by the Trustee
                  on Shares allocated to Participants pursuant to Section 13.02,
                  which dividends have not then been applied to the purchase of
                  additional Shares pursuant to Section 13.02; and

            (iii) Third, by CECONY.

     In no event shall the amounts paid by the Trustee during such Plan Year
pursuant to clauses "first" and "second" above, exceed the smaller of: the sum
of (x)10 percent of the first $100,000 and (y) 5 percent of an amount in excess
of $100,000 of the income from

                                                                              81


dividends paid to the Trustee with respect to common stock of the Company during
such Plan Year or $100,000.

     10.06  FIDUCIARY INSURANCE

     The Employers may purchase and carry fiduciary responsibility insurance
under which each member of the Board, each Named Fiduciary, the Plan
Administrator, and any person, including each employee, to whom there may be
delegated any responsibility in connection with the administration of the Plan,
including the Trustee, will be indemnified against any cost or expense
(including counsel's fees) or liability which may be incurred arising out of any
act or failure to act in the administration of this Plan, except for gross
negligence or willful misconduct.

     10.07  CLAIM REVIEW

     (a)    Upon receipt from a Participant or Beneficiary of an initial claim
for benefits, the Plan Administrator shall respond in writing and deliver or
mail to the Participant or Beneficiary within 90 days following the date on
which the initial claim is filed. If the initial claim is denied, in part or
totally, the Plan Administrator shall set forth the specific reasons for the
denial, written in a plain and understandable manner, with specific reference to
pertinent Plan, ESOP and TRASOP provisions on which the denial is based, a
description of any additional material or information necessary for the claimant
to perfect the claim, an explanation of why such material or information is
necessary, and an explanation of the Plan's ESOP and TRASOP claim review
procedure. If special circumstances require an extension of time for processing
the claim, written notice of an extension shall be furnished to the claimant
prior to the end of the initial period of 90 days following the date on which
the claim was filed. Such an extension may not exceed a period of 90 days beyond
the end of the initial period. If the claim has not been granted, and if written
notice of the denial of the

                                                                              82


claim is not furnished within 90 days following the date on which the claim is
filed, the claim shall be deemed denied for the purpose of proceeding to the
claim review procedure.

     (b)    CLAIM REVIEW PROCEDURE. A Participant, Beneficiary, or the
authorized representative of either shall have 60 days after receipt of written
notification of denial of a claim to request a review of the denial by making
written request to the Plan Administrator. The Plan Administrator shall give the
Participant, Beneficiary, or the authorized representative of either an
opportunity to appear to review pertinent documents, to submit issues and
comments in writing, and to present evidence supporting the claim. Not later
than 60 days after receipt of the request for review, the Plan Administrator
shall render and furnish to the claimant a written decision which shall include
specific reasons for the decision, and shall make specific references to
pertinent Plan provisions on which it is based. If special circumstances require
an extension of time for processing, the decision shall be rendered as soon as
possible, but not later than 120 days after receipt of the request for review,
provided that written notice and explanation of the delay are given to the
claimant prior to commencement of the extension. Such decision by the Plan
Administrator shall not be subject to further review. If a decision on review is
not furnished to a claimant within the specified time period, the claim will be
deemed to have been denied on review.

     (c)    EXHAUSTION OF REMEDY. No claimant shall institute any action or
proceeding in any state or federal court of law or equity, or before any
administrative tribunal or arbitrator, for a claim for benefits under the Plan
until he or she has first exhausted the procedures set forth in this section.

     10.08  APPOINTMENT OF TRUSTEE

     The Trustee will be appointed by the Board.

     10.09  LIMITATION OF LIABILITY

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     The Company, the Board, the Named Fiduciaries, the Plan Administrator, the
Employers and any officer, Employee or agent of the Company and each Employer
shall not incur any liability individually or on behalf of any other individuals
or on behalf of the Company or Employers for any act or failure to act, made in
good faith in relation to the Plan or the funds of the Plan. However, this
limitation shall not act to relieve any such individual or the Company or
Employers from a responsibility or liability for any fiduciary responsibility,
obligation or duty under Part 4, Title I, of ERISA.

                                                                              84


                                   ARTICLE XI

                                  MISCELLANEOUS

     11.01  EXCLUSIVE BENEFIT - AMENDMENTS

     It shall be impossible for any part of the corpus or income of the Trust
Fund, ESOP Trust Fund or the TRASOP Trust Fund to be used for or diverted to
purposes other than for the exclusive benefit of Participants or Beneficiaries
entitled to benefits under the Plan and for paying the expenses of the Plan. No
person has any interest in, or right to, any part of the Trust Fund except as
and to the extent expressly provided in the Plan. Subject to the foregoing, the
Plan may be amended, in whole or in part, at any time and from time to time by
the Board or pursuant to authority granted by the Board and any amendment may be
given such retroactive effect as the Board or its duly authorized delegate may
determine. If an Employer, other than CECONY, wishes to amend the Plan as to its
participating employees, that Employer will present a resolution of its board of
directors approving the proposed amendment and requesting CECONY to amend the
Plan. CECONY shall have the sole discretion whether to amend the Plan as
requested by an Employer.

     Solely in this Article XI, the term Plan includes the Thrift Savings Plan,
the ESOP and the TRASOP and reference to the Trust Fund includes the ESOP Trust
Fund and the TRASOP Trust Fund, unless the context clearly designates otherwise.

     11.02  TERMINATION - SALE OF ASSETS OF SUBSIDIARY

     (a)    The Plan may be partially or fully terminated or contributions may
be permanently discontinued for any reason at any time by the Board. In the
event of a partial or total termination of the Plan or permanent discontinuance
of contributions under the Plan:

                                                                              85


(i) no contribution will be made thereafter except for a Payroll Period the last
day of which coincides with or precedes such termination or discontinuance; (ii)
no distribution shall be made except as provided in the Plan; (iii) the rights
of all Participants to the entire amounts to the credit of their Account
Balances as of the date of such termination or partial termination or
discontinuance shall become 100% vested; (iv) no person shall have any right or
interest except with respect to the Trust Fund; (v) any remaining forfeitures
shall be considered a special Employer Contribution and shall be allocated on a
pro-rata basis, based on Account Balance, to all Participants with an Account
Balance as of the date of termination, partial termination or discontinuance;
and (vi) the Trustee shall continue to act until the Trust Fund shall have been
distributed in accordance with the Plan.

     (b)    Upon termination of the Plan, Pre-Tax Contributions, with Earnings,
will be distributed to Participants only if neither the Company, Employers nor
an Affiliate establishes or maintains a successor defined contribution plan. For
purposes of this paragraph, a "successor defined contribution plan" is a defined
contribution plan, other than an employee stock ownership plan as defined in
Code Section 4975(e)(7) or a simplified employee pension as defined in Code
Section 408(k) which exists at the time the Plan is terminated or within the
12-month period beginning on the date all assets are distributed. A defined
contribution plan will not be deemed a successor plan if fewer than two percent
of the Employees who are eligible to participate in the Plan at the time of its
termination are or were eligible to participate under another defined
contribution plan of the Company or an Affiliate (other than an ESOP or a SEP)
at any time during the period beginning 12 months before and ending 12 months
after the date of the Plan's termination.

                                                                              86


     11.03  BENEFICIARIES

     Upon the death of a Participant, his or her Account Balance shall be
payable in a lump sum to his or her surviving spouse. If there is no surviving
spouse or the surviving spouse has consented, in the manner provided in this
Section 11.03, to a designation of a Beneficiary in addition to or instead of
such spouse, and such designation is in effect at the time of the Participant's
death, the Participant's Account Balance will be paid to such Beneficiary.
Effective beginning June 1, 2002, the surviving spouse or Beneficiary(ies) may
elect to take a distribution in monthly, quarterly or yearly installments up to
but not exceeding a 15-year period; providing, however, that any distribution
election is consistent with Code Section 401(a)(9) and the regulations
promulgated thereunder. Each Participant may designate a primary or contingent
Beneficiary or Beneficiaries in the event of the death of the Participant prior
to distribution of such benefits. The Participant may file a written designation
with the Plan, on a form furnished by the Plan Administrator, or his or her
delegate. Such designation shall be effective only if (1) such designation is
accompanied by the written consent of the Participant's spouse which
acknowledges the effect on the spouse of the designation and it witnessed by a
notary public, or (2) the Participant if not married. Any such designation made
by an unmarried Participant shall become null and void in the event the
unmarried Participant marries before his or her Annuity Starting Date. Any
consent of a spouse shall be effective only with respect to such spouse. If, at
the time of a Participant's death, there is no surviving spouse of the
Participant and no designation of a Beneficiary by such Participant is in
effect, then the Participant's benefits shall be payable to his or her estate or
legal representative. A Participant may revoke a designation made pursuant to
this Section 11.03 by signing and filing with the Plan Administrator or his or
her delegate a written instrument to that effect, in such manner and on such
conditions as may be

                                                                              87


prescribed by the Plan Administrator, or by filing a new designation pursuant to
this Section 11.03. The consent of a Participant's spouse may not be revoked,
but such spouse's consent shall be required for every designation of a
Beneficiary other than the Participant's spouse and for every change in any such
designation. The requirement for spousal consent may be waived by the Plan
Administrator if he or she believes there is no spouse, or the spouse cannot be
located, or because of such other circumstances as may be established by
applicable law.

     11.04  ASSIGNMENT OF BENEFITS

     (a)    No Participant or Beneficiary shall have the right to assign,
transfer, alienate, pledge, encumber or subject to lien any benefits to which he
or she is entitled under the Plan. Nothing in this Section shall preclude
payment of Plan benefits pursuant to a qualified domestic relations order as
defined in Code Section 414(p) and Section 206(d) of ERISA. The Plan
Administrator will establish a written procedure to determine the qualified
status of domestic relations orders and to administer distributions under such
qualified orders.

     (b)    Notwithstanding anything herein to the contrary, if the amount
payable to the alternate payee under the qualified domestic relations order is
$5,000 or less, such amount shall be paid in one lump sum as soon as practicable
following the qualification of the order. If the amount exceeds $5,000, it may
be paid as soon as practicable following the qualification of the order if the
alternate payee consents thereto; otherwise it may not be payable before the
earliest of (1) the Participant's termination of employment, (2) the time such
amount could be withdrawn under Article 7 or (3) the Participant's attainment of
age 50.

     (c)    A Participant's Account Balance may be offset against the amount
owed to the Plan as a result of a breach of fiduciary duty to the Plan or
criminality involving the Plan.

                                                                              88


The participant's Account Balance will be reduced to satisfy liabilities of the
Participant to the Plan due to: (1) the Participant being convicted of
committing a crime involving the Plan; (2) a civil judgment (or consent order or
decree) being entered by a court in an action brought in connection with a
violation of ERISA's fiduciary duty rules; or (3) a settlement agreement between
the Secretary of Labor and the Participant in connection with a violation of
ERISA's fiduciary rules. If the Participant is married at the time at which the
offset is to be made, either the Participant's spouse must consent in writing to
these offset (unless there is no spouse, the spouse cannot be located, or due to
other circumstances prescribed by the Secretary pursuant to Code Section
417(a)(2)(B)), or a spousal waiver of survivor benefits must be in effect for
the offset to take place. Spousal consent is not required if the spouse is
ordered or required by the judgment, order, decree, or settlement to pay an
amount to the Plan in connection with a violation of Part 4 of Title I of ERISA.
Spousal consent is not required where, in the judgment, order, decree, or
settlement, the spouse retains the right to receive a 50% survivor annuity under
a qualified joint and survivor annuity and under a qualified pre-retirement
survivor annuity. The amount of a benefit that is so offset is includible in
income on the date of the offset.

                                                                              89


     11.05  MERGER

     The Plan may not be merged or consolidated with, or its assets or
liabilities may not be transferred to any other plan unless each person entitled
to benefits under the Plan would, if the resulting plan were then terminated,
receive immediately after the merger or consolidation, or transfer of assets or
liabilities, a benefit which is equal to or greater than the benefit he or she
would have been entitled to receive immediately before the merger, consolidation
or transfer if the Plan had then terminated.

     In the event of a corporate transaction, divestiture of assets or an
Affiliate, or other corporate reorganization in which one or a group of
Participants are transferred to another employer, the Plan Administrator, in his
or her sole discretion, may effectuate a trust-to-trust transfer of affected
Participants' Account Balance to the other employer's qualified defined
contribution plan.

     In the event of a corporate acquisition, merger, or other corporate
reorganization in which one or a group of persons become Employees, the Plan
Administrator, in his or her sole discretion, or if CECONY so requires, may
accept a trust-to-trust transfer of the affected persons' Account Balance from
another employer's qualified defined contribution plan to the Plan.

     11.06  CONDITIONS OF EMPLOYMENT NOT AFFECTED BY PLAN

     The establishment and maintenance of the Plan shall not confer any legal
rights upon any Employee or other person for a continuation of employment, nor
shall it interfere with the rights of the Employers to discharge any Employee
and to treat him or her without regard to the effect which that treatment might
have upon him or her as a Participant or potential Participant of the Plan.

     11.07  FACILITY OF PAYMENT

                                                                              90


     If the Plan Administrator finds that a Participant or other person entitled
to a benefit is unable to care for his or her affairs because of illness or
accident or is a minor, the Plan Administrator may direct that any benefit due
him or her, unless claim has been made by a duly appointed legal representative,
be paid to his or her spouse, a child, a parent or other blood relative, or to a
person with whom he or she resides. Any payment so made shall be a complete
discharge of the liabilities of the Plan for that benefit.

     11.08  INFORMATION

     Each Participant, Beneficiary or other person entitled to a benefit, before
any benefit is payable to him or her/on his or her account under the Plan, shall
file with the Plan Administrator the information that the Plan Administrator
requires to establish his or her rights and benefits under the Plan.

     11.09  ADDITIONAL PARTICIPATING EMPLOYERS

     (a)    If any entity is or becomes an Affiliate, the Board may include the
employees of that Affiliate in the participation of the Plan upon appropriate
action by that Affiliate necessary to adopt the Plan. If any person becomes an
Employee as the result of a merger, a consolidation, or an acquisition of all or
part of the assets or business of another company, the Board shall determine to
what extent, if any, previous service with the other entity will be recognized
under the Plan, subject to the continued qualification of the trust for the Plan
as tax-exempt under the Code.

     (b)    An Employer may terminate its participation in the Plan upon
appropriate action. In that event, the funds of the Plan held on account of
Participants in the employ of that Affiliate, and any unpaid Account Balances of
Participants who have separated from the employ of that Affiliate, shall be
determined by the Plan Administrator. Those funds will be distributed as
provided in and permitted under Section 11.02 if the Plan, as to that employer,

                                                                              91


is terminated, or segregated by the Trustee to a separate trust, pursuant to
certification to the Trustee by the Plan Administrator, continuing the Plan as a
separate plan for the employees of that Affiliate under which the board of
directors of that Affiliate will succeed to all the powers and duties of the
Board, including the appointment of named fiduciaries and plan administrator.

     11.10  IRS DETERMINATION

     All contributions made to the Trust Fund, and all loans made pursuant to
Article 9, which are made prior to the receipt of a determination from the
Internal Revenue Service to the effect that the Plan is a qualified plan under
Code Sections 401 (a) and 401(k) or the refusal of the IRS in writing to issue
such a determination, shall be made on the express condition that such
determination is received. In the event the Internal Revenue Service determines
that the Plan is not so qualified or refuses in writing to make such
determination, such contributions, increased by any earnings thereon, and
reduced by any losses thereon and by the outstanding balance (principal and
interest) on any loans made under Article 9, shall be returned to the
Employer(s) and Participants, as appropriate, as promptly as practicable after
such determination. In the event the Internal Revenue Service requires
reductions in such contributions and/or changes in the terms and conditions of
such loans as a condition of its determination that the Plan is so qualified,
the required reductions in contributions, increased by any earnings and reduced
by any losses attributable thereto, shall be returned to the Employer(s) and
Participants, as appropriate, and/or the amounts and terms and conditions of any
such outstanding loans shall be modified to meet Internal Revenue Service
requirements, as promptly as practicable after notification from the Internal
Revenue Service. If all or part of an Employer's deductions under Code Section
404 for Employer Contributions to the Plan are disallowed by the Internal
Revenue Service, the portion of the

                                                                              92


Employer Contributions to which the disallowance applies shall be returned to
that Employer without earnings thereon, but reduced by any losses attributable
thereto. The return shall be made within one year after the denial of
qualification or disallowance of deduction, as the case may be.

     11.11  MISTAKEN CONTRIBUTIONS

     Any contribution made by mistake of fact shall be returnable, without any
earnings thereon but reduced by any losses attributable thereto, to the
Employer(s) and/or Participants, as appropriate within one year after the
payment of the contribution.

     11.12  PREVENTION OF ESCHEAT

     If the Plan Administrator cannot ascertain the whereabouts of any person to
whom a payment is due under the Plan, the Plan Administrator may, no earlier
than three years from the date such payment is due, mail a notice of such due
and owing payment to the last known address of such person, as shown on the
records of the Plan or Employer. If such person has not made written claim
therefor within three months of the date of the mailing, the Plan Administrator
may, if he or she so elects and upon receiving advice from counsel to the Plan,
direct that such payment and all remaining payments otherwise due such person be
canceled on the records of the Plan and the amount thereof applied to reduce the
contributions of the applicable Employer. Upon such cancellation, the Plan and
the Trust shall have no further liability therefor except that, in the event
such person or his or her beneficiary later notifies the Plan Administrator of
his or her whereabouts and requests the payment or payments due to him under the
Plan, the amount so applied shall be paid to him or her in accordance with the
provisions of the Plan.

     11.13  CONSTRUCTION

                                                                              93


     The Plan shall be construed, regulated and administered under ERISA and the
laws of the State of New York, except where ERISA controls. In the event a
claimant institutes an action or proceeding in any state or federal court of law
or equity, the applicable "statute of limitations" for such action will be New
York State statute for actions brought in contract matters.

                                                                              94


                                   ARTICLE XII

                              TOP-HEAVY PROVISIONS

     12.01  APPLICATION OF TOP-HEAVY PROVISIONS

     This Article XII shall apply for purposes of determining whether the plan
is a top-heavy plan under Code Section 416(g) for Plan Years beginning after
December 31, 2001, and whether the Plan satisfies the minimum benefit
requirements of Code Section 416(c) for such years.

     12.02  MINIMUM BENEFIT FOR TOP-HEAVY YEAR

     (a)    KEY EMPLOYEE. Key Employee means any Employee or former Employee
(including any deceased Employee) who at any time during the Plan Year that
includes the determination date was an officer of the Company or Affiliate
having Annual Compensation greater that $130,000 (as adjusted under Code Section
416(i)(1) beginning after December 31, 2002, a 5-percent owner of the Company or
Affiliate or a 1-percent owner of the Company or Affiliate having Annual
Compensation of more than $150,000. The determination of who is a Key Employee
will be made in accordance with Code Section 416(i)(1) and the applicable
regulations and other guidance of general applicability issued thereunder.

     (b)    DETERMINATION OF PRESENT VALUES AND AMOUNTS. This section 12.02(b)
shall apply for purposes of determining the present values of accrued benefits
and the amounts of Account Balances of Employees as of the determination date.

            (i)   Distributions during the year ending on the determination
                  date. The present values of accrued benefits and the amounts
                  of Account Balances of an Employee as of the determination
                  date shall be increased by the

                                                                              95


                  distributions made with respect to the Employee under the Plan
                  and any Plan aggregated with the Plan under Code Section
                  416(g)(2) during the 1-year period ending on the determination
                  date. The preceding sentence shall also apply to distribution
                  under a terminated plan which, had if not been terminated,
                  would have been aggregated with the plan under Code Section
                  416(g)(2)(A)(i). In the case of a distribution made for a
                  reason other than separation from service, death, or
                  disability, this provision shall be applied by substituting
                  "5-year period" for "1-year period."

            (ii)  Employees not performing services during year ending on the
                  determination date. The accrued benefits and Account Balances
                  of any individual who has not performed services for the
                  Company or an Affiliate during the 1-year period ending on the
                  determination date shall not be taken into account.

     12.03  MINIMUM BENEFITS

     Matching Contributions. Employer Contributions shall be taken into account
for purposes of satisfying the minimum contribution requirements of Code Section
416(C)(2) and the Plan. Employer Contributions that are used to satisfy the
minimum contribution requirements shall be treated as matching contributions for
purposes for the Actual Contribution Percentage Test and other requirements of
Code Section 401(m).

     12.04  AGGREGATION GROUPS

     (a)    Notwithstanding anything to the contrary herein, this Plan shall not
be a Top-Heavy Plan if it is part of either a "required aggregation group" or a
"permissive aggregation group" that is not a Top-Heavy Group.

     (b)    The "required aggregation group" consists of:

                                                                              96


            (i)   Each Defined Contribution Plan or Defined Benefit Plan in
                  which at least one Key Employee participates; and

            (ii)  Each other Defined Contribution Plan or Defined Benefit Plan
                  which enables a plan referred to in the preceding subparagraph
                  (i) to meet the nondiscrimination requirements of Section
                  401(a)(4) or 410 of the Code.

     (c)    A "permissive aggregation group" consists of the plans included in
the "required aggregation group" plus any one or more other Defined Contribution
Plans or Defined Benefit Plans which, when considered as a group with the
"required aggregation group", would continue to meet the nondiscrimination
requirements of Section 401(a)(4) and 410 of the Code.

     12.05  SPECIAL BENEFIT LIMITS

     For any Plan Year for which this Article 12 is applicable the definitions
of "Defined Benefit Plan Fraction" and "Defined Contribution Plan Fraction" in
Sections 1.20 and 1.22, respectively, shall be modified in each case by
substituting "1.0"for "1.25".

     12.06  SPECIAL DISTRIBUTION RULE

     For any Plan Year for which this Article 12 is applicable, Section 7.08(a)
shall apply to Key Employees.

                                                                              97


                                  ARTICLE XIII

                     TAX REDUCTION ACT STOCK OWNERSHIP PLAN

     13.01  PURPOSE - SEPARATE ENTITY

     (a)    The TRASOP, is a stock bonus plan, established under the Tax
Reduction Act of 1975 was intended to give eligible participants an equity
interest in CECONY and encourage those participants to remain in the employ of
CECONY. The TRASOP is invested in Shares and in a short-term investment fund of
cash and cash equivalents. Applicable laws do not permit additional
contributions to the TRASOP. CECONY desires to continue the TRASOP Accounts of
Participants having such accounts. Effective as of July 1, 1988, all TRASOP
Accounts were transferred to this Plan, and all TRASOP provisions which continue
to be applicable were added to this Plan and shall, together with other
applicable provisions of this Plan, govern the TRASOP Accounts.

     (b)    Participant's Plan Account Balances and TRASOP Accounts shall be
administered separately, although they shall be held as part of the same Trust
Fund. There shall be no transfers between TRASOP Accounts and Plan Accounts.

     (c)    All matters relating to the TRASOP which relate to or arise out of
facts, circumstances or conditions in effect prior to July 1, 1988, shall be
governed by the provisions of the TRASOP as in effect on June 30, 1988 prior to
the merger, unless expressly otherwise provided in this Plan.

     (d)    Effective on or after January 1, 2002, the Economic Growth and Tax
Reduction Recovery Act of 2001 amended the definition of applicable dividend to
allow a deduction for dividends paid on applicable employer securities with
respect to which participants or beneficiaries are provided an election to have
the dividend paid to an ESOP

                                                                              98


and distributed in cash, or reinvested in qualifying employer securities. The
deduction is available both with respect to dividends that are reinvested and
paid out in cash. Accordingly, effective January 1, 2002, the TRASOP is being
amended to provide participants or beneficiaries with the election to have
dividends paid in cash or reinvested, as set forth below.

     13.02  TRASOP ACCOUNTS - APPLICATION OF DIVIDENDS

     (a)    The TRASOP Account of each Participant in TRASOP who remained in the
employ of CECONY on July 1, 1988 was transferred to this Plan effective as of
July 1, 1988. Each such Participant shall continue to have a nonforfeitable
right to all Shares allocated and all amounts credited to such Participant's
TRASOP Account.

     (b)    All dividends received by the Trustee with respect to Shares
allocated to the TRASOP Accounts of Participants shall be applied to the
purchase of additional Shares. Such purchases shall be made promptly after the
receipt of each such dividend. The Trustee shall purchase, in one or more
transactions, the maximum number of whole Shares obtainable at then prevailing
prices, including brokerage commissions and other reasonable expenses incurred
in connection with such purchases. Such purchases may be made on any securities
exchange where Shares are traded, in the over-the-counter market, or in
negotiated transactions, and may be on such terms as to price, delivery and
otherwise as the Trustee may determine to be in the best interest of the
Participants. The Trustee shall complete such purchases as soon as practical
after receipt of such dividends, having due regard for any applicable
requirements of law affecting the timing or manner of such purchases. The
additional Shares so purchased shall be allocated among the respective TRASOP
Accounts of the Participants in proportion to the number of Shares in each
TRASOP Account at the record date for the payment of the dividend so applied.
Such allocation shall be made as

                                                                              99


promptly as practicable but for purposes of determining the time at which such
additional Shares shall become distributable pursuant to Section 13.04, the
additional Shares so allocated to each Participant's TRASOP Account shall be
deemed to have been allocated as of the respective allocation dates of the
Shares in such TRASOP Account at such record date, in proportion to the number
of such Shares previously allocated as of each such allocation date.

     (c)    For Plan Years beginning on and after January 1, 2002, dividends
received by the Trustee with respect to Shares allocated to the TRASOP accounts
of Participants, in accordance with the election of the Participant, will be
either paid in cash to Participants not later than 90 days after the close of
the Plan Year in which the dividends are paid, or applied by the Trustee for the
purchase of additional shares. A Participant will be given a reasonable
opportunity before a dividend is paid or distributed to make the election and
can change a dividend election at least annually. If there is a change in the
Plan governing the manner in which the dividends are paid or distributed to
Participants, each Participant will be given a reasonable opportunity to make an
election under the new Plan terms prior to the date on which the first dividend
subject to the new Plan terms is paid or distributed. A Participant who fails to
make an election as to whether to receive his or her dividend in cash or have
such dividend reinvested will be treated as if he or she elected to have his or
her dividend reinvested until such time that he or she makes an affirmation
election for a distribution of the dividend. Dividends that are distributed will
be held and invested in a short-term investment fund or like kind of cash
account until distributed.

     13.03  VOTING RIGHTS, OPTIONS, RIGHTS, AND WARRANTS

     (a)    Each Participant shall be entitled to direct the Trustee as to the
manner in which any Shares or fractional Shares allocated to the Participant's
TRASOP Account are to

                                                                             100


be voted.

     (b)    In the event that any option, right, or warrant shall be granted or
issued with respect to any Shares allocated to the Participant's TRASOP Account,
each Participant shall be entitled to direct the Trustee whether to exercise,
sell, or deal with such option, right, or warrant.

     (c)    The Trustee shall keep confidential the Participant's voting
instructions and instructions as to any option, right or warrant and any
information regarding a Participant's purchases, holdings and sales of Shares.

     13.04  DISTRIBUTION OF SHARES

     (a)    Each Share allocated to a Participant's TRASOP Account shall be
available for distribution to such Participant promptly after the earlier of the
death, disability or termination of employment of such Participant.

     (b)    Each Share which shall become distributable to a Participant by
reason of clause (a)(i) above is herein called, from the time such Share shall
become so distributable, an Unrestricted Share. Notwithstanding the provisions
of the aforesaid clause A.(i), Unrestricted Shares shall be distributed to
Participants as follows:

            (i)   From time to time, a Participant may request, in such manner
                  and on such conditions as may be prescribed by CECONY, that
                  Unrestricted Shares held in the Participant's TRASOP Account
                  be distributed to the Participant. If such Participant is
                  married, the written application shall include written consent
                  of the Participant's spouse witnessed by a Notary Public.
                  Spousal consent shall not be required with respect to
                  withdrawal requests made on or after March 1, 1994.
                  Applications made in a calendar month shall be effective as of
                  the last day of such calendar

                                                                             101


                  month. Any such request must be for whole Shares only and must
                  be for at least ten Shares or the number of whole Unrestricted
                  Shares in the TRASOP Account, whichever is less.

            (ii)  Certificates for Unrestricted Shares requested in accordance
                  with the preceding paragraph B(a) shall be delivered, or a
                  cash distribution in respect of such Unrestricted Shares if
                  elected by the Participant pursuant to Section 13.04D below
                  shall be made, to the Participant as soon as practicable after
                  the effective date of the application.

            (iii) Any Unrestricted Share which shall become distributable by
                  reason of any provision of this Plan other than clause A.(i)
                  above (including, without limitation, provision for
                  distribution upon the death, disability or termination of
                  employment of the Participant) shall be distributed in
                  accordance with such provision.

     (c)    In the case of death of a Participant, distributions in respect of
Shares allocated to the Participant's TRASOP Account shall be made to the
Participant's Beneficiary. In the case of disability or termination of
employment with the Company or an Affiliate of a Participant, distributions in
respect of Shares allocated to the Participant's TRASOP Account shall be made to
the Participant.

     All distributions under the TRASOP will begin, subject to Section 7.08 and
Subsection 13.04.F, not later than the 60th day after the close of the Plan Year
in which the latest of the following events occurs: (1) the Participant attains
age 65, (2) the 10th anniversary of the year in which the Participant commenced
participation in TRASOP, or (3)

                                                                             102


the Participant becomes disabled, dies or terminates employment with the Company
or an Affiliate.

     (d)    All distributions from a Participant's TRASOP Account shall be made
in Shares; provided, however, that a Participant or Beneficiary shall have the
right to elect, on a form furnished by and submitted to CECONY, to receive a
distribution, other than a distribution upon termination of TRASOP, in cash.
Except in the case of a final distribution from a Participant's TRASOP Account
and a distribution of the Participant's entire TRASOP Account balance after such
time as all Shares in a Participant's TRASOP Account have become Unrestricted
Shares, all distributions from such TRASOP Account shall be made in respect of
whole Shares only, and any fractional Share which is otherwise distributable
shall be retained in such TRASOP Account until it can be combined, in whole or
in part, with another fractional Share which shall subsequently become
distributable, so as to make up a whole Share. In the case of a final
distribution from a Participant's TRASOP Account (except a distribution upon
termination of the TRASOP) or in the case of a distribution of the Participant's
entire TRASOP Account balance after such time as all of the Shares in the
Participant's TRASOP Account have become Unrestricted Shares, such distribution
shall be made in respect of the number of whole Shares then remaining in the
Participant's TRASOP Account, together with a cash payment in respect of any
fractional Share based on the closing price of a Share as reported on the New
York Stock Exchange consolidated tape on the last trading day of the month
immediately preceding the month in which such final distribution is made. The
Trustee, in each such case, shall purchase such fractional Share from the
Participant at a price equal to the cash payment to be made to the Participant.
Whenever the Trustee requires funds for the purchase of fractional Shares, such
funds shall be drawn from

                                                                             103


the accumulated income of the TRSOP Trust Fund, if any, and otherwise shall be
advanced by CECONY upon the Trustee's request, subject to reimbursement from
future income of the TRASOP Trust. All fractional Shares so purchased by the
Trustee shall be allocated to the TRASOP Accounts of the remaining Participants
at such intervals as shall be determined by the Plan Administrator, but no later
than the end of the next succeeding Plan Year. The Trustee shall sell any Shares
in respect of which a cash distribution is to be made. The Trustee may make such
sales on any securities exchange where Shares are traded, in the
over-the-counter market, or in negotiated transactions. Such sales may be on
such terms as to price, delivery and otherwise as the Trustee may determine to
be in the best interests of the Participants. The Trustee shall complete such
sales as soon as practical under the circumstances having due regard for any
applicable requirements of law affecting the timing or manner of such sales. All
brokerage commissions and other direct selling expenses incurred by the Trustee
in the sale of Shares under this Subsection 13.04D shall be paid as provided in
Section 10.05.

     (e)    Upon any termination of TRASOP pursuant to Section 11.02, the Trust
shall continue until all Shares which have been allocated to Participants'
TRASOP Accounts have been distributed to the Participants, unless the Board
directs an earlier termination of the TRASOP Trust Fund. Upon the final
distribution of Shares, or at such earlier time as the Board shall have fixed
for the termination of the TRASOP Trust Fund, the Plan Administrator shall
direct the Trustee to allocate to the Participants any Shares then held by the
Trustee and not yet allocated, and the Trustee shall distribute to the
Participants any whole Shares which have been allocated to their TRASOP Accounts
but which have not been distributed, shall sell all fractional Shares and
distribute the proceeds to the respective

                                                                             104


Participants entitled to such fractional Shares, shall liquidate any remaining
assets (other than Shares) held by the TRASOP Trust Fund, and shall apply the
proceeds of such liquidation and any remaining funds held by the Trustee, the
disposition of which is not otherwise provided for, to a distribution to all
Participants then receiving a final distribution of Shares, in proportion to the
whole and fractional Shares to which each is entitled; and the TRASOP Trust Fund
shall thereupon terminate.

     (f)    Notwithstanding any other provision of this Plan, unless a
Participant otherwise elects in writing on a form furnished by CECONY:

     A.     Distribution of a Participant's TRASOP Account balance will commence
            not later than one

       (1)  year after the close of the Plan Year (1) in which the Participant
            terminates employment with the Company or an Affiliate by reason of
            Retirement upon or after attainment of Normal Retirement Age, death,
            or disability, or

       (2)  which is the fifth Plan Year following the Plan Year in which the
            Participant terminates employment for any other reason, and the
            Participant is not reemployed before such Plan Year.

     B.     Distribution of the Participant's TRASOP Account balance will be in
            five (5) annual distributions as promptly as practicable after the
            end of each Plan Year; provided, however, that a TRASOP Account
            balance that equals $5,000 or less shall be distributed in a single
            distribution as soon as practicable, but not later than 60 days
            after the close of the Plan Year in which the Participant's
            termination of employment occurs. Each such annual distribution
            shall be in respect of the number of Shares, rounded down to the

                                                                             105


            nearest number of whole Shares, which most closely approximates the
            entire balance in the Participant's TRASOP Account as of December 31
            of the previous year divided by the number of annual distributions
            remaining to be made under this subsection, except that the fifth
            such distribution shall be respect of the entire balance in the
            Participant's TRASOP Account as of the preceding December 31. Each
            such annual distribution shall be taken pro rata from all
            contribution years in Participant's TRASOP Account.

     C.     A Participant whose employment with the Company or an Affiliate is
            terminated by reason of Retirement, disability or any other reason
            (other than death) may elect in such a manner and on such conditions
            as may be prescribed by CECONY to have his TRASOP Account balance
            distributed in one of the following forms:

            (i)   a single lump sum distribution as soon as practicable, but not
                  later than 60 days after the end of the Calendar Year in which
                  the Participant's termination of employment occurs; or

            (ii)  a distribution deferred until the last day of a calendar month
                  not later than the calendar month in which the Participant
                  attains age 70, as designated by the Participant, in which
                  event the distribution of the Participant's TRASOP Account
                  balance as of the last day of the calendar month so designated
                  by the Participant shall be made in a single lump sum as soon
                  as practicable after such calendar month.

     13.00  DIVERSIFICATION OF TRASOP ACCOUNTS

     (a)    DEFINITIONS: The following terms shall have the following meanings
for purposes of this Section 13.05:

                                                                             106


            (i)   Qualified Participant shall mean a Participant who has a
                  TRASOP Account and has attained at least age 55 and completed
                  at least 10 years of participation in TRASOP.

            (ii)  Qualified Election Period shall mean the first ninety (90)
                  days following the end of each Plan Year.

            (iii) Eligible Shares shall mean Shares added to a Participant's
                  TRASOP Account after December 31, 1986.

            (iv)  Diversifiable Amount shall, with respect to any Qualified
                  Election Period, mean twenty-five percent (25%) of the number
                  of Eligible Shares in the Participant's TRASOP Account as of
                  the end of the preceding Plan Year. However, if the
                  Diversifiable Amount for any Qualified Election Period shall
                  have a value which may be deemed de minimis under regulations
                  issued by the Secretary of the United States Department of the
                  Treasury, then there shall be no Diversifiable Amount
                  available for such Qualified Election Period.

     (b)    ELIGIBILITY FOR DIVERSIFICATION: Each Qualified Participant shall
have the right to elect to diversify, by means of a distribution of whole
Eligible Shares only, all or some portion of the Diversifiable Amount in his
TRASOP Account during each of the six (6) consecutive Qualified Election Periods
following the Plan Year in which such Participant first became a Qualified
Participant, provided, however, that, notwithstanding subsection 13.05.A.(d),
the Diversifiable Amount in the sixth Qualified Election Period for each
Qualified Participant shall be fifty percent (50%) of the number of Eligible
Shares in his TRASOP Account as to the end of the preceding Plan Year. A
distribution pursuant to this

                                                                             107


Article 13.05 must be a minimum of ten (10) Shares, or all Whole Shares
comprising the Diversifiable Amount for such Qualified Election Period if less
than 10. Each Qualified Participant who desires to elect diversification under
this Section shall, during the Qualified Election Period, complete and execute a
diversification election and consent form provided by CECONY. Such election may
be revoked or modified or a new election may be made in its stead within the
Qualified Election Period, upon the expiration of which the diversification
election shall be irrevocable.

     (c)    DIVERSIFICATION PROCEDURE

            (i)   The TRASOP shall, within the 90 day period following each
                  Qualified Election Period, distribute to each Qualified
                  Participant who has elected to diversify under this Section,
                  the number of whole Eligible Shares which most closely
                  approximates, but does not exceed, the number of Eligible
                  Shares duly elected to be diversified by each such Qualified
                  Participant. Failure by a Qualified Participant to provide
                  required consents to distribution of any Diversifiable Amount,
                  shall relieve the TRASOP of all obligation to make any such
                  distribution.

            (ii)  To the extent a Qualified Participant has Eligible Shares
                  which are Unrestricted Shares in his TRASOP Account, such
                  Unrestricted Shares shall be distributed pursuant to this
                  Section 13.05. Only upon exhaustion of all such Unrestricted
                  Shares may additional Eligible Shares then be distributed
                  hereunder.

                                                                             108


                                   ARTICLE XIV

                          EMPLOYEE STOCK OWNERSHIP PLAN

     14.01  PURPOSE - SEPARATE ENTITY

     (a)    Effective as of the ESOP Effective Date, the Company established the
Consolidated Edison Employee Stock Ownership Plan ("ESOP") as a portion of,
included within and separate from the Thrift Plan. The ESOP affords special
rights and has specific requirements which must be satisfied that are distinct
from the Thrift Plan, such as the right of an ESOP Participant to: (1) vote his
or her allocated Shares; (2) request his or her distribution be in the form of
Shares; (3) diversify his or her ESOP Account; (4) elect to take dividends in
cash or have dividends reinvested; and, (5) be 100% fully invested immediately
in those Shares purchased by reinvested dividends. Each of these distinct ESOP
rights and requirements is set forth in the Thrift Plan and obligations in the
Thrift Plan such as those requirements regarding eligibility to participate,
vesting, distributions, in-service distributions, operational, administrative
and fiduciary requirements continue to apply to the ESOP and are deemed
incorporated into and so are not repeated in this Article XIV. The ESOP is
intended to be an employee stock ownership plan within the meaning of Code
Section 4975(e)(7). The ESOP is intended to give ESOP Participants an equity
interest in CEI and encourage ESOP Participants to remain in the employ of CEI.

     (b)    Effective as of the ESOP Effective Date, the part of a Participant's
Employer Contributions Subaccount invested in the Company Stock Fund in the
Thrift Plan was transferred to the ESOP and ESOP Trust Fund and established and
included into the Participant's ESOP Account.

     (c)    Participants' ESOP Accounts will be held in the ESOP Trust Fund and

                                                                             109


administered separately, although they shall be held as part of the same Trust
Fund. Participants are permitted to transfer assets to and from their ESOP
Accounts to their Thrift Plan Accounts within the ESOP Trust Fund and the Trust
Fund.

     14.02  SPECIAL DEFINITIONS FOR ESOP

     (a)    The following terms shall have the following meanings for purposes
of the ESOP:

     (i)    ESOP ACCOUNT means the account into which is credited a
            Participant's Employer Contributions' invested in the Company Stock
            Fund and dividends paid on these Shares and comprising the following
            Subaccounts:

       (1)  the Participant's TRANSFERRED ESOP SUBACCOUNT which is the
            Participant's Company Stock Fund that was transferred from the
            Thrift Plan to the ESOP as of the ESOP Effective Date;

       (2)  a Participant's DIVIDEND SUBACCOUNT which, for a Participant who is
            credited with less than three Years of Service, consists solely of
            Shares purchased with reinvested dividends after the ESOP Effective
            Date and are 100% fully vested at all times; and

       (3)  a Participant's ESOP SUBACCOUNT which is the account into which is
            credited a Participant's Employer Contributions contributed to the
            ESOP after the ESOP Effective Date.

       (4)  Once a Participant is credited with at least three Years of Vesting
            Service, his or her Dividend Subaccount will be merged into his or
            her ESOP Subaccount. After the ESOP Effective Date, a Participant's
            ESOP Subaccount will include any Employer Contributions invested in
            the other Investment Funds to the extent such amounts were ever at
            any time invested in the ESOP after the ESOP Effective Date.

                                                                             110


     (ii)   ESOP EFFECTIVE DATE means May 8, 2002.

     (iii)  ESOP PARTICIPANT means a Participant in the Thrift Plan who has
            elected to invest some or all of his or her Employer Contributions
            in the Company Stock Fund.

     (iv)   DIVERSIFIABLE ESOP AMOUNT, with respect to any Qualified ESOP
            Election Period, means 25% of the number of Shares in the
            Participant's ESOP Account as of the end of the preceding Plan Year.
            However, if the Diversifiable ESOP Amount for any Qualified ESOP
            Election Period has a value which may be deemed de minimis under
            regulations issued by the Secretary of the United States Department
            of the Treasury, then there will be no Diversifiable ESOP Amount
            available for such Qualified ESOP Election Period.

     (v)    QUALIFIED ESOP PARTICIPANT shall mean an ESOP Participant who has an
            ESOP Account, attained at least age 55 and completed at least 10
            years of participation in the ESOP. Years of participation in the
            Thrift Plan will be taken into account in determining whether a
            Qualified ESOP Participant has completed 10 years of participation.

     (vi)   QUALIFIED ESOP ELECTION PERIOD shall mean the first 90 days
            following the end of each Plan Year.

     14.03  PARTICIPATION IN ESOP

     Each Participant in the Thrift Plan who elects to have his or her Employer
Contributions invested in the Company Stock Fund will automatically become an
ESOP Participant in the ESOP. Each ESOP Participant will have his or her ESOP
Account held in the ESOP Trust Fund.

     14.04  EMPLOYER CONTRIBUTIONS

                                                                             111


     Only Employer Contributions and dividends issued on Shares held in the ESOP
Trust Fund will be contributed to the ESOP.

     14.05  PURCHASE OF SHARES PURCHASES FOR ESOP TRUST FUND. The Trustee
shall regularly purchase Shares for the ESOP Trust Fund in accordance with a
non-discretionary purchasing program. Such purchases may be made on any
securities exchange where Shares are traded, in the over-the-counter market, or
in negotiated transactions, and may be on such terms as to price, delivery and
otherwise as the Trustee may determine to be in the best interests of the ESOP
Participants. Interest and other income received on assets held in the ESOP
Trust Fund shall be reinvested in the ESOP Trust Fund. All funds to be invested
shall be invested by the Trustee in one or more transactions promptly after
receipt by the Trustee, subject to any applicable requirement of law affecting
the timing or manner of such transactions. All brokerage commissions and other
direct expenses incurred by the Trustee in the purchase of sale of Shares under
the ESOP will be borne by the ESOP Account investing and/or trading in Shares.

     (b)    UNITS. The interests of an ESOP Participant in his or her ESOP
Account shall be measures in Units, the number and value of which shall be
determined daily.

                                                                             112


     14.06  DIVIDENDS

     Beginning on and after the ESOP Effective Date, and for all Plan Years
thereafter, dividends received by the Trustee with respect to Shares allocated
to the ESOP Accounts, in accordance with the election of each ESOP Participant,
will be either paid in cash to the ESOP Participant as soon as practicable
following the declaration date but in any case not later than 90 days after the
close of the Plan Year in which the dividends are paid or applied by the Trustee
for the purchase of additional Shares.

     An ESOP Participant will be given a reasonable opportunity before a
dividend is paid or distributed to make the election. The ESOP Participant will
have a reasonable opportunity to change a dividend election at least annually.
If there is a change in the ESOP governing the manner in which the dividends are
paid or distributed to ESOP Participants, each ESOP Participant will be given a
reasonable opportunity to make an election under the new ESOP terms prior to the
date on which the first dividend subject to the new ESOP terms is paid or
distributed. An ESOP Participant who fails to make an election as to whether to
receive his or her dividend in cash or have such dividend reinvested will be
treated as if he or she elected to have his or her dividend reinvested until
such time that he or she makes an affirmation election for a distribution of the
dividend. If dividends are reinvested and applied to the purchase of additional
Shares, such purchases shall be made promptly after the receipt of each such
dividend. The Trustee shall purchase, in one or more transactions, the maximum
number of whole Shares obtainable at then prevailing prices, including brokerage
commissions and other reasonable expenses incurred in connection with such
purchases. Such purchases may be made on any securities exchange where Shares
are traded, in the over-the-counter market, or in negotiated transactions, and
may be on such terms as to price, delivery and otherwise as the Trustee may
determine to be in the best interest of the ESOP

                                                                             113


Participants. The Trustee shall complete such purchases as soon as practical
after receipt of such dividends, having due regard for any applicable
requirements of law affecting the timing or manner of such purchases. The
additional Shares so purchased shall be allocated among the respective ESOP
Accounts of the Participants in proportion to the number of Shares in each ESOP
Account at the record date for the payment of the dividend so applied. Such
allocation shall be made as promptly as practicable but for purposes of
determining the time at which such additional Shares shall become distributable,
the additional Shares so allocated to each ESOP Participant's ESOP Account shall
be deemed to have been allocated as of the respective allocation dates of the
Shares in such ESOP Account at such record date, in proportion to the number of
such Shares previously allocated as of each such allocation date.

     14.07  VOTING RIGHTS, OPTIONS, RIGHTS, AND WARRANTS

     (a)    Each ESOP Participant is entitled to direct the Trustee as to the
manner in which any Shares or fractional Shares allocated to the ESOP
Participant's ESOP Account are to be voted. Any such Shares or fractional Share
for which the Participant does not give voting directions shall be voted by the
Trustee n the same manner and proportions as all other Shares held by the
Trustee for which voting directions are given by ESOP Participants.

     (b)    In the event that any option, right, or warrant shall be granted or
issued with respect to any Shares allocated to the ESOP Participant's ESOP
Account, each ESOP Participant shall be entitled to direct the Trustee whether
to exercise, sell, or deal with such option, right, or warrant.

     (c)    The Trustee shall keep confidential the ESOP Participant's voting
instructions and instructions as to any option, right or warrant and any
information regarding an ESOP

                                                                             114


Participant's purchases, holdings and sales of Shares. The Plan Administrator
shall be responsible for monitoring the Trustee's performance of its
confidentiality obligations.

     14.08  TRANSFERABILITY

     A Participant may transfer all or any part of his or her existing ESOP
Account once a day to any other Investment Funds in the Trust Fund. Any election
will be made in such manner and on such conditions as may be prescribed by the
Plan Administrator and subject to any restrictions imposed on an Investment Fund
by the Trustee or Investment Manager.

     14.09  DIVERSIFICATION

     (a)    Each Qualified ESOP Participant shall have the right to elect to
diversify, by means of a distribution of whole ESOP Shares only, all or some
portion of the Diversifiable Amount in his ESOP Account during each of the six
consecutive Qualified ESOP Election Periods following the Plan Year in which
such Participant first became a Qualified ESOP Participant. The Diversifiable
ESOP Amount in the sixth Qualified ESOP Election Period for each Qualified ESOP
Participant shall be 50% of the number of Eligible ESOP Shares in his or her
ESOP Account as of the end of the preceding Plan Year. A distribution pursuant
to this must be a minimum of ten Shares, or all Whole Shares comprising the
Diversifiable ESOP Amount for such Qualified ESOP Election Period if less than
10. Each Qualified ESOP Participant who desires to elect diversification under
this Section shall, during the Qualified ESOP Election Period, complete and
execute a diversification election and consent form provided by his or her
Employer. Such election may be revoked or modified or a new election may be made
in its stead within the Qualified ESOP Election Period, upon the expiration of
which the diversification election shall be irrevocable.

     (b)    Diversification Procedure. The ESOP shall, within the 90-day period
following each Qualified ESOP Election Period, distribute to each Qualified ESOP
Participant who has

                                                                             115


elected to diversify under this Section, the number of whole Shares which most
closely approximates, but does not exceed, the number of ESOP Shares duly
elected to be diversified by each such Qualified ESOP Participant. Failure by a
Qualified ESOP Participant to provide required consents to distribution of any
Diversifiable ESOP Amount, shall relieve the ESOP of all obligation to make any
such distribution.

     14.10  DISTRIBUTION OF SHARES

     (a)    An ESOP Participant's ESOP Account shall be available for
distribution to such ESOP Participant promptly after the earlier of the death,
disability or termination of employment of such ESOP Participant.

     (b)    If an ESOP Participant elects a distribution in Shares, certificates
for such Shares shall be delivered to the ESOP Participant as soon as
practicable after the effective date of the application.

     (c) In the case of death of an ESOP Participant, distributions in respect
of Shares allocated to his or her ESOP Account shall be made to his or her
Beneficiary. In the case of disability or termination of employment with the
Company or an Affiliate, distributions in respect of Shares allocated to the
ESOP Participant's ESOP Account shall be made unless the ESOP Participant elects
otherwise.

     (d)    All distributions from an ESOP Participant's ESOP Account shall be
made in Shares; provided, however, that an ESOP Participant or Beneficiary shall
have the right to elect, on a form furnished by and submitted to his or her
Employer, to receive a distribution, other than a distribution upon termination
of the ESOP, in cash. Except in the case of a final distribution from an ESOP
Participant's ESOP Account and a distribution of the entire ESOP Account
balance, all distributions from such ESOP Account made in Shares shall be made
in respect of whole Shares only, and any fractional Share which is otherwise
distributable shall

                                                                             116


be retained in such ESOP Account until it can be combined, in whole or in part,
with another fractional Share which shall subsequently become distributable, so
as to make up a whole Share. A final distribution from an ESOP Account (except a
distribution upon termination of the ESOP) shall be made in respect of the
number of whole Shares then remaining in the ESOP Account, together with a cash
payment in respect of any fractional Share based on the closing price of a Share
as reported on the New York Stock Exchange consolidated tape on the last trading
day of the month immediately preceding the month in which such final
distribution is made. The Trustee, in each such case, shall purchase such
fractional Share from the ESOP Participant at a price equal to the cash payment
to be made to the ESOP Participant.

     (e)    Whenever the Trustee requires funds for the purchase of fractional
Shares, such funds shall be drawn from the accumulated income of the ESOP Trust
Fund, if any, and otherwise shall be advanced by the Employer upon the Trustee's
request, subject to reimbursement from future income of the ESOP Trust Fund. All
fractional Shares so purchased by the Trustee shall be allocated to the ESOP
Accounts of the remaining Participants at such intervals as shall be determined
by the Plan Administrator, but no later than the end of the next succeeding Plan
Year. The Trustee shall sell any Shares in respect of which a cash distribution
is to be made. The Trustee may make such sales on any securities exchange where
Shares are traded, in the over-the-counter market, or in negotiated
transactions. Such sales may be on such terms as to price, delivery and
otherwise as the Trustee may determine to be in the best interests of the ESOP
Participants. The Trustee shall complete such sales as soon as practical under
the circumstances having due regard for any applicable requirements of law
affecting the timing or manner of such sales.

                                                                             117


     (f)    Upon any termination of the ESOP, the ESOP Trust Fund shall continue
until all Shares which have been allocated to ESOP Participants' ESOP Accounts
have been distributed to the ESOP Participants, unless the Board directs an
earlier termination of the ESOP Trust Fund. Upon the final distribution of
Shares, or at such earlier time as the Board shall have fixed for the
termination of the ESOP Trust Fund, the Plan Administrator shall direct the
Trustee to allocate to the ESOP Participants any Shares then held by the Trustee
and not yet allocated, and the Trustee shall distribute to the ESOP Participants
any whole Shares which have been allocated to their ESOP Accounts but which have
not been distributed, shall sell all fractional Shares and distribute the
proceeds to the respective ESOP Participants entitled to such fractional Shares,
shall liquidate any remaining assets (other than Shares) held by the ESOP Trust
Fund, and shall apply the proceeds of such liquidation and any remaining funds
held by the Trustee, the disposition of which is not otherwise provided for, to
a distribution to all ESOP Participants then receiving a final distribution of
Shares, in proportion to the whole and fractional Shares to which each is
entitled; and the ESOP Trust Fund shall thereupon terminate.

                                                                             118


                                   APPENDIX A

                             PARTICIPATING EMPLOYERS

A.   LIST OF PARTICIPATING EMPLOYERS

     The following list sets forth:

     (i)    the Participating Employers,

     (ii)   the effective date of each Employer's participation, and

     (iii)  the designation of those employees who will become Participants or
            continue their participation in the Plan.



                                      EFFECTIVE DATE OF
NAME OF COMPANY                       PARTICIPATION          ELIGIBLE EMPLOYEES
                                                       
Consolidated Edison                   May 1, 1996            All otherwise Eligible Employees.
  Development, Inc.

Consolidated Edison                   May 1, 1997            All otherwise Eligible Employees.
  Solutions, Inc.

Consolidated Edison                   February 1, 1999       All otherwise Eligible Employees.
  Communications, Inc.

Consolidated Edison Energy,           March 1, 1998          All otherwise Eligible Employees.
  Inc.

Orange and Rockland Utilities,        January 1, 2001        All otherwise Eligible Employees
  Inc.

Consolidated Edison Energy            July 18, 1999          Employees working at the Western Massachusetts
  Massachusetts, Inc.                                        Electric Cogeneration Facility.

CED Operating Company,                June 1, 2000           Employees working at the Lakewood Cogeneration
  L.P.                                                       Facility


                                                                             119


                                TABLE OF CONTENTS



                                                                               PAGE
                                                                               ----
                                                                              
ARTICLE I DEFINITIONS.............................................................5

    1.01     Account Balance......................................................5
    1.02     Actual Deferral Percentage...........................................5
    1.03     Affiliate............................................................6
    1.04     After-Tax Contribution...............................................6
    1.05     After-Tax Contributions Subaccount...................................7
    1.06     Annual Dollar Limit..................................................7
    1.07     Annuity Starting Date................................................7
    1.08     Average Contribution Percentage......................................7
    1.09     Average Actual Deferral Percentage...................................7
    1.10     Beneficiary..........................................................8
    1.11     Board................................................................8
    1.12     Break in Service.....................................................8
    1.13     CECONY...............................................................8
    1.14     CECONY Management Employee...........................................8
    1.15     CECONY Management Participant........................................8
    1.16     CECONY Management Plan...............................................9
    1.17     CECONY Participant...................................................9
    1.18     CECONY Weekly Employee...............................................9
    1.19     CECONY Weekly Participant............................................9
    1.20     CECONY Weekly Plan...................................................9
    1.21     CEI..................................................................9
    1.22     CEI Affiliate or CEI Affiliates......................................9
    1.23     CEI Employee.........................................................9
    1.24     CEI Participant......................................................9
    1.25     Code.................................................................9
    1.26     Company.............................................................10
    1.27     Company Stock Fund..................................................10
    1.28     Compensation........................................................10
    1.29     Contribution Percentage.............................................11
    1.30     Cost-of-Living Adjustment...........................................12
    1.31     Disability..........................................................12
    1.32     Earnings............................................................12
    1.33     Eligible Employee...................................................12
    1.34     Employee............................................................12
    1.35     Employer............................................................13
    1.36     Employer Contribution...............................................13
    1.37     Employer Contributions Subaccount...................................13
    1.38     ERISA...............................................................13
    1.39     ESOP................................................................13
    1.40     ESOP Effective Date.................................................13
    1.41     ESOP Trust Fund.....................................................13


                                                                             (i)


                                                                          
    1.42     Excess Aggregate Contributions......................................13
    1.43     Excess Contributions................................................14
    1.44     Excess Deferral Percentage..........................................14
    1.45     Excess Pre-Tax Contributions........................................15
    1.46     Highly Compensated Employee.........................................15
    1.47     Hour of Service.....................................................15
    1.48     Investment Fund.....................................................16
    1.49     Investment Manager..................................................17
    1.50     Leased Employee.....................................................17
    1.51     Loan Reserve........................................................17
    1.52     Local 1-2 Employee..................................................17
    1.53     Local 3 Employee....................................................17
    1.54     Named Fiduciaries...................................................17
    1.55     Non-Highly Compensated Management Employee..........................17
    1.56     Non-Participating Contribution......................................17
    1.57     O&R.................................................................17
    1.58     O&R Employee........................................................18
    1.59     O&R Hourly Employee.................................................18
    1.60     O&R Hourly Plan.....................................................18
    1.61     O&R Management Employee.............................................18
    1.62     O&R Management Plan.................................................18
    1.63     O&R Participant.....................................................18
    1.64     Participant.........................................................18
    1.65     Participating Contribution..........................................18
    1.66     Payroll Period......................................................18
    1.67     Plan................................................................19
    1.68     Plan Administrator..................................................19
    1.69     Plan Year...........................................................19
    1.70     Pre-Tax Contribution................................................19
    1.71     Pre-Tax Contributions Subaccount....................................19
    1.72     Prior Plan or Prior Plans...........................................20
    1.73     Record keeper.......................................................20
    1.74     Retirement..........................................................20
    1.75     Rollover Contributions..............................................20
    1.76     Rollover Contributions Subaccount...................................20
    1.77     Section 125 Contributions...........................................20
    1.78     Section 132 Contributions...........................................21
    1.79     Shares..............................................................21
    1.80     Statutory Compensation..............................................21
    1.81     Top Heavy Group.....................................................21
    1.82     Top-Heavy Plan......................................................22
    1.83     Transferred Employer and Employee PAYSOP Contributions..............22
    1.84     TRASOP..............................................................22
    1.85     TRASOP Account......................................................22
    1.86     TRASOP Trust Fund...................................................22
    1.87     Trust Fund..........................................................22

    


                                                                              ii


                                                                              
    1.88     Trustee.............................................................22
    1.89     Vested Portion......................................................22
    1.90     Year of Service.....................................................23

ARTICLE II ELIGIBILITY AND PARTICIPATION.........................................24

    2.01     Eligibility.........................................................24
    2.02     Participation.......................................................24
    2.03     Reemployment of Former Employees and Former Participants............26
    2.04     Transferred Participants............................................26
    2.05     Termination of Participation........................................26
    2.06     Participation in ESOP...............................................26

ARTICLE III CONTRIBUTIONS........................................................27

    3.01     Contribution Election...............................................27
    3.02     Pre-Tax Contribution Dollar Limitation and Re-characterization......29
    3.03     Return of Excess Pre-Tax Contributions..............................30
    3.04     Excess Deferrals to Other Plans.....................................30
    3.05     Participating Contributions Eligible for Employer Contributions.....31
    3.06     Rollover Contributions..............................................35
    3.07     Changes in Contributions............................................36
    3.08     Payment To Trust....................................................37
    3.09     No Contributions to TRASOP..........................................37
    3.10     Catch-Up Contributions..............................................37
    3.11     Employer Contributions to ESOP......................................38

ARTICLE IV INVESTMENT ELECTIONS - TIMING AND FREQUENCY...........................39

    4.01     Employer Contributions Election.....................................39
    4.02     Participant Pre-Tax Contributions, After-Tax Contributions
             and Rollover Contributions..........................................39
    4.03     Change of Election..................................................39
    4.04     Certification to Company............................................40
    4.05     Forfeitures.........................................................40

ARTICLE V THE TRUST FUND - INVESTMENTS...........................................41

    5.01     Trust Agreement.....................................................41
    5.02     Investment of Trust Fund............................................41
    5.03     Company Stock Fund..................................................42
    5.04     Accounts and Subaccounts............................................44
    5.05     Statements of Account...............................................44
    5.06     Responsibility for Investment.......................................45

ARTICLE VI VESTING...............................................................46

    6.01     Participant Contributions...........................................46
    6.02     Employer Contributions..............................................46
    6.03     Special Vesting Rules...............................................47



                                                                             iii


                                                                              
ARTICLE VII DISTRIBUTIONS, WITHDRAWALS AND FORFEITURES...........................49

    7.01     Voluntary Termination or Termination by the Company - Forfeitures...49
    7.02     Death...............................................................50
    7.03     Withdrawals.........................................................50
    7.04     Hardship Withdrawals................................................56
    7.05     Distribution from Company Stock Fund................................59
    7.06     Leaves of Absence...................................................59
    7.07     Age 70 1/2Required Distribution.....................................60
    7.08     Form and Timing of Distributions....................................61
    7.09     Proof of Death and Right of Beneficiary or Other Person.............63
    7.10     Distribution Limitation.............................................63
    7.11     Direct Rollover of Certain Distributions............................63

ARTICLE VIII NON-DISCRIMINATION AND LIMITATION...................................66

    8.01     Actual Deferral Percentage Test.....................................66
    8.02     Actual Contribution Percentage Test.................................68
    8.03     Separate Non-Discrimination Testing.................................70
    8.04     Maximum Annual Additions............................................70

ARTICLE IX LOANS.................................................................74

    9.01     Loans Permitted.....................................................74
    9.02     Amount of Loans.....................................................74
    9.03     Source of Loans.....................................................74
    9.04     Interest Rate.......................................................75
    9.05     Repayment...........................................................76
    9.06     Multiple Loans......................................................77
    9.07     Pledge..............................................................77
    9.08     Loan Reserve........................................................78
    9.09     Minimum Account Balance.............................................78
    9.10     Other Terms.........................................................78

ARTICLE X ADMINISTRATION OF THE PLAN, ESOP AND TRASOP............................79

    10.01    Named Fiduciaries and Plan Administrator of Plan ESOP and
             TRASOP..............................................................79
    10.02    Authority of Plan Administrator.....................................79
    10.03    Reliance on Reports.................................................80
    10.04    Delegation of Authority.............................................80
    10.05    Administration Expenses.............................................81
    10.06    Fiduciary Insurance.................................................82
    10.07    Claim Review........................................................82
    10.08    Appointment of Trustee..............................................83
    10.09    Limitation of Liability.............................................83

ARTICLE XI MISCELLANEOUS.........................................................85

    11.01    Exclusive Benefit - Amendments......................................85
    11.02    Termination - Sale of Assets of Subsidiary..........................85
    11.03    Beneficiaries.......................................................87



                                                                              iv


                                                                             
    11.04    Assignment of Benefits..............................................88
    11.05    Merger..............................................................90
    11.06    Conditions of Employment Not Affected by Plan.......................90
    11.07    Facility of Payment.................................................90
    11.08    Information.........................................................91
    11.09    Additional Participating Employers..................................91
    11.10    IRS Determination...................................................92
    11.11    Mistaken Contributions..............................................93
    11.12    Prevention of Escheat...............................................93
    11.13    Construction........................................................93

ARTICLE XII TOP-HEAVY PROVISIONS.................................................95

    12.01    Application of Top-Heavy Provisions.................................95
    12.02    Minimum Benefit for Top-Heavy Year..................................95
    12.03    Minimum Benefits....................................................96
    12.04    Aggregation Groups..................................................96
    12.05    Special Benefit Limits..............................................97
    12.06    Special Distribution Rule...........................................97

ARTICLE XIII TAX REDUCTION ACT STOCK OWNERSHIP PLAN..............................98

    13.01    Purpose - Separate Entity...........................................98
    13.02    TRASOP Accounts - Application of Dividends..........................99
    13.03    Voting Rights, Options, Rights, and Warrants.......................100
    13.04    Distribution of Shares.............................................101
    13.00    Diversification of TRASOP Accounts.................................106

ARTICLE XIV EMPLOYEE STOCK OWNERSHIP PLAN.......................................109

    14.01    Purpose - Separate Entity..........................................109
    14.02    Special Definitions for ESOP.......................................110
    14.03    Participation in ESOP..............................................111
    14.04    Employer Contributions.............................................111
    14.05    Purchase of Shares.................................................112
    14.06    Dividends..........................................................113
    14.07    Voting Rights, Options, Rights, and Warrants.......................114
    14.08    Transferability....................................................115
    14.09    Diversification....................................................115
    14.10    Distribution of Shares.............................................116



                                                                               v



                                                                    EXHIBIT 12.1

                            CONSOLIDATED EDISON, INC.

                       RATIO OF EARNINGS TO FIXED CHARGES
                                NINE MONTHS ENDED
                             (Thousands of Dollars)



                                                                    SEPTEMBER
                                                                       2002
                                                                   ------------
                                                                
EARNINGS
     Net Income for Common Stock                                   $    527,715
     Preferred Dividends                                                  9,627
     Income Tax                                                         325,902
                                                                   ------------

               Total Earnings Before Federal Income Tax                 863,244

FIXED CHARGES*                                                          333,507
                                                                   ------------
               Total Earnings Before Federal Income Tax
                 and Fixed Charges                                 $  1,196,751
                                                                   ============

     * Fixed Charges

     Interest on Long-Term Debt                                    $    286,499
     Amortization of Debt Discount, Premium and Expense                   9,311
     Interest on Component of Rentals                                    10,445
     Other Interest                                                      27,252
                                                                   ------------

               Total Fixed Charges                                 $    333,507
                                                                   ============

     Ratio of Earnings to Fixed Charges                                    3.59




                            CONSOLIDATED EDISON, INC.

                       RATIO OF EARNINGS TO FIXED CHARGES
                               TWELVE MONTHS ENDED
                             (Thousands of Dollars)



                                                                         SEPTEMBER       DECEMBER
                                                                           2002            2001
                                                                       ------------   -------------
                                                                                
EARNINGS
     Net Income for Common Stock                                       $    652,825   $     682,242
     Preferred Dividends                                                     13,025          13,593
     Income Tax                                                             402,043         442,631
                                                                       ------------   -------------

               Total Earnings Before Federal Income Tax                   1,067,893       1,138,466

FIXED CHARGES*                                                              448,368         457,554
                                                                       ------------   -------------
               Total Earnings Before Federal Income Tax
                 and Fixed Charges                                     $  1,516,261   $   1,596,020
                                                                       ============   =============

     * Fixed Charges

     Interest on Long-Term Debt                                        $    382,073   $     384,422
     Amortization of Debt Discount, Premium and Expense                      12,536          12,526
     Interest on Component of Rentals                                        13,927          18,783
     Other Interest                                                          39,832          41,823
                                                                       ------------   -------------

               Total Fixed Charges                                     $    448,368   $     457,554
                                                                       ============   =============

     Ratio of Earnings to Fixed Charges                                        3.38            3.49


                                                          EXHIBIT 99.1.1


   Certification Required Under Section 906 of the Sarbanes-Oxley Act of 2002


I, Eugene R. McGrath, the Chief Executive Officer of Consolidated Edison, Inc.
(the "Company") certify that the Company's Quarterly Report on Form 10-Q for the
quarterly period ended September 30, 2002, which this statement accompanies,
(the "Form 10-Q") fully complies with the requirements of Section 13(a) or 15(d)
of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)) and that the
information contained in the Form 10-Q fairly presents, in all material
respects, the financial condition and results of operations of the Company.


                                                    /s/ Eugene R. McGrath
                                                    ----------------------------
                                                    Eugene R. McGrath

Dated:     November 13, 2002



                                                                  EXHIBIT 99.1.2

   Certification Required Under Section 906 of the Sarbanes-Oxley Act of 2002


I, Joan S. Freilich, the Chief Financial Officer of Consolidated Edison, Inc.
(the "Company") certify that the Company's Quarterly Report on Form 10-Q for the
quarterly period ended September 30, 2002, which this statement accompanies,
(the "Form 10-Q") fully complies with the requirements of Section 13(a) or 15(d)
of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)) and that the
information contained in the Form 10-Q fairly presents, in all material
respects, the financial condition and results of operations of the Company.


                                                   /s/ Joan S. Freilich
                                                   ---------------------
                                                   Joan S. Freilich

Dated: November 13, 2002



                                                                   EXHIBIT 4.2.1

EXECUTION COPY

================================================================================


                         NEW YORK STATE ENERGY RESEARCH
                            AND DEVELOPMENT AUTHORITY


                                       AND


                              THE BANK OF NEW YORK,
                                   as Trustee

                                   ----------

                       FIRST SUPPLEMENTAL TRUST INDENTURE


                           Dated as of October 1, 2002

                                       to

                                 TRUST INDENTURE


                            Dated as of June 1, 2001

                                   ----------

                                   relating to

               $224,600,000 Facilities Revenue Bonds, Series 2001A
             (Consolidated Edison Company of New York, Inc. Project)


================================================================================



          THIS FIRST SUPPLEMENTAL TRUST INDENTURE, made and dated as of October
1, 2002 (the "Supplemental Indenture") to the TRUST INDENTURE made and dated as
of June 1, 2001 (the "Indenture"), by and between NEW YORK STATE ENERGY RESEARCH
AND DEVELOPMENT AUTHORITY (the "Authority"), a body corporate and politic,
constituting a public benefit corporation, and The Bank of New York, as trustee
(together with any successor trustee appointed in accordance with the terms of
such Indenture, hereinafter referred to as the "Trustee"), a banking corporation
organized and existing under and by virtue of the laws of the State of New York,
with its corporate trust office located in New York, New York,

                          W I T N E S S E T H  T H A T:

          WHEREAS, pursuant to special act of the Legislature of the State of
New York (Title 9 of Article 8 of the Public Authorities Law of New York, as
from time to time amended and supplemented, herein called the "Act"), the
Authority has been established as a body corporate and politic, constituting a
public benefit corporation; and

          WHEREAS, pursuant to the Act, the Authority is empowered to contract
with any power company to participate in the construction of facilities to be
used for the furnishing of electric energy to the extent required by the public
interest in development, health, recreation, safety, conservation of natural
resources and aesthetics; and

          WHEREAS, pursuant to the Act, the Authority has also been empowered to
extend credit and make loans from bond and note proceeds to any person for the
construction, acquisition and installation of, or for the reimbursement to any
person for costs not limited to, any land, works, system, building or other
improvement, and all real and personal properties of any nature or any interest
in any of them which are suitable for or related to the furnishing, generation
or production of energy or the conversion of oil-burning facilities to alternate
fuel; and

          WHEREAS, the Authority is also authorized under the Act to borrow
money and issue its negotiable bonds and notes to provide sufficient monies for
achieving its corporate purposes including the refunding of outstanding
obligations of the Authority; and

          WHEREAS, the Authority is also authorized under the Act to enter into
any contracts and to execute all instruments necessary or convenient for the
exercise of its corporate powers and the fulfillment of its corporate purposes;
and

          WHEREAS, the Authority and Consolidated Edison Company of New York,
Inc. (the "Company") have entered into a Participation Agreement, dated as of
June 1, 2001 (the "Agreement"), providing for the refunding of 7 1/2% Electric
Facilities Revenue Bonds, Series 1991 A (Consolidated Edison Company of New
York, Inc. Project) and 6 3/4% Facilities Revenue Bonds, Series 1992 A
(Consolidated Edison Company of New York, Inc. Project) (collectively, the
"Prior Bonds") of the Authority which were issued to finance the acquisition,
construction and installation of certain additional facilities for the
furnishing of electric energy within the



Company's service area and as part of such participation, that the Authority
issue bonds pursuant to the Act to provide funds to refund the Prior Bonds; and

          WHEREAS, on June 6, 2001, the Authority issued its Facilities Revenue
Bonds, Series 2001A (Consolidated Edison Company of New York, Inc. Project) in
an aggregate principal amount of $224,600,000 (the "Bonds") under and pursuant
to the Indenture for the purpose of paying a portion of the redemption price of
the Prior Bonds; and

          WHEREAS, Section 14.02 of the Indenture provides that the Authority
and the Trustee may, in accordance with the terms thereof, modify, amend or
supplement the Indenture; and

          WHEREAS, the Company has requested that the Indenture and the
Agreement be amended to provide that a Liquidity Facility shall not be required
while Bonds bear interest at a Term Rate for a Calculation Period of greater
than 13 months and to clarify certain terms of the Indenture; and

          WHEREAS, simultaneously with the execution and delivery of this
Supplemental Indenture, the Authority and the Company have executed and
delivered the First Supplemental Participation Agreement, dated as of October 1,
2002, to the Agreement (the "Supplemental Agreement"); and

          WHEREAS, all acts, conditions and things necessary or required by the
Constitution and statutes of the State of New York or otherwise, to exist,
happen, and be performed as prerequisites to the execution of this Supplemental
Indenture, do exist, have happened, and have been performed;

          NOW, THEREFORE, for and in consideration of the premises and of the
mutual covenants and agreements hereinafter set forth, the Authority agrees with
the Trustee and with the respective owners, from time to time, of the Bonds or
any part thereof as follows:

                                   ARTICLE I

                           AUTHORIZATION; DEFINITIONS

          Section 1.01. SUPPLEMENTAL INDENTURE. This Supplemental Indenture is
amendatory of and supplemental to, and is entered into in accordance with
Article XIV of the Indenture; and except as modified, amended and supplemented
by this Supplemental Indenture, the provisions of the Indenture are in all
respects ratified and confirmed and shall remain in full force and effect.

                                       (2)


                                   ARTICLE II

                           AMENDMENTS TO THE INDENTURE

          Section 2.01. AMENDMENT TO SECTION 1.01 OF THE INDENTURE. Clause (f)
of the definition of "Calculation Period" in Section 1.01 is hereby amended to
read in its entirety as follows:

     (f)  during any Term Rate Period, any period of not less than 365 days from
     and including a Business Day to and including any day (established by the
     Authority, at the request of the Company, pursuant to Section 4.01.1) not
     later than the day prior to the Stated Maturity.

          Section 2.02. AMENDMENT TO SECTION 1.01 OF THE INDENTURE. Clauses (g)
and (h) of the definition of "Interest Payment Date" in Section 1.01 are hereby
amended to read in their entirety as follows:

     (g)  during each Term Rate Period, the April 1 or October 1 next succeeding
     the first day of a Calculation Period and each April 1 or October 1
     thereafter; provided, however, that if the April 1 or October 1 next
     succeeding the first day of a Calculation Period occurs less than
     twenty-one (21) days after the first day of such Calculation Period, the
     first Interest Payment Date shall be the second such date following the
     first day of such Calculation Period;

     (h)  the April 1 or October 1 next succeeding a Fixed Rate Conversion Date
     and each April 1 or October 1 thereafter; provided, however, that if the
     April 1 or October 1 next succeeding a Fixed Rate Conversion Date occurs
     less than twenty-one (21) days after such Fixed Rate Conversion Date, the
     first Interest Payment Date shall be the second such date following the
     first day of such Fixed Rate Conversion Date;

          Section 2.03. AMENDMENT TO SECTION 3.01 OF THE INDENTURE. Section 3.01
is hereby amended to add the following subsection at the end of such section:

          10.  Notwithstanding anything in this Indenture to the contrary, if
     Bonds have been in a Term Rate Period and there has been a failure to pay
     the Purchase Price of such Bonds on the Business Day immediately following
     a Calculation Period, such Bonds shall continue, to the extent permitted by
     applicable law, to bear interest at the then-existing Term Rate until such
     Purchase Price has been paid.

          Section 2.04. AMENDMENT TO SECTION 4.01 OF THE INDENTURE. Section 4.01
is hereby amended to read in its entirety as follows:

          1.   At the times specified below, the Bonds, in whole or in part,
     shall cease to bear interest at the Adjustable Rate or the Fixed Rate then
     borne by the Bonds and shall bear interest at such Adjustable Rate as shall
     be specified by the Authority, at the request

                                       (3)


     of the Company, in a written notice delivered at least 30 days prior to the
     proposed effective date of the Change in the Interest Rate Mode to the
     Trustee, the Remarketing Agent, the Registrar and Paying Agent and the
     Company (and to the Auction Agent and the Securities Depository if such
     Change in the Interest Rate Mode is to or from an Auction Rate) in
     substantially the form attached hereto as, or containing substantially the
     information contained in Exhibit A hereto. A Change in the Interest Rate
     Mode may only be effected on a day on which the affected Bonds may be
     redeemed at the option of the Authority. A notice of Change in the Interest
     Rate Mode shall be effective only if it is accompanied by the form of
     opinion that Bond Counsel expects to be able to give on the proposed
     effective date of such Change in the Interest Rate Mode to the effect that
     such Change in the Interest Rate Mode is authorized by this Indenture, is
     permitted under the Act and will not have an adverse effect on the
     exclusion of interest on such Bonds from gross income for federal income
     tax purposes.

          In the case of any Change in the Interest Rate Mode to a Term Rate,
     the notice required by this section shall specify the length of the
     Calculation Period and, unless otherwise specified, such Calculation Period
     shall thereafter apply to the Bonds until a Change in the Interest Rate
     Mode effected pursuant to Section 4.01 or Section 4.02. Notwithstanding the
     foregoing, no Calculation Period shall be established during a Term Rate
     Period unless the Trustee shall receive by 2:00 p.m., New York City time,
     on the first day of such Calculation Period, evidence satisfactory to it
     that the Bonds shall be rated at least "A" by S&P or "A" by Moody's or "A"
     by Fitch or an equivalent rating by any nationally recognized rating agency
     on such date. Any change in the Calculation Period during a Term Rate
     Period shall be deemed an optional conversion pursuant to this Section 4.01
     and may not be made unless all the requirements of a conversion pursuant to
     this Section 4.01 are met.

          2.   The Trustee shall mail, or cause the Registrar and Paying Agent
     to mail, the notice received pursuant to subsection 1 of this Section 4.01
     on or before the third Business Day after receipt thereof to the
     Bondholders.

          3.   A Change in the Interest Rate Mode to an Adjustable Rate shall be
     effective pursuant to Subsection 1 of this Section 4.01 only if

          (A)  with respect to any Change in the Interest Rate Mode from an
Auction Rate or from a Fixed Rate to an Adjustable Rate, the Trustee and the
Auction Agent (if any) shall receive:

                     (i)  a certificate of an Authorized Company Representative
               by no later than the tenth day prior to the effective date of
               such Change in the Interest Rate Mode stating that a written
               agreement between the Company and the Remarketing Agent to
               remarket the Bonds on such effective date at a price of 100% of
               the principal amount thereof has been entered into, which
               agreement (i) may be subject to such reasonable terms and

                                       (4)


               conditions agreed to by the Remarketing Agent which in the
               judgment of the Remarketing Agent reflect the current market
               standards regarding investment banking risk and (ii) must include
               a provision requiring payment by the Remarketing Agent in
               same-day funds for any Bond tendered or deemed tendered; and that
               a Liquidity Facility is in effect or has been obtained by the
               Company with respect to the Bonds and shall be in effect prior to
               such Change in the Interest Rate Mode and thereafter for a period
               of at least 364 days;

                     (ii) by 11:00 a.m. (New York City time) on the second
               Business Day prior to the effective date of such Change in the
               Interest Rate Mode by telecopy or other similar means, a
               certificate in substantially the form attached hereto as, or
               containing substantially the information contained in, EXHIBIT B
               hereto, from the Authority on behalf of the Company (y)
               authorizing the establishment of the new Adjustable Rate and (z)
               confirming that Bond Counsel has advised the Authority that it
               expects to be able to give an opinion on the effective date of
               such Change in the Interest Rate Mode to the effect that such
               Change in the Interest Rate Mode is authorized by this Indenture,
               is permitted under the Act and will not have an adverse effect on
               the exclusion of interest on the affected Bonds from gross income
               for federal income tax purposes; and

               (B)   with respect to any Change in the Interest Rate Mode, the
          Trustee (and the Auction Agent in the case of any Change in the
          Interest Rate Mode to an Auction Rate), shall receive by 4:00 p.m.,
          New York City time, on the effective date of such Change in the
          Interest Rate Mode, a certificate in substantially the form attached
          hereto as, or containing substantially the information contained in,
          EXHIBIT C hereto, from an Authorized Company Representative that all
          of the Bonds tendered or deemed tendered have been purchased at a
          price equal to the principal amount thereof plus premium, if any, plus
          any accrued and unpaid interest with funds provided from the
          remarketing of such Bonds in accordance with the Remarketing
          Agreement, from the proceeds of a Support Facility, or from funds
          deposited with the Trustee or the Registrar and Paying Agent;

               (C)   with respect to any Change in the Interest Rate Mode, the
          Trustee (and the Auction Agent in the case of any Change in the
          Interest Rate Mode to or from an Auction Rate) shall receive, by 9:30
          a.m. (New York City time) on the effective date of such Change in the
          Interest Rate Mode, an Opinion of Bond Counsel to the effect that such
          Change in the Interest Rate Mode is authorized by this Indenture, is
          permitted under the Act and will not have an adverse effect on the
          exclusion of interest on such Bonds from gross income for federal
          income tax purposes;

                                       (5)


               (D)   with respect to any Change in the Interest Rate Mode to an
          Adjustable Rate (other than to an Auction Rate or a Term Rate for a
          Calculation Period of greater than 13 months), the Trustee shall
          receive a Liquidity Facility meeting the requirements of this
          Indenture and the Participation Agreement on or prior to the effective
          date of such Change in the Interest Rate Mode which is, by its terms,
          in effect on or prior to such effective date; and

               (E)   with respect to any Change in the Interest Rate Mode to an
          Adjustable Rate, the Trustee shall receive by 2:00 p.m., New York City
          time, on the effective date of such Change in the Interest Rate Mode,
          evidence satisfactory to it that the Bonds shall be rated at least "A"
          by S&P or "A" by Moody's or "A" by Fitch or an equivalent rating by
          any nationally recognized rating agency on the effective date of such
          Change in the Interest Rate Mode.

               If any of the conditions referred to in (A)(i) or (ii) above is
     not met with respect to any Change in the Interest Rate Mode from an
     Auction Rate, the Auction Rate for the next succeeding Auction Period shall
     be determined pursuant to the Auction Procedures applicable to the Auction
     Rate Bonds. If the condition referred to in (B) above is not met with
     respect to any Change in the Interest Rate Mode from an Auction Rate, the
     Auction Rate for the next succeeding Auction Period shall be equal to the
     Maximum Auction Rate as determined on such Auction Date. If any of the
     conditions referred to in (C) or (D) above is not met with respect to any
     Change in the Interest Rate Mode from an Auction Rate, the Auction Rate for
     the next succeeding Auction Period shall equal the Maximum Auction Rate as
     determined on such Auction Date. If any of the conditions referred to in
     (B), (C) or (D) above is not met with respect to any Change in the Interest
     Rate Mode from a Term Rate or a Fixed Rate, the Bonds shall continue to
     bear interest at the current Term Rate or Fixed Rate, as the case may be,
     and be subject to the provisions of this Indenture applicable thereto while
     the Bonds bear interest at such current Term Rate or Fixed Rate, as the
     case may be. If any of the conditions referred to in (B), (C) or (D) above
     is not met with respect to any Change in the Interest Rate Mode from an
     Adjustable Rate (other than an Auction Rate or a Term Rate), the Bonds
     shall continue to bear interest at the Current Adjustable Rate and be
     subject to the provisions of this Indenture applicable thereto while the
     Bonds bear interest at such Current Adjustable Rate; provided, however,
     that notwithstanding the failure to meet such conditions, the Bonds shall
     remain subject to mandatory tender for purchase on the date that would have
     been the effective date of the new interest rate mode if all of such
     conditions were met on such date. If any of the foregoing conditions for a
     Change in the Interest Rate Mode from a Term Rate or a Fixed Rate is not
     met, the Trustee shall mail, or cause the Registrar and Paying Agent to
     mail to the Authority, the Company and the Holders notice thereof in
     substantially the form attached hereto as, or containing substantially the
     information contained in, EXHIBIT D hereto within 3 Business Days after the
     failure to meet any of such conditions.

                                       (6)


          Section 2.05. AMENDMENT TO SECTION 4.02 OF THE INDENTURE. Section
4.02.3 is hereby amended to read in its entirety as follows:

          1.   A Fixed Rate shall take effect only if

               (A)   with respect to a change to a Fixed Rate from an Auction
     Rate, the Trustee and the Auction Agent shall receive:

               (i)   a certificate of an Authorized Company Representative by no
          later than the tenth day prior to a Fixed Rate Conversion Date stating
          that a written agreement has been entered into by the Company and the
          Remarketing Agent to remarket the Bonds affected on a Fixed Rate
          Conversion Date at a price of not less than 100% of the principal
          amount thereof, which written agreement (i) may be subject to
          reasonable terms and conditions imposed by the Remarketing Agent which
          in the judgment of the Remarketing Agent reflect current market
          standards regarding investment banking risk and (ii) must include a
          provision requiring payment by the Remarketing Agent in same-day funds
          for any Auction Rate Bonds tendered or deemed tendered; and

               (ii)  by 11:00 a.m. (New York City time) on the second Business
          Day prior to a Fixed Rate Conversion Date, by telecopy or other
          similar means, a certificate in substantially the form attached hereto
          as, or containing substantially the information contained in, EXHIBIT
          B hereto, from the Authority (y) authorizing the establishment of a
          Fixed Rate and (z) confirming that Bond Counsel expects to be able to
          give an opinion on a Fixed Rate Conversion Date to the effect that the
          change to a Fixed Rate is authorized by this Indenture, is permitted
          under the Act and will not have an adverse effect on the exclusion of
          interest on the Bonds from gross income for federal income tax
          purposes; and

               (B)   with respect to any change to a Fixed Rate the Trustee (and
     the Auction Agent in the case of any change to a Fixed Rate from an Auction
     Rate) receives on a Fixed Rate Conversion Date:

               (i)   by 9:30 a.m. (New York City time) an Opinion of Bond
          Counsel to the effect that the conversion to a Fixed Rate is
          authorized by this Indenture, is permitted under the Act and will not
          have an adverse effect on the exclusion of interest on such Bonds from
          gross income for federal income tax purposes;

               (ii)  by 4:00 p.m. (New York City time) a certificate in
          substantially the form attached hereto as, or containing substantially
          the information contained in, EXHIBIT C hereto, from an Authorized
          Company Representative that all of the Bonds tendered or deemed
          tendered have been purchased at a price equal to the principal amount
          thereof plus premium, if any, plus any accrued and unpaid interest
          with funds provided from the remarketing of such Bonds in accordance

                                       (7)


          with the Remarketing Agreement, from the proceeds of a Support
          Facility, or from funds deposited with the Trustee or the Registrar
          and Paying Agent; AND

               (iii) by 2:00 p.m. (New York City time) evidence satisfactory to
          it that the Bonds shall be rated at least "A" by S&P or "A" by Moody's
          or "A" by Fitch or an equivalent rating by any nationally recognized
          rating agency on the Fixed Rate Conversion Date.

          If any of the conditions referred to in (A) above is not met with
     respect to any Change in the Interest Rate Mode from an Auction Rate to a
     Fixed Rate, the Auction Rate for the next succeeding Auction Period shall
     be determined pursuant to the Auction Procedures applicable to the Auction
     Rate Bonds. If any of the conditions referred to in (B) above is not met
     with respect to any Change in the Interest Rate Mode from an Auction Rate
     to a Fixed Rate, the Auction Rate for the next succeeding Auction Period
     shall be equal to the Maximum Auction Rate as determined as of such Auction
     Date. If any of the conditions referred to in (B) above is not met with
     respect to any Change in the Interest Rate Mode from a Term Rate to a Fixed
     Rate, the Bonds shall continue to bear interest at the current Term Rate
     and be subject to the provisions of this Indenture applicable thereto while
     the Bonds bear interest at such current Term Rate. If any of the conditions
     referred to in (B) above is not met with respect to any other Change in the
     Interest Rate Mode from an Adjustable Rate (other than an Auction Rate or a
     Term Rate) to a Fixed Rate, the Bonds shall continue to bear interest at
     the Current Adjustable Rate and be subject to the provisions of this
     Indenture applicable thereto while the Bonds bear interest at such Current
     Adjustable Rate; provided, however, that notwithstanding the failure to
     meet such conditions, the Bonds shall remain subject to mandatory tender
     for purchase on the date that would have been the effective date of the
     Fixed Rate if all of such conditions were met on such date. If any of the
     foregoing conditions for a Change in the Interest Rate Mode from a Term
     Rate to a Fixed Rate is not met, the Trustee shall mail, or cause the
     Registrar and Paying Agent to mail to the Authority, the Company and the
     Holders notice thereof in substantially the form attached hereto as, or
     containing substantially the information contained in, EXHIBIT D hereto
     within 3 Business Days after the failure to meet any of such conditions.

          Section 2.06. AMENDMENT TO SECTION 5.01 OF THE INDENTURE. Paragraph
(g) of Section 5.01 is hereby amended to read in its entirety as follows:

     During any Term Rate or Fixed Rate Period, such Bonds shall be subject to
     redemption in whole or in part at any time as follows: after the No-Call
     Period shown below, which shall begin on the first day of the Calculation
     Period applicable to such Bonds or on a Fixed Rate Conversion Date, as the
     case may be, at a redemption price equal, initially, to the principal
     amount thereof, plus a premium equal to the percentage of the principal
     amount to be redeemed shown in the Initial Premium column, plus accrued and
     unpaid interest if paid on a Business Day other than an Interest Payment
     Date. The premium percentage, if any, shall decline by the percentage shown
     in the Reduction in Premium

                                       (8)


     column on each anniversary of the date on which such Bonds are first
     redeemable until the Bonds shall be redeemable without premium.

Calculation Period or Period to Maturity
APPLICABLE TO SUBJECT BONDS



Equal to or        But Less             No Call          Initial       Reduction
Greater Than         Than               Period           Premium      in Premium
- ------------       --------          ------------        --------     ----------
                                                                
   18 years           N/A                 8 Years           1 1/2%          1/2%
   12 years        18 Years               6 Years           1               1/2
    7 Years        12 Years               3 Years           0                 0
    5 Years         7 Years               2 Years           0                 0
    4 Years         5 Years               2 Years           0                 0
    3 Years         4 Years               2 Years           0                 0
    0 Years         3 Years          Not callable


     If upon establishment of a Term Rate Period or a Fixed Rate Period, as the
     case may be, the Remarketing Agent certifies to the Trustee, Bond Counsel
     and the Authority in writing that the foregoing schedule is not consistent
     with then-prevailing market conditions, the Authority at the request of the
     Company may revise the foregoing Initial Premium, Reductions in Premium and
     No-Call Periods without the approval of the Holders to reflect
     then-prevailing market conditions, upon receipt of an opinion of Bond
     Counsel to the effect that any revisions pursuant to this paragraph, either
     by itself or in conjunction with the establishment of a Calculation Period
     or a Fixed Rate, as the case may be, are made in accordance with this
     Indenture, is permitted under the Act and will not adversely affect the
     exclusion of interest on the Bonds from gross income for federal income tax
     purposes.

          Section 2.07. AMENDMENT TO SECTION 6.01 OF THE INDENTURE. The first
paragraph of Section 6.01(1) is hereby amended to read in its entirety as
follows:

     The Company has obtained the Initial Support Facility. Pursuant to the
     Participation Agreement, the Company has agreed not to request that the
     interest rate mode applicable to the Bonds be adjusted to an Adjustable
     Rate or a Fixed Rate unless on the effective date of the applicable Change
     in the Interest Rate Mode the Bonds shall be rated at least "A" by S&P or
     "A" by Moody's or "A" by Fitch or an equivalent rating by any nationally
     recognized rating agency. Such rating of the Bonds may, but is not required
     to, be achieved by obtaining a Support Facility which meets the
     requirements of this Article VI. The Company has further agreed to maintain
     a Liquidity Facility meeting the requirements of the Participation
     Agreement with respect to the Bonds at all times, except with respect to
     Bonds bearing interest at an Auction Rate, a Term Rate for a Calculation
     Period of greater than 13 months or a Fixed Rate. A Liquidity Facility also
     must be in effect on or prior to the effective date of (i) any Change in
     the Interest Rate Mode from an Auction Rate or a Term Rate for a
     Calculation Period of greater than 13 months to another Adjustable Rate
     (other than a Change in the Interest Rate Mode to an Auction

                                       (9)


     Rate or a Term Rate for a Calculation Period of greater than 13 months),
     and (ii) any change in the Interest Rate Mode from a Fixed Rate to an
     Adjustable Rate (other than a Change in the Interest Rate Mode to an
     Auction Rate or a Term Rate for a Calculation Period of greater than 13
     months). The Trustee shall be furnished with a certified copy of any
     Support Facility obtained pursuant to this Section 6.01.

          Section 2.08. AMENDMENT TO SECTION 9.03 OF THE INDENTURE. The first
paragraph of Section 9.03.2 is hereby amended to read in its entirety as
follows:

     Pursuant to Section 4.02(d) of the Participation Agreement, the Company has
     agreed that the Company shall provide funds to the Registrar and Paying
     Agent for deposit in the Bond Purchase Fund and credit to the Company
     Account therein established under the Bond Purchase Trust Agreement to be
     applied to the payment of the Purchase Price of any Bond pursuant to the
     Bond Purchase Trust Agreement to the extent not otherwise provided from the
     sources described in the Bond Purchase Trust Agreement.

          Section 2.09. AMENDMENT OF SECTION 14.02 OF THE INDENTURE. The last
paragraph of Section 14.02 is hereby amended to read in its entirety as follows:

          Notwithstanding anything in this Indenture to the contrary, the
     consent of the Holders of the required amount of Bonds shall be deemed
     given with respect to a Supplemental Indenture if:

               (a)   (i) the Supplemental Indenture takes effect on a date on
          which all of the Bonds that are affected by such Supplemental
          Indenture are subject to mandatory tender for purchase in accordance
          with this Indenture, (ii) any modification or amendment effected
          thereby is consented to in writing by the Remarketing Agent, if any,
          for such Bonds on or prior to such effective date and (iii) the Bonds
          so tendered are purchased;

               (b)   (i) not less than 30 days before the effective date of the
          Supplemental Indenture, the Trustee sends a notice of the proposed
          modification or amendment to the Holders of the Bonds that are
          affected by such Supplemental Indenture and the Holders of such Bonds
          have the right to tender their Bonds for purchase pursuant to Section
          5.03 hereof before such effective date, (ii) the Remarketing Agent, if
          any, for such Bonds consents in writing to the proposed modification
          or amendment on or prior to such effective date and (iii) the Bonds so
          tendered are purchased; or

               (c)   (i) not less than 30 days before the effective date of the
          Supplemental Indenture, the Trustee sends a notice of the proposed
          modification or amendment to the Holders of the Auction Rate Bonds
          that are affected by such Supplemental Indenture and the Auction Rate
          determined for such Auction Rate Bonds at the Auction immediately
          preceding such effective date is a Winning Bid Rate, and (ii) the
          Broker-Dealer(s), if any, for such Auction Rate Bonds consent

                                      (10)


          in writing to the proposed modification or amendment on or prior to
          such effective date; provided, however, that, notwithstanding anything
          to the contrary in this Indenture, any Auction Rate Bonds that are not
          the subject of a specific Hold Order or Bid shall be deemed to be
          subject to a Sell Order at the Auction immediately preceding such
          effective date.

          Section 2.10. AMENDMENT OF SECTION 14.07 OF THE INDENTURE. The second
paragraph of Section 14.07 is hereby amended to read in its entirety as follows:

               Notwithstanding anything in this Indenture to the contrary, the
     consent of the Holders of the required amount of Bonds shall be deemed
     given with respect to any Supplemental Participation Agreement or amendment
     to the Participation Agreement if:

               (a)   (i) the Supplemental Participation Agreement or amendment
          to the Participation Agreement takes effect on a date on which all of
          the Bonds that are affected by such Supplemental Participation
          Agreement or amendment to the Participation Agreement are subject to
          mandatory tender for purchase in accordance with this Indenture, (ii)
          any modification or amendment effected thereby is consented to in
          writing by the Remarketing Agent, if any, for such Bonds on or prior
          to such effective date and (iii) the Bonds so tendered are purchased;

               (b)   (i) not less than 30 days before the effective date of the
          Supplemental Participation Agreement or amendment to the Participation
          Agreement, the Trustee sends a notice of the proposed modification or
          amendment to the Holders of the Bonds that are affected by such
          modification or amendment and the Holders of such Bonds have the right
          to tender their Bonds for purchase pursuant to Section 5.03 hereof
          before such effective date, (ii) the Remarketing Agent, if any, for
          such Bonds consents in writing to the proposed modification or
          amendment on or prior to such effective date and (iii) the Bonds so
          tendered are purchased; or

               (c)   (i) not less than 30 days before the effective date of the
          Supplemental Participation Agreement or amendment to the Participation
          Agreement, the Trustee sends a notice of the proposed modification or
          amendment to the Holders of the Auction Rate Bonds that are affected
          by such Supplemental Participation Agreement or amendment to the
          Participation Agreement and the Auction Rate determined for such
          Auction Rate Bonds at the Auction immediately preceding such effective
          date is a Winning Bid Rate, and (ii) the Broker-Dealer(s), if any, for
          such Auction Rate Bonds consent in writing to the proposed
          modification or amendment on or prior to such effective date;
          provided, however, that, notwithstanding anything to the contrary in
          this Indenture, any Auction Rate Bonds that are not the subject of a
          specific Hold

                                      (11)


          Order or Bid shall be deemed to be subject to a Sell Order at the
          Auction immediately preceding such effective date.

          Section 2.11. CHANGE IN THE INTEREST RATE MODE TO A TERM RATE ON
OCTOBER 10, 2002. Notwithstanding Sections 3.01, 4.01.1, 5.04.3 and 5.04.4 of
the Indenture and subject to the satisfaction of the conditions specified in
Section 4.01.3 of the Indenture, the interest rate mode applicable to the Bonds
shall be changed from a Weekly Rate to a Term Rate of 4.70% effective on October
10, 2002 and the Bonds shall bear interest at such Term Rate during a
Calculation Period commencing on October 10, 2002 and ending on and including
September 30, 2012. If any of the conditions specified in Section 4.01.3 of the
Indenture is not met on October 10, 2002, the Bonds (i) shall continue to bear
interest at a Weekly Rate and be subject to the provisions of the Indenture
while the Bonds bear interest at a Weekly Rate and (ii) notwithstanding Section
4.01.3, shall not be subject to mandatory tender for purchase on such date.

          Notwithstanding Section 5.08 of the Indenture, if the Change in the
Interest Rate Mode to a Term Rate pursuant to the preceding paragraph is
effective on October 10, 2002 in accordance with the Indenture, the Bonds shall
not be subject to mandatory tender for purchase pursuant to Section 5.08 of the
Indenture due to the termination, expiration or substitution of the Initial
Support Facility after such effective date.

                                   ARTICLE III

                                  MISCELLANEOUS

          SECTION 5.01. CONSENT TO SUPPLEMENTAL AGREEMENT. The Trustee hereby
consents to the execution and delivery of the Supplemental Agreement.

          SECTION 5.02. EFFECTIVE DATE; COUNTERPARTS. This Supplemental
Indenture may be simultaneously executed in counterparts. Each such counterpart
so executed shall be deemed to be an original, and all together shall constitute
but one and the same instrument. This Supplemental Indenture shall become
effective upon execution and delivery on October 9, 2002 in accordance with, and
satisfaction of other requirements and conditions of, the Indenture.
Notwithstanding the date of such execution and delivery, for convenience and
purposes of reference this Supplemental Indenture shall be dated as of October
1, 2002 and may be cited and referred to as the "First Supplemental Trust
Indenture dated as of October 1, 2002".

          SECTION 5.03. ACCEPTANCE. The Trustee accepts the trusts created by
the Indenture, as amended and supplemented by this Supplemental Indenture, and
agrees to perform the same upon the terms and conditions in the Indenture, as so
amended and supplemented. The Trustee shall not be responsible in any manner
whatsoever for the due execution of this Supplemental Indenture by the Authority
or for or in respect of the recitals contained herein, all of which are made by
the Authority solely.

                   [Signature Page of this Agreement Follows]

                                      (12)


          IN WITNESS WHEREOF, the Authority has caused this Supplemental
Indenture to be executed by its President and its corporate seal to be hereunto
affixed and attested by its Assistant Secretary, and the Trustee has caused this
Supplemental Indenture to be executed by its duly authorized officer, all as of
the date first above written.

                                           NEW YORK STATE ENERGY RESEARCH
                                              AND DEVELOPMENT AUTHORITY


                                           By
                                             -----------------------------------
                                                President

(SEAL)

Attest:



- ---------------------
 Assistant Secretary

                                           THE BANK OF NEW YORK,
                                                 as Trustee


                                           By
                                             -----------------------------------
                                                Name:  Christopher W. Palermo
                                                Title: Assistant Treasurer


                   [Signature Page of Supplemental Indenture]

                                      (13)



                                                                   EXHIBIT 4.2.2

EXECUTION COPY

================================================================================


                         NEW YORK STATE ENERGY RESEARCH
                            AND DEVELOPMENT AUTHORITY


                                       AND


                  CONSOLIDATED EDISON COMPANY OF NEW YORK, INC.


                                   ----------


                   FIRST SUPPLEMENTAL PARTICIPATION AGREEMENT


                           Dated as of October 1, 2002

                                       to

                             PARTICIPATION AGREEMENT

                            Dated as of June 1, 2001


                                   ----------

                                   relating to

               $224,600,000 Facilities Revenue Bonds, Series 2001A
             (Consolidated Edison Company of New York, Inc. Project)


================================================================================



          THIS FIRST SUPPLEMENTAL PARTICIPATION AGREEMENT, made and dated as of
October 1, 2002 (the "Supplemental Agreement") to the PARTICIPATION AGREEMENT
made and dated as of June 1, 2001, by and between NEW YORK STATE ENERGY RESEARCH
AND DEVELOPMENT AUTHORITY (the "Authority"), a body corporate and politic,
constituting a public benefit corporation, and CONSOLIDATED EDISON COMPANY OF
NEW YORK, INC., a corporation duly organized and existing and qualified to do
business as a public utility under the laws of the State of New York (the
"Company"),

                          W I T N E S S E T H  T H A T:

          WHEREAS, pursuant to special act of the Legislature of the State of
New York (Title 9 of Article 8 of the Public Authorities Law of New York, as
from time to time amended and supplemented, herein called the "Act"), the
Authority has been established as a body corporate and politic, constituting a
public benefit corporation; and

          WHEREAS, pursuant to the Act, the Authority is empowered to contract
with any power company to participate in the construction of facilities to be
used for the furnishing of electric energy to the extent required by the public
interest in development, health, recreation, safety, conservation of natural
resources and aesthetics; and

          WHEREAS, pursuant to the Act, the Authority is also authorized to
extend credit and make loans from bond proceeds to any person for the
construction, acquisition, installation, reconstruction, improvement,
maintenance, equipping, furnishing or leasing of any special energy project (as
defined in the Act) including, but not limited to, facilities for the
distribution of steam or for the reimbursement to any person for costs incurred
in connection with a special energy project completed or not completed at the
time of such credit or loan, which credits or loans may, but need not, be
secured by mortgages, contracts, leases or other instruments, upon such terms
and conditions as the Authority shall determine reasonable in connection with
such credits or loans; and

          WHEREAS, the Authority is also authorized under the Act to borrow
money and issue its negotiable bonds and notes to provide sufficient monies for
achieving its corporate purposes including the refunding of outstanding
obligations of the Authority; and

          WHEREAS, the Authority is also authorized under the Act to enter into
any contracts and to execute all instruments necessary or convenient for the
exercise of its corporate powers and the fulfillment of its corporate purposes;
and

          WHEREAS, the Authority and the Company have entered into the
Participation Agreement, dated as of June 1, 2001 (the "Agreement"), providing
for the refunding of 7 1/2% Electric Facilities Revenue Bonds, Series 1991 A
(Consolidated Edison Company of New York, Inc. Project) and 6 3/4% Facilities
Revenue Bonds, Series 1992 A (Consolidated Edison Company of New York, Inc.
Project) (collectively, the "Prior Bonds") of the Authority which were issued to
finance the acquisition, construction and installation of certain additional
facilities for the furnishing of electric energy within the Company's service
area and as part of such participation,

                                       (1)


that the Authority issue bonds pursuant to the Act to provide funds to refund
the Prior Bonds; and

          WHEREAS, on June 6, 2001, the Authority issued its Facilities Revenue
Bonds, Series 2001A (Consolidated Edison Company of New York, Inc. Project) in
an aggregate principal amount of $224,600,000 (the "Bonds") under and pursuant
to the Trust Indenture dated as of June 1, 2001 (the "Indenture"), between the
Authority and The Bank of New York, as trustee (the "Trustee"), for the purpose
of paying a portion of the redemption price of the Prior Bonds; and

          WHEREAS, Section 8.04 of the Agreement and Section 14.07 of the
Indenture provide that the Authority and the Company may, in accordance with the
terms thereof, modify, amend or supplement the Agreement; and

          WHEREAS, the Company has requested that the Indenture and the
Agreement be amended to provide that a Liquidity Facility shall not be required
while Bonds bear interest at a Term Rate for a Calculation Period of greater
than 13 months and to clarify certain terms of the Indenture; and

          WHEREAS, simultaneously with the execution and delivery of this
Supplemental Agreement, the Authority and the Trustee have executed and
delivered the First Supplemental Trust Indenture, dated as of October 1, 2002,
to the Indenture (the "Supplemental Indenture"); and

          WHEREAS, all acts, conditions and things necessary or required by the
Constitution and statutes of the State of New York or otherwise, to exist,
happen, and be performed as prerequisites to the execution of this Supplemental
Agreement, do exist, have happened, and have been performed;

          NOW, THEREFORE, for and in consideration of the premises and of the
mutual covenants and agreements hereinafter set forth, the Authority agrees with
the Company, with the written consent of the Trustee, as follows:

                                    ARTICLE I

                           AUTHORIZATION; DEFINITIONS

          Section 1.01. SUPPLEMENTAL AGREEMENT. This Supplemental Agreement is
amendatory and supplemental to the Agreement, and is entered into in accordance
with Section 8.04 of the Agreement and Article XIV of the Indenture; and except
as modified, amended and supplemented by this Supplemental Agreement, the
provisions of the Agreement are in all respects ratified and confirmed and shall
remain in full force and effect.

                                       (2)


                                   ARTICLE II

                           AMENDMENTS TO THE AGREEMENT

          SECTION 2.01  AMENDMENT TO SECTION 4.09 OF THE AGREEMENT. Section 4.09
is hereby amended to read in its entirety as follows:

     The Company agrees not to request that the interest rate mode applicable to
     the Bonds be adjusted to an Adjustable Rate or a Fixed Rate unless on the
     effective date of the applicable Change in the Interest Rate Mode the Bonds
     shall be rated at least "A" by S&P or "A" by Moody's or "A" by Fitch or an
     equivalent rating by any nationally recognized rating agency. Such rating
     of the Bonds may, but is not required to, be achieved by obtaining a
     Support Facility which meets the requirements of Article VI of the
     Indenture.

     The Company further agrees that it will maintain a Liquidity Facility
     issued by a financial institution rated not less than "A" by at least one
     nationally recognized rating agency in effect with respect to the Bonds at
     all times, except with respect to Bonds bearing an Auction Rate, a Term
     Rate for a Calculation Period of greater than 13 months or a Fixed Rate.

                                   ARTICLE III

                                  MISCELLANEOUS

          Section 3.01. CONSENT TO SUPPLEMENTAL INDENTURE. The Company hereby
consents to the execution and delivery of the Supplemental Indenture.

          Section 3.02. EFFECTIVE DATE; COUNTERPARTS. This Supplemental
Agreement may be simultaneously executed in counterparts. Each such counterpart
so executed shall be deemed to be an original, and all together shall constitute
but one and the same instrument. This Supplemental Agreement shall become
effective upon execution and delivery on October 9, 2002 in accordance with, and
satisfaction of other requirements and conditions of, the Agreement and the
Indenture. Notwithstanding the date of such execution and delivery, for
convenience and purposes of reference this Supplemental Agreement shall be dated
as of October 1, 2002 and may be cited and referred to as the "First
Supplemental Participation Agreement dated as of October 1, 2002".

                   [Signature Page of this Agreement Follows]

                                       (3)


          IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
Agreement to be duly executed as of the day and year first written above.

                                           NEW YORK STATE ENERGY RESEARCH
                                             AND DEVELOPMENT AUTHORITY



                                           By
                                             -----------------------------------
                                                President

(SEAL)

Attest:



- ------------------------
  Assistant Secretary

                                           CONSOLIDATED EDISON COMPANY
                                               OF NEW YORK, INC.



                                           By
                                             -----------------------------------
                                                Name:
                                                Title:

(SEAL)

Attest:



- ------------------------
  Assistant Secretary


            [Signature Page of Supplemental Participation Agreement]

                                       (4)



                                                                    EXHIBIT 12.2

                  CONSOLIDATED EDISON COMPANY OF NEW YORK, INC.

                       RATIO OF EARNINGS TO FIXED CHARGES
                                NINE MONTHS ENDED
                             (Thousands of Dollars)



                                                                                 SEPTEMBER
                                                                                    2002
                                                                                ------------
                                                                             
EARNINGS
     Net Income                                                                 $    516,163
     Income Tax                                                                      302,173
                                                                                ------------

              Total Earnings Before Income Tax                                       818,336

FIXED CHARGES*                                                                       289,126
                                                                                ------------
              Total Earnings Before Income Tax
               and Fixed Charges                                                $  1,107,462
                                                                                ============

     * Fixed Charges

     Interest on Long-Term Debt                                                 $    247,724
     Amortization of Debt Discount, Premium and Expense                                9,311
     Interest on Component of Rentals                                                  9,191
     Other Interest                                                                   22,900
                                                                                ------------

              Total Fixed Charges                                               $    289,126
                                                                                ============

     Ratio of Earnings to Fixed Charges                                                 3.83




                       RATIO OF EARNINGS TO FIXED CHARGES
                               TWELVE MONTHS ENDED
                             (Thousands of Dollars)



                                                                                    SEPTEMBER        DECEMBER
                                                                                       2002            2001
                                                                                  -------------    ------------
                                                                                             
EARNINGS
     Net Income                                                                   $     625,286    $    663,061
     Income Tax                                                                         374,755         427,168
                                                                                  -------------    ------------

              Total Earnings Before Income Tax                                        1,000,041       1,090,229

FIXED CHARGES*                                                                          392,433         409,588
                                                                                  -------------    ------------
              Total Earnings Before Income Tax
               and Fixed Charges                                                  $   1,392,474    $  1,499,817
                                                                                  =============    ============

     * Fixed Charges

     Interest on Long-Term Debt                                                   $     334,099    $    347,260
     Amortization of Debt Discount, Premium and Expense                                  12,536          12,527
     Interest on Component of Rentals                                                    12,254          17,478
     Other Interest                                                                      33,544          32,323
                                                                                  -------------    ------------

              Total Fixed Charges                                                 $     392,433    $    409,588
                                                                                  =============    ============

     Ratio of Earnings to Fixed Charges                                                    3.55            3.66



                                                                  EXHIBIT 99.2.1

   Certification Required Under Section 906 of the Sarbanes-Oxley Act of 2002


I, Eugene R. McGrath, the Chief Executive Officer of Consolidated Edison Company
of New York, Inc. (the "Company") certify that the Company's Quarterly Report on
Form 10-Q for the quarterly period ended September 30, 2002, which this
statement accompanies, (the "Form 10-Q") fully complies with the requirements of
Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or
78o(d)) and that the information contained in the Form 10-Q fairly presents, in
all material respects, the financial condition and results of operations of the
Company.


                                                 /s/ Eugene R. McGrath
                                                 ----------------------
                                                 Eugene R. McGrath

Dated: November 13, 2002



                                                                  EXHIBIT 99.2.2

   Certification Required Under Section 906 of the Sarbanes-Oxley Act of 2002


I, Joan S. Freilich, the Chief Financial Officer of Consolidated Edison Company
of New York, Inc. (the "Company") certify that the Company's Quarterly Report on
Form 10-Q for the quarterly period ended September 30, 2002, which this
statement accompanies, (the "Form 10-Q") fully complies with the requirements of
Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or
78o(d)) and that the information contained in the Form 10-Q fairly presents, in
all material respects, the financial condition and results of operations of the
Company.


                                                  /s/ Joan S. Freilich
                                                  ---------------------
                                                  Joan S. Freilich

Dated: November 13, 2002



                                                                  Exhibit 99.3.1

Certification Required Under Section 906 of the Sarbanes-Oxley Act of 2002


I, Stephen B. Bram, the Chief Executive Officer of Orange and Rockland
Utilities, Inc. (the "Company") certify that the Company's Quarterly Report on
Form 10-Q for the quarterly period ended September 30, 2002, which this
statement accompanies, (the "Form 10-Q") fully complies with the requirements of
Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or
78o(d)) and that the information contained in the Form 10-Q fairly presents, in
all material respects, the financial condition and results of operations of the
Company.


                                                  /s/ Stephen B. Bram
                                                  --------------------
                                                  Stephen B. Bram

Dated: November 13, 2002



                                                                  Exhibit 99.3.2

Certification Required Under Section 906 of the Sarbanes-Oxley Act of 2002


I, Edward J. Rasmussen, the Chief Financial Officer of Orange and Rockland
Utilities, Inc. (the "Company") certify that the Company's Quarterly Report on
Form 10-Q for the quarterly period ended September 30, 2002, which this
statement accompanies, (the "Form 10-Q") fully complies with the requirements of
Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or
78o(d)) and that the information contained in the Form 10-Q fairly presents, in
all material respects, the financial condition and results of operations of the
Company.


                                                 /s/ Edward J. Rasmussen
                                                 -----------------------
                                                 Edward J. Rasmussen

Dated: November 13, 2002