Statement Of Income Alternative (USD $) In Millions, except Per Share data, unless otherwise specified	12 Months Ended
	Dec. 31, 2009	Dec. 31, 2008	Dec. 31, 2007
CONSOLIDATED EDISON INC
OPERATING REVENUES
Electric	$ 8,320	$ 8,611	$ 8,110
Gas	1,943	2,097	2,025
Steam	661	707	686
Non-utility	2,108	2,168	2,299
TOTAL OPERATING REVENUES	13,032	13,583	13,120
OPERATING EXPENSES
Purchased power	4,776	5,749	5,428
Fuel	503	663	624
Gas purchased for resale	963	1,172	1,173
Other operations and maintenance	2,555	2,259	2,080
Depreciation and amortization	791	717	645
Taxes, other than income taxes	1,545	1,364	1,323
TOTAL OPERATING EXPENSES	11,133	11,924	11,273
Gain on sale of electricity generating plants	0	261	0
OPERATING INCOME	1,899	1,920	1,847
OTHER INCOME (DEDUCTIONS)
Investment and other income	32	89	58
Allowance for equity funds used during construction	14	8	8
Other deductions	(15)	(16)	(23)
TOTAL OTHER INCOME (DEDUCTIONS)	31	81	43
INCOME BEFORE INTEREST AND INCOME TAX EXPENSE	1,930	2,001	1,890
INTEREST EXPENSE
Interest on long-term debt	590	519	470
Other interest	30	33	57
Allowance for borrowed funds used during construction	(9)	(8)	(10)
NET INTEREST EXPENSE	611	544	517
INCOME FROM CONTINUING OPERATIONS BEFORE TAXES	1,319	1,457	1,373
INCOME TAX EXPENSE	440	524	437
INCOME FROM CONTINUING OPERATIONS	879	933	936
INCOME FROM DISCONTINUED OPERATIONS
Gain on sale of electricity generating plants, net of tax expense of $174 in 2008	0	270	0
Income from discontinued operations, net of tax expense of $3 and $1 in 2008 and 2007, respectively	0	4	4
TOTAL INCOME FROM DISCONTINUED OPERATIONS	0	274	4
NET INCOME	879	1,207	940
Preferred stock dividend requirements of subsidiary	(11)	(11)	(11)
NET INCOME FOR COMMON STOCK	868	1,196	929
EARNINGS PER COMMON SHARE - BASIC
Continuing operations	$ 3.16	$ 3.37	$ 3.48
Discontinued operations	$ 0.00	$ 1.01	$ 0.01
Net income	$ 3.16	$ 4.38	$ 3.49
EARNINGS PER COMMON SHARE-DILUTED
Continuing operations	$ 3.14	$ 3.36	$ 3.46
Discontinued operations	$ 0.00	$ 1.01	$ 0.01
Net income	$ 3.14	$ 4.37	$ 3.47
DIVIDENDS DECLARED PER SHARE OF COMMON STOCK	$ 2.36	$ 2.34	$ 2.32
AVERAGE NUMBER OF SHARES OUTSTANDING- BASIC (IN MILLIONS)	275.2	272.9	266.3
AVERAGE NUMBER OF SHARES OUTSTANDING - DILUTED (IN MILLIONS)	276.3	273.6	267.3
CONSOLIDATED EDISON CO OF NEW YORK INC
OPERATING REVENUES
Electric	7,674	7,878	7,440
Gas	1,701	1,839	1,759
Steam	661	707	686
TOTAL OPERATING REVENUES	10,036	10,424	9,885
OPERATING EXPENSES
Purchased power	2,583	3,185	3,014
Fuel	503	660	588
Gas purchased for resale	818	999	978
Other operations and maintenance	2,186	1,937	1,780
Depreciation and amortization	744	672	593
Taxes, other than income taxes	1,486	1,304	1,263
TOTAL OPERATING EXPENSES	8,320	8,757	8,216
OPERATING INCOME	1,716	1,667	1,669
OTHER INCOME (DEDUCTIONS)
Investment and other income	34	21	41
Allowance for equity funds used during construction	12	7	7
Other deductions	(13)	(12)	(12)
TOTAL OTHER INCOME (DEDUCTIONS)	33	16	36
INCOME BEFORE INTEREST AND INCOME TAX EXPENSE	1,749	1,683	1,705
INTEREST EXPENSE
Interest on long-term debt	534	474	428
Other interest	27	25	39
Allowance for borrowed funds used during construction	(8)	(7)	(9)
NET INTEREST EXPENSE	553	492	458
INCOME FROM CONTINUING OPERATIONS BEFORE TAXES	1,196	1,191	1,247
INCOME TAX EXPENSE	404	397	392
INCOME FROM DISCONTINUED OPERATIONS
NET INCOME	792	794	855
Preferred stock dividend requirements of subsidiary	(11)	(11)	(11)
NET INCOME FOR COMMON STOCK	$ 781	$ 783	$ 844

Statement Of Cash Flows Indirect (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2009	Dec. 31, 2008	Dec. 31, 2007
CONSOLIDATED EDISON INC
OPERATING ACTIVITIES
Net income	$ 879	$ 1,207	$ 940
PRINCIPAL NON-CASH CHARGES/(CREDITS) TO INCOME
Depreciation and amortization	791	717	667
Deferred income taxes	436	470	335
Rate case amortization and accruals	(63)	(176)	(316)
Net transmission and distribution reconciliation	0	(50)	(187)
Common equity component of allowance for funds used during construction	(14)	(8)	(8)
Prepaid pension costs (net of capitalized amounts)	0	0	(13)
Net derivative (gains)/losses	(31)	100	8
Pre-tax gain on sale of electricity generating plants	0	(704)	0
Other non-cash items (net)	(77)	(83)	72
CHANGES IN ASSETS AND LIABILITIES
Accounts receivable - customers, less allowance for uncollectibles	51	18	(150)
Materials and supplies, including fuel oil and gas in storage	161	(111)	45
Other receivables and other current assets	(346)	(110)	217
Prepayments	566	(578)	38
Recoverable energy costs	90	124	16
Accounts payable	(18)	(92)	64
Pensions and retiree benefits	(14)	18	(21)
Accrued taxes	(6)	31	(3)
Accrued interest	17	(10)	10
Deferred charges, noncurrent assets and other regulatory assets	112	(443)	(66)
Deferred credits and other regulatory liabilities	(23)	303	(173)
Other assets	(5)	121	(19)
Other liabilities	(40)	(104)	110
NET CASH FLOWS FROM OPERATING ACTIVITIES	2,466	640	1,566
INVESTING ACTIVITIES
Utility construction expenditures (excluding capitalized support costs)	(2,184)	(2,322)	(1,928)
Cost of removal less salvage	(181)	(198)	(190)
Non-utility construction expenditures	(9)	(4)	(6)
Common equity component of allowance for funds used during construction	14	8	8
Proceeds from sale of electricity generation projects	0	1,477	0
Proceeds from sale of properties	0	0	30
Purchase of ownership interest in Hawkeye lease	0	(12)	0
Purchase of ownership interest in Newington SCS	0	(20)	0
NET CASH FLOWS USED IN INVESTING ACTIVITIES	(2,360)	(1,071)	(2,086)
FINANCING ACTIVITIES
Net (payments of)/proceeds from short-term debt	(363)	(477)	723
Retirement of long-term debt	(662)	(487)	(699)
Issuance of long-term debt	1,470	1,850	525
Issuance of common stock	257	51	685
Debt issuance costs	(10)	(13)	(5)
Common stock dividends	(601)	(618)	(582)
Preferred stock dividends	(11)	(11)	(11)
NET CASH FLOWS (USED IN)/FROM FINANCING ACTIVITIES	80	295	636
CASH AND TEMPORARY CASH INVESTMENTS:
NET CHANGE FOR THE PERIOD	186	(136)	116
BALANCE AT BEGINNING OF PERIOD	74	210	94
BALANCE AT END OF PERIOD	260	74	210
Cash paid during the period for:
Interest	558	557	463
Income taxes	12	394	234
CONSOLIDATED EDISON CO OF NEW YORK INC
OPERATING ACTIVITIES
Net income	792	794	855
PRINCIPAL NON-CASH CHARGES/(CREDITS) TO INCOME
Depreciation and amortization	744	672	593
Deferred income taxes	364	500	320
Rate case amortization and accruals	(63)	(176)	(316)
Net transmission and distribution reconciliation	0	(50)	(187)
Common equity component of allowance for funds used during construction	(12)	(7)	(7)
Prepaid pension costs (net of capitalized amounts)	0	0	(13)
Other non-cash items (net)	(56)	(33)	(17)
CHANGES IN ASSETS AND LIABILITIES
Accounts receivable - customers, less allowance for uncollectibles	33	16	(116)
Materials and supplies, including fuel oil and gas in storage	133	(91)	14
Other receivables and other current assets	(122)	(195)	198
Prepayments	456	(457)	3
Recoverable energy costs	111	99	28
Accounts payable	(118)	60	38
Pensions and retiree benefits	0	(16)	(39)
Accrued taxes	(16)	36	(82)
Accrued interest	6	(3)	13
Deferred charges, noncurrent assets and other regulatory assets	57	(374)	(138)
Deferred credits and other regulatory liabilities	(25)	280	(2)
Other liabilities	(62)	(19)	106
NET CASH FLOWS FROM OPERATING ACTIVITIES	2,222	1,036	1,251
INVESTING ACTIVITIES
Utility construction expenditures (excluding capitalized support costs)	(2,057)	(2,202)	(1,816)
Cost of removal less salvage	(176)	(195)	(187)
Common equity component of allowance for funds used during construction	12	7	7
Loan to affiliate	113	(58)	(55)
Proceeds from sale of properties	0	0	30
NET CASH FLOWS USED IN INVESTING ACTIVITIES	(2,108)	(2,448)	(2,021)
FINANCING ACTIVITIES
Net (payments of)/proceeds from short-term debt	(253)	(302)	555
Retirement of long-term debt	(655)	(280)	(330)
Issuance of long-term debt	1,350	1,800	525
Debt issuance costs	(10)	(13)	(5)
Capital contribution by parent	211	752	658
Common stock dividends	(652)	(618)	(548)
Preferred stock dividends	(11)	(11)	(11)
NET CASH FLOWS (USED IN)/FROM FINANCING ACTIVITIES	(20)	1,328	844
CASH AND TEMPORARY CASH INVESTMENTS:
NET CHANGE FOR THE PERIOD	94	(84)	74
BALANCE AT BEGINNING OF PERIOD	37	121	47
BALANCE AT END OF PERIOD	131	37	121
Cash paid during the period for:
Interest	513	473	407
Income taxes	$ 26	$ (1)	$ 307

Statement Of Financial Position Classified (USD $) In Millions, unless otherwise specified	Dec. 31, 2009	Dec. 31, 2008
CONSOLIDATED EDISON INC
CURRENT ASSETS
Cash and temporary cash investments	$ 260	$ 74
Accounts receivable - customers, less allowance for uncollectible accounts	1,047	1,098
Other receivables, less allowance for uncollectible accounts	272	194
Accrued unbilled revenue	579	131
Fuel oil, at average cost	39	37
Gas in storage, at average cost	164	325
Materials and supplies, at average cost	152	154
Prepayments	131	697
Fair value of derivative assets	104	162
Recoverable energy costs	60	172
Deferred derivative losses	141	288
Revenue decoupling mechanism receivable	117	22
Other current assets	177	15
TOTAL CURRENT ASSETS	3,243	3,369
INVESTMENTS	385	356
UTILITY PLANT AT ORIGINAL COST
Electric	18,645	17,483
Gas	3,983	3,696
Steam	1,935	1,849
General	1,866	1,795
TOTAL	26,429	24,823
Less: Accumulated depreciation	5,412	5,079
Net	21,017	19,744
Construction work in progress	1,422	1,109
NET UTILITY PLANT	22,439	20,853
NON-UTILITY PLANT
Non-utility property, less accumulated depreciation	19	20
Construction work in progress	6	1
NET PLANT	22,464	20,874
OTHER NONCURRENT ASSETS
Goodwill	416	411
Intangible assets, less accumulated amortization of $2 in 2009 and 2008	4	5
Regulatory assets	7,103	8,055
Other deferred charges and noncurrent assets	258	428
TOTAL OTHER NONCURRENT ASSETS	7,781	8,899
TOTAL ASSETS	33,873	33,498
CURRENT LIABILITIES
Long-term debt due within one year	731	482
Notes payable	0	363
Accounts payable	1,078	1,161
Customer deposits	274	265
Accrued taxes	51	57
Accrued interest	156	139
Accrued wages	91	88
Fair value of derivative liabilities	114	192
Deferred derivative gains	8	23
Deferred income taxes	24	70
Uncertain income taxes	97	0
Other current liabilities	328	365
TOTAL CURRENT LIABILITIES	2,952	3,205
NONCURRENT LIABILITIES
Obligations under capital leases	14	17
Provision for injuries and damages	168	169
Pensions and retiree benefits	3,363	4,511
Superfund and other environmental costs	212	250
Uncertain income taxes	0	118
Asset retirement obligations	122	115
Fair value of derivative liabilities	131	120
Other noncurrent liabilities	108	79
TOTAL NONCURRENT LIABILITIES	4,118	5,379
DEFERRED CREDITS AND REGULATORY LIABILITIES
Deferred income taxes and investment tax credits	5,597	4,999
Regulatory liabilities	858	737
Other deferred credits	32	35
TOTAL DEFERRED CREDITS AND REGULATORY LIABILITIES	6,487	5,771
LONG-TERM DEBT (See Statement of Capitalization)	9,854	9,232
SHAREHOLDER'S EQUITY
Common shareholder's equity (See Statement of Common Shareholder's Equity)	10,249	9,698
Preferred stock (See Statement of Capitalization)	213	213
TOTAL SHAREHOLDER'S EQUITY	10,462	9,911
TOTAL LIABILITIES AND SHAREHOLDER'S EQUITY	33,873	33,498
CONSOLIDATED EDISON CO OF NEW YORK INC
CURRENT ASSETS
Cash and temporary cash investments	131	37
Accounts receivable - customers, less allowance for uncollectible accounts	904	937
Other receivables, less allowance for uncollectible accounts	134	127
Accrued unbilled revenue	413	0
Accounts receivable from affiliated companies	124	272
Fuel oil, at average cost	39	37
Gas in storage, at average cost	131	261
Materials and supplies, at average cost	140	145
Prepayments	82	538
Fair value of derivative assets	39	71
Recoverable energy costs	0	146
Deferred derivative losses	104	247
Revenue decoupling mechanism receivable	107	19
Other current assets	50	3
TOTAL CURRENT ASSETS	2,398	2,840
INVESTMENTS	126	93
UTILITY PLANT AT ORIGINAL COST
Electric	17,570	16,460
Gas	3,537	3,273
Steam	1,935	1,849
General	1,708	1,646
TOTAL	24,750	23,228
Less: Accumulated depreciation	4,947	4,636
Net	19,803	18,592
Construction work in progress	1,334	1,051
NET UTILITY PLANT	21,137	19,643
NON-UTILITY PLANT
Non-utility property, less accumulated depreciation	9	11
NET PLANT	21,146	19,654
OTHER NONCURRENT ASSETS
Regulatory assets	6,590	7,486
Other deferred charges and noncurrent assets	201	342
TOTAL OTHER NONCURRENT ASSETS	6,791	7,828
TOTAL ASSETS	30,461	30,415
CURRENT LIABILITIES
Long-term debt due within one year	625	475
Notes payable	0	253
Accounts payable	843	952
Accounts payable to affiliated companies	17	26
Customer deposits	259	250
Accrued taxes	41	41
Accrued taxes to affiliated companies	9	25
Accrued interest	137	131
Accrued wages	89	80
Fair value of derivative liabilities	45	87
Deferred derivative gains	8	23
Deferred income taxes	0	59
Uncertain income taxes	92	0
Other current liabilities	282	325
TOTAL CURRENT LIABILITIES	2,447	2,727
NONCURRENT LIABILITIES
Obligations under capital leases	14	17
Provision for injuries and damages	160	163
Pensions and retiree benefits	2,978	4,059
Superfund and other environmental costs	159	196
Uncertain income taxes	0	108
Asset retirement obligations	122	115
Fair value of derivative liabilities	44	29
Other noncurrent liabilities	68	61
TOTAL NONCURRENT LIABILITIES	3,545	4,748
DEFERRED CREDITS AND REGULATORY LIABILITIES
Deferred income taxes and investment tax credits	5,139	4,611
Regulatory liabilities	703	600
Other deferred credits	29	31
TOTAL DEFERRED CREDITS AND REGULATORY LIABILITIES	5,871	5,242
LONG-TERM DEBT (See Statement of Capitalization)	9,038	8,494
SHAREHOLDER'S EQUITY
Common shareholder's equity (See Statement of Common Shareholder's Equity)	9,347	8,991
Preferred stock (See Statement of Capitalization)	213	213
TOTAL SHAREHOLDER'S EQUITY	9,560	9,204
TOTAL LIABILITIES AND SHAREHOLDER'S EQUITY	$ 30,461	$ 30,415

Statement Of Other Comprehensive Income (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2009	Dec. 31, 2008	Dec. 31, 2007
CONSOLIDATED EDISON INC
Net income	$ 879	$ 1,207	$ 940
OTHER COMPREHENSIVE INCOME/(LOSS), NET OF TAXES
Pension plan liability adjustments, net of taxes	26	(31)	0
Unrealized gains/(losses) on derivatives qualified as cash flow hedges, net of $(1) and $2 taxes in 2008 and 2007, respectively	0	(2)	3
Less: Reclassification adjustment for (gains)/losses included in net income, net of $1, $(1) and $(25) taxes in 2009, 2008 and 2007, respectively	1	(1)	(37)
Less: Reclassification adjustment for unrealized losses included in regulatory assets, net of $(5) taxes in 2008	0	(8)	0
TOTAL OTHER COMPREHENSIVE INCOME/(LOSS), NET OF TAXES	25	(24)	40
COMPREHENSIVE INCOME	904	1,183	980
Preferred stock dividend requirements of subsidiary	(11)	(11)	(11)
COMPREHENSIVE INCOME FOR COMMON STOCK	893	1,172	969
CONSOLIDATED EDISON CO OF NEW YORK INC
Net income	792	794	855
OTHER COMPREHENSIVE INCOME/(LOSS), NET OF TAXES
Pension plan liability adjustments, net of taxes	16	(11)	0
TOTAL OTHER COMPREHENSIVE INCOME/(LOSS), NET OF TAXES	16	(11)	0
COMPREHENSIVE INCOME	808	783	855
Preferred stock dividend requirements of subsidiary	$ (11)	$ (11)	$ (11)

Statement Of Shareholders Equity And Other Comprehensive Income (USD $) In Millions, except Share data	CONSOLIDATED EDISON INC	CONSOLIDATED EDISON INC Common Stock	CONSOLIDATED EDISON INC Additional Paid- In Capital	CONSOLIDATED EDISON INC Retained Earnings	CONSOLIDATED EDISON INC Repurchased Con Edison Stock	CONSOLIDATED EDISON INC Capital Stock Expense	CONSOLIDATED EDISON INC Accumulated Other Comprehensive Income/(Loss)	CONSOLIDATED EDISON CO OF NEW YORK INC	CONSOLIDATED EDISON CO OF NEW YORK INC Common Stock	CONSOLIDATED EDISON CO OF NEW YORK INC Additional Paid- In Capital	CONSOLIDATED EDISON CO OF NEW YORK INC Retained Earnings	CONSOLIDATED EDISON CO OF NEW YORK INC Repurchased Con Edison Stock	CONSOLIDATED EDISON CO OF NEW YORK INC Capital Stock Expense	CONSOLIDATED EDISON CO OF NEW YORK INC Accumulated Other Comprehensive Income/(Loss)
BEGINNING BALANCE at Dec. 31, 2006	$ 8,004	$ 28	$ 3,314	$ 5,804	$ (1,001)	$ (58)	$ (83)	$ 7,132	$ 589	$ 2,252	$ 5,320	$ (962)	$ (58)	$ (9)
BEGINNING BALANCE (in shares) at Dec. 31, 2006		257,456,303			23,210,700				235,488,094
Net income	940							855			855
Net income for common stock	929			929				844
Common stock dividend to parent	(620)			(620)				(548)			(548)
Capital contribution by parent								658		660			(2)
Cumulative preferred dividends								(11)			(11)
Issuance of common shares - public offering (in shares)		11,000,000
Issuance of common shares - public offering	558	1	559			(2)
Issuance of common shares - dividend reinvestment and employee stock plans (in shares)		3,568,571
Issuance of common shares - dividend reinvestment and employee stock plans	165		165
Other comprehensive income	40						40	0
ENDING BALANCE at Dec. 31, 2007	9,076	29	4,038	6,113	(1,001)	(60)	(43)	8,086	589	2,912	5,616	(962)	(60)	(9)
ENDING BALANCE (in shares) at Dec. 31, 2007		272,024,874			23,210,700				235,488,094
Net income	1,207							794			794
Net income for common stock	1,196			1,196				783
Common stock dividend to parent	(639)			(639)				(618)			(618)
Capital contribution by parent								752		752
Cumulative preferred dividends								(12)			(12)
Issuance of common shares - dividend reinvestment and employee stock plans (in shares)		1,696,812
Issuance of common shares - dividend reinvestment and employee stock plans	74		74
Other comprehensive income	(24)						(24)	(11)						(11)
Adjustment for adoption of fair value standard net of taxes	15			15
ENDING BALANCE at Dec. 31, 2008	9,698	29	4,112	6,685	(1,001)	(60)	(67)	8,991	589	3,664	5,780	(962)	(60)	(20)
ENDING BALANCE (in shares) at Dec. 31, 2008		273,721,686			23,210,700				235,488,094
Net income	879							792			792
Net income for common stock	868			868				781
Common stock dividend to parent	(649)			(649)				(652)			(652)
Capital contribution by parent								211		213			(2)
Cumulative preferred dividends								(11)			(11)
Issuance of common shares - public offering (in shares)		5,000,000
Issuance of common shares - public offering	213	1	214			(2)
Issuance of common shares - dividend reinvestment and employee stock plans (in shares)		2,402,055
Issuance of common shares - dividend reinvestment and employee stock plans	94		94
Other comprehensive income	25						25	16						16
ENDING BALANCE at Dec. 31, 2009	$ 10,249	$ 30	$ 4,420	$ 6,904	$ (1,001)	$ (62)	$ (42)	$ 9,347	$ 589	$ 3,877	$ 5,909	$ (962)	$ (62)	$ (4)
ENDING BALANCE (in shares) at Dec. 31, 2009		281,123,741			23,210,700				235,488,094

Summary of Significant Accounting Policies

12 Months Ended

Dec. 31, 2009

Summary of Significant Accounting Policies

Note A — Summary of Significant Accounting Policies

Principles of Consolidation

The Companies’ consolidated financial statements include the accounts of their respective majority-owned subsidiaries, and variable interest entities (see Note Q), as required. All intercompany balances and transactions have been eliminated.

Accounting Policies

The accounting policies of Con Edison and its subsidiaries conform to accounting principles generally accepted in the United States of America. For the Utilities, these accounting principles include the accounting rules for regulated operations and the accounting requirements of the Federal Energy Regulatory Commission (FERC) and the state public utility regulatory commissions having jurisdiction.

The accounting rules for regulated operations specify the economic effects that result from the causal 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 the accounting rules for regulated operations. 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 the accounting rules for regulated operations.

The Utilities’ principal regulatory assets and liabilities are detailed in Note B. The Utilities are receiving or being credited with a return on all of their regulatory assets for which a cash outflow has been made, and are paying or being charged with a return on all of their regulatory liabilities for which a cash inflow has been received. The Utilities’ 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.

Other significant accounting policies of the Companies are referenced below in this Note A and in the notes that follow.

Plant and Depreciation

Utility Plant

Utility plant is stated at original cost. The cost of repairs and maintenance is charged to expense and the cost of betterments is capitalized. The capitalized cost of additions to utility plant includes indirect costs such as engineering, supervision, payroll taxes, pensions, other benefits and an allowance for funds used during construction (AFDC). The original cost of property is charged to expense over the estimated useful lives of the assets. Upon retirement, the original cost of property is charged to accumulated depreciation. See Note R.

Rates used for AFDC include the cost of borrowed funds and a reasonable rate of return on the Utilities’ own funds when so used, determined in accordance with regulations of the FERC or the state public utility regulatory authority having jurisdiction. The rate is compounded semiannually, and the amounts applicable to borrowed funds are treated as a reduction of interest charges, while the amounts applicable to the Utilities’ own funds are credited to other income (deductions). The AFDC rates for CECONY were 6.9 percent, 6.0 percent and 7.3 percent for 2009, 2008 and 2007, respectively. The AFDC rates for O&R were 4.2 percent, 3.5 percent and 5.2 percent for 2009, 2008 and 2007, respectively.

The Utilities generally compute annual charges for depreciation using the straight-line method for financial statement purposes, with rates based on average service lives and net salvage factors. The average depreciation rate for CECONY was 3.1 percent for 2009 and 2008 and 2.9 percent for 2007. The average depreciation rate for O&R was 2.8 percent for 2009, 2008 and 2007.

The estimated lives for utility plant for CECONY range from 5 to 80 years for electric, 5 to 85 years for gas, 5 to 70 years for steam and 5 to 50 years for general plant. For O&R, the estimated lives for utility plant range from 5 to 65 years for electric, 5 to 75 years for gas and 5 to 55 years for general plant.

At December 31, 2009 and 2008, the capitalized cost of the Companies’ utility plant, net of accumulated depreciation, was as follows:


	Con Edison				CECONY
*(Millions of Dollars)*	2009		2008		2009		2008
Electric
Generation	$	392	$	384	$	392	$	384
Transmission		2,090		2,037		1,953		1,901
Distribution		12,442		11,586		11,824		10,998
Gas*		3,225		2,982		2,892		2,665
Steam		1,555		1,512		1,555		1,512
General		1,231		1,176		1,117		1,073
Held for future use		82		67		70		59
Construction work in progress		1,422		1,109		1,334		1,051
Net Utility Plant	$	22,439	$	20,853	$	21,137	$	19,643

*	Primarily distribution.

Under the Utilities’ current rate plans, the aggregate annual depreciation allowance in effect at December 31, 2009 was $784 million, including $742 million under CECONY’s electric, gas and steam rate plans that have been approved by the New York State Public Service Commission (NYSPSC).

Non-Utility Plant

Non-utility plant is stated at original cost and consists primarily of land and telecommunication facilities that are currently not used within electric, gas or steam utility operations. Depreciation on these assets is computed using the straight-line method for financial statement purposes over their estimated useful lives, which range from 3 to 10 years.

Goodwill

In accordance with the accounting rules for goodwill and intangible assets, Con Edison is required to test goodwill for impairment annually. Goodwill is tested for impairment using a two-step approach. The first step of the goodwill impairment test compares the estimated fair value of a reporting unit with its carrying value, including goodwill. If the estimated fair value of a reporting unit exceeds its carrying value, goodwill of the reporting unit is considered not impaired. If the carrying value exceeds the estimated fair value of the reporting unit, the second step is performed to measure the amount of impairment loss, if any. The second step requires a calculation of the implied fair value of goodwill. See Note K.

Impairments

In accordance with the accounting rules for impairment or disposal of long-lived assets, the Companies evaluate the impairment of long-lived assets, based on projections of undiscounted future cash flows, whenever events or changes in circumstances indicate that the carrying amounts of such assets may not be recoverable. In the event an evaluation indicates that such cash flows cannot be expected to be sufficient to fully recover the assets, the assets are written down to their estimated fair value.

In accordance with the accounting rules for equity method and joint ventures, Con Edison Development recognized pre-tax impairment charges of $2 million in 2008, related to its equity investment in a 29 MW electric generating plant in Michigan (which was sold in 2008), and $5 million and $2 million in 2009 and 2008, respectively, related to its equity investment in an electric generating plant in Guatemala.

Revenues

The Utilities and Con Edison Solutions recognize revenues for energy service on a monthly billing cycle basis. The Utilities defer over a 12-month period net interruptible gas revenues, other than those authorized by the NYSPSC to be retained by the Utilities, for refund to firm gas sales and transportation customers. The Utilities and Con Edison Solutions accrue revenues at the end of each month for estimated energy service not yet billed to customers. Prior to March 31, 2009, CECONY did not accrue revenues for energy service provided but not yet billed to customers except for certain unbilled gas revenues accrued in 1989. This change in accounting for unbilled revenues had no effect on net income. See “Regulatory Assets and Liabilities” in Note B. Unbilled revenues included in Con Edison’s balance sheet at December 31, 2009 and 2008 were $579 million (including $413 million for CECONY) and $131 million, respectively.

CECONY’s electric and gas rate plans and O&R’s New York electric and gas rate plans each contain a revenue decoupling mechanism under which the company’s actual energy delivery revenues is compared on a periodic basis, with the authorized delivery revenues and the difference accrued, with interest, for refund to, or recovery from, customers, as applicable. See “Rate Agreements” in Note B.

The NYSPSC requires utilities to record gross receipts tax revenues and expenses on a gross income statement presentation basis (i.e., included in both revenue and expense). The recovery of these taxes is generally provided for in the revenue requirement within each of the respective NYSPSC approved rate plans.

Recoverable Energy Costs

The Utilities generally recover all of their prudently incurred fuel, purchased power and gas costs, including hedging gains and losses, in accordance with rate provisions approved by the applicable state public utility commissions. If the actual energy supply costs for a given month are more or less than the amounts billed to customers for that month, the difference in most cases is recoverable from or refundable to customers. Differences between actual and billed

electric and steam supply costs are generally deferred for charge or refund to customers during the next billing cycle (normally within one or two months). In addition, CECONY recovers the costs of its electric demand management program, in excess of the costs reflected in rates, as part of recoverable energy costs. For the Utilities’ gas costs, differences between actual and billed gas costs during the 12-month period ending each August are charged or refunded to customers during a subsequent 12-month period.

New York Independent System Operator (NYISO)

The Utilities purchase electricity through the wholesale electricity market administered by the NYISO. The difference between purchased power and related costs initially billed to the Utilities by the NYISO and the actual cost of power subsequently calculated by the NYISO is refunded by the NYISO to the Utilities, or paid to the NYISO by the Utilities. The reconciliation payments or receipts are recoverable from or refundable to the Utilities’ customers. See “Regulatory Assets and Liabilities” in Note B.

Certain other payments to or receipts from the NYISO are also subject to reconciliation, with shortfalls or amounts in excess of specified rate allowances recoverable from or refundable to customers. These include proceeds from the sale through the NYISO of transmission rights on CECONY’s transmission system (transmission congestion contracts or TCCs). See “Regulatory Assets and Liabilities” in Note B.

Sulfur Dioxide (SO₂) Allowances

In accordance with the federal Clean Air Act, CECONY has been allocated SO₂ emission allowances which the company may sell, trade or hold for future use. Generally, CECONY defers its proceeds from the sale of SO₂ allowances as regulatory liabilities to be applied for customer benefit. See “Regulatory Assets and Liabilities” in Note B. The proceeds received from the sale of SO₂ allowances are included in net cash flows from operating activities in the Companies’ consolidated statements of cash flows.

Temporary Cash Investments

Temporary cash investments are short-term, highly- liquid investments that generally have maturities of three months or less at the date of purchase. They are stated at cost, which approximates market. The Companies consider temporary cash investments to be cash equivalents.

Investments

Investments consist primarily of the investments of Con Edison’s competitive energy businesses, which are accounted for under the equity method (depending on the subsidiaries’ percentage ownership) or accounted for as leveraged leases in accordance with the accounting rules for leases. See Note J for a discussion of investments in Lease In/Lease Out transactions. Utilities’ investments are recorded at either cost or fair value and include the deferred income plan and supplemental retirement income plan trust owned life insurance assets.

Pension and Other Postretirement Benefits

The accounting rules for retirement benefits require an employer to recognize an asset or liability for the overfunded or underfunded status of its pension and other postretirement benefit plans. For a pension plan, the asset or liability is the difference between the fair value of the plan’s assets and the projected benefit obligation. For any other postretirement benefit plan, the asset or liability is the difference between the fair value of the plan’s assets and the accumulated postretirement benefit obligation. The accounting rules generally require employers to recognize all unrecognized prior service costs and credits and unrecognized actuarial gains and losses in accumulated other comprehensive income (OCI), net of tax. Such amounts will be adjusted as they are subsequently recognized as components of net periodic benefit cost or income pursuant to the current recognition and amortization provisions.

For the Utilities’ pension and other postretirement benefit plans, regulatory accounting treatment is generally applied in accordance with the accounting rules for regulated operations. Unrecognized prior service costs or credits and unrecognized actuarial gains and losses are recorded to regulatory assets or liabilities, rather than OCI. See Notes E and F.

The net periodic benefit costs are recognized in accordance with the accounting rules for retirement benefits. Investment gains and losses are recognized in expense over a 15-year period and other actuarial gains and losses are recognized in expense over a 10-year period, subject to the deferral provisions in the rate plans.

In accordance with the Statement of Policy issued by the NYSPSC and its current electric, gas and steam rate agreements, CECONY defers for payment to or recovery from customers the difference between such expenses and the amounts for such expenses reflected in rates. Generally, O&R also defers such difference pursuant to its rate plans. See Note B – Regulatory Matters.

The Companies calculate the expected return on pension and other retirement benefit plan assets by multiplying the expected rate of return on plan assets by the market-related value (MRV) of plan assets at the beginning of the year, taking into consideration anticipated contributions and benefit payments that are to be made during the year. The accounting rules allow the MRV of plan assets to be either fair value or a calculated value that recognizes changes in fair value in a systematic and rational manner over not more than five years. The Companies use a calculated value when determining the MRV of the plan assets that adjusts for 20 percent of the difference between fair value and expected MRV of plan assets. This calculated value has the effect of stabilizing variability in assets to which the Companies apply the expected return.

Federal Income Tax

In accordance with the accounting rules for income taxes, the Companies have recorded an accumulated deferred federal income tax liability for temporary differences between the book and tax basis of assets and liabilities at current tax rates. In accordance with rate agreements, the Utilities have recovered amounts from customers for a portion of the tax liability they will pay in the future as a result of the reversal or “turn-around” of these temporary differences. As to the remaining tax liability, in accordance with the accounting rules for regulated operations, the Utilities have established regulatory assets for the net revenue requirements to be recovered from customers for the related future tax expense. See Notes B and L. In 1993, the NYSPSC issued a Policy Statement approving accounting procedures consistent with the accounting rules for income taxes and providing assurances that these future increases in taxes will be recoverable in rates. See Note L.

Accumulated deferred investment tax credits are amortized ratably over the lives of the related properties and applied as a reduction to future federal income tax expense.

The Companies’ federal income tax returns reflect certain tax positions with which the Internal Revenue Service (IRS) does not or may not agree. See “Lease In/Lease Out Transactions” in Note J and “Uncertain Tax Positions” in Note L.

Con Edison and its subsidiaries file a consolidated federal income tax return. The consolidated income tax liability is allocated to each member of the consolidated group using the separate return method. Each member pays or receives an amount based on its own taxable income or loss in accordance with tax sharing agreements between the members of the consolidated group.

State Income Tax

Con Edison and its subsidiaries file a combined New York State Corporation Business Franchise Tax Return. Similar to a federal consolidated income tax return, the income of all entities in the combined group is subject to New York State taxation, after adjustments for differences between federal and New York law and apportionment of income among the states in which the company does business. Each member of the group pays or receives an amount based on its own New York State taxable income or loss.

Research and Development Costs

Generally research and development costs are charged to operating expenses as incurred. Research and development costs were as follows:


	For the Years Ended December 31,
*(Millions of Dollars)*	2009		2008		2007
Con Edison	$	27	$	29	$	20
CECONY	$	25	$	28	$	20

Reclassification

Certain prior year amounts have been reclassified to conform with the current year presentation. Effective June 2009, the Companies are including receivables purchased from energy supply companies within accounts receivable – customers, and to conform to this presentation, have reclassified receivables purchased from energy supply companies that were included in other receivables at December 31, 2008 ($146 million for Con Edison; $121 million for CECONY). This reclassification more appropriately reflects the Utilities’ customer operations’ practices, policies and procedures. In addition, consistent with current industry practice, the Companies are presenting income tax expense as one item on their consolidated income statements (instead of separate items in the operating income and other income sections of the consolidated income statements) and changing the order of presentation on their consolidated balance sheets of current assets, net utility plant, current liabilities, long-term debt and shareholders’ equity.

Earnings Per Common Share

In accordance with the accounting rules for earnings per share, Con Edison presents basic and diluted earnings per share on the face of its consolidated income statement. Basic earnings per share (EPS) are calculated by dividing earnings available to common shareholders (“Net income for common stock” on Con Edison’s consolidated income statement) by the weighted average number of Con Edison 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 units, deferred stock units and stock options for which the average market price of the common shares for the period was greater than the exercise price. See Note M.

Basic and diluted EPS for Con Edison are calculated as follows:


	For the Years Ended December 31,
*(Millions of Dollars, except per share amounts/Shares in Millions)*	2009		2008		2007
Income for common stock from continuing operations	$	868	$	922	$	925
Income for common stock from discontinued operations, net of tax		—		274		4
Net income for common stock	$	868	$	1,196	$	929
Weighted average common shares outstanding – Basic		275.2		272.9		266.3
Add: Incremental shares attributable to effect of potentially dilutive securities		1.1		0.7		1.0
Adjusted weighted average common shares outstanding – Diluted		276.3		273.6		267.3
Earnings per Common Share – Basic
Continuing operations	$	3.16	$	3.37	$	3.48
Discontinued operations		—		1.01		0.01
Net income for common stock	$	3.16	$	4.38	$	3.49
Earnings per Common Share – Diluted
Continuing operations	$	3.14	$	3.36	$	3.46
Discontinued operations		—		1.01		0.01
Net income for common stock	$	3.14	$	4.37	$	3.47

The computation of diluted earnings per share excludes immaterial amounts of incremental Con Edison common shares for the years ended December 31, 2009 and 2008, respectively, because the exercise prices on the options exceeded the average closing market price during these periods. The computation of diluted earnings per share does not exclude any Con Edison common shares for the year ended December 31, 2007

because the average closing market price during this period exceeded the exercise price on the options.

Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Regulatory Matters

12 Months Ended

Dec. 31, 2009

Regulatory Matters

Note B — Regulatory Matters

Rate Agreements

CECONY — Electric

In March 2005, the NYSPSC approved a Joint Proposal by CECONY, the staff of the NYSPSC and other parties with respect to the rates the company can charge its customers for electric delivery service (the 2005 Electric Rate Agreement). The 2005 Electric Rate Agreement covered the three-year period April 2005 through March 2008, pursuant to which CECONY’s electric base rates were increased $104.6 million, effective April 1, 2005, and were increased an additional $220.4 million (of which $60 million was accrued over the period beginning April 1, 2006 to March 31, 2007), effective April 1, 2007. In addition, the company retained the first $60 million of auction proceeds from the sale of transmission rights on the company’s transmission system in each of the three years. The rate increases also included the amortization of certain regulatory assets and liabilities. The net effect of this amortization was a non-cash increase in electric revenues of $128 million, $173 million and $249 million in the first, second and third rate years, respectively.

The 2005 Electric Rate Agreement provided for annual reconciliations of the differences between the actual amount of transmission and distribution utility plant, net of depreciation (Net T&D) and the actual amount of certain operating costs experienced over the term of the agreement, as compared in each case to the amounts reflected in electric rates.

Actual Net T&D was greater than the Net T&D reflected in rates, and in accordance with the 2005 Electric Rate Agreement, the company accrued a regulatory asset and increased its revenues by the revenue requirement impact of such difference (i.e., a return on investment, depreciation and income taxes). If the actual Net T&D had been less than the Net T&D reflected in rates, the company would have accrued a regulatory liability and decreased its revenues by the revenue requirement impact of such difference. For the period from April 1, 2005 through March 31, 2008, actual Net T&D exceeded the Net T&D reflected in rates by approximately $1.5 billion. The company accrued revenues of $50 million, $187 million and $115 million in 2008, 2007 and 2006, respectively, to reflect the revenue requirement impact of the Net T&D difference. In accordance with the 2005 Electric Rate Agreement, the regulatory assets associated with the accrued revenues were offset at the end of each rate year with a like amount of regulatory liabilities.

The NYSPSC’s March 2008 and April 2009 orders and the November 2009 Joint Proposal covering CECONY’s electric rates, discussed below, provide for the collection of a portion of the company’s electric revenues ($237 million in the rate year ended March 2009, $254 million for the rate year ending March 2010 and, beginning April 2010, $249 million on an annual basis) subject to potential refund to customers following NYSPSC review and completion of an investigation by the NYSPSC staff of the company’s capital expenditures during the April 2005 through March 2008 period covered by the 2005 Electric Rate Agreement for transmission and distribution utility plant (the 2005-2008 Capital Expenditure Review). In December 2009, the company established a $24 million regulatory liability for refund to customers with respect to this matter and recognized a $14 million (after-tax) charge in its 2009 consolidated financial statements. In February 2010, the company and the NYSPSC staff entered into a Joint Proposal, which is subject to NYSPSC approval, relating to this matter pursuant to which the company, among other things, agreed to refund to customers an amount approximating this regulatory liability.

Under the 2005 Electric Rate Agreement, if the actual amount of pension or other postretirement benefit costs, environmental remediation costs and, if the variation exceeded 2.5 percent, property taxes or the cost of moving facilities to avoid interfering with government projects was greater than the respective amount for each such cost reflected in rates, the company would accrue a regulatory asset for the difference and defer recognition in income of the difference. If the actual amount had been less than the amount reflected in electric rates, the company would have accrued a regulatory liability for the difference and deferred recognition in income of the difference. As a result of the cost reconciliations, in 2008, the company reduced pre-tax net income by $18 million, and in 2007, the company deferred expenses of $35 million.

The 2005 Electric Rate Agreement also provided for the continuation of the rate provisions pursuant to which the company recovers its potential strandable costs and its purchased power and fuel costs from customers.

The 2005 Electric Rate Agreement included potential positive earnings adjustments (incentives) if the company met certain standards for its retail access and demand side management programs, and potential negative earnings adjustments (revenue reductions), which could have been substantial, if it did not meet certain standards for (i) frequency and duration of service interruptions; (ii) major outages; (iii) repair, removal or replacement of damaged poles, temporary shunts, street lights, traffic signals and circuit breakers; and (iv) customer service. In 2008 and 2007, the company recorded an incentive for demand side management initiatives of $5 million and $11 million, respectively. The company recorded no incentives in 2008. In 2007, the company recorded incentives of $4 million associated with its efforts to promote retail access in its service territory. There was no revenue reduction in 2008. In 2007, the company recorded revenue reductions of $9 million for not meeting certain standards for frequency and duration of service interruptions.

In March 2008, the NYSPSC adopted an order, issued and effective March 25, 2008, granting CECONY an electric rate increase, effective April 1, 2008, of $425 million.

The NYSPSC ruling reflected the following major items:

•

a return on common equity of 9.1 percent;

•

an increase to $150 million from $60 million in the level of annual revenues that, for purposes of setting rates, it is assumed the company will receive and retain from the sale of transmission rights on the company’s transmission system, with the difference between such actual revenues for the rate year and $150 million to be recoverable from or refundable to customers, as the case may be (the company accrued $36 million of revenues under this provision in 2008);

•

collection of $237 million of the $425 million rate increase is subject to potential refund to customers following the 2005-2008 Capital Expenditure Review (see discussion above in this Note B of the February 2010 Joint Proposal);

•

continuation of the rate provisions under which pension and other post-retirement benefit expenses and environmental remediation expenses are reconciled to amounts reflected in rates (the company deferred recognition of $25 million of expenses under these provisions in 2008);

•

change to the reconciliation provisions for transmission and distribution expenditures and costs to relocate facilities to accommodate government projects, which under the NYSPSC ruling will be reconciled only to the extent actual expenditures are less than amounts reflected in rates (the company reduced revenues by $15 million under this provision in 2008);

•

discontinuation of the provisions under which property taxes were reconciled to amounts reflected in rates;

•

potential operations penalties of up to $152 million annually if certain customer service and system reliability performance targets are not met (the company reduced revenues by $5 million under these provisions in 2008);

•

implementation of a revenue decoupling mechanism under which the company’s actual energy delivery revenues would be compared, on a periodic basis, with the authorized delivery revenues and the difference accrued, with interest, for refund to, or recovery from, customers, as applicable (the company reduced revenues by $7 million pursuant to this provision in 2008); and

•

continuation of the rate provisions pursuant to which the company recovers its purchased power and fuel costs from customers.

In April 2009, the NYSPSC adopted an order granting CECONY an electric rate increase, effective April 6, 2009, of $523 million. The NYSPSC ruling reflects the following major items:

•

A return on common equity of 10.0 percent, based on certain assumptions, including a common equity ratio of 48 percent and achievement by the company of unspecified austerity measures required by the NYSPSC that would result in avoided revenue requirements of $60 million (as to which, if not achieved despite the company’s best efforts, the company may, after March 31, 2010, petition the NYSPSC for deferral of the costs related to up to $30 million of revenue requirements);

•

continuation of the revenue decoupling mechanism (in 2009, the company increased revenues by $122 million pursuant to this mechanism and the corresponding provision of the March 2008 rate order);

•

a decrease to $120 million from $150 million in the level of annual revenues that, for purposes of setting rates, it is assumed the company will receive and retain from the sale of transmission rights on the company’s transmission system, with the difference between such actual revenues for the rate year and $120 million to be recoverable from or refundable to customers, as the case may be (in 2009, the company accrued $7 million of revenues under this provision and the corresponding provision of the March 2008 rate order);

•

reconciliation of the actual amount of pension and other postretirement benefit costs, environmental remediation expenses, property taxes and the cost of long-term debt to amounts reflected in rates (in 2009, the company deferred recognition of $36.4 million of expenses under these provisions and the corresponding provisions of the March 2008 rate order);

•

if actual generation, transmission, distribution and shared service plant expenditures (other than removal costs) and capital costs incurred to relocate facilities to accommodate government projects are less than amounts reflected in rates for the respective category of expenditures, the company will accrue a regulatory liability and reduce its revenues by the revenue requirement impact of the difference (i.e., return on investment, depreciation and income taxes) (in 2009, the company did not reduce revenues under these provisions and the corresponding provisions of the March 2008 rate order);

•

collection of a surcharge (in addition to the electric rate increase) from customers in connection with an increase (estimated at $198 million), effective April 2009, in a New York State assessment;

•

continuation of provisions for potential operations penalties of up to $152 million annually if certain customer service and system reliability performance targets are not met (in 2009, the company did not reduce revenues under these provisions and the corresponding provisions of the March 2008 rate order);

•

continuation of the collection of a portion (increased, to reflect higher capital costs, from $237 million collected in the rate year ended March 2009 to $254 million for the rate year ending March 2010) of the April 2008 rate increase subject to potential refund to

customers following the 2005-2008 Capital Expenditure Review (see discussion above in this Note B of the February 2010 Joint Proposal). The portion collected is also subject to refund in the event the NYSPSC determines that some disallowance of costs the company has recovered is warranted to address potential impacts of alleged unlawful conduct by arrested employees and contractors (see “Other Regulatory Matters” below in this Note B and “Investigation of Contractor Payments” in Note H).

•

continuation of the rate provisions pursuant to which the company recovers its purchased power and fuel costs from customers.

In May 2009, the company filed with the NYSPSC the company’s plan with respect to austerity measures that would reduce the company’s revenue requirements during the rate year ending March 31, 2010 by $60 million. The company’s austerity plans include reductions in labor costs, including compensation and other employee benefits, deferral of expenditures for capital projects and operating and maintenance programs and other initiatives. These reductions collectively represent $47 million of the $60 million reduction sought by the NYSPSC. In May 2009, the company filed with the NYSPSC a request for rehearing of the NYSPSC’s April 2009 order with respect to its austerity provisions and certain other matters. The February 2010 Joint Proposal (discussed above in Note B) provides for the company to withdraw this request.

In November 2009, CECONY, the NYSPSC staff and other parties entered into a Joint Proposal with respect to the company’s May 2009 request to the NYSPSC for an increase in the rates the company can charge its customers for electric delivery service. The Joint Proposal, which is subject to NYSPSC approval, covers the three-year period April 2010 through March 2013 and provides for electric base rate increases of $420 million, effective April 2010 and 2011, and $287 million, effective April 2012, with an additional $133 million to be collected through a surcharge in the rate year ending March 2013.

The Joint Proposal reflects the following major items:

•

A weighted average cost of capital of 7.76 percent, reflecting:

return on common equity of 10.15 percent, assuming achievement by the company of unspecified austerity measures that would result in reductions in operations and maintenance expenses of $27 million, $20 million and $13 million in the rate years ending March 2011, 2012 and 2013, respectively;

cost of long-term debt of 5.65 percent;

common equity ratio of 48 percent; and

average rate base of $14,887 million, $15,987 million and $16,826 million for the rate years ending March 2011, 2012 and 2013, respectively.

•

Deferral as a regulatory liability of the revenue requirement impact (i.e., return on investment, depreciation and income taxes) of the amount, if any, by which (A) actual average net plant balances allocable to the company’s electric business for (i) transmission and distribution, excluding municipal infrastructure support (T&D), (ii) generation, shared services and, subject to certain adjustments, municipal infrastructure support (Other) and (iii) a finance and supply chain enterprise resource project (ERP) are less than (B) amounts reflected in rates for the respective category for each rate year. The amounts reflected in rates are:


	Rate Year Ending March 31,
*(Millions of Dollars)*	2011		2012		2013
T&D	$	13,818	$	14,742	$	15,414
Other		1,487		1,565		1,650
ERP		—		25		115

Any deferral for T&D and Other for the rate year ending March 2011 will be based on average net plant balances for the year and for the rate years ending March 2012 and 2013 will be based on average net plant balances over the term of the Joint Proposal.

Any deferral for ERP would be based on average net plant balances for ERP over the term of the Joint Proposal.

•

During the term of the Joint Proposal, the company will not accrue any additional revenue for carrying charges on any capital expenditures allocable to its electric business in excess of specified limits (which limits exclude certain expenditures, including expenditures for projects for which the company has been selected to receive grants under the American Recovery and Reinvestment Act of 2009):

T&D capital expenditures – $1,200 million for the rate year ending March 2011 and an aggregate $2,300 million for the period from April 2011 through March 2013;

Other capital expenditures – $220 million for the rate year ending March 2011 and an aggregate $402 million for the period from April 2011 through March 2013; and

ERP capital expenditures – $125 million.

•

The company is not precluded from seeking to recover in rates effective after March 2013 the annual revenue requirement for T&D and Other capital expenditures made during the term of the Joint Proposal in excess of the applicable capital expenditure limit; provided that:

the company can justify the need for and reasonableness of, and the company’s inability to reasonably avoid, such excess capital expenditures; and

the return on investment for any such excess T&D or Other capital expenditures made during the rate year ending March 2011 will be calculated based on the company’s overall cost of debt.

•

Sharing with electric customers of any actual earnings, excluding the effects of any penalties and certain other items, above specified percentage returns on equity (based on actual average common equity ratio, subject to a 50 percent maximum) as follows:

for the rate year ending March 2011, the company will allocate to customers the revenue requirement equivalent of 50 percent of earnings above 11.15 percent up to and including 12.149 percent, 75 percent of earnings equal to or in excess of 12.15 percent up to and including 13.149 percent and 90 percent of earnings equal to or in excess of 13.15 percent;

for the rate years ending March 2012 and 2013, the company will allocate to customers the revenue requirement equivalent of 60 percent of the earnings, calculated on a cumulative basis for such years, in excess of 10.65 percent up to and including 12.149 percent, 75 percent of such cumulative earnings equal to or in excess of 12.15 percent up to and including 13.149 percent and 90 percent of such cumulative earnings equal to or in excess of 13.15 percent;

the customers’ share of any such earnings and 50 percent of the company’s share would be applied to reduce regulatory assets for pensions and other post-retirement benefits and other costs; and

in the event the company does not file for a rate increase to take effect in April 2013, the earnings sharing levels for the rate year ending March 2013 will continue in effect, calculated on an annual basis, until base rates are reset by the NYSPSC.

•

Deferral as a regulatory asset or liability, as the case may be, of differences between the actual level of certain expenses, including, among others, expenses for pension and other postretirement benefits, environmental remediation, relocation of facilities to accommodate government projects, property taxes and (for the rate years ending March 2012 and 2013) long-term debt, and amounts for those expenses reflected in rates (with deferral for the difference in property taxes limited to 80 percent of the difference, subject to annual maximum for the remaining 20 percent of the difference of not more than a 10 basis point impact on return on common equity and deferral of facility relocation expenses in excess amounts reflected in rates subject to certain limitations).

•

Continuation of the provisions in the April 2009 order relating to revenues from the sale of transmission rights on the company’s transmission system;

•

Continuation of the revenue decoupling mechanism under which the company’s actual electric delivery revenues would be compared, on a periodic basis, with the delivery revenues reflected in rates, and the difference accrued as a regulatory liability (for refund to electric customers) or a regulatory asset (for recovery from electric customers), as the case may be.

•

Continuation of the rate provisions pursuant to which the company recovers its purchased power and fuel costs from electric customers.

•

Continuation of provisions for potential operations penalties of up to $152 million annually if certain electric customer service and system reliability performance targets are not met.

•

Collection from electric customers of $249 million on an annual basis subject to potential refund following the 2005-2008 Capital Expenditure Review (see discussion above in this Note B of the February 2010 Joint Proposal). The amount to be collected would also be subject to refund in the event the NYSPSC determined that some disallowance of costs the company has recovered is warranted to address potential impacts of alleged unlawful conduct by arrested employees and contractors (see “Other Regulatory Matters” below in this Note B and “Investigation of Contractor Payments” in Note H).

O&R — Electric

In October 2007, the NYSPSC issued an order that continued O&R’s rates for electric service rendered in New York at current levels. The order, which was based on an allowed annual rate of return on common equity of 9.1 percent increased, effective July 1, 2007, by $13.1 million annually the amount recognized for pension and other postretirement benefit costs. Because O&R, in accordance with applicable New York regulatory provisions, defers the difference between the actual amount of such costs and the amounts for such costs reflected in rates, the effect of the increase was to decrease the company’s deferrals of such costs and increase other operations and maintenance expense by a like amount. As required by the order, the company also reduced other operating revenues and recorded a regulatory liability of $3 million for earnings attributable to its New York electric business in excess of a 9.1 percent annual rate of return on common equity applicable to the period March through June 2007. In June 2007, O&R commenced an action in New York State Supreme Court seeking to annul the March 2007 NYSPSC order that initiated the proceeding in which the October 2007 order was issued.

In July 2008, the NYSPSC approved a Joint Proposal among O&R, the NYSPSC staff and other parties for the rates O&R can charge its New York customers for electric service from July 2008 through June 2011. The rate plan approved by the NYSPSC provides for electric rate increases of $15.6 million, $15.6 million and $5.7 million effective July 1, 2008, 2009 and 2010, respectively, and the collection of an additional $9.9 million during the 12-month period beginning July 1, 2010.

The Joint Proposal reflected the following major items:

•

an annual return on common equity of 9.4 percent;

•

most of any actual earnings above a 10.2 percent return on equity (based on actual average common equity ratio, subject to a 50 percent maximum) are to be applied to reduce regulatory assets for pension and other post-retirement benefit expenses (the company did not reduce regulatory assets under this provision in 2009 or 2008);

•

deferral as a regulatory asset or regulatory liability, as the case may be, of the difference between actual pension and other post-retirement benefit expenses, environmental remediation expenses, property taxes, tax-exempt debt costs and certain other expenses and amounts for those expenses reflected in rates (the company deferred $16 million and $21 million of expenses under this provision in 2009 and 2008, respectively);

•

deferral as a regulatory liability of the revenue requirement impact (i.e., return on investment, depreciation and income taxes) of the amount, if any, by which actual transmission and distribution related capital expenditures are less than amounts reflected in rates (the company deferred $8 million and $1 million of expenses under this provision in 2009 and 2008, respectively);

•

deferral as a regulatory asset of increases, if any, in certain expenses above a 4 percent annual inflation rate, but only if the actual annual return on common equity is less than 9.4 percent (the company did not defer any expenses under this provision in 2009 or 2008);

•

potential negative earnings adjustments of up to $3 million annually if certain customer service and system reliability performance targets are not met (the company reduced revenues by $0.4 million under these provisions in 2008; the company met the performance targets in 2009);

•

implementation of a revenue decoupling mechanism under which actual energy delivery revenues would be compared, on a periodic basis, with the authorized delivery revenues with the difference accrued, with interest, for refund to, or recovery from, customers, as applicable (the company accrued $6.6 million and $3.3 million of revenues pursuant to this provision in 2009 and 2008, respectively);

•

continuation of the rate provisions pursuant to which the company recovers its purchased power costs from customers; and

•

withdrawal of the litigation O&R commenced seeking to annul the NYSPSC’s March and October 2007 orders relating to O&R’s electric rates.

In March 2007, the New Jersey Board of Public Utilities (NJBPU) approved a three-year electric base rate plan for Rockland Electric Company (RECO), O&R’s New Jersey regulated utility subsidiary that went into effect on April 1, 2007. The plan provides for a $6.4 million rate increase during the first year, with no further increase during the final two years. The plan reflects a return on common equity of 9.75 percent and a common equity ratio of 46.5 percent of capitalization.

In August 2009, RECO filed a request with the NJBPU for a net increase in the rates it charges for electric service, effective May 15, 2010, of $9.8 million. The filing reflects a return on common equity of 11.0 percent and a common equity ratio of 53.6 percent. The filing proposes the continuation of the current provisions with respect to recovery from customers of the cost of purchased power and proposes a reconciliation of actual expenses to amounts reflected in electric rates for pension and other postretirement benefit costs. In January 2010, RECO increased its requested rate increase to $13.8 million, primarily to reflect lower estimated sales volumes.

CECONY — Gas

In September 2004, the NYSPSC approved a Joint Proposal by CECONY, the staff of the NYSPSC and other parties with respect to the rates the company could charge its customers for gas and steam services. The approved gas rate plan covered the three-year period October 2004 through September 2007, and provided for an increase in gas base rates of $46.8 million, effective October 1, 2004. The rate increase was net of a $17.5 million pre-tax charge to gas operating revenues, which the company recognized in 2004, to resolve certain issues raised in the proceeding, relating primarily to the treatment of prior period pension credits. In addition to this rate increase, the company retained the first $35 million of net revenues from non-firm customer transactions in each year of the plan. The rate increase also included the amortization of certain regulatory assets and liabilities. The net effect of this amortization was a non-cash increase in gas revenues of $41 million over the period of the three-year rate plan.

Additional provisions of the gas rate plan included: equal sharing with customers of earnings above an 11.75 percent return on common equity (earnings for the rate years ended September 2005, 2006 and 2007 were below this level); reconciliation of pension and other post-employment benefit costs allocable to the gas business to the amounts for such costs reflected in rates, with the difference deferred as a regulatory asset or liability, as the case may be, for future recovery from or refund to customers; opportunities to retain for shareholders a percentage of annual gas net revenues from non-firm customer transactions (20 percent of revenues between $35 million and $50 million, 25 percent between $50 million and $70 million and 10 percent over $70 million), and to earn an incentive of up to $8.5 million over the period of the rate plan depending upon the number of customers that migrate to retail access; continuation of provisions for the recovery from customers on a current basis of the cost of purchased gas and for the recovery of environmental remediation expenses; continuation of provisions pursuant to which the effects of weather on gas income are moderated; and continuation of the deferral as a regulatory asset or liability, subject to certain limitations, of differences between actual costs and amounts reflected in rates for property taxes and interference costs.

In September 2007, the NYSPSC approved the Joint Proposal that CECONY had entered into in June 2007 with the staff of the NYSPSC and other parties with respect to the rates the company can charge its customers for gas service. The Joint Proposal had provided for rate increases of $84.6 million, $32.7 million and $42.7 million, effective October 1, 2007, 2008 and 2009, respectively, along with annual funding for new energy efficiency programs of $14 million. The NYSPSC modified the Joint Proposal to provide for levelized annual rate increases of $67.5 million in each year of the three year rate plan.

The Joint Proposal continues the previous gas rate plan provisions with respect to recovery from customers of the cost of purchased gas and environmental remediation expenses and corresponding provisions pursuant to which the effects of weather on gas income are moderated and for the reconciliation of actual expenses allocable to the gas business to the amounts for such costs reflected in gas rates for pension and other postretirement benefit costs, property taxes and interference costs. Additional provisions of the gas rate plan include: a revenue decoupling mechanism (pursuant to which the company accrued $25 million, $17 million and $8 million of revenues in 2009, 2008 and 2007, respectively) and equal sharing with customers of earnings above a 10.7 percent return on common equity (earnings for the rate years ended September 30, 2009 and 2008 were reduced $0 and $9 million, respectively, for earnings above the 10.7 percent threshold).

In November 2009, CECONY filed a request with the NYSPSC for a three-year gas rate plan, with level annual rate increases effective October 2010, 2011 and 2012 of $115.5 million per year. The filing reflects a return on common equity of 11.3 percent and a common equity ratio of 48.2 percent. In the alternative, the company requested a net increase in the rates it charges for gas service, effective October 2010, of $160.8 million that would cover the period October 2010 through September 2011. The filing proposes continuation of the current gas rate plan’s revenue decoupling mechanism and provisions with respect to recovery from customers of the cost of purchased gas and corresponding provisions for the reconciliation of actual expenses allocable to the gas business to the amounts for such expenses reflected in gas rates for pension and other postretirement benefit costs, environmental remediation expenses, property taxes and municipal infrastructure support.

O&R — Gas

In October 2006, the NYSPSC approved the June 2006 settlement agreement among O&R, the staff of the NYSPSC and other parties. The settlement agreement established a rate plan that covered the three-year period November 1, 2006 through October 31, 2009. The rate plan provided for rate increases in base rates of $12 million in the first year, $0.7 million in the second year and $1.1 million in the third year. To phase-in the effect of the increase for customers, the rate plan provided for O&R to accrue revenues for, but defer billing to customers of, $5.5 million of the first rate year rate increase by establishing a regulatory asset which, together with interest, was billed to customers in the second and third years. As a result, O&R’s billings to customers increased $6.5 million in each of the first two years and $6.3 million in the third. The first year rate increase included $2.3 million relating to a change in the way customers are provided the benefit of non-firm revenue from sales of pipeline transportation capacity. Under the prior rate plan, base rates were reduced to reflect the assumption that the company would realize these revenues. Under the 2006 rate plan, such revenues were used to offset the cost of gas to be recovered from customers. The rate plan continued the provisions pursuant to which the company recovers its cost of purchasing gas and the provisions pursuant to which the effects of weather on gas income are moderated.

The rate plan provided that if the actual amount of pension or other postretirement benefit costs, environmental remediation costs, property taxes and certain other costs vary from the respective amount for each such cost reflected in gas rates (cost reconciliations), the company would defer recognition of the variation in income and, as the case may be, establish a regulatory asset or liability for recovery from, or refund to, customers of the variation (86 percent of the variation, in the case of property tax differences due to assessment changes).

Earnings attributable to its gas business excluding any revenue reductions (O&R Adjusted Earnings) in excess of an 11 percent annual return on common equity (based upon the actual average common equity ratio, subject to a maximum 50 percent of capitalization) were to be allocated as follows: above an 11 percent return were to be used to offset up to one-half of any regulatory asset to be recorded in that year resulting from the cost reconciliations (discussed in the preceding paragraph). One-half of any remaining O&R Adjusted Earnings between 11 and 12 percent return were to be retained by the company, with the balance deferred for the benefit of customers. Thirty-five percent of any remaining O&R Adjusted Earnings between a 12 and 14 percent return were to be retained by the company, with the balance deferred for the benefit of customers. Any remaining O&R Adjusted Earnings above a 14 percent return were to be deferred for the benefit of customers. For purposes of these earnings sharing provisions, if in any rate year O&R Adjusted Earnings was less than 11 percent, the shortfall was deducted from O&R Adjusted Earnings for the other rate years. The earnings sharing thresholds were to each be reduced by 20 basis points if certain objectives relating to the company’s retail choice program are not met. O&R recorded regulatory liabilities of $0, $0 and $1.3 million for earnings in excess of the 11 percent target return on equity for the rate years ended October 31, 2009, 2008 and 2007, respectively.

The rate plan also included up to $1 million of potential earnings adjustments in the first year of the agreement, increasing up to $1.2 million, if the company did not comply with certain requirements regarding gas main protection and customer service. O&R recorded regulatory liabilities of $0.4 million and $0.2 million for not complying with certain requirements regarding safety and customer service for the rate years ended October 31, 2008 and 2007, respectively. The company met these requirements for the rate year ended October 31, 2009.

In October 2009, the NYSPSC adopted a June 2009 Joint Proposal among O&R, NYSPSC staff and other parties. As approved, the Joint Proposal establishes a gas rate plan that covers the three-year period November 1, 2009 through October 31, 2012 and provides for increases in base rates of $9 million in each of the first two years and $4.6 million in the third year, with an additional $4.3 million to be collected through a surcharge in the third rate year. The rate plan reflects the following major items:

•

an annual return on common equity of 10.4 percent;

•

most of any actual earnings above an 11.4 percent annual return on common equity (based upon the actual average common equity ratio, subject to a maximum 50 percent of capitalization) are to be applied to reduce regulatory assets;

•

deferral as a regulatory asset or liability, as the case may be, of differences between the actual level of certain expenses, including expenses for pension and other postretirement benefits, environmental remediation, property taxes and taxable and tax-exempt long-term debt, and amounts for those expenses reflected in rates;

•

deferral as a regulatory liability of the revenue requirement impact (i.e., return on investment, depreciation and income taxes) of the amount, if any, by which average gas net plant balances are less than balances reflected in rates;

•

deferral as a regulatory asset of increases, if any over the course of the rate plan, in certain expenses above a 4 percent annual inflation rate, but only if the actual annual return on common equity is less than 10.4 percent;

•

implementation of a revenue decoupling mechanism;

•

continuation of the provisions pursuant to which the company recovers its cost of purchasing gas and the provisions pursuant to which the effects of weather on gas income are moderated; and

•

potential negative earnings adjustments of up to $1.4 million annually if certain operations and customer service requirements are not met.

CECONY — Steam

In September 2006, the NYSPSC approved the June 2006 settlement agreement among CECONY, the staff of the NYSPSC and other parties. The settlement agreement established a rate plan that covered the two-year period October 1, 2006 through September 30, 2008. The rate plan provided for no changes in base rates or in the rate provisions pursuant to which the company recovers its fuel and purchased steam costs (the fuel adjustment clause), except for changes in the manner in which certain costs are recovered.

The rate plan provided that if the actual amount of pension or other postretirement benefit costs, environmental remediation costs, property taxes or interference costs is greater than the respective amount for each such cost reflected in steam rates, the company would recognize a regulatory asset for the difference (90 percent of the difference, in the case of property taxes and interference costs) and defer recognition in expense of the difference. If the actual amount of such costs had been less than the amount reflected in steam rates, the company would recognize a regulatory liability for the difference and decrease its revenues by the amount of such difference (90 percent of the difference, in the case of property taxes and interference costs). The company recognized a regulatory liability and increased expenses by $1.7 million and $1.9 million under this provision in 2008 and 2007, respectively.

Earnings attributable to the steam business, excluding the net revenue effect of steam sales related to colder-than-normal weather and certain other items, (Steam Adjusted Earnings) for a rate year in excess of 11 percent return on common equity (based upon the actual average common equity ratio, subject to a maximum of 50 percent of capitalization) were allocated as follows: between 11 and 12 percent were to be used first to offset up to one-half of any regulatory asset recorded in the year resulting from the cost reconciliations (discussed in the preceding paragraph) for the rate year. The company then could retain one-half of any remaining such Steam Adjusted Earnings, with the balance being deferred for the benefit of customers. Any Steam Adjusted Earnings in excess of a 12 percent return on common equity were to be used first to offset any regulatory asset resulting from the cost reconciliations, with the company retaining one-quarter of any remaining Steam Adjusted Earnings and the balance being deferred for the benefit of customers. The earnings sharing thresholds would each be reduced by 20 basis points if certain requirements are not met. Earnings for the rate years ended September 30, 2008 and 2007 were below the 11 percent return on common equity.

The rate plan also included up to approximately $4 million of potential revenue reductions if the company did not comply with certain requirements regarding steam business development and certain other matters. There were no revenue reductions recorded for the rate years ending September 30, 2008 and 2007.

In September 2008, the NYSPSC approved the June 2008 Joint Proposal among the company, the NYSPSC staff and other parties with respect to the rates the company can charge its customers for steam service. The Joint Proposal covers the period from October 1, 2008 through September 30, 2010. The Joint Proposal provides for steam rate increases of $43.7 million effective October 1, 2008 and 2009.

The Joint Proposal reflects the following major items:

•

an annual return on common equity of 9.3 percent;

•

any actual earnings above a 10.1 percent return on equity (based on actual average common equity ratio, subject to a 50 percent maximum) are to be shared as follows: half will be deferred for the benefit of customers and the other half is to be retained by the company (with half of the company’s share subject to offset to reduce any regulatory assets for under-collections of property taxes) (earnings for the rate year ended September 30, 2009 did not exceed a 10.1 percent return on equity);

•

deferral as a regulatory asset or regulatory liability, as the case may be, of the difference between (i) actual costs for pension and other post-retirement benefits, environmental remediation, property taxes, certain tax-exempt debt, municipal infrastructure support and certain other costs and (ii) amounts for those costs reflected in rates (90 percent of the difference in the case of property taxes and interference costs) (the company decreased expenses by $14.4 million and increased expenses by $3.1 million under these provisions in 2009 and 2008, respectively);

•

deferral as a regulatory liability of the revenue requirement impact (i.e., return on investment, depreciation and income taxes) of the amount, if any, by which the actual capital expenditures related to steam production plant are less than amounts reflected in rates (there was no regulatory liability recorded for the rate year ended September 30, 2009);

•

potential negative earnings adjustments (revenue reductions) of approximately $0.95 million to $1 million annually if certain business development, customer service and safety performance targets are not met (the company did not record any such adjustments in 2008) (there were no negative earnings adjustments recorded for the rate year ended September 30, 2009);

•

amortization of certain regulatory assets and liabilities, the net effect of which will be a non-cash increase in steam revenues of $20.3 million over the two-year period covered by the Joint Proposal; and

•

continuation of the rate provisions pursuant to which the company recovers its fuel and purchased steam costs from customers.

In November 2009, CECONY filed a request with the NYSPSC for a four-year steam rate plan, with level annual rate increases effective October 2010, 2011, 2012 and 2013 of $66.1 million per year. The filing reflects a return on common equity of 11.4 percent and a common equity ratio of 48.2 percent. In the alternative, the company requested a net increase in the rates it charges for steam service, effective October 2010, of $128.8 million that would cover the period October 2010 through September 2011. The filing proposes implementation of a revenue decoupling mechanism for steam and the continuation of the current steam rate plan’s provisions with respect to recovery from customers of the cost of fuel and purchased steam and corresponding provisions for the reconciliation of actual expenses allocable to the steam business to the amounts for such expenses reflected in steam rates for pension and other postretirement benefit costs, environmental remediation expenses, property taxes and municipal infrastructure support.

Other Regulatory Matters

In February 2009, the NYSPSC commenced a proceeding to examine the prudence of certain CECONY expenditures (see “Investigation of Contractor Payments” in Note H). Pursuant to NYSPSC orders, a portion of the company’s revenues (currently, $254 million, $32 million and $6 million on an annual basis for electric, gas and steam service, respectively) is being collected subject to potential refund to customers. At December 31, 2009, the company had collected an estimated $210 million from customers subject to potential refund in connection with this proceeding. The company is unable to estimate the amount, if any, of any such refund and, accordingly, has not established a regulatory liability for a refund.

In August 2009, the NYSPSC released a report on its management audit of the company. The NYSPSC is required to audit New York utilities every five years. The NYSPSC consultant that performed the audit identified areas for improvement, including with respect to the company’s construction program, planning and business processes and regulatory relationships. In October 2009, the company filed with the NYSPSC the company’s plan to implement the recommendations contained in the report.

Regulatory Assets and Liabilities

Regulatory assets and liabilities at December 31, 2009 and 2008 were comprised of the following items:


	Con Edison				CECONY
*(Millions of Dollars)*	2009		2008		2009		2008
Regulatory assets
Unrecognized pension and other postretirement costs	$	4,472	$	5,602	$	4,259	$	5,335
Future federal income tax		1,316		1,186		1,249		1,127
Environmental remediation costs		388		378		329		315
Surcharge for New York State Assessment		138		—		126		—
Revenue taxes		119		101		116		99
Deferred derivative losses – long-term		106		94		75		54
Pension and other postretirement benefits deferrals		101		92		49		38
Property tax reconciliation		85		46		85		46
Net electric deferrals		82		27		82		27
O&R transition bond charges		55		59		—		—
World Trade Center restoration costs		41		140		41		140
Workers’ compensation		37		38		37		38
Gas rate plan deferral		21		30		21		30
Other retirement program costs		12		14		12		14
Asbestos-related costs		10		10		9		9
Unbilled gas revenue		—		44		—		44
Recoverable energy costs		—		42		—		42
Other		120		152		100		128
Regulatory assets		7,103		8,055		6,590		7,486
Deferred derivative losses – current		141		288		104		247
Recoverable energy costs – current		60		172		—		146
Total Regulatory Assets	$	7,304	$	8,515	$	6,694	$	7,879
Regulatory liabilities
Allowance for cost of removal less salvage	$	371	$	378	$	303	$	313
Refundable energy costs		147		104		77		47
Net unbilled revenue deferrals		91		—		91		—
2005-2008 capital expenditure reserve		24		—		24		—
Gain on sale of First Avenue properties		23		30		23		30
Rate case amortizations		21		68		21		68
Electric rate case deferral		19		—		19		—
Other		162		157		145		142
Regulatory liabilities		858		737		703		600
Deferred derivative gains – current		8		23		8		23
Total Regulatory Liabilities	$	866	$	760	$	711	$	623

“Unrecognized pension and other postretirement costs” represents the net regulatory asset associated with the accounting rules for retirement benefits. See Note A.

“World Trade Center restoration costs” represents the non-capital costs (net of federal reimbursement and insurance recoveries) incurred by CECONY for emergency response to the September 11, 2001 attack on the World Trade Center, and for restoration of electric, gas and steam transmission and distribution facilities damaged in the attack. Non-capital costs include primarily the costs of moving facilities to avoid interfering with governmental projects (interference costs) and interest on capital and non-capital costs previously deferred. CECONY expects the NYSPSC to permit recovery from customers the prudently incurred costs relating to the World Trade Center attack (net of any federal reimbursement, insurance payments, litigation recoveries and tax savings). The company’s current rate agreements provide for recovery from customers of $25.8 million annually of these World Trade Center restoration costs.

“Revenue taxes” represents the timing difference between taxes collected and paid by the Utilities to fund mass transportation.

“Net electric deferrals” represents the remaining unamortized balance of certain regulatory assets and liabilities of CECONY that were combined effective April 1, 2005 and are being amortized to income over a ten year period, in accordance with CECONY’s April 2009 rate plan.

Effective March 31, 2009, the NYSPSC authorized CECONY to accrue unbilled electric, gas and steam revenues. At December 31, 2009, CECONY has deferred the net margin on the unbilled revenues for the future benefit of customers by accruing an asset of $413 million for unbilled revenues, recording refundable energy cost regulatory liabilities of $187 million for the costs of fuel and purchased power related to services provided but not yet billed, and recording regulatory liabilities of $91 million for the difference between the unbilled revenues and energy cost liabilities. Also, $44 million of the regulatory asset established in 1989 for unbilled gas revenues has been offset against the unbilled revenue regulatory liability.

Capitalization

12 Months Ended

Dec. 31, 2009

Capitalization

Note C — Capitalization

Common Stock

At December 31, 2009 and 2008, Con Edison owned all of the issued and outstanding shares of common stock of the Utilities and the competitive energy businesses. CECONY owns 21,976,200 shares of Con Edison stock, which it purchased prior to 2001 in connection with Con Edison’s stock repurchase plan. CECONY presents in the financial statements the cost of the Con Edison stock it owns as a reduction of common shareholder’s equity.

Capitalization of Con Edison

The outstanding capitalization for each of the Companies is shown on its Consolidated Statement of Capitalization, and for Con Edison includes the Utilities’ outstanding preferred stock and debt.

Preferred Stock of CECONY

As of December 31, 2009, 1,915,319 shares of CECONY’s $5 Cumulative Preferred Stock (the “$5 Preferred”) and 375,626 shares of its Cumulative Preferred Stock ($100 par value) were outstanding.

Dividends on the $5 Preferred Stock are $5 per share per annum, payable quarterly, and dividends on the Cumulative Preferred Stock are $4.65 per share per annum, payable quarterly. The preferred dividends must be declared by CECONY’s Board of Trustees to become payable. See “Dividends” below.

With respect to any corporate action to be taken by a vote of shareholders of CECONY, Con Edison (which owns all of the 235,488,094 shares of CECONY’s common stock that are outstanding) and the holders of the $5 Preferred are each entitled to one vote for each share held. Except as otherwise required by law, holders of the Cumulative Preferred Stock have no right to vote; provided, however, that if the $5 Preferred is no longer outstanding, the holders of the Cumulative Preferred Stock are entitled to one vote for each share with respect to any corporate action to be taken by a vote of the shareholders of CECONY. In addition, if dividends are in arrears for certain periods, the holders are entitled to certain rights with respect to the election of CECONY’s Trustees. Without the consent of the holders of the Cumulative Preferred Stock, CECONY may not create or authorize any kind of stock ranking prior to the Cumulative Preferred Stock or, if such actions would affect the holders of the Cumulative Preferred Stock adversely, be a party to any consolidation or merger, create or amend the terms of the Cumulative Preferred Stock or reclassify the Cumulative Preferred Stock. CECONY may redeem the $5 Preferred at a redemption price of $105 per share and the Cumulative Preferred Stock at a redemption price of $101 per share (in each case, plus accrued and unpaid dividends). In the event of the dissolution, liquidation or winding up of the affairs of CECONY, before any distribution of capital assets could be made to the holders of the company’s common stock, the holders of the $5 Preferred and the Cumulative Preferred Stock would each be entitled to receive $100 per share, in the case of an involuntary liquidation, or an amount equal to the redemption price per share, in the case of a voluntary liquidation, in each case together with all accrued and unpaid dividends.

Dividends

In accordance with NYSPSC requirements, the dividends that the Utilities generally pay are limited to not more than 100 percent of their respective income available for dividends calculated on a two-year rolling average basis. Excluded from the calculation of “income available for dividends” are non-cash charges to income resulting from accounting changes or charges to income resulting from significant unanticipated events. The restriction also does not apply to dividends paid in order to transfer to Con Edison proceeds from major transactions, such as asset sales, or to dividends reducing each utility subsidiary’s equity ratio to a level appropriate to its business risk.

In addition, no dividends may be paid, or funds set apart for payment, on CECONY’s common stock until all dividends accrued on the $5 Preferred Stock and Cumulative Preferred Stock have been paid, or declared and set apart for payment.

Long-term Debt

Long-term debt maturing in the period 2010-2014 is as follows:


*(Millions of Dollars)*	Con Edison		CECONY
2010	$	731	$	625
2011		5		—
2012		305		300
2013		705		700
2014		536		475

The Utilities have issued $324 million of tax-exempt debt through the New York State Energy Research and Development Authority (NYSERDA) that currently bear interest at a rate determined weekly and is subject to tender by bondholders for purchase by the Utilities. At December 31, 2008, $16 million of the $126 million of CECONY’s Series 2005A weekly-rate, tax-exempt debt (Series 2005A Debt), $49 million of the $55 million of O&R’s weekly-rate, tax-exempt debt insured by Financial Guaranty Insurance Company (Series 1994A Debt), and $16 million of the $44 million of O&R’s weekly-rate, tax exempt debt insured by Ambac Assurance Company (Series 1995A Debt), had been tendered by bondholders. The tendered bonds were purchased with funds drawn under letters of credit maintained as liquidity facilities for the tax-exempt debt. O&R reimbursed the bank in 2008 for the funds used to purchase its tendered bonds, together with interest thereon. At December 31, 2008, CECONY’s obligation to reimburse the bank for funds used to purchase the Series 2005A Debt that was tendered is included as long-term debt in the Companies’ consolidated balance sheets. In January 2009, the tendered Series 2005A Debt was remarketed and the proceeds from the remarketing were used to reimburse the bank. The tendered Series 1995A Debt and tendered Series 1994A Debt were remarketed in April 2009 and June 2009, respectively. The proceeds from each remarketing were used to pay short-term borrowings that funded the purchased tendered bonds.

Long-term debt is stated at cost, which in total, as of December 31, 2009, approximates fair value (estimated based on year-end market valuations for the debt).

At December 31, 2009 and 2008, long-term debt of Con Edison included $34 million and $37 million, respectively, of Transition Bonds issued in 2004 by O&R’s New Jersey utility subsidiary through a special purpose entity.

Significant Debt Covenants

The significant debt covenants under the financing arrangements for the notes of Con Edison and the debentures of CECONY are obligations to pay principal and interest when due, covenants not to consolidate with or merge into any other corporation unless certain conditions are met and, for Con Edison’s notes, covenants that Con Edison shall continue its utility business in New York City and shall not permit Con Edison’s ratio of consolidated debt to consolidated capital to exceed 0.675 to 1. Con Edison’s notes are also subject to cross default provisions with respect to other indebtedness of Con Edison or its material subsidiaries having a then outstanding principal balance in excess of $100 million. CECONY’s debentures have no cross default provisions. The tax-exempt financing arrangements of the Utilities are subject to covenants for the CECONY debentures discussed above and the covenants discussed below. The Companies believe that they were in compliance with their significant debt covenants at December 31, 2009.

The tax-exempt financing arrangements involved the issuance of uncollateralized promissory notes of the Utilities to NYSERDA in exchange for the net proceeds of a like amount of tax-exempt bonds with substantially the same terms sold to the public by NYSERDA. The tax-exempt financing arrangements include covenants with respect to the tax-exempt status of the financing, including covenants with respect to the use of the facilities financed. The arrangements include provisions for the maintenance of liquidity and credit facilities, the failure to comply with which would, except as otherwise provided, constitute an event of default with respect to the debt to which such provisions applied.

The failure to comply with debt covenants would, except as otherwise provided, constitute an event of default with respect to the debt to which such provisions applied. If an event of default were to occur, the principal and accrued interest on the debt to which such event of default applied and, in the case of the Con Edison notes, a make-whole premium might and, in the case of certain events of default would, become due and payable immediately.

The liquidity and credit facilities currently in effect for the tax-exempt financing include covenants that the ratio of debt to total capital of the obligated utility will not at any time exceed 0.65 to 1 and that, subject to certain exceptions, the utility will not mortgage, lien, pledge or otherwise encumber its assets. Certain of the facilities also include as events of default, defaults in payments of other debt obligations in excess of specified levels ($100 million for CECONY).

Pension Benefits

12 Months Ended

Dec. 31, 2009

Pension Benefits

Note E — Pension Benefits

Con Edison maintains a tax-qualified, non-contributory pension plan that covers substantially all employees of CECONY and O&R and certain employees of Con Edison’s competitive energy businesses. The plan is designed to comply with the Internal Revenue Code and the Employee Retirement Income Security Act of 1974. In addition, Con Edison maintains additional non-qualified supplemental pension plans.

Net Periodic Benefit Cost

The components of the Companies’ net periodic benefit costs for 2009, 2008 and 2007 were as follows:


	Con Edison									CECONY
*(Millions of Dollars)*	2009			2008			2007			2009			2008			2007
Service cost – including administrative expenses	$	159		$	139		$	131		$	149		$	129		$	122
Interest cost on projected benefit obligation		525			515			491			492			482			459
Expected return on plan assets		(691	)		(691	)		(646	)		(659	)		(660	)		(618	)
Amortization of net actuarial loss		299			192			160			271			170			139
Amortization of prior service costs		8			8			11			7			7			9
NET PERIODIC BENEFIT COST	$	300		$	163		$	147		$	260		$	128		$	111
Amortization of regulatory asset*		3			4			4			3			4			4
TOTAL PERIODIC BENEFIT COST	$	303		$	167		$	151		$	263		$	132		$	115
Cost capitalized		(109	)		(59	)		(50	)		(98	)		(50	)		(41	)
Cost deferred		(38	)		(40	)		(86	)		(32	)		(40	)		(87	)
Cost charged (credited) to operating expenses	$	156		$	68		$	15		$	133		$	42		$	(13	)

*	Relates to increases in CECONY’s pension obligations of $33 million from a 1993 special retirement program and $45 million from a 1999 special retirement program.

Funded Status

The funded status at December 31, 2009, 2008 and 2007 was as follows:


	Con Edison									CECONY
*(Millions of Dollars)*	2009			2008			2007			2009			2008			2007
CHANGE IN PROJECTED BENEFIT OBLIGATION
Projected benefit obligation at beginning of year	$	9,383		$	8,696		$	8,300		$	8,793		$	8,137		$	7,767
Service cost – excluding administrative expenses		158			137			130			147			128			121
Interest cost on projected benefit obligation		525			515			491			492			482			459
Plan amendments		5			—			—			—			—			—
Net actuarial (gain)/loss		(215	)		468			179			(216	)		449			165
Benefits paid		(448	)		(433	)		(404	)		(413	)		(403	)		(375	)
PROJECTED BENEFIT OBLIGATION AT END OF YEAR	$	9,408		$	9,383		$	8,696		$	8,803		$	8,793		$	8,137
CHANGE IN PLAN ASSETS
Fair value of plan assets at beginning of year	$	5,836		$	8,400		$	8,124		$	5,562		$	8,025		$	7,780
Actual return on plan assets		1,220			(2,263	)		570			1,166			(2,158	)		545
Employer contributions		291			154			140			249			119			104
Benefits paid		(448	)		(433	)		(404	)		(413	)		(403	)		(375	)
Administrative expenses		(22	)		(22	)		(30	)		(20	)		(21	)		(29	)
FAIR VALUE OF PLAN ASSETS AT END OF YEAR	$	6,877		$	5,836		$	8,400		$	6,544		$	5,562		$	8,025
FUNDED STATUS	$	(2,531	)	$	(3,547	)	$	(296	)	$	(2,259	)	$	(3,231	)	$	(112	)
Unrecognized net loss		3,868			4,890			1,640			3,666			4,641			1,524
Unrecognized prior service costs		40			44			52			28			35			42
Accumulated benefit obligation		8,598			8,559			7,927			8,015			7,993			7,392

The increase in the value of pension plan assets was a primary driver in the decreased pension liability at Con Edison and CECONY of $1,016 million and $972 million, respectively, compared with December 31, 2008. For Con Edison, this decrease in pension liability resulted in a decrease to regulatory assets of $992 million for unrecognized net losses and unrecognized prior service costs associated with the Utilities consistent with the accounting rules for regulated operations and a credit to OCI of $20 million (net of

taxes) for the unrecognized net losses and unrecognized prior service costs associated with the competitive energy businesses and O&R’s New Jersey and Pennsylvania utility subsidiaries.

For CECONY, the decrease in pension liability resulted in a decrease to regulatory assets of $960 million for unrecognized net losses and unrecognized prior service costs associated with the Utilities consistent with the accounting rules for regulated operations and a credit to OCI of $14 million (net of taxes) for unrecognized net losses and unrecognized prior service costs associated with the competitive energy businesses.

A portion of the estimated net loss and prior service cost for the pension plan, equal to $423 million and $8 million, respectively, will be amortized from accumulated OCI and the regulatory asset into net periodic benefit cost over the next year for Con Edison. Included in these amounts are $399 million and $7 million, respectively, for CECONY.

At December 31, 2009 and 2008, Con Edison’s investments include $85 million and $58 million, respectively, held in external trust accounts for benefit payments pursuant to the supplemental retirement plans. Included in these amounts for CECONY were $75 million and $49 million, respectively. See Note P. The accumulated benefit obligations for the supplemental retirement plans for Con Edison and CECONY were $175 million and $142 million as of December 31, 2009 and $171 million and $137 million as of December 31, 2008, respectively.

Assumptions

The actuarial assumptions were as follows:


	2009		2008		2007
Weighted-average assumptions used to determine benefit obligations at December 31:
Discount rate	6.05	%	5.75	%	6.00	%
Rate of compensation increase
– CECONY	4.00	%	4.00	%	4.00	%
– O&R	4.00	%	4.00	%	4.00	%
Weighted-average assumptions used to determine net periodic benefit cost for the years ended December 31:
Discount rate	5.75	%	6.00	%	6.00	%
Expected return on plan assets	8.50	%	8.50	%	8.50	%
Rate of compensation increase
– CECONY	4.00	%	4.00	%	4.00	%
– O&R	4.00	%	4.00	%	4.00	%

The expected return assumption reflects anticipated returns on the plan’s current and future assets. The Companies’ expected return was based on an evaluation of the current environment, market and economic outlook, relationships between the economy and asset class performance patterns, and recent and long-term trends in asset class performance. The projections were based on the plan’s target asset allocation and were adjusted for historical and expected experience of active portfolio management results compared to benchmark returns.

Discount Rate Assumption

To determine the assumed discount rate, the Companies use a model that produces a yield curve based on yields on selected highly rated (Aaa or Aa, by Moody’s Investors Service) corporate bonds. Bonds with insufficient liquidity, bonds with questionable pricing information and bonds that are not representative of the overall market are excluded from consideration. For example, the bonds used in the model cannot be callable, they must have a price between 50 and 200, the yield must lie between 1 percent and 20 percent, and the amount of the issue must be in excess of $100 million. The spot rates defined by the yield curve and the plan’s projected benefit payments are used to develop a weighted average discount rate.

Expected Benefit Payments

Based on current assumptions, the Companies expect to make the following benefit payments over the next ten years:


*(Millions of Dollars)*	2010		2011		2012		2013		2014		2015-2019
Con Edison	$	486	$	509	$	532	$	555	$	576	$	3,142
CECONY		452		473		495		516		535		2,921

Expected Contributions

Based on estimates as of December 31, 2009, the Companies are not required under funding regulations and laws to make any contributions to the pension plan during 2010. The Companies’ policy is to fund their accounting cost to the extent tax deductible, therefore, Con Edison and CECONY expect to make discretionary contributions of $427 million and $391 million, respectively, to the pension plan during 2010. The Companies are continuing to monitor changes to funding and tax laws that may impact future pension plan funding requirements.

Plan Assets

The asset allocations for the pension plan at the end of 2009, 2008 and 2007, and the target allocation for 2010 are as follows:


	Target Allocation Range		Plan Assets at December 31
Asset Category	2010		2009		2008		2007
Equity Securities	57% - 73	%	67	%	59	%	65	%
Debt Securities	21% - 33	%	28	%	33	%	28	%
Real Estate	5% - 11	%	5	%	8	%	7	%
Total	100	%	100	%	100	%	100	%

Con Edison has established a pension trust for the investment of assets to be used for the exclusive purpose of providing retirement benefits to participants and beneficiaries and payment of plan expenses.

Pursuant to resolutions adopted by Con Edison’s Board of Directors, the Management Development and Compensation Committee of the Board of Directors (the Committee) has general oversight responsibility for Con Edison’s pension and other employee benefit plans. The pension plan’s named fiduciaries have been granted the authority to control and manage the operation and administration of the plans, including overall responsibility for the investment of assets in the trust and the power to appoint and terminate investment managers. The named fiduciaries consist of Con Edison’s chief executive, financial and accounting officers.

The investment objectives of the Con Edison pension plan are to maintain a level and form of assets adequate to meet benefit obligations to participants, maximize the long-term total return on the trust assets within a prudent level of risk and maintain a level of volatility that is not expected to have a material impact on the Company’s expected contribution and expense or the Company’s ability to meet plan obligations. The assets of the plan have no significant concentration of risk in one country (other than the United States), industry or entity.

The strategic asset allocation is intended to meet the objectives of the pension plan by diversifying its funds across asset classes, investment styles and fund managers. An asset/liability study typically is conducted every few years to determine whether the current strategic asset allocation continues to represent the appropriate balance of expected risk and reward for the plan to meet expected liabilities. Each study considers the investment risk of the asset allocation and determines the optimal asset allocation for the plan. The target asset allocation for 2009 reflects the results of such a study conducted in 2007.

Individual fund managers operate under written guidelines provided by Con Edison, which cover such areas as investment objectives, performance measurement, permissible investments, investment restrictions, trading and execution, and communication and reporting requirements. Con Edison management regularly monitors, and the named fiduciaries review and report to the Committee regarding, manager performance, total fund performance, and compliance with asset allocation guidelines. Management changes fund managers and rebalances the portfolio as appropriate. At the direction of the named fiduciaries, such changes are reported to the Committee.

In accordance with the accounting rules for pensions that became effective December 2009, the Company is providing the following disclosures regarding the fair value of the pension trust’s investments.

Assets measured at fair value on a recurring basis are summarized below under a three-level hierarchy established by the accounting rules which define the levels within the hierarchy as follows:

•

Level 1 – Consists of fair value measurements whose value is based on quoted prices in active markets for identical assets or liabilities.

•

Level 2 – Consists of fair value measurements whose value is based on significant other observable inputs.

•

Level 3 – Consists of fair value measurements whose value is based on significant unobservable inputs.

The fair values of the pension plan assets at December 31, 2009 by asset category are as follows:


*(Millions of Dollars)*	Level 1			Level 2			Level 3			Total
U.S. Equity(a)	$	3,470		$	—		$	—		$	3,470
International Equity(b)		1,140			196			1			1,337
U.S. Government Issues(c)		—			1,255			—			1,255
Corporate Bonds(d)		—			435			143			578
Structured Assets(e)		—			—			91			91
Other Fixed Income(f)		—			10			46			56
Swaps(g)		—			—			(3	)		(3	)
Real Estate(h)		—			—			344			344
Cash and Cash Equivalents(i)		197			141			—			338
Total investments	$	4,807		$	2,037		$	622		$	7,466
Funds for retiree health benefits(j)		(215	)		(91	)		(28	)		(334	)
Investments (excluding funds for retiree health benefits)	$	4,592		$	1,946		$	594		$	7,132
Pending activities(k)											(255	)
Total fair value of plan net assets										$	6,877

(a)	U.S. Equity includes both actively- and passively-managed assets with investments in domestic equity index funds, actively-managed small-capitalization equities, rights and warrants.

(b)	International Equity includes international equity index funds, actively-managed international equities, rights and warrants.

(c)	U.S. Government Issues include agency and treasury securities.

(d)	Corporate Bonds held in institutional mutual funds which are measured at Net Asset Value (NAV) are classified as Level 3.

(e)	Structured Assets are measured using broker quotes and investment manager proprietary models and include commercial-mortgage-backed securities, collateralized mortgage obligations and asset-backed securities.

(f)	Other Fixed Income includes emerging market debt valued using broker quotes, municipal bonds, sovereign debt, regional governments and government agencies.

(g)	Swaps include total return swaps, interest rate swaps, credit default swaps and swap collateral. Level 3 Swaps are valued using proprietary investment manager models.

(h)	Real Estate investments include real estate funds based on appraised values that are broadly diversified by geography and property type.

(i)	Cash and Cash Equivalents include short term investments, money markets and foreign currency.

(j)

The Companies set aside funds for retiree health benefits through a separate account within the pension trust, as permitted under Section 401(h) of the Internal Revenue Code of 1986, as amended. In accordance with the Code, the plan’s investments in the 401(h) account may not be used for, or diverted to, any purpose other than providing health benefits for retirees. The net assets held in the 401(h) account are calculated based on a pro-rata percentage allocation of the net assets in the pension plan. The related obligations for health benefits are not included in the pension plan’s obligations and are included in the Companies’ other postretirement benefit obligation. See Note F.

(k)	Pending activities include security purchases and sales that have not settled and interest and dividends that have not been received.

The table below provides a reconciliation of the beginning and ending net balances for assets at December 31, 2009 classified as Level 3 in the fair value hierarchy.


*(Millions of Dollars)*	Beginning Balance as of January 1, 2009			Assets Still Held at Reporting Date – Unrealized Gains (Losses)			Assets Sold During the Period – Realized Gains			Purchases Sales and Settlements			Ending Balance as of December 31, 2009
U.S. Equity	$	1		$	2		$	(2	)	$	(1	)	$	—
International Equity		—			—			—			1			1
Corporate Bonds		172			35			(7	)		(57	)		143
Structured Assets		194			93			(70	)		(126	)		91
Other Fixed Income		52			2			1			(9	)		46
Swaps		(32	)		13			(51	)		67			(3	)
Options		5			(4	)		4			(5	)		—
Real Estate		515			(177	)		—			6			344
Total investments	$	907		$	(36	)	$	(125	)	$	(124	)	$	622
Funds for retiree health benefits		(41	)		2			6			5			(28	)
Investments (excluding funds for retiree health benefits)	$	866		$	(34	)	$	(119	)	$	(119	)	$	594

The Companies also offer a defined contribution savings plan that covers substantially all employees and made contributions to the plan as follows:


	For the Years Ended December 31
*(Millions of Dollars)*	2009		2008		2007
Con Edison	$	19	$	21	$	21
CECONY		17		19		19

Other Postretirement Benefits

12 Months Ended

Dec. 31, 2009

Other Postretirement Benefits

Note F — Other Postretirement Benefits

The Utilities currently have contributory comprehensive hospital, medical and prescription drug programs for all retirees, their dependents and surviving spouses.

CECONY also has a contributory life insurance program for bargaining unit employees and provides basic life insurance benefits up to a specified maximum at no cost to retired management employees. O&R has a non-contributory life insurance program for retirees. Certain employees of Con Edison’s competitive energy businesses are eligible to receive benefits under these programs.

Net Periodic Benefit Cost

The components of the Companies’ net periodic postretirement benefit costs for 2009, 2008 and 2007 were as follows:


	Con Edison									CECONY
*(Millions of Dollars)*	2009			2008			2007			2009			2008			2007
Service cost	$	22		$	20		$	18		$	18		$	16		$	14
Interest cost on accumulated other postretirement benefit obligation		95			95			93			84			84			82
Expected return on plan assets		(86	)		(86	)		(81	)		(78	)		(79	)		(74	)
Amortization of net actuarial loss		74			68			67			65			59			58
Amortization of prior service cost		(12	)		(12	)		(14	)		(14	)		(14	)		(14	)
Amortization of transition obligation		3			3			4			3			4			4
NET PERIODIC POSTRETIREMENT BENEFIT COST	$	96		$	88		$	87		$	78		$	70		$	70
Cost capitalized		(35	)		(32	)		(30	)		(29	)		(27	)		(25	)
Cost charged/(deferred)		3			(11	)		(33	)		1			(9	)		(30	)
Cost charged to operating expenses	$	64		$	45		$	24		$	50		$	34		$	15

Funded Status

The funded status of the programs at December 31, 2009, 2008 and 2007 were as follows:


	Con Edison									CECONY
*(Millions of Dollars)*	2009			2008			2007			2009			2008			2007
CHANGE IN BENEFIT OBLIGATION
Benefit obligation at beginning of year	$	1,702		$	1,630		$	1,566		$	1,495		$	1,433		$	1,376
Service cost		22			20			18			18			16			14
Interest cost on accumulated postretirement benefit obligation		95			95			93			84			84			82
Net actuarial loss/(gain)		(14	)		46			29			(3	)		44			40
Benefits paid and administrative expenses		(141	)		(121	)		(125	)		(130	)		(111	)		(114	)
Participant contributions		26			25			19			25			24			19
Medicare prescription benefit		7			7			9			6			5			9
Plan amendments		—			—			21			—			—			7
BENEFIT OBLIGATION AT END OF YEAR	$	1,697		$	1,702		$	1,630		$	1,495		$	1,495		$	1,433
CHANGE IN PLAN ASSETS
Fair value of plan assets at beginning of year	$	737		$	988		$	1,005		$	668		$	907		$	927
Actual return on plan assets		153			(233	)		10			137			(215	)		11
Employer contributions		86			77			76			73			63			64
Participant contributions		26			25			19			25			24			19
Benefits paid		(136	)		(120	)		(122	)		(126	)		(111	)		(114	)
FAIR VALUE OF PLAN ASSETS AT END OF YEAR	$	866		$	737		$	988		$	777		$	668		$	907
FUNDED STATUS	$	(831	)	$	(965	)	$	(642	)	$	(718	)	$	(827	)	$	(526	)
Unrecognized net loss		646			799			500			601			728			450
Unrecognized prior service costs		(23	)		(35	)		(47	)		(40	)		(54	)		(68	)
Unrecognized net transition liability at January 1, 1993*		11			15			18			11			15			18

*	Being amortized over a period of 20 years and reduced by an additional amount in 2002 due to plan amendments.

The increase in the value of other postretirement benefit plan assets was a primary driver in the decreased liability for other postretirement benefits at Con Edison and CECONY of $134 million and $109 million, respectively, compared with December 31, 2008. For Con Edison, this decrease in liability resulted in a decrease to regulatory assets of $137 million for unrecognized net losses and unrecognized prior service costs associated with the Utilities consistent with the accounting rules for regulated operations and a credit to OCI of $6 million (net of taxes) for the unrecognized net losses and unrecognized prior service costs associated with the competitive energy businesses and O&R’s New Jersey and Pennsylvania utility subsidiaries.

For CECONY, the increase in the value of other postretirement benefit plan assets resulted in a decrease to regulatory assets of $116 million for unrecognized net losses and unrecognized prior service costs associated with the company consistent with the accounting rules for regulated operations and a credit to OCI of $2 million (net of taxes) for unrecognized net losses and unrecognized prior service costs associated with the competitive energy businesses.

A portion of the estimated net loss, prior service costs and transition obligation for the other postretirement benefits, equal to $104 million, $(12) million and $3 million, respectively, will be amortized from accumulated OCI and the regulatory asset into net periodic benefit cost over the next year for Con Edison. Included in these amounts are $95 million, $(14) million and $3 million, respectively, for CECONY.

Assumptions

The actuarial assumptions were as follows:


	2009		2008		2007
Weighted-average assumptions used to determine benefit obligations at December 31:
Discount Rate	5.95	%	5.75	%	6.00	%
Weighted-average assumptions used to determine net periodic benefit cost for the years ended December 31:
Discount Rate	5.75	%	6.00	%	6.00	%
Expected Return on Plan Assets
Tax-Exempt	8.50	%	8.50	%	8.50	%
Taxable
CECONY	7.50	%	7.50	%	7.50	%
O&R	8.00	%	8.00	%	8.00	%

Refer to Note E for descriptions of the basis for determining the expected return on assets, investment policies and strategies, and the assumed discount rate.

The health care cost trend rate used to determine net periodic benefit cost for the year ended December 31, 2009 was 7.0 percent, which is assumed to decrease gradually to 4.5 percent by 2012 and remain at that level thereafter. The health care cost trend rate used to determine benefit obligations as of December 31, 2009 was 6.5 percent, which is assumed to decrease gradually to 4.5 percent by 2014 and remain at that level thereafter.

A one-percentage point change in the assumed health care cost trend rate would have the following effects at December 31, 2009:


	Con Edison				CECONY
	1-Percentage-Point
*(Millions of Dollars)*	Increase		Decrease		Increase			Decrease
Effect on accumulated other postretirement benefit obligation	$	15	$	—	$	(7	)	$	19
Effect on service cost and interest cost components for 2009		1		—		(1	)		2

Expected Benefit Payments

Based on current assumptions, the Companies expect to make the following benefit payments over the next ten years:


*(Millions of Dollars)*	2010		2011		2012		2013		2014		2015-2019
GROSS BENEFIT PAYMENTS
Con Edison	$	120	$	126	$	129	$	133	$	135	$	698
CECONY		108		113		116		119		121		618
MEDICARE PRESCRIPTION BENEFIT RECEIPTS
Con Edison	$	11	$	12	$	13	$	14	$	15	$	88
CECONY		10		11		12		12		13		79

Expected Contributions

Based on estimates as of December 31, 2009, Con Edison and CECONY expect to make contributions of $114 million and $101 million, respectively, to the other postretirement benefit plans in 2010.

Plan Assets

The asset allocations for CECONY’s other postretirement benefit plans at the end of 2009, 2008 and 2007, and the target allocation for 2010 are as follows:


	Target Allocation Range		Plan Assets at December 31
Asset Category	2010		2009		2008		2007
Equity Securities	57% - 73	%	66	%	56	%	65	%
Debt Securities	26% - 44	%	34	%	44	%	35	%
Total	100	%	100	%	100	%	100	%

Con Edison has established postretirement health and life insurance benefit plan trusts for the investment of assets to be used for the exclusive purpose of providing other postretirement benefits to participants and beneficiaries.

Refer to Note E for a discussion of Con Edison’s investment policy for its benefit plans.

The fair values of the plan assets at December 31, 2009 by asset category (see description of levels in Note E) are as follows:


*(Millions of Dollars)*	Level 1		Level 2		Level 3		Total
U.S. Equity(a)	$	101	$	143	$	—	$	244
International Equity(b)		—		92		—		92
Other Fixed Income(c)		—		—		173		173
Insurance Contracts(d)		—		—		8		8
Cash and Cash Equivalents(e)		—		9		—		9
Total investments	$	101	$	244	$	181	$	526
Funds for retiree health benefits(f)		215		91		28		334
Investments (including funds for retiree health benefits)	$	316	$	335	$	209	$	860
Pending activities(g)								6
Total fair value of plan net assets							$	866

(a)	U.S. Equity includes both actively- and passively-managed assets with investments in domestic equity index funds and commingled funds.

(b)	International Equity includes commingled international equity funds.

(c)	Other Fixed Income includes commingled funds, which are valued at Net Asset Value (NAV).

(d)	Insurance Contracts represent the cash surrender value of life insurance policies. The contracts are measured at NAV, adjusted for fees charged by the insurance company.

(e)	Cash and Cash Equivalents include short term investments and money markets.

(f)

The Companies set aside funds for retiree health benefits through a separate account within the pension trust, as permitted under Section 401(h) of the Internal Revenue Code of 1986, as amended. In accordance with the Code, the plan’s investments in the 401(h) account may not be used for, or diverted to, any purpose other than providing health benefits for retirees. The net assets held in the 401(h) account are calculated based on a pro-rata percentage allocation of the net assets in the pension plan. The related obligations for health benefits are not included the pension plan’s obligations and are included in the Companies’ other postretirement benefit obligation. See Note E. in

(g)	Pending activities include security purchases and sales that have not settled and interest and dividends that have not been received.

The table below provides a reconciliation of the beginning and ending net balances for assets at December 31, 2009 classified as Level 3 in the fair value hierarchy.


*(Millions of Dollars)*	Beginning Balance as of January 1, 2009		Assets Still Held at Reporting Date – Unrealized Gains (Losses)			Assets Sold During the Period – Realized Gains			Purchases Sales and Settlements			Ending Balance as of December 31, 2009
Other Fixed Income	$	197	$	11		$	3		$	(38	)	$	173
Insurance Contracts		8		—			—			—			8
Total investments	$	205	$	11		$	3		$	(38	)	$	181
Funds for retiree health benefits		41		(2	)		(6	)		(5	)		28
Investments (including funds for retiree health benefits)	$	246	$	9		$	(3	)	$	(43	)	$	209

Effect of Medicare Prescription Benefit

The Medicare Prescription Drug, Improvement and Modernization Act of 2003 created a benefit for certain employers who provide postretirement drug programs. The accounting rules for retirement benefits provide accounting and disclosure requirements relating to the Act. The Companies’ actuaries have determined that each of their prescription drug plans provides a benefit that is at least actuarially equivalent to the Medicare prescription drug plan and projections indicate that this will be the case for 20 years; therefore, the Companies are eligible to receive the benefit that the Act makes available. When the plans’ benefits are no longer actuarially equivalent to the Medicare plan, 25 percent of the retirees in each plan are assumed to begin to decline participation in the Companies’ prescription programs.

Environmental Matters

12 Months Ended

Dec. 31, 2009

Environmental Matters

Note G — Environmental Matters

Superfund Sites

Hazardous substances, such as asbestos, polychlorinated biphenyls (PCBs) and coal tar, have been used or generated in the course of operations of the Utilities and their predecessors and are present at sites and in facilities and equipment they currently or previously owned, including sites at which gas was manufactured or stored.

The Federal Comprehensive Environmental Response, Compensation and Liability Act of 1980 and similar state statutes (Superfund) impose joint and several liability, regardless of fault, upon generators of hazardous substances for investigation and remediation costs (which include costs of demolition, removal, disposal, storage, replacement, containment, and monitoring) and natural resource damages. Liability under these laws can be material and may be imposed for contamination from past acts, even though such past acts may have been lawful at the time they occurred. The sites at which the Utilities have been asserted to have liability under these laws, including their manufactured gas plant sites and any neighboring areas to which contamination may have migrated, are referred to herein as “Superfund Sites.”

For Superfund Sites where there are other potentially responsible parties and the Utilities are not managing the site investigation and remediation, the accrued liability represents an estimate of the amount the Utilities will need to pay to discharge their related obligations. For Superfund Sites (including the manufactured gas plant sites) for which one of the Utilities is managing the investigation and remediation, the accrued liability represents an estimate of the company’s share of undiscounted cost to investigate the sites and, for sites that have been investigated in whole or in part, the cost to remediate the sites, if remediation is necessary and if a reasonable estimate of such cost can be made. Remediation costs are estimated in light of the information available, applicable remediation standards, and experience with similar sites.

The accrued liabilities and regulatory assets related to Superfund Sites at December 31, 2009 and 2008 were as follows:


	Con Edison				CECONY
*(Millions of Dollars)*	2009		2008		2009		2008
Accrued Liabilities:
Manufactured gas plant sites	$	164	$	207	$	112	$	155
Other Superfund Sites		48		43		47		41
Total	$	212	$	250	$	159	$	196
Regulatory assets	$	388	$	378	$	329	$	315

Most of the accrued Superfund Site liability relates to sites that have been investigated, in whole or in part. However, for many of the sites, the extent and associated cost of the required remediation has not yet been determined. As investigations progress and information pertaining to the required remediation becomes available, the Utilities expect that additional liability will be accrued, the amount of which is not presently determinable but may be material. Under their current rate agreements, the Utilities are permitted to recover or defer as regulatory assets (for subsequent recovery through rates) certain site investigation and remediation costs.

Environmental remediation costs incurred and insurance recoveries received related to Superfund Sites at December 31, 2009 and 2008, were as follows:


	Con Edison				CECONY
*(Millions of Dollars)*	2009		2008		2009		2008
Remediation costs incurred	$	77	$	103	$	75	$	100
Insurance recoveries received*		4		—		4		—

*	Reduced amount deferred for recovery from customers

In 2006, CECONY estimated that for its manufactured gas plant sites, its aggregate undiscounted potential liability for the investigation and remediation of coal tar and/or other manufactured gas plant-related environmental contaminants could range up to $1.1 billion. In 2007, O&R estimated that for its manufactured gas plant sites, each of which has been investigated, the aggregate undiscounted potential liability for the remediation of such contaminants could range up to $115 million. These estimates were based on the assumption that there is contamination at the sites that have not yet been investigated and additional assumptions about these and the other sites regarding the extent of contamination and the type and extent of remediation that may be required. Actual experience may be materially different.

Asbestos Proceedings

Suits have been brought in New York State and federal courts against the Utilities 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 Utilities. The suits that have been resolved, which are many, have been resolved without any payment by the Utilities, or for amounts that were not, in the aggregate, material to them. The amounts specified in all the remaining thousands of suits total billions of dollars; however, the Utilities believe that these amounts are greatly exaggerated, based on the disposition of previous claims. In 2008, CECONY estimated that its aggregate undiscounted potential liability for these suits and additional suits that may be brought over the next 15 years is $9 million. The estimate was based upon a combination of modeling, historical data analysis and risk factor assessment. Actual experience may be materially different. In addition, certain current and former employees have claimed or are claiming workers’ compensation benefits based on alleged disability from exposure to asbestos. Under its current rate agreements, CECONY is permitted to defer as regulatory assets (for subsequent recovery through rates) costs incurred for its asbestos lawsuits and workers’ compensation claims. The accrued liability for asbestos suits and workers’ compensation proceedings (including those related to asbestos exposure) and the amounts deferred as regulatory assets for the Companies at December 31, 2009 and 2008 were as follows:


	Con Edison				CECONY
*(Millions of Dollars)*	2009		2008		2009		2008
Accrued liability – asbestos suits	$	10	$	10	$	9	$	9
Regulatory assets – asbestos suits	$	10	$	10	$	9	$	9
Accrued liability – workers’ compensation	$	113	$	114	$	108	$	109
Regulatory assets – workers’ compensation	$	37	$	38	$	37	$	38

Other Material Contingencies

12 Months Ended

Dec. 31, 2009

Other Material Contingencies

Note H — Other Material Contingencies

Manhattan Steam Main Rupture

In July 2007, a CECONY steam main located in midtown Manhattan ruptured. It has been reported that one person died and others were injured as a result of the incident. Several buildings in the area were damaged. Debris from the incident included dirt and mud containing asbestos. The response to the incident required the closing of several buildings and streets for various periods. Approximately 100 suits are pending against the company seeking generally unspecified compensatory and, in some cases, punitive damages, for personal injury, property damage and business interruption. The company has not accrued a liability for the suits. The company has notified its insurers of the incident and believes that the policies in force at the time of the incident will cover most of the company’s costs, which the company is unable to estimate, but which could be substantial, to satisfy its liability to others in connection with the incident.

Investigation of Contractor Payments

In January 2009, CECONY commenced an internal investigation relating to the arrests of certain employees and retired employees (most of whom have since been indicted or pleaded guilty) for accepting kickbacks from contractors that performed construction work for the company. The company has retained a law firm, which has retained an accounting firm, to assist in the company’s investigation. The company is providing information to governmental authorities, which consider the company to be a victim of unlawful conduct, in connection with their investigation of the arrested employees and contractors. The company has terminated its employment of the arrested employees and its contracts with the contractors. In February 2009, the NYSPSC commenced a proceeding that, among other things, will examine the prudence of certain of the company’s expenditures relating to the arrests and consider whether additional expenditures should also be examined (see “Other Regulatory Matters” in Note B). The company, based upon its evaluation of its internal controls for 2009 and previous years, believes that the controls were effective to provide reasonable assurance that its financial statements have been fairly presented, in all material respects, in conformity with generally accepted accounting principles. Because the company’s investigation is ongoing, the company is unable to predict the impact of any of the employees’ unlawful conduct on the company’s internal controls, business, results of operations or financial position.

Permit Non-Compliance and Pollution Discharges

In March 2009, the New York State Department of Environmental Conservation (DEC) issued a proposed administrative Order on Consent to CECONY with respect to non-compliance with certain laws, regulations and permit conditions and discharges of pollutants at the company’s steam generating facilities. The proposed order effectively institutes a civil enforcement proceeding against the company. In the proposed order, the DEC is seeking, among other things, the company’s agreement to pay a penalty in an amount the DEC has not yet specified, retain an independent consultant to conduct a comprehensive audit of the company’s generating facilities to determine compliance with federal and New York State environmental laws and regulations and recommend best practices, remove all equipment containing polychlorinated biphenyls from the company’s steam and electric facilities, remediate polychlorinated biphenyl contamination, install certain wastewater treatment facilities, and comply with additional sampling, monitoring, and training requirements.

In January 2010, the DEC issued a proposed administrative Order on Consent to CECONY relating to discharges of pollutants, reported by the company to the DEC from 2002 through 2009, into the storm sewer system at a property the company owns in the Astoria section of New York on which the company is permitted by the DEC to operate a hazardous waste storage facility. In the proposed order, the DEC is seeking the company’s agreement to pay a $1.2 million penalty and undertake a corrective action plan. In February 2010, the company agreed to undertake the corrective action plan for the Astoria discharges and the DEC indicated that a coordinated process and schedule will apply to negotiations of the penalties to be paid by the company in connection with the Astoria and steam generating facilities proceedings.

Also in January 2010, the DEC staff indicated that the DEC intends to issue a proposed consent order relating to the release of oil into the Bronx River resulting from a November 2009 transformer fire at the company’s Dunwoodie electric substation.

The company will seek to resolve these matters through negotiations with the DEC. It is unable to predict the impact of these matters on the company’s operations or the amount of penalties and the additional costs, which could be substantial, to comply with the requirements resulting from these matters.

Other Contingencies

See “Lease In/Lease Out Transactions” in Note J.

Guarantees

Con Edison and its subsidiaries enter into various agreements providing financial or performance assurance primarily to third parties on behalf of their subsidiaries. Maximum amounts guaranteed by Con Edison totaled $929 million and $1,612 million at December 31, 2009 and 2008, respectively.

A summary, by type and term, of Con Edison’s total guarantees at December 31, 2009 is as follows:


Guarantee Type	0 – 3 years		4 – 10 years		> 10 years		Total
	*(Millions of Dollars)*
Commodity transactions	$	657	$	26	$	105	$	788
Affordable housing program		6		—		—		6
Intra-company guarantees		29		—		1		30
Other guarantees		79		26		—		105
TOTAL	$	771	$	52	$	106	$	929

Commodity Transactions – Con Edison guarantees payments on behalf of its competitive energy businesses in order to facilitate physical and financial transactions in gas, pipeline capacity, transportation, oil, electricity and related commodity services. To the extent that liabilities exist under the contracts subject to these guarantees, such liabilities are included in Con Edison’s consolidated balance sheet.

Affordable Housing Program – Con Edison Development guarantees the repurchase and remarketing obligations of one of its subsidiaries for debt relating to moderate-income rental apartment properties eligible for tax credits under Section 42 of the Internal Revenue Code. In accordance with applicable accounting rules, neither the rental apartment properties nor the related indebtedness is included on Con Edison’s consolidated balance sheet.

Intra-company Guarantees – Con Edison guarantees electricity sales made by Con Edison Energy and Con Edison Solutions to O&R and CECONY.

Other Guarantees – Con Edison, Con Edison Development and its subsidiaries also guarantee the following:

•

$27 million relates to guarantees issued by Con Edison covering RCN Corporation’s lease payment to use CECONY’s conduit system in accordance with a tariff approved by the NYSPSC and rent payment obligations under various lease agreements for office buildings. RCN Corporation is obligated to reimburse Con Edison for any payments made under these guarantees. In the case of the guarantee to CECONY, this obligation is partially secured by a letter of credit of $16 million, and, in the case of the lease guarantees, this reimbursement is fully secured by letters of credit;

•

$40 million for guarantees provided by Con Edison and Con Edison Solutions for indemnity agreements for surety bonds;

•

$38 million for collateral posted with wholesale counterparties; and

•

In connection with the sale in 2008 by Con Edison Development and its subsidiary of their ownership interests in their electricity generating plants, Con Edison also issued guarantees, which have no specified limitation on the amount guaranteed, covering certain representations and the obligations of Con Edison Development and its subsidiary to pay taxes relating to periods before the sale. See Note U.

Leases

12 Months Ended

Dec. 31, 2009

Leases

Note J — Leases

Con Edison’s subsidiaries lease electric generating and gas distribution facilities, other electric transmission and distribution facilities, office buildings and equipment. In accordance with the accounting rules for leases, these leases are classified as either capital leases, operating leases or leveraged leases. Most of the operating leases provide the option to renew at the fair rental value for future periods. Generally, it is expected that leases will be renewed or replaced in the normal course of business.

Capital leases: For ratemaking purposes capital leases are treated as operating leases; therefore, in accordance with the accounting rules for regulated operations, the amortization of the leased asset is based on the rental payments recovered from customers. The following assets under capital leases are included in the Companies’ consolidated balance sheets at December 31, 2009 and 2008:


	Con Edison				CECONY
*(Millions of Dollars)*	2009		2008		2009		2008
UTILITY PLANT
Transmission	$	3	$	5	$	3	$	5
Common		16		17		16		17
TOTAL	$	19	$	22	$	19	$	22

The accumulated amortization of the capital leases for Con Edison and CECONY was $53 million each at December 31, 2009, and $48 million each at December 31, 2008.

The future minimum lease commitments for the above assets are as follows:


*(Millions of Dollars)*	Con Edison		CECONY
2010	$	8	$	8
2011		8		8
2012		6		6
2013		—		—
2014		—		—
All years thereafter		2		2
Total		24		24
Less: amount representing interest		5		5
Present value of net minimum lease payment	$	19	$	19

CECONY subleases one of its capital leases. The minimum rental to be received in the future under the non-cancelable sublease is $14 million.

Operating leases: The future minimum lease commitments under the Companies’ non-cancelable operating lease agreements are as follows:


*(Millions of Dollars)*	Con Edison		CECONY
2010	$	42	$	41
2011		44		42
2012		45		42
2013		45		43
2014		38		37
All years thereafter		35		26
Total	$	249	$	231

Lease In/Lease Out Transactions

In each of 1997 and 1999, Con Edison Development entered into a transaction in which it leased property and then immediately subleased it back to the lessor (termed “Lease In/Lease Out,” or LILO transactions). The transactions respectively involve electric generating and gas distribution facilities in the Netherlands, with a total investment of $259 million. The transactions were financed with $93 million of equity and $166 million of non-recourse, long-term debt secured by the underlying assets. In accordance with the accounting rules for leases, Con Edison is accounting for the two LILO transactions as leveraged leases. Accordingly, the company’s investment in these leases, net of non-recourse debt, is carried as a single amount in Con Edison’s consolidated balance sheet and income is recognized pursuant to a method that incorporates a level rate of return for those years when net investment in the lease is positive, based upon the after-tax cash flows projected at the inception of the leveraged leases. The company’s investment in these leveraged leases was $(24) million at December 31, 2009 and $(8) million at December 31, 2008 and is comprised of a $235 million gross investment less $259 million of deferred tax liabilities at December 31, 2009 and $235 million gross investment less $243 million of deferred tax liabilities at December 31, 2008.

On audit of Con Edison’s tax return for 1997, the IRS disallowed the tax losses in connection with the 1997 LILO transaction. In December 2005, Con Edison paid a $0.3 million income tax deficiency asserted by the IRS for the tax year 1997 with respect to the 1997 LILO transaction. In April 2006, the company paid interest of $0.2 million associated with the deficiency and commenced an action in the United States Court of Federal Claims, entitled Consolidated Edison Company of New York, Inc. v. United States, to obtain a refund of this tax payment and interest. A trial was completed in November 2007. In October 2009, the court issued a decision in favor of the company concluding that the 1997 LILO transaction was, in substance, a true lease that possessed economic substance, the loans relating to the lease constituted bona fide indebtedness, and the deductions for the 1997 LILO transactions claimed by the company in its 1997 federal income tax return are allowable. The IRS is entitled to appeal the decision but has not indicated whether or not it will.

In connection with its audit of Con Edison’s federal income tax returns for 1998 through 2007, the IRS disallowed $416 million of net tax deductions taken with respect to both of the LILO transactions for the tax years. Con Edison is pursuing administrative appeals of these audit level disallowances. In connection with its audit of Con Edison’s federal income tax return for 2008, the IRS has disallowed $42 million of net tax deductions taken with respect to both of the LILO transactions. When this audit level disallowance becomes appealable, Con Edison intends to file an appeal of the disallowance.

Con Edison believes that its LILO transactions have been correctly reported, and has not recorded any reserve with respect to the disallowance of tax losses, or related interest, in connection with its LILO transactions. Con Edison’s estimated tax savings, reflected in its financial statements, from the two LILO transactions through December 31, 2009, in the aggregate, was $205 million. If Con Edison were required to repay all or a portion of these amounts, it would also be required to pay interest of up to $62 million net of tax at December 31, 2009.

Pursuant to the accounting rules for leveraged lease transactions, the expected timing of income tax cash flows generated by Con Edison’s LILO transactions are required to be reviewed at least annually. If the expected timing of the cash flows is revised, the rate of return and the allocation of income would be recalculated from the inception of the LILO transactions, and the company would be required to recalculate the accounting effect of the LILO transactions, which would result in a charge to earnings that could have a material adverse effect on the company’s results of operations.

Income Tax

12 Months Ended

Dec. 31, 2009

Income Tax

Note L — Income Tax

The components of income tax are as follows:


	Con Edison									CECONY
*(Millions of Dollars)*	2009			2008			2007			2009			2008			2007
Charge/(benefit) to operations:
State
Current	$	(9	)	$	52		$	30		$	(5	)	$	8		$	20
Deferred – net		120			82			72			105			84			70
Federal
Current		17			(3	)		72			29			(106	)		46
Deferred – net		333			387			284			279			416			262
Amortization of investment tax credits		(6	)		(6	)		(6	)		(6	)		(6	)		(6	)
TOTAL CHARGE TO OPERATIONS		455			512			452			402			396			392
Charge/(benefit) to other income:
State
Current		(3	)		1			8			4			(1	)		—
Deferred – net		(2	)		2			(8	)		(2	)		2			—
Federal
Current		(1	)		4			(9	)		13			(4	)		5
Deferred – net		(9	)		5			(6	)		(13	)		4			(5	)
TOTAL CHARGE/(BENEFIT) TO OTHER INCOME		(15	)		12			(15	)		2			1			—
TOTAL	$	440		$	524		$	437		$	404		$	397		$	392

The tax effect of temporary differences, which gave rise to deferred tax assets and liabilities, is as follows:


	Con Edison				CECONY
*(Millions of Dollars)*	2009		2008		2009		2008
Deferred tax liabilities:
Depreciation	$	2,569	$	2,363	$	2,426	$	2,230
Regulatory liability – future income tax		1,489		1,374		1,404		1,296
Unrecognized pension and other postretirement costs		1,814		2,284		1,727		2,172
State income tax Capitalized overheads Other		645 477 646		557 479 539		563 419 434		482 437 330
Total deferred tax liabilities		7,640		7,596		6,973		6,947
Deferred tax assets:
Unrecognized pension and other postretirement costs		1,814		2,284		1,727		2,172
Regulatory asset – future income tax		172		185		155		168
State income tax		27		49		14		16
Other		96		151		1		49
Total deferred tax assets		2,109		2,669		1,897		2,405
NET LIABILITIES		5,531		4,927		5,076		4,542
INVESTMENT TAX CREDITS		66		72		63		69
DEFERRED INCOME TAXES AND INVESTMENT TAX CREDITS	$	5,597	$	4,999	$	5,139	$	4,611
DEFERRED INCOME TAXES – RECOVERABLE ENERGY COSTS		24		70		—		59
TOTAL DEFERRED INCOME TAXES AND INVESTMENT TAX CREDITS	$	5,621	$	5,069	$	5,139	$	4,670

CECONY’s 2009 deferred taxes for recoverable energy costs reflects the impact of the company’s adoption of unbilled revenue accounting in March 2009 which nets refundable energy costs against recoverable energy costs. See “Recoverable Energy Costs” in Note A.

Reconciliation of the difference between income tax expense and the amount computed by applying the prevailing statutory income tax rate to income before income taxes is as follows:


	Con Edison						CECONY
*(% of Pre-tax income)*	2009		2008		2007		2009		2008		2007
STATUTORY TAX RATE
Federal	35	%	35	%	35	%	35	%	35	%	35	%
Changes in computed taxes resulting from:
State income tax	5		6		5		6		5		4
Depreciation related differences	1		1		1		1		1		1
Cost of removal	(5	)	(5	)	(6	)	(6	)	(6	)	(6	)
Other	(3	)	(1	)	(3	)	(2	)	(2	)	(3	)
Effective Tax Rate	33	%	36	%	32	%	34	%	33	%	31	%

For federal income tax purposes in 2009, the Companies have a net operating loss, primarily as a result of deductions for accelerated depreciation. The Companies intend to file a request for a refund using this net operating loss to offset prior years’ federal taxable income. At December 31, 2009, the refund receivable was classified as an other current asset of $107 million on the Companies’ consolidated balance sheet.

Uncertain Tax Positions

Under the accounting rules for income taxes, an enterprise is not allowed to recognize, in its financial statements, the benefit of a tax position unless that position is more likely than not to be sustained upon examination by taxing authorities, including resolution of any related appeals and litigation processes, based solely on the technical merits of the position.

The IRS has essentially completed its field audits of the Companies’ federal income tax returns through 2008. The Companies’ federal income tax returns for 1998 through 2008, which remain open to examination by the IRS, reflect certain tax positions with which the IRS does not or may not agree. Any adjustments to federal income tax returns will result in the Companies filing the federal audit changes with New York State to incorporate in the applicable state income tax returns. In addition, the Companies’ New York State tax returns for years beginning with 2006 remain open to examination by New York State.

The Companies’ uncertain tax positions include the “simplified service cost method” (SSCM) used to determine the extent to which construction-related costs could be deducted in 2002 through 2005. In July 2008, the IRS entered into a closing agreement with Con Edison covering the Companies’ use of the SSCM to determine the extent to which construction-related costs could be deducted in 2002 through 2004. The closing agreement does not cover 2005, the last year for which SSCM is an uncertain tax position. The Companies do not expect the required repayment, with interest, to the IRS of their SSCM tax benefits for 2002 through 2005 to exceed the $160 million ($147 million of which is attributable to CECONY) the Companies paid to the IRS in June 2007 as a deposit for the repayment. Repayment of the SSCM tax benefits would not affect the Companies’ results of operations because deferred taxes have been previously provided for the related temporary differences between the SSCM deductions taken for federal income tax purposes and the corresponding amounts charged to expense for financial reporting purposes. The Companies notified New York State of the closing agreement with the IRS applicable to the years 2002 through 2004 and, in December 2008, made a payment of $34 million, including interest of $12 million ($31 million, including interest of $10 million, is attributable to CECONY) in settlement of the issue for those years.

In June 2009, Con Edison entered into partial agreements with the IRS to resolve its outstanding issues with the Companies’ federal income tax returns for 1998 through 2004, other than the tax treatment of Con Edison Development’s LILO transactions (see “Lease in/Lease Out Transactions” in Note J). The partial agreements incorporate the July 2008 closing agreement between Con Edison and the IRS covering the Companies’ use of the SSCM to deduct construction-related costs in 2002, 2003 and 2004. The partial agreements resulted in tax deficiencies of $78 million for tax years 1998, 2000 and 2002, and tax refunds of $39 million for 1999, 2001 and 2003. The partial agreement for 2004 resulted in an increased net operating loss deduction of $19 million.

In August 2009, the IRS billed the Companies $109 million ($78 million for the tax liabilities, as provided in the partial agreements, and $31 million for related interest) for 1998, 2000 and 2002. In September 2009, the Companies paid the bills by applying $109 million of a $160 million deposit the Companies made with the IRS in June 2007.

At December 31, 2009, the Companies’ estimated refunds receivable from the IRS for 1999, 2001 and 2003 ($39 million for Con Edison and CECONY) and the amount of the Companies’ remaining funds on deposit with the IRS ($51 million for Con Edison and $47 million for CECONY) were classified as current assets on their respective consolidated balance sheets.

At December 31, 2009, the Companies’ estimated liabilities for uncertain tax positions ($86 million for Con Edison and $92 million for CECONY) were classified as current liabilities on their respective consolidated balance sheets. The Companies reasonably expect to resolve these uncertain tax positions with the IRS in the next 12 months.

The Companies recognize interest accrued related to the liability for uncertain tax positions in interest expense and would recognize penalties, if any, in operating expenses in the Companies’ consolidated income statements. In 2009 and 2008, the Companies recognized an immaterial amount of interest expense for uncertain tax positions.

A reconciliation of the beginning and ending amounts of unrecognized tax benefits for Con Edison and CECONY follows:


	Con Edison									CECONY
*(Millions of Dollars)*	2009			2008			2007			2009			2008			2007
Balance at the beginning of the year	$	118		$	155		$	151		$	108		$	142		$	139
Additions based on tax positions related to the current year		—			—			—			—			—			—
Additions based on tax positions of prior years		3			—			19			1			—			17
Reductions for tax positions of prior years		(21	)		(14	)		(15	)		(5	)		(13	)		(14	)
Settlements		(14	)		(23	)		—			(12	)		(21	)		—
Balance at the end of the year	$	86		$	118		$	155		$	92		$	108		$	142

Stock-Based Compensation

12 Months Ended

Dec. 31, 2009

Stock-Based Compensation

Note M — Stock-Based Compensation

The Companies may compensate employees and directors with, among other things, stock options, restricted stock units and contributions to a discount stock purchase plan. The Stock Option Plan (the 1996 Plan) provided for awards of stock options to officers and employees for up to 10 million shares of Con Edison common stock. The Long Term Incentive Plan (LTIP), among other things, provides for awards of restricted stock units, stock options and, to Con Edison’s non-officer directors, deferred stock units for up to 10 million shares of common stock (of which not more than four million shares may be restricted stock or stock units).

Shares of Con Edison common stock used to satisfy the Companies’ obligations with respect to stock-based compensation may be new (authorized, but unissued) shares, treasury shares or shares purchased in the open market. The shares used during the periods ended December 31, 2009 and 2008 have been new shares.

Under the accounting rules for stock compensation, the Companies have recognized the cost of stock-based compensation as an expense using a fair value measurement method. The following table summarizes stock-based compensation expense recognized by the Companies in the period ended December 31, 2009, 2008 and 2007:


	Con Edison						CECONY
*(Millions of Dollars)*	2009		2008		2007		2009		2008		2007
Stock options	$	—	$	1	$	1	$	—	$	1	$	1
Restricted stock units		1		1		2		1		1		1
Performance-based restricted stock		20		8		5		19		7		4
Non-officer director deferred stock compensation		1		1		1		1		1		1
Total	$	22	$	11	$	9	$	21	$	10	$	7

Stock Options

The Companies last issued stock options in 2006. The stock options generally vested over a three-year period and have a term of ten years. Options were granted at an exercise price equal to the fair market value of a common share when the option was granted. The Companies generally recognized compensation expense (based on the fair value of stock option awards) over the continuous service period in which the options vested. Awards to employees eligible for retirement were expensed in the month awarded.

The outstanding options are “equity awards” because shares of Con Edison common stock are delivered upon exercise of the options. As equity awards, the fair value of the options is measured at the grant date. There were no options granted in 2009 and 2008.

A summary of changes in the status of stock options awarded as of December 31, 2009 is as follows:


	Con Edison				CECONY
	Shares		Weighted Average Exercise Price		Shares		Weighted Average Exercise Price
Outstanding at 12/31/08	6,200,600		$	43.229	5,187,800		$	43.335
Exercised	(334,800	)		40.016	(287,900	)		40.277
Forfeited	(552,500	)		47.817	(531,100	)		47.850
Outstanding at 12/31/09	5,313,300		$	42.955	4,368,800		$	42.988

The changes in the fair value of all outstanding options from their grant dates to December 31, 2009 and 2008 (aggregate intrinsic value) for Con Edison were $13 million and $(27) million, respectively. The changes in the fair value of all outstanding options from their grant dates to December 31, 2009 and 2008 (aggregate intrinsic value) for CECONY was $11 million and $(23) million, respectively. The aggregate intrinsic value of options exercised in 2009 and 2008 was $1 million for both years, and the cash received by Con Edison for payment of the exercise price was $13 million and $11 million, respectively. The weighted average remaining contractual life of options outstanding is four years as of December 31, 2009.

The following table summarizes stock options outstanding at December 31, 2009 for each plan year for the Companies:


		Con Edison				CECONY
Plan Year	Remaining Contractual Life	Options Outstanding	Weighted Average Exercise Price		Options Exercisable	Options Outstanding	Weighted Average Exercise Price		Options Exercisable
2006	7	1,583,600	$	45.216	1,583,600	1,363,400	$	45.233	1,363,400
2005	6	1,171,400		42.782	1,171,400	954,450		42.758	954,450
2004	5	912,700		43.762	912,700	729,850		43.757	729,850
2003	4	613,100		39.810	613,100	456,600		39.756	456,600
2002	3	742,550		42.510	742,550	607,550		42.510	607,550
2001	2	223,800		37.750	223,800	201,300		37.750	201,300
2000	1	66,150		32.500	66,150	55,650		32.500	55,650
Total		5,313,300	$	42.955	5,313,300	4,368,800	$	42.988	4,368,800

Restricted Stock Units

Restricted stock unit awards under the LTIP have been made as follows: (i) to officers and certain employees, including awards that provide for adjustment of the number of units (performance-restricted stock units or Performance RSUs); and (ii) in connection with the directors’ deferred compensation plan. Each restricted stock unit awarded represents the right to receive, upon vesting, one share of Con Edison common stock, or, except for units awarded under the directors’ plan, the cash value of a share or a combination thereof.

In accordance with the accounting rules for stock compensation, for outstanding restricted stock awards other than Performance RSUs or awards under the directors’ deferred compensation plan, the Companies have accrued a liability based on the market value of a common share on the grant date and are recognizing compensation expense over the vesting period. The weighted average vesting period for outstanding awards is three years and is based on the employee’s continuous service to Con Edison. Prior to vesting, the awards are subject to forfeiture in whole or in part under certain circumstances. The awards are “liability awards” because each restricted stock unit represents the right to receive, upon vesting, one share of Con Edison common stock, the cash value of a share or a combination thereof. As such, prior to vesting, changes in the fair value of the units are reflected in net income. At December 31, 2009 and 2008, there were 135,048 and 113,145 units outstanding, respectively, for Con Edison, of which 96,598 and 76,045 units were outstanding, respectively, for CECONY. The weighted average fair value as of the grant date of the outstanding units other than Performance RSUs or awards under the directors’ deferred compensation plan for December 31, 2009 and 2008 was $40.812 and $41.080 per unit, respectively, for Con Edison. The weighted average fair value as of the grant date of the outstanding units for December 31, 2009 and 2008 was $42.895 and $43.852 per unit, respectively, for CECONY. The total expense to be recognized by the Companies in future periods for unvested awards outstanding as of December 31, 2009 for Con Edison and CECONY was $1 million.

The number of units in each annual Performance RSU award is subject to adjustment as follows: (i) 50 percent of the units awarded will be multiplied by a factor that may range from 0 to 150 percent based on Con Edison’s total shareholder return relative to a specified peer group during a specified performance period (the TSR portion); and (ii) 50 percent of the units awarded will be multiplied by a factor that may range from 0 to 132 percent based on determinations made in connection with CECONY’s Executive Incentive Plan, or, for certain officers, the O&R Annual Team Incentive Plan or goals relating to Con Edison’s competitive energy businesses (the EIP portion). Units generally vest when the performance period ends.

For the TSR portion of Performance RSU, the Companies use a Monte Carlo simulation model to estimate the fair value of the awards. The fair value is

recomputed each reporting period as of the earlier of the reporting date and the vesting date. For the EIP portion of Performance RSU, the fair value of the awards is determined using the market price as of the earlier of the reporting date or the vesting date. Performance RSU awards are “liability awards” because each Performance RSU represents the right to receive, upon vesting, one share of Con Edison common stock, the cash value of a share or a combination thereof. As such, changes in the fair value of the Performance RSUs are reflected in net income. The following table illustrates the assumptions used to calculate the fair value of the awards:


		2009
Risk-free interest rate		0.45% - 5.95%
Expected term		3 years
Expected volatility		22.30%

The risk-free rate is based on the U.S. Treasury zero-coupon yield curve on the date of grant. The expected term of the Performance RSUs is three years, which equals the vesting period. The Companies do not expect significant forfeitures to occur. The expected volatility is calculated using daily closing stock prices over a period of three years, which approximates the expected term of the awards.

A summary of changes in the status of the Performance RSUs TSR portion during the period ended December 31, 2009 is as follows:


	Con Edison				CECONY
	Units		Weighted Average Fair Value*		Units		Weighted Average Fair Value*
Non-vested at 12/31/08	323,009		$	48.847	247,559		$	48.840
Granted	243,745			35.877	222,501			33.301
Vested	(101,129	)		68.150	(76,392	)		68.150
Forfeited	(38,939	)		—	(36,605	)		—
Non-vested at 12/31/09	426,686		$	54.316	357,063		$	54.436

Fair value is determined using the Monte Carlo simulation described above. Weighted average fair value at December 31, 2008 reflects assumption that dividends are accrued or paid on Performance RSUs prior to vesting. Weighted average fair value at December 31, 2009 and weighted average fair value of Performance RSUs granted do not reflect any accrual or payment of dividends prior to vesting.

A summary of changes in the status of the Performance RSUs’ EIP portion during the period ended December 31, 2009 is as follows:


	Con Edison				CECONY
	Units		Weighted Average Fair Value		Units		Weighted Average Fair Value
Non-vested at 12/31/08	323,009		$	38.930	247,559		$	38.930
Granted	243,745			40.933	222,501			37.857
Vested	(101,129	)		45.430	(76,392	)		45.430
Forfeited	(38,939	)		—	(36,605	)		—
Non-vested at 12/31/09	426,686		$	45.430	357,063		$	45.430

*	Fair value is determined using the market price of one share of Con Edison common stock on the respective dates indicated or the grant or vesting dates. The market price has not been discounted to reflect that dividends do not accrue and are not payable on Performance RSUs until vesting.

The total expense to be recognized by Con Edison in future periods for unvested Performance RSUs outstanding as of December 31, 2009 is $21 million, including $17 million for CECONY.

Con Edison has a deferred stock compensation plan for non-officer directors. Awards under the deferred compensation stock plan are covered by the LTIP. Each director receives 1,500 stock units annually for service as a director. These stock units are deferred until the director’s termination of service. Directors may elect to receive dividend equivalents earned on stock units in cash payments. Restricted stock units issued under the directors’ deferred compensation plan are considered “equity awards,” because they may only be settled in shares. Directors immediately vest in units issued to them. The fair value of the units is determined using the closing price of Con Edison’s common stock on the business day immediately preceding the date of issue. In the period ended December 31, 2009, approximately 25,165 units were issued.

Stock Purchase Plan

The Stock Purchase Plan provides for the Companies to contribute up to $1 for each $9 invested by their directors, officers or employees to purchase Con Edison common stock under the plan. Eligible participants may invest up to $25,000 during any calendar year (subject to an additional limitation for officers and employees of not more than 20% of their pay). Dividends paid on shares held under the plan are reinvested in additional shares unless otherwise directed by the participant.

Participants in the plan immediately vest in shares purchased by them under the plan. The fair value of the shares of Con Edison common stock purchased under the plan was calculated using the average of the high and low composite sale prices at which shares were traded at the New York Stock Exchange on the trading day immediately preceding such purchase dates. During 2009, 2008 and 2007, 868,622, 745,869 and 633,647 shares were purchased under the Stock Purchase Plan at a weighted average price of $38.15, $42.47 and $47.70 per share, respectively.

Financial Information by Business Segment

12 Months Ended

Dec. 31, 2009

Financial Information by Business Segment

Note N — Financial Information by Business Segment

The business segments of each of the Companies were determined based on management’s reporting and decision-making requirements in accordance with the accounting rules for segment reporting.

Con Edison’s principal business segments are CECONY’s regulated electric, gas and steam utility activities, O&R’s regulated electric and gas utility activities and Con Edison’s competitive energy businesses. See Note U. CECONY’s principal business segments are its regulated electric, gas and steam utility activities.

All revenues of these business segments, excluding revenues earned by Con Edison Development on certain energy infrastructure projects, which are deemed to be immaterial, are from customers located in the United States of America. Also, all assets of the business segments, excluding certain investments in energy infrastructure projects by Con Edison Development ($238 million at December 31, 2009), are located in the United States of America. The accounting policies of the segments are the same as those described in Note A.

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 the business segments are as follows:


As of and for the Year Ended December 31, 2009 (Millions of Dollars)	Operating revenues			Inter-segment revenues			Depreciation and amortization		Operating income			Interest charges			Income tax expense		Total assets*		Construction expenditures
CECONY
Electric	$	7,674		$	12		$	587	$	1,368		$	425		$	300	$	23,309	$	1,596
Gas		1,701			5			98		309			82			90		4,796		339
Steam		661			73			59		39			46			12		2,356		122
Consolidation adjustments		—			(90	)		—		—			—			—		—		—
Total CECONY	$	10,036		$	—		$	744	$	1,716		$	553		$	402	$	30,461	$	2,057
O&R
Electric	$	648		$	—		$	30	$	64		$	18		$	15	$	1,554	$	85
Gas		242			—			12		28			9			7		627		42
Other*		—			—			—		—			2			—		35		—
Total O&R	$	890		$	—		$	42	$	92		$	29		$	22	$	2,216	$	127
Competitive energy businesses	$	2,147		$	—		$	5	$	93		$	—		$	31	$	751	$	10
Other**		(41	)		—			—		(3	)		29			—		445		—
Total Con Edison	$	13,032		$	—		$	791	$	1,899		$	611		$	455	$	33,873	$	2,194

As of and for the Year Ended December 31, 2008 (Millions of Dollars)	Operating revenues			Inter-segment revenues			Depreciation and amortization		Operating income			Interest charges			Income tax expense		Total assets*		Construction expenditures
CECONY
Electric	$	7,878		$	12		$	521	$	1,333		$	375		$	295	$	23,181	$	1,743
Gas		1,839			5			90		303			75			91		4,882		338
Steam		707			74			61		31			42			10		2,352		121
Consolidation adjustments		—			(91	)		—		—			—			—		—		—
Total CECONY	$	10,424		$	—		$	672	$	1,667		$	492		$	396	$	30,415	$	2,202
O&R
Electric	$	733		$	—		$	29	$	68		$	18		$	18	$	1,514	$	88
Gas		258			—			11		25			9			6		590		32
Other*		—			—			—		—			1			—		58		—
Total O&R	$	991		$	—		$	40	$	93		$	28		$	24	$	2,162	$	120
Competitive energy businesses	$	2,195		$	(11	)	$	5	$	162		$	(2	)	$	92	$	668	$	4
Other**		(27	)		11			—		(2	)		26			—		253		—
Total Con Edison	$	13,583		$	—		$	717	$	1,920		$	544		$	512	$	33,498	$	2,326

As of and for the Year Ended December 31, 2007 (Millions of Dollars)	Operating revenues			Inter-segment revenues			Depreciation and amortization		Operating income			Interest charges			Income tax expense		Total assets*		Construction expenditures
CECONY
Electric	$	7,440		$	11		$	448	$	1,304		$	347		$	271	$	18,581	$	1,567
Gas		1,759			5			85		309			71			94		3,786		217
Steam		686			77			60		56			40			27		2,137		95
Consolidation adjustments		—			(93	)		—		—			—			—		—		—
Total CECONY	$	9,885		$	—		$	593	$	1,669		$	458		$	392	$	24,504	$	1,879
O&R
Electric	$	671		$	—		$	27	$	76		$	21		$	19	$	1,271	$	80
Gas		265			—			11		27			11			5		530		32
Other*		—			—			—		—			2			—		61		—
Total O&R	$	936		$	—		$	38	$	103		$	34		$	24	$	1,862	$	112
Competitive energy businesses***	$	2,303		$	12		$	14	$	78		$	(4	)	$	36	$	1,629	$	7
Other**		(4	)		(12	)		—		(3	)		29			—		267		—
Total Con Edison	$	13,120		$	—		$	645	$	1,847		$	517		$	452	$	28,262	$	1,998

*	Includes amounts related to the RECO securitization.

**	Parent company expenses, primarily interest, and consolidation adjustments. Other does not represent a business segment.

***	Total assets for the competitive energy businesses included $906 million of assets held for sale at December 31, 2007. See Note U.

Derivative Instruments and Hedging Activities

12 Months Ended

Dec. 31, 2009

Derivative Instruments and Hedging Activities

Note O — Derivative Instruments and Hedging Activities

Under the accounting rules for derivatives and hedging, derivatives are recognized on the balance sheet at fair value, unless an exception is available under the accounting rules. Certain qualifying derivative contracts have been designated as normal purchases or normal sales contracts. These contracts are not reported at fair value under the accounting rules.

The accounting rules for derivatives and hedging were expanded in 2009 to require the Companies to provide users of financial statements with enhanced disclosures about (a) how and why an entity uses derivative instruments, (b) how derivative instruments and related hedged items are accounted for under the accounting rules, and (c) how derivative instruments and related hedged items affect an entity’s financial position, financial performance, and cash flows. The accounting rules require qualitative disclosures about objectives and strategies for using derivatives, quantitative disclosures about fair value amounts of and gains and losses on derivative instruments and disclosures about credit-risk-related contingent features in derivative agreements.

Energy Price Hedging

Con Edison’s subsidiaries hedge market price fluctuations associated with physical purchases and sales of electricity, natural gas, and steam by using derivative instruments including futures, forwards, basis swaps, options, transmission congestion contracts and financial transmission rights contracts. The fair values of these hedges at December 31, 2009 and 2008 were as follows:


	Con Edison						CECONY
*(Millions of Dollars)*	2009			2008			2009			2008
Fair value of net derivative assets/(liabilities) – gross	$	(266	)	$	(428	)	$	(137	)	$	(259	)
Impact of netting of cash collateral		162			322			87			224
Fair value of net derivative assets/(liabilities) – net	$	(104	)	$	(106	)	$	(50	)	$	(35	)

Credit Exposure

The Companies are exposed to credit risk related to transactions entered into primarily for the various energy supply and hedging activities by the Utilities and the competitive energy businesses. The Companies use credit policies to manage this risk, including an established credit approval process, monitoring of counterparty limits, netting provisions within agreements, collateral or prepayment arrangements, credit insurance and credit default swaps.

At December 31, 2009, Con Edison and CECONY had $176 million and $25 million of credit exposure in connection with energy supply and hedging activities, net of collateral, respectively. Con Edison’s net credit exposure consisted of $122 million with investment-grade counterparties and $54 million primarily with commodity exchange brokers or independent system operators. CECONY’s net credit exposure consisted of $4 million with investment-grade counterparties and $21 million with commodity exchange brokers.

Economic Hedges

The Companies enter into certain derivative instruments that do not qualify or are not designated as hedges under the accounting rules for derivatives and hedging. However, management believes these instruments represent economic hedges that mitigate exposure to fluctuations in commodity prices.

The fair values of the Companies’ commodity derivatives at December 31, 2009 were:


*(Millions of Dollars)*	Fair Value of Commodity Derivatives(a) Balance Sheet Location	Con Edison			CECONY
Asset Derivatives
Current	Fair value of derivative assets	$	213		$	40
Long term	Other deferred charges and non-current assets		148			19
Total asset derivatives		$	361		$	59
Impact of netting			(231	)		(20	)
Net asset derivatives		$	130		$	39
Liability Derivatives
Current	Fair value of derivative liabilities	$	401		$	110
Long term	Fair value of derivative liabilities		226			86
Total liability derivatives		$	627		$	196
Impact of netting			(393	)		(107	)
Net liability derivatives		$	234		$	89

(a)	Qualifying derivative contracts, which have been designated as normal purchases or normal sales contracts, are not reported at fair value under the accounting rules for derivatives and hedging and, therefore, are excluded from the table.

The Utilities generally recover all of their prudently incurred fuel, purchased power and gas cost, including hedging gains and losses, in accordance with rate provisions approved by the applicable state utility commissions. See “Recoverable Energy Costs” in Note A. In accordance with the accounting rules for regulated operations, the Utilities record a regulatory asset or liability to defer recognition of unrealized gains and losses on their electric and gas derivatives. As gains and losses are realized in future periods, they will be recognized as purchased power, gas and fuel costs in the Companies’ consolidated income statements. Con Edison’s competitive energy businesses record realized and unrealized gains and losses on their derivative contracts in earnings in the reporting period in which they occur.

The following table presents the changes in the fair values of commodity derivatives that have been deferred or recognized in earnings for the year ended December 31, 2009:


Realized and Unrealized Gains/(Losses) on Commodity Derivatives(a) Deferred or Recognized in Income for the Year Ended December 31, 2009
*(Millions of Dollars)*	Balance Sheet Location	Con Edison			CECONY
Pre-tax gains/(losses) deferred in accordance with accounting rules for regulated operations:
Current	Deferred derivative gains	$	(15	)	$	(15	)
Total deferred gains		$	(15	)	$	(15	)
Current	Deferred derivative losses	$	147		$	143
Current	Recoverable energy costs	$	(558	)	$	(471	)
Long term	Regulatory assets	$	(15	)	$	(21	)
Total deferred losses		$	(426	)	$	(349	)
Net deferred losses		$	(441	)	$	(364	)
	Income Statement Location
Pre-tax gain/(loss) recognized in income
	Purchased power expense	$	(562	)(b)	$	—
	Gas purchased for resale		9			—
	Non-utility revenue		30	(b)		—
Total pre-tax gain/(loss) recognized in income		$	(523	)	$	—

(a)	Qualifying derivative contracts, which have been designated as normal purchases or normal sales contracts, are not reported at fair value under the accounting rules for derivatives and hedging and, therefore, are excluded from the table.

(b)	For the year ended December 31, 2009, Con Edison recorded in non-utility operating revenues and purchased power expense an unrealized pre-tax gain/(loss) of $196 million and $(165) million, respectively.

As of December 31, 2009, Con Edison had 1,349 contracts, including 699 CECONY contracts, which were considered to be derivatives under the accounting rules for derivatives and hedging (excluding qualifying derivative contracts, which have been designated as normal purchases or normal sales contracts). The following table presents the number of contracts by commodity type:


	Electric Derivatives				Gas Derivatives
	Number of Energy Contracts(a)	MWhs(b)	Number of Capacity Contracts(a)	MWs(b)	Number of Contracts(a)	Dths(b)	Total Number Of Contracts(a)
Con Edison	533	15,693,441	83	5,324	733	150,986,469	1,349
CECONY	95	3,412,975	—	—	604	143,760,000	699

(a)	Qualifying derivative contracts, which have been designated as normal purchases or normal sales contracts, are not reported at fair value under the accounting rules for derivatives and hedging and, therefore, are excluded from the table.

(b)	Volumes are reported net of long and short positions.

The Companies also enter into electric congestion and gas basis swap contracts to hedge the congestion and transportation charges which are associated with electric and gas contracts and hedged volumes.

The collateral requirements associated with, and settlement of, derivative transactions are included in net cash flows from operating activities in the Companies’ consolidated statement of cash flows. Most derivative instrument contracts contain provisions that may require the Companies to provide collateral on derivative instruments in net liability positions. The amount of collateral to be provided will depend on the fair value of the derivative instruments and the Companies’ credit ratings.

The aggregate fair value of all derivative instruments with credit-risk-related contingent features that are in a net liability position and collateral posted at December 31, 2009, and the additional collateral that would have been required to be posted had the lowest applicable credit rating been reduced one level and to below investment grade were:


*(Millions of Dollars)*	Con Edison(a)			CECONY(a)
Aggregate fair value – net liabilities	$	280		$	90
Collateral posted	$	185		$	82	(b)
Additional collateral(c) (downgrade one level from current ratings(d))	$	9		$	6
Additional collateral(c) (downgrade to below investment grade from current ratings(d))	$	243	(e)	$	45	(e)

(a)

Non-derivative transactions for the purchase and sale of electricity and gas and qualifying derivative instruments, which have been designated as normal purchases or normal sales, are excluded from the table. These transactions primarily include purchases of electricity from independent system operators. In the event the Utilities and Con Edison’s competitive energy businesses were no longer extended unsecured credit for such purchases, the Companies would be required to post collateral, which at December 31, 2009, would have amounted to an estimated $120 million for Con Edison, including $38 million for CECONY. For certain other such non-derivative transactions, the Companies could be required to post collateral under certain circumstances, including in the event counterparties had reasonable grounds for insecurity.

(b)	Across the Utilities’ energy derivative positions, credit limits for the same counterparties are generally integrated. At December 31, 2009, all collateral for these positions was posted by CECONY, including an estimated $37 million attributable to O&R.

(c)

The Companies measure the collateral requirements by taking into consideration the fair value amounts of derivative instruments that contain credit-risk-related contingent features that are in a net liabilities position plus amounts owed to counterparties for settled transactions and amounts required by counterparties for minimum financial security. The fair value amounts represent unrealized losses, net of any unrealized gains where the Companies have a legally enforceable right of setoff.

(d)

The current ratings are Moody’s, S&P and Fitch long-term credit rating of, as applicable, Con Edison (Baa1/BBB+/BBB+), CECONY (A3/A-/A-) or O&R (Baa1/A-/A). Credit ratings assigned by rating agencies are expressions of opinions that are subject to revision or withdrawal at any time by the assigning rating agency.

(e)	Derivative instruments that are net assets have been excluded from the table. At December 31, 2009, if Con Edison or CECONY had been downgraded to below investment grade, it would have been required to post additional collateral for such derivative instruments of not more than $33 million.

Interest Rate Swaps

In May 2008, Con Edison Development’s interest rate swaps that were designated as cash flow hedges were sold. The losses were classified to income/(loss) from discontinued operations for the year ended December 31, 2008 and were immaterial to Con Edison’s results of operations.

O&R has an interest rate swap related to its Series 1994A Debt. See Note C. O&R pays a fixed-rate of 6.09 percent and receives a LIBOR-based variable rate. The fair value of this interest rate swap at December 31, 2009 was an unrealized loss of $11 million, which has been included in Con Edison’s consolidated balance sheet as a noncurrent liability/fair value of derivative liabilities and a regulatory asset. The increase in the fair value of the swap for the year ended December 31, 2009 was $4 million. In the event O&R’s credit rating was downgraded to BBB- or lower by Standard & Poor’s Rating Services or Baa3 or

lower by Moody’s Investors Service, the swap counterparty could elect to terminate the agreement and, if it did so, the parties would then be required to settle the transaction.

Fair Value Measurements

12 Months Ended

Dec. 31, 2009

Fair Value Measurements

Note P — Fair Value Measurements

The accounting rules for fair value measurements and disclosures define fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date in a principal or most advantageous market. Fair value is a market-based measurement that is determined based on inputs, which refer broadly to assumptions that market participants use in pricing assets or liabilities. These inputs can be readily observable, market corroborated, or generally unobservable firm inputs. The Companies often make certain assumptions that market participants would use in pricing the asset or liability, including assumptions about risk, and the risks inherent in the inputs to valuation techniques. The Companies use valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs.

The accounting rules for fair value measurements and disclosures require consideration of the impact of nonperformance risk (including credit risk) from a market participant perspective in the measurement of the fair value of assets and liabilities. At December 31, 2009, the Companies determined that nonperformance risk would have no material impact on their financial position or results of operations. To assess nonperformance risk, the Companies considered information such as collateral requirements, master netting arrangements, letters of credit and parent company guarantees, and applied a market-based method by using the counterparty (for an asset) or the Companies’ (for a liability) credit default swaps rates.

The accounting rules for fair value measurements and disclosures establish a fair value hierarchy, which prioritizes the inputs to valuation techniques used to measure fair value in three broad levels. The rules require that assets and liabilities be classified in their entirety based on the level of input that is significant to the fair value measurement. Assessing the significance of a particular input may require judgment considering factors specific to the asset or liability, and may affect the valuation of the asset or liability and their placement within the fair value hierarchy. The Companies classify fair value balances based on the fair value hierarchy defined by the accounting rules for fair value measurements and disclosures as follows:

•

Level 1 – Consists of assets or liabilities whose value is based on unadjusted quoted prices in active markets at the measurement date. An active market is one in which transactions for assets or liabilities occur with sufficient frequency and volume to provide pricing information on an ongoing basis. This category includes contracts traded on active exchange markets valued using unadjusted prices quoted directly from the exchange.

•

Level 2 – Consists of assets or liabilities valued using industry standard models and based on prices, other than quoted prices within Level 1, that are either directly or indirectly observable as of the measurement date.

The industry standard models consider observable assumptions including time value, volatility factors, and current market and contractual prices for the underlying commodities, in addition to other economic measures. This category includes contracts traded on active exchanges or in over-the-counter markets priced with industry standard models.

•

Level 3 – Consists of assets or liabilities whose fair value is estimated based on internally developed models or methodologies using inputs that are generally less readily observable and supported by little, if any, market activity at the measurement date. Unobservable inputs are developed based on the best available information and subject to cost benefit constraints. This category includes contracts priced using models that are internally developed and contracts placed in illiquid markets. It also includes contracts that expire after the period of time for which quoted prices are available and internal models are used to determine a significant portion of the value.

Assets and liabilities measured at fair value on a recurring basis as of December 31, 2009 are summarized below.


	Level 1				Level 2				Level 3				Netting Adjustments(4)						Total
*(Millions of Dollars)*	Con Edison		CECONY		Con Edison		CECONY		Con Edison		CECONY		Con Edison			CECONY			Con Edison		CECONY
Derivative assets:
Energy(1)	$	3	$	3	$	92	$	21	$	201	$	17	$	(97	)	$	15		$	199	$	56
Other assets(3)		36		36		—		—		92		83		—			—			128		119
Total	$	39	$	39	$	92	$	21	$	293	$	100	$	(97	)	$	15		$	327	$	175
Derivative liabilities:
Energy(1)	$	6	$	1	$	296	$	155	$	260	$	22	$	(259	)	$	(72	)	$	303	$	106
Financial & other(2)		—		—		—		—		11		—		—			—			11		—
Total	$	6	$	1	$	296	$	155	$	271	$	22	$	(259	)	$	(72	)	$	314	$	106

(1)

A significant portion of the energy derivative contracts categorized in Level 3 is valued using either an industry acceptable model or an internally developed model with observable inputs. The models also include some less readily observable inputs resulting in the classification of the entire contract as Level 3. See Note O.

(2)	Includes an interest rate swap. See Note O.

(3)	Other assets are comprised of assets such as life insurance contracts within the Deferred Income Plan and Supplemental Retirement Income Plans, held in rabbi trusts.

(4)	Amounts represent the impact of legally-enforceable master netting agreements that allow the Companies to net gain and loss positions and cash collateral held or placed with the same counterparties.

Assets and liabilities measured at fair value on a recurring basis as of December 31, 2008 are summarized below.


	Level 1				Level 2				Level 3				Netting Adjustments(4)						Total
*(Millions of Dollars)*	Con Edison		CECONY		Con Edison		CECONY		Con Edison		CECONY		Con Edison			CECONY			Con Edison		CECONY
Derivative assets:
Energy(1)	$	1	$	—	$	150	$	38	$	206	$	16	$	(117	)	$	65		$	240	$	119
Other assets(3)		23		23		—		—		73		65		—			—			96		88
Total	$	24	$	23	$	150	$	38	$	279	$	81	$	(117	)	$	65		$	336	$	207
Derivative liabilities:
Energy(1)	$	34	$	34	$	495	$	264	$	256	$	15	$	(439	)	$	(159	)	$	346	$	154
Financial & other(2)		—		—		—		—		15		—		—			—			15		—
Total	$	34	$	34	$	495	$	264	$	271	$	15	$	(439	)	$	(159	)	$	361	$	154

(1)

(2)	Includes an interest rate swap. See Note O.

(3)	Other assets are comprised of assets such as life insurance contracts within the Deferred Income Plan and Supplemental Retirement Income Plans, held in rabbi trusts.

(4)	Amounts represent the impact of legally-enforceable master netting agreements that allow the Companies to net gain and loss positions and cash collateral held or placed with the same counterparties.

The table listed below provides a reconciliation of the beginning and ending net balances for assets and liabilities measured at fair value for the years ended December 31, 2009 and 2008 and classified as Level 3 in the fair value hierarchy:


	For the Year Ended December 31, 2009
				Total Gains/(Losses) – Realized and Unrealized
*(Millions of Dollars)*	Beginning Balance as of January 1, 2009			Included in Earnings			Included in Regulatory Assets and Liabilities			Purchases, Issuances, Sales and Settlements		Transfer In/Out of Level 3		Ending Balance as of December 31, 2009
Con Edison
Derivatives:
Energy	$	(50	)	$	(283	)	$	(23	)	$	297	$	—	$	(59	)
Financial & other		(15	)		(3	)		4			3		—		(11	)
Other(1)		73			7			12			—		—		92
Total	$	8		$	(279	)	$	(7	)	$	300	$	—	$	22
CECONY
Derivatives:
Energy	$	1		$	(23	)	$	(20	)	$	37	$	—	$	(5	)
Other(1)		65			7			11			—		—		83
Total	$	66		$	(16	)	$	(9	)	$	37	$	—	$	78

(1)	Amounts included in earnings are reported in investment and other income on the consolidated income statement.


	For the Year Ended December 31, 2008
				Total Gains/(Losses) – Realized and Unrealized
*(Millions of Dollars)*	Beginning Balance as of January 1, 2008			Included in Earnings			Included in Regulatory Assets and Liabilities			Purchases, Issuances, Sales and Settlements			Transfer In/Out of Level 3		Ending Balance as of December 31, 2008
Con Edison
Derivatives:
Energy	$	23		$	28		$	(61	)	$	(40	)	$	—	$	(50	)
Financial & other		(11	)		(2	)		(4	)		2			—		(15	)
Other(1)		107			(13	)		(21	)		—			—		73
Total	$	119		$	13		$	(86	)	$	(38	)	$	—	$	8
CECONY
Derivatives:
Energy	$	11		$	13		$	6		$	(29	)	$	—	$	1
Other(1)		95			(13	)		(17	)		—			—		65
Total	$	106		$	—		$	(11	)	$	(29	)	$	—	$	66

(1)	Amounts included in earnings are reported in investment and other income on the consolidated income statement.

For the Utilities, realized gains and losses on Level 3 energy derivative assets and liabilities are reported as part of purchased power and gas costs. The Utilities generally recover these costs in accordance with rate provisions approved by the applicable state public utilities commissions. See Note A. Unrealized gains and losses for energy derivatives are generally deferred on the consolidated balance sheet in accordance with the accounting rules for regulated operations.

For the competitive energy businesses, realized and unrealized gains and losses on Level 3 energy derivative assets and liabilities are reported in non-utility revenues ($17 million gain and $3 million gain) and purchased power costs ($184 million loss and $3 million gain) on the consolidated income statement for the years ended December 31, 2009 and 2008, respectively. The change in fair value relating to Level 3 energy derivative assets held at December 31, 2009 and 2008 is included in non-utility revenues ($27 million loss and $4 million gain), and purchased power costs ($28 million gain and immaterial) on the consolidated income statement for the years ended December 31, 2009 and 2008, respectively.

The accounting rules for fair value measurements and disclosures provide for limited retrospective application for day one gains and losses previously deferred and eliminated the deferral of gains and losses at inception of certain derivative contracts whose fair value was not evidenced by market observable data. The accounting rules for fair value measurements and disclosures require that the impact of this change in accounting for derivative contracts be recorded as an adjustment to beginning retained earnings in the period of adoption. As a result, Con Edison Energy recorded $15 million, net of taxes, as an increase to beginning retained earnings for day one gains that were previously deferred.

- Definition

This element represents the disclosure related to the fair value measurement of assets and liabilities which includes [financial] instruments measured at fair value that are classified in stockholders' equity. Such assets and liabilities may be measured on a recurring or nonrecurring basis. The disclosures which may be required or desired include: (1) for assets and liabilities measured on a recurring basis, disclosure may include: (a) the fair value measurements at the reporting date; (b) the level within the fair value hierarchy in which the fair value measurements in their entirety fall, segregating fair value measurements using quoted prices in active markets for identical assets or liabilities (Level 1), significant other observable inputs (Level 2), and significant unobservable inputs (Level 3); (c) for fair value measurements using significant unobservable inputs (Level 3), a reconciliation of the beginning and ending balances, separately presenting changes during the period attributable to the following: (i) total gains or losses for the period (realized and unrealized), segregating those gains or losses included in earnings (or changes in net assets), and a description of where those gains or losses included in earnings (or changes in net assets) are reported in the statement of income (or activities); (ii) purchases, sales, issuances, and settlements (net); (iii) transfers in and transfers out of Level 3 (for example, transfers due to changes in the observability of significant inputs); (d) the amount of the total gains or losses for the period in subparagraph (c) (i) above included in earnings (or changes in net assets) that are attributable to the change in unrealized gains or losses relating to those assets and liabilities still held at the reporting date and a description of where those unrealized gains or losses are reported in the statement of income (or activities); (e) the valuation technique(s) used to measure fair value and a discussion of changes in valuation techniques, if any, during the period and (2) for assets and liabilities that are measured at fair value on a nonrecurring basis (for example, impaired assets) disclosure may include, in addition to (a) above: (a) the reasons for the fair value measurements recorded; (b) the same as (b) above; (c) for fair value measurements using significant unobservable inputs (Level 3), a description of the inputs and the information used to develop the inputs; and (d) the valuation technique(s) used to measure fair value and a discussion of changes, if any, in the valuation technique(s) used to measure similar assets and/or liabilities in prior periods.

+ References+ Details

New Financial Accounting Standards

12 Months Ended

Dec. 31, 2009

New Financial Accounting Standards

Note T — New Financial Accounting Standards

In December 2009, the Financial Accounting Standards Board (FASB) issued new guidance for consolidations through Accounting Standards Update (ASU) No. 2009-17, “Consolidations (Topic 810): Improvements to Financial Reporting by Enterprises Involved with Variable Interest Entities.” The amendments in this update to the Accounting Standards Codification (ASC) are the result of Statement of Financial Accounting Standards (SFAS) No. 167, “Amendments to FASB Interpretation No. 46(R).” The update amends FASB Interpretation No. 46(R), “Consolidation of Variable Interest Entities (revised December 2003) – an interpretation of ARB No. 51,” to improve financial reporting by entities involved with VIEs and to address the impact of pending amendments to derecognition guidance. Under this new guidance, an entity must perform qualitative assessments of power and economics when determining the primary beneficiary of VIEs. This update is effective as of the beginning of the first fiscal year that begins after November 15, 2009. The application of this guidance does not have a material impact on the Companies’ financial position, results of operations and liquidity.

In December 2009, the FASB issued new guidance for transfers of financial assets through ASU No. 2009-16, “Transfers and Servicing (Topic 860): Accounting for Transfers of Financial Assets.” The amendments in this update to the ASC are the result of SFAS No. 166, “Accounting for Transfers of Financial Assets, an amendment of FASB Statement No. 140.” This update amends FASB Statement No. 140, “Accounting for Transfers of Financial Assets,” by eliminating the concept of a Qualified Special Purpose Entity, modifying the transferability constraints, requiring consideration of all arrangements made in connection with a transfer, clarifying the legal isolation analysis, providing guidance on when a portion of a financial asset can be derecognized, and modifying the initial measurement of a beneficial interest retained by a transferor. This update is effective as of the beginning of the first fiscal year that begins after November 15, 2009. The application of this guidance does not have a material impact on the Companies’ financial position, results of operations and liquidity.

In August 2009, the FASB issued ASU No. 2009-05, “Fair Value Measurements and Disclosures (Topic 820) – Measuring Liabilities at Fair Value.” The amendments in this update attempt to reduce ambiguity in financial reporting when measuring the fair value of liabilities through providing clarification on valuation techniques for circumstances in which a quoted price in an active market for the identical liability is not available. The guidance requires companies to measure fair value using valuation techniques provided within the update or those consistent with Topic 820. The update was effective for the first interim or annual reporting period beginning after the update’s issuance. The Companies currently record certain derivative liabilities at fair value using valuation techniques consistent with Topic 820. As such, the adoption of this guidance did not have a material impact on the Companies’ financial position, results of operations or liquidity.

In June 2009, the FASB issued ASU No. 2009-01, “Generally Accepted Accounting Principles (Topic 105).” The amendments in this update to the ASC are the result of Statement No. 168, “The FASB Accounting Standards Codification^TM and the Hierarchy of Generally Accepted Accounting Principles.” This update replaces FASB Statement No. 162, “The Hierarchy of Generally Accepted Accounting Principles” and establishes the FASB Accounting Standards Codification^TM as the source of authoritative U.S. generally accepted accounting principles recognized by the FASB to be applied to by

nongovernmental entities. This update is effective for interim and annual periods ending after September 15, 2009. The adoption of this Statement did not have a material impact on the Companies’ financial position, results of operations or liquidity.

In May 2009, the FASB issued FAS No. 165, “Subsequent Events.” This Standard has been codified in ASC Topic 855 – “Subsequent Events.” This new guidance establishes general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued or are available to be issued. The guidance specifies the period after the balance sheet date during which management of a reporting entity should evaluate events or transactions that may occur for potential recognition or disclosure in the financial statements, the circumstances under which an entity should recognize events or transactions occurring after the balance sheet date in its financial statements, and the disclosures that an entity should make about events or transactions that occurred after the balance sheet date. This guidance is effective for interim and annual periods ending after June 15, 2009. The application of this guidance did not have a material impact on the Companies’ financial position, results of operations and liquidity.

In April 2009, the FASB issued FASB Staff Position (FSP) FAS 157-4 “Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That are Not Orderly.” This FSP has been incorporated within the Codification in ASC Topic 820, “Fair Value Measurements and Disclosures.” This FSP provides additional guidance on factors that should be considered in estimating fair value when there has been a significant decrease in market activity for a financial asset or liability. Additionally, this FSP requires an entity to disclose the inputs and valuation techniques used to measure fair value and discussion of changes in valuation techniques and related inputs, if any, during the period. This FSP applies to all fair value measurements when appropriate and is effective for interim and annual periods ending after June 15, 2009. The application of this FSP did not have a material impact on the Companies’ financial position, results of operations and liquidity.

In April 2009, the FASB issued FSP FAS 115-2 and FAS 124-2, “Recognition and Presentation of Other-Than-Temporary Impairments.” This FSP has been incorporated within the Codification in ASC Topic 320, “Investments – Debt and Equity Securities.” This FSP amends the method for determining whether an other-than-temporary impairment exists for debt securities and the amount of an impairment charge to be recorded in earnings. Under the FSP, an entity must assess the likelihood of selling the security prior to recovering its cost basis to determine whether any other-than-temporary impairment exists. This FSP is effective for interim and annual periods ending after June 15, 2009. The application of this FSP did not have a material impact on the Companies’ financial position, results of operations and liquidity.

In April 2009, the FASB issued FSP FAS 107-1 and Accounting Principles Board (APB) 28-1 “Interim Disclosures about Fair Value of Financial Instruments.” This FSP has been incorporated within the Codification in ASC Topic 825, “Financial Instruments,” and applies to all financial instruments within the scope of FASB Statement No. 107, “Disclosures about Fair Value of Financial Instruments.” This FSP requires entities to disclose the methods and significant assumptions used to estimate the fair value of financial instruments, in both interim financial statements as well as annual financial statements. This FSP is effective for interim and annual periods ending after June 15, 2009. The application of this FSP did not have a material impact on the Companies’ financial position, results of operations and liquidity.

Schedule I Condensed Financial Information of Consolidated Edison, Inc. (CONSOLIDATED EDISON INC)

12 Months Ended

Dec. 31, 2009

CONSOLIDATED EDISON INC

Schedule I Condensed Financial Information of Consolidated Edison, Inc.

Schedule I

Condensed Financial Information of Consolidated Edison, Inc.

Condensed Income Statement

(Parent Company Only)


	2009			2008			2007
	(Millions of Dollars, except per share amounts)
Equity in earnings of subsidiaries	$	883		$	900		$	946
Other income/(deductions), net of taxes		14			48			8
Interest expense		(29	)		(26	)		(29	)
Income From Continuing Operations		868			922			925
Income from Discontinued Operations (Net of Income Tax Expense of $177 and $1 in 2008 and 2007, respectively)		—			274			4
Net Income for Common Stock	$	868		$	1,196		$	929
Earnings Per Common Share—Basic
Continuing operations	$	3.16		$	3.37		$	3.48
Discontinued operations		—			1.01			0.01
Net Income	$	3.16		$	4.38		$	3.49
Earnings Per Common Share – Diluted
Continuing operations	$	3.14		$	3.36		$	3.46
Discontinued operations		—			1.01			0.01
Net Income	$	3.14		$	4.37		$	3.47
Dividends Declared Per Share Of Common Stock	$	2.36		$	2.34		$	2.32
Average Number Of Shares Outstanding – Basic (In Millions)		275.2			272.9			266.3
Average Number Of Shares Outstanding – Diluted (In Millions)		276.3			273.6			267.2

Condensed Financial Information of Consolidated Edison, Inc.

Condensed Statement of Cash Flows

(Parent Company Only)


	2009			2008			2007
	(Millions of Dollars)
NET INCOME	$	868		$	1,196		$	929
Equity in earnings of subsidiaries		(883	)		(1,174	)		(950	)
Dividends received from:
Consolidated Edison Company of New York, Inc.		652			618			548
Orange and Rockland Utilities, Inc.		32			31			31
Competitive energy businesses		8			12			43
Other – net		85			(462	)		174
NET CASH FLOWS FROM OPERATING ACTIVITIES		762			221			775
INVESTING ACTIVITIES
Contributions to subsidiaries		(241	)		(791	)		(701	)
Proceeds from sale of subsidiaries		—			1,461			—
NET CASH FLOWS FROM/(USED IN) INVESTING ACTIVITIES		(241	)		670			(701	)
FINANCING ACTIVITIES
Net proceeds from/(payments of) short-term debt		(110	)		(130	)		157
Retirement of long-term debt		(4	)		(200	)		(325	)
Common shares issued		257			42			685
Common stock dividends		(601	)		(618	)		(582	)
NET CASH FLOWS USED IN FINANCING ACTIVITIES		(458	)		(906	)		(65	)
NET CHANGE FOR THE PERIOD		63			(15	)		9
BALANCE AT BEGINNING OF PERIOD		17			32			23
BALANCE AT END OF PERIOD	$	80		$	17		$	32

Condensed Financial Information of Consolidated Edison, Inc.

Condensed Balance Sheet

(Parent Company Only)


	At December 31,
	2009		2008
	*(Millions of Dollars)*
ASSETS
CURRENT ASSETS
Cash and temporary cash investments	$	80	$	17
Accounts receivable – other		79		—
Accounts receivable from affiliated companies		1		63
Prepayments		32		145
Other current assets		158		—
TOTAL CURRENT ASSETS		350		225
Investments in subsidiaries and others		11,152		10,718
Goodwill		406		406
Federal income tax due from taxing authority		1		10
Deferred income tax		22		26
Other assets		10		174
TOTAL ASSETS	$	11,941	$	11,559
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES
Long-term debt due within one year	$	3	$	4
Notes payable		—		110
Account payable		8		7
Other current liabilities		309		201
TOTAL CURRENT LIABILITIES		320		322
NONCURRENT LIABILITIES		36		178
TOTAL LIABILITIES		356		500
LONG-TERM DEBT		316		318
SHAREHOLDERS’ EQUITY
Common stock		4,404		4,095
Retained earnings		6,865		6,646
TOTAL SHAREHOLDERS’ EQUITY		11,269		10,741
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	11,941	$	11,559

- Definition

This element can be used to encapsulate the entire condensed financial information disclosure, including the financial position, cash flows, and the results of operations of the registrant (parent company) as of the same dates or for the same periods for which audited consolidated financial statements are being presented. Alternatively, the details of this disclosure can be reported by the specific parent company taxonomy elements, indicating the appropriate date and period contexts in an instance document.

+ References+ Details

Document Information	12 Months Ended
Document Information	Dec. 31, 2009
Document Type	10-K
Amendment Flag	false
Document Period End Date	Dec. 31, 2009

Entity Information (USD $)	12 Months Ended
Entity Information (USD $)	Dec. 31, 2009	Jan. 31, 2010	Jun. 30, 2009
Trading Symbol	ED
Entity Registrant Name	CONSOLIDATED EDISON INC
Entity Central Index Key	0001047862
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	Yes
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		281,351,375
Entity Public Float			$ 10,300,000,000
CONSOLIDATED EDISON CO OF NEW YORK INC
Entity Registrant Name	CONSOLIDATED EDISON CO OF NEW YORK INC
Entity Central Index Key	0000023632
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	Yes
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Filer Category	Non-accelerated Filer

Statement Of Financial Position Classified (Parenthetical) (USD $) In Millions, unless otherwise specified	Dec. 31, 2009	Dec. 31, 2008
CONSOLIDATED EDISON INC
Accounts receivable-customers, allowance for uncollectible accounts	$ 70	$ 60
Other receivables, allowance for uncollectible accounts	5	4
Non-utility property, accumulated depreciation	45	40
Intangible assets, accumulated amortization	2	2
CONSOLIDATED EDISON CO OF NEW YORK INC
Accounts receivable-customers, allowance for uncollectible accounts	63	53
Other receivables, allowance for uncollectible accounts	4	3
Non-utility property, accumulated depreciation	$ 20	$ 19