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Fair Value Measurements (Tables)
 12 Months Ended
Dec. 31, 2015
Fair Value Disclosures [Abstract]  
Assets and Liabilities Measured at Fair Value on Recurring Basis
Assets and liabilities measured at fair value on a recurring basis for the years ended December 31, 2015 and 2014 are summarized below.
 
2015
2014
(Millions of Dollars)
Level 1
Level 2
Level 3
Netting
Adjustment (e)
Total
Level 1
Level 2
Level 3
Netting
Adjustment (e)
Total
Con Edison
 
 
 
 
 
 
 
 
 
 
Derivative assets:
 
 
 
 
 
 
 
 
 
 
Commodity (a)(b)(c)
$2
$25
$13
$7
$47
$3
$78
$28
$(27)
$82
Commodity held for sale (f)
—

63
1
(63)
1
—

—

—

—

—

Other (a)(b)(d)
185
112
—

—

297
163
116
—

—

279
Total assets
$187
$200
$14
$(56)
$345
$166
$194
$28
$(27)
$361
Derivative liabilities:
 
 
 
 
 
 
 
 
 
 
Commodity (a)(b)(c)
$16
$153
$1
$(65)
$105
$18
$246
$8
$(194)
$78
Commodity held for sale (f)
1
133
7
(63)
78
—

—

—

—

—

Total liabilities
$17
$286
$8
$(128)
$183
$18
$246
$8
$(194)
$78
CECONY
 
 
 
 
 
 
 
 
 
 
Derivative assets:
 
 
 
 
 
 
 
 
 
 
Commodity (a)(b)(c)
$1
$9
$8
$17
$35
$1
$3
$13
$21
$38
Other (a)(b)(d)
171
105
—

—

276
155
106
—

—

261
Total assets
$172
$114
$8
$17
$311
$156
$109
$13
$21
$299
Derivative liabilities:
 
 
 
 
 
 
 
 
 
 
Commodity (a)(b)(c)
$14
$129

$—

$(57)
$86
$16
$91

$—

$(49)
$58
 
(a)
The Companies’ policy is to review the fair value hierarchy and recognize transfers into and transfers out of the levels at the end of each reporting period. There were no transfers between levels 1, 2 and 3 for the years ended December 31, 2015 and 2014.
(b)
Level 2 assets and liabilities include investments held in the deferred compensation plan and/or non-qualified retirement plans, exchange-traded contracts where there is insufficient market liquidity to warrant inclusion in Level 1, certain over-the-counter derivative instruments for electricity, refined products and natural gas. Derivative instruments classified as Level 2 are valued using industry standard models that incorporate corroborated observable inputs; such as pricing services or prices from similar instruments that trade in liquid markets, time value and volatility factors.
(c)
The accounting rules for fair value measurements and disclosures require consideration of the impact of nonperformance risk (including credit risk) from a market participant perspective in the measurement of the fair value of assets and liabilities. At December 31, 2015 and 2014, the Companies determined that nonperformance risk would have no material impact on their financial position or results of operations.
(d)
Other assets are comprised of assets such as life insurance contracts within the deferred compensation plan and non-qualified retirement plans.
(e)
Amounts represent the impact of legally-enforceable master netting agreements that allow the Companies to net gain and loss positions and cash collateral held or placed with the same counterparties.
(f)
Amounts represent derivative assets and liabilities included in Assets and Liabilities held for sale on the consolidated balance sheet (see Note U).
Schedule of Commodity Derivatives
The risk management group reports to the Companies’ Vice President and Treasurer.
 
Fair Value of Level 3 at December 31, 2015
 
 
 
 
(Millions of Dollars)
Valuation Techniques
Unobservable Inputs
Range
Con Edison — Commodity
Electricity
$(5)
Discounted Cash Flow
Forward energy prices (a)
$18.33-$77.50 per MWh
 
 
Discounted Cash Flow
Forward capacity prices (a)
$1.17-$7.50 per kW-month
Natural Gas
1
Discounted Cash Flow
Forward natural gas prices (a)
$(7.60) - $5.55 per Dt
Transmission Congestion Contracts/Financial Transmission Rights
10
Discounted Cash Flow
Discount to adjust auction prices for inter-zonal forward price curves (b)
40.8%-62.1%
 
 
 
Discount to adjust auction prices for historical monthly realized settlements (b)
37.5%-82.2%
 
 
 
Inter-zonal forward price curves adjusted for historical zonal losses (b)
$(6.35)-$5.59 per MWh
Total Con Edison — Commodity
$6
 
 
 
CECONY — Commodity
Transmission Congestion Contracts
$8
Discounted Cash Flow
Discount to adjust auction prices for inter-zonal forward price curves (b)
40.8%-62.1%
 
 
 
Discount to adjust auction prices for historical monthly realized settlements (b)
37.5%-82.2%
 
(a)
Generally, increases/(decreases) in this input in isolation would result in a higher/(lower) fair value measurement.
(b)
Generally, increases/(decreases) in this input in isolation would result in a lower/(higher) fair value measurement.
Reconciliation of Beginning and Ending Net Balances for Assets and Liabilities Measured at Level 3 Fair Value
The table listed below provides a reconciliation of the beginning and ending net balances for assets and liabilities measured at fair value for the years ended December 31, 2015 and 2014 and classified as Level 3 in the fair value hierarchy:
 
 
                 Con Edison
                 CECONY
(Millions of Dollars)
2015
2014
2015

2014
Beginning balance as of January 1,
$20
$9
$13
$6
Included in earnings
(20)
30
(6)
2
Included in regulatory assets and liabilities
1
7
—

7
Purchases
11
22
5
16
Settlements
(6)
(48)
(4)
(18)
Ending balance as of December 31,
$6
$20
$8
$13