XML 75 R49.htm IDEA: XBRL DOCUMENT v3.10.0.1
Fair Value Measurements (Tables)
 12 Months Ended
Dec. 31, 2018
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, 2018 and 2017 are summarized below.
 
2018
2017
(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)
$6
$36
$7
$(6)
$43
$5
$77
$7
$(39)
$50
Interest Rate Swaps (a)(b)(c)(f)
—

2
—

—

2
—

—

—

—

—

Other (a)(b)(d)
287
114
—

—

401
283
120
—

—

403
Total assets
$293
$152
$7
$(6)
$446
$288
$197
$7
$(39)
$453
Derivative liabilities:
 
 
 
 
 
 
 
 
 
 
Commodity (a)(b)(c)
$8
$43
$20
$(11)
$60
$8
$93
$6
$(52)
$55
Interest Rate Swaps (a)(b)(c)(f)
—

6
—

—

6
—

—

—

—

—

Total liabilities
$8
$49
$20
$(11)
$66
$8
$93
$6
$(52)
$55
CECONY
 
 
 
 
 
 
 
 
 
 
Derivative assets:
 
 
 
 
 
 
 
 
 
 
Commodity (a)(b)(c)
$3
$28
$1
$(1)
$31
$3
$40
$4
$(7)
$40
Other (a)(b)(d)
267
109
—

—

376
260
114
—

—

374
Total assets
$270
$137
$1
$(1)
$407
$263
$154
$4
$(7)
$414
Derivative liabilities:
 
 
 
 
 
 
 
 
 
 
Commodity (a)(b)(c)
$5
$30
$3
$(6)
$32
$5
$57

$—

$(18)
$44
 
(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. Con Edison and CECONY had $2 million of commodity derivative liabilities transferred from level 3 to level 2 during the year ended December 31, 2018 because of availability of observable market data due to the decrease in the terms of certain contracts from beyond three years as of December 31, 2017 to less than three years as of December 31, 2018. Con Edison and CECONY had $11 million and $10 million, respectively, of commodity derivative liabilities transferred from level 3 to level 2 during the year ended December 31, 2017 because of availability of observable market data due to the decrease in the terms of certain contracts from beyond three years as of September 30, 2017 to less than three years as of December 31, 2017.
(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, 2018 and 2017, 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)
See Note O.
Schedule of Commodity Derivatives
 
Fair Value of Level 3 at December 31, 2018
 
 
 
 
(Millions of Dollars)
Valuation Techniques
Unobservable Inputs
Range
Con Edison — Commodity
Electricity
$(12)
Discounted Cash Flow
Forward energy prices (a)
$21.34-$64.45 per MWh
 
 
Discounted Cash Flow
Forward capacity prices (a)
$1.00-$6.30 per kW-month
Natural Gas
(2)
Discounted Cash Flow
Forward natural gas prices (a)
$0.92-$6.62 per Dt
Transmission Congestion Contracts
1
Discounted Cash Flow
Inter-zonal forward price curves adjusted for historical zonal losses (b)
$0.29-$8.03 per MWh
Total Con Edison — Commodity
$(13)
 
 
 
CECONY — Commodity
Electricity
$(3)
Discounted Cash Flow
Forward capacity prices (a)
$1.00-$6.30 per kW-month
Transmission Congestion Contracts
1
Discounted Cash Flow
Inter-zonal forward price curves adjusted for historical zonal losses (b)
$0.49-$2.60 per MWh
Total CECONY — Commodity
$(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, 2018 and 2017 and classified as Level 3 in the fair value hierarchy:
 
 
                 Con Edison
                 CECONY
(Millions of Dollars)
2018

2017
2018

2017
Beginning balance as of January 1,
$1
$1
$4
$1
Included in earnings
4
8
4
2
Included in regulatory assets and liabilities
(10)
(13)
(4)
(7)
Purchases
—

2
—

1
Settlements
(6)
(8)
(4)
(3)
Transfer out of level 3
(2)
11
(2)
10
Ending balance as of December 31,
$(13)
$1
$(2)
$4