Regulatory Matters

Rate Plans

CECONY – Electric

In April 2019, CECONY preliminarily updated its January 2019 request to the New York State Public Service Commission (NYSPSC) for an electric rate increase effective January 2020. The company decreased its requested January 2020 rate increase by $12 million to $473 million, increased its illustrated January 2021 rate increase by $7 million to $359 million and decreased its illustrated January 2022 rate increase by $14 million to $249 million.

CECONY – Gas

In April 2019, CECONY preliminarily updated its January 2019 request to the NYSPSC for a gas rate increase effective January 2020. The company decreased its requested January 2020 rate increase by $9 million to $201 million, decreased its illustrated January 2021 rate increase by $14 million to $124 million and decreased its illustrated January 2022 rate increase by $1 million to $154 million.

O&R New York – Electric and Gas

In March 2019, the NYSPSC approved the November 2018 joint proposal for new electric and gas rates. The joint proposal provides for electric rate increases of $13.4 million, $8.0 million and $5.8 million, effective January 1, 2019, 2020 and 2021, respectively. The joint proposal provides for a gas rate decrease of $7.5 million, effective January 1, 2019, and gas rate increases of $3.6 million and $0.7 million, effective January 1, 2020 and 2021.

Other Regulatory Matters

In August and November 2017, the NYSPSC issued orders in its proceeding investigating an April 21, 2017 Metropolitan Transportation Authority (MTA) subway power outage. The orders indicated that the investigation determined that the outage was caused by a failure of CECONY’s electricity supply to a subway station, which led to a loss of the subway signals, and that one of the secondary services to the MTA facility had been improperly rerouted and was not properly documented by the company. The orders also indicated that the loss of power to the subway station affected multiple subway lines and caused widespread delays across the subway system. Pursuant to the orders, the company is required to take certain actions, including inspecting, repairing and installing certain electrical equipment that serves the subway system, analyzing power supply and power quality events affecting the MTA’s signaling services, and filing monthly reports with the NYSPSC on all of the company's activities related to the subway system. The company completed the required actions in 2018. Through March 31, 2019, the company incurred costs related to this matter of $270 million. Included in this amount is $31 million in capital and operating and maintenance costs reflected in the company's electric rate plan and $239 million deferred as a regulatory asset that the company is seeking to recover in its pending electric rate proceeding. The company is unable to estimate the amount or range of its possible loss related to this matter. At March 31, 2019, the company had not accrued a liability related to this matter.

In August 2018, the NYSPSC ordered CECONY to begin on January 1, 2019 to credit the company's electric and gas customers, and to begin on October 1, 2018 to credit its steam customers, with the net benefits of the federal Tax Cuts and Jobs Act of 2017 (TCJA) as measured based on amounts reflected in its rate plans prior to the enactment of the TCJA in December 2017. The net benefits include the revenue requirement impact of the reduction in the corporate federal income tax rate to 21 percent, the elimination for utilities of bonus depreciation and the amortization of excess deferred federal income taxes. CECONY estimates that its credit of net benefits of the TCJA to its electric, gas and steam customers in 2019 will amount to $259 million, $113 million and $25 million, respectively. CECONY’s net benefits prior to January 1, 2019 allocable to the company’s electric customers ($311 million) are to be deferred and addressed in its pending electric rate proceeding. CECONY’s net benefits prior to January 1, 2019 allocable to the company’s gas customers ($90 million) and net benefits prior to October 1, 2018 allocable to the company’s steam customers ($15 million) are to be amortized over a three-year period. CECONY’s net regulatory liability for future income taxes, including both the protected and unprotected portions, allocable to the company’s electric customers ($2,489 million) is to continue to be deferred and addressed in its pending electric rate proceeding and the amounts allocable to its gas and steam customers ($804 million and $185 million, respectively) are to be amortized over the remaining lives of the related assets (with the amortization period for the unprotected portion subject to review in its pending gas rate proceeding and next steam rate proceeding).

In January 2018, the NYSPSC issued an order initiating a focused operations audit of the income tax accounting of certain utilities, including CECONY and O&R. The Utilities are unable to estimate the amount or range of their possible loss related to this matter. At March 31, 2019, the Utilities had not accrued a liability related to this matter.

In March 2018, Winter Storms Riley and Quinn caused damage to the Utilities’ electric distribution systems and interrupted service to approximately 209,000 CECONY customers, 93,000 O&R customers and 44,000 RECO customers. At March 31, 2019, CECONY's costs related to March 2018 storms, including Riley and Quinn, amounted to $133 million, including operation and maintenance expenses reflected in its electric rate plan ($15 million), operation and maintenance expenses charged against a storm reserve pursuant to its electric rate plan ($84 million), capital expenditures ($29 million) and removal costs ($6 million). At March 31, 2019, O&R and RECO costs related to 2018 storms amounted to $43 million and $17 million, respectively, most of which were deferred as regulatory assets pursuant to their electric rate plans. The NYSPSC investigated the preparation and response to the storms by CECONY, O&R, and other New York electric utilities, including all aspects of their emergency response plans. In April 2019, following the issuance of a NYSPSC staff report on the investigation, the NYSPSC ordered the utilities to show cause why the NYSPSC should not commence a penalty action against them for violating their emergency response plans. The Utilities are unable to estimate the amount or range of their possible loss related to this matter. At March 31, 2019, the Utilities had not accrued a liability related to this matter.

In May 2018, FERC denied a complaint the NJBPU filed with FERC seeking the re-allocation to CECONY of certain PJM Interconnection LLC (PJM) transmission costs that had been allocated to the company prior to April 2017 when transmission service provided to the company pursuant to the PJM open access transmission tariff terminated. The transmission service terminated because the company did not exercise its option to continue the service following a series of requests PJM had submitted to FERC that substantially increased the charges for the transmission service. CECONY challenged each of these requests. FERC rejected all but one of CECONY’s protests. In June 2015 and May 2016, CECONY filed appeals of certain FERC decisions with the U.S. Court of Appeals. In July 2018, FERC established a settlement proceeding relating to the allocation of PJM transmission costs. Under CECONY’s electric rate plan, unless and until changed by the NYSPSC, the company will recover all charges incurred associated with the transmission service.

In July 2018, the NYSPSC commenced an investigation into the rupture of a CECONY steam main (see Note H).

In March 2019, the NYSPSC ordered CECONY to show cause why the NYSPSC should not commence a penalty action and prudence proceeding against CECONY for alleged violations of gas operator qualification, performance, and inspection requirements. The company is seeking to resolve this matter through settlement negotiations with the NYSPSC staff. Any settlement would be subject to NYSPSC approval. The company is unable to estimate the amount or range of its possible loss related to this matter. At March 31, 2019, the company had not accrued a liability related to this matter.

Regulatory Assets and Liabilities

Regulatory assets and liabilities at March 31, 2019 and December 31, 2018 were comprised of the following items:



	Con Edison		CECONY
(Millions of Dollars)	2019	2018	2019	2018
Regulatory assets
Unrecognized pension and other postretirement costs	$2,166	$2,238	$2,052	$2,111
Environmental remediation costs	798	810	706	716
Revenue taxes	299	291	286	278
MTA power reliability deferral	239	229	239	229
Property tax reconciliation	114	101	101	86
Deferred storm costs	77	76	—	—
Municipal infrastructure support costs	75	67	75	67
Pension and other postretirement benefits deferrals	63	73	45	56
System peak reduction and energy efficiency programs	60	72	59	70
Deferred derivative losses	43	17	37	11
Brooklyn Queens demand management program	37	39	37	39
Meadowlands heater odorization project	36	36	36	36
Unamortized loss on reacquired debt	34	36	32	34
Preferred stock redemption	23	23	23	23
Recoverable REV demonstration project costs	20	20	18	18
Gate station upgrade project	18	17	18	17
Indian Point Energy Center program costs	7	13	7	13
Workers’ compensation	6	5	6	5
O&R transition bond charges	1	2	—	—
Other	129	129	118	114
Regulatory assets – noncurrent	4,245	4,294	3,895	3,923
Deferred derivative losses	39	36	29	29
Recoverable energy costs	4	40	—	35
Regulatory assets – current	43	76	29	64
Total Regulatory Assets	$4,288	$4,370	$3,924	$3,987
Regulatory liabilities
Future income tax	$2,496	$2,515	$2,347	$2,363
Allowance for cost of removal less salvage	934	928	795	790
TCJA net benefits*	438	434	417	411
Energy efficiency portfolio standard unencumbered funds	124	127	119	122
Net unbilled revenue deferrals	115	117	115	117
Pension and other postretirement benefit deferrals	62	62	38	40
Net proceeds from sale of property	46	6	46	6
Property tax refunds	45	45	45	45
System benefit charge carrying charge	31	27	28	24
Settlement of prudence proceeding	29	37	29	37
Property tax reconciliation	26	36	26	36
BQDM and REV Demo reconciliations	20	18	20	18
Earnings sharing - electric, gas and steam	19	36	10	27
Carrying charges on repair allowance and bonus depreciation	15	21	14	21
Settlement of gas proceedings	15	15	15	15
New York State income tax rate change	12	17	12	17
Unrecognized other postretirement costs	11	7	6	7
Base rate change deferrals	7	10	7	10
Other	168	183	131	152
Regulatory liabilities – noncurrent	4,613	4,641	4,220	4,258
Revenue decoupling mechanism	34	53	22	36
Refundable energy costs	83	31	51	8
Deferred derivative gains	35	30	32	29
Regulatory liabilities – current	152	114	105	73
Total Regulatory Liabilities	$4,765	$4,755	$4,325	$4,331

* See "Other Regulatory Matters," above.