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Income Tax
 9 Months Ended
Sep. 30, 2024
Income Tax Disclosure [Abstract]  
Income Tax Income Tax
Con Edison’s income tax expense was $133 million and $144 million for the three months ended September 30, 2024 and September 30, 2023, respectively. The decrease in income tax expense is primarily due to non-recurring state income taxes in 2023 from the sale of all of the stock of the Clean Energy Businesses.

CECONY’s income tax expense was $119 million and $109 million for the three months ended September 30, 2024 and September 30, 2023, respectively. The increase in income tax expense is primarily due to higher income before income tax expense.

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 for the three months ended September 30, 2024 and 2023 is as follows:
For the Three Months Ended September 30,
Con EdisonCECONY
(% of Pre-tax income)2024202320242023
STATUTORY TAX RATE
Federal21 %21 %21 %21 %
Changes in computed taxes resulting from:
State income tax, net of federal income taxes5 8 5 5 
Amortization of excess deferred federal income taxes(7)(6)(7)(7)
Cost of removal1 1 1 1 
Allowance for uncollectible accounts, net of COVID-19 assistance(1)(2)(1)(2)
Changes in state apportionments, net of federal income taxes — 1 — — 
   Other— (2)(1)(1)
Effective tax rate19 %21 %18 %17 %

Con Edison’s income tax expense was $307 million and $416 million for the nine months ended September 30, 2024 and September 30, 2023, respectively. The decrease in income tax expense is primarily due to lower income before income tax expense, offset in part by the absence of a tax benefit from the recognition of deferred unamortized investment tax credits, both related to the sale of the Clean Energy Businesses in 2023.

CECONY’s income tax expense was $301 million and $297 million for the nine months ended September 30, 2024 and September 30, 2023, respectively. The increase in income tax expense is primarily due to higher income before income tax expense, offset in part by higher amortization of excess deferred federal income taxes.

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 for the nine months ended September 30, 2024 and 2023 is as follows:

For the Nine Months Ended September 30,
Con EdisonCECONY
(% of Pre-tax income)2024202320242023
STATUTORY TAX RATE
Federal21 %21 %21 %21 %
Changes in computed taxes resulting from:
State income tax, net of federal income taxes5 5 5 5 
Cost of removal2 1 2 2 
Other plant-related items(1)— — (1)
Renewable energy credits(1)(1)— — 
Amortization of excess deferred federal income taxes(8)(5)(9)(8)
Other(1)— (1)— 
Impacts from the sale of the Clean Energy Businesses:
Changes in state apportionments, net of federal income taxes— (1)— — 
Deferred unamortized ITC recognized on sale of subsidiary— (4)— — 
Effective tax rate17 %16 %18 %19 %
In April 2023, the IRS released Revenue Procedure 2023-15, which provides a safe harbor method of accounting that taxpayers may use to determine whether certain expenditures to maintain, repair, replace, or improve natural gas transmission and distribution property must be capitalized as improvements by the taxpayer or deducted for federal income tax purposes in the current tax year. This revenue procedure also provides procedures for taxpayers to obtain automatic consent to change their method of accounting to the safe harbor method of accounting. Con Edison adopted the safe harbor rules on its 2023 federal and state returns and recorded a reduction in its current tax payable and an increase in accumulated deferred tax liabilities of $457 million, $418 million of which is for CECONY and $39 million of which is for O&R, to reflect the cumulative impact of this change in accounting method for the Utilities.

Corporate Alternative Minimum Tax
On August 16, 2022, the Inflation Reduction Act (IRA) was signed into law and implemented a new corporate alternative minimum tax (CAMT) that imposes a 15 percent tax on modified GAAP net income. Pursuant to the IRA, corporations are entitled to a tax credit (minimum tax credit) to the extent the CAMT liability exceeds the regular tax liability. This amount can be carried forward indefinitely and used in future years when regular tax exceeds the CAMT.

Beginning in 2024, based on the existing statute, the Companies are subject to and report the CAMT in their Consolidated Income Statements, Consolidated Statements of Cash Flows and the Consolidated Balance Sheets. The Companies accrued a CAMT liability of $73 million, $64 million of which is for CECONY, before the application of general business credits, with an offsetting deferred tax asset representing the minimum tax credit carryforward, for the nine months ended September 30, 2024. The deferred tax asset related to the minimum tax credit carryforward will be realized to the extent the Companies’ consolidated deferred tax liabilities exceed the minimum tax credit carryforward. The Companies’ deferred tax liabilities are expected to exceed the minimum tax credit carryforward for the foreseeable future and thus no valuation allowance is required. The Companies are continuing to assess the impacts of the IRA on their financial statements and will update estimates based on future guidance to be issued by the Department of the Treasury.

Uncertain Tax Positions
At September 30, 2024, the estimated liability for uncertain tax positions for Con Edison was $13 million, $9 million of which is for CECONY). For the nine months ended September 30, 2024, Con Edison recognized $2 million, all of which is for CECONY, of income tax expense related to current year positions. Con Edison reasonably expects to resolve within the next twelve months approximately $3 million (the entire amount attributable to CECONY) of various federal uncertainties due to the expected completion of ongoing tax examinations, of which the entire amount, if recognized, would reduce their effective tax rate. The total amount of unrecognized tax benefits, if recognized, that would reduce Con Edison’s effective tax rate is $13 million ($12 million, net of federal income taxes) with $9 million attributable to CECONY.

The Companies recognize interest on liabilities for uncertain tax positions in interest expense and would recognize penalties, if any, in operating expenses in the Companies’ consolidated income statements. For the nine months ended September 30, 2024 and 2023, the Companies recognized an immaterial amount of interest expense and no penalties for uncertain tax positions in their consolidated income statements. At September 30, 2024 and December 31, 2023, the Companies recognized an immaterial amount of accrued interest on their consolidated balance sheets.

In February 2024, New York State completed its examination of the Companies' New York State income and franchise tax returns for tax years 2015 through 2021 with no changes. The Companies' return for tax year 2022 remains open under the statute of limitations.