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FORM 10-Q

SECURITIES AND EXCHANGE COMMISSIONWASHINGTON, D.C. 20549

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|ý | Quarterly Report Pursuant To Section 13 or 15(d) of the Securities Exchange Act of 1934
|- | ---------------------------------------------------------------------------------------

FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2002

OR

|o | Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
|- | ----------------------------------------------------------------------------------------

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|Commission
File Number |  | Exact name of registrant as specified in its charter
and principal office address and telephone number |  | State of
Incorporation |  | I.R.S. Employer
ID. Number
|---------------------- |  | ------------------------------------------------------------------------------------------------------ |  | ---------------------- |  | --------------------------
|1-14514                |  | Consolidated Edison, Inc.
4 Irving Place, New York, New York 10003
(212) 460-4600                      |  | New York               |  | 13-3965100                
|1-1217                 |  | Consolidated Edison Company of New York, Inc.
4 Irving Place, New York, New York 10003
(212) 460-4600  |  | New York               |  | 13-5009340                
|1-4315                 |  | Orange and Rockland Utilities, Inc.
One Blue Hill Plaza, Pearl River, New York 10965
(914) 352-6000    |  | New York               |  | 13-1727729                

Indicate
by check mark whether each Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days.
Yes ý    No o

As
of the close of business on April 30, 2002, Consolidated Edison, Inc. (Con Edison) had outstanding 212,642,776 Common Shares ($.10 par value). Con Edison owns all of the
outstanding common equity of Consolidated Edison Company of New York, Inc. (Con Edison of New York) and Orange and Rockland Utilities, Inc. (O&R).

O&R
MEETS THE CONDITIONS SPECIFIED IN GENERAL INSTRUCTION H (1) (a) AND (b) OF FORM 10-Q AND IS THEREFORE FILING THIS FORM WITH THE REDUCED DISCLOSURE
FORMAT.

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TABLE OF CONTENTS

|                                                                 |  |                                                                                       |  |                                                |  | PAGE 
|---------------------------------------------------------------- |  | ------------------------------------------------------------------------------------- |  | ---------------------------------------------- |  | -----
|FILING FORMAT                                                    |  | 3                                                                                    
|FORWARD-LOOKING STATEMENTS                                       |  | 3                                                                                    
|PART I.FINANCIAL INFORMATION                                    |  |                                                                                      
|ITEM 1.                                                          |  | Financial Statements                                                                  |  |                                                |  |      
|                                                                 |  | Con Edison                                                                            |  | Consolidated Balance Sheet                     |  | 4-5  
|                                                                 |  |                                                                                       |  | Consolidated Income Statement                  |  | 6    
|                                                                 |  |                                                                                       |  | Consolidated Statement of Retained Earnings    |  | 7    
|                                                                 |  |                                                                                       |  | Consolidated Statement of Comprehensive Income |  | 8    
|                                                                 |  |                                                                                       |  | Consolidated Statement of Cash Flows           |  | 9    
|                                                                 |  |                                                                                       |  | Notes to Financial Statements                  |  | 10-16
|                                                                 |  | Con Edison of New York                                                                |  | Consolidated Balance Sheet                     |  | 17-18
|                                                                 |  |                                                                                       |  | Consolidated Income Statement                  |  | 19   
|                                                                 |  |                                                                                       |  | Consolidated Statement of Retained Earnings    |  | 20   
|                                                                 |  |                                                                                       |  | Consolidated Statement of Comprehensive Income |  | 21   
|                                                                 |  |                                                                                       |  | Consolidated Statement of Cash Flows           |  | 22   
|                                                                 |  |                                                                                       |  | Notes to Financial Statements                  |  | 23-27
|                                                                 |  | O&R                                                                                   |  | Consolidated Balance Sheet                     |  | 28-29
|                                                                 |  |                                                                                       |  | Consolidated Income Statement                  |  | 30   
|                                                                 |  |                                                                                       |  | Consolidated Statement of Retained Earnings    |  | 31   
|                                                                 |  |                                                                                       |  | Consolidated Statement of Comprehensive Income |  | 31   
|                                                                 |  |                                                                                       |  | Consolidated Statement of Cash Flows           |  | 32   
|                                                                 |  |                                                                                       |  | Notes to Financial Statements                  |  | 33-37
|ITEM 2.                                                          |  | Management's Discussion and Analysis of Financial Condition and Results of Operations |  |                                               
|                                                                 |  | Con Edison                                                                            |  |                                                |  | 38   
|                                                                 |  | Con Edison of New York                                                                |  |                                                |  | 45   
|                                                                 |  | O&R                                                                                   |  |                                                |  | *    
|O&R Management's Narrative Analysis of the Results of Operations |  | 52                                                                                   
|ITEM 3                                                           |  | Quantitative and Qualitative Disclosures About Market Risk                            |  |                                               
|                                                                 |  | Con Edison                                                                            |  |                                                |  | 54   
|                                                                 |  | Con Edison of New York                                                                |  |                                                |  | 54   
|                                                                 |  | O&R                                                                                   |  |                                                |  | *    
|PART II.OTHER INFORMATION                                       |  |                                                                                      
|ITEM 1.                                                          |  | Legal Proceedings                                                                     |  |                                                |  | 55   
|ITEM 6.                                                          |  | Exhibits and Reports on Form 8-K                                                      |  | 55                                            

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2

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FILING FORMAT

This Quarterly Report on Form 10-Q is a combined report being filed separately by three different registrants: Consolidated Edison, Inc.
(Con Edison), Consolidated Edison Company of New York, Inc. (Con Edison of New York) and Orange and Rockland Utilities, Inc. (O&R). Neither Con Edison of New York nor O&R makes any
representation as to the information contained in this report relating to Con Edison or the subsidiaries of Con Edison other than itself.

O&R,
a wholly-owned subsidiary of Con Edison, meets the conditions specified in General Instruction H of Form 10-Q and is permitted to use the reduced disclosure
format for wholly-owned subsidiaries of companies, such as Con Edison, that are reporting companies under the Securities Exchange Act of 1934. Accordingly, O&R has omitted from this report the
information called for by Part 1, Item 2, Management's Discussion and Analysis of Financial Condition and Results of Operations and has included in this report its Management's Narrative
Analysis of the Results of Operations. In accordance with general instruction H, O&R has also omitted from this report the information, if any, called for by Part 1, Item 3, Quantitative and
Qualitative Disclosure About Market Risk; Part II, Item 2, Changes in Securities and Use of Proceeds; Part II, Item 3, Defaults Upon Senior Securities; and Part II, Item 4,
Submission of Matters to a Vote of Security Holders.

FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q includes forward-looking statements, which are statements of future expectation and not facts. Words such as
"estimates," "expects," "anticipates," "intends," "plans" and similar expressions identify forward-looking statements. Actual results or developments might differ materially from those included in the
forward-looking statements because of factors such as competition and industry restructuring, developments relating to the nuclear generating unit the company sold in September 2001 (see
Note C to the Con Edison financial statements in Part 1, Item 1 of this report), developments relating to Northeast Utilities litigation (see Note D to the Con Edison financial
statements in Part 1, Item 1 of this report), developments relating to the September 11, 2001 World Trade Center attack, developments in wholesale energy markets (including price
volatility and supply adequacy), technological developments, changes in economic conditions, changes in historical weather patterns, changes in laws, regulations or regulatory policies, developments
in legal or public policy doctrines, and other presently unknown or unforeseen factors.

3

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CONSOLIDATED EDISON, INC.        CONSOLIDATED BALANCE SHEET        (Unaudited)

|                                                                |                                                                                                                               | As at                                          
|--------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------- | -----------------------------------------------
|
|
|Assets                                                          |                                                                                                                               |                                                
|Utility plant, at original cost                                 |                                                                                                                               |                                                
|                                                                | Electric                                                                                                                      |                                                
|                                                                | Gas                                                                                                                           |                                                
|                                                                | Steam                                                                                                                         |                                                
|                                                                | General                                                                                                                       |                                                
|                                                                |                                                                                                                               |                                                
|                                                                | Total                                                                                                                         |                                                
|                                                                | Less: Accumulated depreciation                                                                                                |                                                
|                                                                |                                                                                                                               |                                                
|                                                                | Net                                                                                                                           |                                                
|                                                                | Construction work in progress                                                                                                 |                                                
|                                                                |                                                                                                                               |                                                
|Net utility plant                                               |                                                                                                                               |                                                
|                                                                |                                                                                                                               |                                                
|Non-utility plant                                               |                                                                                                                               |                                                
|                                                                | Unregulated generating assets, less accumulated depreciation of $23,165 and $21,289 in 2002 and 2001, respectively            |                                                
|                                                                | Non-utility property, less accumulated depreciation of $12,570 and $11,235 in 2002 and 2001 respectively                      |                                                
|                                                                |                                                                                                                               |                                                
|Net plant                                                       |                                                                                                                               |                                                
|                                                                |                                                                                                                               |                                                
|Current assets                                                  |                                                                                                                               |                                                
|                                                                | Unrestricted cash and temporary cash investments                                                                              |                                                
|                                                                | Restricted cash                                                                                                               |                                                
|                                                                | Accounts receivablecustomer, less allowance for uncollectible accounts of $33,446 and $34,775 in 2002 and 2001, respectively |                                                
|                                                                | Other receivables                                                                                                             |                                                
|                                                                | Fuel, at average cost                                                                                                         |                                                
|                                                                | Gas in storage, at average cost                                                                                               |                                                
|                                                                | Materials and supplies, at average cost                                                                                       |                                                
|                                                                | Prepayments                                                                                                                   |                                                
|                                                                | Other current assets                                                                                                          |                                                
|                                                                |                                                                                                                               |                                                
|Total current assets                                            |                                                                                                                               |                                                
|                                                                |                                                                                                                               |                                                
|Investments                                                     |                                                                                                                               |                                                
|Other                                                           |                                                                                                                               |                                                
|Total investments                                               |                                                                                                                               |                                                
|Deferred charges, regulatory assets and noncurrent assets       |                                                                                                                               |                                                
|                                                                | Goodwill                                                                                                                      |                                                
|                                                                | Intangible assets                                                                                                             |                                                
|                                                                | Accrued pension credits                                                                                                       |                                                
|                                                                | Regulatory assets                                                                                                             |                                                
|                                                                |                                                                                                                               | Future federal income tax                      
|                                                                |                                                                                                                               | Recoverable energy costs                       
|                                                                |                                                                                                                               | Sale of nuclear generating plant               
|                                                                |                                                                                                                               | Real estate sale costsFirst Avenue properties 
|                                                                |                                                                                                                               | Deferred special retirement program costs      
|                                                                |                                                                                                                               | Accrued unbilled revenue                       
|                                                                |                                                                                                                               | Deferred environmental remediation costs       
|                                                                |                                                                                                                               | Workers' compensation                          
|                                                                |                                                                                                                               | Divestiturecapacity replacement reconciliation
|                                                                |                                                                                                                               | Deferred revenue taxes                         
|                                                                |                                                                                                                               | World Trade Center restoration costs           
|                                                                |                                                                                                                               | Other                                          
|                                                                |                                                                                                                               |                                                
|                                                                | Total regulatory assets                                                                                                       |                                                
|                                                                |                                                                                                                               |                                                
|                                                                | Other deferred charges and noncurrent assets                                                                                  |                                                
|                                                                |                                                                                                                               |                                                
|Total deferred charges, regulatory assets and noncurrent assets |                                                                                                                               |                                                
|                                                                |                                                                                                                               |                                                
|Total                                                           |                                                                                                                               | $                                              
|                                                                |                                                                                                                               |                                                

4

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CONSOLIDATED EDISON, INC.        CONSOLIDATED BALANCE SHEET        (Unaudited)

|                                                  |                                                                                                    | As at                                        |           
|------------------------------------------------- | -------------------------------------------------------------------------------------------------- | -------------------------------------------- | ----------
|
|
|Capitalization and Liabilities                    |                                                                                                    |                                              |           
|Capitalization                                    |                                                                                                    |                                              |           
|                                                  | Common stock, authorized 500,000,000 shares; outstanding 212,570,044 shares and 212,257,244 shares |                                              | $         
|                                                  | Retained earnings                                                                                  |                                              |           
|                                                  | Treasury stock, at cost; 23,210,700 shares and 23,460,963 shares                                   |                                              |           
|                                                  | Capital stock expense                                                                              |                                              |           
|                                                  | Accumulated other comprehensive income                                                             |                                              |           
|                                                  |                                                                                                    |                                              |           
|                                                  |                                                                                                    | Total common shareholders' equity            |           
|                                                  |                                                                                                    |                                              |           
|                                                  | Preferred stock                                                                                    |                                              |           
|                                                  | Long-term debt                                                                                     |                                              |           
|                                                  |                                                                                                    |                                              |           
|Total capitalization                              |                                                                                                    |                                              | 11,457,015
|                                                  |                                                                                                    |                                              |           
|Minority interests                                |                                                                                                    |                                              | 8,227     
|Noncurrent liabilities                            |                                                                                                    |                                              |           
|                                                  | Obligations under capital leases                                                                   |                                              |           
|                                                  | Accumulated provision for injuries and damages                                                     |                                              |           
|                                                  | Pension and benefits reserve                                                                       |                                              |           
|                                                  | Other noncurrent liabilities                                                                       |                                              |           
|                                                  |                                                                                                    |                                              |           
|Total noncurrent liabilities                      |                                                                                                    |                                              | 452,978   
|                                                  |                                                                                                    |                                              |           
|Current liabilities                               |                                                                                                    |                                              |           
|                                                  | Long-term debt due within one year                                                                 |                                              |           
|                                                  | Preferred stock to be redeemed in one year                                                         |                                              |           
|                                                  | Notes payable                                                                                      |                                              |           
|                                                  | Accounts payable                                                                                   |                                              |           
|                                                  | Customer deposits                                                                                  |                                              |           
|                                                  | Accrued taxes                                                                                      |                                              |           
|                                                  | Accrued interest                                                                                   |                                              |           
|                                                  | Accrued wages                                                                                      |                                              |           
|                                                  | Other current liabilities                                                                          |                                              |           
|                                                  |                                                                                                    |                                              |           
|Total current liabilities                         |                                                                                                    |                                              | 2,212,039 
|                                                  |                                                                                                    |                                              |           
|Deferred credits and regulatory liabilities       |                                                                                                    |                                              |           
|                                                  | Accumulated deferred income tax                                                                    |                                              |           
|                                                  | Accumulated deferred investment tax credits                                                        |                                              |           
|                                                  | Regulatory liabilities                                                                             |                                              |           
|                                                  |                                                                                                    | NYISO reconciliation                         |           
|                                                  |                                                                                                    | World Trade Center casualty losstax refund  |           
|                                                  |                                                                                                    | Gain on divestiture                          |           
|                                                  |                                                                                                    | Deposit from sale of First Avenue properties |           
|                                                  |                                                                                                    | Refundable energy costs                      |           
|                                                  |                                                                                                    | Accrued electric rate reduction              |           
|                                                  |                                                                                                    | NYPA revenue increase                        |           
|                                                  |                                                                                                    | Transmission congestion contracts proceeds   |           
|                                                  |                                                                                                    | Other                                        |           
|                                                  |                                                                                                    |                                              |           
|                                                  |                                                                                                    | Total regulatory liabilities                 |           
|                                                  |                                                                                                    |                                              |           
|                                                  |                                                                                                    | Other deferred credits                       |           
|                                                  |                                                                                                    |                                              |           
|Total deferred credits and regulatory liabilities |                                                                                                    |                                              | 3,057,998 
|                                                  |                                                                                                    |                                              |           
|Total                                             |                                                                                                    | $                                            | 17,188,257
|                                                  |                                                                                                    |                                              |           

The accompanying notes are an integral part of these financial statements.

5

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CONSOLIDATED EDISON, INC.        CONSOLIDATED INCOME STATEMENT        For the Three Months Ended March 31, 2002 and 2001  (Unaudited)

|                                                      |  | 2002 |             | 2001 |  
|----------------------------------------------------- |  | ---- | ----------- | ---- | -
|
|Operating revenues                                    |  |      |             |      |  
|Electric                                              |  | $    | 1,300,847   |      | $
|Gas                                                   |  |      | 473,832     |      |  
|Steam                                                 |  |      | 141,466     |      |  
|Non-utility                                           |  |      | 182,962     |      |  
|                                                      |  |      |             |      |  
|Total operating revenues                              |  |      | 2,099,107   |      |  
|                                                      |  |      |             |      |  
|Operating expenses                                    |  |      |             |      |  
|Purchased power                                       |  |      | 713,496     |      |  
|Fuel                                                  |  |      | 64,542      |      |  
|Gas purchased for resale                              |  |      | 230,122     |      |  
|Other operations                                      |  |      | 236,599     |      |  
|Maintenance                                           |  |      | 99,707      |      |  
|Depreciation and amortization                         |  |      | 120,443     |      |  
|Taxes, other than income taxes                        |  |      | 267,231     |      |  
|Income taxes                                          |  |      | 109,546     |      |  
|                                                      |  |      |             |      |  
|Total operating expenses                              |  |      | 1,841,686   |      |  
|                                                      |  |      |             |      |  
|Operating income                                      |  |      | 257,421     |      |  
|                                                      |  |      |             |      |  
|Other income (deductions)                             |  |      |             |      |  
|Investment income                                     |  |      | 979         |      |  
|Allowance for equity funds used during construction   |  |      | 4,205       |      |  
|Other income less miscellaneous deductions            |  |      | (4,752      | )    |  
|Income taxes                                          |  |      | 16,839      |      |  
|                                                      |  |      |             |      |  
|Total other income (deductions)                       |  |      | 17,271      |      |  
|                                                      |  |      |             |      |  
|Income before interest charges                        |  |      | 274,692     |      |  
|                                                      |  |      |             |      |  
|Interest on long-term debt                            |  |      | 94,195      |      |  
|Other interest                                        |  |      | 10,563      |      |  
|Allowance for borrowed funds used during construction |  |      | (69         | )    |  
|                                                      |  |      |             |      |  
|Net interest charges                                  |  |      | 104,689     |      |  
|                                                      |  |      |             |      |  
|Net income                                            |  | $    | 170,003     |      | $
|                                                      |  |      |             |      |  
|Preferred stock dividend requirements                 |  |      | 3,398       |      |  
|                                                      |  |      |             |      |  
|Net income for common stock                           |  | $    | 166,605     |      | $
|                                                      |  |      |             |      |  
|Earnings per common shareBasic                       |  | $    | 0.78        |      | $
|                                                      |  |      |             |      |  
|Earnings per common shareDiluted                     |  | $    | 0.78        |      | $
|                                                      |  |      |             |      |  
|Dividends declared per share of common stock          |  | $    | 0.555       |      | $
|                                                      |  |      |             |      |  
|Average number of shares outstandingBasic            |  |      | 212,341,518 |      |  
|                                                      |  |      |             |      |  
|Average number of shares outstandingDiluted          |  |      | 213,309,557 |      |  
|                                                      |  |      |             |      |  

The
accompanying notes are an integral part of these financial statements.

6

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CONSOLIDATED EDISON, INC.        CONSOLIDATED STATEMENT OF RETAINED EARNINGS        (Unaudited)

|                                    |                                                | As at
|----------------------------------- | ---------------------------------------------- | -----
|
|
|Balance, January 1                  |                                                | $    
|Less: Stock options exercised       |                                                |      
|Net income for the period           |                                                |      
|                                    |                                                |      
|Total                               |                                                |      
|                                    |                                                |      
|Dividends declared on capital stock |                                                |      
|                                    | Cumulative Preferred, at required annual rates |      
|                                    | Common, $.555 and $.55 per share, respectively |      
|                                    |                                                |      
|Total dividends declared            |                                                |      
|                                    |                                                |      
|Balance, March 31                   |                                                | $    
|                                    |                                                |      

The
accompanying notes are an integral part of these financial statements.

7

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CONSOLIDATED EDISON, INC.        CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME        For the Three Months Ended March 31, 2002 and 2001  (Unaudited)

|                                                      |                                                                                                                                                | 2002 |         | 2001   |  
|----------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------- | ---- | ------- | ------ | -
|
|NET INCOME FOR COMMON STOCK                           |                                                                                                                                                | $    | 166,605 |        | $
|OTHER COMPREHENSIVE INCOME/(LOSS), NET OF TAXES       |                                                                                                                                                |      |         |        |  
|                                                      | Investment in marketable equity securities, net of $127 and $295 taxes                                                                         |      |         | (180   | )
|                                                      | Minimum pension liability adjustments, net of $2,049 and $1,362 taxes                                                                          |      |         | (2,959 | )
|                                                      | Unrealized gains/(losses) on derivatives qualified as hedges due to cumulative effect of a change in accounting principle, net of $5,635 taxes |      |         |       |  
|                                                      | Unrealized gains/(losses) on derivatives qualified as hedges, net of $7,624 and $406 taxes                                                     |      |         | 10,857 |  
|                                                      | Less: Reclassification adjustment for gains/(losses)included in net income, net of $5,766 and $1,037 taxes                                     |      |         | (8,195 | )
|                                                      |                                                                                                                                                |      |         |        |  
|TOTAL OTHER COMPREHENSIVE INCOME/(LOSS), NET OF TAXES |                                                                                                                                                |      | 15,913  |        |  
|                                                      |                                                                                                                                                |      |         |        |  
|COMPREHENSIVE INCOME                                  |                                                                                                                                                | $    | 182,518 |        | $
|                                                      |                                                                                                                                                |      |         |        |  

The
accompanying notes are an integral part of the financial statements

8

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CONSOLIDATED EDISON, INC.        CONSOLIDATED STATEMENT OF CASH FLOWS        For the Three Months Ended March 31, 2002 and 2001  (Unaudited)

|                                                          |                                                | 2002                                                                          |                                                                        | 2001    |         
|--------------------------------------------------------- | ---------------------------------------------- | ----------------------------------------------------------------------------- | ---------------------------------------------------------------------- | ------- | --------
|
|Operating activities                                      |                                                |                                                                               |                                                                        |         |         
|                                                          | Net income                                     |                                                                               | $                                                                      | 170,003 |         
|                                                          | Principal non-cash charges (credits) to income |                                                                               |                                                                        |         |         
|                                                          |                                                | Depreciation and amortization                                                 |                                                                        |         | 120,443 
|                                                          |                                                | Income tax deferred (excluding taxes resulting from divestiture of plant)     |                                                                        |         | 7,967   
|                                                          |                                                | Common equity component of allowance for funds used during construction       |                                                                        |         | (4,205  
|                                                          |                                                | Accrued pension credits                                                       |                                                                        |         | (85,403 
|                                                          |                                                | Other non-cash charges                                                        |                                                                        |         | 14,982  
|                                                          | Changes in assets and liabilities              |                                                                               |                                                                        |         |         
|                                                          |                                                | Accounts receivablecustomer, less allowance for uncollectibles               |                                                                        |         | (49,564 
|                                                          |                                                | Materials and supplies, including fuel and gas in storage                     |                                                                        |         | 66,617  
|                                                          |                                                | Prepayments (other than pensions), other receivables and other current assets |                                                                        |         | (158,679
|                                                          |                                                | Deferred recoverable energy costs                                             |                                                                        |         | 22,726  
|                                                          |                                                | Cost of removal less salvage                                                  |                                                                        |         | (27,874 
|                                                          |                                                | Accounts payable                                                              |                                                                        |         | 2,228   
|                                                          |                                                | Other-net                                                                     |                                                                        |         | 23,145  
|                                                          |                                                |                                                                               |                                                                        |         |         
|                                                          |                                                |                                                                               | Net cash flows from operating activities                               |         |         
|                                                          |                                                |                                                                               |                                                                        |         |         
|Investing activities including construction               |                                                |                                                                               |                                                                        |         |         
|                                                          |                                                | Utility construction expenditures                                             |                                                                        |         | (237,709
|                                                          |                                                | Nuclear fuel expenditures                                                     |                                                                        |         |        
|                                                          |                                                | Contributions to nuclear decommissioning trust                                |                                                                        |         |        
|                                                          |                                                | Common equity component of allowance for funds used during construction       |                                                                        |         | 4,205   
|                                                          |                                                | Divestiture of utility plant (net of federal income tax)                      |                                                                        |         |        
|                                                          |                                                | Investments by unregulated subsidiaries                                       |                                                                        |         | (4,320  
|                                                          |                                                | Non-utility plant                                                             |                                                                        |         | (120,941
|                                                          |                                                |                                                                               |                                                                        |         |         
|                                                          |                                                |                                                                               | Net cash flows used in investing activities including construction     |         |         
|                                                          |                                                |                                                                               |                                                                        |         |         
|Financing activities including dividends                  |                                                |                                                                               |                                                                        |         |         
|                                                          |                                                | Net proceeds from short-term debt                                             |                                                                        |         | 309,697 
|                                                          |                                                | Retirement of long-term debt                                                  |                                                                        |         | (150,000
|                                                          |                                                | Issuance and refunding costs                                                  |                                                                        |         | (360    
|                                                          |                                                | Common stock dividends                                                        |                                                                        |         | (117,813
|                                                          |                                                | Preferred stock dividends                                                     |                                                                        |         | (3,398  
|                                                          |                                                |                                                                               |                                                                        |         |         
|                                                          |                                                |                                                                               | Net cash flows from/(used) in financing activities including dividends |         |         
|                                                          |                                                |                                                                               |                                                                        |         |         
|Cash and Temporary Cash Investments:                      |                                                |                                                                               |                                                                        |         |         
|Net change for the period                                 |                                                |                                                                               | (218,253                                                               | )       |         
|Balance at Beginning of Period                            |                                                |                                                                               | 341,179                                                                |         |         
|                                                          |                                                |                                                                               |                                                                        |         |         
|Balance at End of Period                                  |                                                | $                                                                             | 122,926                                                                |         | $       
|                                                          |                                                |                                                                               |                                                                        |         |         
|Less: Restricted Cash                                     |                                                |                                                                               | 14,589                                                                 |         |         
|                                                          |                                                |                                                                               |                                                                        |         |         
|Balance: Unrestricted Cash and Temporary Cash Investments |                                                | $                                                                             | 108,337                                                                |         | $       
|                                                          |                                                |                                                                               |                                                                        |         |         
|Supplemental disclosure of cash flow information          |                                                |                                                                               |                                                                        |         |         
|                                                          |                                                | Cash paid during the period for:                                              |                                                                        |         |         
|                                                          |                                                |                                                                               | Interest                                                               |         | $       
|                                                          |                                                |                                                                               | Income taxes                                                           |         |         

The accompanying notes are an integral part of these financial statements.

9

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NOTES TO FINANCIAL STATEMENTSCON EDISON

NOTE AGENERAL

These footnotes accompany and form an integral part of the interim consolidated financial statements of Consolidated Edison, Inc. (Con Edison) and its
subsidiaries, including the regulated utility Consolidated Edison Company of New York, Inc. (Con Edison of New York), the regulated utility Orange and Rockland Utilities, Inc. (O&R) and
several non-utility subsidiaries. These financial statements are unaudited but, in the opinion of Con Edison's management, reflect all adjustments (which include only normally recurring
adjustments) necessary for a fair statement of the results for the interim periods presented. These financial statements should be read together with the audited Con Edison financial statements
(including the notes thereto) included in the combined Con Edison, Con Edison of New York and O&R Annual Reports on Form 10-K for the year ended December 31, 2001 (the
Form 10-K).

Earnings Per Common Share

For the three months ended March 31, 2002 and 2001, the weighted average number of shares used to calculate the diluted earnings per common share included
dilutive common stock equivalents of approximately 968,039 shares and 657,936 shares, respectively. Stock options to purchase 5.00 million and 4.09 million common shares for the three
months ending March 31, 2002 and 2001 were not included in the respective period's computation of diluted earnings per share because the exercise price of the option was greater than the
average market price of the common shares. Therefore, the effect would have been antidilutive. See "Earnings Per Common Share" in Note A to the Con Edison financial statements included in Item
8 of the Form 10-K.

NOTE BENVIRONMENTAL MATTERS

Hazardous substances, such as asbestos, polychlorinated biphenyls (PCBs) and coal tar, have been used or generated in the course of operations of Con Edison's
utility subsidiaries and may be present in their facilities and equipment.

The
Federal Comprehensive Environmental Response, Compensation and Liability Act of 1980 (Superfund) and similar state statutes impose joint and several strict liability, regardless of
fault, upon generators of hazardous substances for resulting removal and remedial costs and environmental damages. Liabilities under these laws can be material and in some instances may be imposed
without regard to fault, or may be imposed for past acts, even though such past acts may have been lawful at the time they occurred.

At
March 31, 2002, Con Edison had accrued $129.6 million as its best estimate of the utility subsidiaries' liability for sites as to which they have received process or
notice alleging that hazardous substances generated by them (and, in most instances, other potentially responsible parties) were deposited. There will be additional liability relating to these sites
and other sites, the amount of which is not presently determinable but may be material to Con Edison's financial position, results of operations or liquidity.

Con
Edison's utility subsidiaries are permitted under current rate agreements to defer for subsequent recovery through rates certain site investigation and remediation costs with respect
to hazardous waste. At March 31, 2002, $62.2 million of such costs had been deferred as regulatory assets.

Suits
have been brought in New York State and federal courts against Con Edison's utility subsidiaries 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 utility subsidiaries. Many of these suits have been disposed of
without any

10

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payment by the utility subsidiaries, or for immaterial amounts. The amounts specified in all the remaining suits total billions of dollars but Con Edison believes that these amounts are greatly
exaggerated, as were the claims already disposed of. Based on the information and relevant circumstances known to Con Edison at this time, these suits are not expected to have a material adverse
effect on Con Edison's financial position, results of operations or liquidity.

Workers'
compensation administrative proceedings have been commenced, wherein current and former employees claim benefits based upon alleged disability from exposure to asbestos. Based
on the information and relevant circumstances known to Con Edison at this time, these claims are not expected to have a material adverse effect on Con Edison's financial position, results of
operations or liquidity. At March 31, 2002, Con Edison had accrued a $130.4 million provision as its best estimate of the utility subsidiaries' liability for workers' compensation
claims, including those related to asbestos
exposure. Of this amount $54.5 million was deferred as a regulatory asset. Other legal proceedings have commenced, wherein non-employee contractors claim benefits based upon alleged
disability from exposure to asbestos. At March 31, 2002, Con Edison of New York had accrued a $4.0 million provision as its best estimate of the utility subsidiaries' liability for these
alleged claims and deferred a like amount as a regulatory asset.

NOTE CNUCLEAR GENERATION

The New York State Public Service Commission (NYPSC) is investigating the February 2000 to January 2001 outage of the nuclear generating unit sold
by Con Edison of New York in September 2001, its causes and the prudence of the company's actions regarding the operation and maintenance of the generating unit. The proceeding covers, among
other things, Con Edison of New York's inspection practices, the circumstances surrounding prior outages, the basis for postponement of the unit's steam generator replacement and whether, and to what
extent, increased replacement power costs and repair and replacement costs should be borne by Con Edison's shareholders.

Con
Edison of New York has billed to customers replacement power costs for the outage incurred prior to August 2000 and after October 2000, but not approximately
$90 million of replacement power costs incurred in August through October 2000. Con Edison of New York has also accrued a $40 million liability for the possible disallowance of
replacement power costs that it had previously recovered from customers.

An
appeal is pending in the United States Court of Appeals for the Second Circuit of the October 2000 decision by the United States District Court for the Northern District of New
York, in an action entitled Consolidated Edison Company of New York, Inc. v. Pataki, et al., in which the court determined that the law that directed the NYPSC to prohibit Con Edison of New
York from recovering replacement power costs for the outage from customers was unconstitutional and granted the company's motion for a permanent injunction to prevent its implementation.

The
company is unable to predict whether or not any proceedings, lawsuits, legislation or other actions relating to the nuclear generating unit will have a material adverse effect on its
financial position, results of operations or liquidity.

NOTE DNORTHEAST UTILITIES

In March 2001 Con Edison commenced an action in the United States District Court for the Southern District of New York, entitled Consolidated
Edison, Inc. v. Northeast Utilities, seeking a declaratory judgment that Northeast Utilities has failed to meet certain conditions precedent to Con Edison's obligation to complete its
acquisition of Northeast Utilities pursuant to their agreement and plan of merger, dated as of October 13, 1999, as amended and restated as of January 11, 2000 (the merger
agreement). In May 2001 Con Edison amended its complaint. As amended, Con Edison's complaint seeks, among other things, recovery of damages sustained by it as a result of the material

11

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breach of the merger agreement by Northeast Utilities and the court's declaration that under the merger agreement Con Edison has no further or continuing obligations to Northeast Utilities, and that
Northeast Utilities has no further or continuing rights against Con Edison.

In
June 2001 Northeast Utilities withdrew the separate action it commenced in March 2001 in the same court and filed as a counter-claim to Con Edison's amended complaint
its claim that Con Edison materially breached the merger agreement and that as a result Northeast Utilities and its shareholders have suffered substantial damages, including the difference between the
consideration to be paid to Northeast Utilities shareholders pursuant to the merger agreement and the current market value of Northeast Utilities common stock, expenditures in connection with
regulatory approvals and lost business opportunities. Pursuant to the merger agreement, Con Edison agreed to acquire Northeast Utilities for $26.00 per share (an estimated aggregate of not more than
$3.9 billion) plus $0.0034 per share for each day after August 5, 2000 through the day prior to the completion of the transaction, payable 50 percent in cash and 50 percent
in stock.

In
May 2002, Con Edison and Northeast Utilities each filed motions for summary judgment with respect to certain claims in this proceeding.

Con
Edison believes that Northeast Utilities has materially breached the merger agreement, and that Con Edison has not materially breached the merger agreement. Con Edison believes it is
not obligated to acquire Northeast Utilities because Northeast Utilities does not meet the merger agreement's conditions that Northeast Utilities perform all of its obligations under the merger
agreement. Those obligations include the obligation that it carry on its businesses in the ordinary course consistent with past practice; that the representations and warranties made by it in the
merger agreement were true and correct when made and remain true and correct; and that there be no material adverse change with respect to Northeast Utilities. Con Edison is unable to predict whether
or not any Northeast Utilities-related lawsuits or other actions will have a material adverse effect on Con Edison's financial position, results of operations or liquidity.

NOTE EDERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

As of January 2001 Con Edison adopted SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities," as amended by SFAS
No. 137, "Deferral of the Effective Date of FASB Statement No. 133," and SFAS No. 138, "Accounting for Certain Derivative Instruments and Certain Hedging Activitiesan
amendment of FASB Statement No. 133" (collectively, SFAS No. 133).

Energy Price Hedging

Con Edison's subsidiaries use derivative financial instruments to hedge market price fluctuations in related underlying transactions for the physical purchase or
sale of electricity and gas (Hedges).

Con
Edison's utility subsidiaries, pursuant to SFAS No. 71, "Accounting for the Effects of Certain Types of Regulation," defer recognition in income of gains and losses on a Hedge
until the underlying transaction is completed. Pursuant to rate provisions that permit the recovery of the cost of purchased power and gas, Con Edison's utility subsidiaries credit or charge to their
customers gains or losses on Hedges and related transaction costs. See "Recoverable Energy Costs" in Note A to the company's financial statements included in Item 8 of the
Form 10-K. To the extent SFAS No. 71 does not allow deferred recognition in income, Con Edison's utility subsidiaries have elected special hedge accounting pursuant to SFAS
No. 133 (Cash Flow Hedge Accounting). Con Edison Solutions (which provides competitive gas and electric supply and energy-related products and services) has also elected Cash Flow Hedge
Accounting.

Pursuant
to Cash Flow Hedge Accounting, except as described in the following paragraph, the mark-to-market unrealized gain or loss on each Hedge is recorded in
other comprehensive income and

12

---

reclassified to income at the time the underlying transaction is completed. Upon adoption of SFAS No. 133, Con Edison's subsidiaries recognized after-tax transition gains of
$1.7 million in other comprehensive income and $0.4 million in income. For the quarters ended March 31, 2002 and 2001, the company recognized in other comprehensive income
unrealized after-tax net gains of $10.5 million and $0.4 million, respectively, relating to the subsidiaries' Hedges for which Cash Flow Hedge Accounting was used. The
company reclassified to income from accumulated other comprehensive income after-tax net losses of $7.2 million for the first quarter of 2002, compared with after-tax
net gains of $1.9 million for the first quarter of 2001. These amounts, which were recognized in net income as fuel or purchased power costs, were largely offset by directionally opposite
changes in the market value of the underlying commodities. As of March 31, 2002, the subsidiaries' Hedges for which Cash Flow Hedge Accounting was used were for a term of less than two years
and $3.4 million of after-tax net gains relating to such Hedges were expected to be reclassified from accumulated other comprehensive income to income within the next
12 months.

Under
Cash Flow Hedge Accounting, any gain or loss relating to any portion of a Hedge determined to be "ineffective" is recognized in income in the period in which such determination is
made. As a result changes in value of a Hedge may be recognized in income in an earlier period than the period in which the underlying transaction is recognized in income. The company expects,
however, that these changes in values will be offset, at least in part, when the underlying transactions are recognized in income. For the first quarter of 2002, the company recognized in income
mark-to-market unrealized pre-tax net gains of $3.1 million compared with unrealized pre-tax net losses of $1.0 million for the first
quarter of 2001, relating primarily to derivative transactions that were determined to be "ineffective."

Con
Edison Energy (which markets specialized energy supply services to wholesale customers) enters into over-the-counter and exchange traded contracts for the
purchase and sale of electricity and installed capacity, gas or oil (which may provide for either physical or financial settlement) and is considered an "energy trading organization" required to
account for such trading activities in accordance with FASB EITF Issue No. 98-10, "Accounting for Contracts Involved in Energy Trading and Risk Management Activities." With respect
to such contracts entered into by Con Edison Energy, Con Edison recognized in income unrealized mark-to-market pre-tax net gains of $4.4 million and
$7.4 million for the first quarters of 2002 and 2001, respectively.

Interest Rate Hedging

O&R and Con Edison Development (which invests in and manages energy infrastructure projects) use Cash Flow Hedge Accounting for their interest rate swap
agreements.

In
connection with its $55 million promissory note issued to the New York State Energy Research and Development Authority for the net proceeds of the Authority's variable rate
Pollution Control Refunding Revenue Bonds, 1994 Series A (the 1994 Bonds), O&R has a swap agreement pursuant to which it pays interest at a fixed rate of 6.09 percent and is paid
interest at the same variable rate as is paid on the 1994 Bonds. Upon adoption of SFAS No. 133, the company recognized in other comprehensive income after-tax transition adjustment
losses relating to the swap agreement of $8.1 million. For the first quarter of 2002, the company recognized in other comprehensive income unrealized after-tax gains of
$0.2 million compared with unrealized after-tax losses of $0.4 million for the first quarter of 2001. During the first quarter of 2002, $0.4 million of
after-tax losses were reclassified from accumulated other comprehensive income to income. There were no reclassifications to income in the first quarter of 2001. As of March 31,
2002, $1.1 million of after-tax losses relating to the swap agreement were expected to be reclassified from accumulated other comprehensive income to income within the next
12 months.

13

---

In
connection with $95 million of variable rate loans undertaken relating to the Lakewood electric generating plant, Con Edison Development has swap agreements pursuant to which
it pays interest at a fixed rate of 6.68 percent and is paid interest at a variable rate equal to the three-month London Interbank Offered Rate. Upon adoption of SFAS No. 133, the
company recognized in other comprehensive income after-tax transition adjustment losses relating to the swap agreements of $1.6 million. For the first quarter of 2002, the company
recognized in other comprehensive income unrealized after-tax gains of $0.2 million compared with unrealized after-tax losses of $2.0 million for the first
quarter of 2001. During the first quarter of 2002, $0.6 million of after-tax losses were reclassified from accumulated other comprehensive income to income. There were no
reclassifications to income in the first quarter of 2001. As of March 31, 2002, $2.2 million of after-tax losses relating to the swap agreements were expected to be
reclassified from accumulated other comprehensive income to income within the next 12 months.

Comprehensive Income

Unrealized gains/(losses) on derivatives, net of tax included in accumulated other comprehensive income for the three months ended March 31, 2002 and 2001 were as
follows:

|                                                                                                                                             |  | Three Months Ended |     
|-------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------ | ----
|
|
|Unrealized gains/(losses) on derivatives qualified as hedges due to cumulative effect of a change in accounting principle, net of $5.6 taxes |  | $                  |    
|Unrealized gains/(losses) on derivatives, qualified as Hedges, net of $7.6 and $0.4 taxes                                                    |  |                    | 10.9
|Less: Reclassification adjustment for gains/(losses) included in net income, net of $5.8 and $1.0 taxes                                      |  |                    | (8.2
|                                                                                                                                             |  |                    |     
|Unrealized gains/(losses) on derivatives qualified as Hedges for the period                                                                  |  | $                  | 19.1
|                                                                                                                                             |  |                    |     

NOTE FFINANCIAL INFORMATION BY BUSINESS SEGMENT

Con Edison's business segments were determined based on similarities in economic characteristics, the regulatory environment, and management's reporting
requirements. Con Edison's principal business segments are:



14

---



All
revenues of Con Edison's business segments, excluding revenues earned by an affiliate of the company on certain energy infrastructure projects, which are deemed to be immaterial are
from customers located in the United States. Also, all assets, excluding certain investments in energy infrastructure projects by an affiliate of the company are located in the United States and are
materially consistent with segment assets as disclosed in Con Edison's 2001 Annual Report on Form 10-K for the year ended December 31, 2001. The accounting policies of the
segments are the same as those described in the summary of significant accounting policies.

Common
services shared by the business segments (shared services) are assigned directly or allocated based on various cost factors, depending on the nature of the service provided.

The
financial data for business segments are as follows:

CONSOLIDATED EDISON, INC.
SEGMENT FINANCIAL INFORMATION
$000's

For the three months ended March 31, 2002 and 2001
(Unaudited)

|                              |  | Regulated Electric |           | Regulated Gas
|----------------------------- |  | ------------------ | --------- | -------------
|
|Operating revenues            |  | $                  | 1,300,847 |              
|Intersegment revenues         |  |                    | 1,817     |              
|Depreciation and amortization |  |                    | 92,470    |              
|Operating income              |  |                    | 124,264   |              

|                              |  | Regulated Steam |         | Unregulated Subsidiaries & Other |  
|----------------------------- |  | --------------- | ------- | -------------------------------- | -
|
|Operating revenues            |  | $               | 141,466 |                                  | $
|Intersegment revenues         |  |                 | 476     |                                  |  
|Depreciation and amortization |  |                 | 4,564   |                                  |  
|Operating income              |  |                 | 26,666  |                                  |  

|                              |  | Consolidated
|----------------------------- |  | ------------
|
|Operating revenues            |  | $           
|Intersegment revenues         |  |             
|Depreciation and amortization |  |             
|Operating income              |  |             

NOTE GNEW FINANCIAL ACCOUNTING STANDARDS

On January 1, 2002, Con Edison adopted SFAS No. 142, "Goodwill and Other Intangible Assets." SFAS No. 142 provides that goodwill (i.e., the
excess of cost over fair value of the assets of a business acquired) and intangible assets with indefinite useful lives will no longer be amortized, but instead be tested for impairment at least
annually. Other intangible assets will continue to be amortized over their useful lives. Con Edison is in the process of carrying out the transitional impairment test. Any impairment loss in 2002 will
be recognized as a cumulative effect of a change in accounting principle as of January 1, 2002.

15

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Had
Con Edison been accounting for goodwill under SFAS No. 142 for all periods presented, its net income and earnings per share would have been as follows:

|                                             |                                    | Three months ended March 31,
|-------------------------------------------- | ---------------------------------- | ----------------------------
|
|
|Reported net income                          |                                    | $                           
|Add back: goodwill amortization (net of tax) |                                    |                             
|                                             |                                    |                             
|Adjusted net income                          |                                    | $                           
|                                             |                                    |                             
|Basic and diluted earnings per share:        |                                    |                             
|                                             | Reported net income                |                             
|                                             | Goodwill amortization (net of tax) |                             
|                                             |                                    |                             
|                                             | Adjusted net income                |                             
|                                             |                                    |                             

Con
Edison's definite life intangible asset relates to a power purchase agreement of an unregulated subsidiary, and is being amortized on a straight-line basis over its
25-year contract period. At March 31, 2002, the gross carrying amount and accumulated amortization were $91.7 million and $6.9 million, respectively. Amortization
expense was $0.9 million for the three months ended March 31, 2002, and is estimated to be $3.7 million per year from 2002 to 2006.

SFAS
No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets," which Con Edison adopted on January 1, 2002, replaces SFAS No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of." SFAS No. 144 requires that all long-lived assets held for
sale be measured at the lower of book value or fair value less cost to sell. The standard also broadens the reporting of discontinued operations. The adoption of SFAS No. 144 had no impact on
Con Edison's consolidated financial position or results of operations.

SFAS
No. 143, "Accounting for Asset Retirement Obligations," which Con Edison is required to adopt on January 1, 2003, requires entities to record the fair value of a
liability associated with an asset retirement obligation in the period incurred. When the liability is initially recorded, the entity capitalizes the cost by increasing the carrying amount of the
related asset. The liability is increased to its present value each period and the capitalized cost is depreciated over the useful life of the related asset. Upon retirement of the asset, the entity
settles the obligation for the amount recorded or incurs a gain or loss. Con Edison has not yet determined the impact of this standard on its consolidated financial position or results of operations.

SFAS
No. 145, "Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections," which was issued in
April 2002, rescinds SFAS No. 4, "Reporting Gains and Losses from Extinguishment of Debt," SFAS No. 44, "Accounting for Intangible Assets of Motor Carriers," and SFAS
No. 64, "Extinguishments of Debt Made to Satisfy Sinking-Fund Requirements." The Statement amends SFAS No. 13, "Accounting for Leases," to eliminate certain inconsistencies.
It also amends other existing authoritative pronouncements to correct references to guidance issued by the American Institute of Certified Public Accountants (AICPA) or the Financial Accounting
Standards Board (FASB) that has been revised or superceded, and to eliminate inconsistencies in existing pronouncements. Certain provisions of the standard are required to be adopted for transactions
occurring after May 15, 2002; other provisions are required to be adopted for financial statements issued after May 15, 2002. Con Edison has not yet determined the impact of this
standard on its consolidated financial position or results of operations.

16

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CONSOLIDATED EDISON OF NEW YORK, INC.        CONSOLIDATED BALANCE SHEET        (Unaudited)

|                                                                |                                                                                                                               | As at                                          
|--------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------- | -----------------------------------------------
|
|
|Assets                                                          |                                                                                                                               |                                                
|Utility plant, at original cost                                 |                                                                                                                               |                                                
|                                                                | Electric                                                                                                                      |                                                
|                                                                | Gas                                                                                                                           |                                                
|                                                                | Steam                                                                                                                         |                                                
|                                                                | General                                                                                                                       |                                                
|                                                                |                                                                                                                               |                                                
|                                                                | Total                                                                                                                         |                                                
|                                                                | Less: Accumulated depreciation                                                                                                |                                                
|                                                                |                                                                                                                               |                                                
|                                                                | Net                                                                                                                           |                                                
|                                                                | Construction work in progress                                                                                                 |                                                
|                                                                |                                                                                                                               |                                                
|Net utility plant                                               |                                                                                                                               |                                                
|                                                                |                                                                                                                               |                                                
|                                                                | Non-utility plant                                                                                                             |                                                
|Non-utility property                                            |                                                                                                                               |                                                
|                                                                |                                                                                                                               |                                                
|Net plant                                                       |                                                                                                                               |                                                
|                                                                |                                                                                                                               |                                                
|Current assets                                                  |                                                                                                                               |                                                
|                                                                | Cash and temporary cash investments                                                                                           |                                                
|                                                                | Accounts receivablecustomer, less allowance for uncollectible accounts of $28,115 and $29,400 in 2002 and 2001, respectively |                                                
|                                                                | Other receivables                                                                                                             |                                                
|                                                                | Fuel, at average cost                                                                                                         |                                                
|                                                                | Gas in storage, at average cost                                                                                               |                                                
|                                                                | Materials and supplies, at average cost                                                                                       |                                                
|                                                                | Prepayments                                                                                                                   |                                                
|                                                                | Other current assets                                                                                                          |                                                
|                                                                |                                                                                                                               |                                                
|Total current assets                                            |                                                                                                                               |                                                
|                                                                |                                                                                                                               |                                                
|Investments                                                     |                                                                                                                               |                                                
|                                                                | Other                                                                                                                         |                                                
|                                                                |                                                                                                                               |                                                
|Total investments                                               |                                                                                                                               |                                                
|                                                                |                                                                                                                               |                                                
|Deferred charges, regulatory assets and noncurrent assets       |                                                                                                                               |                                                
|                                                                | Accrued pension credits                                                                                                       |                                                
|                                                                | Regulatory assets                                                                                                             |                                                
|                                                                |                                                                                                                               | Future federal income tax                      
|                                                                |                                                                                                                               | Sale of nuclear generating unit                
|                                                                |                                                                                                                               | Recoverable energy costs                       
|                                                                |                                                                                                                               | Real estate sale costsFirst Avenue properties 
|                                                                |                                                                                                                               | Workers' compensation                          
|                                                                |                                                                                                                               | Divestiturecapacity replacement reconciliation
|                                                                |                                                                                                                               | Accrued unbilled gas revenue                   
|                                                                |                                                                                                                               | Deferred special retirement program costs      
|                                                                |                                                                                                                               | Deferred revenue tax                           
|                                                                |                                                                                                                               | World Trade Center restoration costs           
|                                                                |                                                                                                                               | Other                                          
|                                                                |                                                                                                                               |                                                
|                                                                | Total regulatory assets                                                                                                       |                                                
|                                                                |                                                                                                                               |                                                
|                                                                | Other deferred charges and noncurrent assets                                                                                  |                                                
|                                                                |                                                                                                                               |                                                
|Total deferred charges, regulatory assets and noncurrent assets |                                                                                                                               |                                                
|                                                                |                                                                                                                               |                                                
|Total                                                           |                                                                                                                               | $                                              
|                                                                |                                                                                                                               |                                                

17

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CONSOLIDATED EDISON OF NEW YORK, INC.        CONSOLIDATED BALANCE SHEET        (Unaudited)

|                                                  |                                                    | As at                                        |           
|------------------------------------------------- | -------------------------------------------------- | -------------------------------------------- | ----------
|
|
|Capitalization and Liabilities                    |                                                    |                                              |           
|Capitalization                                    |                                                    |                                              |           
|                                                  | Common stock                                       |                                              |           
|                                                  | Repurchased Consolidated Edison, Inc. common stock |                                              |           
|                                                  | Retained earnings                                  |                                              |           
|                                                  | Capital stock expense                              |                                              |           
|                                                  | Accumulated other comprehensive income             |                                              |           
|                                                  |                                                    |                                              |           
|                                                  |                                                    | Total common shareholders' equity            |           
|                                                  |                                                    |                                              |           
|                                                  | Preferred stock                                    |                                              |           
|                                                  |                                                    | $5 Cumulative Preferred                      |           
|                                                  |                                                    | 4.65% Series C                               |           
|                                                  |                                                    | 4.65% Series D                               |           
|                                                  |                                                    |                                              |           
|                                                  |                                                    | Total preferred stock                        |           
|                                                  |                                                    |                                              |           
|                                                  | Long-term debt                                     |                                              |           
|                                                  |                                                    |                                              |           
|Total capitalization                              |                                                    |                                              | 9,941,528 
|                                                  |                                                    |                                              |           
|Noncurrent liabilities                            |                                                    |                                              |           
|                                                  | Obligations under capital leases                   |                                              |           
|                                                  | Accumulated provision for injuries and damages     |                                              |           
|                                                  | Pension and benefits reserve                       |                                              |           
|                                                  | Other noncurrent liabilities                       |                                              |           
|                                                  |                                                    |                                              |           
|Total noncurrent liabilities                      |                                                    |                                              | 333,955   
|                                                  |                                                    |                                              |           
|Current liabilities                               |                                                    |                                              |           
|                                                  | Long-term debt due within one year                 |                                              |           
|                                                  | Preferred stock to be redeemed in one year         |                                              |           
|                                                  | Notes payable                                      |                                              |           
|                                                  | Accounts payable                                   |                                              |           
|                                                  | Customer deposits                                  |                                              |           
|                                                  | Accrued taxes                                      |                                              |           
|                                                  | Accrued interest                                   |                                              |           
|                                                  | Accrued wages                                      |                                              |           
|                                                  | Other current liabilities                          |                                              |           
|                                                  |                                                    |                                              |           
|Total current liabilities                         |                                                    |                                              | 1,721,566 
|                                                  |                                                    |                                              |           
|Deferred credits and regulatory liabilities       |                                                    |                                              |           
|                                                  | Accumulated deferred federal income tax            |                                              |           
|                                                  | Accumulated deferred investment tax credits        |                                              |           
|                                                  | Regulatory liabilities                             |                                              |           
|                                                  |                                                    | NYISO reconciliation                         |           
|                                                  |                                                    | World Trade Center casualty loss             |           
|                                                  |                                                    | Gain on divestiture                          |           
|                                                  |                                                    | Deposit from sale of First Avenue properties |           
|                                                  |                                                    | Accrued electric rate reduction              |           
|                                                  |                                                    | DC service incentive                         |           
|                                                  |                                                    | NYPA revenue increase                        |           
|                                                  |                                                    | Transmission congestion contracts proceeds   |           
|                                                  |                                                    | Other                                        |           
|                                                  |                                                    |                                              |           
|                                                  | Total regulatory liabilities                       |                                              |           
|                                                  |                                                    |                                              |           
|Total deferred credits and regulatory liabilities |                                                    |                                              | 2,727,761 
|                                                  |                                                    |                                              |           
|Total                                             |                                                    | $                                            | 14,724,810
|                                                  |                                                    |                                              |           

The accompanying notes are an integral part of these financial statements.

18

---



CONSOLIDATED EDISON OF NEW YORK, INC.        CONSOLIDATED INCOME STATEMENT        For the Three Months Ended March 31, 2002 and 2001  (Unaudited)

|                                                      |                                       | 2002                                          |                                                      | 2001      |           
|----------------------------------------------------- | ------------------------------------- | --------------------------------------------- | ---------------------------------------------------- | --------- | ----------
|
|Operating revenues                                    |                                       |                                               |                                                      |           |           
|Electric                                              |                                       | $                                             | 1,208,757                                            |           | $         
|Gas                                                   |                                       |                                               | 408,842                                              |           |           
|Steam                                                 |                                       |                                               | 141,466                                              |           |           
|                                                      |                                       |                                               |                                                      |           |           
|Total operating revenues                              |                                       |                                               | 1,759,065                                            |           |           
|                                                      |                                       |                                               |                                                      |           |           
|Operating expenses                                    |                                       |                                               |                                                      |           |           
|Purchased power                                       |                                       |                                               | 555,573                                              |           |           
|Fuel                                                  |                                       |                                               | 60,860                                               |           |           
|Gas purchased for resale                              |                                       |                                               | 180,427                                              |           |           
|Other operations                                      |                                       |                                               | 187,291                                              |           |           
|Maintenance                                           |                                       |                                               | 93,951                                               |           |           
|Depreciation and amortization                         |                                       |                                               | 107,423                                              |           |           
|Taxes, other than income taxes                        |                                       |                                               | 248,920                                              |           |           
|Income taxes                                          |                                       |                                               | 94,877                                               |           |           
|                                                      |                                       |                                               |                                                      |           |           
|Total operating expenses                              |                                       |                                               | 1,529,322                                            |           |           
|                                                      |                                       |                                               |                                                      |           |           
|Operating income                                      |                                       |                                               | 229,743                                              |           |           
|                                                      |                                       |                                               |                                                      |           |           
|Other income (deductions)                             |                                       |                                               |                                                      |           |           
|Investment income                                     |                                       |                                               | 62                                                   |           |           
|Allowance for equity funds used during construction   |                                       |                                               | 4,205                                                |           |           
|Other income less miscellaneous deductions            |                                       |                                               | 1,401                                                |           |           
|Income taxes                                          |                                       |                                               | 12,135                                               |           |           
|                                                      |                                       |                                               |                                                      |           |           
|Total other income (deductions)                       |                                       |                                               | 17,803                                               |           |           
|                                                      |                                       |                                               |                                                      |           |           
|Income before interest charges                        |                                       |                                               | 247,546                                              |           |           
|                                                      |                                       |                                               |                                                      |           |           
|Interest on long-term debt                            |                                       |                                               | 84,914                                               |           |           
|Other interest                                        |                                       |                                               | 8,588                                                |           |           
|Allowance for borrowed funds used during construction |                                       |                                               | (9                                                   | )         |           
|                                                      |                                       |                                               |                                                      |           |           
|Net interest charges                                  |                                       |                                               | 93,493                                               |           |           
|                                                      |                                       |                                               |                                                      |           |           
|Net income                                            |                                       |                                               | 154,053                                              |           |           
|                                                      |                                       |                                               |                                                      |           |           
|Preferred stock dividend requirements                 |                                       |                                               | 3,398                                                |           |           
|                                                      |                                       |                                               |                                                      |           |           
|Net income for common stock                           |                                       | $                                             | 150,655                                              |           | $         
|                                                      |                                       |                                               |                                                      |           |           
|Con Edison of New York utility sales                  |                                       |                                               |                                                      |           |           
|                                                      | Electric (thousands of kilowatthours) |                                               |                                                      |           |           
|                                                      |                                       | Full service customers*                       |                                                      |           | 7,238,355 
|                                                      |                                       | Delivery service for Retail Choice customers  |                                                      |           | 2,654,771 
|                                                      |                                       | Delivery service to NYPA customers and others |                                                      |           | 2,380,935 
|                                                      |                                       |                                               |                                                      |           |           
|                                                      |                                       |                                               | Total energy delivered in service areas              |           |           
|                                                      | Gas (dekatherms)                      |                                               |                                                      |           |           
|                                                      |                                       | Full service customers*                       |                                                      |           | 37,827,082
|                                                      |                                       | Off-peak firm/interruptible                   |                                                      |           | 4,044,748 
|                                                      |                                       |                                               |                                                      |           |           
|                                                      |                                       |                                               | Total deliveries to Con Edison of New York customers |           |           
|                                                      |                                       | Transportation of customer-owned gas          |                                                      |           |           
|                                                      |                                       |                                               | NYPA                                                 |           |           
|                                                      |                                       |                                               | Other                                                |           |           
|                                                      |                                       |                                               |                                                      |           |           
|                                                      |                                       |                                               | Total deliveries and transportation                  |           |           
|                                                      | Steam (thousands of pounds)           |                                               |                                                      | 7,935,809 |           
|                                                      |                                       |                                               |                                                      |           |           

The accompanying notes are an integral part of these financial statements.

19

---



CONSOLIDATED EDISON COMPANY OF NEW YORK, INC.        CONSOLIDATED STATEMENT OF RETAINED EARNINGS        (Unaudited)

|                                               |  | As at
|---------------------------------------------- |  | -----
|
|
|Balance, January 1                             |  | $    
|Net income for the period                      |  |      
|                                               |  |      
|Total                                          |  |      
|                                               |  |      
|Dividends declared on capital stock            |  |      
|Cumulative Preferred, at required annual rates |  |      
|Common                                         |  |      
|                                               |  |      
|Total dividends declared                       |  |      
|                                               |  |      
|Ending Balance                                 |  | $    
|                                               |  |      

The
accompanying notes are an integral part of these financial statements.

20

---



CONSOLIDATED EDISON COMPANY OF NEW YORK, INC.        CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME        For the Three Months Ended March 31, 2002 and 2001  (Unaudited)

|                                                      |                                                                                               | 2001 |         | 2002   |  
|----------------------------------------------------- | --------------------------------------------------------------------------------------------- | ---- | ------- | ------ | -
|
|NET INCOME FOR COMMON STOCK                           |                                                                                               | $    | 150,655 |        | $
|OTHER COMPREHENSIVE INCOME/(LOSS), NET OF TAXES       |                                                                                               |      |         |        |  
|                                                      | Minimum pension liability adjustments, net of $1,882 and $1,299 taxes                         |      |         | (2,721 | )
|                                                      | Unrealized gains/(losses) on derivatives qualified as hedges, net of $1,673 taxes             |      |         | 2,398  |  
|                                                      | Less: Reclassification adjustment for gains/(losses) included in net income, net of $50 taxes |      |         | (70    | )
|                                                      |                                                                                               |      |         |        |  
|TOTAL OTHER COMPREHENSIVE INCOME/(LOSS), NET OF TAXES |                                                                                               |      | (253    | )      |  
|                                                      |                                                                                               |      |         |        |  
|COMPREHENSIVE INCOME                                  |                                                                                               | $    | 150,402 |        | $
|                                                      |                                                                                               |      |         |        |  

21

---



CONSOLIDATED EDISON COMPANY OF NEW YORK, INC.        CONSOLIDATED STATEMENT OF CASH FLOWS        For the Three Months Ended March 31, 2002 and 2001  (Unaudited)

|                                                    |                                                | 2002                                                                          |                                                                    | 2001    |         
|--------------------------------------------------- | ---------------------------------------------- | ----------------------------------------------------------------------------- | ------------------------------------------------------------------ | ------- | --------
|
|Operating activities                                |                                                |                                                                               |                                                                    |         |         
|                                                    | Net income                                     |                                                                               | $                                                                  | 154,053 |         
|                                                    | Principal non-cash charges (credits) to income |                                                                               |                                                                    |         |         
|                                                    |                                                | Depreciation and amortization                                                 |                                                                    |         | 107,423 
|                                                    |                                                | Income tax deferred (excluding taxes resulting from divestiture of plant)     |                                                                    |         | 3,395   
|                                                    |                                                | Common equity component of allowance for funds used during construction       |                                                                    |         | (4,205  
|                                                    |                                                | Prepaymentsaccrued pension credits                                           |                                                                    |         | (85,403 
|                                                    |                                                | Other non-cash charges                                                        |                                                                    |         | (9,628  
|                                                    | Changes in assets and liabilities              |                                                                               |                                                                    |         |         
|                                                    |                                                | Accounts receivablecustomer, less allowance for uncollectibles               |                                                                    |         | (35,039 
|                                                    |                                                | Materials and supplies, including fuel and gas in storage                     |                                                                    |         | 52,112  
|                                                    |                                                | Prepayments (other than pensions), other receivables and other current assets |                                                                    |         | (196,176
|                                                    |                                                | Deferred recoverable energy costs                                             |                                                                    |         | 17,091  
|                                                    |                                                | Cost of removal less salvage                                                  |                                                                    |         | (27,496 
|                                                    |                                                | Accounts payable                                                              |                                                                    |         | (24,288 
|                                                    |                                                | Other-net                                                                     |                                                                    |         | 89,534  
|                                                    |                                                |                                                                               |                                                                    |         |         
|                                                    |                                                |                                                                               | Net cash flows from operating activities                           |         |         
|                                                    |                                                |                                                                               |                                                                    |         |         
|Investing activities including construction         |                                                |                                                                               |                                                                    |         |         
|                                                    |                                                | Construction expenditures                                                     |                                                                    |         | (230,171
|                                                    |                                                | Nuclear fuel expenditures                                                     |                                                                    |         |        
|                                                    |                                                | Contributions to nuclear decommissioning trust                                |                                                                    |         |        
|                                                    |                                                | Divestiture of utility plant (net of federal income tax)                      |                                                                    |         |        
|                                                    |                                                | Common equity component of allowance for funds used during construction       |                                                                    |         | 4,205   
|                                                    |                                                |                                                                               |                                                                    |         |         
|                                                    |                                                |                                                                               | Net cash flows used in investing activities including construction |         |         
|                                                    |                                                |                                                                               |                                                                    |         |         
|Financing activities including dividends            |                                                |                                                                               |                                                                    |         |         
|                                                    |                                                | Net proceeds from short-term debt                                             |                                                                    |         | 250,000 
|                                                    |                                                | Retirement of long-term debt                                                  |                                                                    |         | (150,000
|                                                    |                                                | Issuance and refunding costs                                                  |                                                                    |         | (360    
|                                                    |                                                | Common stock dividends                                                        |                                                                    |         | (99,578 
|                                                    |                                                | Preferred stock dividends                                                     |                                                                    |         | (3,398  
|                                                    |                                                |                                                                               |                                                                    |         |         
|                                                    |                                                |                                                                               | Net cash flows used in financing activities including dividends    |         |         
|                                                    |                                                |                                                                               |                                                                    |         |         
|Net decrease in cash and temporary cash investments |                                                |                                                                               | (187,929                                                           | )       |         
|Cash and temporary cash investments at January 1    |                                                |                                                                               | 264,776                                                            |         |         
|                                                    |                                                |                                                                               |                                                                    |         |         
|Cash and temporary cash investments at March 31     |                                                | $                                                                             | 76,847                                                             |         | $       
|                                                    |                                                |                                                                               |                                                                    |         |         
|Supplemental disclosure of cash flow information    |                                                |                                                                               |                                                                    |         |         
|                                                    | Cash paid during the period for:               |                                                                               |                                                                    |         |         
|                                                    |                                                | Interest                                                                      |                                                                    | $       | 69,593  
|                                                    |                                                | Income taxes                                                                  |                                                                    |         | 129,350 

The accompanying notes are an integral part of these financial statements.

22

---



NOTES TO FINANCIAL STATEMENTSCON EDISON OF NEW YORK

NOTE AGENERAL

These footnotes accompany and form an integral part of the interim consolidated financial statements of Consolidated Edison Company of New York, Inc. (Con
Edison of New York) and its subsidiaries. Consolidated Edison, Inc. (Con Edison) owns all of the outstanding common stock of Con Edison of New York. These financial statements are unaudited
but, in the opinion of Con Edison of New York's management, reflect all adjustments (which include only normally recurring adjustments) necessary for a fair statement of the results for the interim
periods presented. These financial statements should be read together with the audited Con Edison of New York financial statements (including the notes thereto) included in the combined Con Edison,
Con Edison of New York and Orange and Rockland Utilities, Inc. Annual Reports on Form 10-K for the year ended December 31, 2001 (the Form 10-K).

NOTE BENVIRONMENTAL MATTERS

Hazardous substances, such as asbestos, polychlorinated biphenyls (PCBs) and coal tar, have been used or generated in the course of operations of Con Edison of
New York and may be present in its facilities and equipment.

The
Federal Comprehensive Environmental Response, Compensation and Liability Act of 1980 (Superfund) and similar state statutes impose joint and several strict liability, regardless of
fault, upon generators of hazardous substances for resulting removal and remedial costs and environmental damages. Liabilities under these laws can be material and in some instances may be imposed
without regard to fault, or may be imposed for past acts, even though such past acts may have been lawful at the time they occurred.

At
March 31, 2002, Con Edison of New York had accrued $91.8 million as its best estimate of its liability for sites as to which it has received process or notice alleging
that hazardous substances generated by Con Edison of New York and, in most instances, other potentially responsible parties were deposited. There will be additional liability relating to these sites
and other sites, the amount of which is not presently determinable but may be material to Con Edison of New York's financial position, results of operations or liquidity.

Under
Con Edison of New York's current electric, gas and steam rate agreements, site investigation and remediation costs in excess of $5 million annually incurred with respect to
hazardous waste for which it is responsible are to be deferred and subsequently reflected in rates. At March 31, 2002, $22.1 million of such costs had been deferred as regulatory assets.

Suits
have been brought in New York State and federal courts against Con Edison of New York 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 Con Edison of New York. Many of these suits have been disposed of without any
payment by Con Edison of New York, or for immaterial amounts. The amounts specified in all the remaining suits total billions of dollars but Con Edison of New York believes that these amounts are
greatly exaggerated, as were the claims already disposed of. Based on the information and relevant circumstances known to Con Edison of New York at this time, these suits are not expected to have a
material adverse effect on its financial position, results of operations or liquidity.

Workers'
compensation administrative proceedings have been commenced, wherein current and former employees claim benefits based upon alleged disability from exposure to asbestos. Based
on the information and relevant circumstances known to Con Edison of New York at this time, these claims are not expected to have a material adverse effect on its financial position, results of
operations or

23

---

liquidity. At March 31, 2002, Con Edison of New York had accrued a $125.6 million provision as its best estimate of its liability for workers' compensation claims, including those
related to asbestos exposure. Of this amount $54.5 million was deferred as a regulatory asset. Other legal proceedings have commenced, wherein non-employee contractors claim
benefits based upon alleged disability from exposure to asbestos. At March 31, 2002, Con Edison of New York had accrued a $4.0 million provision as its best estimate of its liability for
these alleged claims and deferred a like amount as a regulatory asset.

NOTE CNUCLEAR GENERATION

The New York State Public Service Commission (NYPSC) is investigating the February 2000 to January 2001 outage of the nuclear generating unit sold
by Con Edison of New York in September 2001, its causes and the prudence of the company's actions regarding the operation and maintenance of the generating unit. The proceeding covers, among
other things, Con Edison of New York's inspection practices, the circumstances surrounding prior outages, the basis for postponement of the unit's steam
generator replacement and whether, and to what extent, increased replacement power costs and repair and replacement costs should be borne by Con Edison's shareholders.

Con
Edison of New York has billed to customers replacement power costs for the outage incurred prior to August 2000 and after October 2000, but not approximately
$90 million of replacement power costs incurred in August through October 2000. Con Edison of New York has also accrued a $40 million liability for the possible disallowance of
replacement power costs that it had previously recovered from customers.

An
appeal is pending in the United States Court of Appeals for the Second Circuit of the October 2000 decision by the United States District Court for the Northern District of New
York, in an action entitled Consolidated Edison Company of New York, Inc. v. Pataki, et al., in which the court determined that the law that directed the NYPSC to prohibit Con Edison of New
York from recovering replacement power costs for the outage from customers was unconstitutional and granted the company's motion for a permanent injunction to prevent its implementation.

The
company is unable to predict whether or not any proceedings, lawsuits, legislation or other actions relating to the nuclear generating unit will have a material adverse effect on its
financial position, results of operations or liquidity.

NOTE DDERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

As of January 2001 Con Edison of New York adopted SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities," as amended by SFAS
No. 137, "Deferral of the Effective Date of FASB Statement No. 133," and SFAS No. 138, "Accounting for Certain Derivative Instruments and Certain Hedging Activitiesan
amendment of FASB Statement No. 133" (collectively, SFAS No. 133).

Energy Price Hedging

Con Edison of New York uses derivative financial instruments to hedge market price fluctuations in related underlying transactions for the physical purchase or
sale of electricity and gas (Hedges).

Pursuant
to SFAS No. 71, "Accounting for the Effects of Certain Types of Regulation," Con Edison of New York defers recognition in income of gains and losses on a Hedge until the
underlying transaction is completed. Pursuant to rate provisions that permit the recovery of the cost of purchased power and gas, Con Edison of New York credits or charges to its customers gains or
losses on Hedges and related transaction costs. See "Recoverable Energy Costs" in Note A to the company's financial statements included in Item 8 of the Form 10-K. To the
extent SFAS No. 71 does not allow deferred

24

---

recognition in income, Con Edison of New York has elected special hedge accounting pursuant to SFAS No. 133 (Cash Flow Hedge Accounting).

Pursuant
to Cash Flow Hedge Accounting, the mark-to-market unrealized gain or loss on each Hedge is recorded in other comprehensive income and reclassified to
income at the time the underlying transaction is completed (except that any gain or loss relating to any portion of a Hedge determined to be "ineffective" is recognized in income in the period in
which such determination is made).

Upon
adoption of SFAS No. 133, Con Edison of New York had no transition adjustments to recognize in other comprehensive income. For the first quarter of 2002, unrealized
after-tax net gains of $2.4 million were recognized in other comprehensive income. For the first quarter of 2001, there were no such activities. Con Edison of New York reclassified
to income from accumulated other comprehensive income after-tax net losses relating to Hedges of $ 0.1 million for the first quarter of 2002. There were no reclassifications to
income during the first quarter of 2001. As of March 31, 2002, $0.8 million of after-tax net gains relating to Hedges were expected to be reclassified from accumulated other
comprehensive income to income within the next 12 months.

Comprehensive Income

Unrealized gains/(losses) on derivatives, net of tax included in accumulated other comprehensive income for the three months ended March 31, 2002 and 2001 were as
follows:

|                                                                                               |  | Three Months Ended
|---------------------------------------------------------------------------------------------- |  | ------------------
|
|
|Unrealized gains/(losses) on derivatives, qualified as Hedges, net of $1.7 taxes               |  | $                 
|Less: Reclassification adjustment for gains/(losses) included in net income, net of $0.1 taxes |  |                   
|                                                                                               |  |                   
|Unrealized gains/(losses) on derivatives qualified as Hedges for the period                    |  | $                 
|                                                                                               |  |                   

NOTE EFINANCIAL INFORMATION BY BUSINESS SEGMENT

Con Edison of New York's business segments were determined based on similarities in economic characteristics, the regulatory environment, and management's
reporting requirements. Con Edison of New York's principal business segments are:



All
revenues of Con Edison of New York's business segments are from customers located in the United States. Also, all assets, are located in the United States and are materially
consistent with segment assets as disclosed in Con Edison's 2001 Annual Report on Form 10-K for the year ended December 31, 2001.

Common
services shared by the business segments (shared services) are assigned directly or allocated based on various cost factors, depending on the nature of the service provided.

25

---

The
financial data for business segments are as follows:

CONSOLIDATED EDISON COMPANY OF NEW YORK, INC.
SEGMENT FINANCIAL INFORMATION
$000's

For the three months ended March 31, 2002 and 2001
(Unaudited)

|                              |  | Regulated Electric |           | Regulated Gas
|----------------------------- |  | ------------------ | --------- | -------------
|
|Operating revenues            |  | $                  | 1,208,757 |              
|Intersegment revenues         |  |                    | 2,929     |              
|Depreciation and amortization |  |                    | 86,040    |              
|Operating income              |  |                    | 116,101   |              

|                              |  | Regulated Steam |         | Total
|----------------------------- |  | --------------- | ------- | -----
|
|Operating revenues            |  | $               | 141,466 |      
|Intersegment revenues         |  |                 | 476     |      
|Depreciation and amortization |  |                 | 4,564   |      
|Operating income              |  |                 | 26,666  |      

NOTE FNEW FINANCIAL ACCOUNTING STANDARDS

On January 1, 2002, Con Edison of New York adopted SFAS No. 142, "Goodwill and Other Intangible Assets." SFAS No. 142 provides that goodwill
(i.e., the excess of cost over fair value of the assets of a business acquired) and intangible assets with indefinite useful lives will no longer be amortized, but instead be tested for impairment at
least annually. Other intangible assets will continue to be amortized over their useful lives. The adoption of SFAS No. 142 had no impact on Con Edison of New York's consolidated financial
position or results of operations.

SFAS
No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets," which Con Edison of New York adopted on January 1, 2002, replaces SFAS
No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of." SFAS No. 144 requires that all long-lived
assets held for sale be measured at the lower of book value or fair value less cost to sell. The standard also broadens the reporting of discontinued operations. The adoption of SFAS No. 144
had no impact on Con Edison of New York's consolidated financial position or results of operations.

SFAS
No. 143, "Accounting for Asset Retirement Obligations," which Con Edison of New York is required to adopt on January 1, 2003, requires entities to record the fair
value of a liability associated with an asset retirement obligation in the period incurred. When the liability is initially recorded, the entity capitalizes the cost by increasing the carrying amount
of the related asset. The liability is increased to its present value each period and the capitalized cost is depreciated over the useful life of the related asset. Upon retirement of the asset, the
entity settles the obligation for the amount recorded or incurs a gain or loss. Con Edison of New York has not yet determined the impact of this standard on its consolidated financial position or
results of operations.

SFAS
No. 145, "Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections," which was issued in
April 2002, rescinds SFAS No. 4, "Reporting Gains and Losses from Extinguishment of Debt," SFAS No. 44, "Accounting for Intangible Assets of

26

---

Motor Carriers," and SFAS No. 64, "Extinguishments of Debt Made to Satisfy Sinking-Fund Requirements." The Statement amends SFAS No. 13, "Accounting for Leases," to
eliminate certain inconsistencies. It also amends other existing authoritative pronouncements to correct references to guidance issued by the American Institute of Certified Public Accountants (AICPA)
or the Financial Accounting Standards Board (FASB) that has been revised or superceded, and to eliminate inconsistencies in existing pronouncements. Certain provisions of the standard are required to
be adopted for transactions occurring after May 15, 2002; other provisions are required to be adopted for financial statements issued after May 15, 2002. Con Edison of New York has not
yet determined the impact of this standard on its consolidated financial position or results of operations.

27

---



ORANGE AND ROCKLAND UTILITIES, INC.        CONSOLIDATED BALANCE SHEET        (Unaudited)

|                                                                |                                              | As At                                                                                                 
|--------------------------------------------------------------- | -------------------------------------------- | ------------------------------------------------------------------------------------------------------
|
|
|Assets                                                          |                                              |                                                                                                       
|Utility plant, at original cost                                 |                                              |                                                                                                       
|                                                                |                                              | Electric                                                                                              
|                                                                |                                              | Gas                                                                                                   
|                                                                |                                              | Common                                                                                                
|                                                                |                                              |                                                                                                       
|                                                                |                                              | Total                                                                                                 
|                                                                |                                              | Less: accumulated depreciation                                                                        
|                                                                |                                              |                                                                                                       
|                                                                |                                              | Net                                                                                                   
|                                                                |                                              | Construction work in progress                                                                         
|                                                                |                                              |                                                                                                       
|Net utility plant                                               |                                              |                                                                                                       
|                                                                |                                              |                                                                                                       
|Non-utility plant                                               |                                              |                                                                                                       
|                                                                |                                              | Non-utility property, less accumulated depreciation of $2,107 and $2,339 in 2002 and 2001 respectively
|                                                                |                                              |                                                                                                       
|Net plant                                                       |                                              |                                                                                                       
|                                                                |                                              |                                                                                                       
|Current assets                                                  |                                              |                                                                                                       
|                                                                |                                              | Cash and cash equivalents                                                                             
|                                                                |                                              | Customer accounts receivable, less allowance for uncollectable accounts of $3,129 and $2,625          
|                                                                |                                              | Other accounts receivable, less allowance for uncollectable accounts of $1,070 and $860               
|                                                                |                                              | Account receivable from affiliated company                                                            
|                                                                |                                              | Accrued utility revenue                                                                               
|                                                                |                                              | Gas in storage, at average cost                                                                       
|                                                                |                                              | Materials and supplies, at average cost                                                               
|                                                                |                                              | Prepayments                                                                                           
|                                                                |                                              | Other current assets                                                                                  
|                                                                |                                              |                                                                                                       
|Total current assets                                            |                                              |                                                                                                       
|                                                                |                                              |                                                                                                       
|Deferred charges, regulatory assets and noncurrent assets       |                                              |                                                                                                       
|                                                                | Regulatory assets                            |                                                                                                       
|                                                                |                                              | Recoverable fuel costs                                                                                
|                                                                |                                              | Deferred pension and other postretirement benefits                                                    
|                                                                |                                              | Deferred environmental remediation costs                                                              
|                                                                |                                              | Future federal income tax                                                                             
|                                                                |                                              | Other regulatory assets                                                                               
|                                                                |                                              | Deferred revenue taxes                                                                                
|                                                                |                                              | Hedges on energy trading                                                                              
|                                                                |                                              |                                                                                                       
|                                                                | Total regulatory assets                      |                                                                                                       
|                                                                | Other deferred charges and noncurrent assets |                                                                                                       
|                                                                |                                              |                                                                                                       
|Total deferred charges, regulatory assets and noncurrent assets |                                              |                                                                                                       
|                                                                |                                              |                                                                                                       
|Total                                                           |                                              | $                                                                                                     
|                                                                |                                              |                                                                                                       

The
accompanying notes are an integral part of these financial statements.

28

---



ORANGE AND ROCKLAND UTILITIES, INC.        CONSOLIDATED BALANCE SHEET        (Unaudited)

|                                                  |                                          | As At                             |          
|------------------------------------------------- | ---------------------------------------- | --------------------------------- | ---------
|
|
|Capitalization and Liabilities                    |                                          |                                   |          
|Capitalization                                    |                                          |                                   |          
|                                                  | Common stock                             |                                   | $        
|                                                  | Additional paid In capital               |                                   |          
|                                                  | Retained earnings                        |                                   |          
|                                                  | Accumulated comprehensive Income         |                                   |          
|                                                  |                                          |                                   |          
|                                                  |                                          | Total common shareholders' equity |          
|                                                  |                                          |                                   |          
|                                                  | Long-term debt                           |                                   |          
|                                                  |                                          |                                   |          
|Total capitalization                              |                                          |                                   | 676,777  
|                                                  |                                          |                                   |          
|Noncurrent liabilities                            |                                          |                                   |          
|                                                  | Pension and Benefit Reserve              |                                   |          
|                                                  | Other noncurrent liabilities             |                                   |          
|                                                  |                                          |                                   |          
|Total noncurrent liabilities                      |                                          |                                   | 108,386  
|                                                  |                                          |                                   |          
|Current liabilities                               |                                          |                                   |          
|                                                  | Notes payable                            |                                   |          
|                                                  | Accounts payable                         |                                   |          
|                                                  | Accounts payable to affiliated companies |                                   |          
|                                                  | Accrued federal income and other taxes   |                                   |          
|                                                  | Customer deposits                        |                                   |          
|                                                  | Accrued interest                         |                                   |          
|                                                  | Accrued environmental costs              |                                   |          
|                                                  | Other current liabilities                |                                   |          
|                                                  |                                          |                                   |          
|Total current liabilities                         |                                          |                                   | 127,987  
|                                                  |                                          |                                   |          
|Deferred credits and regulatory liabilities       |                                          |                                   |          
|                                                  | Accumulated deferred federal income tax  |                                   |          
|                                                  | Deferred investment tax credits          |                                   |          
|                                                  | Regulatory liabilities                   |                                   |          
|                                                  |                                          | Pension and other benefits        |          
|                                                  |                                          | Recoverable energy costs          |          
|                                                  |                                          | Competition enhancement fund      |          
|                                                  |                                          | Gain on divestiture               |          
|                                                  |                                          | Other regulatory liabilities      |          
|                                                  |                                          |                                   |          
|                                                  | Total regulatory liabilities             |                                   |          
|                                                  | Deferred credits                         |                                   |          
|                                                  |                                          | Hedges on energy trading          |          
|                                                  |                                          | Other deferred credits            |          
|                                                  |                                          |                                   |          
|                                                  | Total deferred credits                   |                                   |          
|                                                  |                                          |                                   |          
|Total deferred credits and regulatory liabilities |                                          |                                   | 219,168  
|                                                  |                                          |                                   |          
|Total                                             |                                          | $                                 | 1,132,318
|                                                  |                                          |                                   |          

The accompanying notes are an integral part of these financial statements.

29

---



ORANGE AND ROCKLAND UTILITIES, INC.        CONSOLIDATED INCOME STATEMENT        For the Three Months Ended March 31, 2002 and 2001  (Unaudited)

|                                                      |                                              | 2002                                   |         | 2001       |          
|----------------------------------------------------- | -------------------------------------------- | -------------------------------------- | ------- | ---------- | ---------
|
|Operating revenues                                    |                                              |                                        |         |            |          
|Electric                                              |                                              | $                                      | 90,978  |            | $        
|Gas                                                   |                                              |                                        | 65,022  |            |          
|Non-utility                                           |                                              |                                        |        |            |          
|                                                      |                                              |                                        |         |            |          
|Total operating revenues                              |                                              |                                        | 156,000 |            |          
|                                                      |                                              |                                        |         |            |          
|Operating expenses                                    |                                              |                                        |         |            |          
|Purchased power                                       |                                              |                                        | 38,052  |            |          
|Gas purchased for resale                              |                                              |                                        | 35,746  |            |          
|Other operations                                      |                                              |                                        | 27,536  |            |          
|Maintenance                                           |                                              |                                        | 5,757   |            |          
|Depreciation and amortization                         |                                              |                                        | 8,460   |            |          
|Taxes, other than income tax                          |                                              |                                        | 13,102  |            |          
|Income taxes                                          |                                              |                                        | 8,765   |            |          
|                                                      |                                              |                                        |         |            |          
|Total operating expenses                              |                                              |                                        | 137,418 |            |          
|                                                      |                                              |                                        |         |            |          
|Operating income                                      |                                              |                                        | 18,582  |            |          
|                                                      |                                              |                                        |         |            |          
|Other income (deductions)                             |                                              |                                        |         |            |          
|Investment income                                     |                                              |                                        | (81     | )          |          
|Other income and deductions                           |                                              |                                        | (285    | )          |          
|Income taxes                                          |                                              |                                        | 216     |            |          
|                                                      |                                              |                                        |         |            |          
|Total other income (deductions)                       |                                              |                                        | (150    | )          |          
|                                                      |                                              |                                        |         |            |          
|Income before interest charges                        |                                              |                                        | 18,432  |            |          
|                                                      |                                              |                                        |         |            |          
|Interest on long-term debt                            |                                              |                                        | 5,241   |            |          
|Other interest                                        |                                              |                                        | 861     |            |          
|Allowance for borrowed funds used during construction |                                              |                                        | (60     | )          |          
|                                                      |                                              |                                        |         |            |          
|Net interest charges                                  |                                              |                                        | 6,042   |            |          
|                                                      |                                              |                                        |         |            |          
|Net income for common stock                           |                                              | $                                      | 12,390  |            | $        
|                                                      |                                              |                                        |         |            |          
|ORANGE AND ROCKLAND SALES & DELIVERIES                |                                              |                                        |         |            |          
|                                                      | Electric(thousands of killowatthours)       |                                        |         |            |          
|                                                      |                                              | Orange And Rockland customers          |         |            | 991,854  
|                                                      |                                              | Delivery service for Retail Choice     |         |            | 247,524  
|                                                      |                                              |                                        |         |            |          
|                                                      | Total electric sales in service territory    |                                        |         | 1,239,378  |          
|                                                      |                                              |                                        |         |            |          
|                                                      | Gas(dekatherms)                             |                                        |         |            |          
|                                                      |                                              | Firm sales and transportation          |         |            | 8,385,847
|                                                      |                                              | Interruptible sales and transportation |         |            | 2,064,164
|                                                      |                                              |                                        |         |            |          
|                                                      | Total sales to Orange and Rockland customers |                                        |         | 10,450,011 |          
|                                                      |                                              | Transportation of customer-owned gas   |         |            | 1,978,503
|                                                      |                                              | Off-system sales                       |         |            | 1,669,612
|                                                      |                                              |                                        |         |            |          
|                                                      | Total gas sales and transportation           |                                        |         | 14,098,126 |          
|                                                      |                                              |                                        |         |            |          

The
accompanying notes are an integral part of these financial statements.

30

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ORANGE AND ROCKLAND UTILITIES, INC.        CONSOLIDATED STATEMENT OF RETAINED EARNINGS        (Unaudited)

|                                    |  | As at |        
|----------------------------------- |  | ----- | -------
|
|Balance, January 1                  |  | $     | 151,792
|Net income for the period           |  |       | 12,390 
|                                    |  |       |        
|Total                               |  |       | 164,182
|                                    |  |       |        
|Dividends declared on capital stock |  |       | (7,000 
|                                    |  |       |        
|Balance, March 31                   |  | $     | 157,182
|                                    |  |       |        

Orange and Rockland Utilities, Inc.  CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME  For the Three Months Ended March 31, 2002 and 2001  (Unaudited)

|                                                      |                                                                                                                                                | 2002 |        | 2001 |  
|----------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------- | ---- | ------ | ---- | -
|
|NET INCOME FOR COMMON STOCK                           |                                                                                                                                                | $    | 12,390 |      | $
|OTHER COMPREHENSIVE INCOME/(LOSS), NET OF TAXES       |                                                                                                                                                |      |        |      |  
|                                                      | Investment in marketable equity securities, net of $127 and $295 taxes                                                                         |      |        | (180 | )
|                                                      | Minimum pension liability adjustments, net of $167 and $63 taxes                                                                               |      |        | (238 | )
|                                                      | Unrealized gains/(losses) on derivatives qualified as hedges due to cumulative effect of a change in accounting principle, net of $5,709 taxes |      |        |     |  
|                                                      | Unrealized gains/(losses) on derivatives qualified as hedges, net of $148 and $272 taxes                                                       |      |        | 211  |  
|                                                      | Less: Reclassification adjustment for gains/(losses) included in net income, net of $282 taxes                                                 |      |        | (402 | )
|                                                      |                                                                                                                                                |      |        |      |  
|TOTAL OTHER COMPREHENSIVE INCOME/(LOSS), NET OF TAXES |                                                                                                                                                |      | 195    |      |  
|                                                      |                                                                                                                                                |      |        |      |  
|COMPREHENSIVE INCOME                                  |                                                                                                                                                | $    | 12,585 |      | $
|                                                      |                                                                                                                                                |      |        |      |  

The
accompanying notes are an integral part of these financial statements.

31

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ORANGE AND ROCKLAND UTILITIES, INC.        CONSOLIDATED STATEMENT OF CASH FLOWS        (Unaudited)

|                                                 |                                                | 2002                                                      |                                  | 2001                                                            |        
|------------------------------------------------ | ---------------------------------------------- | --------------------------------------------------------- | -------------------------------- | --------------------------------------------------------------- | -------
|
|Operating activities                             |                                                |                                                           |                                  |                                                                 |        
|                                                 | Net income                                     |                                                           | $                                | 12,390                                                          |        
|                                                 | Principal non-cash charges (credits) to income |                                                           |                                  |                                                                 |        
|                                                 |                                                | Depreciation and amortization                             |                                  |                                                                 | 8,369  
|                                                 |                                                | Amortization of investment tax credit                     |                                  |                                                                 | (120   
|                                                 |                                                | Federal and state income tax deferred                     |                                  |                                                                 | (177   
|                                                 |                                                | Other non-cash changes (debits)                           |                                  |                                                                 | 850    
|                                                 | Changes in assets and liabilities              |                                                           |                                  |                                                                 |        
|                                                 |                                                | Accounts receivablenet, and accrued utility revenue      |                                  |                                                                 | (2,047 
|                                                 |                                                | Materials and supplies, including fuel and gas in storage |                                  |                                                                 | 10,803 
|                                                 |                                                | Prepayments, other receivables and other current assets   |                                  |                                                                 | 2,850  
|                                                 |                                                | Deferred recoverable fuel costs                           |                                  |                                                                 | 1,644  
|                                                 |                                                | Accounts payable                                          |                                  |                                                                 | 7,983  
|                                                 |                                                | Refunds to customers                                      |                                  |                                                                 | 204    
|                                                 |                                                | Othernet                                                 |                                  |                                                                 | 5,895  
|                                                 |                                                |                                                           |                                  |                                                                 |        
|                                                 |                                                |                                                           |                                  | Net cash flows from operating activities                        |        
|                                                 |                                                |                                                           |                                  |                                                                 |        
|Investing activities including construction      |                                                |                                                           |                                  |                                                                 |        
|                                                 |                                                | Construction expenditures                                 |                                  |                                                                 | (10,845
|                                                 |                                                | Proceeds from disposition of property                     |                                  |                                                                 | 5      
|                                                 |                                                |                                                           |                                  |                                                                 |        
|                                                 |                                                |                                                           |                                  | Net cash flows from operating activities
including construction |        
|                                                 |                                                |                                                           |                                  |                                                                 |        
|Financing activities including dividends         |                                                |                                                           |                                  |                                                                 |        
|                                                 |                                                |                                                           | Short-term debt arrangements     |                                                                 |        
|                                                 |                                                |                                                           | Dividend to parent               |                                                                 |        
|                                                 |                                                |                                                           |                                  |                                                                 |        
|                                                 |                                                |                                                           |                                  | Net cash flows from financing activities
including dividends    |        
|                                                 |                                                |                                                           |                                  |                                                                 |        
|Cash and Temporary Cash Investments:             |                                                |                                                           |                                  |                                                                 |        
|Net change for the period                        |                                                |                                                           | 14,204                           |                                                                 |        
|Balance at Beginning of Period                   |                                                |                                                           | 1,785                            |                                                                 |        
|                                                 |                                                |                                                           |                                  |                                                                 |        
|Balance at End of Period                         |                                                | $                                                         | 15,989                           |                                                                 | $      
|                                                 |                                                |                                                           |                                  |                                                                 |        
|Supplemental disclosure of cash flow information |                                                |                                                           |                                  |                                                                 |        
|                                                 |                                                |                                                           | Cash paid during the period for: |                                                                 |        
|                                                 |                                                |                                                           |                                  | Interest                                                        |        
|                                                 |                                                |                                                           |                                  | Income Taxes                                                    |        
|                                                 |                                                |                                                           |                                  |                                                                 |        

The
accompanying notes are an integral part of these financial statements.

32

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Notes To Financial StatementsO&R

Note AGeneral

These footnotes accompany and form an integral part of the interim consolidated financial statements of Orange and Rockland Utilities, Inc. (O&R), a wholly
owned subsidiary of Consolidated Edison, Inc. (Con Edison). These financial statements are unaudited but, in the opinion of O&R's management, reflect all adjustments (which include only
normally recurring adjustments) necessary for a fair statement of the results for the interim periods presented. These financial statements should be read together with the audited O&R financial
statements (including the notes thereto) included in the combined Con Edison, Consolidated Edison Company of New York, Inc. (Con Edison of New York) and O&R Annual Reports on
Form 10-K for the year ended December 31, 2001.

Note BEnvironmental Matters

Hazardous substances, such as asbestos, polychlorinated biphenyls (PCBs) and coal tar, have been used or generated in the course of operations of O&R and may be
present in its facilities and equipment.

The
Federal Comprehensive Environmental Response, Compensation and Liability Act of 1980 (Superfund) and similar state statutes impose joint and severe liability, regardless of fault,
upon generators of hazardous substances for resulting removal and remedial costs and environmental damages. Liabilities under these laws can be material and in some instances may be imposed without
regard to fault, or may be imposed for past acts, even though such past acts may have been lawful at the time that they occurred.

At
March 31, 2002, O&R had accrued $37.8 million as its best estimate of its liability for sites as to which it has received process or notice alleging that hazardous
substances generated by O&R (and, in most instances, other potentially responsible parties) were deposited. There will be additional liability relating to these sites and other sites, including the
costs of investigating and remediating sites where
O&R or its predecessors manufactured gas. The total amount of liability is not presently determinable but may be material to O&R's financial position, results of operations or liquidity.

O&R
is permitted under current rate agreements to defer for subsequent recovery through rates certain site investigation and remediation costs with respect to hazardous waste. At
March 31, 2002, $40.1 million of such costs had been deferred as a regulatory asset for remediation of MGP sites.

Suits
have been brought in New York State and federal courts against O&R 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 O&R. Many of these suits have been disposed of without any payment by O&R, or for immaterial amounts.
The amounts specified in all the remaining suits total billions of dollars but O&R believes that these amounts are greatly exaggerated, as were the claims already disposed of. Based on the information
and relevant circumstances known to O&R at this time, these suits are not expected to have a material adverse effect on O&R's financial position, results of operation or liquidity.

Workers'
compensation administrative proceedings have been commenced, wherein current and former employees claim benefits based upon alleged disability from exposure to asbestos. Based
on the information and relevant circumstances known to O&R at this time, these claims are not expected to have a material adverse effect on O&R's financial position, results of operations or
liquidity. At March 31, 2002, O&R had accrued a $1.6 million provision as its best estimate of its liability for these alleged claims and deferred a like amount as a regulatory asset.

In
May 2000, the New York State Department of Environmental Conservation (DEC) issued notices of violation to O&R and four other companies that have operated
coal-fired electric generating

33

---

facilities in New York State. The notices allege violations of the Federal Clean Air Act and the New York State Environmental Conservation Law resulting from the alleged failure to install pollution
control equipment that would have reduced harmful emissions. The notice of violation received by O&R relates to the Lovett Generating Station that it sold in June 1999. O&R is unable to predict
whether or not the alleged violations will have a material adverse effect on its financial position, results of operation or liquidity.

Note CRelated Party Transactions

Each month O&R is invoiced by Con Edison and its affiliates for the cost of any services rendered to O&R by Con Edison and its affiliates. These services,
provided primarily by Con Edison's other regulated subsidiary, Consolidated Edison Company of New York, include substantially all administrative support operations, such as corporate directorship and
associated ministerial duties, accounting, treasury, investor relations, information resources, legal, human resources, fuel supply and
energy management services. The cost of these services totaled $3.6 million and $3.3 million, respectively for the first three months of 2002 and 2001. In addition O&R purchased
$26.3 million of natural gas and $6.8 million of electricity from Con Edison of New York during the 2002 period and $71.7 million of natural gas from Con Edison of New York during
the 2001 period.

O&R
provides certain recurring services to Con Edison of New York on a monthly basis, including cash receipts processing and certain administrative services. The cost of these services,
which are invoiced to Con Edison of New York, totaled $3.0 million during the first three months of 2002 and 2001.

In
February 2002, the Federal Energy Regulatory Commission authorized Con Edison of New York to lend funds to O&R, for periods of not more than 12 months, in amounts not to
exceed $150 million at any time outstanding, at prevailing market rates. Through March 31, 2002 O&R has not borrowed any funds from Con Edison of New York.

Note DDerivative Instrument and Hedging Activities

As of January 2001, O&R adopted Statement of Financial Accounting Standards No. 133, "Accounting for Derivative Instruments and Hedging Activities,"
as amended by SFAS No.137, "Deferral of the Effective Date of FASB Statement No. 133," and SFAS No. 138, "Accounting for Certain Derivative Instruments and Certain Hedging
Activities-an amendment of FASB Statement No.133" (collectively, SFAS No.133).

Energy Price Hedging

O&R uses derivative financial instruments to hedge market price fluctuations in related underlying transactions for the physical purchase or sale of electricity
(Hedges).

Pursuant
to SFAS No. 71, "Accounting for the Effects of Certain Types of Regulation," O&R defers recognition in income of gains and losses on a Hedge until the underlying
transaction is completed. Pursuant to rate provisions that permit the recovery of the cost of purchased power, O&R credits or charges its customers' gains or losses on Hedges and related transaction
costs. See "Recoverable Energy Costs" in Note A to the company's financial statements included in Item 8 of the Form 10-K. Upon adoption of SFAS No.133, O&R had no transition
adjustments relating to Hedges to recognize in other comprehensive income.

Interest Rate Hedging

O&R uses Cash Flow Hedge Accounting for its interest rate swap agreement. In connection with its $55 million promissory note issued to the New York State
Energy Research and Development

34

---

Authority for the net proceeds of the Authority's variable rate Pollution Control Refunding Revenue Bonds, 1994 Series A (the 1994 Bonds), O&R has a swap agreement pursuant to which it pays
interest at a fixed rate of 6.09 percent and is paid interest at the same variable rate as is paid on the 1994 Bonds. Upon adoption of SFAS No. 133, O&R recognized in other comprehensive
income after-tax transition adjustment losses relating to the swap agreement of $8.1 million. For the first quarter of 2002, O&R recognized in other comprehensive income unrealized
after-tax gains of $0.2 million compared with unrealized after-tax losses of $0.4 million for the first quarter of 2001. During the first quarter of 2002,
$0.4 million of after-tax losses were reclassified from accumulated other comprehensive income to income. There were no reclassifications to income in the first quarter of 2001. As
of March 31, 2002, $1.1 million of after-tax losses relating to the swap agreement were expected to be reclassified from accumulated other comprehensive income to income
within the next 12 months.

Comprehensive Income

Unrealized gains/(losses) on derivatives, net of tax included in accumulated other comprehensive income for the three months ended March 31, 2002 and 2001 were as
follows:

|                                                                                                                                             |  | Three Months Ended |     
|-------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------ | ----
|
|
|Unrealized gains/(losses) on derivatives qualified as hedges due to
cumulative effect of a change in accounting principle, net of $5.7 taxes |  | $                  |    
|Unrealized gains/(losses) on derivatives, qualified as Hedges, net of
$0.1 and $0.3 taxes                                                    |  |                    | 0.2 
|Less: Reclassification adjustment for gains/(losses) included in net income, net of $0.3 taxes                                               |  |                    | (0.4
|                                                                                                                                             |  |                    |     
|Unrealized gains/(losses) on derivatives qualified as Hedges for the period                                                                  |  | $                  | 0.6 
|                                                                                                                                             |  |                    |     

Note EFinancial Information by Business Segment

O&R's business segments were determined based on similarities in economic characteristics, the regulatory environment, and management's reporting requirements.
O&R's business segments are:



All
revenues of O&R's business segments are from customers located in the United States. Also, all assets are located in the United States and are materially consistent with segment
assets as disclosed in O&R's 2001 Annual Report on Form 10-K for the year ended December 31, 2001.

Common
services shared by the business segments (shared services) are assigned directly or allocated based on various cost factors, depending on the nature of the service provided.

35

---

The
financial data for business segments are as follows:

|                              |  | Regulated Electric
|----------------------------- |  | ------------------
|
|
|Operating revenues            |  | $                 
|Intersegment revenues         |  |                   
|Depreciation and amortization |  |                   
|Operating income              |  |                   

|                              |  | Regulated Gas
|----------------------------- |  | -------------
|
|
|Operating revenues            |  | $            
|Intersegment revenues         |  |              
|Depreciation and amortization |  |              
|Operating income              |  |              

|                              |  | Unregulated Subsidiaries |    
|----------------------------- |  | ------------------------ | ---
|
|
|Operating revenues            |  | $                        |   
|Intersegment revenues         |  |                          |   
|Depreciation and amortization |  |                          |   
|Operating income              |  |                          | (53

|                              |  | Total
|----------------------------- |  | -----
|
|
|Operating revenues            |  | $    
|Intersegment revenues         |  |      
|Depreciation and amortization |  |      
|Operating income              |  |      

Note FNew Financial Accounting Standards

On
January 1, 2002, O&R adopted SFAS No. 142, "Goodwill and Other Intangible Assets." SFAS No. 142 provides that goodwill (i.e., the excess of cost over fair value
of the assets of a business acquired) and intangible assets with indefinite useful lives will no longer be amortized, but instead be tested for impairment at least annually. Other intangible assets
will continue to be amortized over their useful lives. The adoption of SFAS No. 142 had no impact on O&R's consolidated financial position or results of operations.

SFAS
No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets," which O&R adopted on January 1, 2002, replaces SFAS No. 121, "Accounting
for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of." SFAS No. 144 requires that all long-lived assets held for sale be
measured at the lower of book value or fair value less cost to sell. The standard also broadens the reporting of discontinued operations. The adoption of SFAS No. 144 had no impact on O&R's
financial position or results of operations.

36

---

SFAS
No. 143, "Accounting for Asset Retirement Obligations," which O&R is required to adopt on January 1, 2003, requires entities to record the fair value of a liability
associated with an asset retirement obligation in the period in which it is incurred. When the liability is initially recorded, the entity capitalizes the cost by increasing the carrying amount of the
related asset. The liability is increased to its present value each period and the capitalized cost is depreciated over the useful life of the related asset. Upon retirement of the asset, the entity
settles the obligation for the amount recorded or incurs a gain or loss. O&R has not yet determined the impact of this standard on its consolidated financial position or results of operations.

SFAS
No. 145, "Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections," which was issued in
April 2002, rescinds SFAS No. 4, "Reporting Gains and Losses from Extinguishment of Debt," SFAS No. 44, "Accounting for Intangible Assets of Motor Carriers," and SFAS
No. 64, "Extinguishments of Debt Made to Satisfy Sinking-Fund Requirements." The Statement amends SFAS No. 13, "Accounting for Leases," to eliminate certain inconsistencies.
It also amends other existing authoritative pronouncements to correct references to guidance issued by the American Institute of Certified Public Accountants (AICPA) or the Financial Accounting
Standards Board (FASB) that has been revised or superceded, and to eliminate inconsistencies in existing pronouncements. Certain provisions of the standard are required to be adopted for transactions
occurring after May 15, 2002; other provisions are required to be adopted for financial statements issued after May 15, 2002. O&R has not yet determined the impact of this standard on
its consolidated financial position or results of operations.

37

---



ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

CON EDISON

Consolidated Edison, Inc. (Con Edison) is a holding company that operates only through its subsidiaries and has no material assets other than the stock of
its subsidiaries. Con Edison's principal subsidiaries are regulated utilities: Consolidated Edison Company of New York, Inc. (Con Edison of New York) and Orange and Rockland
Utilities, Inc. (O&R). Con Edison also has several unregulated subsidiaries, which accounted for approximately 8.7% of consolidated operating revenues and 2.7% of consolidated net income in the
first quarter of 2002 and 6.4% of consolidated total assets at March 31, 2002.

The
following discussion and analysis, which relates to the interim consolidated financial statements of Con Edison and its subsidiaries (including Con Edison of New York and O&R)
included in Part I, Item 1 of this report, should be read in conjunction with Con Edison's Management's Discussion and Analysis of Financial Condition and Results of Operations (Con Edison's
Form 10-K MD&A) in Item 7 of the combined Con Edison, Con Edison of New York and O&R Annual Reports on Form 10-K for the year ended December 31, 2001 (File
Nos. 1-14514, 1-1217 and 1-4315, the Form 10-K). Reference is also made to the notes to the Con Edison financial statements in Part I,
Item 1 of this report, which notes are incorporated herein by reference.

CRITICAL ACCOUNTING POLICIES

Reference is made to "Critical Accounting Policies" in Con Edison's Form 10-K MD&A.

LIQUIDITY AND CAPITAL RESOURCES

Con Edison's liquidity is dependent on its cash flows from its operating, investing and financing activities listed on the accompanying consolidated statement of
cash flows and discussed below. As a result of these activities, unrestricted cash and temporary cash investments decreased $163.1 million during the first quarter of 2002. In addition,
$55.2 million of restricted cash was used during this period to pay a like amount of short-term financing relating to electric generating projects. See Note C to the Con
Edison financial statements included in Item 8 of the Form 10-K.

Cash Flows from Operating Activities

Net cash flows from operating activities during the first three months of 2002 were $102.4 million, $84.0 million less than the first three months
of 2001. This decrease reflects principally lower net income and increased customer accounts receivable and prepayments, offset in part by lower recoverable energy costs.

Accounts
receivablecustomer, less allowance for uncollectible accounts increased $49.6 million at March 31, 2002 compared with year-end 2001, due
primarily to increased customer billings by Con Edison's utility subsidiaries and Consolidated Edison Solutions, Inc. (Con Edison Solutions) reflecting the timing of customer payments and
higher sales volumes. Con Edison of New York's equivalent number of days of revenue outstanding (ENDRO) was 27.2 days at March 31, 2002 compared with 29.6 days at
December 31, 2001. The decrease in ENDRO was due to a reduction in receivables carried on level billing accounts and customer installment agreements, along with overall improved collections.
For O&R, the ENDRO was 23.6 days at March 31, 2002 and December 31, 2001, respectively.

Prepayments
at March 31, 2002 include prepaid property tax for Con Edison of New York of $139.0 million, compared with $9.6 million at December 31, 2001.
Property taxes are generally prepaid on January 1 and July 1 of each year.

38

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Accrued
pension credits increased $85.4 million at March 31, 2002 compared with December 31, 2001, reflecting favorable past performance in the company's pension
fund and assumptions about future performance. See Note D to the Con Edison financial statements included in Item 8 of the Form 10-K.

The
regulatory asset for deferred recoverable energy costs decreased $22.7 million at March 31, 2002 compared with year-end 2001, reflecting decreased purchased
power and gas costs resulting from lower sales volumes. Deferred recoverable energy cost also decreased due to the ongoing recovery of
previously deferred amounts, offset in part by the deferral for future recovery of additional purchased power and gas costs.    See "Recoverable Energy Costs" in Note A to the Con
Edison financial statements included in Item 8 of the Form 10-K.

The
regulatory asset for deferred revenue tax increased $13.7 million at March 31, 2002 compared with December 31, 2001, due primarily to the deferral for future
recovery of the MTA Business Tax Surcharge, offset in part by the recovery of previously deferred amounts.

Other
regulatory assets increased $15.1 million at March 31, 2002 compared with year-end 2001, due primarily to an increase of $12.1 million in the
deferral related to New York State tax law changes.

Pension
and benefits reserve increased $24.3 million at March 31, 2002 compared with year-end 2001 due primarily to an increase in the cost of postretirement
benefits ($16.5 million). See Note E to the Con Edison financial statements included in Item 8 of the Form 10-K.

Accrued
taxes decreased $67.1 million at March 31, 2002 compared with year-end 2001, primarily because, in light of the World Trade Center attack, the Federal
government extended to January 2002 the due date for final payment of income taxes. As a result, the payment normally made in December was not made until mid-January 2002.

Proceeds
from the auction of transmission congestion contracts increased $48.5 million at March 31, 2002 compared with year-end 2001. Con Edison of New York
sells rights to use its transmission system for specified periods of time, pursuant to procedures established by the New York Independent System Operator (NYISO). These auction proceeds are deferred
for customer benefit and will be refunded to customers at a future date.

Other
regulatory liabilities increased $51.1 million at March 31, 2002 compared with year-end 2001, principally reflecting unrealized
mark-to-market gains on transactions entered into by Con Edison's regulated utility subsidiaries to hedge purchases of electricity and gas against adverse market price
fluctuations ($19.6 million). The utility subsidiaries refund to or collect from customers hedging gains or losses pursuant to rate provisions that permit recovery of the cost of purchased
power and gas. See "Recoverable Energy Costs" in Note A to the Con Edison financial statements included in Item 8 of Form 10-K and Note D to the Con Edison financial
statements included in Part I, Item 1 of this report. The increase is also due to Con Edison of New York accruing an additional $11.1 million for gas rate reductions pursuant to the gas
rate agreement discussed under "Regulatory Matters," below.

Cash Flows Used in Investing and Financing Activities

Net cash flows used in investing activities during the first three months of 2002 increased $224.2 million compared with the first three months of 2001.
The increase reflects increased utility construction expenditures in the first quarter of 2002 as compared with 2001 ($19.2 million) and the receipt in 2001 of proceeds from the sale of the
company's 480 MW interest in the Roseton generating station ($100.0 million, net of federal income tax). Utility construction expenditures increased in 2002 principally to meet load growth on
Con Edison of New York's electric distribution system and the World Trade Center restoration effort.

39

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Con
Edison's investments in non-utility plant increased $123.1 million during the first three months of 2002 compared with the first three months of 2001, due
principally to generation projects of Consolidated Edison Development, Inc. (Con Edison Development) and higher build-out costs for Consolidated Edison Communications, Inc.
(Con Edison Communications).

Net
cash flows from financing activities during the first three months of 2002 increased $125.2 million compared with the first three months of 2001, reflecting principally
increased net proceeds from commercial paper ($126.7 million).

In
April 2002, Con Edison issued $325 million aggregate principal amount of 7.25% 40-year debentures, the proceeds of which were used to repay commercial paper.

Capital Resources

Con Edison's ratio of earnings to fixed charges (for the 12 months ended on the date indicated) and common equity ratio (as of the date indicated) were:

|                          |  | March 31, 2002 |  | December 31, 2001
|------------------------- |  | -------------- |  | -----------------
|Earnings to fixed charges |  | 3.45           |  | 3.49             
|Common equity ratio*      |  | 50.1           |  | 49.8             

---

Con
Edison's ratio of earnings to fixed charges decreased for the 12-month period ending March 31, 2002 compared to the 12-month period ending
December 31, 2001 as a result of decreased earnings.

Contractual Obligations and Commercial Commitments

Reference is made to "Contractual Obligations and Commercial Commitments" in Con Edison's Form 10-K MD&A. At March 31, 2002 there was no
material change in the company's contractual obligations and commercial commitments compared to those at December 31, 2001.

Non-Exchange Traded Contracts Accounted For at Fair Value

Unregulated subsidiaries of Con Edison engage in energy trading activities in relation to which Con Edison recognized in income in the first quarter of 2002
$4.4 million of mark-to-market pre-tax gains, reflecting changes in the fair value of derivative financial and commodity instruments. See "Financial Market
Risks," below, Note D to the Con Edison financial statements included in Part 1, Item 1 of this report and Note O to the Con Edison financial statements included in Item 8 of the
Form 10-K. See "Financial Market Risk" below.

Regulatory Matters

In April 2002 the New York Public Service Commission approved a three-year gas rate and restructuring plan that will reduce rates by
$25 million per year for three years. Reference is made to "Regulatory Matters" in Con Edison's Form 10-K MD&A.

FINANCIAL MARKET RISKS

Con Edison's primary market risks associated with activities in derivative financial instruments, other financial instruments and derivative commodity instruments
are interest rate risk and commodity price risk.

40

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Interest Rate Risk

The interest rate risk relates primarily to new debt financing needed to fund capital requirements, including utility construction expenditures and maturing debt
securities, and to variable rate debt. Con Edison and its subsidiaries manage interest rate risk through the issuance of mostly fixed-rate debt with varying maturities and through
opportunistic refunding of debt through optional redemptions and tender offers. The company estimates that, as of March 31, 2002, a 10 percent change in interest rates applicable to its
variable rate debt would result in a change in annual interest expense of approximately $13.3 million.

In
addition, Con Edison and its subsidiaries, from time to time, have entered into derivative financial instruments to hedge interest rate risk on certain debt securities and may use
derivative financial instruments to hedge interest rate risk or changes in fair value of certain debt securities. See "Interest Rate Hedging" in Note E to the Con Edison financial statements
included in Part I, Item 1 of this report.

Commodity Price Risk

The commodity price risk relates primarily to the purchase of electricity and gas that the company's subsidiaries supply to their customers. Con Edison's utility
subsidiaries and unregulated subsidiaries use derivative instruments to hedge purchases of electricity and gas and the unregulated subsidiaries also
use such instruments for other purposes. See "Energy Price Hedging" in Note E to the Con Edison financial statements included in Part I, Item 1 of this report.

Con
Edison estimates that, as of March 31, 2002, a 10 percent change in market prices would result in a change in fair value of approximately $15.9 million for the
derivative instruments used by its utility subsidiaries to hedge purchases of electricity and gas. The company expects that any such change in fair value would be largely offset by directionally
opposite changes in the cost of the electricity and gas purchased. In general, the rates the utility subsidiaries charge customers for electric, gas and steam service are subject to change for
fluctuations in the cost of purchased power or gas, including gains or losses on such derivative instruments and related transaction costs. See "Recoverable Energy Costs" in Note A to the Con
Edison financial statements included in Item 8 of the Form 10-K.

Con
Edison's unregulated subsidiaries use a value-at-risk model to assess the market risk of their electricity and gas commodity activities. The model includes
fixed price sales commitments, physical forward contracts, and commodity derivative instruments. Value-at-risk represents the potential gain or loss on instruments or
portfolios due to changes in market factors, for a specified time period and confidence level. The unregulated subsidiaries estimate value-at-risk across their electricity and
natural gas commodity business using a delta-normal variance/covariance model with a 95 percent confidence level and assuming a one-day holding period. Since
value-at-risk is an estimate, it is not necessarily indicative of actual results that may occur. The calculated value-at-risk with respect to the
commodity price exposure associated with contractual arrangements of the unregulated subsidiaries was approximately $1.4 million as of March 31, 2002 and $1.2 million as of
December 31, 2001. The average, high, and low value-at-risk for the quarter ended March 31, 2002 was $1.1 million, $2.4 million and
$0.6 million, respectively.

Environmental Matters

For information concerning potential liabilities of Con Edison arising from laws and regulations protecting the environment, including the Federal Comprehensive
Environmental Response, Compensation and Liability Act of 1980 (Superfund), see the notes to the Con Edison's financial statements included in Part I, Item 1 of this report.

41

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RESULTS OF OPERATIONS

First Quarter of 2001 Compared with First Quarter of 2000

Con Edison's net income for common stock for the first quarter of 2002 was $166.6 million or $.78 a share (based upon an average of 212.3 million
common shares outstanding) compared with $179.1 million or $.84 a share (based upon an average of 212.0 million common shares outstanding) for the first quarter of 2001. The decrease in
the company's net income reflects reduced sales and deliveries resulting from the exceptionally warm winter weather and the economic slowdown, offset in part by lower other operations, maintenance and
depreciation expenses.

Earnings
for the quarters ended March 31, 2002 and 2001 were as follows:

|                         |  | 2002 |       | 2001 |  
|------------------------ |  | ---- | ----- | ---- | -
|
|Con Edison of New York   |  | $    | 150.7 |      | $
|O&R                      |  |      | 12.4  |      |  
|Unregulated subsidiaries |  |      | 4.5   |      |  
|Other*                   |  |      | (1.0  | )    |  
|                         |  |      |       |      |  
|Con Edison               |  | $    | 166.6 |      | $
|                         |  |      |       |      |  

---

A
comparison of the results of operations of Con Edison for the first quarter of 2002 compared to the first quarter of 2001 follows.

Three Months Ended March 31, 2002 Compared With Three Months Ended March 31, 2001

|                                                                                          |  | Increases (Decreases)
Amount |        | Increases (Decreases)
Percent |      
|----------------------------------------------------------------------------------------- |  | ---------------------------- | ------ | ----------------------------- | -----
|
|Operating revenues                                                                        |  | $                            | (787.2 | )                             | (27.3
|Purchased powerelectric and steam                                                        |  |                              | (295.1 | )                             | (29.3
|Fuelelectric and steam                                                                   |  |                              | (119.5 | )                             | (64.9
|Gas purchased for resale                                                                  |  |                              | (227.1 | )                             | (49.7
|Operating revenues less purchased power, fuel and gas purchased for resale (net revenues) |  |                              | (145.5 | )                             | (11.8
|Other operations and maintenance                                                          |  |                              | (53.6  | )                             | (13.7
|Depreciation and amortization                                                             |  |                              | (14.6  | )                             | (10.8
|Taxes, other than income tax                                                              |  |                              | (40.6  | )                             | (13.2
|Income tax                                                                                |  |                              | (7.6   | )                             | (6.5 
|Operating income                                                                          |  |                              | (29.1  | )                             | (10.1
|Other income less deductions and related federal income tax                               |  |                              | 13.1   |                               | (A   
|Net interest charges                                                                      |  |                              | (3.5   | )                             | (3.2 
|Net income for common stock                                                               |  | $                            | (12.5  | )                             | (7.0 

---

A
discussion of Con Edison's operating revenues and operating income by business segment follows. Con Edison's principal business segments are the electric, gas and steam utility
businesses of its regulated subsidiaries and the businesses of its unregulated subsidiaries. For additional information

42

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about the segments, see the notes to the Con Edison financial statements included in Part I, Item 1 of this report.

Electric

Con Edison's electric operating revenues in the first quarter of 2002 decreased $406.5 million compared with the first quarter of 2001. The decrease
reflects net rate reductions of approximately $82.7 million pursuant to the 1997 restructuring agreement; lower fuel and purchased power costs of $237.5 million (discussed below), and
reduced sales and deliveries of $20.3 million resulting from the very mild winter weather and economic slowdown. See "Recoverable Energy Costs" and "Rate and Restructuring Agreements" in
Note A to the Con Edison financial statements included in Item 8 of the Form 10-K.

Electricity
sales volumes for Con Edison's utility subsidiaries decreased 3.3 percent in the first quarter of 2002 compared with the first quarter of 2001. Con Edison of New York
and O&R electric sales volumes for these periods are shown at the bottom of their consolidated income statements included in Part I, Item 1 of this report. After adjusting for variations,
principally weather and billing days, in each period, electricity sales volumes for Con Edison of New York and O&R decreased 1.0 percent and increased 4.0 percent, respectively in the
2002 period. Weather-adjusted sales represent an estimate of the sales that would have been made if historical average weather conditions had prevailed.

Purchased
power costs decreased $237.5 million in the first quarter of 2002 compared with the first quarter of 2001, due to a decrease in the price of purchased power, offset in
part by increased purchased volumes resulting from Con Edison of New York's sale of its nuclear generating unit in September 2001. Fuel costs decreased $46.0 million as a result of
decreased generation. In general, Con Edison's utility subsidiaries recover prudently incurred purchased power costs pursuant to rate provisions approved by the relevant state public utility
commission. See "Recoverable Energy Costs" in Note A to the Con Edison financial statements included in Item 8 of the Form 10-K.

Con
Edison's electric operating income decreased $24.9 million in the first quarter of 2002 compared with the first quarter of 2001. The principal components of the decrease were
a decrease in net revenues (operating revenues less fuel and purchased power costs) of $125.0 million. The decrease in net revenues reflects decreased sales due principally to the weather and
economic climate ($20.3 million), a reserve related to the sale of the company's nuclear generating unit ($16.1 million) and electric rate reductions of $82.7 million. The
decrease in net electric revenues is offset in part by reduced other operations and maintenance expenses of $56.9 million and decreased depreciation expenses of $13.6 million resulting
primarily from the sale in September 2001 of the company's nuclear generating unit. The decrease also reflects lower revenue taxes of $24.3 million.

Gas

Con Edison's gas operating revenues decreased $228.0 million, while the cost of purchased gas decreased by $221.4 million in the first quarter of
2002 compared with the prior year. The lower revenues reflect reduced sales to gas customers, resulting primarily from the very mild winter weather. Gas operating income decreased $0.5 million
in the first quarter of 2002, reflecting the $6.6 million decrease in net revenues (operating revenues less gas purchased for resale), as well as increased depreciation and amortization
expenses ($1.1 million), increased property tax expense ($5.6 million) and increased income tax ($5.0 million), offset in part by reduced transmission and distribution expenses
($4.7 million), and reduced revenue taxes ($11.3 million).

Gas
sales and transportation volumes for full service customers for Con Edison's utility subsidiaries decreased 16.1 percent in the first quarter of 2002 compared with the first
quarter of 2001 resulting primarily from the very mild winter weather. Con Edison of New York and O&R gas sales and

43

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transportation volumes for these periods are shown at the bottom of their consolidated income statements included in Part I, Item 1 of this report. After adjusting for variations, principally
weather and billing days, in each period, firm gas sales and transportation volumes in the 2001 period decreased 0.3 percent for Con Edison of New York and decreased 3.9 percent for O&R.
Weather-adjusted sales represent an estimate of the sales that would have been made if historical average weather conditions had prevailed.

A
weather-normalization provision that applies to the gas business of Con Edison's utility subsidiaries moderates, but does not eliminate, the effect of weather-related changes on gas
operating income.

Steam

Con Edison's steam operating revenues decreased $116.8 million and steam operating income decreased $13.2 million for the first quarter of 2002 compared
with the first quarter of 2001. The lower revenues reflect reduced sales volumes and lower fuel and purchased power costs. See "Recoverable Energy Costs" in Note A to the company's financial
statements included in Item 8 of the Form 10-K. The decrease in operating income reflects primarily a decrease in net revenues (operating revenues less fuel and purchased power
costs) of $31.8 million, offset in part by lower income tax ($10.7 million) and revenue taxes ($6.4 million).

Steam
sales volume (see bottom of the Con Edison of New York consolidated income statement included in Part I, Item 1 of this report) decreased 24.3 percent in the 2002
period compared with the 2001 period, reflecting primarily the very warm winter weather. After adjusting for variations, principally weather and billing days, in each period, steam sales volume
decreased 1.1 percent.

Unregulated Business

Earnings for the unregulated subsidiaries increased $4.8 million in the first quarter of 2002 compared with the first quarter of 2001. The increase is due
principally to higher net income for Con Edison Solutions of $12.3 million, reflecting higher gross margins for electric and gas commodity margins and unrealized
mark-to-market gains of $3.1 million. This increase was offset in part by a decrease in net income for Con Edison Communications of $6.3 million, reflecting
principally a $6.7 million write-down of its investment in Neon Communications Inc. (NEON).

Other Income

Other income increased $13.1 million in the first quarter of 2002 compared to the first quarter of 2001, due to reduced income taxes of
$11.2 million primarily attributable to the recognition of tax benefits relating to the September 2001 sale of Con Edison of New York's nuclear generating unit and the
write-down of the NEON investment ($6.0 million and $3.1 million, respectively). In addition, the increase reflects the cessation of goodwill amortization in accordance with
Statement of Financial Accounting Standard No. 142 ($3.1 million). See "New Financial Accounting Standards" in Note A to the Con Edison financial statements included in Item 8 of
the Form 10-K and increased allowance for equity funds used during construction of $4.0 million, as a result of the East River re-powering project.

Net Interest Charges

Net interest charges decreased $3.5 million in the first quarter of 2002 compared to the 2001 period, reflecting principally decreased interest expense on
long-term debt borrowings ($5.2 million), offset in part by increased interest expense on regulatory deferrals ($1.7 million).

44

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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

CON EDISON OF NEW YORK

Consolidated Edison Company of New York, Inc. (Con Edison of New York) is a regulated utility that provides electric service to over 3.1 million
customers and gas service to over 1.1 million customers in New York City and Westchester County. It also provides steam service in parts of Manhattan. All of the common stock of Con Edison of
New York is owned by Consolidated Edison, Inc. (Con Edison).

This
discussion and analysis should be read in conjunction with Con Edison of New York's Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) in
Item 7 of the combined Con Edison, Con Edison of New York and Orange and Rockland Utilities, Inc. (O&R) Annual Reports on Form 10-K for the year ended December 31,
2001 (File Nos. 1-14514, 1-1217 and 1-4315, the Form 10-K). Reference is also made to the notes to the financial statements in Part I,
Item 1 of this report, which notes are incorporated herein by reference.

CRITICAL ACCOUNTING POLICIES

Reference is made to "Critical Accounting Policies" in Con Edison of New York's Form 10-K MD&A.

LIQUIDITY AND CAPITAL RESOURCES

Con Edison of New York's liquidity is dependent on its cash flows from its operating, investing and financing activities listed on the accompanying consolidated
statement of cash flows and discussed below. As a result of these activities cash and temporary cash investments decreased $187.9 million during the first quarter of 2002.

Cash Flows from Operating Activities

Net cash flows from operating activities during the first three months of 2002 were $41.4 million, $115.3 million less than the first three months
of 2001. This decrease reflects principally lower net income, increased receivables and prepayments and decreased accounts payable, offset in part by lower recoverable energy costs.

Con
Edison of New York's customer accounts receivable, less allowance for uncollectible accounts increased $35.0 million at March 31, 2002 compared with
year-end 2001 due primarily to timing of customer payments. The company's equivalent number of days of revenue outstanding (ENDRO) was 27.2 days at March 31, 2002 compared
with 29.6 days at December 31, 2001. The decrease in ENDRO is due to a reduction in receivables carried on level billing accounts and customer installment agreements along with overall
improved collections.

Other
accounts receivable increased $82.9 million at March 31, 2002 compared with year-end 2001, due primarily to higher intercompany billings between Con
Edison of New York and the other subsidiaries of Con Edison, Inc. See Note M to the Con Edison of New York financial statements included in Item 8 of the Form 10-K.

Prepayments
at March 31, 2002 include prepaid property taxes of $139.0 million, compared with $9.6 million at December 31, 2001. Property taxes are generally
prepaid on January 1 and July 1 of each year.

Accrued
pension credits increased $85.4 million at March 31, 2002 compared with December 31, 2001, reflecting favorable past performance in the company's pension
fund and assumptions about future performance. See Note D to the Con Edison of New York financial statements included in Item 8 of the Form 10-K.

45

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The
regulatory asset for deferred recoverable energy costs decreased $17.1 million at March 31, 2002 compared with year-end 2001, reflecting decreased purchased
power and gas costs resulting from lower sales volumes. Deferred recoverable energy cost also decreased due to the ongoing recovery of previously deferred amounts, offset in part by the deferral for
future recovery of additional purchased power and gas costs. See "Recoverable Energy Costs" in Note A to the Con Edison of New York financial statements included in Item 8 of the
Form 10-K.

The
regulatory asset for deferred revenue tax increased $13.6 million at March 31, 2002 compared with December 31, 2001, due primarily to the deferral for future
recovery of the MTA Business Tax Surcharge, offset in part by the recovery of previously deferred amounts.

Other
regulatory assets increased $12.8 million at March 31, 2002 compared with year-end 2001, due primarily to an increase of $12.1 million in the
deferral related to New York State tax law changes.

Pension
and benefits reserve increased $20.7 million at March 31, 2002 compared with year-end 2001 due primarily to an increase in the cost of postretirement
benefits ($16.5 million). See Note E to the Con Edison of New York financial statements included in Item 8 of the Form 10-K.

Accounts
payable decreased $24.3 million at March 31, 2002 compared with year-end 2001, due primarily to lower energy prices in March 2002 as compared to
December 2001.

Accrued
taxes decreased $60.1 million at March 31, 2002 compared with year-end 2001, primarily because, in light of the World Trade Center attack, the Federal
government extended to January 2002 the due date for final payment of income taxes. As a result, the payment normally made in December was not made until mid-January 2002.

Proceeds
from the auction of transmission congestion contracts increased $48.5 million at March 31, 2002 compared with year-end 2001. The company sells rights
to use its transmission system for specified periods of time, pursuant to procedures established by the New York Independent System Operator (NYISO). These auction proceeds are deferred for customer
benefit and will be refunded to customers at a future date.

Other
regulatory liabilities increased $50.0 million at March 31, 2002 compared with year-end 2001, principally reflecting in part unrealized
mark-to-market gains on transactions entered into in order to hedge purchases of electricity and gas against adverse market price fluctuations ($19.6 million). The
company refunds to or collects from its customers its hedging gains or losses, pursuant to rate provisions that permit recovery of the cost of purchased power and gas. See "Recoverable Energy Costs"
in Note A to the Con Edison of New York financial statements included in Item 8 of Form 10-K and Note D to the Con Edison of New York financial statements included in
Part I, Item 1 of this
report. The increase is also due to Con Edison of New York accruing an additional $11.1 million for gas rate reductions pursuant to the gas rate agreement discussed below in regulatory matters.

Cash Flows Used in Investing and Financing Activities

Net cash flows used in investing activities during the first three months of 2002 increased $106.9 million compared with the first three months of 2001.
The increase reflects increased construction expenditures in the first quarter of 2002 as compared with 2001 ($20.0 million) and the receipt in 2001 of proceeds from the sale of the company's
480 MW interest in the Roseton generating station ($100.0 million, net of federal income tax). Construction expenditures increased in 2002 principally to meet load growth on the company's
electric distribution system and the World Trade Center restoration effort.

46

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Net
cash flows used in financing activities during the first three months of 2002 decreased $68.8 million compared with the first three months of 2001, reflecting principally
increased net proceeds from commercial paper ($52.0 million).

Capital Resources

Con Edison of New York's ratio of earnings to fixed charges (for the 12 months ended on the date indicated) and common equity ratio (as of the date
indicated) were:

|                          |  | March 31, 2002 |  | December 31, 2001
|------------------------- |  | -------------- |  | -----------------
|Earnings to fixed charges |  | 3.58           |  | 3.66             
|Common equity ratio*      |  | 47.4           |  | 47.2             

---

Con
Edison of New York's ratio of earnings to fixed charges decreased for the 12-month period ending March 31, 2002 compared to the 12-month period ending
December 31, 2001 as a result of decreased earnings.

Contractual Obligations and Commercial Commitments

Reference is made to "Contractual Obligations and Commercial Commitments" in Con Edison of New York's Form 10-K MD&A. At March 31, 2002
there was no material change in the company's contractual obligations and commercial commitments compared to those at December 31, 2001.

Non-Exchange Traded Contracts Accounted For at Fair Value

Con Edison of New York has not engaged to a material extent in trading activities that are accounted for at fair value. See "Financial Market Risks," below and
Note O to the Con Edison of New York financial statements included in Item 8 of the Form 10-K.

Regulatory Matters

In April 2002 the NYPSC approved a three-year gas rate and restructuring plan that will reduce rates by $25 million per year for three
years. Reference is made to "Regulatory Matters" in Con Edison of New York's Form 10-K MD&A.

FINANCIAL MARKET RISKS

Con Edison of New York's primary market risks associated with activities in derivative financial instruments, other financial instruments and derivative commodity
instruments are interest rate risk and commodity price risk.

Interest Rate Risk

The interest rate risk relates primarily to new debt financing needed to fund capital requirements, including utility construction expenditures and maturing debt
securities, and to variable rate debt.

Con
Edison of New York manages interest rate risk through the issuance of mostly fixed-rate debt with varying maturities and through opportunistic refunding of debt through
optional redemptions and tender offers. The company estimates that, as of March 31, 2002, a 10 percent change in interest rates applicable to its variable rate debt would result in a
change in annual interest expense of approximately $10.2 million.

47

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In
addition, Con Edison of New York, from time to time, has entered into derivative financial instruments to hedge interest rate risk on certain debt securities and may use derivative
financial instruments to hedge interest rate risk or changes in fair value of certain debt securities. See "Interest Rate Hedging" in Note D to the Con Edison of New York financial statements
included in Part I, Item 1 of this report.

Commodity Price Risk

The commodity price risk relates primarily to the purchase of electricity and gas that Con Edison of New York supplies to its customers. Con Edison of New York
uses derivative instruments to hedge purchases of electricity and gas. See "Energy Price Hedging" in Note E to the Con Edison of New York financial statements included in Part I,
Item 1 of this report.

Con
Edison of New York estimates that, as of March 31, 2002, a 10 percent change in market prices would result in a change in fair value of approximately
$12.8 million for the derivative instruments used by it to hedge purchases of electricity and gas. The company expects that any such change in fair value would be largely offset by
directionally opposite changes in the cost of the electricity and gas purchased. In general, the rates Con Edison of New York charges customers for electric, gas and steam service are subject to
change for fluctuations in the cost of purchased power or gas, including gains or losses on such derivative instruments and related transaction costs. See "Recoverable Energy Costs" in Note A
to the Con Edison of New York financial statements included in Item 8 of the Form 10-K.

Environmental Matters

For information concerning potential liabilities of Con Edison of New York arising from laws and regulations protecting the environment, including the Federal
Comprehensive Environmental Response, Compensation and Liability Act of 1980 (Superfund), see the notes to the Con Edison of New York financial statements included in Part I, Item 1 of this
report.

RESULTS OF OPERATIONS

First Quarter of 2002 Compared with First Quarter of 2001

Con Edison of New York's net income for common stock for the first quarter of 2002 was $150.7 million compared with $171.8 million for the first
quarter of 2001. The decrease in the company's net income reflects reduced sales and deliveries resulting from exceptionally warm winter weather and the economic slowdown, offset in part by lower
other operations, maintenance and depreciation expenses.

A
comparison of the results of operations of Con Edison of New York for the first quarter of 2002 with the results for the first quarter of 2001 follows.

48

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Three Months Ended March 31, 2002 Compared With Three Months Ended March 31, 2001

|                                                                                          |  | Increases (Decreases)
Amount |        | Increases (Decreases)
Percent |      
|----------------------------------------------------------------------------------------- |  | ---------------------------- | ------ | ----------------------------- | -----
|
|Operating revenues                                                                        |  | $                            | (679.8 | )                             | (27.9
|Purchased powerelectric and steam                                                        |  |                              | (226.4 | )                             | (29.0
|Fuelelectric and steam                                                                   |  |                              | (109.4 | )                             | (64.3
|Gas purchased for resale                                                                  |  |                              | (184.6 | )                             | (50.6
|Operating revenues less purchased power, fuel and gas purchased for resale (net revenues) |  |                              | (159.4 | )                             | (14.2
|Other operations and maintenance                                                          |  |                              | (55.3  | )                             | (16.4
|Depreciation and amortization                                                             |  |                              | (12.6  | )                             | (10.5
|Taxes, other than income tax                                                              |  |                              | (39.3  | )                             | (13.6
|Income tax                                                                                |  |                              | (14.4  | )                             | (13.1
|Operating income                                                                          |  |                              | (37.8  | )                             | (14.2
|Other income less deductions and related income tax                                       |  |                              | 13.9   |                               | (A   
|Net interest charges                                                                      |  |                              | (2.7   | )                             | (2.9 
|Net income for common stock                                                               |  | $                            | (21.2  | )                             | (12.3

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A
discussion of Con Edison of New York's operating revenues and operating income by business segment follows. Con Edison of New York's principal business segments are its regulated
electric, gas and steam utility businesses. For additional information about the segments, see Note E to the Con Edison of New York financial statements included in Part I, Item 1 of
this report.

Electric

Con Edison of New York's electric operating revenues in the first quarter of 2002 decreased $374.4 million compared with the first quarter of 2001. The
decrease reflects net rate reductions of approximately $82.7 million pursuant to the 1997 restructuring agreement, lower fuel and purchased power costs of $204.8 million (discussed
below), and reduced sales and deliveries of $20.3 million resulting from the very mild winter weather and economic slowdown. See "Recoverable Energy Costs" and "Rate and Restructuring
Agreements" in Note A to the Con Edison of New York financial statements included in Item 8 of the Form 10-K.

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Con
Edison of New York's electric sales and deliveries, excluding off-system sales, for the first quarter of 2002 compared with the first quarter of 2001 were:

Millions of Kwhrs.

|Description                            |                              | Three Months Ended
March 31, 2002 |        | Three Months Ended
March 31, 2001 |        | Variation |      | Percent
Variation |     
|-------------------------------------- | ---------------------------- | --------------------------------- | ------ | --------------------------------- | ------ | --------- | ---- | ----------------- | ----
|Residential/Religious                  |                              | 2,768                             |        | 2,850                             |        | (82       | )    | (2.9              | )%  
|Commercial/Industrial                  |                              | 4,436                             |        | 4,860                             |        | (424      | )    | (8.7              | )   
|Other                                  |                              | 34                                |        | 38                                |        | (4        | )    | (10.5             | )   
|                                       |                              |                                   |        |                                   |        |           |      |                   |     
|                                       | Total Full Service Customers |                                   | 7,238  |                                   | 7,748  |           | (510 | )                 | (6.6
|Retail Choice Customers                |                              | 2,655                             |        | 2,440                             |        | 215       |      | 8.8               |     
|                                       |                              |                                   |        |                                   |        |           |      |                   |     
|                                       | Sub-total                    |                                   | 9,893  |                                   | 10,188 |           | (295 | )                 | (2.9
|NYPA, Municipal Agency and Other Sales |                              | 2,381                             |        | 2,557                             |        | (176      | )    | (6.9              | )   
|                                       |                              |                                   |        |                                   |        |           |      |                   |     
|                                       | Total Service Area           |                                   | 12,274 |                                   | 12,745 |           | (471 | )                 | (3.7
|                                       |                              |                                   |        |                                   |        |           |      |                   |     

Electricity
sales volume in Con Edison of New York's service territory decreased 3.7 percent in the first quarter of 2002 compared with the first quarter of 2001. The decrease in
sales volume reflects the extremely mild 2002 winter weather compared to the 2001 period and the relatively weak economic climate. After adjusting for variations, principally weather and billing days,
in each period, electricity sales volume in the service territory decreased 1.0 percent in the 2002 period. Weather-adjusted sales represent an estimate of the sales that would have been made
if historical average weather conditions had prevailed.

Con
Edison of New York's purchased power costs decreased $204.8 million in the first quarter of 2002 compared with the first quarter of 2001, due to a decrease in the price of
purchased power, offset in part by increased purchased volumes resulting from the sale of the company's nuclear generating unit in September 2001. Fuel costs decreased $46.0 million as a
result of decreased generation. In general, Con Edison of New York recovers prudently incurred purchased power costs pursuant to rate provisions approved by the NYPSC. See "Recoverable Energy Costs"
in Note A to the Con Edison of New York financial statements included in Item 8 of the Form 10-K.

Con
Edison of New York's electric operating income decreased $24.1 million in the first quarter of 2002 compared with the first quarter of 2001. The principal components of the
decrease were a decrease in net revenues (operating revenues less fuel and purchased power costs) of $123.6 million. The decrease in net revenues reflects decreased sales due principally to the
weather and economic climate ($20.3 million), a reserve related to the sale of the company's nuclear generating unit ($16.1 million) and electric rate reductions of $82.7 million.
The decrease in net electric revenues is offset in part by reduced other operations and maintenance expenses of $56.3 million and decreased depreciation expense of $13.9 million
resulting primarily from the sale in September 2001 of the company's nuclear generating unit. The decrease also reflects lower revenue taxes of $23.8 million.

Gas

Con Edison of New York's gas operating revenues decreased $188.6 million, while the cost of purchased gas decreased by $184.6 million in the first
quarter of 2002 compared with the prior year. The lower revenues reflect reduced sales to gas customers, resulting primarily from the very mild winter weather. Gas operating income decreased
$0.5 million in the first quarter of 2002, reflecting the $4.0 million decrease in net revenues (operating revenues less gas purchased for resale), as well as increased depreciation and
amortization expenses ($1.1 million), increased property tax expense

50

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($5.4 million) and increased income tax ($5.2 million), offset in part by reduced transmission and distribution expenses ($4.3 million), and reduced revenue taxes
($10.0 million).

Con
Edison of New York's gas sales and transportation volumes for full service customers (see bottom of the company's consolidated income statement included in Part I, Item 1 of
this report) decreased 16.8 percent in the first quarter of 2002 compared with the 2001 period. After adjusting for variations,
principally weather and billing days, in each period, firm gas sales and transportation volumes in the company's service territory decreased 0.3 percent in the 2002 period. Weather-adjusted
sales represent an estimate of the sales that would have been made if historical average weather conditions had prevailed.

A
weather-normalization provision that applies to Con Edison of New York's gas business moderates, but does not eliminate, the effect of weather-related changes on gas operating income.

Steam

Con Edison of New York's steam operating revenues decreased $116.8 million and steam operating income decreased $13.2 million for the first quarter
of 2002 compared with the first quarter of 2001. The lower revenues reflect reduced sales volumes and lower fuel and purchased power costs. See "Recoverable Energy Costs" in Note A to the Con
Edison financial statements included in Item 8 of the Form 10-K. The decrease in operating income reflects primarily a decrease in net revenues (operating revenues less fuel and
purchased power costs) of $31.8 million, offset in part by lower income tax ($10.7 million) and revenue taxes ($6.4 million).

Con
Edison of New York's steam sales volume (see bottom of the company's consolidated income statement included in Part I, Item 1 of this report) decreased 24.3 percent in
the 2002 period compared with the 2001 period, reflecting primarily the very warm winter weather. After adjusting for variations, principally weather and billing days, in each period, steam sales
volume decreased 1.1 percent.

Other Income

Other income increased $13.9 million in the first quarter of 2002 compared to the first quarter of 2001, due to reduced income taxes of $7.5 million
primarily attributable to the recognition of tax benefits relating to the September 2001 sale of Con Edison of New York's nuclear generating unit ($6.0 million) and an increase in
allowance for equity funds used during construction of $4.0 million as a result of the East River re-powering project.

Net Interest Charges

Net interest charges decreased $2.8 million in the first quarter of 2002 compared to the 2001 period, reflecting principally decreased interest on
long-term debt ($4.9 million), offset in part by increased interest expense on regulatory deferrals ($1.7 million).

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O&R Management's Narrative Analysis of the Result of Operations

Orange
and Rockland Utilities, Inc. (O&R), a wholly-owned subsidiary of Consolidated Edison, Inc. (Con Edison), meets the conditions specified in General Instruction H to
Form 10-Q and is permitted to use the reduced disclosure format for wholly-owned subsidiaries of companies, such as Con Edison, that are reporting companies under the Securities
Exchange Act of 1934. Accordingly, this O&R Management's Narrative Analysis of the Results of Operations is included in this report, and O&R has omitted from this report the information called for by
Part I, Item 2 (Management's Discussion and Analysis of Financial Condition and Results of Operations).

O&R's
net income for common stock for the three-month period ended March 31, 2002 was $12.4 million, $0.8 million lower than the corresponding 2001 period. The
decrease was attributable primarily to lower revenues. Gas sales were 13.4 percent lower than the prior year as a result of very warm winter weather. O&R's weather normalization clause
mitigates, but does not eliminate, the impact of weather on net gas income. Customer late payment charge revenues decreased by 44 percent, as a result of decrease in the cost of energy billed
to customers. Other operating and maintenance expenditures were lower in the current period, offsetting in part the impact of the lower revenues.

A
comparison of the results of operations of O&R for the three months ended March 31, 2002 to the three months ended March 31, 2001, follows.

|(Millions of dollars)                                                                     |  | Increases
(Decreases)
Amount |       | Increases
(Decreases)
Percent |      
|----------------------------------------------------------------------------------------- |  | ---------------------------- | ----- | ----------------------------- | -----
|Operating revenues                                                                        |  | $                            | (73.4 | )                             | (32.0
|Purchased power  electric                                                                |  |                              | (32.7 | )                             | (46.2
|Gas purchased for resale                                                                  |  |                              | (36.7 | )                             | (50.7
|Operating revenues less purchased power, fuel and gas purchased for resale (net revenues) |  |                              | (4.0  | )                             | (4.6 
|Other operation and maintenance expenses                                                  |  |                              | (1.7  | )                             | (4.8 
|Depreciation and amortization                                                             |  |                              | 0.2   |                               | 2.6  
|Taxes, other than income tax                                                              |  |                              | (1.8  | )                             | (12.2
|Income tax                                                                                |  |                              | (0.1  | )                             | (1.3 
|Operating income                                                                          |  |                              | (0.6  | )                             | (3.0 
|Other income less deductions and related income tax                                       |  |                              | (0.6  | )                             | (a   
|Net interest charges                                                                      |  |                              | (0.4  | )                             | (5.8 
|Net income for common stock                                                               |  | $                            | (0.8  | )                             | (6.0 

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A
discussion of O&R's operating revenues by business segment follows. O&R's principal business segments are its electric and gas utility businesses. For additional information about
O&R's business segments, see the notes to the O&R financial statements included in Part I, Item 1 of this report.

Electric

Electric
operating revenues decreased $34.1 million during the three months ended March 31, 2002 compared to the 2001 period. This decrease was primarily the result of
lower purchased power costs in the 2002 period. See "Recoverable Energy Costs" in Note A to the O&R financial statements in Item 8 of the combined O&R, Con Edison and Consolidated Edison
Company of New York, Inc. Annual Reports on Form 10-K for the year ended December 31, 2001 (file Nos. 1-4315, 1-14514 and 1-1217,
the Form 10-K).

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Electric
sales volumes in the three months ended March 31, 2002 increased 0.8 percent compared to the 2001 period. After adjusting for weather variations, total electricity
sales volumes were 4.0 percent higher in the current year. Weather-adjusted sales represent an estimate of the sales that would have been made if historical average weather conditions had
prevailed. Net electric revenues (operating revenues less purchased power and associated tax recoveries) were modestly higher in the current period.

Purchased
power costs decreased $32.7 million for the three months ended March 31, 2002 compared to the 2001 period, reflecting decreases in the unit cost of purchased
power, partially offset by higher energy requirements.

Electric
operating income decreased $0.7 million during the first three months of 2002, compared to the 2001 period. This decrease reflects lower late payment charge revenues,
higher retail access program costs and higher taxes incurred in the current period.

Gas

Gas
operating revenues decreased $39.4 million during the first three months of 2002, compared to the 2001 period. This decrease was primarily the result of lower gas costs in the
2002 period. See "Recoverable Energy Costs" in Note A to the O&R financial statements in Item 8 of the Form 10-K.

Total
gas sales volumes in the three months ended March 31, 2002 decreased 13.4 percent compared to the 2001 period. O&R's revenues from gas sales in New York are subject
to a weather normalization clause that moderates, but does not eliminate, the effect of weather-related changes on net income. After adjusting for weather variations in each period, total sales and
transportation volumes were 3.9 percent lower for the 2002 period compared to the 2001 period.

The
cost of gas purchased for resale decreased $36.8 million in the 2002 period compared to the 2001 period, due to the lower sales volumes and unit costs.

Gas
operating income increased slightly during the first three months of 2002, compared to the 2001 period, reflecting lower operation and maintenance expenses, offset by lower net
revenues.

Taxes Other Than Income Taxes

Taxes
other than income tax decreased by $1.8 million in the 2002 period compared to the 2001 period. The decrease was primarily the result of lower New York State revenue taxes,
which resulted from the reduced energy costs billed to customers.

Other Income

Other
income decreased $0.6 million in the 2002 period compared to the 2001 period, due primarily to lower earnings on short-term investments during the current year.

Net Interest Charges

Interest
charges decreased by $0.4 million in the 2002 period compared to the 2001 period reflecting lower average debt balances and lower average interest rates in the 2002
period, offset in part by lower allowance for borrowed funds used during construction.

Income Taxes

Income
tax decreased $0.1 million in the 2002 period compared to the 2001 period, due to lower earnings in the current period.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

CON EDISON

For information about Con Edison's primary market risks associated with activities in derivative financial instruments, other financial instruments and derivative
commodity instruments, see "Financial Market Risks" in Con Edison's Management's Discussion and Analysis of Financial Condition and Results of Operations in Part 1, Item 2 of this report and
Item 7A of the combined Con Edison, Con Edison of New York and O&R Annual Report on Form 10-K for the year ended December 31, 2001 (the Form 10-K), which
information is incorporated herein by reference.

CON EDISON OF NEW YORK

For information about Con Edison of New York's primary market risks associated with activities in derivative financial instruments, other financial instruments
and derivative commodity instruments, see "Financial Market Risks" in Con Edison of New York's Management's Discussion and Analysis of Financial Condition and Results of Operations in Part 1,
Item 2 of this report and Item 7A of the Form 10-K, which information is incorporated herein by reference.

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PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

CON EDISON

In May 2002, Con Edison and Northeast Utilities each filed motions for summary judgment with respect to certain claims in their ongoing legal proceeding. For
additional information about this proceeding, see note D to the Con Edison financial statements included in Part I, Item 1 of this report (which information is incorporated herein by reference).

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

CON EDISON

|Exhibit 10.1 |  | Amendment, dated April 8, 2002, to The Consolidated Edison, Inc. Stock Purchase Plan. (Incorporated by reference to Exhibit 10.2 to Con Edison's Registration Statement on Form S-8 (No. 333-86820).)
|------------ |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit 12.1 |  | Statement of computation of Con Edison's ratio of earnings to fixed charges for the twelve-month periods ended March 31, 2002 and December 2001.                                                     

CON EDISON OF NEW YORK

|Exhibit 12.2 |  | Statement of computation of Con Edison of New York's ratio of earnings to fixed charges for the twelve-month periods ended March 31, 2002 and December 2001.
|------------ |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------

O&R

|Exhibit 12.3 |  | Statement of computation of O&R's ratio of earnings to fixed charges for the twelve-month periods ended March 31, 2002 and December 2001.
|------------ |  | -----------------------------------------------------------------------------------------------------------------------------------------

CON EDISON

Con Edison filed a Current Report on Form 8-K, dated March 8, 2002, filing (under Item 7) the Con Edison financial statements
that were filed again under Item 8 of the Form 10-K and furnishing (under Item 9) certain material pursuant to Regulation FD. No other Con Edison Current Report on
Form 8-K was filed during the quarter ended March 31, 2002. Con Edison filed a Current Report on Form 8-K,
dated April 3, 2002, reporting (under Item 5) the issuance and sale of $325 million aggregate principal amount of its Public Income NotES, 7.25% Debentures, Series 2002 A.

CON EDISON OF NEW YORK

Con Edison of New York filed no Current Reports on Form 8-K during the quarter ended March 31, 2002.

O&R

O&R filed no Current Reports on Form 8-K during the quarter ended March 31, 2002.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, each Registrant has duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.

|                   |  | CONSOLIDATED EDISON, INC.                    
|------------------ |  | ---------------------------------------------
|                   |  | CONSOLIDATED EDISON COMPANY OF NEW YORK, INC.
|DATE: May 14, 2002 |  | By:                                          
|                   |  | ORANGE AND ROCKLAND UTILITIES, INC.          
|DATE: May 14, 2002 |  | By:                                          

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