Form 10-QSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

|/x/                                          | Quarterly Report Pursuant To Section 13 or 15(d) of the Securities Exchange Act of 1934 
|-------------------------------------------- | ----------------------------------------------------------------------------------------
|For the quarterly period ended JUNE 30, 2003
|OR                                           |                                                                                         
|/ /                                          | Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

|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
(845) 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/x/No/ /

Indicate
by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange
Act). Yes/x/No/ /

As
of the close of business on July 31, 2003, Consolidated Edison, Inc. (Con Edison) had outstanding 224,955,797 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).

1

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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). Con Edison of New York and O&R are subsidiaries of Con Edison and
together with Con Edison are referred to in this report as "the Companies." 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.

TABLE OF CONTENTS

|                             |  |                                                                                       |  |                               |  |                                                |  | PAGE
|---------------------------- |  | ------------------------------------------------------------------------------------- |  | ----------------------------- |  | ---------------------------------------------- |  | ----
|Glossary of Terms            |  | 3                                                                                    
|PART IFinancial Information |  |                                                                                      
|Item 1                       |  | Financial Statements                                                                  |  |                              
|                             |  |                                                                                       |  | Con Edison                    |  |                                               
|                             |  |                                                                                       |  |                               |  | Consolidated Balance Sheet                     |  | 4   
|                             |  |                                                                                       |  |                               |  | Consolidated Income Statement                  |  | 6   
|                             |  |                                                                                       |  |                               |  | Consolidated Statement of Comprehensive Income |  | 7   
|                             |  |                                                                                       |  |                               |  | Consolidated Statement of Retained Earnings    |  | 7   
|                             |  |                                                                                       |  |                               |  | Consolidated Statement of Cash Flows           |  | 8   
|                             |  |                                                                                       |  | Con Edison of New York        |  |                                               
|                             |  |                                                                                       |  |                               |  | Consolidated Balance Sheet                     |  | 9   
|                             |  |                                                                                       |  |                               |  | Consolidated Income Statement                  |  | 11  
|                             |  |                                                                                       |  |                               |  | Consolidated Statement of Comprehensive Income |  | 12  
|                             |  |                                                                                       |  |                               |  | Consolidated Statement of Retained Earnings    |  | 12  
|                             |  |                                                                                       |  |                               |  | Consolidated Statement of Cash Flows           |  | 13  
|                             |  |                                                                                       |  | O&R                           |  |                                               
|                             |  |                                                                                       |  |                               |  | Consolidated Balance Sheet                     |  | 14  
|                             |  |                                                                                       |  |                               |  | Consolidated Income Statement                  |  | 16  
|                             |  |                                                                                       |  |                               |  | Consolidated Statement of Comprehensive Income |  | 17  
|                             |  |                                                                                       |  |                               |  | Consolidated Statement of Retained Earnings    |  | 17  
|                             |  |                                                                                       |  |                               |  | Consolidated Statement of Cash Flows           |  | 18  
|                             |  |                                                                                       |  | Notes to Financial Statements |  | 19                                            
|Item 2                       |  | Management's Discussion and Analysis of Financial Condition and Results of Operations |  | 36                           
|Item 3                       |  | Quantitative and Qualitative Disclosures About Market Risk                            |  | 61                           
|Item 4                       |  | Controls and Procedures                                                               |  | 61                           
|                             |  | Forward-Looking Statements                                                            |  | 61                           
|PART IIOther Information    |  |                                                                                      
|Item 1                       |  | Legal Proceedings                                                                     |  | 62                           
|Item 4                       |  | Submission of Matters to a Vote of Security Holders                                   |  | 62                           
|Item 6                       |  | Exhibits and Reports on Form 8-K                                                      |  | 64                           
|Signatures                   |  | 66                                                                                   

2

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GLOSSARY OF TERMS

The following is a glossary of frequently used abbreviations or acronyms that are found throughout this report:

|Con Edison Companies      |  |                                                         
|------------------------- |  | --------------------------------------------------------
|Companies                 |  | Con Edison, Con Edison of New York and O&R, collectively
|Con Edison                |  | Consolidated Edison, Inc.                               
|Con Edison Communications |  | Con Edison Communications, LLC                          
|Con Edison Development    |  | Consolidated Edison Development, Inc.                   
|Con Edison Energy         |  | Consolidated Edison Energy, Inc.                        
|Con Edison of New York    |  | Consolidated Edison Company of New York, Inc.           
|Con Edison Solutions      |  | Consolidated Edison Solutions, Inc.                     
|O&R                       |  | Orange and Rockland Utilities, Inc.                     
|RECO                      |  | Rockland Electric Company                               

|Regulatory and State Agencies |  |                                         
|----------------------------- |  | ----------------------------------------
|NJBPU                         |  | New Jersey Board of Public Utilities    
|NYPA                          |  | New York Power Authority                
|PSC                           |  | New York State Public Service Commission
|SEC                           |  | Securities and Exchange Commission      

|Other     |  |                                                                                      
|--------- |  | -------------------------------------------------------------------------------------
|AFDC      |  | Allowance for Funds used During Construction                                         
|dth       |  | Dekatherm                                                                            
|EITF      |  | Emerging Issues Task Force                                                           
|FASB      |  | Financial Accounting Standards Board                                                 
|Form 10-K |  | Companies' combined Annual Report on Form 10-K for the year ended December 31, 2002  
|kWh       |  | Kilowatt-hour                                                                        
|MD&A      |  | Management's Discussion and Analysis of Financial Condition and Results of Operations
|MW        |  | Megawatts or thousand kilowatts                                                      
|NYISO     |  | New York Independent System Operator                                                 
|OCI       |  | Other Comprehensive Income                                                           
|PCBs      |  | Polychlorinated biphenyls                                                            
|SFAS      |  | Statement of Financial Accounting Standards                                          
|Superfund |  | Federal Comprehensive Environmental Response, Compensation and Liability Act of 1980 
|VaR       |  | Value-at-Risk                                                                        

3

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Consolidated Edison, Inc.CONSOLIDATED BALANCE SHEET(UNAUDITED)

|                                                                |                                                                                                                         
|--------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------
|
|
|
|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 $35 and $30 in 2003 and 2002, respectively              
|                                                                | Non-utility property, less accumulated depreciation of $26 and $19 in 2003 and 2002, respectively                       
|                                                                | Construction work in progress                                                                                           
|                                                               
|NET PLANT                                                       |                                                                                                                         
|                                                               
|CURRENT ASSETS                                                  |                                                                                                                         
|                                                                | Cash and temporary cash investments                                                                                     
|                                                                | Restricted cash                                                                                                         
|                                                                | Funds held for the redemption of long-term debt                                                                         
|                                                                | Accounts receivable - customers, less allowance for uncollectible accounts of $36 and $35 in 2003 and 2002, respectively
|                                                                | Accrued unbilled revenue                                                                                                
|                                                                | Other receivables, less allowance for uncollectible accounts of $5 and $1 in 2003 and 2002, respectively                
|                                                                | Fuel, at average cost                                                                                                   
|                                                                | Gas in storage, at average cost                                                                                         
|                                                                | Materials and supplies, at average cost                                                                                 
|                                                                | Prepayments                                                                                                             
|                                                                | Other current assets                                                                                                    
|                                                               
|TOTAL CURRENT ASSETS                                            |                                                                                                                         
|                                                               
|INVESTMENTS                                                     |                                                                                                                         
|                                                               
|DEFERRED CHARGES, REGULATORY ASSETS AND NONCURRENT ASSETS       |                                                                                                                         
|                                                                | Goodwill                                                                                                                
|                                                                | Intangible assets, less accumulated amortization of $11 and $10 in 2003 and 2002, respectively                          
|                                                                | Prepaid pension costs                                                                                                   
|                                                                | Regulatory assets                                                                                                       
|                                                                | Other deferred charges and noncurrent assets                                                                            
|                                                               
|TOTAL DEFERRED CHARGES, REGULATORY ASSETS AND NONCURRENT ASSETS |                                                                                                                         
|                                                               
|TOTAL ASSETS                                                    | $                                                                                                                       
|                                                               

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

4

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Consolidated Edison, Inc.CONSOLIDATED BALANCE SHEET(UNAUDITED)

|                                                  |                                                                                                                                   |   |                                  
|------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------------- | - | ---------------------------------
|
|
|
|CAPITALIZATION AND LIABILITIES                    |                                                                                                                                   |   |                                  
|CAPITALIZATION                                    |                                                                                                                                   |   |                                  
|                                                  | Common stock, authorized 500,000,000 shares; outstanding 224,822,736 shares and 213,932,934 shares in 2003 and 2002, respectively |   | $                                
|                                                  | Retained earnings                                                                                                                 |   |                                  
|                                                  | Treasury stock, at cost: 23,210,700 shares in 2003 and 2002                                                                       |   |                                  
|                                                  | Capital stock expense                                                                                                             |   |                                  
|                                                  | Accumulated other comprehensive income (loss)                                                                                     |   |                                  
|                                                  |                                                                                                                                  
|                                                  |                                                                                                                                   |   | TOTAL COMMON SHAREHOLDERS' EQUITY
|                                                  |                                                                                                                                  
|                                                  | Preferred stock                                                                                                                   |   |                                  
|                                                  | Long-term debt                                                                                                                    |   |                                  
|                                                  |                                                                                                                                  
|TOTAL CAPITALIZATION                              |                                                                                                                                   |   | 12,748                           
|                                                  |                                                                                                                                  
|MINORITY INTERESTS                                |                                                                                                                                   |   | 9                                
|NONCURRENT LIABILITIES                            |                                                                                                                                   |   |                                  
|                                                  | Obligations under capital leases                                                                                                  |   |                                  
|                                                  | Provision for injuries and damages                                                                                                |   |                                  
|                                                  | Pension and benefits                                                                                                              |   |                                  
|                                                  | Superfund and other environmental costs                                                                                           |   |                                  
|                                                  | Independent power producer buyout                                                                                                 |   |                                  
|                                                  | Other noncurrent liabilities                                                                                                      |   |                                  
|                                                  |                                                                                                                                  
|TOTAL NONCURRENT LIABILITIES                      |                                                                                                                                   |   | 671                              
|                                                  |                                                                                                                                  
|CURRENT LIABILITIES                               |                                                                                                                                   |   |                                  
|                                                  | Long-term debt due within one year                                                                                                |   |                                  
|                                                  | Notes payable                                                                                                                     |   |                                  
|                                                  | Accounts payable                                                                                                                  |   |                                  
|                                                  | Customer deposits                                                                                                                 |   |                                  
|                                                  | Accrued taxes                                                                                                                     |   |                                  
|                                                  | Accrued interest                                                                                                                  |   |                                  
|                                                  | System benefits charge                                                                                                            |   |                                  
|                                                  | Accrued wages                                                                                                                     |   |                                  
|                                                  | Other current liabilities                                                                                                         |   |                                  
|                                                  |                                                                                                                                  
|TOTAL CURRENT LIABILITIES                         |                                                                                                                                   |   | 2,051                            
|                                                  |                                                                                                                                  
|DEFERRED CREDITS AND REGULATORY LIABILITIES       |                                                                                                                                   |   |                                  
|                                                  | Deferred income taxes                                                                                                             |   |                                  
|                                                  | Deferred investment tax credits                                                                                                   |   |                                  
|                                                  | Regulatory liabilities                                                                                                            |   |                                  
|                                                  | Other deferred credits                                                                                                            |   |                                  
|                                                  |                                                                                                                                  
|TOTAL DEFERRED CREDITS AND REGULATORY LIABILITIES |                                                                                                                                   |   | 3,802                            
|                                                  |                                                                                                                                  
|TOTAL CAPITALIZATION AND LIABILITIES              |                                                                                                                                   | $ | 19,281                           
|                                                  |                                                                                                                                  

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

5

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Consolidated Edison, Inc.CONSOLIDATED INCOME STATEMENT(UNAUDITED)

|                                                                                 |                                                            | For the Three Months
Ended June 30, |       | For the Six Months
Ended June 30, |  
|-------------------------------------------------------------------------------- | ---------------------------------------------------------- | ----------------------------------- | ----- | --------------------------------- | -
|
|
|
|OPERATING REVENUES                                                               |                                                            |                                     |       |                                   |  
|                                                                                 | Electric                                                   |                                     | $     | 1,561                             |  
|                                                                                 | Gas                                                        |                                     |       | 326                               |  
|                                                                                 | Steam                                                      |                                     |       | 97                                |  
|                                                                                 | Non-utility                                                |                                     |       | 192                               |  
|                                                                                 |                                                           
|TOTAL OPERATING REVENUES                                                         |                                                            |                                     | 2,176 |                                   |  
|                                                                                 |                                                           
|OPERATING EXPENSES                                                               |                                                            |                                     |       |                                   |  
|                                                                                 | Purchased power                                            |                                     |       | 906                               |  
|                                                                                 | Fuel                                                       |                                     |       | 102                               |  
|                                                                                 | Gas purchased for resale                                   |                                     |       | 192                               |  
|                                                                                 | Other operations                                           |                                     |       | 280                               |  
|                                                                                 | Maintenance                                                |                                     |       | 91                                |  
|                                                                                 | Depreciation and amortization                              |                                     |       | 130                               |  
|                                                                                 | Taxes, other than income taxes                             |                                     |       | 270                               |  
|                                                                                 | Income taxes                                               |                                     |       | 41                                |  
|                                                                                 |                                                           
|TOTAL OPERATING EXPENSES                                                         |                                                            |                                     | 2,012 |                                   |  
|                                                                                 |                                                           
|OPERATING INCOME                                                                 |                                                            |                                     | 164   |                                   |  
|                                                                                 |                                                           
|OTHER INCOME (DEDUCTIONS)                                                        |                                                            |                                     |       |                                   |  
|                                                                                 | Investment income                                          |                                     |       | 2                                 |  
|                                                                                 | Allowance for equity funds used during construction        |                                     |       | 4                                 |  
|                                                                                 | Other income                                               |                                     |       | 6                                 |  
|                                                                                 | Other deductions                                           |                                     |       | (5                                | )
|                                                                                 | Income taxes                                               |                                     |       | 2                                 |  
|                                                                                 |                                                           
|TOTAL OTHER INCOME (DEDUCTIONS)                                                  |                                                            |                                     | 9     |                                   |  
|                                                                                 |                                                           
|INCOME BEFORE INTEREST CHARGES                                                   |                                                            |                                     | 173   |                                   |  
|                                                                                 |                                                           
|                                                                                 | Interest on long-term debt                                 |                                     |       | 99                                |  
|                                                                                 | Other interest                                             |                                     |       | 8                                 |  
|                                                                                 | Allowance for borrowed funds used during construction      |                                     |       | (3                                | )
|                                                                                 |                                                           
|NET INTEREST CHARGES                                                             |                                                            |                                     | 104   |                                   |  
|                                                                                 |                                                           
|INCOME BEFORE PREFERRED STOCK DIVIDENDS                                          |                                                            |                                     | 69    |                                   |  
|                                                                                 |                                                           
|PREFERRED STOCK DIVIDEND REQUIREMENTS                                            |                                                            |                                     | 3     |                                   |  
|                                                                                 |                                                           
|INCOME BEFORE CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE                |                                                            |                                     | 66    |                                   |  
|                                                                                 |                                                           
|CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE (NET OF INCOME TAXES OF $14) |                                                            |                                     |      |                                   |  
|                                                                                 |                                                           
|NET INCOME FOR COMMON STOCK                                                      |                                                            | $                                   | 66    |                                   | $
|                                                                                 |                                                           
|EARNINGS PER COMMON SHARE - BASIC                                                |                                                            |                                     |       |                                   |  
|                                                                                 | Before cumulative effect of change in accounting principle |                                     | $     | 0.29                              |  
|                                                                                 |                                                           
|                                                                                 | Cumulative effect of change in accounting principle        |                                     | $     |                                  |  
|                                                                                 |                                                           
|                                                                                 | After cumulative effect of change in accounting principle  |                                     | $     | 0.29                              |  
|                                                                                 |                                                           
|EARNINGS PER COMMON SHARE - DILUTED                                              |                                                            |                                     |       |                                   |  
|                                                                                 | Before cumulative effect of change in accounting principle |                                     | $     | 0.29                              |  
|                                                                                 |                                                           
|                                                                                 | Cumulative effect of change in accounting principle        |                                     | $     |                                  |  
|                                                                                 |                                                           
|                                                                                 | After cumulative effect of change in accounting principle  |                                     | $     | 0.29                              |  
|                                                                                 |                                                           
|DIVIDENDS DECLARED PER SHARE OF COMMON STOCK                                     |                                                            | $                                   | 0.560 |                                   | $
|                                                                                 |                                                           
|AVERAGE NUMBER OF SHARES OUTSTANDING - BASIC (IN MILLIONS)                       |                                                            |                                     | 219.3 |                                   |  
|                                                                                 |                                                           
|AVERAGE NUMBER OF SHARES OUTSTANDING - DILUTED (IN MILLIONS)                     |                                                            |                                     | 220.3 |                                   |  
|                                                                                 |                                                           

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

6

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Consolidated Edison, Inc.CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME(UNAUDITED)

|                                                      |                                                                                                                              | For the Three Months
Ended June 30, |    | For the Six Months
Ended June 30, |  
|----------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------- | ----------------------------------- | -- | --------------------------------- | -
|
|
|
|NET INCOME FOR COMMON STOCK                           |                                                                                                                              | $                                   | 66 |                                   | $
|OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAXES       |                                                                                                                              |                                     |    |                                   |  
|                                                      | Minimum pension liability adjustments, net of ($2) taxes in 2002                                                             |                                     |    |                                  |  
|                                                      | Unrealized gains (losses) on derivatives qualified as hedges, net of ($1), ($1), $8 and $7 taxes, respectively               |                                     |    | (2                                | )
|                                                      | Less: Reclassification adjustment for gains (losses) included in net income, net of $3, $0, $11 and ($5) taxes, respectively |                                     |    | 4                                 |  
|                                                      |                                                                                                                             
|TOTAL OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAXES |                                                                                                                              |                                     | (6 | )                                 |  
|                                                      |                                                                                                                             
|COMPREHENSIVE INCOME                                  |                                                                                                                              | $                                   | 60 |                                   | $
|                                                      |                                                                                                                             

Consolidated Edison, Inc.CONSOLIDATED STATEMENT OF RETAINED EARNINGS(UNAUDITED)

|                                                                     |                                                              | For the Three Months
Ended June 30, |       | For the Six Months
Ended June 30,
|-------------------------------------------------------------------- | ------------------------------------------------------------ | ----------------------------------- | ----- | ---------------------------------
|
|
|
|BEGINNING BALANCE                                                    |                                                              | $                                   | 5,453 |                                  
|                                                                     | Less: Stock options exercised                                |                                     |       | 3                                
|                                                                     | Income before preferred stock dividends                      |                                     |       | 69                               
|                                                                     | Less: Cumulative effect of change in accounting principle    |                                     |       |                                 
|                                                                    
|NET INCOME AFTER CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE |                                                              |                                     | 69    |                                  
|                                                                    
|TOTAL                                                                |                                                              |                                     | 5,519 |                                  
|                                                                    
|DIVIDENDS ON CAPITAL STOCK                                           |                                                              |                                     |       |                                  
|                                                                     | Cumulative preferred, at required annual rates               |                                     |       | 3                                
|                                                                     | Common, $.56, $.555, $1.12 and $1.11 per share, respectively |                                     |       | 120                              
|                                                                    
|TOTAL DIVIDENDS                                                      |                                                              |                                     | 123   |                                  
|                                                                    
|ENDING BALANCE                                                       |                                                              | $                                   | 5,396 |                                  
|                                                                    

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

7

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Consolidated Edison, Inc.CONSOLIDATED STATEMENT OF CASH FLOWS(UNAUDITED)

|                                                   |                                                | For the Six Months Ended June 30, |                                                                        
|-------------------------------------------------- | ---------------------------------------------- | --------------------------------- | -----------------------------------------------------------------------
|
|
|
|OPERATING ACTIVITIES                               |                                                |                                   |                                                                        
|                                                   | Income before preferred stock dividends        |                                   | $                                                                      
|                                                   | PRINCIPAL NON-CASH CHARGES (CREDITS) TO INCOME |                                   |                                                                        
|                                                   |                                                |                                   | Depreciation and amortization                                          
|                                                   |                                                |                                   | Deferred income taxes                                                  
|                                                   |                                                |                                   | Common equity component of allowance for funds used during construction
|                                                   |                                                |                                   | Prepaid pension costs (net of capitalized amounts)                     
|                                                   |                                                |                                   | Other non-cash charges                                                 
|                                                   | CHANGES IN ASSETS AND LIABILITIES              |                                   |                                                                        
|                                                   |                                                |                                   | Accounts receivable - customers, less allowance for uncollectibles     
|                                                   |                                                |                                   | Materials and supplies, including fuel and gas in storage              
|                                                   |                                                |                                   | Prepayments, other receivables and other current assets                
|                                                   |                                                |                                   | Recoverable energy costs                                               
|                                                   |                                                |                                   | Accounts payable                                                       
|                                                   |                                                |                                   | Pension and benefits                                                   
|                                                   |                                                |                                   | Accrued taxes                                                          
|                                                   |                                                |                                   | Accrued interest                                                       
|                                                   |                                                |                                   | Deferred charges and regulatory assets                                 
|                                                   |                                                |                                   | Deferred credits and regulatory liabilities                            
|                                                   |                                                |                                   | Transmission congestion contracts                                      
|                                                   |                                                |                                   | Other assets                                                           
|                                                   |                                                |                                   | Other liabilities                                                      
|                                                   |                                               
|NET CASH FLOWS FROM OPERATING ACTIVITIES           |                                                |                                   | 378                                                                    
|                                                   |                                               
|INVESTING ACTIVITIES                               |                                                |                                   |                                                                        
|                                                   |                                                |                                   | Utility construction expenditures                                      
|                                                   |                                                |                                   | Cost of removal less salvage                                           
|                                                   |                                                |                                   | Non-utility construction expenditures                                  
|                                                   |                                                |                                   | Common equity component of allowance for funds used during construction
|                                                   |                                                |                                   | Investments by unregulated subsidiaries                                
|                                                   |                                                |                                   | Demolition and remediation costs for First Avenue properties           
|                                                   |                                               
|NET CASH FLOWS USED IN INVESTING ACTIVITIES        |                                                |                                   | (721                                                                   
|                                                   |                                               
|FINANCING ACTIVITIES                               |                                                |                                   |                                                                        
|                                                   |                                                |                                   | Net proceeds from short-term debt                                      
|                                                   |                                                |                                   | Repayment/retirement of long-term debt                                 
|                                                   |                                                |                                   | Additions to long-term debt                                            
|                                                   |                                                |                                   | Issuance of common stock                                               
|                                                   |                                                |                                   | Application of funds held for redemption of long-term debt             
|                                                   |                                                |                                   | Debt and equity issuance costs                                         
|                                                   |                                                |                                   | Common stock dividends                                                 
|                                                   |                                                |                                   | Preferred stock dividends                                              
|                                                   |                                               
|NET CASH FLOWS FROM/(USED IN) FINANCING ACTIVITIES |                                                |                                   | 287                                                                    
|                                                   |                                               
|CASH AND TEMPORARY CASH INVESTMENTS:               |                                                |                                   |                                                                        
|NET CHANGE FOR THE PERIOD                          |                                                |                                   | (56                                                                    
|BALANCE AT BEGINNING OF PERIOD                     |                                                |                                   | 132                                                                    
|                                                   |                                               
|BALANCE AT END OF PERIOD                           |                                                |                                   | 76                                                                     
|LESS: RESTRICTED CASH                              |                                                |                                   | 16                                                                     
|                                                   |                                               
|BALANCE: CASH AND TEMPORARY CASH INVESTMENTS       |                                                | $                                 | 60                                                                     
|                                                   |                                               
|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.

8

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Consolidated Edison Company of New York, Inc.CONSOLIDATED BALANCE SHEET(UNAUDITED)

|                                                                |                                                                                                          |  
|--------------------------------------------------------------- | -------------------------------------------------------------------------------------------------------- | -
|
|
|
|ASSETS                                                          |                                                                                                          |  
|UTILITY PLANT, AT ORIGINAL COST                                 |                                                                                                          |  
|                                                                | Electric                                                                                                 |  
|                                                                | Gas                                                                                                      |  
|                                                                | Steam                                                                                                    |  
|                                                                | General                                                                                                  |  
|                                                               
|                                                                | TOTAL                                                                                                    |  
|                                                                | Less: Accumulated depreciation                                                                           |  
|                                                               
|                                                                | Net                                                                                                      |  
|                                                                | Construction work in progress                                                                            |  
|                                                               
|NET UTILITY PLANT                                               |                                                                                                          |  
|                                                               
|NON-UTILITY PROPERTY                                            |                                                                                                          |  
|                                                                | Non-utility property                                                                                     |  
|                                                               
|NET PLANT                                                       |                                                                                                          |  
|                                                               
|CURRENT ASSETS                                                  |                                                                                                          |  
|                                                                | Cash and temporary cash investments                                                                      |  
|                                                                | Funds held for the redemption of long-term debt                                                          |  
|                                                                | Accounts receivable - customers, less allowance for uncollectible accounts of $29 in 2003 and 2002       |  
|                                                                | Other receivables, less allowance for uncollectible accounts of $4 and $ in 2003 and 2002, respectively |  
|                                                                | Accounts receivable - from affiliated companies                                                          |  
|                                                                | Fuel, at average cost                                                                                    |  
|                                                                | Gas in storage, at average cost                                                                          |  
|                                                                | Materials and supplies, at average cost                                                                  |  
|                                                                | Prepayments                                                                                              |  
|                                                                | Other current assets                                                                                     |  
|                                                               
|TOTAL CURRENT ASSETS                                            |                                                                                                          |  
|                                                               
|INVESTMENTS                                                     |                                                                                                          |  
|                                                               
|DEFERRED CHARGES, REGULATORY ASSETS AND NONCURRENT ASSETS       |                                                                                                          |  
|                                                                | Prepaid pension costs                                                                                    |  
|                                                                | Regulatory assets                                                                                        |  
|                                                                | Other deferred charges and noncurrent assets                                                             |  
|                                                               
|TOTAL DEFERRED CHARGES, REGULATORY ASSETS AND NONCURRENT ASSETS |                                                                                                          |  
|                                                               
|TOTAL ASSETS                                                    |                                                                                                          | $
|                                                               

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

9

---



Consolidated Edison Company of New York, Inc.CONSOLIDATED BALANCE SHEET(UNAUDITED)

|                                                  |                                                                                              |   |                                  
|------------------------------------------------- | -------------------------------------------------------------------------------------------- | - | ---------------------------------
|
|
|
|CAPITALIZATION AND LIABILITIES                    |                                                                                              |   |                                  
|CAPITALIZATION                                    |                                                                                              |   |                                  
|                                                  | Common stock, authorized 340,000,000 shares; outstanding 235,488,094 shares in 2003 and 2002 |   | $                                
|                                                  | Repurchased Consolidated Edison, Inc. common stock                                           |   |                                  
|                                                  | Retained earnings                                                                            |   |                                  
|                                                  | Capital stock expense                                                                        |   |                                  
|                                                  | Accumulated other comprehensive income (loss)                                                |   |                                  
|                                                  |                                                                                             
|                                                  |                                                                                              |   | 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                              |                                                                                              |   | 10,940                           
|                                                  |                                                                                             
|NONCURRENT LIABILITIES                            |                                                                                              |   |                                  
|                                                  | Obligations under capital leases                                                             |   |                                  
|                                                  | Provision for injuries and damages                                                           |   |                                  
|                                                  | Pension and benefits                                                                         |   |                                  
|                                                  | Superfund and other environmental costs                                                      |   |                                  
|                                                  | Independent power producer buyout                                                            |   |                                  
|                                                  | Other noncurrent liabilities                                                                 |   |                                  
|                                                  |                                                                                             
|TOTAL NONCURRENT LIABILITIES                      |                                                                                              |   | 481                              
|                                                  |                                                                                             
|CURRENT LIABILITIES                               |                                                                                              |   |                                  
|                                                  | Long-term debt due within one year                                                           |   |                                  
|                                                  | Accounts payable                                                                             |   |                                  
|                                                  | Accounts payable to affiliated companies                                                     |   |                                  
|                                                  | Customer deposits                                                                            |   |                                  
|                                                  | Accrued taxes                                                                                |   |                                  
|                                                  | Accrued interest                                                                             |   |                                  
|                                                  | System benefits charge                                                                       |   |                                  
|                                                  | Accrued wages                                                                                |   |                                  
|                                                  | Other current liabilities                                                                    |   |                                  
|                                                  |                                                                                             
|TOTAL CURRENT LIABILITIES                         |                                                                                              |   | 1,515                            
|                                                  |                                                                                             
|DEFERRED CREDITS AND REGULATORY LIABILITIES       |                                                                                              |   |                                  
|                                                  | Deferred income taxes                                                                        |   |                                  
|                                                  | Deferred investment tax credits                                                              |   |                                  
|                                                  | Regulatory liabilities                                                                       |   |                                  
|                                                  |                                                                                             
|TOTAL DEFERRED CREDITS AND REGULATORY LIABILITIES |                                                                                              |   | 3,449                            
|                                                  |                                                                                             
|TOTAL CAPITALIZATION AND LIABILITIES              |                                                                                              | $ | 16,385                           
|                                                  |                                                                                             

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

10

---



Consolidated Edison Company Of New York, Inc.CONSOLIDATED INCOME STATEMENT(UNAUDITED)

|                                        |                                                       | For the Three Months
Ended June 30, |       | For the Six Months
Ended June 30, |  
|--------------------------------------- | ----------------------------------------------------- | ----------------------------------- | ----- | --------------------------------- | -
|
|
|
|OPERATING REVENUES                      |                                                       |                                     |       |                                   |  
|                                        | Electric                                              |                                     | $     | 1,441                             |  
|                                        | Gas                                                   |                                     |       | 290                               |  
|                                        | Steam                                                 |                                     |       | 97                                |  
|                                        |                                                      
|TOTAL OPERATING REVENUES                |                                                       |                                     | 1,828 |                                   |  
|                                        |                                                      
|OPERATING EXPENSES                      |                                                       |                                     |       |                                   |  
|                                        | Purchased power                                       |                                     |       | 733                               |  
|                                        | Fuel                                                  |                                     |       | 77                                |  
|                                        | Gas purchased for resale                              |                                     |       | 167                               |  
|                                        | Other operations                                      |                                     |       | 212                               |  
|                                        | Maintenance                                           |                                     |       | 86                                |  
|                                        | Depreciation and amortization                         |                                     |       | 114                               |  
|                                        | Taxes, other than income taxes                        |                                     |       | 251                               |  
|                                        | Income taxes                                          |                                     |       | 37                                |  
|                                        |                                                      
|TOTAL OPERATING EXPENSES                |                                                       |                                     | 1,677 |                                   |  
|                                        |                                                      
|OPERATING INCOME                        |                                                       |                                     | 151   |                                   |  
|                                        |                                                      
|OTHER INCOME (DEDUCTIONS)               |                                                       |                                     |       |                                   |  
|                                        | Allowance for equity funds used during construction   |                                     |       | 4                                 |  
|                                        | Other income                                          |                                     |       | 8                                 |  
|                                        | Other deductions                                      |                                     |       | (3                                | )
|                                        | Income taxes                                          |                                     |       | (1                                | )
|                                        |                                                      
|TOTAL OTHER INCOME (DEDUCTIONS)         |                                                       |                                     | 8     |                                   |  
|                                        |                                                      
|INCOME BEFORE INTEREST CHARGES          |                                                       |                                     | 159   |                                   |  
|                                        |                                                      
|                                        | Interest on long-term debt                            |                                     |       | 87                                |  
|                                        | Other interest                                        |                                     |       | 7                                 |  
|                                        | Allowance for borrowed funds used during construction |                                     |       | (3                                | )
|                                        |                                                      
|NET INTEREST CHARGES                    |                                                       |                                     | 91    |                                   |  
|                                        |                                                      
|INCOME BEFORE PREFERRED STOCK DIVIDENDS |                                                       |                                     | 68    |                                   |  
|                                        |                                                      
|PREFERRED STOCK DIVIDEND REQUIREMENTS   |                                                       |                                     | 3     |                                   |  
|                                        |                                                      
|NET INCOME FOR COMMON STOCK             |                                                       | $                                   | 65    |                                   | $
|                                        |                                                      

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

11

---



Consolidated Edison Company of New York, Inc.CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME(UNAUDITED)

|                                                      |                                                                              | For the Three Months
Ended June 30, |    | For the Six Months
Ended June 30, |  
|----------------------------------------------------- | ---------------------------------------------------------------------------- | ----------------------------------- | -- | --------------------------------- | -
|
|
|
|NET INCOME FOR COMMON STOCK                           |                                                                              | $                                   | 65 |                                   | $
|OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAXES       |                                                                              |                                     |    |                                   |  
|                                                      | Minimum pension liability adjustments, net of ($2) taxes in 2002             |                                     |    |                                  |  
|                                                      | Unrealized gains on derivatives qualified as hedges, net of $2 taxes in 2002 |                                     |    |                                  |  
|                                                      | Less: Reclassification adjustment for gains (losses) included in net income  |                                     |    |                                  |  
|                                                      |                                                                             
|TOTAL OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAXES |                                                                              |                                     |   |                                   |  
|                                                      |                                                                             
|COMPREHENSIVE INCOME                                  |                                                                              | $                                   | 65 |                                   | $
|                                                      |                                                                             

Consolidated Edison Company of New York, Inc.CONSOLIDATED STATEMENT OF RETAINED EARNINGS(UNAUDITED)

|                           |                                                | For the Three Months
Ended June 30, |       | For the Six Months
Ended June 30,
|-------------------------- | ---------------------------------------------- | ----------------------------------- | ----- | ---------------------------------
|
|
|
|BEGINNING BALANCE          |                                                | $                                   | 4,455 |                                  
|                           | Income before preferred stock dividends        |                                     |       | 68                               
|                          
|TOTAL                      |                                                |                                     | 4,523 |                                  
|                          
|DIVIDENDS ON CAPITAL STOCK |                                                |                                     |       |                                  
|                           | Cumulative preferred, at required annual rates |                                     |       | 3                                
|                           | Common                                         |                                     |       | 93                               
|                          
|TOTAL DIVIDENDS            |                                                |                                     | 96    |                                  
|                          
|ENDING BALANCE             |                                                | $                                   | 4,427 |                                  
|                          

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

12

---



Consolidated Edison Company of New York, Inc.CONSOLIDATED STATEMENT OF CASH FLOWS(UNAUDITED)

|                                                   |                                                | For the Six Months
Ended June 30, |                                                                        
|-------------------------------------------------- | ---------------------------------------------- | --------------------------------- | -----------------------------------------------------------------------
|
|
|
|OPERATING ACTIVITIES                               |                                                |                                   |                                                                        
|                                                   | Income before preferred stock dividends        |                                   | $                                                                      
|                                                   | PRINCIPAL NON-CASH CHARGES (CREDITS) TO INCOME |                                   |                                                                        
|                                                   |                                                |                                   | Depreciation and amortization                                          
|                                                   |                                                |                                   | Deferred income taxes                                                  
|                                                   |                                                |                                   | Common equity component of allowance for funds used during construction
|                                                   |                                                |                                   | Prepaid pension costs (net of capitalized amounts)                     
|                                                   |                                                |                                   | Other non-cash charges                                                 
|                                                   | CHANGES IN ASSETS AND LIABILITIES              |                                   |                                                                        
|                                                   |                                                |                                   | Accounts receivable - customers, less allowance for uncollectibles     
|                                                   |                                                |                                   | Materials and supplies, including fuel and gas in storage              
|                                                   |                                                |                                   | Prepayments, other receivables and other current assets                
|                                                   |                                                |                                   | Recoverable energy costs                                               
|                                                   |                                                |                                   | Accounts payable                                                       
|                                                   |                                                |                                   | Pension and benefits                                                   
|                                                   |                                                |                                   | Accrued taxes                                                          
|                                                   |                                                |                                   | Accrued interest                                                       
|                                                   |                                                |                                   | Deferred charges and regulatory assets                                 
|                                                   |                                                |                                   | Deferred credits and regulatory liabilities                            
|                                                   |                                                |                                   | Transmission congestion contracts                                      
|                                                   |                                                |                                   | Other assets                                                           
|                                                   |                                                |                                   | Other liabilities                                                      
|                                                   |                                               
|NET CASH FLOWS FROM OPERATING ACTIVITIES           |                                                |                                   | 367                                                                    
|                                                   |                                               
|INVESTING ACTIVITIES                               |                                                |                                   |                                                                        
|                                                   |                                                |                                   | Construction expenditures                                              
|                                                   |                                                |                                   | Cost of removal less salvage                                           
|                                                   |                                                |                                   | Common equity component of allowance for funds used during construction
|                                                   |                                                |                                   | Demolition and remediation costs for First Avenue properties           
|                                                   |                                               
|NET CASH FLOWS USED IN INVESTING ACTIVITIES        |                                                |                                   | (625                                                                   
|                                                   |                                               
|FINANCING ACTIVITIES                               |                                                |                                   |                                                                        
|                                                   |                                                |                                   | Net proceeds from short-term debt                                      
|                                                   |                                                |                                   | Retirement of long-term debt                                           
|                                                   |                                                |                                   | Issuance of long-term debt                                             
|                                                   |                                                |                                   | Application of funds held for redemption of long-term debt             
|                                                   |                                                |                                   | Debt and equity issuance costs                                         
|                                                   |                                                |                                   | Capital contribution by parent                                         
|                                                   |                                                |                                   | Dividend to parent                                                     
|                                                   |                                                |                                   | Preferred stock dividends                                              
|                                                   |                                               
|NET CASH FLOWS FROM/(USED IN) FINANCING ACTIVITIES |                                                |                                   | 217                                                                    
|                                                   |                                               
|CASH AND TEMPORARY CASH INVESTMENTS:               |                                                |                                   |                                                                        
|NET CHANGE FOR THE PERIOD                          |                                                |                                   | (41                                                                    
|BALANCE AT BEGINNING OF PERIOD                     |                                                |                                   | 88                                                                     
|                                                   |                                               
|BALANCE AT END OF PERIOD                           |                                                | $                                 | 47                                                                     
|                                                   |                                               
|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.

13

---



Orange and Rockland Utilities, Inc.CONSOLIDATED BALANCE SHEET(UNAUDITED)

|                                                                |                                                                                                   |  
|--------------------------------------------------------------- | ------------------------------------------------------------------------------------------------- | -
|
|
|
|ASSETS                                                          |                                                                                                   |  
|UTILITY PLANT, AT ORIGINAL COST                                 |                                                                                                   |  
|                                                                | Electric                                                                                          |  
|                                                                | Gas                                                                                               |  
|                                                                | General                                                                                           |  
|                                                               
|                                                                | Total                                                                                             |  
|                                                                | Less: accumulated depreciation                                                                    |  
|                                                               
|                                                                | Net                                                                                               |  
|                                                                | Construction work in progress                                                                     |  
|                                                               
|NET UTILITY PLANT                                               |                                                                                                   |  
|                                                               
|NON-UTILITY PLANT                                               |                                                                                                   |  
|                                                                | Non-utility property, less accumulated depreciation of $2 in 2002                                 |  
|                                                               
|NET PLANT                                                       |                                                                                                   |  
|                                                               
|CURRENT ASSETS                                                  |                                                                                                   |  
|                                                                | Cash and temporary cash investments                                                               |  
|                                                                | Accounts receivable - customers, less allowance for uncollectible accounts of $2 in 2003 and 2002 |  
|                                                                | Other accounts receivable, less allowance for uncollectible accounts of $1 in 2003 and 2002       |  
|                                                                | Accrued unbilled 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                                                                                 |  
|                                                                | Other deferred charges and noncurrent assets                                                      |  
|                                                               
|TOTAL DEFERRED CHARGES, REGULATORY ASSETS AND NONCURRENT ASSETS |                                                                                                   |  
|                                                               
|TOTAL ASSETS                                                    |                                                                                                   | $
|                                                               

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

14

---



Orange and Rockland Utilities, Inc.CONSOLIDATED BALANCE SHEET(UNAUDITED)

|                                                  |                                                                        |   |                                  
|------------------------------------------------- | ---------------------------------------------------------------------- | - | ---------------------------------
|
|
|
|CAPITALIZATION AND LIABILITIES                    |                                                                        |   |                                  
|CAPITALIZATION                                    |                                                                        |   |                                  
|                                                  | Common Stock, authorized and outstanding 1,000 shares in 2003 and 2002 |   | $                                
|                                                  | Additional paid in capital                                             |   |                                  
|                                                  | Retained earnings                                                      |   |                                  
|                                                  | Accumulated other comprehensive income (loss)                          |   |                                  
|                                                  |                                                                       
|                                                  |                                                                        |   | TOTAL COMMON SHAREHOLDER'S EQUITY
|                                                  |                                                                       
|                                                  | Long-term debt                                                         |   |                                  
|                                                  |                                                                       
|TOTAL CAPITALIZATION                              |                                                                        |   | 654                              
|                                                  |                                                                       
|NONCURRENT LIABILITIES                            |                                                                        |   |                                  
|                                                  | Pension and benefits                                                   |   |                                  
|                                                  | Hedges on variable rate long term-debt                                 |   |                                  
|                                                  | Superfund and other environmental costs                                |   |                                  
|                                                  | Other noncurrent liabilities                                           |   |                                  
|                                                  |                                                                       
|TOTAL NONCURRENT LIABILITIES                      |                                                                        |   | 178                              
|                                                  |                                                                       
|CURRENT LIABILITIES                               |                                                                        |   |                                  
|                                                  | Long-term debt due within one year                                     |   |                                  
|                                                  | Notes payable                                                          |   |                                  
|                                                  | Accounts payable                                                       |   |                                  
|                                                  | Accounts payable to affiliated companies                               |   |                                  
|                                                  | Accrued taxes                                                          |   |                                  
|                                                  | Customer deposits                                                      |   |                                  
|                                                  | Accrued interest                                                       |   |                                  
|                                                  | Other current liabilities                                              |   |                                  
|                                                  |                                                                       
|TOTAL CURRENT LIABILITIES                         |                                                                        |   | 151                              
|                                                  |                                                                       
|DEFERRED CREDITS AND REGULATORY LIABILITIES       |                                                                        |   |                                  
|                                                  | Deferred income taxes                                                  |   |                                  
|                                                  | Deferred investment tax credits                                        |   |                                  
|                                                  | Regulatory liabilities                                                 |   |                                  
|                                                  | Other deferred credits                                                 |   |                                  
|                                                  |                                                                       
|TOTAL DEFERRED CREDITS AND REGULATORY LIABILITIES |                                                                        |   | 212                              
|                                                  |                                                                       
|TOTAL CAPITALIZATION AND LIABILITIES              |                                                                        | $ | 1,195                            
|                                                  |                                                                       

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

15

---



Orange and Rockland Utilities, Inc.CONSOLIDATED INCOME STATEMENT(UNAUDITED)

|                                |                                | For the Three Months
Ended June 30, |     | For the Six Months
Ended June 30,
|------------------------------- | ------------------------------ | ----------------------------------- | --- | ---------------------------------
|
|
|
|OPERATING REVENUES              |                                |                                     |     |                                  
|                                | Electric                       |                                     | $   | 120                              
|                                | Gas                            |                                     |     | 36                               
|                               
|TOTAL OPERATING REVENUES        |                                |                                     | 156 |                                  
|                               
|OPERATING EXPENSES              |                                |                                     |     |                                  
|                                | Purchased power                |                                     |     | 66                               
|                                | Gas purchased for resale       |                                     |     | 24                               
|                                | Other operations               |                                     |     | 27                               
|                                | Maintenance                    |                                     |     | 6                                
|                                | Depreciation and amortization  |                                     |     | 9                                
|                                | Taxes, other than income taxes |                                     |     | 12                               
|                                | Income taxes                   |                                     |     | 3                                
|                               
|TOTAL OPERATING EXPENSES        |                                |                                     | 147 |                                  
|                               
|OPERATING INCOME                |                                |                                     | 9   |                                  
|                               
|OTHER INCOME (DEDUCTIONS)       |                                |                                     |     |                                  
|                                | Other income                   |                                     |     | 1                                
|                                | Other deductions               |                                     |     | (2                               
|                               
|TOTAL OTHER INCOME (DEDUCTIONS) |                                |                                     | (1  | )                                
|                               
|INCOME BEFORE INTEREST CHARGES  |                                |                                     | 8   |                                  
|                               
|                                | Interest on long-term debt     |                                     |     | 5                                
|                                | Other interest                 |                                     |     |                                 
|                               
|NET INTEREST CHARGES            |                                |                                     | 5   |                                  
|                               
|NET INCOME FOR COMMON STOCK     |                                | $                                   | 3   |                                  
|                               

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

16

---



Orange and Rockland Utilities, Inc.CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME(UNAUDITED)

|                                                      |                                                                                 | For the Three Months
Ended June 30, |   | For the Six Months
Ended June 30, |  
|----------------------------------------------------- | ------------------------------------------------------------------------------- | ----------------------------------- | - | --------------------------------- | -
|
|
|
|NET INCOME FOR COMMON STOCK                           |                                                                                 | $                                   | 3 |                                   | $
|OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAXES       |                                                                                 |                                     |   |                                   |  
|                                                      | Unrealized loss on derivatives qualified as hedges, net of taxes                |                                     |   | (1                                | )
|                                                      | Less: Reclassification adjustment for loss included in net income, net of taxes |                                     |   | (1                                | )
|                                                      |                                                                                
|TOTAL OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAXES |                                                                                 |                                     |  |                                   |  
|                                                      |                                                                                
|COMPREHENSIVE INCOME                                  |                                                                                 | $                                   | 3 |                                   | $
|                                                      |                                                                                

Orange and Rockland Utilities, Inc.CONSOLIDATED STATEMENT OF RETAINED EARNINGS(UNAUDITED)

|                  |                             | For the Three Months
Ended June 30, |     | For the Six Months
Ended June 30, |  
|----------------- | --------------------------- | ----------------------------------- | --- | --------------------------------- | -
|
|
|
|BEGINNING BALANCE |                             | $                                   | 178 |                                   | $
|                  | Net income for common stock |                                     |     | 3                                 |  
|                  |                            
|TOTAL             |                             |                                     | 181 |                                   |  
|                  |                            
|                  | Dividends to parent         |                                     |     | (7                                | )
|                  |                            
|ENDING BALANCE    |                             | $                                   | 174 |                                   | $
|                  |                            

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

17

---



Orange and Rockland Utilities, Inc.CONSOLIDATED STATEMENT OF CASH FLOWS(UNAUDITED)

|                                                   |                                                | For the Six Months
Ended June 30, |                                                                   
|-------------------------------------------------- | ---------------------------------------------- | --------------------------------- | ------------------------------------------------------------------
|
|
|
|OPERATING ACTIVITIES                               |                                                |                                   |                                                                   
|                                                   | Net income for common stock                    |                                   | $                                                                 
|                                                   | PRINCIPAL NON-CASH CHARGES (CREDITS) TO INCOME |                                   |                                                                   
|                                                   |                                                |                                   | Depreciation and amortization                                     
|                                                   |                                                |                                   | Deferred income taxes                                             
|                                                   |                                                |                                   | Gain on sale of land                                              
|                                                   | CHANGES IN ASSETS AND LIABILITIES              |                                   |                                                                   
|                                                   |                                                |                                   | Accounts receivable - customers, less allowance for uncollectibles
|                                                   |                                                |                                   | Materials and supplies, including fuel and gas in storage         
|                                                   |                                                |                                   | Prepayments, other receivables and other current assets           
|                                                   |                                                |                                   | Deferred recoverable energy costs                                 
|                                                   |                                                |                                   | Pension and benefits                                              
|                                                   |                                                |                                   | Accounts payable                                                  
|                                                   |                                                |                                   | Accrued taxes                                                     
|                                                   |                                                |                                   | Accrued interest                                                  
|                                                   |                                                |                                   | Deferred debits and regulatory assets                             
|                                                   |                                                |                                   | Deferred credits and regulatory liabilities                       
|                                                   |                                                |                                   | Unrealized hedges on variable rate long term debt                 
|                                                   |                                                |                                   | Other assets                                                      
|                                                   |                                                |                                   | Other liabilities                                                 
|                                                   |                                               
|NET CASH FLOWS FROM OPERATING ACTIVITIES           |                                                |                                   | 15                                                                
|                                                   |                                               
|INVESTING ACTIVITIES                               |                                                |                                   |                                                                   
|                                                   |                                                |                                   | Construction expenditures                                         
|                                                   |                                                |                                   | Cost of removal less salvage                                      
|                                                   |                                                |                                   | Proceeds from sale of land                                        
|                                                   |                                               
|NET CASH FLOWS USED IN INVESTING ACTIVITIES        |                                                |                                   | (23                                                               
|                                                   |                                               
|FINANCING ACTIVITIES                               |                                                |                                   |                                                                   
|                                                   |                                                |                                   | Net proceeds from/(retirement of) short-term debt                 
|                                                   |                                                |                                   | Retirement of long-term debt                                      
|                                                   |                                                |                                   | Dividend to parent                                                
|                                                   |                                               
|NET CASH FLOWS FROM/(USED IN) FINANCING ACTIVITIES |                                                |                                   | 10                                                                
|                                                   |                                               
|CASH AND TEMPORARY CASH INVESTMENTS:               |                                                |                                   |                                                                   
|NET CHANGE FOR THE PERIOD                          |                                                |                                   | 2                                                                 
|BALANCE AT BEGINNING OF PERIOD                     |                                                |                                   | 2                                                                 
|                                                   |                                               
|BALANCE AT END OF PERIOD                           |                                                | $                                 | 4                                                                 
|                                                   |                                               
|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.

18

---



NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

General

These combined notes accompany and form an integral part of the interim consolidated financial statements of each of Consolidated Edison, Inc. and its
subsidiaries (Con Edison), Consolidated Edison Company of New York, Inc. and its subsidiaries (Con Edison of New York) and Orange & Rockland Utilities, Inc. and its subsidiaries
(O&R). Con Edison of New York and O&R, which are regulated utilities, are subsidiaries of Con Edison and together with Con Edison are referred to in these combined notes as the "Companies." Amounts
shown for Con Edison include the unregulated subsidiaries: Consolidated Edison Solutions, Inc. (Con Edison Solutions), a retail energy services company; Consolidated Edison Energy, Inc.
(Con Edison Energy), a wholesale energy supply company; Consolidated Edison Development, Inc. (Con Edison Development), an infrastructure development company; and Con Edison Communications, LLC
(Con Edison Communications), a telecommunications infrastructure company and service provider. The financial statements of each of the Companies are unaudited but, in the opinion of the Companies'
respective management, reflect all adjustments (which include only normally recurring adjustments) necessary for a fair presentation of the results for the interim periods presented. The financial
statements of each of the Companies should be read together with their respective audited financial statements (including the notes thereto) included in Item 8 of the Companies' combined Annual
Reports on Form 10-K for the year ended December 31, 2002 (the Form 10-K). The use of terms such as "see" or "refer to" shall be deemed to incorporate by
reference into these notes the information to which reference is made. Except as otherwise noted, the information in these combined notes relates to each of the Companies. Neither Con Edison of New
York nor O&R makes any representation as to information relating to Con Edison or the subsidiaries of Con Edison other than itself. Results for interim periods are not necessarily indicative of
results for the entire fiscal year.

19

---

Note A - Earnings per Common Share (Con Edison)

Reference is made to "Earnings per Share" in Note A to the Con Edison financial statements included in Item 8 of the Form 10-K. For
the three and six months ended June 30, 2003 and 2002, respectively, Con Edison's basic and diluted EPS are calculated as follows:

|                                                                                  |  | For the Three Months Ended June 30, |      | For the Six Months Ended June 30,
|--------------------------------------------------------------------------------- |  | ----------------------------------- | ---- | ---------------------------------
|
|
|
|
|Income before preferred stock dividends                                           |  | $                                   | 69   |                                  
|Less: Preferred stock dividend requirements                                       |  |                                     | 3    |                                  
|                                                                                 
|Income before cumulative effect of change in accounting principle                 |  | $                                   | 66   |                                  
|Less: Cumulative effect of change in accounting principle, net of tax             |  |                                     |     |                                  
|                                                                                 
|Net income for common stock                                                       |  | $                                   | 66   |                                  
|                                                                                 
|Number of shares on which basic EPS is calculated:                                |  |                                     | 219  |                                  
|Add: Incremental shares attributable to effect of potentially dilutive securities |  |                                     | 1    |                                  
|                                                                                 
|Number of shares on which diluted EPS is calculated                               |  |                                     | 220  |                                  
|                                                                                 
|EARNINGS PER COMMON SHARE - BASIC                                                 |  |                                     |      |                                  
|Before cumulative effect of change in accounting principle                        |  | $                                   | 0.29 |                                  
|Cumulative effect of change in accounting principle                               |  |                                     |     |                                  
|                                                                                 
|After cumulative effect of change in accounting principle                         |  | $                                   | 0.29 |                                  
|                                                                                 
|EARNINGS PER COMMON SHARE - DILUTED                                               |  |                                     |      |                                  
|Before cumulative effect of change in accounting principle                        |  | $                                   | 0.29 |                                  
|Cumulative effect of change in accounting principle                               |  |                                     |     |                                  
|                                                                                 
|After cumulative effect of change in accounting principle                         |  | $                                   | 0.29 |                                  
|                                                                                 

Stock
options to purchase 7.3 million and 6.3 million common shares for the three months ended June 30, 2003 and 2002, respectively, and 7.3 million and 6.4 million
common shares for the six months ended June 30, 2003 and 2002, respectively, were not included in the respective period's computation of diluted earnings per share because the exercise prices
of the options were greater than the average market price of the common shares.

20

---

Note B - Stock-Based Compensation

Reference is made to "Stock-Based Compensation" in Note A to the Companies' financial statements in Item 8 of the Form 10-K. For the
three and six months ended June 30, 2003 and 2002, respectively, Con Edison's stock-based compensation, illustrating the fair value recognition effect on net income and earnings per share, is
as follows:

|                                                                                                                                      |                       | Con Edison |     | Con Edison of New York |   | O&R
|------------------------------------------------------------------------------------------------------------------------------------- | --------------------- | ---------- | --- | ---------------------- | - | ---
|
|
|
|Net income for common stock                                                                                                           |                       | $          | 66  |                        | $ | 98 
|Add: Stock-based compensation expense included in reported net income, net of related tax effects                                     |                       |            | 1   |                        |   | 1  
|Deduct: Total stock-based employee compensation expense determined under fair value method for all awards, net of related tax effects |                       |            | (3  | )                      |   | (2 
|                                                                                                                                     
|Pro forma net income for common stock                                                                                                 |                       | $          | 64  |                        | $ | 97 
|                                                                                                                                     
|Number of shares on which basic EPS is calculated                                                                                     |                       |            | 219 |                        |   | 213
|Add: Incremental shares attributable to effect of dilutive securities                                                                 |                       |            | 1   |                        |   | 1  
|                                                                                                                                     
|Number of shares on which diluted EPS is calculated                                                                                   |                       |            | 220 |                        |   | 214
|                                                                                                                                     
|Earnings per share:                                                                                                                   |                       |            |     |                        |   |    
|                                                                                                                                      | Basic - as reported   |            | $   | 0.29                   |   | $  
|                                                                                                                                      | Basic - pro forma     |            | $   | 0.29                   |   | $  
|                                                                                                                                     
|                                                                                                                                      | Diluted - as reported |            | $   | 0.29                   |   | $  
|                                                                                                                                      | Diluted - pro forma   |            | $   | 0.29                   |   | $  
|                                                                                                                                     

21

---

|                                                                                                                                      |                       | Con Edison |     | Con Edison of New York |   | O&R
|------------------------------------------------------------------------------------------------------------------------------------- | --------------------- | ---------- | --- | ---------------------- | - | ---
|
|
|
|Net income for common stock                                                                                                           |                       | $          | 220 |                        | $ | 244
|Add: Stock-based compensation expense included in reported net income, net of related tax effects                                     |                       |            | 2   |                        |   | 1  
|Deduct: Total stock-based employee compensation expense determined under fair value method for all awards, net of related tax effects |                       |            | (5  | )                      |   | (3 
|                                                                                                                                     
|Pro forma net income for common stock                                                                                                 |                       | $          | 217 |                        | $ | 242
|                                                                                                                                     
|Number of shares on which basic EPS is calculated                                                                                     |                       |            | 217 |                        |   | 213
|Add: Incremental shares attributable to effect of dilutive securities                                                                 |                       |            | 1   |                        |   | 1  
|                                                                                                                                     
|Number of shares on which diluted EPS is calculated                                                                                   |                       |            | 218 |                        |   | 214
|                                                                                                                                     
|Earnings per share:                                                                                                                   |                       |            |     |                        |   |    
|                                                                                                                                      | Basic - as reported   |            | $   | 1.01                   |   | $  
|                                                                                                                                      | Basic - pro forma     |            | $   | 1.00                   |   | $  
|                                                                                                                                     
|                                                                                                                                      | Diluted - as reported |            | $   | 1.01                   |   | $  
|                                                                                                                                      | Diluted - pro forma   |            | $   | 1.00                   |   | $  
|                                                                                                                                     

22

---

Note C - Capitalization (Con Edison and Con Edison of New York)

Changes in Con Edison and Con Edison of New York's common shareholders' equity, other than changes in retained earnings and accumulated other comprehensive
income (for which separate statements are presented), for the three and six months ended June 30, 2003 and 2002 were as follows:

Three and six months ended June 30, 2003

|                                                                           |  | Con Edison  |  | Con Edison of New York |   
|-------------------------------------------------------------------------- |  | ----------- |  | ---------------------- | --
|
|
|Balance as of December 31, 2002                                            |  | 213,932,934 |  | $                      | 24
|Issuance of common shares - dividend reinvestment and employee stock plans |  | 510,447     |  |                        |  
|                                                                           | 
|Balance as of March 31, 2003                                               |  | 214,443,381 |  | $                      | 24
|Issuance of common shares - public offering                                |  | 9,570,000   |  |                        | 1 
|Capital contribution by parent                                             |  |            |  |                        |  
|Issuance of common shares - dividend reinvestment and employee stock plans |  | 809,355     |  |                        |  
|                                                                           | 
|Balance as of June 30, 2003                                                |  | 224,822,736 |  | $                      | 25
|                                                                           | 

23

---

Three and six months ended June 30, 2002

|                                                                           |  | Con Edison  |  | Con Edison of New York |   
|-------------------------------------------------------------------------- |  | ----------- |  | ---------------------- | --
|
|
|Balance as of December 31, 2001                                            |  | 212,257,244 |  | $                      | 24
|Issuance of common shares - dividend reinvestment and employee stock plans |  | 312,800     |  |                        |  
|                                                                           | 
|Balance as of March 31, 2002                                               |  | 212,570,044 |  | $                      | 24
|Issuance of common shares - dividend reinvestment and employee stock plans |  | 472,986     |  |                        |  
|                                                                           | 
|Balance as of June 30, 2002                                                |  | 213,043,030 |  | $                      | 24
|                                                                           | 

24

---

Note D - Regulatory Matters

Reference is made to "Accounting Policies" and "Rate and Restructuring Agreements" in Note A to the Companies' financial statements in Item 8 of the
Form 10-K.

Regulatory
assets and liabilities at June 30, 2003 and at December 31, 2002 were comprised of the following items:

|                             |                                                   | Con Edison |       | Con Edison of New York |   | O&R  
|---------------------------- | ------------------------------------------------- | ---------- | ----- | ---------------------- | - | -----
|
|
|
|Regulatory assets            |                                                   |            |       |                        |   |      
|                             | Future federal income tax                         |            | $     | 649                    |   | $    
|                             | Recoverable energy costs                          |            |       | 342                    |   |      
|                             | Sale of nuclear generating plant                  |            |       | 191                    |   |      
|                             | Real estate sale costs - First Avenue properties  |            |       | 138                    |   |      
|                             | Deferred retirement program costs                 |            |       | 87                     |   |      
|                             | Deferred unbilled gas revenue                     |            |       | 44                     |   |      
|                             | Deferred environmental remediation costs          |            |       | 91                     |   |      
|                             | Workers' compensation                             |            |       | 51                     |   |      
|                             | Deferred asbestos - related costs                 |            |       | 39                     |   |      
|                             | Divestiture - capacity replacement reconciliation |            |       | 22                     |   |      
|                             | Deferred revenue taxes                            |            |       | 73                     |   |      
|                             | World Trade Center restoration costs              |            |       | 77                     |   |      
|                             | Other                                             |            |       | 146                    |   |      
|                            
|Total Regulatory Assets      |                                                   | $          | 1,950 |                        | $ | 1,866
|                            
|Regulatory liabilities       |                                                   |            |       |                        |   |      
|                             | NYISO reconciliation                              |            | $     | 116                    |   | $    
|                             | World Trade Center casualty loss                  |            |       | 79                     |   |      
|                             | Gain on divestiture                               |            |       | 68                     |   |      
|                             | Deposit from sale of First Avenue properties      |            |       | 50                     |   |      
|                             | Refundable energy costs                           |            |       | 40                     |   |      
|                             | Accrued electric rate reduction                   |            |       | 37                     |   |      
|                             | DC service incentive                              |            |       | 37                     |   |      
|                             | Transmission congestion contracts                 |            |       | 205                    |   |      
|                             | Gas rate plan - World Trade Center recovery       |            |       | 36                     |   |      
|                             | Electric excess earnings                          |            |       | 49                     |   |      
|                             | Other                                             |            |       | 287                    |   |      
|                            
|Total Regulatory Liabilities |                                                   | $          | 1,004 |                        | $ | 898  
|                            

25

---

In
July 2003, O&R entered into agreements with the staff of the PSC and other parties with respect to the rates O&R can charge to its New York customers for electric and gas services. The
electric agreement, which covers the period from July 1, 2003 through October 31, 2006, provides for no changes to electric base rates and contains provisions for the amortization and
offset of regulatory assets and liabilities, the net effect of which will reduce electric operating income by a total of $11 million (pre-tax) over the period covered by the
agreement. The O&R gas agreement, which covers the period from November 1, 2003 through October 31, 2006, provides for increases in gas base rates of $9 million
(5.8 percent) effective November 2003, $9 million (4.8 percent) effective November 2004 and $5 million (2.5 percent) effective November 2005.
Both agreements continue to provide for recovery of energy costs from customers on a current basis. The O&R gas agreement also continues a weather normalization clause that moderates, but does not
eliminate, the effect of weather-related changes on net income. These agreements are subject to approval by the PSC.

In
July 2003, the New Jersey Board of Public Utilities (NJBPU) ruled on the petitions of Rockland Electric Company (RECO), the New Jersey utility subsidiary of O&R, for an increase in electric
rates and recovery of deferred purchased power costs. See "Rate and Restructuring Agreements -Electric" and "Recoverable Energy Costs" in Note A to the Con Edison and O&R financial
statements in Part II, Item 8 of the Form 10-K. The NJBPU ordered a $7 million decrease in RECO's electric base rates, effective August 2003, authorized RECO's
recovery of approximately $83 million of previously deferred purchased power costs and associated interest and disallowed recovery of approximately $19 million of such costs and
associated interest. At December 31, 2002, the company had accrued a reserve for most of the disallowance, and at June 30, 2003 was fully reserved for the disallowance.

Note E - Environmental Matters

Superfund Sites

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 O&R and their predecessors and are present at sites and in facilities and equipment they currently or previously owned, including sites at which gas was manufactured or stored.

The
Federal Comprehensive Environmental Response, Compensation and Liability Act of 1980 and similar statutes impose joint and several liabilities, regardless of fault, upon generators of hazardous
substances for removal and remediation costs (which include costs of investigation, demolition, removal, disposal, storage, replacement, containment and monitoring) and environmental damages.
Liabilities under these laws can be material and may be imposed for contamination from past acts, even though such past acts may have been lawful at the time they occurred. The sites at which Con
Edison of New York or O&R have been asserted to have liability under these laws, including their manufactured gas sites, are referred to herein as "Superfund Sites."

For
Superfund Sites where there are other potentially responsible parties and neither Con Edison of New York nor O&R are managing the site investigation and remediation, the accrued Superfund Sites
liability represents an estimate of the amount Con Edison of New York or O&R will need to pay to settle its obligations with respect to the site. For the other Superfund Sites (including the
manufactured gas sites),

26

---

for
which Con Edison of New York or O&R is managing the investigation and remediation, the accrued Superfund Sites liability represents an estimate of the undiscounted cost to investigate the sites
and, for sites that have been investigated in whole or in part, the cost to remediate the sites in light of the information available, applicable remediation standards and experience with similar
sites.

Con
Edison of New York and O&R are permitted under their current rate agreements to defer as regulatory assets (for subsequent recovery through rates) certain site investigation and remediation costs.
The accrued liabilities and regulatory assets related to Superfund Sites for each of the Companies at June 30, 2003 and December 31, 2002 were as follows:

|                     |                              | Con Edison |       | Con Edison of New York |   | O&R
|-------------------- | ---------------------------- | ---------- | ----- | ---------------------- | - | ---
|
|
|
|Accrued Liabilities: |                              |            |       |                        |   |    
|                     | Manufactured gas plant sites |            | $     | 103                    |   | $  
|                     | Other Superfund Sites        |            |       | 35                     |   |    
|                    
|                     |                              |            | Total |                        | $ | 138
|                    
|Regulatory assets    |                              | $          | 91    |                        | $ | 83 
|                    

Most
of the accrued Superfund Site liability relates to Superfund Sites that have been investigated, in whole or in part. As investigation progresses on these and other sites, the Companies expect
that additional liability will be accrued, the amount of which is not presently determinable but may be material to the financial position, results of operations or liquidity of each of the Companies.

In
2002, Con Edison of New York estimated that for its manufactured gas sites, many of which had not been investigated, its aggregate undiscounted potential liability for the investigation and
remediation of coal tar and/or other manufactured gas plant-related environmental contaminants could range from approximately $65 million to $1.1 billion. For O&R's manufactured gas
sites, estimates of the aggregate undiscounted potential liability for the cleanup of coal, tar and/or other
manufactured gas plant-related environmental contaminants range from approximately $25 million to $95 million. These estimates were based upon the assumption that there is contamination
at each of the sites and additional assumptions regarding the extent of contamination and the type and extent of remediation that may be required. Actual experience may be materially different.

Asbestos Proceedings

Suits have been brought in New York State and federal courts against Con Edison of New York and 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 the utilities. The suits that have been
resolved, which are many, have been resolved without any payment by the utilities, or for amounts that were not, in the aggregate, material to them. The amounts specified in all the remaining
thousands of suits total billions of dollars but the Companies believe that these amounts are greatly exaggerated, as experienced through the disposition of previous claims. In 2002, Con Edison of New
York estimated that its aggregate undiscounted potential liability for these suits and additional such suits that may be brought over the next 50 years is estimated to range

27

---

from
approximately $38 million to $162 million (with no amount within the range considered more reasonable than any other). The estimate was based upon a combination of modeling,
historical data analysis and risk factor assessment. Actual experience may be materially different.

Workers'
compensation administrative proceedings have been commenced, wherein current and former employees claim benefits based upon alleged disability from exposure to asbestos.

Con
Edison of New York is permitted under its current rate agreement to defer as regulatory assets (for subsequent recovery through rates) liabilities incurred for its asbestos lawsuits and workers'
compensation claims. O&R also defers as regulatory assets (for subsequent recovery through rates), liabilities incurred for its asbestos lawsuits.

The
accrued liability for asbestos suits and workers' compensation proceedings (including those related to asbestos exposure) and the amounts deferred as regulatory assets for each of the Companies at
June 30, 2003 and December 31, 2002 were as follows:

|                                          |  | Con Edison |     | Con Edison of New York |   | O&R
|----------------------------------------- |  | ---------- | --- | ---------------------- | - | ---
|
|
|
|Accrued liability - asbestos              |  | $          | 39  |                        | $ | 39 
|Regulatory asset - asbestos suits         |  | $          | 39  |                        | $ | 39 
|                                         
|Accrued liability - workers' compensation |  | $          | 127 |                        | $ | 130
|Regulatory asset - workers' compensation  |  | $          | 51  |                        | $ | 54 
|                                         

Note F - Nuclear Generation (Con Edison and Con Edison of New York)

In September 2001, Con Edison of New York completed the sale of its nuclear generating facilities. See Note I to the Con Edison and Con Edison of
New York financial statements in Item 8 of the Form 10-K.

The
New York State Public Service Commission is investigating a February 2000 to January 2001 outage of the nuclear generating unit, its causes and the prudence of Con Edison of New
York'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 the company's decisions concerning replacement of the unit's steam generators 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 not billed to customers $90 million of replacement power costs incurred during the February 2000 to January 2001 outage. In addition, in 2000, Con
Edison of New York accrued a $40 million liability for the possible disallowance of replacement power costs that it had previously recovered from customers.

Neither
Con Edison nor Con Edison of New York is able 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.

28

---

Note G - Northeast Utilities Litigation (Con Edison)

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 (the Federal Proceeding), 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
breach of the merger agreement by Northeast Utilities, 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 the Federal Proceeding 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 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
March 2003, the court ruled on certain motions filed by Con Edison and Northeast Utilities in the Federal Proceeding. The court ruled that Con Edison's claim against Northeast Utilities for
hundreds of millions of dollars for breach of the merger agreement, as well as Con Edison's claim that Northeast Utilities underwent a material adverse change, will go to trial. The court also
dismissed Con Edison's fraud and misrepresentation claims. In addition, the court ruled that Northeast Utilities' claims on behalf of its shareholders against Con Edison for damages in excess of
$1.2 billion will go to trial.

In
May 2003, a lawsuit by a purported class of Northeast Utilities' shareholders, entitled Rimkoski, et al. v. Consolidated Edison, Inc., was filed in New York County Supreme Court (the
State Proceeding) alleging breach of the merger agreement. The complaint defines the putative class as holders of Northeast Utilities' common stock on March 5, 2001, and alleges that the class
members were intended third party beneficiaries of the merger agreement. The complaint seeks damages believed to be substantially duplicative of those sought by Northeast Utilities on behalf of its
shareholders in the Federal Proceeding.

Con
Edison believes that Northeast Utilities materially breached the merger agreement, and that Con Edison did not materially breach the merger agreement. Con Edison believes it was not obligated to
acquire Northeast Utilities because Northeast Utilities did 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;

29

---

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 H - Other Material Contingencies (Con Edison)

Con Edison Development, through its subsidiaries, owns a 48 percent interest in a partnership that owns a 29 MW cogeneration facility. At June 30,
2003, the company's investment in the partnership amounted to $11 million and the company had guaranteed $2 million of partnership obligations. The partnership sells electric capacity
and energy under a long-term agreement, which the customer can terminate if the facility is not a qualifying facility under applicable Federal rules. Termination of the agreement could
have a material adverse effect on the partnership. In July 2003, the customer filed a motion with the Federal Energy Regulatory Commission asserting that the partnership was no longer a
qualifying facility. The partnership will dispute the motion.

For
information about contingencies relating to a dispute between the construction contractor for Con Edison Development's 525 MW electric generating facility in Newington, New Hampshire and the
Internal Revenue Service's proposed disallowance of certain tax losses recognized in connection with transactions in which unregulated subsidiaries of Con Edison leased property and then immediately
subleased it back to the lessor (termed "Lease In/Lease Out," or LILO transactions), see Notes J and S to the Con Edison financial statements in Item 8 of the Form 10-K.

Note I - Derivative Instruments and Hedging Activities

Reference is made to Note O to both the Con Edison and Con Edison of New York financial statements, and Note N to the O&R financial statements in
Item 8 of the Form 10-K.

Energy Price Hedging

Con Edison's subsidiaries use derivative instruments to hedge market price fluctuations in related underlying transactions for the physical purchase or sale of
electricity and gas. The net fair value of the derivatives for such use at June 30, 2003 and December 31, 2002 was as follows:

|                         |  | Con Edison |    | Con Edison of New York |   | O&R
|------------------------ |  | ---------- | -- | ---------------------- | - | ---
|
|
|
|
|Fair value of net assets |  | $          | 35 |                        | $ | 39 
|                        

As
of June 30, 2003, the maximum remaining terms of Con Edison's, Con Edison of New York's and O&R's energy price hedging contracts were less than three years.

Con
Edison of New York, Con Edison Solutions and Con Edison Energy use cash flow hedge accounting under Statement of Financial Accounting Standards (SFAS) No. 133, "Accounting for Derivative
Instruments and Hedging Activities," as amended. Under cash flow hedge accounting, to the extent a hedge is determined to be "effective," the unrealized gain or loss on the hedge is recorded in

30

---

other
comprehensive income (OCI) and reclassified to income at the time the underlying transaction is completed. A gain or loss relating to any portion of the hedge determined to be "ineffective" is
recognized in income in the period in which such determination is made.

For
Con Edison and Con Edison of New York, unrealized gains and losses on cash flow hedges for energy transactions, net of tax, included in accumulated OCI for the three and six months ended
June 30, 2003 and 2002 were as follows:

|                                                                                         |  | Three Months Ended June 30, |    | Six Months Ended June 30,
|---------------------------------------------------------------------------------------- |  | --------------------------- | -- | -------------------------
|
|
|
|
|Unrealized gains/(losses) on derivatives qualified as hedges, net of taxes               |  | $                           | (1 | )                        
|Less: Reclassification adjustment of gains/(losses) included in net income, net of taxes |  |                             | 4  |                          
|                                                                                        
|Unrealized gains/(losses) on derivatives qualified as hedges for the period              |  | $                           | (5 | )                        
|                                                                                        

In
the three- and six-month periods ended June 30, 2003 and 2002, Con Edison and Con Edison of New York recognized in net income unrealized pre-tax net gains and losses
relating to hedge ineffectiveness of these cash flow hedges as follows:

|                                                                                                |  | Three Months Ended June 30, |    | Six Months Ended June 30,
|----------------------------------------------------------------------------------------------- |  | --------------------------- | -- | -------------------------
|
|
|
|
|Unrealized gains/(losses) on ineffective portion of derivatives qualified as hedges, net of tax |  | $                           | (2 | )                        
|                                                                                               

Con
Edison and Con Edison of New York estimate that $10 million and $1 million, respectively, of after-tax net gains accumulated in OCI as of June 30, 2003 will be
reclassified to income within the next 12 months.

Con
Edison's unregulated subsidiaries also enter into certain other contracts that are derivatives, but do not qualify for hedge accounting under SFAS No. 133. Changes in fair market value of
these derivative contracts are recorded in income in the reporting period in which they occur and were not material to Con Edison's results of operations of the unregulated subsidiaries for the three
and six months ended June 30, 2003 and 2002.

31

---

Interest Rate Hedging

Con Edison's subsidiaries use interest rate swaps to manage interest rate exposures associated with debt. The fair value of the interest rate swaps at
June 30, 2003 and December 31, 2002 was as follows:

|                                  |  | Con Edison |     | Con Edison of New York |   | O&R |  
|--------------------------------- |  | ---------- | --- | ---------------------- | - | --- | -
|
|
|
|Fair value of interest rate swaps |  | $          | (20 | )                      | $ | (21 | )
|                                  | 

Con
Edison of New York's swap is designated as a fair value hedge, which qualifies for "short-cut" hedge accounting under SFAS No. 133. Under this method, changes in fair value of
the swap are recorded directly against the carrying value of the hedged bonds and have no impact on earnings.

Con
Edison Development and O&R's swaps are designated as cash flow hedges under SFAS No. 133. Unrealized gains and losses on these cash flow hedges, net of tax, included in accumulated OCI for
the three and six months ended June 30, 2003 and 2002 were as follows:

|                                                                                    |  | Three Months Ended June 30, |    | Six Months Ended June 30, |  
|----------------------------------------------------------------------------------- |  | --------------------------- | -- | ------------------------- | -
|
|
|
|
|Unrealized gains/(losses) on derivatives qualified as hedges, net of taxes          |  | $                           | (1 | )                         | $
|Reclassification adjustment for gains/(losses) included in net income, net of taxes |  |                             |   |                           |  
|                                                                                    | 
|Unrealized gains/(losses) on derivatives qualified as hedges for the period         |  | $                           | (1 | )                         | $
|                                                                                    | 

As
of June 30, 2003, the accumulated OCI related to Con Edison's and O&R's interest rate swaps amounted to after-tax losses of $17 million and $12 million,
respectively, of which $3 million and $1 million, respectively, is expected to be reclassified to income within the next 12 months. The reclassification to income has no impact on
O&R's results of operations because these costs are currently recovered in O&R's rates.

Energy Trading Activities

Unregulated subsidiaries of Con Edison engage in energy trading activities that are accounted for at fair value. For the six months ended June 30, 2003,
energy-trading contracts have been marked to market in accordance with SFAS No. 133 and Emerging Issues Task Force (EITF) Issue No. 02-3, "Issues Involved in Accounting for
Derivative Contracts Held for Trading Purposes and Contracts Involved in Energy Trading and Risk Management Activities." For the corresponding period in 2002, these contracts were accounted for under
EITF Issue No. 98-10, "Accounting for Contracts Involved in Energy Trading and Risk Management Activities," which was rescinded in October of 2002.

The
fair value of energy trading net assets as of June 30, 2003 and December 31, 2002 was $3 million and $5 million, respectively.

32

---

Note J - Financial Information By Business Segment

Reference is made to Note I to the financial statements in Part I, Item 1 of the Companies' combined Quarterly Report on
Form 10-Q for the period ended March 31, 2003 (the First Quarter Form 10-Q) for information about the Companies' business segments This segment financial
information is presented differently than it was in Note N to the Con Edison financial statements in Item 8 of the Form 10-K. Con Edison no longer aggregates the regulated
electric and gas operations of Con Edison of New York and O&R. Segment financial information for 2002, 2001 and 2000 presented on the same basis as the segment financial information shown below is
included in Note I to the financial statements in Part I, Item 1 of the First Quarter Form 10-Q.

|                             |          | For the Three Months Ended June 30, |      
|---------------------------- | -------- | ----------------------------------- | -----
|
|
|
|
|
|Con Edison of New York       |          |                                     |      
|                             | Electric |                                     | $    
|                             | Gas      |                                     |      
|                             | Steam    |                                     |      
|                             |         
|Total Con Edison of New York |          | $                                   | 1,828
|                             |         
|O&R                          |          |                                     |      
|                             | Electric |                                     | $    
|                             | Gas      |                                     |      
|                             |         
|Total O&R                    |          | $                                   | 156  
|                             |         
|Unregulated Subsidiaries     |          | $                                   | 192  
|Other                        |          |                                     |     
|                             |         
|Total Con Edison             |          | $                                   | 2,176
|                             |         

33

---

|                             |          | For the Six Months Ended June 30,
|---------------------------- | -------- | ---------------------------------
|
|
|
|
|
|Con Edison of New York       |          |                                  
|                             | Electric |                                  
|                             | Gas      |                                  
|                             | Steam    |                                  
|                            
|Total Con Edison of New York |          | $                                
|                            
|O&R                          |          |                                  
|                             | Electric |                                  
|                             | Gas      |                                  
|                            
|Total O&R                    |          | $                                
|                            
|Unregulated Subsidiaries     |          | $                                
|Other                        |          |                                  
|                            
|Total Con Edison             |          | $                                
|                            

Note K - Guarantees (Con Edison)

Con Edison and its subsidiaries enter into various agreements providing financial or performance assurance to third parties on behalf of their subsidiaries. In
addition, a Con Edison Development subsidiary has issued guarantees on behalf of entities in which it has an equity interest. Con Edison's guarantees had maximum limits totaling $1.2 billion at
June 30, 2003 of which $672 million was outstanding.

The
following table summarizes, by type and term, the total maximum amount of guarantees:

|                           |  | Maximum Amount
|-------------------------- |  | --------------
|
|
|
|Commodity Transactions     |  | $             
|Newington Lease Agreement  |  |               
|Affordable Housing Program |  |               
|Intra-company Guarantee    |  |               
|Other                      |  |               
|                          
|TOTAL                      |  | $             
|                          

For a description of guarantee types see Note J to the financial statements in Part I, Item 1 of the First Quarter Form 10-Q.

Note L - Related Party Transactions (Con Edison of New York and O&R)

Reference is made to Note M to the Con Edison of New York financial statements, and Note I to the O&R financial statements, in Item 8 of the
Form 10-K.

34

---

The
costs of administrative and other services provided by Con Edison of New York and O&R to, and received from, Con Edison and its subsidiaries for the six months ended June 30, 2003 and 2002
were as follows:

|                          |  | Con Edison of New York |    | O&R
|------------------------- |  | ---------------------- | -- | ---
|
|
|
|
|Cost of Services Provided |  | $                      | 17 |    
|Cost of Services Received |  | $                      | 13 |    
|                         

In addition, O&R purchased from Con Edison of New York $87 million and $51 million of natural gas and $7 million and $12 million of
electricity for the six months ended June 30, 2003 and 2002, respectively.

Note M - New Financial Accounting Standards

In January 2003, the Financial Accounting Standards Board (FASB) issued Interpretation No. 46, "Consolidation of Variable Interest Entities" (FIN
46). For discussion of FIN 46, see Notes S, Q and O, respectively, to the Con Edison, Con Edison of New York and O&R financial statements included in Item 8 of the Form 10-K.

In
January 2003, the Companies adopted SFAS 143, "Accounting for Asset Retirement Obligations." For a discussion of SFAS No. 143, see Notes T, Q and O, respectively, to the Con
Edison, Con Edison of New York and O&R financial statements included in Item 8 of the Form 10-K. Con Edison of New York and O&R generally compute annual charges for depreciation
using the straight-line method for financial statement purposes, with rates based on average service lives and net removal costs (removal costs less salvage value). At June 30, 2003
the estimated net removal costs included in accumulated depreciation were $749 million and $42 million for Con Edison of New York and O&R, respectively.

In
June 2003, the Companies adopted SFAS No. 149, "Amendment of Statement 133 on Derivative Instruments and Hedging Activities," which amends and clarifies financial accounting and
reporting for derivative instruments. The adoption of SFAS No. 149 did not have a material impact on the Companies' financial position, results of operations or liquidity.

In
June 2003, the Companies adopted SFAS No. 150, "Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity." This Statement revises and expands
the definition of a liability (FASB Concept Statement No. 5, "Elements of Financial Statements") and provides accounting and reporting guidance. The adoption of SFAS No. 150 did not have
a material impact on the Companies' financial position, results of operations or liquidity as the Companies do not currently hold any of the financial instruments covered by this Statement.

35

---



ITEM 2.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (COMBINED FOR CON EDISON, CON EDISON OF NEW  YORK AND O&R)

This
discussion and analysis relates to the consolidated financial statements of 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) in Part I, Item 1 of this report. This discussion and analysis should be read in conjunction with these financial
statements and the notes thereto and Con Edison's Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A), Con Edison of New York's MD&A and O&R's Management's
Narrative Discussion of Results of Operations (O&R Narrative) 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, 2002 (File Nos. 1-14514, 1-1217 and 1-4315, the Form 10-K) and the MD&A in Part I, Item 2 of the combined Quarterly
Reports on Form 10-Q for the quarterly period ended March 31, 2003 (File Nos. 1-14514, 1-1217 and 1-4315, the First Quarter
Form 10-Q). Con Edison of New York and O&R, which are regulated utilities, are subsidiaries of Con Edison and together with Con Edison are referred to in this MD&A as "the
Companies."

Neither
Con Edison of New York nor O&R makes any representation as to information in this report relating to Con Edison or the subsidiaries of Con Edison other than itself.

Information
in the notes to the consolidated financial statements referred to in this discussion and analysis is hereby incorporated by reference herein. The use of terms such as "see" or "refer to"
shall be deemed to incorporate by reference into this discussion and analysis the information to which reference is made.

CORPORATE OVERVIEW

Con Edison's principal business operations are those of its regulated utility subsidiaries, Con Edison of New York and O&R. Con Edison also has unregulated
subsidiaries that compete in energy-related and telecommunications businesses.

|                         |                           | Three months ended June 30, 2003 |       | Six months ended June 30, 2003 |    | At June 30, 2003 |  
|------------------------ | ------------------------- | -------------------------------- | ----- | ------------------------------ | -- | ---------------- | -
|
|
|
|Con Edison of New York   |                           | $                                | 1,828 |                                | 84 | %                | $
|O&R                      |                           |                                  | 156   |                                | 7  | %                |  
|                         |                          
|                         | Total regulated utilities |                                  |       | 1,984                          |    | 91               | %
|                         |                          
|Unregulated subsidiaries |                           |                                  | 192   |                                | 9  | %                |  
|Other                    |                           |                                  |      |                                |   | %                |  
|                         |                          
|                         | Total Con Edison          |                                  | $     | 2,176                          |    | 100              | %
|                         |                          

Con Edison's net income for common stock for the three months ended June 30, 2003 was $66 million or $0.29 a share compared with earnings of
$98 million or $0.46 a share for the three months ended June 30, 2002.

Net
income for common stock for the six months ended June 30, 2003 was $220 million or $1.01 a share compared with earnings of $244 million, after the cumulative effect of a
change in accounting principle,

36

---

or
$1.14 a share for the six months ended June 30, 2002. See "Results of Operations - Summary," below. For additional segment financial information, see Note J to the financial
statements included in Part I, Item 1 and "Results of Operations," below.

REGULATED UTILITY SUBSIDIARIES

Con Edison of New York provides electric service to over 3.1 million customers and gas service to 1.1 million customers in New York City and
Westchester County. The company also provides steam service in parts of Manhattan. O&R, along with its regulated utility subsidiaries, provides electric service to over 285,000 customers in
southeastern New York and adjacent sections of New Jersey and northeastern Pennsylvania and gas service to over 120,000 customers in southeastern New York and northeastern Pennsylvania.

The
utilities are primarily "wires and pipes" energy delivery companies that are subject to extensive federal and state regulation. Pursuant to restructuring agreements, the utilities have sold most
of their electric generating capacity and provide their customers the opportunity to buy electricity and gas from other suppliers through their retail access programs. The utilities continue to supply
energy to most of their customers and provide delivery service to their customers that buy energy from other suppliers. The utilities purchase substantially all of the energy they supply to customers
pursuant to firm contracts or through wholesale energy markets.

The
utilities have rate plans approved by state utility regulators that cover the rates they can charge their customers. Con Edison of New York has an electric rate agreement that ends
March 2005 and gas and steam rate agreements that end in September 2004. O&R has rate agreements, subject to regulatory approval, for its electric and gas services in New York, which
would extend through October 2006. The rate agreements generally require the utilities to share with customers earnings in excess of specified rates of return on equity. Changes in energy sales
and delivery volumes are reflected in operating income (except to the extent that a weather-normalization provision applies to the gas business). With limited exceptions, rates charged to customers,
pursuant to these agreements, may not be changed during the respective terms of these agreements. However, in accordance with provisions approved by state regulators, the utilities generally recover
from customers on a current basis the costs they prudently incur for energy purchased for them. See "Rate and Restructuring Agreements" and "Recoverable Energy Costs" in each of the companies'
Note A to its financial statements in Item 8 of the Form 10-K and "Regulatory Matters," below.

In
recent years, utility construction expenditures have increased to meet increased customer demand and reliability needs. See "Capital Requirements" in the Con Edison and Con Edison of New York MD&A
in Item 7 of the Form 10-K. In June, July and August of 2002, both Con Edison of New York and O&R set new three-month electric delivery records of more than 17 and
1.7 million megawatt hours, respectively. Con Edison of New York also experienced five of its 10 highest electric peak load days while O&R experienced eight of its 10 highest peak load days. In
June 2003, Con Edison of New York and O&R each experienced a new all-time electric peak load for that month. In addition, both Con Edison of New York's and O&R's 10 highest winter
electric peak loads all occurred during the 2002-2003 winter.

37

---

Also
during the 2002-2003 winter, Con Edison of New York experienced five new top ten all-time gas distribution records while O&R experienced seven gas distribution records.

Accounting
rules and regulations for public utilities include Statement of Financial Accounting Standards (SFAS) No. 71, "Accounting for the Effects of Certain Types of Regulation," pursuant to
which the economic effects of rate regulation are reflected in financial statements. See "Application of Critical Accounting Policies," below.

UNREGULATED BUSINESSES

Con Edison's unregulated subsidiaries participate in competitive businesses and are subject to different risks than the regulated utility subsidiaries. At
June 30, 2003, Con Edison's investment in its unregulated subsidiaries was $771 million and the unregulated subsidiaries' assets amounted to $1.3 billion. Con Edison expects to
include $353 million of non-utility plant and long-term debt and other liabilities related to Con Edison Development's Newington project on its consolidated balance
sheet upon adoption of Financial Accounting Standards Board (FASB) Interpretation No. 46, "Consolidation of Variable Interest Entities" in the third quarter of 2003. See Note S to the
Con Edison financial statements in Item 8 of the Form 10-K.

Consolidated
Edison Solutions, Inc. (Con Edison Solutions) sells electricity, gas and energy-related services to delivery customers of Con Edison of New York, O&R and other utilities. The
company serves approximately 32,000 electric customers with an estimated aggregate annual load of 1,100 MW of electricity as of June 30, 2003.

Consolidated
Edison Development, Inc. (Con Edison Development) owns and operates generating plants and energy and other infrastructure projects. At June 30, 2003, the company owned
interests in or leased electric generating facilities with an aggregate capacity of 1,778 MW. The electricity produced from these facilities is sold under contract or on the wholesale electricity
markets.

Consolidated
Edison Energy, Inc. (Con Edison Energy) provides energy and capacity to Con Edison Solutions and others and markets the output of plants owned or operated by Con Edison
Development. The company supplies an estimated 300 MW of electric load (including capacity, energy, ancillary services and transmission) to a utility in New Jersey for basic generation service under a
contract that expired in July 2003 and has agreed to supply an estimated 600 MW of such service to other New Jersey utilities (including 100 MW for a regulated utility subsidiary of O&R) for
the period August 2003 through May 2004, and an additional 400 MW to unaffiliated New Jersey utilities for the period August 2003 through May 2006. The company also
provides risk management services to Con Edison Solutions, Con Edison Development and others.

Con
Edison Communications, LLC (Con Edison Communications) builds and operates fiber optic networks to provide telecommunications services. The company's properties (the capitalized cost of which at
June 30, 2003 amounted to $162 million, net of accumulated depreciation) include network facilities and more than 300 miles of fiber optic cable that has been installed in the New York
City metropolitan area primarily through Con Edison of New York's underground conduits and other rights of way. The company, incorporated in 1997, began providing services to customers in 2001. During
its start-up phase and currently, the company has incurred operating losses.

38

---

RESULTS OF OPERATIONS - SUMMARY

Con Edison's earnings per share for the three months ended June 30, 2003 were $0.29 ($0.29 on a diluted basis) as compared to $0.46 ($0.46 on a diluted
basis) for the 2002 period.

Con
Edison's earnings per share for the six months ended June 30, 2003 were $1.01 ($1.01 on a diluted basis) as compared to $1.14, after the cumulative effect of a change in accounting
principle, ($1.14 on a diluted basis) for the 2002 period.

Earnings
for the three and six months ended June 30, 2003 and 2002 were as follows:

|                         |  | Three Months Ended June 30, |    | Six Months Ended June 30, |  
|------------------------ |  | --------------------------- | -- | ------------------------- | -
|
|
|
|Con Edison of New York   |  | $                           | 65 |                           | $
|O&R                      |  |                             | 3  |                           |  
|Unregulated Subsidiaries |  |                             | 3  |                           |  
|Other*                   |  |                             | (5 | )                         |  
|                         | 
|Con Edison               |  | $                           | 66 |                           | $
|                         | 

* Includes parent company and inter-company accounting.

** Includes a charge for the cumulative effect of a change in accounting principles for goodwill impairment of certain
unregulated generating assets totaling $20 million after tax.

Con Edison's earnings for the three months ended June 30, 2003 were $32 million lower than the 2002 period, reflecting the following factors
(after tax, in millions):

|Con Edison of New York:                           |                                                                   |  |     |    
|------------------------------------------------- | ----------------------------------------------------------------- |  | --- | ---
|                                                  | Impact of weather in 2003 on net revenues versus 2002 (estimated) |  | $   | (13
|                                                  | Sales growth from factors other than weather (estimated)          |  |     | 7  
|                                                  | Reduced net credit for pensions & other postretirement benefits   |  |     | (17
|                                                  | Higher depreciation and property tax expense                      |  |     | (7 
|                                                  | Other                                                             |  |     | (2 
|                                                  |                                                                   |  |    
|Total Con Edison of New York                      |                                                                   |  | (32 | )  
|O&R                                               |                                                                   |  | (4  | )  
|Unregulated subsidiaries including parent company |                                                                   |  | 4   |    
|                                                  |                                                                  
|                                                  | Total                                                             |  | $   | (32
|                                                  |                                                                  

39

---

Con Edison's earnings for the six months ended June 30, 2003 were $24 million lower than the 2002 period, reflecting the following factors (after
tax, in millions):

|Con Edison of New York:                                     |                                                                   |   |     |    
|----------------------------------------------------------- | ----------------------------------------------------------------- | - | --- | ---
|                                                            | Impact of weather in 2003 on net revenues versus 2002 (estimated) |   | $   | 16 
|                                                            | Sales growth from factors other than weather (estimated)          |   |     | 18 
|                                                            | Reduced net credit for pensions & other postretirement benefits   |   |     | (33
|                                                            | Regulatory accounting/amortizations                               |   |     | (16
|                                                            | Higher depreciation and property tax expense                      |   |     | (13
|                                                            | Amortization of divestiture gain in the first quarter of 2002     |   |     | (13
|                                                            | Other                                                             |   |     | (4 
|                                                            |                                                                   |   |    
|Total Con Edison of New York                                |                                                                   |   | (45 | )  
|O&R                                                         |                                                                   |   |    |    
|Unregulated subsidiaries including parent company           |                                                                   |   | 1   |    
|Cumulative effect of change in accounting principle in 2002 |                                                                   |   | 20  |    
|                                                            |                                                                  
|Total                                                       |                                                                   | $ | (24 | )  
|                                                            |                                                                  

See "Results of Operations" below for further discussion and analysis of results of operations.

APPLICATION OF CRITICAL ACCOUNTING POLICIES

The Companies' financial statements reflect the application of their accounting policies, which conform to accounting principles generally accepted in the
United States of America. The Companies' critical accounting policies include industry-specific accounting applicable to regulated public utilities and accounting for pensions and other postretirement
benefits, contingencies, derivative instruments, goodwill and leases. See "Application of Critical Accounting Policies" in the Con Edison and Con Edison of New York MD&A and the O&R Narrative in Item
7 of the Form 10-K and in Part I, Item 2 of First Quarter Form 10-Q.

LIQUIDITY AND CAPITAL RESOURCES

The Companies' liquidity reflects cash flows from operating, investing and financing activities, as shown on the respective consolidated statement of cash flows
included in Part I, Item 1 of this report. See "Liquidity and Capital Resources" in the Con Edison and Con Edison of New York MD&A in Item 7 of the Form 10-K. Changes in the
Companies' cash and temporary cash investments resulting from operating, investing and financing activities for the six months ended June 30, 2003 and 2002 are summarized as follows:

|                                                     |            | Con Edison |      | Con Edison of
New York |   | O&R  |     
|---------------------------------------------------- | ---------- | ---------- | ---- | ---------------------- | - | ---- | ----
|
|
|
|Operating activities                                 |            | $          | 378  |                        | $ | 515  |     
|Investing activities                                 |            |            | (721 | )                      |   | (729 | )   
|Financing activities                                 |            |            | 287  |                        |   | (72  | )   
|                                                     |           
|                                                     | Net change |            |      | (56                    | ) |      | (286
|                                                     |           
|Balance at beginning of period                       |            |            | 132  |                        |   | 359  |     
|                                                     |           
|Balance at end of period (including restricted cash) |            | $          | 76   |                        | $ | 73   |     
|                                                     |           

Cash flows used in operating activities for the six months ended June 30, 2003, as compared to the 2002 period, reflect, for Con Edison and Con Edison of
New York, lower income before preferred stock

40

---

dividends
and, for each of the Companies, increased accounts receivable. These increases resulted from higher electric, gas and steam sales for Con Edison of New York, higher electric and gas sales
for O&R and higher fuel and purchased power unit costs for the period ended June 30, 2003 compared with the 2002 period. In general, changes in Con Edison of New York's and O&R's cost of
purchased power, fuel and gas affect the timing of cash flows but not net income because, in accordance with provisions approved by state regulators, the utilities generally recover from customers the
costs they prudently incur for energy purchased for their customers. See "Rate and Restructuring Agreements" and "Recoverable Energy Costs" in each of the Companies' Note A to their financial
statements in Item 8 of the Form 10-K and "Regulatory Matters," below.

The
reconciliation of income to determine cash flows from operating activities for each of the Companies for the six months ended June 30, 2003, as compared with the 2002 period is also
impacted by changes in non-cash items that were reflected in net income. Non-cash items for Con Edison and Con Edison of New York include decreased prepaid pension costs
(resulting from past investment performance and a reduction for 2003 in the assumption for future performance) and increased depreciation and amortization (resulting from higher plant balances).

Cash
flows used in investing activities of each of the Companies reflect increased utility construction expenditures and, for Con Edison, also reflect decreased construction expenditures by its
unregulated subsidiaries.

Cash
flows from financing activities of Con Edison and O&R reflect increased commercial paper issuance (shown on the consolidated balance sheets in Part I, Item 1 of this report as "Notes
payable"). The amounts outstanding at June 30, 2003 for Con Edison and O&R were $267 million and $60 million, respectively. Con Edison of New York had no commercial paper
outstanding at June 30, 2003. At June 30, 2003, the weighted average yield for the Companies' commercial paper was 1.15 percent. In July 2003, Con Edison issued
$200 million of 3.625 percent 5-year Series 2003A Debentures, the net proceeds of which were used to repay commercial paper.

Cash
flows from financing activities for the six months ended June 30, 2003, reflect the issuance of 9.6 million Con Edison common shares (resulting in net proceeds of
$378 million, which were invested by Con Edison in Con Edison of New York). Cash flows from financing activities in the 2002 period reflect the issuance of $325 million of Con Edison's
7.25 percent 40-year Series 2002A Debentures (the proceeds of which were used to repay commercial paper). Cash flows from financing activities in both the 2003 and 2002
periods also reflect the issuance of Con Edison common shares through its dividend reinvestment and employee stock plans (2003: 1.3 million shares for $31 million; 2002:
0.8 million shares for $10 million).

In
addition, cash flows from financing activities during the 2003 and 2002 periods reflect the refunding of long-term debt. In the 2003 period, Con Edison of New York redeemed
$275 million 7.75 percent 35-year Series 1996A, Subordinated Deferrable Interest Debentures using cash held for that purpose at December 31, 2002; redeemed at
maturity $150 million of 6.375 percent 10-year Series 1993D Debentures and issued $175 million 5.875 percent 30-year Series 2003A
Debentures; redeemed $380 million

41

---

7.5 percent
30-year Series 1993G Debentures using the net proceeds from the issuance of its $200 million 3.85 percent 10-year Series 2003B
Debentures and $200 million 5.10 percent 30-year Series 2003C Debentures. Also in the 2003 period, O&R redeemed at maturity its $35 million 6.56 percent
10-year Series 1993D Debentures using proceeds from the issuance of commercial paper. In the 2002 period, Con Edison of New York redeemed at maturity its $150 million
6.6 percent 9-year Series 1993C and its $150 million variable-rate 5-year Series 1997A and issued $300 million of
5.625 percent 10-year Series 2002A Debentures.

Con
Edison's shareholders, at their annual meeting in May 2003, approved the Con Edison Long-Term Incentive Plan under which up to ten million shares of its common stock may be
issued. No shares have been issued under the plan.

The
following table shows variations in certain significant line items on the Companies' consolidated balance sheets at June 30, 2003, compared with December 31, 2002, that have also
impacted specific line items within the Companies' consolidated statements of cash flows for the six months ended June 30, 2003. With respect to regulatory assets and liabilities, see
Note D to the financial statements in Part I, Item 1 of this report.

|                                                                           |  | Con Edison
2003 vs. 2002
Variance |     | Con Edison of New York
2003 vs. 2002
Variance |   | O&R
2003 vs. 2002
Variance |  
|-------------------------------------------------------------------------- |  | --------------------------------- | --- | --------------------------------------------- | - | -------------------------- | -
|
|
|Accounts receivable - customers, less allowance for uncollectible accounts |  | $                                 | 52  |                                               | $ | 30                         |  
|Regulatory assets - recoverable energy costs                               |  |                                   | 32  |                                               |   | 24                         |  
|Gas in storage                                                             |  |                                   | 24  |                                               |   | 20                         |  
|Accounts payable                                                           |  |                                   | (32 | )                                             |   | (22                        | )
|Regulatory liabilities - electric excess earnings                          |  |                                   | 9   |                                               |   | 9                          |  
|Regulatory liabilities - transmission congestion contracts                 |  |                                   | 80  |                                               |   | 80                         |  
|                                                                           | 

Accounts receivable - customers, less allowance for uncollectible accounts and regulatory assets -recoverable energy costs increased due primarily
to higher electric sales and purchased power unit costs for Con Edison of New York and O&R during June 2003 compared with December 2002. To a lesser extent, the higher customer accounts
receivable balance also reflects the timing of payment and collection of customer bills and increased customer payment agreements at Con Edison of New York, and an increase in level billing balances
for Con Edison of New York and O&R. The higher energy sales and energy unit purchase costs are discussed below under "Results of Operations." In accordance with provisions approved by state
regulators, the utilities generally recover from customers the costs they prudently incur for energy purchased for their customers. See "Rate and Restructuring Agreements," "Recoverable Energy Costs"
of the Companies' Note A to their financial statements in Item 8 of the Form 10-K and "Regulatory Matters," below.

Gas
in storage increased at June 30, 2003 as compared with year-end 2002 due primarily to higher unit costs of gas in storage during the second quarter of 2003 as compared to
year-end 2002.

Accounts
payable decreased at June 30, 2003 as compared with year-end 2002 due primarily to the comparatively lower level of outstanding payments for capital expenditures as of
June 30, 2003. This

42

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decrease
is offset in part by increased electric purchased power costs at June 30, 2003 as compared to year-end 2002, reflecting higher sales volumes and higher unit costs. Accounts
payable increased at June 30, 2002 as compared with year-end 2001 due primarily to a higher level of energy purchases in June 2002 as compared to December 2001.

Electric
excess earnings for Con Edison of New York increased at June 30, 2003 as compared with year-end 2002. This amount is an addition to a reserve established in 2002 for the
rate year ended March 31, 2003 for earnings in excess of a specified rate of return in accordance with Con Edison of New York's 2000 Electric Rate Agreement. As of June 30, 2003,
the total electric excess earnings reserve was $49 million. See "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.

Transmission
congestion contracts increased at June 30, 2003 compared with year-end 2002 reflecting proceeds from the sale through the New York Independent System Operator (NYISO)
of transmission rights on Con Edison of New York's transmission system. These proceeds are being retained for customer benefit.

Capital
Resources and Requirements

In August 2002, President Bush signed into law an appropriations bill that authorizes funds, for which Con Edison of New York is eligible to apply, to
recover costs it incurred in connection with the attack on the World Trade Center. The procedural guidelines for disbursement of the federal funds are in the process of being developed. See
Note Q to the Con Edison financial statements and Note P to the Con Edison of New York financial statements in Item 8 of the Form 10-K.

For
each of the Companies, the ratio of earnings to fixed charges (Securities and Exchange Commission basis) for the six months and 12 months ended June 30, 2003 and the years ended
December 31, 2002, 2001, 2000, 1999 and 1998 was:

|                       |  | Earnings to Fixed Charges
|---------------------- |  | -------------------------
|
|
|
|
|Con Edison             |  | 2.5                      
|Con Edison of New York |  | 2.7                      
|O&R                    |  | 3.9                      
|                      

For each of the Companies, the common equity ratio as of June 30, 2003 and the years ended December 31, 2002, 2001 and 2000 was:

|                       |  | Common Equity Ratio
|---------------------- |  | -------------------
|
|
|
|
|
|Con Edison             |  | 49.6               
|Con Edison of New York |  | 48.3               
|O&R                    |  | 54.0               
|                      

43

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The commercial paper of the Companies is rated P-1, A-1 and F-1, respectively, by Moody's Investor Service, Inc.
(Moody's), Standard & Poor's Rating Services (S&P) and Fitch Ratings (Fitch). Con Edison's unsecured debt is rated A2, A- and A-, respectively, by Moody's, S&P and
Fitch. The unsecured debt of Con Edison of New York and O&R is rated A1, A and A+, respectively, by Moody's, S&P and Fitch. A securities rating is subject to revision or withdrawal at any time by the
assigning rating organization.

Contractual
Obligations and Commercial Commitments

At June 30, 2003, there was no material change in the Companies' contractual obligations and commercial commitments compared to those disclosed in
"Contractual Obligations and Commercial Commitments" in the Con Edison and Con Edison of New York MD&A in Item 7 of the Form 10-K, other than the long-term debt
transactions described above and the capacity and energy purchase agreements described in the "Electric Power Requirements" in Part I, Item 2 of the First Quarter 10-Q.

ELECTRIC POWER REQUIREMENTS

At June 30, 2003, there was no material change in the Companies' electric power requirements compared to those discussed in "Electric Power Requirements"
in the Con Edison and Con Edison of New York MD&A in Item 7 of the Form 10-K and in Part I, Item 2 of the First Quarter 10-Q.

REGULATORY MATTERS

At June 30, 2003, there was no material change in the Companies' regulatory matters compared to those disclosed under "Regulatory Matters" in the Con
Edison and Con Edison of New York MD&A in Item 7 in the Form 10-K; in "Rate and Restructuring Agreements and
Recoverable Energy Costs" in Note A to the O&R financial statements in Item 8 of the Form 10-K; and in "Regulatory Matters" in Part I, Item 2 of the First Quarter
Form 10-Q, other than as described in Note D to the financial statements in Part I, Item 1 of this report.

FINANCIAL MARKET RISKS

The Companies are subject to various risks and uncertainties associated with their operations. The most significant market risks include interest rate risk,
commodity price risk, credit risk and investment risk. At June 30, 2003, there were no material changes to the Companies' financial market risks from those disclosed under "Financial Market
Risks" in the Con Edison and Con Edison of New York MD&A in Item 7 of the Form 10-K and O&R Narrative in Item 7A of the Form 10-K, to which reference is made.

Interest
Rate Risk

Con Edison estimates that, as of June 30, 2003, each 10 percent variation in interest rates applicable to its variable rate debt of
$926 million would result in a change in annual interest expense of $1 million. Each 10 percent change in Con Edison of New York's and O&R's variable interest rates applicable to
their variable rate debt of $615 million and $104 million, respectively, annual interest expense for Con Edison of New York would change by $1 million and there would be no
material impact for O&R.

Commodity
Price Risk

Con Edison estimates that, as of June 30, 2003, a 10 percent change in market prices would result in a change in fair value of $13 million
for the derivative instruments used by its regulated utility subsidiaries to hedge purchases of electricity and gas, of which $9 million is for Con Edison of New York and

44

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$4 million
for O&R. Con Edison 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
accordance with provisions approved by state regulators, the utilities generally recover from customers the costs they prudently incur for energy purchased for their customers. See "Rate and
Restructuring Agreements," "Recoverable Energy Costs" of the Companies' Note A to their financial statements in Item 8 of the Form 10-K and "Regulatory Matters," above.

Con
Edison's unregulated subsidiaries use a value-at-risk (VaR) model to assess the market risk of their electricity and gas commodity fixed price purchase and sales
commitments, physical forward contracts and commodity derivative instruments. VaR for hedges associated with generating assets and commodity contracts, assuming a one-day holding period,
for the six months ended June 30, 2003, and 2002, respectively, was as follows:

|                       |  | 2003 |   | 2002
|---------------------- |  | ---- | - | ----
|
|
|Average for the period |  | $    | 1 |     
|High                   |  | $    | 3 |     
|Low                    |  | $    |  |     
|                      

Credit
Risk

Con Edison's unregulated energy subsidiaries had $80 million of credit exposure, net of collateral and reserves, at June 30, 2003, of which
$58 million was with investment grade counterparties and $19 million was with the New York Mercantile Exchange or independent system operators.

Investment
Risk

The Companies' current investment policy for their pension plan assets includes investment targets of 60 percent equities and 40 percent fixed
income and other securities. At June 30, 2003, the pension plan investments consisted of 56 percent equity and 44 percent fixed income and other securities.

ENERGY TRADING ACTIVITIES

Unregulated subsidiaries of Con Edison engage in energy trading activities that are accounted for in accordance with SFAS No. 133, "Accounting for
Derivative Instruments and Hedging Activities," as amended. Con Edison Energy makes wholesale purchases and sales of electric, gas and related energy trading products and provides risk management
services to other unregulated Con Edison subsidiaries in order to optimize the value of their electric generating facilities and retail supply contracts. It also engages in a limited number of other
wholesale commodity transactions. Con Edison Energy utilizes forward contracts for the purchase and sale of electricity and capacity, over-the-counter swap contracts,
exchange-traded natural gas and crude oil futures and options, transmission congestion contracts, natural gas transportation contracts and other physical and financial contracts.

For
the period ended June 30, 2003, these contracts were marked to market in accordance with Emerging Issues Task Force (EITF) 02-3, "Issues Involved in Accounting for Derivative
Contracts Held for Trading Purposes and Contracts Involved in Energy Trading and Risk Management Activities," and SFAS No. 133. Changes in fair value of energy trading contracts that do not
qualify for hedge accounting treatment are recorded in income in the reporting period in which they occur. For the corresponding

45

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period
in 2002, these contracts had been accounted for under EITF Issue No. 98-10, "Accounting for Contracts Involved in Energy Trading and Risk Management Activities," which was
rescinded in October of 2002. Certain contracts, such as long-term natural gas transportation contracts that were marked to market under EITF Issue No. 98-10 do not fall
within the scope of SFAS No. 133, and therefore, are no longer marked to market for accounting purposes.

The
changes in fair value of energy trading net assets for the three and six months ended June 30, 2003 and 2002 were as follows:

|                                                           |                                                | Three Months Ended June 30, |    | Six Months Ended June 30, |  
|---------------------------------------------------------- | ---------------------------------------------- | --------------------------- | -- | ------------------------- | -
|
|
|
|Fair value of net assets outstanding - beginning of period |                                                | $                           | 9  |                           | $
|Change in fair value during the period:                    |                                                |                             |    |                           |  
|                                                           | Net premium paid                               |                             |    | 1                         |  
|                                                           | Changes in fair value prior to settlement      |                             |    | 4                         |  
|                                                           | Fair value realized at settlement of contracts |                             |    | (11                       | )
|                                                           |                                               
|Total change in fair value during the period               |                                                |                             | (6 | )                         |  
|                                                           |                                               
|Fair value of net assets outstanding - end of period       |                                                | $                           | 3  |                           | $
|                                                           |                                               

As of June 30, 2003, the sources of fair value of the energy trading net assets were as follows:

|                                                   |  | Fair Value of Net Assets at Period End |   
|-------------------------------------------------- |  | -------------------------------------- | --
|
|
|
|Prices provided by external sources                |  | $                                      | 5 
|Prices based on models and other valuation methods |  |                                        | (2
|                                                   | 
|Total                                              |  | $                                      | 3 
|                                                   | 

"Prices provided by external sources" represent the fair value of exchange-traded futures and options and the fair value of positions for which price quotations
are available through or derived from brokers or other market sources.

"Prices
based on models and other valuation methods" represent the fair value of positions calculated using internal models when directly and indirectly quoted external prices or prices derived from
external sources are not available. Internal models incorporate the use of options pricing and estimates of the present value of cash flows based upon underlying contractual terms. The models reflect
management's estimates, taking into account observable market prices, estimated market prices in the absence of quoted market prices, the risk-free market discount rate, volatility
factors, estimated correlations of energy commodity prices and contractual volumes. Counterparty specific credit quality, market price uncertainty and other risks are also factored into the models.

MATERIAL CONTINGENCIES

For information concerning potential liabilities arising from the Companies' material contingencies, see the notes to the Companies' financial statements in
Part I, Item 1 of this report.

46

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RESULTS OF OPERATIONS

THREE MONTHS ENDED JUNE 30, 2003 COMPARED WITH THREE MONTHS ENDED JUNE 30, 2002

The Companies' results of operations (which were discussed above under "Results of OperationsSummary") for the three months ended June 30,
2003 compared with the three months ended June 30, 2002 were:

|                                                                                          |  | Con Edison* |     | Con Edison of New York |       | O&R |  
|----------------------------------------------------------------------------------------- |  | ----------- | --- | ---------------------- | ----- | --- | -
|
|
|
|Operating revenues                                                                        |  | $           | 328 |                        | 17.7  | %   | $
|Purchased power                                                                           |  |             | 204 |                        | 29.1  |     |  
|Fuel                                                                                      |  |             | 55  |                        | 117.0 |     |  
|Gas purchased for resale                                                                  |  |             | 73  |                        | 61.3  |     |  
|                                                                                          | 
|Operating revenues less purchased power, fuel and gas purchased for resale (net revenues) |  |             | (4  | )                      | (0.4  | )   |  
|Other operations and maintenance                                                          |  |             | 43  |                        | 13.1  |     |  
|Depreciation and amortization                                                             |  |             | 8   |                        | 6.6   |     |  
|Taxes, other than income tax                                                              |  |             | 1   |                        | 0.4   |     |  
|Income tax                                                                                |  |             | (20 | )                      | (32.8 | )   |  
|                                                                                          | 
|Operating income                                                                          |  |             | (36 | )                      | (18.0 | )   |  
|Other income less deductions and related federal income tax                               |  |             | 3   |                        | 50.0  |     |  
|Net interest charges                                                                      |  |             | (1  | )                      | (1.0  | )   |  
|Preferred stock dividend requirements                                                     |  |             |    |                        |      |     |  
|                                                                                          | 
|Net income for common stock                                                               |  | $           | (32 | )                      | (32.7 | )%  | $
|                                                                                          | 

* Represents the consolidated financial results of Con Edison and its subsidiaries.

A discussion of the results of operations by principal business segment follows. Con Edison's principal segments are Con Edison of New York's regulated
electric, gas and steam utility segments, O&R's regulated electric and gas utility and other operations segments, and Con Edison's unregulated businesses. For additional business segment financial
information, see Note J to the financial statements in Part I, Item 1 of this report.

CON EDISON OF NEW YORK

Electric

Con
Edison of New York's electric operating revenues in the second quarter of 2003 increased $158 million compared with the second quarter of 2002, reflecting higher fuel and purchased power
costs of $173 million (see below). This increase also reflects a decrease in net revenues (operating revenues less fuel and purchased power costs) due primarily to the exceptionally cool
weather ($14 million).

47

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Con
Edison of New York's electric sales and deliveries, excluding off-system sales, for the second quarter of 2003 compared with the second quarter of 2002 were:

MILLIONS OF KWHS

|                                       |                              | Three Months Ended |        |       |        |      |     
|-------------------------------------- | ---------------------------- | ------------------ | ------ | ----- | ------ | ---- | ----
|
|
|Residential/Religious                  |                              | 2,558              |        | 2,629 |        | (71  | )   
|Commercial/Industrial                  |                              | 4,137              |        | 4,515 |        | (378 | )   
|Other                                  |                              | 37                 |        | 46    |        | (9   | )   
|                                       |                             
|                                       | Total Full Service Customers |                    | 6,732  |       | 7,190  |      | (458
|Retail access customers                |                              | 2,888              |        | 2,677 |        | 211  |     
|                                       |                             
|                                       | Sub-total                    |                    | 9,620  |       | 9,867  |      | (248
|NYPA, Municipal Agency and Other Sales |                              | 2,393              |        | 2,516 |        | (123 | )   
|                                       |                             
|                                       | Total Service Area           |                    | 12,013 |       | 12,383 |      | (370
|                                       |                             

Electric delivery volumes in Con Edison of New York's service area decreased 3.0 percent in the second quarter of 2003 compared with the second quarter
of 2002. The decrease in delivery volumes reflects the exceptionally cool weather in the second quarter of 2003 as compared with the 2002 period. After adjusting for variations, principally weather
and billing days in each period, electric delivery volumes in Con Edison of New York's area increased 0.3 percent in the second quarter of 2003 compared with the second quarter of 2002.
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 electric purchased power costs increased $166 million in the second quarter of 2003 as compared with the second quarter of 2002, due to an increase in the average unit
price of purchased power. This increase was offset in part by lower usage by the company's full service customers and higher volumes of electricity purchased from other suppliers by participants in
the company's retail access programs. Electric fuel costs increased $7 million, reflecting an increase in the average unit price of fuel. In general, Con Edison of New York recovers prudently
incurred fuel and purchased power costs pursuant to rate provisions approved by the PSC. See "Recoverable Energy Costs" in Note A to the Con Edison of New York financial statements in Item 8 of
the Form 10-K.

Con
Edison of New York's electric operating income decreased $31 million in the second quarter of 2003 compared with the second quarter of 2002. The principal component of the decrease was an
increase in other operations and maintenance expense of $28 million, due primarily to a reduced net credit for pensions and other postretirement benefits. The decrease also reflects lower net
revenues ($14 million) primarily as a result of the exceptionally cool weather, higher depreciation ($4 million) and higher property taxes ($5 million), offset in part by lower
income taxes ($22 million).

Gas

Con Edison of New York's gas operating revenues increased $75 million, reflecting primarily the higher cost of purchased gas ($70 million) in the
second quarter of 2003 compared with the second quarter of 2002. The higher cost of purchased gas reflects higher unit costs and increased sales volumes for firm

48

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sales
customers. The increased sales volumes result primarily from the exceptionally cool weather in the second quarter of 2003. See "Recoverable Energy Costs" in Note A to the Con Edison of
New York financial statements in Item 8 of the Form 10-K.

Con
Edison of New York's revenues from gas sales are subject to a weather normalization clause that moderates, but does not eliminate, the effect of weather-related changes on net income.

Con
Edison of New York's gas operating income increased $3 million in the second quarter of 2003 compared with the second quarter of 2002, reflecting primarily an increase in net revenues
(operating revenues less gas purchased for resale) of $4 million and a decrease to property taxes of $5 million. The property tax decrease reflects a reconciliation adjustment in the
second quarter of 2002. The increase in operating income was partially offset by a reduced net credit for pension and other post-retirement benefits ($5 million) and increased
depreciation expense ($1 million).

Con
Edison of New York's gas sales and deliveries, excluding off-system sales, for the second quarter of 2003 compared with the second quarter of 2002 were:

THOUSANDS OF DTHS

|                                 |                                     | Three Months Ended |        |        |        |         |        
|-------------------------------- | ----------------------------------- | ------------------ | ------ | ------ | ------ | ------- | -------
|
|
|Firm Sales                       |                                     |                    |        |        |        |         |        
|Residential                      |                                     | 10,034             |        | 8,627  |        | 1,407   |        
|General                          |                                     | 7,538              |        | 6,940  |        | 598     |        
|Firm Transportation              |                                     | 3,449              |        | 3,527  |        | (78     | )      
|                                 |                                    
|                                 | Total Firm Sales and Transportation |                    | 21,021 |        | 19,094 |         | 1,927  
|Off Peak/Interruptible Sales     |                                     | 4,759              |        | 2,911  |        | 1,848   |        
|Non-Firm Transportation of Gas   |                                     |                    |        |        |        |         |        
|NYPA                             |                                     | 6,386              |        | 4,544  |        | 1,842   |        
|Generation Plants                |                                     | 5,587              |        | 20,011 |        | (14,424 | )      
|Total NYPA and Generation Plants |                                     | 11,973             |        | 24,555 |        | (12,582 | )      
|Other                            |                                     | 2,818              |        | 5,960  |        | (3,142  | )      
|                                 |                                    
|                                 | Total Sales and Transportation      |                    | 40,571 |        | 52,520 |         | (11,949
|                                 |                                    

Con Edison of New York's firm sales and transportation volumes increased 10.1 percent in the second quarter 2003 compared with the second quarter of
2002. The increase reflects the impact of the exceptionally cool weather in the second quarter of 2003 as compared with the second quarter of 2002. After adjusting for variations, principally weather
and billing days in each period, firm gas sales and transportation volumes in the company's service area increased 0.5 percent in the second quarter of 2003 as compared with the second quarter
of 2002.

Non-firm
transportation of customer-owned gas to NYPA and electric generating plants decreased 51.2 percent in the second quarter of 2003 as compared with the second quarter of 2002
due to higher gas prices. In 2003, because of the relative prices of natural gas and fuel oil, power plants in the company's gas service area utilized oil rather than gas for a significant portion of
their generation. The decline in gas usage had minimal impact on earnings due to the application of a fixed demand charge for local transportation.

49

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Steam

Con Edison of New York's steam operating revenues increased $26 million and steam operating loss increased $7 million for the second quarter of
2003 compared with the second quarter of 2002. The increase in revenues reflects higher fuel and purchased power costs for the second quarter of 2003 compared to the second quarter of 2002. See
"Recoverable Energy Costs" in Note A to the Con Edison of New York financial statements in Item 8 of the Form 10-K. The increase in operating loss primarily reflects the
decrease in net revenues (operating revenues less fuel and purchased power costs) of $10 million, higher income taxes ($2 million) and higher property taxes ($1 million), offset
in part by lower state and local taxes on revenues ($5 million).

Con
Edison of New York's steam sales and deliveries for the second quarter of 2003 compared with the second quarter of 2002 were:

MILLIONS OF POUNDS

|                |             | Three Months Ended |       |       |       |      |    
|--------------- | ----------- | ------------------ | ----- | ----- | ----- | ---- | ---
|
|
|General         |             | 101                |       | 86    |       | 15   |    
|Apartment house |             | 1,438              |       | 1,297 |       | 141  |    
|Annual power    |             | 2,896              |       | 3,099 |       | (203 | )  
|                |            
|                | Total Sales |                    | 4,435 |       | 4,482 |      | (47
|                |            

Steam sales volumes decreased 1.0 percent in the second quarter of 2003 compared with the second quarter of 2002, primarily as a result of the
exceptionally cool weather in the second quarter of 2003. After adjusting for variations, principally weather and billing days in each period, steam sales increased 1.3 percent.

Income
Taxes

Income taxes decreased $18 million in the second quarter of 2003 compared with the second quarter of 2002 due primarily to lower taxable income.

Other
Income

Other income (deductions) increased $3 million in the second quarter of 2003 compared with the second quarter of 2002 due primarily to an increase in
allowance for equity funds used during construction ($2 million).

O&R

Electric

Electric operating revenues increased $3 million in the second quarter of 2003 compared with the second quarter of 2002, due primarily to higher
purchased power costs in the 2003 period (see below). This increase was offset in part by a decrease in net revenues (operating revenues less fuel and purchased power costs) in the 2003 period
($7 million). The decrease is due primarily to the accrual of an additional $6 million for disallowed deferred purchased power costs for RECO (see Note D to the financial
statements in Part I, Item 1 of this report) and the exceptionally cool weather.

50

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O&R's
electric sales and deliveries, excluding off-system sales, for the second quarter of 2003 compared with the second quarter of 2002 were:

MILLIONS OF KWHS

|                        |                              | Three Months Ended |       |     |       |     |    
|----------------------- | ---------------------------- | ------------------ | ----- | --- | ----- | --- | ---
|
|
|Residential/Religious   |                              | 372                |       | 405 |       | (33 | )  
|Commercial/Industrial   |                              | 585                |       | 609 |       | (24 | )  
|Other                   |                              | 24                 |       | 24  |       |    |    
|                        |                             
|                        | Total Full Service Customers |                    | 981   |     | 1,038 |     | (57
|                        |                             
|Retail Access Customers |                              | 327                |       | 298 |       | 29  |    
|                        |                             
|                        | Total Service Area           |                    | 1,308 |     | 1,336 |     | (28
|                        |                             

Electric delivery volumes in O&R's service area decreased 2.1 percent in the second quarter of 2003 compared with the second quarter of 2002 due to the
exceptionally cool weather in the second quarter of 2003. After adjusting for weather variations, electric delivery volumes in O&R's service area were 2.7 percent higher in the 2003 period.

O&R's
purchased power costs increased $10 million in the second quarter of 2003 as compared with the second quarter of 2002, due to an increase in the average unit price of purchased power.
This increase was offset in part by lower energy use by the company's full service customers and higher volumes of electricity purchased by customers from other suppliers by participants in O&R's
retail access program. In general, O&R recovers prudently incurred fuel and purchased power costs pursuant to rate provisions approved by state utility regulators. See "Recoverable Energy Costs" in
Note A to the O&R financial statements in Item 8 of the Form 10-K and "Regulatory Matters," above.

O&R's
electric operating income decreased $4 million in the second quarter of 2003 compared with the second quarter of 2002. The decrease is due primarily to the decrease in net revenues
(operating revenues less purchased power) discussed above ($7 million), offset in part by reduced electric operations and maintenance expenses of $3 million.

Gas

O&R's gas operating revenues increased $9 million in the second quarter of 2003 compared with the second quarter of 2002, reflecting primarily the higher
cost of purchased gas ($8 million) in the 2003 period. This increase in the cost of gas purchased for resale resulted from increased sales to firm customers in response to the exceptionally
cool weather in the 2003 period, and increased gas unit costs. See "Recoverable Energy Costs" in Note A to the O&R financial statements in Item 8 of the Form 10-K.

51

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O&R's
gas sales and deliveries, excluding off-system sales, for the second quarter of 2003 compared with the second quarter of 2002 were:

THOUSANDS OF DTHS

|                               |                                     | Three Months Ended |       |       |       |        |       
|------------------------------ | ----------------------------------- | ------------------ | ----- | ----- | ----- | ------ | ------
|
|
|Firm Sales                     |                                     |                    |       |       |       |        |       
|Residential                    |                                     | 1,765              |       | 1,616 |       | 149    |       
|General                        |                                     | 563                |       | 522   |       | 41     |       
|Firm Transportation            |                                     | 1,315              |       | 931   |       | 384    |       
|                               |                                    
|                               | Total Firm Sales and Transportation |                    | 3,643 |       | 3,069 |        | 574   
|Off Peak/Interruptible Sales   |                                     | 1,574              |       | 1,707 |       | (133   | )     
|Non-Firm Transportation of Gas |                                     |                    |       |       |       |        |       
|Generation Plants              |                                     | 604                |       | 4,255 |       | (3,651 | )     
|Other                          |                                     | 184                |       | 193   |       | (9     | )     
|                               |                                    
|                               | Total Sales and Transportation      |                    | 6,005 |       | 9,224 |        | (3,219
|                               |                                    

O&R's firm sales and transportation volumes increased 18.7 percent in the second quarter of 2003 compared with the second quarter of 2002. The increase
reflects the impact of exceptionally cool weather in the second quarter of 2003 as compared with the second quarter of 2002 and an adjustment to the unbilled revenue accrual recorded in the second
quarter of 2003 to reflect lower
line losses. 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 firm sales and transportation volumes were 6.8 percent higher for the 2003 period compared with the second quarter of 2002.

Non-firm
transportation of customer-owned gas to the electric generating plants decreased 85.8 percent in the second quarter of 2003 as compared with the second quarter of 2002 due
to higher gas prices. In 2003, because of the relative prices of natural gas and fuel oil, power plants in the company's gas service area utilized oil rather than gas for a significant portion of
their generation. The decline in gas usage had minimal impact on earnings due to the application of a fixed demand charge for local transportation.

The
cost of gas purchased for resale increased $8 million in the second quarter of 2003 compared with the second quarter of 2002 due to higher sales volumes and higher unit costs. The increase
is offset in part by increased volumes of gas purchased by customers from other suppliers by participants in O&R's retail access program.

Gas
operating income increased $1 million in the second quarter of 2003 compared with the second quarter of 2002. The increase is due primarily to the increase in net revenues (operating
revenues less gas purchased for resale), resulting from higher sales volumes.

Income
Taxes

Income taxes decreased $1 million in the second quarter of 2003 compared with the second quarter of 2002 due primarily to lower taxable income.

52

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Other
Income

O&R's other income (deductions) decreased $1 million in the second quarter of 2003 compared with the second quarter of 2002, reflecting primarily amounts
accrued in connection with a settlement
with the New York State Department of Environmental Conservation. A reserve established in 2002 covered substantially all of this expense. See "Clean Air Act Proceeding" in Part II, Item 3 of
this report.

UNREGULATED BUSINESSES

Unregulated subsidiaries' operating income for the second quarter of 2003 was $2 million higher than the second quarter of 2002. Operating revenues
increased $56 million in the 2003 period compared to 2002 due primarily to higher sales from increased generating capacity and increased retail electric sales.

Unregulated
subsidiaries' operating expenses, excluding income taxes, increased by $55 million, reflecting increased fuel and purchased power supply costs of $37 million and a
$18 million increase in operation and maintenance expenses attributable to increased costs to operate generation assets ($13 million), Con Edison Communications' increased operating
costs ($3 million) and depreciation costs for telecommunications facilities placed in service ($2 million).

SIX MONTHS ENDED JUNE 30, 2003 COMPARED WITH SIX MONTHS ENDED JUNE 30, 2002

The Companies' results of operations (which were discussed above under "Results of OperationsSummary") for the six months ended June 30,
2003 compared with the six months ended June 30, 2002 were:

|                                                                                          |  | Con Edison* |     | Con Edison of New York |        | O&R |  
|----------------------------------------------------------------------------------------- |  | ----------- | --- | ---------------------- | ------ | --- | -
|
|
|
|Operating revenues                                                                        |  | $           | 841 |                        | 21.5   | %   | $
|Purchased power                                                                           |  |             | 400 |                        | 29.2   |     |  
|Fuel                                                                                      |  |             | 175 |                        | 156.3  |     |  
|Gas purchased for resale                                                                  |  |             | 206 |                        | 58.9   |     |  
|                                                                                          | 
|Operating revenues less purchased power, fuel and gas purchased for resale (net revenues) |  |             | 60  |                        | 2.9    |     |  
|Other operations and maintenance                                                          |  |             | 93  |                        | 14.0   |     |  
|Depreciation and amortization                                                             |  |             | 16  |                        | 6.6    |     |  
|Taxes, other than income tax                                                              |  |             | 18  |                        | 3.4    |     |  
|Income tax                                                                                |  |             | (29 | )                      | (17.1  | )   |  
|                                                                                          | 
|Operating income                                                                          |  |             | (38 | )                      | (8.3   | )   |  
|Other income less deductions and related federal income tax                               |  |             | (8  | )                      | (34.8  | )   |  
|Net interest charges                                                                      |  |             | (1  | )                      | (0.5   | )   |  
|Preferred stock dividend requirements                                                     |  |             | (1  | )                      | (14.3  | )   |  
|Cumulative effect of change in accounting principle                                       |  |             | (20 | )                      | (100.0 | )   |  
|                                                                                          | 
|Net income for common stock                                                               |  | $           | (24 | )                      | (9.8   | )%  | $
|                                                                                          | 

* Represents the consolidated financial results of Con Edison and its subsidiaries.

53

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A discussion of the results of operations by principal business segment follows. For additional business segment financial information, see Note J to the
financial statements in Part I, Item 1 of this report.

CON EDISON OF NEW YORK

Electric

Con Edison of New York's electric operating revenues for the six months ended June 30, 2003 increased $330 million compared with the 2002 period,
reflecting higher fuel and purchased power costs of $328 million (see below). See "Recoverable Energy Costs" and "Rate and Restructuring Agreements" in Note A to the Con Edison of New
York financial statements in Item 8 of the Form 10-K. The increase in electric operating revenues was offset in part by the increase in the 2003 period of the reserve for earnings
in excess of a specified rate of return that are to be retained for customer benefit in accordance with the 2000 Electric Rate Agreement ($9 million). The increase in electric operating
revenues also reflects the absence in the 2003 period of the following actions taken in the 2002 period: the accrual of a reserve related to the sale of the company's nuclear generating unit
($16 million); the recognition in 2002 of a previously deferred gain on the sale of divested plants ($12 million) and the recognition of a previously deferred revenue increase for the
New York Power Authority ($9 million). The impact of weather in the six months ended June 30, 2003 as compared with the 2002 period ($6 million net revenue increase) reflects the
colder than normal 2003 winter, partially offset by the exceptionally cool weather in the second quarter.

Con
Edison of New York's electric sales and deliveries, excluding off-system sales, for the six months ended 2003 compared with the 2002 period were:

MILLIONS OF KWHS

|                                       |                              | Six Months Ended |        |       |        |      |     
|-------------------------------------- | ---------------------------- | ---------------- | ------ | ----- | ------ | ---- | ----
|
|
|Residential/Religious                  |                              | 5,523            |        | 5,396 |        | 127  |     
|Commercial/Industrial                  |                              | 8,628            |        | 8,966 |        | (338 | )   
|Other                                  |                              | 72               |        | 76    |        | (4   | )   
|                                       |                             
|                                       | Total Full Service Customers |                  | 14,223 |       | 14,438 |      | (215
|Retail access customers                |                              | 5,909            |        | 5,339 |        | 572  |     
|                                       |                             
|                                       | Sub-total                    |                  | 20,132 |       | 19,777 |      | 355 
|                                       |                             
|NYPA, Municipal Agency and Other Sales |                              | 5,032            |        | 4,896 |        | 136  |     
|                                       |                             
|                                       | Total Service Area           |                  | 25,164 |       | 24,673 |      | 491 
|                                       |                             

Electric delivery volumes in Con Edison of New York's service area increased 2.0 percent for the six months ended June 30, 2003 compared with the
2002 period. The increase in delivery volumes reflects the colder winter weather in the first quarter of 2003 as compared with the mild winter in 2002, partially offset by the exceptionally cool
weather in the second quarter of 2003. After adjusting for variations, principally weather and billing days in each period, electric delivery volumes in Con Edison of New York's service area increased
1.7 percent for the six months ended June 30, 2003 compared with the 2002

54

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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 electric purchased power costs increased $313 million for the six months ended June 30, 2003 as compared with the 2002 period, due to an increase in the average
unit price of purchased power and higher customer usage. This increase was offset in part by lower usage by the company's full service customers and higher volumes of electricity purchased from other
suppliers by participants in the company's retail access programs. Electric fuel costs increased $14 million, reflecting an increase in the average unit price of fuel. In general, Con Edison of
New York recovers prudently incurred fuel and purchased power costs pursuant to rate provisions approved by the PSC. See "Recoverable Energy Costs" in Note A to the Con Edison of New York
financial statements in Item 8 of the Form 10-K.

Con
Edison of New York's electric operating income decreased $47 million for the six months ended June 30, 2003 compared with the 2002 period. The principal component of the decrease was
an increase in electric other operations and maintenance expense of $60 million, reflecting primarily a reduced net credit for pensions and other postretirement benefits ($37 million).
The decrease also reflects an increase in property taxes ($9 million), offset in part by lower income taxes ($34 million).

Gas

Con Edison of New York's gas operating revenues increased $199 million, resulting primarily from the higher cost of purchased gas ($189 million)
for the six months ended June 30, 2003 compared with the 2002 period. The higher cost of purchased gas reflects higher unit costs and increased sales volumes to firm sales customers. The
increased sales volumes resulted primarily from the colder weather for the six months ended June 30, 2003 compared with the mild weather in the 2002 period. The revenue increases were partially
offset by rate reductions implemented in accordance with the gas rate agreement approved by the PSC in 2002. See "Rate and Restructuring AgreementsGas" in Note A to the Con Edison
of New York financial statements in Item 8 of the Form 10-K.

Con
Edison of New York's revenues from gas sales are subject to a weather normalization clause that moderates, but does not eliminate, the effect of weather-related changes on net income.

Con
Edison of New York's gas operating income increased $1 million for the six months ended June 30, 2003 compared with the 2002 period, reflecting higher net revenues (operating
revenues less gas purchased for resale) of $10 million, offset by an increase in gas other operations and maintenance expense ($5 million). The increase in other operations and
maintenance expense was due primarily to a reduced net credit for pensions and other postretirement benefits. In addition, gas net revenues were reduced by higher state and local taxes on revenues
($5 million).

55

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Con
Edison of New York's gas sales and deliveries, excluding off-system sales, for the six months ended June 30, 2003 compared with the 2002 period were:

THOUSANDS OF DTHS

|                                 |                                     | Six Months Ended |         |        |         |         |       
|-------------------------------- | ----------------------------------- | ---------------- | ------- | ------ | ------- | ------- | ------
|
|
|Firm Sales                       |                                     |                  |         |        |         |         |       
|Residential                      |                                     | 35,895           |         | 28,000 |         | 7,895   |       
|General                          |                                     | 23,378           |         | 19,485 |         | 3,893   |       
|Firm Transportation              |                                     | 10,608           |         | 9,436  |         | 1,172   |       
|                                 |                                    
|                                 | Total Firm Sales and Transportation |                  | 69,881  |        | 56,921  |         | 12,960
|Off Peak/Interruptible Sales     |                                     | 10,443           |         | 6,956  |         | 3,487   |       
|Non-Firm Transportation of Gas   |                                     |                  |         |        |         |         |       
|NYPA                             |                                     | 10,229           |         | 8,764  |         | 1,465   |       
|Generation Plants                |                                     | 11,049           |         | 34,227 |         | (23,178 | )     
|                                 |                                    
|Total NYPA and Generation Plants |                                     | 21,278           |         | 42,991 |         | (21,713 | )     
|                                 |                                    
|Other                            |                                     | 10,061           |         | 13,524 |         | (3,463  | )     
|                                 |                                    
|                                 | Total Sales and Transportation      |                  | 111,663 |        | 120,392 |         | (8,729
|                                 |                                    

Con Edison of New York's sales and transportation volumes for firm customers increased 22.8 percent for the six months ended June 30, 2003
compared with the 2002 period. The increase reflects the impact of the cold weather in the 2003 period compared with the mild weather in the 2002 period. After adjusting for variations, principally
weather and billing days in each period, firm gas sales and transportation volumes in the company's service area increased 2.3 percent in the 2003 period.

Non-firm
transportation of customer-owned gas to NYPA and the electric generating plants decreased 50.5 percent in the six months ended June 30, 2003 as compared with the
2002 period due to higher gas prices. In 2003, because of the relative prices of natural gas and fuel oil, power plants in the company's gas service area utilized oil rather than gas for a significant
portion of their generation. The decline in gas usage had minimal impact on earnings due to the application of a fixed demand charge for local transportation.

Steam

Con Edison of New York's steam operating revenues increased $122 million and steam operating income increased $10 million for the six months ended
June 30, 2003 compared with the 2002 period. The higher revenues reflect higher sales volumes due to the cold winter weather in the six-month period ended June 30, 2003 as
compared with the mild weather in the 2002 period. The increase also includes higher fuel and purchased power costs for the six months ended June 30, 2003 compared to the 2002 period. See
"Recoverable Energy Costs" in Note A to the Con Edison of New York financial statements in Item 8 of the Form 10-K. The increase in steam operating income reflects primarily
an increase in net revenues (operating revenues less fuel and purchased power costs) of $19 million and a decrease to state and local taxes on steam revenues ($3 million), offset in part
by higher income taxes on steam income ($11 million).

56

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Con
Edison of New York's steam sales and deliveries for the six months ended June 30, 2003 compared with the 2002 period were:

MILLIONS OF POUNDS

|                |             | Six Months Ended |        |       |        |       |      
|--------------- | ----------- | ---------------- | ------ | ----- | ------ | ----- | -----
|
|
|General         |             | 549              |        | 388   |        | 161   |      
|Apartment house |             | 4,883            |        | 3,925 |        | 958   |      
|Annual power    |             | 9,675            |        | 8,104 |        | 1,571 |      
|                |            
|                | Total Sales |                  | 15,107 |       | 12,417 |       | 2,690
|                |            

Steam sales volumes increased 21.7 percent for the six months ended June 30, 2003 compared to the 2002 period, primarily as a result of the cold
winter weather in 2003 as compared with the mild winter in 2002. After adjusting for variations, principally weather and billing days in each period, steam sales increased 1.0 percent.

Income
Taxes

Income taxes decreased $24 million in the six months ended June 30, 2003 compared with to the 2002 period due primarily to lower taxable income.

Other
Income

Other income (deductions) decreased $8 million for the six months ended June 30, 2003 compared to the 2002 period. The decrease is due primarily
to an increase in income tax expense in the 2003 period as a result of the recognition in 2002 of income tax benefits relating to the September 2001 sale of the company's nuclear generating
unit.

O&R

Electric

Electric operating revenues increased $25 million during the six months ended June 30, 2003 compared to the 2002 period, reflecting higher
purchased power costs in the 2003 period (see below). See "Recoverable Energy Costs" in Note A to the O&R financial statements in Item 8 of the Form 10-K. This increase was
offset in part by the accrual of a reserve in the 2003 period of $6 million for disallowed deferred purchased power costs for RECO (see Note D to the financial statements in
Part I, Item 1 of this report.).

57

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O&R's
electric sales and deliveries, excluding off-system sales, for the six months ended June 30, 2003 compared with the 2002 period were:

MILLIONS OF KWHS

|                        |                              | Six Months Ended |       |       |       |     |    
|----------------------- | ---------------------------- | ---------------- | ----- | ----- | ----- | --- | ---
|
|
|Residential/Religious   |                              | 809              |       | 802   |       | 7   |    
|Commercial/Industrial   |                              | 1,156            |       | 1,176 |       | (20 | )  
|Other                   |                              | 51               |       | 51    |       |    |    
|                        |                             
|                        | Total Full Service Customers |                  | 2,016 |       | 2,029 |     | (13
|                        |                             
|Retail Access Customers |                              | 634              |       | 546   |       | 88  |    
|                        |                             
|                        | Total Service Area           |                  | 2,650 |       | 2,575 |     | 75 
|                        |                             

Electric delivery volumes in O&R's service area increased 2.9 percent in the six months ended June 30, 2003 compared to the 2002 period due to the
cold winter weather in 2003 compared with the mild winter in 2002, growth in the number of customers, and higher average customer usage, partially offset by the extremely cool weather in the second
quarter of 2003. After adjusting for weather variations, electric delivery volumes in O&R's service area increased 2.0 percent in the 2003 period.

O&R's
purchased power cost increased $28 million in the six months ended June 30, 2003 as compared with to the 2002 period due to an increase in the average unit cost of purchased power.
This increase was offset by lower energy usage by the company's full-service customers and higher volumes of electricity purchased from other suppliers by participants in O&R's retail
access program.

O&R's
electric operating income decreased $2 million during the six months ended June 30, 2003 as compared to the 2002 period reflecting primarily a decrease in net revenues (operating
revenues less fuel and purchased power) of $3 million, an increase in property and payroll taxes of $1 million and reduced electric operations and maintenance expenses of
$3 million.

Gas

O&R's gas operating revenues increased $32 million during the six months ended June 30, 2003 compared to the 2002 period, reflecting primarily
higher costs of gas purchased for resale ($28 million) due to increased sales to firm customers and increased gas unit costs in the 2003 period. The increase is offset in part by increased
volumes of gas purchased by customers from other suppliers by participants in O&R's retail access program. Winter weather in the first quarter of 2003 was colder than normal, while the second quarter
was exceptionally cool. See "Recoverable Energy Costs" in Note A to the O&R financial statements in Item 8 of the Form 10-K.

58

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O&R's
gas sales and deliveries, excluding off-system sales, for the six months ended June 30, 2003 compared with the 2002 period were:

THOUSANDS OF DTHS

|                               |                                     | Six Months Ended |        |       |        |        |       
|------------------------------ | ----------------------------------- | ---------------- | ------ | ----- | ------ | ------ | ------
|
|
|Firm Sales                     |                                     |                  |        |       |        |        |       
|Residential                    |                                     | 7,185            |        | 6,126 |        | 1,059  |       
|General                        |                                     | 2,286            |        | 1,983 |        | 303    |       
|Firm Transportation            |                                     | 4,754            |        | 3,386 |        | 1,368  |       
|                               |                                    
|                               | Total Firm Sales and Transportation |                  | 14,225 |       | 11,495 |        | 2,730 
|Off Peak/Interruptible Sales   |                                     | 3,477            |        | 3,781 |        | (304   | )     
|Non-Firm Transportation of Gas |                                     |                  |        |       |        |        |       
|Generation Plants              |                                     | 1,419            |        | 5,852 |        | (4,433 | )     
|Other                          |                                     | 683              |        | 575   |        | 108    |       
|                               |                                    
|                               | Total Sales and Transportation      |                  | 19,804 |       | 21,703 |        | (1,899
|                               |                                    

O&R's firm sales and transportation volumes increased 23.7 percent for the six months ended June 30, 2003 compared to the 2002 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 firm sales and transportation volumes were 2.6 percent higher for the six months ended June 30, 2003 period compared to the 2002 period.

Non-firm
transportation of customer-owned gas to the electric generating plants decreased 75.8 percent in the six months ended June 30, 2003 as compared with the 2002 period
due to higher gas prices. In 2003, because of the relative prices of natural gas and fuel oil, power plants in the company's gas service area utilized oil rather than gas for a significant portion of
their generation. The decline in gas usage had minimal impact on earnings due to the application of a fixed demand charge for local transportation.

Gas
operating income increased $1 million during the six months ended June 30, 2003 as compared to the 2002 period. The increase reflects an increase in net gas revenues (operating
revenues less purchased gas) of $4 million, which is due primarily to increased sales. The increase in net revenues was offset in part by increased gas operations and maintenance expenses of
$1 million and increased federal and state income tax of $2 million.

Taxes
Other Than Income Taxes

Taxes other than income taxes increased by $2 million in the 2003 period compared to the 2002 period. The increase was due primarily to higher property
taxes and payroll taxes.

Income
Taxes

Income taxes increased by $2 million in the 2003 period compared to the 2002 period due primarily to lower interest expense deductions.

59

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Net
Interest Charges

O&R's net interest charges decreased by $1 million in the 2003 period compared to the 2002 period, due primarily to lower interest on
long-term debt as a result of the redemption of a $35 million, 10-year Debenture in March 2003 (see "Liquidity and Capital Resources," above).

UNREGULATED BUSINESSES

Unregulated subsidiaries' operating income for the six months ended June 30, 2003 was $1 million lower than the 2002 period. Operating revenues
increased $136 million in the 2003 period compared to 2002 due primarily to higher sales from increased generating capacity and increased retail electric sales.

Unregulated
subsidiaries' operating expenses, excluding income taxes, increased by $143 million, reflecting increased fuel and purchased power supply costs of $106 million and a
$37 million increase in operation and maintenance expenses attributable to increased costs to operate the generation assets ($25 million), Con Edison Communications' increased operating
costs ($7 million) and higher depreciation for additional telecommunications facilities and generating assets placed in service ($5 million). Operating income taxes decreased
$8 million for the six months ended June 30, 2003 as compared with the 2002 period, reflecting lower taxable income.

Unregulated
subsidiaries' other income (deductions) decreased $3 million for the six months ended June 30, 2003 compared to the 2002 period, reflecting lower unrealized gains on
derivative contracts ($8 million), offset by the 2002 write-down of an investment in Neon Communications ($5 million after tax).

60

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ITEM 3.    QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

For information about the Companies' primary market risks associated with activities in derivative financial instruments, other financial instruments and
derivative commodity instruments, see "Financial Market Risks" in the Management's Discussion and Analysis of Financial Condition and Results of Operations in Part 1, Item 2 of this report,
which information is incorporated herein by reference. Also, see Item 7A of the Companies' combined Annual Report on Form 10-K for the year ended December 31, 2002
(Form 10-K).

ITEM 4.    CONTROLS AND PROCEDURES

For each of the Companies, its management, with the participation of its principal executive officer and principal financial officer, has evaluated its
disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) as of the end of the period covered
by this report and, based on such evaluation, its principal executive officer and principal financial officer have concluded that these controls and other procedures are effective to provide
reasonable assurance that the information required to be disclosed by the company of which he or she is the principal executive officer or principal financial officer in the reports that it files or
submits under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange
Commission.

There
has been no change in the Companies' internal control over financial reporting that occurred during the quarterly period ended June 30, 2003 that has materially affected, or is reasonably
likely to materially affect, the Companies' internal control over financial reporting.

Forward-Looking Statements

This Quarterly Report on Form 10-Q includes forward-looking statements intended to qualify for the safe-harbor provisions of Section 27A
of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are statements of future expectation and not facts.
Words such as "expects," "estimates," "anticipates," "intends," "plans," "will" and similar expressions identify forward-looking statements.

Actual
results or developments might differ materially from those included in the forward-looking statements because of various factors such as those detailed in "Forward-Looking Statements" in
Part II of the Form 10-K.

61

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PART II.    OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

Con Edison

Northeast Utilities

For information about legal proceedings relating to Con Edison's October 1999 agreement to acquire Northeast Utilities, see Note F to the
financial statements included in Part 1, Item 1 of this report (which information is incorporated herein by reference).

Con Edison of New York

Asbestos Proceedings

For information about Con Edison of New York's legal proceedings relating to asbestos, see Note D to the financial statements included in Part 1,
Item 1 of this report and in "Con Edison of New YorkAsbestos Proceedings" in Part II, Item 1 of the Companies' combined Quarterly Report on Form 10-Q for the
quarterly period ended March 31, 2003 (which information is incorporated herein by reference).

In
March 2003, a jury awarded a 53-year old man $47 million for asbestos-related injuries in an action in New York State Supreme Court, New York County, entitled Robert
Croteau v. A.C.& S., Inc. et al. The man was employed by a subcontractor who did work in the 1970s on two power plants being constructed for Con Edison of New York. The jury awarded the
plaintiff $45 million for pain and suffering and $2 million for economic injuries. In June 2003, the court reduced from $45 million to a maximum of $17 million the
portion of the jury award that was for pain and suffering and limited the company's responsibility for such damages to 34 percent. The court is still reviewing the company's motion to vacate or
reduce the verdict still further for other reasons. The company believes that it has strong legal and factual arguments supporting its position. In the event the court fails to vacate the verdict, the
company will appeal. If the verdict is ultimately upheld, the company believes it is entitled to full reimbursement from other entities.

O&R

Clean Air Act Proceeding

Reference is made to "O&R Clean Air Act Proceeding" in Item 3 of the Form 10-K. In June 2003, O&R entered into a settlement agreement
with the New York State Department of Environmental Conservation relating to an electric generating plant O&R sold in 1999. O&R agreed to pay a $600,000 penalty and an additional $800,000 to fund
energy conservation and clean renewable energy projects in the lower Hudson Valley.

ITEM 4.    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

Con Edison

62

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Votes For

Votes WithheldVincent A. Calarco

166,046,897

4,696,474George Campbell, Jr.

166,677,628

4,065,743Gordon J. Davis

166,487,293

4,256,078Michael J. Del Giudice

166,205,914

4,537,457Joan S. Freilich

166,796,719

3,946,652Ellen V. Futter

166,335,844

4,407,527Sally Hernandez-Pinero

166,579,124

4,164,247Peter W. Likins

166,750,473

3,992,898Eugene R. McGrath

166,054,011

4,689,360Frederic V. Salerno

166,093,078

4,650,293Richard A. Voell

166,631,849

4,111,522Stephen R. Volk

166,751,194

3,992,177




Con Edison of New York

At the Annual Meeting of Stockholders of Con Edison of New York on May 19, 2003, all 235,488,094 outstanding shares of common stock of Con Edison of New
York, which are owned by Con Edison, were voted to elect Vincent A. Calarco, George Campbell, Jr., Gordon J. Davis, Michael J. Del Giudice, Joan S. Freilich, Ellen V. Futter, Sally Hernandez-Pinero,
Peter W. Likins, Eugene R. McGrath, Frederic V. Salerno, Richard A. Voell and Stephen R. Volk as members of Con Edison of New York's Board of

63

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Trustees
and to ratify and approve the appointment of PricewaterhouseCoopers, LLP as Con Edison of New York's independent accountants for 2003.

O&R

Pursuant to a consent of sole shareholder to shareholder action without a meeting dated June 9, 2003, Con Edison, which owns all 1,000 outstanding shares
of common stock of O&R, elected Eugene R. McGrath, John D. McMahon and George Strayton as members of O&R's Board of Directors.

ITEM 6.    EXHIBITS AND REPORTS ON FORM 8-K

Con Edison

|Exhibit 12.1   |  | Statement of computation of Con Edison's ratio of earnings to fixed charges for the six and twelve-month periods ended June 30, 2003 and the years 1998-2002.
|-------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit 31.1.1 |  | Rule 13a-14(a)/15d-14(a) CertificationsChief Executive Officer.                                                                                             
|Exhibit 31.1.2 |  | Rule 13a-14(a)/15d-14(a) CertificationsChief Financial Officer.                                                                                             
|Exhibit 32.1.1 |  | Section 1350 CertificationsChief Executive Officer.                                                                                                         
|Exhibit 32.1.2 |  | Section 1350 CertificationsChief Financial Officer.                                                                                                         

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 six and twelve-month periods ended June 30, 2003 and the years 1998-2002.
|-------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit 31.2.1 |  | Rule 13a-14(a)/15d-14(a) CertificationsChief Executive Officer.                                                                                                         
|Exhibit 31.2.2 |  | Rule 13a-14(a)/15d-14(a) CertificationsChief Financial Officer.                                                                                                         
|Exhibit 32.2.1 |  | Section 1350 CertificationsChief Executive Officer.                                                                                                                     
|Exhibit 32.2.2 |  | Section 1350 CertificationsChief Financial Officer.                                                                                                                     

O&R

|Exhibit 12.3   |  | Statement of computation of O&R's ratio of earnings to fixed charges for the six and twelve-month periods ended June 30, 2003 and the years 1998-2002.
|-------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit 31.3.1 |  | Rule 13a-14(a)/15d-14(a) CertificationsChief Executive Officer.                                                                                      
|Exhibit 31.3.2 |  | Rule 13a-14(a)/15d-14(a) CertificationsChief Financial Officer.                                                                                      
|Exhibit 32.3.1 |  | Section 1350 CertificationsChief Executive Officer.                                                                                                  
|Exhibit 32.3.2 |  | Section 1350 CertificationsChief Financial Officer.                                                                                                  

Con Edison filed Current Reports on Form 8-K dated (i) April 17, 2003, furnishing (under Item 9) a copy of its press release with
respect to, among other things, its first quarter earnings; (ii) May 16, 2003, reporting (under Item 5) the State Proceeding referred to in Note F to the financial
statements included in Part I, Item 1 of this report; (iii) May 22, 2003, reporting (under Item 5) the completion of the sale of 8.7 million of its Common Shares;
and (iv) June 10, 2003, furnishing (under Item 9) a presentation dated June 10, 2003.

64

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Con
Edison of New York filed Current Reports on Form 8-K dated (i) April 7, 2003, reporting (under Item 5) the completion of the sale of $175 million
aggregate principal amount of the company's 5.875% Debentures, Series 2003A, due 2033; (ii) June 10, 2003, reporting (under Item 5) the completion of the sale of
$200 million aggregate principal amount of the company's 3.85% Debentures, Series 2003B, due 2013 and $200 million aggregate principle amount of the company's 5.10%,
Series 2003C, due 2033; and (iii) June 10, 2003, furnishing (under Item 9) a presentation dated June 10, 2003.

The
Companies filed no other Current Reports on Form 8-K during the quarter ended June 30, 2003.

Subsequent
to June 30, 2003, (i) Con Edison and O&R filed a Current Report on Form 8-K, dated June 24, 2003, reporting (under Item 5) the O&R electric
and gas rate settlement agreements discussed under "Regulatory Matters" in Part 1, Item 2 of this report; (ii) the Companies filed a Current Report on Form 8-K, dated
July 16, 2003, reporting (under Item 5) second quarter financial results and the NJBPU rulings discussed under "Regulatory Matters" in Part 1, Item 2 of this report and furnishing
(under Item 9) a copy of Con Edison's press release, dated July 17, 2003, with respect to, among other things, its second quarter earnings; and (iii) Con Edison filed a Current
Report on Form 8-K, dated July 22, 2003 reporting (under Item 5) the completion of the sale of $200 million aggregate principal amount of its 3.625% Debentures,
Series 2003A, due 2008.

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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: August 12, 2003 |  | By                                           
|                      |  | Orange and Rockland Utilities, Inc.          
|DATE: August 12, 2003 |  | By:                                          

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