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Form 10-Q



SECURITIES AND EXCHANGE COMMISSION



Washington, 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, 2005
|                                             | 
|OR                                           |  |                                                                                         
|                                             | 
| ̈                                            |  | Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934



|                      |  |                                                                                                       |  |                       |  |                          
|--------------------- |  | ----------------------------------------------------------------------------------------------------- |  | --------------------- |  | -------------------------
|CommissionFile Number |  | Exact name of registrant as specified in its charterand principal office address and telephone number |  | State ofIncorporation |  | I.R.S. EmployerID. 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               



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.
YesxNo ̈(See Filing Format on next
page)



Indicate by check mark whether the registrant is an accelerated filer
(as defined in Rule 12b-2 of the Exchange Act).



|                                                                       |  |  |  |        
|---------------------------------------------------------------------- |  |  |  | -------
|Consolidated Edison, Inc. (Con Edison)                                 |  |  |  | YesxNo ̈
|                                                                       |  | 
|Consolidated Edison Company of New York, Inc. (Con Edison of New York) |  |  |  | Yes ̈Nox



As of the close of business on July
29, 2005 Con Edison had outstanding 244,351,287 Common Shares ($.10 par value). Con Edison owns all of the outstanding common equity of Con Edison of New York.



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Filing Format



This Quarterly Report on Form 10-Q is a combined report being filed separately by two different registrants: Consolidated Edison, Inc. (Con Edison) and Consolidated
Edison Company of New York, Inc. (Con Edison of New York). Con Edison of New York is a subsidiary of Con Edison and, as such, the information in this report about Con Edison of New York also applies to Con Edison. As used in this report, the term
the Companies refers to each of the two separate registrants: Con Edison and Con Edison of New York. However, Con Edison of New York makes no representation as to the information contained in this report relating to Con Edison or the
subsidiaries of Con Edison other than itself.



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TABLE OF CONTENTS



|                             |  |                                                                                      |  |                                                       |  |     
|---------------------------- |  | ------------------------------------------------------------------------------------ |  | ----------------------------------------------------- |  | ----
|                             |  |                                                                                      |  |                                                       |  | PAGE
|Glossary of Terms            |  | 4                                                                                   
|                             | 
|PART IFinancial Information |  |                                                                                     
|Item 1                       |  | Financial Statements (Unaudited)                                                     |  |                                                      
|                             |  | Con Edison                                                                           |  |                                                      
|                             |  |                                                                                      |  | Consolidated Balance Sheet                            |  | 5   
|                             |  |                                                                                      |  | Consolidated Income Statement                         |  | 7   
|                             |  |                                                                                      |  | Consolidated Statement of Comprehensive Income        |  | 8   
|                             |  |                                                                                      |  | Consolidated Statement of Common Shareholders Equity |  | 9   
|                             |  |                                                                                      |  | Consolidated Statement of Cash Flows                  |  | 10  
|                             |  | Con Edison of New York                                                               |  |                                                      
|                             |  |                                                                                      |  | Consolidated Balance Sheet                            |  | 11  
|                             |  |                                                                                      |  | Consolidated Income Statement                         |  | 13  
|                             |  |                                                                                      |  | Consolidated Statement of Comprehensive Income        |  | 14  
|                             |  |                                                                                      |  | Consolidated Statement of Common Shareholders Equity |  | 15  
|                             |  |                                                                                      |  | Consolidated Statement of Cash Flows                  |  | 16  
|                             |  | Notes to Financial Statements (Unaudited)                                            |  | 17                                                   
|Item 2                       |  | Managements Discussion and Analysis of Financial Condition and Results ofOperations |  | 37                                                   
|Item 3                       |  | Quantitative and Qualitative Disclosures About Market Risk                           |  | 67                                                   
|Item 4                       |  | Controls and Procedures                                                              |  | 67                                                   
|                             | 
|PART IIOther Information    |  |                                                                                     
|Item 1                       |  | Legal Proceedings                                                                    |  | 68                                                   
|Item 4                       |  | Submission of Matters to a Vote of Security Holders                                  |  | 68                                                   
|Item 6                       |  | Exhibits                                                                             |  | 70                                                   
|Signatures                   |  | 71                                                                                  



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GLOSSARY OF TERMS



The following is a glossary of abbreviations or acronyms that may be used in this report:



|                              |  |                                                                                                
|----------------------------- |  | -----------------------------------------------------------------------------------------------
|Con Edison Companies          |  |                                                                                                
|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.                                                            
|The Companies                 |  | The separate registrants: Con Edison and Con Edison of New York                                
|The Utilities                 |  | Con Edison of New York and O&R                                                                 
|                             
|Regulatory and State Agencies
|NYPA                          |  | New York Power Authority                                                                       
|PSC                           |  | New York State Public Service Commission                                                       
|SEC                           |  | Securities and Exchange Commission                                                             
|                             
|Other                        
|DTH                           |  | Dekatherm                                                                                      
|EITF                          |  | Emerging Issues Task Force                                                                     
|FASB                          |  | Financial Accounting Standards Board                                                           
|First Quarter Form 10-Q       |  | Companies combined Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2005
|Form 10-K                     |  | Companies combined Annual Report on Form 10-K for the year ended December 31, 2004            
|kWh                           |  | Kilowatt-hour                                                                                  
|MD&A                          |  | Managements Discussion and Analysis of Financial Condition and Results of Operations          
|MW                            |  | Megawatts or thousand kilowatts                                                                
|mWhrs                         |  | Megawatt hours                                                                                 
|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           



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Consolidated Edison, Inc.



CONSOLIDATED BALANCE SHEET

(UNAUDITED)



|                                                                                                                         |  |                       |        |                   |   |       
|------------------------------------------------------------------------------------------------------------------------ |  | --------------------- | ------ | ----------------- | - | ------
|                                                                                                                         |  | June 30, 2005         |        | December 31, 2004
|                                                                                                                         |  | (Millions of Dollars)
|ASSETS                                                                                                                   |  |                       |        |                   |   |       
|UTILITY PLANT, AT ORIGINAL COST                                                                                          |  |                       |        |                   |   |       
|Electric                                                                                                                 |  | $                     | 13,101 |                   | $ | 12,912
|Gas                                                                                                                      |  |                       | 2,935  |                   |   | 2,867 
|Steam                                                                                                                    |  |                       | 1,563  |                   |   | 823   
|General                                                                                                                  |  |                       | 1,516  |                   |   | 1,500 
|TOTAL                                                                                                                    |  |                       | 19,115 |                   |   | 18,102
|Less: Accumulated depreciation                                                                                           |  |                       | 4,260  |                   |   | 4,288 
|Net                                                                                                                      |  |                       | 14,855 |                   |   | 13,814
|Construction work in progress                                                                                            |  |                       | 656    |                   |   | 1,354 
|NET UTILITY PLANT                                                                                                        |  |                       | 15,511 |                   |   | 15,168
|NON-UTILITY PLANT                                                                                                        |  |                       |        |                   |   |       
|Unregulated generating assets, less accumulated depreciation of $91 and $78 in 2005 and 2004, respectively               |  |                       | 829    |                   |   | 841   
|Non-utility property, less accumulated depreciation of $27 and $25 in 2005 and 2004, respectively                        |  |                       | 30     |                   |   | 31    
|Non-utility property held for sale                                                                                       |  |                       | 70     |                   |   | 65    
|Construction work in progress                                                                                            |  |                       | 1      |                   |   | 1     
|NET PLANT                                                                                                                |  |                       | 16,441 |                   |   | 16,106
|CURRENT ASSETS                                                                                                           |  |                       |        |                   |   |       
|Cash and temporary cash investments                                                                                      |  |                       | 818    |                   |   | 26    
|Restricted cash - funds held for redemption of long-term debt                                                            |  |                       | 126    |                   |   |      
|Restricted cash - other                                                                                                  |  |                       | 18     |                   |   | 18    
|Accounts receivable - customers, less allowance for uncollectible accounts of $32 and $33 in 2005 and 2004, respectively |  |                       | 735    |                   |   | 741   
|Accrued unbilled revenue                                                                                                 |  |                       | 102    |                   |   | 73    
|Other receivables, less allowance for uncollectible accounts of $6 and $5 in 2005 and 2004, respectively                 |  |                       | 179    |                   |   | 198   
|Fuel oil, at average cost                                                                                                |  |                       | 27     |                   |   | 32    
|Gas in storage, at average cost                                                                                          |  |                       | 135    |                   |   | 170   
|Materials and supplies, at average cost                                                                                  |  |                       | 106    |                   |   | 105   
|Prepayments                                                                                                              |  |                       | 788    |                   |   | 93    
|Current assets held for sale                                                                                             |  |                       | 9      |                   |   | 5     
|Other current assets                                                                                                     |  |                       | 413    |                   |   | 248   
|TOTAL CURRENT ASSETS                                                                                                     |  |                       | 3,456  |                   |   | 1,709 
|INVESTMENTS                                                                                                              |  |                       | 260    |                   |   | 257   
|DEFERRED CHARGES, REGULATORY ASSETS AND NONCURRENT
ASSETS                                                                |  |                       |        |                   |   |       
|Goodwill                                                                                                                 |  |                       | 406    |                   |   | 406   
|Intangible assets, less accumulated amortization of $19 and $13 in 2005 and 2004, respectively                           |  |                       | 96     |                   |   | 100   
|Prepaid pension costs                                                                                                    |  |                       | 1,458  |                   |   | 1,442 
|Regulatory assets                                                                                                        |  |                       | 1,953  |                   |   | 2,258 
|Other deferred charges and noncurrent assets                                                                             |  |                       | 301    |                   |   | 282   
|TOTAL DEFERRED CHARGES, REGULATORY
ASSETS AND NONCURRENT ASSETS                                                          |  |                       | 4,214  |                   |   | 4,488 
|TOTAL ASSETS                                                                                                             |  | $                     | 24,371 |                   | $ | 22,560



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



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Consolidated Edison, Inc.



CONSOLIDATED BALANCE SHEET

(UNAUDITED)



|                                                                           |  |                       |        |                   |   |       
|-------------------------------------------------------------------------- |  | --------------------- | ------ | ----------------- | - | ------
|                                                                           |  | June 30, 2005         |        | December 31, 2004
|                                                                           |  | (Millions of Dollars)
|CAPITALIZATION AND LIABILITIES                                             |  |                       |        |                   |   |       
|CAPITALIZATION                                                             |  |                       |        |                   |   |       
|Common shareholders' equity (See Statement of Common Shareholders' Equity) |  | $                     | 7,146  |                   | $ | 7,054 
|Preferred stock of subsidiary                                              |  |                       | 213    |                   |   | 213   
|Long-term debt                                                             |  |                       | 7,190  |                   |   | 6,561 
|TOTAL CAPITALIZATION                                                       |  |                       | 14,549 |                   |   | 13,828
|MINORITY INTERESTS                                                         |  |                       | 42     |                   |   | 39    
|NONCURRENT LIABILITIES                                                     |  |                       |        |                   |   |       
|Obligations under capital leases                                           |  |                       | 31     |                   |   | 33    
|Provision for injuries and damages                                         |  |                       | 181    |                   |   | 180   
|Pensions and retiree benefits                                              |  |                       | 267    |                   |   | 207   
|Superfund and other environmental costs                                    |  |                       | 246    |                   |   | 198   
|Noncurrent liabilities held for sale                                       |  |                       | 6      |                   |   | 5     
|Other noncurrent liabilities                                               |  |                       | 65     |                   |   | 62    
|TOTAL NONCURRENT LIABILITIES                                               |  |                       | 796    |                   |   | 685   
|CURRENT LIABILITIES                                                        |  |                       |        |                   |   |       
|Long-term debt due within one year                                         |  |                       | 471    |                   |   | 469   
|Notes payable                                                              |  |                       | 176    |                   |   | 156   
|Accounts and other payables                                                |  |                       | 1,685  |                   |   | 920   
|Customer deposits                                                          |  |                       | 228    |                   |   | 232   
|Accrued taxes                                                              |  |                       | 189    |                   |   | 36    
|Accrued interest                                                           |  |                       | 101    |                   |   | 95    
|Accrued wages                                                              |  |                       | 87     |                   |   | 88    
|Current liabilities held for sale                                          |  |                       | 9      |                   |   | 11    
|Other current liabilities                                                  |  |                       | 253    |                   |   | 215   
|TOTAL CURRENT LIABILITIES                                                  |  |                       | 3,199  |                   |   | 2,222 
|DEFERRED CREDITS AND REGULATORY LIABILITIES                                |  |                       |        |                   |   |       
|Deferred income taxes and investment tax credits                           |  |                       | 3,703  |                   |   | 3,726 
|Regulatory liabilities                                                     |  |                       | 2,052  |                   |   | 2,022 
|Other deferred credits                                                     |  |                       | 30     |                   |   | 38    
|TOTAL DEFERRED CREDITS AND
REGULATORY LIABILITIES                          |  |                       | 5,785  |                   |   | 5,786 
|TOTAL CAPITALIZATION AND
LIABILITIES                                       |  | $                     | 24,371 |                   | $ | 22,560



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



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Consolidated Edison, Inc.



CONSOLIDATED INCOME STATEMENT

(UNAUDITED)



|                                                                             |  |                                         |       |   |                    |   |       |      |  |   |       |   |  |   |       |  
|---------------------------------------------------------------------------- |  | --------------------------------------- | ----- | - | ------------------ | - | ----- | ---- |  | - | ----- | - |  | - | ----- | -
|                                                                             |  | For the Three Months                    |       |   | For the Six Months |  
|                                                                             |  | Ended June 30,                          |       |   | Ended June 30,     |  
|                                                                             |  | 2005                                    |       |   | 2004               |   |       | 2005 |  |   | 2004  |  
|                                                                             |  | (Millions of Dollars/Except Share Data) |      
|OPERATING REVENUES                                                           |  |                                         |       |   |                    |   |       |      |  |   |       |   |  |   |       |  
|Electric                                                                     |  | $                                       | 1,651 |   |                    | $ | 1,531 |      |  | $ | 3,164 |   |  | $ | 3,070 |  
|Gas                                                                          |  |                                         | 354   |   |                    |   | 283   |      |  |   | 1,082 |   |  |   | 928   |  
|Steam                                                                        |  |                                         | 96    |   |                    |   | 93    |      |  |   | 363   |   |  |   | 328   |  
|Non-utility                                                                  |  |                                         | 305   |   |                    |   | 257   |      |  |   | 598   |   |  |   | 517   |  
|TOTAL OPERATING REVENUES                                                     |  |                                         | 2,406 |   |                    |   | 2,164 |      |  |   | 5,207 |   |  |   | 4,843 |  
|OPERATING EXPENSES                                                           |  |                                         |       |   |                    |   |       |      |  |   |       |   |  |   |       |  
|Purchased power                                                              |  |                                         | 969   |   |                    |   | 890   |      |  |   | 1,908 |   |  |   | 1,820 |  
|Fuel                                                                         |  |                                         | 139   |   |                    |   | 134   |      |  |   | 331   |   |  |   | 319   |  
|Gas purchased for resale                                                     |  |                                         | 201   |   |                    |   | 155   |      |  |   | 653   |   |  |   | 557   |  
|Other operations and maintenance                                             |  |                                         | 405   |   |                    |   | 359   |      |  |   | 819   |   |  |   | 737   |  
|Depreciation and amortization                                                |  |                                         | 146   |   |                    |   | 137   |      |  |   | 287   |   |  |   | 273   |  
|Taxes, other than income taxes                                               |  |                                         | 281   |   |                    |   | 255   |      |  |   | 551   |   |  |   | 537   |  
|Income taxes                                                                 |  |                                         | 39    |   |                    |   | 46    |      |  |   | 149   |   |  |   | 153   |  
|TOTAL OPERATING EXPENSES                                                     |  |                                         | 2,180 |   |                    |   | 1,976 |      |  |   | 4,698 |   |  |   | 4,396 |  
|OPERATING INCOME                                                             |  |                                         | 226   |   |                    |   | 188   |      |  |   | 509   |   |  |   | 447   |  
|OTHER INCOME (DEDUCTIONS)                                                    |  |                                         |       |   |                    |   |       |      |  |   |       |   |  |   |       |  
|Investment and other income                                                  |  |                                         | 11    |   |                    |   | 4     |      |  |   | 16    |   |  |   | 16    |  
|Allowance for equity funds used during construction                          |  |                                         |      |   |                    |   | 6     |      |  |   | 8     |   |  |   | 12    |  
|Preferred stock dividend requirements of subsidiary                          |  |                                         | (3    | ) |                    |   | (3    | )    |  |   | (6    | ) |  |   | (6    | )
|Other deductions                                                             |  |                                         | (4    | ) |                    |   | (3    | )    |  |   | (10   | ) |  |   | (6    | )
|Income taxes                                                                 |  |                                         | 2     |   |                    |   | 5     |      |  |   | 6     |   |  |   | 6     |  
|TOTAL OTHER INCOME
(DEDUCTIONS)                                              |  |                                         | 6     |   |                    |   | 9     |      |  |   | 14    |   |  |   | 22    |  
|INTEREST EXPENSE                                                             |  |                                         |       |   |                    |   |       |      |  |   |       |   |  |   |       |  
|Interest on long-term debt                                                   |  |                                         | 113   |   |                    |   | 106   |      |  |   | 219   |   |  |   | 214   |  
|Other interest                                                               |  |                                         | 1     |   |                    |   | 6     |      |  |   | 10    |   |  |   | 16    |  
|Allowance for borrowed funds used during construction                        |  |                                         |      |   |                    |   | (4    | )    |  |   | (6    | ) |  |   | (8    | )
|NET INTEREST EXPENSE                                                         |  |                                         | 114   |   |                    |   | 108   |      |  |   | 223   |   |  |   | 222   |  
|INCOME FROM CONTINUING
OPERATIONS                                            |  |                                         | 118   |   |                    |   | 89    |      |  |   | 300   |   |  |   | 247   |  
|LOSS FROM DISCONTINUED
OPERATIONS(NET OF INCOME TAXES OF $2, $2, $2, AND $4) |  |                                         | (3    | ) |                    |   | (3    | )    |  |   | (3    | ) |  |   | (6    | )
|NET INCOME                                                                   |  | $                                       | 115   |   |                    | $ | 86    |      |  | $ | 297   |   |  | $ | 241   |  
|EARNINGS PER COMMON SHARE - BASIC                                            |  |                                         |       |   |                    |   |       |      |  |   |       |   |  |   |       |  
|Continuing operations                                                        |  | $                                       | 0.48  |   |                    | $ | 0.38  |      |  | $ | 1.23  |   |  | $ | 1.07  |  
|Discontinued operations                                                      |  |                                         | (0.01 | ) |                    |   | (0.01 | )    |  |   | (0.01 | ) |  |   | (0.02 | )
|Net income                                                                   |  | $                                       | 0.47  |   |                    | $ | 0.37  |      |  | $ | 1.22  |   |  | $ | 1.05  |  
|EARNINGS PER COMMON SHARE - DILUTED                                          |  |                                         |       |   |                    |   |       |      |  |   |       |   |  |   |       |  
|Continuing operations                                                        |  | $                                       | 0.48  |   |                    | $ | 0.38  |      |  | $ | 1.23  |   |  | $ | 1.06  |  
|Discontinued operations                                                      |  |                                         | (0.01 | ) |                    |   | (0.01 | )    |  |   | (0.01 | ) |  |   | (0.02 | )
|Net income                                                                   |  | $                                       | 0.47  |   |                    | $ | 0.37  |      |  | $ | 1.22  |   |  | $ | 1.04  |  
|DIVIDENDS DECLARED PER SHARE
OF COMMON STOCK                                 |  | $                                       | 0.570 |   |                    | $ | 0.565 |      |  | $ | 1.140 |   |  | $ | 1.130 |  
|AVERAGE NUMBER OF SHARES
OUTSTANDING - BASIC (IN MILLIONS)                   |  |                                         | 243.4 |   |                    |   | 234.0 |      |  |   | 243.1 |   |  |   | 230.6 |  
|AVERAGE NUMBER OF SHARES
OUTSTANDING - DILUTED (IN MILLIONS)                 |  |                                         | 244.2 |   |                    |   | 234.9 |      |  |   | 243.8 |   |  |   | 231.6 |  



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



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Consolidated Edison, Inc.



CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

(UNAUDITED)



|                                                                                                                                           |  |                                    |     |                                  |      |   |      |  |   |      |   |  |   |    
|------------------------------------------------------------------------------------------------------------------------------------------ |  | ---------------------------------- | --- | -------------------------------- | ---- | - | ---- |  | - | ---- | - |  | - | ---
|                                                                                                                                           |  | For the Three MonthsEnded June 30, |     | For the Six MonthsEnded June 30,
|                                                                                                                                           |  | 2005                               |     |                                  | 2004 |   | 2005 |  |   | 2004
|                                                                                                                                           |  | (Millions of Dollars)             
|NET INCOME                                                                                                                                 |  | $                                  | 115 |                                  |      | $ | 86   |  | $ | 297  |   |  | $ | 241
|OTHER COMPREHENSIVE INCOME/(LOSS), NET OF
TAXES                                                                                            |  |                                    |     |                                  |      |   |      |  |   |      |   |  |   |    
|Minimum pension liability adjustments, net of $(2) and $1 taxes in 2005 and 2004, respectively                                             |  |                                    |    |                                  |      |   |     |  |   | (3   | ) |  |   | 1  
|Unrealized (losses)/gains on derivatives qualified as cash flow hedges, net of $(3), $10, $18 and $15 taxes in 2005 and 2004,
respectively |  |                                    | (3  | )                                |      |   | 13   |  |   | 27   |   |  |   | 21 
|Less: Reclassification adjustment for gains included in net income, net of $4, $1, $7 and $4 taxes in
2005 and 2004, respectively          |  |                                    | 6   |                                  |      |   | 2    |  |   | 11   |   |  |   | 6  
|TOTAL OTHER COMPREHENSIVE
(LOSS)/INCOME, NET OF TAXES                                                                                      |  |                                    | (9  | )                                |      |   | 11   |  |   | 13   |   |  |   | 16 
|COMPREHENSIVE INCOME                                                                                                                       |  | $                                  | 106 |                                  |      | $ | 97   |  | $ | 310  |   |  | $ | 257



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



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Consolidated Edison, Inc.



CONSOLIDATED STATEMENT OF COMMON SHAREHOLDERS' EQUITY

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2005 AND 2004

(UNAUDITED)



|                                                                           |  |                                         |  |                          |    |                   |   |        |                |        |       |                      |  |            |                                               |   |        |       |  |   |     |   |  |   |     |   |  |   |       |  
|-------------------------------------------------------------------------- |  | --------------------------------------- |  | ------------------------ | -- | ----------------- | - | ------ | -------------- | ------ | ----- | -------------------- |  | ---------- | --------------------------------------------- | - | ------ | ----- |  | - | --- | - |  | - | --- | - |  | - | ----- | -
|                                                                           |  | Common Stock                            |  | AdditionalPaid-InCapital |    | Retained Earnings |   |        | Treasury Stock |        |       | CapitalStock Expense |  |            | Accumulated Other Comprehensive Income/(Loss) |   |        | Total | 
|                                                                           |  | Shares                                  |  | Amount                   |    |                   |   | Shares |                | Amount |       |                      |  |           
|                                                                           |  | (Millions of Dollars/Except Share Data) | 
|BALANCE AS OF DECEMBER 31, 2003                                            |  | 225,840,220                             |  | $                        | 25 |                   | $ | 2,003  |                | $      | 5,451 |                      |  | 23,210,700 |                                               | $ | (1,001 | )     |  | $ | (39 | ) |  | $ | (16 | ) |  | $ | 6,423 |  
|                                                                           |  |                                         |  |                          |    |                   |   |        |               
|Net income                                                                 |  |                                         |  |                          |    |                   |   |        |                |        | 155   |                      |  |            |                                               |   |        |       |  |   |     |   |  |   |     |   |  |   | 155   |  
|Common stock dividends                                                     |  |                                         |  |                          |    |                   |   |        |                |        | (127  | )                    |  |            |                                               |   |        |       |  |   |     |   |  |   |     |   |  |   | (127  | )
|Issuance of common shares - dividend reinvestment and employee stock plans |  | 955,259                                 |  |                          |    |                   |   | 42     |                |        | (6    | )                    |  |            |                                               |   |        |       |  |   |     |   |  |   |     |   |  |   | 36    |  
|Other comprehensive income                                                 |  |                                         |  |                          |    |                   |   |        |                |        |       |                      |  |            |                                               |   |        |       |  |   |     |   |  |   | 5   |   |  |   | 5     |  
|BALANCE AS OF MARCH 31,
2004                                               |  | 226,795,479                             |  | $                        | 25 |                   | $ | 2,045  |                | $      | 5,473 |                      |  | 23,210,700 |                                               | $ | (1,001 | )     |  | $ | (39 | ) |  | $ | (11 | ) |  | $ | 6,492 |  
|Net income                                                                 |  |                                         |  |                          |    |                   |   |        |                |        | 86    |                      |  |            |                                               |   |        |       |  |   |     |   |  |   |     |   |  |   | 86    |  
|Common stock dividends                                                     |  |                                         |  |                          |    |                   |   |        |                |        | (128  | )                    |  |            |                                               |   |        |       |  |   |     |   |  |   |     |   |  |   | (128  | )
|Issuance of common shares - public offering                                |  | 14,000,000                              |  |                          | 1  |                   |   | 527    |                |        |       |                      |  |            |                                               |   |        |       |  |   | (15 | ) |  |   |     |   |  |   | 513   |  
|Issuance of common shares - dividend reinvestment and employee stock plans |  | 530,885                                 |  |                          |    |                   |   | 21     |                |        | (1    | )                    |  |            |                                               |   |        |       |  |   |     |   |  |   |     |   |  |   | 20    |  
|Other comprehensive income                                                 |  |                                         |  |                          |    |                   |   |        |                |        |       |                      |  |            |                                               |   |        |       |  |   |     |   |  |   | 11  |   |  |   | 11    |  
|BALANCE AS OFJUNE 30,
2004                                                 |  | 241,326,364                             |  | $                        | 26 |                   | $ | 2,593  |                | $      | 5,430 |                      |  | 23,210,700 |                                               | $ | (1,001 | )     |  | $ | (54 | ) |  | $ |    |   |  | $ | 6,994 |  
|                                                                           |  |                                         |  |                          |    |                   |   |        |               
|BALANCE AS OF DECEMBER 31, 2004                                            |  | 242,514,183                             |  | $                        | 26 |                   | $ | 2,642  |                | $      | 5,451 |                      |  | 23,210,700 |                                               | $ | (1,001 | )     |  | $ | (55 | ) |  | $ | (9  | ) |  | $ | 7,054 |  
|                                                                           |  |                                         |  |                          |    |                   |   |        |               
|Net income                                                                 |  |                                         |  |                          |    |                   |   |        |                |        | 181   |                      |  |            |                                               |   |        |       |  |   |     |   |  |   |     |   |  |   | 181   |  
|Common stock dividends                                                     |  |                                         |  |                          |    |                   |   |        |                |        | (138  | )                    |  |            |                                               |   |        |       |  |   |     |   |  |   |     |   |  |   | (138  | )
|Issuance of common shares - dividend reinvestment and employee stock plans |  | 476,235                                 |  |                          |    |                   |   | 20     |                |        |       |                      |  |            |                                               |   |        |       |  |   |     |   |  |   |     |   |  |   | 20    |  
|Other comprehensive income                                                 |  |                                         |  |                          |    |                   |   |        |                |        |       |                      |  |            |                                               |   |        |       |  |   |     |   |  |   | 22  |   |  |   | 22    |  
|BALANCE AS OF MARCH 31,
2005                                               |  | 242,990,418                             |  | $                        | 26 |                   | $ | 2,662  |                | $      | 5,494 |                      |  | 23,210,700 |                                               | $ | (1,001 | )     |  | $ | (55 | ) |  | $ | 13  |   |  | $ | 7,139 |  
|Net income                                                                 |  |                                         |  |                          |    |                   |   |        |                |        | 115   |                      |  |            |                                               |   |        |       |  |   |     |   |  |   |     |   |  |   | 115   |  
|Common stock dividends                                                     |  |                                         |  |                          |    |                   |   |        |                |        | (139  | )                    |  |            |                                               |   |        |       |  |   |     |   |  |   |     |   |  |   | (139  | )
|Issuance of common shares - dividend reinvestment and employee stock plans |  | 948,465                                 |  |                          | 1  |                   |   | 43     |                |        | (4    | )                    |  |            |                                               |   |        |       |  |   |     |   |  |   |     |   |  |   | 40    |  
|Other comprehensive loss                                                   |  |                                         |  |                          |    |                   |   |        |                |        |       |                      |  |            |                                               |   |        |       |  |   |     |   |  |   | (9  | ) |  |   | (9    | )
|BALANCE AS OFJUNE 30,
2005                                                 |  | 243,938,883                             |  | $                        | 27 |                   | $ | 2,705  |                | $      | 5,466 |                      |  | 23,210,700 |                                               | $ | (1,001 | )     |  | $ | (55 | ) |  | $ | 4   |   |  | $ | 7,146 |  



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



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Consolidated Edison, Inc.



CONSOLIDATED STATEMENT OF CASH FLOWS

(UNAUDITED)



|                                                                                                                    |  |                                  |       |   |      |   |      |  
|------------------------------------------------------------------------------------------------------------------- |  | -------------------------------- | ----- | - | ---- | - | ---- | -
|                                                                                                                    |  | For the Six MonthsEnded June 30, |      
|                                                                                                                    |  | 2005                             |       |   | 2004 |  
|                                                                                                                    |  | (Millions of Dollars)            |      
|OPERATING ACTIVITIES                                                                                                |  |                                  |       |   |      |   |      |  
|Net Income                                                                                                          |  | $                                | 297   |   |      | $ | 241  |  
|PRINCIPAL NON-CASH CHARGES/(CREDITS) TO
INCOME                                                                      |  |                                  |       |   |      |   |      |  
|Depreciation and amortization                                                                                       |  |                                  | 287   |   |      |   | 275  |  
|Deferred income taxes                                                                                               |  |                                  | (85   | ) |      |   | 204  |  
|Common equity component of allowance for funds used during construction                                             |  |                                  | (8    | ) |      |   | (12  | )
|Prepaid pension costs (net of capitalized amounts)                                                                  |  |                                  | (21   | ) |      |   | (69  | )
|Other non-cash items (net)                                                                                          |  |                                  | 36    |   |      |   | 38   |  
|CHANGES IN ASSETS AND LIABILITIES                                                                                   |  |                                  |       |   |      |   |      |  
|Accounts receivable - customers, less allowance for uncollectibles                                                  |  |                                  | 25    |   |      |   | 96   |  
|Materials and supplies, including fuel oil and gas in storage                                                       |  |                                  | 39    |   |      |   | 16   |  
|Prepayments                                                                                                         |  |                                  | (695  | ) |      |   | 8    |  
|Other receivables                                                                                                   |  |                                  | (29   | ) |      |   | (117 | )
|Other current assets                                                                                                |  |                                  | (165  | ) |      |   | (66  | )
|Recoverable energy costs                                                                                            |  |                                  |      |   |      |   | (28  | )
|Accounts payable                                                                                                    |  |                                  | 31    |   |      |   | 40   |  
|Pensions and retiree benefits                                                                                       |  |                                  | 60    |   |      |   | 25   |  
|Accrued taxes                                                                                                       |  |                                  | 153   |   |      |   | (49  | )
|Accrued interest                                                                                                    |  |                                  | 6     |   |      |   | (5   | )
|Deferred charges and other regulatory assets                                                                        |  |                                  | (138  | ) |      |   | (146 | )
|Deferred credits and other regulatory liabilities                                                                   |  |                                  | 28    |   |      |   | 175  |  
|Other assets                                                                                                        |  |                                  | 128   |   |      |   | (22  | )
|Other liabilities                                                                                                   |  |                                  | 84    |   |      |   | 32   |  
|NET CASH FLOWS FROM
OPERATING ACTIVITIES                                                                            |  |                                  | 33    |   |      |   | 636  |  
|INVESTING ACTIVITIES                                                                                                |  |                                  |       |   |      |   |      |  
|Utility construction expenditures (excluding capitalized support costs of $5 and $8 in 2005 and 2004, respectively) |  |                                  | (715  | ) |      |   | (659 | )
|Cost of removal less salvage                                                                                        |  |                                  | (92   | ) |      |   | (69  | )
|Non-utility construction expenditures                                                                               |  |                                  | (9    | ) |      |   | (22  | )
|Common equity component of allowance for funds used during construction                                             |  |                                  | 8     |   |      |   | 12   |  
|Investments by unregulated subsidiaries                                                                             |  |                                  | (4    | ) |      |   | (5   | )
|Increase in restricted cash                                                                                         |  |                                  | (126  | ) |      |   |     |  
|Proceeds from sale of First Avenue properties                                                                       |  |                                  | 534   |   |      |   |     |  
|NET CASH FLOWS USED IN
INVESTING ACTIVITIES                                                                         |  |                                  | (404  | ) |      |   | (743 | )
|FINANCING ACTIVITIES                                                                                                |  |                                  |       |   |      |   |      |  
|Net proceeds from/(payments of) short-term debt                                                                     |  |                                  | 20    |   |      |   | (119 | )
|Increase in other payable                                                                                           |  |                                  | 734   |   |      |   |     |  
|Retirement of long-term debt                                                                                        |  |                                  | (11   | ) |      |   | (556 | )
|Issuance of long-term debt                                                                                          |  |                                  | 642   |   |      |   | 920  |  
|Issuance of common stock                                                                                            |  |                                  | 41    |   |      |   | 550  |  
|Debt issuance costs                                                                                                 |  |                                  | (6    | ) |      |   | (14  | )
|Common stock dividends                                                                                              |  |                                  | (257  | ) |      |   | (236 | )
|NET CASH FLOWS FROM
FINANCING ACTIVITIES                                                                            |  |                                  | 1,163 |   |      |   | 545  |  
|CASH AND TEMPORARY CASH INVESTMENTS:                                                                                |  |                                  |       |   |      |   |      |  
|NET CHANGE FOR THE PERIOD                                                                                           |  |                                  | 792   |   |      |   | 438  |  
|BALANCE AT BEGINNING OF
PERIOD                                                                                      |  |                                  | 26    |   |      |   | 49   |  
|BALANCE AT END OF
PERIOD                                                                                            |  | $                                | 818   |   |      | $ | 487  |  
|SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION                                                                    |  |                                  |       |   |      |   |      |  
|Cash paid during the period for:                                                                                    |  |                                  |       |   |      |   |      |  
|Interest                                                                                                            |  | $                                | 207   |   |      | $ | 204  |  
|Income taxes                                                                                                        |  | $                                | 60    |   |      | $ | 103  |  



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



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Consolidated Edison Company of New York, Inc.



CONSOLIDATED BALANCE SHEET

(UNAUDITED)



|                                                                                                                         |  |                       |        |                   |   |       
|------------------------------------------------------------------------------------------------------------------------ |  | --------------------- | ------ | ----------------- | - | ------
|                                                                                                                         |  | June 30, 2005         |        | December 31, 2004
|                                                                                                                         |  | (Millions of Dollars)
|ASSETS                                                                                                                   |  |                       |        |                   |   |       
|UTILITY PLANT, AT ORIGINAL COST                                                                                          |  |                       |        |                   |   |       
|Electric                                                                                                                 |  | $                     | 12,273 |                   | $ | 12,100
|Gas                                                                                                                      |  |                       | 2,593  |                   |   | 2,531 
|Steam                                                                                                                    |  |                       | 1,563  |                   |   | 823   
|General                                                                                                                  |  |                       | 1,393  |                   |   | 1,379 
|TOTAL                                                                                                                    |  |                       | 17,822 |                   |   | 16,833
|Less: Accumulated depreciation                                                                                           |  |                       | 3,871  |                   |   | 3,906 
|Net                                                                                                                      |  |                       | 13,951 |                   |   | 12,927
|Construction work in progress                                                                                            |  |                       | 632    |                   |   | 1,328 
|NET UTILITY PLANT                                                                                                        |  |                       | 14,583 |                   |   | 14,255
|NON-UTILITY PROPERTY                                                                                                     |  |                       |        |                   |   |       
|Non-utility property                                                                                                     |  |                       | 18     |                   |   | 19    
|NET PLANT                                                                                                                |  |                       | 14,601 |                   |   | 14,274
|CURRENT ASSETS                                                                                                           |  |                       |        |                   |   |       
|Cash and temporary cash investments                                                                                      |  |                       | 792    |                   |   | 10    
|Restricted cash - funds held for redemption of long-term debt                                                            |  |                       | 126    |                   |   |      
|Accounts receivable - customers, less allowance for uncollectible accounts of $28 and $29 in 2005 and 2004, respectively |  |                       | 633    |                   |   | 666   
|Other receivables, less allowance for uncollectible accounts of $4 and $3 in 2005 and 2004, respectively                 |  |                       | 113    |                   |   | 113   
|Accounts receivable from affiliated companies                                                                            |  |                       | 188    |                   |   | 115   
|Fuel oil, at average cost                                                                                                |  |                       | 18     |                   |   | 24    
|Gas in storage, at average cost                                                                                          |  |                       | 100    |                   |   | 125   
|Materials and supplies, at average cost                                                                                  |  |                       | 94     |                   |   | 94    
|Prepayments                                                                                                              |  |                       | 767    |                   |   | 73    
|Other current assets                                                                                                     |  |                       | 148    |                   |   | 87    
|TOTAL CURRENT ASSETS                                                                                                     |  |                       | 2,979  |                   |   | 1,307 
|INVESTMENTS                                                                                                              |  |                       | 3      |                   |   | 3     
|DEFERRED CHARGES, REGULATORY ASSETS AND NONCURRENT
ASSETS                                                                |  |                       |        |                   |   |       
|Prepaid pension costs                                                                                                    |  |                       | 1,458  |                   |   | 1,442 
|Regulatory assets                                                                                                        |  |                       | 1,693  |                   |   | 2,005 
|Other deferred charges and noncurrent assets                                                                             |  |                       | 243    |                   |   | 213   
|TOTAL DEFERRED CHARGES, REGULATORY
ASSETS AND NONCURRENT ASSETS                                                          |  |                       | 3,394  |                   |   | 3,660 
|TOTAL ASSETS                                                                                                             |  | $                     | 20,977 |                   | $ | 19,244



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



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Consolidated Edison Company of New York, Inc.



CONSOLIDATED BALANCE SHEET

(UNAUDITED)



|                                                                           |  |                       |        |                   |   |       
|-------------------------------------------------------------------------- |  | --------------------- | ------ | ----------------- | - | ------
|                                                                           |  | June 30, 2005         |        | December 31, 2004
|                                                                           |  | (Millions of Dollars)
|CAPITALIZATION AND LIABILITIES                                             |  |                       |        |                   |   |       
|CAPITALIZATION                                                             |  |                       |        |                   |   |       
|Common shareholders equity (See Statement of Common Shareholders Equity) |  | $                     | 6,233  |                   | $ | 6,116 
|Preferred stock                                                            |  |                       | 213    |                   |   | 213   
|Long-term debt                                                             |  |                       | 5,835  |                   |   | 5,235 
|TOTAL CAPITALIZATION                                                       |  |                       | 12,281 |                   |   | 11,564
|NONCURRENT LIABILITIES                                                     |  |                       |        |                   |   |       
|Obligations under capital leases                                           |  |                       | 31     |                   |   | 33    
|Provision for injuries and damages                                         |  |                       | 172    |                   |   | 170   
|Pensions and retiree benefits                                              |  |                       | 146    |                   |   | 109   
|Superfund and other environmental costs                                    |  |                       | 189    |                   |   | 141   
|Other noncurrent liabilities                                               |  |                       | 33     |                   |   | 34    
|TOTAL NONCURRENT LIABILITIES                                               |  |                       | 571    |                   |   | 487   
|CURRENT LIABILITIES                                                        |  |                       |        |                   |   |       
|Long-term debt due within one year                                         |  |                       | 450    |                   |   | 450   
|Notes payable                                                              |  |                       | 122    |                   |   | 100   
|Accounts and other payables                                                |  |                       | 1,472  |                   |   | 738   
|Accounts payable to affiliated companies                                   |  |                       | 36     |                   |   | 40    
|Customer deposits                                                          |  |                       | 214    |                   |   | 218   
|Accrued taxes                                                              |  |                       | 261    |                   |   | 58    
|Accrued interest                                                           |  |                       | 86     |                   |   | 79    
|Accrued wages                                                              |  |                       | 82     |                   |   | 81    
|Other current liabilities                                                  |  |                       | 187    |                   |   | 160   
|TOTAL CURRENT LIABILITIES                                                  |  |                       | 2,910  |                   |   | 1,924 
|DEFERRED CREDITS AND REGULATORY LIABILITIES                                |  |                       |        |                   |   |       
|Deferred income taxes and investment tax credits                           |  |                       | 3,282  |                   |   | 3,346 
|Regulatory liabilities                                                     |  |                       | 1,905  |                   |   | 1,895 
|Other deferred credits                                                     |  |                       | 28     |                   |   | 28    
|TOTAL DEFERRED CREDITS AND
REGULATORY LIABILITIES                          |  |                       | 5,215  |                   |   | 5,269 
|TOTAL CAPITALIZATION AND
LIABILITIES                                       |  | $                     | 20,977 |                   | $ | 19,244



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



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Consolidated Edison Company of New York, Inc.



CONSOLIDATED INCOME STATEMENT

(UNAUDITED)



|                                                      |  |                                    |       |   |                                  |   |       |      |  |   |       |   |  |   |       |  
|----------------------------------------------------- |  | ---------------------------------- | ----- | - | -------------------------------- | - | ----- | ---- |  | - | ----- | - |  | - | ----- | -
|                                                      |  | For the Three MonthsEnded June 30, |       |   | For the Six MonthsEnded June 30, |  
|                                                      |  | 2005                               |       |   | 2004                             |   |       | 2005 |  |   | 2004  |  
|                                                      |  | (Millions of Dollars)              |      
|OPERATING REVENUES                                    |  |                                    |       |   |                                  |   |       |      |  |   |       |   |  |   |       |  
|Electric                                              |  | $                                  | 1,527 |   |                                  | $ | 1,409 |      |  | $ | 2,920 |   |  | $ | 2,829 |  
|Gas                                                   |  |                                    | 320   |   |                                  |   | 249   |      |  |   | 951   |   |  |   | 801   |  
|Steam                                                 |  |                                    | 96    |   |                                  |   | 93    |      |  |   | 363   |   |  |   | 327   |  
|TOTAL OPERATING REVENUES                              |  |                                    | 1,943 |   |                                  |   | 1,751 |      |  |   | 4,234 |   |  |   | 3,957 |  
|OPERATING EXPENSES                                    |  |                                    |       |   |                                  |   |       |      |  |   |       |   |  |   |       |  
|Purchased power                                       |  |                                    | 696   |   |                                  |   | 676   |      |  |   | 1,403 |   |  |   | 1,391 |  
|Fuel                                                  |  |                                    | 92    |   |                                  |   | 81    |      |  |   | 226   |   |  |   | 218   |  
|Gas purchased for resale                              |  |                                    | 177   |   |                                  |   | 134   |      |  |   | 556   |   |  |   | 459   |  
|Other operations and maintenance                      |  |                                    | 342   |   |                                  |   | 293   |      |  |   | 693   |   |  |   | 610   |  
|Depreciation and amortization                         |  |                                    | 127   |   |                                  |   | 119   |      |  |   | 249   |   |  |   | 236   |  
|Taxes, other than income taxes                        |  |                                    | 264   |   |                                  |   | 237   |      |  |   | 517   |   |  |   | 500   |  
|Income taxes                                          |  |                                    | 36    |   |                                  |   | 43    |      |  |   | 135   |   |  |   | 146   |  
|TOTAL OPERATING EXPENSES                              |  |                                    | 1,734 |   |                                  |   | 1,583 |      |  |   | 3,779 |   |  |   | 3,560 |  
|OPERATING INCOME                                      |  |                                    | 209   |   |                                  |   | 168   |      |  |   | 455   |   |  |   | 397   |  
|OTHER INCOME (DEDUCTIONS)                             |  |                                    |       |   |                                  |   |       |      |  |   |       |   |  |   |       |  
|Investment and other income                           |  |                                    | 9     |   |                                  |   | 5     |      |  |   | 17    |   |  |   | 20    |  
|Allowance for equity funds used during construction   |  |                                    |      |   |                                  |   | 6     |      |  |   | 7     |   |  |   | 12    |  
|Other deductions                                      |  |                                    | (3    | ) |                                  |   | (3    | )    |  |   | (7    | ) |  |   | (6    | )
|Income taxes                                          |  |                                    | (2    | ) |                                  |   | 1     |      |  |   | (2    | ) |  |   | (1    | )
|TOTAL OTHER INCOME
(DEDUCTIONS)                       |  |                                    | 4     |   |                                  |   | 9     |      |  |   | 15    |   |  |   | 25    |  
|INTEREST EXPENSE                                      |  |                                    |       |   |                                  |   |       |      |  |   |       |   |  |   |       |  
|Interest on long-term debt                            |  |                                    | 89    |   |                                  |   | 83    |      |  |   | 172   |   |  |   | 168   |  
|Other interest                                        |  |                                    |      |   |                                  |   | 6     |      |  |   | 7     |   |  |   | 16    |  
|Allowance for borrowed funds used during construction |  |                                    |      |   |                                  |   | (4    | )    |  |   | (6    | ) |  |   | (9    | )
|NET INTEREST EXPENSE                                  |  |                                    | 89    |   |                                  |   | 85    |      |  |   | 173   |   |  |   | 175   |  
|NET INCOME                                            |  |                                    | 124   |   |                                  |   | 92    |      |  |   | 297   |   |  |   | 247   |  
|PREFERRED STOCK DIVIDEND
REQUIREMENTS                 |  |                                    | 3     |   |                                  |   | 3     |      |  |   | 6     |   |  |   | 6     |  
|NET INCOME FOR COMMON
STOCK                           |  | $                                  | 121   |   |                                  | $ | 89    |      |  | $ | 291   |   |  | $ | 241   |  



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



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Consolidated Edison Company of New York, Inc.



CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

(UNAUDITED)



|                                                                                                    |  |                                    |     |                                  |      |   |      |  |   |      |   |  |   |    
|--------------------------------------------------------------------------------------------------- |  | ---------------------------------- | --- | -------------------------------- | ---- | - | ---- |  | - | ---- | - |  | - | ---
|                                                                                                    |  | For the Three MonthsEnded June 30, |     | For the Six MonthsEnded June 30,
|                                                                                                    |  | 2005                               |     |                                  | 2004 |   | 2005 |  |   | 2004
|                                                                                                    |  | (Millions of Dollars)             
|NET INCOME                                                                                          |  | $                                  | 124 |                                  |      | $ | 92   |  | $ | 297  |   |  | $ | 247
|OTHER COMPREHENSIVE INCOME/(LOSS), NET OF
TAXES                                                     |  |                                    |     |                                  |      |   |      |  |   |      |   |  |   |    
|Minimum pension liability adjustments, net of $(2) and $2 taxes in 2005 and 2004, respectively      |  |                                    |    |                                  |      |   |     |  |   | (2   | ) |  |   | 3  
|Unrealized losses on derivatives qualified as cash flow hedges, net of $(11) and $(5) taxes in 2005 |  |                                    | (16 | )                                |      |   |     |  |   | (8   | ) |  |   |   
|Less: Reclassification adjustment for gains included in net income, net of $1 taxes in
2005         |  |                                    |    |                                  |      |   |     |  |   | 1    |   |  |   |   
|TOTAL OTHER COMPREHENSIVE
(LOSS)/INCOME, NET OF TAXES                                               |  |                                    | (16 | )                                |      |   |     |  |   | (11  | ) |  |   | 3  
|COMPREHENSIVE INCOME                                                                                |  | $                                  | 108 |                                  |      | $ | 92   |  | $ | 286  |   |  | $ | 250



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



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Consolidated Edison Company of New York, Inc.



CONSOLIDATED STATEMENT OF COMMON SHAREHOLDERS EQUITY

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2005 AND 2004

(UNAUDITED)



|                                |  |                                         |  |                          |     |                   |   |       |                             |   |       |                      |  |   |                                             |   |  |       |     |   |  |   |     |   |  |   |       |  
|------------------------------- |  | --------------------------------------- |  | ------------------------ | --- | ----------------- | - | ----- | --------------------------- | - | ----- | -------------------- |  | - | ------------------------------------------- | - |  | ----- | --- | - |  | - | --- | - |  | - | ----- | -
|                                |  | Common Stock                            |  | AdditionalPaid-InCapital |     | Retained Earnings |   |       | RepurchasedCon Edison Stock |   |       | CapitalStock Expense |  |   | AccumulatedOtherComprehensive Income/(Loss) |   |  | Total |    
|                                |  | Shares                                  |  | Amount                   |     |                   |   |       |                             |  
|                                |  | (Millions of Dollars/Except Share Data) | 
|BALANCE AS OF DECEMBER 31, 2003 |  | 235,488,094                             |  | $                        | 589 |                   | $ | 1,274 |                             | $ | 4,626 |                      |  | $ | (962                                        | ) |  | $     | (39 | ) |  | $ | (6  | ) |  | $ | 5,482 |  
|Net income                      |  |                                         |  |                          |     |                   |   |       |                             |   | 155   |                      |  |   |                                             |   |  |       |     |   |  |   |     |   |  |   | 155   |  
|Common stock dividend to parent |  |                                         |  |                          |     |                   |   |       |                             |   | (103  | )                    |  |   |                                             |   |  |       |     |   |  |   |     |   |  |   | (103  | )
|Cumulative preferred dividends  |  |                                         |  |                          |     |                   |   |       |                             |   | (3    | )                    |  |   |                                             |   |  |       |     |   |  |   |     |   |  |   | (3    | )
|Other comprehensive income      |  |                                         |  |                          |     |                   |   |       |                             |   |       |                      |  |   |                                             |   |  |       |     |   |  |   | 3   |   |  |   | 3     |  
|BALANCE AS OF MARCH 31,
2004    |  | 235,488,094                             |  | $                        | 589 |                   | $ | 1,274 |                             | $ | 4,675 |                      |  | $ | (962                                        | ) |  | $     | (39 | ) |  | $ | (3  | ) |  | $ | 5,534 |  
|Net income                      |  |                                         |  |                          |     |                   |   |       |                             |   | 92    |                      |  |   |                                             |   |  |       |     |   |  |   |     |   |  |   | 92    |  
|Common stock dividend to parent |  |                                         |  |                          |     |                   |   |       |                             |   | (82   | )                    |  |   |                                             |   |  |       |     |   |  |   |     |   |  |   | (82   | )
|Capital contribution by parent  |  |                                         |  |                          |     |                   |   | 528   |                             |   |       |                      |  |   |                                             |   |  |       | (15 | ) |  |   |     |   |  |   | 513   |  
|Cumulative preferred dividends  |  |                                         |  |                          |     |                   |   |       |                             |   | (3    | )                    |  |   |                                             |   |  |       |     |   |  |   |     |   |  |   | (3    | )
|Other comprehensive income      |  |                                         |  |                          |     |                   |   |       |                             |   |       |                      |  |   |                                             |   |  |       |     |   |  |   |    |   |  |   |      |  
|BALANCE AS OF JUNE 30,
2004     |  | 235,488,094                             |  | $                        | 589 |                   | $ | 1,802 |                             | $ | 4,682 |                      |  | $ | (962                                        | ) |  | $     | (54 | ) |  | $ | (3  | ) |  | $ | 6,054 |  
|                                |  |                                         |  |                          |     |                   |   |      
|BALANCE AS OF DECEMBER 31, 2004 |  | 235,488,094                             |  | $                        | 589 |                   | $ | 1,802 |                             | $ | 4,748 |                      |  | $ | (962                                        | ) |  | $     | (55 | ) |  | $ | (6  | ) |  | $ | 6,116 |  
|                                |  |                                         |  |                          |     |                   |   |      
|Net income                      |  |                                         |  |                          |     |                   |   |       |                             |   | 173   |                      |  |   |                                             |   |  |       |     |   |  |   |     |   |  |   | 173   |  
|Common stock dividend to parent |  |                                         |  |                          |     |                   |   |       |                             |   | (111  | )                    |  |   |                                             |   |  |       |     |   |  |   |     |   |  |   | (111  | )
|Cumulative preferred dividends  |  |                                         |  |                          |     |                   |   |       |                             |   | (3    | )                    |  |   |                                             |   |  |       |     |   |  |   |     |   |  |   | (3    | )
|Other comprehensive income      |  |                                         |  |                          |     |                   |   |       |                             |   |       |                      |  |   |                                             |   |  |       |     |   |  |   | 5   |   |  |   | 5     |  
|BALANCE AS OF MARCH 31,
2005    |  | 235,488,094                             |  | $                        | 589 |                   | $ | 1,802 |                             | $ | 4,807 |                      |  | $ | (962                                        | ) |  | $     | (55 | ) |  | $ | (1  | ) |  | $ | 6,180 |  
|Net income                      |  |                                         |  |                          |     |                   |   |       |                             |   | 124   |                      |  |   |                                             |   |  |       |     |   |  |   |     |   |  |   | 124   |  
|Common stock dividend to parent |  |                                         |  |                          |     |                   |   |       |                             |   | (52   | )                    |  |   |                                             |   |  |       |     |   |  |   |     |   |  |   | (52   | )
|Cumulative preferred dividends  |  |                                         |  |                          |     |                   |   |       |                             |   | (3    | )                    |  |   |                                             |   |  |       |     |   |  |   |     |   |  |   | (3    | )
|Other comprehensive loss        |  |                                         |  |                          |     |                   |   |       |                             |   |       |                      |  |   |                                             |   |  |       |     |   |  |   | (16 | ) |  |   | (16   | )
|BALANCE AS OF JUNE 30,
2005     |  | 235,488,094                             |  | $                        | 589 |                   | $ | 1,802 |                             | $ | 4,876 |                      |  | $ | (962                                        | ) |  | $     | (55 | ) |  | $ | (17 | ) |  | $ | 6,233 |  



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



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Consolidated Edison Company of New York, Inc.



CONSOLIDATED STATEMENT OF CASH FLOWS

(UNAUDITED)



|                                                                                                                    |  |                                  |       |   |      |   |      |  
|------------------------------------------------------------------------------------------------------------------- |  | -------------------------------- | ----- | - | ---- | - | ---- | -
|                                                                                                                    |  | For the Six MonthsEnded June 30, |      
|                                                                                                                    |  | 2005                             |       |   | 2004 |  
|                                                                                                                    |  | (Millions of Dollars)            |      
|OPERATING ACTIVITIES                                                                                                |  |                                  |       |   |      |   |      |  
|Net income                                                                                                          |  | $                                | 297   |   |      | $ | 247  |  
|PRINCIPAL NON-CASH CHARGES/(CREDITS) TO
INCOME                                                                      |  |                                  |       |   |      |   |      |  
|Depreciation and amortization                                                                                       |  |                                  | 249   |   |      |   | 236  |  
|Deferred income taxes                                                                                               |  |                                  | (105  | ) |      |   | 194  |  
|Common equity component of allowance for funds used during construction                                             |  |                                  | (7    | ) |      |   | (12  | )
|Prepaid pension costs (net of capitalized amounts)                                                                  |  |                                  | (21   | ) |      |   | (69  | )
|Other non-cash items (net)                                                                                          |  |                                  | (10   | ) |      |   | 10   |  
|CHANGES IN ASSETS AND LIABILITIES                                                                                   |  |                                  |       |   |      |   |      |  
|Accounts receivable - customers, less allowance for uncollectibles                                                  |  |                                  | 33    |   |      |   | 85   |  
|Materials and supplies, including fuel oil and gas in storage                                                       |  |                                  | 31    |   |      |   | 14   |  
|Prepayments                                                                                                         |  |                                  | (694  | ) |      |   | 9    |  
|Other receivables                                                                                                   |  |                                  | (73   | ) |      |   | (97  | )
|Other current assets                                                                                                |  |                                  | (61   | ) |      |   | (34  | )
|Recoverable energy costs                                                                                            |  |                                  | 5     |   |      |   | (49  | )
|Accounts payable                                                                                                    |  |                                  | (4    | ) |      |   | 38   |  
|Pensions and retiree benefits                                                                                       |  |                                  | 37    |   |      |   | 8    |  
|Accrued taxes                                                                                                       |  |                                  | 203   |   |      |   | (72  | )
|Accrued interest                                                                                                    |  |                                  | 7     |   |      |   | (5   | )
|Deferred charges and other regulatory assets                                                                        |  |                                  | (131  | ) |      |   | (128 | )
|Deferred credits and other regulatory liabilities                                                                   |  |                                  | 9     |   |      |   | 165  |  
|Other assets                                                                                                        |  |                                  | 122   |   |      |   | (4   | )
|Other liabilities                                                                                                   |  |                                  | 71    |   |      |   | 4    |  
|NET CASH FLOWS FROM
OPERATING ACTIVITIES                                                                            |  |                                  | (42   | ) |      |   | 540  |  
|INVESTING ACTIVITIES                                                                                                |  |                                  |       |   |      |   |      |  
|Utility construction expenditures (excluding capitalized support costs of $5 and $8 in 2005 and 2004, respectively) |  |                                  | (683  | ) |      |   | (624 | )
|Cost of removal less salvage                                                                                        |  |                                  | (89   | ) |      |   | (68  | )
|Common equity component of allowance for funds used during construction                                             |  |                                  | 7     |   |      |   | 12   |  
|Increase in restricted cash                                                                                         |  |                                  | (126  | ) |      |   |     |  
|Proceeds from sale of First Avenue properties                                                                       |  |                                  | 534   |   |      |   |     |  
|NET CASH FLOWS USED IN
INVESTING ACTIVITIES                                                                         |  |                                  | (357  | ) |      |   | (680 | )
|FINANCING ACTIVITIES                                                                                                |  |                                  |       |   |      |   |      |  
|Net proceeds from/(payments of) short-term debt                                                                     |  |                                  | 22    |   |      |   | (99  | )
|Increase in other payable                                                                                           |  |                                  | 734   |   |      |   |     |  
|Retirement of long-term debt                                                                                        |  |                                  |      |   |      |   | (548 | )
|Issuance of long-term debt                                                                                          |  |                                  | 600   |   |      |   | 920  |  
|Debt issuance costs                                                                                                 |  |                                  | (6    | ) |      |   | (14  | )
|Capital contribution by parent                                                                                      |  |                                  |      |   |      |   | 513  |  
|Dividend to parent                                                                                                  |  |                                  | (163  | ) |      |   | (185 | )
|Preferred stock dividends                                                                                           |  |                                  | (6    | ) |      |   | (6   | )
|NET CASH FLOWS FROM
FINANCING ACTIVITIES                                                                            |  |                                  | 1,181 |   |      |   | 581  |  
|CASH AND TEMPORARY CASH INVESTMENTS:                                                                                |  |                                  |       |   |      |   |      |  
|NET CHANGE FOR THE PERIOD                                                                                           |  |                                  | 782   |   |      |   | 441  |  
|BALANCE AT BEGINNING OF
PERIOD                                                                                      |  |                                  | 10    |   |      |   | 33   |  
|BALANCE AT END OF
PERIOD                                                                                            |  | $                                | 792   |   |      | $ | 474  |  
|SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION                                                                    |  |                                  |       |   |      |   |      |  
|Cash paid during the period for:                                                                                    |  |                                  |       |   |      |   |      |  
|Interest                                                                                                            |  | $                                | 160   |   |      | $ | 158  |  
|Income taxes                                                                                                        |  | $                                | 112   |   |      | $ | 127  |  



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



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NOTES TO THE FINANCIAL STATEMENTS (UNAUDITED)



General

These combined notes accompany and form
an integral part of the separate interim consolidated financial statements of two separate registrants: Consolidated Edison, Inc. and its subsidiaries (Con Edison); and Consolidated Edison Company of New York, Inc. and its subsidiaries (Con Edison
of New York). Con Edison of New York is a subsidiary of Con Edison and as such its financial condition and results of operations and cash flows, which are presented separately in the Con Edison of New York interim consolidated financial statements,
are also consolidated, along with those of Con Edisons other utility subsidiary, Orange and Rockland Utilities, Inc. (O&R) and Con Edisons unregulated subsidiaries (discussed below), in Con Edisons interim consolidated
financial statements. The term the Utilities is used in these notes to refer to Con Edison of New York and O&R. As used in these notes, the term the Companies refers to Con Edison and Con Edison of New York and, except as
otherwise noted, the information in these combined notes relates to each of the Companies.



The separate interim consolidated financial statements of each of the Companies are unaudited but, in the opinion of their respective managements, reflect all adjustments (which include only normally recurring
adjustments) necessary for a fair presentation of the results for the interim periods presented. The Companies separate interim consolidated financial statements should be read together with their separate audited financial statements
(including the combined notes thereto) included in Item 8 of their combined Annual Report on Form 10-K for the year ended December 31, 2004 (the Form 10-K) and their separate unaudited financial statements (including the combined notes thereto)
included in Part I, Item 1 of their combined Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2005 (the First Quarter Form 10-Q). Certain prior period amounts have been reclassified to conform to the current period
presentation. Results for interim periods are not necessarily indicative of results for the entire fiscal year.



Con Edison has two regulated utility subsidiaries: Con Edison of New York and O&R. Con Edison of New York provides electric service to approximately 3.2 million
customers and gas service to over 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
approximately 0.3 million customers in southeastern New York and adjacent areas of northern New Jersey and eastern Pennsylvania and gas service to over 0.1 million customers in southeastern New York and adjacent areas of eastern Pennsylvania. Con
Edison has the following unregulated energy subsidiaries: Consolidated Edison Solutions, Inc. (Con Edison Solutions), a retail energy services company that sells electricity to delivery customers of utilities, including Con Edison of New York and
O&R, and also offers energy-related services; Consolidated Edison Energy, Inc. (Con



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NOTES TO THE FINANCIAL
STATEMENTS (UNAUDITED)  CONTINUED



Edison Energy), a wholesale energy supply company; and Consolidated Edison Development, Inc. (Con Edison Development), a company that owns and operates
generating plants and participates in other infrastructure projects.



In
December 2004, after a comprehensive strategic review, Con Edison determined to sell Con Edison Communications, LLC (Con Edison Communications). See Note N.



Note A - Earnings per Common Share

Reference is made to Earnings per
Common Share in Note A to the financial statements included in Item 8 of the Form 10-K. For the three and six months ended June 30, 2005 and 2004, Con Edisons basic and diluted EPS are calculated as follows:



|                                                                                  |  |                                    |       |   |                                  |   |       |      |  |   |       |   |  |   |       |  
|--------------------------------------------------------------------------------- |  | ---------------------------------- | ----- | - | -------------------------------- | - | ----- | ---- |  | - | ----- | - |  | - | ----- | -
|                                                                                  |  | For the Three MonthsEnded June 30, |       |   | For the Six MonthsEnded June 30, |  
|(Millions of Dollars, except per share amounts/Shares in Millions)                |  | 2005                               |       |   | 2004                             |   |       | 2005 |  |   | 2004  |  
|Income from continuing operations                                                 |  | $                                  | 118   |   |                                  | $ | 89    |      |  | $ | 300   |   |  | $ | 247   |  
|Loss from discontinued operations, net of tax                                     |  |                                    | (3    | ) |                                  |   | (3    | )    |  |   | (3    | ) |  |   | (6    | )
|Net income                                                                        |  |                                    | 115   |   |                                  |   | 86    |      |  |   | 297   |   |  |   | 241   |  
|Weighted average common shares outstanding  Basic                                |  |                                    | 243.4 |   |                                  |   | 234.0 |      |  |   | 243.1 |   |  |   | 230.6 |  
|Add: Incremental shares attributable to effect of potentially dilutive securities |  |                                    | 0.8   |   |                                  |   | 0.9   |      |  |   | 0.7   |   |  |   | 1.0   |  
|Adjusted weighted average common shares outstanding  Diluted                     |  |                                    | 244.2 |   |                                  |   | 234.9 |      |  |   | 243.8 |   |  |   | 231.6 |  
|EARNINGS PER COMMON SHARE  BASIC                                                 |  |                                    |       |   |                                  |   |       |      |  |   |       |   |  |   |       |  
|Continuing operations                                                             |  | $                                  | 0.48  |   |                                  | $ | 0.38  |      |  | $ | 1.23  |   |  | $ | 1.07  |  
|Discontinued operations                                                           |  |                                    | (0.01 | ) |                                  |   | (0.01 | )    |  |   | (0.01 | ) |  |   | (0.02 | )
|Net income                                                                        |  | $                                  | 0.47  |   |                                  | $ | 0.37  |      |  | $ | 1.22  |   |  | $ | 1.05  |  
|EARNINGS PER COMMON SHARE  DILUTED                                               |  |                                    |       |   |                                  |   |       |      |  |   |       |   |  |   |       |  
|Continuing operations                                                             |  | $                                  | 0.48  |   |                                  | $ | 0.38  |      |  | $ | 1.23  |   |  | $ | 1.06  |  
|Discontinued operations                                                           |  |                                    | (0.01 | ) |                                  |   | (0.01 | )    |  |   | (0.01 | ) |  |   | (0.02 | )
|Net income                                                                        |  | $                                  | 0.47  |   |                                  | $ | 0.37  |      |  | $ | 1.22  |   |  | $ | 1.04  |  

The computation of diluted earnings per share excludes 0.9 million and 8.0 million Con Edison common shares for the
three months ended June 30, 2005 and 2004, respectively, and 1.8 million and 7.9 million common shares for the six months ended June 30, 2005 and 2004, respectively, because the exercise prices of the related underlying options were greater than the
average daily closing market price of the common shares during the respective periods.



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NOTES TO THE FINANCIAL
STATEMENTS (UNAUDITED)  CONTINUED



Note B - Stock-Based Compensation

Reference is made to Stock-Based Compensation in Note A to the financial statements in Item 8 of the Form 10-K. The following table illustrates the effect on net income and earnings per share for the three and six months ended
June 30, 2005 and 2004, respectively, if the Companies had applied the fair value recognition provisions of SFAS No. 123, Accounting for Stock-Based Compensation, for purposes of recognizing compensation expense for employee stock-based
arrangements:



|                                                                                                                             |  |                                     |      |                       |   |      |  |      |     |  |   |   
|---------------------------------------------------------------------------------------------------------------------------- |  | ----------------------------------- | ---- | --------------------- | - | ---- |  | ---- | --- |  | - | --
|                                                                                                                             |  | For the Three Months Ended June 30,
|                                                                                                                             |  | Con Edison*                         |      | Con Edison ofNew York
|(Millions of Dollars, except per share amounts/Shares in Millions)                                                           |  | 2005                                |      | 2004                  |   | 2005 |  | 2004
|Net income, as reported                                                                                                      |  | $                                   | 115  |                       | $ | 86   |  | $    | 124 |  | $ | 92
|Add: Stock-based compensation expense included in reported net income, net of related tax effects                            |  |                                     | 2    |                       |   | 2    |  |      | 1   |  |   | 1 
|Deduct: Total stock-based compensation expense determined under fair value method for all awards, net
of related tax effects |  |                                     | 3    |                       |   | 3    |  |      | 2   |  |   | 2 
|Pro forma net income                                                                                                         |  | $                                   | 114  |                       | $ | 85   |  | $    | 123 |  | $ | 91
|Earnings per common share:                                                                                                   |  |                                     |      |                       |   |      |  |      |     |  |   |   
|Basic - as reported                                                                                                          |  | $                                   | 0.47 |                       | $ | 0.37 |  |      |     |  |   |   
|Basic - pro forma                                                                                                            |  | $                                   | 0.47 |                       | $ | 0.36 |  |      |     |  |   |   
|Diluted - as reported                                                                                                        |  | $                                   | 0.47 |                       | $ | 0.37 |  |      |     |  |   |   
|Diluted - pro forma                                                                                                          |  | $                                   | 0.47 |                       | $ | 0.36 |  |      |     |  |   |   

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



|                                                                                                                             |  |                                   |      |                       |   |      |  |      |     |  |   |    
|---------------------------------------------------------------------------------------------------------------------------- |  | --------------------------------- | ---- | --------------------- | - | ---- |  | ---- | --- |  | - | ---
|                                                                                                                             |  | For the Six Months Ended June 30,
|                                                                                                                             |  | Con Edison*                       |      | Con Edison ofNew York
|(Millions of Dollars, except per share amounts/Shares in Millions)                                                           |  | 2005                              |      | 2004                  |   | 2005 |  | 2004
|Net income, as reported                                                                                                      |  | $                                 | 297  |                       | $ | 241  |  | $    | 297 |  | $ | 247
|Add: Stock-based compensation expense included in reported net income, net of related tax effects                            |  |                                   | 3    |                       |   | 3    |  |      | 2   |  |   | 2  
|Deduct: Total stock-based compensation expense determined under fair value method for all awards, net
of related tax effects |  |                                   | 5    |                       |   | 4    |  |      | 4   |  |   | 4  
|Pro forma net income                                                                                                         |  | $                                 | 295  |                       | $ | 240  |  | $    | 295 |  | $ | 245
|Earnings per common share:                                                                                                   |  |                                   |      |                       |   |      |  |      |     |  |   |    
|Basic - as reported                                                                                                          |  | $                                 | 1.22 |                       | $ | 1.05 |  |      |     |  |   |    
|Basic - pro forma                                                                                                            |  | $                                 | 1.21 |                       | $ | 1.04 |  |      |     |  |   |    
|Diluted - as reported                                                                                                        |  | $                                 | 1.22 |                       | $ | 1.04 |  |      |     |  |   |    
|Diluted - pro forma                                                                                                          |  | $                                 | 1.21 |                       | $ | 1.04 |  |      |     |  |   |    

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



Note C - Regulatory Matters

Reference is made to
Accounting Policies in Note A and Rate and Restructuring Agreements in Note B to the financial statements in Item 8 of the Form 10-K and Note C to the financial statements in Part I, Item 1 of the First Quarter Form 10-Q.



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NOTES TO THE FINANCIAL
STATEMENTS (UNAUDITED)  CONTINUED



Regulatory Assets and Liabilities

Regulatory assets and liabilities at June 30, 2005 and December 31, 2004 were comprised of the following items:



|                                                        |  |            |       |                       |   |       |  |      |       |  |   |      
|------------------------------------------------------- |  | ---------- | ----- | --------------------- | - | ----- |  | ---- | ----- |  | - | -----
|                                                        |  | Con Edison |       | Con Edison ofNew York
|(Millions of Dollars)                                   |  | 2005       |       | 2004                  |   | 2005  |  | 2004
|Regulatory assets                                       |  |            |       |                       |   |       |  |      |       |  |   |      
|Future federal income tax                               |  | $          | 808   |                       | $ | 762   |  | $    | 760   |  | $ | 715  
|Recoverable energy costs                                |  |            | 236   |                       |   | 275   |  |      | 219   |  |   | 257  
|Environmental remediation costs                         |  |            | 223   |                       |   | 165   |  |      | 162   |  |   | 106  
|World Trade Center restoration costs                    |  |            | 122   |                       |   | 104   |  |      | 122   |  |   | 104  
|Retirement program costs                                |  |            | 99    |                       |   | 71    |  |      | 49    |  |   | 29   
|Transition bond charges                                 |  |            | 72    |                       |   | 74    |  |      |      |  |   |     
|Workers compensation                                   |  |            | 47    |                       |   | 48    |  |      | 47    |  |   | 48   
|Revenue taxes                                           |  |            | 45    |                       |   | 46    |  |      | 45    |  |   | 46   
|Unbilled gas revenue                                    |  |            | 44    |                       |   | 44    |  |      | 44    |  |   | 44   
|NYS tax law changes                                     |  |            | 34    |                       |   | 40    |  |      | 34    |  |   | 40   
|Asbestos-related costs                                  |  |            | 25    |                       |   | 26    |  |      | 25    |  |   | 25   
|Collection agent deferral                               |  |            | 21    |                       |   | 21    |  |      | 21    |  |   | 21   
|Sale costs - First Avenue properties                    |  |            |      |                       |   | 178   |  |      |      |  |   | 178  
|Sale of nuclear generating plant including interest     |  |            |      |                       |   | 176   |  |      |      |  |   | 176  
|Electric interference costs                             |  |            |      |                       |   | 44    |  |      |      |  |   | 44   
|Other                                                   |  |            | 177   |                       |   | 184   |  |      | 165   |  |   | 172  
|Total Regulatory Assets                                 |  | $          | 1,953 |                       | $ | 2,258 |  | $    | 1,693 |  | $ | 2,005
|Regulatory liabilities                                  |  |            |       |                       |   |       |  |      |       |  |   |      
|Allowance for cost of removal less salvage              |  | $          | 673   |                       | $ | 723   |  | $    | 616   |  | $ | 666  
|Net electric deferrals                                  |  |            | 431   |                       |   |      |  |      | 431   |  |   |     
|Gain on sale of First Avenue properties                 |  |            | 257   |                       |   |      |  |      | 257   |  |   |     
|2004 electric, gas and steam one-time rate plan charges |  |            | 124   |                       |   | 124   |  |      | 124   |  |   | 124  
|Utilities electric hedging unrealized gains            |  |            | 80    |                       |   |      |  |      | 80    |  |   |     
|NYS tax law changes                                     |  |            | 47    |                       |   | 44    |  |      | 35    |  |   | 32   
|EPA SO2Allowance Proceeds  Electric and Steam          |  |            | 45    |                       |   | 20    |  |      | 45    |  |   | 20   
|Interest on federal income tax refund                   |  |            | 37    |                       |   | 37    |  |      | 37    |  |   | 37   
|DC service incentive                                    |  |            | 26    |                       |   | 33    |  |      | 26    |  |   | 33   
|Refundable energy costs                                 |  |            | 23    |                       |   | 29    |  |      |      |  |   |     
|Excess dividends tax                                    |  |            | 22    |                       |   | 18    |  |      | 22    |  |   | 18   
|NYISO reconciliation                                    |  |            | 20    |                       |   | 160   |  |      | 20    |  |   | 160  
|Gas interference  cost sharing                         |  |            | 13    |                       |   | 11    |  |      | 13    |  |   | 11   
|Gas interruptible sales credits                         |  |            | 13    |                       |   | 22    |  |      | 13    |  |   | 22   
|Transmission congestion contracts                       |  |            |      |                       |   | 391   |  |      |      |  |   | 391  
|Gain on divestiture                                     |  |            |      |                       |   | 56    |  |      |      |  |   | 55   
|Electric excess earnings                                |  |            |      |                       |   | 50    |  |      |      |  |   | 50   
|Deposit from sale of First Avenue properties            |  |            |      |                       |   | 50    |  |      |      |  |   | 50   
|Accrued electric rate reduction                         |  |            |      |                       |   | 25    |  |      |      |  |   | 25   
|Gain on disposition of property  W. 45 St.             |  |            |      |                       |   | 24    |  |      |      |  |   | 24   
|Other                                                   |  |            | 241   |                       |   | 205   |  |      | 186   |  |   | 177  
|Total Regulatory Liabilities                            |  | $          | 2,052 |                       | $ | 2,022 |  | $    | 1,905 |  | $ | 1,895



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Net electric deferrals represents the remaining unamortized balance of certain regulatory assets and
liabilities of Con Edison of New York that were combined effective April 1, 2005 and are being amortized to income over the period April 2005 through March 2008, in accordance with the electric rate plan discussed in Note C to the financial
statements in Part I, Item I of the First Quarter Form 10-Q.



In May 2005, Con
Edison of New York completed the sale of certain properties located on First Avenue in Manhattan. Net proceeds from the sale totaled $534 million, resulting in a pre-tax gain on the sale of $257 million. In accordance with the PSC order approving
the sale of the properties, the company has deferred the net gain for the benefit of customers. The net after-tax gain on the sale, including additional expenses to be incurred, is estimated at $114 million.



Other Regulatory Matters

In January 2004, a woman died when she came into contact with the metal frame of a Con Edison of New York service box that had been energized by a low voltage cable that
had been repaired in a manner that varied from the companys written procedures. Following the accident, the Public Service Commission (PSC) instituted a proceeding as to whether the company violated the safety requirements of the New York
Public Service Law and ordered the company to show cause why the PSC should not commence an action seeking penalties from the company. In July 2005, the PSC agreed not to commence such an action in consideration of the companys agreement to
spend $11 million (which would not be recoverable from customers) over a period of three or more years to conduct certain stray voltage testing and electric safety research. The new testing will be in addition to PSC requirements for all New York
utilities to conduct ongoing testing and inspections of their electrical related infrastructure.



Note D - Short-Term Borrowing and Credit Agreements

For information about the Companies commercial paper programs and revolving
credit agreements, see Note D to the financial statements in Part I, Item 1 of the First Quarter 10-Q. At June 30, 2005, Con Edison had $176 million of commercial paper outstanding of which $122 million was outstanding under Con Edison of New
Yorks program. The weighted average interest rate for the six-month period was 2.54 percent and 2.46 percent for Con Edison and Con Edison of New York, respectively. At June 30, 2005, no loans were outstanding under any of the credit
agreements and $119 million of letters of credit were outstanding.



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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 the Utilities 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 state statutes (Superfund) impose joint and several liability, regardless of fault, upon generators of hazardous substances for investigation and remediation costs (which include costs of demolition, removal, disposal, storage, replacement,
containment and monitoring) and environmental damages. Liability 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 the
Utilities have been asserted to have liability under these laws, including their manufactured gas plant sites, are referred to herein as Superfund Sites.



For Superfund Sites where there are other potentially responsible parties and the Utilities are not managing the site investigation and
remediation, the accrued liability represents an estimate of the amount the Utilities will need to pay to discharge their related obligations. For Superfund Sites (including the manufactured gas plant sites) for which one of the Utilities is
managing the investigation and remediation, the accrued 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. Remediation
costs are estimated in light of the information available, applicable remediation standards and experience with similar sites.



For the three and six months ended June 30, 2005, Con Edison of New York incurred approximately $10 million and $13 million, respectively, for environmental remediation
costs. Insurance recoveries were $2 million for the three and six months ended June 30, 2005. For the three and six months ended June 30, 2004, Con Edison of New York incurred approximately $10 million and $15 million, respectively, for
environmental remediation costs. No insurance recoveries were received during these 2004 periods.



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The accrued liabilities and regulatory assets related to Superfund Sites for the Companies at June 30, 2005 and
December 31, 2004 were as follows:



|                             |  |            |     |                       |   |      |  |      |     |  |   |    
|---------------------------- |  | ---------- | --- | --------------------- | - | ---- |  | ---- | --- |  | - | ---
|                             |  | Con Edison |     | Con Edison ofNew York
|(Millions of Dollars)        |  | 2005       |     | 2004                  |   | 2005 |  | 2004
|Accrued liabilities:         |  |            |     |                       |   |      |  |      |     |  |   |    
|Manufactured gas plant sites |  | $          | 185 |                       | $ | 148  |  | $    | 128 |  | $ | 92 
|Other Superfund Sites        |  |            | 62  |                       |   | 50   |  |      | 61  |  |   | 49 
|Total                        |  | $          | 247 |                       | $ | 198  |  | $    | 189 |  | $ | 141
|Regulatory assets            |  | $          | 223 |                       | $ | 165  |  | $    | 162 |  | $ | 106



Most of the accrued Superfund Site
liability relates to sites that have been investigated, in whole or in part. As investigations progress 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. Under their current rate agreements, the Utilities are permitted to recover or defer as regulatory assets (for subsequent recovery through rates) certain site investigation and remediation costs.



In 2002, Con Edison of New York estimated that for its manufactured gas plant 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. In 2004, O&R estimated that for its manufactured gas plant sites, each of which has been investigated, the aggregate undiscounted potential liability for the remediation of such contaminants could range from approximately $31
million to $87 million. These estimates were based on 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 the Utilities 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 the remaining thousands of suits total billions of dollars; however, the Companies believe that these amounts are greatly exaggerated, based on the
disposition of previous claims. In 2004, Con Edison of New York estimated that its aggregate undiscounted potential liability for these suits and



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additional suits that may be brought over the next 15 years is $25 million. The estimate was based upon a combination of modeling, historical data analysis
and risk factor assessment. Actual experience may be materially different.



In
addition, certain current and former employees have claimed or are claiming workers compensation benefits based on alleged disability from exposure to asbestos. Under its current rate agreements, Con Edison of New York is permitted to defer as
regulatory assets (for subsequent recovery through rates) liabilities incurred for its asbestos lawsuits and workers compensation claims.



The accrued liability for asbestos suits and workers compensation proceedings (including those related to asbestos exposure) and the amounts deferred as regulatory
assets for the Companies at June 30, 2005 and December 31, 2004 were as follows:



|                                          |  |            |     |                       |   |      |  |      |     |  |   |    
|----------------------------------------- |  | ---------- | --- | --------------------- | - | ---- |  | ---- | --- |  | - | ---
|                                          |  | Con Edison |     | Con Edison ofNew York
|(Millions of Dollars)                     |  | 2005       |     | 2004                  |   | 2005 |  | 2004
|Accrued liability - asbestos suits        |  | $          | 25  |                       | $ | 26   |  | $    | 25  |  | $ | 25 
|Regulatory assets - asbestos suits        |  |            | 25  |                       |   | 26   |  |      | 25  |  |   | 25 
|Accrued liability - workers compensation |  |            | 123 |                       |   | 122  |  |      | 118 |  |   | 119
|Regulatory assets - workers compensation |  | $          | 47  |                       | $ | 48   |  | $    | 47  |  | $ | 48 



Note F - Northeast Utilities Litigation

In March 2001, Con Edison commenced an action in the United States District Court for the Southern District of New York (the District Court), entitled
Consolidated Edison, Inc. v. Northeast Utilities (the First 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, and the District Courts declaration that under the merger agreement Con Edison has no
further or continuing obligations to Northeast Utilities and 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 in the First 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



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Utilities common stock (the so-called lost premium claim), 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 District Court ruled on certain motions filed by Con Edison and Northeast Utilities in the First Federal Proceeding. The District 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 District Court also dismissed Con Edisons fraud and
misrepresentation claims. In addition, the District Court ruled that Northeast Utilities shareholders were intended third-party beneficiaries of the merger agreement and the alleged $1.2 billion lost premium claim against Con Edison would 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 defined the putative class as holders of
Northeast Utilities common stock on March 5, 2001, and alleged that the class members were intended third party beneficiaries of the merger agreement. The complaint sought damages believed to be substantially duplicative of those sought by
Northeast Utilities on behalf of its shareholders in the First Federal Proceeding. In December 2003, the District Court granted Rimkoskis motion to intervene in the First Federal Proceeding and, in February 2004, the State Proceeding was
dismissed without prejudice. In January 2004, Rimkoski filed a motion in the First Federal Proceeding to certify his action as a class action on behalf of all holders of Northeast Utilities common stock on March 5, 2001 and to appoint Rimkoski
as class representative. The motion is pending.



In May 2004, the District
Court ruled that the Northeast Utilities shareholders who may pursue the lost premium claim against Con Edison are the holders of Northeast Utilities common stock on March 5, 2001 and the District Court therefore dismissed Northeast
Utilities lost premium claim. The District Court certified its ruling regarding the lost premium claim for interlocutory appeal to the United States Court of Appeals for the Second Circuit (the Court of Appeals), and in June 2004 Northeast
Utilities filed its motion for leave to appeal the issue to the Court of Appeals. The District Court further certified for interlocutory appeal its March 2003 determination that Northeast Utilities shareholders are intended third-party
beneficiaries under the merger agreement, and in June 2004 Con Edison filed its motion for leave to appeal the issue to the Court of Appeals. In October 2004, the



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Court of Appeals granted both Con Edisons motion and Northeast Utilities motion. The appeals have been fully briefed and argued and the parties
are currently awaiting a decision.



In May 2004, the District Court dismissed
the lawsuit that was commenced in October 2003 by a purported class of Northeast Utilities shareholders, entitled Siegel et al. v. Consolidated Edison, Inc. (the Second Federal Proceeding). The Second Federal Proceeding had sought unspecified
injunctive relief and damages believed to be substantially duplicative of the damages sought from Con Edison in the First Federal Proceeding. A motion by the plaintiffs in the Second Federal Proceeding to intervene in the First Federal Proceeding is
pending.



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; 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 G -
Other Material Contingencies

Lease In/Lease Out Transactions

As part of a broad initiative, the Internal Revenue Service is reviewing certain categories of transactions. Among these are transactions in which a taxpayer leases property and then immediately subleases it back to the lessor (termed
Lease In/Lease Out, or LILO transactions). In 1997 and 1999, Con Edison Development entered into two LILO transactions, involving gas distribution and electric generating facilities in the Netherlands, with a total investment of $259
million. The transactions were financed with $93 million of equity and $166 million of non-recourse, long-term debt secured by the underlying assets. In accordance with SFAS No. 13, Accounting for Leases, Con Edison is accounting for the
two LILO transactions as leveraged leases. Accordingly, the companys investment in these leases, net of non-recourse debt, is carried as a single amount in Con Edisons consolidated balance sheet and income is recognized pursuant to a
method that incorporates a level rate of return for those years when net investment in the lease is positive, based upon the after-tax cash flows projected at the inception of the leveraged leases. At June 30, 2005, and December 31, 2004, the
companys investment in these leveraged leases ($220 million and $215 million, respectively) net of



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deferred tax liabilities ($176 million and $165 million, respectively), amounted to $44 million and $50 million, respectively. The estimated tax savings from
the two LILO transactions during the tax years 1997 through June 30, 2005, in the aggregate, was $128 million. On audit of Con Edisons tax return for 1997, the Internal Revenue Service proposed that the tax losses in connection with the 1997
LILO transaction be disallowed.



Con Edison believes that its LILOs were
correctly reported and is currently appealing the proposed disallowance within the Internal Revenue Service. However, under the proposed accounting guidance for leveraged leases discussed in Note M, if the amount or the timing of the tax benefits
anticipated to be realized by Con Edison from the LILO transactions were to be altered in connection with either a settlement with the Internal Revenue Service or by a final court decision, the company could be required to recalculate the accounting
effect of the LILOs, which could result in a charge to earnings that could have a material adverse effect on its results of operations.



Collection Agent Termination

In April 2004, Con Edison of New York terminated
arrangements with a collection agent, which also processed payments for other large corporations and governmental agencies. The New York State Banking Department suspended the license of the collection agent, and the collection agent consented to an
involuntary bankruptcy proceeding commenced against it by a group of its unsecured creditors. The collection agent has not forwarded to the company an estimated $21 million of payments it received from the companys customers. The company is
continuing to review the matter and the possible recovery of these payments from the bankrupts estate, insurance or other sources. In April 2004, the company reflected the possible loss of these payments on its balance sheet and recorded an
offsetting regulatory asset. The company has filed a petition with the PSC in connection with this matter.



Lower Manhattan Restoration

Con Edison of New York estimates that its costs for emergency response to the September 11, 2001
attack on the World Trade Center, and for resulting temporary and subsequent permanent restoration of electric, gas and steam transmission and distribution facilities damaged in the attack will total $430 million, net of insurance payments. Most of
the costs, which are capital in nature, have already been incurred. At June 30, 2005, the company has received reimbursement for $139 million of these costs ($76 million under insurance policies and $63 million from the federal government). The
company submitted additional applications for federal government reimbursement totaling $172 million in December 2004 and March 2005. The company expects to receive up to $10 million in additional funds from insurance policies and to submit
additional applications for federal government reimbursement when appropriate. At June 30, 2005, the company had incurred capital costs of $218



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million and, pursuant to a petition it filed with the PSC in 2001, deferred $130 million, including interest, as a regulatory asset; these amounts are net of
reimbursements to that date. The company expects the PSC to permit recovery from customers of the costs, net of any federal reimbursement, insurance payments and tax savings.



Suits have been brought in New York State and federal courts against Con Edison, Con Edison of New York and other parties, including the
City of New York, by employees of the City and contractors working at the World Trade Center site. The suits, of which there are hundreds, generally seek unspecified amounts of damages allegedly resulting from exposure to hazardous substances in
connection with emergency response and restoration activities at the site. The Companies believe that their activities were prudent and in compliance with applicable laws. Neither of the Companies, however, is able to predict whether or not any
proceedings or other actions relating to the activities will have a material adverse effect on its financial condition, results of operations or liquidity.



Based upon New York Citys announced plans for improvement projects in lower Manhattan, including a transportation hub, the company anticipates that over the next
five to ten years it may incur up to $250 million in incremental interference costs in lower Manhattan. The companys rate plans include provisions for the recovery of interference costs.



Note H  Guarantees

Con Edison and its subsidiaries enter into various agreements providing financial or performance assurance primarily 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. Maximum amounts guaranteed by Con Edison totaled $1,054 million and $989 million at June 30, 2005 and December 31, 2004, respectively.



A summary by type and term, of Con Edisons total guarantees at June 30, 2005 is as
follows:



|                           |  |                       |     |            |   |            |  |       |     |  |   |      
|-------------------------- |  | --------------------- | --- | ---------- | - | ---------- |  | ----- | --- |  | - | -----
|Guarantee Type             |  | 0-3 years             |     | 4-10 years |   | > 10 years |  | Total
|                           |  | (Millions of Dollars)
|Commodity transactions     |  | $                     | 754 |            | $ | 3          |  | $     | 150 |  | $ | 907  
|Affordable housing program |  |                       |    |            |   | 37         |  |       |    |  |   | 37   
|Intra-company guarantees   |  |                       | 20  |            |   | 43         |  |       | 1   |  |   | 64   
|Other guarantees           |  |                       | 32  |            |   | 12         |  |       | 2   |  |   | 46   
|TOTAL                      |  | $                     | 806 |            | $ | 95         |  | $     | 153 |  | $ | 1,054



For a description of guarantee types,
see Note S to the financial statements in Item 8 of the Form 10-K.



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Note I - Financial Information By Business Segment

Reference is made to Note O to the financial statements in Item 8 of Form 10-K.



The financial data for the business segments are as follows:



|                                |  |                                     |       |                      |   |       |                              |   |                 |   |  |      |    |      |  |      |     |  |      |     |  |   |     |   |  |   |     |  
|------------------------------- |  | ----------------------------------- | ----- | -------------------- | - | ----- | ---------------------------- | - | --------------- | - |  | ---- | -- | ---- |  | ---- | --- |  | ---- | --- |  | - | --- | - |  | - | --- | -
|                                |  | For the Three Months Ended June 30, |      
|                                |  | OperatingRevenues                   |       | IntersegmentRevenues |   |       | Depreciation andAmortization |   | OperatingIncome |  
|(Millions of Dollars)           |  | 2005                                |       | 2004                 |   | 2005  |                              |   | 2004            |   |  | 2005 |    | 2004 |  | 2005 |     |  | 2004 |    
|Con Edison of New York          |  |                                     |       |                      |   |       |                              |   |                 |   |  |      |    |      |  |      |     |  |      |     |  |   |     |   |  |   |     |  
|Electric                        |  | $                                   | 1,527 |                      | $ | 1,409 |                              | $ | 2               |   |  | $    | 2  |      |  | $    | 97  |  | $    | 95  |  | $ | 180 |   |  | $ | 153 |  
|Gas                             |  |                                     | 320   |                      |   | 249   |                              |   | 1               |   |  |      | 1  |      |  |      | 19  |  |      | 19  |  |   | 32  |   |  |   | 20  |  
|Steam                           |  |                                     | 96    |                      |   | 93    |                              |   | 18              |   |  |      | 1  |      |  |      | 11  |  |      | 5   |  |   | (3  | ) |  |   | (5  | )
|Total Con Edison of New York    |  | $                                   | 1,943 |                      | $ | 1,751 |                              | $ | 21              |   |  | $    | 4  |      |  | $    | 127 |  | $    | 119 |  | $ | 209 |   |  | $ | 168 |  
|O&R                             |  |                                     |       |                      |   |       |                              |   |                 |   |  |      |    |      |  |      |     |  |      |     |  |   |     |   |  |   |     |  
|Electric                        |  | $                                   | 122   |                      | $ | 122   |                              | $ |                |   |  | $    |   |      |  | $    | 5   |  | $    | 6   |  | $ | 10  |   |  | $ | 10  |  
|Gas                             |  |                                     | 34    |                      |   | 34    |                              |   |                |   |  |      |   |      |  |      | 3   |  |      | 2   |  |   |    |   |  |   |    |  
|Total O&R                       |  | $                                   | 156   |                      | $ | 156   |                              | $ |                |   |  | $    |   |      |  | $    | 8   |  | $    | 8   |  | $ | 10  |   |  | $ | 10  |  
|Unregulated Energy Subsidiaries |  | $                                   | 306   |                      | $ | 257   |                              | $ |                |   |  | $    |   |      |  | $    | 11  |  | $    | 10  |  | $ | 6   |   |  | $ | 10  |  
|Other*                          |  |                                     | 1     |                      |   |      |                              |   | (21             | ) |  |      | (4 | )    |  |      |    |  |      |    |  |   | 1   |   |  |   |    |  
|Total Con Edison                |  | $                                   | 2,406 |                      | $ | 2,164 |                              | $ |                |   |  | $    |   |      |  | $    | 146 |  | $    | 137 |  | $ | 226 |   |  | $ | 188 |  

|* | Parent company expenses, primarily interest and consolidation adjustments. Operating revenues and operating income in 2005 include amounts related to RECO securitization. Other does
not represent a business segment.
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|                                |  |                                   |       |                      |   |       |                              |   |                 |   |  |      |    |      |  |      |     |      |   |     |  |   |     |  |   |    
|------------------------------- |  | --------------------------------- | ----- | -------------------- | - | ----- | ---------------------------- | - | --------------- | - |  | ---- | -- | ---- |  | ---- | --- | ---- | - | --- |  | - | --- |  | - | ---
|                                |  | For the Six Months Ended June 30,
|                                |  | OperatingRevenues                 |       | IntersegmentRevenues |   |       | Depreciation andAmortization |   | OperatingIncome
|(Millions of Dollars)           |  | 2005                              |       | 2004                 |   | 2005  |                              |   | 2004            |   |  | 2005 |    | 2004 |  | 2005 |     | 2004
|Con Edison of New York          |  |                                   |       |                      |   |       |                              |   |                 |   |  |      |    |      |  |      |     |      |   |     |  |   |     |  |   |    
|Electric                        |  | $                                 | 2,920 |                      | $ | 2,829 |                              | $ | 5               |   |  | $    | 5  |      |  | $    | 196 |      | $ | 189 |  | $ | 286 |  | $ | 267
|Gas                             |  |                                   | 951   |                      |   | 801   |                              |   | 2               |   |  |      | 2  |      |  |      | 38  |      |   | 37  |  |   | 124 |  |   | 98 
|Steam                           |  |                                   | 363   |                      |   | 327   |                              |   | 19              |   |  |      | 1  |      |  |      | 15  |      |   | 10  |  |   | 45  |  |   | 32 
|Total Con Edison of New York    |  | $                                 | 4,234 |                      | $ | 3,957 |                              | $ | 26              |   |  | $    | 8  |      |  | $    | 249 |      | $ | 236 |  | $ | 455 |  | $ | 397
|O&R                             |  |                                   |       |                      |   |       |                              |   |                 |   |  |      |    |      |  |      |     |      |   |     |  |   |     |  |   |    
|Electric                        |  | $                                 | 242   |                      | $ | 242   |                              | $ |                |   |  | $    |   |      |  | $    | 12  |      | $ | 12  |  | $ | 21  |  | $ | 19 
|Gas                             |  |                                   | 131   |                      |   | 127   |                              |   |                |   |  |      |   |      |  |      | 5   |      |   | 5   |  |   | 11  |  |   | 10 
|Total O&R                       |  | $                                 | 373   |                      | $ | 369   |                              | $ |                |   |  | $    |   |      |  | $    | 17  |      | $ | 17  |  | $ | 32  |  | $ | 29 
|Unregulated Energy Subsidiaries |  | $                                 | 600   |                      | $ | 517   |                              | $ |                |   |  | $    |   |      |  | $    | 20  |      | $ | 20  |  | $ | 20  |  | $ | 19 
|Other*                          |  |                                   |      |                      |   |      |                              |   | (26             | ) |  |      | (8 | )    |  |      | 1   |      |   |    |  |   | 2   |  |   | 2  
|Total Con Edison                |  | $                                 | 5,207 |                      | $ | 4,843 |                              | $ |                |   |  | $    |   |      |  | $    | 287 |      | $ | 273 |  | $ | 509 |  | $ | 447

|* | Parent company expenses, primarily interest and consolidation adjustments. Operating revenues and operating income in 2005 include amounts related to RECO securitization. Other does
not represent a business segment.
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



29



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##### Table of Contents

NOTES TO THE FINANCIAL
STATEMENTS (UNAUDITED)  CONTINUED



Note J - Pension Benefits

Reference is made to Note E to the financial statements in Item 8 of the Form 10-K.



Net Periodic Benefit Cost

The components of the Companies net periodic benefit costs for the three and six months ended June 30, 2005
and 2004 were as follows:



|                                                 |  |                                     |      |   |                       |   |      |      |  |   |      |   |  |   |      |  
|------------------------------------------------ |  | ----------------------------------- | ---- | - | --------------------- | - | ---- | ---- |  | - | ---- | - |  | - | ---- | -
|                                                 |  | For the Three Months Ended June 30, |     
|                                                 |  | Con Edison                          |      |   | Con Edison ofNew York |  
|(Millions of Dollars)                            |  | 2005                                |      |   | 2004                  |   |      | 2005 |  |   | 2004 |  
|Service cost - including administrative expenses |  | $                                   | 28   |   |                       | $ | 25   |      |  | $ | 27   |   |  | $ | 23   |  
|Interest cost on projected benefit obligation    |  |                                     | 109  |   |                       |   | 104  |      |  |   | 102  |   |  |   | 98   |  
|Expected return on plan assets                   |  |                                     | (160 | ) |                       |   | (162 | )    |  |   | (154 | ) |  |   | (157 | )
|Amortization of net actuarial (gain)/loss        |  |                                     | 23   |   |                       |   | (9   | )    |  |   | 19   |   |  |   | (12  | )
|Amortization of prior service costs              |  |                                     | 4    |   |                       |   | 3    |      |  |   | 3    |   |  |   | 3    |  
|NET PERIODIC BENEFIT COST                        |  | $                                   | 4    |   |                       | $ | (39  | )    |  | $ | (3   | ) |  | $ | (45  | )
|Amortization of regulatory asset*                |  |                                     | 1    |   |                       |   | 1    |      |  |   | 1    |   |  |   | 1    |  
|TOTAL PERIODIC BENEFIT COST                      |  | $                                   | 5    |   |                       | $ | (38  | )    |  | $ | (2   | ) |  | $ | (44  | )
|Cost capitalized                                 |  |                                     | (1   | ) |                       |   | 14   |      |  |   |     |   |  |   | 15   |  
|Cost deferred                                    |  |                                     | (18  | ) |                       |   | (1   | )    |  |   | (14  | ) |  |   |     |  
|Cost (credited)/charged to operating expenses    |  | $                                   | (14  | ) |                       | $ | (25  | )    |  | $ | (16  | ) |  | $ | (29  | )



|* | Relates to increases in Con Edison of New Yorks pension obligations of $33 million from a 1993 special retirement program and $45 million from a 1999 special retirement
program.
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|                                                 |  |                                   |      |   |                       |   |      |      |  |   |      |   |  |   |      |  
|------------------------------------------------ |  | --------------------------------- | ---- | - | --------------------- | - | ---- | ---- |  | - | ---- | - |  | - | ---- | -
|                                                 |  | For the Six Months Ended June 30, |     
|                                                 |  | Con Edison                        |      |   | Con Edison ofNew York |  
|(Millions of Dollars)                            |  | 2005                              |      |   | 2004                  |   |      | 2005 |  |   | 2004 |  
|Service cost - including administrative expenses |  | $                                 | 59   |   |                       | $ | 52   |      |  | $ | 54   |   |  | $ | 48   |  
|Interest cost on projected benefit obligation    |  |                                   | 215  |   |                       |   | 207  |      |  |   | 201  |   |  |   | 194  |  
|Expected return on plan assets                   |  |                                   | (321 | ) |                       |   | (325 | )    |  |   | (309 | ) |  |   | (314 | )
|Amortization of net actuarial (gain)/loss        |  |                                   | 40   |   |                       |   | (19  | )    |  |   | 32   |   |  |   | (25  | )
|Amortization of prior service costs              |  |                                   | 7    |   |                       |   | 6    |      |  |   | 6    |   |  |   | 6    |  
|NET PERIODIC BENEFIT COST                        |  | $                                 |     |   |                       | $ | (79  | )    |  | $ | (16  | ) |  | $ | (91  | )
|Amortization of regulatory asset*                |  |                                   | 2    |   |                       |   | 2    |      |  |   | 2    |   |  |   | 2    |  
|TOTAL PERIODIC BENEFIT COST                      |  | $                                 | 2    |   |                       | $ | (77  | )    |  | $ | (14  | ) |  | $ | (89  | )
|Cost capitalized                                 |  |                                   | 1    |   |                       |   | 24   |      |  |   | 4    |   |  |   | 26   |  
|Cost deferred                                    |  |                                   | (23  | ) |                       |   | (1   | )    |  |   | (16  | ) |  |   |     |  
|Cost (credited)/charged to operating expenses    |  | $                                 | (20  | ) |                       | $ | (54  | )    |  | $ | (26  | ) |  | $ | (63  | )



|* | Relates to increases in Con Edison of New Yorks pension obligations of $33 million from a 1993 special retirement program and $45 million from a 1999 special retirement
program.
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



30



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##### Table of Contents

NOTES TO THE FINANCIAL
STATEMENTS (UNAUDITED)  CONTINUED



Expected Contributions

Based on current estimates, the Companies are not required under funding regulations and laws to make any contributions to the pension plan during 2005. Con Edison expects to make discretionary contributions of $30 million by September
2005. Con Edison of New York does not expect to make any contributions in 2005.



Note
K - Other Postretirement Benefits

Reference is made to Note F to the financial statements in Item 8 of the Form 10-K.



Net Periodic Benefit Cost

The components of the Companies net periodic other postretirement benefit costs for the three and six months ended June 30, 2005 and 2004 were as follows:



|                                                                     |  |                                     |     |   |                       |   |     |      |  |   |      |   |  |   |     |  
|-------------------------------------------------------------------- |  | ----------------------------------- | --- | - | --------------------- | - | --- | ---- |  | - | ---- | - |  | - | --- | -
|                                                                     |  | For the Three Months Ended June 30, |    
|                                                                     |  | Con Edison                          |     |   | Con Edison ofNew York |  
|(Millions of Dollars)                                                |  | 2005                                |     |   | 2004                  |   |     | 2005 |  |   | 2004 |  
|Service cost                                                         |  | $                                   | 4   |   |                       | $ | 2   |      |  | $ | 3    |   |  | $ | 2   |  
|Interest cost on accumulated other postretirement benefit obligation |  |                                     | 24  |   |                       |   | 16  |      |  |   | 21   |   |  |   | 14  |  
|Expected return on plan assets                                       |  |                                     | (21 | ) |                       |   | (19 | )    |  |   | (19  | ) |  |   | (18 | )
|Amortization of net actuarial loss                                   |  |                                     | 22  |   |                       |   | 7   |      |  |   | 19   |   |  |   | 5   |  
|Amortization of prior service costs                                  |  |                                     | (4  | ) |                       |   | (4  | )    |  |   | (4   | ) |  |   | (4  | )
|Amortization of transition obligation                                |  |                                     | 1   |   |                       |   | 1   |      |  |   | 1    |   |  |   | 1   |  
|NET PERIODIC OTHER POSTRETIREMENT BENEFIT COST                       |  | $                                   | 26  |   |                       | $ | 3   |      |  | $ | 21   |   |  | $ |    |  
|Cost capitalized                                                     |  |                                     | (8  | ) |                       |   | (1  | )    |  |   | (7   | ) |  |   |    |  
|Cost deferred                                                        |  |                                     | (11 | ) |                       |   | (1  | )    |  |   | (9   | ) |  |   |    |  
|Cost charged to operating expenses                                   |  | $                                   | 7   |   |                       | $ | 1   |      |  | $ | 5    |   |  | $ |    |  



|                                                                     |  |                                   |     |   |                       |   |     |      |  |   |      |   |  |   |     |  
|-------------------------------------------------------------------- |  | --------------------------------- | --- | - | --------------------- | - | --- | ---- |  | - | ---- | - |  | - | --- | -
|                                                                     |  | For the Six Months Ended June 30, |    
|                                                                     |  | Con Edison                        |     |   | Con Edison ofNew York |  
|(Millions of Dollars)                                                |  | 2005                              |     |   | 2004                  |   |     | 2005 |  |   | 2004 |  
|Service cost                                                         |  | $                                 | 7   |   |                       | $ | 5   |      |  | $ | 5    |   |  | $ | 4   |  
|Interest cost on accumulated other postretirement benefit obligation |  |                                   | 42  |   |                       |   | 37  |      |  |   | 37   |   |  |   | 33  |  
|Expected return on plan assets                                       |  |                                   | (40 | ) |                       |   | (39 | )    |  |   | (37  | ) |  |   | (37 | )
|Amortization of net actuarial loss                                   |  |                                   | 36  |   |                       |   | 20  |      |  |   | 31   |   |  |   | 17  |  
|Amortization of prior service costs                                  |  |                                   | (7  | ) |                       |   | (7  | )    |  |   | (7   | ) |  |   | (7  | )
|Amortization of transition obligation                                |  |                                   | 2   |   |                       |   | 2   |      |  |   | 2    |   |  |   | 2   |  
|NET PERIODIC OTHER POSTRETIREMENT BENEFIT COST                       |  | $                                 | 40  |   |                       | $ | 18  |      |  | $ | 31   |   |  | $ | 12  |  
|Cost capitalized                                                     |  |                                   | (12 | ) |                       |   | (5  | )    |  |   | (10  | ) |  |   | (3  | )
|Cost deferred                                                        |  |                                   | (11 | ) |                       |   | (1  | )    |  |   | (8   | ) |  |   |    |  
|Cost charged to operating expenses                                   |  | $                                 | 17  |   |                       | $ | 12  |      |  | $ | 13   |   |  | $ | 9   |  



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##### Table of Contents

NOTES TO THE FINANCIAL
STATEMENTS (UNAUDITED)  CONTINUED



Expected Contributions

Based on current estimates, Con Edison and Con Edison of New York expect to make contributions of $71 million and $58 million, respectively, to the other postretirement benefit plans in 2005.



Note L - Derivative Instruments and Hedging Activities

Reference is made to Note P to the financial statements in Item 8 of the Form 10-K.



Energy Price Hedging

Con Edisons
subsidiaries hedge market price fluctuations associated with physical purchases and sales of electricity and natural gas by using derivative instruments including futures, options, forwards, basis swaps, transmission congestion contracts and
financial transmission rights contracts. The fair values of these hedges at June 30, 2005 and December 31, 2004 were as follows:



|                         |  |            |     |                       |   |      |  |      |     |  |   |  
|------------------------ |  | ---------- | --- | --------------------- | - | ---- |  | ---- | --- |  | - | -
|                         |  | Con Edison |     | Con Edison ofNew York
|(Millions of Dollars)    |  | 2005       |     | 2004                  |   | 2005 |  | 2004
|Fair value of net assets |  | $          | 219 |                       | $ | 49   |  | $    | 109 |  | $ | 9



Cash Flow Hedges

Con Edisons subsidiaries designate a portion of derivative instruments as cash flow hedges under Statement of Financial Accounting Standards (SFAS) No. 133,
Accounting for Derivative Instruments and Hedging Activities.



The
following table presents selected information related to these cash flow hedges included in accumulated other comprehensive income (OCI) at June 30, 2005:



|                                      |  |              |  |                                                         |  |                                                                        |  |                       |  |            |  |                      
|------------------------------------- |  | ------------ |  | ------------------------------------------------------- |  | ---------------------------------------------------------------------- |  | --------------------- |  | ---------- |  | ---------------------
|                                      |  | Maximum Term |  | Accumulated OtherComprehensive Income/(Loss) Net of Tax |  | Portion Expected to beReclassified to EarningsDuring the
Next12 Months
|(Term in Months/ Millions of Dollars) |  | Con Edison   |  | Con Edison ofNew York                                   |  | Con Edison                                                             |  | Con Edison ofNew York |  | Con Edison |  | Con Edison ofNew York
|Energy Price Hedges                   |  | 21           |  | 21                                                      |  | $32                                                                    |  | $                    |  | $32        |  | $                   



The actual amounts that will be
reclassified to earnings may vary from the expected amounts presented above as a result of changes in market prices. The effect of reclassification from accumulated OCI to earnings will generally be offset by the recognition of the hedged
transaction in earnings.



The unrealized net gains and losses relating to the
ineffectiveness of these cash flow hedges that were recognized in net earnings for the three and six months ended June 30, 2005 and 2004 were immaterial to the results of operations of the Companies for those periods.



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NOTES TO THE FINANCIAL
STATEMENTS (UNAUDITED)  CONTINUED



Other Derivatives

The
Companies enter into certain derivative instruments that do not qualify or are not designated as hedges under SFAS No. 133. However, management believes these instruments represent economic hedges that mitigate exposure to fluctuations in commodity
prices. The Utilities recover all gains and losses on these instruments. See Recoverable Energy Costs in Note A to the financial statements in Item 8 of the Form 10-K. Con Edisons unregulated subsidiaries record unrealized gains
and losses on these derivative contracts in earnings in the reporting period in which they occur. For the three and six months ended June 30, 2005 and 2004 unrealized gains and losses on these contracts were immaterial to the results of operations
of the Companies for those periods.



Interest Rate Hedging

Con Edisons subsidiaries use interest rate swaps to manage interest rate exposure associated with debt. The fair values of these interest rate swaps at June 30,
2005 and December 31, 2004 were as follows:



|                                  |  |            |     |   |                       |   |     |      |  |   |      |   |  |   |  
|--------------------------------- |  | ---------- | --- | - | --------------------- | - | --- | ---- |  | - | ---- | - |  | - | -
|                                  |  | Con Edison |     |   | Con Edisonof New York
|(Millions of Dollars)             |  | 2005       |     |   | 2004                  |   |     | 2005 |  |   | 2004
|Fair value of interest rate swaps |  | $          | (23 | ) |                       | $ | (19 | )    |  | $ | (5   | ) |  | $ | 1



Fair Value Hedges

Con Edison of New Yorks swap (related to $225 million of tax-exempt debt) 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.



Cash Flow Hedges

Con Edison Developments
and O&Rs swaps are designated as cash flow hedges under SFAS No. 133. Any gain or loss on the hedges is recorded in OCI and reclassified to interest expense and included in earnings during the periods in which the hedged interest payments
occur. See Interest Rate Hedging in Note P to the financial statements in Item 8 of the Form 10-K for the contractual components of the interest rate swaps accounted for as cash flow hedges.



In January and February of 2005, Con Edison of New York entered into seven forward starting
swap agreements to hedge a portion of anticipated interest payments associated with future debt issuance. The swaps are designated as cash flow hedges. At the inception of each hedge, the company locks in a swap rate that has a high correlation with
the companys total borrowing costs. The swap agreements are expected to be settled at the time of debt issuance. No cash payments will be made until the settlement date, although under some circumstances, collateral may be given to, or
received from, the swap counterparty.



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NOTES TO THE FINANCIAL
STATEMENTS (UNAUDITED)  CONTINUED



In June 2005, Con Edison of New York issued $125 million of 30-year debentures. Also, five related forward starting
swap agreements, which were entered into in December 2004, were settled. A cumulative loss of $9 million with respect to the swap agreements was recorded in OCI. This loss will be reclassified to interest expense over the term of the debt issued.



The following table presents amounts related to these cash flow hedges that
are included in accumulated OCI at June 30, 2005:



|                      |  |                                                         |     |   |                                                                        |   |    |            |  |   |                       |   |  |   |  
|--------------------- |  | ------------------------------------------------------- | --- | - | ---------------------------------------------------------------------- | - | -- | ---------- |  | - | --------------------- | - |  | - | -
|                      |  | Accumulated OtherComprehensive Income/(Loss) Net of Tax |     |   | Portion Expected to beReclassified to Earningsduring the Next12
Months
|(Millions of Dollars) |  | Con Edison                                              |     |   | Con Edison ofNew York                                                  |   |    | Con Edison |  |   | Con Edison ofNew York
|Interest Rate Swaps   |  | $                                                       | (19 | ) |                                                                        | $ | (8 | )          |  | $ | (2                    | ) |  | $ | 



The actual amounts that will be
reclassified may vary from the expected amounts presented above as a result of changes in interest rates. For the Utilities, these costs are recovered in rates and the reclassification will have no impact on results of operations.



Note M - New Financial Accounting Standards

In July 2005, the Financial Accounting Standards Board (FASB) issued Exposure Draft titled Accounting for Uncertain Tax Positions, an
interpretation of FASB Statement No. 109, Accounting for Income Taxes. The proposed interpretation would clarify the accounting for uncertain tax positions in accordance with FASB Statement No. 109. Under this Interpretation, an
enterprise would not be allowed to recognize, in its financial statements, the benefit of a tax position unless that position is probable of being sustained on audit by taxing authorities based solely on the technical merits of the position. Also,
in July 2005, the FASB issued a proposed FASB Staff Position (FSP), Accounting for a Change or Projected Change in the Timing of Cash Flows Relating to Income Taxes Generated by a Leveraged Lease Transaction. This FSP
requires that leveraged leases be evaluated under the guidance on uncertain tax positions provided by the Exposure Draft and also imposes additional requirements on assessment of the expected timing of income tax cash flows generated by the lease.
More specifically, the proposed FSP would require that a change in the amount or timing of tax benefits that are realized by a lessor in a leveraged lease would result in a recalculation of the leverage lease, with any change in the recalculated net
investment recognized as a gain or loss currently. Refer to Note G for a description on Con Edisons leveraged lease transactions. Neither the Exposure Draft, if adopted, nor the proposed FSP are expected to have a material impact on the
Companies financial position, results of operations, or liquidity.



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NOTES TO THE FINANCIAL
STATEMENTS (UNAUDITED)  CONTINUED



In June 2005, the Emerging Issues Task Force (EITF) reached a tentative conclusion on Issue 04-13,
Accounting for Purchases and Sales of Inventory with the Same Counterparty (EITF 04-13). The FASB Task Force concluded that inventory purchases and sales transactions with the same counterparty should be combined for accounting purposes
if they were entered into in contemplation of each other. The Task Force provided indicators to be considered for purposes of determining whether such transactions are entered into in contemplation of each other. The Task Force also provided
guidance on the circumstances under which nonmonetary exchanges of inventory within the same line of business should be recognized at fair value. EITF 04-13 will be effective in reporting periods beginning after March 15, 2006. The adoption of EITF
04-13 is not expected to have a material impact on the Companies financial position, results of operation, or liquidity.



In June 2005, the EITF reached a consensus on Issue 05-6, Determining the Amortization Period for Leasehold Improvements (EITF 05-6), which is effective for
periods beginning after June 30, 2005. EITF 05-6 states that leasehold improvements acquired in a business combination and those acquired after the inception of a lease should be amortized over the shorter of the useful life of the assets or a term
that includes renewals that are reasonably assured at the date of the acquisition of the leasehold improvements. The adoption of EITF 05-6 is not expected to have a material impact on the Companies financial position, results of operations or
liquidity.



In May 2005, the FASB issued Statement No. 154, Accounting
for Changes and Error Corrections (SFAS No. 154), which is effective for fiscal years beginning after December 15, 2005. This statement replaces Accounting Principles Board Opinion No. 20, Accounting Changes (APB 20) and FASB
Statement No. 3, Reporting Accounting Changes in Interim Financial Statements. APB 20 previously required that most voluntary changes in accounting principle be recognized by including in net income of the period of the change the
cumulative effect of changing to the new accounting principle. SFAS No. 154 requires retrospective application to prior periods financial statements of changes in accounting principle, unless it is impracticable to determine either the period
specific effects or the cumulative effect of the change. The adoption of SFAS No. 154 is not expected to have a material impact on the Companies financial position, results of operations or liquidity.



For information about other recent financial accounting standards, see Note N to the
financial statements in Part I, Item 1 of the First Quarter Form 10-Q.



Note N - Con
Edison Communications (CEC)

For information about CEC, including the termination in May 2005 of an agreement to sell CEC, and the accounting for its
assets and liabilities as held for sale and its results of operations as discontinued operations, see Note W to the financial statements in Item 8 of the Form 10-K and



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NOTES TO THE FINANCIAL
STATEMENTS (UNAUDITED)  CONTINUED



Note O to the financial statements in Part I, Item 1 of the First Quarter Form 10-Q. Con Edison remains committed to its plan to sell CEC. As of June 30,
2005, CEC had assets and liabilities of $60 million and $14 million, respectively.



CECs total operating revenues were $10 million and $8 million for the three months ended June 30, 2005 and 2004, respectively, and $20 million and $15 million for the six months ended June 30, 2005 and 2004, respectively.



Note O - NYC Tax Payment

Under a New York City program, Con Edison of New York achieved a 1.5 percent reduction in its City property taxes for the fiscal year ending June 30, 2006 by prepaying the taxes on June 30, 2005 instead of paying them
in semi-annual installments on their due dates (July 1, 2005 and January 1, 2006). The company authorized a $734 million electronic funds transfer to the City effective June 30, 2005. Because the City did not complete the transaction until July 1,
2005, the company invested these funds overnight in temporary cash investments. At June 30, 2005, the Companies consolidated balance sheets included these funds as cash and temporary cash investments, and the obligation to fund the
electronic transfer that had been authorized by the company on June 30, 2005 as accounts and other payables. This obligation is reported in the Companies consolidated cash flow statements as a financing activity.



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|        |  |                                                                                                                                           
|------- |  | ------------------------------------------------------------------------------------------------------------------------------------------
|ITEM 2. |  | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (COMBINED FOR CON EDISON AND CON EDISON OF NEW YORK)

This combined managements discussion and analysis of financial condition and results of operations (MD&A)
relates to the consolidated financial statements in Part I, Item 1 of this report (the Second Quarter Financial Statements) of two separate registrants: Consolidated Edison, Inc. (Con Edison) and Consolidated Edison Company of New York, Inc. (Con
Edison of New York). As used in this report, the term the Companies refers to Con Edison and Con Edison of New York. Con Edison of New York is a subsidiary of Con Edison and, as such, information in this MD&A about Con Edison of New
York applies to Con Edison.



This MD&A should be read in conjunction with
the Second Quarter Financial Statements and the notes thereto and the MD&A in Item 7 of the Companies combined Annual Report on Form 10-K for the year ended December 31, 2004 (File Nos. 1-14514 and 1-1217, the Form 10-K) and the MD&A
in Part I, Item 2 of their combined Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2005 (File Nos. 1-14514 and 1-1217, the First Quarter Form 10-Q).



Information in the notes to the Second Quarter Financial Statements referred to in this discussion and analysis is incorporated by reference
herein.



CORPORATE OVERVIEW

Con Edisons principal business operations are those of its utility subsidiaries Con Edison of New York and Orange and Rockland Utilities, Inc. (O&R), together
known as the Utilities. Con Edison also has unregulated subsidiaries that compete primarily in energy-related and communications businesses (see Unregulated Energy Subsidiaries, below).



Certain financial data of Con Edisons subsidiaries is presented below:



|                            |  |                                  |       |   |                                |     |   |                   |   |     |            |  |     |        |  |   |       |   |  |     |   |  |   |     |   |  |     |    |  |   |        |  |     |  
|--------------------------- |  | -------------------------------- | ----- | - | ------------------------------ | --- | - | ----------------- | - | --- | ---------- |  | --- | ------ |  | - | ----- | - |  | --- | - |  | - | --- | - |  | --- | -- |  | - | ------ |  | --- | -
|                            |  | Three Months Ended June 30, 2005 |       |   | Six Months Ended June 30, 2005 |     |   | At June 30, 2005  |  
|(Millions of Dollars)       |  | OperatingRevenues                |       |   | Net Income                     |     |   | OperatingRevenues |   |     | Net Income |  |     | Assets | 
|Con Edison of New York      |  | $                                | 1,943 |   |                                | 81  | % |                   | $ | 121 |            |  | 105 | %      |  | $ | 4,234 |   |  | 81  | % |  | $ | 291 |   |  | 98  | %  |  | $ | 20,977 |  | 86  | %
|O&R                         |  |                                  | 157   |   |                                | 6   | % |                   |   | 6   |            |  | 5   | %      |  |   | 375   |   |  | 7   | % |  |   | 23  |   |  | 8   | %  |  |   | 1,447  |  | 6   | %
|Total Utilities             |  |                                  | 2,100 |   |                                | 87  | % |                   |   | 127 |            |  | 110 | %      |  |   | 4,609 |   |  | 88  | % |  |   | 314 |   |  | 106 | %  |  |   | 22,424 |  | 92  | %
|Con Edison Development      |  |                                  | 85    |   |                                | 4   | % |                   |   | (4  | )          |  | (3  | )%     |  |   | 185   |   |  | 4   | % |  |   | (5  | ) |  | (2  | )% |  |   | 1,279  |  | 5   | %
|Con Edison Energy           |  |                                  | 5     |   |                                |    | % |                   |   |    |            |  |    | %      |  |   | 18    |   |  |    | % |  |   |    |   |  |    | %  |  |   | 96     |  |    | %
|Con Edison Solutions        |  |                                  | 219   |   |                                | 9   | % |                   |   | 1   |            |  | 1   | %      |  |   | 402   |   |  | 8   | % |  |   | 1   |   |  |    | %  |  |   | 178    |  | 1   | %
|Other (a)                   |  |                                  | (3    | ) |                                |    | % |                   |   | (6  | )          |  | (5  | )%     |  |   | (7    | ) |  |    | % |  |   | (10 | ) |  | (3  | )% |  |   | 334    |  | 2   | %
|Total continuing operations |  |                                  | 2,406 |   |                                | 100 | % |                   |   | 118 |            |  | 103 | %      |  |   | 5,207 |   |  | 100 | % |  |   | 300 |   |  | 101 | %  |  |   | 24,311 |  | 100 | %
|Discontinued operations (b) |  |                                  |      |   |                                |    | % |                   |   | (3  | )          |  | (3  | )%     |  |   |      |   |  |    | % |  |   | (3  | ) |  | (1  | )% |  |   | 60     |  |    | %
|Total Con Edison            |  | $                                | 2,406 |   |                                | 100 | % |                   | $ | 115 |            |  | 100 | %      |  | $ | 5,207 |   |  | 100 | % |  | $ | 297 |   |  | 100 | %  |  | $ | 24,371 |  | 100 | %



|(a) | Represents inter-company and parent company accounting.
|--- | -------------------------------------------------------

|(b) | Represents the discontinued operations of Con Edison Communications.
|--- | --------------------------------------------------------------------



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MANAGEMENTS DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS
(COMBINED FOR CON EDISON AND CON EDISON OF

NEW YORK)  CONTINUED



Con Edisons net income for common stock for the three months ended June 30, 2005 was $115 million or $0.47 a
share compared with earnings of $86 million or $0.37 a share for the three months ended June 30, 2004. Net income for common stock for the six months ended June 30, 2005 was $297 million or $1.22 a share compared with earnings of $241 million or
$1.05 a share for the six months ended June 30, 2004. The three-month periods ended June 30, 2005 and 2004 each reflect a $3 million (after-tax) loss from the discontinued operations of Con Edison Communications. The six-month periods ended June 30,
2005 and 2004 reflect (after-tax) losses from the discontinued operations of Con Edison Communications of $3 million and $6 million, respectively (see Note N to the Second Quarter Financial Statements).



See Results of Operations  Summary, below. For segment financial
information, see Note I to the Second Quarter Financial Statements and Results of Operations, below.



REGULATED UTILITY SUBSIDIARIES

Con
Edison of New York provides electric service to approximately 3.2 million customers and gas service to over 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 approximately 0.3 million customers in southeastern New York and adjacent areas of northern New Jersey and eastern Pennsylvania and gas service to over 0.1 million customers in
southeastern New York and adjacent areas of eastern Pennsylvania.



The
Utilities are primarily wires and pipes energy delivery companies that deliver energy in their service areas subject to extensive federal and state regulation. The Utilities customers buy this energy from the Utilities, or from
other suppliers through the Utilities retail access programs. The Utilities purchase substantially all of the energy they sell to customers pursuant to firm contracts or through wholesale energy markets, and recover (generally on a current
basis) the cost of the energy sold, pursuant to approved rate plans.



In April
2005, Con Edison of New York commenced commercial operation of its East River Repowering Project and retired its Waterside generating station, resulting in incremental summer electric capacity of 125 MW. At June 30, 2005, Con Edison of New
Yorks generating facilities consisted of plants located in New York City with an aggregate capacity of 690 MW, most of which are combined steam-electric generating facilities.



Con Edison anticipates that the Utilities will provide substantially all of its earnings over the next few years. The Utilities
earnings will depend on various factors including demand for utility service and the



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OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS
(COMBINED FOR CON EDISON AND CON EDISON OF

NEW YORK)  CONTINUED



Utilities ability to charge rates for their services that reflect the costs of service, including a return on invested equity capital. The factors
affecting demand for utility service include weather and economic conditions.



Because the energy delivery infrastructure must be adequate to meet demand in peak periods with a high level of reliability, the Utilities capital investment plans reflect, in great part, forecast growth in peak loads. Con Edison of
New York has estimated that, under design weather conditions, the 2005 peak electric load in its service area would be 13,025 MW. The average annual growth rate of the peak load over the next five years is estimated to be 1.5 percent. As of July 31,
2005, the highest peak electric loads served by the Utilities were, for Con Edison of New York, 13,059 MW and for O&R, 1,539 MW. Both new record peaks were reached on July 27, 2005. The company anticipates an ongoing need for substantial capital
investment in order to meet this load growth with the high level of reliability that it currently provides (see Liquidity and Capital Resources - Capital Requirements, below).



The Utilities have rate plans approved by state utility regulators that cover the rates they can charge their customers. Con Edison of New
Yorks electric, gas and steam rate plans are effective through March 31, 2008, September 30, 2007 and September 30, 2006, respectively. O&R has rate plans for its electric and gas services in New York that extend through October 31, 2006.
Pursuant to the Utilities rate plans, charges to customers may not be changed during the respective terms of the rate plans other than for the rate increases provided for in the plans, recovery of the costs incurred for energy supply and
limited other exceptions. The rate plans generally require the Utilities to share with customers earnings in excess of specified rates of return on equity. Changes in delivery volumes are reflected in operating income (except to the extent that
weather-normalization provisions apply to the gas businesses). See Regulatory Matters below and Recoverable Energy Costs and Rate and Restructuring Agreements in Notes A and B, respectively, to the financial
statements in Item 8 of the Form 10-K.



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.



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##### Table of Contents

MANAGEMENTS DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS
(COMBINED FOR CON EDISON AND CON EDISON OF

NEW YORK)  CONTINUED



UNREGULATED ENERGY SUBSIDIARIES

Con Edisons unregulated energy subsidiaries participate in competitive businesses and are subject to different risks than the Utilities. At June 30, 2005, Con
Edisons investment in its unregulated energy subsidiaries was $603 million and the unregulated subsidiaries assets amounted to $1.6 billion.



Consolidated Edison Solutions, Inc. (Con Edison Solutions) sells electricity to delivery customers of the Utilities and other utilities in the Northeast and Mid-Atlantic
regions and also offers energy-related services. The company sold approximately 8.3 million mWhrs of electricity to customers over the 12-month period ended June 30, 2005.



Consolidated Edison Development, Inc. (Con Edison Development) owns and operates generating plants and participates in other infrastructure
projects. At June 30, 2005, the company owned the equivalent of 1,668 MW of capacity in electric generating facilities of which 224 MW is sold under long-term purchase power agreements and the balance is sold 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 also provides risk management services to Con Edison Solutions and Con Edison Development and offers these services
to others.



DISCONTINUED OPERATIONS

In December 2004, Con Edison determined to sell Consolidated Edison Communications, LLC (Con Edison Communications). See Note N to the Second Quarter Financial
Statements.



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MANAGEMENTS DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS
(COMBINED FOR CON EDISON AND CON EDISON OF

NEW YORK)  CONTINUED



RESULTS OF OPERATIONS - SUMMARY

Con Edisons earnings per share (basic and
diluted) for the three months ended June 30, 2005 were $0.47 compared to $0.37 for the 2004 period. Con Edisons earnings per share for the six months ended June 30, 2005 were $1.22 (basic and diluted) compared to $1.05 ($1.04 on a diluted
basis) for the 2004 period.



Earnings for the three and six months ended June
30, 2005 and 2004 were as follows:



|                            |  |                                 |     |   |                               |   |    |      |  |   |      |   |  |   |     |  
|--------------------------- |  | ------------------------------- | --- | - | ----------------------------- | - | -- | ---- |  | - | ---- | - |  | - | --- | -
|                            |  | Three Months Ended     June 30, |     |   | Six Months Ended     June 30, |  
|(Millions of Dollars)       |  | 2005                            |     |   | 2004                          |   |    | 2005 |  |   | 2004 |  
|Con Edison of New York      |  | $                               | 121 |   |                               | $ | 89 |      |  | $ | 291  |   |  | $ | 241 |  
|O&R                         |  |                                 | 6   |   |                               |   | 5  |      |  |   | 23   |   |  |   | 20  |  
|Con Edison Development      |  |                                 | (4  | ) |                               |   | (3 | )    |  |   | (5   | ) |  |   | (8  | )
|Con Edison Energy           |  |                                 |    |   |                               |   |   |      |  |   |     |   |  |   |    |  
|Con Edison Solutions        |  |                                 | 1   |   |                               |   | 2  |      |  |   | 1    |   |  |   | 3   |  
|Other (a)                   |  |                                 | (6  | ) |                               |   | (4 | )    |  |   | (10  | ) |  |   | (9  | )
|Total continuing operations |  |                                 | 118 |   |                               |   | 89 |      |  |   | 300  |   |  |   | 247 |  
|Discontinued operations (b) |  |                                 | (3  | ) |                               |   | (3 | )    |  |   | (3   | ) |  |   | (6  | )
|CON EDISON                  |  | $                               | 115 |   |                               | $ | 86 |      |  | $ | 297  |   |  | $ | 241 |  

|(a) | Represents inter-company and parent company accounting, including interest expense on debt and non-operating income tax expense.
|--- | --------------------------------------------------------------------------------------------------------------------------------

|(b) | Represents the discontinued operations of Con Edison Communications.
|--- | --------------------------------------------------------------------



Con Edisons earnings for the three and six months ended June 30, 2005 were $29 and $56 million higher, respectively, than the 2004 period, reflecting the following
factors (after tax, in millions):



|                                                         |  |                    |     |   |                  |   |     |  
|-------------------------------------------------------- |  | ------------------ | --- | - | ---------------- | - | --- | -
|                                                         |  | Three Months Ended |     |   | Six Months Ended |  
|Con Edison of New York:                                  |  |                    |     |   |                  |   |     |  
|Sales growth (estimated)                                 |  | $                  | 7   |   |                  | $ | 16  |  
|Impact of weather in 2005 versus 2004 (estimated)        |  |                    | (7  | ) |                  |   | (10 | )
|Electric rate plan (estimated)                           |  |                    | 56  |   |                  |   | 56  |  
|Gas rate plan (estimated)                                |  |                    | 9   |   |                  |   | 26  |  
|Steam rate plan (estimated)                              |  |                    | 9   |   |                  |   | 30  |  
|Increased pension and other postretirement benefit costs |  |                    | (11 | ) |                  |   | (22 | )
|Higher operations and maintenance expense                |  |                    | (10 | ) |                  |   | (18 | )
|Higher depreciation and property tax expense             |  |                    | (23 | ) |                  |   | (32 | )
|Other                                                    |  |                    | 2   |   |                  |   | 4   |  
|Total Con Edison of New York                             |  |                    | 32  |   |                  |   | 50  |  
|O&R                                                      |  |                    | 1   |   |                  |   | 3   |  
|Unregulated energy subsidiaries including parent company |  |                    | (4  | ) |                  |   |    |  
|Discontinued operations                                  |  |                    |    |   |                  |   | 3   |  
|Total                                                    |  | $                  | 29  |   |                  | $ | 56  |  



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



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MANAGEMENTS DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS
(COMBINED FOR CON EDISON AND CON EDISON OF

NEW YORK)  CONTINUED



RISK FACTORS

The Companies are influenced by many factors that are difficult to predict, and that involve uncertainties that may materially affect our actual operating results, cash flows and financial condition. See Risk
Factors in Item 7 of the Form 10-K.



FORWARD-LOOKING STATEMENTS

This report 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 which reflect expectations and not facts. Words
such as expects, estimates, anticipates, intends, believes, plans, will and similar expressions identify forward-looking statements. Forward-looking statements are
based on information available at the time the statements are made, and accordingly speak only as of that time. Actual results or developments may differ materially from those expectations included in the forward-looking statements because of
factors such as those discussed under Risk Factors in Item 7 of the Form 10-K.



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, long-lived assets, derivative instruments, goodwill and leases. See Application of Critical Accounting
Policies in Item 7 of the Form 10-K.



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MANAGEMENTS DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS
(COMBINED FOR CON EDISON AND CON EDISON OF

NEW YORK)  CONTINUED



LIQUIDITY AND CAPITAL RESOURCES

The Companies liquidity reflects cash
flows from operating, investing and financing activities, as shown on their respective consolidated statement of cash flows included in Part I, Item 1 of this report and as discussed below. See Liquidity and Capital Resources 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, 2005 and 2004 are summarized as follows:



|                               |  |            |       |   |                        |   |      |          |  |   |      |   |  |      |       |   |          |   |      |   |  |   |      |  
|------------------------------ |  | ---------- | ----- | - | ---------------------- | - | ---- | -------- |  | - | ---- | - |  | ---- | ----- | - | -------- | - | ---- | - |  | - | ---- | -
|                               |  | Con Edison |       |   | Con Edison of New York |  
|(Millions of Dollars)          |  | 2005       |       |   | 2004                   |   |      | Variance |  |   | 2005 |   |  | 2004 |       |   | Variance |  
|Operating activities           |  | $          | 33    |   |                        | $ | 636  |          |  | $ | (603 | ) |  | $    | (42   | ) |          | $ | 540  |   |  | $ | (582 | )
|Investing activities           |  |            | (404  | ) |                        |   | (743 | )        |  |   | 339  |   |  |      | (357  | ) |          |   | (680 | ) |  |   | 323  |  
|Financing activities           |  |            | 1,163 |   |                        |   | 545  | *        |  |   | 618  |   |  |      | 1,181 |   |          |   | 581  | * |  |   | 600  |  
|Net change                     |  | $          | 792   |   |                        | $ | 438  |          |  | $ | 354  |   |  | $    | 782   |   |          | $ | 441  |   |  | $ | 341  |  
|Balance at beginning of period |  |            | 26    |   |                        |   | 49   |          |  |   | (23  | ) |  |      | 10    |   |          |   | 33   |   |  |   | (23  | )
|Balance at end of period       |  | $          | 818   |   |                        | $ | 487  | *        |  | $ | 331  |   |  | $    | 792   |   |          | $ | 474  | * |  | $ | 318  |  

|* | Includes $275 million used in July 2004 to redeem in advance of maturity 7.35% 40-year debentures.
|- | --------------------------------------------------------------------------------------------------



Cash Flows from Operating Activities

The Utilities cash flows from operating activities reflect principally their energy sales and deliveries and cost of operations. The volume of energy sales and deliveries depends primarily on factors external to
the Utilities, such as weather and economic conditions. The prices at which the Utilities provide energy to their customers are determined in accordance with rate plans approved by state public utility regulators. In general, changes in the
Utilities cost of purchased power, fuel and gas may affect the timing of cash flows but not net income because the costs are recovered in accordance with rate plans. See Recoverable Energy Costs in Note A to the financial
statements in Item 8 of the Form 10-K.



Net income results from cash and
non-cash (or accrual) transactions. Only cash transactions affect the Companies cash flows from operating activities. Principal non-cash charges and credits include depreciation, deferred income taxes and for Con Edison of New York, electric
rate plan amortizations and prepaid pension costs. The pension credits resulted primarily from past favorable performance of Con Edison of New Yorks pension fund. See Application of Critical Accounting Policies  Accounting for
Pensions and Other Postretirement Benefits in Item 7 of the Form 10-K and Notes E and F to the financial statements in Item 8 of the Form 10-K.



Net cash flows from operating activities for the six months ended June 30, 2005 for Con Edison and Con Edison of New York were $603 million and $582 million lower,
respectively, than in the 2004 period. The change at Con Edison and Con Edison of New York reflects primarily prepayment of Con



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MANAGEMENTS DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS
(COMBINED FOR CON EDISON AND CON EDISON OF

NEW YORK)  CONTINUED



Edison of New Yorks New York City property taxes (see Note O to the Second Quarter Financial Statements) and increased net income (see Results of
Operations, below).



Cash Flows Used in Investing
Activities

Net cash flows used in investing activities for Con Edison and Con Edison of New York were $339 million and $323 million higher for the six
months ended June 30, 2005 than in the 2004 period, respectively. The increases reflect $534 million of net proceeds from the completion of the sale of properties located on First Avenue in Manhattan, collectively referred to as the First
Avenue Properties (see Note C to the Second Quarter Financial Statements), partially offset by increased construction expenditures.



Cash Flows from Financing Activities

Net cash flows
from financing activities for Con Edison and Con Edison of New York increased $618 million and $600 million in the six months ended June 30, 2005 compared with the 2004 period, respectively. A prepayment of Con Edison of New Yorks New York
City property taxes was made on June 30, 2005 when the company authorized a $734 million electronic funds transfer to the City, but the transaction was not completed by the City until July 1, 2005. Financing activities include the obligation to fund
the overnight investment in temporary cash investments of $734 million (see Note O to the Second Quarter Financial Statements).



Cash flows from financing activities reflect an increase in commercial paper balances (included on the consolidated balance sheets as Notes payable). At June
30, 2005, Con Edison had $176 million of commercial paper outstanding, of which $122 million was outstanding under Con Edison of New Yorks program. The weighted average interest rate for the six-month period was 2.54 percent and 2.46 percent
for Con Edison and Con Edison of New York, respectively.



Con Edisons net
cash flows for the six months ended June 30, 2005 include the issuance of $40 million 5.3 percent 10-year debentures by O&R.



Con Edisons cash flows from financing activities for the six months ended June 30, 2005 and 2004, reflect the issuance of Con Edison common shares through its
dividend reinvestment and employee stock plans (2005: 1,424,700 shares for $41 million, 2004: 1,486,144 shares for $37 million), and for the 2004 period, the issuance through a public offering of 14 million shares resulting in net proceeds of $513
million. In addition, as a result of dividend reinvestment under the stock plans, stock instead of cash was used to pay common stock dividends of $20 million and $19 million in the 2005 and 2004 periods, respectively.



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OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS
(COMBINED FOR CON EDISON AND CON EDISON OF

NEW YORK)  CONTINUED



Net cash flows from financing activities during the six months ended June 30, 2005 and 2004 also reflect the following Con Edison of New York transactions:



2005

| |  |  | Issued $350 million 5.3% 30-year debentures, the proceeds of which were used for general corporate purposes;
| | - |  | ------------------------------------------------------------------------------------------------------------



| |  |  | Issued $126 million of variable-rate, tax-exempt Facilities Revenue Bonds due 2039, the proceeds of which were classified as restricted cash at June 30, 2005 and used in July to
redeem in advance of maturity 6.10% fixed-rate tax-exempt Facilities Revenue Bonds due 2020; and
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Issued $125 million 5.25% 30-year debentures, the proceeds of which were used for general corporate purposes.
| | - |  | -------------------------------------------------------------------------------------------------------------



2004

| |  |  | Issued $245 million of variable-rate, tax-exempt Facilities Revenue Bonds, with various maturity dates between 28 and 35 years, the proceeds of which were used to redeem in advance
of maturity fixed-rate tax-exempt Facilities Revenue Bonds, 5.25% due 2020, 5.375% due 2022 and 6.0% due 2028;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Issued $200 million 4.7% 10-year debentures and $200 million 5.7% 30-year debentures, the proceeds of which were used to redeem in advance of maturity $150 million 7.125% debentures
due 2029 and for general corporate purposes;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Redeemed at maturity $150 million 7.625% 12-year debentures; and
| | - |  | ----------------------------------------------------------------



| |  |  | Issued $275 million 4.7% 5-year debentures, the proceeds of which were used in July to redeem in advance of maturity $275 million 7.35% 40-year debentures.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------



External borrowings are a source of liquidity that could be affected by changes in credit
ratings, financial performance and capital markets. For information about the Companies credit ratings and certain financial ratios, see Capital Resources, below.



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MANAGEMENTS DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS
(COMBINED FOR CON EDISON AND CON EDISON OF

NEW YORK)  CONTINUED



Changes in Assets and Liabilities

The following table shows changes in assets and liabilities at June 30, 2005, compared with December 31, 2004, that have impacted the Companies consolidated
statements of cash flows. The changes in these balances are used to reconcile income to cash flow from operations. With respect to regulatory liabilities, see Note C to the Second Quarter Financial Statements.



|                      |  |                                 |      |   |                                             |   |      |  
|--------------------- |  | ------------------------------- | ---- | - | ------------------------------------------- | - | ---- | -
|(Millions of Dollars) |  | Con Edison2005 vs. 2004Variance |      |   | Con Edison of New York2005 vs. 2004Variance |  
|Assets                |  |                                 |      |   |                                             |   |      |  
|Prepayments           |  | $                               | 695  |   |                                             | $ | 694  |  
|Other current assets  |  |                                 | 165  |   |                                             |   | 61   |  
|Regulatory assets     |  |                                 | (305 | ) |                                             |   | (312 | )
|                      |  |                                
|Liabilities           |  |                                 |      |   |                                             |   |      |  
|Accrued taxes         |  |                                 | 153  |   |                                             |   | 203  |  



The increase in the Companies
prepayments at June 30, 2005 as compared with year-end 2004 reflects the prepayment of $734 million of property taxes (see Note O to the Second Quarter Financial Statements).



Other current assets for Con Edison and Con Edison of New York increased at June 30, 2005 as compared with year-end 2004 due primarily to
higher mark-to-market gains on commodity hedges, which, for the Utilities, reduce the cost of energy recoverable from customers and have no effect on net income.



Regulatory assets decreased for Con Edison and Con Edison of New York at June 30, 2005 as compared with year-end due principally to
completion of the sale of the First Avenue Properties and amortizations in accordance with the electric rate case. See Note C to the financial statements for further detail on the changes in regulatory assets.



Accrued taxes increased for Con Edison and Con Edison of New York at June 30, 2005 as
compared with year-end 2004 due primarily to higher pre-tax income in the period and the gain on the sale of the First Avenue Properties.



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OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS
(COMBINED FOR CON EDISON AND CON EDISON OF

NEW YORK)  CONTINUED



Capital Resources

At June 30, 2005, there was no
material change in the Companies capital resources compared to those disclosed under Capital Resources in Item 7 of the Form 10-K and in Part I, Item 2 of the First Quarter Form 10-Q, other than as described below.



For each of the Companies, the ratio of earnings to fixed charges (Securities and Exchange
Commission basis) for the six month periods ended June 30, 2005 and 2004 and the years ended December 31, 2004, 2003, 2002, 2001 and 2000 was:



|                       |  |                                   |  |                                  |  |      |  |      |  |      |  |      |  |     
|---------------------- |  | --------------------------------- |  | -------------------------------- |  | ---- |  | ---- |  | ---- |  | ---- |  | ----
|                       |  | Earnings to Fixed Charges (Times)
|                       |  | For the Six MonthsEnded June 30,  |  | For the Years Ended December 31,
|                       |  | 2005                              |  | 2004                             |  | 2004 |  | 2003 |  | 2002 |  | 2001 |  | 2000
|Con Edison             |  | 2.8                               |  | 2.6                              |  | 2.6  |  | 3.1  |  | 3.1  |  | 3.4  |  | 3.0 
|Con Edison of New York |  | 3.3                               |  | 3.0                              |  | 3.1  |  | 3.4  |  | 3.4  |  | 3.7  |  | 3.2 



The ratios of earnings to fixed
charges for the years ended December 31, 2003 and 2001 have been revised to exclude discontinued operations.



For each of the Companies, the common equity ratio at June 30, 2005 and December 31, 2004 was:



|                       |  |                                                      |  |                  
|---------------------- |  | ---------------------------------------------------- |  | -----------------
|                       |  | Common Equity Ratio(Percent of total capitalization)
|                       |  | June 30, 2005                                        |  | December 31, 2004
|Con Edison             |  | 49.1                                                 |  | 51.0             
|Con Edison of New York |  | 50.8                                                 |  | 52.9             



Capital
Requirements

At June 30, 2005, there was no material change in the Companies capital requirements compared to those discussed under Capital
Requirements in Item 7 of the Form 10-K and in Part I, Item 2 of the First Quarter 10-Q.



Contractual Obligations

The following table
summarizes the Companies material obligations at June 30, 2005, to make payments pursuant to contracts. Long-term debt, capital lease obligations and other long-term liabilities are included on their balance sheets. Operating leases,
non-utility generator (NUG) contracts and other purchase power agreements (PPAs) (for which undiscounted future annual payments are shown) are discussed in the notes to the financial statements in Item 8 of the Form 10-K.



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MANAGEMENTS DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS
(COMBINED FOR CON EDISON AND CON EDISON OF

NEW YORK)  CONTINUED



|                                                                                    |  |                        |        |                  |   |           |  |           |       |              |   |       |  |   |       
|----------------------------------------------------------------------------------- |  | ---------------------- | ------ | ---------------- | - | --------- |  | --------- | ----- | ------------ | - | ----- |  | - | ------
|(Millions of Dollars)                                                               |  | Payments Due by Period
|Contractual Obligations                                                             |  | Total                  |        | Less than 1 year |   | 23 years |  | 4-5 years |       | After 5years
|Long-term debt, including interest                                                  |  |                        |        |                  |   |           |  |           |       |              |   |       |  |   |       
|Con Edison of New York                                                              |  | $                      | 11,450 |                  | $ | 779       |  | $         | 1,228 |              | $ | 1,647 |  | $ | 7,796 
|O&R                                                                                 |  |                        | 675    |                  |   | 21        |  |           | 58    |              |   | 93    |  |   | 503   
|Unregulated energy subsidiaries and parent                                          |  |                        | 2,402  |                  |   | 89        |  |           | 380   |              |   | 154   |  |   | 1,779 
|Total Long-term debt, including interest                                            |  | $                      | 14,527 |                  | $ | 889       |  | $         | 1,666 |              | $ | 1,894 |  | $ | 10,078
|Capital lease obligations                                                           |  |                        |        |                  |   |           |  |           |       |              |   |       |  |   |       
|Con Edison of New York                                                              |  | $                      | 53     |                  | $ | 7         |  | $         | 15    |              | $ | 15    |  | $ | 16    
|Total Capital lease obligations                                                     |  | $                      | 53     |                  | $ | 7         |  | $         | 15    |              | $ | 15    |  | $ | 16    
|Operating leases                                                                    |  |                        |        |                  |   |           |  |           |       |              |   |       |  |   |       
|Con Edison of New York                                                              |  | $                      | 349    |                  | $ | 38        |  | $         | 75    |              | $ | 76    |  | $ | 160   
|O&R                                                                                 |  |                        | 25     |                  |   | 2         |  |           | 4     |              |   | 4     |  |   | 15    
|Unregulated energy subsidiaries                                                     |  |                        | 8      |                  |   | 2         |  |           | 3     |              |   | 2     |  |   | 1     
|Total operating leases                                                              |  | $                      | 382    |                  | $ | 42        |  | $         | 82    |              | $ | 82    |  | $ | 176   
|Purchase obligations:                                                               |  |                        |        |                  |   |           |  |           |       |              |   |       |  |   |       
|Non-utility generator contracts and purchase poweragreements  Utilities            |  |                        |        |                  |   |           |  |           |       |              |   |       |  |   |       
|Con Edison of New York                                                              |  |                        |        |                  |   |           |  |           |       |              |   |       |  |   |       
|Energy (a)                                                                          |  | $                      | 14,344 |                  | $ | 926       |  | $         | 1,543 |              | $ | 1,105 |  | $ | 10,770
|Capacity                                                                            |  |                        | 6,184  |                  |   | 463       |  |           | 998   |              |   | 1,023 |  |   | 3,700 
|Total Con Edison of New York                                                        |  | $                      | 20,528 |                  | $ | 1,389     |  | $         | 2,541 |              | $ | 2,128 |  | $ | 14,470
|O&R                                                                                 |  |                        |        |                  |   |           |  |           |       |              |   |       |  |   |       
|Energy (a)                                                                          |  | $                      | 206    |                  | $ | 90        |  | $         | 116   |              | $ |      |  | $ |      
|Capacity                                                                            |  |                        | 22     |                  |   | 12        |  |           | 8     |              |   | 2     |  |   |      
|Total O&R                                                                           |  | $                      | 228    |                  | $ | 102       |  | $         | 124   |              | $ | 2     |  | $ |      
|Total non-utility generator contracts and purchase power agreements  Utilities
(b) |  | $                      | 20,756 |                  | $ | 1,491     |  | $         | 2,665 |              | $ | 2,130 |  | $ | 14,470
|Natural gas supply, transportation, and storagecontracts  Utilities (c)            |  |                        |        |                  |   |           |  |           |       |              |   |       |  |   |       
|Con Edison of New York                                                              |  |                        |        |                  |   |           |  |           |       |              |   |       |  |   |       
|Natural gas supply                                                                  |  | $                      | 1,200  |                  | $ | 573       |  | $         | 541   |              | $ | 86    |  | $ |      
|Transportation and storage                                                          |  |                        | 587    |                  |   | 151       |  |           | 219   |              |   | 149   |  |   | 68    
|Total Con Edison of New York                                                        |  | $                      | 1,787  |                  | $ | 724       |  | $         | 760   |              | $ | 235   |  | $ | 68    
|O&R                                                                                 |  |                        |        |                  |   |           |  |           |       |              |   |       |  |   |       
|Natural gas supply                                                                  |  | $                      | 252    |                  | $ | 119       |  | $         | 110   |              | $ | 23    |  | $ |      
|Transportation and storage                                                          |  |                        | 134    |                  |   | 35        |  |           | 53    |              |   | 34    |  |   | 12    
|Total O&R                                                                           |  | $                      | 386    |                  | $ | 154       |  | $         | 163   |              | $ | 57    |  | $ | 12    
|Total natural gas supply, transportation and storage contracts                      |  | $                      | 2,173  |                  | $ | 878       |  | $         | 923   |              | $ | 292   |  | $ | 80    
|Other purchase obligations (d)                                                      |  |                        |        |                  |   |           |  |           |       |              |   |       |  |   |       
|Con Edison of New York                                                              |  | $                      | 1,821  |                  | $ | 1,057     |  | $         | 544   |              | $ | 179   |  | $ | 41    
|O&R                                                                                 |  |                        | 156    |                  |   | 81        |  |           | 54    |              |   | 16    |  |   | 5     
|Total other purchase obligations                                                    |  | $                      | 1,977  |                  | $ | 1,138     |  | $         | 598   |              | $ | 195   |  | $ | 46    
|Unregulated energy subsidiary commodity and service agreements (e)                  |  | $                      | 860    |                  | $ | 402       |  | $         | 229   |              | $ | 49    |  | $ | 180   
|Total                                                                               |  | $                      | 40,728 |                  | $ | 4,847     |  | $         | 6,178 |              | $ | 4,657 |  | $ | 25,046

|(a) | Included in these amounts is the cost of minimum quantities of energy that the company is obligated to purchase at both fixed and variable prices.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------



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OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS
(COMBINED FOR CON EDISON AND CON EDISON OF

NEW YORK)  CONTINUED



|(b) | Con Edison of New Yorks contractual obligations under its non-utility generator contracts and other purchase power agreements include the cost of energy and capacity that the
company is obligated to purchase under the contracts described in Notes I, P and T to the financial statements in Item 8 of the Form 10-K.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(c) | Included in these amounts is the cost of minimum quantities of natural gas supply, transportation and storage that the Utilities are obligated to purchase at both fixed and variable
prices.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(d) | Amounts shown for other purchase obligations, which reflect capital and operations and maintenance costs incurred by the Utilities in running their day-to-day operations, were
derived from the Utilities purchasing systems as the difference between the amounts authorized and the amounts paid (or vouchered to be paid) for each obligation. For many of these obligations, the Utilities are committed to purchase less than
the amount authorized. Payments of the other purchase obligations are generally assumed to be made ratably over the term of the obligations. The Utilities believe that unreasonable effort and expense would be involved to modify their purchasing
systems to enable them to report their other purchase obligations in a different manner.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(e) | Amounts represent commitments to purchase minimum quantities of electric energy and capacity, natural gas, natural gas pipeline capacity and generating plant services entered into
by Con Edisons unregulated subsidiaries. Amounts do not include commitments of Con Edison Communications.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



The Companies commitments to make payments in addition to these contractual commitments include other liabilities reflected in their balance sheets, any funding
obligations for pension and other postretirement benefit plans, and Con Edisons guarantees of certain obligations of its subsidiaries. See Notes E, F, S and T to the financial statements in Item 8 of the Form 10-K and Notes H, J and K to the
Second Quarter Financial Statements.



ELECTRIC POWER
REQUIREMENTS

At June 30, 2005, there was no material change in the Companies electric power requirements compared to those
disclosed under Electric Power Requirements 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, 2005, there were
no material changes in the Companies regulatory matters compared to those disclosed under Regulatory Matters in Item 7 of the Form 10-K, Rate and Restructuring Agreements in Note B to the financial statements in Item 8
of the Form 10-K and Note C to the financial statements included in Part 1, Item 1 of the First Quarter Form 10-Q other than as described in Note C to the Second Quarter Financial Statements.



FINANCIAL AND COMMODITY MARKET
RISKS

The Companies are subject to various risks and uncertainties associated with financial and commodity markets. The most significant
market risks include interest rate risk, commodity price risk, credit risk and investment risk. At June 30, 2005, there were no material changes in the Companies financial and commodity market risks compared to those disclosed under
Financial and Commodity Market Risks in Item 7 of the Form 10-K and in Part I, Item 2 of the First Quarter Form 10-Q, other than as described below and in Note L to the Second Quarter Financial Statements.



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MANAGEMENTS DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS
(COMBINED FOR CON EDISON AND CON EDISON OF

NEW YORK)  CONTINUED



Commodity Price Risk

Con Edison estimates that, as of June 30, 2005, a 10 percent decline in market prices would result in a decline in fair value of $134 million for the derivative instruments used by the Utilities to hedge purchases of
electricity, gas and steam, of which $114 million is for Con Edison of New York. Con Edison estimates that the value-at-risk using a delta-normal variance/covariance model with a 95 percent confidence level and assuming a one-day holding period for
transactions associated with its unregulated energy subsidiaries hedges on generating assets and commodity contracts for the three months ended June 30, 2005 and 2004, respectively, was as follows:



|                                             |  |                       |   |      |   |  
|-------------------------------------------- |  | --------------------- | - | ---- | - | -
|                                             |  | 2005                  |   | 2004
|                                             |  | (Millions of Dollars)
|95% Confidence Level, One-Day Holding Period |  |                       |   |      |   |  
|Average for the period                       |  | $                     | 1 |      | $ | 1
|High                                         |  |                       | 2 |      |   | 2
|Low                                          |  |                       | 1 |      |   | 1



Credit Risk

Con Edisons unregulated energy subsidiaries had $132 million of credit exposure in connection with energy supply and hedging activities, net of
collateral and reserves, at June 30, 2005, of which $99 million was with investment grade counterparties and $29 million was with the New York Mercantile Exchange or independent system operators. The remainder was with unrated entities.



MATERIAL CONTINGENCIES

For information concerning potential liabilities arising from the Companies material contingencies, see Notes E through H to the Second Quarter Financial
Statements.



RESULTS OF OPERATIONS

Results of operations reflect, among other things, the Companies accounting policies (see Application of Critical Accounting Policies
in Item 7 of the Form 10-K), rate plans that cover the rates the Utilities can charge their customers (see Regulatory Matters, above and in Item 7 of the Form 10-K) and demand for utility service. Demand for utility service is affected
by weather, economic conditions and other factors.



The Companies results
of operations for the three and six months ended June 30, 2005 reflect higher net revenues resulting from growth in energy sales and from the Con Edison of New York electric rate plan that became effective April 1, 2005 and gas and steam rate plans
that became effective October 1, 2004. The higher net revenues were partially offset by cooler spring and warmer winter weather in the



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OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS
(COMBINED FOR CON EDISON AND CON EDISON OF

NEW YORK)  CONTINUED



2005 periods, higher operations and maintenance expenses, and a reduction in net credits for pensions and other postretirement benefits. In addition,
depreciation and property taxes were higher in 2005, reflecting large continuing investments in energy delivery infrastructure. In large part, the increased expenses were reflected in the rate plans and are being recovered through the higher net
revenues. For Con Edison, results of operations for the 2005 periods also reflect, and the 2004 periods has been restated to reflect, accounting for the discontinued operations of Con Edison Communications. For additional information about major
factors affecting earnings, see Results of Operations  Summary, above.



In general, the Utilities recover on a current basis the fuel, purchased power and gas costs they incur in supplying energy to their full-service customers (see Recoverable Energy Costs in Note A and
Regulatory Matters in Note B to the financial statements in Item 8 of the Form 10-K). Accordingly, such costs do not generally affect the Companies results of operations. Management uses the term net revenues (operating
revenues less such costs) to identify changes in operating revenues that may affect the Companies results of operations. Management believes that, although net revenues may not be a measure determined in accordance with Generally
Accepted Accounting Principles, the measure facilitates the analysis by management and investors of the Companies results of operations.



A discussion of the results of operations by principal business segment for the three and six months ended June 30, 2005 and 2004 follows. For additional business segment
financial information, see Note I to the Second Quarter Financial Statements.



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OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS
(COMBINED FOR CON EDISON AND CON EDISON OF

NEW YORK)  CONTINUED



THREE MONTHS ENDED JUNE 30, 2005 COMPARED
WITH THREE MONTHS ENDED JUNE 30, 2004

The results of operations (which were
discussed above under Results of Operations  Summary) in 2005 compared with 2004 were:



|                                                                                          |  |                            |     |   |                             |       |   |                            |   |     |                                     |  |       |                            |  |   |                             |   |  |                            |   |  |                             |    |   |  |       |   
|----------------------------------------------------------------------------------------- |  | -------------------------- | --- | - | --------------------------- | ----- | - | -------------------------- | - | --- | ----------------------------------- |  | ----- | -------------------------- |  | - | --------------------------- | - |  | -------------------------- | - |  | --------------------------- | -- | - |  | ----- | --
|                                                                                          |  | Con Edison*                |     |   | Con Edison of New York      |       |   | O&R                        |   |     | Unregulated Subsidiariesand Other** | 
|(Millions of Dollars)                                                                     |  | Increases(Decreases)Amount |     |   | Increases(Decreases)Percent |       |   | Increases(Decreases)Amount |   |     | Increases(Decreases)Percent         |  |       | Increases(Decreases)Amount |  |   | Increases(Decreases)Percent |   |  | Increases(Decreases)Amount |   |  | Increases(Decreases)Percent |   
|Operating revenues                                                                        |  | $                          | 242 |   |                             | 11.2  | % |                            | $ | 192 |                                     |  | 11.0  | %                          |  | $ | 1                           |   |  | 0.6                        | % |  | $                           | 49 |   |  | 19.1  | % 
|Purchased power                                                                           |  |                            | 79  |   |                             | 8.9   |   |                            |   | 20  |                                     |  | 3.0   |                            |  |   | (2                          | ) |  | (3.3                       | ) |  |                             | 61 |   |  | 39.6  |   
|Fuel                                                                                      |  |                            | 5   |   |                             | 3.7   |   |                            |   | 11  |                                     |  | 13.6  |                            |  |   |                            |   |  |                           |   |  |                             | (6 | ) |  | (11.3 | ) 
|Gas purchased for resale                                                                  |  |                            | 46  |   |                             | 29.7  |   |                            |   | 43  |                                     |  | 32.1  |                            |  |   | 1                           |   |  | 5.0                        |   |  |                             | 2  |   |  | Large |   
|Operating revenues less purchased power, fuel and gas purchased for resale (net revenues) |  |                            | 112 |   |                             | 11.4  |   |                            |   | 118 |                                     |  | 13.7  |                            |  |   | 2                           |   |  | 2.7                        |   |  |                             | (8 | ) |  | (16.3 | ) 
|Other operations and maintenance                                                          |  |                            | 46  |   |                             | 12.8  |   |                            |   | 49  |                                     |  | 16.7  |                            |  |   | 1                           |   |  | 2.4                        |   |  |                             | (4 | ) |  | (17.4 | ) 
|Depreciation and amortization                                                             |  |                            | 9   |   |                             | 6.6   |   |                            |   | 8   |                                     |  | 6.7   |                            |  |   |                            |   |  |                           |   |  |                             | 1  |   |  | 10.0  |   
|Taxes, other than income taxes                                                            |  |                            | 26  |   |                             | 10.2  |   |                            |   | 27  |                                     |  | 11.4  |                            |  |   | (1                          | ) |  | (8.3                       | ) |  |                             |   |   |  |      |   
|Income taxes                                                                              |  |                            | (7  | ) |                             | (15.2 | ) |                            |   | (7  | )                                   |  | (16.3 | )                          |  |   | 1                           |   |  | 33.3                       |   |  |                             | (1 | ) |  | Large |   
|Operating income                                                                          |  |                            | 38  |   |                             | 20.2  |   |                            |   | 41  |                                     |  | 24.4  |                            |  |   | 1                           |   |  | 10.0                       |   |  |                             | (4 | ) |  | (36.4 | ) 
|Other income less deductions and related federal income tax                               |  |                            | (3  | ) |                             | (33.3 | ) |                            |   | (5  | )                                   |  | (55.6 | )                          |  |   |                            |   |  |                           |   |  |                             | 2  |   |  | 66.7  |   
|Net interest charges                                                                      |  |                            | 6   |   |                             | 5.6   |   |                            |   | 4   |                                     |  | 4.7   |                            |  |   |                            |   |  |                           |   |  |                             | 2  |   |  | 10.5  |   
|Income from continuing operations                                                         |  |                            | 29  |   |                             | 32.6  |   |                            |   | 32  |                                     |  | 34.8  |                            |  |   | 1                           |   |  | 20.0                       |   |  |                             | (4 | ) |  | (80.0 | ) 
|Discontinued operations                                                                   |  |                            |    |   |                             |      |   |                            |   | N/A |                                     |  | N/A   |                            |  |   | N/A                         |   |  | N/A                        |   |  |                             |   |   |  |      |   
|Net income                                                                                |  | $                          | 29  |   |                             | 33.7  | % |                            | $ | 32  |                                     |  | 34.8  | %                          |  | $ | 1                           |   |  | 20.0                       | % |  | $                           | (4 | ) |  | (50.0 | )%

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

|** | Includes inter-company and parent company accounting.
|-- | -----------------------------------------------------



CON EDISON OF NEW YORK

Electric

Con Edison of New Yorks electric
operating revenues were $118 million higher in the three months ended June 30, 2005 as compared with the 2004 period, due primarily to the April 2005 electric rate plan ($75 million), recovery of costs relating to the East River Repowering Project,
which commenced commercial operations in April 2005 ($18 million), sales growth ($10 million) and increased recoverable purchased power and fuel costs ($38 million) reflecting higher unit costs, partially offset by a provision for a refund to
customers of deferred taxes associated with the sale of the First Avenue Properties ($23 million).



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OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS
(COMBINED FOR CON EDISON AND CON EDISON OF

NEW YORK)  CONTINUED



Con Edison of New Yorks electric sales and deliveries, excluding off-system sales, for the three months ended June 30, 2005 compared with the 2004 period were:



MILLIONS OF KWHS



|                                       |  |                    |  |               |  |      |                  |  |       |   
|-------------------------------------- |  | ------------------ |  | ------------- |  | ---- | ---------------- |  | ----- | --
|                                       |  | Three Months Ended |  | Variation     |  |      | PercentVariation | 
|Description                            |  | June 30, 2005      |  | June 30, 2004 |  |     
|Residential/Religious                  |  | 2,820              |  | 2,790         |  | 30   |                  |  | 1.1   | % 
|Commercial/Industrial                  |  | 3,522              |  | 4,116         |  | (594 | )                |  | (14.4 | ) 
|Other                                  |  | 67                 |  | 45            |  | 22   |                  |  | 48.9  |   
|Total Full Service Customers           |  | 6,409              |  | 6,951         |  | (542 | )                |  | (7.8  | ) 
|Retail access customers                |  | 3,758              |  | 3,230         |  | 528  |                  |  | 16.3  |   
|Sub-total                              |  | 10,167             |  | 10,181        |  | (14  | )                |  | (0.1  | ) 
|NYPA, Municipal Agency and Other Sales |  | 2,511              |  | 2,531         |  | (20  | )                |  | (0.8  | ) 
|Total Service Area                     |  | 12,678             |  | 12,712        |  | (34  | )                |  | (0.3  | )%



Electric sales and delivery volumes in
Con Edison of New Yorks service area decreased 0.3 percent in the three months ended June 30, 2005 compared with the 2004 period as a result of cooler weather in the 2005 period. After adjusting for variations, principally weather and billing
days in each period, electric sales and delivery volumes in Con Edison of New Yorks service area increased 1.5 percent in the three months ended June 30, 2005 compared with the 2004 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 $22 million in the three months ended June 30, 2005 as compared with the 2004 period. Electric fuel costs increased $16 million, reflecting an increase in unit costs.



Con Edison of New Yorks electric operating income increased $27 million
in the three months ended June 30, 2005 compared with the 2004 period. The increase reflects primarily higher net revenues ($80 million) due principally to the new electric rate plan and lower income taxes ($23 million, reflecting primarily the
deferred income taxes associated with the sale of the First Avenue Properties and increased deductions for removal costs), partially offset by higher operations and maintenance costs ($51 million, due primarily to lower pension credits and higher
costs addressed in the electric rate plan), depreciation ($2 million) and taxes other than income taxes ($22 million, principally property taxes).



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OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS
(COMBINED FOR CON EDISON AND CON EDISON OF

NEW YORK)  CONTINUED



Gas

Con Edison of New Yorks gas operating revenues in the three months ended June 30, 2005 increased $71 million compared with the 2004 period, reflecting primarily higher firm and non-firm revenues due principally to the October 2004 gas
rate plan ($26 million) and an increase in recoverable gas costs ($43 million).



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 sales and deliveries, excluding off-system sales, in the
three months ended June 30, 2005 compared with the 2004 period were:



THOUSANDS OF DTHS



|                                    |  |                    |  |               |  |                   |  |      |  
|----------------------------------- |  | ------------------ |  | ------------- |  | ----------------- |  | ---- | -
|                                    |  | Three Months Ended |  | Variation     |  | Percent Variation | 
|Description                         |  | June 30, 2005      |  | June 30, 2004 |  |                  
|Firm Sales                          |  |                    |  |               |  |                   |  |      |  
|Residential                         |  | 9,148              |  | 9,090         |  | 58                |  | 0.6  | %
|General                             |  | 7,693              |  | 7,460         |  | 233               |  | 3.1  |  
|Firm Transportation                 |  | 3,964              |  | 3,452         |  | 512               |  | 14.8 |  
|Total Firm Sales and Transportation |  | 20,805             |  | 20,002        |  | 803               |  | 4.0  |  
|Off Peak/Interruptible Sales        |  | 3,208              |  | 2,995         |  | 213               |  | 7.1  |  
|Non-Firm Transportation of Gas      |  |                    |  |               |  |                   |  |      |  
|NYPA                                |  | 5,866              |  | 3,748         |  | 2,118             |  | 56.5 |  
|Generation Plants                   |  | 14,632             |  | 9,371         |  | 5,261             |  | 56.1 |  
|Total NYPA and Generation Plants    |  | 20,498             |  | 13,119        |  | 7,379             |  | 56.2 |  
|Other                               |  | 4,781              |  | 4,621         |  | 160               |  | 3.5  |  
|Total Sales and Transportation      |  | 49,292             |  | 40,737        |  | 8,555             |  | 21.0 | %



Con Edison of New Yorks sales
and transportation volumes for firm customers increased 4.0 percent in the three months ended June 30, 2005 compared with the 2004 period reflecting increased new business, and the impact of weather. 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 2.0 percent in the 2005 period.



Con Edison of New Yorks purchased gas cost increased $43 million in the three months ended June 30, 2005 compared with the 2004 period, due to higher unit costs
and higher delivery volumes.



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OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS
(COMBINED FOR CON EDISON AND CON EDISON OF

NEW YORK)  CONTINUED



Con Edison of New Yorks gas operating income increased $12 million in the three months ended June 30, 2005 compared with the 2004 period, reflecting primarily higher net revenues ($28 million) as a result of the gas rate plan. This
increase was partially offset by higher income taxes ($5 million), operations and maintenance expense ($6 million, due primarily to lower pension credits) and taxes other than income taxes ($4 million, principally property taxes).



Steam

Con Edison of New Yorks steam operating revenues increased $3 million in the three months ended June 30, 2005 as compared with the 2004 period, due primarily to the October 2004 steam rate plan ($8 million) and
recovery of costs relating to the East River Repowering Project ($6 million), offset in part by lower recoverable fuel costs ($5 million), a decrease in sales due to weather ($3 million) and lower recoverable purchased power costs ($2 million).



Con Edison of New Yorks steam sales and deliveries in the three months
ended June 30, 2005 compared with the 2004 period were:



MILLIONS OF POUNDS



|                |  |                    |  |               |  |      |                   |  |       |   
|--------------- |  | ------------------ |  | ------------- |  | ---- | ----------------- |  | ----- | --
|                |  | Three Months Ended |  | Variation     |  |      | Percent Variation | 
|Description     |  | June 30, 2005      |  | June 30, 2004 |  |     
|General         |  | 78                 |  | 93            |  | (15  | )                 |  | (16.1 | )%
|Apartment house |  | 1,388              |  | 1,332         |  | 56   |                   |  | 4.2   |   
|Annual power    |  | 3,051              |  | 3,319         |  | (268 | )                 |  | (8.1  | ) 
|Total Sales     |  | 4,517              |  | 4,744         |  | (227 | )                 |  | (4.8  | )%



Steam sales and delivery volumes
decreased 4.8 percent in the three months ended June 30, 2005 compared with the 2004 period, reflecting in part the impact of weather. After adjusting for variations, principally weather and billing days in each period, steam sales and deliveries
increased 1.0 percent in the 2005 period.



Con Edison of New Yorks steam
purchased power costs decreased $2 million in the three months ended June 30, 2005 as compared with the 2004 period, due primarily to lower purchased volumes, offset in part by increased unit costs. Steam fuel costs decreased $5 million, due
primarily to lower unit costs.



Steam operating income increased $2 million in
the three months ended June 30, 2005 compared with the 2004 period. The increase is due to higher net revenues ($10 million) and the recovery of costs



55



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##### Table of Contents

MANAGEMENTS DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS
(COMBINED FOR CON EDISON AND CON EDISON OF

NEW YORK)  CONTINUED



related to the East River Repowering Project ($18 million), offset by higher operations and maintenance expenses ($8 million), depreciation ($6 million), and
income taxes ($10 million).



Other Income (Deductions)

Other income (deductions) decreased $5 million in the three months ended June 30, 2005 compared with the 2004 period due primarily to decreased allowance
for equity funds used during construction related to the commencement of commercial operations of the East River Repowering Project.



Net Interest Charges

Net interest charges
increased $4 million in the three months ended June 30, 2005 compared with the 2004 period due principally to additional interest expense on long-term debt issued in 2005.



O&R

Electric

Electric operating revenues increased $1 million in the three months ended June 30, 2005 compared with the 2004 period.



O&Rs electric sales and deliveries, excluding off-system sales, for the second
quarter of 2005 compared with the 2004 period were:



MILLIONS OF KWHS



|                             |  |                    |  |               |  |    |                   |  |      |  
|---------------------------- |  | ------------------ |  | ------------- |  | -- | ----------------- |  | ---- | -
|                             |  | Three Months Ended |  | Variation     |  |    | Percent Variation | 
|Description                  |  | June 30, 2005      |  | June 30, 2004 |  |   
|Residential/Religious        |  | 413                |  | 396           |  | 17 |                   |  | 4.3  | %
|Commercial/Industrial        |  | 547                |  | 524           |  | 23 |                   |  | 4.4  |  
|Other                        |  | 25                 |  | 26            |  | (1 | )                 |  | (3.8 | )
|Total Full Service Customers |  | 985                |  | 946           |  | 39 |                   |  | 4.1  |  
|Retail access customers      |  | 452                |  | 443           |  | 9  |                   |  | 2.0  |  
|Total Service Area           |  | 1,437              |  | 1,389         |  | 48 |                   |  | 3.5  | %



Electric sales and delivery volumes in
O&Rs service area increased 3.5 percent in the three months ended June 30, 2005 compared with 2004 due primarily to growth in the economy and in number of customers. After adjusting for weather variations, electric sales and delivery
volumes in O&Rs service area increased 4.1 percent in the 2005 period.



O&Rs purchased power cost decreased $2 million in the three months ended June 30, 2005 as compared with the 2004 period due to a decrease in the average unit cost.



56



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##### Table of Contents

MANAGEMENTS DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS
(COMBINED FOR CON EDISON AND CON EDISON OF

NEW YORK)  CONTINUED



O&Rs electric operating income increased $1 million in the three months ended June 30, 2005 as compared with the 2004 as a result of higher net revenues ($3 million) and lower depreciation and amortization costs ($1 million),
offset in part by higher income taxes ($2 million).



Gas

O&Rs gas operating revenues were unchanged during the three months ended June 30, 2005 compared with the 2004 period.



Gas sales and deliveries, excluding off-system sales, in the three months ended June 30, 2005
compared with the 2004 period were:



THOUSANDS
OF DTHS



|                                    |  |                    |  |               |  |      |                   |  |        
|----------------------------------- |  | ------------------ |  | ------------- |  | ---- | ----------------- |  | -------
|                                    |  | Three Months Ended |  | Variation     |  |      | Percent Variation
|Description                         |  | June 30, 2005      |  | June 30, 2004 |  |     
|Firm Sales                          |  |                    |  |               |  |      |                   |  |        
|Residential                         |  | 1,266              |  | 1,458         |  | (192 | )                 |  | (13.2)%
|General                             |  | 292                |  | 352           |  | (60  | )                 |  | (17.0) 
|Firm Transportation                 |  | 1,085              |  | 1,435         |  | (350 | )                 |  | (24.4) 
|Total Firm Sales and Transportation |  | 2,643              |  | 3,245         |  | (602 | )                 |  | (18.6) 
|Off Peak/Interruptible Sales        |  | 1,666              |  | 1,672         |  | (6   | )                 |  | (0.4)  
|Non-Firm Transportation of Gas      |  |                    |  |               |  |      |                   |  |        
|Generation Plants                   |  | 508                |  | 144           |  | 364  |                   |  | Large  
|Other                               |  | 155                |  | 157           |  | (2   | )                 |  | (1.3)  
|Total Sales and Transportation      |  | 4,972              |  | 5,218         |  | (246 | )                 |  | (4.7)% 



Sales and transportation volumes for
firm customers decreased 18.6 percent in the three months ended June 30, 2005 compared with the 2004 period reflecting the impact of weather. After adjusting for weather and other variations in each period, total firm sales and transportation
volumes were 5.7 percent lower in the three months ended June 30, 2005 compared with the 2004 period.



Non-firm transportation of customer-owned gas to electric generating plants increased substantially in the three months ended June 30, 2005 as compared with the 2004 period because the relative prices of gas and fuel
oil led generating plants in the companys gas service area to use gas rather than fuel oil for a significant portion of their generation. The increase in gas usage had minimal impact on earnings due to the application of a fixed demand charge
for local transportation.



57



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##### Table of Contents

MANAGEMENTS DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS
(COMBINED FOR CON EDISON AND CON EDISON OF

NEW YORK)  CONTINUED



Gas operating income was unchanged during the three months ended June 30, 2005 compared with the 2004 period.



UNREGULATED SUBSIDIARIES AND
OTHER

Unregulated Energy Subsidiaries

The earnings of the unregulated energy subsidiaries were $3 million lower in the three months ended June 30, 2005 than in the 2004 period.



Operating revenues of the unregulated energy subsidiaries were $46 million higher in the three months ended June 30, 2005 than in the 2004
period, reflecting principally higher retail sales of electricity.



Operating
expenses excluding income taxes increased by $51 million, reflecting principally increased purchased power ($58 million), offset in part by lower fuel ($5 million) and other operations and maintenance costs ($2 million).



Operating income for the three months ended June 30, 2005 was $5 million lower than in the
2004 period.



Other income (deductions) increased $2 million in the quarter due
principally to the gain on the sale of long-term receivables recorded in accordance with SFAS No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishment of Liabilities.



Discontinued Operations

Losses from the discontinued operations of Con Edison Communications were the same in the three months ended June 30, 2005 as in the 2004 period. See Note N to the Second
Quarter Financial Statements.



58



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##### Table of Contents

MANAGEMENTS DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS
(COMBINED FOR CON EDISON AND CON EDISON OF

NEW YORK)  CONTINUED



SIX MONTHS ENDED JUNE 30, 2005 COMPARED WITH SIX MONTHS ENDEDJUNE 30, 2004

The results of operations (which were discussed above under Results of Operations  Summary) in 2005 compared with 2004 were:



|                                                                                          |  |                            |     |   |                             |       |   |                            |   |     |                                     |  |       |                            |  |   |                             |   |  |                            |   |  |                             |    |   |  |       |  
|----------------------------------------------------------------------------------------- |  | -------------------------- | --- | - | --------------------------- | ----- | - | -------------------------- | - | --- | ----------------------------------- |  | ----- | -------------------------- |  | - | --------------------------- | - |  | -------------------------- | - |  | --------------------------- | -- | - |  | ----- | -
|                                                                                          |  | Con Edison*                |     |   | Con Edison of New York      |       |   | O&R                        |   |     | Unregulated Subsidiariesand Other** | 
|(Millions of Dollars)                                                                     |  | Increases(Decreases)Amount |     |   | Increases(Decreases)Percent |       |   | Increases(Decreases)Amount |   |     | Increases(Decreases)Percent         |  |       | Increases(Decreases)Amount |  |   | Increases(Decreases)Percent |   |  | Increases(Decreases)Amount |   |  | Increases(Decreases)Percent |   
|Operating revenues                                                                        |  | $                          | 364 |   |                             | 7.5   | % |                            | $ | 277 |                                     |  | 7.0   | %                          |  | $ | 6                           |   |  | 1.6                        | % |  | $                           | 81 |   |  | 15.7  | %
|Purchased power                                                                           |  |                            | 88  |   |                             | 4.8   |   |                            |   | 12  |                                     |  | 0.9   |                            |  |   | (5                          | ) |  | (4.1                       | ) |  |                             | 81 |   |  | 26.5  |  
|Fuel                                                                                      |  |                            | 12  |   |                             | 3.8   |   |                            |   | 8   |                                     |  | 3.7   |                            |  |   |                            |   |  |                           |   |  |                             | 4  |   |  | 4.0   |  
|Gas purchased for resale                                                                  |  |                            | 96  |   |                             | 17.2  |   |                            |   | 97  |                                     |  | 21.1  |                            |  |   | 3                           |   |  | 3.8                        |   |  |                             | (4 | ) |  | (21.1 | )
|Operating revenues less purchased power, fuel and gas purchased for resale (net revenues) |  |                            | 168 |   |                             | 7.8   |   |                            |   | 160 |                                     |  | 8.5   |                            |  |   | 8                           |   |  | 4.8                        |   |  |                             |   |   |  |      |  
|Other operations and maintenance                                                          |  |                            | 82  |   |                             | 11.1  |   |                            |   | 83  |                                     |  | 13.6  |                            |  |   | 2                           |   |  | 2.4                        |   |  |                             | (3 | ) |  | (7.0  | )
|Depreciation and amortization                                                             |  |                            | 14  |   |                             | 5.1   |   |                            |   | 13  |                                     |  | 5.5   |                            |  |   |                            |   |  |                           |   |  |                             | 1  |   |  | 5.0   |  
|Taxes, other than income taxes                                                            |  |                            | 14  |   |                             | 2.6   |   |                            |   | 17  |                                     |  | 3.4   |                            |  |   | (2                          | ) |  | (8.0                       | ) |  |                             | (1 | ) |  | (8.3  | )
|Income taxes                                                                              |  |                            | (4  | ) |                             | (2.6  | ) |                            |   | (11 | )                                   |  | (7.5  | )                          |  |   | 3                           |   |  | 23.1                       |   |  |                             | 4  |   |  | 66.7  |  
|Operating income                                                                          |  |                            | 62  |   |                             | 13.9  |   |                            |   | 58  |                                     |  | 14.6  |                            |  |   | 5                           |   |  | 17.2                       |   |  |                             | (1 | ) |  | (5.0  | )
|Other income less deductions and related federal income tax                               |  |                            | (8  | ) |                             | (36.4 | ) |                            |   | (10 | )                                   |  | (40.0 | )                          |  |   |                            |   |  |                           |   |  |                             | 2  |   |  | 66.7  |  
|Net interest charges                                                                      |  |                            | 1   |   |                             | 0.5   |   |                            |   | (2  | )                                   |  | (1.1  | )                          |  |   | 2                           |   |  | 22.2                       |   |  |                             | 1  |   |  | 2.7   |  
|Income from continuing operations                                                         |  |                            | 53  |   |                             | 21.5  |   |                            |   | 50  |                                     |  | 20.7  |                            |  |   | 3                           |   |  | 15.0                       |   |  |                             |   |   |  |      |  
|Discontinued operations                                                                   |  |                            | 3   |   |                             | 50.0  |   |                            |   | N/A |                                     |  | N/A   |                            |  |   | N/A                         |   |  | N/A                        |   |  |                             | 3  |   |  | 50.0  |  
|Net income                                                                                |  | $                          | 56  |   |                             | 23.2  | % |                            | $ | 50  |                                     |  | 20.7  | %                          |  | $ | 3                           |   |  | 15.0                       | % |  | $                           | 3  |   |  | 15.0  | %

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

|** | Includes inter-company and parent company accounting.
|-- | -----------------------------------------------------



CON EDISON OF NEW YORK

Electric

Con Edison of New Yorks electric
operating revenues were $91 million higher in the six months ended June 30, 2005 as compared with the 2004 period, due primarily to the April 2005 electric rate plan ($75 million) and recovery of costs relating to the East River Repowering Project
($18 million), increased recoverable purchased power and fuel costs ($23 million), partially offset by a provision for refund to customers of deferred taxes associated with the sale of the First Avenue Properties ($23 million).



59



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##### Table of Contents

MANAGEMENTS DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS
(COMBINED FOR CON EDISON AND CON EDISON OF

NEW YORK)  CONTINUED



Con Edison of New Yorks electric sales and deliveries, excluding off-system sales, for the six months ended
June 30, 2005 compared with the 2004 period were:



MILLIONS OF KWHS



|                                       |  |                  |  |               |  |        |                   |  |       |  
|-------------------------------------- |  | ---------------- |  | ------------- |  | ------ | ----------------- |  | ----- | -
|                                       |  | Six Months Ended |  | Variation     |  |        | Percent Variation | 
|Description                            |  | June 30, 2005    |  | June 30, 2004 |  |       
|Residential/Religious                  |  | 5,900            |  | 5,832         |  | 68     |                   |  | 1.2   | %
|Commercial/Industrial                  |  | 7,353            |  | 8,380         |  | (1,027 | )                 |  | (12.3 | )
|Other                                  |  | 151              |  | 83            |  | 68     |                   |  | 81.9  |  
|Total Full Service Customers           |  | 13,404           |  | 14,295        |  | (891   | )                 |  | (6.2  | )
|Retail access customers                |  | 7,527            |  | 6,439         |  | 1,088  |                   |  | 16.9  |  
|Sub-total                              |  | 20,931           |  | 20,734        |  | 197    |                   |  | 1.0   |  
|NYPA, Municipal Agency and Other Sales |  | 5,357            |  | 5,301         |  | 56     |                   |  | 1.1   |  
|Total Service Area                     |  | 26,288           |  | 26,035        |  | 253    |                   |  | 1.0   | %



Electric sales and delivery volumes in
Con Edison of New Yorks service area increased 1.0 percent in the six months ended June 30, 2005 compared with the 2004 period, reflecting principally growth in usage by existing customers as well as increased new business. After adjusting for
variations, principally weather and billing days in each period, electric sales and delivery volumes in Con Edison of New Yorks service area increased 1.9 percent in the six months ended June 30, 2005 compared with the 2004 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 $9 million in the six months ended June 30, 2005 as compared with the 2004 period reflecting an
increase in unit costs, partially offset by decreased sendout volumes. Electric fuel costs increased $14 million, reflecting higher sendout volumes and an increase in unit costs.



Con Edison of New Yorks electric operating income increased $20 million in the six months ended June 30, 2005 compared with the 2004
period. The increase reflects higher net revenues ($68 million) due principally to the new electric rate plan and lower income taxes ($46 million, due to deferred income taxes associated with the sale of the First Avenue Properties and increased
deductions for removal costs). This increase was partially offset by higher operations and maintenance costs ($77 million, due primarily to lower pension credits), depreciation ($8 million) and taxes other than income taxes ($9 million, principally
property taxes).



60



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##### Table of Contents

MANAGEMENTS DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS
(COMBINED FOR CON EDISON AND CON EDISON OF

NEW YORK)  CONTINUED



Gas

Con Edison of New Yorks gas operating
revenues in the six months ended June 30, 2005 increased $150 million compared with the 2004 period, reflecting primarily an increase in recoverable gas costs ($97 million) and the gas rate plan ($54 million).



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 sales and deliveries, excluding off-system sales, in the six months ended June 30, 2005 compared with the 2004 period were:



THOUSANDS OF DTHS



|                                    |  |                  |  |               |  |        |                   |  |       |   
|----------------------------------- |  | ---------------- |  | ------------- |  | ------ | ----------------- |  | ----- | --
|                                    |  | Six Months Ended |  | Variation     |  |        | Percent Variation | 
|Description                         |  | June 30, 2005    |  | June 30, 2004 |  |       
|Firm Sales                          |  |                  |  |               |  |        |                   |  |       |   
|Residential                         |  | 33,444           |  | 33,726        |  | (282   | )                 |  | (0.8  | )%
|General                             |  | 23,699           |  | 22,820        |  | 879    |                   |  | 3.9   |   
|Firm Transportation                 |  | 11,411           |  | 10,480        |  | 931    |                   |  | 8.9   |   
|Total Firm Sales and Transportation |  | 68,554           |  | 67,026        |  | 1,528  |                   |  | 2.3   |   
|Off Peak/Interruptible Sales        |  | 7,396            |  | 8,482         |  | (1,086 | )                 |  | (12.8 | ) 
|Non-Firm Transportation of Gas      |  |                  |  |               |  |        |                   |  |       |   
|NYPA                                |  | 10,092           |  | 6,416         |  | 3,676  |                   |  | 57.3  |   
|Generation Plants                   |  | 20,733           |  | 14,358        |  | 6,375  |                   |  | 44.4  |   
|Total NYPA and Generation Plants    |  | 30,825           |  | 20,774        |  | 10,051 |                   |  | 48.4  |   
|Other                               |  | 10,259           |  | 9,881         |  | 378    |                   |  | 3.8   |   
|Total Sales and Transportation      |  | 117,034          |  | 106,163       |  | 10,871 |                   |  | 10.2  | % 



Con Edison of New Yorks sales
and transportation volumes for firm customers increased 2.3 percent in the six months ended June 30, 2005 compared with the 2004 period reflecting increased new business, partially offset by the impact of warmer winter in the 2005 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 3.2 percent in the 2005 period.



Con Edison of New Yorks purchased gas cost increased $97 million in the six months
ended June 30, 2005 compared with the 2004 period due to higher unit costs.



61



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MANAGEMENTS DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS
(COMBINED FOR CON EDISON AND CON EDISON OF

NEW YORK)  CONTINUED



Con Edison of New Yorks gas operating income increased $26 million in the six months ended June 30, 2005
compared with the 2004 period, reflecting primarily higher net revenues ($53 million) as a result of the October 2004 gas rate plan. This increase was partially offset by higher income taxes ($13 million), operations and maintenance expense ($8
million, due primarily to lower pension credits) and taxes other than income taxes ($6 million, principally property taxes).



Steam

Con Edison of New Yorks steam operating
revenues increased $36 million in the six months ended June 30, 2005 as compared with the 2004 period, due primarily to the October 2004 steam rate plan ($43 million) and recovery of costs associated with the East River Repowering Project ($6
million), offset in part by lower revenues related to weather ($8 million) and lower recoverable fuel costs ($6 million).



Con Edison of New Yorks steam sales and deliveries in the six months ended June 30, 2005 compared with the 2004 period were:



MILLIONS OF POUNDS



|                |  |                  |  |               |  |      |                  |  |      |   
|--------------- |  | ---------------- |  | ------------- |  | ---- | ---------------- |  | ---- | --
|                |  | Six Months Ended |  | Variation     |  |      | PercentVariation | 
|Description     |  | June 30, 2005    |  | June 30, 2004 |  |     
|General         |  | 486              |  | 521           |  | (35  | )                |  | (6.7 | )%
|Apartment house |  | 4,699            |  | 4,711         |  | (12  | )                |  | (0.3 | ) 
|Annual power    |  | 9,797            |  | 10,125        |  | (328 | )                |  | (3.2 | ) 
|Total Sales     |  | 14,982           |  | 15,357        |  | (375 | )                |  | (2.4 | )%



Steam sales and deliveries volumes
decreased 2.4 percent in the six months ended June 30, 2005 compared with the 2004 period, reflecting the impact of the warmer winter in the 2005 period. After adjusting for variations, principally weather and billing days in each period, steam
sales and deliveries increased 2.5 percent in the 2005 period.



Con Edison of
New Yorks steam purchased power costs increased $3 million in the six months ended June 30, 2005 as compared with the 2004 period, due primarily to higher unit costs, offset in part by lower purchased volumes. Steam fuel costs decreased $6
million, reflecting decreased sendout volumes and a decrease in unit costs.



Steam operating income increased $12 million in the six months ended June 30, 2005 compared with the 2004 period. The increase is due to higher net revenues resulting from the steam rate plan ($39



62



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##### Table of Contents

MANAGEMENTS DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS
(COMBINED FOR CON EDISON AND CON EDISON OF

NEW YORK)  CONTINUED



million) and the recovery of costs related to the East River Repowering Project ($18 million), offset in part by higher income tax ($22 million), operations
and maintenance expenses ($15 million), depreciation expense ($6 million) and taxes other than income taxes ($2 million, principally property taxes).



Taxes Other Than Income Taxes

Taxes, other than
income taxes increased $17 million in the six months ended June 30, 2005 as compared with the 2004 period, due principally to higher property taxes.



Other Income (Deductions)

Other income (deductions)
decreased $10 million in the six months ended June 30, 2005 compared with the 2004 period due primarily to decreased allowance for equity funds used during construction related to the commencement of commercial operations of the East River
Repowering Project.



O&R

Electric

O&Rs electric operating revenues
increased $2 million in the six months ended June 30, 2005 compared with the 2004 period, due primarily to higher sales and deliveries in 2005 and a one-time adjustment for unbilled revenues recorded in March 2005, offset in part by the accrual (in
accordance with its New York electric rate plan) of a regulatory liability for earnings in excess of target levels.



Electric sales and deliveries, excluding off-system sales, for the six months ended June 30, 2005 compared with the 2004 period were:



MILLIONS OF KWHS



|                             |  |                  |  |               |  |                   |  |     |  
|---------------------------- |  | ---------------- |  | ------------- |  | ----------------- |  | --- | -
|                             |  | Six Months Ended |  | Variation     |  | Percent Variation | 
|Description                  |  | June 30, 2005    |  | June 30, 2004 |  |                  
|Residential/Religious        |  | 869              |  | 811           |  | 58                |  | 7.2 | %
|Commercial/Industrial        |  | 1,091            |  | 1,055         |  | 36                |  | 3.4 |  
|Other                        |  | 52               |  | 52            |  |                  |  |    |  
|Total Full Service Customers |  | 2,012            |  | 1,918         |  | 94                |  | 4.9 |  
|Retail access customers      |  | 916              |  | 849           |  | 67                |  | 7.9 |  
|Total Service Area           |  | 2,928            |  | 2,767         |  | 161               |  | 5.9 | %



Electric sales and delivery volumes in
O&Rs service area recorded in the six months ended June 30, 2005 increased 5.9 percent compared with the 2004 period due primarily to the unbilled revenue



63



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##### Table of Contents

MANAGEMENTS DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS
(COMBINED FOR CON EDISON AND CON EDISON OF

NEW YORK)  CONTINUED



adjustment referenced above. Absent this adjustment, O&Rs electric sales and delivery volume variation would have been a positive 2.6 percent,
reflecting primarily growth in the number of customers and higher average customer usage. After adjusting for weather variations in each period, electric delivery volumes in O&Rs service area increased 4.0 percent in the 2005 period,
excluding the unbilled revenue adjustment (7.3 percent with the adjustment).



Electric operating income increased by $4 million in the six months ended June 30, 2005 as compared with the 2004 period due primarily to higher net revenues ($7 million), offset by higher operations and maintenance expenses ($1 million)
and income taxes ($2 million).



Gas

O&Rs gas operating revenues increased $4 million in the six months ended June 30, 2005 compared with 2003. The increase is due primarily to increased
transportation volumes and higher costs for gas purchased for resale costs in 2005, offset by reduced energy sales, reflecting additional customers obtaining their energy supply through competitive providers.



O&R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.



Gas sales and deliveries, excluding off-system sales, in the six months ended June 30, 2005 period compared with the 2004 period were:



THOUSANDS OF DTHS



|                                    |  |                  |  |               |  |      |                   |  |       |   
|----------------------------------- |  | ---------------- |  | ------------- |  | ---- | ----------------- |  | ----- | --
|                                    |  | Six Months Ended |  | Variation     |  |      | Percent Variation | 
|Description                         |  | June 30, 2005    |  | June 30, 2004 |  |     
|Firm Sales                          |  |                  |  |               |  |      |                   |  |       |   
|Residential                         |  | 5,974            |  | 6,214         |  | (240 | )                 |  | (3.9  | )%
|General                             |  | 1,463            |  | 1,656         |  | (193 | )                 |  | (11.7 | ) 
|Firm Transportation                 |  | 5,898            |  | 5,690         |  | 208  |                   |  | 3.7   |   
|Total Firm Sales and Transportation |  | 13,335           |  | 13,560        |  | (225 | )                 |  | (1.7  | ) 
|Off Peak/Interruptible Sales        |  | 3,417            |  | 3,476         |  | (59  | )                 |  | (1.7  | ) 
|Non-Firm Transportation of Gas      |  |                  |  |               |  |      |                   |  |       |   
|Generation Plants                   |  | 698              |  | 381           |  | 317  |                   |  | 83.2  |   
|Other                               |  | 690              |  | 692           |  | (2   | )                 |  | (0.3  | ) 
|Total Sales and Transportation      |  | 18,140           |  | 18,109        |  | 31   |                   |  | 0.2   | % 



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MANAGEMENTS DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS
(COMBINED FOR CON EDISON AND CON EDISON OF

NEW YORK)  CONTINUED



Sales and transportation volumes for firm customers decreased 1.7 percent in the six months ended June 30, 2005 compared with 2004 reflecting the impact of the milder winter and warmer spring weather. After adjusting for weather variations
in each period, total firm sales and transportation volumes were 3.0 percent higher for the 2005 period than in 2004.



Non-firm transportation of customer-owned gas to electric generating plants increased 83.2 percent for the six months ended June 30, 2005 as compared with the 2004 period
because the relative prices of gas and fuel oil led generating plants in the companys gas service area to use gas rather than fuel oil for a significant portion of their generation. The increase 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 for the six months ended June 30, 2005 as compared with the 2004 period due primarily to lower gas operations and maintenance expenses ($1 million).



Taxes Other Than Income Taxes

Taxes other than income taxes decreased $2 million during the six months ended June 30, 2005 compared with 2004, reflecting principally lower payroll and gross receipts taxes.



Net Interest Expense

O&Rs net interest expense increased by $2 million during the six months ended June 30, 2005 compared with 2004, reflecting interest on the $40 million 5.3% 10-year debentures on March 31, 2005 and $46 million 5.22% Transition
Bonds associated with securitization of previously deferred purchase power costs of O&Rs New Jersey subsidiary issued in August 2004.



UNREGULATED SUBSIDIARIES AND OTHER

Unregulated Energy Subsidiaries

The earnings of the
unregulated energy subsidiaries remained the same in the six months ended June 30, 2005 as in the 2004 period.



Operating revenues of the unregulated energy subsidiaries were $77 million higher in the six months ended June 30, 2005 than in the 2004 period, reflecting principally higher retail sales of electricity.



Operating expenses excluding income taxes increased by $73 million, reflecting principally
increased purchased power ($76 million) and fuel costs ($4 million), offset in part by lower gas purchased for resale ($3 million), other operations and maintenance costs ($2 million) and taxes other than income taxes ($2 million).



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##### Table of Contents

MANAGEMENTS DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS
(COMBINED FOR CON EDISON AND CON EDISON OF

NEW YORK)  CONTINUED



Operating income taxes increased $1 million in the six months ended June 30, 2005, reflecting primarily higher
taxable income.



Operating income for the six months ended June 30, 2005 was $3
million higher than in the 2004 period.



Other income (deductions) decreased $3
million in the six months ended June 30, 2005 as compared with 2004 due principally to the recognition of losses previously allocated to the minority interest in the Con Edison subsidiary that owns the Newington generating plant.



Discontinued Operations

Losses from the discontinued operations of Con Edison Communications were $3 million less in the six months ended June 30, 2005 than in the 2004 period due primarily to
reduced operating costs, including the cessation of depreciation. See Note N to the Second Quarter Financial Statements.



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ITEM 3.    QUANTITATIVE AND QUALITATIVE DISCLOSURES 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 and Commodity Market Risks in Part 1, Item 2 of this report, which information is incorporated herein by reference. Also, see Item 7A of the Form 10-K.



ITEM 4.    CONTROLS AND PROCEDURES

The
Companies maintain disclosure controls and procedures designed to provide reasonable assurance that the information required to be disclosed in the reports that they submit to the Securities and Exchange Commission (SEC) is recorded, processed,
summarized and reported within the time periods specified in the rules and forms of the SEC. For each of the Companies, its management, with the participation of its principal executive officer and principal financial officer, has evaluated the
companys disclosure controls and procedures as of the end of the period covered by this report and, based upon such evaluation, has concluded that the controls and procedures were effective to provide such reasonable assurance. Reasonable
assurance is not absolute assurance, however, and there can be no assurance that any design of controls or procedures would be effective under all potential future conditions.



There were no changes in the Companies internal control over financial reporting that occurred during the most recent fiscal quarter
that have materially affected, or are reasonably likely to materially affect, the Companies internal control over financial reporting.



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##### Table of Contents

PART II OTHER INFORMATION



ITEM 1    LEGAL PROCEEDINGS

CON EDISON
OF NEW YORK



Washington Heights Power Outage



For information regarding the Washington Heights Power Outage, see Item 3 of the
Form 10-K. In May 2005, the lawsuits relating to the July 1999 interruption of electric service to customers brought by Columbia University and New York and Presbyterian Hospital were settled for amounts that were not material to Con Edison of New
York. The company does not expect that the remaining lawsuits relating to the service interruption will have a material adverse effect on its financial position, results of operation, or liquidity.



Electric System Safety



For information about the July 2005 settlement of the New York State Public Service Commissions proceeding relating to whether the PSC
should commence an action seeking penalties from the company, see Other Regulatory Matters in Note C to the financial statements included in Part 1, Item 1 of this report, which is incorporated herein by reference.



ITEM 4    SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS

Con Edison

| | (a) | At the Annual Meeting of Stockholders of Con Edison on May 16, 2005, the stockholders of Con Edison voted to elect members of the Board of Directors, to ratify and approve the
appointment of Con Edisons independent accountants and not to adopt a stockholders proposal. 192,279,713 shares of Common Stock of Con Edison, representing approximately 79.13 percent of the 243,004,214 shares of Common Stock outstanding
and entitled to vote, were present at the meeting or by proxy.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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##### Table of Contents

| | (b) | The name of each nominee for election as a member of Con Edisons Board of Directors and the number of shares voted for or with respect to which authority to vote for was
withheld are as follows:
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|                       |  |             |  |               
|---------------------- |  | ----------- |  | --------------
|                       |  | Votes For   |  | Votes Withheld
|Vincent A. Calarco     |  | 188,861,269 |  | 3,418,444     
|George Campbell, Jr.   |  | 188,812,099 |  | 3,467,614     
|Gordon J. Davis        |  | 188,065,320 |  | 4,214,393     
|Michael J. Del Giudice |  | 188,983,467 |  | 3,296,246     
|Joan S. Freilich       |  | 183,101,272 |  | 9,178,441     
|Ellen V. Futter        |  | 187,174,242 |  | 5,105,471     
|Sally Hernandez        |  | 188,900,361 |  | 3,379,352     
|Peter W. Likins        |  | 188,987,257 |  | 3,292,456     
|Eugene R. McGrath      |  | 188,381,848 |  | 3,897,865     
|Frederic V. Salerno    |  | 186,008,474 |  | 6,271,239     
|Stephen R. Volk        |  | 188,336,657 |  | 3,943,056     



| | (c) | The results of the vote on the appointment of PricewaterhouseCoopers LLP as independent accountants for Con Edison for 2005 were as follows: 188,252,342 shares were voted for this
proposal; 1,909,428 shares were voted against the proposal; and 2,117,943 shares were abstentions.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (d) | The following stockholder-proposed resolution was voted upon at the Annual Meeting:
| | --- | -----------------------------------------------------------------------------------



RESOLVED: That the shareholders recommend that the Board take the necessary steps that Con Edison specifically
identify by name and corporate title in all future proxy statements those executive officers, not otherwise so identified, who are contractually entitled to receive in excess of $500,000 annually as a base salary, together with whatever other
additional compensation bonuses and other cash payments were due them.



The results of the vote on this proposal were as follows: 17,075,035 shares were voted for this proposal; 112,806,529 shares were voted against the proposal; 4,652,664 shares were abstentions; and 57,745,485 shares
were broker non-votes.



Con Edison of New York

At the Annual Meeting of Stockholders of Con Edison of New York, which was convened and adjourned on May 16, 2005 and reconvened on June 9, 2005, 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,
Peter W. Likins, Eugene R. McGrath, Frederic V. Salerno and Stephen R. Volk as members of Con Edison of New Yorks Board of Trustees and to ratify and approve the appointment of PricewaterhouseCoopers, LLP as Con Edison of New Yorks
independent accountants for 2005.



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##### Table of Contents

ITEM 6    EXHIBITS

(a) EXHIBITS



Con Edison



|               |  |                                                                                                                                                                                                      
|-------------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit 3.1    |  | By-laws of Con Edison, effective May 16, 2005.                                                                                                                                                       
|               | 
|Exhibit 10.1.1 |  | Amendment, executed April 5, 2005, to The Consolidated Edison Thrift Plan.                                                                                                                           
|               | 
|Exhibit 12.1   |  | Statement of computation of Con Edisons ratio of earnings to fixed charges for the six-month periods ended June 30, 2005 and 2004, and the years ended December 31, 2004, 2003, 2002,
2001 and 2000.
|               | 
|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 3.2    |  | By-laws of Con Edison of New York, effective May 16, 2005.                                                                                                                                                       
|               | 
|Exhibit 12.2   |  | Statement of computation of Con Edison of New Yorks ratio of earnings to fixed charges for the six-month periods ended June 30, 2005 and 2004, and the years ended December 31, 2004,
2003, 2002, 2001 and 2000.
|               | 
|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.                                                                                                                                                             



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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 3, 2005 |  | By                                            |  | /S/    JOAN S. FREILICH                                                                       
|                     |  |                                               |  | Joan S. Freilich Executive Vice President, Chief
Financial Officer and Duly Authorized Officer



71