# EDGAR Filing Document

**Accession Number:** 0001047862
**File Stem:** 0001047862-23-000095
**Filing Date:** 2023-3
**Character Count:** 413041
**Document Hash:** 99472f01afd756ef08eaa97bfa940d8a
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001047862-23-000095.hdr.sgml**: 20230330

**ACCESSION NUMBER**: 0001047862-23-000095

**CONFORMED SUBMISSION TYPE**: ARS

**PUBLIC DOCUMENT COUNT**: 1

**CONFORMED PERIOD OF REPORT**: 20230330

**FILED AS OF DATE**: 20230330

**DATE AS OF CHANGE**: 20230330

**EFFECTIVENESS DATE**: 20230330

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** CONSOLIDATED EDISON INC
- **CENTRAL INDEX KEY:** 0001047862
- **STANDARD INDUSTRIAL CLASSIFICATION:** ELECTRIC & OTHER SERVICES COMBINED [4931]
- **IRS NUMBER:** 133965100
- **STATE OF INCORPORATION:** NY
- **FISCAL YEAR END:** 1231

**FILING VALUES:**
- **FORM TYPE:** ARS
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 001-14514
- **FILM NUMBER:** 23780994

**BUSINESS ADDRESS:**
- **STREET 1:** 4 IRVING PLACE
- **CITY:** NEW YORK
- **STATE:** NY
- **ZIP:** 10003
- **BUSINESS PHONE:** 8005225635

**MAIL ADDRESS:**
- **STREET 1:** 4 IRVING PLACE
- **CITY:** NEW YORK
- **STATE:** NY
- **ZIP:** 10003
**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** CONSOLIDATED EDISON CO OF NEW YORK INC
- **CENTRAL INDEX KEY:** 0000023632
- **STANDARD INDUSTRIAL CLASSIFICATION:** ELECTRIC & OTHER SERVICES COMBINED [4931]
- **IRS NUMBER:** 135009340
- **STATE OF INCORPORATION:** NY
- **FISCAL YEAR END:** 1231

**FILING VALUES:**
- **FORM TYPE:** ARS
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 001-01217
- **FILM NUMBER:** 23780995

**BUSINESS ADDRESS:**
- **STREET 1:** 4 IRVING PL
- **CITY:** NEW YORK
- **STATE:** NY
- **ZIP:** 10003
- **BUSINESS PHONE:** 2124604600

**MAIL ADDRESS:**
- **STREET 1:** 4 IRVING PL
- **CITY:** NEW YORK
- **STATE:** NY
- **ZIP:** 10003

### Attached PDF Documents

**Attachment 1:** `ceannualreport22.pdf`

# 2022 Annual Report

![img-0.jpeg](img-0.jpeg)

![img-1.jpeg](img-1.jpeg)

![img-2.jpeg](img-2.jpeg)

![img-3.jpeg](img-3.jpeg)

conEdison

# New York's Clean Energy Vision

**2025**

**NYS:** 6 GW of **private solar**

**NYC:** 500 MW of **energy storage**

**2030**

**NYS:** 40% **reduction** in greenhouse gas emissions
(from 1990 levels)

**NYS:** 70% of **electricity** from **renewable** generation

**NYS:** 3 GW of **energy storage**

**NYS:** 10 GW of **private solar**

**2035**

**NYS:** 9 GW **offshore wind**

**NYC:** City-owned **vehicles** to be **electric** models
(passenger and light, medium
and non-emergency vehicles)

**NYS:** All new **passenger vehicles** and **trucks** sold in
New York will be **zero-emissions** models

**2040**

**NYS:** 100% **zero-emissions** electricity

**2050**

**NYS:** 85% **reduction** in greenhouse gas emissions
(from 1990 levels)

![img-4.jpeg](img-4.jpeg)

Timothy P. Cawley
Chairman, President, and
Chief Executive Officer

## Dear Fellow Shareholders,

Clean energy for everyone, now and for generations to come. Our company made strong progress on realizing that vision in 2022.

With New York's ambitious climate goals in mind, Con Edison has built on our foundational work of safety, operational excellence, and providing the best possible experience for customers as we shift toward a greener future. Collectively, these efforts yielded excellent results in 2022, positioning us for more growth in 2023 and the years ahead.

For our customers, we continue to safely deliver world-class reliability. Our company, now celebrating 200 years in business, powers the lives and livelihoods of 10 million people. We keep New York City and the surrounding areas' leading cultural, financial, and transportation hubs running. In 2022, we made it easier for our customers to use energy more efficiently, drive electric vehicles, and switch to electric heating.

For our employees, we continue to prioritize safety while investing in the growth and development of our teams. We are supporting and expanding our diversity, equity, and inclusion efforts to build a workforce that reflects our region. Our impressive people constantly innovate to improve everything we do.

And for you, our shareholders, we continue to provide value through steady and adept management. Proceeds from the sale of our Clean Energy Businesses strengthen our balance sheet and allow us to focus more sharply on delivering service and value through our core utility businesses going forward. Our 49-year record of dividend increases is a testament to our success. You're seeing an 8-cent increase over 2022, to $3.24 per share.

I remain tremendously proud of our work to lead the clean energy transition, and am confident we will continue creating a safer, cleaner, more resilient future for the communities we serve.

8-cent dividend
increase over 2022 to
$3.24 per share

Con Edison Annual Report 2022

## Investing in Clean Energy and Reliability

**2023 - 2025 Forecasted Capital Investment: $14.6 billion**

![img-5.jpeg](img-5.jpeg)

## The Most Reliable Service in the U.S.

### Customer Interruption Rate 2021

*Customers Interrupted per 1,000 Customers Served*

![img-6.jpeg](img-6.jpeg)

**Sources:** PA Consulting, the New York State Public Service Commission's Annual Electric Reliability Report

## CREATE THE CLEAN ENERGY FUTURE

Our Clean Energy Commitment is our way forward. To meet the ambitious and necessary climate goals in New York State and New York City, urgency must underpin everything we do. Our work is expansive, from energy efficiency programs to the electrification of buildings and homes to electric vehicle charging infrastructure. We are working to ensure green energy can meet the needs of our diverse service territory in the timeframe required to impact the effects of climate change.

### Build the Grid of the Future.

By 2030, we'll invest more than $3 billion in infrastructure to make our systems more resilient against extreme weather and to build transmission to move renewable resources from where they are generated to where they are needed.

Con Edison's grid of the future will need to accommodate additional electric demand to support more electric vehicles on the road year-round, and peak energy use in the winter once electric heating is more common. We're investing nearly $800 million in transmission infrastructure to deliver renewable energy from solar plants and wind farms to our customers. Another $1 billion project will establish an interconnection point so clean offshore wind power reaches the heart of the city. In Orange County, we've already brought online a new, modern $38 million electric substation to improve reliability and better integrate clean, renewable energy.

Ensuring clean energy can be dispatched when needed will be critical to the reliability of our grid going forward, and battery storage will become an essential component of our systems. Con Edison is planning to deliver 1,000 MW of energy storage by 2030. Our expertise in delivering renewable energy reliably and efficiently positions us to own and operate large-scale renewable generation, which will help bring more renewables to market more efficiently for customers. That's why we're making the case to the state to allow us to do so.

Simultaneously, Con Edison Transmission is growing our electric transmission business. We are in the final phase of a transmission project that will bring an additional 2,100 MW of energy from upstate New York to downstate, including more renewable generation. We also have a proposal to bring offshore wind power from the south shore of Long Island to New York City and more northern areas of the state. Con Edison Transmission continues to seek transmission opportunities that bring renewables from production areas to customers across the country.

To maintain our standout reliability, we'll continue to prioritize the resiliency of our systems. In the face of ever-more extreme weather, we reassess our processes

Invest $3 billion by 2030 in our systems

Deliver 1,000 MW of energy storage by 2030

Con Edison Annual Report 2022

and reinforce our infrastructure. We have invested in a fleet of more than 100 bucket trucks and staged them to respond to widespread storm damage whenever they're needed. Crews from across the country can use those trucks upon flying into the region instead of driving their own vehicles here. The fleet will speed up outage-response time for customers and give us greater control over resources at a time when extreme weather is causing more widespread damage.

Security is essential to our infrastructure as well as our customers. So, we continue to invest in cyber and physical security measures. We've leveraged technology to tighten access to our critical facilities and collaborated with government, law enforcement, and energy sector partners to fortify the power grid.

## Empower All Customers to Meet Climate Goals.

Energy efficiency is at the heart of the clean energy future. Since 2009, our rebates and incentives have helped more than 5 million customers upgrade their lighting, heating, and cooling systems. The impact is equivalent to taking more than 3 million gasoline vehicles off the road.

Commercial and multi-family buildings are two of the largest and toughest-to-tackle sources of carbon emissions, but by addressing them, we have potential to make significant progress on our climate goals. To reach the state's 2030 carbon-reduction target, Con Edison will need to invest billions in the electrification of buildings. We're working closely with partners in government at the city and state level, and with building owners and managers directly to make this happen on schedule.

On the transportation side, we want to make sure every driver in our region has access to electric vehicle charging stations. Building out charging infrastructure is the key to EV adoption, especially in urban areas. We'll increase the number of charging plugs in our region by tenfold over the next three years. And, we're looking to expand our incentives to encourage more overnight charging when energy use is low, easing strain on the grid.

---

***Increase the number  
of charging plugs  
by tenfold in the next  
3 years***---

## Reimagine the Gas System.

1.2 million customers use our gas system for heating, hot water, and cooking. They count on us for safe, reliable, and efficient energy, and we must create a cleaner path forward for them.

Our gas transition strategy starts with working with customers to reduce their gas consumption through energy efficiency, and moving them to electric appliances wherever possible. As new all-electric buildings come online, we'll

Con Edison Annual Report 2022

have the grid to support their needs. We'll work to electrify older building stock, including schools and public housing, with new technology like window-unit heat pumps. We're exploring the use of low-carbon fuels, specifically for hard-to-electrify customers and large commercial customers where electrification is not practical. All of these efforts support our goals of achieving net-zero greenhouse gas emissions by 2050.

## Lead by Reducing Our Carbon Footprint.

For the last two decades, we've steadfastly focused on greening our business. We've succeeded in reducing our carbon footprint, namely our directly-produced emissions, by more than 50% since 2005.

We're also working to eliminate methane emissions from our gas system, and to decarbonize our steam system, with a goal of net-zero emissions by 2040. Ultimately, we aim to power all our company facilities with 100% clean energy within the next decade.

We're making our commitment visible on the streets by purchasing only electric light-duty vehicles. We continue to look at alternative technologies to reduce fossil fuels for our truck fleet. Today, we're operating one of the nation's first all-electric bucket trucks. Another is expected to be delivered this year.

Power all our company facilities with 100% clean energy in the next decade

## PARTNER WITH OUR STAKEHOLDERS

Collaborations and partnerships with our stakeholders are the keys to uncovering different perspectives, limitless potential, and critical support.

## Diversity and Sustainability of Our Supply Chain.

Last year alone, we spent more than $420 million with minority- and women-owned businesses. We were proud to be named the 2022 Local Corporation of the Year by the New York & New Jersey Minority Supplier Development Council. We're a partner in the Clean Energy Academy, which prepares participants to enter the green-collar workforce as energy efficiency professionals. It's part of an ecosystem of programs we've developed called Green Energy Opportunities to support our commitment to supplier diversity and growing participation in our energy efficiency programs.

Spent $420 million with minority- and women-owned businesses in 2022

Con Edison Annual Report 2022

## Environmental Justice.

To deliver a more just energy future, we're focused on disadvantaged communities who have been overburdened by pollution. We advocate for and support community solar power programs. We've formed an Environmental Justice Working Group to bring an equity lens to all we do. This group complements our advocacy work at the state and federal levels, as well as our operational efforts, to ensure the costs and benefits of new investments are borne equitably.

## Charitable Giving.

To enhance the quality of life in our communities, we gave $12.6 million to more than 600 nonprofits in our service territory last year. Our support for environmental groups grew for the fifth year. Some of our beneficiaries include the NYC Wildflower Project, The Friends of the High Line, and the City Growers' Bee Corps youth program, which concentrate on biodiversity and fortifying ecosystems that protect life. Additionally, we connect our people with opportunities to give back through volunteering and by matching employee donations.

Gave $12.6 million to 600 nonprofits in 2022

## Our Dedicated and Diverse Workforce.

Our nearly 14,000 employees are at the heart of everything we do. Their unparalleled expertise drives our exceptional performance and successes. We're laser-focused on cultivating a more equitable, inclusive, and diverse culture, and increasing the representation of people of color and women from entry-level positions through corporate leadership. Con Edison has been recognized as a Forbes Best Company for Diversity and was named a Top 100 corporation by the Human Rights Campaign for adopting equitable workplace policies, practices, and benefits for LGTBQ+ employees.

## Financial Highlights 2022

![img-7.jpeg](img-7.jpeg)

Con Edison Annual Report 2022

## STRONG FINANCIAL OUTLOOK

Our fiscal discipline will continue to serve us well as we transition to the clean energy future and ensure our customers reap the long-term benefits of a cleaner, more equitable future. We are ready to deliver those needed investments and provide returns to you, our investors.

Our new rate cases for electric, gas, and steam services set up the structure for programs and finances over the next several years, positioning our company to remain competitive and keep our service reliable and efficient.

Still, the clean energy future will put pressure on customer bills. While these increases are burdensome, our efforts to create efficiencies and our thoughtful, consistent, clear communications, demonstrate our concern for customers. We're committed to keeping our customers informed about ways to manage bills, reduce energy use, and take advantage of bill relief and other incentive programs offered by the state. We will also pursue funding for some of the transition costs through federal and state tax incentives or grant programs in order to reduce costs for customers. Affordability remains an important part of our mission.

Strong corporate governance practices and our board with diverse skills, ethnicity, and gender makeup, will keep us sustainable and enable us to deliver great things.

Ever optimistic, I believe that the very best is yet to come. I'm confident Con Edison has the talent, technology, and tenacity to deliver a more equitable, clean energy future that's worthy of our customers and the great region we serve, now and for generations to come.

Thank you for your support.

Chairman, President, and Chief Executive Officer

Con Edison Annual Report 2022

# UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

# FORM 10-K

☒ Annual Report Pursuant To Section 13 or 15(d) of the Securities Exchange Act of 1934

FOR THE FISCAL YEAR ENDED DECEMBER 31, 2022

OR

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

For the transition period from __________ to __________

Commission File Number 1-14514

# Consolidated Edison, Inc.

Exact name of registrant as specified in its charter
and principal office address and telephone number

New York
State of Incorporation

13-3965100
I.R.S. Employer
ID. Number

4 Irving Place,
New York, New York 10003

(212) 460-4600

Commission File Number 1-1217

# Consolidated Edison Company of New York, Inc.

Exact name of registrant as specified in its charter
and principal office address and telephone number

New York
State of Incorporation

13-5009340
I.R.S. Employer
ID. Number

4 Irving Place,
New York, New York 10003

(212) 460-4600

CON EDISON ANNUAL REPORT 2022

1

## Securities Registered Pursuant to Section 12(b) of the Act:

| Title of each class | Trading Symbol | Name of each exchange on which registered |
| --- | --- | --- |
| Consolidated Edison, Inc., Common Shares ($.10 par value) | ED | New York Stock Exchange |

## Securities Registered Pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

| Consolidated Edison, Inc. (Con Edison) | Yes ☑ | No ☐ |
| --- | --- | --- |
| Consolidated Edison Company of New York, Inc. (CECONY) | Yes ☑ | No ☐ |

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

| Con Edison | Yes ☐ | No ☑ |
| --- | --- | --- |
| CECONY | Yes ☐ | No ☑ |

Indicate by check mark whether the 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 (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

| Con Edison | Yes ☑ | No ☐ |
| --- | --- | --- |
| CECONY | Yes ☑ | No ☐ |

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

| Con Edison | Yes ☑ | No ☐ |
| --- | --- | --- |
| CECONY | Yes ☑ | No ☐ |

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

| Con Edison |  |  |  |
| --- | --- | --- | --- |
| Large accelerated filer | ☑ | Accelerated filer | ☐ |
| Non-accelerated filer | ☐ | Smaller reporting company | ☐ |
|  |  | Emerging growth company | ☐ |
| CECONY |  |  |  |
| Large accelerated filer | ☐ | Accelerated filer | ☐ |
| Non-accelerated filer | ☑ | Smaller reporting company | ☐ |
|  |  | Emerging growth company | ☐ |

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.

| Con Edison | Yes ☑ | No ☐ |
| --- | --- | --- |
| CECONY | Yes ☑ | No ☐ |

2

CON EDISON ANNUAL REPORT 2022

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements.

Con Edison
CECONY

☐
Not Applicable

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant's executive officers during the relevant recovery period pursuant to §240.10D-1(b).

Con Edison
CECONY

☐
Not Applicable

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).

Con Edison
CECONY

Yes ☐ No ☒
Yes ☐ No ☒

The aggregate market value of the common equity of Con Edison held by non-affiliates of Con Edison, as of June 30, 2022, was approximately $33.7 billion.

As of January 31, 2023, Con Edison had outstanding 355,045,021 Common Shares ($.10 par value).

All of the outstanding common equity of CECONY is held by Con Edison.

### Documents Incorporated By Reference

Portions of Con Edison's definitive proxy statement for its Annual Meeting of Stockholders to be held on May 15, 2023, to be filed with the Commission pursuant to Regulation 14A, not later than 120 days after December 31, 2022, is incorporated in Part III of this report.

### Filing Format

This Annual Report on Form 10-K is a combined report being filed separately by two different registrants: Consolidated Edison, Inc. (Con Edison) and Consolidated Edison Company of New York, Inc. (CECONY). CECONY is a wholly-owned subsidiary of Con Edison and, as such, the information in this report about CECONY also applies to Con Edison. CECONY meets the conditions set forth in General Instruction (I)(1)(a) and (b) of Form 10-K and is therefore filing this Form 10-K with the reduced disclosure format.

As used in this report, the term the "Companies" refers to Con Edison and CECONY. However, CECONY makes no representation as to the information contained in this report relating to Con Edison or the subsidiaries of Con Edison other than itself.

CON EDISON ANNUAL REPORT 2022

3

# Glossary of Terms

The following is a glossary of abbreviations or acronyms that are used in the Companies' SEC reports:

## Con Edison Companies

| Con Edison | Consolidated Edison, Inc. |
| --- | --- |
| CECONY | Consolidated Edison Company of New York, Inc. |
| Clean Energy Businesses | Con Edison Clean Energy Businesses, Inc., together with its subsidiaries, including Consolidated Edison Development, Inc., Consolidated Edison Energy, Inc. and Consolidated Edison Solutions, Inc. |
| Con Edison Transmission | Con Edison Transmission, Inc., together with its subsidiaries |
| O&R | Orange and Rockland Utilities, Inc. |
| RECO | Rockland Electric Company |
| The Companies | Con Edison and CECONY |
| The Utilities | CECONY and O&R |

## Regulatory Agencies, Government Agencies and Other Organizations

| EPA | U.S. Environmental Protection Agency |
| --- | --- |
| FASB | Financial Accounting Standards Board |
| FERC | Federal Energy Regulatory Commission |
| IRS | Internal Revenue Service |
| NJBPU | New Jersey Board of Public Utilities |
| NJDEP | New Jersey Department of Environmental Protection |
| NYISO | New York Independent System Operator |
| NYPA | New York Power Authority |
| NYSDEC | New York State Department of Environmental Conservation |
| NYSDPS | New York State Department of Public Service |
| NYSERDA | New York State Energy Research and Development Authority |
| NYSPSC | New York State Public Service Commission |
| NYSRC | New York State Reliability Council, LLC |
| PJM | PJM Interconnection LLC |
| SEC | U.S. Securities and Exchange Commission |

## Accounting

| AFUDC | Allowance for funds used during construction |
| --- | --- |
| ASU | Accounting Standards Update |
| GAAP | Generally Accepted Accounting Principles in the United States of America |
| HLBV | Hypothetical Liquidation at Book Value |
| NOL | Net Operating Loss |
| OCI | Other Comprehensive Income |
| VIE | Variable Interest Entity |

4

CON EDISON ANNUAL REPORT 2022

## Environmental

| CO2 | Carbon dioxide |
| --- | --- |
| GHG | Greenhouse gases |
| MGP Sites | Manufactured gas plant sites |
| PCBs | Polychlorinated biphenyls |
| PRP | Potentially responsible party |
| RGGI | Regional Greenhouse Gas Initiative |
| Superfund | Federal Comprehensive Environmental Response, Compensation and Liability Act of 1980 and similar state statutes |

## Units of Measure

| AC | Alternating current |
| --- | --- |
| Bcf | Billion cubic feet |
| Dt | Dekatherms |
| kV | Kilovolt |
| kWh | Kilowatt-hour |
| MDt | Thousand dekatherms |
| Mlb | Thousands of pounds |
| MMlb | Million pounds |
| MVA | Megavolt ampere |
| MW | Megawatt or thousand kilowatts |
| MWh | Megawatt hour |

## Other

| AMI | Advanced Metering Infrastructure |
| --- | --- |
| CARES Act | Coronavirus Aid, Relief, and Economic Security Act, as enacted on March 27, 2020 |
| CLCPA | Climate Leadership and Community Protection Act |
| COSO | Committee of Sponsoring Organizations of the Treadway Commission |
| COVID-19 | Coronavirus Disease 2019 |
| DER | Distributed energy resources |
| Fitch | Fitch Ratings |
| LTIP | Long Term Incentive Plan |
| Moody's | Moody's Investors Service |
| S&P | S&P Global Ratings |
| TCJA | The federal Tax Cuts and Jobs Act of 2017, as enacted on December 22, 2017 |
| VaR | Value-at-Risk |

CON EDISON ANNUAL REPORT 2022

5

# TABLE OF CONTENTS

|  | PAGE |
| --- | --- |
| Introduction | 7 |
| Available Information | 9 |
| Forward-Looking Statements | 9 |
| Non-GAAP Financial Measures | 9 |
| Part I |  |
| Item 1: Business | 14 |
| Item 1A: Risk Factors | 44 |
| Item 1B: Unresolved Staff Comments | 48 |
| Item 2: Properties | 48 |
| Item 3: Legal Proceedings | 48 |
| Item 4: Mine Safety Disclosures | 48 |
| Information about our Executive Officers | 49 |
| Part II |  |
| Item 5: Market for the Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities | 50 |
| Item 6: [Reserved] | 51 |
| Item 7: Management's Discussion and Analysis of Financial Condition and Results of Operations | 52 |
| Item 7A: Quantitative and Qualitative Disclosures about Market Risk | 95 |
| Item 8: Financial Statements and Supplementary Data | 96 |
| Item 9: Changes in and Disagreements with Accountants on Accounting and Financial Disclosure | 200 |
| Item 9A: Controls and Procedures | 200 |
| Item 9B: Other Information | 200 |
| Item 9C: Disclosure Regarding Foreign Jurisdictions that Prevent Inspections | 200 |
| Part III |  |
| Item 10: Directors, Executive Officers and Corporate Governance | 201 |
| Item 11: Executive Compensation | 201 |
| Item 12: Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters | 201 |
| Item 13: Certain Relationships and Related Transactions, and Director Independence | 201 |
| Item 14: Principal Accounting Fees and Services | 201 |
| Part IV |  |
| Item 15: Exhibits and Financial Statement Schedules | 203 |
| Item 16: Form 10-K Summary | 209 |
| Signatures | 210 |

6

CON EDISON ANNUAL REPORT 2022

## Introduction

*This introduction contains certain information about Con Edison and its subsidiaries, including CECONY. This introduction is not a summary and should be read together with, and is qualified in its entirety by reference to, the more detailed information appearing elsewhere or incorporated by reference in this report.*

Con Edison's mission is to provide energy services to our customers safely, reliably, efficiently and in keeping with our vision for a clean energy future; to provide a workplace that embraces diversity and inclusion and allows employees to realize their full potential; to provide a fair return to our investors; and to improve the quality of life in the communities we serve. The company has ongoing programs designed to support each component of its mission, including initiatives focused on safety, operational excellence and the customer experience.

Con Edison is a holding company that owns:

- Consolidated Edison Company of New York, Inc. (CECONY), which provides electric service and gas service in New York City and Westchester County and steam service in parts of Manhattan;
- Orange & Rockland Utilities, Inc., which along with its NJ electric utility subsidiary, Rockland Electric Company (together referred to herein as O&R), provides electric service in southeastern NY and northern NJ and gas service in southeastern NY (O&R, together with CECONY referred to as the Utilities);
- Con Edison Clean Energy Businesses, Inc., which through its subsidiaries, develops, owns and operates renewable energy infrastructure projects and provides energy-related products and services to wholesale and retail customers (Con Edison Clean Energy Businesses, Inc., together with its subsidiaries referred to as the Clean Energy Businesses); see "Assets and Liabilities Held For Sale" in Note A and Note X to the financial statements in Item 8 for information about the anticipated sale of the Clean Energy Businesses; and
- Con Edison Transmission, Inc., which through its subsidiaries, invests in electric transmission projects supporting Con Edison's effort to transition to clean, renewable energy and through joint ventures manages both electric and gas assets while seeking to develop electric transmission projects (Con Edison Transmission, Inc., together with its subsidiaries referred to as Con Edison Transmission).

Con Edison anticipates that the Utilities, which are subject to extensive regulation, will continue to provide substantially all of its earnings over the next few years. The Utilities have approved rate plans that are generally designed to cover each company's cost of service, including capital and other costs of each company's energy delivery systems. The Utilities recover from their full-service customers (who purchase energy from them), generally on a current basis, the cost the Utilities pay for energy and charge all of their customers the cost of delivery service. See "Utility Regulation" in Item 1, "Risk Factors" in Item 1A, "Financial and Commodity Market Risks - Commodity Price Risk" in Item 7 and "Rate Plans" in Note B to the financial statements in Item 8.

## Significant Developments and Outlook

- Con Edison reported 2022 net income of $1,660 million or $4.68 a share compared with $1,346 million or $3.86 a share in 2021. Adjusted earnings were $1,620 million or $4.57 a share in 2022 compared with $1,528 million or $4.39 a share in 2021. See "Results of Operations" in Item 7 and "Non-GAAP Financial Measures," below.
- In 2022, the Utilities invested $4,001 million to upgrade and reinforce their energy delivery systems, the Clean Energy Businesses invested $399 million in renewable electric projects and Con Edison Transmission invested $65 million primarily in electric transmission. For 2023, 2024 and 2025 the Utilities expect to invest $4,675 million, $4,840 million and $4,957 million, respectively, for their energy delivery systems and Con Edison Transmission expects to invest $58 million, $6 million and $6 million, respectively, primarily in electric transmission. See "Capital Requirements and Resources - Capital Requirements" in Item 1.
- During the first nine months of 2022, Con Edison considered strategic alternatives with respect to the Clean Energy Businesses. In October 2022, following the conclusion of such review and to allow for continued focus on the Utilities and their clean energy transition, Con Edison entered into a purchase and sale agreement pursuant to which Con Edison agreed to sell the Clean Energy Businesses to RWE Renewables America, LLC, a subsidiary of RWE Aktiengesellschaft. The transaction is expected to close on or about the end of the first quarter of 2023, subject to satisfaction of certain conditions. The Clean Energy Businesses were classified as held for sale as of December 31, 2022. See "Assets and Liabilities Held for Sale" in Note A and Note X to the financial statements in Item 8.
- Con Edison plans to meet its capital requirements for 2023 through 2025 through internally-generated funds, the anticipated net proceeds from the sale of the Clean Energy Businesses and the issuance of long-term debt

CON EDISON ANNUAL REPORT 2022

7

and common equity. See “Capital Requirements and Resources - Capital Requirements” in Item 1. Subject to, and following the closing of the sale of the Clean Energy Businesses, Con Edison intends to repay $1,250 million of parent company debt in 2023, invest in the Utilities and repurchase up to $1,000 million of its common shares. In anticipation of the proceeds from the pending transaction, Con Edison intends to forego common equity issuances in 2023 and 2024 and plans on issuing up to $900 million of common equity in 2025. The company’s plans also include the issuance of up to $1,400 million of long-term debt at the Utilities in 2023 and approximately $2,600 million in aggregate of long-term debt, including for maturing securities, at the Utilities, during 2024 and 2025.

- • CECONY forecasts average annual increase in peak demand in its service area at design conditions over the next five years for electricity and gas to be approximately 0.6 percent and 1.0 percent, respectively and an average annual decrease in steam peak demand in its service area at design weather conditions over the next five years to be approximately 0.1 percent. O&R forecasts an average annual increase in electric peak demand in its service area at design conditions over the next five years to be approximately 0.4 percent and average annual decrease in gas peak demand in its service area over the next five years at design conditions to be approximately 0.1 percent. See 'The Utilities' in Item 1.
- • For the year ended December 31, 2022, CECONY and O&R issued total credits of approximately \$360 million and \$6 million, respectively, towards reducing customers' accounts receivable balances pursuant to COVID-19 arrears assistance programs. See 'COVID-19 Regulatory Matters' in Note B to the financial statements in Item 8.
- • Pursuant to their current electric and gas rate plans, CECONY and O&R recorded \$53 million (\$39 million after-tax) and \$3 million (\$2 million after-tax) of revenues for the year ended December 31, 2022, respectively, of earnings adjustment mechanisms and positive incentives, primarily reflecting the achievement of certain energy efficiency measures, as compared with \$92 million (\$68 million after-tax) and \$2 million (\$2 million after-tax) for CECONY and O&R, respectively, for the year ended December 31, 2021 and \$50 million (\$37 million after-tax) and \$3 million (\$2 million after-tax) for CECONY and O&R, respectively, for the year ended December 31, 2020. See 'Rate Plans' in Note B to the financial statements in Item 8.
- • The New York State Public Service Commission (NYSPSC) continued its focused operations audit of the Utilities related to income tax accounting. The audit is investigating the Utilities' inadvertent understatement of a portion, the amount of which may be material, of their calculation of total federal income tax expense for ratemaking purposes. The understatement was related to the calculation of plant retirement-related cost of removal. See 'Other Regulatory Matters' in Note B to the financial statements in Item 8.
- • In November 2022, as updated in February 2023, CECONY filed a request with the NYSPSC for a steam rate increase of \$141 million, effective November 2023. See 'Rate Plans' in Note B to the financial statements in Item 8.
- • In February 2023, CECONY, the New York State Department of Public Service (NYSDPS) and other parties entered into a Joint Proposal for CECONY electric and gas rate plans for the three-year period from January 2023 through December 2025. The Joint Proposal is subject to NYSPSC approval. See 'Rate Plans' in Note B to the financial statements in Item 8.
- • In January 2023, the NYSPSC issued an order implementing a Phase 2 COVID-19 arrears assistance program that provides credits towards reducing the arrears balances of residential and small commercial electric and gas customers of CECONY and O&R. At the time the order was issued, CECONY's and O&R's eligible arrears balances were estimated to be approximately \$389 million and \$3 million, respectively. The order authorizes a surcharge mechanism for recovery of the eligible credit amounts over a ten-year period commencing after credits are issued for CECONY and over a one-year period commencing after credits are issued for O&R. Pursuant to the order, CECONY and O&R agreed not to seek recovery of incremental financing costs incurred associated with arrears from March 2020 through December 2022 estimated to be \$46 million, most of which is attributable to CECONY. To facilitate implementation, CECONY and O&R agreed to suspend residential terminations for non-payment through March 1, 2023 or 30 days after credits have been applied, whichever is later. See 'COVID-19 Regulatory Matters' in Note B to the financial statements in Item 8.

8

CON EDISON ANNUAL REPORT 2022

## Available Information

Con Edison and CECONY file annual, quarterly and current reports and other information, and Con Edison files proxy statements, with the Securities and Exchange Commission (SEC). The SEC maintains an Internet site at www.sec.gov that contains reports, proxy statements, and other information regarding issuers (including Con Edison and CECONY) that file electronically with the SEC.

This information the Companies file with the SEC is also available free of charge on or through the investor information section of their websites as soon as reasonably practicable after the reports are electronically filed with, or furnished to, the SEC. Con Edison's internet website is at: www.conedison.com; and CECONY's is at: www.coned.com.

The 'About Us - Corporate Governance' section of Con Edison's website includes the company's Standards of Business Conduct (its code of ethics) and amendments or waivers of the standards for executive officers or directors, corporate governance guidelines and the charters of the following committees of the company's Board of Directors: Audit Committee, Corporate Governance and Nominating Committee, Management Development and Compensation Committee, and Safety, Environment, Operations, and Sustainability Committee. This information is available in print to any shareholder who requests it. Requests should be directed to: Corporate Secretary, Consolidated Edison, Inc., 4 Irving Place, New York, NY 10003.

The 'About Us - Sustainability Report' section of Con Edison's website includes 'Leading the Clean Energy Transition,' the company's 2021 sustainability report.

Information on the Companies' websites is not incorporated herein.

## Forward-Looking Statements

This report contains forward-looking statements that are intended to qualify for the safe-harbor provisions of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are statements of future expectation and not facts. Words such as 'forecasts,' 'expects,' 'estimates,' 'anticipates,' 'intends,' 'believes,' 'plans,' 'will,' 'target,' 'guidance,' 'potential,' 'consider' and similar expressions identify forward-looking statements. The forward-looking statements reflect information available and assumptions at the time the statements are made, and accordingly, speak only as of that time. Actual results or developments might differ materially from those included in the forward-looking statements because of various factors including, but not limited to, those discussed under 'Risk Factors,' in Item 1A.

## Non-GAAP Financial Measures

Adjusted earnings and adjusted earnings per share are financial measures that are not determined in accordance with generally accepted accounting principles in the United States of America (GAAP). These non-GAAP financial measures should not be considered as an alternative to net income for common stock or net income per share, respectively, each of which is an indicator of financial performance determined in accordance with GAAP. Adjusted earnings and adjusted earnings per share exclude from net income and net income per share, respectively, certain other items that the company does not consider indicative of its ongoing financial performance. Management uses these non-GAAP financial measures to facilitate the analysis of the company's financial performance as compared to its internal budgets and previous financial results and to communicate to investors and others the company's expectations regarding its future earnings and dividends on its common stock. Management believes that these non-GAAP financial measures are also useful and meaningful to investors to facilitate their analysis of the company's financial performance. The following table is a reconciliation of Con Edison's reported net income for common stock to adjusted earnings and reported earnings per share to adjusted earnings per share.

CON EDISON ANNUAL REPORT 2022

9

(Millions of Dollars, except per share amounts)

|  | 2020 | 2021 | 2022 |
| --- | --- | --- | --- |
| Reported net income for common stock - GAAP basis | $1,101 | $1,346 | $1,660 |
| Impact of the anticipated sale of the Clean Energy Businesses (pre-tax) (a) (b) | - | - | (13) |
| Income taxes (c) | - | - | 127 |
| Impact of the anticipated sale of the Clean Energy Businesses (net of tax) (a) (b) | - | - | 114 |
| HLBV effects (pre-tax) (d) | 44 | (142) | (61) |
| Income taxes (e) | (12) | 44 | 19 |
| HLBV effects (net of tax) (d) | 32 | (98) | (42) |
| Net mark-to-market effects (pre-tax) | 57 | (53) | (181) |
| Income taxes (f) | (14) | 16 | 56 |
| Net mark-to-market effects (net of tax) | 43 | (37) | (125) |
| Loss from sale of a renewable electric project (pre-tax) | - | 4 | - |
| Income taxes (g) | - | (1) | - |
| Loss from sale of a renewable electric project (net of tax) | - | 3 | - |
| Remeasurement of deferred state taxes related to prior year dispositions (net of federal taxes) | - | - | 13 |
| Remeasurement of deferred state taxes related to prior year dispositions (net of federal taxes) | - | - | 13 |
| Impairment loss related to investment in Stagecoach Gas Services LLC (pre-tax) (h) | - | 212 | - |
| Income taxes (g) | - | (65) | - |
| Impairment loss related to investment in Stagecoach Gas Services LLC (net of tax) (h) | - | 147 | - |
| Impairment loss related to investment in Honeoye Storage Corporation (pre-tax) (i) | - | 5 | - |
| Income taxes | - | - | - |
| Impairment loss related to investment in Honeoye Storage Corporation (net of tax) (i) | - | 5 | - |
| Impairment loss related to investment in Mountain Valley Pipeline, LLC (pre-tax) (j) | 320 | 231 | - |
| Income taxes (g) | (97) | (69) | - |
| Impairment loss related to investment in Mountain Valley Pipeline, LLC (net of tax) (j) | 223 | 162 | - |
| Adjusted earnings (Non-GAAP) | $1,399 | $1,528 | $1,620 |
| Reported earnings per share - GAAP basis (basic) | $3.29 | $3.86 | $4.68 |
| Impact of the anticipated sale of the Clean Energy Businesses (pre-tax) (a) (b) | - | - | (0.03) |
| Income taxes (c) | - | - | 0.35 |
| Impact of the anticipated sale of the Clean Energy Businesses (net of tax) (a) (b) | - | - | 0.32 |
| HLBV effects (pre-tax) (d) | 0.14 | (0.41) | (0.17) |
| Income taxes (e) | (0.04) | 0.12 | 0.05 |
| HLBV effects (net of tax) (d) | 0.10 | (0.29) | (0.12) |
| Net mark-to-market effects (pre-tax) | 0.18 | (0.15) | (0.51) |
| Income taxes (f) | (0.05) | 0.05 | 0.16 |
| Net mark-to-market effects | 0.13 | (0.10) | (0.35) |
| Loss from sale of a renewable electric project (pre-tax) | - | 0.01 | - |
| Income taxes (g) | - | - | - |
| Loss from sale of a renewable electric project (net of tax) | - | 0.01 | - |
| Remeasurement of deferred state taxes related to prior year dispositions (net of federal taxes) | - | - | 0.04 |
| Remeasurement of deferred state taxes related to prior year dispositions (net of federal taxes) | - | - | 0.04 |
| Impairment loss related to investment in Stagecoach Gas Services LLC (pre-tax) (h) | - | 0.61 | - |
| Income taxes (g) | - | (0.19) | - |
| Impairment loss related to investment in Stagecoach Gas Services LLC (net of tax) (h) | - | 0.42 | - |
| Impairment loss related to investment in Honeoye Storage Corporation (pre-tax) (i) | - | 0.02 | - |
| Income taxes | - | - | - |
| Impairment loss related to investment in Honeoye Storage Corporation (net of tax) (i) | - | 0.02 | - |
| Impairment loss related to investment in Mountain Valley Pipeline, LLC (pre-tax) (j) | 0.95 | 0.66 | - |
| Income taxes (g) | (0.29) | (0.19) | - |
| Impairment loss related to investment in Mountain Valley Pipeline, LLC (net of tax) (j) | 0.66 | 0.47 | - |
| Adjusted earnings per share (Non-GAAP) | $4.18 | $4.39 | $4.57 |

10

CON EDISON ANNUAL REPORT 2022

years to be approximately 0.6 percent per year, including the effect of certain electric energy efficiency programs and the anticipated phase-out of natural gas in certain new construction buildings, including major renovations, in New York City. See “Environmental Matters - Clean Energy Future,” below. The five-year forecast in peak demand is used by the company for electric supply planning purposes.

### ***Electric Supply***

Most of the electricity sold by CECONY to its full-service customers in 2022 was purchased under firm power contracts or through the wholesale electricity market administered by the NYISO. The company expects that these resources will again be adequate to meet the requirements of its customers in 2023. The company plans to meet its continuing obligation to supply electricity to its full-service customers through a combination of electricity purchased under contracts, purchased through the NYISO’s wholesale electricity market, or generated from its electricity generating facilities. For information about the company’s contracts for electric generating capacity, see Notes I and Q to the financial statements in Item 8. To reduce the volatility of its full-service customers’ electric energy costs, the company has contracts to purchase electric energy and enters into derivative transactions to hedge the costs of a portion of its expected purchases under these contracts and through the NYISO’s wholesale electricity market.

CECONY owns generating stations in New York City associated primarily with its steam system. The generating stations have a combined electric nameplate capacity of approximately 780 MW. For information about electric generating capacity owned by the company, see “Electric Operations - Electric Facilities - Generating Facilities,” above.

In general, the Utilities recover their costs of purchasing power for full-service customers, including the cost of hedging purchase prices, pursuant to rate provisions approved by the state public utility regulatory authority having jurisdiction. See “Financial and Commodity Market Risks - Commodity Price Risk” in Item 7 and “Recoverable Energy Costs” in Note A to the financial statements in Item 8.

CECONY monitors the adequacy of the electric capacity resources and related developments in its service area, and works with other parties on long-term resource adequacy within the framework of the NYISO reliability planning process. The NYISO process includes obligations on transmission owners (such as CECONY) to construct facilities that may be needed for system reliability if the market does not solve a reliability need identified by the NYISO. See “New York Independent System Operator,” above. In a July 1998 order, the NYSPSC indicated that it “agree(s) generally that CECONY need not plan on constructing new generation as the competitive market develops,” but considers “overly broad” and did not adopt CECONY’s request for a declaration that, solely with respect to providing generating capacity, it will no longer be required to engage in long-range planning to meet potential demand and, in particular, that it will no longer have the obligation to construct new generating facilities, regardless of the market price of capacity.

In 2019, the New York State Department of Environmental Conservation issued regulations that may require the retirement or seasonal unavailability of fossil-fueled electric generating units owned by CECONY and others in New York City. Compliance with the rule would impact approximately 1,400 MW of generating units in CECONY’s service territory, of which 54 MW are owned by CECONY. Two CECONY units, Hudson Avenue GT 3 and GT 5 (33 MW nameplate) were retired in November 2022. In January 2021, CECONY updated its Local Transmission Plan (LTP) to address identified reliability needs on its local system resulting from the regulation through the construction of three transmission projects, the Reliable Clean City (RCC) projects. In April 2021, the NYSPSC approved CECONY’s December 2020 petition to recover $780 million of costs to construct the RCC projects to solve the local reliability needs. NYISO’s 2022 Reliability Needs Assessment concluded that, while reliability margins are sufficient statewide through year 2032, the margins within New York City are very narrow in 2025. NYISO continues to monitor system reliability margins and CECONY would propose solutions in a future LTP if needs arise in its service territory.

### ***Gas Operations***

#### ***Gas Facilities***

CECONY’s capitalized costs for utility plant, net of accumulated depreciation, for gas facilities, which are primarily distribution facilities, were $10,567 million and $9,748 million at December 31, 2022 and 2021, respectively.

Natural gas is delivered by pipeline to CECONY at various points in or near its service territory and is distributed to customers by the company through an estimated 4,359 miles of mains and 377,741 service lines. The company owns a natural gas liquefaction facility and storage tank at its Astoria property in Queens, NY. The plant can store 1,062 MDt of which a maximum of about 240 MDt can be withdrawn per day. The company has approximately 1,226 MDt of additional natural gas storage capacity available to it at a field in upstate NY, owned and operated by Honeoye Storage Corporation, a corporation 71.2 percent owned by CET and 28.8 percent owned by CECONY.

CON EDISON ANNUAL REPORT 2022

21

## Gas Sales and Deliveries

CECONY delivers gas to its full-service customers who purchase gas from the company. The company generally recovers the cost of the gas that it buys and then sells to its full-service customers. It does not make any margin or profit on the gas it sells. Under the company's retail choice program, CECONY also delivers gas to its customers who choose to purchase gas from other suppliers. CECONY's gas delivery revenues are subject to a weather normalization clause and a revenue decoupling mechanism. As a result, its gas delivery revenues are generally not affected by changes in delivery volumes from levels assumed when rates were approved. CECONY's gas sales and deliveries for the last five years were:

|  | Year Ended December 31, |  |  |  |  |
| --- | --- | --- | --- | --- | --- |
|  | 2018 | 2019 | 2020 | 2021 | 2022 |
| Gas Delivered (MDt) |  |  |  |  |  |
| Firm sales |  |  |  |  |  |
| Full service | 92,305 | 87,637 | 78,515 | 81,637 | 85,246 |
| Delivery service for firm retail choice customers | 82,472 | 81,710 | 76,614 | 76,765 | 75,172 |
| Total Firm Sales | 174,777 | 169,347 | 155,129 | 158,402 | 160,418 |
| Interruptible sales (a) | 7,351 | 9,903 | 8,482 | 5,927 | 6,098 |
| Total Gas Delivered to CECONY Customers | 182,128 | 179,250 | 163,611 | 164,329 | 166,516 |
| Transportation of customer-owned gas |  |  |  |  |  |
| NYPA | 34,079 | 39,643 | 41,577 | 43,094 | 45,085 |
| Other (mainly generating plants and interruptible transportation) | 93,346 | 72,712 | 70,537 | 67,871 | 72,448 |
| Off-system sales | 195 | 12 | 12 | 12 | 12 |
| Total Sales | 309,748 | 291,617 | 275,737 | 275,306 | 284,061 |
| Gas Delivered ($ in millions) |  |  |  |  |  |
| Firm sales |  |  |  |  |  |
| Full service | $1,356 | $1,327 | $1,229 | $1,473 | $1,850 |
| Delivery service for firm retail choice customers | 595 | 593 | 649 | 704 | 798 |
| Total Firm Sales | 1,951 | 1,920 | 1,878 | 2,177 | 2,648 |
| Interruptible sales | 40 | 42 | 27 | 29 | 51 |
| Total Gas Delivered to CECONY Customers | 1,991 | 1,962 | 1,905 | 2,206 | 2,699 |
| Transportation of customer-owned gas |  |  |  |  |  |
| NYPA | 2 | 2 | 2 | 2 | 2 |
| Other (mainly generating plants and interruptible transportation) | 57 | 54 | 55 | 59 | 64 |
| Other operating revenues (mainly regulatory amortizations) | 28 | 114 | 74 | 111 | 159 |
| Total Sales | $2,078 | $2,132 | $2,036 | $2,378 | $2,924 |
| Average Revenue per Dt Sold |  |  |  |  |  |
| Residential | $16.71 | $17.33 | $18.59 | $20.71 | $24.67 |
| General | $11.31 | $11.55 | $10.77 | $13.67 | $17.17 |

(a) Includes 3,326, 5,484, 3,510, 1,920 and 2,015 MDt for 2018, 2019, 2020, 2021 and 2022, respectively, which are also reflected in delivery service for firm retail choice customers and other.

For further discussion of the company's gas operating revenues and its gas results, see 'Results of Operations' in Item 7. For additional segment information, see Note P to the financial statements in Item 8.

## Gas Peak Demand

The gas actual peak day demand for firm gas customers in CECONY's service area occurs during the winter heating season and during the winter of 2022/2023 (through January 31, 2023) occurred on December 24, 2022 when the firm gas customers' demand reached approximately 1,261 MDt. 'Design Weather Conditions' for the gas system is a standard to which the actual peak demand is adjusted for evaluation and planning purposes. The company estimates that, under Design Weather Conditions, the 2023/2024 service area peak day demand for firm gas customers will be 1,684 MDt. The forecasted peak day demand for firm gas customers at design conditions does not include gas used by interruptible gas customers including electric and steam generating stations. As of January 2023, the company forecasts an average annual increase of the gas peak day demand for firm gas customers over the next five years at design conditions to be approximately 1.0 percent in its service area, including the effect of certain gas energy efficiency programs and the anticipated phase-out of natural gas in certain new construction buildings, including major renovations, in New York City. See 'Environmental Matters - Clean Energy Future,' below. The five-year forecast in peak demand is used by the company for gas supply planning purposes.

22 CON EDISON ANNUAL REPORT 2022

In March 2019, due to gas supply constraints, CECONY established a temporary moratorium on new applications for firm gas service in most of Westchester County. In July 2020, CECONY filed a gas planning analysis with the NYSPSC that stated the moratorium could be lifted when increased pipeline capacity is achieved upon completion of Tennessee Gas Pipeline's East 300 Upgrade Project (the East 300 Upgrade Project) or peak demand is reduced through efficiency and other demand side reductions to a level that would enable CECONY to lift the moratorium. The East 300 Upgrade Project would involve modifying two existing compressor stations in Pennsylvania and NJ and construction of one new compressor station in NJ. In April 2022, FERC issued a certificate of public convenience and necessity that authorizes Tennessee Gas Pipeline to construct and operate the East 300 Upgrade Project. In October 2022 and February 2023, FERC approved Tennessee Gas Pipeline's requests to begin construction activities for: (1) the existing compressor station in Pennsylvania and the new compressor station in NJ and (2) the existing compressor station in NJ, respectively. Tennessee Gas Pipeline's East 300 Upgrade Project is expected to be completed by November 2023.

CECONY's gas planning analysis also stated that the company is monitoring a gas supply constraint for the New York City portion of its service territory. In May 2022, the NYSPSC issued orders on gas planning and moratorium management. The orders set forth a schedule for filing future gas planning analyses and the process for initiating, operating and lifting a natural gas moratorium.

### Gas Supply

CECONY and O&R have combined their gas requirements, and contracts to meet those requirements, into a single portfolio. The combined portfolio is administered by, and related management services are provided by, CECONY (for itself and as agent for O&R) and costs are allocated between the Utilities in accordance with provisions approved by the NYSPSC. See Note U to the financial statements in Item 8.

Charges from suppliers for the firm purchase of gas, which are based on formulas or indexes or are subject to negotiation, are generally designed to approximate market prices. The Utilities have contracts with interstate pipeline companies for the purchase of firm transportation from upstream points where gas has been purchased to the Utilities' distribution systems, and for upstream storage services. Charges under these transportation and storage contracts are approved by the FERC. The Utilities are required to pay certain fixed charges under the supply, transportation and storage contracts whether or not the contracted capacity is actually used. These fixed charges amounted to approximately $385.7 million in 2022, including $340.2 million for CECONY. See 'Contractual Obligations,' below. At December 31, 2022, the contracts were for various terms extending to 2025 for supply and 2043 for transportation and storage. In addition, the Utilities purchase gas on the spot market and contract for interruptible gas transportation. See 'Recoverable Energy Costs' in Note A, Note Q and Note U to the financial statements in Item 8.

### Steam Operations

#### Steam Facilities

CECONY's capitalized costs for utility plant, net of accumulated depreciation, for steam facilities, including steam's portion of the steam-electric generation facilities, were $1,962 million and $1,924 million at December 31, 2022 and 2021, respectively. See 'CECONY - Electric Operations - Electric Facilities,' above.

CECONY generates steam at one steam-electric generating station and four steam-only generating stations and distributes steam to its customers through approximately 106 miles of transmission, distribution and service piping.

CON EDISON ANNUAL REPORT 2022

23

## Steam Sales and Deliveries

CECONY's steam sales and deliveries for the last five years were:

|  | Year Ended December 31, |  |  |  |  |
| --- | --- | --- | --- | --- | --- |
|  | 2018 | 2019 | 2020 | 2021 | 2022 |
| Steam Sold (MMlb) |  |  |  |  |  |
| General | 593 | 536 | 445 | 504 | 513 |
| Apartment house | 6,358 | 5,919 | 5,131 | 5,013 | 5,122 |
| Annual power | 14,811 | 13,340 | 10,977 | 11,367 | 11,792 |
| Total Steam Delivered to CECONY Customers | 21,762 | 19,795 | 16,553 | 16,884 | 17,427 |
| Steam Sold ($ in millions) |  |  |  |  |  |
| General | $30 | $27 | $23 | $25 | $27 |
| Apartment house | 174 | 160 | 136 | 137 | 155 |
| Annual power | 441 | 395 | 321 | 340 | 391 |
| Other operating revenues | (14) | 45 | 28 | 30 | 20 |
| Total Steam Delivered to CECONY Customers | $631 | $627 | $508 | $532 | $593 |
| Average Revenue per Mlb Sold | $29.64 | $29.40 | $29.00 | $29.73 | $32.88 |

For further discussion of the company's steam operating revenues and its steam results, see 'Results of Operations' in Item 7. For additional segment information, see Note P to the financial statements in Item 8.

## Steam Peak Demand and Capacity

The steam actual hourly peak demand in CECONY's service area occurs during the winter heating season and during the winter of 2022/2023 (through January 31, 2023) occurred on December 24, 2022 when the actual hourly demand reached approximately 6.7 MMlb per hour. 'Design Weather Conditions' for the steam system is a standard to which the actual hourly peak demand is adjusted for evaluation and planning purposes. The company's estimate for the winter of 2023/2024 hourly peak demand of its steam customers is about 7.9 MMlb per hour under Design Weather Conditions. The company forecasts an average annual decrease in steam hourly peak demand in its service area at Design Weather Conditions over the next five years to be approximately 0.1 percent.

On December 31, 2022, the steam system was capable of delivering approximately 11.4 MMlb of steam per hour, and CECONY estimates that the system will have the same capability in the 2023/2024 winter.

## Steam Supply

31 percent of the steam produced by CECONY in 2022 was supplied by the company's steam-only generating assets; 49 percent was produced by the company's steam-electric generating assets, where steam and electricity are primarily cogenerated; and 20 percent was purchased under an agreement with Brooklyn Navy Yard Cogeneration Partners L.P.

## O&R

### Electric Operations

#### Electric Facilities

O&R's capitalized costs for utility plant, net of accumulated depreciation, for distribution facilities were $1,215 million and $1,178 million at December 31, 2022 and 2021, respectively. For its transmission facilities, the costs for utility plant, net of accumulated depreciation, were $307 million and $297 million at December 31, 2022 and 2021, respectively.

O&R and RECO own, in whole or in part, transmission and distribution facilities which include 543 circuit miles of transmission lines, 15 transmission substations, 63 distribution substations, 87,951 in-service line transformers, 3,869 pole miles of overhead distribution lines and 2,320 miles of underground distribution lines. O&R's transmission system is part of the NYISO system except that portions of RECO's system are located within the transmission area controlled by PJM.

#### Electric Sales and Deliveries

O&R delivers electricity to its full-service customers who purchase electricity from the company. Under the company's retail choice program, O&R also delivers electricity to its customers who purchase electricity from load serving entities.

The company charges all customers in its service area for the delivery of electricity. O&R generally recovers, on a current basis, the cost of the electricity that it buys and then sells to its full-service customers. It does not make any margin or profit on the electricity it sells. O&R's NY electric revenues (which accounted for 78 percent of O&R's

24 CON EDISON ANNUAL REPORT 2022

electric revenues in 2022) are subject to a revenue decoupling mechanism. As a result, O&R's NY electric delivery revenues are generally not affected by changes in delivery volumes from levels assumed when rates were approved. Effective July 2021, the majority of O&R's electric distribution revenues in NJ are subject to a conservation incentive program, as a result of which distribution revenues are generally not affected by changes in delivery volumes from levels assumed when rates were approved. O&R's electric sales and deliveries for the last five years were:

|  | Year Ended December 31, |  |  |  |  |
| --- | --- | --- | --- | --- | --- |
|  | 2018 | 2019 | 2020 | 2021 | 2022 |
| Electric Energy Delivered (millions of kWh) |  |  |  |  |  |
| Total deliveries to O&R full service customers | 2,643 | 2,617 | 2,712 | 2,702 | 2,973 |
| Delivery service for retail choice customers | 2,974 | 2,885 | 2,622 | 2,839 | 2,580 |
| Total Deliveries in Franchise Area | 5,617 | 5,502 | 5,334 | 5,541 | 5,553 |
| Electric Energy Delivered ($ in millions) |  |  |  |  |  |
| Total deliveries to O&R full service customers | $453 | $429 | $442 | $453 | $576 |
| Delivery service for retail choice customers | 201 | 191 | 186 | 223 | 198 |
| Other operating revenues | (12) | 14 | 1 | 5 | (1) |
| Total Deliveries in Franchise Area | $642 | $634 | $629 | $681 | $773 |
| Average Revenue Per kWh Sold (Cents) |  |  |  |  |  |
| Residential | 19.1 | 18.2 | 17.8 | 19.0 | 21.5 |
| Commercial and Industrial | 14.4 | 13.9 | 14.2 | 13.0 | 15.6 |

For further discussion of the company's electric operating revenues and its electric results, see 'Results of Operations' in Item 7. For additional segment information, see Note P to the financial statements in Item 8.

### **Electric Peak Demand**

The electric peak demand in O&R's service area occurs during the summer air conditioning season. The weather during the summer of 2022 was cooler than design conditions. O&R's 2022 service area actual hourly peak demand was 1,457 MW, which occurred on August 9, 2022. 'Design Weather Conditions' for the electric system is a standard to which the actual hourly peak demand is adjusted for evaluation and planning purposes. Since NYISO-invoked demand reduction programs can only be called upon under specific circumstances, Design Weather Conditions do not include these programs' potential impact. However, the O&R forecasted hourly peak demand at design conditions does include the impact of certain demand reduction programs. The company estimates that, under Design Weather Conditions, the 2023 service area peak demand will be 1,545 MW. The company forecasts an average annual increase in hourly electric peak demand in its service area at design conditions over the next five years to be approximately 0.4 percent, including the effect of certain electric energy efficiency programs and distributed generation additions. The five-year forecast in peak demand is used by the company for electric supply planning purposes.

### **Electric Supply**

The electricity O&R sold to its full-service customers in 2022 was purchased under firm power contracts or through the wholesale electricity market. The company expects that these resources will again be adequate to meet the requirements of its customers in 2023. O&R does not own any electric generating capacity. The company plans to meet its continuing obligation to supply electricity to its customers through a combination of electricity purchased under contracts or purchased through the wholesale electricity market. To reduce the volatility of its customers' electric energy costs, the company has contracts to purchase electric energy and enters into derivative transactions to hedge the costs of a portion of its expected purchases. For information about the company's contracts, see Note Q to the financial statements in Item 8.

In general, the Utilities recover their costs of purchasing power for full service customers, including the cost of hedging purchase prices, pursuant to rate provisions approved by the state public utility regulatory authority having jurisdiction. See 'Financial and Commodity Market Risks - Commodity Price Risk,' in Item 7 and 'Recoverable Energy Costs' in Note A to the financial statements in Item 8. From time to time, certain parties have petitioned the NYSPSC to review these provisions, the elimination of which could have a material adverse effect on the Companies' financial position, results of operations or liquidity.

### **Gas Operations**

#### **Gas Facilities**

O&R's capitalized costs for utility plant, net of accumulated depreciation for gas facilities, which are primarily distribution facilities, were $759 million and $725 million at December 31, 2022 and 2021, respectively. Natural gas

CON EDISON ANNUAL REPORT 2022

25

is delivered by pipeline to O&R at various points in or near its service territory and is distributed to customers by the company through an estimated 1,887 miles of mains and 106,855 service lines.

### Gas Sales and Deliveries

O&R delivers gas to its full-service customers who purchase gas from the company. O&R generally recovers the cost of the gas that it buys and then sells to its full-service customers. It does not make any margin or profit on the gas it sells. Under the company's retail choice program, O&R also delivers gas to its customers who choose to purchase gas from other suppliers. O&R's gas delivery revenues are subject to a weather normalization clause and to a revenue decoupling mechanism. As a result, its gas delivery revenues are generally not affected by changes in delivery volumes from levels assumed when rates were approved. O&R's gas sales and deliveries for the last five years were:

|  | Year Ended December 31, |  |  |  |  |
| --- | --- | --- | --- | --- | --- |
|  | 2018 | 2019 | 2020 | 2021 | 2022 |
| Gas Delivered (MDt) |  |  |  |  |  |
| Firm sales |  |  |  |  |  |
| Full service | 12,050 | 12,537 | 11,877 | 13,998 | 15,353 |
| Delivery service for firm retail choice customers | 9,950 | 9,459 | 8,271 | 7,584 | 6,396 |
| Total Firm Sales | 22,000 | 21,996 | 20,148 | 21,582 | 21,749 |
| Interruptible sales | 3,746 | 3,668 | 3,633 | 3,821 | 3,911 |
| Total Gas Delivered to O&R Customers | 25,746 | 25,664 | 23,781 | 25,403 | 25,660 |
| Transportation of customer-owned gas |  |  |  |  |  |
| Sales for resale | 959 | 914 | 658 | 468 | 673 |
| Sales to electric generating stations | 1 | 4 | 59 | 26 | 10 |
| Off-system sales | 15 | 1 | 19 | 81 | 73 |
| Total Sales | 26,721 | 26,583 | 24,517 | 25,978 | 26,416 |

|  | Year Ended December 31, |  |  |  |  |
| --- | --- | --- | --- | --- | --- |
|  | 2018 | 2019 | 2020 | 2021 | 2022 |
| Gas Delivered ($ in millions) |  |  |  |  |  |
| Firm sales |  |  |  |  |  |
| Full service | $166 | $161 | $141 | $190 | $245 |
| Delivery service for firm retail choice customers | 78 | 63 | 62 | 55 | 45 |
| Total Firm Sales | 244 | 224 | 203 | 245 | 290 |
| Interruptible Sales | 6 | 6 | 6 | 6 | 6 |
| Total Gas Delivered to O&R Customers | 250 | 230 | 209 | 251 | 296 |
| Transportation of customer-owned gas |  |  |  |  |  |
| Sales to electric generating stations | - | - | - | - | - |
| Other operating revenues | (1) | 29 | 24 | 9 | 16 |
| Total Sales | $249 | $259 | $233 | $260 | $312 |
| Average Revenue Per Dt Sold |  |  |  |  |  |
| Residential | $14.22 | $13.32 | $12.40 | $14.09 | $16.49 |
| General | $11.80 | $10.68 | $9.51 | $11.24 | $13.62 |

For further discussion of the company's gas operating revenues and its gas results, see 'Results of Operations' in Item 7. For additional segment information, see Note P to the financial statements in Item 8.

### Gas Peak Demand

The gas actual peak day demand for firm sales customers in O&R's service area occurs during the winter heating season and during the winter of 2022/2023 (through January 31, 2023) occurred on December 24, 2022 when the firm sales customers' demand reached approximately 185 MDt. 'Design Weather Conditions' for the gas system is a standard to which the actual peak demand is adjusted for evaluation and planning purposes. The company estimates that, under Design Weather Conditions, the 2023/2024 service area peak day demand for firm sales customers will be 241 MDt. The forecasted peak day demand at design conditions does not include gas used by interruptible gas customers including electric generating stations. The company forecasts an average annual decrease of the gas peak day demand for firm sales customers over the next five years at design conditions to be approximately 0.1 percent in its service area, including the effect of certain gas energy efficiency programs. The five-year forecast in peak demand is used by the company for gas supply planning purposes.

26 CON EDISON ANNUAL REPORT 2022

### Gas Supply

O&R and CECONY have combined their gas requirements and purchase contracts to meet those requirements into a single portfolio. See “CECONY - Gas Operations - Gas Supply” above.

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## Clean Energy Businesses

The following table provides information about the Clean Energy Businesses' renewable electric projects that are in operation and/or in construction at December 31, 2022. Unless otherwise noted, the projects listed in the table below or the Clean Energy Businesses' equity interest in these projects have been pledged as security for project debt financing. In October 2022, Con Edison entered into a purchase and sale agreement pursuant to which Con Edison agreed to sell the Clean Energy Businesses to RWE Renewables America, LLC, a subsidiary of RWE Aktiengesellschaft. The Clean Energy Businesses were classified as held for sale as of December 31, 2022. See 'Assets and Liabilities Held for Sale' in Note A and Note X to the financial statements in Item 8.

| Project Name | Generating Capacity (MW AC) | Power Purchase Agreement (PPA) Term (in Years) (a) | Actual In-Service/ Acquisition Date | State | PPA Counterparty |
| --- | --- | --- | --- | --- | --- |
| Utility Scale |  |  |  |  |  |
| Solar |  |  |  |  |  |
| PJM assets (c) | 73 | (b) | 2011/2013 | NJ/PA | Various |
| New England assets (c) | 24 | Various | 2011/2017 | MA/RI | Various |
| California Solar | 110 | 25 | 2012/2013 | CA | PG&E |
| Mesquite Solar 1 | 165 | 20 | 2013 | AZ | PG&E |
| Copper Mountain Solar 2 | 150 | 25 | 2013/2015 | NV | PG&E |
| Copper Mountain Solar 3 | 255 | 20 | 2014/2015 | NV | SCPPA |
| California Solar 2 | 80 | 20 | 2014/2016 | CA | SCE/PG&E |
| Texas Solar 4 | 40 | 25 | 2014 | TX | City of San Antonio |
| Texas Solar 5 | 100 | 25 | 2015 | TX | City of San Antonio |
| Texas Solar 7 | 112 | 25 | 2016 | TX | City of San Antonio |
| California Solar 3 | 110 | 20 | 2016/2017 | CA | SCE/PG&E |
| Upton Solar | 158 | 25 | 2017 | TX | City of Austin |
| California Solar 4 | 240 | 20 | 2017/2018 | CA | SCE |
| Copper Mountain Solar 1 | 58 | 12 | 2018 | NV | PG&E |
| Copper Mountain Solar 4 (d) | 94 | 20 | 2018 | NV | SCE |
| Mesquite Solar 2 (d) | 100 | 18 | 2018 | AZ | SCE |
| Mesquite Solar 3 (d) | 150 | 23 | 2018 | AZ | WAPA (U.S. Navy) |
| Great Valley Solar (d) | 200 | 17 | 2018 | CA | MCE/SMUD/PG&E/SCE |
| Water Strider Solar (d) | 80 | 20 | 2021 | VA | VEPCO |
| Battle Mountain Solar/Battery Energy Storage System (d) | 101 | 25 | 2021 | NV | SPP |
| Copper Mountain Solar 5 (d) | 250 | 25 | 2021 | NV | NPC |
| Other (c) | 26 | Various | Various | Various | Various |
| Total Solar | 2,676 |  |  |  |  |
| Wind |  |  |  |  |  |
| Broken Bow II | 75 | 25 | 2014 | NE | NPPD |
| Wind Holdings | 180 | Various | Various | SD/MT | NWE/Basin Electric |
| Adams Rose Wind | 23 | 7 | 2016 | MN | Dairyland |
| Other (c) | 51 | Various | Various | Various | Various |
| Total Wind | 329 |  |  |  |  |
| Total MW (AC) in Operation | 3,005 |  |  |  |  |
| Total MW (AC) in Construction (c) | 293 |  |  |  |  |
| Total MW (AC) Utility Scale | 3,298 |  |  |  |  |
| Behind the Meter |  |  |  |  |  |
| Total MW (AC) in Operation (c) | 69 |  |  |  |  |
| Total MW (AC) in Construction (c) | - |  |  |  |  |
| Total MW Behind the Meter | 69 |  |  |  |  |

(a) Represents PPA contractual term or remaining term from the date of acquisition.

(b) Solar renewable energy credit hedges are in place, in lieu of PPAs, through 2025.

(c) Projects have generally not been pledged as security for project debt financing.

(d) Projects are financed with tax equity. See Note S to the financial statements in Item 8.

28 CON EDISON ANNUAL REPORT 2022

### Renewable Electric Generation

The Clean Energy Businesses develop, own and operate renewable energy infrastructure projects. In December 2018, the Clean Energy Businesses acquired Sempra Solar Holdings, LLC to expand the company's renewable energy asset portfolio. The Clean Energy Businesses focus their efforts on utility scale renewable electric projects. The output of most of the projects is sold under long-term power purchase agreements (PPA) with utilities and municipalities. The following table shows the generating capacity (MW AC) of the Clean Energy Businesses' utility scale renewable electric projects in operation at the end of the last five years:

| Generating Capacity (MW AC) | 2018 | 2019 | 2020 | 2021 | 2022 |
| --- | --- | --- | --- | --- | --- |
| Renewable electric projects | 2,588 | 2,628 | 2,809 | 3,061 | 3,074 |

Renewable electric volumes produced by utility scale assets at the end of the last five years were:

| Description | Millions of kWh Produced For the Years Ended December 31, |  |  |  |  |
| --- | --- | --- | --- | --- | --- |
|  | 2018 | 2019 | 2020 | 2021 | 2022 |
| Renewable electric projects |  |  |  |  |  |
| Solar | 2,680 | 5,506 | 5,699 | 6,219 | 6,926 |
| Wind | 1,074 | 1,333 | 1,425 | 1,300 | 1,280 |
| Total | 3,754 | 6,839 | 7,124 | 7,519 | 8,206 |

### Energy-Related Products and Services

The Clean Energy Businesses provide services to manage the dispatch, fuel requirements and risk management activities for 12,433 MW of generating plants and merchant transmission in the northeastern United States owned by unrelated parties, manage energy supply assets leased from others and provide wholesale hedging and risk management services to renewable electric projects owned by their subsidiaries.

The Clean Energy Businesses also provide energy-efficiency services to government and commercial customers. The services include the design and installation of lighting retrofits, high-efficiency heating, ventilating and air conditioning equipment and other energy saving technologies.

For information about the Clean Energy Businesses' results, see 'Results of Operations' in Item 7 and Note P to the financial statements in Item 8.

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## Con Edison Transmission

CET owns a 45.7 percent interest in New York Transco LLC (NY Transco). Affiliates of certain other New York transmission owners own the remaining interests.

NY Transco's Transmission Owner Transmission Solutions (TOTS) projects were approved by the NYSPSC in October 2013. In April 2015, the FERC issued an order granting certain transmission incentives for the NY Transco TOTS projects. In March 2016, the FERC approved a November 2015 settlement agreement that provides, in relation to the TOTS projects described above, a 10 percent return on common equity (which is comprised of 9.5 percent base return on equity plus an additional 50 basis points) and a maximum actual common equity ratio of 53 percent. The revenues for these TOTS projects costs are collected by the NYISO and allocated across NYISO transmission customers in NY State, with 63 percent allocated to load serving entities in the CECONY and O&R service areas.

In December 2015, the NYSPSC issued an order in its competitive proceeding to select AC transmission projects that would relieve transmission congestion between upstate and downstate. The NYSPSC determined that there was a public policy need for new transmission to address congestion and directed the NYISO, under its FERC-approved public policy planning process, to request developers to submit transmission project proposals for two segments of the transmission system. In April 2019, the NYISO selected a project that was jointly proposed by National Grid and NY Transco for one of the segments ($600 million estimated cost, excluding certain interconnection costs) that would increase transmission capacity by 1,850 MW between upstate and downstate when combined with another developer's project selected by the NYISO for the other segment. The NYISO and National Grid/NY Transco entered into an agreement for the development and operation of the project, referred to as the New York Energy Solution (NYES) project, whereby NYES would be solely owned by NY Transco. Construction is underway and the project is scheduled for entry into service by December 2023. In November 2017, FERC approved a settlement agreement with respect to the National Grid/NY Transco project that provides for a 10.65 percent return on common equity (which is comprised of a 9.65 percent base ROE, with 100 basis points added for congestion reduction and a cost containment mechanism applicable to certain capital costs) and a maximum actual common equity ratio of 53 percent. The interconnection costs of the awarded project segment include network upgrades identified by the NYISO and NYSPSC that earn the same base ROE, with a 50-basis point adder. Revenues for the NYES project are collected by the NYISO including 100 percent of construction work-in-progress, and are allocated across NYISO transmission customers in NY State with 84 percent allocated to load serving entities in the CECONY and O&R service areas.

CET, through its subsidiaries, owns a 71.2 percent interest in Honeoye Storage Corporation (Honeoye), a company that operates a gas storage facility in upstate NY and in which CECONY owns the remaining interest. A goodwill impairment loss of $7 million was recorded related to CET and CECONY's investment in Honeoye Storage Corporation for the year ended December 31, 2021, of which $5 million was attributed to CET. See Note K to the financial statements in Item 8.

In addition, CET owns a 9.6 percent interest (that is expected to be reduced to 8.0 percent based on the current project cost estimate and CET' previous capping of its cash contributions to the joint venture) in Mountain Valley Pipeline, LLC (MVP). MVP is a joint venture with four other partners to construct and operate a proposed 300-mile gas transmission project in WV and VA. CET recorded pre-tax impairment losses on its interest in MVP of $231 million ($162 million after-tax) and $320 million ($223 million after-tax) for the years ended December 31, 2021 and December 31, 2020, respectively. In May 2022, the operator of the Mountain Valley Pipeline indicated it plans to pursue new permits and is targeting a full in-service date during the second half of 2023 at a total project cost of approximately $6,600 million, excluding allowance for funds used during construction. In June 2022, the Mountain Valley Pipeline joint venture filed a request with the FERC for, and in August 2022, the FERC granted, a four-year extension of time to complete the project by October 2026. At December 31, 2022, CET's carrying value of its investment in MVP was $111 million and CET's cash contributions to the joint venture amounted to $530 million. See 'Investments - 2020 and 2021 Partial Impairments of Investment in Mountain Valley Pipeline, LLC (MVP)' in Note A to the financial statements in Item 8.

During 2021, CET sold its 50 percent interest in Stagecoach Gas Services LLC (Stagecoach), a gas pipeline and storage business located in northern PA and southern NY for $629 million. CET recorded pre-tax impairment losses of $212 million ($147 million after-tax). See 'Investments - Partial Impairment of Investment in Stagecoach Gas Services' in Note A and Note W to the financial statements in Item 8.

For information about Con Edison Transmission's results, see 'Results of Operations' in Item 7 and Note P to the financial statements in Item 8.

30 CON EDISON ANNUAL REPORT 2022

## Capital Requirements and Resources

### Capital Requirements

The following table contains the Companies' capital requirements for the years 2020 through 2022 and their current estimate of amounts for 2023 through 2025:

| (Millions of Dollars) | Actual |  |  | Estimate |  |  |
| --- | --- | --- | --- | --- | --- | --- |
|  | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 |
| CECONY (a)(b) |  |  |  |  |  |  |
| Electric | $2,080 | $2,189 | $2,522 | $3,168 | $3,267 | $3,347 |
| Gas | 1,044 | 1,126 | 1,128 | 1,128 | 1,155 | 1,120 |
| Steam | 122 | 103 | 108 | 103 | 119 | 135 |
| Sub-total | 3,246 | 3,418 | 3,758 | 4,399 | 4,541 | 4,602 |
| O&R |  |  |  |  |  |  |
| Electric | 159 | 147 | 167 | 200 | 218 | 275 |
| Gas | 61 | 70 | 76 | 76 | 81 | 80 |
| Sub-total | 220 | 217 | 243 | 276 | 299 | 355 |
| Con Edison Transmission | 3 | 31 | 65 | 58 | 6 | 6 |
| Clean Energy Businesses (c) | 616 | 298 | 399 | 76 | - | - |
| Total capital investments | 4,085 | 3,964 | 4,465 | 4,809 | 4,846 | 4,963 |
| Retirement of long-term securities |  |  |  |  |  |  |
| Con Edison - parent company | 3 | 1,178 | 293 | 650 | - | - |
| CECONY | 350 | 640 | - | - | 250 | - |
| O&R | - | - | - | - | - | - |
| Clean Energy Businesses (c) | 165 | 141 | 147 | 25 | - | - |
| Total retirement of long-term securities | 518 | 1,959 | 440 | 675 | 250 | - |
| Total capital requirements | $4,603 | $5,923 | $4,905 | $5,484 | $5,096 | $4,963 |

(a) CECONY's capital investments for environmental protection facilities and related studies were $491 million, $731 million and $733 million in 2020, 2021 and 2022, respectively, and are estimated to be $568 million in 2023.

(b) Amounts shown do not include amounts for the energy efficiency, demand reduction and combined heat and power programs.

(c) Estimates shown for 2023 include estimates through the anticipated closing date of the sale of the Clean Energy Businesses, which were classified as held for sale as of December 31, 2022. See 'Assets and Liabilities Held For Sale' in Note A and Note X to the financial statements in Item 8.

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## Contractual Obligations

The following table summarizes the Companies' material obligations at December 31, 2022 to make payments pursuant to contracts. Long-term debt, operating and capital lease obligations and other noncurrent liabilities are included on their balance sheets. Electricity and gas purchase agreements (for which undiscounted future annual payments are shown) are described in the notes to the financial statements. The Clean Energy Businesses were classified as held for sale as of December 31, 2022. Accordingly, the long-term debt and operating lease obligations of the Clean Energy Businesses are shown within 'Liabilities Held for Sale' on Con Edison's consolidated balance sheet as of December 31, 2022.

| (Millions of Dollars) | Payments Due by Period |  |  |  |  |
| --- | --- | --- | --- | --- | --- |
|  | Total | 1 year or less | Years 2 & 3 | Years 4 & 5 | After 5 years |
| Long-term debt (Statement of Capitalization) |  |  |  |  |  |
| CECONY | $19,275 | - | $250 | $600 | $18,425 |
| O&R | 1,075 | - | - | 80 | 995 |
| Clean Energy Businesses (a) | 2,666 | 353 | 463 | 281 | 1,569 |
| Parent | 650 | 650 | - | - | - |
| Interest on long-term debt (b) | 19,706 | 1,015 | 1,932 | 1,883 | 14,876 |
| Total long-term debt, including interest | 43,372 | 2,018 | 2,645 | 2,844 | 35,865 |
| Finance lease obligations (Note J) |  |  |  |  |  |
| CECONY | 1 | - | 1 | - | - |
| O&R | 1 | - | - | - | 1 |
| Total capital lease obligations | 2 | - | 1 | - | 1 |
| Operating leases (Note J) |  |  |  |  |  |
| CECONY | 739 | 64 | 128 | 128 | 419 |
| O&R | 2 | - | 2 | - | - |
| Clean Energy Businesses (c) | 582 | 19 | 37 | 34 | 492 |
| Total operating leases | 1,323 | 83 | 167 | 162 | 911 |
| Purchase obligations |  |  |  |  |  |
| Electricity power purchase agreements - Utilities (Note I) |  |  |  |  |  |
| CECONY |  |  |  |  |  |
| Energy | 2,072 | 139 | 264 | 272 | 1,397 |
| Capacity (d) | 766 | 121 | 153 | 102 | 390 |
| Total CECONY | 2,838 | 260 | 417 | 374 | 1,787 |
| O&R |  |  |  |  |  |
| Energy and Capacity (d) | 79 | 49 | 30 | - | - |
| Total electricity and power purchase agreements - Utilities | 2,917 | 309 | 447 | 374 | 1,787 |
| Natural gas supply, transportation, and storage contracts - Utilities (Note I) (e) |  |  |  |  |  |
| CECONY |  |  |  |  |  |
| Natural gas supply | 611 | 603 | 8 | - | - |
| Transportation and storage | 4,806 | 412 | 912 | 720 | 2,762 |
| Total CECONY | 5,417 | 1,015 | 920 | 720 | 2,762 |
| O&R |  |  |  |  |  |
| Natural gas supply | 77 | 76 | 1 | - | - |
| Transportation and storage | 694 | 59 | 130 | 103 | 402 |
| Total O&R | 771 | 135 | 131 | 103 | 402 |
| Total natural gas supply, transportation and storage contracts | 6,188 | 1,150 | 1,051 | 823 | 3,164 |
| Other purchase obligations |  |  |  |  |  |
| CECONY (f) | 3,887 | 1,164 | 599 | 1,753 | 371 |
| O&R (f) | 190 | 110 | 27 | 10 | 43 |
| Clean Energy Businesses (g) | 52 | 52 | - | - | - |
| Total other purchase obligations | 4,129 | 1,326 | 626 | 1,763 | 414 |
| Total | $57,931 | $4,886 | $4,937 | $5,966 | $42,142 |

(a) Amounts reclassified as Liabilities Held For Sale on Con Edison's balance sheet. See 'Assets and Liabilities Held for Sale' in Note A and Note X to the financial statements in Item 8

(b) Includes interest on variable rate debt calculated at rates in effect at December 31, 2022. Amounts include $120 million, $160 million, $128 million, and $379 million of interest due under 1 year, 2-3 years, 4-5 years, and over 5 years, respectively, reclassified as Liabilities Held For Sale on Con Edison's balance sheet. See 'Assets and Liabilities Held for Sale' in Note A and Note X to the financial statements in Item 8.

32 CON EDISON ANNUAL REPORT 2022

- (c) Amounts reclassified as Liabilities Held For Sale on the balance sheet. See 'Assets and Liabilities Held for Sale' in Note A and Note X to the financial statements in Item 8.
- (d) 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.
- (e) Included in these amounts is the cost of minimum quantities of energy that the Utilities are obligated to purchase at both fixed and variable prices.
- (f) 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 system 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 for the 'Other Purchase Obligations' are generally assumed to be made ratably over the term of the obligations. Long-term Purchase Obligations, which comprises \$3,333 million of 'Other Purchase Obligations,' were derived from the Utilities' purchasing system by using a method that identifies the remaining purchase obligations. The Utilities believe that unreasonable effort and expense would be involved to enable them to report their 'Other Purchase Obligations' in a different manner.
- (g) The Clean Energy Businesses were classified as held for sale as of December 31, 2022. See 'Assets and Liabilities Held for Sale,' in Note A and Note X to the financial statements in Item 8. Amounts represent commitments by the Clean Energy Businesses to purchase minimum quantities of electric energy and capacity, renewable energy certificates, natural gas, natural gas pipeline capacity, energy efficiency services and construction services. The Clean Energy Businesses have also entered into power purchase agreements for the sale of power from their renewable electric projects, provisions of which provide for penalties to be paid by the Clean Energy Businesses in the event certain minimum production quantities are not met. The future minimum production quantities and the amount of the penalties, if any, are not estimable and are not included in the amounts shown on the table.

The Companies' commitments to make payments in addition to these contractual commitments include their other liabilities reflected on their balance sheets, any funding obligations for their pension and other postretirement benefit plans, financial hedging activities, their collective bargaining agreements and Con Edison's and the Clean Energy Business' guarantees of certain obligations. See Notes E, F, Q and 'Guarantees' in Note H to the financial statements in Item 8.

## Capital Resources

Con Edison is a holding company that operates only through its subsidiaries and has no material assets other than its interests in its subsidiaries. Con Edison finances its capital requirements primarily through internally-generated funds, the sale of its common shares or external borrowings. Con Edison's ability to make payments on external borrowings and dividends on its common shares depends on receipt of dividends from its subsidiaries, proceeds from the sale of additional common shares or its interests in its subsidiaries or additional external borrowings. See 'Con Edison's Ability To Pay Dividends Or Interest Depends On Dividends From Its Subsidiaries' in Item 1A and Note U to the financial statements in Item 8.

For information about restrictions on the payment of dividends by the Utilities and significant debt covenants, see Note C to the financial statements in Item 8.

For information on the Companies' commercial paper program and revolving credit agreements with banks, see Note D to the financial statements in Item 8.

The Companies require access to the capital markets to fund capital requirements that are substantially in excess of available internally-generated funds. See 'Capital Requirements,' above and 'The Companies Require Access To Capital Markets to Satisfy Funding Requirements' in Item 1A. Each of the Companies believes that it will continue to be able to access capital, although capital market conditions may affect the timing and cost of the Companies' financing activities. The Companies monitor the availability and costs of various forms of capital, and will seek to issue Con Edison common shares and other securities when it is necessary or advantageous to do so. See 'Coronavirus Disease 2019 (COVID-19) Impacts - Liquidity and Financing' in Item 7. For information about the Companies' long-term debt and short-term borrowing, see Notes C and D to the financial statements in Item 8.

The Utilities finance their operations, capital requirements and payment of dividends to Con Edison from internally-generated funds, contributions of equity capital from Con Edison, if any, and external borrowings. See 'Liquidity and Capital Resources' in Item 7.

Con Edison plans to meet its capital requirements for 2023 through 2025 through internally-generated funds, the anticipated net proceeds from the sale of the Clean Energy Businesses and the issuance of long-term debt and common equity. See 'Capital Requirements and Resources - Capital Requirements,' in Item 1. See 'Assets Held for Sale' in Note A and Note X to the financial statements in Item 8 and 'Anticipated Sale of the Clean Energy Business,' above. Subject to, and following the closing of the sale of the Clean Energy Businesses, Con Edison intends to repay $1,250 million of parent company debt in 2023, invest in the Utilities and repurchase up to $1,000 million of its common shares. In anticipation of the proceeds from the pending transaction, Con Edison intends to forego common equity issuances in 2023 and 2024 and plans on issuing up to $900 million of common equity in 2025. The company's plans also include the issuance of up to $1,400 million of long-term debt at the Utilities in 2023 and approximately $2,600 million in aggregate, including for maturing securities, at the Utilities during 2024 and 2025.

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In 2021, the NYSPSC authorized CECONY, through 2025, to issue up to $4,025 million of debt securities ($1,450 million of which the company had issued as of December 31, 2022). In 2022, the NYSPSC authorized O&R, through 2025, to issue up to $285 million of debt securities ($100 million of which the company had issued as of December 31, 2022). The NYSPSC also authorized CECONY and O&R for such periods to issue debt securities to refund existing debt securities of up to $2,500 million and $125 million, respectively. As of December 31, 2022, the Utilities had not refunded any securities pursuant to these authorizations.

The Clean Energy Businesses, which were classified as held for sale as of December 31, 2022, have financed their operations and capital requirements primarily with capital contributions and borrowings from Con Edison, internally-generated funds and external borrowings. See Con Edison's Consolidated Statement of Capitalization in Item 8 and Note Q to the financial statements in Item 8.

Con Edison Transmission has financed its operations and capital requirements primarily with capital contributions and borrowings from Con Edison and internally-generated funds. See 'Liquidity and Capital Resources' in Item 7.

For each of the Companies, the common equity ratio for the last five years was:

|  | Common Equity Ratio (Percent of total capitalization) |  |  |  |  |
| --- | --- | --- | --- | --- | --- |
|  | 2018 | 2019 | 2020 | 2021 | 2022 |
| Con Edison | 49.0 | 49.6 | 48.3 | 47.4 | 50.9 |
| CECONY | 48.6 | 49.2 | 47.9 | 47.0 | 46.9 |

The credit ratings assigned by Moody's, S&P and Fitch to the senior unsecured debt and commercial paper of Con Edison, CECONY and O&R are as follows:

|  | Moody's | S&P | Fitch |
| --- | --- | --- | --- |
| Con Edison |  |  |  |
| Senior Unsecured Debt | Baa2 | BBB+ | BBB+ |
| Commercial Paper | P-2 | A-2 | F2 |
| CECONY |  |  |  |
| Senior Unsecured Debt | Baa1 | A- | A- |
| Commercial Paper | P-2 | A-2 | F2 |
| O&R |  |  |  |
| Senior Unsecured Debt | Baa2 | A- | A- |
| Commercial Paper | P-2 | A-2 | F2 |

Credit ratings assigned by rating organizations are expressions of opinion and are not recommendations to buy, sell or hold securities. A credit rating is subject to revision or withdrawal at any time by the assigning rating organization. Each rating should be evaluated independently of any other rating. See 'The Companies Require Access To Capital Markets To Satisfy Funding Requirements' and 'Changes To Tax Laws Could Adversely Affect the Companies' in Item 1A.

In 2017, the United Kingdom's Financial Conduct Authority announced that it intends to stop persuading or compelling banks to submit London Interbank Offered Rates (LIBOR). LIBOR's administrator ceased publishing one-week and two-month U.S. Dollar LIBOR immediately after the LIBOR publication on December 31, 2021, and is scheduled to cease publication of the remaining U.S. Dollar LIBOR tenors immediately after the publication on June 30, 2023. The Companies have been and are continuing to monitor LIBOR-related market, regulatory and accounting developments. The Companies' material contracts that reference LIBOR and currently extend beyond 2022 include their $2,200 million credit agreement (see Note D to the financial statements in Item 8). Pursuant to the credit agreement, the Companies may borrow at interest rates determined with reference to a prime rate, the federal funds rate or LIBOR. The credit agreement may be amended by the Companies and the administrative agent to provide for a LIBOR successor rate unless a majority of the lenders do not accept the amendment. In addition, the Clean Energy Businesses have $1,093 million of variable rate project debt that reference LIBOR and currently extends beyond 2022 and that allows for an alternate reference rate and associated interest rate swaps with a notional amount of $982 million (see Note Q to the financial statements in Item 8). Con Edison expects that the Clean Energy Businesses will be able to agree with project lenders and swap counterparties on the use of an

34 CON EDISON ANNUAL REPORT 2022

alternate reference rate as needed. The Companies do not expect that a discontinuation of LIBOR would have a material impact on their financial position, results of operations or liquidity.

## Environmental Matters

### Clean Energy Future

#### Clean Energy Goals

In 2019, New York State enacted the Climate Leadership and Community Protection Act (CLCPA) that established a goal of 70 percent of the electricity procured by load serving entities regulated by the NYSPSC to be produced by renewable energy systems by 2030 and requires the statewide electrical demand system to have zero emissions by 2040. The law also codified state targets for energy efficiency (end-use energy savings of 185 trillion British thermal units below 2025 energy-use forecast), offshore wind (9,000 megawatts (MW) by 2035), solar (6,000 MW by 2025) and energy storage (3,000 MW by 2030). In addition, the law established a climate action council. In December 2022, the council approved a final scoping plan containing recommendations for meeting the CLCPA's statewide greenhouse gas (GHG) emission reduction requirements including measures to reduce emissions by displacing fossil-fuel fired electricity with renewable electricity, transitioning heating and transportation energy uses to lower GHG impact fuels (including substantial electrification of those uses), implementing energy efficiency measures and providing 35 percent - 40 percent of the benefits of CLCPA-related investments to disadvantaged communities. As required by the law, the New York State Department of Environmental Conservation (NYSDEC) published the 1990 inventory of GHG emissions and adopted regulations establishing statewide GHG emissions limits that are 60 percent of 1990 emissions levels by 2030 and 15 percent of 1990 emissions by 2050. The Utilities are unable to predict the impact on them of the implementation of this law.

In October 2020, the NYSPSC, in response to the CLCPA, modified its clean energy standard to establish a new renewable energy credits (RECs) program to support increased renewable energy availability in New York City for which the costs would be borne by load serving entities across New York State on a volumetric basis. CECONY and O&R have been required to obtain RECs and zero-emissions credits (ZECs) for their full service customers since 2017. Load serving entities may satisfy their REC obligation by either purchasing RECs acquired through central procurement by the New York State Energy Research and Development Authority (NYSERDA), by self-supply through direct purchase of tradable RECs, or by making alternative compliance payments. Load serving entities purchase ZECs which are only available from NYSERDA at prices determined by the NYSPSC. In April 2022, the NYSPSC issued an order approving contracts between NYSERDA and two project sponsors selected by NYSERDA to provide RECs directly to New York City: Clean Path New York and H.Q. Energy Services (U.S.) Inc. The H.Q. Energy Services project and the Clean Path New York project anticipate in-service dates of 2026 and 2027, respectively. Both projects have submitted requests to the NYISO to interconnect to CECONY's high-voltage transmission system.

Prior to enactment of the CLCPA and its expansion of offshore wind goals, in July 2018, the NYSPSC established a goal of 2,400 MW of new offshore wind facilities by 2030. As a result of this goal, load serving entities, such as CECONY and O&R, will be required to purchase offshore wind renewable energy credits (ORECs) from NYSERDA beginning in 2025 when projects are expected to begin operation. In October 2019, NYSERDA entered into a 25-year power purchase agreement (PPA) with Equinor Wind US LLC for its 816 MW Empire Wind Project, and a 25-year PPA with Sunrise Wind LLC for its 880 MW Sunrise Wind Project. In January 2022, NYSERDA expanded its contract with Empire Wind Project to 1,260 MW and awarded another contract to Equinor Wind US LLC for its 1,230 MW Beacon Wind Project.

In May 2020, the NYSPSC initiated a proceeding implementing the Accelerated Renewable Energy Growth and Community Benefit Act to align New York State's electric system with CLCPA goals. In November 2020, NY's investor-owned utilities (including the Utilities) and LIPA filed a comprehensive report in this proceeding, identifying proactive local transmission and distribution investments in their systems to facilitate achieving the goals of the CLCPA and setting out policy recommendations for how they will identify, prioritize and allocate costs of these and future such projects going forward. CECONY and O&R identified approximately $4,500 million and $400 million, respectively, in local transmission investment. In January 2022, the NYSPSC issued an order based on recommendations from a 2021 power grid study that authorized CECONY to file a comprehensive petition addressing a proposed clean energy hub in Brooklyn, NY (Brooklyn Clean Energy Hub) that could accommodate interconnection to offshore wind generation. In April 2022, CECONY filed the petition, seeking cost recovery approval for the proposed Brooklyn Clean Energy Hub that would connect up to 6,000 MW of offshore wind energy into the New York City grid at an estimated cost of $1,000 million and an estimated in-service date of 2027. In December 2022, CECONY supplemented its petition to propose an alternate version that focuses on a 2028 reliability need and has an estimated cost of $810 million. It omits certain elements related to offshore wind interconnection but provides the flexibility for offshore wind resources to interconnect to the Brooklyn Clean Energy

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Hub during construction and after it commences operation. CECONY requested that the NYSPSC approve either the original or alternate version of the project at its March 2023 session.

Federal and local municipal laws and agencies also regulate emissions levels and impact the CLCPA's decarbonization pathways. In June 2022, the U.S. Supreme Court issued a decision that restricts the authority of the United States Environmental Protection Agency (EPA) to establish GHG emission reduction measures under the federal Clean Air Act for technologies that reduce GHG emissions from fossil fuel combustion at the source. Con Edison, as part of a coalition of public and private utilities, was a party in the case and had argued that the U.S. Supreme Court should not adopt this restrictive statutory reading of the Clean Air Act. The U.S. Supreme Court's decision could have potential cost implications for CECONY because it could limit its flexibility to use measures such as trading emissions allowances from higher emitting sources to lower emitting sources and averaging emissions across different sources, to cost-effectively meet federal GHG emissions limits for its limited portfolio of steam and electric generating assets. The decision could also indirectly impact CECONY's and O&R's initiatives to develop renewable energy sources. The Companies are unable to predict the impact on them as a result of the decision or any regulations that may be promulgated by the EPA in light of this U.S. Supreme Court decision.

In 2014, New York City announced a goal to reduce GHG emissions 80 percent below 2005 levels by 2050. In May 2019, New York City enacted a package of legislation known as the Climate Mobilization Act, that includes provisions intended to reduce GHG emissions from large buildings by 40 percent from 2005 levels by 2030. Building owners may achieve compliance through operational changes, building retrofits, the purchase of GHG offsets, the purchase of renewable energy credits and the use of clean distributed energy resources. CECONY is unable to predict the impact on it of the implementation of this law.

In December 2021, New York City enacted Local Law 154. The law prohibits submitting permits for the construction or major renovation of buildings that use oil, natural gas and some low carbon fuels beginning in 2024 for affected buildings with less than seven stories and beginning in 2027 for all other affected buildings. The law includes exceptions for buildings that use electric or steam generation, commercial kitchens, manufacturing, laundromats, and hospitals. The Department of Buildings may also create additional exceptions.

### ***Energy Efficiency, Electric Vehicles, Energy Storage and Thermal Energy Networks***

In January 2020, and updated in August 2022 for CECONY, the NYSPSC issued an order directing energy efficiency targets and budgets for NY utilities. The order approved $2,000 million statewide for electric and gas energy efficiency programs and heat pump budgets, and associated targets, for the years 2020 through 2025 to meet the NYSPSC's goal of reducing electric use by 3 percent annually and gas use by 1.3 percent annually by 2025. The order and subsequent update authorized budgets for the years 2020 through 2025 for: electric energy efficiency programs of $688 million and $71 million for CECONY and O&R, respectively; gas energy efficiency programs of $338 million and $17 million for CECONY and O&R, respectively; and heat pump programs of $746 million and $15 million for CECONY and O&R, respectively. CECONY's current electric and gas rate plans allow it to recover the costs of energy efficiency expenditures, including a full rate of return, in rates from customers. See Note B to the financial statements in Item 8.

In May 2018, the NYSPSC initiated a proceeding on the role of electric utilities in providing needed infrastructure and rate options to advance adoption of electric vehicles. In July 2020, the NYSPSC established a light-duty electric vehicle make-ready program that includes budgets of $290 million and $24 million for CECONY and O&R, respectively, through 2025 for electric vehicle infrastructure and related program costs. CECONY's current electric rate plan also includes funding to offer up to $22 million in incentives for off-peak charging and electric vehicle infrastructure. The NYSPSC authorized both CECONY and O&R to recover these costs, including a full rate of return, in rates from customers.

In July 2022, the NYSPSC issued an order directing New York utilities, including CECONY and O&R, to implement managed electric vehicle charging programs and prescribing program and funding requirements. The order provides CECONY and O&R with up to a total of $31 million and $5.8 million, respectively, through 2025, for program implementation and administration costs. The NYSPSC authorized both CECONY and O&R to recover these costs via surcharge or other mechanisms. The order also provides CECONY and O&R with authorization to offer incentives to encourage electric vehicle charging to occur overnight and during off-peak times totaling approximately $71.8 million and $8.2 million, respectively, through 2025, that would be recovered through the respective company's revenue reconciliation mechanisms.

In October 2022, the NJBPU approved RECO's electric vehicle make-ready program that includes a budget of $7.6 million through 2026 for electric vehicle infrastructure and related program costs. The NJBPU authorized RECO to recover these costs, including a full rate of return, in rates from customers.

36 CON EDISON ANNUAL REPORT 2022

In December 2018, the NYSPSC issued an order establishing an energy storage goal of up to 3,000 MW of energy storage by 2030 with an interim objective of 1,500 MW by 2025. The order also required CECONY to file an implementation plan for a competitive procurement process to deploy 300 MW of energy storage while O&R and the other NY electric utilities must plan to deploy 10 MW each. CECONY and O&R filed their implementation plans in February 2019. In December 2020, CECONY entered into a contract with a storage developer for energy storage services to provide power capacity of up to 100 MW. The Utilities expect to recover the cost of energy storage services, including a full rate of return, in rates from customers. In December 2022, NYSDPS and NYSERDA issued an updated storage roadmap that proposes to increase the storage goal from 3,000 MW to 6,000 MW by 2030. The proposal includes the recommendation that New York State's utilities study the potential of energy storage to provide non-market transmission and distribution services and identify services that are cost-effective compared to traditional alternatives.

In September 2022, the NYSPSC initiated a proceeding to implement the Utility Thermal Energy and Jobs Act that requires NY State's utilities to propose at least one thermal energy network pilot for NYSPSC review and approval. CECONY and O&R have submitted preliminary proposals for further development in consultation with NYSDPS.

### Distribution System and Distributed Resources

The NYSPSC is directing development by NY electric utilities of a distributed system platform to manage and coordinate DER in their service areas under NYSPSC regulation and to provide customers, together with third parties, with data and tools to better manage their energy use. Regarding the latter, CECONY and O&R are working with other NY electric utilities and NYSERDA to respond to the NYSPSC's order to implement a data access framework and integrated energy data resources to share energy-related information. The Utilities are also working with the other utilities to enhance the NYSPSC's Utility Energy Registry hosted by NYSERDA that provides public access to aggregated community energy usage data from the utilities. The NYSPSC has required the Utilities to file distributed system implementation plans and ordered the Utilities to develop demonstration projects to inform distributed system platform business models. As of December 31, 2022, CECONY and O&R had one shared active demonstration project, and individually, CECONY had four and O&R had three active demonstration projects.

The NYSPSC approved CECONY's advanced metering infrastructure (AMI) installation plan for its electric and gas delivery businesses, subject to a cap on capital expenditures of $1,285 million. CECONY expects to complete its AMI installation plan in 2023. The NYSPSC also authorized O&R to expend $98.5 million to install AMI for its NY customers, which work was complete as of December 31, 2020.

The NYSPSC began to change compensation for DERs and phase out net energy metering (NEM) in 2015. In NY, NEM compensates kilowatt-hours exported to the electric distribution system at the full-service rate for production, delivery, taxes and fees. NYSPSC's policy is to phase in changes to limit annual bill increases to two percent, reducing the impact of this policy on non-participating residential customers that would have occurred under NEM, but the NYSPSC have permitted exceptions to this policy.

### Climate Change

As indicated by the Intergovernmental Panel on Climate Change, emissions of greenhouse gases (GHG), including carbon dioxide, are very likely changing the world's climate.

Climate change could affect customer demand for the Companies' energy services. It might also cause physical damage to the Companies' facilities and disruption of their operations due to more frequent and more extreme weather. In August 2020, Tropical Storm Isaias caused significant damage to the Utilities' electric distribution systems and interrupted service to approximately 530,000 of the Utilities' customers and caused the second-largest power outage in the Utilities' history (Superstorm Sandy interrupted service to 1.4 million of the Utilities' customers' in October 2012) and resulted in the Utilities incurring substantial response and restoration costs. After Superstorm Sandy, CECONY invested $1,000 million in its infrastructure to improve its resilience against storms. In December 2019, CECONY completed a study of climate change vulnerability. The study evaluated present-day infrastructure, design specifications and procedures under a range of potential climate futures. The study identified sea level rise, coastal storm surge, inland flooding from intense rainfall, hurricane-strength winds and extreme heat to be CECONY's most significant climate-driven risks to its electric, gas and steam systems. The study estimated that CECONY might need to invest between $1,800 million and $5,200 million by 2050 on targeted programs to adapt to potential impacts from climate change. During 2020, CECONY further evaluated its future climate change adaptation strategies and developed a climate change implementation plan that it filed with the NYSPSC in December 2020. The climate change implementation plan explains how CECONY will incorporate climate change projections for heat, precipitation, and sea level rise from the 2019 Climate Change Vulnerability Study into its

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operations to mitigate climate change risks to its assets and operations and establishes an ongoing process to reflect the latest science in the company's planning. With respect to governance, CECONY adopted a climate change planning and design guideline, created an executive committee to oversee implementation of the plan, and established a climate risk and resilience team to execute the day-to-day activities required by the plan.

Effective March 2022, the NY State legislature amended the NY Public Service Law to require all NY electric utilities, including CECONY and O&R, to conduct a climate change vulnerability study by September 2023 and develop and file for approval by the NYSPSC a climate vulnerability and resiliency plan by November 2023 that includes 10- and 20-year outlooks for resiliency. The law authorizes utilities to recover costs through a climate resiliency cost recovery surcharge for costs incurred outside of rate proceedings and include any unrecovered costs in base rates when base rates are reset. The NY utilities are required to file an updated climate vulnerability and resiliency plan with the NYSPSC for approval at least every five years. In June 2022, the NYSPSC initiated a proceeding to implement the requirements of the legislation.

Based on the most recent data (2020) published by the U.S. Environmental Protection Agency (EPA), Con Edison estimates that its direct GHG emissions constitute less than 0.1 percent of the nation's GHG emissions. According to the CLCPA final scoping plan, the Buildings and Transportation sectors are the two largest sources of GHG emissions in NY State. Con Edison's estimated Scope 1 emissions of GHG during the past five years were:

| (Metric tons, in millions (a)) | 2018 | 2019 | 2020 | 2021 | 2022 |
| --- | --- | --- | --- | --- | --- |
| CO2 equivalent emissions | 3.1 | 2.9 | 2.7 | 2.8 | 2.9 |

(a) Estimated emissions for 2022 are based on preliminary data and are subject to third-party verification. Scope 1 emissions are GHG emitted into the atmosphere by assets owned by Con Edison. Con Edison's Scope 1 emissions primarily include emissions from CECONY's operation of steam, electric, and co-generation plants. Con Edison's Scope 1 emissions also include fugitive emissions that occur when pressurized equipment and infrastructure containing a GHG has a controlled or uncontrolled emission and emissions from Con Edison's vehicle fleet.

Con Edison's more than 50 percent decrease in direct GHG emissions (carbon dioxide, methane and sulfur hexafluoride) from the 2005 baseline (6.0 million metric tons) reflects the emission reductions resulting from equipment and repair projects, reduced steam demand, the increased use of natural gas in lieu of fuel oil at CECONY's steam production facilities as well as projects to reduce sulfur hexafluoride emissions and to replace leak-prone gas distribution pipes.

CECONY has participated for several years in voluntary initiatives with the EPA to reduce its methane and sulfur hexafluoride emissions. The Utilities reduce methane emissions from the operation of their gas distribution systems through pipe maintenance and replacement programs and by introducing new technologies to reduce fugitive emissions from leaks or when work is performed on operating assets. The Utilities reduce emissions of sulfur hexafluoride, which is used for arc suppression in substation circuit breakers and switches, by using improved technologies to locate and repair leaks and by replacing older equipment. The Utilities also actively promote energy efficiency and the use of renewable generation to help their customers reduce their GHG emissions.

Emissions in NY State are also avoided by renewable electric production facilities replacing fossil-fueled electric production facilities and the continued operation of upstate nuclear power plants. See - 'Clean Energy Future,' above. NYSERDA has been responsible for implementing the renewable portfolio standard (RPS) and Clean Energy Standard (CES) established by the NYSPSC. NYSERDA has entered into agreements with developers of large renewable electric production facilities and the owners of upstate nuclear power plants and pays them premiums based on the facilities' electric output. These facilities sell their energy output in the wholesale energy and capacity markets administered by the NYISO. As a result of the Utilities' participation in the NYISO wholesale markets, a portion of the Utilities' NYISO energy purchases are sourced from renewable electric production facilities. NYSERDA also has provided rebates to customers who installed eligible renewable electric production technologies. The electricity produced by such customer-sited renewables generation offsets the energy that the Utilities would otherwise have procured, thereby reducing the amount of electricity produced by non-renewable production facilities.

In 2022, NYSERDA and the NYSDEC published the 2022 Statewide GHG Emissions Report, which provided a summary of statewide GHG emissions from 1990 to 2020, including an analysis of trends, the relative contribution of each type of GHG and the relative contribution of each type of source. In 2020, total statewide gross GHG emissions were 15 percent lower than in 1990 and 8 percent lower than in 2019, although the decline from 2019 to 2020 likely reflects the economic impacts of the COVID-19 pandemic and is not considered representative of current conditions. Annual GHG emission levels are expected to increase from 2020 levels in future reports for 2021 and 2022, reflecting economic recovery following the COVID-19 global pandemic.

38 CON EDISON ANNUAL REPORT 2022

In January 2016, the NYSPSC approved a 10-year $5,300 million clean energy fund to be managed by NYSERDA under the NYSPSC's supervision. The clean energy fund has four portfolios: market development; innovation and research; NY Green Bank and NY Sun. The Utilities collect all clean energy fund surcharges through the system benefit charge (including previously authorized RPS, EEPS, Technology and Market Development collections and incremental clean energy fund collections to be collected from electric customers only). The Utilities billed customers clean energy fund surcharges of $216 million, $224 million and $212 million in 2022, 2021, and 2020, respectively. For information about NYSPSC proceedings considering renewable generation see "Clean Energy Future," above.

CECONY is subject to carbon dioxide emissions regulations established by NY State under the Regional Greenhouse Gas Initiative (RGGI) due to its ownership of electric generation assets. The initiative, a cooperative effort by Northeastern and Mid-Atlantic states, established a decreasing cap on carbon dioxide emissions resulting from the generation of electricity. Under RGGI, affected electric generators are required to obtain emission allowances to cover their carbon dioxide emissions, available primarily through auctions administered by participating states or a secondary market. Due to changes in the New York State CO2 Budget Trading Program, for the fifth RGGI control period (2021 - 2023) two additional CECONY generation units were added to the RGGI program. However, since the affected units are used only for peaking generation and when needed to restore power to the electric grid, the incremental allowances that will need to be purchased are not expected to materially impact the company's RGGI obligations. CECONY will purchase RGGI allowances for the fifth control period based on anticipated emissions, which are expected to be similar to past compliance periods.

The cost to the Companies to comply with legislation, regulations or initiatives limiting GHG emissions could be substantial.

### Environmental Sustainability

Con Edison's sustainability strategy, as it relates to the environment, provides that the company seeks, among other things, to reduce direct and indirect GHG emissions; enhance the efficiency of its water use; reduce its impact to natural ecosystems; focus on reducing, reusing and recycling to lower materials consumption and disposal; and design its work in consideration of climate forecasts.

Con Edison has adopted a Clean Energy Commitment whereby it commits to leading and delivering the transition to the clean energy future. Con Edison's Clean Energy Commitment is supported by five pillars:

- Build the grid of the future
- Empower Con Edison's customers to meet their climate goals
- Reimagine the gas system
- Lead by reducing Con Edison's carbon footprint
- Partner with stakeholders

### CECONY

#### Superfund

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 costs, remediation costs and environmental damages. The sites as to which CECONY has been asserted to have liability under Superfund include its and its predecessor companies' former manufactured gas sites, its multi-purpose Astoria site, the Gowanus Canal site, the Newtown Creek site and other Superfund sites discussed below. There may be additional sites as to which assertions will be made that the company has liability. For a further discussion of claims and possible claims against the company under Superfund, estimated liability accrued for Superfund claims and recovery from customers of site investigation and remediation costs, see Note G to the financial statements in Item 8.

#### Manufactured Gas Sites

CECONY and its predecessors formerly owned and operated manufactured gas plants at 51 sites (MGP Sites) in New York City and Westchester County. Many of these sites have been subdivided and are now owned by parties other than CECONY and have been redeveloped for other uses, including schools, residential and commercial developments and hospitals. The NYSDEC is requiring CECONY to investigate, and if necessary, develop and implement remediation programs for the sites, including any neighboring areas to which contamination may have migrated.

CECONY has started remedial investigations at all 51 MGP Sites. After investigations, no MGP impacts have been detected at all or portions of 15 sites, and the NYSDEC has issued No Further Action (NFA) letters for these sites.

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Coal tar or other MGP-related contaminants have been detected at the remaining 36 sites. Remedial actions have been completed at all or portions of 14 sites and the NYSDEC has issued NFA letters for these sites. In addition, remedial actions have been completed by property owners at all or portions of four sites under the NY State Brownfield Cleanup Program and Certificates of Completion have been issued by the NYSDEC for these sites. Remedial design, planning or action is ongoing for the remaining sites or portions of sites; however, the information as to the extent of contamination and scope of the remediation likely to be required for many of these sites is incomplete. The company estimates that its undiscounted potential liability for the completion of the site investigation and cleanup of the known contamination on MGP sites (other than the Astoria site, which is discussed below) could range from $710 million to $2,500 million.

### Astoria Site

CECONY is permitted by the NYSDEC to operate a hazardous waste storage facility on property owned by it in the Astoria section of Queens, NY. Portions of the property were formerly the location of a manufactured gas plant and also have been used or are being used for, among other things, electric generation operations, electric substation operations, the storage of fuel oil, the manufacture and storage of liquefied natural gas and the maintenance and storage of electric equipment. As a condition of its NYSDEC permit, the company is required to investigate the property and, where environmental contamination is found and action is necessary, to remediate the contamination. The company's investigations are ongoing. The company has submitted reports to the NYSDEC and the New York State Department of Health and in the future will be submitting additional reports identifying the known areas of contamination. The company estimates that its undiscounted potential liability for the completion of the site investigation and cleanup of the known contamination on the property could range from $191 million to $639 million.

### Gowanus Canal

In August 2009, CECONY received a notice of potential liability and request for information from the EPA about the operations of the company and its predecessors at sites adjacent to or near the 1.8 mile Gowanus Canal in Brooklyn, NY. In March 2010, the EPA added the Gowanus Canal to its National Priorities List of Superfund sites. The canal's adjacent waterfront is primarily commercial and industrial, currently consisting of concrete plants, warehouses and parking lots. The canal is near several residential neighborhoods. In September 2013, the EPA issued its record of decision for the site. The EPA concluded that there was significant contamination at the site, including polycyclic aromatic hydrocarbons, polychlorinated biphenyls (PCBs), pesticides, metals and volatile organic compounds. The EPA selected a remedy for the site that includes dredging and disposal of some contaminated sediments and stabilization and capping of contamination that will not be removed. The EPA estimated the cost of the selected remedy to be $506 million (and has indicated the actual cost could be significantly higher). The EPA has identified 39 potentially responsible parties (PRPs) with respect to the site, including CECONY (which the EPA indicated has facilities that may be a source of PCBs at the site). The EPA ordered the PRPs, including CECONY, to coordinate and cooperate with each other to perform and/or fund the remedial design for the selected remedy, which current estimates indicate could cost approximately $113 million. CECONY is funding its allocated share of the remedial design costs along with the other PRPs. In April 2019, the EPA issued an order that requires the PRPs, including CECONY, to: (1) design and perform bulkhead structural support work, including associated access dredging, along certain portions of the upper reaches of the canal, and (2) complete the design work for bulkhead structural support along certain portions of the middle part of the canal. The PRPs and CECONY are coordinating the implementation of this order. In January 2020, the EPA issued an order that requires six PRPs, including CECONY, to initiate the remedial action work in the upper reaches of the canal following the completion of the bulkhead upgrades. The EPA estimated that this work would cost approximately $125 million, although actual costs may be significantly higher, and require about 30 months to complete. In November 2020, the PRPs began implementation of the work required under this order. Cleanup in other areas of the canal is not addressed by this order. In addition, other Federal agencies and the NYSDEC have previously notified the PRPs of their intent to perform a natural resource damage assessment for the site. CECONY is unable to estimate its exposure to liability for the Gowanus Canal site.

### Newtown Creek

In June 2017, CECONY received a notice of potential liability from the EPA with respect to the Newtown Creek site that was listed in 2010 on the EPA's National Priorities List of Superfund sites. The EPA has identified 20 potentially responsible parties (PRPs) with respect to the site, including CECONY, and has indicated that it will notify the company as additional PRPs are identified and notified by the EPA. Newtown Creek and its tributaries (collectively, Newtown Creek) form a 3.8 mile border between Brooklyn and Queens, NY. Currently, the predominant land use around Newtown Creek includes industrial, petroleum, recycling, manufacturing and distribution facilities and warehouses. Other uses include trucking, concrete manufacture, transportation infrastructure and a wastewater treatment plant. Newtown Creek is near several residential neighborhoods. Six PRPs, not including CECONY, pursuant to an administrative settlement agreement and order on consent the EPA issued to them in 2011, have

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been performing a remedial investigation of the site. The EPA indicated that sampling events have shown the sediments in Newtown Creek to be contaminated with a wide variety of hazardous substances including PCBs, metals, pesticides, polycyclic aromatic hydrocarbons and volatile organic compounds. The EPA also indicated that it has reason to believe that hazardous substances have come to be released from CECONY facilities into Newtown Creek. The current schedule anticipates completion of a feasibility study for the site during 2023 or 2024 and issuance of the EPA's record of decision selecting a remedy for the site thereafter. CECONY is unable to estimate its exposure to liability for the Newtown Creek site.

### Other Superfund Sites

CECONY is a PRP at additional Superfund sites involving other PRPs and participates in PRP groups at those sites. The company generally is not managing the site investigation and remediation at these multiparty sites. Work at these sites is in various stages, and investigation, remediation and monitoring activities at some of these sites can be expected to continue over extended periods of time. The company believes that it is unlikely that monetary sanctions, such as penalties, will be imposed by any governmental authority with respect to these sites.

The following table lists each of the additional Superfund sites for which the company anticipates it may have liability. The table also shows for each such site its location, the year in which the company was designated or alleged to be a PRP or to otherwise have responsibilities for the site (shown in the table under 'Start'), the name of the court or agency in which proceedings for the site are pending and CECONY's estimated percentage of the total liability for each site. The company currently estimates that its potential liability for investigation, remediation, monitoring and environmental damages in aggregate for the sites below is less than $2 million. Superfund liability is joint and several. The company's estimate of its liability for each site was determined pursuant to consent decrees, settlement agreements or otherwise and in light of the financial condition of other PRPs. The company's actual liability could differ substantially from amounts estimated.

| Site | Location | Start | Court or Agency | % of Total Liability |
| --- | --- | --- | --- | --- |
| Cortese Landfill | Narrowsburg, NY | 1987 | EPA | 6.0% |
| Curcio Scrap Metal | Saddle Brook, NJ | 1987 | EPA | 100.0% |
| Metal Bank of America | Philadelphia, PA | 1987 | EPA | 1.0% |
| Global Landfill | Old Bridge, NJ | 1988 | EPA | 0.4% |
| Borne Chemical | Elizabeth, NJ | 1997 | NJDEP | 0.7% |
| Pure Earth | Vineland, NJ | 2018 | EPA | to be determined |

### Other Environmental Matters

In July 2021, a CECONY feeder failure led to the discharge of thousands of gallons of dielectric fluid from a street manhole in New Rochelle, NY. Dielectric fluid reached nearby streets, properties and the New Rochelle Harbor. CECONY, the U.S. Coast Guard, the NYSDEC and other agencies responded to the incident. CECONY stopped the feeder leak on the same day that the discharge occurred and has completed the spill recovery and associated cleanup operations. In coordination with federal and state regulators, CECONY has evaluated certain shoreline areas for the potential presence of residual dielectric fluid and the extent to which additional cleaning in such areas may be necessary. In addition, the company has received third-party damage claims. The costs associated with this matter are not expected to have a material adverse effect on the company's financial condition, results of operations or liquidity. In connection with the incident, the company may incur monetary sanctions of more than $0.3 million for violations of certain provisions regulating the discharge of materials into, and for the protection of, the environment.

In 2016, CECONY and another utility responded to a reported dielectric fluid leak at a NJ marina on the Hudson River associated with one or two underwater transmission lines, the NJ portion of which is owned and operated by the other utility and the NY portion of which is owned and operated by CECONY. In 2017, after the marina owner had cleared substantial debris from its collapsed pier and rip rap material that it had previously placed over and in the vicinity of the underwater transmission lines in an attempt to shore up its failing pier, a dielectric fluid leak was found and repaired on one of the underwater transmission lines. In August 2018, the EPA declared the leak response complete. CECONY, the other utility and the marina owner are involved in litigation in federal court regarding response and repair costs, related damages, and the future of the lines. In August 2020, CECONY and the other utility entered into a settlement with the United States federal government, under which the utilities settled the federal government's claims for outstanding response costs, without admitting fault and while preserving the utilities' rights to pursue recovery from the marina owner. CECONY expects that, consistent with the cost allocation provisions of its prior arrangements with the other utility for the transmission lines, the response and repair costs incurred by CECONY, the other utility and government agencies, net of any recovery from the marina owner, will be

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shared by CECONY and the other utility and that CECONY's share is not reasonably likely to have a material adverse effect on its financial position, results of operations or liquidity

## O&R

### Superfund

The sites at which O&R has been asserted to have liability under Superfund include its manufactured gas sites and the Superfund sites discussed below. There may be additional sites as to which assertions will be made that O&R has liability. For a further discussion of claims and possible claims against O&R under Superfund, see Note G to the financial statements in Item 8.

### Manufactured Gas Sites

O&R and its predecessors formerly owned and operated manufactured gas plants at seven sites (O&R MGP Sites) in Orange County and Rockland County, NY. Three of these sites are now owned by parties other than O&R, and have been redeveloped by them for residential, commercial or industrial uses. The NYSDEC is requiring O&R to develop and implement remediation programs for the O&R MGP Sites including any neighboring areas to which contamination may have migrated.

O&R has completed remedial investigations and has received the NYSDEC's decision regarding the remedial work to be performed at all seven of its MGP sites. Of the seven sites, O&R has completed remediation at four sites. Remedial construction was conducted on a portion of one of the remaining sites in 2019 and remedial design is ongoing for the other remaining sites. The company estimates that its undiscounted potential liability for the completion of the site investigation and cleanup of the known contamination on MGP sites could range from $94 million to $149 million.

### Superfund Sites

O&R is a PRP at Superfund sites involving other PRPs and participates in PRP groups at those sites. The company is not managing the site investigation and remediation at these multiparty Superfund sites. Work at these sites is in various stages, and investigation, remediation and monitoring activities at some of these sites is expected to continue over extended periods of time. The company believes that it is unlikely that monetary sanctions, such as penalties, will be imposed by any governmental authority with respect to these sites.

The following table lists each of the Superfund sites for which the company anticipates it may have liability. The table also shows for each such site its location, the year in which the company was designated or alleged to be a PRP or to otherwise have responsibilities for the site (shown in the table under 'Start'), the name of the court or agency in which proceedings for the site are pending and O&R's estimated percentage of the total liability for each site. The company currently estimates that its potential liability for investigation, remediation, monitoring and environmental damages in aggregate for the sites below is less than $1 million. Superfund liability is joint and several. The company's estimate of its liability for each site was determined pursuant to consent decrees, settlement agreements or otherwise and in light of the financial condition of other PRPs. The company's actual liability could differ substantially from amounts estimated.

| Site | Location | Start | Court or Agency | % of Total Liability |
| --- | --- | --- | --- | --- |
| Metal Bank of America | Philadelphia, PA | 1993 | EPA | 4.6% |
| Borne Chemical | Elizabeth, NJ | 1997 | NJDEP | 2.3% |
| Ellis Road | Jacksonville, FL | 2011 | EPA | 0.2% |

## Other Federal, State and Local Environmental Provisions

### Toxic Substances Control Act

Virtually all electric utilities, including CECONY and O&R, own equipment that may contain PCBs. PCBs are regulated under the Federal Toxic Substances Control Act of 1976. The Utilities have procedures in place to manage and dispose of oil and equipment containing PCBs properly when they are removed from service.

### Water Quality

Under NYSDEC regulations, the operation of CECONY's generating facilities requires permits for water discharges and water withdrawals. Conditions to the renewal of such permits may include limitations on the operations of the permitted facility or requirements to install certain equipment, the cost of which could be substantial. For information about the company's generating facilities, see 'CECONY - Electric Operations - Electric Facilities' and 'Steam Operations - Steam Facilities' above in this Item 1.

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Certain governmental authorities are investigating contamination in the Hudson River and the New York Harbor. These waters run through portions of CECONY's service area. Governmental authorities could require entities that released hazardous substances that contaminated these waters to bear the cost of investigation and remediation, which could be substantial.

### Air Quality

Under new source review regulations, an owner of a large generating facility, including CECONY's steam and steam-electric generating facilities, is required to obtain a permit before making certain modifications to the facility, other than routine maintenance, repair, or replacement, that cause the increase of emissions of pollutants from the facility above specified thresholds. To obtain a permit, the facility owner could be required to install additional pollution controls or otherwise limit emissions from the facility. The company reviews on an on-going basis its planned modifications to its facilities to determine the potential applicability of new source review and similar regulations.

The EPA's Transport Rule (also referred to as the Cross-State Air Pollution Rule), which was implemented in January 2015, established a new cap-and-trade program requiring further reductions in air emissions than the Clean Air Intrastate Rule (CAIR) that it replaced. Under the Transport Rule, utilities are to be allocated emissions allowances and may sell the allowances or buy additional allowances. CECONY requested and received NYSPSC approval to change the provisions under which the company recovers its purchased power costs to provide for costs incurred to purchase emissions allowances and revenues received from the sale of allowances. In 2021, the EPA finalized changes to the Transport Rule in response to a court decision. The revised Transport Rule reduced the number of allowances allocated to CECONY and required the company to purchase allowances to offset the decreased allocation. CECONY has complied with the Transport Rule in 2022 and expects to comply with the rule in 2023.

The NYSDEC issued regulations in 2019 that limit nitrous oxides (NOx) emissions during the ozone season from May through September and affect older peaking units that are generally located downstate and needed during periods of high electric demand or for local reliability purposes. See 'CECONY - Electric Operations - Electric Supply,' above.

### Environmental Matters

For information concerning climate change, environmental sustainability, potential liabilities arising from laws and regulations protecting the environment and other environmental matters, see 'Environmental Matters' in Item 1, 'Air Quality,' above and Note G to the financial statements in Item 8.

### State Anti-Takeover Law

New York State law provides that a 'domestic corporation,' such as Con Edison, may not consummate a merger, consolidation or similar transaction with the beneficial owner of a 20 percent or greater voting stock interest in the corporation, or with an affiliate of the owner, for five years after the acquisition of the voting stock interest, unless the transaction or the acquisition of the voting stock interest was approved by the corporation's board of directors prior to the acquisition of the voting stock interest. After the expiration of the five-year period, the transaction may be consummated only pursuant to a stringent 'fair price' formula or with the approval of a majority of the disinterested stockholders.

### Human Capital

Con Edison is committed to attracting, developing, and retaining a talented, diverse workforce. It values and supports a wide range of employee needs and interests. The company's skilled and experienced workforce enables the company to maintain best-in-class reliability and progress towards achieving a clean energy future. Human capital measures focus on employee safety, hiring the right talent, employee development and retention and diversity and inclusion.

On December 31, 2022, Con Edison and its subsidiaries had 14,319 employees, based entirely in the United States including 12,717 at CECONY; 1,131 at O&R, 462 at the Clean Energy Businesses and 9 at Con Edison Transmission. Of the total CECONY and O&R employees, 7,399 and 587 employees, respectively, were represented by a collective bargaining unit. The collective bargaining agreement covering most of the CECONY employees expires in June 2024. Agreements covering other CECONY employees and O&R employees expire in June 2025 and May 2023, respectively.

Con Edison measures the voluntary attrition rate of its employees in assessing the company's overall human capital. The company's turnover rate in 2022 was approximately 8.2 percent, 35 percent of which is attributed to retirements. The average length of service is 14.2 years. Con Edison strives to have a diverse and inclusive workforce. A comprehensive diversity and inclusion strategy underlies the corporate culture; informing how its

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employees engage with one another, and setting the foundation for a respectful and inclusive environment. On December 31, 2022, women represented 22.6 percent of the total workforce and people of color represented 51.7 percent of the workforce, with ethnicity breaking down as follows: 48.3 percent White, 22.0 percent Black, 19.0 percent Hispanic, 9.3 percent Asian and 1.4 percent other.

In managing the business, the company emphasizes a strong safety culture. Continuous focus on safety while performing work is paramount, and leaders and managers are committed to implementing programs and practices that promote the right knowledge, skills, and attitudes to undertake the responsibilities of safety, including required training for both field and office employees. To that end, the company has a dedicated facility, the Learning Center, that offers classes to employees covering technical courses, skills enhancement, safety and leadership development. During 2022, employees spent over 600,000 hours in instructor-led, leadership and skill-based training. Further, the company maintains a career development and succession planning program that is committed to helping employees grow their careers, talents, skills and abilities. In addition to their daily job functions, employees of the Utilities are assigned to and trained for a position for emergency response that is mobilized in the event of a weather event or emergency.

Although working remotely for certain positions has been made possible by digital software and smart device capabilities that enable employees to collaborate with each other and remain productive, the entire CECONY and O&R workforce is available in the event of an emergency that requires on-site presence. Con Edison and its subsidiaries managed their operations and resources while avoiding lay-offs and furloughs and continue to recruit, interview, and hire internal and external applicants to fill open positions.

### Available Information

For the sources of information about the Companies, see “Available Information” in the “Introduction” appearing before this Item 1.

### Item 1A: Risk Factors

Information in any item of this report as to which reference is made in this Item 1A is incorporated by reference herein. The use of such terms as “see” or “refer to” shall be deemed to incorporate at the place such term is used the information to which such reference is made.

The Companies’ businesses are influenced by many factors that are difficult to predict, and that involve uncertainties that may materially affect actual operating results, cash flows and financial condition.

The Companies have established an enterprise risk management program to identify, assess, manage and monitor its major business risks based on established criteria for the severity of an event, the likelihood of its occurrence, and the programs in place to control the event or reduce its impact. The Companies’ major risks include:

#### Regulatory/Compliance Risks:

**The Companies Are Extensively Regulated And Are Subject To Substantial Penalties.** The Companies’ operations require numerous permits, approvals and certificates from various federal, state and local governmental agencies. State utility regulators may seek to impose substantial penalties on the Utilities for violations of state utility laws, regulations or orders. The Utilities are also subject to recurring, independent, third-party audits with respect to these regulations and standards. In addition, the Utilities’ rate plans usually include negative revenue adjustments for failing to meet certain operating and customer satisfaction standards. FERC has the authority to impose penalties on the Utilities, the Clean Energy Businesses and the projects that Con Edison Transmission invests in, which could be substantial, for violations of the Federal Power Act, the Natural Gas Act or related rules, including reliability and cyber security rules. Environmental agencies may seek penalties for failure to comply with laws, regulations or permits. The Companies may also be subject to penalties from other regulatory agencies. The Companies may be subject to new laws, regulations or other requirements or the revision or reinterpretation of such requirements, which could adversely affect them. See “Utility Regulation”, “Competition” and “Environmental Matters - Climate Change” and “Environmental Matters - Other Federal, State and Local Environmental Provisions” in Item 1, “Critical Accounting Estimates” in Item 7 and “COVID-19 Regulatory Matters” and “Other Regulatory Matters” in Note B to the financial statements in Item 8.

**The Utilities’ Rate Plans May Not Provide A Reasonable Return.** The Utilities have rate plans approved by state utility regulators that limit the rates they can charge their customers. The rates are generally designed for, but do not guarantee, the recovery of the Utilities’ cost of providing service (including a return on equity). See “Utility Regulation - State Utility Regulation - Rate Plans” in Item 1 and “Rate Plans” in Note B to the financial statements in Item 8. Rates usually may not be changed during the specified terms of the rate plans other than to recover energy costs and limited other exceptions. The Utilities’ actual costs may exceed levels provided for such costs in

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the rate plans (see “COVID-19 Regulatory Matters” in Note B to the financial statements in Item 8). State utility regulators can initiate proceedings to prohibit the Utilities from recovering from their customers the cost of service (including energy costs and storm restoration costs) that the regulators determine to have been imprudently incurred (see “Other Regulatory Matters” in Note B to the financial statements in Item 8). The Utilities have from time to time entered into settlement agreements to resolve various prudence proceedings.

**The Companies May Be Adversely Affected By Changes To The Utilities’ Rate Plans.** The Utilities’ rate plans typically require action by regulators at their expiration dates, which may include approval of new plans with different provisions. The need to recover from customers increasing commodity or other costs, taxes or state-mandated assessments or surcharges could adversely affect the Utilities’ opportunity to obtain new rate plans that provide a reasonable rate of return and continue important provisions of current rate plans. The Utilities’ current NY electric and gas rate plans include revenue decoupling mechanisms and their NY electric, gas and steam rate plans include provisions for the recovery of energy costs and reconciliation of the actual amount of pension and other postretirement, environmental and certain other costs to amounts reflected in rates. See “Rate Plans” in Note B to the financial statements in Item 8.

#### **Operations Risks:**

**The Failure Of, Or Damage To, The Companies’ Facilities Could Adversely Affect The Companies.** The Utilities provide electricity, gas and steam service using energy facilities, many of which are located either in, or close to, densely populated public places. See the description of the Utilities’ facilities in Item 1. A failure of, or damage to, these facilities, or an error in the operation or maintenance of these facilities, could result in bodily injury or death, property damage, the release of hazardous substances or extended service interruptions. Impacts of climate change, such as sea level rise, coastal storm surge, inland flooding from intense rainfall, hurricane-strength winds and extreme heat could damage facilities and the Utilities may experience more severe consequences from attempting to operate during and after such events. The Utilities’ response to such events may be perceived to be below customer expectations. The Utilities’ successful implementation of their maintenance programs reduces, but does not fully protect against, damage to their facilities for which they will be held responsible and which may hinder their restoration efforts. The Utilities could be required to pay substantial amounts that may not be covered by the Utilities’ insurance policies to repair or replace their facilities, compensate others for injury or death or other damage and settle any proceedings initiated by state utility regulators or other regulatory agencies. The occurrence of such events could also adversely affect the cost and availability of insurance. See “Other Regulatory Matters” in Note B and “Manhattan Explosion and Fire” in Note H to the financial statements in Item 8. Changes to laws, regulations or judicial doctrines could further expand the Utilities’ liability for service interruptions. See “Utility Regulation - State Utility Regulation” and “Environmental Matters - Climate Change” in Item 1.

**A Cyber Attack Could Adversely Affect The Companies.** The Companies and other operators of critical energy infrastructure and energy market participants face a heightened risk of cyber attack and the Companies’ businesses require the continued operation of information systems and network infrastructure. See Item 1 for a description of the businesses of the Utilities, the Clean Energy Businesses and Con Edison Transmission. Cyber attacks may include hacking, viruses, malware, denial of service attacks, ransomware, exploited vulnerabilities or other security breaches, including loss of data and communications. Cyber threats in general, and in particular to critical infrastructure, are increasing in sophistication, magnitude and frequency. Interconnectivity with customers, independent system operators, energy traders and other energy market participants, suppliers, contractors and others also exposes the Companies’ information systems and network infrastructure to an increased risk of cyber incidents, including attacks. Such interconnectivity increases the risk that a cyber incident or attack on the Companies could affect others and that a cyber incident or attack on others could affect the Companies. In the event of a cyber incident or attack that the Companies were unable to defend against or mitigate, the Companies could have their operations and the operations of their customers and others disrupted. The Companies could also have their financial and other information systems and network infrastructure impaired, property damaged, and customer and employee information stolen; experience substantial loss of revenues, response costs and other financial loss; and be subject to increased regulation, litigation, penalties and damage to their reputation. The Companies have experienced cyber incidents and attacks, although none of the incidents or attacks had a material impact.

**The Failure Of Processes and Systems And The Performance And Failure to Retain and Attract Employees And Contractors Could Adversely Affect The Companies.** The Companies have developed business processes and use information and communication systems and enterprise platforms for operations, customer service, legal compliance, personnel, accounting, planning and other matters. The Utilities are replacing their existing customer billing and information systems. Failures in successfully implementing the new customer billing and information system could adversely affect the Utilities’ billing and revenue collection processes and cash flow and could result in higher costs. The Companies have completed a multi-year, phased transition of certain information technology services, including application maintenance and support and infrastructure and operations services, to a contractor. The failure of the Companies’ or its contractors’ business processes or information and

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communication systems or the failure by the Companies' employees or contractors to follow procedures, their unsafe actions, errors or intentional misconduct, cyber incidents or attacks, or work stoppages could adversely affect the Companies' operations and liquidity and result in substantial liability, higher costs and increased regulatory requirements. The violation of laws or regulations by employees or contractors for personal gain may result from contract and procurement fraud, extortion, bribe acceptance, fraudulent related-party transactions and serious breaches of corporate policy or standards of business conduct. Competition for employee and contractor talent may result in operating challenges and increased costs to attract and retain talent. If the Companies are unable to successfully attract and retain an appropriately qualified workforce, their results of operations, financial position and cash flows could be negatively affected. See 'Human Capital' in Item 1.

### **Environmental Risks:**

#### **The Companies Are Exposed To Risks From The Environmental Consequences Of Their Operations.**

The Companies are exposed to risks relating to climate change and related matters. In 2019, CECONY completed a climate change vulnerability study and during 2020, CECONY further evaluated its future climate change adaptation strategies and developed a climate change implementation plan. NY State enacted the Climate Leadership and Community Protection Act and New York City enacted the Climate Mobilization Act. See 'Environmental Matters - Clean Energy Future' in Item 1. CECONY may also be impacted by regulations requiring reductions in air emissions. See 'Environmental Matters - Other Federal, State and Local Environmental Provisions - Air Quality' in Item 1. In addition, the Utilities are responsible for hazardous substances, such as oil, asbestos, PCBs and coal tar, that have been used or produced in the course of the Utilities' operations and are present on properties or in facilities and equipment currently or previously owned by them. See 'Environmental Matters' in Item 1 and Note G to the financial statements in Item 8. The Companies could be adversely affected if a causal relationship between electric and magnetic fields and adverse health effects were to be established.

### **Financial and Market Risks:**

**Con Edison's Ability To Pay Dividends Or Interest Depends On Dividends From Its Subsidiaries.** Con Edison's ability to pay dividends on its common shares or interest on its external borrowings depends primarily on the dividends and other distributions it receives from its subsidiaries. The dividends that the Utilities may pay to Con Edison are limited by the NYSPSC to not more than 100 percent of their respective income available for dividends calculated on a two-year rolling average basis, with certain exceptions. See 'Dividends' in Note C and Note U to the financial statements in Item 8.

**Changes To Tax Laws Could Adversely Affect the Companies.** Changes to tax laws, regulations or interpretations thereof could have a material adverse impact on the Companies. Depending on the extent of these changes, the changes could also adversely impact the Companies' credit ratings and liquidity. See 'Capital Requirements and Resources - Capital Resources' in Item 1, 'Liquidity and Capital Resources - Cash Flows from Operating Activities' in Item 7, 'Rate Plans' and 'Other Regulatory Matters' in Note B and Note L to the financial statements in Item 8.

**The Companies Require Access To Capital Markets To Satisfy Funding Requirements.** The Utilities estimate that their construction expenditures will exceed $14,600 million over the next three years. The Utilities use internally-generated funds, equity contributions from Con Edison, if any, and external borrowings to fund the construction expenditures. Con Edison expects to finance its capital requirements primarily through internally generated funds, proceeds from the anticipated sale of the Clean Energy Businesses, the sale of its common shares or external borrowings. Changes in financial market conditions or in the Companies' credit ratings could adversely affect their ability to raise new capital and the cost thereof. See 'Capital Requirements and Resources' in Item 1.

**A Disruption In The Wholesale Energy Markets, Increased Commodity Costs Or Failure By An Energy Supplier or Customer Could Adversely Affect The Companies.** Almost all the electricity and gas the Utilities sell to their full-service customers is purchased through the wholesale energy markets or pursuant to contracts with energy suppliers. See the description of the Utilities' energy supply in Item 1. A disruption in the wholesale energy markets or a failure on the part of the Utilities' energy suppliers or operators of energy delivery systems that connect to the Utilities' energy facilities could adversely affect their ability to meet their customers' energy needs and adversely affect the Companies. The Utilities' ability to gain access to additional energy supplies, if needed, depends on effective markets and siting approvals for developer projects, which the Utilities do not control. See 'CECONY - Gas Peak Demand' in Item 1. Increases in electric and gas commodity prices may contribute to a slower recovery of cash from outstanding customer accounts receivable balances and increases to the allowance for uncollectible accounts, and may result in increases to write-offs of customer accounts receivable balances. See 'Financial and Commodity Market Risks - Commodity Price Risk' in Item 7. The Clean Energy Businesses sell the output of their renewable electric projects under long-term power purchase agreements with utilities and municipalities, and a failure of the production projects could adversely affect Con Edison.

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### **The Companies May Have Substantial Unfunded Pension And Other Postretirement Benefit Liabilities.**

The Utilities may have substantial unfunded pension and other postretirement benefit liabilities. Significant declines in the market values of the investments held to fund pension and other postretirement benefits could trigger substantial funding requirements under governmental regulations. See 'Critical Accounting Estimates - Accounting for Pensions and Other Postretirement Benefits' and 'Financial and Commodity Market Risks' in Item 7 and Notes E and F to the financial statements in Item 8.

### **Other Risks:**

#### **The Companies Face Risks Related To Health Epidemics And Other Outbreaks, Including The COVID-19**

Pandemic.** Pandemic illness could potentially disrupt the Utilities' employees and contractors from providing essential utility services and the Companies' liquidity, financial condition and results of operations. The COVID-19 pandemic has impacted, and continues to impact, countries, communities, supply chains and markets. As a result of the COVID-19 pandemic, there has been an economic slowdown in the Companies' service territories and changes in governmental and regulatory policy. The decline in business activity in the Companies' service territories has resulted in a slower recovery of cash from outstanding customer accounts receivable balances, material increases in customer accounts receivable balances, increases to the allowance for uncollectible accounts, and may result in increases to write-offs of customer accounts. Although the Utilities' NY electric and gas businesses have largely effective revenue decoupling mechanisms in place, higher unpaid accounts have impacted and could continue to impact the Companies' liquidity. See 'Coronavirus Disease 2019 (COVID-19) Impacts' in Item 7 and 'COVID-19 Regulatory Matters' in Note B.

#### **The Companies' Strategies May Not Be Effective To Address Changes In The External Business**

Environment.** The failure to identify, plan and execute strategies to address changes in the external business environment could have a material adverse impact on the Companies. Con Edison seeks to provide shareholder value through continued dividend growth, supported by earnings growth in regulated utilities and contracted electric and gas assets. Changes to the competitive landscape, public policy, laws or regulations (or interpretations thereof), customer behavior or technology could significantly impact the value of the Utilities' energy delivery facilities and Con Edison Transmission's investment in electric and gas transmission projects. Such changes could also affect the Companies' opportunities to make additional investments in such assets and the potential return on the investments. The Utilities' gas delivery customers and CECONY's steam delivery customers have alternatives, such as electricity and oil. Distributed energy resources, and demand reduction and energy efficiency investments, provide ways for the energy consumers within the Utilities' service areas to manage their energy usage. The Companies expect distributed energy resources and electric alternatives to gas and steam to increase, and for gas and steam usage to decrease, as the CLCPA and the Climate Mobilization Act continue to be implemented. CECONY established a gas moratorium in March 2019 on new gas service in most of Westchester County. CECONY filed a gas planning analysis with the NYSPSC in July 2020 stating the moratorium could be lifted when increased pipeline capacity is achieved or peak demand is reduced to a level that would enable the company to lift the moratorium and that it is monitoring gas supply constraint in the New York City portion of its service territory. See 'Clean Energy Businesses,' 'Con Edison Transmission,' 'Environmental Matters - Clean Energy Future' and 'Environmental Matters - Climate Change,' 'Competition' and 'CECONY - Gas Peak Demand' in Item 1.

**The Companies Face Risks Related To Supply Chain Disruptions And Inflation.** The Companies have been impacted, and expect to continue to be impacted by, global and U.S. supply chain disruptions and shortages of materials, equipment, labor and other resources that are critical to the Companies' business operations, primarily the Utilities' electric and central operations. Such disruptions and shortages have resulted in increased prices and lead times for critical orders of materials and equipment needed by the Companies in their operations, such as certain raw materials, microprocessors, semiconductors, microchips, vehicles and transformers. Long lead times for replacement parts could restrict the availability and delay the construction, maintenance or repair of items that are needed to support the Utilities' normal operations and may result in prolonged customer outages, which could in turn lead to unrecovered costs for such service interruptions. Demand for electric equipment is increasing due to utilities' efforts to meet clean energy goals and in order to prepare for more frequent extreme weather events at a time when manufacturing capacity and supply are decreasing. Prices of materials, equipment, transportation and other resources have increased as a result of these supply chain disruptions and shortages and may continue to increase as a result of inflation. Increases in inflation raise the Companies' costs for operating and capital costs and employee and retiree benefit costs in excess of the costs reflected in the Utilities' rate plans and could also increase the amount of capital that needs to be raised by the Companies and the costs of such capital.

**The Companies Also Face Other Risks That Are Beyond Their Control.** The Companies' results of operations can be affected by circumstances or events that are beyond their control. Weather and energy efficiency efforts directly influence the demand for electricity, gas and steam service, and can affect the price of energy commodities.

CON EDISON ANNUAL REPORT 2022

47

Terrorist or other physical attacks or acts of war could damage the Companies' facilities. Economic conditions can affect customers' demand and ability to pay for service, which could adversely affect the Companies.

#### **Item 1B: Unresolved Staff Comments**

##### **Con Edison**

Con Edison has no unresolved comments from the SEC staff.

##### **CECONY**

CECONY has no unresolved comments from the SEC staff.

#### **Item 2: Properties**

##### **Con Edison**

Con Edison has no significant properties other than those of the Utilities and the Clean Energy Businesses.

For information about the capitalized cost of the Companies' utility plant, net of accumulated depreciation, see 'Plant and Depreciation' in Note A to the financial statements in Item 8 (which information is incorporated herein by reference).

##### **CECONY**

For a discussion of CECONY's electric, gas and steam facilities, see 'CECONY - Electric Operations - Electric Facilities,' 'CECONY - Gas Operations - Gas Facilities' and 'CECONY - Steam Operations - Steam Facilities' in Item 1 (which information is incorporated herein by reference).

##### **O&R**

For a discussion of O&R's electric and gas facilities, see 'O&R - Electric Operations - Electric Facilities' and 'O&R - Gas Operations - Gas Facilities' in Item 1 (which information is incorporated herein by reference).

##### **Clean Energy Businesses**

For a discussion of the Clean Energy Businesses' facilities, see 'Clean Energy Businesses' in Item 1 (which information is incorporated herein by reference).

##### **Con Edison Transmission**

Con Edison Transmission has no properties. Con Edison Transmission has ownership interests in electric and gas transmission companies. For information about these companies, see 'Con Edison Transmission' in Item 1 (which information is incorporated herein by reference).

#### **Item 3: Legal Proceedings**

For information about certain legal proceedings affecting the Companies, see 'Other Regulatory Matters' in Note B and 'Superfund Sites' and 'Asbestos Proceedings' in Note G and 'Manhattan Explosion and Fire' in Note H to the financial statements in Item 8 and 'Environmental Matters - CECONY' and 'Environmental Matters - O&R' in Item 1 of this report, which information is incorporated herein by reference.

#### **Item 4: Mine Safety Disclosures**

Not applicable.

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CON EDISON ANNUAL REPORT 2022

## Information about our Executive Officers

The following table sets forth certain information about the executive officers of Con Edison as of February 16, 2023. The term of office of each officer, is until the next election of directors (trustees) of their company and until his or her successor is chosen and qualifies. Officers are subject to removal at any time by the board of directors (trustees) of their company.

| Name | Age | Offices and Positions During Past Five Years |
| --- | --- | --- |
| Timothy P. Cawley | 58 | 1/22 to present - Chairman of the Board, President and Chief Executive Officer and Director of Con Edison, Chairman of the Board, Chief Executive Officer and Trustee of CECONY 12/20 to 12/21 - President and Chief Executive Officer and Director of Con Edison and Chief Executive Officer and Trustee of CECONY 1/18 to 12/20 - President of CECONY |
| Robert Hoglund | 61 | 9/05 to present - Senior Vice President and Chief Financial Officer of Con Edison and CECONY |
| Matthew Ketschke | 51 | 1/21 to present - President of CECONY 11/17 to 12/20 - Senior Vice President - Customer Energy Solutions |
| Robert Sanchez | 57 | 12/17 to present - President and Chief Executive Officer of O&R |
| Mark Noyes | 57 | 12/16 to present - President and Chief Executive Officer of Con Edison Clean Energy Businesses, Inc. |
| Stuart Nachmias | 57 | 1/20 to present - President and Chief Executive Officer of Con Edison Transmission, Inc. 05/08 to 12/19 - Vice President of Energy Policy and Regulatory Affairs of CECONY |
| Deneen L. Donnley | 57 | 1/20 to present - Senior Vice President and General Counsel of Con Edison and CECONY 10/19 to 12/19 - Senior Vice President of Con Edison and CECONY 9/15 to 10/19 - Executive Vice President, Chief Legal Officer and Corporate Secretary - USAA |
| Jennifer Hensley | 44 | 9/22 to present - Senior Vice President - Corporate Affairs of CECONY 7/22 to 9/22 - Senior Vice President of CECONY 1/21 to 7/22 - Vice President, Head of Government Relations - LYFT 9/19 to 1/21 - Senior Director, Public Policy - LYFT 11/17 to 9/19 - President, Link - INTERSECTION Co. |
| Mary E. Kelly | 54 | 11/17 to present - Senior Vice President - Corporate Shared Services of CECONY |
| Nancy Shannon | 55 | 6/22 to present - Senior Vice President - Utility Shared Services of CECONY 6/18 to 5/22 - Vice President - Human Resources 11/16 to 5/18 - Director of the HR Employee Wellness Center |
| Joseph Miller | 60 | 1/21 to present - Vice President and Controller of Con Edison and CECONY 1/21 to present - Chief Financial Officer and Controller of O&R 8/06 to 12/20 - Assistant Controller of Corporate Accounting of CECONY |
| Yukari Saegusa | 55 | 9/16 to present - Treasurer of Con Edison and CECONY 8/16 to present - Vice President of Con Edison and CECONY 8/13 to present - Treasurer of O&R |
| Gurudatta Nadkarni | 57 | 1/08 to present - Vice President of Strategic Planning of CECONY |

CON EDISON ANNUAL REPORT 2022

49

## Part II

### Item 5: Market for the Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

#### Con Edison

Con Edison's Common Shares ($.10 par value), the only class of common equity of Con Edison, are traded on the New York Stock Exchange under the trading symbol 'ED.' As of January 31, 2023, there were 37,423 holders of record of Con Edison's Common Shares. Con Edison paid quarterly dividends of 77.5 cents per Common Share in 2021 and quarterly dividends of 79 cents per Common Share in 2022. On January 19, 2023, Con Edison declared a quarterly dividend of 81 cents per Common Share that is payable on March 15, 2023. Con Edison expects to pay dividends to its shareholders primarily from dividends and other distributions it receives from its subsidiaries. The payment of future dividends is subject to approval and declaration by Con Edison's Board of Directors and will depend on a variety of factors including business, financial and regulatory considerations. For additional information about the payment of dividends by the Utilities to Con Edison, and restrictions thereon, see 'Dividends' in Note C to the financial statements in Item 8 (which information is incorporated herein by reference).

During 2022, the market price of Con Edison's Common Shares increased by 11.7 percent (from $85.32 at year-end 2021 to $95.31 at year-end 2022). By comparison, the S&P 500 Index decreased 19.4 percent and the S&P 500 Utilities Index decreased 1.4 percent. The total return to Con Edison's common shareholders during 2022, including both price appreciation and investment of dividends, was 15.7 percent. By comparison, the total returns for the S&P 500 Index and the S&P 500 Utilities Index were (18.1) percent and 1.6 percent, respectively. For the five-year period 2018 through 2022 inclusive, Con Edison's shareholders' total return was 35.1 percent, compared with total returns for the S&P 500 Index and the S&P 500 Utilities Index of 56.9 percent and 58.0 percent, respectively.

![img-0.jpeg](img-0.jpeg)

| Company / Index | Years Ended December 31, |  |  |  |  |  |
| --- | --- | --- | --- | --- | --- | --- |
|  | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 |
| Consolidated Edison, Inc. | 100.00 | 93.38 | 114.43 | 94.98 | 116.79 | 135.08 |
| S&P 500 Index | 100.00 | 95.62 | 125.72 | 148.85 | 191.58 | 156.88 |
| S&P Utilities | 100.00 | 104.11 | 131.54 | 132.18 | 155.53 | 157.97 |

Based on $100 invested at December 31, 2017, reinvestment of all dividends in equivalent shares of stock and market price changes on all such shares.

50 CON EDISON ANNUAL REPORT 2022

## CECONY

The outstanding shares of CECONY's Common Stock ($2.50 par value) are the only class of common equity of CECONY. They are held by Con Edison and are not traded.

The dividends declared by CECONY in 2021 and 2022 are shown in its Consolidated Statement of Shareholder's Equity included in Item 8 (which information is incorporated herein by reference). For additional information about the payment of dividends by CECONY, and restrictions thereon, see 'Dividends' in Note C to the financial statements in Item 8 (which information is incorporated herein by reference).

**Item 6: [Reserved]**

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## Item 7: Management's Discussion and Analysis of Financial Condition and Results of Operations

This combined management's discussion and analysis of financial condition and results of operations relates to the consolidated financial statements included in this report of two separate registrants: Con Edison and CECONY, and should be read in conjunction with the financial statements and the notes thereto. As used in this report, the term the 'Companies' refers to Con Edison and CECONY. CECONY is a subsidiary of Con Edison and, as such, information in this management's discussion and analysis about CECONY applies to Con Edison.

Information in any item of this report referred to in this discussion and analysis is incorporated by reference herein. The use of terms such as 'see' or 'refer to' shall be deemed to incorporate by reference into this discussion and analysis the information to which reference is made.

### Corporate Overview

Con Edison's principal business operations are those of the Utilities, the Clean Energy Businesses and Con Edison Transmission. CECONY is a regulated utility that provides electric service in New York City and New York's Westchester County, gas service in Manhattan, the Bronx, parts of Queens and parts of Westchester, and steam service in Manhattan. O&R is a regulated utility serving customers in a 1,300-square-mile-area in southeastern NY State and northern NJ. Con Edison Clean Energy Businesses, through its subsidiaries, develops, owns and operates renewable energy infrastructure projects and provides energy-related products and services to wholesale and retail customers. In October 2022, Con Edison entered into a purchase and sale agreement pursuant to which Con Edison agreed to sell the Clean Energy Businesses to RWE Renewables Americas, LLC, a subsidiary of RWE Aktiengesellschaft. The Clean Energy Businesses were classified as held for sale as of December 31, 2022. See 'Assets and Liabilities Held for Sale' in Note A and Note X to the financial statements in Item 8. Con Edison Transmission, through its subsidiaries, invests in electric transmission projects supporting Con Edison's effort to transition to clean, renewable energy and manages, through joint ventures, both electric and gas assets while seeking to develop electric transmission projects that will bring clean, renewable electricity to customers, focusing on NY, New England, the Mid-Atlantic states and the Midwest.

In addition to the risks and uncertainties described in Item 1A and the Companies' material contingencies described in Notes B, G and H to the financial statements in Item 8, the Companies' management considers the following events, trends, and uncertainties to be important to understanding the Companies' current and future financial condition.

### Anticipated Sale of the Clean Energy Businesses

During the first nine months of 2022, Con Edison considered strategic alternatives with respect to the Clean Energy Businesses. On October 1, 2022, following the conclusion of such review and to allow for continued focus on the Utilities and their clean energy transition, Con Edison entered into a purchase and sale agreement pursuant to which Con Edison agreed to sell the Clean Energy Businesses to RWE Renewables Americas, LLC, a subsidiary of RWE Aktiengesellschaft (RWE) for a total of $6,800 million, subject to closing adjustments. The purchase price will be adjusted (i) upward for certain cash and cash equivalents, (ii) downward for certain indebtedness and debt-like items, (iii) downward for certain transaction expenses, (iv) upward or downward to the extent that the net working capital varies from a set target, (v) upward or downward to the extent that capital expenditures incurred prior to the closing of the transaction vary from a set budget, and (vi) downward by the value allocated to certain assets and projects that are not able to be conveyed to RWE upon closing of the transaction. The purchase and sale agreement includes certain customary representations, warranties and covenants. The transaction is subject to customary closing conditions, including, among other things; expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, which occurred on November 28, 2022; approval from the FERC under Section 203 of the Federal Power Act, which was obtained on January 20, 2023 and approval by the Committee on Foreign Investment in the United States, which was obtained on February 6, 2023. The transaction is expected to close on or about the end of the first quarter of 2023.

Subject to, and following the closing of the sale of the Clean Energy Businesses, Con Edison intends to use the net proceeds from the sale to repay $1,250 million of parent company debt in 2023, invest in the Utilities and repurchase up to $1,000 million of its common shares.

See 'Assets and Liabilities Held for Sale' in Note A and Note X to the financial statements in Item 8 and 'Liquidity and Financing,' below.

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CON EDISON ANNUAL REPORT 2022

## Clean Energy Goals

The success of the Companies' efforts to meet federal, state and city clean energy policy goals and the impact of such goals on CECONY's electric, gas and steam businesses and O&R's electric and gas businesses may impact the Companies' future financial condition. The Utilities expect electric demand to increase and gas and steam usage to decrease in their service territories as federal, state and local laws and policies are enacted and implemented that continue to promote renewable electric energy. In particular, the long-term future of the Utilities' gas businesses depends upon the role that natural gas or other gaseous fuels will play in facilitating New York State's and New York City's climate goals. In addition, the impact and costs of climate change on the Utilities' systems and the success of the Utilities' efforts to increase system reliability and manage service interruptions resulting from severe weather may impact the Companies' future financial condition, results of operations and liquidity.

## CECONY Steam Rate Plan

In November 2022, as updated in February 2023, CECONY filed a request with the NYSPSC for a steam rate increase of $141 million, effective November 2023. The filing reflects a return on common equity of 10.0 percent and a common equity ratio of 50 percent and requests a new mechanism for decoupling revenues from steam consumption. CECONY's future earnings will depend on the rates authorized in, and the other provisions of, its November 2023 steam rate plan and CECONY's ability to operate its businesses in a manner consistent with such rate plan. Therefore, the outcome of CECONY's rate request, which requires approval by the NYSPSC, will impact the Companies' future financial condition, results of operations and liquidity. See 'Utility Regulation - State Utility Regulation - Rate Plans' in Item 1 and 'Rate Plans' in Note B to the financial statements in Item 8.

## Con Edison Transmission

Con Edison Transmission has taken steps to realign its portfolio to focus on electric transmission by completing the sale of its 50 percent interest in Stagecoach in 2021. During 2020 and 2021, Con Edison Transmission recorded impairments on its investment in Mountain Valley Pipeline, LLC and during 2021, Con Edison Transmission recorded impairments on its previously held interest in Stagecoach and its interest in Honeoye Storage Corporation (Honeoye). Any future impairments of Con Edison Transmission's investments may impact Con Edison's future financial condition and results of operations. Con Edison Transmission is pursuing opportunities and participating in competitive solicitations to develop electric transmission projects that will deliver renewable energy to high voltage electric grids in NY, through its NY Transco partnership, and in other states. The success of Con Edison Transmission's efforts in these competitive solicitations and to grow its electric transmission portfolio may impact Con Edison's future capital requirements. See 'Con Edison Transmission' in Item 1 and 'Investments' in Note A, Note K and Note W to the financial statements in Item 8.

## Coronavirus Disease 2019 (COVID-19) Impacts

The Coronavirus Disease 2019 (COVID-19) pandemic has impacted, and continues to impact, countries, communities, supply chains and markets. The COVID-19 pandemic resulted in changes in governmental and regulatory policy and contributed to an economic slowdown in the Companies' service territories. The decline in business activity in the Companies' service territories resulted in a slower recovery of cash from outstanding customer accounts receivable balances, material increases in customer accounts receivable balances, increases to the allowance for uncollectible accounts, and may result in increases to write-offs and recoveries of customer accounts. The extent to which COVID-19 will continue to impact the Companies, in particular, the Companies' ability to recover cash for outstanding customer accounts receivable balances and the amount of write-offs of customer accounts, may impact Con Edison's future financial condition, results of operations and liquidity. See 'Coronavirus Disease 2019 (COVID-19) Impacts' in Item 7 and 'COVID-19 Regulatory Matters' in Note B.

The Companies continue to monitor the impact of the COVID-19 global pandemic on their employees, customers and other stakeholders. The Companies support employee health and facility hygiene through regular cleaning and disinfecting of their facilities and leveraging technology through hybrid (combination of in-person and remote) meetings. Employees who test positive for COVID-19 are directed to isolate at home and are evaluated for close, prolonged contact with other employees. Following the Centers for Disease Control and Prevention guidelines, sick employees return to work when they can safely do so. The Utilities continue to provide critical electric, gas and steam service to customers during the emergence from the pandemic.

Below is additional information related to the effects of the COVID-19 pandemic and the Companies' actions. Also, see 'COVID-19 Regulatory Matters' in Note B to the financial statements in Item 8.

Certain financial data of Con Edison's businesses are presented below:

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53

| (Millions of Dollars, except percentages) | For the Year Ended December 31, 2022 |  |  |  | At December 31, 2022 |  |
| --- | --- | --- | --- | --- | --- | --- |
|  | Operating Revenues |  | Net Income for Common Stock |  | Assets |  |
| CECONY | $13,268 | 85% | $1,390 | 84% | $57,445 | 83% |
| O&R | 1,085 | 7% | 88 | 5% | 3,511 | 5% |
| Total Utilities | 14,353 | 92% | 1,478 | 89% | 60,956 | 88% |
| Clean Energy Businesses (a) | 1,319 | 8% | 382 | 23% | 7,224 | 10% |
| Con Edison Transmission (b) | 4 | -% | (1) | -% | 314 | 1% |
| Other (c) | (6) | -% | (199) | (12)% | 571 | 1% |
| Total Con Edison | $15,670 | 100% | $1,660 | 100% | $69,065 | 100% |

(a) Net income for common stock from the Clean Energy Businesses for the year ended December 31, 2022 reflects $46 million (after-tax) of the effects of HLBV accounting for tax equity investments in certain renewable electric projects and $135 million of net after-tax mark-to-market effects. The Clean Energy Businesses were classified as held for sale as of December 31, 2022. Depreciation and amortization expenses on their assets of $(46) million (after-tax) were not recorded for the three months ended December 31, 2022. The impact of the anticipated sale of the Clean Energy Businesses on the remeasurement of deferred state taxes and valuation allowance for deferred tax assets (net of federal taxes) was $(2) million for the year ended December 31, 2022. See "Assets and Liabilities Held for Sale" in Note A, Note S and Note X to the financial statements in Item 8.
(b) Net loss for common stock from Con Edison Transmission for the year ended December 31, 2022 includes $(4) million (net of federal taxes) relating to the remeasurement of deferred state taxes related to prior year dispositions. See "Critical Accounting Estimates - Investments" in Item 7, "Investments - 2020 and 2021 Partial Impairments of Investment in Mountain Valley Pipeline, LLC (MVP)" in Note A to the financial statements in Item 8.
(c) Other includes parent company and consolidation adjustments. Net income for common stock for the year ended December 31, 2022 includes $(4) million (after-tax) of income tax impact on the effects of HLBV accounting for tax equity investments in certain renewable projects and $(10) million of income tax impact on the net after-tax mark-to-market effects. Net income for common stock for the year ended December 31, 2022 includes $(9) million (net of federal taxes) relating to the remeasurement of deferred state taxes related to prior year dispositions for Con Edison Transmission. Net income for common stock for the year ended December 31, 2022 also includes $(35) million of transaction costs related to the anticipated sale of the Clean Energy Businesses (net of tax). The impact of the anticipated sale of the Clean Energy Businesses on the remeasurement of deferred state taxes and valuation allowance for deferred tax assets (net of federal taxes) was $(119) million for the year ended December 31, 2022. Depreciation and amortization expenses on the assets of the Clean Energy Businesses $(4) million (after-tax) were not recorded for the three months ended December 31, 2022. See "Assets and Liabilities Held for Sale" in Note A, Note S and Note X to the financial statements in Item 8.

## Inflation Reduction Act

On August 16, 2022, the Inflation Reduction Act of 2022 (the Act) was signed into law and included a new 15 percent Corporate Alternative Minimum Tax (CAMT). Under the Act, a corporation will be subject to the CAMT if its average annual Adjusted Financial Statement Income (AFSI) for the three taxable year period ending prior to the taxable year exceeds $1,000 million, and will apply to tax years beginning after December 31, 2022. Based on management's preliminary calculations, Con Edison and CECONY do not expect to be subject to the CAMT in 2023 but are expected to be subject to the CAMT in subsequent years. However, the provisions of the CAMT are not expected to have a material impact on the Companies' financial position, results of operations or liquidity.

## Impact of CARES Act and 2021 Appropriations Act on Accounting for Income Taxes

In response to the economic impacts of the COVID-19 pandemic, the Coronavirus Aid, Relief, and Economic Security (CARES) Act became law on March 27, 2020. The CARES Act had several key business tax relief measures that presented cash benefits and/or refunds for Con Edison and its subsidiaries, including permitting a five-year carryback of a NOL for tax years 2018, 2019 and 2020, temporary removal of the 80 percent limitation of NOL carryforwards against taxable income for tax years before 2021, temporary relaxation of the limitations on interest deductions, employee retention tax credit and deferral of payments of employer payroll taxes.

Con Edison carried back a NOL of $29 million from tax year 2018 to tax year 2013. This allowed Con Edison, mostly at the Clean Energy Businesses, to receive a $2.5 million net tax refund and to recognize a discrete income tax benefit of $4 million in 2020, due to the higher federal statutory tax rate in 2013. See "Income Tax" in Note L. Con Edison and its subsidiaries did not have a federal NOL in tax years 2019 or 2020.

Con Edison and its subsidiaries benefited by the increase in the percentage for calculating the limitation on the interest expense deduction from 30 percent of Adjusted Taxable Income (ATI) to 50 percent of ATI in 2019 and 2020, which allowed the Companies to deduct 100 percent of their interest expense. For 2021, the limitation on interest expense for computing ATI reverted back to 30 percent.

The Companies qualify for an employee retention tax credit created under the CARES Act for "eligible employers" related to governmental authorities imposing restrictions that partially suspended their operations for a portion of their workforce due to the COVID-19 pandemic and the Companies continued to pay them. For the year ended

54 CON EDISON ANNUAL REPORT 2022

December 31, 2020, Con Edison and CECONY recognized a tax benefit to Taxes, other than income taxes of $10 million and $7 million, respectively.

The CARES Act also allowed employers to defer payments of the employer share of Social Security payroll taxes that would have otherwise been owed from March 27, 2020 through December 31, 2020. The Companies deferred the payment of employer payroll taxes for the period April 1, 2020 through December 31, 2020 of approximately $71 million ($63 million of which is for CECONY). The Companies repaid half of this liability during 2021 and the other half during 2022.

Under the CARES Act, the Companies qualified for an employee retention tax credit for “eligible employers” related to governmental authorities imposing restrictions that partially suspended their operation for a portion of their workforce due to the COVID-19 pandemic. In December 2020, the Consolidated Appropriations Act, 2021 (the 2021 Appropriations Act) was signed into law. The 2021 Appropriations Act, among other things, extended the expiring employee retention tax credit to include qualified wages paid in the first two quarters of 2021, increased the qualified wages paid to an employee from 50 percent up to $10,000 annually in 2020 to 70 percent up to $10,000 per quarter in 2021 and increased the maximum employee retention tax credit amount an employer could take per employee from $5,000 in 2020 to $14,000 in the first two quarters of 2021. In March 2021, the American Rescue Plan Act was signed into law that expanded the 2021 Appropriations Act to extend the period for eligible employers to receive the employer retention credit from June 30, 2021 to December 31, 2021. In November 2021, the Infrastructure and Investment and Jobs Act was signed into law and accelerated the end of the employee retention tax credit retroactive to October 1, 2021, rather than December 31, 2021. This effectively reduced the maximum credit available from $28,000 to $21,000 per employee.

For the year ended December 31, 2021, Con Edison and CECONY recognized a tax benefit to Taxes, other than income taxes of $9 million and $4 million, respectively.

### Accounting Considerations

Due to the COVID-19 pandemic and subsequent New York State on PAUSE and related executive orders (that have since been lifted), a decline in business, bankruptcies, layoffs and furloughs, among other factors, both commercial and residential customers have had and may continue to have increased difficulty paying their utility bills. In June 2020, the state of NY enacted a law prohibiting NY utilities, including CECONY and O&R, from disconnecting residential customers, and starting in May 2021 small business customers, during the COVID-19 state of emergency, which ended in June 2021. In addition, such prohibitions were in effect until December 21, 2021 for residential and small business customers who experienced a change in financial circumstances due to the COVID-19 pandemic.

CECONY and O&R have existing allowances for uncollectible accounts established against their customer accounts receivable balances that are reevaluated each quarter and updated accordingly. Changes to the Utilities’ reserve balances that result in write-offs of customer accounts receivable balances are not reflected in rates during the term of the current rate plans.

For the year ended December 31, 2022, CECONY and O&R issued total credits of $359.9 million and $6.1 million, respectively, towards reducing customers’ accounts receivable balances pursuant to COVID-19 arrears assistance programs. See “COVID-19 Regulatory Matters” in Note B to the financial statements in Item 8.

In January 2023, the NYSPSC issued an order implementing a Phase 2 COVID-19 arrears assistance program that provides credits towards reducing the arrears balances of residential and small commercial electric and gas customers of CECONY and O&R. At the time the order was issued, CECONY’s and O&R’s eligible arrears balances were estimated to be $388.7 million and $2.9 million, respectively. The order authorizes a surcharge mechanism for recovery of the eligible credit amounts over a ten-year period commencing after credits are issued for CECONY and over a one-year period commencing after credits are issued for O&R. See “COVID-19 Regulatory Matters” in Note B and Note N to the financial statements in Item 8.

CECONY’s and O&R’s “accounts receivable - customers” balance (net of allowance for uncollectible accounts) increased from $1,841 million and $91 million at December 31, 2021 to $2,099 million and $93 million at December 31, 2022, respectively. CECONY’s customer accounts receivable balances that are over 60 days in arrears increased from $1,272 million at December 31, 2021 to $1,308 million at December 31, 2022. CECONY’s allowances for uncollectible customer accounts reserve increased from $304 million at December 31, 2021 to $314 million at December 31, 2022. O&R’s customer accounts receivable balances that are over 60 days in arrears decreased from $29 million at December 31, 2021 to $22 million at December 31, 2022. O&R’s allowances for uncollectible customer accounts reserve decreased from $12.3 million at December 31, 2021 to $8 million at December 31, 2022.

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During 2022, the potential economic impact of the COVID-19 pandemic and the COVID-19 arrears assistance programs, were considered in forward-looking projections related to write-off and recovery rates, resulting in changes to the customer allowance for uncollectible accounts as detailed herein. The Companies test goodwill for impairment at least annually or whenever there is a triggering event, and test long-lived and intangible assets for recoverability when events or changes in circumstances indicate that the carrying value of long-lived or intangible assets may not be recoverable. The Companies identified no triggering events or changes in circumstances related to the COVID-19 pandemic that would indicate that the carrying value of goodwill, long-lived or intangible assets may not be recoverable at December 31, 2021 and 2022. See Note K to the financial statements in Item 8.

## NY Legislation

In April 2021, NY passed a law that increases the corporate franchise tax rate on business income from 6.5 percent to 7.25 percent, retroactive to January 1, 2021, for taxpayers with taxable income greater than $5 million. The law also reinstates the business capital tax at 0.1875 percent, not to exceed a maximum tax liability of $5 million per taxpayer. NY requires a corporate franchise taxpayer to calculate and pay the highest amount of tax under the three alternative methods: a tax on business income; a tax on business capital; or a fixed dollar minimum. The provisions to increase the corporate franchise tax rate and reinstate a capital tax are scheduled to expire after 2023 and are not expected to have a material impact on the Companies' financial position, results of operations or liquidity.

In addition, the new law created a program that allows eligible residential renters in NY who require assistance with rent and utility bills to have up to twelve months of electric and gas utility bill arrears forgiven, provided that such arrears were accrued on or after March 13, 2020. The program will be administered by the State Office of Temporary and Disability Assistance (OTDA) in coordination with the NYSDPS and the NYSPSC (the OTDA Program). Under the OTDA Program, CECONY and O&R would qualify for a refundable tax credit for NY gross-receipts tax equal to the amount of arrears waived by the Utilities in the year that the arrears are waived and certified by the NYSPSC. See 'COVID-19 Regulatory Matters' in Note B to the financial statements in Item 8.

## Liquidity and Financing

The Companies continue to monitor the impacts of the COVID-19 pandemic on the financial markets closely, including borrowing rates and daily cash collections. The Companies have been able to access the capital markets as needed since the start of the COVID-19 pandemic in March 2020. Inflationary pressure and higher interest rates could increase the amount of capital needed by the Utilities and the costs of such capital. See Notes C and D to the financial statements in Item 8.

The decline in business activity in the Utilities' service territory due to the COVID-19 pandemic and subsequent New York State on PAUSE and related executive orders (that have since been lifted) resulted in a slower recovery in cash of outstanding customer accounts receivable balances in 2020 and 2021. During 2022, increases in electric and gas commodity prices have contributed and may further contribute to a slower recovery of cash from outstanding customer accounts receivable balances. The Utilities use derivative instruments to hedge price fluctuations for the purchase of electricity and gas. Volatility in electric and gas commodity prices that lead to the posting of cash collateral with counterparties could negatively impact the Utilities' liquidity. See 'COVID-19 Regulatory Matters' in Note B to the financial statements in Item 8 and 'Financial and Commodity Market Risks - Commodity Price Risk,' below.

The Utilities' rate plans have revenue decoupling mechanisms in their NY electric and gas businesses that largely reconcile actual energy delivery revenues to the authorized delivery revenues approved by the NYSPSC per month and reconcile the deferred balances semi-annually under CECONY's electric rate plan (January through June and July through December, respectively) and annually under CECONY's gas rate plan and O&R NY's electric and gas rate plans (January through December). Differences are accrued with interest each month for CECONY's and O&R NY's electric customers and after the annual deferral period ends for CECONY's and O&R NY's gas customers for refund to, or recovery from customers, as applicable. Generally, the refund to or recovery from customers begins August and February of each year over an ensuing six-month period for CECONY's electric customers and February of each year over an ensuing twelve-month period for CECONY's gas and O&R NY's electric and gas customers. Although these revenue decoupling mechanisms are in place, lower billed sales revenues and higher unpaid accounts have reduced and are expected to continue to reduce liquidity at the Utilities.

In March 2020, the Utilities began suspending service disconnections, certain collection notices, final bill collection agency activity, new late payment charges and certain other fees for all customers. In November 2021, the NYSPSC issued an order establishing a surcharge recovery mechanism for CECONY to collect, commencing December 1, 2021 through December 31, 2022, $43 million and $7 million for electric and gas, respectively, of late payment charges and fees that were not billed for the year ended December 31, 2020. The company recorded such amounts as revenue for the year ended December 31, 2021, as permitted under the accounting rules for regulated utilities, and also accrued such amounts as a current asset at December 31, 2021. Pursuant to the November 2021

56 CON EDISON ANNUAL REPORT 2022

order, the company also established a recovery mechanism for CECONY to collect, commencing January 2023 through December 2023, $19 million and $4 million for electric and gas, respectively, of late payment charges and fees that were not billed for the year ended December 31, 2021 and the company recorded such amounts as revenue for the year ended December 31, 2021, as permitted under the accounting rules for regulated utilities, and also accrued such amounts as a current asset at December 31, 2021. In addition, pursuant to the November 2021 order, CECONY established a reserve of $7 million toward addressing customer arrearages for the year ended December 31, 2021 that, pursuant to a June 2022 NYSPSC order discussed below, was used to fund a portion of the COVID-19 arrears assistance program for low-income customers. The order also established a surcharge recovery or sur-credit mechanism for any late payment charges and fee deferrals, subject to offsetting related savings resulting from the COVID-19 pandemic, for 2022 starting in January 2024 over a twelve-month period. CECONY resumed late payment charges for commercial and residential customers who have not experienced a change in financial circumstances due to the COVID-19 pandemic on September 3, 2021 and October 1, 2021, respectively. Pursuant to the October 2021 joint proposal for new electric and gas rates for O&R that was approved by the NYSPSC in April 2022, O&R recorded late payment charges and fees that were not billed for the years ended December 31, 2020 and December 31, 2021 of $1.7 million and $2.4 million, respectively, as revenue for the year ended December 31, 2021, as permitted under the accounting rules for regulated utilities, and also accrued such amounts as a current asset at December 31, 2021. See 'Rate Plans,' above. O&R resumed late payment charges for commercial and residential customers who have not experienced a change in financial circumstances due to the COVID-19 pandemic on October 1, 2021.

Con Edison and the Utilities have a $2,250 million credit agreement (Credit Agreement) in place under which banks are committed to provide loans on a revolving credit basis until December 2023 ($2,200 million of commitments from December 2022), subject to certain conditions. In March 2022, CECONY entered into a 364-Day Revolving Credit Agreement (CECONY Credit Agreement) under which banks are committed to provide loans up to $750 million on a revolving credit basis until March 30, 2023, subject to certain conditions. In April 2022, FERC issued an order that increases CECONY's authorization to issue short-term debt from $2,250 million to $3,000 million effective May 2022. Con Edison and the Utilities have not entered into any loans under the Credit Agreement and CECONY has not entered into any loans under the CECONY Credit Agreement. See Note D to the financial statements in Item 8.

New York State and the NYSPSC implemented COVID-19 arrears assistance programs that provide credits and establishes surcharge recovery mechanisms towards reducing the arrears balances of low-income electric and gas customers of CECONY and O&R. See 'COVID-19 Regulatory Matters' in Note B and Note L to the financial statements in Item 8 and 'Coronavirus Disease 2019 (COVID-19) Impacts - Accounting Considerations,' above.

In October 2022, Con Edison entered into an agreement to sell the Clean Energy Businesses for $6,800 million, subject to closing adjustments, including working capital adjustments and downward adjustments for indebtedness, transaction expenses and the value of certain assets and projects that are not able to be conveyed to the buyer upon closing of the transaction. Subject to, and following the closing of the sale of the Clean Energy Businesses, Con Edison intends to use the net proceeds from the sale to repay $1,250 million of parent company debt in 2023, invest in the Utilities and repurchase up $1,000 million of its common shares. The transaction is expected to close on or about the end of the first quarter of 2023, subject to satisfaction of certain conditions. See 'Assets and Liabilities Held for Sale' in Note A and Note X to the financial statements in Item 8 and 'Anticipated Sale of the Clean Energy Business,' above.

CON EDISON ANNUAL REPORT 2022

57

## Results of Operations

Net income for common stock and earnings per share for the years ended December 31, 2022, 2021 and 2020 were as follows:

| (Millions of Dollars, except per share amounts) | Net Income for Common Stock |  |  | Earnings per Share |  |  |
| --- | --- | --- | --- | --- | --- | --- |
|  | 2022 | 2021 | 2020 | 2022 | 2021 | 2020 |
| CECONY | $1,390 | $1,344 | $1,185 | $3.92 | $3.86 | $3.54 |
| O&R | 88 | 75 | 71 | 0.25 | 0.22 | 0.21 |
| Clean Energy Businesses (a) (e) | 382 | 266 | 24 | 1.08 | 0.76 | 0.07 |
| Con Edison Transmission (b) | (1) | (316) | (175) | - | (0.91) | (0.52) |
| Other (c) | (199) | (23) | (4) | (0.57) | (0.07) | (0.01) |
| Con Edison (d) | $1,660 | $1,346 | $1,101 | $4.68 | $3.86 | $3.29 |

(a) Net income for common stock and earnings per share from the Clean Energy Businesses for the year ended December 31, 2022, 2021 and 2020 reflects $46 million or $0.14 a share (after-tax), $107 million or $0.31 a share (after-tax) and $(32) million or $(0.10) a share (after-tax) of the effects of HLBV accounting for tax equity investments in certain renewable electric projects. Net income for common stock and earnings per share from the Clean Energy Businesses also includes $135 million or $0.38 a share, $40 million or $0.11 a share and $(43) million or $(0.13) a share of net after-tax mark-to-market effects in 2022, 2021 and 2020, respectively. The Clean Energy Businesses were classified as held for sale as of December 31, 2022. Depreciation and amortization expenses on their assets of $(46) million or $(0.13) a share (after-tax) were not recorded for the three months ended December 31, 2022. The impact of the anticipated sale of the Clean Energy Businesses on the remeasurement of deferred state taxes and valuation allowance for deferred tax assets (net of federal taxes) was $(2) million or $(0.01) a share for the three months ended December 31, 2022. See 'Assets and Liabilities Held for Sale' in Note A, Note S and Note X to the financial statements in Item 8. Net income for common stock and earnings per share from the Clean Energy Businesses for the year ended December 31, 2021 includes $(3) million (after-tax) or $(0.01) a share (after-tax) for the loss from the sale of a renewable electric project. See Note S to the financial statements in Item 8.

(b) Net loss for common stock and earnings per share from Con Edison Transmission for the year ended December 31, 2022 includes $(4) million or $(0.01) a share (net of federal taxes) relating to the remeasurement of deferred state taxes related to prior year dispositions. Net loss for common stock and earnings per share from Con Edison Transmission for the year ended December 31, 2021 includes $(153) million or $(0.44) a share of net after-tax impairment loss related to its investment in Stagecoach, $(168) million or $(0.48) a share of net after-tax impairment loss related to its investment in Mountain Valley Pipeline, LLC and $(5) million or $(0.02) a share of loss related to a goodwill impairment loss related to its investment in Honeoye. Net income for common stock and earnings per share from Con Edison Transmission for the year ended December 31, 2020 includes $(232) million or $(0.69) a share of net after-tax impairment loss related to its investment in Mountain Valley Pipeline, LLC. See 'Critical Accounting Estimates - Investments' in Item 7 and 'Investments - Partial Impairment of Investment in Mountain Valley Pipeline, LLC (MVP)' in Note A to the financial statements in Item 8.

(c) Other includes parent company and consolidation adjustments. Net income for common stock and earnings per share for the year ended December 31, 2022 includes $(4) million (after-tax) or $(0.02) a share (after-tax) of income tax impact on the effects of HLBV accounting for tax equity investments in certain renewable electric projects and $(11) million or $(0.03) a share of income tax impact on the net after-tax mark-to-market effects. Net income for common stock and earnings per share for the year ended December 31, 2022 includes $(9) million or $(0.03) a share (net of federal taxes) relating to the remeasurement of deferred state taxes related to prior year dispositions for Con Edison Transmission. Net income for common stock for the year ended December 31, 2022 also includes $(35) million and $(0.10) a share of transaction costs related to the anticipated sale of the Clean Energy Businesses (net of tax) related to the anticipated sale of the Clean Energy Businesses. Impact of the anticipated sale of the Clean Energy Businesses on the remeasurement of deferred state taxes and valuation allowance for deferred tax assets (net of federal taxes) is $(119) million or $(0.33) per share. Depreciation and amortization expenses on the assets of the Clean Energy Businesses $(4) million or $(0.01) a share (after-tax) were not recorded for the three months ended December 31, 2022. See 'Assets and Liabilities Held for Sale' in Note A, Note S and Note X to the financial statements in Item 8.

Net income for common stock and earnings per share for the year ended December 31, 2021 includes $(9) million (after-tax) or $(0.02) a share (after-tax) of income tax impact on the effects of HLBV accounting for tax equity investments in certain renewable electric projects and $(3) million or $(0.01) a share of income tax impact on the net after-tax mark-to-market effects. Net income for common stock and earnings per share for the year ended December 31, 2021 includes $6 million or $0.02 a share of income tax impact for the impairment loss related to Con Edison Transmission's investment in Stagecoach. Net income for common stock and earnings per share for the year ended December 31, 2021 includes $6 million or $0.01 a share of income tax impact for the impairment loss related to Con Edison Transmission's investment in Mountain Valley Pipeline, LLC. See 'Investments - Partial Impairment of Investment in Stagecoach Gas Services LLC (Stagecoach)' and 'Investments - 2020 and 2021 Partial Impairments of Investment in Mountain Valley Pipeline, LLC (MVP)' in Note A to the financial statements in Item 8.

Net income for common stock and earnings per share for the year ended December 31, 2020 includes $3 million or $0.01 a share (after-tax), respectively, of income tax impact on the effects of HLBV accounting for tax equity investments in certain renewable electric projects. Net income for common stock and earnings per share from the Clean Energy Businesses for the year ended December 31, 2020 includes $4 million or $0.01 a share of income tax impact on the net after-tax mark-to-market effects. Net income for common stock and earnings per share for the year ended December 31, 2020 includes $9 million or $0.03 a share of income tax impact for the impairment loss related to Con Edison Transmission's investment in Mountain Valley Pipeline, LLC. See 'Investments - 2020 and 2021 Partial Impairments of Investment in Mountain Valley Pipeline, LLC (MVP)' in Note A to the financial statements in Item 8.

(d) Earnings per share on a diluted basis were $4.66 a share, $3.85 a share and $3.28 a share in 2022, 2021 and 2020, respectively. See 'Earnings Per Common Share' in Note A to the financial statements in Item 8.

(e) The Clean Energy Businesses were classified as held for sale as of December 31, 2022. See 'Assets and Liabilities Held for Sale' in Note A and Note X to the financial statements in Item 8.

The following tables present the estimated effect of major factors on earnings per share and net income for common stock for the years ended December 31, 2022 as compared with 2021, and 2021 as compared with 2020.

58 CON EDISON ANNUAL REPORT 2022

# Variation for the Year Ended December 31, 2022 vs. 2021

|  | Net Income for Common Stock (Millions of Dollars) | Earnings per Share |
| --- | --- | --- |
| CECONY (a) |  |  |
| Higher electric rate base | $48 | $0.14 |
| Higher gas rate base | 39 | 0.11 |
| Lower costs related to winter storms and heat events | 26 | 0.08 |
| Higher income from allowance for funds used during construction | 16 | 0.04 |
| Lower health care and other employee benefits costs | 13 | 0.03 |
| Weather impact on steam revenues | 6 | 0.02 |
| Resumption of the billing of late payment charges and other fees to allowed rate plan levels | (34) | (0.10) |
| Lower incentives earned under the electric and gas earnings adjustment mechanisms (EAMs) and positive incentives | (28) | (0.08) |
| Higher stock-based compensation costs | (18) | (0.05) |
| Regulatory commission expense | (11) | (0.03) |
| Higher payroll taxes | (4) | (0.01) |
| Dilutive effect of stock issuances | - | (0.07) |
| Other | (7) | (0.02) |
| Total CECONY | 46 | 0.06 |
| O&R (a) |  |  |
| Electric base rate increase | 16 | 0.04 |
| Gas base rate increase | 8 | 0.02 |
| Higher stock-based compensation costs | (2) | (0.01) |
| Other | (9) | (0.02) |
| Total O&R | 13 | 0.03 |
| Clean Energy Businesses (b) |  |  |
| Higher wholesale revenue | 207 | 0.59 |
| Net mark-to-market effects | 95 | 0.27 |
| Impact of the anticipated sale of the Clean Energy Businesses | 44 | 0.12 |
| Loss from sale of a renewable electric project in 2021 | 3 | 0.01 |
| Higher gas purchased for resale | (135) | (0.39) |
| HLBV effects | (61) | (0.17) |
| Higher operation and maintenance expense from engineering, procurement and construction of renewable electric projects | (21) | (0.06) |
| Higher cost from purchased power | (5) | (0.01) |
| Lower tax credits | (4) | (0.01) |
| Higher interest expense | (3) | (0.01) |
| Dilutive effect of stock issuances | - | (0.02) |
| Other | (4) | - |
| Total Clean Energy Businesses | 116 | 0.32 |
| Con Edison Transmission |  |  |
| Impairment loss related to investment in Mountain Valley Pipeline, LLC | 168 | 0.48 |
| Impairment loss related to investment in Stagecoach in 2021 | 153 | 0.44 |
| Impairment loss related to investment in Honeoye in 2021 | 5 | 0.02 |
| Lower interest expense | 3 | 0.01 |
| Lower investment income | (14) | (0.04) |
| Remeasurement of deferred state taxes related to prior year dispositions | (4) | (0.01) |
| Other | 4 | 0.01 |
| Total Con Edison Transmission | 315 | 0.91 |
| Other, including parent company expenses |  |  |
| HLBV effects | 5 | - |
| Impact of the anticipated sale of the Clean Energy Businesses | (158) | (0.44) |
| Remeasurement of deferred state tax related to prior year dispositions | (9) | (0.03) |
| Impact of net mark-to-market effects | (7) | (0.02) |
| Impairment related to investment in Stagecoach in 2021 | (6) | (0.02) |

CON EDISON ANNUAL REPORT 2022

59

| Impairment related to investment in Mountain Valley Pipeline, LLC | (6) | (0.01) |
| --- | --- | --- |
| Dilutive effect of stock issuances | - | 0.01 |
| Other | 5 | 0.01 |
| Total Other, including parent company expenses | (176) | (0.50) |
| Total Reported (GAAP basis) | 314 | 0.82 |

a. Under the revenue decoupling mechanisms in the Utilities' NY electric and gas rate plans and the weather-normalization clause applicable to their gas businesses, revenues are generally not affected by changes in delivery volumes from levels assumed when rates were approved. In general, the Utilities recover on a current basis the fuel, gas purchased for resale and purchased power costs they incur in supplying energy to their full-service customers. Accordingly, such costs do not generally affect Con Edison's results of operations.

b. The Clean Energy Businesses were classified as held for sale as of December 31, 2022.

60 CON EDISON ANNUAL REPORT 2022

# Variation for the Year Ended December 31, 2021 vs. 2020

|  | Net Income for Common Stock (Millions of Dollars) | Earnings per Share |
| --- | --- | --- |
| CECONY (a) |  |  |
| Recognition of late payment charges for the year ended 2020 that are being recovered through a surcharge mechanism established by the New York Public Service Commission in its November 2021 order | $32 | $0.09 |
| Recognition of late payment charges for the year ended 2021 that are being recovered through a surcharge mechanism established by the New York Public Service Commission in its November 2021 order, and resuming the billing of late payment charges and no access fees | 41 | 0.13 |
| Higher electric rate base | 64 | 0.19 |
| Higher gas rate base | 38 | 0.11 |
| Higher incentives earned under the electric and gas earnings adjustment mechanisms (EAMs) and positive incentives | 30 | 0.09 |
| Weather impact on steam revenues | 16 | 0.05 |
| Higher costs related to heat, storm and emergency response | (37) | (0.11) |
| Higher healthcare costs | (16) | (0.05) |
| Higher stock-based compensation costs | (11) | (0.03) |
| Dilutive effect of stock issuances | - | (0.15) |
| Other | 2 | - |
| Total CECONY | 159 | 0.32 |
| O&R (a) |  |  |
| Electric base rate increase | 9 | 0.03 |
| Higher storm-related costs | (5) | (0.02) |
| Total O&R | 4 | 0.01 |
| Clean Energy Businesses |  |  |
| Higher revenues | 209 | 0.62 |
| HLBV effects | 139 | 0.41 |
| Net mark-to-market effects | 83 | 0.24 |
| Higher operations and maintenance expenses | (180) | (0.54) |
| Loss from sale of a renewable electric project | (3) | (0.01) |
| Dilutive effect of stock issuances | - | (0.03) |
| Other | (6) | - |
| Total Clean Energy Businesses | 242 | 0.69 |
| Con Edison Transmission |  |  |
| Impairment loss related to investment in Mountain Valley Pipeline, LLC | 64 | 0.21 |
| Impairment losses related to investment in Stagecoach | (153) | (0.44) |
| Foregoing Allowance for Funds Used During Construction income starting in January 2021 until significant construction resumes on the Mountain Valley Pipeline | (44) | (0.13) |
| Impairment loss related to investment in Honeoye | (5) | (0.02) |
| Other | (3) | (0.01) |
| Total Con Edison Transmission | (141) | (0.39) |
| Other, including parent company expenses |  |  |
| Impairment tax benefits related to investment in Mountain Valley Pipeline, LLC | (3) | (0.02) |
| Tax impact of HLBV effects | (9) | (0.02) |
| Tax impact of net mark-to-market effects | (3) | (0.01) |
| Lower consolidated state income tax benefit | (9) | (0.03) |
| Impairment tax benefits related to investment in Stagecoach | 6 | 0.02 |
| Other | (1) | - |
| Total Other, including parent company expenses | (19) | (0.06) |
| Total Reported (GAAP basis) | $245 | $0.57 |

a. Under the revenue decoupling mechanisms in the Utilities' NY electric and gas rate plans and the weather-normalization clause applicable to their gas businesses, revenues are generally not affected by changes in delivery volumes from levels assumed when rates were approved. In general, the Utilities recover on a current basis the fuel, gas purchased for resale and purchased power costs they incur in supplying energy to their full-service customers. Accordingly, such costs do not generally affect Con Edison's results of operations.

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61

The Companies' other operations and maintenance expenses for the years ended December 31, 2022, 2021 and 2020 were as follows:

| (Millions of Dollars) | 2022 | 2021 | 2020 |
| --- | --- | --- | --- |
| CECONY |  |  |  |
| Operations | $1,717 | $1,691 | $1,606 |
| Pensions and other postretirement benefits | 415 | (42) | (103) |
| Health care and other benefits | 155 | 173 | 151 |
| Regulatory fees and assessments (a) | 354 | 332 | 330 |
| Other | 401 | 298 | 285 |
| Total CECONY | 3,042 | 2,452 | 2,269 |
| O&R | 351 | 313 | 310 |
| Clean Energy Businesses (c) | 504 | 475 | 228 |
| Con Edison Transmission | 13 | 19 | 11 |
| Other (b) | (5) | (5) | (4) |
| Total other operations and maintenance expenses | $3,905 | $3,254 | $2,814 |

(a) Includes Demand Side Management, System Benefit Charges and Public Service Law 18A assessments which are collected in revenues.

(b) Includes parent company and consolidation adjustments.

(c) The Clean Energy Businesses were classified as held for sale as of December 31, 2022. See 'Assets and Liabilities Held for Sale' in Note A and Note X to the financial statements in Item 8.

Con Edison's principal business segments are CECONY's regulated utility activities, O&R's regulated utility activities, the Clean Energy Businesses and Con Edison Transmission. The Clean Energy Businesses were classified as held for sale as of December 31, 2022. See 'Assets and Liabilities Held for Sale' in Note A and Note X to the financial statements in Item 8. CECONY's principal business segments are its regulated electric, gas and steam utility activities. A discussion of the results of operations by principal business segment for the years ended December 31, 2022, 2021 and 2020 follows. For additional business segment financial information, see Note P to the financial statements in Item 8.

62

CON EDISON ANNUAL REPORT 2022

The Companies' results of operations for the years ended December 31, 2022, 2021 and 2020 were:

|  | CECONY |  |  | O&R |  |  | Clean Energy (e) Businesses |  |  | Con Edison Transmission |  |  | Other (a) |  |  | Con Edison (b) |  |  |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  | 2022 | 2021 | 2020 | 2022 | 2021 | 2020 | 2022 | 2021 | 2020 | 2022 | 2021 | 2020 | 2022 | 2021 | 2020 | 2022 | 2021 | 2020 |
| (Millions of Dollars) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| Operating revenues | $13,268 | $11,716 | $10,647 | $1,085 | $941 | $862 | $1,319 | $1,022 | $736 | $4 | $4 | $4 | $(6) | $(7) | $(3) | $15,670 | $13,676 | $12,246 |
| Purchased power | 2,201 | 1,633 | 1,432 | 276 | 206 | 169 | 7 | - | - | - | - | - | (5) | (4) | (1) | 2,479 | 1,835 | 1,600 |
| Fuel | 356 | 229 | 156 | - | - | - | - | - | - | - | - | - | - | - | - | 356 | 229 | 156 |
| Gas purchased for resale | 869 | 541 | 426 | 135 | 88 | 61 | 241 | 62 | 41 | - | - | - | - | (1) | (1) | 1,245 | 690 | 527 |
| Other operations and maintenance (c) | 3,042 | 2,452 | 2,269 | 351 | 313 | 310 | 504 | 475 | 228 | 13 | 19 | 11 | (5) | (5) | (4) | 3,905 | 3,254 | 2,814 |
| Depreciation and amortization | 1,778 | 1,705 | 1,598 | 98 | 95 | 90 | 178 | 231 | 231 | 1 | 1 | 1 | 1 | - | - | 2,056 | 2,032 | 1,920 |
| Taxes, other than income taxes | 2,887 | 2,696 | 2,456 | 89 | 89 | 85 | 21 | 18 | 21 | - | - | - | 8 | 7 | 13 | 3,005 | 2,810 | 2,575 |
| Operating income (loss) | 2,135 | 2,460 | 2,310 | 136 | 150 | 147 | 368 | 236 | 215 | (10) | (16) | (8) | (5) | (4) | (10) | 2,624 | 2,826 | 2,654 |
| Other income (deductions) (d) | 332 | (108) | (171) | 23 | (12) | (14) | 3 | (10) | 4 | 19 | (407) | (215) | (51) | (1) | (5) | 326 | (538) | (401) |
| Net interest expense (income) | 822 | 762 | 739 | 46 | 42 | 41 | (35) | 68 | 196 | 5 | 9 | 18 | 14 | 24 | 25 | 852 | 905 | 1,019 |
| Income before income tax expense | 1,645 | 1,590 | 1,400 | 113 | 96 | 92 | 406 | 158 | 23 | 4 | (432) | (241) | (70) | (29) | (40) | 2,098 | 1,383 | 1,234 |
| Income tax expense (benefit) | 255 | 246 | 215 | 25 | 21 | 21 | 84 | 44 | (44) | 5 | (114) | (66) | 129 | (7) | (36) | 498 | 190 | 90 |
| Net income (loss) | $1,390 | $1,344 | $1,185 | $88 | $75 | $71 | $322 | $114 | $67 | $(1) | $(318) | $(175) | $(199) | $(22) | $(4) | $1,600 | $1,193 | $1,144 |
| Income (loss) attributable to non-controlling interest | - | - | - | - | - | - | (60) | (152) | 43 | - | (2) | - | - | 1 | - | (60) | (153) | 43 |
| Net income (loss) from common stock | $1,390 | $1,344 | $1,185 | $88 | $75 | $71 | $382 | $266 | $24 | $(1) | $(316) | $(175) | $(199) | $(23) | $(4) | $1,660 | $1,346 | $1,101 |

(a) Includes parent company and consolidation adjustments.

(b) Represents the consolidated results of operations of Con Edison and its businesses.

(c) For the year ended December 31, 2021, Con Edison Transmission recorded a $5 million loss related to a goodwill impairment on its investment in Honeoye. See Note K to the financial statements in Item 8.

(d) For the year ended December 31, 2021, Con Edison Transmission recorded pre-tax impairment losses of $212 million ($147 million, after-tax) on its investment in Stagecoach and during 2021 completed the sale of its interest in Stagecoach. For the year ended December 31, 2021, Con Edison Transmission recorded a pre-tax impairment loss of $231 million ($162 million, after-tax), to reduce the carrying value of its investment in MVP from $342 million to $111 million. See 'Investments - 2020 and 2021 Partial Impairments of Investment in Mountain Valley Pipeline, LLC (MVP)' in Note A to the financial statements in Item 8. For the year ended December 31, 2020, Con Edison Transmission recorded a pre-tax impairment loss of $320 million ($223 million, after-tax), to reduce the carrying value of its investment in MVP from $662 million to $342 million. See 'Investments - 2020 and 2021 Partial Impairments of Investment in Mountain Valley Pipeline, LLC (MVP)' in Note A to the financial statements in Item 8.

(e) The Clean Energy Businesses were classified as held for sale as of December 31, 2022. See 'Assets and Liabilities Held for Sale' in Note A and Note X to the financial statements in Item 8.

CON EDISON ANNUAL REPORT 2022

63

# Year Ended December 31, 2022 Compared with Year Ended December 31, 2021

# **CECONY**

| (Millions of Dollars) | For the Year Ended December 31, 2022 |  |  |  | For the Year Ended December 31, 2021 |  |  |  | 2022-2021 Variation |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  | Electric | Gas | Steam | 2022 Total | Electric | Gas | Steam | 2021 Total |  |
| Operating revenues | $9,751 | $2,924 | $593 | $13,268 | $8,806 | $2,378 | $532 | $11,716 | $1,552 |
| Purchased power | 2,137 | - | 64 | 2,201 | 1,588 | - | 45 | 1,633 | 568 |
| Fuel | 246 | - | 110 | 356 | 156 | - | 73 | 229 | 127 |
| Gas purchased for resale | - | 869 | - | 869 | - | 541 | - | 541 | 328 |
| Other operations and maintenance | 2,373 | 472 | 197 | 3,042 | 1,919 | 368 | 165 | 2,452 | 590 |
| Depreciation and amortization | 1,315 | 367 | 96 | 1,778 | 1,286 | 326 | 93 | 1,705 | 73 |
| Taxes, other than income taxes | 2,184 | 556 | 147 | 2,887 | 2,055 | 497 | 144 | 2,696 | 191 |
| Operating income | $1,496 | $660 | $(21) | $2,135 | $1,802 | $646 | $12 | $2,460 | $(325) |

# **Electric**

CECONY's results of electric operations for the year ended December 31, 2022 compared with the year ended December 31, 2021 were as follows:

| (Millions of Dollars) | For the Years Ended December 31, |  |  |
| --- | --- | --- | --- |
|  | 2022 | 2021 | Variation |
| Operating revenues | $9,751 | $8,806 | $945 |
| Purchased power | 2,137 | 1,588 | 549 |
| Fuel | 246 | 156 | 90 |
| Other operations and maintenance | 2,373 | 1,919 | 454 |
| Depreciation and amortization | 1,315 | 1,286 | 29 |
| Taxes, other than income taxes | 2,184 | 2,055 | 129 |
| Electric operating income | $1,496 | $1,802 | $(306) |

CECONY's electric sales and deliveries in 2022 compared with 2021 were:

| Description | Millions of kWh Delivered |  |  |  | Revenues in Millions (a) |  |  |  |
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  | For the Years Ended |  |  |  | For the Years Ended |  |  |  |
|  | December 31, 2022 | December 31, 2021 | Variation | Percent Variation | December 31, 2022 | December 31, 2021 | Variation | Percent Variation |
| Residential/Religious (b) | 11,875 | 11,344 | 531 | 4.7% | $3,416 | $3,100 | $316 | 10.2% |
| Commercial/Industrial | 10,522 | 9,250 | 1,272 | 13.8 | 2,740 | 2,174 | 566 | 26.0 |
| Retail choice customers | 21,116 | 21,549 | (433) | (2.0) | 2,526 | 2,613 | (87) | (3.3) |
| NYPA, Municipal Agency and other sales | 9,507 | 9,185 | 322 | 3.5 | 751 | 708 | 43 | 6.1 |
| Other operating revenues (c) | - | - | - | - | 318 | 211 | 107 | 50.7 |
| Total | 53,020 | 51,328 | 1,692 | 3.3 % (d) | $9,751 | $8,806 | $945 | 10.7% |

- (a) Revenues from electric sales are subject to a revenue decoupling mechanism, as a result of which, delivery revenues are generally not affected by changes in delivery volumes from levels assumed when rates were approved.
- (b) "Residential/Religious" generally includes single-family dwellings, individual apartments in multi-family dwellings, religious organizations and certain other not-for-profit organizations.
- (c) Other electric operating revenues generally reflect changes in the revenue decoupling mechanism current asset or regulatory liability and changes in regulatory assets and liabilities in accordance with other provisions of the company's rate plan.
- (d) After adjusting for variations, primarily weather and billing days, electric delivery volumes in the company's service area increased 3.3 percent in 2022 compared with 2021. See "Coronavirus Disease 2019 (COVID-19) Impacts," above.

Operating revenues increased $945 million in 2022 compared with 2021 primarily due to higher purchased power expenses ($549 million), higher revenues from the electric rate plan ($279 million) and higher fuel expenses ($90 million).

Purchased power expenses increased $549 million in 2022 compared with 2021 due to higher unit costs ($400 million) and purchased volume ($149 million).

64 CON EDISON ANNUAL REPORT 2022

Fuel expenses increased $90 million in 2022 compared with 2021 due to higher unit costs ($106 million), offset in part by lower purchased volumes from the company's electric generating facilities ($16 million).

Other operations and maintenance expenses increased $454 million in 2022 compared with 2021 primarily due to higher costs for pension and other postretirement benefits ($355 million), higher stock-based compensation ($19 million), higher total surcharges for assessments and fees that are collected in revenues from customers ($19 million), higher municipal infrastructure support costs ($13 million), higher uncollectible expense ($8 million) and higher costs for injuries and damages ($6 million).

Depreciation and amortization increased $29 million in 2022 compared with 2021 primarily due to higher electric utility plant balances.

Taxes, other than income taxes increased $129 million in 2022 compared with 2021 primarily due to higher property taxes ($75 million), higher deferral of over-collected property taxes ($27 million) and higher state and local taxes ($24 million).

## Gas

CECONY's results of gas operations for the year ended December 31, 2022 compared with the year ended December 31, 2021 were as follows:

| (Millions of Dollars) | For the Years Ended December 31, |  |  |
| --- | --- | --- | --- |
|  | 2022 | 2021 | Variation |
| Operating revenues | $2,924 | $2,378 | $546 |
| Gas purchased for resale | 869 | 541 | 328 |
| Other operations and maintenance | 472 | 368 | 104 |
| Depreciation and amortization | 367 | 326 | 41 |
| Taxes, other than income taxes | 556 | 497 | 59 |
| Gas operating income | $660 | $646 | $14 |

CECONY's gas sales and deliveries, excluding off-system sales, in 2022 compared with 2021 were:

| Description | Thousands of Dt Delivered |  |  |  | Revenues in Millions (a) |  |  |  |
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  | For the Years Ended |  |  |  | For the Years Ended |  |  |  |
|  | December 31, 2022 | December 31, 2021 | Variation | Percent Variation | December 31, 2022 | December 31, 2021 | Variation | Percent Variation |
| Residential | 51,580 | 50,690 | 890 | 1.8% | $1,272 | $1,050 | $222 | 21.1% |
| General | 33,666 | 30,947 | 2,719 | 8.8 | 578 | 423 | 155 | 36.6 |
| Firm retail choice customers | 75,172 | 76,765 | (1,593) | (2.1) | 798 | 704 | 94 | 13.4 |
| Total firm sales and firm retail choice | 160,418 | 158,402 | 2,016 | 1.3 (b) | $2,648 | $2,177 | $471 | 21.6 |
| Interruptible sales (c) | 6,098 | 5,927 | 171 | 2.9% | 51 | 29 | 22 | 75.9% |
| NYPA | 45,085 | 43,094 | 1,991 | 4.6 | 2 | 2 | - | - |
| Generation plants | 53,262 | 47,620 | 5,642 | 11.8 | 30 | 25 | 5 | 20.0 |
| Other | 19,186 | 20,251 | (1,065) | (5.3) | 34 | 34 | - | - |
| Other operating revenues (d) | - | - | - | - | 159 | 111 | 48 | 43.2 |
| Total | 284,049 | 275,294 | 8,755 | 3.2% | $2,924 | $2,378 | $546 | 23.0% |

(a) Revenues from gas sales are subject to a weather normalization clause and a revenue decoupling mechanism, as a result of which, delivery revenues are generally not affected by changes in delivery volumes from levels assumed when rates were approved.
(b) After adjusting for variations, primarily billing days, firm gas sales and firm retail choice volumes in the company's service area increased 0.4 percent in 2022 compared with 2021. See "Coronavirus Disease 2019 (COVID-19) Impacts," above.
(c) Includes 2,015 thousands and 1,921 thousands of Dt for 2022 and 2021, respectively, which are also reflected in firm retail choice customers and other.
(d) Other gas operating revenues generally reflect changes in the revenue decoupling mechanism and weather normalization clause current asset or regulatory liability and changes in regulatory assets and liabilities in accordance with other provisions of the company's rate plans. See Note B to the financial statements in Item 8.

Operating revenues increased $546 million in 2022 compared with 2021 primarily due to higher gas purchased for resale expense ($328 million) and higher gas revenues under the company's gas rate plan ($207 million).

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65

Gas purchased for resale increased $328 million in 2022 compared with 2021 due to higher unit costs ($273 million) and higher purchased volumes ($55 million).

Other operations and maintenance expenses increased $104 million in 2022 compared with 2021 primarily due to higher costs for pension and other postretirement benefits ($73 million), higher municipal infrastructure support ($6 million), higher stock-based compensation ($4 million), higher uncollectible expense ($2 million), higher total surcharges for assessments and fees that are collected in revenues from customers ($2 million) and higher costs for injuries and damages ($1 million).

Depreciation and amortization increased $41 million in 2022 compared with 2021 primarily due to higher gas utility plant balances.

Taxes, other than income taxes increased $59 million in 2022 compared with 2021 primarily due to higher deferral of over-collected property taxes ($23 million), higher property taxes ($23 million) and higher state and local taxes ($13 million).

## Steam

CECONY's results of steam operations for the year ended December 31, 2022 compared with the year ended December 31, 2021 were as follows:

| (Millions of Dollars) | For the Years Ended December 31, |  |  |
| --- | --- | --- | --- |
|  | 2022 | 2021 | Variation |
| Operating revenues | $593 | $532 | $61 |
| Purchased power | 64 | 45 | 19 |
| Fuel | 110 | 73 | 37 |
| Other operations and maintenance | 197 | 165 | 32 |
| Depreciation and amortization | 96 | 93 | 3 |
| Taxes, other than income taxes | 147 | 144 | 3 |
| Steam operating income | $(21) | $12 | $(33) |

CECONY's steam sales and deliveries in 2022 compared with 2021 were:

| Description | Millions of Pounds Delivered |  |  |  | Revenues in Millions |  |  |  |
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  | For the Years Ended |  |  |  | For the Years Ended |  |  |  |
|  | December 31, 2022 | December 31, 2021 | Variation | Percent Variation | December 31, 2022 | December 31, 2021 | Variation | Percent Variation |
| General | 513 | 504 | 9 | 1.8% | $27 | $25 | $2 | 8.0% |
| Apartment house | 5,122 | 5,013 | 109 | 2.2 | 155 | 137 | 18 | 13.1 |
| Annual power | 11,792 | 11,367 | 425 | 3.7 | 391 | 340 | 51 | 15.0 |
| Other operating revenues (a) | - | - | - | - | 20 | 30 | (10) | (33.3) |
| Total | 17,427 | 16,884 | 543 | 3.2 % (b) | $593 | $532 | $61 | 11.5% |

(a) Other steam operating revenues generally reflect changes in regulatory assets and liabilities in accordance with the company's rate plan. See Note B to the financial statements in Item 8.

(b) After adjusting for variations, primarily weather and billing days, steam sales and deliveries in the company's service area increased 1.1 percent in 2022 compared with 2021. See 'Coronavirus Disease 2019 (COVID-19) Impacts,' above.

Operating revenues increased $61 million in 2022 compared with 2021 primarily due to higher fuel expenses ($37 million), higher purchased power expenses ($19 million) and the impact of colder winter weather ($8 million).

Purchased power expenses increased $19 million in 2022 compared with 2021 due to higher unit costs ($23 million) offset in part by lower purchased volumes ($4 million).

Fuel expenses increased $37 million in 2022 compared with 2021 due to higher unit costs ($28 million) and higher purchased volumes from the company's steam generating facilities ($9 million).

Other operations and maintenance expenses increased $32 million in 2022 compared with 2021 primarily due to higher costs for pension and other postretirement benefits ($30 million) and higher stock-based compensation ($2 million).

Depreciation and amortization increased $3 million in 2022 compared with 2021 primarily due to higher steam utility plant balances.

66 CON EDISON ANNUAL REPORT 2022

Taxes, other than income taxes increased $3 million in 2022 compared with 2021 primarily due to higher property taxes ($5 million) and higher state and local taxes ($2 million), offset in part by higher deferral of under-collected property taxes ($5 million).

### Taxes, Other Than Income Taxes

At $2,887 million, taxes other than income taxes remain one of CECONY's largest operating expenses. The principal components of, and variations in, taxes other than income taxes were:

| (Millions of Dollars) | For the Years Ended December 31, |  |  |
| --- | --- | --- | --- |
|  | 2022 | 2021 | Variation |
| Property taxes | $2,318 | $2,215 | $103 |
| State and local taxes related to revenue receipts | 411 | 373 | 38 |
| Payroll taxes | 70 | 65 | 5 |
| Other taxes | 88 | 43 | 45 |
| Total | $2,887 (a) | $2,696 (a) | $191 |

(a) Including sales tax on customers' bills, total taxes other than income taxes in 2022 and 2021 were $3,548 million and $3,296 million, respectively.

### Other Income (Deductions)

Other deductions increased $440 million in 2022 compared with 2021 primarily due to higher costs associated with components of pension and other postretirement benefits other than service cost ($458 million), offset in part by lower expenses resulting from investment performance in a deferred income plan ($19 million).

### Net Interest Expense

Net interest expense increased $60 million in 2022 compared with 2021 primarily due to higher interest on long-term debt ($49 million) and higher interest on short-term debt ($29 million), offset in part by an increase in the allowance for borrowed funds used during construction ($22 million).

### Income Tax Expense

Income taxes increased $9 million in 2022 compared with 2021 primarily due to higher income before income tax expense ($11 million) and higher state income taxes ($3 million), offset in part by higher research and development credits from prior years ($5 million).

## O&R

| (Millions of Dollars) | For the Year Ended December 31, 2022 |  |  | For the Year Ended December 31, 2021 |  |  | 2022-2021 Variation |
| --- | --- | --- | --- | --- | --- | --- | --- |
|  | Electric | Gas | 2022 Total | Electric | Gas | 2021 Total |  |
| Operating revenues | $773 | $312 | $1,085 | $681 | $260 | $941 | $144 |
| Purchased power | 276 | - | 276 | 206 | - | 206 | 70 |
| Gas purchased for resale | - | 135 | 135 | - | 88 | 88 | 47 |
| Other operations and maintenance | 275 | 76 | 351 | 249 | 64 | 313 | 38 |
| Depreciation and amortization | 71 | 27 | 98 | 69 | 26 | 95 | 3 |
| Taxes, other than income taxes | 57 | 32 | 89 | 57 | 32 | 89 | - |
| Operating income | $94 | $42 | $136 | $100 | $50 | $150 | $(14) |

CON EDISON ANNUAL REPORT 2022

67

## Electric

O&R's results of electric operations for the year ended December 31, 2022 compared with the year ended December 31, 2021 were as follows:

| (Millions of Dollars) | For the Years Ended December 31, |  |  |
| --- | --- | --- | --- |
|  | 2022 | 2021 | Variation |
| Operating revenues | $773 | $681 | $92 |
| Purchased power | 276 | 206 | 70 |
| Other operations and maintenance | 275 | 249 | 26 |
| Depreciation and amortization | 71 | 69 | 2 |
| Taxes, other than income taxes | 57 | 57 | - |
| Electric operating income | $94 | $100 | $(6) |

O&R's electric sales and deliveries in 2022 compared with 2021 were:

| Description | Millions of kWh Delivered |  |  |  | Revenues in Millions (a) |  |  |  |
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  | For the Years Ended |  |  |  | For the Years Ended |  |  |  |
|  | December 31, 2022 | December 31, 2021 | Variation | Percent Variation | December 31, 2022 | December 31, 2021 | Variation | Percent Variation |
| Residential/Religious (b) | 1,916 | 1,742 | 174 | 10.0% | $413 | $331 | $82 | 24.8% |
| Commercial/Industrial | 944 | 850 | 94 | 11.1 | 147 | 111 | 36 | 32.4 |
| Retail choice customers | 2,580 | 2,839 | (259) | (9.1) | 198 | 223 | (25) | (11.2) |
| Public authorities | 113 | 110 | 3 | 2.7 | 16 | 11 | 5 | 45.5 |
| Other operating revenues (c) | - | - | - | - | (1) | 5 | (6) | Large |
| Total | 5,553 | 5,541 | 12 | 0.2 % (d) | $773 | $681 | $92 | 13.5% |

(a) O&R's NY electric delivery revenues are subject to a revenue decoupling mechanism, as a result of which delivery revenues are generally not affected by changes in delivery volumes from levels assumed when rates were approved. Effective July 2021, the majority of O&R's electric distribution revenues in NJ are subject to a conservation incentive program, as a result of which distribution revenues are generally not affected by changes in delivery volumes from levels assumed when rates were approved. O&R's electric transmission revenues in NJ are not subject to a conservation incentive program, and as a result, changes in such volumes do impact revenues.
(b) "Residential/Religious" generally includes single-family dwellings, individual apartments in multi-family dwellings, religious organizations and certain other not-for-profit organizations.
(c) Other electric operating revenues generally reflect changes in the revenue decoupling mechanism current asset or regulatory liability in accordance with the company's NY electric rate plan and changes in regulatory assets and liabilities in accordance with the company's electric rate plans. See Note B to the financial statements in Item 8.
(d) After adjusting for weather and other variations, electric delivery volumes in company's service area increased 1.5 percent in 2022 compared with 2021. See "Coronavirus Disease 2019 (COVID-19) Impacts," above.

Operating revenues increased $92 million in 2022 compared with 2021 primarily due to higher purchased power expenses ($70 million) and higher revenues from the NY electric rate plan ($18 million).

Purchased power expenses increased $70 million in 2022 compared with 2021 due to higher unit costs ($59 million) and purchased volumes ($11 million).

Other operations and maintenance expenses increased $26 million in 2022 compared with 2021 primarily due to higher pension costs ($13 million), increased regulatory amortizations ($11 million) and higher stock-based compensation ($2 million).

Depreciation and amortization increased $2 million in 2022 compared with 2021 primarily due to higher electric utility plant balances.

## Gas

O&R's results of gas operations for the year ended December 31, 2022 compared with the year ended December 31, 2021 were as follows:

68

CON EDISON ANNUAL REPORT 2022

| (Millions of Dollars) | For the Years Ended December 31, |  |  |
| --- | --- | --- | --- |
|  | 2022 | 2021 | Variation |
| Operating revenues | $312 | $260 | $52 |
| Gas purchased for resale | 135 | 88 | 47 |
| Other operations and maintenance | 76 | 64 | 12 |
| Depreciation and amortization | 27 | 26 | 1 |
| Taxes, other than income taxes | 32 | 32 | - |
| Gas operating income | $42 | $50 | $(8) |

O&R's gas sales and deliveries, excluding off-system sales, in 2022 compared with 2021 were:

| Description | Thousands of Dt Delivered |  |  |  | Revenues in Millions (a) |  |  |  |
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  | For the Years Ended |  |  |  | For the Years Ended |  |  |  |
|  | December 31, 2022 | December 31, 2021 | Variation | Percent Variation | December 31, 2022 | December 31, 2021 | Variation | Percent Variation |
| Residential | 12,588 | 11,500 | 1,088 | 9.5% | $207 | $162 | $45 | 27.8% |
| General | 2,766 | 2,498 | 268 | 10.7 | 38 | 28 | 10 | 35.7 |
| Firm retail choice customers | 6,396 | 7,584 | (1,188) | (15.7) | 45 | 55 | (10) | (18.2) |
| Total firm sales and firm retail choice | 21,750 | 21,582 | 168 | 0.8 (b) | 290 | 245 | 45 | 18.4 |
| Interruptible sales | 3,911 | 3,820 | 91 | 2.4% | 6 | 6 | - | - |
| Generation plants | 10 | 26 | (16) | (61.5) | - | - | - | - |
| Other | 673 | 468 | 205 | 43.8 | 1 | 1 | - | - |
| Other gas revenues | - | - | - | - | 15 | 8 | 7 | 87.5 |
| Total | 26,344 | 25,896 | 448 | 1.7% | $312 | $260 | $52 | 20.0% |

(a) Revenues from NY gas sales are subject to a weather normalization clause and a revenue decoupling mechanism, as a result of which, delivery revenues are generally not affected by changes in delivery volumes from levels assumed when rates were approved.

(b) After adjusting for weather and other variations, firm sales and firm retail choice volumes in the company's service area increased 1.2 percent in 2022 compared with 2021. See 'Coronavirus Disease 2019 (COVID-19) Impacts,' above.

Operating revenues increased $52 million in 2022 compared with 2021 primarily due to higher gas purchased for resale ($47 million) and higher revenues from the NY gas rate plan ($13 million).

Gas purchased for resale increased $47 million in 2022 compared with 2021 due to higher unit costs ($35 million) and purchased volumes ($12 million).

Other operations and maintenance expenses increased $12 million in 2022 compared with 2021 primarily due to higher pension costs ($10 million) and higher stock-based compensation ($1 million).

Depreciation and amortization increased $1 million in 2022 compared with 2021 primarily due to higher gas utility plant balances.

## Taxes, Other Than Income Taxes

Taxes, other than income taxes, remained consistent in 2022 compared with 2021. The principal components of taxes, other than income taxes, were:

| (Millions of Dollars) | For the Years Ended December 31, |  |  |
| --- | --- | --- | --- |
|  | 2022 | 2021 | Variation |
| Property taxes | $69 | $71 | $(2) |
| State and local taxes related to revenue receipts | 12 | 11 | 1 |
| Payroll taxes | 8 | 7 | 1 |
| Total | $89 (a) | $89 (a) | $- |

(a) Including sales tax on customers' bills, total taxes other than income taxes in 2022 and 2021 were $131 million and $129 million, respectively.

## Income Tax Expense

Income taxes increased $4 million in 2022 compared with 2021 primarily due to higher income before income tax expense ($4 million) and higher state income taxes ($2 million), offset in part by an increase in the amortization of excess deferred federal income taxes ($2 million).

CON EDISON ANNUAL REPORT 2022

69

## Clean Energy Businesses

The Clean Energy Businesses were classified as held for sale as of December 31, 2022. See “Assets and Liabilities Held for Sale” in Note A and Note X to the financial statements in Item 8. The Clean Energy Businesses’ results of operations for the year ended December 31, 2022 compared with the year ended December 31, 2021 were as follows:

| (Millions of Dollars) | For the Years Ended December 31, |  |  |
| --- | --- | --- | --- |
|  | 2022 | 2021 | Variation |
| Operating revenues | $1,319 | $1,022 | $297 |
| Purchased power | 7 | - | 7 |
| Gas purchased for resale | 241 | 62 | 179 |
| Other operations and maintenance | 504 | 475 | 29 |
| Depreciation and amortization | 178 | 231 | (53) |
| Taxes, other than income taxes | 21 | 18 | 3 |
| Operating income | $368 | $236 | $132 |

Operating revenues increased $297 million in 2022 compared with 2021 primarily due to higher wholesale revenues ($195 million), higher revenue from renewable electric projects ($92 million) and higher net mark-to-market values ($21 million), offset in part by lower energy services revenues ($11 million).

Gas purchased for resale increased $179 million in 2022 compared with 2021 primarily due to higher purchased volumes.

Depreciation and amortization decreased $53 million in 2022 compared with 2021 primarily due to the company ceasing to record depreciation and amortization in 2022 as the Clean Energy Businesses were classified as held for sale as of December 31, 2022. See “Assets and Liabilities Held for Sale” in Note A and Note X to the financial statements in Item 8.

Other operations and maintenance expenses increased $29 million in 2022 compared with 2021 primarily due to higher costs from engineering, procurement and construction of renewable electric projects for customers.

### Other Income (Deductions)

Other income (deductions) decreased $13 million in 2022 compared with 2021 primarily due to lower income in the 2022 period from an equity method investment in renewable electric projects accounted for under the HLBV method of accounting.

### Net Interest Expense

Net interest expense decreased $103 million in 2022 compared with 2021 primarily due to higher unrealized gains on interest rate swaps in the 2022 period.

### Income Tax Expense

Income taxes increased $40 million in 2022 compared with 2021 primarily due to higher income before income tax expense ($50 million), higher state income taxes ($6 million), lower research and development credits ($3 million) and an increase in the reserve for uncertain tax positions ($5 million), offset in part by a lower loss attributable to non-controlling interest ($20 million) and higher renewable energy credits ($4 million).

### Income (Loss) Attributable to Non-Controlling Interest

Income attributable to non-controlling interest decreased $92 million in 2022 compared with 2021 primarily due to lower income in the 2021 period attributable to a tax equity investor in renewable electric projects accounted for under the HLBV method of accounting. See Note S to the financial statements in Item 8.

### Con Edison Transmission

Other operations and maintenance decreased $6 million in 2022 compared with 2021 primarily due to a goodwill impairment loss on its investment in Honeoye in 2021. See Note K to the financial statements in Item 8.

### Other Income (Deductions)

Other deductions decreased $426 million in 2022 compared with 2021 primarily due to losses in 2021 from CET’s pre-tax impairment loss of ($212 million) on its investment in Stagecoach, pre-tax impairment loss of ($231 million)

70 CON EDISON ANNUAL REPORT 2022

on its investment in MVP in 2021, lower investment income in 2022 due to the sale of Stagecoach during 2021 ($19 million), offset in part by higher investment income from NY Transco ($4 million). See 'Critical Accounting Estimates - Investments' in Item 7 and 'Investments' in Note A and Note W to the financial statement in Item 8.

#### **Net Interest Expense**

Net interest expense decreased $4 million in 2022 compared with 2021 primarily due to the repayment of an intercompany loan from the parent company from a portion of the proceeds from the sale of Stagecoach in 2021.

#### **Income Tax Expense**

Income taxes increased $119 million in 2022 compared with 2021 primarily due to higher income before income tax expense ($91 million), higher state income taxes ($27 million) and a remeasurement of deferred state income tax assets and liabilities ($3 million), offset in part by lower amortization of excess deferred federal income taxes ($2 million).

#### **Other**

##### **Taxes, Other Than Income Taxes**

Taxes, other than income taxes increased $1 million in 2022 compared with 2021 primarily due to the settlement in 2022 of the NYC capital tax audit for the years 2015 through 2018 ($1 million).

##### **Other Income (Deductions)**

Other income (deductions) decreased $50 million in 2022 compared with 2021 primarily due to the transaction costs at the parent company incurred from the sale of the Clean Energy Businesses ($49 million). See 'Assets and Liabilities Held for Sale' in Note A and Note X to the financial statements in Item 8.

##### **Income Tax Expense**

Income taxes increased $136 million in 2022 compared with 2021 primarily due to higher consolidated state income taxes ($17 million), an increase in the valuation allowance on state and local net operating loss carryovers ($8 million) and a remeasurement of consolidated deferred state income tax assets and liabilities ($120 million), offset in part by lower income before income tax expense ($8 million).

During the fourth quarter of 2022, Con Edison entered into a purchase and sale agreement pursuant to which Con Edison agreed to sell the Clean Energy Businesses. See Note X to the financial statements in Item 8. Con Edison analyzed the potential impact of the anticipated sale on its state apportionment factors and remeasured its consolidated state tax liability. Based on estimates, Con Edison recorded an increase to its net deferred income tax liabilities of $111 million, an increase in the valuation allowance on the deferred tax asset related to state net operating loss carryforwards of $8 million and a corresponding deferred income tax expense of $119 million (net of federal income taxes) in the fourth quarter of 2022. Con Edison also recorded a $9 million expense from a remeasurement of state deferred liability due to other dispositions.

CON EDISON ANNUAL REPORT 2022

71

# Year Ended December 31, 2021 Compared with Year Ended December 31, 2020

# CECONY

| (Millions of Dollars) | For the Year Ended December 31, 2021 |  |  |  | For the Year Ended December 31, 2020 |  |  |  | 2021-2020 Variation |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  | Electric | Gas | Steam | 2021 Total | Electric | Gas | Steam | 2020 Total |  |
| Operating revenues | $8,806 | $2,378 | $532 | $11,716 | $8,103 | $2,036 | $508 | $10,647 | $1,069 |
| Purchased power | 1,588 | - | 45 | 1,633 | 1,405 | - | 27 | 1,432 | 201 |
| Fuel | 156 | - | 73 | 229 | 75 | - | 81 | 156 | 73 |
| Gas purchased for resale | - | 541 | - | 541 | - | 426 | - | 426 | 115 |
| Other operations and maintenance | 1,919 | 368 | 165 | 2,452 | 1,753 | 355 | 161 | 2,269 | 183 |
| Depreciation and amortization | 1,286 | 326 | 93 | 1,705 | 1,214 | 294 | 90 | 1,598 | 107 |
| Taxes, other than income taxes | 2,055 | 497 | 144 | 2,696 | 1,925 | 387 | 144 | 2,456 | 240 |
| Operating income | $1,802 | $646 | $12 | $2,460 | $1,731 | $574 | $5 | $2,310 | $150 |

# Electric

CECONY's results of electric operations for the year ended December 31, 2021 compared with the year ended December 31, 2020 were as follows:

| (Millions of Dollars) | For the Years Ended December 31, |  |  |
| --- | --- | --- | --- |
|  | 2021 | 2020 | Variation |
| Operating revenues | $8,806 | $8,103 | $703 |
| Purchased power | 1,588 | 1,405 | 183 |
| Fuel | 156 | 75 | 81 |
| Other operations and maintenance | 1,919 | 1,753 | 166 |
| Depreciation and amortization | 1,286 | 1,214 | 72 |
| Taxes, other than income taxes | 2,055 | 1,925 | 130 |
| Electric operating income | $1,802 | $1,731 | $71 |

CECONY's electric sales and deliveries in 2021 compared with 2020 were:

| Description | Millions of kWh Delivered |  |  |  | Revenues in Millions (a) |  |  |  |
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  | For the Years Ended |  |  |  | For the Years Ended |  |  |  |
|  | December 31, 2021 | December 31, 2020 | Variation | Percent Variation | December 31, 2021 | December 31, 2020 | Variation | Percent Variation |
| Residential/Religious (b) | $11,344 | $11,107 | 237 | 2.1% | $3,100 | $2,901 | $199 | 6.9% |
| Commercial/Industrial | 9,250 | 9,280 | (30) | (0.3) | 2,174 | 1,876 | 298 | 15.9 |
| Retail choice customers | 21,549 | 22,000 | (451) | (2.1) | 2,613 | 2,391 | 222 | 9.3 |
| NYPA, Municipal Agency and other sales | 9,185 | 9,184 | 1 | - | 708 | 665 | 43 | 6.5 |
| Other operating revenues (c) | - | - | - | - | 211 | 270 | (59) | (21.9) |
| Total | $51,328 | $51,571 | (243) | (0.5)% (d) | $8,806 | $8,103 | $703 | 8.7% |

- (a) Revenues from electric sales are subject to a revenue decoupling mechanism, as a result of which, delivery revenues are generally not affected by changes in delivery volumes from levels assumed when rates were approved.
- (b) "Residential/Religious" generally includes single-family dwellings, individual apartments in multi-family dwellings, religious organizations and certain other not-for-profit organizations.
- (c) Other electric operating revenues generally reflect changes in the revenue decoupling mechanism current asset or regulatory liability and changes in regulatory assets and liabilities in accordance with other provisions of the company's rate plan.
- (d) After adjusting for variations, primarily weather and billing days, electric delivery volumes in the company's service area decreased 0.2 percent in 2021 compared with 2020. See "Coronavirus Disease 2019 (COVID-19) Impacts," above.

Operating revenues increased $703 million in 2021 compared with 2020 primarily due to higher revenues from the electric rate plan ($243 million), higher purchased power expenses ($183 million), higher fuel expenses ($81 million), higher late payment charges ($90 million), including charges that are being recovered pursuant to a surcharge mechanism established as a result of the order issued by the NYSPSC in November 2021 and resuming billing of late payment charges, and higher incentives earned under the earnings adjustment mechanisms and positive incentives ($30 million). See "COVID-19 Regulatory Matters" in Note B to the financial statements in Item 8.

72 CON EDISON ANNUAL REPORT 2022

*Purchased power* expenses increased \$183 million in 2021 compared with 2020 due to higher unit costs (\$112 million) and purchased volumes (\$72 million).

*Fuel* expenses increased \$81 million in 2021 compared with 2020 due to higher unit costs (\$79 million) and higher purchased volumes from the company's electric generating facilities (\$3 million).

*Other operations and maintenance* expenses increased \$166 million in 2021 compared with 2020 primarily due to higher costs for pension and other postretirement benefits (\$47 million), higher costs related to heat, storm and emergency response (\$50 million), higher stock-based compensation (\$24 million), higher healthcare costs (\$16 million) and higher municipal infrastructure support costs (\$12 million).

*Depreciation and amortization* increased \$72 million in 2021 compared with 2020 primarily due to higher electric utility plant balances.

*Taxes, other than income taxes* increased \$130 million in 2021 compared with 2020 primarily due to lower deferral of under-collected property taxes (\$53 million), higher property taxes (\$52 million) and higher state and local taxes (\$23 million).

CECONY's results of gas operations for the year ended December 31, 2021 compared with the year ended December 31, 2020 were as follows:

| (Millions of Dollars) | For the Years Ended December 31, |  |  |
| --- | --- | --- | --- |
|  | 2021 | 2020 | Variation |
| Operating revenues | $2,378 | $2,036 | $342 |
| Gas purchased for resale | 541 | 426 | 115 |
| Other operations and maintenance | 368 | 355 | 13 |
| Depreciation and amortization | 326 | 294 | 32 |
| Taxes, other than income taxes | 497 | 387 | 110 |
| Gas operating income | $646 | $574 | $72 |

CECONY's gas sales and deliveries, excluding off-system sales, in 2021 compared with 2020 were:

| Description | Thousands of Dt Delivered |  |  |  | Revenues in Millions (a) |  |  |  |
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  | For the Years Ended |  |  |  | For the Years Ended |  |  |  |
|  | December 31, 2021 | December 31, 2020 | Variation | Percent Variation | December 31, 2021 | December 31, 2020 | Variation | Percent Variation |
| Residential | 50,690 | 48,999 | 1,691 | 3.5% | $1,050 | $911 | $139 | 15.3% |
| General | 30,947 | 29,516 | 1,431 | 4.8 | 423 | 318 | 105 | 33.0 |
| Firm retail choice customers | 76,765 | 76,614 | 151 | 0.2 | 704 | 649 | 55 | 8.5 |
| Total firm sales and firm retail choice | 158,402 | 155,129 | 3,273 | 2.1 (b) | 2,177 | 1,878 | 299 | 15.9 |
| Interruptible sales (c) | 5,927 | 8,482 | (2,555) | (30.1)% | 29 | 27 | 2 | 7.4% |
| NYPA | 43,094 | 41,577 | 1,517 | 3.6 | 2 | 2 | - | - |
| Generation plants | 47,620 | 49,723 | (2,103) | (4.2) | 25 | 22 | 3 | 13.6 |
| Other | 20,251 | 20,814 | (563) | (2.7) | 34 | 33 | 1 | 3.0 |
| Other operating revenues (d) | - | - | - | - | 111 | 74 | 37 | 50.0 |
| Total | 275,294 | 275,725 | (431) | (0.2)% | $2,378 | $2,036 | $342 | 16.8% |

(a) Revenues from gas sales are subject to a weather normalization clause and a revenue decoupling mechanism, as a result of which, delivery revenues are generally not affected by changes in delivery volumes from levels assumed when rates were approved.

(b) After adjusting for variations, primarily billing days, firm gas sales and firm retail choice volumes in the company's service area decreased 0.4 percent in 2021 compared with 2020. See 'Coronavirus Disease 2019 (COVID-19) Impacts,' above.

(c) Includes 1,921 thousands and 3,510 thousands of Dt for 2021 and 2020, respectively, which are also reflected in firm retail choice customers and other.

(d) Other gas operating revenues generally reflect changes in the revenue decoupling mechanism and weather normalization clause current asset or regulatory liability and changes in regulatory assets and liabilities in accordance with other provisions of the company's rate plans. See Note B to the financial statements in Item 8.

*Operating revenues* increased \$342 million in 2021 compared with 2020 primarily due to higher gas revenues under the company's gas rate plan (\$200 million), higher gas purchased for resale expense (\$115 million), higher

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late payment charges ($16 million), including charges that are being recovered pursuant to a surcharge mechanism established as a result of the order issued by the NYSPSC in November 2021 and resuming billing of late payment charges, and higher incentives earned under gas adjustment mechanisms (EAMs) ($11 million). See 'COVID-19 Regulatory Matters' in Note B to the financial statements in Item 8.

*Gas purchased for resale* increased $115 million in 2021 compared with 2020 due to higher unit costs ($106 million) and higher purchased volumes ($8 million).

*Other operations and maintenance* expenses increased $13 million in 2021 compared with 2020 primarily due to higher costs for pension and other postretirement benefits ($10 million), higher total surcharges for assessments and fees that are collected in revenues from customers ($7 million) and higher stock-based compensation ($5 million), offset in part by lower municipal infrastructure support costs ($9 million).

*Depreciation and amortization* increased $32 million in 2021 compared with 2020 primarily due to higher gas utility plant balances.

*Taxes, other than income taxes* increased $110 million in 2021 compared with 2020 primarily due to lower deferral of under-collected property taxes ($68 million), higher property taxes ($30 million) and higher state and local taxes ($12 million).

## Steam

CECONY's results of steam operations for the year ended December 31, 2021 compared with the year ended December 31, 2020 were as follows:

| (Millions of Dollars) | For the Years Ended December 31, |  |  |
| --- | --- | --- | --- |
|  | 2021 | 2020 | Variation |
| Operating revenues | $532 | $508 | $24 |
| Purchased power | 45 | 27 | 18 |
| Fuel | 73 | 81 | (8) |
| Other operations and maintenance | 165 | 161 | 4 |
| Depreciation and amortization | 93 | 90 | 3 |
| Taxes, other than income taxes | 144 | 144 | - |
| Steam operating income | $12 | $5 | $7 |

CECONY's steam sales and deliveries in 2021 compared with 2020 were:

| Description | Millions of Pounds Delivered |  |  |  | Revenues in Millions |  |  |  |
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  | For the Years Ended |  |  |  | For the Years Ended |  |  |  |
|  | December 31, 2021 | December 31, 2020 | Variation | Percent Variation | December 31, 2021 | December 31, 2020 | Variation | Percent Variation |
| General | 504 | 445 | 59 | 13.3% | $25 | $23 | $2 | 8.7% |
| Apartment house | 5,013 | 5,131 | (118) | (2.3) | 137 | 136 | 1 | 0.7 |
| Annual power | 11,367 | 10,977 | 390 | 3.6 | 340 | 321 | 19 | 5.9 |
| Other operating revenues (a) | - | - | - | - | 30 | 28 | 2 | 7.1 |
| Total | 16,884 | 16,553 | 331 | 2.0 % (b) | $532 | $508 | $24 | 4.7% |

(a) Other steam operating revenues generally reflect changes in regulatory assets and liabilities in accordance with the company's rate plan. See Note B to the financial statements in Item 8.

(b) After adjusting for variations, primarily weather and billing days, steam sales and deliveries in the company's service area decreased 3.4 percent in 2021 compared with 2020. See 'Coronavirus Disease 2019 (COVID-19) Impacts,' above.

*Operating revenues* increased $24 million in 2021 compared with 2020 primarily due to the impact of colder winter weather ($21 million) and higher purchased power expenses ($18 million), offset in part by lower fuel expenses ($8 million) and tax law surcharge ($3 million).

*Purchased power* expenses increased $18 million in 2021 compared with 2020 due to higher unit costs ($13 million) and purchased volumes ($5 million).

*Fuel* expenses decreased $8 million in 2021 compared with 2020 due to lower unit costs ($11 million), offset in part by higher purchased volumes from the company's steam generating facilities ($3 million).

74 CON EDISON ANNUAL REPORT 2022

*Other operations and maintenance expenses* increased $4 million in 2021 compared with 2020 primarily due to higher costs for pension and other postretirement benefits ($4 million) and higher stock-based compensation ($2 million), offset in part by lower municipal infrastructure support costs ($1 million).

*Depreciation and amortization* increased $3 million in 2021 compared with 2020 primarily due to higher steam utility plant balances.

### Taxes, Other Than Income Taxes

At $2,696 million, taxes other than income taxes remain one of CECONY's largest operating expenses. The principal components of, and variations in, taxes other than income taxes were:

| (Millions of Dollars) | For the Years Ended December 31, |  |  |
| --- | --- | --- | --- |
|  | 2021 | 2020 | Variation |
| Property taxes | $2,215 | $2,129 | $86 |
| State and local taxes related to revenue receipts | 373 | 338 | 35 |
| Payroll taxes | 65 | 64 | 1 |
| Other taxes | 43 | (75) | 118 |
| Total | $2,696 (a) | $2,456 (a) | $240 |

(a) Including sales tax on customers' bills, total taxes other than income taxes in 2021 and 2020 were $3,296 million and $2,989 million, respectively.

### Other Income (Deductions)

Other deductions decreased $63 million in 2021 compared with 2020 primarily due to lower costs associated with components of pension and other postretirement benefits other than service cost ($61 million).

### Net Interest Expense

Net interest expense increased $23 million in 2021 compared with 2020 primarily due to higher interest on long-term debt ($42 million), offset in part by lower interest accrued on the system benefit charge liability ($7 million), lower interest expense for short-term debt ($4 million), lower interest on deposits ($3 million) and lower interest accrued on deferred storm costs ($2 million).

### Income Tax Expense

Income taxes increased $31 million in 2021 compared with 2020 primarily due to higher income before income tax expense ($40 million) and higher state income taxes ($9 million), offset in part by a higher favorable tax adjustment in 2021 for the prior year tax return primarily due to an increase in the general business tax credit ($6 million), higher tax benefits in 2021 from research credits ($5 million) and the absence of the amortization of deficit deferred state income taxes in 2020 ($6 million).

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## O&R

| (Millions of Dollars) | For the Year Ended December 31, 2021 |  |  | For the Year Ended December 31, 2020 |  |  | 2021-2020 Variation |
| --- | --- | --- | --- | --- | --- | --- | --- |
|  | Electric | Gas | 2021 Total | Electric | Gas | 2020 Total |  |
| Operating revenues | $681 | $260 | $941 | $629 | $233 | $862 | $79 |
| Purchased power | 206 | - | 206 | 169 | - | 169 | 37 |
| Gas purchased for resale | - | 88 | 88 | - | 61 | 61 | 27 |
| Other operations and maintenance | 249 | 64 | 313 | 242 | 68 | 310 | 3 |
| Depreciation and amortization | 69 | 26 | 95 | 65 | 25 | 90 | 5 |
| Taxes, other than income taxes | 57 | 32 | 89 | 54 | 31 | 85 | 4 |
| Operating income | $100 | $50 | $150 | $99 | $48 | $147 | $3 |

### Electric

O&R's results of electric operations for the year ended December 31, 2021 compared with the year ended December 31, 2020 were as follows:

| (Millions of Dollars) | For the Years Ended December 31, |  |  |
| --- | --- | --- | --- |
|  | 2021 | 2020 | Variation |
| Operating revenues | $681 | $629 | $52 |
| Purchased power | 206 | 169 | 37 |
| Other operations and maintenance | 249 | 242 | 7 |
| Depreciation and amortization | 69 | 65 | 4 |
| Taxes, other than income taxes | 57 | 54 | 3 |
| Electric operating income | $100 | $99 | $1 |

O&R's electric sales and deliveries in 2021 compared with 2020 were:

| Description | Millions of kWh Delivered |  |  |  | Revenues in Millions (a) |  |  |  |
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  | For the Years Ended |  |  |  | For the Years Ended |  |  |  |
|  | December 31, 2021 | December 31, 2020 | Variation | Percent Variation | December 31, 2021 | December 31, 2020 | Variation | Percent Variation |
| Residential/Religious (b) | 1,742 | 1,786 | (44) | (2.5%) | $331 | $318 | $13 | 4.1% |
| Commercial/Industrial | 850 | 820 | 30 | 3.7 | 111 | 117 | (6) | (5.1) |
| Retail choice customers | 2,839 | 2,621 | 218 | 8.3 | 223 | 186 | 37 | 19.9 |
| Public authorities | 110 | 107 | 3 | 2.8 | 11 | 7 | 4 | 57.1 |
| Other operating revenues (c) | - | - | - | - | 5 | 1 | 4 | Large |
| Total | 5,541 | 5,334 | 207 | 3.9 % (d) | $681 | $629 | $52 | 8.3% |

(a) O&R's NY electric delivery revenues are subject to a revenue decoupling mechanism, as a result of which delivery revenues are generally not affected by changes in delivery volumes from levels assumed when rates were approved. Effective July 2021, the majority of O&R's electric distribution revenues in NJ are subject to a conservation incentive program, as a result of which distribution revenues are generally not affected by changes in delivery volumes from levels assumed when rates were approved. O&R's electric transmission revenues in NJ are not subject to a conservation incentive program, and as a result, changes in such volumes do impact revenues.
(b) "Residential/Religious" generally includes single-family dwellings, individual apartments in multi-family dwellings, religious organizations and certain other not-for-profit organizations.
(c) Other electric operating revenues generally reflect changes in the revenue decoupling mechanism current asset or regulatory liability in accordance with the company's NY electric rate plan and changes in regulatory assets and liabilities in accordance with the company's electric rate plans. See Note B to the financial statements in Item 8.
(d) After adjusting for weather and other variations, electric delivery volumes in company's service area increased 1.1 percent in 2021 compared with 2020. See "Coronavirus Disease 2019 (COVID-19) Impacts," above.

Operating revenues increased $52 million in 2021 compared with 2020 primarily due to higher purchased power expenses ($37 million) and higher revenues from the NY electric rate plan ($13 million).

Purchased power expenses increased $37 million in 2021 compared with 2020 due to higher unit costs ($35 million) and purchased volumes ($2 million).

Other operations and maintenance expenses increased $7 million in 2021 compared with 2020 primarily due to higher storm-related costs.

76 CON EDISON ANNUAL REPORT 2022

Depreciation and amortization increased $4 million in 2021 compared with 2020 primarily due to higher electric utility plant balances.

Taxes, other than income taxes increased $3 million in 2021 compared with 2020 primarily due to higher property taxes ($2 million).

### Gas

O&R's results of gas operations for the year ended December 31, 2021 compared with the year ended December 31, 2020 were as follows:

| (Millions of Dollars) | For the Years Ended December 31, |  |  |
| --- | --- | --- | --- |
|  | 2021 | 2020 | Variation |
| Operating revenues | $260 | $233 | $27 |
| Gas purchased for resale | 88 | 61 | 27 |
| Other operations and maintenance | 64 | 68 | (4) |
| Depreciation and amortization | 26 | 25 | 1 |
| Taxes, other than income taxes | 32 | 31 | 1 |
| Gas operating income | $50 | $48 | $2 |

O&R's gas sales and deliveries, excluding off-system sales, in 2021 compared with 2020 were:

| Description | Thousands of Dt Delivered |  |  |  | Revenues in Millions (a) |  |  |  |
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  | For the Years Ended |  |  |  | For the Years Ended |  |  |  |
|  | December 31, 2021 | December 31, 2020 | Variation | Percent Variation | December 31, 2021 | December 31, 2020 | Variation | Percent Variation |
| Residential | 11,500 | 9,736 | 1,764 | 18.1% | $162 | 121 | $41 | 33.9% |
| General | 2,498 | 2,142 | 356 | 16.6 | 28 | 20 | 8 | 40.0 |
| Firm retail choice customers | 7,584 | 8,271 | (687) | (8.3) | 55 | 62 | (7) | (11.3) |
| Total firm sales and firm retail choice | 21,582 | 20,149 | 1,433 | 7.1 (b) | 245 | 203 | 42 | 20.7 |
| Interruptible sales | 3,820 | 3,632 | 188 | 5.2% | 6 | 6 | - | - % |
| Generation plants | 26 | 59 | (33) | (55.9) | - | - | - | - |
| Other | 468 | 658 | (190) | (28.9) | 1 | 1 | - | - |
| Other gas revenues | - | - | - | - | 8 | 23 | (15) | (65.2) |
| Total | 25,896 | 24,498 | 1,398 | 5.7% | $260 | 233 | $27 | 11.6% |

(a) Revenues from NY gas sales are subject to a weather normalization clause and a revenue decoupling mechanism, as a result of which, delivery revenues are generally not affected by changes in delivery volumes from levels assumed when rates were approved.

(b) After adjusting for weather and other variations, firm sales and firm retail choice volumes in the company's service area increased 0.2 percent in 2021 compared with 2020. See 'Coronavirus Disease 2019 (COVID-19) Impacts,' above.

Operating revenues increased $27 million in 2021 compared with 2020 primarily due to higher gas purchased for resale expense.

Gas purchased for resale increased $27 million in 2021 compared with 2020 due to higher unit costs ($15 million) and purchased volumes ($12 million).

Other operations and maintenance expenses decreased $4 million in 2021 compared with 2020 primarily due to lower pension costs ($2 million) and lower spending on gas programs ($2 million).

Depreciation and amortization increased $1 million in 2021 compared with 2020 primarily due to higher gas utility plant balances.

Taxes, other than income taxes increased $1 million in 2021 compared with 2020 primarily due to higher property taxes.

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### Taxes, Other Than Income Taxes

Taxes, other than income taxes, increased $4 million in 2021 compared with 2020. The principal components of taxes, other than income taxes, were:

| (Millions of Dollars) | For the Years Ended December 31, |  |  |
| --- | --- | --- | --- |
|  | 2021 | 2020 | Variation |
| Property taxes | $71 | $69 | $2 |
| State and local taxes related to revenue receipts | 11 | 10 | 1 |
| Payroll taxes | 7 | 6 | 1 |
| Total | $89 (a) | $85 (a) | $4 |

(a) Including sales tax on customers' bills, total taxes other than income taxes in 2021 and 2020 were $129 million and $121 million, respectively.

### Income Tax Expense

Income taxes remained unchanged in 2021 compared with 2020 primarily due to higher income before income tax expense ($1 million) entirely offset by lower state income taxes, primarily due to a decrease in the amortization of New York's metropolitan transportation business tax surcharge in 2021 ($1 million).

### Clean Energy Businesses

The Clean Energy Businesses were classified as held for sale as of December 31, 2022. See 'Assets and Liabilities Held for Sale' in Note A and Note X to the financial statements in Item 8. The Clean Energy Businesses' results of operations for the year ended December 31, 2021 compared with the year ended December 31, 2020 were as follows:

| (Millions of Dollars) | For the Years Ended December 31, |  |  |
| --- | --- | --- | --- |
|  | 2021 | 2020 | Variation |
| Operating revenues | $1,022 | $736 | $286 |
| Gas purchased for resale | 62 | 41 | 21 |
| Other operations and maintenance | 475 | 228 | 247 |
| Depreciation and amortization | 231 | 231 | - |
| Taxes, other than income taxes | 18 | 21 | (3) |
| Operating income | $236 | $215 | $21 |

Operating revenues increased $286 million in 2021 compared with 2020 primarily due to higher revenue from renewable electric projects ($211 million), higher wholesale revenues ($35 million) and higher energy services revenues ($47 million), offset in part by lower net mark-to-market values ($7 million).

Gas purchased for resale increased $21 million in 2021 compared with 2020 primarily due to higher purchased volumes.

Other operations and maintenance expenses increased $247 million in 2021 compared with 2020 primarily due to higher costs from engineering, procurement and construction of renewable electric projects for customers.

### Other Income (Deductions)

Other income (deductions) decreased $14 million in 2021 compared with 2020 primarily due to lower income in the 2021 period from an equity method investment in renewable electric projects accounted for under the HLBV method of accounting.

### Net Interest Expense

Net interest expense decreased $128 million in 2021 compared with 2020 primarily due to lower unrealized losses on interest rate swaps in the 2021 period.

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### **Income Tax Expense**

Income taxes increased $88 million in 2021 compared with 2020 primarily due to higher income before income tax expense ($30 million), lower income attributable to non-controlling interest ($47 million), higher state income taxes ($7 million) and the absence of a tax benefit due to the change in the federal corporate income tax rate recognized for a loss carryback from the 2018 tax year to the 2013 tax year as allowed under the CARES Act signed into law during the first quarter of 2020 ($4 million). See Note L to the financial statements in Item 8.

### **Income (Loss) Attributable to Non-Controlling Interest**

Income attributable to non-controlling interest decreased $195 million in 2021 compared with 2020 primarily due to lower income in the 2021 period attributable to a tax equity investor in renewable electric projects accounted for under the HLBV method of accounting. See Note S to the financial statements in Item 8.

### **Con Edison Transmission**

*Other operations and maintenance* increased $8 million in 2021 compared with 2020 primarily due to a goodwill impairment loss on its investment in Honeoye in 2021. See Note K to the financial statements in Item 8.

### **Other Income (Deductions)**

Other deductions decreased $192 million in 2021 compared with 2020 primarily due to lower losses in 2021 from CET's pre-tax impairment loss of $212 million on its investment in Stagecoach, pre-tax impairment loss of $231 million on its investment in MVP in 2021, lower investment income in 2021 due to the sale of Stagecoach during 2021 ($19 million) and foregoing AFUDC income from MVP starting January 2021 until significant construction resumes ($60 million), compared to the pre-tax impairment loss of $320 million on its investment in MVP in 2020. See 'Critical Accounting Estimates - Investments' in Item 7 and 'Investments' in Note A and Note W to the financial statement in Item 8.

### **Net Interest Expense**

Net interest expense decreased $9 million in 2021 compared with 2020 primarily due to the repayment of an intercompany loan from the parent company from a portion of the proceeds from the sale of Stagecoach.

### **Income Tax Expense**

Income taxes decreased $48 million in 2021 compared with 2020 primarily due to lower income before income tax expense ($40 million), lower state income taxes ($12 million), offset in part by higher amortization of excess deferred federal income taxes in 2021 ($2 million).

### **Other**

#### **Taxes, Other Than Income Taxes**

Taxes, other than income taxes decreased $6 million in 2021 compared with 2020 primarily due to adjustments made to the New York City capital tax for prior periods in the 2020 period.

#### **Other Income (Deductions)**

Other income (deductions) increased $4 million in 2021 compared with 2020 primarily due to the elimination of CECONY's goodwill impairment related to Con Edison Transmission's investment in Honeoye.

### **Income Tax Expense**

Income taxes increased $29 million in 2021 compared with 2020 primarily due to higher income before income tax expense ($2 million), lower consolidated state income tax benefits in 2021 ($16 million) and the absence of a change to the New York City valuation allowance in 2021 ($10 million).

During the fourth quarter of 2020, Con Edison reversed a portion of its valuation allowance that was recorded against the deferred tax asset established for the New York City NOL. Management has reassessed its ability to realize a portion of the deferred tax benefits generated primarily by its renewable energy projects due to the future reversal of temporary differences associated with the accelerated tax depreciation and by implementing its strategy to secure tax equity financing from third parties for which certain tax deductions and amortization will be specifically allocated to members outside of the consolidated group.

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## Liquidity and Capital Resources

The Companies' liquidity reflects cash flows from operating, investing and financing activities, as shown on their respective consolidated statements of cash flows and as discussed below.

The principal factors affecting Con Edison's liquidity are its investments in the Utilities, the Clean Energy Businesses and Con Edison Transmission, the dividends it pays to its shareholders and the dividends it receives from its subsidiaries and cash flows from financing activities discussed below.

The principal factors affecting CECONY's liquidity are its cash flows from operating activities, cash used in investing activities (including construction expenditures), the dividends it pays to Con Edison and cash flows from financing activities discussed below.

The Companies generally maintain minimal cash balances and use short-term borrowings to meet their working capital needs and other cash requirements. The Companies repay their short-term borrowings using funds from long-term financings and operating activities. The Utilities' cost of capital, including working capital, is reflected in the rates they charge to their customers.

Each of the Companies believes that it will be able to meet its reasonably likely short-term and long-term cash requirements. See 'The Companies Require Access To Capital Markets To Satisfy Funding Requirements,' 'Changes To Tax Laws Could Adversely Affect the Companies,' 'The Companies Face Risks Related to Health Epidemics And Other Outbreaks, Including The COVID-19 Pandemic,' and 'The Companies Also Face Other Risks That Are Beyond Their Control' in Item 1A, and 'Capital Requirements and Resources' in Item 1.

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CON EDISON ANNUAL REPORT 2022

The Companies' cash, temporary cash investments and restricted cash resulting from operating, investing and financing activities for the years ended December 31, 2022, 2021 and 2020 are summarized as follows:

|  | CECONY |  |  | O&R |  |  | Clean Energy Businesses (d) |  |  | Con Edison Transmission |  |  | Other (a) |  |  | Con Edison (b) |  |  |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  | 2022 | 2021 | 2020 | 2022 | 2021 | 2020 | 2022 | 2021 | 2020 | 2022 | 2021 | 2020 | 2022 | 2021 | 2020 | 2022 | 2021 | 2020 |
| (Millions of Dollars) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| Operating activities | $3,263 | $2,186 | $1,693 | $216 | $127 | $146 | $506 | $175 | $887 | $66 | $44 | $(7) | $(116) | $201 | ($521) | $3,935 | $2,733 | $2,198 |
| Investing activities | (3,926) | (3,729) | (3,416) | (235) | (224) | (220) | (339) | (139) | (606) | (65) | 608 | 18 | - | - | - | (4,565) | (3,484) | (4,224) |
| Financing activities | 799 | 1,396 | 1,857 | 25 | 89 | 79 | (97) | (45) | (345) | (1) | (652) | (11) | 288 | (327) | 665 | 1,014 | 461 | 2,245 |
| Net change for the period | 136 | (147) | 134 | 6 | (8) | 5 | 70 | (9) | (64) | - | - | - | 172 | (126) | 144 | 384 | (290) | 219 |
| Balance at beginning of period | 920 | 1,067 | 933 | 29 | 37 | 32 | 178 | 187 | 251 | - | - | - | 19 | 145 | 1 | 1,146 | 1,436 | 1,217 |
| Balance at end of period (c) | $1,056 | $920 | $1,067 | $35 | $29 | $37 | $248 | $178 | $187 | $- | $- | $- | $191 | $19 | $145 | $1,530 | $1,146 | $1,436 |
| Less: Change in cash balances held for sale (d) | - | - | - | - | - | - | 248 | - | - | - | - | - | - | - | - | 248 | - | - |
| Balance at end of period excluding held for sale | $1,056 | $920 | $1,067 | $35 | $29 | $37 | $- | $178 | $187 | $- | $- | $- | $191 | $19 | $145 | $1,282 | $1,146 | $1,436 |

(a) Includes parent company and consolidation adjustments.

(b) Represents the consolidated results of operations of Con Edison and its businesses.

(c) See 'Reconciliation of Cash, Temporary Cash Investments and Restricted Cash' in Note A to the financial statements in Item 8.

(d) The Clean Energy Businesses were classified as held for sale as of December 31, 2022. See 'Assets and Liabilities Held for Sale' in Note A and Note X to the financial statements in Item 8.

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## Cash Flows from Operating Activities

The Utilities' cash flows from operating activities primarily reflect their energy sales and deliveries and cost of operations. The volume of energy sales and deliveries is primarily affected by factors external to the Utilities, such as customer demand, weather, market prices for energy and economic conditions. Measures that promote distributed energy resources, such as distributed generation, demand reduction and energy efficiency, also affect the volume of energy sales and deliveries. See 'Competition' and 'Environmental Matters - Clean Energy Future - Reforming the Energy Vision' and 'Environmental Matters - Climate Change' in Item 1.

During 2020 and 2021, the decline in business activity in the Utilities' service territory due to the COVID-19 pandemic and the Utilities' suspension of service disconnections, bill collection activities and certain charges and fees resulted in a slower recovery of cash from outstanding customer accounts receivable balances, material increases in customer accounts receivable balances, increases to the allowance for uncollectible accounts, and may result in increases to write-offs of customer accounts, as compared to prior to the COVID-19 pandemic. Under the revenue decoupling mechanisms in the Utilities' NY electric and gas rate plans, changes in delivery volumes from levels assumed when rates were approved may affect the timing of cash flows, but largely not net income. The prices at which the Utilities provide energy to their customers are determined in accordance with their rate plans. However, increases in electric and gas commodity prices, coupled with the decline in business activity due to the COVID-19 pandemic, may further contribute to a slower recovery of cash from outstanding customer accounts receivable balances, increases to the allowance for uncollectible accounts, and increases to write-offs of customer accounts receivable balances. 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.

The Utilities' NY rate plans allow them to defer costs resulting from a change in legislation, regulation and related actions that have taken effect during the term of the rate plans once the costs exceed a specified threshold. Increases to the allowance for uncollectible accounts related to the COVID-19 pandemic have been deferred pursuant to the legislative, regulatory and related actions provisions of their rate plans. In November 2021, the NYSPSC issued an order establishing a surcharge recovery mechanism commencing December 1, 2021 through December 31, 2022 for CECONY to collect late payment charges and fees that were not billed for the year ended December 31, 2020 due to the COVID-19 pandemic. The order also established a surcharge recovery or sur-credit mechanism for any fee deferrals for 2021 and 2022. In April 2022, the NYSPSC approved the October 2021 joint proposal for new electric and gas rates for O&R for the three-year period from January 2022 through December 2024 (the Joint Proposal) that includes certain COVID-19 provisions, such as: recovery of 2020 late payment charges over three years; reconciliation of late payment charges to amounts reflected in rates for years 2021 through 2024; and reconciliation of write-offs of customer accounts receivable balances to amounts reflected in rates from January 1, 2020 through December 31, 2024. In June 2022 and January 2023, the NYSPSC issued orders implementing COVID-19 arrears assistance programs that provides credits towards the arrears balances of electric and gas customers of CECONY and O&R. See 'The Companies Face Risks Related To Health Epidemics And Other Outbreaks, Including The COVID-19 Pandemic,' in Item 1A, 'Rate Plans,' 'COVID-19 Regulatory Matters' and 'Other Regulatory Matters' in Note B to the financial statements in Item 8 and 'Coronavirus Disease 2019 (COVID-19) Impacts - Liquidity and Financing,' above.

Pursuant to their rate plans, the Utilities have recovered from customers a portion of the tax liability they will pay in the future as a result of temporary differences between the book and tax basis of assets and liabilities. These temporary differences affect the timing of cash flows, but not net income, as the Companies are required to record deferred tax assets and liabilities at the current corporate tax rate for the temporary differences. For the Utilities, credits to their customers of the net benefits of the TCJA, including the reduction of the corporate tax rate to 21 percent, decrease cash flows from operating activities. Pursuant to their rate plans, the Utilities also recover from customers the amount of property taxes they will pay. The payment of property taxes by the Utilities affects the timing of cash flows and increases the amount of short-term borrowings issued by the Utilities when property taxes are due and as property taxes increase, but generally does not impact net income. See 'Changes To Tax Laws Could Adversely Affect the Companies,' in Item 1A, 'Federal Income Tax' in Note A, 'Rate Plans' in Note B, 'COVID-19 Regulatory Matters' in Note B, 'Other Regulatory Matters' in Note B and Note L to the financial statements in Item 8 and 'Coronavirus Disease 2019 (COVID-19) Impacts - Liquidity and Financing,' above.

The Clean Energy Businesses were classified as held for sale as of December 31, 2022. See 'Assets and Liabilities Held for Sale' in Note A and Note X to the financial statements in Item 8.

Net income is the result of cash and non-cash (or accrual) transactions. Only cash transactions affect the Companies' cash flows from operating activities. Principal non-cash charges or credits include depreciation, deferred income tax expense, amortizations of certain regulatory assets and liabilities and accrued unbilled revenue. Non-cash charges or credits may also be accrued under the revenue decoupling and cost reconciliation mechanisms in the Utilities' NY electric and gas rate plans. See 'Rate Plans - CECONY- Electric and Gas' and

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'Rate Plans - O&R New York - Electric and Gas' in Note B to the financial statements in Item 8. For Con Edison, 2021 net income also included non-cash losses recognized with respect to impairments of Con Edison Transmission's investments in MVP, Stagecoach and Honeoye. For Con Edison, 2020 net income included a non-cash loss recognized with respect to a partial impairment of Con Edison Transmission's investment in MVP. See 'Investments' in Note A and Note K to the financial statements in Item 8.

Net cash flows from operating activities in 2022 for Con Edison and CECONY were $1,202 million and $1,077 million higher, respectively, than in 2021. The changes in net cash flows for Con Edison and CECONY primarily reflect an increase in accounts payable ($514 million and $257 million, respectively), lower pension and retiree benefit contributions ($433 million and $407 million, respectively) and lower prepayments, other receivables and other current assets ($265 million and $410 million, respectively).

Net cash flows from operating activities in 2021 for Con Edison and CECONY were $535 million and $493 million higher, respectively, than in 2020. The changes in net cash flows for Con Edison and CECONY primarily reflect a lower increase of accounts receivable balances from customers, net of allowance for uncollectible accounts ($223 million and $196 million, respectively) (see 'COVID-19 Regulatory Matters' in Note B to the financial statements in Item 8 and 'Coronavirus Disease 2019 (COVID-19) Impacts - Accounting Considerations' and 'Liquidity and Financing,' above), higher recoveries of depreciation expense ($112 million and $107 million, respectively), lower system benefit charge ($85 million and $80 million, respectively), lower superfund and environmental remediation costs ($12 million and $12 million, respectively) and lower pension and retiree benefit contributions ($6 million and $5 million, respectively). For Con Edison, changes in net cash flows reflects lower other receivables and other current assets ($31 million), lower taxes receivable ($19 million), lower revenue decoupling receivable ($8 million), offset in part by a change in pension and retiree benefit obligations, net ($19 million) and for CECONY, a change in pension and retiree benefit obligations, net ($30 million).

The change in net cash flows also reflects the timing of payments for and recovery of energy costs. This timing is reflected within changes to accounts receivable - customers, recoverable and refundable energy costs within other regulatory assets and liabilities and accounts payable balances.

#### **Cash Flows Used in Investing Activities**

Net cash flows used in investing activities for Con Edison and CECONY were $1,081 million and $197 million higher, respectively, in 2022 than in 2021. The change for Con Edison primarily reflects a decrease due to receiving proceeds from the completion of the sale of Stagecoach in 2021 ($629 million), higher utility construction expenditures ($194 million) and a decrease due to receiving proceeds from the divestiture of renewable electric projects at the Clean Energy Businesses in 2021 ($183 million). The change for CECONY primarily reflects an increase in utility construction expenditures ($183 million). Pursuant to their rate plans, the Utilities recover the cost of utility construction expenditures from customers, including an approved rate of return (before and after being placed in service and or AFUDC before being placed in service). Increases in the amount of utility construction expenditures may temporarily increase the amount of short-term debt issued by the Utilities prior to the long-term financing of such amounts.

Net cash flows used in investing activities for Con Edison and CECONY were $740 million lower and $313 million higher, respectively, in 2021 than in 2020. The change for Con Edison primarily reflects proceeds from the completion of the sale of Stagecoach ($629 million), a decrease in non-utility construction expenditures at the Clean Energy Businesses ($261 million) and proceeds from the divestiture of renewable electric projects at the Clean Energy Businesses ($183 million), offset in part by an increase in utility construction expenditures at CECONY ($301 million) and O&R ($3 million). Pursuant to their rate plans, the Utilities recover the cost of utility construction expenditures from customers, including an approved rate of return (before and after being placed in service and or AFUDC before being placed in service). Increases in the amount of utility construction expenditures may temporarily increase the amount of short-term debt issued by the Utilities prior to the long-term financing of such amounts.

#### **Cash Flows From Financing Activities**

Net cash flows from financing activities in 2022 for Con Edison and CECONY were $553 million and $597 million lower, respectively, than in 2021. Net cash flows from financing activities in 2021 for Con Edison and CECONY were $1,784 million higher and $461 million lower, respectively, than in 2020.

Net cash flows from financing activities during the years ended December 31, 2022, 2021 and 2020 reflect the following Con Edison transactions:

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2022

- Entered into and borrowed $400 million under a 364-Day Senior Unsecured Term Loan Credit Agreement, the proceeds from which were used for general corporate purposes. See Note D to the financial statements in Item 8;
- Redeemed at maturity $293 million of 8.71 percent senior unsecured notes.

2021

- Issued 10,100,000 shares of its common stock resulting in net proceeds of approximately $775 million, after issuance expenses. The net proceeds from the sale of the common shares were invested by Con Edison in CECONY, for funding of its construction expenditures and for its other general corporate purposes;
- Redeemed at maturity $500 million of 2.00 percent 5-year debentures with proceeds from a $500 million borrowing under an April 2021 Credit Agreement, which Con Edison prepaid in full in July 2021; and
- Optionally prepaid the remaining $675 million outstanding under a February 2019 term loan prior to its maturity in June 2021.

2020

- Issued 1,050,000 shares of its common shares for $88 million upon physical settlement of the remaining shares subject to its May 2019 forward sale agreement. Con Edison used the proceeds to invest in CECONY for funding of its capital requirements and other general corporate purposes;
- Borrowed $820 million pursuant to a credit agreement that was converted to a term loan (the “July 2020 Term Loan”). Con Edison used the proceeds from the borrowing for general corporate purposes, including repayment of short-term debt bearing interest at variable rates. The July 2020 Term Loan was prepaid in full in December 2020;
- Issued 7,200,000 common shares resulting in net proceeds of $553 million, after issuance expenses. The net proceeds from the sale of the common shares, together with the net proceeds from the sale of $650 million aggregate principal amount of 0.65 percent debentures due 2023, were used to prepay in full the July 2020 Term Loan. The remaining net proceeds from the sale of the common shares were invested by Con Edison in its subsidiaries, principally CECONY and O&R, and for other general corporate purposes; and
- Issued $650 million aggregate principal amount of 0.65 percent debentures, due 2023, with an option to redeem at par, in whole or in part, on or after December 1, 2021. The proceeds from the $650 million refinancing, together with a portion of the proceeds from the sale of common shares, were used to prepay in full the July 2020 Term Loan.

Con Edison’s cash flows from financing activities in 2022, 2021 and 2020 also reflect the proceeds, and reduction in cash used for reinvested dividends, resulting from the issuance of common shares under the company’s dividend reinvestment, stock purchase and long-term incentive plans of $88 million, $109 million and $106 million, respectively.

Net cash flows from financing activities during the years ended December 31, 2022, 2021 and 2020 reflect the following CECONY transactions:

2022

- Issued $700 million aggregate principal amount of 6.15 percent debentures, due 2052, the net proceeds from the sale of which were used to repay short-term borrowings and for other general corporate purposes.

2021

- Issued $600 million aggregate principal amount of 3.20 percent debentures, due 2051, the net proceeds from the sale of which were used to repay short-term borrowings and for other general corporate purposes;
- Issued $900 million aggregate principal amount of 2.40 percent debentures, due 2031, the aggregate net proceeds from the sales of which were used to redeem at maturity its $640 million floating rate 3-year debentures and for other general corporate purposes, including repayment of short-term debt; and
- Issued $750 million aggregate principal amount of 3.60 percent debentures, due 2061, the net proceeds from the sale of which will be used to pay or reimburse the payment of, in whole or in part, existing and new qualifying eligible green expenditures, such as energy efficiency and clean transportation expenditures, that include those funded on or after January 1, 2021 until the maturity date of the debentures. Pending the allocation of the net proceeds to finance or refinance eligible green expenditures, CECONY used the net proceeds for repayment of short-term debt and temporarily placed the remaining net proceeds in short-term interest-bearing instruments.

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2020

- Issued $600 million aggregate principal amount of 3.00 percent debentures, due 2060, the net proceeds from the sale of which were used to repay short-term borrowings and for other general corporate purposes;
- Redeemed at maturity $350 million of 4.45 percent 10-year debentures; and
- Issued $600 million aggregate principal amount of 3.35 percent debentures, due 2030 and $1,000 million aggregate principal amount of 3.95 percent debentures, due 2050, the net proceeds from the sale of which will be used to pay or reimburse the payment of, in whole or in part, existing and new qualifying eligible green expenditures, such as energy efficiency and clean transportation expenditures, that include those funded on or after January 1, 2018 until the maturity date of each series of the debentures. Pending the allocation of the net proceeds to finance or refinance eligible green expenditures, CECONY used a portion of the net proceeds for repayment of short-term debt and temporarily placed the remaining net proceeds in short-term interest-bearing instruments.

Net cash flows from financing activities during the years ended December 31, 2022, 2021 and 2020 also reflect the following O&R transactions:

2022

- Issued $100 million aggregate principal amount of 5.70 percent debentures, due 2032, the net proceeds from the sale of which were used to repay short-term borrowings and for other general corporate purposes.

2021

- Issued $45 million aggregate principal amount of 2.31 percent debentures, due 2031 and $30 million aggregate principal amount of 3.17 percent debentures, due 2051, the net proceeds from the sales of which were used to repay short-term borrowings and for other general corporate purposes.

2020

- Issued $35 million aggregate principal amount of 2.02 percent debentures, due 2030, and $40 million aggregate principal amount of 3.24 percent debentures, due 2050, the net proceeds from the sales of which were used to repay short-term borrowings and for other general corporate purposes.

Net cash flows from financing activities during the years ended December 31, 2022, 2021 and 2020 also reflect the following Clean Energy Businesses transactions:

2022

- Entered into and borrowed $150 million under a 364-Day Senior Unsecured Term Loan Credit Agreement guaranteed by Con Edison, the proceeds from which were used for general corporate purposes;

2021

- Borrowed $250 million at a variable rate, due 2028, secured by equity interests in four of the company's solar electric production projects, the interest rate for which was swapped to a fixed rate of 3.39 percent;
- Entered into an agreement with a tax equity investor for the financing of a portfolio of three of the Clean Energy Businesses' solar electric production projects (CED Nevada Virginia). Under the financing, the tax equity investor acquired a noncontrolling interest in the portfolio and will receive a percentage of earnings, tax attributes and cash flows. As of December 31, 2021, the tax equity investor fully funded its $263 million financing obligation. The Clean Energy Businesses will continue to consolidate this entity and will report the noncontrolling tax equity investor's interest in the tax equity arrangement. See Note Q to the financial statements in Item 8;
- Prepaid in full $249 million of borrowings outstanding under, and terminated, a $613 million variable-rate construction loan facility that was secured by and used to fund construction costs for CED Nevada Virginia; and
- Issued $229 million aggregate principal amount of 3.77 percent senior notes, due 2046, secured by equity interests in CED Nevada Virginia.

2020

- Borrowed $165 million under a $613 million variable-rate construction loan facility that was terminated in 2021 that was secured by and used to fund construction costs for CED Nevada Virginia.

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Cash flows from financing activities of the Companies also reflect commercial paper issuance. The commercial paper amounts outstanding at December 31, 2022, 2021 and 2020 and the average daily balances for 2022, 2021 and 2020 for Con Edison and CECONY were as follows:

| (Millions of Dollars, except Weighted Average Yield) | 2022 |  | 2021 |  | 2020 |  |
| --- | --- | --- | --- | --- | --- | --- |
|  | Outstanding at December 31 | Daily average | Outstanding at December 31 | Daily average | Outstanding at December 31 | Daily average |
| Con Edison | $2,640 | $1,485 | $1,488 | $1,189 | $1,705 | $980 |
| CECONY | $2,300 | $1,306 | $1,361 | $1,082 | $1,660 | $678 |
| Weighted average yield | 4.8% | 2.3% | 0.3% | 0.2% | 0.3% | 1.0% |

Common stock issuances and external borrowings are sources of liquidity that could be affected by changes in credit ratings, financial performance and capital market conditions. For information about the Companies' credit ratings and certain financial ratios, see 'Capital Requirements and Resources' in Item 1.

### Capital Requirements and Resources

For information about capital requirements, contractual obligations and capital resources, see 'Capital Requirements and Resources' in Item 1.

### Assets, Liabilities and Equity

The Companies' assets, liabilities and equity at December 31, 2022 and 2021 are summarized as follows:

| (Millions of Dollars) | CECONY |  | O&R |  | Clean Energy Businesses (c) |  | Con Edison Transmission |  | Other (a) |  | Con Edison (b) |  |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 |
| ASSETS |  |  |  |  |  |  |  |  |  |  |  |  |
| Current assets | $5,247 | $4,703 | $332 | $290 | $879 | $542 | $4 | $2 | $6,510 | $14 | $12,972 | $5,551 |
| Investments | 539 | 608 | 20 | 26 | - | - | 286 | 223 | (4) | (4) | 841 | 853 |
| Net plant | 44,011 | 41,613 | 2,738 | 2,599 | 4,718 | 4,367 | 17 | 17 | (4,718) | - | 46,766 | 48,596 |
| Other noncurrent assets | 7,648 | 5,731 | 421 | 377 | 1,627 | 1,645 | 7 | 7 | (1,217) | 356 | 8,486 | 8,116 |
| Total Assets | $57,445 | $52,655 | $3,511 | $3,292 | $7,224 | $6,554 | $314 | $249 | $571 | $366 | $69,065 | $63,116 |
| LIABILITIES AND SHAREHOLDERS' EQUITY |  |  |  |  |  |  |  |  |  |  |  |  |
| Current liabilities | $6,036 | $4,321 | $409 | $372 | $1,596 | $1,011 | $163 | $100 | $3,132 | $(377) | $11,336 | $5,427 |
| Noncurrent liabilities | 15,451 | 13,640 | 1,103 | 1,064 | 338 | 121 | (86) | (90) | (113) | 14 | 16,693 | 14,749 |
| Long-term debt | 19,080 | 18,382 | 1,068 | 968 | 2,292 | 2,607 | - | - | (2,293) | 647 | 20,147 | 22,604 |
| Equity | 16,878 | 16,312 | 931 | 888 | 2,998 | 2,815 | 237 | 239 | (155) | 82 | 20,889 | 20,336 |
| Total Liabilities and Equity | $57,445 | $52,655 | $3,511 | $3,292 | $7,224 | $6,554 | $314 | $249 | $571 | $366 | $69,065 | $63,116 |

(a) Includes parent company and consolidation adjustments.

(b) Represents the consolidated results of operations of Con Edison and its businesses.

(c) The Clean Energy Businesses were classified as held for sale as of December 31, 2022.

### CECONY

Current assets at December 31, 2022 were $544 million higher than at December 31, 2021. The change in current assets primarily reflects increases in accounts receivables, net of allowance for uncollectible accounts ($258 million) (see 'COVID-19 Regulatory Matters' in Note B to the financial statements in Item 8 and 'Coronavirus Disease 2019 (COVID-19) Impacts - Accounting Considerations' and 'Liquidity and Financing,' above), an increase in cash and temporary cash investments ($136 million), higher fuel oil, gas in storage, materials and supplies, at average cost ($71 million), an increase in other receivables, net of allowance for uncollectible accounts ($26 million) and an increase to accrued unbilled revenue ($24 million).

Investments at December 31, 2022 were $69 million lower than at December 31, 2021. The change in investments primarily reflects decreases in supplemental retirement income plan assets ($60 million) and deferred income plan assets ($9 million). See 'Investments' in Note A and Note E to the financial statements in Item 8.

Net plant at December 31, 2022 was $2,398 million higher than at December 31, 2021. The change in net plant primarily reflects an increase in electric ($1,790 million), gas ($1,017 million), steam ($107 million) and general ($25

86 CON EDISON ANNUAL REPORT 2022

million) plant balances and an increase in construction work in progress ($283 million), offset in part by an increase in accumulated depreciation ($824 million).

Other noncurrent assets at December 31, 2022 were $1,917 million higher than at December 31, 2021. The change in other noncurrent assets primarily reflects an increase in pension and retiree benefits ($1,507 million) and an increase in the regulatory asset for system peak reduction and energy efficiency programs ($496 million), partially offset in part by property tax reconciliation ($81 million) and deferred derivative losses ($19 million). The change in the regulatory asset also reflects the period's amortization of accounting costs. See Notes B, E, and F to the financial statements in Item 8.

Current liabilities at December 31, 2022 were $1,715 million higher than at December 31, 2021. The change in current liabilities primarily reflects increases in notes payable ($939 million), accounts payable ($478 million), deferred derivative gains ($155 million) and accrued taxes to affiliated companies ($79 million).

Noncurrent liabilities at December 31, 2022 were $1,811 million higher than at December 31, 2021. The change in noncurrent liabilities primarily reflects an increase in regulatory liabilities for unrecognized other postretirement costs ($1,536 million), allowance for cost of removal less salvage ($104 million) and pension and other postretirement benefit deferrals ($43 million), offset in part by a decrease in the liability for pension and retiree benefits ($143 million) as a result of the final actuarial valuation of the pension and other retiree benefit plans, as measured at December 31, 2022, in accordance with the accounting rules for retirement benefits. See Notes E and F to the financial statements in Item 8.

Long-term debt at December 31, 2022 was $698 million higher than at December 31, 2021. The change in long-term debt primarily reflects the November 2022 issuance of $700 million of debentures. See 'Liquidity and Capital Resources - Cash Flows From Financing Activities' above and Note C to the financial statements in Item 8.

Equity at December 31, 2022 was $566 million higher than at December 31, 2021. The change in equity primarily reflects net income for the year ($1,390 million) and capital contributions from parent ($150 million) in 2022, offset in part by common stock dividends to parent ($978 million) in 2022.

## O&R

Current assets at December 31, 2022 were $42 million higher than at December 31, 2021. The change in current assets primarily reflects increases in accrued unbilled revenue ($20 million), gas in storage, at average cost ($12 million) and temporary cash investments ($6 million) and accounts receivables, net of allowance for uncollectible accounts ($2 million) (see 'COVID-19 Regulatory Matters' in Note B to the financial statements in Item 8 and 'Coronavirus Disease 2019 (COVID-19) Impacts - Accounting Considerations' and 'Liquidity and Financing,' above).

Net plant at December 31, 2022 was $139 million higher than at December 31, 2021. The change in net plant primarily reflects an increase in electric ($91 million), gas ($59 million), and general ($10 million) plant balances and an increase in construction work in progress ($48 million), offset in part by an increase in accumulated depreciation ($69 million).

Other noncurrent assets at December 31, 2022 were $44 million higher than at December 31, 2021. The change in other noncurrent assets primarily reflects an increase in pension and retiree benefits ($56 million) and an increase in other deferred charges and noncurrent assets ($6 million), offset in part by a decrease in regulatory assets ($18 million).

Current liabilities at December 31, 2022 were $37 million higher than at December 31, 2020. The change in current liabilities primarily reflects an increase in accounts payables ($43 million), regulatory liabilities ($15 million) and accounts payables to affiliates ($11 million), offset in part by a decrease in notes payable ($18 million) and system benefit charge ($12 million).

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Noncurrent liabilities at December 31, 2022 were $39 million higher than at December 31, 2021. The change in noncurrent liabilities primarily reflects an increase in the regulatory liabilities for unrecognized pension and other postretirement costs ($13 million), allowance for cost of removal less salvage ($12 million) and long-term deferred derivative gains ($9 million).

Long-term debt at December 31, 2022 was $100 million higher than at December 31, 2021. The change in long-term debt reflects the November 2022 issuance of $100 million of debentures. See 'Liquidity and Capital Resources - Cash Flows From Financing Activities' above.

Equity at December 31, 2022 was $43 million higher than at December 31, 2021. The change in equity primarily reflects net income for the year ($88 million) and an increase in other comprehensive income ($12 million), offset in part by common stock dividends to parent ($57 million) in 2022.

### **Clean Energy Businesses**

Current assets at December 31, 2022 were $337 million higher than at December 31, 2021. The change in current assets primarily reflects increases in other receivables ($125 million), restricted cash ($69 million), accrued unbilled revenue ($48 million), other current assets ($42 million) and prepayments ($11 million).

Net plant at December 31, 2022 was $351 million higher than at December 31, 2021. The change in net plant primarily reflects the divestiture of renewable electric projects in 2021.

Other noncurrent assets at December 31, 2022 were $18 million lower than at December 31, 2021. The change in other noncurrent assets primarily reflects decreases in intangible assets ($71 million) and other long noncurrent assets ($27 million), offset in part by an increase in the long-term fair value of derivative assets ($78 million).

Current liabilities at December 31, 2022 were $585 million higher than at December 31, 2021. The change in current liabilities primarily reflects increases in accounts payable ($223 million), current long term debt ($206 million) and term loan ($150 million), offset in part by a decrease in the fair value of derivative liabilities ($36 million).

Noncurrent liabilities at December 31, 2022 were $217 million higher than at December 31, 2021. The change in noncurrent liabilities primarily reflects an increase in deferred taxes ($250 million), offset in part by a decrease in the fair value of derivative liabilities ($30 million).

Long-term debt at December 31, 2022 was $315 million lower than at December 31, 2021. The change in long-term debt primarily reflects the timing of principal loan repayments.

Equity at December 31, 2022 was $183 million higher than at December 31, 2021. The change in equity primarily reflects an increase in net income for common stock ($382 million) offset in part by a decrease in noncontrolling tax equity interest ($97 million) and common stock dividends to parent ($98 million) in 2022.

### **Con Edison Transmission**

Investments at December 31, 2022 were $63 million higher than at December 31, 2021. The increase in investments primarily reflects the additional investment in NY Transco ($64 million).

Current liabilities at December 31, 2022 were $63 million higher than at December 31, 2021. The change in current liabilities primarily reflects an increase in short-term borrowings under an intercompany capital funding facility.

Noncurrent liabilities at December 31, 2022 were $4 million higher than at December 31, 2021. The change in noncurrent liabilities reflects primarily the remeasurement of deferred state income taxes related to prior year dispositions ($4 million). See 'Investments - 2020 and 2021 Partial Impairments of Investment in Mountain Valley Pipeline, LLC (MVP)' in Note A to the financial statements in Item 8.

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## Regulatory Matters

For information about the Utilities' rate plans and other regulatory matters affecting the Companies, see 'Utility Regulation' in Item 1 and Note B to the financial statements in Item 8.

## Risk Factors

The Companies' businesses are influenced by many factors that are difficult to predict, and that involve uncertainties that may materially affect actual operating results, cash flows and financial condition. See 'Risk Factors' in Item 1A.

## Critical Accounting Estimates

The Companies' financial statements reflect the application of certain critical accounting estimates, which conform to accounting principles generally accepted in the United States of America. The Companies' critical accounting estimates include assumptions applied to accounting for: pensions and other postretirement benefits, contingencies, derivative instruments, investments, allowance for uncollectible accounts receivable, asset retirement obligations, and for Con Edison, the use of the hypothetical liquidation at book value method. Also, see 'Summary of Significant Accounting Policies and Other Matters' in Note A to the financial statements in Item 8.

## Accounting for Pensions and Other Postretirement Benefits

The Utilities provide pensions and other postretirement benefits to substantially all of their employees and retirees. The Clean Energy Businesses and Con Edison Transmission also provide such benefits to transferred employees who previously worked for the Utilities. The Companies account for these benefits in accordance with the accounting rules for retirement benefits. In addition, the Utilities apply the accounting rules for regulated operations to account for the regulatory treatment of these obligations (which, as described in Note B to the financial statements in Item 8, reconciles the amounts reflected in rates for the costs of the benefit to the costs actually incurred). In applying these accounting policies, the Companies have made critical estimates related to actuarial assumptions, including assumptions of expected returns on plan assets, discount rates, health care cost trends and future compensation. See Notes A, E and F to the financial statements in Item 8 for information about the Companies' pension and other postretirement benefits, the actuarial assumptions, actual performance, amortization of investment and other actuarial gains and losses and calculated plan costs for 2022, 2021 and 2020.

The discount rate for determining the present value of future period benefit payments is determined using a model to match the durations of Aa rated (by either Moody's or S&P) corporate bonds with the projected stream of benefit payments.

In determining the health care cost trend rate, the Companies review actual recent cost trends and projected future trends.

The cost of pension and other postretirement benefits in future periods will depend on actual returns on plan assets, assumptions for future periods, contributions and benefit experience. Con Edison's and CECONY's current estimates for 2023 are decreases, compared with 2022, in their pension and other postretirement benefits costs of $543 million and $515 million, respectively, largely driven by increases in the discount rates used to determine plan liabilities. See Notes E and F to the financial statements in Item 8.

The following table illustrates the effect on 2023 pension and other postretirement costs of changing the critical actuarial assumptions, while holding all other actuarial assumptions constant:

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| Actuarial Assumption | Change in Assumption | Pension | Other Postretirement Benefits | Total |
| --- | --- | --- | --- | --- |
| (Millions of Dollars) |  |  |  |  |
| Increase in accounting cost: |  |  |  |  |
| Discount rate |  |  |  |  |
| Con Edison | (0.25)% | $36 | $2 | $38 |
| CECONY | (0.25)% | $34 | $1 | $35 |
| Expected return on plan assets |  |  |  |  |
| Con Edison | (0.25)% | $41 | $3 | $44 |
| CECONY | (0.25)% | $39 | $2 | $41 |
| Health care trend rate |  |  |  |  |
| Con Edison | 1.00% | $- | $20 | $20 |
| CECONY | 1.00% | $- | $18 | $18 |
| Increase in projected benefit obligation: |  |  |  |  |
| Discount rate |  |  |  |  |
| Con Edison | (0.25)% | $375 | $25 | $400 |
| CECONY | (0.25)% | $356 | $21 | $377 |
| Health care trend rate |  |  |  |  |
| Con Edison | 1.00% | $- | $117 | $117 |
| CECONY | 1.00% | $- | $103 | $103 |

A 5 percentage point variation in the actual annual return in 2023, as compared with the expected annual asset return of 6.75 percent, would change pension and other postretirement benefit costs for Con Edison and CECONY by approximately $26 million and $25 million, respectively, in 2024.

Pension benefits are provided through a pension plan maintained by Con Edison to which CECONY, O&R, the Clean Energy Businesses and Con Edison Transmission make contributions for their participating employees. Pension accounting by the Utilities includes an allocation of plan assets.

The Companies' policy is to fund their pension and other postretirement benefit accounting costs to the extent tax deductible, and for the Utilities, to the extent these costs are recovered under their rate plans. The Companies were not required to make cash contributions to the pension plan in 2022 under funding regulations and tax laws. However, CECONY and O&R made discretionary contributions to the pension plan in 2022 of $17 million and $13 million, respectively. In 2023, CECONY and O&R expect to make contributions to the pension plan of $8 million and $2 million, respectively. See 'Expected Contributions' in Notes E and F to the financial statements in Item 8.

### Accounting for Contingencies

The accounting rules for contingencies apply to an existing condition, situation or set of circumstances involving uncertainty as to possible loss that will ultimately be resolved when one or more future events occur or fail to occur. Known material contingencies, which are described in the notes to the financial statements, include certain regulatory matters (Note B), the Utilities' responsibility for hazardous substances, such as asbestos, PCBs and coal tar that have been used or generated in the course of operations (Note G) and other contingencies (Note H). Inputs to the estimation of the liability for such environmental remediation include the possible selected remedy for each site where investigation is ongoing, the inflation rate related to the cost of inputs to the remediation process, and for those sites where there are other potentially responsible parties, the allocation of costs to the Companies. Inputs to the estimation of the liability for certain regulatory matters include facts specific to each item and the status and progress of discussions with the applicable state regulator. Inputs to the estimation of the liability for other contingencies may include liabilities incurred for similar circumstances and the outcome of legal proceedings. In accordance with the accounting rules, the Companies have accrued estimates of losses relating to the contingencies as to which loss is probable and can be reasonably estimated, and no liability has been accrued for contingencies as to which loss is not probable or cannot be reasonably estimated.

The Utilities recover costs for asbestos lawsuits, workers' compensation and environmental remediation pursuant to their current rate plans. Generally, changes during the terms of the rate plans to the amounts accrued for these contingencies would not impact earnings.

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## Accounting for Derivative Instruments

The Companies apply the accounting rules for derivatives and hedging to their derivative financial instruments. The Companies use derivative financial instruments to hedge market price fluctuations in related underlying transactions for the physical purchase and sale of electricity and gas. The Utilities are permitted by their respective regulators to reflect in rates all reasonably incurred gains and losses on these instruments. The Clean Energy Businesses have also hedged interest rate risk on certain debt securities. See 'Financial and Commodity Market Risks,' below and Note P to the financial statements in Item 8.

Where the Companies are required to make mark-to-market estimates pursuant to the accounting rules, the estimates of gains and losses at a particular period end do not reflect the end results of particular transactions and will most likely not reflect the actual gain or loss at the conclusion of a transaction. Substantially all of the estimated gains or losses are based on prices supplied by external sources such as the fair value of exchange-traded futures and options and the fair value of positions for which price quotations are available through or derived from brokers or other market sources. See Note Q to the financial statements in Item 8.

## Investments

The accounting rules require Con Edison to periodically evaluate its equity method investments, to determine whether they are impaired. The standard for determining whether an impairment exists and must be recorded is whether an other-than-temporary decline in carrying value has occurred. The evaluation and measurement of impairments involve uncertainties. The estimates that Con Edison makes with respect to its equity method investments are based on assumptions that management believes are reasonable, and variations in these estimates or the underlying assumptions could have a material impact on whether a triggering event is determined to exist or the amount of any such impairment. Additionally, if the projects in which Con Edison holds these investments recognize an impairment, Con Edison may record its proportionate share of that impairment loss and would evaluate its investment for an other-than-temporary decline in value.

Con Edison evaluated its equity method investments and concluded that as of December 31, 2020 and 2021 that the fair value of its investment in Mountain Valley Pipeline, LLC (MVP) declined below its carrying value and the decline is other-than-temporary. Accordingly, Con Edison recorded pre-tax impairment losses of $320 million ($223 million after tax) and $231 million ($162 million after tax) for the years ended December 31, 2020 and 2021, respectively, that reduced the carrying value of its investment in MVP from $662 million to $342 million with an associated deferred tax asset of $53 million for the year ended December 31, 2020 and from $342 million to $111 million with an additional $77 million associated deferred tax asset for the year ended December 31, 2021, totaling a deferred tax asset of $130 million at period end. See 'Investments - 2020 and 2021 Partial Impairments of Investment in Mountain Valley Pipeline, LLC (MVP)' in Note A to the financial statements in Item 8.

There is risk that the fair value of Con Edison's investment in MVP may be further or fully impaired in the future. There are ongoing legal and regulatory matters that must be resolved favorably before the project can be completed. Assumptions and estimates used to test Con Edison's investment in MVP for impairment, including the likelihood of project completion, may change if adverse or delayed resolutions to the Project's pending legal and regulatory challenges were to occur, which could have a material adverse effect on the fair value of Con Edison's investment in MVP.

In May 2021, a subsidiary of Con Edison Gas Pipeline and Storage, LLC (CET) entered into a purchase and sale agreement pursuant to which the subsidiary and its joint venture partner agreed to sell their combined interests in Stagecoach Gas Services LLC (Stagecoach) for a total of $1,225 million, of which $629 million was attributed to CET for its 50 percent interest, subject to closing adjustments. The purchase and sale agreement contemplated a two-stage closing, the first of which was completed in July 2021 and the second of which was completed in November 2021.

As a result of information made available to Stagecoach as part of the sale process, Stagecoach performed impairment tests that resulted in Stagecoach recording impairment charges of $414 million for the year ended December 31, 2021. Accordingly, Con Edison recorded pre-tax impairment losses on its 50 percent interest in Stagecoach of $212 million ($147 million after-tax), including working capital and transaction cost adjustments, within 'Investment income/(loss)' on Con Edison's consolidated income statement for the year ended December 31, 2021.

Stagecoach's impairment charges and information obtained from the sales process constituted triggering events for Con Edison's investment in Stagecoach as of March 31, 2021 and June 30, 2021. Con Edison evaluated the carrying value of its investment in Stagecoach for other-than-temporary declines in value using income and market-based approaches. Con Edison determined that the carrying value of its investment in Stagecoach of $667 million

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and $630 million as of March 31, 2021 and June 30, 2021, respectively, was not impaired. The carrying value of $630 million at June 30, 2021 reflected the final sales price received in July 2021 and the remaining amount received in November 2021, including closing adjustments.

At December 31, 2022 and 2021, Con Edison's consolidated balance sheet included investments of $841 million and $853 million, respectively. See 'Investments' in Note A and Note W to the financial statements in Item 8.

### Allowance for Uncollectible Accounts

The Companies develop expected loss estimates using past events data and consider current conditions and future reasonable and supportable forecasts. For the Utilities' customer accounts receivable allowance for uncollectible accounts, past events considered include write-offs relative to customer accounts receivable; current conditions include macro-and micro-economic conditions related to trends in the local economy, bankruptcy rates and aged customer accounts receivable balances, among other factors; and forecasts about the future include assumptions related to the level of write-offs and recoveries. From January 1, 2020 to December 31, 2022, the historical write-off rate was determined based on an historical weather event with a significant impact to the Companies' service territory. During that period, Con Edison's and CECONY's allowances for uncollectible accounts increased from $70 million and $65 million, respectively to $322 million and $314 million, respectively. See 'COVID-19 Regulatory Matters' in Note B and 'Allowance for Uncollectible Accounts' in Note N to the financial statements in Item 8.

### Asset Retirement Obligations (AROs)

AROs are computed as the present value of the estimated costs for an asset's future retirement and are recorded in the period in which the liability is incurred. The estimated costs are capitalized as part of the related long-lived asset and depreciated over the asset's useful life. CECONY and O&R, as rate-regulated entities, recognize Regulatory Assets or Liabilities as a result of timing differences between the recording of costs and costs recovered through the ratemaking process. Because quoted market prices are not available for AROs, the Companies estimate the fair value of AROs by calculating discounted cash flows that are dependent upon various assumptions including estimated retirement dates, discount rates, inflation rates, the timing and amount of future cash outlays, and currently available technologies.

The Companies recorded asset retirement obligations associated with the removal of asbestos and asbestos-containing material in their buildings (other than the structures enclosing generating stations and substations), electric equipment and steam and gas distribution systems. The Companies also recorded asset retirement obligations relating to gas and oil pipelines abandoned in place and municipal infrastructure support. See Note T to the financial statements in Item 8.

A 1% increase in the assumed inflation rate used to value the ARO liability as of December 31, 2022 would increase the liability by $29 million for Con Edison and CECONY.

### Hypothetical Liquidation at Book Value (HLBV)

For certain investments of the Clean Energy Businesses, Con Edison has determined that the use of HLBV accounting is reasonable and appropriate to attribute income and loss to the tax equity investors. Using the HLBV method, the company's earnings from the projects are adjusted to reflect the income or loss allocable to the tax equity investors calculated based on how the project would allocate and distribute its cash if it were to sell all of its assets for their carrying amounts and liquidate at a particular point in time. Under the HLBV method, the company calculates the liquidation value allocable to the tax equity investors at the beginning and end of each period based on contractual liquidation waterfall calculations and adjusts its income for the period to reflect the change in the liquidation value allocable to the tax equity investors based on the terms of the partnerships' operating agreements. The Clean Energy Businesses were classified as held for sale as of December 31, 2022. See 'Assets and Liabilities Held for Sale' in Note A, Notes S and X to the financial statements in Item 8.

### 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 and investment risk.

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## Interest Rate Risk

The Companies' interest rate risk primarily relates to new debt financing needed to fund capital requirements, including the construction expenditures of the Utilities and maturing debt securities, and variable-rate debt. Con Edison and its subsidiaries manage interest rate risk through the issuance of mostly fixed-rate debt with varying maturities and through opportunistic refinancing of debt. The Clean Energy Businesses use interest rate swaps to exchange variable-rate project financed debt for a fixed interest rate. See Note Q to the financial statements in Item 8. Con Edison and CECONY estimate that at December 31, 2022, a 10 percent increase in interest rates applicable to its variable rate debt would result in an increase in annual interest expense of $17 million and $13 million, respectively. The increase in annual interest expense pertaining to Con Edison includes $1 million attributable to the Clean Energy Businesses. Debt of the Clean Energy Businesses was classified as held for sale on Con Edison's Consolidated Balance Sheet as of December 31, 2022. See 'Assets and Liabilities Held for Sale' in Note A and Note X to the financial statements in Item 8. Under CECONY's current electric, gas and steam rate plans, variations in actual variable rate tax-exempt debt interest expense, including costs associated with the refinancing of the variable rate tax-exempt debt, are reconciled to levels reflected in rates.

Inflationary pressure has prompted the Federal Reserve to increase interest rates. Higher interest rates have resulted in, and are expected to continue to result in, increased interest expense on commercial paper and variable-rate debt. Higher interest rates are also expected to increase interest expense on future long-term debt issuances.

## Commodity Price Risk

Con Edison's commodity price risk primarily relates to the purchase and sale of electricity, gas and related derivative instruments. The Utilities and the Clean Energy Businesses apply risk management strategies to mitigate their related exposures. See Note P to the financial statements in Item 8.

Con Edison estimates that, as of December 31, 2022, a 10 percent decline in market prices would result in a decline in fair value of $214 million for the derivative instruments used by the Utilities to hedge purchases of electricity and gas, of which $199 million is for CECONY and $15 million is for O&R. Con Edison expects that any such change in fair value would be largely offset by directionally opposite changes in the cost of the electricity and gas purchased.

The Utilities do not make any margin or profit on the electricity or gas they sell. In accordance with provisions approved by state regulators, the Utilities generally recover from full-service customers the costs they incur for energy purchased for those customers, including gains and losses on certain derivative instruments used to hedge energy purchased and related costs. See 'Recoverable Energy Costs' in Note A to the financial statements in Item 8. However, increases in electric and gas commodity prices may contribute to a slower recovery of cash from outstanding customer accounts receivable balances and increases to the allowance for uncollectible accounts, and may result in increases to write-offs of customer accounts receivable balances.

In February 2022, the NYSPSC, in response to higher customer bills, requested that CECONY enhance its efforts to mitigate customer bill volatility due to commodity price increases by reassessing its power supply billing practices and improve communications to customers regarding forecasted significant bill increases resulting from commodity price increases. In August 2022, the NYSPSC approved CECONY's March 2022 request to amend its electric tariff, effective June 1, 2022, to change how CECONY recovers the cost of electricity supplied to its full-service electric customers to reduce the likelihood of customer bill volatility by more closely aligning supply prices with CECONY's electric supply hedging positions. CECONY has also committed to provide notice to customers in cases where supply price increases could result in significantly higher bills.

In September 2022, in anticipation of commodity price volatility and potential oil supply disruption during the upcoming winter heating season, the NYSPSC requested, and CECONY and O&R have since taken, the following measures: advise their dual-fuel customers and power operators to fill their alternate fuel tanks; inspect by November 1, 2022 the alternate fuel tanks of interruptible gas customers where human needs are served to ensure they have adequate alternate supply; review their emergency plans to address alternate fuel supply disruptions of interruptible gas customers during peak gas demand; and promote bill payment assistance and energy use reduction programs.

The Clean Energy Businesses use a value-at-risk (VaR) model to assess the market price risk of their portfolio of electricity and gas commodity fixed-price purchase and sales commitments, physical forward contracts, generating assets and commodity derivative instruments. The Clean Energy Businesses were classified as held for sale as of December 31, 2022. See 'Assets and Liabilities Held for Sale' in Note A and Note X to the financial statements in Item 8. VaR represents the potential change in fair value of the portfolio due to changes in market prices for a

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specified time period and confidence level. These businesses estimate VaR across their portfolio using a delta-normal variance/covariance model with a 95 percent confidence level, compare the measured VaR results against performance due to actual prices and stress test the portfolio each quarter using an assumed 30 percent price change from forecast. Since the VaR calculation involves complex methodologies and estimates and assumptions that are based on past experience, it is not necessarily indicative of future results. VaR for the portfolio, assuming a one-day holding period, for the years ended December 31, 2022 and 2021, respectively, was as follows:

| 95% Confidence Level, One-Day Holding Period | 2022 | 2021 |
| --- | --- | --- |
|  | (Millions of Dollars) |  |
| Average for the period | $1 | $1 |
| High | 2 | 3 |
| Low | - | - |

### Investment Risk

The Companies' investment risk relates to the investment of plan assets for their pension and other postretirement benefit plans. Con Edison's investment risk also relates to the investments of Con Edison Transmission that are accounted for under the equity method. See 'Critical Accounting Estimates - Accounting for Pensions and Other Postretirement Benefits,' above and 'Investments' in Note A and Notes E and F to the financial statements in Item 8.

The Companies' current investment policy for pension plan assets includes investment targets of 28 to 38 percent equity securities, 42 to 60 percent debt securities, 12 to 22 percent alternatives. At December 31, 2022, the pension plan investments consisted of 32 percent equity securities, 48 percent debt securities and 20 percent alternatives.

For the Utilities' pension and other postretirement benefit plans, regulatory accounting treatment is generally applied in accordance with the accounting rules for regulated operations. In accordance with the Statement of Policy issued by the NYSPSC and its current electric, gas and steam rate plans, CECONY defers for payment to or recovery from customers the difference between the pension and other postretirement benefit expenses and the amounts for such expenses reflected in rates. O&R also defers such difference pursuant to its NY rate plans.

### Environmental Matters

For information concerning climate change, environmental sustainability, potential liabilities arising from laws and regulations protecting the environment and other environmental matters, see 'Environmental Matters' in Item 1 and Note G to the financial statements in Item 8.

### Material Contingencies

For information concerning potential liabilities arising from the Companies' material contingencies, see 'Critical Accounting Estimates - Accounting for Contingencies,' above, and Notes B, G and H to the financial statements in Item 8.

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## Item 7A: Quantitative and Qualitative Disclosures about Market Risk

### Con Edison

For information about Con Edison's primary market risks associated with activities in derivative financial instruments, other financial instruments and derivative commodity instruments, see 'Financial and Commodity Market Risks,' in Item 7 (which information is incorporated herein by reference). See also 'The Companies Require Access To Capital Markets To Satisfy Funding Requirements,' in Item 1A.

### CECONY

For information about CECONY's primary market risks associated with activities in derivative financial instruments, other financial instruments and derivative commodity instruments, see 'Financial and Commodity Market Risks' in Item 7 (which information is incorporated herein by reference). See also 'The Companies Require Access To Capital Markets To Satisfy Funding Requirements,' in Item 1A.

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## Item 8: Financial Statements and Supplementary Data

| Financial Statements | Page |
| --- | --- |
| Supplementary Financial Information |  |
| Con Edison |  |
| Report of Management on Internal Control Over Financial Reporting | 98 |
| Report of Independent Registered Public Accounting Firm (PCAOB ID 238) | 99 |
| Consolidated Income Statement for the years ended December 31, 2022, 2021, and 2020 | 101 |
| Consolidated Statement of Comprehensive Income for the years ended December 31, 2022, 2021 and 2020 | 102 |
| Consolidated Statement of Cash Flows for the years ended December 31, 2022, 2021 and 2020 | 103 |
| Consolidated Balance Sheet at December 31, 2022 and 2021 | 104 |
| Consolidated Statement of Equity for the years ended December 31, 2022, 2021 and 2020 | 106 |
| Consolidated Statement of Capitalization at December 31, 2022 and 2021 | 107 |
| CECONY |  |
| Report of Management on Internal Control Over Financial Reporting | 110 |
| Report of Independent Registered Public Accounting Firm (PCAOB ID 238) | 111 |
| Consolidated Income Statement for the years ended December 31, 2022, 2021 and 2020 | 113 |
| Consolidated Statement of Comprehensive Income for the years ended December 31, 2022, 2021 and 2020 | 114 |
| Consolidated Statement of Cash Flows for the years ended December 31, 2022, 2021 and 2020 | 115 |
| Consolidated Balance Sheet at December 31, 2022 and 2021 | 116 |
| Consolidated Statement of Shareholder's Equity for the years ended December 31, 2022, 2021 and 2020 | 118 |
| Consolidated Statement of Capitalization at December 31, 2022 and 2021 | 119 |
| Notes to the Financial Statements | 121 |
| Financial Statement Schedules |  |
| Con Edison |  |
| Schedule I - Condensed Financial Information of Consolidated Edison, Inc. at December 31, 2022 and 2021 and for the years ended December 31, 2022, 2021 and 2020 | 196 |
| Schedule II - Valuation and Qualifying Accounts for the years ended December 31, 2022, 2021 and 2020 | 199 |
| CECONY |  |
| Schedule II - Valuation and Qualifying Accounts for the years ended December 31, 2022, 2021 and 2020 | 199 |

All other schedules are omitted because they are not applicable or the required information is shown in financial statements or notes thereto.

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# Supplementary Financial Information

# Selected Quarterly Financial Data for the years ended December 31, 2022 and 2021 (Unaudited)

| Con Edison | 2022 |  |  |  |
| --- | --- | --- | --- | --- |
|  | First Quarter | Second Quarter | Third Quarter | Fourth Quarter |
| (Millions of Dollars, except per share amounts) |  |  |  |  |
| Operating revenues | $4,060 | $3,415 | $4,165 | $4,031 |
| Operating income | 799 | 387 | 889 | 550 |
| Net income for common stock | 554 | 254 | 619 | 190 |
| Basic earnings per share | $1.70 | $0.72 | $1.73 | $0.53 |
| Diluted earnings per share | $1.70 | $0.72 | $1.72 | $0.52 |

| Con Edison | 2021 |  |  |  |
| --- | --- | --- | --- | --- |
|  | First Quarter | Second Quarter | Third Quarter | Fourth Quarter |
| (Millions of Dollars, except per share amounts) |  |  |  |  |
| Operating revenues | $3,677 | $2,971 | $3,613 | $3,415 |
| Operating income | 860 | 418 | 850 | 697 |
| Net income for common stock | 419 | 165 | 538 | 224 |
| Basic earnings per share | $1.23 | $0.48 | $1.52 | $0.63 |
| Diluted earnings per share | $1.22 | $0.48 | $1.52 | $0.63 |

In the opinion of Con Edison, these quarterly amounts include all adjustments, consisting only of normal recurring accruals, necessary for a fair presentation. The sum of the quarterly financial information may vary from the annual data due to rounding.

| CECONY | 2022 |  |  |  |
| --- | --- | --- | --- | --- |
|  | First Quarter | Second Quarter | Third Quarter | Fourth Quarter |
| (Millions of Dollars) |  |  |  |  |
| Operating revenues | $3,517 | $2,906 | $3,549 | $3,296 |
| Operating income | 711 | 280 | 738 | 406 |
| Net income | 475 | 170 | 493 | 252 |

| CECONY | 2021 |  |  |  |
| --- | --- | --- | --- | --- |
|  | First Quarter | Second Quarter | Third Quarter | Fourth Quarter |
| (Millions of Dollars) |  |  |  |  |
| Operating revenues | $3,205 | $2,486 | $3,092 | $2,932 |
| Operating income | 786 | 321 | 728 | 624 |
| Net income | 465 | 128 | 418 | 333 |

In the opinion of CECONY, these quarterly amounts include all adjustments, consisting only of normal recurring accruals, necessary for a fair presentation. The sum of the quarterly financial information may vary from the annual data due to rounding.

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## Report of Management on Internal Control Over Financial Reporting

Management of Consolidated Edison, Inc. and its subsidiaries (the Company) is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is a process designed to provide reasonable, but not absolute, assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of the effectiveness of controls to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with policies or procedures may deteriorate.

Management of the Company assessed the effectiveness of internal control over financial reporting as of December 31, 2022, using the criteria established by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in *Internal Control - Integrated Framework* (2013). Based on that assessment, management has concluded that the Company had effective internal control over financial reporting as of December 31, 2022.

The effectiveness of the Company's internal control over financial reporting as of December 31, 2022, has been audited by PricewaterhouseCoopers LLP, the Company's independent registered public accounting firm, as stated in their report which appears on the following page of this Annual Report on Form 10-K.

/s/ Timothy P. Cawley

Timothy P. Cawley
Chairman, President and Chief Executive Officer

/s/ Robert Hoglund

Robert Hoglund
Senior Vice President and Chief Financial Officer

February 16, 2023

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# Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholders of Consolidated Edison, Inc.:

## *Opinions on the Financial Statements and Internal Control over Financial Reporting*

We have audited the consolidated financial statements, including the related notes and financial statement schedules, of Consolidated Edison, Inc. and its subsidiaries (the 'Company'), as listed in the index appearing under Item 8 (collectively referred to as the 'consolidated financial statements'). We also have audited the Company's internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2022 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.

## *Basis for Opinions*

The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Report of Management on Internal Control Over Financial Reporting. Our responsibility is to express opinions on the Company's consolidated financial statements and on the Company's internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

## *Definition and Limitations of Internal Control over Financial Reporting*

A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

CON EDISON ANNUAL REPORT 2022

99

## *Critical Audit Matters*

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

### *Accounting for the Effects of Regulatory Matters*

As described in Notes A and B to the consolidated financial statements, the Company applies the accounting rules for regulated operations, which specifies the economic effects that result from the causal relationship of costs and revenues in the rate-regulated environment and how these effects are to be accounted for by a regulated enterprise. As of December 31, 2022, there were $4,279 million of deferred costs included in regulatory assets and $6,401 million of regulatory liabilities awaiting potential refund or future rate reductions. Under regulatory accounting rules, if it is probable that incurred costs will be recovered in the future, those costs would be recorded as deferred charges or “regulatory assets.” Similarly, if revenues are recorded for costs expected to be incurred in the future, these revenues would be recorded as deferred credits or “regulatory liabilities.” The Company’s regulatory assets and liabilities will be recovered from customers, or applied for customer benefit, in accordance with rate provisions approved by the applicable state regulators.

The principal considerations for our determination that performing procedures relating to the accounting for the effects of regulatory matters is a critical audit matter are the significant judgment by management in determining the recoverability of certain regulatory assets and the significant auditor judgment and subjectivity in performing procedures and evaluating audit evidence relating to the recognition of regulatory assets and regulatory liabilities, including evaluating management’s judgments relating to the recoverability of certain regulatory assets.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to management’s assessment of regulatory proceedings and the implementation of new regulatory orders or changes to existing regulatory balances. These procedures also included, among others, evaluating the reasonableness of management’s assessment of impacts arising from correspondence with regulators and changes in laws and regulations; evaluating management’s judgments related to the recoverability of regulatory assets and the establishment of regulatory liabilities; and recalculating regulatory assets and liabilities based on provisions and formulas outlined in rate orders and other correspondence with regulators.

/s/ PricewaterhouseCoopers LLP  
New York, New York  
February 16, 2023

We have served as the Company’s or its predecessors’ auditor since 1938.

100 CON EDISON ANNUAL REPORT 2022

# **Consolidated Edison, Inc.**  
 **Consolidated Income Statement**

|  | For the Years Ended December 31, |  |  |
| --- | --- | --- | --- |
| (Millions of Dollars/Except Share Data) | 2022 | 2021 | 2020 |
| OPERATING REVENUES |  |  |  |
| Electric | $10,522 | $9,485 | $8,730 |
| Gas | 3,237 | 2,638 | 2,269 |
| Steam | 593 | 532 | 508 |
| Non-utility | 1,318 | 1,021 | 739 |
| TOTAL OPERATING REVENUES | 15,670 | 13,676 | 12,246 |
| OPERATING EXPENSES |  |  |  |
| Purchased power | 2,479 | 1,835 | 1,600 |
| Fuel | 356 | 229 | 156 |
| Gas purchased for resale | 1,245 | 690 | 527 |
| Other operations and maintenance | 3,905 | 3,254 | 2,814 |
| Depreciation and amortization | 2,056 | 2,032 | 1,920 |
| Taxes, other than income taxes | 3,005 | 2,810 | 2,575 |
| TOTAL OPERATING EXPENSES | 13,046 | 10,850 | 9,592 |
| OPERATING INCOME | 2,624 | 2,826 | 2,654 |
| OTHER INCOME (DEDUCTIONS) |  |  |  |
| Investment income (loss) | 20 | (420) | (214) |
| Other income | 402 | 22 | 23 |
| Allowance for equity funds used during construction | 19 | 21 | 17 |
| Other deductions | (115) | (161) | (227) |
| TOTAL OTHER INCOME (DEDUCTIONS) | 326 | (538) | (401) |
| INCOME BEFORE INTEREST AND INCOME TAX EXPENSE | 2,950 | 2,288 | 2,253 |
| INTEREST EXPENSE |  |  |  |
| Interest on long-term debt | 987 | 930 | 915 |
| Other interest | (99) | (14) | 118 |
| Allowance for borrowed funds used during construction | (36) | (11) | (14) |
| NET INTEREST EXPENSE | 852 | 905 | 1,019 |
| INCOME BEFORE INCOME TAX EXPENSE | 2,098 | 1,383 | 1,234 |
| INCOME TAX EXPENSE | 498 | 190 | 90 |
| NET INCOME | $1,600 | $1,193 | $1,144 |
| (Loss) Income attributable to non-controlling interest | $(60) | $(153) | $43 |
| NET INCOME FOR COMMON STOCK | $1,660 | $1,346 | $1,101 |
| Net income per common share - basic | $4.68 | $3.86 | $3.29 |
| Net income per common share - diluted | $4.66 | $3.85 | $3.28 |
| AVERAGE NUMBER OF SHARES OUTSTANDING - BASIC (IN MILLIONS) | 354.5 | 348.4 | 334.8 |
| AVERAGE NUMBER OF SHARES OUTSTANDING - DILUTED (IN MILLIONS) | 355.8 | 349.4 | 335.7 |

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

CON EDISON ANNUAL REPORT 2022 101

# **Consolidated Edison, Inc.**

# **Consolidated Statement of Comprehensive Income**

|  | For the Years Ended December 31, |  |  |
| --- | --- | --- | --- |
| (Millions of Dollars) | 2022 | 2021 | 2020 |
| NET INCOME | $1,600 | $1,193 | $1,144 |
| LOSS (INCOME) ATTRIBUTABLE TO NON-CONTROLLING INTEREST | 60 | 153 | (43) |
| OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAXES |  |  |  |
| Pension and other postretirement benefit plan liability adjustments, net of taxes | 16 | 30 | (6) |
| Other income, net of taxes | 1 | - | - |
| TOTAL OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAXES | 17 | 30 | (6) |
| COMPREHENSIVE INCOME | $1,677 | $1,376 | $1,095 |

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

102 CON EDISON ANNUAL REPORT 2022

# **Consolidated Edison, Inc.**

# **Consolidated Statement of Cash Flows**

|  | For the Years Ended December 31, |  |  |
| --- | --- | --- | --- |
| (Millions of Dollars) | 2022 | 2021 | 2020 |
| OPERATING ACTIVITIES |  |  |  |
| Net Income | $1,600 | $1,193 | $1,144 |
| PRINCIPAL NON-CASH CHARGES/(CREDITS) TO INCOME |  |  |  |
| Depreciation and amortization | 2,056 | 2,032 | 1,920 |
| Impairment of assets | - | 443 | 320 |
| Deferred income taxes | 435 | 133 | 85 |
| Net derivative (gains)/losses | (181) | (53) | 57 |
| Other non-cash items, net | 163 | 111 | (8) |
| CHANGES IN ASSETS AND LIABILITIES |  |  |  |
| Accounts receivable - customers | (285) | (411) | (543) |
| Unbilled revenue and net unbilled revenue deferrals | (96) | (53) | (1) |
| Allowance for uncollectible accounts - customers | 5 | 169 | 78 |
| Materials and supplies, including fuel oil and gas in storage | (111) | (82) | (4) |
| Prepayments, other receivables and other current assets | 31 | (234) | (179) |
| Accounts payable | 558 | 44 | 170 |
| Pensions and retiree benefits obligations, net | 176 | 266 | 285 |
| Pensions and retiree benefits contributions | (39) | (472) | (478) |
| Accrued taxes | 7 | (46) | 74 |
| Distributions from equity investments | 20 | 18 | 39 |
| System benefit charge | (41) | (34) | (119) |
| Deferred charges, noncurrent assets, leases, net and other regulatory assets | (870) | (496) | (686) |
| Deferred credits, noncurrent liabilities and other regulatory liabilities | 423 | 248 | (58) |
| Other current liabilities | 84 | (43) | 102 |
| NET CASH FLOWS FROM OPERATING ACTIVITIES | 3,935 | 2,733 | 2,198 |
| INVESTING ACTIVITIES |  |  |  |
| Utility construction expenditures | (3,824) | (3,630) | (3,326) |
| Cost of removal less salvage | (337) | (323) | (310) |
| Non-utility construction expenditures | (344) | (323) | (583) |
| Investments in electric and gas transmission projects | (64) | (30) | (3) |
| Investments in acquisitions of renewable electric projects | - | - | (24) |
| Proceeds from sale of assets | - | 629 | - |
| Divestiture of renewable electric projects | - | 183 | - |
| Other investing activities | 4 | 10 | 22 |
| NET CASH FLOWS USED IN INVESTING ACTIVITIES | (4,565) | (3,484) | (4,224) |
| FINANCING ACTIVITIES |  |  |  |
| Net (payment)/issuance of short-term debt | 1,702 | (382) | 178 |
| Issuance of long-term debt | 800 | 2,804 | 2,925 |
| Retirement of long-term debt | (406) | (1,960) | (518) |
| Debt issuance costs | (13) | (40) | (47) |
| Common stock dividends | (1,089) | (1,030) | (975) |
| Issuance of common shares - public offering | - | 775 | 640 |
| Issuance of common shares for stock plans | 57 | 60 | 58 |
| Distribution to noncontrolling interest | (37) | (23) | (16) |
| Sale of equity interest | - | 257 | - |
| NET CASH FLOWS FROM FINANCING ACTIVITIES | 1,014 | 461 | 2,245 |
| CASH, TEMPORARY CASH INVESTMENTS AND RESTRICTED CASH: |  |  |  |
| NET CHANGE FOR THE PERIOD | 384 | (290) | 219 |
| BALANCE AT BEGINNING OF PERIOD | 1,146 | 1,436 | 1,217 |
| BALANCE AT END OF PERIOD | $1,530 | $1,146 | $1,436 |
| LESS: CHANGE IN CASH BALANCES HELD FOR SALE | 248 | - | - |
| BALANCE AT END OF PERIOD EXCLUDING HELD FOR SALE | $1,282 | $1,146 | $1,436 |
| SUPPLEMENTAL DISCLOSURE OF CASH INFORMATION |  |  |  |
| Cash paid/(received) during the period for: |  |  |  |
| Interest | $900 | $924 | $920 |
| Income taxes | $47 | $9 | $38 |
| SUPPLEMENTAL DISCLOSURE OF NON-CASH INFORMATION |  |  |  |
| Construction expenditures in accounts payable | $681 | $457 | $478 |
| Issuance of common shares for dividend reinvestment | $31 | $49 | $48 |
| Software licenses acquired but unpaid as of end of period | $2 | $23 | $51 |
| Equipment acquired but unpaid as of end of period | $17 | $22 | $28 |

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

CON EDISON ANNUAL REPORT 2022

103

# **Consolidated Edison, Inc.**  
 **Consolidated Balance Sheet**

| (Millions of Dollars) | December 31, 2022 | December 31, 2021 |
| --- | --- | --- |
| ASSETS |  |  |
| CURRENT ASSETS |  |  |
| Cash and temporary cash investments | $1,282 | $992 |
| Accounts receivable - customers, net allowance for uncollectible accounts of $322 and $317 in 2022 and 2021, respectively | 2,192 | 1,943 |
| Other receivables, net allowance for uncollectible accounts of $10 and $22 in 2022 and 2021, respectively | 164 | 298 |
| Taxes receivable | 10 | 13 |
| Accrued unbilled revenue | 702 | 662 |
| Fuel oil, gas in storage, materials and supplies, at average cost | 492 | 437 |
| Prepayments | 264 | 295 |
| Regulatory assets | 305 | 206 |
| Restricted cash | - | 154 |
| Revenue decoupling mechanism receivable | 164 | 190 |
| Fair value of derivative assets | 59 | 128 |
| Assets held for sale | 7,162 | - |
| Other current assets | 176 | 233 |
| TOTAL CURRENT ASSETS | 12,972 | 5,551 |
| INVESTMENTS | 841 | 853 |
| UTILITY PLANT, AT ORIGINAL COST |  |  |
| Electric | 36,819 | 34,938 |
| Gas | 13,378 | 12,303 |
| Steam | 2,935 | 2,828 |
| General | 4,205 | 4,170 |
| TOTAL | 57,337 | 54,239 |
| Less: Accumulated depreciation | 13,069 | 12,177 |
| Net | 44,268 | 42,062 |
| Construction work in progress | 2,484 | 2,152 |
| NET UTILITY PLANT | 46,752 | 44,214 |
| NON-UTILITY PLANT |  |  |
| Non-utility property, net accumulated depreciation of $23 and $626 in 2022 and 2021, respectively | 13 | 4,194 |
| Construction work in progress | 1 | 188 |
| NET PLANT | 46,766 | 48,596 |
| OTHER NONCURRENT ASSETS |  |  |
| Goodwill | 408 | 439 |
| Intangible assets, net accumulated amortization of $297 in 2021 | - | 1,293 |
| Operating lease right-of-use-asset | 568 | 809 |
| Regulatory assets | 3,974 | 3,639 |
| Pension and Retiree Benefits | 3,269 | 1,654 |
| Fair value of derivative assets | 85 | 77 |
| Other deferred charges and noncurrent assets | 182 | 205 |
| TOTAL OTHER NONCURRENT ASSETS | 8,486 | 8,116 |
| TOTAL ASSETS | $69,065 | $63,116 |

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

104 CON EDISON ANNUAL REPORT 2022

# **Consolidated Edison, Inc.**  
 **Consolidated Balance Sheet**

| (Millions of Dollars) | December 31, 2022 | December 31, 2021 |
| --- | --- | --- |
| LIABILITIES AND SHAREHOLDERS' EQUITY |  |  |
| CURRENT LIABILITIES |  |  |
| Long-term debt due within one year | $649 | $440 |
| Term Loan | 400 | - |
| Notes payable | 2,640 | 1,488 |
| Accounts payable | 1,955 | 1,497 |
| Customer deposits | 358 | 300 |
| Accrued taxes | 102 | 104 |
| Accrued interest | 153 | 151 |
| Accrued wages | 116 | 113 |
| Fair value of derivative liabilities | 42 | 152 |
| Regulatory liabilities | 374 | 185 |
| System benefit charge | 390 | 423 |
| Operating lease liabilities | 103 | 113 |
| Liabilities held for sale | 3,610 | - |
| Other current liabilities | 444 | 461 |
| TOTAL CURRENT LIABILITIES | 11,336 | 5,427 |
| NONCURRENT LIABILITIES |  |  |
| Provision for injuries and damages | 181 | 183 |
| Pensions and retiree benefits | 577 | 737 |
| Superfund and other environmental costs | 997 | 940 |
| Asset retirement obligations | 500 | 577 |
| Fair value of derivative liabilities | 13 | 84 |
| Deferred income taxes and unamortized investment tax credits | 7,641 | 6,873 |
| Operating lease liabilities | 476 | 717 |
| Regulatory liabilities | 6,027 | 4,381 |
| Other deferred credits and noncurrent liabilities | 281 | 257 |
| TOTAL NONCURRENT LIABILITIES | 16,693 | 14,749 |
| LONG-TERM DEBT | 20,147 | 22,604 |
| COMMITMENTS, CONTINGENCIES, AND GUARANTEES (Note B, Note G, and Note H) |  |  |
| EQUITY |  |  |
| Common shareholders' equity | 20,687 | 20,037 |
| Noncontrolling interest | 202 | 299 |
| TOTAL EQUITY (See Statement of Equity) | 20,889 | 20,336 |
| TOTAL LIABILITIES AND EQUITY | $69,065 | $63,116 |

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

CON EDISON ANNUAL REPORT 2022 105

# **Consolidated Edison, Inc.**  
 **Consolidated Statement of Equity**

| (In Millions, except for dividends per share) | Common Stock |  | Additional Paid-In Capital | Retained Earnings | Treasury Stock |  | Capital Stock Expense | Accumulated Other Comprehensive Income/(Loss) | Noncontrolling Interest | Total |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  | Shares | Amount |  |  | Shares | Amount |  |  |  |  |
| BALANCE AS OF DECEMBER 31, 2019 | 333 | $35 | $8,054 | $11,100 | 23 | $(1,038) | $(110) | $(19) | $191 | $18,213 |
| Net income |  |  |  | 1,101 |  |  |  |  | 43 | 1,144 |
| Common stock dividends ($3.06 per share) |  |  |  | (1,023) |  |  |  |  |  | (1,023) |
| Issuance of common shares - public offering | 9 | 1 | 641 |  |  |  | (2) |  |  | 640 |
| Issuance of common shares for stock plans |  |  | 113 |  |  |  |  |  |  | 113 |
| Other comprehensive income |  |  |  |  |  |  |  | (6) |  | (6) |
| Distributions to noncontrolling interests |  |  |  |  |  |  |  |  | (16) | (16) |
| BALANCE AS OF DECEMBER 31, 2020 | 342 | $36 | $8,808 | $11,178 | 23 | $(1,038) | $(112) | $(25) | $218 | $19,065 |
| Net income (loss) |  |  |  | 1,346 |  |  |  |  | (153) | 1,193 |
| Common stock dividends ($3.10 per share) |  |  |  | (1,079) |  |  |  |  |  | (1,079) |
| Issuance of common shares - public offering | 10 | 1 | 775 |  |  |  | (10) |  |  | 766 |
| Issuance of common shares for stock plans | 2 |  | 127 |  |  |  |  |  |  | 127 |
| Other comprehensive income |  |  |  |  |  |  |  | 30 |  | 30 |
| Distributions to noncontrolling interests |  |  |  |  |  |  |  |  | (23) | (23) |
| Net proceeds from sale of equity interest |  |  |  |  |  |  |  |  | 257 | 257 |
| BALANCE AS OF DECEMBER 31, 2021 | 354 | $37 | $9,710 | $11,445 | 23 | $(1,038) | $(122) | $5 | $299 | $20,336 |
| Net income (loss) |  |  |  | 1,660 |  |  |  |  | (60) | 1,600 |
| Common stock dividends ($3.16 per share) |  |  |  | (1,120) |  |  |  |  |  | (1,120) |
| Issuance of common shares - public offering |  |  |  |  |  |  |  |  |  | - |
| Issuance of common shares for stock plans | 1 |  | 93 |  |  |  |  |  |  | 93 |
| Other comprehensive income |  |  |  |  |  |  |  | 17 |  | 17 |
| Distributions to noncontrolling interests |  |  |  |  |  |  |  |  | (37) | (37) |
| BALANCE AS OF DECEMBER 31, 2022 | 355 | $37 | $9,803 | $11,985 | 23 | $(1,038) | $(122) | $22 | $202 | $20,889 |

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

106 CON EDISON ANNUAL REPORT 2022

# **Consolidated Edison, Inc.**  
 **Consolidated Statement of Capitalization**

| (In Millions) | Shares outstanding December 31, |  | At December 31, |  |
| --- | --- | --- | --- | --- |
|  | 2022 | 2021 | 2022 | 2021 |
| TOTAL EQUITY BEFORE ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) | 355 | 354 | $20,665 | $20,032 |
| Pension plan liability adjustments, net of taxes |  |  | 23 | 7 |
| Unrealized gains/(losses) on derivatives qualified as cash flow hedges, less reclassification adjustment for gains/(losses) included in net income and reclassification adjustment for unrealized losses included in regulatory assets, net of taxes |  |  | (1) | (2) |
| TOTAL ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAXES |  |  | 22 | 5 |
| Equity |  |  | 20,687 | 20,037 |
| Noncontrolling interest |  |  | 202 | 299 |
| TOTAL EQUITY (See Statement of Equity) |  |  | $20,889 | $20,336 |

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

CON EDISON ANNUAL REPORT 2022 107

# **Consolidated Edison, Inc.**

# **Consolidated Statement of Capitalization**

| LONG-TERM DEBT (Millions of Dollars) |  |  | At December 31, |  |
| --- | --- | --- | --- | --- |
| Maturity | Interest Rate | Series | 2022 | 2021 |
| DEBENTURES: |  |  |  |  |
| 2023 | 0.65 | 2020A | $650 | $650 |
| 2024 | 3.30 | 2014B | 250 | 250 |
| 2026 | 2.90 | 2016B | 250 | 250 |
| 2027 | 6.50 | 1997F | 80 | 80 |
| 2027 | 3.125 | 2017B | 350 | 350 |
| 2028 | 3.80 | 2018A | 300 | 300 |
| 2028 | 4.00 | 2018D | 500 | 500 |
| 2029 | 2.94 | 2019B | 44 | 44 |
| 2030 | 3.35 | 2020A | 600 | 600 |
| 2030 | 2.02 | 2020A | 35 | 35 |
| 2031 | 2.40 | 2021A | 900 | 900 |
| 2031 | 2.31 | 2021A | 45 | 45 |
| 2032 | 5.70 | 2022A | 100 | - |
| 2033 | 5.875 | 2003A | 175 | 175 |
| 2033 | 5.10 | 2003C | 200 | 200 |
| 2034 | 5.70 | 2004B | 200 | 200 |
| 2035 | 5.30 | 2005A | 350 | 350 |
| 2035 | 5.25 | 2005B | 125 | 125 |
| 2036 | 5.85 | 2006A | 400 | 400 |
| 2036 | 6.20 | 2006B | 400 | 400 |
| 2036 | 5.70 | 2006E | 250 | 250 |
| 2037 | 6.30 | 2007A | 525 | 525 |
| 2038 | 6.75 | 2008B | 600 | 600 |
| 2039 | 6.00 | 2009B | 60 | 60 |
| 2039 | 5.50 | 2009C | 600 | 600 |
| 2039 | 3.46 | 2019C | 38 | 38 |
| 2040 | 5.70 | 2010B | 350 | 350 |
| 2040 | 5.50 | 2010B | 115 | 115 |
| 2042 | 4.20 | 2012A | 400 | 400 |
| 2043 | 3.95 | 2013A | 700 | 700 |
| 2044 | 4.45 | 2014A | 850 | 850 |
| 2045 | 4.50 | 2015A | 650 | 650 |
| 2045 | 4.95 | 2015A | 120 | 120 |
| 2045 | 4.69 | 2015B | 100 | 100 |
| 2046 | 3.85 | 2016A | 550 | 550 |
| 2046 | 3.88 | 2016A | 75 | 75 |
| 2047 | 3.875 | 2017A | 500 | 500 |
| 2048 | 4.65 | 2018E | 600 | 600 |
| 2048 | 4.35 | 2018A | 125 | 125 |
| 2048 | 4.35 | 2018B | 25 | 25 |
| 2049 | 4.125 | 2019A | 700 | 700 |
| 2049 | 3.73 | 2019A | 43 | 43 |
| 2050 | 3.95 | 2020B | 1,000 | 1,000 |
| 2050 | 3.24 | 2020B | 40 | 40 |
| 2051 | 3.17 | 2021B | 30 | 30 |
| 2051 | 3.20 | 2021C | 600 | 600 |
| 2052 | 6.15 | 2022A | 700 | - |
| 2054 | 4.63 | 2014C | 750 | 750 |
| 2056 | 4.30 | 2016C | 500 | 500 |
| 2057 | 4.00 | 2017C | 350 | 350 |
| 2058 | 4.50 | 2018B | 700 | 700 |

108 CON EDISON ANNUAL REPORT 2022

| 2059 | 3.70 | 2019B | 600 | 600 |
| --- | --- | --- | --- | --- |
| 2060 | 3.00 | 2020C | 600 | 600 |
| 2061 | 3.60 | 2021B | 750 | 750 |
| TOTAL DEBENTURES |  |  | 20,550 | 19,750 |

## Consolidated Edison, Inc.

### Consolidated Statement of Capitalization

| LONG-TERM DEBT (Millions of Dollars) |  |  | At December 31, |  |
| --- | --- | --- | --- | --- |
| Maturity | Interest Rate | Series | 2022 | 2021 |
| TAX-EXEMPT DEBT - Notes issued to New York State Energy Research and Development Authority for Facilities Revenue Bonds: |  |  |  |  |
| 2036 | 3.61 (a) | 2010A | 225 | 225 |
| 2039 | 3.68 (a) | 2004C | 99 | 99 |
| 2039 | 3.63 (a) | 2005A | 126 | 126 |
| TOTAL TAX-EXEMPT DEBT |  |  | 450 | 450 |
| PROJECT DEBT: |  |  |  |  |
| 2023 | 6.91 (b) | Copper Mountain Solar 2 | 179 | 192 |
| 2025 | 6.91 (b) | Copper Mountain Solar 3 | 229 | 247 |
| 2026 | 5.92 (b) | CED Southwest | 408 | 418 |
| 2028 | 4.41 | Wind Holdings | 87 | 95 |
| 2028 | 6.48 (b) | Copper Mountain Solar 1 | 41 | 49 |
| 2028 | 6.42 (b) | CED California Texas | 236 | 248 |
| 2031 | 2.24 - 3.03 (c) | Mesquite Solar 1 | 149 | 165 |
| 2031-2038 | 5.25 - 4.95 (c) | Texas Solar 4 | 49 | 52 |
| 2036 | 3.94 | California Solar 2 | 86 | 88 |
| 2036 | 4.07 | California Solar 3 | 77 | 79 |
| 2037 | 4.78 | California Solar | 168 | 171 |
| 2038 | 3.82 | California Solar 4 | 265 | 271 |
| 2039 | 4.82 | Broken Bow II | 64 | 65 |
| 2040 | 4.53 | Texas Solar 5 | 132 | 135 |
| 2041 | 4.21 | Texas Solar 7 | 180 | 184 |
| 2042 | 4.45 | Upton County Solar | 81 | 83 |
| 2046 | 3.77 | CED Nevada Virginia | 228 | 228 |
| Other project debt |  |  | 6 | 7 |
| TOTAL PROJECT DEBT |  |  | 2,665 | 2,777 |
| Other long-term debt |  |  | (1) | 293 |
| Unamortized debt expense |  |  | (172) | (177) |
| Unamortized debt discount |  |  | (51) | (49) |
| TOTAL |  |  | 23,441 | 23,044 |
| Less: Long-term debt due within one year |  |  | 1,002 | 440 |
| TOTAL LONG-TERM DEBT |  |  | 22,439 | 22,604 |
| Less: Held for sale project debt, net |  |  | 2,292 | - |
| TOTAL LONG-TERM DEBT EXCLUDING HELD FOR SALE |  |  | 20,147 | 22,604 |
| TOTAL CAPITALIZATION |  |  | $40,834 | $42,641 |

(a) Rates reset weekly: December 31, 2022 rates shown.

(b) December 31, 2022 effective rates shown, reflecting variable interest rates on the debt that are reset quarterly or semi-annually. Refer to Note Q for the effect of applicable interest rate swaps.

(c) Range of rates shown reflect multiple tranches associated with the debt.

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

CON EDISON ANNUAL REPORT 2022 109

## Report of Management on Internal Control Over Financial Reporting

Management of Consolidated Edison Company of New York, Inc. and its subsidiaries (the Company) is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is a process designed to provide reasonable, but not absolute, assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of the effectiveness of controls to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with policies or procedures may deteriorate.

Management of the Company assessed the effectiveness of internal control over financial reporting as of December 31, 2022, using the criteria established by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in *Internal Control - Integrated Framework* (2013). Based on that assessment, management has concluded that the Company had effective internal control over financial reporting as of December 31, 2022.

The effectiveness of the Company's internal control over financial reporting as of December 31, 2022, has been audited by PricewaterhouseCoopers LLP, the Company's independent registered public accounting firm, as stated in their report which appears on the following page of this Annual Report on Form 10-K.

/s/ Timothy P. Cawley

Timothy P. Cawley
Chairman and Chief Executive Officer

/s/ Robert Hoglund

Robert Hoglund
Senior Vice President and Chief Financial Officer

February 16, 2023

110 CON EDISON ANNUAL REPORT 2022

# Report of Independent Registered Public Accounting Firm

To the Board of Trustees and Shareholder of Consolidated Edison Company of New York, Inc.:

## *Opinions on the Financial Statements and Internal Control over Financial Reporting*

We have audited the consolidated financial statements, including the related notes and financial statement schedule, of Consolidated Edison Company of New York, Inc. and its subsidiaries (the 'Company') as listed in the index appearing under Item 8 (collectively referred to as the 'consolidated financial statements'). We also have audited the Company's internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2022 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.

## *Basis for Opinions*

The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Report of Management on Internal Control Over Financial Reporting. Our responsibility is to express opinions on the Company's consolidated financial statements and on the Company's internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

## *Definition and Limitations of Internal Control over Financial Reporting*

A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

CON EDISON ANNUAL REPORT 2022

111

## *Critical Audit Matters*

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

### *Accounting for the Effects of Regulatory Matters*

As described in Notes A and B to the consolidated financial statements, the Company applies the accounting rules for regulated operations, which specifies the economic effects that result from the causal relationship of costs and revenues in the rate-regulated environment and how these effects are to be accounted for by a regulated enterprise. As of December 31, 2022, there were $3,955 million of deferred costs included in regulatory assets and $5,789 million of regulatory liabilities awaiting potential refund or future rate reductions. Under regulatory accounting rules, if it is probable that incurred costs will be recovered in the future, those costs would be recorded as deferred charges or “regulatory assets.” Similarly, if revenues are recorded for costs expected to be incurred in the future, these revenues would be recorded as deferred credits or “regulatory liabilities.” The Company’s regulatory assets and liabilities will be recovered from customers, or applied for customer benefit, in accordance with rate provisions approved by the applicable state regulators

The principal considerations for our determination that performing procedures relating to the accounting for the effects of regulatory matters is a critical audit matter are the significant judgment by management in determining the recoverability of certain regulatory assets and the significant auditor judgment and subjectivity in performing procedures and evaluating audit evidence relating to the recognition of regulatory assets and regulatory liabilities, including evaluating management’s judgments relating to the recoverability of certain regulatory assets.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to management’s assessment of regulatory proceedings and the implementation of new regulatory orders or changes to existing regulatory balances. These procedures also included, among others, evaluating the reasonableness of management’s assessment of impacts arising from correspondence with regulators and changes in laws and regulations; evaluating management’s judgments related to the recoverability of regulatory assets and the establishment of regulatory liabilities; and recalculating regulatory assets and liabilities based on provisions and formulas outlined in rate orders and other correspondence with regulators.

/s/ PricewaterhouseCoopers LLP  
New York, New York  
February 16, 2023

We have served as the Company’s auditor since 1938.

112 CON EDISON ANNUAL REPORT 2022

# **Consolidated Edison Company of New York, Inc.**  
 **Consolidated Income Statement**

|  | For the Years Ended December 31, |  |  |
| --- | --- | --- | --- |
| (Millions of Dollars) | 2022 | 2021 | 2020 |
| OPERATING REVENUES |  |  |  |
| Electric | $9,751 | $8,806 | $8,103 |
| Gas | 2,924 | 2,378 | 2,036 |
| Steam | 593 | 532 | 508 |
| TOTAL OPERATING REVENUES | 13,268 | 11,716 | 10,647 |
| OPERATING EXPENSES |  |  |  |
| Purchased power | 2,201 | 1,633 | 1,432 |
| Fuel | 356 | 229 | 156 |
| Gas purchased for resale | 869 | 541 | 426 |
| Other operations and maintenance | 3,042 | 2,452 | 2,269 |
| Depreciation and amortization | 1,778 | 1,705 | 1,598 |
| Taxes, other than income taxes | 2,887 | 2,696 | 2,456 |
| TOTAL OPERATING EXPENSES | 11,133 | 9,256 | 8,337 |
| OPERATING INCOME | 2,135 | 2,460 | 2,310 |
| OTHER INCOME (DEDUCTIONS) |  |  |  |
| Investment and other income | 376 | 16 | 19 |
| Allowance for equity funds used during construction | 18 | 19 | 14 |
| Other deductions | (62) | (143) | (204) |
| TOTAL OTHER INCOME (DEDUCTIONS) | 332 | (108) | (171) |
| INCOME BEFORE INTEREST AND INCOME TAX EXPENSE | 2,467 | 2,352 | 2,139 |
| INTEREST EXPENSE |  |  |  |
| Interest on long-term debt | 808 | 759 | 718 |
| Other interest | 47 | 13 | 33 |
| Allowance for borrowed funds used during construction | (33) | (10) | (12) |
| NET INTEREST EXPENSE | 822 | 762 | 739 |
| INCOME BEFORE INCOME TAX EXPENSE | 1,645 | 1,590 | 1,400 |
| INCOME TAX EXPENSE | 255 | 246 | 215 |
| NET INCOME | $1,390 | $1,344 | $1,185 |

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

CON EDISON ANNUAL REPORT 2022 113

# **Consolidated Edison Company of New York, Inc.**  
 **Consolidated Statement of Comprehensive Income**

|  | For the Years Ended December 31, |  |  |
| --- | --- | --- | --- |
| (Millions of Dollars) | 2022 | 2021 | 2020 |
| NET INCOME | $1,390 | $1,344 | $1,185 |
| OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAXES |  |  |  |
| Pension and other postretirement benefit plan liability adjustments, net of taxes | 3 | 7 | (1) |
| Other income, net of taxes | 1 | - | - |
| TOTAL OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAXES | 4 | 7 | (1) |
| COMPREHENSIVE INCOME | $1,394 | $1,351 | $1,184 |

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

114 CON EDISON ANNUAL REPORT 2022

# **Consolidated Edison Company of New York, Inc.**  
 **Consolidated Statement of Cash Flows**

|  | For the Years Ended December 31, |  |  |
| --- | --- | --- | --- |
| (Millions of Dollars) | 2022 | 2021 | 2020 |
| OPERATING ACTIVITIES |  |  |  |
| Net income | $1,390 | $1,344 | $1,185 |
| PRINCIPAL NON-CASH CHARGES/(CREDITS) TO INCOME |  |  |  |
| Depreciation and amortization | 1,778 | 1,705 | 1,598 |
| Deferred income taxes | 85 | 124 | 168 |
| Other non-cash items, net | 175 | (2) | (62) |
| CHANGES IN ASSETS AND LIABILITIES |  |  |  |
| Accounts receivable - customers | (268) | (412) | (516) |
| Allowance for uncollectible accounts - customers | 10 | 166 | 74 |
| Prepayments, other receivables and other current assets | 56 | (354) | (98) |
| Accounts receivables from affiliated companies | (8) | 96 | (61) |
| Accounts payable | 322 | 65 | 145 |
| Accounts payable to affiliated companies | (1) | (4) | 9 |
| Pensions and retiree benefits obligations, net | 182 | 283 | 253 |
| Pensions and retiree benefits contributions | (26) | (433) | (438) |
| Accrued taxes | 15 | (54) | 61 |
| Accrued taxes to affiliated companies | 79 | 9 | 1 |
| System benefit charge | (33) | (32) | (112) |
| Deferred charges, noncurrent assets, leases, net and other regulatory assets | (852) | (484) | (633) |
| Deferred credits, noncurrent liabilities and other regulatory liabilities | 312 | 192 | 15 |
| Other current liabilities | 47 | (23) | 104 |
| NET CASH FLOWS FROM OPERATING ACTIVITIES | 3,263 | 2,186 | 1,693 |
| INVESTING ACTIVITIES |  |  |  |
| Utility construction expenditures | (3,596) | (3,413) | (3,112) |
| Cost of removal less salvage | (330) | (316) | (304) |
| NET CASH FLOWS USED IN INVESTING ACTIVITIES | (3,926) | (3,729) | (3,416) |
| FINANCING ACTIVITIES |  |  |  |
| Net (payment)/issuance of short-term debt | 939 | (299) | 523 |
| Issuance of long-term debt | 700 | 2,250 | 2,200 |
| Retirement of long-term debt | - | (640) | (350) |
| Debt issuance costs | (12) | (27) | (34) |
| Capital contribution by parent | 150 | 1,100 | 500 |
| Dividend to parent | (978) | (988) | (982) |
| NET CASH FLOWS FROM FINANCING ACTIVITIES | 799 | 1,396 | 1,857 |
| CASH, TEMPORARY CASH INVESTMENTS AND RESTRICTED CASH: |  |  |  |
| NET CHANGE FOR THE PERIOD | 136 | (147) | 134 |
| BALANCE AT BEGINNING OF PERIOD | 920 | 1,067 | 933 |
| BALANCE AT END OF PERIOD | $1,056 | $920 | $1,067 |
| SUPPLEMENTAL DISCLOSURE OF CASH INFORMATION |  |  |  |
| Cash paid during the period for: |  |  |  |
| Interest | $755 | $739 | $693 |
| Income taxes | $87 | $5 | $102 |
| SUPPLEMENTAL DISCLOSURE OF NON-CASH INFORMATION |  |  |  |
| Construction expenditures in accounts payable | $561 | $406 | $417 |
| Software licenses acquired but unpaid as of end of period | $2 | $22 | $48 |
| Equipment acquired but unpaid as of end of period | $17 | $22 | $28 |

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

CON EDISON ANNUAL REPORT 2022 115

# **Consolidated Edison Company of New York, Inc.**  
 **Consolidated Balance Sheet**

| (Millions of Dollars) | December 31, 2022 | December 31, 2021 |
| --- | --- | --- |
| ASSETS |  |  |
| CURRENT ASSETS |  |  |
| Cash and temporary cash investments | $1,056 | $920 |
| Accounts receivable - customers, net allowance for uncollectible accounts of $314 and $304 in 2022 and 2021, respectively | 2,099 | 1,841 |
| Other receivables, net allowance for uncollectible accounts of $7 and $19 in 2022 and 2021, respectively | 147 | 121 |
| Taxes receivable | 5 | 5 |
| Accrued unbilled revenue | 573 | 549 |
| Accounts receivable from affiliated companies | 46 | 38 |
| Fuel oil, gas in storage, materials and supplies, at average cost | 440 | 369 |
| Prepayments | 223 | 212 |
| Regulatory assets | 286 | 188 |
| Revenue decoupling mechanism receivable | 164 | 191 |
| Fair value of derivative assets | 51 | 71 |
| Other current assets | 157 | 198 |
| TOTAL CURRENT ASSETS | 5,247 | 4,703 |
| INVESTMENTS | 539 | 608 |
| UTILITY PLANT AT ORIGINAL COST |  |  |
| Electric | 34,636 | 32,846 |
| Gas | 12,338 | 11,321 |
| Steam | 2,935 | 2,828 |
| General | 3,879 | 3,854 |
| TOTAL | 53,788 | 50,849 |
| Less: Accumulated depreciation | 12,047 | 11,223 |
| Net | 41,741 | 39,626 |
| Construction work in progress | 2,268 | 1,985 |
| NET UTILITY PLANT | 44,009 | 41,611 |
| NON-UTILITY PROPERTY |  |  |
| Non-utility property, net accumulated depreciation of $25 in 2022 and 2021 | 2 | 2 |
| NET PLANT | 44,011 | 41,613 |
| OTHER NONCURRENT ASSETS |  |  |
| Regulatory assets | 3,669 | 3,316 |
| Operating lease right-of-use asset | 567 | 545 |
| Pension and Retiree Benefits | 3,184 | 1,677 |
| Fair value of derivative assets | 80 | 56 |
| Other deferred charges and noncurrent assets | 148 | 137 |
| TOTAL OTHER NONCURRENT ASSETS | 7,648 | 5,731 |
| TOTAL ASSETS | $57,445 | $52,655 |

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

116 CON EDISON ANNUAL REPORT 2022

# **Consolidated Edison Company of New York, Inc.**  
 **Consolidated Balance Sheet**

| (Millions of Dollars) | December 31, 2022 | December 31, 2021 |
| --- | --- | --- |
| LIABILITIES AND SHAREHOLDER'S EQUITY |  |  |
| CURRENT LIABILITIES |  |  |
| Notes payable | $2,300 | $1,361 |
| Accounts payable | 1,763 | 1,285 |
| Accounts payable to affiliated companies | 17 | 18 |
| Customer deposits | 341 | 285 |
| Accrued taxes | 93 | 78 |
| Accrued taxes to affiliated companies | 89 | 10 |
| Accrued interest | 134 | 127 |
| Accrued wages | 105 | 103 |
| Fair value of derivative liabilities | 35 | 88 |
| Regulatory liabilities | 308 | 134 |
| System benefit charge | 351 | 372 |
| Operating lease liabilities | 103 | 90 |
| Other current liabilities | 397 | 370 |
| TOTAL CURRENT LIABILITIES | 6,036 | 4,321 |
| NONCURRENT LIABILITIES |  |  |
| Provision for injuries and damages | 177 | 178 |
| Pensions and retiree benefits | 526 | 669 |
| Superfund and other environmental costs | 903 | 850 |
| Asset retirement obligations | 499 | 504 |
| Fair value of derivative liabilities | 9 | 40 |
| Deferred income taxes and unamortized investment tax credits | 7,144 | 6,796 |
| Operating lease liabilities | 475 | 462 |
| Regulatory liabilities | 5,481 | 3,921 |
| Other deferred credits and noncurrent liabilities | 237 | 220 |
| TOTAL NONCURRENT LIABILITIES | 15,451 | 13,640 |
| LONG-TERM DEBT | 19,080 | 18,382 |
| COMMITMENTS AND CONTINGENCIES (Note B and Note G) |  |  |
| COMMON SHAREHOLDER'S EQUITY (See Statement of Shareholder's Equity) | 16,878 | 16,312 |
| TOTAL LIABILITIES AND SHAREHOLDER'S EQUITY | $57,445 | $52,655 |

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

CON EDISON ANNUAL REPORT 2022 117

# **Consolidated Edison Company of New York, Inc.**  
 **Consolidated Statement of Shareholder's Equity**

| (In Millions) | Common Stock |  | Additional Paid-In Capital | Retained Earnings | Repurchased Con Edison Stock | Capital Stock Expense | Accumulated Other Comprehensive Income/(Loss) | Total |
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  | Shares | Amount |  |  |  |  |  |  |
| BALANCE AS OF DECEMBER 31, 2019 | 235 | $589 | $5,669 | $8,919 | $(962) | $(62) | $(6) | $14,147 |
| Net income |  |  |  | 1,185 |  |  |  | 1,185 |
| Common stock dividend to parent |  |  |  | (982) |  |  |  | (982) |
| Capital contribution by parent |  |  | 500 |  |  |  |  | 500 |
| Other comprehensive income |  |  |  |  |  |  | (1) | (1) |
| BALANCE AS OF DECEMBER 31, 2020 | 235 | $589 | $6,169 | $9,122 | $(962) | $(62) | $(7) | $14,849 |
| Net income |  |  |  | 1,344 |  |  |  | 1,344 |
| Common stock dividend to parent |  |  |  | (988) |  |  |  | (988) |
| Capital contribution by parent |  |  | 1,100 |  |  |  |  | 1,100 |
| Other comprehensive income |  |  |  |  |  |  | 7 | 7 |
| BALANCE AS OF DECEMBER 31, 2021 | 235 | $589 | $7,269 | $9,478 | $(962) | $(62) | $- | $16,312 |
| Net income |  |  |  | 1,390 |  |  |  | 1,390 |
| Common stock dividend to parent |  |  |  | (978) |  |  |  | (978) |
| Capital contribution by parent |  |  | 150 |  |  |  |  | 150 |
| Other comprehensive income |  |  |  |  |  |  | 4 | 4 |
| BALANCE AS OF DECEMBER 31, 2022 | 235 | $589 | $7,419 | $9,890 | $(962) | $(62) | $4 | $16,878 |

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

118 CON EDISON ANNUAL REPORT 2022

# **Consolidated Edison Company of New York, Inc.**  
 **Consolidated Statement of Capitalization**

| (In Millions) | Shares outstanding December 31, |  | At December 31, |  |
| --- | --- | --- | --- | --- |
|  | 2022 | 2021 | 2022 | 2021 |
| TOTAL SHAREHOLDER'S EQUITY BEFORE ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) | 235 | 235 | $16,874 | $16,312 |
| Pension plan liability adjustments, net of taxes |  |  | 5 | 1 |
| Unrealized gains/(losses) on derivatives qualified as cash flow hedges, less reclassification adjustment for gains/(losses) included in net income and reclassification adjustment for unrealized losses included in regulatory assets, net of taxes |  |  | (1) | (1) |
| TOTAL ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAXES |  |  | 4 | - |
| TOTAL SHAREHOLDER'S EQUITY (See Statement of Shareholder's Equity) |  |  | $16,878 | $16,312 |

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

CON EDISON ANNUAL REPORT 2022 119

# **Consolidated Edison Company of New York, Inc.**  
 **Consolidated Statement of Capitalization**

| LONG-TERM DEBT (Millions of Dollars) |  |  | At December 31, |  |
| --- | --- | --- | --- | --- |
| Maturity | Interest Rate | Series | 2022 | 2021 |
| DEBENTURES: |  |  |  |  |
| 2024 | 3.30 | 2014B | $250 | $250 |
| 2026 | 2.90 | 2016B | 250 | 250 |
| 2027 | 3.125 | 2017B | 350 | 350 |
| 2028 | 3.80 | 2018A | 300 | 300 |
| 2028 | 4.00 | 2018D | 500 | 500 |
| 2030 | 3.35 | 2020A | 600 | 600 |
| 2031 | 2.40 | 2021A | 900 | 900 |
| 2033 | 5.875 | 2003A | 175 | 175 |
| 2033 | 5.10 | 2003C | 200 | 200 |
| 2034 | 5.70 | 2004B | 200 | 200 |
| 2035 | 5.30 | 2005A | 350 | 350 |
| 2035 | 5.25 | 2005B | 125 | 125 |
| 2036 | 5.85 | 2006A | 400 | 400 |
| 2036 | 6.20 | 2006B | 400 | 400 |
| 2036 | 5.70 | 2006E | 250 | 250 |
| 2037 | 6.30 | 2007A | 525 | 525 |
| 2038 | 6.75 | 2008B | 600 | 600 |
| 2039 | 5.50 | 2009C | 600 | 600 |
| 2040 | 5.70 | 2010B | 350 | 350 |
| 2042 | 4.20 | 2012A | 400 | 400 |
| 2043 | 3.95 | 2013A | 700 | 700 |
| 2044 | 4.45 | 2014A | 850 | 850 |
| 2045 | 4.50 | 2015A | 650 | 650 |
| 2046 | 3.85 | 2016A | 550 | 550 |
| 2047 | 3.875 | 2017A | 500 | 500 |
| 2048 | 4.65 | 2018E | 600 | 600 |
| 2049 | 4.125 | 2019A | 700 | 700 |
| 2050 | 3.95 | 2020B | 1,000 | 1,000 |
| 2051 | 3.20 | 2021C | 600 | 600 |
| 2052 | 6.15 | 2022A | 700 | - |
| 2054 | 4.625 | 2014C | 750 | 750 |
| 2056 | 4.30 | 2016C | 500 | 500 |
| 2057 | 4.00 | 2017C | 350 | 350 |
| 2058 | 4.50 | 2018B | 700 | 700 |
| 2059 | 3.70 | 2019B | 600 | 600 |
| 2060 | 3.00 | 2020C | 600 | 600 |
| 2061 | 3.60 | 2021B | 750 | 750 |
| TOTAL DEBENTURES |  |  | 18,825 | 18,125 |
| TAX-EXEMPT DEBT - Notes issued to New York State Energy Research and Development Authority for Facilities Revenue Bonds: |  |  |  |  |
| 2036 | 3.61 (a) | 2010A | 225 | 225 |
| 2039 | 3.68 (a) | 2004C | 99 | 99 |
| 2039 | 3.63 (a) | 2005A | 126 | 126 |
| TOTAL TAX-EXEMPT DEBT |  |  | 450 | 450 |
| Unamortized debt expense |  |  | (145) | (145) |
| Unamortized debt discount |  |  | (50) | (48) |
| TOTAL LONG-TERM DEBT |  |  | 19,080 | 18,382 |
| TOTAL CAPITALIZATION |  |  | $35,958 | $34,694 |

(a) Rates reset weekly: December 31, 2022 rates shown.

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

120 CON EDISON ANNUAL REPORT 2022