|
New York
|
|
13-3965100
|
State of Incorporation
|
|
I.R.S. Employer
ID. Number
|
New York
|
|
13-5009340
|
State of Incorporation
|
|
I.R.S. Employer
ID. Number
|
Title of each class
|
|
|
Name of each exchange
on which registered
|
|
Consolidated Edison, Inc.,
|
|
|
|
|
Common Shares ($.10 par value)
|
|
|
New York Stock Exchange
|
CON EDISON ANNUAL REPORT 2018
|
1
|
|
Consolidated Edison, Inc. (Con Edison)
|
Yes
|
|
x
|
|
No
|
|
¨
|
|
|
Consolidated Edison Company of New York, Inc. (CECONY)
|
Yes
|
|
x
|
|
No
|
|
¨
|
|
|
Con Edison
|
Yes
|
|
¨
|
|
No
|
|
x
|
|
|
CECONY
|
Yes
|
|
¨
|
|
No
|
|
x
|
|
|
Con Edison
|
Yes
|
|
x
|
|
No
|
|
¨
|
|
|
CECONY
|
Yes
|
|
x
|
|
No
|
|
¨
|
|
|
Con Edison
|
Yes
|
|
x
|
|
No
|
|
¨
|
|
|
CECONY
|
Yes
|
|
x
|
|
No
|
|
¨
|
|
Con Edison
|
|
|
|
|
|
|
|
|
|
|
Large accelerated filer
|
|
x
|
|
Accelerated filer
|
|
¨
|
|
Non-accelerated filer
|
|
¨
|
Smaller reporting company
|
|
¨
|
|
Emerging growth company
|
|
¨
|
|
|
|
|
CECONY
|
|
|
|
|
|
|
|
|
|
|
Large accelerated filer
|
|
¨
|
|
Accelerated filer
|
|
¨
|
|
Non-accelerated filer
|
|
x
|
Smaller reporting company
|
|
¨
|
|
Emerging growth company
|
|
¨
|
|
|
|
|
Con Edison
|
|
Yes
|
|
¨
|
|
No
|
|
x
|
|
CECONY
|
|
Yes
|
|
¨
|
|
No
|
|
x
|
|
2
|
CON EDISON ANNUAL REPORT 2018
|
|
CON EDISON ANNUAL REPORT 2018
|
3
|
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
|
Con Edison Development
|
|
Consolidated Edison Development, Inc.
|
Con Edison Energy
|
|
Consolidated Edison Energy, Inc.
|
Con Edison Solutions
|
|
Consolidated Edison Solutions, Inc.
|
Con Edison Transmission
|
|
Con Edison Transmission, Inc., together with its subsidiaries
|
CET Electric
|
|
Consolidated Edison Transmission, LLC
|
CET Gas
|
|
Con Edison Gas Pipeline and Storage, LLC
|
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
|
IASB
|
|
International Accounting Standards Board
|
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
|
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
|
LILO
|
|
Lease In/Lease Out
|
OCI
|
|
Other Comprehensive Income
|
VIE
|
|
Variable Interest Entity
|
4
|
CON EDISON ANNUAL REPORT 2018
|
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
|
COSO
|
|
Committee of Sponsoring Organizations of the Treadway Commission
|
DER
|
|
Distributed energy resources
|
Fitch
|
|
Fitch Ratings
|
LTIP
|
|
Long Term Incentive Plan
|
Moody’s
|
|
Moody’s Investors Service
|
REV
|
|
Reforming the Energy Vision
|
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 2018
|
5
|
|
PAGE
|
|
|
||
Item 1:
|
||
Item 1A:
|
||
Item 1B:
|
||
Item 2:
|
||
Item 3:
|
||
Item 4:
|
||
|
||
|
|
|
Item 5:
|
||
Item 6:
|
||
Item 7:
|
||
Item 7A:
|
||
Item 8:
|
||
Item 9:
|
||
Item 9A:
|
||
Item 9B:
|
||
|
|
|
Item 10:
|
||
Item 11:
|
||
Item 12:
|
||
Item 13:
|
||
Item 14:
|
||
|
|
|
Item 15:
|
||
Item 16:
|
||
|
6
|
CON EDISON ANNUAL REPORT 2018
|
•
|
Consolidated Edison Company of New York, Inc. (CECONY), which delivers electricity, natural gas and steam to customers in New York City and Westchester County;
|
•
|
Orange & Rockland Utilities, Inc. (O&R), which together with its subsidiary, Rockland Electric Company, delivers electricity and natural gas to customers primarily located in southeastern New York State and northern New Jersey (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 and 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); and
|
•
|
Con Edison Transmission, Inc., which through its subsidiaries invests in electric and gas transmission projects (Con Edison Transmission, Inc., together with its subsidiaries referred to as Con Edison Transmission).
|
|
For the Year Ended December 31,
|
||||||||||
(Millions of Dollars, except per share amounts)
|
2014
|
|
2015
|
|
2016
|
|
2017
|
|
2018
|
|
|
Operating revenues
|
$12,919
|
|
$12,554
|
|
$12,075
|
|
$12,033
|
|
12,337
|
|
|
Energy costs
|
4,513
|
|
3,716
|
|
3,088
|
|
2,625
|
|
2,948
|
|
|
Operating income (h)
|
2,591
|
|
2,879
|
|
2,780
|
|
2,774
|
|
2,664
|
|
|
Net income
|
1,092
|
|
1,193
|
|
1,245
|
|
1,525
|
(g)
|
1,382
|
|
(g)
|
Total assets (e)(f)
|
44,071
|
|
45,642
|
(a)
|
48,255
|
(b)
|
48,111
|
(c)
|
53,920
|
|
(d)
|
Long-term debt (e)
|
11,546
|
|
12,006
|
|
14,735
|
|
14,731
|
|
17,495
|
|
|
Total equity
|
12,585
|
|
13,061
|
|
14,306
|
|
15,425
|
|
16,839
|
|
|
Net Income per common share – basic
|
$3.73
|
|
$4.07
|
|
$4.15
|
|
$4.97
|
|
$4.43
|
|
|
Net Income per common share – diluted
|
$3.71
|
|
$4.05
|
|
$4.12
|
|
$4.94
|
|
$4.42
|
|
|
Dividends declared per common share
|
$2.52
|
|
$2.60
|
|
$2.68
|
|
$2.76
|
|
$2.86
|
|
|
Book value per share
|
$42.97
|
|
$44.50
|
|
$46.91
|
|
$49.72
|
|
$52.46
|
|
|
Average common shares outstanding
(millions)
|
293
|
|
293
|
|
300
|
|
307
|
|
312
|
|
(a)
|
Reflects a $2,382 million increase in net plant offset by a $970 million decrease in regulatory assets for unrecognized pension and other postretirement costs. See Notes
B
,
E
and
F
to the financial statements in Item 8.
|
(b)
|
Reflects a $3,007 million increase in net plant offset by a $1,002 million decrease in regulatory assets for unrecognized pension and other postretirement costs. See Notes
B
,
E
and
F
to the financial statements in Item 8.
|
(c)
|
Reflects a $2.384 million increase in net plant, offset by decreases in regulatory assets resulting from the enactment of the federal Tax Cuts and Jobs Act of 2017, as enacted on December 22, 2017 (TCJA) of $2,418 million (including the netting of $1,168 million against the
|
CON EDISON ANNUAL REPORT 2018
|
7
|
(d)
|
Reflects a
$4,149 million
increase in net plant, offset by a $
288 million
decrease in regulatory assets for unrecognized pension and other postretirement costs. See Notes
B
,
E
, and
F
to the financial statements in Item 8.
|
(e)
|
Reflects $85 million in 2014, related to the adoption of Accounting Standards Update (ASU) No. 2015-03, “Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs.”
|
(f)
|
Reflects $152 million in 2014, related to the adoption of ASU No. 2015-17, “Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes.”
|
(g)
|
In 2017, upon enactment of the TCJA, Con Edison re-measured its deferred tax assets and liabilities based upon the 21 percent corporate income tax rate under the TCJA. As a result, Con Edison decreased its net deferred tax liabilities by
$5,312 million
, recognized
$259 million
(or $0.85 per share) in net income, decreased its regulatory asset for future income tax by
$1,250 million
, decreased its regulatory asset for revenue taxes by
$90 million
, and accrued a regulatory liability for federal income tax rate change of
$3,713 million
. In 2018, the company recognized $42 million of income tax expense resulting from a re-measurement of its deferred tax assets and liabilities following the issuance of proposed TCJA regulations. See “Other Regulatory Matters” in Note B and Note L to the financial statements in Item 8.
|
(h)
|
Excludes the non-service components of pension and other postretirement benefits. See Notes E and F to the financial statements in Item 8.
|
|
For the Year Ended December 31,
|
|||||||||
(Millions of Dollars)
|
2014
|
|
2015
|
|
2016
|
|
2017
|
|
2018
|
|
Operating revenues
|
$10,786
|
|
$10,328
|
|
$10,165
|
|
$10,468
|
|
$10,680
|
|
Energy costs
|
2,985
|
|
2,304
|
|
2,059
|
|
2,141
|
|
2,339
|
|
Operating income (g)
|
2,494
|
|
2,670
|
|
2,451
|
|
2,549
|
|
2,354
|
|
Net income
|
1,058
|
|
1,084
|
|
1,056
|
|
1,104
|
|
1,196
|
|
Total assets (e)(f)
|
39,443
|
|
40,230
|
(a)
|
40,856
|
(b)
|
40,451
|
(c)
|
43,108
|
(d)
|
Long-term debt (e)
|
10,788
|
|
10,787
|
|
12,073
|
|
12,065
|
|
13,676
|
|
Shareholder’s equity
|
11,188
|
|
11,415
|
|
11,829
|
|
12,439
|
|
12,910
|
|
(a)
|
Reflects a $1,725 million increase in net plant and a $912 million decr
ease in regulatory assets for unrecognized pension and other postretirement costs. See Notes
B
,
E
and
F
to the financial statements in Item 8.
|
(b)
|
Reflects a $1,804 million increase in net plant and a $967 million decrease in regulatory assets for unrecognized pension and other postretirement costs. See Notes
B
,
E
and
F
to the financial statements in Item 8.
|
(c)
|
Reflects a $2,090 million increase in net plant, offset by decreases in regulatory assets resulting from the enactment of the TCJA of $2,305 million (including the netting of $1,123 million against the regulatory liability for future income tax) and unrecognized pension and other postretirement costs of $354 million. See Notes
B
,
E
,
F
and L to the financial statements in Item 8.
|
(d)
|
Reflects a
$2,165 million
increase in net plant and a $
265 million
decrease in regulatory assets for unrecognized pension and other postretirement costs. See Notes
B
,
E
,
F
and L to the financial statements in Item 8.
|
(e)
|
Reflects $76 million in 2014, related to the adoption of ASU No. 2015-03, “Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs.”
|
(f)
|
Reflects $118 million in 2014, related to the adoption of ASU No. 2015-17, “Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes.”
|
(g)
|
Excludes the non-service components of pension and other postretirement benefits. See Notes E and F to the financial statements in Item 8.
|
•
|
Con Edison reported
2018
net income of
$1,382 million
or
$4.43
a share compared with
$1,525 million
or
$4.97
a share in
2017
. Adjusted earnings were
$1,349 million
or
$4.33
a share in
2018
compared with
$1,264 million
or
$4.12
a share in
2017
. See “Results of Operations” in Item 7 and “Non-GAAP Financial Measure” below.
|
•
|
In
2018
, the Utilities invested
$3,210 million
to upgrade and reinforce their energy delivery systems, Con Edison Transmission invested
$248 million
in electric transmission and gas pipeline and storage businesses and the Clean Energy Businesses invested
$1,791 million
primarily in renewable electric production projects, including $
1,609
million to acquire Sempra Solar Holdings, LLC in December 2018. See "Capital Requirements and Resources" in Item 1 and
Note U
to the financial statements in Item 8.
|
•
|
In
2019
, the Utilities expect to invest
$3,227 million
for their energy delivery systems, Con Edison Transmission expects to invest
$200 million
in gas pipeline businesses and the Clean Energy Businesses expect to invest
$200 million
in renewable electric production projects.
Con Edison plans to meet its 2019 capital requirements, including for maturing securities, through internally-generated funds and the issuance of long-term debt and common equity. The company's plans include the issuance of between $1,600 million and $2,200 million of long-term debt
, mostly at the Utilities,
and the issuance of additional debt secured by its renewable electric production projects. The company’s plans also include the issuance of up to $500 million of common equity in addition to equity under its dividend reinvestment, employee stock purchase and long term incentive plans and
|
8
|
CON EDISON ANNUAL REPORT 2018
|
•
|
CECONY forecasts average annual growth in peak demand in its service area at design conditions over the next five years for electric and gas to be approximately
0.1
percent and
1.0
percent, respectively, and an average annual decrease in steam peak demand in its service area at design conditions over the next five years to be approximately
0.5
percent. In January 2019, due to gas supply constraints, CECONY filed notice with the NYSPSC to establish a temporary moratorium beginning in March 2019 on new applications for firm gas service in most of Westchester County. O&R forecasts average annual decrease in electric peak demand in its service area at design conditions over the next five years to be approximately 0.3 percent and average annual growth in gas peak demand in its service area over the next five years at design conditions to be approximately
0.6
percent. See “The Utilities” in Item 1.
|
•
|
In 2018, O&R, the staff of the New York State Public Service Commission (NYSPSC) and other parties entered into a joint proposal for new electric and gas rates. The joint proposal is subject to NYSPSC approval. The joint proposal provides for electric rate increases of $13.4 million, $8.0 million and $5.8 million, effective January 1, 2019, 2020 and 2021, respectively. The joint proposal provides for a gas rate decrease of $7.5 million, effective January 1, 2019 and gas rate increases of $3.6 million and $0.7 million effective January 1, 2020 and 2021, respectively. See “Rate Plans” in Note B to the financial statements in Item 8.
|
•
|
In 2018, the NYSPSC continued its Reforming the Energy Vision (REV) and related proceedings. See “Utility Regulation - State Utility Regulation - Reforming the Energy Vision” in Item 1. The NYSPSC also continued its proceedings related to the federal Tax Cuts and Jobs Act of 2017, as enacted on December 22, 2017 (TCJA), income tax accounting and an April 2017 subway power outage. In addition, the NYSPSC commenced investigations into the Utilities' preparation and response to the March 2018 Winter Storms Riley and Quinn and a July 2018 CECONY steam main rupture. See "Other Regulatory Matters" in Note B, Note H and Note L to the financial statements in Item 8.
|
•
|
In January 2019, CECONY filed a request with the NYSPSC for electric and gas rate increases of $485 million and $210 million, respectively, effective January 2020. See “Rate Plans” in Note B to the financial statements in Item 8.
|
•
|
In January 2019, Pacific Gas and Electric Company (PG&E) filed for reorganization under Chapter 11 of the U.S. Bankruptcy Code. The output of Con Edison Development renewable electric production projects with an aggregate of 680 MW (AC) of generating capacity (PG&E Projects) is sold to PG&E under long-term power purchase agreements (PG&E PPAs). At December 31, 2018, Con Edison’s consolidated balance sheet included $885 million of net non-utility plant relating to the PG&E Projects, of $1,125 million of intangible assets relating to the PG&E PPAs, $292 million of net non-utility plant of additional projects that secure the related project debt and $1,050 million of related project debt. The PG&E bankruptcy is an event of default under the PG&E PPAs. Pursuant to the related project debt agreements, distributions from the related projects to Con Edison Development have been suspended. Unless the lenders for the related project debt otherwise agree, the lenders may, upon written notice, declare principal and interest on the related project debt to be due and payable immediately and, if such amounts are not timely paid, foreclose on the related projects. See “Clean Energy Businesses - Con Edison Development” in Item 1 and “Long-Lived and Intangible Assets” in Note A and "Long-term Debt" in Note C to the financial statements in Item 8.
|
CON EDISON ANNUAL REPORT 2018
|
9
|
10
|
CON EDISON ANNUAL REPORT 2018
|
(Millions of Dollars, except per share amounts)
|
2014
|
|
2015
|
|
2016
|
|
2017
|
|
2018
|
|
Reported net income for common stock – GAAP basis
|
$1,092
|
$1,193
|
$1,245
|
$1,525
|
$1,382
|
|||||
|
|
|
|
|
|
|||||
Income tax effect of the Tax Cuts and Jobs Act (a)
|
—
|
|
—
|
|
—
|
|
(259
|
)
|
42
|
|
Gain on sale of solar electric production projects (pre-tax)
|
(45)
|
—
|
|
—
|
|
(2)
|
—
|
|
||
Income taxes (b)
|
19
|
—
|
|
—
|
|
1
|
—
|
|
||
Gain on sale of solar electric production projects (net of tax)
|
(26
|
)
|
—
|
|
—
|
|
(1
|
)
|
—
|
|
Loss from LILO transactions (pre-tax)(c)
|
2
|
—
|
|
—
|
|
—
|
|
—
|
|
|
Income taxes (b)
|
(1)
|
—
|
|
—
|
|
—
|
|
—
|
|
|
Loss from LILO transactions (net of tax)(c)
|
1
|
—
|
|
—
|
|
—
|
|
—
|
|
|
Impairment of assets held for sale (pre-tax)
|
—
|
|
5
|
—
|
|
—
|
|
—
|
|
|
Income taxes (b)
|
—
|
|
(2)
|
—
|
|
—
|
|
—
|
|
|
Impairment of assets held for sale (net of tax)
|
—
|
|
3
|
|
—
|
|
—
|
|
—
|
|
Gain on sale of the Clean Energy Businesses' retail electric supply business (pre-tax)
|
—
|
|
—
|
|
(104
|
)
|
—
|
|
—
|
|
Income taxes (b)
|
—
|
|
—
|
|
48
|
—
|
|
—
|
|
|
Gain on sale of the Clean Energy Businesses' retail electric supply business (net of tax)
|
—
|
|
—
|
|
(56
|
)
|
—
|
|
—
|
|
Goodwill impairment related to the Clean Energy Businesses' energy service business (pre-tax)
|
—
|
|
—
|
|
15
|
—
|
|
—
|
|
|
Income taxes (b)
|
—
|
|
—
|
|
(3)
|
—
|
|
—
|
|
|
Goodwill impairment related to the Clean Energy Businesses' energy service business (net of tax)
|
—
|
|
—
|
|
12
|
|
—
|
|
—
|
|
Gain on acquisition of Sempra Solar Holdings, LLC, net of transaction costs (pre-tax) (d)
|
—
|
|
—
|
|
—
|
|
—
|
|
(114)
|
|
Income taxes (b)
|
—
|
|
—
|
|
—
|
|
—
|
|
33
|
|
Gain on acquisition of Sempra Solar Holdings, LLC, net of transaction costs (net of tax) (d)
|
—
|
|
—
|
|
—
|
|
—
|
|
(81)
|
|
Net mark-to-market effects of the Clean Energy Businesses (pre-tax)
|
128
|
—
|
|
(5)
|
(1)
|
8
|
||||
Income taxes (b)
|
(55)
|
—
|
|
2
|
—
|
|
(2)
|
|||
Net mark-to-market effects of the Clean Energy Businesses (net of tax)
|
73
|
—
|
|
(3
|
)
|
(1)
|
6
|
|||
|
|
|
|
|
|
|||||
Adjusted earnings
|
$1,140
|
$1,196
|
$1,198
|
$1,264
|
$1,349
|
|||||
Reported earnings per share – GAAP basis (basic)
|
$3.73
|
$4.07
|
$4.15
|
$4.97
|
$4.43
|
|||||
|
|
|
|
|
|
|||||
Income tax effect of the Tax Cuts and Jobs Act (a)
|
—
|
|
—
|
|
—
|
|
(0.85)
|
0.14
|
||
Gain on sale of solar electric production projects (pre-tax)
|
(0.15
|
)
|
—
|
|
—
|
|
—
|
|
—
|
|
Income taxes (b)
|
0.06
|
—
|
|
—
|
|
—
|
|
—
|
|
|
Gain on sale of solar electric production projects (net of tax)
|
(0.09)
|
—
|
|
—
|
|
—
|
|
—
|
|
|
Loss from LILO transactions (pre-tax) (c)
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
Income taxes (b)
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
Loss from LILO transactions (net of tax) (c)
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
Impairment of assets held for sale (pre-tax)
|
—
|
|
0.02
|
—
|
|
—
|
|
—
|
|
|
Income taxes (b)
|
—
|
|
(0.01)
|
—
|
|
—
|
|
—
|
|
|
Impairment of assets held for sale (net of tax)
|
—
|
|
0.01
|
—
|
|
—
|
|
—
|
|
|
Gain on sale of the Clean Energy Businesses' retail electric supply business (pre-tax)
|
—
|
|
—
|
|
(0.35)
|
—
|
|
—
|
|
|
Income taxes (b)
|
—
|
|
—
|
|
0.16
|
—
|
|
—
|
|
|
Gain on sale of the Clean Energy Businesses' retail electric supply business (net of tax)
|
—
|
|
—
|
|
(0.19)
|
—
|
|
—
|
|
|
Goodwill impairment related to the Clean Energy Businesses' energy service business (pre-tax)
|
—
|
|
—
|
|
0.07
|
—
|
|
—
|
|
|
Income taxes (b)
|
—
|
|
—
|
|
(0.03)
|
—
|
|
—
|
|
|
Goodwill impairment related to the Clean Energy Businesses' energy service business (net of tax)
|
—
|
|
—
|
|
0.04
|
—
|
|
—
|
|
|
Gain on acquisition of Sempra Solar Holdings, LLC, net of transaction costs (pre-tax) (d)
|
—
|
|
—
|
|
—
|
|
—
|
|
(0.36)
|
|
Income taxes (b)
|
—
|
|
—
|
|
—
|
|
—
|
|
0.10
|
|
Gain on acquisition of Sempra Solar Holdings, LLC, net of transaction costs (net of tax) (d)
|
—
|
|
—
|
|
—
|
|
—
|
|
(0.26)
|
|
Net mark-to-market effects of the Clean Energy Businesses (pre-tax)
|
0.42
|
—
|
|
(0.02)
|
—
|
|
0.03
|
|||
Income taxes (b)
|
(0.17)
|
—
|
|
(0.01)
|
—
|
|
(0.01)
|
|||
Net mark-to-market effects of the Clean Energy Businesses
|
0.25
|
—
|
|
(0.01)
|
—
|
|
0.02
|
|||
|
|
|
|
|
|
|||||
Adjusted earnings per share
|
$3.89
|
$4.08
|
$3.99
|
$4.12
|
$4.33
|
(a)
|
In 2017, upon enactment of the TCJA, Con Edison re-measured its deferred tax assets and liabilities based upon the 21 percent corporate income tax rate under the TCJA. As a result, Con Edison decreased its net deferred tax liabilities by
$5,312 million
, recognized
$259 million
|
CON EDISON ANNUAL REPORT 2018
|
11
|
(b)
|
The amount of income taxes was calculated using a combined federal and state income tax rate of 28% for the year ended December 31, 2018 and a combined federal and state income tax rate of 40% for the years ended December 31, 2014-2017.
|
(c)
|
In 2013, a court disallowed tax losses claimed by Con Edison relating to Con Edison Development’s Lease In/Lease Out (LILO) transactions and the company subsequently terminated the transactions, resulting in a charge to earnings of $95 million (after taxes of $63 million). In 2014, adjustments were made to taxes and accrued interest.
|
(d)
|
Gain recognized with respect to jointly-owned renewable energy production projects upon completion of the acquisition of Sempra Solar Holdings, LLC, net of transaction costs for the acquisition. See Note U to the financial statements in Item 8.
|
12
|
CON EDISON ANNUAL REPORT 2018
|
Contents of Item 1
|
Page
|
CON EDISON ANNUAL REPORT 2018
|
13
|
Contents of Item 1
|
Page
|
14
|
CON EDISON ANNUAL REPORT 2018
|
CON EDISON ANNUAL REPORT 2018
|
15
|
16
|
CON EDISON ANNUAL REPORT 2018
|
CON EDISON ANNUAL REPORT 2018
|
17
|
18
|
CON EDISON ANNUAL REPORT 2018
|
CON EDISON ANNUAL REPORT 2018
|
19
|
20
|
CON EDISON ANNUAL REPORT 2018
|
Technology
|
CECONY
|
O&R
|
||||||||||||||||||
Total MW, except project number
|
2014
|
|
2015
|
|
2016
|
|
2017
|
|
2018
|
|
2014
|
|
2015
|
|
2016
|
|
2017
|
|
2018
|
|
Internal-combustion engines
|
101
|
|
103
|
|
104
|
|
108
|
|
110
|
|
1
|
|
1
|
|
2
|
|
2
|
|
2
|
|
Photovoltaic solar
|
58
|
|
95
|
|
135
|
|
178
|
|
226
|
|
28
|
|
46
|
|
63
|
|
75
|
|
96
|
|
Gas turbines
|
40
|
|
40
|
|
40
|
|
48
|
|
48
|
|
20
|
|
20
|
|
20
|
|
20
|
|
20
|
|
Micro turbines
|
9
|
|
10
|
|
10
|
|
14
|
|
17
|
|
1
|
|
1
|
|
1
|
|
1
|
|
1
|
|
Fuel cells
|
8
|
|
8
|
|
9
|
|
12
|
|
13
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
Steam turbines
|
3
|
|
3
|
|
4
|
|
6
|
|
6
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
Landfill
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
2
|
|
2
|
|
2
|
|
2
|
|
2
|
|
Total distribution-level DG
|
219
|
|
259
|
|
302
|
|
366
|
|
420
|
|
52
|
|
70
|
|
88
|
|
100
|
|
121
|
|
Number of DG projects
|
4,200
|
|
7,451
|
|
12,928
|
|
18,090
|
|
23,942
|
|
1,877
|
|
3,718
|
|
5,409
|
|
6,537
|
|
7,566
|
|
CON EDISON ANNUAL REPORT 2018
|
21
|
|
|
Year Ended December 31,
|
||||||||
|
|
2014
|
|
2015
|
|
2016
|
|
2017
|
|
2018
|
Electric Energy Delivered
(millions of kWh)
|
|
|
|
|
|
|
|
|
|
|
CECONY full service customers
|
|
19,757
|
|
20,206
|
|
19,886
|
|
19,227
|
|
20,452
|
Delivery service for retail choice customers
|
|
26,221
|
|
26,662
|
|
26,813
|
|
26,136
|
|
26,266
|
Delivery service to NYPA customers and others
|
|
10,325
|
|
10,147
|
|
10,046
|
|
9,955
|
|
10,119
|
Total Deliveries in Franchise Area
|
|
56,303
|
|
57,015
|
|
56,745
|
|
55,318
|
|
56,837
|
Electric Energy Delivered
($ in millions)
|
|
|
|
|
|
|
|
|
|
|
CECONY full service customers
|
|
$5,023
|
|
$4,757
|
|
$4,404
|
|
$4,348
|
|
$4,706
|
Delivery service for retail choice customers
|
|
2,646
|
|
2,714
|
|
2,768
|
|
2,712
|
|
2,624
|
Delivery service to NYPA customers and others
|
|
625
|
|
600
|
|
610
|
|
623
|
|
652
|
Other operating revenues
|
|
143
|
|
101
|
|
324
|
|
289
|
|
(11)
|
Total Deliveries in Franchise Area
|
|
$8,437
|
|
$8,172
|
|
$8,106
|
|
$7,972
|
|
$7,971
|
Average Revenue per kWh Sold
(Cents)
|
|
|
|
|
|
|
|
|
|
|
Residential
|
|
28.9
|
|
26.3
|
|
24.9
|
|
25.3
|
|
26.4
|
Commercial and industrial
|
|
22.1
|
|
20.6
|
|
19.1
|
|
19.7
|
|
19.3
|
22
|
CON EDISON ANNUAL REPORT 2018
|
CON EDISON ANNUAL REPORT 2018
|
23
|
|
Year Ended December 31,
|
||||||||
|
2014
|
|
2015
|
2016
|
|
2017
|
|
2018
|
|
Gas Delivered
(MDt)
|
|
|
|
|
|
||||
Firm sales
|
|
|
|
|
|
||||
Full service
|
75,630
|
77,197
|
75,892
|
83,005
|
92,305
|
||||
Firm transportation of customer-owned gas
|
68,731
|
72,864
|
68,442
|
71,353
|
82,472
|
||||
Total Firm Sales
|
144,361
|
150,061
|
144,334
|
154,358
|
174,777
|
||||
Interruptible sales (a)
|
10,498
|
6,332
|
8,957
|
7,553
|
7,351
|
||||
Total Gas Delivered to CECONY Customers
|
154,859
|
156,393
|
153,291
|
161,911
|
182,128
|
||||
Transportation of customer-owned gas
|
|
|
|
|
|
||||
NYPA
|
47,548
|
44,038
|
43,101
|
37,033
|
34,079
|
||||
Other (mainly generating plants and interruptible transportation)
|
105,012
|
104,857
|
109,000
|
83,117
|
93,346
|
||||
Off-system sales
|
15
|
389
|
—
|
|
55
|
195
|
|||
Total Sales
|
307,434
|
305,677
|
305,392
|
282,116
|
309,748
|
||||
Gas Delivered
($ in millions)
|
|
|
|
|
|
||||
Firm sales
|
|
|
|
|
|
||||
Full service
|
$1,141
|
$956
|
$933
|
$1,136
|
$1,356
|
||||
Firm transportation of customer-owned gas
|
453
|
458
|
426
|
524
|
595
|
||||
Total Firm Sales
|
1,594
|
1,414
|
1,359
|
1,660
|
1,951
|
||||
Interruptible sales
|
91
|
46
|
34
|
35
|
40
|
||||
Total Gas Delivered to CECONY Customers
|
1,685
|
1,460
|
1,393
|
1,695
|
1,991
|
||||
Transportation of customer-owned gas
|
|
|
|
||||||
NYPA
|
2
|
2
|
2
|
2
|
2
|
||||
Other (mainly generating plants and interruptible transportation)
|
70
|
54
|
57
|
56
|
57
|
||||
Off-system sales
|
—
|
|
1
|
—
|
|
—
|
|
—
|
|
Other operating revenues (mainly regulatory amortizations)
|
(36)
|
11
|
56
|
148
|
28
|
||||
Total Sales
|
$1,721
|
$1,528
|
$1,508
|
$1,901
|
$2,078
|
||||
Average Revenue per Dt Sold
|
|
|
|
||||||
Residential
|
$16.76
|
$13.91
|
$13.96
|
$15.35
|
$16.71
|
||||
General
|
$12.38
|
$9.73
|
$9.47
|
$10.86
|
$11.31
|
(a)
|
Includes 6,057, 1,229, 4,708, 3,816, and
3,326
MDt for 2014, 2015, 2016, 2017 and 2018, respectively, which are also reflected in firm transportation and other.
|
24
|
CON EDISON ANNUAL REPORT 2018
|
CON EDISON ANNUAL REPORT 2018
|
25
|
|
Year Ended December 31,
|
||||
|
2014
|
2015
|
2016
|
2017
|
2018
|
Steam Sold
(MMlb)
|
|
|
|
|
|
General
|
594
|
538
|
465
|
490
|
593
|
Apartment house
|
6,574
|
6,272
|
5,792
|
5,754
|
6,358
|
Annual power
|
15,848
|
15,109
|
13,722
|
13,166
|
14,811
|
Total Steam Delivered to CECONY Customers
|
23,016
|
21,919
|
19,979
|
19,410
|
21,762
|
Steam Sold
($ in millions)
|
|
|
|
|
|
General
|
$30
|
$29
|
$23
|
$26
|
$30
|
Apartment house
|
180
|
176
|
148
|
158
|
174
|
Annual power
|
469
|
453
|
378
|
392
|
441
|
Other operating revenues
|
(51)
|
(29)
|
2
|
19
|
(14)
|
Total Steam Delivered to CECONY Customers
|
$628
|
$629
|
$551
|
$595
|
$631
|
Average Revenue per Mlb Sold
|
$29.50
|
$30.02
|
$27.48
|
$29.68
|
$29.64
|
26
|
CON EDISON ANNUAL REPORT 2018
|
CON EDISON ANNUAL REPORT 2018
|
27
|
|
Year Ended December 31,
|
||||
|
2014
|
2015
|
2016
|
2017
|
2018
|
Gas Delivered
(MDt)
|
|
|
|
|
|
Firm sales
|
|
|
|
|
|
Full service
|
9,529
|
9,348
|
9,723
|
10,480
|
12,050
|
Firm transportation
|
12,592
|
11,752
|
10,381
|
9,873
|
9,950
|
Total Firm Sales
|
22,121
|
21,100
|
20,104
|
20,353
|
22,000
|
Interruptible sales
|
4,216
|
4,205
|
3,853
|
3,771
|
3,746
|
Total Gas Delivered to O&R Customers
|
26,337
|
25,305
|
23,957
|
24,124
|
25,746
|
Transportation of customer-owned gas
|
|
|
|
|
|
Sales for resale
|
945
|
906
|
867
|
896
|
959
|
Sales to electric generating stations
|
70
|
25
|
18
|
9
|
1
|
Off-system sales
|
3
|
62
|
16
|
6
|
15
|
Total Sales
|
27,355
|
26,298
|
24,858
|
25,035
|
26,721
|
|
Year Ended December 31,
|
||||||||
|
2014
|
2015
|
|
2016
|
|
2017
|
|
2018
|
|
Gas Delivered
($ in millions)
|
|
|
|
|
|
||||
Firm sales
|
|
|
|
|
|
||||
Full service
|
$121
|
$91
|
$99
|
$139
|
$166
|
||||
Firm transportation
|
75
|
68
|
70
|
74
|
78
|
||||
Total Firm Sales
|
196
|
159
|
169
|
213
|
244
|
||||
Interruptible Sales
|
2
|
3
|
3
|
7
|
6
|
||||
Total Gas Delivered to O&R Customers
|
198
|
162
|
172
|
220
|
250
|
||||
Transportation of customer-owned gas
|
|
|
|
|
|
||||
Sales to electric generating stations
|
1
|
—
|
|
—
|
|
—
|
|
—
|
|
Other operating revenues
|
13
|
20
|
12
|
12
|
(1)
|
||||
Total Sales
|
$212
|
$182
|
$184
|
$232
|
$249
|
||||
Average Revenue Per Dt Sold
|
|
|
|
|
|
||||
Residential
|
$13.01
|
$10.11
|
$10.71
|
$13.86
|
$14.22
|
||||
General
|
$11.30
|
$8.24
|
$8.17
|
$11.08
|
$11.80
|
28
|
CON EDISON ANNUAL REPORT 2018
|
CON EDISON ANNUAL REPORT 2018
|
29
|
Project Name
|
Generating
Capacity (a) (MW AC) |
Power Purchase Agreement (PPA) Term (In Years) (b)
|
Actual/Expected
In-Service Date (c) |
Location
(State) |
PPA Counterparty (d)
|
Utility Scale
|
|
|
|
|
|
Solar
|
|
|
|
|
|
Wholly owned projects
|
|
|
|
|
|
PJM assets
|
53
|
(e)
|
2011/2013
|
New Jersey/Pennsylvania
|
Various
|
New England assets
|
24
|
Various
|
2011/2017
|
Massachusetts/Rhode Island
|
Various
|
California Solar (f)
|
110
|
25
|
2012/2013/2018
|
California
|
PG&E
|
Mesquite Solar 1 (f)
|
165
|
20
|
2013/2018
|
Arizona
|
PG&E
|
Copper Mountain Solar 2 (f)
|
150
|
25
|
2013/2015/2018
|
Nevada
|
PG&E
|
Copper Mountain Solar 3 (f)
|
255
|
20
|
2014/2015/2018
|
Nevada
|
SCPPA
|
California Solar 2 (f)
|
80
|
20
|
2014/2016
|
California
|
SCE/PG&E
|
Texas Solar 5 (f)
|
95
|
25
|
2015
|
Texas
|
City of San Antonio
|
Texas Solar 7 (f)
|
106
|
25
|
2016
|
Texas
|
City of San Antonio
|
California Solar 3 (f)
|
110
|
20
|
2016/2017
|
California
|
SCE/PG&E
|
Upton Solar (f)
|
158
|
25
|
2017
|
Texas
|
City of Austin
|
Panoche Valley
|
140
|
20
|
2017/2018
|
California
|
SCE
|
Copper Mountain Solar 1 (f)
|
58
|
12
|
2018
|
Nevada
|
PG&E
|
Copper Mountain Solar 4 (h)
|
94
|
20
|
2018
|
Nevada
|
SCE
|
Mesquite Solar 2 (h)
|
100
|
18
|
2018
|
Arizona
|
SCE
|
Mesquite Solar 3 (h)
|
150
|
23
|
2018
|
Arizona
|
WAPA (Navy)
|
Great Valley Solar (h)
|
200
|
17
|
2018
|
California
|
MCE/SMUD/PG&E/SCE
|
Wistaria Solar (i)
|
100
|
20
|
2018
|
California
|
SCE
|
Other
|
6
|
Various
|
Various
|
Various
|
Various
|
Jointly owned projects (f) (g)
|
|
|
|
|
|
Texas Solar 4
|
32
|
25
|
2014
|
Texas
|
City of San Antonio
|
Total Solar
|
2,186
|
|
|
|
|
Wind
|
|
|
|
|
|
Wholly owned projects
|
|
|
|
|
|
Broken Bow II (f)
|
75
|
25
|
2014
|
Nebraska
|
NPPD
|
Wind Holdings (f)
|
180
|
Various
|
2014/2015/2018
|
Various
|
NWE/Basin Electric
|
Adams Rose Wind
|
23
|
7
|
2016
|
Minnesota
|
Dairyland
|
Coram Wind (f)
|
102
|
16
|
2016
|
California
|
PG&E
|
Other
|
22
|
Various
|
Various
|
Various
|
Various
|
Total Wind
|
402
|
|
|
|
|
Total MW (AC) in Operation
|
2,588
|
|
|
|
|
Lost Hills Solar
|
20
|
(j)
|
2019
|
California
|
MCE
|
Total MW (AC) in Construction
|
20
|
|
|
|
|
Total MW (AC) Utility Scale
|
2,608
|
|
|
|
|
Behind the Meter
|
|
|
|
|
|
Total MW (AC) in Operation
|
45
|
|
|
|
|
Total MW (AC) in Construction
|
1
|
|
|
|
|
Total MW Behind the Meter
|
46
|
|
|
|
|
(a)
|
Represents Con Edison Development’s ownership interest in the project.
|
(b)
|
Represents Power Purchase Agreement (PPA) contractual term or remaining term from Con Edison Development’s date of acquisition.
|
(c)
|
Represents Actual/Expected In-Service Date or Con Edison Development's date of acquisition.
|
(d)
|
PPA Counterparties include: Pacific Gas and Electric Company (PG&E), Southern California Public Power Authority (SCPPA), Southern California Edison Company (SCE), Western Area Power Administration (WAPA), Marin Clean Energy (MCE), Sacramento Municipal Utility District (SMUD), Nebraska Public Power District (NPPD) and NorthWestern Energy (NWE)
|
(e)
|
Solar renewable energy credit hedges are in place, in lieu of PPAs, through 2022.
|
(f)
|
Project has been pledged as security for project debt financing. See Con Edison's Consolidated Statement of Capitalization in Item 8.
|
30
|
CON EDISON ANNUAL REPORT 2018
|
(g)
|
Texas Solar 4 is 80 percent owned. See Note Q to the financial statements in Item 8.
|
(h)
|
Projects are financed with tax equity.
|
(i)
|
Pending California Public Utility Commission approval to sell energy on a contracted basis to SCE
|
(j)
|
Solar renewable energy hedges in place through 2019.
|
Generating Capacity (MW AC)
|
2014
|
2015
|
2016
|
2017
|
2018
|
Renewable electric production projects
|
446
|
748
|
1,098
|
1,358
|
2,588
|
|
Millions of kWh Generated
|
||
|
For the Years Ended December 31,
|
||
Description
|
2016
|
2017
|
2018
|
Renewable electric production projects
|
|
|
|
Solar
|
1,565
|
2,158
|
2,680
|
Wind
|
651
|
988
|
1,074
|
Total
|
2,216
|
3,146
|
3,754
|
CON EDISON ANNUAL REPORT 2018
|
31
|
|
2014
|
2015
|
2016
|
2017
|
|
2018
|
|
Retail electric volumes sold (millions of kWh)
|
11,871
|
13,594
|
9,843
|
—
|
|
—
|
|
32
|
CON EDISON ANNUAL REPORT 2018
|
|
Actual
|
Estimate
|
|||||||||
(Millions of Dollars)
|
2016
|
2017
|
|
2018
|
|
2019
|
|
2020
|
|
2021
|
|
CECONY (a)(b)
|
|
|
|
|
|
|
|||||
Electric
|
$1,819
|
$1,905
|
$1,861
|
$1,871
|
$2,347
|
$2,489
|
|||||
Gas
|
811
|
909
|
1,050
|
1,049
|
1,113
|
1,100
|
|||||
Steam
|
126
|
90
|
94
|
96
|
89
|
82
|
|||||
Sub-total
|
2,756
|
2,904
|
3,005
|
3,016
|
3,549
|
3,671
|
|||||
O&R
|
|
|
|
|
|
|
|||||
Electric
|
114
|
128
|
138
|
155
|
169
|
145
|
|||||
Gas
|
52
|
61
|
67
|
56
|
56
|
52
|
|||||
Sub-total
|
166
|
189
|
205
|
211
|
225
|
197
|
|||||
Con Edison Transmission
|
|
|
|
|
|
|
|||||
CET Electric
|
51
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
CET Gas
|
1,027
|
66
|
248
|
200
|
—
|
|
—
|
|
|||
Sub-total
|
1,078
|
66
|
248
|
200
|
—
|
|
—
|
|
|||
Clean Energy Businesses
|
1,235
|
447
|
1,791
|
200
|
400
|
400
|
|||||
Total capital expenditures
|
5,235
|
3,606
|
5,249
|
3,627
|
4,174
|
4,268
|
|||||
Retirement of long-term securities
|
|
|
|
|
|
|
|||||
Con Edison – parent company
|
2
|
402
|
2
|
3
|
403
|
503
|
|||||
CECONY
|
650
|
—
|
|
1,836
|
475
|
350
|
640
|
||||
O&R
|
79
|
4
|
55
|
62
|
—
|
|
—
|
|
|||
Clean Energy Businesses
|
4
|
28
|
45
|
110
|
113
|
117
|
|||||
Total retirement of long-term securities
|
735
|
434
|
1,938
|
650
|
866
|
1,260
|
|||||
Total capital requirements
|
$5,970
|
$4,040
|
$7,187
|
$4,277
|
$5,040
|
$5,528
|
(a)
|
CECONY’s capital expenditures for environmental protection facilities and related studies were $259 million, $381 million and $490 million in
2016
,
2017
and
2018
, respectively, and are estimated to be $447 million in
2019
.
|
(b)
|
Amounts shown do not include amounts for the energy efficiency, demand reduction and combined heat and power programs.
|
CON EDISON ANNUAL REPORT 2018
|
33
|
|
Payments Due by Period
|
||||||||
(Millions of Dollars)
|
Total
|
1 year
or less |
Years
2 & 3 |
|
Years
4 & 5
|
|
After 5
years
|
|
|
Long-term debt (Statement of Capitalization)
|
|
|
|
|
|
||||
CECONY
|
$14,290
|
$475
|
$990
|
|
$—
|
|
$12,825
|
||
O&R
|
762
|
62
|
—
|
|
—
|
|
700
|
||
Clean Energy Businesses
|
2,076
|
110
|
230
|
413
|
1,323
|
||||
Parent
|
1,201
|
2
|
906
|
293
|
—
|
|
|||
Interest on long-term debt (a)
|
15,418
|
791
|
1,494
|
1,385
|
11,748
|
||||
Total long-term debt, including interest
|
33,747
|
1,440
|
3,620
|
2,091
|
26,596
|
||||
Capital lease obligations (Note J)
|
|
|
|
|
|
||||
CECONY
|
1
|
1
|
—
|
|
—
|
|
—
|
|
|
Total capital lease obligations
|
1
|
1
|
—
|
|
—
|
|
—
|
|
|
Operating leases (Notes J and Q)
|
|
|
|
|
|
||||
CECONY
|
864
|
57
|
110
|
105
|
592
|
||||
O&R
|
4
|
1
|
2
|
1
|
|
—
|
|
||
Clean Energy Businesses
|
373
|
15
|
31
|
30
|
297
|
||||
Total operating leases
|
1,241
|
73
|
143
|
136
|
889
|
||||
Purchase obligations
|
|
|
|
|
|
||||
Electricity power purchase agreements – Utilities (Note I)
|
|
|
|
|
|
||||
CECONY
|
|
|
|
|
|
||||
Energy
|
1,957
|
100
|
189
|
193
|
1,475
|
||||
Capacity (b)
|
1,089
|
202
|
177
|
109
|
601
|
||||
Total CECONY
|
3,046
|
302
|
366
|
302
|
2,076
|
||||
O&R
|
|
|
|
|
|
||||
Energy and Capacity (b)
|
109
|
66
|
43
|
—
|
|
—
|
|
||
Total electricity and power purchase agreements – Utilities
|
3,155
|
368
|
409
|
302
|
2,076
|
||||
Natural gas supply, transportation, and storage contracts – Utilities (c)
|
|
|
|
|
|||||
CECONY
|
|
|
|
|
|
||||
Natural gas supply
|
323
|
240
|
80
|
3
|
—
|
|
|||
Transportation and storage
|
3,048
|
307
|
608
|
514
|
1,619
|
||||
Total CECONY
|
3,371
|
547
|
688
|
517
|
1,619
|
||||
O&R
|
|
|
|
|
|
||||
Natural gas supply
|
48
|
36
|
11
|
1
|
—
|
|
|||
Transportation and storage
|
464
|
47
|
92
|
78
|
247
|
||||
Total O&R
|
512
|
83
|
103
|
79
|
247
|
||||
Total natural gas supply, transportation and storage contracts
|
3,883
|
630
|
791
|
596
|
1,866
|
||||
Other purchase obligations
|
|
|
|
|
|
||||
CECONY (d)
|
6,597
|
1,790
|
2,906
|
1,592
|
309
|
||||
O&R (d)
|
392
|
76
|
80
|
235
|
1
|
||||
Clean Energy Businesses (e)
|
248
|
191
|
18
|
16
|
23
|
||||
Total other purchase obligations
|
7,237
|
2,057
|
3,004
|
1,843
|
333
|
||||
Total
|
49,264
|
4,569
|
7,967
|
4,968
|
31,760
|
(a)
|
Includes interest on variable rate debt calculated at rates in effect at
December 31, 2018
.
|
(b)
|
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.
|
(c)
|
Included in these amounts is the cost of minimum quantities of natural gas supply, transportation and storage that the Utilities are obligated to purchase at both fixed and variable prices.
|
34
|
CON EDISON ANNUAL REPORT 2018
|
(d)
|
Amounts shown for other purchase obligations, which reflect capital and operations and maintenance costs incurred by the Utilities in running their day-to-day operations, were derived from the Utilities’ purchasing 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. The Utilities believe that unreasonable effort and expense would be involved to enable them to report their “Other Purchase Obligations” in a different manner.
|
(e)
|
Amounts represent commitments to purchase minimum quantities of electric energy and capacity, renewable energy certificates, natural gas, natural gas pipeline capacity, energy efficiency services and construction services entered into by the Clean Energy Businesses.
|
CON EDISON ANNUAL REPORT 2018
|
35
|
|
Moody's
|
S&P
|
Fitch
|
Con Edison
|
|
|
|
Senior Unsecured Debt
|
Baa1
|
BBB+
|
BBB+
|
Commercial Paper
|
P-2
|
A-2
|
F2
|
CECONY
|
|
|
|
Senior Unsecured Debt
|
A3
|
A-
|
A-
|
Commercial Paper
|
P-2
|
A-2
|
F2
|
O&R
|
|
|
|
Senior Unsecured Debt
|
Baa1
|
A-
|
A-
|
Commercial Paper
|
P-2
|
A-2
|
F2
|
(Metric tons,
in millions
(a))
|
2014
|
|
2015
|
|
2016
|
|
2017
|
|
2018
|
|
CO2 equivalent emissions
|
3.2
|
|
3.2
|
|
3.1
|
|
3.0
|
|
3.1
|
|
(a)
|
Estimated emissions for 2018 are based on preliminary data and are subject to third-party verification.
|
36
|
CON EDISON ANNUAL REPORT 2018
|
CON EDISON ANNUAL REPORT 2018
|
37
|
38
|
CON EDISON ANNUAL REPORT 2018
|
CON EDISON ANNUAL REPORT 2018
|
39
|
40
|
CON EDISON ANNUAL REPORT 2018
|
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%
|
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%
|
CON EDISON ANNUAL REPORT 2018
|
41
|
42
|
CON EDISON ANNUAL REPORT 2018
|
CON EDISON ANNUAL REPORT 2018
|
43
|
44
|
CON EDISON ANNUAL REPORT 2018
|
CON EDISON ANNUAL REPORT 2018
|
45
|
46
|
CON EDISON ANNUAL REPORT 2018
|
Name
|
Age
|
Offices and Positions During Past Five Years
|
John McAvoy
|
58
|
5/14 to present – Chairman of the Board, President and Chief Executive Officer and Director of Con Edison and Chairman, Chief Executive Officer and Trustee of CECONY
|
|
|
12/13 to 4/14 – President and Chief Executive Officer and Director of Con Edison and Chief Executive Officer and Trustee of CECONY
|
Robert Hoglund
|
57
|
9/05 to present – Senior Vice President and Chief Financial Officer of Con Edison and CECONY
|
Timothy P. Cawley
|
54
|
1/18 to present – President of CECONY
|
|
|
12/13 to 12/17 – President and Chief Executive Officer of O&R
|
Robert Sanchez
|
53
|
12/17 to present – President and Chief Executive Officer of O&R
|
|
|
11/17 – Senior Vice President of CECONY
|
|
|
9/16 to 10/17 – Senior Vice President – Corporate Shared Services of CECONY
|
|
|
9/14 to 8/16 – Vice President – Brooklyn & Queens Electric Operations of CECONY
|
|
|
5/11 to 8/14 – Vice President – System & Transmission Operations of CECONY
|
Mark Noyes
|
54
|
12/16 to present – President and Chief Executive Officer of Con Edison Clean Energy Businesses, Inc.
|
|
|
5/16 to present – President and Chief Executive Officer of Con Edison Solutions
|
|
|
10/15 to present – President and Chief Executive Officer of Con Edison Development and Con Edison Energy
|
|
|
10/14 to 9/15 – Senior Vice President and Chief Operating Officer of Con Edison Development and Con Edison Energy
|
|
|
3/09 to 9/14 – Vice President of Con Edison Development
|
Joseph P. Oates
|
57
|
9/16 to present – President and Chief Executive Officer of Con Edison Transmission, Inc.
|
|
|
1/16 to 8/16 – President of Con Edison Transmission, Inc.
|
|
|
9/15 to 8/16 – Senior Vice President – Corporate Shared Services of CECONY
|
|
|
9/12 to 8/15 – Senior Vice President – Business Shared Services of CECONY
|
Elizabeth D. Moore
|
64
|
5/13 to present – Senior Vice President and General Counsel of Con Edison and CECONY
|
Frances A. Resheske
|
58
|
2/02 to present – Senior Vice President – Corporate Affairs (formerly known as Public Affairs) of CECONY
|
Mary E. Kelly
|
50
|
11/17 to present – Senior Vice President – Corporate Shared Services of CECONY
|
|
|
1/16 to 10/17 – Vice President – Gas Engineering
|
|
|
1/14 to 12/15 – Vice President – Construction
|
|
|
5/09 to 12/14 – General Manager – Construction
|
Saumil P. Shukla
|
59
|
9/15 to present – Senior Vice President – Utility Shared Services of CECONY
|
|
|
10/14 to 8/15 – Vice President – Supply Chain (Shared Services)
|
|
|
9/07 to 9/14 – Vice President – Steam Operations of CECONY
|
Robert Muccilo
|
62
|
7/09 to present – Vice President and Controller of Con Edison and CECONY
|
|
|
11/09 to present – Chief Financial Officer and Controller of O&R
|
Yukari Saegusa
|
51
|
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
|
|
|
3/13 to 7/16 – Director of Corporate Finance of CECONY
|
Gurudatta Nadkarni
|
53
|
1/08 to present – Vice President of Strategic Planning of CECONY
|
CON EDISON ANNUAL REPORT 2018
|
47
|
|
Years Ended December 31,
|
|||||
Company / Index
|
2013
|
2014
|
2015
|
2016
|
2017
|
2018
|
Consolidated Edison, Inc.
|
100.00
|
124.80
|
126.56
|
150.52
|
179.53
|
167.65
|
S&P 500 Index
|
100.00
|
113.69
|
115.26
|
129.05
|
157.22
|
150.33
|
S&P Utilities
|
100.00
|
128.98
|
122.73
|
142.72
|
159.99
|
166.57
|
48
|
CON EDISON ANNUAL REPORT 2018
|
CON EDISON ANNUAL REPORT 2018
|
49
|
|
For the Year Ended December 31, 2018
|
At December 31, 2018
|
|||||||
(Millions of Dollars,
except percentages)
|
Operating
Revenues
|
|
Net
Income
|
|
Assets
|
|
|||
CECONY
|
$10,680
|
87
|
%
|
$1,196
|
87
|
%
|
$43,108
|
80
|
%
|
O&R
|
891
|
7
|
%
|
59
|
4
|
%
|
2,892
|
5
|
%
|
Total Utilities
|
11,571
|
94
|
%
|
1,255
|
91
|
%
|
46,000
|
85
|
%
|
Clean Energy Businesses (a) (b)
|
763
|
6
|
%
|
145
|
10
|
%
|
5,821
|
11
|
%
|
Con Edison Transmission
|
4
|
—
|
%
|
47
|
4
|
%
|
1,425
|
3
|
%
|
Other (c)
|
(1)
|
—
|
%
|
(65)
|
(5
|
)%
|
674
|
1
|
%
|
Total Con Edison
|
$12,337
|
100
|
%
|
$1,382
|
100
|
%
|
$53,920
|
100
|
%
|
(a)
|
Net income from the Clean Energy Businesses for the year ended
December 31, 2018
includes
$6 million
of net after-tax mark-to-market loss.
|
(b)
|
In December 2018, a Con Edison Development subsidiary acquired Sempra Solar Holdings, LLC. The purchase price for the acquisition was $1,609 million. Upon completion of the acquisition, the Clean Energy Businesses recognized an after-tax gain of $89 million with respect to jointly-owned renewable energy production projects. See Note U to the financial statements in Item 8.
|
(c)
|
Other includes parent company and consolidation adjustments. Net income includes $(42) million of income tax expense resulting from a re-measurement of the company's deferred tax assets and liabilities following the issuance of proposed regulations relating to the Tax Cuts and Jobs Act of 2017 (TCJA) for the year ended December 31, 2018. See Note L to the financial statements in Item 8. Net income for the year ended December 31, 2018 also includes the after-tax transaction costs of $(8) million related to a Con Edison Development subsidiary’s purchase of Sempra Solar Holdings, LLC. See Note U to the financial statements in Item 8.
|
(Millions of Dollars,
except per share amounts) |
Net Income
|
Earnings per Share
|
||||||||||
|
2018
|
2017
|
2016
|
2018
|
|
2017
|
|
2016
|
|
|||
CECONY
|
$1,196
|
$1,104
|
$1,056
|
|
$3.84
|
|
|
$3.59
|
|
|
$3.52
|
|
O&R
|
59
|
64
|
59
|
0.19
|
|
0.21
|
|
0.20
|
|
|||
Clean Energy Businesses (a)(b)(c)
|
145
|
332
|
118
|
0.46
|
|
1.08
|
|
0.39
|
|
|||
Con Edison Transmission (c)
|
47
|
44
|
20
|
0.15
|
|
0.15
|
|
0.07
|
|
|||
Other (c)(d)
|
(65)
|
(19)
|
(8)
|
(0.21
|
)
|
(0.06
|
)
|
(0.03
|
)
|
|||
Con Edison (e)
|
$1,382
|
$1,525
|
$1,245
|
|
$4.43
|
|
|
$4.97
|
|
|
$4.15
|
|
(a)
|
Includes $1 million or $0.00 a share of net after-tax gain on the sale of a solar electric production project in 2017 (see Note U to the financial statements in Item 8). Also includes $56 million or $0.19 a share of net gain related to the sale of the retail electric supply business and $(12) million or $(0.04) a share of net loss related to the goodwill impairment charge on two energy services companies in 2016 (see Notes U and K to the financial statements in Item 8). Includes $(6) million or $(0.02) a share, $1 million or $0.00 a share and $3 million or $0.02 a share of net after-tax mark-to-market gains/(losses) in 2018, 2017 and
2016
, respectively.
|
(b)
|
In December 2018, a Con Edison Development subsidiary acquired Sempra Solar Holdings, LLC. Upon completion of the acquisition, the Clean Energy Businesses recognized an after-tax gain of $89 million or $0.28 per share with respect to jointly-owned renewable energy production projects. See Note U to the financial statements in Item 8.
|
(c)
|
Upon enactment of the TCJA in December 2017, Con Edison re-measured its deferred tax assets and liabilities based upon the 21 percent corporate income tax rate under TCJA. As a result, Con Edison decreased its net deferred tax liabilities by
$5,312 million
, recognized
$259 million
in net income, decreased its regulatory asset for future income tax by
$1,250 million
, decreased its regulatory asset for revenue taxes by
$90 million
and accrued a regulatory liability for future income tax of
$3,713 million
. The amount recognized in net income for the
|
50
|
CON EDISON ANNUAL REPORT 2018
|
(d)
|
Other includes parent company and consolidation adjustments. Net income includes $(42) million or $(0.14) a share of income tax expense resulting from a re-measurement of the company's deferred tax assets and liabilities following the issuance of proposed regulations relating to the TCJA for the year ended December 31, 2018. See Note L to the financial statements in Item 8. Net income for the year ended December 31, 2018 also includes $(8) million or $(0.02) a share of the after-tax transaction costs related to a Con Edison Development subsidiary’s purchase of Sempra Solar Holdings, LLC. See Note U to the financial statements in Item 8.
|
(e)
|
Earnings per share on a diluted basis were
$4.42
a share,
$4.94
a share and
$4.12
a share in
2018
,
2017
and
2016
, respectively. See "Earnings Per Common Share" in Note A to the financial statements in Item 8.
|
CON EDISON ANNUAL REPORT 2018
|
51
|
|
|
|
|
|
|
Variation for the Years Ended December 31, 2018 vs. 2017
|
|||
|
Earnings
per Share |
Net Income
(Millions of Dollars) |
|
|
CECONY (a)
|
|
|
|
|
Changes in rate plans
|
$0.84
|
$258
|
Reflects primarily higher electric and gas net base revenues of $0.59 a share and $0.16 a share, respectively, and growth in the number of gas customers of $0.06 a share. Electric and gas base rates increased in January 2018 in accordance with the company's rate plans.
|
|
Weather impact on steam revenues
|
0.10
|
31
|
Steam revenues were $0.06 a share higher in 2018 due to the estimated impact of colder than normal winter weather. Steam revenues were $(0.05) a share lower in 2017 due to the estimated impact of warmer than normal winter weather.
|
|
Operations and maintenance expenses
|
(0.08)
|
(25)
|
Reflects primarily higher consultant costs of $(0.05) a share and storm-related costs of $(0.04) a share.
|
|
Depreciation, property taxes and other tax matters
|
(0.37)
|
(115)
|
Reflects higher net property taxes of $(0.25) a share and depreciation and amortization expense of $(0.19) a share, offset, in part, by New York State sales and use tax refunds of $0.07 a share.
|
|
Other
|
(0.24)
|
(57)
|
Reflects primarily higher interest expense on long-term debt of $(0.16) a share, regulatory reserve related to steam earnings sharing of $(0.05) a share, and the dilutive effect of Con Edison's stock issuances of $(0.06) a share.
|
|
Total CECONY
|
0.25
|
92
|
|
|
O&R (a)
|
|
|
|
|
Changes in rate plans
|
0.02
|
6
|
Reflects primarily higher gas net base revenues. Gas base rates increased in November 2017 in accordance with the company's gas rate plan.
|
|
Operations and maintenance expenses
|
(0.02)
|
(6)
|
Reflects primarily reduction of a regulatory asset associated with certain site investigation and environmental remediation costs.
|
|
Depreciation, property taxes and other tax matters
|
(0.01)
|
(4)
|
Reflects higher depreciation and amortization expense.
|
|
Other
|
(0.01)
|
(1)
|
|
|
Total O&R
|
(0.02)
|
(5)
|
|
|
Clean Energy Businesses
|
|
|
|
|
Operating revenues less energy costs
|
(0.05)
|
(16)
|
Reflects primarily lower renewable revenues, including engineering, procurement and construction services, offset, in part, by an increase in renewable electric production projects in operation and an increase in energy services revenue.
|
|
Operations and maintenance expenses
|
0.06
|
19
|
Reflects primarily lower engineering, procurement and construction costs.
|
|
Depreciation
|
(0.03)
|
(9)
|
|
|
Net interest expense
|
(0.05)
|
(15)
|
|
|
Gain on sale of solar electric production project
|
—
|
|
(1)
|
|
Income tax effect of the TCJA
|
(0.88)
|
(269)
|
|
|
Gain on acquisition of Sempra Solar Holdings, LLC
|
0.42
|
131
|
|
|
Other
|
(0.09)
|
(27)
|
|
|
Total Clean Energy Businesses
|
(0.62)
|
(187)
|
|
|
Con Edison Transmission
|
—
|
|
3
|
Includes the effect of the TCJA of $0.04 a share in December 2017. Reflects income from equity investments.
|
Other, including parent company expenses
|
(0.15)
|
(46)
|
Includes TCJA re-measurement of $(0.14) a share, New York State capital tax of $(0.03) a share and transaction costs related to acquisition of Sempra Solar Holdings, LLC of $(0.02) a share. Also includes the effect of the TCJA of $(0.07) a share in December 2017.
|
|
Total Reported (GAAP basis)
|
$(0.54)
|
$(143)
|
|
|
|
|
|
|
|
a.
Under the revenue decoupling mechanisms in the Utilities’ New York 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.
|
|
|
|
|
52
|
CON EDISON ANNUAL REPORT 2018
|
|
Variation for the Years Ended December 31, 2017 vs. 2016
|
|||
|
Earnings
per Share |
Net Income
(Millions of Dollars) |
|
|
CECONY (a)
|
|
|
|
|
Changes in rate plans and regulatory charges
|
$0.47
|
$143
|
Reflects higher electric net base revenues of $0.10 a share resulting from the increased base rates under the company's new electric rate plan, higher gas net base revenues of $0.21 a share, growth in the number of gas customers of $0.05 a share, incentives earned under the Earnings Adjustment Mechanisms of $0.03 a share and the Energy Efficiency Portfolio Standard of $0.04 a share, a property tax refund incentive of $0.01 a share, lower retention of TCC auction proceeds of $(0.03) a share, and an increase to the regulatory reserve related to certain gas proceedings in 2016 of $0.03 a share.
|
|
Weather impact on steam revenues
|
0.02
|
6
|
|
|
Operations and maintenance expenses
|
0.30
|
90
|
Reflects lower pension and other postretirement benefits costs of $0.29 a share.
|
|
Depreciation, property taxes and other tax matters
|
(0.57)
|
(170)
|
Reflects higher depreciation and amortization expense of $(0.18) a share, property taxes of $(0.27) a share, and income taxes of $(0.12) a share.
|
|
Other
|
(0.15)
|
(21)
|
Includes the dilutive effect of Con Edison's stock issuances.
|
|
Total CECONY
|
0.07
|
48
|
|
|
O&R (a)
|
|
|
|
|
Changes in rate plans and regulatory charges
|
0.06
|
18
|
Reflects higher electric and gas net base revenues of $0.01 and $0.04 a share, respectively.
|
|
Operations and maintenance expenses
|
(0.03)
|
(9)
|
Reflects higher pension costs.
|
|
Depreciation, property taxes and other tax matters
|
(0.03)
|
(6)
|
|
|
Other
|
0.01
|
2
|
Includes the dilutive effect of Con Edison's stock issuances.
|
|
Total O&R
|
0.01
|
5
|
|
|
Clean Energy Businesses
|
|
|
|
|
Operating revenues less energy costs
|
0.33
|
99
|
Reflects revenues from the engineering, procurement and construction of Upton 2 and higher revenues from renewable electric production projects, lower revenues and energy costs resulting from the retail electric supply business that was sold in September 2016. Includes $0.01 a share net after-tax mark-to market gains in 2016. Substantially all the mark-to-market effects in the 2016 periods were related to the retail electric business sold in September 2016.
|
|
Operations and maintenance expenses
|
(0.30)
|
(89)
|
Reflects Upton 2 engineering, procurement and construction costs and higher energy service costs.
|
|
Depreciation
|
(0.06)
|
(19)
|
|
|
Net interest expense
|
(0.02)
|
(5)
|
|
|
Gain on sale of the Clean Energy Businesses' retail electric supply business in 2016
|
0.19
|
56
|
|
|
Goodwill impairment related to the Clean Energy Businesses' energy service business in 2016
|
(0.04)
|
(12)
|
|
|
Gain on sale of the Clean Energy Businesses' solar electric production project
|
—
|
|
(1)
|
|
Enactment of the TCJA
|
0.88
|
269
|
|
|
Other
|
(0.29)
|
(84)
|
Includes the dilutive effect of Con Edison's stock issuances.
|
|
Total Clean Energy Businesses
|
0.69
|
214
|
|
|
Con Edison Transmission
|
0.08
|
24
|
Includes the effect of the TCJA of $0.04 a share. Reflects income from equity investments and the dilutive effect of Con Edison's stock issuances.
|
|
Other, including parent company expenses
|
(0.03)
|
(11)
|
Includes the effect of the TCJA of $(0.07) a share. Reflects higher state income tax benefits and the dilutive effect of Con Edison's stock issuances.
|
|
Total
|
$0.82
|
$280
|
|
|
|
|
|
|
|
a.
Under the revenue decoupling mechanisms in the Utilities’ New York 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.
|
CON EDISON ANNUAL REPORT 2018
|
53
|
(Millions of Dollars)
|
2018
|
2017
|
2016
|
CECONY
|
|
|
|
Operations
|
$1,553
|
$1,528
|
$1,477
|
Pensions and other postretirement benefits
|
71
|
58
|
159
|
Health care and other benefits
|
166
|
170
|
160
|
Regulatory fees and assessments (a)
|
444
|
476
|
469
|
Other
|
321
|
294
|
352
|
Total CECONY
|
2,555
|
2,526
|
2,617
|
O&R
|
305
|
296
|
285
|
Clean Energy Businesses (b)
|
287
|
313
|
164
|
Con Edison Transmission
|
10
|
9
|
3
|
Other (c)
|
(5)
|
(5)
|
(5)
|
Total other operations and maintenance expenses
|
$3,152
|
$3,139
|
$3,064
|
(a)
|
Includes Demand Side Management, System Benefit Charges and Public Service Law 18A assessments which are collected in revenues.
|
(b)
|
The increase in other operations and maintenance expenses for the years ended December 31, 2018 and 2017 compared with the 2016 period is due primarily to higher engineering, procurement and construction costs.
|
(c)
|
Includes parent company and consolidation adjustments.
|
54
|
CON EDISON ANNUAL REPORT 2018
|
|
CECONY
|
O&R
|
Clean Energy
Businesses
|
Con Edison
Transmission |
Other (a)
|
Con Edison (b)
|
|||||||||||||||||||||||||||||||
(Millions of Dollars)
|
2018
|
|
2017
|
|
2016
|
|
2018
|
|
2017
|
|
2016
|
|
2018
|
|
2017
|
|
2016
|
|
2018
|
|
2017
|
|
2016
|
|
2018
|
|
2017
|
|
2016
|
|
2018
|
|
2017
|
|
2016
|
|
|
Operating revenues
|
$10,680
|
$10,468
|
$10,165
|
$891
|
$874
|
$821
|
$763
|
$694
|
$1,091
|
$4
|
$2
|
|
$—
|
|
$(1)
|
$(5)
|
$(2)
|
$12,337
|
$12,033
|
$12,075
|
|||||||||||||||||
Purchased power
|
1,433
|
1,415
|
1,568
|
208
|
191
|
197
|
2
|
(3)
|
674
|
—
|
|
—
|
|
—
|
|
1
|
|
(2)
|
—
|
|
1,644
|
1,601
|
2,439
|
||||||||||||||
Fuel
|
263
|
216
|
172
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
263
|
216
|
172
|
|||||||
Gas purchased for resale
|
643
|
510
|
319
|
86
|
73
|
47
|
313
|
226
|
112
|
—
|
|
—
|
|
—
|
|
(1
|
)
|
(1)
|
(1)
|
1,041
|
808
|
477
|
|||||||||||||||
Other operations and maintenance
|
2,555
|
2,526
|
2,617
|
305
|
296
|
285
|
287
|
313
|
164
|
10
|
9
|
3
|
(5)
|
(5)
|
(5)
|
3,152
|
3,139
|
3,064
|
|||||||||||||||||||
Depreciation and amortization
|
1,276
|
1,195
|
1,106
|
77
|
71
|
67
|
85
|
74
|
42
|
1
|
1
|
—
|
|
(1)
|
—
|
|
1
|
1,438
|
1,341
|
1,216
|
|||||||||||||||||
Taxes, other than income taxes
|
2,156
|
2,057
|
1,932
|
83
|
82
|
79
|
13
|
16
|
20
|
—
|
|
—
|
|
—
|
|
14
|
—
|
|
—
|
|
2,266
|
2,155
|
2,031
|
||||||||||||||
Gain on sale of retail electric supply business (2016) and solar electric production project (2017) (c)
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
1
|
104
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
1
|
104
|
|||||
Gain on acquisition of Sempra Solar Holdings, LLC (c)
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
131
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
131
|
—
|
|
—
|
|
|||
Operating income
|
2,354
|
2,549
|
2,451
|
132
|
161
|
146
|
194
|
69
|
183
|
(7)
|
(8)
|
(3)
|
(9)
|
3
|
3
|
2,664
|
2,774
|
2,780
|
|||||||||||||||||||
Other income less deductions
|
(143)
|
(137)
|
(189)
|
(19)
|
(19)
|
(15)
|
33
|
33
|
22
|
91
|
80
|
43
|
(24)
|
(5)
|
(2)
|
(62)
|
(48)
|
(141)
|
|||||||||||||||||||
Net interest expense
|
689
|
623
|
603
|
39
|
36
|
36
|
63
|
43
|
34
|
20
|
16
|
6
|
8
|
11
|
17
|
819
|
729
|
696
|
|||||||||||||||||||
Income before income tax expense
|
1,522
|
1,789
|
1,659
|
74
|
106
|
95
|
164
|
59
|
171
|
64
|
56
|
34
|
(41)
|
(13)
|
(16)
|
1,783
|
1,997
|
1,943
|
|||||||||||||||||||
Income tax expense
|
326
|
685
|
603
|
15
|
42
|
36
|
19
|
(273)
|
53
|
17
|
12
|
14
|
24
|
6
|
(8)
|
401
|
472
|
698
|
|||||||||||||||||||
Net income
|
$1,196
|
$1,104
|
$1,056
|
$59
|
$64
|
$59
|
$145
|
$332
|
$118
|
$47
|
$44
|
$20
|
$(65)
|
$(19)
|
$(8)
|
$1,382
|
$1,525
|
$1,245
|
CON EDISON ANNUAL REPORT 2018
|
55
|
|
For the Year Ended December 31, 2018
|
|
For the Year Ended December 31, 2017
|
|
|
||||||||||
(Millions of Dollars)
|
Electric
|
|
Gas
|
|
Steam
|
|
2018 Total
|
Electric
|
|
Gas
|
|
Steam
|
|
2017 Total
|
2018-2017 Variation
|
Operating revenues
|
$7,971
|
$2,078
|
$631
|
$10,680
|
$7,972
|
$1,901
|
$595
|
$10,468
|
$212
|
||||||
Purchased power
|
1,393
|
—
|
|
40
|
1,433
|
1,379
|
—
|
|
36
|
1,415
|
18
|
||||
Fuel
|
158
|
—
|
|
105
|
263
|
127
|
—
|
|
89
|
216
|
47
|
||||
Gas purchased for resale
|
—
|
|
643
|
—
|
|
643
|
—
|
|
510
|
—
|
|
510
|
133
|
||
Other operations and maintenance
|
1,961
|
420
|
174
|
2,555
|
1,942
|
413
|
171
|
2,526
|
29
|
||||||
Depreciation and amortization
|
984
|
205
|
87
|
1,276
|
925
|
185
|
85
|
1,195
|
81
|
||||||
Taxes, other than income taxes
|
1,676
|
332
|
148
|
2,156
|
1,625
|
298
|
134
|
2,057
|
99
|
||||||
Operating income
|
$1,799
|
$478
|
$77
|
$2,354
|
$1,974
|
$495
|
$80
|
$2,549
|
$(195)
|
|
For the Years Ended December 31,
|
||
(Millions of Dollars)
|
2018
|
2017
|
Variation
|
Operating revenues
|
$7,971
|
$7,972
|
$(1)
|
Purchased power
|
1,393
|
1,379
|
14
|
Fuel
|
158
|
127
|
31
|
Other operations and maintenance
|
1,961
|
1,942
|
19
|
Depreciation and amortization
|
984
|
925
|
59
|
Taxes, other than income taxes
|
1,676
|
1,625
|
51
|
Electric operating income
|
$1,799
|
$1,974
|
$(175)
|
|
Millions of kWh Delivered
|
|
Revenues in Millions (a)
|
|||||||||||
|
For the Years Ended
|
|
|
For the Years Ended
|
|
|||||||||
Description
|
December 31, 2018
|
|
December 31, 2017
|
|
Variation
|
|
Percent
Variation
|
|
|
December 31, 2018
|
December 31, 2017
|
Variation
|
Percent
Variation
|
|
Residential/Religious (b)
|
10,797
|
|
9,924
|
|
873
|
|
8.8
|
%
|
|
$2,846
|
$2,515
|
$331
|
13.2
|
%
|
Commercial/Industrial
|
9,588
|
|
9,246
|
|
342
|
|
3.7
|
|
|
1,850
|
1,823
|
27
|
1.5
|
|
Retail choice customers
|
26,266
|
|
26,136
|
|
130
|
|
0.5
|
|
|
2,624
|
2,712
|
(88)
|
(3.2
|
)
|
NYPA, Municipal Agency and other sales
|
10,186
|
|
10,012
|
|
174
|
|
1.7
|
|
|
662
|
633
|
29
|
4.6
|
|
Other operating revenues (c)
|
—
|
|
—
|
|
—
|
|
—
|
|
|
(11)
|
289
|
(300)
|
Large
|
|
Total
|
56,837
|
|
55,318
|
|
1,519
|
|
2.7
|
%
|
(d)
|
$7,971
|
$7,972
|
$(1)
|
—
|
%
|
(a)
|
Revenues from electric sales are subject to a revenue decoupling mechanism, as a result of which, delivery revenues generally are 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 regulatory assets and liabilities in accordance with the revenue decoupling mechanism and other provisions of the company’s rate plans. See Note B to the financial statements in Item 8.
|
(d)
|
After adjusting for variations, primarily weather and billing days, electric delivery volumes in CECONY’s service area remained flat in
2018
compared with
2017
.
|
56
|
CON EDISON ANNUAL REPORT 2018
|
|
For the Years Ended December 31,
|
||
(Millions of Dollars)
|
2018
|
2017
|
Variation
|
Operating revenues
|
$2,078
|
$1,901
|
$177
|
Gas purchased for resale
|
643
|
510
|
133
|
Other operations and maintenance
|
420
|
413
|
7
|
Depreciation and amortization
|
205
|
185
|
20
|
Taxes, other than income taxes
|
332
|
298
|
34
|
Gas operating income
|
$478
|
$495
|
$(17)
|
|
Thousands of Dt Delivered
|
|
Revenues in Millions (a)
|
||||||||||||
|
For the Years Ended
|
|
|
For the Years Ended
|
|
||||||||||
Description
|
December 31, 2018
|
|
December 31, 2017
|
|
Variation
|
|
Percent
Variation
|
|
|
December 31, 2018
|
December 31, 2017
|
Variation
|
|
Percent
Variation
|
|
Residential
|
57,815
|
|
52,244
|
|
5,571
|
|
10.7
|
%
|
|
$966
|
$802
|
$164
|
20.4
|
%
|
|
General
|
34,490
|
|
30,761
|
|
3,729
|
|
12.1
|
|
|
390
|
334
|
56
|
16.8
|
|
|
Firm transportation
|
82,472
|
|
71,353
|
|
11,119
|
|
15.6
|
|
|
595
|
524
|
71
|
13.5
|
|
|
Total firm sales and transportation
|
174,777
|
|
154,358
|
|
20,419
|
|
13.2
|
|
(b)
|
1,951
|
1,660
|
291
|
17.5
|
|
|
Interruptible sales (c)
|
7,351
|
|
7,553
|
|
(202
|
)
|
(2.7
|
)
|
|
40
|
35
|
5
|
14.3
|
|
|
NYPA
|
34,079
|
|
37,033
|
|
(2,954
|
)
|
(8.0
|
)
|
|
2
|
2
|
—
|
|
—
|
|
Generation plants
|
72,524
|
|
61,800
|
|
10,724
|
|
17.4
|
|
|
26
|
25
|
1
|
4.0
|
|
|
Other
|
20,822
|
|
21,317
|
|
(495
|
)
|
(2.3
|
)
|
|
31
|
31
|
—
|
|
—
|
|
Other operating revenues (d)
|
—
|
|
—
|
|
—
|
|
—
|
|
|
28
|
148
|
(120)
|
(81.1
|
)
|
|
Total
|
309,553
|
|
282,061
|
|
27,492
|
|
9.7
|
%
|
|
$2,078
|
$1,901
|
$177
|
9.3
|
%
|
(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 transportation volumes in the company’s service area increased
5.1
percent in
2018
compared with
2017
, reflecting primarily increased volumes attributable to the growth in the number of gas customers.
|
(c)
|
Includes
3,326
thousands and 3,816 thousands of Dt for
2018
and
2017
, respectively, which are also reflected in firm transportation and other.
|
(d)
|
Other gas 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.
|
CON EDISON ANNUAL REPORT 2018
|
57
|
|
For the Years Ended December 31,
|
||
(Millions of Dollars)
|
2018
|
2017
|
Variation
|
Operating revenues
|
$631
|
$595
|
$36
|
Purchased power
|
40
|
36
|
4
|
Fuel
|
105
|
89
|
16
|
Other operations and maintenance
|
174
|
171
|
3
|
Depreciation and amortization
|
87
|
85
|
2
|
Taxes, other than income taxes
|
148
|
134
|
14
|
Steam operating income
|
$77
|
$80
|
$(3)
|
|
Millions of Pounds Delivered
|
|
Revenues in Millions
|
|||||||||||
|
For the Years Ended
|
|
|
For the Years Ended
|
|
|||||||||
Description
|
December 31, 2018
|
|
December 31, 2017
|
|
Variation
|
|
Percent
Variation
|
|
|
December 31, 2018
|
December 31, 2017
|
Variation
|
Percent
Variation
|
|
General
|
593
|
|
490
|
|
103
|
|
21.0
|
%
|
|
$30
|
$26
|
$4
|
15.4
|
%
|
Apartment house
|
6,358
|
|
5,754
|
|
604
|
|
10.5
|
|
|
174
|
158
|
16
|
10.1
|
|
Annual power
|
14,811
|
|
13,166
|
|
1,645
|
|
12.5
|
|
|
441
|
392
|
49
|
12.5
|
|
Other operating revenues (a)
|
—
|
|
—
|
|
—
|
|
—
|
|
|
(14)
|
19
|
(33)
|
Large
|
|
Total
|
21,762
|
|
19,410
|
|
2,352
|
|
12.1
|
%
|
(b)
|
$631
|
$595
|
$36
|
6.1
|
%
|
(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 increased
0.6
percent in
2018
compared with
2017
.
|
58
|
CON EDISON ANNUAL REPORT 2018
|
|
For the Years Ended December 31,
|
|
|||
(Millions of Dollars)
|
2018
|
|
2017
|
|
Variation
|
Property taxes
|
$1,845
|
|
$1,692
|
|
$153
|
State and local taxes related to revenue receipts
|
330
|
|
319
|
|
11
|
Payroll taxes
|
69
|
|
67
|
|
2
|
Other taxes
|
(88)
|
|
(21)
|
|
(67)
|
Total
|
$2,156
|
(a)
|
$2,057
|
(a)
|
$99
|
(a)
|
Including sales tax on customers’ bills, total taxes other than income taxes in
2018
and
2017
were $2,628 and $2,495 million, respectively.
|
|
For the Year Ended December 31, 2018
|
|
For the Year Ended December 31, 2017
|
|
|
||||||
(Millions of Dollars)
|
Electric
|
|
Gas
|
|
2018 Total
|
Electric
|
|
Gas
|
|
2017 Total
|
2018-2017
Variation
|
Operating revenues
|
$642
|
$249
|
$891
|
$642
|
$232
|
$874
|
$17
|
||||
Purchased power
|
208
|
—
|
|
208
|
191
|
—
|
|
191
|
17
|
||
Gas purchased for resale
|
—
|
|
86
|
86
|
—
|
|
73
|
73
|
13
|
||
Other operations and maintenance
|
233
|
72
|
305
|
232
|
64
|
296
|
9
|
||||
Depreciation and amortization
|
56
|
21
|
77
|
51
|
20
|
71
|
6
|
||||
Taxes, other than income taxes
|
52
|
31
|
83
|
53
|
29
|
82
|
1
|
||||
Operating income
|
$93
|
$39
|
$132
|
$115
|
$46
|
$161
|
$(29)
|
CON EDISON ANNUAL REPORT 2018
|
59
|
|
For the Years Ended December 31,
|
||||
(Millions of Dollars)
|
2018
|
2017
|
Variation
|
|
|
Operating revenues
|
$642
|
$642
|
|
$—
|
|
Purchased power
|
208
|
191
|
17
|
||
Other operations and maintenance
|
233
|
232
|
1
|
||
Depreciation and amortization
|
56
|
51
|
5
|
||
Taxes, other than income taxes
|
52
|
53
|
(1)
|
||
Electric operating income
|
$93
|
$115
|
$(22)
|
|
Millions of kWh Delivered
|
|
Revenues in Millions (a)
|
||||||||||||
|
For the Years Ended
|
|
|
For the Years Ended
|
|
||||||||||
Description
|
December 31, 2018
|
|
December 31, 2017
|
|
Variation
|
|
Percent
Variation
|
|
|
December 31, 2018
|
December 31, 2017
|
Variation
|
|
Percent
Variation
|
|
Residential/Religious (b)
|
1,713
|
|
1,567
|
|
146
|
|
9.3
|
%
|
|
$326
|
$311
|
$15
|
4.8
|
%
|
|
Commercial/Industrial
|
799
|
|
763
|
|
36
|
|
4.7
|
|
|
115
|
113
|
2
|
1.8
|
|
|
Retail choice customers
|
2,974
|
|
2,976
|
|
(2
|
)
|
(0.1
|
)
|
|
201
|
201
|
—
|
|
—
|
|
Public authorities
|
131
|
|
105
|
|
26
|
|
24.8
|
|
|
12
|
9
|
3
|
33.3
|
|
|
Other operating revenues (c)
|
—
|
|
—
|
|
—
|
|
—
|
|
|
(12)
|
8
|
(20)
|
Large
|
|
|
Total
|
5,617
|
|
5,411
|
|
206
|
|
3.8
|
%
|
(d)
|
$642
|
$642
|
$0
|
—
|
|
(a)
|
O&R’s New York 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. O&R’s electric sales in New Jersey are not subject to a decoupling mechanism, 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 regulatory assets and liabilities in accordance with the company’s electric rate plan. See Note B to the financial statements in Item 8.
|
(d)
|
After adjusting for weather and other variations, electric delivery volumes in O&R’s service area increased
0.3
percent in
2018
compared with
2017
.
|
60
|
CON EDISON ANNUAL REPORT 2018
|
|
For the Years Ended December 31,
|
||
(Millions of Dollars)
|
2018
|
2017
|
Variation
|
Operating revenues
|
$249
|
$232
|
$17
|
Gas purchased for resale
|
86
|
73
|
13
|
Other operations and maintenance
|
72
|
64
|
8
|
Depreciation and amortization
|
21
|
20
|
1
|
Taxes, other than income taxes
|
31
|
29
|
2
|
Gas operating income
|
$39
|
$46
|
$(7)
|
|
Thousands of Dt Delivered
|
|
Revenues in Millions (a)
|
||||||||||||||
|
For the Years Ended
|
|
|
For the Years Ended
|
|
||||||||||||
Description
|
December 31, 2018
|
|
December 31, 2017
|
|
Variation
|
|
Percent
Variation |
|
|
December 31, 2018
|
|
December 31, 2017
|
|
Variation
|
|
Percent
Variation
|
|
Residential
|
9,860
|
|
8,296
|
|
1,564
|
|
18.9
|
%
|
|
$140
|
$115
|
$25
|
21.7
|
%
|
|||
General
|
2,190
|
|
2,184
|
|
6
|
|
0.3
|
|
|
26
|
24
|
2
|
8.3
|
|
|||
Firm transportation
|
9,950
|
|
9,873
|
|
77
|
|
0.8
|
|
|
78
|
74
|
4
|
5.4
|
|
|||
Total firm sales and transportation
|
22,000
|
|
20,353
|
|
1,647
|
|
8.1
|
|
(b)
|
244
|
213
|
31
|
14.6
|
|
|||
Interruptible sales
|
3,746
|
|
3,771
|
|
(25
|
)
|
(0.7
|
)
|
|
6
|
7
|
(1)
|
(14.3
|
)
|
|||
Generation plants
|
1
|
|
9
|
|
(8
|
)
|
(88.9
|
)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
Other
|
959
|
|
896
|
|
63
|
|
7.0
|
|
|
1
|
1
|
—
|
|
—
|
|
||
Other gas revenues
|
—
|
|
—
|
|
—
|
|
—
|
|
|
(2)
|
11
|
(13)
|
Large
|
|
|||
Total
|
26,706
|
|
25,029
|
|
1,677
|
|
6.7
|
%
|
|
$249
|
$232
|
$17
|
7.3
|
%
|
(a)
|
Revenues from New York 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, total firm sales and transportation volumes increased
2.4
percent in
2018
compared with
2017
.
|
CON EDISON ANNUAL REPORT 2018
|
61
|
|
For the Years Ended December 31,
|
||||
(Millions of Dollars)
|
2018
|
|
2017
|
|
Variation
|
Property taxes
|
$65
|
|
$66
|
|
$(1)
|
State and local taxes related to revenue receipts
|
10
|
|
9
|
|
1
|
Payroll taxes
|
8
|
|
7
|
|
1
|
Total
|
$83
|
(a)
|
$82
|
(a)
|
$1
|
(a)
|
Including sales tax on customers’ bills, total taxes other than income taxes in
2018
and
2017
were $112 million and $109 million, respectively.
|
|
For the Years Ended December 31,
|
||||
(Millions of Dollars)
|
2018
|
|
2017
|
|
Variation
|
Operating revenues
|
$763
|
$694
|
$69
|
||
Purchased power
|
2
|
(3)
|
5
|
||
Gas purchased for resale
|
313
|
226
|
87
|
||
Other operations and maintenance
|
287
|
313
|
(26)
|
||
Depreciation and amortization
|
85
|
74
|
11
|
||
Taxes, other than income taxes
|
13
|
16
|
(3)
|
||
Gain on sale of solar electric production project (a)
|
—
|
|
1
|
(1)
|
|
Gain on acquisition of Sempra Solar Holdings, LLC (a)
|
131
|
—
|
|
131
|
|
Operating income
|
$194
|
$69
|
$125
|
62
|
CON EDISON ANNUAL REPORT 2018
|
CON EDISON ANNUAL REPORT 2018
|
63
|
|
For the Year Ended December 31, 2017
|
|
For the Year Ended December 31, 2016
|
|
|
||||||||||
(Millions of Dollars)
|
Electric
|
|
Gas
|
|
Steam
|
|
2017 Total
|
Electric
|
|
Gas
|
|
Steam
|
|
2016 Total
|
2017-2016 Variation
|
Operating revenues
|
$7,972
|
$1,901
|
$595
|
$10,468
|
$8,106
|
$1,508
|
$551
|
$10,165
|
$303
|
||||||
Purchased power
|
1,379
|
—
|
|
36
|
1,415
|
1,533
|
—
|
|
35
|
1,568
|
(153)
|
||||
Fuel
|
127
|
—
|
|
89
|
216
|
104
|
—
|
|
68
|
172
|
44
|
||||
Gas purchased for resale
|
—
|
|
510
|
—
|
|
510
|
—
|
|
319
|
—
|
|
319
|
191
|
||
Other operations and maintenance
|
1,942
|
413
|
171
|
2,526
|
2,061
|
378
|
178
|
2,617
|
(91)
|
||||||
Depreciation and amortization
|
925
|
185
|
85
|
1,195
|
865
|
159
|
82
|
1,106
|
89
|
||||||
Taxes, other than income taxes
|
1,625
|
298
|
134
|
2,057
|
1,547
|
265
|
120
|
1,932
|
125
|
||||||
Operating income
|
$1,974
|
$495
|
$80
|
$2,549
|
$1,996
|
$387
|
$68
|
$2,451
|
$98
|
|
For the Years Ended December 31,
|
||
(Millions of Dollars)
|
2017
|
2016
|
Variation
|
Operating revenues
|
$7,972
|
$8,106
|
$(134)
|
Purchased power
|
1,379
|
1,533
|
(154)
|
Fuel
|
127
|
104
|
23
|
Other operations and maintenance
|
1,942
|
2,061
|
(119)
|
Depreciation and amortization
|
925
|
865
|
60
|
Taxes, other than income taxes
|
1,625
|
1,547
|
78
|
Electric operating income
|
$1,974
|
$1,996
|
$(22)
|
|
Millions of kWh Delivered
|
|
Revenues in Millions (a)
|
|||||||||||
|
For the Years Ended
|
|
|
For the Years Ended
|
|
|||||||||
Description
|
December 31, 2017
|
|
December 31, 2016
|
|
Variation
|
|
Percent
Variation
|
|
|
December 31, 2017
|
December 31, 2016
|
Variation
|
Percent
Variation
|
|
Residential/Religious (b)
|
9,924
|
|
10,400
|
|
(476
|
)
|
(4.6
|
)%
|
|
$2,515
|
$2,591
|
$(76)
|
(2.9
|
)%
|
Commercial/Industrial
|
9,246
|
|
9,429
|
|
(183
|
)
|
(1.9
|
)
|
|
1,823
|
1,803
|
20
|
1.1
|
|
Retail choice customers
|
26,136
|
|
26,813
|
|
(677
|
)
|
(2.5
|
)
|
|
2,712
|
2,768
|
(56)
|
(2.0
|
)
|
NYPA, Municipal Agency and other sales
|
10,012
|
|
10,103
|
|
(91
|
)
|
(0.9
|
)
|
|
633
|
620
|
13
|
2.1
|
|
Other operating revenues (c)
|
—
|
|
—
|
|
—
|
|
—
|
|
|
289
|
324
|
(35)
|
(10.8
|
)
|
Total
|
55,318
|
|
56,745
|
|
(1,427
|
)
|
(2.5
|
)%
|
(d)
|
$7,972
|
$8,106
|
$(134)
|
(1.7
|
)%
|
(a)
|
Revenues from electric sales are subject to a revenue decoupling mechanism, as a result of which, delivery revenues generally are 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 regulatory assets and liabilities in accordance with the revenue decoupling mechanism and other provisions of the company’s rate plans. See Note B to the financial statements in Item 8.
|
(d)
|
After adjusting for variations, primarily weather and billing days, electric delivery volumes in CECONY’s service area decreased 1.1 percent in
2017
compared with
2016
.
|
64
|
CON EDISON ANNUAL REPORT 2018
|
|
For the Years Ended December 31,
|
||
(Millions of Dollars)
|
2017
|
2016
|
Variation
|
Operating revenues
|
$1,901
|
$1,508
|
$393
|
Gas purchased for resale
|
510
|
319
|
191
|
Other operations and maintenance
|
413
|
378
|
35
|
Depreciation and amortization
|
185
|
159
|
26
|
Taxes, other than income taxes
|
298
|
265
|
33
|
Gas operating income
|
$495
|
$387
|
$108
|
|
Thousands of Dt Delivered
|
|
Revenues in Millions (a)
|
||||||||||||
|
For the Years Ended
|
|
|
For the Years Ended
|
|
||||||||||
Description
|
December 31, 2017
|
|
December 31, 2016
|
|
Variation
|
|
Percent
Variation
|
|
|
December 31, 2017
|
December 31, 2016
|
Variation
|
|
Percent
Variation
|
|
Residential
|
52,244
|
|
47,794
|
|
4,450
|
|
9.3
|
%
|
|
$802
|
$667
|
$135
|
20.2
|
%
|
|
General
|
30,761
|
|
28,098
|
|
2,663
|
|
9.5
|
|
|
334
|
266
|
68
|
25.6
|
|
|
Firm transportation
|
71,353
|
|
68,442
|
|
2,911
|
|
4.3
|
|
|
524
|
426
|
98
|
23.0
|
|
|
Total firm sales and transportation
|
154,358
|
|
144,334
|
|
10,024
|
|
6.9
|
|
(b)
|
1,660
|
1,359
|
301
|
22.1
|
|
|
Interruptible sales (c)
|
7,553
|
|
8,957
|
|
(1,404
|
)
|
(15.7
|
)
|
|
35
|
34
|
1
|
2.9
|
|
|
NYPA
|
37,033
|
|
43,101
|
|
(6,068
|
)
|
(14.1
|
)
|
|
2
|
2
|
—
|
|
—
|
|
Generation plants
|
61,800
|
|
87,835
|
|
(26,035
|
)
|
(29.6
|
)
|
|
25
|
25
|
—
|
|
—
|
|
Other
|
21,317
|
|
21,165
|
|
152
|
|
0.7
|
|
|
31
|
32
|
(1)
|
(3.1
|
)
|
|
Other operating revenues (d)
|
—
|
|
—
|
|
—
|
|
—
|
|
|
148
|
56
|
92
|
Large
|
|
|
Total
|
282,061
|
|
305,392
|
|
(23,331
|
)
|
(7.6
|
)%
|
|
$1,901
|
$1,508
|
$393
|
26.1
|
%
|
(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 transportation volumes in the company’s service area increased 5.9 percent in
2017
compared with
2016
, reflecting primarily increased volumes attributable to the growth in the number of gas customers.
|
(c)
|
Includes
3,816
thousands and 4,708 thousands of Dt for
2017
and
2016
, respectively, which are also reflected in firm transportation and other.
|
(d)
|
Other gas operating revenues generally reflect changes in regulatory assets and liabilities in accordance with the company’s rate plans. See Note B to the financial statements in Item 8.
|
CON EDISON ANNUAL REPORT 2018
|
65
|
|
For the Years Ended December 31,
|
||
(Millions of Dollars)
|
2017
|
2016
|
Variation
|
Operating revenues
|
$595
|
$551
|
$44
|
Purchased power
|
36
|
35
|
1
|
Fuel
|
89
|
68
|
21
|
Other operations and maintenance
|
171
|
178
|
(7)
|
Depreciation and amortization
|
85
|
82
|
3
|
Taxes, other than income taxes
|
134
|
120
|
14
|
Steam operating income
|
$80
|
$68
|
$12
|
|
Millions of Pounds Delivered
|
|
Revenues in Millions
|
|||||||||||
|
For the Years Ended
|
|
|
For the Years Ended
|
|
|||||||||
Description
|
December 31, 2017
|
|
December 31, 2016
|
|
Variation
|
|
Percent
Variation
|
|
|
December 31, 2017
|
December 31, 2016
|
Variation
|
Percent
Variation
|
|
General
|
490
|
|
465
|
|
25
|
|
5.4
|
%
|
|
$26
|
$23
|
$3
|
13.0
|
%
|
Apartment house
|
5,754
|
|
5,792
|
|
(38
|
)
|
(0.7
|
)
|
|
158
|
148
|
10
|
6.8
|
|
Annual power
|
13,166
|
|
13,722
|
|
(556
|
)
|
(4.1
|
)
|
|
392
|
378
|
14
|
3.7
|
|
Other operating revenues (a)
|
—
|
|
—
|
|
—
|
|
—
|
|
|
19
|
2
|
17
|
Large
|
|
Total
|
19,410
|
|
19,979
|
|
(569
|
)
|
(2.8
|
)%
|
(b)
|
$595
|
$551
|
$44
|
8.0
|
%
|
(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 decreased 3.8 percent in
2017
compared with
2016
.
|
66
|
CON EDISON ANNUAL REPORT 2018
|
|
For the Years Ended December 31,
|
|
|||
(Millions of Dollars)
|
2017
|
|
2016
|
|
Variation
|
Property taxes
|
$1,692
|
|
$1,557
|
|
$135
|
State and local taxes related to revenue receipts
|
319
|
|
315
|
|
4
|
Payroll taxes
|
67
|
|
65
|
|
2
|
Other taxes
|
(21)
|
|
(5)
|
|
(16)
|
Total
|
$2,057
|
(a)
|
$1,932
|
(a)
|
$125
|
(a)
|
Including sales tax on customers’ bills, total taxes other than income taxes in
2017
and
2016
were $2,495 and $2,358 million, respectively.
|
|
For the Year Ended December 31, 2017
|
|
For the Year Ended December 31, 2016
|
|
|
||||||
(Millions of Dollars)
|
Electric
|
|
Gas
|
|
2017 Total
|
Electric
|
|
Gas
|
|
2016 Total
|
2017-2016
Variation
|
Operating revenues
|
$642
|
$232
|
$874
|
$637
|
$184
|
$821
|
$53
|
||||
Purchased power
|
191
|
—
|
|
191
|
197
|
—
|
|
197
|
(6)
|
||
Gas purchased for resale
|
—
|
|
73
|
73
|
—
|
|
47
|
47
|
26
|
||
Other operations and maintenance
|
232
|
64
|
296
|
232
|
53
|
285
|
11
|
||||
Depreciation and amortization
|
51
|
20
|
71
|
49
|
18
|
67
|
4
|
||||
Taxes, other than income taxes
|
53
|
29
|
82
|
52
|
27
|
79
|
3
|
||||
Operating income
|
$115
|
$46
|
$161
|
$107
|
$39
|
$146
|
$15
|
|
For the Years Ended December 31,
|
|||
(Millions of Dollars)
|
2017
|
2016
|
Variation
|
|
Operating revenues
|
$642
|
$637
|
$5
|
|
Purchased power
|
191
|
197
|
(6)
|
|
Other operations and maintenance
|
232
|
232
|
—
|
|
Depreciation and amortization
|
51
|
49
|
2
|
|
Taxes, other than income taxes
|
53
|
52
|
1
|
|
Electric operating income
|
$115
|
$107
|
$8
|
CON EDISON ANNUAL REPORT 2018
|
67
|
|
Millions of kWh Delivered
|
|
Revenues in Millions (a)
|
|||||||||||
|
For the Years Ended
|
|
|
For the Years Ended
|
|
|||||||||
Description
|
December 31, 2017
|
|
December 31, 2016
|
|
Variation
|
|
Percent
Variation
|
|
|
December 31, 2017
|
December 31, 2016
|
Variation
|
Percent
Variation
|
|
Residential/Religious (b)
|
1,567
|
|
1,654
|
|
(87
|
)
|
(5.3
|
)%
|
|
$311
|
$304
|
$7
|
2.3
|
%
|
Commercial/Industrial
|
763
|
|
801
|
|
(38
|
)
|
(4.7
|
)
|
|
113
|
114
|
(1)
|
(0.9
|
)
|
Retail choice customers
|
2,976
|
|
3,180
|
|
(204
|
)
|
(6.4
|
)
|
|
201
|
213
|
(12)
|
(5.6
|
)
|
Public authorities
|
105
|
|
100
|
|
5
|
|
5.0
|
|
|
9
|
8
|
1
|
12.5
|
|
Other operating revenues (c)
|
—
|
|
—
|
|
—
|
|
—
|
|
|
8
|
(2)
|
10
|
Large
|
|
Total
|
5,411
|
|
5,735
|
|
(324
|
)
|
(5.6
|
)%
|
(d)
|
$642
|
$637
|
$5
|
0.8
|
%
|
(a)
|
O&R’s New York 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. O&R’s electric sales in New Jersey are not subject to a decoupling mechanism, 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 regulatory assets and liabilities in accordance with the company’s electric rate plan. See Note B to the financial statements in Item 8.
|
(d)
|
After adjusting for weather and other variations, electric delivery volumes in O&R’s service area decreased 2.2 percent in
2017
compared with
2016
.
|
|
For the Years Ended December 31,
|
||
(Millions of Dollars)
|
2017
|
2016
|
Variation
|
Operating revenues
|
$232
|
$184
|
$48
|
Gas purchased for resale
|
73
|
47
|
26
|
Other operations and maintenance
|
64
|
53
|
11
|
Depreciation and amortization
|
20
|
18
|
2
|
Taxes, other than income taxes
|
29
|
27
|
2
|
Gas operating income
|
$46
|
$39
|
$7
|
68
|
CON EDISON ANNUAL REPORT 2018
|
|
Thousands of Dt Delivered
|
|
Revenues in Millions (a)
|
||||||||||||||
|
For the Years Ended
|
|
|
For the Years Ended
|
|
||||||||||||
Description
|
December 31, 2017
|
|
December 31, 2016
|
|
Variation
|
|
Percent
Variation |
|
|
December 31, 2017
|
|
December 31, 2016
|
|
Variation
|
|
Percent
Variation
|
|
Residential
|
8,296
|
|
7,872
|
|
424
|
|
5.4
|
%
|
|
$115
|
$84
|
$31
|
36.9
|
%
|
|||
General
|
2,184
|
|
1,851
|
|
333
|
|
18.0
|
|
|
24
|
15
|
9
|
60.0
|
|
|||
Firm transportation
|
9,873
|
|
10,381
|
|
(508
|
)
|
(4.9
|
)
|
|
74
|
70
|
4
|
5.7
|
|
|||
Total firm sales and transportation
|
20,353
|
|
20,104
|
|
249
|
|
1.2
|
|
(b)
|
213
|
169
|
44
|
26.0
|
|
|||
Interruptible sales
|
3,771
|
|
3,853
|
|
(82
|
)
|
(2.1
|
)
|
|
7
|
3
|
4
|
Large
|
|
|||
Generation plants
|
9
|
|
18
|
|
(9
|
)
|
(50.0
|
)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
Other
|
896
|
|
867
|
|
29
|
|
3.3
|
|
|
1
|
—
|
|
1
|
—
|
|
||
Other gas revenues
|
—
|
|
—
|
|
—
|
|
—
|
|
|
11
|
12
|
(1)
|
(8.3
|
)
|
|||
Total
|
25,029
|
|
24,842
|
|
187
|
|
0.8
|
%
|
|
$232
|
$184
|
$48
|
26.1
|
%
|
(a)
|
Revenues from New York 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, total firm sales and transportation volumes decreased 0.8 percent in
2017
compared with
2016
.
|
|
For the Years Ended December 31,
|
||||
(Millions of Dollars)
|
2017
|
|
2016
|
|
Variation
|
Property taxes
|
$66
|
|
$63
|
|
$3
|
State and local taxes related to revenue receipts
|
9
|
|
10
|
|
(1)
|
Payroll taxes
|
7
|
|
6
|
|
1
|
Total
|
$82
|
(a)
|
$79
|
(a)
|
$3
|
(a)
|
Including sales tax on customers’ bills, total taxes other than income taxes in
2017
and
2016
were $109 million and $105 million, respectively.
|
CON EDISON ANNUAL REPORT 2018
|
69
|
|
For the Years Ended December 31,
|
||
(Millions of Dollars)
|
2017
|
2016
|
Variation
|
Operating revenues
|
$694
|
$1,091
|
$(397)
|
Purchased power
|
(3)
|
674
|
(677)
|
Gas purchased for resale
|
226
|
112
|
114
|
Other operations and maintenance
|
313
|
164
|
149
|
Depreciation and amortization
|
74
|
42
|
32
|
Taxes, other than income taxes
|
16
|
20
|
(4)
|
Gain on sale of retail electric supply business (2016) and solar electric production project (2017) (a)
|
1
|
104
|
103
|
Operating income
|
$69
|
$183
|
$(114)
|
70
|
CON EDISON ANNUAL REPORT 2018
|
CON EDISON ANNUAL REPORT 2018
|
71
|
|
CECONY
|
O&R
|
Clean Energy
Businesses |
Con Edison
Transmission |
Other (a)
|
Con Edison (b)
|
|||||||||||||||||||||||||||||
(Millions of Dollars)
|
2018
|
|
2017
|
|
2016
|
|
2018
|
|
2017
|
|
2016
|
2018
|
|
2017
|
|
2016
|
|
2018
|
|
2017
|
|
2016
|
|
2018
|
|
2017
|
|
2016
|
|
2018
|
|
2017
|
|
2016
|
|
Operating activities
|
$2,204
|
$2,866
|
$3,038
|
$172
|
$216
|
$158
|
$220
|
$253
|
$242
|
$87
|
$(4)
|
$(2)
|
$12
|
$36
|
$23
|
$2,695
|
$3,367
|
$3,459
|
|||||||||||||||||
Investing activities
|
(3,306)
|
(3,080)
|
(2,753)
|
(198)
|
(196)
|
(143)
|
(1,740)
|
(410)
|
(989)
|
(227)
|
(23)
|
(498)
|
—
|
|
(1)
|
(567)
|
(5,471)
|
(3,710)
|
(4,950)
|
||||||||||||||||
Financing activities
|
1,190
|
240
|
(440)
|
31
|
(22)
|
(17)
|
1,590
|
149
|
796
|
140
|
29
|
500
|
(13)
|
(39)
|
506
|
2,938
|
357
|
1,345
|
|||||||||||||||||
Net change for the period
|
88
|
26
|
(155)
|
5
|
(2)
|
(2)
|
70
|
(8)
|
$49
|
—
|
|
2
|
—
|
|
(1)
|
(4)
|
(38)
|
162
|
14
|
(146)
|
|||||||||||||||
Balance at beginning of period
|
730
|
704
|
859
|
47
|
49
|
47
|
56
|
64
|
15
|
2
|
—
|
|
—
|
|
9
|
13
|
51
|
844
|
830
|
972
|
|||||||||||||||
Balance at end of period
|
818
|
730
|
704
|
52
|
47
|
45
|
126
|
56
|
64
|
2
|
2
|
—
|
|
8
|
9
|
13
|
1,006
|
844
|
826
|
||||||||||||||||
Less: Change in cash balances held for sale
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(4)
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(4)
|
|
Balance at end of period excluding held for sale (c)
|
$818
|
$730
|
$704
|
$52
|
$47
|
$49
|
$126
|
$56
|
$64
|
$2
|
$2
|
|
$—
|
|
$8
|
$9
|
$13
|
$1,006
|
$844
|
$830
|
72
|
CON EDISON ANNUAL REPORT 2018
|
CON EDISON ANNUAL REPORT 2018
|
73
|
•
|
Issued 9,324,123 common shares for $705 million pursuant to forward sale agreements and borrowed $825 million under a variable rate term loan, which amounts, along with $79 million of other company funds, were used to pay the purchase price for the acquisition by a Con Edison Development subsidiary of Sempra Solar Holdings, LLC. In February 2019, the company repaid the $825 million term loan with borrowings under a two-year term loan agreement. See Notes C, D and U to the financial statements in Item 8.
|
•
|
Issued 4.1 million common shares resulting in net proceeds of $343 million, after issuance expenses, that were invested by Con Edison in its subsidiaries, principally CECONY and the Clean Energy Businesses, for funding of their construction expenditures and for other general corporate purposes; and
|
•
|
Issued $400 million aggregate principal amount of 2.00 percent debentures, due 2020, and prepaid the June 2016 $400 million variable rate term loan that was to mature in 2018.
|
•
|
Issued approximately 10 million common shares resulting in net proceeds of $702 million, after issuance expenses, and $500 million aggregate principal amount of 2.00 percent debentures, due 2021, the net proceeds from the sale of which were used in connection with the acquisition by a CET Gas subsidiary of a 50 percent equity interest in Stagecoach, a gas pipeline and storage joint venture (see "Con Edison Transmission" in Item 1), and for general corporate purposes.
|
•
|
Issued $500 million aggregate principal amount of 4.00 percent debentures, due 2028, and $600 million aggregate principal amount of 4.65 percent debentures, due 2048, the net proceeds from the sale of which were used to redeem at maturity $600 million of 7.125 percent 10-year debentures and other general corporate purposes, including repayment of short-term debt;
|
•
|
Issued $640 million aggregate principal amount of debentures, due 2021, at a variable interest rate of 0.40 percent above three-month LIBOR and redeemed $636 million of its tax-exempt debt for which the interest rates were to be determined pursuant to periodic auctions;
|
74
|
CON EDISON ANNUAL REPORT 2018
|
•
|
Issued $700 million aggregate principal amount of 4.50 percent debentures, due 2058, and $300 million aggregate principal amount of 3.80 percent debentures, due 2028, the net proceeds from the sale of which were used to repay short-term borrowings and for other general corporate purposes; and
|
•
|
Redeemed at maturity $600 million of 5.85 percent 10-year debentures.
|
•
|
Issued $350 million aggregate principal amount of 3.125 percent debentures, due 2027, $350 million aggregate principal amount of 4.00 percent debentures, due 2057, and $500 million aggregate principal amount of 3.875 percent debentures, due 2047, the net proceeds from the sales of which were used to repay short-term borrowings and for other general corporate purposes.
|
•
|
Issued $250 million aggregate principal amount of 2.90 percent debentures, due 2026, $500 million aggregate principal amount of 4.30 percent debentures, due 2056, and $550 million aggregate principal amount of 3.85 percent debentures, due 2046, the net proceeds from the sales of which were used to repay short-term borrowings and for other general corporate purposes;
|
•
|
Redeemed at maturity $400 million of 5.50 percent 10-year debentures; and
|
•
|
Redeemed at maturity $250 million of 5.30 percent 10-year debentures.
|
•
|
Redeemed at maturity $50 million of 6.15 percent 10-year debentures; and
|
•
|
Issued $150 million aggregate principal amount of 4.35 percent debentures, due 2048, the net proceeds from the sale of which were used to repay short-term borrowings and for other general corporate purposes.
|
•
|
Issued $75 million aggregate principal amount of 3.88 percent debentures, due 2046, the net proceeds from the sale of which were used to repay short-term borrowings; and
|
•
|
Redeemed at maturity $75 million of 5.45 percent 10-year debentures.
|
•
|
Issued $140 million aggregate principal amount of 4.41 percent senior notes, due 2028, secured by five of the company’s wind electric production projects.
|
•
|
Issued $97 million aggregate principal amount of 4.45 percent senior notes, due 2042, secured by the company’s Upton County Solar renewable electric production project.
|
•
|
Borrowed $2 million pursuant to a loan agreement with a New Jersey utility. The borrowing matures in 2026, bears interest of 11.18 percent and may be repaid in cash or project Solar Renewable Energy Certificates;
|
•
|
Issued $95 million aggregate principal amount of 4.07 percent senior notes, due 2036, secured by the company's California Holdings 3 renewable electric production project; and
|
•
|
Issued $218 million aggregate principal amount of 4.21 percent senior notes, due 2041, secured by the company's Texas Solar 7 renewable electric production project.
|
CON EDISON ANNUAL REPORT 2018
|
75
|
|
2018
|
2017
|
2016
|
|||||||||
(Millions of Dollars, except
Weighted Average Yield)
|
Outstanding at
December 31
|
|
Daily
average
|
|
Outstanding at
December 31 |
|
Daily
average
|
|
Outstanding at
December 31 |
|
Daily
average
|
|
Con Edison
|
$1,741
|
$889
|
$577
|
$566
|
$1,054
|
$744
|
||||||
CECONY
|
$1,192
|
$532
|
$150
|
$251
|
$600
|
$362
|
||||||
Weighted average yield
|
3.0
|
%
|
2.3
|
%
|
1.8
|
%
|
1.2
|
%
|
1.0
|
%
|
0.6
|
%
|
76
|
CON EDISON ANNUAL REPORT 2018
|
CON EDISON ANNUAL REPORT 2018
|
77
|
78
|
CON EDISON ANNUAL REPORT 2018
|
CON EDISON ANNUAL REPORT 2018
|
79
|
80
|
CON EDISON ANNUAL REPORT 2018
|
Actuarial Assumption
|
Change in
Assumption
|
|
Pension
|
|
Other
Postretirement
Benefits
|
Total
|
|
|
|
(Millions of Dollars)
|
|||||
Increase in accounting cost:
|
|
|
|
|
|||
Discount rate
|
|
|
|
|
|||
Con Edison
|
(0.25
|
)%
|
$51
|
$3
|
$54
|
||
CECONY
|
(0.25
|
)%
|
$48
|
$2
|
$50
|
||
Expected return on plan assets
|
|
|
|
|
|||
Con Edison
|
(0.25
|
)%
|
$34
|
$2
|
$36
|
||
CECONY
|
(0.25
|
)%
|
$32
|
$2
|
$34
|
||
Health care trend rate
|
|
|
|
|
|||
Con Edison
|
1.00
|
%
|
|
$—
|
|
$3
|
$3
|
CECONY
|
1.00
|
%
|
|
$—
|
|
$(3)
|
$(3)
|
Increase in projected benefit obligation:
|
|
|
|
|
|||
Discount rate
|
|
|
|
|
|||
Con Edison
|
(0.25
|
)%
|
$527
|
$32
|
$559
|
||
CECONY
|
(0.25
|
)%
|
$496
|
$24
|
$520
|
||
Health care trend rate
|
|
|
|
|
|||
Con Edison
|
1.00
|
%
|
|
$—
|
|
$9
|
$9
|
CECONY
|
1.00
|
%
|
|
$—
|
|
$(18)
|
$(18)
|
CON EDISON ANNUAL REPORT 2018
|
81
|
82
|
CON EDISON ANNUAL REPORT 2018
|
95% Confidence Level, One-Day Holding Period
|
2018
|
|
2017
|
|
||
|
(Millions of Dollars)
|
|||||
Average for the period
|
|
$—
|
|
|
$—
|
|
High
|
1
|
|
1
|
|
||
Low
|
—
|
|
—
|
|
CON EDISON ANNUAL REPORT 2018
|
83
|
84
|
CON EDISON ANNUAL REPORT 2018
|
Financial Statements
|
Page
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Con Edison
|
|
CECONY
|
|
CON EDISON ANNUAL REPORT 2018
|
85
|
|
2018
|
|||
Con Edison
|
First
Quarter
|
Second
Quarter
|
Third
Quarter
|
Fourth
Quarter
|
|
(Millions of Dollars, except per share amounts)
|
|||
Operating revenues
|
$3,364
|
$2,696
|
$3,328
|
$2,949
|
Operating income (a)
|
755
|
426
|
826
|
657
|
Net income
|
428
|
188
|
435
|
331
|
Basic earnings per share
|
$1.38
|
$0.60
|
$1.40
|
$1.06
|
Diluted earnings per share
|
$1.37
|
$0.60
|
$1.39
|
$1.05
|
|
2017
|
|||
Con Edison
|
First
Quarter |
Second
Quarter |
Third
Quarter |
Fourth
Quarter |
|
(Millions of Dollars, except per share amounts)
|
|||
Operating revenues
|
$3,228
|
$2,633
|
$3,211
|
$2,961
|
Operating income (a)
|
812
|
464
|
914
|
585
|
Net income
|
388
|
175
|
457
|
505
|
Basic earnings per share
|
$1.27
|
$0.57
|
$1.48
|
$1.63
|
Diluted earnings per share
|
$1.27
|
$0.57
|
$1.48
|
$1.62
|
|
2018
|
|||
CECONY
|
First
Quarter
|
Second
Quarter
|
Third
Quarter
|
Fourth
Quarter
|
|
(Millions of Dollars)
|
|||
Operating revenues
|
$2,884
|
$2,338
|
$2,899
|
$2,558
|
Operating income (a)
|
705
|
382
|
764
|
504
|
Net income
|
389
|
149
|
431
|
227
|
|
2017
|
|||
CECONY
|
First
Quarter |
Second
Quarter |
Third
Quarter |
Fourth
Quarter |
|
(Millions of Dollars)
|
|||
Operating revenues
|
$2,856
|
$2,293
|
$2,799
|
$2,520
|
Operating income (a)
|
741
|
423
|
836
|
550
|
Net income
|
339
|
143
|
401
|
221
|
86
|
CON EDISON ANNUAL REPORT 2018
|
|
/s/ John McAvoy
|
|
John McAvoy
|
|
Chairman, President and Chief Executive Officer
|
|
|
|
/s/ Robert Hoglund
|
|
Robert Hoglund
|
|
Senior Vice President and Chief Financial Officer
|
CON EDISON ANNUAL REPORT 2018
|
87
|
88
|
CON EDISON ANNUAL REPORT 2018
|
CON EDISON ANNUAL REPORT 2018
|
89
|
|
For the Years Ended December 31,
|
|||||||
(Millions of Dollars/Except Share Data)
|
2018
|
|
|
2017
|
|
|
2016
|
|
OPERATING REVENUES
|
|
|
|
|
|
|||
Electric
|
$8,612
|
|
$8,612
|
|
$8,741
|
|||
Gas
|
2,327
|
|
2,133
|
|
1,692
|
|||
Steam
|
631
|
|
595
|
|
551
|
|||
Non-utility
|
767
|
|
693
|
|
1,091
|
|||
TOTAL OPERATING REVENUES
|
12,337
|
|
12,033
|
|
12,075
|
|||
OPERATING EXPENSES
|
|
|
|
|
|
|||
Purchased power
|
1,644
|
|
1,601
|
|
2,439
|
|||
Fuel
|
263
|
|
216
|
|
172
|
|||
Gas purchased for resale
|
1,041
|
|
808
|
|
477
|
|||
Other operations and maintenance
|
3,152
|
|
3,139
|
|
3,064
|
|||
Depreciation and amortization
|
1,438
|
|
1,341
|
|
1,216
|
|||
Taxes, other than income taxes
|
2,266
|
|
2,155
|
|
2,031
|
|||
TOTAL OPERATING EXPENSES
|
9,804
|
|
9,260
|
|
9,399
|
|||
Gain on sale of solar electric production project in 2017 and retail electric supply business in 2016
|
—
|
|
|
1
|
|
104
|
|
|
Gain on acquisition of Sempra Solar Holdings, LLC
|
131
|
|
—
|
|
|
—
|
|
|
OPERATING INCOME
|
2,664
|
|
2,774
|
|
2,780
|
|||
OTHER INCOME (DEDUCTIONS)
|
|
|
|
|
|
|||
Investment income
|
119
|
|
111
|
|
75
|
|
||
Other income
|
17
|
|
15
|
|
16
|
|||
Allowance for equity funds used during construction
|
12
|
|
11
|
|
10
|
|||
Other deductions
|
(210)
|
|
(185)
|
|
(242)
|
|||
TOTAL OTHER INCOME
|
(62)
|
|
(48)
|
|
(141)
|
|||
INCOME BEFORE INTEREST AND INCOME TAX EXPENSE
|
2,602
|
|
2,726
|
|
2,639
|
|||
INTEREST EXPENSE
|
|
|
|
|
|
|||
Interest on long-term debt
|
780
|
|
726
|
|
678
|
|||
Other interest
|
49
|
|
11
|
|
24
|
|||
Allowance for borrowed funds used during construction
|
(10)
|
|
(8)
|
|
(6)
|
|||
NET INTEREST EXPENSE
|
819
|
|
729
|
|
696
|
|||
INCOME BEFORE INCOME TAX EXPENSE
|
1,783
|
|
1,997
|
|
1,943
|
|||
INCOME TAX EXPENSE
|
401
|
|
472
|
|
698
|
|||
NET INCOME
|
$1,382
|
|
$1,525
|
|
$1,245
|
|||
Net income per common share — basic
|
$4.43
|
|
$4.97
|
|
$4.15
|
|||
Net income per common share — diluted
|
$4.42
|
|
$4.94
|
|
$4.12
|
|||
AVERAGE NUMBER OF SHARES OUTSTANDING — BASIC (IN MILLIONS)
|
311.7
|
|
307.1
|
|
300.4
|
|||
AVERAGE NUMBER OF SHARES OUTSTANDING — DILUTED (IN MILLIONS)
|
312.9
|
|
308.8
|
|
301.9
|
90
|
CON EDISON ANNUAL REPORT 2018
|
|
For the Years Ended December 31,
|
||||
(Millions of Dollars)
|
2018
|
|
2017
|
|
2016
|
NET INCOME
|
$1,382
|
|
$1,525
|
|
$1,245
|
OTHER COMPREHENSIVE INCOME, NET OF TAXES
|
|
|
|
|
|
Pension and other postretirement benefit plan liability adjustments, net of taxes
|
10
|
|
1
|
|
7
|
TOTAL OTHER COMPREHENSIVE INCOME, NET OF TAXES
|
10
|
|
1
|
|
7
|
COMPREHENSIVE INCOME
|
$1,392
|
|
$1,526
|
|
$1,252
|
CON EDISON ANNUAL REPORT 2018
|
91
|
|
For the Years Ended December 31,
|
||||||||
(Millions of Dollars)
|
2018
|
|
2017
|
|
2016
|
|
|||
OPERATING ACTIVITIES
|
|
|
|
||||||
Net Income
|
$1,382
|
$1,525
|
$1,245
|
||||||
PRINCIPAL NON-CASH CHARGES/(CREDITS) TO INCOME
|
|
|
|
||||||
Depreciation and amortization
|
1,438
|
1,341
|
1,216
|
||||||
Deferred income taxes
|
408
|
485
|
783
|
||||||
Rate case amortization and accruals
|
(117)
|
(124)
|
(210)
|
||||||
Common equity component of allowance for funds used during construction
|
(12)
|
(11)
|
(10)
|
||||||
Net derivative (gains)/losses
|
8
|
(4)
|
(6)
|
||||||
Unbilled revenue and net unbilled revenue deferrals
|
18
|
(113)
|
(71)
|
||||||
(Gain) on sale of retail electric supply business and solar electric production projects
|
—
|
|
(1)
|
(104)
|
|||||
(Gain) on acquisition of Sempra Solar Holdings, LLC
|
(131)
|
—
|
|
—
|
|
||||
Other non-cash items, net
|
115
|
5
|
198
|
||||||
CHANGES IN ASSETS AND LIABILITIES
|
|
|
|
||||||
Accounts receivable - customers
|
(140)
|
9
|
(69)
|
||||||
Materials and supplies, including fuel oil and gas in storage
|
(20)
|
5
|
13
|
||||||
Other receivables and other current assets
|
(62)
|
—
|
|
69
|
|||||
Taxes receivable
|
27
|
15
|
87
|
||||||
Prepayments
|
(7)
|
(19)
|
20
|
||||||
Accounts payable
|
(46)
|
95
|
29
|
||||||
Pensions and retiree benefits obligations, net
|
325
|
414
|
609
|
||||||
Pensions and retiree benefits contributions
|
(479)
|
(467)
|
(515)
|
||||||
Accrued taxes
|
(49)
|
44
|
2
|
||||||
Accrued interest
|
(35)
|
(7)
|
14
|
||||||
Superfund and environmental remediation costs, net
|
(19)
|
(14)
|
69
|
||||||
Distributions from equity investments
|
107
|
108
|
68
|
||||||
System benefit charge
|
92
|
101
|
244
|
||||||
Deferred charges, noncurrent assets and other regulatory assets
|
(393)
|
2,376
|
(97)
|
||||||
Deferred credits and other regulatory liabilities
|
436
|
(2,524)
|
(68)
|
||||||
Other current and noncurrent liabilities
|
(151)
|
128
|
(57)
|
||||||
NET CASH FLOWS FROM OPERATING ACTIVITIES
|
2,695
|
3,367
|
3,459
|
||||||
INVESTING ACTIVITIES
|
|
|
|
||||||
Utility construction expenditures
|
(3,251)
|
(3,028)
|
(2,835)
|
||||||
Cost of removal less salvage
|
(258)
|
(248)
|
(206)
|
||||||
Non-utility construction expenditures
|
(246)
|
(415)
|
(845)
|
||||||
Investments in electric and gas transmission projects
|
(248)
|
(45)
|
(1,076)
|
||||||
Investments in/acquisitions of renewable electric production projects
|
(19)
|
(45)
|
(393)
|
||||||
Acquisition of Sempra Solar Holdings, LLC, net of cash acquired
|
(1,488)
|
—
|
|
—
|
|
||||
Proceeds from sale of assets
|
5
|
34
|
|
252
|
|||||
Proceeds from the transfer of assets to NY Transco
|
—
|
|
—
|
|
122
|
||||
Other investing activities
|
34
|
37
|
|
31
|
|||||
NET CASH FLOWS USED IN INVESTING ACTIVITIES
|
(5,471)
|
(3,710)
|
(4,950)
|
||||||
FINANCING ACTIVITIES
|
|
|
|
|
|||||
Net (payment)/issuance of short-term debt
|
1,989
|
(477)
|
(475)
|
||||||
Issuance of long-term debt
|
3,030
|
1,697
|
2,590
|
||||||
Retirement of long-term debt
|
(1,938)
|
(434)
|
(735)
|
||||||
Debt issuance costs
|
(61)
|
(19)
|
(24)
|
||||||
Common stock dividends
|
(842)
|
(803)
|
(763)
|
||||||
Issuance of common shares - public offering
|
705
|
343
|
702
|
||||||
Issuance of common shares for stock plans
|
53
|
51
|
51
|
||||||
Distribution to noncontrolling interest
|
2
|
(1)
|
(1)
|
||||||
NET CASH FLOWS FROM FINANCING ACTIVITIES
|
2,938
|
357
|
|
1,345
|
|||||
CASH, TEMPORARY CASH INVESTMENTS AND RESTRICTED CASH:
|
|
|
|
|
|||||
NET CHANGE FOR THE PERIOD
|
162
|
14
|
|
(146)
|
|||||
BALANCE AT BEGINNING OF PERIOD
|
844
|
830
|
|
972
|
|||||
BALANCE AT END OF PERIOD
|
1,006
|
844
|
|
826
|
|||||
LESS: CHANGE IN CASH BALANCES HELD FOR SALE
|
—
|
|
—
|
|
(4)
|
||||
BALANCE AT END OF PERIOD EXCLUDING HELD FOR SALE
|
$1,006
|
$844
|
$830
|
||||||
|
|
|
|
||||||
SUPPLEMENTAL DISCLOSURE OF CASH INFORMATION
|
|
|
|
||||||
Cash paid/(received) during the period for:
|
|
|
|
||||||
Interest
|
$805
|
$725
|
$664
|
||||||
Income taxes
|
|
$—
|
|
$(29)
|
$(180)
|
||||
SUPPLEMENTAL DISCLOSURE OF NON-CASH INFORMATION
|
|
|
|
||||||
Construction expenditures in accounts payable
|
$369
|
$432
|
$388
|
||||||
Issuance of common shares for dividend reinvestment
|
$47
|
$46
|
$46
|
||||||
Debt assumed with business acquisitions
|
$568
|
|
$—
|
|
|
$195
|
|
||
Software licenses acquired but unpaid as of end of period
|
$100
|
|
$—
|
|
|
$—
|
|
92
|
CON EDISON ANNUAL REPORT 2018
|
(Millions of Dollars)
|
December 31, 2018
|
|
December 31, 2017
|
ASSETS
|
|
|
|
CURRENT ASSETS
|
|
|
|
Cash and temporary cash investments
|
$895
|
|
$797
|
Accounts receivable — customers, less allowance for uncollectible accounts of $62 and $63 in 2018 and 2017, respectively
|
1,267
|
|
1,103
|
Other receivables, less allowance for uncollectible accounts of $5 and $8 in 2018 and 2017, respectively
|
285
|
|
160
|
Taxes receivable
|
49
|
|
76
|
Accrued unbilled revenue
|
514
|
|
598
|
Fuel oil, gas in storage, materials and supplies, at average cost
|
358
|
|
334
|
Prepayments
|
187
|
|
178
|
Regulatory assets
|
76
|
|
67
|
Restricted cash
|
111
|
|
47
|
Other current assets
|
122
|
|
177
|
TOTAL CURRENT ASSETS
|
3,864
|
|
3,537
|
INVESTMENTS
|
1,766
|
|
2,001
|
UTILITY PLANT, AT ORIGINAL COST
|
|
|
|
Electric
|
30,378
|
|
28,994
|
Gas
|
9,100
|
|
8,256
|
Steam
|
2,562
|
|
2,473
|
General
|
3,331
|
|
3,008
|
TOTAL
|
45,371
|
|
42,731
|
Less: Accumulated depreciation
|
9,769
|
|
9,063
|
Net
|
35,602
|
|
33,668
|
Construction work in progress
|
1,978
|
|
1,605
|
NET UTILITY PLANT
|
37,580
|
|
35,273
|
NON-UTILITY PLANT
|
|
|
|
Non-utility property, less accumulated depreciation of $275 and $201 in 2018 and 2017, respectively
|
4,000
|
|
1,776
|
Construction work in progress
|
169
|
|
551
|
NET PLANT
|
41,749
|
|
37,600
|
OTHER NONCURRENT ASSETS
|
|
|
|
Goodwill
|
440
|
|
428
|
Intangible assets, less accumulated amortization of $29 and $15 in 2018 and 2017, respectively
|
1,654
|
|
131
|
Regulatory assets
|
4,294
|
|
4,266
|
Other deferred charges and noncurrent assets
|
153
|
|
148
|
TOTAL OTHER NONCURRENT ASSETS
|
6,541
|
|
4,973
|
TOTAL ASSETS
|
$53,920
|
|
$48,111
|
CON EDISON ANNUAL REPORT 2018
|
93
|
(Millions of Dollars)
|
December 31, 2018
|
|
|
December 31, 2017
|
|
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
|
|
|
||
CURRENT LIABILITIES
|
|
|
|
||
Long-term debt due within one year
|
$650
|
|
$1,298
|
||
Term Loan
|
825
|
|
—
|
|
|
Notes payable
|
1,741
|
|
577
|
||
Accounts payable
|
1,187
|
|
1,286
|
||
Customer deposits
|
351
|
|
346
|
||
Accrued taxes
|
61
|
|
|
108
|
|
Accrued interest
|
129
|
|
143
|
||
Accrued wages
|
109
|
|
105
|
||
Fair value of derivative liabilities
|
50
|
|
17
|
||
Regulatory liabilities
|
114
|
|
101
|
||
System benefit charge
|
627
|
|
535
|
||
Other current liabilities
|
363
|
|
386
|
||
TOTAL CURRENT LIABILITIES
|
6,207
|
|
4,902
|
||
NONCURRENT LIABILITIES
|
|
|
|
||
Provision for injuries and damages
|
146
|
|
153
|
||
Pensions and retiree benefits
|
1,228
|
|
1,443
|
||
Superfund and other environmental costs
|
779
|
|
737
|
||
Asset retirement obligations
|
450
|
|
314
|
||
Fair value of derivative liabilities
|
16
|
|
38
|
||
Deferred income taxes and unamortized investment tax credits
|
5,820
|
|
5,495
|
||
Regulatory liabilities
|
4,641
|
|
4,577
|
||
Other deferred credits and noncurrent liabilities
|
299
|
|
296
|
||
TOTAL NONCURRENT LIABILITIES
|
13,379
|
|
13,053
|
||
LONG-TERM DEBT
|
17,495
|
|
14,731
|
||
EQUITY
|
|
|
|
||
Common shareholders’ equity
|
16,726
|
|
15,418
|
||
Noncontrolling interest
|
113
|
|
7
|
||
TOTAL EQUITY (See Statement of Equity)
|
16,839
|
|
15,425
|
||
TOTAL LIABILITIES AND EQUITY
|
$53,920
|
|
$48,111
|
94
|
CON EDISON ANNUAL REPORT 2018
|
(In Millions/Except Share Data)
|
Common Stock
|
Additional
Paid-In
Capital
|
Retained
Earnings
|
Treasury Stock
|
Capital
Stock
Expense
|
Accumulated
Other
Comprehensive
Income/(Loss)
|
Noncontrolling
Interest
|
|
|||
Shares
|
Amount
|
Shares
|
Amount
|
Total
|
|||||||
BALANCE AS OF DECEMBER 31, 2015
|
293
|
$32
|
$5,030
|
$9,123
|
23
|
|
$(1,038)
|
$(61)
|
$(34)
|
$9
|
$13,061
|
Net income
|
|
|
|
1,245
|
|
|
|
|
|
1,245
|
|
Common stock dividends ($2.68 per share)
|
|
|
|
(809)
|
|
|
|
|
|
(809)
|
|
Issuance of common shares - public offering
|
10
|
1
|
723
|
|
|
|
(22)
|
|
|
702
|
|
Issuance of common shares for stock plans
|
2
|
|
101
|
|
|
|
|
|
|
101
|
|
Other comprehensive income
|
|
|
|
|
|
|
|
7
|
|
7
|
|
Noncontrolling interest
|
|
|
|
|
|
|
|
|
(1)
|
(1)
|
|
BALANCE AS OF DECEMBER 31, 2016
|
305
|
$33
|
$5,854
|
$9,559
|
23
|
|
$(1,038)
|
$(83)
|
$(27)
|
$8
|
$14,306
|
Net income
|
|
|
|
1,525
|
|
|
|
|
|
1,525
|
|
Common stock dividends ($2.76 per share)
|
|
|
|
(849)
|
|
|
|
|
|
(849)
|
|
Issuance of common shares - public offering
|
5
|
1
|
344
|
|
|
|
(2)
|
|
|
343
|
|
Issuance of common shares for stock plans
|
|
|
100
|
|
|
|
|
|
|
100
|
|
Other comprehensive income
|
|
|
|
|
|
|
|
1
|
|
1
|
|
Noncontrolling interest
|
|
|
|
|
|
|
|
|
(1)
|
(1)
|
|
BALANCE AS OF DECEMBER 31, 2017
|
310
|
$34
|
$6,298
|
$10,235
|
23
|
|
$(1,038)
|
$(85)
|
$(26)
|
$7
|
$15,425
|
Net income
|
|
|
|
1,382
|
|
|
|
|
|
$1,382
|
|
Common stock dividends ($2.86 per share)
|
|
|
|
(889)
|
|
|
|
|
|
(889)
|
|
Issuance of common shares - public offering
|
11
|
|
719
|
|
|
|
(14)
|
|
|
705
|
|
Issuance of common shares for stock plans
|
|
|
100
|
|
|
|
|
|
|
100
|
|
Other comprehensive income
|
|
|
|
|
|
|
|
10
|
|
10
|
|
Noncontrolling interest
|
|
|
|
|
|
|
|
|
106
|
106
|
|
BALANCE AS OF DECEMBER 31, 2018
|
321
|
$34
|
$7,117
|
$10,728
|
23
|
|
$(1,038)
|
$(99)
|
$(16)
|
$113
|
$16,839
|
CON EDISON ANNUAL REPORT 2018
|
95
|
|
Shares outstanding
December 31,
|
|
At December 31,
|
||||||
(In Millions)
|
2018
|
|
|
2017
|
|
|
2018
|
|
2017
|
TOTAL EQUITY BEFORE ACCUMULATED OTHER COMPREHENSIVE LOSS
|
321
|
|
|
310
|
|
|
$16,742
|
|
$15,444
|
Pension plan liability adjustments, net of taxes
|
|
|
|
|
(12)
|
|
(23)
|
||
Unrealized 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
|
|
|
|
|
(4)
|
|
(3)
|
||
TOTAL ACCUMULATED OTHER COMPREHENSIVE LOSS, NET OF TAXES
|
|
|
|
|
(16)
|
|
(26)
|
||
Equity
|
|
|
|
|
16,726
|
|
15,418
|
||
Noncontrolling interest
|
|
|
|
|
113
|
|
7
|
||
TOTAL EQUITY (See Statement of Equity)
|
|
|
|
|
$16,839
|
|
$15,425
|
96
|
CON EDISON ANNUAL REPORT 2018
|
LONG-TERM DEBT
(Millions of Dollars)
|
|
|
|
At December 31,
|
||||||
Maturity
|
Interest Rate
|
|
Series
|
|
2018
|
|
|
2017
|
|
|
DEBENTURES:
|
|
|
|
|
|
|
|
|||
2018
|
5.85%
|
|
2008A
|
|
|
$—
|
|
|
$600
|
|
2018
|
6.15
|
|
2008A
|
|
—
|
|
|
50
|
||
2018
|
7.125
|
|
2008C
|
|
—
|
|
|
600
|
||
2019
|
4.96
|
|
2009A
|
|
60
|
|
60
|
|||
2019
|
6.65
|
|
2009B
|
|
475
|
|
475
|
|||
2020
|
4.45
|
|
2010A
|
|
350
|
|
350
|
|||
2020
|
2.00
|
|
2017A
|
|
400
|
|
400
|
|
||
2021
|
Variable
|
|
2018C
|
|
640
|
|
—
|
|
||
2021
|
2.00
|
|
2016A
|
|
500
|
|
500
|
|||
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
|
|
—
|
|
||
2028
|
4.00
|
|
2018D
|
|
500
|
|
—
|
|
||
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
|
|||
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
|
|
—
|
|
||
2048
|
4.35
|
|
2018A
|
|
125
|
|
—
|
|
||
2048
|
4.35
|
|
2018B
|
|
25
|
|
—
|
|
||
2054
|
4.625
|
|
2014C
|
|
750
|
|
750
|
|||
2056
|
4.30
|
|
2016C
|
|
500
|
|
500
|
|||
2057
|
4.00
|
|
2017C
|
|
350
|
|
350
|
|||
2058
|
4.50
|
|
2018B
|
|
700
|
|
—
|
|
||
TOTAL DEBENTURES
|
|
|
|
|
15,500
|
|
13,860
|
CON EDISON ANNUAL REPORT 2018
|
97
|
LONG-TERM DEBT
(Millions of Dollars)
|
|
|
|
At December 31,
|
|||||||
Maturity
|
Interest Rate
|
|
Series
|
|
2018
|
|
|
2017
|
|
||
TAX-EXEMPT DEBT - Notes issued to New York State Energy Research and Development Authority for Facilities Revenue Bonds:
|
|
|
|
|
|
|
|||||
2032
|
|
|
|
2004B Series 1
|
|
—
|
|
|
127
|
||
2034
|
|
|
|
1999A
|
|
—
|
|
|
293
|
||
2035
|
|
|
|
2004B Series 2
|
|
—
|
|
|
20
|
||
2036
|
|
|
|
2001B
|
|
—
|
|
|
98
|
||
2036
|
1.74
|
(a)
|
|
2010A
|
|
225
|
|
225
|
|||
2039
|
|
|
|
2004A
|
|
—
|
|
|
98
|
||
2039
|
1.75
|
(a)
|
|
2004C
|
|
99
|
|
99
|
|||
2039
|
1.71
|
(a)
|
|
2005A
|
|
126
|
|
126
|
|||
TOTAL TAX-EXEMPT DEBT
|
|
|
|
|
450
|
|
1,086
|
||||
PROJECT DEBT:
|
|
|
|
|
|
|
|
||||
2023
|
Variable
|
|
|
Copper Mountain Solar 2
|
|
230
|
|
—
|
|
||
2024-2032
|
Variable - 4.52
|
|
|
Coram
|
|
160
|
|
170
|
|||
2025
|
Variable
|
|
|
Copper Mountain Solar 3
|
|
298
|
|
—
|
|
||
2028
|
4.41
|
|
|
Wind Holdings
|
|
137
|
|
—
|
|
||
2028
|
Variable
|
|
|
Copper Mountain Solar 1
|
|
70
|
|
—
|
|
||
2031
|
3.03 - 2.24
|
|
|
Mesquite Solar 1
|
|
208
|
|
—
|
|
||
2031-2038
|
5.25 - 4.95
|
|
|
Texas Solar 4
|
|
58
|
|
61
|
|||
2036
|
3.94
|
|
|
California Solar 2
|
|
103
|
|
110
|
|||
2036
|
4.07
|
|
|
California Solar 3
|
|
89
|
|
93
|
|||
2037
|
4.78
|
|
|
California Solar
|
|
190
|
—
|
|
—
|
|
|
2039
|
4.82
|
|
|
Broken Bow II
|
|
69
|
|
—
|
|
||
2040
|
4.53
|
|
|
Texas Solar 5
|
|
150
|
|
155
|
|||
2041
|
4.21
|
|
|
Texas Solar 7
|
|
206
|
|
214
|
|||
2042
|
4.45
|
|
|
Upton County Solar
|
|
94
|
|
97
|
|||
Other project debt
|
|
|
|
|
|
14
|
|
15
|
|||
TOTAL PROJECT DEBT
|
|
|
|
|
2,076
|
|
915
|
||||
Other long-term debt
|
|
|
|
|
304
|
|
310
|
||||
Unamortized debt expense
|
|
|
|
|
(152)
|
|
(113)
|
||||
Unamortized debt discount
|
|
|
|
|
(33)
|
|
(29)
|
||||
TOTAL
|
|
|
|
|
|
18,145
|
|
16,029
|
|||
Less: Long-term debt due within one year
|
|
|
|
|
650
|
|
1,298
|
||||
TOTAL LONG-TERM DEBT
|
|
|
|
|
17,495
|
|
14,731
|
||||
TOTAL CAPITALIZATION
|
|
|
|
|
$34,221
|
|
$30,149
|
98
|
CON EDISON ANNUAL REPORT 2018
|
|
/s/ John McAvoy
|
|
John McAvoy
|
|
Chairman and Chief Executive Officer
|
|
|
|
/s/ Robert Hoglund
|
|
Robert Hoglund
|
|
Senior Vice President and Chief Financial Officer
|
CON EDISON ANNUAL REPORT 2018
|
99
|
100
|
CON EDISON ANNUAL REPORT 2018
|
CON EDISON ANNUAL REPORT 2018
|
101
|
|
For the Years Ended December 31,
|
||||
(Millions of Dollars)
|
2018
|
|
2017
|
|
2016
|
OPERATING REVENUES
|
|
|
|
|
|
Electric
|
$7,971
|
|
$7,972
|
|
$8,106
|
Gas
|
2,078
|
|
1,901
|
|
1,508
|
Steam
|
631
|
|
595
|
|
551
|
TOTAL OPERATING REVENUES
|
10,680
|
|
10,468
|
|
10,165
|
OPERATING EXPENSES
|
|
|
|
|
|
Purchased power
|
1,433
|
|
1,415
|
|
1,568
|
Fuel
|
263
|
|
216
|
|
172
|
Gas purchased for resale
|
643
|
|
510
|
|
319
|
Other operations and maintenance
|
2,555
|
|
2,526
|
|
2,617
|
Depreciation and amortization
|
1,276
|
|
1,195
|
|
1,106
|
Taxes, other than income taxes
|
2,156
|
|
2,057
|
|
1,932
|
TOTAL OPERATING EXPENSES
|
8,326
|
|
7,919
|
|
7,714
|
OPERATING INCOME
|
2,354
|
|
2,549
|
|
2,451
|
OTHER INCOME (DEDUCTIONS)
|
|
|
|
|
|
Investment and other income
|
13
|
|
14
|
|
8
|
Allowance for equity funds used during construction
|
11
|
|
10
|
|
8
|
Other deductions
|
(167)
|
|
(161)
|
|
(205)
|
TOTAL OTHER INCOME (DEDUCTIONS)
|
(143)
|
|
(137)
|
|
(189)
|
INCOME BEFORE INTEREST AND INCOME TAX EXPENSE
|
2,211
|
|
2,412
|
|
2,262
|
INTEREST EXPENSE
|
|
|
|
|
|
Interest on long-term debt
|
662
|
|
615
|
|
588
|
Other interest
|
36
|
|
14
|
|
19
|
Allowance for borrowed funds used during construction
|
(9)
|
|
(6)
|
|
(4)
|
NET INTEREST EXPENSE
|
689
|
|
623
|
|
603
|
INCOME BEFORE INCOME TAX EXPENSE
|
1,522
|
|
1,789
|
|
1,659
|
INCOME TAX EXPENSE
|
326
|
|
685
|
|
603
|
NET INCOME
|
$1,196
|
|
$1,104
|
|
$1,056
|
102
|
CON EDISON ANNUAL REPORT 2018
|
|
For the Years Ended December 31,
|
||||
(Millions of Dollars)
|
2018
|
|
2017
|
|
2016
|
NET INCOME
|
$1,196
|
|
$1,104
|
|
$1,056
|
OTHER COMPREHENSIVE INCOME, NET OF TAXES
|
|
|
|
|
|
Pension and other postretirement benefit plan liability adjustments, net of taxes
|
1
|
|
1
|
|
2
|
TOTAL OTHER COMPREHENSIVE INCOME, NET OF TAXES
|
1
|
|
1
|
|
2
|
COMPREHENSIVE INCOME
|
$1,197
|
|
$1,105
|
|
$1,058
|
CON EDISON ANNUAL REPORT 2018
|
103
|
|
For the Years Ended December 31,
|
|||||
(Millions of Dollars)
|
2018
|
|
2017
|
|
2016
|
|
OPERATING ACTIVITIES
|
|
|
|
|||
Net income
|
$1,196
|
$1,104
|
$1,056
|
|||
PRINCIPAL NON-CASH CHARGES/(CREDITS) TO INCOME
|
|
|
|
|||
Depreciation and amortization
|
1,276
|
1,195
|
1,106
|
|||
Deferred income taxes
|
354
|
575
|
545
|
|||
Rate case amortization and accruals
|
(133)
|
(142)
|
(227)
|
|||
Common equity component of allowance for funds used during construction
|
(11)
|
(10)
|
(8)
|
|||
Unbilled revenue and net unbilled revenue deferrals
|
(4)
|
(17)
|
(36)
|
|||
Other non-cash items, net
|
13
|
(59)
|
5
|
|||
CHANGES IN ASSETS AND LIABILITIES
|
|
|
|
|||
Accounts receivable - customers
|
(153)
|
15
|
(23)
|
|||
Materials and supplies, including fuel oil and gas in storage
|
(17)
|
(17)
|
18
|
|||
Other receivables and other current assets
|
(96)
|
23
|
(11)
|
|||
Accounts receivables from affiliated companies
|
(150)
|
45
|
81
|
|||
Prepayments
|
(9)
|
(8)
|
13
|
|||
Accounts payable
|
(27)
|
125
|
20
|
|||
Accounts payable to affiliated companies
|
7
|
|
—
|
|
(2)
|
|
Pensions and retiree benefits obligations, net
|
293
|
370
|
579
|
|||
Pensions and retiree benefits contributions
|
(440)
|
(420)
|
(476)
|
|||
Superfund and environmental remediation costs, net
|
(18)
|
(12)
|
79
|
|||
Accrued taxes
|
(47)
|
52
|
1
|
|||
Accrued taxes to affiliated companies
|
(72)
|
(47)
|
117
|
|||
Accrued interest
|
(1)
|
2
|
(7)
|
|||
System benefit charge
|
86
|
85
|
221
|
|||
Deferred charges, noncurrent assets and other regulatory assets
|
(314)
|
2,212
|
(172)
|
|||
Deferred credits and other regulatory liabilities
|
549
|
(2,242)
|
179
|
|||
Other current and noncurrent liabilities
|
(78)
|
37
|
(20)
|
|||
NET CASH FLOWS FROM OPERATING ACTIVITIES
|
2,204
|
2,866
|
3,038
|
|||
INVESTING ACTIVITIES
|
|
|
|
|||
Utility construction expenditures
|
(3,051)
|
(2,840)
|
(2,672)
|
|||
Cost of removal less salvage
|
(255)
|
(240)
|
(203)
|
|||
Proceeds from the transfer of assets to NY Transco
|
—
|
|
—
|
|
122
|
|
NET CASH FLOWS USED IN INVESTING ACTIVITIES
|
(3,306)
|
(3,080)
|
(2,753)
|
|||
FINANCING ACTIVITIES
|
|
|
|
|||
Net (payment)/issuance of short-term debt
|
1,042
|
(450)
|
(433)
|
|||
Issuance of long-term debt
|
2,740
|
1,200
|
1,300
|
|||
Retirement of long-term debt
|
(1,836)
|
—
|
|
(650)
|
||
Debt issuance costs
|
(30)
|
(15)
|
(13)
|
|||
Capital contribution by parent
|
120
|
301
|
100
|
|||
Dividend to parent
|
(846)
|
(796)
|
(744)
|
|||
NET CASH FLOWS FROM/(USED IN) FINANCING ACTIVITIES
|
1,190
|
240
|
(440)
|
|||
CASH, TEMPORARY CASH INVESTMENTS AND RESTRICTED CASH:
|
|
|
|
|||
NET CHANGE FOR THE PERIOD
|
88
|
26
|
(155)
|
|||
BALANCE AT BEGINNING OF PERIOD
|
730
|
704
|
859
|
|||
BALANCE AT END OF PERIOD
|
$818
|
$730
|
$704
|
|||
|
|
|
|
|||
SUPPLEMENTAL DISCLOSURE OF CASH INFORMATION
|
|
|
|
|||
Cash paid/(received) during the period for:
|
|
|
|
|||
Interest
|
$662
|
$602
|
$581
|
|||
Income taxes
|
$195
|
$108
|
($162)
|
|||
SUPPLEMENTAL DISCLOSURE OF NON-CASH INFORMATION
|
|
|
|
|||
Construction expenditures in accounts payable
|
$299
|
$351
|
$295
|
|||
Software licenses acquired but unpaid as of end of period
|
$95
|
—
|
|
—
|
|
104
|
CON EDISON ANNUAL REPORT 2018
|
(Millions of Dollars)
|
December 31, 2018
|
|
December 31, 2017
|
ASSETS
|
|
|
|
CURRENT ASSETS
|
|
|
|
Cash and temporary cash investments
|
$818
|
|
$730
|
Accounts receivable – customers, less allowance for uncollectible accounts of $57 and $58 in 2018 and 2017, respectively
|
1,163
|
|
1,009
|
Other receivables, less allowance for uncollectible accounts of $3 and $7 in 2018 and 2017, respectively
|
211
|
|
92
|
Taxes receivable
|
5
|
|
19
|
Accrued unbilled revenue
|
392
|
|
454
|
Accounts receivable from affiliated companies
|
214
|
|
64
|
Fuel oil, gas in storage, materials and supplies, at average cost
|
304
|
|
287
|
Prepayments
|
117
|
|
108
|
Regulatory assets
|
64
|
|
62
|
Other current assets
|
69
|
|
84
|
TOTAL CURRENT ASSETS
|
3,357
|
|
2,909
|
INVESTMENTS
|
385
|
|
383
|
UTILITY PLANT AT ORIGINAL COST
|
|
|
|
Electric
|
28,595
|
|
27,299
|
Gas
|
8,295
|
|
7,499
|
Steam
|
2,562
|
|
2,473
|
General
|
3,056
|
|
2,753
|
TOTAL
|
42,508
|
|
40,024
|
Less: Accumulated depreciation
|
8,988
|
|
8,321
|
Net
|
33,520
|
|
31,703
|
Construction work in progress
|
1,850
|
|
1,502
|
NET UTILITY PLANT
|
35,370
|
|
33,205
|
NON-UTILITY PROPERTY
|
|
|
|
Non-utility property, less accumulated depreciation of $25 in 2018 and 2017
|
4
|
|
4
|
NET PLANT
|
35,374
|
|
33,209
|
OTHER NONCURRENT ASSETS
|
|
|
|
Regulatory assets
|
3,923
|
|
3,863
|
Other deferred charges and noncurrent assets
|
69
|
|
87
|
TOTAL OTHER NONCURRENT ASSETS
|
3,992
|
|
3,950
|
TOTAL ASSETS
|
$43,108
|
|
$40,451
|
CON EDISON ANNUAL REPORT 2018
|
105
|
(Millions of Dollars)
|
December 31, 2018
|
|
|
December 31, 2017
|
LIABILITIES AND SHAREHOLDER’S EQUITY
|
|
|
|
|
CURRENT LIABILITIES
|
|
|
|
|
Long-term debt due within one year
|
$475
|
|
$1,200
|
|
Notes payable
|
1,192
|
|
150
|
|
Accounts payable
|
977
|
|
1,057
|
|
Accounts payable to affiliated companies
|
17
|
|
10
|
|
Customer deposits
|
339
|
|
334
|
|
Accrued taxes
|
55
|
|
102
|
|
Accrued taxes to affiliated companies
|
—
|
|
|
72
|
Accrued interest
|
112
|
|
113
|
|
Accrued wages
|
99
|
|
95
|
|
Fair value of derivative liabilities
|
25
|
|
12
|
|
Regulatory liabilities
|
73
|
|
65
|
|
System benefit charge
|
569
|
|
483
|
|
Other current liabilities
|
267
|
|
245
|
|
TOTAL CURRENT LIABILITIES
|
4,200
|
|
3,938
|
|
NONCURRENT LIABILITIES
|
|
|
|
|
Provision for injuries and damages
|
141
|
|
147
|
|
Pensions and retiree benefits
|
952
|
|
1,140
|
|
Superfund and other environmental costs
|
693
|
|
637
|
|
Asset retirement obligations
|
292
|
|
287
|
|
Fair value of derivative liabilities
|
6
|
|
31
|
|
Deferred income taxes and unamortized investment tax credits
|
5,739
|
|
5,306
|
|
Regulatory liabilities
|
4,258
|
|
4,219
|
|
Other deferred credits and noncurrent liabilities
|
241
|
|
242
|
|
TOTAL NONCURRENT LIABILITIES
|
12,322
|
|
12,009
|
|
LONG-TERM DEBT
|
13,676
|
|
12,065
|
|
COMMON SHAREHOLDER’S EQUITY (See Statement of Shareholder’s Equity)
|
12,910
|
|
12,439
|
|
TOTAL LIABILITIES AND SHAREHOLDER’S EQUITY
|
$43,108
|
|
$40,451
|
106
|
CON EDISON ANNUAL REPORT 2018
|
(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, 2015
|
235
|
|
$589
|
$4,247
|
$7,611
|
$(962)
|
$(61)
|
$(9)
|
$11,415
|
Net income
|
|
|
|
1,056
|
|
|
|
1,056
|
|
Common stock dividend to parent
|
|
|
|
(744)
|
|
|
|
(744)
|
|
Capital contribution by parent
|
|
|
100
|
|
|
|
|
100
|
|
Other comprehensive income
|
|
|
|
|
|
|
2
|
2
|
|
BALANCE AS OF DECEMBER 31, 2016
|
235
|
|
$589
|
$4,347
|
$7,923
|
$(962)
|
$(61)
|
$(7)
|
$11,829
|
Net income
|
|
|
|
|
$1,104
|
|
|
|
1,104
|
Common stock dividend to parent
|
|
|
|
(796)
|
|
|
|
(796)
|
|
Capital contribution by parent
|
|
|
302
|
|
|
(1)
|
|
301
|
|
Other comprehensive income
|
|
|
|
|
|
|
|
1
|
1
|
BALANCE AS OF DECEMBER 31, 2017
|
235
|
|
$589
|
$4,649
|
$8,231
|
$(962)
|
$(62)
|
$(6)
|
$12,439
|
Net income
|
|
|
|
1,196
|
|
|
|
1,196
|
|
Common stock dividend to parent
|
|
|
|
(846)
|
|
|
|
(846)
|
|
Capital contribution by parent
|
|
|
120
|
|
|
|
|
120
|
|
Other comprehensive income
|
|
|
|
|
|
|
1
|
1
|
|
BALANCE AS OF DECEMBER 31, 2018
|
235
|
|
$589
|
$4,769
|
$8,581
|
$(962)
|
$(62)
|
$(5)
|
$12,910
|
CON EDISON ANNUAL REPORT 2018
|
107
|
|
Shares outstanding
|
|
|
|||||||
|
December 31,
|
|
At December 31,
|
|||||||
(In Millions)
|
2018
|
|
|
2017
|
|
|
2018
|
|
|
2017
|
TOTAL SHAREHOLDER’S EQUITY BEFORE ACCUMULATED OTHER COMPREHENSIVE LOSS
|
235
|
|
|
235
|
|
|
$12,915
|
|
$12,445
|
|
Pension plan liability adjustments, net of taxes
|
|
|
|
|
—
|
|
|
(3)
|
||
Unrealized losses on derivatives qualified as cash flow hedges, less reclassification adjustment for losses included in net income and reclassification adjustment for unrealized losses included in regulatory assets, net of taxes
|
|
|
|
|
(5)
|
|
(3)
|
|||
TOTAL ACCUMULATED OTHER COMPREHENSIVE LOSS, NET OF TAXES
|
|
|
|
|
(5)
|
|
(6)
|
|||
TOTAL SHAREHOLDER’S EQUITY (See Statement of Shareholder’s Equity)
|
|
|
|
|
$12,910
|
|
$12,439
|
108
|
CON EDISON ANNUAL REPORT 2018
|
LONG-TERM DEBT
(Millions of Dollars)
|
|
|
|
At December 31,
|
|||||||
Maturity
|
Interest Rate
|
|
Series
|
|
2018
|
|
|
2017
|
|
||
DEBENTURES:
|
|
|
|
|
|
|
|
|
|||
2018
|
5.85%
|
|
|
2008A
|
|
|
$—
|
|
|
$600
|
|
2018
|
7.125
|
|
|
2008C
|
|
—
|
|
|
600
|
||
2019
|
6.65
|
|
|
2009B
|
|
475
|
|
475
|
|||
2020
|
4.45
|
|
|
2010A
|
|
350
|
|
350
|
|||
2021
|
Variable
|
|
|
2018C
|
|
640
|
|
—
|
|
||
2024
|
3.30
|
|
|
2014B
|
|
250
|
|
250
|
|||
2026
|
2.90
|
|
|
2016B
|
|
250
|
|
250
|
|||
2027
|
3.125
|
|
|
2017B
|
|
350
|
|
350
|
|||
2028
|
3.80
|
|
|
2018A
|
|
300
|
|
—
|
|
||
2028
|
4.00
|
|
|
2018D
|
|
500
|
|
—
|
|
||
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
|
|
—
|
|
||
2054
|
4.625
|
|
|
2014C
|
|
750
|
|
750
|
|||
2056
|
4.30
|
|
|
2016C
|
|
500
|
|
500
|
|||
2057
|
4.00
|
|
|
2017C
|
|
350
|
|
350
|
|||
2058
|
4.50
|
|
|
2018B
|
|
700
|
|
—
|
|
||
TOTAL DEBENTURES
|
|
|
|
|
13,840
|
|
12,300
|
||||
TAX-EXEMPT DEBT – Notes issued to New York State Energy Research and Development Authority for Facilities Revenue Bonds:
|
|
|
|
|
|
|
|||||
2032
|
|
|
|
2004B Series 1
|
|
—
|
|
|
127
|
||
2034
|
|
|
|
1999A
|
|
—
|
|
|
293
|
||
2035
|
|
|
|
2004B Series 2
|
|
—
|
|
|
20
|
||
2036
|
|
|
|
2001B
|
|
—
|
|
|
98
|
||
2036
|
1.74
|
(a)
|
|
2010A
|
|
225
|
|
225
|
|||
2039
|
|
|
|
2004A
|
|
—
|
|
|
98
|
||
2039
|
1.75
|
(a)
|
|
2004C
|
|
99
|
|
99
|
|||
2039
|
1.71
|
(a)
|
|
2005A
|
|
126
|
|
126
|
|||
TOTAL TAX-EXEMPT DEBT
|
|
450
|
|
1,086
|
|||||||
Unamortized debt expense
|
|
|
|
|
(107)
|
|
(94)
|
||||
Unamortized debt discount
|
|
|
|
|
(32)
|
|
(27)
|
||||
TOTAL
|
|
14,151
|
|
13,265
|
|||||||
Less: Long-term debt due within one year
|
|
475
|
|
1,200
|
|||||||
TOTAL LONG-TERM DEBT
|
|
|
|
|
13,676
|
|
12,065
|
||||
TOTAL CAPITALIZATION
|
|
$26,586
|
|
$24,504
|
CON EDISON ANNUAL REPORT 2018
|
109
|
110
|
CON EDISON ANNUAL REPORT 2018
|
(Millions of Dollars)
|
Revenues from contracts with customers
|
|
Other revenues (a)
|
Total operating revenues
|
|||
CECONY
|
|
|
|
|
|||
Electric
|
$7,920
|
|
$51
|
$7,971
|
|||
Gas
|
2,052
|
|
26
|
2,078
|
|||
Steam
|
625
|
|
6
|
631
|
|||
Total CECONY
|
$10,597
|
|
$83
|
$10,680
|
|||
O&R
|
|
|
|
|
|||
Electric
|
647
|
|
(5)
|
642
|
|||
Gas
|
256
|
|
(7)
|
249
|
|||
Total O&R
|
$903
|
|
$(12)
|
$891
|
|||
Clean Energy Businesses
|
|
|
|
|
|||
Renewables
|
329
|
(b)
|
—
|
|
329
|
||
Energy services
|
95
|
|
—
|
|
95
|
||
Other
|
—
|
|
|
339
|
339
|
||
Total Clean Energy Businesses
|
$424
|
|
$339
|
$763
|
|||
Con Edison Transmission
|
4
|
|
—
|
|
4
|
||
Other (c)
|
—
|
|
|
(1
|
)
|
(1
|
)
|
Total Con Edison
|
$11,928
|
|
$409
|
$12,337
|
CON EDISON ANNUAL REPORT 2018
|
111
|
(Millions of Dollars)
|
Unbilled contract revenue (a)
|
|
Unearned revenue (b)
|
|
Beginning balance as of January 1, 2018
|
$58
|
|
$87
|
|
Additions (c)
|
144
|
|
38
|
|
Subtractions (c)
|
173
|
|
105
|
(d)
|
Ending balance as of December 31, 2018
|
$29
|
|
$20
|
|
(a)
|
Unbilled contract revenue represents accumulated incurred costs and earned profits on contracts (revenue arrangements), which have been recorded as revenue, but have not yet been billed to customers, and which represent contract assets as defined in Topic 606. Substantially all accrued unbilled contract revenue is expected to be collected within one year. Unbilled contract revenue arises from the cost-to-cost method of revenue recognition. Unbilled contract revenue from fixed-price type contracts is converted to billed receivables when amounts are invoiced to customers according to contractual billing terms, which generally occur when deliveries or other performance milestones are completed.
|
(b)
|
Unearned revenue represents a liability for billings to customers in excess of earned revenue, which are contract liabilities as defined in Topic 606.
|
(c)
|
Additions for unbilled contract revenue and subtractions for unearned revenue represent additional revenue earned. Additions for unearned revenue and subtractions for unbilled contract revenue represent billings. Activity also includes appropriate balance sheet classification for the period.
|
(d)
|
Of the
$105 million
in subtractions from unearned revenue,
$50 million
was included in the balance as of December 31, 2017.
|
|
For the Years Ended December 31,
|
||||
(Millions of Dollars)
|
2018
|
|
2017
|
|
2016
|
Con Edison
|
$330
|
|
$302
|
|
$336
|
CECONY
|
318
|
|
292
|
|
316
|
112
|
CON EDISON ANNUAL REPORT 2018
|
|
Con Edison
|
|
CECONY
|
||||
(Millions of Dollars)
|
2018
|
|
2017
|
|
2018
|
|
2017
|
Electric
|
|
|
|
|
|
|
|
Generation
|
$593
|
|
$544
|
|
$592
|
|
$544
|
Transmission
|
3,333
|
|
3,210
|
|
3,106
|
|
2,990
|
Distribution
|
19,750
|
|
18,959
|
|
18,716
|
|
17,996
|
Gas (a)
|
7,714
|
|
6,976
|
|
7,107
|
|
6,403
|
Steam
|
1,830
|
|
1,798
|
|
1,830
|
|
1,798
|
General
|
2,306
|
|
2,105
|
|
2,102
|
|
1,905
|
Held for future use
|
76
|
|
76
|
|
67
|
|
67
|
Construction work in progress
|
1,978
|
|
1,605
|
|
1,850
|
|
1,502
|
Net Utility Plant
|
$37,580
|
|
$35,273
|
|
$35,370
|
|
$33,205
|
CON EDISON ANNUAL REPORT 2018
|
113
|
114
|
CON EDISON ANNUAL REPORT 2018
|
|
Con Edison
|
|
CECONY
|
|||||||||
(Millions of Dollars)
|
2018
|
|
|
2017
|
|
2018
|
|
|
2017
|
|
||
CET Gas investment in Stagecoach Gas Services, LLC
|
$948
|
|
$971
|
|
|
$—
|
|
|
|
$—
|
|
|
CET Gas investment in Mountain Valley Pipeline, LLC (a)
|
363
|
|
98
|
|
—
|
|
|
—
|
|
|||
Supplemental retirement income plan assets (c)
|
326
|
|
330
|
|
301
|
|
301
|
|||||
Deferred income plan assets
|
75
|
|
73
|
|
75
|
|
73
|
|||||
CET Electric investment in New York Transco, LLC
|
52
|
|
53
|
|
—
|
|
|
—
|
|
|||
Con Edison Development equity method investments (b)
|
—
|
|
|
467
|
|
—
|
|
|
—
|
|
||
Other
|
2
|
|
9
|
|
9
|
|
9
|
|||||
Total investments
|
$1,766
|
|
$2,001
|
|
$385
|
|
$383
|
(a)
|
See Note U.
|
(b)
|
Upon completion of the acquisition of Sempra Solar Holdings, LLC in December 2018, Con Edison is accounting on a consolidated basis for certain jointly-owned renewable electric production projects that previously were accounted for as equity method investments. See Note U.
|
(c)
|
See Note E.
|
CON EDISON ANNUAL REPORT 2018
|
115
|
116
|
CON EDISON ANNUAL REPORT 2018
|
|
For the Years Ended December 31,
|
||||
(Millions of Dollars)
|
2018
|
|
2017
|
|
2016
|
Con Edison
|
$24
|
|
$24
|
|
$24
|
CECONY
|
23
|
|
23
|
|
22
|
|
For the Years Ended December 31,
|
||||
(Millions of Dollars, except per share amounts/Shares in Millions)
|
2018
|
|
2017
|
|
2016
|
Net income
|
$1,382
|
|
$1,525
|
|
$1,245
|
Weighted average common shares outstanding – basic
|
311.7
|
|
307.1
|
|
300.4
|
Add: Incremental shares attributable to effect of potentially dilutive securities
|
1.2
|
|
1.7
|
|
1.5
|
Adjusted weighted average common shares outstanding – diluted
|
312.9
|
|
308.8
|
|
301.9
|
Net Income per common share – basic
|
$4.43
|
|
$4.97
|
|
$4.15
|
Net Income per common share – diluted
|
$4.42
|
|
$4.94
|
|
$4.12
|
CON EDISON ANNUAL REPORT 2018
|
117
|
(Millions of Dollars)
|
Con Edison
|
|
CECONY
|
|
Accumulated OCI, net of taxes, at December 31, 2015 (a)
|
$(34)
|
|
$(9)
|
|
OCI before reclassifications, net of tax of $(1) for Con Edison and CECONY
|
2
|
|
1
|
|
Amounts reclassified from accumulated OCI related to pension plan liabilities, net of tax of $(3) and $(1) for Con Edison and CECONY, respectively (a)(b)
|
5
|
|
1
|
|
Total OCI, net of taxes, at December 31, 2016
|
7
|
|
2
|
|
Accumulated OCI, net of taxes, at December 31, 2016 (a)
|
$(27)
|
|
$(7)
|
|
OCI before reclassifications, net of tax of $3 and $1 for Con Edison and CECONY, respectively
|
(4)
|
|
—
|
|
Amounts reclassified from accumulated OCI related to pension plan liabilities, net of tax of $(3) and $(1) for Con Edison and CECONY, respectively (a)(b)
|
5
|
|
1
|
|
Total OCI, net of taxes, at December 31, 2017
|
1
|
|
1
|
|
Accumulated OCI, net of taxes, at December 31, 2017 (a)
|
$(26)
|
|
$(6)
|
|
OCI before reclassifications, net of tax of $3 for Con Edison
|
4
|
|
—
|
|
Amounts reclassified from accumulated OCI related to pension plan liabilities, net of tax of $(2) for Con Edison (a)(b)
|
6
|
|
1
|
|
Total OCI, net of taxes, at December 31, 2018
|
10
|
|
1
|
|
Accumulated OCI, net of taxes, at December 31, 2018 (a)
|
$(16)
|
|
$(5)
|
(a)
|
Restricted cash included cash of Con Edison Development renewable electric production project subsidiaries (
$109 million
and
$46 million
at
December 31, 2018
and
2017
, respectively) that, under the related project debt agreements, is restricted until the various maturity dates of the project debt to being used for normal operating expenses and capital expenditures, debt service, and required reserves. Also, during the pendency of the PG&E bankruptcy, restricted cash may also include additional cash that, unless the lenders for the related project debt agree, may not be distributed from the related projects to Con Edison Development. See "Long-Lived and Intangible Assets,” above. In addition, restricted cash includes O&R's New Jersey utility subsidiary, Rockland Electric Company transition bond charge collections, net of principal, interest, trustee and service fees (
$2 million
and
$1 million
at
December 31, 2018
and
2017
, respectively) that are restricted until the bonds mature in 2019.
|
118
|
CON EDISON ANNUAL REPORT 2018
|
CECONY – Electric
|
|
|
|
|
Effective period
|
|
January 2014 – December 2016
|
|
January 2017 – December 2019 (b)
|
Base rate changes
|
|
Yr. 1 – $(76.2) million (a)
Yr. 2 – $124.0 million (a) Yr. 3 – None |
|
Yr. 1 – $195 million (c)
Yr. 2 – $155 million (c) Yr. 3 – $155 million (c) |
Amortizations to income of net regulatory (assets) and liabilities
|
|
Yr. 1 and 2 – $(37) million (d)
Yr. 3 – $123 million (d) |
|
Yr. 1 – $84 million
Yr. 2 – $83 million Yr. 3 – $69 million |
CON EDISON ANNUAL REPORT 2018
|
119
|
Other revenue sources
|
|
Retention of $90 million of annual transmission congestion revenues.
|
|
Retention of $75 million of annual transmission congestion revenues.
Potential earnings adjustment mechanism incentives for energy efficiency and other potential incentives of up to: Yr. 1 – $28 million Yr. 2 – $47 million Yr. 3 – $64 million In 2017 and 2018, the company recorded $13 million and $25 million of earnings adjustment mechanism incentives for energy efficiency, respectively. The company also achieved other incentives of $5 million in 2017 and 2018 that, pursuant to the rate plan, is being recorded ratably in earnings from 2018 to 2020. In 2018, the company recorded $3 million for service terminations. |
Revenue decoupling mechanisms
|
|
In 2014, 2015 and 2016, the company deferred for customer benefit $146 million, $98 million and $101 million of revenues, respectively.
|
|
Continuation of reconciliation of actual to authorized electric delivery revenues.
In 2017 and 2018, the company deferred for customer benefit $45 million and $(6) million of revenues, respectively. |
Recoverable energy costs (e)
|
|
Current rate recovery of purchased power and fuel costs.
|
|
Continuation of current rate recovery of purchased power and fuel costs.
|
Negative revenue adjustments
|
|
Potential penalties (up to $400 million annually) if certain performance targets are not met. In 2014, the company recorded a $5 million negative revenue adjustment. In 2015 and 2016, the company did not record any negative revenue adjustments.
|
|
Potential penalties if certain performance targets relating to service, reliability, safety and other matters are not met:
Yr. 1 – $376 million Yr. 2 – $341 million Yr. 3 – $352 million In 2017 and 2018, the company did not record any negative revenue adjustments. |
Cost reconciliations
|
|
In 2014, 2015 and 2016, the company deferred $57 million, $26 million and $68 million of net regulatory liabilities, respectively (f).
|
|
Continuation of reconciliation of expenses for pension and other postretirement benefits, variable-rate tax-exempt debt, major storms, property taxes (f), municipal infrastructure support costs (g), the impact of new laws and environmental site investigation and remediation to amounts reflected in rates (h).
In 2017 and 2018, the company deferred $35 million and $189 million of net regulatory assets, respectively. |
Net utility plant reconciliations
|
|
Target levels reflected in rates were:
Transmission and distribution: Yr. 1 – $16,869 million Yr. 2 – $17,401 million Yr. 3 – $17,929 million Storm hardening: Yr. 1 – $89 million; Yr. 2 – $177 million; Yr. 3 – $268 million Other: Yr. 1 – $2,034 million; Yr. 2 – $2,102 million; Yr. 3 – $2,069 million The company deferred $6 million and $17 million as a regulatory liability in 2014 and 2015, respectively. In 2016, $9 million was deferred as a regulatory asset. |
|
Target levels reflected in rates:
Electric average net plant target excluding advanced metering infrastructure (AMI): Yr. 1 – $21,689 million Yr. 2 – $22,338 million Yr. 3 – $23,002 million AMI: Yr. 1 – $126 million Yr. 2 – $257 million Yr. 3 – $415 million The company deferred $0.4 million as a regulatory asset in 2017. In 2018, $0.4 was deferred as a regulatory liability. |
Average rate base
|
|
Yr. 1 – $17,323 million
Yr. 2 – $18,113 million Yr. 3 – $18,282 million |
|
Yr. 1 – $18,902 million
Yr. 2 – $19,530 million Yr. 3 – $20,277 million |
Weighted average cost of capital (after-tax)
|
|
Yr. 1 – 7.05 percent
Yr. 2 – 7.08 percent Yr. 3 – 6.91 percent |
|
Yr. 1 – 6.82 percent
Yr. 2 – 6.80 percent Yr. 3 – 6.73 percent |
Authorized return on common equity
|
|
Yrs. 1 and 2 – 9.2 percent
Yr. 3 – 9.0 percent |
|
9.0 percent
|
Actual return on common equity
|
|
Yr. 1 – 9.04 percent
Yr. 2 – 10.16 percent Yr. 3 – 9.66 percent |
|
Yr. 1 – 9.30 percent
Yr. 2 – 9.36 percent |
120
|
CON EDISON ANNUAL REPORT 2018
|
Earnings sharing
|
|
Most earnings above an annual earnings threshold of 9.8 percent for Yrs. 1 and 2 and 9.6 percent for Yr. 3 are to be applied to reduce regulatory assets for environmental remediation and other costs. In 2014 the company had no earnings above the threshold. Actual earnings were $44.4 million and $6.5 million above the threshold for 2015 and 2016, respectively.
|
|
Most earnings above an annual earnings threshold of 9.5 percent are to be applied to reduce regulatory assets for environmental remediation and other costs accumulated in the rate year.
In 2017, the company had no earnings above the threshold but recorded a positive adjustment related to 2016 of $5.7 million in earnings. In 2018, the company had no earnings sharing above the threshold. |
Cost of long-term debt
|
|
Yr. 1 – 5.17 percent
Yr. 2 – 5.23 percent Yr. 3 – 5.09 percent |
|
Yr. 1 – 4.93 percent
Yr. 2 – 4.88 percent Yr. 3 – 4.74 percent |
Common equity ratio
|
|
48 percent
|
|
48 percent
|
(a)
|
The impact of these base rate changes was deferred; this amount was amortized to
$0
at December 31, 2016.
|
(b)
|
In January 2017, the NYSPSC approved the September 2016 Joint Proposal for CECONY's electric rate plan for January 2017 through December 2019. If at the end of any year, Con Edison’s investments in its non-utility businesses exceed
15 percent
of Con Edison’s total consolidated revenues, assets or cash flow, or if the ratio of holding company debt to total consolidated debt rises above
20 percent
, CECONY is required to notify the NYSPSC and submit a ring-fencing plan or a demonstration why additional ring-fencing measures (see Note S) are not necessary.
|
(c)
|
The electric base rate increases are in addition to a
$48 million
increase resulting from the December 2016 expiration of a temporary credit under the prior rate plan. At the NYSPSC’s option, these increases are being implemented with increases of
$199 million
in each rate year. Base rates reflect recovery by the company of certain costs of its energy efficiency, system peak reduction and electric vehicle programs (Yr. 1 -
$20.5 million
; Yr. 2 -
$49 million
; and Yr. 3 -
$107.5 million
) over a
ten
-year period, including the overall pre-tax rate of return on such costs.
|
(d)
|
Amounts reflect annual amortization of
$107 million
of the regulatory asset for deferred Superstorm Sandy and other major storm costs. The costs recoverable from customers were reduced by
$4 million
. The costs are no longer subject to NYSPSC staff review and the recovery of the costs is no longer subject to refund. In 2016, an additional
$123 million
of net regulatory liabilities were amortized to income.
|
(e)
|
For transmission service provided pursuant to the open access transmission tariff of PJM Interconnection LLC (PJM), unless and until changed by the NYSPSC, the company will recover all charges incurred associated with the transmission service. In April 2017, the transmission service terminated because CECONY did not exercise its option to continue the service. See "Other Regulatory Matters," below.
|
(f)
|
Deferrals for property taxes are limited to
90 percent
of the difference from amounts reflected in rates, subject to an annual maximum for the remaining difference of not more than a maximum number of basis points (
5.0
,
7.5
or
10.0 basis points
, depending on the year).
|
(g)
|
In general, if actual expenses for municipal infrastructure support (other than company labor) are below the amounts reflected in rates the company will defer the difference for credit to customers, and if the actual expenses are above the amount reflected in rates the company will defer for recovery from customers
80 percent
of the difference subject to a maximum deferral of
30 percent
of the amount reflected in rates.
|
(h)
|
In addition, amounts reflected in rates relating to the regulatory asset for future income tax and the excess deferred federal income tax liability are subject to reconciliation. The NYSPSC staff is to audit the regulatory asset and the tax liability. Differences resulting from the NYSPSC staff review will be deferred for NYSPSC determination of any amounts to be refunded or collected from customers. See "Other Regulatory Matters," below.
|
CON EDISON ANNUAL REPORT 2018
|
121
|
CECONY – Gas
|
|
|
|
|
Effective period
|
|
January 2014 – December 2016
|
|
January 2017 - December 2019 (b)
|
Base rate changes
|
|
Yr. 1 – $(54.6) million (a)
Yr. 2 – $38.6 million (a) Yr. 3 – $56.8 million (a) |
|
Yr. 1 – $(5) million (b)
Yr. 2 – $92 million (b) Yr. 3 – $90 million (b) |
Amortizations to income of net
regulatory (assets) and liabilities
|
|
$4 million over three years
|
|
Yr. 1 – $39 million
Yr. 2 – $37 million Yr. 3 – $36 million |
Other revenue sources
|
|
Retention of revenues from non-firm customers of up to $65 million and 15 percent of any such revenues above $65 million. The company retained $70 million, $66 million and $65 million of such revenues in 2014, 2015 and 2016, respectively.
|
|
Retention of annual revenues from non-firm customers of up to $65 million and 15 percent of any such revenues above $65 million.
Potential incentives if performance targets related to gas leak backlog, leak prone pipe and service terminations are met: Yr. 1 – $7 million Yr. 2 – $8 million Yr. 3 – $8 million In 2017 and 2018, the company achieved incentives of $7 million and $6 million, respectively that, pursuant to the rate plan, is being recorded ratably in earnings from 2018 to 2020. In 2018, the company recorded $5 million for gas leak backlog, leak prone pipe and service terminations. |
Revenue decoupling mechanisms
|
|
In 2014, 2015 and 2016, the company deferred $28 million, $54 million and $71 million of regulatory liabilities, respectively.
|
|
Continuation of reconciliation of actual to authorized gas delivery revenues.
In 2017 and 2018, the company deferred $3 million and $12 million of regulatory liabilities, respectively. |
Recoverable energy costs
|
|
Current rate recovery of purchased gas costs.
|
|
Continuation of current rate recovery of purchased gas costs.
|
Negative revenue adjustments
|
|
Potential penalties (up to $33 million in 2014, $44 million in 2015, and $56 million in 2016) if certain gas performance targets are not met. In 2014, 2015 and 2016, the company did not record any negative revenue adjustments.
|
|
Potential penalties if performance targets relating to service, safety and other matters are not met:
Yr. 1 – $68 million Yr. 2 – $63 million Yr. 3 – $70 million In 2017 and 2018, the company recorded $5 million and $4 million of negative revenue adjustments, respectively. |
Cost reconciliations
|
|
In 2014, 2015 and 2016, the company deferred $38 million, $11 million, and $32 million of net regulatory liabilities, respectively. (c)
|
|
Continuation of reconciliation of expenses for pension and other postretirement benefits, variable-rate tax-exempt debt, major storms, property taxes, municipal infrastructure support costs, the impact of new laws and environmental site investigation and remediation to amounts reflected in rates. (d)
In 2017 and 2018, the company deferred $2 million of net regulatory liabilities and $44 million of net regulatory assets, respectively. |
Net utility plant reconciliations
|
|
Target levels reflected in rates were:
Gas delivery Yr. 1 – $3,899 million; Yr. 2 – $4,258 million; Yr. 3 – $4,698 million Storm hardening: Yr. 1 – $3 million; Yr. 2 – $8 million; Yr. 3 – $30 million In 2015 $1 million was deferred as a regulatory liability. In 2014 and 2016 the company deferred an immaterial amount. |
|
Target levels reflected in rates:
Gas average net plant target excluding AMI: Yr. 1 – $5,844 million Yr. 2 – $6,512 million Yr. 3 – $7,177 million AMI: Yr. 1 – $27 million Yr. 2 – $57 million Yr. 3 – $100 million In 2017 and 2018 the company deferred $2.2 million as regulatory liabilities. |
Average rate base
|
|
Yr. 1 – $3,521 million
Yr. 2 – $3,863 million Yr. 3 – $4,236 million |
|
Yr. 1 – $4,841 million
Yr. 2 – $5,395 million Yr. 3 – $6,005 million |
Weighted average cost of capital
(after-tax) |
|
Yr. 1 – 7.10 percent
Yr. 2 – 7.13 percent Yr. 3 – 7.21 percent |
|
Yr. 1 – 6.82 percent
Yr. 2 – 6.80 percent Yr. 3 – 6.73 percent |
Authorized return on common equity
|
|
9.3 percent
|
|
9.0 percent
|
Actual return on common equity
|
|
Yr. 1 – 8.02 percent
Yr. 2 – 8.13 percent Yr. 3 – 7.83 percent |
|
Yr. 1 – 9.22 percent
Yr. 2 – 9.04 percent |
122
|
CON EDISON ANNUAL REPORT 2018
|
Earnings sharing
|
|
Most earnings above an annual earnings threshold of 9.9 percent are to be applied to reduce regulatory assets for environmental remediation and other costs. In 2014, 2015 and 2016, the company had no earnings above the threshold.
|
|
Most earnings above an annual earnings threshold of 9.5 percent are to be applied to reduce regulatory assets for environmental remediation and other costs accumulated in the rate year.
In 2017 and 2018, the company had no earnings above the threshold. |
Cost of long-term debt
|
|
Yr. 1 – 5.17 percent
Yr. 2 – 5.23 percent Yr. 3 – 5.39 percent |
|
Yr. 1 – 4.93 percent
Yr. 2 – 4.88 percent Yr. 3 – 4.74 percent |
Common equity ratio
|
|
48 percent
|
|
48 percent
|
(a)
|
The impact of these base rate changes was deferred which resulted in a
$32 million
regulatory liability at December 31, 2016.
|
(b)
|
In January 2017, the NYSPSC approved the September 2016 Joint Proposal for CECONY's gas rate plan for January 2017 through December 2019. The gas base rate decrease is offset by a
$41 million
increase resulting from the December 2016 expiration of a temporary credit under the prior rate plan.
|
(c)
|
Deferrals for property taxes are limited to
90 percent
of the difference from amounts reflected in rates, subject to an annual maximum for the remaining difference of not more than a
10 basis point
impact on return on common equity
|
(d)
|
See footnotes (e), (f), (g) and (h) to the table under "CECONY - Electric" above.
|
CON EDISON ANNUAL REPORT 2018
|
123
|
CECONY – Steam
|
|
|
|
|
Effective period
|
|
January 2014 – December 2016 (a)
|
|
|
Base rate changes
|
|
Yr. 1 – $(22.4) million (b)
Yr. 2 – $19.8 million (b) Yr. 3 – $20.3 million (b) Yr. 4 – None Yr. 5 – None |
|
|
Amortizations to income of net
regulatory (assets) and liabilities
|
|
$37 million over three years
|
|
|
Recoverable energy costs
|
|
Current rate recovery of purchased power and fuel costs.
|
|
|
Negative revenue adjustments
|
|
Potential penalties (up to $1 million annually) if certain steam performance targets are not met. In 2014, 2015, 2016 and 2017 and 2018, the company did not record any negative revenue adjustments.
|
|
|
Cost reconciliations (c)
|
|
In 2014, 2015, 2016 2017 and 2018, the company deferred $42 million of net regulatory liabilities, $17 million of net regulatory assets, $8 million and $14 million of net regulatory liabilities, and $1 million of net regulatory assets, respectively.
|
|
|
Net utility plant reconciliations
|
|
Target levels reflected in rates were:
Production: Yr. 1 – $1,752 million; Yr. 2 – $1,732 million; Yr. 3 – $1,720 million Distribution: Yr. 1 – $6 million; Yr. 2 – $11 million; Yr. 3 – $25 million The company reduced its regulatory liability by $0.1 million in 2014 and immaterial amounts in 2015 and 2016 and no deferrals were recorded in 2017 and 2018. |
|
|
Average rate base
|
|
Yr. 1 – $1,511 million
Yr. 2 – $1,547 million Yr. 3 – $1,604 million |
|
|
Weighted average cost of capital (after-tax)
|
|
Yr. 1 – 7.10 percent
Yr. 2 – 7.13 percent Yr. 3 – 7.21 percent |
|
|
Authorized return on common equity
|
|
9.3 percent
|
|
|
Actual return on common equity
|
|
Yr. 1 – 9.82 percent
Yr. 2 – 10.88 percent Yr. 3 – 10.54 percent Yr. 4 – 9.51 percent Yr. 5 – 11.73 percent |
|
|
Earnings sharing
|
|
Weather normalized earnings above an annual earnings threshold of 9.9 percent are to be applied to reduce regulatory assets for environmental remediation and other costs.
In 2014, the company had no earnings above the threshold. Actual earnings were $11.5 million and $7.8 million above the threshold in 2015 and 2016, respectively. In 2017, actual earnings were $8.5 million above the threshold, offset in part by a positive adjustment related to 2016 of $4 million. In 2018, actual earnings were $14.2 million above the threshold, and an additional $1.1 million related to 2017 was recorded. |
|
|
Cost of long-term debt
|
|
Yr. 1 – 5.17 percent
Yr. 2 – 5.23 percent Yr. 3 – 5.39 percent |
|
|
Common equity ratio
|
|
48 percent
|
|
|
(a)
|
Rates determined pursuant to this rate plan continue in effect until a new rate plan is approved by the NYSPSC.
|
(b)
|
The impact of these base rate changes was deferred which resulted in an
$8 million
regulatory liability at December 31, 2016.
|
(c)
|
Deferrals for property taxes are limited to
90 percent
of the difference from amounts reflected in rates, subject to an annual maximum for the remaining difference of not more than a
10 basis point
impact on return on common equity.
|
124
|
CON EDISON ANNUAL REPORT 2018
|
O&R New York – Electric
|
|
|
|
|
Effective period
|
|
November 2015 - October 2017 (a)
|
|
January 2019 – December 2021 (d)
|
Base rate changes
|
|
Yr. 1 – $9.3 million
Yr. 2 – $8.8 million Yr. 3 – None |
|
Yr. 1 – $13.4 million (e)
Yr. 2 – $8.0 million (e) Yr. 3 – $5.8 million (e) |
Amortizations to income of net
regulatory (assets) and liabilities
|
|
Yr. 1 – $(8.5) million (b)
Yr. 2 – $(9.4) million (b) Yr. 3 – None |
|
Yr. 1 – $(1.5) million (f)
Yr. 2 – $(1.5) million (f) Yr. 3 – $(1.5) million (f) |
Other revenue sources
|
|
|
|
Potential earnings adjustment mechanism incentives for peak reduction, energy efficiency, Distributed Energy Resources utilization and other potential incentives of up to: Yr. 1 - $3.6 million; Yr. 2 - $4.0 million; and Yr. 3 - $4.2 million.
Potential incentive if performance target related to service terminations is met: $0.5 million annually. |
Revenue decoupling mechanisms
|
|
In 2015, 2016, 2017 and 2018, the company deferred for the customer’s benefit an immaterial amount, $6.3 million as regulatory liabilities, $11.2 million as regulatory asset and $0.5 million as regulatory asset, respectively.
|
|
Continuation of reconciliation of actual to authorized electric delivery revenues.
|
Recoverable energy costs
|
|
Continuation of current rate recovery of purchased power costs.
|
|
Continuation of current rate recovery of purchased power costs.
|
Negative revenue adjustments
|
|
Potential penalties (up to $4 million annually) if certain performance targets are not met. In 2015 the company recorded $1.25 million in negative revenue adjustments. In 2016, 2017 and 2018, the company did not record any negative revenue adjustments.
|
|
Potential penalties if certain performance targets relating to service, reliability and other matters are not met: Yr. 1 - $4.4 million; Yr. 2 - $4.4 million; and Yr. 3 - $4.5 million.
|
Cost reconciliations
|
|
In 2015, 2016 and 2017, the company deferred $0.3 million, $7.4 million and $3.2 million as net decreases to regulatory assets, respectively. In 2018, the company deferred $5 million as a net regulatory asset.
|
|
Reconciliation of expenses for pension and other postretirement benefits, environmental remediation costs, property taxes (g), energy efficiency program (h), major storms, the impact of new laws and certain other costs to amounts reflected in rates.(i)
|
Net utility plant reconciliations
|
|
Target levels reflected in rates are:
Yr. 1 – $928 million (c) Yr. 2 – $970 million (c) The company increased/(reduced) its regulatory asset by $2.2 million, $(1.9) million, $(1.9) million and $1.4 million in 2015, 2016, 2017 and 2018, respectively. |
|
Target levels reflected in rates were:
Electric average net plant target excluding advanced metering infrastructure (AMI): Yr. 1 - $1,008 million; Yr. 2 - $1,032 million; Yr. 3 - $1,083 million AMI (j): Yr. 1 - $48 million; Yr. 2 - $58 million; Yr. 3 - $61 million |
Average rate base
|
|
Yr. 1 – $763 million
Yr. 2 – $805 million Yr. 3 – $805 million |
|
Yr. 1 – $878 million
Yr. 2 – $906 million Yr. 3 – $948 million |
Weighted average cost of capital (after-tax)
|
|
Yr. 1 – 7.10 percent
Yr. 2 – 7.06 percent Yr. 3 – 7.06 percent |
|
Yr. 1 – 6.97 percent
Yr. 2 – 6.96 percent Yr. 3 – 6.96 percent |
Authorized return on common equity
|
|
9.0 percent
|
|
9.00 percent
|
Actual return on common equity
|
|
Yr. 1 – 10.8 percent
Yr. 2 – 9.7 percent Yr. 3 – 7.2 percent |
|
|
Earnings sharing
|
|
Most earnings above an annual earnings threshold of 9.6 percent are to be applied to reduce regulatory assets. In 2015, earnings did not exceed the earnings threshold. Actual earnings were $6.1 million, $0.3 million above the threshold for 2016 and 2017, respectively. In 2018, earnings did not exceed the earnings threshold.
|
|
Most earnings above an annual earnings threshold of 9.6 percent are to be applied to reduce regulatory assets for environmental remediation and other costs accumulated in the rate year.
|
Cost of long-term debt
|
|
Yr. 1 – 5.42 percent
Yr. 2 – 5.35 percent Yr. 3 – 5.35 percent |
|
Yr. 1 – 5.17 percent
Yr. 2 – 5.14 percent Yr. 3 – 5.14 percent |
Common equity ratio
|
|
48 percent
|
|
48 percent
|
(a)
|
Rates determined pursuant to this rate plan continue in effect until a new rate plan is approved by the NYSPSC.
|
CON EDISON ANNUAL REPORT 2018
|
125
|
(b)
|
$59.3 million
of the regulatory asset for deferred storm costs is to be recovered from customers over a
five
year period, including
$11.85 million
in each of years 1 and 2,
$1 million
of the regulatory asset for such costs will not be recovered from customers, and all outstanding issues related to Superstorm Sandy and other past major storms prior to November 2014 are resolved. Approximately
$4 million
of regulatory assets for property tax and interest rate reconciliations will not be recovered from customers. Amounts that will not be recovered from customers were charged-off in June 2015.
|
(c)
|
Excludes electric AMI as to which the company will be required to defer as a regulatory liability the revenue requirement impact of the amount, if any, by which actual average net utility plant balances are less than amounts reflected in rates:
$1 million
in year 1 and
$9 million
in year 2.
|
(d)
|
If at the end of any year, Con Edison’s investments in its non-utility businesses exceed
15 percent
of Con Edison’s total consolidated revenues, assets or cash flow, or if the ratio of holding company debt to total consolidated debt rises above
20 percent
, O&R is required to notify the NYSPSC and submit a ring-fencing plan or a demonstration why additional ring-fencing measures (see Note S) are not necessary.
|
(e)
|
The Joint Proposal recommends that these base rate changes may be implemented with increases of: Yr. 1 -
$8.6 million
; Yr. 2 -
$12.1 million
; and Yr. 3 -
$12.2 million
.
|
(f)
|
Reflects amortization of, among other things, the Company’s net benefits under the TCJA prior to January 1, 2019, amortization of net regulatory liability for future income taxes and reduction of previously incurred regulatory assets for environmental remediation costs. Also, for electric, reflects amortization over a six year period of previously incurred incremental major storm costs. See "Other Regulatory Matters," below.
|
(g)
|
Deferrals for property taxes are limited to
90 percent
of the difference from amounts reflected in rates, subject to an annual maximum for the remaining difference of not more than a maximum number of basis points impact on return on common equity: Yr. 1 -
10.0
basis points; Yr. 2 -
7.5
basis points; and Yr. 3 -
5.0
basis points.
|
(h)
|
Energy efficiency costs are expensed as incurred. Such costs are subject to a downward-only reconciliation over the terms of the electric and gas rate plans. The Company will defer for the benefit of customers any cumulative shortfall over the terms of the electric and gas rate plans between actual expenditures and the levels provided in rates.
|
(i)
|
In addition, amounts reflected in rates relating to income taxes and excess deferred federal income tax liability balances will be reconciled (i.e., refunded to or collected from customers) to any final, non-appealable NYSPSC-ordered findings in its investigation of O&R’s income tax accounting. See “Other Regulatory Matters,” in Note B.
|
(j)
|
Net plant reconciliation for AMI expenditures will be implemented for a single category of AMI capital expenditures that includes amounts allocated to both electric and gas customers.
|
126
|
CON EDISON ANNUAL REPORT 2018
|
O&R New York – Gas
|
|
|
|
|
Effective period
|
|
November 2015
–
October 2018 (a)
|
|
January 2019 – December 2021 (d)
|
Base rate changes
|
|
Yr. 1
–
$16.4 million
Yr. 2 – $16.4 million Yr. 3 – $5.8 million Yr. 3 – $10.6 million collected through a surcharge |
|
Yr. 1 – $(7.5) million (e)
Yr. 2 – $3.6 million (e) Yr. 3 – $0.7 million (e) |
Amortization to income of net regulatory (assets) and liabilities
|
|
Yr. 1
–
$(1.7) million (b)
Yr. 2 – $(2.1) million (b) Yr. 3 – $(2.5) million (b) |
|
Yr. 1 – $1.8 million (f)
Yr. 2 – $1.8 million (f) Yr. 3 – $1.8 million (f) |
Other revenue sources
|
|
|
|
Continuation of retention of annual revenues from non-firm customers of up to $4.0 million, with variances to be shared 80 percent by customers and 20 percent by company
.
Potential earnings adjustment mechanism incentives of up to $0.3 million annually. Potential incentives if performance targets related to gas leak backlog, leak prone pipe, emergency response, damage prevention and service terminations are met: Yr. 1 - $1.2 million; Yr. 2 - $1.3 million; and Yr. 3 - $1.3 million. |
Revenue decoupling mechanisms
|
|
In 2015, 2016 2017 and 2018, the company deferred $0.8 million of regulatory assets, $6.2 million of regulatory liabilities, $1.7 million of regulatory liabilities and $6.3 million of regulatory liabilities, respectively.
|
|
Continuation of reconciliation of actual to authorized gas delivery revenues.
|
Recoverable energy costs
|
|
Current rate recovery of purchased gas costs.
|
|
Continuation of current rate recovery of purchased gas costs.
|
Negative revenue adjustments
|
|
Potential penalties (up to $3.7 million in Yr. 1, $4.7 million in Yr. 2 and $4.9 million in Yr. 3) if certain performance targets are not met. In 2015, 2016 and 2017, the company did not record any negative revenue adjustments. In 2018, the company recorded a $0.1 million negative revenue adjustment.
|
|
Potential penalties if performance targets relating to service, safety and other matters are not met: Yr. 1 - $5.5 million; Yr. 2 - $5.7 million; and Yr. 3 - $6.0 million.
|
Cost reconciliations
|
|
In 2015 and 2016, the company deferred $4.5 million and $6.6 million as net regulatory liabilities and assets, respectively. In 2017 and 2018, the company deferred $3.5 million and $7.4 million as net regulatory liabilities, respectively.
|
|
Reconciliation of expenses for pension and other postretirement benefits, environmental remediation costs, property taxes (g), energy efficiency program (h), the impact of new laws and certain other costs to amounts reflected in rates.(i)
|
Net utility plant reconciliations
|
|
Target levels reflected in rates are:
Yr. 1 – $492 million (c) Yr. 2 – $518 million (c) Yr. 3 – $546 million (c) No deferral was recorded for 2015 and immaterial amounts were recorded as regulatory liabilities in 2016 and 2017. In 2018, the company deferred $0.4 million as regulatory asset. |
|
Target levels reflected in rates were:
Gas average net plant target excluding AMI: Yr. 1 - $593 million; Yr. 2 - $611 million; Yr. 3 - $632 million AMI (j): Yr. 1 - $20 million; Yr. 2 - $24 million; Yr. 3 - $25 million |
Average rate base
|
|
Yr. 1 – $366 million
Yr. 2 – $391 million Yr. 3 – $417 million |
|
Yr. 1 – $454 million
Yr. 2 – $476 million Yr. 3 – $498 million |
Weighted average cost of capital (after-tax)
|
|
Yr. 1 – 7.10 percent
Yr. 2 – 7.06 percent Yr. 3 – 7.06 percent |
|
Yr. 1 – 6.97 percent
Yr. 2 – 6.96 percent Yr. 3 – 6.96 percent |
Authorized return on common equity
|
|
9.0 percent
|
|
9.00 percent
|
Actual return on common equity
|
|
Yr. 1 – 11.2 percent
Yr. 2 – 9.7 percent Yr. 3 – 8.1 percent |
|
|
Earnings sharing
|
|
Most earnings above an annual earnings threshold of 9.6 percent are to be applied to reduce regulatory assets. In 2015, earnings did not exceed the earnings threshold. Actual earnings were $4 million, $0.2 million above the threshold for 2016 and 2017, respectively. In 2018, earnings did not exceed the earnings threshold.
|
|
Most earnings above an annual earnings threshold of 9.6 percent are to be applied to reduce regulatory assets for environmental remediation and other costs accumulated in the rate year.
|
Cost of long-term debt
|
|
Yr. 1 – 5.42 percent
Yr. 2 – 5.35 percent Yr. 3 – 5.35 percent |
|
Yr. 1 – 5.17 percent
Yr. 2 – 5.14 percent Yr. 3 – 5.14 percent |
Common equity ratio
|
|
48 percent
|
|
48 percent
|
(a)
|
Rates pursuant to this rate plan continue in effect until a new rate plan is approved by the NYSPSC.
|
(b)
|
Reflects that the company will not recover from customers a total of approximately
$14 million
of regulatory assets for property tax and interest rate reconciliations. Amounts that will not be recovered from customers were charged-off in June 2015.
|
(c)
|
Excludes gas AMI as to which the company will be required to defer as a regulatory liability the revenue requirement impact of the amount, if any, by which actual average net utility plant balances are less than amounts reflected in rates:
$0.5 million
in year 1,
$4.2 million
in year 2 and
$7.2 million
in year 3.
|
CON EDISON ANNUAL REPORT 2018
|
127
|
(d)
|
If at the end of any year, Con Edison’s investments in its non-utility businesses exceed
15 percent
of Con Edison’s total consolidated revenues, assets or cash flow, or if the ratio of holding company debt to total consolidated debt rises above
20 percent
, O&R is required to notify the NYSPSC and submit a ring-fencing plan or a demonstration why additional ring-fencing measures (see Note S) are not necessary.
|
(e)
|
The Joint Proposal recommends that these base rate changes may be implemented with changes of: Yr. 1 -
$(5.9) million
; Yr. 2 -
$1.0 million
; and Yr. 3 -
$1.0 million
.
|
128
|
CON EDISON ANNUAL REPORT 2018
|
RECO
|
|
|
|
|
Effective period
|
|
August 2014 – February 2017
|
|
March 2017 (a)
|
Base rate changes
|
|
Yr. 1 – $13.0 million
|
|
Yr. 1 – $1.7 million
|
Amortization to income of net
regulatory (assets) and liabilities
|
|
$0.4 million over three years and $(25.6) million of deferred storm costs over four years
|
|
$0.2 million over three years and continuation of $(25.6) million of deferred storm costs over four years which expired on July 31, 2018 (b)
|
Recoverable energy costs
|
|
Current rate recovery of purchased power costs.
|
|
Current rate recovery of purchased power costs.
|
Cost reconciliations
|
|
None
|
|
None
|
Average rate base
|
|
$172.2 million
|
|
Yr. 1 – $178.7 million
|
Weighted average cost of capital
(after-tax)
|
|
7.83 percent
|
|
7.47 percent
|
Authorized return on common equity
|
|
9.75 percent
|
|
9.6 percent
|
Actual return on common equity
|
|
Yr. 1 – 9.2 percent
Yr. 2 – 8.7 percent |
|
Yr. 1 – 7.5 percent
|
Cost of long-term debt
|
|
5.89 percent
|
|
5.37 percent
|
Common equity ratio
|
|
50 percent
|
|
49.7 percent
|
(a)
|
Effective until a new rate plan approved by the NJBPU goes into effect.
|
(b)
|
In January 2016, the NJBPU approved RECO’s plan to spend
$15.7 million
in capital over
three years
to harden its electric system against storms, the costs of which RECO, beginning in 2017, is collecting through a customer surcharge.
|
CON EDISON ANNUAL REPORT 2018
|
129
|
130
|
CON EDISON ANNUAL REPORT 2018
|
CON EDISON ANNUAL REPORT 2018
|
131
|
|
Con Edison
|
CECONY
|
||||||
(Millions of Dollars)
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
Regulatory assets
|
|
|
|
|
||||
Unrecognized pension and other postretirement costs
|
$2,238
|
$2,526
|
$2,111
|
$2,376
|
||||
Environmental remediation costs
|
810
|
793
|
716
|
677
|
||||
Revenue taxes
|
291
|
260
|
278
|
248
|
||||
MTA power reliability deferral
|
229
|
50
|
229
|
50
|
||||
Property tax reconciliation
|
101
|
51
|
86
|
25
|
||||
Deferred storm costs
|
76
|
38
|
—
|
|
—
|
|
||
Pension and other postretirement benefits deferrals
|
73
|
79
|
56
|
58
|
||||
Municipal infrastructure support costs
|
67
|
56
|
67
|
56
|
||||
System peak reduction and energy efficiency programs
|
72
|
14
|
70
|
14
|
||||
Brooklyn Queens demand management program
|
39
|
37
|
39
|
37
|
||||
Unamortized loss on reacquired debt
|
36
|
37
|
34
|
35
|
||||
Meadowlands heater odorization project
|
36
|
18
|
36
|
18
|
||||
Preferred stock redemption
|
23
|
24
|
23
|
24
|
||||
Recoverable REV demonstration project costs
|
20
|
19
|
18
|
17
|
||||
Deferred derivative losses
|
17
|
44
|
11
|
37
|
||||
Gate station upgrade project
|
17
|
13
|
17
|
13
|
||||
Indian Point Energy Center program costs
|
13
|
29
|
13
|
29
|
||||
Workers’ compensation
|
5
|
10
|
5
|
10
|
||||
Recoverable energy costs
|
3
|
60
|
—
|
|
52
|
|||
O&R transition bond charges
|
2
|
9
|
—
|
|
—
|
|
||
Surcharge for New York State assessment
|
—
|
|
2
|
—
|
|
2
|
||
Other
|
126
|
97
|
114
|
85
|
||||
Regulatory assets – noncurrent
|
4,294
|
4,266
|
3,923
|
3,863
|
||||
Recoverable energy costs
|
40
|
27
|
35
|
25
|
||||
Deferred derivative losses
|
36
|
40
|
29
|
37
|
||||
Regulatory assets – current
|
76
|
67
|
64
|
62
|
||||
Total Regulatory Assets
|
$4,370
|
$4,333
|
$3,987
|
$3,925
|
||||
Regulatory liabilities
|
|
|
|
|
||||
Future income tax*
|
$2,515
|
$2,545
|
$2,363
|
$2,390
|
||||
Allowance for cost of removal less salvage
|
928
|
846
|
790
|
719
|
||||
TCJA net benefits
|
434
|
—
|
|
411
|
—
|
|
||
Energy efficiency portfolio standard unencumbered funds
|
127
|
127
|
122
|
122
|
||||
Net unbilled revenue deferrals
|
117
|
183
|
117
|
183
|
||||
Pension and other postretirement benefit deferrals
|
62
|
207
|
40
|
181
|
||||
Property tax refunds
|
45
|
44
|
45
|
44
|
||||
Settlement of prudence proceeding
|
37
|
66
|
37
|
66
|
||||
Property tax reconciliation
|
36
|
107
|
36
|
107
|
||||
Earnings sharing - electric, gas and steam
|
36
|
29
|
27
|
19
|
||||
System benefit charge carrying charge
|
27
|
12
|
24
|
11
|
||||
Carrying charges on repair allowance and bonus depreciation
|
21
|
43
|
21
|
42
|
||||
BQDM and REV Demo reconciliations
|
18
|
9
|
18
|
9
|
||||
New York State income tax rate change
|
17
|
36
|
17
|
35
|
||||
Settlement of gas proceedings
|
15
|
27
|
15
|
27
|
||||
Base rate change deferrals
|
10
|
21
|
10
|
21
|
||||
Unrecognized other postretirement costs
|
7
|
92
|
7
|
92
|
||||
Net utility plant reconciliations
|
3
|
12
|
1
|
8
|
||||
Variable-rate tax-exempt debt - cost rate reconciliation
|
1
|
30
|
1
|
26
|
||||
Other
|
185
|
141
|
156
|
117
|
||||
Regulatory liabilities – noncurrent
|
4,641
|
4,577
|
4,258
|
4,219
|
||||
Revenue decoupling mechanism
|
53
|
29
|
36
|
21
|
||||
Refundable energy costs
|
31
|
41
|
8
|
16
|
||||
Deferred derivative gains
|
30
|
31
|
29
|
28
|
||||
Regulatory liabilities—current
|
114
|
101
|
73
|
65
|
||||
Total Regulatory Liabilities
|
$4,755
|
$4,678
|
$4,331
|
$4,284
|
132
|
CON EDISON ANNUAL REPORT 2018
|
CON EDISON ANNUAL REPORT 2018
|
133
|
(Millions of Dollars)
|
2018
|
|
2017
|
||||
Long-Term Debt (including current portion) (a)
|
Carrying
Amount
|
|
Fair
Value
|
|
Carrying
Amount
|
|
Fair
Value
|
Con Edison
|
$18,145
|
|
$18,740
|
|
$16,029
|
|
$18,147
|
CECONY
|
$14,151
|
|
$14,685
|
|
$13,625
|
|
$15,163
|
(a)
|
Amounts shown are net of unamortized debt expense and unamortized debt discount of
$185 million
and
$139 million
for Con Edison and CECONY, respectively, as of
December 31, 2018
and
$142 million
and
$121 million
for Con Edison and CECONY, respectively, as of
December 31, 2017
.
|
134
|
CON EDISON ANNUAL REPORT 2018
|
CON EDISON ANNUAL REPORT 2018
|
135
|
|
Con Edison
|
CECONY
|
||||
(Millions of Dollars)
|
2018
|
2017
|
2016
|
2018
|
2017
|
2016
|
Service cost – including administrative expenses
|
$290
|
$263
|
$275
|
$272
|
$246
|
$258
|
Interest cost on projected benefit obligation
|
561
|
591
|
596
|
525
|
554
|
559
|
Expected return on plan assets
|
(1,033)
|
(968)
|
(947)
|
(979)
|
(917)
|
(898)
|
Recognition of net actuarial loss
|
688
|
595
|
596
|
651
|
563
|
565
|
Recognition of prior service cost/(credit)
|
(17)
|
(17)
|
4
|
(19)
|
(19)
|
2
|
TOTAL PERIODIC BENEFIT COST
|
$489
|
$464
|
$524
|
$450
|
$427
|
$486
|
Cost capitalized
|
(127)
|
(181)
|
(214)
|
(119)
|
(169)
|
(203)
|
Reconciliation to rate level
|
(92)
|
(34)
|
54
|
(100)
|
(41)
|
58
|
Total expense recognized
|
$270
|
$249
|
$364
|
$231
|
$217
|
$341
|
136
|
CON EDISON ANNUAL REPORT 2018
|
|
Con Edison
|
CECONY
|
|||||||
(Millions of Dollars)
|
2018
|
|
2017
|
2016
|
2018
|
|
2017
|
|
2016
|
CHANGE IN PROJECTED BENEFIT OBLIGATION
|
|
|
|
|
|
|
|||
Projected benefit obligation at beginning of year
|
$15,536
|
$14,095
|
$14,377
|
$14,567
|
$13,203
|
$13,482
|
|||
Service cost – excluding administrative expenses
|
286
|
259
|
271
|
267
|
241
|
254
|
|||
Interest cost on projected benefit obligation
|
561
|
591
|
596
|
525
|
554
|
559
|
|||
Net actuarial loss/(gain)
|
(1,219)
|
1,231
|
(302)
|
(1,159)
|
1,171
|
(282)
|
|||
Plan amendments
|
—
|
|
6
|
(256)
|
—
|
|
—
|
|
(259)
|
Benefits paid
|
(715)
|
(646)
|
(591)
|
(658)
|
(602)
|
(551)
|
|||
PROJECTED BENEFIT OBLIGATION AT END OF YEAR
|
$14,449
|
$15,536
|
$14,095
|
$13,542
|
$14,567
|
$13,203
|
|||
CHANGE IN PLAN ASSETS
|
|
|
|
|
|
|
|||
Fair value of plan assets at beginning of year
|
$14,274
|
$12,472
|
$11,759
|
$13,519
|
$11,815
|
$11,141
|
|||
Actual return on plan assets
|
(536)
|
2,041
|
829
|
(507)
|
1,935
|
787
|
|||
Employer contributions
|
473
|
450
|
508
|
434
|
412
|
469
|
|||
Benefits paid
|
(715)
|
(646)
|
(591)
|
(658)
|
(602)
|
(551)
|
|||
Administrative expenses
|
(46)
|
(43)
|
(33)
|
(44)
|
(41)
|
(31)
|
|||
FAIR VALUE OF PLAN ASSETS AT END OF YEAR
|
$13,450
|
$14,274
|
$12,472
|
$12,744
|
$13,519
|
$11,815
|
|||
FUNDED STATUS
|
$(999)
|
$(1,262)
|
$(1,623)
|
$(798)
|
$(1,048)
|
$(1,388)
|
|||
Unrecognized net loss
|
$2,464
|
$2,760
|
$3,157
|
$2,338
|
$2,624
|
$2,995
|
|||
Unrecognized prior service costs
|
(205)
|
(223)
|
(244)
|
(222)
|
(242)
|
(258)
|
|||
Accumulated benefit obligation
|
13,030
|
13,897
|
12,655
|
12,161
|
12,972
|
11,806
|
CON EDISON ANNUAL REPORT 2018
|
137
|
|
2018
|
|
2017
|
|
2016
|
|
Weighted-average assumptions used to determine benefit obligations at December 31:
|
|
|
|
|||
Discount rate
|
4.25
|
%
|
3.70
|
%
|
4.25
|
%
|
Rate of compensation increase
|
|
|
|
|||
CECONY
|
4.25
|
%
|
4.25
|
%
|
4.25
|
%
|
O&R
|
4.00
|
%
|
4.00
|
%
|
4.00
|
%
|
Weighted-average assumptions used to determine net periodic benefit cost for the years ended December 31:
|
|
|
|
|||
Discount rate
|
3.70
|
%
|
4.25
|
%
|
4.25
|
%
|
Expected return on plan assets
|
7.50
|
%
|
7.50
|
%
|
7.80
|
%
|
Rate of compensation increase
|
|
|
|
|||
CECONY
|
4.25
|
%
|
4.25
|
%
|
4.25
|
%
|
O&R
|
4.00
|
%
|
4.00
|
%
|
4.00
|
%
|
(Millions of Dollars)
|
2019
|
2020
|
2021
|
2022
|
2023
|
2024-2028
|
Con Edison
|
$707
|
$726
|
$740
|
$755
|
$772
|
$4,072
|
CECONY
|
658
|
676
|
689
|
703
|
718
|
3,795
|
138
|
CON EDISON ANNUAL REPORT 2018
|
|
Target
Allocation Range
|
|
Plan Assets at December 31,
|
|||||||
Asset Category
|
2019
|
|
2018
|
|
|
2017
|
|
|
2016
|
|
Equity Securities
|
45% - 55%
|
|
51
|
%
|
|
58
|
%
|
|
58
|
%
|
Debt Securities
|
33% - 43%
|
|
39
|
%
|
|
33
|
%
|
|
33
|
%
|
Real Estate
|
10% -14%
|
|
10
|
%
|
|
9
|
%
|
|
9
|
%
|
Total
|
100%
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
CON EDISON ANNUAL REPORT 2018
|
139
|
(Millions of Dollars)
|
Level 1
|
|
|
Level 2
|
|
|
Total
|
Investments within the fair value hierarchy
|
|
|
|
|
|
||
U.S. Equity (a)
|
$3,515
|
|
$10
|
|
$3,525
|
||
International Equity (b)
|
2,896
|
|
—
|
|
|
2,896
|
|
U.S. Government Issued Debt (c)
|
—
|
|
|
1,886
|
|
1,886
|
|
Corporate Bonds Debt (d)
|
—
|
|
|
2,619
|
|
2,619
|
|
Structured Assets Debt (e)
|
—
|
|
|
6
|
|
6
|
|
Other Fixed Income Debt (f)
|
—
|
|
|
121
|
|
121
|
|
Cash and Cash Equivalents (g)
|
160
|
|
556
|
|
716
|
||
Futures (h)
|
568
|
|
—
|
|
|
568
|
|
Total investments within the fair value hierarchy
|
$7,139
|
|
$5,198
|
|
$12,337
|
||
Investments measured at NAV per share (n)
|
|
|
|
|
|
|
|
Private Equity (i)
|
|
|
|
|
440
|
||
Real Estate (j)
|
|
|
|
|
1,310
|
||
Hedge Funds (k)
|
|
|
|
|
255
|
||
Total investments valued using NAV per share
|
|
|
|
|
$2,005
|
||
Funds for retiree health benefits (l)
|
(118)
|
|
(86)
|
|
(204)
|
||
Funds for retiree health benefits measured at NAV per share (l)(n)
|
|
|
|
|
(33)
|
||
Total funds for retiree health benefits
|
|
|
|
|
$(237)
|
||
Investments (excluding funds for retiree health benefits)
|
$7,021
|
|
$5,112
|
|
$14,105
|
||
Pending activities (m)
|
|
|
|
|
(655)
|
||
Total fair value of plan net assets
|
|
|
|
|
$13,450
|
(a)
|
U.S. Equity includes both actively- and passively-managed assets with investments in domestic equity index funds and actively-managed small-capitalization equities.
|
(b)
|
International Equity includes international equity index funds and actively-managed international equities.
|
(c)
|
U.S. Government Issued Debt includes agency and treasury securities.
|
(d)
|
Corporate Bonds Debt consists of debt issued by various corporations.
|
(e)
|
Structured Assets Debt includes commercial-mortgage-backed securities and collateralized mortgage obligations.
|
(f)
|
Other Fixed Income Debt includes municipal bonds, sovereign debt and regional governments.
|
(g)
|
Cash and Cash Equivalents include short term investments, money markets, foreign currency and cash collateral.
|
(h)
|
Futures consist of exchange-traded financial contracts encompassing U.S. Equity, International Equity and U.S. Government indices.
|
(i)
|
Private Equity consists of global equity funds that are not exchange-traded.
|
(j)
|
Real Estate investments include real estate funds based on appraised values that are broadly diversified by geography and property type.
|
(k)
|
Hedge Funds are within a commingled structure which invests in various hedge fund managers who can invest in all financial instruments.
|
(l)
|
The Companies set aside funds for retiree health benefits through a separate account within the pension trust, as permitted under Section 401(h) of the Internal Revenue Code of 1986, as amended. In accordance with the Code, the plan’s investments in the 401(h) account may not be used for, or diverted to, any purpose other than providing health benefits for retirees. The net assets held in the 401(h) account are calculated based on a pro-rata percentage allocation of the net assets in the pension plan. The related obligations for health benefits are not included in the pension plan’s obligations and are included in the Companies’ other postretirement benefit obligation. See Note F.
|
(m)
|
Pending activities include security purchases and sales that have not settled, interest and dividends that have not been received and reflects adjustments for available estimates at year end.
|
(n)
|
In accordance with ASU 2015-07, Fair Value Measurements (Topic 820): Disclosures for Investments in Certain Entities That Calculate Net Asset Value per Share (or its equivalent), certain investments that are measured at fair value using the net asset value per share (or its equivalent) practical expedient have not been classified in the fair value hierarchy.
|
140
|
CON EDISON ANNUAL REPORT 2018
|
(Millions of Dollars)
|
Level 1
|
|
|
Level 2
|
|
|
Total
|
Investments within the fair value hierarchy
|
|
|
|
|
|
||
U.S. Equity (a)
|
$3,872
|
|
$28
|
|
$3,900
|
||
International Equity (b)
|
4,132
|
|
—
|
|
|
4,132
|
|
U.S. Government Issued Debt (c)
|
—
|
|
|
1,786
|
|
1,786
|
|
Corporate Bonds Debt (d)
|
—
|
|
|
2,450
|
|
2,450
|
|
Structured Assets Debt (e)
|
—
|
|
|
3
|
|
3
|
|
Other Fixed Income Debt (f)
|
—
|
|
|
125
|
|
125
|
|
Cash and Cash Equivalents (g)
|
124
|
|
352
|
|
476
|
||
Futures (h)
|
308
|
|
—
|
|
|
308
|
|
Total investments within the fair value hierarchy
|
$8,436
|
|
$4,744
|
|
$13,180
|
||
Investments measured at NAV per share (n)
|
|
|
|
|
|
||
Private Equity (i)
|
|
|
|
|
336
|
||
Real Estate (j)
|
|
|
|
|
1,214
|
||
Hedge Funds (k)
|
|
|
|
|
|
251
|
|
Total investments valued using NAV per share
|
|
|
|
|
$1,801
|
||
Funds for retiree health benefits (l)
|
(168)
|
|
(94)
|
|
(262)
|
||
Funds for retiree health benefits measured at NAV per share (l)(n)
|
|
|
|
|
(36)
|
||
Total funds for retiree health benefits
|
|
|
|
|
$(298)
|
||
Investments (excluding funds for retiree health benefits)
|
$8,268
|
|
$4,650
|
|
$14,683
|
||
Pending activities (m)
|
|
|
|
|
(409)
|
||
Total fair value of plan net assets
|
|
|
|
|
$14,274
|
|
For the Years Ended December 31,
|
||||
(Millions of Dollars)
|
2018
|
|
2017
|
|
2016
|
Con Edison
|
$45
|
|
$40
|
|
$36
|
CECONY
|
39
|
|
35
|
|
32
|
CON EDISON ANNUAL REPORT 2018
|
141
|
|
Con Edison
|
CECONY
|
||||
(Millions of Dollars)
|
2018
|
2017
|
2016
|
2018
|
2017
|
2016
|
Service cost
|
$20
|
$20
|
$18
|
$14
|
$13
|
$13
|
Interest cost on accumulated other postretirement benefit obligation
|
42
|
46
|
48
|
34
|
38
|
40
|
Expected return on plan assets
|
(73)
|
(69)
|
(77)
|
(63)
|
(61)
|
(67)
|
Recognition of net actuarial loss/(gain)
|
8
|
2
|
5
|
3
|
(3)
|
3
|
Recognition of prior service cost/(credit)
|
(6)
|
(17)
|
(20)
|
(2)
|
(11)
|
(14)
|
TOTAL PERIODIC POSTRETIREMENT BENEFIT COST/(CREDIT)
|
$(9)
|
$(18)
|
$(26)
|
$(14)
|
$(24)
|
$(25)
|
Cost capitalized
|
(8)
|
8
|
11
|
(6)
|
10
|
10
|
Reconciliation to rate level
|
8
|
(4)
|
22
|
9
|
(2)
|
22
|
Total expense/(credit) recognized
|
$(9)
|
$(14)
|
$7
|
$(11)
|
$(16)
|
$7
|
|
Con Edison
|
CECONY
|
||||
(Millions of Dollars)
|
2018
|
2017
|
2016
|
2018
|
2017
|
2016
|
CHANGE IN BENEFIT OBLIGATION
|
|
|
|
|
|
|
Benefit obligation at beginning of year
|
$1,219
|
$1,198
|
$1,287
|
$985
|
$1,007
|
$1,093
|
Service cost
|
20
|
20
|
18
|
14
|
13
|
13
|
Interest cost on accumulated postretirement benefit obligation
|
42
|
46
|
48
|
34
|
38
|
40
|
Net actuarial loss/(gain)
|
(70)
|
53
|
(57)
|
(32)
|
16
|
(52)
|
Benefits paid and administrative expenses, net of subsidies
|
(135)
|
(134)
|
(134)
|
(125)
|
(124)
|
(122)
|
Participant contributions
|
38
|
36
|
36
|
37
|
35
|
35
|
BENEFIT OBLIGATION AT END OF YEAR
|
$1,114
|
$1,219
|
$1,198
|
$913
|
$985
|
$1,007
|
CHANGE IN PLAN ASSETS
|
|
|
|
|
|
|
Fair value of plan assets at beginning of year
|
$1,039
|
$975
|
$994
|
$893
|
$851
|
$870
|
Actual return on plan assets
|
(66)
|
150
|
60
|
(54)
|
130
|
52
|
Employer contributions
|
6
|
17
|
7
|
6
|
8
|
7
|
Employer group waiver plan subsidies
|
34
|
34
|
35
|
32
|
30
|
33
|
Participant contributions
|
37
|
35
|
36
|
37
|
35
|
35
|
Benefits paid
|
(165)
|
(172)
|
(157)
|
(155)
|
(161)
|
(146)
|
FAIR VALUE OF PLAN ASSETS AT END OF YEAR
|
$885
|
$1,039
|
$975
|
$759
|
$893
|
$851
|
FUNDED STATUS
|
$(229)
|
$(180)
|
$(223)
|
$(154)
|
$(92)
|
$(156)
|
Unrecognized net loss/(gain)
|
$14
|
$(47)
|
$(24)
|
$(2)
|
$(85)
|
$(42)
|
Unrecognized prior service costs
|
(8)
|
(14)
|
(31)
|
(5)
|
(7)
|
(18)
|
142
|
CON EDISON ANNUAL REPORT 2018
|
|
2018
|
|
2017
|
|
2016
|
|
Weighted-average assumptions used to determine benefit obligations at December 31:
|
|
|
|
|||
Discount Rate
|
|
|
|
|||
CECONY
|
4.15
|
%
|
3.55
|
%
|
4.00
|
%
|
O&R
|
4.30
|
%
|
3.70
|
%
|
4.20
|
%
|
Weighted-average assumptions used to determine net periodic benefit cost for the years ended December 31:
|
|
|
|
|||
Discount Rate
|
|
|
|
|||
CECONY
|
3.55
|
%
|
4.00
|
%
|
4.05
|
%
|
O&R
|
3.70
|
%
|
4.20
|
%
|
4.20
|
%
|
Expected Return on Plan Assets
|
7.50
|
%
|
7.50
|
%
|
7.00
|
%
|
|
Con Edison
|
CECONY
|
||
|
1-Percentage-Point
|
|||
(Millions of Dollars)
|
Increase
|
Decrease
|
Increase
|
Decrease
|
Effect on accumulated other postretirement benefit obligation
|
$9
|
$11
|
$(18)
|
$31
|
Effect on service cost and interest cost components for 2018
|
2
|
(1)
|
(1)
|
1
|
(Millions of Dollars)
|
2019
|
2020
|
2021
|
2022
|
2023
|
2024-2028
|
Con Edison
|
$80
|
$78
|
$76
|
$75
|
$74
|
$359
|
CECONY
|
70
|
67
|
65
|
64
|
63
|
302
|
CON EDISON ANNUAL REPORT 2018
|
143
|
|
Target Allocation Range
|
|
Plan Assets at December 31,
|
|||||||
Asset Category
|
2019
|
|
2018
|
|
|
2017
|
|
|
2016
|
|
Equity Securities
|
42%-80%
|
|
52
|
%
|
|
60
|
%
|
|
60
|
%
|
Debt Securities
|
20%-58%
|
|
48
|
%
|
|
40
|
%
|
|
40
|
%
|
Total
|
100%
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
(Millions of Dollars)
|
Level 1
|
|
|
Level 2
|
|
Total
|
|
Equity (a)
|
|
$—
|
|
|
$322
|
|
$322
|
Other Fixed Income Debt (b)
|
—
|
|
|
289
|
|
289
|
|
Cash and Cash Equivalents (c)
|
—
|
|
|
14
|
|
14
|
|
Total investments
|
|
$—
|
|
|
$625
|
|
$625
|
Funds for retiree health benefits (d)
|
118
|
|
|
86
|
|
204
|
|
Investments (including funds for retiree health benefits)
|
|
$118
|
|
|
$711
|
|
$829
|
Funds for retiree health benefits measured at net asset value (d)(e)
|
|
|
|
|
33
|
||
Pending activities (f)
|
|
|
|
|
23
|
||
Total fair value of plan net assets
|
|
|
|
|
$885
|
(a)
|
Equity includes a passively managed commingled index fund benchmarked to the MSCI All Country World Index.
|
(b)
|
Other Fixed Income Debt includes a passively managed commingled index fund benchmarked to the Bloomberg Barclays U.S. Long Credit Index and an active separately managed fund indexed to the Bloomberg Barclays U.S. Long Credit Index.
|
(c)
|
Cash and Cash Equivalents include short term investments and money markets.
|
(d)
|
The Companies set aside funds for retiree health benefits through a separate account within the pension trust, as permitted under Section 401(h) of the Internal Revenue Code of 1986, as amended. In accordance with the Code, the plan’s investments in the 401(h) account may not be used for, or diverted to, any purpose other than providing health benefits for retirees. The net assets held in the 401(h) account are calculated based on a pro-rata percentage allocation of the net assets in the pension plan. The related obligations for health benefits are not included in the pension plan’s obligations and are included in the Companies’ other postretirement benefit obligation. See Note E.
|
(e)
|
In accordance with ASU 2015-07, Fair Value Measurements (Topic 820): Disclosures for Investments in Certain Entities That Calculate Net Asset Value per Share (or its equivalent), certain investments that are measured at fair value using the net asset value per share (or its equivalent) practical expedient have not been classified in the fair value hierarchy.
|
(f)
|
Pending activities include security purchases and sales that have not settled, interest and dividends that have not been received, and reflects adjustments for available estimates at year end.
|
144
|
CON EDISON ANNUAL REPORT 2018
|
(Millions of Dollars)
|
Level 1
|
|
|
Level 2
|
|
Total
|
|
Equity (a)
|
|
$—
|
|
|
$420
|
|
$420
|
Other Fixed Income Debt (b)
|
—
|
|
|
286
|
|
286
|
|
Cash and Cash Equivalents (c)
|
—
|
|
|
16
|
|
16
|
|
Total investments
|
|
$—
|
|
|
$722
|
|
$722
|
Funds for retiree health benefits (d)
|
168
|
|
|
94
|
|
262
|
|
Investments (including funds for retiree health benefits)
|
|
$168
|
|
|
$816
|
|
$984
|
Funds for retiree health benefits measured at net asset value (d)(e)
|
|
|
|
|
36
|
||
Pending activities (f)
|
|
|
|
|
19
|
||
Total fair value of plan net assets
|
|
|
|
|
$1,039
|
|
Con Edison
|
|
CECONY
|
||||
(Millions of Dollars)
|
2018
|
|
2017
|
|
2018
|
|
2017
|
Accrued Liabilities:
|
|
|
|
|
|
|
|
Manufactured gas plant sites
|
$689
|
|
$651
|
|
$603
|
|
$551
|
Other Superfund Sites
|
90
|
|
86
|
|
90
|
|
86
|
Total
|
$779
|
|
$737
|
|
$693
|
|
$637
|
Regulatory assets
|
$810
|
|
$793
|
|
$716
|
|
$677
|
CON EDISON ANNUAL REPORT 2018
|
145
|
|
Con Edison
|
|
CECONY
|
||||
(Millions of Dollars)
|
2018
|
|
2017
|
|
2018
|
|
2017
|
Remediation costs incurred
|
$25
|
|
$24
|
|
$18
|
|
$19
|
|
Con Edison
|
|
CECONY
|
||||
(Millions of Dollars)
|
2018
|
|
2017
|
|
2018
|
|
2017
|
Accrued liability – asbestos suits
|
$8
|
|
$8
|
|
$7
|
|
$7
|
Regulatory assets – asbestos suits
|
$8
|
|
$8
|
|
$7
|
|
$7
|
Accrued liability – workers’ compensation
|
$79
|
|
$84
|
|
$75
|
|
$80
|
Regulatory assets – workers’ compensation
|
$5
|
|
$10
|
|
$5
|
|
$10
|
146
|
CON EDISON ANNUAL REPORT 2018
|
CON EDISON ANNUAL REPORT 2018
|
147
|
Guarantee Type
|
0 – 3 years
|
|
4 – 10 years
|
|
|
> 10 years
|
|
|
Total
|
|
|
(Millions of Dollars)
|
|||||||||
Con Edison Transmission
|
$742
|
|
$404
|
|
|
$—
|
|
|
$1,146
|
|
Energy transactions
|
462
|
|
20
|
|
201
|
|
683
|
|||
Renewable electric production projects
|
137
|
|
—
|
|
|
403
|
|
540
|
||
Other
|
70
|
|
—
|
|
|
—
|
|
|
70
|
|
Total
|
$1,411
|
|
$424
|
|
$604
|
|
$2,439
|
(Millions of Dollars)
|
2019
|
|
2020
|
|
2021
|
|
2022
|
|
2023
|
|
All Years
Thereafter
|
Con Edison
|
$206
|
|
$117
|
|
$65
|
|
$54
|
|
$55
|
|
$601
|
CECONY
|
202
|
|
113
|
|
64
|
|
54
|
|
55
|
|
601
|
148
|
CON EDISON ANNUAL REPORT 2018
|
|
For the Years Ended December 31,
|
|||||||
(Millions of Dollars)
|
2018
|
|
|
2017
|
|
|
2016
|
|
Indian Point (a)
|
$6
|
|
$211
|
|
$203
|
|||
Linden Cogeneration (b)
|
—
|
|
|
114
|
|
304
|
||
Astoria Energy (c)
|
—
|
|
|
—
|
|
|
50
|
|
Astoria Generating Company (d)
|
179
|
|
92
|
|
16
|
|||
Brooklyn Navy Yard (e)
|
124
|
|
117
|
|
119
|
|||
Cogen Technologies
|
9
|
|
18
|
|
—
|
|
||
Total
|
$318
|
|
$552
|
|
$692
|
|
Con Edison
|
|
CECONY
|
||||
(Millions of Dollars)
|
2018
|
|
2017
|
|
2018
|
|
2017
|
UTILITY PLANT
|
|
|
|
|
|
|
|
Common
|
$1
|
|
$2
|
|
$1
|
|
$1
|
CON EDISON ANNUAL REPORT 2018
|
149
|
|
Con Edison
|
|
CECONY
|
||||||||
(Millions of Dollars)
|
2018
|
|
2017
|
|
2016
|
|
2018
|
|
2017
|
|
2016
|
State
|
|
|
|
|
|
|
|
|
|
|
|
Current
|
$(10)
|
|
$(2)
|
|
$(42)
|
|
$6
|
|
$37
|
|
$(1)
|
Deferred
|
107
|
|
103
|
|
188
|
|
82
|
|
75
|
|
114
|
Federal
|
|
|
|
|
|
|
|
|
|
|
|
Current
|
3
|
|
(11)
|
|
(43)
|
|
(34)
|
|
73
|
|
59
|
Deferred
|
310
|
|
391
|
|
604
|
|
275
|
|
504
|
|
435
|
Amortization of investment tax credits
|
(9)
|
|
(9)
|
|
(9)
|
|
(3)
|
|
(4)
|
|
(4)
|
Total income tax expense
|
$401
|
|
$472
|
|
$698
|
|
$326
|
|
$685
|
|
$603
|
150
|
CON EDISON ANNUAL REPORT 2018
|
|
Con Edison
|
CECONY
|
||||
(Millions of Dollars)
|
2018
|
2017
|
2018
|
|
2017
|
|
Deferred tax liabilities:
|
|
|
|
|
||
Property basis differences
|
$7,402
|
$6,555
|
$6,446
|
$5,968
|
||
Regulatory assets:
|
|
|
|
|
||
Unrecognized pension and other postretirement costs
|
627
|
697
|
591
|
656
|
||
Environmental remediation costs
|
227
|
219
|
200
|
187
|
||
Deferred storm costs
|
21
|
11
|
—
|
|
—
|
|
Other regulatory assets
|
273
|
269
|
252
|
241
|
||
Equity investments
|
102
|
263
|
—
|
|
—
|
|
Total deferred tax liabilities
|
$8,652
|
$8,014
|
$7,489
|
$7,052
|
||
Deferred tax assets:
|
|
|
|
|
||
Accrued pension and other postretirement costs
|
$248
|
$264
|
$180
|
$187
|
||
Regulatory liabilities:
|
|
|
|
|
||
Future income tax
|
702
|
698
|
662
|
660
|
||
Other regulatory liabilities
|
632
|
593
|
554
|
524
|
||
Superfund and other environmental costs
|
218
|
203
|
194
|
176
|
||
Asset retirement obligations
|
114
|
86
|
82
|
79
|
||
Loss carryforwards
|
229
|
95
|
—
|
|
—
|
|
Tax credits carryforward
|
817
|
658
|
—
|
|
—
|
|
Valuation allowance
|
(33)
|
(33)
|
—
|
|
—
|
|
Other
|
53
|
112
|
102
|
148
|
||
Total deferred tax assets
|
2,980
|
2,676
|
1,774
|
1,774
|
||
Net deferred tax liabilities
|
$5,672
|
$5,338
|
$5,715
|
$5,278
|
||
Unamortized investment tax credits
|
148
|
157
|
24
|
28
|
||
Net deferred tax liabilities and unamortized investment tax credits
|
$5,820
|
$5,495
|
$5,739
|
$5,306
|
CON EDISON ANNUAL REPORT 2018
|
151
|
|
Con Edison
|
|
CECONY
|
||||||||||||||
(% of Pre-tax income)
|
2018
|
|
|
2017
|
|
|
2016
|
|
|
2018
|
|
|
2017
|
|
|
2016
|
|
STATUTORY TAX RATE
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Federal
|
21
|
%
|
|
35
|
%
|
|
35
|
%
|
|
21
|
%
|
|
35
|
%
|
|
35
|
%
|
Changes in computed taxes resulting from:
|
|
|
|
|
|
|
|
|
|
|
|
||||||
State income tax
|
4
|
|
|
4
|
|
|
4
|
|
|
5
|
|
|
4
|
|
|
4
|
|
Cost of removal
|
1
|
|
|
1
|
|
|
(1
|
)
|
|
1
|
|
|
1
|
|
|
(1
|
)
|
Other plant-related items
|
(1
|
)
|
|
(1
|
)
|
|
—
|
|
|
(1
|
)
|
|
(1
|
)
|
|
(1
|
)
|
TCJA deferred tax re-measurement
|
2
|
|
|
(13
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Amortization of excess deferred federal income taxes
|
(3
|
)
|
|
—
|
|
|
—
|
|
|
(3
|
)
|
|
—
|
|
|
—
|
|
Renewable energy credits
|
(1
|
)
|
|
(1
|
)
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
Research and development credits
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
(1
|
)
|
|
—
|
|
|
(1
|
)
|
Other
|
—
|
|
|
(2
|
)
|
|
—
|
|
|
(1
|
)
|
|
(1
|
)
|
|
—
|
|
Effective tax rate
|
23
|
%
|
|
23
|
%
|
|
36
|
%
|
|
21
|
%
|
|
38
|
%
|
|
36
|
%
|
152
|
CON EDISON ANNUAL REPORT 2018
|
CON EDISON ANNUAL REPORT 2018
|
153
|
|
Con Edison
|
CECONY
|
||||||||
(Millions of Dollars)
|
2018
|
2017
|
2016
|
|
2018
|
|
2017
|
|
2016
|
|
Balance at January 1,
|
$12
|
$42
|
$34
|
$5
|
$21
|
$2
|
||||
Additions based on tax positions related to the current year
|
2
|
1
|
2
|
2
|
1
|
2
|
||||
Additions based on tax positions of prior years
|
1
|
1
|
19
|
1
|
1
|
19
|
||||
Reductions for tax positions of prior years
|
(2)
|
(24)
|
(13)
|
(1)
|
(18)
|
(2)
|
||||
Reductions from expiration of statute of limitations
|
(4)
|
(2)
|
—
|
|
—
|
|
—
|
|
—
|
|
Settlements
|
(3)
|
(6)
|
—
|
|
(3)
|
—
|
|
—
|
|
|
Balance at December 31,
|
$6
|
$12
|
$42
|
$4
|
$5
|
$21
|
154
|
CON EDISON ANNUAL REPORT 2018
|
|
Con Edison
|
|
CECONY
|
||||||||
(Millions of Dollars)
|
2018
|
|
2017
|
|
2016
|
|
2018
|
|
2017
|
|
2016
|
Performance-based restricted stock
|
$3
|
|
$53
|
|
$42
|
|
$3
|
|
$45
|
|
$36
|
Time-based restricted stock
|
2
|
|
2
|
|
2
|
|
1
|
|
2
|
|
2
|
Non-employee director deferred stock compensation
|
3
|
|
2
|
|
2
|
|
3
|
|
2
|
|
2
|
Stock purchase plan
|
6
|
|
6
|
|
4
|
|
6
|
|
6
|
|
4
|
Total
|
$14
|
|
$63
|
|
$50
|
|
$13
|
|
$55
|
|
$44
|
Income tax benefit
|
$4
|
|
$25
|
|
$20
|
|
$4
|
|
$22
|
|
$18
|
|
2018
|
|
2017
|
|
2016
|
Risk-free interest rate (a)
|
2.48% - 2.63%
|
|
1.76% - 1.89%
|
|
0.85% - 1.20%
|
Expected term (b)
|
3 years
|
|
3 years
|
|
3 years
|
Expected share price volatility (c)
|
14.76% - 17.71%
|
|
11.01% - 14.70%
|
|
17.72% - 18.22%
|
(a)
|
The risk-free rate is based on the U.S. Treasury zero-coupon yield curve.
|
(b)
|
The expected term of the Performance RSUs equals the vesting period. The Companies do not expect significant forfeitures to occur.
|
(c)
|
Based on historical experience.
|
CON EDISON ANNUAL REPORT 2018
|
155
|
|
Con Edison
|
CECONY
|
||||
|
|
Weighted Average Grant Date Fair Value (a)
|
|
Weighted Average Grant Date Fair Value (a)
|
||
|
Units
|
TSR
Portion (b)
|
Non-TSR
Portion (c)
|
Units
|
TSR
Portion (b)
|
Non-TSR
Portion (c)
|
Non-vested at December 31, 2017
|
1,028,932
|
$71.74
|
$70.11
|
784,166
|
$71.06
|
$70.08
|
Granted
|
328,850
|
67.26
|
76.37
|
247,532
|
66.79
|
76.48
|
Vested
|
(327,069)
|
57.77
|
63.27
|
(261,167)
|
57.37
|
63.18
|
Forfeited
|
(24,877)
|
72.22
|
74.97
|
(20,877)
|
71.76
|
75.14
|
Transferred (d)
|
—
|
—
|
—
|
12,252
|
78.47
|
72.71
|
Non-vested at December 31, 2018
|
1,005,836
|
$74.81
|
$74.27
|
761,906
|
$74.47
|
$74.42
|
(a)
|
The TSR and non-TSR Portions each account for
50 percent
of the awards’ value.
|
(b)
|
Fair value is determined using the Monte Carlo simulation described above. Weighted average grant date fair value does not reflect any accrual or payment of dividends prior to vesting.
|
(c)
|
Fair value is determined using the market price of one share of Con Edison common stock on the grant date. The market price has not been discounted to reflect that dividends do not accrue and are not payable on Performance RSUs until vesting.
|
(d)
|
Represents allocation to another Con Edison subsidiary of a portion of the Performance RSUs that had been awarded to a CECONY officer who transferred to another subsidiary.
|
|
Con Edison
|
|
CECONY
|
||||
|
Units
|
|
Weighted Average Grant Date
Fair Value
|
|
Units
|
|
Weighted Average Grant Date
Fair Value
|
Non-vested at December 31, 2017
|
64,870
|
|
$71.93
|
|
61,420
|
|
$71.93
|
Granted
|
23,000
|
|
77.94
|
|
21,400
|
|
77.94
|
Vested
|
(20,523)
|
|
61.03
|
|
(19,473)
|
|
61.03
|
Forfeited
|
(2,167)
|
|
73.93
|
|
(1,967)
|
|
73.97
|
Non-vested at December 31, 2018
|
65,180
|
|
$77.42
|
|
61,380
|
|
$77.42
|
156
|
CON EDISON ANNUAL REPORT 2018
|
As of and for the Year Ended December 31, 2018
(Millions of Dollars)
|
Operating
revenues
|
Inter-
segment revenues
|
Depreciation
and
amortization
|
Operating
income
|
Other Income (deductions)
|
Interest
charges
|
Income
taxes on
operating
income (a)
|
Total
assets
|
Capital
expenditures
|
||||||||||
CECONY
|
|
|
|
|
|
|
|
|
|
||||||||||
Electric
|
$7,971
|
$16
|
$984
|
$1,799
|
$(110)
|
$519
|
$233
|
$31,012
|
$1,861
|
||||||||||
Gas
|
2,078
|
7
|
205
|
478
|
(23)
|
131
|
87
|
9,710
|
1,050
|
||||||||||
Steam
|
631
|
75
|
87
|
77
|
(10)
|
39
|
8
|
2,386
|
94
|
||||||||||
Consolidation adjustments
|
—
|
|
(98)
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
||
Total CECONY
|
$10,680
|
|
$—
|
|
$1,276
|
$2,354
|
($143)
|
$689
|
$328
|
$43,108
|
$3,005
|
||||||||
O&R
|
|
|
|
|
|
|
|
|
|
||||||||||
Electric
|
$642
|
|
$—
|
|
$56
|
$93
|
$(14)
|
$25
|
$14
|
$2,036
|
$138
|
||||||||
Gas
|
249
|
—
|
|
21
|
39
|
(5)
|
14
|
7
|
856
|
67
|
|||||||||
Other
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
Total O&R
|
$891
|
|
$—
|
|
$77
|
$132
|
$(19)
|
$39
|
$21
|
$2,892
|
$205
|
||||||||
Clean Energy Businesses
|
$763
|
|
$—
|
|
$85
|
$194
|
$33
|
$63
|
$19
|
$5,821
|
$1,791
|
||||||||
Con Edison Transmission
|
4
|
—
|
|
1
|
(7)
|
91
|
20
|
(1)
|
1,425
|
248
|
|||||||||
Other (b)
|
(1
|
)
|
—
|
|
(1)
|
(9)
|
(24)
|
8
|
39
|
674
|
—
|
|
|||||||
Total Con Edison
|
$12,337
|
|
$—
|
|
$1,438
|
$2,664
|
$(62)
|
$819
|
$406
|
$53,920
|
$5,249
|
CON EDISON ANNUAL REPORT 2018
|
157
|
As of and for the Year Ended December 31, 2017
(Millions of Dollars)
|
Operating
revenues
|
Inter-
segment
revenues
|
Depreciation
and
amortization
|
Operating
income
|
Other Income (deductions)
|
Interest
charges
|
Income
taxes on
operating
income (a)
|
Total
assets
|
Capital
expenditures
|
||||||||||
CECONY
|
|
|
|
|
|
|
|
|
|
||||||||||
Electric
|
$7,972
|
$16
|
$925
|
$1,974
|
$(105)
|
$472
|
$511
|
$29,661
|
$1,905
|
||||||||||
Gas
|
1,901
|
6
|
185
|
495
|
(23)
|
113
|
152
|
8,387
|
909
|
||||||||||
Steam
|
595
|
75
|
85
|
80
|
(9)
|
38
|
25
|
2,403
|
90
|
||||||||||
Consolidation adjustments
|
—
|
|
(97)
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
||
Total CECONY
|
$10,468
|
|
$—
|
|
$1,195
|
$2,549
|
$(137)
|
$623
|
$688
|
$40,451
|
$2,904
|
||||||||
O&R
|
|
|
|
|
|
|
|
|
|
||||||||||
Electric
|
$642
|
|
$—
|
|
$51
|
$115
|
$(14)
|
$24
|
$30
|
$1,949
|
$128
|
||||||||
Gas
|
232
|
—
|
|
20
|
46
|
(5)
|
12
|
12
|
824
|
61
|
|||||||||
Other
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
Total O&R
|
$874
|
|
$—
|
|
$71
|
$161
|
$(19)
|
$36
|
$42
|
$2,773
|
$189
|
||||||||
Clean Energy Businesses
|
$694
|
|
$—
|
|
$74
|
$69
|
$33
|
$43
|
$(273)
|
$2,735
|
$447
|
||||||||
Con Edison Transmission
|
2
|
—
|
|
1
|
(8)
|
80
|
16
|
(11)
|
1,222
|
66
|
|||||||||
Other (b)
|
(5)
|
—
|
|
—
|
|
3
|
(5)
|
11
|
13
|
930
|
—
|
|
|||||||
Total Con Edison
|
$12,033
|
|
$—
|
|
$1,341
|
$2,774
|
$(48)
|
$729
|
$459
|
$48,111
|
$3,606
|
As of and for the Year Ended December 31, 2016
(Millions of Dollars)
|
Operating
revenues
|
Inter-
segment
revenues
|
Depreciation
and
amortization
|
Operating
income
|
Other Income (deductions)
|
Interest
charges
|
Income
taxes on
operating
income (a)
|
Total
assets
|
Capital
expenditures
|
||||||||||
CECONY
|
|
|
|
|
|
|
|
|
|
||||||||||
Electric
|
$8,106
|
$17
|
$865
|
$1,996
|
$(147)
|
$459
|
$495
|
$30,708
|
$1,819
|
||||||||||
Gas
|
1,508
|
6
|
159
|
387
|
(31)
|
105
|
92
|
7,553
|
811
|
||||||||||
Steam
|
551
|
88
|
82
|
68
|
(11)
|
39
|
30
|
2,595
|
126
|
||||||||||
Consolidation adjustments
|
—
|
|
(111)
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
||
Total CECONY
|
$10,165
|
|
$—
|
|
$1,106
|
$2,451
|
$(189)
|
$603
|
$617
|
$40,856
|
$2,756
|
||||||||
O&R
|
|
|
|
|
|
|
|
|
|
||||||||||
Electric
|
$637
|
|
$—
|
|
$49
|
$107
|
$(11)
|
$24
|
$30
|
$1,949
|
$114
|
||||||||
Gas
|
184
|
—
|
|
18
|
39
|
(4)
|
12
|
10
|
809
|
52
|
|||||||||
Other
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
Total O&R
|
$821
|
|
$—
|
|
$67
|
$146
|
$(15)
|
$36
|
$40
|
$2,758
|
$166
|
||||||||
Clean Energy Businesses
|
$1,091
|
$7
|
$42
|
$183
|
$21
|
$34
|
$53
|
$2,551
|
$1,235
|
||||||||||
Con Edison Transmission
|
—
|
|
—
|
|
—
|
|
(3)
|
43
|
6
|
—
|
|
1,150
|
1,078
|
||||||
Other (b)
|
(2)
|
(7)
|
1
|
3
|
(1)
|
17
|
4
|
940
|
—
|
|
|||||||||
Total Con Edison
|
$12,075
|
|
$—
|
|
$1,216
|
$2,780
|
$(141)
|
$696
|
$714
|
$48,255
|
$5,235
|
(a)
|
For Con Edison, the income tax expense/(benefit) on non-operating income was
$(5) million
,
$13 million
and
$(16) million
in
2018
,
2017
and
2016
, respectively. For CECONY, the income tax expense/(benefit) on non-operating income was
$(2) million
,
$(3) million
and
$(14) million
in
2018
,
2017
and
2016
, respectively. At December 31, 2017, Con Edison re-measured its deferred tax assets and liabilities based upon the
21 percent
corporate income tax rate under the TCJA. As a result, Con Edison, decreased its federal income tax expense by
$259 million
(
$269 million
,
$11 million
and
$(21) million
, respectively, for the Clean Energy Businesses, Con Edison Transmission and the parent company). See “Other Regulatory Matters” in Note B and Note L to the financial statements in Item 8.
|
(b)
|
Parent company and consolidation adjustments. Other does not represent a business segment.
|
158
|
CON EDISON ANNUAL REPORT 2018
|
(Millions of Dollars)
|
2018
|
|
2017
|
|
||||||
Balance Sheet Location
|
Gross
Amounts of
Recognized
Assets/
(Liabilities)
|
Gross
Amounts
Offset
|
Net Amounts of Assets/(Liabilities) (a)
|
|
Gross
Amounts of
Recognized
Assets/
(Liabilities)
|
Gross
Amounts
Offset
|
Net Amounts of Assets/(Liabilities) (a)
|
|
||
Con Edison
|
|
|
|
|
|
|
|
|
||
Fair value of derivative assets
|
|
|
|
|
|
|
|
|
||
Current
|
$43
|
$(14)
|
$29
|
(b)
|
$83
|
$(51)
|
$32
|
(b)
|
||
Noncurrent
|
14
|
(7)
|
7
|
(c)
|
10
|
(4)
|
6
|
|
||
Total fair value of derivative assets
|
$57
|
$(21)
|
$36
|
(b)(c)
|
$93
|
$(55)
|
$38
|
|
||
Fair value of derivative liabilities
|
|
|
|
|
|
|
|
|
||
Current
|
$(61)
|
$11
|
$(50)
|
|
$(67)
|
$50
|
$(17)
|
|
||
Noncurrent
|
(19)
|
9
|
(10)
|
(c)
|
(43)
|
5
|
(38)
|
|
||
Total fair value of derivative liabilities
|
$(80)
|
$20
|
$(60)
|
|
$(110)
|
$55
|
$(55)
|
|
||
Net fair value derivative assets/(liabilities)
|
$(23)
|
$(1)
|
$(24)
|
(b)(c)
|
$(17)
|
|
$—
|
|
$(17)
|
(b)
|
CECONY
|
|
|
|
|
|
|
|
|
||
Fair value of derivative assets
|
|
|
|
|
|
|
|
|
||
Current
|
$25
|
$(6)
|
$19
|
(b)
|
$39
|
$(15)
|
$24
|
(b)
|
||
Noncurrent
|
11
|
(5)
|
6
|
|
9
|
(4)
|
5
|
|
||
Total fair value of derivative assets
|
$36
|
$(11)
|
$25
|
|
$48
|
$(19)
|
$29
|
|
||
Fair value of derivative liabilities
|
|
|
|
|
|
|
|
|
||
Current
|
$(31)
|
$6
|
$(25)
|
|
$(26)
|
$14
|
$(12)
|
|
||
Noncurrent
|
(12)
|
6
|
(6)
|
|
(36)
|
4
|
(32)
|
|
||
Total fair value of derivative liabilities
|
$(43)
|
$12
|
$(31)
|
|
$(62)
|
$18
|
$(44)
|
|
||
Net fair value derivative assets/(liabilities)
|
$(7)
|
$1
|
$(6)
|
(b)
|
$(14)
|
$(1)
|
$(15)
|
(b)
|
(a)
|
Derivative instruments and collateral were offset on the consolidated balance sheet as applicable under the accounting rules. The Companies enter into master agreements for their commodity derivatives. These agreements typically provide offset in the event of contract termination. In such case, generally the non-defaulting party’s payable will be offset by the defaulting party’s payable. The non-defaulting party will customarily notify the defaulting party within a specific time period and come to an agreement on the early termination amount.
|
(b)
|
At
December 31, 2018
and
2017
, margin deposits for Con Edison (
$7 million
and
$12 million
, respectively) and CECONY (
$6 million
and
$11 million
, respectively) were classified as derivative assets on the consolidated balance sheet, but not included in the table. Margin is collateral, typically cash, that the holder of a derivative instrument is required to deposit in order to transact on an exchange and to cover its potential losses with its broker or the exchange.
|
(c)
|
Does not include interest rate swaps of
$2 million
in noncurrent assets and
$(6) million
in noncurrent liabilities (see below).
|
CON EDISON ANNUAL REPORT 2018
|
159
|
|
|
Con Edison
|
|
CECONY
|
|
||||||||||||
(Millions of Dollars)
|
Balance Sheet Location
|
2018
|
|
|
2017
|
|
|
2018
|
|
|
2017
|
|
|
||||
Pre-tax gains/(losses) deferred in accordance with accounting rules for regulated operations:
|
|
|
|
|
|
||||||||||||
Current
|
Deferred derivative gains
|
$(1)
|
|
$3
|
|
$1
|
|
$4
|
|
||||||||
Noncurrent
|
Deferred derivative gains
|
4
|
|
—
|
|
|
3
|
|
—
|
|
|
||||||
Total deferred gains/(losses)
|
$3
|
|
$3
|
|
$4
|
|
$4
|
|
|||||||||
Current
|
Deferred derivative losses
|
$4
|
|
$51
|
|
$8
|
|
$49
|
|
||||||||
Current
|
Recoverable energy costs
|
(26)
|
|
(154)
|
|
(26)
|
|
(144)
|
|
||||||||
Noncurrent
|
Deferred derivative losses
|
27
|
|
4
|
|
26
|
|
5
|
|
||||||||
Total deferred gains/(losses)
|
$5
|
|
$(99)
|
|
$8
|
|
$(90)
|
|
|||||||||
Net deferred gains/(losses)
|
$8
|
|
$(96)
|
|
$12
|
|
$(86)
|
|
|||||||||
|
Income Statement Location
|
|
|
|
|
|
|
|
|
||||||||
Pre-tax gain/(loss) recognized in income
|
|
|
|
|
|
|
|
|
|||||||||
|
Purchased power expense
|
|
$—
|
|
|
|
$—
|
|
|
|
$—
|
|
|
|
$—
|
|
|
|
Gas purchased for resale
|
(2)
|
|
3
|
|
—
|
|
|
—
|
|
|
||||||
|
Non-utility revenue
|
4
|
(a)
|
5
|
(b)
|
—
|
|
|
—
|
|
|
||||||
|
Other operations and maintenance expense
|
(2)
|
(c)
|
—
|
|
|
(2)
|
|
—
|
|
|
||||||
Total pre-tax gain/(loss) recognized in income
|
|
$—
|
|
|
$8
|
|
$(2)
|
|
|
$—
|
|
|
(a)
|
For the year ended
December 31, 2018
, Con Edison recorded unrealized pre-tax losses in non-utility operating revenue (
$5 million
).
|
(b)
|
For the year ended
December 31, 2017
, Con Edison recorded an
immaterial
unrealized pre-tax gain in non-utility operating revenue.
|
(c)
|
For the year ended
December 31, 2018
, Con Edison recorded unrealized pre-tax losses in other operations and maintenance expense (
$2 million
).
|
|
Electric Energy (MWh) (a)(b)
|
Capacity (MW) (a)
|
Natural Gas (Dt) (a)(b)
|
Refined Fuels (gallons)
|
Con Edison
|
28,303,678
|
18,519
|
164,668,697
|
3,780,000
|
CECONY
|
25,458,600
|
10,350
|
151,280,000
|
3,780,000
|
(a)
|
Volumes are reported net of long and short positions, except natural gas collars where the volumes of long positions are reported.
|
(b)
|
Excludes electric congestion and gas basis swap contracts which are associated with electric and gas contracts and hedged volumes.
|
160
|
CON EDISON ANNUAL REPORT 2018
|
(a)
|
Non-derivative transactions for the purchase and sale of electricity and gas and qualifying derivative instruments, which have been designated as normal purchases or normal sales, are excluded from the table. These transactions primarily include purchases of electricity from independent system operators. In the event the Utilities and the Clean Energy Businesses were no longer extended unsecured credit for such purchases, the Companies would be required to post additional collateral of
$1 million
at
December 31, 2018
. For certain other such non-derivative transactions, the Companies could be required to post collateral under certain circumstances, including in the event counterparties had reasonable grounds for insecurity.
|
(b)
|
The Companies measure the collateral requirements by taking into consideration the fair value amounts of derivative instruments that contain credit-risk-related contingent features that are in a net liabilities position plus amounts owed to counterparties for settled transactions and amounts required by counterparties for minimum financial security. The fair value amounts represent unrealized losses, net of any unrealized gains where the Companies have a legally enforceable right to offset.
|
(c)
|
Derivative instruments that are net assets have been excluded from the table. At
December 31, 2018
, if Con Edison had been downgraded to below investment grade, it would have been required to post additional collateral for such derivative instruments of
$20 million
.
|
•
|
Level 1 – Consists of assets or liabilities whose value is based on unadjusted quoted prices in active markets at the measurement date. An active market is one in which transactions for assets or liabilities occur with sufficient frequency and volume to provide pricing information on an ongoing basis. This category includes
|
CON EDISON ANNUAL REPORT 2018
|
161
|
•
|
Level 2 – Consists of assets or liabilities valued using industry standard models and based on prices, other than quoted prices within Level 1, that are either directly or indirectly observable as of the measurement date. The industry standard models consider observable assumptions including time value, volatility factors and current market and contractual prices for the underlying commodities, in addition to other economic measures. This category includes contracts traded on active exchanges or in over-the-counter markets priced with industry standard models.
|
•
|
Level 3 – Consists of assets or liabilities whose fair value is estimated based on internally developed models or methodologies using inputs that are generally less readily observable and supported by little, if any, market activity at the measurement date. Unobservable inputs are developed based on the best available information and subject to cost benefit constraints. This category includes contracts priced using models that are internally developed and contracts placed in illiquid markets. It also includes contracts that expire after the period of time for which quoted prices are available and internal models are used to determine a significant portion of the value.
|
|
2018
|
2017
|
|||||||||||||||||
(Millions of Dollars)
|
Level 1
|
Level 2
|
Level 3
|
Netting
Adjustment (e)
|
Total
|
Level 1
|
Level 2
|
Level 3
|
Netting
Adjustment (e)
|
Total
|
|||||||||
Con Edison
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Derivative assets:
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Commodity (a)(b)(c)
|
$6
|
$36
|
$7
|
$(6)
|
$43
|
$5
|
$77
|
$7
|
$(39)
|
$50
|
|||||||||
Interest Rate Swaps (a)(b)(c)(f)
|
—
|
|
2
|
—
|
|
—
|
|
2
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
Other (a)(b)(d)
|
287
|
114
|
—
|
|
—
|
|
401
|
283
|
120
|
—
|
|
—
|
|
403
|
|||||
Total assets
|
$293
|
$152
|
$7
|
$(6)
|
$446
|
$288
|
$197
|
$7
|
$(39)
|
$453
|
|||||||||
Derivative liabilities:
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Commodity (a)(b)(c)
|
$8
|
$43
|
$20
|
$(11)
|
$60
|
$8
|
$93
|
$6
|
$(52)
|
$55
|
|||||||||
Interest Rate Swaps (a)(b)(c)(f)
|
—
|
|
6
|
—
|
|
—
|
|
6
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
Total liabilities
|
$8
|
$49
|
$20
|
$(11)
|
$66
|
$8
|
$93
|
$6
|
$(52)
|
$55
|
|||||||||
CECONY
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Derivative assets:
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Commodity (a)(b)(c)
|
$3
|
$28
|
$1
|
$(1)
|
$31
|
$3
|
$40
|
$4
|
$(7)
|
$40
|
|||||||||
Other (a)(b)(d)
|
267
|
109
|
—
|
|
—
|
|
376
|
260
|
114
|
—
|
|
—
|
|
374
|
|||||
Total assets
|
$270
|
$137
|
$1
|
$(1)
|
$407
|
$263
|
$154
|
$4
|
$(7)
|
$414
|
|||||||||
Derivative liabilities:
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Commodity (a)(b)(c)
|
$5
|
$30
|
$3
|
$(6)
|
$32
|
$5
|
$57
|
|
$—
|
|
$(18)
|
$44
|
(a)
|
The Companies’ policy is to review the fair value hierarchy and recognize transfers into and transfers out of the levels at the end of each reporting period. Con Edison and CECONY had
$2 million
of commodity derivative liabilities transferred from level 3 to level 2 during the year ended
December 31, 2018
because of availability of observable market data due to the decrease in the terms of certain contracts from beyond
three years
as of December 31, 2017 to less than
three years
as of
December 31, 2018
. Con Edison and CECONY had
$11 million
and
$10 million
, respectively, of commodity derivative liabilities transferred from level 3 to level 2 during the year ended December 31, 2017 because of availability of observable market data due to the decrease in the terms of certain contracts from beyond three years as of September 30, 2017 to less than three years as of
December 31, 2017
.
|
(b)
|
Level 2 assets and liabilities include investments held in the deferred compensation plan and/or non-qualified retirement plans, exchange-traded contracts where there is insufficient market liquidity to warrant inclusion in Level 1, certain over-the-counter derivative instruments for electricity, refined products and natural gas. Derivative instruments classified as Level 2 are valued using industry standard models that incorporate corroborated observable inputs; such as pricing services or prices from similar instruments that trade in liquid markets, time value and volatility factors.
|
(c)
|
The accounting rules for fair value measurements and disclosures require consideration of the impact of nonperformance risk (including credit risk) from a market participant perspective in the measurement of the fair value of assets and liabilities. At
December 31, 2018
and
2017
, the Companies determined that nonperformance risk would have no material impact on their financial position or results of operations.
|
(d)
|
Other assets are comprised of assets such as life insurance contracts within the deferred compensation plan and non-qualified retirement plans.
|
(e)
|
Amounts represent the impact of legally-enforceable master netting agreements that allow the Companies to net gain and loss positions and cash collateral held or placed with the same counterparties.
|
162
|
CON EDISON ANNUAL REPORT 2018
|
(f)
|
See Note O.
|
|
Fair Value of Level 3 at December 31, 2018
|
|
|
|
|
(Millions of Dollars)
|
Valuation Techniques
|
Unobservable Inputs
|
Range
|
Con Edison
—
Commodity
|
||||
Electricity
|
$(12)
|
Discounted Cash Flow
|
Forward energy prices (a)
|
$21.34-$64.45 per MWh
|
|
|
Discounted Cash Flow
|
Forward capacity prices (a)
|
$1.00-$6.30 per kW-month
|
Natural Gas
|
(2)
|
Discounted Cash Flow
|
Forward natural gas prices (a)
|
$0.92-$6.62 per Dt
|
Transmission Congestion Contracts
|
1
|
Discounted Cash Flow
|
Inter-zonal forward price curves adjusted for historical zonal losses (b)
|
$0.29-$8.03 per MWh
|
Total Con Edison — Commodity
|
$(13)
|
|
|
|
CECONY — Commodity
|
||||
Electricity
|
$(3)
|
Discounted Cash Flow
|
Forward capacity prices (a)
|
$1.00-$6.30 per kW-month
|
Transmission Congestion Contracts
|
1
|
Discounted Cash Flow
|
Inter-zonal forward price curves adjusted for historical zonal losses (b)
|
$0.49-$2.60 per MWh
|
Total CECONY — Commodity
|
$(2)
|
|
|
|
(a)
|
Generally, increases (decreases) in this input in isolation would result in a higher (lower) fair value measurement.
|
(b)
|
Generally, increases (decreases) in this input in isolation would result in a lower (higher) fair value measurement.
|
|
Con Edison
|
CECONY
|
||||
(Millions of Dollars)
|
2018
|
|
2017
|
2018
|
|
2017
|
Beginning balance as of January 1,
|
$1
|
$1
|
$4
|
$1
|
||
Included in earnings
|
4
|
8
|
4
|
2
|
||
Included in regulatory assets and liabilities
|
(10)
|
(13)
|
(4)
|
(7)
|
||
Purchases
|
—
|
|
2
|
—
|
|
1
|
Settlements
|
(6)
|
(8)
|
(4)
|
(3)
|
||
Transfer out of level 3
|
(2)
|
11
|
(2)
|
10
|
||
Ending balance as of December 31,
|
$(13)
|
$1
|
$(2)
|
$4
|
CON EDISON ANNUAL REPORT 2018
|
163
|
164
|
CON EDISON ANNUAL REPORT 2018
|
|
Tax Equity Projects
|
|
||||||
|
Great Valley Solar
|
|
Copper Mountain - Mesquite Solar
|
|
Texas Solar 4
|
|||
(Millions of Dollars)
|
2018
|
|
2018
|
|
2018
|
2017
|
||
Restricted cash
|
|
$—
|
|
|
$—
|
|
$4
|
$5
|
Non-utility property, less accumulated depreciation of $1 for each of the Tax Equity Projects and $15 and $12, for Texas Solar 4 in 2018 and 2017, respectively
|
313
|
492
|
98
|
101
|
||||
Other assets
|
18
|
97
|
9
|
8
|
||||
Total assets (a)
|
$331
|
$589
|
$111
|
$114
|
||||
Long-term debt due within one year
|
|
$—
|
|
|
$—
|
|
$2
|
$2
|
Other liabilities
|
17
|
33
|
26
|
28
|
||||
Long-term debt
|
—
|
|
—
|
|
56
|
58
|
||
Total liabilities (b)
|
$17
|
$33
|
$84
|
$88
|
(a)
|
The assets of the Tax Equity Projects and Texas Solar 4 represent assets of a consolidated VIE that can be used only to settle obligations of the consolidated VIE.
|
(b)
|
The liabilities of the Tax Equity Projects and Texas Solar 4 represent liabilities of a consolidated VIE for which creditors do not have recourse to the general credit of the primary beneficiary.
|
Project Name
|
Generating Capacity (a) (MW AC)
|
Power Purchase Agreement Term in Years
|
Year of Investment
|
Location
|
Maximum
Exposure to Loss ( Millions of Dollars ) (b) |
Great Valley Solar (c)
|
200
|
15-20
|
2018
|
California
|
$281
|
Copper Mountain - Mesquite Solar (d)
|
344
|
20-25
|
2018
|
Nevada and Arizona
|
485
|
Texas Solar 4
|
32
|
25
|
2014
|
Texas
|
20
|
(a)
|
Represents Con Edison Development’s ownership interest in the project.
|
(b)
|
Maximum exposure is equal to the net assets of the project on the consolidated balance sheet less any applicable noncontrolling interest (
$33 million
for Great Valley Solar,
$71 million
for Copper Mountain - Mesquite Solar and
$7 million
for Texas Solar 4). Con Edison did not provide any financial or other support during the year that was not previously contractually required.
|
(c)
|
Great Valley Solar consists of the Great Valley Solar 1, Great Valley Solar 2, Great Valley Solar 3 and Great Valley Solar 4 projects.
|
(d)
|
Copper Mountain - Mesquite Solar consists of the Copper Mountain Solar 4, Mesquite Solar 2 and Mesquite Solar 3 projects.
|
CON EDISON ANNUAL REPORT 2018
|
165
|
|
CECONY
|
||
(Millions of Dollars)
|
2018
|
2017
|
2016
|
Cost of services provided
|
$115
|
$111
|
$108
|
Cost of services received
|
73
|
64
|
64
|
166
|
CON EDISON ANNUAL REPORT 2018
|
CON EDISON ANNUAL REPORT 2018
|
167
|
168
|
CON EDISON ANNUAL REPORT 2018
|
CON EDISON ANNUAL REPORT 2018
|
169
|
|
Years ended December 31,
|
|
(Millions of Dollars)
|
2018
|
2017
|
As Reported
|
|
|
Revenue
|
$12,337
|
$12,033
|
Net income
|
1,382
|
1,525
|
|
|
|
PRO FORMA SUPPLEMENTAL INFORMATION
|
|
|
If Acquired January 1, 2017 (a)(b)
|
|
|
Revenue
|
$12,655
|
$12,331
|
Net income
|
1,279
|
1,612
|
•
|
included additional interest expense of
$37 million
and
$38 million
in 2018 and 2017, respectively, that would have been incurred if
$825 million
that was borrowed in December 2018 under a variable rate term loan agreement to fund a portion of the purchase price for the acquisition had instead been borrowed for such purpose on January 1, 2017 at a fixed rate of
4.64%
per annum; and
|
•
|
with respect to the Previously-Owned JV Interests: eliminated the
$131 million
purchase accounting gain (pre-tax) that Con Edison recognized upon the completion of the acquisition in 2018 and reflected the
$131 million
purchase accounting gain in 2017; recorded the corresponding increase to the book value of the related net utility plant and power purchase agreement intangible asset as of January 1, 2017 instead of December 13, 2018, and included the increased depreciation and amortization expense in 2018 and 2017; and eliminated
$33 million
and
$32 million
of other income that Con Edison had recorded in 2018 and 2017, respectively, under the equity method of accounting.
|
170
|
CON EDISON ANNUAL REPORT 2018
|
|
For the Years Ended December 31,
|
||||
(Millions of Dollars, except per share amounts)
|
2018
|
|
2017
|
|
2016
|
Equity in earnings of subsidiaries
|
$1,447
|
|
$1,544
|
|
$1,254
|
Other income (deductions), net of taxes
|
(6)
|
|
31
|
|
32
|
Interest expense
|
(59)
|
|
(50)
|
|
(41)
|
Net Income
|
$1,382
|
|
$1,525
|
|
$1,245
|
Comprehensive Income
|
$1,392
|
|
$1,526
|
|
$1,252
|
Net Income Per Share – Basic
|
$4.43
|
|
$4.97
|
|
$4.15
|
Net Income Per Share – Diluted
|
$4.42
|
|
$4.94
|
|
$4.12
|
Dividends Declared Per Share
|
$2.86
|
|
$2.76
|
|
$2.68
|
Average Number Of Shares Outstanding—Basic (In Millions)
|
311.7
|
|
307.1
|
|
300.4
|
Average Number Of Shares Outstanding—Diluted (In Millions)
|
312.9
|
|
308.8
|
|
301.9
|
(a)
|
These financial statements, in which Con Edison’s subsidiaries have been included using the equity method, should be read together with its consolidated financial statements and the notes thereto appearing above.
|
CON EDISON ANNUAL REPORT 2018
|
171
|
|
For the Years Ended December 31,
|
|||||||
(Millions of Dollars)
|
2018
|
|
|
2017
|
|
|
2016
|
|
Net Income
|
1,382
|
|
1,525
|
|
1,245
|
|||
Equity in earnings of subsidiaries
|
(1,447)
|
|
(1,544)
|
|
(1,254)
|
|||
Dividends received from:
|
|
|
|
|
|
|||
CECONY
|
846
|
|
796
|
|
744
|
|||
O&R
|
46
|
|
44
|
|
43
|
|||
Clean Energy Businesses
|
15
|
|
12
|
|
10
|
|||
Con Edison Transmission
|
10
|
|
8
|
|
—
|
|
||
Change in Assets:
|
|
|
|
|
|
|||
Special deposits
|
(8)
|
|
—
|
|
|
—
|
|
|
Income taxes receivable
|
2
|
|
34
|
|
87
|
|||
Other – net
|
187
|
|
21
|
|
(152)
|
|||
Net Cash Flows from Operating Activities
|
1,033
|
|
896
|
|
723
|
|||
Investing Activities
|
|
|
|
|
|
|||
Contributions to subsidiaries
|
(1,110)
|
|
(434)
|
|
(691)
|
|||
Debt receivable from affiliated companies
|
(825)
|
|
—
|
|
|
(900)
|
||
Net Cash Flows Used in Investing Activities
|
(1,935)
|
|
(434)
|
|
(1,591)
|
|||
Financing Activities
|
|
|
|
|
|
|||
Net proceeds of short-term debt
|
164
|
|
(53)
|
|
(53)
|
|||
Issuance of long-term debt
|
825
|
|
400
|
|
900
|
|||
Retirement of long-term debt
|
(3)
|
|
(402)
|
|
(2)
|
|||
Debt issuance costs
|
—
|
|
|
(2)
|
|
(5)
|
||
Issuance of common shares for stock plans, net of repurchases
|
53
|
|
51
|
|
51
|
|||
Issuance of common shares - public offering
|
705
|
|
343
|
|
702
|
|||
Common stock dividends
|
(842)
|
|
(803)
|
|
(763)
|
|||
Net Cash Flows Used in Financing Activities
|
902
|
|
(466)
|
|
830
|
|||
Net Change for the Period
|
—
|
|
|
(4)
|
|
(38)
|
||
Balance at Beginning of Period
|
9
|
|
13
|
|
51
|
|||
Balance at End of Period
|
$9
|
|
$9
|
|
$13
|
(a)
|
These financial statements, in which Con Edison’s subsidiaries have been included using the equity method, should be read together with its consolidated financial statements and the notes thereto appearing above.
|
172
|
CON EDISON ANNUAL REPORT 2018
|
|
|
December 31,
|
||||
(Millions of Dollars)
|
|
2018
|
|
|
2017
|
|
Assets
|
|
|
|
|
||
Current Assets
|
|
|
|
|
||
Cash and temporary cash investments
|
|
$9
|
|
$9
|
||
Income taxes receivable
|
|
43
|
|
45
|
||
Term loan receivable from affiliated companies
|
|
825
|
|
—
|
|
|
Accounts receivable from affiliated companies
|
|
536
|
|
687
|
||
Prepayments
|
|
33
|
|
36
|
||
Other current assets
|
|
12
|
|
18
|
||
Total Current Assets
|
|
1,458
|
|
795
|
||
Investments in subsidiaries
|
|
16,707
|
|
15,110
|
||
Goodwill
|
|
406
|
|
406
|
||
Deferred income tax
|
|
69
|
|
18
|
||
Long-term debt receivable from affiliated companies
|
|
900
|
|
900
|
||
Other noncurrent assets
|
|
2
|
|
2
|
||
Total Assets
|
|
$19,542
|
|
$17,231
|
||
Liabilities and Shareholders’ Equity
|
|
|
|
|
||
Current Liabilities
|
|
|
|
|
||
Long-term debt due within one year
|
|
$3
|
|
$2
|
||
Term loan
|
|
825
|
|
—
|
|
|
Notes payable
|
|
495
|
|
331
|
||
Accounts payable
|
|
9
|
|
—
|
|
|
Accounts payable to affiliated companies
|
|
274
|
|
274
|
||
Accrued taxes
|
|
2
|
|
|
—
|
|
Other current liabilities
|
|
13
|
|
10
|
||
Total Current Liabilities
|
|
1,621
|
|
617
|
||
Total Liabilities
|
|
1,621
|
|
617
|
||
Long-term debt
|
|
1,195
|
|
1,195
|
||
Shareholders’ Equity
|
|
|
|
|
||
Common stock, including additional paid-in capital
|
|
7,151
|
|
6,331
|
||
Retained earnings
|
|
9,575
|
|
9,088
|
||
Total Shareholders’ Equity
|
|
16,726
|
|
15,419
|
||
Total Liabilities and Shareholders’ Equity
|
|
$19,542
|
|
$17,231
|
(a)
|
These financial statements, in which Con Edison’s subsidiaries have been included using the equity method, should be read together with its consolidated financial statements and the notes thereto appearing above.
|
CON EDISON ANNUAL REPORT 2018
|
173
|
|
|
|
|
|
COLUMN C
Additions
|
|
|
|
|
||||||
Company
(Millions of Dollars)
|
COLUMN A
Description
|
|
|
|
COLUMN B
Balance at
Beginning
of Period
|
|
(1)
Charged To
Costs And
Expenses
|
|
(2)
Charged
To Other
Accounts
|
|
|
COLUMN D
Deductions (b)
|
|
COLUMN E
Balance
At End of
Period
|
|
Con Edison
|
Allowance for uncollectible
accounts (a):
|
|
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
2018
|
|
$70
|
|
$62
|
|
|
$—
|
|
|
$64
|
|
$68
|
|
|
|
2017
|
|
$83
|
|
$64
|
|
|
$—
|
|
|
$77
|
|
$70
|
|
|
|
2016
|
|
$96
|
|
$63
|
|
|
$—
|
|
|
$76
|
|
$83
|
CECONY
|
Allowance for uncollectible
accounts (a):
|
|
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
2018
|
|
$65
|
|
$56
|
|
|
$—
|
|
|
$60
|
|
$61
|
|
|
|
2017
|
|
$78
|
|
$60
|
|
|
$—
|
|
|
$73
|
|
$65
|
|
|
|
2016
|
|
$91
|
|
$57
|
|
|
$—
|
|
|
$70
|
|
$78
|
(a)
|
This is a valuation account deducted in the balance sheet from the assets (Accounts receivable - customers and Other receivables) to which they apply.
|
(b)
|
Accounts written off less cash collections, miscellaneous adjustments and amounts reinstated as receivables previously written off.
|
174
|
CON EDISON ANNUAL REPORT 2018
|
CON EDISON ANNUAL REPORT 2018
|
175
|
Plan category
|
Number of securities to
be issued upon
exercise of
outstanding options,
warrants and rights
|
|
|
Weighted-average
exercise price of
outstanding options,
warrants and rights
|
|
Number of securities
remaining available for
future issuance under
equity compensation
plans (excluding
securities reflected in
column (1))
|
|||
|
(1)
|
|
|
(2)
|
|
(3)
|
|||
Equity compensation plans approved by security holders
|
|
|
|
|
|
|
|||
2003 LTIP (a)
|
229,881
|
|
|
|
—
|
|
|
—
|
|
2013 LTIP (b)
|
1,427,052
|
|
|
|
—
|
|
|
3,256,406
|
|
Stock Purchase Plan (c)
|
—
|
|
|
|
—
|
|
|
6,560,561
|
|
Total equity compensation plans approved by security holders
|
1,656,933
|
|
|
|
—
|
|
|
9,816,967
|
|
Total equity compensation plans not approved by security holders
|
2,500
|
|
(d)
|
|
—
|
|
|
—
|
|
Total
|
1,659,433
|
|
|
|
—
|
|
|
9,816,967
|
|
(a)
|
The number of shares of Con Edison common stock that may be issued pursuant to outstanding awards under the Long Term Incentive Plan approved by the company’s shareholders in 2003 (the “2003 LTIP”) include: (A) 191,425 shares for stock unit awards made prior to 2013 that have vested and for which the receipt of shares was deferred and (B) 38,456 shares covered by outstanding directors’ deferred stock unit awards (which vested upon grant). Amounts do not include shares that may be issued pursuant to any dividend reinvestment in the future on the deferred stock units. There is no dividend reinvestment on the other outstanding awards. Outstanding awards had no exercise price. No new awards may be made under the 2003 LTIP.
|
(b)
|
The number of shares of Con Edison common stock that may be issued pursuant to outstanding awards under the Long Term Incentive Plan approved by the company’s shareholders in 2013 (the “2013 LTIP”) include: (A) outstanding awards made in 2014 and subsequent years (1,123,793 shares for performance restricted stock units and 65,180 shares for time-based restricted stock units); (B) 238,079 shares covered by outstanding directors’ deferred stock unit awards (which vested upon grant). Amounts do not include shares that may be issued pursuant to any dividend reinvestment in the future on the deferred stock units. There is no dividend reinvestment on the other outstanding awards. The outstanding awards had no exercise price. No new awards may be made under the 2013 LTIP after May 20, 2023.
|
(c)
|
Shares of Con Edison common stock may be issued under the Stock Purchase Plan until May 19, 2024 (which is 10 years after the date of the annual meeting at which Con Edison’s shareholders approved the plan).
|
(d)
|
This amount represents shares to be issued to an officer who had elected to defer receipt of these shares until separation from service or later. These shares are issuable pursuant to awards of restricted stock units made in 2000, which vested in 2004.
|
176
|
CON EDISON ANNUAL REPORT 2018
|
|
2018
|
|
2017
|
Audit fees
|
$3,970,086
|
|
$3,664,793
|
Audit-related fees (a)
|
693,930
|
|
739,834
|
Total fees
|
$4,664,016
|
|
$4,404,627
|
(a)
|
Relates to assurance and related service fees that are reasonably related to the performance of the annual audit or quarterly reviews of the company's financial statements that are not specifically deemed “Audit Services.” The major items included in audit-related fees in 2018 and 2017 are fees related to reviews of system implementations.
|
CON EDISON ANNUAL REPORT 2018
|
177
|
178
|
CON EDISON ANNUAL REPORT 2018
|
3.1.1
|
|
Restated Certificate of Incorporation of Consolidated Edison, Inc.
(Designated in Con Edison’s Annual Report on Form 10-K for the year ended December 31, 2017 (File No. 1-14514) as Exhibit 3.1.1)
|
|
|
|
3.1.2
|
|
By-laws of Con Edison, effective as of February 16, 2017.
(Designated in Con Edison’s Current Report on Form 8-K, dated February 16, 2017 (File No. 1-14514) as Exhibit 3.1)
|
|
|
|
4.1.1.1
|
|
Indenture, dated as of April 1, 2002, between Con Edison and JP Morgan Chase Bank (formerly known as The Chase Manhattan Bank), as Trustee.
(Designated in Con Edison's Registration Statement on Form S-3 of Con Edison (No. 333-102005) as Exhibit 4.1)
|
|
|
|
4.1.1.2
|
|
First Supplemental Indenture, dated as of August 1, 2009, between Con Edison and The Bank of New York Mellon (formerly known as The Bank of New York (successor as trustee to JPMorgan Chase Bank, N.A. (formerly known as JPMorgan Chase Bank))), as Trustee
. (Designated in Con Edison’s Registration Statement (No. 333-161018) as Exhibit 4.2)
|
|
|
|
4.1.1.3
|
|
Form of Con Edison’s 2.00% Debentures, Series 2016 A.
(Designated in Con Edison's Current Report on Form 8-K, dated May 10, 2016 (File No. 1-14514) as Exhibit 4)
|
|
|
|
4.1.1.4
|
|
Form of Con Edison’s 2.00% Debentures, Series 2017 A.
(Designated in Con Edison's Current Report on Form 8-K, dated March 2, 2017 (File No. 1-4514) as Exhibit 4)
|
|
|
|
4.1.2
|
|
Note Assumption and Exchange Agreement, dated as of June 20, 2008, between Con Edison and the institutional investors listed in Schedule I thereto.
(Designated in Con Edison’s Current Report on Form 8-K, dated June 20, 2008 (File No. 1-14514) as Exhibit 4)
|
|
|
|
10.1.1.1
|
|
Credit Agreement, dated as of December 7, 2016, among CECONY, Con Edison, O&R, the lenders party thereto and Bank of America, N.A., as Administrative Agent.
(Designated in Con Edison’s Current Report on Form 8-K dated December 7, 2016 (File No. 1-14514) as Exhibit 10)
|
|
|
|
10.1.1.2
|
|
Extension Agreement, dated as of January 8, 2018, among CECONY, Con Edison, O&R, the lenders party thereto and Bank of America, N.A., as Administrative Agent
. (Designated in Con Edison's Current Report on Form 8-K dated January 8, 2018 (File No. 1-14514) as Exhibit 10)
|
|
|
|
10.1.2.1
|
|
Severance Program for Officers of Consolidated Edison, Inc. and its Subsidiaries, as amended, effective as of January 1, 2008.
(Designated in Con Edison’s Annual Report on Form 10-K for the year ended December 31, 2008 (File No. 1-14514) as Exhibit 10.1.3)
|
|
|
|
10.1.2.2
|
|
Amendment #1, dated December 19, 2012, to the Severance Program for Officers of Consolidated Edison, Inc. and its Subsidiaries.
(Designated in Con Edison’s Annual Report on Form 10-K for the year ended December 31, 2012 (File No. 1-14514) as Exhibit 10.1.4.2)
|
|
|
|
10.1.2.3
|
|
Amendment to the Severance Program for Officers of Consolidated Edison, Inc. and its Subsidiaries
(Designated in Con Edison’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2017 (File No. 1-14514 as Exhibit 10.1)
|
|
|
|
10.1.3.1
|
|
The Consolidated Edison, Inc. Stock Purchase Plan, as amended and restated as of May 19, 2014.
(Designated in Con Edison’s Current Report on Form 8-K dated May 19, 2014 (File No. 1-14514) as Exhibit 10)
|
|
|
|
10.1.3.2
|
|
Amendment One to The Consolidated Edison, Inc. Stock Purchase Plan.
(Designated in Con Edison's Current Report on Form 10-K for the year ended December 31, 2016 (File No. 1-14514) as Exhibit 10.1.3.2)
|
|
|
|
|
|
|
10.1.4.1
|
|
The Consolidated Edison Retirement Plan.
(Designated in Con Edison’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2017 (File No. 1-14514) as Exhibit 10.1.1)
|
|
|
|
10.1.4.2
|
|
Amendment to the Consolidated Edison Retirement Plan
. (Designated in Con Edison’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2017 (File No. 1-14514) as Exhibit 10.1.1)
|
|
|
|
10.1.4.3
|
|
Amendment to the Consolidated Edison Retirement Plan
. (Designated in Con Edison’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2017 (File No. 1-14514) as Exhibit 10.1.2)
|
|
|
|
10.1.4.4
|
|
Amendment, dated December 18, 2017, to the Consolidated Edison Retirement Plan
.(Designated in Con Edison’s Annual Report on Form 10-K for the year ended December 31, 2017 (File No. 1-14514) as Exhibit 10.1.4.2)
|
|
|
|
10.1.5.1
|
|
The Consolidated Edison Thrift Savings Plan
(Designated in Con Edison’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2017 (File No. 1-14514) as Exhibit 10.1.2)
|
|
|
|
10.1.5.3
|
|
Amendment, dated December 18, 2017, to the Consolidated Edison Thrift Savings Plan
(Designated in Con Edison's Annual Report on 10-K for the year ended December 31, 2017 (File No. 1-14514) as Exhibit 10.1.5.3
|
|
|
|
10.1.6.1
|
|
Consolidated Edison, Inc. Long Term Incentive Plan (2003), as amended and restated effective as of December 26, 2012.
(Designated in Con Edison’s Annual Report on Form 10-K for the year ended December 31, 2012 (File No. 1-14514) as Exhibit 10.1.8.10)
|
|
|
|
10.1.6.2
|
|
Form of Restricted Stock Unit Award under the Con Edison Long Term Incentive Plan.
(Designated in Con Edison’s Annual Report on Form 10-K for the year ended December 31, 2008 (File No. 1-14514) as Exhibit 10.1.7.2)
|
|
|
|
10.1.6.3
|
|
Form of Restricted Stock Unit Award for Officers under the Con Edison Long Term Incentive Plan.
(Designated in Con Edison’s Quarterly Report on Form 10-Q for the year quarterly period ended March 31, 2011 (File No. 1-14514) as Exhibit 10.1)
|
10.1.6.4
|
|
Form of Stock Option Agreement under the Con Edison Long Term Incentive Plan.
(Designated in Con Edison’s Current Report on Form 8-K, dated January 24, 2005, (File No. 1-14514) as Exhibit 10.3)
|
|
|
|
CON EDISON ANNUAL REPORT 2018
|
179
|
10.1.6.5
|
|
Amendment Number 1, effective July 1, 2010, to the Consolidated Edison, Inc. Long Term Incentive Plan, as amended and restated effective as of January 1, 2008.
(Designated in Con Edison’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2010 as Exhibit 10.1)
|
|
|
|
10.1.6.6
|
|
Amendment Number 2, effective January 1, 2011, to the Consolidated Edison, Inc. Long Term Incentive Plan, as amended and restated effective as of January 1, 2008.
(Designated in Con Edison’s Annual Report on Form 10-K for the year ended December 31, 2010 (File No. 1-14514) as Exhibit 10.1.7.5)
|
|
|
|
10.1.7.1
|
|
Consolidated Edison, Inc. Long Term Incentive Plan.
(Designated in Con Edison’s Current Report on Form 8-K, dated May 20, 2013 (File No. 1-14514) as Exhibit 10)
|
|
|
|
10.1.7.2
|
|
Form of Performance Unit Award for Officers under the Consolidated Edison, Inc. Long Term Incentive Plan.
(Designated in Con Edison’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2013 (File No. 1-14514) as Exhibit 10.1.2)
|
|
|
|
10.1.7.3
|
|
Form of Performance Unit Award for Certain Specified Officers under the Consolidated Edison, Inc. Long Term Incentive Plan.
(Designated in Con Edison’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2014 (File No. 1-14514) as Exhibit 10.1)
|
|
|
|
10.1.7.4
|
|
Amendment No. 1 to the Consolidated Edison, Inc. Long Term Incentive Plan.
(Designated in Con Edison’s Annual Report on Form 10-K for the year ended December 31, 2016 (File No. 1-14514) as Exhibit 10.1.7.4)
|
|
|
|
10.1.7.5
|
|
Amendment No. 2 to the Consolidated Edison, Inc. Long Term Incentive Plan.
(Designated in Con Edison’s Annual Report on Form 10-K for the year ended December 31, 2016 (File No. 1-14514) as Exhibit 10.1.7.5)
|
|
|
|
10.1.8
|
|
|
|
|
|
10.1.9
|
|
Letter, dated February 23, 2004, to Robert Hoglund.
(Designated in Con Edison’s Current Report on Form 8-K, dated July 21, 2005, (File No. 1-14514) as Exhibit 10.5)
|
|
|
|
10.1.10
|
|
Employment offer letter, dated November 21, 2013 to John McAvoy.
(Designated in Con Edison’s Current Report on Form 8-K, dated November 21, 2013 (File No. 1-14514) as Exhibit 10)
|
|
|
|
10.1.11
|
|
Contribution Agreement, dated as of April 20, 2016, by and between Crestwood Pipeline and Storage Northeast LLC and Con Edison Gas Pipeline and Storage Northeast, LLC.
(Designated in CEI’s Current Report on Form 8-K, dated April 20, 2016 (File No. 1-14514) as Exhibit 10)
|
|
|
|
10.1.12
|
|
Purchase and Sale Agreement, dated as of September 20, 2018, by and between Sempra Solar Portfolio Holdings, LLC and CED Southwest Holdings, Inc
. (Designated in Con Edison’s Current Report on Form 8-K, dated September 20, 2018) (File No.1-14514) as Exhibit 2)
|
|
|
|
10.1.13
|
|
Credit Agreement, dated as of November 29, 2018, among Con Edison, the Lenders party thereto and Citibank, N.A, as Administrative Agent
. (Designated in Con Edison’s Current Report on Form 8-K, dated December 13, 2018 (File No. 1-14514) as Exhibit 10)
|
|
|
|
10.1.14
|
|
Credit Agreement, dated as of February 11, 2019, among Con Edison, the Lenders party thereto and Mizuho Bank, Ltd. as Administrative Agent
. (Designated in Con Edison’s Current Report on Form 8-K, dated February 11, 2019 (File No. 1-14514) as Exhibit 10)
|
|
|
|
10.1.15
|
|
Confirmation of Forward Sale Transaction, dated November 14, 2018, between Con Edison and Citibank, N.A.
(Designated in Con Edison’s Current Report on Form 8-K, dated November 14, 2018 (File No. 1-14514) as Exhibit 10.1)
|
|
|
|
10.1.16
|
|
C
onfirmation of Forward Sale Transaction, dated November 14, 2018, between Con Edison and Barclays Bank PLC.
Designated in Con Edison’s Current Report on Form 8-K, dated November 14, 2018 (File No. 1-14514) as Exhibit 10.2)
|
|
|
|
10.1.17
|
|
Confirmation of Forward Sale Transaction, dated November 14, 2018, between Con Edison and JPMorgan Chase Bank, London Branch.
Designated in Con Edison’s Current Report on Form 8-K, dated November 14, 2018 (File No. 1-14514) as Exhibit 10.3)
|
|
|
|
10.1.18
|
|
|
|
|
|
10.1.19
|
|
|
|
|
|
10.1.20
|
|
|
|
|
|
21.1
|
|
|
|
|
|
23.1
|
|
|
|
|
|
31.1.1
|
|
|
|
|
|
31.1.2
|
|
|
|
|
|
32.1.1
|
|
|
|
|
|
32.1.2
|
|
|
|
|
|
101.INS
|
|
XBRL Instance Document
|
|
|
|
101.SCH
|
|
XBRL Taxonomy Extension Schema
|
|
|
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase
|
|
|
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase
|
|
|
|
180
|
CON EDISON ANNUAL REPORT 2018
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase
|
|
|
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase
|
3.2.1.1
|
|
Restated Certificate of Incorporation of CECONY filed with the Department of State of the State of New York on December 31, 1984.
(Designated in CECONY’s Annual Report on Form 10-K for the year ended December 31, 2017 (File No. 1-1217) as Exhibit 3.2.1.1)
|
|
|
|
3.2.1.2
|
|
The certificates of amendment of Restated Certificate of Incorporation of CECONY filed with the Department of State of the State of New York on the following dates: May 16, 1988; June 2, 1989; April 28, 1992; August 21, 1992 and February 18, 1998.
(Designated in CECONY’s Annual Report on Form 10-K for the year ended December 31, 2017 (File No. 1-1217) as Exhibit 3.2.1.2)
|
3.2.2
|
|
|
|
|
|
4.2.1
|
|
Participation Agreement, dated as of November 1, 2010, between NYSERDA and CECONY
. (Designated in CECONY’s Annual Report on Form 10-K for the year ended December 31, 2010 (File No. 1-1217) as Exhibit 4.2.2)
|
|
|
|
4.2.2
|
|
Participation Agreement, dated as of November 1, 2004, between NYSERDA and CECONY.
(Designated in CECONY’s Current Report on Form 8-K, dated November 9, 2004 (File No. 1-1217) as Exhibit 4.1)
|
|
|
|
4.2.3
|
|
Participation Agreement, dated as of May 1, 2005, between NYSERDA and CECONY
. (Designated in CECONY’s Current Report on Form 8-K, dated May 25, 2005 (File No. 1-1217) as Exhibit 4.1)
|
|
|
|
4.2.4.1
|
|
Trust Indenture, dated as of November 1, 2010 between NYSERDA and The Bank of New York Mellon, as trustee
. (Designated in CECONY’s Annual Report on Form 10-K for the year ended December 31, 2010 (File No. 1-1217) as Exhibit 4.2.9)
|
|
|
|
4.2.4.2
|
|
First Supplemental Indenture dated November 2, 2012 to the Trust Indenture dated as of November 1, 2010
. (Designated in CECONY’s Annual Report on Form 10-K for the year ended December 31, 2012 (File No. 1-1217) as Exhibit 4.2.9.2)
|
|
|
|
4.2.5
|
|
Indenture of Trust, dated as of November 1, 2004, between NYSERDA and The Bank of New York
. (Designated in CECONY’s Current Report on Form 8-K, dated November 9, 2004 (File No. 1-1217) as Exhibit 4.2)
|
|
|
|
4.2.6.1
|
|
Indenture of Trust, dated as of May 1, 2005, between NYSERDA and The Bank of New York
. (Designated in CECONY’s Current Report on Form 8-K, dated May 25, 2005 (File No. 1-1217) as Exhibit 4.2)
|
|
|
|
4.2.7.2
|
|
Supplemental Indenture of Trust, dated as of June 30, 2010, to Indenture of Trust, dated May 1, 2005 between NYSERDA and The Bank of New York Mellon (formerly known as The Bank of New York), as trustee
. (Designated in CECONY’s Annual Report on Form 10-K for the year ended December 31, 2010 (File No. 1-1217) as Exhibit 4.2.14.2)
|
|
|
|
4.2.8.1
|
|
Indenture, dated as of December 1, 1990, between CECONY and The Chase Manhattan Bank (National Association), as Trustee (the “Debenture Indenture”)
. (Designated in CECONY’s Annual Report on Form 10-K for the year ended December 31, 2017 (File No. 1-1217) as Exhibit 4.2.15.1)
|
4.2.9.2
|
|
First Supplemental Indenture (to the Debenture Indenture), dated as of March 6, 1996, between CECONY and The Chase Manhattan Bank (National Association), as Trustee.
(Designated in CECONY’s Annual Report on Form 10-K for the year ended December 31, 2017 (File No. 1-1217) as Exhibit 4.2.15.2)
|
|
|
|
4.2.10.3
|
|
Second Supplemental Indenture (to the Debenture Indenture), dated as of June 23, 2005, between CECONY and JPMorgan Chase Bank, N.A. (successor to The Chase Manhattan Bank (National Association)), as Trustee
. (Designated in CECONY’s Current Report on Form 8-K, dated November 16, 2005 (File No. 1-1217) as Exhibit 4.1)
|
|
|
|
4.2.11
|
|
The following forms of CECONY’s Debentures, which are designated as follows:
|
CON EDISON ANNUAL REPORT 2018
|
181
|
|
Securities Exchange Act
File No. 1-1217
|
|||
Debenture Series
|
Form
|
Date
|
Exhibit
|
|
8-K
|
4/7/2003
|
4
|
|
|
8-K
|
6/12/2003
|
4.2
|
|
|
8-K
|
2/11/2004
|
4.2
|
|
|
8-K
|
3/7/2005
|
4
|
|
|
8-K
|
6/20/2005
|
4
|
|
|
8-K
|
3/9/2006
|
4
|
|
|
8-K
|
6/15/2006
|
4
|
|
|
8-K
|
12/1/2006
|
4.2
|
|
|
8-K
|
8/28/2007
|
4
|
|
|
8-K
|
4/4/2008
|
4.2
|
|
|
8-K
|
3/25/2009
|
4.2
|
|
|
8-K
|
12/4/2009
|
4
|
|
|
8-K
|
6/7/2010
|
4.1
|
|
|
8-K
|
6/7/2010
|
4.2
|
|
|
8-K
|
3/13/2012
|
4
|
|
|
8-K
|
2/25/2013
|
4
|
|
|
8-K
|
3/3/2014
|
4
|
|
|
8-K
|
11/19/2014
|
4.1
|
|
|
8-K
|
11/19/2014
|
4.2
|
|
|
8-K
|
11/12/2015
|
4
|
|
|
8-K
|
6/14/2016
|
4
|
|
|
8-K
|
11/10/2016
|
4.1
|
|
|
8-K
|
11/10/2016
|
4.2
|
|
|
8-K
|
6/5/2017
|
4
|
|
|
8-K
|
11/13/2017
|
4.1
|
|
|
8-K
|
11/13/2017
|
4.2
|
|
|
8-K
|
5/7/2018
|
4.1
|
|
|
8-K
|
5/7/2018
|
4.2
|
|
|
8-K
|
6/21/2018
|
4.0
|
|
|
8-K
|
11/27/2018
|
4.1
|
|
|
8-K
|
11/27/2018
|
4.2
|
|
182
|
CON EDISON ANNUAL REPORT 2018
|
10.2.1
|
|
Settlement Agreement, dated October 2, 2000, by and among CECONY, the Staff of the New York State Public Service Commission and certain other parties.
(Designated in CECONY’s Current Report on Form 8-K, dated September 22, 2000 (File No. 1-1217) as Exhibit 10)
|
|
|
|
10.2.2
|
|
The Consolidated Edison Company of New York, Inc. Executive Incentive Plan, as amended and restated as of January 1, 2008.
(Designated in CECONY’s Annual Report on Form 10-K for the year ended December 31, 2008 (File No. 1-1217) as Exhibit 10.2.5)
|
|
|
|
10.2.3.1
|
|
Consolidated Edison Company of New York, Inc. Supplemental Retirement Income Plan, as amended and restated as of January 1, 2009.
(Designated in CECONY’s Annual Report on Form 10-K for the year ended December 31, 2009 (File No. 1-1217) as Exhibit 10.2.6)
|
|
|
|
10.2.3.2
|
|
Amendment, dated December 24, 2015, to the Consolidated Edison Company of New York, Inc. Supplemental Retirement Income Plan
(Designated in CECONY’s Annual Report on Form 10-K for the year ended December 31, 2015 (File No. 1-1217) as Exhibit 10.2.6.2)
|
|
|
|
10.2.3.3
|
|
Amendment One to the Consolidated Edison Company of New York, Inc. Supplemental Retirement Income Plan.
(Designated in CECONY’s Annual Report on Form 10-K for the year ended December 31, 2016 (File No. 1-1217) as Exhibit 10.2.6.3)
|
|
|
|
10.2.3.4
|
|
Amendment to the Consolidated Edison Company of New York, Inc. Supplemental Retirement Income Plan
(Designated in CECONY's Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2017 (File No. 1-1217) as Exhibit 10.2.1.1)
|
|
|
|
10.2.3.5
|
|
Amendment to the Consolidated Edison Company of New York, Inc. Supplemental Retirement Income Plan
(Designated in CECONY's Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2017 (File No. 1-1217) as Exhibit 10.2.1.2)
|
|
|
|
10.2.4.1
|
|
Deferred Compensation Plan for the Benefit of Trustees of CECONY, as amended effective January 1, 2008.
(Designated in CECONY’s Annual Report on Form 10-K for the year ended December 31, 2008 (File No. 1-1217) as Exhibit 10.2.7)
|
|
|
|
10.2.4.2
|
|
Amendment #1, dated December 26, 2012, to the Deferred Compensation Plan for the Benefit of Trustees of CECONY.
(Designated in CECONY’s Annual Report on Form 10-K for the year ended December 31, 2012 (File No. 1-1217) as Exhibit 10.2.7.2)
|
|
|
|
10.2.5
|
|
CECONY Supplemental Medical Benefits.
(Designated in CECONY's Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2017 (File No. 1-1217) as Exhibit 10.2.1)
|
|
|
|
10.2.6
|
|
The Severance Pay Plan for Management Employees of Consolidated Edison Company of New York, Inc. and Orange and Rockland Utilities, Inc. and Other Affiliated Entities That Have Adopted the Plan, effective January 1, 2017.
(Designated in CECONY’s Annual Report on Form 10-K for the year ended December 31, 2016 (File No. 1-1217) as Exhibit 10.2.9)
|
|
|
|
10.2.7.1
|
|
The Consolidated Edison Company of New York, Inc. Deferred Income Plan
. (Designated in CECONY’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2017 (File No. 1-1217) as Exhibit 10.2.2)
|
|
|
|
10.2.7.2
|
|
|
|
|
|
10.2.8.8
|
|
The Consolidated Edison Company of New York, Inc. 2005 Executive Incentive Plan, as amended and restated effective as of January 1, 2018
. (Designated in CECONY’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2018 (File No. 1-1217) as Exhibit 10.2)
|
|
|
|
10.2.9.1
|
|
Trust Agreement, dated as of March 31, 1999, between CECONY and Mellon Bank, N.A., as Trustee.
(Designated in CECONY’s Annual Report on Form 10-K, for the year ended December 31, 2005 (File No. 1-1217) as Exhibit 10.2.13.1)
|
|
|
|
10.2.9.2
|
|
Amendment Number 1 to the CECONY Rabbi Trust, executed October 24, 2003, between CECONY and Mellon Bank, N.A., as Trustee.
(Designated in CECONY’s Annual Report on Form 10-K, for the year ended December 31, 2005 (File No. 1-1217) as Exhibit 10.2.13.2)
|
|
|
|
23.2
|
|
|
|
|
|
31.2.1
|
|
|
|
|
|
31.2.2
|
|
|
|
|
|
32.2.1
|
|
|
|
|
|
32.2.2
|
|
|
|
|
|
101.INS
|
|
XBRL Instance Document
|
|
|
|
101.SCH
|
|
XBRL Taxonomy Extension Schema
|
|
|
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase
|
|
|
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase
|
|
|
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase
|
|
|
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase
|
CON EDISON ANNUAL REPORT 2018
|
183
|
184
|
CON EDISON ANNUAL REPORT 2018
|
By
|
/s/ Robert Hoglund
|
|
|
Robert Hoglund
Senior Vice President and
Chief Financial Officer
|
|
Signature
|
|
Registrant
|
|
Title
|
|
|
|
|
|
/s/ John McAvoy
|
|
Con Edison
|
|
Chairman of the Board, President, Chief Executive Officer and Director (Principal Executive Officer)
|
John McAvoy
|
|
CECONY
|
|
Chairman of the Board, Chief Executive Officer and Trustee (Principal Executive Officer)
|
|
|
|
|
|
/s/ Robert Hoglund
|
|
Con Edison
|
|
Senior Vice President and Chief Financial Officer
(Principal Financial Officer)
|
Robert Hoglund
|
|
CECONY
|
|
Senior Vice President and Chief Financial Officer (Principal Financial Officer)
|
|
|
|
|
|
/s/ Robert Muccilo
|
|
Con Edison
|
|
Vice President, Controller and Chief Accounting Officer (Principal Accounting Officer)
|
Robert Muccilo
|
|
CECONY
|
|
Vice President, Controller and Chief Accounting Officer (Principal Accounting Officer)
|
|
|
|
|
|
/s/ George Campbell Jr.
|
|
Con Edison
CECONY
|
|
Director
Trustee
|
George Campbell Jr.
|
|
|
||
|
|
|
|
|
/s/ Ellen V. Futter
|
|
Con Edison
CECONY
|
|
Director
Trustee
|
Ellen V. Futter
|
|
|
||
|
|
|
|
|
/s/ John F. Killian
|
|
Con Edison
CECONY
|
|
Director
Trustee
|
John F. Killian
|
|
|
||
|
|
|
|
|
/s/ William J. Mulrow
|
|
Con Edison
CECONY
|
|
Director
Trustee
|
William J. Mulrow
|
|
|
||
|
|
|
|
|
/s/ Armando J. Olivera
|
|
Con Edison
CECONY
|
|
Director
Trustee
|
Armando J. Olivera
|
|
|
||
|
|
|
|
|
/s/ Michael W. Ranger
|
|
Con Edison
CECONY
|
|
Director
Trustee
|
Michael W. Ranger
|
|
|
||
|
|
|
|
|
/s/ Linda S. Sanford
|
|
Con Edison
CECONY
|
|
Director
Trustee
|
Linda S. Sanford
|
|
|
||
|
|
|
|
|
/s/ Deirdre Stanley
|
|
Con Edison
CECONY
|
|
Director
Trustee
|
Deirdre Stanley
|
|
|
||
|
|
|
|
|
/s/ L. Frederick Sutherland
|
|
Con Edison
CECONY
|
|
Director
Trustee
|
L. Frederick Sutherland
|
|
|
CON EDISON ANNUAL REPORT 2018
|
185
|
Buyer:
|
Dealer.
|
Effective Date:
|
November 21, 2018, or such later date on which the conditions set forth in Section 4 of this Confirmation have been satisfied.
|
Number of Shares:
|
Initially, (x) if no Initial Hedging Disruption (as defined in Section 4(b)) occurs, 445,711 Shares (the “
Full Number of Shares
”) or (y) if an Initial Hedging Disruption occurs, the Reduced Number of Shares (as defined in Section 4(b)).
|
Maturity Date:
|
December 27, 2019 (or, if such date is not a Clearance System Business Day, the next following Clearance System Business Day).
|
Daily Forward Price:
|
On the Effective Date, the Initial Forward Price, and on any other day, the Daily Forward Price as of the immediately preceding calendar day
multiplied by
the sum of (i) 1
and
(ii) the Daily Rate for such day;
provided
that on each Forward Price Reduction Date, the Daily Forward Price in effect on such date shall be the Daily Forward Price otherwise in effect on such date,
minus
the Forward Price Reduction Amount for such Forward Price Reduction Date.
|
Daily Rate:
|
For any day, (i)(A) Overnight Bank Rate for such day,
minus
(B) the Spread,
divided
by (ii) 365. For the avoidance of doubt, the Daily Rate may be negative.
|
Overnight Bank Rate
|
For any day,
the rate set forth for such day opposite the caption “Overnight bank funding rate”, as such rate is displayed on the page “OBFR01 <Index> <GO>” on the BLOOMBERG Professional Service, or any successor page;
provided
that if no rate appears for any day on such page, the rate for the immediately preceding day for which a rate appears shall be used for such day.
|
Forward Price Reduction Date:
|
Each date as separately agreed in writing between Dealer and Counterparty.
|
Amount:
|
For each Forward Price Reduction Date, an amount as separately agreed in writing between Dealer and Counterparty.
|
Shares:
|
Common Shares, $0.10 par value per share, of Counterparty (Exchange identifier: “ED”).
|
Related Exchange(s):
|
All Exchanges.
|
Clearance System:
|
The Depository Trust Company.
|
Designated Valuation:
|
Subject to Section 9 of this Confirmation, Counterparty shall have the right to designate from time to time one or more Scheduled Trading Days (each, a “
Designated Date
”) occurring on or prior to the Maturity Date for a valuation and settlement of the Transaction with respect to all or a portion of the Undesignated Shares as of the Designated Date by written notice to Dealer delivered no later than 11:30 a.m., New York time, on the applicable Settlement Method Election Date;
provided
that, except with respect to the Maturity Date, Counterparty may not designate a Designated Date occurring during an Unwind Period related to a different Designated Date unless Physical Settlement is applicable in respect of such Designated Date. The portion of the Undesignated Shares designated for valuation and settlement in respect of a Designated Date shall be the “
Designated Shares
” for such Designated Date. If the number of Undesignated Shares on the Maturity Date is greater than zero (meaning, for the avoidance of doubt, that Counterparty did not deliver written notice to Dealer designating the Maturity Date as the Designated Date with respect to such Undesignated Shares on or prior to the related Settlement Method Election Date), then the Maturity Date will be a Designated Date with a number of Designated Shares equal to such remaining number of Undesignated Shares.
|
Valuation Date:
|
With respect to any Physical Settlement, the relevant Designated Date. With respect to any Cash Settlement or Net Share Settlement, the last day of the related Unwind Period.
|
Undesignated Shares:
|
At any time, the Number of Shares
minus
the aggregate number of Designated Shares for all Designated Dates occurring prior to such time.
|
Unwind Period:
|
For any Cash Settlement or Net Share Settlement, a period of consecutive Scheduled Trading Days (not to exceed ninety (90) Scheduled Trading Days), determined in a good faith and commercially reasonable manner by Dealer beginning on, and including, the Designated Date and ending on the date on which Dealer or its affiliates finishes unwinding Dealer’s Hedge Positions in respect of the Designated Shares for such Designated Date.
|
Market Disruption Event:
|
Section 6.3(a) of the Equity Definitions shall be amended by deleting the words “at any time during the one hour period that ends at the relevant Valuation Time, Latest Exercise Time, Knock-in Valuation Time or Knock-out Valuation Time, as the case may be” and replacing them with the words “at any time during the regular trading session on the Exchange, without regard to after hours or any other trading outside of the regular trading session hours”, and by replacing “or (iii) an Early
|
Consequences of Disrupted Days:
|
Solely as set forth in Section 9 of this Confirmation. The occurrence of a Disrupted Day shall not otherwise affect an Unwind Period.
|
Settlement Date:
|
Each Valuation Date.
|
Settlement Method Election:
|
Applicable;
provided
that:
|
(i)
|
Net Share Settlement shall be deemed to be included as an additional potential settlement method under Section 7.1 of the Equity Definitions;
|
(ai)
|
If Counterparty elects Cash Settlement or Net Share Settlement in the Settlement Notice (as defined below) to Dealer, Counterparty represents and warrants to the Dealer that, as of the date of such election,
|
(A)
|
Counterparty is not aware of any material non-public information concerning itself or the Shares;
|
(B)
|
Counterparty is electing the settlement method and designating the related Designated Date in good faith and not as part of a plan or scheme to evade compliance with Rule 10b-5 (“
Rule 10b-5
”) under the Securities Exchange Act of 1934, as amended (the “
Exchange Act
”), or any other provision of the federal securities laws;
|
(C)
|
Counterparty is not “insolvent” (as such term is defined under Section 101(32) of the U.S. Bankruptcy Code (Title 11 of the United States Code) (the “
Bankruptcy Code
”));
|
(D)
|
Counterparty would be able to purchase a number of Shares equal to the number of related Designated Shares (or, if greater in the case of a Net Share Settlement, a number of Shares with a value as of the date of such election equal to the product of (I) such number of Designated Shares and (II) the expected Daily Forward Price as of the relevant Designated Date) in compliance with the laws of Counterparty’s jurisdiction of organization;
|
(E)
|
Counterparty is not electing Cash Settlement or Net Share Settlement to create actual or apparent trading activity in the Shares (or any security convertible into or exchangeable for Shares) or to raise or depress or otherwise manipulate the price of the Shares (or any security convertible into or exchangeable for Shares) in violation of the Exchange Act; and
|
(F)
|
such election, and settlement in accordance therewith, does not and will not violate or conflict with, in any material respect, any law or regulation applicable to Counterparty, or any order or judgment of any court or other agency of government applicable to it or any of its assets, and any governmental consents that are required to have been obtained by Counterparty with respect to such election or settlement have been obtained and are in full force and effect and all conditions of any such consents have been complied with in all material respects; and
|
(bi)
|
Notwithstanding any election to the contrary as of any Settlement Method Election Date, Physical Settlement shall be applicable:
|
Electing Party:
|
Counterparty.
|
Settlement Method Election Date:
|
The second Scheduled Trading Day immediately preceding the relevant Designated Date;
provided,
that Counterparty may only elect Cash Settlement or Net Share Settlement if Counterparty (i) selects a Designated Date at least ninety (90) Scheduled Trading Days prior to the Maturity Date and (ii) delivers written notice of Settlement Method Election (the “
Settlement Notice
”) to Dealer and such notice contains the Designated Date and the
|
Default Settlement Method:
|
Physical Settlement.
|
Physical Settlement:
|
If Physical Settlement is applicable, then on the relevant Settlement Date, Dealer will pay to Counterparty an amount equal to the product of (x) the number of Designated Shares for the related Designated Date and (y) the Daily Forward Price on such Settlement Date and Counterparty will deliver to Dealer a number of Shares equal to such number of Designated Shares. Section 9.2 of the Equity Definitions (other than the last sentence thereof) will not apply to any Physical Settlement.
|
Prepayment:
|
Not Applicable.
|
Variable Obligation:
|
Not Applicable.
|
Cash Settlement Payment Date:
|
If Cash Settlement is applicable, the second Currency Business Day following the applicable Valuation Date.
|
Forward Cash Settlement Amount:
|
The aggregate sum, for all Unwind Dates in the relevant Unwind Period, of the Daily Cash Settlement Amounts.
|
Daily Cash Settlement Amount:
|
For any Unwind Date, the product (which may be negative) of (i) the Daily Share Number of such Unwind Date, and (ii)(A) the Settlement Price for such Unwind Date
minus
(B) the Daily Forward Price on the day that is the second Exchange Business Day immediately following such Unwind Date.
|
Unwind Date:
|
Each Exchange Business Day during the Unwind Period on which Dealer or its affiliates unwind any portion of Dealer’s Hedge Positions in respect of the relevant Designated Date.
|
Daily Share Number:
|
For any Unwind Date, the number of Designated Shares with respect to which Dealer or its affiliates unwind any portion of Dealer’s Hedge Positions in respect of the relevant Designated Date.
|
Settlement Price:
|
For any Unwind Date, the Rule 10b-18 volume-weighted average price per Share for the regular trading session of the Exchange on such date (without considering trading before the open or after hours trading outside of the regular trading session), as reported by Bloomberg on page “ED <Equity> AQR SEC” or any successor page thereto at 4:15 p.m., New York time (or 15 minutes following the end of any extension of the regular trading session), on such date or, if such price is not so reported on such date or is in the Calculation Agent’s reasonable determination erroneous, as reasonably determined by the Calculation Agent (provided that such price determined by the Calculation Agent is consistent with the price used by the Calculation Agent with respect to other similar equity derivative transactions outstanding, if any, involving the Shares), plus $0.02.
|
Net Share Settlement:
|
If Net Share Settlement is applicable, then on the relevant Net Share Settlement Date:
|
(i)
|
if the Net Share Settlement Number is positive, then Counterparty will deliver to Dealer a number of Shares equal to the Net Share Settlement Number; and
|
(ii)
|
if the Net Share Settlement Number is negative, then Dealer will deliver to Counterparty a number of Shares equal to the absolute value of the Net Share Settlement Number;
|
Net Share Settlement Number:
|
A number of Shares equal to the sum of (i) the Aggregate Net Share Number as of the last Unwind Date in the Unwind Period and (ii) the sum of the quotients (rounded to the nearest whole number), for each Unwind Adjustment Amount for such Unwind Period, obtained by dividing (x) such Unwind Adjustment Amount by (y) the Settlement Price on the Forward Price Reduction Date relating to such Unwind Adjustment Amount.
|
Aggregate Net Share Number:
|
As of any date, the aggregate sum, for all Unwind Dates in the relevant Unwind Period occurring on or prior to such date, of the quotient (rounded to the nearest whole number) obtained by dividing (x) the Daily Cash Settlement Amount for such Unwind Date by (y) the Settlement Price for such Unwind Date.
|
Net Share Settlement Date:
|
Two (2) Clearance System Business Days following the applicable Valuation Date.
|
Unwind Adjustment Amount:
|
For any Unwind Period, for any Forward Price Reduction Date that occurs during the period from, and including, the date that is one (1) Settlement Cycle immediately following the relevant Designated Date to, and including, the date that is one (1) Settlement Cycle immediately following the relevant Valuation Date, an amount equal to the product of (i) the relevant Forward Price Reduction Amount
multiplied by
(ii)(A) if the Aggregate Net Share Number as of the date immediately prior to the date that is one (1) Settlement Cycle immediately preceding the relevant Forward Price Reduction Date is a positive number, such Aggregate Net Share Number or (B) otherwise, zero.
|
Unwound Shares:
|
For any Unwind Period at any time, the
aggregate sum of the Daily Share Numbers for all Unwind Dates in such Unwind Period that have occurred prior to such time.
|
Delivery of Shares:
|
Notwithstanding anything to the contrary herein, either party may, by prior notice to the other party, satisfy its obligation to deliver any Shares on any date due (an “
Original Delivery
|
Consequences of Late Delivery:
|
Without limiting the generality of this Confirmation, the Agreement and the Equity Definitions, if for any reason Counterparty fails to deliver when due any Shares required to be delivered hereunder and a Forward Price Reduction Date occurs on or after the date such Shares are due and on or before the date such Shares are delivered, Counterparty acknowledges and agrees that, in addition to any other amounts for which Counterparty may be liable hereunder or under law (but without duplication), Counterparty shall be liable to Dealer for an amount equal to the product of the number of Shares so due but not yet delivered on or prior to such Forward Price Reduction Date and the Forward Price Reduction Amount for such Forward Price Reduction Date.
|
Representation and Agreement:
|
Section 9.11 of the Equity Definitions is hereby modified to exclude any representations therein relating to restrictions, obligations, limitations or requirements under applicable securities laws that exist or arise as a result of the fact that Counterparty is the Issuer of the Shares.
|
Method of Adjustment:
|
Calculation Agent Adjustment; provided that, Section 11.2(e)(iii) of the Equity Definitions shall be deleted.
|
Extraordinary Dividend:
|
Any dividend or distribution on the Shares which has an ex-dividend date occurring on any day following the Trade Date (other than (i) any dividend or distribution of the type described in Section 11.2(e)(i) or Section 11.2(e)(ii)(A) of the Equity Definitions or (ii) a regular, quarterly cash dividend in an amount per Share equal to or less than the Forward Price Reduction Amount corresponding to the relevant quarter that has an ex-dividend date no earlier than the Forward Price Reduction Date corresponding to the relevant quarter).
|
Merger Event:
|
Section 12.1(b) of the Equity Definitions shall be amended by deleting the remainder of such Section following the definition of “Reverse Merger” therein.
|
Tender Offer:
|
Applicable.
|
Delisting:
|
In addition to the provisions of Section 12.6(a)(iii) of the Equity Definitions, it shall also constitute a Delisting if the Exchange is located in the United States and the Shares are not immediately re-listed, re-traded or re-quoted on any of the New York Stock Exchange, The NASDAQ Global Select Market or The NASDAQ Global Market (or their respective successors); if the
|
Change in Law:
|
Applicable;
provided
that Section 12.9(a)(ii) of the Equity Definitions is hereby amended by (i) replacing the phrase “the interpretation” in the third line thereof with the phrase “or public announcement of the formal interpretation”; (ii) replacing the word “Shares” where it appears in clause (X) with the words “Hedge Position”; and (iii) immediately following the word “Transaction” in clause (X) thereof, adding the phrase “in the manner contemplated by it on the Trade Date”.
|
Failure to Deliver:
|
Not Applicable.
|
Hedging Disruption:
|
Not Applicable.
|
Increased Cost of Hedging:
|
Not Applicable.
|
Increased Cost of Stock Borrow:
|
Applicable;
provided
that clause (C) of Section 12.9(b)(v) of the Equity Definitions and the third, fourth and fifth sentences of Section 12.9(b)(v) of the Equity Definitions shall be deleted.
|
Loss of Stock Borrow:
|
Applicable.
|
Hedging Party:
|
For all applicable Additional Disruption Events, Dealer.
|
Determining Party:
|
For all applicable Extraordinary Events, Dealer.
|
Extraordinary Events:
|
The consequences that would otherwise apply under Article 12 of the Equity Definitions to any applicable Extraordinary Event (other than an Increased Cost of Stock Borrow and any event that also constitutes a Bankruptcy Termination Event) shall not apply, and instead, the consequences specified in Section 9 (or, in the case of a Bankruptcy Termination Event, Section 7) of this Confirmation shall apply.
|
Non-Reliance:
|
Applicable.
|
Regarding Hedging Activities:
|
Applicable.
|
Additional Acknowledgements:
|
Applicable.
|
Calculation Agent:
|
Dealer;
provided
that if an Event of Default under Section 5(a)(i) or 5(a)(vii) of the Agreement has occurred and is continuing
|
Payments to Dealer:
|
As set forth in Section 4 (
Account Details
) of Annex C hereto.
|
Payments to Counterparty:
|
As instructed by Counterparty prior to settlement.
|
Delivery of Shares to Dealer:
|
As set forth in Section 4 (
Account Details
) of Annex C hereto.
|
4.
|
Conditions to Effectiveness
:
|
(a)
|
The effectiveness of this Confirmation on the Effective Date shall be subject to the following conditions:
|
(i)
|
The representations and warranties of Counterparty contained in the Underwriting Agreement dated November 14, 2018, between Counterparty and Citigroup Global Markets Inc., Barclays Capital Inc. and J.P. Morgan Securities LLC, acting in their capacity as Forward Sellers (as defined therein), and Citibank, N.A., Barclays Bank PLC and JPMorgan Chase Bank, London Branch, acting in their capacity as Forward Purchasers (as defined therein) and Citigroup Global Markets Inc., Barclays Capital Inc. and J.P. Morgan Securities LLC, as representative of the several Underwriters named therein (the “
Underwriting Agreement
”), and any certificate delivered pursuant thereto by Counterparty shall be true and correct on the Effective Date as if made as of the Effective Date;
|
(ii)
|
Counterparty shall have performed all of the obligations required to be performed by it under the Underwriting Agreement on or prior to the Effective Date;
|
(iii)
|
All of the conditions set forth in Section 9 (
Conditions of the Obligations of the Underwriters
) of the Underwriting Agreement shall have been satisfied;
|
(iv)
|
The delivery of Option Shares (as defined in the Underwriting Agreement) and payment of the Option Purchase Price (as defined in the
|
(v)
|
All of the representations and warranties of Counterparty hereunder and under the Agreement shall be true and correct on the Effective Date as if made as of the Effective Date;
|
(vi)
|
Counterparty shall have performed all of the obligations required to be performed by it hereunder and under the Agreement on or prior to the Effective Date, including without limitation its obligations under Section 5 hereof; and
|
(vii)
|
Counterparty shall have delivered to Dealer an opinion of counsel substantially in the form of Annex B hereto.
|
(b)
|
Notwithstanding the foregoing or any other provision of this Confirmation, if (x) on or prior to 9:00 a.m., New York City time, on the date the Additional Time of Delivery is scheduled to occur, Dealer, in its commercially reasonable judgment, is unable to borrow and deliver for sale the Full Number of Shares or (y) in Dealer’s commercially reasonable judgment, it would incur a stock loan cost of more than 200 basis points per annum with respect to all or any portion of the Full Number of Shares (in each case, an “
Initial Hedging Disruption
”), the effectiveness of this Confirmation and the Transaction shall be limited to the number of Shares Dealer may borrow at a cost of not more than 200 basis points per annum (such number of Shares, the “
Reduced Number of Shares
”), which, for the avoidance of doubt, may be zero;
provided, however,
that if the Counterparty terminates the Transaction under the Base Confirmation (as defined herein) pursuant to Section 4(b) thereto, then Counterparty shall have the option to terminate the Transaction. Counterparty shall have no liability to Dealer hereunder (including for any costs or expenses incurred by Dealer) as a result of any reduction in the Number of Shares or as a result of or following any termination of the Transaction pursuant to this Section 4(b).
|
5.
|
Representations and Agreements of Counterparty
:
Counterparty represents and warrants to, and agrees with, Dealer as of the date hereof that:
|
(a)
|
Counterparty shall promptly provide written notice, to the extent such notice does not constitute material non-public information, to Dealer upon obtaining knowledge of (i) the occurrence or announcement of any event that would constitute an Event of Default, Potential Event of Default or a Potential Adjustment Event or (ii) any Announcement Date in respect of an Extraordinary Event;
|
(b)
|
Counterparty shall maintain, by all required corporate action of Counterparty, a number of authorized but unissued Shares not reserved for other purposes at least equal to two times the sum of (i) the number of Undesignated Shares as of the time of determination, (ii)(A) if any, the number of Designated Shares for any Designated Date occurring prior to such time for which the related Unwind Period has not been completed at such time minus (B) the number of Unwound Shares for such Unwind Period at such time and (iii) if any Net Share Settlement Number as of such time is (A) a positive number and (B) has not been delivered by Counterparty to Dealer pursuant to “Net Share Settlement” above, such Net Share Settlement Number (the sum of the Shares in clauses (i)–(iii), the “
Remaining Amount
” and the product of two times the Remaining Amount, the “
Capped Number
”) in reserve for
|
(c)
|
Counterparty shall not take any action to reduce or decrease the number of authorized and unissued Shares below the sum of (i) the Capped Number
plus
(ii) the total number of Shares issuable upon settlement (whether by net share settlement or otherwise) of any other transaction or agreement relating to the Shares to which it is a party (or, if greater, the number of Shares reserved by Counterparty for settlement of or delivery under such transaction or agreement);
|
(d)
|
Counterparty will not repurchase any Shares during the term of this Transaction if, immediately following such repurchase, the Number of Shares plus the “Number of Shares” under the letter agreement (the ‘
Base Confirmation
”) , dated November 14, 2018, between Dealer and Counterparty, relating to the forward sale of Shares, results in a Share Percentage (as defined below) equal to or greater than 8.0%. Counterparty shall notify Dealer promptly upon the announcement or consummation of any repurchase of Shares that, taken together with the amount of all repurchases since the date of the last such notice (or, if no such notice has been given, the Trade Date for the Base Confirmation) exceeds 3.1 million Shares. The “
Share Percentage
” as of any day is the fraction (1) the numerator of which is the Number of Shares and (2) the denominator of which is the number of Shares outstanding on such day;
|
(e)
|
As of the Trade Date, it is not and it agrees that, as of the Effective Date and the date of any payment or delivery by Counterparty or Dealer hereunder, it will not be, “insolvent” (as such term is defined under Section 101(32) of the Bankruptcy Code);
|
(f)
|
Neither Counterparty nor any of its “affiliated purchasers” (as defined by Rule 10b-18 under the Exchange Act (“
Rule 10b-18
”) shall take any action during any Unwind Period that would cause any purchases of Shares by Dealer or any of its affiliates in connection with any Cash Settlement or Net Share Settlement not to meet the requirements of the safe harbor provided by Rule 10b-18 if such purchases were made by Counterparty. Without limiting the foregoing, during any Unwind Period, except with the prior written consent of Dealer, Counterparty will not, and will cause its affiliated purchasers (as defined in Rule 10b-18) not to, directly or indirectly (including, without limitation, by means of a derivative instrument) purchase, offer to purchase, place any bid or limit order that would effect a purchase of, or announce or commence any tender offer relating to, any Shares (or equivalent interest, including a unit of beneficial interest in a trust or limited partnership or a depository share) or any security convertible into or exchangeable for the Shares. For the avoidance of doubt the immediately preceding sentence shall not apply to any purchase, offer to purchase, bid or limit orders effected by or for an issuer plan by an agent independent of the issuer (each as defined in Regulation M (“
Regulation M
”)
promulgated under the Exchange Act);
|
(g)
|
Counterparty will not be subject to any “restricted period” (as such term is defined in Regulation M) in respect of Shares or any security with respect to which the Shares are a “reference security” (as such term is defined in Regulation M) during any Unwind Period;
|
(h)
|
During any Unwind Period, Counterparty shall: (i) prior to the opening of trading in the Shares on any day on which Counterparty makes, or expects to be made, any public announcement (as defined in Rule 165(f) under the Securities Act) of any Merger Transaction, notify Dealer of such public announcement; (ii) promptly notify Dealer following any such announcement that such announcement has been made; (iii) promptly (but in any event prior to the next opening of the regular trading session on the Exchange) provide Dealer with written notice specifying (A) Counterparty’s average daily Rule 10b-18 Purchases (as defined in Rule 10b-18) during the three full calendar months immediately preceding the Announcement Date that were not effected through Dealer or its affiliates and (B) the number of Shares purchased pursuant to the proviso in Rule 10b-18(b)(4) under the Exchange Act for the three full calendar months preceding the Announcement Date. Such written notice shall be deemed to be a certification by Counterparty to Dealer that such information is true and correct. In addition, Counterparty shall promptly notify Dealer of the earlier to occur of the completion of such transaction and the completion of the vote by target shareholders. Counterparty acknowledges that any such notice may result in a Regulatory Disruption or may affect the length of any ongoing Unwind Period; accordingly, Counterparty acknowledges that its delivery of such notice must comply with the standards set forth in Section 11(c) of this Confirmation. “
Securities Act
” means the Securities Act of 1933, as amended. “
Merger Transaction
” means any merger, acquisition or similar transaction involving a recapitalization as contemplated by Rule 10b-18(a)(13)(iv) under the Exchange Act;
|
(i)
|
Counterparty is an “eligible contract participant” (as such term is defined in the Commodity Exchange Act, as amended);
|
(j)
|
Counterparty is not entering into the Transaction, and will not elect Cash Settlement or Net Share Settlement, to create actual or apparent trading activity in the Shares (or any security convertible into or exchangeable for Shares) or to raise or depress or otherwise manipulate the price of the Shares (or any security convertible into or exchangeable for Shares) in violation of the Exchange Act or any other applicable securities laws;
|
(k)
|
Counterparty (i) is capable of evaluating investment risks independently, both in general and with regard to all transactions and investment strategies involving a security or securities; (ii) will exercise independent judgment in evaluating the recommendations of any broker-dealer or its associated persons, unless it has otherwise notified the broker-dealer in writing; and (iii) has total assets of at least $50 million as of the date hereof;
|
(l)
|
Without limiting the generality of Section 13.1 of the Equity Definitions, Counterparty acknowledges that Dealer is not making any representations or warranties with respect to the treatment of the Transaction, including without limitation ASC Topic 260,
Earnings Per Share
, ASC Topic 815,
Derivatives and Hedging
, FASB Statements 128, 133, as amended, 149 or 150, EITF 00-19, 01-6, 03-6 or 07-5, ASC Topic 480,
Distinguishing Liabilities from Equity
, ASC 815-40,
Derivatives and Hedging – Contracts in Entity’s Own Equity
(or any successor issue statements) or under the Financial Accounting Standards Board’s Liabilities & Equity Project;
|
(m)
|
Counterparty is in compliance with its reporting obligations under the Exchange Act and its most recent Annual Report on Form 10-K, together with all reports subsequently filed by it pursuant to the Exchange Act, taken together and as
|
(n)
|
Counterparty is not aware of any material non-public information regarding itself or the Shares. Counterparty is entering into this Confirmation and will provide any Settlement Notice in good faith and not as part of a plan or scheme to evade compliance with Rule 10b-5 or any other provision of the federal securities laws; and Counterparty has consulted with its own advisors as to the legal aspects of its adoption and implementation of this Confirmation under Rule 10b5-1 under the Exchange Act (“
Rule 10b5-1
”);
|
(o)
|
Counterparty is not, and after giving effect to the transactions contemplated hereby will not be, required to register as an “investment company” as such term is defined in the Investment Company Act of 1940, as amended;
|
(p)
|
Counterparty: (i) is an “institutional account” as defined in FINRA Rule 4512(c); and (ii) is capable of evaluating investment risks independently, both in general and with regard to all transactions and investment strategies involving a security or securities, and will exercise independent judgment in evaluating any recommendations of Dealer or its associated persons; and
|
(q)
|
COUNTERPARTY UNDERSTANDS THAT THE TRANSACTION IS SUBJECT TO COMPLEX RISKS WHICH MAY ARISE WITHOUT WARNING AND MAY AT TIMES BE VOLATILE AND THAT LOSSES MAY OCCUR QUICKLY AND IN UNANTICIPATED MAGNITUDE AND IS WILLING TO ACCEPT SUCH TERMS AND CONDITIONS AND ASSUME SUCH RISKS.
|
6.
|
Covenant Regarding Settlement
:
Counterparty acknowledges and agrees that any Shares delivered by Counterparty to Dealer on any Settlement Date or Net Share Settlement Date will be (i) newly issued, (ii) approved for listing or quotation on the Exchange, subject to official notice of issuance, and (iii) registered under the Exchange Act. Subject to Section 10 of this Confirmation, on the basis of the Forward Letter (as defined below), such Shares, when delivered by Dealer (or an affiliate of Dealer) to securities lenders from whom Dealer (or an affiliate of Dealer) borrowed Shares in connection with hedging its exposure to the Transaction, will be freely saleable without further registration or other restrictions under the Securities Act in the hands of those securities lenders
(other than any restriction arising from the status or actions of Dealer or its affiliates). Dealer agrees, subject to Section 10 of this Confirmation, that it will use such Shares, directly or indirectly, and irrespective of whether any such stock loan is effected by Dealer or an affiliate thereof, solely for the purposes of delivery to such securities lenders as contemplated in the Forward Letter. Accordingly, Counterparty agrees that any Shares so delivered by Counterparty will not bear a restrictive legend and will be deposited in, and the delivery thereof shall be effected through the facilities of, the Clearance System.
|
7.
|
Termination on Bankruptcy
:
The parties hereto agree that, notwithstanding anything to the contrary in the Agreement or the Equity Definitions, the Transaction constitutes a contract to issue a security of Counterparty as contemplated by Section 365(c)(2) of the Bankruptcy Code and that the Transaction and the obligations and rights of Counterparty and Dealer (except for any liability as a result of breach of any of the representations or warranties provided by Counterparty in Section 5 above) shall immediately terminate, without the necessity of any notice, payment (whether directly, by netting or otherwise) or other action
|
8.
|
[
Reserved
]
|
9.
|
Acceleration Events
:
|
(a)
|
Notwithstanding anything to the contrary herein, in the Agreement or in the Equity Definitions, at any time following the occurrence and during the continuation of an Acceleration Event, Dealer (or, in the case of an Acceleration Event that is an Event of Default or a Termination Event, the party that would be entitled to designate an Early Termination Date in respect of such event pursuant to Section 6 of the Agreement) (the “
Accelerating Party
”) shall, by not more than 20 days’ notice to the other party, have the right to designate any Scheduled Trading Day on or following the date that notice of such designation is effective to be the “
Early Valuation Date
,” in which case the provisions set forth in this Section 9 shall apply in lieu of Section 6 of the Agreement or Article 12 of the Equity Definitions; provided that Section 6 of the Agreement shall apply in the case of (1) an Event of Default pursuant to Section 5(a)(i) of the Agreement in connection with an Early Valuation Date, and (2) an Event of Default pursuant to Section 5(a)(vii) of the Agreement with respect to Dealer.
|
(b)
|
If the Early Valuation Date occurs on a date that is not during an Unwind Period, then the Early Valuation Date shall be deemed to be a Designated Date for a Physical Settlement, and the number of Designated Shares for such Designated Date shall be the number of Undesignated Shares on the Early Valuation Date;
provided
that in the case of an Acceleration Event of the type described in paragraph (e)(iii) or (vi) below, the number of Designated Shares for such Designated Date shall be only such number of Designated Shares necessary so that such Acceleration Event shall no longer exist after such Physical Settlement, as determined by the Calculation Agent.
|
(c)
|
If the Early Valuation Date occurs during an Unwind Period, then (i) (A) the last Unwind Date of such Unwind Period shall occur on the Early Valuation Date, (B) a settlement shall occur in respect of such Unwind Period and, except as otherwise provided herein, the settlement method elected by Counterparty in respect of such settlement shall apply, and (C) the number of Designated Shares for such settlement shall be deemed to be the number of Unwound Shares for such Unwind Period on the Early Valuation Date, and (ii) (A) the Early Valuation Date shall be deemed to be an additional Designated Date for a Physical Settlement and (B) the number of Designated Shares for such additional Designated Date shall be the Remaining Amount on the Early Valuation Date;
provided
that in the case of an Acceleration Event of the type described in paragraph (e)(iii) or (vi) below, the number of Designated Shares for such additional Designated Date shall be only such number of Designated Shares necessary so that such Acceleration Event shall no longer exist after such Physical Settlement, as determined by the Calculation Agent.
|
(d)
|
Notwithstanding the foregoing, in the case of an Early Valuation Date that occurs due to the announcement of a Nationalization or a Merger Event, if at the time of the related Settlement Date or Net Share Settlement Date, as applicable, the Shares have changed into cash or any other property or the right to receive cash or any
|
(e)
|
“
Acceleration Event
” means:
|
(i)
|
any Event of Default or Termination Event (other than an Event of Default or Termination Event that also constitutes a Bankruptcy Termination Event) that would give rise to the right of either party to designate an Early Termination Date pursuant to Section 6 of the Agreement;
|
(ii)
|
the announcement of any event or transaction relating to the Shares that, if consummated, would result in (x) the occurrence of a Merger Event or Tender Offer, or (y) the occurrence of a Nationalization, Delisting or Change in Law, in each case as determined by the Calculation Agent in good faith and a commercially reasonable manner;
|
(iii)
|
A Loss of Stock Borrow;
|
(iv)
|
the declaration or payment by Counterparty of any Extraordinary Dividend;
|
(v)
|
the occurrence of a Market Disruption Event during an Unwind Period and the continuance of such Market Disruption Event for at least eight consecutive Scheduled Trading Days;
|
(vi)
|
the occurrence of an Excess Section 13 Ownership Position or Excess Regulatory Ownership Position; or
|
(vii)
|
the occurrence of the Maturity Date during an Unwind Period.
|
10.
|
Private Placement Procedures
:
If either Dealer or Counterparty reasonably determines, based on the advice of counsel, that Counterparty will be unable to comply with the covenant set forth in the second sentence of Section 6 of this Confirmation because of a change in law or a change in the policy of the Securities and Exchange Commission or its staff, or Dealer otherwise reasonably determines, based on the advice of counsel, that in its reasonable opinion any Shares to be delivered to Dealer by Counterparty hereunder may not be freely returned by Dealer or its affiliates to securities lenders as contemplated by Section 6 of this Confirmation, then delivery of any such Shares (the “
Restricted Shares
”) shall be effected pursuant to Annex A hereto, unless waived by Dealer.
|
11.
|
Rule 10b5-1
:
|
(a)
|
The parties acknowledge that following any election of Cash Settlement or Net Share Settlement by Counterparty, this Confirmation is intended to constitute a binding contract satisfying the requirements of Rule 10b5-1(c) of the Exchange Act and agree that this Confirmation shall be interpreted to comply with such requirements.
|
(b)
|
The times and prices at which Dealer (or its agent or affiliate) purchases any Shares during any Unwind Period shall be at Dealer’s sole discretion. Counterparty acknowledges that during any Unwind Period Counterparty does not have, and shall not attempt to exercise, any influence over how, when or whether to effect
|
(c)
|
Counterparty hereby agrees with Dealer that during any Unwind Period Counterparty shall not communicate, directly or indirectly, any material non-public information (within the meaning of such term under Rule 10b5-1) to any employee of Dealer (or its agents or affiliates) who is directly involved with the hedging of, and trading with respect to, the Transaction. Counterparty acknowledges and agrees that any amendment, modification, waiver or termination of the Transaction must be effected in accordance with the requirements for the amendment or termination of a contract, instruction or plan under Rule 10b5-1(c). Without limiting the generality of the foregoing, any such amendment, modification, waiver or termination shall be made in good faith and not as part of a plan or scheme to evade the prohibitions of Rule 10b-5 under the Exchange Act, and no such amendment, modification or waiver shall be made at any time at which Counterparty is aware of any material non-public information regarding Counterparty or the Shares.
|
12.
|
Capped Number of Shares
:
Notwithstanding any other provision of the Agreement or this Confirmation, in no event will Counterparty be required to deliver in the aggregate in respect of all Settlement Dates, Net Share Settlement Dates or other dates on which Shares are delivered in respect of any amount owed under this Confirmation a number of Shares greater than the Capped Number. If the number of Shares to be issued at settlement by the Counterparty exceeds the authorized and unissued shares that are not reserved for any other purposes (such excess, the “
Deficit Shares
”), Counterparty shall be obligated to deliver Shares, from time to time until the full number of Deficit Shares have been delivered pursuant to this paragraph, when, and to the extent, that (A) Shares are repurchased, acquired or otherwise received by Counterparty or any of its subsidiaries after the Trade Date (whether or not in exchange for cash, fair value or any other consideration) and are not required to be used for any other purpose, (B) authorized and unissued Shares reserved for issuance in respect of other transactions as of the Trade Date become no longer so reserved and (C) Counterparty authorizes any additional unissued Shares that are not reserved for other transactions (such events as set forth in clauses (A), (B) and (C) above, collectively, the “
Share Issuance Events
”). Counterparty shall promptly notify Dealer of the occurrence of any of the Share Issuance Events (including the number of Shares subject to clause (A), (B) or (C) and the corresponding number of Shares to be delivered) and, as promptly as reasonably practicable after such Share Issuance Event (or, if later, on the Settlement Date or the date of any Private Placement Settlement for which there are Deficit Shares), deliver such Shares. For the avoidance of doubt, Counterparty shall not be required to satisfy in cash any share delivery obligation if a Share Issuance Event does not occur.
|
13.
|
Transfer, Assignment and Designation
:
|
(a)
|
Notwithstanding any provision of the Agreement to the contrary, Dealer may assign, transfer and set over all rights, title and interest, powers, privileges and remedies of Dealer under the Transaction, in whole but not in part, to an affiliate of Dealer without the consent of Counterparty; provided that (i) at the time of assignment or transfer, such affiliate or its guarantor, if any, has equal or better creditworthiness than Dealer; (ii) no Event of Default, Potential Event of Default or Termination Event with respect to which Dealer or such affiliate is the Defaulting Party or an Affected Party, as the case may be, exists or would result therefrom, (iii) no Acceleration Event or other event giving rise to a right or responsibility to designate an Early Valuation Date or otherwise terminate or cancel the Transaction or to make an adjustment to the terms of the Transaction would result therefrom, and
|
(b)
|
Notwithstanding any other provision in this Confirmation to the contrary requiring or allowing Dealer to purchase, sell, receive or deliver any Shares or other securities to or from Counterparty, Dealer may designate any of its affiliates to purchase, sell, receive or deliver such Shares or other securities and otherwise to perform Dealer’s obligations in respect of the Transaction and any such designee may assume such obligations. Dealer shall be discharged of its obligations to Counterparty to the extent of any such performance.
|
14.
|
Indemnity
: Counterparty agrees to indemnify Dealer and its affiliates and their respective directors, officers, agents and controlling parties (Dealer and each such affiliate or person being an “
Indemnified Party
”) from and against any and all losses (but, for the avoidance of doubt, not including financial losses to an Indemnified Party relating to the economic terms of the Transaction provided that the Counterparty performs its obligations under this Confirmation in accordance with its terms), claims, damages and liabilities, joint and several, incurred by or asserted against such Indemnified Party, that arise out of, are in connection with, or relate to, any breach of any covenant or representation made by Counterparty in this Confirmation or the Agreement, and Counterparty will reimburse any Indemnified Party for all reasonable documented out-of-pocket expenses (including reasonable legal fees and expenses) as they are incurred in connection with the investigation of, preparation for, or defense of any pending or threatened claim or any action or proceeding arising therefrom, whether or not such Indemnified Party is a party thereto. Counterparty will not be liable under this Indemnity paragraph to the extent that any such loss, claim, damage, liability or expense results from an Indemnified Party’s material breach of this Agreement, gross negligence, bad faith, or willful misconduct. If for any reason the foregoing indemnification is unavailable to any Indemnified Party or insufficient to hold harmless any Indemnified Party, then Counterparty shall contribute, to the maximum extent permitted by law, to the amount paid or payable by the Indemnified Party as a result of such loss, claim, damage or liability.
|
15.
|
No Collateral; Netting; Setoff
:
|
(a)
|
Notwithstanding any provision of the Agreement or any other agreement between the parties to the contrary, the obligations of Counterparty hereunder are not secured by any collateral.
|
(b)
|
If on any date any Shares would otherwise be deliverable under the Transaction or the Base Confirmation by Counterparty to Dealer and by Dealer to Counterparty, then, on such date, each party’s obligations to make delivery of such Shares will be automatically satisfied and discharged and, if the aggregate number of Shares that would otherwise have been deliverable by one party exceeds the aggregate number of Shares that would have otherwise been deliverable by the other party, replaced by an obligation upon the party by whom the larger aggregate number of Shares would have been deliverable to deliver to the other party the excess of the larger aggregate number over the smaller aggregate number.
|
(c)
|
The parties agree that upon the occurrence of an Early Valuation Date or an Early Termination Date with respect to the non-Accelerating Party, the Defaulting Party or the Affected Party, as applicable (“X”), the other party (“Y”) will have the right (but not be obliged) without prior notice to X or any other person to set-off or apply any obligation of X owed to Y (whether or not matured or contingent and whether or not arising under the Agreement, and regardless of the currency, place of payment or booking office of the obligation) against any obligation of Y owed to X (whether or not matured or contingent and whether or not arising under the Agreement, and regardless of the currency, place of payment or booking office of the obligation). Y will give notice to the other party of any set-off effected under this Section 15.
|
(d)
|
Amounts (or the relevant portion of such amounts) subject to set-off may be converted by Y into the Termination Currency or into Shares, at the election of Y, at the rate of exchange at which such party would be able, acting in a reasonable manner and in good faith, to purchase the relevant amount of such currency or Shares. If any obligation is unascertained, Y may in good faith estimate that obligation and set-off in respect of the estimate, subject to the relevant party accounting to the other when the obligation is ascertained. Nothing in this Section 15 shall be effective to create a charge or other security interest. This Section 15 shall be without prejudice and in addition to any right of set-off, combination of accounts, lien or other right to which any party is at any time otherwise entitled (whether by operation of law, contract or otherwise).
|
(e)
|
Notwithstanding anything to the contrary in the foregoing, Dealer agrees not to set off or net amounts due from Counterparty with respect to the Transaction against amounts due from Dealer to Counterparty with respect to contracts or instruments that are not Equity Contracts. “
Equity Contract
” means any transaction or instrument that does not convey to Dealer rights, or the ability to assert claims, that are senior to the rights and claims of common stockholders in the event of Counterparty’s bankruptcy.
|
16.
|
Delivery of Cash
:
For the avoidance of doubt, nothing in this Confirmation shall be interpreted as requiring Counterparty to deliver cash in respect of the settlement of the Transaction, except (i) where Counterparty elects Cash Settlement and the Forward Cash Settlement Amount is a positive number or (ii) where Section 6 of the Agreement applies as provided in Section 9(a) of this Confirmation. For the avoidance of doubt, the preceding sentence shall not be construed as limiting any damages that may be payable by Counterparty as a result of a breach of or an indemnity under this Confirmation or the Agreement.
|
17.
|
Status of Claims in Bankruptcy
:
Dealer acknowledges and agrees that this Confirmation is not intended to convey to Dealer rights with respect to the transactions contemplated hereby that are senior to the claims of common stockholders in any U.S. bankruptcy proceedings of Counterparty;
provided
that nothing herein shall limit or shall be deemed to limit Dealer’s right to pursue remedies in the event of a breach by Counterparty of its obligations and agreements with respect to this Confirmation and the Agreement; and
provided further
that nothing herein shall limit or shall be deemed to limit Dealer’s rights in respect of any transaction other than the Transaction.
|
18.
|
Limit on Beneficial Ownership
:
Notwithstanding anything to the contrary in the Agreement or this Confirmation, in no event shall Dealer be entitled to receive, or be deemed to receive, Shares to the extent that, upon such receipt of such Shares, and after taking into account any Shares concurrently delivered by Seller under the Base Confirmation, (i) the “beneficial ownership” (within the meaning of Section 13 of the Exchange Act and the rules promulgated thereunder) of Shares by Dealer, any of its affiliates’ business units subject to
|
19.
|
Acknowledgements
:
|
(a)
|
Counterparty acknowledges that:
|
(i)
|
During the term of the Transaction, Dealer and its affiliates may buy or sell Shares or other securities or buy or sell options or futures contracts or enter into swaps or other derivative securities in order to establish, adjust or unwind its hedge position with respect to the Transaction.
|
(ii)
|
Dealer and its affiliates may also be active in the market for the Shares and derivatives linked to the Shares other than in connection with hedging activities in relation to the Transaction, including acting as agent or as principal and for its own account or on behalf of customers.
|
(iii)
|
Dealer shall make its own determination as to whether, when or in what manner any hedging or market activities in Counterparty’s securities shall be conducted and shall do so in a manner that it deems appropriate to hedge its price and market risk with respect to the Settlement Price.
|
(iv)
|
Any market activities of Dealer and its affiliates with respect to the Shares may affect the market price of the Shares, as well as any Settlement Price, each in a manner that may be adverse to Counterparty.
|
(v)
|
The Transaction is a derivative transaction; Dealer and its affiliates may purchase or sell Shares for their own account at prices that may be greater than, or less than, the prices paid or received by Counterparty under the terms of the Transaction.
|
(b)
|
The parties intend for this Confirmation to constitute a “Contract” as described in the letter dated October 6, 2003 submitted on behalf of GS&Co. to Paula Dubberly of the staff of the Securities and Exchange Commission (the “
Staff
”) to which the Staff responded in an interpretive letter dated October 9, 2003 (the “
Forward Letter
”).
|
(c)
|
The parties hereto intend for:
|
(i)
|
this Transaction to be a “securities contract” as defined in Section 741(7) of the Bankruptcy Code, qualifying for the protections under Sections 362(b)(6), 362(b)(27), 362(o), 546(e), 546(j), 548(d)(2), 555 and 561 of the Bankruptcy Code;
|
(ii)
|
the rights given to Dealer and Counterparty pursuant to “Acceleration Events” in Section 9 above to constitute “contractual rights” to cause the liquidation of a “securities contract” and to set off mutual debts and claims in connection with a “securities contract”, as such terms are used in Sections 555 and 362(b)(6) of the Bankruptcy Code;
|
(iii)
|
Dealer to be a “financial institution” within the meaning of Section 101(22) of the Bankruptcy Code;
|
(iv)
|
all payments for, under or in connection with the Transaction, all payments for Shares and the transfer of Shares to constitute “settlement payments” and “transfers” under a “securities contract” as defined in the Bankruptcy Code; and
|
(v)
|
any or all obligations that either party has with respect to this Confirmation or the Agreement to constitute property held by or due from such party to margin, guaranty or settle obligations of the other party with respect to the transactions under the Agreement (including the Transaction) or any other agreement between such parties.
|
20.
|
Notices
:
For the purpose of Section 12(a) of the Agreement:
|
(a)
|
Address for notices or communications to Dealer: As set forth in Section 1 (
Notices
) of
Annex C hereto.
|
(b)
|
Address for notices or communications to Counterparty:
|
21.
|
Waiver of Right to Trial by Jury
:
EACH OF COUNTERPARTY AND DEALER HEREBY IRREVOCABLY WAIVES (ON SUCH PARTY’S OWN BEHALF AND, TO THE EXTENT PERMITTED BY APPLICABLE LAW, ON BEHALF OF SUCH PARTY’S STOCKHOLDERS) ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS CONFIRMATION OR THE ACTIONS OF COUNTERPARTY AND DEALER OR ANY OF THEIR AFFILIATES IN THE NEGOTIATION, PERFORMANCE OR ENFORCEMENT HEREOF.
|
22.
|
Severability
:
If any term, provision, covenant or condition of this Confirmation, or the application thereof to any party or circumstance, shall be held to be invalid or unenforceable in whole or in part for any reason, the remaining terms, provisions, covenants, and conditions hereof shall continue in full force and effect as if this Confirmation had been executed with the invalid or unenforceable provision eliminated, so long as this Confirmation as so modified continues to express, without material change, the original intentions of the parties as to the subject matter of this Confirmation and the deletion of such portion of this Confirmation will not substantially impair the respective benefits or expectations of parties to the Agreement;
provided
that this severability provision shall not be applicable if any provision of Section 2, 5, 6 or 13 of the Agreement (or any definition or provision in Section 14 of the Agreement to the extent that it relates to, or is used in or in connection with any such Section) shall be so held to be invalid or unenforceable.
|
23.
|
Tax Disclosure:
Notwithstanding anything to the contrary herein, in the Equity Definitions or in the Agreement, and notwithstanding any express or implied claims of exclusivity or proprietary rights, the parties (and each of their employees, representatives or other agents) are authorized to disclose to any and all persons, beginning immediately upon commencement of their discussions and without limitation of any kind, the tax treatment and tax structure of the Transaction, and all materials of any kind (including opinions or other tax analyses) that are provided by either party to the other relating to such tax treatment and tax structure.
|
24.
|
Schedule Provisions
:
|
(a)
|
Notwithstanding Part 1(f) (
Payments on Early Termination
) of the Schedule to the Agreement and for so long as the Agreement is in the form of the 1992 ISDA Master Agreement, for purposes of Section 6(e) of the Agreement and this Transaction:
|
(i)
|
Loss will apply.
|
(ii)
|
The Second Method will apply.
|
(b)
|
The Termination Currency shall be USD.
|
(c)
|
Other:
|
(i)
|
Cross Default: The provisions of Section 5(a)(vi) of the Agreement will not apply to Dealer and will not apply to Counterparty.
|
(ii)
|
The “Automatic Early Termination” provision of Section 6(a) of the Agreement will not apply to Dealer and will not apply to Counterparty.
|
(d)
|
Part 2(b) of the ISDA Schedule – Payee Representation:
|
(e)
|
Part 3(a) of the ISDA Schedule – Tax Forms:
|
|
Form/Document/Certificate
|
Date by which to be Delivered
|
Counterparty
|
A complete and duly executed United States Internal Revenue Service Form W-9 (or successor thereto.)
|
(i) Upon execution and delivery of the Agreement; (ii) promptly upon reasonable demand by Dealer; and (iii) promptly upon learning that any such Form previously provided by Counterparty has become obsolete or incorrect.
|
Dealer
|
As set forth in Section 3 (
Tax Forms
) of Annex C hereto.
|
(i) Upon execution and delivery of the Agreement; (ii) promptly upon reasonable demand by Counterparty; and (iii) promptly upon learning that any such Form previously provided by Dealer has become obsolete or incorrect.
|
25.
|
Transaction Reporting
:
To the extent any information regarding this Transaction is required to be reported to a trade repository or similar entity by applicable law, Dealer shall satisfy, or cause to be satisfied, such reporting obligations.
|
26.
|
Dealer Provisions:
The parties hereby agree that the terms set forth in Section 5 (
Miscellaneous Provisions
) of Annex C hereto shall apply to this Agreement.
|
By:
/s/ James Heathcote
|
Name: James Heathcote Title: Authorized Signatory |
By:
/s/ Yukari Saegusa
|
Name: Yukari Saegusa Title: Vice President and Treasurer |
1.
|
Notice.
Address for notices or communications to Dealer:
|
2.
|
Payee Representation.
For the purpose of Section 3(f) of the Agreement, Dealer makes the following representation(s) to Counterparty:
|
3.
|
Tax Forms
. For the purpose of Section 24(e) of the Confirmation, Dealer shall deliver to Counterparty a complete and duly executed United States Internal Revenue Service Form W-9 (or successor thereto).
|
4.
|
Account Details
.
|
5.
|
Miscellaneous Provisions
.
|
a.
|
No Insurance or Guaranty
:
Counterparty understands, agrees and acknowledges that no obligations of Dealer to it hereunder shall be entitled to the benefit of deposit insurance and that such obligations shall not be guaranteed by any affiliate of Dealer or any governmental agency.
|
b.
|
Wall Street Transparency and Accountability Act
:
In connection with Section 739 of the Wall Street Transparency and Accountability Act of 2010 (“
WSTAA
”), the parties hereby agree that neither the enactment of WSTAA or any regulation under the WSTAA, nor any requirement under WSTAA or an amendment made by WSTAA, shall limit or otherwise impair either party’s otherwise applicable rights to terminate, renegotiate, modify, amend or supplement this Confirmation or the Agreement, as applicable, arising from a termination event, force majeure, illegality, increased costs, regulatory change or similar event under this Confirmation, the Swap Definitions or Equity Definitions incorporated herein or the Agreement (including, but not limited to, rights arising from an Acceleration Event, Increased Cost of Stock Borrow, any condition described in clause (i) of Section 18, an Excess Regulatory Ownership Position or Illegality (as defined in the Agreement)).
|
Buyer:
|
Dealer.
|
Effective Date:
|
November 21, 2018, or such later date on which the conditions set forth in Section 4 of this Confirmation have been satisfied.
|
Number of Shares:
|
Initially, (x) if no Initial Hedging Disruption (as defined in Section 4(b)) occurs, 445,709 Shares (the “
Full Number of Shares
”) or (y) if an Initial Hedging Disruption occurs, the Reduced Number of Shares (as defined in Section 4(b)).
|
Maturity Date:
|
December 27, 2019 (or, if such date is not a Clearance System Business Day, the next following Clearance System Business Day).
|
Daily Forward Price:
|
On the Effective Date, the Initial Forward Price, and on any other day, the Daily Forward Price as of the immediately preceding calendar day
multiplied by
the sum of (i) 1
and
(ii) the Daily Rate for such day;
provided
that on each Forward Price Reduction Date, the Daily Forward Price in effect on such date shall be the Daily Forward Price otherwise in effect on such date,
minus
the Forward Price Reduction Amount for such Forward Price Reduction Date.
|
Daily Rate:
|
For any day, (i)(A) Overnight Bank Rate for such day,
minus
(B) the Spread,
divided
by (ii) 365. For the avoidance of doubt, the Daily Rate may be negative.
|
Overnight Bank Rate
|
For any day,
the rate set forth for such day opposite the caption “Overnight bank funding rate”, as such rate is displayed on the page “OBFR01 <Index> <GO>” on the BLOOMBERG Professional Service, or any successor page;
provided
that if no rate appears for any day on such page, the rate for the immediately preceding day for which a rate appears shall be used for such day.
|
Forward Price Reduction Date:
|
Each date as separately agreed in writing between Dealer and Counterparty.
|
Amount:
|
For each Forward Price Reduction Date, an amount as separately agreed in writing between Dealer and Counterparty.
|
Shares:
|
Common Shares, $0.10 par value per share, of Counterparty (Exchange identifier: “ED”).
|
Exchange:
|
New York Stock Exchange.
|
Related Exchange(s):
|
All Exchanges.
|
Clearance System:
|
The Depository Trust Company.
|
Designated Valuation:
|
Subject to Section 9 of this Confirmation, Counterparty shall have the right to designate from time to time one or more Scheduled Trading Days (each, a “
Designated Date
”) occurring on or prior to the Maturity Date for a valuation and settlement of the Transaction with respect to all or a portion of the Undesignated Shares as of the Designated Date by written notice to Dealer delivered no later than 11:30 a.m., New York time, on the applicable Settlement Method Election Date;
provided
that, except with respect to the Maturity Date, Counterparty may not designate a Designated Date occurring during an Unwind Period related to a different Designated Date unless Physical Settlement is applicable in respect of such Designated Date. The portion of the Undesignated Shares designated for valuation and settlement in respect of a Designated Date shall be the “
Designated Shares
” for such Designated Date. If the number of Undesignated Shares on the Maturity Date is greater than zero (meaning, for the avoidance of doubt, that Counterparty did not deliver written notice to Dealer designating the Maturity Date as the Designated Date with respect to such Undesignated Shares on or prior to the related Settlement Method Election Date), then the Maturity Date will be a Designated Date with a number of Designated Shares equal to such remaining number of Undesignated Shares.
|
Valuation Date:
|
With respect to any Physical Settlement, the relevant Designated Date. With respect to any Cash Settlement or Net Share Settlement, the last day of the related Unwind Period.
|
Undesignated Shares:
|
At any time, the Number of Shares
minus
the aggregate number of Designated Shares for all Designated Dates occurring prior to such time.
|
Unwind Period:
|
For any Cash Settlement or Net Share Settlement, a period of consecutive Scheduled Trading Days (not to exceed ninety (90) Scheduled Trading Days), determined in a good faith and commercially reasonable manner by Dealer beginning on, and including, the Designated Date and ending on the date on which Dealer or its affiliates finishes unwinding Dealer’s Hedge Positions in respect of the Designated Shares for such Designated Date.
|
Market Disruption Event:
|
Section 6.3(a) of the Equity Definitions shall be amended by deleting the words “at any time during the one hour period that ends at the relevant Valuation Time, Latest Exercise Time, Knock-in Valuation Time or Knock-out Valuation Time, as the case may be” and replacing them with the words “at any time during the regular trading session on the Exchange, without regard to after hours or any other trading outside of the regular trading session hours”, and by replacing “or (iii) an Early
|
Consequences of Disrupted Days:
|
Solely as set forth in Section 9 of this Confirmation. The occurrence of a Disrupted Day shall not otherwise affect an Unwind Period.
|
Settlement Date:
|
Each Valuation Date.
|
Settlement Method Election:
|
Applicable;
provided
that:
|
(i)
|
Net Share Settlement shall be deemed to be included as an additional potential settlement method under Section 7.1 of the Equity Definitions;
|
(ai)
|
If Counterparty elects Cash Settlement or Net Share Settlement in the Settlement Notice (as defined below) to Dealer, Counterparty represents and warrants to the Dealer that, as of the date of such election,
|
(A)
|
Counterparty is not aware of any material non-public information concerning itself or the Shares;
|
(B)
|
Counterparty is electing the settlement method and designating the related Designated Date in good faith and not as part of a plan or scheme to evade compliance with Rule 10b-5 (“
Rule 10b-5
”) under the Securities Exchange Act of 1934, as amended (the “
Exchange Act
”), or any other provision of the federal securities laws;
|
(C)
|
Counterparty is not “insolvent” (as such term is defined under Section 101(32) of the U.S. Bankruptcy Code (Title 11 of the United States Code) (the “
Bankruptcy Code
”));
|
(D)
|
Counterparty would be able to purchase a number of Shares equal to the number of related Designated Shares (or, if greater in the case of a Net Share Settlement, a number of Shares with a value as of the date of such election equal to the product of (I) such number of Designated Shares and (II) the expected Daily Forward Price as of the relevant Designated Date) in compliance with the laws of Counterparty’s jurisdiction of organization;
|
(E)
|
Counterparty is not electing Cash Settlement or Net Share Settlement to create actual or apparent trading activity in the Shares (or any security convertible into or exchangeable for Shares) or to raise or depress or otherwise manipulate the price of the Shares (or any security convertible into or exchangeable for Shares) in violation of the Exchange Act; and
|
(F)
|
such election, and settlement in accordance therewith, does not and will not violate or conflict with, in any material respect, any law or regulation applicable to Counterparty, or any order or judgment of any court or other agency of government applicable to it or any of its assets, and any governmental consents that are required to have been obtained by Counterparty with respect to such election or settlement have been obtained and are in full force and effect and all conditions of any such consents have been complied with in all material respects; and
|
(bi)
|
Notwithstanding any election to the contrary as of any Settlement Method Election Date, Physical Settlement shall be applicable:
|
Electing Party:
|
Counterparty.
|
Settlement Method Election Date:
|
The second Scheduled Trading Day immediately preceding the relevant Designated Date;
provided,
that Counterparty may only elect Cash Settlement or Net Share Settlement if Counterparty (i) selects a Designated Date at least ninety (90) Scheduled Trading Days prior to the Maturity Date and (ii) delivers written notice of Settlement Method Election (the “
Settlement Notice
”) to Dealer and such notice contains the Designated Date and the
|
Default Settlement Method:
|
Physical Settlement.
|
Physical Settlement:
|
If Physical Settlement is applicable, then on the relevant Settlement Date, Dealer will pay to Counterparty an amount equal to the product of (x) the number of Designated Shares for the related Designated Date and (y) the Daily Forward Price on such Settlement Date and Counterparty will deliver to Dealer a number of Shares equal to such number of Designated Shares. Section 9.2 of the Equity Definitions (other than the last sentence thereof) will not apply to any Physical Settlement.
|
Prepayment:
|
Not Applicable.
|
Variable Obligation:
|
Not Applicable.
|
Cash Settlement Payment Date:
|
If Cash Settlement is applicable, the second Currency Business Day following the applicable Valuation Date.
|
Forward Cash Settlement Amount:
|
The aggregate sum, for all Unwind Dates in the relevant Unwind Period, of the Daily Cash Settlement Amounts.
|
Daily Cash Settlement Amount:
|
For any Unwind Date, the product (which may be negative) of (i) the Daily Share Number of such Unwind Date, and (ii)(A) the Settlement Price for such Unwind Date
minus
(B) the Daily Forward Price on the day that is the second Exchange Business Day immediately following such Unwind Date.
|
Unwind Date:
|
Each Exchange Business Day during the Unwind Period on which Dealer or its affiliates unwind any portion of Dealer’s Hedge Positions in respect of the relevant Designated Date.
|
Daily Share Number:
|
For any Unwind Date, the number of Designated Shares with respect to which Dealer or its affiliates unwind any portion of Dealer’s Hedge Positions in respect of the relevant Designated Date.
|
Settlement Price:
|
For any Unwind Date, the Rule 10b-18 volume-weighted average price per Share for the regular trading session of the Exchange on such date (without considering trading before the open or after hours trading outside of the regular trading session), as reported by Bloomberg on page “ED <Equity> AQR SEC” or any successor page thereto at 4:15 p.m., New York time (or 15 minutes following the end of any extension of the regular trading session), on such date or, if such price is not so reported on such date or is in the Calculation Agent’s reasonable determination erroneous, as reasonably determined by the Calculation Agent (provided that such price determined by the Calculation Agent is consistent with the price used by the Calculation Agent with respect to other similar equity derivative transactions outstanding, if any, involving the Shares), plus $0.02.
|
Net Share Settlement:
|
If Net Share Settlement is applicable, then on the relevant Net Share Settlement Date:
|
(i)
|
if the Net Share Settlement Number is positive, then Counterparty will deliver to Dealer a number of Shares equal to the Net Share Settlement Number; and
|
(ii)
|
if the Net Share Settlement Number is negative, then Dealer will deliver to Counterparty a number of Shares equal to the absolute value of the Net Share Settlement Number;
|
Net Share Settlement Number:
|
A number of Shares equal to the sum of (i) the Aggregate Net Share Number as of the last Unwind Date in the Unwind Period and (ii) the sum of the quotients (rounded to the nearest whole number), for each Unwind Adjustment Amount for such Unwind Period, obtained by dividing (x) such Unwind Adjustment Amount by (y) the Settlement Price on the Forward Price Reduction Date relating to such Unwind Adjustment Amount.
|
Aggregate Net Share Number:
|
As of any date, the aggregate sum, for all Unwind Dates in the relevant Unwind Period occurring on or prior to such date, of the quotient (rounded to the nearest whole number) obtained by dividing (x) the Daily Cash Settlement Amount for such Unwind Date by (y) the Settlement Price for such Unwind Date.
|
Net Share Settlement Date:
|
Two (2) Clearance System Business Days following the applicable Valuation Date.
|
Unwind Adjustment Amount:
|
For any Unwind Period, for any Forward Price Reduction Date that occurs during the period from, and including, the date that is one (1) Settlement Cycle immediately following the relevant Designated Date to, and including, the date that is one (1) Settlement Cycle immediately following the relevant Valuation Date, an amount equal to the product of (i) the relevant Forward Price Reduction Amount
multiplied by
(ii)(A) if the Aggregate Net Share Number as of the date immediately prior to the date that is one (1) Settlement Cycle immediately preceding the relevant Forward Price Reduction Date is a positive number, such Aggregate Net Share Number or (B) otherwise, zero.
|
Unwound Shares:
|
For any Unwind Period at any time, the
aggregate sum of the Daily Share Numbers for all Unwind Dates in such Unwind Period that have occurred prior to such time.
|
Delivery of Shares:
|
Notwithstanding anything to the contrary herein, either party may, by prior notice to the other party, satisfy its obligation to deliver any Shares on any date due (an “
Original Delivery
|
Consequences of Late Delivery:
|
Without limiting the generality of this Confirmation, the Agreement and the Equity Definitions, if for any reason Counterparty fails to deliver when due any Shares required to be delivered hereunder and a Forward Price Reduction Date occurs on or after the date such Shares are due and on or before the date such Shares are delivered, Counterparty acknowledges and agrees that, in addition to any other amounts for which Counterparty may be liable hereunder or under law (but without duplication), Counterparty shall be liable to Dealer for an amount equal to the product of the number of Shares so due but not yet delivered on or prior to such Forward Price Reduction Date and the Forward Price Reduction Amount for such Forward Price Reduction Date.
|
Representation and Agreement:
|
Section 9.11 of the Equity Definitions is hereby modified to exclude any representations therein relating to restrictions, obligations, limitations or requirements under applicable securities laws that exist or arise as a result of the fact that Counterparty is the Issuer of the Shares.
|
Method of Adjustment:
|
Calculation Agent Adjustment; provided that, Section 11.2(e)(iii) of the Equity Definitions shall be deleted.
|
Extraordinary Dividend:
|
Any dividend or distribution on the Shares which has an ex-dividend date occurring on any day following the Trade Date (other than (i) any dividend or distribution of the type described in Section 11.2(e)(i) or Section 11.2(e)(ii)(A) of the Equity Definitions or (ii) a regular, quarterly cash dividend in an amount per Share equal to or less than the Forward Price Reduction Amount corresponding to the relevant quarter that has an ex-dividend date no earlier than the Forward Price Reduction Date corresponding to the relevant quarter).
|
Merger Event:
|
Section 12.1(b) of the Equity Definitions shall be amended by deleting the remainder of such Section following the definition of “Reverse Merger” therein.
|
Tender Offer:
|
Applicable.
|
Delisting:
|
In addition to the provisions of Section 12.6(a)(iii) of the Equity Definitions, it shall also constitute a Delisting if the Exchange is located in the United States and the Shares are not immediately re-listed, re-traded or re-quoted on any of the New York Stock Exchange, The NASDAQ Global Select Market or The NASDAQ Global Market (or their respective successors); if the
|
Change in Law:
|
Applicable;
provided
that Section 12.9(a)(ii) of the Equity Definitions is hereby amended by (i) replacing the phrase “the interpretation” in the third line thereof with the phrase “or public announcement of the formal interpretation”; (ii) replacing the word “Shares” where it appears in clause (X) with the words “Hedge Position”; and (iii) immediately following the word “Transaction” in clause (X) thereof, adding the phrase “in the manner contemplated by it on the Trade Date”.
|
Failure to Deliver:
|
Not Applicable.
|
Hedging Disruption:
|
Not Applicable.
|
Increased Cost of Hedging:
|
Not Applicable.
|
Increased Cost of Stock Borrow:
|
Applicable;
provided
that clause (C) of Section 12.9(b)(v) of the Equity Definitions and the third, fourth and fifth sentences of Section 12.9(b)(v) of the Equity Definitions shall be deleted.
|
Loss of Stock Borrow:
|
Applicable.
|
Hedging Party:
|
For all applicable Additional Disruption Events, Dealer.
|
Determining Party:
|
For all applicable Extraordinary Events, Dealer.
|
Extraordinary Events:
|
The consequences that would otherwise apply under Article 12 of the Equity Definitions to any applicable Extraordinary Event (other than an Increased Cost of Stock Borrow and any event that also constitutes a Bankruptcy Termination Event) shall not apply, and instead, the consequences specified in Section 9 (or, in the case of a Bankruptcy Termination Event, Section 7) of this Confirmation shall apply.
|
Non-Reliance:
|
Applicable.
|
Regarding Hedging Activities:
|
Applicable.
|
Additional Acknowledgements:
|
Applicable.
|
Calculation Agent:
|
Dealer;
provided
that if an Event of Default under Section 5(a)(i) or 5(a)(vii) of the Agreement has occurred and is continuing
|
Payments to Dealer:
|
As set forth in Section 4 (
Account Details
) of Annex C hereto.
|
Payments to Counterparty:
|
As instructed by Counterparty prior to settlement.
|
Delivery of Shares to Dealer:
|
As set forth in Section 4 (
Account Details
) of Annex C hereto.
|
4.
|
Conditions to Effectiveness
:
|
(a)
|
The effectiveness of this Confirmation on the Effective Date shall be subject to the following conditions:
|
(i)
|
The representations and warranties of Counterparty contained in the Underwriting Agreement dated November 14, 2018, between Counterparty and Citigroup Global Markets Inc., Barclays Capital Inc. and J.P. Morgan Securities LLC, acting in their capacity as Forward Sellers (as defined therein), and Citibank, N.A., Barclays Bank PLC and JPMorgan Chase Bank, London Branch, acting in their capacity as Forward Purchasers (as defined therein) and Citigroup Global Markets Inc., Barclays Capital Inc. and J.P. Morgan Securities LLC, as representative of the several Underwriters named therein (the “
Underwriting Agreement
”), and any certificate delivered pursuant thereto by Counterparty shall be true and correct on the Effective Date as if made as of the Effective Date;
|
(ii)
|
Counterparty shall have performed all of the obligations required to be performed by it under the Underwriting Agreement on or prior to the Effective Date;
|
(iii)
|
All of the conditions set forth in Section 9 (
Conditions of the Obligations of the Underwriters
) of the Underwriting Agreement shall have been satisfied;
|
(iv)
|
The delivery of Option Shares (as defined in the Underwriting Agreement) and payment of the Option Purchase Price (as defined in
|
(v)
|
All of the representations and warranties of Counterparty hereunder and under the Agreement shall be true and correct on the Effective Date as if made as of the Effective Date;
|
(vi)
|
Counterparty shall have performed all of the obligations required to be performed by it hereunder and under the Agreement on or prior to the Effective Date, including without limitation its obligations under Section 5 hereof; and
|
(vii)
|
Counterparty shall have delivered to Dealer an opinion of counsel substantially in the form of Annex B hereto.
|
(b)
|
Notwithstanding the foregoing or any other provision of this Confirmation, if (x) on or prior to 9:00 a.m., New York City time, on the date the Additional Time of Delivery is scheduled to occur, Dealer, in its commercially reasonable judgment, is unable to borrow and deliver for sale the Full Number of Shares or (y) in Dealer’s commercially reasonable judgment, it would incur a stock loan cost of more than 200 basis points per annum with respect to all or any portion of the Full Number of Shares (in each case, an “
Initial Hedging Disruption
”), the effectiveness of this Confirmation and the Transaction shall be limited to the number of Shares Dealer may borrow at a cost of not more than 200 basis points per annum (such number of Shares, the “
Reduced Number of Shares
”), which, for the avoidance of doubt, may be zero;
provided, however,
that if the Counterparty terminates the Transaction under the Base Confirmation (as defined herein) pursuant to Section 4(b) thereto, then Counterparty shall have the option to terminate the Transaction. Counterparty shall have no liability to Dealer hereunder (including for any costs or expenses incurred by Dealer) as a result of any reduction in the Number of Shares or as a result of or following any termination of the Transaction pursuant to this Section 4(b).
|
5.
|
Representations and Agreements of Counterparty
:
Counterparty represents and warrants to, and agrees with, Dealer as of the date hereof that:
|
(a)
|
Counterparty shall promptly provide written notice, to the extent such notice does not constitute material non-public information, to Dealer upon obtaining knowledge of (i) the occurrence or announcement of any event that would constitute an Event of Default, Potential Event of Default or a Potential Adjustment Event or (ii) any Announcement Date in respect of an Extraordinary Event;
|
(b)
|
Counterparty shall maintain, by all required corporate action of Counterparty, a number of authorized but unissued Shares not reserved for other purposes at least equal to two times the sum of (i) the number of Undesignated Shares as of the time of determination, (ii)(A) if any, the number of Designated Shares for any Designated Date occurring prior to such time for which the related Unwind Period has not been completed at such time minus (B) the number of Unwound Shares for such Unwind Period at such time and (iii) if any Net Share Settlement Number as of such time is (A) a positive number and (B) has not been delivered by Counterparty to Dealer pursuant to “Net Share Settlement” above, such Net Share Settlement Number (the sum of the Shares in clauses (i)–(iii), the “
Remaining Amount
” and the product of two times the Remaining Amount, the “
Capped Number
”) in reserve for
|
(c)
|
Counterparty shall not take any action to reduce or decrease the number of authorized and unissued Shares below the sum of (i) the Capped Number
plus
(ii) the total number of Shares issuable upon settlement (whether by net share settlement or otherwise) of any other transaction or agreement relating to the Shares to which it is a party (or, if greater, the number of Shares reserved by Counterparty for settlement of or delivery under such transaction or agreement);
|
(d)
|
Counterparty will not repurchase any Shares during the term of this Transaction if, immediately following such repurchase, the Number of Shares plus the “Number of Shares” under the letter agreement (the ‘
Base Confirmation
”) , dated November 14, 2018, between Dealer and Counterparty, relating to the forward sale of Shares, results in a Share Percentage (as defined below) equal to or greater than 8.0%. Counterparty shall notify Dealer promptly upon the announcement or consummation of any repurchase of Shares that, taken together with the amount of all repurchases since the date of the last such notice (or, if no such notice has been given, the Trade Date for the Base Confirmation) exceeds 3.1 million Shares. The “
Share Percentage
” as of any day is the fraction (1) the numerator of which is the Number of Shares and (2) the denominator of which is the number of Shares outstanding on such day;
|
(e)
|
As of the Trade Date, it is not and it agrees that, as of the Effective Date and the date of any payment or delivery by Counterparty or Dealer hereunder, it will not be, “insolvent” (as such term is defined under Section 101(32) of the Bankruptcy Code);
|
(f)
|
Neither Counterparty nor any of its “affiliated purchasers” (as defined by Rule 10b-18 under the Exchange Act (“
Rule 10b-18
”) shall take any action during any Unwind Period that would cause any purchases of Shares by Dealer or any of its affiliates in connection with any Cash Settlement or Net Share Settlement not to meet the requirements of the safe harbor provided by Rule 10b-18 if such purchases were made by Counterparty. Without limiting the foregoing, during any Unwind Period, except with the prior written consent of Dealer, Counterparty will not, and will cause its affiliated purchasers (as defined in Rule 10b-18) not to, directly or indirectly (including, without limitation, by means of a derivative instrument) purchase, offer to purchase, place any bid or limit order that would effect a purchase of, or announce or commence any tender offer relating to, any Shares (or equivalent interest, including a unit of beneficial interest in a trust or limited partnership or a depository share) or any security convertible into or exchangeable for the Shares. For the avoidance of doubt the immediately preceding sentence shall not apply to any purchase, offer to purchase, bid or limit orders effected by or for an issuer plan by an agent independent of the issuer (each as defined in Regulation M (“
Regulation M
”)
promulgated under the Exchange Act);
|
(g)
|
Counterparty will not be subject to any “restricted period” (as such term is defined in Regulation M) in respect of Shares or any security with respect to which the Shares are a “reference security” (as such term is defined in Regulation M) during any Unwind Period;
|
(h)
|
During any Unwind Period, Counterparty shall: (i) prior to the opening of trading in the Shares on any day on which Counterparty makes, or expects to be made, any public announcement (as defined in Rule 165(f) under the Securities Act) of any Merger Transaction, notify Dealer of such public announcement; (ii) promptly notify Dealer following any such announcement that such announcement has been made; (iii) promptly (but in any event prior to the next opening of the regular trading session on the Exchange) provide Dealer with written notice specifying (A) Counterparty’s average daily Rule 10b-18 Purchases (as defined in Rule 10b-18) during the three full calendar months immediately preceding the Announcement Date that were not effected through Dealer or its affiliates and (B) the number of Shares purchased pursuant to the proviso in Rule 10b-18(b)(4) under the Exchange Act for the three full calendar months preceding the Announcement Date. Such written notice shall be deemed to be a certification by Counterparty to Dealer that such information is true and correct. In addition, Counterparty shall promptly notify Dealer of the earlier to occur of the completion of such transaction and the completion of the vote by target shareholders. Counterparty acknowledges that any such notice may result in a Regulatory Disruption or may affect the length of any ongoing Unwind Period; accordingly, Counterparty acknowledges that its delivery of such notice must comply with the standards set forth in Section 11(c) of this Confirmation. “
Securities Act
” means the Securities Act of 1933, as amended. “
Merger Transaction
” means any merger, acquisition or similar transaction involving a recapitalization as contemplated by Rule 10b-18(a)(13)(iv) under the Exchange Act;
|
(i)
|
Counterparty is an “eligible contract participant” (as such term is defined in the Commodity Exchange Act, as amended);
|
(j)
|
Counterparty is not entering into the Transaction, and will not elect Cash Settlement or Net Share Settlement, to create actual or apparent trading activity in the Shares (or any security convertible into or exchangeable for Shares) or to raise or depress or otherwise manipulate the price of the Shares (or any security convertible into or exchangeable for Shares) in violation of the Exchange Act or any other applicable securities laws;
|
(k)
|
Counterparty (i) is capable of evaluating investment risks independently, both in general and with regard to all transactions and investment strategies involving a security or securities; (ii) will exercise independent judgment in evaluating the recommendations of any broker-dealer or its associated persons, unless it has otherwise notified the broker-dealer in writing; and (iii) has total assets of at least $50 million as of the date hereof;
|
(l)
|
Without limiting the generality of Section 13.1 of the Equity Definitions, Counterparty acknowledges that Dealer is not making any representations or warranties with respect to the treatment of the Transaction, including without limitation ASC Topic 260,
Earnings Per Share
, ASC Topic 815,
Derivatives and Hedging
, FASB Statements 128, 133, as amended, 149 or 150, EITF 00-19, 01-6, 03-6 or 07-5, ASC Topic 480,
Distinguishing Liabilities from Equity
, ASC 815-40,
Derivatives and Hedging – Contracts in Entity’s Own Equity
(or any successor issue statements) or under the Financial Accounting Standards Board’s Liabilities & Equity Project;
|
(m)
|
Counterparty is in compliance with its reporting obligations under the Exchange Act and its most recent Annual Report on Form 10-K, together with all reports subsequently filed by it pursuant to the Exchange Act, taken together and as
|
(n)
|
Counterparty is not aware of any material non-public information regarding itself or the Shares. Counterparty is entering into this Confirmation and will provide any Settlement Notice in good faith and not as part of a plan or scheme to evade compliance with Rule 10b-5 or any other provision of the federal securities laws; and Counterparty has consulted with its own advisors as to the legal aspects of its adoption and implementation of this Confirmation under Rule 10b5-1 under the Exchange Act (“
Rule 10b5-1
”);
|
(o)
|
Counterparty is not, and after giving effect to the transactions contemplated hereby will not be, required to register as an “investment company” as such term is defined in the Investment Company Act of 1940, as amended;
|
(p)
|
Counterparty: (i) is an “institutional account” as defined in FINRA Rule 4512(c); and (ii) is capable of evaluating investment risks independently, both in general and with regard to all transactions and investment strategies involving a security or securities, and will exercise independent judgment in evaluating any recommendations of Dealer or its associated persons; and
|
(q)
|
COUNTERPARTY UNDERSTANDS THAT THE TRANSACTION IS SUBJECT TO COMPLEX RISKS WHICH MAY ARISE WITHOUT WARNING AND MAY AT TIMES BE VOLATILE AND THAT LOSSES MAY OCCUR QUICKLY AND IN UNANTICIPATED MAGNITUDE AND IS WILLING TO ACCEPT SUCH TERMS AND CONDITIONS AND ASSUME SUCH RISKS.
|
6.
|
Covenant Regarding Settlement
:
Counterparty acknowledges and agrees that any Shares delivered by Counterparty to Dealer on any Settlement Date or Net Share Settlement Date will be (i) newly issued, (ii) approved for listing or quotation on the Exchange, subject to official notice of issuance, and (iii) registered under the Exchange Act. Subject to Section 10 of this Confirmation, on the basis of the Forward Letter (as defined below), such Shares, when delivered by Dealer (or an affiliate of Dealer) to securities lenders from whom Dealer (or an affiliate of Dealer) borrowed Shares in connection with hedging its exposure to the Transaction, will be freely saleable without further registration or other restrictions under the Securities Act in the hands of those securities lenders
(other than any restriction arising from the status or actions of Dealer or its affiliates). Dealer agrees, subject to Section 10 of this Confirmation, that it will use such Shares, directly or indirectly, and irrespective of whether any such stock loan is effected by Dealer or an affiliate thereof, solely for the purposes of delivery to such securities lenders as contemplated in the Forward Letter. Accordingly, Counterparty agrees that any Shares so delivered by Counterparty will not bear a restrictive legend and will be deposited in, and the delivery thereof shall be effected through the facilities of, the Clearance System.
|
7.
|
Termination on Bankruptcy
:
The parties hereto agree that, notwithstanding anything to the contrary in the Agreement or the Equity Definitions, the Transaction constitutes a contract to issue a security of Counterparty as contemplated by Section 365(c)(2) of the Bankruptcy Code and that the Transaction and the obligations and rights of Counterparty and Dealer (except for any liability as a result of breach of any of the representations or warranties provided by Counterparty in Section 5 above) shall immediately terminate, without the necessity of any notice, payment (whether directly, by netting or otherwise) or other action
|
8.
|
[
Reserved
]
|
9.
|
Acceleration Events
:
|
(a)
|
Notwithstanding anything to the contrary herein, in the Agreement or in the Equity Definitions, at any time following the occurrence and during the continuation of an Acceleration Event, Dealer (or, in the case of an Acceleration Event that is an Event of Default or a Termination Event, the party that would be entitled to designate an Early Termination Date in respect of such event pursuant to Section 6 of the Agreement) (the “
Accelerating Party
”) shall, by not more than 20 days’ notice to the other party, have the right to designate any Scheduled Trading Day on or following the date that notice of such designation is effective to be the “
Early Valuation Date
,” in which case the provisions set forth in this Section 9 shall apply in lieu of Section 6 of the Agreement or Article 12 of the Equity Definitions; provided that Section 6 of the Agreement shall apply in the case of (1) an Event of Default pursuant to Section 5(a)(i) of the Agreement in connection with an Early Valuation Date, and (2) an Event of Default pursuant to Section 5(a)(vii) of the Agreement with respect to Dealer.
|
(b)
|
If the Early Valuation Date occurs on a date that is not during an Unwind Period, then the Early Valuation Date shall be deemed to be a Designated Date for a Physical Settlement, and the number of Designated Shares for such Designated Date shall be the number of Undesignated Shares on the Early Valuation Date;
provided
that in the case of an Acceleration Event of the type described in paragraph (e)(iii) or (vi) below, the number of Designated Shares for such Designated Date shall be only such number of Designated Shares necessary so that such Acceleration Event shall no longer exist after such Physical Settlement, as determined by the Calculation Agent.
|
(c)
|
If the Early Valuation Date occurs during an Unwind Period, then (i) (A) the last Unwind Date of such Unwind Period shall occur on the Early Valuation Date, (B) a settlement shall occur in respect of such Unwind Period and, except as otherwise provided herein, the settlement method elected by Counterparty in respect of such settlement shall apply, and (C) the number of Designated Shares for such settlement shall be deemed to be the number of Unwound Shares for such Unwind Period on the Early Valuation Date, and (ii) (A) the Early Valuation Date shall be deemed to be an additional Designated Date for a Physical Settlement and (B) the number of Designated Shares for such additional Designated Date shall be the Remaining Amount on the Early Valuation Date;
provided
that in the case of an Acceleration Event of the type described in paragraph (e)(iii) or (vi) below, the number of Designated Shares for such additional Designated Date shall be only such number of Designated Shares necessary so that such Acceleration Event shall no longer exist after such Physical Settlement, as determined by the Calculation Agent.
|
(d)
|
Notwithstanding the foregoing, in the case of an Early Valuation Date that occurs due to the announcement of a Nationalization or a Merger Event, if at the time of the related Settlement Date or Net Share Settlement Date, as applicable, the Shares have changed into cash or any other property or the right to receive cash or any
|
(e)
|
“
Acceleration Event
” means:
|
(i)
|
any Event of Default or Termination Event (other than an Event of Default or Termination Event that also constitutes a Bankruptcy Termination Event) that would give rise to the right of either party to designate an Early Termination Date pursuant to Section 6 of the Agreement;
|
(ii)
|
the announcement of any event or transaction relating to the Shares that, if consummated, would result in (x) the occurrence of a Merger Event or Tender Offer, or (y) the occurrence of a Nationalization, Delisting or Change in Law, in each case as determined by the Calculation Agent in good faith and a commercially reasonable manner;
|
(iii)
|
A Loss of Stock Borrow;
|
(iv)
|
the declaration or payment by Counterparty of any Extraordinary Dividend;
|
(v)
|
the occurrence of a Market Disruption Event during an Unwind Period and the continuance of such Market Disruption Event for at least eight consecutive Scheduled Trading Days;
|
(vi)
|
the occurrence of an Excess Section 13 Ownership Position or Excess Regulatory Ownership Position; or
|
(vii)
|
the occurrence of the Maturity Date during an Unwind Period.
|
10.
|
Private Placement Procedures
:
If either Dealer or Counterparty reasonably determines, based on the advice of counsel, that Counterparty will be unable to comply with the covenant set forth in the second sentence of Section 6 of this Confirmation because of a change in law or a change in the policy of the Securities and Exchange Commission or its staff, or Dealer otherwise reasonably determines, based on the advice of counsel, that in its reasonable opinion any Shares to be delivered to Dealer by Counterparty hereunder may not be freely returned by Dealer or its affiliates to securities lenders as contemplated by Section 6 of this Confirmation, then delivery of any such Shares (the “
Restricted Shares
”) shall be effected pursuant to Annex A hereto, unless waived by Dealer.
|
11.
|
Rule 10b5-1
:
|
(a)
|
The parties acknowledge that following any election of Cash Settlement or Net Share Settlement by Counterparty, this Confirmation is intended to constitute a binding contract satisfying the requirements of Rule 10b5-1(c) of the Exchange Act and agree that this Confirmation shall be interpreted to comply with such requirements.
|
(b)
|
The times and prices at which Dealer (or its agent or affiliate) purchases any Shares during any Unwind Period shall be at Dealer’s sole discretion. Counterparty acknowledges that during any Unwind Period Counterparty does not have, and shall not attempt to exercise, any influence over how, when or whether to effect
|
(c)
|
Counterparty hereby agrees with Dealer that during any Unwind Period Counterparty shall not communicate, directly or indirectly, any material non-public information (within the meaning of such term under Rule 10b5-1) to any employee of Dealer (or its agents or affiliates) who is directly involved with the hedging of, and trading with respect to, the Transaction. Counterparty acknowledges and agrees that any amendment, modification, waiver or termination of the Transaction must be effected in accordance with the requirements for the amendment or termination of a contract, instruction or plan under Rule 10b5-1(c). Without limiting the generality of the foregoing, any such amendment, modification, waiver or termination shall be made in good faith and not as part of a plan or scheme to evade the prohibitions of Rule 10b-5 under the Exchange Act, and no such amendment, modification or waiver shall be made at any time at which Counterparty is aware of any material non-public information regarding Counterparty or the Shares.
|
12.
|
Capped Number of Shares
:
Notwithstanding any other provision of the Agreement or this Confirmation, in no event will Counterparty be required to deliver in the aggregate in respect of all Settlement Dates, Net Share Settlement Dates or other dates on which Shares are delivered in respect of any amount owed under this Confirmation a number of Shares greater than the Capped Number. If the number of Shares to be issued at settlement by the Counterparty exceeds the authorized and unissued shares that are not reserved for any other purposes (such excess, the “
Deficit Shares
”), Counterparty shall be obligated to deliver Shares, from time to time until the full number of Deficit Shares have been delivered pursuant to this paragraph, when, and to the extent, that (A) Shares are repurchased, acquired or otherwise received by Counterparty or any of its subsidiaries after the Trade Date (whether or not in exchange for cash, fair value or any other consideration) and are not required to be used for any other purpose, (B) authorized and unissued Shares reserved for issuance in respect of other transactions as of the Trade Date become no longer so reserved and (C) Counterparty authorizes any additional unissued Shares that are not reserved for other transactions (such events as set forth in clauses (A), (B) and (C) above, collectively, the “
Share Issuance Events
”). Counterparty shall promptly notify Dealer of the occurrence of any of the Share Issuance Events (including the number of Shares subject to clause (A), (B) or (C) and the corresponding number of Shares to be delivered) and, as promptly as reasonably practicable after such Share Issuance Event (or, if later, on the Settlement Date or the date of any Private Placement Settlement for which there are Deficit Shares), deliver such Shares. For the avoidance of doubt, Counterparty shall not be required to satisfy in cash any share delivery obligation if a Share Issuance Event does not occur.
|
13.
|
Transfer, Assignment and Designation
:
|
(a)
|
Notwithstanding any provision of the Agreement to the contrary, Dealer may assign, transfer and set over all rights, title and interest, powers, privileges and remedies of Dealer under the Transaction, in whole but not in part, to an affiliate of Dealer without the consent of Counterparty; provided that (i) at the time of assignment or transfer, such affiliate or its guarantor, if any, has equal or better creditworthiness than Dealer; (ii) no Event of Default, Potential Event of Default or Termination Event with respect to which Dealer or such affiliate is the Defaulting Party or an Affected Party, as the case may be, exists or would result therefrom, (iii) no Acceleration Event or other event giving rise to a right or responsibility to designate an Early Valuation Date or otherwise terminate or cancel the Transaction or to make an adjustment to the terms of the Transaction would result therefrom, and
|
(b)
|
Notwithstanding any other provision in this Confirmation to the contrary requiring or allowing Dealer to purchase, sell, receive or deliver any Shares or other securities to or from Counterparty, Dealer may designate any of its affiliates to purchase, sell, receive or deliver such Shares or other securities and otherwise to perform Dealer’s obligations in respect of the Transaction and any such designee may assume such obligations. Dealer shall be discharged of its obligations to Counterparty to the extent of any such performance.
|
14.
|
Indemnity
: Counterparty agrees to indemnify Dealer and its affiliates and their respective directors, officers, agents and controlling parties (Dealer and each such affiliate or person being an “
Indemnified Party
”) from and against any and all losses (but, for the avoidance of doubt, not including financial losses to an Indemnified Party relating to the economic terms of the Transaction provided that the Counterparty performs its obligations under this Confirmation in accordance with its terms), claims, damages and liabilities, joint and several, incurred by or asserted against such Indemnified Party, that arise out of, are in connection with, or relate to, any breach of any covenant or representation made by Counterparty in this Confirmation or the Agreement, and Counterparty will reimburse any Indemnified Party for all reasonable documented out-of-pocket expenses (including reasonable legal fees and expenses) as they are incurred in connection with the investigation of, preparation for, or defense of any pending or threatened claim or any action or proceeding arising therefrom, whether or not such Indemnified Party is a party thereto. Counterparty will not be liable under this Indemnity paragraph to the extent that any such loss, claim, damage, liability or expense results from an Indemnified Party’s material breach of this Agreement, gross negligence, bad faith, or willful misconduct. If for any reason the foregoing indemnification is unavailable to any Indemnified Party or insufficient to hold harmless any Indemnified Party, then Counterparty shall contribute, to the maximum extent permitted by law, to the amount paid or payable by the Indemnified Party as a result of such loss, claim, damage or liability.
|
15.
|
No Collateral; Netting; Setoff
:
|
(a)
|
Notwithstanding any provision of the Agreement or any other agreement between the parties to the contrary, the obligations of Counterparty hereunder are not secured by any collateral.
|
(b)
|
If on any date any Shares would otherwise be deliverable under the Transaction or the Base Confirmation by Counterparty to Dealer and by Dealer to Counterparty, then, on such date, each party’s obligations to make delivery of such Shares will be automatically satisfied and discharged and, if the aggregate number of Shares that would otherwise have been deliverable by one party exceeds the aggregate number of Shares that would have otherwise been deliverable by the other party, replaced by an obligation upon the party by whom the larger aggregate number of Shares would have been deliverable to deliver to the other party the excess of the larger aggregate number over the smaller aggregate number.
|
(c)
|
The parties agree that upon the occurrence of an Early Valuation Date or an Early Termination Date with respect to the non-Accelerating Party, the Defaulting Party or the Affected Party, as applicable (“X”), the other party (“Y”) will have the right (but not be obliged) without prior notice to X or any other person to set-off or apply any obligation of X owed to Y (whether or not matured or contingent and whether or not arising under the Agreement, and regardless of the currency, place of payment or booking office of the obligation) against any obligation of Y owed to X (whether or not matured or contingent and whether or not arising under the Agreement, and regardless of the currency, place of payment or booking office of the obligation). Y will give notice to the other party of any set-off effected under this Section 15.
|
(d)
|
Amounts (or the relevant portion of such amounts) subject to set-off may be converted by Y into the Termination Currency or into Shares, at the election of Y, at the rate of exchange at which such party would be able, acting in a reasonable manner and in good faith, to purchase the relevant amount of such currency or Shares. If any obligation is unascertained, Y may in good faith estimate that obligation and set-off in respect of the estimate, subject to the relevant party accounting to the other when the obligation is ascertained. Nothing in this Section 15 shall be effective to create a charge or other security interest. This Section 15 shall be without prejudice and in addition to any right of set-off, combination of accounts, lien or other right to which any party is at any time otherwise entitled (whether by operation of law, contract or otherwise).
|
(e)
|
Notwithstanding anything to the contrary in the foregoing, Dealer agrees not to set off or net amounts due from Counterparty with respect to the Transaction against amounts due from Dealer to Counterparty with respect to contracts or instruments that are not Equity Contracts. “
Equity Contract
” means any transaction or instrument that does not convey to Dealer rights, or the ability to assert claims, that are senior to the rights and claims of common stockholders in the event of Counterparty’s bankruptcy.
|
16.
|
Delivery of Cash
:
For the avoidance of doubt, nothing in this Confirmation shall be interpreted as requiring Counterparty to deliver cash in respect of the settlement of the Transaction, except (i) where Counterparty elects Cash Settlement and the Forward Cash Settlement Amount is a positive number or (ii) where Section 6 of the Agreement applies as provided in Section 9(a) of this Confirmation. For the avoidance of doubt, the preceding sentence shall not be construed as limiting any damages that may be payable by Counterparty as a result of a breach of or an indemnity under this Confirmation or the Agreement.
|
17.
|
Status of Claims in Bankruptcy
:
Dealer acknowledges and agrees that this Confirmation is not intended to convey to Dealer rights with respect to the transactions contemplated hereby that are senior to the claims of common stockholders in any U.S. bankruptcy proceedings of Counterparty;
provided
that nothing herein shall limit or shall be deemed to limit Dealer’s right to pursue remedies in the event of a breach by Counterparty of its obligations and agreements with respect to this Confirmation and the Agreement; and
provided further
that nothing herein shall limit or shall be deemed to limit Dealer’s rights in respect of any transaction other than the Transaction.
|
18.
|
Limit on Beneficial Ownership
:
Notwithstanding anything to the contrary in the Agreement or this Confirmation, in no event shall Dealer be entitled to receive, or be deemed to receive, Shares to the extent that, upon such receipt of such Shares, and after taking into account any Shares concurrently delivered by Seller under the Base Confirmation, (i) the “beneficial ownership” (within the meaning of Section 13 of the Exchange Act and the rules promulgated thereunder) of Shares by Dealer, any of its affiliates’ business units subject to
|
19.
|
Acknowledgements
:
|
(a)
|
Counterparty acknowledges that:
|
(i)
|
During the term of the Transaction, Dealer and its affiliates may buy or sell Shares or other securities or buy or sell options or futures contracts or enter into swaps or other derivative securities in order to establish, adjust or unwind its hedge position with respect to the Transaction.
|
(ii)
|
Dealer and its affiliates may also be active in the market for the Shares and derivatives linked to the Shares other than in connection with hedging activities in relation to the Transaction, including acting as agent or as principal and for its own account or on behalf of customers.
|
(iii)
|
Dealer shall make its own determination as to whether, when or in what manner any hedging or market activities in Counterparty’s securities shall be conducted and shall do so in a manner that it deems appropriate to hedge its price and market risk with respect to the Settlement Price.
|
(iv)
|
Any market activities of Dealer and its affiliates with respect to the Shares may affect the market price of the Shares, as well as any Settlement Price, each in a manner that may be adverse to Counterparty.
|
(v)
|
The Transaction is a derivative transaction; Dealer and its affiliates may purchase or sell Shares for their own account at prices that may be greater than, or less than, the prices paid or received by Counterparty under the terms of the Transaction.
|
(b)
|
The parties intend for this Confirmation to constitute a “Contract” as described in the letter dated October 6, 2003 submitted on behalf of GS&Co. to Paula Dubberly of the staff of the Securities and Exchange Commission (the “
Staff
”) to which the Staff responded in an interpretive letter dated October 9, 2003 (the “
Forward Letter
”).
|
(c)
|
The parties hereto intend for:
|
(i)
|
this Transaction to be a “securities contract” as defined in Section 741(7) of the Bankruptcy Code, qualifying for the protections under Sections 362(b)(6), 362(b)(27), 362(o), 546(e), 546(j), 548(d)(2), 555 and 561 of the Bankruptcy Code;
|
(ii)
|
the rights given to Dealer and Counterparty pursuant to “Acceleration Events” in Section 9 above to constitute “contractual rights” to cause the liquidation of a “securities contract” and to set off mutual debts and claims in connection with a “securities contract”, as such terms are used in Sections 555 and 362(b)(6) of the Bankruptcy Code;
|
(iii)
|
Dealer to be a “financial institution” within the meaning of Section 101(22) of the Bankruptcy Code;
|
(iv)
|
all payments for, under or in connection with the Transaction, all payments for Shares and the transfer of Shares to constitute “settlement payments” and “transfers” under a “securities contract” as defined in the Bankruptcy Code; and
|
(v)
|
any or all obligations that either party has with respect to this Confirmation or the Agreement to constitute property held by or due from such party to margin, guaranty or settle obligations of the other party with respect to the transactions under the Agreement (including the Transaction) or any other agreement between such parties.
|
20.
|
Notices
:
For the purpose of Section 12(a) of the Agreement:
|
(a)
|
Address for notices or communications to Dealer: As set forth in Section 1 (
Notices
) of
Annex C hereto.
|
(b)
|
Address for notices or communications to Counterparty:
|
21.
|
Waiver of Right to Trial by Jury
:
EACH OF COUNTERPARTY AND DEALER HEREBY IRREVOCABLY WAIVES (ON SUCH PARTY’S OWN BEHALF AND, TO THE EXTENT PERMITTED BY APPLICABLE LAW, ON BEHALF OF SUCH PARTY’S STOCKHOLDERS) ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS CONFIRMATION OR THE ACTIONS OF COUNTERPARTY AND DEALER OR ANY OF THEIR AFFILIATES IN THE NEGOTIATION, PERFORMANCE OR ENFORCEMENT HEREOF.
|
22.
|
Severability
:
If any term, provision, covenant or condition of this Confirmation, or the application thereof to any party or circumstance, shall be held to be invalid or unenforceable in whole or in part for any reason, the remaining terms, provisions, covenants, and conditions hereof shall continue in full force and effect as if this Confirmation had been executed with the invalid or unenforceable provision eliminated, so long as this Confirmation as so modified continues to express, without material change, the original intentions of the parties as to the subject matter of this Confirmation and the deletion of such portion of this Confirmation will not substantially impair the respective benefits or expectations of parties to the Agreement;
provided
that this severability provision shall not be applicable if any provision of Section 2, 5, 6 or 13 of the Agreement (or any definition or provision in Section 14 of the Agreement to the extent that it relates to, or is used in or in connection with any such Section) shall be so held to be invalid or unenforceable.
|
23.
|
Tax Disclosure:
Notwithstanding anything to the contrary herein, in the Equity Definitions or in the Agreement, and notwithstanding any express or implied claims of exclusivity or proprietary rights, the parties (and each of their employees, representatives or other agents) are authorized to disclose to any and all persons, beginning immediately upon commencement of their discussions and without limitation of any kind, the tax treatment and tax structure of the Transaction, and all materials of any kind (including opinions or other tax analyses) that are provided by either party to the other relating to such tax treatment and tax structure.
|
24.
|
Schedule Provisions
:
|
(a)
|
Notwithstanding Part 1(f) (
Payments on Early Termination
) of the Schedule to the Agreement and for so long as the Agreement is in the form of the 1992 ISDA Master Agreement, for purposes of Section 6(e) of the Agreement and this Transaction:
|
(i)
|
Loss will apply.
|
(ii)
|
The Second Method will apply.
|
(b)
|
The Termination Currency shall be USD.
|
(c)
|
Other:
|
(i)
|
Cross Default: The provisions of Section 5(a)(vi) of the Agreement will not apply to Dealer and will not apply to Counterparty.
|
(ii)
|
The “Automatic Early Termination” provision of Section 6(a) of the Agreement will not apply to Dealer and will not apply to Counterparty.
|
(d)
|
Part 2(b) of the ISDA Schedule – Payee Representation:
|
(e)
|
Part 3(a) of the ISDA Schedule – Tax Forms:
|
|
Form/Document/Certificate
|
Date by which to be Delivered
|
Counterparty
|
A complete and duly executed United States Internal Revenue Service Form W-9 (or successor thereto.)
|
(i) Upon execution and delivery of the Agreement; (ii) promptly upon reasonable demand by Dealer; and (iii) promptly upon learning that any such Form previously provided by Counterparty has become obsolete or incorrect.
|
Dealer
|
As set forth in Section 3 (
Tax Forms
) of Annex C hereto.
|
(i) Upon execution and delivery of the Agreement; (ii) promptly upon reasonable demand by Counterparty; and (iii) promptly upon learning that any such Form previously provided by Dealer has become obsolete or incorrect.
|
25.
|
Transaction Reporting
:
To the extent any information regarding this Transaction is required to be reported to a trade repository or similar entity by applicable law, Dealer shall satisfy, or cause to be satisfied, such reporting obligations.
|
26.
|
Dealer Provisions:
The parties hereby agree that the terms set forth in Section 5 (
Miscellaneous Provisions
) of Annex C hereto shall apply to this Agreement.
|
By:
/s/ Paul Robinson
|
Name: Paul Robinson Title: Managing Director |
By:
/s/ Yukari Saegusa
|
Name: Yukari Saegusa Title: Vice President and Treasurer |
1.
|
Notice.
Address for notices or communications to Dealer:
|
2.
|
Payee Representation.
For the purpose of Section 3(f) of the Agreement, Dealer makes the following representation(s) to Counterparty:
|
(A)
|
Each payment received or to be received by it in connection with the Agreement is effectively connected with its conduct of a trade or business within the United States; and
|
(B)
|
It is a “foreign person” (as that term is used in Section 1.6041-4(a)(4) of the United States Treasury Regulations) for United States federal income tax purposes.
|
3.
|
Tax Forms
. For the purpose of Section 24(e) of the Confirmation, Dealer shall deliver to Counterparty a complete and duly executed United States Internal Revenue Service Form W-8ECI (or successor thereto).
|
4.
|
Account Details
.
|
5.
|
Miscellaneous Provisions
.
|
a.
|
Agent
:
Dealer is entering the Confirmation through its agent Barclays Capital Inc. (the “
Agent
”). Each of Dealer and Counterparty acknowledges to and agrees with the other party hereto and to and with the Agent that (i) the Agent is acting as agent for Dealer under the Transaction pursuant to instructions from Dealer, (ii) the Agent is not a principal or party to the Transaction, and may transfer its rights and obligations with respect to the Transaction, (iii) the Agent shall have no responsibility, obligation or liability, by way of issuance, guaranty, endorsement or otherwise in any manner with respect to the performance of either party under the Transaction, (iv) Dealer and the Agent have not given, and Counterparty is not relying (for purposes of making any investment decision or otherwise) upon, any statements, opinions or representations (whether written or oral) of Dealer or the Agent, other than the representations expressly set forth in this Confirmation or the Agreement, and (v) each party agrees to proceed solely against the other party, and not the Agent, to collect or recover any money or securities owed to it in connection with the Transaction. Counterparty acknowledges that the
|
b.
|
Confirmation
:
This Confirmation is a confirmation for purposes of Rule 10b-10 promulgated under the Securities Exchange Act of 1934, as amended (the “
Exchange Act
”).
|
c.
|
Regulation
:
Dealer is not a member of the Securities Investor Protection Corporation. Dealer is authorized by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority.
|
d.
|
No Insurance or Guaranty
:
Counterparty understands, agrees and acknowledges that no obligations of Dealer to it hereunder shall be entitled to the benefit of deposit insurance and that such obligations shall not be guaranteed by any affiliate of Dealer or any governmental agency.
|
e.
|
Wall Street Transparency and Accountability Act
:
In connection with Section 739 of the Wall Street Transparency and Accountability Act of 2010 (“
WSTAA
”), the parties hereby agree that neither the enactment of WSTAA or any regulation under the WSTAA, nor any requirement under WSTAA or an amendment made by WSTAA, shall limit or otherwise impair either party’s otherwise applicable rights to terminate, renegotiate, modify, amend or supplement this Confirmation or the Agreement, as applicable, arising from a termination event, force majeure, illegality, increased costs, regulatory change or similar event under this Confirmation, the Swap Definitions or Equity Definitions incorporated herein or the Agreement (including, but not limited to, rights arising from an Acceleration Event, Increased Cost of Stock Borrow, any condition described in clause (i) of Section 18, an Excess Regulatory Ownership Position or Illegality (as defined in the Agreement)).
|
f.
|
2013 EMIR Portfolio Reconciliation, Dispute Resolution and Disclosure Protocol
:
The parties agree that the terms of the 2013 EMIR Portfolio Reconciliation, Dispute Resolution and Disclosure Protocol published by ISDA on July 19, 2013 (“
Protocol
”) apply to the Agreement as if the parties had adhered to the Protocol without amendment. In respect of the Attachment to the Protocol, (i) the definition of “Adherence Letter” shall be deemed to be deleted and references to “Adherence Letter” shall be deemed to be to this section (and references to “such party’s Adherence Letter” and “its Adherence Letter” shall be read accordingly), (ii) references to “adheres to the Protocol” shall be deemed to be “enters into the Agreement”, (iii) references to “Protocol Covered Agreement” shall be deemed to be references to the Agreement (and each “Protocol Covered Agreement” shall be read accordingly), and (iv) references to “Implementation Date” shall be deemed to be references to the date of this Confirmation. For the purposes of this section:
|
2.
|
Dealer and Counterparty may use a Third Party Service Provider, and each of Dealer and Counterparty consents to such use including the communication of the relevant data in relation to Dealer and Counterparty to such Third Party Service Provider for the purposes of the reconciliation services provided by such entity.
|
3.
|
The Local Business Days for such purposes in relation to Dealer and Counterparty is New York, New York, USA.
|
g.
|
NFC Representation Protocol
:
The parties agree that the provisions set out in the Attachment to the ISDA 2013 EMIR NFC Representation Protocol published by ISDA on March 8, 2013 (the “
NFC Representation Protocol
”) shall apply to the Agreement as if each party were an Adhering Party under the terms of the NFC Representation Protocol. In respect of the Attachment to the NFC Representation Protocol, (i) the definition of “Adherence Letter” shall be deemed to be deleted and references to “Adherence Letter” shall be deemed to be to this section (and references to “the relevant Adherence Letter” and “its Adherence Letter” shall be read accordingly), (ii) references to “adheres to the Protocol” shall be deemed to be “enters into the Agreement”, (iii) references to “Covered Master Agreement” shall be deemed to be references to the Agreement (and each “Covered Master Agreement” shall be read accordingly), and (iv) references to “Implementation Date” shall be deemed to be references to the date of this Confirmation. Counterparty confirms that it enters into this Confirmation as a party making the NFC Representation (as such term is defined in the NFC Representation Protocol). Counterparty shall promptly notify Dealer of any change to its status as a party making the NFC Representation.
|
h.
|
Contractual Recognition of UK Stay in Resolution
:
Notwithstanding anything contained in the Agreement, the parties agree that the provisions of paragraphs 1 to 4 (inclusive) of the UK (PRA Rule) Jurisdictional Module (the “
UK Module
”) published by the International Swaps and Derivatives Association, Inc. on 3 May 2016, as amended from time to time, shall be deemed to be incorporated into the Agreement as if references in those provisions to “Covered Agreement” were references to the Agreement, and on the basis that: (i) Dealer shall be treated as a “Regulated Entity” and as a “Regulated Entity Counterparty” with respect to Counterparty, (ii) Counterparty shall be treated as a “Module Adhering Party”, and (iii) references to the “Implementation Date” in the UK Module shall be deemed to be references to the date of this Confirmation.
|
Buyer:
|
Dealer.
|
Effective Date:
|
November 21, 2018, or such later date on which the conditions set forth in Section 4 of this Confirmation have been satisfied.
|
Number of Shares:
|
Initially, (x) if no Initial Hedging Disruption (as defined in Section 4(b)) occurs, 445,709 Shares (the “
Full Number of Shares
”) or (y) if an Initial Hedging Disruption occurs, the Reduced Number of Shares (as defined in Section 4(b)).
|
Maturity Date:
|
December 27, 2019 (or, if such date is not a Clearance System Business Day, the next following Clearance System Business Day).
|
Daily Forward Price:
|
On the Effective Date, the Initial Forward Price, and on any other day, the Daily Forward Price as of the immediately preceding calendar day
multiplied by
the sum of (i) 1
and
(ii) the Daily Rate for such day;
provided
that on each Forward Price Reduction Date, the Daily Forward Price in effect on such date shall be the Daily Forward Price otherwise in effect on such date,
minus
the Forward Price Reduction Amount for such Forward Price Reduction Date.
|
Daily Rate:
|
For any day, (i)(A) Overnight Bank Rate for such day,
minus
(B) the Spread,
divided
by (ii) 365. For the avoidance of doubt, the Daily Rate may be negative.
|
Overnight Bank Rate
|
For any day,
the rate set forth for such day opposite the caption “Overnight bank funding rate”, as such rate is displayed on the page “OBFR01 <Index> <GO>” on the BLOOMBERG Professional Service, or any successor page;
provided
that if no rate appears for any day on such page, the rate for the immediately preceding day for which a rate appears shall be used for such day.
|
Forward Price Reduction Date:
|
Each date as separately agreed in writing between Dealer and Counterparty.
|
Amount:
|
For each Forward Price Reduction Date, an amount as separately agreed in writing between Dealer and Counterparty.
|
Shares:
|
Common Shares, $0.10 par value per share, of Counterparty (Exchange identifier: “ED”).
|
Related Exchange(s):
|
All Exchanges.
|
Clearance System:
|
The Depository Trust Company.
|
Designated Valuation:
|
Subject to Section 9 of this Confirmation, Counterparty shall have the right to designate from time to time one or more Scheduled Trading Days (each, a “
Designated Date
”) occurring on or prior to the Maturity Date for a valuation and settlement of the Transaction with respect to all or a portion of the Undesignated Shares as of the Designated Date by written notice to Dealer delivered no later than 11:30 a.m., New York time, on the applicable Settlement Method Election Date;
provided
that, except with respect to the Maturity Date, Counterparty may not designate a Designated Date occurring during an Unwind Period related to a different Designated Date unless Physical Settlement is applicable in respect of such Designated Date. The portion of the Undesignated Shares designated for valuation and settlement in respect of a Designated Date shall be the “
Designated Shares
” for such Designated Date. If the number of Undesignated Shares on the Maturity Date is greater than zero (meaning, for the avoidance of doubt, that Counterparty did not deliver written notice to Dealer designating the Maturity Date as the Designated Date with respect to such Undesignated Shares on or prior to the related Settlement Method Election Date), then the Maturity Date will be a Designated Date with a number of Designated Shares equal to such remaining number of Undesignated Shares.
|
Valuation Date:
|
With respect to any Physical Settlement, the relevant Designated Date. With respect to any Cash Settlement or Net Share Settlement, the last day of the related Unwind Period.
|
Undesignated Shares:
|
At any time, the Number of Shares
minus
the aggregate number of Designated Shares for all Designated Dates occurring prior to such time.
|
Unwind Period:
|
For any Cash Settlement or Net Share Settlement, a period of consecutive Scheduled Trading Days (not to exceed ninety (90) Scheduled Trading Days), determined in a good faith and commercially reasonable manner by Dealer beginning on, and including, the Designated Date and ending on the date on which Dealer or its affiliates finishes unwinding Dealer’s Hedge Positions in respect of the Designated Shares for such Designated Date.
|
Market Disruption Event:
|
Section 6.3(a) of the Equity Definitions shall be amended by deleting the words “at any time during the one hour period that ends at the relevant Valuation Time, Latest Exercise Time, Knock-in Valuation Time or Knock-out Valuation Time, as the case may be” and replacing them with the words “at any time during the regular trading session on the Exchange, without regard to after hours or any other trading outside of the regular trading session hours”, and by replacing “or (iii) an Early
|
Consequences of Disrupted Days:
|
Solely as set forth in Section 9 of this Confirmation. The occurrence of a Disrupted Day shall not otherwise affect an Unwind Period.
|
Settlement Date:
|
Each Valuation Date.
|
Settlement Method Election:
|
Applicable;
provided
that:
|
(i)
|
Net Share Settlement shall be deemed to be included as an additional potential settlement method under Section 7.1 of the Equity Definitions;
|
(ai)
|
If Counterparty elects Cash Settlement or Net Share Settlement in the Settlement Notice (as defined below) to Dealer, Counterparty represents and warrants to the Dealer that, as of the date of such election,
|
(A)
|
Counterparty is not aware of any material non-public information concerning itself or the Shares;
|
(B)
|
Counterparty is electing the settlement method and designating the related Designated Date in good faith and not as part of a plan or scheme to evade compliance with Rule 10b-5 (“
Rule 10b-5
”) under the Securities Exchange Act of 1934, as amended (the “
Exchange Act
”), or any other provision of the federal securities laws;
|
(C)
|
Counterparty is not “insolvent” (as such term is defined under Section 101(32) of the U.S. Bankruptcy Code (Title 11 of the United States Code) (the “
Bankruptcy Code
”));
|
(D)
|
Counterparty would be able to purchase a number of Shares equal to the number of related Designated Shares (or, if greater in the case of a Net Share Settlement, a number of Shares with a value as of the date of such election equal to the product of (I) such number of Designated Shares and (II) the expected Daily Forward Price as of the relevant Designated Date) in compliance with the laws of Counterparty’s jurisdiction of organization;
|
(E)
|
Counterparty is not electing Cash Settlement or Net Share Settlement to create actual or apparent trading activity in the Shares (or any security convertible into or exchangeable for Shares) or to raise or depress or otherwise manipulate the price of the Shares (or any security convertible into or exchangeable for Shares) in violation of the Exchange Act; and
|
(F)
|
such election, and settlement in accordance therewith, does not and will not violate or conflict with, in any material respect, any law or regulation applicable to Counterparty, or any order or judgment of any court or other agency of government applicable to it or any of its assets, and any governmental consents that are required to have been obtained by Counterparty with respect to such election or settlement have been obtained and are in full force and effect and all conditions of any such consents have been complied with in all material respects; and
|
(bi)
|
Notwithstanding any election to the contrary as of any Settlement Method Election Date, Physical Settlement shall be applicable:
|
Electing Party:
|
Counterparty.
|
Settlement Method Election Date:
|
The second Scheduled Trading Day immediately preceding the relevant Designated Date;
provided,
that Counterparty may only elect Cash Settlement or Net Share Settlement if Counterparty (i) selects a Designated Date at least ninety (90) Scheduled Trading Days prior to the Maturity Date and (ii) delivers written notice of Settlement Method Election (the “
Settlement Notice
”) to Dealer and such notice contains the Designated Date and the
|
Default Settlement Method:
|
Physical Settlement.
|
Physical Settlement:
|
If Physical Settlement is applicable, then on the relevant Settlement Date, Dealer will pay to Counterparty an amount equal to the product of (x) the number of Designated Shares for the related Designated Date and (y) the Daily Forward Price on such Settlement Date and Counterparty will deliver to Dealer a number of Shares equal to such number of Designated Shares. Section 9.2 of the Equity Definitions (other than the last sentence thereof) will not apply to any Physical Settlement.
|
Prepayment:
|
Not Applicable.
|
Variable Obligation:
|
Not Applicable.
|
Cash Settlement Payment Date:
|
If Cash Settlement is applicable, the second Currency Business Day following the applicable Valuation Date.
|
Forward Cash Settlement Amount:
|
The aggregate sum, for all Unwind Dates in the relevant Unwind Period, of the Daily Cash Settlement Amounts.
|
Daily Cash Settlement Amount:
|
For any Unwind Date, the product (which may be negative) of (i) the Daily Share Number of such Unwind Date, and (ii)(A) the Settlement Price for such Unwind Date
minus
(B) the Daily Forward Price on the day that is the second Exchange Business Day immediately following such Unwind Date.
|
Unwind Date:
|
Each Exchange Business Day during the Unwind Period on which Dealer or its affiliates unwind any portion of Dealer’s Hedge Positions in respect of the relevant Designated Date.
|
Daily Share Number:
|
For any Unwind Date, the number of Designated Shares with respect to which Dealer or its affiliates unwind any portion of Dealer’s Hedge Positions in respect of the relevant Designated Date.
|
Settlement Price:
|
For any Unwind Date, the Rule 10b-18 volume-weighted average price per Share for the regular trading session of the Exchange on such date (without considering trading before the open or after hours trading outside of the regular trading session), as reported by Bloomberg on page “ED <Equity> AQR SEC” or any successor page thereto at 4:15 p.m., New York time (or 15 minutes following the end of any extension of the regular trading session), on such date or, if such price is not so reported on such date or is in the Calculation Agent’s reasonable determination erroneous, as reasonably determined by the Calculation Agent (provided that such price determined by the Calculation Agent is consistent with the price used by the Calculation Agent with respect to other similar equity derivative transactions outstanding, if any, involving the Shares), plus $0.02.
|
Net Share Settlement:
|
If Net Share Settlement is applicable, then on the relevant Net Share Settlement Date:
|
(i)
|
if the Net Share Settlement Number is positive, then Counterparty will deliver to Dealer a number of Shares equal to the Net Share Settlement Number; and
|
(ii)
|
if the Net Share Settlement Number is negative, then Dealer will deliver to Counterparty a number of Shares equal to the absolute value of the Net Share Settlement Number;
|
Net Share Settlement Number:
|
A number of Shares equal to the sum of (i) the Aggregate Net Share Number as of the last Unwind Date in the Unwind Period and (ii) the sum of the quotients (rounded to the nearest whole number), for each Unwind Adjustment Amount for such Unwind Period, obtained by dividing (x) such Unwind Adjustment Amount by (y) the Settlement Price on the Forward Price Reduction Date relating to such Unwind Adjustment Amount.
|
Aggregate Net Share Number:
|
As of any date, the aggregate sum, for all Unwind Dates in the relevant Unwind Period occurring on or prior to such date, of the quotient (rounded to the nearest whole number) obtained by dividing (x) the Daily Cash Settlement Amount for such Unwind Date by (y) the Settlement Price for such Unwind Date.
|
Net Share Settlement Date:
|
Two (2) Clearance System Business Days following the applicable Valuation Date.
|
Unwind Adjustment Amount:
|
For any Unwind Period, for any Forward Price Reduction Date that occurs during the period from, and including, the date that is one (1) Settlement Cycle immediately following the relevant Designated Date to, and including, the date that is one (1) Settlement Cycle immediately following the relevant Valuation Date, an amount equal to the product of (i) the relevant Forward Price Reduction Amount
multiplied by
(ii)(A) if the Aggregate Net Share Number as of the date immediately prior to the date that is one (1) Settlement Cycle immediately preceding the relevant Forward Price Reduction Date is a positive number, such Aggregate Net Share Number or (B) otherwise, zero.
|
Unwound Shares:
|
For any Unwind Period at any time, the
aggregate sum of the Daily Share Numbers for all Unwind Dates in such Unwind Period that have occurred prior to such time.
|
Delivery of Shares:
|
Notwithstanding anything to the contrary herein, either party may, by prior notice to the other party, satisfy its obligation to deliver any Shares on any date due (an “
Original Delivery
|
Consequences of Late Delivery:
|
Without limiting the generality of this Confirmation, the Agreement and the Equity Definitions, if for any reason Counterparty fails to deliver when due any Shares required to be delivered hereunder and a Forward Price Reduction Date occurs on or after the date such Shares are due and on or before the date such Shares are delivered, Counterparty acknowledges and agrees that, in addition to any other amounts for which Counterparty may be liable hereunder or under law (but without duplication), Counterparty shall be liable to Dealer for an amount equal to the product of the number of Shares so due but not yet delivered on or prior to such Forward Price Reduction Date and the Forward Price Reduction Amount for such Forward Price Reduction Date.
|
Representation and Agreement:
|
Section 9.11 of the Equity Definitions is hereby modified to exclude any representations therein relating to restrictions, obligations, limitations or requirements under applicable securities laws that exist or arise as a result of the fact that Counterparty is the Issuer of the Shares.
|
Method of Adjustment:
|
Calculation Agent Adjustment; provided that, Section 11.2(e)(iii) of the Equity Definitions shall be deleted.
|
Extraordinary Dividend:
|
Any dividend or distribution on the Shares which has an ex-dividend date occurring on any day following the Trade Date (other than (i) any dividend or distribution of the type described in Section 11.2(e)(i) or Section 11.2(e)(ii)(A) of the Equity Definitions or (ii) a regular, quarterly cash dividend in an amount per Share equal to or less than the Forward Price Reduction Amount corresponding to the relevant quarter that has an ex-dividend date no earlier than the Forward Price Reduction Date corresponding to the relevant quarter).
|
Merger Event:
|
Section 12.1(b) of the Equity Definitions shall be amended by deleting the remainder of such Section following the definition of “Reverse Merger” therein.
|
Tender Offer:
|
Applicable.
|
Delisting:
|
In addition to the provisions of Section 12.6(a)(iii) of the Equity Definitions, it shall also constitute a Delisting if the Exchange is located in the United States and the Shares are not immediately re-listed, re-traded or re-quoted on any of the New York Stock Exchange, The NASDAQ Global Select Market or The NASDAQ Global Market (or their respective successors); if the
|
Change in Law:
|
Applicable;
provided
that Section 12.9(a)(ii) of the Equity Definitions is hereby amended by (i) replacing the phrase “the interpretation” in the third line thereof with the phrase “or public announcement of the formal interpretation”; (ii) replacing the word “Shares” where it appears in clause (X) with the words “Hedge Position”; and (iii) immediately following the word “Transaction” in clause (X) thereof, adding the phrase “in the manner contemplated by it on the Trade Date”.
|
Failure to Deliver:
|
Not Applicable.
|
Hedging Disruption:
|
Not Applicable.
|
Increased Cost of Hedging:
|
Not Applicable.
|
Increased Cost of Stock Borrow:
|
Applicable;
provided
that clause (C) of Section 12.9(b)(v) of the Equity Definitions and the third, fourth and fifth sentences of Section 12.9(b)(v) of the Equity Definitions shall be deleted.
|
Loss of Stock Borrow:
|
Applicable.
|
Hedging Party:
|
For all applicable Additional Disruption Events, Dealer.
|
Determining Party:
|
For all applicable Extraordinary Events, Dealer.
|
Extraordinary Events:
|
The consequences that would otherwise apply under Article 12 of the Equity Definitions to any applicable Extraordinary Event (other than an Increased Cost of Stock Borrow and any event that also constitutes a Bankruptcy Termination Event) shall not apply, and instead, the consequences specified in Section 9 (or, in the case of a Bankruptcy Termination Event, Section 7) of this Confirmation shall apply.
|
Non-Reliance:
|
Applicable.
|
Regarding Hedging Activities:
|
Applicable.
|
Additional Acknowledgements:
|
Applicable.
|
Calculation Agent:
|
Dealer;
provided
that if an Event of Default under Section 5(a)(i) or 5(a)(vii) of the Agreement has occurred and is continuing
|
Payments to Dealer:
|
As set forth in Section 4 (
Account Details
) of Annex C hereto.
|
Payments to Counterparty:
|
As instructed by Counterparty prior to settlement.
|
Delivery of Shares to Dealer:
|
As set forth in Section 4 (
Account Details
) of Annex C hereto.
|
4.
|
Conditions to Effectiveness
:
|
(a)
|
The effectiveness of this Confirmation on the Effective Date shall be subject to the following conditions:
|
(i)
|
The representations and warranties of Counterparty contained in the Underwriting Agreement dated November 14, 2018, between Counterparty and Citigroup Global Markets Inc., Barclays Capital Inc. and J.P. Morgan Securities LLC, acting in their capacity as Forward Sellers (as defined therein), and Citibank, N.A., Barclays Bank PLC and JPMorgan Chase Bank, London Branch, acting in their capacity as Forward Purchasers (as defined therein) and Citigroup Global Markets Inc., Barclays Capital Inc. and J.P. Morgan Securities LLC, as representative of the several Underwriters named therein (the “
Underwriting Agreement
”), and any certificate delivered pursuant thereto by Counterparty shall be true and correct on the Effective Date as if made as of the Effective Date;
|
(ii)
|
Counterparty shall have performed all of the obligations required to be performed by it under the Underwriting Agreement on or prior to the Effective Date;
|
(iii)
|
All of the conditions set forth in Section 9 (
Conditions of the Obligations of the Underwriters
) of the Underwriting Agreement shall have been satisfied;
|
(iv)
|
The delivery of Option Shares (as defined in the Underwriting Agreement) and payment of the Option Purchase Price (as defined in the
|
(v)
|
All of the representations and warranties of Counterparty hereunder and under the Agreement shall be true and correct on the Effective Date as if made as of the Effective Date;
|
(vi)
|
Counterparty shall have performed all of the obligations required to be performed by it hereunder and under the Agreement on or prior to the Effective Date, including without limitation its obligations under Section 5 hereof; and
|
(vii)
|
Counterparty shall have delivered to Dealer an opinion of counsel substantially in the form of Annex B hereto.
|
(b)
|
Notwithstanding the foregoing or any other provision of this Confirmation, if (x) on or prior to 9:00 a.m., New York City time, on the date the Additional Time of Delivery is scheduled to occur, Dealer, in its commercially reasonable judgment, is unable to borrow and deliver for sale the Full Number of Shares or (y) in Dealer’s commercially reasonable judgment, it would incur a stock loan cost of more than 200 basis points per annum with respect to all or any portion of the Full Number of Shares (in each case, an “
Initial Hedging Disruption
”), the effectiveness of this Confirmation and the Transaction shall be limited to the number of Shares Dealer may borrow at a cost of not more than 200 basis points per annum (such number of Shares, the “
Reduced Number of Shares
”), which, for the avoidance of doubt, may be zero;
provided, however,
that if the Counterparty terminates the Transaction under the Base Confirmation (as defined herein) pursuant to Section 4(b) thereto, then Counterparty shall have the option to terminate the Transaction. Counterparty shall have no liability to Dealer hereunder (including for any costs or expenses incurred by Dealer) as a result of any reduction in the Number of Shares or as a result of or following any termination of the Transaction pursuant to this Section 4(b).
|
5.
|
Representations and Agreements of Counterparty
:
Counterparty represents and warrants to, and agrees with, Dealer as of the date hereof that:
|
(a)
|
Counterparty shall promptly provide written notice, to the extent such notice does not constitute material non-public information, to Dealer upon obtaining knowledge of (i) the occurrence or announcement of any event that would constitute an Event of Default, Potential Event of Default or a Potential Adjustment Event or (ii) any Announcement Date in respect of an Extraordinary Event;
|
(b)
|
Counterparty shall maintain, by all required corporate action of Counterparty, a number of authorized but unissued Shares not reserved for other purposes at least equal to two times the sum of (i) the number of Undesignated Shares as of the time of determination, (ii)(A) if any, the number of Designated Shares for any Designated Date occurring prior to such time for which the related Unwind Period has not been completed at such time minus (B) the number of Unwound Shares for such Unwind Period at such time and (iii) if any Net Share Settlement Number as of such time is (A) a positive number and (B) has not been delivered by Counterparty to Dealer pursuant to “Net Share Settlement” above, such Net Share Settlement Number (the sum of the Shares in clauses (i)–(iii), the “
Remaining Amount
” and the product of two times the Remaining Amount, the “
Capped Number
”) in reserve for
|
(c)
|
Counterparty shall not take any action to reduce or decrease the number of authorized and unissued Shares below the sum of (i) the Capped Number
plus
(ii) the total number of Shares issuable upon settlement (whether by net share settlement or otherwise) of any other transaction or agreement relating to the Shares to which it is a party (or, if greater, the number of Shares reserved by Counterparty for settlement of or delivery under such transaction or agreement);
|
(d)
|
Counterparty will not repurchase any Shares during the term of this Transaction if, immediately following such repurchase, the Number of Shares plus the “Number of Shares” under the letter agreement (the ‘
Base Confirmation
”) , dated November 14, 2018, between Dealer and Counterparty, relating to the forward sale of Shares, results in a Share Percentage (as defined below) equal to or greater than 8.0%. Counterparty shall notify Dealer promptly upon the announcement or consummation of any repurchase of Shares that, taken together with the amount of all repurchases since the date of the last such notice (or, if no such notice has been given, the Trade Date for the Base Confirmation) exceeds 3.1 million Shares. The “
Share Percentage
” as of any day is the fraction (1) the numerator of which is the Number of Shares and (2) the denominator of which is the number of Shares outstanding on such day;
|
(e)
|
As of the Trade Date, it is not and it agrees that, as of the Effective Date and the date of any payment or delivery by Counterparty or Dealer hereunder, it will not be, “insolvent” (as such term is defined under Section 101(32) of the Bankruptcy Code);
|
(f)
|
Neither Counterparty nor any of its “affiliated purchasers” (as defined by Rule 10b-18 under the Exchange Act (“
Rule 10b-18
”) shall take any action during any Unwind Period that would cause any purchases of Shares by Dealer or any of its affiliates in connection with any Cash Settlement or Net Share Settlement not to meet the requirements of the safe harbor provided by Rule 10b-18 if such purchases were made by Counterparty. Without limiting the foregoing, during any Unwind Period, except with the prior written consent of Dealer, Counterparty will not, and will cause its affiliated purchasers (as defined in Rule 10b-18) not to, directly or indirectly (including, without limitation, by means of a derivative instrument) purchase, offer to purchase, place any bid or limit order that would effect a purchase of, or announce or commence any tender offer relating to, any Shares (or equivalent interest, including a unit of beneficial interest in a trust or limited partnership or a depository share) or any security convertible into or exchangeable for the Shares. For the avoidance of doubt the immediately preceding sentence shall not apply to any purchase, offer to purchase, bid or limit orders effected by or for an issuer plan by an agent independent of the issuer (each as defined in Regulation M (“
Regulation M
”)
promulgated under the Exchange Act);
|
(g)
|
Counterparty will not be subject to any “restricted period” (as such term is defined in Regulation M) in respect of Shares or any security with respect to which the Shares are a “reference security” (as such term is defined in Regulation M) during any Unwind Period;
|
(h)
|
During any Unwind Period, Counterparty shall: (i) prior to the opening of trading in the Shares on any day on which Counterparty makes, or expects to be made, any public announcement (as defined in Rule 165(f) under the Securities Act) of any Merger Transaction, notify Dealer of such public announcement; (ii) promptly notify Dealer following any such announcement that such announcement has been made; (iii) promptly (but in any event prior to the next opening of the regular trading session on the Exchange) provide Dealer with written notice specifying (A) Counterparty’s average daily Rule 10b-18 Purchases (as defined in Rule 10b-18) during the three full calendar months immediately preceding the Announcement Date that were not effected through Dealer or its affiliates and (B) the number of Shares purchased pursuant to the proviso in Rule 10b-18(b)(4) under the Exchange Act for the three full calendar months preceding the Announcement Date. Such written notice shall be deemed to be a certification by Counterparty to Dealer that such information is true and correct. In addition, Counterparty shall promptly notify Dealer of the earlier to occur of the completion of such transaction and the completion of the vote by target shareholders. Counterparty acknowledges that any such notice may result in a Regulatory Disruption or may affect the length of any ongoing Unwind Period; accordingly, Counterparty acknowledges that its delivery of such notice must comply with the standards set forth in Section 11(c) of this Confirmation. “
Securities Act
” means the Securities Act of 1933, as amended. “
Merger Transaction
” means any merger, acquisition or similar transaction involving a recapitalization as contemplated by Rule 10b-18(a)(13)(iv) under the Exchange Act;
|
(i)
|
Counterparty is an “eligible contract participant” (as such term is defined in the Commodity Exchange Act, as amended);
|
(j)
|
Counterparty is not entering into the Transaction, and will not elect Cash Settlement or Net Share Settlement, to create actual or apparent trading activity in the Shares (or any security convertible into or exchangeable for Shares) or to raise or depress or otherwise manipulate the price of the Shares (or any security convertible into or exchangeable for Shares) in violation of the Exchange Act or any other applicable securities laws;
|
(k)
|
Counterparty (i) is capable of evaluating investment risks independently, both in general and with regard to all transactions and investment strategies involving a security or securities; (ii) will exercise independent judgment in evaluating the recommendations of any broker-dealer or its associated persons, unless it has otherwise notified the broker-dealer in writing; and (iii) has total assets of at least $50 million as of the date hereof;
|
(l)
|
Without limiting the generality of Section 13.1 of the Equity Definitions, Counterparty acknowledges that Dealer is not making any representations or warranties with respect to the treatment of the Transaction, including without limitation ASC Topic 260,
Earnings Per Share
, ASC Topic 815,
Derivatives and Hedging
, FASB Statements 128, 133, as amended, 149 or 150, EITF 00-19, 01-6, 03-6 or 07-5, ASC Topic 480,
Distinguishing Liabilities from Equity
, ASC 815-40,
Derivatives and Hedging – Contracts in Entity’s Own Equity
(or any successor issue statements) or under the Financial Accounting Standards Board’s Liabilities & Equity Project;
|
(m)
|
Counterparty is in compliance with its reporting obligations under the Exchange Act and its most recent Annual Report on Form 10-K, together with all reports subsequently filed by it pursuant to the Exchange Act, taken together and as
|
(n)
|
Counterparty is not aware of any material non-public information regarding itself or the Shares. Counterparty is entering into this Confirmation and will provide any Settlement Notice in good faith and not as part of a plan or scheme to evade compliance with Rule 10b-5 or any other provision of the federal securities laws; and Counterparty has consulted with its own advisors as to the legal aspects of its adoption and implementation of this Confirmation under Rule 10b5-1 under the Exchange Act (“
Rule 10b5-1
”);
|
(o)
|
Counterparty is not, and after giving effect to the transactions contemplated hereby will not be, required to register as an “investment company” as such term is defined in the Investment Company Act of 1940, as amended;
|
(p)
|
Counterparty: (i) is an “institutional account” as defined in FINRA Rule 4512(c); and (ii) is capable of evaluating investment risks independently, both in general and with regard to all transactions and investment strategies involving a security or securities, and will exercise independent judgment in evaluating any recommendations of Dealer or its associated persons; and
|
(q)
|
COUNTERPARTY UNDERSTANDS THAT THE TRANSACTION IS SUBJECT TO COMPLEX RISKS WHICH MAY ARISE WITHOUT WARNING AND MAY AT TIMES BE VOLATILE AND THAT LOSSES MAY OCCUR QUICKLY AND IN UNANTICIPATED MAGNITUDE AND IS WILLING TO ACCEPT SUCH TERMS AND CONDITIONS AND ASSUME SUCH RISKS.
|
6.
|
Covenant Regarding Settlement
:
Counterparty acknowledges and agrees that any Shares delivered by Counterparty to Dealer on any Settlement Date or Net Share Settlement Date will be (i) newly issued, (ii) approved for listing or quotation on the Exchange, subject to official notice of issuance, and (iii) registered under the Exchange Act. Subject to Section 10 of this Confirmation, on the basis of the Forward Letter (as defined below), such Shares, when delivered by Dealer (or an affiliate of Dealer) to securities lenders from whom Dealer (or an affiliate of Dealer) borrowed Shares in connection with hedging its exposure to the Transaction, will be freely saleable without further registration or other restrictions under the Securities Act in the hands of those securities lenders
(other than any restriction arising from the status or actions of Dealer or its affiliates). Dealer agrees, subject to Section 10 of this Confirmation, that it will use such Shares, directly or indirectly, and irrespective of whether any such stock loan is effected by Dealer or an affiliate thereof, solely for the purposes of delivery to such securities lenders as contemplated in the Forward Letter. Accordingly, Counterparty agrees that any Shares so delivered by Counterparty will not bear a restrictive legend and will be deposited in, and the delivery thereof shall be effected through the facilities of, the Clearance System.
|
7.
|
Termination on Bankruptcy
:
The parties hereto agree that, notwithstanding anything to the contrary in the Agreement or the Equity Definitions, the Transaction constitutes a contract to issue a security of Counterparty as contemplated by Section 365(c)(2) of the Bankruptcy Code and that the Transaction and the obligations and rights of Counterparty and Dealer (except for any liability as a result of breach of any of the representations or warranties provided by Counterparty in Section 5 above) shall immediately terminate, without the necessity of any notice, payment (whether directly, by netting or otherwise) or other action
|
8.
|
[
Reserved
]
|
9.
|
Acceleration Events
:
|
(a)
|
Notwithstanding anything to the contrary herein, in the Agreement or in the Equity Definitions, at any time following the occurrence and during the continuation of an Acceleration Event, Dealer (or, in the case of an Acceleration Event that is an Event of Default or a Termination Event, the party that would be entitled to designate an Early Termination Date in respect of such event pursuant to Section 6 of the Agreement) (the “
Accelerating Party
”) shall, by not more than 20 days’ notice to the other party, have the right to designate any Scheduled Trading Day on or following the date that notice of such designation is effective to be the “
Early Valuation Date
,” in which case the provisions set forth in this Section 9 shall apply in lieu of Section 6 of the Agreement or Article 12 of the Equity Definitions; provided that Section 6 of the Agreement shall apply in the case of (1) an Event of Default pursuant to Section 5(a)(i) of the Agreement in connection with an Early Valuation Date, and (2) an Event of Default pursuant to Section 5(a)(vii) of the Agreement with respect to Dealer.
|
(b)
|
If the Early Valuation Date occurs on a date that is not during an Unwind Period, then the Early Valuation Date shall be deemed to be a Designated Date for a Physical Settlement, and the number of Designated Shares for such Designated Date shall be the number of Undesignated Shares on the Early Valuation Date;
provided
that in the case of an Acceleration Event of the type described in paragraph (e)(iii) or (vi) below, the number of Designated Shares for such Designated Date shall be only such number of Designated Shares necessary so that such Acceleration Event shall no longer exist after such Physical Settlement, as determined by the Calculation Agent.
|
(c)
|
If the Early Valuation Date occurs during an Unwind Period, then (i) (A) the last Unwind Date of such Unwind Period shall occur on the Early Valuation Date, (B) a settlement shall occur in respect of such Unwind Period and, except as otherwise provided herein, the settlement method elected by Counterparty in respect of such settlement shall apply, and (C) the number of Designated Shares for such settlement shall be deemed to be the number of Unwound Shares for such Unwind Period on the Early Valuation Date, and (ii) (A) the Early Valuation Date shall be deemed to be an additional Designated Date for a Physical Settlement and (B) the number of Designated Shares for such additional Designated Date shall be the Remaining Amount on the Early Valuation Date;
provided
that in the case of an Acceleration Event of the type described in paragraph (e)(iii) or (vi) below, the number of Designated Shares for such additional Designated Date shall be only such number of Designated Shares necessary so that such Acceleration Event shall no longer exist after such Physical Settlement, as determined by the Calculation Agent.
|
(d)
|
Notwithstanding the foregoing, in the case of an Early Valuation Date that occurs due to the announcement of a Nationalization or a Merger Event, if at the time of the related Settlement Date or Net Share Settlement Date, as applicable, the Shares have changed into cash or any other property or the right to receive cash or any
|
(e)
|
“
Acceleration Event
” means:
|
(i)
|
any Event of Default or Termination Event (other than an Event of Default or Termination Event that also constitutes a Bankruptcy Termination Event) that would give rise to the right of either party to designate an Early Termination Date pursuant to Section 6 of the Agreement;
|
(ii)
|
the announcement of any event or transaction relating to the Shares that, if consummated, would result in (x) the occurrence of a Merger Event or Tender Offer, or (y) the occurrence of a Nationalization, Delisting or Change in Law, in each case as determined by the Calculation Agent in good faith and a commercially reasonable manner;
|
(iii)
|
A Loss of Stock Borrow;
|
(iv)
|
the declaration or payment by Counterparty of any Extraordinary Dividend;
|
(v)
|
the occurrence of a Market Disruption Event during an Unwind Period and the continuance of such Market Disruption Event for at least eight consecutive Scheduled Trading Days;
|
(vi)
|
the occurrence of an Excess Section 13 Ownership Position or Excess Regulatory Ownership Position; or
|
(vii)
|
the occurrence of the Maturity Date during an Unwind Period.
|
10.
|
Private Placement Procedures
:
If either Dealer or Counterparty reasonably determines, based on the advice of counsel, that Counterparty will be unable to comply with the covenant set forth in the second sentence of Section 6 of this Confirmation because of a change in law or a change in the policy of the Securities and Exchange Commission or its staff, or Dealer otherwise reasonably determines, based on the advice of counsel, that in its reasonable opinion any Shares to be delivered to Dealer by Counterparty hereunder may not be freely returned by Dealer or its affiliates to securities lenders as contemplated by Section 6 of this Confirmation, then delivery of any such Shares (the “
Restricted Shares
”) shall be effected pursuant to Annex A hereto, unless waived by Dealer.
|
11.
|
Rule 10b5-1
:
|
(a)
|
The parties acknowledge that following any election of Cash Settlement or Net Share Settlement by Counterparty, this Confirmation is intended to constitute a binding contract satisfying the requirements of Rule 10b5-1(c) of the Exchange Act and agree that this Confirmation shall be interpreted to comply with such requirements.
|
(b)
|
The times and prices at which Dealer (or its agent or affiliate) purchases any Shares during any Unwind Period shall be at Dealer’s sole discretion. Counterparty acknowledges that during any Unwind Period Counterparty does not have, and shall not attempt to exercise, any influence over how, when or whether to effect
|
(c)
|
Counterparty hereby agrees with Dealer that during any Unwind Period Counterparty shall not communicate, directly or indirectly, any material non-public information (within the meaning of such term under Rule 10b5-1) to any employee of Dealer (or its agents or affiliates) who is directly involved with the hedging of, and trading with respect to, the Transaction. Counterparty acknowledges and agrees that any amendment, modification, waiver or termination of the Transaction must be effected in accordance with the requirements for the amendment or termination of a contract, instruction or plan under Rule 10b5-1(c). Without limiting the generality of the foregoing, any such amendment, modification, waiver or termination shall be made in good faith and not as part of a plan or scheme to evade the prohibitions of Rule 10b-5 under the Exchange Act, and no such amendment, modification or waiver shall be made at any time at which Counterparty is aware of any material non-public information regarding Counterparty or the Shares.
|
12.
|
Capped Number of Shares
:
Notwithstanding any other provision of the Agreement or this Confirmation, in no event will Counterparty be required to deliver in the aggregate in respect of all Settlement Dates, Net Share Settlement Dates or other dates on which Shares are delivered in respect of any amount owed under this Confirmation a number of Shares greater than the Capped Number. If the number of Shares to be issued at settlement by the Counterparty exceeds the authorized and unissued shares that are not reserved for any other purposes (such excess, the “
Deficit Shares
”), Counterparty shall be obligated to deliver Shares, from time to time until the full number of Deficit Shares have been delivered pursuant to this paragraph, when, and to the extent, that (A) Shares are repurchased, acquired or otherwise received by Counterparty or any of its subsidiaries after the Trade Date (whether or not in exchange for cash, fair value or any other consideration) and are not required to be used for any other purpose, (B) authorized and unissued Shares reserved for issuance in respect of other transactions as of the Trade Date become no longer so reserved and (C) Counterparty authorizes any additional unissued Shares that are not reserved for other transactions (such events as set forth in clauses (A), (B) and (C) above, collectively, the “
Share Issuance Events
”). Counterparty shall promptly notify Dealer of the occurrence of any of the Share Issuance Events (including the number of Shares subject to clause (A), (B) or (C) and the corresponding number of Shares to be delivered) and, as promptly as reasonably practicable after such Share Issuance Event (or, if later, on the Settlement Date or the date of any Private Placement Settlement for which there are Deficit Shares), deliver such Shares. For the avoidance of doubt, Counterparty shall not be required to satisfy in cash any share delivery obligation if a Share Issuance Event does not occur.
|
13.
|
Transfer, Assignment and Designation
:
|
(a)
|
Notwithstanding any provision of the Agreement to the contrary, Dealer may assign, transfer and set over all rights, title and interest, powers, privileges and remedies of Dealer under the Transaction, in whole but not in part, to an affiliate of Dealer without the consent of Counterparty; provided that (i) at the time of assignment or transfer, such affiliate or its guarantor, if any, has equal or better creditworthiness than Dealer; (ii) no Event of Default, Potential Event of Default or Termination Event with respect to which Dealer or such affiliate is the Defaulting Party or an Affected Party, as the case may be, exists or would result therefrom, (iii) no Acceleration Event or other event giving rise to a right or responsibility to designate an Early Valuation Date or otherwise terminate or cancel the Transaction or to make an adjustment to the terms of the Transaction would result therefrom, and
|
(b)
|
Notwithstanding any other provision in this Confirmation to the contrary requiring or allowing Dealer to purchase, sell, receive or deliver any Shares or other securities to or from Counterparty, Dealer may designate any of its affiliates to purchase, sell, receive or deliver such Shares or other securities and otherwise to perform Dealer’s obligations in respect of the Transaction and any such designee may assume such obligations. Dealer shall be discharged of its obligations to Counterparty to the extent of any such performance.
|
14.
|
Indemnity
: Counterparty agrees to indemnify Dealer and its affiliates and their respective directors, officers, agents and controlling parties (Dealer and each such affiliate or person being an “
Indemnified Party
”) from and against any and all losses (but, for the avoidance of doubt, not including financial losses to an Indemnified Party relating to the economic terms of the Transaction provided that the Counterparty performs its obligations under this Confirmation in accordance with its terms), claims, damages and liabilities, joint and several, incurred by or asserted against such Indemnified Party, that arise out of, are in connection with, or relate to, any breach of any covenant or representation made by Counterparty in this Confirmation or the Agreement, and Counterparty will reimburse any Indemnified Party for all reasonable documented out-of-pocket expenses (including reasonable legal fees and expenses) as they are incurred in connection with the investigation of, preparation for, or defense of any pending or threatened claim or any action or proceeding arising therefrom, whether or not such Indemnified Party is a party thereto. Counterparty will not be liable under this Indemnity paragraph to the extent that any such loss, claim, damage, liability or expense results from an Indemnified Party’s material breach of this Agreement, gross negligence, bad faith, or willful misconduct. If for any reason the foregoing indemnification is unavailable to any Indemnified Party or insufficient to hold harmless any Indemnified Party, then Counterparty shall contribute, to the maximum extent permitted by law, to the amount paid or payable by the Indemnified Party as a result of such loss, claim, damage or liability.
|
15.
|
No Collateral; Netting; Setoff
:
|
(a)
|
Notwithstanding any provision of the Agreement or any other agreement between the parties to the contrary, the obligations of Counterparty hereunder are not secured by any collateral.
|
(b)
|
If on any date any Shares would otherwise be deliverable under the Transaction or the Base Confirmation by Counterparty to Dealer and by Dealer to Counterparty, then, on such date, each party’s obligations to make delivery of such Shares will be automatically satisfied and discharged and, if the aggregate number of Shares that would otherwise have been deliverable by one party exceeds the aggregate number of Shares that would have otherwise been deliverable by the other party, replaced by an obligation upon the party by whom the larger aggregate number of Shares would have been deliverable to deliver to the other party the excess of the larger aggregate number over the smaller aggregate number.
|
(c)
|
The parties agree that upon the occurrence of an Early Valuation Date or an Early Termination Date with respect to the non-Accelerating Party, the Defaulting Party or the Affected Party, as applicable (“X”), the other party (“Y”) will have the right (but not be obliged) without prior notice to X or any other person to set-off or apply any obligation of X owed to Y (whether or not matured or contingent and whether or not arising under the Agreement, and regardless of the currency, place of payment or booking office of the obligation) against any obligation of Y owed to X (whether or not matured or contingent and whether or not arising under the Agreement, and regardless of the currency, place of payment or booking office of the obligation). Y will give notice to the other party of any set-off effected under this Section 15.
|
(d)
|
Amounts (or the relevant portion of such amounts) subject to set-off may be converted by Y into the Termination Currency or into Shares, at the election of Y, at the rate of exchange at which such party would be able, acting in a reasonable manner and in good faith, to purchase the relevant amount of such currency or Shares. If any obligation is unascertained, Y may in good faith estimate that obligation and set-off in respect of the estimate, subject to the relevant party accounting to the other when the obligation is ascertained. Nothing in this Section 15 shall be effective to create a charge or other security interest. This Section 15 shall be without prejudice and in addition to any right of set-off, combination of accounts, lien or other right to which any party is at any time otherwise entitled (whether by operation of law, contract or otherwise).
|
(e)
|
Notwithstanding anything to the contrary in the foregoing, Dealer agrees not to set off or net amounts due from Counterparty with respect to the Transaction against amounts due from Dealer to Counterparty with respect to contracts or instruments that are not Equity Contracts. “
Equity Contract
” means any transaction or instrument that does not convey to Dealer rights, or the ability to assert claims, that are senior to the rights and claims of common stockholders in the event of Counterparty’s bankruptcy.
|
16.
|
Delivery of Cash
:
For the avoidance of doubt, nothing in this Confirmation shall be interpreted as requiring Counterparty to deliver cash in respect of the settlement of the Transaction, except (i) where Counterparty elects Cash Settlement and the Forward Cash Settlement Amount is a positive number or (ii) where Section 6 of the Agreement applies as provided in Section 9(a) of this Confirmation. For the avoidance of doubt, the preceding sentence shall not be construed as limiting any damages that may be payable by Counterparty as a result of a breach of or an indemnity under this Confirmation or the Agreement.
|
17.
|
Status of Claims in Bankruptcy
:
Dealer acknowledges and agrees that this Confirmation is not intended to convey to Dealer rights with respect to the transactions contemplated hereby that are senior to the claims of common stockholders in any U.S. bankruptcy proceedings of Counterparty;
provided
that nothing herein shall limit or shall be deemed to limit Dealer’s right to pursue remedies in the event of a breach by Counterparty of its obligations and agreements with respect to this Confirmation and the Agreement; and
provided further
that nothing herein shall limit or shall be deemed to limit Dealer’s rights in respect of any transaction other than the Transaction.
|
18.
|
Limit on Beneficial Ownership
:
Notwithstanding anything to the contrary in the Agreement or this Confirmation, in no event shall Dealer be entitled to receive, or be deemed to receive, Shares to the extent that, upon such receipt of such Shares, and after taking into account any Shares concurrently delivered by Seller under the Base Confirmation, (i) the “beneficial ownership” (within the meaning of Section 13 of the Exchange Act and the rules promulgated thereunder) of Shares by Dealer, any of its affiliates’ business units subject to
|
19.
|
Acknowledgements
:
|
(a)
|
Counterparty acknowledges that:
|
(i)
|
During the term of the Transaction, Dealer and its affiliates may buy or sell Shares or other securities or buy or sell options or futures contracts or enter into swaps or other derivative securities in order to establish, adjust or unwind its hedge position with respect to the Transaction.
|
(ii)
|
Dealer and its affiliates may also be active in the market for the Shares and derivatives linked to the Shares other than in connection with hedging activities in relation to the Transaction, including acting as agent or as principal and for its own account or on behalf of customers.
|
(iii)
|
Dealer shall make its own determination as to whether, when or in what manner any hedging or market activities in Counterparty’s securities shall be conducted and shall do so in a manner that it deems appropriate to hedge its price and market risk with respect to the Settlement Price.
|
(iv)
|
Any market activities of Dealer and its affiliates with respect to the Shares may affect the market price of the Shares, as well as any Settlement Price, each in a manner that may be adverse to Counterparty.
|
(v)
|
The Transaction is a derivative transaction; Dealer and its affiliates may purchase or sell Shares for their own account at prices that may be greater than, or less than, the prices paid or received by Counterparty under the terms of the Transaction.
|
(b)
|
The parties intend for this Confirmation to constitute a “Contract” as described in the letter dated October 6, 2003 submitted on behalf of GS&Co. to Paula Dubberly of the staff of the Securities and Exchange Commission (the “
Staff
”) to which the Staff responded in an interpretive letter dated October 9, 2003 (the “
Forward Letter
”).
|
(c)
|
The parties hereto intend for:
|
(i)
|
this Transaction to be a “securities contract” as defined in Section 741(7) of the Bankruptcy Code, qualifying for the protections under Sections 362(b)(6), 362(b)(27), 362(o), 546(e), 546(j), 548(d)(2), 555 and 561 of the Bankruptcy Code;
|
(ii)
|
the rights given to Dealer and Counterparty pursuant to “Acceleration Events” in Section 9 above to constitute “contractual rights” to cause the liquidation of a “securities contract” and to set off mutual debts and claims in connection with a “securities contract”, as such terms are used in Sections 555 and 362(b)(6) of the Bankruptcy Code;
|
(iii)
|
Dealer to be a “financial institution” within the meaning of Section 101(22) of the Bankruptcy Code;
|
(iv)
|
all payments for, under or in connection with the Transaction, all payments for Shares and the transfer of Shares to constitute “settlement payments” and “transfers” under a “securities contract” as defined in the Bankruptcy Code; and
|
(v)
|
any or all obligations that either party has with respect to this Confirmation or the Agreement to constitute property held by or due from such party to margin, guaranty or settle obligations of the other party with respect to the transactions under the Agreement (including the Transaction) or any other agreement between such parties.
|
20.
|
Notices
:
For the purpose of Section 12(a) of the Agreement:
|
(a)
|
Address for notices or communications to Dealer: As set forth in Section 1 (
Notices
) of
Annex C hereto.
|
(b)
|
Address for notices or communications to Counterparty:
|
21.
|
Waiver of Right to Trial by Jury
:
EACH OF COUNTERPARTY AND DEALER HEREBY IRREVOCABLY WAIVES (ON SUCH PARTY’S OWN BEHALF AND, TO THE EXTENT PERMITTED BY APPLICABLE LAW, ON BEHALF OF SUCH PARTY’S STOCKHOLDERS) ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS CONFIRMATION OR THE ACTIONS OF COUNTERPARTY AND DEALER OR ANY OF THEIR AFFILIATES IN THE NEGOTIATION, PERFORMANCE OR ENFORCEMENT HEREOF.
|
22.
|
Severability
:
If any term, provision, covenant or condition of this Confirmation, or the application thereof to any party or circumstance, shall be held to be invalid or unenforceable in whole or in part for any reason, the remaining terms, provisions, covenants, and conditions hereof shall continue in full force and effect as if this Confirmation had been executed with the invalid or unenforceable provision eliminated, so long as this Confirmation as so modified continues to express, without material change, the original intentions of the parties as to the subject matter of this Confirmation and the deletion of such portion of this Confirmation will not substantially impair the respective benefits or expectations of parties to the Agreement;
provided
that this severability provision shall not be applicable if any provision of Section 2, 5, 6 or 13 of the Agreement (or any definition or provision in Section 14 of the Agreement to the extent that it relates to, or is used in or in connection with any such Section) shall be so held to be invalid or unenforceable.
|
23.
|
Tax Disclosure:
Notwithstanding anything to the contrary herein, in the Equity Definitions or in the Agreement, and notwithstanding any express or implied claims of exclusivity or proprietary rights, the parties (and each of their employees, representatives or other agents) are authorized to disclose to any and all persons, beginning immediately upon commencement of their discussions and without limitation of any kind, the tax treatment and tax structure of the Transaction, and all materials of any kind (including opinions or other tax analyses) that are provided by either party to the other relating to such tax treatment and tax structure.
|
24.
|
Schedule Provisions
:
|
(a)
|
Notwithstanding Part 1(f) (
Payments on Early Termination
) of the Schedule to the Agreement and for so long as the Agreement is in the form of the 1992 ISDA Master Agreement, for purposes of Section 6(e) of the Agreement and this Transaction:
|
(i)
|
Loss will apply.
|
(ii)
|
The Second Method will apply.
|
(b)
|
The Termination Currency shall be USD.
|
(c)
|
Other:
|
(i)
|
Cross Default: The provisions of Section 5(a)(vi) of the Agreement will not apply to Dealer and will not apply to Counterparty.
|
(ii)
|
The “Automatic Early Termination” provision of Section 6(a) of the Agreement will not apply to Dealer and will not apply to Counterparty.
|
(d)
|
Part 2(b) of the ISDA Schedule – Payee Representation:
|
(e)
|
Part 3(a) of the ISDA Schedule – Tax Forms:
|
|
Form/Document/Certificate
|
Date by which to be Delivered
|
Counterparty
|
A complete and duly executed United States Internal Revenue Service Form W-9 (or successor thereto.)
|
(i) Upon execution and delivery of the Agreement; (ii) promptly upon reasonable demand by Dealer; and (iii) promptly upon learning that any such Form previously provided by Counterparty has become obsolete or incorrect.
|
Dealer
|
As set forth in Section 3 (
Tax Forms
) of Annex C hereto.
|
(i) Upon execution and delivery of the Agreement; (ii) promptly upon reasonable demand by Counterparty; and (iii) promptly upon learning that any such Form previously provided by Dealer has become obsolete or incorrect.
|
25.
|
Transaction Reporting
:
To the extent any information regarding this Transaction is required to be reported to a trade repository or similar entity by applicable law, Dealer shall satisfy, or cause to be satisfied, such reporting obligations.
|
26.
|
Dealer Provisions:
The parties hereby agree that the terms set forth in Section 5 (
Miscellaneous Provisions
) of Annex C hereto shall apply to this Agreement.
|
By:
/s/ Alaoui Zenere
|
Name: Alaoui Zenere Title: Vice President |
By:
/s/ Yukari Saegusa
|
Name: Yukari Saegusa Title: Vice President and Treasurer |
1.
|
Notice.
Address for notices or communications to Dealer:
|
2.
|
Payee Representation.
For the purpose of Section 3(f) of the Agreement, Dealer makes the following representation(s) to Counterparty:
|
3.
|
Tax Forms
. For the purpose of Section 24(e) of the Confirmation, Dealer shall deliver to Counterparty a complete and duly executed United States Internal Revenue Service Form W-9 (or successor thereto).
|
4.
|
Account Details
.
|
5.
|
Miscellaneous Provisions
.
|
a.
|
No Insurance or Guaranty
:
Counterparty understands, agrees and acknowledges that no obligations of Dealer to it hereunder shall be entitled to the benefit of deposit insurance and that such obligations shall not be guaranteed by any affiliate of Dealer or any governmental agency.
|
b.
|
Wall Street Transparency and Accountability Act
:
In connection with Section 739 of the Wall Street Transparency and Accountability Act of 2010 (“
WSTAA
”), the parties hereby agree that neither the enactment of WSTAA or any regulation under the WSTAA, nor any requirement under WSTAA or an amendment made by WSTAA, shall limit or otherwise impair either party’s otherwise applicable rights to terminate, renegotiate, modify, amend or supplement this Confirmation or the Agreement, as applicable, arising from a termination event, force majeure, illegality, increased costs, regulatory change or similar event under this Confirmation, the Swap Definitions or Equity Definitions incorporated herein or the Agreement (including, but not limited to, rights arising from an Acceleration Event, Increased Cost of Stock Borrow, any condition described in clause (i) of Section 18, an Excess Regulatory Ownership Position or Illegality (as defined in the Agreement)).
|
|
|
||
|
Amount
|
||
Annual Retainer
(1)
|
$
|
115,000
|
|
Lead Director Retainer
|
$
|
35,000
|
|
Chair of Audit Committee Retainer
(2)
|
$
|
30,000
|
|
Member of Audit Committee Retainer (excluding the Audit Committee Chair)
(3)
|
$
|
15,000
|
|
Chair of Corporate Governance and Nominating Committee Retainer
(4)
|
$
|
15,000
|
|
Chair of Management Development and Compensation Committee Retainer
|
$
|
15,000
|
|
Retainer for Chairs of: Environment, Health and Safety Committee; Finance Committee; and Operations Oversight Committee
|
$
|
5,000
|
|
Acting Committee Chair Fee (where the regular Chair is absent)
|
$
|
200
|
|
Audit Committee member fee (for each meeting of the Audit Committee attended)
(5)(
|
$
|
2,000
|
|
Committee member fee (for each Committee meeting attended)
(5)
|
$
|
1,500
|
|
Annual equity award (deferred stock units)
(6)(
|
$
|
150,000
|
|
(1)
|
Effective April 1, 2018, the annual retainer was increased from $100,000 to $115,000.
|
(2)
|
Effective April 1, 2018, the annual retainer for the Chair of the Audit Committee was increased from $25,000 to $30,000.
|
(3)
|
Effective April 1, 2018, the annual retainer for the members of the Audit Committee (excluding the Chair of the Audit Committee) was increased from $10,000 to $15,000
|
(4)
|
Effective April 1, 2018, the annual retainer for the Chair of the Corporate Governance and Nominating Committee was increased from $10,000 to $15,000.
|
(5)
|
Effective April 1, 2018, all Committee member fees were eliminated.
|
(6)
|
Effective April 1, 2018, the annual equity award was increased from $135,000 to $150,000.
|
2.
|
Con Edison Clean Energy Businesses, Inc., a New York corporation, which owns Consolidated Edison Development, Inc., Consolidated Edison Energy, Inc. and Consolidated Edison Solutions, Inc., each a New York corporation.
|
/s/ PricewaterhouseCoopers LLP
|
|
New York, New York
|
|
February 21, 2019
|
|
/s/ PricewaterhouseCoopers LLP
|
|
New York, New York
|
|
February 21, 2019
|
|
|
/s/ John McAvoy
|
|
John McAvoy
|
|
Chairman, President and Chief Executive Officer
|
|
/s/ Robert Hoglund
|
|
Robert Hoglund
|
|
Senior Vice President and Chief Financial Officer
|
|
/s/ John McAvoy
|
|
John McAvoy
|
|
Chairman and Chief Executive Officer
|
|
/s/ Robert Hoglund
|
|
Robert Hoglund
|
|
Senior Vice President and Chief Financial Officer
|
|
/s/ John McAvoy
|
|
John McAvoy
|
|
/s/ Robert Hoglund
|
|
Robert Hoglund
|
|
|
|
|
|
|
|
|
|
|
SECTION 1. The annual meeting of stockholders of the Company for the election of Trustees and such other business as may properly come before such meeting shall be held on the third Monday in May in each year at such hour and at such place in the City of New York or the County of Westchester as may be designated by the Board of Trustees.
|
Date
Annual
Meeting
|
|
SECTION 2. Special meetings of the stockholders of the Company may be held upon call of the Chairman of the Board, the President, the Board of Trustees, or stockholders holding one-fourth of the outstanding shares of stock entitled to vote at such meeting.
|
Special
Meetings
Stockholders
|
|
SECTION 3. Notice of the time and place of every meeting of stockholders, the purpose of such meeting and, in case of a special meeting, the person or persons by or at whose direction the meeting is being called, shall be mailed by the Secretary, or other officer performing his duties, at least ten days, but not more than fifty days, before the meeting to each stockholder of record, at his last known Post Office address; provided, however, that if a stockholder be present at a meeting, in person or by proxy, without protesting prior to the conclusion of the meeting the lack of notice of such meeting, or in writing waives notice thereof before or after the meeting, the mailing to such stockholder of notice of such meeting is unnecessary.
|
Notice
Stockholders’
Meeting
|
|
SECTION 4. The holders of a majority of the outstanding shares of stock of the Company, entitled to vote at a meeting, present in person or by proxy shall constitute a quorum, but less than a quorum shall have power to adjourn.
|
Quorum
Stockholders
|
|
SECTION 5. The Chairman of the Board, or in his absence the President, shall preside over all meetings of stockholders. In their absence one of the Vice Presidents shall preside over such meetings. The Secretary of the Board of Trustees shall act as Secretary of such meeting, if present. In his absence, the Chairman of the meeting may appoint any person to act as Secretary of the meeting.
|
Chairman,
Secretary,
Stockholders’
Meetings
|
|
SECTION 6. At each meeting of stockholders at which votes are to be taken by ballot there shall be at least two and not more than five inspectors of election and of stockholders’ votes, who shall be either designated prior to such meeting by the Board of Trustees or, in the absence of such designation, appointed by the Chairman of the meeting.
|
Inspectors of
Election
|
|
|
|
SECTION 7. The Board of Trustees may, in their discretion, appoint one or more transfer agents, paying agents and/or registrars of the stock of the Company.
|
Stock
Transfers
Registrars
|
|
SECTION 8. The affairs of the Company shall be managed under the direction of a Board consisting of ten Trustees, who shall be elected annually by the stockholders by ballot and shall hold office until their successors are elected and qualified. Vacancies in the Board of Trustees may be filled by the Board at any meeting, but if the number of Trustees is increased or decreased by the Board by an amendment of this section of the By-laws, such amendment shall require the vote of a majority of the whole Board. Members of the Board of Trustees shall be entitled to receive such reasonable fees or other forms of compensation, on a per diem, annual or other basis, as may be fixed by resolution of the Board of Trustees or the stockholders in respect of their services as such, including attendance at meetings of the Board and its committees; provided, however, that nothing herein contained shall be construed as precluding any Trustee from serving the Company in any capacity other than as a member of the Board or a committee thereof and receiving compensation for such other services.
|
Number of
Board
Members
Vacancies
Fees
|
|
SECTION 9. Meetings of the Board of Trustees shall be held at the time and place fixed by resolution of the Board or upon call of the Chairman of the Board, the President, or a Vice President or any two Trustees. The Secretary of the Board or officer performing his duties shall give 24 hours’ notice of all meetings of Trustees; provided that a meeting may be held without notice immediately after the annual election of Trustees, and notice need not be given of regular meetings held at times fixed by resolution of the Board. Meetings may be held at any time without notice if all the Trustees are present and none protests the lack of notice either prior to the meeting or at its commencement, or if those not present waive notice either before or after the meeting. Notice by mailing or telegraphing, or delivering by hand, to the usual business address or residence of the Trustee not less than the time above specified before the meeting shall be sufficient. A majority of the Trustees in office shall constitute a quorum, but less than such quorum shall have power to adjourn. The Chairman of the Board or, in his absence a Chairman pro tem elected by the meeting from among the Trustees present shall preside at all meetings of the Board. Any one or more members of the Board may participate in a meeting of the Board by means of a conference telephone or similar communications equipment allowing all persons participating in the meeting to hear each other at the same time. Participation by such means shall constitute presence in person at such meeting. Any action required or permitted to be taken by the Board may be taken without a meeting if all members of the Board consent in writing to the adoption of a resolution authorizing the action; provided, however, that no action taken by the Board by unanimous written consent shall be taken in lieu of a regular monthly meeting of the Board. Each resolution so adopted and the written consents thereto by the members of the Board shall be filed with the minutes of the proceedings of the Board.
|
Board
Meetings
Notices
Quorum
Participation
by
Conference
Telephone
Action by
Unanimous
Written
Consent
|
|
SECTION 10. The Board of Trustees, as soon as may be after the election of Trustees in each year, shall elect from their number a Chairman of the Board and shall elect a President, one of whom the Board shall designate to be the chief executive officer of the Company. The Board shall also elect one or more Vice Presidents, a Secretary and a Treasurer, and may from time to time elect such other officers as they may deem proper. Any two or more offices may be held by the same person, except as otherwise may be required by law.
|
Election of
Officers
|
|
|
|
SECTION 14. The Board of Trustees are authorized to select such depositories as they shall deem proper for the funds of the Company. All checks and drafts against such deposited funds shall be signed by such person or persons and in such manner as may be specified by the Board of Trustees.
|
Depositories
Signatures
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SECTION 15. The Company shall fully indemnify in all circumstances to the extent not prohibited by law any person made, or threatened to be made, a party to an action or proceeding, whether civil or criminal, including an investigative, administrative or legislative proceeding, and including an action by or in the right of the Company or any other corporation of any type or kind, domestic or foreign, or any partnership, joint venture, trust, employee benefit plan or other enterprise, by reason of the fact that he, his testator or intestate, is or was a Trustee or officer of the Company, or is or was serving at the request of the Company any other corporation of any type or kind, domestic or foreign, or any partnership, joint venture, trust, employee benefit plan or other enterprise, as a director, officer or in any other capacity against any and all judgments, fines, amounts paid in settlement, and expenses, including attorneys’ fees, actually and reasonably incurred as a result of or in connection with any such action or proceeding or related appeal; provided, however, that no indemnification shall be made to or on behalf of any Trustee, director or officer if a judgment or other final adjudication adverse to the Trustee, director or officer establishes that his acts were committed in bad faith or were the result of active and deliberate dishonesty and were material to the cause of action so adjudicated, or that he personally gained in fact a financial profit or other advantage to which he was not legally entitled; and, except in the case of an action or proceeding specifically approved by the Board of Trustees, the Company shall pay expenses incurred by or on behalf of such a person in defending such a civil or criminal action or proceeding (including appeals) in advance of the final disposition of such action or proceeding promptly upon receipt by the Company, from time to time, of a written demand of such person for such advancement, together with an undertaking by or on behalf of such person to repay any expenses so advanced to the extent that the person receiving the advancement is ultimately found not to be entitled to indemnification for such expenses; and the right to indemnification and advancement of defense expenses granted by or pursuant to this by-law (i) shall not limit or exclude, but shall be in addition to, any other rights which may be granted by or pursuant to any statute, certificate of incorporation, by-law, resolution or agreement, (ii) shall be deemed to constitute contractual obligations of the Company to any Trustee, director or officer who serves in such capacity at any time while this by-law is in effect, (iii) are intended to be retroactive and shall be available with respect to events occurring prior to the adoption of this by-law and (iv) shall continue to exist after the repeal or modification hereof with respect to events occurring prior thereto. It is the intent of this by-law to require the Company to indemnify the persons referred to herein for the aforementioned judgments, fines, amounts paid in settlement and expenses, including attorneys’ fees, in each and every circumstance in which such indemnification could lawfully be permitted by an express provision of a by-law, and the indemnification required by this by-law shall not be limited by the absence of an express recital of such circumstances. The Company may, with the approval of the Board of Trustees, enter into an agreement with any person who is, or is about to become, a Trustee or officer of the Company, or who is serving, or is about to serve, at the request of the Company, any other corporation of any type or kind, domestic or foreign, or any partnership, joint venture, trust, employee benefit plan or other enterprise, as a director, officer or in any other capacity, which agreement may provide for indemnification of such person and advancement of defense expenses to such person upon such terms, and to the extent, as may be permitted by law.
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Indemnification
of Trustees
and Officers
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SECTION 16. Wherever the expression “Trustees” or “Board of Trustees” is used in these By-laws the same shall be deemed to apply to the Directors or Board of Directors, as the case may be, if the designation of those persons constituting the governing board of this Company is changed from “Trustees” to “Directors".
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SECTION 17. Either the Board of Trustees or the stockholders may alter or amend these By-laws at any meeting duly held as above provided, the notice of which includes notice of the proposed amendment.
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Amendment
of By-laws
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/s/ John McAvoy
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John McAvoy
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/s/ Robert Hoglund
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Robert Hoglund
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