CONSOLIDATED EDISON INC - 10-Q Quarterly Report

Form 10-Q

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


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

For the quarterly period ended JUNE 30, 2004

OR

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


Commission File Number	Exact name of registrant as specified in its charter and principal office address and telephone number	State of Incorporation	I.R.S. Employer ID. Number

1-14514	Consolidated Edison, Inc. 4 Irving Place, New York, New York 10003 (212) 460-4600	New York	13-3965100

1-1217	Consolidated Edison Company of New York, Inc. 4 Irving Place, New York, New York 10003 (212) 460-4600	New York	13-5009340

1-4315	Orange and Rockland Utilities, Inc. One Blue Hill Plaza, Pearl River, New York 10965 (845) 352-6000	New York	13-1727729

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

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


Consolidated Edison, Inc. (Con Edison)				Yes x No ¨

Consolidated Edison Company of New York, Inc. (Con Edison of New York)				Yes ¨ No x

Orange and Rockland Utilities, Inc. (O&R)				Yes ¨ No x

As of the close of business on July 30, 2004, Con Edison had outstanding 241,451,273 Common Shares ($.10 par value). Con Edison owns all of the outstanding common equity of Con Edison of New York and O&R.

Filing Format

This Quarterly Report on Form 10-Q is a combined report being filed separately by three different registrants: Consolidated Edison, Inc. (Con Edison), Consolidated Edison Company of New York, Inc. (Con Edison of New York) and Orange and Rockland Utilities, Inc. (O&R, and together with Con Edison of New York, are collectively referred to in this combined report as the “Utilities”). Con Edison and Con Edison of New York file reports required by Section 13 of the Securities Exchange Act of 1934. O&R is not required to file such reports since it has no securities registered under Section 12 of the Act and its duty under Section 15(d) of the Act to file reports in 2004 was automatically suspended because at the beginning of the year it had fewer than 300 security holders of record for each class of its securities that had been registered under the Securities Act of 1933. O&R is filing this report voluntarily. O&R may discontinue filing reports during periods when it is not required to do so.

The Utilities are subsidiaries of Con Edison and, as such, the information in this report about each of the Utilities also applies to Con Edison. As used in this report, the term the “Companies” refers to each of the three separate registrants: Con Edison, Con Edison of New York and O&R. However, neither of the Utilities makes any representation as to the information contained in this report relating to Con Edison or the subsidiaries of Con Edison other than itself.

TABLE OF CONTENTS


			PAGE
Glossary of Terms			4

PART I—Financial Information
Item 1	Financial Statements (Unaudited)
	Con Edison
		Consolidated Balance Sheet	5
		Consolidated Income Statement	7
		Consolidated Statement of Comprehensive Income	8
		Consolidated Statement of Common Shareholders’ Equity	9
		Consolidated Statement of Cash Flows	10
	Con Edison of New York
		Consolidated Balance Sheet	11
		Consolidated Income Statement	13
		Consolidated Statement of Comprehensive Income	14
		Consolidated Statement of Common Shareholder’s Equity	15
		Consolidated Statement of Cash Flows	16
	O&R
		Consolidated Balance Sheet	17
		Consolidated Income Statement	19
		Consolidated Statement of Comprehensive Income	20
		Consolidated Statement of Common Shareholder’s Equity	21
		Consolidated Statement of Cash Flows	22
	Notes to Financial Statements (Unaudited)		23
Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations		44
Item 3	Quantitative and Qualitative Disclosures About Market Risk		69
Item 4	Controls and Procedures		69
	Forward-Looking Statements		69

PART II—Other Information
Item 1	Legal Proceedings		70
Item 4	Submission of Matters to a Vote of Security Holders		70
Item 6	Exhibits and Reports on Form 8-K		71
Signatures			74

GLOSSARY OF TERMS

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


Con Edison Companies
Con Edison		Consolidated Edison, Inc.
Con Edison Communications		Con Edison Communications, LLC
Con Edison Development		Consolidated Edison Development, Inc.
Con Edison Energy		Consolidated Edison Energy, Inc.
Con Edison of New York		Consolidated Edison Company of New York, Inc.
Con Edison Solutions		Consolidated Edison Solutions, Inc.
O&R		Orange and Rockland Utilities, Inc.
RECO		Rockland Electric Company
The Companies		The three separate registrants: Con Edison, Con Edison of New York and O&R
The Utilities		Con Edison of New York and O&R

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

Other
AFDC		Allowance for Funds used During Construction
DTH		Dekatherm
EITF		Emerging Issues Task Force
FASB		Financial Accounting Standards Board
Form 10-K		Companies’ combined Annual Report on Form 10-K for the year ended December 31, 2003
FSP		FASB Staff Position
kWh		Kilowatt-hour
MD&A		Management’s Discussion and Analysis of Financial Condition and Results of Operations
MW		Megawatts or thousand kilowatts
NUG		Non-Utility Generator
NYISO		New York Independent System Operator
OCI		Other Comprehensive Income
PCBs		Polychlorinated biphenyls
PPA		Purchase Power Agreement
SFAS		Statement of Financial Accounting Standards
Superfund		Federal Comprehensive Environmental Response, Compensation and Liability Act of 1980
TBC		Transition Bond Charge
TRC		Transition Recovery Charge
VaR		Value-at-Risk

Consolidated Edison, Inc.

CONSOLIDATED BALANCE SHEET

(UNAUDITED)


	June 30, 2004		December 31, 2003
	(Millions of Dollars)
ASSETS
UTILITY PLANT, AT ORIGINAL COST
Electric	$	12,534	$	12,097
Gas		2,755		2,699
Steam		808		799
General		1,486		1,482
TOTAL		17,583		17,077
Less: Accumulated depreciation		4,188		4,069
NET		13,395		13,008
Construction work in progress		1,313		1,276
NET UTILITY PLANT		14,708		14,284
NON-UTILITY PLANT
Unregulated generating assets, less accumulated depreciation of $65 and $52 in 2004 and 2003, respectively		874		873
Non-utility property, less accumulated depreciation of $25 and $15 in 2004 and 2003, respectively		62		56
Construction work in progress		10		12
NET PLANT		15,654		15,225
CURRENT ASSETS
Cash and temporary cash investments		487		49
Restricted cash		18		18
Accounts receivable - customers, less allowance for uncollectible accounts of $33 and $36 in 2004 and 2003, respectively		694		790
Accrued unbilled revenue		64		61
Other receivables, less allowance for uncollectible accounts of $7 in 2004 and 2003		297		184
Fuel oil, at average cost		28		33
Gas in storage, at average cost		140		150
Materials and supplies, at average cost		98		100
Prepayments		90		98
Other current assets		175		109
TOTAL CURRENT ASSETS		2,091		1,592
INVESTMENTS		253		248
DEFERRED CHARGES, REGULATORY ASSETS AND NONCURRENT ASSETS
Goodwill		406		406
Intangible assets, less accumulated amortization of $21 and $16 in 2004 and 2003, respectively		106		111
Prepaid pension costs		1,348		1,257
Regulatory assets		2,073		1,861
Other deferred charges and noncurrent assets		293		266
TOTAL DEFERRED CHARGES, REGULATORY ASSETS AND NONCURRENT ASSETS		4,226		3,901
TOTAL ASSETS	$	22,224	$	20,966

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

Consolidated Edison, Inc.

CONSOLIDATED BALANCE SHEET

(UNAUDITED)


	June 30, 2004		December 31, 2003
	(Millions of Dollars)
CAPITALIZATION AND LIABILITIES
CAPITALIZATION
Common shareholders’ equity (See Statement of Common Shareholders’ Equity)	$	6,994	$	6,423
Preferred stock of subsidiary		213		213
Long-term debt		6,971		6,733
TOTAL CAPITALIZATION		14,178		13,369
MINORITY INTERESTS		40		42
NONCURRENT LIABILITIES
Obligations under capital leases		34		36
Provision for injuries and damages		198		194
Pensions and retiree benefits		230		205
Superfund and other environmental costs		200		193
Other noncurrent liabilities		76		79
TOTAL NONCURRENT LIABILITIES		738		707
CURRENT LIABILITIES
Long-term debt due within one year		291		166
Notes payable		40		159
Accounts payable		944		905
Customer deposits		234		228
Accrued taxes		20		69
Accrued interest		97		102
Accrued wages		80		79
Other current liabilities		222		203
TOTAL CURRENT LIABILITIES		1,928		1,911
DEFERRED CREDITS AND REGULATORY LIABILITIES
Deferred income taxes and investment tax credits		3,412		3,172
Regulatory liabilities		1,881		1,733
Other deferred credits		47		32
TOTAL DEFERRED CREDITS AND REGULATORY LIABILITIES		5,340		4,937
TOTAL CAPITALIZATION AND LIABILITIES	$	22,224	$	20,966

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

Consolidated Edison, Inc.

CONSOLIDATED INCOME STATEMENT

(UNAUDITED)


	For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2004			2003			2004			2003
	(Millions of Dollars/Except Share Data)
OPERATING REVENUES
Electric	$	1,531		$	1,561		$	3,070		$	3,054
Gas		283			326			928			946
Steam		93			97			328			334
Non-utility		262			192			528			412
TOTAL OPERATING REVENUES		2,169			2,176			4,854			4,746
OPERATING EXPENSES
Purchased power		890			906			1,820			1,770
Fuel		134			102			319			286
Gas purchased for resale		155			193			557			556
Other operations and maintenance		370			370			759			759
Depreciation and amortization		138			130			275			258
Taxes, other than income taxes		256			270			538			556
Income taxes		44			41			149			141
TOTAL OPERATING EXPENSES		1,987			2,012			4,417			4,326
OPERATING INCOME		182			164			437			420
OTHER INCOME (DEDUCTIONS)
Investment and other income		7			8			20			14
Allowance for equity funds used during construction		6			4			12			6
Other deductions		(3	)		(5	)		(6	)

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