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Regulatory Matters (Tables) | 12 Months Ended
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Dec. 31, 2019
Regulated Operations [Abstract] |
Summary of Utilities Rate Plans | The following tables contain a summary of the Utilities’ rate plans:
CECONY – Electric |  |  |  |
Effective period |  | January 2017 – December 2019 |  | January 2020 – December 2022 (a)
Base rate changes |  | Yr. 1 – $195 million (b) Yr. 2 – $155 million (b) Yr. 3 – $155 million (b) |  | Yr. 1 – $113 million (c) Yr. 2 – $370 million (c) Yr. 3 – $326 million (c)
Amortizations to income of net regulatory (assets) and liabilities |  | Yr. 1 – $84 million Yr. 2 – $83 million Yr. 3 – $69 million |  | Yr. 1 – $267 million (d) Yr. 2 – $269 million (d) Yr. 3 – $272 million (d)
Other revenue sources |  | 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, 2018 and 2019, the company recorded $13 million, $25 million and $43 million of earnings adjustment mechanism incentives for energy efficiency, respectively. The company also achieved $5 million of incentives for service terminations in 2017, 2018 and 2019 that, pursuant to the rate plan, is being recorded ratably in earnings from 2018 to 2020. In 2018 and 2019, the company recorded $3 million and $7 million of incentives for service terminations, respectively. |  | 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 - $69 million Yr. 2 - $74 million Yr. 3 - $79 million
Revenue decoupling mechanisms |  | Continuation of reconciliation of actual to authorized electric delivery revenues. In 2017, 2018 and 2019, the company deferred for customer benefit $45 million, $(6) million and $169 million of revenues, respectively. |  | Continuation of reconciliation of actual to authorized electric delivery revenues.
Recoverable energy costs |  | Continuation of current rate recovery of purchased power and fuel costs. |  | Continuation of current rate recovery of purchased power and fuel costs.
Negative revenue adjustments |  | Potential charges 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. In 2019, the company recorded negative revenue adjustments of $15 million. |  | Potential charges if certain performance targets relating to service, reliability, safety and other matters are not met: Yr. 1 - $450 million Yr. 2 - $461 million Yr. 3 - $476 million
Cost reconciliations |  | Continuation of reconciliation of expenses for pension and other postretirement benefits, variable-rate tax-exempt debt, major storms, property taxes (e), municipal infrastructure support costs (f), the impact of new laws and environmental site investigation and remediation to amounts reflected in rates (g). In 2017, 2018 and 2019, the company deferred $35 million, $189 million and $10 million of net regulatory assets, respectively. |  | Continuation of reconciliation of expenses for pension and other postretirement benefits, variable-rate debt, major storms, property taxes (e), municipal infrastructure support costs (f), the impact of new laws and environmental site investigation and remediation to amounts reflected in rates. (g)
Net utility plant reconciliations |  | 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 and 2019, $0.4 and $11.8 million was deferred as a regulatory liability, respectively. |  | Target levels reflected in rates: Electric average net plant target excluding advanced metering infrastructure (AMI): Yr. 1 - $24,491 million Yr. 2 - $25,092 million Yr. 3 - $25,708 million AMI: Yr. 1 - $572 million Yr. 2 - $740 million Yr. 3 - $806 million (h)
Average rate base |  | Yr. 1 – $18,902 million Yr. 2 – $19,530 million Yr. 3 – $20,277 million |  | Yr. 1 - $21,660 million Yr. 2 - $22,783 million Yr. 3 - $23,926 million
Weighted average cost of capital (after-tax) |  | Yr. 1 – 6.82 percent Yr. 2 – 6.80 percent Yr. 3 – 6.73 percent |  | 6.61 percent
Authorized return on common equity |  | 9.0 percent |  | 8.80 percent
Actual return on common equity (i) |  | Yr. 1 – 9.30 percent Yr. 2 – 9.36 percent Yr. 3 – 8.82 percent |  |
Earnings sharing |  | 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 and 2019, the company had no earnings sharing above the threshold. |  | Most earnings above an annual earnings threshold of 9.3 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 – 4.93 percent Yr. 2 – 4.88 percent Yr. 3 – 4.74 percent |  | 4.63 percent
Common equity ratio |  | 48 percent |  | 48 percent
(a) | In January 2020, the NYSPSC approved the October 2019 Joint Proposal for CECONY's electric rate plan for January 2020 through December 2022. If at the end of any semi-annual period ending June 30 and December 31, Con Edison’s investments in its non-utility businesses exceed 15 percent of its 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.
(b) | The electric base rate increases were 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 were 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 10-year period, including the overall pre-tax rate of return on such costs.
(c) | Base rates reflect recovery by the company of certain costs of its energy efficiency, Reforming the Energy Vision demonstration projects, non-wire alternative projects (including the Brooklyn Queens demand management program), and off-peak electric vehicle charging programs (Yr. 1 - $206 million; Yr. 2 - $245 million; and Yr. 3 - $251 million) over a ten-year period, including the overall pre-tax rate of return on such costs.
(d) | Amounts reflect amortization of the 2018 tax savings under the federal Tax Cuts and Jobs Act of 2017 (TCJA) allocable to CECONY’s electric customers ($377 million) over a three-year period ($126 million annually), the protected portion of the regulatory liability for excess deferred income taxes allocable to CECONY’s electric customers ($1,663 million) over the remaining lives of the related assets ($49 million in Yr. 1, $50 million in Yr. 2, and $53 million in Yr. 3) and the unprotected portion of the net regulatory liability ($784 million) over five years ($157 million annually). Amounts also reflect amortization of the regulatory asset for deferred MTA power reliability costs ($238 million) over a five-year period ($48 million annually).
(e) | 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.
(f) | 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, subject to certain conditions, of
30 percent of the amount reflected in the January 2017-December 2019 rate plan and 15 percent of the amount reflected in the January 2020-December 2022 rate plan.
(g) | In addition, the NYSPSC staff has commenced a focused operations audit to investigate the income tax accounting of CECONY and other New York utilities. Any NYSPSC-ordered adjustment to CECONY’s income tax accounting will be refunded to or collected from customers, as determined by the NYSPSC. See "Other Regulatory Matters," below.
(h) | Reconciliation of net utility plant for AMI will be done on a combined basis for electric and gas.
(i) | Calculated in accordance with the earnings calculation method prescribed in the rate order.
CECONY – Gas |  |  |  |
Effective period |  | January 2017 - December 2019 |  | January 2020 – December 2022 (a)
Base rate changes |  | Yr. 1 – $(5) million (b) Yr. 2 – $92 million Yr. 3 – $90 million |  | Yr. 1 – $84 million (c) Yr. 2 – $122 million (c) Yr. 3 – $167 million (c)
Amortizations to income of net regulatory (assets) and liabilities |  | Yr. 1 – $39 million Yr. 2 – $37 million Yr. 3 – $36 million |  | Yr. 1 – $45 million (d) Yr. 2 – $43 million (d) Yr. 3 – $10 million (d)
Other revenue sources |  | 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, 2018 and 2019, the company achieved incentives of $7 million, $6 million and $7 million, respectively, that, pursuant to the rate plan, is being recorded ratably in earnings from 2018 to 2020. In 2018 and 2019, the company recorded incentives of $5 million and $9 million, respectively, for gas leak backlog, leak prone pipe and service terminations. |  | Retention of annual revenues from non-firm customers of up to $65 million and 15 percent of any such revenues above $65 million. Potential earnings adjusted mechanism incentives for energy efficiency and other potential incentives of up to: Yr. 1 - $20 million Yr. 2 - $22 million Yr. 3 - $25 million
Revenue decoupling mechanisms |  | Continuation of reconciliation of actual to authorized gas delivery revenues. In 2017, 2018 and 2019, the company deferred $3 million, $12 million and $10 million of regulatory liabilities, respectively. |  | Continuation of reconciliation of actual to authorized gas delivery revenues, modified to be calculated based upon revenue per customer class instead of revenue per customer.
Recoverable energy costs |  | Continuation of current rate recovery of purchased gas costs. |  | Continuation of current rate recovery of purchased gas costs.
Negative revenue adjustments |  | Potential charges 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 negative revenue adjustments of $5 million and $4 million, respectively. In 2019, the company did not record any negative revenue adjustments. |  | Potential charges if performance targets relating to service, safety and other matters are not met: Yr. 1 - $81 million Yr. 2 - $88 million Yr. 3 - $96 million
Cost reconciliations |  | Continuation of reconciliation of expenses for pension and other postretirement benefits, variable-rate tax-exempt debt, major storms, property taxes (e), municipal infrastructure support costs (f), the impact of new laws and environmental site investigation and remediation to amounts reflected in rates. (g) In 2017, 2018 and 2019, the company deferred $2 million of net regulatory liabilities, $44 million of net regulatory assets and $18 million of net regulatory assets, respectively. |  | Continuation of reconciliation of expenses for pension and other postretirement benefits, variable-rate debt, major storms, property taxes (e), municipal infrastructure support costs (f), the impact of new laws and environmental site investigation and remediation to amounts reflected in rates. (g)
Net utility plant reconciliations |  | 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. In 2019, the company deferred $1.7 million as a regulatory liability. |  | Target levels reflected in rates: Gas average net plant target excluding AMI: Yr. 1 - $8,108 million Yr. 2 - $8,808 million Yr. 3 - $9,510 million AMI: Yr. 1 - $142 million Yr. 2 - $183 million Yr. 3 - $211 million (h)
Average rate base |  | Yr. 1 – $4,841 million Yr. 2 – $5,395 million Yr. 3 – $6,005 million |  | Yr. 1 - $7,171 million Yr. 2 - $7,911 million Yr. 3 - $8,622 million
Weighted average cost of capital (after-tax) |  | Yr. 1 – 6.82 percent Yr. 2 – 6.80 percent Yr. 3 – 6.73 percent |  | 6.61 percent
Authorized return on common equity |  | 9.0 percent |  | 8.80 percent
Actual return on common equity (i) |  | Yr. 1 – 9.22 percent Yr. 2 – 9.04 percent Yr. 3 – 8.72 percent |  |
Earnings sharing |  | 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, 2018 and 2019, the company had no earnings above the threshold. |  | Most earnings above an annual earnings threshold of 9.3 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 – 4.93 percent Yr. 2 – 4.88 percent Yr. 3 – 4.74 percent |  | 4.63 percent
Common equity ratio |  | 48 percent |  | 48 percent
(a) | In January 2020, the NYSPSC approved the October 2019 Joint Proposal for CECONY's gas rate plan for January 2020 through December 2022. If at the end of any semi-annual period ending June 30 and December 31, Con Edison’s investments in its non-utility businesses exceed 15 percent of its 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.
(b) | The gas base rate decrease was offset by a $41 million increase resulting from the December 2016 expiration of a temporary credit under the prior rate plan.
(c) | The gas base rate increases shown above will be implemented with increases of $47 million in Yr. 1; $176 million in Yr. 2; and $170 million in Yr. 3 in order to levelize customer bill impacts. Base rates reflect recovery by the company of certain costs of its energy efficiency program (Yr. 1 - $30 million; Yr. 2 - $37 million; and Yr. 3 - $40 million) over a ten-year period, including the overall pre-tax rate of return on such costs.
(d) | Amounts reflect amortization of the remaining 2018 TCJA tax savings allocable to CECONY’s gas customers ($63 million) over a two year period ($32 annually), the protected portion of the regulatory liability for excess deferred income taxes allocable to CECONY’s gas customers ($725 million) over the remaining lives of the related assets ($14 million in Yr. 1, $14 million in Yr. 2, and $12 million in Yr. 3) and the unprotected portion of the net regulatory liability ($107 million) over five years ($21 million annually)
(e)-(i) | See footnotes (e) - (i) to the table under “CECONY Electric,” above.
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 Yr. 6 – 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 charges (up to $1 million annually) if certain steam performance targets are not met. In years 2014 through 2019, the company did not record any negative revenue adjustments. |  |
Cost reconciliations (c) |  | In 2014, 2015, 2016, 2017, 2018 and 2019, the company deferred $42 million of net regulatory liabilities, $17 million of net regulatory assets, $8 million and $14 million of net regulatory liabilities, $1 million of net regulatory assets and $8 million of net regulatory liabilities, 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, 2018 and 2019. |  |
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 (d) |  | 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 Yr. 6 – 10.45 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 $16.5 million above the threshold, and an additional $1.1 million related to 2017 was recorded. In 2019 actual earnings were $5 million above the threshold, offset in part by an adjustment related to 2018 of $2.3 million. |  |
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.
(d) | Calculated in accordance with the earnings calculation method prescribed in the rate order.
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 Yr. 3 - $4.2 million Potential incentive if performance target related to service terminations is met: $0.5 million annually. In 2019, the company recorded $2.6 million of earnings adjustment mechanism incentives for energy efficiency and $0.2 million of incentives for service terminations.
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. In 2019 the company deferred $0.1 million as a regulatory asset.
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 charges (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 charges if certain performance targets relating to service, reliability and other matters are not met: Yr. 1 - $4.4 million Yr. 2 - $4.4 million Yr. 3 - $4.5 million In 2019, the company did not record any negative revenue adjustments.
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) In 2019, the company deferred $4.3 million as a net regulatory asset.
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 The company increased regulatory asset by an immaterial amount in 2019.
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 |  | 9.0 percent
Actual return on common equity (k) |  | Yr. 1 – 10.8 percent Yr. 2 – 9.7 percent Yr. 3 – 7.2 percent |  | Yr. 1 – 9.6 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. In 2019, earnings did not exceed the earnings threshold.
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 continued in effect until the subsequent rate plan became effective.
(b) | $59.3 million of the regulatory asset for deferred storm costs is to be recovered from customers over a 5 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 electric base rate increases shown above will 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.
(k) | Calculated in accordance with the earnings calculation method prescribed in the rate order.
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. In 2019, the company recorded $0.3 million of earnings adjustment mechanism incentives for energy efficiency and $0.7 million of incentives for gas leak backlog, leak prone pipe and service terminations.
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. In 2019, the company deferred $0.8 million of regulatory assets.
Recoverable energy costs |  | Current rate recovery of purchased gas costs. |  | Continuation of current rate recovery of purchased gas costs.
Negative revenue adjustments |  | Potential charges (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 charges 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. In 2019, the company recorded a $0.2 million negative revenue adjustment.
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) In 2019, the company deferred $6 million as net regulatory liabilities.
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 In 2019, the company deferred an immaterial amount as regulatory asset.
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 |  | 9.0 percent
Actual return on common equity (k) |  | Yr. 1 – 11.2 percent Yr. 2 – 9.7 percent Yr. 3 – 8.1 percent |  | Yr. 1 – 8.9 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. In 2019, earnings did not exceed the earnings threshold.
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 continued in effect until the subsequent rate plan became effective.
(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.
(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 gas base rate changes shown above will be implemented with changes of: Yr. 1 - $(5.9) million; Yr. 2 - $1.0 million; and Yr. 3 - $1.0 million.
(f)-(k) See footnotes (f) - (k) to the table under “O&R New York - Electric,” above. In January 2020, the NJBPU approved an electric rate increase, effective February 1, 2020, of $12 million for RECO. The following table contains a summary of the terms of the distribution rate plans.
RECO |  |  |  |
Effective period |  | March 2017 – January 2020 |  | February 2020
Base rate changes |  | Yr. 1 – $1.7 million |  | Yr. 1 – $12 million
Amortization to income of net regulatory (assets) and liabilities |  | $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 (a) |  | $4.8 million over four years.
Recoverable energy costs |  | Current rate recovery of purchased power costs. |  | Current rate recovery of purchased power costs.
Cost reconciliations |  | None |  | None
Average rate base |  | Yr. 1 – $178.7 million |  | Yr. 1 – $229.9 million
Weighted average cost of capital (after-tax) |  | 7.47 percent |  | 7.11 percent
Authorized return on common equity |  | 9.6 percent |  | 9.5 percent
Actual return on common equity |  | Yr. 1 – 7.5 percent Yr. 2 – 5.7 percent |  |
Cost of long-term debt |  | 5.37 percent |  | 4.88 percent
Common equity ratio |  | 49.7 percent |  | 48.32 percent
(a) | 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.
Schedule of Regulatory Assets | Regulatory Assets and Liabilities Regulatory assets and liabilities at December 31, 2019 and 2018 were comprised of the following items:
| Con Edison | CECONY
(Millions of Dollars) | 2019 |  | 2018 | 2019 |  | 2018 |
Regulatory assets |  |  |  |
Unrecognized pension and other postretirement costs | $2,541 | $2,238 | $2,403 | $2,111
Environmental remediation costs | 732 | 810 | 647 | 716
Revenue taxes | 321 | 291 | 308 | 278
MTA power reliability deferral | 248 | 229 | 248 | 229
Property tax reconciliation | 219 | 101 | 210 | 86
System peak reduction and energy efficiency programs | 131 | 72 | 130 | 70
Deferred derivative losses | 83 | 17 | 76 | 11
Municipal infrastructure support costs | 75 | 67 | 75 | 67
Pension and other postretirement benefits deferrals | 71 | 73 | 47 | 56
Deferred storm costs | 77 | 76 | — |  | — |
Brooklyn Queens demand management program | 39 | 39 | 39 | 39
Meadowlands heater odorization project | 35 | 36 | 35 | 36
Unamortized loss on reacquired debt | 28 | 36 | 26 | 34
Preferred stock redemption | 22 | 23 | 22 | 23
Recoverable REV demonstration project costs | 21 | 20 | 19 | 18
Gate station upgrade project | 19 | 17 | 19 | 17
Non-wire alternative projects | 14 | 3 | 14 | 3
Workers’ compensation | 3 | 5 | 3 | 5
O&R transition bond charges | — |  | 2 | — |  | — |
Other | 180 | 139 | 166 | 124
Regulatory assets – noncurrent | 4,859 | 4,294 | 4,487 | 3,923
Deferred derivative losses | 128 | 36 | 113 | 29
Recoverable energy costs | — |  | 40 | — |  | 35
Regulatory assets – current | 128 | 76 | 113 | 64
Total Regulatory Assets | $4,987 | $4,370 | $4,600 | $3,987
Regulatory liabilities |  |  |  |
Future income tax* | $2,426 | $2,515 | $2,275 | $2,363
Allowance for cost of removal less salvage | 989 | 928 | 843 | 790
TCJA net benefits | 471 | 434 | 454 | 411
Net unbilled revenue deferrals | 199 | 117 | 199 | 117
Net proceeds from sale of property | 173 | 6 | 173 | 6
Energy efficiency portfolio standard unencumbered funds | 122 | 127 | 118 | 122
Pension and other postretirement benefit deferrals | 75 | 62 | 46 | 40
System benefit charge carrying charge | 48 | 27 | 44 | 24
Property tax refunds | 45 | 45 | 45 | 45
BQDM and REV Demo reconciliations | 27 | 18 | 26 | 18
Earnings sharing - electric, gas and steam | 22 | 36 | 15 | 27
Settlement of gas proceedings | 10 | 15 | 10 | 15
Unrecognized other postretirement costs | 9 | 7 | — |  | 7
Settlement of prudence proceeding | 8 | 37 | 8 | 37
Property tax reconciliation | — |  | 36 | — |  | 36
Other | 203 | 231 | 171 | 200
Regulatory liabilities – noncurrent | 4,827 | 4,641 | 4,427 | 4,258
Refundable energy costs | 44 | 31 | 12 | 8
Deferred derivative gains | 34 | 30 | 34 | 29
Revenue decoupling mechanism | 24 | 53 | 17 | 36
Regulatory liabilities—current | 102 | 114 | 63 | 73
Total Regulatory Liabilities | $4,929 | $4,755 | $4,490 | $4,331
* See "Federal Income Tax" in Note A, "Other Regulatory Matters," above, and Note L.
Schedule of Regulatory Liabilities | Regulatory Assets and Liabilities Regulatory assets and liabilities at December 31, 2019 and 2018 were comprised of the following items:
| Con Edison | CECONY
(Millions of Dollars) | 2019 |  | 2018 | 2019 |  | 2018 |
Regulatory assets |  |  |  |
Unrecognized pension and other postretirement costs | $2,541 | $2,238 | $2,403 | $2,111
Environmental remediation costs | 732 | 810 | 647 | 716
Revenue taxes | 321 | 291 | 308 | 278
MTA power reliability deferral | 248 | 229 | 248 | 229
Property tax reconciliation | 219 | 101 | 210 | 86
System peak reduction and energy efficiency programs | 131 | 72 | 130 | 70
Deferred derivative losses | 83 | 17 | 76 | 11
Municipal infrastructure support costs | 75 | 67 | 75 | 67
Pension and other postretirement benefits deferrals | 71 | 73 | 47 | 56
Deferred storm costs | 77 | 76 | — |  | — |
Brooklyn Queens demand management program | 39 | 39 | 39 | 39
Meadowlands heater odorization project | 35 | 36 | 35 | 36
Unamortized loss on reacquired debt | 28 | 36 | 26 | 34
Preferred stock redemption | 22 | 23 | 22 | 23
Recoverable REV demonstration project costs | 21 | 20 | 19 | 18
Gate station upgrade project | 19 | 17 | 19 | 17
Non-wire alternative projects | 14 | 3 | 14 | 3
Workers’ compensation | 3 | 5 | 3 | 5
O&R transition bond charges | — |  | 2 | — |  | — |
Other | 180 | 139 | 166 | 124
Regulatory assets – noncurrent | 4,859 | 4,294 | 4,487 | 3,923
Deferred derivative losses | 128 | 36 | 113 | 29
Recoverable energy costs | — |  | 40 | — |  | 35
Regulatory assets – current | 128 | 76 | 113 | 64
Total Regulatory Assets | $4,987 | $4,370 | $4,600 | $3,987
Regulatory liabilities |  |  |  |
Future income tax* | $2,426 | $2,515 | $2,275 | $2,363
Allowance for cost of removal less salvage | 989 | 928 | 843 | 790
TCJA net benefits | 471 | 434 | 454 | 411
Net unbilled revenue deferrals | 199 | 117 | 199 | 117
Net proceeds from sale of property | 173 | 6 | 173 | 6
Energy efficiency portfolio standard unencumbered funds | 122 | 127 | 118 | 122
Pension and other postretirement benefit deferrals | 75 | 62 | 46 | 40
System benefit charge carrying charge | 48 | 27 | 44 | 24
Property tax refunds | 45 | 45 | 45 | 45
BQDM and REV Demo reconciliations | 27 | 18 | 26 | 18
Earnings sharing - electric, gas and steam | 22 | 36 | 15 | 27
Settlement of gas proceedings | 10 | 15 | 10 | 15
Unrecognized other postretirement costs | 9 | 7 | — |  | 7
Settlement of prudence proceeding | 8 | 37 | 8 | 37
Property tax reconciliation | — |  | 36 | — |  | 36
Other | 203 | 231 | 171 | 200
Regulatory liabilities – noncurrent | 4,827 | 4,641 | 4,427 | 4,258
Refundable energy costs | 44 | 31 | 12 | 8
Deferred derivative gains | 34 | 30 | 34 | 29
Revenue decoupling mechanism | 24 | 53 | 17 | 36
Regulatory liabilities—current | 102 | 114 | 63 | 73
Total Regulatory Liabilities | $4,929 | $4,755 | $4,490 | $4,331
* See "Federal Income Tax" in Note A, "Other Regulatory Matters," above, and Note L.

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