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Income Tax | 9 Months Ended
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Sep. 30, 2021
Income Tax Disclosure [Abstract] |
Income Tax | Income Tax Con Edison’s income tax expense increased to $127 million for the three months ended September 30, 2021 from $119 million for the three months ended September 30, 2020. The increase in income tax expense is primarily due to lower income attributable to non-controlling interests, offset in part by lower income before income tax expense, lower state income taxes, an increase in the amortization of excess deferred federal income taxes due to the TCJA and a higher favorable tax adjustment for the prior year tax return primarily due to an increase in the general business tax credit compared with last year. CECONY’s income tax expense decreased to $90 million for the three months ended September 30, 2021 from $97 million for the three months ended September 30, 2020. The decrease in income tax expense is primarily due to an increase in the amortization of excess deferred federal income taxes due to the TCJA and a higher favorable tax adjustment for the prior year tax return primarily due to an increase in the general business tax credit compared with last year, offset in part by higher income before income tax expense and lower flow-through tax benefits in 2021 for plant-related items. Reconciliation of the difference between income tax expense and the amount computed by applying the prevailing statutory income tax rate to income before income taxes for the three months ended September 30, 2021 and 2020 is as follows:
| Con Edison | CECONY
(% of Pre-tax income) | 2021 | 2020 | 2021 | 2020
STATUTORY TAX RATE |  |  |  |
Federal | 21 | % | 21 | % | 21 | % | 21 | %
Changes in computed taxes resulting from: |  |  |  |
State income tax, net of federal income tax benefit | 5 |  | 6 |  | 5 |  | 5 |
Amortization of excess deferred federal income taxes | (7) |  | (7) |  | (8) |  | (8) |
Taxes attributable to non-controlling interests | 4 |  | (1) |  | — |  | — |
Cost of removal | 1 |  | 1 |  | 1 |  | 2 |
Other plant-related items | (1) |  | (1) |  | (1) |  | (1) |
Renewable energy credits | (1) |  | (1) |  | — |  | — |
Injuries and damages reserve | — |  | — |  | 1 |  | — |
Prior period federal income tax return adjustments | (1) |  | — |  | (1) |  | — |
Other | — |  | 1 |  | — |  | — |
Effective tax rate | 21 | % | 19 | % | 18 | % | 19 | %
Con Edison’s income tax expense increased to $194 million for the nine months ended September 30, 2021 from $183 million for the nine months ended September 30, 2020. The increase in income tax expense is primarily due to lower income attributable to non-controlling interests, offset in part by lower income before income tax expense, lower state income taxes, an increase in the amortization of excess deferred federal income taxes due to the TCJA and a higher favorable tax adjustment for the prior year tax return primarily due to an increase in the general business tax credit compared with last year. CECONY’s income tax expense decreased to $188 million for the nine months ended September 30, 2021 from $199 million for the nine months ended September 30, 2020. The decrease in income tax expense is primarily due to an increase in the amortization of excess deferred federal income taxes due to the TCJA, a higher favorable tax adjustment for the prior year tax return primarily due to an increase in the general business tax credit compared with last year, the absence of the amortization of excess deferred state income taxes in 2021, offset in part by higher income before income tax expense and lower flow-through tax benefits in 2021 for plant-related items. Reconciliation of the difference between income tax expense and the amount computed by applying the prevailing statutory income tax rate to income before income taxes for the nine months ended September 30, 2021 and 2020 is as follows:
| Con Edison | CECONY
(% of Pre-tax income) | 2021 | 2020 | 2021 | 2020
STATUTORY TAX RATE |  |  |  |
Federal | 21 | % | 21 | % | 21 | % | 21 | %
Changes in computed taxes resulting from: |  |  |  |
State income tax, net of federal income tax benefit | 5 |  | 5 |  | 5 |  | 5 |
Amortization of excess deferred federal income taxes | (11) |  | (10) |  | (11) |  | (10) |
Taxes attributable to non-controlling interests | 3 |  | (1) |  | — |  | — |
Cost of removal | 2 |  | 2 |  | 2 |  | 2 |
Other plant-related items | (1) |  | (1) |  | (1) |  | (2) |
Renewable energy credits | (2) |  | (2) |  | — |  | — |
Other | (1) |  | — |  | — |  | 1 |
Effective tax rate | 16 | % | 14 | % | 16 | % | 17 | %
In response to the economic impacts of the COVID-19 pandemic, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) was signed into law on March 27, 2020. The CARES Act provides relief to corporate taxpayers by permitting a five-year carryback of net operating losses (NOLs) for tax years 2018, 2019 and 2020, temporarily removing the 80 percent limitation when applying the NOLs to carryback years, increasing the 30 percent limitation on interest deductibility to 50 percent of adjusted taxable income for tax years 2019 and 2020, and provides for certain employee retention tax credits and refunds for eligible employers. Under the CARES Act, Con Edison carried back its $29 million NOL from tax year 2018 to tax year 2013 generating a $2.5 million net tax refund for which a tax receivable was established in 2020. In addition, Con Edison recognized a discrete income tax benefit of $4 million in 2020, due to the higher federal statutory tax rate in 2013. The 2018 federal NOL was recorded at 21 percent and will be carried back to tax year 2013, which had a 35 percent federal statutory tax rate. This tax benefit was primarily recognized at the Clean Energy Businesses. Pursuant to CECONY’s electric rate plan that went into effect in January 2020, the deferral of its net benefits for its electric service ceased and is included in rates. Additionally, the unprotected excess deferred federal income taxes for its electric and gas services is being amortized over a five-year period, which decreased the income tax expense for the nine months ended September 30, 2021 and 2020. See “Other Regulatory Matters” in Note B. In April 2021, New York State passed a law that increased the corporate franchise tax rate on business income from 6.5% to 7.25%, retroactive to January 1, 2021, for taxpayers with taxable income greater than $5 million. The law also reinstated the business capital tax at 0.1875%, not to exceed an annual maximum tax liability of $5 million per taxpayer. New York State requires a corporate franchise taxpayer to calculate and pay the highest amount of tax under the three alternative methods: a tax on business income; a tax on business capital; or a fixed dollar minimum. The provisions to increase the corporate franchise tax rate and reinstate a business capital tax are scheduled to expire after 2023 and are not expected to have a material impact on the Companies’ financial position, results of operations or liquidity. Uncertain Tax Positions At September 30, 2021, the estimated liability for uncertain tax positions for Con Edison was $17 million ($6 million for CECONY). Con Edison reasonably expects to resolve within the next twelve months approximately $3 million of various federal and state uncertainties due to the expected completion of ongoing tax examinations, of which the entire amount, if recognized, would reduce Con Edison's effective tax rate. The amount related to CECONY is $1 million, which, if recognized, would reduce CECONY’s effective tax rate. The total amount of unrecognized tax benefits, if recognized, that would reduce Con Edison’s effective tax rate is $17 million ($16 million, net of federal taxes) with $6 million attributable to CECONY. The Companies recognize interest on liabilities for uncertain tax positions in interest expense and would recognize penalties, if any, in operating expenses in the Companies’ consolidated income statements. For the nine months ended September 30, 2021, the Companies recognized an immaterial amount of interest expense and no penalties for uncertain tax positions in their consolidated income statements. At September 30, 2021 and December 31, 2020, the Companies recognized an immaterial amount of accrued interest on their consolidated balance sheets.

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- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 21 -URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32857-109319 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -URI http://asc.fasb.org/extlink&oid=122134291&loc=d3e330215-122817 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 17 -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32809-109319 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 6.I.5.Q1) -URI http://asc.fasb.org/extlink&oid=122134291&loc=d3e330036-122817 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 14 -URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32705-109319 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 270 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6424409&loc=d3e44925-109338 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 30 -Section 50 -Paragraph 2 -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(h)(2)) -URI http://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690 + Details
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