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Variable Interest Entities | 9 Months Ended
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Sep. 30, 2021
Equity Method Investments and Joint Ventures [Abstract] |
Variable Interest Entities | Variable Interest Entities The accounting rules for consolidation address the consolidation of a variable interest entity (VIE) by a business enterprise that is the primary beneficiary. A VIE is an entity that does not have a sufficient equity investment at risk to permit it to finance its activities without additional subordinated financial support, or whose equity investors lack the characteristics of a controlling financial interest. The primary beneficiary is the business enterprise that has the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance and either absorbs a significant amount of the VIE’s losses or has the right to receive benefits that could be significant to the VIE. The Companies enter into arrangements including leases, partnerships and electricity purchase agreements, with various entities. As a result of these arrangements, the Companies retain or may retain a variable interest in these entities. CECONY CECONY has an ongoing long-term electricity purchase agreement with Brooklyn Navy Yard Cogeneration Partners, LP, a potential VIE. In 2020, a request was made of this counterparty for information necessary to determine whether the entity was a VIE and whether CECONY is the primary beneficiary; however, the information was not made available. The payments for this contract constitute CECONY’s maximum exposure to loss with respect to the potential VIE. Clean Energy Businesses In June 2021, a subsidiary of the Clean Energy Businesses sold substantially all of its membership interest in a renewable electric project, and retained an equity interest of $11 million i n the project which, as of September 30, 2021, is valued at $7 million and is accounted for as an equity method investment. See Note R. The earnings of the project are determined using the hypothetical liquidation at book value (HLBV) method of accounting, and such earnings were not material for the three and nine months ended September 30, 2021. Con Edison is not the primary beneficiary since the power to direct the activities that most significantly impact the economics of the renewable electric project is not held by the Clean Energy Businesses. In February 2021, a subsidiary of the Clean Energy Businesses entered into an agreement relating to certain projects (CED Nevada Virginia) with a noncontrolling tax equity investor to which a percentage of earnings, tax attributes and cash flows will be allocated. CED Nevada Virginia is a consolidated entity in which Con Edison has less than a 100 percent membership interest. Con Edison is the primary beneficiary since the power to direct the activities that most significantly impact the economics of CED Nevada Virginia during construction of the projects, and upon commercial operation, is held by the Clean Energy Businesses. For the three months ended September 30, 2021, the hypothetical liquidation at book value (HLBV) method of accounting for CED Nevada Virginia resulted in a $74 million loss ($56 million, after-tax) for the tax equity investor and an equivalent amount of income for Con Edison. For the nine months ended September 30, 2021, the HLBV method of accounting for CED Nevada Virginia resulted in a $127 million loss ($96 million, after tax) for the tax equity investor and an equivalent amount of income for Con Edison. In December 2018, the Clean Energy Businesses completed its acquisition of Sempra Solar Holdings, LLC. Included in the ac quisition were certain operating projects (Tax Equity Projects) with a noncontrolling tax equity investor to which a percentage of earnings, tax attributes and cash flows are allocated. The Tax Equity Projects are consolidated entities in which Con Edison has less than a 100 percent membership interest. Con Edison is the primary beneficiary since the power to direct the activities that most significantly impact the economics of the Tax Equity Projects is held by the Clean Energy Businesses. Electricity generated by the Tax Equity Projects is sold to utilities and municipalities pursuant to long-term power purchase agreements. For the three months ended September 30, 2021, the HLBV method of accounting for the Tax Equity Projects resulted in an immaterial amount of income for the tax equity investor and $14 million of income ($11 million, after-tax) for Con Edison. For the three months ended September 30, 2020, the HLBV method of accounting for the Tax Equity Projects resulted in $9 million of income ($7 million, after-tax) for the tax equity investor and $7 million of income ($5 million, after-tax) for Con Edison. For the nine months ended September 30, 2021, the HLBV method of accounting for the Tax Equity Projects resulted in $8 million of income ($6 million, after tax) for the tax equity investor and $27 million of income ($20 million, after tax) for Con Edison. For the nine months ended September 30, 2020, the HLBV method of accounting for the Tax Equity Projects resulted in $38 million of income ($29 million, after tax) for the tax equity investor and a $3 million loss ($2 million, after tax) for Con Edison. Con Edison has determined that the use of HLBV accounting is reasonable and appropriate to attribute income and loss to the tax equity investors. Using the HLBV method, the company's earnings from the projects are adjusted to reflect the income or loss allocable to the tax equity investors calculated based on how the project would allocate and distribute its cash if it were to sell all of its assets for their carrying amounts and liquidate at a particular point in time. Under the HLBV method, the company calculates the liquidation value allocable to the tax equity investors at the beginning and end of each period based on the contractual liquidation waterfall and adjusts its income for the period to reflect the change in the liquidation value allocable to the tax equity investors. At September 30, 2021 and December 31, 2020, Con Edison’s consolidated balance sheet included the following amounts associated with its VIEs:
| Tax Equity Projects |
| Great Valley Solar (c)(d) | Copper Mountain - Mesquite Solar (c)(e) | CED Nevada Virginia (c)(h)
(Millions of Dollars) | 2021 | 2020 | 2021 | 2020 | 2021
Non-utility property, less accumulated depreciation (f)(g) | $278 | $284 | $435 | $446 | $647
Other assets | 40 | 39 | 174 | 176 | 57
Total assets (a) | $318 | $323 | $609 | $622 | $704
Other liabilities | 14 | 13 | 79 | 71 | 328
Total liabilities (b) | $14 | $13 | $79 | $71 | $328
(a)The assets of the Tax Equity Projects and CED Nevada Virginia 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 CED Nevada Virginia represent liabilities of a consolidated VIE for which creditors do not have recourse to the general credit of the primary beneficiary. (c)Con Edison did not provide any financial or other support during the year that was not previously contractually required. (d)Great Valley Solar consists of the Great Valley Solar 1, Great Valley Solar 2, Great Valley Solar 3 and Great Valley Solar 4 projects, for which the noncontrolling interest of the tax equity investor was $88 million and $82 million at September 30, 2021 and December 31, 2020, respectively. (e)Copper Mountain - Mesquite Solar consists of the Copper Mountain Solar 4, Mesquite Solar 2 and Mesquite Solar 3 projects for which the noncontrolling interest of the tax equity investor was $122 million and $134 million at September 30, 2021 and December 31, 2020, respectively. (f)Non-utility property is reduced by accumulated depreciation of $24 million for Great Valley Solar, $40 million for Copper Mountain - Mesquite Solar, and $5 million for CED Nevada Virginia at September 30, 2021. (g)Non-utility property is reduced by accumulated depreciation of $18 million for Great Valley Solar and $30 million for Copper Mountain - Mesquite Solar at December 31, 2020. (h)CED Nevada Virginia consists of the Copper Mountain Solar 5, Battle Mountain Solar and Water Strider Solar projects for which the noncontrolling interest of the tax equity investor was $128 million at September 30, 2021.

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- Definition The entire disclosure for a variable interest entity (VIE), including but not limited to, judgments and assumptions in determining whether to consolidate and in identifying the primary beneficiary, gain (loss) recognized on the initial consolidation of the VIE, terms of arrangements, amounts and classification of the VIE's assets and liabilities, and the entity's maximum exposure to loss. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 810 -URI http://asc.fasb.org/topic&trid=2197479 + Details
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