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Other Postretirement Benefits | 12 Months Ended
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Dec. 31, 2022
Retirement Benefits [Abstract] |
Other Postretirement Benefits | Other Postretirement Benefits The Utilities and Con Edison Transmission currently have contributory comprehensive hospital, medical and prescription drug programs for eligible retirees, their dependents and surviving spouses. CECONY also has a contributory life insurance program for bargaining unit employees and provides basic life insurance benefits up to a specified maximum at no cost to certain retired management employees. O&R has a non-contributory life insurance program for retirees. Certain employees of the Clean Energy Businesses and Con Edison Transmission are eligible to receive benefits under these programs. Total Periodic Benefit Cost The components of the Companies’ total periodic postretirement benefit costs for 2022, 2021 and 2020 were as follows:
| Con Edison | CECONY
(Millions of Dollars) | 2022 | 2021 | 2020 | 2022 | 2021 | 2020
Service cost | $18 | $22 | $21 | $15 | $16 | $16
Interest cost on accumulated other postretirement benefit obligation | 35 | 33 | 37 | 30 | 28 | 31
Expected return on plan assets | (72) | (68) | (66) | (58) | (56) | (54)
Recognition of net actuarial loss/(gain) | (14) | 31 | 37 | (9) | 27 | 36
Recognition of prior service credit | (1) | (3) | (3) | — | (1) | (2)
TOTAL PERIODIC POSTRETIREMENT BENEFIT COST/(CREDIT) | $(34) | $15 | $26 | $(22) | $14 | $27
Cost capitalized | (8) | (9) | (9) | (7) | (7) | (7)
Reconciliation to rate level | 29 | (7) | (17) | 24 | (12) | (25)
Total credit recognized | $(13) | ($1) |  | $— | $(5) | $(5) | $(5)
For information about the presentation of the components of net periodic benefit cost and disclosure requirements, see Note E. Funded Status The funded status of the programs at December 31, 2022, 2021 and 2020 were as follows:
| Con Edison | CECONY
(Millions of Dollars) | 2022 | 2021 | 2020 | 2022 | 2021 | 2020
CHANGE IN BENEFIT OBLIGATION |  |  |  |  |  |
Benefit obligation at beginning of year | $1,398 | $1,425 | $1,357 | $1,189 | $1,209 | $1,154
Service cost | 18 | 22 | 21 | 15 | 16 | 16
Interest cost on accumulated postretirement benefit obligation | 35 | 33 | 37 | 30 | 28 | 31
Net actuarial loss/(gain) | (311) | (13) | 74 | (239) | (3) | 63
Benefits paid and administrative expenses, net of subsidies | (130) | (117) | (117) | (121) | (107) | (107)
Participant contributions | 48 | 48 | 53 | 47 | 46 | 52
BENEFIT OBLIGATION AT END OF YEAR | $1,058 | $1,398 | $1,425 | $921 | $1,189 | $1,209
CHANGE IN PLAN ASSETS |  |  |  |  |  |
Fair value of plan assets at beginning of year | $1,150 | $1,115 | $1,026 | $955 | $940 | $872
Actual return on plan assets | (225) | 92 | 142 | (187) | 67 | 117
Employer contributions | 13 | 6 | 7 | 10 | 3 | 4
Employer group waiver plan subsidies | 55 | 21 | 20 | 50 | 19 | 19
Participant contributions | 48 | 48 | 53 | 47 | 46 | 51
Benefits paid | (181) | (132) | (133) | (167) | (120) | (123)
FAIR VALUE OF PLAN ASSETS AT END OF YEAR | $860 | $1,150 | $1,115 | $708 | $955 | $940
FUNDED STATUS | $(198) | $(248) | $(310) | $(213) | $(234) | $(269)
Unrecognized net loss/(gain) | $37 | $41 | $115 | $78 | $67 | $114
Unrecognized prior service costs | (12) | (13) | (16) | — |  | — | (1)
The decrease in the other postretirement benefits funded status liability at December 31, 2022 for Con Edison and CECONY of $50 million and $21 million, respectively, compared with December 31, 2021, was primarily due to a decrease in the plans' projected benefit obligation as a result of an increase in the discount rate, which more than offset the decrease in the fair value of plan assets as a result of the actual return on plan assets. See below for further information on the change in the discount rate and see Note E for determination of the discount rate assumption. The decrease in the other postretirement benefits funded status liability at December 31, 2021 for Con Edison and CECONY of $62 million and $35 million, respectively, compared with December 31, 2020, was primarily due to an increase in the fair value of plan assets as a result of the actual return on plan assets, along with a decrease in the plans' projected benefit obligation as a result of an increase in the discount rate. For 2022, included within the funded status are noncurrent assets of $72 million and $27 million for Con Edison and CECONY, respectively. For 2021, included within the funded status are noncurrent assets of $79 million and $55 million for Con Edison and CECONY, respectively. For Con Edison, the decrease in funded status liability at December 31, 2022 corresponds with a net decrease to regulatory assets of $2 million for unrecognized net losses and unrecognized prior service costs associated with the Utilities consistent with the accounting rules for regulated operations, a credit to OCI of $2 million (net of taxes) for the unrecognized net losses and an immaterial change to OCI for the unrecognized prior service costs associated with the Clean Energy Businesses, Con Edison Transmission, and RECO. For CECONY, the decrease in funded status liability at December 31, 2022 corresponds with an increase to regulatory assets of $11 million for unrecognized net losses and the unrecognized prior service costs associated with the company consistent with the accounting rules for regulated operations, a credit to OCI of $1 million (net of taxes) for the unrecognized net losses and an immaterial change to OCI for the unrecognized prior service costs associated with eligible employees of the Clean Energy Businesses and Con Edison Transmission who previously worked for CECONY. Assumptions The actuarial assumptions were as follows:
| 2022 | 2021 | 2020
Weighted-average assumptions used to determine benefit obligations at December 31: |  |  |
Discount Rate |  |  |
CECONY | 5.35 | % | 2.75 | % | 2.25 | %
O&R | 5.45 | % | 3.00 | % | 2.55 | %
Weighted-average assumptions used to determine net periodic benefit cost for the years ended December 31: |  |  |
Discount Rate |  |  |
CECONY | 2.75 | % | 2.25 | % | 3.10 | %
O&R | 3.00 | % | 2.55 | % | 3.35 | %
Expected Return on Plan Assets | 6.80 | % | 6.80 | % | 6.80 | %
Refer to Note E for descriptions of the basis for determining the expected return on assets, investment policies and strategies and the assumed discount rate. The health care cost trend rates for covered medical and prescription medication expenses used to determine the accumulated other postretirement benefit obligations (APBO) at December 31, 2022 were assumed to increase each year, with the initial rate gradually decreasing to the ultimate rate as follows:
| Initial Cost Trend Rate | Ultimate Cost Trend Rate | Year That Ultimate Rate is Reached
Pre-65 Medical | 7.00% | 4.50% | 2036
Post-65 Medical | 4.50% | 4.50% | —
Prescription Medications | 7.50% | 4.50% | 2035
Expected Benefit Payments Based on current assumptions, the Companies expect to make the following benefit payments over the next ten years, net of receipt of governmental subsidies and participant contributions:
(Millions of Dollars) | 2023 | 2024 | 2025 | 2026 | 2027 | 2028-2032
Con Edison | $79 | $80 | $85 | $86 | $87 | $430
CECONY | 71 | 71 | 76 | 77 | 78 | 384
Expected Contributions Based on estimates as of December 31, 2022, Con Edison expects to make a contribution of $1 million (all of which is expected to be made by CECONY) to the other postretirement benefit plans in 2023. The Companies’ policy is to fund the total periodic benefit cost of the plans to the extent tax deductible. Plan Assets The asset allocations for CECONY’s other postretirement benefit plans at the end of 2022, 2021 and 2020, and the target allocation for 2023 are as follows:
| Target Allocation Range | Plan Assets at December 31,
Asset Category | 2023 | 2022 | 2021 |  | 2020
Equity Securities | 42%-80% | 49 | % | 55 | % |  | 54 | %
Debt Securities | 20%-58% | 51 | % | 45 | % |  | 46 | %
Total | 100% | 100 | % | 100 | % |  | 100 | %
Con Edison has established postretirement health and life insurance benefit plan trusts for the investment of assets to be used for the exclusive purpose of providing other postretirement benefits to participants and beneficiaries. Refer to Note E for a discussion of Con Edison’s investment policy for its benefit plans. The fair values of the plans' assets at December 31, 2022 by asset category as defined by the accounting rules for fair value measurements (see Note R) are as follows:
(Millions of Dollars) | Level 1 |  | Level 2 |  | Total
Equity (a) | $— |  |  | $339 |  | $339
Other Fixed Income Debt (b) | 10 |  |  | 275 |  | 285
Cash and Cash Equivalents (c) | — |  |  | 25 |  | 25
Total investments | $10 |  |  | $639 |  | $649
Funds for retiree health benefits (d) | 48 |  |  | 91 |  | 139
Investments (including funds for retiree health benefits) | $58 |  |  | $730 |  | $788
Funds for retiree health benefits measured at net asset value (d)(e) |  |  |  |  | 51
Pending activities (f) |  |  |  |  | 21
Total fair value of plan net assets |  |  |  |  | $860
(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. The fair values of the plans' assets at December 31, 2021 by asset category (see Note R) are as follows:
(Millions of Dollars) | Level 1 |  | Level 2 |  | Total
Equity (a) | $— |  |  | $474 |  | $474
Other Fixed Income Debt (b) | — |  |  | 379 |  | 379
Cash and Cash Equivalents (c) | — |  |  | 22 |  | 22
Total investments | $— |  |  | $875 |  | $875
Funds for retiree health benefits (d) | 110 |  |  | 100 |  | 210
Investments (including funds for retiree health benefits) | $110 |  |  | $975 |  | $1,085
Funds for retiree health benefits measured at net asset value (d)(e) |  |  |  |  | 48
Pending activities (f) |  |  |  |  | 17
Total fair value of plan net assets |  |  |  |  | $1,150
(a) - (f) Reference is made to footnotes (a) through (f) in the above table of other postretirement benefit plan assets at December 31, 2022 by asset category.

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- Definition The entire disclosure for postemployment benefits, which may include supplemental unemployment benefits, obligations recognized for all types of benefits provided to former or inactive employees, their beneficiaries, and covered dependents after employment but before retirement. Disclosure may also include discussion that an obligation for postemployment benefits is not accrued in accordance with regulation only because the amount cannot be reasonably estimated. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 712 -SubTopic 10 -Section 50 -Paragraph 2 -URI https://asc.fasb.org/extlink&oid=6410195&loc=d3e80090-111668 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 712 -URI https://asc.fasb.org/topic&trid=2197446 + Details
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