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Income Tax | 6 Months Ended
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Jun. 30, 2024
Income Tax Disclosure [Abstract] |
Income Tax | Income Tax Con Edison’s income tax expense (benefit) was ($10 million) and $29 million, respectively, for the three months ended June 30, 2024 and June 30, 2023. The decrease in income tax expense is primarily due to lower income before income tax expense, lower state income taxes from a reduction in the Company’s New York State apportionment factor from its investment in Mountain Valley Pipeline going into service, higher flow-through tax benefits in 2024 for plant-related items, the absence in 2024 of a remeasurement of state deferred income tax assets and liabilities as a result of New York State legislation enacted in 2023 and higher amortization of excess deferred federal income taxes. CECONY’s income tax expense was $1 million and $34 million, respectively, for the three months ended June 30, 2024 and June 30, 2023. The decrease in income tax expense is primarily due to lower income before income tax expense, the absence in 2024 of a remeasurement of state deferred income tax assets and liabilities as a result of New York State legislation enacted in 2023, higher flow-through tax benefits in 2024 for plant-related items and higher amortization of excess deferred federal income taxes. 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 June 30, 2024 and 2023 is as follows:
| For the Three Months Ended June 30, |  |
| Con Edison | CECONY |  |
(% of Pre-tax income) | 2024 | 2023 | 2024 | 2023 |  |
STATUTORY TAX RATE |  |  |  |  |  |
Federal | 21 | % | 21 | % | 21 | % | 21 | % |  |
Changes in computed taxes resulting from: |  |  |  |  |  |
State income tax, net of federal income taxes | 1 |  | 2 |  | 4 |  | 5 |  |  |
Amortization of excess deferred federal income taxes | (27) |  | (17) |  | (27) |  | (18) |  |  |
Cost of removal | 4 |  | 4 |  | 4 |  | 4 |  |  |
Other plant-related items | (4) |  | (1) |  | (2) |  | (1) |  |  |
Renewable energy credits | — |  | (1) |  | — |  | — |  |  |
Injuries and damages reserve | — |  | 1 |  | — |  | 1 |  |  |
Remeasurement of deferred NYS income taxes, net of federal income taxes | — |  | 4 |  | — |  | 4 |  |  |
Research and development credits | — |  | (1) |  | (1) |  | (1) |  |  |
Other | — |  | — |  | 1 |  | — |  |  |
Effective tax rate | (5 | %) | 12 | % | — |  | 15 | % |  |
Con Edison’s income tax expense was $174 million and $272 million, respectively, for the six months ended June 30, 2024 and June 30, 2023. The decrease in income tax expense is primarily due to lower income before income tax expense, primarily due to the prior year gain on the sale of all of the stock of the Clean Energy Businesses, the absence in 2024 of a remeasurement of state deferred income tax assets and liabilities as a result of New York State legislation enacted in 2023 and higher amortization of excess deferred federal income taxes, offset in part by the absence of a tax benefit from the recognition of deferred unamortized investment tax credits and lower state taxes due to change in state apportionments, both related to the sale of all of the stock of the Clean Energy Businesses in 2023. CECONY’s income tax expense was $182 million and $189 million, respectively, for the six months ended June 30, 2024 and June 30, 2023. The decrease in income tax expense is primarily due to the absence in 2024 of a remeasurement of state deferred income tax assets and liabilities as a result of New York State legislation enacted in 2023, higher amortization of excess deferred federal income taxes and a decrease in the reserve for injuries and damages, offset in part by higher income before income tax expense and lower flow through tax benefits in 2024 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 six months ended June 30, 2024 and 2023 is as follows:
| For the Six Months Ended June 30, |  |
| Con Edison | CECONY |  |
(% of Pre-tax income) | 2024 | 2023 | 2024 | 2023 |  |
STATUTORY TAX RATE |  |  |  |  |  |
Federal | 21 | % | 21 | % | 21 | % | 21 | % |  |
Changes in computed taxes resulting from: |  |  |  |  |  |
State income tax, net of federal income taxes | 5 |  | 4 |  | 5 |  | 5 |  |  |
Cost of removal | — |  | 1 |  | 2 |  | 2 |  |  |
Other plant-related items | (1) |  | — |  | (1) |  | (1) |  |  |
Amortization of excess deferred federal income taxes | (9) |  | (5) |  | (9) |  | (8) |  |  |
Remeasurement of deferred NYS income taxes, net of federal income taxes | — |  | 1 |  | — |  | 1 |  |  |
Research and development credits | — |  | — |  | (1) |  | (1) |  |  |
Deferred unamortized ITC recognized on sale of subsidiary | — |  | (6) |  | — |  | — |  |  |
Gain on sale of subsidiary | — |  | (2) |  | — |  | — |  |  |
Effective tax rate | 16 | % | 14 | % | 17 | % | 19 | % |  |
Corporate Alternative Minimum Tax On August 16, 2022, the Inflation Reduction Act (IRA) was signed into law and implemented a new corporate alternative minimum tax (CAMT) that imposes a 15 percent tax on modified GAAP net income. Pursuant to the IRA, corporations are entitled to a tax credit (minimum tax credit) to the extent the CAMT liability exceeds the regular tax liability. This amount can be carried forward indefinitely and used in future years when regular tax exceeds the CAMT. Beginning in 2024, based on the existing statue, the Companies are subject to and report the CAMT in their Consolidated Income Statements, Consolidated Statements of Cash Flows and the Consolidated Balance Sheets. The deferred tax asset related to the minimum tax credit carryforward will be realized to the extent the Companies’ consolidated deferred tax liabilities exceed the minimum tax credit carryforward. The Companies’ deferred tax liabilities are expected to exceed the minimum tax credit carryforward for the foreseeable future and thus no valuation allowance is required. The Companies are continuing to assess the impacts of the IRA on their financial statements and will update estimates based on future guidance to be issued by the Department of the Treasury. Uncertain Tax Positions At June 30, 2024, the estimated liability for uncertain tax positions for Con Edison was $12 million ($8 million for CECONY). For the six months ended June 30, 2024, Con Edison recognized $1 million ($1 million for CECONY) of income tax expense related to current year positions. Con Edison reasonably expects to resolve within the next twelve months approximately $3 million (the entire amount attributable to CECONY) of various federal uncertainties due to the expected completion of ongoing tax examinations, of which the entire amount, if recognized, would reduce their effective tax rate. The total amount of unrecognized tax benefits, if recognized, that would reduce Con Edison’s effective tax rate is $12 million ($11 million, net of federal income taxes) with $8 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 six months ended June 30, 2024 and 2023, the Companies recognized an immaterial amount of interest expense and no penalties for uncertain tax positions in their consolidated income statements. At June 30, 2024 and December 31, 2023, the Companies recognized an immaterial amount of accrued interest on their consolidated balance sheets. In February 2024, New York State completed its examination of the Companies' New York State income and franchise tax returns for tax years 2015 through 2021 with no changes. The Companies' return for tax year 2022 remains open under the statute of limitations.

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