CONSOLIDATED EDISON CO OF NEW YORK INC, 10-Q, 2000-11-14

CONSOLIDATED EDISON CO OF NEW YORK INC
10-Q, 2000-11-14
ELECTRIC & OTHER SERVICES COMBINED

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Form 10-Q
Securities and Exchange Commission
Washington, D.C. 20549

/x/	Quarterly Report Pursuant To Section 13 or 15(d) of the Securities Exchange Act of 1934
For The Quarterly Period Ended September 30, 2000
or
/ /	Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Commission File Number	Exact name of registrant as specified in its charter and principal office address and telephone number	State of Incorporation	I.R.S. Employer ID. Number

1-14514	Consolidated Edison, Inc. 4 Irving Place, New York, New York 10003 (212) 460-4600	New York	13-3965100
1-1217	Consolidated Edison Company of New York, Inc. 4 Irving Place, New York, New York 10003 (212) 460-4600	New York	13-5009340
1-4315	Orange and Rockland Utilities, Inc. One Blue Hill Plaza, Pearl River, New York 10965 (914) 352-6000	New York	13-1727729

Indicate by check mark whether each Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days. Yes /x/ No / /

As of the close of business on October 31, 2000, Consolidated Edison, Inc. ("Con Edison") had outstanding 211,990,844 Common Shares ($.10 par value). Con Edison owns all of the outstanding common equity of Consolidated Edison Company of New York, Inc. ("Con Edison of New York") and Orange and Rockland Utilities, Inc. ("O&R").

O&R meets the conditions specified in general instruction H (1) (a) and (b) of form 10-Q
and is therefore filing this form with the reduced disclosure format.

Table of Contents

			PAGE


Filing Format			3
Forward-Looking Statements			3
Part I.	Financial Information
Item 1.	Financial Statements
	Con Edison	Consolidated Balance Sheet	4-5
		Consolidated Income Statements	6-7
		Consolidated Statement of Cash Flows	8
		Notes to Financial Statements	9
	Con Edison	Consolidated Balance Sheet	14-15
	of New York	Consolidated Income Statements	16-17
		Consolidated Statement of Cash Flows	18
		Notes to Financial Statements	19
	O&R	Consolidated Balance Sheet	23-24
		Consolidated Income Statements	25-26
		Consolidated Statement of Cash Flows	27
		Notes to Financial Statements	28
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations
	Con Edison		32
	Con Edison of New York		49
	O&R		*
O&R Management's Narrative Analysis of the Results of Operations			64
Item 3.	Quantitative and Qualitative Disclosures About Market Risk
	Con Edison		68
	Con Edison of New York		68
	O&R		*
Part II.	Other Information
Item 1.	Legal Proceedings		69
Item 6.	Exhibits and Reports on Form 8-K		71

* O&R is omitting this information pursuant to General Instruction H of Form 10-Q.

Filing Format

This Quarterly Report on Form 10-Q is a combined report being filed separately by three different registrants: Consolidated Edison, Inc. ("Con Edison"), Consolidated Edison Company of New York, Inc. ("Con Edison of New York") and Orange and Rockland Utilities, Inc. ("O&R"). Neither Con Edison of New York nor O&R makes any representation as to the information contained in this report relating to Con Edison or the subsidiaries of Con Edison other than itself.

O&R, a wholly-owned subsidiary of Con Edison, meets the conditions specified in General Instruction H of Form 10-Q and is permitted to use the reduced disclosure format for wholly-owned subsidiaries of companies, such as Con Edison, that are reporting companies under the Securities Exchange Act of 1934. Accordingly, O&R has omitted from this report the information called for by Part 1, Item 2, Management's Discussion and Analysis of Financial Condition and Results of Operations and has included in this report its Management's Narrative Analysis of the Results of Operations. In accordance with general instruction H, O&R has also omitted from this report the information, if any, called for by Part 1, Item 3, Quantitative and Qualitative Disclosure About Market Risk; Part II, Item 2, Changes in Securities and Use of Proceeds; Part II, Item 3, Defaults Upon Senior Securities; and Part II, Item 4, Submission of Matters to a Vote of Security Holders.

Forward-Looking Statements

This Quarterly Report on Form 10-Q includes forward-looking statements, which are statements of future expectation and not facts. Words such as "estimates," "expects," "anticipates," "intends," "plans" and similar expressions identify forward-looking statements. Actual results or developments might differ materially from those included in the forward-looking statements because of factors such as competition and industry restructuring, Con Edison's pending acquisition of Northeast Utilities, the ongoing Indian Point 2 outage, technological developments, changes in economic conditions, changes in historical weather patterns, changes in laws, regulations or regulatory policies, developments in legal or public policy doctrines, and other presently unknown or unforeseen factors.

Consolidated Edison, Inc.

CONSOLIDATED BALANCE SHEET

			As at
As at September 30, 2000 and December 31, 1999 (Unaudited)			September 30, 2000		December 31, 1999

			(Thousands of Dollars)
ASSETS
UTILITY PLANT, AT ORIGINAL COST
	Electric		$	11,621,217	$	11,323,826
	Gas			2,263,998		2,197,735
	Steam			732,371		722,265
	General			1,369,405		1,328,544
	Unregulated generating assets			351,702		48,583

	TOTAL			16,338,693		15,620,953
	Less: Accumulated depreciation			5,028,658		4,733,613

	NET			11,310,035		10,887,340
	Construction work in progress			497,748		381,804
	Nuclear fuel assemblies and components, less accumulated amortization			106,757		84,701

NET UTILITY PLANT				11,914,540		11,353,845

CURRENT ASSETS
	Cash and temporary cash investments			72,810		485,050
	Accounts receivable - customer, less allowance for uncollectible accounts of $29,675 and $34,821			800,019		647,545
	Other receivables			108,137		98,454
	Fuel, at average cost			23,040		24,271
	Gas in storage, at average cost			75,586		55,387
	Materials and supplies, at average cost			160,347		142,905
	Prepayments			495,676		197,671
	Other current assets			81,901		61,395

TOTAL CURRENT ASSETS				1,817,516		1,712,678

INVESTMENTS
	Nuclear decommissioning trust funds			335,444		305,717
	Other			214,871		182,201

TOTAL INVESTMENTS				550,315		487,918

DEFERRED CHARGES AND REGULATORY ASSETS
	Goodwill			419,328		427,496
	Regulatory assets
		Future federal income tax		750,353		785,014
		Recoverable energy costs		218,566		95,162
		Power contract termination costs		73,063		71,861
		Accrued unbilled revenues		74,105		67,775
		Divestiture - capacity replacement reconciliation		73,850		24,373
		Deferred revenue taxes		67,685		60,712
		Property tax reconciliation		49,229		29,751
		Deferred pension and other postretirement benefits		43,956		57,630
		Deferred environmental remediation costs		74,990		13,330
		Other		193,448		172,504

	TOTAL REGULATORY ASSETS			1,619,245		1,378,112
	Other deferred charges			187,006		171,427

TOTAL DEFERRED CHARGES AND REGULATORY ASSETS				2,225,579		1,977,035

TOTAL			$	16,507,950	$	15,531,476

The accompanying notes are an integral part of these financial statements.

Consolidated Edison, Inc.

CONSOLIDATED BALANCE SHEET

			As at
As at September 30, 2000 and December 31, 1999 (Unaudited)			September 30, 2000			December 31, 1999

			(Thousands of Dollars)
CAPITALIZATION AND LIABILITIES
CAPITALIZATION
	Common stock, authorized 500,000,000 shares; outstanding 211,986,844 shares and 213,810,634 shares		$	1,482,346		$	1,482,341
	Retained earnings			5,111,002			4,921,089
	Treasury stock, at cost; 23,210,700 shares and 21,358,500 shares			(1,014,740	)		(955,311	)
	Capital stock expense			(35,884	)		(36,112	)

	TOTAL COMMON SHAREHOLDERS' EQUITY			5,542,724			5,412,007

	Preferred stock subject to mandatory redemption			37,050			37,050
	Other preferred stock			212,563			212,563
	Long-term debt			5,222,309			4,524,604

TOTAL CAPITALIZATION				11,014,646			10,186,224

NONCURRENT LIABILITIES
	Obligations under capital leases			32,283			34,544
	Accumulated provision for injuries and damages			131,528			119,010
	Pension and benefits reserve			187,130			143,757
	Other noncurrent liabilities			51,124			42,865

TOTAL NONCURRENT LIABILITIES				402,065			340,176

CURRENT LIABILITIES
	Long-term debt due within one year			158,910			395,000
	Notes payable			243,004			495,371
	Accounts payable			832,264			615,983
	Customer deposits			203,158			204,421
	Accrued taxes			122,009			18,389
	Accrued interest			81,680			60,061
	Accrued wages			81,217			79,408
	Other current liabilities			297,247			232,706

TOTAL CURRENT LIABILITIES				2,019,489			2,101,339

DEFERRED CREDITS AND REGULATORY LIABILITIES
	Accumulated deferred federal income tax			2,410,001			2,267,548
	Regulatory liabilities
		Gain on divestiture		310,623			306,867
		Accumulated deferred investment tax credits		133,706			139,838
		NYPA revenue increase		32,676			25,630
		Interruptible sales credit		21,028			23,715
		Other		163,714			139,972

	TOTAL REGULATORY LIABILITIES			661,747			636,022
	Other deferred credits			2			167

TOTAL DEFERRED CREDITS AND REGULATORY LIABILITIES				3,071,750			2,903,737

TOTAL			$	16,507,950		$	15,531,476

The accompanying notes are an integral part of these financial statements.

CONSOLIDATED EDISON, INC.
CONSOLIDATED INCOME STATEMENT
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999
(UNAUDITED)

			2000			1999
			(Thousands of Dollars)
Operating revenues
	Electric		$	2,328,220		$	2,005,523
	Gas			177,891			154,548
	Steam			82,837			66,808
	Non-utility			231,831			119,362

		Total operating revenues		2,820,779			2,346,241

Operating expenses
	Purchased power			1,208,450			647,360
	Fuel			105,544			110,402
	Gas purchased for resale			131,921			81,172
	Other operations			263,463			325,389
	Maintenance			114,971			115,753
	Depreciation and amortization			150,786			134,470
	Taxes, other than federal income tax			330,041			317,826
	Federal income tax			130,730			190,585

		Total operating expenses		2,435,906			1,922,957

Operating income				384,873			423,284
Other income (deductions)
	Investment income			1,520			7,478
	Allowance for equity funds used during construction			542			859
	Other income less miscellaneous deductions			6,560			1,325
	Federal income tax			(2,075	)		(4,329	)

		Total other income (deductions)		6,547			5,333

Income before interest charges				391,420			428,617
Interest on long-term debt				95,399			84,498
Other interest				13,899			5,171
Allowance for borrowed funds used during construction				(1,148	)		(457	)

		Net interest charges		108,150			89,212

Net income				283,270			339,405
Preferred stock dividend requirements				3,399			3,399

Net income for common stock			$	279,871		$	336,006

Common shares outstanding—average (000)				211,974			220,293
Basic earnings per share			$	1.32		$	1.50

Diluted earnings per share			$	1.32		$	1.50

Dividends declared per share of common stock			$	0.545		$	0.535

The accompanying notes are an integral part of these financial statements.

Consolidated Edison, Inc.

CONSOLIDATED INCOME STATEMENT

For the nine months ended September 30, 2000 and 1999 (Unaudited)		2000			1999

		(Thousands of Dollars)
OPERATING REVENUES
	Electric	$	5,371,732		$	4,361,566
	Gas		894,380			725,590
	Steam		327,695			260,419
	Non-utility		587,458			254,332

TOTAL OPERATING REVENUES			7,181,265			5,601,907

OPERATING EXPENSES
	Purchased power		2,724,301			1,216,637
	Fuel		239,189			349,369
	Gas purchased for resale		562,758			339,716
	Other operations		865,426			899,613
	Maintenance		349,943			320,634
	Depreciation and amortization		439,125			400,793
	Taxes, other than federal income tax		896,471			903,185
	Federal income tax		265,141			340,524

TOTAL OPERATING EXPENSES			6,342,354			4,770,471

OPERATING INCOME			838,911			831,436
OTHER INCOME (DEDUCTIONS)
	Investment income		8,461			9,500
	Allowance for equity funds used during construction		451			2,768
	Other income less miscellaneous deductions		2,310			(117	)
	Federal income tax		(2,315	)		(5,207	)

TOTAL OTHER INCOME (DEDUCTIONS)			8,907			6,944

INCOME BEFORE INTEREST CHARGES			847,818			838,380
	Interest on long-term debt		266,370			236,161
	Other interest		38,436			14,322
	Allowance for borrowed funds used during construction		(3,935	)		(1,349	)

NET INTEREST CHARGES			300,871			249,134

NET INCOME			546,947			589,246

PREFERRED STOCK DIVIDEND REQUIREMENTS			10,194			10,194

NET INCOME FOR COMMON STOCK		$	536,753		$	579,052

COMMON SHARES OUTSTANDING - AVERAGE (000)			212,240			225,754
BASIC EARNINGS PER SHARE		$	2.53		$	2.56

DILUTED EARNINGS PER SHARE		$	2.53		$	2.56

DIVIDENDS DECLARED PER SHARE OF COMMON STOCK		$	1.635		$	1.605

The accompanying notes are an integral part of these financial statements.

Consolidated Edison, Inc.

CONSOLIDATED STATEMENT OF CASH FLOWS

For the nine months ended September 30, 2000 and 1999 (Unaudited)			2000			1999

			(Thousands of Dollars)
OPERATING ACTIVITIES
	Net income for common stock		$	536,753		$	579,052
	PRINCIPAL NON-CASH CHARGES (CREDITS) TO INCOME
		Depreciation and amortization		439,125			400,793
		Federal income tax deferred (excluding taxes resulting from divestiture of plant)		164,031			74,655
		Common equity component of allowance for funds used during construction		(451	)		(2,768	)
		Other non-cash charges		28,437			27,573
	CHANGES IN ASSETS AND LIABILITIES
		Accounts receivable - customer, less allowance for uncollectibles		(152,474	)		(137,138	)
		Materials and supplies, including fuel and gas in storage		(36,410	)		44,790
		Prepayments, other receivables and other current assets		(328,194	)		(212,638	)
		Enlightened Energy program costs		17,261			26,651
		Deferred recoverable energy costs		(123,404	)		(49,691	)
		Cost of removal less salvage		(83,386	)		(48,931	)
		Power contract termination costs		(1,050	)		(1,050	)
		Accounts payable		216,281			175,426
		Accrued income taxes		27,766			93,173
		Other-net		43,002			48,444

NET CASH FLOWS FROM OPERATING ACTIVITIES				747,287			1,018,341

INVESTING ACTIVITIES INCLUDING CONSTRUCTION
		Construction expenditures		(633,180	)		(435,527	)
		Nuclear fuel expenditures		(26,473	)		(4,394	)
		Contributions to nuclear decommissioning trust		(15,975	)		(15,975	)
		Common equity component of allowance for funds used during construction		451			2,768
		Payment for purchase of Orange and Rockland, net of cash and cash equivalents		—			(509,083	)
		Divestiture of utility plant (net of federal income tax)		—			1,138,750
		Non-regulated subsidiary investments		(19,072	)		(54,180	)
		Non-regulated subsidiary utility plant		(256,392	)		(48,152	)

NET CASH FLOWS (USED IN) FROM INVESTING ACTIVITIES INCLUDING CONSTRUCTION				(950,641	)		74,207

FINANCING ACTIVITIES INCLUDING DIVIDENDS

		Repurchase of common stock		(68,531	)		(672,702	)
		Repayments of short-term debt		(252,367	)		—
		Additions to long-term debt		858,660			567,700
		Retirement of long-term debt		(395,000	)		(225,000	)
		Advance refunding of long-term debt		—			(300,000	)
		Issuance and refunding costs		(4,894	)		(13,971	)
		Common stock dividends		(346,754	)		(361,930	)

NET CASH FLOWS USED IN FINANCING ACTIVITIES INCLUDING DIVIDENDS				(208,886	)		(1,005,903	)

NET INCREASE (DECREASE) IN CASH AND TEMPORARY CASH INVESTMENTS				(412,240	)		86,645

CASH AND TEMPORARY CASH INVESTMENTS AT JANUARY 1				485,050			102,295

CASH AND TEMPORARY CASH INVESTMENTS AT SEPTEMBER 30			$	72,810		$	188,940

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
	Cash paid during the period for:
		Interest	$	241,157		$	247,017
		Income taxes		74,245			624,275

The accompanying notes are an integral part of these financial statements.

NOTES TO FINANCIAL STATEMENTS - CON EDISON

Note A - General

These footnotes accompany and form an integral part of the interim consolidated financial statements of Consolidated Edison, Inc. (Con Edison) and its subsidiaries, including the regulated utility Consolidated Edison Company of New York, Inc. (Con Edison of New York), the regulated utility Orange and Rockland Utilities, Inc. (O&R), which Con Edison acquired in July 1999, and several non-utility subsidiaries. These financial statements are unaudited but, in the opinion of Con Edison's management, reflect all adjustments (which include only normally recurring adjustments) necessary for a fair statement of the results for the interim periods presented. These financial statements should be read together with the audited Con Edison financial statements (including the notes thereto) included in the combined Con Edison, Con Edison of New York and O&R Annual Report on Form 10-K for the year ended December 31, 1999 (the "Form 10-K").

Note B - Environmental Matters

Hazardous substances, such as asbestos, polychlorinated biphenyls (PCBs) and coal tar, have been used or generated in the course of operations of Con Edison's utility subsidiaries and may be present in their facilities and equipment.

The Federal Comprehensive Environmental Response, Compensation and Liability Act of 1980 (Superfund) and similar state statutes impose joint and several strict liability, regardless of fault, upon generators of hazardous substances for resulting removal and remedial costs and environmental damages. Liabilities under these laws can be material and in some instances may be imposed without regard to fault, or may be imposed for past acts, even though such past acts may have been lawful at the time they occurred.

At September 30, 2000, Con Edison had accrued $120.0 million as its best estimate of the utility subsidiaries' liability for sites as to which they have received process or notice alleging that hazardous substances generated by them (and, in most instances, other potentially responsible parties) were deposited. There will be additional liability at these sites and other sites, the amount of which is not presently determinable but may be material to Con Edison's financial position, results of operations or liquidity.

Con Edison's utility subsidiaries are permitted under current rate agreements to defer for subsequent recovery through rates certain site investigation and remediation costs with respect to hazardous waste. At September 30, 2000, $74.9 million of such costs had been deferred as a regulatory asset.

Suits have been brought in New York State and federal courts against Con Edison's utility subsidiaries and many other defendants, wherein a large number of plaintiffs sought large amounts of compensatory and punitive damages for deaths and injuries allegedly caused by exposure to asbestos at various premises

of the utility subsidiaries. Many of these suits have been disposed of without any payment by the utility subsidiaries, or for immaterial amounts. The amounts specified in all the remaining suits total billions of dollars but Con Edison believes that these amounts are greatly exaggerated, as were the claims already disposed of. Based on the information and relevant circumstances known to Con Edison at this time, it does not believe that these suits will have a material adverse effect on its financial position, results of operations or liquidity.

Note C - Nuclear Generation

Con Edison of New York owns the Indian Point 2 nuclear generating unit, which has a capacity of approximately 1,000 MW, and the retired Indian Point 1 nuclear generating unit. See Note G to the Con Edison financial statements included in the Form 10-K.

On February 15, 2000, Con Edison of New York shut down Indian Point 2 following a leak in one of its four steam generators. Con Edison of New York expects to complete replacement of the steam generators by the end of 2000, and estimates that replacement will require capital expenditures of up to $150 million (exclusive of the costs of the replacement steam generators, which it has owned since 1988).

The staff of the Nuclear Regulatory Commission (NRC) has advised Con Edison of New York that it will monitor Indian Point 2 with heightened oversight.

The New York State Public Service Commission (PSC) is investigating the Indian Point 2 outage and its causes and the prudence of Con Edison of New York's actions regarding the operation and maintenance of Indian Point 2. The PSC has indicated that the examination should include, among other things, Con Edison of New York's inspection practices, the circumstances surrounding Indian Point 2's October 1997 to September 1998 outage, the basis for postponement of the steam generator replacement and whether, and to what extent, increased replacement power costs and repair and replacement costs should be borne by Con Edison's shareholders. Con Edison of New York is in settlement discussions with the staff of the PSC and other interested parties with respect to this proceeding.

In August 2000, following the passage of the Indian Point 2 Law (discussed below) and pursuant to a PSC order, Con Edison of New York revised its electric tariff to prevent prospective recovery of Indian Point 2 replacement power costs.

The "Indian Point 2 Law" was signed into law by New York Governor Pataki in August 2000. The law directed the PSC to prohibit Con Edison of New York from recovering Indian Point 2 replacement power costs from customers. In October 2000, United States District Court for the Northern District of New York, in an action entitled Consolidated Edison Company of New York, Inc. v. Pataki, et al., determined that the Indian Point 2 Law was unconstitutional and granted the company's motion for a permanent injunction to prevent its implementation. Appeals of the court's decision have been filed in the United States Court of Appeals for the Second Circuit.

Con Edison of New York has billed to customers the Indian Point 2 replacement power costs incurred prior to August 2000, but not the replacement power costs it has incurred since then (which amounted to approximately $32 million in August 2000, $26 million in September 2000 and $31.5 million in October 2000).

Westchester County, New York is suing the PSC and Con Edison of New York seeking to prevent the company from recovering costs relating to the ongoing outage. The suit, which is entitled The County of Westchester et al., v. Maureen O. Helmer, et al., was brought in May 2000 in the Supreme Court of the State of New York, County of Albany.

In November 2000, Con Edison of New York entered into an agreement with Entergy Corporation for the sale of Indian Point 2, the retired Indian Point 1 and certain related assets for $602 million. The sale is subject to NRC, PSC and Federal Energy Regulatory Commission approvals and other conditions.

Con Edison believes that the operation, maintenance and inspection practices related to Indian Point 2 have been prudent. However, the company is unable to predict whether or not any Indian Point 2-related proceedings, lawsuits, legislation or other actions, will have a material adverse effect on its financial position, results of operations or liquidity.

Note D - O&R

In July 1999, Con Edison completed its acquisition of O&R for $791.5 million in cash. See Note K to the Con Edison financial statements included in the Form 10-K. The unaudited pro forma consolidated Con Edison financial information shown below has been prepared based upon the historical consolidated income statements of Con Edison and O&R for the nine-month period ended September 30,1999, giving effect to the acquisition as if it had occurred at January 1, 1999. The historical information has been adjusted to reflect amortization for the nine-month period of the goodwill recorded by Con Edison in connection the acquisition and the after-tax cost Con Edison would have incurred during the period for financing the acquisition by issuing debt on January 1, 1999 at an assumed 8 percent per annum interest rate. The proforma information is not necessarily indicative of the results that Con Edison would have had if the acquisition had been completed prior to July 1999, or the results that Con Edison will have in the future.

	Nine Months Ended September 30, 1999
Revenues	$	5,927,399
Operating income		816,855
Net income		544,591
Non-recurring charges		21,530
Adjusted net income		566,121
Earnings per share	$	2.51
Average shares outstanding (000)		225,754

Note E - Financial Information by Business Segment (Thousands of Dollars)

For the three months ended September 30, 2000 and 1999
(Unaudited)

	Electric						Gas
	2000			1999			2000		1999

Operating revenues	$	2,328,220		$	2,005,523		$	177,891	$	154,548
Intersegment revenues		4,623			56,607			719		878
Depreciation and amortization		119,943			108,361			17,482		17,826
Operating income		390,411			433,987			525		(1,963	)
	Steam						Other
	2000			1999			2000		1999

Operating revenues	$	82,837		$	66,808		$	231,831	$	119,362
Intersegment revenues		467			423			157		—
Depreciation and amortization		4,631			4,513			8,730		3,770
Operating income		(11,468	)		(7,539	)		5,405		(1,201	)
	Total
	2000			1999

Operating revenues	$	2,820,779		$	2,346,241
Intersegment revenues		5,966			57,908
Depreciation and amortization		150,786			134,470
Operating income		384,873			423,284

For the nine months ended September 30, 2000 and 1999
(Unaudited)

	Electric				Gas
	2000		1999		2000			1999

Operating revenues	$	5,371,732	$	4,361,566	$	894,380		$	725,590
Intersegment revenues		36,359		116,233		5,155			1,988
Depreciation and amortization		355,664		333,046		51,624			49,528
Operating income		695,039		711,343		130,209			111,104
	Steam				Other
	2000		1999		2000			1999

Operating revenues	$	327,695	$	260,419	$	587,458		$	254,332
Intersegment revenues		1,401		1,250		848			309
Depreciation and amortization		13,841		13,438		17,996			4,781
Operating income		14,906		19,777		(1,243	)		(10,788	)
	Total
	2000		1999

Operating revenues	$	7,181,265	$	5,601,907
Intersegment revenues		43,763		119,780
Depreciation and amortization		439,125		400,793
Operating income		838,911		831,436

Note F - New Financial Accounting Standard

In June 2000, Statement of Financial Accounting Standards (SFAS) No. 138, "Accounting for Certain Derivative Instruments and Certain Hedging Activities - an amendment of FASB Statement No. 133," was issued. SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities," is effective for fiscal years beginning after June 15, 2000. The company will adopt SFAS No. 133, as amended by SFAS No. 138, on January 1, 2001. The application of SFAS No. 133, as amended by SFAS No. 138, is not expected to have a material effect on the financial position or results of operations of the company or materially change its current disclosure practices.

Consolidated Edison Company of New York, Inc.

CONSOLIDATED BALANCE SHEET

			As at
As at September 30, 2000 and December 31, 1999 (Unaudited)			September 30, 2000		December 31, 1999

			(Thousands of Dollars)
ASSETS
UTILITY PLANT, AT ORIGINAL COST
	Electric		$	10,952,705	$	10,670,257
	Gas			1,989,968		1,934,090
	Steam			732,371		722,265
	General			1,261,821		1,220,948

	TOTAL			14,936,865		14,547,560
	Less: Accumulated depreciation			4,613,790		4,384,783

	NET			10,323,075		10,162,777
	Construction work in progress			472,224		359,431
	Nuclear fuel assemblies and components, less accumulated amortization			106,757		84,701

NET UTILITY PLANT				10,902,056		10,606,909

CURRENT ASSETS
	Cash and temporary cash investments			46,309		349,033
	Accounts receivable - customer, less allowance for uncollectible accounts of $21,883 and $22,600			649,694		541,978
	Other receivables			84,294		71,746
	Fuel, at average cost			22,435		23,641
	Gas in storage, at average cost			59,065		40,280
	Materials and supplies, at average cost			153,404		138,300
	Prepayments			466,207		178,693
	Other current assets			43,050		32,513

TOTAL CURRENT ASSETS				1,524,458		1,376,184

INVESTMENTS
	Nuclear decommissioning trust funds			335,444		305,717
	Other			24,513		18,491

TOTAL INVESTMENTS				359,957		324,208

DEFERRED CHARGES AND REGULATORY ASSETS

	Regulatory assets
		Future federal income tax		717,620		751,899
		Recoverable energy costs		181,984		78,650
		Divestiture - capacity replacement reconciliation		73,850		24,373
		Power contract termination costs		73,063		71,861
		MTA business tax surcharge		58,736		60,712
		Property tax reconciliation		49,229		29,751
		Accrued unbilled gas revenue		43,594		43,594
		Deferred environmental remediation costs		41,247		10,000
		Other		171,087		148,371

	TOTAL REGULATORY ASSETS			1,410,410		1,219,211
	Other deferred charges			163,182		155,640

TOTAL DEFERRED CHARGES AND REGULATORY ASSETS				1,573,592		1,374,851

TOTAL			$	14,360,063	$	13,682,152

The accompanying notes are an integral part of these financial statements.

Consolidated Edison Company of New York, Inc.

CONSOLIDATED BALANCE SHEET

				As at
As at September 30, 2000 and December 31, 1999 (Unaudited)				September 30, 2000			December 31, 1999

				(Thousands of Dollars)
CAPITALIZATION AND LIABILITIES
CAPITALIZATION
	Common stock			$	1,482,341		$	1,482,341
	Repurchased Concolidated Edison, Inc. common stock				(962,092	)		(940,477	)
	Retained earnings				4,056,978			3,887,993
	Capital stock expense				(35,884	)		(36,086	)

	TOTAL COMMON SHAREHOLDER'S EQUITY				4,541,343			4,393,771

	Preferred stock
		Subject to mandatory redemption 6¹/8% Series J			37,050			37,050

	TOTAL SUBJECT TO MANDATORY REDEMPTION				37,050			37,050

		Other preferred stock
			$5 Cumulative Preferred		175,000			175,000
			4.65% Series C		15,330			15,330
			4.65% Series D		22,233			22,233

	TOTAL OTHER PREFERRED STOCK				212,563			212,563

	TOTAL PREFERRED STOCK				249,613			249,613

	Long-term debt				4,716,901			4,243,080

TOTAL CAPITALIZATION					9,507,857			8,886,464

NONCURRENT LIABILITIES
	Obligations under capital leases				32,184			34,406
	Accumulated provision for injuries and damages				122,070			110,131
	Pension and benefits reserve				115,932			76,807
	Other noncurrent liabilities				17,210			17,210

TOTAL NONCURRENT LIABILITIES					287,396			238,554

CURRENT LIABILITIES
	Long-term debt due within one year				150,000			275,000
	Accounts payable				697,042			505,357
	Notes payable				164,969			495,371
	Customer deposits				196,763			208,865
	Accrued taxes				104,694			23,272
	Accrued interest				74,642			51,581
	Accrued wages				81,217			79,408
	Other current liabilities				225,897			202,657

TOTAL CURRENT LIABILITIES					1,695,224			1,841,511

DEFERRED CREDITS AND REGULATORY LIABILITIES
	Accumulated deferred federal income tax				2,253,152			2,121,054
	Regulatory liabilities
		Gain on divestiture			310,623			306,867
		Accumulated deferred investment tax credits			126,695			132,487
		NYPA rate increase			32,676			25,630
		Interruptible sales credit			21,028			23,715
		Other			125,412			105,870

	Total regulatory liabilities				616,434			594,569
TOTAL DEFERRED CREDITS AND REGULATORY LIABILITIES					2,869,586			2,715,623

TOTAL				$	14,360,063		$	13,682,152

The accompanying notes are an integral part of these financial statements.

Consolidated Edison Company of New York, Inc.

CONSOLIDATED INCOME STATEMENT

For The Three Months Ended September 30, 2000 and 1999 (Unaudited)				2000			1999

				(Thousands of Dollars)
OPERATING REVENUES
	Electric			$	2,156,383		$	1,900,467
	Gas				159,439			141,697
	Steam				82,837			66,808

	TOTAL OPERATING REVENUES				2,398,659			2,108,972

OPERATING EXPENSES
	Purchased power				984,022			574,913
	Fuel				95,977			110,486
	Gas purchased for resale				72,866			52,484
	Other operations				212,756			264,557
	Maintenance				107,544			107,867
	Depreciation and amortization				134,651			123,962
	Taxes, other than federal income tax				307,983			295,446
	Federal income tax				123,067			179,775

	TOTAL OPERATING EXPENSES				2,038,866			1,709,490

OPERATING INCOME					359,793			399,482
Other income (deductions)
	Investment income				547			4,484
	Allowance for equity funds used during construction				439			851
	Other income less miscellaneous deductions				7,627			2,728
	Federal income tax				(2,501	)		(3,758	)

	TOTAL OTHER INCOME (DEDUCTIONS)				6,112			4,305

INCOME BEFORE INTEREST CHARGES					365,905			403,787
	Interest on long-term debt				85,633			77,468
	Other interest				11,540			3,768
	Allowance for borrowed funds used during construction				(994	)		(397	)

	NET INTEREST CHARGES				96,179			80,839

NET INCOME					269,726			322,948
PREFERRED STOCK DIVIDEND REQUIREMENTS					3,399			3,399
NET INCOME FOR COMMON STOCK				$	266,327		$	319,549

CON EDISON OF NEW YORK SALES
	Electric (thousands of kilowatthours)
		Con Edison of New York customers			9,263,651			9,785,280
		Delivery service for Retail Choice			2,597,461			2,743,698
		Delivery service to NYPA and others			2,682,320			2,753,558

		Total sales in service territory			14,543,432			15,282,536
		Off-system and ESCO sales			1,217,721			3,322,358
	Gas (dekatherms)
		Firm sales and transportation			10,914,927			10,024,570
		Off-peak firm/interruptible			3,049,018			2,894,472

			Total sales to Con Edison of New York customers		13,963,945			12,919,042
		Transportation of customer-owned gas
			NYPA		6,626,479			5,474,790
			Other		33,674,972			4,779,375
		Off-system sales			5,087,047			9,685,972

			Total sales and transportation		59,352,443			32,859,179
	Steam (thousands of pounds)				5,500,759			6,324,110

The accompanying notes are an integral part of these financial statements.

Consolidated Edison Company of New York, Inc.

CONSOLIDATED INCOME STATEMENT

For the Nine Months Ended September 30, 2000 and 1999 (Unaudited)				2000			1999

				(Thousands of Dollars)
OPERATING REVENUES
	Electric			$	5,009,046		$	4,310,741
	Gas				770,461			712,739
	Steam				327,695			260,419

TOTAL OPERATING REVENUES					6,107,202			5,283,899

OPERATING EXPENSES
	Purchased power				2,241,446			1,131,911
	Fuel				223,906			349,453
	Gas purchased for resale				323,046			265,737
	Other operations				709,050			807,958
	Maintenance				329,786			312,748
	Depreciation and amortization				399,149			389,274
	Taxes, other than federal income tax				835,402			875,635
	Federal income tax				251,184			333,962

TOTAL OPERATING EXPENSES					5,312,969			4,466,678

OPERATING INCOME					794,233			817,221
OTHER INCOME (DEDUCTIONS)
	Investment income				2,097			4,676
	Allowance for equity funds used during construction				214			2,760
	Other income less miscellaneous deductions				5,330			1,484
	Federal income tax				(1,685	)		(4,703	)

TOTAL OTHER INCOME (DEDUCTIONS)					5,956			4,217

INCOME BEFORE INTEREST CHARGES					800,189			821,438
	Interest on long-term debt				243,532			229,131
	Other interest				34,303			12,664
	Allowance for borrowed funds used during construction				(3,579	)		(1,289	)

NET INTEREST CHARGES					274,256			240,506

NET INCOME					525,933			580,932
PREFERRED STOCK DIVIDEND REQUIREMENTS					10,194			10,194

NET INCOME FOR COMMON STOCK				$	515,739		$	570,738

CON EDISON OF NEW YORK SALES
	Electric (thousands of kilowatthours)
		Con Edison of New York customers			24,282,320			25,359,206
		Delivery service for Retail Choice			6,973,290			5,609,770
		Delivery service to NYPA and others			7,494,113			7,483,393

		Total sales in service territory			38,749,723			38,452,369
		Off-system and ESCO sales			3,661,958			7,150,548
	Gas (dekatherms)
		Firm sales and transportation			71,562,503			68,229,912
		Off-peak firm/interruptible			11,404,662			10,857,220

			Total sales to Con Edison of New York customers		82,967,165			79,087,132
		Transportation of customer-owned gas
			NYPA		15,607,822			7,741,815
			Other		78,807,982			16,247,948
		Off-system sales			20,896,680			26,147,665

			Total sales and transportation		198,279,649			129,224,560
	Steam (thousands of pounds)				20,392,813			21,099,048

The accompanying notes are an integral part of these financial statements.

Consolidated Edison Company of New York, Inc.

CONSOLIDATED STATEMENT OF CASH FLOWS

For the Nine Months Ended September 30, 2000 and 1999 (Unaudited)			2000			1999

			(Thousands of Dollars)
OPERATING ACTIVITIES
	Net income		$	525,933		$	580,932
	PRINCIPAL NON-CASH CHARGES (CREDITS) TO INCOME
		Depreciation and amortization		399,149			389,274
		Federal income tax deferred (excluding taxes resulting from divestiture of plant)		153,943			57,203
		Common equity component of allowance for funds used during construction		(214	)		(2,760	)
		Other non-cash charges		4,256			27,984
	CHANGES IN ASSETS AND LIABILITIES
		Accounts receivable - customer, less allowance for uncollectibles		(107,716	)		(120,211	)
		Materials and supplies, including fuel and gas in storage		(32,683	)		51,568
		Prepayments, other receivables and other current assets		(310,599	)		(208,541	)
		Enlightened Energy program costs		17,261			26,651
		Deferred recoverable energy costs		(103,334	)		(42,442	)
		Cost of removal less salvage		(83,386	)		(48,931	)
		Power contract termination costs		(1,050	)		(1,050	)
		Accounts payable		191,685			140,759
		Accrued income taxes		15,487			165,010
		Other-net		44,556			175,903

NET CASH FLOWS FROM OPERATING ACTIVITIES				713,288			1,191,349

INVESTING ACTIVITIES INCLUDING CONSTRUCTION
		Construction expenditures		(602,080	)		(435,527	)
		Nuclear fuel expenditures		(26,473	)		(4,394	)
		Contributions to nuclear decommissioning trust		(15,975	)		(15,975	)
		Common equity component of allowance for funds used during construction		214			2,760
		Divestiture of utility plant (net of federal income tax)		—			1,138,750

NET CASH FLOWS (USED IN) FROM INVESTING ACTIVITIES INCLUDING CONSTRUCTION				(644,314	)		685,614

FINANCING ACTIVITIES INCLUDING DIVIDENDS
		Repurchase of common stock		(29,454	)		(672,702	)
		Repayments of short-term debt		(330,402	)		—
		Issuance of long-term debt		625,000			567,700
		Retirement of long-term debt		(275,000	)		(225,000	)
		Advance refunding of long-term debt		—			(300,000	)
		Issuance and refunding costs		(4,894	)		(13,971	)
		Common stock dividends		(346,754	)		(1,211,930	)
		Preferred stock dividends		(10,194	)		(10,194	)

NET CASH FLOWS USED IN FINANCING ACTIVITIES INCLUDING DIVIDENDS				(371,698	)		(1,866,097	)

NET INCREASE (DECREASE) IN CASH AND TEMPORARY CASH INVESTMENTS				(302,724	)		10,866
CASH AND TEMPORARY CASH INVESTMENTS AT JANUARY 1				349,033			30,026

CASH AND TEMPORARY CASH INVESTMENTS AT SEPTEMBER 30			$	46,309		$	40,892

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
	Cash paid during the period for:
		Interest	$	226,346		$	247,017
		Income taxes		67,515			638,450

The accompanying notes are an integral part of these financial statements.

NOTES TO FINANCIAL STATEMENTS - CON EDISON OF NEW YORK

Note A - General

These footnotes accompany and form an integral part of the interim consolidated financial statements of Consolidated Edison Company of New York, Inc. (Con Edison of New York) and its subsidiaries. Consolidated Edison, Inc. (Con Edison) owns all of the outstanding common stock of Con Edison of New York. These financial statements are unaudited but, in the opinion of Con Edison of New York's management, reflect all adjustments (which include only normally recurring adjustments) necessary for a fair statement of the results for the interim periods presented. These financial statements should be read together with the audited Con Edison of New York financial statements (including the notes thereto) included in the combined Con Edison, Con Edison of New York and Orange and Rockland Utilities, Inc. Annual Report on Form 10-K for the year ended December 31, 1999 (the"Form 10-K").

Note B - Environmental Matters

Hazardous substances, such as asbestos, polychlorinated biphenyls (PCBs) and coal tar, have been used or generated in the course of operations of Con Edison of New York and may be present in its facilities and equipment.

At September 30, 2000, Con Edison of New York had accrued $87.4 million as its best estimate of its liability for sites as to which it has received process or notice alleging that hazardous substances generated by the company (and, in most instances, other potentially responsible parties) were deposited. There will be additional liability at these sites and other sites, the amount of which is not presently determinable but may be material to the company's financial position, results of operations or liquidity.

Under Con Edison of New York's current electric, gas and steam rate agreements, site investigation and remediation costs in excess of $5 million annually incurred with respect to hazardous waste for which it is responsible are to be deferred and subsequently reflected in rates. At September 30, 2000, $41.2 million of such costs had been deferred as a regulatory asset.

Suits have been brought in New York State and federal courts against Con Edison of New York and many other defendants, wherein a large number of plaintiffs sought large amounts of compensatory and punitive damages for deaths and injuries allegedly caused by exposure to asbestos at various premises of the company. Many of these suits have been disposed of without any payment by Con Edison of

New York, or for immaterial amounts. The amounts specified in all the remaining suits total billions of dollars but the company believes that these amounts are greatly exaggerated, as were the claims already disposed of. Based on the information and relevant circumstances known to the company at this time, it does not believe that these suits will have a material adverse effect on its financial position, results of operations or liquidity.

Note C - Nuclear Generation

On February 15, 2000, Con Edison of New York shut down Indian Point 2 following a leak in one of its four steam generators. The company expects to complete replacement of the steam generators by the end of 2000, and estimates that replacement will require capital expenditures of up to $150 million (exclusive of the costs of the replacement steam generators, which it has owned since 1988).

The staff of the Nuclear Regulatory Commission (NRC) has advised the company that it will monitor Indian Point 2 with heightened oversight.

The New York State Public Service Commission (PSC) is investigating the Indian Point 2 outage and its causes and the prudence of the company's actions regarding the operation and maintenance of Indian Point 2. The PSC has indicated that the examination should include, among other things, Con Edison of New York's inspection practices, the circumstances surrounding Indian Point 2's October 1997 to September 1998 outage, the basis for postponement of the steam generator replacement and whether, and to what extent, increased replacement power costs and repair and replacement costs should be borne by Con Edison's shareholders. The company is in settlement discussions with the staff of the PSC and other interested parties with respect to this proceeding.

In August 2000, following the passage of the Indian Point 2 Law (discussed below) and pursuant to a PSC order, the company revised its electric tariff to prevent prospective recovery of Indian Point 2 replacement power costs.

Con Edison of New York believes that the operation, maintenance and inspection practices related to Indian Point 2 have been prudent. However, the company is unable to predict whether or not any Indian Point 2-related proceedings, lawsuits, legislation or other actions, will have a material adverse effect on its financial position, results of operations or liquidity.

Note D - Financial Information By Business Segment (Thousands of Dollars)

For the three months ended September 30, 2000 and 1999
(Unaudited)

	Electric						Gas
	2000			1999			2000		1999

Operating revenues	$	2,156,383		$	1,900,467		$	159,439	$	141,697
Intersegment revenues		2,663			4,160			719		878
Depreciation and amortization		114,835			103,379			15,185		16,070
Operating income		368,097			403,102			3,164		3,919
	Steam						Total
	2000			1999			2000		1999

Operating revenues	$	82,837		$	66,808		$	2,398,659	$	2,108,972
Intersegment revenues		467			423			3,849		5,461
Depreciation and amortization		4,631			4,513			134,651		123,962
Operating income		(11,468	)		(7,539	)		359,793		399,482

For the nine months ended September 30, 2000 and 1999
(Unaudited)

	Electric				Gas
	2000		1999		2000		1999

Operating revenues	$	5,009,046	$	4,310,741	$	770,461	$	712,739
Intersegment revenues		7,990		9,555		2,155		2,108
Depreciation and amortization		340,448		328,064		44,860		47,772
Operating income		654,857		680,458		124,470		116,986
	Steam				Total
	2000		1999		2000		1999

Operating revenues	$	327,695	$	260,419	$	6,107,202	$	5,283,899
Intersegment revenues		1,401		1,250		11,546		12,913
Depreciation and amortization		13,841		13,438		399,149		389,274
Operating income		14,906		19,777		794,233		817,221

Note E - New Financial Accounting Standard

Orange and Rockland Utilities, Inc. and Subsidiaries

CONSOLIDATED BALANCE SHEET

			As at
As at September 30, 2000 and December 31, 1999 (Unaudited)			September 30, 2000		December 31, 1999

			(Thousands of Dollars)
ASSETS
UTILITY PLANT, AT ORIGINAL COST
	Electric		$	668,512	$	653,503
	Gas			274,030		263,645
	General			107,584		107,661

	TOTAL			1,050,126		1,024,809
	Less: Accumulated depreciation			367,372		348,060

	NET			682,754		676,749
	Construction work in progress			25,524		22,373

NET UTILITY PLANT				708,278		699,122

CURRENT ASSETS:
	Cash and cash equivalents			8,181		78,927
	Customer accounts receivable, less allowance for uncollectible accounts of $3,474 and $5,395			62,584		58,586
	Other accounts receivable, less allowance for uncollectible accounts of $1,345 and $1,401			13,298		12,707
	Account receivable from affiliated company			5,888		626
	Accrued utility revenue			30,511		24,181
	Gas in storage, at average cost			14,425		14,856
	Materials and supplies, at average cost			4,487		4,333
	Prepayments			26,593		20,761
	Other current assets			19,066		22,316

TOTAL CURRENT ASSETS				185,033		237,293

INVESTMENTS
	Non-Utility Property-net of accumulated depreciation and amortization			3,252		3,415
	Other			6		6

TOTAL INVESTMENTS				3,258		3,421

DEFERRED CHARGES AND REGULATORY ASSETS
	Regulatory Assets
		Deferred pension and other postretirement benefits		42,650		45,328
		Recoverable energy costs		38,223		18,400
		Deferred environmental remediation costs		33,743		3,330
		Future federal income tax		32,733		33,115
		Other regulatory assets		22,390		31,400
		Deferred revenue taxes		8,949		10,130

	TOTAL REGULATORY ASSETS			178,688		141,703
	Other deferred charges			12,427		7,237

TOTAL DEFERRED CHARGES AND REGULATORY ASSETS				191,115		148,940

TOTAL			$	1,087,684	$	1,088,776

The accompanying notes are an integral part of these financial statements.

Orange and Rockland Utilities, Inc. and Subsidiaries

CONSOLIDATED BALANCE SHEET

		As at
As at September 30, 2000 and December 31, 1999 (Unaudited)		September 30, 2000		December 31, 1999

		(Thousands of Dollars)
CAPITALIZATION AND LIABILITIES
CAPITALIZATION:
	Common stock	$	5	$	5
	Additional paid in capital		194,499		194,499
	Capital stock expense		—		(25	)
	Retained earnings		142,156		137,535

	TOTAL COMMON SHAREHOLDER'S EQUITY		336,660		332,014
	Long-term debt		335,628		281,524

TOTAL CAPITALIZATION			672,288		613,538

NON-CURRENT LIABILITIES:
	Pension and benefit reserve		71,198		66,950
	Other noncurrent liabilities		34,068		34,538

TOTAL NON-CURRENT LIABILITIES			105,266		101,488

CURRENT LIABILITIES:
	Long-term debt due within one year		—		120,000
	Notes payable		5,900		—
	Accounts payable		57,805		49,626
	Accounts payable to affiliated companies		—		5,105
	Accrued federal income and other taxes		10,600		—
	Customer deposits		6,395		7,217
	Accrued interest		7,078		8,521
	Dividend payable to parent		9,250		—
	Accrued environmental costs		32,557		2,300
	Other current liabilities		22,944		20,019

TOTAL CURRENT LIABILITIES			152,529		212,788

DEFERRED CREDITS AND REGULATORY LIABILITIES
	Deferred federal income taxes		112,289		119,509
	Deferred investment tax credits		7,010		7,351
	Regulatory liabilities and other deferred credits		38,302		34,102

TOTAL DEFERRED CREDITS AND REGULATORY LIABILITIES			157,601		160,962

TOTAL		$	1,087,684	$	1,088,776

The accompanying notes are an integral part of these financial statements.

Orange And Rockland Utilities, Inc.

CONSOLIDATED INCOME STATEMENT

For the three months ended September 30, 2000 and 1999 (Unaudited)			2000			1999

			(Thousands of Dollars)
OPERATING REVENUES
		Electric	$	173,794		$	157,503
		Gas		18,452			12,731
		Non-utility		4,390			44

TOTAL OPERATING REVENUES				196,636			170,278

OPERATING EXPENSES
		Purchased power		97,827			63,235
		Gas purchased for resale		11,148			5,759
		Other operations		27,785			34,999
		Maintenance		7,426			7,833
		Depreciation and amortization		7,406			6,739
		Taxes, other than federal income tax		16,943			17,582
		Federal income tax		6,234			9,052

TOTAL OPERATING EXPENSES				174,769			145,199

OPERATING INCOME				21,867			25,079
OTHER INCOME (DEDUCTIONS)
		Investment income		817			1,857
		Allowance for equity funds used during construction		102			8
		Other income and deductions		326			(235	)
		Federal income tax		(442	)		(484	)

TOTAL OTHER INCOME (DEDUCTIONS)				803			1,146

INCOME BEFORE INTEREST CHARGES				22,670			26,225
INTEREST CHARGES
		Interest on long-term debt		5,616			7,030
		Other interest		887			348
		Allowance for borrowed funds used during construction		(154	)		(60	)

TOTAL INTEREST CHARGES				6,349			7,318

NET INCOME			$	16,321		$	18,907

ORANGE AND ROCKLAND SALES & DELIVERIES
	Electric - Thousands of killowatthours (Mwhr's)
		O&R Customers		1,442,651			1,473,895
		Off-system sales		—			928

		Total Electric Sales & Deliveries		1,442,651			1,474,823
	Gas - Dekatherms (Dth)			3,517,813			3,098,289

The accompanying notes are an integral part of these financial statements.

Orange and Rockland Utilities, Inc.

CONSOLIDATED INCOME STATEMENT

For nine months ended September 30, 2000 and 1999 (Unaudited)			2000			1999

			(Thousands of Dollars)
OPERATING REVENUES
		Electric	$	391,046		$	359,214
		Gas		126,919			113,284
		Non-utility		4,506			661

TOTAL OPERATING REVENUES				522,471			473,159

OPERATING EXPENSES
		Purchased power		206,998			86,383
		Fuel		39			43,504
		Gas purchased for resale		78,074			62,803
		Other operations		85,524			138,731
		Maintenance		20,158			26,443
		Depreciation and amortization		21,982			25,960
		Taxes, other than federal income tax		47,935			63,838
		Federal income tax		14,035			3,631

TOTAL OPERATING EXPENSES				474,745			451,293

OPERATING INCOME				47,726			21,866
OTHER INCOME (DEDUCTIONS)
		Investment income		5,202			2,089
		Allowance for equity funds used during construction		237			23
		Other income and deductions		83			52,930
		Federal income tax		(1,813	)		(40,965	)

TOTAL OTHER INCOME (DEDUCTIONS)				3,709			14,077

INCOME BEFORE INTEREST CHARGES				51,435			35,943
INTEREST CHARGES
		Interest on long-term debt		17,286			20,431
		Other interest		2,140			4,292
		Allowance for borrowed funds used during construction		(356	)		(177	)

TOTAL INTEREST CHARGES				19,070			24,546

NET INCOME				32,365			11,397
PREFERRED AND PREFERENCE STOCK REQUIREMENTS				—			886

NET INCOME FOR COMMON STOCK			$	32,365		$	10,511

ORANGE AND ROCKLAND SALES & DELIVERIES
	Electric - Thousands of killowatthours (Mwhr's)
		O&R Customers		3,846,181			3,727,678
		Off-system sales		2,400			109,158

		Total Electric Sales & Deliveries		3,848,581			3,836,836
	Gas - Dekatherms (Dth)			20,748,167			19,879,334

The accompanying notes are an integral part of these financial statements.

Orange and Rockland Utilities, Inc.

CONSOLIDATED STATEMENT OF CASH FLOWS

For the nine months ended September 30, 2000 and 1999 (Unaudited)			2000			1999

			(Thousands of Dollars)
OPERATING ACTIVITIES
	NET INCOME		$	32,365		$	11,397
	PRINCIPAL NON-CASH CHARGES (CREDITS) TO INCOME
		Depreciation and amortization		21,982			25,960
		Amortization of investment tax credit		(341	)		(6,194	)
		Federal income tax deferred		(6,839	)		(45,777	)
		Common equity component of allowance for funds used during construction		(237	)		(23	)
		Other non-cash charges (debits)		1,676			2,543
	CHANGES IN ASSETS AND LIABILITIES
		Accounts receivable - net, and accrued utility revenue		(10,328	)		(3,169	)
		Materials and supplies, including fuel and gas in storage		277			15,681
		Prepayments, other receivables and other current assets		(8,442	)		7,855
		Deferred recoverable energy costs		(11,854	)		1,730
		Accounts payable		3,075			6,989
		Refunds to customers		(1,049	)		25,597
		Deferred environmental remediation costs		(30,413	)		(414	)
		Accrued environmental costs		29,981			(1,200	)
		Other - net		17,894			33,633

NET CASH FLOWS FROM OPERATING ACTIVITIES				37,747			74,608

INVESTING ACTIVITIES INCLUDING CONSTRUCTION
		Construction expenditures		(31,100	)		(30,480	)
		Net proceeds from the sale of the electric generating assets		—			243,888
		Common equity component of allowance for funds used during construction		237			23

NET CASH FLOWS (USED IN) FROM INVESTING ACTIVITIES INCLUDING CONSTRUCTION				(30,863	)		213,431

FINANCING ACTIVITIES
		Issuance of long-term debt		55,000			45,000
		Retirement of long-term debt		(120,030	)		(2,354	)
		Retirement of preference and preferred stock		—			(43,516	)
		Short-term debt arrangements		5,900			(148,386	)
		Dividend to parent		(18,500	)		(45,000	)
		Common stock dividends		—			(17,447	)
		Preferred stock dividends		—			(886	)

NET CASH FLOWS USED IN FINANCING ACTIVITIES INCLUDING DIVIDENDS				(77,630	)		(212,589	)

NET (DECREASE) INCREASE IN CASH AND TEMPORARY CASH INVESTMENTS				(70,746	)		75,450
CASH AND TEMPORARY CASH INVESTMENTS AT JANUARY 1				78,927			6,143

CASH AND TEMPORARY CASH INVESTMENTS AT SEPTEMBER 30			$	8,181		$	81,593

	Cash paid during the period for:
		Interest	$	20,878		$	24,137
		Income Taxes		27,819			93,000

The accompanying notes are an integral part of these financial statements.

NOTES TO FINANCIAL STATEMENTS - O&R

Note A - General

These footnotes accompany and form an integral part of the interim consolidated financial statements of Orange and Rockland Utilities, Inc. (O&R), a wholly-owned subsidiary of Cosolidated Edison, Inc. (Con Edison). These financial statements are unaudited but, in the opinion of O&R's management, reflect all adjustments (which include only normally recurring adjustments) necessary for a fair statement of the results for the interim periods presented. These financial statements should be read together with the audited O&R financial statements (including the notes thereto) included in the combined Con Edison, Consolidated Edison Company of New York, Inc. and O&R Annual Report on Form 10-K for the year ended December 31, 1999 (the Form 10-K).

Note B - Environmental And Other Litigation

Environmental Matters

Hazardous substances, such as asbestos, polychlorinated biphenyls (PCBs) and coal tar, have been used or generated in the course of operations of O&R and may be present in its facilities and equipment.

The Federal Comprehensive Environmental Response, Compensation and Liability Act of 1980 (Superfund) and similar state statutes impose joint and several liability, regardless of fault, upon generators of hazardous substances for resulting removal and remedial costs and environmental damages. Liabilities under these laws can be material and in some instances may be imposed without regard to fault, or may imposed for past acts, even though such past acts may have been lawful at the time they occurred.

At September 30, 2000, O&R had accrued $32.6 million as its best estimate of its liability for sites as to which it has received process or notice alleging that hazardous substances generated by the company (and, in most instances, other potentially responsible parties) were deposited. There will be additional liability at these sites and other sites, including the costs of investigating and remediating sites where the company or its predecessors manufactured gas. The total amount of liability is not presently determinable but may be material to the company's financial position, results of operations or liquidity.

Under O&R's current gas rate agreement, O&R may defer for subsequent recovery through rates the costs of investigating and remediating manufactured gas sites. At September 30, 2000, $33.7 million of such costs had been deferred as a regulatory asset.

Suits have been brought in New York State and federal courts against O&R and many other defendants, wherein a large number of plaintiffs sought large amounts of compensatory and punitive damages for deaths and injuries allegedly caused by exposure to asbestos at various premises of the company. Many of these suits have been disposed of without any payment by O&R, or for immaterial amounts. The

amounts specified in all the remaining suits total billions of dollars but the company believes that these amounts are greatly exaggerated, as were the claims already disposed of. Based on the information and relevant circumstances known to the company at this time, it does not believe that these suits will have a material adverse effect on its financial position, results of operations or liquidity.

In May 2000, the New York State Department of Environmental Conservation (DEC) issued notices of violation to O&R and four other companies that have operated coal-fired electric generating facilities in New York State. The notices allege violations of the federal Clean Air Act and the New York State Environmental Conservation Law resulting from the alleged failure of the companies to obtain DEC permits for physical modifications to their generating facilities and to install air pollution control equipment that would have reduced harmful emissions. The notice of violation received by O&R relates to the Lovett Generating Station that it sold in June 1999. O&R is unable to predict whether or not the alleged violations will have a material adverse effect on its financial position, results of operation or liquidity.

Other Litigation

In 1996, O&R was sued for its alleged breach of an agreement to purchase electric capacity and associated energy from a 4 MW cogeneration facility and for an alleged breach of an implied covenant of good faith. In August 2000, the court denied the plaintiff's motion for summary judgment. O&R cannot predict the ultimate outcome of this proceeding.

Note C - Financial Information By Business Segment (Thousands of Dollars)

For The Three Months Ended September 30, 2000 and 1999
(Unaudited)

	Electric		Gas
	2000	1999	2000		1999

Sales Revenues	173,794	157,503	18,452		12,731
Intersegment Revenues	3	—	—		—
Depreciation and amortization	5,108	4,982	2,297		1,756
Operating Income	22,314	30,885	(2,639	)	(5,882	)
	Other		Total
	2000	1999	2000		1999

Sales Revenues	4,390	44	196,636		170,278
Intersegment Revenues	—	—	3		0
Depreciation and amortization	1	1	7,406		6,739
Operating Income	2,192	76	21,867		25,079

For The Nine Months Ended September 30, 2000 and 1999
(Unaudited)

	Electric			Gas
	2000	1999		2000	1999

Sales Revenues	391,046	359,214		126,919	113,284
Intersegment Revenues	9	7		—	37
Depreciation and amortization	15,216	20,889		6,764	5,068
Operating Income	40,182	19,733		5,739	3,676
	Other			Total
	2000	1999		2000	1999

Sales Revenues	4,506	661		522,471	473,159
Intersegment Revenues	—	—		9	44
Depreciation and amortization	2	3		21,982	25,960
Operating Income	1,805	(1,543	)	47,726	21,866

Note D - Related Party Transactions

Each month O&R is invoiced by Con Edison and its affiliates for the cost of any services rendered to O&R by Con Edison and its affiliates. These services, provided primarily by Con Edison of New York, include substantially all administrative support operations such as corporate directorship and associated ministerial duties, accounting, treasury, investor relations, information resources, legal, human resources, fuel supply and energy management services. The cost of these services totaled $8.0 million during the first nine months of 2000. In addition, O&R purchased $47.2 million of gas from Con Edison of New York during this period.

O&R provides certain recurring services to Con Edison of New York on a monthly basis, including cash receipts processing, rubber goods testing, and certain administrative services. The cost of these services totaled $5.9 million during the first nine months of 2000. In addition, O&R sold $4.9 million of gas to Con Edison of New York during this period.

Note E - Restatement Of Retained Earnings

In July 1999, O&R's retained earnings as of the effective date of its acquisition by Con Edison was reclassified to additional paid in capital. See "Acquisition By Con Edison" immediately preceding Note A to the O&R financial statements included in the Form 10-K. O&R has reversed this reclassification. The amounts shown as additional paid in capital and retained earnings on O&R's December 31, 1999 balance sheet have been changed to reflect this restatement. This restatement did not change the total common shareholder's equity for any of the periods presented.

Note F - New Financial Accounting Standard

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

CON EDISON

Consolidated Edison, Inc. (Con Edison) is a holding company which operates only through its subsidiaries and has no material assets other than the stock of its subsidiaries. Con Edison's principal subsidiaries are regulated utilities: Consolidated Edison Company of New York, Inc. (Con Edison of New York) and Orange and Rockland Utilities, Inc. (O&R). Con Edison also has several unregulated subsidiaries. In October 1999 Con Edison agreed to acquire Northeast Utilities.

The following discussion and analysis, which relates to the interim consolidated financial statements of Con Edison and its subsidiaries (including Con Edison of New York and, from its date of acquisition in July 1999, O&R) included in Part I, Item 1 of this report, should be read in conjunction with Con Edison's Management's Discussion and Analysis of Financial Condition and Results of Operations (Con Edison's 10-K MD&A) in Item 7 of the combined Con Edison, Con Edison of New York and O&R Annual Report on Form 10-K for the year ended December 31, 1999 (File Nos. 1-14514, 1-1217 and 1-4315, the Form 10-K) and Con Edison's Management's Discussion and Analysis of Financial Condition and Results of Operations (Con Edison's earlier 2000 10-Q MD&As) in Part I, Item 2 of the combined Con Edison, Con Edison of New York and O&R Quarterly Reports on Form 10-Q for the quarterly periods ended March 31, 2000 and June 30, 2000 (the earlier 2000 Form 10-Qs). Reference is also made to the notes to the Con Edison financial statements in Part I, Item 1 of this report, which notes are incorporated herein by reference.

Liquidity and Capital Resources

Cash and temporary cash investments and outstanding commercial paper (shown as notes payable on the balance sheet) at September 30, 2000 and December 31, 1999 were (amounts shown in millions):

	September 30, 2000		December 31, 1999

Cash and temporary cash investments	$	72.8	$	485.1
Commercial paper	$	243.0	$	495.4

Cash and temporary cash investments, net of commercial paper, decreased at September 30, 2000, compared to December 31, 1999, reflecting reduced cash flows from operations, increased construction expenditures by Con Edison of New York, investment in nonregulated electric generating facilities, repayments and issuances of long-term debt and repurchases of common stock.

Net cash flows from operating activities during the first nine months of 2000 decreased $271.1 million, compared to the first nine months of 1999, reflecting principally lower net income, pension credits (see discussion of prepayments, below) and increased purchased power costs (see discussion of accounts receivable and recoverable energy costs, below).

Construction expenditures during the first nine months of 2000 increased $197.7 million compared to the first nine months of 1999, principally as a result of expenditures related to meeting load growth on Con Edison of New York's electric distribution system and replacement of the steam generators at its Indian Point 2 nuclear generating unit. See "Nuclear Generation," below.

In June 2000 an unregulated subsidiary of Con Edison purchased an 80 percent interest in a partnership that owns a 236-MW electric generating unit in Lakewood, New Jersey (the Lakewood Project) for $96.3 million. The Lakewood Project had $178.7 million of long-term debt outstanding at September 30, 2000, which has been included in Con Edison's interim consolidated financial statements.

During the first nine months of 2000, Con Edison of New York repaid at maturity $275 million of debentures, with a weighted average annual interest rate of approximately 7.48 percent, and issued $625 million of ten-year debentures, with a weighted average annual interest rate of approximately 7.83 percent. During this period O&R repaid at maturity $120 million of debentures, with a weighted average annual interest rate of 8.27 percent, and issued $55 million of ten-year 7.5 percent debentures. See "Liquidity and Capital Resources - Capital Resources" in Con Edison's 10-K MD&A.

During the first quarter of 2000, Con Edison purchased approximately 1.9 million shares of its common stock at an aggregate cost of $60.6 million. No shares were repurchased in the second or third quarters of 2000. See "Liquidity and Capital Resources - Stock Repurchases" in Con Edison's 10-K MD&A.

Con Edison's accounts receivable - customer, less allowance for uncollectible accounts increased $152.5 million at September 30, 2000, compared with year-end 1999, due primarily to increased customer billings by Con Edison of New York and O&R, reflecting higher wholesale power costs. Con Edison of New York's equivalent number of days of revenue outstanding (ENDRO) of customer accounts receivable was 26.4 days at September 30, 2000, compared with 28.8 days at December 31, 1999. For O&R, the ENDRO was 33.7 days at September 30, 2000 and 36.5 days at December 31, 1999.

Prepayments at September 30, 2000 include cumulative credits to pension expense for Con Edison of New York of $293.0 million, compared with $116.0 million at December 31, 1999. See Note D to the Con Edison financial statements included in Item 8 of the Form 10-K. Prepayments at September 30, 2000 also include prepaid property tax for Con Edison of New York of $129.6 million, compared with $10.7 million at December 31, 1999. Property taxes are generally prepaid on January 1 and July 1 of each year.

Recoverable energy costs increased $123.4 million at September 30, 2000, compared with year-end 1999, reflecting increased purchased power costs, discussed below in "Results of Operations," offset in part by the ongoing recovery of previously deferred amounts. Purchased power costs of Con Edison of New York and O&R are recovered, on average, 40 days after such costs are incurred. See "Recoverable

Fuel Costs" in Note A to the Con Edison financial statements included in Item 8 of the Form 10-K. Also see "Regulatory Matters - Electric," below, and Note C to the Con Edison financial statements included in Part I, Item 1 of this report (which Note C is incorporated herein by reference).

Deferred charges for divestiture - capacity replacement reconciliation increased $49.5 million at September 30, 2000, compared with year-end 1999, reflecting the deferral of incremental electric capacity costs under contracts with the buyers of the generating assets sold by Con Edison of New York incurred prior to the initiation in May 2000 of a capacity market under the New York Independent System Operator. See Note I to the Con Edison financial statements included in Item 8 of the Form 10-K and "Regulatory Matters - Electric," below.

Deferred environmental remediation costs increased $61.7 million at September 30, 2000, compared with year-end 1999, reflecting site investigation and remediation costs of Con Edison's utility subsidiaries deferred under current rate agreements. See Note B to the Con Edison financial statements included in Part I, Item 1 of this report (which Note B is incorporated herein by reference).

Other regulatory assets increased $20.9 million at September 30, 2000, compared with year-end 1999, reflecting primarily the deferral of $14.4 million of Indian Point 2 refueling and maintenance outage expenses discussed below in "Results of Operations."

Unfunded other post-employment benefit (OPEB) obligations (shown as pension and benefit reserve on the balance sheet) were $187.1 million at September 30, 2000, compared to $143.8 million at December 31, 1999. Con Edison of New York's policy is to fund its estimated OPEB costs to the extent deductible under current tax limitations. O&R's policy is to fund its obligations to the extent of its cost recovery in rates. O&R's obligations also include a reserve for its supplemental executive retirement program. See Note E to the Con Edison financial statements included in Item 8 of the Form 10-K.

The accumulated provision for injuries and damages was $131.5 million at September 30, 2000, compared to $119.0 million at December 31, 1999. The increase resulted primarily from increased workers' compensation claims.

Accounts payable increased $216.3 million compared with year-end 1999, due primarily to the higher costs of power purchases.

Accrued taxes increased $103.6 million compared to year-end 1999, due principally to timing differences.

Other regulatory liabilities increased $23.7 million compared with year-end 1999, reflecting primarily the deferral under Con Edison of New York's current gas rate agreement of $14.5 million of earnings above a 13 percent threshold that are to be shared with customers (see "Regulatory Matters - Gas" in Con Edison's 10-K MD&A) and $8.0 million of interest on the gain on divestiture (see "Regulatory Matters - Electric," below), offset by the recognition of $22.3 million of previously deferred revenues relating to a scheduled Indian Point 2 refueling and maintenance outage.

Capital Resources

Con Edison's ratio of earnings to fixed charges (for the 12 months ended on the date indicated) and common equity ratio (as of the date indicated) were:

	September 30, 2000	December 31, 1999

Earnings to fixed charges (SEC basis)	3.35	4.04
Common equity ratio*	50.3	53.1

* Common shareholders' equity as a percentage of total capitalization

Con Edison's ratio of earnings to fixed charges decreased for the 12-month period ending September 30, 2000 compared to the 12-month period ending December 31, 1999 as a result of decreased net income available for common stock before Federal income tax and increased interest expense.

Northeast Utilities

In October 1999 Con Edison agreed to acquire Northeast Utilities for an estimated aggregate purchase price of not more than $3.8 billion, payable 50 percent in cash and 50 percent in common stock (subject to election and proration procedures). The merger is subject to certain conditions, including the approval of shareholders and federal and state regulatory agencies.

In April 2000 Con Edison and Northeast Utilities shareholders approved the merger.

In June 2000 the Federal Energy Regulatory Commission approved the merger.

In June 2000 Con Edison and Northeast Utilities entered into a settlement agreement with the staff of the New Hampshire Public Utilities Commission (NHPUC) under which the NHPUC is asked to approve the merger, subject to the conditions set forth in the agreement.

In October 2000 Con Edison, Con Edison of New York, O&R and Northeast Utilities entered into an agreement with the staff of the New York State Public Service Commission (PSC) and certain other parties, which, among other things, provides for the PSC's approval of the merger. For additional information about the agreement, which is subject to PSC approval, see "Regulatory Matters—Electric," below.

In October 2000 the Connecticut Department of Public Utility Control (DPUC) issued a decision conditionally approving the merger. In November 2000 Con Edison and Northeast Utilities petitioned

the DPUC to reconsider its decision. The petition indicates that the companies accept many of the conditions set forth in the decision, but that "substantial uncertainty remains as to whether the merger will proceed based on the conditions currently imposed by the Decision."

The merger also requires approval by the Securities and Exchange Commission. In addition, applicable waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act and the related rules and regulations must be satisfied. Con Edison is in the process of responding to related requests for additional information from the Department of Justice.

In September 2000 the required Connecticut regulatory recommendation with respect to the sale by subsidiaries of Northeast Utilities of interests in certain nuclear facilities was received and, as a result, the consideration that Con Edison would be required to pay to shareholders of Northeast Utilities under the merger agreement was increased by $1.00 per share to $26.00 per share plus $.0034 per share for every day after August 5, 2000 through the day prior to the closing of the merger.

Con Edison does not expect that the merger will be completed prior to the end of 2000.

For additional information about the merger, see "Liquidity and Capital Resources - Northeast Utilities Merger" in Con Edison's 10-K MD&A. See also "Financial Market Risks," below.

Regulatory Matters

Electric

In October 2000 Con Edison, Con Edison of New York, O&R and Northeast Utilities entered into an agreement with the staff of the PSC and certain other parties (the Agreement). The Agreement, which is subject to PSC approval, revises and extends the electric rate plan provisions of the 1997 restructuring agreement pursuant to which Con Edison of New York has been implementing retail choice for all its electric customers and has divested most of its electric generating assets (the 1997 Restructuring Agreement) and addresses certain divestiture-related issues. The Agreement also provides for the approval by the PSC of Con Edison's acquisition of Northeast Utilities. See "Northeast Utilities," above.

The electric rate plan provisions of the Agreement, which cover the five-year period ending March 2005, revise and extend the rate plan provisions of the 1997 Restructuring Agreement. The Agreement provides for Con Edison of New York to reduce the distribution component of its electric rates by $170 million on an annual basis, effective October 2000, and, in accordance with the 1997 Restructuring Agreement, to reduce the generation-related component of its electric rates by $208.7 million on an annual basis, effective April 2001. Following completion of Con Edison's acquisition of Northeast Utilities, Con Edison of New York's electric rates would be further reduced by $18.5 million on an annual basis to reflect approximately half of the net synergy savings applicable to its electric operations that are expected to result from the merger.

In general, under the Agreement, Con Edison of New York's base electric transmission and distribution rates will not otherwise be changed during the five-year period ending March 2005 except (i) with respect to certain changes in costs above anticipated annual levels resulting from legal or regulatory requirements, inflation in excess of a 4 percent annual rate, property tax changes and environmental cost increases or (ii) if the PSC determines that circumstances have occurred that either threaten the company's economic viability or ability to provide, or render the company's rate of return unreasonable for the provision of, safe and adequate service.

The Agreement continues the rate provisions pursuant to which Con Edison of New York recovers purchased power and fuel costs from its customers. The Agreement does not address the New York State Attorney General's petitions that are discussed below. The Agreement includes the recommendation that the PSC establish a proceeding to consider rate measures that reduce the volatility of fuel and energy costs experienced during the months of peak usage, provided that such measures may neither be materially inconsistent with the Agreement nor adversely impact Con Edison of New York's financial integrity. For information about recovery of replacement power and other costs relating to Con Edison of New York's Indian Point 2 nuclear generating unit, see Note C to the Con Edison financial statements included in Part I, Item 1 of this report.

Under the Agreement, 50 percent of any earnings in each of the rate years ending March 2002 through 2005 in excess of a specified rate of return on electric common equity (12.9 percent for the rate year ending March 2002; 11.75 percent for the other rate years, the Earnings Sharing Level) will be retained for shareholders and 50 percent will be applied for customer benefit through rate reductions or as otherwise determined by the PSC. The rate of return calculation will exclude certain items, including incentives and penalties discussed in the Agreement and the synergy savings from Con Edison's acquisition of Northeast Utilities that have been allocated to the company's shareholders. For the rate year ending March 2004, the calculation will reflect the amount, if any, by which the calculated rate of return fell below the Earnings Sharing Level for the rate year ending March 2003; for the rate year ending March 2005, the calculation will reflect any shortfall in the prior two rate years. There is no sharing of earnings for the rate year ending March 2001.

Under the Agreement's performance incentive mechanisms, the Earnings Sharing Level for the rate years ending March 2003 through 2005 may be increased to 12 percent if certain customer service and reliability objectives are achieved. The Agreement includes other incentive mechanisms, pursuant to which Con Edison of New York could be required to pay up to $40 million annually in penalties if certain threshold service and reliability objectives are not achieved.

The Agreement continues the stranded cost recovery provisions of the 1997 Restructuring Agreement, stating that Con Edison of New York "will be given a reasonable opportunity to recover stranded and strandable costs remaining at March 31, 2005, including a reasonable return on investments, under the parameters and during the time periods set forth therein."

The Agreement provides for the following disposition of the approximately $303.9 million estimated net gain on the sale by Con Edison of New York of most of its electric generating assets: $192.3 million will be credited against electric distribution plant balances; $103.8 million may be retained by the company to offset a like amount of existing regulatory assets (including deferred power contract termination costs, property tax increases and retail choice customer incentives), and the balance will be set aside as a partial funding source for low-income ratepayer programs.

The Agreement also addresses Con Edison of New York's recovery of an approximately $74 million regulatory asset representing incremental electric capacity costs incurred prior to May 2000 to purchase capacity from the buyers of the generating assets it sold. The Agreement provides for the company to recover these deferred costs from the shareholders' portion of any earnings above the Earnings Sharing Levels and by March 2005 to charge to expense any remaining asset balance. For additional information about these incremental capacity costs, see "Regulatory Matters" in Con Edison's earlier 2000 10-Q MD&As and Note I to the Con Edison financial statements in Item 8 of the Form 10-K.

The Agreement provides for the approval of Con Edison's acquisition of Northeast Utilities, indicates that the PSC should authorize the merger as being in the public interest and allocates to New York customers approximately half of the net synergy savings applicable to New York utility operations that are expected to result from the merger over the ten-year period ending March 2011. To reflect this allocation, following the completion of the merger, Con Edison of New York will reduce its electric rates by $18.5 million (discussed above) and annually accrue credits of about $3.4 million and $0.9 million, respectively, for its gas and steam customers, and O&R will annually accrue credits of about $1.15 million and $0.4 million, respectively, for its electric and gas customers. The Agreement also amends the existing guidelines governing transactions among affiliates of Con Edison of New York to reflect, to the extent necessary, the requirements of the Public Utility Holding Company Act that will apply following the merger.

For additional information about the 1997 Restructuring Agreement, see "Regulatory Matters - Electric" in Con Edison's 10-K MD&A and "Regulatory Matters" in Con Edison's earlier 2000 10-Q MD&As.

PSC inquiry into the cause of increases in electric bills, to make electric rates temporary until the conclusion of the PSC's inquiry, and to roll those rates back to levels such that customers would pay no more for the same amount of electric service than they would have in 1999. In October 2000, AARP and the Public Utility Law Project of New York, Inc. filed a similar petition with the PSC. Con Edison believes that these petitions are without merit, but is unable to predict whether or not any related proceedings or other actions will have a material adverse effect on its financial position, results of operations or liquidity.

Gas

In November 2000 Con Edison of New York, the PSC staff and certain other parties agreed to revise and extend the 1996 gas rate settlement agreement through September 2001. For information about the 1996 agreement, see "Regulatory Matters - Gas" in Con Edison's 10-K MD&A.

Under the new agreement, which is subject to PSC approval, the level above which the company will share with customers 50 percent of earnings is increased from 13 percent to a 14 percent rate of return on gas common equity. In addition, customer bills are to be reduced by $20 million during the January through March 2001 period; approximately $22.6 million that normally would be credited to customers over various annual periods is to be credited during the four-month period ending March 2001; and $19 million of charges to customers resulting from the reconciliation of actual gas costs to amounts included in rates which were scheduled to be billed to customers beginning January 2001 instead are to be billed to customers beginning April 2001. These provisions are intended to reduce gas costs during the winter months.

Under the new agreement, the company will also reduce firm transportation customer bills by a retail choice credit and will implement other programs designed to increase customer and marketer participation in the company's gas Retail Choice program, the net costs of which are to be recovered by reducing credits otherwise due customers or deferred for future recovery from customers.

Steam

In November 2000 the PSC approved a settlement agreement between Con Edison of New York, the PSC staff and certain other parties with respect to the steam rate plan filed by the company in November 1999.

East River steam-electric generating plant is not completed). A rate moderation mechanism will permit the company to defer a portion of the revenues collected in the first two rate years attributable to the rate increase and recognize such deferrals in income during the last two rate years.

Under the agreement, upon completion of the East River repowering project, the net benefits of the project (including any net gain from the sale of certain mid-town Manhattan real estate) allocable to steam operations will be used to offset any deficiency in the accumulated reserve for depreciation of steam plant or otherwise inure to the benefit of steam customers.

The settlement agreement continues the rate provisions pursuant to which the company recovers from its customers purchased steam and fuel costs and requires the company to develop a strategy for hedging price variations for a portion of the steam produced each year.

For additional information, see "Regulatory Matters - Steam" in Con Edison's 10-K MD&A.

Nuclear Generation

Con Edison of New York's Indian Point 2 nuclear generating unit was shut down on February 15, 2000 following a leak in one of its four steam generators. See "Nuclear Generation" in Con Edison's 10-K MD&A and Con Edison's earlier 2000 Form 10-Q MD&As, the combined Con Edison and Con Edison of New York Current Reports on Form 8-K, dated March 30, 2000 and October 10, 2000 and Note C to the Con Edison financial statements included in Part I, Item 1 of this report (which Note C is incorporated herein by reference).

Financial Market Risks

Reference is made to "Financial Market Risks" in Con Edison's 10-K MD&A. At September 30, 2000 the cash-settled options expiring December 2000 that Con Edison purchased for $8.9 million in June 2000 to hedge its interest rate risk with respect to $800 million of the cash portion of the Northeast Utilities merger consideration had a fair market value of approximately $309,000. See "Northeast Utilities," above. At September 30, 2000 neither the fair value of derivatives outstanding nor potential derivative losses from reasonably possible near-term changes in market prices were material to the financial position, results of operations or liquidity of the company.

Environmental Matters

For information concerning potential liabilities of the company arising from laws and regulations protecting the environment, including the Federal Comprehensive Environmental Response, Compensation and Liability Act of 1980 (Superfund), see the notes to Con Edison's financial statements included in Part I, Item 1 of this report and also see Part II, Item 3 of this report.

Results of Operations

Third Quarter of 2000 Compared with Third Quarter of 1999

Con Edison's net income for common stock for the third quarter of 2000 was $279.9 million or $1.32 a share (based upon an average of 212.0 million common shares outstanding), compared with $336.0 million or $1.50 a share (based upon an average of 220.3 million common shares outstanding) for the third quarter of 1999.

Earnings for the quarters ended September 30, 2000 and 1999 were as follows:

(Millions of dollars)

		2000			1999

Con Edison of New York		$	266.3		$	319.5
O&R			16.3			18.9
Nonregulated subsidiaries			2.7			(1.1	)
Other*			(5.4	)		(1.3	)
	Con Edison	$	279.9		$	336.0

* Includes holding company expenses (including amortization of $2.7 million and $1.3 million for 2000 and 1999, respectively, of goodwill from the acquisition of O&R) and intercompany eliminations.

Con Edison's earnings for the third quarter of 2000, compared to the third quarter of 1999, decreased $56.1 million, reflecting $28 million of Indian Point 2 replacement power costs that have not been recovered by Con Edison of New York from its customers (see "Nuclear Generation," above), $31.1 million of electric rate reductions and the effects of cooler than normal summer weather as compared to the warmer than normal weather experienced in the 1999 period, offset in part by $57.7 million of increased pension credits (see Note D to the Con Edison financial statements included in Item 8 of the Form 10-K) and a $59.8 million reduction in Federal income taxes.

A comparison of the results of operations of Con Edison for the third quarter of 2000 compared to the third quarter of 1999 follows.

Three Months Ended Sept. 30, 2000 Compared With Three Months Ended Sept. 30, 1999

(Millions of dollars)

	Increases (Decreases) Amount			Increases (Decreases) Percent

Operating revenues	$	474.5		20.2
Purchased power - electric and steam		561.1		86.7
Fuel - electric and steam		(4.9	)	(4.4	)
Gas purchased for resale		50.7		62.5
Operating revenues less purchased power, fuel and gas purchased for resale (net revenues)		(132.4	)	(8.8	)
Other operations and maintenance		(62.7	)	(14.2	)
Depreciation and amortization		16.3		12.1
Taxes, other than federal income tax		12.2		3.8
Federal income tax		(59.8	)	(31.4	)
Operating income		(38.4	)	(9.1	)
Other income less deductions and related federal income tax		1.2		22.8
Net interest charges		18.9		21.2
Preferred stock dividend requirements		—		—
Net income for common stock	$	(56.1	)	(16.7	)%

A discussion of Con Edison's operating revenues and operating income by business segment follows. Con Edison's principal business segments are its electric, gas and steam utility businesses. For additional information about Con Edison's business segments, see the notes to the Con Edison financial statements included in Part I, Item 1 of this report.

Electric

Con Edison's electric operating revenues in the third quarter of 2000 increased $322.7 million, compared to the third quarter of 1999, reflecting Con Edison of New York's and O&R's increased purchased power costs, offset by electric rate reductions of approximately $31.1 million and the effects of cooler than normal summer weather as compared to the warmer than normal weather experienced in the 1999 period. Under PSC-approved rate provisions, Con Edison of New York and O&R recover their purchased power costs from customers. See, however, Note C to the Con Edison financial statements included in Part I, Item 1 of this report (which Note C is incorporated herein by reference).

Electricity sales volumes for Con Edison of New York and O&R for the three-month periods ended September 30, 2000 and 1999 are shown at the bottom of their consolidated income statements for those periods included in Part I, Item 1 of this report. Electricity sales volume decreased 4.6 percent in the third quarter of 2000, compared to the third quarter of 1999. The decrease in sales volume is attributable to the cooler than normal summer weather, offset in part by the continued strength of the economy in the New York City metropolitan area. After adjusting for variations, principally weather and billing days, in

each period, electricity sales volume increased 3.6 percent in the 2000 period. Weather-adjusted sales represent an estimate of the sales that would have been made if historical average weather conditions had prevailed.

Purchased power costs increased $557.9 million in the third quarter of 2000, compared to the third quarter of 1999, as a result of divestiture of electric generating capacity in 1999 (and the resultant requirement to purchase capacity and energy to serve customers), replacement power costs for the Indian Point 2 nuclear generating station and increases in the price of purchased power. Fuel costs decreased $21.9 million as a result of generation divestiture.

Con Edison's electric operating income decreased $43.6 million in the third quarter of 2000, compared to the third quarter of 1999. The principal components of this variation were: a reduction in net revenues (operating revenues less fuel and purchased power) of $138.3 million (reflecting the effects of the cooler than normal summer weather, $31.1 million of electric rate reductions and $28 million of Indian Point 2 replacement power costs that have not been recovered from customers), offset by decreases in other operations and maintenance expenses (discussed in the following paragraph) and reduced Federal income tax ($51.4 million).

The decrease in the 2000 period in other operations and maintenance expenses reflects certain expenses relating to Indian Point 2, increased pension credits ($45.8 million) and a $17.8 million decrease in expenses relating to Con Edison of New York's other electric generating assets (most of which were sold in 1999). Indian Point 2 refueling and maintenance expenses of $10.5 million, offset by $7.2 million of revenues, were recognized in income in the third quarter of 2000. Approximately $14.4 million of Indian Point 2 refueling and maintenance expenses have been deferred and will be matched against revenues of an equal amount which will be realized during the remaining months of the rate year ending March 2001. See "Outage Accounting" in Note G to the Con Edison financial statements included in the Form 10-K and Note C to the Con Edison financial statements included in Part I, Item 1 of this report (which Note C is incorporated herein by reference).

Gas

Gas sales volumes for Con Edison of New York and O&R for the three-month periods ended September 30, 2000 and 1999 are shown at the bottom of their consolidated income statements for those periods included in Part I, Item 1 of this report. Con Edison's gas operating revenues and operating income increased $23.3 million and $2.5 million, respectively, in the third quarter of 2000, compared to the third quarter of 1999, reflecting increased gas sales and transportation volumes.

Gas sales and transportation volume for firm customers increased 10.0 percent in the third quarter of 2000, compared to the third quarter of 1999. Weather had a minimal impact on gas sales for this period.

Steam

Con Edison's steam operating revenues increased $16.0 million and operating income decreased $3.9 million in the third quarter of 2000, compared to the third quarter of 1999. The higher revenues reflect Con Edison of New York's increased fuel and purchased power costs (which it bills to customers under PSC-approved rate provisions).

Steam sales volume decreased 13.0 percent in the 2000 period. After adjusting for variations, principally weather and billing days, in each period, steam sales volume decreased 0.5 percent in the 2000 period.

Other Income

Investment income decreased $6.0 million in the 2000 period, compared to the 1999 period, because during a portion of the 1999 period net proceeds from generation divestiture were invested in temporary cash investments.

Net Interest Charges

Net interest charges increased $18.9 million in the 2000 period, reflecting $10.9 million of increased interest on long-term borrowings, $2.3 million of increased interest related to short-term borrowings and $4.0 million of interest accrued on the gain on generation divestiture that has been deferred for disposition by the PSC. See "Regulatory Matters - Electric," above.

Nine Months Ended September 30, 2000 Compared with the Nine Months Ended September 30, 1999

Con Edison's net income for common stock for the nine months ended September 30, 2000 was $536.8 million or $2.53 a share (based upon an average of 212.2 million common shares outstanding), compared with $579.1 million or $2.56 a share (based upon an average of 225.8 million common shares outstanding) for the nine months ended September 30, 1999. O&R financial results are not included in earnings for periods prior to its July 1999 acquisition by Con Edison.

Earnings for the nine months ended September 30, 2000 and 1999 were as follows:

	2000			1999

Con Edison of New York	$	515.7		$	570.7
O&R		32.4			18.9
Nonregulated subsidiaries		0.9			(9.0	)
Other*		(12.2	)		(1.5	)
Con Edison	$	536.8		$	579.1

* Includes holding company expenses (including amortization of $8.2 million and $1.3 million for 2000 and 1999, respectively, of goodwill from the acquisition of O&R) and intercompany eliminations.

Con Edison's earnings for the first nine months of 2000, compared to the first nine months of 1999, decreased $42.3 million, reflecting the effects of cooler than normal summer weather for the 2000 period as compared to the warmer than normal weather experienced in the 1999 period, electric rate reductions of $76.8 million, $58 million of replacement power costs for Con Edison of New York's Indian Point 2 nuclear generating station that have not been recovered from customers, $43.6 million of increased transmission and distribution expenses and $51.7 million of increased interest charges, offset by increased revenues resulting from the favorable economy, $114.7 million of increased pension credits, reduced federal income tax expense of $75.4 million, and $13.5 million of O&R earnings.

Con Edison estimates that the earnings per share impact in the 2000 period of the June and August 1999 divestiture of most of Con Edison of New York's electric generating capacity was substantially offset by reductions in property taxes, depreciation and other operating and maintenance costs, its acquisition of O&R and the common stock repurchase program.

A comparison of the results of operations of Con Edison for the nine months ended September 30, 2000 compared to the nine months ended September 30, 1999 follows.

Nine Months Ended Sept. 30, 2000 Compared With Nine Months Ended Sept. 30, 1999

		Increases (Decreases)			Increases (Decreases)
(Millions of dollars)		Amount			Percent

	Operating revenues	$	1,579.3		28.2	%
	Purchased power - electric and steam		1,507.7		(A	)
	Fuel - electric and steam		(110.2	)	(31.5	)
	Gas purchased for resale		223.0		65.7
	Operating revenues less purchased power, fuel and gas purchased for resale (net revenues)		(41.2	)	(1.1	)
	Other operations and maintenance		(4.9	)	(0.4	)
	Depreciation and amortization		38.3		9.6
	Taxes, other than federal income tax		(6.7	)	(0.7	)
	Federal income tax		(75.4	)	(22.1	)
	Operating income		7.5		0.9
	Other income less deductions and related federal income tax		1.9		28.3
	Net interest charges		51.7		20.8
	Preferred stock dividend requirements		—		—
	Net income for common stock	$	(42.3	)	(7.3	)%

(A): Amounts in excess of 100 percent

Electric

Con Edison's electric operating revenues for the nine months ended September 30, 2000 increased $1.0 billion compared to the comparable period of 1999, reflecting Con Edison of New York's increased sales volumes and increased purchased power costs (which it bills to customers under PSC-approved rate provisions), offset by electric rate reductions of approximately $76.8 million. See Note C to the Con Edison financial statements included in Part I, Item 1 of this report (which Note C is incorporated herein by reference). The increase also reflects $391.0 million of O&R electric operating revenues for the nine months ended September 30, 2000, compared to $157.5 million of O&R electric operating revenues recognized in the 1999 period following Con Edison's July 1999 acquisition of O&R.

Electricity sales volumes for Con Edison of New York and O&R for the nine-month periods ended September 30, 2000 and 1999 are shown at the bottom of their consolidated income statements for those periods included in Part I, Item 1 of this report. Electricity sales volume in Con Edison of New York's service territory increased 0.8 percent for the nine months ended September 30, 2000, compared to the nine months ended September 30, 1999. The increase in sales volume reflects the continued strength of the New York City economy, offset in part by the effects of the cooler than normal summer weather. After adjusting for variations, principally weather and billing days, in each period, electricity sales volume in Con Edison of New York's service territory increased 3.2 percent in the 2000 period. Weather-adjusted sales represent an estimate of the sales that would have been made if historical average weather conditions had prevailed.

Con Edison's purchased power costs increased $1.5 billion in the nine months ended September 30, 2000, compared to the nine months ended September 30, 1999, reflecting a $1.1 billion increase in Con Edison of New York's purchased power costs as a result of its divestiture of most of its generating capacity in 1999, the ongoing Indian Point 2 outage and increases in the price of purchased power and a $254.6 million increase in Con Edison's unregulated subsidiaries' purchased power costs as a result of increased sales and trading volume and increases in the price of purchased power. The increase also reflects $207.0 million of O&R purchased power costs for the nine months ended September 30, 2000, compared to $63.2 million of O&R purchased power costs recognized in the 1999 period following Con Edison's July 1999 acquisition of O&R. Fuel costs decreased $177.1 million as a result of generation divestiture.

Con Edison's electric operating income decreased $16.3 million for the nine months ended September 30, 2000 from the comparable 1999 period, reflecting a decrease in Con Edison of New York's electric operating income of $25.6 million, comprised primarily of a reduction in net revenues (operating revenues less fuel and purchased power) of $225.5 million (reflecting the effects of the cooler than normal summer weather, $76.8 million of electric rate reductions and $58 million of Indian Point 2 replacement power costs that have not been recovered from customers) and $43.6 million of increased transmission

and distribution expenses, offset by decreases in other operations and maintenance expenses (discussed in the following paragraph), property taxes ($33.6 million) and Federal income tax ($70.8 million) and the deferral of electric capacity costs ($49.5 million). The decrease also reflects $40.2 million of O&R electric operating income for the nine months ended September 30, 2000, compared to $30.9 million of O&R electric operating income recognized in the 1999 period following Con Edison's July 1999 acquisition of O&R.

The decrease in the 2000 period in other operations and maintenance expenses reflects certain expenses relating to Indian Point 2, increased pension credits ($91.3 million), and an $89.2 million decrease in expenses relating to Con Edison of New York's other electric generating assets (most of which were sold in 1999). Indian Point 2 refueling and maintenance expenses of $47.1 million, offset by $43.9 million of revenues, were recognized in income in the 2000 period. Approximately $14.4 million of Indian Point 2 refueling and maintenance expenses have been deferred and will be matched against revenues of an equal amount which will be realized during the remaining months of the rate year ending March 2001. In addition, operation and maintenance expenses in the 2000 period reflect $15.2 million of other expenses related to the ongoing Indian Point 2 outage. See "Outage Accounting" in Note G to the Con Edison financial statements included in the Form 10-K and Note C to the Con Edison financial statements included in Part I, Item 1 of this report (which Note C is incorporated herein by reference). The decrease in the 2000 period also reflects $105.7 million of O&R operations and maintenance expenses for the nine months ended September 30, 2000, compared to $42.8 million of O&R operations and maintenance expenses recognized in the 1999 period following Con Edison's July 1999 acquisition of O&R.

Gas

Con Edison's gas operating revenues and operating income increased $168.8 million and $19.1 million, respectively, for the nine months ended September 30, 2000, compared to the nine months ended September 30, 1999. These changes reflect increases in O&R's gas operating revenues of approximately $114.2 million and gas operating income of approximately $11.6 million (reflecting O&R's 1999 financial results only since its July 1999 acquisition by Con Edison), Con Edison of New York's increased gas sales and transportation volumes, and higher pension credits.

Gas sales volumes for Con Edison of New York and O&R for the nine-month periods ended September 30, 2000 and 1999 are shown at the bottom of their consolidated income statements for those periods included in Part I, Item 1 of this report. Gas sales and transportation volume for Con Edison of New York's firm customers increased 4.9 percent in the nine months ended September 30, 2000, compared to the nine months ended September 30, 1999. After adjusting for variations, principally weather and billing days, in each period, firm gas sales and transportation volume increased 2.3 percent in the 2000 period.

A weather-normalization provision that applies to the gas businesses of Con Edison's utility subsidiaries operating in New York moderates, but does not eliminate, the effect of weather-related changes on gas operating income.

Steam

Con Edison of New York's steam operating revenues increased $67.3 million and operating income decreased $4.9 million for the nine months ended September 30, 2000, compared to the nine months ended September 30, 1999. The higher revenues reflect increased fuel and purchased power costs (which it bills to customers under PSC-approved rate provisions).

Steam sales volume decreased 3.3 percent in the 2000 period. After adjusting for variations, principally weather and billing days, in each period, steam sales volume decreased 0.6 percent in the 2000 period.

Net Interest Charges

Net interest charges increased $51.7 million in the 2000 period, reflecting $4.3 million of increased interest expense related to short-term borrowings of Con Edison (the holding company) and increases in Con Edison of New York's interest expense of $14.4 million related to long-term borrowings and $10.5 million related to short-term borrowings, and $8.0 million of interest accrued on the gain on generation divestiture that has been deferred for disposition by the PSC. See "Regulatory Matters - Electric," above. The increase also reflects $19.1 million of O&R interest expense for the nine months ended September 30, 2000, compared to $7.3 million of O&R interest expense recognized in the 1999 period following Con Edison's July 1999 acquisition of O&R. In addition $5.6 million of interest was incurred in the 2000 period on the long-term debt of the Lakewood Project (which Con Edison purchased on June 2000 - see "Liquidity and Capital Resources," above).

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

CON EDISON OF NEW YORK

Consolidated Edison Company of New York, Inc. (Con Edison of New York) is a regulated utility that provides electric service to over three million customers and gas service to over one million customers in New York City and Westchester County. It also provides steam service in parts of Manhattan. All of the common stock of Con Edison of New York is owned by Consolidated Edison, Inc. (Con Edison).

This discussion and analysis should be read in conjunction with Con Edison of New York's Management's Discussion and Analysis of Financial Condition and Results of Operations in Item 7 of the combined Con Edison, Con Edison of New York and Orange and Rockland Utilities, Inc. (O&R) Annual Report on Form 10-K for the year ended December 31, 1999 (File Nos. 1-14514, 1-1217 and 1-4315, the Form 10-K) and Con Edison of New York's Management's Discussion and Analysis of Financial Condition and Results of Operations (Con Edison of New York's earlier 2000 10-Q MD&As) in Part I, Item 2 of the combined Con Edison, Con Edison of New York and O&R Quarterly Reports on Form 10-Q for the quarterly periods ended March 31, 2000 and June 30, 2000 (Con Edison of New York's earlier 2000 Form 10-Qs). Reference is also made to the notes to the financial statements in Part I, Item 1 of this report, which notes are incorporated herein by reference.

Liquidity and Capital Resources

Cash and temporary cash investments and outstanding commercial paper (shown as notes payable on the balance sheet) at September 30, 2000 and December 31, 1999 were (amounts shown in millions):

	September 30, 2000		December 31,1999

Cash and temporary cash investments	$	46.3	$	349.0
Commercial paper	$	165.0	$	495.4

Net cash flows from operating activities during the first nine months of 2000 decreased $478.1 million, compared to the first nine months of 1999, reflecting principally lower net income, pension credits (see discussion of prepayments, below) and increased purchased power costs (see discussion of accounts receivable and recoverable energy costs, below).

Construction expenditures during the first nine months of 2000 increased $166.6 million compared to the first nine months of 1999, principally as a result of expenditures related to meeting load growth on the company's electric distribution system and replacement of the steam generators at its Indian Point 2 nuclear generating unit. See "Nuclear Generation," below.

Con Edison of New York's accounts receivable - customer, less allowance for uncollectible accounts increased $107.7 million at September 30, 2000 compared with year-end 1999, due primarily to increased customer billings, reflecting higher wholesale power costs. The company's equivalent number of days of revenue outstanding (ENDRO) of customer accounts receivable was 26.4 days at September 30, 2000, compared with 28.8 days at December 31, 1999.

Prepayments at September 30, 2000 include cumulative credits to pension expense of $293.0 million, compared with $116.0 million at December 31, 1999. See Note D to the Con Edison of New York financial statements included in Item 8 of the Form 10-K. Prepayments at September 30, 2000 also include prepaid property tax of $129.6 million, compared with $10.7 million at December 31, 1999. Property taxes are generally prepaid on January 1 and July 1 of each year.

Recoverable energy costs increased $103.3 million at September 30, 2000 compared with year-end 1999, reflecting increased purchased power costs discussed below in "Results of Operations," offset in part by the ongoing recovery of previously deferred amounts. Purchased power costs are recovered, on average, 40 days after such costs are incurred. See "Recoverable Fuel Costs" in Note A to the Con Edison of New York financial statements included in Item 8 of the Form 10-K. Also see "Regulatory Matters - Electric," below, and Note C to the Con Edison of New York financial statements included in Part I, Item 1 of this report (which Note C is incorporated herein by reference).

Deferred charges for divestiture - capacity replacement reconciliation increased $49.5 million at September 30, 2000, compared with year-end 1999, reflecting the deferral of incremental electric capacity costs under contracts with the buyers of the generating assets sold by Con Edison of New York incurred prior to the initiation in May 2000 of a capacity market under the New York Independent System Operator. See Note G to the Con Edison of New York financial statements included in Item 8 of the Form 10-K and "Regulatory Matters - Electric," below.

Deferred environmental remediation costs increased $31.2 million at September 30, 2000, compared with year-end 1999, reflecting site investigation and remediation costs deferred under current rate agreements. See Note B to the Con Edison of New York financial statements included in Part I, Item 1 of this report (which Note B is incorporated herein by reference).

Other regulatory assets increased $22.7 million at September 30, 2000 compared with year-end 1999, reflecting the deferral of $14.4 million of Indian Point 2 refueling and maintenance outage expenses discussed below in "Results of Operations."

Unfunded other post-employment benefit (OPEB) obligations (shown as pension and benefit reserve on the balance sheet) were $115.9 million at September 30, 2000, compared to $76.8 million at December 31, 1999. Con Edison of New York's policy is to fund its estimated OPEB costs to the extent deductible under current tax limitations. See Note E to the Con Edison of New York financial statements included in Item 8 of the Form 10-K.

The accumulated provision for injuries and damages was $122.1 million at September 30, 2000, compared to $110.1 million at December 31, 1999. The increase resulted primarily from increased workers' compensation claims.

Accounts payable increased $191.7 million compared with year-end 1999, due primarily to the higher costs of power purchases.

Accrued taxes increased $81.4 million compared to year-end 1999, due principally to timing differences.

Other regulatory liabilities increased $19.5 million compared with year-end 1999, reflecting primarily the deferral under the company's current gas rate agreement of $14.5 million of earnings above a 13 percent threshold that are to be shared with customers (see "Regulatory Matters - Gas" in Con Edison of New York's 10-K MD&A) and $8.0 million of interest on the gain on divestiture (see "Regulatory Matters - Electric," below), offset by the recognition of $22.3 million of previously deferred revenues relating to a scheduled Indian Point 2 refueling and maintenance outage.

Capital Resources

Con Edison of New York's ratio of earnings to fixed charges (for the 12 months ended on the date indicated) and common equity ratio (as of the date indicated) were:

	September 30, 2000	December 31, 1999

Earnings to fixed charges (SEC basis)	3.49	4.17
Common equity ratio*	47.8	49.4

* Common shareholder's equity as a percentage of total capitalization

Con Edison of New York's ratio of earnings to fixed charges decreased for the 12-month period ending September 30, 2000 compared to the 12-month period ending December 31, 1999 as a result of decreased net income available for common stock before Federal income tax and increased interest expense.

Regulatory Matters

Electric

The Agreement continues the rate provisions pursuant to which Con Edison of New York recovers from its customers purchased power and fuel costs. The Agreement does not address the New York State Attorney General's petitions that are discussed below. The Agreement includes the recommendation that the PSC establish a proceeding to consider rate measures that reduce the volatility of fuel and energy costs experienced during the months of peak usage, provided that such measures may neither be materially inconsistent with the Agreement nor adversely impact Con Edison of New York's financial

integrity. For information about recovery of replacement power and other costs relating to Con Edison of New York's Indian Point 2 nuclear generating unit, see Note C to the Con Edison of New York financial statements included in Part I, Item 1 of this report.

about these incremental capacity costs, see "Regulatory Matters" in Con Edison of New York's earlier 2000 10-Q MD&As and Note I to the Con Edison of New York financial statements in Item 8 of the Form 10-K.

The Agreement provides for the approval of Con Edison's acquisition of Northeast Utilities, indicates that the PSC should authorize the merger as being in the public interest and allocates to New York customers approximately half of the net synergy savings applicable to New York utility operations that are expected to result from the merger over the ten-year period ending March 2011. To reflect this allocation, following the completion of the merger, Con Edison of New York will reduce its electric rates by $18.5 million (discussed above) and annually accrue credits of about $3.4 million and $0.9 million, respectively, for its gas and steam customers. The Agreement also amends the existing guidelines governing transactions among affiliates of Con Edison of New York to reflect, to the extent necessary, the requirements of the Public Utility Holding Company Act that will apply following the merger.

For additional information about the 1997 Restructuring Agreement, see "Regulatory Matters - Electric" in Con Edison of New York's 10-K MD&A and "Regulatory Matters" in Con Edison of New York's earlier 2000 10-Q MD&As.

In August and September 2000, the New York State Attorney General (NYSAG) filed petitions with the PSC regarding the rate adjustment mechanisms that permit Con Edison of New York to recover purchased power and other costs from its customers. The petitions seek the institution of a PSC inquiry into the cause of increases in electric bills, to make electric rates temporary until the conclusion of the PSC's inquiry, and to roll those rates back to levels such that customers would pay no more for the same amount of electric service than they would have in 1999. In October 2000, AARP and the Public Utility Law Project of New York, Inc. filed a similar petition with the PSC. Con Edison of New York believes that these petitions are without merit, but is unable to predict whether or not any related proceedings or other actions will have a material adverse effect on its financial position, results of operations or liquidity.

Gas

in rates which was scheduled to be billed to customers beginning January 2001 instead are to be billed to customers beginning April 2001. These provisions are intended to reduce gas costs during the winter months.

Steam

The settlement agreement provides for a $16.6 million steam rate increase to take effect October 2000 and, with limited exceptions, no further changes in steam rates prior to October 2004. The company is required to share with customers 50 percent of any earnings for any rate year covered by the agreement in excess of a specified rate of return on steam common equity (11.0 percent for the first rate year, the 12-month period ending September 2001; 10.5 percent thereafter if the repowering of the company's East River steam-electric generating plant is not completed). A rate moderation mechanism will permit the company to defer a portion of the revenues collected in the first two rate years attributable to the rate increase and recognize such deferrals in income during the last two rate years.

For additional information, see "Regulatory Matters - Steam" in Con Edison of New York's 10-K MD&A.

Nuclear Generation

Con Edison and Con Edison of New York Current Reports on Form 8-K, dated March 30, 2000 and October 10, 2000 and Note C to the Con Edison of New York financial statements included in Part I, Item 1 of this report (which Note C is incorporated herein by reference).

Financial Market Risks

Reference is made to "Financial Market Risks" in Con Edison of New York's 10-K MD&A. At September 30, 2000 neither the fair value of derivatives outstanding nor potential derivative losses from reasonably possible near-term changes in market prices were material to the financial position, results of operations or liquidity of the company.

Environmental Matters

For information concerning potential liabilities of Con Edison of New York arising from laws and regulations protecting the environment, including the Federal Comprehensive Environmental Response, Compensation and Liability Act of 1980 (Superfund), see the notes to Con Edison of New York's financial statements included in Part I, Item 1 of this report and also see Part II, Item 3 of this report.

Results Of Operations

Third Quarter of 2000 Compared with Third Quarter of 1999

Con Edison of New York's net income for common stock for the third quarter of 2000 was $266.3 million, compared with $319.5 million for the third quarter of 1999. Con Edison of New York's net income reflects the effects of the cooler than normal summer weather as compared to the warmer than normal weather experienced in the 1999 period, $29.1 million of electric rate reductions and $28 million of Indian Point 2 replacement power costs that have not been recovered from customers (see "Nuclear Generation," above), offset in part by $57.7 million of increased pension credits (see Note D to the Con Edison of New York financial statements included in Item 8 of the Form 10-K) and a $56.7 million reduction in Federal income taxes.

A comparison of the results of operations of Con Edison of New York for the third quarter of 2000 compared to the third quarter of 1999 follows.

Three Months Ended Sept. 30, 2000 Compared With Three Months Ended Sept. 30, 1999

(Millions of dollars)	Increases (Decreases) Amount			Increases (Decreases) Percent

Operating revenues	$	289.7		13.7	%
Purchased power - electric and steam		409.1		71.2
Fuel - electric and steam		(14.5	)	(13.1	)
Gas purchased for resale		20.4		38.8
Operating revenues less purchased power, fuel and gas purchased for resale (net revenues)		(125.3	)	(9.1	)
Other operations and maintenance		(52.1	)	(14.0	)
Depreciation and amortization		10.7		8.6
Taxes, other than federal income tax		12.5		4.2
Federal income tax		(56.7	)	(31.5	)
Operating income		(39.7	)	(9.9	)
Other income less deductions and related federal income tax		1.8		42.0
Net interest charges		15.3		19.0
Net income for common stock	$	(53.2	)	(16.7	)%

A discussion of Con Edison of New York's operating revenues and operating income by business segment follows. Con Edison of New York's principal business segments are its electric, gas and steam utility businesses. For additional information about Con Edison of New York's business segments, see the notes to the Con Edison of New York financial statements included in Part I, Item 1 of this report.

Electric

Con Edison of New York's electric operating revenues in the third quarter of 2000 increased $255.9 million compared to the third quarter of 1999. The increase reflects increased purchased power costs (which it bills to customers under PSC-approved rate provisions), offset by the effects of the cooler than normal summer weather compared to warmer than normal summer weather for the 1999 period and electric rate reductions of approximately $29.1 million. See Note C to the Con Edison of New York financial statements included in Part I, Item 1 of this report (which Note C is incorporated herein by reference).

Con Edison of New York's electric sales, excluding off-system sales, for the third quarter of 2000 compared with the third quarter of 1999 were:

Millions of KWHRS.

Description	Three Months Ended September 30, 2000	Three Months Ended September 30, 1999	Variation		Percent Variation

Residential/Religious	3,517	4,032	(515	)	(12.8	)%
Commercial/Industrial	5,679	5,612	67		1.2
Other	68	142	(74	)	(52.1	)

TOTAL FULL SERVICE CUSTOMERS	9,264	9,786	(522	)	(5.3	)
Retail Choice Customers	2,597	2,743	(146	)	(5.3	)

SUB-TOTAL	11,861	12,529	(668	)	(5.3	)
NYPA, Municipal Agency and Other Sales	2,682	2,754	(72	)	(2.6	)

TOTAL SERVICE AREA	14,543	15,283	(740	)	(4.8	)%

Electricity sales volume in Con Edison of New York's service territory decreased 4.8 percent in the third quarter of 2000, compared to the third quarter of 1999. The decrease in sales volume reflects the effects of the cooler than normal summer weather, offset in part by the continued strength of the New York City economy. After adjusting for variations, principally weather and billing days, in each period, electricity sales volume in Con Edison of New York's service territory increased 3.0 percent in the 2000 period. Weather-adjusted sales represent an estimate of the sales that would have been made if historical average weather conditions had prevailed.

Con Edison of New York's purchased power costs increased $405.9 million in the third quarter of 2000, compared to the third quarter of 1999, as a result of its divestiture of most of its generating capacity in 1999, replacement power costs for the Indian Point 2 nuclear generating station and increases in the price of purchased power. Fuel costs decreased $31.5 million as a result of generation divestiture.

Con Edison of New York's electric operating income decreased $35.0 million in the third quarter of 2000, compared to the third quarter of 1999. The principal components of the decrease were a reduction in net revenues (operating revenues less fuel and purchased power) of $120.0 million, reflecting the cooler than normal summer weather and $28.0 million of replacement power costs for the Indian Point 2 nuclear generating station that have not been recovered from customers, offset by decreases in other operations and maintenance expenses (discussed in the following paragraph) and lower Federal income tax ($47.3 million).

2001. See "Outage Accounting" in Note G to the Con Edison of New York financial statements included in the Form 10-K and Note C to the Con Edison of New York financial statements included in Part I, Item 1 of this report (which Note C is incorporated herein by reference).

Gas

Con Edison of New York's gas operating revenues increased $17.7 million and operating income decreased $0.8 million in the third quarter of 2000, compared to the third quarter of 1999. These changes reflect increased gas sales and transportation volumes.

Con Edison of New York's gas sales volumes for the third quarter of 2000 and the third quarter of 1999 are shown at the bottom of its consolidated income statement for those periods included in Part I, Item 1 of this report. Gas sales and transportation volume for Con Edison of New York's firm customers increased 8.9 percent in the third quarter of 2000, compared to the 1999 period. Weather had a minimal impact on gas sales for this period.

Steam

Con Edison of New York's steam operating revenues increased $16.0 million and operating income decreased $3.9 million in the third quarter of 2000 compared to the third quarter of 1999. The higher revenues reflect increased fuel and purchased power costs (which it bills to customers under PSC-approved rate provisions).

Con Edison of New York's steam sales volumes for the third quarter of 2000 and the third quarter of 1999 are shown at the bottom of its consolidated income statement for those periods included in Part I, Item 1 of this report. Steam sales volume decreased 13.0 percent in the 2000 period. After adjusting for variations, principally weather and billing days, in each period, steam sales volume decreased 0.5 percent in the 2000 period.

Net Interest Charges

Net interest charges increased $15.3 million in the 2000 period, reflecting $8.2 million of increased interest on long-term borrowings, $2.6 million of increased interest related to short-term borrowings and $4.0 million of interest accrued on the gain on generation divestiture that has been deferred for disposition by the PSC. See "Regulatory Matters - Electric," above.

Nine Months Ended September 30, 2000 Compared with the Nine Months Ended
September 30, 1999

Con Edison of New York's net income for common stock for the nine months ended September 30, 2000 was $515.7 million, compared with $570.7 million for the nine months ended September 30, 1999. Con Edison of New York's net income reflects the effects of cooler than normal summer weather for the 2000 period as compared to the warmer than normal weather experienced in the 1999 period, $76.8 million of electric rate reductions, $58 million of replacement power costs for the Indian Point nuclear generating station that were not recovered from customers, $33.7 million of increased interest charges and increased transmission and distribution expenses of $43.6 million, offset by increased revenues from a favorable economy, increased pension credits of $114.7 million and reduced federal income taxes of $82.8 million.

A comparison of the results of operations of Con Edison of New York for the nine months ended September 30, 2000 compared to the nine months ended September 30, 1999 follows.

Nine Months Ended Sept. 30, 2000 Compared With Nine Months Ended Sept. 30, 1999

	Increases (Decreases) Amount			Increases (Decreases) Percent

Operating revenues	$	823.3		15.6	%
Purchased power - electric and steam		1,109.5		98.0
Fuel - electric and steam		(125.5	)	(35.9	)
Gas purchased for resale		57.3		21.6
Operating revenues less purchased power, fuel and gas purchased for resale (net revenues)		(218.0	)	(6.2	)
Other operations and maintenance		(81.9	)	(7.3	)
Depreciation and amortization		9.9		2.5
Taxes, other than federal income tax		(40.2	)	(4.6	)
Federal income tax		(82.8	)	(24.8	)
Operating income		(23.0	)	(2.8	)
Other income less deductions and related federal income tax		1.7		41.2
Net interest charges		33.7		14.0
Net income for common stock	$	(55.0	)	(9.6	)%

Electric

Con Edison of New York's electric operating revenues in the nine months ended September 30, 2000 increased $698.3 million, compared to the nine months ended September 30, 1999. The increase reflects increased sales volumes and increased purchased power costs (which it bills to customers under

PSC-approved rate provisions), offset by electric rate reductions of approximately $76.8 million. See Note C to the Con Edison of New York financial statements included in Part I, Item 1 of this report (which Note C is incorporated herein by reference).

Con Edison of New York's electric sales, excluding off-system sales, for the nine months ended September 30, 2000 compared with the nine months ended September 30, 1999 were:

Millions of Kwhrs.

Description	Nine Months Ended September 30, 2000	Nine Months Ended September 30, 1999	Variation		Percent Variation

Residential/Religious	8,925	9,224	(299	)	(3.2	)%
Commercial/Industrial	15,049	15,731	(682	)	(4.3	)
Other	308	404	(96	)	(23.8	)

TOTAL FULL SERVICE CUSTOMERS	24,282	25,359	(1,077	)	(4.2	)
Retail Choice Customers	6,974	5,610	1,364		24.3

SUB-TOTAL	31,256	30,969	287		0.9
NYPA, Municipal Agency and Other Sales	7,494	7,483	11		0.1

TOTAL SERVICE AREA	38,750	38,452	298		0.8	%

Electricity sales volume in Con Edison of New York's service territory increased 0.8 percent for the nine months ended September 30, 2000 compared to the nine months ended September 30, 1999. The increase in sales volume reflects the continued strength of the New York City economy, offset in part by the cooler than normal summer weather. After adjusting for variations, principally weather and billing days, in each period, electricity sales volume in Con Edison of New York's service territory increased 3.2 percent in the 2000 period. Weather-adjusted sales represent an estimate of the sales that would have been made if historical average weather conditions had prevailed.

Con Edison of New York's purchased power costs increased $1.1 billion for the nine months ended September 30, 2000, compared to the nine months ended September 30, 1999, as a result of its divestiture of most of its generating capacity in 1999, replacement power costs for the Indian Point 2 nuclear generating station and increases in the price of purchased power. Fuel costs decreased $177.1 million as a result of generation divestiture.

Con Edison of New York's electric operating income decreased $25.6 million in the nine months ended September 30, 2000, compared with the nine months ended September 30, 1999, reflecting decreased net revenues (operating revenues less fuel and purchased power) of $225.5 million (reflecting the effects of the cooler than normal summer weather, $76.8 million of electric rate reductions and $58 million of Indian Point 2 replacement power costs that have not been recovered from customers) and $43.6 million

of increased transmission and distribution expenses, offset by decreases in other operations and maintenance expenses (discussed on the following paragraph) property taxes ($33.6 million) and reduced Federal income tax ($70.8 million) and the deferral of electric capacity costs ($49.5 million).

The decrease in the 2000 period in other operations and maintenance expenses reflects increased pension credits ($91.3 million), an $89.2 million decrease in expenses relating to Con Edison of New York's other electric generating assets (most of which were sold in 1999) and certain expenses relating to Indian Point 2. Indian Point 2 refueling and maintenance expenses of $47.1 million, offset by $43.9 million of revenues, were recognized in income in the 2000 period. Approximately $14.4 million of Indian Point 2 refueling and maintenance expenses have been deferred and will be matched against revenues of an equal amount which will be realized during the remaining months of the rate year ending March 2001. See "Outage Accounting" in Note G to the Con Edison of New York financial statements included in the Form 10-K. In addition, operation and maintenance expenses in the 2000 period reflect $15.2 million of other expenses related to the ongoing Indian Point 2 outage.

Gas

Con Edison of New York's gas operating revenues and operating income increased $57.7 million and $7.5 million, respectively, for the nine months ended September 30, 2000, compared to the nine months ended September 30, 1999. These changes reflect increased gas sales and transportation volumes and higher pension credits.

Con Edison of New York's gas sales volumes for the nine-month periods ended September 30, 2000 and 1999 are shown at the bottom of its consolidated income statement for those periods included in Part I, Item 1 of this report. Gas sales and transportation volume for Con Edison of New York's firm customers increased 4.9 percent for the nine months ended September 30, 2000 compared to the 1999 period. After adjusting for variations, principally weather and billing days, in each period, firm gas sales and transportation volume increased 2.3 percent in the 2000 period.

A weather-normalization provision that applies to Con Edison of New York's gas business moderates, but does not eliminate, the effect of weather-related changes on gas operating income.

Steam

Con Edison of New York's steam sales volumes for the nine-month periods ended September 30, 2000 and 1999 are shown at the bottom of its consolidated income statement for those periods included in

Part I, Item 1 of this report. Steam sales volume decreased 3.3 percent in the 2000 period. After adjusting for variations, principally weather and billing days, in each period, steam sales volume decreased 0.6 percent in the 2000 period.

Net Interest Charges

Net interest charges increased $33.7 million in the 2000 period, reflecting $14.4 million of increased interest on long-term borrowings, $10.5 million of increased interest related to short-term borrowings and $8.0 million of interest accrued on the gain on generation divestiture that has been deferred for disposition by the PSC. See "Regulatory Matters - Electric," above.

O&R Management's Narrative Analysis Of The Results Of Operations

Orange and Rockland Utilities, Inc. (O&R), a wholly-owned subsidiary of Consolidated Edison, Inc. (Con Edison), meets the conditions specified in General Instruction H to Form 10-Q and is permitted to use the reduced disclosure format for wholly-owned subsidiaries of companies, such as Con Edison, that are reporting companies under the Securities Exchange Act of 1934. Accordingly, this O&R Management's Narrative Analysis of the Results of Operations is included in this report, and O&R has omitted from this report the information called for by Part I, Item 2 (Management's Discussion and Analysis of Financial Condition and Results of Operations).

O&R's net income for common stock for the nine months ended September 30, 2000 was $32.4 million, $21.9 million higher than the corresponding 1999 period. The 1999 period included $21.5 million of non-recurring merger and electric generating capacity divestiture related charges. Excluding the impact of these charges, net income increased $0.4 million in the 2000 period compared to the corresponding 1999 period. This increase was due primarily to higher electric and gas sales, a gain on the sale of land by a non-utility subsidiary and reduced operation and maintenance expenses, property taxes, depreciation expense and interest charges. These items were offset in part by rate reductions implemented in 1999 as a result of generation divestiture and acquisition by Con Edison. See Note A to the O&R financial statements in Item 8 of the combined Con Edison, Consolidated Edison Company of New York (Con Edison of New York) and O&R Annual Reports on Form 10-K for the year ended December 31, 1999 (File Nos. 1-14514, 1-1217 and 1-4315, the Form 10-K).

In September 2000 O&R, the Staff of the New York State Public Service Commission (PSC) and other parties entered into a settlement agreement in O&R's gas base rate case. The agreement, which is subject to PSC approval, covers the three-year period ending October 2003. The agreement maintains base gas rates at approximately current levels and allows O&R to record in income over the term of the agreement $18 million of previously deferred credits and Gas Adjustment Clause overcollections. O&R may reduce the term of the agreement to 18 months (with a corresponding reduction in the amount of credits to be recorded to income) if the company and the PSC staff are unable to reach agreement on certain further restructuring of the company's gas business by April 2002.

In October 2000 Con Edison, O&R, Con Edison of New York and Northeast Utilities entered into an agreement with the staff of the PSC and certain other parties. The agreement, which is subject to PSC approval, among other things, provides for the approval by the PSC of Con Edison's acquisition of Northeast Utilities and allocates to New York customers approximately half of the net synergy savings applicable to New York utility operations that are expected to result from the merger over the ten-year period ending March 2011. To reflect this allocation, following the completion of the merger, O&R will annually accrue credits of about $1.15 million and $0.4 million, respectively, for its electric and gas customers.

A comparison of the results of operations of O&R for the nine months ended September 30, 2000 compared to the nine months ended September 30, 1999 follows.

(Millions of dollars)	Increases (Decreases) Amount			Increases (Decreases) Percent

Operating revenues	$	49.3		10.4	%
Purchased power - electric		120.6		(A	)
Fuel - electric		(43.5	)	(A	)
Gas purchased for resale		15.3		24.3
Operating revenues less purchased power, fuel and gas purchased for resale (net revenues)		(43.1	)	(15.4	)
Other operations and maintenance		(59.5	)	(36.0	)
Depreciation and amortization		(4.0	)	(15.3	)
Taxes, other than federal income tax		(15.8	)	(24.9	)
Federal income tax		10.4		(A	)
Operating income		25.8		(A	)
Other income less deductions and related federal income tax		(10.3	)	(73.7	)
Net interest charges		(5.5	)	(22.3	)
Preferred stock dividend requirements		(0.9	)	(A	)
Net income for common stock	$	21.9		(A	)

(A): Amounts in excess of 100 percent

A discussion of O&R's operating revenues by business segment follows. O&R's principal business segments are its electric and gas utility businesses. For additional information about O&R's business segments, see the notes to the O&R financial statements included in Part I, Item 1 of this report.

Electric operating revenues increased $32.0 million in the nine months ended September 30, 2000, compared to the corresponding 1999 period. In the 1999 period, O&R reduced revenues by $24.9 million to reflect a liability to refund to customers this amount of proceeds from the June 1999 divestiture of the company's electric generating assets. See Note H to the O&R financial statements in Item 8 of the Form 10-K. Excluding the impact of this non-recurring accrual, electric operating revenues increased $7.1 million in the 2000 period compared to the corresponding 1999 period, due primarily to an increase in sales and higher purchased power costs (which O&R bills to its New York customers under rate provisions approved by state utility regulatory commissions) in the 2000 period, offset in part by rate reductions in August 1999.

O&R's electric sales volumes for the nine-month periods ended September 30, 2000 and 1999 are shown at the bottom of its consolidated income statement for those periods included in Part I, Item 1 of this report. O&R's electric energy sales in the nine months ended September 30, 2000 increased 3.0 percent from the corresponding 1999 period. The increase was due primarily to the continued strength of the

economy. After adjusting for variations, principally weather and billing days, electricity sales were 5.4 percent higher in the 2000 period. Weather-adjusted sales represent an estimate of the sales that would have been made if historical average weather conditions had prevailed.

O&R's purchased power costs increased $120.6 million during the nine months ended September 30, 2000, compared to the corresponding 1999 period. Fuel costs decreased $43.5 million in the 2000 period. These variations are attributable primarily to the June 1999 divestiture of the company's electric generating assets, higher customer sales, and increases in the cost of purchased energy. O&R's purchased power and fuel costs are recoverable from O&R's customers under rate provisions approved by the PSC. For Rockland Electric Company, an O&R utility subsidiary subject to regulation by the New Jersey Board of Public Utilities, current recovery of these costs is subject to certain limitations, and costs that are not currently recovered are deferred for future recovery. At September 30, 2000, net recoverable purchased power costs of approximately $21.4 million were deferred for future recovery by Rockland Electric Company.

O&R's gas operating revenues increased $13.6 million in the nine months ended September 30, 2000, compared to the corresponding 1999 period. The increase was due primarily to recovery from customers of higher gas costs and increases in gas sales and transportation volumes in the 2000 period. O&R's total sales of gas to customers during the 2000 period increased 4.4 percent compared with the 1999 period.

O&R's gas sales volumes for the nine-month periods ended September 30, 2000 and 1999 are shown at the bottom of its consolidated income statement for those periods included in Part I, Item 1 of this report. O&R's revenues from gas sales in New York are subject to a weather normalization clause. After adjusting for variations, principally weather and billing days, in each period, gas sales and transportation volume was 6.6 percent higher for the 2000 period, compared to the 1999 period.

Non-utility operating revenues in the nine months ended September 30, 2000 increased compared to the corresponding 1999 period, primarily as a result of a $2.4 million after-tax gain on the sale of land by a non-utility subsidiary of O&R that is winding down its business.

O&R's cost of gas purchased for resale increased $15.3 million in the nine months ended September 30, 2000, compared to the corresponding 1999 period, due primarily to higher gas costs and an increase in firm sales for the period.

O&R's other operation and maintenance expenses decreased $59.5 million in the nine months ended September 30, 2000, compared to the corresponding 1999 period, due primarily to the June 1999 divestiture of the company's electric generating assets and operating efficiencies resulting from Con Edison's July 1999 acquisition of the company.

Taxes other than federal income tax decreased $15.8 million in the nine months ended September 30, 2000, compared to the corresponding 1999 period, due primarily to reduced property taxes resulting from the June 1999 divestiture of the company's electric generating assets.

O&R's other income decreased $10.4 million in the nine months ended September 30, 2000, compared to the corresponding 1999 period. The 1999 period included a $14.7 million gain relating to the company's June 1999 divestiture of its electric generating assets. Excluding the impact of the gain in the 1999 period, other income increased $4.3 million in the 2000 period, due primarily to interest earned on proceeds from the divestiture.

O&R's interest charges decreased $5.5 million in the nine months ended September 30, 2000 compared to the corresponding 1999 period, due primarily to lower debt outstanding as a result of repayment of indebtedness with a portion of the proceeds from the June 1999 divestiture of the company's electric generating assets.

O&R redeemed all outstanding shares of its preferred stock in April 1999 and therefore had no preferred stock dividend requirements in the nine months ended September 30, 2000.

Item 3. Quantitative And Qualitative Disclosure About Market Risk

Con Edison

For information about Con Edison's primary market risks associated with activities in derivative financial instruments, other financial instruments and derivative commodity instruments, see "Financial Market Risks" in Con Edison's Management's Discussion and Analysis of Financial Condition and Results of Operations in Part 1, Item 2 of this report and Item 7A of the combined Con Edison, Con Edison of New York and O&R Annual Report on Form 10-K for the year ended December 31, 1999 (the "Form 10-K"), which information is incorporated herein by reference.

Con Edison Of New York

For information about Con Edison of New York's primary market risks associated with activities in derivative financial instruments, other financial instruments and derivative commodity instruments, see "Financial Market Risks" in Con Edison of New York's Management's Discussion and Analysis of Financial Condition and Results of Operations in Part 1, Item 2 of this report and Item 7A of the Form 10-K, which information is incorporated herein by reference.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

Con Edison

Northeast Utilities Shareholders' Suit

Reference is made to "Northeast Utilities Shareholders Suit" in Part II, Item 1, Legal Proceedings in the combined Con Edison, Con Edison of New York and O&R Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2000 (the "First Quarter Form 10-Q").

Con Edison Of New York

Superfund - Arthur Kill Transformer Site

Reference is made to "Superfund - Arthur Kill Transformer Site" in Part I, Item 3, Legal Proceedings of the combined Con Edison, Con Edison of New York and O&R Annual Report on Form 10-K for the year ended December 31, 1999 (the "Form 10-K") and in Part II, Item 1, Legal Proceedings in the First Quarter Form 10-Q.

Superfund - Manufactured Gas Sites

Reference is made to "Superfund - Manufactured Gas Sites" in Part I, Item 3, Legal Proceedings of the Form 10-K and in Part II, Item 1, Legal Proceedings in the combined Con Edison, Con Edison of New York and O&R Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2000 (the "Second Quarter Form 10-Q").

Superfund - BCF Oil Refining Site

Reference is made to "Superfund - BCF Oil Refining Site" in Part II, Item 1, Legal Proceedings in the Second Quarter Form 10-Q.

Superfund - Mattiace Petrochemical Company Site

Reference is made to "Superfund - Mattiace Petrochemical Company Site" in Part II, Item 1, Legal Proceedings in the Second Quarter Form 10-Q.

Employees' Class Action

Reference is made to "Employees' Class Action" in Part I, Item 3, Legal Proceedings of the Form 10-K and in Part II, Item 1, Legal Proceedings in the Second Quarter Form 10-Q. In June 2000, the court preliminarily approved a settlement agreement between Con Edison of New York and the plaintiffs. If the agreement receives final approval, the company will pay an estimated aggregate $10 million (including attorneys' fees) and will take certain actions with respect to its personnel practices. At September 30, 2000, the company had accrued a $12.1 million liability with respect to this action.

Washington Heights Power Outage

Reference is made to "Washington Heights Power Outage" in Part I, Item 3, Legal Proceedings of the Form 10-K. In August 2000, the New York State Supreme Court, New York County denied plaintiffs' motion to certify the class action. In September 2000, the City of New York's lawsuit against the company was discontinued.

Indian Point 2 Outage Litigation

Reference is made to "Indian Point 2 Outage Litigation" in Part II, Item 1, Legal Proceedings in the Second Quarter Form 10-Q and Note C to the Con Edison of New York financial statements included in Part I, Item1 of this report.

Religious Rate Proceedings

Reference is made to "Religious Rate Proceedings" in Part I, Item 3, Legal Proceedings of the Form 10-K. The Appellate Division of the New York State Supreme Court, Second Department has affirmed the trial court's dismissal of plaintiffs' lawsuit and denial of their class certification motion.

O&R

Shareholder Lawsuits

Reference is made to "Shareholder Lawsuits" in Part I, Item 3, Legal Proceedings of the Form 10-K and in Part II, Item 1, Legal Proceedings in the First Quarter Form 10-Q and Second Quarter Form 10-Q. In September 2000, the New York State Court of Appeals denied plaintiffs' motion for leave to appeal the April 2000 Appellate Division of the New York State Supreme Court, First Department's affirmation of the trial court's dismissal of plaintiffs' complaint in Virgilio Ciullo, et al. v. Orange and Rockland Utilities, Inc., et al. Plaintiffs have filed a notice of appeal with the Appellate Division of the New York State Supreme Court, First Department with respect to the May 2000 trial court's dismissal of plaintiffs' actions in Suzanne Hennessy, et al. v. D. Louis Peoples, et al.

O&R Clean Air Act Proceeding

Reference is made to "O&R Clean Air Act Proceeding" in Part II, Item 1, Legal Proceedings in the Second Quarter Form 10-Q.

Crossroads Cogeneration

Reference is made to "Crossroads Cogeneration" in Part I, Item 3, Legal Proceedings of the Form 10-K. In August 2000, the United States District Court for the District of New Jersey denied plaintiff's motion for summary judgement.

Item 6. Exhibits And Reports On Form 8-K

(a) Exhibits

Con Edison

Exhibit 10.1.1		Employment Agreement, dated as of September 1, 2000, between Con Edison and Eugene R. McGrath.
Exhibit 10.1.2		Employment Agreement, dated as of September 1, 2000, between Con Edison and Joan S. Freilich.
Exhibit 10.1.3		Severance Program for Officers of Consolidated Edison, Inc. and its Subsidiaries, effective as of September 1, 2000.
Exhibit 12.1		Statement of computation of Con Edison's ratio of earnings to fixed charges for the twelve-month periods ended September 30, 2000 and 1999.
Exhibit 27.1		Financial Data Schedule for Con Edison.*

Con Edison Of New York

Exhibit 10.2.1		Amendment, dated July 20, 2000, to Employment Contract, dated May 22, 1990, between Con Edison of New York and Eugene R. McGrath.
Exhibit 10.2.2		Agreement, dated August 22, 2000, between Con Edison of New York and J. Michael Evans.
Exhibit 12.2		Statement of computation of Con Edison of New York's ratio of earnings to fixed charges for the twelve-month periods ended September 30, 2000 and 1999.
Exhibit 27.2		Financial Data Schedule for Con Edison of New York.*

O&R

Exhibit 12.3		Statement of computation of O&R's ratio of earnings to fixed charges for the twelve-month periods ended September 30, 2000 and 1999.
Exhibit 27.3		Financial Data Schedule for O&R.*

* To the extent provided in Rule 402 of Regulation S-T, this exhibit shall not be deemed "filed", or otherwise subject to liabilities, or be deemed part of a registration statement.

(b) Reports On Form 8-K

Con Edison of New York filed a Current Report on Form 8-K, dated August 23, 2000, reporting (under Item 5): (i) the issuance and sale of $300 million aggregate principal amount of its 7.50% Debentures, Series 2000 B and (ii) the New York State Attorney General's August 2000 petition discussed under "Regulatory Matters - Electric" in the Management's Discussion and Analysis of Financial Condition and Results of Operation of Con Edison and Con Edison of New York included in Part I, Item 2 of this report.

Con Edison, along with Con Edison of New York and O&R, filed a combined Current Report on Form 8-K, dated September 22, 2000, reporting (under Item 5): (i) the October 2000 agreement with the staff of the New York State Public Service Commission and other parties discussed under "Regulatory Matters - Electric" in the Management's Discussion and Analysis of Financial Condition and Results of Operation of Con Edison and Con Edison of New York included in Part I, Item 2 of this report, and (ii) the increase in the merger consideration and issuance of a draft of the October 2000 decision of the Connecticut Department of Public Utility Control discussed under "Northeast Utilities" in the Management's Discussion and Analysis of Financial Condition and Results of Operation of Con Edison included in Part I, Item 2 of this report.

In addition, Con Edison, along with Con Edison of New York, filed (i) a combined Current Report on Form 8-K, dated October 10, 2000, reporting (under Item 5) the determination by the United States District Court for the Northern District of New York that the Indian Point 2 Law was unconstitutional and certain other developments with respect to the ongoing Indian Point 2 outage discussed in Note C to the Con Edison and Con Edison of New York financial statements included in Part I, Item 1 of this report, and (ii) combined Current Reports on Form 8-K, dated October 31, 2000 and November 3, 2000, furnishing (under Item 9) certain material pursuant to Regulation FD.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, each Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

		Consolidated Edison, Inc.
		Consolidated Edison Company of New York, Inc.
Date: November 13, 2000		By:
		/s/ JOAN S. FREILICH Joan S. Freilich
		Executive Vice President,
		Chief Financial Officer and
		Duly Authorized Officer
		Orange and Rockland Utilities, Inc.
Date: November 13, 2000		By:
		/s/ HYMAN SCHOENBLUM Hyman Schoenblum
		Vice President,
		Chief Financial Officer and
		Duly Authorized Officer