This combined management's discussion and analysis of financial condition and results of operations (MD&A) relates to the consolidated financial statements (the Second Quarter Financial Statements) included in this report of two separate registrants: Consolidated Edison, Inc. (Con Edison) and Consolidated Edison Company of New York, Inc. (Con Edison of New York) and should be read in conjunction with the financial statements and the notes thereto. As used in this report, the term the "Companies" refers to Con Edison and Con Edison of New York. Con Edison of New York is a subsidiary of Con Edison and, as such, information in this MD&A about Con Edison of New York applies to Con Edison.

This MD&A should be read in conjunction with the Second Quarter Financial Statements and the notes thereto and the MD&A in Item 7 of the Companies' combined Annual Report on Form 10-K for the year ended December 31, 2008 (File Nos. 1-14514 and 1-1217, the Form 10-K) and the MD&A in Part I, Item 2 of the Companies' combined Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2009 (File Nos. 1-14514 and 1-1217, the First Quarter Form 10-Q).

Information in the notes to the consolidated financial statements referred to in this discussion and analysis is incorporated by reference herein. The use of terms such as "see" or "refer to" shall be deemed to incorporate by reference into this discussion and analysis the information to which reference is made.

Corporate Overview

Con Edison's principal business operations are those of its utility companies,
Con Edison of New York and Orange and Rockland Utilities, Inc. (O&R), together
known as the "Utilities." Con Edison also has competitive energy businesses (see
"Competitive Energy Businesses," below). Certain financial data of Con Edison's
businesses is presented below:



                                     Three Months Ended June 30, 2009                         Six Months Ended June 30, 2009                   At June 30, 2009
                                   Operating                 Net Income for                 Operating               Net Income for
(Millions of Dollars)               Revenues                  Common Stock                  Revenues                 Common Stock                   Assets
Con Edison of New York       $    2,220          78 %      $    136         91 %      $   4,990          79 %     $    333        101 %      $    30,444      90%
O&R                                 183           6 %             2          1 %            434           7 %           14          4 %            2,128       6%
Total Utilities                   2,403          84 %           138         92 %          5,424          86 %          347        105 %           32,572      96%
Con Edison Development(a)             -           - %             -          - %              -           - %            -          - %              425       1%
Con Edison Energy(a)                129           5 %            (8 )       (5 )%           312           5 %            4          1 %              249       1%
Con Edison Solutions(a)             324          11 %            23         15 %            552           9 %          (14 )       (4 )%             168       1%
Other(b)                            (11 )         - %            (3 )       (2 )%           (19 )         - %           (7 )       (2 )%             296       1%
Total Con Edison             $    2,845         100 %      $    150        100 %      $   6,269         100 %     $    330        100 %      $    33,710     100%

(a) Net income from the competitive energy businesses for the three and six months ended June 30, 2009 includes $19 million and $(15) million, respectively, of net after-tax mark-to-market gains/(losses) (Con Edison Development, $1 million and $2 million, Con Edison Energy, $0 million and $6 million and Con Edison Solutions, $18 million and $(23) million).

(b) Represents inter-company and parent company accounting. See "Results of Operations," below.

MANAGEMENT'S DISCUSSION AND ANALYSISOF FINANCIAL CONDITION

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NEW YORK) - CONTINUED

Con Edison's net income for common stock for the three months ended June 30, 2009 was $150 million or $0.55 a share compared with earnings of $552 million or $2.02 a share for the three months ended June 30, 2008. Net income for common stock for the six months ended June 30, 2009 was $330 million or $1.20 a share compared with earnings of $854 million or $3.14 a share for the six months ended June 30, 2008. See "Results of Operations-Summary," below.

Regulated Utilities

Con Edison of New York provides electric service to approximately 3.3 million customers and gas service to approximately 1.1 million customers in New York City and Westchester County. The company also provides steam service in parts of Manhattan. O&R, along with its regulated utility businesses, provides electric service to approximately 0.3 million customers in southeastern New York and adjacent areas of northern New Jersey and eastern Pennsylvania and gas service to over 0.1 million customers in southeastern New York and adjacent areas of eastern Pennsylvania.

The Utilities are primarily "wires and pipes" energy delivery businesses that deliver energy in their service areas subject to extensive federal and state regulation. The Utilities' customers buy this energy from the Utilities, or from other suppliers through the Utilities' retail access programs. The Utilities purchase substantially all of the energy they sell to customers pursuant to firm contracts or through wholesale energy markets, and recover (generally on a current basis) the cost of the energy sold, pursuant to approved rate plans.

Con Edison anticipates that the Utilities will continue to provide substantially all of its earnings over the next few years. The Utilities' earnings will depend on various factors including demand for utility service and the Utilities' ability to charge rates for their services that reflect the costs of service, including a return on invested equity capital.

Because the energy delivery infrastructure must be adequate to meet demand in peak periods with a high level of reliability, the Utilities' capital investment plans reflect in great part past actual electric peak demand adjusted to summer design weather conditions, as well as forecast growth in peak usage. The factors affecting demand for utility service include growth of customer demand, weather, market prices for energy, economic conditions and measures that promote energy efficiency. Demand for electric service peaks during the summer air conditioning season. Demand for gas and steam service peaks during the winter heating season.

MANAGEMENT'S DISCUSSION AND ANALYSISOF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS(COMBINED FOR CON EDISON AND CON EDISON OF

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The weather during the summer of 2008 was cooler than design conditions. The highest peak electric demand reached in 2008 was 12,987 MW for Con Edison of New York and 1,530 MW for O&R. Both peaks occurred on June 10, 2008. The Companies have continued to monitor the effects of the ongoing global financial turmoil on the local economy and have reduced their outlook for customer demand. The Utilities currently estimate that, under design weather conditions, the 2009 peak electric demand in their respective service areas will be 13,750 MW for Con Edison of New York and 1,650 MW for O&R. The average annual growth rate of the peak electric demand over the next five years at design conditions is estimated to be approximately 0.6 percent for Con Edison of New York and 2.1 percent for O&R. The Con Edison of New York forecasted peak demand includes the impact of permanent demand reduction programs. The Companies anticipate an ongoing need for substantial capital investment in order to meet this growth in peak usage with the high level of reliability that they currently provide (see "Liquidity and Capital Resources-Capital Requirements," below).

The Utilities have rate plans approved by state utility regulators that cover the rates they can charge their customers. Con Edison of New York's electric, gas and steam rate plans are effective through April 2010, September 30, 2010 and September 30, 2010, respectively. In April 2009, the New York State Public Service Commission (PSC) adopted an order granting Con Edison of New York an electric rate increase, retroactive to April 6, 2009. In May 2009, Con Edison of New York filed a request for a new electric rate plan to be effective April 2010. O&R's rate plans for its electric and gas service in New York and its subsidiary's electric service in New Jersey extend through June 30, 2011, October 31, 2009 and March 31, 2010, respectively. In June 2009, O&R entered into a Joint Proposal with the PSC staff and other parties which, subject to PSC approval, will establish a rate plan for O&R's gas service in New York for the period from November 1, 2009 through October 31, 2012. Pursuant to the Utilities' multi-year rate plans, charges to customers generally may not be changed during the respective terms of the rate plans other than for recovery of the costs incurred for energy supply, for specified increases provided in the rate plans and for limited other exceptions. The New York rate plans for Con Edison of New York's gas and steam operations as well as O&R's electric and gas operations generally require the Utilities to share with customers earnings in excess of specified rates of return on common equity capital. Under the revenue decoupling mechanisms in Con Edison of New York's current electric and gas rate plans and O&R's electric rate plan, the Utilities' revenues will generally not be affected by changes in delivery volumes from levels assumed when rates were approved. See "Regulatory Matters," below, "Recoverable Energy Costs" and "Rate Agreements" in Notes A and B, respectively, to the financial statements in Item 8 of the Form 10-K and Notes A and B to the Second Quarter Financial Statements.

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Accounting rules and regulations for public utilities include Statement of Financial Accounting Standards (SFAS) No. 71, "Accounting for the Effects of Certain Types of Regulation," pursuant to which the economic effects of rate regulation are reflected in financial statements. See "Application of Critical Accounting Policies" in Item 7 of the Form 10-K.

Competitive Energy Businesses

Con Edison's competitive energy businesses participate in segments of the electricity industry that are less comprehensively regulated than the Utilities. These segments include the sales and related hedging of electricity to wholesale and retail customers and sales of certain energy-related products and services. At June 30, 2009, Con Edison's equity investment in its competitive energy businesses was $215 million and their assets amounted to $842 million. Con Edison is evaluating additional opportunities to invest in electric and gas-related businesses.

Consolidated Edison Solutions, Inc. (Con Edison Solutions) sells electricity directly to delivery-service customers of utilities primarily in the Northeast and Mid-Atlantic regions (including some of the Utilities' customers) and also offers energy-related services. Con Edison Solutions does not sell electricity to the Utilities. The company sold approximately 5.6 million MWHs of electricity to customers over the six-month period ended June 30, 2009.

Consolidated Edison Development, Inc. (Con Edison Development) participates in infrastructure projects. In 2008, Con Edison Development and its subsidiary, CED/SCS Newington, LLC, completed the sale of their ownership interests in power generating projects with an aggregate capacity of approximately 1,706 MW. See Note M to the Second Quarter Financial Statements.

Consolidated Edison Energy, Inc. (Con Edison Energy) procures electric energy and capacity for Con Edison Solutions and fuel for other companies. It sells the electric capacity and energy produced by plants owned, leased or operated by others. The company also provides energy risk management services to Con Edison Solutions, offers these services to others and enters into wholesale supply transactions.

Discontinued Operations

In 2008, Con Edison Development and its subsidiary, CED/SCS Newington, LLC, completed the sale of their ownership interests in power generating projects with an aggregate capacity of approximately 1,706 MW. See Note M to the Second Quarter Financial Statements.

MANAGEMENT'S DISCUSSION AND ANALYSISOF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS(COMBINED FOR CON EDISON AND CON EDISON OF

NEW YORK) - CONTINUED

Results of Operations-Summary

Con Edison's earnings per share for the three months ended June 30, 2009 were $0.55 (basic and diluted basis) compared with $2.02 (basic and diluted basis) for the 2008 period. Con Edison's earnings per share for the six months ended June 30, 2009 were $1.20 (basic and diluted basis) compared with $3.14 ($3.13 on a diluted basis) for the 2008 period.

Net income for common stock for the three and six months ended June 30, 2009 and 2008 was as follows:

                                         Three Months Ended June 30,                Six Months Ended June 30,
                                     -----------------------------------        ---------------------------------
(Millions of Dollars)                    2009                   2008               2009                  2008
Con Edison of New York               $        136           $        121        $       333           $       340
O&R                                             2                      3                 14                    16
Competitive energy businesses(a)               15                    158                (10 )                 197
Other(b)                                       (3 )                   (2 )               (7 )                  27
Total continuing operations                   150                    280                330                   580
Discontinued operations(c)                      -                    272                  -                   274
CON EDISON                           $        150           $        552        $       330           $       854

(a) Income from continuing operations of the competitive energy businesses for the three and six months ended June 30, 2009 includes $19 million and $(15) million of net after-tax mark-to-market gains/(losses), respectively. Income from continuing operations of the competitive energy businesses for the three and six months ended June 30, 2008 includes $30 million and $63 million of net after-tax mark-to-market gains, respectively. Income from continuing operations in 2008 also includes $136 million after-tax from the gain on the sale of Con Edison Development's generation projects. See Note M to the Second Quarter Financial Statements.

(b) Other consists of inter-company and parent company accounting. The six month period ended June 30, 2008 includes $30 million of after-tax net income related to the resolution of Con Edison's legal proceeding with Northeast Utilities. See "Results of Operations," below.

(c) Represents the discontinued operations of certain of Con Edison Development's generation projects, which includes a $270 million after-tax gain on the sale of generation projects for the three and six months ended June 30, 2008, respectively. See Note M to the Second Quarter Financial Statements.

Con Edison's results of operations for the three and six months ended June 30, 2009, as compared with the 2008 period, reflect changes in the Utilities' rate plans (including additional revenues designed to recover increases in certain operations and maintenance expenses, depreciation and property taxes, and interest charges), and the operating results of the competitive energy businesses (including net mark-to-market effects). The results of operations for the six months ended June 30, 2009, as compared with the 2008 period include a lower allowed electric return on common equity for Con Edison of New York in 2009 for the first quarter, offset in part by a higher allowed return for the second quarter. Operations and maintenance expenses were higher in the three and six months ended June 30, 2009 compared with the 2008 period reflecting primarily higher costs, which are generally reflected in rates, such as pension and other post-retirement benefits and uncollectible accounts.

MANAGEMENT'S DISCUSSION AND ANALYSISOF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS(COMBINED FOR CON EDISON AND CON EDISON OF

NEW YORK) - CONTINUED

Depreciation and property taxes were higher in the three and six months ended June 30, 2009 compared with the 2008 period reflecting primarily the impact from increased capital expenditures and higher property tax rates. Results of operations for Con Edison in the 2008 period include the gain on the sale of generation projects and the impact of discontinued operations and for the six months ended June 30, 2008 include the resolution of litigation with Northeast Utilities.

The following table presents the estimated effect on earnings per share and net income for common stock for the three and six months ended June 30, 2009 as compared with the 2008 period, resulting from these and other major factors:

                                                         Three Months Variation                           Six Months Variation
                                                                       Net Income for                                 Net Income for
                                                Earnings                Common Stock            Earnings               Common Stock
                                                per Share          (Millions of Dollars)        per Share          (Millions of Dollars)
Con Edison of New York
Rate plans, primarily to recover increases
in certain costs                               $      0.28         $                   76      $      0.44        $                   123
Operations and maintenance expense                   (0.06 )                          (16 )          (0.22 )                          (59 )
Long Island City power outage reserve in
2008                                                     -                              -             0.05                             14
Depreciation, property taxes and other tax
matters                                              (0.12 )                          (33 )          (0.20 )                          (53 )
Net interest expense                                 (0.05 )                          (14 )          (0.08 )                          (21 )
Other (includes dilutive effect of new stock
issuances)                                           (0.01 )                            2            (0.03 )                          (11 )
Total Con Edison of New York                          0.04                             15            (0.04 )                           (7 )
Orange and Rockland Utilities                            -                             (1 )          (0.01 )                           (2 )
Competitive energy businesses
Earnings excluding net mark-to-market
effects, gain on the sale of generation
projects and discontinued operations                  0.02                              4             0.03                              8
Net mark-to-market effects                           (0.04 )                          (11 )          (0.29 )                          (79 )
Gain on the sale of generation projects              (0.50 )                         (136 )          (0.50 )                         (136 )
Discontinued operations                              (0.99 )                         (272 )          (1.01 )                         (274 )
Total Competitive energy businesses                  (1.51 )                         (415 )          (1.77 )                         (481 )
Northeast Utilities litigation settlement                -                              -            (0.11 )                          (30 )
Other, including parent company expenses                 -                             (1 )          (0.01 )                           (4 )
Total                                          $     (1.47 )       $                 (402 )    $     (1.94 )      $                  (524 )

See "Results of Operations," below for further discussion and analysis of results of operations.

Risk Factors

The Companies' businesses are influenced by many factors that are difficult to predict, and that involve uncertainties that may materially affect actual operating results, cash flows and financial condition. The factors include those described under "Risk Factors" in Item 7 of the Form 10-K.

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Forward-Looking Statements

This report includes forward-looking statements intended to qualify for the safe-harbor provisions of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are statements of future expectation and not facts. Words such as "expects," "estimates," "anticipates," "intends," "believes," "plans," "will" and similar expressions identify forward-looking statements. Forward-looking statements are based on information available at the time the statements are made, and accordingly speak only as of that time. Actual results or developments might differ materially from those included in the forward-looking statements because of various factors such as those discussed under "Risk Factors" in Item 7 of the Form 10-K.

Application of Critical Accounting Policies

The Companies' financial statements reflect the application of their accounting policies, which conform to accounting principles generally accepted in the United States of America. The Companies' critical accounting policies include industry-specific accounting applicable to regulated public utilities and accounting for pensions and other postretirement benefits, contingencies, long-lived assets, derivative instruments, goodwill and leases. See "Application of Critical Accounting Policies" in Item 7 of the Form 10-K.

Liquidity and Capital Resources

The Companies' liquidity reflects cash flows from operating, investing and financing activities, as shown on their respective consolidated statement of cash flows and as discussed below. See "Liquidity and Capital Resources" in Item 7 of the Form 10-K. Changes in the Companies' cash and temporary cash investments resulting from operating, investing and financing activities for the six months ended June 30, 2009 and 2008 are summarized as follows:

                                               Con Edison                           Con Edison of New York
(Millions of Dollars)               2009         2008        Variance         2009          2008         Variance
Operating activities              $  1,437      $ 1,290      $     147       $ 1,327      $  1,065      $      262
Investing activities                (1,119 )        294         (1,413 )        (959 )      (1,060 )           101
Financing activities                   (81 )        (37 )          (44 )        (115 )         215            (330 )
Net change                             237        1,547         (1,310 )         253           220              33
Balance at beginning of period          74          210           (136 )          37           121             (84 )
Balance at end of period          $    311      $ 1,757      $  (1,446 )     $   290      $    341      $      (51 )

MANAGEMENT'S DISCUSSION AND ANALYSISOF FINANCIAL CONDITION

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Cash Flows from Operating Activities

The Utilities' cash flows from operating activities reflect principally their energy sales and deliveries and cost of operations. The volume of energy sales and deliveries is dependent primarily on factors external to the Utilities, such as growth of customer demand, weather, market prices for energy, economic conditions and measures that promote energy efficiency. Under the revenue decoupling mechanisms in Con Edison of New York's electric and gas rate plans and O&R's electric rate plan, changes in delivery volumes from levels assumed when rates were approved may affect the timing of cash flows but not net income. See Note B to the financial statements in Item 8 of the Form 10-K and Note B to the Second Quarter Financial Statements. The prices at which the Utilities provide energy to their customers are determined in accordance with their rate agreements. In general, changes in the Utilities' cost of purchased power, fuel and gas may affect the timing of cash flows but not net income because the costs are recovered in accordance with rate agreements. See "Recoverable Energy Costs" in Note A to the financial statements in Item 8 of the Form 10-K.

Net income is the result of cash and non-cash (or accrual) transactions. Only cash transactions affect the Companies' cash flows from operating activities. Principal non-cash charges include depreciation and deferred income tax expense. Principal non-cash credits include amortizations of certain net regulatory liabilities and the 2008 pre-tax gain on the sale of Con Edison Development's generation projects. Non-cash charges or credits may also be accrued under the revenue decoupling mechanisms in Con Edison of New York's current electric and gas rate plans and O&R's electric rate plan. See "Application of Critical Accounting Policies-Accounting for Pensions and Other Postretirement Benefits" in Item 7 of the Form 10-K and Notes B, E and F to the Second Quarter Financial Statements.

In March 2009, Con Edison of New York adopted unbilled revenue accounting which had the non-cash effect of increasing an accrued unbilled revenue receivable and regulatory liabilities. See Note A to the Second Quarter Financial Statements.

Net cash flows from operating activities for the six months ended June 30, 2009 . . .