This combined management's discussion and analysis of financial condition and results of operations (MD&A) relates to the consolidated financial statements (the Third 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 Third 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 periods ended March 31, 2009 and June 30, 2009 (File Nos. 1-14514 and 1-1217, the First Quarter Form 10-Q and the Second Quarter Form 10-Q, respectively).

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                                  Nine Months Ended
                                         September 30, 2009                                 September 30, 2009                        At September 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       $ 2,655        76 %     $    282         84 %      $ 7,645        78 %     $    615         92 %      $        30,925          90%
O&R                              235         7 %           19          6 %          670         7 %           34          5 %                2,175           6%
Total Utilities                2,890        83 %          301         90 %        8,315        85 %          649         97 %               33,100          96%
Con Edison Development(a)          -         - %           (4 )       (1 )%           -         - %           (4 )       (1 )%                 421           1%
Con Edison Energy(a)             160         4 %           (9 )       (3 )%         472         5 %           (6 )       (1 )%                 190           1%
Con Edison Solutions(a)          452        13 %           51         15 %        1,004        10 %           37          6 %                  208           1%
Other(b)                         (13 )       - %           (3 )       (1 )%         (33 )       - %          (10 )       (1 )%                 293           1%
Total Con Edison             $ 3,489       100 %     $    336        100 %      $ 9,758       100 %     $    666        100 %      $        34,212         100%

(a) Net income from the competitive energy businesses for the three and nine months ended September 30, 2009 includes $16 million and $1 million, respectively, of net after-tax mark-to-market gains/(losses) (Con Edison Development, $0 million and $2 million, Con Edison Energy, $(11) million and $(5) million and Con Edison Solutions, $27 million and $4 million).

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

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Con Edison's net income for common stock for the three months ended September 30, 2009 was $336 million or $1.22 a share compared with earnings of $182 million or $0.66 a share for the three months ended September 30, 2008. Net income for common stock for the nine months ended September 30, 2009 was $666 million or $2.43 a share compared with earnings of $1,036 million or $3.80 a share for the nine months ended September 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.

The weather during the summer of 2009 was cooler than design conditions. The highest peak electric demand reached in 2009 was 12,242 MW for Con Edison of New York on August 21, 2009 and 1,375

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MW for O&R on August 17, 2009. 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 2010 peak electric demand in their respective service areas will be 13,500 MW for Con Edison of New York and 1,595 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 0.3 percent for Con Edison of New York and 0.9 percent for O&R. The Utilities' 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 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, 2012 and March 31, 2010, respectively. 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 New York electric and (beginning November 2009) gas rate plans, 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 Third Quarter Financial Statements.

The economic effects of rate regulation are reflected in financial statements pursuant to the accounting rules for regulated operations. See "Application of Critical Accounting Policies" in Item 7 of the Form 10-K.

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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 September 30, 2009, Con Edison's equity investment in its competitive energy businesses was $250 million and their assets amounted to $819 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 9.5 million MWHs of electricity to customers over the nine-month period ended September 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 N to the Third 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 N to the Third Quarter Financial Statements.

Results of Operations-Summary

Con Edison's earnings per share for the three months ended September 30, 2009 were $1.22 (basic and diluted basis) compared with $0.66 (basic and diluted basis) for the 2008 period. Con Edison's earnings per share for the nine months ended September 30, 2009 were $2.43 ($2.42 on a diluted basis) compared with $3.80 ($3.79 on a diluted basis) for the 2008 period.

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

                                         Three Months Ended September 30,                 Nine Months Ended September 30,
                                      ---------------------------------------         ----------------------------------------
(Millions of Dollars)                     2009                      2008                  2009                      2008
Con Edison of New York                $         282             $         250         $        615            $            590
O&R                                              19                        19                   34                          35
Competitive energy businesses(a)                 38                       (86 )                 27                         112
Other(b)                                         (3 )                      (1 )                (10 )                        25
Total continuing operations                     336                       182                  666                         762
Discontinued operations(c)                        -                         -                    -                         274
CON EDISON                            $         336             $         182         $        666            $          1,036

(a) Income from continuing operations of the competitive energy businesses for the three and nine months ended September 30, 2009 includes $16 million and $1 million of net after-tax mark-to-market gains, respectively. Income from continuing operations of the competitive energy businesses for the three and nine months ended September 30, 2008 includes $(88) million and $(25) million of net after-tax mark-to-market losses, respectively. Income from continuing operations in 2008 also includes $137 million after-tax from the gain on the sale of Con Edison Development's generation projects. See Note N to the Third Quarter Financial Statements.

(b) Other consists of inter-company and parent company accounting. The nine month period ended September 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 nine months ended September 30, 2008, respectively. See Note N to the Third Quarter Financial Statements.

Con Edison's results of operations for the three and nine months ended September 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 three months ended September 30, 2009 include a higher allowed electric return on common equity as compared with the 2008 period reflecting increased capital costs. The results of operations for the nine months ended September 30, 2009, as compared with the 2008 period include a higher allowed electric return on common equity for Con Edison of New York in 2009 for the second and third quarters, offset in part by, a lower allowed return for the first quarter. Operations and maintenance expenses were higher in the three and nine months ended September 30, 2009 compared with the 2008 period reflecting primarily higher costs, which are generally reflected in rates, such as pension and other postretirement benefits and uncollectible accounts that were offset in part by austerity initiatives reflecting the general economic downturn. Depreciation and property taxes were higher in the three and nine months ended September 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 for the nine

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months ended September 30, 2008 period include the gain on the sale of generation projects, the impact of discontinued operations and 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 nine months ended September 30, 2009 as compared with the 2008 period, resulting from these and other major factors:

                                                   Three Months Variation                                Nine 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             $       0.49           $                   134         $      0.95          $                  256
Operations and maintenance
expense                                       (0.18 )                             (48 )             (0.39 )                          (107 )
Long Island City power outage
reserve in 2008                                   -                                 -                0.05                              14
Depreciation and property taxes               (0.20 )                             (54 )             (0.38 )                          (104 )
Net interest expense                          (0.04 )                             (11 )             (0.12 )                           (32 )
Other (includes dilutive effect
of new stock issuances)                        0.05                                11               (0.03 )                            (2 )
Total Con Edison of New York                   0.12                                32                0.08                              25
Orange and Rockland Utilities                     -                                 -               (0.01 )                            (1 )
Competitive energy businesses
Earnings excluding net
mark-to-market effects, gain on
the sale of generation projects
and discontinued operations                    0.07                                19                0.10                              27
Net mark-to-market effects                     0.38                               105                0.09                              26
Gain on the sale of generation
projects                                          -                                (1 )             (0.50 )                          (137 )
Discontinued operations                           -                                 -               (1.01 )                          (274 )
Total Competitive energy
businesses                                     0.45                               123               (1.32 )                          (358 )
Northeast Utilities litigation
settlement                                        -                                 -               (0.11 )                           (30 )
Other, including parent company
expenses                                      (0.01 )                              (1 )             (0.01 )                            (6 )
Total                                  $       0.56           $                   154         $     (1.37 )        $                 (370 )

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.

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

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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 nine months ended September 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              $  1,460       $   50       $   1,410        $  1,326       $    487       $      839
Investing activities                (1,646 )       (288 )        (1,358 )        (1,456 )       (1,611 )            155
Financing activities                   187           96              91             147          1,042             (895 )
Net change                               1         (142 )           143              17            (82 )             99
Balance at beginning of period          74          210            (136 )            37            121              (84 )
Balance at end of period          $     75       $   68       $       7        $     54       $     39       $       15

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 New York electric and (beginning November 2009) gas rate plans, changes in delivery volumes from levels assumed when rates were

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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 Third 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 New York electric and (beginning November 2009) gas rate plans. 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 Third Quarter Financial Statements.

. . .