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Form 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

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, 2002, Consolidated Edison, Inc. ("Con Edison") had outstanding 213,622,478 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.

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TABLE OF CONTENTS

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

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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.

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Consolidated Edison, Inc.


CONSOLIDATED BALANCE SHEET
(UNAUDITED)

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

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Consolidated Edison, Inc.

CONSOLIDATED BALANCE SHEET
(UNAUDITED)

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

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Consolidated Edison, Inc.

CONSOLIDATED INCOME STATEMENT
(UNAUDITED)

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

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Consolidated Edison, Inc.

CONSOLIDATED INCOME STATEMENT
(UNAUDITED)

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

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Consolidated Edison, Inc.

CONSOLIDATED STATEMENT OF RETAINED EARNINGS
(UNAUDITED)

Consolidated Edison, Inc.

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
(UNAUDITED)

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

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Consolidated Edison, Inc.

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
(UNAUDITED)

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

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Consolidated Edison, Inc.

CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)

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

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NOTES TO FINANCIAL STATEMENTS (UNAUDITED) - CONSOLIDATED EDISON, INC.

Note A - General

These notes accompany and form an integral part of the interim consolidated financial statements of Consolidated Edison, Inc. and its subsidiaries (Con Edison), 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) and several unregulated subsidiaries. These financial statements are unaudited but, in the opinion of Con Edison's management, reflect all adjustments (which include only normally recurring adjustments with the exception of the cumulative effect of a change in accounting principle) necessary for a fair presentation 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 Reports on Form 10-K for the year ended December 31, 2001 (the Form 10-K). Results for interim periods are not necessarily indicative of results for the entire fiscal year.

Earnings Per Common Share

In accordance with Statement of Financial Accounting Standards (SFAS) No. 128, "Earnings per Share," Con Edison presents basic and diluted earnings per share on the face of the Consolidated Income Statement. Basic earnings per share (EPS) is calculated by dividing earnings available to common shareholders ("Net income for common stock" on the Consolidated Income Statement) by the weighted average number of common shares outstanding during the period. In the calculation of diluted EPS, weighted average shares outstanding are increased for additional shares that would be outstanding if potentially dilutive securities were converted to common stock.

Potentially dilutive securities for Con Edison consist of restricted stock and stock options whose exercise price is less than the average market price of the common shares during the reporting period. These options were granted under the company's Stock Option Plan (see Note M to the Con Edison financial statements included in Item 8 of the Form 10-K).

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Basic and diluted EPS are calculated as follows:

Stock options to purchase 6.43 million and 5.01 million common shares for the three months ended September 30, 2002 and 2001, and 6.35 million and 5.21 million common shares for the nine months ending September 30, 2002 and 2001, were not included in the respective period's computation of diluted earnings per share because the exercise prices of the options were greater than the average market price of the common shares.

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 facilities and equipment currently or previously owned by the utility subsidiaries.

The Federal Comprehensive Environmental Response, Compensation and Liability Act of 1980 (Superfund) and similar state statutes impose joint and several strict liabilities 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.

The nature of the environmental remediation costs for the sites at which Con Edison has been asserted to have liability for remediation under Superfund or similar state statutes, including its manufactured gas sites (Con Edison's Superfund Sites), include investigation, demolition, removal, storage, replacement,

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containment and monitoring costs. The liability accrued for Con Edison's Superfund Sites has been developed on a site-by-site basis without separate accounting for the specific components of the costs. For sites where there are other potentially responsible parties and the company is not managing the site investigation and remediation, the liability accrued represents the company's best estimate of what it will need to pay to settle its obligations with respect to the site. For other sites, the liability accrued represents the company's best estimate of its investigation and remediation costs for the site. In either case, the company makes its best estimate of its undiscounted liability for each site in light of the applicable remediation standards, experience with similar sites, the information it has available to it at the time about the site and site-specific assumptions about such matters as the extent of contamination and remediation and monitoring methods to be used. For some of the sites, the available information includes consultant reports that provide a probabilistic range of potential exposure. The liability accrued for Con Edison's Superfund Sites is reviewed at least quarterly and adjusted as determined to be necessary.

At September 30, 2002, Con Edison had accrued $142.7 million as its best estimate of its liability for Con Edison's Superfund Sites. There will be additional liability relating to these sites and other sites. The amount of the additional liability 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, 2002, $72.0 million of such costs had been deferred as regulatory assets.

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. The suits that have been resolved, which are many, have been resolved without any payment by the utility subsidiaries, or for amounts that were not, in the aggregate, material to the company. The amounts specified in all the remaining suits total billions of dollars. However, Con Edison believes that these amounts are greatly exaggerated, as experienced through the disposition of previous claims. Based on the information and relevant circumstances known to Con Edison at this time, these suits are not expected to have a material adverse effect on Con Edison's financial position, results of operations or liquidity.

Workers' compensation administrative proceedings have been commenced, wherein current and former employees claim benefits based upon alleged disability from exposure to asbestos. Based on the information and relevant circumstances known to Con Edison at this time, these claims are not expected to have a material adverse effect on Con Edison's financial position, results of operations or liquidity. At September 30, 2002, Con Edison had accrued a $129.8 million provision as its best estimate of the utility subsidiaries' liability for workers' compensation claims, including those related to asbestos exposure. Of this amount $58.4 million was deferred as a regulatory asset.

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Note C - Nuclear Generation

The New York State Public Service Commission (PSC) is investigating the February 2000 to January 2001 outage of the nuclear generating unit sold by Con Edison of New York in September 2001, its causes and the prudence of the company's actions regarding the operation and maintenance of the generating unit. The proceeding covers, among other things, Con Edison of New York's inspection practices, the circumstances surrounding prior outages, the basis for postponement of the unit's 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 has billed to customers replacement power costs for the outage incurred prior to August 2000 and after October 2000, but not approximately $90 million of replacement power costs incurred in August through October 2000. Con Edison of New York has also accrued a $40 million liability for the possible disallowance of replacement power costs that it had previously recovered from customers.

In June 2002, the United States Court of Appeals for the Second Circuit unanimously affirmed the October 2000 decision by the 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., in which the district court had determined that the New York State law that directed the PSC to prohibit Con Edison of New York from recovering replacement power costs for the outage from customers was unconstitutional and granted the company's motion for a permanent injunction to prevent its implementation. The defendants are seeking to have the decision reviewed by the United States Supreme Court.

The company is unable to predict whether or not any proceedings, lawsuits, legislation or other actions relating to the nuclear generating unit will have a material adverse effect on its financial position, results of operations or liquidity.

Note D - Northeast Utilities

In March 2001, Con Edison commenced an action in the United States District Court for the Southern District of New York, entitled Consolidated Edison, Inc. v. Northeast Utilities, seeking a declaratory judgment that Northeast Utilities has failed to meet certain conditions precedent to Con Edison's obligation to complete its acquisition of Northeast Utilities pursuant to their agreement and plan of merger, dated October 13, 1999, as amended and restated as of January 11, 2000 (the merger agreement). In May 2001 Con Edison amended its complaint. As amended, Con Edison's complaint seeks, among other things, recovery of damages sustained by it as a result of the material breach of the merger agreement by Northeast Utilities and the court's declaration that under the merger agreement Con Edison has no further or continuing obligations to Northeast Utilities, and that Northeast Utilities has no further or continuing rights against Con Edison.

In June 2001, Northeast Utilities withdrew the separate action it commenced in March 2001 in the same court and filed as a counter-claim to Con Edison's amended complaint its claim that Con Edison materially breached the merger agreement and that as a result Northeast Utilities and its shareholders have suffered substantial damages, including the difference between the consideration to be paid to

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Northeast Utilities shareholders pursuant to the merger agreement and the market value of Northeast Utilities common stock, expenditures in connection with regulatory approvals and lost business opportunities. Pursuant to the merger agreement, Con Edison had agreed to acquire Northeast Utilities for $26.00 per share (an estimated aggregate of not more than $3.9 billion) plus $0.0034 per share for each day after August 5, 2000 through the day prior to the completion of the transaction, payable 50 percent in cash and 50 percent in stock.

Con Edison believes that Northeast Utilities has materially breached the merger agreement, and that Con Edison has not materially breached the merger agreement. Con Edison believes it is not obligated to acquire Northeast Utilities because Northeast Utilities does not meet the merger agreement's conditions that Northeast Utilities perform all of its obligations under the merger agreement. Those obligations include the obligation that it carry on its businesses in the ordinary course consistent with past practice; that the representations and warranties made by it in the merger agreement were true and correct when made and remain true and correct; and that there be no material adverse change with respect to Northeast Utilities.

Both parties have filed motions for summary judgment. Con Edison is unable to predict whether or not any Northeast Utilities related lawsuits or other actions will have a material adverse effect on Con Edison's financial position, results of operations or liquidity.

Note E - Leases

Con Edison accounts for a 525 MW electric generating facility in Newington, New Hampshire that is subject to an operating lease arrangement to which a Con Edison unregulated subsidiary is a party (the Newington Project) in accordance with SFAS No. 13, "Accounting for Leases" and related Financial Accounting Standards Board's (FASB) Emerging Issues Task Force (EITF) issue statements. Con Edison has not included the Newington Project or the related lease obligations on its consolidated balance sheet.

In June 2002, the FASB issued an exposure draft of a proposed interpretation on "Consolidation of Certain Special Purpose Entities" (SPEs). If the exposure draft were adopted in its current form, Con Edison would be required to include the Newington Project assets and the related debt issued by the SPE on its consolidated balance sheet. Con Edison estimates that this would result in a decrease in annual after tax net income of approximately $4 million and increases of approximately $350 million in non-utility plant and long-term debt.

Substantial completion under the Newington contract is now scheduled for the fourth quarter of 2002. The company's unregulated subsidiary and the construction contractor for this plant have initiated arbitration and state court proceedings regarding whether the subsidiary is entitled to damages for a delay in completion of this plant and whether the contractor is entitled to additional project costs. Con Edison does not expect that this dispute will have a material adverse effect on its financial position, results of operations or liquidity.

As part of a broad initiative, the Internal Revenue Service is reviewing certain categories of transactions. Among these are transactions in which a taxpayer leases property and then immediately subleases it back

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to the lessor (termed "Lease In/Lease Out," or LILO transactions). In 1997 and 1999, Con Edison's unregulated subsidiaries invested $93 million in two LILO transactions, involving gas distribution and electric generating facilities in the Netherlands.

For additional information, see Note J to financial statements included in the Form 10-K.

Note F - Investments

For 2002 and 2001, investments consisted primarily of the investments of Con Edison's unregulated subsidiaries, which are recorded at cost, accounted for under the equity method, or accounted for as leveraged leases in accordance with SFAS No. 13. See Note A and Note J to the Con Edison financial statements in Item 8 of the 2001 Form 10-K and Note E to the Con Edison financial statements included in Part I, Item 1 of this report.

Note G - Derivative Instruments and Hedging Activities

As of January 2001 Con Edison adopted SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities," as amended by SFAS No. 137, "Deferral of the Effective Date of FASB Statement No. 133," and SFAS No. 138, "Accounting for Certain Derivative Instruments and Certain Hedging Activities—an amendment of FASB Statement No. 133" (collectively, SFAS No. 133).

Energy Price Hedging

Con Edison's subsidiaries use derivative financial instruments to hedge market price fluctuations in related underlying transactions for the physical purchase or sale of electricity and gas (hedges). As of September 30, 2002, the fair value of the derivatives for such use was $27.5 million, comprised of $15.5 million at the regulated utility subsidiaries and $12.0 million at the unregulated subsidiaries.

Con Edison's utility subsidiaries, pursuant to SFAS No. 71, "Accounting for the Effects of Certain Types of Regulation," defer recognition in income of gains and losses on hedges until the underlying transactions are completed. In accordance with rate provisions that permit the recovery of the cost of purchased power and gas purchased for resale, Con Edison's utility subsidiaries credit or charge to their customers gains or losses on hedges and related transaction costs. See "Recoverable Energy Costs" in Note A to the company's financial statements included in Item 8 of the Form 10-K.

To the extent SFAS No. 71 does not allow deferred recognition in income, Con Edison's utility subsidiaries have elected hedge accounting pursuant to SFAS No. 133 (cash flow hedge accounting). Con Edison Solutions (which provides competitive gas and electric supply and energy-related products and services) has also elected cash flow hedge accounting.

Pursuant to cash flow hedge accounting, except as described below, the mark-to-market unrealized gain or loss on each hedge is recorded in other comprehensive income and reclassified to income at the time the underlying transaction is completed.

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Cash flow hedge gains and losses for energy transactions, net of tax, included in accumulated other comprehensive income for the three months ended September 30, 2002 and 2001 were as follows:

Cash flow hedge gains and losses for energy transactions, net of tax, included in accumulated other comprehensive income for the nine months ended September 30, 2002 and 2001 were as follows:

As of September 30, 2002, the subsidiaries' hedges for which cash flow hedge accounting was used were for a term of less than two years and $7.8 million of after-tax net gains relating to such hedges were expected to be reclassified from accumulated other comprehensive income to income within the next 12 months.

Under cash flow hedge accounting, any gain or loss relating to any portion of a hedge determined to be "ineffective" is recognized in income in the period in which such determination is made. As a result, changes in the value of a hedge may be recognized in income in an earlier period than the period in which the underlying transaction is recognized in income. The company expects, however, that these changes in values will be offset, at least in part, when the underlying transactions are recognized in income. For the third quarter of 2002, the company recognized in income mark-to-market unrealized pre-tax net losses of $1.7 million, compared with unrealized pre-tax net losses of $1.1 million for the third quarter of 2001, relating to derivative transactions at Con Edison Solutions. For the nine months ended September 30, 2002 and 2001, with respect to such hedges, the company recognized in income mark-to-market unrealized pre-tax net gains of $4.8 million and pre-tax net losses of $10.3 million, respectively.

Con Edison Energy markets energy through specialized products and provides wholesale capacity, risk management and load forecasting and scheduling services to wholesale and retail energy providers and asset optimization services for the electric generating plants of Con Edison Development. Con Edison

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Energy procures and markets energy for other Con Edison subsidiaries and utilizes energy commodity contracts such as two-party forward contracts for the purchase or sale of electricity and capacity, over-the-counter swap contracts, exchange-traded natural gas and crude oil futures and options, transmission congestion contracts, natural gas transportation contracts, and other physical and financial contracts. See Note I below for a discussion of the accounting for Con Edison Energy trading activities.

Interest Rate Hedging

O&R and Con Edison Development (which invests in and manages energy infrastructure projects) use cash flow hedge accounting for their interest rate swap agreements as described below. As of September 30, 2002, the fair value of the O&R interest rate swap was a loss of $19.1 million, and the fair value of the Con Edison Development interest rate swap was a loss of $10.0 million.

In connection with its $55 million promissory note issued to the New York State Energy Research and Development Authority (the Authority) for the net proceeds of the Authority's variable rate Pollution Control Refunding Revenue Bonds, 1994 Series A (the 1994 Bonds), O&R has a swap agreement pursuant to which it pays interest at a fixed rate of 6.09 percent and is paid interest at the same variable rate as is paid on the 1994 Bonds.

In connection with $90 million of variable rate loans relating to the Lakewood electric generating plant, Con Edison Development has swap agreements pursuant to which it pays interest at a fixed rate of 6.68 percent and is paid interest at a variable rate equal to the one, two, or three-month London Interbank Offered Rate (LIBOR).

Cash flow hedges for interest rate hedging, net of tax, included in accumulated other comprehensive income for the three months ended September 30, 2002 and 2001 were as follows:

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Cash flow hedges for interest rate hedging, net of tax, included in accumulated other comprehensive income for the nine months ended September 30, 2002 and 2001 were as follows:

As of September 30, 2002, $3.4 million of after-tax loss relating to the interest rate swap agreements were expected to be reclassified from accumulated other comprehensive income to income within the next 12 months.

In October 2002, Con Edison of New York entered into a swap agreement in connection with its $224.6 million Facilities Revenue Bonds, Series 2001A. Pursuant to the swap agreement provisions, Con Edison of New York pays interest at a variable rate equal to the three-month LIBOR and is paid interest at a fixed rate of 5.375 percent. The swap has a term of 10 years callable at par after three years.

Note H - Financial Information by Business Segment

Con Edison's business segments were determined based on similarities in economic characteristics, the regulatory environment, and management's reporting requirements. Con Edison's principal business segments are:

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Regulated Electric - consists of regulated utility activities of Con Edison of New York and O&R relating to the generation, transmission and distribution and sale of electricity in New York, New Jersey and Pennsylvania.


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Regulated Gas - consists of regulated utility activities of Con Edison of New York and O&R relating to the transportation, storage, distribution and sale of natural gas in New York and Pennsylvania.


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Regulated Steam - consists of regulated utility activities of Con Edison of New York relating to the generation, distribution and sale of steam in New York.


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Unregulated subsidiaries - represents the operations of the competitive electric and gas supply and energy-related products and services businesses and the operations of the affiliates that invest in energy infrastructure and telecommunications projects.


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Other - - includes the operations of the parent company and consolidation adjustments.

All revenues of Con Edison's business segments, excluding revenues earned by an unregulated subsidiary on certain energy infrastructure projects, which are deemed to be immaterial, are from customers located in the United States of America. Also, all assets, excluding certain investments in energy infrastructure projects by an unregulated subsidiary are located in the United States of America and are materially

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consistent with segment assets as disclosed in the Form 10-K. The accounting policies of the segments are the same as those described in the summary of significant accounting policies. See Note A to the Con Edison's financial statements included in Item 8 in the Form 10-K.

Common services shared by the business segments are assigned directly or allocated based on various cost factors, depending on the nature of the service provided.

The financial data for business segments are as follows:

CONSOLIDATED EDISON, INC.
SEGMENT FINANCIAL INFORMATION
$000'S

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2002 AND 2001