MUNICIPAL INFRASTRUCTURE SUPPORT PANEL - GAS Would the members of

MUNICIPAL INFRASTRUCTURE SUPPORT PANEL - GAS

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Qo Would the members of the Municipal Infrastructure

Support Panel please state your names and business

addresses?

Thomas M. Gencarelli, Paul Cherian and Joseph Bedell

Jr. Our business addresses are 1610 Matthews Avenue,

Bronx, NY 10462 (for Gencarelli and Cherian), and 4

Irving Place, New York, NY 10003 (for Bedell). We are

all employed by Consolidated Edison Company of New

York, Inc. ("Con Edison" or the "Company").

What are your current positions with Con Edison?

(Gencarelli) I am the General Manager of Public

Improvement.

(Cherian) I am the Section Manager of Engineering

Services in Public Improvement.

(Bedell Jr.) I am an Analyst for Engineering Services

in Public Improvement.

Please describe your educational background.

(Gencarelli) I graduated from New York Institute of

Technology with a Bachelor’s Degree in Mechanical

Technology in 1970.

(Cherian) I received a Bachelor’s Degree in Electrical

Engineering from University of Kerala, India in 1976.

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MUNICIPAL INFRASTRUCTURE SUPPORT PANEL -GAS

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(Bedell Jr.) I received a Bachelor’s Degree in

Economics from the State University of New Paltz in

2004.

Please describe your past work experience.

(Gencarelli) I have been employed by Con Edison since

1972. I have Held the positions of Engineer in Power

Generation, Project Superintendent at Indian Point

Generating Station, Department Manager of the Nuclear

Projects Department at Indian Point, and Department

Manager of Public Improvement.

(Cherian) I have been employed by Con Edison since

1987. I have held the positions of Engineer in the

Estimating group, Engineer in Central Construction and

Superintendent at the Indian Point Generating Station.

(Bedell Jr.) I have been employed by Con Edison as an

Analyst for Public Improvement since 2006.

Please generally describe your current

responsibilities.

(Gencarelli) My current responsibilities as General

Manager of Public Improvement are to maintain the

integrity of Con Edison’s electric, gas and steam

systems during the course of municipal construction

projects in a cost-effective manner. This requires

planning, coordinating, engineering and negotiating

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Qo

with municipalities and the contractors assigned to

work for them to ensure the timely completion of their

projects.

(Cherian) As Section Manager, I manage the Municipal

Infrastructure Support O&M and Capital budgeting and

expenditure tracking process. Part of my function is

to manage the Engineering Estimating process, which

prepares estimates for interference related O&M and

Capital projects. In addition, I am responsible for

handling the Emergency Sewer/Water and Test pit

contracts.

(Bedell Jr.) As an Analyst, I am responsible for the

financial functions associated with the O&M and Capital

budgeting and expenditure tracking process including

accrual analysis, cash flows, current working

estimates, 5 Year Plans, variance reports, etc.

What is the purpose of the Panel’s testimony?

Our testimony addresses: (I) the meaning of

"interference" as it relates to Con Edison’s Gas

system; (2) Operation and Maintenance ("O&M")

interference costs associated with the Company’s gas

facilities (other than for Lower Manhattan) for the

rate years ending September 30, 2011 ("Rate Year" or

"RYI"), September 30, 2012 ("RY2") and September 30,

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2013 ("RY3"); (3) Capital interference costs associated

with the Company’s gas facilities (other than for Lower

Manhattan) for the period 2010-2013; (4) Lower

Manhattan O&M interference costs for RYI, RY2 and RY3

and capital interference costs for the period 2010-

2013; 5) mitigation measures the Company has undertaken

to reduce its interference costs; 6) impact of Federal

Stimulus funds on projected interference expenditures;

and 7) a proposal for bilateral reconciliation of

interference O&M expenses.

Please summarize your testimony.

When a municipality performs work, such as installation

or repairs to water mains, sewers and drainage

facilities, reconstruction of roadways, curbs and

sidewalks, and if the work affects the Company’s gas

facilities, Con Edison must bear the costs to support

and protect its facilities. The forecasted amount of

O&M interference costs (other than for Lower Manhattan)

is $19.36 million for the Rate Year, and $18.02 million

and $13.22 million for RY2 and RY3, respectively.

Spending in the historic year for O&M interference

costs was $ii million. The Company’s increased

interference forecast is driven by New York City’s

forecast. The Company calculates its forecasted

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expenditures based on New York City’s forecast of its

infrastructure expenditures as reflected in the City’s

January 2009 Capital Commitment Plan.

The Company’s capital interference costs are the

capital expenditures incurred when the Company is

required to remove and relocate Company gas facilities

to a new location due to direct interference with

proposed City or other municipal facilities. The

Company’s forecast for capital interference costs for

gas (other than for Lower Manhattan) for calendar years

2010-2013 is $33.24 million, $26.68 million, $24.54

million and $24.6 million, respectively, equating to an

average expenditure forecast of $27.26 million, which

is approximately 8.4 percent below the average actual

expenditure of $29.8 million for the period 2005-2008.

The methodology utilized in forecasting Lower Manhattan

O&M expenditure is different from the method used to

forecast expenditures in other areas, which we explain

later in our testimony. Therefore, as in previous rate

cases, the forecast for Lower Manhattan expenditures

are being presented separately in this rate filing.

What are the forecasts for Lower Manhattan O&M and

capital expenses?

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The forecast for Lower Manhattan ("World Trade Center"

or "WTC") interference O&M expenditures for RYI, RY2

and RY3 is approximately $3.15 million, $3.11 million

and $2.89 million, respectively. Spending in the

historic year for lower Manhattan was $1.2 million.

The forecast for Lower Manhattan Capital expenditures

for calendar years 2010 through 2013 is approximately

$4.56 million, $6.33 million, $8.46 million and $8.4

million, respectively. The forecast for O&M and

capital expenditures for Lower Manhattan are higher

than the historlc year expenditures due to the

increased bidding activity and awarding of projects,

which are addressed later in our testimony.

Our testimony explains the steps the Company takes to

mitigate the costs associated with interference work,

including using Joint Bidding for Lower Manhattan

projects.

Our testimony next discusses potential expenditures

associated with projects funded by the Federal Stimulus

package which are not reflected in the Company’s

projections.

Finally, since the Company’s interference forecast is

based on municipal infrastructure programs that the

municipalities determine, programs over which the

Company has no direct control, the Company proposes

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continuing the current two-way true-up with a 90/10

(customer/Company) split for any variance from spending

levels provided in rates.

INTERFERENCE

Please explain interference.

Con Edison has an extensive system of gas mains,

services, and appurtenances of various sizes, within

the streets of its service territories, which includes

Manhattan, Queens, Bronx, and Westchester County.

These facilities share the space under the streets with

other facilities, such as telephone and cable TV, owned

by private utility companies, and sewer, water and

traffic facilities owned by New York City and other

municipalities. When an entity plans to perform work

and is prevented from completing the proposed plan due

to other facilities being in the way, the term

"interference" is used.

Is ther4 more than one kind of interference?

Yes. Interference can be direct or indirect. A direct

interference is where an existing Con Edison facility

must be located, identified, removed and reinstalled at

a new location in order to accommodate and provide

space for a new City or other municipal facility.

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An indirect interference requires the Company to

identify the location of Company facilities, monitor

construction work, and take steps necessary to support

and protect Company facilities, which sometimes

requires the Company to temporarily relocate its

facilities.

Please explain interference expenses as they relate to

Gas Operations.

If a private entity, like the telephone company,

performs work in the vicinity of the Company’s gas

facilities, and Con Edison determines that the gas main

or service needs to be supported, protected, adjusted

or relocated to accommodate the work of the private

entity, then the private entity is required to bear

this cost.

However, if the City of New York or another

municipality performs work, such as installing or

repairing a sewer or water main in the vicinity of Con

Edison’s gas facilities, then Con Edison must bear the

costs to move, replace, support and protect these

facilities affected by the construction activity.

Another component of interference expense is the cost

the Company incurs to support and protect or modify its

facilities during the course of a municipal public

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Qo

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improvement project. For example, when a City street

is repaved or the pavement around Con Edison’s

facilities is modified, raising or lowering of

castings (e.g., castings of valve boxes) may be

required. The costs that the Company incurs to raise

or lower these castings are also considered to be a gas

interference expense.

What type of municipal construction activities cause

interference with gas facilities?

The typical public improvement activities that affect

Company gas facilities are the installation of water,

sewer and drainage facilities, reconstruction of roads,

bridges, curbs and sidewalks, and, as mentioned above,

the repaving of roadways.

How often does the Company have to support, protect

and/or relocate its gas facilities?

On any given day, there are hundreds of municipal

projects being planned, engineered, or constructed

within our service area. These projects are initiated

by such organizations as the Department of Design and

Construction ("DDC"), Department of Transportation

("DOT" , Department of Environmental Protection

("DEP" , Department of Parks, Bureau of Bridges and the

Economic Development Corporation, in addition to the

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various municipalities in Westchester County. The

projects may be planned or may be emergency activities,

such as a response to a sewer or water main break.

However, any excavation needed for these City/Municipal

project activities can potentially impact the gas

facilities located in that area and, therefore, may

present interference.

The Company’s engineering groups work with these State

and local agencies to try to m±nimize the impact of

municipal projects on gas facilities. However, due to

the heavy congestion of various underground facilities

within the streets, in many cases, there is simply no

way to avoid the interference.

Is New York City the primary municipality that drives

the level of the Company’s interference expenditures?

Yes. The City of New York’s Capital Infrastructure

Improvement Program is the primary driver of the

Company’s interference expenditures, both for capital

and O&M. Other municipalities also perform this work,

but on a much smaller scale.

O&M INTERFERENCE FORECAST FOR THE RATE YEAR

Was the exhibit, entitled "GAS INTERFERENCE O&M AND

CAPITAL EXPENDITURE FORECAST EXCLUDING LOWER

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MANHATTAN," prepared under your supervision or

direction?

Yes, it was.

MARK FOR IDENTIFICATION AS EXHIBIT (MISP-I

What does this exhibit show?

This exhibit shows the Company’s forecast of gas

interference O&M expenses for the Rate Year and the

capital interference forecast for the period 2010-2013.

For O&M, it is forecasted that the Company will spend

an estimated $19.36 million, excluding labor, in the

Rate Year. This is approximately $8.34 million higher

than O&M expenditures incurred during the historic year

(12 Months Ending June 30, 2009).

Can you explain why the Company is forecasting an

increase in O&M expenditures in the Rate Year?

The City’s actual and forecasted expenditures for

infrastructure improvement projects have significantly

increased over the last several years. Actual

infrastructure improvement project expenditures have

increased from $635 million in 2006 to $732 million in

2008 (See Exhibit (MISP-2), page 2 of 5).

Similarly, the City’s forecasts have jumped from $610

million in 2006 to $958 million in 2008 (See Exhibit

MISP-2 , page 2 of 5). For 2009, the City’s forecast

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has once again increased to approximately $I billion

(See Exhibit (MISP-2) page 2 of 5).

The City’s forecasted level of expenditures is the main

driver for the Company’s interference forecast in rate

cases. However, the Company’s actual gas interference

expenditures are also affected by the amount of

infrastructure work undertaken by the City and the

concentration of Company facilities at the locations

where City work is performed.

Since the City’s projections have increased, as have

their expenditures, we believe that the current higher

projections by the City for the Rate Year will

translate into higher interference expenditures. While

the Company works with the City to try to minimize

Company costs, the City’s plans and the actual level of

infrastructure work undertaken by the City is not

within the Company’s control. In the same vein, we

note that these City forecasts do not take into account

any of the significant infrastructure improvement

expenditures that are anticipated as a result of

Federal Stimulus funding, which we discuss later in our

testimony.

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Have you prepared an exhibit entitled "NEW YORK CITY

CAPITAL COMMITMENT & EXPENDITURES AND CON EDISON’S

INTERFERENCE O&M FORECAST 2010 - 20137"

Yes, this exhibit was prepared under our supervision

and direction.

MARK FOR IDENTIFICATION AS EXHIBIT (MISP-2)

Is the methodology the Panel uses to forecast

interference expenses consistent with the methodology

utilized by the Company to forecast its interference

expenditures in Case 06-G-13327

Yes. We used the same overall approach to develop our

forecast as we did in Case 06-G-1332 with a minor

adjustment in the way we calculate the NYC commitment

target. In the prior Gas Rate Case, we utilized the

Commitment Target from a single year corresponding to

the Commitment Plan for that same year in preparing our

forecast. However, in this filing, we have used a

Commitment Target based on a five-year average of prior

NYC Commitment Targets. This change was recommended by

Staff in Case 07-E-0523 and adopted by the Company in

order to smooth out year-to-year fluctuations in the

Commitment Targets. For the reasons explained below,

the Company continues to believe that this methodology

is reasonable and appropriate.

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Does the City develop a forecast for its infrastructure

expenditures?

Yes. New York City publishes its five-year Capital

Commitment Plan ("Commitment Plan") three times a year,

in April, September and January. This plan describes

anticipated infrastructure projects and includes all

project costs that the City expects to commit in each

of the upcoming fiscal years for all the different

categories of reconstruction work that the City e~pects

to undertake.

The City’s Commitment Plan also includes a Commitment

Target. Commitment Targets are set because the City

realizes that not all planned projects will actually be

undertaken and completed.

Does the Company base its forecast on the City’s

Commitment Plan?

Yes. The Company reviews the City’s proposed forecast

for the categories in the Commitment Plan defined as

Water, Sewer, Highway and Bridge projects. Since these

four City expenditure categories have the greatest

impact on Company facilities, the projected

expenditures for these categories are extracted from

the Commitment Plan.

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Why does the Company use the City’s Commitment Plan in

developing the Company’s forecast for O&M interference

expenditures?

Over the years, Con Edison has determined that there is

a proportional relationship between its gross

interference expenditure and the City’s Capital

infrastructure improvement expenditures. Since the

City is in the best position to determine what its

future expenditures will be, the Company relies on the

City’s Commitment Plan, which sets forth the City’s

forecast of its infrastructure improvement

expenditures.

You mentioned that the Company proposes to use a multi-

step approach to estimating these expenses.

these steps?

The steps are as follows:

I.

2.

What are

developing the modified City Commitment Target;

developing the City’s projected "actual"

infrastructure expenditure forecast;

applying a factor reflecting the Company’s actual

interference costs as a percentage of the City’s

actual expenditures; and

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4. applying a factor reflecting the ratio of gas

expenditures to the Company’s total interference

expenditures

In Case 09-E-0428, did the Company propose adding a

fifth step to its forecast methodology, which it

described as a "Mitigation Factor?"

Yes.

Why is the Company not proposing a similar step in this

proceeding?

The purpose of the mitigation factor, as indicated by

its name, was to reduce the amount of interference

costs reflected in rates resulting from the City’s

increased projection of expenditures in its Commitment

Plan (subject to reconciliation, as proposed by the

Company, in the event the City did spend the higher

amount). Unlike the lower forecast which resulted from

applying this factor to the Company’s electric

interference expenditures, applying this same factor to

gas interference expenditures results in a higher

forecast. The mitigation factor is a ratio of the

actual gas O&M expenditure versus the gas O&M budget,

and in this case the mitigation factor is greater than

I00 percent which would result in a higher request.

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MUNICIPAL INFRASTRUCTURE SUPPORT PANEL GAS

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Therefore, the Company is not applying this factor to

its gas interference costs.

Please explain in greater detail the four-step

me~hodology used to calculate the Rate Year

interference forecast.

The first step in the Company’s methodology is the

development of the modified Commitment Target. The

City’s Commitment Target forecast reflects the projects

that are expected to be engineered, bid, and awarded

for each fiscal year. In the City’s Commitment Plan,

published in January 2009, the Commitment Target varies

among the three City agencies, DDC, DOT and DEP, whose

projects primarily impact the Company’s interference

expenses. The January 2009 Commitment Targets for DOT

and DDC is 66 percent. However, the Commitment Target

for DEP (water and sewer projects) is I00 percent.

This means that the City is forecasting that it will

expend 66 percent of the Commitment Plans for DDC and

DOT and I00 percent for DEP. Therefore, a weighted

average was calculated to be approximately 80%.

For purposes of further refining the interference O&M

forecast, the Company extracted from the January 2009

City Commitment plan the City’s forecast amounts for

four specific categories of projects that impact

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Company facilities, which are Water, Sewer, Highway and

Bridges. The bridge category is then separated into

Highway Bridges and Waterway Bridges because we realize

that not all waterway bridge projects will have an

impact on our interference expenditures. In this rate

filing, none of the Waterway Bridge projects are

currently expected to have an impact on the gas

interference expenditure and we have zero dollars

allocated as shown on Exhibit (MISP-2) page i. The

total amount for these five categories is $1.44 billion

for 2009 and $1.6 billion for 2010, which is then

multiplied by 67.4 percent, the average of the

Commitment Targets in each of the last five January

Commitment Plans for the years 2005-2009.

The Company used the average as a representation of the

Commitment Plan targets, instead of simply relying on

the current year. This smoothes out fluctuations that

may occur from year to year and better reflects the

typical Commitment Target level over time. However, as

discussed later, since the Commitment Plan target for

any year can vary significantly from the average, a

circumstance over which the Company has no control, a

reconciliation mechanism to protect both customers and

the Company from material variations is warranted.

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Is there a particular area in which the City’s

forecasted expenditures is expected to rise

significantly?

Yes, you will note that we have utilized a weighted

average of 80 percent in our calculations for the

City’s Commitment Target (see Exhibit (MISP-2) page

1 of 6). The 80 percent City Commitment Target is

higher than it has been recently, when it has averaged

between 63 - 66 percent. This increase in the weighted

average for the Commitment Target is due to the fact,

which we noted earlier, that the City’s Commitment

Target for DE? is i00 percent. DEP budget lines WM-I,

WM-6, and sewers are being fully funded by the City at

i00 percent.

Do you have a reasonable degree of confidence that the

expected DEP expenditures will materialize?

A. Yes. Based on the DEP projects that are fully

funded and for which work is scheduled to occur during

the Rate Year, we are reasonably confident these

expenditures will materialize. The following are

examples of some of the DEP projects that are fully

funded and for which work has been scheduled for the

Rate Year: Distribution water main projects in Bronx

and Manhattan, Trunk Water mains and water main in

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Manhattan and Queens and trunk water main connections

to the shaft in Manhattan.

Please describe the splitting of the bridge category

mentioned above under the first step.

The City’s Commitment level for Bridges is the sum of

expenditures forecasted for highway bridges and

waterway bridges. We know bridges over waterways have

Company facilities on them. However, impact to Company

facilities will depend upon the individual bridges

involved and the type of work being undertaken by the

City. Based on these criteria, we separated the Bridge

category into Highway Bridges and Waterway Bridges.

Upon reviewing the.work proposed by the City in this

category, we determined that the work for the waterway

bridges would have no impact on our facilities for 2009

through 2013.

Please continue.

As shown on Exhibit (MISP-2, page 1 of 5), the

Company’s first step in its calculation results in a

projected City expenditure target of $971 million,

$1082 million, $948 million, $452 million and $973

million for fiscal years 2009-2013, respectively.

Please describe the second step, development of the

City’s "actual" infrastructure expenditure forecast.

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io In the second step, in order to further refine the

forecast, the Company compared the City’s forecast (as

reflected in the Commitment Plan from January of the

previous fiscal year) to the City’s actual expenditures

and averaged the results of this comparison for the

past five years to develop a City expenditure factor of

91.9 percent. This comparison shows that, on average,

over the last five years (2004-2008), 91.9 percent of

the City’s January Commitment Plan forecast resulted in

actual City expenditures. This calculation is shown in

Exhibit (MISP-2, p. 2 of 5), and results in

projected City expenditures of $893 million, $994

million, $871 million and $416 million for fiscal years

2010-2013, respectively.

For the third and fourth steps, has the Company found

any correlation between the City’s infrastructure

expenditures and the Company’s interference costs?

Yes. The Company’s actual interference costs as a

percentage of the City’s actual expenditure averaged

approximately 11.8 percent over the last five years

2004-2008. The 11.8 percent factor, as shown in

Exhibit (MISP-2, p. 3 of 5), is the five-year

average (2004-2008) of the Company’s gross interference

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expenditure compared to the City’s actual expenditures

for the five categories mentioned above.

The Company has also developed a ratio for the gas

expenditure to total Company interference expenditures.

The most current five-year average, 2004-2008, of

actual gas interference expenditures to the Company’s

actual gross interference expenditures is 22 percent.

The 22 percent factor, as shown in Exhibit (MISP-2,

p. 4 of 5), is the percentage of the Company’s

interference expenditure associated with gas facilities

compared to the gross interference expenditure for all

items combined. This process is demonstrated in

Exhibit (MISP-2, p. 1 of 5).

What is the forecast that results from these

computations?

By applying these percentages to the last quarter of

2010 and the first three quarters of 2011, the Company

derived the total Gas interference forecast of $19.36

million for RYI, excluding Company labor. Exhibit __

(MISP-2, page 1 of 5) also provides the forecast for

RY2 and RY3, excluding Company labor. The City’s

forecasted expenditure target of approximately $971

million and $1.082 billion in fiscal years 2009 and

2010, respectively, is driving the Company’s increased

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interference forecast. As the Company has noted, these

costs are largely beyond the Company’s control. The

increase in the City’s forecast coupled with the

inability of the Company to control these costs

underscores the need for a reconciliation mechanism,

discussed later in our testimony.

Does the Company propose to update the forecast of

interference expenses during this rate case?

Yes. New York City’s Capital Commitment Plan is

generally published in January, April and September of

each calendar year. Our testimony and exhibits were

prepared based on the City’s commitment plan published

in January 2009. We propose to update our forecast

utilizing the January 2010 Commitment Plan.

CAPITAL EXPENDITURES (OTHER THAN LOWER MANHATTAN)

What is the interference Gas capital expenditure

forecast?

The interference Gas capital expenditure forecast for

the period 2010-2013, based on our estimate, is $33.24

million in 2010, $26.68 million in 2011, $24.54 million

in 2012 and $24.6 million in 2013, as shown on Exhibit

(HISP-i).

How does the forecast compare to the previous years’

actual Gas capital expenditures?

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The average forecasted Gas Capital expenditure for 2010

- 2013 expenditure is approximately $27.26 million,

which is approximately 8.4 percent below the Company’s

Gas capital average expenditure of $29.79 million for

calendar years 2005 - 2008.

Does the Company’s forecast include projects that could

receive Federal Stimulus funding?

No. This forecast does not take into account projects

that could potentially be introduced due to the

anticipated availability of Federal Stimulus funds.

The impact of stimulus funds and the Company’s

reconciliation proposals will be addressed later in

this testimony.

Is the methodology the Company uses to forecast capital

expenses the same as that used to forecast O&M?

No. Unlike the O&M projection, which is calculated

based on the City’s infrastructure expenditure

forecast, the forecast for capital interference

expenses is based on the estimated cost of projects

contained within the New York City Commitment Plan.

The Company also relies on information obtained in

meetings with various City agencies, specifically the

DDC, concerning future projects.

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Q. Why does the Company utilize a different methodology

for calculating capital expenses?

A. Because unlike O&M expenses, the Company could not

establish a consistent correlation between its capital

expenditures and the City’s expenditures. Therefore,

the forecast for capital interference expense is based

on order of magnitude estimates of projects contained

within the Commitment Plan. These estimates are

supplemented with information the Company obtains from

various City agencies, specifically the NYC Department

of Design and Construction, to derive our forecast.

LOWER MANHATTAN CAPITAL EXPENDITURES AND O&M EXPENSES

Q. Was the exhibit entitled "LOWER MANHATTAN GAS O&M AND

CAPITAL FORECAST" prepared under your supervision and

direction?

A. Yes, it was.


Q. What does this exhibit demonstrate?

A. This exhibit shows the projected Lower Manhattan

Interference O&M expenditure for RYI through RY3 and

Capital expenditure forecast for the period 2010 to

2013.

Q. What is the gas interference forecast associated with

Lower Manhattan?

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The Company’s O&M expenditure forecast for Lower

Manhattan is $3.15 million, $3.11 million, and $2.89

million for RYI, RY2 and RY3, respectively. The Lower

Manhattan Capital expenditure forecast is $4.56 million

for 2010, $6.33 million for 2011, $8.46 million for

2012 and $8.4 million for 2013.

What was the historic year expenditure for O&M in Lower

Manhattan?

The historic year O&M expenditure was $1.2 million.

Why the difference between the historic year expense

and the Rate Year forecast?

The overall list of projects that need to be completed

for Lower Manhattan and their scopes have not changed.

However, the prolonged delay in bidding, awarding and

commencing field work resulted in lower than forecasted

expenditures for the historic year. The current pace

for bidding and awarding of projects is picking up.

This accelerated pace of work is demonstrated in

Exhibit (MISP-7), which shows the current bidding

schedule for Lower Manhattan work. Generally, once

projects enter the bidding cycle, contracts are awarded

and work begins within a few months. The projects that

did not materialize during the historic year coupled

with the new projects to be bid and awarded will

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increase expenditures in future years. Our forecast

takes into consideration the shifting of these

expenditures.

Explain the methodology used to calculate the

interference cost for Lower Manhattan.

The City provided a listing of projects with

anticipated starting dates and the type of the projects

for the Lower Manhattan area. Based on this list, we

developed order of magnitude estimates for O&M and

capital work for each project given the Company’s past

experience with similar jobs in the Lower Manhattan

area. Our estimate reflects the unique nature of the

work required in Lower Manhattan.

Please explain the difference in the work in Lower

Manhattan.

Through the years, most of the new facilities in Lower

Manhattan have been installed on top of existing active

and abandoned facilities. As a result, there is

significant underground congestion with layers upon

layers of facilities in Lower Manhattan. The federal

financing for Lower Manhattan projects, which is used

to defray the costs the City incurs for the rebuilding

of Lower Manhattan roadways, requires the roadways to

be constructed to meet Federal DOT specifications.

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MUNICIPAL INFRASTRUCTURE SUPPORT PANELGAS

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This means a 7-inch curb reveal (the distance between

the top of the curb and the roadway surface) must be

achieved. To attain the 7-inch curb reveal, the

current level of the roadway has to be lowered, which

requires the lowering of Company facilities. This

requires the removal of abandoned facilities and then

rearranging and lowering active facilities to provide

adequate space for lowering the roadway. Consequently,

extensive removal work is required for these projects,

which generally comes at a higher cost to perform

interference work relative to areas outside of Lower

Manhattan.

Are there any other reasons why the methodology used

for calculating Lower Manhattan interference expenses

is different from the methodology used to calculate all

other interference expenses?

Yes. For areas outside of Lower Manhattan, the

majority of interference work is being done under the

bid protocol called Section U, which is Section U of

the DDC contract. However, the work in Lower Manhattan

is being implemented under a different protocol called

"Joint Bid." Under Joint Bid, the utility interference

work is included in the City bid document and is

competitively bid by the contractors bidding the City

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project. This protocol was introduced by State

Legislation specifically for the work funded by the

Federal Government in Lower Manhattan and was accepted

by the City of New York and all the major utility

companies operating in the City. The City and the

utilities spent approximately two years establishing

the detailed process for Joint Bid and the first

project under this protocol was bid in late 2007. At

this point, due to the early stages of this work, there

is no historic data available to develop a methodology

to forecast future interference expenditures as a

percentage of the City’s forecast. In addition to

higher levels of underground congestion, the narrower

than normal roadways in Lower Manhattan are also a

complicating factor, which precludes the development of

a generic mathematical formula to forecast future

expenditures. For the foregoing reasons, we are

forecasting our future interference costs on an

individual project estimate basis.

SUMMARY OF O&M & CAPITAL FORECASTS

What is the total O&M and capital forecast identified

in this rate case?

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There are two separate O&M and Capital forecasts

outlined in this rate case (I) Lower Manhattan program,

and (2) program for area outside of Lower Manhattan.

Have you prepared an exhibit entitled "CON EDISON’S

TOTAL INTERFERENCE O&M AND CAPITAL FORECAST?"

Yes, it was prepared under our supervision and

direction.


What does this exhibit demonstrate?

This exhibit lists the O&M and Capital forecasts

associated with the two programs discussed above. The

total O&M forecast (i.e., both within and outside Lower

Manhattan) for RYI, RY2 and RY3 is $22.52 million,

$21.13 million and $16.11 million, respectively. The

total capital for 2010, 2011, 2012 and 2013 is $37.8

million, $33 million, $33 million and $33 million,

respectively.

MITIGATION MEASURES

Please describe any mitigation measures that the

Company takes to minimize interference costs.

In addressing interference costs, the Company is

required to adhere to state and municipal statutes,

codes, regulations and other established protocols,

which limit the Company’s flexibility in implementing

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mitigation measures. In addition, and as discussed in

more detail below, given the nature of interference

work and the fact that this work (and related

expenditures) is largely driven by factors outside of

the Company’s control, the opportunities for mitigation

measures are, consequently, limited. However, over the

past eight or so years, the Public Improvement

department has implemented several aggressive

initiatives to mitigate interference costs, and they

are as follows:

Expansion of the Joint Bidding Contracting Format:

Currently, the Joint Bidding contracting concept is

restricted to Lower Manhattan which was initiated

through State legislation. The Company initiated

discussions with NYC DDC to apply the joint bidding

concept to other locations in Manhattan and eventually

to expand the concept to all boroughs. The City has

introduced legislation in Albany to increase the areas

for joint bidding and as this proposal moves through

the legislature, the Company will work on its enactment

in the legislature. This concept is seen as the best

method of obtaining competitive pricing, minimizing

schedule delays, mitigating community impact and

apportioning costs fairly.

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Strengthening Public Improvement Engineering:

Engineering is our first line of defense in cost

mitigation and therefore, we have increased our in-

house resources and structured engineering’s

functioning to maximize efficiency. Engineering

interfaces with various agencies during the initial

design and planning phases of a project, and has the

first opportunity to study the agencies’ scope of work.

Engineering performs an in-depth analysis of the work

scope to determine the type and nature of the

interference and to quantify it. During the planning

phase of agency projects, Engineering may

suggest/request and discuss possible scope changes to

minimize interferences and request accommodations.

Then the Section U package is prepared quantifying the

interference items and identifying their locations.

This package is submitted to the agency to be included

in the Section-U of their contract document. Almost

always, the time available to perform the above-

mentioned functions is less than thirty days. Hundreds

of projects of varying size and complexity are

engineered by various agencies during any given fiscal

year in this short time period. Recognizing the

importance of performing a thorough engineering

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analysis and issuing a quality Section U package for

every project led to the initiative to increase

internal resources and established access to external

resources, if required.

Aggressive Arbitration Strateqy: Section U is the

section in the City contract for infrastructure work,

where the utilities identify and quantify the

interference scope of work. The protocol for Section U

is established jointly by the City of New York and the

major utilities operating in the City. Under the

protocol, the contractor of record for any Section U

project Should negotiate and reach an agreement with

the utilities prior to the start of the project. If an

agreement cannot be reached, the matter is submitted

for arbitration and the result is final and binding.

Another goal served by the studies/surveys and the

negotiating team concept is to support efforts to

successfully challenge contractors in arbitration if

the pricing offered by the contractor is out of line

with fair market value. To date, the Company has an

approximate 90 percent success rate when we have

arbitrated these projects.

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Maximize Number of Section-U Projects: The Section U

protocol provides the Company with certain limited

leverage to negotiate a fair market price with the City

agency contractors for the Company’s portion of

interference work. Projects are not automatically

classified as Section U unless certain engineering

requirements are met. Through the efforts of the

Engineering department to meet City requirements, the

Company has been able to maximize the number of

interference projects under Section U.

Conduct Studies and Surveys: Since the protocol for

dealing with underground interferences is unique,

particularly in the City of New York, it does not

easily lend itself to benchmarking with other

utilities. This led Public Improvement to seek the

assistance of experts in the field, to conduct

independent studies to provide guidance in determining

fair market value for interference items of work and

best construction practices based on the latest

technology. In addition, we also conducted periodic

surveys utilizing internal Company resources to

ascertain the latest methodology utilized by roadway

contractors in implementing certain tasks. This

information allows the Company to update estimating

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pricing structure and keeps the Company current with

the latest technology and methodologies.

Negotiating Team: The negotiating team concept has

been extremely successful since its inception in 2001.

The team consists of the estimator, the project

engineer, the borough manager and the borough project

specialist. The estimator is the lead and the common

individual for all negotiations irrespective of the

borough. This helped the enforcement of uniform

pricing for same work items throughout the boroughs and

also forced the reduction of prices for certain items

that resulted from the studies and surveys.

Maximize Lump Sum Agreements: Our experience

demonstrates that lump sum agreements generally result

in lower total project cost.as compared to unit price

agreements. Therefore, we prefer and promote lump sum

agreements. For the past three years, approximately 76

percent of agreements are of the lump sum type. The

added advantage of lump sum agreements is that it

allows our field personnel to concentrate primarily on

preventing damage to our facilities instead of

negotiating for extra work on a piecemeal basis.

Structure Department Functions for Maximum Efficiency:

We restructured the Public Improvement Department to

maximize efficiency. One recent example of this

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restructuring was the creation of an independent sub-

section in Engineering Services to focus on Emergency

Sewer and Water projects as well as borough wide Test

Pitting. The Emergency Sewer and Water personnel focus

on "relining" of a sewer instead of a larger more

costly "open cut." We work with the DEP on making this

change to a project after we perform timely rigorous

test pitting in advance of Engineering to properly

identify interference relationships with other

utilities and verify the accuracy of our maps and

records. As a result, we benefit through consistent

pricing of contractor work as the section uses a

"borough wide" approach rather then each borough being

independent.

We have also created an office in Lower Manhattan that

focuses on work in this area as their primary mission.

FEDERAL STIMULUS FUNDING

Do the Company’s O&M and capital forecasts include

interference costs associated with Federal Stimulus

funds?

No. Our O&M and capital forecasts do not include

expenditures that may result from Federal Stimulus

funds that may be awarded to municipalities, in

particular, New York City. The information that is

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currently available relating to Federal Stimulus

funding for City projects is preliminary in nature. As

the Company obtains more information over the course of

this proceeding regarding specific funding amounts and

projects, it will update its forecast as permitted

under Commission policies. However, absent reflecting

the preliminary forecast relating to stimulus funding

(set forth below) to set rates in this proceeding, it

would be unreasonable for the Company to bear the risk

of materially increased expenditures associated with

stimulus funding. Accordingly, additional expenditures

related to Federal Stimulus funds provides further

support for a bi-lateral reconciliation mechanism for

O&M and for a deferral mechanism for capital relating

to stimulus projects (as proposed in the testimony of

the Company Gas Operations Panel), which could be very

significant and are outside of the Company’s control.

If the proposed reconciliation and deferral mechanisms

are rejected, the Company’s forecasts used to set rates

should be increased to reflect the preliminary

estimates set forth below.

Does the Company have a list of projects planned to be

funded by the Federal Stimulus funds?

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Yes. The Company has a preliminary list of projects,

published by the City of New York, identifying the

projects to receive stimulus funds, which is presented

as Exhibit (MISP-4). This document was obtained

from the City’s website.

Has the Company prepared a preliminary interference

forecast for the Federal Stimulus projects?

Yes. The Company has prepared a preliminary order of

magnitude forecast based on a project by project review

of the scope identified in the City’s listing of

projects receiving direct stimulus funding shown in

Exhibit (MISP-4).


Was the exhibit entitled "GAS O&M AND CAPITAL FORECAST

FOR STIMULUS PROJECTS" prepared under your supervision

and direction?

Yes, it was.


What does this exhibit demonstrate?

This exhibit lists projects receiving direct stimulus

funding and projects receiving displaced funding (i.e.,

money from the City’s capital funds, which is now

available for previously unfunded or under-funded

projects). This exhibit also shows the City’s total

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project cost for each project, the stimulus funding for

each project, and the pre-stimulus funding from the

City’s capital funds. The difference between the total

project cost and the pre-stimulus funding is the amount

that will impact the Company’s interference

expenditures. This amount is allocated between 2009

and 2013 based on the bid and completion dates

identified in the City’s report.

We then utilized the same methodology applied in

determining the O&M interference costs, as shown on

Exhibit (MISP-2) to calculate the potential impact

stimulus funding would have on Company’s interference

expenditures. Based on our calculations the forecasts

for RYI, RY2 and RY3 would be increased by

$i million, $0.86 million and $0.41 million,

respectively. In addition to the O&M component, these

projects will also have a capital component. The

capital forecast is also shown on Exhibit (MISP-5).

Due to the lack of preliminary design information, the

capital cost is calculated as a percentage of the O&M

expenditure. The percentage was derived by comparing

the past five year capital expenditures to the

corresponding O&M expenditures, which results in a

ratio of 159 percent. The capital expenditure forecast

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for calendar years 2010, 2011, 2012 and 2013 would be

increased by $2.13 million, $2.19 million, $0.56

million and $1.75 million, respectively.

RECONCILIATION

Is there a reconciliation mechanism in the current Rate

Plan?

Yes. The current Rate Plan has a full two-way

reconciliation mechanism with a 90/10

(customer/Company) split for any variance from spending

levels provided in rates.

What is the Company proposing in this Rate Case?

The Company proposes to continue the reconciliation

mechanism under the current rate plan.

Why is the Company proposing to continue the

reconciliation mechanism under the current rate plan?

In past rate filings and for the reasons discussed

above, the Company has consistently argued that

reconciliation of interference expenditures is

appropriate due to the nature of these costs. Recent

circumstances relating to Federal Stimulus funding,

which we discuss above, lends further support to our

observation that in any one year, the Company’s costs

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can dramatically increase for reasons outside of its

control.

Is the Company also proposing to reconcile gas

interference O&M costs for Lower Manhattan projects?

Yes. Like other interference costs, the Company’s

forecast of expenditures for Lower Manhattan projects

is driven by the City’s forecasted projects and

estimated costs and the City’s actual execution of its

program. These costs are not directly within the

Company’s control. Therefore, the Company proposes to

utilize a single reconciliation mechanism (as described

above) that would include O&M interference expenditures

both for areas outside of Lower Manhattan and for Lower

Manhattan.

How is reconciliation for Lower Manhattan O&M

expenditures treated under the current gas rate plan?

Under the current gas rate plan (Case 06-G-1332) the

Company did not request reconciliation for gas O&M

expenditures in Lower Manhattan because at the time

that case was settled, the Company was still eligible

for reimbursement for its WTC expenditures, under the

Lower Manhattan Development Corporation’s Partial

Action Plan $2. Since the provisions for reimbursement

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have expired, going forward the Company is requesting

reconciliation for WTC Gas O&M expenditures.

Does this conclude the Panel’s initial testimony?

Yes, it does.

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CONSOLIDATED EDISON COMPANY OF NEW YORK INC.GAS INTERFERENCE O&M AND CAPITAL EXPENDITURE FORECAST

EXCLUDING LOWER MAHATTAN

O&M FORECASTRate year 1Gas Interference expenditure forecast for rate year including Company labor $25,149,000

Company Labor 23% (Labor % based on 5 Year Average)

Net expenditure forecast excluding labor

Historic yearGas interference expenditure for historic year, twelve months endingJune 30th 2009

Company labor

Net expenditure

$5,784,220

$15,075,702

$4,047,521

$19,364,780

$11,028,181

Program change $8,336,599

CAPITAL FORECAST

Gas Interference capital expenditure forecast $33,240,000 $26,675,000 $24,540,000 $24,600,000m

CONSOLIDATED EDISON COMPANY OF NEW YORK INC.NEW YORK CITY CAPITAL COMMITMENT & EXPENDITURES

AND CON EDISON O&M INTERFERENCE FORECAST 2010 - 2013(millions)

NYC Capital Commitment (Jan 2009 Publication) 2009Water (WM - 1 & WM - 6 Budget Categories) 100

2010171

2011215

2012 201397 252

192 279277 320105 593

0 0671 1444

Sewer IHighway (Excluding VVTC)Highway BridgeWaterway BridgeTotal Commitment

Five year Average Commitment Target 67.4% (See calc. below)I

City Expenditure Forecast calculated @91.9% of target (See Page 2)

208460673

01441

971

142569723

01605

1082

893

272445474

01406

948

994

452 973

871 416

Con Edison’s Interference Forecast:

Con Edison’s gross Interference forecast @11.8% of City forecast (5 Yr Avg) (See Page 3)

Gas O&M forecast @ 22% of Con Ed gross forecast(5 Yr.Avg) (See Page 4)

20101 20111 20121 2013J

105.32 117.31 102.76 49.04

23.17 25.81 22.61 10.79

RATE YEAR FORECASTGas Interference forecast for rate year 10/01/10 - 9/30/11 (RY1)Gas Interference forecast for rate year 10/01/11 - 9/30/12 (RY2)Gas Interference forecast for rate year 10/01/12 - 9/30/13 (RY3)

With Lab. W/O Lab25.149 19.36523.408 18.02413.744 13.222

Five year average Commitment target calculation for January Commitment Plans

Year Target2005 63%2006 63%2007 65%2008 66%2009 80%Avg 67.40%

13m~ X

~Q :3-

CONSOLIDATED EDISON COMPANY OF NEW YORKNYC’s ACTUAL EXPENDITURE AS A % OF NYC’s

COMMITMENT TARGET FROM JAN COMMITMENT PLAN

FiscalYear

2O04200520062O072008

NYC’sActualExpenditure

$695$716$635$644$732

NYC’s Comm.ta~et from previousFY Jan. CommitmentPlan

$664$771$610$721$958

NYC Actual Exp.as a % of PreviousYears CommitmentTarget

105%93%104%89%76%

Five YearAverage

$3,422 $3,724 91.89%

Say 91,9%

Items

COMMITMENT TARGET CALCULATIONCity’s Comm. City’s Comm.

Plan - Jan Plan - Jan2003 Pub. 2004 Pub.

City’s Comm.Plan-Jan2005 Pub.

Ci~’s Comm.Plan-Jan2006 Pub.

Water Main(WM1 & WM 6)SewerHighwayBridgesTotal Comm. PlanCommitment Target @62% - 200366% - 200463% - 200563% - 200664% - 2007

City’s Comm.Plan-Jan2007 Pub.

167 $151 $117 155 135

288 272 222 253 234303 382 348 284 507313 363 281 453 598

1071 1168 968 1145 1474664 $771 610 721 958

m

CONSOLIDATE EDISON COMPANY OF NEW YORK INC

CON EDISON’S EXPENDITURE AS A PERCENTAGE OF NYC’S EXPENDITURE (EXCLUDING LM)

Description 2004 CE Expenditure 2005 CE ExpenditureExpenditure As a % Of NYC’s Expenditure As a % Of NYC’s

City Expenditure 695,054,000 715,775,000

Con Edison O&M 73,046,721 10.51% 86,665,819 12.11%

2006Expenditure635,305,000

80,679,793

CE ExpenditureAs a % Of NYC’s

12.70%

2OO7Expenditure644,367,000

77,577,762

CE ExpenditureAs a % Of NYC’s

2008 CE ExpenditureExpenditure As a % Of NYC’s731,769,000

12.04% 84,839,601 11.59%

Description 5 :/r Total CE O&M as a %Expenditure of City Exp.

Cit)~ Expenditure 3,422,270,000

Con Edison O&M 402,809,696 11.77%

Use 11.8% of City’s Projected Expenditure to derive at Con Edison’s O&M Expenditure.

CONSOLIDATED EDISON COMPANY OF NEW YORK tNCGAS INTERFERENCE EXPENDITURE

AS A PERCENTAGE OF GROSS INTERFERENCE EXPENDITURE

Analysis based on 2004 Thru 2008 data

DISCIPLINEElectricGasSteam InterferenceSteam Op’s InterferenceTotal

2004 Expenditure % of Total56,171,355 76.90%14,019,604 19.19%1,177,383 1.61%1,680,684 2.30%73,049,027 100.00%

2005 Expenditure % of Total 2006 Expenditure % of Total 2007 Expenditure69,665,085 80.38% 53,969,294 66.89% 53,981,42214,238,308 16.43% 23,083,953 28.61% 21,601,323

730,201 0.84% 1,049,951 1.30% 582,7952,034,816 2.35% 2,578,472 3.20% 1,413,99786,668,409 100.00% 80,681,670 100.00% 77,579,537

% of Total 2008 Expenditure % of Total69.58% 63,061,142 74.33%27.84% 17,932,167 21.14%0.75% 1,012,774 1.19%1.82% 2,833,519 3.34%

100.00% 84,839,602 100.00%

DISCIPLINE

ElectricGasSteam InterferenceSteam Op’s InterferenceTotal

Total Expenditure %of Total2004-2008 by discipline 2004-2008

296,848,298 73.69%90,875,355 22.56%4,553,104 1.13%10,541,488 2.62%

402,818,245 100.00%

m

ExhibiL(MISP-2)January 2004 - December 2004 Gas Interference Expenditures & Company Labor Excluding Lower Manhattan Page 5 of 5

Account Type : O & M

Jan-04 Feb-04 Mar-04 Apr-04 May-04 Jun-04 Jul-04 Aug-04 8ep-04 Oct-04 Nov-04 Dec-04

Interference Expense w/labor 832~492 601~756 837~679 1~150,696 1~228~274 1~074~462 1~295~103 1~582,667 1~898~506 1~174,59~ 981~28~ 1~362,081Basic Labor 102,968 147~575 212~783 207,890 380~497 475~889 504~251 526~615 344,601 448~54~ 280~601 547~422Total without labor 729,525 454~ 181 624~896 942~806 847~778 598~573 790~852 1~056~051 1 ~553~905 726,05(~ 700~687 814~65~

Jan. 2004 - Dec. 2004 Total expense wllabor 14,019,604Total basic labor 4,179,641Total without labor 9,839,964

Labor as a percentage

January 2005 - December 2005Account Type : O & M

Gas Interference Expenditures & Company Labor Excluding Lower Manhattan

Jan-05 Feb-05 Ma~05 Ap~05 Map05 Jun-05 Jut-05 Aug-05 Sep05 Oct-05 No~05 Dec-05

nterference Expense w/labor 1~039~810 830~50~ 1~119~479 1~444~635 1~243~393 723~988 1~350~698 1~156~598 1,429~850 1~353,060 1,190,935 1,355~355Basic Labor 347,153 375~077 472~243 396~589 385,968 530~035 429~307 286,044 402,149 308~266 240,251 328~685Total withoutlabor 692~656 455~428 647~236 1,048,045 857~425 193~954 921~391 870~554 1~027~701 t,044~806 950,684 1,026~671

Jan. 2005 - Dec. 2005 Total expense w/labor 14,238,308Total basic labor 4,501,762Total without labor 9,736,546

Lab~ as a percentage



Jan-06 Feb-06 Ma~06 Ap~06 May-06 Jun-06 Jul-06 Aug-06 Sep-06 Oct-06 Nov-06 Dec-06

ntefferenco Expense w/labor 1~173~806 1~703,334 1~518~253 2~045~580 2~641~716 1~429~396 2~119,975 2,848~473 2~215,295 1,943~121 1~870~630 1~574~375Basic Labor 302~226 344~657 296~942 415~978 399~122 308~448 569~686 437~785 218~398 443~355 368,471 351~37~Total withoutlabor 871~580 1~358~677 1~221~311 1~629,602 2i242~593 I~120~947 I~550~289 2~410~688 1~996,898 1~499~767 1,502~15~ 1~222~99~





Jan-07 Feb-07 Mar-07 Apr-07 Ma~/-07 Jun-07 Jui-07 Aug-07 Sep-07 Oct-07 Nov-07 Dec-0"~

Interference Expense w/labor 2,251~303 1~627~013 1~729~876 1~736~890 1~477~060 1~978~496 1~924~568 2~173,644 1,589~943 1,917~255 1~450,729 1,744,548Basic Labor 251,008 290~407 268~871 395~980 319~281 248~956 439~787 276~705 422~27(~ 391 ~04~ 367,838 324~444Total without labor 2~000~295 1~336~606 1,461,004 1~340,910 1~157~780 1,729~541 1~484~781 1~896~93~ 1~167~672 1~526~208 1~082,892! 1~420~10~


Labor as a percentage ~



Interference Expensew/labor 2~823~476 870~446 1~551~951 1~578~952 796~85(~ 1,282~204 1737705~ ~ i 1~703,623’ 929110~ i 1,442~400 1,072~631 2~142~820Basic Labor 259~394 265~394 266,102 250~736 260~093 318,27(; 381~593 389,649 348,537 333,439 395,302 317~179Total without labor 2,564~082 605~052 1~285~849I 1~328~215 536~758 963~934 1,356~112 1,313~974 580,573 1,108,961 677~329 1,825~640



I 5 Year Average Labor Percenta~le 23.00%

O&M FORECAST;

CONSOLIDATED EDISON COMPANY OF NEW YORK INC.LOWER MANHATTAN GAS O&M AND CAPITAL FORECAST

(millions)

Description

Lower Manhattan Gas O&M expenditureforecast (excluding Company labor)

1,202 1,948 3,150 (44) 3,106 (218) 2,888

CAPITAL FORECAST

Description

Lower Manhattan Gas Capital expenditureforecast

m

LOWER MANHATTAN - WTC - 2010 5 Year Plan Exhibit_(MISP-3)Page 2 of 4

PROJECT LOCATION Budget Ref.2010

PARKS Burring Slip & Sara D Roosevelt Trocom/P&T O&MPARKS Burlin9 Slip & Sara D Roosevelt 8ED-6141 EDPARKS Burlin~l Slip & Sara D Roosevelt 8GD-3211 GDPARKS Burling Slip & Sara D Roosevelt SD17060007 ERW Esplanade & Piers O&M17060007 ERW Esplanade & Piers ED17060007 ERW Esplanade & Piers GD17060007 ERW Esplanade & Piers SDNYS - Route 9A Segment 2 Tully O&MNYS - Route 9A Sediment 2 6ED6311 EDNYS - Route 9A Sediment 2 6GD3311 GDNYS o Route 9A Segment 2 SDHWMWTCA6E Beekman St Trocom O&MHWMWTCA6E Beekman St 6ED6291 EDHWMWTCA6E Beekman St 6GD3301 GDHWMWTCA6E Beekman St 6SD1471 SDHWMWTCA6C Liberty St Trocom O&MHWMWTCA6C Liberty/St 8ED-6431 EDHWMWTCA6C Libert)/St 8GD-3261 GDHWMWTCA6C Liberty St 8SD-1441 SDHWMVVTCA7A Harrison St Felix O&MHWMWTCA7A Harrison St Felix EDHWMWTCA7A Harrison St Felix GDHWMWTCA7A Harrison St Felix SDHWMWTCA8B Fulton St Phase B (MED-601) Trocom O&MHWMWTCA8B Fulton St Phase B (MED-601) 9ED-6051 EDHWMWTCA8B Fulton St Phase B ’MED-601) 9GD-3221 GDHWMWTCA8B Fulton St Phase B ’MED-601) 9SD-1211 SDHWMWTCA6B Chambers St O&MHWMWTCA6B Chambers St 5ED6281 EDHWMWTCA6B Chambers St 5GD3291 GDHWMWTCA6B Chambers St 6SD1191 SDHWMP2030 Chatham Square O&MHWMP2030 Chatham Square EDHWMP2030 Chatham Square GDHWMP2030 Chatham Square SDH~NM1165 Nassau Street (Fulton St P3) O&MHWM1165 Nassau Street (Fulton St P3) EDHWM1165 Nassau Street (Fulton St P3) GDHWM1165 Nassau Street (Fulton St P3) SDMED-596 Shaft 29b Hudson St O&MMED-596 Shaft 29b Hudson St EDMED-596 Shaft 29b Hudson St GDMED-596 Shaft 29b Hudson St SDHWMWCA7D Peck Slip (HWM-1159) O&MHWMWCA7D Peck Slip (HWM-1159) EDHWMWCA7D Peck Slip (HWM-1159) GDHWMWCA7D Peck Slip (HWM-1159) SDHWMWTCA6A Broadway Phase 1 O&MHWMWTCA6A Broadway Phase 1 5ED6261 EDHWMWTCA6A Broadway Phase 1 5GD3281 GDHWMWTCA6A Broadway Phase 1 5SD1351 SDHWMM009 Chinatown Streetscape O&MHWMM009 Chinatown Streetscape EDHWMM009 Chinatown Streetscape GDHWMM009 Chinatown Streetscape SD

2011HWMWTCA7G John St (SEN002161) O&MHWMWTCA7G John St (SEN002161) EDHWMWTCA7G John St (SEN002161 GDHWMWTCA7G John St (SEN002161 SDMED-606 Shaft 30b Grand St O&MMED-606 Shaft 30b Grand St EDMED-606 Shaft 30b Grand St GDM’ED-606 Shaft 30b Grand St SDHWMP2030B Chatham Square Phase II iStreetscape O&M

2010 I 2011 I 20’ 2 I 2013 I 2014 j Tota 100905

lOOlOOlOO

501 ,ooo1 ,ooo

1 ,ooo1,525

320220850

1,2oo 1,ooo500105

1,5oo3,600 1 ,ooo1,525

2503,000 3,0003,500 3,706 500

225 2251,o5o 1,1oo1,ooo 2,000 1,ooo1 ,ooo 1 ,o5o 640

230 800 420

2,000 2,570 2,570470 4,770 5,t7o

365 735 735650 650 lOO700 1,300 600200 400 200lOO 200 lOO

3,000 4,200 1,2oo800 3,500 3,500lOO 1,2oo 1,1oo300 600 300

2,000 2,200 700940 3,400 3~ooo260 1,700 840350 700 350400 2,1oo 1,o5o

1,5oo 2,800 1,8oolOO 1,2oo 600lOO 600 50035o

5603,890

365

1,761

6501,700

500

350 700 350650 1,300 650200 400 20050 150

2,100 4,200 2,1001,950 3,900 1,950

600 1,200 600300 900350

100905

100100100

501,0001,000

.I

1,0001,525

320220850

2,200500105

1,5004,6001,525

2506,0007,706;

4502,1504,0002,6901,450

7,70014,300

2,2001,4002,600

800400

8,4007,8002,4001,2004,9009,1012,8001,4004,2007,8002,4001,200

350

1,4002,600

800200

8,4007,8002,4001,200

350

Exhibit 3 / Exhibit_(MISP-3) Page 2 Page 2 of 4

Exhibit_(MISP-3)Page 3 of 4

PROJECTHWMP2030BHWMP2030BHWMP2030B

HWMWTCA7EHWMWTCA7EHWMWTCA7EHWMWTCA7EHWMWTCA7FHWMWTCA7FHWMWTCA7FHWMWTCA7FHWMWTCA7BHWMWTCA7BHWMWTCA7BHWMWTCA7BHWMWTCA7CHWMWTCA7CHWMWTCA7CHWMWTCA7C

HWMWTCA8AHWMWTCA8AHWMWTCA8AHWMWTCA8AHWMWTCA8DHWMWTCA8DHWMWTCA8DHWMWTCA8D

LOCATIONChatham Square Phase IIChatham Square Phase IIChatham Square Phase II

2012Worth StWorth StWorth StWorth StWarren StWarren StWarren StWarren StBwa~/Recon - Leonard/CortlandtBwa~’ Recon - Leonard/CortlandtBwa~, Recon - Leonard/CortlandtBway Recon - Leonard/CortlandtWater StWater StWater StWater St

Church StChurch StChurch StChurch StFrankfort StFrankfort StFrankfort StFrankfort St

2013

Budget Ref.No CapitalNo CapitalNo Capital

CAT.EDGDSD

O&MEDGDSD

O&MEDGDSD

O&MEDGDSD

O&MEDGDSD

O&MEDGDSD

O&MEDGDSD

2010 2011 2012 I 2013 2014 Total

1,400 2,800 1,400 5,6002,600 2,600 5,200 10,400

800 1,600 800 3,200

700 1,400 700 2,8001,300 2,600 1,300 5,200

400 400 800 1,600200 400 200 800

2,275 4,550 2,275 9,1004,180 4,180 8,540 16,9001,300 2,600 1,300 5,200

650 1,300 650 2,6002,100 2,100 4,200 8,4003,900 3,900 7,800 15,6001,200 1,200 2,400 4,800

600 600 1,200 2,400

1,400 1,400 2,8002,600 2,600 5,200

800 800 1,600400 800 1,200875 875 1,750

1,625 1,625 3,250500 1,000 1,500250 500 750

TOTAL O&M O&M 16,000 19,520 17,995 16,785 10,850 81,150TOTAL ELECTRIC CAPITAL ED 17,240 25,126 32,390 27,456 27,065 129,277

TOTAL GAS CAPITAL GD 4,560 6,325 8,460 8,400 7,100 34,845

TOTAL STEAM CAPITAL SD i 2,840 4,285 4,485 3,315 3,360 18,275

(See Page 4)

RYIRY;RY3

O&M Gas PortionO&M Labor @ 6.11%

O&M Excluding LaborMonthly

Rate Year 1Rate Year 2Rate Year 3

2,880176

2,704225

3,150

3,5t4215

3,299275

3,106

3,239198

3,041253

2,888

3,021185

2,837236

1,953119

1,834153

Exhibit 3 / Exhibit_(MISP-3) Page 2 Page 2 of 2

O&M

Electric

Gas

Steam

Total

2008

6,299,119

1,165,517

1,812,573

$ 9,277,209

Lower ManhattanGas as a pecentage of the total O&M expenditure

2O073,123,482

1,537,320

234,000

4,894,802

2OO612,607,351

1,324,975

3,941,648

$ 17,873,974

200514,395,096

6,272,323

3,079,810

$ 23,747,229

200417,608,588

5,068,012

5,076,997

$ 27,753,597

200315,485,868

5,141,766

4,668,919

$ 25,296,553

20027,353,977

2,773,277

1,485,814

$ 11,613,068

Total2002-2008

76,873,480

23,283,190

20,299,761

120,456,432

Utility%

65%

18%

17o/,

100%

NYC.gov

Funding Category:Infrastructure

Description:Funding to spur the region’sconstruction industry and create iobs,while meeting critical needs in areaslike highways, mass transit, efficientenergy use, public housing, and watersupply.

Funding by 8ubcategory

Zero means =~o funds allocated yet.

Stimulus Funding by Subcategory, Funding Source & ProjecUProgram

(]+ Nm armed ~~ L~-tl’mm ~ Completed (~ ¢omplet~ 50% or More ~. Full,/Completed

Subcategory

Transportation

Transportation TotalWater Supply andWastewater Treatment

Funding Source Project/Program

Surface Trar)sportation Progrem -ARRA Funding ;Brooklyn Bridge Rehabilitation ¯

, Bruc~ner Expressway Bridges (2)¯ Replacement of Protective Coating °~r~enpoint A~e~ue Bridoe over New’ownCreek Rehabilitation

Roadway Bddge (12) Rehabilitation

St. George Ferry Termi~-al Ram~sRehabilitation

Wards Island Pedestrian Bridge Upgrades

Surface TransportationProgram - ARRA Funding TotalTransit Capital Assistance- ARRA In-house Sta~e~:Fund ng ~ ’

Transit Capital Assistance -ARRA Funding Total

Clean Water State RevolvingFund

26th Ward Sewag~

Hunts Point Sewa

New, own ~reek Sewa~

Po~t Richmon . " "~-’~ction of Boiler System

z .....~mary S~ud~e System ¯

StimulusFunding ($ ; Statusmillions)

$30.00= LO

$3.50= C)

$2.50O

$2.50 O"

$175.00 (,~

$1.50 C)

$21S.O0

$37.70 @

Clean Water State Revolving $2t9.52.Fund TotalWatershed Agricultural Program ~ $1.00 ~,~’~

$46.70

S~1.70

$50.0O

S2.00

$47.0O

$46.52

$29.00

~5.0~

http://a858-anltw.nyc.gov/analytics/saw.d11?portal&nquser=aye485xAWZp&nqpassword=... 9/22/2009

NYC.gov

Water Supply andWastewater Treatment

i TotalPublic Housing

W̄atershed AgriculturalProgram Total

...... i~ll~]i~ i~iousing Capita’i’l~nd "’Recove~j Grant (Formula) ~.3eO ~,m~t~rd’ar~ Ho~se~:Elev~tor i ": ....habilitation

~terdam Houses" R~°P wrr9~ve ~t M~in~y Houses’ROOfl~ Repla~mentAda~ou~s- R )ofing Repla~ent

A~stron~Hou~ I & II -

Baisley Pa~ Is ,~ Bd~wor[ Re~irand Roofing ~1~

’

BeachUpgradeBeachReplacement"B~Ol~d Stuyvesant }

.=ating

:ooflng

R~hab -

~ping and

Tank

NYCHA

Roofi~lg

Roofing

Elevator

~nges at

¯ Betances Houses -" FirApartment RestorationBoston Secor Houses =ReplacementBrickwork

:Locations CitywideCollege:Repfacement

~ (~n~ Lihfe Tower~R.e_Pl._ac?me,nt ..Eastchester Garde sRehabilitation

various locations

at various tocati¢ =sE~pan~ion ~f Ei Vator Remote l~ nitoringSystem at Vark ~s Locations

~.vari0us Lo,.capns " _

Brickwork R~pair and Roofing

:, Brickw(~rk Repair and Roofing

’~ ~--~l Bar Fen~ng at

~h~fior C~pa~om at Various Man~IDevef°~en~

$1

$220.52

$0.34

$O.60

$3.93

$20.79

$6.25

$0.22 ~

$0.27

$8.70

$0.39¯

~0.~0

$2-65~

$3.85

$23.19

$3.~ ~

$1.00

$1.94: ~ ,

$1.21

http://a858 _anltw.nyc.gov/analytics/saw.dll?portal&nquser=aye485xAWZp&nqpassword=... 9/22/2009

NYC.gov

~.sbJ0hnso~ H~se-~-’~acuum pumps,

ndensate pumps, zone valves~g Tours Houses - E~v=or

, ~i~Houses - Roofing Repl.~ent l_ =0.66

’ Lehma~~lla~ Ho~s~s: Roofing ",R~’~~¯ Lower ~t Side Houses Rehab (GmU~ 5)

~a~i:Lower Eas Side I Hours - Elev~or/: $0.57Lowe~ East e tl Hous~ Roofing ’L~ East ~ - I]

-.- I. ¯Manha~ille ~ouses Rehab Gro~ 1~ - -

:Manha~anvil~ H~s Rehab G~p II1 -

~o~ ...... ~i.. , --R~la~ment ~ .

Roo~op Water Tank .....

Morris I Houses - Roof’ < $0,28

$5.50

’Mott Haven Houses -:Roottop Water Tank I¯ Ocean HillBrickworkR~P!..a.,~..ment.

PS 139 *

Qu’eensbrid~e’ Com

Various

VariousSaratoga

$0.83~ ~

$1.00:

$2.05

$26.00

http://a858 -anltw.nyc.gov/analytics/saw.dll?portal&nquser=aye485xAWZp&nqpassword=... 9/22t2009

NYC.gov

Pub|ic Housing Total

Grand Total

~n.and Roofing Replacement

Jamaica Houses I & I! - Stea~g Zone Valve Replacement../

i Su. mner !~,ses - Elevator R~b!lit.ation

¯ T~psco~t’Hb~ses Rehabs :

~Thro~gs~’~l~ck ~l~uses 7Brickwork and

_Rehabilitation y "~.~y Plaza (17, 24,~1~A) - RoofingRep~9°me. pt . ./ ,\

~ngersoII Houses - Al~artment i.

ire

:Recovery Grant {Formula) Total jr.. _\ ’.

# of Records: 91

$0.39

$8.62

$7.15 ..~

$2.73,

$15.00’

$0 70

$3.45’

$6.00

$1.80

$1.oo

$1.00

$21.32’

$2o.~~,

$1.73~

$37B.39’,

$858.61

Displaced City Funding* by Subcategory, Funding Source & Project/Program

i’-~~ Not, Started, (~.~,~,,, Les~thanS0%Cempleted (~, Completed S0% or More ~ Fully Completed

~ " ...................... . ...................... . ......................... "" 6i~Pl~¢~l’CityProject/Program StatusSubcategory Funding Source , Funding ($ millions) ;

Surface Transportation Program 132nd Street / Linden Place Extension $7"001 L~~ Displaced City Funding*

Distdct Improvements

Brooklyn Navy Yerd Improvements

Claremont Pado~ay Bridge ReconstrucfJon $5.77

http :l/a858 -anltw.nyc.gov/analytics/saw.dll?portal&nquser=aye485xAWZp&nqpassword=... 9/22/2009

NYC.gov

(Bathgate)

College Point / 32nd Avenue Reconstruction

Coney Island Boardwalk Reconstruction

Decrier Av~"R~t~iningwall Recor~tructi~)n.!B~q!.o_~+,+.P.,"+ ~ ....................... . ...................East Houston Street Reconstruction (LowerEast Side)Eastern Parkway Reconstruction (Prospect

¯ Heights)

Flatbush Avenue Streetscape Improvements

Hill~i(~eA~en~e Sidewalk R~placement(Jamaica)Hug~l ~i’~t Cir~cie Improvements(Parkchester)

H̄unts Point Improvements

K̄ingston Avenue Reconstruction

Improvements - Phase I

: imp.,r?..v~+erm_?..ts+.-..p..h~as_e. I.! ...........Nassau Avenue and Monitor Street

:. Paulding Avenue Reconstruction ~

: Rockaway Boardwalk Reconstruction

; Shore (Belt) Parkway Bddges (6) Steel;.§.t+r?~+u~ re+. + .Pr, ~t+e~.v++~+c2a~ +n g..,, _Re. P. !.a+~+m.. e++n+t .........: Shore (Belt) Parkway East 8th Street:.Acce.ss. Ramp R~con .Struction

S̄idewalk Repairs Citywide

Reta!!+ I rn p_m. ve_m..e. ,.t so.;Staten Island Railway Bridges (11), Rehabilitation

i West 125th Street Reconstruction¯

+ Surface Transportation Program- k ................. / +2,5 01i Displaced City Funding* Total . ~ . .. / ......! T"~ n~ii �~i~i A~s~+i~ n~-~~+~)iSPla~ed ’ At~e~biiity I~r°vements f°r,,~t River

~;t4 00City Funding* :. FerryLa~_g_s ./ ¯’~ ......

i ’+ Rehabilit~~t Wall S~et .+2.50:

~ "~rarmit Capital Assistance - / "X~ ’ $16 SODisplaced City Funding* Total

~-- ¯ +i" + ....¯ ~.s~’o~;,~, ................................................ ’~ .... ~ i ==~m~

!Grand ~’;tal ~ $231.511

# of Records: 27¯ Includes infrastructure projects receiving Displaced City Funding, which is not federal ARRA Funding. City funding for these projects ismade possible by allocation of ARRA funding to other projects.

http://a858.anltw.~ayc.gov/analytics/saw.dll?portal&nquser=aye485xAWZp&nqpassword=... 9/22/2009

Project

Saint George Ferry Terminal Ramp

Brookl~,n Bridge (See note 1)

Wards Island Pedestrian Bridge

12 Roadway brid~es

Bruckner Expressway Bridges

Green Point Avenue Bridge

Improvement to Hunts Point

Pauldin9 avenue

Claremont Parkwa)/

Decatur Ave Retainin~l wall

Hugh Grant Circle

Brooklyn Nave/Yard

Flatbush Avenue

Nassau Ave and Monitor Street

Cone,! Island Boardwalk

Shore Parkw.a~, East 8th Street Access Ramp

Eastern Parkway/

Bedford Stuyvesant Gateway’

Six Belt/Shore Parkwa}[ Bddges

West 125th Street

East Houston Street

Lon~l Island City Queens Plaza Phase 1

Phase 2

CONSOLIDATED EDISON COMPANY OF NEW YORK INC.NEW YORK CITY STIMILUS PROJECT AND EXPENDITURESGAS O&M AND CAPITAL FORECAST FOR STIMULUS PROJECTS

(millions)

Pre-Stimulus Additional Cityfunding (Amount expense due to

identified in stimulus(Total Cost)Capital funding) (Pre-Stimulus)

Total Project Cost Stimulus Funding

175 175 175 NA

382 382 30 NA

14.3 12.8 1.5 1.5

5.87 3.37 2.5 2.5

6.52 3.02 3.5 3.5

4.2 1.7 2.5 NA

46.28 30.03 16.25 16.25

21.05 3.71 17.34 21.05

7 1.23 5.77 5.77

4.5 0.67 3.83 3.83

3.5 0.62 2.88 2.88

35.45 30.7 4.75 NA

23 19.5 3.5 NA

15 4.37 10.63 NA

14.12 1.48 12.64 NA

14.05 2.48 11.57 14.05

6 1.06 4.94 NA

9.03 3.68 5.35 NA

6.8 1.2 5.6 NA

32.98 31.08 1.9 1.9

26.07 4.71 21.36 21.36

46.2 27.37 18.83 18.83

12.4 1.4 11 11

ADDITIONAL CITY EXPENDITURE DUE TO STIMULUS

2009 2010 2011 2012 2013

0.5

2.5

1

6

5

2

2

1.5

0.5 0.5

1.5

6

6

2.77

1.83

1.38

4.25

6 4.05

2.05

1.36

2

1

1

10

8.83

5

0.9

lO

8

5

Ill

Project

Rockaway boardwalk

College Point/32nd Avenue

Hillside Avenue Sidewalk

132nd Street/Linden Place

Staten Island Railwa), Brid~Ies

St George Ferry terminal retail area

City Sidewalk RepairsTotal

Target 100%Ratio of actual vs. Committed 91.9% (Note 2)

Gross Interference forecast at 11.8% ofCity forecast

Gas Interference at 22% of gross Interference

Note:

Total Project Cost

13.55

12

10

7

8.22

6

3.28

Pre-Stimulusfunding (Amount

identified inCapital funding)

1.4

2.11

1.76

0

1.45

1.06

0.34

Stimulus Funding

12.15

9.89

8.24

7

6.77

4.94

2.94

Additional Cityexpense due to

stimulus(Total Cost)(Pre-Stimulus)

NA

9.89

NA

7

NA

NA

3.28

2009 2010

4.95

2011

4.94

2012 2013

3.289.69 56.28 57,82 14.75 6.059.69 56.28 57.82 14.75 6.059 52 53 14 391 6 6 2 5

0.2

1. Due to lack of information in the capital commitment plan, we did not consider the Brooklyn Bridge project having an impact on Interference. However, the description of work.in this stimulus plan indicates potential interference due to widening of the approach ramps.2. The 8.1% deviation of the work not accomplished during the earlier calendar years is accounted for in 2013

RY 1RATE YEAR FORECAST

RY 2

RY 3

CAPITAL FORECAST

Capital forecast at 159% of O&M forecast.

Calculation of Capital vs. O&M ratio

Total

With Labor1.35

1,12

0.54

20102,13

Gas O&M14,02014,23823,08421,60117,93290,875

W/O Labor (23%)11.04

0.86

0.41

20112.19

Gas Capital25,51725,16531,89033,92028,202144,694

20120.56

Capital as a % ofO&M

182.00%176.75%138.15%157.03%157.27%159.22%

20131.75

20042005200620072008

O&MProgram

CONSOLIDATED EDISON COMPANY OF NEW YORK INC.TOTAL INTERFERENCE O&M AND CAPITAL FORECAST

(millions)

RY1

19.37

3.15

RY2

18.02

3.11

Area outside of Lower Manhattan

Lower Manhattan

Total 22.52 21.13 16.11

RY3

13.22

2.89

CAPITALP[ogram

Area outside of Lower Manhattan

2010

33.24

4.56

2011

26.68

6.33

2012

24.54

8.46

2013

24.60

8.40Lower Manhattan

Total 37.80 33.00 33.00 33.00

m

CONSOLIDATED EDISON COMPANY OF NEW YORK Inc.

Project Name

Broadway Phase 1

Chamber Street

Liberty Street

Beekman Street

Fulton Street Phase B

Harrison Street

John Street

Peck Slip

Chatam Square

LOWER MANHATTAN PROJECT STATUS

Project No:

HWMWTCA6A

HWMWTCA6B

HWMWTCA6C

HWMWTCA6E

HWMWTCA8B

HWMWTCA7A

HWMWTCA7G

HWMWCA7D

HWMP2030B

Scheduled start

8/15/2010

Awaiting contractor to start

Apt-08

Oct-07

Feb-09

Sep-08

7/31/2010

7/15/2010

8/18/2010

Current Status

In Bid Cycle

Awarded

Working

Working

Working

Working

In Bid Cycle

In Bid Cycle

Engineering

Comments

m

MUNICIPAL INFRASTRUCTURE SUPPORT PANEL - GAS Would the members of

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