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39
included on the accompanying consolidated statements of (loss)/income.
For further information regarding the adoption of FIN 47, see Note 1P,
“Summary of Significant Accounting Policies – Asset Retirement
Obligations,” to the consolidated financial statements.
Under SFAS No. 71, regulated utilities, including NU’s Utility Group
companies, currently recover amounts in rates for future costs of
removal of plant assets. At December 31, 2005 and 2004, these
amounts totaling $305.5 million and $328.8 million, respectively, are
classified as regulatory liabilities on the accompanying consolidated
balance sheets.
Special Purpose Entities: In addition to SPEs that are described in the “Off-
Balance Sheet Arrangements” section of this management’s discussion
and analysis, during 2001 and 2002, to facilitate the issuance of rate
reduction bonds and certificates intended to finance certain stranded
costs, NU established four SPEs: CL&P Funding LLC, PSNH Funding
LLC, PSNH Funding LLC 2, and WMECO Funding LLC (the funding
companies). The funding companies were created as part of state-
sponsored securitization programs. The funding companies are restricted
from engaging in non- related activities and are required to operate in a
manner intended to reduce the likelihood that they would be included
in their respective parent company’s bankruptcy estate if they ever
become involved in a bankruptcy proceeding. The funding companies
and the securitization amounts are consolidated in the accompanying
consolidated financial statements.
During 1999, SESI established an SPE, HEC/Tobyhanna Energy Project,
Inc. (HEC/Tobyhanna), in connection with a federal energy savings
performance project located at the United States Army Depot in
Tobyhanna, Pennsylvania. HEC/Tobyhanna sold $26.5 million of Certificates
related to the project and used the funds to repay SESI for the costs
of the project. HEC/Tobyhanna’sactivities and Certificates areincluded
in NU’sconsolidated financial statements. NU Enterprises is in the
process of exiting SESI.
Other Matters
Commitments and Contingencies: For further information regarding other
commitments and contingencies, see Note 9, “Commitments and
Contingencies,” to the consolidated financial statements.
Accounting Standards Issued But Not Yet Adopted:
Share-Based Payments: On December 16, 2004, the FASB issued SFAS
No. 123 (Revised 2004), “Share-Based Payments,” (SFAS No. 123R),
which amended SFAS No. 123, “Accounting for Stock-Based
Compensation.” Under the provisions of SFAS No. 123R, NU will
recognize compensation expense for the unvested portion of
previously granted awards outstanding beginning on January 1, 2006,
the effective date of SFAS No. 123R, and any new awards after that
date. The adoption of SFAS No. 123R is not expected to have a
material impact on NU’s consolidated financial statements. For
information regarding current accounting for equity-based compensation,
see Note 1N, “Summary of Significant Accounting Policies - Equity-
Based Compensation,” to the consolidated financial statements.
Accounting Changes and Error Corrections: In May of 2005, the FASB issued
SFAS No. 154, “Accounting Changes and Error Corrections.” SFAS
No. 154 is effective beginning on January 1, 2006 for NU and requires
retrospective application to prior periods’ financial statements of voluntary
changes in accounting principles. It also applies to accounting changes
required by a new accounting pronouncement in the unusual instance
that the pronouncement does not include specific transition provisions.
SFAS No. 154 does not change previous guidance for reporting the
correction of an error in previously issued financial statements or a
change in accounting estimate. Implementation of SFAS No. 154 on
January 1, 2006 is not expected to affect NU’s consolidated financial
statements until such time that its provisions are required to be
applied as described above.
Contractual Obligations and Commercial Commitments: Information regarding
NU’s contractual obligations and commercial commitments at
December 31, 2005 is summarized through 2010 and thereafter
as follows: