Eversource 2009 Annual Report Download - page 115

FS-30
COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Summary of Significant Accounting Policies (All Companies)
A. About Northeast Utilities, The Connecticut Light and Power Company, Public Service Company of New Hampshire
and Western Massachusetts Electric Company
Consolidated: Northeast Utilities (NU or the Company) is the parent company of The Connecticut Light and Power Company (CL&P),
Public Service Company of New Hampshire (PSNH), Western Massachusetts Electric Company (WMECO), and Yankee Gas Services
Company (Yankee Gas) (the regulated companies) and NU Enterprises, Inc. (NU Enterprises), as described below. NU was formed on
July 1, 1966 when CL&P, WMECO and The Hartford Electric Light Company affiliated under the common ownership of NU. In 1992,
PSNH became a subsidiary of NU. On March 1, 2000, gas became an integral part of NU's Connecticut operations when NU's merger
with Yankee Energy System, Inc. (Yankee) and its principal subsidiary, Yankee Gas, was completed. CL&P, PSNH and WMECO are
reporting companies under the Securities Exchange Act of 1934. NU is a public utility holding company under the Public Utility Holding
Company Act of 2005 (PUHCA). Arrangements among the regulated electric companies, NU Enterprises and other NU companies,
outside agencies and other utilities covering interconnections, interchange of electric power and sales of utility property are subject to
regulation by the Federal Energy Regulatory Commission (FERC). The regulated companies are subject to further regulation for rates,
accounting and other matters by the FERC and/or applicable state regulatory commissions (the Connecticut Department of Public Utility
Control (DPUC) for CL&P and Yankee Gas, the New Hampshire Public Utilities Commission (NHPUC), as well as certain regulatory
oversight by the Vermont Department of Public Service and the Maine Public Utilities Commission for PSNH, and the Massachusetts
Department of Public Utilities (DPU) for WMECO).
Regulated Companies: CL&P, PSNH and WMECO furnish franchised retail electric service in Connecticut, New Hampshire and
Massachusetts, respectively. Yankee Gas owns and operates Connecticut's largest natural gas distribution system. CL&P, PSNH and
WMECO's results include the operations of their respective distribution and transmission segments. PSNH's distribution results include
the operations of its generation business. Yankee Gas' results include the operations of its gas distribution segment.
NU Enterprises: NU Enterprises is the parent company of Select Energy, Inc. (Select Energy), E. S. Boulos Company (Boulos),
Northeast Generation Services Company (NGS), NGS Mechanical, Inc. and Select Energy Contracting, Inc. (SECI), which are
collectively referred to as NU Enterprises. For information regarding NU's exit from certain of these businesses, see Note 1B,
"Summary of Significant Accounting Policies - Presentation," to the consolidated financial statements.
B. Presentation
The consolidated financial statements of NU, CL&P, PSNH and WMECO include the accounts of all their respective subsidiaries.
Intercompany transactions have been eliminated in consolidation.
The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States
of America (GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent liabilities as of the date of the consolidated financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those estimates.
In accordance with Financial Accounting Standards Board (FASB) guidance on noncontrolling interests in consolidated financial
statements effective January 1, 2009, the Preferred stock of CL&P, which is not owned by NU or its consolidated subsidiaries and is not
subject to mandatory redemption, has been presented as a noncontrolling interest in CL&P in the accompanying consolidated financial
statements of NU. The Preferred stock of CL&P is considered to be temporary equity and has been classified between liabilities and
permanent shareholders' equity on the accompanying consolidated balance sheets of NU and CL&P due to a provision in CL&P's
certificate of incorporation that grants preferred stockholders the right to elect a majority of CL&P's board of directors should certain
conditions exist, such as if preferred dividends are in arrears for one year. The Net income reported in the accompanying consolidated
statements of income and cash flows represents consolidated net income prior to apportionment to noncontrolling interests, which is
represented by dividends on preferred stock of CL&P.
The included presentation and disclosure requirements effective January 1, 2009 have been applied retrospectively to the consolidated
balance sheet as of December 31, 2008 and the consolidated statements of income, comprehensive income, shareholders' equity, and
cash flows for the years ended December 31, 2008 and 2007. For the years ended December 31, 2009, 2008 and 2007, there was no
change in NU parent's 100 percent ownership of the common equity of CL&P.
Certain other reclassifications of prior period data were made in the accompanying consolidated balance sheets and cash flows for all
companies presented as well as in the accompanying consolidated statements of common shareholders' equity and comprehensive
income for NU. These reclassifications were made to conform to the current year's presentation.
NU's consolidated statement of income for the year ended December 31, 2007 classifies the following as discontinued operations:
 Northeast Generation Company (NGC), including certain components of NGS,
 The Mt. Tom generating plant (Mt. Tom),
 Select Energy Services, Inc. (SESI) and its wholly-owned subsidiaries HEC/Tobyhanna Energy Project, Inc. and HEC/CJTS
Energy Center LLC,
 A portion of the former Woods Electrical Co., Inc. (Woods Electrical), and