Eversource 2009 Annual Report Download - page 131

FS-46
A reconciliation of the beginning and ending carrying amounts of regulated companies' AROs is as follows:
As of December 31,
2009 2008
(Millions of Dollars) NU NU
Balance at beginning of year $ (50.6) $ (49.7)
Liabilities incurred during the year - (1.8)
Liabilities settled during the year 2.3 3.6
Accretion (3.3) (3.2)
Changes in estimates - -
Revisions in estimated cash flows 1.0 0.5
Balance at end of year $ (50.6) $ (50.6)
As of December 31,
2009 2008
(Millions of Dollars) CL&P PSNH WMECO CL&P PSNH WMECO
Balance at beginning of year $ (28.7) $ (15.9) $ (3.4) $(28.6) $ (14.9) $(3.7)
Liabilities incurred during the year - - - (1.8) - -
Liabilities settled during the year 2.0 - 0.3 3.0 - 0.5
Accretion (1.9) (1.0) (0.2) (1.8) (1.0) (0.2)
Changes in estimates - - - - - -
Revisions in estimated cash flows - 0.5 - 0.5 - -
Balance at end of year $ (28.6) $ (16.4) $ (3.3) $(28.7) $ (15.9) $(3.4)
Changes in estimates and revisions in estimated cash flows supporting the carrying amounts of AROs include changes in estimated
quantities and removal costs, discount rates and inflation rates.
N. Fuel, Materials and Supplies and Allowance Inventory
Fuel, materials and supplies include natural gas storage, coal, oil and materials purchased primarily for construction or operation and
maintenance (O&M) purposes. Natural gas inventory, coal and oil are valued at the weighted average cost of gas, coal and oil.
Materials and supplies are valued at the lower of average cost or market.
PSNH is subject to federal and state laws and regulations that regulate emissions of air pollutants, including sulfur dioxide (SO2), carbon
dioxide (CO2), and nitrogen oxide (NOx) related to its regulated generation units, and uses SO2, CO2, and NOx emissions allowances.
At the end of each compliance period, PSNH is required to relinquish SO2, CO2, and NOx emissions allowances corresponding to the
actual emissions emitted by its generating units over the compliance period. SO2 and NOx emissions allowances are obtained through
an annual allocation from the federal and state regulators that are granted at no cost and through purchases from third parties. CO2
emissions allowances are acquired through auctions and through purchases from third parties.
SO2, CO2, and NOx emissions allowances are recorded within Fuel, materials and supplies and are classified on the balance sheet as
short-term or long-term depending on the period they are expected to be utilized against actual emissions. As of December 31, 2009
and 2008, PSNH had $7.8 million and $6.5 million, respectively, of short-term SO2, CO2, and NOx emissions allowances classified as
Fuel, materials and supplies on the accompanying consolidated balance sheets and $20.7 million and $26.3 million, respectively, of
long-term SO2 and CO2 emissions allowances classified as Deferred debits and other assets - other on the accompanying consolidated
balance sheets.
SO2, CO2, and NOx emissions allowances are charged to expense based on their weighted average cost as they are utilized against
emissions volumes at PSNH's generating units. PSNH recorded expenses of $7.6 million, $2.8 million and $5.9 million for the years
ended December 31, 2009, 2008, and 2007, respectively, which was included in Fuel, purchased and net interchange power on the
accompanying consolidated income statements. These costs are recovered from ratepayers through PSNH ES revenues. See
Note 1H, "Summary of Significant Accounting Policies - Regulatory Accounting," for further information.
O. Cash and Cash Equivalents
Cash and cash equivalents include cash on hand and short-term cash investments that are highly liquid in nature and have original
maturities of three months or less. At the end of each reporting period, any overdraft amounts are reclassified from Cash and cash
equivalents to Accounts payable on the accompanying consolidated balance sheets.
As of December 31, 2009, PSNH had $10 million of restricted cash held with a trustee related to insurance proceeds received on
bondable property, which was included in Prepayments and other on the accompanying consolidated balance sheet. As of
December 31, 2008, there was no restricted cash.
P. Special Deposits and Counterparty Deposits
To the extent NU Enterprises, through Select Energy, requires collateral from counterparties, or the counterparties require collateral
from Select Energy, cash is held on deposit by Select Energy or with unaffiliated counterparties and brokerage firms as a part of the
total collateral required based on Select Energy's position in transactions with the counterparty. Select Energy's right to use cash
collateral is determined by the terms of the related agreements. Key factors affecting the unrestricted status of a portion of this cash
collateral include the financial standing of Select Energy and of NU as its credit supporter.