Eversource 2009 Annual Report Download - page 139

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York Municipal Power Agency (an agency that is comprised of municipalities) are compared with contracted supply, both of which
extend through 2013.
CL&P energy and capacity contracts required by regulation: CL&P has contracts with two IPPs to purchase electricity monthly in
amounts aggregating approximately 1.5 million MWh per year through March 2015 under one of these contracts and 0.1 million MWh
per year through December 2020 under the second contract. CL&P also has two capacity-related CfDs to increase energy supply in
Connecticut relating to one generating project that has been modified and one generating plant to be built. The total capacity of these
CfDs and two additional CfDs of The United Illuminating Company (UI) is expected to be approximately 787 megawatts (MW). CL&P
has an agreement with UI, which is also accounted for as a derivative, under which they will share the costs and benefits of the four
CfDs, with 80 percent allocated to CL&P and 20 percent to UI. The four CfDs obligate the utilities to pay/receive monthly the difference
between a set capacity price and the forward capacity market price that the projects receive in the ISO-NE capacity markets for periods
of up to 15 years beginning in 2009. For further information, see Note 19, "Subsequent Events," to the consolidated financial
statements.
CL&P, PSNH, and Yankee Gas energy and natural gas price risk management: As of December 31, 2009, CL&P had 2.7 million MWh
remaining under FTRs that extend through 2010 and require monthly payments or receipts.
PSNH has electricity procurement contracts with delivery dates through 2011 to purchase an aggregate amount of 1 million MWh of
power that is used to serve customer load and manage price risk of its electricity delivery service obligations. These contracts are
settled monthly. PSNH also has two energy call options that it received in exchange for assigning its transmission rights in a direct
current transmission line. The options give PSNH the right to purchase 0.6 million MWh of electricity through December 2010. In
addition, PSNH has entered into FTRs to manage the risk of congestion costs associated with its electricity delivery service. As of
December 31, 2009, there were 0.4 million MWh remaining under FTRs that extend through 2010 and required monthly payments or
receipts. The purpose of the PSNH derivative contracts is to provide stable rates for customers by mitigating price uncertainties
associated with the New England electricity spot market.
As of December 31, 2009, Yankee Gas had two peaking supply option contracts to purchase up to 17 thousand MMBtu of natural gas
on up to 20 days per season to manage natural gas supply price risk related to winter load obligations. One contract for 3 thousand
MMBtu expires on October 31, 2010 and the other contract for 14 thousand MMBtu expires on April 1, 2012. Demand fees on these
contracts are paid annually and are included in Yankee Gas' PGA clause for recovery.
The following table presents the realized and unrealized gains/(losses) associated with derivative contracts not designated as hedging
instruments for the year ended December 31, 2009:
Amount of Gain/(Loss)
Recognized on
Derivative Instrument
Derivatives Not Designated
as Hedging Instruments
Location of Gain or Loss
Recognized on Derivative
For the Year Ended
December 31, 2009
NU Enterprises: (Millions of Dollars)
Energy sales contract and energy price
risk management
Fuel, purchased and net interchange
power $ 6.2
Regulated Companies:
CL&P energy and capacity
contracts required by regulation Regulatory assets/liabilities (99.9)
Commodity price and supply risk
management:
CL&P Regulatory assets/liabilities (7.8)
PSNH Regulatory assets/liabilities (62.6)
Yankee Gas Regulatory assets/liabilities (2.8)
For the regulated companies, monthly settlement amounts are recorded as receivables or payables and as Operating revenues or Fuel,
purchased and net interchange power on the accompanying consolidated financial statements. Regulatory assets/liabilities are
established with no impact to Net income.
Derivatives designated as hedging instruments
Interest Rate Risk Management: To manage the interest rate risk characteristics of NU parent's fixed rate long-term debt, NU parent
has a fixed to floating interest rate swap on its $263 million, 7.25 percent fixed rate senior notes maturing on April 1, 2012. This interest
rate swap qualifies and was designated as a fair value hedge and requires semi-annual cash settlements. The changes in fair value of
the swap and the interest component of the hedged long-term debt instrument are recorded in Interest expense on the accompanying
consolidated statements of income. There was no ineffectiveness recorded for the year ended December 31, 2009. The cumulative
changes in fair values of the swap and the Long-term debt are recorded as a Derivative asset/liability and an adjustment to Long-term
debt. Interest receivable is recorded as a reduction of Interest expense and is included in Prepayments and other.