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NORTHEAST UTILITIES AND SUBSIDIARIES
THE CONNECTICUT LIGHT AND POWER COMPANY
NSTAR ELECTRIC COMPANY AND SUBSIDIARY
PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE AND SUBSIDIARY
WESTERN MASSACHUSETTS ELECTRIC COMPANY
COMBINED NOTES TO FINANCIAL STATEMENTS
Refer to the Glossary of Terms included in this combined Annual Report on Form 10-K for abbreviations and acronyms used throughout
the combined notes to the financial statements.
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. About NU, CL&P, NSTAR Electric, PSNH and WMECO
NU Consolidated: NU is a public utility holding company primarily engaged through its wholly owned regulated utility subsidiaries in the
energy delivery business. On April 10, 2012, NU acquired NSTAR and its subsidiaries. NU's wholly owned regulated utility subsidiaries
consist of CL&P, NSTAR Electric, PSNH, WMECO, Yankee Gas and NSTAR Gas. NU provides energy delivery service to
approximately 3.6 million electric and natural gas customers through these six regulated utilities in Connecticut, Massachusetts and
New Hampshire. See Note 2, "Merger of NU and NSTAR," for further information regarding the merger.
NU, CL&P, NSTAR Electric, 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. Arrangements among the regulated electric companies
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 FERC. The Regulated companies are subject to regulation of rates, accounting and
other matters by the FERC and/or applicable state regulatory commissions (the PURA for CL&P and Yankee Gas, the DPU for NSTAR
Electric, WMECO and NSTAR Gas, and the NHPUC for PSNH).
Regulated Companies: CL&P, NSTAR Electric, PSNH and WMECO furnish franchised retail electric service in Connecticut,
Massachusetts and New Hampshire. NSTAR Gas is engaged in the distribution and sale of natural gas to customers within central and
eastern Massachusetts. Yankee Gas owns and operates Connecticut's largest natural gas distribution system. CL&P, NSTAR Electric,
PSNH and WMECO's results include the operations of their respective distribution and transmission businesses. PSNH and WMECO's
distribution results include the operations of their respective generation businesses. NU also has a regulated subsidiary, NPT, which
was formed to construct, own and operate the Northern Pass line, a new HVDC transmission line from Québec to New Hampshire that
will interconnect with a new HVDC transmission line being developed by a transmission subsidiary of HQ.
Other: NUSCO, RRR, Renewable Properties, Inc., a wholly-owned subsidiary of NUTV, and Properties, Inc., a wholly-owned
subsidiary of PSNH, provide support services to NU, including its regulated companies. Harbor Electric Energy Company, a wholly-
owned subsidiary of NSTAR Electric, provides distribution service and ongoing support to its only customer, the Massachusetts Water
Resources Authority. Hopkinton, a subsidiary of NU, provides natural gas liquefaction and storage services to NSTAR Gas. As of
December 31, 2013, NU Enterprises’ primary business consisted of NGS’ operation and maintenance agreements, E.S. Boulos
Company, an electrical contractor based in Maine, and NSTAR Communications, Inc., an unregulated telecommunications subsidiary.
B. Basis of Presentation
The consolidated financial statements of NU, NSTAR Electric and PSNH include the accounts of each of their respective subsidiaries.
Intercompany transactions have been eliminated in consolidation. The accompanying consolidated financial statements of NU, NSTAR
Electric and PSNH and the financial statements of CL&P and WMECO are herein collectively referred to as the "financial statements."
The preparation of the financial statements in conformity with 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 financial statements and
the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
NU's consolidated financial information includes NSTAR and its subsidiaries’ results of operations beginning April 10, 2012. The
information disclosed for NSTAR Electric represents its results of operations for each of the years ended December 31, 2013, 2012 and
2011 presented on a comparable basis. NU did not apply "push-down accounting" to NSTAR Electric, whereby the adjustments of
assets and liabilities to fair value and the resultant goodwill would be shown on the financial statements of the acquired subsidiary.
NU consolidates CYAPC and YAEC as CL&P’s, NSTAR Electric’s, PSNH’s and WMECO’s combined ownership interest in each of
these entities is greater than 50 percent. Intercompany transactions between CL&P, NSTAR Electric, PSNH and WMECO and the
CYAPC and YAEC companies have been eliminated in consolidation of the NU financial statements. For CL&P, NSTAR Electric,
PSNH and WMECO, the investments in CYAPC and YAEC continue to be accounted for under the equity method. See Note 1J,
"Summary of Significant Accounting Policies – Equity Method Investments," for further information.
NU's utility subsidiaries are subject to the application of accounting guidance for entities with rate-regulated operations that considers
the effect of regulation resulting from differences in the timing of the recognition of certain revenues and expenses from those of other
businesses and industries. NU's utility subsidiaries' energy delivery business is subject to rate-regulation that is based on cost recovery
and meets the criteria for application of rate-regulated accounting. See Note 3, "Regulatory Accounting," for further information.