Eversource 2013 Annual Report Download - page 79

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Certain reclassifications of prior year data were made in the accompanying balance sheets for NU, NSTAR Electric, PSNH and
WMECO and the statements of cash flows for all companies presented. These reclassifications were made to conform to the current
year presentation.
In accordance with accounting guidance on noncontrolling interests in consolidated financial statements, the Preferred Stock of CL&P
and the Preferred Stock of NSTAR Electric, which are not owned by NU or its consolidated subsidiaries and are not subject to
mandatory redemption, have been presented as noncontrolling interests in the financial statements of NU. The Preferred Stock of
CL&P and the Preferred Stock of NSTAR Electric are considered to be temporary equity and have been classified between liabilities
and permanent shareholders' equity on the balance sheets of NU, CL&P and NSTAR Electric due to a provision in the preferred stock
agreements of both CL&P and NSTAR Electric that grant preferred stockholders the right to elect a majority of the CL&P and NSTAR
Electric Board of Directors, respectively, should certain conditions exist, such as if preferred dividends are in arrears for a specified
amount of time. The Net Income reported in the statements of income and cash flows represents net income prior to apportionment to
noncontrolling interests, which is represented by dividends on preferred stock of CL&P and NSTAR Electric.
C. Accounting Standards
Recently Adopted Accounting Standards: In the first quarter of 2013, NU, CL&P, NSTAR Electric, PSNH and WMECO, adopted the
following Financial Accounting Standards Board’s (FASB) final Accounting Standards Updates (ASU) relating to additional disclosure
requirements:
Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income (AOCI): The ASU does not change existing
guidance on which items should be reclassified out of AOCI but requires additional disclosures about the components of AOCI and the
amount of reclassification adjustments to be presented in one location in the footnotes. The ASU was effective beginning in the first
quarter of 2013 and was applied prospectively. For further information, see Note 15, "Accumulated Other Comprehensive
Income/(Loss)," to the financial statements. The ASU did not affect the calculation of net income, comprehensive income or EPS and
did not have an impact on financial position, results of operations or cash flows.
Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities: Clarifies the scope of the offsetting disclosure requirements
under GAAP and applies to derivative instruments. The ASU was effective beginning in the first quarter of 2013 with retrospective
application. For further information, see Note 5, "Derivative Instruments," to the financial statements. The ASU did not have an impact
on financial position, results of operations or cash flows.
Accounting Standards Issued but not Yet Adopted: In July 2013, the FASB issued a final ASU effective January 1, 2014, requiring
presentation of certain unrecognized tax benefits as reductions to deferred tax assets. The ASU is required to be implemented
prospectively on January 1, 2014. Implementation of this guidance will have an immaterial impact on the balance sheets and no impact
on the results of operations or cash flows.
D. 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 balance sheets.
E. Provision for Uncollectible Accounts
NU, including CL&P, NSTAR Electric, PSNH and WMECO, presents its receivables at net realizable value by maintaining a provision
for uncollectible amounts. This provision is determined based upon a variety of factors, including applying an estimated uncollectible
account percentage to each receivable aging category, based upon historical collection and write-off experience and management's
assessment of collectibility from individual customers. Management assesses the collectibility of receivables, and if circumstances
change, collectibility estimates are adjusted accordingly. Receivable balances are written off against the provision for uncollectible
accounts when the accounts are terminated and these balances are deemed to be uncollectible.
The PURA allows CL&P and Yankee Gas to accelerate the recovery of accounts receivable balances attributable to qualified customers
under financial or medical duress (uncollectible hardship accounts receivable) outstanding for greater than 90 days. The DPU allows
WMECO to also recover in rates amounts associated with certain uncollectible hardship accounts receivable. As of December 31,
2013, CL&P, WMECO and Yankee Gas had uncollectible hardship accounts receivable reserves in the amount of $67.3 million, $5.5
million and $8.4 million, respectively, with the corresponding under recovery of bad debt expense recorded as Regulatory Assets or
Other Long-Term Assets as these amounts are probable of recovery. As of December 31, 2012, these amounts totaled $65.2 million,
$4.7 million and $6.4 million, respectively. These amounts are reflected in the total provision for uncollectible accounts in the table
below.