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84
Fair Value Measurements: The following table presents the marketable securities recorded at fair value on a recurring basis by the
level in which they are classified within the fair value hierarchy:
NU
WMECO
As of December 31,
As of December 31,
(Millions of Dollars)
2013
2012
2013
2012
Level 1:
Mutual Funds and Equities
$
281.3
$
212.5
$
-
$
-
Money Market Funds
32.9
40.2
10.9
5.2
Total Level 1
$
314.2
$
252.7
$
10.9
$
5.2
Level 2:
U.S. Government Issued Debt Securities
(Agency and Treasury)
$
61.4
$
69.9
$
6.8
$
18.7
Corporate Debt Securities
53.6
33.0
15.1
7.0
Asset-Backed Debt Securities
30.4
28.5
9.0
10.9
Municipal Bonds
105.5
93.8
11.2
11.6
Other Fixed Income Securities
15.8
14.4
4.9
4.3
Total Level 2
$
266.7
$
239.6
$
47.0
$
52.5
Total Marketable Securities
$
580.9
$
492.3
$
57.9
$
57.7
U.S. government issued debt securities are valued using market approaches that incorporate transactions for the same or similar bonds
and adjustments for yields and maturity dates. Corporate debt securities are valued using a market approach, utilizing recent trades of
the same or similar instrument and also incorporating yield curves, credit spreads and specific bond terms and conditions. Asset-
backed debt securities include collateralized mortgage obligations, commercial mortgage backed securities, and securities
collateralized by auto loans, credit card loans or receivables. Asset-backed debt securities are valued using recent trades of similar
instruments, prepayment assumptions, yield curves, issuance and maturity dates and tranche information. Municipal bonds are valued
using a market approach that incorporates reported trades and benchmark yields. Other fixed income securities are valued using
pricing models, quoted prices of securities with similar characteristics, and discounted cash flows.
7. ASSET RETIREMENT OBLIGATIONS
In accordance with accounting guidance for conditional AROs, NU, including CL&P, NSTAR Electric, PSNH and WMECO, recognizes a
liability for the fair value of an ARO on the obligation date if the liability's fair value can be reasonably estimated and is conditional on a
future event. Settlement dates and future costs are reasonably estimated when sufficient information becomes available. Management
has identified various categories of AROs, primarily certain assets containing asbestos and hazardous contamination and has
performed fair value calculations, reflecting expected probabilities for settlement scenarios.
The fair value of an ARO is recorded as a liability in Other Long-Term Liabilities with a corresponding amount included in Property,
Plant and Equipment, Net on the balance sheets. As the Regulated companies are rate-regulated on a cost-of-service basis, these
companies apply regulatory accounting guidance and the costs associated with the Regulated companies' AROs are included in
Regulatory Assets. The ARO assets are depreciated, and the ARO liabilities are accreted over the estimated life of the obligation with
corresponding credits recorded as accumulated depreciation and ARO liabilities, respectively. Both the depreciation and accretion
were recorded as increases to Regulatory Assets on the balance sheets. For further information, see Note 3, "Regulatory Accounting,"
to the financial statements.
A reconciliation of the beginning and ending carrying amounts of ARO liabilities are as follows:
NU
As of December 31,
(Millions of Dollars)
2013
2012
Balance as of Beginning of Year
$
412.2
$
56.2
Liability Assumed Upon Consolidation of CYAPC and YAEC
-
284.2
Liability Assumed Upon Merger With NSTAR
-
35.9
Liabilities Incurred During the Year
0.1
1.5
Liabilities Settled During the Year
(13.8)
(7.2)
Accretion
23.8
20.2
Revisions in Estimated Cash Flows
2.6
21.4
Balance as of End of Year
$
424.9
$
412.2
As of December 31,
2013
2012
NSTAR
NSTAR
(Millions of Dollars)
CL&P
Electric
PSNH
WMECO
CL&P
Electric
PSNH
WMECO
Balance as of Beginning of Year
$
33.6
$
31.4
$
18.4
$
4.3
$
32.2
$
27.5
$
17.0
$
4.0
Liabilities Incurred During the Year
-
-
-
-
-
-
0.3
-
Liabilities Settled During the Year
(0.7)
(0.1)
-
-
(0.9)
(1.0)
-
-
Accretion
2.2
1.5
1.2
0.3
2.0
1.5
1.1
0.3
Revisions in Estimated Cash Flows
(0.1)
-
(0.1)
(0.1)
0.3
3.4
-
-
Balance as of End of Year
$
35.0
$
32.8
$
19.5
$
4.5
$
33.6
$
31.4
$
18.4
$
4.3