Eversource 2001 Annual Report Download - page 49

fied quantity of gas is effectively fixed over the term of the gas ser-
vice agreement, which extends through 2005. As of December 31,
2001, the commodity swap agreement had a notional value of
$16.9 million and a negative mark-to-market position of $1.4
million, net of tax, which is included within the $36.9 million
reported for accumulated other comprehensive income related to
hedging activities.
10. Minority Interest In Consolidated Subsidiary
CL&P Capital LP (CL&P LP), a subsidiary of CL&P, previously
had issued $100 million of cumulative 9.3 percent Monthly
Income Preferred Securities (MIPS), Series A. CL&P has the sole
ownership in CL&P LP, as a general partner, and was the guaran-
tor of the MIPS securities. Subsequent to the MIPS issuance,
CL&P LP loaned the proceeds of the MIPS issuance, along with
CL&P’s $3.1 million capital contribution, back to CL&P in the
form of an unsecured debenture. CL&P consolidates CL&P LP
for financial reporting purposes. Upon consolidation, the unse-
cured debenture was eliminated, and the MIPS securities were
accounted for as a minority interest. In the second quarter of
2001, CL&P repaid the $100 million in notes associated with the
MIPS.
11. Fair Value of Financial Instruments
The following methods and assumptions were used to estimate
the fair value of each of the following financial instruments:
Cash and cash equivalents: The carrying amounts approximate
fair value due to the short-term nature of cash and cash equiva-
lents.
Supplemental Executive Retirement Plan (SERP) Investments:
Investments held for the benefit of the SERP are recorded at fair
market value. The investments having a cost basis of $6.3 million
and $6.5 million held for benefit of the SERP were recorded at
their fair market values at December 31, 2001 and 2000, of $9
million and $10.1 million, respectively.
Nuclear decommissioning trusts: The investments held in the
NU system companies’ nuclear decommissioning trusts were
marked-to-market by a negative $2.5 million as of December 31,
2001, and a positive $117.6 million as of December 31, 2000,
with corresponding offsets to the accumulated provision for
depreciation.
Preferred stock and long-term debt: The fair value of the NU
system’s fixed-rate securities is based upon the quoted market
price for those issues or similar issues. Adjustable rate securities are
assumed to have a fair value equal to their carrying value. The car-
rying amounts of the NU system’s financial instruments and the
estimated fair values are as follows:
At December 31, 2001
(Millions of Dollars) Carrying Amount Fair Value
Preferred stock not subject
to mandatory redemption $116.2 $ 62.4
Long-term debt —
First mortgage bonds 795.9 847.2
Other long-term debt 1,552.1 1,554.6
Rate reduction bonds 2,018.4 2,061.8
At December 31, 2000
(Millions of Dollars) Carrying Amount Fair Value
Preferred stock not subject
to mandatory redemption $ 136.2 $ 159.9
Preferred stock subject to
mandatory redemption 40.8 42.0
Long-term debt —
First mortgage bonds 1,008.1 1,012.5
Other long-term debt 1,342.2 1,290.6
MIPS 100.0 100.5
12. Other Comprehensive Income
The accumulated balance for each other comprehensive income
item is as follows:
December 31, Current December 31,
(Millions of Dollars) 2000 Period Change 2001
Qualified cash flow
hedging instruments $ — $ (36.9) $(36.9)
Unrealized gains
on securities 2.4 2.6 5.0
Minimum pension
liability adjustments (0.6) — (0.6)
Accumulated other
comprehensive
income/(loss) $ 1.8 $ (34.3) $(32.5)
December 31, Current December 31,
(Millions of Dollars) 1999 Period Change 2000
Qualified cash flow
hedging instruments $ — $ — $ —
Unrealized gains
on securities 2.1 0.3 2.4
Minimum pension
liability adjustments (0.6) — (0.6)
Accumulated other
comprehensive income $ 1.5 $ 0.3 $ 1.8
The changes in the components of other comprehensive
income are reported net of the following income tax effects:
(Millions of Dollars) 2001 2000 1999
Qualified cash flow
hedging instruments $2.3 $— $—
Unrealized gains
on securities (1.9) (0.2) (0.1)
Minimum pension
liability adjustments ———
Accumulated other
comprehensive income/
(loss) $0.4 $(0.2) $ (0.1)
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