Eversource 2008 Annual Report Download - page 62

N. Fuel, Materials and Supplies
Fuel, materials and supplies include natural gas storage, coal, oil and materials
purchased primarily for construction or operation and maintenance (O&M) purposes.
Natural gas inventory, coal and oil are valued at the weighted average cost of gas, coal
and oil. Materials and supplies are valued at the lower of average cost or market.
O. 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.
P. Special Deposits and Counterparty Deposits
To the extent Select Energy requires collateral from counterparties, or the counterparties
require collateral from Select Energy, cash is held on deposit by Select Energy or with
unaliated counterparties and brokerage firms as a part of the total collateral required
based on Select Energy’s position in transactions with the counterparty. Select Energy’s
right to use cash collateral is determined by the terms of the related agreements. Key
factors aecting the unrestricted status of a portion of this cash collateral include the
financial standing of Select Energy and of NU as its credit supporter.
NU and its subsidiaries record special deposits and counterparty deposits in accordance
with FSP FIN 39-1, “Amendment of FASB Interpretation No. 39,” which requires NU to net
collateral amounts posted under a master netting agreement if the related derivatives are
recorded in a net position. At December 31, 2008, NU and its subsidiaries had no special
deposits or counterparty collateral posted under master netting agreements that would
be required to be netted against the fair value of derivatives.
Special deposits paid by Select Energy to unaliated counterparties and brokerage
firms were not subject to master netting agreements and totaled $26.3 million and
$18.9 million at December 31, 2008 and 2007, respectively. These amounts are recorded
as current assets and are included in prepayments and other on the accompanying
consolidated balance sheets. There were no counterparty deposits for Select Energy
as of December31, 2008 and 2007.
NU has established credit policies regarding counterparties to minimize overall credit
risk. These policies require an evaluation of potential counterparties financial condition,
collateral requirements and the use of standardized agreements that allow for the
netting of positive and negative exposures associated with a single counterparty.
These evaluations result in established credit limits prior to entering into a contract.
At December 31, 2008 and 2007, there were no counterparty deposits.
NU had amounts on deposit related to four subsidiaries used to facilitate the issuance of
RRBs. These amounts totaled $41.3 million and $43.5 million at December31, 2008 and
2007, respectively. In addition, NU had $7 million and $6.4 million in other cash deposits
held with unaliated parties at December 31, 2008 and 2007, respectively. These
amounts are included in deferred debits and other assets - other on the accompanying
consolidated balance sheets.
Q. Other Taxes
Certain excise taxes levied by state or local governments are collected by CL&P and
Yankee Gas from its customers. These excise taxes are accounted for on a gross
basis with collections in revenues and payments in expenses. For the years ended
December31, 2008, 2007, and 2006, gross receipts taxes, franchise taxes and other
excise taxes of $126.6 million, $112.2 million, and $114.1 million, respectively, were
included in operating revenues and taxes other than income taxes on the accompanying
consolidated statements of income.
Certain sales taxes are also collected by CL&P and Yankee Gas from their customers as
agents for state and local governments and are recorded on a net basis with no impact
on the accompanying consolidated statements of income.
R. Other Income, Net
The pre-tax components of other income/(loss) items are as follows:
For the Years Ended December 31,
(Millions of Dollars) 2008 2007 2006
Other Income:
Investment income $ 6.6 $ 22.3 $ 24.9
2008 federal tax settlement - interest 10.1 - -
AFUDC - equity funds 29.0 17.4 13.6
Energy Independence Act incentives 12.1 9.9 5.5
Conservation and load management incentives 4.8 7.7 6.5
CL&P fixed procurement fee - - 11.0
Equity in earnings of regional nuclear generating
and transmission companies 1.6 4.0 0.3
Gain on sale of Globix investment - - 3.1
Other 1.1 1.0 0.8
Total Other Income 65.3 62.3 65.7
Other Loss:
Investment write-downs (14.6 ) (0.5 ) -
Loss on investment in receivables - - (1.1 )
Other (0.3 ) (0.2 ) (0.2 )
Total Other Loss (14.9 ) (0.7 ) (1.3 )
Total Other Income, Net $ 50.4 $ 61.6 $ 64.4
Equity in earnings of regional nuclear generating and transmission companies relates
to NU’s investment in the Yankee Companies and the two Hydro-Québec transmission
companies.
The CL&P fixed procurement fee represents compensation approved by the DPUC
associated with Transitional Standard Oer (TSO) supply procurement. The
conservation and load management incentives relate to incentives earned if certain
energy and demand savings goals are met.
The Energy Independence Act incentives relate to incentives earned under the Act to
encourage regulated companies to construct distributed generation, new large-scale
generation and implement conservation and load management initiatives to reduce
FMCC charges.
For further information regarding interest from the 2008 federal tax settlement,
see Note 1H, “Summary of Significant Accounting Policies - Income Taxes,” to the
consolidated financial statements.
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