Eversource 2008 Annual Report Download - page 64

short-term debt, PSNH is not currently required to obtain FERC approval for its short-
term borrowings.
CL&P’s certificate of incorporation contains preferred stock provisions restricting the
amount of unsecured debt that CL&P may incur. In November 2003, CL&P obtained
from its preferred stockholders authorization for a ten-year period expiring in March
2014 to issue unsecured indebtedness with a maturity of less than 10 years in excess
of the 10 percent of total capitalization limitation in CL&P’s preferred stock provisions,
provided that all unsecured indebtedness does not exceed 20 percent of total
capitalization. As of December31, 2008, CL&P was permitted to incur $584.4 million of
additional unsecured debt under this authorization.
Yankee Gas is not required to obtain approval from any state or federal authority to
incur short-term debt.
Regulated Companies Credit Agreement: CL&P, PSNH, WMECO, and Yankee Gas are
parties to a five-year unsecured revolving credit facility in the nominal amount of $400
million that expires on November 6, 2010. CL&P may draw up to $200 million under
this facility, with PSNH, WMECO and Yankee Gas able to draw up to $100 million each,
subject to the $400 million maximum borrowing limit. This total commitment may be
increased to $500 million at the request of the borrowers, subject to lender approval.
There were $188 million, $45.2 million, $29.9 million and $52.3 million in short-term
borrowings by CL&P, PSNH, WMECO and Yankee Gas, respectively, outstanding under
this facility as of December 31, 2008. There were $45 million of long-term borrowings
by Yankee Gas outstanding under this facility at December31, 2007. There were $10
million and $27 million in short-term borrowings by PSNH and Yankee Gas, respectively,
outstanding under this facility at December 31, 2007. The weighted-average interest
rate on these short-term borrowings on December31, 2008 and 2007 was 3.35 percent
and 7.25 percent, respectively.
NU Parent Credit Agreement: Eective December31, 2006, NU reduced the total
commitments under its 5-year unsecured revolving credit agreement from $700 million
to $500 million, which may be increased at NU’s request to $600 million, subject
to lender approval. The decrease in the total commitment amount also resulted in a
reduction in the letter of credit (LOC) commitment amount from $550 million to $500
million. Subject to the advances outstanding, LOCs may be issued for periods up to
364 days in the name of NU or any of its subsidiaries, including Select Energy. This
agreement expires on November 6, 2010.
Under this facility, NU can borrow either on a short-term or a long-term basis. At
December 31, 2008, NU had $303.5 million in short-term borrowings outstanding under
this facility. At December31, 2007, there were $42 million in short-term borrowings
outstanding under this facility. The weighted-average interest rate on such borrowings
outstanding under these credit agreements on December31, 2008 and 2007 was 3.35
percent and 7.25 percent, respectively. There were $87 million and $27 million in LOCs
outstanding at December31, 2008 and 2007, respectively.
Under the regulated companies and NU parent credit agreements, NU and the regulated
companies may borrow at prime rates or variable rates plus an applicable margin based
upon the higher of Standard and Poor’s (S&P) or Moody’s Investors Service (Moody’s)
credit ratings assigned to the borrower. 
A participating lender in both agreements, Lehman Brothers Commercial Bank, has
declined to fund on its remaining aggregate $55 million commitment since September
2008. At December31, 2008, $23.5 million of this commitment remained outstanding
from prior borrowings.
In addition, NU and the regulated companies must comply with certain financial and
non-financial covenants, including a consolidated debt to capitalization ratio. NU and
the regulated companies are in compliance with these covenants at December31, 2008.
If NU or the regulated companies were not in compliance with these covenants, they
would not be allowed to borrow on the revolving credit agreements.
Amounts outstanding under these credit facilities, excluding the $45 million of long-
term borrowings by Yankee Gas at December 31, 2007, are classified as current
liabilities as notes payable to banks on the accompanying consolidated balance sheets,
as management anticipates that all borrowings under these credit facilities will be
outstanding for no more than 364 days at one time.
3. Derivative Instruments
Contracts that are derivatives and do not meet the requirements to be treated as a
cash flow hedge or normal purchase or normal sale are recorded at fair value with
changes in fair value included in earnings. For those contracts that meet the definition
of a derivative and meet the cash flow hedge requirements, including those related
to initial and ongoing documentation, the contract is recorded at fair value and the
changes in the fair value of the eective portion of those contracts are recognized
in accumulated other comprehensive income. Cash flow hedges include forward
interest rate swap agreements on proposed debt issuances. When a cash flow hedge
is settled, the settlement amount is recorded in accumulated other comprehensive
income and is amortized into earnings over the term of the debt. Cash flow hedges
impact net income when the hedged items aect earnings, when hedge ineectiveness
is measured and recorded, or when the forecasted transaction being hedged is
improbable of occurring. Derivative contracts designated as fair value hedges and the
items they are hedging are both recorded at fair value with changes in fair value of both
items recognized in earnings. Derivative contracts that meet the requirements of a
normal purchase or sale, and are so designated, are recognized in revenues or expenses,
as applicable, when the quantity of the contract is delivered. 
The fair value of the company’s derivative contracts may not represent amounts that
will be realized. For further information on the fair value of derivative contracts, see
Note 1F, “Summary of Significant Accounting Policies - Fair Value Measurements,” and
Note4, “Fair Value Measurements,” to the consolidated financial statements. On the
accompanying consolidated balance sheets at December 31, 2008 and 2007, these
amounts are recorded as current or long-term derivative assets or liabilities and are
summarized as follows:
At December 31, 2008
Assets Liabilities
(Millions of Dollars) Current Long-Term Current Long-Term Net Total
NU Enterprises:
Wholesale $ - $ - $ (14.5 ) $ (49.4 ) $ (63.9 )
Regulated Companies -
Gas:
Supply - 1.9 (0.2 ) - 1.7
Regulated Companies -
Electric:
Supply/Stranded Costs 31.4 219.1 (86.2 ) (863.0 ) (698.7 )
NU Parent:
Interest Rate Hedging - 20.8 - - 20.8
Totals $ 31.4 $ 241.8 $ (100.9 ) $ (912.4 ) $ (740.1 )
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