Eversource 2010 Annual Report Download - page 104

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For further information regarding marketable securities, see Note 1K, "Summary of Significant Accounting Policies - Marketable
Securities," to the consolidated financial statements.
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
(Millions of Dollars) As of
December 31, 2010
As of
December 31, 2009 As of December 31, 2010
As of
December 31, 2009
Level 1:
Exchange Traded Funds $ 38.9 $ 32.0 $ - $ -
High Yield Bond Fund 3.3 3.3 - -
Money Market Funds 1.8 8.9 0.3 6.6
Total Level 1 44.0 44.2 0.3 6.6
Level 2:
U.S. Government Issued Debt Securities
(Agency and Treasury) 17.8 29.9 6.0 17.0
Corporate Debt Securities 22.5 25.1 15.6 17.4
Asset Backed Debt Securities 11.6 6.1 4.7 0.9
Municipal Bonds 16.1 10.8 15.4 10.6
Other Fixed Income Securities 17.5 5.0 15.1 4.3
Total Level 2 85.5 76.9 56.8 50.2
Total Marketable Securities $ 129.5 $ 121.1 $ 57.1 $ 56.8
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.
Municipal bonds are valued using a market approach that incorporates reported trades and benchmark yields. 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. Other fixed income securities are valued using pricing
models, quoted prices of securities with similar characteristics, and discounted cash flows.
Not included in the tables above are $0.6 million and $11.6 million of cash equivalents as of December 31, 2010 and 2009,
respectively, held by NU parent in an unrestricted money market account and included in Cash and Cash Equivalents on the
accompanying consolidated balance sheets of NU, which are classified as Level 1 in the fair value hierarchy.
6. ASSET RETIREMENT OBLIGATIONS
In accordance with accounting guidance for conditional AROs, NU, including CL&P, 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.
The guidance provides that settlement dates and future costs should be reasonably estimated when sufficient information becomes
available and provides direction on the definition and timing of sufficient information in determining expected cash flows and fair values.
Management has identified various categories of AROs, primarily certain assets containing asbestos and hazardous contamination. A
fair value calculation, reflecting expected probabilities for settlement scenarios, has been performed.
The fair value of an ARO is recorded as a liability in Other Long-Term Liabilities with an offset included in Property, Plant and
Equipment, Net on the accompanying consolidated 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 Other Regulatory Assets as of December 31, 2010 and 2009. 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 accompanying
consolidated balance sheets as of December 31, 2010 and 2009.