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8. SHORT-TERM DEBT
Limits: The amount of short-term borrowings that may be incurred by CL&P and WMECO is subject to periodic approval by the FERC
and short-term borrowings in excess of 10 percent of net plant by PSNH are subject to approval by the NHPUC. As a result of the
NHPUC having jurisdiction over PSNH's short-term debt, PSNH is not currently required to obtain FERC approval for its short-term
borrowings. On December 22, 2009, the FERC granted authorization to allow CL&P and WMECO to incur total short-term borrowings
up to a maximum of $450 million and $300 million, respectively, effective January 1, 2010 through December 31, 2011.
PSNH is authorized by regulation of the NHPUC to incur short-term borrowings up to 10 percent of net fixed plant. In an order dated
December 17 2010, the NHPUC increased the amount of short-term borrowings authorized for PSNH to a maximum of 10 percent of
net fixed plant plus an additional $60 million until further ordered by the NHPUC. As of December 31, 2010, PSNH's short-term debt
authorization under the 10 percent of net fixed plant test plus $60 million totaled $224.4 million.
CL&P's certificate of incorporation contains preferred stock provisions restricting the amount of unsecured debt that CL&P may incur,
including limiting unsecured indebtedness with a maturity of less than 10 years to 10 percent of total capitalization. In November 2003,
CL&P obtained from its preferred stockholders a waiver of such 10 percent limit for a ten-year period expiring in March 2014, provided
that all unsecured indebtedness does not exceed 20 percent of total capitalization. As of December 31, 2010, CL&P had approximately
$909.6 million of unsecured debt capacity available under this authorization.
Yankee Gas is not required to obtain approval from any state or federal authority to incur short-term debt.
CL&P, PSNH, WMECO and Yankee Gas Credit Agreement: On September 24, 2010, CL&P, PSNH, WMECO and Yankee Gas jointly
entered into a three-year unsecured revolving credit facility in the amount of $400 million, which expires on September 24, 2013. This
facility replaced a five-year $400 million credit facility that was scheduled to expire on November 6, 2010. CL&P and PSNH may draw
up to $300 million each under this facility, with WMECO and Yankee Gas able to draw up to $200 million each, subject to the $400
million maximum aggregate borrowing limit. This total commitment may be increased to $500 million at the request of the borrowers,
subject to lender approval. Under this facility, each company can borrow either on a short-term or a long-term basis subject to
regulatory approval. As of December 31, 2010, PSNH had $30 million in short-term borrowings outstanding under this credit facility.
The weighted average interest rate on such borrowings outstanding under this credit facility as of December 31, 2010 was 2.05 percent.
There were no borrowings outstanding by CL&P, WMECO and Yankee Gas under this facility as of December 31, 2010. There were
no borrowings outstanding under the previous facility as of December 31, 2009.
NU Parent Credit Agreement: On September 24, 2010, NU parent entered into a three-year unsecured revolving credit facility in the
amount of $500 million, which expires on September 24, 2013. This facility replaced a five-year $500 million credit facility that was
scheduled to expire on November 6, 2010. Subject to the amount of advances outstanding, LOCs can be issued under this facility for
periods up to 364 days in the name of NU parent or any of its subsidiaries up to the total amount of the facility. This total commitment
may be increased to $600 million at the request of NU parent, subject to lender approval. Under this facility, NU parent can borrow
either on a short-term or a long-term basis. As of December 31, 2010, NU parent had $237 million in short-term borrowings
outstanding under this facility. The weighted-average interest rate on such borrowings outstanding under this credit facility as of
December 31, 2010 was 2.85 percent. At December 31, 2009, NU had $100.3 million in short-term borrowings outstanding under the
previous facility. The weighted-average interest rate on such borrowings outstanding as of December 31, 2009 was 0.63 percent.
There were $32.1 million ($30.1 million for PSNH) in LOCs outstanding as of December 31, 2010. There were $41 million ($39 million
for PSNH) in LOCs outstanding under the previous facility as of December 31, 2009.
Under these credit facilities, NU parent and CL&P, PSNH, WMECO and Yankee Gas may borrow at prime rates or LIBOR-based rates,
plus an applicable margin based upon the higher of S&P's or Moody's credit ratings assigned to the borrower.
In addition, NU parent and CL&P, PSNH, WMECO and Yankee Gas must comply with certain financial and non-financial covenants,
including a consolidated debt to total capitalization ratio. NU parent and CL&P, PSNH, WMECO and Yankee Gas were in compliance
with these covenants as of December 31, 2010. If NU parent or CL&P, PSNH, WMECO or Yankee Gas were not in compliance with
these covenants, an event of default would occur requiring all outstanding borrowings by such borrower to be repaid and additional
borrowings by such borrower would not be permitted under the respective credit facility.
Amounts outstanding under these credit facilities 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.
Pool: NU Parent, CL&P, PSNH, WMECO, Yankee Gas and certain of NU's other subsidiaries are members of the Pool. The Pool
provides an efficient use of cash resources of NU and reduces outside short-term borrowings. NUSCO participates in the Pool and
administers the Pool as agent for the member companies. Short-term borrowing needs of the member companies are met with
available funds of other member companies, including funds borrowed by NU. NU may lend to the Pool but may not borrow. Funds
may be withdrawn from or repaid to the Pool at any time without prior notice. Investing and borrowing subsidiaries receive or pay
interest based on the average daily federal funds rate. Borrowings based on external loans of NU, however, bear interest at NU's cost
and are payable on demand. In NU's consolidated financial statements, Pool amounts payable or receivable to or from members
eliminate in consolidation. By order, the FERC has exempted all holding company system money pools from active regulation. As of
December 31, 2010 and 2009, CL&P, PSNH and WMECO had the following borrowings from/(contributions to) the Pool with the
respective weighted-average interest rate on borrowings from the Pool: