Eversource 2010 Annual Report Download - page 109

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As of December 31, 2010, PSNH had $407.3 million in outstanding PCRBs. PSNH's obligation to repay each series of PCRBs is
secured by first mortgage bonds and three series, the 2001 Series A, B and C, also carry bond insurance. Each such series of first
mortgage bonds contains similar terms and provisions as the applicable series of PCRBs. For financial reporting purposes, these first
mortgage bonds would not be considered outstanding unless PSNH failed to meet its obligations under the PCRBs. The 2001 Series A
PCRBs, in the aggregate principal amount of $89.3 million, bears interest at a rate that is periodically set pursuant to auctions. Since
March 2008, a significant majority of this series of PCRBs has been held by the remarketing agent as a result of failed auctions due to
general market concerns. The interest rate on this series of PCRBs has been reset by formula under the applicable documents every
35 days. The formula is based on a combination of the ratings on the PCRBs and an index rate. The interest rate has been between
0.16 percent and 4.03 percent since March 2008 and was 0.36 percent as of December 31, 2010. The Company is not obligated to
purchase these PCRBs, which mature in 2021, from the remarketing agent. The weighted average effective interest rate on PSNH's
Series A variable-rate PCRBs was 0.34 percent in 2010 and 0.25 percent for 2009.
NU's, including CL&P, PSNH and WMECO, long-term debt agreements provide that NU and certain of its subsidiaries must comply with
certain financial and non-financial covenants as are customarily included in such agreements, including a consolidated debt to total
capitalization ratio. NU and these subsidiaries are in compliance with these covenants as of December 31, 2010.
Yankee Gas has certain long-term debt agreements that contain cross-default provisions. These cross-default provisions apply to all of
Yankee Gas’ outstanding first mortgage bond series. The cross-default provisions on Yankee Gas’ Series B Bonds would be triggered
if Yankee Gas were to default in a payment due on indebtedness in excess of $2 million. The cross-default provisions on all other
series of Yankee Gas’ first mortgage bonds would be triggered if Yankee Gas were to default in a payment due on indebtedness in
excess of $10 million. PSNH would also be in default under its first mortgage indentures if it defaulted on any prior lien obligation
exceeding $25 million. PSNH had no prior lien obligations as of December 31, 2010. There are no other debt issuances for CL&P,
WMECO or NU parent with cross-default provisions as of December 31, 2010.
The accompanying consolidated statements of capitalization as of December 31, 2010 reflect the issuance in 2010 of bonds in the
amount of $50 million at Yankee Gas, which are included in Long-Term Debt - First Mortgage Bonds and the issuance in 2010 of senior
unsecured notes in the amount of $95 million at WMECO, which are included in Other Long-Term Debt.
For information regarding fees and interest due for spent nuclear fuel disposal costs, see Note 12B, "Commitments and Contingencies -
Spent Nuclear Fuel Disposal Costs," to the consolidated financial statements.
The change in fair value totaling a positive $11.8 million and $13.3 million as of December 31, 2010 and 2009, respectively, on the
accompanying consolidated statements of capitalization reflects the NU parent 7.25 percent amortizing note, due 2012 in the amount of
$263 million, that is hedged with a fixed to floating interest rate swap. The change in fair value of the interest component of the debt
was recorded as an adjustment to Long-Term Debt with an equal and offsetting adjustment to Derivative Assets for the change in fair
value of the fixed to floating interest rate swap.
10. EMPLOYEE BENEFITS
A. Pension Benefits and Postretirement Benefits Other Than Pensions
Pursuant to GAAP, NU is required to record the funded status of its pension and PBOP plans on the accompanying consolidated
balance sheets, based on the difference between the projected benefit obligation for the Pension Plan and accumulated postretirement
benefit obligation for the PBOP Plan and the fair value of plan assets measured in accordance with fair value measurement accounting
guidance. The funded status is recorded with an offset to Accumulated Other Comprehensive Income/(Loss) on the accompanying
consolidated balance sheets. This amount is remeasured annually, or as circumstances dictate.
As of December 31, 2010 and 2009, NU recorded an after-tax charge totaling $0.5 million and $5.4 million, respectively, to
Accumulated Other Comprehensive Income/(Loss) for its unregulated subsidiaries. Charges for the Regulated companies are recorded
as Regulatory Assets and included as deferred benefit costs as these benefits expense amounts have been and continue to be
recoverable in cost-of-service, regulated rates. For further information see Note 2, "Regulatory Accounting," to the consolidated
financial statements. Regulatory accounting was also applied to the portions of the NUSCO costs that support the Regulated
companies, as these amounts are also recoverable through rates charged to customers.