Eversource 2010 Annual Report Download - page 131

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114
14. FAIR VALUE OF FINANCIAL INSTRUMENTS
The following methods and assumptions were used to estimate the fair value of each of the following financial instruments:
Preferred Stock, Long-Term Debt and Rate Reduction Bonds: The fair value of CL&P's preferred stock is based upon pricing models
that incorporate interest rates and other market factors, valuations or trades of similar securities and cash flow projections. The fair
value of fixed-rate long-term debt securities and RRBs is based upon pricing models that incorporate quoted market prices for those
issues or similar issues adjusted for market conditions, credit ratings of the respective companies and treasury benchmark yields.
Adjustable rate securities are assumed to have a fair value equal to their carrying value. Carrying amounts and estimated fair values
are as follows:
A
s of December 31, 2010
NU CL&P PSNH WMECO
(Millions of Dollars)
Carrying
Amount
Fair
Value
Carrying
Amount
Fair
Value
Carrying
Amount
Fair
Value
Carrying
Amount
Fair
Value
Preferred Stock Not
Subject to Mandatory
Redemption $ 116.2 $ 93.7 $ 116.2 $ 93.7 $ - $ - $ - $ -
Long-Term Debt -
First Mortgage Bonds 2,703.4 2,998.7 1,919.8 2,148.3 430.0 462.8 - -
Other Long-Term Debt 1,989.0 2,045.1 667.7 668.4 407.3 408.6 401.0 417.0
Rate Reduction Bonds 181.6 193.3 - - 138.2 146.9 43.3 46.4
A
s of December 31, 2009
NU CL&P PSNH WMECO
(Millions of Dollars)
Carrying
Amount
Fair
Value
Carrying
Amount
Fair
Value
Carrying
Amount
Fair
Value
Carrying
Amount
Fair
Value
Preferred Stock Not
Subject to Mandatory
Redemption $ 116.2 $ 86.8 $ 116.2 $ 86.8 $ - $ - $ - $ -
Long-Term Debt -
First Mortgage Bonds 2,657.7 2,713.5 1,919.8 1,960.6 430.0 425.4 - -
Other Long-Term Debt 1,893.6 1,938.0 667.4 673.4 407.3 408.6 305.9 304.9
Rate Reduction Bonds 442.4 487.3 195.6 220.1 188.1 203.5 58.7 63.7
The NU Other Long-Term Debt includes $301 million and $300.6 million of fees and interest due for spent nuclear fuel disposal costs as
of December 31, 2010 and 2009, respectively. CL&P's portion of this obligation is $243.8 million and $243.5 million and WMECO's
portion of this obligation is $57.2 million and $57.1 million as of December 31, 2010 and 2009, respectively.
Derivative Instruments: NU, including CL&P and PSNH, holds various derivative instruments that are carried at fair value. For further
information, see Note 4, "Derivative Instruments," to the consolidated financial statements.
Other Financial Instruments: Investments in marketable securities are carried at fair value on the accompanying consolidated balance
sheets. For further information, see Note 1I, "Summary of Significant Accounting Policies - Fair Value Measurements," and Note 5,
"Marketable Securities," to the consolidated financial statements.
The carrying value of other financial instruments included in current assets and current liabilities, including cash and cash equivalents
and special deposits, approximates their fair value due to the short-term nature of these instruments.