Eversource 2010 Annual Report Download - page 84

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F. Provision for Uncollectible Accounts
NU, including CL&P, PSNH and WMECO, maintains a provision for uncollectible accounts to record receivables at an estimated net
realizable value. This provision is determined based upon a variety of factors, including applying an estimated uncollectible account
percentage to each receivable aging category, based upon historical collection and write-off experience and management's
assessment of collectibility from individual customers. Management reviews at least quarterly the collectibility of the receivables, and if
circumstances change, collectibility estimates are adjusted accordingly. Receivable balances are written-off against the provision for
uncollectible accounts when the accounts are terminated and these balances are deemed to be uncollectible.
The provision for uncollectible accounts, which is included in Receivables, Net on the accompanying consolidated balance sheets, was
as follows:
As of December 31,
(Millions of Dollars) 2010 2009
NU $ 39.8 $ 55.3
CL&P 17.2 26.1
PSNH 6.8 5.1
WMECO 6.0 7.2
The DPUC allows CL&P and Yankee Gas to accelerate the recovery of uncollectible hardship accounts receivable outstanding for
greater than 90 days. As of December 31, 2010, CL&P and Yankee Gas had uncollectible hardship accounts receivable reserves in
the amount of $65 million and $7.5 million, respectively, with the corresponding bad debt expense recorded as Regulatory Assets as
these amounts are probable of recovery. As of December 31, 2009, these amounts totaled $54.5 million and $8.6 million, respectively.
As of December 31, 2010 and 2009, WMECO had a reserve for uncollectible hardship accounts receivable of $6.9 million and $9.1
million, respectively. As a result of the January 2011 DPU decision, WMECO is allowed to collect these amounts in rates.
G. Fuel, Materials and Supplies and Allowance Inventory
Fuel, Materials and Supplies include natural gas, coal, oil and materials purchased primarily for construction or operation and
maintenance purposes. Natural gas inventory, coal and oil are valued at their respective weighted average cost. Materials and
supplies are valued at the lower of average cost or market.
PSNH is subject to federal and state laws and regulations that regulate emissions of air pollutants, including SO2, CO2, and NOx related
to its regulated generation units, and uses SO2, CO2, and NOx emissions allowances. At the end of each compliance period, PSNH is
required to relinquish SO2, CO2, and NOx emissions allowances corresponding to the actual emissions emitted by its generating units
over the compliance period. SO2 and NOx emissions allowances are obtained through an annual allocation from the federal and state
regulators that are granted at no cost and through purchases from third parties. CO2 emissions allowances are acquired through
auctions and through purchases from third parties.
SO2, CO2, and NOx emissions allowances are recorded within Fuel, Materials and Supplies and are classified on the balance sheet as
short-term or long-term depending on the period they are expected to be utilized against actual emissions. As of December 31, 2010
and 2009, PSNH had $7.1 million and $7.8 million, respectively, of short-term SO2, CO2, and NOx emissions allowances classified as
Fuel, Materials and Supplies on the accompanying consolidated balance sheets and $18.2 million and $20.7 million, respectively, of
long-term SO2 and CO2 emissions allowances classified as Other Long-Term Assets on the accompanying consolidated balance
sheets.
SO2, CO2, and NOx emissions allowances are charged to expense based on their weighted average cost as they are utilized against
emissions volumes at PSNH's generating units. PSNH recorded expenses of $6.6 million, $7.6 million and $2.8 million for the years
ended December 31, 2010, 2009, and 2008, respectively, which was included in Fuel, Purchased and Net Interchange Power on the
accompanying consolidated statements of income. These costs are recovered from customers through PSNH ES revenues. See
Note 2, "Regulatory Accounting," for further information.
H. Special Deposits and Counterparty Deposits
To the extent NU Enterprises, through Select Energy, requires collateral from counterparties, or the counterparties require collateral
from Select Energy, cash is held on deposit by Select Energy or with unaffiliated counterparties and brokerage firms as a part of the
total collateral required based on Select Energy's position in transactions with the counterparty. Select Energy's right to use cash
collateral is determined by the terms of the related agreements. Key factors affecting the unrestricted status of a portion of this cash
collateral include the financial standing of Select Energy and of NU as its credit supporter.
Special deposits paid by Select Energy to unaffiliated counterparties and brokerage firms not subject to master netting agreements
totaled $22.6 million and $28.1 million as of December 31, 2010 and 2009, respectively. These amounts are included in Prepayments
and Other Current Assets on the accompanying consolidated balance sheets. There were no counterparty deposits for Select Energy
as of December 31, 2010 and 2009.
NU, including CL&P, PSNH, and WMECO, records special deposits and counterparty deposits posted under master netting agreements
as an offset to a derivative asset or liability if the related derivatives are recorded in a net position. For further information, see Note 4,
"Derivative Instruments" to the consolidated financial statements.