Eversource 2010 Annual Report Download - page 95

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As of December 31,
2010 2009
(Millions of Dollars) CL&P PSNH WMECO CL&P PSNH WMECO
Distribution $ 4,180.7 $ 1,375.4 $ 673.7 $ 3,960.1 $ 1,309.2 $ 654.9
Transmission 2,668.4 476.1 233.5 2,573.2 450.2 195.7
Generation - 687.7 9.4 - 660.1 -
Total Property, Plant and Equipment, Gross 6,849.1 2,539.2 916.6 6,533.3 2,419.5 850.6
Less: Accumulated Depreciation (1,508.7) (837.3) (228.5) (1,426.6) (805.5) (218.2)
Property, Plant and Equipment, Net 5,340.4 1,701.9 688.1 5,106.7 1,614.0 632.4
Construction Work in Progress 246.1 351.4 129.0 233.9 200.7 73.4
Total Property, Plant and Equipment, Net $ 5,586.5 $ 2,053.3 $ 817.1 $ 5,340.6 $ 1,814.7 $ 705.8
PSNH charges planned major maintenance activities to Operating Expenses unless the cost represents the acquisition of additional
components. PSNH capitalizes the cost of plant additions.
CL&P, PSNH and WMECO have entered into certain equipment purchase contracts that require the Company to make advance
payments during the design, manufacturing, shipment and installation of equipment. As of December 31, 2010 and 2009, advance
payments totaling $9.3 million and $27 million, respectively ($1.3 million and $5.4 million for CL&P, $4.9 million and $16.6 million for
PSNH and $3.1 million and $5 million for WMECO, respectively) are included within CWIP in the table above and not subject to
depreciation.
The following table summarizes average depreciable lives as of December 31, 2010:
Average Depreciable Life
(Years) NU CL&P PSNH WMECO
Distribution 36.8 36.0 37.0 32.5
Transmission 43.2 42.3 44.6 54.2
Generation 31.9 - 31.6 25.0
Other 20.7 - - -
The provision for depreciation on utility assets is calculated using the straight-line method based on the estimated remaining useful
lives of depreciable plant in-service, adjusted for salvage value and removal costs, as approved by the appropriate regulatory agency
(the DPUC, NHPUC, and the DPU for CL&P, PSNH, and WMECO, respectively). Depreciation rates are applied to plant-in-service
from the time it is placed in service. When a plant is retired from service, the original cost of the plant is charged to the accumulated
provision for depreciation, which includes cost of removal less salvage. Cost of removal is classified as a Regulatory Liability on the
accompanying consolidated balance sheets. The depreciation rates for the several classes of utility plant-in-service are equivalent to
composite rates as follows:
(Percent) 2010 2009 2008
NU 2.7 2.9 3.0
CL&P 2.7 3.0 3.1
PSNH 2.8 2.7 2.7
WMECO 2.8 2.9 2.8
4. DERIVATIVE INSTRUMENTS
The costs and benefits of derivative contracts that meet the definition of and are designated as "normal purchases or normal sales"
(normal) are recognized in Operating Expenses or Operating Revenues on the accompanying consolidated statements of income, as
applicable, as electricity or natural gas is delivered.
Derivative contracts that are not recorded as normal under the applicable accounting guidance, are recorded at fair value as current or
long-term derivative assets or liabilities. Changes in fair values of NU Enterprises' derivatives are included in Net Income. For the
Regulated companies, regulatory assets or liabilities are recorded for the changes in fair values of derivatives, as these contracts are
part of current regulated operating costs, or have an allowed recovery mechanism, and management believes that these costs will
continue to be recovered from or refunded to customers in cost-of-service, regulated rates. See below for discussion of "Derivatives not
designated as hedges."
The Regulated companies are exposed to the volatility of the prices of energy and energy-related products in procuring energy supply
for their customers. The costs associated with supplying energy to customers are recoverable through customer rates. The Company
manages the risks associated with the price volatility of energy and energy-related products through the use of derivative contracts,
many of which are accounted for as normal (for WMECO all derivative contracts are accounted for as normal) and the use of
nonderivative contracts.