Eversource 2012 Annual Report Download - page 103

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7. ASSET RETIREMENT OBLIGATIONS
In accordance with accounting guidance for conditional AROs, NU, including CL&P, NSTAR Electric, PSNH and WMECO, recognizes a
liability for the fair value of an ARO on the obligation date if the liability's fair value can be reasonably estimated and is conditional on a
future event. Settlement dates and future costs are reasonably estimated when sufficient information becomes available. Management
has identified various categories of AROs, primarily certain assets containing asbestos and hazardous contamination and has
performed fair value calculations, reflecting expected probabilities for settlement scenarios.
The fair value of an ARO is recorded as a liability in Other Long-Term Liabilities with a corresponding amount included in Property,
Plant and Equipment, Net on the accompanying consolidated balance sheets. As the Regulated companies are rate-regulated on a
cost-of-service basis, these companies apply regulatory accounting guidance and the costs associated with the Regulated companies'
AROs are included in Regulatory Assets as of December 31, 2012 and 2011. The ARO assets are depreciated, and the ARO liabilities
are accreted over the estimated life of the obligation with corresponding credits recorded as accumulated depreciation and ARO
liabilities, respectively. Both the depreciation and accretion were recorded as increases to Regulatory Assets on the accompanying
consolidated balance sheets as of December 31, 2012 and 2011. For further information, see Note 3, "Regulatory Accounting," to the
consolidated financial statements.
A reconciliation of the beginning and ending carrying amounts of Regulated companies’ ARO liabilities are as follows:
NU
As of December 31,
(Millions of Dollars)
2012
2011
Balance as of Beginning of Year
$
56.2
$
53.3
Liability Assumed Upon Consolidation of CYAPC and YAEC
284.2
-
Liability Assumed Upon Merger With NSTAR
35.9
-
Liabilities Incurred During the Year
1.5
2.1
Liabilities Settled During the Year
(7.2)
(0.8)
Accretion
20.2
3.5
Revisions in Estimated Cash Flows
21.4
(1.9)
Balance as of End of Year
$
412.2
$
56.2
As of December 31,
2012
2011
NSTAR
NSTAR
(Millions of Dollars)
CL&P
Electric
PSNH
WMECO
CL&P
Electric(1)
PSNH
WMECO
Balance as of Beginning of Year $ 32.2
$
27.5
$
17.0
$
4.0
$
29.3
$
26.2
$
17.6
$
3.6
Liabilities Incurred During the Year
-
-
0.3
-
1.7
-
0.2
0.2
Liabilities Settled During the Year
(0.9)
(1.0)
-
-
(0.8)
-
-
-
Accretion
2.0
1.5
1.1
0.3
2.0
1.3
1.1
0.2
Revisions in Estimated Cash Flows
0.3
3.4
-
-
-
-
(1.9)
-
Balance as of End of Year
$
33.6
$
31.4
$
18.4
$
4.3
$
32.2
$
27.5
$
17.0
$
4.0
(1)
NSTAR Electric amounts are not included in NU consolidated as of December 31, 2011.
The Liability Assumed Upon Consolidation of CYAPC and YAEC represents the CYAPC and YAEC ARO fair value as of the merger
date. The fair value of the ARO for CYAPC and YAEC includes uncertainties of the fuel off-load dates related to the DOE’s timing of
performance regarding its obligation to dispose of the spent nuclear fuel and high level waste. The incremental asset recorded as an
offset to the ARO was fully depreciated since the plants have no remaining useful life. Any changes in the assumptions used to
calculate the fair value of the ARO are recorded as an offset to the related regulatory asset. The assets held in the decommissioning
trust are restricted for settling the asset retirement obligation and all other decommissioning obligations. For further information on the
regulatory asset established or the assets held in trust to support this obligation, see Note 3, "Regulatory Accounting," and Note 6,
"Marketable Securities," to the consolidated financial statements.
8. SHORT-TERM DEBT
Limits: The amount of short-term borrowings that may be incurred by CL&P, NSTAR Electric and WMECO is subject to periodic
approval by the FERC. On November 30, 2011, 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, 2012 through December 31, 2013. On
March 22, 2012, the FERC approved CL&P's application requesting to increase its total short-term borrowing capacity from a maximum
of $450 million to a maximum of $600 million for the authorization period through December 31, 2013. On May 16, 2012, the FERC
granted authorization to allow NSTAR Electric to issue total short-term debt securities in an aggregate principal amount not to exceed
$655 million outstanding at any one time, effective October 23, 2012 through October 23, 2014. 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.
PSNH is authorized by regulation of the NHPUC to incur short-term borrowings up to 10 percent of net fixed plant plus an additional
$60 million until further ordered by the NHPUC. As of December 31, 2012, PSNH's short-term debt authorization under the 10 percent
of net fixed plant test plus $60 million totaled approximately $280 million.