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122
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 and NSTAR Electric’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. The fair values provided in
the tables below are classified as Level 2 within the fair value hierarchy. Carrying amounts and estimated fair values are as follows:
As of December 31,
2012
2011
NU
Carrying
Fair
Carrying
Fair
(Millions of Dollars)
Amount
Value
Amount
Value
Preferred Stock Not
Subject to Mandatory Redemption
$
155.6
$
152.2
$
116.2
$
105.1
Long-Term Debt
7,963.5
8,640.7
4,950.7
5,517.0
Rate Reduction Bonds 82.1
83.0
112.3
116.8
As of December 31, 2012
CL&P
NSTAR Electric
PSNH
WMECO
Carrying
Fair
Carrying
Fair
Carrying
Fair
Carrying
Fair
(Millions of Dollars)
Amount
Value
Amount
Value
Amount
Value
Amount
Value
Preferred Stock Not
Subject to Mandatory Redemption
$
116.2
$
110.0
$
43.0
$
42.2
$
-
$
-
$
-
$
-
Long-Term Debt
2,862.8
3,295.4
1,602.6
1,818.8
997.9
1,088.0
605.3
660.4
Rate Reduction Bonds
-
-
43.5
43.9
29.3
29.6
9.4
9.5
As of December 31, 2011
CL&P
NSTAR Electric (1)
PSNH
WMECO
Carrying
Fair
Carrying
Fair
Carrying
Fair
Carrying
Fair
(Millions of Dollars)
Amount
Value
Amount
Value
Amount
Value
Amount
Value
Preferred Stock Not
Subject to Mandatory Redemption
$
116.2
$
105.1
$
43.0
$
41.2
$
-
$
-
$
-
$
-
Long-Term Debt 2,587.8
2,987.1
1,605.1
1,816.1
999.5
1,075.2
501.1
539.8
Rate Reduction Bonds
-
-
127.9
131.2
85.4
88.8
26.9
28.1
(1) NSTAR Electric amounts are not included in NU consolidated as of December 31, 2011.
Derivative Instruments: NU, including CL&P, NSTAR Electric and WMECO, holds various derivative instruments that are carried at fair
value. For further information, see Note 5, "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 1H, "Summary of Significant Accounting Policies - Fair Value Measurements," and Note 6,
"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.
15. ACCUMULATED OTHER COMPREHENSIVE INCOME/(LOSS)
The accumulated balance for each component of other comprehensive income/(loss), net of tax, is as follows:
(Millions of Dollars)
As of December 31,
NU
2012
2011
Qualified Cash Flow Hedging Instruments $
(16.4)
$
(18.4)
Unrealized Gains on Other Securities
1.3
1.1
Pension, SERP and PBOP Benefits
(57.8)
(53.4)
Accumulated Other Comprehensive Loss
$
(72.9)
$
(70.7)
CL&P
Qualified Cash Flow Hedging Instruments
$
(1.8)
$
(2.3)
PSNH
Qualified Cash Flow Hedging Instruments
$
(9.7)
$
(10.9)
WMECO
Qualified Cash Flow Hedging Instruments
$
(3.8)
$
(4.2)