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123
Qualified cash flow hedging items impacting Net Income in the tables above represent amounts that were reclassified from
Accumulated Other Comprehensive Income/(Loss) into Net Income for interest rate swap agreements. For the year ended
December 31, 2012, qualified cash flow hedging activity relates to the amortization of previously settled interest rate swap agreements.
For the year ended December 31, 2011, activity related to qualified cash flow hedging activity was as follows:
For the Year Ended December 31, 2011
(Millions of Dollars)
NU
PSNH
WMECO
Balance as of January 1, 2011
$
(4.2)
$
(0.6)
$
(0.1)
Hedged Transactions Recognized into Earnings 0.7
0.5
0.1
Cash Flow Hedging Transactions Entered into for the Year (14.9)
(10.8)
(4.2)
Net Change Associated with Hedging Transactions
(14.2)
(10.3)
(4.1)
Balance as of December 31, 2011
$
(18.4)
$
(10.9)
$
(4.2)
For further information regarding cash flow hedging transactions, see Note 5, "Derivative Instruments," to the consolida
ted
financial statements.
The changes in the components of other comprehensive income/(loss) are reported net of the following income tax effects:
(Millions of Dollars)
NU
2012
2011
2010
Qualified Cash Flow Hedging Instruments
$ 1.3
$ (9.5)
$ 0.2
Change in Unrealized Gains on Other Securities
0.1
0.4
0.2
Pension, SERP and PBOP Benefits
(2.7)
(7.9)
-
Total
$
(1.3)
$
(17.0)
$
0.4
CL&P
Qualified Cash Flow Hedging Instruments
$
0.3
$
0.3
$
0.3
PSNH
Qualified Cash Flow Hedging Instruments
$
0.8
$
(7.0)
$
0.1
WMECO
Qualified Cash Flow Hedging Instruments
$
0.2
$
(2.7)
$
-
It is estimated that a charge of $2 million will be reclassified from Accumulated Other Comprehensive Income/(Loss) as a decrease to
earnings over the next 12 months as a result of amortization of the interest rate swap agreements, which have been settled. Included
in this amount are estimated charges of $0.4 million, $1.2 million and $0.3 million for CL&P, PSNH and WMECO, respectively. As of
December 31, 2012, it is estimated that a pre-tax amount of $10.5 million included in the Accumulated Other Comprehensive
Income/(Loss) balance will be reclassified as a decrease to Net Income over the next 12 months related to Pension, SERP and PBOP
adjustments for NU.
16. DIVIDEND RESTRICTIONS
NU parent's ability to pay dividends may be affected by certain state statutes, the ability of its subsidiaries to pay common dividends
and the leverage restriction tied to its consolidated total debt to total capitalization ratio requirement in its revolving credit agreement.
CL&P, NSTAR Electric, PSNH and WMECO are subject to Section 305 of the Federal Power Act that makes it unlawful for a public
utility to make or pay a dividend from any funds "properly included in its capital account." Management believes that this Federal Power
Act restriction, as applied to CL&P, NSTAR Electric, PSNH and WMECO, would not be construed or applied by the FERC to prohibit
the payment of dividends for lawful and legitimate business purposes from retained earnings. In addition, certain state statutes may
impose additional limitations on such companies and on Yankee Gas and NSTAR Gas. Such state law restrictions do not restrict
payment of dividends from retained earnings or net income. CL&P, NSTAR Electric, PSNH, WMECO, Yankee Gas and NSTAR Gas
also have revolving credit agreements that impose leverage restrictions including consolidated total debt to total capitalization ratio
requirements. The Retained Earnings balances subject to these leverage restrictions are $1.803 billion for NU, $839.6 million for
CL&P, $1.210 billion for NSTAR Electric, $395.1 million for PSNH and $160.6 million for WMECO as of December 31, 2012. PSNH is
further required to reserve an additional amount under its FERC hydroelectric license conditions. As of December 31, 2012,
approximately $12.3 million of PSNH's Retained Earnings is subject to restriction under its FERC hydroelectric license conditions. As of
December 31, 2012, NU, CL&P, NSTAR Electric, PSNH, WMECO, Yankee Gas and NSTAR Gas were in compliance with all such
provisions of its credit agreements that may restrict the payment of dividends.