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NORTHEAST UTILITIES AND SUBSIDIARIES
THE CONNECTICUT LIGHT AND POWER COMPANY AND SUBSIDIARY
NSTAR ELECTRIC COMPANY AND SUBSIDIARIES
PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE AND SUBSIDIARIES
WESTERN MASSACHUSETTS ELECTRIC COMPANY AND SUBSIDIARY
COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Refer to the Glossary of Terms included in this combined Annual Report on Form 10-K for abbreviations and acronyms used throughout
the combined notes to the consolidated financial statements.
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. About NU, CL&P, NSTAR Electric, PSNH and WMECO
NU Consolidated: NU is a public utility holding company primarily engaged through its wholly owned regulated utility subsidiaries in the
energy delivery business. NU's wholly owned regulated utility subsidiaries included CL&P, PSNH, WMECO and Yankee Gas prior to
NU's merger with NSTAR. On April 10, 2012, NU acquired 100 percent of the outstanding common shares of NSTAR, at which time
NSTAR (through a successor, NSTAR LLC) became a direct wholly owned subsidiary of NU along with its regulated utility subsidiaries,
NSTAR Electric and NSTAR Gas. NU provides energy delivery service to approximately 3.5 million electric and natural gas customers
through six regulated utilities in Connecticut, Massachusetts and New Hampshire. See Note 2, "Merger of NU and NSTAR," for further
information regarding the merger.
NU, CL&P, NSTAR Electric, PSNH and WMECO are reporting companies under the Securities Exchange Act of 1934. NU is a public
utility holding company under the Public Utility Holding Company Act of 2005. Arrangements among the regulated electric companies
and other NU companies, outside agencies and other utilities covering interconnections, interchange of electric power and sales of
utility property are subject to regulation by the FERC. The Regulated companies are subject to regulation of rates, accounting and
other matters by the FERC and/or applicable state regulatory commissions (the PURA for CL&P and Yankee Gas, the DPU for NSTAR
Electric, NSTAR Gas and WMECO, and the NHPUC as well as certain regulatory oversight by the Vermont Public Service Board and
the Maine Public Utilities Commission for PSNH).
Regulated Companies: CL&P, NSTAR Electric, PSNH and WMECO furnish franchised retail electric service in Connecticut,
Massachusetts and New Hampshire. NSTAR Gas is engaged in the distribution and sale of natural gas to customers within central and
eastern Massachusetts. Yankee Gas owns and operates Connecticut's largest natural gas distribution system. CL&P, NSTAR Electric,
PSNH and WMECO's results include the operations of their respective distribution and transmission businesses. PSNH and WMECO's
distribution results include the operations of their respective generation businesses. NU also has a regulated subsidiary, NPT, which
was formed to construct, own and operate the Northern Pass line, a new HVDC transmission line from Québec to New Hampshire that
will interconnect with a new HVDC transmission line being developed by a transmission subsidiary of HQ.
Other: As of December 31, 2012, NU Enterprises’ primary business consisted of Select Energy’s remaining energy wholesale
marketing contracts with a municipal authority that expires on December 31, 2013 and related purchase contracts and NGS’ operation
and maintenance agreements as well as its subsidiary, E.S. Boulos Company, an electrical contractor based in Maine that NU
Enterprises continues to own and manage. NUSCO, NSTAR Electric & Gas, RRR, Renewable Properties, Inc. and Properties, Inc.
provide support services to NU, including its regulated companies. Harbor Electric Energy Company, a wholly-owned subsidiary of
NSTAR Electric, provides distribution service and ongoing support to its only customer, the Massachusetts Water Resources Authority.
NSTAR also has unregulated subsidiaries in telecommunications (NSTAR Communications, Inc.) and natural gas liquefaction and
storage services (Hopkinton).
B. Basis of Presentation
The consolidated financial statements of NU, CL&P, NSTAR Electric, PSNH and WMECO include the accounts of each of their
respective subsidiaries. Intercompany transactions have been eliminated in consolidation.
The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities as of the date of the
consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could
differ from those estimates.
NSTAR Electric continues to maintain reporting requirements as an SEC registrant. The information disclosed for NSTAR Electric
represents its results of operations for each of the years ended December 31, 2012, 2011 and 2010 and the financial position as of
December 31, 2012 and 2011, presented on a comparable basis. NU did not apply "push-down accounting" to NSTAR Electric,
whereby the adjustments of assets and liabilities to fair value and the resultant goodwill would be shown on the financial statements of
the acquired subsidiary. NU's consolidated financial information includes NSTAR LLC and its subsidiaries' results of operations from
April 10, 2012 through December 31, 2012.
On April 10, 2012, upon consummation of the merger with NSTAR, NSTAR Electric's ownership in CYAPC and YAEC combined with
CL&P's, PSNH's and WMECO's respective ownership interests in CYAPC and YAEC totaled greater than 50 percent, requiring NU to
consolidate CYAPC and YAEC from April 10, 2012 and forward. The investment in CYAPC and YAEC had previously been accounted
for under the equity method by NU. The consolidation of CYAPC and YAEC results in NU recording nuclear decommissioning trust
marketable securities of $340.4 million, regulatory assets of $214 million, long-term debt associated with the long-term spent nuclear