Eversource 2012 Annual Report Download - page 82

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fuel disposal liabilities of $179.3 million, net accumulated deferred income tax liability of $56.4 million and asset retirement obligations
related to decommissioning activity of $311.4 million as of December 31, 2012. At the NU consolidated level, intercompany
transactions between CL&P, NSTAR Electric, PSNH and WMECO and the CYAPC and YAEC companies have been eliminated in
consolidation. For CL&P, NSTAR Electric, PSNH and WMECO, the investment in CYAPC and YAEC continue to be accounted for
under the equity method. See Note 1J, "Summary of Significant Accounting Policies – Equity Method Investments," for further
information.
NPT, a limited liability company, was formed to construct, own and operate the Northern Pass transmission project. NPT and Hydro
Renewable Energy entered into a TSA whereby NPT will sell to Hydro Renewable Energy electric transmission rights over the Northern
Pass for a 40-year term at cost of service rates. NPT will be required to maintain a capital structure of 50 percent debt and 50 percent
equity. On April 10, 2012, upon consummation of the merger with NSTAR, an NSTAR subsidiary that owned 25 percent of NPT was
merged into NUTV, resulting in NUTV owning 100 percent of NPT. Accordingly, 100 percent ownership of NPT was reflected in
Common Shareholders' Equity as of December 31, 2012 on the accompanying consolidated balance sheet. See Note 2, "Merger of NU
and NSTAR," and Note 19, "Common Shareholders' Equity and Noncontrolling Interests," for further information.
NU's utility subsidiaries are subject to the application of accounting guidance for entities with rate-regulated operations that considers
the effect of regulation resulting from differences in the timing of the recognition of certain revenues and expenses from those of other
businesses and industries. NU's utility subsidiaries' energy delivery business is subject to rate-regulation that is based on cost recovery
and meets the criteria for application of rate-regulated accounting. See Note 3, "Regulatory Accounting," for further information.
Certain prior year amounts in NSTAR Electric's accompanying consolidated balance sheet, statements of income and cash flows have
been reclassified between line items for comparative purposes and in order to conform to NU's presentation. The reclassifications did
not affect NSTAR Electric's net income. The NSTAR Electric consolidated statements of cash flows were revised to correct an error in
the presentation of cash deposits related to the RRBs. The impact of this revision was an increase in investing cash inflows from Other
Investing Activities in an amount of $1.7 million and $24.1 million and a corresponding increase to financing cash outflows from
Retirements of Rate Reduction Bonds for the years ended December 31, 2011 and 2010, respectively. These revisions had no impact
on NSTAR Electric’s results of operations or cash balance and are not deemed material, individually or in the aggregate, to the
previously issued consolidated financial statements.
Certain changes in classification and corresponding reclassifications of prior year data were made in the accompanying consolidated
balance sheets and statements of income for NU, CL&P, PSNH and WMECO and statements of cash flows for NU, CL&P and WMECO
for comparative purposes to conform the current year presentation. The consolidated statements of income reflect the reclassification
of transmission expenses from Other Operating Expenses, as originally reported, to Purchased Power, Fuel and Transmission and the
reclassification of energy efficiency expenses primarily from Other Operating Expenses, as originally reported, to Energy Efficiency
Programs. In addition, Other Operating Expenses and Maintenance, as originally reported, were combined and are reported in
aggregate as Operations and Maintenance. The reclassifications on the statements of income were as follows:
Transmission Expense
Energy Efficiency Expense
For the Years Ended December 31,
For the Years Ended December 31,
(Millions of Dollars)
2011
2010
2011
2010
NU
$
77.2
$
48.9
$
131.4
$
124.0
CL&P 52.6
39.4
90.3
92.3
PSNH
19.1
26.4
12.9
12.0
WMECO
15.9
18.3
21.8
16.3
Effective January 1, 2012, NSTAR Electric changed its estimates with respect to the allowance for doubtful accounts, incurred but not
reported claims on medical benefits, general and workers' compensation liabilities and compensation accruals. The total aggregate
impact of these changes in estimates on NSTAR Electric's accompanying consolidated statements was a decrease to net income of
$11.4 million, after-tax, for the year ended December 31, 2012.
In accordance with accounting guidance on noncontrolling interests in consolidated financial statements, the Preferred Stock of CL&P
and the Preferred Stock of NSTAR Electric, which are not owned by NU or its consolidated subsidiaries and are not subject to
mandatory redemption, have been presented as noncontrolling interests in the accompanying consolidated financial statements of NU.
The Preferred Stock of CL&P and the Preferred Stock of NSTAR Electric are considered to be temporary equity and have been
classified between liabilities and permanent shareholders' equity on the accompanying consolidated balance sheets of NU, CL&P and
NSTAR Electric due to a provision in the preferred stock agreements of both CL&P and NSTAR Electric that grant preferred
stockholders the right to elect a majority of the CL&P and NSTAR Electric Board of Directors, respectively, should certain conditions
exist, such as if preferred dividends are in arrears for a specified amount of time. The Net Income reported in the accompanying
consolidated statements of income and cash flows represents consolidated net income prior to apportionment to noncontrolling
interests, which is represented by dividends on preferred stock of CL&P and NSTAR Electric.
NU evaluates events and transactions that occur after the balance sheet date but before financial statements are issued and
recognizes in the financial statements the effects of all subsequent events that provide additional evidence about conditions that existed
as of the balance sheet date and discloses, but does not recognize, in the financial statements subsequent events that provide
evidence about the conditions that arose after the balance sheet date but before the financial statements are issued. See Note 23,
"Subsequent Events," for further information.