Eversource 2012 Annual Report Download - page 83

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C. Recently Adopted Accounting Standards
In the first quarter of 2012, NU adopted the Financial Accounting Standards Board’s (FASB) final Accounting Standards Update (ASU)
on fair value measurement. The ASU did not have an impact on NU’s financial position, results of operations or cash flows, but
required additional financial statement disclosures related to fair value measurements. For further information, see Note 5, "Derivative
Instruments," to the consolidated financial statements.
In the first quarter of 2012, NU adopted the FASB’s final ASU on testing goodwill for impairment. The ASU provides the election to
perform a qualitative assessment to determine whether it is more likely than not that the fair value of a reporting unit is less than its
carrying value; if so, quantitative testing is required. The ASU does not change existing guidance relating to when an entity should test
goodwill for impairment or the methodology to be utilized in performing quantitative testing. NU did not utilize the election provided by
this ASU in its current year evaluation of goodwill.
In the first quarter of 2012, NU adopted the FASB’s final ASU on the presentation of comprehensive income. The ASU does not
change existing guidance on which items should be presented in other comprehensive income but requires other comprehensive
income to be presented as part of a single continuous statement of comprehensive income or in a statement of other comprehensive
income immediately following the statement of net income. The ASU did not affect the calculation of net income, comprehensive
income or EPS. The ASU did not have an impact on NU’s financial position, results of operations or cash flows.
D. Cash and Cash Equivalents
Cash and cash equivalents include cash on hand and short-term cash investments that are highly liquid in nature and have original
maturities of three months or less. At the end of each reporting period, any overdraft amounts are reclassified from Cash and Cash
Equivalents to Accounts Payable on the accompanying consolidated balance sheets.
E. Provision for Uncollectible Accounts
NU, including CL&P, NSTAR Electric, PSNH and WMECO, presents its receivables at net realizable value by maintaining a provision
for uncollectible accounts receivables. This provision is determined based upon a variety of factors, including applying an estimated
uncollectible account percentage to each receivable aging category, based upon historical collection and write-off experience and
management's assessment of collectibility from individual customers. Management assesses the collectibility of receivables, and if
circumstances change, collectibility estimates are adjusted accordingly. Receivable balances are written off against the provision for
uncollectible accounts when the accounts are terminated and these balances are deemed to be uncollectible.
The PURA allows CL&P and Yankee Gas to accelerate the recovery of accounts receivable balances attributable to qualified customers
under financial or medical duress (uncollectible hardship accounts receivable) outstanding for greater than 90 days. As a result of the
January 2011 DPU rate case decision, WMECO is allowed to recover amounts associated with basic service and certain uncollectible
hardship accounts receivable in rates. As of December 31, 2012, CL&P, WMECO and Yankee Gas had uncollectible hardship
accounts receivable reserves in the amount of $65.2 million, $4.7 million and $6.4 million, respectively, with the corresponding bad debt
expense recorded as Regulatory Assets or Other Long-Term Assets as these amounts are probable of recovery. As of December 31,
2011, these amounts totaled $68.6 million, $5.4 million and $6.8 million, respectively. These amounts are reflected in the total provision
for uncollectible accounts in the table below.
The provision for uncollectible accounts, which is included in Receivables, Net on the accompanying consolidated balance sheets, was
as follows:
As of December 31,
(Millions of Dollars)
2012
2011
NU (2)
$
165.5
$
115.7
CL&P (2)
77.6
83.5
NSTAR Electric (1)
44.1
27.1
PSNH
6.8
7.2
WMECO (2)
8.5
10.0
(1) NSTAR Electric amounts are not included in NU consolidated as of December 31, 2011.
(2) NU, CL&P and WMECO balances as of December 31, 2011 have been reclassified to include the uncollectible hardship reserve in
the total provision for uncollectible accounts.
F. Fuel, Materials and Supplies and Allowance Inventory
Fuel, Materials and Supplies include natural gas, coal, biomass, oil and materials purchased primarily for construction or operation and
maintenance purposes. Natural gas inventory, coal, biomass, and oil are valued at their respective weighted average cost. Materials
and supplies are valued at the lower of average cost or market.
PSNH is subject to federal and state laws and regulations that regulate emissions of air pollutants, including SO2, CO2, and NOx related
to its regulated generation units, and uses SO2, CO2, and NOx emissions allowances. At the end of each compliance period, PSNH is
required to relinquish SO2, CO2, and NOx emissions allowances corresponding to the actual respective emissions emitted by its
generating units over the compliance period. SO2 and NOx emissions allowances are obtained through an annual allocation from the
federal and state regulators that are granted at no cost and through purchases from third parties. CO2 emissions allowances are
acquired through auctions and through purchases from third parties.