Eversource 2013 Annual Report Download - page 80

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The provision for uncollectible accounts, which is included in Receivables, Net on the balance sheets, was as follows:
As of December 31,
(Millions of Dollars)
2013
2012
NU
$
171.3
$
165.5
CL&P
82.0
77.6
NSTAR Electric
41.7
44.1
PSNH
7.4
6.8
WMECO
10.0
8.5
F. Fuel, Materials and Supplies and Allowance Inventory
Fuel, Materials and Supplies include natural gas, coal, biomass and oil inventories as well as materials purchased primarily for
construction or operation and maintenance purposes. Natural gas, coal, biomass and oil inventories are valued at their respective
weighted average cost. Materials and supplies are valued at the lower of average cost or market.
As of December 31, 2013, NU had $139.5 million ($74.2 million at PSNH) of fuel and $163.7 million ($54.5 million at PSNH) of
materials and supplies. As of December 31, 2012, NU had $109 million ($39.6 million at PSNH) of fuel and $158.7 million ($55.7
million at PSNH) of materials and supplies.
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.
SO2, CO2, and NOx emissions allowances are recorded within Fuel, Materials and Supplies and are classified on the balance sheet as
short-term or long-term depending on the period in which they are expected to be utilized against actual emissions. As of
December 31, 2013 and 2012, PSNH had $0.2 million and $0.4 million, respectively, of short-term SO2, CO2, and NOx emissions
allowances classified as Fuel, Materials and Supplies and $19.4 million and $19.4 million, respectively, of long-term SO2 and CO2
emissions allowances classified as Other Long-Term Assets on the balance sheets.
SO2, CO2, and NOx emissions allowances are charged to expense based on their weighted average cost as they are utilized against
emissions volumes at PSNH's generating units. PSNH recorded expenses of $0.3 million, $0.4 million and $5.1 million for the years
ended December 31, 2013, 2012, and 2011, respectively, which were included in Purchased Power, Fuel and Transmission on the
statements of income. These costs or benefits are recovered from or refunded to customers through energy supply revenues. For the
year ended December 31, 2013, PSNH received $6.8 million in proceeds from the auction of allowances, resulting in a net benefit of
$6.5 million.
G. Restricted Cash and Other Deposits
As of December 31, 2013, NU and CL&P had $1.7 million and $1.4 million, respectively, of restricted cash relating to amounts held in
escrow, which were included in Prepayments and Other Current Assets on the balance sheets. As of December 31, 2012, these
amounts were $3.3 million, $1.3 million and $1.7 million for NU, CL&P and PSNH, respectively.
As of December 31, 2013 and 2012, NU had $17.9 million ($9 million of which related to NSTAR Electric) and $14.6 million,
respectively, of cash collateral posted not subject to master netting agreements, primarily with ISO-NE, which were included in
Prepayments and Other Current Assets on the balance sheets.
As of December 31, 2012, NU, NSTAR Electric, PSNH and WMECO had $69.4 million, $42.2 million, $22 million and $5.1 million,
respectively, on deposit related to subsidiaries used for the payment of RRBs. As of December 31, 2013, there were no deposits
related to these RRB subsidiaries as NSTAR Electric, PSNH and WMECO made their final payments in the first half of 2013 and these
deposit balances were fully utilized.
H. Fair Value Measurements
Fair value measurement guidance is applied to derivative contracts that are not elected or designated as "normal purchases or normal
sales" (normal) and to the marketable securities held in trusts. Fair value measurement guidance is also applied to investment
valuations used to calculate the funded status of pension and PBOP plans and nonrecurring fair value measurements of nonfinancial
assets such as goodwill and AROs.
Fair Value Hierarchy: In measuring fair value, NU uses observable market data when available and minimizes the use of unobservable
inputs. Inputs used in fair value measurements are categorized into three fair value hierarchy levels for disclosure purposes. The
entire fair value measurement is categorized based on the lowest level of input that is significant to the fair value measurement. NU
evaluates the classification of assets and liabilities measured at fair value on a quarterly basis, and NU's policy is to recognize transfers
between levels of the fair value hierarchy as of the end of the reporting period. The three levels of the fair value hierarchy are
described below: