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75
3. REGULATORY ACCOUNTING
The rates charged to the customers of NU's Regulated companies are designed to collect each company's costs to provide service,
including a return on investment. Therefore, the accounting policies of the Regulated companies reflect the application of accounting
guidance for entities with rate-regulated operations and reflect the effects of the rate-making process.
Management believes it is probable that each of the Regulated companies will recover their respective investments in long-lived assets,
including regulatory assets. If management were to determine that it could no longer apply the accounting guidance applicable to rate-
regulated enterprises to any of the Regulated companies' operations, or that management could not conclude it is probable that costs
would be recovered from customers in future rates, the costs would be charged to net income in the period in which the determination is
made.
Regulatory Assets: The components of regulatory assets are as follows:
NU
As of December 31,
(Millions of Dollars)
2013
2012
Benefit Costs
$
1,240.2
$
2,452.1
Derivative Liabilities
638.0
885.6
Goodwill
525.9
537.6
Storm Restoration Costs
589.6
547.7
Income Taxes, Net
626.2
516.2
Securitized Assets
-
232.6
Contractual Obligations - Yankee Companies
154.2
217.6
Buy Out Agreements for Power Contracts
70.2
92.9
Regulatory Tracker Mechanisms
323.4
190.1
Other Regulatory Assets
126.8
165.0
Total Regulatory Assets
4,294.5
5,837.4
Less: Current Portion
535.8
705.0
Total Long-Term Regulatory Assets
$
3,758.7
$
5,132.4
As of December 31,
2013
2012
NSTAR
NSTAR
(Millions of Dollars)
CL&P
Electric
PSNH
WMECO
CL&P
Electric
PSNH
WMECO
Benefit Costs
$
297.7
$
496.7
$
100.6
$
57.3
$
563.2
$
781.2
$
223.7
$
116.0
Derivative Liabilities
630.4
7.7
-
-
866.2
14.9
-
3.0
Goodwill
-
451.5
-
-
-
461.5
-
-
Storm Restoration Costs
397.8
109.3
43.7
38.8
413.9
55.8
34.5
43.5
Income Taxes, Net
415.5
84.0
40.3
43.7
367.5
47.1
36.2
31.0
Securitized Assets
-
-
-
-
-
205.1
19.7
7.8
Contractual Obligations -
Yankee Companies
19.8
6.2
-
4.5
64.0
22.8
-
14.9
Buy Out Agreements for Power Contracts
-
64.7
5.5
-
-
85.9
7.0
-
Regulatory Tracker Mechanisms
8.0
169.5
83.3
32.6
12.2
71.4
49.3
31.9
Other Regulatory Assets
44.8
49.7
38.1
12.2
57.3
46.3
43.6
16.1
Total Regulatory Assets
1,814.0
1,439.3
311.5
189.1
2,344.3
1,792.0
414.0
264.2
Less: Current Portion
150.9
204.1
92.2
43.0
185.9
347.1
62.9
42.4
Total Long-Term Regulatory Assets
$
1,663.1
$
1,235.2
$
219.3
$
146.1
$
2,158.4
$
1,444.9
$
351.1
$
221.8
Regulatory Costs in Other Long-Term Assets: The Regulated companies had $65.1 million ($7.3 million for CL&P, $33.4 million for
NSTAR Electric, and $10.1 million for WMECO) and $69.9 million ($3.9 million for CL&P, $25.4 million for NSTAR Electric, $35.7 million
for PSNH, and $1.4 million for WMECO) of additional regulatory costs as of December 31, 2013 and 2012, respectively, that were
included in Other Long-Term Assets on the balance sheets. These amounts represent incurred costs for which recovery has not yet
been specifically approved by the applicable regulatory agency. However, based on regulatory policies or past precedent on similar
costs, management believes it is probable that these costs will ultimately be approved and recovered from customers in rates.
The PSNH balance as of December 31, 2012 primarily related to storm restoration costs incurred for Tropical Storm Irene, the October
2011 snowstorm and Storm Sandy that met the NHPUC criteria for cost deferral and recovery. Refer to the "Storm Restoration Costs"
section in this Note for further discussion. The NSTAR Electric balance as of December 31, 2013 and 2012 primarily related to costs
deferred in connection with the basic service bad debt adder. See Note 12G, "Commitments and Contingencies – Basic Service Bad
Debt Adder," for further information.
Equity Return on Regulatory Assets: For rate-making purposes, the Regulated companies recover the carrying cost related to their
regulatory assets. For certain regulatory assets, the carrying cost recovered includes an equity return component. This equity return,
which is not recorded on the balance sheets, totaled $1.9 million and $2.5 million for CL&P and $33.1 million and $21.8 million for
PSNH as of December 31, 2013 and 2012, respectively. These carrying costs will be recovered from customers in future rates.