Eversource 2014 Annual Report Download - page 109

Download and view the complete annual report

Please find page 109 of the 2014 Eversource annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 136

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136

97
13. FAIR VALUE OF FINANCIAL INSTRUMENTS
The following methods and assumptions were used to estimate the fair value of each of the following financial instruments:
- The fair value of CL&P's and NSTAR Electric's preferred stock is based upon pricing models that incorporate
interest rates and other market factors, valuations or trades of similar securities and cash flow projections. The fair value of long-term debt securities
is based upon pricing models that incorporate quoted market prices for those issues or similar issues adjusted for market conditions, credit ratings of
the respective companies and treasury benchmark yields. The fair values provided in the tables below are classified as Level 2 within the fair value
hierarchy. Carrying amounts and estimated fair values are as follows:
As of December 31,
2014 2013
NU Carrying Fair Carrying Fair
 Amount Value Amount Value
Preferred Stock Not Subject
to Mandatory Redemption $155.6 $153.6 $155.6 $152.7
Long-Term Debt 8,851.6 9,451.2 8,310.2 8,443.1
As of December 31, 2014
CL&P NSTAR Electric PSNH WMECO
Carrying Fair Carrying Fair Carrying Fair Carrying Fair
 Amount Value Amount Value Amount Value Amount Value
Preferred Stock Not Subject
to Mandatory Redemption $116.2 $112.0 $43.0 $41.6 $ - $ - $ - $ -
Long-Term Debt 2,842.0 3,214.5 1,797.4 1,993.5 1,076.3 1,137.9 628.5 689.4
As of December 31, 2013
CL&P NSTAR Electric PSNH WMECO
Carrying Fair Carrying Fair Carrying Fair Carrying Fair
 Amount Value Amount Value Amount Value Amount Value
Preferred Stock Not Subject
to Mandatory Redemption $116.2 $110.5 $43.0 $42.2 $ - $ - $ - $ -
Long-Term Debt 2,741.2 2,952.8 1,801.1 1,888.0 1,049.0 1,073.9 629.4 640.1
Derivative instruments are carried at fair value. For further information, see Note 4, "Derivative Instruments," to the
financial statements.
 Investments in marketable securities are carried at fair value. For further information, see Note 5, "Marketable
Securities," to the financial statements. The carrying value of other financial instruments included in current assets and current liabilities, including
cash and cash equivalents and special deposits, approximates their fair value due to the short-term nature of these instruments.
See Note1H, "Summary of Significant Accounting Policies -Fair Value Measurements," for the fair value measurement policy and the fair value
hierarchy.
14. ACCUMULATED OTHER COMPREHENSIVE INCOME/(LOSS)
The changes in accumulated other comprehensive income/(loss) by component, net of tax effect, is as follows:
For the Year Ended December 31, 2014 For the Year Ended December 31, 2013
Qualified Unrealized Qualified Unrealized
Cash Flow Gains/(Losses) Defined Cash Flow Gains/(Losses) Defined
Hedging on Marketable Benefit Hedging on Marketable Benefit
 Instruments Securities Plans Total Instruments Securities Plans Total
AOCI as of January 1
st
$(14.4) $0.4 $(32.0) $(46.0) $
(16.4)
$1.3 $(57.8) $(72.9)
OCI Before Reclassifications - 0.3 (34.2) (33.9) -
(0.9) 19.4 18.5
Amounts Reclassified from AOCI 2.0 -
3.9 5.9 2.0 - 6.4 8.4
Net OCI
2.0 0.3 (30.3) (28.0) 2.0 (0.9) 25.8 26.9
AOCI as of December 31
st
$(12.4) $0.7 $(62.3) $(74.0) $
(14.4)
$0.4 $(32.0) $(46.0)
NU's qualified cash flow hedging instruments represent interest rate swap agreements on debt issuances that were settled in prior years. The
settlement amount was recorded in AOCI and is being amortized into Net Income over the term of the underlying debt instrument. CL&P, PSNH
and WMECO continue to amortize interest rate swaps settled in prior years from AOCI into Interest Expense over the remaining life of the associated
long-term debt, which are not material to their respective financial statements.
The tax effects of Defined Benefit Plan OCI amounts before reclassifications, which relate to actuarial gains and losses that arose during 2014, 2013
and 2012 were recognized in AOCI as net deferred tax assets of $22.3 million and $6.2 million in 2014 and 2012, respectively, and net deferred tax
liabilities of $11.4 million in 2013.