Eversource 2014 Annual Report Download - page 29

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Increases in electric and gas prices and/or a weak economy, can lead to changes in legislative and regulatory policy promoting increased
energy efficiency, conservation, and self-generation and/or a reduction in our customers'ability to pay their bills, which may adversely
impact our business.
Energy consumption is significantly impacted by the general level of economic activity and cost of energy supply. Economic downturns or periods
of high energy supply costs typically can lead to the development of legislative and regulatory policy designed to promote reductions in energy
consumption and increased energy efficiency and self-generation by customers. This focus on conservation, energy efficiency and self-generation
may result in a decline in electricity and natural gas sales in our service territories. If any such declines were to occur without corresponding
adjustments in rates at our Regulated companies that do not currently have revenue decoupling, then our revenues would be reduced and our future
growth prospects would be limited.
In addition, a period of prolonged economic weakness could impact customers'ability to pay bills in a timely manner and increase customer
bankruptcies, which may lead to increased bad debt expenses or other adverse effects on our financial position, results of operations or cash flows.
Changes in regulatory and/or legislative policy could negatively impact our transmission planning and cost allocation rules.
The existing FERC-approved New England transmission tariff allocates the costs of transmission facilities that provide regional benefits to all
customers of participating transmission-owning utilities. As new investment in regional transmission infrastructure occurs in any one state, its cost is
shared across New England in accordance with a FERC approved formula found in the transmission tariff. All New England transmission owners'
agreement to this regional cost allocation is set forth in the Transmission Operating Agreement. This agreement can be modified with the approval of
a majority of the transmission owning utilities and approval by FERC. In addition, other parties, such as state regulators, may seek certain changes to
the regional cost allocation formula, which could have adverse effects on the rates our distribution companies charge their retail customers.
FERC has issued rules requiring all regional transmission organizations and transmission owning utilities to make compliance changes to their tariffs
and contracts in order to further encourage the construction of transmission for generation, including renewable generation. This compliance will
require ISO-NE and New England transmission owners to develop methodologies that allow for regional planning and cost allocation for
transmission projects chosen in the regional plan that are designed to meet public policy goals such as reducing greenhouse gas emissions or
encouraging renewable generation. Such compliance may also allow non-incumbent utilities and other entities to participate in the planning and
construction of new projects in our service area and regionally.
Changes in the Transmission Operating Agreement, the New England Transmission Tariff or legislative policy, or implementation of these new
FERC planning rules, could adversely affect our transmission planning, our earnings and our prospects for growth.
Changes in regulatory or legislative policy or unfavorable outcomes in regulatory proceedings could jeopardize our full and/or timely
recovery of costs incurred by our regulated distribution and generation businesses.
Under state law, our Regulated companies are entitled to charge rates that are sufficient to allow them an opportunity to recover their reasonable
operating and capital costs, to attract needed capital and maintain their financial integrity, while also protecting relevant public interests. Each of
these companies prepares and submits periodic rate filings with their respective state regulatory commissions for review and approval. There is no
assurance that these state commissions will approve the recovery of all such costs incurred by our Regulated companies, such as for construction,
operation and maintenance, as well as a return on investment on their respective regulated assets. The amount of costs incurred by the Regulated
companies, coupled with increases in fuel and energy prices, could lead to consumer or regulatory resistance to the timely recovery of such costs,
thereby adversely affecting our financial position, results of operations or cash flows.
Additionally, state legislators may enact laws that significantly impact our Regulated companies'revenues, including by mandating electric or gas
rate relief and/or by requiring surcharges to customer bills to support state programs not related to the utilities or energy policy. Such increases could
pressure overall rates to our customers and our routine requests to regulators for rate relief.
In addition, CL&P, NSTAR Electric and WMECO procure energy for a substantial portion of their customers'needs via requests for proposal on an
annual, semi-annual or quarterly basis. CL&P, NSTAR Electric and WMECO receive approval to recover the costs of these contracts from the
PURA and DPU, respectively. While both regulatory agencies have consistently approved the solicitation processes, results and recovery of costs,
management cannot predict the outcome of future solicitation efforts or the regulatory proceedings related thereto.
PSNH meets most of its energy requirements through its own generation resources and fixed-price forward purchase contracts. PSNH's remaining
energy needs are met primarily through spot market purchases. Unplanned forced outages of its generating plants could increase the level of energy
purchases needed by PSNH and therefore increase the market risk associated with procuring the energy to meet its requirements. PSNH recovers
these costs through its ES rate, subject to a prudence review by the NHPUC. We cannot predict the outcome of future regulatory proceedings related
to recovery of these costs.
Our goodwill is valued and recorded at an amount that, if impaired and written down, could adversely affect our future operating results
and total capitalization.
We have a significant amount of goodwill on our consolidated balance sheet. The carrying value of goodwill represents the fair value of an acquired
business in excess of identifiable assets and liabilities as of the acquisition date. As of December 31, 2014, goodwill totaled $3.5 billion, of which
$3.2 billion was attributable to the acquisition of NSTAR in April 2012. Total goodwill represented approximately 35 percent of our $10 billion of
shareholders'equity and approximately 12 percent of our total assets of $29.8 billion. We test our goodwill balances for impairment on an annual
basis or whenever events occur or circumstances change that would indicate a potential for impairment. A determination that goodwill is deemed to