Eversource 2014 Annual Report Download - page 73

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each year. The Schedule 21 -NU and Schedule 21 -NSTAR rate calculations recover total transmission revenue requirements net of revenues
received from other sources (i.e., RNS, rentals, etc.), thereby ensuring that NU recovers all of CL&P's, NSTAR Electric's, PSNH's and WMECO's
regional and local transmission revenue requirements in accordance with the ISO-NE Tariff. RNS, Schedule 21 -NU and Schedule 21 -NSTAR
rates provide for the annual reconciliation and recovery or refund of estimated costs to actual costs. The financial impacts of differences between
actual and estimated costs are deferred for future recovery from, or refunded to, transmission customers. See Note 11E, "Commitments and
Contingencies –FERC Base ROE Complaints," for complaints filed at FERC relating to NU's base ROE.
'- A significant portion of the NU transmission segment revenue comes from ISO-NE
charges to the distribution businesses of CL&P, NSTAR Electric, PSNH and WMECO, each of which recovers these costs through rates charged to
their retail customers. CL&P, NSTAR Electric, PSNH and WMECO each have a retail transmission cost tracking mechanism as part of their rates,
which allows the electric distribution companies to charge their retail customers for transmission costs on a timely basis.
L. Operating Expenses
Costs related to fuel and natural gas included in Purchased Power, Fuel and Transmission on the statements of income were as follows:
For the Years Ended December 31,
 2014 2013 2012
NU
-Natural Gas and Fuel
(1)
$599.4 $466.5 $346.8
PSNH –Fuel 113.4 104.8 103.4
(1)
NSTAR Gas natural gas costs were included in NU beginning April 10, 2012.
M. Allowance for Funds Used During Construction
AFUDC represents the cost of borrowed and equity funds used to finance construction and is included in the cost of the Regulated companies'utility
plant. The portion of AFUDC attributable to borrowed funds is recorded as a reduction of Other Interest Expense, and the AFUDC related to equity
funds is recorded as Other Income, Net on the statements of income. AFUDC costs are recovered from customers over the service life of the related
plant in the form of increased revenue collected as a result of higher depreciation expense.
The Regulated companies'average AFUDC rate is based on a FERC-prescribed formula using the cost of a company's short-term financings and
capitalization (preferred stock, long-term debt and common equity), as appropriate. The average rate is applied to average eligible CWIP amounts to
calculate AFUDC.
NU For the Years Ended December 31,
 2014 2013 2012
(1)
Borrowed Funds $5.8 $4.1 $5.3
Equity Funds 13.7 7.1 6.8
Total AFUDC $19.5 $11.2 $12.1
Average AFUDC Rate
3.4%
2.7%
3.7%
(1)
NSTAR amounts were included in NU beginning April 10, 2012.
For the Years Ended December 31,
2014 2013 2012
 NSTAR NSTAR NSTAR
 CL&P Electric PSNH WMECO CL&P Electric PSNH WMECO CL&P Electric PSNH WMECO
Borrowed Funds $1.9 $2.0 $0.6 $0.9 $2.2 $0.5 $0.5 $0.5 $2.5 $0.3 $1.6 $0.5
Equity Funds 2.9 3.8 0.6 1.7 2.9 - 0.2 1.0 1.9 - 1.9 1.0
Total AFUDC $4.8 $5.8 $1.2 $2.6 $5.1 $0.5 $0.7 $1.5 $4.4 $0.3 $3.5 $1.5
Average AFUDC Rate 3.4%
2.5%
1.8% 5.6% 3.7% 0.5% 1.1% 6.1% 3.6% 0.4% 5.9% 6.
8%
N. Other Income, Net
Items included within Other Income, Net on the statements of income primarily consist of investment income/(loss), interest income, AFUDC related
to equity funds, and equity in earnings. Investment income/(loss) primarily relates to debt and equity securities held in trust. For further information,
see Note 5, "Marketable Securities," to the financial statements. For further information on AFUDC related to equity funds, see Note 1M, "Summary
of Significant Accounting Policies –Allowance for Funds Used During Construction," to the financial statements.
O. Other Taxes
Gross receipts taxes levied by the state of Connecticut are collected by CL&P and Yankee Gas from their respective customers. These gross receipts
taxes are shown on a gross basis with collections in Operating Revenues and payments in Taxes Other Than Income Taxes on the statements of
income as follows:
For the Years Ended December 31,
 2014 2013 2012
NU
$148.2 $144.1 $135.0
CL&P 127.9 128.2 120.7
Certain sales taxes are collected by NU's companies that serve customers in Connecticut and Massachusetts as agents for state and local governments
and are recorded on a net basis with no impact on the statements of income.