Eversource 2014 Annual Report Download - page 83

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receivables. Asset-backed debt securities are valued using recent trades of similar instruments, prepayment assumptions, yield curves, issuance and
maturity dates,and tranche information. Municipal bonds are valued using a market approach that incorporates reported trades and benchmark
yields. Other fixed income securities are valued using pricing models, quoted prices of securities with similar characteristics, and discounted cash
flows.
6. ASSET RETIREMENT OBLIGATIONS
NU, including CL&P, NSTAR Electric, PSNH and WMECO, recognizes a liability for the fair value of an ARO on the obligation date if the
liability's fair value can be reasonably estimated and is conditional on a future event. Settlement dates and future costs are reasonably estimated
when sufficient information becomes available. Management has identified various categories of AROs, primarily certain assets containing asbestos
and hazardous contamination and has performed fair value calculations, reflecting expected probabilities for settlement scenarios.
The fair value of an ARO is recorded as a liability in Other Long-Term Liabilities with a corresponding amount included in Property, Plant and
Equipment, Net on the balance sheets. The ARO assets are depreciated, and the ARO liabilities are accreted over the estimated life of the obligation
with corresponding credits recorded as accumulated depreciation and ARO liabilities, respectively. As the Regulated companies are rate-regulated
on a cost-of-service basis, these companies apply regulatory accounting guidance and both the depreciation and accretion costs associated with the
Regulated companies'AROs are recorded as increases to Regulatory Assets on the balance sheets.
A reconciliation of the beginning and ending carrying amounts of ARO liabilities are as follows:
NU As of December 31,
 2014 2013
Balance as of Beginning of Year $424.9 $412.2
Liabilities Incurred During the Year 1.3 0.1
Liabilities Settled During the Year (19.5)
(13.8)
Accretion 25.1 23.8
Revisions in Estimated Cash Flows (5.5) 2.6
Balance as of End of Year $426.3 $424.9
As of December 31,
2014 2013
NSTAR NSTAR
 CL&P Electric PSNH WMECO CL&P Electric PSNH WMECO
Balance as of Beginning of Year $35.0 $32.8 $19.5 $4.5 $33.6 $31.4 $18.4 $4.3
Liabilities Incurred During the Year - - - 1.1 - - - -
Liabilities Settled During the Year (1.1) - - - (0.7)
(0.1)
- -
Accretion 1.9 1.5 1.1 0.3 2.2 1.5 1.2 0.3
Revisions in Estimated Cash Flows (0.5) - - - (0.1) - (0.1) (0.1)
Balance as of End of Year $35.3 $34.3 $20.6 $5.9 $35.0 $32.8 $19.5 $4.5
NU's amounts include CYAPC and YAEC's AROs of $317.3 million and $318.8 million as of December 31, 2014 and 2013, respectively. The fair
value of the ARO for CYAPC and YAEC includes uncertainties of the fuel off-load dates related to the DOE's timing of performance regarding its
obligation to dispose of the spent nuclear fuel and high level waste. The incremental asset recorded as an offset to the ARO liability was fully
depreciated since the plants have no remaining useful life. Any changes in the assumptions used to calculate the fair value of the ARO liability are
recorded with a corresponding offset to the related regulatory asset. The assets held in the CYAPC and YAEC nuclear decommissioning trusts are
restricted for settling the ARO and all other decommissioning obligations. For further information on the assets held in the nuclear decommissioning
trusts, see Note 5, "Marketable Securities," to the financial statements.
7. SHORT-TERM DEBT
- The amount of short-term borrowings that may be incurred by CL&P, NSTAR Electric and WMECO is subject to
periodic approval by the FERC. As a result of the NHPUC having jurisdiction over PSNH's short-term debt, PSNH is not currently required to
obtain FERC approval for its short-term borrowings. On July 31, 2013, the FERC granted authorization to allow CL&P and WMECO to incur total
short-term borrowings up to a maximum of $600 million and $300 million, respectively, effective January 1, 2014 through December 31, 2015. On
June 11, 2014, the FERC granted authorization to allow NSTAR Electric to issue total short-term debt securities in an aggregate principal amount not
to exceed $655 million outstanding at any one time, effective October 24, 2014 through October 23, 2016.
PSNH is authorized by regulation of the NHPUC to incur short-term borrowings up to 10 percent of net fixed plant plus an additional $60 million
until further ordered by the NHPUC. As of December 31, 2014, PSNH's short-term debt authorization under the 10 percent of net fixed plant test
plus $60 million totaled approximately $306 million.
CL&P's certificate of incorporation contains preferred stock provisions restricting the amount of unsecured debt that CL&P may incur, including
limiting unsecured indebtedness with a maturity of less than 10 years to 10 percent of total capitalization. As of December 31, 2014, CL&P had
$432.1 million of unsecured debt capacity available under this authorization.
Yankee Gas and NSTAR Gas are not required to obtain approval from any state or federal authority to incur short-term debt.
 NU parent, CL&P, PSNH, WMECO, NSTAR Gas and Yankee Gas are parties to a five-year
$1.45 billion revolving credit facility. The revolving credit facility is to be used primarily to backstop NU parent's $1.45 billion commercial paper