Eversource 2015 Annual Report Download - page 103

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Environmental reserves are accrued when assessments indicate it is probable that a liability has been incurred and an amount can be reasonably
estimated. The approach used estimates the liability based on the most likely action plan from a variety of available remediation options, including
no action required or several different remedies ranging from establishing institutional controls to full site remediation and monitoring. These
liabilities are estimated on an undiscounted basis and do not assume that the amounts are recoverable from insurance companies or other third parties.
The environmental reserves include sites at different stages of discovery and remediation and do not include any unasserted claims.
These estimates are subjective in nature as they take into consideration several different remediation options at each specific site. The reliability and
precision of these estimates can be affected by several factors, including new information concerning either the level of contamination at the site, the
extent of Eversource, CL&P, NSTAR Electric, PSNH and WMECO’s responsibility for remediation or the extent of remediation required, recently
enacted laws and regulations or changes in cost estimates due to certain economic factors. It is possible that new information or future developments
could require a reassessment of the potential exposure to related environmental matters. As this information becomes available, management will
continue to assess the potential exposure and adjust the reserves accordingly.
The amounts recorded as environmental reserves included in Other Current Liabilities and Other Long-Term Liabilities on the balance sheets
represent management’s best estimate of the liability for environmental costs, and take into consideration site assessment, remediation and long-term
monitoring costs. The environmental reserves also take into account recurring costs of managing hazardous substances and pollutants, mandated
expenditures to remediate previously contaminated sites and any other infrequent and non-recurring clean-up costs. A reconciliation of the activity in
the environmental reserves is as follows:
(Millions of Dollars)
Eversource CL&P NSTAR Electric PSNH WMECO
Balance as of January 1, 2014 $ 35.4 $ 3.4 $ 1.2 $ 5.4 $ 0.4
Additions 12.7 1.0 - 0.1 0.2
Payments/Reductions (4.8) (0.6) (0.1) (0.3) (0.1)
Balance as of December 31, 2014 43.3 3.8 1.1 5.2 0.5
Additions 13.5 1.3 2.0 2.3 0.2
Payments/Reductions (5.7) (0.5) (0.7) (3.0) (0.1)
Balance as of December 31, 2015 $ 51.1 $ 4.6 $ 2.4 $ 4.5 $ 0.6
The number of related environmental sites and reserves for which remediation or long-term monitoring, preliminary site work or site assessment is
being performed are as follows:
As of December 31, 2015
As of December 31, 2014
Reserve Reserve
Number of Sites (in millions) Number of Sites (in millions)
Eversource 64 $ 51.1 65 $ 43.3
CL&P 14 4.6 16 3.8
NSTAR Electric
15 2.4 13 1.1
PSNH 12 4.5 13 5.2
WMECO 4 0.6 4 0.5
Included in the Eversource number of sites and reserve amounts above are former MGP sites that were operated several decades ago and
manufactured gas from coal and other processes, which resulted in certain by-products remaining in the environment that may pose a potential risk to
human health and the environment, for which Eversource may have potential liability. The reserve balances related to these former MGP sites were
$45.5 million and $38.8 million as of December 31, 2015 and 2014, respectively, and related primarily to the natural gas business segment.
As of December 31, 2015, for 9 environmental sites (3 for CL&P, 1 for WMECO) that are included in the Company’s reserve for environmental
costs, the information known and the nature of the remediation options allow for the Company to estimate the range of losses for environmental
costs. As of December 31, 2015, $24.7 million (including $1.7 million for CL&P and $0.3 million for WMECO) had been accrued as a liability for
these sites, which represents the low end of the range of the liabilities for environmental costs. Management believes that additional losses of up to
approximately $33.9 million (approximately $1.4 million for CL&P, and $0.1 million for WMECO) may be incurred in remediating these sites.
As of December 31, 2015, for 12 environmental sites (3 for CL&P and 2 for NSTAR Electric) that are included in the Company’s reserve for
environmental costs, management cannot reasonably estimate the exposure to loss in excess of the reserve, or range of loss, as these sites are under
investigation and/or there is significant uncertainty as to what remedial actions, if any, the Company may be required to undertake. As of
December 31, 2015, $13.7 million (including $2 million for CL&P) had been accrued as a liability for these sites. As of December 31, 2015, for the
remaining 43 environmental sites (including 8 for CL&P, 13 for NSTAR Electric, 12 for PSNH, and 3 for WMECO) that are included in the
Company’s reserve for environmental costs, the $12.7 million accrual (including $0.9 million for CL&P, $2.4 million for NSTAR Electric, $4.5
million for PSNH, and $0.3 million for WMECO) represents management’s best estimate of the potential liability and no additional loss is
anticipated at this time.
CERCLA: Of the total environmental sites, nine sites (four for NSTAR Electric and three for PSNH) are superfund sites under the federal
Comprehensive Environmental Response, Compensation and Liability Act of 1980 (CERCLA) and its amendments or state equivalents for which the
Company has been notified that it is a potentially responsible party but for which the site assessment and remediation are not being managed by the
Company. As of December 31, 2015, a liability of $0.8 million accrued on these sites represents management’s best estimate of its potential
remediation costs with respect to these superfund sites.