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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:
Preferred Stock and Long-Term Debt: 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,
2015 2014
Eversource Carrying Fair Carrying Fair
(Millions of Dollars) Amount Value Amount Value
Preferred Stock Not Subject
to Mandatory Redemption $ 155.6
$ 157.9 $ 155.6 $ 153.6
Long-Term Debt 9,034.5
9,425.9 8,814.0 9,451.2
As of December 31, 2015
CL&P NSTAR Electric PSNH WMECO
Carrying Fair Carrying Fair Carrying Fair Carrying Fair
(Millions of Dollars) Amount Value Amount Value Amount Value Amount Value
Preferred Stock Not Subject
to Mandatory Redemption $
116.2 $
114.9
$
43.0 $
43.0 $
- $
-
$
- $
-
Long-Term Debt 2,763.7 3,031.6
2,029.8 2,182.4 1,071.0 1,121.2
517.3 551.8
As of December 31, 2014
CL&P NSTAR Electric PSNH WMECO
Carrying Fair Carrying Fair Carrying Fair Carrying Fair
(Millions of Dollars)
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 2,826.2 3,214.5
1,786.2 1,993.5 1,070.0 1,137.9
625.2 689.4
Effective December 31, 2015, the carrying amount of Long-Term Debt includes unamortized debt issuance costs presented as a direct reduction from
the carrying amount of the debt liability, in accordance with new accounting guidance. The December 31, 2014 carrying amount of Long-Term Debt
was retrospectively adjusted to conform to the current year presentation. See Note 1C, “Summary of Significant Accounting Policies – Accounting
Standards,” for further information.
Derivative Instruments: Derivative instruments are carried at fair value. For further information, see Note 4, “Derivative Instruments,” to the
financial statements.
Other Financial Instruments: 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 on the
balance sheets, including cash and cash equivalents and special deposits, approximates their fair value due to their short-term nature.
See Note 1H, “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, 2015 For the Year Ended December 31, 2014
Qualified
Unrealized
Qualified
Unrealized
Cash Flow
Gains/(Losses)
Defined
Cash Flow
Gains on
Defined
Eversource Hedging
on Marketable
Benefit
Hedging
Marketable
Benefit
(Millions of Dollars) Instruments
Securities
Plans
Total Instruments
Securities
Plans
Total
Balance as of January 1
st
$
(12.4) $
0.7
$
(62.3)
$
(74.0) $
(14.4)
$
0.4 $
(32.0) $
(46.0)
OCI Before Reclassifications -
(2.6)
3.5
0.9 -
0.3 (34.2) (33.9)
Amounts Reclassified from AOCI 2.1 -
4.2
6.3 2.0
- 3.9 5.9
Net OCI
2.1
(2.6)
7.7
7.2 2.0
0.3 (30.3) (28.0)
Balance as of December 31
st
$
(10.3) $
(1.9)
$
(54.6)
$
(66.8) $
(12.4)
$
0.7 $
(62.3) $
(74.0)
Eversource’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. Such interest rate swaps are not material to their respective financial statements.