Eversource 2015 Annual Report Download - page 30

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Eversource Energy and its utility subsidiaries are exposed to significant reputational risks, which make them vulnerable to increased
regulatory oversight or other sanctions.
Because utility companies, including our electric and natural gas utility subsidiaries, have large customer bases, they are subject to adverse publicity
focused on the reliability of their distribution services and the speed with which they are able to respond to electric outages, natural gas leaks and
similar interruptions caused by storm damage or other unanticipated events. Adverse publicity of this nature could harm the reputations of
Eversource Energy and its subsidiaries; may make state legislatures, utility commissions and other regulatory authorities less likely to view
Eversource Energy and its subsidiaries in a favorable light; and may cause Eversource Energy and its subsidiaries to be subject to less favorable
legislative and regulatory outcomes or increased regulatory oversight. Unfavorable regulatory outcomes can include more stringent laws and
regulations governing our operations, such as reliability and customer service quality standards or vegetation management requirements, as well as
fines, penalties or other sanctions or requirements. The imposition of any of the foregoing could have a material adverse effect on the business,
results of operations, cash flow and financial condition of Eversource Energy and each of its utility subsidiaries.
Limits on our access to and increases in the cost of capital may adversely impact our ability to execute our business plan.
We use short-term debt and the long-term capital markets as a significant source of liquidity and funding for capital requirements not obtained from
our operating cash flow. If access to these sources of liquidity becomes constrained, our ability to implement our business strategy could be
adversely affected. In addition, higher interest rates would increase our cost of borrowing, which could adversely impact our results of operations. A
downgrade of our credit ratings or events beyond our control, such as a disruption in global capital and credit markets, could increase our cost of
borrowing and cost of capital or restrict our ability to access the capital markets and negatively affect our ability to maintain and to expand our
businesses.
Our counterparties may not meet their obligations to us or may elect to exercise their termination rights, which could adversely affect our
earnings.
We are exposed to the risk that counterparties to various arrangements who owe us money, have contracted to supply us with energy, coal, or other
commodities or services, or who work with us as strategic partners, including on significant capital projects, will not be able to perform their
obligations, will terminate such arrangements or, with respect to our credit facilities, fail to honor their commitments. Should any of these
counterparties fail to perform their obligations or terminate such arrangements, we might be forced to replace the underlying commitment at higher
market prices and/or have to delay the completion of, or cancel a capital project. Should any lenders under our credit facilities fail to perform, the
level of borrowing capacity under those arrangements could decrease. In any such events, our financial position, results of operations, or cash flows
could be adversely affected.
The unauthorized access to and the misappropriation of confidential and proprietary customer, employee, financial or system operating
information could adversely affect our business operations and adversely impact our reputation.
In the regular course of business we maintain sensitive customer, employee, financial and system operating information and are required by various
federal and state laws to safeguard this information. Cyber intrusions, security breaches, theft or loss of this information by cyber crime or otherwise
could lead to the release of critical operating information or confidential customer or employee information, which could adversely affect our
business operations or adversely impact our reputation, and could result in significant costs, fines and litigation. We maintain limited privacy
protection liability insurance to cover limited damages and defense costs arising from unauthorized disclosure of, or failure to protect, private
information as well as costs for notification to, or for credit card monitoring of, customers, employees and other persons in the event of a breach of
private information. This insurance covers amounts paid to avert, prevent or stop a network attack or the disclosure of personal information, and
costs of a qualified forensics firm to determine the cause, source and extent of a network attack or to investigate, examine and analyze our network to
find the cause, source and extent of a data breach. While we have implemented measures designed to prevent cyber-attacks and mitigate their effects
should they occur. These measures may not be effective due to the continually evolving nature of efforts to access confidential information.
The loss of key personnel or the inability to hire and retain qualified employees could have an adverse effect on our business, financial
position and results of operations.
Our operations depend on the continued efforts of our employees. Retaining key employees and maintaining the ability to attract new employees are
important to both our operational and financial performance. We cannot guarantee that any member of our management or any key employee at the
Eversource parent or subsidiary level will continue to serve in any capacity for any particular period of time. In addition, a significant portion of our
workforce, including many workers with specialized skills maintaining and servicing the electrical infrastructure, will be eligible to retire over the
next five to ten years. Such highly skilled individuals cannot be quickly replaced due to the technically complex work they perform. We have
developed strategic workforce plans to identify key functions and proactively implement plans to assure a ready and qualified workforce, but cannot
predict the impact of these plans on our ability to hire and retain key employees.
Market performance or changes in assumptions require us to make significant contributions to our pension and other postretirement benefit
plans.
We provide a defined benefit pension plan and other postretirement benefits for a substantial number of employees, former employees and retirees.
Our future pension obligations, costs and liabilities are highly dependent on a variety of factors beyond our control. These factors include estimated
investment returns, interest rates, discount rates, health care cost trends, benefit changes, salary increases and the demographics of plan participants.
If our assumptions prove to be inaccurate, our future costs could increase significantly. In addition, various factors, including underperformance of
plan investments and changes in law or regulation, could increase the amount of contributions required to fund our pension plan in the future.
Additional large funding requirements, when combined with the financing requirements of our construction program, could impact the timing and