Eversource 2015 Annual Report Download - page 77

65
As of December 31,
2015 2014
NSTAR NSTAR
(Millions of Dollars)
CL&P Electric PSNH WMECO CL&P Electric PSNH WMECO
Benefit Costs $ 413.6 $ 479.9 $ 164.2 $ 84.9 $ 445.4 $ 515.9 $ 174.3 $ 85.0
Derivative Liabilities 380.8 1.3 - - 410.9 4.5 - -
Income Taxes, Net 444.4 85.7 34.5 31.8 437.7 83.7 38.0 35.5
Storm Restoration Costs 271.4 110.9 31.5 23.1 319.6 103.7 47.7 31.8
Goodwill-related - 416.3 - - - 433.9 - -
Regulatory Tracker Mechanisms 45.1 311.0 101.2 40.1 16.1 141.4 103.5 33.0
Other Regulatory Assets 82.0 56.3 31.5 11.3 66.1 94.7 41.3 12.9
Total Regulatory Assets 1,637.3 1,461.4 362.9 191.2 1,695.8 1,377.8 404.8 198.2
Less: Current Portion 268.3 348.4 105.0 56.2 220.3 198.7 111.7 51.9
Total Long-Term Regulatory Assets $ 1,369.0 $ 1,113.0 $ 257.9 $ 135.0 $ 1,475.5 $ 1,179.1 $ 293.1 $ 146.3
Benefit Costs: Eversource’s Pension, SERP and PBOP Plans are accounted for in accordance with accounting guidance on defined benefit pension
and other PBOP plans. The liability recorded by the Regulated companies to recognize the funded status of their retiree benefit plans is offset by a
regulatory asset in lieu of a charge to Accumulated Other Comprehensive Income/(Loss), reflecting ultimate recovery from customers through rates.
The regulatory asset is amortized as the actuarial gains and losses and prior service cost are amortized to net periodic benefit cost for the pension and
PBOP plans. All amounts are remeasured annually. Regulatory accounting is also applied to the portions of Eversource’s service company costs that
support the Regulated companies, as these amounts are also recoverable. As these regulatory assets do not represent a cash outlay for the Regulated
companies, no carrying charge is recovered from customers.
CL&P, NSTAR Electric, PSNH and WMECO recover benefit costs related to their distribution and transmission operations from customers in rates
as allowed by their applicable regulatory commissions. NSTAR Electric and WMECO each recover their qualified pension and PBOP expenses
related to distribution operations through rate reconciling mechanisms that fully track the change in net pension and PBOP expenses each year.
Derivative Liabilities: Regulatory assets are recorded as an offset to derivative liabilities and relate to the fair value of contracts used to purchase
energy and energy-related products that will be recovered from customers in future rates. These assets are excluded from rate base and are being
recovered as the actual settlements occur over the duration of the contracts. See Note 4, “Derivative Instruments,” to the financial statements for
further information on these contracts.
Income Taxes, Net: The tax effect of temporary book-tax differences (differences between the periods in which transactions affect income in the
financial statements and the periods in which they affect the determination of taxable income, including those differences relating to uncertain tax
positions) is accounted for in accordance with the rate-making treatment of the applicable regulatory commissions and accounting guidance for
income taxes. Differences in income taxes between the accounting guidance and the rate-making treatment of the applicable regulatory commissions
are recorded as regulatory assets. As these assets are offset by deferred income tax liabilities, no carrying charge is collected. The amortization
period of these assets varies depending on the nature and/or remaining life of the underlying assets and liabilities. For further information regarding
income taxes, see Note 10, “Income Taxes,” to the financial statements.
Storm Restoration Costs: The storm restoration cost deferrals relate to costs incurred for major storm events at CL&P, NSTAR Electric, PSNH and
WMECO that each company expects to recover from customers. A storm must meet certain criteria to qualify as a major storm with the criteria
specific to each state jurisdiction and utility company. Once a storm qualifies as a major storm, all qualifying expenses incurred during storm
restoration efforts are deferred and recovered from customers. In addition to storm restoration costs, CL&P and PSNH are each allowed to recover
pre-staging storm costs. Of the total deferred storm restoration costs, $197 million is pending regulatory approval (including $106 million at NSTAR
Electric, $61 million at PSNH, and $30 million at WMECO). Management believes the storm restoration costs were prudent and meet the criteria for
specific cost recovery in Connecticut, Massachusetts and New Hampshire, and that recovery from customers is probable through the applicable
regulatory recovery process. Each electric utility has sought, or is seeking, recovery of its deferred storm restoration costs through its applicable
regulatory recovery process. Each electric utility company earns a return on its deferred storm restoration cost regulatory asset balance.
Goodwill-related: The goodwill regulatory asset originated from a 1999 merger transaction and the DPU allowed its recovery in NSTAR Electric
and NSTAR Gas rates. This regulatory asset is currently being amortized and recovered from customers in rates without a carrying charge over a 40-
year period, and, as of December 31, 2015, there were 24 years of amortization remaining.
Regulatory Tracker Mechanisms: The Regulated companies’ approved rates are designed to recover their costs incurred to provide service to
customers. The Regulated companies recover certain of their costs on a fully-reconciling basis through regulatory commission-approved tracking
mechanisms. The differences between the costs incurred (or the rate recovery allowed) and the actual revenues are recorded as regulatory assets (for
undercollections) or as regulatory liabilities (for overcollections) to be included in future customer rates each year. Carrying charges are recorded on
all material regulatory tracker mechanisms.
CL&P, NSTAR Electric, PSNH and WMECO each recover, on a fully reconciling basis, the costs associated with the procurement of energy,
transmission related costs from FERC-approved transmission tariffs, energy efficiency programs (including LBR at NSTAR Electric), low income
assistance programs, certain uncollectible accounts receivable for hardship customers, and restructuring and stranded costs as a result of deregulation.
Energy procurement costs at PSNH include the costs related to its generating stations and at WMECO include the costs related to its solar generation.