Eversource 2015 Annual Report Download - page 80

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As of December 31,
2015 2014
NSTAR NSTAR
(Millions of Dollars) CL&P
Electric PSNH WMECO CL&P Electric PSNH WMECO
Distribution $ 5,377.2 $ 5,100.5 $ 1,804.8 $ 812.3 $ 5,158.8 $ 4,895.5 $ 1,696.7 $ 784.2
Transmission 3,618.0 2,131.3 928.2 964.9 3,274.0 1,928.5 789.7 891.0
Generation - - 1,158.1 36.0 - - 1,136.5 34.4
Property, Plant and
Equipment, Gross 8,995.2 7,231.8 3,891.1 1,813.2 8,432.8 6,824.0 3,622.9 1,709.6
Less: Accumulated Depreciation (2,041.9) (1,886.8) (1,171.0) (307.0) (1,928.0) (1,761.4) (1,090.0) (297.4)
Property, Plant and Equipment, Net 6,953.3 5,345.0 2,720.1 1,506.2 6,504.8 5,062.6 2,532.9 1,412.2
Construction Work in Progress 203.5 310.5 135.3 69.1 304.9 272.8 102.9 49.1
Total Property, Plant and
Equipment, Net $ 7,156.8 $ 5,655.5 $ 2,855.4 $ 1,575.3 $ 6,809.7 $ 5,335.4 $ 2,635.8 $ 1,461.3
As of December 31, 2015, PSNH had $1.2 billion in gross generation utility plant assets and related Accumulated Depreciation of $522.4 million.
These generation assets are the subject of a divestiture agreement entered into on June 10, 2015 between Eversource, PSNH and key New Hampshire
officials whereby, among other resolutions, PSNH has agreed to divest these generation assets upon NHPUC approval. Upon completion of the
divestiture process, remaining costs not recovered by the sale of these assets (stranded costs) will be recovered via bonds that will be secured by a
non-bypassable charge or other recovery mechanisms in rates billed to PSNH’s customers. See Note 11H, “Commitments and Contingencies –
PSNH Generation Restructuring,” for further information.
Depreciation of utility assets is calculated on a straight-line basis using composite rates based on the estimated remaining useful lives of the various
classes of property (estimated useful life for PSNH distribution). The composite rates, which are subject to approval by the appropriate state
regulatory agency, include a cost of removal component (other than PSNH Generation), which is collected from customers over the lives of the plant
assets and is recognized as a regulatory liability. Depreciation rates are applied to property from the time it is placed in service.
Upon retirement from service, the cost of the utility asset is charged to the accumulated provision for depreciation. The actual incurred removal costs
are applied against the related regulatory liability.
The depreciation rates for the various classes of utility property, plant and equipment aggregate to composite rates as follows:
(Percent)
2015 2014 2013
Eversource 2.9 % 3.0 % 2.8 %
CL&P 2.7 % 2.7 % 2.5 %
NSTAR Electric
3.0 % 3.0 % 2.9 %
PSNH 3.2 % 3.0 % 3.0 %
WMECO 2.7 % 3.3 % 2.9 %
The following table summarizes average remaining useful lives of depreciable assets:
As of December 31, 2015
(Years) Eversource
CL&P NSTAR Electric PSNH WMECO
Distribution 34.8 37.3 31.9 31.3 30.5
Transmission 41.6 38.7 43.8 41.6 50.0
Generation 30.7 - - 30.9 25.0
Other 14.1 - - - -
4. DERIVATIVE INSTRUMENTS
The Regulated companies purchase and procure energy and energy-related products, which are subject to price volatility, for their customers. The
costs associated with supplying energy to customers are recoverable from customers in future rates. The Regulated companies manage the risks
associated with the price volatility of energy and energy-related products through the use of derivative and nonderivative contracts.
Many of the derivative contracts meet the definition of, and are designated as, normal and qualify for accrual accounting under the applicable
accounting guidance. The costs and benefits of derivative contracts that meet the definition of normal are recognized in Operating Expenses or
Operating Revenues on the statements of income, as applicable, as electricity or natural gas is delivered.
Derivative contracts that are not designated as normal are recorded at fair value as current or long-term Derivative Assets or Derivative Liabilities on
the balance sheets. For the Regulated companies, regulatory assets or regulatory liabilities are recorded to offset the fair values of derivatives, as
contract settlement amounts are recovered from, or refunded to, customers in their respective energy supply rates.