10-Q 1 a2018q110-qxdocument.htm FIRST QUARTER 2018 FORM 10-Q Document



 
eversourcea01.jpg
 

UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q

x
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 
For the Quarterly Period Ended March 31, 2018
 
or
¨

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE     
SECURITIES EXCHANGE ACT OF 1934
 

For the transition period from ____________ to ____________


Commission
File Number
Registrant; State of Incorporation;
Address; and Telephone Number
I.R.S. Employer
Identification No.
 
 
 
1-5324
EVERSOURCE ENERGY
(a Massachusetts voluntary association)
300 Cadwell Drive
Springfield, Massachusetts 01104
Telephone:  (800) 286-5000
04-2147929
 
 
 
0-00404
THE CONNECTICUT LIGHT AND POWER COMPANY
(a Connecticut corporation)
107 Selden Street
Berlin, Connecticut 06037-1616
Telephone:  (800) 286-5000
06-0303850
 
 
 
1-02301
NSTAR ELECTRIC COMPANY
(a Massachusetts corporation)
800 Boylston Street
Boston, Massachusetts 02199
Telephone:  (800) 286-5000
04-1278810
 
 
 
1-6392
PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE
(a New Hampshire corporation)
Energy Park
780 North Commercial Street
Manchester, New Hampshire 03101-1134
Telephone:  (800) 286-5000
02-0181050
 
 
 


 
 

Indicate by check mark whether the registrants (1) have filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrants were required to file such reports), and (2) have been subject to such filing requirements for the past 90 days.
 
Yes
No
 
x
¨

Indicate by check mark whether the registrants have submitted electronically and posted on its corporate Web sites, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrants were required to submit and post such files).
 
Yes
No
 
x
¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.  (Check one):
 
Large
accelerated filer
 
Accelerated
filer
 
Non-accelerated
filer
 
Smaller reporting company
 
Emerging growth company
 
 
 
 
 
 
 
 
 
 
Eversource Energy
x
 
¨
 
¨
 
¨
 
¨
The Connecticut Light and Power Company
¨
 
¨
 
x
 
¨
 
¨
NSTAR Electric Company
¨
 
¨
 
x
 
¨
 
¨
Public Service Company of New Hampshire
¨
 
¨
 
x
 
¨
 
¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrants are shell companies (as defined in Rule 12b-2 of the Exchange Act):
 
Yes
No
 
 
 
Eversource Energy
¨
x
The Connecticut Light and Power Company
¨
x
NSTAR Electric Company
¨
x
Public Service Company of New Hampshire
¨
x

Indicate the number of shares outstanding of each of the issuers' classes of common stock, as of the latest practicable date:
Company - Class of Stock
Outstanding as of April 30, 2018
 
 
Eversource Energy Common Shares, $5.00 par value
316,885,808 shares
The Connecticut Light and Power Company Common Stock, $10.00 par value
6,035,205 shares
NSTAR Electric Company Common Stock, $1.00 par value
200 shares
Public Service Company of New Hampshire Common Stock, $1.00 par value
301 shares

Eversource Energy holds all of the 6,035,205 shares, 200 shares, and 301 shares of the outstanding common stock of The Connecticut Light and Power Company, NSTAR Electric Company, and Public Service Company of New Hampshire, respectively.

NSTAR Electric Company and Public Service Company of New Hampshire each meet the conditions set forth in General Instructions H(1)(a) and (b) of Form 10-Q, and each is therefore filing this Form 10-Q with the reduced disclosure format specified in General Instruction H(2) of Form 10‑Q.

Eversource Energy, The Connecticut Light and Power Company, NSTAR Electric Company, and Public Service Company of New Hampshire each separately file this combined Form 10-Q.  Information contained herein relating to any individual registrant is filed by such registrant on its own behalf.  Each registrant makes no representation as to information relating to the other registrants.  



GLOSSARY OF TERMS

The following is a glossary of abbreviations and acronyms that are found in this report:
Current or former Eversource Energy companies, segments or investments:
Eversource, ES or the Company
Eversource Energy and subsidiaries
Eversource parent or ES parent
Eversource Energy, a public utility holding company
ES parent and other companies
ES parent and other companies are comprised of Eversource parent, Eversource Service and other subsidiaries, which primarily includes our unregulated businesses, HWP Company, The Rocky River Realty Company (a real estate subsidiary), and the consolidated operations of CYAPC and YAEC
CL&P
The Connecticut Light and Power Company
NSTAR Electric
NSTAR Electric Company
PSNH
Public Service Company of New Hampshire
NSTAR Gas
NSTAR Gas Company
Yankee Gas
Yankee Gas Services Company
Aquarion
Eversource Aquarion Holdings, Inc and its subsidiaries (formerly known as Macquarie Utilities Inc)
NPT
Northern Pass Transmission LLC
Northern Pass
The HVDC and associated alternating-current transmission line project from Canada into New Hampshire
Eversource Service
Eversource Energy Service Company
Bay State Wind
A project being developed jointly by Eversource and Denmark-based Ørsted (formerly known as DONG Energy) to construct an offshore wind farm off the coast of Massachusetts
CYAPC
Connecticut Yankee Atomic Power Company
MYAPC
Maine Yankee Atomic Power Company
YAEC
Yankee Atomic Electric Company
Yankee Companies
CYAPC, YAEC and MYAPC
Regulated companies
The Eversource regulated companies are comprised of the electric distribution and transmission businesses of CL&P, NSTAR Electric and PSNH, the natural gas distribution businesses of Yankee Gas and NSTAR Gas, NPT, Aquarion, the generation facilities of PSNH, and the solar power facilities of NSTAR Electric
Regulators:
 
DEEP
Connecticut Department of Energy and Environmental Protection
DOE
U.S. Department of Energy
DOER
Massachusetts Department of Energy Resources
DPU
Massachusetts Department of Public Utilities
EPA
U.S. Environmental Protection Agency
FERC
Federal Energy Regulatory Commission
ISO-NE
ISO New England, Inc., the New England Independent System Operator
MA DEP
Massachusetts Department of Environmental Protection
NHPUC
New Hampshire Public Utilities Commission
PURA
Connecticut Public Utilities Regulatory Authority
SEC
U.S. Securities and Exchange Commission
SJC
Supreme Judicial Court of Massachusetts
Other Terms and Abbreviations:
Access Northeast
A project being developed jointly by Eversource, Enbridge, Inc. ("Enbridge"), and National Grid plc ("National Grid") through Algonquin Gas Transmission, LLC to bring needed additional natural gas pipeline and storage capacity to New England.
ADIT
Accumulated Deferred Income Taxes
AFUDC
Allowance For Funds Used During Construction
AOCI
Accumulated Other Comprehensive Income
ARO
Asset Retirement Obligation
Bcf
Billion cubic feet
C&LM
Conservation and Load Management
CfD
Contract for Differences
Clean Air Project
The construction of a wet flue gas desulphurization system, known as "scrubber technology," to reduce mercury emissions of the Merrimack coal-fired generation station in Bow, New Hampshire
CO2
Carbon dioxide
CTA
Competitive Transition Assessment
CWIP
Construction Work in Progress
EDC
Electric distribution company
EPS
Earnings Per Share
ERISA
Employee Retirement Income Security Act of 1974

i


ESOP
Employee Stock Ownership Plan
ESPP
Employee Share Purchase Plan
Eversource 2017 Form 10-K
The Eversource Energy and Subsidiaries 2017 combined Annual Report on Form 10-K as filed with the SEC
Fitch
Fitch Ratings
FMCC
Federally Mandated Congestion Charge
FTR
Financial Transmission Rights
GAAP
Accounting principles generally accepted in the United States of America
GSC
Generation Service Charge
GSRP
Greater Springfield Reliability Project
GWh
Gigawatt-Hours
HQ
Hydro-Québec, a corporation wholly-owned by the Québec government, including its divisions that produce, transmit and distribute electricity in Québec, Canada
HVDC
High-voltage direct current
Hydro Renewable Energy
Hydro Renewable Energy, Inc., a wholly-owned subsidiary of Hydro-Québec
IPP
Independent Power Producers
ISO-NE Tariff
ISO-NE FERC Transmission, Markets and Services Tariff
kV
Kilovolt
kVa
Kilovolt-ampere
kW
Kilowatt (equal to one thousand watts)
kWh
Kilowatt-Hours (the basic unit of electricity energy equal to one kilowatt of power supplied for one hour)
LBR
Lost Base Revenue
LNG
Liquefied natural gas
LRS
Supplier of last resort service
MG
Million gallons
MGP
Manufactured Gas Plant
MMBtu
One million British thermal units
MMcf
Million cubic feet
Moody's
Moody's Investors Services, Inc.
MW
Megawatt
MWh
Megawatt-Hours
NEEWS
New England East-West Solution
NETOs
New England Transmission Owners (including Eversource, National Grid and Avangrid)
NOx
Nitrogen oxides
OCI
Other Comprehensive Income/(Loss)
PAM
Pension and PBOP Rate Adjustment Mechanism
PBOP
Postretirement Benefits Other Than Pension
PBOP Plan
Postretirement Benefits Other Than Pension Plan that provides certain retiree benefits, primarily medical, dental and life insurance
PCRBs
Pollution Control Revenue Bonds
Pension Plan
Single uniform noncontributory defined benefit retirement plan
PPA
Pension Protection Act
RECs
Renewable Energy Certificates
Regulatory ROE
The average cost of capital method for calculating the return on equity related to the distribution and generation business segment excluding the wholesale transmission segment
RNS
Regional Network Service
ROE
Return on Equity
RRB
Rate Reduction Bond or Rate Reduction Certificate
RSUs
Restricted share units
S&P
Standard & Poor's Financial Services LLC
SBC
Systems Benefits Charge
SCRC
Stranded Cost Recovery Charge
SERP
Supplemental Executive Retirement Plans and non-qualified defined benefit retirement plans
SIP
Simplified Incentive Plan
SO2
Sulfur dioxide
SS
Standard service
TCAM
Transmission Cost Adjustment Mechanism
TSA
Transmission Service Agreement
UI
The United Illuminating Company


ii


EVERSOURCE ENERGY AND SUBSIDIARIES   
THE CONNECTICUT LIGHT AND POWER COMPANY
NSTAR ELECTRIC COMPANY AND SUBSIDIARY
PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE AND SUBSIDIARY

TABLE OF CONTENTS
 
Page
PART I – FINANCIAL INFORMATION
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
PART II – OTHER INFORMATION
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

iii



EVERSOURCE ENERGY AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Thousands of Dollars)
As of March 31, 2018

As of December 31, 2017





ASSETS
 


 
Current Assets:
 


 
Cash and Cash Equivalents
$
303,810


$
38,165

Receivables, Net
1,086,282


925,083

Unbilled Revenues
164,082


201,361

Fuel, Materials, Supplies and Inventory
264,171


223,063

Regulatory Assets
683,211


741,868

Prepayments and Other Current Assets
210,534


138,009

Assets Held for Sale
59,346

 
219,550

Total Current Assets
2,771,436


2,487,099







Property, Plant and Equipment, Net
23,958,688


23,617,463







Deferred Debits and Other Assets:
 


 

Regulatory Assets
4,655,521


4,497,447

Goodwill
4,427,266


4,427,266

Marketable Securities
580,446


585,419

Other Long-Term Assets
646,626


605,692

Total Deferred Debits and Other Assets
10,309,859


10,115,824







Total Assets
$
37,039,983


$
36,220,386





LIABILITIES AND CAPITALIZATION
 

 
Current Liabilities:
 

 
Notes Payable
$
1,049,305


$
1,088,087

Long-Term Debt – Current Portion
1,097,288


549,631

Accounts Payable
984,343


1,085,034

Regulatory Liabilities
205,970


128,071

Other Current Liabilities
759,112


738,222

Total Current Liabilities
4,096,018


3,589,045





Deferred Credits and Other Liabilities:
 

 
Accumulated Deferred Income Taxes
3,389,606


3,297,518

Regulatory Liabilities
3,703,735


3,637,273

Derivative Liabilities
415,402


377,257

Accrued Pension, SERP and PBOP
1,026,181


1,228,091

Other Long-Term Liabilities
1,053,765


1,073,501

Total Deferred Credits and Other Liabilities
9,588,689


9,613,640







Capitalization:
 

 
Long-Term Debt
12,015,992


11,775,889







Noncontrolling Interest – Preferred Stock of Subsidiaries
155,570


155,570







Equity:
 

 
Common Shareholders' Equity:
 

 
Common Shares
1,669,392


1,669,392

Capital Surplus, Paid In
6,224,620


6,239,940

Retained Earnings
3,670,603


3,561,084

Accumulated Other Comprehensive Loss
(63,130
)

(66,403
)
Treasury Stock
(317,771
)

(317,771
)
Common Shareholders' Equity
11,183,714


11,086,242

Total Capitalization
23,355,276


23,017,701







Total Liabilities and Capitalization
$
37,039,983


$
36,220,386


The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

1


EVERSOURCE ENERGY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
 
For the Three Months Ended March 31,
(Thousands of Dollars, Except Share Information)
2018
 
2017
 
 
 
 
Operating Revenues
$
2,287,962

 
$
2,105,135

 
 
 
 
Operating Expenses:
 
 
 
Purchased Power, Fuel and Transmission
946,747

 
753,649

Operations and Maintenance
332,549

 
338,307

Depreciation
204,266

 
186,805

Amortization
45,194

 
24,017

Energy Efficiency Programs
134,241

 
146,158

Taxes Other Than Income Taxes
182,433

 
155,222

Total Operating Expenses
1,845,430

 
1,604,158

Operating Income
442,532

 
500,977

Interest Expense
121,129

 
103,429

Other Income, Net
33,789

 
21,619

Income Before Income Tax Expense
355,192

 
419,167

Income Tax Expense
83,766

 
157,829

Net Income
271,426

 
261,338

Net Income Attributable to Noncontrolling Interests
1,880

 
1,880

Net Income Attributable to Common Shareholders
$
269,546

 
$
259,458

 
 
 
 
Basic and Diluted Earnings Per Common Share
$
0.85

 
$
0.82

 
 
 
 
Dividends Declared Per Common Share
$
0.51

 
$
0.48

 
 
 
 
Weighted Average Common Shares Outstanding:
 
 
 
Basic
317,397,052

 
317,463,151

Diluted
317,992,999

 
318,124,536


The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.


CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
 
For the Three Months Ended March 31,
(Thousands of Dollars)
2018
 
2017
 
 
 
 
Net Income
$
271,426

 
$
261,338

Other Comprehensive Income, Net of Tax:
 
 
 
Qualified Cash Flow Hedging Instruments
724

 
534

Changes in Unrealized (Losses)/Gains on Marketable Securities
(444
)
 
1,645

Changes in Funded Status of Pension, SERP and PBOP Benefit Plans
2,993

 
962

Other Comprehensive Income, Net of Tax
3,273

 
3,141

Comprehensive Income Attributable to Noncontrolling Interests
(1,880
)
 
(1,880
)
Comprehensive Income Attributable to Common Shareholders
$
272,819

 
$
262,599


The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

2


EVERSOURCE ENERGY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 
For the Three Months Ended March 31,
(Thousands of Dollars)
2018
 
2017




Operating Activities:
 

 
Net Income
$
271,426


$
261,338

Adjustments to Reconcile Net Income to Net Cash Flows Provided by Operating Activities:
 

 
Depreciation
204,266


186,805

Deferred Income Taxes
88,481


141,398

Pension, SERP and PBOP (Income)/Expense, Net
(1,965
)

5,828

Pension and PBOP Contributions
(171,244
)

(45,700
)
Regulatory Overrecoveries, Net
70,457


56,734

Amortization
45,194


24,017

Other
(54,969
)

(36,176
)
Changes in Current Assets and Liabilities:
 

 
Receivables and Unbilled Revenues, Net
(156,888
)

(50,251
)
Fuel, Materials, Supplies and Inventory
(26,956
)

(33,058
)
Taxes Receivable/Accrued, Net
(5,061
)

32,313

Accounts Payable
(61,571
)

(57,701
)
Other Current Assets and Liabilities, Net
(23,456
)

(40,198
)
Net Cash Flows Provided by Operating Activities
177,714


445,349





Investing Activities:
 

 
Investments in Property, Plant and Equipment
(607,334
)

(523,560
)
Proceeds from Sales of Marketable Securities
145,438


154,772

Purchases of Marketable Securities
(143,264
)

(149,688
)
Proceeds from the Sale of PSNH Generation Assets
130,641

 
—

Other Investing Activities
(5,200
)

(16,105
)
Net Cash Flows Used in Investing Activities
(479,719
)

(534,581
)




Financing Activities:
 

 
Cash Dividends on Common Shares
(160,027
)

(150,521
)
Cash Dividends on Preferred Stock
(1,880
)

(1,880
)
Decrease in Notes Payable
(240,005
)

(173,000
)
Issuance of Long-Term Debt
1,150,000


600,000

Retirements of Long-Term Debt
(150,218
)

(150,000
)
Other Financing Activities
(19,140
)

(15,832
)
Net Cash Flows Provided by Financing Activities
578,730


108,767

Net Increase in Cash, Cash Equivalents and Restricted Cash
276,725


19,535

Cash, Cash Equivalents and Restricted Cash - Beginning of Period
85,890


106,750

Cash, Cash Equivalents and Restricted Cash - End of Period
$
362,615


$
126,285


The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.



3



THE CONNECTICUT LIGHT AND POWER COMPANY
CONDENSED BALANCE SHEETS
(Unaudited)
(Thousands of Dollars)
As of March 31, 2018
 
As of December 31, 2017
 
 
 
 
ASSETS
 
 
 
Current Assets:
 
 
 
Cash
$
240,217

 
$
6,028

Receivables, Net
411,437

 
370,676

Accounts Receivable from Affiliated Companies
29,122

 
28,181

Unbilled Revenues
48,763

 
54,154

Materials, Supplies and Inventory
53,637

 
48,438

Regulatory Assets
229,735

 
200,281

Prepayments and Other Current Assets
56,413

 
46,926

Total Current Assets
1,069,324

 
754,684

 
 
 
 
Property, Plant and Equipment, Net
8,406,595

 
8,271,030

 
 
 
 
Deferred Debits and Other Assets:
 
 
 
Regulatory Assets
1,499,588

 
1,444,935

Other Long-Term Assets
171,092

 
159,597

Total Deferred Debits and Other Assets
1,670,680

 
1,604,532

 
 
 
 
Total Assets
$
11,146,599

 
$
10,630,246

 
 
 
 
LIABILITIES AND CAPITALIZATION
 
 
 
Current Liabilities:
 
 
 
Notes Payable to Eversource Parent
$
—

 
$
69,500

Long-Term Debt – Current Portion
550,000

 
300,000

Accounts Payable
346,676

 
367,605

Accounts Payable to Affiliated Companies
90,481

 
82,201

Regulatory Liabilities
66,949

 
38,967

Other Current Liabilities
264,064

 
234,486

Total Current Liabilities
1,318,170

 
1,092,759

 
 
 
 
Deferred Credits and Other Liabilities:
 
 
 
Accumulated Deferred Income Taxes
1,133,045

 
1,103,367

Regulatory Liabilities
1,136,361

 
1,112,136

Derivative Liabilities
415,036

 
376,918

Accrued Pension, SERP and PBOP
266,824

 
354,469

Other Long-Term Liabilities
124,056

 
128,135

Total Deferred Credits and Other Liabilities
3,075,322

 
3,075,025

 
 
 
 
Capitalization:
 
 
 
Long-Term Debt
3,003,562

 
2,759,135

 
 
 
 
Preferred Stock Not Subject to Mandatory Redemption
116,200

 
116,200

 
 
 
 
Common Stockholder's Equity:
 
 
 
Common Stock
60,352

 
60,352

Capital Surplus, Paid In
2,119,765

 
2,110,765

Retained Earnings
1,452,919

 
1,415,741

Accumulated Other Comprehensive Income
309

 
269

Common Stockholder's Equity
3,633,345

 
3,587,127

Total Capitalization
6,753,107

 
6,462,462

 
 
 
 
Total Liabilities and Capitalization
$
11,146,599

 
$
10,630,246


The accompanying notes are an integral part of these unaudited condensed financial statements.

4


THE CONNECTICUT LIGHT AND POWER COMPANY
CONDENSED STATEMENTS OF INCOME
(Unaudited)
 
For the Three Months Ended March 31,
(Thousands of Dollars)
2018
 
2017
 
 
 
 
Operating Revenues
$
784,983

 
$
732,310

 
 
 
 
Operating Expenses:
 
 
 
Purchased Power and Transmission
301,889

 
244,938

Operations and Maintenance
117,292

 
128,737

Depreciation
67,498

 
59,751

Amortization of Regulatory Assets, Net
28,006

 
12,803

Energy Efficiency Programs
22,760

 
36,591

Taxes Other Than Income Taxes
90,300

 
73,979

Total Operating Expenses
627,745

 
556,799

Operating Income
157,238

 
175,511

Interest Expense
36,823

 
34,964

Other Income, Net
6,560

 
3,267

Income Before Income Tax Expense
126,975

 
143,814

Income Tax Expense
28,407

 
53,606

Net Income
$
98,568

 
$
90,208


The accompanying notes are an integral part of these unaudited condensed financial statements.


CONDENSED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
 
For the Three Months Ended March 31,
(Thousands of Dollars)
2018
 
2017
 
 
 
 
Net Income
$
98,568

 
$
90,208

Other Comprehensive Income, Net of Tax:
 
 
 
Qualified Cash Flow Hedging Instruments
52

 
111

Changes in Unrealized (Losses)/Gains on Marketable Securities
(12
)
 
56

Other Comprehensive Income, Net of Tax
40

 
167

Comprehensive Income
$
98,608

 
$
90,375


The accompanying notes are an integral part of these unaudited condensed financial statements.


5


THE CONNECTICUT LIGHT AND POWER COMPANY
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
 
For the Three Months Ended March 31,
(Thousands of Dollars)
2018
 
2017
 
 
 
 
Operating Activities:
 
 
 
Net Income
$
98,568

 
$
90,208

Adjustments to Reconcile Net Income to Net Cash Flows Provided by Operating Activities:
 
 
 
Depreciation
67,498

 
59,751

Deferred Income Taxes
29,109

 
47,864

Pension Contributions
(82,276
)
 
(625
)
Regulatory Underrecoveries, Net
(8,878
)
 
(18,734
)
Amortization of Regulatory Assets, Net
28,006

 
12,803

Other
(11,870
)
 
(1,710
)
Changes in Current Assets and Liabilities:
 
 
 
Receivables and Unbilled Revenues, Net
(46,330
)
 
(1,280
)
Taxes Receivable/Accrued, Net
42,460

 
32,920

Accounts Payable
(28,408
)
 
(16,957
)
Other Current Assets and Liabilities, Net
(23,160
)
 
(30,823
)
Net Cash Flows Provided by Operating Activities
64,719

 
173,417

 
 
 
 
Investing Activities:
 
 
 
Investments in Property, Plant and Equipment
(202,126
)
 
(181,601
)
Other Investing Activities
56

 
32

Net Cash Flows Used in Investing Activities
(202,070
)
 
(181,569
)
 
 
 
 
Financing Activities:
 
 
 
Cash Dividends on Common Stock
(60,000
)
 
(49,600
)
Cash Dividends on Preferred Stock
(1,390
)
 
(1,390
)
Capital Contributions from Eversource Parent
9,000

 
—

Issuance of Long-Term Debt
500,000

 
300,000

Retirement of Long-Term Debt
—

 
(150,000
)
Decrease in Notes Payable to Eversource Parent
(69,500
)
 
(76,700
)
Other Financing Activities
(6,539
)
 
(3,631
)
Net Cash Flows Provided by Financing Activities
371,571

 
18,679

Net Increase in Cash and Restricted Cash
234,220

 
10,527

Cash and Restricted Cash- Beginning of Period
9,619

 
8,403

Cash and Restricted Cash - End of Period
$
243,839

 
$
18,930


The accompanying notes are an integral part of these unaudited condensed financial statements.




6



NSTAR ELECTRIC COMPANY AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Thousands of Dollars)
As of March 31, 2018
 
As of December 31, 2017
 
 
 
 
ASSETS
 

 
 

Current Assets:
 
 
 
Cash and Cash Equivalents
$
9,471

 
$
1,763

Receivables, Net
406,599

 
341,341

Accounts Receivable from Affiliated Companies
26,335

 
40,723

Unbilled Revenues
41,213

 
49,865

Materials, Supplies and Inventory
132,943

 
95,517

Regulatory Assets
276,962

 
333,882

Prepayments and Other Current Assets
42,250

 
24,499

Total Current Assets
935,773

 
887,590

 
 
 
 
Property, Plant and Equipment, Net
8,323,826

 
8,246,494

 
 
 
 
Deferred Debits and Other Assets:
 
 
 
Regulatory Assets
1,287,282

 
1,190,575

Prepaid PBOP
133,650

 
126,948

Other Long-Term Assets
86,898

 
84,766

Total Deferred Debits and Other Assets
1,507,830

 
1,402,289

 
 
 
 
Total Assets
$
10,767,429

 
$
10,536,373

 
 
 
 
LIABILITIES AND CAPITALIZATION
 
 
 
Current Liabilities:
 
 
 
Notes Payable
$
367,000

 
$
234,000

Accounts Payable
329,558

 
340,115

Accounts Payable to Affiliated Companies
137,132

 
91,260

Obligations to Third Party Suppliers
101,654

 
88,721

Renewable Portfolio Standards Compliance Obligations
139,174

 
111,524

Regulatory Liabilities
89,230

 
79,562

Other Current Liabilities
57,333

 
79,916

Total Current Liabilities
1,221,081

 
1,025,098

 
 
 
 
Deferred Credits and Other Liabilities:
 
 
 
Accumulated Deferred Income Taxes
1,297,365

 
1,275,814

Regulatory Liabilities
1,530,103

 
1,514,451

Accrued Pension and SERP
80,248

 
89,995

Other Long-Term Liabilities
197,371

 
198,176

Total Deferred Credits and Other Liabilities
3,105,087

 
3,078,436

 
 
 
 
Capitalization:
 
 
 
Long-Term Debt
2,943,915

 
2,943,759

 
 
 
 
Preferred Stock Not Subject to Mandatory Redemption
43,000

 
43,000

 
 
 
 
Common Stockholder's Equity:
 
 
 
Common Stock
—

 
—

Capital Surplus, Paid In
1,595,442

 
1,502,942

Retained Earnings
1,860,621

 
1,944,961

Accumulated Other Comprehensive Loss
(1,717
)
 
(1,823
)
Common Stockholder's Equity
3,454,346

 
3,446,080

Total Capitalization
6,441,261

 
6,432,839

 
 
 
 
Total Liabilities and Capitalization
$
10,767,429


$
10,536,373


The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

7


NSTAR ELECTRIC COMPANY AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
 
For the Three Months Ended March 31,
(Thousands of Dollars)
2018
 
2017
 
 
 
 
Operating Revenues
$
770,127

 
$
733,808

 
 
 
 
Operating Expenses:
 

 
 

Purchased Power and Transmission
332,579

 
273,852

Operations and Maintenance
118,682

 
115,872

Depreciation
70,542

 
67,218

Amortization of Regulatory Assets, Net
6,364

 
4,489

Energy Efficiency Programs
74,793

 
77,976

Taxes Other Than Income Taxes
48,186

 
37,821

Total Operating Expenses
651,146

 
577,228

Operating Income
118,981

 
156,580

Interest Expense
26,464

 
28,279

Other Income, Net
12,601

 
8,349

Income Before Income Tax Expense
105,118

 
136,650

Income Tax Expense
27,969

 
53,269

Net Income
$
77,149

 
$
83,381


The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.


CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
 
For the Three Months Ended March 31,
(Thousands of Dollars)
2018
 
2017
 
 
 
 
Net Income
$
77,149

 
$
83,381

Other Comprehensive Income, Net of Tax:
 
 
 
  Changes in Funded Status of SERP Benefit Plan
1

 
(4
)
  Qualified Cash Flow Hedging Instruments
109

 
109

  Changes in Unrealized (Losses)/Gains on Marketable
(4
)
 
16

Other Comprehensive Income, Net of Tax
106

 
121

Comprehensive Income
$
77,255

 
$
83,502


The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.


8


NSTAR ELECTRIC COMPANY AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 
For the Three Months Ended March 31,
(Thousands of Dollars)
2018
 
2017
 
 
 
 
Operating Activities:
 

 
 

Net Income
$
77,149

 
$
83,381

Adjustments to Reconcile Net Income to Net Cash Flows Provided by Operating Activities:
 

 
 

Depreciation
70,542

 
67,218

Deferred Income Taxes
22,542

 
45,375

Pension, SERP and PBOP Benefits, Net
(9,295
)
 
(10,548
)
Regulatory Overrecoveries, Net
17,618

 
3,921

Amortization of Regulatory Assets, Net
6,364

 
4,489

Other
(2,204
)
 
(3,877
)
Changes in Current Assets and Liabilities:
 

 
 

Receivables and Unbilled Revenues, Net
(52,949
)
 
(9,275
)
Materials, Supplies and Inventory
(37,427
)
 
(33,342
)
Taxes Receivable/Accrued, Net
(22,698
)
 
37,566

Accounts Payable
43,170

 
(29,015
)
Other Current Assets and Liabilities, Net
23,703

 
1,251

Net Cash Flows Provided by Operating Activities
136,515

 
157,144

 
 
 
 
Investing Activities:
 

 
 

Investments in Property, Plant and Equipment
(192,036
)
 
(164,849
)
Other Investing Activities
(654
)
 
(3,608
)
Net Cash Flows Used in Investing Activities
(192,690
)
 
(168,457
)
 
 
 
 
Financing Activities:
 

 
 

Cash Dividends on Common Stock
(161,000
)
 
(56,000
)
Cash Dividends on Preferred Stock
(490
)
 
(490
)
Capital Contributions from Eversource Parent
92,500

 
—

Increase in Notes Payable
133,000

 
68,400

Other Financing Activities
(78
)
 
(38
)
Net Cash Flows Provided by Financing Activities
63,932

 
11,872

Increase in Cash, Cash Equivalents and Restricted Cash
7,757

 
559

Cash, Cash Equivalents and Restricted Cash - Beginning of Period
14,708

 
15,506

Cash, Cash Equivalents and Restricted Cash - End of Period
$
22,465

 
$
16,065


The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.


9



PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Thousands of Dollars)
As of March 31, 2018
 
As of December 31, 2017
 
 
 
 
ASSETS
 
 
 
Current Assets:
 
 
 
Cash
$
2,917

 
$
900

Receivables, Net
94,179

 
92,774

Accounts Receivable from Affiliated Companies
10,253

 
5,297

Unbilled Revenues
41,444

 
49,448

Taxes Receivable
34,871

 
5,838

Materials, Supplies and Inventory
49,582

 
40,285

Regulatory Assets
122,481

 
130,134

Prepayments and Other Current Assets
15,918

 
23,093

Assets Held for Sale
59,346

 
219,550

Total Current Assets
430,991

 
567,319

 
 
 
 
Property, Plant and Equipment, Net
2,693,951

 
2,642,274

 
 
 
 
Deferred Debits and Other Assets:
 
 
 
Regulatory Assets
816,194

 
810,677

Other Long-Term Assets
53,656

 
42,391

Total Deferred Debits and Other Assets
869,850

 
853,068

 
 
 
 
Total Assets
$
3,994,792

 
$
4,062,661

 
 
 
 
LIABILITIES AND CAPITALIZATION
 
 
 
Current Liabilities:
 
 
 
Notes Payable to Eversource Parent
$
271,300

 
$
262,900

Long-Term Debt – Current Portion
110,000

 
110,000

Accounts Payable
94,498

 
128,685

Accounts Payable to Affiliated Companies
33,828

 
24,676

Dividends Payable to Eversource Parent
—

 
150,000

Renewable Portfolio Standards Compliance Obligations
35,447

 
27,765

Regulatory Liabilities
15,607

 
6,251

Other Current Liabilities
59,876

 
40,159

Total Current Liabilities
620,556

 
750,436

 
 
 
 
Deferred Credits and Other Liabilities:
 
 
 
Accumulated Deferred Income Taxes
490,487

 
443,468

Regulatory Liabilities
449,588

 
444,397

Accrued Pension, SERP and PBOP
121,414

 
124,639

Other Long-Term Liabilities
34,990

 
56,689

Total Deferred Credits and Other Liabilities
1,096,479

 
1,069,193

 
 
 
 
Capitalization:
 
 
 
Long-Term Debt
891,801

 
892,438

 
 
 
 
Common Stockholder's Equity:
 
 
 
Common Stock
—

 
—

Capital Surplus, Paid In
843,134

 
843,134

Retained Earnings
546,475

 
511,382

Accumulated Other Comprehensive Loss
(3,653
)
 
(3,922
)
Common Stockholder's Equity
1,385,956

 
1,350,594

Total Capitalization
2,277,757

 
2,243,032

 
 
 
 
Total Liabilities and Capitalization
$
3,994,792

 
$
4,062,661


The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.


10


PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
 
For the Three Months Ended March 31,
(Thousands of Dollars)
2018
 
2017
 
 
 
 
Operating Revenues
$
267,350

 
$
253,157

 
 
 
 
Operating Expenses:
 
 
 
Purchased Power, Fuel and Transmission
109,717

 
61,747

Operations and Maintenance
51,380

 
63,964

Depreciation
23,493

 
30,735

Amortization of Regulatory Assets, Net
5,035

 
5,445

Energy Efficiency Programs
5,157

 
3,746

Taxes Other Than Income Taxes
16,801

 
20,881

Total Operating Expenses
211,583

 
186,518

Operating Income
55,767

 
66,639

Interest Expense
12,772

 
12,808

Other Income, Net
4,749

 
2,811

Income Before Income Tax Expense
47,744

 
56,642

Income Tax Expense
12,651

 
22,330

Net Income
$
35,093

 
$
34,312


The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.


CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
 
For the Three Months Ended March 31,
(Thousands of Dollars)
2018
 
2017
 
 
 
 
Net Income
$
35,093

 
$
34,312

Other Comprehensive Income, Net of Tax:
 
 
 
Qualified Cash Flow Hedging Instruments
290

 
291

Changes in Unrealized (Losses)/Gains on Marketable Securities
(21
)
 
97

Other Comprehensive Income, Net of Tax
269

 
388

Comprehensive Income
$
35,362

 
$
34,700


The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.


11


PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 
For the Three Months Ended March 31,
(Thousands of Dollars)
2018
 
2017
 
 
 
 
Operating Activities:
 
 
 
Net Income
$
35,093

 
$
34,312

Adjustments to Reconcile Net Income to Net Cash Flows Provided by Operating Activities:
 
 
 
Depreciation
23,493

 
30,735

Deferred Income Taxes
43,021

 
11,290

Regulatory Overrecoveries, Net
129

 
3,507

Amortization of Regulatory Assets, Net
5,035

 
5,445

Other
(15,212
)
 
(4,405
)
Changes in Current Assets and Liabilities:
 
 
 
Receivables and Unbilled Revenues, Net
(80
)
 
1,149

Fuel, Materials, Supplies and Inventory
4,854

 
(3,371
)
Taxes Receivable/Accrued, Net
(5,867
)
 
1,778

Accounts Payable
(18,760
)
 
5,475

Other Current Assets and Liabilities, Net
24,543

 
27,332

Net Cash Flows Provided by Operating Activities
96,249

 
113,247

 
 
 
 
Investing Activities:
 
 
 
Investments in Property, Plant and Equipment
(72,287
)
 
(75,327
)
Proceeds from the Sale of Generation Assets
130,641

 
—

Other Investing Activities
97

 
(145
)
Net Cash Flows Provided by/(Used in) Investing Activities
58,451

 
(75,472
)
 
 
 
 
Financing Activities:
 
 
 
Cash Dividends on Common Stock
(150,000
)
 
(18,500
)
Increase/(Decrease) in Notes Payable to Eversource Parent
8,400

 
(16,000
)
Other Financing Activities
(38
)
 
(112
)
Net Cash Flows Used in Financing Activities
(141,638
)
 
(34,612
)
Net Increase in Cash and Restricted Cash
13,062

 
3,163

Cash and Restricted Cash - Beginning of Period
2,191

 
5,953

Cash and Restricted Cash - End of Period
$
15,253

 
$
9,116


The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.


12



EVERSOURCE ENERGY AND SUBSIDIARIES
THE CONNECTICUT LIGHT AND POWER COMPANY
NSTAR ELECTRIC COMPANY AND SUBSIDIARY
PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE AND SUBSIDIARY

COMBINED NOTES TO CONDENSED FINANCIAL STATEMENTS (Unaudited)

Refer to the Glossary of Terms included in this combined Quarterly Report on Form 10-Q for abbreviations and acronyms used throughout the combined notes to the unaudited condensed financial statements.

1.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A.    Basis of Presentation
Eversource Energy is a public utility holding company primarily engaged, through its wholly-owned regulated utility subsidiaries, in the energy delivery business.  Eversource Energy's wholly-owned regulated utility subsidiaries consist of CL&P, NSTAR Electric and PSNH (electric utilities), Yankee Gas and NSTAR Gas (natural gas utilities) and Aquarion (water utilities).  Eversource provides energy delivery and/or water service to approximately four million electric, natural gas and water customers through eight regulated utilities in Connecticut, Massachusetts and New Hampshire.

On December 31, 2017, Western Massachusetts Electric Company ("WMECO") was merged into NSTAR Electric. In accordance with accounting guidance on combinations between entities under common control, the net assets, results of operations and cash flows of WMECO are reflected in the NSTAR Electric financial statements. NSTAR Electric's financial statements for all prior periods presented in this combined Quarterly Report on Form 10-Q have been retrospectively recast as if the merger occurred on the first day of the earliest reporting period.  

The unaudited condensed consolidated financial statements of Eversource, NSTAR Electric and PSNH include the accounts of each of their respective subsidiaries.  Intercompany transactions have been eliminated in consolidation.  The accompanying unaudited condensed consolidated financial statements of Eversource, NSTAR Electric and PSNH and the unaudited condensed financial statements of CL&P are herein collectively referred to as the "financial statements."

The combined notes to the financial statements have been prepared pursuant to the rules and regulations of the SEC.  Certain information and footnote disclosures included in annual financial statements prepared in accordance with GAAP have been omitted pursuant to such rules and regulations.  The accompanying financial statements should be read in conjunction with the Combined Notes to Financial Statements included in Item 8, "Financial Statements and Supplementary Data," of the Eversource 2017 Form 10-K, which was filed with the SEC on February 26, 2018.  The preparation of the financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates.

The financial statements contain, in the opinion of management, all adjustments (including normal, recurring adjustments) necessary to present fairly Eversource's, CL&P's, NSTAR Electric's and PSNH's financial position as of March 31, 2018 and December 31, 2017, and the results of operations, comprehensive income and cash flows for the three months ended March 31, 2018 and 2017.  The results of operations, comprehensive income and cash flows for the three months ended March 31, 2018 and 2017 are not necessarily indicative of the results expected for a full year.  

Eversource consolidates CYAPC and YAEC because CL&P's, NSTAR Electric's and PSNH's combined ownership interest in each of these entities is greater than 50 percent.  Intercompany transactions between CL&P, NSTAR Electric, PSNH and the CYAPC and YAEC companies have been eliminated in consolidation of the Eversource financial statements.

Eversource's utility subsidiaries' electric and natural gas distribution (including generation assets), transmission and water distribution businesses are subject to rate-regulation that is based on cost recovery and meets the criteria for application of accounting guidance for entities with rate-regulated operations, which considers the effect of regulation on the differences in the timing of the recognition of certain revenues and expenses from those of other businesses and industries. See Note 2, "Regulatory Accounting," for further information.

Certain reclassifications of prior period data were made in the accompanying financial statements to conform to the current period presentation.

On December 22, 2017, the Tax Cuts and Jobs Act became law, which amended existing federal tax rules and included numerous provisions that impacted corporations. In particular, this act reduced the U.S. federal corporate income tax rate from 35 percent to 21 percent effective January 1, 2018. Our regulated companies have established a reserve in revenue to reflect the difference between the 35 percent federal corporate income tax rate included in rates charged to customers and the 21 percent federal income tax rate. Eversource, CL&P, NSTAR Electric and PSNH's effective tax rate has decreased, as compared to the prior period, as a result of incurring a lower federal income tax expense, which is reflected on the statements of income as of March 31, 2018. See Note 15, "Revenues," for further information on the amounts reserved in revenues.



13



B.    Accounting Standards
Accounting Standards Issued but Not Yet Effective:  In February 2016, the FASB issued Accounting Standards Update ("ASU") 2016-02, Leases, which changes existing lease accounting guidance and is required to be applied in the first quarter of 2019, with earlier application permitted.  The ASU lease criteria are required to be applied to leases and lease renewals entered into effective January 1, 2019. The Company will implement the ASU in the first quarter of 2019. The requirements of the ASU include balance sheet recognition of leases previously deemed to be operating leases, and additional disclosure requirements. The Company is in the process of evaluating what impact the ASU will have on its financial statements.  As of December 31, 2017, Eversource’s total future undiscounted minimum rental payments, excluding executory costs, under long-term noncancelable operating and capital leases were less than $100 million.

Accounting Standards Recently Adopted: On January 1, 2018, Eversource, CL&P, NSTAR Electric and PSNH adopted ASU 2014-09, Revenue from Contracts with Customers, which amended existing revenue recognition guidance, using the modified retrospective method (cumulatively at the date of initial application) applying it only to contracts that were not complete at January 1, 2018. Under this method of adoption, prior year reported results were not restated. Implementation of the ASU did not have a material effect on the results of operations, financial position or cash flows of Eversource, CL&P, NSTAR Electric or PSNH. See Note 15, "Revenues," for further information.

The Company identified an item that was accounted for differently under the new revenue guidance, as compared to the previously existing guidance. As a result of applying guidance on the unit of account under the new standard, purchases of power from and sales of power to ISO-New England are now accounted for net by the hour, rather than net by the month. This change increased Operating Revenues and Purchased Power, Fuel and Transmission by $19 million for the three months ended March 31, 2018, with no impact on net income.

On January 1, 2018, Eversource adopted ASU 2016-01, Financial Instruments - Overall: Recognition and Measurement of Financial Assets and Liabilities.  The ASU removed the available-for-sale designation for equity securities, whereby changes in fair value were previously recorded in accumulated other comprehensive income within shareholders' equity, and required changes in fair value of all equity securities to be recorded in earnings effective January 1, 2018. There was no cumulative effect of adoption. For the three months ended March 31, 2018, unrealized losses recorded in Other Income, Net were $0.7 million. For further information, see Note 5, "Marketable Securities," to the financial statements.  

On January 1, 2018, Eversource, CL&P, NSTAR Electric and PSNH adopted ASU 2017-07, Compensation – Retirement Benefits: Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. The ASU required separate presentation of service cost from other components of net pension and PBOP costs, with the other components presented as non-operating income and not subject to capitalization. The ASU has been applied retrospectively for the separate presentation in the income statement of service costs and other components and prospectively in the balance sheet for the capitalization of only the service cost component. As of March 31, 2018, the non-service cost components of net pension, SERP and PBOP costs that were not capitalized in plant were recorded as an increase to regulatory liabilities of approximately $10 million, as these amounts continue to be included in rates. See Note 1F, "Summary of Significant Accounting Policies - Other Income, Net," to the financial statements for the portion of pension and PBOP costs that are presented as non-operating income for the three months ended March 31, 2018 and 2017. The March 31, 2017 amounts, which were previously presented within Operations and Maintenance expense on the statements of income, totaled $8.0 million at Eversource, $0.5 million at CL&P, $5.0 million at NSTAR Electric and $1.6 million at PSNH, and have been retrospectively presented to Other Income, Net.

On January 1, 2018, Eversource, CL&P, NSTAR Electric and PSNH adopted two accounting standards relating to the statement of cash flows; ASU 2016-15, Classification of Certain Cash Receipts and Cash Payments, and ASU 2016-18, Restricted Cash. As a result of implementing ASU 2016-15, dividends from equity method investments of $6.2 million and $4.8 million in the first quarter of 2018 and 2017, respectively, are presented in operating activities at Eversource, for which the 2017 amounts were previously classified in investing activities. ASU 2016-18 required that the statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash and restricted cash equivalents. Both standards were applied retrospectively, as required, and neither had a material impact on Eversource's, CL&P's, NSTAR Electric's or PSNH's statements of cash flows. See Note 1H, "Summary of Significant Accounting Policies - Supplemental Cash Flow Information," to the financial statements for a reconciliation of cash and cash equivalents as reported on the balance sheet to the statement of cash flows, which includes amounts described as restricted cash and restricted cash equivalents.

C.    Northern Pass
Northern Pass is Eversource's planned 1,090 MW HVDC transmission line that will interconnect from the Québec-New Hampshire border to Franklin, New Hampshire and an associated alternating current radial transmission line between Franklin and Deerfield, New Hampshire.  As of March 31, 2018, our capitalized Northern Pass project costs were approximately $289 million.

In March 2018, the Massachusetts EDCs terminated contract negotiations with and conditional selection of Northern Pass under the Massachusetts Clean Energy RFP, and the New Hampshire Site Evaluation Committee ("NHSEC") issued a written decision denying Northern Pass’ siting application. NPT reviewed the written decision and filed a motion for rehearing with the NHSEC on April 27, 2018. The NHSEC denial of Northern Pass' siting application caused us to review the recoverability of our Northern Pass project costs. In this recoverability review, we estimated undiscounted expected project cash flows and compared the result to our estimated project costs to determine whether the recorded amount is recoverable. Our undiscounted cash flows were substantially in excess of our estimated project costs. We completed this analysis and concluded that our project costs are recoverable based on our expectation that the Northern Pass project remains probable of being placed in service.


14


Consistent with Eversource’s and HQ’s long-term relationship to bring clean energy into New England, Eversource and HQ remain committed to Northern Pass and the many benefits this project will bring to our customers and the region.  If as a result of future events and changes in circumstances a new recoverability review were to conclude that our project costs are not recoverable, then we would reduce Northern Pass' project costs to the estimated fair value, which could result in most of our $289 million of capitalized project costs being written off. Such a write off could have a material adverse effect on our financial position and results of operations.

D.    Provision for Uncollectible Accounts
Eversource, including CL&P, NSTAR Electric and PSNH, presents its receivables at estimated net realizable value by maintaining a provision for uncollectible accounts.  This provision is determined based upon a variety of judgments and factors, including the application of an estimated uncollectible percentage to each receivable aging category.  The estimate is based upon historical collection and write-off experience and management's assessment of collectability from customers.  Management continuously assesses the collectability of receivables and adjusts collectability estimates based on actual experience.  Receivable balances are written off against the provision for uncollectible accounts when the customer accounts are terminated and these balances are deemed to be uncollectible.

The PURA allows CL&P and Yankee Gas to accelerate the recovery of accounts receivable balances attributable to qualified customers under financial or medical duress (uncollectible hardship accounts receivable) outstanding for greater than 180 days and 90 days, respectively.  The DPU allows NSTAR Electric and NSTAR Gas to recover in rates, amounts associated with certain uncollectible hardship accounts receivable. These uncollectible hardship customer account balances are included in Regulatory Assets or Other Long-Term Assets on the balance sheets.

The total provision for both uncollectible accounts and for uncollectible hardship accounts (the uncollectible hardship balance is included in the total provision) is included in Receivables, Net on the balance sheets, and is as follows:
 
Total Provision for Uncollectible Accounts
 
Uncollectible Hardship
(Millions of Dollars)
As of March 31, 2018
 
As of December 31, 2017
 
As of March 31, 2018
 
As of December 31, 2017
Eversource
$
207.7

 
$
195.7

 
$
123.7

 
$
122.5

CL&P
82.8

 
78.9

 
67.7

 
65.5

NSTAR Electric
72.6

 
69.7

 
38.5

 
40.3

PSNH
10.9

 
10.5

 
—

 
—


In accordance with new revenue accounting guidance, bad debt expense associated with customers' accounts receivable included in Operations and Maintenance expense on the statements of income is presented as follows:
 
For the Three Months Ended
(Millions of Dollars)
March 31, 2018
 
March 31, 2017
Eversource
$
19.6

 
$
15.9

CL&P
3.9

 
2.8

NSTAR Electric
7.5

 
6.5

PSNH
1.7

 
1.7


E.    Fair Value Measurements
Fair value measurement guidance is applied to derivative contracts that are not elected or designated as "normal purchases" or "normal sales" ("normal") and to the marketable securities held in trusts.  Fair value measurement guidance is also applied to valuations of the investments used to calculate the funded status of pension and PBOP plans, the nonrecurring fair value measurements of nonfinancial assets such as goodwill and AROs, and the estimated fair value of preferred stock and long-term debt.

Fair Value Hierarchy:  In measuring fair value, Eversource uses observable market data when available in order to minimize the use of unobservable inputs.  Inputs used in fair value measurements are categorized into three fair value hierarchy levels for disclosure purposes.  The entire fair value measurement is categorized based on the lowest level of input that is significant to the fair value measurement.  Eversource evaluates the classification of assets and liabilities measured at fair value on a quarterly basis, and Eversource's policy is to recognize transfers between levels of the fair value hierarchy as of the end of the reporting period.  The three levels of the fair value hierarchy are described below:

Level 1 - Inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities as of the reporting date.  Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis.  

Level 2 - Inputs are quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-derived valuations in which all significant inputs are observable.

Level 3 - Quoted market prices are not available.  Fair value is derived from valuation techniques in which one or more significant inputs or assumptions are unobservable.  Where possible, valuation techniques incorporate observable market inputs that can be validated to external sources such as industry exchanges, including prices of energy and energy-related products.  

Determination of Fair Value:  The valuation techniques and inputs used in Eversource's fair value measurements are described in Note 4, "Derivative Instruments," Note 5, "Marketable Securities," and Note 10, "Fair Value of Financial Instruments," to the financial statements.

15



F.    Other Income, Net
The components of Other Income, Net on the statements of income were as follows:
 
For the Three Months Ended
 
March 31, 2018
 
March 31, 2017
(Millions of Dollars)
Eversource
 
CL&P
 
NSTAR Electric
 
PSNH
 
Eversource
 
CL&P
 
NSTAR Electric
 
PSNH
Pension, SERP and PBOP Non-Service
  Income Components (1)
$
15.2

 
$
3.0

 
$
8.4

 
$
2.3

 
$
8.0

 
$
0.5

 
$
5.0

 
$
1.6

AFUDC Equity
9.7

 
2.8

 
3.4

 
—

 
6.7

 
2.0

 
1.9

 
—

Equity in Earnings
4.6

 
—

 
—

 
—

 
4.6

 
—

 
0.1

 
—

Investment Income/(Loss)
0.7

 
(0.1
)
 
0.6

 
—

 
0.7

 
(0.3
)
 
1.2

 
0.7

Interest Income
3.5

 
0.9

 
0.2

 
2.4

 
1.6

 
1.1

 
0.1

 
0.5

Other
0.1

 
—

 
—

 
—

 
—

 
—

 
—

 
—

Total Other Income, Net (1)
$
33.8

 
$
6.6

 
$
12.6

 
$
4.7

 
$
21.6

 
$
3.3

 
$
8.3

 
$
2.8


(1) 
As a result of the adoption of new accounting guidance, the non-service related components of pension, SERP and PBOP benefit costs are presented as non-operating income and recorded in Other Income, Net on the statements of income. The 2017 amounts, which were previously presented within Operations and Maintenance expense on the statements of income, have been retrospectively presented to Other Income, Net for the three months ended March 31, 2017. Eversource elected the practical expedient in the accounting guidance that allows the Company to use the amounts disclosed in its Pension Benefits and Postretirement Benefits Other Than Pension footnote for the prior period presentations as the estimation basis for applying the retrospective presentation requirements.

G.    Other Taxes
Eversource's companies that serve customers in Connecticut collect gross receipts taxes levied by the state of Connecticut from their customers. These gross receipts taxes are shown separately with collections in Operating Revenues and with payments in Taxes Other Than Income Taxes on the statements of income as follows:
 
For the Three Months Ended
(Millions of Dollars)
March 31, 2018
 
March 31, 2017
Eversource
$
43.4

 
$
42.2

CL&P
35.6

 
33.9


As agents for state and local governments, Eversource's companies that serve customers in Connecticut and Massachusetts collect certain sales taxes that are recorded on a net basis with no impact on the statements of income.   

Separately from the amounts above are $12.7 million of expense recorded as Taxes Other than Income Taxes in the first quarter of 2018 related to the future remittance of energy efficiency funds collected from customers in Operating Revenues to the State of Connecticut. These amounts are shown separately with collections in Operating Revenues and expenses in Taxes Other than Income Taxes on the Eversource and CL&P statements of income.  

H.    Supplemental Cash Flow Information
Non-cash investing activities include plant additions included in Accounts Payable as follows:
(Millions of Dollars)
As of March 31, 2018
 
As of March 31, 2017
Eversource
$
274.4

 
$
220.5

CL&P
117.7

 
104.2

NSTAR Electric
59.5

 
49.4

PSNH
36.0

 
28.7



16


The following table reconciles cash and cash equivalents as reported on the balance sheets to the cash, cash equivalents, and restricted cash as reported on the statements of cash flows:
 
As of March 31, 2018
 
As of December 31, 2017
(Millions of Dollars)
Eversource
 
CL&P
 
NSTAR Electric
 
PSNH
 
Eversource
 
CL&P
 
NSTAR Electric
 
PSNH
Cash and Cash Equivalents as reported on the Balance Sheets
$
303.8

 
$
240.2

 
$
9.5

 
$
2.9

 
$
38.2

 
$
6.0

 
$
1.8

 
$
0.9

Restricted cash included in:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Prepayments and Other Current Assets
35.5

 
3.1

 
12.9

 
11.6

 
24.4

 
3.1

 
12.8

 
0.5

Marketable Securities
23.3

 
0.5

 
0.1

 
0.8

 
23.3

 
0.5

 
0.1

 
0.8

Cash, Cash Equivalents, and Restricted Cash reported on the Statements of Cash Flows
$
362.6

 
$
243.8

 
$
22.5

 
$
15.3

 
$
85.9

 
$
9.6

 
$
14.7

 
$
2.2


Restricted cash included in Prepayments and Other Current Assets, shown above, primarily represents required ISO-NE cash deposits. Restricted cash included in Marketable Securities, shown above, represents money market funds held in trusts to fund certain non-qualified executive benefits and restricted trusts to fund CYAPC and YAEC's spent nuclear fuel removal obligations of their nuclear fuel storage facilities.

2.    REGULATORY ACCOUNTING

Eversource's utility companies are subject to rate regulation that is based on cost recovery and meets the criteria for application of accounting guidance for rate-regulated operations, which considers the effect of regulation on the timing of the recognition of certain revenues and expenses. The regulated companies' financial statements reflect the effects of the rate-making process.  The rates charged to the customers of Eversource's regulated companies are designed to collect each company's costs to provide service, including a return on investment.  

Management believes it is probable that each of the regulated companies will recover its respective investments in long-lived assets, including regulatory assets.  If management were to determine that it could no longer apply the accounting guidance applicable to rate-regulated enterprises to any of the regulated companies' operations, or if management could not conclude it is probable that costs would be recovered from customers in future rates, the costs would be charged to net income in the period in which the determination is made.

Regulatory Assets:  The components of regulatory assets were as follows:
Eversource
As of March 31, 2018
 
As of December 31, 2017
(Millions of Dollars)
 
Benefit Costs
$
2,033.5

 
$
2,068.8

Income Taxes, Net
727.1

 
768.9

Deferred Costs from Generation Asset Sale
539.6

 
516.1

Storm Restoration Costs
544.4

 
404.8

Regulatory Tracker Mechanisms
461.1

 
509.9

Derivative Liabilities
388.0

 
367.2

Goodwill-related
361.0

 
365.2

Asset Retirement Obligations
88.9

 
101.0

Other Regulatory Assets
195.1

 
137.4

Total Regulatory Assets
5,338.7

 
5,239.3

Less:  Current Portion
683.2

 
741.9

Total Long-Term Regulatory Assets
$
4,655.5

 
$
4,497.4

 
As of March 31, 2018
 
As of December 31, 2017
(Millions of Dollars)
CL&P
 
NSTAR
Electric
 
PSNH
 
CL&P
 
NSTAR
Electric
 
PSNH
Benefit Costs
$
460.6

 
$
549.9

 
$
208.6

 
$
469.2

 
$
560.7

 
$
212.3

Income Taxes, Net
451.8

 
115.6

 
20.5

 
453.8

 
113.2

 
21.7

Deferred Costs from Generation Asset Sale
—

 
—

 
539.6

 
—

 
—

 
516.1

Storm Restoration Costs
254.4

 
246.4

 
43.6

 
216.7

 
146.6

 
41.5

Regulatory Tracker Mechanisms
118.0

 
221.4

 
107.7

 
85.3

 
273.0

 
116.4

Derivative Liabilities
386.5

 
—

 
—

 
362.3

 
—

 
—

Goodwill-related
—

 
310.0

 
—

 
—

 
313.6

 
—

Asset Retirement Obligations
30.8

 
39.8

 
3.4

 
30.3

 
39.0

 
17.0

Other Regulatory Assets
27.2

 
81.2

 
15.3

 
27.6

 
78.4

 
15.8

Total Regulatory Assets
1,729.3


1,564.3


938.7


1,645.2


1,524.5


940.8

Less:  Current Portion
229.7

 
277.0

 
122.5

 
200.3

 
333.9

 
130.1

Total Long-Term Regulatory Assets
$
1,499.6


$
1,287.3


$
816.2


$
1,444.9


$
1,190.6