Derivative Instruments

3 Months Ended

Mar. 31, 2012

Derivative Instruments [Abstract]

Derivative Instruments

Note B. Derivative Instruments

Energy Contracts

NSTAR Electric has determined that the majority of its electricity supply contracts qualify for, and NSTAR Electric has elected, the normal purchases and sales exception (normal) under accounting principles for derivative financial instruments. As a result, these electricity supply contracts are not reflected on the accompanying Condensed Consolidated Balance Sheets.

NSTAR Electric has a long-term renewable energy contract that does not qualify as normal and is valued in a liability position of approximately $5.4 million and $3.4 million as of March 31, 2012 and December 31, 2011, respectively. NSTAR Electric has measured the difference between the cost of this contract and projected market energy costs over the life of the contract, and recorded a long-term derivative liability and a corresponding long-term regulatory asset for the value of this contract. Changes in the value of the contract have no impact on earnings, as all amounts are recovered in rates charged to customers. The fair value of the renewable energy contract deemed to be a derivative and the balance sheet position of this agreement is as follows:

(in thousands)	March 31, 2012		December 31, 2011
Renewable Energy Contract – Non-hedging instrument
Consolidated Balance Sheet Account:
Deferred credits and other liabilities: Power contract obligations	$	5,396	$	3,376
Total liability for non-hedging derivative instrument	$	5,396	$	3,376