COMMITMENTS AND CONTINGENCIES

3 Months Ended

Mar. 31, 2012

Notes To Consolidated Financial Statements [Abstract]

Commitments and Contingencies Disclosure [Text Block]

10.       COMMITMENTS AND CONTINGENCIES

A.       Environmental Matters

General: NU, CL&P, PSNH and WMECO are subject to environmental laws and regulations intended to mitigate or remove the effect of past operations and improve or maintain the quality of the environment. These laws and regulations require the removal or the remedy of the effect on the environment of the disposal or release of certain specified hazardous substances at current and former operating sites. NU, CL&P, PSNH and WMECO have an active environmental auditing and training program and believe that they are substantially in compliance with all enacted laws and regulations.

The number of environmental sites and reserves related to these sites for which remediation or long-term monitoring, preliminary site work or site assessment are being performed, as well as the portion related to MGP sites are as follows

	As of March 31, 2012						As of December 31, 2011
					Portion Related to						Portion Related to
			Reserve		MGP Sites				Reserve		MGP Sites
	Number of Sites		(in millions)		(in millions)		Number of Sites		(in millions)		(in millions)
NU		61	$	31.7	$	28.6		59	$	31.7	$	28.9
CL&P		19		3.3		1.5		18		2.9		1.5
PSNH		19		6.8		5.8		18		6.6		5.8
WMECO		10		0.3		0.1		10		0.3		0.1

MGP sites are sites that were operated several decades ago and produced manufacturing gas from coal, which resulted in certain byproducts in the environment that may pose a risk to human health and the environment.

HWP: HWP, a subsidiary of NU, continues to investigate the potential need for additional remediation at a river site in Massachusetts containing tar deposits associated with an MGP site that HWP sold to HG&E, a municipal utility, in 1902. HWP shares responsibility for site remediation with HG&E and has conducted substantial investigative and remediation activities. The cumulative expense recorded to the reserve for this site since 1994 through March 31, 2012 was $19.5million, of which $17.2million had been spent, leaving $2.3million in the reserve as of March 31, 2012. There were no charges to the reserve for the three months ended March 31, 2012 or 2011. HWP's share of the costs related to this site is not recoverable from customers.

The $2.3 million reserve balance as of March 31, 2012 represents estimated costs that HWP considers probable over the remaining life of the project, including testing and related costs in the near term and field activities to be agreed upon with the MA DEP, further studies and long-term monitoring that are expected to be required by the MA DEP, and certain soft tar remediation activities. Various factors could affect management's estimates and require an increase to the reserve, which would be reflected as a charge to Net Income. Although a material increase to the reserve is not presently anticipated, management cannot reasonably estimate potential additional investigation or remediation costs because these costs would depend on, among other things, the nature, extent and timing of additional investigation and remediation that may be required by the MA DEP.

B.       Guarantees and Indemnifications

NU parent provides credit assurances on behalf of its subsidiaries, including CL&P, PSNH and WMECO, in the form of guarantees and LOCs in the normal course of business.

NU provided guarantees and various indemnifications on behalf of external parties as a result of the sales of former subsidiaries of NU Enterprises, with maximum exposures either not specified or not material.

NU also issued a guaranty for the benefit of Hydro Renewable Energy under which, beginning at the time the Northern Pass Transmission line goes into commercial operation, NU will guarantee the financial obligations of NPT under the TSA in an amount not to exceed $18.8 million. NU's obligations under the guaranty expire upon the full, final and indefeasible payment of the guaranteed obligations.

Management does not anticipate a material impact to Net Income to result from these various guarantees and indemnifications.

The following table summarizes NU's guarantees of its subsidiaries, including CL&P, PSNH and WMECO, as of March 31,

		Maximum
		Exposure
Subsidiary	Description	(in millions)			Expiration Dates
Various	Surety Bonds and Performance Guarantees	$	22.8		April 2012 - April 2013 (1)
Various	Letters of Credit	$	19.9		June 2012 - December 2012
NUSCO and RRR	Lease Payments for Vehicles and Real Estate	$	22.1		2019 and 2024
NU Enterprises	Surety Bonds, Insurance Bonds and Performance Guarantees	$	121.4	(2)	(2)

(1)       Surety bond expiration dates reflect bond termination dates, the majority of which will be renewed or extended.

(2)       The maximum exposure includes $50.4million related to performance guarantees on wholesale marketing purchase contracts, which expire in 2013. The maximum exposure also includes $14million related to a performance guarantee for which no maximum exposure is specified in the agreement. The maximum exposure was calculated as of March 31,2012based on limits of the liability contained in the underlying service contract and assumes that NU Enterprises will perform under that contract through its expiration in 2020. Also included in the maximum exposure is $1.2million related to insurance bonds with no expiration date that are billed annually on their anniversary date. The remaining $55.8million of maximum exposure relates to surety bonds covering ongoing projects, which expire upon project completion.

CL&P, PSNH and WMECO do not guarantee the performance of third parties.

Many of the underlying contracts that NU parent guarantees, as well as certain surety bonds, contain credit ratings triggers that would require NU parent to post collateral in the event that the unsecured debt credit ratings of NU are downgraded below investment grade.

C.        Exposure Regarding Complaint on FERC Base ROE

On September 30, 2011, several New England state attorneys general, state regulatory commissions, consumer advocates and other parties filed a joint complaint with the FERC under Sections 206 and 306 of the Federal Power Act alleging that the base ROE used in calculating formula rates for transmission service under the ISO-NE Open Access Transmission Tariff by New England transmission owners, including CL&P, NSTAR Electric, PSNH and WMECO, is unjust and unreasonable. The complainants asserted that the current 11.14 percent rate, which became effective in 2006, is excessive due to changes in the capital markets and are seeking an order to reduce the rate to 9.2 percent, effective September 30, 2011. In response, the New England transmission owners filed testimony and analysis based on standard FERC methodology and precedent justifying a base ROE of approximately 11.2 percent, thus demonstrating that the base ROE of 11.14 percent remained just and reasonable.

On May 3, 2012, the FERC issued an order establishing hearing and settlement procedures for the complaint. In the order, FERC encouraged the parties to reach a settlement of the dispute before hearings commence. One of the commissioners dissented, stating that the complaint should have been rejected based on the record and FERC precedent. The FERC indicated that if a settlement was not reached, it would expect to render a final decision in the third quarter of 2013 with changes, if any, effective October 1, 2011. Management cannot at this time predict what ROE will ultimately be established or its impact on CL&P's, NSTAR Electric's, PSNH's, or WMECO's respective financial position, results of operations or cash flows.