REGULATORY ACCOUNTING

6 Months Ended

Jun. 30, 2012

Notes To Consolidated Financial Statements [Abstract]

Public Utilities Disclosure [Text Block]

3. REGULATORY ACCOUNTING

On April 10, 2012, NSTAR LLC's regulated utility subsidiaries, NSTAR Electric and NSTAR Gas, became subsidiaries of NU. For NSTAR Electric, certain regulatory asset and liability balances as of December 31, 2011 have been reclassified to the current period presentation in order to align the reporting of regulatory activities subsequent to the closing of the merger. See Note F and Note C, "Regulatory Assets," and Note E and Note B, "Asset Retirement Obligations and Cost of Removal," of the NSTAR and NSTAR Electric 2011 Form 10-Ks, respectively, for further information on specific regulatory assets and liabilities.

NU's Regulated companies continue to be rate-regulated on a cost-of-service basis; therefore, the accounting policies of the Regulated companies apply GAAP applicable to rate-regulated enterprises and historically reflect the effects of the rate-making process.

Management believes it is probable that the Regulated companies will recover their respective investments in long-lived assets, including regulatory assets. If management determined that it could no longer apply the accounting guidance applicable to rate-regulated enterprises to the Regulated companies' operations, or that management could not conclude it is probable that costs would be recovered or reflected 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 are as follows:

	As of June 30, 2012		As of December 31, 2011
(Millions of Dollars)	NU		NU
Deferred Benefit Costs	$	2,427.7	$	1,360.5
Regulatory Assets Offsetting Derivative Liabilities		941.2		939.6
Goodwill⁽²⁾		547.7		-
Income Taxes, Net		502.9		425.4
Storm Cost Deferrals		363.4		356.0
Securitized Assets		364.4		101.8
Unrecovered Contractual Obligations		236.1		100.9
Power Contracts Buy Out Agreements		105.7		8.6
Regulatory Tracker Deferrals		119.2		45.9
Asset Retirement Obligations		82.4		47.5
Losses on Reacquired Debt		40.7		24.5
Deferred Environmental Remediation Costs		58.4		38.5
Other Regulatory Assets		35.8		73.6
Total Regulatory Assets	$	5,825.6	$	3,522.8
Less: Current Portion	$	624.4	$	255.1
Total Long-Term Regulatory Assets	$	5,201.2	$	3,267.7

		As of June 30, 2012								As of December 31, 2011
				NSTAR								NSTAR
(Millions of Dollars)		CL&P		Electric		PSNH		WMECO		CL&P		Electric⁽¹⁾		PSNH		WMECO
Deferred Benefit Costs		$	533.6	$	819.5	$	184.1	$	111.2	$	572.8	$	813.7	$	200.0	$	118.9
Regulatory Assets Offsetting
	Derivative Liabilities		911.0		15.8		-		13.5		932.0		3.4		-		7.3
Goodwill⁽²⁾			-		470.2		-		-		-		478.9		-		-
Income Taxes, Net			356.0		47.9		36.9		30.0		339.6		48.8		38.0		17.8
Storm Cost Deferrals			246.5		36.6		38.9		41.4		268.3		30.6		44.0		43.7
Securitized Assets			-		299.2		48.6		16.6		-		368.5		76.4		25.4
Unrecovered Contractual Obligations			72.4		26.8		-		17.4		80.9		30.8		-		20.0
Power Contracts Buy Out Agreements			-		97.9		7.8		-		-		109.5		8.6		-
Regulatory Tracker Deferrals			26.5		52.3		13.6		24.9		5.5		61.1		11.9		22.1
Asset Retirement Obligations			29.1		25.5		13.8		3.4		27.9		24.5		13.5		3.2
Losses on Reacquired Debt			13.7		16.9		8.5		0.3		13.9		18.2		9.0		0.3
Deferred Environmental Remediation
	Costs		-		-		9.9		-		-		-		9.7		-
Other Regulatory Assets			32.9		12.6		14.3		13.9		33.1		16.5		17.0		10.0
Total Regulatory Assets		$	2,221.7	$	1,921.2	$	376.4	$	272.6	$	2,274.0	$	2,004.5	$	428.1	$	268.7
Less: Current Portion		$	196.1	$	326.6	$	28.9	$	40.6	$	170.2	$	323.9	$	34.2	$	35.5
Total Long-Term Regulatory Assets		$	2,025.6	$	1,594.6	$	347.5	$	232.0	$	2,103.8	$	1,680.6	$	393.9	$	233.2

NSTAR Electric amounts are not included in NU consolidated as of December 31, 2011.
Originated from the merger that created NSTAR in 1999, recoverable in rates over 40 years.

Storm Costs: On August 1, 2012, PURA issued a final decision in the investigation of CL&P's performance related to both Tropical Storm Irene and the October 2011 snowstorm. The decision identified certain penalties that could be imposed on CL&P during its next rate case, including a reduction in allowed regulatory ROE and the disallowance of certain deferred storm restoration costs. However, PURA will consider and weigh the extent to which CL&P has taken steps in its restructuring of storm management and the establishment of new practices for execution in future storm response in determining any potential penalties. At this time, management cannot estimate the impact on CL&P's financial position, results of operations or cash flows. CL&P continues to believe that its response to these events was prudent, is consistent with industry norms, and probable that it will be able to recover its deferred costs. As of June 30, 2012, CL&P had recorded total deferred storm costs relating to Tropical Storm Irene and the October 2011 snowstorm of $283 million. The storm cost deferral regulatory asset balance also reflects a reserve of $40 million recorded in connection with the Connecticut settlement agreement. See Note 2, "Merger of NU and NSTAR," for further information.

Regulatory Costs Not Yet Approved: Additionally, the Regulated companies had $57.6 million ($5.2 million for CL&P, $23.2 million for NSTAR Electric, $23.5 million for PSNH and $2.3 million for WMECO) and $32.4 million ($5 million for CL&P, $22.4 million for PSNH and $1.6 million for WMECO) of regulatory costs as of June 30, 2012 and December 31, 2011, respectively, which were included in Other Long-Term Assets on the accompanying unaudited condensed consolidated balance sheets. For comparative purposes, NSTAR Electric had $9.5 million of such regulatory costs as of December 31, 2011. These amounts represent incurred costs that have not yet been approved for recovery by the applicable regulatory agency. Management believes it is probable that these costs will be recovered in future cost-of-service regulated rates.

Regulatory Liabilities: The components of regulatory liabilities are as follows:

	As of June 30, 2012		As of December 31, 2011
(Millions of Dollars)	NU		NU
Cost of Removal	$	454.4	$	172.2
Regulatory Tracker Deferrals		134.9		139.1
AFUDC Transmission Incentive		70.6		67.0
Overrecovered Spent Nuclear Fuel Costs and Contractual Obligations		15.4		15.4
Wholesale Transmission Overcollections		-		9.6
Other Regulatory Liabilities		80.2		30.6
Total Regulatory Liabilities	$	755.5	$	433.9
Less: Current Portion	$	203.8	$	167.8
Total Long-Term Regulatory Liabilities	$	551.7	$	266.1

		As of June 30, 2012										As of December 31, 2011
				NSTAR									NSTAR
(Millions of Dollars)		CL&P		Electric		PSNH		WMECO		CL&P			Electric⁽¹⁾		PSNH		WMECO
Cost of Removal		$	52.0	$	240.5	$	51.9	$	4.1	$	63.8		$	235.8	$	53.2	$	7.2
Regulatory Tracker Deferrals			74.6		13.6		13.8		15.3		94.4			11.7		17.3		21.3
AFUDC Transmission Incentive			57.1		4.2		-		9.3		57.7			4.3		-		9.3
Overrecovered Spent Nuclear Fuel
	Costs and Contractual Obligations		15.4		-		-		-		15.4			-		-		-
Wholesale Transmission Overcollections			8.1		-		5.3		2.5		4.5			-		2.6		9.5
Other Regulatory Liabilities⁽²⁾			11.8		48.1		5.4		1.8		11.8			29.7		5.8		2.4
Total Regulatory Liabilities		$	219.0	$	306.4	$	76.4	$	33.0	$	247.6		$	281.5	$	78.9	$	49.7
Less: Current Portion		$	88.4	$	52.6	$	23.1	$	19.4	$	108.3		$	41.6	$	24.5	$	33.1
Total Long-Term Regulatory Liabilities		$	130.6	$	253.8	$	53.3	$	13.6	$	139.3		$	239.9	$	54.4	$	16.6

NSTAR Electric amounts are not included in NU consolidated as of December 31, 2011.
Other Regulatory Liabilities include amounts that are subject to various rate reconciling mechanisms that could result in refunds to customers.