LEASES

6 Months Ended

Jun. 30, 2019

Leases [Abstract]

LEASES

LEASES

Eversource, including CL&P, NSTAR Electric and PSNH, has entered into lease agreements as a lessee for the use of land, office space, service centers, vehicles, information technology, and equipment. These lease agreements are classified as either finance or operating leases and the liability and right-of-use asset are recognized on the balance sheet at lease commencement.  Leases with an initial term of 12 months or less are not recorded on the balance sheet and are recognized as lease expense on a straight-line basis over the lease term.

Eversource determines whether or not a contract contains a lease based on whether or not it provides Eversource with the use of a specifically identified asset for a period of time, as well as both the right to direct the use of that asset and receive the significant economic benefits of the asset. Eversource has elected the practical expedient to not separate non-lease components from lease components and instead to account for both as a single lease component, with the exception of the information technology asset class where the lease and non-lease components are separated.

The provisions of Eversource, CL&P, NSTAR Electric and PSNH lease agreements contain renewal options. The renewal options range from one year to twenty years. The renewal period is included in the measurement of the lease liability if it is reasonably certain that Eversource will exercise these renewal options.

For leases entered into or modified after the January 1, 2019 implementation date, the discount rate utilized for classification and measurement purposes as of the inception date of the lease is based on each company's collateralized incremental interest rate to borrow over a comparable term for an individual lease, as the rate implicit in the lease is not determinable.

CL&P and PSNH entered into certain contracts for the purchase of energy that qualify as leases.  These contracts do not have minimum lease payments and therefore are not recognized as a lease liability on the balance sheet and are not reflected in the future minimum lease payments table below.  Expense related to these contracts are included as variable lease cost in the table below. The expense and long-term obligation for these contracts are included in the annually reported contractual obligations table in Note 12B, "Commitments and Contingencies - Long-Term Contractual Arrangements," of the Eversource 2018 Form 10-K.  

The components of lease cost, prior to amounts capitalized, are as follows:

	For the Three Months Ended June 30, 2019								For the Six Months Ended June 30, 2019
(Millions of Dollars)	Eversource		CL&P		NSTAR Electric		PSNH		Eversource		CL&P		NSTAR Electric		PSNH
Financing Lease Cost:
Amortization of Right-of-use-Assets	$	0.4	$	0.2	$	—	$	—	$	0.7	$	0.4	$	0.1	$	—
Interest on Lease Liabilities	0.3		0.1		0.2		—		0.7		0.3		0.3		—
Total Finance Lease Cost	0.7		0.3		0.2		—		1.4		0.7		0.4		—
Operating Lease Cost	2.9		0.1		0.5		—		5.9		0.1		0.9		—
Variable Lease Cost	15.7		3.1		—		12.6		31.1		6.5		—		24.6
Total Lease Cost	$	19.3	$	3.5	$	0.7	$	12.6	$	38.4	$	7.3	$	1.3	$	24.6

Operating lease cost, less the capitalized portion, is included in Operations and Maintenance (or Purchased Power, Fuel and Transmission expense for transmission segment leases) on the statements of income. Amortization of finance lease assets is included in Depreciation on the statements of income. Interest expense on finance leases is included in Interest Expense, Net on the statements of income.

Supplemental balance sheet information related to leases is as follows:

		As of June 30, 2019
(Millions of Dollars)	Balance Sheet Classification	Eversource		CL&P		NSTAR Electric		PSNH
Operating Leases:
Operating Lease Right-of-use-Assets, Net	Other Long-Term Assets	$	54.6	$	0.6	$	24.4	$	0.8
Operating Lease Liabilities
Operating Lease Liabilities - Current Portion	Other Current Liabilities	$	8.8	$	0.2	$	0.5	$	0.2
Operating Lease Liabilities - Long-Term	Other Long-Term Liabilities	45.8		0.4		23.9		0.6
Total Operating Lease Liabilities		$	54.6	$	0.6	$	24.4	$	0.8
Finance Leases:
Finance Lease Right-of-use-Assets, Net	Property, Plant and Equipment, Net	$	9.4	$	2.6	$	3.4	$	0.9
Finance Lease Liabilities
Finance Lease Liabilities - Current Portion	Other Current Liabilities	$	2.3	$	1.5	$	—	$	0.1
Finance Lease Liabilities - Long-Term	Other Long-Term Liabilities	9.3		2.3		4.4		0.8
Total Finance Lease Liabilities		$	11.6	$	3.8	$	4.4	$	0.9

The finance lease payments that NSTAR Electric will make over the next twelve months are entirely interest-related, due to escalating payments. As such, none of the finance lease payments over the next twelve months will reduce the finance lease liability.

Other information related to leases is as follows (in millions of dollars, unless otherwise noted):

	Eversource			CL&P			NSTAR Electric			PSNH
As of June 30, 2019
Weighted-Average Remaining Lease Term (Years):
Operating Leases	12			4			21			8
Financing Leases	11			2			23			9
Weighted-Average Discount Rate (Percentage):
Operating Leases	3.9		%	2.7		%	4.1		%	3.6		%
Financing Leases	4.3		%	10.5		%	2.9		%	3.5		%
For the Three Months Ended June 30, 2019
Cash Paid for Amounts Included in the Measurement of Lease Liabilities:
Operating Cash Flows from Operating Leases	$	3.0		$	0.1		$	0.5		$	—
Operating Cash Flows from Finance Leases	0.3			0.1			0.1			—
Financing Cash Flows from Finance Leases	0.5			0.4			—			—
Supplemental Non-Cash Information on Lease Liabilities:
Right-of-use-Assets Obtained in Exchange for New Operating Lease Liabilities	0.4			0.2			—			0.2
Right-of-use-Assets Obtained in Exchange for New Finance Lease Liabilities	1.3			—			—			—

	Eversource		CL&P		NSTAR Electric		PSNH
For the Six Months Ended June 30, 2019
Cash Paid for Amounts Included in the Measurement of Lease Liabilities:
Operating Cash Flows from Operating Leases	$	5.9	$	0.1	$	0.8	$	—
Operating Cash Flows from Finance Leases	0.6		0.3		0.3		—
Financing Cash Flows from Finance Leases	0.9		0.7		—		—
Supplemental Non-Cash Information on Lease Liabilities:
Right-of-use-Assets Obtained in Exchange for New Operating Lease Liabilities	1.7		0.2		—		0.2
Right-of-use-Assets Obtained in Exchange for New Finance Lease Liabilities	1.3		—		—		—

Future minimum lease payments, excluding variable costs, under long-term leases, as of June 30, 2019 are as follows:

	Operating Leases								Finance Leases
(Millions of Dollars)	Eversource		CL&P		NSTAR Electric		PSNH		Eversource		CL&P		NSTAR Electric		PSNH
July 1, 2019 through December 31, 2019	$	5.7	$	0.3	$	0.8	$	0.2	$	1.7	$	1.0	$	0.3	$	0.1
Year Ending December 31,
2020	10.3		0.2		1.6		0.2		3.4		2.0		0.5		0.1
2021	9.2		0.1		1.6		0.2		2.9		1.5		0.5		0.1
2022	7.5		—		1.6		0.1		1.5		—		0.6		0.1
2023	4.9		—		1.6		0.1		0.7		—		0.6		0.1
2024	2.9		—		1.7		—		0.7		—		0.6		0.1
Thereafter	29.2		0.1		28.9		0.2		13.2		—		12.8		0.4
Future lease payments	69.7		0.7		37.8		1.0		24.1		4.5		15.9		1.0
Less amount representing interest	15.1		0.1		13.4		0.2		12.5		0.7		11.5		0.1
Present value of future minimum lease payments	$	54.6	$	0.6	$	24.4	$	0.8	$	11.6	$	3.8	$	4.4	$	0.9

At December 31, 2018, future minimum rental payments, excluding executory costs, such as property taxes, state use taxes, insurance, and maintenance were as follows:

Operating Leases (Millions of Dollars)	Eversource		CL&P		NSTAR Electric		PSNH
2019	$	11.5	$	1.5	$	7.2	$	0.5
2020	9.8		1.4		6.0		0.4
2021	8.7		1.2		5.3		0.4
2022	7.2		1.1		4.4		0.4
2023	4.7		0.5		3.1		0.2
Thereafter	32.7		0.2		29.5		0.3
Future minimum lease payments	$	74.6	$	5.9	$	55.5	$	2.2

Capital Leases (Millions of Dollars)	Eversource		CL&P		NSTAR Electric		PSNH
2019	$	3.4	$	2.0	$	0.5	$	0.1
2020	3.4		2.0		0.5		0.1
2021	2.9		1.5		0.5		0.1
2022	1.5		—		0.6		0.1
2023	0.7		—		0.6		0.1
Thereafter	13.9		—		13.4		0.5
Future minimum lease payments	25.8		5.5		16.1		1.0
Less amount representing interest	13.8		1.0		12.4		0.1
Present value of future minimum lease payments	$	12.0	$	4.5	$	3.7	$	0.9

LEASES

LEASES

Eversource, including CL&P, NSTAR Electric and PSNH, has entered into lease agreements as a lessee for the use of land, office space, service centers, vehicles, information technology, and equipment. These lease agreements are classified as either finance or operating leases and the liability and right-of-use asset are recognized on the balance sheet at lease commencement.  Leases with an initial term of 12 months or less are not recorded on the balance sheet and are recognized as lease expense on a straight-line basis over the lease term.

Eversource determines whether or not a contract contains a lease based on whether or not it provides Eversource with the use of a specifically identified asset for a period of time, as well as both the right to direct the use of that asset and receive the significant economic benefits of the asset. Eversource has elected the practical expedient to not separate non-lease components from lease components and instead to account for both as a single lease component, with the exception of the information technology asset class where the lease and non-lease components are separated.

The provisions of Eversource, CL&P, NSTAR Electric and PSNH lease agreements contain renewal options. The renewal options range from one year to twenty years. The renewal period is included in the measurement of the lease liability if it is reasonably certain that Eversource will exercise these renewal options.

For leases entered into or modified after the January 1, 2019 implementation date, the discount rate utilized for classification and measurement purposes as of the inception date of the lease is based on each company's collateralized incremental interest rate to borrow over a comparable term for an individual lease, as the rate implicit in the lease is not determinable.

CL&P and PSNH entered into certain contracts for the purchase of energy that qualify as leases.  These contracts do not have minimum lease payments and therefore are not recognized as a lease liability on the balance sheet and are not reflected in the future minimum lease payments table below.  Expense related to these contracts are included as variable lease cost in the table below. The expense and long-term obligation for these contracts are included in the annually reported contractual obligations table in Note 12B, "Commitments and Contingencies - Long-Term Contractual Arrangements," of the Eversource 2018 Form 10-K.  

The components of lease cost, prior to amounts capitalized, are as follows:

	For the Three Months Ended June 30, 2019								For the Six Months Ended June 30, 2019
(Millions of Dollars)	Eversource		CL&P		NSTAR Electric		PSNH		Eversource		CL&P		NSTAR Electric		PSNH
Financing Lease Cost:
Amortization of Right-of-use-Assets	$	0.4	$	0.2	$	—	$	—	$	0.7	$	0.4	$	0.1	$	—
Interest on Lease Liabilities	0.3		0.1		0.2		—		0.7		0.3		0.3		—
Total Finance Lease Cost	0.7		0.3		0.2		—		1.4		0.7		0.4		—
Operating Lease Cost	2.9		0.1		0.5		—		5.9		0.1		0.9		—
Variable Lease Cost	15.7		3.1		—		12.6		31.1		6.5		—		24.6
Total Lease Cost	$	19.3	$	3.5	$	0.7	$	12.6	$	38.4	$	7.3	$	1.3	$	24.6

Operating lease cost, less the capitalized portion, is included in Operations and Maintenance (or Purchased Power, Fuel and Transmission expense for transmission segment leases) on the statements of income. Amortization of finance lease assets is included in Depreciation on the statements of income. Interest expense on finance leases is included in Interest Expense, Net on the statements of income.

Supplemental balance sheet information related to leases is as follows:

		As of June 30, 2019
(Millions of Dollars)	Balance Sheet Classification	Eversource		CL&P		NSTAR Electric		PSNH
Operating Leases:
Operating Lease Right-of-use-Assets, Net	Other Long-Term Assets	$	54.6	$	0.6	$	24.4	$	0.8
Operating Lease Liabilities
Operating Lease Liabilities - Current Portion	Other Current Liabilities	$	8.8	$	0.2	$	0.5	$	0.2
Operating Lease Liabilities - Long-Term	Other Long-Term Liabilities	45.8		0.4		23.9		0.6
Total Operating Lease Liabilities		$	54.6	$	0.6	$	24.4	$	0.8
Finance Leases:
Finance Lease Right-of-use-Assets, Net	Property, Plant and Equipment, Net	$	9.4	$	2.6	$	3.4	$	0.9
Finance Lease Liabilities
Finance Lease Liabilities - Current Portion	Other Current Liabilities	$	2.3	$	1.5	$	—	$	0.1
Finance Lease Liabilities - Long-Term	Other Long-Term Liabilities	9.3		2.3		4.4		0.8
Total Finance Lease Liabilities		$	11.6	$	3.8	$	4.4	$	0.9

The finance lease payments that NSTAR Electric will make over the next twelve months are entirely interest-related, due to escalating payments. As such, none of the finance lease payments over the next twelve months will reduce the finance lease liability.

Other information related to leases is as follows (in millions of dollars, unless otherwise noted):

	Eversource			CL&P			NSTAR Electric			PSNH
As of June 30, 2019
Weighted-Average Remaining Lease Term (Years):
Operating Leases	12			4			21			8
Financing Leases	11			2			23			9
Weighted-Average Discount Rate (Percentage):
Operating Leases	3.9		%	2.7		%	4.1		%	3.6		%
Financing Leases	4.3		%	10.5		%	2.9		%	3.5		%
For the Three Months Ended June 30, 2019
Cash Paid for Amounts Included in the Measurement of Lease Liabilities:
Operating Cash Flows from Operating Leases	$	3.0		$	0.1		$	0.5		$	—
Operating Cash Flows from Finance Leases	0.3			0.1			0.1			—
Financing Cash Flows from Finance Leases	0.5			0.4			—			—
Supplemental Non-Cash Information on Lease Liabilities:
Right-of-use-Assets Obtained in Exchange for New Operating Lease Liabilities	0.4			0.2			—			0.2
Right-of-use-Assets Obtained in Exchange for New Finance Lease Liabilities	1.3			—			—			—

	Eversource		CL&P		NSTAR Electric		PSNH
For the Six Months Ended June 30, 2019
Cash Paid for Amounts Included in the Measurement of Lease Liabilities:
Operating Cash Flows from Operating Leases	$	5.9	$	0.1	$	0.8	$	—
Operating Cash Flows from Finance Leases	0.6		0.3		0.3		—
Financing Cash Flows from Finance Leases	0.9		0.7		—		—
Supplemental Non-Cash Information on Lease Liabilities:
Right-of-use-Assets Obtained in Exchange for New Operating Lease Liabilities	1.7		0.2		—		0.2
Right-of-use-Assets Obtained in Exchange for New Finance Lease Liabilities	1.3		—		—		—

Future minimum lease payments, excluding variable costs, under long-term leases, as of June 30, 2019 are as follows:

	Operating Leases								Finance Leases
(Millions of Dollars)	Eversource		CL&P		NSTAR Electric		PSNH		Eversource		CL&P		NSTAR Electric		PSNH
July 1, 2019 through December 31, 2019	$	5.7	$	0.3	$	0.8	$	0.2	$	1.7	$	1.0	$	0.3	$	0.1
Year Ending December 31,
2020	10.3		0.2		1.6		0.2		3.4		2.0		0.5		0.1
2021	9.2		0.1		1.6		0.2		2.9		1.5		0.5		0.1
2022	7.5		—		1.6		0.1		1.5		—		0.6		0.1
2023	4.9		—		1.6		0.1		0.7		—		0.6		0.1
2024	2.9		—		1.7		—		0.7		—		0.6		0.1
Thereafter	29.2		0.1		28.9		0.2		13.2		—		12.8		0.4
Future lease payments	69.7		0.7		37.8		1.0		24.1		4.5		15.9		1.0
Less amount representing interest	15.1		0.1		13.4		0.2		12.5		0.7		11.5		0.1
Present value of future minimum lease payments	$	54.6	$	0.6	$	24.4	$	0.8	$	11.6	$	3.8	$	4.4	$	0.9

At December 31, 2018, future minimum rental payments, excluding executory costs, such as property taxes, state use taxes, insurance, and maintenance were as follows:

Operating Leases (Millions of Dollars)	Eversource		CL&P		NSTAR Electric		PSNH
2019	$	11.5	$	1.5	$	7.2	$	0.5
2020	9.8		1.4		6.0		0.4
2021	8.7		1.2		5.3		0.4
2022	7.2		1.1		4.4		0.4
2023	4.7		0.5		3.1		0.2
Thereafter	32.7		0.2		29.5		0.3
Future minimum lease payments	$	74.6	$	5.9	$	55.5	$	2.2

Capital Leases (Millions of Dollars)	Eversource		CL&P		NSTAR Electric		PSNH
2019	$	3.4	$	2.0	$	0.5	$	0.1
2020	3.4		2.0		0.5		0.1
2021	2.9		1.5		0.5		0.1
2022	1.5		—		0.6		0.1
2023	0.7		—		0.6		0.1
Thereafter	13.9		—		13.4		0.5
Future minimum lease payments	25.8		5.5		16.1		1.0
Less amount representing interest	13.8		1.0		12.4		0.1
Present value of future minimum lease payments	$	12.0	$	4.5	$	3.7	$	0.9