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, NSTAR Gas and Eversource Gas Company of Massachusetts (natural gas utilities) and Aquarion (water utilities). Eversource provides energy delivery and/or water service to approximately 4.3 million electric, natural gas and water customers through nine regulated utilities in Connecticut, Massachusetts and New Hampshire.

On October 9, 2020, Eversource completed the acquisition of certain assets that comprised NiSource’s local natural gas distribution business in Massachusetts, which was previously doing business as Columbia Gas of Massachusetts (CMA). The natural gas distribution assets acquired from CMA were assigned to Eversource Gas Company of Massachusetts, an indirect wholly-owned subsidiary of Eversource formed in 2020. The LNG assets acquired from CMA were assigned to Hopkinton LNG Corp. The cash purchase price was $1.1 billion plus a target working capital amount, which is subject to adjustment to reflect actual working capital as of the closing date. See Note 17, "Acquisition of Assets of Columbia Gas of Massachusetts," for further information.

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 2019 Form 10-K, which was filed with the SEC on February 27, 2020. 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 September 30, 2020 and December 31, 2019, and the results of operations, comprehensive income and common shareholders' equity for the three and nine months ended September 30, 2020 and 2019, and the cash flows for the nine months ended September 30, 2020 and 2019. The results of operations and comprehensive income for the three and nine months ended September 30, 2020 and 2019 and the cash flows for the nine months ended September 30, 2020 and 2019 are not necessarily indicative of the results expected for a full year.

Eversource consolidates the operations of CYAPC and YAEC, both of which are inactive regional nuclear power companies engaged in the long-term storage of their spent nuclear fuel. Eversource consolidates CYAPC and YAEC because CL&P's, NSTAR Electric's and PSNH's combined ownership and voting interests 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, natural gas and water distribution and transmission 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.

COVID-19 has adversely affected workers and the economy and caused volatility in the financial markets. Due to the inherent uncertainty of the unprecedented and evolving situation, we continue to closely monitor how COVID-19 related developments affect Eversource. As of the date of our filing and based on available information, we have not experienced significant impacts directly related to the pandemic that have adversely affected our current operations, financial position, results of operations, and cash flows. The extent of the impact to us in the future will vary and depend in large part on the duration, scope and severity of the pandemic and the timing and extent of COVID-19 relief legislation, and the resulting impact on economic, health care and capital market conditions. The future impact will also depend on the outcome of planned proceedings before our state regulatory commissions to recover our incremental costs associated with COVID-19.

We believe that we have in place, or are developing, successful mechanisms with our state regulatory commissions that allow, or will allow, us to recover our incremental costs associated with COVID-19, which include uncollectible customer receivable expenses, while balancing the impact on our customers’ bills and our operating cash flows. See Note 1C, "Summary of Significant Accounting Policies - Allowance for Uncollectible Accounts," for discussion of our evaluation of the allowance for doubtful accounts as of September 30, 2020 in light of the COVID-19 pandemic.

An extended economic slowdown has resulted in lower demand for electricity, natural gas and/or water by our commercial and industrial customers. However, fluctuations in retail sales volumes for CL&P, NSTAR Electric, Yankee Gas, NSTAR Gas, Eversource Gas Company of Massachusetts, and our Connecticut water distribution business do not materially impact earnings due to their respective state regulatory commission-approved distribution revenue decoupling mechanisms.

Accounting Standards Issued but Not Yet Effective: In December 2019, the FASB issued Accounting Standards Update (ASU) 2019-12, Income Taxes (Topic 740) - Simplifying the Accounting for Income Taxes, which eliminates certain exceptions to the general principles of current income tax guidance in ASC 740 and simplifies and improves consistency in application of that income tax guidance through clarifications of and amendments to ASC 740. The guidance is effective in the first quarter of 2021. The ASU is not expected to have a material impact on the financial statements of Eversource, CL&P, NSTAR Electric and PSNH.

Accounting Standards Recently Adopted: On January 1, 2020, the Company adopted ASU 2016-13, Financial Instruments - Credit Losses (Topic 326), which provides a model for recognizing credit losses on financial instruments based on an estimate of current expected losses, requiring immediate recognition of credit losses expected over the life of a financial instrument. The Company determined the impacts of this standard on the allowance for credit losses on its financial instruments, primarily accounts receivable. As of January 1, 2020, the Company recorded increases to the allowance for uncollectible accounts for late fees and other receivable amounts of $1.6 million, $0.9 million, $0.2 million and $0.3 million at Eversource, CL&P, NSTAR Electric and PSNH, respectively. The impact to retained earnings, net of tax, was $1.5 million, $0.9 million, $0.2 million and $0.3 million at Eversource, CL&P, NSTAR Electric and PSNH, respectively.

The Company also adjusted the allowance for uncollectible amounts of hardship receivables and other low-income assistance programs, which are ultimately collectible in rates at specified points in time under approved regulatory mechanisms. The impact on the allowance, which was offset in other long-term assets on the balance sheets, was an increase of $22.2 million and $21.3 million at Eversource and CL&P, respectively, and a decrease of $1.5 million at NSTAR Electric. See Note 1C, “Summary of Significant Accounting Policies - Allowance for Uncollectible Accounts,” for further information.

The Company adopted ASU 2017-04, Intangibles - Goodwill and Other (Topic 350), Simplifying the Test for Goodwill Impairment as of January 1, 2020. The ASU simplified the accounting for goodwill impairment by removing a complex step in the goodwill impairment test. Under the guidance, goodwill impairment is measured as the amount by which its carrying value exceeds its fair value. The ASU is not expected to have an impact on the financial statements of Eversource.

On January 1, 2020, the Company adopted ASU 2018-15, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40) - Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract. The ASU aligned the requirements for capitalizing costs incurred to implement a cloud computing arrangement with existing internal-use software guidance. The prospective implementation of this standard did not have any impact on the financial statements of Eversource, CL&P, NSTAR Electric or PSNH for the period ending September 30, 2020.

On January 1, 2020, the Company prospectively adopted ASU 2018-13, Fair Value Measurement (Topic 820), Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement. The ASU modified fair value disclosure requirements. The standard includes new disclosure requirements for Level 3 unobservable inputs and eliminated the requirement to disclose certain information relating to transfers between levels. The modified disclosures are included in Note 1D, “Summary of Significant Accounting Policies - Fair Value Measurements,” and Note 4, “Derivative Instruments.”

Receivables, Net on the balance sheets primarily includes trade receivables from retail customers and customers related to wholesale transmission contracts, wholesale market sales, sales of RECs and property rentals. Receivables, Net also includes customer receivables for the purchase of electricity from a competitive third party supplier, the current portion of customer energy efficiency loans, property damage receivables and other miscellaneous receivables. There is no material concentration of receivables. Receivables are recorded at amortized cost, net of a credit loss provision (or allowance for uncollectible accounts).

Receivables are presented net of expected credit losses at estimated net realizable value by maintaining an allowance for uncollectible accounts. Effective January 1, 2020, the current expected credit loss (CECL) model was applied to receivables for purposes of calculating the allowance for uncollectible accounts. This model is based on expected losses and results in the recognition of estimated expected credit losses, including uncollectible amounts for both billed and unbilled revenues, over the life of the receivable at the time a receivable is recorded.

The allowance for uncollectible accounts is determined based upon a variety of judgments and factors, including the application of an estimated uncollectible percentage to each receivable aging category. Factors in determining credit loss include historical collection, write-off experience, and management's assessment of collectibility from customers, including current conditions, reasonable forecasts, and expectations of future collectibility and collection efforts. Management continuously assesses the collectibility of receivables and adjusts estimates based on actual experience and future expectations based on economic indicators, collection efforts and other factors. Management also monitors the aging analysis of receivables to determine if there are changes in the collections of accounts receivable. Receivable balances are written off against the allowance for uncollectible accounts when the customer accounts are no longer in service and these balances are deemed to be uncollectible.

As of September 30, 2020, management evaluated the adequacy of the allowance for uncollectible accounts in light of the COVID-19 pandemic and the related economic downturn. This evaluation included an analysis of collection and customer payment trends in 2020, economic conditions, flexible payment plans and financial hardship arrearage management programs being offered to customers, and the impacts of federal governmental pandemic relief programs for our customers and the expansion of unemployment benefit initiatives, which help to mitigate the potential for increasing customer account delinquencies. Additionally, management considered past economic declines and corresponding uncollectible reserves as part of the current assessment. This evaluation has shown that our operating companies have experienced an increase in aged receivables and some lower cash collections from customers because of the moratorium on disconnections and the economic slowdown resulting from the COVID-19 pandemic. Based upon the evaluation performed, for the three and nine months ended September 30, 2020, management increased the allowance for uncollectible costs incurred as a result of COVID-19 by $11.3 million and $16.5 million for Eversource, respectively ($2.8 million for CL&P for both periods, $5.1 million for NSTAR Electric for both periods, and $1.5 million for PSNH for both periods). These COVID-19 related uncollectible amounts were deferred either as incremental regulatory costs or deferred through existing regulatory tracking mechanisms that recover uncollectible energy supply costs as management believes it is probable that these costs will ultimately be recovered from customers in rates.

Management concluded that the reserve balance as of September 30, 2020 adequately reflected the collection risk and net realizable value for Eversource’s receivables. Management will continue to evaluate the adequacy of the uncollectible allowance in future reporting periods based on an ongoing assessment of accounts receivable collections, delinquency statistics, and analysis of aging-based quantitative assessments.

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. Hardship customers are protected from shut-off in certain circumstances, and historical collection experience has reflected a higher default risk as compared to the rest of the receivable population. As a result of the adoption of ASU 2016-13, management aligned the allowance for uncollectible hardship accounts across all regulatory jurisdictions, using a higher credit risk profile for this pool of trade receivables as compared to non-hardship receivables. Implementation impacts of the accounting standard on the allowance for uncollectible hardship accounts are reflected in the rollforward of the uncollectible allowance in the table below. The allowance for uncollectible hardship accounts is included in the total uncollectible allowance balance.



	Eversource									CL&P									NSTAR Electric									PSNH
(Millions of Dollars)	Hardship Accounts			Retail (Non-Hardship), Wholesale, and Other Receivables			Total Allowance			Hardship Accounts			Retail (Non-Hardship), Wholesale and Other Receivables			Total Allowance			Hardship Accounts			Retail (Non-Hardship), Wholesale, and Other Receivables			Total Allowance			Total Allowance
Three Months Ended
Beginning Balance	$	175.5		$	94.5		$	270.0		$	116.3		$	20.4		$	136.7		$	34.6		$	34.1		$	68.7		$	11.8
Uncollectible Expense ⁽¹⁾	—			10.5			10.5			—			3.8			3.8			—			4.5			4.5			0.8
Uncollectible Costs Deferred ⁽²⁾	10.1			20.4			30.5			11.2			4.9			16.1			(1.3		)	10.4			9.1			3.2
Write-Offs	(7.3		)	(11.8		)	(19.1		)	(2.6		)	(4.6		)	(7.2		)	(0.2		)	(6.3		)	(6.5		)	(2.0		)
Recoveries Collected	0.4			2.7			3.1			0.3			1.1			1.4			—			1.0			1.0			0.2
Ending Balance	$	178.7		$	116.3		$	295.0		$	125.2		$	25.6		$	150.8		$	33.1		$	43.7		$	76.8		$	14.0

Nine Months Ended
Beginning Balance	$	143.3		$	81.5		$	224.8		$	80.1		$	17.2		$	97.3		$	43.9		$	31.5		$	75.4		$	10.5
ASU 2016-13 Implementation Impact on January 1, 2020	21.6			2.2			23.8			21.3			0.9			22.2			(1.6		)	0.3			(1.3		)	0.3
Uncollectible Expense ⁽¹⁾	—			31.1			31.1			—			10.0			10.0			—			11.3			11.3			2.1
Uncollectible Costs Deferred ⁽²⁾	24.9			41.5			66.4			32.7			8.3			41.0			(8.4		)	17.3			8.9			5.6
Write-Offs	(12.3		)	(49.3		)	(61.6		)	(10.0		)	(14.0		)	(24.0		)	(0.8		)	(20.5		)	(21.3		)	(5.0		)
Recoveries Collected	1.2			9.3			10.5			1.1			3.2			4.3			—			3.8			3.8			0.5
Ending Balance	$	178.7		$	116.3		$	295.0		$	125.2		$	25.6		$	150.8		$	33.1		$	43.7		$	76.8		$	14.0

⁽¹⁾Uncollectible expense associated with customer and other accounts receivable is included in Operations and Maintenance expense on the statements of income. For the three and nine months ended September 30, 2019, uncollectible expense included in Operations and Maintenance Expense was $14.9 million and $46.4 million for Eversource, $4.5 million and $12.1 million for CL&P, $7.0 million and $18.6 million for NSTAR Electric and $1.8 million and $5.0 million for PSNH, respectively.

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, long-lived assets and AROs, and the estimated fair value of preferred stock, long-term debt and RRBs.

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. The levels of the fair value hierarchy are described below:

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.

The components of Other Income, Net on the statements of income were as follows:



	For the Three Months Ended
	September 30, 2020										September 30, 2019
(Millions of Dollars)	Eversource			CL&P		NSTAR Electric			PSNH		Eversource			CL&P			NSTAR Electric			PSNH
Pension, SERP and PBOP Non-Service Income Components	$	11.0		$	0.9	$	7.2		$	1.8	$	10.1		$	1.7		$	5.6		$	1.4
AFUDC Equity	10.3			3.5		5.5			0.9		10.5			3.6			5.6			1.0
Equity in Earnings of Unconsolidated Affiliates ⁽¹⁾	3.9			—		0.1			—		6.1			—			0.2			—
Investment Income/(Loss)	1.0			1.3		(0.2		)	0.2		(2.8		)	(0.8		)	(0.9		)	(0.3		)
Interest Income	1.5			0.2		0.1			1.2		2.9			0.3			0.1			2.5
Gain on Sale of Property	1.5			—		—			—		—			—			—			—
Other	—			—		0.1			—		0.2			—			0.1			—
Total Other Income, Net	$	29.2		$	5.9	$	12.8		$	4.1	$	27.0		$	4.8		$	10.7		$	4.6

	For the Nine Months Ended
	September 30, 2020										September 30, 2019
(Millions of Dollars)	Eversource			CL&P		NSTAR Electric			PSNH		Eversource			CL&P			NSTAR Electric			PSNH
Pension, SERP and PBOP Non-Service Income Components	$	34.3		$	3.0	$	22.2		$	5.2	$	23.2		$	0.1		$	18.0		$	3.5
AFUDC Equity	31.8			11.4		15.8			3.5		34.5			9.4			14.7			2.1
Equity in Earnings of Unconsolidated Affiliates ⁽¹⁾	13.8			—		0.4			—		37.0			0.2			0.6			—
Investment (Loss)/Income	(1.5		)	—		(1.5		)	0.1		(2.3		)	0.9			(1.5		)	—
Interest Income	3.3			1.8		0.7			2.0		10.8			1.1			0.5			9.0
Gain on Sale of Property	1.8			—		0.3			—		0.2			—			—			—
Other	0.1			0.1		0.3			0.1		0.4			(0.1		)	0.2			—
Total Other Income, Net	$	83.6		$	16.3	$	38.2		$	10.9	$	103.8		$	11.6		$	32.5		$	14.6

Separate from above was an amount recorded as Taxes Other Than Income Taxes at CL&P related to the remittance to the State of Connecticut of energy efficiency funds collected from customers of $21.4 million for the nine months ended September 30, 2019. Energy efficiency funds collected from customers after July 1, 2019 are no longer subject to remittance to the State of Connecticut. This amount was recorded separately, with collections in Operating Revenues and with payments in Taxes Other Than Income Taxes on the Eversource and CL&P statements of income.

The following table reconciles cash and cash equivalents as reported on the balance sheets to the cash, cash equivalents and restricted cash balance as reported on the statements of cash flows:



	As of September 30, 2020								As of December 31, 2019
(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	$	730.0	$	8.2	$	0.1	$	0.8	$	15.4	$	—	$	0.1	$	0.4
Restricted cash included in:
Special Deposits	51.3		8.6		12.2		19.1		52.5		4.6		6.2		32.5
Marketable Securities	45.6		0.4		0.1		0.6		46.0		0.4		—		0.6
Other Long-Term Assets	2.1		—		—		2.1		3.2		—		—		3.2
Cash, Cash Equivalents and Restricted Cash as reported on the Statements of Cash Flows	$	829.0	$	17.2	$	12.4	$	22.6	$	117.1	$	5.0	$	6.3	$	36.7

Special Deposits represent cash collections related to the PSNH RRB customer charges that are held in trust, required ISO-NE cash deposits, and CYAPC and YAEC cash balances. Special Deposits are included in Current Assets on the balance sheets. Restricted cash included in Marketable Securities 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 storage obligations.