GOODWILL

12 Months Ended

Dec. 31, 2021

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill

GOODWILL

In a business combination, the excess of the purchase price over the estimated fair values of the assets acquired and liabilities assumed

is recognized as goodwill. Goodwill is evaluated for impairment at least annually and more frequently if indicators of impairment arise. In accordance with the accounting standards, if the fair value of a reporting unit is less than its carrying value (including goodwill), the goodwill is tested for impairment. Goodwill is not subject to amortization, however is subject to a fair value based assessment for impairment at least annually and whenever facts or circumstances indicate that there may be an impairment.  A resulting write-down, if any, would be charged to Operating Expenses.   

Eversource's reporting units for the purpose of testing goodwill are Electric Distribution, Electric Transmission, Natural Gas Distribution and Water Distribution. These reporting units are consistent with the operating segments underlying the reportable segments identified in Note 23, "Segment Information," to the financial statements.

Eversource completed the acquisition of NESC on December 1, 2021, resulting in the addition of $21.7 million of goodwill, all of which was allocated to the Water Distribution reporting unit. Eversource completed the CMA asset acquisition on October 9, 2020, resulting in the addition of $51.9 million of goodwill, which included measurement period adjustments in 2021 resulting in an additional $9.6 million of goodwill. The goodwill was allocated to the Natural Gas Distribution reporting unit. On July 31, 2020, Eversource sold its water system and treatment plant that supplies water to the towns of Hingham, Hull and North Cohasset to the town of Hingham, Massachusetts, resulting in a reduction to goodwill of $23.6 million. This goodwill was previously reflected in the Water Distribution reporting unit.

In assessing goodwill for impairment, an entity is permitted to first assess qualitatively whether it is more likely than not that goodwill impairment exists as of the annual impairment test date. A quantitative impairment test is required only if it is concluded that it is more likely than not that a reporting unit’s fair value is less than it’s carrying amount. The annual goodwill assessment included a qualitative evaluation of multiple factors that impact the fair value of the reporting units, including general, macroeconomic and market conditions, and entity-specific assumptions that affect the future cash flows of the reporting units. Key considerations include discount rates, utility sector market performance and merger transaction multiples, the Company's share price and credit ratings, analyst reports, financial performance, cost and risk factors, internal estimates and projections of future cash flows and net income, long-term strategy, the timing and outcome of rate cases, and recent regulatory and legislative proceedings.

Eversource completed its annual goodwill impairment test for the Electric Distribution, Electric Transmission, Natural Gas Distribution and Water Distribution reporting units as of October 1, 2021 and determined that no impairment existed. There were no events subsequent to October 1, 2021 that indicated impairment of goodwill.

 The following table presents goodwill by reportable segment:

(Millions of Dollars)	Electric Distribution		Electric Transmission		Natural Gas Distribution		Water Distribution		Total
Balance as of January 1, 2020	$	2,544	$	577	$	399	$	907	$	4,427
Acquisition of CMA Assets	—		—		42		—		42
Sale of Hingham water system	—		—		—		(23)		(23)
Balance as of December 31, 2020	$	2,544	$	577	$	441	$	884	$	4,446
CMA Measurement Period Adjustments	—		—		10		—		10
Acquisition of NESC	—		—		—		21		21
Balance as of December 31, 2021	$	2,544	$	577	$	451	$	905	$	4,477