As of December 31, 2014, NUSCO sponsored two defined benefit retirement plans that covered eligible employees, including employees of CL&P, NSTAR Electric, PSNH and WMECO (NUSCO Pension Plan and NSTAR Pension Plan). Effective January 1, 2015, the two plans were merged into one plan, sponsored by NUSCO. The NUSCO and NSTAR Pension Plans are subject to the provisions of ERISA, as amended by the PPA of 2006. NU's policy is to annually fund the Pension Plans in an amount at least equal to an amount that will satisfy federal requirements. In addition, NU maintains non-qualified defined benefit retirement plans sponsored by NUSCO (herein collectively referred to as the SERP Plans), which provide benefits in excess of Internal Revenue Code limitations to eligible current and retired participants.

As of December 31, 2014, NUSCO also sponsored defined benefit postretirement plans that provide certain retiree benefits, primarily medical, dental and life insurance, to retiring employees that meet certain age and service eligibility requirements (NUSCO PBOP Plans and NSTAR PBOP Plan). Effective January 1, 2015, the plans were merged into one plan, sponsored by NUSCO. Under certain circumstances, eligible retirees are required to contribute to the costs of postretirement benefits. The benefits provided under the PBOP Plans are not vested and the Company has the right to modify any benefit provision subject to applicable laws at that time.

Because the Regulated companies recover the retiree benefit costs from customers through rates, regulatory assets are recorded in lieu of an adjustment to Accumulated Other Comprehensive Income/(Loss) to record the funded status of the Pension, SERP and PBOP Plans. Regulatory accounting was also applied to the portions of the NUSCO costs that support the Regulated companies, as these costs are also recovered from customers. Adjustments to the Pension and PBOP funded status for the unregulated companies are recorded on an after-tax basis to Accumulated Other Comprehensive Income/(Loss). For further information, see Note 2, "Regulatory Accounting," and Note 14, "Accumulated Other Comprehensive Income/(Loss)," to the financial statements. The SERP Plans do not have plan assets.

For the years ended December 31, 2014 and 2013, the expected return on plan assets for the NUSCO Pension and PBOP Plans was calculated by applying the assumed rate of return to a four-year rolling average of plan asset fair values. This calculation recognized investment gains or losses over a four-year period from the years in which they occurred. Investment gains or losses for this purpose are the difference between the calculated expected return and the actual return. As investment gains and losses are reflected in the average plan asset fair values, they are subject to amortization with other unrecognized actuarial gains or losses. For the NSTAR Pension and PBOP Plans, the entire difference between the actual return and calculated expected return on plan assets is reflected as a component of unrecognized actuarial gain or loss. Unrecognized actuarial gains or losses are amortized as a component of Pension and PBOP expense over the estimated average future employee service period.

Pension and SERP Plans: As of December 31, 2013, the funded status of the NSTAR Pension Plan was recorded on NSTAR Electric's balance sheet, while the total SERP obligation was recorded on NSTAR Electric & Gas' balance sheet. As of December 31, 2013, all NSTAR employees were employed by NSTAR Electric & Gas. On January 1, 2014, NSTAR Electric & Gas was merged into NUSCO (service company merger) and, concurrently, all employees were transferred to the company they predominantly provide services for: NUSCO, NSTAR Electric or NSTAR Gas. As a result of the employee transfers, the pension and SERP assets and liabilities were attributed by participant and transferred to the applicable company's balance sheets. This change had no impact on the income statement or net assets of NSTAR Electric or NU. For the year ended December 31, 2014, the NUSCO and NSTAR pension and SERP plans are accounted for under the multiple-employer approach, with each company's balance sheet reflecting its share of the funded status of the plans. The following tables provide information on the Pension and SERP Plan benefit obligations, fair values of Pension Plan assets, and funded status:

	Pension and SERP
NU	As of December 31,
(Millions of Dollars)	2014		2013
Change in Benefit Obligation
Benefit Obligation as of Beginning of Year	$	(4,676.5)	$	(5,022.8)
Service Cost		(79.9)		(102.3)
Interest Cost		(225.7)		(206.7)
Actuarial Gain/(Loss)		(739.6)		433.6
Benefits Paid - Pension		230.3		216.6
Benefits Paid - SERP		5.2		5.1
Benefit Obligation as of End of Year	$	(5,486.2)	$	(4,676.5)
Change in Pension Plan Assets
Fair Value of Plan Assets as of Beginning of Year	$	3,985.9	$	3,411.3
Employer Contributions		171.6		284.7
Actual Return on Plan Assets		199.3		506.5
Benefits Paid		(230.3)		(216.6)
Fair Value of Plan Assets as of End of Year	$	4,126.5	$	3,985.9
Funded Status as of December 31^st	$	(1,359.7)	$	(690.6)

	Pension and SERP
	As of December 31, 2014								As of December 31, 2013
			NSTAR								NSTAR
(Millions of Dollars)	CL&P		Electric		PSNH		WMECO		CL&P		Electric ⁽¹⁾		PSNH		WMECO
Change in Benefit Obligation
Benefit Obligation as of Beginning of Year	$	(1,083.4)	$	(1,353.3)	$	(529.0)	$	(223.9)	$	(1,178.0)	$	(1,430.0)	$	(576.0)	$	(243.1)
Decrease due to transfer of employees		26.4		479.9		32.2		6.2		-		-		-		-
Service Cost		(20.2)		(13.6)		(9.7)		(3.5)		(24.9)		(33.1)		(13.1)		(4.7)
Interest Cost		(50.5)		(41.3)		(23.8)		(10.3)		(48.3)		(58.0)		(23.6)		(10.0)
Actuarial Gain/(Loss)		(161.0)		(107.0)		(73.3)		(29.8)		110.7		96.6		62.4		22.4
Benefits Paid - Pension		58.3		52.4		22.8		11.9		56.6		71.2		21.1		11.5
Benefits Paid - SERP		0.3		0.3		0.1		-		0.5		-		0.2		-
Benefit Obligation as of End of Year	$	(1,230.1)	$	(982.6)	$	(580.7)	$	(249.4)	$	(1,083.4)	$	(1,353.3)	$	(529.0)	$	(223.9)
Change in Pension Plan Assets
Fair Value of Plan Assets as of Beginning of Year	$	1,016.3	$	1,235.3	$	528.6	$	240.4	$	937.6	$	1,069.1	$	386.6	$	218.5
Decrease due to transfer of employees		(26.4)		(441.4)		(32.2)		(6.2)		-		-		-		-
Employer Contributions		-		101.0		-		-		-		82.0		108.3		-
Actual Return on Plan Assets		49.2		36.5		24.8		11.7		135.3		155.4		54.8		33.4
Benefits Paid		(58.3)		(52.4)		(22.8)		(11.9)		(56.6)		(71.2)		(21.1)		(11.5)
Fair Value of Plan Assets as of End of Year	$	980.8	$	879.0	$	498.4	$	234.0	$	1,016.3	$	1,235.3	$	528.6	$	240.4
Funded Status as of December 31^st	$	(249.3)	$	(103.6)	$	(82.3)	$	(15.4)	$	(67.1)	$	(118.0)	$	(0.4)	$	16.5

During 2014, the Society of Actuaries released a series of updated mortality tables resulting from recent studies that measured mortality rates for various groups of individuals. The updated mortality tables released in 2014 increased life expectancy of plan participants by 3 to 5 years and have the effect of increasing the estimate of benefits to be provided to plan participants. The impact of this adoption on NU's funded status liability for the year ended December 31, 2014 was an increase of approximately $340 million. In addition, the decreases in the discount rates resulted in an increase on NU's funded status liability of approximately $530 million. Partially offsetting these increases are the impact of other actuarial assumptions.

As of December 31, 2013, prepaid pension assets for PSNH and WMECO were included in Other Long-Term Assets on their accompanying balance sheets. The pension and SERP benefits funded status includes the current portion of the SERP liability, which is included in Other Current Liabilities on the accompanying balance sheets. Although NU maintains marketable securities in a supplemental benefit trust, the SERP plan itself does not contain any assets. See Note 5, "Marketable Securities," to the financial statements.

The accumulated benefit obligation for the Pension and SERP Plans is as follows:

(Millions of Dollars)		NU		CL&P		NSTAR Electric ⁽¹⁾		PSNH		WMECO
2014		$	5,000.1	$	1,101.4	$	910.4	$	524.5	$	226.4
2013			4,538.8		1,058.0		1,280.6		520.1		220.6

⁽¹⁾	NSTAR Electric amounts do not include the accumulated benefit obligation for the SERP Plan as of December 31, 2013.

The following actuarial assumptions were used in calculating the Pension and SERP Plans' year end funded status:

Pension and SERP Expense: NU charges net periodic pension expense to its subsidiaries based on the actual participant demographic data for each subsidiary's participants. Benefit payments to participants and contributions are also tracked for each subsidiary. The actual investment return in the trust is allocated to each of the subsidiaries annually in proportion to the investment return expected to be earned during the year. For the years ended December 31, 2013 and 2012 (prior to the service company merger), the net periodic pension expense recorded at NSTAR Electric represented the full cost of the plan with a portion of the costs allocated to affiliated companies based on participant demographic data.

The components of net periodic benefit expense for the Pension and SERP Plans are shown below. The net periodic benefit expense and the intercompany allocations less the capitalized portion of pension is included in Operations and Maintenance on the statements of income. Capitalized pension amounts relate to employees working on capital projects and are included in Property, Plant and Equipment, Net. Intercompany allocations are not included in the CL&P, NSTAR Electric, PSNH and WMECO net periodic benefit expense amounts. Pension and SERP expense reflected in the statements of cash flows for CL&P, NSTAR Electric, PSNH and WMECO does not include the intercompany allocations and the corresponding capitalized portion, as these amounts are cash settled on a short-term basis.

	Pension and SERP
	For the Year Ended December 31, 2014
					NSTAR
(Millions of Dollars)	NU		CL&P		Electric		PSNH		WMECO
Service Cost	$	79.9	$	20.2	$	13.6	$	9.7	$	3.5
Interest Cost		225.7		50.5		41.3		23.8		10.3
Expected Return on Plan Assets		(310.8)		(75.4)		(63.0)		(38.1)		(17.9)
Actuarial Loss		128.4		33.7		23.5		11.6		6.9
Prior Service Cost		4.4		1.8		-		0.7		0.4
Total Net Periodic Benefit Expense	$	127.6	$	30.8	$	15.4	$	7.7	$	3.2
Intercompany Allocations		N/A	$	26.7	$	10.4	$	7.6	$	5.1
Capitalized Pension Expense	$	35.2	$	17.6	$	7.9	$	3.0	$	2.4

	Pension and SERP
	For the Year Ended December 31, 2013
					NSTAR
(Millions of Dollars)	NU		CL&P		Electric⁽¹⁾		PSNH		WMECO
Service Cost	$	102.3	$	24.9	$	33.1	$	13.1	$	4.7
Interest Cost		206.7		48.3		58.0		23.6		10.0
Expected Return on Plan Assets		(278.1)		(73.8)		(84.4)		(35.4)		(17.4)
Actuarial Loss		210.5		55.9		58.1		21.6		11.8
Prior Service Cost/(Credit)		4.0		1.8		(0.3)		0.7		0.4
Total Net Periodic Benefit Expense	$	245.4	$	57.1	$	64.5	$	23.6	$	9.5
Intercompany Allocations		N/A	$	44.9	$	(8.4)	$	10.5	$	8.0
Capitalized Pension Expense	$	73.2	$	28.0	$	28.9	$	7.3	$	5.2

	Pension and SERP
	For the Year Ended December 31, 2012
					NSTAR
(Millions of Dollars)	NU ⁽²⁾		CL&P		Electric⁽¹⁾		PSNH		WMECO
Service Cost	$	84.3	$	21.8	$	30.3	$	11.8	$	4.1
Interest Cost		198.3		51.2		58.9		24.4		10.5
Expected Return on Plan Assets		(220.9)		(70.6)		(65.6)		(28.2)		(16.4)
Actuarial Loss		172.4		49.6		63.1		16.2		10.7
Prior Service Cost/(Credit)		7.9		3.6		(0.6)		1.5		0.8
Total Net Periodic Benefit Expense	$	242.0	$	55.6	$	86.1	$	25.7	$	9.7
Curtailments and Settlements	$	2.2	$	-	$	-	$	-	$	-
Intercompany Allocations		N/A	$	42.8	$	(12.3)	$	10.1	$	8.1
Capitalized Pension Expense	$	70.6	$	26.8	$	30.7	$	7.9	$	5.1

The following actuarial assumptions were used to calculate Pension and SERP expense amounts:

	Pension and SERP
	For the Years Ended December 31,
	2014					2013					2012
Discount Rate	4.85	%	-	5.03	%	4.13	%	-	4.24	%	4.52	%	-	5.03	%
Expected Long-Term Rate of Return	8.25 %					8.25 %					7.30	%	-	8.25	%
Compensation/Progression Rate	3.50	%	-	4.00	%	3.50	%	-	4.00	%	3.50	%	-	4.00	%

The following is a summary of the changes in plan assets and benefit obligations recognized in Regulatory Assets and Other Comprehensive Income (OCI) as well as amounts in Regulatory Assets and OCI reclassified as net periodic benefit expense during the years presented:

	Amounts Reclassified To/From
	Regulatory Assets				OCI
	For the Years Ended December 31,
(Millions of Dollars)	2014		2013		2014		2013
Actuarial (Gains)/Losses Arising During the Year	$	797.3	$	(635.2)	$	55.9	$	(28.9)
Actuarial Losses Reclassified as Net Periodic Benefit Expense		(122.8)		(201.2)		(5.6)		(9.4)
Prior Service Cost Reclassified as Net Periodic Benefit Expense		(4.2)		(3.8)		(0.2)		(0.2)

The following is a summary of the remaining Regulatory Assets and Accumulated Other Comprehensive Loss amounts that have not been recognized as components of net periodic benefit expense as of December 31, 2014 and 2013, and the amounts that are expected to be recognized as components in 2015:

		Regulatory Assets as of				Expected		AOCI as of			Expected
	December 31,					2015	December 31,				2015
(Millions of Dollars)	2014		2013		Expense		2014		2013		Expense
Actuarial Loss	$	1,811.9	$	1,137.4	$	149.1	$	93.5	$	43.2	$	6.4
Prior Service Cost		13.2		17.4		3.5		0.8		1.0		0.2

PBOP Plans: As of December 31, 2013, the funded status of the NSTAR PBOP Plan was recorded on the NSTAR Electric & Gas balance sheet. As of December 31, 2013, all NSTAR employees were employed by NSTAR Electric & Gas. On January 1, 2014, concurrent with the service company merger, the PBOP assets and liabilities were attributed by participant and transferred to the applicable company's balance sheets. This change had no impact on the income statement or net assets of NSTAR Electric or NU. For the year ended December 31, 2014, the NUSCO and NSTAR PBOP Plans are accounted for under the multiple-employer approach, with each company's balance sheet reflecting its share of the funded status of the plans.

NU annually funds postretirement costs through tax deductible contributions to external trusts.

The following tables provide information on PBOP Plan benefit obligations, fair values of plan assets, and funded status:

	PBOP
NU	As of December 31,
(Millions of Dollars)	2014		2013
Change in Benefit Obligation
Benefit Obligation as of Beginning of Year	$	(1,038.0)	$	(1,233.3)
Service Cost		(12.5)		(16.9)
Interest Cost		(49.5)		(47.2)
Actuarial Gain/(Loss)		(95.5)		200.9
Benefits Paid		47.6		58.5
Benefit Obligation as of End of Year	$	(1,147.9)	$	(1,038.0)
Change in PBOP Plan Assets
Fair Value of Plan Assets as of Beginning of Year	$	826.5	$	709.1
Actual Return on Plan Assets		43.7		118.3
Employer Contributions		40.0		57.6
Benefits Paid		(47.6)		(58.5)
Fair Value of Plan Assets as of End of Year	$	862.6	$	826.5
Funded Status as of December 31^st	$	(285.3)	$	(211.5)

	PBOP
	As of December 31,
	2014								2013
			NSTAR
(Millions of Dollars)	CL&P		Electric		PSNH		WMECO			CL&P		PSNH		WMECO
Change in Benefit Obligation
Benefit Obligation as of Beginning of Year	$	(180.4)	$	-	$	(93.5)	$	(38.7)		$	(196.8)	$	(100.2)	$	(42.5)
Decrease/(Increase) due to transfer of employees		3.7		(395.5)		4.3		1.0			-		-		-
Service Cost		(2.2)		(3.1)		(1.3)		(0.4)			(3.4)		(2.3)		(0.7)
Interest Cost		(8.1)		(19.4)		(4.3)		(1.7)			(7.9)		(4.0)		(1.7)
Actuarial Gain/(Loss)		3.5		(68.6)		(1.1)		1.3			13.3		7.2		3.3
Benefits Paid		9.6		17.9		4.1		1.9			14.4		5.8		2.9
Benefit Obligation as of End of Year	$	(173.9)	$	(468.7)	$	(91.8)	$	(36.6)		$	(180.4)	$	(93.5)	$	(38.7)
Change in PBOP Plan Assets
Fair Value of Plan Assets as of Beginning of Year	$	151.3	$	-	$	81.8	$	35.3		$	132.2	$	69.5	$	31.0
(Decrease)/Increase due to transfer of employees		(3.2)		316.7		(3.1)		(1.0)			-		-		-
Actual Return on Plan Assets		6.3		18.4		3.8		1.6			24.8		13.4		6.0
Employer Contributions		4.2		19.3		2.5		0.4			8.7		4.7		1.2
Benefits Paid		(9.6)		(17.9)		(4.1)		(1.9)			(14.4)		(5.8)		(2.9)
Fair Value of Plan Assets as of End of Year	$	149.0	$	336.5	$	80.9	$	34.4		$	151.3	$	81.8	$	35.3
Funded Status as of December 31^st	$	(24.9)	$	(132.2)	$	(10.9)	$	(2.2)		$	(29.1)	$	(11.7)	$	(3.4)

In addition, the decreases in the discount rates resulted in an increase on NU's funded status liability of approximately $110 million. Partially offsetting these increases are the impact of other actuarial assumptions.

PBOP Expense: NU charges net periodic postretirement benefits expense to its subsidiaries based on the actual participant demographic data for each subsidiary's participants. Benefit payments to participants and contributions are also tracked for each subsidiary. The actual investment return in the trust each year is allocated to each of the subsidiaries annually in proportion to the investment return expected to be earned during the year. For the years ended December 31, 2013 and 2012 (prior to the service company merger), the net periodic postretirement expense of the NSTAR PBOP Plan allocated to NSTAR Electric was $4.6 million and $34.1 million, respectively.

The components of net periodic benefit expense for the PBOP Plans are shown below. The net periodic benefit expense and the intercompany allocations less the capitalized portion of PBOP is included in Operations and Maintenance on the statements of income. Capitalized PBOP amounts relate to employees working on capital projects and are included in Property, Plant and Equipment, Net. Intercompany allocations are not included in the CL&P, NSTAR Electric, PSNH and WMECO net periodic benefit expense amounts. PBOP expense reflected in the statements of cash flows for CL&P, NSTAR Electric, PSNH and WMECO does not include the intercompany allocations and the corresponding capitalized portion, as these amounts are cash settled on a short-term basis.

			PBOP
		For the Year Ended December 31, 2014
						NSTAR
(Millions of Dollars)		NU		CL&P		Electric		PSNH		WMECO
Service Cost		$	12.5	$	2.2	$	3.1	$	1.3	$	0.4
Interest Cost			49.5		8.1		19.4		4.3		1.7
Expected Return on Plan Assets			(63.3)		(10.5)		(25.9)		(5.4)		(2.3)
Actuarial Loss/(Gain)			12.2		4.2		(0.5)		2.2		0.5
Prior Service Credit			(2.8)		-		(1.9)		-		-
Total Net Periodic Benefit Expense/(Income)		$	8.1	$	4.0	$	(5.8)	$	2.4	$	0.3
Intercompany Allocations			N/A	$	3.8	$	0.8	$	1.0	$	0.7
Capitalized PBOP Expense/(Income)		$	1.4	$	1.8	$	(2.3)	$	0.8	$	0.2

		PBOP
		For the Year Ended December 31, 2013
(Millions of Dollars)		NU		CL&P		PSNH		WMECO
Service Cost		$	16.9	$	3.4	$	2.3	$	0.7
Interest Cost			47.2		7.9		4.0		1.7
Expected Return on Plan Assets			(55.4)		(10.1)		(5.2)		(2.3)
Actuarial Loss			26.0		7.4		3.6		1.1
Prior Service Credit			(2.1)		-		-		-
Total Net Periodic Benefit Expense		$	32.6	$	8.6	$	4.7	$	1.2
Intercompany Allocations			N/A	$	7.1	$	1.6	$	1.3
Capitalized PBOP Expense		$	8.8	$	3.9	$	1.3	$	0.6

		PBOP
		For the Year Ended December 31, 2012
(Millions of Dollars)		NU ⁽¹⁾		CL&P		PSNH		WMECO
Service Cost		$	15.7	$	3.0	$	2.0	$	0.6
Interest Cost			49.0		9.2		4.6		2.0
Expected Return on Plan Assets			(39.2)		(9.1)		(4.6)		(2.1)
Actuarial Loss			36.0		7.5		3.6		1.2
Prior Service Credit			(1.4)		-		-		-
Net Transition Obligation Cost			12.2		6.1		2.5		1.3
Total Net Periodic Benefit Expense		$	72.3	$	16.7	$	8.1	$	3.0
Intercompany Allocations			N/A	$	7.9	$	2.0	$	1.5
Capitalized PBOP Expense		$	26.6	$	8.2	$	2.3	$	1.6

⁽¹⁾	NSTAR amounts were included in NU beginning April 10, 2012.

As of December 31, 2014 and 2013, the health care cost trend rate assumption used to determine the PBOP Plans' funded status was 6.5 percent and 7 percent, respectively, subsequently decreasing to an ultimate rate of 4.5 percent in 2023. The health care cost trend rate assumption used to calculate the PBOP expense amounts was 7 percent for the year ended December 31, 2014.

Assumed health care cost trend rates have a significant effect on the amounts reported for the health care plans. The effect of changing the assumed health care cost trend rate by one percentage point for the year ended December 31, 2014 would have the following effects:

The following is a summary of the changes in plan assets and benefit obligations recognized in Regulatory Assets and OCI as well as amounts in Regulatory Assets and OCI reclassified as net periodic benefit (expense)/income during the years presented:

		Amounts Reclassified To/From
	Regulatory Assets				OCI
	For the Years Ended December 31,
(Millions of Dollars)	2014		2013		2014		2013
Actuarial Losses/(Gains) Arising During the Year	$	115.1	$	(262.0)	$	0.4	$	(1.9)
Actuarial Losses Reclassified as Net Periodic Benefit Expense		(11.6)		(24.9)		(0.6)		(1.1)
Prior Service Credit Reclassified as Net Periodic Benefit Income		2.8		2.1		-		-

The following is a summary of the remaining Regulatory Assets and Accumulated Other Comprehensive Loss amounts that have not been recognized as components of net periodic benefit expense as of December 31, 2014 and 2013, and the amounts that are expected to be recognized as components in 2015:

		Regulatory Assets as of			Expected			AOCI as of			Expected
	December 31,				2015			December 31,			2015
(Millions of Dollars)	2014		2013		Expense		2014		2013		Expense
Actuarial Loss	$	192.7	$	89.2	$	6.9	$	6.0	$	6.2	$	0.3
Prior Service Credit		(1.8)		(4.6)		(0.5)		-		-		-

Contributions: NU contributed $171.6 million to the Pension Plans in 2014, of which $101 million was contributed by NSTAR Electric. Based on the current status of the Pension Plans, NU expects to make contributions of approximately $155 million in 2015, of which $5 million will be contributed by NSTAR Electric and $1 million will be contributed by PSNH. The remaining $149 million is expected to be contributed by other NU subsidiaries, primarily NUSCO.

NU contributed $40 million to the PBOP Plans in 2014 and expects to make approximately $27 million in contributions in 2015. This amount will be funded into the 401(h) account and VEBAs up to the maximum tax-deductible level permitted.

Fair Value of Pension and PBOP Plan Assets: Pension and PBOP funds are held in external trusts. Trust assets, including accumulated earnings, must be used exclusively for Pension and PBOP payments. NU's investment strategy for its Pension and PBOP Plans is to maximize the long-term rates of return on these plans' assets within an acceptable level of risk. The investment strategy for each asset category includes a diversification of asset types, fund strategies and fund managers and establishes target asset allocations that are routinely reviewed and periodically rebalanced. PBOP assets are comprised of assets held in the PBOP Plans as well as specific assets within the defined benefit pension plan trust (401(h) assets). The investment policy and strategy of the 401(h) assets is consistent with those of the defined benefit pension plans. NU's expected long-term rates of return on Pension and PBOP Plan assets are based on target asset allocation assumptions and related expected long-term rates of return. In developing its expected long-term rate of return assumptions for the Pension and PBOP Plans, NU evaluated input from consultants, as well as long-term inflation assumptions and historical returns. For the year ended December 31, 2014, management has assumed long-term rates of return of 8.25 percent for the Pension and PBOP Plan assets. These long-term rates of return are based on the assumed rates of return for the target asset allocations as follows:

		As of December 31, 2014 and 2013
		Pension and Tax-Exempt PBOP Plans
		Target Asset Allocation	Assumed Rate of Return
Equity Securities:
	United States	24%	9%
	International	10%	9%
	Emerging Markets	6%	10%
	Private Equity	10%	13%
Debt Securities:
	Fixed Income	15%	5%
	High Yield Fixed Income	9%	7.5%
	Emerging Markets Debt	6%	7.5%
Real Estate and Other Assets		9%	7.5%
Hedge Funds		11%	7%

The Taxable PBOP Plans have a target asset allocation of 70 percent equity securities and 30 percent fixed income securities.

The following table presents, by asset category, the Pension and PBOP Plan assets recorded at fair value on a recurring basis by the level in which they are classified within the fair value hierarchy:

		NU Pension Plans
		Fair Value Measurements as of December 31,
(Millions of Dollars)		2014								2013
Asset Category:		Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Equity Securities ⁽¹⁾		$	414.7	$	1,035.0	$	292.2	$	1,741.9	$	326.8	$	1,172.1	$	255.5	$	1,754.4
Private Equity			18.8		-		367.9		386.7		96.4		-		300.3		396.7
Fixed Income ⁽²⁾			10.2		561.4		722.0		1,293.6		11.6		605.1		589.5		1,206.2
Real Estate and Other Assets			-		132.0		265.8		397.8		-		88.2		288.5		376.7
Hedge Funds			-		20.0		475.0		495.0		-		-		416.9		416.9
Total Master Trust Assets		$	443.7	$	1,748.4	$	2,122.9	$	4,315.0	$	434.8	$	1,865.4	$	1,850.7	$	4,150.9
	Less: 401(h) PBOP Assets ⁽³⁾								(188.5)								(165.0)
Total Pension Assets								$	4,126.5							$	3,985.9

		NU PBOP Plans
		Fair Value Measurements as of December 31,
(Millions of Dollars)		2014								2013
Asset Category:		Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Cash and Cash Equivalents		$	-	$	-	$	-	$	-	$	11.1	$	-	$	-	$	11.1
Equity Securities ⁽¹⁾			104.1		172.8		75.1		352.0		110.3		176.8		69.1		356.2
Private Equity			-		-		24.9		24.9		-		-		17.9		17.9
Fixed Income ⁽²⁾			16.1		110.0		78.3		204.4		-		119.7		51.5		171.2
Real Estate and Other Assets					19.4		15.0		34.4		-		14.2		33.9		48.1
Hedge Funds					-		58.4		58.4		-		-		57.0		57.0
Total		$	120.2	$	302.2	$	251.7	$	674.1	$	121.4	$	310.7	$	229.4	$	661.5
	Add: 401(h) PBOP Assets ⁽³⁾								188.5								165.0
Total PBOP Assets								$	862.6							$	826.5

Effective January 1, 2013, the NSTAR Pension Plan assets were transferred into the NUSCO Pension Plan master trust. The NUSCO Pension Plan is entitled to approximately 66 percent of each asset category in the master trust, the NSTAR Pension Plan is entitled to approximately 30 percent of each asset category in the master trust and the 401(h) plans are entitled to approximately four percent of each asset category in the master trust. For the years ended December 31, 2014 and 2013 the NUSCO Pension Plan was entitled to $2,803.6 million and $2,750.4 million respectively and the NSTAR Pension Plan was entitled to $1,322.9 million and $1,235.3 million, respectively. Also effective January 1, 2013, the NSTAR PBOP Plan assets were transferred into a master trust with the NUSCO PBOP Plan assets and assets were allocated to each plan. For the years ended December 31, 2014 and 2013, the NUSCO PBOP Plan was entitled to $399 million and $391 million, respectively, and the NSTAR PBOP Plan was entitled to $463.6 million and $435.5 million, respectively. CL&P, PSNH and WMECO are allocated a portion of the NUSCO Pension and PBOP Plan assets. NSTAR Electric is entitled to a portion of the NSTAR Pension and PBOP Plan assets.

The Company values assets based on observable inputs when available. Equity securities, exchange traded funds and futures contracts classified as Level 1 in the fair value hierarchy are priced based on the closing price on the primary exchange as of the balance sheet date. Commingled funds included in Level 2 equity securities are recorded at the net asset value provided by the asset manager, which is based on the market prices of the underlying equity securities. Swaps are valued using pricing models that incorporate interest rates and equity and fixed income index closing prices to determine a net present value of the cash flows. Fixed income securities, such as government issued securities, corporate bonds and high yield bond funds, are included in Level 2 and are valued using pricing models, quoted prices of securities with similar characteristics or discounted cash flows. The pricing models utilize observable inputs such as recent trades for the same or similar instruments, yield curves, discount margins and bond structures. Hedge funds and investments in opportunistic fixed income funds are recorded at net asset value based on the values of the underlying assets. The assets in the hedge funds and opportunistic fixed income funds are valued using observable inputs and are classified as Level 3 within the fair value hierarchy due to redemption restrictions. Private Equity investments and Real Estate and Other Assets are valued using the net asset value provided by the partnerships, which are based on discounted cash flows of the underlying investments, real estate appraisals or public market comparables of the underlying investments. These investments are classified as Level 3 due to redemption restrictions.

Fair Value Measurements Using Significant Unobservable Inputs (Level 3): The following tables present changes in the Level 3 category of Pension and PBOP Plan assets for the years ended December 31, 2014 and 2013:

		NU Pension Plans
		Equity		Private		Fixed		Real Estate and		Hedge
(Millions of Dollars)		Securities		Equity		Income		Other Assets		Funds		Total
Balance as of January 1, 2013		$	322.7	$	267.9	$	315.1	$	235.4	$	418.9	$	1,560.0
Transfer Between Categories			-		-		32.5		-		(32.5)		-
Actual Return/(Loss) on Plan Assets:
	Relating to Assets Still Held as of Year End		20.6		15.4		55.3		12.9		33.4		137.6
	Relating to Assets Distributed During the Year		12.2		13.7		(1.0)		6.2		-		31.1
Purchases, Sales and Settlements			(100.0)		3.3		187.6		34.0		(2.9)		122.0
Balance as of December 31, 2013		$	255.5	$	300.3	$	589.5	$	288.5	$	416.9	$	1,850.7
Actual Return/(Loss) on Plan Assets:
	Relating to Assets Still Held as of Year End		(2.3)		14.0		45.2		(3.6)		23.5		76.8
	Relating to Assets Distributed During the Year		-		13.9		(6.2)		28.3		(15.2)		20.8
Purchases, Sales and Settlements			39.0		39.7		93.5		(47.4)		49.8		174.6
Balance as of December 31, 2014		$	292.2	$	367.9	$	722.0	$	265.8	$	475.0	$	2,122.9

		NU PBOP Plans
		Equity		Private		Fixed		Real Estate and		Hedge
(Millions of Dollars)		Securities		Equity		Income		Other Assets		Funds		Total
Balance as of January 1, 2013		$	36.3	$	11.3	$	32.1	$	26.7	$	39.6	$	146.0
Actual Return/(Loss) on Plan Assets:
	Relating to Assets Still Held as of Year End		20.8		1.5		4.1		3.9		5.4		35.7
	Relating to Assets Distributed During the Year		-		0.2		-		(0.1)		-		0.1
Purchases, Sales and Settlements			12.0		4.9		15.3		3.4		12.0		47.6
Balance as of December 31, 2013		$	69.1	$	17.9	$	51.5	$	33.9	$	57.0	$	229.4
Actual Return/(Loss) on Plan Assets:
	Relating to Assets Still Held as of Year End		6.0		1.3		1.9		(2.8)		1.4		7.8
	Relating to Assets Distributed During the Year		-		0.1		-		(2.2)		-		(2.1)
Purchases, Sales and Settlements			-		5.6		24.9		(13.9)		-		16.6
Balance as of December 31, 2014		$	75.1	$	24.9	$	78.3	$	15.0	$	58.4	$	251.7