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REGULATORY ACCOUNTING
9 Months Ended
Sep. 30, 2011
Notes To Consolidated Financial Statements [Abstract] 
Public Utilities Disclosure [Text Block]

2.       REGULATORY ACCOUNTING

 

The Regulated companies continue to be rate-regulated on a cost-of-service basis, therefore, the accounting policies of the Regulated companies conform to 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. All material net regulatory assets are earning a return, except for the majority of deferred benefit cost assets, regulatory assets offsetting derivative liabilities, securitized regulatory assets, income tax regulatory assets and certain storm costs, all of which are not in rate base.

Regulatory Assets: The components of regulatory assets are as follows:
      
 As of September 30, 2011 As of December 31, 2010
(Millions of Dollars)NU NU
Deferred Benefit Costs$ 1,006.6 $ 1,094.2
Regulatory Assets Offsetting Derivative Liabilities  895.3   859.7
Securitized Assets  119.7   171.7
Income Taxes, Net  417.1   401.5
Unrecovered Contractual Obligations  106.9   123.2
Regulatory Tracker Deferrals  30.4   70.3
Storm Cost Deferrals  171.7   60.1
Asset Retirement Obligations   47.7   45.3
Losses on Reacquired Debt  21.8   21.5
Deferred Environmental Remediation Costs  39.0   36.8
Deferred Operation and Maintenance Costs  5.9   29.5
Other Regulatory Assets  79.5   81.5
Total Regulatory Assets$ 2,941.6 $ 2,995.3
Less: Current Portion$ 235.5 $ 238.7
Total Long-Term Regulatory Assets$ 2,706.1 $ 2,756.6

 As of September 30, 2011 As of December 31, 2010
(Millions of Dollars)CL&P PSNH WMECO CL&P PSNH WMECO
Deferred Benefit Costs$ 432.9 $ 141.4 $ 88.6 $ 471.8 $ 152.6 $ 96.0
Regulatory Assets Offsetting Derivative Liabilities  891.6   3.3   -   846.2   12.8   -
Securitized Assets  -   90.1   29.6   -   129.8   41.9
Income Taxes, Net  333.5   37.6   16.9   328.9   31.4   16.8
Unrecovered Contractual Obligations  85.4   -   21.5   97.9   -   25.3
Regulatory Tracker Deferrals  7.1   2.3   15.9   35.5   14.7   15.2
Storm Cost Deferrals  104.9   46.2   20.6   4.0   40.7   15.4
Asset Retirement Obligations   26.6   15.1   3.2   24.9   14.7   3.0
Losses on Reacquired Debt  10.9   9.2   0.3   11.2   8.4   0.4
Deferred Environmental Remediation Costs  -   9.7   -   -   9.7   -
Deferred Operation and Maintenance Costs  5.9   -   -   29.5   -   -
Other Regulatory Assets  26.6   23.9   9.9   29.0   19.6   13.1
Total Regulatory Assets$ 1,925.4 $ 378.8 $ 206.5 $ 1,878.9 $ 434.4 $ 227.1
Less: Current Portion$ 170.3 $ 20.7 $ 24.2 $ 157.5 $ 39.2 $ 19.5
Total Long-Term Regulatory Assets$ 1,755.1 $ 358.1 $ 182.3 $ 1,721.4 $ 395.2 $ 207.6

Additionally, the Regulated companies had $11.9 million ($0.9 million for CL&P, $6.3 million for PSNH and $1.1 million for WMECO) and $37.5 million ($0.6 million for CL&P, $26.5 million for PSNH and $1.9 million for WMECO) of regulatory costs as of September 30, 2011 and December 31, 2010, respectively, which were included in Other Long-Term Assets on the accompanying unaudited condensed consolidated balance sheets. These amounts represent incurred costs that have not yet been approved for recovery by the applicable regulatory agency. Management believes these costs are probable of recovery in future cost-of-service regulated rates.

 

Major Storms: On August 28, 2011, Tropical Storm Irene caused extensive damage to the NU overhead electric distribution system, particularly at CL&P. The estimated cost of restoration that was deferred for future recovery from customers and recorded as a regulatory asset as of September 30, 2011 for CL&P totaled approximately $92 million. The estimated cost of restoration is subject to change as additional cost information becomes available. CL&P is currently allowed to collect from customers $3 million per year for major storm costs. CL&P will seek recovery of the Tropical Storm Irene deferred storm costs through the appropriate regulatory recovery process. Management believes CL&P will be allowed to recover these deferred storm costs.

 

On October 29, 2011, a snowstorm delivered high winds and heavy snowfall across the NU service territory, causing significant damage to NU's distribution and transmission systems. Approximately 1.2 million NU customers were without power at the peak of the outages, with approximately 830,000 of those customers in Connecticut, approximately 240,000 of those customers in New Hampshire, and approximately 140,000 of those customers in Massachusetts. In terms of customer outages, this was the largest in CL&P's history, surpassing Tropical Storm Irene, the third largest in PSNH's history and the largest in WMECO's history. As a result of the magnitude of the damage, management anticipates the costs of restoring service will approximate or exceed those of Tropical Storm Irene. As management expects such costs to meet the criteria for recovery in Connecticut, Massachusetts, and New Hampshire, CL&P, WMECO and PSNH will seek recovery of these anticipated deferred storm costs through their applicable regulatory recovery process and as a result, these respective costs will be deferred as either a long-term regulatory asset or long-term other deferred debit at CL&P, PSNH and WMECO.

Regulatory Liabilities: The components of regulatory liabilities are as follows:
      
 As of September 30, 2011 As of December 31, 2010
(Millions of Dollars)NU NU
Cost of Removal$ 180.7 $ 194.8
Regulatory Liabilities Offsetting Derivative Assets  -   38.1
Regulatory Tracker Deferrals  152.4   95.1
AFUDC Transmission Incentive  67.2   62.1
Pension Liability - Yankee Gas Acquisition  10.6   12.5
Overrecovered Spent Nuclear Fuel Costs and Contractual Obligations  14.6   14.6
Wholesale Transmission Overcollections  10.5   13.7
Other Regulatory Liabilities  14.8   8.2
Total Regulatory Liabilities$ 450.8 $ 439.1
Less: Current Portion$ 174.6 $ 99.4
Total Long-Term Regulatory Liabilities$ 276.2 $ 339.7

  As of September 30, 2011 As of December 31, 2010
(Millions of Dollars)CL&P PSNH WMECO CL&P PSNH WMECO
Cost of Removal$ 69.6 $ 55.2 $ 7.6 $ 78.6 $ 57.3 $ 9.5
Regulatory Liabilities Offsetting                 
 Derivative Assets  -   -   -   38.1   -   -
Regulatory Tracker Deferrals  107.6   22.5   20.9   79.4   6.6   4.8
AFUDC Transmission Incentive   57.9   -   9.3   56.5   -   5.6
Overrecovered Spent Nuclear Fuel Costs and                  
 Contractual Obligations  14.6   -   -   14.6   -   -
Wholesale Transmission Overcollections  2.0   -   8.5   13.7   -   -
WMECO Provision For Rate Refunds  -   -   1.3   -   -   2.0
Other Regulatory Liabilities  6.1   4.5   2.0   1.2   3.1   1.1
Total Regulatory Liabilities$ 257.8 $ 82.2 $ 49.6 $ 282.1 $ 67.0 $ 23.0
Less: Current Portion$ 111.9 $ 25.6 $ 32.6 $ 75.7 $ 8.4 $ 8.0
Total Long-Term Regulatory Liabilities$ 145.9 $ 56.6 $ 17.0 $ 206.4 $ 58.6 $ 15.0