SHARE-BASED PAYMENTS

12 Months Ended

Dec. 31, 2012

Notes To Consolidated Financial Statements [Abstract]

Shareholders' Equity and Share-based Payments [Text Block]

C.       Employee Stock Ownership Plan

NU maintains an ESOP for purposes of allocating shares to employees participating in the NUSCO 401(k) Savings Plan. Allocations of NU common shares were made from NU treasury shares to satisfy the NUSCO 401(k) Savings Plan obligation to provide a portion of the matching contribution in NU common shares.

For treasury shares used to satisfy the 401(k) Savings Plan matching contributions, compensation expense is recognized equal to the fair value of shares that have been allocated to participants. Any difference between the fair value and the average cost of the allocated treasury shares is charged or credited to Capital Surplus, Paid In. For the years ended December 31, 2012, 2011 and 2010, NU recognized $8.9million, $8.8 million and $8.5 million, respectively, of expense related to the ESOP.

D.       Share-Based Payments

Share-based compensation awards are recorded using the fair value-based method at the date of grant. NU, CL&P, NSTAR Electric, PSNH and WMECO record compensation cost related to these awards, as applicable, for shares issued or sold to their respective employees and officers, as well as the allocation of costs associated with shares issued or sold to NU's service companies' employees and officers that support CL&P, NSTAR Electric, PSNH and WMECO.

Upon consummation of the merger with NSTAR, the NSTAR 1997 Share Incentive Plan and the NSTAR 2007 Long-Term Incentive Plan were assumed by NU. Share-based awards granted under the NSTAR Plans and held by NSTAR employees and officers were generally converted into outstanding NU share-based compensation awards with an estimated fair value of $53.2 million. Refer to Note2, "Merger of NU and NSTAR," for further information regarding the merger transaction. Specifically, as of the merger closing, and as adjusted by the exchange ratio, (1) NU converted outstanding NSTAR stock options into 2,664,894 NU stock options valued at $30.5 million, (2) NU converted NSTAR deferred shares and NSTAR performance shares into 421,775 NU RSU's valued at $15.5 million, and (3) NU converted NSTAR RSU retention awards into 195,619 NU RSU retention awards valued at $7.2 million.

NU Incentive Plan: NU maintains long-term equity-based incentive plans under the NU Incentive Plan in which NU, CL&P, PSNH and WMECO employees, officers and board members are entitled to participate. The NU Incentive Plan was approved in 2007, and authorized NU to grant up to 4,500,000 new shares for various types of awards, including RSUs and performance shares, to eligible employees, officers, and board members. As of December 31, 2012 and 2011, NU had 2,502,512and 2,685,615common shares, respectively, available for issuance under the NU Incentive Plan. In addition to the NU Incentive Plan, NU maintains an ESPP for eligible employees.

NSTAR Incentive Plans: Awards may continue to be granted following the merger under the NSTAR 2007 Long-Term Incentive Plan; however, no additional awards will be granted under the NSTAR 1997 Share Incentive Plan. The aggregate number of common shares initially authorized for issuance under the NSTAR 2007 Long-Term Incentive Plan was 3,500,000. As of December 31, 2012, there were 977,922NU common shares available for issuance under the NSTAR 2007 Long-Term Incentive Plan.

NU accounts for its various share-based plans as follows:

• RSUs - NU records compensation expense, net of estimated forfeitures, on a straight-line basis over the requisite service period based upon the fair value of NU's common shares at the date of grant. The par value of RSUs is reclassified to Common Stock from APIC as RSUs become issued as common shares.
• Performance Shares - NU records compensation expense, net of estimated forfeitures, on a straight-line basis over the requisite service period. Performance shares vest based upon the extent to which Company goals are achieved. For the majority of performance shares, fair value is based upon the value of NU's common shares at the date of grant and compensation expense is recorded based upon the probable outcome of the achievement of Company targets. For the remaining performance shares, vesting is based upon the achievement of the Company's share price as compared to an index of similar equity securities. The fair value at the date of grant for these remaining performance shares was determined using a lattice model and compensation expense is recorded over the requisite service period.
• Stock Options - Stock options issued under the NSTAR Incentive Plan that were outstandingimmediately prior to the completion of the merger with NSTARconverted into fully vested options to acquire NU common shares, as adjusted by the exchange ratio. The fair value of these awards on the merger date was included in the purchase price as it represented consideration transferred in the merger. Accordingly, no compensation expense is recorded for these stock options. Additionally, no compensation expense is recorded for stock options issued under the NU Incentive Plan as these stock options were fully vested prior to January 1, 2006.
• ESPP Shares - For shares sold under the ESPP, no compensation expense is recorded, as the ESPP qualifies as a non-compensatory plan.

RSUs:NU granted RSUs under theannual Long-Term incentive programs that are subject to three-year graded vesting schedules for employees, and one-year graded vesting schedules for board members. RSUs are paid in shares, reduced by amounts sufficient to satisfy withholdings for income taxes, subsequent to vesting. A summary of RSU transactions is as follows:

			Weighted Average
	RSUs		Grant-Date
	(Units)		Fair Value
Outstanding as of January 1, 2010		1,037,912	$	24.07
Granted		258,174	$	26.03
Shares issued		(267,951)	$	25.05
Forfeited		(13,656)	$	24.26
Outstanding as of December 31, 2010		1,014,479	$	24.31
Granted		208,533	$	33.87
Shares issued		(244,782)	$	24.47
Forfeited		(18,310)	$	23.74
Outstanding as of December 31, 2011		959,920	$	26.36
Granted		614,930	$	33.04
Converted NSTAR Awards upon Merger		617,394	$	36.79
Converted from NU Performance Shares upon Merger		451,358	$	34.32
Shares issued		(363,779)	$	29.05
Forfeited		(96,504)	$	34.97
Outstanding as of December 31, 2012		2,183,319	$	31.99

As of December 31, 2012 and 2011, the number and weighted average grant-date fair value of unvested RSUs was 1,417,688 and $34.70 per share, and 403,108and $28.70per share, respectively. The number and weighted average grant-date fair value of RSUs vested during 2012 was 471,323 and $30.20per share, respectively. As of December 31, 2012, 765,631RSUs were fully vested and an additional 1,346,804are expected to vest.

Performance Shares: NU had granted performance shares under the annual Long-Term Incentive programs that vested based upon the extent to which the Company achieved targets at the end of three-year performance measurement periods. Performance shares are paid in shares, after the performance measurement period. A summary of performance share transactions is as follows:

	Performance		Weighted Average
	Shares		Grant-Date
	(Units)		Fair Value
Outstanding as of January 1, 2010		99,086	$	23.93
Granted		149,520	$	25.24
Shares issued		-	$	-
Forfeited		(47)	$	23.96
Outstanding as of December 31, 2010		248,559	$	24.72
Granted		244,870	$	33.76
Shares issued		-	$	-
Forfeited		(10,296)	$	30.47
Outstanding as of December 31, 2011		483,133	$	29.18
Granted		225,935	$	35.09
Converted to RSUs upon Merger		(451,358)	$	34.32
Shares issued		(106,773)	$	24.52
Forfeited		-	$	-
Outstanding as of December 31, 2012		150,937	$	25.04

Upon closing of the merger with NSTAR, 451,358 performance shares under the NU 2011 and 2012 Long-Term Incentive Programs converted to RSUs according to the terms of these programs. The remaining performance shares were measured based upon a modified performance period through the date of the merger, in accordance with the terms of the NU 2010 Incentive Program, with distribution in 2013.

The total compensation cost and associated future income tax benefit recognized by NU, CL&P, NSTAR Electric, PSNH and WMECO for share-based compensation awards were as follows:

NU	For the Years Ended December 31,
(Millions of Dollars)	2012		2011		2010
Compensation Cost	$	25.8	$	12.3	$	10.5
Future Income Tax Benefit		10.2		4.9		4.2

		For the Years Ended December 31,
		2012								2011								2010
(Millions of Dollars)		CL&P		NSTAR Electric(1)		PSNH		WMECO		CL&P		NSTAR Electric(1)		PSNH		WMECO		CL&P		NSTAR Electric(1)		PSNH		WMECO
Compensation Cost		$	4.8	$	7.4	$	1.8	$	1.0	$	7.1	$	7.7	$	2.5	$	1.4	$	6.2	$	6.5	$	2.1	$	1.1
Future Income Tax
	Benefit		1.9		2.9		0.7		0.4		2.8		3.0		1.0		0.6		2.5		2.6		0.9		0.4

• NSTAR Electric amounts are included in NU consolidated from the date of the merger, April 10, 2012, through December 31, 2012. NSTAR Electric amounts are not included in NU consolidated for the years ended December 31, 2011 and 2010.

As of December 31, 2012, there was $26.1million of total unrecognized compensation cost related to nonvested share-based awards for NU, $5.3million for CL&P, $10.6million for NSTAR Electric, $1.8 million for PSNH and $1.1million for WMECO. This cost is expected to be recognized ratably over a weighted-average period of 1.90 years for NU, 2.03 years for CL&P, 1.76 years for NSTAR Electric and1.84 years for PSNH and WMECO.

For the years ended December 31, 2012, 2011 and 2010, additional tax benefits totaling $8.5million, $1.3 million and $0.9million, respectively, increased cash flows from financing activities.

Stock Options:Stock options were granted under the NU and NSTAR Incentive Plans. Options currently outstanding expire ten years from the date of grant and are fully vested. The weighted average remaining contractual lives for the options outstanding as of December 31, 2012 is 4.8 years. A summary of stock option transactions is as follows:

		Weighted Average		Intrinsic Value
	Options	Exercise Price		(Millions)
Outstanding and Exercisable - January 1, 2010	225,216	$	18.96
Exercised	(112,617)	$	19.12	$	1.0
Forfeited and Cancelled	-	$	-
Outstanding and Exercisable - December 31, 2010	112,599	$	18.80
Exercised	(65,225)	$	18.81	$	1.0
Forfeited and Cancelled	-	$	-
Outstanding and Exercisable - December 31, 2011	47,374	$	18.78
Converted NSTAR Options upon Merger	2,664,894	$	23.99
Exercised	(1,166,511)	$	22.53	$	18.7
Forfeited and Cancelled	-	$	-
Outstanding and Exercisable - December 31, 2012	1,545,757	$	24.92	$	21.9

Cash received for options exercised during the year ended December 31, 2012 totaled $26.3 million. The tax benefit realized from stock options exercised totaled $7.5million for the year ended December 31, 2012.

Employee Share Purchase Plan: NU maintains an ESPP for eligible employees, which allows for NU common shares to be purchased by employees at the end of successive six-month offering periods at 95 percent of the closing market price on the last day of each six-month period. Employees are permitted to purchase shares having a value not exceeding 25 percent of their compensation as of the beginning of the offering period up to a limit of $25,000 per annum. The ESPP qualifies as a non-compensatory plan under accounting guidance for share-based payments, and no compensation expense is recorded for ESPP purchases.

During 2012, employees purchased 39,422 shares at discounted prices of $33.01and $37.89. Employees purchased 35,476 shares in 2011 at discounted prices of $31.27 and $32.30. As of December 31, 2012 and 2011, 857,280 and 896,702shares, respectively, remained available for future issuance under the ESPP.

An income tax rate of 40 percent is used to estimate the tax effect on total share-based payments determined under the fair value-based method for all awards. The Company generally settles stock option exercises and fully vested RSUs and performance shares with either the issuance of new common shares or the issuance of common shares purchased in the open market.