As of December 31, 2014, Eversource Service sponsored two defined benefit retirement plans that covered eligible employees, including, among others, employees of CL&P, NSTAR Electric, PSNH and WMECO. Effective January 1, 2015, these two pension plans were merged into one plan, sponsored by Eversource Service (Pension Plan). The Pension Plan is subject to the provisions of ERISA, as amended by the PPA of 2006. Eversource's policy is to annually fund the Pension Plan in an amount at least equal to an amount that will satisfy all federal funding requirements. In addition to the Pension Plan, Eversource maintains non-qualified defined benefit retirement plans sponsored by Eversource Service (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, Eversource Service also sponsored defined benefit postretirement plans that provided certain retiree benefits, primarily medical, dental and life insurance, to retired employees that met certain age and service eligibility requirements, including, among others, employees of CL&P, NSTAR Electric, PSNH and WMECO. Effective January 1, 2015, these postretirement plans were merged into one plan, sponsored by Eversource Service (PBOP Plan). Under certain circumstances, eligible retirees are required to contribute to the costs of postretirement benefits. The benefits provided under the PBOP Plan are not vested and the Company has the right to modify any benefit provision subject to applicable laws at that time. Eversource annually funds postretirement costs through tax deductible contributions to external trusts.

Because the Regulated companies recover the retiree benefit costs from customers through rates, regulatory assets are recorded in lieu of recording an adjustment to Accumulated Other Comprehensive Income/(Loss) for the funded status of the Pension, SERP and PBOP Plans. Regulatory accounting is also applied to the portions of the Eversource Service costs that support the Regulated companies, as these costs are also recovered from customers. Adjustments to the Pension and PBOP Plans 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.

For the year ended December 31, 2015, the difference between the actual return and calculated expected return on plan assets for the Pension and PBOP Plans are reflected as a component of unrecognized actuarial gains or losses, which are recorded in Regulatory Assets or Accumulated Other Comprehensive Income/(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: On January 1, 2014, NSTAR Electric & Gas was merged into Eversource Service (service company merger) and, concurrently, all employees were transferred to the company they predominantly provide services for: Eversource Service, NSTAR Electric or NSTAR Gas. As a result of these employee transfers, the pension and SERP assets and liabilities of NSTAR Electric & Gas were attributed by participant and transferred to the applicable operating company's balance sheets. This change had no impact on the income statement or net assets of NSTAR Electric or Eversource.

The Pension and SERP Plans are accounted for under the multiple-employer approach, with each operating company's balance sheet reflecting its share of the funded status of the plans. Although Eversource maintains marketable securities in a benefit trust, the SERP Plans do not contain any assets. For further information, see Note 5, "Marketable Securities," to the financial statements. 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
Eversource	As of December 31,
(Millions of Dollars)	2015		2014
Change in Benefit Obligation
Benefit Obligation as of Beginning of Year	$	(5,486.2)	$	(4,676.5)
Service Cost		(91.4)		(79.9)
Interest Cost		(227.0)		(225.7)
Actuarial Gain/(Loss)		331.5		(739.6)
Benefits Paid - Pension		238.5		230.3
Benefits Paid - Lump Sum		149.5		-
Benefits Paid - SERP		5.0		5.2
Benefit Obligation as of End of Year	$	(5,080.1)	$	(5,486.2)
Change in Pension Plan Assets
Fair Value of Pension Plan Assets as of Beginning of Year	$	4,126.5	$	3,985.9
Employer Contributions		154.6		171.6
Actual Return on Pension Plan Assets		12.3		199.3
Benefits Paid		(238.5)		(230.3)
Benefits Paid - Lump Sum		(149.5)		-
Fair Value of Pension Plan Assets as of End of Year	$	3,905.4	$	4,126.5
Funded Status as of December 31^st	$	(1,174.7)	$	(1,359.7)

	Pension and SERP
	As of December 31, 2015								As of December 31, 2014
			NSTAR								NSTAR
(Millions of Dollars)	CL&P		Electric		PSNH		WMECO		CL&P		Electric		PSNH		WMECO
Change in Benefit Obligation
Benefit Obligation as of Beginning of Year	$	(1,230.1)	$	(982.6)	$	(580.7)	$	(249.4)	$	(1,083.4)	$	(1,353.3)	$	(529.0)	$	(223.9)
Change due to transfer of employees		(4.6)		6.2		(1.9)		(1.3)		26.4		479.9		32.2		6.2
Service Cost		(24.7)		(14.9)		(12.1)		(4.3)		(20.2)		(13.6)		(9.7)		(3.5)
Interest Cost		(51.1)		(40.2)		(24.3)		(10.4)		(50.5)		(41.3)		(23.8)		(10.3)
Actuarial Gain/(Loss)		77.8		34.1		38.9		12.6		(161.0)		(107.0)		(73.3)		(29.8)
Benefits Paid - Pension		60.2		47.6		23.2		12.7		58.3		52.4		22.8		11.9
Benefits Paid - Lump Sum		14.5		-		9.1		2.5		-		-		-		-
Benefits Paid - SERP		0.4		0.1		0.2		-		0.3		0.3		0.1		-
Benefit Obligation as of End of Year	$	(1,157.6)	$	(949.7)	$	(547.6)	$	(237.6)	$	(1,230.1)	$	(982.6)	$	(580.7)	$	(249.4)
Change in Pension Plan Assets
Fair Value of Pension Plan Assets as of Beginning of Year	$	980.8	$	879.0	$	498.4	$	234.0	$	1,016.3	$	1,235.3	$	528.6	$	240.4
Change due to transfer of employees		4.6		(6.2)		1.9		1.3		(26.4)		(441.4)		(32.2)		(6.2)
Employer Contributions		-		5.0		1.0		-		-		101.0		-		-
Actual Return on Pension Plan Assets		2.8		2.7		1.5		0.7		49.2		36.5		24.8		11.7
Benefits Paid		(60.2)		(47.6)		(23.2)		(12.7)		(58.3)		(52.4)		(22.8)		(11.9)
Benefits Paid - Lump Sum		(14.5)		-		(9.1)		(2.5)		-		-		-		-
Fair Value of Pension Plan Assets as of End of Year	$	913.5	$	832.9	$	470.5	$	220.8	$	980.8	$	879.0	$	498.4	$	234.0
Funded Status as of December 31^st	$	(244.1)	$	(116.8)	$	(77.1)	$	(16.8)	$	(249.3)	$	(103.6)	$	(82.3)	$	(15.4)

In August 2015, Eversource made a total lump-sum payout of $149.5 million, which reduced the projected benefit obligation and Pension Plan assets by a corresponding amount. Therefore, the lump-sum payment had no impact on the net Accrued Pension Liability reflected on the Eversource, CL&P, PSNH and WMECO balance sheets as of December 31, 2015.

During 2014, the Society of Actuaries released a series of updated mortality tables resulting from studies that measured mortality rates for various groups of individuals. The updated mortality tables released in 2014 increased the life expectancy of plan participants by three to five years and had the effect of increasing the estimated benefits to be provided to plan participants. The impact of adopting the updated mortality tables on Eversource's liability as of December 31, 2014 was an increase of approximately $340 million. In 2015, a revised scale for the mortality table was released having the effect of decreasing the estimate of benefits to be provided to plan participants. The impact of the adoption of the new mortality scale resulted in a decrease of $48 million on Eversource's liability as of December 31, 2015.

The increase in the discount rate used to calculate the funded status resulted in a decrease on Eversource's liability of approximately $267 million as of December 31, 2015. Decreases in the discount rates resulted in an increase on Eversource's liability of approximately $530 million as of December 31, 2014.

The pension and SERP Plans' funded status includes the current portion of the SERP liability, which is included in Other Current Liabilities on the accompanying balance sheets.

As of December 31, 2015 and 2014, the accumulated benefit obligation for the Pension and SERP Plans is as follows:

(Millions of Dollars)	Eversource		CL&P		NSTAR Electric		PSNH		WMECO
2015	$	4,733.2	$	1,062.7	$	888.8	$	506.4	$	222.3
2014		5,000.1		1,101.4		910.4		524.5		226.4

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

Pension and SERP Expense: Eversource charges net periodic pension expense to its subsidiaries based on the actual participant demographic data for each subsidiary's participants. 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 year ended December 31, 2013 (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 and SERP amounts are included in Operations and Maintenance expense on the statements of income. Capitalized pension amounts relate to employees working on capital projects and are included in Property, Plant and Equipment, Net on the balance sheets. 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 or the corresponding capitalized portion, as these amounts are cash settled on a short-term basis.

	Pension and SERP
	For the Year Ended December 31, 2015
					NSTAR
(Millions of Dollars)	Eversource ⁽¹⁾		CL&P		Electric		PSNH ⁽¹⁾		WMECO
Service Cost	$	91.4	$	24.7	$	14.9	$	12.1	$	4.3
Interest Cost		227.0		51.1		40.2		24.3		10.4
Expected Return on Pension Plan Assets		(335.9)		(78.9)		(70.0)		(40.4)		(18.9)
Actuarial Loss		148.5		32.2		35.8		11.6		6.4
Prior Service Cost/(Credit)		3.7		1.5		(0.1)		0.5		0.3
Total Net Periodic Benefit Expense	$	134.7	$	30.6	$	20.8	$	8.1	$	2.5
Intercompany Allocations		N/A	$	22.5	$	13.6	$	6.7	$	4.4
Capitalized Pension Expense	$	41.0	$	18.8	$	11.4	$	3.5	$	1.9

	Pension and SERP
	For the Year Ended December 31, 2014
					NSTAR
(Millions of Dollars)	Eversource		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 Pension 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)	Eversource		CL&P		Electric⁽²⁾		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 Pension 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

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 that were reclassified as net periodic benefit expense during the years presented:

	Regulatory Assets				OCI
	For the Years Ended December 31,
(Millions of Dollars)	2015		2014		2015		2014
Actuarial (Gains)/Losses Arising During the Year	$	(2.0)	$	797.3	$	(6.2)	$	55.9
Actuarial Losses Reclassified as Net Periodic Benefit Expense		(142.3)		(122.8)		(6.2)		(5.6)
Prior Service Cost Reclassified as Net Periodic Benefit Expense		(3.5)		(4.2)		(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, 2015 and 2014, as well as the amounts that are expected to be recognized as components in 2016:

	Regulatory Assets as of				Expected		AOCI as of				Expected
	December 31,				2016		December 31,				2016
(Millions of Dollars)	2015		2014		Expense		2015		2014		Expense
Actuarial Loss	$	1,667.6	$	1,811.9	$	120.6	$	81.1	$	93.5	$	5.4
Prior Service Cost		9.7		13.2		3.4		0.6		0.8		0.2

PBOP Plan: On January 1, 2014, concurrent with the service company merger, the PBOP assets and liabilities of NSTAR Electric & Gas were attributed by participant and transferred to the applicable operating company's balance sheets. This change had no impact on the income statements or net assets of NSTAR Electric or Eversource. The PBOP Plan is accounted for under the multiple-employer approach, with each operating company's balance sheet reflecting its share of the funded status of the plan. The following tables provide information on the PBOP Plan benefit obligations, fair values of plan assets, and funded status:

	PBOP
Eversource	As of December 31,
(Millions of Dollars)	2015		2014
Change in Benefit Obligation
Benefit Obligation as of Beginning of Year	$	(1,147.9)	$	(1,038.0)
Service Cost		(16.3)		(12.5)
Interest Cost		(47.2)		(49.5)
Actuarial Gain/(Loss)		106.0		(95.5)
Benefits Paid		54.0		47.6
Benefit Obligation as of End of Year	$	(1,051.4)	$	(1,147.9)
Change in Plan Assets
Fair Value of Plan Assets as of Beginning of Year	$	862.6	$	826.5
Actual Return on Plan Assets		(4.3)		43.7
Employer Contributions		7.9		40.0
Benefits Paid		(54.0)		(47.6)
Fair Value of Plan Assets as of End of Year	$	812.2	$	862.6
Funded Status as of December 31^st	$	(239.2)	$	(285.3)

	PBOP
	As of December 31,
	2015								2014
			NSTAR								NSTAR
(Millions of Dollars)	CL&P		Electric		PSNH		WMECO		CL&P		Electric		PSNH		WMECO
Change in Benefit Obligation
Benefit Obligation as of Beginning of Year	$	(173.9)	$	(468.7)	$	(91.8)	$	(36.6)	$	(180.4)	$	-	$	(93.5)	$	(38.7)
Change due to transfer of employees		0.1		2.3		(0.3)		-		3.7		(395.5)		4.3		1.0
Service Cost		(2.1)		(5.4)		(1.4)		(0.4)		(2.2)		(3.1)		(1.3)		(0.4)
Interest Cost		(7.2)		(19.0)		(3.9)		(1.5)		(8.1)		(19.4)		(4.3)		(1.7)
Actuarial Gain/(Loss)		7.2		59.1		3.6		1.5		3.5		(68.6)		(1.1)		1.3
Benefits Paid		11.9		18.9		5.3		2.6		9.6		17.9		4.1		1.9
Benefit Obligation as of End of Year	$	(164.0)	$	(412.8)	$	(88.5)	$	(34.4)	$	(173.9)	$	(468.7)	$	(91.8)	$	(36.6)
Change in Plan Assets
Fair Value of Plan Assets as of Beginning of Year	$	149.0	$	336.5	$	80.9	$	34.4	$	151.3	$	-	$	81.8	$	35.3
Change due to transfer of employees		-		0.6		0.2		-		(3.2)		316.7		(3.1)		(1.0)
Actual Return on Plan Assets		(0.4)		(2.8)		-		(0.1)		6.3		18.4		3.8		1.6
Employer Contributions		-		4.9		-		-		4.2		19.3		2.5		0.4
Benefits Paid		(11.9)		(18.9)		(5.3)		(2.6)		(9.6)		(17.9)		(4.1)		(1.9)
Fair Value of Plan Assets as of End of Year	$	136.7	$	320.3	$	75.8	$	31.7	$	149.0	$	336.5	$	80.9	$	34.4
Funded Status as of December 31^st	$	(27.3)	$	(92.5)	$	(12.7)	$	(2.7)	$	(24.9)	$	(132.2)	$	(10.9)	$	(2.2)

During 2014, the Society of Actuaries released a series of updated mortality tables resulting from studies that measured mortality rates for various groups of individuals. The updated mortality tables released in 2014 increased the life expectancy of plan participants by three to five years and had the effect of increasing the estimated benefits to be provided to plan participants. The impact of adopting the updated mortality tables on Eversource's liability as of December 31, 2014 was an increase of approximately $82 million. In 2015, a revised scale for the mortality table was released having the effect of decreasing the estimate of benefits to be provided to plan participants. The impact of the adoption of the new mortality scale resulted in a decrease of $23 million on Eversource's liability as of December 31, 2015.

The increase in the discount rate used to calculate the funded status resulted in a decrease on Eversource's liability of approximately $60 million as of December 31, 2015. Decreases in the discount rates resulted in an increase on Eversource's liability of approximately $110 million as of December 31, 2014.

PBOP Expense: Eversource charges net periodic postretirement benefits expense to its subsidiaries based on the actual participant demographic data for each subsidiary's participants. 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 year ended December 31, 2013 (prior to the service company merger), the net periodic postretirement expense of the NSTAR PBOP Plan allocated to NSTAR Electric was $4.6 million.

The components of net periodic benefit expense for the PBOP Plan are shown below. The net periodic benefit expense and the intercompany allocations less the capitalized portion of PBOP are 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 on the balance sheets. PBOP expense reflected in the statements of cash flows for CL&P, NSTAR Electric, PSNH and WMECO does not include the intercompany allocations or the corresponding capitalized portion, as these amounts are cash settled on a short-term basis.

		PBOP
	For the Year Ended December 31, 2015
					NSTAR
(Millions of Dollars)	Eversource		CL&P		Electric		PSNH		WMECO
Service Cost	$	16.3	$	2.1	$	5.4	$	1.4	$	0.4
Interest Cost		47.2		7.2		19.0		3.9		1.5
Expected Return on Plan Assets		(67.4)		(11.1)		(27.3)		(6.0)		(2.5)
Actuarial Loss		6.8		0.7		2.3		0.5		-
Prior Service Credit		(0.5)		-		(0.2)		-		-
Total Net Periodic Benefit Expense/(Income)	$	2.4	$	(1.1)	$	(0.8)	$	(0.2)	$	(0.6)
Intercompany Allocations		N/A	$	1.9	$	0.8	$	0.4	$	0.3
Capitalized PBOP Expense/(Income)	$	0.1	$	(0.2)	$	(0.2)	$	0.2	$	(0.2)

	PBOP
	For the Year Ended December 31, 2014
					NSTAR
(Millions of Dollars)	Eversource		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)	Eversource		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

As of December 31, 2015 and 2014, the health care cost trend rate assumptions used to determine the PBOP Plan's funded status was 6.25 percent and 6.5 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 amount was 6.5 percent for the year ended December 31, 2015.

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, 2015 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 recognized in Regulatory Assets and OCI that were reclassified as net periodic benefit (expense)/income during the years presented:

	Regulatory Assets				OCI
	For the Years Ended December 31,
(Millions of Dollars)	2015		2014		2015		2014
Actuarial (Gains)/Losses Arising During the Year	$	(34.1)	$	115.1	$	0.7	$	0.4
Actuarial Losses Reclassified as Net Periodic Benefit Expense		(6.4)		(11.6)		(0.4)		(0.6)
Prior Service Credit Reclassified as Net Periodic Benefit Income		0.5		2.8		-		-

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, 2015 and 2014, as well as the amounts that are expected to be recognized as components in 2016:

		Regulatory Assets as of			Expected			AOCI as of			Expected
	December 31,				2016			December 31,			2016
(Millions of Dollars)	2015		2014		Expense		2015		2014		Expense
Actuarial Loss	$	152.2	$	192.7	$	4.0	$	6.3	$	6.0	$	0.4
Prior Service Credit		(1.3)		(1.8)		(0.2)		-		-		-

Eversource Contributions: Eversource contributed $154.6 million to the Pension Plan in 2015, of which $5 million was contributed by NSTAR Electric, $1 million by PSNH and the remainder by other Eversource subsidiaries, primarily Eversource Service. Based on the current status of the Pension Plan and federal pension funding requirements, although not required to make a minimum pension contribution in 2016, Eversource currently expects to make contributions of approximately $146 million in 2016, of which $21 million will be contributed by NSTAR Electric and $17 million by PSNH. The remaining $108 million is expected to be contributed by other Eversource subsidiaries, primarily Eversource Service.

Eversource contributed $7.9 million to the PBOP Plan in 2015, of which $4.9 million was contributed by NSTAR Electric. Eversource expects to make approximately $9.5 million in contributions in 2016.

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. Eversource'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 it establishes target asset allocations that are routinely reviewed and periodically rebalanced. PBOP assets are comprised of assets held in the PBOP Plan 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 that of the defined benefit pension plan. Eversource'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, Eversource evaluated input from consultants, as well as long-term inflation assumptions and historical returns. For the year ended December 31, 2015, 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, 2015		As of December 31, 2014
		Pension Plan and Tax-Exempt Assets Within PBOP Plan		Pension Plan and Tax-Exempt Assets Within PBOP Plan
		Target Asset Allocation	Assumed Rate of Return	Target Asset Allocation	Assumed Rate of Return
Equity Securities:
	United States	22%	8.5%	24%	9%
	International	13%	8.5%	10%	9%
	Emerging Markets	5%	10%	6%	10%
	Private Equity	12%	12%	10%	13%
Debt Securities:
	Fixed Income	12%	4.5%	15%	5%
	High Yield Fixed Income	13%	8.5%	9%	7.5%
	Emerging Markets Debt	5%	7.5%	6%	7.5%
Real Estate and Other Assets		10%	7.5%	9%	7.5%
Hedge Funds		8%	7%	11%	7%

The taxable assets within the PBOP Plan 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:

		Pension Plan
		Fair Value Measurements as of December 31,
(Millions of Dollars)		2015								2014
Asset Category:		Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Equity Securities ⁽¹⁾		$	396.5	$	985.7	$	305.2	$	1,687.4	$	414.7	$	1,035.0	$	292.2	$	1,741.9
Private Equity			7.6		-		464.7		472.3		18.8		-		367.9		386.7
Fixed Income ⁽²⁾			-		432.0		784.8		1,216.8		10.2		561.4		722.0		1,293.6
Real Estate and Other Assets			-		117.5		260.3		377.8		-		132.0		265.8		397.8
Hedge Funds			-		49.7		290.8		340.5		-		20.0		475.0		495.0
Total		$	404.1	$	1,584.9	$	2,105.8	$	4,094.8	$	443.7	$	1,748.4	$	2,122.9	$	4,315.0
	Less: 401(h) PBOP Assets ⁽³⁾								(189.4)								(188.5)
Total Pension Assets								$	3,905.4							$	4,126.5

		PBOP Plan
		Fair Value Measurements as of December 31,
(Millions of Dollars)		2015								2014
Asset Category:		Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Equity Securities ⁽¹⁾		$	109.7	$	121.6	$	77.8	$	309.1	$	104.1	$	172.8	$	75.1	$	352.0
Private Equity			-		-		32.9		32.9		-		-		24.9		24.9
Fixed Income ⁽²⁾			9.7		99.9		81.6		191.2		16.1		110.0		78.3		204.4
Real Estate and Other Assets			-		17.0		20.4		37.4		-		19.4		15.0		34.4
Hedge Funds			-		-		52.2		52.2		-		-		58.4		58.4
Total		$	119.4	$	238.5	$	264.9	$	622.8	$	120.2	$	302.2	$	251.7	$	674.1
	Add: 401(h) PBOP Assets ⁽³⁾								189.4								188.5
Total PBOP Assets								$	812.2							$	862.6

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 Eversource's Pension and PBOP Plan assets for the years ended December 31, 2015 and 2014:

		Pension Plan
		Equity		Private		Fixed		Real Estate and		Hedge
(Millions of Dollars)		Securities		Equity		Income		Other Assets		Funds		Total
Balance as of January 1, 2014		$	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
	Transfer Between Categories		76.5		-		-		-		(76.5)		-
Actual Return/(Loss) on Plan Assets:
	Relating to Assets Still Held as of Year End		5.3		24.4		(6.7)		(7.1)		-		15.9
	Relating to Assets Distributed During the Year		-		27.3		17.0		24.8		(0.9)		68.2
Purchases, Sales and Settlements			(68.8)		45.1		52.5		(23.2)		(106.8)		(101.2)
Balance as of December 31, 2015		$	305.2	$	464.7	$	784.8	$	260.3	$	290.8	$	2,105.8

		PBOP Plan
		Equity		Private		Fixed		Real Estate and		Hedge
(Millions of Dollars)		Securities		Equity		Income		Other Assets		Funds		Total
Balance as of January 1, 2014		$	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
Actual Return/(Loss) on Plan Assets:
	Relating to Assets Still Held as of Year End		(2.0)		2.6		2.1		0.3		(1.5)		1.5
	Relating to Assets Distributed During the Year		-		-		(0.3)		-		-		(0.3)
Purchases, Sales and Settlements			4.7		5.4		1.5		5.1		(4.7)		12.0
Balance as of December 31, 2015		$	77.8	$	32.9	$	81.6	$	20.4	$	52.2	$	264.9