MARKETABLE SECURITIES

9 Months Ended

Sep. 30, 2016

Investments, Debt and Equity Securities [Abstract]

Investments in Debt and Marketable Equity Securities (and Certain Trading Assets) Disclosure [Text Block]

5.    MARKETABLE SECURITIES

Eversource maintains trusts that hold marketable securities to fund certain non-qualified executive benefits. These trusts are not subject to regulatory oversight by state or federal agencies.  CYAPC and YAEC maintain legally restricted trusts, each of which holds marketable securities, to fund the decommissioning and spent nuclear fuel removal obligations of their nuclear fuel storage facilities.

Trading Securities:  Eversource has elected to record certain equity securities as trading securities, with the changes in fair values recorded in Other Income, Net on the statements of income.  As of September 30, 2016 and December 31, 2015, these securities were classified as Level 1 in the fair value hierarchy and totaled $10.3 million and $14.2 million, respectively.  For the three months ended September 30, 2016 and 2015, net gains on these securities of $0.1 million and net losses of $0.5 million, respectively, and for the nine months ended September 30, 2016 and 2015, net gains of $0.6 million and $1.6 million, respectively, were recorded in Other Income, Net on the statements of income.   Dividend income is recorded in Other Income, Net when dividends are declared.  

Available-for-Sale Securities:  The following is a summary of available-for-sale securities, which are recorded at fair value and are included in current and long-term Marketable Securities on the balance sheets.

	As of September 30, 2016									As of December 31, 2015
Eversource (Millions of Dollars)	Amortized Cost		Pre-Tax Unrealized Gains		Pre-Tax Unrealized Losses			Fair Value		Amortized Cost		Pre-Tax Unrealized Gains		Pre-Tax Unrealized Losses			Fair Value
Debt Securities	$	261.2	$	10.7	$	—		$	271.9	$	256.5	$	4.5	$	(0.6	)	$	260.4
Equity Securities	206.7		63.7		(1.0		)	269.4		215.3		59.2		(3.4		)	271.1

Eversource’s debt and equity securities include CYAPC’s and YAEC’s marketable securities held in nuclear decommissioning trusts of $446.9 million and $436.9 million as of September 30, 2016 and December 31, 2015, respectively.  Unrealized gains and losses for these nuclear decommissioning trusts are recorded in Marketable Securities with the corresponding offset to Other Long-Term Liabilities on the balance sheets, with no impact on the statements of income.  

Unrealized Losses and Other-than-Temporary Impairment:  There have been no significant unrealized losses, other-than-temporary impairments or credit losses for the three and nine months ended September 30, 2016 and 2015. Factors considered in determining whether a credit loss exists include the duration and severity of the impairment, adverse conditions specifically affecting the issuer, and the payment history, ratings and rating changes of the security.  For asset-backed debt securities, underlying collateral and expected future cash flows are also evaluated.

Realized Gains and Losses:  Realized gains and losses on available-for-sale securities are recorded in Other Income, Net for Eversource’s benefit trust and are offset in Other Long-Term Liabilities for CYAPC and YAEC.  Eversource utilizes the specific identification basis method for the Eversource benefit trust, and the average cost basis method for the CYAPC and YAEC nuclear decommissioning trusts to compute the realized gains and losses on the sale of available-for-sale securities.

Contractual Maturities:  As of September 30, 2016, the contractual maturities of available-for-sale debt securities were as follows:  

Eversource (Millions of Dollars)	Amortized Cost		Fair Value
Less than one year (1)	$	29.3	$	29.1
One to five years	58.0		59.1
Six to ten years	47.0		49.5
Greater than ten years	126.9		134.2
Total Debt Securities	$	261.2	$	271.9

(1) Amounts in the Less than one year category include securities in the CYAPC and YAEC nuclear decommissioning trusts, which are restricted and are classified in long-term Marketable Securities on the balance sheets.

Fair Value Measurements:  The following table presents the marketable securities recorded at fair value on a recurring basis by the level in which they are classified within the fair value hierarchy:

Eversource (Millions of Dollars)	As of September 30, 2016		As of December 31, 2015
Level 1:
Mutual Funds and Equities	$	279.7	$	285.3
Money Market Funds	24.5		26.9
Total Level 1	$	304.2	$	312.2
Level 2:
U.S. Government Issued Debt Securities (Agency and Treasury)	$	65.5	$	46.6
Corporate Debt Securities	43.3		43.9
Asset-Backed Debt Securities	18.0		20.0
Municipal Bonds	110.3		111.4
Other Fixed Income Securities	10.3		11.6
Total Level 2	$	247.4	$	233.5
Total Marketable Securities	$	551.6	$	545.7

U.S. government issued debt securities are valued using market approaches that incorporate transactions for the same or similar bonds and adjustments for yields and maturity dates.  Corporate debt securities are valued using a market approach, utilizing recent trades of the same or similar instrument and also incorporating yield curves, credit spreads and specific bond terms and conditions.  Asset-backed debt securities include collateralized mortgage obligations, commercial mortgage backed securities, and securities collateralized by auto loans, credit card loans or receivables.  Asset-backed debt securities are valued using recent trades of similar instruments, prepayment assumptions, yield curves, issuance and maturity dates, and tranche information.  Municipal bonds are valued using a market approach that incorporates reported trades and benchmark yields.  Other fixed income securities are valued using pricing models, quoted prices of securities with similar characteristics, and discounted cash flows.

MARKETABLE SECURITIES

Fair Value Measurements

Fair value measurement guidance is applied to derivative contracts that are not elected or designated as “normal purchases or normal sales” (normal) and to the marketable securities held in trusts.  Fair value measurement guidance is also applied to valuations of the investments used to calculate the funded status of pension and PBOP plans, the nonrecurring fair value measurements of nonfinancial assets such as goodwill and AROs, and the estimated fair value of preferred stock and long-term debt.

Fair Value Hierarchy:  In measuring fair value, Eversource uses observable market data when available in order to minimize the use of unobservable inputs.  Inputs used in fair value measurements are categorized into three fair value hierarchy levels for disclosure purposes.  The entire fair value measurement is categorized based on the lowest level of input that is significant to the fair value measurement.  Eversource evaluates the classification of assets and liabilities measured at fair value on a quarterly basis, and Eversource’s policy is to recognize transfers between levels of the fair value hierarchy as of the end of the reporting period.  The three levels of the fair value hierarchy are described below:

Level 1 - Inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities as of the reporting date.  Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis.  

Level 2 - Inputs are quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-derived valuations in which all significant inputs are observable.

Level 3 - Quoted market prices are not available.  Fair value is derived from valuation techniques in which one or more significant inputs or assumptions are unobservable.  Where possible, valuation techniques incorporate observable market inputs that can be validated to external sources such as industry exchanges, including prices of energy and energy-related products.