Eversource Energy is a public utility holding company primarily engaged, through its wholly-owned regulated utility subsidiaries, in the energy delivery business. Eversource Energy's wholly-owned regulated utility subsidiaries consist of CL&P, NSTAR Electric and PSNH (electric utilities), Yankee Gas and NSTAR Gas (natural gas utilities) and Aquarion (water utilities). Eversource provides energy delivery and/or water service to approximately four million electric, natural gas and water customers through eight regulated utilities in Connecticut, Massachusetts and New Hampshire.

The unaudited condensed consolidated financial statements of Eversource, NSTAR Electric and PSNH include the accounts of each of their respective subsidiaries. Intercompany transactions have been eliminated in consolidation. The accompanying unaudited condensed consolidated financial statements of Eversource, NSTAR Electric and PSNH and the unaudited condensed financial statements of CL&P are herein collectively referred to as the "financial statements."

The combined notes to the financial statements have been prepared pursuant to the rules and regulations of the SEC. Certain information and footnote disclosures included in annual financial statements prepared in accordance with GAAP have been omitted pursuant to such rules and regulations. The accompanying financial statements should be read in conjunction with the Combined Notes to Financial Statements included in Item 8, "Financial Statements and Supplementary Data," of the Eversource 2018 Form 10-K, which was filed with the SEC on February 26, 2019. The preparation of the financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

The financial statements contain, in the opinion of management, all adjustments (including normal, recurring adjustments) necessary to present fairly Eversource's, CL&P's, NSTAR Electric's and PSNH's financial position as of September 30, 2019 and December 31, 2018, and the results of operations, comprehensive income and common shareholders' equity for the three and nine months ended September 30, 2019 and 2018, and the cash flows for the nine months ended September 30, 2019 and 2018. The results of operations and comprehensive income for the three and nine months ended September 30, 2019 and 2018 and the cash flows for the nine months ended September 30, 2019 and 2018 are not necessarily indicative of the results expected for a full year.

Eversource consolidates CYAPC and YAEC because CL&P's, NSTAR Electric's and PSNH's combined ownership and voting interests in each of these entities is greater than 50 percent. Intercompany transactions between CL&P, NSTAR Electric, PSNH and the CYAPC and YAEC companies have been eliminated in consolidation of the Eversource financial statements.

Eversource's utility subsidiaries' electric, natural gas and water distribution and transmission businesses are subject to rate-regulation that is based on cost recovery and meets the criteria for application of accounting guidance for entities with rate-regulated operations, which considers the effect of regulation on the differences in the timing of the recognition of certain revenues and expenses from those of other businesses and industries. See Note 2, "Regulatory Accounting," for further information.

Accounting Standards Issued but Not Yet Effective: In June 2016, the FASB issued Accounting Standards Update (“ASU”) 2016-13, Financial Instruments - Credit Losses (Topic 326), which provides a new model for recognizing credit losses on financial instruments based on an estimate of current expected credit losses. Under the new guidance, immediate recognition of all credit losses expected over the life of a financial instrument is required. The standard is effective January 1, 2020 and requires a modified retrospective method through a cumulative effect adjustment to retained earnings. The Company is assessing the impacts of this standard on the accounting for credit losses on its financial instruments, including accounts receivable, and does not expect it to have a material impact on the financial statements.

Accounting Standards Recently Adopted: On January 1, 2019, the Company adopted ASU 2016-02, Leases (Topic 842), which amended existing lease accounting guidance. The Company applied the Topic 842 lease criteria to new leases and lease renewals entered into effective on or after January 1, 2019. The ASU required balance sheet recognition of leases deemed to be operating leases as well as additional disclosure requirements. The recognition, measurement and presentation of expenses and cash flows were not significantly changed.

The Company also adopted the modified retrospective transition method allowed in ASU 2018-11, Leases (Topic 842) - Targeted Improvements, which allowed the Company to adopt the new leases standard as of January 1, 2019, with prior periods presented in the financial statements continuing to follow existing lease accounting guidance under Topic 840 (Leases) in the accounting literature. Implementation of ASU 2018-11 had no effect on retained earnings, and the requirements of the new lease standard (Topic 842) are reflected in the 2019 financial statements and footnotes.

The Company elected the practical expedient package whereby it did not need to reassess whether or not an existing contract is or contains a lease or whether a lease is an operating or capital lease, and it did not need to reassess initial direct costs for leases. Election of this practical expedient allowed us to carry forward our historical lease classifications. The Company elected the practical expedient to not reevaluate land easements existing at adoption if they were not previously accounted for as leases. The Company also elected to use the discount rate as of the January 1, 2019 implementation date to discount its operating lease liabilities. The Company did not elect the hindsight practical expedient to determine the lease term for existing leases.

The Company determined the impact the ASUs had on its financial statements by reviewing its lease population and identifying lease data needed for the disclosure requirements. The Company implemented a new lease accounting system in 2019 to ensure ongoing compliance with the ASU’s requirements. Adoption of the new standard resulted in the recording of operating lease liabilities and right-of-use assets on the balance sheet upon transition at January 1, 2019 of $58.0 million at Eversource, $25.3 million at NSTAR Electric, $0.6 million at CL&P, and $0.6 million at PSNH. Implementation of the new guidance did not have an impact on each company’s results of operations or cash flows.

Northern Pass was Eversource's planned 1,090 MW HVDC transmission line that would interconnect from the Québec-New Hampshire border to Franklin, New Hampshire and an associated alternating current radial transmission line between Franklin and Deerfield, New Hampshire. As a result of a final decision received on July 19, 2019 from the New Hampshire Supreme Court, whereby the court issued a decision denying Northern Pass’ appeal and affirming the NHSEC’s evaluation and decision that denied Northern Pass’ siting application on NPT, Eversource concluded that construction of NPT was no longer probable. As a result, substantially all of the capitalized project costs, which totaled $318 million, certain of which are subject to cost reimbursement agreements, were impaired.

Based on the conclusion that the construction of Northern Pass was not probable, Eversource recorded an impairment charge in the second quarter of 2019 for all of the project costs associated with Northern Pass, which were primarily engineering design, siting, permitting and legal costs, along with appropriate allowances for funds used during construction, and recognized a receivable for certain cost reimbursement agreements. Additionally, Eversource recorded an impairment charge associated with the land acquired to construct Northern Pass in order to recognize the land at its estimated fair value based on assessed values and transaction costs. In total, this resulted in a pre-tax impairment charge of $239.6 million within Operating Income on the statement of income for the nine months ended September 30, 2019, and was reflected in the Electric Transmission segment. The after-tax impact of the second quarter impairment charge was $204.4 million, or $0.64 per share, after giving effect to the estimated fair value of the related land, reimbursement agreements, and the impact of expected income tax benefits associated with the impairment charge. Eversource does not expect any significant estimated future cash expenditures associated with this impairment charge.

Eversource, including CL&P, NSTAR Electric and PSNH, presents its receivables at estimated net realizable value by maintaining a provision for uncollectible accounts. This provision is determined based upon a variety of judgments and factors, including the application of an estimated uncollectible percentage to each receivable aging category. The estimate is based upon historical collection and write-off experience and management's assessment of collectability from customers. Management continuously assesses the collectability of receivables and adjusts collectability estimates based on actual experience. Receivable balances are written off against the provision for uncollectible accounts when the customer accounts are terminated and these balances are deemed to be uncollectible.

The PURA allows CL&P and Yankee Gas to accelerate the recovery of accounts receivable balances attributable to qualified customers under financial or medical duress (uncollectible hardship accounts receivable) outstanding for greater than 180 days and 90 days, respectively. The DPU allows NSTAR Electric and NSTAR Gas to recover in rates amounts associated with certain uncollectible hardship accounts receivable. These uncollectible hardship customer account balances are included in Regulatory Assets or Other Long-Term Assets on the balance sheets.



	Total Provision for Uncollectible Accounts				Provision for Uncollectible Hardship Accounts
(Millions of Dollars)	As of September 30, 2019		As of December 31, 2018		As of September 30, 2019		As of December 31, 2018
Eversource	$	225.5	$	212.7	$	146.5	$	131.5
CL&P	94.1		88.0		77.8		71.9
NSTAR Electric	80.7		74.5		49.4		42.5
PSNH	10.6		11.1		—		—

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, long-term debt and RRBs.

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 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.

Investments in Offshore Wind Business: Eversource's offshore wind business includes ownership interests in North East Offshore and Bay State Wind, which together hold power purchase agreements and contracts for the Revolution Wind, South Fork Wind and Sunrise Wind projects. Eversource's offshore wind projects are being developed in joint and equal partnership with Ørsted.

On February 8, 2019, Eversource and Ørsted entered into an equal partnership to acquire key offshore wind assets in the Northeast, where Eversource owns 50 percent of these assets. Eversource's initial payment and contribution under the terms of the partnership agreements totaled approximately $225 million for a 50 percent ownership interest in North East Offshore, which holds the Revolution Wind and South Fork Wind projects, as well as a 257 square-mile lease off the coasts of Massachusetts and Rhode Island. Eversource also has a 50 percent ownership interest in Bay State Wind, which holds the Sunrise Wind project. These equity investments are included in long-term assets on the balance sheet, and earnings impacts are included in Other Income, Net on the statement of income. As of September 30, 2019, Eversource's total equity investment balance in its offshore wind business was $637.2 million. In the third quarter of 2019, Eversource made additional capital contributions of $133.6 million.

The components of Other Income, Net on the statements of income were as follows:



	For the Three Months Ended
	September 30, 2019												September 30, 2018
(Millions of Dollars)	Eversource			CL&P			NSTAR Electric			PSNH			Eversource			CL&P		NSTAR Electric			PSNH
Pension, SERP and PBOP Non-Service Income Components	$	10.1		$	1.7		$	5.6		$	1.4		$	14.8		$	2.0	$	9.0		$	2.0
AFUDC Equity	10.5			3.6			5.6			1.0			12.0			3.3		4.2			—
Equity in Earnings/(Loss) and Impairment of Unconsolidated Affiliates ⁽¹⁾	6.1			—			0.2			—			(27.9		)	—		0.2			—
Investment Income/(Loss)	(2.8		)	(0.8		)	(0.9		)	(0.3		)	1.8			0.7		(0.4		)	0.1
Interest Income ⁽²⁾	2.9			0.3			0.1			2.5			10.8			0.9		0.2			9.6
Gain on Sale of Property	—			—			—			—			5.0			—		0.5			4.4
Other	0.2			—			0.1			—			0.2			0.2		—			—
Total Other Income, Net	$	27.0		$	4.8		$	10.7		$	4.6		$	16.7		$	7.1	$	13.7		$	16.1

	For the Nine Months Ended
	September 30, 2019												September 30, 2018
(Millions of Dollars)	Eversource			CL&P			NSTAR Electric			PSNH			Eversource			CL&P		NSTAR Electric			PSNH
Pension, SERP and PBOP Non-Service Income Components	$	23.2		$	0.1		$	18.0		$	3.5		$	44.6		$	7.3	$	26.8		$	6.4
AFUDC Equity	34.5			9.4			14.7			2.1			32.6			9.4		11.5			—
Equity in Earnings/(Loss) and Impairment of Unconsolidated Affiliates ⁽¹⁾	37.0			0.2			0.6			—			(0.4		)	—		0.6			—
Investment Income/(Loss)	(2.3		)	0.9			(1.5		)	—			2.2			0.9		0.6			0.2
Interest Income ⁽²⁾	10.8			1.1			0.5			9.0			16.2			2.9		0.6			13.3
Gain on Sale of Property	0.2			—			—			—			5.0			—		0.5			4.4
Other	0.4			(0.1		)	0.2			—			0.5			0.2		—			—
Total Other Income, Net	$	103.8		$	11.6		$	32.5		$	14.6		$	100.7		$	20.7	$	40.6		$	24.3

⁽¹⁾For the three and nine months ended September 30, 2018, equity in earnings/(loss) and impairment of unconsolidated affiliates includes an other-than-temporary impairment of $32.9 million of the Access Northeast project investment. For the nine months ended September 30, 2019 and 2018, equity in earnings includes $20.4 million and $17.6 million, respectively, of unrealized gains associated with an investment in a renewable energy fund.

⁽²⁾For the nine months ended September 30, 2019, see Note 2, "Regulatory Accounting," for further information on $5.2 million of interest income recognized in 2019 for the equity return component of carrying charges on storm costs at PSNH. For the three and nine months ended September 30, 2018, PSNH recognized $8.7 million for the equity return component of carrying charges on storm costs incurred from August 2011 through March 2013.

Separate from above were amounts recorded as Taxes Other Than Income Taxes related to the remittance to the State of Connecticut of energy efficiency funds collected from customers in Operating Revenues. These amounts were $21.4 million for the nine months ended September 30, 2019, and $10.7 million and $36.1 million for the three and nine months ended September 30, 2018, respectively. Energy efficiency funds collected from customers after July 1, 2019 are no longer subject to remittance to the State of Connecticut. These amounts were recorded separately, with collections in Operating Revenues and with payments in Taxes Other Than Income Taxes on the Eversource and CL&P statements of income.

Beginning in 2019, Eversource began issuing treasury shares to satisfy awards under the Company's incentive plans, shares issued under the dividend reinvestment and share purchase plan, and matching contributions under the Eversource 401k Plan. The issuance of treasury shares represents a non-cash transaction, as the treasury shares were used to fulfill Eversource's obligations that require the issuance of common shares.



	As of September 30, 2019								As of December 31, 2018
(Millions of Dollars)	Eversource		CL&P		NSTAR Electric		PSNH		Eversource		CL&P		NSTAR Electric		PSNH
Cash as reported on the Balance Sheets	$	22.7	$	9.3	$	0.3	$	1.6	$	108.1	$	87.7	$	1.6	$	1.4
Restricted cash included in:
Prepayments and Other Current Assets	37.7		4.6		6.1		18.5		72.1		3.5		13.0		47.5
Marketable Securities	19.6		0.4		0.1		0.7		25.9		0.4		0.1		0.6
Other Long-Term Assets	71.9		—		—		3.2		3.2		—		—		3.2
Cash and Restricted Cash reported on the Statements of Cash Flows	$	151.9	$	14.3	$	6.5	$	24.0	$	209.3	$	91.6	$	14.7	$	52.7

Restricted cash included in Prepayments and Other Current Assets primarily represents cash collections related to the PSNH RRB customer charges that are held in trust, and required ISO-NE cash deposits. Restricted cash included in Marketable Securities represents money market funds held in trusts to fund certain non-qualified executive benefits and restricted trusts to fund CYAPC and YAEC's spent nuclear fuel storage facilities obligations. Restricted cash included in Other Long-Term Assets at Eversource primarily relates to DOE Phase IV damages proceeds received at CYAPC and YAEC in the second quarter of 2019. See Note 9D, "Commitments and Contingencies - Spent Nuclear Fuel Obligations - Yankee Companies," for further information.