The rates charged to the customers of NU's Regulated companies are designed to collect each company's costs to provide service, including a return on investment. Therefore, the accounting policies of the Regulated companies follow the application of accounting guidance for entities with rate-regulated operations and reflect the effects of the rate-making process.

Management believes it is probable that each of the Regulated companies will recover their respective investments in long-lived assets, including regulatory assets. If management were to determine that it could no longer apply the accounting guidance applicable to rate-regulated enterprises to any of the Regulated companies' operations, or that management could not conclude it is probable that costs would be recovered from customers in future rates, the costs would be charged to net income in the period in which the determination is made.

	As of March 31, 2014		As of December 31, 2013
(Millions of Dollars)	NU		NU
Benefit Costs	$	1,205.4	$	1,240.2
Derivative Liabilities		564.9		638.0
Income Taxes, Net		629.2		626.2
Storm Restoration Costs		580.9		589.6
Goodwill		520.8		525.9
Regulatory Tracker Mechanisms		347.4		323.4
Buy Out Agreements for Power Contracts		63.4		70.2
Other Regulatory Assets		147.6		281.0
Total Regulatory Assets		4,059.6		4,294.5
Less: Current Portion		573.0		535.8
Total Long-Term Regulatory Assets	$	3,486.6	$	3,758.7

	As of March 31, 2014								As of December 31, 2013
			NSTAR								NSTAR
(Millions of Dollars)	CL&P		Electric		PSNH		WMECO		CL&P		Electric		PSNH		WMECO
Benefit Costs	$	287.1	$	321.3	$	96.7	$	55.1	$	297.7	$	496.7	$	100.6	$	57.3
Derivative Liabilities		557.0		7.9		-		-		630.4		7.7		-		-
Income Taxes, Net		419.7		82.5		39.4		43.5		415.5		84.0		40.3		43.7
Storm Restoration Costs		395.3		109.2		40.3		36.1		397.8		109.3		43.7		38.8
Goodwill		-		447.1		-		-		-		451.5		-		-
Regulatory Tracker Mechanisms		33.3		182.7		75.2		31.6		8.0		169.5		83.3		32.6
Buy Out Agreements for Power Contracts		-		58.3		5.1		-		-		64.7		5.5		-
Other Regulatory Assets		64.1		55.5		37.8		15.5		64.6		55.9		38.1		16.7
Total Regulatory Assets		1,756.5		1,264.5		294.5		181.8		1,814.0		1,439.3		311.5		189.1
Less: Current Portion		175.9		222.6		83.8		49.6		150.9		204.1		92.2		43.0
Total Long-Term Regulatory Assets	$	1,580.6	$	1,041.9	$	210.7	$	132.2	$	1,663.1	$	1,235.2	$	219.3	$	146.1

Benefit Costs: For information related to the Regulated companies' pension and other postretirement benefits, see Note 7, "Pension Benefits and Postretirement Benefits Other Than Pensions."

Storm Restoration Costs: From 2011 to 2013, CL&P, NSTAR Electric, PSNH and WMECO experienced several significant storm events. As a result of these storm events, each company suffered extensive damage to its distribution and transmission systems resulting in customer outages. Each company incurred significant costs to repair damage and restore customer service. The storm restoration cost regulatory asset balance at CL&P, NSTAR Electric, PSNH and WMECO reflects incremental costs incurred for major storm events. Management believes the storm restoration costs were prudent and meet the criteria for specific cost recovery in Connecticut, Massachusetts and New Hampshire and that recovery from customers is probable through the applicable regulatory recovery process.

On March 12, 2014, the PURA issued a final decision on CL&P's request to recover storm restoration costs associated with five major storms, which occurred in 2011 and 2012. The PURA approved recovery of $365 million of deferred storm restoration costs and ordered CL&P to capitalize approximately $18 million of the deferred storm restoration costs as utility plant, which will be recovered through depreciation expense in future rate proceedings. CL&P will recover the $365 million with carrying charges in its distribution rates over a six-year period beginning December 1, 2014. The remaining costs were either disallowed or we believe will be recovered from other sources. These costs did not have a material impact on CL&P's financial position, results of operations or cash flows.

Regulatory Costs in Other Long-Term Assets: The Regulated companies had $71.7 million ($12.4 million for CL&P, $33.7 million for NSTAR Electric, and $10.2 million for WMECO) and $65.1 million ($7.3 million for CL&P, $33.4 million for NSTAR Electric, and $10.1 million for WMECO) of additional regulatory costs as of March 31, 2014 and December 31, 2013, respectively, that were included in Other Long-Term Assets on the balance sheets. These amounts represent incurred costs for which recovery has not yet been specifically approved by the applicable regulatory agency. However, based on regulatory policies or past precedent on similar costs, management believes it is probable that these costs will ultimately be approved and recovered from customers in rates.

Regulatory Liabilities: The components of regulatory liabilities are as follows:

	As of March 31, 2014		As of December 31, 2013
(Millions of Dollars)	NU		NU
Cost of Removal	$	437.3	$	435.1
Regulatory Tracker Mechanisms		203.6		151.2
AFUDC - Transmission		67.8		68.1
Contractual Obligations - Yankee Companies		93.3		-
Other Regulatory Liabilities		53.3		52.9
Total Regulatory Liabilities		855.3		707.3
Less: Current Portion		263.8		204.3
Total Long-Term Regulatory Liabilities	$	591.5	$	503.0

	As of March 31, 2014								As of December 31, 2013
			NSTAR								NSTAR
(Millions of Dollars)	CL&P		Electric		PSNH		WMECO		CL&P		Electric		PSNH		WMECO
Cost of Removal	$	27.5	$	252.5	$	49.7	$	-	$	29.1	$	250.0	$	49.7	$	-
Regulatory Tracker Mechanisms		105.6		43.8		27.5		22.4		95.6		21.9		21.6		21.1
AFUDC - Transmission		54.5		4.0		-		9.3		54.7		4.1		-		9.3
Other Regulatory Liabilities		9.8		30.4		1.9		0.5		8.4		31.1		1.0		3.4
Total Regulatory Liabilities		197.4		330.7		79.1		32.2		187.8		307.1		72.3		33.8
Less: Current Portion		107.3		73.6		27.3		21.8		94.0		54.0		20.6		19.9
Total Long-Term Regulatory Liabilities	$	90.1	$	257.1	$	51.8	$	10.4	$	93.8	$	253.1	$	51.7	$	13.9

For further information on matters related to the Yankee Companies, see Note 8B, "Commitments and Contingencies - Contractual Obligations - Yankee Companies," to the financial statements.