Item 8. Financial Statements and Supplementary Data

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Item 8. Financial Statements and Supplementary Data

Financial Statements and Supplementary Data



NU
	Company Report on Internal Controls Over Financial Reporting
	Report of Independent Registered Public Accounting Firm
	Consolidated Financial Statements

CL&P
	Company Report on Internal Controls Over Financial Reporting
	Report of Independent Registered Public Accounting Firm
	Financial Statements

NSTAR Electric
	Company Report on Internal Controls Over Financial Reporting
	Report of Independent Registered Public Accounting Firm
	Consolidated Financial Statements

PSNH
	Company Report on Internal Controls Over Financial Reporting
	Report of Independent Registered Public Accounting Firm
	Consolidated Financial Statements

WMECO
	Company Report on Internal Controls Over Financial Reporting
	Report of Independent Registered Public Accounting Firm
	Financial Statements

Company Report on Internal Controls Over Financial Reporting

Northeast Utilities

Management is responsible for the preparation, integrity, and fair presentation of the accompanying consolidated financial statements of Northeast Utilities and subsidiaries (NU or the Company) and of other sections of this annual report. NU's internal controls over financial reporting were audited by Deloitte & Touche LLP.

Management is responsible for establishing and maintaining adequate internal controls over financial reporting. The Company's internal control framework and processes have been designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America. There are inherent limitations of internal controls over financial reporting that could allow material misstatements due to error or fraud to occur and not be prevented or detected on a timely basis by employees during the normal course of business. Additionally, internal controls over financial reporting may become inadequate in the future due to changes in the business environment.

Under the supervision and with the participation of the principal executive officer and principal financial officer, NU conducted an evaluation of the effectiveness of internal controls over financial reporting based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on this evaluation under the framework in COSO, management concluded that internal controls over financial reporting were effective as of December 31, 2014.

February 25, 2015

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Trustees and Shareholders of Northeast Utilities:

We have audited the accompanying consolidated balance sheets of Northeast Utilities and subsidiaries (the "Company") as of December 31, 2014 and 2013, and the related consolidated statements of income, comprehensive income, common shareholders' equity, and cash flows for each of the three years in the period ended December 31, 2014. Our audits also included the financial statement schedules listed in the Index at Item 15 of Part IV. We also have audited the Company's internal control over financial reporting as of December 31, 2014, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. The Company's management is responsible for these financial statements and financial statement schedules, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Company Report on Internal Controls Over Financial Reporting. Our responsibility is to express an opinion on these financial statements and financial statement schedules and an opinion on the Company's internal control over financial reporting based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

A company's internal control over financial reporting is a process designed by, or under the supervision of, the company's principal executive and principal financial officers, or persons performing similar functions, and effected by the company's board of directors, management, and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may not be prevented or detected on a timely basis. Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Northeast Utilities and subsidiaries as of December 31, 2014 and 2013, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2014, in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, such financial statement schedules, when considered in relation to the basic consolidated financial statements taken as a whole, present fairly, in all material respects, the information set forth therein. Also, in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2014, based on the criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission_._

/s/ Deloitte & Touche LLP

Hartford, Connecticut

February 25, 2015


NORTHEAST UTILITIES AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS


		As of December 31,
(Thousands of Dollars)		2014		2013

ASSETS

Current Assets:
	Cash and Cash Equivalents	$	38,703	$	43,364
	Receivables, Net		856,346		765,391
	Unbilled Revenues		211,758		224,982
	Taxes Receivable		337,307		16,629
	Fuel, Materials and Supplies		349,664		303,233
	Regulatory Assets		672,493		535,791
	Prepayments and Other Current Assets		226,194		197,659
Total Current Assets			2,692,465		2,087,049

Property, Plant and Equipment, Net			18,647,041		17,576,186

Deferred Debits and Other Assets:
	Regulatory Assets		4,054,086		3,758,694
	Goodwill		3,519,401		3,519,401
	Marketable Securities		515,025		488,515
	Other Long-Term Assets		349,957		365,692
Total Deferred Debits and Other Assets			8,438,469		8,132,302

Total Assets		$	29,777,975	$	27,795,537


LIABILITIES AND CAPITALIZATION

Current Liabilities:
Notes Payable		$	956,825	$	1,093,000
Long-Term Debt - Current Portion			245,583		533,346
Accounts Payable			868,231		742,251
Regulatory Liabilities			235,022		204,278
Other Current Liabilities			828,720		702,776
Total Current Liabilities			3,134,381		3,275,651

Deferred Credits and Other Liabilities:
Accumulated Deferred Income Taxes			4,467,473		4,029,026
Regulatory Liabilities			515,144		502,984
Derivative Liabilities			409,632		624,050
Accrued Pension, SERP and PBOP			1,638,558		896,844
Other Long-Term Liabilities			874,387		923,053
Total Deferred Credits and Other Liabilities			7,905,194		6,975,957

Capitalization:
Long-Term Debt			8,606,017		7,776,833

Noncontrolling Interest - Preferred Stock of Subsidiaries			155,568		155,568

Equity:
	Common Shareholders' Equity:
	Common Shares		1,666,796		1,665,351
	Capital Surplus, Paid In		6,235,834		6,192,765
	Retained Earnings		2,448,661		2,125,980
	Accumulated Other Comprehensive Loss		(74,009)		(46,031)
	Treasury Stock		(300,467)		(326,537)
Common Shareholders' Equity			9,976,815		9,611,528
Total Capitalization			18,738,400		17,543,929

Commitments and Contingencies (Note 11)

Total Liabilities and Capitalization		$	29,777,975	$	27,795,537



The accompanying notes are an integral part of these consolidated financial statements.


NORTHEAST UTILITIES AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME


			For the Years Ended December 31,
(Thousands of Dollars, Except Share Information)			2014		2013		2012

Operating Revenues			$	7,741,856	$	7,301,204	$	6,273,787

Operating Expenses:
	Purchased Power, Fuel and Transmission			3,021,550		2,482,954		2,084,364
	Operations and Maintenance			1,427,589		1,514,986		1,583,070
	Depreciation			614,657		610,777		519,010
	Amortization of Regulatory Assets, Net			10,704		206,322		79,762
	Amortization of Rate Reduction Bonds			-		42,581		142,019
	Energy Efficiency Programs			473,127		401,919		313,149
	Taxes Other Than Income Taxes			561,380		512,230		434,207
		Total Operating Expenses		6,109,007		5,771,769		5,155,581
Operating Income				1,632,849		1,529,435		1,118,206

Interest Expense:
	Interest on Long-Term Debt			345,001		340,970		316,987
	Interest on Rate Reduction Bonds			-		422		6,168
	Other Interest			17,105		(2,693)		6,790
		Interest Expense		362,106		338,699		329,945
Other Income, Net				24,619		29,894		19,742
Income Before Income Tax Expense				1,295,362		1,220,630		808,003
Income Tax Expense				468,297		426,941		274,926
Net Income				827,065		793,689		533,077
Net Income Attributable to Noncontrolling Interests				7,519		7,682		7,132
Net Income Attributable to Controlling Interest			$	819,546	$	786,007	$	525,945

Basic Earnings Per Common Share			$	2.59	$	2.49	$	1.90

Diluted Earnings Per Common Share			$	2.58	$	2.49	$	1.89

Weighted Average Common Shares Outstanding:
	Basic			316,136,748		315,311,387		277,209,819
	Diluted			317,417,414		316,211,160		277,993,631

The accompanying notes are an integral part of these consolidated financial statements.




CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Net Income			$	827,065	$	793,689	$	533,077
Other Comprehensive Income/(Loss), Net of Tax:
	Qualified Cash Flow Hedging Instruments			2,037		2,049		1,971
	Changes in Unrealized Gains/(Losses) on Other Securities			315		(940)		217
	Changes in Funded Status of Pension, SERP and PBOP Benefit Plans			(30,330)		25,714		(4,356)
Other Comprehensive Income/(Loss), Net of Tax				(27,978)		26,823		(2,168)
Comprehensive Income Attributable to Noncontrolling Interests				(7,519)		(7,682)		(7,132)
Comprehensive Income Attributable to Controlling Interest			$	791,568	$	812,830	$	523,777

The accompanying notes are an integral part of these consolidated financial statements.


NORTHEAST UTILITIES AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMMON SHAREHOLDERS' EQUITY

						Accumulated		Total
				Capital		Other		Common
		Common Shares		Surplus,	Retained	Comprehensive	Treasury	Shareholders'
(Thousands of Dollars, Except Share Information)		Shares	Amount	Paid In	Earnings	Income/(Loss)	Stock	Equity
Balance as of January 1, 2012		177,158,692	$ 980,264	$ 1,797,884	$ 1,651,875	$ (70,686)	$ (346,667)	$ 4,012,670
	Net Income				533,077			533,077
	Shares Issued in Connection with NSTAR Merger	136,048,595	680,243	4,358,027				5,038,270
	Other Equity Impacts of Merger with NSTAR			2,938	421			3,359
	Dividends on Common Shares - $1.32 Per Share				(375,527)			(375,527)
	Dividends on Preferred Stock				(7,029)			(7,029)
	Issuance of Common Shares, $5 Par Value	408,018	2,040	11,287				13,327
	Long-Term Incentive Plan Activity			(3,897)				(3,897)
	Issuance of Treasury Shares to Fund ESOP	438,329		8,454			8,043	16,497
	Other Changes in Shareholders' Equity			8,574				8,574
	Net Income Attributable to Noncontrolling Interests				(103)			(103)
	Other Comprehensive Loss					(2,168)		(2,168)
Balance as of December 31, 2012		314,053,634	1,662,547	6,183,267	1,802,714	(72,854)	(338,624)	9,237,050
	Net Income				793,689			793,689
	Dividends on Common Shares - $1.47 Per Share				(462,741)			(462,741)
	Dividends on Preferred Stock				(7,682)			(7,682)
	Issuance of Common Shares, $5 Par Value	560,848	2,804	8,274				11,078
	Long-Term Incentive Plan Activity			(10,748)				(10,748)
	Issuance of Treasury Shares	659,077		17,381			12,087	29,468
	Other Changes in Shareholders' Equity			(5,409)				(5,409)
	Other Comprehensive Income					26,823		26,823
Balance as of December 31, 2013		315,273,559	1,665,351	6,192,765	2,125,980	(46,031)	(326,537)	9,611,528
	Net Income				827,065			827,065
	Dividends on Common Shares - $1.57 Per Share				(496,524)			(496,524)
	Dividends on Preferred Stock				(7,519)			(7,519)
	Issuance of Common Shares, $5 Par Value	288,941	1,445	5,164				6,609
	Long-Term Incentive Plan Activity			(9,569)				(9,569)
	Issuance of Treasury Shares	1,420,837		37,817			26,070	63,887
	Other Changes in Shareholders' Equity			9,657	(341)			9,316
	Other Comprehensive Loss					(27,978)		(27,978)
Balance as of December 31, 2014		316,983,337	$ 1,666,796	$ 6,235,834	$ 2,448,661	$ (74,009)	$ (300,467)	$ 9,976,815



The accompanying notes are an integral part of these consolidated financial statements.


NORTHEAST UTILITIES AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS



			For the Years Ended December 31,
(Thousands of Dollars)			2014		2013		2012

Operating Activities:
	Net Income		$	827,065	$	793,689	$	533,077
	Adjustments to Reconcile Net Income to Net Cash Flows
		Provided by Operating Activities:
		Depreciation		614,657		610,777		519,010
		Deferred Income Taxes		443,259		431,413		292,000
		Pension, SERP and PBOP Expense		99,056		195,698		218,540
		Pension and PBOP Contributions		(211,649)		(342,184)		(295,028)
		Regulatory Over/(Under) Recoveries, Net		6,853		(24,276)		(259,853)
		Amortization of Regulatory Assets, Net		10,704		206,322		79,762
		Amortization of Rate Reduction Bonds		-		42,581		142,019
		Proceeds from DOE Damages Claim, Net		132,138		-		-
		Other		39,523		56,071		42,852
	Changes in Current Assets and Liabilities:
		Receivables and Unbilled Revenues, Net		(122,139)		(163,549)		(20,214)
		Fuel, Materials and Supplies		(41,310)		(14,811)		34,321
		Taxes Receivable/Accrued, Net		(323,224)		(50,950)		(5,450)
		Accounts Payable		144,743		(54,619)		(128,339)
		Other Current Assets and Liabilities, Net		15,797		(22,623)		8,532
Net Cash Flows Provided by Operating Activities				1,635,473		1,663,539		1,161,229

Investing Activities:
	Investments in Property, Plant and Equipment			(1,603,744)		(1,456,787)		(1,472,272)
	Proceeds from Sales of Marketable Securities			488,789		627,532		317,294
	Purchases of Marketable Securities			(491,220)		(679,784)		(348,629)
	Other Investing Activities			14,380		67,816		35,683
Net Cash Flows Used in Investing Activities				(1,591,795)		(1,441,223)		(1,467,924)

Financing Activities:
	Cash Dividends on Common Shares			(475,227)		(462,741)		(375,047)
	Cash Dividends on Preferred Stock			(7,519)		(7,682)		(7,029)
	Increase/(Decrease) in Short-Term Debt			285,075		(397,000)		825,000
	Issuance of Long-Term Debt			725,000		1,680,000		850,000
	Retirements of Long-Term Debt			(576,551)		(929,885)		(839,136)
	Retirements of Rate Reduction Bonds			-		(82,139)		(114,433)
	Other Financing Activities			883		(25,253)		6,529
Net Cash Flows (Used in)/Provided by Financing Activities				(48,339)		(224,700)		345,884
Net (Decrease)/Increase in Cash and Cash Equivalents				(4,661)		(2,384)		39,189
Cash and Cash Equivalents - Beginning of Year				43,364		45,748		6,559
Cash and Cash Equivalents - End of Year			$	38,703	$	43,364	$	45,748

The accompanying notes are an integral part of these consolidated financial statements.

Company Report on Internal Controls Over Financial Reporting

The Connecticut Light and Power Company

Management is responsible for the preparation, integrity, and fair presentation of the accompanying financial statements of The Connecticut Light and Power Company (CL&P or the Company) and of other sections of this annual report.

Under the supervision and with the participation of the principal executive officer and principal financial officer, CL&P conducted an evaluation of the effectiveness of internal controls over financial reporting based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on this evaluation under the framework in COSO, management concluded that internal controls over financial reporting were effective as of December 31, 2014.

February 25, 2015

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholder of The Connecticut Light and Power Company:

We have audited the accompanying balance sheets of The Connecticut Light and Power Company (the "Company") as of December 31, 2014 and 2013, and the related statements of income, comprehensive income, common stockholder's equity, and cash flows for each of the three years in the period ended December 31, 2014. Our audits also included the financial statement schedule listed in the Index at Item 15 of Part IV. These financial statements and financial statement schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on the financial statements and financial statement schedule based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such financial statements present fairly, in all material respects, the financial position of The Connecticut Light and Power Company as of December 31, 2014 and 2013, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2014, in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, such financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.

/s/ Deloitte & Touche LLP

Hartford, Connecticut

February 25, 2015


THE CONNECTICUT LIGHT AND POWER COMPANY
BALANCE SHEETS


		As of December 31,
(Thousands of Dollars)		2014		2013

ASSETS

Current Assets:
	Cash	$	2,356	$	7,237
	Receivables, Net		355,140		319,670
	Accounts Receivable from Affiliated Companies		16,757		13,777
	Unbilled Revenues		102,137		92,401
	Taxes Receivable		116,148		20,041
	Regulatory Assets		220,344		150,943
	Materials and Supplies		46,664		54,606
	Prepayments and Other Current Assets		37,822		33,041
Total Current Assets			897,368		691,716

Property, Plant and Equipment, Net			6,809,664		6,451,259

Deferred Debits and Other Assets:
	Regulatory Assets		1,475,508		1,663,147
	Other Long-Term Assets		177,568		174,380
Total Deferred Debits and Other Assets			1,653,076		1,837,527

Total Assets		$	9,360,108	$	8,980,502


LIABILITIES AND CAPITALIZATION

Current Liabilities:
	Notes Payable to NU Parent		$	133,400	$	287,300
	Long-Term Debt - Current Portion			162,000		150,000
	Accounts Payable			272,971		201,047
	Accounts Payable to Affiliated Companies			65,594		56,531
	Obligations to Third Party Suppliers			73,624		73,914
	Regulatory Liabilities			124,722		93,961
	Derivative Liabilities			88,459		92,233
	Other Current Liabilities			153,420		134,716
Total Current Liabilities				1,074,190		1,089,702

Deferred Credits and Other Liabilities:
	Accumulated Deferred Income Taxes			1,642,805		1,510,586
	Regulatory Liabilities			81,298		93,757
	Derivative Liabilities			406,199		617,072
	Accrued Pension, SERP and PBOP			273,854		95,895
	Other Long-Term Liabilities			148,844		163,588
Total Deferred Credits and Other Liabilities				2,553,000		2,480,898

Capitalization:
	Long-Term Debt			2,679,951		2,591,208

Preferred Stock Not Subject to Mandatory Redemption				116,200		116,200

	Common Stockholder's Equity:
		Common Stock		60,352		60,352
		Capital Surplus, Paid In		1,804,869		1,682,047
		Retained Earnings		1,072,477		961,482
		Accumulated Other Comprehensive Loss		(931)		(1,387)
	Common Stockholder's Equity			2,936,767		2,702,494
Total Capitalization				5,732,918		5,409,902

Commitments and Contingencies (Note 11)

Total Liabilities and Capitalization			$	9,360,108	$	8,980,502



The accompanying notes are an integral part of these financial statements.


THE CONNECTICUT LIGHT AND POWER COMPANY
STATEMENTS OF INCOME



			For the Years Ended December 31,
(Thousands of Dollars)			2014		2013		2012

Operating Revenues			$	2,692,582	$	2,442,341	$	2,407,449

Operating Expenses:
	Purchased Power and Transmission			982,876		872,769		858,231
	Operations and Maintenance			494,578		523,247		635,733
	Depreciation			188,837		177,603		166,853
	Amortization of Regulatory Assets, Net			59,336		4,870		14,372
	Energy Efficiency Programs			156,335		89,858		89,299
	Taxes Other Than Income Taxes			255,370		234,418		215,972
		Total Operating Expenses		2,137,332		1,902,765		1,980,460
Operating Income				555,250		539,576		426,989

Interest Expense:
	Interest on Long-Term Debt			135,656		130,620		124,894
	Other Interest			11,765		3,030		8,233
		Interest Expense		147,421		133,650		133,127
Other Income, Net				13,376		15,149		10,300
Income Before Income Tax Expense				421,205		421,075		304,162
Income Tax Expense				133,451		141,663		94,437
Net Income			$	287,754	$	279,412	$	209,725



The accompanying notes are an integral part of these financial statements.




STATEMENTS OF COMPREHENSIVE INCOME

Net Income			$	287,754	$	279,412	$	209,725
Other Comprehensive Income, Net of Tax:
	Qualified Cash Flow Hedging Instruments			444		444		444
	Changes in Unrealized Gains/(Losses) on Other Securities			12		(31)		7
Other Comprehensive Income, Net of Tax				456		413		451
Comprehensive Income			$	288,210	$	279,825	$	210,176



The accompanying notes are an integral part of these financial statements.


THE CONNECTICUT LIGHT AND POWER COMPANY
STATEMENTS OF COMMON STOCKHOLDER'S EQUITY

						Accumulated	Total
				Capital		Other	Common
		Common Stock		Surplus,	Retained	Comprehensive	Stockholder's
(Thousands of Dollars, Except Stock Information)		Stock	Amount	Paid In	Earnings	Income/(Loss)	Equity
Balance as of January 1, 2012		6,035,205	$ 60,352	$ 1,613,503	$ 735,948	$ (2,251)	$ 2,407,552
	Net Income				209,725		209,725
	Dividends on Preferred Stock				(5,559)		(5,559)
	Dividends on Common Stock				(100,486)		(100,486)
	Allocation of Benefits - ESOP			1,595			1,595
	Capital Stock Expenses, Net			51			51
	Capital Contributions from NU Parent			25,000			25,000
	Other Comprehensive Income					451	451
Balance as of December 31, 2012		6,035,205	60,352	1,640,149	839,628	(1,800)	2,538,329
	Net Income				279,412		279,412
	Dividends on Preferred Stock				(5,559)		(5,559)
	Dividends on Common Stock				(151,999)		(151,999)
	Allocation of Benefits - ESOP			1,847			1,847
	Capital Stock Expenses, Net			51			51
	Capital Contributions from NU Parent			40,000			40,000
	Other Comprehensive Income					413	413
Balance as of December 31, 2013		6,035,205	60,352	1,682,047	961,482	(1,387)	2,702,494
	Net Income				287,754		287,754
	Dividends on Preferred Stock				(5,559)		(5,559)
	Dividends on Common Stock				(171,200)		(171,200)
	Allocation of Benefits - ESOP			2,771			2,771
	Capital Stock Expenses, Net			51			51
	Capital Contributions from NU Parent			120,000			120,000
	Other Comprehensive Income					456	456
Balance as of December 31, 2014		6,035,205	$ 60,352	$ 1,804,869	$ 1,072,477	$ (931)	$ 2,936,767



The accompanying notes are an integral part of these financial statements.


THE CONNECTICUT LIGHT AND POWER COMPANY
STATEMENTS OF CASH FLOWS



			For the Years Ended December 31,
(Thousands of Dollars)			2014		2013		2012

Operating Activities:
	Net Income		$	287,754	$	279,412	$	209,725
	Adjustments to Reconcile Net Income to Net Cash Flows
		Provided by Operating Activities:
		Depreciation		188,837		177,603		166,853
		Deferred Income Taxes		130,949		130,038		140,993
		Pension, SERP and PBOP Expense, Net of PBOP Contributions		14,992		24,416		24,062
		Regulatory (Under)/Over Recoveries, Net		(20,502)		28,298		(100,505)
		Amortization of Regulatory Assets, Net		59,336		4,870		14,372
		Proceeds from DOE Damages Claim		68,610		-		-
		Other		(1,342)		(3,478)		(28,952)
	Changes in Current Assets and Liabilities:
		Receivables and Unbilled Revenues, Net		(78,631)		(56,593)		(7,741)
		Materials and Supplies		13,063		9,997		(4,573)
		Taxes Receivable/Accrued, Net		(126,376)		(41,594)		15,702
		Accounts Payable		68,891		(66,225)		(190,240)
		Other Current Assets and Liabilities, Net		6,838		8,513		(27,803)
Net Cash Flows Provided by Operating Activities				612,419		495,257		211,893

Investing Activities:
	Investments in Property, Plant and Equipment			(515,710)		(434,934)		(449,137)
	Other Investing Activities			12,653		2,650		32,009
Net Cash Flows Used in Investing Activities				(503,057)		(432,284)		(417,128)

Financing Activities:
	Cash Dividends on Common Stock			(171,200)		(151,999)		(100,486)
	Cash Dividends on Preferred Stock			(5,559)		(5,559)		(5,559)
	(Decrease)/Increase in Short-Term Debt			-		(89,000)		58,000
	(Decrease)/Increase in Notes Payable to NU Parent			(153,900)		(117,800)		346,575
	Issuance of Long-Term Debt			250,000		400,000		-
	Retirements of Long-Term Debt			(150,000)		(125,000)		(116,400)
	Capital Contributions from NU Parent			120,000		40,000		25,000
	Other Financing Activities			(3,584)		(6,379)		(1,895)
Net Cash Flows (Used in)/Provided by Financing Activities				(114,243)		(55,737)		205,235
Net (Decrease)/Increase in Cash				(4,881)		7,236		-
Cash - Beginning of Year				7,237		1		1
Cash - End of Year			$	2,356	$	7,237	$	1

The accompanying notes are an integral part of these financial statements.

Company Report on Internal Controls Over Financial Reporting

NSTAR Electric Company

Management is responsible for the preparation, integrity, and fair presentation of the accompanying consolidated financial statements of NSTAR Electric Company and subsidiary (NSTAR Electric or the Company) and of other sections of this annual report.

Under the supervision and with the participation of the principal executive officer and principal financial officer, NSTAR Electric conducted an evaluation of the effectiveness of internal controls over financial reporting based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on this evaluation under the framework in COSO, management concluded that internal controls over financial reporting were effective as of December 31, 2014.

February 25, 2015

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholder of NSTAR Electric Company:

We have audited the accompanying consolidated balance sheets of NSTAR Electric Company and subsidiary (the "Company") as of December 31, 2014 and 2013 and the related consolidated statements of income, comprehensive income, common stockholder's equity, and cash flows for each of the three years in the period ended December 31, 2014. Our audits also included the financial statement schedule listed in the Index at Item 15 of Part IV. These financial statements and financial statement schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on the financial statements and financial statement schedule based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of NSTAR Electric Company and subsidiary as of December 31, 2014 and 2013, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2014, in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, such financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.

/s/ Deloitte & Touche LLP

Hartford, Connecticut

February 25, 2015


NSTAR ELECTRIC COMPANY AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS


		As of December 31,
(Thousands of Dollars)		2014		2013

ASSETS

Current Assets:
	Cash and Cash Equivalents	$	12,773	$	8,021
	Receivables, Net		234,481		209,711
	Accounts Receivable from Affiliated Companies		40,353		27,264
	Unbilled Revenues		29,741		41,368
	Taxes Receivable		144,601		25,590
	Materials and Supplies		74,179		44,236
	Regulatory Assets		198,710		204,144
	Prepayments and Other Current Assets		10,815		11,120
Total Current Assets			745,653		571,454

Property, Plant and Equipment, Net			5,335,436		5,043,887

Deferred Debits and Other Assets:
	Regulatory Assets		1,179,100		1,235,156
	Other Long-Term Assets		73,051		60,624
Total Deferred Debits and Other Assets			1,252,151		1,295,780

Total Assets		$	7,333,240	$	6,911,121


LIABILITIES AND CAPITALIZATION

Current Liabilities:
	Notes Payable		$	302,000	$	103,500
	Long-Term Debt - Current Portion			4,700		301,650
	Accounts Payable			217,311		202,100
	Accounts Payable to Affiliated Companies			63,517		75,707
	Accumulated Deferred Income Taxes			55,136		50,128
	Regulatory Liabilities			49,611		53,958
	Other Current Liabilities			186,513		123,869
Total Current Liabilities				878,788		910,912

Deferred Credits and Other Liabilities:
	Accumulated Deferred Income Taxes			1,527,667		1,466,835
	Regulatory Liabilities			262,738		253,108
	Accrued Pension, SERP and PBOP			235,529		118,010
	Other Long-Term Liabilities			129,279		206,386
Total Deferred Credits and Other Liabilities				2,155,213		2,044,339

Capitalization:
	Long-Term Debt			1,792,712		1,499,417

Preferred Stock Not Subject to Mandatory Redemption				43,000		43,000

	Common Stockholder's Equity:
		Common Stock		-		-
		Capital Surplus, Paid In		994,130		992,625
		Retained Earnings		1,468,955		1,420,828
		Accumulated Other Comprehensive Income		442		-
	Common Stockholder's Equity			2,463,527		2,413,453
Total Capitalization				4,299,239		3,955,870

Commitments and Contingencies (Note 11)

Total Liabilities and Capitalization			$	7,333,240	$	6,911,121



The accompanying notes are an integral part of these consolidated financial statements.


NSTAR ELECTRIC COMPANY AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME



			For the Years Ended December 31,
(Thousands of Dollars)			2014		2013		2012

Operating Revenues			$	2,536,677	$	2,493,479	$	2,300,997

Operating Expenses:
	Purchased Power and Transmission			1,122,298		849,149		788,252
	Operations and Maintenance			326,972		376,360		431,802
	Depreciation			188,693		180,298		171,070
	Amortization of Regulatory Assets/(Liabilities), Net			(6,330)		230,148		117,682
	Amortization of Rate Reduction Bonds			-		15,054		90,322
	Energy Efficiency Programs			193,516		206,536		201,234
	Taxes Other Than Income Taxes			133,072		127,778		119,219
		Total Operating Expenses		1,958,221		1,985,323		1,919,581
Operating Income				578,456		508,156		381,416

Interest Expense:
	Interest on Long-Term Debt			77,140		79,088		87,100
	Interest on Rate Reduction Bonds			-		399		3,585
	Other Interest			738		(9,104)		(20,631)
		Interest Expense		77,878		70,383		70,054
Other Income, Net				4,491		3,639		2,846
Income Before Income Tax Expense				505,069		441,412		314,208
Income Tax Expense				201,981		172,866		123,966
Net Income			$	303,088	$	268,546	$	190,242



The accompanying notes are an integral part of these consolidated financial statements.




CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Net Income			$	303,088	$	268,546	$	190,242
Other Comprehensive Income, Net of Tax:
		Changes in Funded Status of SERP Benefit Plan		442		-		-
Other Comprehensive Income, Net of Tax				442		-		-
Comprehensive Income			$	303,530	$	268,546	$	190,242



The accompanying notes are an integral part of these consolidated financial statements.


NSTAR ELECTRIC COMPANY AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF COMMON STOCKHOLDER'S EQUITY

						Accumulated	Total
				Capital		Other	Common
		Common Stock		Surplus,	Retained	Comprehensive	Stockholder's
(Thousands of Dollars, Except Stock Information)		Stock	Amount	Paid In	Earnings	Income	Equity
Balance as of January 1, 2012		100	$ -	$ 992,625	$ 1,239,123	$ -	$ 2,231,748
	Net Income				190,242		190,242
	Dividends on Preferred Stock				(1,960)		(1,960)
	Dividends on Common Stock				(217,000)		(217,000)
Balance as of December 31, 2012		100	-	992,625	1,210,405	-	2,203,030
	Net Income				268,546		268,546
	Dividends on Preferred Stock				(2,123)		(2,123)
	Dividends on Common Stock				(56,000)		(56,000)
Balance as of December 31, 2013		100	-	992,625	1,420,828	-	2,413,453
	Net Income				303,088		303,088
	Dividends on Preferred Stock				(1,961)		(1,961)
	Dividends on Common Stock				(253,000)		(253,000)
	Other Changes in Stockholder's Equity			1,505			1,505
	Accumulated Other Comprehensive Income					442	442
Balance as of December 31, 2014		100	$ -	$ 994,130	$ 1,468,955	$ 442	$ 2,463,527



The accompanying notes are an integral part of these consolidated financial statements.


NSTAR ELECTRIC COMPANY AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS



			For the Years Ended December 31,
(Thousands of Dollars)			2014		2013		2012

Operating Activities:
	Net Income		$	303,088	$	268,546	$	190,242
	Adjustments to Reconcile Net Income to Net Cash Flows
		Provided by Operating Activities:
		Depreciation		188,693		180,298		171,070
		Deferred Income Taxes		108,133		48,808		4,264
		Pension and PBOP Expense		6,760		35,731		66,010
		Pension and PBOP Contributions		(120,306)		(82,000)		(25,000)
		Regulatory Over/(Under) Recoveries, Net		57,696		(119,433)		(16,129)
		Amortization of Regulatory (Liabilities)/Assets, Net		(6,330)		230,148		117,682
		Amortization of Rate Reduction Bonds		-		15,054		90,322
		Bad Debt Expense		24,740		28,108		40,301
		Proceeds from DOE Damages Claim		30,193		-		-
		Other		(51,478)		4,428		(32,048)
	Changes in Current Assets and Liabilities:
		Receivables and Unbilled Revenues, Net		(18,853)		(45,405)		(10,496)
		Materials and Supplies		(29,943)		3,227		1,813
		Taxes Receivable/Accrued, Net		(122,746)		(38,003)		29,899
		Accounts Payable		9,753		31,875		2,662
		Accounts Receivable from/Payable to Affiliates, Net		115,092		(44,491)		(61,879)
		Other Current Assets and Liabilities, Net		38,535		(6,468)		22,568
Net Cash Flows Provided by Operating Activities				533,027		510,423		591,281

Investing Activities:
	Investments in Property, Plant and Equipment			(465,028)		(476,600)		(414,089)
	Decrease in Special Deposits			-		37,604		3,060
	Other Investing Activities			-		400		400
Net Cash Flows Used in Investing Activities				(465,028)		(438,596)		(410,629)

Financing Activities:
	Cash Dividends on Common Stock			(253,000)		(56,000)		(217,000)
	Cash Dividends on Preferred Stock			(1,961)		(2,123)		(1,960)
	Increase/(Decrease) in Short-Term Debt			198,500		(172,500)		134,500
	Issuance of Long-Term Debt			300,000		200,000		400,000
	Retirements of Long-Term Debt			(301,650)		(1,650)		(401,650)
	Retirements of Rate Reduction Bonds			-		(43,493)		(84,367)
	Other Financing Activities			(5,136)		(1,735)		(5,853)
Net Cash Flows Used in Financing Activities				(63,247)		(77,501)		(176,330)
Net Increase/(Decrease) in Cash and Cash Equivalents				4,752		(5,674)		4,322
Cash and Cash Equivalents - Beginning of Year				8,021		13,695		9,373
Cash and Cash Equivalents - End of Year			$	12,773	$	8,021	$	13,695

The accompanying notes are an integral part of these consolidated financial statements.

Company Report on Internal Controls Over Financial Reporting

Public Service Company of New Hampshire

Management is responsible for the preparation, integrity, and fair presentation of the accompanying consolidated financial statements of Public Service Company of New Hampshire and subsidiary (PSNH or the Company) and of other sections of this annual report.

Under the supervision and with the participation of the principal executive officer and principal financial officer, PSNH conducted an evaluation of the effectiveness of internal controls over financial reporting based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on this evaluation under the framework in COSO, management concluded that internal controls over financial reporting were effective as of December 31, 2014.

February 25, 2015

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholder of Public Service Company of New Hampshire:

We have audited the accompanying consolidated balance sheets of Public Service Company of New Hampshire and subsidiary (the "Company") as of December 31, 2014 and 2013 and the related consolidated statements of income, comprehensive income, common stockholder's equity, and cash flows for each of the three years in the period ended December 31, 2014. Our audits also included the financial statement schedule listed in the Index at Item 15 of Part IV. These financial statements and financial statement schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on the financial statements and financial statement schedule based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of Public Service Company of New Hampshire and subsidiary as of December 31, 2014 and 2013, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2014, in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, such financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.

/s/ Deloitte & Touche LLP

Hartford, Connecticut

February 25, 2015


PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS


		As of December 31,
(Thousands of Dollars)		2014		2013

ASSETS

Current Assets:
	Cash	$	489	$	130
	Receivables, Net		80,151		76,331
	Accounts Receivable from Affiliated Companies		3,194		90
	Unbilled Revenues		40,181		38,344
	Fuel, Materials and Supplies		148,139		128,736
	Regulatory Assets		111,705		92,194
	Prepayments and Other Current Assets		42,392		24,100
Total Current Assets			426,251		359,925

Property, Plant and Equipment, Net			2,635,844		2,467,556

Deferred Debits and Other Assets:
	Regulatory Assets		293,115		219,346
	Other Long-Term Assets		39,228		39,891
Total Deferred Debits and Other Assets			332,343		259,237

Total Assets		$	3,394,438	$	3,086,718


LIABILITIES AND CAPITALIZATION

Current Liabilities:
	Notes Payable to NU Parent		$	90,500	$	86,500
	Long-Term Debt - Current Portion			-		50,000
	Accounts Payable			93,349		82,920
	Accounts Payable to Affiliated Companies			33,734		22,040
	Regulatory Liabilities			16,044		20,643
	Accumulated Deferred Income Taxes			36,164		28,596
	Other Current Liabilities			38,969		51,729
Total Current Liabilities				308,760		342,428

Deferred Credits and Other Liabilities:
	Accumulated Deferred Income Taxes			587,292		500,166
	Regulatory Liabilities			51,372		51,723
	Accrued Pension, SERP and PBOP			93,243		15,272
	Other Long-Term Liabilities			50,155		46,247
Total Deferred Credits and Other Liabilities				782,062		613,408

Capitalization:
	Long-Term Debt			1,076,286		999,006

	Common Stockholder's Equity:
		Common Stock		-		-
		Capital Surplus, Paid In		748,240		701,911
		Retained Earnings		486,459		438,515
		Accumulated Other Comprehensive Loss		(7,369)		(8,550)
	Common Stockholder's Equity			1,227,330		1,131,876
Total Capitalization				2,303,616		2,130,882

Commitments and Contingencies (Note 11)

Total Liabilities and Capitalization			$	3,394,438	$	3,086,718



The accompanying notes are an integral part of these consolidated financial statements.


PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME


			For the Years Ended December 31,
(Thousands of Dollars)			2014		2013		2012

Operating Revenues			$	959,500	$	935,402	$	988,013

Operating Expenses:
	Purchased Power, Fuel and Transmission			313,732		269,754		319,253
	Operations and Maintenance			261,848		267,797		263,234
	Depreciation			98,436		91,581		87,602
	Amortization of Regulatory Liabilities, Net			(29,602)		(20,387)		(24,086)
	Amortization of Rate Reduction Bonds			-		19,748		56,645
	Energy Efficiency Programs			14,286		14,494		14,245
	Taxes Other Than Income Taxes			71,417		67,196		66,025
		Total Operating Expenses		730,117		710,183		782,918
Operating Income				229,383		225,219		205,095

Interest Expense:
	Interest on Long-Term Debt			45,116		44,370		46,228
	Interest on Rate Reduction Bonds			-		(154)		2,687
	Other Interest			233		1,960		1,313
		Interest Expense		45,349		46,176		50,228
Other Income, Net				2,045		3,455		3,008
Income Before Income Tax Expense				186,079		182,498		157,875
Income Tax Expense				72,135		71,101		60,993
Net Income			$	113,944	$	111,397	$	96,882



The accompanying notes are an integral part of these consolidated financial statements.




CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Net Income			$	113,944	$	111,397	$	96,882
Other Comprehensive Income, Net of Tax:
	Qualified Cash Flow Hedging Instruments			1,162		1,162		1,162
	Changes in Unrealized Gains/(Losses) on Other Securities			19		(54)		13
	Changes in Funded Status of SERP Benefit Plan			-		(3)		2
Other Comprehensive Income, Net of Tax				1,181		1,105		1,177
Comprehensive Income			$	115,125	$	112,502	$	98,059



The accompanying notes are an integral part of these consolidated financial statements.


PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF COMMON STOCKHOLDER'S EQUITY

						Accumulated	Total
				Capital		Other	Common
		Common Stock		Surplus,	Retained	Comprehensive	Stockholder's
(Thousands of Dollars, Except Stock Information)		Stock	Amount	Paid In	Earnings	Income/(Loss)	Equity
Balance as of January 1, 2012		301	$ -	$ 700,285	$ 388,910	$ (10,832)	$ 1,078,363
	Net Income				96,882		96,882
	Dividends on Common Stock				(90,674)		(90,674)
	Allocation of Benefits - ESOP			767			767
	Other Comprehensive Income					1,177	1,177
Balance as of December 31, 2012		301	-	701,052	395,118	(9,655)	1,086,515
	Net Income				111,397		111,397
	Dividends on Common Stock				(68,000)		(68,000)
	Allocation of Benefits - ESOP			859			859
	Other Comprehensive Income					1,105	1,105
Balance as of December 31, 2013		301	-	701,911	438,515	(8,550)	1,131,876
	Net Income				113,944		113,944
	Dividends on Common Stock				(66,000)		(66,000)
	Capital Contributions from NU Parent			45,000			45,000
	Allocation of Benefits - ESOP			1,329			1,329
	Other Comprehensive Income					1,181	1,181
Balance as of December 31, 2014		301	$ -	$ 748,240	$ 486,459	$ (7,369)	$ 1,227,330



The accompanying notes are an integral part of these consolidated financial statements.


PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS



			For the Years Ended December 31,
(Thousands of Dollars)			2014		2013		2012

Operating Activities:
	Net Income		$	113,944	$	111,397	$	96,882
	Adjustments to Reconcile Net Income to Net Cash Flows
		Provided by Operating Activities:
		Depreciation		98,436		91,581		87,602
		Deferred Income Taxes		94,813		75,693		58,552
		Pension, SERP and PBOP Expense		7,197		26,846		26,312
		Pension and PBOP Contributions		(2,482)		(112,964)		(96,880)
		Regulatory Underrecoveries, Net		(11,875)		(8,481)		(183)
		Amortization of Regulatory Liabilities, Net		(29,602)		(20,387)		(24,086)
		Amortization of Rate Reduction Bonds		-		19,748		56,645
		Proceeds from DOE Damages Claim		14,453		-		-
		Other		10,095		16,079		11,205
	Changes in Current Assets and Liabilities:
		Receivables and Unbilled Revenues, Net		(15,576)		2,412		(84)
		Fuel, Materials and Supplies		(19,403)		(33,391)		25,897
		Taxes Receivable/Accrued, Net		(23,857)		26,462		(9,752)
		Accounts Payable		17,796		2,632		(15,248)
		Other Current Assets and Liabilities, Net		(5,972)		(9,520)		13,436
Net Cash Flows Provided by Operating Activities				247,967		188,107		230,298

Investing Activities:
	Investments in Property, Plant and Equipment			(256,159)		(186,009)		(203,902)
	Decrease in Notes Receivable from Affiliate			-		-		55,900
	(Increase)/Decrease in Special Deposits			(1,013)		22,040		4,200
	Other Investing Activities			(139)		(88)		(135)
Net Cash Flows Used in Investing Activities				(257,311)		(164,057)		(143,937)

Financing Activities:
	Cash Dividends on Common Stock			(66,000)		(68,000)		(90,674)
	Increase in Short-Term Debt			4,000		23,200		-
	Issuance of Long-Term Debt			75,000		250,000		-
	Retirements of Long-Term Debt			(50,000)		(198,235)		-
	Retirements of Rate Reduction Bonds			-		(29,294)		(56,074)
	Increase in Notes Payable to NU Parent			-		-		63,300
	Capital Contributions from NU Parent			45,000		-		-
	Other Financing Activities			1,703		(4,084)		(476)
Net Cash Flows Provided by/(Used in) Financing Activities				9,703		(26,413)		(83,924)
Net Increase/(Decrease) in Cash				359		(2,363)		2,437
Cash - Beginning of Year				130		2,493		56
Cash - End of Year			$	489	$	130	$	2,493

The accompanying notes are an integral part of these consolidated financial statements.

Company Report on Internal Controls Over Financial Reporting

Western Massachusetts Electric Company

Management is responsible for the preparation, integrity, and fair presentation of the accompanying financial statements of Western Massachusetts Electric Company (WMECO or the Company) and of other sections of this annual report.

Under the supervision and with the participation of the principal executive officer and principal financial officer, WMECO conducted an evaluation of the effectiveness of internal controls over financial reporting based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on this evaluation under the framework in COSO, management concluded that internal controls over financial reporting were effective as of December 31, 2014.

February 25, 2015

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholder of Western Massachusetts Electric Company:

We have audited the accompanying balance sheets of Western Massachusetts Electric Company (the "Company") as of December 31, 2014 and 2013 and the related statements of income, comprehensive income, common stockholder's equity, and cash flows for each of the three years in the period ended December 31, 2014. Our audits also included the financial statement schedule listed in the Index at Item 15 of Part IV. These financial statements and financial statement schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on the financial statements and financial statement schedule based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such financial statements present fairly, in all material respects, the financial position of Western Massachusetts Electric Company as of December 31, 2014 and 2013, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2014, in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, such financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.

/s/ Deloitte & Touche LLP

Hartford, Connecticut

February 25, 2015


WESTERN MASSACHUSETTS ELECTRIC COMPANY
BALANCE SHEETS


		As of December 31,
(Thousands of Dollars)		2014		2013

ASSETS

Current Assets:
	Receivables, Net	$	51,066	$	49,018
	Accounts Receivable from Affiliated Companies		7,851		47,607
	Unbilled Revenues		15,146		16,562
	Taxes Receivable		18,126		432
	Regulatory Assets		51,923		43,024
	Marketable Securities		28,658		26,628
	Prepayments and Other Current Assets		7,607		10,479
Total Current Assets			180,377		193,750

Property, Plant and Equipment, Net			1,461,321		1,381,060

Deferred Debits and Other Assets:
	Regulatory Assets		146,307		146,088
	Marketable Securities		29,452		31,243
	Other Long-Term Assets		22,018		40,679
Total Deferred Debits and Other Assets			197,777		218,010

Total Assets		$	1,839,475	$	1,792,820


LIABILITIES AND CAPITALIZATION

Current Liabilities:
	Notes Payable to NU Parent		$	21,400	$	-
	Long-Term Debt - Current Portion			50,000		-
	Accounts Payable			53,732		62,961
	Accounts Payable to Affiliated Companies			14,328		9,230
	Accrued Interest			7,526		7,525
	Regulatory Liabilities			22,486		19,858
	Accumulated Deferred Income Taxes			18,089		13,098
	Counterparty Deposits			3,376		7,688
	Other Current Liabilities			13,178		20,629
Total Current Liabilities				204,115		140,989

Deferred Credits and Other Liabilities:
	Accumulated Deferred Income Taxes			416,822		396,933
	Regulatory Liabilities			10,835		13,873
	Accrued Pension, SERP and PBOP			17,705		3,911
	Other Long-Term Liabilities			33,747		28,619
Total Deferred Credits and Other Liabilities				479,109		443,336

Capitalization:
	Long-Term Debt			578,471		629,389

	Common Stockholder's Equity:
		Common Stock		10,866		10,866
		Capital Surplus, Paid In		391,256		390,743
		Retained Earnings		178,834		181,014
		Accumulated Other Comprehensive Loss		(3,176)		(3,517)
	Common Stockholder's Equity			577,780		579,106
Total Capitalization				1,156,251		1,208,495

Commitments and Contingencies (Note 11)

Total Liabilities and Capitalization			$	1,839,475	$	1,792,820



The accompanying notes are an integral part of these financial statements.


WESTERN MASSACHUSETTS ELECTRIC COMPANY
STATEMENTS OF INCOME



			For the Years Ended December 31,
(Thousands of Dollars)			2014		2013		2012

Operating Revenues			$	493,423	$	472,724	$	441,164

Operating Expenses:
	Purchased Power and Transmission			172,876		147,059		136,086
	Operations and Maintenance			89,406		96,194		97,031
	Depreciation			41,886		37,568		29,971
	Amortization of Regulatory Assets/(Liabilities), Net			(6,228)		(3,206)		410
	Amortization of Rate Reduction Bonds			-		7,780		17,632
	Energy Efficiency Programs			42,937		39,524		27,802
	Taxes Other Than Income Taxes			34,907		28,458		21,458
		Total Operating Expenses		375,784		353,377		330,390
Operating Income				117,639		119,347		110,774

Interest Expense:
	Interest on Long-Term Debt			24,245		23,625		23,462
	Interest on Rate Reduction Bonds			-		177		1,229
	Other Interest			686		1,049		1,943
		Interest Expense		24,931		24,851		26,634
Other Income, Net				2,379		3,310		2,503
Income Before Income Tax Expense				95,087		97,806		86,643
Income Tax Expense				37,268		37,368		32,140
Net Income			$	57,819	$	60,438	$	54,503



The accompanying notes are an integral part of these financial statements.




STATEMENTS OF COMPREHENSIVE INCOME

Net Income			$	57,819	$	60,438	$	54,503
Other Comprehensive Income/(Loss), Net of Tax:
	Qualified Cash Flow Hedging Instruments			338		338		338
	Changes in Unrealized Gains/(Losses) on Other Securities			3		(9)		2
Other Comprehensive Income/(Loss), Net of Tax				341		329		340
Comprehensive Income			$	58,160	$	60,767	$	54,843



The accompanying notes are an integral part of these financial statements.


WESTERN MASSACHUSETTS ELECTRIC COMPANY
STATEMENTS OF COMMON STOCKHOLDER'S EQUITY

						Accumulated	Total
				Capital		Other	Common
		Common Stock		Surplus,	Retained	Comprehensive	Stockholder's
(Thousands of Dollars, Except Stock Information)		Stock	Amount	Paid In	Earnings	Income/(Loss)	Equity
Balance as of January 1, 2012		434,653	$ 10,866	$ 340,115	$ 115,506	$ (4,186)	$ 462,301
	Net Income				54,503		54,503
	Dividends on Common Stock				(9,432)		(9,432)
	Allocation of Benefits - ESOP			297			297
	Capital Contributions from NU Parent			50,000			50,000
	Other Comprehensive Income					340	340
Balance as of December 31, 2012		434,653	10,866	390,412	160,577	(3,846)	558,009
	Net Income				60,438		60,438
	Dividends on Common Stock				(40,001)		(40,001)
	Allocation of Benefits - ESOP			331			331
	Other Comprehensive Income					329	329
Balance as of December 31, 2013		434,653	10,866	390,743	181,014	(3,517)	579,106
	Net Income				57,819		57,819
	Dividends on Common Stock				(59,999)		(59,999)
	Allocation of Benefits - ESOP			513			513
	Other Comprehensive Income					341	341
Balance as of December 31, 2014		434,653	$ 10,866	$ 391,256	$ 178,834	$ (3,176)	$ 577,780



The accompanying notes are an integral part of these financial statements.


WESTERN MASSACHUSETTS ELECTRIC COMPANY
STATEMENTS OF CASH FLOWS



			For the Years Ended December 31,
(Thousands of Dollars)			2014		2013		2012

Operating Activities:
	Net Income		$	57,819	$	60,438	$	54,503
	Adjustments to Reconcile Net Income to Net Cash Flows
		Provided by Operating Activities:
		Depreciation		41,886		37,568		29,971
		Deferred Income Taxes		34,108		87,028		53,942
		Regulatory Overrecoveries, Net		1,925		8,458		(19,152)
		Amortization of Regulatory (Liabilities)/Assets, Net		(6,228)		(3,206)		410
		Amortization of Rate Reduction Bonds		-		7,780		17,632
		Proceeds from DOE Damages Claim		18,883		-		-
		Other		(2,005)		3,381		(3,954)
	Changes in Current Assets and Liabilities:
		Receivables and Unbilled Revenues, Net		39,872		(53,292)		(8,896)
		Materials and Supplies		(627)		865		(2,882)
		Taxes Receivable/Accrued, Net		(22,454)		19,840		(8,311)
		Accounts Payable		1,269		7,456		(19,297)
		Other Current Assets and Liabilities, Net		(11,169)		2,491		581
Net Cash Flows Provided by Operating Activities				153,279		178,807		94,547

Investing Activities:
	Investments in Property, Plant and Equipment			(116,205)		(128,786)		(264,175)
	Proceeds from Sales of Marketable Securities			73,198		70,778		79,769
	Purchases of Marketable Securities			(73,888)		(71,390)		(80,529)
	Decrease in Notes Receivable from Affiliate			-		-		11,000
	Other Investing Activities			3,200		7,401		(28)
Net Cash Flows Used in Investing Activities				(113,695)		(121,997)		(253,963)

Financing Activities:
	Cash Dividends on Common Stock			(59,999)		(40,001)		(9,432)
	Issuance of Long-Term Debt			-		80,000		150,000
	Retirements of Long-Term Debt			-		(55,000)		(53,800)
	Increase/(Decrease) in Notes Payable to NU Parent			21,400		(31,900)		31,900
	Retirements of Rate Reduction Bonds			-		(9,352)		(17,540)
	Capital Contributions from NU Parent			-		-		50,000
	Other Financing Activities			(985)		(558)		8,288
Net Cash Flows (Used in)/Provided by Financing Activities				(39,584)		(56,811)		159,416
Net Decrease in Cash				-		(1)		-
Cash - Beginning of Year				-		1		1
Cash - End of Year			$	-	$	-	$	1

The accompanying notes are an integral part of these financial statements.

NORTHEAST UTILITIES AND SUBSIDIARIES

THE CONNECTICUT LIGHT AND POWER COMPANY

NSTAR ELECTRIC COMPANY AND SUBSIDIARY

PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE AND SUBSIDIARY

WESTERN MASSACHUSETTS ELECTRIC COMPANY

COMBINED NOTES TO FINANCIAL STATEMENTS

Refer to the Glossary of Terms included in this combined Annual Report on Form 10-K for abbreviations and acronyms used throughout the combined notes to the financial statements.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

About NU, CL&P, NSTAR Electric, PSNH and WMECO

NU Consolidated: NU is a public utility holding company primarily engaged through its wholly owned regulated utility subsidiaries in the energy delivery business. On April 10, 2012, NU acquired NSTAR and its subsidiaries. See Note 21, "Merger of NU and NSTAR," for further information regarding the merger. NU's wholly owned regulated utility subsidiaries consist of CL&P, NSTAR Electric, PSNH, WMECO, Yankee Gas and NSTAR Gas. NU provides energy delivery service to approximately 3.6 million electric and natural gas customers through these six regulated utilities in Connecticut, Massachusetts and New Hampshire. On February 2, 2015, NU, CL&P, NSTAR Electric, PSNH and WMECO commenced doing business as Eversource Energy.

NU, CL&P, NSTAR Electric, PSNH and WMECO are reporting companies under the Securities Exchange Act of 1934. NU is a public utility holding company under the Public Utility Holding Company Act of 2005. Arrangements among the regulated electric companies and other NU companies, outside agencies and other utilities covering interconnections, interchange of electric power and sales of utility property are subject to regulation by the FERC. The Regulated companies are subject to regulation of rates, accounting and other matters by the FERC and/or applicable state regulatory commissions (the PURA for CL&P and Yankee Gas, the DPU for NSTAR Electric, WMECO and NSTAR Gas, and the NHPUC for PSNH).

Regulated Companies: CL&P, NSTAR Electric, PSNH and WMECO furnish franchised retail electric service in Connecticut, Massachusetts and New Hampshire. Yankee Gas and NSTAR Gas are engaged in the distribution and sale of natural gas to customers within Connecticut and central and eastern Massachusetts, respectively. CL&P, NSTAR Electric, PSNH and WMECO's results include the operations of their respective distribution and transmission businesses. PSNH and WMECO's distribution results include the operations of their respective generation businesses. NU also has a regulated subsidiary, NPT, which was formed to construct, own and operate the Northern Pass line, a HVDC transmission line from Québec to New Hampshire under development that will interconnect with a new HVDC transmission line being developed by a transmission subsidiary of HQ.

Other: NUSCO, NU's service company, Rocky River Realty Company, a wholly-owned real estate subsidiary of NU, Renewable Properties, Inc., a wholly-owned subsidiary of EETV, and Properties, Inc., a wholly-owned subsidiary of PSNH, provide support services to NU, including its regulated companies. Harbor Electric Energy Company, a wholly-owned subsidiary of NSTAR Electric, provides distribution service and ongoing support to the Massachusetts Water Resources Authority. Hopkinton LNG Corp, an indirect, wholly-owned subsidiary of NU, provides natural gas liquefaction, vaporization, and storage services for NSTAR Gas.

Basis of Presentation

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

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 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.

NU's consolidated financial information includes NSTAR and its subsidiaries' results of operations beginning April 10, 2012. The information disclosed for the year ended December 31, 2012 for NSTAR Electric is presented on a comparable basis.

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

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

Certain reclassifications of prior year data were made in the accompanying balance sheets for NU, CL&P, NSTAR Electric and PSNH. These reclassifications were made to conform to the current year presentation.

In accordance with accounting guidance on noncontrolling interests in consolidated financial statements, the Preferred Stock of CL&P and the Preferred Stock of NSTAR Electric, which are not owned by NU or its consolidated subsidiaries and are not subject to mandatory redemption, have

been presented as noncontrolling interests in the financial statements of NU. The Preferred Stock of CL&P and the Preferred Stock of NSTAR Electric are considered to be temporary equity and have been classified between liabilities and permanent shareholders' equity on the balance sheets of NU, CL&P and NSTAR Electric due to a provision in the preferred stock agreements of both CL&P and NSTAR Electric that grant preferred stockholders the right to elect a majority of the CL&P and NSTAR Electric Board of Directors, respectively, should certain conditions exist, such as if preferred dividends are in arrears for a specified amount of time. The Net Income reported in the statements of income and cash flows represents net income prior to apportionment to noncontrolling interests, which is represented by dividends on preferred stock of CL&P and NSTAR Electric.

As of December 31, 2014 and 2013, NU's carrying amount of goodwill was approximately $3.5 billion. NU performs an assessment for possible impairment of its goodwill at least annually. NU completed its annual goodwill impairment test for each of its reporting units as of October 1, 2014 and determined that no impairment exists. See Note 22, "Goodwill," for further information.

Accounting Standards

Recently Adopted Accounting Standards: On January 1, 2014, as required, NU prospectively adopted the Financial Accounting Standards Board's (FASB) final Accounting Standards Updates (ASU) that required presentation of certain unrecognized tax benefits as reductions to deferred tax assets. Implementation of this guidance had an immaterial impact on the balance sheets and no impact on the results of operations or cash flows of NU, CL&P, NSTAR Electric, PSNH and WMECO.

Accounting Standards Issued but not Yet Adopted: In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers, effective January 1, 2017, which amends existing revenue recognition guidance and is required to be applied retrospectively (either to each reporting period presented or cumulatively at the date of initial application). Management is reviewing the requirements of the ASU. The ASU's impact is not expected to have a material impact on the financial statements of NU, CL&P, NSTAR Electric, PSNH and WMECO.

Cash and Cash Equivalents

Cash and cash equivalents include cash on hand and short-term cash investments that are highly liquid in nature and have original maturities of three months or less. At the end of each reporting period, any overdraft amounts are reclassified from Cash and Cash Equivalents to Accounts Payable on the balance sheets.

Provision for Uncollectible Accounts

NU, including CL&P, NSTAR Electric, PSNH and WMECO, 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 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 90 days. The DPU allows WMECO to also recover in rates amounts associated with certain uncollectible hardship accounts receivable. Uncollectible customer account balances, which are expected to be recovered in rates, are included in Regulatory Assets or Other Long-Term Assets.

The total provision for uncollectible accounts and for uncollectible hardship accounts, which is included in the total provision, are included in Receivables, Net on the balance sheets, and were as follows:


	Total Provision for Uncollectible Accounts				Uncollectible Hardship
	As of December 31,				As of December 31,
(Millions of Dollars)	2014		2013		2014		2013
NU	$	175.3	$	171.3	$	91.5	$	81.2
CL&P		84.3		82.0		74.0		67.3
NSTAR Electric		40.7		41.7		-		-
PSNH		7.7		7.4		-		-
WMECO		9.9		10.0		6.2		5.5

Fuel, Materials and Supplies and Allowance Inventory

Fuel, Materials and Supplies include natural gas, coal, biomass and oil inventories as well as materials purchased primarily for construction or operation and maintenance purposes. Natural gas, coal, biomass and oil inventories are valued at their respective weighted average cost. Materials and supplies are valued at the lower of average cost or market. As of December 31, 2014, NU and PSNH had $164.3 million and $95.1 million, respectively, of fuel and $185.4 million and $53 million, respectively, of materials and supplies. As of December 31, 2013, NU and PSNH had $139.5 million and $74.2 million, respectively, of fuel and $163.7 million and $54.5 million, respectively, of materials and supplies.

Fuel, Materials and Supplies also include Renewable Energy Certificates (RECs), which are purchased from suppliers of renewable sources of generation. RECs are used to meet state mandated Renewable Portfolio Standards requirements. As of December 31, 2014 and 2013, NSTAR Electric had $25.1 million and $4.9 million, respectively, of RECs classified as Materials and Supplies on the balance sheets.

PSNH is subject to federal and state laws and regulations that regulate emissions of air pollutants, including SO2, CO2, and NOx related to its regulated generation units, and uses SO2, CO2, and NOx emissions allowances. At the end of each compliance period, PSNH is required to relinquish SO2, CO2, and NOx emissions allowances corresponding to the actual respective emissions emitted by its generating units over the compliance period. SO2 and NOx emissions allowances are obtained through an annual allocation from the federal and state regulators that are granted at no cost and through purchases from third parties. CO2 emissions allowances are obtained through an annual allocation from the state regulator that are

granted at no cost and are acquired through auctions and through purchases from third parties. SO2, CO2, and NOx emissions allowances are charged to expense based on their weighted average cost as they are utilized against emissions volumes at PSNH's generating units.

SO2, CO2, and NOx emissions allowances are recorded within Fuel, Materials and Supplies and are classified on the balance sheet as short-term or long-term depending on the period in which they are expected to be utilized against actual emissions. As of December 31, 2014 and 2013, PSNH had $20.1 million and $19.4 million, respectively, of long-term SO2 and CO2 emissions allowances classified as Other Long-Term Assets on the balance sheets.

Restricted Cash and Other Deposits

As of December 31, 2014, NU, CL&P and PSNH had $3.2 million, $2.1 million, and $1 million, respectively, of restricted cash relating to amounts held in escrow, which were included in Prepayments and Other Current Assets on the balance sheets. As of December 31, 2013, these amounts were $1.7 million and $1.4 million for NU and CL&P, respectively.

As of December 31, 2014, NU, CL&P and PSNH had $9.9 million, $1.2 million and $2.5 million, respectively, of cash collateral posted not subject to master netting agreements, primarily with ISO-NE, which were included in Prepayments and Other Current Assets on the balance sheets. As of December 31, 2013, these amounts were $17.9 million and $9 million for NU and NSTAR Electric, respectively.

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 and nonrecurring fair value measurements of nonfinancial assets such as goodwill and AROs, and is also used to estimate the fair value of preferred stock and long-term debt.

Fair Value Hierarchy: In measuring fair value, NU uses observable market data when available and minimizes 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. NU evaluates the classification of assets and liabilities measured at fair value on a quarterly basis, and NU'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.

Determination of Fair Value: The valuation techniques and inputs used in NU's fair value measurements are described in Note 4, "Derivative Instruments," Note 5, "Marketable Securities," Note 6, "Asset Retirement Obligations," Note 9A, "Employee Benefits – Pension Benefits and Postretirement Benefits Other Than Pensions," Note 13, "Fair Value of Financial Instruments," and Note 21, "Merger of NU and NSTAR," to the financial statements.

Derivative Accounting

Many of the Regulated companies' contracts for the purchase and sale of energy or energy-related products are derivatives. The accounting treatment for energy contracts entered into varies and depends on the intended use of the particular contract and on whether or not the contract is a derivative. For the Regulated companies, regulatory assets or regulatory liabilities are recorded to offset the fair values of derivative contracts, as contract settlements are recovered from, or refunded to, customers in future rates.

The application of derivative accounting is complex and requires management judgment in the following respects: identification of derivatives and embedded derivatives, election and designation of the normal exception, and determination of the fair value of derivative contracts. All of these judgments can have a significant impact on the financial statements.

The judgment applied in the election of the normal exception (and resulting accrual accounting) includes the conclusion that it is probable at the inception of the contract and throughout its term that it will result in physical delivery of the underlying product and that the quantities will be used or sold by the business in the normal course of business. If facts and circumstances change and management can no longer support this conclusion, then the normal exception and accrual accounting is terminated, and fair value accounting is applied prospectively.

The fair value of derivative contracts is based upon the contract terms and conditions and the underlying market price or fair value per unit. When quantities are not specified in the contract, the Company determines whether the contract has a determinable quantity by using amounts referenced in default provisions and other relevant sections of the contract. The fair value of derivative assets and liabilities with the same counterparty are offset and recorded as a net derivative asset or liability on the balance sheets. Changes in the fair value of derivative contracts are recorded as regulatory assets or liabilities and do not impact net income.

For further information regarding derivative contracts, see Note 4, "Derivative Instruments," to the financial statements.

Equity Method Investments

Regional Decommissioned Nuclear Companies: CL&P, NSTAR Electric, PSNH and WMECO own common stock in three regional nuclear generation companies (CYAPC, YAEC and MYAPC, collectively referred to as the Yankee Companies), each of which owned a single nuclear generating facility that has been decommissioned. For CL&P, NSTAR Electric, PSNH and WMECO, the respective investments in CYAPC, YAEC and MYAPC are accounted for under the equity method. NU consolidates CYAPC and YAEC because CL&P's, NSTAR Electric's, PSNH's and WMECO's combined ownership interest in each of these entities is greater than 50 percent. Intercompany transactions between CL&P, NSTAR Electric, PSNH and WMECO and the CYAPC and YAEC companies have been eliminated in consolidation of the NU financial statements.

Ownership interests in the Yankee Companies as of December 31, 2014 and 2013 were as follows:


(Percent)	CYAPC		YAEC		MYAPC
CL&P	34.5	%	24.5	%	12.0	%
NSTAR Electric	14.0		14.0		4.0
PSNH	5.0		7.0		5.0
WMECO	9.5		7.0		3.0

The total carrying values of CL&P's, NSTAR Electric's, PSNH's and WMECO's ownership interests in CYAPC, YAEC and MYAPC, which are included in Other Long-Term Assets on their respective balance sheets, were as follows:


	As of December 31,
(Millions of Dollars)	2014		2013
CL&P	$	1.2	$	1.2
NSTAR Electric		0.5		0.5
PSNH		0.3		0.3
WMECO		0.3		0.3

For further information on the Yankee Companies, see Note 11C, "Commitments and Contingencies - Contractual Obligations - Yankee Companies," to the financial statements.

Other Investments: As of December 31, 2014 and 2013, NU had an equity ownership interest in an energy investment fund of $17.8 million and $9.8 million, respectively.

Equity investments are included in Other Long-Term Assets on the balance sheets and net earnings related to these equity investments are included in Other Income, Net on the statements of income.

Revenues

Regulated Companies: The Regulated companies' retail revenues are based on rates approved by their respective state regulatory commissions. In general, rates can only be changed through formal proceedings with the state regulatory commissions. The Regulated companies' rates are designed to recover the costs to provide service to their customers, including a return on investment. The Regulated companies also utilize regulatory commission-approved tracking mechanisms to recover certain costs on a fully-reconciling basis. These tracking mechanisms require rates to be changed periodically to ensure recovery of actual costs incurred. WMECO and CL&P (effective December 1, 2014), each have a revenue decoupling mechanism to recover a pre-established level of baseline distribution delivery service revenues per year, independent of actual customer usage. Decoupling mechanisms effectively break the relationship between sales volumes and revenues recognized.

A significant portion of the Regulated companies' retail revenues relate to the recovery of costs incurred for the sale of electricity and natural gas purchased on behalf of customers. These energy supply costs are recovered from customers in rates through cost tracking mechanisms. Energy purchases are recorded in Purchased Power, Fuel and Transmission, and the sale of energy associated with these purchases are recorded in Operating Revenues.

Regulated Companies' Unbilled Revenues: Because customers are billed throughout the month based on pre-determined cycles rather than on a calendar month basis, an estimate of electricity or natural gas delivered to customers for which the customers have not yet been billed is calculated as of the balance sheet date. Unbilled revenues are included in Operating Revenues on the statements of income and are assets on the balance sheets. Actual amounts billed to customers when meter readings become available may vary from the estimated amount.

The Regulated companies estimate unbilled sales monthly using the daily load cycle method. The daily load cycle method allocates billed sales to the current calendar month based on the daily load for each billing cycle. The billed sales are subtracted from total month load, net of delivery losses, to estimate unbilled sales. Unbilled revenues are estimated by first allocating unbilled sales to the respective customer classes, then applying an estimated rate by customer class to those sales.

Regulated Companies' Transmission Revenues - Wholesale Rates: Wholesale transmission revenues are recovered through FERC approved formula rates. Wholesale transmission revenues for CL&P, NSTAR Electric, PSNH, and WMECO are collected under the ISO New England Inc. Transmission, Markets and Services Tariff (ISO-NE Tariff). The ISO-NE Tariff includes Regional Network Service (RNS), Schedule 21 - NU rate schedules, which recover the costs of transmission and other transmission-related services for CL&P, PSNH and WMECO, and Schedule 21 - NSTAR rate schedules, which recover costs of transmission and other transmission-related services for NSTAR Electric. The RNS rate, administered by ISO-NE and billed to all New England transmission load, including CL&P, NSTAR Electric, PSNH and WMECO's distribution businesses, is reset on June 1st of each year and recovers the revenue requirements associated with transmission facilities that benefit the entire New England region. Schedule 21 - NU and Schedule 21 - NSTAR rates, administered by NU, recovers the remainder of the transmission revenue requirements. The Schedule 21 - NU rate is reset on January 1st and June 1st of each year, while the Schedule 21 - NSTAR rate is reset on June 1st of each year. The Schedule 21 - NU and Schedule 21 - NSTAR rate calculations recover total transmission revenue requirements net of revenues

received from other sources (i.e., RNS, rentals, etc.), thereby ensuring that NU recovers all of CL&P's, NSTAR Electric's, PSNH's and WMECO's regional and local transmission revenue requirements in accordance with the ISO-NE Tariff. RNS, Schedule 21 - NU and Schedule 21 - NSTAR rates provide for the annual reconciliation and recovery or refund of estimated costs to actual costs. The financial impacts of differences between actual and estimated costs are deferred for future recovery from, or refunded to, transmission customers. See Note 11E, "Commitments and Contingencies – FERC Base ROE Complaints," for complaints filed at FERC relating to NU's base ROE.

Regulated Companies' Transmission Revenues - Retail Rates: A significant portion of the NU transmission segment revenue comes from ISO-NE charges to the distribution businesses of CL&P, NSTAR Electric, PSNH and WMECO, each of which recovers these costs through rates charged to their retail customers. CL&P, NSTAR Electric, PSNH and WMECO each have a retail transmission cost tracking mechanism as part of their rates, which allows the electric distribution companies to charge their retail customers for transmission costs on a timely basis.

Operating Expenses

Costs related to fuel and natural gas included in Purchased Power, Fuel and Transmission on the statements of income were as follows:


	For the Years Ended December 31,
(Millions of Dollars)	2014		2013		2012
NU - Natural Gas and Fuel (1)	$	599.4	$	466.5	$	346.8
PSNH – Fuel		113.4		104.8		103.4

(1) NSTAR Gas natural gas costs were included in NU beginning April 10, 2012.

Allowance for Funds Used During Construction

AFUDC represents the cost of borrowed and equity funds used to finance construction and is included in the cost of the Regulated companies' utility plant. The portion of AFUDC attributable to borrowed funds is recorded as a reduction of Other Interest Expense, and the AFUDC related to equity funds is recorded as Other Income, Net on the statements of income. AFUDC costs are recovered from customers over the service life of the related plant in the form of increased revenue collected as a result of higher depreciation expense.

The Regulated companies' average AFUDC rate is based on a FERC-prescribed formula using the cost of a company's short-term financings and capitalization (preferred stock, long-term debt and common equity), as appropriate. The average rate is applied to average eligible CWIP amounts to calculate AFUDC.


NU	For the Years Ended December 31,
(Millions of Dollars, except percentages)	2014		2013		2012 (1)
Borrowed Funds	$	5.8	$	4.1	$	5.3
Equity Funds		13.7		7.1		6.8
Total AFUDC	$	19.5	$	11.2	$	12.1
Average AFUDC Rate		3.4%		2.7%		3.7%

(1) NSTAR amounts were included in NU beginning April 10, 2012.


	For the Years Ended December 31,
	2014								2013								2012
(Millions of Dollars,			NSTAR								NSTAR								NSTAR
except percentages)	CL&P		Electric		PSNH		WMECO		CL&P		Electric		PSNH		WMECO		CL&P		Electric		PSNH		WMECO
Borrowed Funds	$	1.9	$	2.0	$	0.6	$	0.9	$	2.2	$	0.5	$	0.5	$	0.5	$	2.5	$	0.3	$	1.6	$	0.5
Equity Funds		2.9		3.8		0.6		1.7		2.9		-		0.2		1.0		1.9		-		1.9		1.0
Total AFUDC	$	4.8	$	5.8	$	1.2	$	2.6	$	5.1	$	0.5	$	0.7	$	1.5	$	4.4	$	0.3	$	3.5	$	1.5
Average AFUDC Rate		3.4%		2.5%		1.8%		5.6%		3.7%		0.5%		1.1%		6.1%		3.6%		0.4%		5.9%		6.8%

Other Income, Net

Items included within Other Income, Net on the statements of income primarily consist of investment income/(loss), interest income, AFUDC related to equity funds, and equity in earnings. Investment income/(loss) primarily relates to debt and equity securities held in trust. For further information, see Note 5, "Marketable Securities," to the financial statements. For further information on AFUDC related to equity funds, see Note 1M, "Summary of Significant Accounting Policies – Allowance for Funds Used During Construction," to the financial statements.

Other Taxes

Gross receipts taxes levied by the state of Connecticut are collected by CL&P and Yankee Gas from their respective customers. These gross receipts taxes are shown on a gross basis with collections in Operating Revenues and payments in Taxes Other Than Income Taxes on the statements of income as follows:


	For the Years Ended December 31,
(Millions of Dollars)	2014		2013		2012
NU	$	148.2	$	144.1	$	135.0
CL&P		127.9		128.2		120.7

Certain sales taxes are collected by NU's companies that serve customers in Connecticut and Massachusetts as agents for state and local governments and are recorded on a net basis with no impact on the statements of income.


P.		Supplemental Cash Flow Information

NU			As of and For the Years Ended December 31,
(Millions of Dollars)			2014		2013		2012 (1)
Cash Paid/(Received) During the Year for:
	Interest, Net of Amounts Capitalized		$	349.6	$	343.3	$	356.5
	Income Taxes			334.2		50.0		(12.8)
Non-Cash Investing Activities:
	Plant Additions Included in Accounts Payable (As of)			181.9		193.1		160.6

(1) NSTAR amounts were included in NU beginning April 10, 2012.


		As of and For the Years Ended December 31,
		2014								2013								2012
				NSTAR								NSTAR								NSTAR
(Millions of Dollars)		CL&P		Electric		PSNH		WMECO		CL&P		Electric		PSNH		WMECO		CL&P		Electric		PSNH		WMECO
Cash Paid/(Received) During the Year for:
	Interest, Net of Amounts Capitalized	$	144.1	$	75.3	$	41.1	$	25.9	$	131.6	$	75.8	$	43.3	$	25.8	$	129.4	$	94.6	$	49.8	$	25.8
	Income Taxes		135.4		217.1		2.3		25.1		55.0		163.4		(30.1)		(69.0)		(42.0)		88.1		14.7		(8.4)
Non-Cash Investing Activities:
	Plant Additions Included in Accounts Payable (As of)		63.5		34.6		39.3		14.2		51.4		57.0		34.9		19.5		42.8		50.0		16.8		30.0

In 2014, as a result of damages awarded to the Yankee Companies for spent nuclear fuel lawsuits against the DOE described in Note 11C, "Commitments and Contingencies - Contractual Obligations - Yankee Companies," NU received total proceeds of $132.1 million, which were net of $80.6 million in proceeds CYAPC and YAEC returned to non-affiliated member companies.

The merger of NU with NSTAR on April 10, 2012 represented a significant non-cash transaction. Refer to Note 21, "Merger of NU and NSTAR," for further information.

Related Parties

NUSCO, NU's service company, provides centralized accounting, administrative, engineering, financial, information technology, legal, operational, planning, purchasing, and other services to NU's companies. The Rocky River Realty Company, Renewable Properties, Inc. and Properties, Inc., three other NU subsidiaries, construct, acquire or lease some of the property and facilities used by NU's companies.

As of both December 31, 2014 and 2013, CL&P, PSNH and WMECO had long-term receivables from NUSCO in the amounts of $25 million, $3.8 million and $5.5 million, respectively, which were included in Other Long-Term Assets on the balance sheets. These amounts related to the funding of investments held in trust by NUSCO in connection with certain postretirement benefits for CL&P, PSNH and WMECO employees and have been eliminated in consolidation on the NU financial statements.

Included in the CL&P, NSTAR Electric, PSNH and WMECO balance sheets as of December 31, 2014 and 2013 were Accounts Receivable from Affiliated Companies and Accounts Payable to Affiliated Companies relating to transactions between CL&P, NSTAR Electric, PSNH and WMECO and other subsidiaries that are wholly-owned by NU. These amounts have been eliminated in consolidation on the NU financial statements.

Severance Benefits

For the years ended December 31, 2014 and 2013, NU recorded severance benefit expenses of $15 million and $9.7 million, respectively, in connection with the partial outsourcing of information technology functions and facilities closures, as well as ongoing post-merger integration. As of December 31, 2014 and 2013, the severance accrual totaled $10.4 million and $14.7 million, respectively, and was included in Other Current Liabilities on the balance sheets.

REGULATORY ACCOUNTING

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.

Regulatory Assets: The components of regulatory assets are as follows:


NU	As of December 31,
(Millions of Dollars)	2014		2013
Benefit Costs	$	2,016.0	$	1,240.2
Derivative Liabilities		425.5		638.0
Income Taxes, Net		635.3		626.2
Storm Restoration Costs		502.8		589.6
Goodwill-related		505.4		525.9
Regulatory Tracker Mechanisms		350.5		323.4
Contractual Obligations - Yankee Companies		123.8		154.2
Buy Out Agreements for Power Contracts		42.6		70.2
Other Regulatory Assets		124.7		126.8
Total Regulatory Assets		4,726.6		4,294.5
Less: Current Portion		672.5		535.8
Total Long-Term Regulatory Assets	$	4,054.1	$	3,758.7


	As of December 31,
	2014								2013
			NSTAR								NSTAR
(Millions of Dollars)	CL&P		Electric		PSNH		WMECO		CL&P		Electric		PSNH		WMECO
Benefit Costs	$	445.4	$	515.9	$	174.3	$	85.0	$	297.7	$	496.7	$	100.6	$	57.3
Derivative Liabilities		410.9		4.5		-		-		630.4		7.7		-		-
Income Taxes, Net		437.7		83.7		38.0		35.5		415.5		84.0		40.3		43.7
Storm Restoration Costs		319.6		103.7		47.7		31.8		397.8		109.3		43.7		38.8
Goodwill-related		-		433.9		-		-		-		451.5		-		-
Regulatory Tracker Mechanisms		16.1		141.4		103.5		33.0		8.0		169.5		83.3		32.6
Buy Out Agreements for Power Contracts		-		38.6		4.0		-		-		64.7		5.5		-
Other Regulatory Assets		66.1		56.1		37.3		12.9		64.6		55.9		38.1		16.7
Total Regulatory Assets		1,695.8		1,377.8		404.8		198.2		1,814.0		1,439.3		311.5		189.1
Less: Current Portion		220.3		198.7		111.7		51.9		150.9		204.1		92.2		43.0
Total Long-Term Regulatory Assets	$	1,475.5	$	1,179.1	$	293.1	$	146.3	$	1,663.1	$	1,235.2	$	219.3	$	146.1

Regulatory Costs in Other Long-Term Assets: The Regulated companies had $60.5 million ($1.3 million for CL&P, $33.2 million for NSTAR Electric, $0.9 million for PSNH, and $11 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 December 31, 2014 and 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. The NSTAR Electric balance as of December 31, 2014 and 2013 primarily related to costs deferred in connection with the basic service bad debt adder. See Note 11G, "Commitments and Contingencies – Basic Service Bad Debt Adder," for further information.

Equity Return on Regulatory Assets: For rate-making purposes, the Regulated companies recover the carrying costs related to their regulatory assets. For certain regulatory assets, the carrying cost recovered includes an equity return component. This equity return, which is not recorded on the balance sheets, totaled $1.7 million and $1.9 million for CL&P and $43.3 million and $33.1 million for PSNH as of December 31, 2014 and 2013, respectively. These carrying costs will be recovered from customers in future rates.

Regulatory Assets - The following provides further information about regulatory assets:

Benefit Costs: NU's Pension, SERP and PBOP Plans are accounted for in accordance with accounting guidance on defined benefit pension and other PBOP plans. The liability recorded by the Regulated companies to recognize the funded status of their retiree benefit plans are offset by regulatory assets in lieu of a charge to Accumulated Other Comprehensive Income/(Loss), reflecting ultimate recovery from customers through rates. All amounts are remeasured annually. Regulatory accounting was also applied to the portions of NU's service company costs that support the Regulated companies, as these amounts are also recoverable. As these regulatory assets do not represent a cash outlay for the Regulated companies, no carrying charge is recovered from customers.

The increase in the funded status liability of the retiree benefit plans and the corresponding regulatory assets was primarily driven by a change in mortality assumptions, which increased the estimate of benefits to be provided to plan participants, and a decrease in the discount rate assumption. For further information on the funded status liability and related regulatory assets of the Pension, SERP and PBOP plans, see Note 9A, "Employee Benefits – Pension Benefits and Postretirement Benefits Other Than Pensions."

CL&P, NSTAR Electric, PSNH and WMECO recover benefit costs related to their distribution and transmission operations from customers in rates as allowed by their applicable regulatory commissions. NSTAR Electric and WMECO each recover their qualified pension and PBOP expenses related to distribution operations through rate reconciling mechanisms that fully track the change in net pension and PBOP expenses each year.

Derivative Liabilities: Regulatory assets recorded as an offset to derivative liabilities relate to the fair value of contracts used to purchase energy and energy-related products that will be recovered from customers in future rates. See Note 4, "Derivative Instruments," to the financial statements for further information. These assets are excluded from rate base and are being recovered as the actual settlements occur over the duration of the contracts.

Income Taxes, Net: The tax effect of temporary book-tax differences (differences between the periods in which transactions affect income in the financial statements and the periods in which they affect the determination of taxable income, including those differences relating to uncertain tax positions) is accounted for in accordance with the rate-making treatment of the applicable regulatory commissions and accounting guidance for income taxes. Differences in income taxes between the accounting guidance and the rate-making treatment of the applicable regulatory commissions are recorded as regulatory assets. As these assets are offset by deferred income tax liabilities, no carrying charge is collected. For further information regarding income taxes, see Note 10, "Income Taxes," to the financial statements.

Storm Restoration Costs: The storm restoration cost deferrals relate to costs incurred at CL&P, NSTAR Electric, PSNH and WMECO that each company expects to recover from customers. A storm must meet certain criteria to be declared a major storm with the criteria specific to each state jurisdiction and utility company. Once a storm is declared major, all qualifying expenses incurred during storm restoration efforts are deferred and recovered from customers. In addition to storm restoration costs, CL&P and PSNH are each allowed to recover storm pre-staging costs in accordance with applicable regulation.

CL&P, NSTAR Electric, PSNH and WMECO experienced several significant storm events, including Tropical Storm Irene in 2011, the October 2011 snowstorm, Storm Sandy in 2012 and the February 2013 blizzard. 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 customers' service. In addition, on November 26, 2014, a snowstorm caused damage to the electric delivery systems of PSNH and WMECO. This snowstorm resulted in estimated deferred storm restoration costs of approximately $23 million at PSNH and approximately $3 million at WMECO. The storm restoration cost regulatory asset balance at CL&P, NSTAR Electric, PSNH and WMECO reflects deferrable 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.

Storm Filings: Each electric utility has sought, or is seeking, recovery of its deferred storm restoration costs through its applicable regulatory recovery process.

CL&P: As of December 31, 2014, all CL&P deferred storm costs have been reviewed and approved for recovery in distribution rates.

On March 12, 2014, the PURA approved recovery of $365 million of deferred storm restoration costs (with carrying charges) associated with five major storms that occurred in 2011 and 2012 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 in its distribution rates over a six-year period that commenced on December 1, 2014. The remaining costs were either disallowed or are probable of recovery from other sources. These costs did not have a material impact on CL&P's financial position, results of operations or cash flows.

Effective June 1, 2014, CL&P received $65.4 million of DOE Phase II Damages proceeds. On June 17, 2014, the PURA ordered CL&P to refund these proceeds to customers by offsetting the deferred storm restoration costs regulatory asset. For further information on the DOE Phase II Damages proceeds received from the Yankee Companies, see Note 11C, "Commitments and Contingencies - Contractual Obligations - Yankee Companies," to the financial statements.

On December 17, 2014, as part of the distribution rate case decision, CL&P was also allowed recovery of the 2013 storm costs and residual 2012 Storm Sandy costs over a seven-year period that commenced on December 1, 2014.

NSTAR Electric: On December 30, 2013, the DPU approved recovery of $34.2 million of NSTAR Electric's storm restoration costs, plus carrying costs, related to Tropical Storm Irene in 2011 and the October 2011 snowstorm. NSTAR Electric is recovering these costs, plus carrying costs, in its distribution rates over a five-year period that commenced on January 1, 2014.

PSNH: On June 27, 2013, the NHPUC approved an increase to PSNH's distribution rates effective July 1, 2013, which included a $5 million increase to the level of funding for the major storm cost reserve. The major storm cost reserve is used to offset the storm restoration cost regulatory asset. On April 7, 2014, PSNH received an audit report from the NHPUC approving storm costs from 2011 through March 2013.

WMECO: On December 20, 2013, the DPU approved WMECO's 2013 Annual Storm Reserve Recovery Cost Adjustment filing to begin recovering the October 2011 snowstorm and 2012 Storm Sandy restoration costs, which commenced on January 1, 2014, subject to further review and reconciliation. On December 5, 2014, the DPU approved the majority of deferred storm costs through 2011.

Goodwill-related: The goodwill regulatory asset originated from the transaction that created NSTAR in 1999. This regulatory asset is currently being amortized and recovered from customers in rates without a carrying charge over a 40-year period (as of December 31, 2014, there were 25 years of amortization remaining).

Regulatory Tracker Mechanisms: The Regulated companies' approved rates are designed to recover their incurred costs to provide service to customers. The Regulated companies recover certain of their costs on a fully-reconciling basis through regulatory commission-approved tracking mechanisms. The difference between the costs incurred (or the rate recovery allowed) and the actual revenues is recorded as regulatory assets (for undercollections) or regulatory liabilities (for overcollections) to be included in future customer rates each year. Carrying charges are recorded on all material regulatory tracker mechanisms.

CL&P, NSTAR Electric, PSNH and WMECO each recover the costs associated with the procurement of energy, transmission related costs from FERC-approved transmission tariffs, energy efficiency programs, low income assistance programs, and restructuring and stranded costs as a result of deregulation, on a fully reconciling basis. Energy procurement costs at PSNH include the costs related to its generating stations.

WMECO's and CL&P's (effective December 1, 2014) distribution revenue is decoupled from their customer sales volume. CL&P and WMECO reconcile their annual base distribution rate recovery to a pre-established level of baseline distribution delivery service revenue. Any difference

between the allowed level of distribution revenue and the actual amount incurred during a 12-month period is adjusted through rates in the following period.

Contractual Obligations - Yankee Companies: CL&P, NSTAR Electric, PSNH and WMECO are responsible for their proportionate share of the remaining costs of the CYAPC, YAEC and MYAPC nuclear facilities, including nuclear fuel storage. A portion of these amounts was recorded as a regulatory asset. Amounts for CL&P are earning a return and are being recovered through the CTA. Amounts for NSTAR Electric and WMECO are being recovered without a return through the transition charge. Amounts for PSNH were fully recovered in 2006. As a result of NU's consolidation of CYAPC and YAEC, NU's regulatory asset balance also includes the regulatory assets of CYAPC and YAEC, which totaled $97.8 million and $129.8 million as of December 31, 2014 and 2013, respectively. Intercompany transactions between CL&P, NSTAR Electric, PSNH and WMECO and the CYAPC and YAEC companies have been eliminated in consolidation of the NU financial statements.

Buy Out Agreements for Power Contracts: NSTAR Electric's balance represents the contract termination liability related to certain purchase power contract buy out agreements that were executed in 2004. The contracts' termination payments occur through September 2016 and are collected from customers through NSTAR Electric's transition charge over the same period. NSTAR Electric does not earn a return on this regulatory asset. PSNH's balance represents payments associated with the termination of various power purchase contracts that were recorded as regulatory assets and are amortized over the remaining life of the contracts.

Other Regulatory Assets: Other Regulatory Assets primarily include asset retirement obligations, environmental remediation costs, losses associated with the reacquisition or redemption of long-term debt and various other items, partially offset by purchase price adjustments recorded as Regulatory Assets in connection with the merger with NSTAR.

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


NU	As of December 31,
(Millions of Dollars)	2014		2013
Cost of Removal	$	439.9	$	435.1
Regulatory Tracker Mechanisms		192.3		151.2
AFUDC - Transmission		67.1		68.1
Other Regulatory Liabilities		50.8		52.9
Total Regulatory Liabilities		750.1		707.3
Less: Current Portion		235.0		204.3
Total Long-Term Regulatory Liabilities	$	515.1	$	503.0


	As of December 31,
	2014								2013
			NSTAR								NSTAR
(Millions of Dollars)	CL&P		Electric		PSNH		WMECO		CL&P		Electric		PSNH		WMECO
Cost of Removal	$	19.7	$	258.3	$	50.3	$	1.1	$	29.1	$	250.0	$	49.7	$	-
Regulatory Tracker Mechanisms		122.6		20.7		14.2		22.3		95.6		21.9		21.6		21.1
AFUDC – Transmission		53.6		4.4		-		9.1		54.7		4.1		-		9.3
Other Regulatory Liabilities		10.1		28.9		2.9		0.8		8.4		31.1		1.0		3.4
Total Regulatory Liabilities		206.0		312.3		67.4		33.3		187.8		307.1		72.3		33.8
Less: Current Portion		124.7		49.6		16.0		22.5		94.0		54.0		20.6		19.9
Total Long-Term Regulatory Liabilities	$	81.3	$	262.7	$	51.4	$	10.8	$	93.8	$	253.1	$	51.7	$	13.9

Cost of Removal: NU's Regulated companies currently recover amounts in rates for future costs of removal of plant assets over the lives of the assets. The estimated cost to remove utility assets from service is recognized as a component of depreciation expense and the cumulative amounts collected from customers but not yet expended is recognized as a regulatory liability. Expended costs that exceed amounts collected from customers are recognized as regulatory assets, as they are probable of recovery in future rates.

AFUDC - Transmission: AFUDC was recorded by CL&P and WMECO for their NEEWS projects through May 31, 2011, all of which was reserved as a regulatory liability to reflect rate base recovery for 100 percent of the CWIP as a result of FERC-approved transmission incentives. Effective June 1, 2011, FERC approved changes to the ISO-NE Tariff in order to include 100 percent of the NEEWS CWIP in regional rate base. As a result, CL&P and WMECO no longer record AFUDC on NEEWS CWIP. NSTAR Electric recorded AFUDC on reliability-related projects over $5 million through December 31, 2014, 50 percent of which was recorded as a regulatory liability to reflect rate base recovery for 50 percent of the CWIP as a result of FERC-approved transmission incentives.

Other Regulatory Liabilities: Other Regulatory Liabilities primarily includes amounts that are subject to various rate reconciling mechanisms that, as of each period end date, would result in refunds to customers.

2014 Regulatory Developments: As a result of actions taken by the FERC and other developments in the pending base ROE complaint proceedings described in Note 11E, "Commitments and Contingencies – FERC Base ROE Complaints," in 2014 the Company recorded reserves at its electric subsidiaries to recognize the potential financial impact of the first and second complaints. As of December 31, 2014, the cumulative pre-tax reserves (excluding interest), which exclude refunds for the first complaint refund period, totaled $60.7 million at NU, $33.5 million at CL&P, $13.6 million at NSTAR Electric, $5.1 million at PSNH and $8.5 million at WMECO. As of December 31, 2013, as a result of the 2013 FERC ALJ initial decision, the Company had an aggregate pre-tax reserve (excluding interest) of $23.7 million at NU, $12.8 million at CL&P, $5.7 million at NSTAR Electric, $2.3 million at PSNH and $2.9 million at WMECO. These reserves were recorded as a regulatory liability in Regulatory Tracker Mechanisms and as a reduction of Operating Revenues.

Effective June 1, 2014, as a result of damages awarded to the Yankee Companies for spent nuclear fuel lawsuits against the DOE described in Note 11C, "Commitments and Contingencies - Contractual Obligations - Yankee Companies," the Yankee Companies returned the DOE Phase II Damages proceeds to the member companies, including CL&P, NSTAR Electric, PSNH, and WMECO, for the benefit of their respective customers. CL&P's refund obligation to customers of $65.4 million was recorded as an offset to the deferred storm restoration costs regulatory asset, as directed by PURA. NSTAR Electric's, PSNH's and WMECO's refund obligation to customers of $29.1 million, $13.1 million and $18.1 million, respectively, was recorded as a regulatory liability in Regulatory Tracker Mechanisms. Refunds to customers for these DOE proceeds began in 2014.

On December 31, 2014, NSTAR Electric, NSTAR Gas and the Massachusetts Attorney General filed a comprehensive settlement agreement with the DPU. The comprehensive settlement agreement included resolution of the outstanding NSTAR Electric CPSL program filings for the periods 2006 through 2011, the NSTAR Electric and NSTAR Gas PAM and energy efficiency-related customer billing adjustments reported in 2012, and the NSTAR Electric energy efficiency program filings regarding LBR for the periods 2008 through 2011. If approved by the DPU, NSTAR Electric and NSTAR Gas will be required to refund a total of $44.7 million to their respective customers, which was included in Regulatory Tracker Mechanisms and Other Regulatory Liabilities as of December 31, 2014. For further information, see Note 11F, "Commitments and Contingencies – 2014 Comprehensive Settlement Agreement."

PROPERTY, PLANT AND EQUIPMENT AND ACCUMULATED DEPRECIATION

Utility property, plant and equipment is recorded at original cost. Original cost includes materials, labor, construction overhead and AFUDC for regulated property. The cost of repairs and maintenance, including planned major maintenance activities, is charged to Operating Expenses as incurred.

The following tables summarize the investments in utility property, plant and equipment by asset category:


NU		As of December 31,
(Millions of Dollars)		2014		2013
Distribution - Electric		$	12,495.2	$	11,950.2
Distribution - Natural Gas			2,595.4		2,425.9
Transmission			6,930.7		6,412.5
Generation			1,170.9		1,152.3
Electric and Natural Gas Utility			23,192.2		21,940.9
Other (1)			551.3		508.7
Property, Plant and Equipment, Gross			23,743.5		22,449.6
Less: Accumulated Depreciation
	Electric and Natural Gas Utility		(5,777.8)		(5,387.0)
	Other		(231.8)		(196.2)
Total Accumulated Depreciation			(6,009.6)		(5,583.2)
Property, Plant and Equipment, Net			17,733.9		16,866.4
Construction Work in Progress			913.1		709.8
Total Property, Plant and Equipment, Net		$	18,647.0	$	17,576.2

(1)

These assets are primarily comprised of building improvements, computer software, hardware and equipment and telecommunications assets at NU's service company and unregulated companies.


	As of December 31,
	2014								2013
			NSTAR								NSTAR
(Millions of Dollars)	CL&P		Electric		PSNH		WMECO		CL&P		Electric		PSNH		WMECO
Distribution	$	5,158.8	$	4,895.5	$	1,696.7	$	784.2	$	4,930.7	$	4,694.7	$	1,608.2	$	756.6
Transmission		3,274.0		1,928.5		789.7		891.0		3,071.9		1,772.3		695.7		826.4
Generation		-		-		1,136.5		34.4		-		-		1,131.2		21.1
Property, Plant and Equipment, Gross		8,432.8		6,824.0		3,622.9		1,709.6		8,002.6		6,467.0		3,435.1		1,604.1
Less: Accumulated Depreciation		(1,928.0)		(1,761.4)		(1,090.0)		(297.4)		(1,804.1)		(1,631.3)		(1,021.8)		(271.5)
Property, Plant and Equipment, Net		6,504.8		5,062.6		2,532.9		1,412.2		6,198.5		4,835.7		2,413.3		1,332.6
Construction Work in Progress		304.9		272.8		102.9		49.1		252.8		208.2		54.3		48.5
Total Property, Plant and Equipment, Net	$	6,809.7	$	5,335.4	$	2,635.8	$	1,461.3	$	6,451.3	$	5,043.9	$	2,467.6	$	1,381.1

Depreciation of utility assets is calculated on a straight-line basis using composite rates based on the estimated remaining useful lives of the various classes of property (estimated useful life for PSNH distribution). The composite rates are subject to approval by the appropriate state regulatory agency. The composite rates include a cost of removal component, which is collected from customers over the lives of the plant assets and is recognized as a regulatory liability. Depreciation rates are applied to property from the time it is placed in service.

Upon retirement from service, the cost of the utility asset is charged to the accumulated provision for depreciation. The actual incurred removal costs are applied against the related regulatory liability.

The depreciation rates for the various classes of utility property, plant and equipment aggregate to composite rates as follows:


(Percent)	2014		2013		2012
NU	3.0	%	2.8	%	2.5	%
CL&P	2.7		2.5		2.5
NSTAR Electric	3.0		2.9		2.8
PSNH	3.0		3.0		3.0
WMECO	3.3		2.9		3.3


The following table summarizes average useful lives of depreciable assets:

	Average Depreciable Life
(Years)	NU		CL&P		NSTAR Electric		PSNH		WMECO
Distribution		34.9		37.5		32.3		32.3		30.9
Transmission		42.5		39.8		44.0		43.7		49.9
Generation		31.9		-		-		32.1		25.0
Other		14.2		-		-		-		-

DERIVATIVE INSTRUMENTS

The Regulated companies purchase and procure energy and energy-related products, which are subject to price volatility, for their customers. The costs associated with supplying energy to customers are recoverable through customer rates. The Regulated companies manage the risks associated with the price volatility of energy and energy-related products through the use of derivative and nonderivative contracts.

Many of the derivative contracts meet the definition of, and are designated as, normal and qualify for accrual accounting under the applicable accounting guidance. The costs and benefits of derivative contracts that meet the definition of normal are recognized in Operating Expenses or Operating Revenues on the statements of income, as applicable, as electricity or natural gas is delivered.

Derivative contracts that are not designated as normal are recorded at fair value as current or long-term Derivative Assets or Derivative Liabilities on the balance sheets. For the Regulated companies, regulatory assets or regulatory liabilities are recorded to offset the fair values of derivatives, as contract settlements are recovered from, or refunded to, customers in their respective energy supply rates. For NU's unregulated wholesale marketing contracts that expired on December 31, 2013, changes in fair values of derivatives were included in Net Income.

The gross fair values of derivative assets and liabilities with the same counterparty are offset and reported as net Derivative Assets or Derivative Liabilities, with current and long-term portions, on the balance sheets. The following table presents the gross fair values of contracts categorized by risk type and the net amount recorded as current or long-term derivative asset or liability:


		As of December 31,
		2014						2013
		Commodity Supply				Net Amount		Commodity Supply				Net Amount
		and Price Risk				Recorded as		and Price Risk					Recorded as
(Millions of Dollars)		Management		Netting (1)		a Derivative		Management		Netting (1)		a Derivative
Current Derivative Assets:
Level 2:
	NU	$	-	$	-	$	-	$	1.9	$	(0.3)	$	1.6
Level 3:
	NU		16.2		(6.6)		9.6		18.4		(9.8)		8.6
	CL&P		16.1		(6.6)		9.5		17.1		(9.8)		7.3
	NSTAR Electric		0.1		-		0.1		1.2		-		1.2

Long-Term Derivative Assets:
Level 2:
	NU	$	-	$	-	$	-	$	0.2	$	-	$	0.2
Level 3:
	NU		93.5		(19.2)		74.3		116.2		(42.2)		74.0
	CL&P		93.5		(19.2)		74.3		113.6		(42.2)		71.4

Current Derivative Liabilities:
Level 2:
	NU	$	(9.8)	$	-	$	(9.8)	$	-	$	-	$	-
Level 3:
	NU		(90.0)		-		(90.0)		(93.7)		-		(93.7)
	CL&P		(88.5)		-		(88.5)		(92.2)		-		(92.2)
	NSTAR Electric		(1.5)		-		(1.5)		(1.5)		-		(1.5)


Level 2:
	NU	$	(0.3)	$	-	$	(0.3)	$	-	$	-	$	-
Level 3:
	NU		(409.3)		-		(409.3)		(624.1)		-		(624.1)
	CL&P		(406.2)		-		(406.2)		(617.1)		-		(617.1)
	NSTAR Electric		(3.1)		-		(3.1)		(7.0)		-		(7.0)

(1)

Amounts represent derivative assets and liabilities that NU elected to record net on the balance sheets. These amounts are subject to master netting agreements or similar agreements for which the right of offset exists.

The business activities that result in the recognition of derivative assets also create exposure to various counterparties. As of December 31, 2014, NU and CL&P's derivative assets were exposed to counterparty credit risk. Of NU's and CL&P's derivative assets, $64 million was contracted with investment grade entities.

For further information on the fair value of derivative contracts, see Note 1H, "Summary of Significant Accounting Policies - Fair Value Measurements," and Note 1I, "Summary of Significant Accounting Policies - Derivative Accounting," to the financial statements.

Derivative Contracts At Fair Value with Offsetting Regulatory Amounts

Commodity Supply and Price Risk Management: As required by regulation, CL&P, along with UI, has capacity-related contracts with generation facilities. CL&P has a sharing agreement with UI, with 80 percent of each contract allocated to CL&P and 20 percent allocated to UI. The combined capacity of these contracts is 787 MW. The capacity contracts extend through 2026 and obligate both CL&P and UI to make or receive payments on a monthly basis to or from the generation facilities based on the difference between a set capacity price and the capacity market price received in the ISO-NE capacity markets. In addition, CL&P has a contract to purchase 0.1 million MWh of energy per year through 2020.

NSTAR Electric has a renewable energy contract to purchase 0.1 million MWh of energy per year through 2018 and a capacity-related contract to purchase up to 35 MW per year through 2019.

As of December 31, 2014 and 2013, NU had NYMEX future contracts in order to reduce variability associated with the purchase price of approximately 8.8 million and 9.1 million MMBtu of natural gas, respectively.

The following table presents the current change in fair value, primarily recovered through rates from customers, associated with NU's derivative contracts:


		Gain/(Loss) Recognized on Derivatives
(Millions of Dollars)		For the Years Ended December 31,
NU		2014		2013		2012
Balance Sheets:
	Regulatory Assets and Liabilities	$	134.4	$	160.6	$	(29.0)
Statements of Income:
	Purchased Power, Fuel and Transmission		-		1.0		(0.7)

Credit Risk

Certain of NU's derivative contracts contain credit risk contingent features. These features require NU to maintain investment grade credit ratings from the major rating agencies and to post collateral for contracts in a net liability position over specified credit limits. As of December 31, 2014, NU had approximately $10 million of derivative contracts in a net liability position that were subject to credit risk contingent features and would have been required to post additional collateral of approximately $10 million if NU parent's unsecured debt credit ratings had been downgraded to below investment grade. As of December 31, 2013, there were no derivative contracts in a net liability position that were subject to credit risk contingent features.

Fair Value Measurements of Derivative Instruments

Derivative contracts classified as Level 2 in the fair value hierarchy relate to the financial contracts for natural gas futures. Prices are obtained from broker quotes and are based on actual market activity. The contracts are valued using NYMEX natural gas prices. Valuations of these contracts also incorporate discount rates using the yield curve approach.

The fair value of derivative contracts classified as Level 3 utilizes significant unobservable inputs. The fair value is modeled using income techniques, such as discounted cash flow valuations adjusted for assumptions relating to exit price. Significant observable inputs for valuations of these contracts include energy and energy-related product prices in future years for which quoted prices in an active market exist. Fair value measurements categorized in Level 3 of the fair value hierarchy are prepared by individuals with expertise in valuation techniques, pricing of energy and energy-related products, and accounting requirements. The future power and capacity prices for periods that are not quoted in an active market or established at auction are based on available market data and are escalated based on estimates of inflation to address the full time period of the contract.

Valuations of derivative contracts using a discounted cash flow methodology include assumptions regarding the timing and likelihood of scheduled payments and also reflect non-performance risk, including credit, using the default probability approach based on the counterparty's credit rating for assets and the Company's credit rating for liabilities. Valuations incorporate estimates of premiums or discounts that would be required by a market participant to arrive at an exit price, using historical market transactions adjusted for the terms of the contract.

The following is a summary of NU's, including CL&P's and NSTAR Electric's, Level 3 derivative contracts and the range of the significant unobservable inputs utilized in the valuations over the duration of the contracts:


	As of December 31,
	2014							2013
		Range					Period Covered		Range					Period Covered
Energy Prices:
NU	$	52			per MWh		2020	$	49	-	77	per MWh		2018 - 2029
CL&P	$	52			per MWh		2020	$	56	-	58	per MWh		2018 - 2029

Capacity Prices:
NU	$	5.30	-	12.98		per kW-Month	2016 - 2026	$	5.07	-	11.82		per kW-Month	2017 - 2029
CL&P	$	11.08	-	12.98		per kW-Month	2018 - 2026	$	5.07	-	10.42		per kW-Month	2017 - 2026
NSTAR Electric	$	5.30	-	11.10		per kW-Month	2016 - 2019	$	5.07	-	7.38		per kW-Month	2017 - 2019

Forward Reserve:
NU, CL&P	$	5.80	-	9.50		per kW-Month	2015 - 2024	$	3.30				per kW-Month	2014 - 2024

REC Prices:
NU	$	38	-	56	per REC		2015 - 2018	$	36	-	87		per REC	2014 - 2029
NSTAR Electric	$	38	-	56	per REC		2015 - 2018	$	36	-	70		per REC	2014 - 2018

Exit price premiums of 7 percent through 24 percent are also applied on these contracts and reflect the most recent market activity available for similar type contracts.

Significant increases or decreases in future energy or capacity prices in isolation would decrease or increase, respectively, the fair value of the derivative liability. Any increases in the risk premiums would increase the fair value of the derivative liabilities. Changes in these fair values are recorded as a regulatory asset or liability and would not impact net income.

Valuations using significant unobservable inputs: The following tables present changes in the Level 3 category of derivative assets and derivative liabilities measured at fair value on a recurring basis. The derivative assets and liabilities are presented on a net basis.


(Millions of Dollars)		NU		CL&P		NSTAR Electric
Derivatives, Net:
Fair Value as of January 1, 2013		$	(878.6)	$	(866.2)	$	(14.9)
Net Realized/Unrealized Gains Included in:
	Net Income (1)		10.9		-		-
	Regulatory Assets and Liabilities		158.3		148.9		3.5
Settlements			74.2		86.7		4.1
Fair Value as of December 31, 2013		$	(635.2)	$	(630.6)	$	(7.3)
Net Realized/Unrealized Gains Included in Regulatory Assets and Liabilities			141.3		139.7		4.3
Settlements			78.5		80.0		(1.5)
Fair Value as of December 31, 2014		$	(415.4)	$	(410.9)	$	(4.5)

(1)

The Net Income impact for the year ended December 31, 2013 related to the unregulated wholesale marketing sales contract that was offset by the losses on the unregulated sourcing contracts classified as Level 2 in the fair value hierarchy, resulting in a total net gain of $1 million.

MARKETABLE SECURITIES

NU maintains trusts to fund certain non-qualified executive benefits and WMECO maintains a spent nuclear fuel trust to fund WMECO's prior period spent nuclear fuel liability. These trusts hold marketable securities. These trusts are not subject to regulatory oversight by state or federal agencies. In addition, CYAPC and YAEC maintain legally restricted trusts, each of which holds marketable securities, for settling the decommissioning obligations of their nuclear power plants.

The Company elected to record mutual funds at fair value and certain other equity investments as trading securities, with the changes in fair values recorded in Other Income, Net on the statements of income. As of December 31, 2014 and 2013, the mutual funds and equity investments were classified as Level 1 in the fair value hierarchy and totaled $85.1 million and $57.2 million, respectively. For the years ended December 31, 2014, 2013 and 2012, net gains on these securities of $1.9 million, $10.2 million and $5.9 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. All other marketable securities are accounted for as available-for-sale.

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


		As of December 31,
		2014								2013
				Pre-Tax		Pre-Tax						Pre-Tax		Pre-Tax
		Amortized		Unrealized		Unrealized				Amortized		Unrealized		Unrealized
(Millions of Dollars)		Cost		Gains		Losses		Fair Value		Cost		Gains		Losses		Fair Value
NU
	Debt Securities (1)	$	313.0	$	7.5	$	(0.3)	$	320.2	$	299.2	$	2.5	$	(2.1)	$	299.6
	Equity Securities (1)		160.6		73.3		-		233.9		163.6		60.5		-		224.1
WMECO
	Debt Securities (2)		58.2		-		(0.1)		58.1		57.9		-		-		57.9

(1)

NU's amounts include CYAPC's and YAEC's marketable securities held in nuclear decommissioning trusts of $450.8 million and $424 million as of December 31, 2014 and 2013, respectively, which are legally restricted and can only be used for the costs of decommissioning of the nuclear power plants owned by these companies. Unrealized gains and losses for the 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. All of the equity securities accounted for as available-for-sale securities are held in the CYAPC and YAEC trusts.

(2)

Unrealized gains and losses on debt securities held by WMECO are recorded in Marketable Securities with the corresponding offset to Other Long-Term Assets on the balance sheets.

Unrealized Losses and Other-than-Temporary Impairment: There have been no significant unrealized losses, other-than-temporary impairments or credit losses for NU or WMECO. 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 NU's benefit trust, Other Long-Term Assets for WMECO, and offset in Other Long-Term Liabilities for CYAPC and YAEC. NU utilizes the specific identification basis method for the NU benefit trust and the average cost basis method for the WMECO trust and 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 December 31, 2014, the contractual maturities of available-for-sale debt securities are as follows:


	NU				WMECO
	Amortized				Amortized
(Millions of Dollars)	Cost		Fair Value		Cost		Fair Value
Less than one year (1)	$	55.0	$	55.0	$	28.7	$	28.7
One to five years		88.8		89.1		25.8		25.8
Six to ten years		66.0		67.7		0.7		0.7
Greater than ten years		103.2		108.4		3.0		2.9
Total Debt Securities	$	313.0	$	320.2	$	58.2	$	58.1

(1)

Amounts in the Less than one year NU 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:


		NU				WMECO
		As of December 31,				As of December 31,
(Millions of Dollars)		2014		2013		2014		2013
Level 1:
	Mutual Funds and Equities	$	319.0	$	281.3	$	-	$	-
	Money Market Funds		24.9		32.9		4.3		10.9
Total Level 1		$	343.9	$	314.2	$	4.3	$	10.9
Level 2:
	U.S. Government Issued Debt Securities (Agency and Treasury)	$	51.3	$	61.4	$	-	$	6.8
	Corporate Debt Securities		49.1		53.6		14.7		15.1
	Asset-Backed Debt Securities		54.1		30.4		14.5		9.0
	Municipal Bonds		116.3		105.5		13.0		11.2
	Other Fixed Income Securities		24.5		15.8		11.6		4.9
Total Level 2		$	295.3	$	266.7	$	53.8	$	47.0
Total Marketable Securities		$	639.2	$	580.9	$	58.1	$	57.9

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.

ASSET RETIREMENT OBLIGATIONS

NU, including CL&P, NSTAR Electric, PSNH and WMECO, recognizes a liability for the fair value of an ARO on the obligation date if the liability's fair value can be reasonably estimated and is conditional on a future event. Settlement dates and future costs are reasonably estimated when sufficient information becomes available. Management has identified various categories of AROs, primarily certain assets containing asbestos and hazardous contamination and has performed fair value calculations, reflecting expected probabilities for settlement scenarios.

The fair value of an ARO is recorded as a liability in Other Long-Term Liabilities with a corresponding amount included in Property, Plant and Equipment, Net on the balance sheets. The ARO assets are depreciated, and the ARO liabilities are accreted over the estimated life of the obligation with corresponding credits recorded as accumulated depreciation and ARO liabilities, respectively. As the Regulated companies are rate-regulated on a cost-of-service basis, these companies apply regulatory accounting guidance and both the depreciation and accretion costs associated with the Regulated companies' AROs are recorded as increases to Regulatory Assets on the balance sheets.

A reconciliation of the beginning and ending carrying amounts of ARO liabilities are as follows:


NU	As of December 31,
(Millions of Dollars)	2014		2013
Balance as of Beginning of Year	$	424.9	$	412.2
Liabilities Incurred During the Year		1.3		0.1
Liabilities Settled During the Year		(19.5)		(13.8)
Accretion		25.1		23.8
Revisions in Estimated Cash Flows		(5.5)		2.6
Balance as of End of Year	$	426.3	$	424.9


	As of December 31,
	2014								2013
			NSTAR								NSTAR
(Millions of Dollars)	CL&P		Electric		PSNH		WMECO		CL&P		Electric		PSNH		WMECO
Balance as of Beginning of Year	$	35.0	$	32.8	$	19.5	$	4.5	$	33.6	$	31.4	$	18.4	$	4.3
Liabilities Incurred During the Year		-		-		-		1.1		-		-		-		-
Liabilities Settled During the Year		(1.1)		-		-		-		(0.7)		(0.1)		-		-
Accretion		1.9		1.5		1.1		0.3		2.2		1.5		1.2		0.3
Revisions in Estimated Cash Flows		(0.5)		-		-		-		(0.1)		-		(0.1)		(0.1)
Balance as of End of Year	$	35.3	$	34.3	$	20.6	$	5.9	$	35.0	$	32.8	$	19.5	$	4.5

NU's amounts include CYAPC and YAEC's AROs of $317.3 million and $318.8 million as of December 31, 2014 and 2013, respectively. The fair value of the ARO for CYAPC and YAEC includes uncertainties of the fuel off-load dates related to the DOE's timing of performance regarding its obligation to dispose of the spent nuclear fuel and high level waste. The incremental asset recorded as an offset to the ARO liability was fully depreciated since the plants have no remaining useful life. Any changes in the assumptions used to calculate the fair value of the ARO liability are recorded with a corresponding offset to the related regulatory asset. The assets held in the CYAPC and YAEC nuclear decommissioning trusts are restricted for settling the ARO and all other decommissioning obligations. For further information on the assets held in the nuclear decommissioning trusts, see Note 5, "Marketable Securities," to the financial statements.

SHORT-TERM DEBT

Short-Term Borrowing Limits: The amount of short-term borrowings that may be incurred by CL&P, NSTAR Electric and WMECO is subject to periodic approval by the FERC. As a result of the NHPUC having jurisdiction over PSNH's short-term debt, PSNH is not currently required to obtain FERC approval for its short-term borrowings. On July 31, 2013, the FERC granted authorization to allow CL&P and WMECO to incur total short-term borrowings up to a maximum of $600 million and $300 million, respectively, effective January 1, 2014 through December 31, 2015. On June 11, 2014, the FERC granted authorization to allow NSTAR Electric to issue total short-term debt securities in an aggregate principal amount not to exceed $655 million outstanding at any one time, effective October 24, 2014 through October 23, 2016.

PSNH is authorized by regulation of the NHPUC to incur short-term borrowings up to 10 percent of net fixed plant plus an additional $60 million until further ordered by the NHPUC. As of December 31, 2014, PSNH's short-term debt authorization under the 10 percent of net fixed plant test plus $60 million totaled approximately $306 million.

CL&P's certificate of incorporation contains preferred stock provisions restricting the amount of unsecured debt that CL&P may incur, including limiting unsecured indebtedness with a maturity of less than 10 years to 10 percent of total capitalization. As of December 31, 2014, CL&P had $432.1 million of unsecured debt capacity available under this authorization.

Yankee Gas and NSTAR Gas are not required to obtain approval from any state or federal authority to incur short-term debt.

Credit Agreements and Commercial Paper Programs: NU parent, CL&P, PSNH, WMECO, NSTAR Gas and Yankee Gas are parties to a five-year $1.45 billion revolving credit facility. The revolving credit facility is to be used primarily to backstop NU parent's $1.45 billion commercial paper program. The commercial paper program allows NU parent to issue commercial paper as a form of short-term debt. Effective July 23, 2014, NU parent, CL&P, PSNH, WMECO, NSTAR Gas and Yankee Gas extended the expiration date of their joint revolving credit facility for one additional

year to September 6, 2019. CL&P has a borrowing sublimit of $600 million and PSNH and WMECO each have borrowing sublimits of $300 million. As of December 31, 2014 and 2013, NU had approximately $1.1 billion and $1.01 billion, respectively, in short-term borrowings outstanding under the NU parent commercial paper program, leaving $348.9 million and $435.5 million of available borrowing capacity as of December 31, 2014 and 2013, respectively. The weighted-average interest rate on these borrowings as of December 31, 2014 and 2013 was 0.43 percent and 0.24 percent, respectively, which is generally based on A2/P2 rated commercial paper. As of December 31, 2014, there were intercompany loans from NU of $133.4 million to CL&P, $90.5 million to PSNH and $21.4 million to WMECO. As of December 31, 2013, there were intercompany loans from NU of $287.3 million to CL&P and $86.5 million to PSNH.

NSTAR Electric has a five-year $450 million revolving credit facility. This facility serves to backstop NSTAR Electric's existing $450 million commercial paper program. Effective July 23, 2014, NSTAR Electric extended the expiration date of its revolving credit facility for one additional year to September 6, 2019. As of December 31, 2014 and 2013, NSTAR Electric had $302 million and $103.5 million, respectively, in short-term borrowings outstanding under its commercial paper program, leaving $148 million and $346.5 million of available borrowing capacity as of December 31, 2014 and 2013, respectively. The weighted-average interest rate on these borrowings as of December 31, 2014 and 2013 was 0.27 percent and 0.13 percent, respectively, which is generally based on A2/P1 rated commercial paper.

Except as described below, amounts outstanding under the commercial paper programs are included in Notes Payable for NU and NSTAR Electric and classified in current liabilities on the balance sheets as all borrowings are outstanding for no more than 364 days at one time. Intercompany loans from NU to CL&P, PSNH and WMECO are included in Notes Payable to NU Parent and classified in current liabilities on the balance sheets. Intercompany loans from NU to CL&P, PSNH and WMECO are eliminated in consolidation in NU's balance sheets.

On January 15, 2015, NU parent issued $150 million of 1.60 percent Series G Senior Notes due to mature in 2018 and $300 million of 3.15 percent Series H Senior Notes, due to mature in 2025. The proceeds, net of issuance costs, were used to repay short-term borrowings outstanding under the NU commercial paper program. As the debt issuances refinanced short-term debt, the short-term debt was classified as Long-Term Debt as of December 31, 2014. On January 2, 2014, Yankee Gas issued $100 million of Series L First Mortgage Bonds and $25 million of the proceeds was used to repay short-term borrowings outstanding under the NU commercial paper program. As the debt issuance refinanced short-term debt, these amounts were classified as Long-Term Debt on NU's balance sheet as of December 31, 2013. See Note 8, "Long-Term Debt" for further information on these debt issuances.

Under the credit facilities, NU and its subsidiaries must comply with certain financial and non-financial covenants, including a consolidated debt to total capitalization ratio. As of December 31, 2014 and 2013, NU and its subsidiaries were in compliance with these covenants. If NU or its subsidiaries were not in compliance with these covenants, an event of default would occur requiring all outstanding borrowings by such borrower to be repaid and additional borrowings by such borrower would not be permitted under its respective credit facility.

LONG-TERM DEBT

Details of long-term debt outstanding are as follows:


CL&P		As of December 31,
(Millions of Dollars)		2014		2013
First Mortgage Bonds:
	7.875% 1994 Series D due 2024	$	139.8	$	139.8
	4.800% 2004 Series A due 2014 (1)		-		150.0
	5.750% 2004 Series B due 2034		130.0		130.0
	5.000% 2005 Series A due 2015		100.0		100.0
	5.625% 2005 Series B due 2035		100.0		100.0
	6.350% 2006 Series A due 2036		250.0		250.0
	5.375% 2007 Series A due 2017		150.0		150.0
	5.750% 2007 Series B due 2037		150.0		150.0
	5.750% 2007 Series C due 2017		100.0		100.0
	6.375% 2007 Series D due 2037		100.0		100.0
	5.650% 2008 Series A due 2018		300.0		300.0
	5.500% 2009 Series A due 2019		250.0		250.0
	2.500% 2013 Series A due 2023		400.0		400.0
	4.300% 2014 Series A due 2044 (2)		250.0		-
Total First Mortgage Bonds			2,419.8		2,319.8
Pollution Control Revenue Bonds:
	4.375% Fixed Rate Tax Exempt due 2028		120.5		120.5
	1.550% Fixed Rate Tax Exempt due 2031 (3)		62.0		62.0
Total Pollution Control Revenue Bonds			182.5		182.5
Spent Nuclear Fuel Obligation			244.5		244.4
Less Amounts due Within One Year			(162.0)		(150.0)
Unamortized Premiums and Discounts, Net			(4.8)		(5.5)
CL&P Long-Term Debt		$	2,680.0	$	2,591.2


NSTAR Electric		As of December 31,
(Millions of Dollars)		2014		2013
Debentures:
	4.875% due 2014 (4)	$	-	$	300.0
	5.750% due 2036		200.0		200.0
	5.625% due 2017		400.0		400.0
	5.500% due 2040		300.0		300.0
	2.375% due 2022		400.0		400.0
	Variable Rate due 2016 (5)		200.0		200.0
	4.400% due 2044 (4)		300.0		-
Total Debentures			1,800.0		1,800.0
Bonds:
	7.375% Tax Exempt Sewage Facility Revenue Bonds, due 2015		4.7		6.4
Total Bonds			4.7		6.4
Less Amounts due Within One Year			(4.7)		(301.7)
Unamortized Premiums and Discounts, Net			(7.3)		(5.3)
NSTAR Electric Long-Term Debt		$	1,792.7	$	1,499.4

PSNH		As of December 31,
(Millions of Dollars)		2014		2013
First Mortgage Bonds:
	5.25% Series L due 2014 (6)	$	-	$	50.0
	5.60% Series M due 2035		50.0		50.0
	6.15% Series N due 2017		70.0		70.0
	6.00% Series O due 2018		110.0		110.0
	4.50% Series P due 2019		150.0		150.0
	4.05% Series Q due 2021		122.0		122.0
	3.20% Series R due 2021		160.0		160.0
	3.50% Series S due 2023 (7)		325.0		250.0
Total First Mortgage Bonds			987.0		962.0
Pollution Control Revenue Bonds:
	Adjustable Rate Tax Exempt Series A due 2021		89.3		89.3
Total Pollution Control Revenue Bonds			89.3		89.3
Less Amounts due Within One Year			-		(50.0)
Unamortized Premiums and Discounts, Net			-		(2.3)
PSNH Long-Term Debt		$	1,076.3	$	999.0


WMECO		As of December 31,
(Millions of Dollars)		2014		2013
Notes:
	5.90% Senior Notes Series B, due 2034	$	50.0	$	50.0
	5.24% Senior Notes Series C, due 2015		50.0		50.0
	6.70% Senior Notes Series D, due 2037		40.0		40.0
	5.10% Senior Notes Series E, due 2020		95.0		95.0
	3.50% Senior Notes Series F, due 2021		250.0		250.0
	3.88% Senior Notes Series G, due 2023		80.0		80.0
Total Notes			565.0		565.0
Spent Nuclear Fuel Obligation			57.4		57.3
Less Amounts due Within One Year			(50.0)		-
Unamortized Premiums and Discounts, Net			6.1		7.1
WMECO Long-Term Debt		$	578.5	$	629.4


OTHER		As of December 31,
(Millions of Dollars)		2014			2013
Yankee Gas - First Mortgage Bonds:
	8.48% Series B due 2022	$	20.0	$	20.0
	4.80% Series G due 2014 (8)		-		75.0
	5.26% Series H due 2019		50.0		50.0
	5.35% Series I due 2035		50.0		50.0
	6.90% Series J due 2018		100.0		100.0
	4.87% Series K due 2020		50.0		50.0
	4.82% Series L due 2044 (8)		100.0		-
Total First Mortgage Bonds			370.0		345.0
Unamortized Premium			0.6		0.7
Yankee Gas Long-Term Debt			370.6		345.7

NSTAR Gas - First Mortgage Bonds:
	9.95% Series J due 2020		25.0		25.0
	7.11% Series K due 2033		35.0		35.0
	7.04% Series M due 2017		25.0		25.0
	4.46% Series N due 2020		125.0		125.0
NSTAR Gas Long-Term Debt			210.0		210.0

Other - Notes and Debentures:
	1.45% Senior Notes Series E due 2018 (NU Parent)		300.0		300.0
	2.80% Senior Notes Series F due 2023 (NU Parent)		450.0		450.0
	4.50% Debentures due 2019 (NU Parent)		350.0		350.0
	NU Commercial Paper Borrowings(8) (9)		446.3		25.0
	Spent Nuclear Fuel Obligation (CYAPC)		179.4		179.4
Total Other Notes and Debentures			1,725.7		1,304.4
Fair Value Adjustment (10)			202.3		230.7
Less Amounts due Within One Year			-		-
Less Fair Value Adjustment - Current Portion (10)			(28.9)		(31.7)
Unamortized Premiums and Discounts, Net			(1.2)		(1.3)
Total Other Long-Term Debt		$	2,478.5	$	2,057.8

Total NU Long-Term Debt		$	8,606.0	$	7,776.8

(1)

On September 15, 2014, CL&P repaid at maturity the $150 million of 4.80 percent 2004 Series A First Mortgage Bonds, using short-term borrowings.

(2)

On April 24, 2014, CL&P issued $250 million of 4.30 percent 2014 Series A First Mortgage Bonds, due to mature in 2044. The proceeds, net of issuance costs, were used to repay short-term borrowings.

(3)

On February 12, 2015, CL&P notified the trustee that it intends to purchase and cancel the bonds on April 1, 2015, after they have been tendered by the bondholders.

(4)

On March 7, 2014, NSTAR Electric issued $300 million of 4.40 percent debentures, due to mature in 2044. The proceeds, net of issuance costs, were used to repay the $300 million of 4.875 percent debentures that matured on April 15, 2014.

(5)

As of December 31, 2014 and 2013, the interest rate was 0.4721 percent and 0.478 percent, respectively.

(6)

On July 15, 2014, PSNH repaid at maturity the $50 million of 5.25 percent Series L First Mortgage Bonds using short-term borrowings.

(7)

On October 14, 2014, PSNH issued $75 million of first mortgage bonds at a yield of 3.144 percent due to mature in 2023. The first mortgage bonds are part of the same series of PSNH's existing 3.50 percent Series S First Mortgage Bonds that were initially issued in November 2013. The proceeds, net of issuance costs, were used to repay short-term borrowings.

(8)

On January 2, 2014, Yankee Gas issued $100 million of 4.82 percent Series L First Mortgage Bonds, due to mature in 2044. The proceeds, net of issuance costs, were used to repay the $75 million 4.80 percent Series G First Mortgage Bonds that matured on January 1, 2014 and to pay $25 million in short-term borrowings. As the debt issuance refinanced short-term debt, these amounts were classified as Long-Term Debt on NU's balance sheet as of December 31, 2013.

(9)

On January 15, 2015, NU parent issued $150 million of 1.60 percent Series G Senior Notes due to mature in 2018 and $300 million of 3.15 percent Series H Notes, due to mature in 2025. The proceeds, net of issuance costs, were used to repay short-term borrowings outstanding under the NU commercial paper program. As the debt issuances refinanced short-term debt, the short-term debt was classified as Long-Term Debt as of December 31, 2014.

(10)

Amount relates to the purchase price adjustment required to record the NSTAR long-term debt at fair value on the date of the merger.

Long-term debt maturities, mandatory tender payments and cash sinking fund requirements on debt outstanding for the years 2015 through 2019 and thereafter are shown below. These amounts exclude the spent nuclear fuel obligation, net unamortized premiums and discounts, and other fair value adjustments as of December 31, 2014:


(Millions of Dollars)	NU		CL&P		NSTAR Electric		PSNH		WMECO
2015	$	216.7	$	162.0	$	4.7	$	-	$	50.0
2016		200.0		-		200.0		-		-
2017		745.0		250.0		400.0		70.0		-
2018		810.0		300.0		-		110.0		-
2019		800.0		250.0		-		150.0		-
Thereafter		4,956.6		1,640.3		1,200.0		746.3		515.0
Total	$	7,728.3	$	2,602.3	$	1,804.7	$	1,076.3	$	565.0

The utility plant of CL&P, PSNH, Yankee Gas and NSTAR Gas is subject to the lien of each company's respective first mortgage bond indenture. The NSTAR Electric, WMECO and NU parent debt is unsecured.

CL&P's obligation to repay each series of PCRBs is secured by first mortgage bonds. Each such series of first mortgage bonds contains similar terms and provisions as the applicable series of PCRBs. If CL&P fails to meet its obligations under the first mortgage bonds, then the holder of the first mortgage bonds (the issuer of the PCRBs) would have rights under the first mortgage bonds. CL&P's $62 million tax-exempt PCRBs, which are subject to mandatory tender for purchase on April 1, 2015 and carry a coupon rate of 1.55 percent during the current three-year fixed rate period, cannot be redeemed prior to its tender date. CL&P's $120.5 million tax-exempt PCRBs will be subject to redemption at par on or after September 1, 2021. All other long-term debt securities are subject to make-whole provisions.

PSNH's obligation to repay the PCRBs is secured by first mortgage bonds and bond insurance. The first mortgage bonds contain similar terms and provisions as the PCRBs. If PSNH fails to meet its obligations under the first mortgage bonds, then the holder of the first mortgage bonds (the issuer of the PCRBs) would have rights under the first mortgage bonds. The PSNH Series A tax-exempt PCRBs are currently callable at 100 percent of par. The PCRBs bear interest at a rate that is periodically set pursuant to auctions. PSNH is not obligated to purchase these PCRBs, which mature in 2021, from the remarketing agent. As of December 31, 2014 and 2013, the interest rate was 0.175 percent and 0.088 percent, respectively.

The long-term debt agreements provide that NU and certain of its subsidiaries must comply with certain covenants as are customarily included in such agreements, including a minimum equity requirement for NSTAR Gas. Under the minimum equity requirement, the outstanding long-term debt of NSTAR Gas must not exceed equity.

Yankee Gas has certain long-term debt agreements that contain cross-default provisions. No other debt issuances contain cross-default provisions as of December 31, 2014.

On August 27, 2014, PURA approved CL&P's request to extend the authorization period for issuance of up to $366.4 million in long-term debt from December 31, 2014 to December 31, 2015.

On October 3, 2014, FERC granted authorization to allow NPT to issue short-term and long-term debt securities in an aggregate amount not to exceed $500 million outstanding at any one time, effective December 31, 2014 through December 31, 2016.

On November 26, 2014, PURA approved Yankee Gas' request to extend the authorization period for issuance of up to $200 million in long-term debt from December 31, 2014 to December 31, 2015.

On January 12, 2015, NSTAR Gas filed an application with the DPU requesting authorization to issue up to $100 million in long-term debt for the period ending December 31, 2015.

Spent Nuclear Fuel Obligation: Under the Nuclear Waste Policy Act of 1982, CL&P and WMECO must pay the DOE for the costs of disposal of spent nuclear fuel and high-level radioactive waste for the period prior to the sale of their ownership shares in the Millstone nuclear power stations. The Millstone Nuclear Generating station was made up of Millstone 1, Millstone 2, and Millstone 3 and all three units were sold in March 2001.

The DOE is responsible for the selection and development of repositories for, and the disposal of, spent nuclear fuel and high-level radioactive waste. For nuclear fuel used to generate electricity prior to April 7, 1983 (Prior Period Spent Nuclear Fuel) for CL&P and WMECO, an accrual has been recorded for the full liability, and payment must be made by CL&P and WMECO to the DOE prior to the first delivery of spent fuel to the DOE. After the sale of Millstone, CL&P and WMECO remained responsible for their share of the disposal costs associated with the Prior Period Spent Nuclear Fuel. Until such payment to the DOE is made, the outstanding liability will continue to accrue interest at the 3-month Treasury bill yield rate. In addition, as a result of consolidating CYAPC, NU has consolidated $179.4 million in additional spent nuclear fuel obligations, including interest, as of both December 31, 2014 and 2013. The obligation due to the DOE for the disposal of CL&P's and WMECO's Prior Period Spent Nuclear Fuel and CYAPC's spent nuclear fuel obligation include accumulated interest costs of $350.4 million and $350.3 million ($178 million and $177.9 million for CL&P and $41.8 million and $41.7 million for WMECO) as of December 31, 2014 and 2013, respectively.

WMECO and CYAPC maintain trusts to fund amounts due to the DOE for the disposal of spent nuclear fuel. For further information on these trusts, see Note 5, "Marketable Securities," to the financial statements.

EMPLOYEE BENEFITS

Pension Benefits and Postretirement Benefits Other Than Pensions

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

Because the Regulated companies recover the retiree benefit costs from customers through rates, regulatory assets are recorded in lieu of an adjustment to Accumulated Other Comprehensive Income/(Loss) to record the funded status of the Pension, SERP and PBOP Plans. Regulatory accounting was also applied to the portions of the NUSCO costs that support the Regulated companies, as these costs are also recovered from customers. Adjustments to the Pension and PBOP 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. The SERP Plans do not have plan assets.

For the years ended December 31, 2014 and 2013, the expected return on plan assets for the NUSCO Pension and PBOP Plans was calculated by applying the assumed rate of return to a four-year rolling average of plan asset fair values. This calculation recognized investment gains or losses over a four-year period from the years in which they occurred. Investment gains or losses for this purpose are the difference between the calculated expected return and the actual return. As investment gains and losses are reflected in the average plan asset fair values, they are subject to amortization with other unrecognized actuarial gains or losses. For the NSTAR Pension and PBOP Plans, the entire difference between the actual return and calculated expected return on plan assets is reflected as a component of unrecognized actuarial gain or 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: As of December 31, 2013, the funded status of the NSTAR Pension Plan was recorded on NSTAR Electric's balance sheet, while the total SERP obligation was recorded on NSTAR Electric & Gas' balance sheet. As of December 31, 2013, all NSTAR employees were employed by NSTAR Electric & Gas. On January 1, 2014, NSTAR Electric & Gas was merged into NUSCO (service company merger) and, concurrently, all employees were transferred to the company they predominantly provide services for: NUSCO, NSTAR Electric or NSTAR Gas. As a result of the employee transfers, the pension and SERP assets and liabilities were attributed by participant and transferred to the applicable company's balance sheets. This change had no impact on the income statement or net assets of NSTAR Electric or NU. For the year ended December 31, 2014, the NUSCO and NSTAR pension and SERP plans are accounted for under the multiple-employer approach, with each company's balance sheet reflecting its share of the funded status of the plans. 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
NU	As of December 31,
(Millions of Dollars)	2014		2013
Change in Benefit Obligation
Benefit Obligation as of Beginning of Year	$	(4,676.5)	$	(5,022.8)
Service Cost		(79.9)		(102.3)
Interest Cost		(225.7)		(206.7)
Actuarial Gain/(Loss)		(739.6)		433.6
Benefits Paid - Pension		230.3		216.6
Benefits Paid - SERP		5.2		5.1
Benefit Obligation as of End of Year	$	(5,486.2)	$	(4,676.5)
Change in Pension Plan Assets
Fair Value of Plan Assets as of Beginning of Year	$	3,985.9	$	3,411.3
Employer Contributions		171.6		284.7
Actual Return on Plan Assets		199.3		506.5
Benefits Paid		(230.3)		(216.6)
Fair Value of Plan Assets as of End of Year	$	4,126.5	$	3,985.9
Funded Status as of December 31st	$	(1,359.7)	$	(690.6)


	Pension and SERP
	As of December 31, 2014								As of December 31, 2013
			NSTAR								NSTAR
(Millions of Dollars)	CL&P		Electric		PSNH		WMECO		CL&P		Electric (1)		PSNH		WMECO
Change in Benefit Obligation
Benefit Obligation as of Beginning of Year	$	(1,083.4)	$	(1,353.3)	$	(529.0)	$	(223.9)	$	(1,178.0)	$	(1,430.0)	$	(576.0)	$	(243.1)
Decrease due to transfer of employees		26.4		479.9		32.2		6.2		-		-		-		-
Service Cost		(20.2)		(13.6)		(9.7)		(3.5)		(24.9)		(33.1)		(13.1)		(4.7)
Interest Cost		(50.5)		(41.3)		(23.8)		(10.3)		(48.3)		(58.0)		(23.6)		(10.0)
Actuarial Gain/(Loss)		(161.0)		(107.0)		(73.3)		(29.8)		110.7		96.6		62.4		22.4
Benefits Paid - Pension		58.3		52.4		22.8		11.9		56.6		71.2		21.1		11.5
Benefits Paid - SERP		0.3		0.3		0.1		-		0.5		-		0.2		-
Benefit Obligation as of End of Year	$	(1,230.1)	$	(982.6)	$	(580.7)	$	(249.4)	$	(1,083.4)	$	(1,353.3)	$	(529.0)	$	(223.9)
Change in Pension Plan Assets
Fair Value of Plan Assets as of Beginning of Year	$	1,016.3	$	1,235.3	$	528.6	$	240.4	$	937.6	$	1,069.1	$	386.6	$	218.5
Decrease due to transfer of employees		(26.4)		(441.4)		(32.2)		(6.2)		-		-		-		-
Employer Contributions		-		101.0		-		-		-		82.0		108.3		-
Actual Return on Plan Assets		49.2		36.5		24.8		11.7		135.3		155.4		54.8		33.4
Benefits Paid		(58.3)		(52.4)		(22.8)		(11.9)		(56.6)		(71.2)		(21.1)		(11.5)
Fair Value of Plan Assets as of End of Year	$	980.8	$	879.0	$	498.4	$	234.0	$	1,016.3	$	1,235.3	$	528.6	$	240.4
Funded Status as of December 31st	$	(249.3)	$	(103.6)	$	(82.3)	$	(15.4)	$	(67.1)	$	(118.0)	$	(0.4)	$	16.5

(1)

NSTAR Electric amounts do not include benefit obligations of the NSTAR SERP Plan as of December 31, 2013.

During 2014, the Society of Actuaries released a series of updated mortality tables resulting from recent studies that measured mortality rates for various groups of individuals. The updated mortality tables released in 2014 increased life expectancy of plan participants by 3 to 5 years and have the effect of increasing the estimate of benefits to be provided to plan participants. The impact of this adoption on NU's funded status liability for the year ended December 31, 2014 was an increase of approximately $340 million. In addition, the decreases in the discount rates resulted in an increase on NU's funded status liability of approximately $530 million. Partially offsetting these increases are the impact of other actuarial assumptions.

As of December 31, 2013, prepaid pension assets for PSNH and WMECO were included in Other Long-Term Assets on their accompanying balance sheets. The pension and SERP benefits funded status includes the current portion of the SERP liability, which is included in Other Current Liabilities on the accompanying balance sheets. Although NU maintains marketable securities in a supplemental benefit trust, the SERP plan itself does not contain any assets. See Note 5, "Marketable Securities," to the financial statements.


The accumulated benefit obligation for the Pension and SERP Plans is as follows:

(Millions of Dollars)		NU		CL&P		NSTAR Electric (1)		PSNH		WMECO
2014		$	5,000.1	$	1,101.4	$	910.4	$	524.5	$	226.4
2013			4,538.8		1,058.0		1,280.6		520.1		220.6

(1)	NSTAR Electric amounts do not include the accumulated benefit obligation for the SERP Plan as of December 31, 2013.

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


	Pension and SERP
	As of December 31,
	2014		2013
Discount Rate	4.20	%	4.85	%	-	5.03	%
Compensation/Progression Rate	3.50	%	3.50	%	-	4.00	%

Pension and SERP Expense: NU charges net periodic pension expense to its subsidiaries based on the actual participant demographic data for each subsidiary's participants. Benefit payments to participants and contributions are also tracked for each subsidiary. 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 years ended December 31, 2013 and 2012 (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 is included in Operations and Maintenance on the statements of income. Capitalized pension amounts relate to employees working on capital projects and are included in Property, Plant and Equipment, Net. Intercompany allocations are not included in the CL&P, NSTAR Electric, PSNH and WMECO net periodic benefit expense amounts. 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 and the corresponding capitalized portion, as these amounts are cash settled on a short-term basis.


	Pension and SERP
	For the Year Ended December 31, 2014
					NSTAR
(Millions of Dollars)	NU		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 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)	NU		CL&P		Electric (1)		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 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

	Pension and SERP
	For the Year Ended December 31, 2012
					NSTAR
(Millions of Dollars)	NU (2)		CL&P		Electric (1)		PSNH		WMECO
Service Cost	$	84.3	$	21.8	$	30.3	$	11.8	$	4.1
Interest Cost		198.3		51.2		58.9		24.4		10.5
Expected Return on Plan Assets		(220.9)		(70.6)		(65.6)		(28.2)		(16.4)
Actuarial Loss		172.4		49.6		63.1		16.2		10.7
Prior Service Cost/(Credit)		7.9		3.6		(0.6)		1.5		0.8
Total Net Periodic Benefit Expense	$	242.0	$	55.6	$	86.1	$	25.7	$	9.7
Curtailments and Settlements	$	2.2	$	-	$	-	$	-	$	-
Intercompany Allocations		N/A	$	42.8	$	(12.3)	$	10.1	$	8.1
Capitalized Pension Expense	$	70.6	$	26.8	$	30.7	$	7.9	$	5.1

(1)

NSTAR Electric's allocated expense associated with the NSTAR SERP was $3.2 million and $3.6 million for the years ended December 31, 2013 and 2012, respectively, and were not included in the NSTAR Electric amounts in the tables above. For the year ended December 31, 2014, the SERP amounts are now allocated to NSTAR Electric due to the service company merger.

(2)

NSTAR amounts were included in NU beginning April 10, 2012.


The following actuarial assumptions were used to calculate Pension and SERP expense amounts:

	Pension and SERP
	For the Years Ended December 31,
	2014					2013					2012
Discount Rate	4.85	%	-	5.03	%	4.13	%	-	4.24	%	4.52	%	-	5.03	%
Expected Long-Term Rate of Return	8.25 %					8.25 %					7.30	%	-	8.25	%
Compensation/Progression Rate	3.50	%	-	4.00	%	3.50	%	-	4.00	%	3.50	%	-	4.00	%


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 reclassified as net periodic benefit expense during the years presented:

	Amounts Reclassified To/From
	Regulatory Assets				OCI
	For the Years Ended December 31,
(Millions of Dollars)	2014		2013		2014		2013
Actuarial (Gains)/Losses Arising During the Year	$	797.3	$	(635.2)	$	55.9	$	(28.9)
Actuarial Losses Reclassified as Net Periodic Benefit Expense		(122.8)		(201.2)		(5.6)		(9.4)
Prior Service Cost Reclassified as Net Periodic Benefit Expense		(4.2)		(3.8)		(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, 2014 and 2013, and the amounts that are expected to be recognized as components in 2015:

		Regulatory Assets as of				Expected		AOCI as of			Expected
	December 31,					2015	December 31,				2015
(Millions of Dollars)	2014		2013		Expense		2014		2013		Expense
Actuarial Loss	$	1,811.9	$	1,137.4	$	149.1	$	93.5	$	43.2	$	6.4
Prior Service Cost		13.2		17.4		3.5		0.8		1.0		0.2

PBOP Plans: As of December 31, 2013, the funded status of the NSTAR PBOP Plan was recorded on the NSTAR Electric & Gas balance sheet. As of December 31, 2013, all NSTAR employees were employed by NSTAR Electric & Gas. On January 1, 2014, concurrent with the service company merger, the PBOP assets and liabilities were attributed by participant and transferred to the applicable company's balance sheets. This change had no impact on the income statement or net assets of NSTAR Electric or NU. For the year ended December 31, 2014, the NUSCO and NSTAR PBOP Plans are accounted for under the multiple-employer approach, with each company's balance sheet reflecting its share of the funded status of the plans.

NU annually funds postretirement costs through tax deductible contributions to external trusts.

The following tables provide information on PBOP Plan benefit obligations, fair values of plan assets, and funded status:


	PBOP
NU	As of December 31,
(Millions of Dollars)	2014		2013
Change in Benefit Obligation
Benefit Obligation as of Beginning of Year	$	(1,038.0)	$	(1,233.3)
Service Cost		(12.5)		(16.9)
Interest Cost		(49.5)		(47.2)
Actuarial Gain/(Loss)		(95.5)		200.9
Benefits Paid		47.6		58.5
Benefit Obligation as of End of Year	$	(1,147.9)	$	(1,038.0)
Change in PBOP Plan Assets
Fair Value of Plan Assets as of Beginning of Year	$	826.5	$	709.1
Actual Return on Plan Assets		43.7		118.3
Employer Contributions		40.0		57.6
Benefits Paid		(47.6)		(58.5)
Fair Value of Plan Assets as of End of Year	$	862.6	$	826.5
Funded Status as of December 31st	$	(285.3)	$	(211.5)


	PBOP
	As of December 31,
	2014								2013
			NSTAR
(Millions of Dollars)	CL&P		Electric		PSNH		WMECO			CL&P		PSNH		WMECO
Change in Benefit Obligation
Benefit Obligation as of Beginning of Year	$	(180.4)	$	-	$	(93.5)	$	(38.7)		$	(196.8)	$	(100.2)	$	(42.5)
Decrease/(Increase) due to transfer of employees		3.7		(395.5)		4.3		1.0			-		-		-
Service Cost		(2.2)		(3.1)		(1.3)		(0.4)			(3.4)		(2.3)		(0.7)
Interest Cost		(8.1)		(19.4)		(4.3)		(1.7)			(7.9)		(4.0)		(1.7)
Actuarial Gain/(Loss)		3.5		(68.6)		(1.1)		1.3			13.3		7.2		3.3
Benefits Paid		9.6		17.9		4.1		1.9			14.4		5.8		2.9
Benefit Obligation as of End of Year	$	(173.9)	$	(468.7)	$	(91.8)	$	(36.6)		$	(180.4)	$	(93.5)	$	(38.7)
Change in PBOP Plan Assets
Fair Value of Plan Assets as of Beginning of Year	$	151.3	$	-	$	81.8	$	35.3		$	132.2	$	69.5	$	31.0
(Decrease)/Increase due to transfer of employees		(3.2)		316.7		(3.1)		(1.0)			-		-		-
Actual Return on Plan Assets		6.3		18.4		3.8		1.6			24.8		13.4		6.0
Employer Contributions		4.2		19.3		2.5		0.4			8.7		4.7		1.2
Benefits Paid		(9.6)		(17.9)		(4.1)		(1.9)			(14.4)		(5.8)		(2.9)
Fair Value of Plan Assets as of End of Year	$	149.0	$	336.5	$	80.9	$	34.4		$	151.3	$	81.8	$	35.3
Funded Status as of December 31st	$	(24.9)	$	(132.2)	$	(10.9)	$	(2.2)		$	(29.1)	$	(11.7)	$	(3.4)

year ended December 31, 2014 was an increase of approximately $82 million. In addition, the decreases in the discount rates resulted in an increase on NU's funded status liability of approximately $110 million. Partially offsetting these increases are the impact of other actuarial assumptions.


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

	PBOP
	As of December 31,
	2014		2013
Discount Rate	4.22	%	4.78	%	-	5.10	%
Health Care Cost Trend Rate	6.50	%	7.00 %

PBOP Expense: NU charges net periodic postretirement benefits expense to its subsidiaries based on the actual participant demographic data for each subsidiary's participants. Benefit payments to participants and contributions are also tracked for each subsidiary. 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 years ended December 31, 2013 and 2012 (prior to the service company merger), the net periodic postretirement expense of the NSTAR PBOP Plan allocated to NSTAR Electric was $4.6 million and $34.1 million, respectively.

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


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


		PBOP
		For the Year Ended December 31, 2012
(Millions of Dollars)		NU (1)		CL&P		PSNH		WMECO
Service Cost		$	15.7	$	3.0	$	2.0	$	0.6
Interest Cost			49.0		9.2		4.6		2.0
Expected Return on Plan Assets			(39.2)		(9.1)		(4.6)		(2.1)
Actuarial Loss			36.0		7.5		3.6		1.2
Prior Service Credit			(1.4)		-		-		-
Net Transition Obligation Cost			12.2		6.1		2.5		1.3
Total Net Periodic Benefit Expense		$	72.3	$	16.7	$	8.1	$	3.0
Intercompany Allocations			N/A	$	7.9	$	2.0	$	1.5
Capitalized PBOP Expense		$	26.6	$	8.2	$	2.3	$	1.6

(1)	NSTAR amounts were included in NU beginning April 10, 2012.


The following actuarial assumptions were used to calculate PBOP expense amounts:

	PBOP
	For the Years Ended December 31,
	2014					2013					2012
Discount Rate	4.78	%	-	5.10	%	4.04	%	-	4.35	%	4.58	%	-	4.84	%
Expected Long-Term Rate of Return	8.25 %					8.25 %					7.30	%	-	8.25	%

As of December 31, 2014 and 2013, the health care cost trend rate assumption used to determine the PBOP Plans' funded status was 6.5 percent and 7 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 amounts was 7 percent for the year ended December 31, 2014.

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, 2014 would have the following effects:


	One Percentage		One Percentage
(Millions of Dollars)	Point Increase		Point Decrease
Effect on PBOP Obligation	$	111.2	$	(88.4)
Effect on Total Service and Interest Cost Components		5.3		(4.4)


The following is a summary of the changes in plan assets and benefit obligations recognized in Regulatory Assets and OCI as well as amounts in Regulatory Assets and OCI reclassified as net periodic benefit (expense)/income during the years presented:

		Amounts Reclassified To/From
	Regulatory Assets				OCI
	For the Years Ended December 31,
(Millions of Dollars)	2014		2013		2014		2013
Actuarial Losses/(Gains) Arising During the Year	$	115.1	$	(262.0)	$	0.4	$	(1.9)
Actuarial Losses Reclassified as Net Periodic Benefit Expense		(11.6)		(24.9)		(0.6)		(1.1)
Prior Service Credit Reclassified as Net Periodic Benefit Income		2.8		2.1		-		-

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, 2014 and 2013, and the amounts that are expected to be recognized as components in 2015:

		Regulatory Assets as of			Expected			AOCI as of			Expected
	December 31,				2015			December 31,			2015
(Millions of Dollars)	2014		2013		Expense		2014		2013		Expense
Actuarial Loss	$	192.7	$	89.2	$	6.9	$	6.0	$	6.2	$	0.3
Prior Service Credit		(1.8)		(4.6)		(0.5)		-		-		-


Estimated Future Benefit Payments: The following benefit payments, which reflect expected future service, are expected to be paid by the Pension, SERP and PBOP Plans:

(Millions of Dollars)	2015		2016			2017	2018		2019		2020-2024
Pension and SERP	$	244.5	$	253.6	$	268.9	$	273.4	$	285.4	$	1,591.1
PBOP		58.7		59.7		60.6		61.3		62.0		318.8

Contributions: NU contributed $171.6 million to the Pension Plans in 2014, of which $101 million was contributed by NSTAR Electric. Based on the current status of the Pension Plans, NU expects to make contributions of approximately $155 million in 2015, of which $5 million will be contributed by NSTAR Electric and $1 million will be contributed by PSNH. The remaining $149 million is expected to be contributed by other NU subsidiaries, primarily NUSCO.

NU contributed $40 million to the PBOP Plans in 2014 and expects to make approximately $27 million in contributions in 2015. This amount will be funded into the 401(h) account and VEBAs up to the maximum tax-deductible level permitted.

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. NU'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 establishes target asset allocations that are routinely reviewed and periodically rebalanced. PBOP assets are comprised of assets held in the PBOP Plans 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 those of the defined benefit pension plans. NU'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, NU evaluated input from consultants, as well as long-term inflation assumptions and historical returns. For the year ended December 31, 2014, 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, 2014 and 2013
		Pension and Tax-Exempt PBOP Plans
		Target Asset Allocation	Assumed Rate of Return
Equity Securities:
	United States	24%	9%
	International	10%	9%
	Emerging Markets	6%	10%
	Private Equity	10%	13%
Debt Securities:
	Fixed Income	15%	5%
	High Yield Fixed Income	9%	7.5%
	Emerging Markets Debt	6%	7.5%
Real Estate and Other Assets		9%	7.5%
Hedge Funds		11%	7%

The Taxable PBOP Plans 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:


		NU Pension Plans
		Fair Value Measurements as of December 31,
(Millions of Dollars)		2014								2013
Asset Category:		Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Equity Securities (1)		$	414.7	$	1,035.0	$	292.2	$	1,741.9	$	326.8	$	1,172.1	$	255.5	$	1,754.4
Private Equity			18.8		-		367.9		386.7		96.4		-		300.3		396.7
Fixed Income (2)			10.2		561.4		722.0		1,293.6		11.6		605.1		589.5		1,206.2
Real Estate and Other Assets			-		132.0		265.8		397.8		-		88.2		288.5		376.7
Hedge Funds			-		20.0		475.0		495.0		-		-		416.9		416.9
Total Master Trust Assets		$	443.7	$	1,748.4	$	2,122.9	$	4,315.0	$	434.8	$	1,865.4	$	1,850.7	$	4,150.9
	Less: 401(h) PBOP Assets (3)								(188.5)								(165.0)
Total Pension Assets								$	4,126.5							$	3,985.9

		NU PBOP Plans
		Fair Value Measurements as of December 31,
(Millions of Dollars)		2014								2013
Asset Category:		Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Cash and Cash Equivalents		$	-	$	-	$	-	$	-	$	11.1	$	-	$	-	$	11.1
Equity Securities (1)			104.1		172.8		75.1		352.0		110.3		176.8		69.1		356.2
Private Equity			-		-		24.9		24.9		-		-		17.9		17.9
Fixed Income (2)			16.1		110.0		78.3		204.4		-		119.7		51.5		171.2
Real Estate and Other Assets					19.4		15.0		34.4		-		14.2		33.9		48.1
Hedge Funds					-		58.4		58.4		-		-		57.0		57.0
Total		$	120.2	$	302.2	$	251.7	$	674.1	$	121.4	$	310.7	$	229.4	$	661.5
	Add: 401(h) PBOP Assets (3)								188.5								165.0
Total PBOP Assets								$	862.6							$	826.5

(1)

United States, International and Emerging Markets equity securities classified as Level 2 include investments in commingled funds. Level 3 investments include hedge funds that are overlayed with equity index swaps and futures contracts and funds invested in equities that have redemption restrictions.

(2)

Fixed Income investments classified as Level 3 investments include fixed income funds that invest in a variety of opportunistic fixed income strategies, and hedge funds that are overlayed with fixed income futures.

(3)

The assets of the Pension Plans include a 401(h) account that has been allocated to provide health and welfare postretirement benefits under the PBOP Plans.

Effective January 1, 2013, the NSTAR Pension Plan assets were transferred into the NUSCO Pension Plan master trust. The NUSCO Pension Plan is entitled to approximately 66 percent of each asset category in the master trust, the NSTAR Pension Plan is entitled to approximately 30 percent of each asset category in the master trust and the 401(h) plans are entitled to approximately four percent of each asset category in the master trust. For the years ended December 31, 2014 and 2013 the NUSCO Pension Plan was entitled to $2,803.6 million and $2,750.4 million respectively and the NSTAR Pension Plan was entitled to $1,322.9 million and $1,235.3 million, respectively. Also effective January 1, 2013, the NSTAR PBOP Plan

assets were transferred into a master trust with the NUSCO PBOP Plan assets and assets were allocated to each plan. For the years ended December 31, 2014 and 2013, the NUSCO PBOP Plan was entitled to $399 million and $391 million, respectively, and the NSTAR PBOP Plan was entitled to $463.6 million and $435.5 million, respectively. CL&P, PSNH and WMECO are allocated a portion of the NUSCO Pension and PBOP Plan assets. NSTAR Electric is entitled to a portion of the NSTAR Pension and PBOP Plan assets.

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 Pension and PBOP Plan assets for the years ended December 31, 2014 and 2013:


		NU Pension Plans
		Equity		Private		Fixed		Real Estate and		Hedge
(Millions of Dollars)		Securities		Equity		Income		Other Assets		Funds		Total
Balance as of January 1, 2013		$	322.7	$	267.9	$	315.1	$	235.4	$	418.9	$	1,560.0
Transfer Between Categories			-		-		32.5		-		(32.5)		-
Actual Return/(Loss) on Plan Assets:
	Relating to Assets Still Held as of Year End		20.6		15.4		55.3		12.9		33.4		137.6
	Relating to Assets Distributed During the Year		12.2		13.7		(1.0)		6.2		-		31.1
Purchases, Sales and Settlements			(100.0)		3.3		187.6		34.0		(2.9)		122.0
Balance as of December 31, 2013		$	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

		NU PBOP Plans
		Equity		Private		Fixed		Real Estate and		Hedge
(Millions of Dollars)		Securities		Equity		Income		Other Assets		Funds		Total
Balance as of January 1, 2013		$	36.3	$	11.3	$	32.1	$	26.7	$	39.6	$	146.0
Actual Return/(Loss) on Plan Assets:
	Relating to Assets Still Held as of Year End		20.8		1.5		4.1		3.9		5.4		35.7
	Relating to Assets Distributed During the Year		-		0.2		-		(0.1)		-		0.1
Purchases, Sales and Settlements			12.0		4.9		15.3		3.4		12.0		47.6
Balance as of December 31, 2013		$	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

Defined Contribution Plans

Effective January 1, 2014, NU maintains one defined contribution plan on behalf of eligible participants, the NUSCO 401k Plan. The NUSCO 401k Plan provides for employee and employer contributions up to statutory limits. For eligible employees, the NUSCO 401k Plan provides employer matching contributions of either 100 percent up to a maximum of three percent of eligible compensation or 50 percent up to a maximum of eight percent of eligible compensation. For newly hired employees beginning in 2014, the NUSCO 401k Plan provides employer matching contributions of 100 percent up to a maximum of three percent of eligible compensation.

The NUSCO 401k Plan also contains a K-Vantage feature on behalf of eligible participants, which provides an additional employer contribution based on age and years of service. K-Vantage participants are not eligible to actively participate in the NU defined benefit plans.

The total defined contribution plan employer matching contributions, including the K-Vantage program contributions, were as follows:


					NSTAR
(Millions of Dollars)	NU (1)		CL&P		Electric		PSNH		WMECO
2014	$	29.7	$	5.0	$	6.3	$	3.2	$	1.0
2013		37.0		5.1		8.5		3.3		1.0
2012		25.7		4.8		9.0		3.3		0.9

(1)

NSTAR amounts were included in NU beginning April 10, 2012.

Allocations of NU common shares were made from NU treasury shares to satisfy the NUSCO 401k Plan obligation to provide 100 percent of the matching contribution in NU common shares. For treasury shares used to satisfy the NUSCO 401k Plan employer 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, 2014, 2013 and 2012, NU recognized $22 million, $9.1 million and $8.9 million, respectively, of compensation expense related to treasury shares used to satisfy the matching contribution.

Share-Based Payments

Share-based compensation awards are recorded using a fair-value-based method at the date of grant. NU, CL&P, NSTAR Electric, PSNH and WMECO record compensation expense 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 company 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 Note 21, "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, NU converted (1) outstanding NSTAR stock options into 2,664,894 NU stock options valued at $30.5 million, (2) NSTAR deferred shares and NSTAR performance shares into 421,775 NU RSU's valued at $15.5 million, and (3) NSTAR RSU retention awards into 195,619 NU RSU retention awards valued at $7.2 million.

NU Incentive Plans: NU maintains long-term equity-based incentive plans in which NU, CL&P, NSTAR Electric, PSNH and WMECO employees, officers and board members are eligible to participate. The incentive plans authorize NU to grant up to 8,000,000 new shares for various types of awards, including RSUs and performance shares, to eligible employees, officers, and board members. As of December 31, 2014 and 2013, NU had 3,112,020 and 3,440,590 common shares, respectively, available for issuance under these plans. NU also maintains an ESPP for eligible employees.

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. Vesting of outstanding performance shares is based upon both the Company's EPS growth over the requisite service period and the total shareholder return as compared to the Edison Electric Institute (EEI) Index during the requisite service period. The fair value of performance shares is determined at the date of grant using a lattice model.

Stock Options - Stock options issued under the NSTAR Incentive Plan that were outstanding immediately prior to the completion of the merger with NSTAR converted 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 was recorded for these stock options.

ESPP Shares - For shares sold under the ESPP, no compensation expense was recorded as the ESPP qualifies as a non-compensatory plan.

RSUs: NU granted RSUs under the annual long-term incentive programs that are subject to three-year graded vesting schedules for employees, and one-year graded vesting schedules, or immediate vesting, 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, 2012		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
Granted		373,939	$	39.56
Shares issued		(891,129)	$	32.15
Forfeited		(29,689)	$	33.75
Outstanding as of December 31, 2013		1,636,440	$	33.61
Granted		338,576	$	42.27
Shares issued		(567,209)	$	33.48
Forfeited		(27,060)	$	39.62
Outstanding as of December 31, 2014		1,380,747	$	35.67

As of December 31, 2014 and 2013, the number and weighted average grant-date fair value of unvested RSUs was 1,024,729 and $38.14 per share, and 1,162,216 and $36.58 per share, respectively. The number and weighted average grant-date fair value of RSUs vested and either paid or deferred during 2014 was 437,887 and $37.36 per share, respectively. As of December 31, 2014, 356,018 RSUs were fully vested and deferred and an additional 973,493 are expected to vest.

Performance Shares: NU granted performance shares under the annual long-term incentive programs that vest based upon the extent to which Company goals are achieved 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, 2012		483,133	$	29.18
Granted		225,935	$	35.09
Converted to RSUs upon Merger		(451,358)	$	34.32
Shares issued		(106,773)	$	24.52
Outstanding as of December 31, 2012		150,937	$	25.04
Granted		191,961	$	40.96
Shares issued		(150,944)	$	25.04
Forfeited		(1,526)	$	40.93
Outstanding as of December 31, 2013		190,428	$	40.96
Granted		193,396	$	43.40
Shares issued		(2,009)	$	41.46
Forfeited		(6,171)	$	42.02
Outstanding as of December 31, 2014		375,644	$	42.20

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. Performance shares under the NU 2010 Incentive Program were measured based upon a modified performance period through the date of the merger, in accordance with the terms of the program, and were fully distributed in 2013.

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


NU	For the Years Ended December 31,
(Millions of Dollars)	2014		2013		2012 (1)
Compensation Expense	$	24.6	$	27.0	$	25.8
Future Income Tax Benefit		10.3		10.7		10.2


	For the Years Ended December 31,
	2014								2013								2012
			NSTAR								NSTAR								NSTAR
(Millions of Dollars)	CL&P		Electric		PSNH		WMECO		CL&P		Electric		PSNH		WMECO		CL&P		Electric		PSNH		WMECO
Compensation Expense	$	8.1	$	7.4	$	3.0	$	1.3	$	6.8	$	7.5	$	2.3	$	1.3	$	4.8	$	7.4	$	1.8	$	1.0
Future Income Tax Benefit		3.4		3.1		1.3		0.5		2.7		3.0		0.9		0.5		1.9		2.9		0.7		0.4

(1)

NSTAR amounts were included in NU beginning April 10, 2012.

As of December 31, 2014, there was $15.7 million of total unrecognized compensation expense related to nonvested share-based awards for NU, $6.1 million for CL&P, $4.3 million for NSTAR Electric, $2 million for PSNH and $1 million for WMECO. This cost is expected to be recognized ratably over a weighted-average period of 1.65 years for NU, 1.68 years for CL&P, 1.69 years for NSTAR Electric, 1.71 years for PSNH and 1.68 years for WMECO.

For the years ended December 31, 2014 and 2012, additional tax benefits totaling $9.5 million and $8.5 million increased cash flows from financing activities. For the year ended December 31, 2013, additional tax benefits totaling $5.5 million decreased 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, 2014 is 4.3 years. A summary of stock option transactions is as follows:


		Weighted Average		Intrinsic Value
	Options	Exercise Price		(Millions)
Outstanding and Exercisable - January 1, 2012	47,374	$	18.78
Converted NSTAR Options upon Merger	2,664,894	$	23.99
Exercised	(1,166,511)	$	22.53	$	18.7
Outstanding and Exercisable - December 31, 2012	1,545,757	$	24.92
Exercised	(324,382)	$	20.97	$	6.7
Outstanding and Exercisable - December 31, 2013	1,221,375	$	25.97
Exercised	(869,759)	$	25.68	$	16.4
Outstanding and Exercisable - December 31, 2014	351,616	$	26.69	$	9.4

Cash received for options exercised during the year ended December 31, 2014 totaled $22.3 million. The tax benefit realized from stock options exercised totaled $6.6 million for the year ended December 31, 2014.

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 specified limit. 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 2014, employees purchased 40,779 shares at discounted prices of $41.61 and $41.71. Employees purchased 39,526 shares in 2013 at discounted prices of $38.69 and $42.19. As of December 31, 2014 and 2013, 776,975 and 817,754 shares, 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.

Other Retirement Benefits

NU provides benefits for retirement and other benefits for certain current and past company officers of NU, including CL&P, PSNH and WMECO. These benefits are accounted for on an accrual basis and expensed over the service lives of the employees. The actuarially-determined liability for these benefits, which is included in Other Long-Term Liabilities on the balance sheets, as well as the related expense, are as follows:



NU	For the Years Ended December 31,
(Millions of Dollars)	2014		2013		2012
Actuarially-Determined Liability	$	57.5	$	51.3	$	54.6
Other Retirement Benefits Expense		4.5		4.4		4.7


	For the Years Ended December 31,
	2014								2013						2012
(Millions of Dollars)	CL&P		NSTAR Electric		PSNH		WMECO		CL&P		PSNH		WMECO		CL&P		PSNH		WMECO
Actuarially-Determined Liability	$	0.4	$	-	$	2.6	$	0.2	$	0.4	$	2.3	$	0.1	$	0.4	$	2.5	$	0.2
Other Retirement Benefits Expense		2.1		0.3		0.9		0.4		2.5		1.0		0.5		2.6		1.0		0.5

10.

INCOME TAXES

The components of income tax expense are as follows:


NU	For the Years Ended December 31,
(Millions of Dollars)	2014		2013		2012 (1)
Current Income Taxes:
Federal	$	4.4	$	8.8	$	(30.9)
State		24.5		(9.4)		17.6
Total Current		28.9		(0.6)		(13.3)
Deferred Income Taxes, Net:
Federal		406.8		386.2		291.3
State		36.5		45.4		0.8
Total Deferred		443.3		431.6		292.1
Investment Tax Credits, Net		(3.9)		(4.1)		(3.9)
Income Tax Expense	$	468.3	$	426.9	$	274.9

(1) NSTAR amounts were included in NU beginning April 10, 2012.


		For the Years Ended December 31,
		2014								2013								2012
				NSTAR								NSTAR								NSTAR
(Millions of Dollars)		CL&P		Electric		PSNH		WMECO		CL&P		Electric		PSNH		WMECO		CL&P		Electric		PSNH		WMECO
Current Income Taxes:
	Federal	$	(0.2)	$	75.0	$	(22.6)	$	1.9	$	20.1	$	95.8	$	(8.2)	$	(53.4)	$	(47.8)	$	93.5	$	(0.9)	$	(24.7)
	State		4.3		20.2		(0.1)		1.8		(6.7)		29.6		3.6		4.2		3.1		27.6		3.4		3.4
Total Current			4.1		95.2		(22.7)		3.7		13.4		125.4		(4.6)		(49.2)		(44.7)		121.1		2.5		(21.3)
Deferred Income Taxes, Net:
	Federal		138.0		88.0		79.6		28.1		114.9		49.8		64.5		84.7		141.5		11.4		46.5		51.2
	State		(7.1)		20.1		15.2		6.0		15.1		(1.0)		11.2		2.3		(0.5)		(7.1)		12.0		2.7
Total Deferred			130.9		108.1		94.8		34.1		130.0		48.8		75.7		87.0		141.0		4.3		58.5		53.9
Investment Tax Credits, Net			(1.5)		(1.3)		-		(0.5)		(1.7)		(1.3)		-		(0.4)		(1.9)		(1.4)		-		(0.5)
Income Tax Expense		$	133.5	$	202.0	$	72.1	$	37.3	$	141.7	$	172.9	$	71.1	$	37.4	$	94.4	$	124.0	$	61.0	$	32.1


A reconciliation between income tax expense and the expected tax expense at the statutory rate is as follows:

NU		For the Years Ended December 31,
(Millions of Dollars, except percentages)		2014		2013		2012 (1)
Income Before Income Tax Expense		$	1,295.4	$	1,220.6	$	808.0

Statutory Federal Income Tax Expense at 35%			453.4		427.2		282.8
Tax Effect of Differences:
	Depreciation		(5.6)		(7.4)		(10.8)
	Investment Tax Credit Amortization		(3.9)		(4.1)		(3.9)
	Other Federal Tax Credits		(3.5)		(3.7)		(3.8)
	State Income Taxes, Net of Federal Impact		42.5		27.6		4.4
	Dividends on ESOP		(8.0)		(8.0)		(6.4)
	Tax Asset Valuation Allowance/Reserve Adjustments		(2.9)		(4.3)		7.6
	Other, Net		(3.7)		(0.4)		5.0
Income Tax Expense		$	468.3	$	426.9	$	274.9
Effective Tax Rate			36.2%		35.0%		34.0%

(1) NSTAR amounts were included in NU beginning April 10, 2012.


		For the Years Ended December 31,
		2014								2013								2012
(Millions of Dollars,				NSTAR								NSTAR								NSTAR
	except percentages)	CL&P		Electric		PSNH		WMECO		CL&P		Electric		PSNH		WMECO		CL&P		Electric		PSNH		WMECO
Income Before Income Tax Expense		$	421.2	$	505.1	$	186.1	$	95.1	$	421.1	$	441.4	$	182.5	$	97.8	$	304.2	$	314.2	$	157.9	$	86.6

Statutory Federal Income Tax Expense at 35%			147.4		176.8		65.1		33.3		147.4		154.5		63.9		34.2		106.5		110.0		55.3		30.3
Tax Effect of Differences:
	Depreciation		(3.6)		(1.3)		0.3		(0.2)		(7.0)		0.1		0.6		-		(9.0)		-		(0.3)		0.2
	Investment Tax Credit Amortization		(1.5)		(1.3)		-		(0.5)		(1.7)		(1.3)		-		(0.4)		(1.9)		(1.4)		-		(0.5)
	Other Federal Tax Credits		-		-		(3.5)		-		-		-		(3.7)		-		-		-		(3.8)		-
	State Income Taxes, Net of Federal Impact		4.4		26.2		9.8		5.0		5.0		18.6		9.6		4.2		0.1		13.4		10.0		4.0
	Tax Asset Valuation Allowance/ Reserve Adjustments		(6.3)		-		-		-		0.4		-		-		-		1.6		-		-		-
	Other, Net		(6.9)		1.6		0.4		(0.3)		(2.4)		1.0		0.7		(0.6)		(2.9)		2.0		(0.2)		(1.9)
Income Tax Expense		$	133.5	$	202.0	$	72.1	$	37.3	$	141.7	$	172.9	$	71.1	$	37.4	$	94.4	$	124.0	$	61.0	$	32.1
Effective Tax Rate			31.7%		40.0%		38.7%		39.2%		33.6%		39.2%		39.0%		38.2%		31.0%		39.5%		38.6%		37.1%

NU, CL&P, NSTAR Electric, PSNH and WMECO file a consolidated federal income tax return and unitary, combined and separate state income tax returns. These entities are also parties to a tax allocation agreement under which taxable subsidiaries do not pay any more taxes than they would have otherwise paid had they filed a separate company tax return, and subsidiaries generating tax losses, if any, are paid for their losses when utilized.

Deferred tax assets and liabilities are recognized for the future tax effects of temporary differences between the carrying amounts and the tax basis of assets and liabilities. The tax effect of temporary differences is accounted for in accordance with the rate-making treatment of the applicable regulatory commissions and relevant accounting authoritative literature. The tax effects of temporary differences that give rise to the net accumulated deferred income tax obligations are as follows:


NU			As of December 31,
(Millions of Dollars)			2014		2013
Deferred Tax Assets:
	Employee Benefits		$	632.2	$	435.2
	Derivative Liabilities			199.6		272.9
	Regulatory Deferrals - Liabilities			366.7		272.7
	Allowance for Uncollectible Accounts			60.5		65.0
	Tax Effect - Tax Regulatory Liabilities			10.0		16.2
	Federal Net Operating Loss Carryforwards			59.1		158.0
	Purchase Accounting Adjustment			126.2		132.8
	Other			198.7		230.6
Total Deferred Tax Assets				1,653.0		1,583.4
	Less: Valuation Allowance			5.1		24.3
Net Deferred Tax Assets			$	1,647.9	$	1,559.1
Deferred Tax Liabilities:
	Accelerated Depreciation and Other Plant-Related Differences		$	4,215.9	$	3,806.5
	Property Tax Accruals			109.6		95.1
	Regulatory Amounts:
		Regulatory Deferrals - Assets		1,277.9		1,146.7
		Tax Effect - Tax Regulatory Assets		240.2		248.2
		Goodwill Regulatory Asset - 1999 Merger		203.2		211.5
		Derivative Assets		32.6		30.1
		Other		196.3		157.1
Total Deferred Tax Liabilities			$	6,275.7	$	5,695.2


			As of December 31,
			2014								2013
					NSTAR								NSTAR
(Millions of Dollars)			CL&P		Electric		PSNH		WMECO		CL&P		Electric		PSNH		WMECO
Deferred Tax Assets:
	Employee Benefits		$	129.0	$	39.9	$	46.8	$	9.2	$	56.0	$	38.3	$	15.5	$	(1.8)
	Derivative Liabilities			193.0		1.8		-		-		272.4		3.3		-		(2.9)
	Regulatory Deferrals - Liabilities			73.9		181.3		46.5		11.4		61.5		114.7		40.9		1.0
	Allowance for Uncollectible Accounts			32.3		13.8		3.2		3.8		31.2		15.4		3.1		3.3
	Tax Effect - Tax Regulatory Liabilities			3.1		1.8		2.1		2.5		4.7		5.4		2.1		1.6
	Federal Net Operating Loss Carryforwards			-		-		32.1		4.5		51.0		-		56.6		18.6
	Other			53.8		19.9		48.9		4.9		75.3		31.3		40.3		8.3
Total Deferred Tax Assets				485.1		258.5		179.6		36.3		552.1		208.4		158.5		28.1
	Less: Valuation Allowance			4.0		-		-		-		23.1		-		-		-
Net Deferred Tax Assets			$	481.1	$	258.5	$	179.6	$	36.3	$	529.0	$	208.4	$	158.5	$	28.1
Deferred Tax Liabilities:
	Accelerated Depreciation and Other Plant-Related Differences		$	1,378.6	$	1,296.9	$	596.6	$	385.8	$	1,238.1	$	1,179.4	$	526.6	$	361.1
	Property Tax Accruals			58.1		25.0		7.4		12.8		49.3		25.3		7.1		5.9
	Regulatory Amounts:
		Regulatory Deferrals - Assets		502.3		276.0		147.6		60.4		550.4		276.2		109.3		49.3
		Tax Effect - Tax Regulatory Assets		166.9		35.5		15.9		9.3		160.1		36.0		16.3		18.2
		Goodwill Regulatory Asset - 1999 Merger		-		174.4		-		-		-		181.6		-		-
		Derivative Assets		32.6		-		-		-		29.0		0.5		-		-
		Other		19.4		33.5		35.6		2.8		20.6		26.4		28.0		3.6
Total Deferred Tax Liabilities			$	2,157.9	$	1,841.3	$	803.1	$	471.1	$	2,047.5	$	1,725.4	$	687.3	$	438.1


Carryforwards: The following tables provide the amounts and expiration dates of state tax credit and loss carryforwards and federal tax credit and net operating loss carryforwards:

	As of December 31, 2014
					NSTAR
(Millions of Dollars)	NU		CL&P		Electric		PSNH		WMECO		Expiration Range
Federal Net Operating Loss	$	168.8	$	-	$	-	$	91.8	$	12.7	2031 - 2032
Federal Tax Credit		16.3		0.1		0.2		11.1		-	2031 - 2034
Federal Charitable Contribution		19.4		-		-		-		-	2016 - 2018
State Tax Credit		99.7		71.0		-		-		-	2014 - 2019
State Loss Carryforwards		40.6		-		-		-		-	2014 - 2034
State Charitable Contribution		2.1		-		-		-		-	2015 - 2018

	As of December 31, 2013
					NSTAR
(Millions of Dollars)	NU		CL&P		Electric		PSNH		WMECO		Expiration Range
Federal Net Operating Loss	$	451.3	$	145.8	$	-	$	161.8	$	53.3	2031 - 2032
Federal Tax Credit		8.0		-		-		7.6		-	2031 - 2033
Federal Charitable Contribution		33.7		-		-		-		-	2015 - 2017
State Tax Credit		104.7		86.8		-		-		-	2013 - 2018
State Loss Carryforwards		12.1		-		-		-		-	2013 - 2015
State Charitable Contribution		1.0		-		-		-		-	2015

In 2014, the Company recorded a reduction to its state credit carryforwards of $11 million (CL&P $10.1 million), net of tax, as a result of an update to reflect the amounts expired. Further, the Company decreased its valuation allowance reserve for state credits by $19.2 million at CL&P, net of tax, to reflect an update for expired state credits and latest estimate of usage.

For 2014, state credit and state loss carryforwards have been partially reserved by a valuation allowance of $4.4 million (net of federal income tax). For 2013, state credit and state loss carryforwards have been partially reserved by a valuation allowance of $23.7 million (net of federal income tax).

Unrecognized Tax Benefits: A reconciliation of the activity in unrecognized tax benefits, all of which would impact the effective tax rate if recognized, is as follows:


(Millions of Dollars)		NU		CL&P
Balance as of January 1, 2012		$	73.5	$	46.5
	Gross Increases - Current Year		10.3		2.5
	Gross Increases - Prior Year		0.1		-
	Gross Decreases - Prior Year		(0.8)		-
Balance as of December 31, 2012			83.1		49.0
	Gross Increases - Current Year		8.2		2.1
	Gross Decreases - Prior Year		(1.1)		(0.3)
	Settlements		(49.8)		(39.4)
	Lapse of Statute of Limitations		(2.2)		-
Balance as of December 31, 2013			38.2		11.4
	Gross Increases - Current Year		9.3		2.7
	Gross Increases - Prior Year		0.3		0.2
	Lapse of Statute of Limitations		(1.6)		-
Balance as of December 31, 2014		$	46.2	$	14.3

Interest and Penalties: Interest on uncertain tax positions is recorded and generally classified as a component of Other Interest Expense on the statements of income. However, when resolution of uncertainties results in the Company receiving interest income, any related interest benefit is recorded in Other Income, Net on the statements of income. No penalties have been recorded. The amount of interest expense/(income) on uncertain tax positions recognized and the related accrued interest payable/(receivable) are as follows:


Other Interest	For the Years Ended December 31,						Accrued Interest	As of December 31,
Expense/(Income)	2014		2013		2012		Expense	2014		2013
(Millions of Dollars)							(Millions of Dollars)
NU (1)	$	0.4	$	(8.6)	$	3.1	NU	$	1.9	$	1.5
CL&P		-		(4.0)		1.3	CL&P		-		-

(1)

NSTAR amounts were included in NU beginning April 10, 2012.

Tax Positions: During 2014, NU did not resolve any of its uncertain tax positions.

During 2013, NU received a Final Determination from the Connecticut Department of Revenue Services (DRS) that concluded its audit of NU's Connecticut income tax returns for the years 2005 through 2008. The DRS Determination resulted in total NU and CL&P after-tax benefits of $13.6 million and $6.9 million, respectively, that included a reduction in NU and CL&P pre-tax interest expense of $8.7 million and $4 million, or $5.2 million and $2.4 million after-tax, respectively. Further, the income tax expense impact resulted in a tax benefit to NU and CL&P of $8.4 million and $4.5 million after-tax, respectively.

Open Tax Years: The following table summarizes NU, CL&P, NSTAR Electric, PSNH and WMECO's tax years that remain subject to examination by major tax jurisdictions as of December 31, 2014:


Description		Tax Years
Federal		2014
Connecticut		2011 – 2014
Massachusetts		2011 – 2014
New Hampshire		2011 – 2014

NU estimates that during the next twelve months, differences of a non-timing nature could be resolved, resulting in a zero to $2 million decrease in unrecognized tax benefits by NU. These estimated changes are not expected to have a material impact on the earnings of NU. Other companies' impacts are not expected to be material.

2014 Federal Legislation: On December 19, 2014, the "Tax Increase Prevention Act of 2014" became law, which extended the accelerated deduction of depreciation to businesses through 2014. This extended stimulus provides NU with cash flow benefits of approximately $200 million (approximately $70 million at CL&P, $50 million at NSTAR Electric, $35 million at PSNH, and $15 million at WMECO) in 2015.

2013 Federal Legislation: On January 2, 2013, the "American Taxpayer Relief Act of 2012" became law, which extended the accelerated deduction of depreciation to businesses through 2013. This extended stimulus provided NU with cash flow benefits of approximately $300 million (approximately $95 million at CL&P, $85 million at NSTAR Electric, $35 million at PSNH, and $50 million at WMECO).

On September 13, 2013, the Internal Revenue Service issued final Tangible Property regulations that are meant to simplify, clarify and make more administrable previously issued guidance. NU is in compliance with the new regulations, but continues to evaluate several new potential elections.

2013 Massachusetts: On July 24, 2013, Massachusetts enacted a law that changed the income tax rate applicable to utility companies effective January 1, 2014, from 6.5 percent to 8 percent. The tax law change required NU to remeasure its accumulated deferred income taxes and resulted in NU increasing its deferred tax liability with an offsetting regulatory asset of approximately $61 million at its utility companies ($46.3 million at NSTAR Electric and $9.8 million at WMECO).

11.

COMMITMENTS AND CONTINGENCIES

Environmental Matters

General: NU, CL&P, NSTAR Electric, PSNH and WMECO are subject to environmental laws and regulations intended to mitigate or remove the effect of past operations and improve or maintain the quality of the environment. These laws and regulations require the removal or the remedy of the effect on the environment of the disposal or release of certain specified hazardous substances at current and former operating sites. NU, CL&P, NSTAR Electric, PSNH and WMECO have an active environmental auditing and training program and believe that they are substantially in compliance with all enacted laws and regulations.

Environmental reserves are accrued when assessments indicate it is probable that a liability has been incurred and an amount can be reasonably estimated. The approach used estimates the liability based on the most likely action plan from a variety of available remediation options, including no action required or several different remedies ranging from establishing institutional controls to full site remediation and monitoring.

These estimates are subjective in nature as they take into consideration several different remediation options at each specific site. The reliability and precision of these estimates can be affected by several factors, including new information concerning either the level of contamination at the site, the extent of NU, CL&P, NSTAR Electric, PSNH and WMECO's responsibility or the extent of remediation required, recently enacted laws and regulations or a change in cost estimates due to certain economic factors.

The amounts recorded as environmental liabilities included in Other Current Liabilities and Other Long-Term Liabilities on the balance sheets represent management's best estimate of the liability for environmental costs, and take into consideration site assessment, remediation and long-term monitoring costs. The environmental liability also takes into account recurring costs of managing hazardous substances and pollutants, mandated expenditures to remediate previously contaminated sites and any other infrequent and non-recurring clean-up costs. A reconciliation of the activity in the environmental reserves is as follows:


(Millions of Dollars)	NU		CL&P		NSTAR Electric		PSNH		WMECO
Balance as of January 1, 2013	$	39.4	$	3.7	$	1.7	$	4.9	$	0.6
Additions		3.5		0.2		0.2		1.0		-
Payments/Reductions		(7.5)		(0.5)		(0.7)		(0.5)		(0.2)
Balance as of December 31, 2013		35.4		3.4		1.2		5.4		0.4
Additions		12.7		1.0		-		0.1		0.2
Payments/Reductions		(4.8)		(0.6)		(0.1)		(0.3)		(0.1)
Balance as of December 31, 2014	$	43.3	$	3.8	$	1.1	$	5.2	$	0.5

These liabilities are estimated on an undiscounted basis and do not assume that any amounts are recoverable from insurance companies or other third parties. The environmental reserves include sites at different stages of discovery and remediation and do not include any unasserted claims.

It is possible that new information or future developments could require a reassessment of the potential exposure to related environmental matters. As this information becomes available, management will continue to assess the potential exposure and adjust the reserves accordingly.

The number of environmental sites and reserves related to these sites for which remediation or long-term monitoring, preliminary site work or site assessment are being performed are as follows:


	As of December 31, 2014				As of December 31, 2013
			Reserve				Reserve
	Number of Sites		(in millions)		Number of Sites		(in millions)
NU		65	$	43.3		68	$	35.4
CL&P		16		3.8		18		3.4
NSTAR Electric		13		1.1		12		1.2
PSNH		13		5.2		15		5.4
WMECO		4		0.5		5		0.4

Included in the NU number of sites and reserve amounts above are former MGP sites that were operated several decades ago and manufactured gas from coal and other processes, which resulted in certain by-products remaining in the environment that may pose a potential risk to human health and the environment. The reserve balance related to these former MGP sites was $38.8 million and $31.4 million as of December 31, 2014 and 2013, respectively, and relates primarily to the natural gas business segment. The increase in the reserve balance for the MGP sites was due to the completion of the site assessment at three sites. The assessments provided new information related to the extent and nature of the contamination and the costs of required remediation.

As of December 31, 2014, for 5 environmental sites (1 for CL&P, and 1 for WMECO) that are included in the Company's reserve for environmental costs, the information known and nature of the remediation options at those sites allow for the Company to estimate the range of losses for environmental costs. As of December 31, 2014, $17.7 million ($1 million for CL&P and $0.3 million for WMECO) had been accrued as a liability for these sites, which represent management's best estimates of the liabilities for environmental costs. These amounts are the best estimates with estimated ranges of additional losses from zero to $24 million.

As of December 31, 2014, for 15 environmental sites (3 for CL&P, 3 for NSTAR Electric and 2 for PSNH) that are included in the Company's reserve for environmental costs, management cannot reasonably estimate the exposure to loss in excess of the reserve, or range of loss, as these sites are under investigation and/or there is significant uncertainty as to what remedial actions, if any, the Company may be required to undertake. As of December 31, 2014, $13.4 million ($1.4 million for CL&P, $0.2 million for PSNH) had been accrued as a liability for these sites. As of December 31, 2014, for the remaining 45 environmental sites (12 for CL&P, 10 for NSTAR Electric, 11 for PSNH, and 3 for WMECO) that are included in the Company's reserve for environmental costs, the $12.2 million accrual ($1.4 million for CL&P, $1.1 million for NSTAR Electric, $5 million for PSNH, and $0.2 million for WMECO) represents management's best estimate of the liability and no additional loss is anticipated.

CERCLA: Of the total environmental sites, 9 sites (1 for CL&P, 3 for NSTAR Electric and 3 for PSNH) are superfund sites under the federal Comprehensive Environmental Response, Compensation and Liability Act of 1980 (CERCLA) and its amendments or state equivalents for which the Company has been notified that it is a potentially responsible party but for which the site assessment and remediation are not being managed by the Company. As of December 31, 2014, a liability of $0.7 million accrued on these sites represents management's best estimate of its potential remediation costs with respect to these superfund sites.

Environmental Rate Recovery: PSNH, NSTAR Gas and Yankee Gas have rate recovery mechanisms for MGP related environmental costs. CL&P recovers a certain level of environmental costs currently in rates but does not have an environmental cost recovery tracking mechanism. Accordingly, changes in CL&P's environmental reserves impact CL&P's Net Income. NSTAR Electric and WMECO do not have a separate regulatory mechanism to recover environmental costs from its customers, and changes in NSTAR Electric's and WMECO's environmental reserves impact Net Income.


B.	Long-Term Contractual Arrangements
Estimated Future Annual Costs: The estimated future annual costs of significant long-term contractual arrangements as of December 31, 2014 are as follows:

NU
(Millions of Dollars)		2015		2016		2017		2018		2019		Thereafter		Total
Supply and Stranded Cost		$	196.6	$	169.2	$	101.9	$	65.3	$	38.1	$	82.4	$	653.5
Renewable Energy			204.3		240.5		239.6		204.2		202.9		1,994.6		3,086.1
Peaker CfDs			26.3		25.4		10.5		-		-		-		62.2
Natural Gas Procurement			133.7		116.3		45.6		31.9		25.8		85.1		438.4
Coal, Wood and Other			99.0		25.2		5.0		5.0		1.9		15.0		151.1
Transmission Support Commitments			25.9		21.6		19.0		21.2		21.3		21.3		130.3
Total		$	685.8	$	598.2	$	421.6	$	327.6	$	290.0	$	2,198.4	$	4,521.6

CL&P
(Millions of Dollars)		2015		2016		2017		2018		2019		Thereafter		Total
Supply and Stranded Cost		$	134.3	$	136.8	$	79.0	$	42.0	$	25.0	$	43.6	$	460.7
Renewable Energy			61.2		70.3		71.3		72.1		72.1		715.9		1,062.9
Peaker CfDs			26.3		25.4		10.5		-		-		-		62.2
Transmission Support Commitments			10.2		8.5		7.5		8.4		8.4		8.4		51.4
Yankee Billings			1.4		0.8		0.8		0.9		0.9		11.8		16.6
Total		$	233.4	$	241.8	$	169.1	$	123.4	$	106.4	$	779.7	$	1,653.8

NSTAR Electric
(Millions of Dollars)		2015		2016		2017		2018		2019		Thereafter		Total
Supply and Stranded Cost		$	34.3	$	14.1	$	4.8	$	5.5	$	5.5	$	31.4	$	95.6
Renewable Energy			85.4		99.9		96.9		59.6		57.7		319.8		719.3
Transmission Support Commitments			8.1		6.7		5.9		6.6		6.6		6.6		40.5
Yankee Billings			0.5		0.3		0.3		0.3		0.3		4.0		5.7
Total		$	128.3	$	121.0	$	107.9	$	72.0	$	70.1	$	361.8	$	861.1

PSNH
(Millions of Dollars)		2015		2016		2017		2018		2019		Thereafter		Total
Supply and Stranded Cost		$	28.0	$	18.3	$	18.1	$	17.8	$	7.6	$	7.4	$	97.2
Renewable Energy			57.7		67.9		69.0		70.1		70.7		932.4		1,267.8
Coal, Wood and Other			99.0		25.2		5.0		5.0		1.9		15.0		151.1
Transmission Support Commitments			5.5		4.6		4.0		4.5		4.5		4.5		27.6
Yankee Billings			0.4		0.3		0.3		0.3		0.3		4.7		6.3
Total		$	190.6	$	116.3	$	96.4	$	97.7	$	85.0	$	964.0	$	1,550.0

WMECO
(Millions of Dollars)		2015		2016		2017		2018		2019		Thereafter		Total
Renewable Energy		$	-	$	2.4	$	2.4	$	2.4	$	2.4	$	26.5	$	36.1
Transmission Support Commitments			2.1		1.8		1.6		1.7		1.8		1.8		10.8
Yankee Billings			0.3		0.2		0.2		0.2		0.2		3.0		4.1
Total		$	2.4	$	4.4	$	4.2	$	4.3	$	4.4	$	31.3	$	51.0

Supply and Stranded Cost: CL&P, NSTAR Electric and PSNH have various IPP contracts or purchase obligations for electricity, including payment obligations resulting from the buydown of electricity purchase contracts. Such contracts extend through 2024 for CL&P, 2030 for NSTAR Electric and 2023 for PSNH.

In addition, CL&P, along with UI, has four capacity CfDs for a total of approximately 787 MW of capacity consisting of three generation projects and one demand response project. The capacity CfDs extend through 2026 and obligate both CL&P and UI to make or receive payments on a monthly basis to or from the generation facilities based on the difference between a set capacity price and the capacity market prices received by the generation facilities in the ISO-NE capacity markets. CL&P has a sharing agreement with UI, whereby UI will share 20 percent of the costs and benefits of these contracts. CL&P's portion of the costs and benefits of these contracts will be paid by or refunded to CL&P's customers.

The contractual obligations table does not include CL&P's SS or LRS, or NSTAR Electric's or WMECO's default service contracts, the amounts of which vary with customers' energy needs. The contractual obligations table also does not include PSNH's short-term power supply management.

Renewable Energy: Renewable energy contracts include non-cancellable commitments under contracts of CL&P, NSTAR Electric, PSNH, and WMECO for the purchase of energy and capacity from renewable energy facilities. Such contracts extend through 2035 for CL&P, 2030 for NSTAR Electric, 2033 for PSNH and 2030 for WMECO.

The contractual obligations table does not include long-term commitments signed by CL&P, NSTAR Electric and WMECO, as required by the PURA and DPU, for the purchase of renewable energy and related products that are contingent on the future construction of energy facilities.

Peaker CfDs: In 2008, CL&P entered into three CfDs with developers of peaking generation units approved by the PURA (Peaker CfDs). These units have a total of approximately 500 MW of peaking capacity. As directed by the PURA, CL&P and UI have entered into a sharing agreement, whereby CL&P is responsible for 80 percent and UI for 20 percent of the net costs or benefits of these CfDs. The Peaker CfDs pay the generation facility owner the difference between capacity, forward reserve and energy market revenues and a cost-of-service payment stream for 30 years. The ultimate cost or benefit to CL&P under these contracts will depend on the costs of plant operation and the prices that the projects receive for capacity

and other products in the ISO-NE markets. CL&P's portion of the amounts paid or received under the Peaker CfDs will be recoverable from or refunded to CL&P's customers.

Natural Gas Procurement: NU's natural gas distribution businesses have long-term contracts for the purchase, transportation and storage of natural gas in the normal course of business as part of its portfolio of supplies. These contracts extend through 2029.

Coal, Wood and Other: PSNH has entered into various arrangements for the purchase of coal, wood and the transportation services for fuel supply for its electric generating assets. Also included in the table above is a contract for capacity on the Portland Natural Gas Transmission System (PNGTS) pipeline that extends through 2018. The costs on this contract of $11.4 million are not recoverable from customers.

Transmission Support Commitments: Along with other New England utilities, CL&P, NSTAR Electric, PSNH and WMECO entered into agreements in 1985 to support transmission and terminal facilities that were built to import electricity from the Hydro-Québec system in Canada. CL&P, NSTAR Electric, PSNH and WMECO are obligated to pay, over a 30-year period ending in 2020, their proportionate shares of the annual operation and maintenance expenses and capital costs of those facilities.

The total costs incurred under these agreements were as follows:


NU	For the Years Ended December 31,
(Millions of Dollars)	2014		2013		2012 (1)
Supply and Stranded Cost	$	99.2	$	141.0	$	216.8
Renewable Energy		114.4		91.3		48.7
Peaker CfDs		18.1		51.9		59.3
Natural Gas Procurement		482.5		349.8		243.1
Coal, Wood and Other		120.5		112.6		105.2
Transmission Support Commitments		25.0		24.9		24.8


	For the Years Ended December 31,
	2014								2013								2012
			NSTAR								NSTAR								NSTAR
(Millions of Dollars)	CL&P		Electric		PSNH		WMECO		CL&P		Electric		PSNH		WMECO		CL&P		Electric		PSNH		WMECO
Supply and Stranded Cost	$	63.0	$	7.0	$	26.0	$	3.2	$	77.6	$	32.4	$	29.0	$	2.0	$	158.2	$	36.3	$	30.5	$	0.9
Renewable Energy		0.7		87.4		26.3		-		-		84.9		6.4		-		-		60.2		4.1		-
Peaker CfDs		18.1		-		-		-		51.9		-		-		-		59.3		-		-		-
Coal, Wood and Other		-		-		120.5		-		-		-		112.6		-		-		-		105.2		-
Transmission Support Commitments		9.9		7.7		5.3		2.1		9.8		7.7		5.3		2.1		9.6		7.6		5.2		2.0

(1)

NSTAR amounts were included in NU beginning April 10, 2012.

Contractual Obligations - Yankee Companies

CL&P, NSTAR Electric, PSNH and WMECO have decommissioning and plant closure cost obligations to the Yankee Companies, which have each completed the physical decommissioning of their respective nuclear facilities and are now engaged in the long-term storage of their spent fuel. The Yankee Companies collect decommissioning and closure costs through wholesale, FERC-approved rates charged under power purchase agreements with several New England utilities, including CL&P, NSTAR Electric, PSNH and WMECO. These companies in turn recover these costs from their customers through state regulatory commission-approved retail rates.

CL&P, NSTAR Electric, PSNH and WMECO's percentage share of the obligations to support the Yankee Companies under FERC-approved rate tariffs is the same as their respective ownership percentages in the Yankee Companies. For further information on the ownership percentages, see Note 1J, "Summary of Significant Accounting Policies - Equity Method Investments," to the financial statements.

The Yankee Companies have collected or are currently collecting amounts that management believes are adequate to recover the remaining decommissioning and closure cost estimates for the respective plants. Management believes CL&P, NSTAR Electric and WMECO will recover their shares of these decommissioning and closure obligations from their customers. PSNH has already recovered its share of these costs from its customers.

Spent Nuclear Fuel Litigation:

DOE Phase I Damages – In 1998, the Yankee Companies filed separate complaints against the DOE in the Court of Federal Claims seeking monetary damages resulting from the DOE's failure to begin accepting spent nuclear fuel for disposal by January 31, 1998 pursuant to the terms of the 1983 spent fuel and high level waste disposal contracts between the Yankee Companies and the DOE (DOE Phase I Damages). Phase I covered damages for the period 1998 through 2002. Following multiple appeals and cross-appeals, in December 2012, the judgment awarding CYAPC $39.6 million, YAEC $38.3 million and MYAPC $81.7 million became final.

In January 2013, the proceeds from the DOE Phase I Damages Claim were received by the Yankee Companies and transferred to each Yankee Company's respective decommissioning trust. As a result of NU's consolidation of CYAPC and YAEC, the financial statements reflected an increase of $77.9 million in marketable securities for CYAPC and YAEC's Phase I Damage awards that were invested in the nuclear decommissioning trusts in 2013.

In June 2013, FERC approved CYAPC, YAEC and MYAPC to reduce rates in their wholesale power contracts through the application of the DOE proceeds for the benefit of customers. Changes to the terms of the wholesale power contracts became effective on July 1, 2013. In accordance with the FERC order, CL&P, NSTAR Electric, PSNH and WMECO began receiving the benefit of the DOE proceeds, and the benefits have been passed on to customers.

On September 17, 2014, in accordance with the MYAPC refund plan, MYAPC returned a portion of the DOE Phase I Damages proceeds to the member companies, including CL&P, NSTAR Electric, PSNH, and WMECO, in the amount of $3.2 million, $1.1 million, $1.4 million and $0.8 million, respectively. These amounts reduced receivables at CL&P, NSTAR Electric, PSNH and WMECO.

DOE Phase II Damages - In December 2007, the Yankee Companies each filed subsequent lawsuits against the DOE seeking recovery of actual damages incurred related to the alleged failure of the DOE to provide for a permanent facility to store spent nuclear fuel generated in years 2001 through 2008 for CYAPC and YAEC and from 2002 through 2008 for MYAPC (DOE Phase II Damages). In November 2013, the court issued a final judgment awarding CYAPC $126.3 million, YAEC $73.3 million, and MYAPC $35.8 million. On January 14, 2014, the Yankee Companies received a letter from the U.S. Department of Justice stating that the DOE will not appeal the court's final judgment.

In March and April 2014, CYAPC, YAEC and MYAPC received payment of $126.3 million, $73.3 million and $35.8 million, respectively, of the DOE Phase II Damages proceeds and made the required informational filing with FERC in accordance with the process and methodology outlined in the 2013 FERC order. The Yankee Companies returned the DOE Phase II Damages proceeds to the member companies, including CL&P, NSTAR Electric, PSNH, and WMECO, for the benefit of their respective customers, on June 1, 2014.

As of December 31, 2014, CL&P's refund obligation to customers of $65.4 million was recorded as an offset to the deferred storm restoration costs regulatory asset, as directed by PURA. NSTAR Electric's, PSNH's and WMECO's refund obligation to customers of $29.1 million, $13.1 million and $18.1 million, respectively, was recorded as a regulatory liability in each company's respective regulatory tracker mechanisms. Refunds to customers for these DOE proceeds began in the third quarter of 2014. For further information, see Note 2, "Regulatory Accounting," to the financial statements.

DOE Phase III Damages – In August 2013, the Yankee Companies each filed subsequent lawsuits against the DOE seeking recovery of actual damages incurred in the years 2009 through 2012. The presiding judge issued a Pre-Trial Scheduling Order on September 3, 2014 that set the case for trial from June 30 to July 2, 2015.

Guarantees and Indemnifications

NU parent provides credit assurances on behalf of its subsidiaries, including CL&P, NSTAR Electric, PSNH and WMECO, in the form of guarantees in the normal course of business.

NU provided guarantees and various indemnifications on behalf of external parties as a result of the sales of former subsidiaries of NU Enterprises and the termination of an unregulated business, with maximum exposures either not specified or not material.

NU also issued a guaranty under which, beginning at the time the Northern Pass Transmission line goes into commercial operation, NU will guarantee the financial obligations of NPT under the TSA in an amount not to exceed $25 million. NU's obligations under the guaranty expire upon the full, final and indefeasible payment of the guaranteed obligations.

Management does not anticipate a material impact to Net Income as a result of these various guarantees and indemnifications.

The following table summarizes NU's guarantees of its subsidiaries, including CL&P, NSTAR Electric, PSNH and WMECO, as of December 31, 2014:


		Maximum Exposure
Subsidiary	Description	(in millions)		Expiration Dates

Various	Surety Bonds (1)	$	60.0	2015 - 2016

NUSCO and Rocky River Realty Company	Lease Payments for Vehicles and Real Estate	$	14.4	2019 and 2024

(1)

Surety bond expiration dates reflect termination dates, the majority of which will be renewed or extended. Certain surety bonds contain credit ratings triggers that would require NU parent to post collateral in the event that the unsecured debt credit ratings of NU are downgraded.

FERC Base ROE Complaints

Beginning in 2011, several New England state attorneys general, state regulatory commissions, consumer advocates, consumer groups, municipal parties and other parties (the "Complainants") jointly filed three separate complaints at FERC. In the first complaint, filed in 2011, the Complainants alleged that the NETOs' base ROE of 11.14 percent that was utilized since 2006 was unjust and unreasonable, asserted that the rate was excessive due to changes in the capital markets, and sought an order to reduce it prospectively from the date of the final FERC order and for the 15-month period beginning October 1, 2011 to December 31, 2012 (the "first complaint refund period"). In the pursuant second and third complaints, filed in 2012 and 2014, respectively, the Complainants challenged the NETOs' base ROE and sought refunds for the 15-month periods beginning December 27, 2012 and July 31, 2014, respectively.

In 2014, the FERC determined that the base ROE should be set at 10.57 percent for the first complaint refund period and that a utility's total or maximum ROE should not exceed the top of the new zone of reasonableness (7.03 percent to 11.74 percent). The FERC ordered the NETOs to provide refunds to customers for the first complaint refund period and set the new base ROE of 10.57 percent prospectively from October 16, 2014. In late 2014, the NETOs made a compliance filing, and began refunding amounts from the first complaint period, inclusive of incentive ROE adders that exceeded the 11.74 percent as compared to the total company transmission ROE. Complainants have challenged the compliance filing.

As a result of the actions taken by the FERC and other developments in this matter, NU recorded reserves in 2013 and 2014 to recognize the potential financial impacts of the first and second complaints. The Company is unable to determine any amount related to the third complaint. The following is a summary of the cumulative pre-tax reserves (excluding interest) established by the Company in 2013 and 2014:


	NU
	For the Years Ended December 31,
(Millions of Dollars)	2013		2014		Total
1st Complaint - Base ROE	$	23.7	$	1.2	$	24.9
2nd Complaint - Base ROE		-		27.4		27.4
Incentive ROE (1st and 2nd Complaint)		-		8.4		8.4
Cumulative Reserve	$	23.7	$	37.0	$	60.7

	CL&P						NSTAR Electric
	For the Years Ended December 31,						For the Years Ended December 31,
(Millions of Dollars)	2013		2014		Total		2013		2014		Total
1st Complaint - Base ROE	$	12.8	$	0.5	$	13.3	$	5.7	$	0.4	$	6.1
2nd Complaint - Base ROE		-		13.5		13.5		-		7.5		7.5
Incentive ROE (1st and 2nd Complaint)		-		6.7		6.7		-		-		-
Cumulative Reserve	$	12.8	$	20.7	$	33.5	$	5.7	$	7.9	$	13.6

	PSNH						WMECO
	For the Years Ended December 31,						For the Years Ended December 31,
(Millions of Dollars)	2013		2014		Total		2013		2014		Total
1st Complaint - Base ROE	$	2.3	$	0.1	$	2.4	$	2.9	$	0.2	$	3.1
2nd Complaint - Base ROE		-		2.7		2.7		-		3.7		3.7
Incentive ROE (1st and 2nd Complaint)		-		-		-		-		1.7		1.7
Cumulative Reserve	$	2.3	$	2.8	$	5.1	$	2.9	$	5.6	$	8.5

As of December 31, 2014, the cumulative reserves above do not reflect refunds totaling $4.8 million at NU, $2.7 million at CL&P, $1 million at NSTAR Electric, $0.5 million at PSNH and $0.6 million at WMECO for the first complaint refund period.

The aggregate after-tax net charge to 2014 earnings resulting from the 2014 FERC orders totaled $22.4 million at NU, $12.4 million at CL&P, $4.9 million at NSTAR Electric, $1.7 million at PSNH and $3.4 million at WMECO. In 2013, the aggregate after-tax charge to earnings totaled $14.3 million at NU, $7.7 million at CL&P, $3.4 million at NSTAR Electric, $1.4 million at PSNH and $1.8 million at WMECO.

Although management is uncertain on the final outcome on the second and third complaints regarding the base ROE and the incentive ROE adder, management believes the current reserves established are appropriate to reflect probable and reasonably estimable refunds.

2014 Comprehensive Settlement Agreement

On December 31, 2014, NSTAR Electric, NSTAR Gas and the Massachusetts Attorney General filed a comprehensive settlement agreement with the DPU. The comprehensive settlement agreement included resolution of the outstanding NSTAR Electric CPSL program filings for the periods 2006 through 2011, the NSTAR Electric and NSTAR Gas PAM and energy efficiency-related customer billing adjustments reported in 2012, and the NSTAR Electric energy efficiency program filings regarding LBR for the periods 2008 through 2011. If approved by the DPU, NSTAR Electric and NSTAR Gas will be required to refund a total of $44.7 million to their respective customers, which was included in regulatory liabilities as of December 31, 2014. Upon the DPU's approval, NSTAR Electric will adjust its regulatory liabilities, which it expects will result in a benefit of $23 million in the first quarter of 2015. Management expects a response from the DPU in the first quarter of 2015.

Basic Service Bad Debt Adder

In accordance with a generic 2005 DPU order, electric utilities in Massachusetts recover the energy-related portion of bad debt costs in their Basic Service rates. In 2007, NSTAR Electric filed its 2006 Basic Service reconciliation with the DPU proposing an adjustment related to the increase of its Basic Service bad debt charge-offs. The DPU issued an order approving the implementation of a revised Basic Service rate but instructed NSTAR Electric to reduce distribution rates by an amount equal to the increase in its Basic Service bad debt charge-offs. This adjustment to NSTAR Electric's distribution rates would eliminate the fully reconciling nature of the Basic Service bad debt adder.

In 2010, NSTAR Electric filed an appeal of the DPU's order with the SJC. NSTAR Electric's position was that it had fully removed the collection of energy-related bad debt costs from its distribution rates effective January 1, 2006. Therefore, no further adjustment to distribution rates was warranted. In 2012, the SJC vacated the DPU order and remanded the matter to the DPU for further review.

As of December 31, 2014, NSTAR Electric has a total deferred regulatory asset of approximately $33 million of costs associated with energy-related bad debt.

On January 7, 2015, the DPU issued an order on remand stating that NSTAR Electric had, in fact, removed energy-related bad debt costs from distribution rates effective January 1, 2006. The DPU order approved NSTAR Electric's 2005 and 2006 reconciliation filings and ordered NSTAR Electric and the Massachusetts Attorney General to collaborate on the submission of a proposal for the reconciliation of energy-related bad debt costs for the open years of 2007 through 2014 by April 7, 2015. Management expects to present a proposal to the Attorney General in the first quarter of 2015 with a decision from the DPU later in 2015.

Litigation and Legal Proceedings

NU, including CL&P, NSTAR Electric, PSNH and WMECO, are involved in legal, tax and regulatory proceedings regarding matters arising in the ordinary course of business, which involve management's assessment to determine the probability of whether a loss will occur and, if probable, its best estimate of probable loss. The Company records and discloses losses when these losses are probable and reasonably estimable, and discloses matters when losses are probable but not estimable or when losses are reasonably possible. Legal costs related to the defense of loss contingencies are expensed as incurred.

12.

LEASES

NU, including CL&P, NSTAR Electric, PSNH and WMECO, has entered into lease agreements, some of which are capital leases, for the use of data processing and office equipment, vehicles, service centers, and office space. In addition, CL&P, NSTAR Electric, PSNH and WMECO incur costs associated with leases entered into by NUSCO and Rocky River Realty Company, which are included below in their respective operating lease rental expenses and future minimum rental payments. These intercompany lease amounts are eliminated on an NU consolidated basis. The provisions of the NU, CL&P, NSTAR Electric, PSNH, and WMECO lease agreements generally contain renewal options. Certain lease agreements contain payments impacted by the commercial paper rate plus a credit spread or the consumer price index.

Operating lease rental payments charged to expense are as follows:


					NSTAR
(Millions of Dollars)	NU (1)		CL&P		Electric		PSNH		WMECO
2014	$	14.3	$	6.0	$	7.8	$	1.5	$	1.2
2013		16.3		8.1		6.7		1.7		2.9
2012		14.8		8.2		6.2		2.5		3.0

(1)

NSTAR amounts were included in NU beginning April 10, 2012.

Future minimum rental payments, excluding executory costs, such as property taxes, state use taxes, insurance, and maintenance, under long-term noncancelable leases, as of December 31, 2014 are as follows:


Operating Leases					NSTAR
(Millions of Dollars)	NU		CL&P		Electric		PSNH		WMECO
2015	$	20.1	$	4.3	$	10.0	$	1.1	$	1.2
2016		17.6		3.8		8.8		1.0		1.0
2017		14.6		2.6		7.7		0.8		0.8
2018		10.5		1.5		5.8		0.6		0.6
2019		8.6		1.1		4.7		0.5		0.6
Thereafter		22.5		4.0		10.4		1.5		2.5
Future minimum lease payments	$	93.9	$	17.3	$	47.4	$	5.5	$	6.7


Capital Leases
(Millions of Dollars)	NU		CL&P		PSNH
2015	$	2.4	$	2.0	$	0.4
2016		2.2		1.9		0.3
2017		2.1		2.0		0.1
2018		2.1		2.0		0.1
2019		2.0		2.0		-
Thereafter		3.5		3.5		-
Future minimum lease payments		14.3		13.4		0.9
Less amount representing interest		4.9		5.0		-
Present value of future minimum lease payments	$	9.4	$	8.4	$	0.9

CL&P entered into certain contracts for the purchase of energy that qualify as leases. These contracts do not have minimum lease payments and therefore are not included in the tables above. However, such contracts have been included in the contractual obligations table in Note 11B, "Commitments and Contingencies - Long-Term Contractual Arrangements," to the financial statements.

13.

FAIR VALUE OF FINANCIAL INSTRUMENTS

The following methods and assumptions were used to estimate the fair value of each of the following financial instruments:

Preferred Stock and Long-Term Debt: The fair value of CL&P's and NSTAR Electric's preferred stock is based upon pricing models that incorporate interest rates and other market factors, valuations or trades of similar securities and cash flow projections. The fair value of long-term debt securities is based upon pricing models that incorporate quoted market prices for those issues or similar issues adjusted for market conditions, credit ratings of the respective companies and treasury benchmark yields. The fair values provided in the tables below are classified as Level 2 within the fair value hierarchy. Carrying amounts and estimated fair values are as follows:


	As of December 31,
	2014				2013
NU	Carrying		Fair		Carrying		Fair
(Millions of Dollars)	Amount		Value		Amount		Value
Preferred Stock Not Subject to Mandatory Redemption	$	155.6	$	153.6	$	155.6	$	152.7
Long-Term Debt		8,851.6		9,451.2		8,310.2		8,443.1


	As of December 31, 2014
	CL&P				NSTAR Electric				PSNH				WMECO
	Carrying		Fair		Carrying		Fair		Carrying		Fair		Carrying		Fair
(Millions of Dollars)	Amount		Value		Amount		Value		Amount		Value		Amount		Value
Preferred Stock Not Subject to Mandatory Redemption	$	116.2	$	112.0	$	43.0	$	41.6	$	-	$	-	$	-	$	-
Long-Term Debt		2,842.0		3,214.5		1,797.4		1,993.5		1,076.3		1,137.9		628.5		689.4

	As of December 31, 2013
	CL&P				NSTAR Electric				PSNH				WMECO
	Carrying		Fair		Carrying		Fair		Carrying		Fair		Carrying		Fair
(Millions of Dollars)	Amount		Value		Amount		Value		Amount		Value		Amount		Value
Preferred Stock Not Subject to Mandatory Redemption	$	116.2	$	110.5	$	43.0	$	42.2	$	-	$	-	$	-	$	-
Long-Term Debt		2,741.2		2,952.8		1,801.1		1,888.0		1,049.0		1,073.9		629.4		640.1

Derivative Instruments: Derivative instruments are carried at fair value. For further information, see Note 4, "Derivative Instruments," to the financial statements.

Other Financial Instruments: Investments in marketable securities are carried at fair value. For further information, see Note 5, "Marketable Securities," to the financial statements. The carrying value of other financial instruments included in current assets and current liabilities, including cash and cash equivalents and special deposits, approximates their fair value due to the short-term nature of these instruments.

See Note 1H, "Summary of Significant Accounting Policies - Fair Value Measurements," for the fair value measurement policy and the fair value hierarchy.

14.

ACCUMULATED OTHER COMPREHENSIVE INCOME/(LOSS)

The changes in accumulated other comprehensive income/(loss) by component, net of tax effect, is as follows:


	For the Year Ended December 31, 2014								For the Year Ended December 31, 2013
	Qualified		Unrealized						Qualified		Unrealized
	Cash Flow		Gains/(Losses)		Defined				Cash Flow		Gains/(Losses)		Defined
	Hedging		on Marketable		Benefit				Hedging		on Marketable		Benefit
(Millions of Dollars)	Instruments		Securities		Plans		Total		Instruments		Securities		Plans		Total
AOCI as of January 1st	$	(14.4)	$	0.4	$	(32.0)	$	(46.0)	$	(16.4)	$	1.3	$	(57.8)	$	(72.9)

OCI Before Reclassifications		-		0.3		(34.2)		(33.9)		-		(0.9)		19.4		18.5
Amounts Reclassified from AOCI		2.0		-		3.9		5.9		2.0		-		6.4		8.4
Net OCI		2.0		0.3		(30.3)		(28.0)		2.0		(0.9)		25.8		26.9
AOCI as of December 31st	$	(12.4)	$	0.7	$	(62.3)	$	(74.0)	$	(14.4)	$	0.4	$	(32.0)	$	(46.0)

NU's qualified cash flow hedging instruments represent interest rate swap agreements on debt issuances that were settled in prior years. The settlement amount was recorded in AOCI and is being amortized into Net Income over the term of the underlying debt instrument. CL&P, PSNH and WMECO continue to amortize interest rate swaps settled in prior years from AOCI into Interest Expense over the remaining life of the associated long-term debt, which are not material to their respective financial statements.

The tax effects of Defined Benefit Plan OCI amounts before reclassifications, which relate to actuarial gains and losses that arose during 2014, 2013 and 2012 were recognized in AOCI as net deferred tax assets of $22.3 million and $6.2 million in 2014 and 2012, respectively, and net deferred tax liabilities of $11.4 million in 2013.

The following table sets forth the amounts reclassified from AOCI by component and the impacted line item on the statements of income:


	For the Years Ended December 31,
	2014		2013		2012
	Amounts Reclassified		Amounts Reclassified		Amounts Reclassified		Statements of Income
(Millions of Dollars)	from AOCI		from AOCI		from AOCI		Line Item Impacted
Qualified Cash Flow Hedging Instruments	$	(3.4)	$	(3.4)	$	(3.3)	Interest Expense
Tax Effect		1.4		1.4		1.3	Income Tax Expense
Qualified Cash Flow Hedging Instruments, Net of Tax	$	(2.0)	$	(2.0)	$	(2.0)

Defined Benefit Plan Costs:
Amortization of Actuarial Losses	$	(6.2)	$	(10.5)	$	(8.9)	Operations and Maintenance (1)
Amortization of Prior Service Cost		(0.2)		(0.2)		(0.2)	Operations and Maintenance (1)
Amortization of Transition Obligation		-		-		(0.2)	Operations and Maintenance (1)
Total Defined Benefit Plan Costs		(6.4)		(10.7)		(9.3)
Tax Effect		2.5		4.3		3.5	Income Tax Expense
Defined Benefit Plan Costs, Net of Tax	$	(3.9)	$	(6.4)	$	(5.8)

Total Amounts Reclassified from AOCI, Net of Tax	$	(5.9)	$	(8.4)	$	(7.8)

(1)

These amounts are included in the computation of net periodic Pension, SERP and PBOP costs. See Note 9A, "Employee Benefits - Pension Benefits and Postretirement Benefits Other Than Pensions," for further information.

As of December 31, 2014, it is estimated that a pre-tax amount of $3.5 million ($0.7 million for CL&P, $2 million for PSNH and $0.6 million for WMECO) will be reclassified from AOCI as a decrease to Net Income over the next 12 months as a result of the amortization of the interest rate swap agreements, which have been settled. In addition, it is estimated that a pre-tax amount of $6.9 million will be reclassified from AOCI as a decrease to Net Income over the next 12 months as a result of the amortization of Pension, SERP and PBOP costs.

15.

DIVIDEND RESTRICTIONS

NU parent's ability to pay dividends may be affected by certain state statutes, the ability of its subsidiaries to pay common dividends and the leverage restriction tied to its consolidated total debt to total capitalization ratio requirement in its revolving credit agreement.

CL&P, NSTAR Electric, PSNH and WMECO are subject to Section 305 of the Federal Power Act that makes it unlawful for a public utility to make or pay a dividend from any funds "properly included in its capital account." Management believes that this Federal Power Act restriction, as applied to CL&P, NSTAR Electric, PSNH and WMECO, would not be construed or applied by the FERC to prohibit the payment of dividends for lawful and legitimate business purposes from retained earnings. In addition, certain state statutes may impose additional limitations on such companies and on Yankee Gas and NSTAR Gas. Such state law restrictions do not restrict payment of dividends from retained earnings or net income. Pursuant to the joint revolving credit agreement of NU, CL&P, PSNH, WMECO, Yankee Gas and NSTAR Gas, and the NSTAR Electric revolving credit agreement, each company is required to maintain consolidated total debt to total capitalization ratio of no greater than 65 percent at all times. As of December 31, 2014, all companies were in compliance with such covenant. The Retained Earnings balances subject to these restrictions were $2.4 billion for NU, $1.1 billion for CL&P, $1.5 billion for NSTAR Electric, $486.5 million for PSNH and $178.8 million for WMECO as of December 31, 2014. As of December 31, 2014, NU, CL&P, NSTAR Electric, PSNH, WMECO, Yankee Gas and NSTAR Gas were in compliance with all such provisions of the revolving credit agreements that may restrict the payment of dividends. PSNH is further required to reserve an additional amount under its FERC hydroelectric license conditions. As of December 31, 2014, $13 million of PSNH's Retained Earnings was subject to restriction under its FERC hydroelectric license conditions and PSNH was in compliance with this provision.

16.

COMMON SHARES

The following table sets forth the NU common shares and the shares of common stock of CL&P, NSTAR Electric, PSNH and WMECO that were authorized and issued and the respective per share par values:


			Shares
			Authorized	Issued
	Per Share		as of December 31,	as of December 31,
	Par Value		2014 and 2013	2014		2013
NU	$	5	380,000,000		333,359,172		333,113,492
CL&P	$	10	24,500,000		6,035,205		6,035,205
NSTAR Electric	$	1	100,000,000		100		100
PSNH	$	1	100,000,000		301		301
WMECO	$	25	1,072,471		434,653		434,653

As of December 31, 2014 and 2013, there were 16,375,835 and 17,796,672 NU common shares held as treasury shares, respectively. As of December 31, 2014 and 2013, NU common shares outstanding were 316,983,337 and 315,273,559, respectively.

17.

PREFERRED STOCK NOT SUBJECT TO MANDATORY REDEMPTION

The CL&P and NSTAR Electric preferred stock is not subject to mandatory redemption and is presented as a noncontrolling interest of a subsidiary in NU's financial statements.

CL&P Preferred Stock: CL&P's charter authorizes it to issue up to 9 million shares of preferred stock ($50 par value per share). The issuance of additional preferred shares would be subject to PURA approval. Preferred stockholders have liquidation rights equal to the par value of the preferred stock, which they would receive in preference to any distributions to any junior stock. Were there to be a shortfall, all preferred stockholders would share ratably in available liquidation assets.

NSTAR Electric Preferred Stock: NSTAR Electric is authorized to issue 2,890,000 shares ($100 par value per share). NSTAR Electric has two outstanding series of cumulative preferred stock. Upon liquidation, holders of cumulative preferred stock are entitled to receive a liquidation preference before any distribution to holders of common stock. The liquidation preference for each outstanding series of cumulative preferred stock is equal to the par value, plus accrued and unpaid dividends. Were there to be a shortfall, holders of cumulative preferred stock would share ratably in available liquidation assets.

Details of preferred stock not subject to mandatory redemption are as follows (in millions except in redemption price and shares):


				Redemption Price			Shares Outstanding as of	As of December 31,
Series				Per Share		December 31, 2014 and 2013	2014		2013
CL&P
$	1.90		Series of 1947	$	52.50		163,912	$	8.2	$	8.2
$	2.00		Series of 1947	$	54.00		336,088		16.8		16.8
$	2.04		Series of 1949	$	52.00		100,000		5.0		5.0
$	2.20		Series of 1949	$	52.50		200,000		10.0		10.0
	3.90	%	Series of 1949	$	50.50		160,000		8.0		8.0
$	2.06		Series E of 1954	$	51.00		200,000		10.0		10.0
$	2.09		Series F of 1955	$	51.00		100,000		5.0		5.0
	4.50	%	Series of 1956	$	50.75		104,000		5.2		5.2
	4.96	%	Series of 1958	$	50.50		100,000		5.0		5.0
	4.50	%	Series of 1963	$	50.50		160,000		8.0		8.0
	5.28	%	Series of 1967	$	51.43		200,000		10.0		10.0
$	3.24		Series G of 1968	$	51.84		300,000		15.0		15.0
	6.56	%	Series of 1968	$	51.44		200,000		10.0		10.0
Total CL&P							2,324,000	$	116.2	$	116.2

NSTAR Electric
	4.25	%	Series	$	103.625		180,000	$	18.0	$	18.0
	4.78	%	Series	$	102.80		250,000		25.0		25.0
Total NSTAR Electric							430,000	$	43.0	$	43.0
Fair Value Adjustment due to Merger with NSTAR									(3.6)		(3.6)
Total NU - Preferred Stock of Subsidiaries								$	155.6	$	155.6


18.	COMMON SHAREHOLDERS' EQUITY AND NONCONTROLLING INTERESTS

A summary of the changes in Common Shareholders' Equity and Noncontrolling Interests of NU is as follows:

								Noncontrolling
		Common						Interest -
		Shareholders'		Noncontrolling		Total		Preferred Stock
(Millions of Dollars)		Equity		Interest		Equity		of Subsidiaries
Balance as of January 1, 2012		$	4,012.7	$	3.0	$	4,015.7	$	116.2
Net Income			533.1		-		533.1		-
Purchase Price of NSTAR (1)			5,038.3		-		5,038.3		-
Other Equity Impacts of Merger with NSTAR (2)			3.4		(3.4)		-		39.4
Dividends on Common Shares			(375.5)		-		(375.5)		-
Dividends on Preferred Stock			(7.0)		-		(7.0)		(7.0)
Issuance of Common Shares			13.3		-		13.3		-
Contributions to NPT			-		0.3		0.3		-
Other Transactions, Net			21.1		-		21.1		-
Net Income Attributable to Noncontrolling Interests			(0.1)		0.1		-		7.0
Other Comprehensive Loss			(2.2)		-		(2.2)		-
Balance as of December 31, 2012		$	9,237.1	$	-	$	9,237.1	$	155.6
Net Income			793.7		-		793.7		-
Dividends on Common Shares			(462.7)		-		(462.7)		-
Dividends on Preferred Stock			(7.7)		-		(7.7)		(7.7)
Issuance of Common Shares			11.1		-		11.1		-
Other Transactions, Net			13.2		-		13.2		-
Net Income Attributable to Noncontrolling Interests			-		-		-		7.7
Other Comprehensive Income			26.8		-		26.8		-
Balance as of December 31, 2013		$	9,611.5	$	-	$	9,611.5	$	155.6
Net Income			827.1		-		827.1		-
Dividends on Common Shares			(496.5)		-		(496.5)		-
Dividends on Preferred Stock			(7.5)		-		(7.5)		(7.5)
Issuance of Common Shares			6.6		-		6.6		-
Other Transactions, Net			63.6		-		63.6		-
Net Income Attributable to Noncontrolling Interests			-		-		-		7.5
Other Comprehensive Loss			(28.0)		-		(28.0)		-
Balance as of December 31, 2014		$	9,976.8	$	-	$	9,976.8	$	155.6

(1)

On April 10, 2012, NU issued approximately 136 million common shares to the NSTAR shareholders in connection with the merger. See Note 21, "Merger of NU and NSTAR," for further information.

(2)

The preferred stock of NSTAR Electric is not subject to mandatory redemption and has been presented as a noncontrolling interest in NSTAR Electric in NU's financial statements. In addition, upon completion of the merger, an NSTAR subsidiary that held 25 percent of NPT was merged into EETV, resulting in EETV owning 100 percent of NPT. Accordingly, the noncontrolling interest balance was eliminated and 100 percent ownership of NPT was reflected in Common Shareholders' Equity.

For the years ended December 31, 2014, 2013 and 2012, there was no change in ownership of the common equity of CL&P and NSTAR Electric.

19.

EARNINGS PER SHARE

Basic EPS is computed based upon the weighted average number of common shares outstanding during each period. Diluted EPS is computed on the basis of the weighted average number of common shares outstanding plus the potential dilutive effect of certain share-based compensation awards as if they were converted into common shares. For the years ended December 31, 2014, 2013 and 2012, there were 3,643, 1,575 and 4,266, respectively, antidilutive share awards excluded from the computation.

The following table sets forth the components of basic and diluted EPS:


		For the Years Ended December 31,
(Millions of Dollars, except share information)		2014		2013		2012
Net Income Attributable to Controlling Interest		$	819.5	$	786.0	$	525.9

Weighted Average Common Shares Outstanding:
	Basic		316,136,748		315,311,387		277,209,819
	Dilutive Effect		1,280,666		899,773		783,812
	Diluted		317,417,414		316,211,160		277,993,631
Basic EPS		$	2.59	$	2.49	$	1.90
Diluted EPS		$	2.58	$	2.49	$	1.89

On April 10, 2012, NU issued approximately 136 million common shares as a result of the merger with NSTAR, which are reflected in the weighted average common shares outstanding.

RSUs and performance shares are included in basic weighted average common shares outstanding as of the date that all necessary vesting conditions have been satisfied. The dilutive effect of unvested RSUs and performance shares is calculated using the treasury stock method. Assumed proceeds of these units under the treasury stock method consist of the remaining compensation cost to be recognized and a theoretical tax benefit. The theoretical tax benefit is calculated as the tax impact of the intrinsic value of the units (the difference between the market value of the average units outstanding for the period, using the average market price during the period, and the grant date market value).

The dilutive effect of stock options to purchase common shares is also calculated using the treasury stock method. Assumed proceeds for stock options consist of cash proceeds that would be received upon exercise, and a theoretical tax benefit. The theoretical tax benefit is calculated as the tax impact of the intrinsic value of the stock options (the difference between the market value of the average stock options outstanding for the period, using the average market price during the period, and the exercise price).

20.

SEGMENT INFORMATION

Presentation: NU is organized between the Electric Distribution, Electric Transmission and Natural Gas Distribution reportable segments and Other based on a combination of factors, including the characteristics of each segments' products and services, the sources of operating revenues and expenses and the regulatory environment in which each segment operates. These reportable segments represented substantially all of NU's total consolidated revenues for the years ended December 31, 2014, 2013 and 2012. Revenues from the sale of electricity and natural gas primarily are derived from residential, commercial and industrial customers and are not dependent on any single customer. The Electric Distribution reportable segment includes the generation activities of PSNH and WMECO.

The remainder of NU's operations is presented as Other in the tables below and primarily consists of 1) the equity in earnings of NU parent from its subsidiaries and intercompany interest income, both of which are eliminated in consolidation, and interest expense related to the debt of NU parent, 2) the revenues and expenses of NU's service company, most of which are eliminated in consolidation, 3) the operations of CYAPC and YAEC, and 4) the results of other non-regulated subsidiaries, which are not part of its core business.

Cash flows used for investments in plant included in the segment information below are cash capital expenditures that do not include amounts incurred but not paid, cost of removal, AFUDC related to equity funds, and the capitalized portions of pension expense.

NU's reportable segments are determined based upon the level at which NU's chief operating decision maker assesses performance and makes decisions about the allocation of company resources. Each of NU's subsidiaries, including CL&P, NSTAR Electric, PSNH and WMECO, has one reportable segment. NU's operating segments and reporting units are consistent with its reportable business segments.

NSTAR amounts were included in NU beginning April 10, 2012.

NU's segment information is as follows:


	For the Year Ended December 31, 2014
	Electric		Natural Gas
(Millions of Dollars)	Distribution		Distribution		Transmission		Other		Eliminations		Total
Operating Revenues	$	5,663.4	$	1,007.3	$	1,018.2	$	790.9	$	(737.9)	$	7,741.9
Depreciation and Amortization		(384.6)		(68.1)		(150.5)		(42.1)		19.9		(625.4)
Other Operating Expenses		(4,366.2)		(786.7)		(302.1)		(748.0)		719.3		(5,483.7)
Operating Income		912.6		152.5		565.6		0.8		1.3		1,632.8
Interest Expense		(191.6)		(34.0)		(104.1)		(36.6)		4.2		(362.1)
Interest Income		5.1		-		0.9		3.6		(3.6)		6.0
Other Income, Net		10.7		0.2		10.3		916.0		(918.6)		18.6
Income Tax (Expense)/Benefit		(269.7)		(46.4)		(174.5)		22.3		-		(468.3)
Net Income		467.1		72.3		298.2		906.1		(916.7)		827.0
Net Income Attributable to Noncontrolling Interests		(4.7)		-		(2.8)		-		-		(7.5)
Net Income Attributable to Controlling Interest	$	462.4	$	72.3	$	295.4	$	906.1	$	(916.7)	$	819.5
Total Assets (as of)	$	17,563.4	$	3,030.9	$	7,625.6	$	12,682.5	$	(11,124.4)	$	29,778.0
Cash Flows Used for Investments in Plant	$	645.2	$	176.7	$	731.6	$	50.2	$	-	$	1,603.7


	For the Year Ended December 31, 2013
	Electric		Natural Gas
(Millions of Dollars)	Distribution		Distribution		Transmission		Other		Eliminations		Total
Operating Revenues	$	5,362.3	$	855.8	$	978.7	$	777.5	$	(673.1)	$	7,301.2
Depreciation and Amortization		(604.8)		(66.7)		(136.2)		(62.2)		10.2		(859.7)
Other Operating Expenses		(3,927.7)		(659.4)		(281.8)		(715.0)		671.8		(4,912.1)
Operating Income		829.8		129.7		560.7		0.3		8.9		1,529.4
Interest Expense		(175.0)		(33.1)		(100.3)		(35.5)		5.2		(338.7)
Interest Income		4.1		-		0.7		5.4		(5.6)		4.6
Other Income, Net		12.9		0.8		10.9		858.9		(858.2)		25.3
Income Tax (Expense)/Benefit		(240.0)		(36.5)		(182.1)		31.9		(0.2)		(426.9)
Net Income		431.8		60.9		289.9		861.0		(849.9)		793.7
Net Income Attributable to Noncontrolling Interests		(4.8)		-		(2.9)		-		-		(7.7)
Net Income Attributable to Controlling Interest	$	427.0	$	60.9	$	287.0	$	861.0	$	(849.9)	$	786.0
Total Assets (as of)	$	17,260.0	$	2,759.7	$	6,745.8	$	11,842.4	$	(10,812.4)	$	27,795.5
Cash Flows Used for Investments in Plant	$	639.0	$	168.1	$	618.5	$	31.2	$	-	$	1,456.8


	For the Year Ended December 31, 2012
	Electric		Natural Gas
(Millions of Dollars)	Distribution		Distribution		Transmission		Other		Eliminations		Total
Operating Revenues	$	4,716.5	$	572.9	$	861.5	$	803.8	$	(680.9)	$	6,273.8
Depreciation and Amortization		(530.3)		(49.1)		(109.2)		(56.4)		4.2		(740.8)
Other Operating Expenses		(3,585.4)		(445.2)		(251.6)		(817.0)		684.4		(4,414.8)
Operating Income/(Loss)		600.8		78.6		500.7		(69.6)		7.7		1,118.2
Interest Expense		(165.6)		(31.3)		(96.7)		(43.6)		7.3		(329.9)
Interest Income		2.8		-		0.4		7.1		(7.1)		3.2
Other Income, Net		8.9		0.4		7.3		795.0		(795.1)		16.5
Income Tax (Expense)/Benefit		(150.2)		(16.9)		(159.2)		55.5		(4.1)		(274.9)
Net Income		296.7		30.8		252.5		744.4		(791.3)		533.1
Net Income Attributable to Noncontrolling Interests		(4.4)		-		(2.8)		-		-		(7.2)
Net Income Attributable to Controlling Interest	$	292.3	$	30.8	$	249.7	$	744.4	$	(791.3)	$	525.9
Cash Flows Used for Investments in Plant	$	611.7	$	148.7	$	663.6	$	48.3	$	-	$	1,472.3

21.

MERGER OF NU AND NSTAR

On April 10, 2012, NU acquired 100 percent of the outstanding common shares of NSTAR. Pursuant to the terms and conditions of the Agreement and Plan of Merger, as amended, (the "Merger Agreement,") NSTAR and its subsidiaries became wholly-owned subsidiaries of NU.

NSTAR was a holding company engaged through its subsidiaries in the energy delivery business serving electric and natural gas distribution customers in Massachusetts. As part of the merger, NSTAR shareholders received 1.312 NU common shares for each NSTAR common share owned (the "exchange ratio") as of the acquisition date. NU issued approximately 136 million common shares to the NSTAR shareholders as a result of the merger.

Purchase Price: Pursuant to the merger, all of the NSTAR common shares were exchanged at the fixed exchange ratio of 1.312 NU common shares for each NSTAR common share. The total consideration transferred in the merger was based on the closing price of NU common shares on April 9, 2012, the day prior to the date the merger was completed, and was calculated as follows:


NSTAR common shares outstanding as of April 9, 2012 (in thousands)*		103,696
Exchange ratio		1.312
NU common shares issued for NSTAR common shares outstanding (in thousands)		136,049
Closing price of NU common shares on April 9, 2012	$	36.79
Value of common shares issued (in millions)	$	5,005
Fair value of NU replacement stock-based compensation awards related to pre-merger service (in millions)		33
Total purchase price (in millions)	$	5,038

Included 109 thousand shares related to NSTAR stock-based compensation awards that vested immediately prior to the merger.

Certain of NSTAR's stock-based compensation awards, including deferred shares, performance shares and all outstanding stock options, were replaced with NU awards using the exchange ratio upon consummation of the merger. In accordance with accounting guidance for business combinations, the portion of the fair value of these awards attributable to service provided prior to the merger was included in the purchase price as it represented consideration transferred in the merger. See Note 9C, "Employee Benefits – Share-Based Payments," for further information.

Purchase Price Allocation: The allocation of the total purchase price to the estimated fair values of the assets acquired and liabilities assumed was determined based on the accounting guidance for fair value measurements. The allocation of the total purchase price included adjustments to record the fair value of NSTAR's unregulated telecommunications business, regulatory assets not earning a return, lease agreements, long-term debt and the preferred stock of NSTAR Electric. The fair values of NSTAR's assets and liabilities were determined based on significant estimates and assumptions, including Level 3 inputs, that were judgmental in nature. These estimates and assumptions included the timing and amounts of projected future cash flows and discount rates reflecting risk inherent in future cash flows.

In accordance with accounting guidance for business combinations, the excess of the purchase price over the estimated fair values of the assets acquired and liabilities assumed was recognized as goodwill.

The goodwill from the merger with NSTAR totaled $3.2 billion and was allocated to NU's reporting units based on their estimated fair values. See Note 22, "Goodwill," for the allocation of goodwill to each reporting unit.

Pro Forma Financial Information: The following unaudited pro forma financial information reflects the pro forma combined results of operations of NU and NSTAR and reflects the amortization of purchase price adjustments assuming the merger had taken place on January 1, 2011. The unaudited pro forma financial information has been presented for illustrative purposes only and is not necessarily indicative of the consolidated results of operations that would have been achieved or the future consolidated results of operations of NU.


(Pro forma amounts in millions, except per share amounts)	For the Year Ended December 31, 2012
Operating Revenues	$	7,004
Net Income Attributable to Controlling Interest		630
Basic EPS		2.00
Diluted EPS		1.99

Pro forma net income does not include potential cost savings associated with the merger. Pro forma net income also excludes certain non-recurring merger costs and costs related to the Connecticut and Massachusetts merger settlement agreements described below, with the following aggregate after-tax impacts:


(Millions of Dollars)	For the Year Ended December 31, 2012
Transaction and Other Costs	$	32
Settlement Agreement Impacts		60
Total After-Tax Non-Recurring Costs Excluded from Pro Forma Net Income Attributable to Controlling Interest	$	92

Regulatory Approvals: On February 15, 2012, NU and NSTAR reached comprehensive merger settlement agreements with the Massachusetts Attorney General and the DOER. The Attorney General settlement agreement covered a variety of rate-making and rate design issues, including a base distribution rate freeze through 2015 for NSTAR Electric, NSTAR Gas and WMECO and $15 million, $3 million and $3 million in the form of rate credits to their respective customers. On April 4, 2012, the DPU approved the settlement agreements and the merger of NU and NSTAR.

On March 13, 2012, NU and NSTAR reached a comprehensive merger settlement agreement with both the Connecticut Attorney General and the Connecticut Office of Consumer Counsel. The settlement agreement covered a variety of matters, including a $25 million rate credit to CL&P customers, a CL&P base distribution rate freeze until December 1, 2014, and the establishment of a $15 million fund for energy efficiency and other initiatives to be disbursed at the direction of the DEEP. In the agreement, CL&P agreed to forego rate recovery of $40 million of the deferred storm restoration costs associated with restoration activities following Tropical Storm Irene and the October 2011 snowstorm. On April 2, 2012, the PURA approved the settlement agreement and the merger of NU and NSTAR.

The pre-tax financial impacts of the Connecticut and Massachusetts merger settlement agreements that were recognized in 2012 by NU, CL&P, NSTAR Electric, and WMECO are summarized as follows:


(Millions of Dollars)	NU		CL&P		NSTAR Electric		WMECO
Customer Rate Credits	$	46	$	25	$	15	$	3
Storm Costs Deferral Reduction		40		40		-		-
Establishment of Energy Efficiency Fund		15		-		-		-
Total Pre-Tax Settlement Agreement Impacts	$	101	$	65	$	15	$	3

22.

GOODWILL

In accordance with the accounting standards, goodwill is not subject to amortization. However, goodwill is subject to fair value-based rules for measuring impairment, and resulting write-downs, if any, are charged to Operating Expenses. These accounting standards require that goodwill be reviewed at least annually for impairment and whenever facts or circumstances indicate that there may be an impairment. NU uses October 1st as the annual goodwill impairment testing date.

On April 10, 2012, upon consummation of the merger with NSTAR, NU recorded approximately $3.2 billion of goodwill. With the completion of the merger, NU reviewed its management structure and determined that the reporting units for the purpose of testing goodwill for impairment are Electric Distribution, Electric Transmission and Natural Gas Distribution. NU's reporting units are consistent with the operating segments underlying the reportable segments identified in Note 20, "Segment Information," to the financial statements. Accordingly, the goodwill resulting from the merger was allocated to the Electric Distribution, Electric Transmission and Natural Gas Distribution reporting units based on the estimated fair values of the reporting units as of the merger date.

Prior to the merger with NSTAR, the only reporting unit that maintained goodwill was the Natural Gas Distribution reportable segment related to the acquisition of the parent of Yankee Gas in 2000. This goodwill was recorded at Yankee Gas. The goodwill balance at Yankee Gas as of December 31, 2014 and 2013 was $0.3 billion.

NU completed its annual goodwill impairment test for each of its reporting units as of October 1, 2014 and determined that no impairment exists. There were no events subsequent to October 1, 2014 that indicated impairment of goodwill.

There were no changes to the goodwill balance or the allocation of goodwill as of December 31, 2014 or 2013. The allocation of goodwill to NU's reporting units as of both December 31, 2014 and 2013 was as follows:


	Electric		Electric		Natural Gas
(Billions of Dollars)	Distribution		Transmission		Distribution		Total
Goodwill Allocation	$	2.5	$	0.6	$	0.4	$	3.5

23.

VARIABLE INTEREST ENTITIES

The Company's variable interests outside of the consolidated group are not material and consist of contracts that are required by regulation and provide for regulatory recovery of contract costs and benefits through customer rates. NU, CL&P and NSTAR Electric hold variable interests in variable interest entities (VIEs) through agreements with certain entities that own single renewable energy or peaking generation power plants and with other independent power producers. NU, CL&P and NSTAR Electric do not control the activities that are economically significant to these VIEs or provide financial or other support to these VIEs. Therefore, NU, CL&P and NSTAR Electric do not consolidate any power plant VIEs.

24.

QUARTERLY FINANCIAL DATA (UNAUDITED)


NU Consolidated Statements of Quarterly Financial Data	Quarter Ended
(Millions of Dollars, except per share information)	March 31,		June 30,		September 30,		December 31,
2014
Operating Revenues	$	2,290.6	$	1,677.6	$	1,892.5	$	1,881.2
Operating Income		467.7		294.0		440.9		430.2
Net Income		237.8		129.2		236.5		223.6
Net Income Attributable to Controlling Interest		236.0		127.4		234.6		221.5
Basic EPS (a)	$	0.75	$	0.40	$	0.74	$	0.69
Diluted EPS (a)	$	0.74	$	0.40	$	0.74	$	0.69

2013
Operating Revenues	$	1,995.0	$	1,635.9	$	1,892.6	$	1,777.7
Operating Income		418.9		350.6		399.3		360.6
Net Income		230.0		173.1		211.4		179.2
Net Income Attributable to Controlling Interest		228.1		171.0		209.5		177.4
Basic and Diluted EPS (a)	$	0.72	$	0.54	$	0.66	$	0.56

(a) The summation of quarterly EPS data may not equal annual data due to rounding.


Statements of Quarterly Financial Data	Quarter Ended
(Millions of Dollars)	March 31,		June 30,		September 30,		December 31,
CL&P
2014
Operating Revenues	$	734.6	$	587.3	$	695.6	$	675.1
Operating Income		158.0		92.1		146.2		159.0
Net Income		79.3		37.4		83.9		87.2

2013
Operating Revenues	$	624.1	$	569.3	$	648.4	$	600.5
Operating Income		149.7		136.8		133.9		119.2
Net Income		85.0		67.9		66.3		60.2

NSTAR Electric
2014
Operating Revenues	$	666.2	$	561.5	$	727.9	$	581.1
Operating Income		118.4		121.5		206.6		132.0
Net Income		58.1		60.1		115.6		69.3

2013
Operating Revenues	$	592.3	$	570.4	$	753.9	$	576.9
Operating Income		94.5		112.5		192.0		109.2
Net Income		48.1		58.0		107.0		55.4

PSNH
2014
Operating Revenues	$	299.8	$	211.6	$	223.7	$	224.4
Operating Income		64.0		49.0		56.4		60.0
Net Income		32.6		24.1		28.2		29.0

2013
Operating Revenues	$	273.8	$	216.1	$	218.6	$	226.9
Operating Income		58.1		54.3		56.6		56.2
Net Income		29.0		27.2		28.4		26.8

WMECO
2014
Operating Revenues	$	137.4	$	108.3	$	118.1	$	129.6
Operating Income		34.7		17.7		31.2		34.0
Net Income		18.1		7.0		14.7		18.0

2013
Operating Revenues	$	125.0	$	115.0	$	121.8	$	110.9
Operating Income		35.6		32.4		28.9		22.4
Net Income		18.6		16.4		15.0		10.4

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