Item 8. Financial Statements and Supplementary Data

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Item 8. Financial Statements and Supplementary Data



Eversource
	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

Company Report on Internal Controls Over Financial Reporting

Eversource Energy

Management is responsible for the preparation, integrity, and fair presentation of the accompanying consolidated financial statements of Eversource Energy and subsidiaries (Eversource or the Company) and of other sections of this annual report. Eversource'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, Eversource 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, 2017.

Management has excluded from our assessment of and conclusion on the effectiveness of internal controls over financial reporting the internal controls of Eversource Aquarion Holdings, Inc. (formerly Macquarie Utilities Inc.), acquired on December 4, 2017, which is included in the consolidated financial statements of the Company as of and for the year ended December 31, 2017, constituting 4.31% and 2.37% of total and net assets, respectively, as of December 31, 2017, and 0.20% of revenues for the year ended December 31, 2017.

February 23, 2018

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Trustees and Shareholders of Eversource Energy:

Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated balance sheets of Eversource Energy and subsidiaries (the “Company”) as of December 31, 2017 and 2016, 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, 2017, and the related notes and the schedules listed in the Index at Item 15 of Part IV (collectively referred to as the “financial statements”). We also have audited the Company’s internal control over financial reporting as of December 31, 2017, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2017 and 2016, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2017, in conformity with accounting principles generally accepted in the United States of America.

As discussed in Note 1, the Company acquired Macquarie Utilities Inc. on December 4, 2017.

Also, in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2017, based on criteria established in Internal Control - Integrated Framework (2013) issued by COSO.

As described in Company Report on Internal Controls Over Financial Reporting, management excluded from its assessment the internal control over financial reporting at Eversource Aquarion Holdings, Inc. (formerly Macquarie Utilities Inc.) which was acquired on December 4, 2017 and whose financial statements constitute 2.37% and 4.31% of net and total assets, respectively, and 0.20% of revenues of the consolidated financial statement amounts as of and for the year ended December 31, 2017. Accordingly, our audit did not include the internal control over financial reporting at Eversource Aquarion Holdings, Inc.

Basis for Opinions

The Company’s management is responsible for these financial statements, 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 an opinion on the Company’s internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our audits of the financial statements included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures to respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. 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, and 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.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed 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 its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ Deloitte & Touche LLP

Hartford, Connecticut

February 23, 2018

We have served as the Company’s auditor since 2002.

EVERSOURCE ENERGY AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS



	As of December 31,
(Thousands of Dollars)	2017			2016

ASSETS
Current Assets:
Cash and Cash Equivalents	$	38,165		$	30,251
Receivables, Net	925,083			847,301
Unbilled Revenues	201,361			168,490
Fuel, Materials, Supplies and Inventory	223,063			328,721
Regulatory Assets	741,868			887,625
Prepayments and Other Current Assets	138,009			215,284
Assets Held for Sale	219,550			—
Total Current Assets	2,487,099			2,477,672

Property, Plant and Equipment, Net	23,617,463			21,350,510

Deferred Debits and Other Assets:
Regulatory Assets	4,497,447			3,638,688
Goodwill	4,427,266			3,519,401
Marketable Securities	585,419			544,642
Other Long-Term Assets	605,692			522,260
Total Deferred Debits and Other Assets	10,115,824			8,224,991

Total Assets	$	36,220,386		$	32,053,173

LIABILITIES AND CAPITALIZATION
Current Liabilities:
Notes Payable	$	1,088,087		$	1,148,500
Long-Term Debt – Current Portion	549,631			773,883
Accounts Payable	1,085,034			884,521
Regulatory Liabilities	128,071			146,787
Other Current Liabilities	738,222			684,914
Total Current Liabilities	3,589,045			3,638,605

Deferred Credits and Other Liabilities:
Accumulated Deferred Income Taxes	3,297,518			5,607,207
Regulatory Liabilities	3,637,273			702,255
Derivative Liabilities	377,257			413,676
Accrued Pension, SERP and PBOP	1,228,091			1,141,514
Other Long-Term Liabilities	1,073,501			853,260
Total Deferred Credits and Other Liabilities	9,613,640			8,717,912

Capitalization:
Long-Term Debt	11,775,889			8,829,354

Noncontrolling Interest - Preferred Stock of Subsidiaries	155,570			155,568

Equity:
Common Shareholders' Equity:
Common Shares	1,669,392			1,669,392
Capital Surplus, Paid In	6,239,940			6,250,224
Retained Earnings	3,561,084			3,175,171
Accumulated Other Comprehensive Loss	(66,403		)	(65,282		)
Treasury Stock	(317,771		)	(317,771		)
Common Shareholders' Equity	11,086,242			10,711,734
Total Capitalization	23,017,701			19,696,656

Commitments and Contingencies (Note 11)

Total Liabilities and Capitalization	$	36,220,386		$	32,053,173

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

EVERSOURCE ENERGY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME



	For the Years Ended December 31,
(Thousands of Dollars, Except Share Information)	2017		2016		2015

Operating Revenues	$	7,751,952	$	7,639,129	$	7,954,827

Operating Expenses:
Purchased Power, Fuel and Transmission	2,535,271		2,500,828		3,086,905
Operations and Maintenance	1,277,147		1,323,549		1,329,289
Depreciation	773,802		715,466		665,856
Amortization of Regulatory Assets, Net	89,986		71,696		22,339
Energy Efficiency Programs	480,835		533,659		495,701
Taxes Other Than Income Taxes	676,757		634,072		590,573
Total Operating Expenses	5,833,798		5,779,270		6,190,663
Operating Income	1,918,154		1,859,859		1,764,164
Interest Expense	421,755		400,961		372,420
Other Income, Net	78,008		45,920		34,227
Income Before Income Tax Expense	1,574,407		1,504,818		1,425,971
Income Tax Expense	578,892		554,997		539,967
Net Income	995,515		949,821		886,004
Net Income Attributable to Noncontrolling Interests	7,519		7,519		7,519
Net Income Attributable to Common Shareholders	$	987,996	$	942,302	$	878,485

Basic Earnings Per Common Share	$	3.11	$	2.97	$	2.77

Diluted Earnings Per Common Share	$	3.11	$	2.96	$	2.76

Weighted Average Common Shares Outstanding:
Basic	317,411,097		317,650,180		317,336,881
Diluted	318,031,580		318,454,239		318,432,687

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

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME



	For the Years Ended December 31,
(Thousands of Dollars, Except Share Information)	2017			2016			2015

Net Income	$	995,515		$	949,821		$	886,004
Other Comprehensive (Loss)/Income, Net of Tax:
Qualified Cash Flow Hedging Instruments	1,974			2,137			2,079
Changes in Unrealized (Losses)/Gains on Marketable Securities	(350		)	2,294			(2,588		)
Changes in Funded Status of Pension, SERP and PBOP Benefit Plans	(2,745		)	(2,869		)	7,674
Other Comprehensive (Loss)/Income, Net of Tax	(1,121		)	1,562			7,165
Comprehensive Income Attributable to Noncontrolling Interests	(7,519		)	(7,519		)	(7,519		)
Comprehensive Income Attributable to Common Shareholders	$	986,875		$	943,864		$	885,650

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

EVERSOURCE ENERGY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMMON SHAREHOLDERS' EQUITY



	Common Shares				Capital Surplus, Paid In			Retained Earnings			Accumulated Other Comprehensive Loss			Treasury Stock			Total Common Shareholders' Equity
(Thousands of Dollars, Except Share Information)	Shares		Amount
Balance as of January 1, 2015	316,983,337		$	1,666,796	$	6,235,834		$	2,448,661		$	(74,009	)	$	(300,467	)	$	9,976,815
Net Income								886,004									886,004
Dividends on Common Shares - $1.67 Per Share								(529,791		)							(529,791		)
Dividends on Preferred Stock								(7,519		)							(7,519		)
Issuance of Common Shares, $5 Par Value	503,443		2,517		6,951												9,468
Long-Term Incentive Plan Activity					(6,140		)										(6,140		)
Increase in Treasury Shares	(295,531	)			22,070									(9,510		)	12,560
Other Changes in Shareholders' Equity					3,653												3,653
Other Comprehensive Income											7,165						7,165
Balance as of December 31, 2015	317,191,249		1,669,313		6,262,368			2,797,355			(66,844		)	(309,977		)	10,352,215
Net Income								949,821									949,821
Dividends on Common Shares - $1.78 Per Share								(564,486		)							(564,486		)
Dividends on Preferred Stock								(7,519		)							(7,519		)
Issuance of Common Shares, $5 Par Value	15,787		79		(5,639		)										(5,560		)
Long-Term Incentive Plan Activity					(6,056		)										(6,056		)
Increase in Treasury Shares	(321,228	)												(7,794		)	(7,794		)
Other Changes in Shareholders' Equity					(449		)										(449		)
Other Comprehensive Income											1,562						1,562
Balance as of December 31, 2016	316,885,808		1,669,392		6,250,224			3,175,171			(65,282		)	(317,771		)	10,711,734
Net Income								995,515									995,515
Dividends on Common Shares - $1.90 Per Share								(602,083		)							(602,083		)
Dividends on Preferred Stock								(7,519		)							(7,519		)
Long-Term Incentive Plan Activity					(10,834		)										(10,834		)
Other Changes in Shareholders' Equity					550												550
Other Comprehensive Loss											(1,121		)				(1,121		)
Balance as of December 31, 2017	316,885,808		$	1,669,392	$	6,239,940		$	3,561,084		$	(66,403	)	$	(317,771	)	$	11,086,242

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

EVERSOURCE ENERGY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS



	For the Years Ended December 31,
(Thousands of Dollars)	2017			2016			2015

Operating Activities:
Net Income	$	995,515		$	949,821		$	886,004
Adjustments to Reconcile Net Income to Net Cash Flows
Provided by Operating Activities:
Depreciation	773,802			715,466			665,856
Deferred Income Taxes	491,630			466,463			491,736
Pension, SERP and PBOP Expense	22,454			39,912			96,017
Pension and PBOP Contributions	(242,800		)	(158,741		)	(162,452		)
Regulatory (Under)/Over Recoveries, Net	(47,935		)	13,340			(163,287		)
Amortization of Regulatory Assets, Net	89,986			71,696			22,339
Refunds/(Payments) Related to Spent Nuclear Fuel, Net	—			59,804			(297,253		)
Other	(148,429		)	(77,294		)	(82,219		)
Changes in Current Assets and Liabilities:
Receivables and Unbilled Revenues, Net	(117,155		)	(142,699		)	(39,797		)
Fuel, Materials, Supplies and Inventory	(9,223		)	7,755			34,112
Taxes Receivable/Accrued, Net	52,284			234,543			30,282
Accounts Payable	56,067			(14,126		)	(91,618		)
Other Current Assets and Liabilities, Net	88,738			9,112			44,031
Net Cash Flows Provided by Operating Activities	2,004,934			2,175,052			1,433,751

Investing Activities:
Investments in Property, Plant and Equipment	(2,348,105		)	(1,976,867		)	(1,724,139		)
Proceeds from Sales of Marketable Securities	832,903			659,338			799,165
Purchases of Marketable Securities	(810,507		)	(681,272		)	(717,114		)
Acquisition of Aquarion	(877,652		)	—			—
Payments to Acquire Investments	(32,634		)	(188,958		)	(23,353		)
Other Investing Activities	25,521			36,951			6,291
Net Cash Flows Used in Investing Activities	(3,210,474		)	(2,150,808		)	(1,659,150		)

Financing Activities:
Cash Dividends on Common Shares	(602,083		)	(564,486		)	(529,791		)
Cash Dividends on Preferred Stock	(7,519		)	(7,519		)	(7,519		)
Increase/(Decrease) in Notes Payable	72,810			(12,453		)	(242,122		)
Issuance of Long-Term Debt	2,500,000			800,000			1,225,000
Retirements of Long-Term Debt	(745,000		)	(200,000		)	(216,700		)
Other Financing Activities	(4,754		)	(33,482		)	(18,225		)
Net Cash Flows Provided by/(Used in) Financing Activities	1,213,454			(17,940		)	210,643
Net Increase/(Decrease) in Cash and Cash Equivalents	7,914			6,304			(14,756		)
Cash and Cash Equivalents - Beginning of Year	30,251			23,947			38,703
Cash and Cash Equivalents - End of Year	$	38,165		$	30,251		$	23,947

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, 2017.

February 23, 2018

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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

Opinion on the Financial Statements

We have audited the accompanying balance sheets of The Connecticut Light and Power Company (the “Company”) as of December 31, 2017 and 2016, 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, 2017, and the related notes and the schedule listed in the Index at Item 15 of Part IV (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2017 and 2016, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2017, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting 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.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ Deloitte & Touche LLP

Hartford, Connecticut

February 23, 2018

We have served as the Company’s auditor since 2002.

THE CONNECTICUT LIGHT AND POWER COMPANY

BALANCE SHEETS



	As of December 31,
(Thousands of Dollars)	2017		2016

ASSETS
Current Assets:
Cash	$	6,028	$	6,579
Receivables, Net	370,676		359,132
Accounts Receivable from Affiliated Companies	28,181		16,851
Unbilled Revenues	54,154		50,373
Materials, Supplies and Inventory	48,438		52,050
Regulatory Assets	200,281		335,526
Prepayments and Other Current Assets	46,926		52,670
Total Current Assets	754,684		873,181

Property, Plant and Equipment, Net	8,271,030		7,632,392

Deferred Debits and Other Assets:
Regulatory Assets	1,444,935		1,391,564
Other Long-Term Assets	159,597		137,907
Total Deferred Debits and Other Assets	1,604,532		1,529,471

Total Assets	$	10,630,246	$	10,035,044

LIABILITIES AND CAPITALIZATION
Current Liabilities:
Notes Payable to Eversource Parent	$	69,500	$	80,100
Long-Term Debt – Current Portion	300,000		250,000
Accounts Payable	367,605		289,532
Accounts Payable to Affiliated Companies	82,201		88,075
Obligations to Third Party Suppliers	52,860		55,520
Regulatory Liabilities	38,967		47,055
Derivative Liabilities	54,392		77,765
Other Current Liabilities	127,234		120,399
Total Current Liabilities	1,092,759		1,008,446

Deferred Credits and Other Liabilities:
Accumulated Deferred Income Taxes	1,103,367		1,987,661
Regulatory Liabilities	1,112,136		100,138
Derivative Liabilities	376,918		412,750
Accrued Pension, SERP and PBOP	354,469		300,208
Other Long-Term Liabilities	128,135		123,244
Total Deferred Credits and Other Liabilities	3,075,025		2,924,001

Capitalization:
Long-Term Debt	2,759,135		2,516,010

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	2,110,765		2,110,714
Retained Earnings	1,415,741		1,299,374
Accumulated Other Comprehensive Income/(Loss)	269		(53		)
Common Stockholder's Equity	3,587,127		3,470,387
Total Capitalization	6,462,462		6,102,597

Commitments and Contingencies (Note 11)

Total Liabilities and Capitalization	$	10,630,246	$	10,035,044

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)	2017		2016		2015

Operating Revenues	$	2,887,359	$	2,805,955	$	2,802,675

Operating Expenses:
Purchased Power and Transmission	930,780		919,723		1,054,313
Operations and Maintenance	500,358		490,069		487,281
Depreciation	249,352		230,489		215,289
Amortization of Regulatory Assets, Net	83,166		38,765		12,318
Energy Efficiency Programs	114,713		154,015		153,725
Taxes Other Than Income Taxes	323,887		299,719		268,688
Total Operating Expenses	2,202,256		2,132,780		2,191,614
Operating Income	685,103		673,175		611,061
Interest Expense	142,973		144,110		145,795
Other Income, Net	21,242		13,497		11,490
Income Before Income Tax Expense	563,372		542,562		476,756
Income Tax Expense	186,646		208,308		177,396
Net Income	$	376,726	$	334,254	$	299,360

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

STATEMENTS OF COMPREHENSIVE INCOME



	For the Years Ended December 31,
(Thousands of Dollars)	2017			2016		2015

Net Income	$	376,726		$	334,254	$	299,360
Other Comprehensive Income, Net of Tax:
Qualified Cash Flow Hedging Instruments	334			444		444
Changes in Unrealized (Losses)/Gains on Marketable Securities	(12		)	79		(89		)
Other Comprehensive Income, Net of Tax	322			523		355
Comprehensive Income	$	377,048		$	334,777	$	299,715

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

THE CONNECTICUT LIGHT AND POWER COMPANY

STATEMENTS OF COMMON STOCKHOLDER'S EQUITY



	Common Stock			Capital Surplus, Paid In		Retained Earnings			Accumulated Other Comprehensive (Loss)/Income			Total Common Stockholder's Equity
(Thousands of Dollars, Except Stock Information)	Stock	Amount
Balance as of January 1, 2015	6,035,205	$	60,352	$	1,804,869	$	1,072,477		$	(931	)	$	2,936,767
Net Income						299,360						299,360
Dividends on Preferred Stock						(5,559		)				(5,559		)
Dividends on Common Stock						(196,000		)				(196,000		)
Allocation of Benefits - ESOP				743								743
Capital Stock Expenses, Net				51								51
Capital Contributions from Eversource Parent				105,000								105,000
Other Comprehensive Income									355			355
Balance as of December 31, 2015	6,035,205	60,352		1,910,663		1,170,278			(576		)	3,140,717
Net Income						334,254						334,254
Dividends on Preferred Stock						(5,559		)				(5,559		)
Dividends on Common Stock						(199,599		)				(199,599		)
Capital Stock Expenses, Net				51								51
Capital Contributions from Eversource Parent				200,000								200,000
Other Comprehensive Income									523			523
Balance as of December 31, 2016	6,035,205	60,352		2,110,714		1,299,374			(53		)	3,470,387
Net Income						376,726						376,726
Dividends on Preferred Stock						(5,559		)				(5,559		)
Dividends on Common Stock						(254,800		)				(254,800		)
Capital Stock Expenses, Net				51								51
Other Comprehensive Income									322			322
Balance as of December 31, 2017	6,035,205	$	60,352	$	2,110,765	$	1,415,741		$	269		$	3,587,127

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)	2017			2016			2015

Operating Activities:
Net Income	$	376,726		$	334,254		$	299,360
Adjustments to Reconcile Net Income to Net Cash Flows
Provided by Operating Activities:
Depreciation	249,352			230,489			215,289
Deferred Income Taxes	119,295			168,919			135,994
Pension, SERP and PBOP Expense, Net of Pension Contributions	7,409			6,948			14,091
Regulatory Underrecoveries, Net	(8,017		)	(68,730		)	(53,781		)
Amortization of Regulatory Assets, Net	83,166			38,765			12,318
Refunds/(Payments) Related to Spent Nuclear Fuel, Net	—			13,568			(242,231		)
Other	(37,648		)	(32,212		)	(36,385		)
Changes in Current Assets and Liabilities:
Receivables and Unbilled Revenues, Net	(47,768		)	3,229			(29,195		)
Materials and Supplies	3,612			(8,926		)	22,810
Taxes Receivable/Accrued, Net	(9,688		)	123,692			(13,517		)
Accounts Payable	48,032			3,252			(16,910		)
Other Current Assets and Liabilities, Net	20,080			(1,770		)	(9,514		)
Net Cash Flows Provided by Operating Activities	804,551			811,478			298,329

Investing Activities:
Investments in Property, Plant and Equipment	(824,383		)	(611,984		)	(523,849		)
Proceeds from the Sale of Property, Plant and Equipment	—			9,047			—
Other Investing Activities	236			296			(716		)
Net Cash Flows Used in Investing Activities	(824,147		)	(602,641		)	(524,565		)

Financing Activities:
Cash Dividends on Common Stock	(254,800		)	(199,599		)	(196,000		)
Cash Dividends on Preferred Stock	(5,559		)	(5,559		)	(5,559		)
(Decrease)/Increase in Notes Payable to Eversource Parent	(10,600		)	(197,300		)	144,000
Issuance of Long-Term Debt	525,000			—			350,000
Retirements of Long-Term Debt	(250,000		)	—			(162,000		)
Capital Contributions from Eversource Parent	—			200,000			105,000
Other Financing Activities	15,004			(857		)	(10,504		)
Net Cash Flows Provided by/(Used in) Financing Activities	19,045			(203,315		)	224,937
Net (Decrease)/Increase in Cash	(551		)	5,522			(1,299		)
Cash - Beginning of Year	6,579			1,057			2,356
Cash - End of Year	$	6,028		$	6,579		$	1,057

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, 2017.

February 23, 2018

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of NSTAR Electric Company and subsidiary (the “Company”) as of December 31, 2017 and 2016, 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, 2017, and the related notes and the schedule listed in the Index at Item 15 of Part IV (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2017 and 2016, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2017, in conformity with accounting principles generally accepted in the United States of America.

Emphasis of a Matter

As discussed in Note 1 to the financial statements, the Company merged with Western Massachusetts Electric Company on December 31, 2017 and financial information is presented as combined and consolidated for all periods presented.

Basis for Opinion

/s/ Deloitte & Touche LLP

Hartford, Connecticut

February 23, 2018

We have served as the Company’s auditor since 2012.

NSTAR ELECTRIC COMPANY AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS



	As of December 31,
(Thousands of Dollars)	2017			2016

ASSETS
Current Assets:
Cash and Cash Equivalents	$	1,763		$	3,494
Receivables, Net	341,341			312,497
Accounts Receivable from Affiliated Companies	40,723			17,771
Unbilled Revenues	49,865			46,961
Materials, Supplies and Inventory	95,517			70,907
Regulatory Assets	333,882			353,522
Prepayments and Other Current Assets	24,499			56,066
Total Current Assets	887,590			861,218

Property, Plant and Equipment, Net	8,246,494			7,730,096

Deferred Debits and Other Assets:
Regulatory Assets	1,190,575			1,185,037
Prepaid PBOP	126,948			91,607
Other Long-Term Assets	84,766			89,635
Total Deferred Debits and Other Assets	1,402,289			1,366,279

Total Assets	$	10,536,373		$	9,957,593

LIABILITIES AND CAPITALIZATION
Current Liabilities:
Notes Payable	$	234,000		$	126,500
Notes Payable to Eversource Parent	—			51,000
Long-Term Debt – Current Portion	—			400,000
Accounts Payable	340,115			288,634
Accounts Payable to Affiliated Companies	91,260			105,775
Obligations to Third Party Suppliers	88,721			66,371
Renewable Portfolio Standards Compliance Obligations	111,524			95,954
Regulatory Liabilities	79,562			78,541
Other Current Liabilities	79,916			84,933
Total Current Liabilities	1,025,098			1,297,708

Deferred Credits and Other Liabilities:
Accumulated Deferred Income Taxes	1,275,814			2,327,085
Regulatory Liabilities	1,514,451			409,050
Accrued Pension and SERP	89,995			128,751
Other Long-Term Liabilities	198,176			164,503
Total Deferred Credits and Other Liabilities	3,078,436			3,029,389

Capitalization:
Long-Term Debt	2,943,759			2,244,653

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

Common Stockholder's Equity:
Common Stock	—			—
Capital Surplus, Paid In	1,502,942			1,500,642
Retained Earnings	1,944,961			1,844,195
Accumulated Other Comprehensive Loss	(1,823		)	(1,994		)
Common Stockholder's Equity	3,446,080			3,342,843
Total Capitalization	6,432,839			5,630,496

Commitments and Contingencies (Note 11)

Total Liabilities and Capitalization	$	10,536,373		$	9,957,593

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)	2017		2016		2015

Operating Revenues	$	2,980,629	$	3,041,588	$	3,198,887

Operating Expenses:
Purchased Power and Transmission	1,025,414		1,084,324		1,366,779
Operations and Maintenance	463,737		489,882		392,888
Depreciation	274,008		259,262		240,132
Amortization of Regulatory Assets, Net	33,831		34,332		1,556
Energy Efficiency Programs	294,053		321,787		267,622
Taxes Other Than Income Taxes	181,959		177,837		171,563
Total Operating Expenses	2,273,002		2,367,424		2,440,540
Operating Income	707,627		674,164		758,347
Interest Expense	105,729		108,428		100,139
Other Income, Net	14,913		10,830		7,854
Income Before Income Tax Expense	616,811		576,566		666,062
Income Tax Expense	242,085		225,789		265,014
Net Income	$	374,726	$	350,777	$	401,048

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

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME



	For the Years Ended December 31,
(Thousands of Dollars)	2017			2016			2015

Net Income	$	374,726		$	350,777		$	401,048
Other Comprehensive Income, Net of Tax:
Changes in Funded Status of SERP Benefit Plan	(264		)	(177		)	103
Qualified Cash Flow Hedging Instruments	438			437			380
Changes in Unrealized (Losses)/Gains on Marketable Securities	(3		)	22			(25		)
Other Comprehensive Income, Net of Tax	171			282			458
Comprehensive Income	$	374,897		$	351,059		$	401,506

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

NSTAR ELECTRIC COMPANY AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF COMMON STOCKHOLDER'S EQUITY



	Common Stock			Capital Surplus, Paid In		Retained Earnings			Accumulated Other Comprehensive Loss			Total Common Stockholder's Equity
(Thousands of Dollars, Except Stock Information)	Stock	Amount
Balance as of January 1, 2015	200	$	—	$	1,396,252	$	1,647,790		$	(2,734	)	$	3,041,308
Net Income						401,048						401,048
Dividends on Preferred Stock						(1,960		)				(1,960		)
Dividends on Common Stock						(235,200		)				(235,200		)
Other Changes in Stockholder's Equity				1,390								1,390
Other Comprehensive Income									458			458
Balance as of December 31, 2015	200	—		1,397,642		1,811,678			(2,276		)	3,207,044
Net Income						350,777						350,777
Dividends on Preferred Stock						(1,960		)				(1,960		)
Dividends on Common Stock						(316,300		)				(316,300		)
Capital Contributions from Eversource Parent				103,000								103,000
Other Comprehensive Income									282			282
Balance as of December 31, 2016	200	—		1,500,642		1,844,195			(1,994		)	3,342,843
Net Income						374,726						374,726
Dividends on Preferred Stock						(1,960		)				(1,960		)
Dividends on Common Stock						(272,000		)				(272,000		)
Capital Contributions from Eversource Parent				2,300								2,300
Other Comprehensive Income									171			171
Balance as of December 31, 2017	200	$	—	$	1,502,942	$	1,944,961		$	(1,823	)	$	3,446,080

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)	2017			2016			2015

Operating Activities:
Net Income	$	374,726		$	350,777		$	401,048
Adjustments to Reconcile Net Income to Net Cash Flows
Provided by Operating Activities:
Depreciation	274,008			259,262			240,132
Deferred Income Taxes	110,499			101,698			212,583
Pension, SERP and PBOP (Income)/Expense, Net	(9,509		)	(771		)	11,639
Pension and PBOP Contributions	(90,721		)	(37,305		)	(9,886		)
Regulatory (Under)/Over Recoveries, Net	(20,009		)	118,385			(141,824		)
Amortization of Regulatory Assets, Net	33,831			34,332			1,556
Bad Debt Expense	21,252			31,728			19,168
Refunds/(Payments) Related to Spent Nuclear Fuel	—			8,536			(56,001		)
Other	(24,868		)	(59,359		)	(68,275		)
Changes in Current Assets and Liabilities:
Receivables and Unbilled Revenues, Net	(50,896		)	(70,302		)	(17,028		)
Materials, Supplies and Inventory	(24,610		)	10,571			19
Taxes Receivable/Accrued, Net	39,205			60,774			62,148
Accounts Payable	(20,421		)	18,000			(5,510		)
Other Current Assets and Liabilities, Net	25,913			(17,607		)	50,283
Net Cash Flows Provided by Operating Activities	638,400			808,719			700,052

Investing Activities:
Investments in Property, Plant and Equipment	(719,623		)	(664,932		)	(604,018		)
Proceeds from Sales of Marketable Securities	3,934			2,479			186,444
Purchases of Marketable Securities	(3,869		)	(2,426		)	(128,861		)
Other Investing Activities	(3,617		)	—			—
Net Cash Flows Used in Investing Activities	(723,175		)	(664,879		)	(546,435		)

Financing Activities:
Cash Dividends on Common Stock	(272,000		)	(316,300		)	(235,200		)
Cash Dividends on Preferred Stock	(1,960		)	(1,960		)	(1,960		)
Increase/(Decrease) in Short-Term Debt	56,500			(28,400		)	(117,500		)
Capital Contributions from Eversource Parent	2,300			103,000			—
Issuance of Long-Term Debt	700,000			300,000			250,000
Retirements of Long-Term Debt	(400,000		)	(200,000		)	(54,700		)
Other Financing Activities	(1,796		)	(866		)	(2,850		)
Net Cash Flows Provided by/(Used in) Financing Activities	83,044			(144,526		)	(162,210		)
Net Decrease in Cash and Cash Equivalents	(1,731		)	(686		)	(8,593		)
Cash and Cash Equivalents - Beginning of Year	3,494			4,180			12,773
Cash and Cash Equivalents - End of Year	$	1,763		$	3,494		$	4,180

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, 2017.

February 23, 2018

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Public Service Company of New Hampshire and subsidiary (the “Company”) as of December 31, 2017 and 2016, 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, 2017, and the related notes and the schedule listed in the Index at Item 15 of Part IV (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2017 and 2016, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2017, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

/s/ Deloitte & Touche LLP

Hartford, Connecticut

February 23, 2018

We have served as the Company’s auditor since 2002.

PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS



	As of December 31,
(Thousands of Dollars)	2017			2016

ASSETS
Current Assets:
Cash	$	900		$	4,646
Receivables, Net	92,774			84,450
Accounts Receivable from Affiliated Companies	5,297			4,185
Unbilled Revenues	49,448			41,004
Fuel, Materials, Supplies and Inventory	40,285			162,354
Regulatory Assets	130,134			117,240
Prepayments and Other Current Assets	28,931			28,908
Assets Held for Sale	219,550			—
Total Current Assets	567,319			442,787

Property, Plant and Equipment, Net	2,642,274			3,039,313

Deferred Debits and Other Assets:
Regulatory Assets	810,677			245,525
Other Long-Term Assets	42,391			37,720
Total Deferred Debits and Other Assets	853,068			283,245

Total Assets	$	4,062,661		$	3,765,345

LIABILITIES AND CAPITALIZATION
Current Liabilities:
Notes Payable to Eversource Parent	$	262,900		$	160,900
Long-Term Debt – Current Portion	110,000			70,000
Accounts Payable	128,685			85,716
Accounts Payable to Affiliated Companies	24,676			29,154
Dividends Payable to Eversource Parent	150,000			—
Regulatory Liabilities	6,251			12,659
Other Current Liabilities	67,924			43,253
Total Current Liabilities	750,436			401,682

Deferred Credits and Other Liabilities:
Accumulated Deferred Income Taxes	443,468			785,385
Regulatory Liabilities	444,397			44,779
Accrued Pension, SERP and PBOP	124,639			94,652
Other Long-Term Liabilities	56,689			49,442
Total Deferred Credits and Other Liabilities	1,069,193			974,258

Capitalization:
Long-Term Debt	892,438			1,002,048

Common Stockholder's Equity:
Common Stock	—			—
Capital Surplus, Paid In	843,134			843,134
Retained Earnings	511,382			549,286
Accumulated Other Comprehensive Loss	(3,922		)	(5,063		)
Common Stockholder's Equity	1,350,594			1,387,357
Total Capitalization	2,243,032			2,389,405

Commitments and Contingencies (Note 11)

Total Liabilities and Capitalization	$	4,062,661		$	3,765,345

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)	2017			2016		2015

Operating Revenues	$	981,624		$	959,482	$	972,203

Operating Expenses:
Purchased Power, Fuel and Transmission	237,478			210,786		247,721
Operations and Maintenance	257,185			260,779		276,554
Depreciation	128,192			116,519		105,372
Amortization of Regulatory (Liabilities)/Assets, Net	(16,577		)	11,170		16,276
Energy Efficiency Programs	13,788			14,204		14,324
Taxes Other Than Income Taxes	89,760			82,964		81,779
Total Operating Expenses	709,826			696,422		742,026
Operating Income	271,798			263,060		230,177
Interest Expense	51,007			50,040		45,990
Other Income, Net	3,880			1,329		3,315
Income Before Income Tax Expense	224,671			214,349		187,502
Income Tax Expense	88,675			82,364		73,060
Net Income	$	135,996		$	131,985	$	114,442

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

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME



	For the Years Ended December 31,
(Thousands of Dollars)	2017			2016		2015

Net Income	$	135,996		$	131,985	$	114,442
Other Comprehensive Income, Net of Tax:
Qualified Cash Flow Hedging Instruments	1,162			1,162		1,162
Changes in Unrealized (Losses)/Gains on Marketable Securities	(21		)	136		(154		)
Other Comprehensive Income, Net of Tax	1,141			1,298		1,008
Comprehensive Income	$	137,137		$	133,283	$	115,450

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



	Common Stock			Capital Surplus, Paid In		Retained Earnings			Accumulated Other Comprehensive Loss			Total Common Stockholder's Equity
(Thousands of Dollars, Except Stock Information)	Stock	Amount
Balance as of January 1, 2015	301	$	—	$	748,240	$	486,459		$	(7,369	)	$	1,227,330
Net Income						114,442						114,442
Dividends on Common Stock						(106,000		)				(106,000		)
Allocation of Benefits - ESOP				394								394
Other Comprehensive Income									1,008			1,008
Balance as of December 31, 2015	301	—		748,634		494,901			(6,361		)	1,237,174
Net Income						131,985						131,985
Dividends on Common Stock						(77,600		)				(77,600		)
Capital Contributions from Eversource Parent				94,500								94,500
Other Comprehensive Income									1,298			1,298
Balance as of December 31, 2016	301	—		843,134		549,286			(5,063		)	1,387,357
Net Income						135,996						135,996
Dividends on Common Stock						(173,900		)				(173,900		)
Other Comprehensive Income									1,141			1,141
Balance as of December 31, 2017	301	$	—	$	843,134	$	511,382		$	(3,922	)	$	1,350,594

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)	2017			2016			2015

Operating Activities:
Net Income	$	135,996		$	131,985		$	114,442
Adjustments to Reconcile Net Income to Net Cash Flows
Provided by Operating Activities:
Depreciation	128,192			116,519			105,372
Deferred Income Taxes	63,883			87,345			83,776
Pension, SERP and PBOP Expense	1,368			875			4,580
Pension Contributions	(800		)	(17,078		)	(982		)
Regulatory (Under)/Over Recoveries, Net	(30,788		)	(4,491		)	41
Amortization of Regulatory (Liabilities)/Assets, Net	(16,577		)	11,170			16,276
Refunds Related to Spent Nuclear Fuel	—			3,926			979
Other	(10,088		)	6,521			8,677
Changes in Current Assets and Liabilities:
Receivables and Unbilled Revenues, Net	(22,055		)	(18,822		)	(4,750		)
Fuel, Materials, Supplies and Inventory	5,519			(5,485		)	(8,729		)
Taxes Receivable/Accrued, Net	339			32,303			(23,909		)
Accounts Payable	29,453			11,353			(22,203		)
Other Current Assets and Liabilities, Net	16,458			5,651			953
Net Cash Flows Provided by Operating Activities	300,900			361,772			274,523

Investing Activities:
Investments in Property, Plant and Equipment	(312,720		)	(305,430		)	(308,036		)
Other Investing Activities	199			326			306
Net Cash Flows Used in Investing Activities	(312,521		)	(305,104		)	(307,730		)

Financing Activities:
Cash Dividends on Common Stock	(23,900		)	(77,600		)	(106,000		)
Increase/(Decrease) in Notes Payable to Eversource Parent	102,000			(70,400		)	140,800
Retirements of Long-Term Debt	(70,000		)	—			—
Capital Contributions from Eversource Parent	—			94,500			—
Other Financing Activities	(225		)	(255		)	(349		)
Net Cash Flows Provided by/(Used in) Financing Activities	7,875			(53,755		)	34,451
Net (Decrease)/Increase in Cash	(3,746		)	2,913			1,244
Cash - Beginning of Year	4,646			1,733			489
Cash - End of Year	$	900		$	4,646		$	1,733

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

EVERSOURCE ENERGY AND SUBSIDIARIES

THE CONNECTICUT LIGHT AND POWER COMPANY

NSTAR ELECTRIC COMPANY AND SUBSIDIARY

PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE AND SUBSIDIARY

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

A. About Eversource, CL&P, NSTAR Electric and PSNH

Eversource Energy is a public utility holding company primarily engaged, through its wholly-owned regulated utility subsidiaries, in the energy delivery business. Eversource Energy's wholly-owned regulated utility subsidiaries consist of CL&P, NSTAR Electric and PSNH (electric utilities), Yankee Gas and NSTAR Gas (natural gas utilities) and Aquarion (water utilities). Eversource provides energy delivery and/or water service to approximately 4 million electric, natural gas and water customers through eight regulated utilities in Connecticut, Massachusetts and New Hampshire.

On December 4, 2017, Eversource completed the acquisition of Aquarion (formerly Macquarie Utilities Inc.) from Macquarie Infrastructure Partners for $1.675 billion, consisting of approximately $880 million in cash and $795 million of assumed Aquarion debt. Aquarion became an indirect wholly-owned subsidiary of Eversource. Aquarion is a holding company primarily engaged, through its three separate regulated water utility subsidiaries, in the water collection, treatment and distribution business. Eversource's consolidated financial information includes Aquarion and its subsidiaries' activity from December 4, 2017 through December 31, 2017. See Note 22A, "Acquisition of Aquarion and Goodwill - Acquisition of Aquarion," for further information.

On December 31, 2017, Western Massachusetts Electric Company ("WMECO") was merged into NSTAR Electric. In accordance with accounting guidance on combinations between entities under common control, the net assets, results of operations and cash flows of WMECO are reflected in the NSTAR Electric financial statements. NSTAR Electric's financial statements for all periods presented in this combined Annual Report on Form 10-K have been retrospectively recast as if the merger occurred on the first day of the earliest reporting period. All contracts and operations of WMECO are now part of NSTAR Electric. Balance sheet and income statement adjustments were made for consistent presentation between WMECO’s and NSTAR Electric’s financial statements, including the elimination of intercompany transactions and a merger-related transaction for common equity. Balance sheet adjustments included the elimination of intercompany accounts receivable and payable between NSTAR Electric and WMECO. Income statement adjustments included the elimination of intercompany revenues and expenses between NSTAR Electric and WMECO.

Eversource, CL&P, NSTAR Electric and PSNH are reporting companies under the Securities Exchange Act of 1934. Eversource Energy is a public utility holding company under the Public Utility Holding Company Act of 2005. Arrangements among the regulated electric companies and other Eversource companies, outside agencies and other utilities covering interconnections, interchange of electric power and sales of utility property are subject to regulation by the FERC. Eversource's 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 and NSTAR Gas, the NHPUC for PSNH, and the PURA, the DPU and the NHPUC for Aquarion).

CL&P, NSTAR Electric and PSNH 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 Massachusetts, respectively. Aquarion is engaged in the collection, treatment and distribution of water in Connecticut, Massachusetts and New Hampshire. CL&P, NSTAR Electric and PSNH's results include the operations of their respective distribution and transmission businesses. The distribution business also included the results of PSNH's generation facilities and NSTAR Electric's solar power facilities. Eversource 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.

On January 10, 2018, Eversource and PSNH completed the sale of PSNH's thermal generation assets. See Note 12, "Assets Held for Sale," for further information.

Eversource Service, Eversource's service company, and several wholly-owned real estate subsidiaries of Eversource, provide support services to Eversource, including its regulated companies. Eversource holds several equity ownership interests, which are accounted for under the equity method. Eversource also consolidates the operations of CYAPC and YAEC, both of which are inactive regional nuclear generation companies engaged in the long-term storage of their spent nuclear fuel.

B. Basis of Presentation

The consolidated financial statements of Eversource, NSTAR Electric and PSNH include the accounts of each of their respective subsidiaries. Intercompany transactions have been eliminated in consolidation. The accompanying consolidated financial statements of Eversource, NSTAR Electric and PSNH and the financial statements of CL&P 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 the disclosure of contingent liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

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

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

Certain reclassifications of prior year data were made in the accompanying financial statements 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 Eversource or its consolidated subsidiaries and are not subject to mandatory redemption, have been presented as noncontrolling interests in the financial statements of Eversource. 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 Eversource, 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 Boards 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, 2017 and 2016, Eversource's carrying amount of goodwill was approximately $4.4 billion and $3.5 billion, respectively. Eversource performs an assessment for possible impairment of its goodwill at least annually. Eversource completed its annual goodwill impairment test for each of its reporting units as of October 1, 2017 and determined that no impairment exists. See Note 22B, "Acquisition of Aquarion and Goodwill - Goodwill," for further information.

C. Northern Pass

Northern Pass is Eversource's planned 1,090 MW HVDC transmission line that will interconnect from the Québec-New Hampshire border to Franklin, New Hampshire and an associated alternating current radial transmission line between Franklin and Deerfield, New Hampshire.

On February 1, 2018, the New Hampshire Site Evaluation Committee ("NHSEC") voted to deny Northern Pass’ siting application. On February 14, 2018, pursuant to the NHSEC’s decision, the Massachusetts EDCs, in coordination with the DOER and an independent evaluator, notified NPT that the EDCs will continue contract negotiations, with the option of discontinuing discussions and terminating its conditional selection by March 27, 2018.

Consistent with Eversource’s and HQ’s long-term relationship to bring clean energy into New England, Eversource and HQ continue to support Northern Pass and the many benefits this project will bring to our customers and region. Eversource intends to seek reconsideration of the NHSEC’s decision and to review all options for moving this critical clean energy project forward.

As of December 31, 2017, Eversource has approximately $277 million in capitalized costs associated with Northern Pass. The Company continues to believe that the Northern Pass project is probable of being placed in service. If in the future, events and changes in circumstances indicate that the Northern Pass project's capitalized costs may not be fully recoverable, the Company will then evaluate those costs for impairment. Should the Company conclude that these capitalized costs are impaired, this would have a significant negative impact on Eversource's financial position, results of operations, and cash flows.

D. Accounting Standards

Accounting Standards Issued but Not Yet Effective: In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2014-09, Revenue from Contracts with Customers, which amends existing revenue recognition guidance and is required to be applied either fully retrospectively (to each reporting period presented) or under a modified retrospective method (cumulatively at the date of initial application). The FASB deferred implementation of ASU 2014-09 in ASU 2015-14, Revenue from Contracts with Customers (Topic: 606): Deferral of the Effective Date. The new accounting guidance is effective for interim and annual periods beginning in 2018 with early adoption permitted. The Company implemented the standard in the first quarter of 2018 using the modified retrospective method of adoption. Under this method of adoption, prior year reported results are not restated.

Under the new standard, an entity must identify the performance obligations in a contract, determine the transaction price and allocate the price to specific performance obligations to recognize the revenue when the obligation is completed. The amendments in this ASU also require disclosure of sufficient information to allow users to understand the nature, amount, timing and uncertainty of revenue and cash flow arising from contracts.

The Company has reviewed and performed accounting analyses of its revenue streams under contracts with customers. These accounting analyses included reviewing representative contracts and tariffs for each material revenue stream and evaluating them under the new guidance. The majority of the Company’s sales are derived from tariffs to provide electric and natural gas to customers. For such tariffs, the Company expects that the revenue from contracts with customers under ASU 2014-09 will be equivalent to revenue from electricity and natural gas supplied and billed in that period (including estimated unbilled revenues), which is consistent with current practice.

Based on our assessments, the Company has identified one item that will be accounted for differently under the new revenue guidance as compared to current guidance. As a result of applying guidance on the unit of account under the new standard, purchases and sales of power from and to ISO-New England will be accounted for net by the hour, rather than net by the month, with no impact on net income.

After taking into consideration this identified change, the Company has concluded that the new guidance will not have a material impact on the amounts or timing of revenue recognition. Implementation of the ASU will not have a material effect on the results of operations, financial position or cash flows of Eversource, CL&P, NSTAR Electric or PSNH. Significant additional disclosures of the nature, amount, timing and uncertainty of revenues and cash flows arising from contracts with customers will be presented beginning in the first quarter of 2018.

In January 2016, the FASB issued ASU 2016-01, Financial Instruments - Overall: Recognition and Measurement of Financial Assets and Liabilities, which is required to be implemented in the first quarter of 2018. The ASU will remove the available-for-sale designation for equity securities, whereby changes in fair value are recorded in accumulated other comprehensive income within shareholders' equity, and will require changes in fair value of all equity securities to be recorded in earnings beginning on January 1, 2018, with the unrealized gain or loss on available-for-sale equity securities as of that date reclassified to retained earnings as a cumulative effect of adoption. The fair value of available-for-sale equity securities subject to this guidance as of December 31, 2017 was approximately $51 million with an unrealized loss of $0.1 million. The unrealized loss recorded in AOCI will be recorded as an adjustment to the opening balance of retained earnings as of January 1, 2018. The remaining available-for-sale equity securities included in marketable securities on the balance sheet are held in nuclear decommissioning trusts and are subject to regulatory accounting treatment and will not be impacted by this guidance. Implementation of the ASU for other financial instruments is not expected to have a material impact on the financial statements of Eversource, CL&P, NSTAR Electric or PSNH.

In February 2016, the FASB issued ASU 2016-02, Leases, which changes existing lease accounting guidance and is required to be applied in the first quarter of 2019, with earlier application permitted. The ASU lease criteria are required to be applied to leases and lease renewals entered into effective January 1, 2019, and leases entered into before that date are required to be recognized and measured using a modified retrospective approach. The Company is reviewing the requirements of ASU 2016-02, including balance sheet recognition of leases previously deemed to be operating leases, and expects to implement the ASU in the first quarter of 2019.

In March 2017, the FASB issued ASU 2017-07, Compensation – Retirement Benefits: Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost, required to be implemented in the first quarter of 2018. The ASU requires separate presentation of service cost from other components of net pension and PBOP costs, with the other components presented as non-operating income and not subject to capitalization. The ASU is required to be applied retrospectively for the separate presentation in the income statement of service costs and other components and prospectively in the balance sheet for the capitalization of only the service cost component. The implementation of the ASU will not have an impact on the net income of Eversource, CL&P, NSTAR Electric or PSNH.

E. 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.

F. Provision for Uncollectible Accounts

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

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

The total provision for both uncollectible accounts and for uncollectible hardship accounts (the uncollectible hardship balance is included in the total provision) is included in Receivables, Net on the balance sheets, and was as follows:



	Total Provision for Uncollectible Accounts				Uncollectible Hardship
	As of December 31,				As of December 31,
(Millions of Dollars)	2017		2016		2017		2016
Eversource	$	195.7	$	200.6	$	122.5	$	119.9
CL&P	78.9		86.4		65.5		67.7
NSTAR Electric	69.7		70.3		40.3		36.1
PSNH	10.5		9.9		—		—

G. Fuel, Materials, Supplies and Inventory

Fuel, Materials, Supplies and Inventory include natural gas, coal, biomass and oil inventories, materials and supplies purchased primarily for construction or operation and maintenance purposes, RECs and emission allowances. Inventory is valued at the lower of cost or net realizable value. RECs are purchased from suppliers of renewable sources of generation and are used to meet state mandated Renewable Portfolio Standards requirements.

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 used SO2, CO2, and NOx emissions allowances. SO2, CO2, and NOx emissions allowances were charged to expense based on their average cost as they were utilized against emissions volumes at PSNH's generating units.

On October 11, 2017, PSNH entered into two Purchase and Sale Agreements ("Agreements") to sell its thermal and hydroelectric generation assets. The NHPUC approved the Agreements in late November 2017 and on January 10, 2018, PSNH completed the sale of its thermal generation assets. As of December 31, 2017, PSNH has classified its generation assets, which included coal, biomass and oil inventories and emission allowances, as held for sale. As of December 31, 2016, these inventories were recorded within Fuel, Materials, Supplies and Inventory on the balance sheet. See Note 12, "Assets Held for Sale," for further information.

The carrying amounts of fuel, materials and supplies, RECs, and emission allowances were as follows:



	As of December 31,
	2017								2016
(Millions of Dollars)	Eversource		CL&P		NSTAR Electric		PSNH		Eversource		CL&P		NSTAR Electric		PSNH
Current:
Fuel	$	29.7	$	—	$	—	$	—	$	135.7	$	—	$	—	$	99.9
Materials and Supplies	117.1		44.4		45.1		18.5		142.7		48.2		39.7		47.3
RECs	76.3		4.0		50.4		21.8		47.9		3.9		31.2		12.8
Emission Allowances	—		—		—		—		2.4		—		—		2.4
Long-Term:
Emission Allowances	—		—		—		—		17.5		—		—		17.5

H. Deposits

As of December 31, 2017, Eversource, CL&P, NSTAR Electric and PSNH had $24.5 million, $3.1 million, $12.8 million and $0.5 million, respectively, of cash collateral posted not subject to master netting agreements, with ISO-NE related to energy transactions, which was included in Prepayments and Other Current Assets on the balance sheets. As of December 31, 2016, these amounts were $21.7 million, $1.4 million, $11.8 million and $0.5 million for Eversource, CL&P, NSTAR Electric and PSNH, respectively.

I. Fair Value Measurements

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

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

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

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

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

Determination of Fair Value: The valuation techniques and inputs used in Eversource'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," and Note 14, "Fair Value of Financial Instruments" to the financial statements.

J. Derivative Accounting

Many of the electric and natural gas 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 related to energy and energy-related products, 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 a contract as normal, 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 a contract as normal (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 a contract cannot be considered normal 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.

All 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.

K. Investments

Investments are included in Other Long-Term Assets on the balance sheets and earnings impacts from equity investments are included in Other Income, Net on the statements of income.

Strategic, Infrastructure and Other Investments: As of December 31, 2017 and 2016, Eversource had investments totaling $277.6 million and $236.9 million, respectively. As of December 31, 2017 and 2016, Eversource's investments included a 15 percent ownership interest in a FERC-regulated natural gas transmission business of $159.6 million and $154.6 million, respectively, a 40 percent ownership interest in Access Northeast of $31.3 million and $30.9 million, respectively, a 37.2 percent (14.5 percent of which related to NSTAR Electric) ownership interest in two companies that transmit hydro-electricity imported from the Hydro-Quebec system in Canada of $17.7 million and $7.7 million, respectively, and other investments totaling $69.0 million and $43.7 million, respectively. NSTAR Electric's investments totaled $6.9 million and $3.0 million, respectively, as of December 31, 2017 and 2016.

Regional Decommissioned Nuclear Companies: CL&P, NSTAR Electric and PSNH 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 and PSNH, the respective investments in CYAPC, YAEC and MYAPC are accounted for under the equity method and are included in Other Long-Term Assets on their respective balance sheets. Eversource consolidates CYAPC and YAEC because CL&P's, NSTAR Electric's and PSNH's combined ownership interest in each of these entities is greater than 50 percent. For further information on the Yankee Companies, see Note 11C, "Commitments and Contingencies – Spent Nuclear Fuel Obligations – Yankee Companies," to the financial statements.

Equity in Earnings and Dividends from Equity Investments: For the years ended December 31, 2017, 2016 and 2015, Eversource had equity in earnings of $27.4 million, $0.2 million, and $0.9 million, respectively. Eversource received dividends from its equity method investees of $20.0 million and $0.1 million, respectively, for the years ended December 31, 2017 and 2016.

L. Revenues

Retail Revenues: Retail revenues are based on rates approved by respective state regulatory commissions. In general, rates can only be changed through formal proceedings with the state regulatory commissions. These rates are designed to recover the costs to provide service to customers, and include a return on investment. Regulatory commission-approved tracking mechanisms are also used 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.

Certain Eversource electric, natural gas and water companies, including CL&P and NSTAR Electric (for a portion of its customers), have a regulatory commission approved revenue decoupling mechanism ("decoupled companies"). Distribution revenues are decoupled from customer sales volumes, where applicable, which breaks the relationship between sales volumes and revenues recognized. The decoupled companies reconcile their annual base distribution rate recovery to pre-established levels of baseline distribution delivery service revenues. Any difference between the allowed level of distribution revenue and the actual amount realized is adjusted through rates in a subsequent period.

A significant portion of the electric and natural gas 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 sales of energy associated with these purchases are recorded in Operating Revenues on the statements of income.

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, natural gas or water 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 in Current Assets on the balance sheets. Actual amounts billed to customers when meter readings become available may vary from the estimated amount.

Unbilled revenues are recognized by allocating estimated unbilled sales volumes to the respective customer classes, and then applying an estimated rate by customer class to those sales volumes. Unbilled revenues can vary significantly from period to period as a result of seasonality, weather, customer usage patterns, customer rates in effect for customer classes, and the timing of customer billing. The estimate of unbilled revenues can significantly impact the amount of revenues recorded at the companies that do not have a revenue decoupling mechanism. Companies that do have a decoupling mechanism record a regulatory deferral to reflect the actual allowed amount of revenue associated with their respective decoupled distribution rate design.

Transmission Revenues - Wholesale Rates: The Eversource electric transmission-owning companies have a combination of FERC-approved regional and local formula rates that work in tandem to recover all their transmission costs. These rates are part of the ISO-NE Tariff. Regional rates recover the costs of higher voltage transmission facilities that benefit the region, and are collected from all New England transmission customers, including the Eversource distribution businesses. Eversource and NSTAR Electric each have two sets of local rates that recover the companies' total transmission revenue requirements, less revenues received from regional rates and other sources, and are collected from Eversource's distribution businesses and other transmission customers. The distribution businesses of Eversource, in turn, recover the FERC- approved charges from retail customers through annual or semiannual tracking mechanisms. The transmission formula 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 refund to, transmission customers. See Note 11E, "Commitments and Contingencies – FERC ROE Complaints," for complaints filed at the FERC relating to Eversource's ROE.

Transmission Revenues - Retail Rates: A significant portion of the Eversource electric transmission segment revenue comes from ISO-NE charges to the distribution businesses of CL&P, NSTAR Electric, and PSNH, each of which recovers these costs through rates charged to their retail customers. CL&P, NSTAR Electric and PSNH 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.

M. 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)	2017		2016		2015
Eversource - Natural Gas and Fuel	$	432.5	$	372.2	$	516.7
PSNH - Fuel	43.4		45.0		85.4

N. 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 electric, natural gas and water companies' utility plant on the balance sheet. The portion of AFUDC attributable to borrowed funds is recorded as a reduction of 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 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.

AFUDC costs and the weighted-average AFUDC rates were as follows:



Eversource	For the Years Ended December 31,
(Millions of Dollars, except percentages)	2017			2016			2015
Borrowed Funds	$	12.5		$	10.8		$	7.2
Equity Funds	34.4			26.2			18.8
Total AFUDC	$	46.9		$	37.0		$	26.0
Average AFUDC Rate	5.1		%	4.4		%	3.9		%



	For the Years Ended December 31,
	2017									2016									2015
(Millions of Dollars, except percentages)	CL&P			NSTAR Electric			PSNH			CL&P			NSTAR Electric			PSNH			CL&P			NSTAR Electric			PSNH
Borrowed Funds	$	5.1		$	4.8		$	0.7		$	3.3		$	5.3		$	0.8		$	2.6		$	3.0		$	1.0
Equity Funds	12.1			10.2			—			6.3			10.2			0.3			5.2			6.0			1.2
Total AFUDC	$	17.2		$	15.0		$	0.7		$	9.6		$	15.5		$	1.1		$	7.8		$	9.0		$	2.2
Average AFUDC Rate	6.2		%	5.0		%	0.7		%	4.7		%	3.2		%	1.0		%	5.5		%	3.5		%	1.8		%

O. Other Income, Net

Items included within Other Income, Net on the statements of income primarily consist of investment income/(loss) related to debt and equity securities held in trust, market value changes related to deferred compensation plans, interest income, AFUDC related to equity funds, and income/(loss) related to equity method investees. For further information on gains/(losses) related to debt and equity securities, see Note 5, "Marketable Securities," to the financial statements. For further information on AFUDC related to equity funds, see Note 1N, "Summary of Significant Accounting Policies – Allowance for Funds Used During Construction," to the financial statements. For further information on equity in earnings, see Note 1K, "Summary of Significant Accounting Policies – Investments," to the financial statements.

P. Other Taxes

Eversource's companies that serve customers in Connecticut collect gross receipts taxes levied by the state of Connecticut from their customers. These gross receipts taxes are shown separately with collections in Operating Revenues and with payments in Taxes Other Than Income Taxes on the statements of income as follows:



	For the Years Ended December 31,
(Millions of Dollars)	2017		2016		2015
Eversource	$	157.4	$	162.7	$	147.2
CL&P	137.5		145.2		128.5

As agents for state and local governments, Eversource's companies that serve customers in Connecticut and Massachusetts collect certain sales taxes that are recorded on a net basis with no impact on the statements of income.

Separately from the amounts above are $25.4 million of expense recorded as Taxes Other than Income Taxes in 2017 related to the future remittance of energy efficiency funds collected from customers in Operating Revenues to the State of Connecticut. These amounts are shown separately with collections in Operating Revenues and expenses in Taxes Other than Income Taxes on the Eversource and CL&P statements of income.

Q. Supplemental Cash Flow Information



Eversource (Millions of Dollars)	As of and For the Years Ended December 31,
2017			2016				2015
Cash Paid/(Received) During the Year for:
Interest, Net of Amounts Capitalized	$	419.1		$	398.1			$	365.9
Income Taxes	30.8			(135.5		)		10.3
Non-Cash Investing Activities:
Plant Additions Included in Accounts Payable (As of)	379.5			301.5				216.6



	As of and For the Years Ended December 31,
	2017						2016								2015
(Millions of Dollars)	CL&P		NSTAR Electric		PSNH		CL&P			NSTAR Electric		PSNH			CL&P		NSTAR Electric			PSNH
Cash Paid/(Received) During the Year for:
Interest, Net of Amounts Capitalized	$	144.6	$	124.6	$	45.9	$	143.3		$	112.9	$	46.5		$	144.4	$	102.4		$	42.3
Income Taxes	68.8		95.5		26.1		(73.9		)	66.0		(36.0		)	55.2		(5.1		)	14.4
Non-Cash Investing Activities:
Plant Additions Included in Accounts Payable (As of)	132.5		116.5		44.4		116.2			87.0		37.9			76.0		50.5			46.5

In 2016, 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 – Spent Nuclear Fuel Obligations – Yankee Companies," CYAPC and YAEC received total proceeds of $52.2 million, which were classified as operating activities on the Eversource consolidated statements of cash flows. CYAPC returned $6.8 million of these proceeds to its non-affiliated member companies. In addition, CL&P, NSTAR Electric and PSNH received a total distribution of $14.4 million from MYAPC as a result of DOE Phase III proceeds and a distribution from its spent nuclear fuel trust.

The 2015 cash paid for interest excludes interest payments made by CL&P and NSTAR Electric in connection with the full satisfaction of their respective obligations to the DOE for the disposal of spent nuclear fuel and high-level radioactive waste for all periods prior to 1983 from their previous ownership interest in the Millstone nuclear power stations. CL&P and NSTAR Electric divested their ownership interest in Millstone in 2001. In late 2015, CL&P and NSTAR Electric made payments of $244.6 million and $57.4 million, respectively, to satisfy their pre-1983 spent nuclear fuel obligations to the DOE in full, which included accumulated interest of $178 million and $41.8 million, respectively.

R. Related Parties

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

As of both December 31, 2017 and 2016, CL&P, NSTAR Electric and PSNH had long-term receivables from Eversource Service in the amounts of $25.0 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 Eversource Service in connection with certain postretirement benefits for CL&P, NSTAR Electric and PSNH employees and have been eliminated in consolidation on the Eversource financial statements.

Included in the CL&P, NSTAR Electric and PSNH balance sheets as of December 31, 2017 and 2016 were Accounts Receivable from Affiliated Companies and Accounts Payable to Affiliated Companies relating to transactions between CL&P, NSTAR Electric and PSNH and other subsidiaries that are wholly-owned by Eversource. These amounts have been eliminated in consolidation on the Eversource financial statements.

REGULATORY ACCOUNTING

Eversource's utility companies are subject to rate regulation that is based on cost recovery and meets the criteria for application of accounting guidance for rate-regulated operations, which considers the effect of regulation on the timing of the recognition of certain revenues and expenses. The regulated companies' financial statements reflect the effects of the rate-making process. The rates charged to the customers of Eversource's regulated companies are designed to collect each company's costs to provide service, including a return on investment.

Management believes it is probable that each of the regulated companies will recover its 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 if 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 were as follows:



Eversource (Millions of Dollars)	As of December 31,
2017			2016
Benefit Costs	$	2,068.8		$	1,817.8
Deferred Costs from Generation Asset Sale	516.1			—
Derivative Liabilities	367.2			423.3
Income Taxes, Net	768.9			644.5
Storm Restoration Costs	404.8			385.3
Goodwill-related	365.2			464.4
Regulatory Tracker Mechanisms	509.9			576.6
Asset Retirement Obligations	101.0			99.3
Other Regulatory Assets	137.4			115.1
Total Regulatory Assets	5,239.3			4,526.3
Less: Current Portion	741.9			887.6
Total Long-Term Regulatory Assets	$	4,497.4		$	3,638.7



	As of December 31,
	2017						2016
(Millions of Dollars)	CL&P		NSTAR Electric		PSNH		CL&P		NSTAR Electric		PSNH
Benefit Costs	$	469.2	$	560.7	$	212.3	$	429.3	$	525.3	$	184.2
Deferred Costs from Generation Asset Sale	—		—		516.1		—		—		—
Derivative Liabilities	362.3		—		—		420.5		2.8		—
Income Taxes, Net	453.8		113.2		21.7		437.0		120.5		24.2
Storm Restoration Costs	216.7		146.6		41.5		239.8		128.4		17.1
Goodwill-related	—		313.6		—		—		398.7		—
Regulatory Tracker Mechanisms	85.3		273.0		116.4		123.9		304.0		104.5
Asset Retirement Obligations	30.3		39.0		17.0		33.2		36.1		16.2
Other Regulatory Assets	27.6		78.4		15.8		43.4		22.7		16.5
Total Regulatory Assets	1,645.2		1,524.5		940.8		1,727.1		1,538.5		362.7
Less: Current Portion	200.3		333.9		130.1		335.5		353.5		117.2
Total Long-Term Regulatory Assets	$	1,444.9	$	1,190.6	$	810.7	$	1,391.6	$	1,185.0	$	245.5

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

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

Deferred Costs from Generation Asset Sale: Represents PSNH's $516.1 million of deferred costs associated with the sale of PSNH's generation assets that are expected to be recovered. These deferred costs were the difference between the carrying value and the fair value less costs to sell of the thermal generation assets that were classified as held for sale as of December 31, 2017. Full recovery of PSNH's generation assets (including these deferred costs and the results of the sale of the hydro generation assets) are expected to occur through a combination of cash flows during the remaining operating period, sales proceeds, and recovery of stranded costs via the issuance of bonds that will be secured by a non-bypassable charge or through recoveries in future rates billed to PSNH's customers. For further information, see Note 12, "Assets Held for Sale."

Derivative Liabilities: Regulatory assets are recorded as an offset to derivative liabilities and relate to the fair value of contracts used to purchase energy and energy-related products that will be recovered from customers in future rates. These assets are excluded from rate base and are being recovered as the actual settlements occur over the duration of the contracts. See Note 4, "Derivative Instruments," to the financial statements for further information on these 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. The amortization period of these assets varies depending on the nature and/or remaining life of the underlying assets and liabilities. 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 for major storm events at CL&P, NSTAR Electric and PSNH that each company expects to recover from customers. A storm must meet certain criteria to qualify as a major storm with the criteria specific to each state jurisdiction and utility company. Once a storm qualifies as a major storm, 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 pre-staging storm costs. 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. Each electric utility has sought, or is seeking, recovery of its deferred storm restoration costs through its applicable regulatory recovery process. Each electric utility company either recovers a carrying charge on its deferred storm restoration cost regulatory asset balance or the regulatory asset balance is included in rate base.

Goodwill-related: The goodwill regulatory asset originated from a 1999 transaction, and the DPU allowed its recovery in NSTAR Electric and NSTAR Gas rates. This regulatory asset is currently being amortized and recovered from customers in rates without a carrying charge over a 40-year period, and, as of December 31, 2017, there were 22 years of amortization remaining.

Regulatory Tracker Mechanisms: The regulated companies' approved rates are designed to recover costs incurred 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 differences between the costs incurred (or the rate recovery allowed) and the actual revenues are recorded as regulatory assets (for undercollections) or as regulatory liabilities (for overcollections) to be included in future customer rates each year. Carrying charges are recovered in rates on all material regulatory tracker mechanisms.

CL&P, NSTAR Electric and PSNH each recover, on a fully reconciling basis, the costs associated with the procurement of energy, transmission related costs from FERC-approved transmission tariffs, energy efficiency programs, low income assistance programs, certain uncollectible accounts receivable for hardship customers, and restructuring and stranded costs as a result of deregulation. Energy procurement costs at PSNH include the costs related to its generation facilities and at NSTAR Electric include the costs related to its solar power facilities.

CL&P, NSTAR Electric (for their western Massachusetts customer rates) and NSTAR Gas each have a regulatory commission approved revenue decoupling mechanism. Distribution revenues are decoupled from customer sales volumes, where applicable, which breaks the relationship between sales volumes and revenues recognized. In 2017 and 2016, NSTAR Electric operated under two different rate structures based on its service territory geography. For customers that were served in eastern Massachusetts, including metropolitan Boston, Cape Cod and Martha's Vineyard, NSTAR Electric operated using traditional rates. For customers that were served in western Massachusetts, including the metropolitan Springfield region, NSTAR Electric operated using decoupled rates. Effective February 1, 2018, all of NSTAR Electric's distribution revenues were decoupled as a result of the DPU-approved rate decision. CL&P and NSTAR Electric reconciled their annual base distribution rate recovery amounts to their pre-established levels of baseline distribution delivery service revenues of $1.059 billion and $132.4 million, respectively, through December 31, 2017. Effective February 1, 2018, NSTAR Electric, operating entirely under decoupled rates, will reconcile its annual base distribution rate recovery to its new baseline of $974.8 million. Any difference between the allowed level of distribution revenue and the actual amount realized during a 12-month period is adjusted through rates in the following period.

Asset Retirement Obligations: The costs associated with the depreciation of the regulated companies' ARO assets and accretion of the ARO liabilities are recorded as regulatory assets in accordance with regulatory accounting guidance. The regulated companies' ARO assets, regulatory assets and liabilities offset and are excluded from rate base. These costs are being recovered over the life of the underlying property, plant and equipment.

Other Regulatory Assets: Other Regulatory Assets primarily include contractual obligations associated with the remaining nuclear fuel storage costs of the CYAPC, YAEC and MYAPC nuclear facilities, environmental remediation costs, losses associated with the reacquisition or redemption of long-term debt, certain uncollectible accounts receivable for hardship customers, certain merger-related costs allowed for recovery, water tank painting costs, and various other items.

Regulatory Costs in Long-Term Assets: Eversource's regulated companies had $105.8 million (including $18.2 million for CL&P, $42.7 million for NSTAR Electric and $27.2 million for PSNH) and $86.3 million (including $5.9 million for CL&P, $55.1 million for NSTAR Electric and $8.2 million for PSNH) of additional regulatory costs as of December 31, 2017 and 2016, respectively, that were included in 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.

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 $1.0 million and $1.2 million for CL&P as of December 31, 2017 and 2016, respectively. These carrying costs will be recovered from customers in future rates. As of December 31, 2017 and 2016, this equity return, which is not recorded on the balance sheets, totaled $42.0 million and $44.9 million, respectively, for PSNH. These amounts include $25 million of equity return on the Clean Air Project costs that PSNH has agreed not to bill customers as part of a generation divestiture settlement agreement.

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



Eversource (Millions of Dollars)	As of December 31,
2017			2016
Cost of Removal	$	502.1		$	459.7
Benefit Costs	132.3			136.2
Regulatory Tracker Mechanisms	136.7			145.3
AFUDC - Transmission	67.1			65.8
Other Regulatory Liabilities	45.2			42.1
Total Regulatory Liabilities (1)	883.4			849.1
Less: Current Portion	128.1			146.8
Total Long-Term Regulatory Liabilities (1)	$	755.3		$	702.3



	As of December 31,
	2017						2016
(Millions of Dollars)	CL&P		NSTAR Electric		PSNH		CL&P		NSTAR Electric		PSNH
Cost of Removal	$	23.2	$	293.8	$	37.9	$	38.8	$	280.2	$	44.1
Benefit Costs	—		112.6		—		—		113.1		—
Regulatory Tracker Mechanisms	34.6		77.8		5.0		37.2		78.4		10.7
AFUDC - Transmission	48.8		18.3		—		50.2		15.6		—
Other Regulatory Liabilities	12.9		3.7		2.7		21.0		0.3		2.7
Total Regulatory Liabilities (1)	119.5		506.2		45.6		147.2		487.6		57.5
Less: Current Portion	39.0		79.6		6.3		47.1		78.5		12.7
Total Long-Term Regulatory Liabilities (1)	$	80.5	$	426.6	$	39.3	$	100.1	$	409.1	$	44.8

(1) The amounts above do not include the impacts associated with the "Tax Cuts and Jobs Act" (the "Act"), which became law on December 22, 2017. Pursuant to the enacted law, Eversource remeasured its existing deferred federal income tax balances as of December 31, 2017 to reflect the decrease in the U.S. federal corporate income tax rate from 35 percent to 21 percent. The remeasurement resulted in provisional regulated excess accumulated deferred income tax (ADIT) liabilities that we expect to benefit our customers in future periods, which were estimated to be approximately $2.9 billion (approximately $1.0 billion at CL&P, $1.1 billion at NSTAR Electric and $0.4 billion at PSNH) as of December 31, 2017 and recognized as regulatory liabilities on the balance sheet. We estimate that about 85 percent of the provisional regulated excess ADIT liabilities relate to property, plant, and equipment with remaining useful lives estimated to be in excess of 20 years. These amounts are subject to IRS normalization rules and would be returned to customers using the same timing as the remaining useful lives of the underlying assets that gave rise to the ADIT liabilities. The Eversource regulated companies are currently working with the state regulatory commissions, who have opened investigations to examine the impact of the Act on customer rates. For further information, see Note 10, "Income Taxes," to the financial statements.

Cost of Removal: Eversource'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 amount collected from customers but not yet expended is recognized as a regulatory liability.

AFUDC - Transmission: Regulatory liabilities were recorded by CL&P and NSTAR Electric for AFUDC accrued on certain reliability-related transmission projects to reflect local rate base recovery. These regulatory liabilities will be amortized over the depreciable life of the related transmission assets.

FERC ROE Complaints: As of December 31, 2017, Eversource has a reserve established for the first and second ROE complaints in the pending FERC ROE complaint proceedings, which was recorded as a regulatory liability. The cumulative pre-tax reserve (excluding interest) as of December 31, 2017, which includes the impact of refunds given to customers, totaled $39.1 million for Eversource (including $21.4 million for CL&P, $14.6 million for NSTAR Electric and $3.1 million for PSNH). See Note 11E, "Commitments and Contingencies – FERC ROE Complaints," for further information on developments in the pending ROE complaint proceedings.

Recent Regulatory Developments:

NSTAR Electric Distribution Rate Case Decision: On November 30, 2017, the DPU issued its decision in the NSTAR Electric distribution rate case, which approved an annual distribution rate increase of $37 million, with rates effective February 1, 2018. On January 3, 2018, NSTAR Electric filed a motion to reflect a revenue requirement reduction of $56 million (due to the decrease in the federal corporate income tax rate, as part of the "Tax Cuts and Jobs Act"), resulting in an annual net decrease in rates of $19 million.

In addition to its decision regarding rates, the DPU approved an authorized regulatory ROE of 10 percent, the establishment of a revenue decoupling rate mechanism for the portion of the NSTAR Electric business that did not previously have a decoupling mechanism, and the implementation of an inflation-based adjustment mechanism with a five-year stay-out until January 1, 2023.

Among other items, the DPU approved the recovery of previously expensed merger-related costs (which were incurred by Eversource parent in prior years) over a 10-year period and the recovery of previously deferred storm costs with carrying charges at the prime rate, but disallowed certain property taxes. The rate case decision resulted in the recognition of an aggregate $44.1 million pre-tax benefit recorded in 2017 ($14.1 million at NSTAR Electric).

CL&P Rate Case Settlement: On January 11, 2018, CL&P filed a distribution rate case settlement agreement for approval by PURA, which included, among other things, rate increases of $97.1 million, $32.7 million and $24.7 million, effective May 1, 2018, 2019, and 2020, respectively, an authorized regulatory ROE of 9.25 percent, 53 percent common equity in CL&P's capital structure, and a new capital tracker through 2020 for capital additions, system resiliency, and grid modernization. The rate increases associated with the settlement agreement will be reduced by the impact of the decrease in the federal corporate income tax rate, as part of the "Tax Cuts and Jobs Act," while amounts related to ADIT will be addressed in a separate manner. CL&P expects to receive final approval from PURA in the second quarter of 2018. No actions arose from this settlement that had an impact on previously deferred costs.

PROPERTY, PLANT AND EQUIPMENT AND ACCUMULATED DEPRECIATION

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

The following tables summarize property, plant and equipment by asset category:



Eversource	As of December 31,
(Millions of Dollars)	2017			2016
Distribution - Electric	$	14,410.5		$	13,716.9
Distribution - Natural Gas	3,244.2			3,010.4
Transmission - Electric	9,270.9			8,517.4
Water (1)	1,558.4			—
Generation and Solar(2)	36.2			1,224.2
Utility	28,520.2			26,468.9
Other (3)	693.7			591.6
Property, Plant and Equipment, Gross	29,213.9			27,060.5
Less: Accumulated Depreciation
Utility	(6,846.9		)	(6,480.4		)
Other	(286.9		)	(242.0		)
Total Accumulated Depreciation	(7,133.8		)	(6,722.4		)
Property, Plant and Equipment, Net	22,080.1			20,338.1
Construction Work in Progress	1,537.4			1,012.4
Total Property, Plant and Equipment, Net	$	23,617.5		$	21,350.5



	As of December 31,
	2017									2016
(Millions of Dollars)	CL&P			NSTAR Electric			PSNH			CL&P			NSTAR Electric			PSNH
Distribution	$	5,888.3		$	6,479.0		$	2,083.4		$	5,562.9		$	6,244.2		$	1,949.8
Transmission	4,239.9			3,821.2			1,161.3			3,912.9			3,496.9			1,059.3
Generation and Solar (2)	—			36.2			—			—			36.0			1,188.2
Property, Plant and Equipment, Gross	10,128.2			10,336.4			3,244.7			9,475.8			9,777.1			4,197.3
Less: Accumulated Depreciation	(2,239.0		)	(2,550.2		)	(751.8		)	(2,082.4		)	(2,364.2		)	(1,254.7		)
Property, Plant and Equipment, Net	7,889.2			7,786.2			2,492.9			7,393.4			7,412.9			2,942.6
Construction Work in Progress	381.8			460.3			149.4			239.0			317.2			96.7
Total Property, Plant and Equipment, Net	$	8,271.0		$	8,246.5		$	2,642.3		$	7,632.4		$	7,730.1		$	3,039.3


(1)	On December 4, 2017, Eversource completed the acquisition of Aquarion. See Note 22A, "Acquisition of Aquarion and Goodwill - Acquisition of Aquarion," for further information.


(2)	On October 11, 2017, PSNH entered into two Purchase and Sale Agreements ("Agreements") to sell its thermal and hydroelectric generation assets. As of December 31, 2017, PSNH has classified its generation assets as held for sale. As of December 31, 2016, these plant balances were recorded within Property, Plant and Equipment, Net on the balance sheet. See Note 12, "Assets Held for Sale," for further information.

(2)

On October 11, 2017, PSNH entered into two Purchase and Sale Agreements ("Agreements") to sell its thermal and hydroelectric generation assets. As of December 31, 2017, PSNH has classified its generation assets as held for sale. As of December 31, 2016, these plant balances were recorded within Property, Plant and Equipment, Net on the balance sheet. See Note 12, "Assets Held for Sale," for further information.


(3)	These assets are primarily comprised of building improvements, computer software, hardware and equipment at Eversource Service.

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 and the water utilities). The composite rates, which are subject to approval by the appropriate state regulatory agency, 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)	2017		2016		2015
Eversource	3.0	%	3.0	%	2.9	%
CL&P	2.8	%	2.7	%	2.7	%
NSTAR Electric	2.9	%	2.9	%	2.9	%
PSNH	3.1	%	3.1	%	3.2	%

The following table summarizes average remaining useful lives of depreciable assets:



	As of December 31, 2017
(Years)	Eversource	CL&P	NSTAR Electric	PSNH
Distribution	34.6	35.8	31.7	31.3
Transmission	40.9	37.2	44.7	43.5
Water	32.0	—	—	—
Solar	25.0	—	25.0	—
Other	12.7	—	—	—

DERIVATIVE INSTRUMENTS

The electric and natural gas 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 from customers in future rates. These regulated companies manage the risks associated with the price volatility of energy and energy-related products through the use of derivative and non-derivative 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 electric and natural gas companies, regulatory assets or regulatory liabilities are recorded to offset the fair values of derivatives, as contract settlement amounts are recovered from, or refunded to, customers in their respective energy supply rates.

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 amounts recorded as current or long-term derivative assets or liabilities:



	As of December 31,
	2017									2016
(Millions of Dollars)	Commodity Supply and Price Risk Management			Netting (1)			Net Amount Recorded as a Derivative			Commodity Supply and Price Risk Management			Netting (1)				Net Amount Recorded as a Derivative
Current Derivative Assets:
Level 2:
Eversource	$	—		$	—		$	—		$	6.0		$	—			$	6.0
Level 3:
CL&P	9.5			(7.1		)	2.4			13.9			(9.4		)		4.5
Long-Term Derivative Assets:
Level 2:
Eversource	$	—		$	—		$	—		$	0.3		$	(0.1	)		$	0.2
Level 3:
CL&P	71.9			(5.3		)	66.6			77.3			(11.7		)		65.6
Current Derivative Liabilities:
Level 2:
Eversource	$	(4.5	)	$	—		$	(4.5	)	$	—		$	—			$	—
Level 3:
Eversource	(54.4		)	—			(54.4		)	(79.7		)	—				(79.7		)
CL&P	(54.4		)	—			(54.4		)	(77.8		)	—				(77.8		)
Long-Term Derivative Liabilities:
Level 2:
Eversource	$	(0.4	)	$	—		$	(0.4	)	$	—		$	—		—	$	—
Level 3:
Eversource	(376.9		)	—			(376.9		)	(413.7		)	—				(413.7		)
CL&P	(376.9		)	—			(376.9		)	(412.8		)	—				(412.8		)


(1)	Amounts represent derivative assets and liabilities that Eversource 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, 2017, CL&P's derivative assets were exposed to counterparty credit risk. Of CL&P's derivative assets, $69.0 million was contracted with investment grade entities.

For further information on the fair value of derivative contracts, see Note 1I, "Summary of Significant Accounting Policies – Fair Value Measurements," and Note 1J, "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 the costs or benefits of each contract borne by or allocated to CL&P and 20 percent borne by or 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.

As of December 31, 2017 and 2016, Eversource had NYMEX financial contracts for natural gas futures in order to reduce variability associated with the purchase price of 9.5 million and 9.2 million MMBtu of natural gas, respectively.

For the years ended December 31, 2017, 2016 and 2015, there were losses of $29.0 million, $125.5 million and $60.2 million, respectively, deferred as regulatory costs, which reflect the change in fair value associated with Eversource's derivative contracts.

Credit Risk

Certain of Eversource's derivative contracts contain credit risk contingent provisions. These provisions require Eversource 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, 2017, Eversource had $3.4 million of derivative contracts in a net liability position that were subject to credit risk contingent provisions and would have been required to post additional collateral of $3.7 million if Eversource's unsecured debt credit ratings had been downgraded to below investment grade. As of December 31, 2016, Eversource had no derivative contracts in a net liability position that were subject to credit risk contingent provisions.

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 related 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 in order to address the full term 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 CL&P'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,
	2017						2016
CL&P	Range					Period Covered	Range					Period Covered
Capacity Prices	$	5.00	—	8.70	per kW-Month	2021 - 2026	$	5.50	—	8.70	per kW-Month	2020 - 2026
Forward Reserve	1.00		—	2.00	per kW-Month	2018 - 2024	1.40		—	2.00	per kW-Month	2017 - 2024

Exit price premiums of 6 percent through 18 percent are also applied on these contracts and reflect the uncertainty and illiquidity premiums that would be required based on the most recent market activity available for similar type contracts.

Valuations using significant unobservable inputs: The following table presents 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)	Eversource			CL&P
Derivatives, Net:
Fair Value as of January 1, 2016	$	(380.9	)	$	(380.8	)
Net Realized/Unrealized Losses Included in Regulatory Assets and Liabilities	(130.7		)	(122.7		)
Settlements	88.3			83.0
Fair Value as of December 31, 2016	$	(423.3	)	$	(420.5	)
Transfer out of Level 3	1.2			—
Net Realized/Unrealized Losses Included in Regulatory Assets and Liabilities	(11.4		)	(9.5		)
Settlements	71.2			67.7
Fair Value as of December 31, 2017	$	(362.3	)	$	(362.3	)

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 risk premiums would increase the fair value of the derivative liability. Changes in these fair values are recorded as a regulatory asset or liability and do not impact net income.

MARKETABLE SECURITIES

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

Trading Securities: Eversource has elected to record certain equity securities as trading securities, with the changes in fair values recorded in Other Income, Net on the statements of income. As of December 31, 2016, these securities were classified as Level 1 in the fair value hierarchy and totaled $9.6 million. These securities were sold during 2017 and were no longer held as of December 31, 2017. For the years ended December 31, 2016 and 2015, net gains on these securities of $0.6 million and $2.0 million, respectively, were recorded in Other Income, Net on the statements of income. Dividend income is recorded in Other Income, Net when dividends are declared.

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



	As of December 31,
	2017									2016
Eversource (Millions of Dollars)	Amortized Cost		Pre-Tax Unrealized Gains		Pre-Tax Unrealized Losses			Fair Value		Amortized Cost		Pre-Tax Unrealized Gains		Pre-Tax Unrealized Losses			Fair Value
Debt Securities	$	284.9	$	3.2	$	(1.1	)	$	287.0	$	296.2	$	1.1	$	(2.1	)	$	295.2
Equity Securities	216.1		97.8		(0.1		)	313.8		203.3		62.3		(1.2		)	264.4

Eversource's debt and equity securities include CYAPC's and YAEC's marketable securities held in nuclear decommissioning trusts in the amounts of $503.6 million and $466.7 million as of December 31, 2017 and 2016, respectively. Unrealized gains and losses for these nuclear decommissioning trusts are recorded in Marketable Securities with the corresponding offset to Other Long-Term Liabilities on the balance sheets, with no impact on the statements of income.

Unrealized Losses and Other-than-Temporary Impairment: There have been no significant unrealized losses, other-than-temporary impairments or credit losses in 2017 or 2016. Factors considered in determining whether a credit loss exists include the duration and severity of the impairment, adverse conditions specifically affecting the issuer, and the payment history, ratings and rating changes of the security. For asset-backed debt securities, underlying collateral and expected future cash flows are also evaluated.

Realized Gains and Losses: Realized gains and losses on available-for-sale securities are recorded in Other Income, Net for Eversource's benefit trust and are offset in Other Long-Term Liabilities for CYAPC and YAEC. Eversource utilizes the specific identification basis method for the Eversource benefit trust, and the average cost basis method for the CYAPC and YAEC nuclear decommissioning trusts to compute the realized gains and losses on the sale of available-for-sale securities. For the year ended December 31, 2017, Eversource recognized net realized gains of $9.8 million on the sales of available-for-sale securities held in the benefit trust. The proceeds of the sales were re-invested in the Eversource benefit trust.

Contractual Maturities: As of December 31, 2017, the contractual maturities of available-for-sale debt securities were as follows:



Eversource (Millions of Dollars)	Amortized Cost		Fair Value

Less than one year (1)	$	40.2	$	40.1
One to five years	46.7		47.5
Six to ten years	64.7		65.6
Greater than ten years	133.3		133.8
Total Debt Securities	$	284.9	$	287.0


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

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



Eversource (Millions of Dollars)	As of December 31,
2017			2016
Level 1:
Mutual Funds and Equities	$	313.8		$	274.0
Money Market Funds	23.3			54.8
Total Level 1	$	337.1		$	328.8
Level 2:
U.S. Government Issued Debt Securities (Agency and Treasury)	$	70.2		$	63.0
Corporate Debt Securities	50.9			41.1
Asset-Backed Debt Securities	21.2			18.5
Municipal Bonds	110.7			107.5
Other Fixed Income Securities	10.7			10.3
Total Level 2	$	263.7		$	240.4
Total Marketable Securities	$	600.8		$	569.2

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 instruments 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

Eversource, including CL&P, NSTAR Electric and PSNH, recognizes a liability for the fair value of an ARO on the obligation date if the liability's fair value can be reasonably estimated, even if it 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 and the corresponding credits are recorded as accumulated depreciation and ARO liabilities, respectively. As the electric and natural gas 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 these 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:



Eversource (Millions of Dollars)	As of December 31,
2017				2016
Balance as of Beginning of Year	$	426.4			$	430.1
Liabilities Incurred During the Year	0.2				1.3
Liabilities Settled During the Year	(19.3		)		(19.0		)
Accretion	26.3				22.9
Revisions in Estimated Cash Flows	(14.5		)		(8.9		)
Balance as of End of Year	$	419.1			$	426.4



	As of December 31,
	2017								2016
(Millions of Dollars)	CL&P			NSTAR Electric			PSNH		CL&P		NSTAR Electric			PSNH
Balance as of Beginning of Year	$	36.0		$	42.6		$	23.5	$	33.8	$	41.0		$	21.6
Liabilities Incurred During the Year	0.1			0.1			—		—		—			0.5
Liabilities Settled During the Year	(1.0		)	(0.2		)	—		—		(0.4		)	—
Accretion	2.3			2.1			1.5		2.2		2.0			1.4
Revisions in Estimated Cash Flows	(5.9		)	—			—		—		—			—
Balance as of End of Year	$	31.5		$	44.6		$	25.0	$	36.0	$	42.6		$	23.5

Eversource's amounts include CYAPC and YAEC's AROs of $301.5 million and $308.6 million as of December 31, 2017 and 2016, 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 Debt Borrowing Limits: The amount of short-term borrowings that may be incurred by CL&P, NSTAR Electric and NPT is subject to periodic approval by the FERC. Because the NHPUC has jurisdiction over PSNH's short-term debt, PSNH is not currently required to obtain FERC approval for its short-term borrowings. On November 30, 2017, the FERC granted authorization that allows CL&P to issue total short-term borrowings in an aggregate principal amount not to exceed $600 million outstanding at any one time, through December 31, 2019. On November 30, 2017, the FERC granted authorization that allows NSTAR Electric to issue total short-term borrowings in an aggregate principal amount not to exceed $655 million outstanding at any one time, through December 30, 2019. On November 3, 2016, FERC authorized NPT to issue up to an aggregate of $800 million in short-term debt and long-term debt through December 31, 2018.

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, 2017, PSNH's short-term debt authorization under the 10 percent of net fixed plant test plus $60 million totaled approximately $364 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, 2017, CL&P had $607.4 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.

Commercial Paper Programs and Credit Agreements: Eversource parent has a $1.45 billion commercial paper program allowing Eversource parent to issue commercial paper as a form of short-term debt. Eversource parent, CL&P, PSNH, NSTAR Gas and Yankee Gas are also parties to a five-year $1.45 billion revolving credit facility. On December 8, 2017, Eversource parent amended and restated the revolving credit facility. The amended and restated credit facility terminates on December 8, 2022 and serves to backstop Eversource parent's $1.45 billion commercial paper program. There were no borrowings outstanding on the revolving credit facility as of December 31, 2017 or 2016.

NSTAR Electric has a $650 million commercial paper program allowing NSTAR Electric to issue commercial paper as a form of short-term debt. On December 8, 2017, NSTAR Electric increased its commercial paper program from $450 million to $650 million. NSTAR Electric is also a party to a five-year $650 million revolving credit facility. On December 8, 2017, NSTAR Electric amended and restated the revolving credit facility, increasing it from $450 million to $650 million. The amended and restated credit facility terminates on December 8, 2022 and serves to backstop NSTAR Electric's $650 million commercial paper program. There were no borrowings outstanding on the revolving credit facility as of December 31, 2017 or 2016.

The amount of borrowings outstanding and available under the commercial paper programs and revolving credit facility was as follows:



	Borrowings Outstanding as of December 31,				Available Borrowing Capacity as of December 31,				Weighted-Average Interest Rate as of December 31,
(Millions of Dollars)	2017		2016		2017		2016		2017		2016
Eversource Parent Commercial Paper Program	$	979.3	$	1,022.0	$	470.7	$	428.0	1.86	%	0.88	%
NSTAR Electric Commercial Paper Program	234.0		126.5		416.0		323.5		1.55	%	0.71	%
Revolving Credit Facility (1)	76.0		N/A		24.0		N/A		2.66	%	N/A

(1) Aquarion has a $100.0 million revolving credit facility, which expires on August 19, 2019.

Amounts outstanding under the commercial paper programs and revolving credit facility are included in Notes Payable for Eversource and NSTAR Electric and are classified in current liabilities on the balance sheets as all borrowings are outstanding for no more than 364 days at one time. As a result of the Eversource parent long-term debt issuances on January 8, 2018, the net proceeds of which were used to repay short-term borrowings outstanding under its commercial paper program, $201.2 million of commercial paper borrowings under the Eversource parent commercial paper program were reclassified as Long-Term Debt as of December 31, 2017.

As of December 31, 2017, there were intercompany loans from Eversource parent of $69.5 million to CL&P and $262.9 million to PSNH. As of December 31, 2016, there were intercompany loans from Eversource parent of $80.1 million to CL&P, $160.9 million to PSNH and $51.0 million to NSTAR Electric. These intercompany loans from Eversource parent are included in Notes Payable to Eversource Parent and are classified in current liabilities on the respective subsidiary's balance sheets. Intercompany loans from Eversource parent are eliminated in consolidation on Eversource's balance sheets.

Under the credit facilities described above, Eversource and its subsidiaries must comply with certain financial and non-financial covenants, including a consolidated debt to total capitalization ratio. As of December 31, 2017 and 2016, Eversource and its subsidiaries were in compliance with these covenants. If Eversource 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 (Millions of Dollars)	As of December 31,
2017				2016
First Mortgage Bonds:
7.875% 1994 Series D due 2024	$	139.8			$	139.8
5.750% 2004 Series B due 2034	130.0				130.0
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
5.750% 2007 Series B due 2037	150.0				150.0
5.750% 2007 Series C due 2017	—				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	475.0				250.0
4.150% 2015 Series A due 2045	350.0				350.0
3.200% 2017 Series A due 2027	300.0				—
Total First Mortgage Bonds	2,944.8				2,669.8
Pollution Control Revenue Bonds:
4.375% Fixed Rate Tax Exempt due 2028	120.5				120.5
Less Amounts due Within One Year	(300.0		)		(250.0		)
Unamortized Premiums and Discounts, Net	11.5				(10.0		)
Unamortized Debt Issuance Costs	(17.7		)		(14.3		)
CL&P Long-Term Debt	$	2,759.1			$	2,516.0



NSTAR Electric (Millions of Dollars)	As of December 31,
2017				2016
Debentures:
5.750% due 2036	$	200.0			$	200.0
5.625% due 2017	—				400.0
5.500% due 2040	300.0				300.0
2.375% due 2022	400.0				400.0
4.400% due 2044	300.0				300.0
3.250% due 2025	250.0				250.0
2.700% due 2026	250.0				250.0
3.200% due 2027	700.0				—
Total Debentures	2,400.0				2,100.0
Notes:
5.900% Senior Notes Series B due 2034	50.0				50.0
6.700% Senior Notes Series D due 2037	40.0				40.0
5.100% Senior Notes Series E due 2020	95.0				95.0
3.500% Senior Notes Series F due 2021	250.0				250.0
3.880% Senior Notes Series G due 2023	80.0				80.0
2.750% Senior Notes Series H due 2026	50.0				50.0
Total Notes	565.0				565.0
Less Amounts due Within One Year	—				(400.0		)
Unamortized Premiums and Discounts, Net	(1.8		)		(4.9		)
Unamortized Debt Issuance Costs	(19.4		)		(15.5		)
NSTAR Electric Long-Term Debt	$	2,943.8			$	2,244.6



PSNH (Millions of Dollars)	As of December 31,
2017				2016
First Mortgage Bonds:
5.600% Series M due 2035	$	50.0			$	50.0
6.150% Series N due 2017	—				70.0
6.000% Series O due 2018	110.0				110.0
4.500% Series P due 2019	150.0				150.0
4.050% Series Q due 2021	122.0				122.0
3.200% Series R due 2021	160.0				160.0
3.500% Series S due 2023	325.0				325.0
Total First Mortgage Bonds	917.0				987.0
Pollution Control Revenue Bonds:
Adjustable Rate Tax Exempt Series A due 2021 (2.048% and 1.138% as of December 31, 2017 and 2016, respectively)	89.3				89.3
Less Amounts due Within One Year	(110.0		)		(70.0		)
Unamortized Premiums and Discounts, Net	0.2				0.1
Unamortized Debt Issuance Costs	(4.1		)		(4.4		)
PSNH Long-Term Debt	$	892.4			$	1,002.0



OTHER (Millions of Dollars)	As of December 31,
2017				2016
Yankee Gas - First Mortgage Bonds: 3.020% - 8.480% due 2018 - 2044	$	520.0			$	445.0
NSTAR Gas - First Mortgage Bonds: 4.350% - 9.950% due 2020 - 2045	285.0				310.0
Eversource Parent and Other - Notes and Debentures:
4.500% Debentures due 2019	350.0				350.0
1.450% - 4.000% Senior Notes due 2018 - 2026	3,260.0				1,700.0
Notes Payable Unsecured 3.57% - 6.430% due 2021 - 2037	290.9				—
Notes Payable Secured 4.10% - 9.64% due 2021 - 2035	70.4				—
Pre-1983 Spent Nuclear Fuel Obligation (CYAPC)	181.4				180.0
Fair Value Adjustment (1)	172.6				144.6
Less Fair Value Adjustment - Current Portion (1)	(35.4		)		(28.9		)
Less Amounts due in One Year	(104.2		)		(25.0		)
Commercial Paper Classified as Long-Term Debt	201.2				—
Unamortized Premiums and Discounts, Net	1.5				(1.8		)
Unamortized Debt Issuance Costs	(12.8		)		(7.1		)
Total Other Long-Term Debt	5,180.6				$	3,066.8

Total Eversource Long-Term Debt	11,775.9				$	8,829.4


(1)	The fair value adjustment amount is the purchase price adjustments, net of amortization, required to record the NSTAR long-term debt at fair value on the date of the 2012 merger and to record the Aquarion long-term debt at fair value as of December 4, 2017.

Long-Term Debt Issuances and Repayments: The following table summarizes long-term debt issuances and repayments:



(Millions of Dollars)	Issue Date	Issuances/(Repayments)			Maturity Date	Use of Proceeds
CL&P:
3.20% 2017 Series A First Mortgage Bonds	March 2017	$	300.0		2027	Repay short-term debt borrowings
4.30% 2014 Series A First Mortgage Bonds (1)	August 2017	225.0			2044	Refinance short-term debt and fund working capital and capital expenditures
5.375% 2007 Series A First Mortgage Bonds	March 2007	(150.0		)	2017	N/A
5.75% 2007 Series C First Mortgage Bonds	September 2007	(100.0		)	2017	N/A
NSTAR Electric:
3.20% Debentures	May 2017	350.0			2027	Repay short-term borrowings and fund capital expenditures and working capital
3.20% Debentures (2)	October 2017	350.0			2027	Redeem long-term debt that matured in 2017
5.625% Debentures	November 2007	(400.0		)	2017	N/A
PSNH:
6.15% Series N First Mortgage Bonds	September 2007	(70.0		)	2017	N/A
Other:
Yankee Gas 3.02% Series N First Mortgage Bonds	September 2017	75.0			2027	Repay short-term borrowings
NSTAR Gas 7.04% Series M First Mortgage Bonds	September 1997	(25.0		)	2017	N/A
Eversource Parent 2.75% Series K Senior Notes	March 2017	300.0			2022	Repay short-term borrowings
Eversource Parent 2.75% Series K Senior Notes (3)	October 2017	450.0			2022	Repay short-term borrowings
Eversource Parent 2.90% Series L Senior Notes	October 2017	450.0			2024	Repay short-term borrowings
Eversource Parent 2.50% Series I Senior Notes (4)	January 2018	200.0			2021	Repay long-term debt due to mature in 2018 and repay short-term borrowings
Eversource Parent 3.30% Series M Senior Notes	January 2018	450.0			2028	Repay long-term debt due to mature in 2018
Eversource Parent 1.60% Series G Senior Notes (5)	January 2015	(150.0		)	2018	N/A


(1)	These bonds are part of the existing series initially issued by CL&P in 2014. The aggregate outstanding principal amount for these bonds is now $475 million.


(2)	These debentures are part of the same series initially issued by NSTAR Electric in May 2017. The aggregate outstanding principal amount for these debentures is now $700 million.


(3)	These notes are part of the same series issued by Eversource parent in March 2017. The aggregate outstanding principal amount for these notes is now $750 million.


(4)	These notes are part of the same series issued by Eversource parent in March 2016. The aggregate outstanding principal amount for these notes is now $450 million.


(5)	Represents a repayment at maturity on January, 15 2018.

As a result of the Eversource parent debt issuances in January 2018, $446.8 million of current portion of long-term debt related to two Eversource parent issuances maturing in 2018 and $201.2 million of commercial paper borrowings were reclassified to Long-Term Debt as of December 31, 2017.

Long-Term Debt Issuance Authorizations: On January 4, 2017, PURA approved CL&P's request for authorization to issue up to $1.325 billion in long-term debt through December 31, 2020. On March 30, 2017, the DPU approved NSTAR Electric's request for authorization to issue up to $700 million in long-term debt through December 31, 2018. On December 20, 2017, PURA approved Yankee Gas' request to extend the authorization period for issuance of up to $50 million in long-term debt from December 31, 2017 to December 31, 2018.

Long-Term Debt Provisions: 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 Eversource parent and NSTAR Electric debt is unsecured. Additionally, the long-term debt agreements provide that Eversource and certain of its subsidiaries must comply with certain covenants as are customarily included in such agreements, including equity requirements for NSTAR Electric and NSTAR Gas. Under the equity requirements, NSTAR Electric's senior notes must maintain a certain consolidated indebtedness to capitalization ratio as of the end of any fiscal quarter and NSTAR Gas' outstanding long-term debt must not exceed equity.

CL&P's obligation to repay the PCRBs is secured by first mortgage bonds. The first mortgage bonds contain 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 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.

Certain secured and unsecured notes payable are callable at redemption price and are subject to make-whole provisions.

Eversource, NSTAR Electric and Yankee Gas have certain long-term debt agreements that contain cross-default provisions. No other debt issuances contain cross-default provisions as of December 31, 2017.

Pre-1983 Spent Nuclear Fuel Obligation: Under the Nuclear Waste Policy Act of 1982, the DOE is responsible for the selection and development of repositories for, and the disposal of, spent nuclear fuel and high-level radioactive waste. CYAPC is obligated to pay the DOE for the costs to dispose of spent nuclear fuel and high-level radioactive waste generated prior to April 7, 1983 (pre-1983 Spent Nuclear Fuel) and recorded an accrual for the full liability thereof to the DOE. This liability accrues interest costs at the 3-month Treasury bill yield rate. For nuclear fuel used to generate electricity prior to April 7, 1983, payment may be made any time prior to the first delivery of spent fuel to the DOE. Fees for disposal of nuclear fuel burned on or after April 7, 1983 were billed to member companies and paid to the DOE.

As of December 31, 2017 and 2016, as a result of consolidating CYAPC, Eversource has consolidated $181.4 million and $180.0 million, respectively, in pre-1983 spent nuclear fuel obligations to the DOE. These obligations include accumulated interest costs of $132.6 million and $131.2 million as of December 31, 2017 and 2016, respectively. CYAPC maintains a trust to fund amounts due to the DOE for the disposal of pre-1983 spent nuclear fuel. For further information, see Note 5, "Marketable Securities," to the financial statements.

Long-Term Debt Maturities: Long-term debt maturities on debt outstanding for the years 2018 through 2022 and thereafter are shown below. These amounts exclude the CYAPC pre-1983 spent nuclear fuel obligation, net unamortized premiums, discounts and debt issuance costs, and other fair value adjustments as of December 31, 2017:



(Millions of Dollars)	Eversource		CL&P		NSTAR Electric		PSNH
2018	$	961.0	$	300.0	$	—	$	110.0
2019	801.0		250.0		—		150.0
2020	296.1		—		95.0		—
2021	922.8		—		250.0		371.3
2022	1,188.9		—		400.0		—
Thereafter	7,643.1		2,515.3		2,220.0		375.0
Total	$	11,812.9	$	3,065.3	$	2,965.0	$	1,006.3

EMPLOYEE BENEFITS

A. Pension Benefits and Postretirement Benefits Other Than Pensions

Eversource provides defined benefit plans (the "Pension Plans") that cover eligible employees, including, among others, employees of CL&P, NSTAR Electric and PSNH. The Pension Plans are subject to the provisions of ERISA, as amended by the PPA of 2006. Eversource's policy is to annually fund the Pension Plans in an amount at least equal to an amount that will satisfy all federal funding requirements. In addition to the Pension Plans, Eversource maintains SERP Plans which provide benefits in excess of Internal Revenue Code limitations to eligible participants consisting of current and retired employees.

Eversource also provides defined benefit postretirement plans (the "PBOP Plans") that provided certain benefits, primarily medical, dental and life insurance to eligible employees that met certain age and service eligibility requirements. In August 2016, Eversource Service amended its PBOP Plan, which standardized separate benefit structures that existed within the plan and made other benefit changes. The new plan provides life insurance and a health reimbursement arrangement created for the purpose of reimbursing retirees and dependents for health insurance premiums and certain medical expenses. 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. Eversource annually funds postretirement costs through tax deductible contributions to external trusts.

Because the regulated companies recover the retiree benefit costs from customers through rates, regulatory assets are recorded in lieu of recording an adjustment to Accumulated Other Comprehensive Income/(Loss) for the funded status of the Pension, SERP and PBOP Plans. Regulatory accounting is also applied to the portions of the Eversource Service costs that support the regulated companies, as these costs are also recovered from customers. Adjustments to the Pension and PBOP Plans funded status for the unregulated companies are recorded on an after-tax basis to Accumulated Other Comprehensive Income/(Loss). For further information, see Note 2, "Regulatory Accounting," and Note 15, "Accumulated Other Comprehensive Income/(Loss)," to the financial statements.

The difference between the actual return and calculated expected return on plan assets for the Pension and PBOP Plans is reflected as a component of unrecognized actuarial gains or losses, which are recorded in Regulatory Assets or Accumulated Other Comprehensive Income/(Loss). Unrecognized actuarial gains or losses are amortized as a component of pension and PBOP expense over the estimated average future employee service period.

Pension and SERP Plans: The Pension and SERP Plans are accounted for under the multiple-employer approach, with each operating company's balance sheet reflecting its share of the funded status of the plans. Although Eversource maintains marketable securities in a benefit trust, the SERP Plans do not contain any assets. For further information, see Note 5, "Marketable Securities," to the financial statements. The following table provides information on the Pension and SERP Plan benefit obligations, fair values of Pension Plan assets, and funded status:



	Pension and SERP
	As of December 31, 2017												As of December 31, 2016
(Millions of Dollars)	Eversource			CL&P			NSTAR Electric			PSNH			Eversource			CL&P			NSTAR Electric			PSNH
Change in Benefit Obligation:
Benefit Obligation as of Beginning of Year	$	(5,242.3	)	$	(1,170.2	)	$	(1,217.3	)	$	(572.2	)	$	(5,080.1	)	$	(1,157.6	)	$	(1,187.3	)	$	(547.6	)
Plan Amendment	—			—			—			—			(9.0		)	—			(2.8		)	—
Employee Transfers	—			8.2			5.5			(0.7		)	—			8.8			1.3			2.4
Service Cost	(71.3		)	(18.5		)	(15.5		)	(9.7		)	(75.0		)	(18.8		)	(16.3		)	(9.9		)
Interest Cost	(188.0		)	(41.6		)	(42.7		)	(21.2		)	(185.5		)	(41.6		)	(42.2		)	(20.7		)
Actuarial Loss	(548.7		)	(116.9		)	(143.5		)	(65.1		)	(151.8		)	(23.9		)	(37.2		)	(21.5		)
Benefits Paid - Pension	243.7			63.5			55.4			26.4			254.0			62.6			67.0			24.9
Benefits Paid - Lump Sum	18.4			—			6.8			—			—			—			—			—
Benefits Paid - SERP	20.4			0.3			0.3			0.3			5.1			0.3			0.2			0.2
Increase due to acquisition of Aquarion	(168.7		)	—			—			—			—			—			—			—
Benefit Obligation as of End of Year	$	(5,936.5	)	$	(1,275.2	)	$	(1,351.0	)	$	(642.2	)	$	(5,242.3	)	$	(1,170.2	)	$	(1,217.3	)	$	(572.2	)
Change in Pension Plan Assets:
Fair Value of Pension Plan Assets as of Beginning of Year	$	4,076.0		$	905.5		$	1,088.3		$	494.0		$	3,905.4		$	913.5		$	1,053.7		$	470.5
Employee Transfers	—			(8.2		)	(5.5		)	0.7			—			(8.8		)	(1.3		)	(2.4		)
Employer Contributions	235.2			2.5			85.4			0.8			146.2			0.4			28.4			17.1
Actual Return on Pension Plan Assets	589.7			126.7			154.8			70.4			278.4			63.0			74.5			33.7
Benefits Paid	(243.7		)	(63.5		)	(55.4		)	(26.4		)	(254.0		)	(62.6		)	(67.0		)	(24.9		)
Benefits Paid - Lump Sum	(18.4		)	—			(6.8		)	—			—			—			—			—
Increase due to acquisition of Aquarion	100.7			—			—			—			—			—			—			—
Fair Value of Pension Plan Assets as of End of Year	$	4,739.5		$	963.0		$	1,260.8		$	539.5		$	4,076.0		$	905.5		$	1,088.3		$	494.0
Funded Status as of December 31st	$	(1,197.0	)	$	(312.2	)	$	(90.2	)	$	(102.7	)	$	(1,166.3	)	$	(264.7	)	$	(129.0	)	$	(78.2	)

In 2017, there was a decrease to the discount rate used to calculate the funded status of the Eversource pension liability, which resulted in an increase to Eversource's pension liability of approximately $390 million as of December 31, 2017.

In 2016, there was a decrease in the discount rate used to calculate the funded status of the Eversource pension liability, which resulted in an increase to Eversource's pension liability of approximately $177 million, partially offset by a revised scale for the mortality table resulting in a decrease to Eversource's pension liability of approximately $32 million as of December 31, 2016. In December 2016, Eversource amended its pension plan to adjust the calculation of lump sum payments or annuity payments for certain employees. This amendment resulted in an increase to the liability of $9 million as of December 31, 2016.

The pension and SERP Plans' funded status includes the current portion of the SERP liability totaling $8.4 million and $24.8 million as of December 31, 2017 and 2016, respectively, which is included in Other Current Liabilities on the balance sheets.

As of December 31, 2017 and 2016, the accumulated benefit obligation for the Pension and SERP Plans is as follows:



(Millions of Dollars)	Eversource		CL&P		NSTAR Electric		PSNH
2017	$	5,583.6	$	1,179.2	$	1,260.1	$	597.2
2016	4,829.6		1,065.2		1,124.8		518.9

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



	Pension and SERP
	As of December 31,
		2017			2016
Discount Rate		3.43%	—	3.75%	4.01%	—	4.33%
Compensation/Progression Rate		3.50%	—	4.00%	3.50%

Pension and SERP Expense: Eversource charges net periodic pension expense to its subsidiaries based on the actual participant demographic data for each subsidiary's participants. The actual investment return in the trust is allocated to each of the subsidiaries annually in proportion to the investment return expected to be earned during the year.

Effective January 1, 2016, the Company refined its method of estimating the discount rate for the service and interest cost components of Pension expense from the yield-curve approach to the spot rate methodology, which provides a more precise measurement by matching projected cash flows to the corresponding spot rates on the yield curve. Historically, these components were estimated using the same weighted-average discount rate as for the funded status. The total pre-tax benefit of this change on Pension expense, prior to the capitalized portion and amounts deferred and recovered through rate reconciliation mechanisms, for the year ended December 31, 2016 was approximately $46 million.

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 portions of pension and SERP amounts, are included in Operations and Maintenance expense on the statements of income. Capitalized amounts relate to employees working on capital projects and are included in Property, Plant and Equipment, Net on the balance sheets. Pension and SERP expense reflected in the statements of cash flows for CL&P, NSTAR Electric and PSNH does not include the intercompany allocations or the corresponding capitalized portion, as these amounts are cash settled on a short-term basis.



	Pension and SERP
	For the Year Ended December 31, 2017
(Millions of Dollars)	Eversource			CL&P			NSTAR Electric			PSNH
Service Cost	$	71.3		$	18.5		$	15.5		$	9.7
Interest Cost	188.0			41.6			42.7			21.2
Expected Return on Pension Plan Assets	(334.1		)	(71.7		)	(87.6		)	(40.0		)
Actuarial Loss	135.2			27.7			41.1			11.6
Prior Service Cost	4.5			1.5			0.6			0.5
Total Net Periodic Benefit Expense	$	64.9		$	17.6		$	12.3		$	3.0
Intercompany Allocations	N/A			$	9.8		$	9.1		$	3.3
Capitalized Pension Expense	$	22.0		$	9.7		$	7.6		$	1.5



	Pension and SERP
	For the Year Ended December 31, 2016
(Millions of Dollars)	Eversource			CL&P			NSTAR Electric			PSNH
Service Cost	$	75.0		$	18.8		$	16.3		$	9.9
Interest Cost	185.5			41.6			42.2			20.7
Expected Return on Pension Plan Assets	(317.9		)	(72.1		)	(85.1		)	(38.6		)
Actuarial Loss	125.7			25.4			39.9			9.9
Prior Service Cost	3.6			1.5			0.3			0.5
Total Net Periodic Benefit Expense	$	71.9		$	15.2		$	13.6		$	2.4
Intercompany Allocations	N/A			$	13.8		$	11.4		$	4.0
Capitalized Pension Expense	$	22.1		$	9.3		$	8.0		$	1.4



	Pension and SERP
	For the Year Ended December 31, 2015
(Millions of Dollars)	Eversource (1)			CL&P			NSTAR Electric			PSNH (1)
Service Cost	$	91.4		$	24.7		$	19.2		$	12.1
Interest Cost	227.0			51.1			50.6			24.3
Expected Return on Pension Plan Assets	(335.9		)	(78.9		)	(88.9		)	(40.4		)
Actuarial Loss	148.5			32.2			42.2			11.6
Prior Service Cost	3.7			1.5			0.2			0.5
Total Net Periodic Benefit Expense	$	134.7		$	30.6		$	23.3		$	8.1
Intercompany Allocations	N/A			$	22.5		$	18.0		$	6.7
Capitalized Pension Expense	$	41.0		$	18.8		$	13.3		$	3.5


(1)	Amounts exclude $3.2 million for the year ended December 31, 2015 that represent amounts included in other deferred debits.

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



	Pension and SERP
	For the Years Ended December 31,
	2017			2016			2015
Discount Rate	3.20%	—	3.90%	3.27%	—	4.89%	4.20	%
Expected Long-Term Rate of Return	8.25%			8.25%			8.25	%
Compensation/Progression Rate	3.50%			3.50%			3.50	%

The following is a summary of the changes in plan assets and benefit obligations recognized in Regulatory Assets and Other Comprehensive Income ("OCI") as well as amounts in Regulatory Assets and OCI that were reclassified as net periodic benefit expense during the years presented:



	Regulatory Assets						OCI
	For the Years Ended December 31,
(Millions of Dollars)	2017			2016			2017			2016
Actuarial Losses Arising During the Year	$	333.0		$	184.6		$	9.3		$	6.8
Actuarial Losses Reclassified as Net Periodic Benefit Expense	(129.5		)	(119.9		)	(5.7		)	(5.8		)
Prior Service Cost/(Credit) Arising During the Year	1.0			7.1			(0.4		)	1.9
Prior Service Cost Reclassified as Net Periodic Benefit Expense	(4.1		)	(3.4		)	(0.4		)	(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, 2017 and 2016, as well as the amounts that are expected to be recognized as components in 2018:



	Regulatory Assets as of December 31,				Expected 2018 Expense		AOCL as of December 31,				Expected 2018 Expense
(Millions of Dollars)	2017		2016			2017		2016
Actuarial Loss	$	1,935.8	$	1,732.3	$	141.8	$	85.7	$	82.1	$	5.8
Prior Service Cost	10.3		13.4		4.2		1.5		2.3		0.3

PBOP Plans: The PBOP Plans are accounted for under the multiple-employer approach, with each operating company's balance sheet reflecting its share of the funded status of the plans. The following table provides information on the PBOP Plan benefit obligations, fair values of plan assets, and funded status:



	PBOP
	As of December 31,
	2017												2016
(Millions of Dollars)	Eversource			CL&P			NSTAR Electric			PSNH			Eversource			CL&P			NSTAR Electric			PSNH
Change in Benefit Obligation:
Benefit Obligation as of Beginning of Year	$	(810.0	)	$	(165.0	)	$	(270.0	)	$	(89.7	)	$	(1,051.4	)	$	(164.0	)	$	(447.2	)	$	(88.5	)
Plan Amendment	—			—			—			—			244.0			(12.5		)	193.6			(6.7		)
Employee Transfers	—			2.4			1.5			0.2			—			1.3			0.5			0.3
Service Cost	(9.5		)	(1.9		)	(1.7		)	(1.3		)	(12.2		)	(2.0		)	(3.4		)	(1.3		)
Interest Cost	(27.1		)	(5.3		)	(8.7		)	(3.0		)	(32.9		)	(5.3		)	(13.3		)	(2.9		)
Actuarial Gain/(Loss)	(81.8		)	(18.5		)	(13.2		)	(11.9		)	(17.7		)	3.6			(23.5		)	3.6
Benefits Paid	41.5			9.9			13.5			4.6			60.2			13.9			23.3			5.8
Increase due to acquisition of Aquarion	(61.7		)	—			—			—			—			—			—			—
Benefit Obligation as of End of Year	$	(948.6	)	$	(178.4	)	$	(278.6	)	$	(101.1	)	$	(810.0	)	$	(165.0	)	$	(270.0	)	$	(89.7	)
Change in Plan Assets:
Fair Value of Plan Assets as of Beginning of Year	$	815.8		$	129.2		$	361.6		$	73.2		$	812.2		$	136.7		$	352.0		$	75.8
Employee Transfers	—			(1.5		)	(0.8		)	—			—			(0.8		)	(0.6		)	(0.2		)
Actual Return on Plan Assets	118.0			18.1			52.9			10.4			51.3			7.2			24.6			3.4
Employer Contributions	7.6			—			5.3			—			12.5			—			8.9			—
Benefits Paid	(41.5		)	(9.9		)	(13.5		)	(4.6		)	(60.2		)	(13.9		)	(23.3		)	(5.8		)
Increase due to acquisition of Aquarion	22.3			—			—			—			—			—			—			—
Fair Value of Plan Assets as of End of Year	$	922.2		$	135.9		$	405.5		$	79.0		$	815.8		$	129.2		$	361.6		$	73.2
Funded Status as of December 31st	$	(26.4	)	$	(42.5	)	$	126.9		$	(22.1	)	$	5.8		$	(35.8	)	$	91.6		$	(16.5	)

The Eversource funded status includes a prepaid asset of $13.1 million recorded in Other Long-Term Assets and a liability of $39.5 million included in Accrued Pension, SERP and PBOP on the balance sheet.

As of December 31, 2017, there was a decrease in the discount rate used to calculate the funded status, as compared to the discount rate as of December 31, 2016, resulting in an increase to the Eversource PBOP liability of approximately $64 million.

The August 2016 PBOP plan amendment resulted in a reduction to Eversource's accumulated benefit liability of approximately $244 million. As of December 31, 2016, there was a decrease in the discount rate used to calculate the funded status, as compared to the discount rate as of December 31, 2015, resulting in an increase to the Eversource liability of approximately $75 million, which was partially offset by a decrease of approximately $52 million from changes in mortality and other assumptions.

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



	PBOP
	As of December 31,
	2017			2016
Discount Rate	3.55%	—	3.70%	4.21%

For the Eversource Service PBOP Plan, effective with the plan amendment that standardized plan designs and made benefit changes in August 2016, the health care cost trend rate is no longer applicable.

PBOP Expense: Eversource charges net periodic postretirement benefits expense to its subsidiaries based on the actual participant demographic data for each subsidiary's participants. The actual investment return in the trust each year is allocated to each of the subsidiaries annually in proportion to the investment return expected to be earned during the year.

Effective January 1, 2016, the Company refined its method of estimating the discount rate for the service and interest cost components of PBOP expense from the yield-curve methodology to the spot rate methodology, which provides a more precise measurement by matching projected cash flows to the corresponding spot rates on the yield curve. Historically these components were estimated using the same weighted-average discount rate as for the funded status. The total pre-tax benefit of this change on PBOP expense, prior to the capitalized portion and amounts deferred and recovered through rate reconciliation mechanisms, for the year ended December 31, 2016 was approximately $10 million.

The August 2016 PBOP Plan amendment resulted in a remeasurement of the benefit obligation and annual expense using assumptions at that point in time, including updated discount rates and asset values. The remeasurement resulted in a decrease in net periodic benefit costs for PBOP benefits, prior to the capitalized portion and amounts deferred and recovered through rate reconciliation mechanisms, of approximately $10 million, which was recorded in 2016, and most of this amount will be deferred for future refund to customers.

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, are included in Operations and Maintenance expense on the statements of income. Capitalized PBOP amounts relate to employees working on capital projects and are included in Property, Plant and Equipment, Net on the balance sheets. PBOP expense reflected in the statements of cash flows for CL&P, NSTAR Electric and PSNH does not include the intercompany allocations or the corresponding capitalized portion, as these amounts are cash settled on a short-term basis.



	PBOP
	For the Year Ended December 31, 2017
(Millions of Dollars)	Eversource			CL&P			NSTAR Electric			PSNH
Service Cost	$	9.5		$	1.9		$	1.7		$	1.3
Interest Cost	27.1			5.3			8.7			3.0
Expected Return on Plan Assets	(63.7		)	(9.7		)	(28.6		)	(5.5		)
Actuarial Loss	9.1			1.0			3.4			0.6
Prior Service (Credit)/Cost	(21.6		)	1.1			(17.0		)	0.6
Total Net Periodic Benefit Expense/(Income)	$	(39.6	)	$	(0.4	)	$	(31.8	)	$	—
Intercompany Allocations	N/A			$	(0.7	)	$	(1.1	)	$	(0.5	)
Capitalized PBOP Expense/(Income)	$	(19.1	)	$	(0.5	)	$	(16.2	)	$	0.2



	PBOP
	For the Year Ended December 31, 2016
(Millions of Dollars)	Eversource			CL&P			NSTAR Electric			PSNH
Service Cost	$	12.2		$	2.0		$	3.4		$	1.3
Interest Cost	32.9			5.3			13.3			2.9
Expected Return on Plan Assets	(62.9		)	(10.1		)	(28.1		)	(5.5		)
Actuarial Loss	9.0			1.5			3.3			0.7
Prior Service (Credit)/Cost	(9.1		)	0.5			(7.1		)	0.2
Total Net Periodic Benefit Income	$	(17.9	)	$	(0.8	)	$	(15.2	)	$	(0.4	)
Intercompany Allocations	N/A			$	0.3		$	(0.1	)	$	(0.1	)
Capitalized PBOP Expense/(Income)	$	(8.0	)	$	(0.5	)	$	(6.7	)	$	0.1



	PBOP
	For the Year Ended December 31, 2015
(Millions of Dollars)	Eversource			CL&P			NSTAR Electric			PSNH
Service Cost	$	16.3		$	2.1		$	5.8		$	1.4
Interest Cost	47.2			7.2			20.5			3.9
Expected Return on Plan Assets	(67.4		)	(11.1		)	(29.8		)	(6.0		)
Actuarial Loss	6.8			0.7			2.3			0.5
Prior Service Credit	(0.5		)	—			(0.2		)	—
Total Net Periodic Benefit Expense/(Income)	$	2.4		$	(1.1	)	$	(1.4	)	$	(0.2	)
Intercompany Allocations	N/A			$	1.9		$	1.1		$	0.4
Capitalized PBOP Expense/(Income)	$	0.1		$	(0.2	)	$	(0.4	)	$	0.2

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



	PBOP
	For the Years Ended December 31,
	2017			2016			2015
Discount Rate	3.48%	—	4.64%	2.88%	—	4.09%	4.22%
Expected Long-Term Rate of Return	8.25%			8.25%			8.25%

The health care cost trend rate assumption used to calculate the PBOP expense amount for the Eversource PBOP Plan was 6.25 percent and 6.5 percent for the years ended December 31, 2016 and 2015, respectively. Effective January 1, 2017, the health care trend rate no longer has an impact on the PBOP expense on the Eversource Service PBOP Plan due to the benefit design changes effective with the 2016 plan amendment.

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



	Regulatory Assets						OCI
	For the Years Ended December 31,
(Millions of Dollars)	2017			2016			2017			2016
Actuarial Losses/(Gains) Arising During the Year	$	44.8		$	32.4		$	2.6		$	(2.0	)
Actuarial (Losses)/Gains Reclassified as Net Periodic Benefit (Expense)/Income	(8.6		)	(9.2		)	(0.5		)	0.2
Prior Service (Credit)/Cost Arising During the Year	(4.0		)	(247.9		)	(0.1		)	4.0
Prior Service Credit/(Cost) Reclassified as Net Periodic Benefit Income/(Expense)	22.3			9.7			(0.7		)	(0.6		)



	Regulatory Assets as of December 31,						Expected 2018 Expense			AOCL as of December 31,				Expected 2018 Expense
(Millions of Dollars)	2017			2016				2017			2016
Actuarial Loss	$	211.6		$	175.4		$	8.8		$	6.6	$	4.5	$	0.3
Prior Service (Credit)/Cost	(221.2		)	(239.5		)	(21.7		)	2.6		3.4		0.2

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)	2018		2019		2020		2021		2022		2023 - 2027
Pension and SERP	$	296.5	$	304.7	$	311.1	$	320.8	$	329.4	$	1,739.7
PBOP	56.8		57.1		57.3		57.5		57.4		279.3

Eversource Contributions: Based on the current status of the Pension Plans and federal pension funding requirements, Eversource currently expects to make contributions of approximately $180 million in 2018, of which approximately $82 million and $6 million, will be contributed by CL&P and PSNH, respectively. The remaining $92 million is expected to be contributed by other Eversource subsidiaries, primarily Eversource Service. Eversource expects to make approximately $10 million in contributions to the PBOP Plan in 2018, of which approximately $5 million will be contributed by NSTAR Electric.

Fair Value of Pension and PBOP Plan Assets: Pension and PBOP funds are held in external trusts. Trust assets, including accumulated earnings, must be used exclusively for Pension and PBOP payments. Eversource's investment strategy for its Pension and PBOP Plans is to maximize the long-term rates of return on these plans' assets within an acceptable level of risk. The investment strategy for each asset category includes a diversification of asset types, fund strategies and fund managers and it establishes target asset allocations that are routinely reviewed and periodically rebalanced. PBOP assets are comprised of assets held in the PBOP Plan, as well as specific assets within the Pension Plan trust (401(h) assets). The investment policy and strategy of the 401(h) assets is consistent with that of the defined benefit pension plan. Eversource's expected long-term rates of return on Pension and PBOP Plan assets are based on target asset allocation assumptions and related expected long-term rates of return. In developing its expected long-term rate of return assumptions for the Pension and PBOP Plans, Eversource evaluated input from consultants, as well as long-term inflation assumptions and historical returns. For the year ended December 31, 2017, management has assumed long-term rates of return of 8.25 percent for the Eversource 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,
	2017				2016
	Eversource Pension Plan and Tax-Exempt Assets Within PBOP Plan				Eversource Pension Plan and Tax-Exempt Assets Within PBOP Plan
	Target Asset Allocation		Assumed Rate of Return		Target Asset Allocation		Assumed Rate of Return
Equity Securities:
United States	21.5	%	8.5	%	22.0	%	8.5	%
International	11.0	%	8.5	%	13.0	%	8.5	%
Emerging Markets	4.5	%	10.0	%	5.0	%	10.0	%
Private Equity	15.0	%	12.0	%	12.0	%	12.0	%
Debt Securities:
Fixed Income	11.0	%	4.0	%	12.0	%	4.5	%
Public High Yield Fixed Income	4.0	%	6.5	%	3.0	%	7.0	%
Private Debt	15.0	%	9.0	%	10.0	%	9.0	%
Emerging Markets Debt	2.0	%	6.5	%	5.0	%	7.5	%
Real Estate and Other Assets	12.0	%	7.5	%	10.0	%	7.5	%
Hedge Funds	4.0	%	6.0	%	8.0	%	7.0	%

The taxable assets within the Eversource PBOP Plan have a target asset allocation of 70 percent equity securities and 30 percent fixed income securities.

The following table presents, by asset category, the Pension and PBOP Plan assets recorded at fair value on a recurring basis by the level in which they are classified within the fair value hierarchy:



	Pension Plan
	Fair Value Measurements as of December 31,
(Millions of Dollars)	2017									2016
Asset Category:	Level 1		Level 2		Uncategorized		Total			Level 1		Level 2		Uncategorized		Total
Equity Securities (1)	$	535.4	$	—	$	1,653.3	$	2,188.7		$	455.5	$	—	$	1,279.7	$	1,735.2
Private Equity	11.2		—		641.8		653.0			6.0		—		518.4		524.4
Fixed Income (2)	56.6		215.9		1,218.3		1,490.8			—		183.0		1,099.4		1,282.4
Real Estate and Other Assets	101.6		—		374.4		476.0			77.2		—		325.9		403.1
Hedge Funds	—		—		165.5		165.5			—		—		335.0		335.0
Total	$	704.8	$	215.9	$	4,053.3	$	4,974.0		$	538.7	$	183.0	$	3,558.4	$	4,280.1
Less: 401(h) PBOP Assets (3)							(234.5		)							(204.1		)
Total Pension Assets							$	4,739.5								$	4,076.0



	PBOP Plan
	Fair Value Measurements as of December 31,
(Millions of Dollars)	2017								2016
Asset Category:	Level 1		Level 2		Uncategorized		Total		Level 1		Level 2		Uncategorized		Total
Equity Securities (1)	$	115.3	$	—	$	241.9	$	357.2	$	88.6	$	—	$	214.1	$	302.7
Private Equity	—		—		31.3		31.3		—		—		32.2		32.2
Fixed Income (2)	23.4		44.0		133.9		201.3		9.5		44.8		132.3		186.6
Real Estate and Other Assets	22.4		—		29.0		51.4		15.5		—		27.5		43.0
Hedge Funds	—		—		46.5		46.5		—		—		47.2		47.2
Total	$	161.1	$	44.0	$	482.6	$	687.7	$	113.6	$	44.8	$	453.3	$	611.7
Add: 401(h) PBOP Assets (3)							234.5								204.1
Total PBOP Assets							$	922.2							$	815.8


(1)	United States, International and Emerging Markets equity securities that are uncategorized include investments in commingled funds and hedge funds that are overlayed with equity index swaps and futures contracts.


(2)	Fixed Income investments that are uncategorized include investments in commingled funds, 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 Plan include a 401(h) account that has been allocated to provide health and welfare postretirement benefits under the PBOP Plan.

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.

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. 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.

Certain investments, such as commingled funds, private equity investments, real estate funds and hedge funds are valued using the NAV as a practical expedient. These investments are structured as investment companies offering shares or units to multiple investors for the purpose of providing a return. Commingled funds are recorded at NAV provided by the asset manager, which is based on the market prices of the underlying equity securities. Hedge Funds are recorded at NAV based on the values of the underlying assets. Private Equity investments, Fixed Income partnership funds and Real Estate and Other Assets are valued using the NAV 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. The Company has retrospectively adopted new accounting guidance that eliminates the requirement to classify assets valued at NAV, as a practical expedient, within the fair value hierarchy. Prior to the adoption of this guidance, these investments were classified as Level 2 or Level 3 in the fair value hierarchy. The adoption of this guidance changes fair value measurement disclosures, but does not impact the methodology for valuing the investments or financial statement results.

B. Defined Contribution Plan

Eversource maintains defined contribution plans on behalf of eligible participants. The Eversource 401k Plan provides for employee and employer contributions up to statutory limits. For eligible employees, the Eversource 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, the Eversource 401k Plan provides employer matching contributions of 100 percent up to a maximum of three percent of eligible compensation.

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

The total defined Eversource 401k Plan employer matching contributions, including the K-Vantage contributions, were as follows:



(Millions of Dollars)	Eversource		CL&P		NSTAR Electric		PSNH
2017	$	34.5	$	4.6	$	8.5	$	3.7
2016	31.8		4.5		8.1		3.4
2015	30.4		4.8		7.3		3.4

C. Share-Based Payments

Share-based compensation awards are recorded using a fair-value based method at the date of grant. Eversource, CL&P, NSTAR Electric and PSNH record compensation expense related to these awards, as applicable, for shares issued or sold to their respective employees and officers, as well as for the allocation of costs associated with shares issued or sold to Eversource's service company employees and officers that support CL&P, NSTAR Electric and PSNH.

Eversource Incentive Plans: Eversource maintains long-term equity-based incentive plans in which Eversource, CL&P, NSTAR Electric and PSNH employees, officers and board members are eligible to participate. The incentive plans authorize Eversource 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, 2017 and 2016, Eversource had 2,445,110 and 2,692,350 common shares, respectively, available for issuance under these plans.

Eversource accounts for its various share-based plans as follows:


•	RSUs - Eversource records compensation expense, net of estimated forfeitures, on a straight-line basis over the requisite service period based upon the fair value of Eversource'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 - Eversource 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 - All outstanding stock options were exercised during 2017.

RSUs: Eversource 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:



	RSUs (Units)		Weighted Average Grant-Date Fair Value
Outstanding as of December 31, 2016	724,270		$	47.86
Granted	299,285		$	55.97
Shares Issued	(289,635	)	$	52.26
Forfeited	(16,881	)	$	55.60
Outstanding as of December 31, 2017	717,039		$	49.29

The weighted average grant-date fair value of RSUs granted for the years ended December 31, 2017, 2016 and 2015 was $55.97, $54.67 and $54.57, respectively. As of December 31, 2017 and 2016, the number and weighted average grant-date fair value of unvested RSUs was 388,269 and $56.15 per share, and 322,158 and $53.47 per share, respectively. During 2017, there were 306,087 RSUs at a weighted average grant-date fair value of $52.75 per share that vested during the year and were either paid or deferred. As of December 31, 2017, 328,770 RSUs were fully vested and deferred and an additional 368,856 are expected to vest.

Performance Shares: Eversource 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 Shares (Units)		Weighted Average Grant-Date Fair Value
Outstanding as of December 31, 2016	522,934		$	51.09
Granted	180,032		$	55.70
Shares Issued	(173,914	)	$	43.48
Forfeited	(18,487	)	$	47.06
Outstanding as of December 31, 2017	510,565		$	55.45

The weighted average grant-date fair value of performance shares granted for the years ended December 31, 2017, 2016 and 2015 was $55.70, $53.64 and $55.04, respectively. As of December 31, 2017 and 2016, the number and weighted average grant-date fair value of unvested performance shares was 331,207 and $55.79 per share, and 301,363 and $51.52 per share, respectively. During 2017, there were 131,308 performance shares at a weighted average grant-date fair value of $47.12 per share that vested during the year and were either paid or deferred. As of December 31, 2017, 179,358 performance shares were fully vested and deferred.

Compensation Expense: The total compensation expense and associated future income tax benefits recognized by Eversource, CL&P, NSTAR Electric and PSNH for share-based compensation awards were as follows:



Eversource	For the Years Ended December 31,
(Millions of Dollars)	2017		2016		2015
Compensation Expense	$	19.7	$	23.6	$	23.1
Future Income Tax Benefit	8.0		9.6		9.4



	For the Years Ended December 31,
	2017						2016						2015
(Millions of Dollars)	CL&P		NSTAR Electric		PSNH		CL&P		NSTAR Electric		PSNH		CL&P		NSTAR Electric		PSNH
Compensation Expense	$	7.0	$	7.0	$	3.2	$	9.1	$	8.2	$	3.5	$	9.3	$	7.5	$	3.2
Future Income Tax Benefit	2.9		2.8		1.3		3.7		3.3		1.4		3.8		3.1		1.3

As of December 31, 2017, there was $20.1 million of total unrecognized compensation expense related to nonvested share-based awards for Eversource, including $7.3 million for CL&P, $7.1 million for NSTAR Electric and $3.1 million for PSNH. This cost is expected to be recognized ratably over a weighted-average period of 1.83 years for Eversource and NSTAR Electric, 1.84 years for CL&P and 1.82 years for PSNH.

An income tax rate of 40 percent was 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 fully vested RSUs and performance shares with the issuance of common shares purchased in the open market.

In 2016, the Company adopted new accounting guidance, which prospectively changed the accounting for excess tax benefits associated with the distribution of stock compensation awards and also changed the presentation of excess tax benefits on the statement of cash flows from a financing activity to an operating activity. For the years ended December 31, 2017 and 2016, the impact of the ASU was to reduce income tax expense by $2.9 million and $19.1 million, respectively, which increased cash flows from operating activities on the statement of cash flows. For the year ended December 31, 2015, changes in excess tax benefits totaling $9.5 million increased cash flows from financing activities.

Stock Options: All remaining outstanding stock options under the NSTAR Incentive Plan were exercised during 2017. A summary of stock option transactions is as follows:



	Options		Weighted Average Exercise Price		Intrinsic Value (Millions)
Outstanding and Exercisable - December 31, 2016	124,640		$	25.84	$	3.7
Exercised	(124,640	)	$	25.84	$	4.4
Outstanding and Exercisable - December 31, 2017	—		$	—	$	—

Cash received for options exercised during the year ended December 31, 2017 totaled $3.2 million. The tax benefit realized from stock options exercised totaled $1.8 million for the year ended December 31, 2017.

D. Other Retirement Benefits

Eversource provides retirement and other benefits for certain current and past company officers. These benefits are accounted for on an accrual basis and expensed over a period equal to 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 included in Operations and Maintenance Expense on the income statements, are as follows:



Eversource (Millions of Dollars)	As of and For the Years Ended December 31,
2017			2016			2015
Actuarially-Determined Liability	$	53.4		$	54.2		$	55.2
Other Retirement Benefits Expense	2.8			2.9			3.9



	As of and For the Years Ended December 31,
	2017						2016						2015
(Millions of Dollars)	CL&P		NSTAR Electric		PSNH		CL&P		NSTAR Electric		PSNH		CL&P		NSTAR Electric		PSNH
Actuarially-Determined Liability	$	0.3	$	0.1	$	1.9	$	0.3	$	0.1	$	2.0	$	0.4	$	0.2	$	2.4
Other Retirement Benefits Expense	1.0		1.0		0.5		1.1		0.9		0.6		1.5		1.3		0.7

INCOME TAXES

The components of income tax expense are as follows:



Eversource (Millions of Dollars)	For the Years Ended December 31,
2017				2016				2015
Current Income Taxes:
Federal	$	58.9			$	38.9			$	6.2
State	31.6				53.0				45.7
Total Current	90.5				91.9				51.9
Deferred Income Taxes, Net:
Federal	433.0				427.9				436.1
State	58.6				38.6				55.6
Total Deferred	491.6				466.5				491.7
Investment Tax Credits, Net	(3.2		)		(3.4		)		(3.6		)
Income Tax Expense	$	578.9			$	555.0			$	540.0



	For the Years Ended December 31,
	2017								2016									2015
(Millions of Dollars)	CL&P			NSTAR Electric			PSNH		CL&P			NSTAR Electric			PSNH			CL&P			NSTAR Electric			PSNH
Current Income Taxes:
Federal	$	50.9		$	107.8		$	18.6	$	27.3		$	86.4		$	(13.7	)	$	26.9		$	32.8		$	(16.7	)
State	17.4			25.6			6.2		13.3			39.5			8.8			15.8			21.4			6.0
Total Current	68.3			133.4			24.8		40.6			125.9			(4.9		)	42.7			54.2			(10.7		)
Deferred Income Taxes, Net:
Federal	123.9			88.1			52.7		157.6			96.6			79.5			135.8			180.9			74.5
State	(4.6		)	22.4			11.2		11.3			5.1			7.8			0.2			31.7			9.3
Total Deferred	119.3			110.5			63.9		168.9			101.7			87.3			136.0			212.6			83.8
Investment Tax Credits, Net	(1.0		)	(1.8		)	—		(1.2		)	(1.8		)	—			(1.3		)	(1.8		)	—
Income Tax Expense	$	186.6		$	242.1		$	88.7	$	208.3		$	225.8		$	82.4		$	177.4		$	265.0		$	73.1

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



Eversource (Millions of Dollars, except percentages)	For the Years Ended December 31,
2017				2016				2015
Income Before Income Tax Expense	$	1,574.4			$	1,504.8			$	1,425.9

Statutory Federal Income Tax Expense at 35%	551.0				526.7				499.1
Tax Effect of Differences:
Depreciation	(10.8		)		(3.4		)		(4.6		)
Investment Tax Credit Amortization	(3.2		)		(3.4		)		(3.6		)
Other Federal Tax Credits	—				(3.5		)		(3.8		)
State Income Taxes, Net of Federal Impact	47.7				56.2				61.1
Dividends on ESOP	(8.4		)		(8.4		)		(8.1		)
Tax Asset Valuation Allowance/Reserve Adjustments	7.0				3.3				4.7
Excess Stock Benefit (1)	(2.9		)		(19.1		)		—
Other, Net	(1.5		)		6.6				(4.8		)
Income Tax Expense	$	578.9			$	555.0			$	540.0
Effective Tax Rate	36.8		%		36.9		%		37.9		%



	For the Years Ended December 31,
	2017									2016									2015
(Millions of Dollars, except percentages)	CL&P			NSTAR Electric			PSNH			CL&P			NSTAR Electric			PSNH			CL&P			NSTAR Electric			PSNH
Income Before Income Tax Expense	$	563.4		$	616.8		$	224.7		$	542.6		$	576.6		$	214.3		$	476.8		$	666.1		$	187.5

Statutory Federal Income Tax Expense at 35%	197.2			215.9			78.6			189.9			201.8			75.0			166.9			233.1			65.6
Tax Effect of Differences:
Depreciation	(5.2		)	(3.0		)	1.1			1.6			(3.1		)	1.0			(1.7		)	(1.7		)	0.5
Investment Tax Credit Amortization	(1.0		)	(1.8		)	—			(1.2		)	(1.8		)	—			(1.3		)	(1.8		)	—
Other Federal Tax Credits	—			—			—			—			—			(3.5		)	—			—			(3.8		)
State Income Taxes, Net of Federal Impact	4.5			31.2			11.3			14.5			29.0			10.8			9.2			34.5			9.9
Tax Asset Valuation Allowance/Reserve Adjustments	(9.5		)	—			—			1.5			—			—			1.2			—			—
Excess Stock Benefit (1)	(0.7		)	(0.7		)	(0.3		)	(0.9		)	(1.2		)	(0.4		)	—			—			—
Other, Net	1.3			0.5			(2.0		)	2.9			1.1			(0.5		)	3.1			0.9			0.9
Income Tax Expense	$	186.6		$	242.1		$	88.7		$	208.3		$	225.8		$	82.4		$	177.4		$	265.0		$	73.1
Effective Tax Rate	33.1		%	39.2		%	39.5		%	38.4		%	39.2		%	38.4		%	37.2		%	39.8		%	39.0		%

(1)

In 2016, the Company adopted new accounting guidance, which prospectively changed the accounting for excess tax benefits associated with the distribution of stock compensation awards, previously recognized in Capital Surplus, Paid In within Common Shareholders' Equity on the balance sheet, to recognition within income tax expense in the income statement. See Note 1D, "Summary of Significant Accounting Policies - Accounting Standards," for further information.

Eversource, CL&P, NSTAR Electric and PSNH 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:



Eversource (Millions of Dollars)	As of December 31,
2017			2016
Deferred Tax Assets:
Employee Benefits	$	442.1		$	640.6
Derivative Liabilities	111.8			192.6
Regulatory Deferrals - Liabilities	205.6			290.9
Allowance for Uncollectible Accounts	50.1			76.6
Tax Effect - Tax Regulatory Liabilities	832.6			11.8
Federal Net Operating Loss Carryforwards	47.8			—
Purchase Accounting Adjustment	69.9			112.2
Other	149.5			170.5
Total Deferred Tax Assets	1,909.4			1,495.2
Less: Valuation Allowance	14.6			5.1
Net Deferred Tax Assets	$	1,894.8		$	1,490.1
Deferred Tax Liabilities:
Accelerated Depreciation and Other Plant-Related Differences	$	3,562.0		$	5,001.2
Property Tax Accruals	56.7			81.9
Regulatory Amounts:
Regulatory Deferrals - Assets	924.9			1,321.8
Tax Effect - Tax Regulatory Assets	243.1			252.6
Goodwill Regulatory Asset - 1999 Merger	99.8			186.7
Derivative Assets	17.4			29.5
Other	288.4			223.6
Total Deferred Tax Liabilities	$	5,192.3		$	7,097.3



	As of December 31,
	2017						2016
(Millions of Dollars)	CL&P		NSTAR Electric		PSNH		CL&P		NSTAR Electric		PSNH
Deferred Tax Assets:
Employee Benefits	$	112.3	$	34.0	$	38.0	$	138.8	$	69.5	$	46.5
Derivative Liabilities	110.5		0.3		—		191.5		1.1		—
Regulatory Deferrals - Liabilities	12.0		139.8		17.9		6.3		194.9		36.7
Allowance for Uncollectible Accounts	20.6		17.3		2.9		33.0		25.7		4.1
Tax Effect - Tax Regulatory Liabilities	337.2		281.2		116.8		4.9		3.3		2.6
Other	70.7		4.9		49.6		59.4		6.6		56.4
Total Deferred Tax Assets	663.3		477.5		225.2		433.9		301.1		146.3
Less: Valuation Allowance	6.3		—		—		4.5		—		—
Net Deferred Tax Assets	$	657.0	$	477.5	$	225.2	$	429.4	$	301.1	$	146.3
Deferred Tax Liabilities:
Accelerated Depreciation and Other Plant-Related Differences	$	1,224.9	$	1,229.2	$	502.5	$	1,700.3	$	1,901.9	$	726.3
Property Tax Accruals	20.7		24.2		5.5		29.7		36.8		8.0
Regulatory Amounts:
Regulatory Deferrals - Assets	310.6		267.1		103.6		473.4		381.7		142.1
Tax Effect - Tax Regulatory Assets	173.1		9.8		11.4		170.4		44.8		12.2
Goodwill Regulatory Asset - 1999 Merger	—		85.7		—		—		160.3		—
Derivative Assets	17.4		—		—		27.0		—		—
Other	13.7		137.3		45.7		16.3		102.7		43.1
Total Deferred Tax Liabilities	$	1,760.4	$	1,753.3	$	668.7	$	2,417.1	$	2,628.2	$	931.7

2017 Federal Legislation: On December 22, 2017, the "Tax Cuts and Jobs Act" (the "Act") became law, which amended existing federal tax rules and included numerous provisions that impacted corporations. In particular, the Act reduced the U.S. federal corporate income tax rate from 35 percent to 21 percent effective January 1, 2018. In terms of the impacts to the regulated companies, the most significant changes will be (1) the benefit of incurring a lower federal income tax expense, which we expect to be passed back to customers, and (2) the provisional regulated excess ADIT liabilities that we expect to benefit customers in future periods, which were estimated to be approximately $2.9 billion (approximately $1.0 billion at CL&P, $1.1 billion at NSTAR Electric and $0.4 billion at PSNH) as of December 31, 2017 and recognized as regulatory liabilities on the balance sheet.

The Eversource regulated companies are currently working with their applicable state regulatory commissions, who have opened investigations to examine the impact of the Act on customer rates. FERC has yet to address how the Act would impact transmission rates. Eversource, CL&P, NSTAR Electric, and PSNH will continue to evaluate the impacts of the Act, which will vary depending on the ultimate amount and timing of when certain income tax benefits will benefit customers, and will vary by jurisdiction.

Although the impacts could not be finalized upon the issuance of this combined Annual Report on Form 10-K, reasonable provisional estimates were recognized as of December 31, 2017. In accordance with SEC Staff Accounting Bulletin No. 118 ("SAB 118"), additional re-measurement may occur based on final analysis, computations, technical corrections, or other forms of guidance issued from regulatory agencies or commissions. While the Company believes the impacts of the Act were appropriately accounted for in accordance with the applicable authoritative guidance, the ultimate outcome may be different from the provisional estimates recorded, and those differences may materially impact its future statement of financial position, results of operations, and cash flows.

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, 2017
(Millions of Dollars)	Eversource		CL&P		NSTAR Electric		PSNH		Expiration Range
Federal Net Operating Loss	$	197.3	$	—	$	—	$	—	2027-2037
Federal Charitable Contribution	18.7		—		—		—		2017-2022
State Net Operating Loss	82.8		—		—		—		2028-2037
State Tax Credit	139.0		94.5		—		—		2017-2022
State Charitable Contribution	31.4		—		—		—		2017-2022



	As of December 31, 2016
(Millions of Dollars)	Eversource	CL&P	NSTAR Electric	PSNH	Expiration Range
Federal Tax Credit	8.6	—	—	—	—
Federal Charitable Contribution	27.8	—	—	—	2016 - 2019
State Tax Credit	111.1	80.5	—	—	2016 - 2021
State Charitable Contribution	36.5	—	—	—	2016 - 2020

In 2017, the company increased its valuation allowance reserve for state credits by $9.9 million ($1.8 million for CL&P), net of tax, to reflect and update for expired tax credits. In 2016, the Company increased its valuation allowance reserve for state credits by $1.3 million ($1.3 million for CL&P), net of tax, to reflect an update for expired tax credits.

For 2017 and 2016, state credit and state loss carryforwards have been partially reserved by a valuation allowance of $14.4 million and $4.5 million (net of tax), respectively.

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)	Eversource			CL&P
Balance as of January 1, 2015	$	46.2		$	14.3
Gross Increases - Current Year	9.9			2.6
Gross Increases - Prior Year	0.1			—
Lapse of Statute of Limitations	(8.2		)	(3.4		)
Balance as of December 31, 2015	48.0			13.5
Gross Increases - Current Year	9.9			3.9
Gross Increases - Prior Year	0.2			0.2
Lapse of Statute of Limitations	(9.7		)	(2.3		)
Balance as of December 31, 2016	48.4			15.3
Gross Increases - Current Year	11.4			4.7
Gross Decreases - Prior Year	(0.9		)	(0.5		)
Lapse of Statute of Limitations	(7.2		)	(1.4		)
Balance as of December 31, 2017	$	51.7		$	18.1

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 Expense/(Income)							Accrued Interest Expense
	For the Years Ended December 31,							As of December 31,
(Millions of Dollars)	2017		2016			2015		2017		2016
Eversource	$	—	$	(0.2	)	$	0.1	$	1.8	$	1.8

Tax Positions: During 2017 and 2016, Eversource did not resolve any of its uncertain tax positions.

Open Tax Years: The following table summarizes Eversource, CL&P, NSTAR Electric and PSNH's tax years that remain subject to examination by major tax jurisdictions as of December 31, 2017:



Description	Tax Years
Federal	2017
Connecticut	2014 - 2017
Massachusetts	2014 - 2017
New Hampshire	2015 - 2017

Eversource estimates that during the next twelve months, differences of a non-timing nature could be resolved, resulting in a zero to $2.2 million decrease in unrecognized tax benefits by Eversource. These estimated changes are not expected to have a material impact on the earnings of Eversource. Other companies' impacts are not expected to be material.

COMMITMENTS AND CONTINGENCIES

A. Environmental Matters

General: Eversource, CL&P, NSTAR Electric and PSNH 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. Eversource, CL&P, NSTAR Electric and PSNH have an active environmental auditing and training program and each believes it is 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 liabilities are estimated on an undiscounted basis and do not assume that the 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.

These reserve 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 Eversource's, CL&P's, NSTAR Electric's and PSNH's responsibility for remediation or the extent of remediation required, recently enacted laws and regulations or changes in cost estimates due to certain economic factors. 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 amounts recorded as environmental reserves are included in Other Current Liabilities and Other Long-Term Liabilities on the balance sheets and 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 reserves also take into account recurring costs of managing hazardous substances and pollutants, mandated expenditures to remediate 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)	Eversource			CL&P			NSTAR Electric			PSNH
Balance as of January 1, 2016	$	51.1		$	4.6		$	3.0		$	4.5
Additions	20.6			0.6			1.8			1.2
Payments/Reductions	(5.9		)	(0.3		)	(1.0		)	(0.4		)
Balance as of December 31, 2016	65.8			4.9			3.8			5.3
Additions	6.2			0.5			1.8			1.0
Payments/Reductions	(17.1		)	(0.7		)	(2.9		)	(0.6		)
Balance as of December 31, 2017	$	54.9		$	4.7		$	2.7		$	5.7

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



	As of December 31, 2017			As of December 31, 2016
	Number of Sites	Reserve (in millions)		Number of Sites	Reserve (in millions)
Eversource	59	$	54.9	61	$	65.8
CL&P	14	4.7		14	4.9
NSTAR Electric	15	2.7		17	3.8
PSNH	10	5.7		11	5.3

Included in the Eversource 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, for which Eversource may have potential liability. The reserve balances related to these former MGP sites were $49.0 million and $59.0 million as of December 31, 2017 and 2016, respectively, and related primarily to the natural gas business segment. The reduction in the reserve balance at the MGP sites was primarily due to a change in cost estimates at one site where actual contamination was less than originally estimated.

As of December 31, 2017, for 8 environmental sites (3 for CL&P, 1 for NSTAR Electric) that are included in the Company's reserve for environmental costs, the information known and the nature of the remediation options allow for the Company to estimate the range of losses for environmental costs. As of December 31, 2017, $25.4 million (including $1.8 million for CL&P and $0.3 million for NSTAR Electric) had been accrued as a liability for these sites, which represents the low end of the range of the liabilities for environmental costs. Management believes that additional losses of up to approximately $20 million ($1 million at CL&P) may be incurred in executing current remediation plans for these sites.

As of December 31, 2017, for 10 environmental sites (3 for CL&P) 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, 2017, $12.3 million (including $1.8 million for CL&P) had been accrued as a liability for these sites. As of December 31, 2017, for the remaining 41 environmental sites (including 8 for CL&P, 14 for NSTAR Electric and 10 for PSNH) that are included in the Company's reserve for environmental costs, the $17.2 million accrual (including $1.1 million for CL&P, $2.4 million for NSTAR Electric and $5.7 million for PSNH) represents management's best estimate of the probable liability and no additional loss is anticipated at this time.

CERCLA: Of the total environmental sites, nine sites (four for NSTAR Electric and three 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, 2017, a liability of $0.9 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, therefore, changes in their respective environmental reserves do not impact Net Income. CL&P recovers a certain level of environmental costs currently in rates. CL&P and NSTAR Electric do not have a separate environmental cost recovery regulatory mechanism.

B. Long-Term Contractual Arrangements

Estimated Future Annual Costs: The estimated future annual costs of significant long-term contractual arrangements as of December 31, 2017 are as follows:



Eversource
(Millions of Dollars)	2018		2019		2020		2021		2022		Thereafter		Total
Supply and Stranded Cost	$	81.7	$	69.3	$	74.6	$	68.8	$	63.7	$	144.3	$	502.4
Renewable Energy	242.9		242.5		241.7		232.2		224.5		1,665.7		2,849.5
Peaker CfDs	26.1		24.2		34.0		32.3		23.4		53.3		193.3
Natural Gas Procurement	225.5		219.2		169.3		148.7		131.4		989.6		1,883.7
Transmission Support Commitments	22.8		23.0		23.2		15.2		16.5		16.5		117.2
Total	$	599.0	$	578.2	$	542.8	$	497.2	$	459.5	$	2,869.4	$	5,546.1



CL&P
(Millions of Dollars)	2018		2019		2020		2021		2022		Thereafter		Total
Supply and Stranded Cost	$	58.7	$	56.7	$	69.5	$	63.7	$	59.1	$	121.6	$	429.3
Renewable Energy	84.1		85.4		85.5		85.8		86.6		655.5		1,082.9
Peaker CfDs	26.1		24.2		34.0		32.3		23.4		53.3		193.3
Transmission Support Commitments	9.0		9.1		9.2		6.0		6.5		6.5		46.3
Total	$	177.9	$	175.4	$	198.2	$	187.8	$	175.6	$	836.9	$	1,751.8



NSTAR Electric
(Millions of Dollars)	2018		2019		2020		2021		2022		Thereafter		Total
Supply and Stranded Cost	$	5.5	$	5.5	$	3.1	$	3.1	$	3.1	$	22.0	$	42.3
Renewable Energy	96.1		94.3		92.6		88.2		88.4		489.4		949.0
Transmission Support Commitments	9.0		9.0		9.1		6.0		6.5		6.5		46.1
Total	$	110.6	$	108.8	$	104.8	$	97.3	$	98.0	$	517.9	$	1,037.4



PSNH
(Millions of Dollars)	2018		2019		2020		2021		2022		Thereafter		Total
Supply and Stranded Cost	$	17.5	$	7.1	$	2.0	$	2.0	$	1.5	$	0.7	$	30.8
Renewable Energy	62.7		62.8		63.6		58.2		49.5		520.8		817.6
Transmission Support Commitments	4.8		4.9		4.9		3.2		3.5		3.5		24.8
Total	$	85.0	$	74.8	$	70.5	$	63.4	$	54.5	$	525.0	$	873.2

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, 2031 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 units 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 contractual 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 shares 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 above does not include CL&P's or NSTAR Electric'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 and PSNH for the purchase of energy and capacity from renewable energy facilities. Such contracts extend through 2038 for CL&P, 2031 for NSTAR Electric and 2033 for PSNH.

The contractual obligations table above does not include long-term commitments signed by CL&P and NSTAR Electric, 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 PURA (Peaker CfDs). These units have a total of approximately 500 MW of peaking capacity. As directed by 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: In the normal course of business, Eversource's natural gas distribution businesses have long-term contracts for the purchase, transportation and storage of natural gas as part of its portfolio of supplies. These contracts extend through 2032.

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. On January 10, 2018, Eversource and PSNH completed the sale of PSNH's thermal generation assets, at which time, remaining future contractual obligations were transferred to the buyer. See Note 12, "Assets Held for Sale," for further information.

Transmission Support Commitments: Along with other New England utilities, CL&P, NSTAR Electric and PSNH 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 and PSNH 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:



Eversource	For the Years Ended December 31,
(Millions of Dollars)	2017		2016		2015
Supply and Stranded Cost	$	103.9	$	152.5	$	147.6
Renewable Energy	235.5		210.9		144.3
Peaker CfDs	38.7		47.7		42.7
Natural Gas Procurement	377.0		323.9		428.6
Coal, Wood and Other	47.7		55.7		95.9
Transmission Support Commitments	19.8		15.9		25.3



	For the Years Ended December 31,
	2017						2016						2015
(Millions of Dollars)	CL&P		NSTAR Electric		PSNH		CL&P		NSTAR Electric		PSNH		CL&P		NSTAR Electric		PSNH
Supply and Stranded Cost	$	81.0	$	4.0	$	18.9	$	132.7	$	0.7	$	19.1	$	120.3	$	6.5	$	20.8
Renewable Energy	51.0		123.7		60.8		42.1		101.1		67.7		20.0		87.1		37.2
Peaker CfDs	38.7		—		—		47.7		—		—		42.7		—		—
Coal, Wood and Other	—		—		47.7		—		—		55.7		—		—		95.9
Transmission Support Commitments	7.8		7.8		4.2		6.3		6.2		3.4		10.0		9.9		5.4

C. Spent Nuclear Fuel Obligations - Yankee Companies

CL&P, NSTAR Electric and PSNH have plant closure and fuel storage 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 these costs through wholesale, FERC-approved rates charged under power purchase agreements with several New England utilities, including CL&P, NSTAR Electric and PSNH. These companies in turn recover these costs from their customers through state regulatory commission-approved retail rates. The Yankee Companies have collected or are currently collecting amounts that management believes are adequate to recover the remaining plant closure and fuel storage cost estimates for the respective plants. Management believes CL&P and NSTAR Electric will recover their shares of these obligations from their customers. PSNH has recovered its total share of these costs from its customers.

Spent Nuclear Fuel Litigation:

The Yankee Companies have filed complaints against the DOE in the Court of Federal Claims seeking monetary damages resulting from the DOE's failure to provide for a permanent facility to store spent nuclear fuel pursuant to the terms of the 1983 spent fuel and high level waste disposal contracts between the Yankee Companies and the DOE. The court had previously awarded the Yankee Companies damages for Phase I, II and III of litigation resulting from the DOE's failure to meet its contractual obligations. These Phases covered damages incurred in the years 1998 through 2012, and the awarded damages have been received by the Yankee Companies with certain amounts of the damages refunded to their customers.

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 ("DOE Phase III"). On March 25, 2016, the court issued its decision and awarded CYAPC, YAEC and MYAPC damages of $32.6 million, $19.6 million and $24.6 million, respectively. In total, the Yankee Companies were awarded $76.8 million of the $77.9 million in damages sought in DOE Phase III. The decision became final on July 18, 2016, and the Yankee Companies received the awards from the DOE on October 14, 2016. The Yankee Companies received FERC approval of their proposed distribution of certain amounts of the awarded damages proceeds to member companies, including CL&P, NSTAR Electric and PSNH, which CYAPC and MYAPC made in December 2016. MYAPC also refunded $56.5 million from its spent nuclear fuel trust, a portion of which was also refunded to the Eversource utility subsidiaries. In total, Eversource received $26.1 million, of which CL&P, NSTAR Electric and PSNH received $13.6 million, $8.6 million and $3.9 million, respectively. These amounts have been refunded to the customers of the respective Eversource utility subsidiaries.

DOE Phase IV Damages - On May 22, 2017, each of the Yankee Companies filed subsequent lawsuits against the DOE in the Court of Federal

Claims seeking monetary damages totaling approximately $100 million for CYAPC, YAEC and MYAPC, resulting from the DOE's failure to begin accepting spent nuclear fuel for disposal covering the years from 2013 to 2016 (“DOE Phase IV”). The DOE Phase IV trial is expected to begin in 2018.

D. Guarantees and Indemnifications

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

Eversource parent issued a guaranty on behalf of its subsidiary, NPT, under which, beginning at the time the Northern Pass Transmission line goes into commercial operation, Eversource parent will guarantee the financial obligations of NPT under the TSA with HQ in an amount not to exceed $25 million. Eversource parent's obligations under the guaranty expire upon the full, final and indefeasible payment of the guaranteed obligations. Eversource parent has also entered into a guaranty on behalf of NPT under which Eversource parent will guarantee NPT's obligations under a facility with a financial institution pursuant to which NPT may request letters of credit in an aggregate amount of up to approximately $14 million.

Eversource parent has also guaranteed certain indemnification and other obligations as a result of the sales of former unregulated subsidiaries and the termination of an unregulated business, with maximum exposures either not specified or not material.

Management does not anticipate a material impact to net income or cash flows as a result of these various guarantees and indemnifications. The following table summarizes Eversource parent's exposure to guarantees and indemnifications of its subsidiaries to external parties, as of December 31, 2017:



Company	Description	Maximum Exposure (in millions)		Expiration Dates
On behalf of subsidiaries:
Eversource Gas Transmission LLC	Access Northeast Project Capital Contributions Guaranty (1)	$	185.1	2021
Various	Surety Bonds (2)	40.4		2018
Eversource Service and Rocky River Realty Company	Lease Payments for Vehicles and Real Estate	7.8		2019 - 2024

(1) Eversource parent issued a declining balance guaranty on behalf of its subsidiary, Eversource Gas Transmission LLC, to guarantee the payment of the subsidiary's capital contributions for its investment in the Access Northeast project. The guaranty decreases as capital contributions are made. The guaranty will expire upon the earlier of the full performance of the guaranteed obligations or December 31, 2021.

(2) 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 Eversource parent to post collateral in the event that the unsecured debt credit ratings of Eversource parent are downgraded.

Aquarion has a $0.9 million letter of credit relating to an insurance program, which expires on December 31, 2018 and includes annual automatic renewals. As of December 31, 2017, and 2016, there were no amounts outstanding under the letter of credit. Aquarion also guarantees surety bonds with a maximum exposure of $1.2 million related to ongoing operations with expiration dates ranging through 2018, the majority of which will be renewed or extended.

E. FERC ROE Complaints

Four separate complaints have been filed at the FERC by combinations of New England state attorneys general, state regulatory commissions, consumer advocates, consumer groups, municipal parties and other parties (collectively the "Complainants"). In each of the first three complaints, the Complainants challenged the NETOs' base ROE of 11.14 percent that had been utilized since 2005 and sought an order to reduce it prospectively from the date of the final FERC order and for the separate 15-month complaint periods. In the fourth complaint, filed April 29, 2016, the Complainants challenged the NETOs' base ROE of 10.57 percent and the maximum ROE for transmission incentive ("incentive cap") of 11.74 percent, asserting that these ROEs were unjust and unreasonable.

In response to appeals of the FERC decision in the first complaint filed by the NETOs and the Complainants, the U.S. Court of Appeals for the D.C. Circuit (the "Court") issued a decision on April 14, 2017 vacating and remanding the FERC's decision. The Court found that the FERC failed to make an explicit finding that the 11.14 percent base ROE was unjust and unreasonable, as required under Section 206 of the Federal Power Act, before it set a new base ROE. The Court also found that the FERC did not provide a rational connection between the record evidence and its decision to select the midpoint of the upper half of the zone of reasonableness for the new base ROE.

Hearings on the fourth complaint were held in December 2017 before the Administrative Law Judge ("ALJ"), who is expected to issue an initial decision in March 2018.

A summary of the four separate complaints and the base ROEs pertinent to those complaints are as follows:



Complaint	15-Month Time Period of Complaint (Beginning as of Complaint Filing Date)	Original Base ROE Authorized by FERC at Time of Complaint Filing Date (1)	Base ROE Subsequently Authorized by FERC for First Complaint Period and also Effective from October 16, 2014 through April 14, 2017 (1)	Reserve (Pre-Tax and Excluding Interest) as of December 31, 2017 (in millions)		FERC ALJ Recommendation of Base ROE on Second and Third Complaints (Issued March 22, 2016)
First	10/1/2011 - 12/31/2012	11.14%	10.57%	$—	(2)	N/A
Second	12/27/2012 - 3/26/2014	11.14%	N/A	39.1	(3)	9.59%
Third	7/31/2014 - 10/30/2015	11.14%	10.57%	—		10.90%
Fourth	4/29/2016 - 7/28/2017	10.57%	10.57%	—		N/A

(1) The ROE billed during the period October 1, 2011 through October 15, 2014 consisted of a base ROE of 11.14 percent and incentives up to 13.1 percent. On October 16, 2014, the FERC set the base ROE at 10.57 percent and an incentive cap at 11.74 percent for the first complaint period and also effective from the date of the FERC order on October 16, 2014. This FERC order was vacated on April 14, 2017.

(2) CL&P, NSTAR Electric and PSNH have refunded all amounts associated with the first complaint period, totaling $38.9 million (pre-tax and excluding interest) at Eversource (consisting of $22.4 million at CL&P, $13.7 million at NSTAR Electric and $2.8 million at PSNH), reflecting both the base ROE and incentive cap prescribed by the FERC order.

(3) The reserve represents the difference between the billed rates during the second complaint period and a 10.57 percent base ROE and 11.74 percent incentive cap. The reserve consisted of $21.4 million for CL&P, $14.6 million for NSTAR Electric and $3.1 million for PSNH as of December 31, 2017.

On June 5, 2017, the NETOs, including Eversource, submitted a filing to the FERC to reinstate the base ROE of 11.14 percent with an associated ROE incentive cap of 13.5 percent effective June 8, 2017, as these were the last ROEs lawfully in effect for transmission billing purposes prior to the FERC order vacated by the Court on April 14, 2017. On October 6, 2017, the FERC did not accept the NETOs filing, temporarily leaving in place the ROEs (10.57 percent base ROE with an 11.74 percent incentive cap ROE) set in the first complaint proceeding until the FERC addresses the Court’s decision. On November 6, 2017, the NETOs submitted a request for rehearing of the FERC’s October 6, 2017 Order rejecting the compliance filing.

On October 5, 2017, the NETOs filed a series of motions, requesting that the FERC dismiss the four complaint proceedings. Alternatively, if the FERC does not dismiss the proceedings, the NETOs requested that the FERC consolidate all four complaint proceedings for expeditious resolution and/or stay the trial in the fourth complaint proceeding and resolve it based on the standards set in the April 14, 2017 Court decision.

At this time, the Company cannot reasonably estimate a range of gain or loss for the complaint proceedings. No events in 2017 provided a reasonable basis for a change to the reserve balance of $39.1 million (pre-tax, excluding interest) for the second complaint period, and the Company has not changed its reserve or recognized ROEs for any of the complaint periods.

Management cannot at this time predict the ultimate effect of the Court decision or future FERC action on any of the complaint periods or the estimated impacts on the financial position, results of operations or cash flows of Eversource, CL&P, NSTAR Electric or PSNH.

The average impact of a 10 basis point change to the base ROE for each of the 15-month complaint periods would affect Eversource's after-tax earnings by approximately $3 million.

F. Eversource and NSTAR Electric Boston Harbor Civil Action

On July 15, 2016, the United States Attorney on behalf of the United States Army Corps of Engineers filed a civil action in the United States District Court for the District of Massachusetts under provisions of the Rivers and Harbors Act of 1899 and the Clean Water Act against NSTAR Electric, Harbor Electric Energy Company, a wholly-owned subsidiary of NSTAR Electric ("HEEC"), and the Massachusetts Water Resources Authority (together with NSTAR Electric and HEEC, the "Defendants"). The action alleged that the Defendants failed to comply with certain permitting requirements related to the placement of the HEEC-owned electric distribution cable beneath Boston Harbor. The action sought an order to compel HEEC to comply with cable depth requirements in the United States Army Corps of Engineers' permit or alternatively to remove the electric distribution cable and cease unauthorized work in U.S. waterways. The action also sought civil penalties and other costs.

The parties reached a settlement pursuant to which HEEC agreed to install a new 115kV distribution cable across Boston Harbor to Deer Island, utilizing a different route, and remove portions of the existing cable. Upon the installation and completion of the new cable and the removal of the portions of the existing cable, all issues surrounding the current permit from the United States Army Corps of Engineers are expected to be resolved, and such litigation is expected to be dismissed with prejudice.

In 2017, as a result of the settlement, NSTAR Electric expensed $4.9 million (pre-tax) of previously incurred capitalized costs associated with engineering work performed on the existing cable that will no longer be used. In addition, NSTAR Electric agreed to provide a rate base credit of $17.5 million to the Massachusetts Water Resources Authority for the new cable. This negotiated credit will result in the initial $17.5 million of construction costs on the new cable to be expensed as incurred. Of this amount, NSTAR Electric expensed $11.1 million (pre-tax) of costs incurred on the new cable in 2017. Construction of the new cable is expected to be completed in 2019.

G. Litigation and Legal Proceedings

Eversource, including CL&P, NSTAR Electric and PSNH, 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.

ASSETS HELD FOR SALE

In June 2015, Eversource and PSNH entered into the 2015 Public Service Company of New Hampshire Restructuring and Rate Stabilization Agreement, under the terms of which PSNH agreed to divest its generation assets, subject to NHPUC approval. The NHPUC approval for this agreement, as well as NHPUC approval of the final divestiture plan and auction process, were received in the second half of 2016. In October 2017, PSNH entered into two Purchase and Sale Agreements ("Agreements") to sell its thermal and hydroelectric generation assets to private investors at purchase prices of $175 million and $83 million, respectively, subject to adjustments as set forth in the Agreements. The NHPUC approved the Agreements in late November 2017, at which time the Company classified these assets as held for sale.

On January 10, 2018, PSNH completed the sale of its thermal generation assets, pursuant to the Agreement dated October 11, 2017. In accordance with the Purchase and Sale Agreement, the original purchase price of $175 million was adjusted to reflect working capital adjustments, closing date adjustments and proration of taxes and fees prior to closing, totaling $40.9 million, resulting in net proceeds of $134.1 million. As of December 31, 2017, the thermal generation assets classified as assets held for sale are stated at fair value less costs to sell. Deferred costs of $516.1 million were included in Regulatory Assets on the Eversource and PSNH Balance Sheets, and represent the difference between the carrying value and the fair value less costs to sell of the thermal generation assets as of December 31, 2017. The hydroelectric generation assets are targeted to be sold in the first quarter of 2018 at an amount above net carrying value, and are therefore stated at carrying value. As of December 31, 2017, the difference between the carrying value of the hydroelectric generation assets and the expected proceeds from the sale was approximately $25 million, which will be recognized as a reduction to the stranded costs upon completion of the sale.

Upon completion of the divestiture, full recovery of PSNH's generation assets and transaction-related costs are expected to occur through a combination of cash flows during the remaining operating period, sales proceeds, and recovery of stranded costs via the issuance of bonds that will be secured by a non-bypassable charge or through recoveries in future rates billed to PSNH's customers. On January 30, 2018, the NHPUC approved the issuance of rate reduction bonds up to $690 million to recover stranded costs, subject to an audit by the NHPUC Audit Staff. This order is subject to an appeal period of 30 days.

For the years ended December 31, 2017, 2016 and 2015, pre-tax income associated with the assets held for sale was $60.0 million, $65.3 million and $56.9 million, respectively.

As of December 31, 2017, PSNH's generation assets held for sale, which are included in current assets on the Eversource and PSNH balance sheets, and are part of the Electric Distribution reportable segment, were as follows (liabilities held for sale were $1.2 million as of December 31, 2017):



(Millions of Dollars)
Thermal Gross Plant	$	1,091.4
Hydroelectric Gross Plant	83.0
Accumulated Depreciation	(575.4		)
Net Plant	599.0
Fuel and Inventory	87.7
Materials and Supplies	27.3
Emission Allowances	19.1
Other Assets	2.6
Deferred Costs from Generation Asset Sale	(516.1		)
Total Generation Assets Held for Sale	$	219.6

As of December 31, 2017, the difference between the carrying value of the generation assets and the amounts recognized as assets held for sale represented the deferred costs on the thermal generation asset sale and were calculated as follows:



(Millions of Dollars)
Generation Assets to be Sold (Carrying Value)	$	735.7
Less: Generation Assets Held for Sale:
Thermal Generation Assets (Fair Value less Cost to Sell)	(161.7		)
Hydroelectric Generation (Carrying Value)	(57.9		)
Generation Assets Held for Sale	(219.6		)

Deferred Costs from Generation Asset Sale	$	516.1

LEASES

Eversource, including CL&P, NSTAR Electric and PSNH, has entered into lease agreements, some of which are capital leases, for the use of data processing and office equipment, vehicles, service centers, land and office space. In addition, CL&P, NSTAR Electric and PSNH incur costs associated with leases entered into by other Eversource subsidiaries, which include Eversource Service and Rocky River Realty Company, and are included below in their respective operating lease rental expenses and future minimum rental payments. These intercompany lease amounts are eliminated on an Eversource consolidated basis. The provisions of the Eversource, CL&P, NSTAR Electric and PSNH 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:



(Millions of Dollars)	Eversource		CL&P		NSTAR Electric		PSNH
2017	$	10.5	$	11.7	$	11.3	$	3.3
2016	12.1		12.5		11.4		2.9
2015	12.1		12.5		11.8		2.8

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, 2017 are as follows:



Operating Leases (Millions of Dollars)	Eversource		CL&P		NSTAR Electric		PSNH
2018	$	13.2	$	1.8	$	7.9	$	1.0
2019	11.4		1.5		6.9		1.0
2020	10.0		1.3		6.1		0.9
2021	8.9		1.1		5.5		0.8
2022	7.4		1.0		4.5		0.6
Thereafter	19.7		1.0		15.4		2.0
Future minimum lease payments	$	70.6	$	7.7	$	46.3	$	6.3



Capital Leases (Millions of Dollars)	Eversource		CL&P		NSTAR Electric		PSNH
2018	$	2.9	$	2.0	$	0.5	$	0.1
2019	3.3		2.0		0.6		—
2020	3.3		2.0		0.5		—
2021	2.8		1.4		0.6		—
2022	1.3		—		0.6		—
Thereafter	2.5		—		2.5		—
Future minimum lease payments	16.1		7.4		5.3		0.1
Less amount representing interest	3.1		1.7		1.2		—
Present value of future minimum lease payments	$	13.0	$	5.7	$	4.1	$	0.1

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.

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,
	2017				2016
Eversource (Millions of Dollars)	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Preferred Stock Not Subject to Mandatory Redemption	$	155.6	$	160.8	$	155.6	$	158.3
Long-Term Debt	12,325.5		12,877.1		9,603.2		9,980.5



	CL&P				NSTAR Electric				PSNH
(Millions of Dollars)	Carrying Amount		Fair Value		Carrying Amount		Fair Value		Carrying Amount		Fair Value
As of December 31, 2017:
Preferred Stock Not Subject to Mandatory Redemption	$	116.2	$	116.5	$	43.0	$	44.3	$	—	$	—
Long-Term Debt	3,059.1		3,430.5		2,943.8		3,156.5		1,002.4		1,038.2

As of December 31, 2016:
Preferred Stock Not Subject to Mandatory Redemption	$	116.2	$	114.7	$	43.0	$	43.6	$	—	$	—
Long-Term Debt	2,766.0		3,049.6		2,644.6		2,790.6		1,072.0		1,109.7

Derivative Instruments and Marketable Securities: Derivative instruments and investments in marketable securities are carried at fair value. For further information, see Note 4, "Derivative Instruments," and Note 5, "Marketable Securities," to the financial statements.

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

ACCUMULATED OTHER COMPREHENSIVE INCOME/(LOSS)

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



	For the Year Ended December 31, 2017												For the Year Ended December 31, 2016
Eversource (Millions of Dollars)	Qualified Cash Flow Hedging Instruments			Unrealized Gains/(Losses) on Marketable Securities			Defined Benefit Plans			Total			Qualified Cash Flow Hedging Instruments			Unrealized Gains/(Losses) on Marketable Securities			Defined Benefit Plans			Total
Balance as of January 1st	$	(8.2	)	$	0.4		$	(57.5	)	$	(65.3	)	$	(10.3	)	$	(1.9	)	$	(54.6	)	$	(66.8	)

OCI Before Reclassifications	—			(0.4		)	(7.2		)	(7.6		)	—			2.3			(6.8		)	(4.5		)
Amounts Reclassified from AOCL	2.0			—			4.5			6.5			2.1			—			3.9			6.0
Net OCI	2.0			(0.4		)	(2.7		)	(1.1		)	2.1			2.3			(2.9		)	1.5
Balance as of December 31st	$	(6.2	)	$	—		$	(60.2	)	$	(66.4	)	$	(8.2	)	$	0.4		$	(57.5	)	$	(65.3	)

Eversource'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 AOCL and is being amortized into Net Income over the term of the underlying debt instrument. CL&P, NSTAR Electric and PSNH continue to amortize interest rate swaps settled in prior years from AOCL into Interest Expense over the remaining life of the associated long-term debt. Such interest rate swaps are not material to their respective financial statements.

Defined benefit plan OCI amounts before reclassifications relate to actuarial gains and losses and prior service costs that arose during the year and were recognized in AOCL. The related tax effects recognized in AOCL were net deferred tax assets of $4.1 million and $4.0 million in 2017 and 2016, respectively, and were net deferred tax liabilities of $2.0 million in 2015. The unamortized actuarial gains and losses and prior service costs on the defined benefit plans are amortized from AOCL into Operations and Maintenance expense over the average future employee service period, and are reflected in amounts reclassified from AOCL.

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



	Amounts Reclassified from AOCL
Eversource (Millions of Dollars)	For the Years Ended December 31,											Statements of Income Line Item Impacted
2017				2016				2015
Qualified Cash Flow Hedging Instruments	$	(3.3	)		$	(3.5	)		$	(3.5	)	Interest Expense
Tax Effect	1.3				1.4				1.4			Income Tax Expense
Qualified Cash Flow Hedging Instruments, Net of Tax	$	(2.0	)		$	(2.1	)		$	(2.1	)
Defined Benefit Plan Costs:
Amortization of Actuarial Losses	$	(6.2	)		$	(5.6	)		$	(6.6	)	Operations and Maintenance Expense (1)
Amortization of Prior Service Cost	(1.1		)		(0.8		)		(0.2		)	Operations and Maintenance Expense (1)
Total Defined Benefit Plan Costs	(7.3		)		(6.4		)		(6.8		)
Tax Effect	2.8				2.5				2.6			Income Tax Expense
Defined Benefit Plan Costs, Net of Tax	$	(4.5	)		$	(3.9	)		$	(4.2	)
Total Amounts Reclassified from AOCL, Net of Tax	$	(6.5	)		$	(6.0	)		$	(6.3	)


(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, 2017, it is estimated that a pre-tax amount of $2.8 million (including $0.1 million for CL&P, $0.7 million for NSTAR Electric and $1.9 million for PSNH) will be reclassified from AOCL 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 $6.6 million will be reclassified from AOCL as a decrease to Net Income over the next 12 months as a result of the amortization of Pension, SERP and PBOP costs.

DIVIDEND RESTRICTIONS

Eversource 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. Pursuant to the joint revolving credit agreement of Eversource, CL&P, PSNH, Yankee Gas and NSTAR Gas, and to the NSTAR Electric revolving credit agreement, each company is required to maintain consolidated total indebtedness to total capitalization ratio of no greater than 65 percent at the end of each fiscal quarter. As of December 31, 2017, all companies were in compliance with such covenant. Eversource, CL&P, NSTAR Electric, PSNH, Yankee Gas and NSTAR Gas were in compliance with all such provisions of the revolving credit agreements that may restrict the payment of dividends as of December 31, 2017.

The Retained Earnings balances subject to dividend restrictions were $3.6 billion for Eversource, $1.4 billion for CL&P, $1.9 billion for NSTAR Electric and $511.4 million for PSNH as of December 31, 2017. PSNH is further required to reserve an additional amount under its FERC hydroelectric license conditions. As of December 31, 2017, $14.3 million of PSNH's Retained Earnings was subject to restriction under its FERC hydroelectric license conditions and PSNH was in compliance with this provision.

CL&P, NSTAR Electric and PSNH 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 and PSNH, would not be construed or applied by the FERC to prohibit the payment of dividends from retained earnings for lawful and legitimate business purposes. 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 the payment of dividends from retained earnings or net income.

COMMON SHARES

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



	Shares
	Par Value			Authorized as of December 31, 2017 and 2016	Issued as of December 31,
2017			2016
Eversource	$	5		380,000,000	333,878,402	333,878,402
CL&P	$	10		24,500,000	6,035,205	6,035,205
NSTAR Electric	$	1		100,000,000	200	200
PSNH	$	1		100,000,000	301	301

On December 31, 2017, as a result of the WMECO merger with and into NSTAR Electric, WMECO's common stock was converted into 100 shares of NSTAR Electric common stock. In accordance with accounting guidance on combinations between entities under common control, NSTAR Electric's common stock has been retrospectively adjusted as if the merger occurred on January 1, 2015.

As of both December 31, 2017 and 2016, there were 16,992,594 Eversource common shares held as treasury shares. As of both December 31, 2017 and 2016, Eversource common shares outstanding were 316,885,808.

In 2016, the Company converted 321,228 Eversource common shares at a share price of $52.56 to Treasury Stock on the consolidated balance sheet at their weighted average original average cost of $24.26 per share.

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 Eversource's financial statements.

CL&P is authorized to issue up to 9,000,000 shares of preferred stock, par value $50 per share, and NSTAR Electric is authorized to issue 2,890,000 shares of preferred stock, par value $100 per share. Holders of preferred stock of CL&P and NSTAR Electric are entitled to receive cumulative dividends in preference to any payment of dividends on the common stock. Upon liquidation, holders of preferred stock of CL&P and NSTAR Electric are entitled to receive a liquidation preference before any distribution to holders of common stock in an amount equal to the par value of the preferred stock plus accrued and unpaid dividends. If the net assets were to be insufficient to pay the liquidation preference in full, then the net assets would be distributed ratably to all holders of preferred stock. The preferred stock of CL&P and NSTAR Electric is subject to optional redemption by the CL&P and NSTAR Electric Board of Directors at any time.

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



		Redemption Price Per Share			Shares Outstanding as of December 31,			As of December 31,
Series		2017		2016		2017		2016
CL&P
$1.90	Series of 1947	$	52.50		163,912		163,912	$	8.2		$	8.2
$2.00	Series of 1947	$	54.00		336,088		336,088	16.8			16.8
$2.04	Series of 1949	$	52.00		100,000		100,000	5.0			5.0
$2.20	Series of 1949	$	52.50		200,000		200,000	10.0			10.0
3.90%	Series of 1949	$	50.50		160,000		160,000	8.0			8.0
$2.06	Series E of 1954	$	51.00		200,000		200,000	10.0			10.0
$2.09	Series F of 1955	$	51.00		100,000		100,000	5.0			5.0
4.50%	Series of 1956	$	50.75		104,000		104,000	5.2			5.2
4.96%	Series of 1958	$	50.50		100,000		100,000	5.0			5.0
4.50%	Series of 1963	$	50.50		160,000		160,000	8.0			8.0
5.28%	Series of 1967	$	51.43		200,000		200,000	10.0			10.0
$3.24	Series G of 1968	$	51.84		300,000		300,000	15.0			15.0
6.56%	Series of 1968	$	51.44		200,000		200,000	10.0			10.0
Total CL&P					2,324,000		2,324,000	$	116.2		$	116.2
NSTAR Electric
4.25%	Series of 1956	$	103.625		180,000		180,000	$	18.0		$	18.0
4.78%	Series of 1958	$	102.80		250,000		250,000	25.0			25.0
Total NSTAR Electric					430,000		430,000	$	43.0		$	43.0
Fair Value Adjustment due to Merger with NSTAR								(3.6		)	(3.6		)
Other
6.00%	Series of 1958	$	100.00		23		—	$	—		$	—
Total Eversource - Preferred Stock of Subsidiaries								$	155.6		$	155.6

COMMON SHAREHOLDERS' EQUITY AND NONCONTROLLING INTERESTS

Dividends on the preferred stock of CL&P and NSTAR Electric totaled $7.5 million for each of the years ended December 31, 2017, 2016 and 2015. These dividends were presented as Net Income Attributable to Noncontrolling Interests on the Eversource statements of income. Noncontrolling Interest – Preferred Stock of Subsidiaries on the Eversource balance sheets totaled $155.6 million as of December 31, 2017 and 2016. On the Eversource balance sheets, Common Shareholders' Equity was fully attributable to the parent and Noncontrolling Interest – Preferred Stock of Subsidiaries was fully attributable to the noncontrolling interest.

For the years ended December 31, 2017, 2016 and 2015, there was no change in ownership of the common equity of CL&P and NSTAR Electric.

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. The dilutive effect of unvested RSU and performance share awards is calculated using the treasury stock method. RSU and performance share awards are included in basic weighted average common shares outstanding as of the date that all necessary vesting conditions have been satisfied. For the years ended December 31, 2017 and 2016, there were no antidilutive share awards excluded from the diluted EPS computation. For the year ended December 31, 2015, there were 1,474 antidilutive share awards excluded from the computation of diluted EPS.

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



Eversource (Millions of Dollars, except share information)	For the Years Ended December 31,
2017			2016			2015
Net Income Attributable to Common Shareholders	$	988.0		$	942.3		$	878.5
Weighted Average Common Shares Outstanding:
Basic	317,411,097			317,650,180			317,336,881
Dilutive Effect	620,483			804,059			1,095,806
Diluted	318,031,580			318,454,239			318,432,687
Basic EPS	$	3.11		$	2.97		$	2.77
Diluted EPS	$	3.11		$	2.96		$	2.76

SEGMENT INFORMATION

Presentation: Eversource is organized among 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' services, the sources of operating revenues and expenses and the regulatory environment in which each segment operates. These reportable segments represent substantially all of Eversource's total consolidated revenues. 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 results of PSNH's generation facilities and NSTAR Electric's solar power facilities. Eversource's reportable segments are determined based upon the level at which Eversource's chief operating decision maker assesses performance and makes decisions about the allocation of company resources. On December 4, 2017, Eversource acquired Aquarion, which was considered to be a new operating segment, water. Financial statement results, however, were not considered material as a result of a short period of ownership by Eversource, and were not reported separately. Therefore, the results of the water operating segment have been included in Other for the year ended December 31, 2017.

The remainder of Eversource's operations is presented as Other in the tables below and primarily consists of 1) the equity in earnings of Eversource parent from its subsidiaries and intercompany interest income, both of which are eliminated in consolidation, and interest expense related to the debt of Eversource parent, 2) the revenues and expenses of Eversource Service, most of which are eliminated in consolidation, 3) the operations of CYAPC and YAEC, 4) the results of Aquarion's water business from the date of the acquisition on December 4, 2017 through December 31, 2017; and 5) the results of other unregulated subsidiaries, which are not part of its core business. In addition, Other in the tables below includes Eversource parent's equity ownership interests in certain natural gas pipeline projects owned by Enbridge, Inc., the Bay State Wind project, a renewable energy investment fund, and two companies that transmit hydroelectricity imported from the Hydro-Quebec system in Canada. In the ordinary course of business, Yankee Gas and NSTAR Gas purchase natural gas transmission services from the Enbridge, Inc. natural gas pipeline projects described above. These affiliate transaction costs total approximately $62.5 million annually and are classified as Purchased Power, Fuel and Transmission on the Eversource statements of income.

Each of Eversource's subsidiaries, including CL&P, NSTAR Electric and PSNH, has one reportable segment.

The Electric Transmission segment includes a reduction to Operations and Maintenance expense of $27.5 million in 2016 for costs incurred in previous years that was recovered in transmission rates over the period June 1, 2016 through May 31, 2017. These costs were associated with the merger of Northeast Utilities and NSTAR.

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.

Eversource's segment information is as follows:



	For the Year Ended December 31, 2017
Eversource (Millions of Dollars)	Electric Distribution			Natural Gas Distribution			Electric Transmission			Other			Eliminations			Total
Operating Revenues	$	5,542.9		$	947.3		$	1,301.7		$	946.9		$	(986.8	)	$	7,752.0
Depreciation and Amortization	(542.6		)	(72.9		)	(209.4		)	(41.1		)	2.2			(863.8		)
Other Operating Expenses	(4,046.0		)	(713.5		)	(382.6		)	(814.6		)	986.7			(4,970.0		)
Operating Income	954.3			160.9			709.7			91.2			2.1			1,918.2
Interest Expense	(186.3		)	(43.1		)	(115.1		)	(93.1		)	15.8			(421.8		)
Interest Income	7.3			0.1			1.8			15.8			(16.7		)	8.3
Other Income, Net	15.0			0.9			27.1			1,112.7			(1,086.0		)	69.7
Income Tax Expense	(288.3		)	(44.2		)	(228.7		)	(17.6		)	(0.1		)	(578.9		)
Net Income	502.0			74.6			394.8			1,109.0			(1,084.9		)	995.5
Net Income Attributable to Noncontrolling Interests	(4.6		)	—			(2.9		)	—			—			(7.5		)
Net Income Attributable to Common Shareholders	$	497.4		$	74.6		$	391.9		$	1,109.0		$	(1,084.9	)	$	988.0
Total Assets (as of)	$	19,250.4		$	3,595.2		$	9,401.2		$	18,403.8		$	(14,430.2	)	$	36,220.4
Cash Flows Used for Investments in Plant	$	1,020.7		$	298.2		$	867.6		$	161.6		$	—		$	2,348.1



	For the Year Ended December 31, 2016
Eversource (Millions of Dollars)	Electric Distribution			Natural Gas Distribution			Electric Transmission			Other			Eliminations			Total
Operating Revenues	$	5,594.3		$	857.7		$	1,210.0		$	870.4		$	(893.3	)	$	7,639.1
Depreciation and Amortization	(504.7		)	(65.3		)	(185.8		)	(33.5		)	2.2			(787.1		)
Other Operating Expenses	(4,155.1		)	(628.9		)	(321.8		)	(778.1		)	891.8			(4,992.1		)
Operating Income	934.5			163.5			702.4			58.8			0.7			1,859.9
Interest Expense	(193.1		)	(41.3		)	(110.0		)	(63.5		)	6.9			(401.0		)
Interest Income	10.0			0.1			1.2			7.0			(7.3		)	11.0
Other Income, Net	4.8			0.6			18.3			1,020.1			(1,008.9		)	34.9
Income Tax (Expense)/Benefit	(288.8		)	(45.2		)	(238.2		)	16.5			0.7			(555.0		)
Net Income	467.4			77.7			373.7			1,038.9			(1,007.9		)	949.8
Net Income Attributable to Noncontrolling Interests	(4.6		)	—			(2.9		)	—			—			(7.5		)
Net Income Attributable to Common Shareholders	$	462.8		$	77.7		$	370.8		$	1,038.9		$	(1,007.9	)	$	942.3
Total Assets (as of)	$	18,367.5		$	3,303.8		$	8,751.5		$	14,493.1		$	(12,862.7	)	$	32,053.2
Cash Flows Used for Investments in Plant	$	812.6		$	255.3		$	801.0		$	108.0		$	—		$	1,976.9



	For the Year Ended December 31, 2015
Eversource (Millions of Dollars)	Electric Distribution			Natural Gas Distribution			Electric Transmission			Other			Eliminations			Total
Operating Revenues	$	5,903.6		$	995.5		$	1,069.1		$	863.6		$	(877.0	)	$	7,954.8
Depreciation and Amortization	(425.2		)	(70.5		)	(165.6		)	(29.0		)	2.1			(688.2		)
Other Operating Expenses	(4,470.2		)	(776.7		)	(314.9		)	(817.9		)	877.3			(5,502.4		)
Operating Income	1,008.2			148.3			588.6			16.7			2.4			1,764.2
Interest Expense	(186.3		)	(36.9		)	(105.8		)	(48.0		)	4.6			(372.4		)
Interest Income	5.7			0.1			1.6			4.4			(5.1		)	6.7
Other Income, Net	7.2			0.8			14.5			977.8			(972.8		)	27.5
Income Tax (Expense)/Benefit	(322.8		)	(40.1		)	(191.6		)	14.5			—			(540.0		)
Net Income	512.0			72.2			307.3			965.4			(970.9		)	886.0
Net Income Attributable to Noncontrolling Interests	(4.7		)	—			(2.8		)	—			—			(7.5		)
Net Income Attributable to Common Shareholders	$	507.3		$	72.2		$	304.5		$	965.4		$	(970.9	)	$	878.5
Cash Flows Used for Investments in Plant	$	718.9		$	182.2		$	749.1		$	73.9		$	—		$	1,724.1

ACQUISITION OF AQUARION AND GOODWILL

A. Acquisition of Aquarion

On December 4, 2017, Eversource acquired Aquarion from Macquarie Infrastructure Partners for $1.675 billion, consisting of approximately $880 million in cash purchase price and $795 million of assumed Aquarion debt. Aquarion is a holding company primarily engaged, through its three separate regulated water utility subsidiaries, in the water collection, treatment and distribution business, and operates in Connecticut, Massachusetts and New Hampshire. These regulated utilities collect, treat and distribute water to residential, commercial and industrial customers, to other utilities for resale, and for private and municipal fire protection. With the acquisition of Aquarion, Eversource is now the only U.S.-based electric utility to also own a water utility. The transaction was approved by PURA, the DPU, the NHPUC, the Maine PUC, and the Federal Communications Commission. Aquarion and its subsidiaries became wholly-owned subsidiaries of Eversource, and Eversource's consolidated financial information includes Aquarion and its subsidiaries' activity from December 4, 2017 through December 31, 2017.

The approximate $880 million cash purchase price includes the $745 million equity purchase price and a $135 million shareholder loan, paid at closing.

Purchase Price Allocation: The allocation of the total purchase price to the estimated fair values of the assets acquired and liabilities assumed has been determined based on the accounting guidance for fair value measurements, which defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The allocation of the total purchase price includes adjustments to record the fair value of unregulated and regulated long-term debt, non-utility land and buildings, regulatory assets not earning a return, and Aquarion's Homeowners Safety Valve unregulated business.

The fair values of Aquarion's assets and liabilities were determined based on significant estimates and assumptions, including Level 3 inputs, that are judgmental in nature. These estimates and assumptions include the timing and amounts of projected future cash flows and discount rates reflecting risk inherent in future cash flows. The excess of the purchase price over the estimated fair values of the assets acquired and liabilities assumed was recognized as goodwill.

The preliminary allocation of the cash purchase price is as follows:



(Millions of Dollars)
Current Assets	$	41.2
PP&E	1,034.9
Goodwill	907.9
Other Noncurrent Assets, excluding Goodwill	207.6
Current Liabilities	(121.1		)
Noncurrent Liabilities	(421.6		)
Long-Term Debt	(771.2		)
Total Cash Purchase Price	$	877.7

Pro Forma Financial Information: The following unaudited pro forma financial information reflects the pro forma combined results of operations of Eversource and Aquarion and reflects the amortization of purchase price adjustments assuming the acquisition had taken place on January 1, 2016. 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 Eversource.



	For the Years Ended December 31,
(Pro forma amounts in millions, except share amounts)	2017		2016
Operating Revenues	$	7,947.7	$	7,849.0
Net Income Attributable to Common Shareholders	1,019.1		969.3
Basic EPS	3.21		3.05
Diluted EPS	3.20		3.04

Aquarion Revenues and Pre-Tax Income: The impact of Aquarion on Eversource's accompanying consolidated statement of income includes operating revenues of $15.9 million and pre-tax income of $1.1 million for the year ended December 31, 2017.

B. Goodwill

In a business combination, the excess of the purchase price over the estimated fair values of the assets acquired and liabilities assumed

is recognized as goodwill. Goodwill is evaluated for impairment at least annually and more frequently if indicators of impairment arise. In accordance with the accounting standards, if the fair value of a reporting unit is less than its carrying value (including goodwill), the goodwill is tested for impairment. Goodwill is not subject to amortization, however is subject to a fair value based assessment for impairment at least annually and whenever facts or circumstances indicate that there may be an impairment. A resulting write-down, if any, would be charged to Operating Expenses.

Eversource completed the acquisition of Aquarion on December 4, 2017, resulting in the addition of $0.9 billion of goodwill. Upon completion of the acquisition, Eversource determined that the reporting units for the purpose of testing goodwill are Electric Distribution, Electric Transmission, Natural Gas Distribution and Water. The goodwill resulting from the Aquarion acquisition has been entirely allocated to the Water reporting unit. These reporting units are consistent with the operating segments underlying the reportable segments identified in Note 21, "Segment Information," to the financial statements.

Eversource completed its annual goodwill impairment test for Electric Distribution, Electric Transmission and Natural Gas Distribution reporting units as of October 1, 2017 and determined that no impairment existed. There were no events subsequent to October 1, 2017 that indicated impairment of goodwill. The annual goodwill assessment included an evaluation of the Company's share price and credit ratings, analyst reports, financial performance, cost and risk factors, long-term strategy, growth and future projections, as well as macroeconomic, industry and market conditions. This evaluation required the consideration of several factors that impact the fair value of the reporting units, including conditions and assumptions that affect the future cash flows of the reporting units. Key considerations include discount rates, utility sector market performance and merger transaction multiples, and internal estimates of future cash flows and net income.

The following table presents goodwill by reportable segment:



(Billions of Dollars)	Electric Distribution		Electric Transmission		Natural Gas Distribution		Parent and Other		Total
Balance as of January 1, 2017	$	2.5	$	0.6	$	0.4	$	—	$	3.5
Acquisition of Aquarion	—		—		—		0.9		0.9
Balance as of December 31, 2017	$	2.5	$	0.6	$	0.4	$	0.9	$	4.4

VARIABLE INTEREST ENTITIES

The Company's variable interests outside of the consolidated group include contracts that are required by regulation and provide for regulatory recovery of contract costs and benefits through customer rates. Eversource, 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, with other independent power producers and with transmission businesses. Eversource, 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, Eversource, CL&P and NSTAR Electric do not consolidate these VIEs.

QUARTERLY FINANCIAL DATA (UNAUDITED)



	Quarter Ended
Eversource (Millions of Dollars, except per share information)	2017												2016
March 31,			June 30,			September 30,			December 31,			March 31,			June 30,			September 30,			December 31,
Operating Revenues	$	2,105.1		$	1,762.8		$	1,988.5		$	1,895.6		$	2,055.6		$	1,767.2		$	2,039.7		$	1,776.6
Operating Income	509.0			455.7			502.6			450.9			488.5			423.4			509.9			438.1
Net Income	261.3			232.6			262.2			239.4			246.0			205.5			267.2			231.1
Net Income Attributable to Common Shareholders	259.5			230.7			260.4			237.4			244.2			203.6			265.3			229.2
Basic EPS (1)	$	0.82		$	0.73		$	0.82		$	0.75		$	0.77		$	0.64		$	0.83		$	0.72
Diluted EPS (1)	$	0.82		$	0.73		$	0.82		$	0.75		$	0.77		$	0.64		$	0.83		$	0.72

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



	Quarter Ended
	2017								2016
(Millions of Dollars)	March 31,		June 30,		September 30,		December 31,		March 31,		June 30,		September 30,		December 31,
CL&P
Operating Revenues	$	732.3	$	666.6	$	774.8	$	713.7	$	735.3	$	679.8	$	760.0	$	630.9
Operating Income	176.0		176.0		177.5		155.6		171.5		162.1		176.1		163.5
Net Income	90.2		91.3		96.1		99.1		87.0		82.9		86.6		77.8
NSTAR Electric
Operating Revenues	$	733.8	$	704.7	$	851.9	$	690.2	$	742.2	$	707.6	$	904.4	$	687.4
Operating Income	161.6		182.7		234.4		128.9		142.9		159.7		240.8		130.8
Net Income	83.4		95.0		125.8		70.5		71.3		81.4		133.2		64.9
PSNH
Operating Revenues	$	253.2	$	230.4	$	250.0	$	248.0	$	242.3	$	218.5	$	266.9	$	231.8
Operating Income	68.3		64.9		67.4		71.2		70.7		63.1		74.7		54.6
Net Income	34.3		31.6		33.7		36.4		36.1		31.3		38.5		26.1

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