Item 8. Financial Statements and Supplementary Data

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Item 8. Financial Statements and Supplementary Data


Eversource
			Management’s Report on Internal Controls Over Financial Reporting
			Reports of Independent Registered Public Accounting Firm (PCAOB ID No. 34)
			Consolidated Financial Statements

CL&P
			Management’s Report on Internal Controls Over Financial Reporting
			Report of Independent Registered Public Accounting Firm (PCAOB ID No. 34)
			Financial Statements

NSTAR Electric
			Management’s Report on Internal Controls Over Financial Reporting
			Report of Independent Registered Public Accounting Firm (PCAOB ID No. 34)
			Consolidated Financial Statements

PSNH
			Management’s Report on Internal Controls Over Financial Reporting
			Report of Independent Registered Public Accounting Firm (PCAOB ID No. 34)
			Consolidated Financial Statements

Management’s 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, 2021.

February 16, 2022

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Trustees and Shareholders of Eversource Energy:

Opinion on Internal Control over Financial Reporting

We have audited the internal control over financial reporting of Eversource Energy and subsidiaries (the “Company”) as of December 31, 2021, 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 Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control - Integrated Framework (2013) issued by COSO.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended December 31, 2021, of the Company and our report dated February 16, 2022, expressed an unqualified opinion on those financial statements.

Basis for Opinion

The Company’s management is responsible 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 Management’s Report on Internal Controls Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. 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 audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

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 16, 2022

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Trustees and Shareholders of Eversource Energy:

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Eversource Energy and subsidiaries (the “Company”) as of December 31, 2021 and 2020, 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, 2021, and the related notes and the schedules 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, 2021 and 2020, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2021, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 16, 2022, expressed an unqualified opinion on the Company’s internal control over financial reporting.

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. 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.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Regulatory Accounting - Impact of Rate Regulation on the Financial Statements - Refer to Note 2 to the Financial Statements

Critical Audit Matter Description

The Company’s utility companies are subject to rate regulation by the Federal Energy Regulatory Commission and by their respective state public utility authorities in Connecticut, Massachusetts, or New Hampshire (the “Commissions”). The rate regulation by these Commissions is based on cost recovery. The regulated companies’ financial statements reflect the effects of the rate-making process. The rates charged to the customers of the Company’s regulated companies are designed to collect each company’s cost to provide service, plus a return on investment.

The application of accounting guidance for rate-regulated enterprises results in recording regulatory assets and liabilities. Regulatory assets represent the deferral of incurred costs that are probable of future recovery in customer rates. Regulatory assets are amortized as the incurred costs are recovered through customer rates. In some cases, the Company records regulatory assets before approval for recovery has been received from the applicable regulatory commission. The Company must use judgment to conclude that costs deferred as regulatory assets are probable of future recovery. The Company bases its conclusion on certain factors, including, but not limited to, regulatory precedent. Regulatory liabilities represent either revenues received from customers to fund expected costs that have not yet been incurred or probable future refunds to customers.

The Company uses judgment when recording regulatory assets and liabilities; however, regulatory commissions can reach different conclusions about the recovery of costs, and those conclusions could have a material impact on the Company’s financial statements. Management believes it is probable that each of the regulated companies will recover its respective investment 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.

Accounting for the economics of rate-regulation impacts multiple financial statement line items and disclosures, such as regulated property, plant, and equipment, regulatory assets and liabilities, operating revenues, depreciation expense and amortization of regulatory assets. While management has indicated it expects to recover costs from customers through regulated rates, there is a risk that the Commissions will not approve full recovery of such costs or full recovery of all amounts invested in the utility business and a reasonable return on that investment. We identified the impact of rate-regulation as a critical audit matter due to the significant judgments made by management to support its assertions about impact of future regulatory orders on the financial statements. Management judgments include assessing the probability of recovery in future rates of incurred costs and of a refund to customers. Given that management’s accounting judgments are based on assumptions about the outcome of future decisions by the Commissions, auditing these judgments requires specialized knowledge of accounting for rate regulation and the rate setting process due to its inherent complexities.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the uncertainty of future decisions by the Commissions included the following, among others:

We tested the effectiveness of management’s controls over the evaluation of the likelihood of (1) the recovery in future rates of costs incurred as property, plant, and equipment and deferred as regulatory assets, and (2) a refund or a future reduction in rates that should be reported as regulatory liabilities. We tested the effectiveness of management’s controls over the initial recognition of amounts as property, plant, and equipment; regulatory assets or liabilities; and the monitoring and evaluation of regulatory developments that may affect the likelihood of recovering costs in future rates, a refund, or a future reduction in rates.
We evaluated the Company’s disclosures related to the applicability and impacts of rate regulation, including the balances recorded and regulatory developments disclosed in the financial statements. This included an evaluation of disclosures related to Tropical Storm Isaias costs and other associated regulatory proceedings in Connecticut.
We read relevant regulatory orders issued by the Commissions for the Company, including orders in Connecticut associated with the Tropical Storm Isaias Response Investigation and associated settlement agreement. We also read orders issued by the Commissions for other public utilities, regulatory statutes, interpretations, procedural memorandums, filings made by intervenors, and other publicly available information to assess the likelihood of recovery in future rates or of a future refund or reduction in rates based on precedents of the Commissions’ treatment of similar costs under similar circumstances. We evaluated the external information and compared it to management’s recorded regulatory asset and liability balances for completeness.
For regulatory matters in process, we inspected the Company’s filings with the Commissions and the filings with the Commissions by intervenors that may impact the Company’s future rates, for any evidence that might contradict management’s assertions*.*
We made inquiries of management, including legal counsel, and obtained the regulatory orders and analysis from management that support the probability of recovery, refund, or future reductions in rates for regulatory assets and liabilities, including amounts related to Tropical Storm Isaias restoration costs and associated regulatory proceedings in Connecticut, to assess management’s assertion that amounts are probable of recovery, refund, or a future reduction in rates.

/s/ Deloitte & Touche LLP

Hartford, Connecticut

February 16, 2022

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

EVERSOURCE ENERGY AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS


	As of December 31,
(Thousands of Dollars)	2021		2020

ASSETS
Current Assets:
Cash	$	66,773	$	106,599
Receivables, Net (net of allowance for uncollectible accounts of $417,406 and $358,851 as of December 31, 2021 and 2020, respectively)	1,226,069		1,195,925
Unbilled Revenues	210,879		233,025
Fuel, Materials, Supplies and REC Inventory	267,547		265,599
Regulatory Assets	1,129,093		1,076,556
Prepayments and Other Current Assets	369,759		252,439
Total Current Assets	3,270,120		3,130,143
Property, Plant and Equipment, Net	33,377,650		30,882,523
Deferred Debits and Other Assets:
Regulatory Assets	4,586,709		5,493,330
Goodwill	4,477,269		4,445,988
Investments in Unconsolidated Affiliates	1,436,293		1,107,143
Marketable Securities	460,347		456,617
Other Long-Term Assets	883,756		583,854
Total Deferred Debits and Other Assets	11,844,374		12,086,932
Total Assets	$	48,492,144	$	46,099,598

LIABILITIES AND CAPITALIZATION
Current Liabilities:
Notes Payable	$	1,505,450	$	1,249,325
Long-Term Debt – Current Portion	1,193,097		1,053,186
Rate Reduction Bonds – Current Portion	43,210		43,210
Accounts Payable	1,672,230		1,370,647
Regulatory Liabilities	602,432		389,430
Other Current Liabilities	830,620		809,214
Total Current Liabilities	5,847,039		4,915,012
Deferred Credits and Other Liabilities:
Accumulated Deferred Income Taxes	4,597,120		4,095,339
Regulatory Liabilities	3,866,251		3,850,781
Derivative Liabilities	235,387		294,535
Asset Retirement Obligations	500,111		499,713
Accrued Pension, SERP and PBOP	242,463		1,653,788
Other Long-Term Liabilities	971,080		948,506
Total Deferred Credits and Other Liabilities	10,412,412		11,342,662
Long-Term Debt	17,023,577		15,125,876
Rate Reduction Bonds	453,702		496,912
Noncontrolling Interest - Preferred Stock of Subsidiaries	155,570		155,570
Common Shareholders' Equity:
Common Shares	1,789,092		1,789,092
Capital Surplus, Paid In	8,098,514		8,015,663
Retained Earnings	5,005,391		4,613,201
Accumulated Other Comprehensive Loss	(42,275)		(76,411)
Treasury Stock	(250,878)		(277,979)
Common Shareholders' Equity	14,599,844		14,063,566
Commitments and Contingencies (Note 13)
Total Liabilities and Capitalization	$	48,492,144	$	46,099,598

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)	2021		2020		2019

Operating Revenues	$	9,863,085	$	8,904,430	$	8,526,470

Operating Expenses:
Purchased Power, Fuel and Transmission	3,372,344		2,987,840		3,040,160
Operations and Maintenance	1,739,685		1,480,252		1,363,113
Depreciation	1,103,008		981,380		885,278
Amortization	231,965		177,679		195,380
Energy Efficiency Programs	592,775		535,760		501,369
Taxes Other Than Income Taxes	829,987		752,785		711,035
Impairment of Northern Pass Transmission	—		—		239,644
Total Operating Expenses	7,869,764		6,915,696		6,935,979
Operating Income	1,993,321		1,988,734		1,590,491
Interest Expense	582,334		538,452		533,197
Other Income, Net	161,282		108,590		132,777
Income Before Income Tax Expense	1,572,269		1,558,872		1,190,071
Income Tax Expense	344,223		346,186		273,499
Net Income	1,228,046		1,212,686		916,572
Net Income Attributable to Noncontrolling Interests	7,519		7,519		7,519
Net Income Attributable to Common Shareholders	$	1,220,527	$	1,205,167	$	909,053

Basic Earnings Per Common Share	$	3.55	$	3.56	$	2.83

Diluted Earnings Per Common Share	$	3.54	$	3.55	$	2.81

Weighted Average Common Shares Outstanding:
Basic	343,972,926		338,836,147		321,416,086
Diluted	344,631,056		339,847,062		322,941,636

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)	2021		2020		2019

Net Income	$	1,228,046	$	1,212,686	$	916,572
Other Comprehensive Income/(Loss), Net of Tax:
Qualified Cash Flow Hedging Instruments	972		1,596		1,393
Changes in Unrealized (Losses)/Gains on Marketable Securities	(671)		342		1,166
Changes in Funded Status of Pension, SERP and PBOP Benefit Plans	33,835		(13,290)		(7,618)
Other Comprehensive Income/(Loss), Net of Tax	34,136		(11,352)		(5,059)
Comprehensive Income Attributable to Noncontrolling Interests	(7,519)		(7,519)		(7,519)
Comprehensive Income Attributable to Common Shareholders	$	1,254,663	$	1,193,815	$	903,994

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, 2019	316,885,808	$	1,669,392	$	6,241,222	$	3,953,974	$	(60,000)	$	(317,771)	$	11,486,817
Net Income						916,572						916,572
Dividends on Common Shares - $2.14 Per Share						(685,979)						(685,979)
Dividends on Preferred Stock						(7,519)						(7,519)
Issuance of Common Shares - $5 par value	11,980,000	59,900		808,650								868,550
Long-Term Incentive Plan Activity				3,434								3,434
Issuance of Treasury Shares	1,014,837			50,758						18,716		69,474
Capital Stock Expense				(16,296)								(16,296)

Other Comprehensive Loss								(5,059)				(5,059)
Balance as of December 31, 2019	329,880,645	1,729,292		7,087,768		4,177,048		(65,059)		(299,055)		12,629,994
Net Income						1,212,686						1,212,686
Dividends on Common Shares - $2.27 Per Share						(767,500)						(767,500)
Dividends on Preferred Stock						(7,519)						(7,519)
Issuance of Common Shares - $5 par value	11,960,000	59,800		889,860								949,660
Long-Term Incentive Plan Activity				7,890								7,890
Issuance of Treasury Shares	1,113,378			50,812						21,076		71,888
Capital Stock Expense				(20,667)								(20,667)
Adoption of Accounting Standards Update 2016-13						(1,514)						(1,514)
Other Comprehensive Loss								(11,352)				(11,352)
Balance as of December 31, 2020	342,954,023	1,789,092		8,015,663		4,613,201		(76,411)		(277,979)		14,063,566
Net Income						1,228,046						1,228,046
Dividends on Common Shares - $2.41 Per Share						(828,337)						(828,337)
Dividends on Preferred Stock						(7,519)						(7,519)

Long-Term Incentive Plan Activity				3,537								3,537
Issuance of Treasury Shares	986,656			49,913						18,451		68,364

Issuance of Treasury Shares for Acquisition of New England Service Company	462,517			29,401						8,650		38,051

Other Comprehensive Income								34,136				34,136
Balance as of December 31, 2021	344,403,196	$	1,789,092	$	8,098,514	$	5,005,391	$	(42,275)	$	(250,878)	$	14,599,844

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)	2021		2020		2019

Operating Activities:
Net Income	$	1,228,046	$	1,212,686	$	916,572
Adjustments to Reconcile Net Income to Net Cash Flows Provided by Operating Activities:
Depreciation	1,103,008		981,380		885,278
Deferred Income Taxes	347,056		257,154		209,812
Uncollectible Expense	60,886		53,461		63,446
Pension, SERP and PBOP (Income)/Expense, Net	(14,693)		12,888		22,000
Pension and PBOP Contributions	(182,344)		(111,524)		(121,782)
Regulatory Underrecoveries, Net	(314,211)		(516,411)		(124,870)
Reserve at CL&P related to PURA Settlement Agreement and Storm Performance Penalty	81,274		—		—
Amortization	231,965		177,679		195,380
Payments Related to CYAPC's DOE Pre-1983 Spent Nuclear Fuel Obligation	—		—		(29,000)
Proceeds from DOE Spent Nuclear Fuel Litigation	—		—		68,840
Impairment of Northern Pass Transmission	—		—		239,644
Cost of Removal Expenditures	(242,130)		(148,332)		(153,477)
Other	(64,640)		(25,957)		(42,610)
Changes in Current Assets and Liabilities:
Receivables and Unbilled Revenues, Net	(135,505)		(351,843)		(98,716)
Fuel, Materials, Supplies and REC Inventory	(1,859)		(15,404)		(8,074)
Taxes Receivable/Accrued, Net	(110,621)		43,819		(16,129)
Accounts Payable	(29,201)		122,567		14,866
Other Current Assets and Liabilities, Net	5,569		(9,591)		(11,603)
Net Cash Flows Provided by Operating Activities	1,962,600		1,682,572		2,009,577

Investing Activities:
Investments in Property, Plant and Equipment	(3,175,080)		(2,942,996)		(2,911,489)
Proceeds from Sales of Marketable Securities	447,893		434,124		566,592

Purchases of Marketable Securities	(414,980)		(401,823)		(537,258)
Acquisition of Assets of Columbia Gas of Massachusetts, Net of Restricted Cash	—		(1,113,252)		—
Investments in Unconsolidated Affiliates, Net	(327,385)		(239,673)		(416,337)
Proceeds from the Sale of Hingham Water System	—		110,536		—

Other Investing Activities	22,178		23,809		24,204
Net Cash Flows Used in Investing Activities	(3,447,374)		(4,129,275)		(3,274,288)

Financing Activities:
Issuance of Common Shares, Net of Issuance Costs	—		928,992		852,254
Cash Dividends on Common Shares	(805,439)		(744,665)		(663,239)
Cash Dividends on Preferred Stock	(7,519)		(7,519)		(7,519)
Increase in Notes Payable	256,125		13,955		325,370
Repayment of Rate Reduction Bonds	(43,210)		(43,210)		(52,332)
Issuance of Long-Term Debt	3,230,000		2,760,000		1,520,000
Retirement of Long-Term Debt	(1,142,500)		(327,236)		(801,078)
Other Financing Activities	(46,625)		14,273		(1,006)
Net Cash Flows Provided by Financing Activities	1,440,832		2,594,590		1,172,450
Net (Decrease)/Increase in Cash and Restricted Cash	(43,942)		147,887		(92,261)
Cash and Restricted Cash - Beginning of Year	264,950		117,063		209,324
Cash and Restricted Cash - End of Year	$	221,008	$	264,950	$	117,063

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

Management’s 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, 2021.

February 16, 2022

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, 2021 and 2020, 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, 2021, 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, 2021 and 2020, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2021, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

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.

Critical Audit Matter

Regulatory Accounting - Impact of Rate Regulation on the Financial Statements - Refer to Note 2 to the Financial Statements

Critical Audit Matter Description

The Company is subject to rate regulation by the Federal Energy Regulatory Commission and the state public utility authority in Connecticut (the “Commissions”). The rate regulation by these Commissions is based on cost recovery. The Company’s financial statements reflect the effects of the rate-making process. The rates charged to the customers are designed to collect the Company’s cost to provide service, plus a return on investment.

The Company uses judgment when recording regulatory assets and liabilities; however, regulatory commissions can reach different conclusions about the recovery of costs, and those conclusions could have a material impact on the Company’s financial statements. Management believes it is probable that the Company will recover its investment 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 the Company’s 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.

Accounting for the economics of rate-regulation impacts multiple financial statement line items and disclosures, such as regulated property, plant, and equipment, regulatory assets and liabilities, operating revenues, depreciation expense and amortization of regulatory assets. While management has indicated it expects to recover costs from customers through regulated rates, there is a risk that the Commissions will not approve full recovery of such costs or full recovery of all amounts invested in the Company and a reasonable return on that investment. We identified the impact of rate-regulation as a critical audit matter due to the significant judgments made by management to support its assertions about impact of future regulatory orders on the financial statements. Management judgments include assessing the probability of recovery in future rates of incurred costs and of a refund to customers. Given that management’s accounting judgments are based on assumptions about the outcome of future decisions by the Commissions, auditing these judgments requires specialized knowledge of accounting for rate regulation and the rate setting process due to its inherent complexities.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the uncertainty of future decisions by the Commissions included the following, among others:

We tested the effectiveness of management’s controls over the evaluation of the likelihood of (1) the recovery in future rates of costs incurred as property, plant, and equipment and deferred as regulatory assets, and (2) a refund or a future reduction in rates that should be reported as regulatory liabilities. We tested the effectiveness of management’s controls over the initial recognition of amounts as property, plant, and equipment; regulatory assets or liabilities; and the monitoring and evaluation of regulatory developments that may affect the likelihood of recovering costs in future rates, a refund, or a future reduction in rates.
We evaluated the Company’s disclosures related to the applicability and impacts of rate regulation, including the balances recorded and regulatory developments disclosed in the financial statements. This included an evaluation of disclosures related to Tropical Storm Isaias costs and associated regulatory proceedings.
We read relevant regulatory orders issued by the Commissions for the Company, including orders associated with the Tropical Storm Isaias Response Investigation and associated settlement agreement. We also read orders issued by the Commissions for other public utilities, regulatory statutes, interpretations, procedural memorandums, filings made by intervenors, and other publicly available information to assess the likelihood of recovery in future rates or of a future refund or reduction in rates based on precedents of the Commissions’ treatment of similar costs under similar circumstances. We evaluated the external information and compared it to management’s recorded regulatory asset and liability balances for completeness.
For regulatory matters in process, we inspected the Company’s filings with the Commissions and the filings with the Commissions by intervenors that may impact the Company’s future rates, for any evidence that might contradict management’s assertions*.*
We made inquiries of management, including legal counsel, and obtained the regulatory orders and analysis from management that support the probability of recovery, refund, or future reductions in rates for regulatory assets and liabilities, including amounts related to Tropical Storm Isaias restoration costs and associated regulatory proceedings, to assess management’s assertion that amounts are probable of recovery, refund, or a future reduction in rates.

/s/ Deloitte & Touche LLP

Hartford, Connecticut

February 16, 2022

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)	2021		2020

ASSETS
Current Assets:
Cash	$	55,804	$	90,801
Receivables, Net (net of allowance for uncollectible accounts of $181,319 and $157,447 as of December 31, 2021 and 2020, respectively)	447,774		459,214
Accounts Receivable from Affiliated Companies	43,944		17,486
Unbilled Revenues	56,787		57,407
Materials and Supplies	60,264		57,924
Regulatory Assets	371,609		345,622
Prepayments and Other Current Assets	120,257		83,950
Total Current Assets	1,156,439		1,112,404
Property, Plant and Equipment, Net	10,803,543		10,234,556
Deferred Debits and Other Assets:
Regulatory Assets	1,713,161		1,866,152
Other Long-Term Assets	276,513		242,862
Total Deferred Debits and Other Assets	1,989,674		2,109,014
Total Assets	$	13,949,656	$	13,455,974

LIABILITIES AND CAPITALIZATION
Current Liabilities:


Accounts Payable	$	533,454	$	451,240
Accounts Payable to Affiliated Companies	132,578		51,118
Obligations to Third Party Suppliers	43,183		49,967
Regulatory Liabilities	266,489		137,166
Derivative Liabilities	73,528		68,767
Other Current Liabilities	98,772		102,060
Total Current Liabilities	1,148,004		860,318
Deferred Credits and Other Liabilities:
Accumulated Deferred Income Taxes	1,562,102		1,408,343
Regulatory Liabilities	1,193,259		1,204,942
Derivative Liabilities	235,387		294,535
Accrued Pension, SERP and PBOP	26,820		478,325
Other Long-Term Liabilities	153,004		133,690
Total Deferred Credits and Other Liabilities	3,170,572		3,519,835
Long-Term Debt	4,215,379		3,914,835
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	3,010,765		2,810,765
Retained Earnings	2,228,133		2,173,367
Accumulated Other Comprehensive Income	251		302
Common Stockholder's Equity	5,299,501		5,044,786
Commitments and Contingencies (Note 13)
Total Liabilities and Capitalization	$	13,949,656	$	13,455,974

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)	2021		2020		2019

Operating Revenues	$	3,637,412	$	3,547,527	$	3,232,551

Operating Expenses:
Purchased Power and Transmission	1,392,969		1,369,196		1,188,202
Operations and Maintenance	644,175		572,897		549,167
Depreciation	338,915		320,709		301,188
Amortization of Regulatory Assets, Net	99,009		58,412		51,621
Energy Efficiency Programs	129,564		141,453		118,235
Taxes Other Than Income Taxes	363,862		344,451		342,489
Total Operating Expenses	2,968,494		2,807,118		2,550,902
Operating Income	668,918		740,409		681,649
Interest Expense	166,107		153,547		151,357
Other Income, Net	30,187		20,774		17,531
Income Before Income Tax Expense	532,998		607,636		547,823
Income Tax Expense	131,273		149,702		136,971
Net Income	$	401,725	$	457,934	$	410,852

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

STATEMENTS OF COMPREHENSIVE INCOME


	For the Years Ended December 31,
(Thousands of Dollars)	2021		2020		2019

Net Income	$	401,725	$	457,934	$	410,852
Other Comprehensive (Loss)/Income, Net of Tax:
Qualified Cash Flow Hedging Instruments	(26)		(26)		(26)
Changes in Unrealized (Losses)/Gains on Marketable Securities	(25)		12		41
Other Comprehensive (Loss)/Income, Net of Tax	(51)		(14)		15
Comprehensive Income	$	401,674	$	457,920	$	410,867

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 Income		Total Common Stockholder's Equity
(Thousands of Dollars, Except Stock Information)	Stock	Amount
Balance as of January 1, 2019	6,035,205	$	60,352	$	2,410,765	$	1,727,899	$	301	$	4,199,317
Net Income						410,852				410,852
Dividends on Preferred Stock						(5,559)				(5,559)
Dividends on Common Stock						(341,800)				(341,800)
Capital Contributions from Eversource Parent				125,000						125,000
Other Comprehensive Income								15		15
Balance as of December 31, 2019	6,035,205	60,352		2,535,765		1,791,392		316		4,387,825
Net Income						457,934				457,934
Dividends on Preferred Stock						(5,559)				(5,559)
Dividends on Common Stock						(69,500)				(69,500)
Capital Contributions from Eversource Parent				275,000						275,000
Adoption of Accounting Standards Update 2016-13						(900)				(900)
Other Comprehensive Loss								(14)		(14)
Balance as of December 31, 2020	6,035,205	60,352		2,810,765		2,173,367		302		5,044,786
Net Income						401,725				401,725
Dividends on Preferred Stock						(5,559)				(5,559)
Dividends on Common Stock						(341,400)				(341,400)
Capital Contributions from Eversource Parent				200,000						200,000

Other Comprehensive Loss								(51)		(51)
Balance as of December 31, 2021	6,035,205	$	60,352	$	3,010,765	$	2,228,133	$	251	$	5,299,501

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)	2021		2020		2019

Operating Activities:
Net Income	$	401,725	$	457,934	$	410,852
Adjustments to Reconcile Net Income to Net Cash Flows Provided by Operating Activities:
Depreciation	338,915		320,709		301,188
Deferred Income Taxes	123,889		144,527		54,005
Uncollectible Expense	13,495		12,882		15,948
Pension, SERP and PBOP Expense, Net	5,295		11,372		12,761
Pension Contributions	(98,913)		(23,200)		(24,000)
Regulatory Underrecoveries, Net	(152,775)		(279,941)		(24,653)
Reserve related to PURA Settlement Agreement and Storm Performance Penalty	81,274		—		—
Amortization of Regulatory Assets, Net	99,009		58,412		51,621
Cost of Removal Expenditures	(95,792)		(57,343)		(60,399)
Other	(10,194)		(57,870)		(19,867)
Changes in Current Assets and Liabilities:
Receivables and Unbilled Revenues, Net	(75,881)		(126,638)		(52,746)
Materials and Supplies	(2,339)		(7,225)		(6,171)
Taxes Receivable/Accrued, Net	(25,162)		(12,014)		(23,089)
Accounts Payable	24,895		(17,028)		102,344
Other Current Assets and Liabilities, Net	(14,586)		(27,504)		(11,350)
Net Cash Flows Provided by Operating Activities	612,855		397,073		726,444

Investing Activities:
Investments in Property, Plant and Equipment	(790,083)		(833,973)		(917,532)
Other Investing Activities	329		573		714
Net Cash Flows Used in Investing Activities	(789,754)		(833,400)		(916,818)

Financing Activities:
Cash Dividends on Common Stock	(341,400)		(69,500)		(341,800)
Cash Dividends on Preferred Stock	(5,559)		(5,559)		(5,559)
(Decrease)/Increase in Notes Payable to Eversource Parent	—		(63,800)		63,800
Issuance of Long-Term Debt	425,000		400,000		500,000
Retirement of Long-Term Debt	(120,500)		—		(250,000)
Capital Contributions from Eversource Parent	200,000		275,000		125,000
Other Financing Activities	(5,663)		(4,976)		12,291
Net Cash Flows Provided by Financing Activities	151,878		531,165		103,732
(Decrease)/Increase in Cash and Restricted Cash	(25,021)		94,838		(86,642)
Cash and Restricted Cash - Beginning of Year	99,809		4,971		91,613
Cash and Restricted Cash - End of Year	$	74,788	$	99,809	$	4,971

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

Management’s 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, 2021.

February 16, 2022

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, 2021 and 2020, 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, 2021, 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, 2021 and 2020, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2021 in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

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.

Critical Audit Matter

Regulatory Accounting - Impact of Rate Regulation on the Financial Statements - Refer to Note 2 to the Financial Statements

Critical Audit Matter Description

The Company is subject to rate regulation by the Federal Energy Regulatory Commission and the state public utility authority in Massachusetts (the “Commissions”). The rate regulation by these Commissions is based on cost recovery. The Company’s financial statements reflect the effects of the rate-making process. The rates charged to the customers are designed to collect the Company’s cost to provide service, plus a return on investment.

The Company uses judgment when recording regulatory assets and liabilities; however, regulatory commissions can reach different conclusions about the recovery of costs, and those conclusions could have a material impact on the Company’s financial statements. Management believes it is probable that the Company will recover its investment 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 the Company’s 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.

Accounting for the economics of rate-regulation impacts multiple financial statement line items and disclosures, such as regulated property, plant, and equipment, regulatory assets and liabilities, operating revenues, depreciation expense and amortization of regulatory assets. While management has indicated it expects to recover costs from customers through regulated rates, there is a risk that the Commissions will not approve full recovery of such costs or full recovery of all amounts invested in the Company and a reasonable return on that investment. We identified the impact of rate-regulation as a critical audit matter due to the significant judgments made by management to support its assertions about impact of future regulatory orders on the financial statements. Management judgments include assessing the probability of recovery in future rates of incurred costs and of a refund to customers. Given that management’s accounting judgments are based on assumptions about the outcome of future decisions by the Commissions, auditing these judgments requires specialized knowledge of accounting for rate regulation and the rate setting process due to its inherent complexities.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the uncertainty of future decisions by the Commissions included the following, among others:

We tested the effectiveness of management’s controls over the evaluation of the likelihood of (1) the recovery in future rates of costs incurred as property, plant, and equipment and deferred as regulatory assets, and (2) a refund or a future reduction in rates that should be reported as regulatory liabilities. We tested the effectiveness of management’s controls over the initial recognition of amounts as property, plant, and equipment; regulatory assets or liabilities; and the monitoring and evaluation of regulatory developments that may affect the likelihood of recovering costs in future rates, a refund, or a future reduction in rates.
We evaluated the Company’s disclosures related to the applicability and impacts of rate regulation, including the balances recorded and regulatory developments disclosed in the financial statements.
We read relevant regulatory orders issued by the Commissions for the Company and other public utilities, regulatory statutes, interpretations, procedural memorandums, filings made by intervenors, and other publicly available information to assess the likelihood of recovery in future rates or of a future refund or reduction in rates based on precedents of the Commissions’ treatment of similar costs under similar circumstances. We evaluated the external information and compared it to management’s recorded regulatory asset and liability balances for completeness.
For regulatory matters in process, we inspected the Company’s filings with the Commissions and the filings with the Commissions by intervenors that may impact the Company’s future rates, for any evidence that might contradict management’s assertions*.*
We made inquiries of management, including legal counsel, and obtained the regulatory orders and analysis from management that support the probability of recovery, refund, or future reductions in rates for regulatory assets and liabilities to assess management’s assertion that amounts are probable of recovery, refund, or a future reduction in rates.

/s/ Deloitte & Touche LLP

Hartford, Connecticut

February 16, 2022

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)	2021		2020

ASSETS
Current Assets:
Cash	$	745	$	102
Receivables, Net (net of allowance for uncollectible accounts of $97,005 and $91,583 as of December 31, 2021 and 2020, respectively)	405,674		403,045
Accounts Receivable from Affiliated Companies	67,420		30,095
Unbilled Revenues	37,497		38,342
Materials, Supplies and REC Inventory	116,712		133,894
Taxes Receivable	80,617		65,051
Regulatory Assets	443,956		399,882
Prepayments and Other Current Assets	22,397		21,833
Total Current Assets	1,175,018		1,092,244
Property, Plant and Equipment, Net	10,876,614		10,123,062
Deferred Debits and Other Assets:
Regulatory Assets	1,135,231		1,304,019
Prepaid Pension and PBOP	441,426		204,138
Other Long-Term Assets	171,657		162,836
Total Deferred Debits and Other Assets	1,748,314		1,670,993
Total Assets	$	13,799,946	$	12,886,299

LIABILITIES AND CAPITALIZATION
Current Liabilities:
Notes Payable	$	162,500	$	195,000
Notes Payable to Eversource Parent	—		21,300
Long-Term Debt – Current Portion	400,000		250,000
Accounts Payable	490,915		383,558
Accounts Payable to Affiliated Companies	129,575		95,703
Obligations to Third Party Suppliers	116,273		98,572
Renewable Portfolio Standards Compliance Obligations	100,200		127,536
Regulatory Liabilities	228,248		164,761
Other Current Liabilities	84,303		72,118
Total Current Liabilities	1,712,014		1,408,548
Deferred Credits and Other Liabilities:
Accumulated Deferred Income Taxes	1,579,508		1,459,906
Regulatory Liabilities	1,559,072		1,550,390
Accrued Pension and SERP	2,046		172,571
Other Long-Term Liabilities	345,888		337,245
Total Deferred Credits and Other Liabilities	3,486,514		3,520,112
Long-Term Debt	3,585,399		3,393,221
Preferred Stock Not Subject to Mandatory Redemption	43,000		43,000
Common Stockholder's Equity:
Common Stock	—		—
Capital Surplus, Paid In	2,253,942		1,993,942
Retained Earnings	2,718,576		2,527,167
Accumulated Other Comprehensive Income	501		309
Common Stockholder's Equity	4,973,019		4,521,418
Commitments and Contingencies (Note 13)
Total Liabilities and Capitalization	$	13,799,946	$	12,886,299

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)	2021		2020		2019

Operating Revenues	$	3,056,350	$	2,941,148	$	3,044,642

Operating Expenses:
Purchased Power and Transmission	932,530		879,244		1,064,289
Operations and Maintenance	563,172		534,118		468,436
Depreciation	337,451		319,468		296,500
Amortization of Regulatory Assets, Net	55,774		83,248		103,735
Energy Efficiency Programs	288,612		263,986		289,206
Taxes Other Than Income Taxes	216,703		206,764		195,586
Total Operating Expenses	2,394,242		2,286,828		2,417,752
Operating Income	662,108		654,320		626,890
Interest Expense	146,048		130,508		114,198
Other Income, Net	74,844		52,017		44,577
Income Before Income Tax Expense	590,904		575,829		557,269
Income Tax Expense	114,335		130,828		125,313
Net Income	$	476,569	$	445,001	$	431,956

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)	2021		2020		2019

Net Income	$	476,569	$	445,001	$	431,956
Other Comprehensive Income, Net of Tax:
Changes in Funded Status of SERP Benefit Plan	(100)		(286)		1,084
Qualified Cash Flow Hedging Instruments	298		437		437
Changes in Unrealized (Losses)/Gains on Marketable Securities	(6)		3		12
Other Comprehensive Income, Net of Tax	192		154		1,533
Comprehensive Income	$	476,761	$	445,155	$	433,489

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)/Income		Total Common Stockholder's Equity
(Thousands of Dollars, Except Stock Information)	Stock	Amount
Balance as of January 1, 2019	200	$	—	$	1,633,442	$	2,098,091	$	(1,378)	$	3,730,155
Net Income						431,956				431,956
Dividends on Preferred Stock						(1,960)				(1,960)
Dividends on Common Stock						(181,800)				(181,800)
Capital Contributions from Eversource Parent				180,000						180,000
Other Comprehensive Income								1,533		1,533
Balance as of December 31, 2019	200	—		1,813,442		2,346,287		155		4,159,884
Net Income						445,001				445,001
Dividends on Preferred Stock						(1,960)				(1,960)
Dividends on Common Stock						(262,000)				(262,000)
Capital Contributions from Eversource Parent				180,500						180,500
Adoption of Accounting Standards Update 2016-13						(161)				(161)
Other Comprehensive Income								154		154
Balance as of December 31, 2020	200	—		1,993,942		2,527,167		309		4,521,418
Net Income						476,569				476,569
Dividends on Preferred Stock						(1,960)				(1,960)
Dividends on Common Stock						(283,200)				(283,200)
Capital Contributions from Eversource Parent				260,000						260,000
Other Comprehensive Income								192		192
Balance as of December 31, 2021	200	$	—	$	2,253,942	$	2,718,576	$	501	$	4,973,019

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)	2021		2020		2019

Operating Activities:
Net Income	$	476,569	$	445,001	$	431,956
Adjustments to Reconcile Net Income to Net Cash Flows Provided by Operating Activities:
Depreciation	337,451		319,468		296,500
Deferred Income Taxes	57,507		72,595		27,107
Pension, SERP and PBOP Income, Net	(26,120)		(18,132)		(12,399)
Pension and PBOP Contributions	(30,000)		(650)		(6,359)
Regulatory Underrecoveries, Net	(79,075)		(186,081)		(60,863)
Amortization of Regulatory Assets, Net	55,774		83,248		103,735
Uncollectible Expense	16,649		15,293		25,079
Cost of Removal Expenditures	(58,967)		(39,166)		(44,363)
Other	(32,447)		(22,888)		(33,857)
Changes in Current Assets and Liabilities:
Receivables and Unbilled Revenues, Net	(45,774)		(81,571)		(11,087)
Materials, Supplies and REC Inventory	17,182		(9,834)		(9,858)
Taxes Receivable/Accrued, Net	(16,219)		(44,045)		14,147
Accounts Payable	31,650		25,573		(22,659)
Other Current Assets and Liabilities, Net	(3,238)		(32,997)		1,194
Net Cash Flows Provided by Operating Activities	700,942		525,814		698,273

Investing Activities:
Investments in Property, Plant and Equipment	(960,949)		(907,000)		(861,391)


Other Investing Activities	91		159		86
Net Cash Flows Used in Investing Activities	(960,858)		(906,841)		(861,305)

Financing Activities:
Cash Dividends on Common Stock	(283,200)		(262,000)		(181,800)
Cash Dividends on Preferred Stock	(1,960)		(1,960)		(1,960)
(Decrease)/Increase in Notes Payable	(32,500)		184,500		(268,000)
(Decrease)/Increase in Notes Payable to Eversource Parent	(21,300)		(9,000)		30,300
Capital Contributions from Eversource Parent	260,000		180,500		180,000
Issuance of Long-Term Debt	600,000		400,000		400,000
Retirement of Long-Term Debt	(250,000)		(95,000)		—
Other Financing Activities	(10,355)		(4,915)		(3,855)
Net Cash Flows Provided by Financing Activities	260,685		392,125		154,685
Net Increase/(Decrease) in Cash and Restricted Cash	769		11,098		(8,347)
Cash and Restricted Cash - Beginning of Year	17,410		6,312		14,659
Cash and Restricted Cash - End of Year	$	18,179	$	17,410	$	6,312

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

Management’s 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 subsidiaries (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, 2021.

February 16, 2022

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 subsidiaries (the “Company”) as of December 31, 2021 and 2020, 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, 2021, 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, 2021 and 2020, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2021, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

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.

Critical Audit Matter

Regulatory Accounting - Impact of Rate Regulation on the Financial Statements - Refer to Note 2 to the Financial Statements

Critical Audit Matter Description

The Company is subject to rate regulation by the Federal Energy Regulatory Commission and the state public utility authority in New Hampshire (the “Commissions”). The rate regulation by these Commissions is based on cost recovery. The Company’s financial statements reflect the effects of the rate-making process. The rates charged to the customers are designed to collect the Company’s cost to provide service, plus a return on investment.

The Company uses judgment when recording regulatory assets and liabilities; however, regulatory commissions can reach different conclusions about the recovery of costs, and those conclusions could have a material impact on the Company’s financial statements. Management believes it is probable that the Company will recover its investment 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 the Company’s 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.

Accounting for the economics of rate-regulation impacts multiple financial statement line items and disclosures, such as regulated property, plant, and equipment, regulatory assets and liabilities, operating revenues, depreciation expense and amortization of regulatory assets. While management has indicated it expects to recover costs from customers through regulated rates, there is a risk that the Commissions will not approve full recovery of such costs or full recovery of all amounts invested in the Company and a reasonable return on that investment. We identified the impact of rate-regulation as a critical audit matter due to the significant judgments made by management to support its assertions about impact of future regulatory orders on the financial statements. Management judgments include assessing the probability of recovery in future rates of incurred costs and of a refund to customers. Given that management’s accounting judgments are based on assumptions about the outcome of future decisions by the Commissions, auditing these judgments requires specialized knowledge of accounting for rate regulation and the rate setting process due to its inherent complexities.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the uncertainty of future decisions by the Commissions included the following, among others:

We tested the effectiveness of management’s controls over the evaluation of the likelihood of (1) the recovery in future rates of costs incurred as property, plant, and equipment and deferred as regulatory assets, and (2) a refund or a future reduction in rates that should be reported as regulatory liabilities. We tested the effectiveness of management’s controls over the initial recognition of amounts as property, plant, and equipment; regulatory assets or liabilities; and the monitoring and evaluation of regulatory developments that may affect the likelihood of recovering costs in future rates, a refund, or a future reduction in rates.
We evaluated the Company’s disclosures related to the applicability and impacts of rate regulation, including the balances recorded and regulatory developments disclosed in the financial statements.
We read relevant regulatory orders issued by the Commissions for the Company and other public utilities, regulatory statutes, interpretations, procedural memorandums, filings made by intervenors, and other publicly available information to assess the likelihood of recovery in future rates or of a future refund or reduction in rates based on precedents of the Commissions’ treatment of similar costs under similar circumstances. We evaluated the external information and compared it to management’s recorded regulatory asset and liability balances for completeness.
For regulatory matters in process, we inspected the Company’s filings with the Commissions and the filings with the Commissions by intervenors that may impact the Company’s future rates, for any evidence that might contradict management’s assertions*.*
We made inquiries of management, including legal counsel, and obtained the regulatory orders and analysis from management that support the probability of recovery, refund, or future reductions in rates for regulatory assets and liabilities to assess management’s assertion that amounts are probable of recovery, refund, or a future reduction in rates.

/s/ Deloitte & Touche LLP

Hartford, Connecticut

February 16, 2022

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

PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS


	As of December 31,
(Thousands of Dollars)	2021		2020

ASSETS
Current Assets:
Cash	$	15	$	141
Receivables, Net (net of allowance for uncollectible accounts of $24,331 and $17,157 as of December 31, 2021 and 2020, respectively)	124,232		119,899
Accounts Receivable from Affiliated Companies	17,156		10,925
Unbilled Revenues	53,937		46,041

Materials, Supplies and REC Inventory	25,930		26,829
Regulatory Assets	107,169		115,852
Special Deposits	31,390		36,767
Prepaid Property Taxes	15,165		26,257
Prepayments and Other Current Assets	6,944		10,788
Total Current Assets	381,938		393,499
Property, Plant and Equipment, Net	3,656,462		3,374,270
Deferred Debits and Other Assets:
Regulatory Assets	679,182		873,203
Other Long-Term Assets	23,202		23,733
Total Deferred Debits and Other Assets	702,384		896,936
Total Assets	$	4,740,784	$	4,664,705

LIABILITIES AND CAPITALIZATION
Current Liabilities:
Notes Payable to Eversource Parent	$	110,600	$	46,300
Long-Term Debt – Current Portion	—		282,000
Rate Reduction Bonds – Current Portion	43,210		43,210
Accounts Payable	166,452		132,635
Accounts Payable to Affiliated Companies	43,485		43,397
Regulatory Liabilities	120,176		58,756

Other Current Liabilities	63,005		58,487
Total Current Liabilities	546,928		664,785
Deferred Credits and Other Liabilities:
Accumulated Deferred Income Taxes	537,978		537,627
Regulatory Liabilities	381,366		383,183
Accrued Pension, SERP and PBOP	30,184		184,715
Other Long-Term Liabilities	34,080		37,874
Total Deferred Credits and Other Liabilities	983,608		1,143,399
Long-Term Debt	1,163,833		817,070
Rate Reduction Bonds	453,702		496,912
Common Stockholder's Equity:
Common Stock	—		—
Capital Surplus, Paid In	1,088,134		928,134
Retained Earnings	504,556		615,018
Accumulated Other Comprehensive Income/(Loss)	23		(613)
Common Stockholder's Equity	1,592,713		1,542,539
Commitments and Contingencies (Note 13)
Total Liabilities and Capitalization	$	4,740,784	$	4,664,705

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

PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME


	For the Years Ended December 31,
(Thousands of Dollars)	2021		2020		2019

Operating Revenues	$	1,177,248	$	1,079,095	$	1,065,936

Operating Expenses:
Purchased Power and Transmission	370,271		364,067		398,449
Operations and Maintenance	237,659		219,325		210,995
Depreciation	120,065		100,372		93,737
Amortization of Regulatory Assets, Net	86,832		52,804		57,732
Energy Efficiency Programs	38,752		37,583		25,982
Taxes Other Than Income Taxes	91,465		81,611		62,574
Total Operating Expenses	945,044		855,762		849,469
Operating Income	232,204		223,333		216,467
Interest Expense	56,998		58,127		60,666
Other Income, Net	14,565		13,786		19,222
Income Before Income Tax Expense	189,771		178,992		175,023
Income Tax Expense	39,433		31,680		40,975
Net Income	$	150,338	$	147,312	$	134,048

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)	2021		2020		2019

Net Income	$	150,338	$	147,312	$	134,048
Other Comprehensive Income, Net of Tax:
Qualified Cash Flow Hedging Instruments	673		1,075		1,075
Changes in Unrealized (Losses)/Gains on Marketable Securities	(37)		19		69
Other Comprehensive Income, Net of Tax	636		1,094		1,144
Comprehensive Income	$	150,974	$	148,406	$	135,192

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

PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE AND SUBSIDIARIES

CONSOLIDATED 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, 2019	301	$	—	$	678,134	$	627,258	$	(2,851)	$	1,302,541
Net Income						134,048				134,048
Dividends on Common Stock						(271,000)				(271,000)
Capital Contributions from Eversource Parent				225,000						225,000
Other Comprehensive Income								1,144		1,144
Balance as of December 31, 2019	301	—		903,134		490,306		(1,707)		1,391,733
Net Income						147,312				147,312
Dividends on Common Stock						(22,300)				(22,300)
Capital Contributions from Eversource Parent				25,000						25,000
Adoption of Accounting Standards Update 2016-13						(300)				(300)
Other Comprehensive Income								1,094		1,094
Balance as of December 31, 2020	301	—		928,134		615,018		(613)		1,542,539
Net Income						150,338				150,338
Dividends on Common Stock						(260,800)				(260,800)
Capital Contributions from Eversource Parent				160,000						160,000

Other Comprehensive Income								636		636
Balance as of December 31, 2021	301	$	—	$	1,088,134	$	504,556	$	23	$	1,592,713

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

PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS


	For the Years Ended December 31,
(Thousands of Dollars)	2021		2020		2019

Operating Activities:
Net Income	$	150,338	$	147,312	$	134,048
Adjustments to Reconcile Net Income to Net Cash Flows Provided by Operating Activities:
Depreciation	120,065		100,372		93,737
Deferred Income Taxes	(14,530)		7,337		15,917
Uncollectible Expense	13,113		5,164		6,726
Pension, SERP and PBOP (Income)/Expense, Net	(3,296)		(1,255)		417
Pension Contributions	—		(19,500)		(15,400)
Regulatory Over/(Underrecoveries), Net	32,587		(45,830)		(26,288)
Amortization of Regulatory Assets, Net	86,832		52,804		57,732

Cost of Removal Expenditures	(30,804)		(22,063)		(21,814)
Other	(1,370)		17,221		(6,414)
Changes in Current Assets and Liabilities:
Receivables and Unbilled Revenues, Net	(32,003)		(33,612)		(210)
Materials, Supplies and REC Inventory	899		(1,872)		1,902
Taxes Receivable/Accrued, Net	3,952		(6,942)		25,374
Accounts Payable	(3,256)		27,270		12,281
Other Current Assets and Liabilities, Net	13,555		(7,738)		(3,573)
Net Cash Flows Provided by Operating Activities	336,082		218,668		274,435

Investing Activities:
Investments in Property, Plant and Equipment	(326,379)		(342,586)		(308,993)


Other Investing Activities	562		982		1,023
Net Cash Flows Used in Investing Activities	(325,817)		(341,604)		(307,970)

Financing Activities:
Cash Dividends on Common Stock	(260,800)		(22,300)		(271,000)
Increase/(Decrease) in Notes Payable to Eversource Parent	64,300		19,300		(30,000)
Issuance of Long-Term Debt	350,000		150,000		300,000
Retirement of Long-Term Debt	(282,000)		—		(150,000)
Repayment of Rate Reduction Bonds	(43,210)		(43,210)		(52,332)

Capital Contributions from Eversource Parent	160,000		25,000		225,000
Other Financing Activities	(2,984)		(2,987)		(4,168)
Net Cash Flows (Used in)/Provided by Financing Activities	(14,694)		125,803		17,500
Net (Decrease)/Increase in Cash and Restricted Cash	(4,429)		2,867		(16,035)
Cash and Restricted Cash - Beginning of Year	39,555		36,688		52,723
Cash and Restricted Cash - End of Year	$	35,126	$	39,555	$	36,688

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 SUBSIDIARIES

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.

1. 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, NSTAR Gas and Eversource Gas Company of Massachusetts (EGMA) (natural gas utilities) and Aquarion (water utilities). Eversource provides energy delivery and/or water service to approximately 4.4 million electric, natural gas and water customers through ten regulated utilities in Connecticut, Massachusetts and New Hampshire.

On October 9, 2020, Eversource acquired certain assets and liabilities that comprised the NiSource Inc. (NiSource) natural gas distribution business in Massachusetts, which was previously doing business as Columbia Gas of Massachusetts (CMA), pursuant to an asset purchase agreement (the Agreement) entered into on February 26, 2020 between Eversource and NiSource. The natural gas distribution assets acquired from CMA were assigned to EGMA, an indirect wholly-owned subsidiary of Eversource formed in 2020. The LNG assets acquired from CMA were assigned to Hopkinton LNG Corp. The cash purchase price was $1.1 billion, plus a working capital amount of $68.6 million, as finalized in the first quarter of 2021. Eversource's consolidated financial information includes the results of the acquisition of the assets of CMA beginning on October 9, 2020. See Note 24, "Acquisition of Assets of Columbia Gas of Massachusetts," for further information.

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, Yankee Gas and Aquarion, the DPU for NSTAR Electric, NSTAR Gas, EGMA and Aquarion, and the NHPUC for PSNH and Aquarion).

CL&P, NSTAR Electric and PSNH furnish franchised retail electric service in Connecticut, Massachusetts and New Hampshire, respectively. NSTAR Gas and EGMA are engaged in the distribution and sale of natural gas to customers within Massachusetts and Yankee Gas is engaged in the distribution and sale of natural gas to customers within Connecticut. 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 includes the results of NSTAR Electric's solar power facilities.

Eversource Service, Eversource's service company, and several wholly-owned real estate subsidiaries of Eversource, provide support services to Eversource, including its regulated companies.

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 the operations of CYAPC and YAEC, both of which are inactive regional nuclear power companies engaged in the long-term storage of their spent nuclear fuel. Eversource consolidates CYAPC and YAEC because CL&P's, NSTAR Electric's and PSNH's combined ownership and voting interests in each of these entities is greater than 50 percent. Intercompany transactions between CL&P, NSTAR Electric, PSNH and the CYAPC and YAEC companies have been eliminated in consolidation of the Eversource financial statements.

Eversource holds several equity ownership interests that are not consolidated and are accounted for under the equity method.

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.

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

COVID-19 has adversely affected customers, workers and the U.S. economy. We provide a critical service to our customers and have taken extensive measures to maintain its safety and reliability. We continue to address the impacts of the COVID-19 pandemic and how the related developments affect Eversource. We have not experienced significant impacts directly related to the pandemic that have materially affected our current operations, our workforce, or results of operations. The extent of the impact to us in the future will vary, and depend on the duration, scope and severity of the pandemic and the resulting impact on economic, health care and capital market conditions. The future impact will also depend on the outcome of future proceedings before our state regulatory commissions to recover our incremental costs associated with COVID-19, which include uncollectible customer receivable expenses. See Note 1F, "Summary of Significant Accounting Policies - Allowance for Uncollectible Accounts," for an evaluation of the allowance for doubtful accounts as of December 31, 2021 in light of the COVID-19 pandemic.

As of December 31, 2021, we did not identify indicators or triggering events for impairments to our goodwill, long-lived assets, available-for-sale debt securities, or equity method investment carrying values.

Certain reclassifications of prior year data were made in the accompanying financial statements to conform to the current year presentation.

As of December 31, 2021 and 2020, Eversource's carrying amount of goodwill was $4.48 billion and $4.45 billion, respectively. Eversource performs an assessment for possible impairment of its goodwill at least annually. Eversource completed its annual goodwill impairment assessment for each of its reporting units as of October 1, 2021 and determined that no impairment exists. See Note 25, "Goodwill," for further information.

C. Accounting Standards

Accounting Standards Recently Adopted: On January 1, 2021, the Company adopted Accounting Standards Update (ASU) 2019-12, Income Taxes (Topic 740) - Simplifying the Accounting for Income Taxes, which eliminates certain exceptions to the general principles of current income tax guidance in ASC 740 and simplifies and improves consistency in application of that income tax guidance through clarifications of and amendments to ASC 740. The ASU did not have a material impact on the financial statements of Eversource, CL&P, NSTAR Electric and PSNH.

D. Impairment of Northern Pass Transmission

Northern Pass was Eversource's planned 1,090 MW HVDC transmission line that would have interconnected from the Québec-New Hampshire border to Franklin, New Hampshire and an associated alternating current radial transmission line between Franklin and Deerfield, New Hampshire. As a result of a final decision received on July 19, 2019 from the New Hampshire Supreme Court, whereby the court denied Northern Pass’ appeal and affirmed the NHSEC’s denial of Northern Pass’ siting application on NPT, Eversource concluded that construction of NPT was no longer probable and that there was no constructive path forward for the project. In 2019, Eversource terminated the project and permanently abandoned any further development. As a result, substantially all of the capitalized project costs, which totaled $318 million, certain of which were subject to cost reimbursement agreements, were impaired.

Based on the conclusion that the construction of Northern Pass was no longer probable, Eversource recorded an impairment charge in 2019 for all of the project costs associated with Northern Pass, which were primarily engineering design, siting, permitting and legal costs, along with appropriate allowances for funds used during construction, and recognized a receivable for certain cost reimbursement agreements. Additionally, Eversource recorded an impairment charge associated with the land acquired to construct Northern Pass in order to recognize the land at its estimated fair value based on assessed values and transaction costs. In total, this resulted in a pre-tax impairment charge of $239.6 million within Operating Income on the statement of income for the year ended December 31, 2019 and was reflected in the Electric Transmission segment. The after-tax impact of the impairment charge was $204.4 million, or $0.64 per share, after giving effect to the estimated fair value of the related land, reimbursement agreements, and the impact of expected income tax benefits associated with the impairment charge. As a result of the decision to terminate the NPT project and permanently abandon any further development, Eversource does not expect any future cash expenditures associated with this project.

E. Cash

Cash includes cash on hand. At the end of each reporting period, any overdraft amounts are reclassified from Cash to Accounts Payable on the balance sheets.

F. Allowance for Uncollectible Accounts

Receivables, Net on the balance sheets primarily includes trade receivables from retail customers and customers related to wholesale transmission contracts, wholesale market sales, sales of RECs, and property rentals. Receivables, Net also includes customer receivables for the purchase of electricity from a competitive third party supplier, the current portion of customer energy efficiency loans, property damage receivables and other miscellaneous receivables. There is no material concentration of receivables. Receivables are recorded at amortized cost, net of a credit loss provision (or allowance for uncollectible accounts).

Receivables are presented net of expected credit losses at estimated net realizable value by maintaining an allowance for uncollectible accounts. The current expected credit loss (CECL) model, which was implemented on January 1, 2020 (ASU 2016-13) is applied to receivables for purposes of calculating the allowance for uncollectible accounts. This model is based on expected losses and results in the recognition of estimated expected credit losses, including uncollectible amounts for both billed and unbilled revenues, over the life of the receivable at the time a receivable is recorded.

The allowance for uncollectible accounts is determined based upon a variety of judgments and factors, including the application of an estimated uncollectible percentage to each receivable aging category. Factors in determining credit loss include historical collection, write-off experience, and management's assessment of collectability from customers, including current conditions, reasonable forecasts, and expectations of future collectability and collection efforts. Management continuously assesses the collectability of receivables and adjusts estimates based on actual experience and future expectations based on economic indicators, collection efforts and other factors. Management also monitors the aging analysis of receivables to determine if there are changes in the collections of accounts receivable. Receivable balances are written off against the allowance for uncollectible accounts when the customer accounts are no longer in service and these balances are deemed to be uncollectible.

As of December 31, 2021, management evaluated the adequacy of the allowance for uncollectible accounts in light of the evolving COVID-19 pandemic. This evaluation included an analysis of collection and customer payment trends, economic conditions, delinquency statistics, aging-based quantitative assessments, the impact on residential customer bills because of energy usage and change in rates, flexible payment plans and financial hardship arrearage management programs being offered to customers, and COVID-19 developments, including any potential federal governmental pandemic relief programs and the expansion of unemployment benefit initiatives, which help to mitigate the potential for increasing customer account delinquencies. Additionally, management considered past economic declines and corresponding uncollectible reserves as part of the current assessment.

This evaluation has shown that our operating companies have experienced an increase in aged receivables and lower cash collections from customers because of the length of the moratorium on disconnections in Connecticut and Massachusetts, and the economic slowdown resulting from the COVID-19 pandemic. In Connecticut, the moratorium on disconnections of commercial and non-hardship residential customers ended in June 2021 and September 2021, respectively, but is still in place for hardship residential customers. In Massachusetts, the moratorium on disconnections of commercial customers and residential customers ended in September 2020 and July 2021, respectively. Disconnection activities have resumed after these moratoria have expired, which has resulted in recent improved collection experience, more customers applying for, and receiving, hardship status, and higher write-offs of aged receivable amounts. On July 7, 2021, the NHPUC issued an order to New Hampshire utilities that concluded that recovery of incremental bad debt or waived late fees related to the COVID-19 pandemic would be addressed in a future rate case to the extent those costs are relevant at that time. As a result of the order, PSNH removed its $0.6 million deferral of net incremental COVID-19 costs in 2021. In New Hampshire, the moratorium on disconnections of non-hardship residential and commercial customers ended in late 2020 and for hardship residential customers ended in May 2021 and PSNH has resumed disconnection activities, which has resulted in improved collection of outstanding customer receivable balances.

Based upon the evaluation performed, for the year ended December 31, 2021, management increased the allowance for uncollectible accounts for amounts incurred as a result of COVID-19 by $24.1 million for Eversource (increase of $20.1 million for CL&P and $6.6 million at our natural gas businesses, and decrease of $1.3 million at NSTAR Electric). The COVID-19 related uncollectible amounts were deferred either as incremental regulatory costs at our Connecticut and Massachusetts utilities or deferred through existing regulatory tracking mechanisms that recover uncollectible energy supply costs, as management believes it is probable that these costs will ultimately be recovered from customers in future rates. As of December 31, 2021, the total amount incurred as a result of COVID-19 included in the allowance for uncollectible accounts was $55.3 million at Eversource ($23.9 million at CL&P, $9.0 million at NSTAR Electric, and $21.4 million at our natural gas businesses). Based on the status of our COVID-19 regulatory dockets, communications with our state regulatory commissions, and policies and practices in the jurisdictions in which we operate, we believe our state regulatory commissions in Connecticut and Massachusetts will allow us to recover our incremental costs associated with COVID-19, which include uncollectible customer receivable expenses, while balancing the impact on our customers’ bills and our operating cash flows.

Management concluded that the reserve balance as of December 31, 2021 adequately reflected the collection risk and net realizable value for Eversource’s receivables. Management will continue to evaluate the adequacy of the uncollectible allowance in future reporting periods based on an ongoing assessment of accounts receivable collections, delinquency statistics, and analysis of aging-based quantitative assessments.

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, NSTAR Gas and EGMA 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. Hardship customers are protected from shut-off in certain circumstances, and historical collection experience has reflected a higher default risk as compared to the rest of the receivable population. Management uses a higher credit risk profile for this pool of trade receivables as compared to non-hardship receivables. The allowance for uncollectible hardship accounts is included in the total uncollectible allowance balance.

The total allowance for uncollectible accounts is included in Receivables, Net on the balance sheets. The activity in the allowance for uncollectible accounts by portfolio segment is as follows:


	Eversource						CL&P						NSTAR Electric						PSNH
(Millions of Dollars)	Hardship Accounts		Retail (Non-Hardship), Wholesale, and Other		Total Allowance		Hardship Accounts		Retail (Non-Hardship), Wholesale, and Other		Total Allowance		Hardship Accounts		Retail (Non-Hardship), Wholesale, and Other		Total Allowance		Total Allowance
Balance as of January 1, 2020	$	143.3	$	81.5	$	224.8	$	80.1	$	17.2	$	97.3	$	43.9	$	31.5	$	75.4	$	10.5
ASU 2016-13 Implementation Impact on January 1, 2020	21.6		2.2		23.8		21.3		0.9		22.2		(1.6)		0.3		(1.3)		0.3
Increase due to CMA acquisition	—		24.2		24.2		—		—		—		—		—		—		—
Uncollectible Expense (1)	—		53.5		53.5		—		12.9		12.9		—		15.3		15.3		5.2
Uncollectible Costs Deferred (2)	43.1		53.9		97.0		38.2		10.8		49.0		(1.7)		26.4		24.7		7.4
Write-Offs	(14.7)		(63.3)		(78.0)		(11.9)		(17.8)		(29.7)		(0.9)		(26.3)		(27.2)		(6.9)
Recoveries Collected	1.5		12.1		13.6		1.4		4.3		5.7		—		4.7		4.7		0.7
Balance as of December 31, 2020	$	194.8	$	164.1	$	358.9	$	129.1	$	28.3	$	157.4	$	39.7	$	51.9	$	91.6	$	17.2
Uncollectible Expense (1)	—		60.9		60.9		—		13.5		13.5		—		16.6		16.6		13.1
Uncollectible Costs Deferred (2)	51.9		58.7		110.6		32.3		25.5		57.8		4.3		15.8		20.1		3.1
Write-Offs	(22.0)		(107.7)		(129.7)		(18.0)		(36.2)		(54.2)		(0.7)		(36.3)		(37.0)		(10.0)
Recoveries Collected	1.4		15.3		16.7		1.2		5.6		6.8		—		5.7		5.7		0.9
Balance as of December 31, 2021	$	226.1	$	191.3	$	417.4	$	144.6	$	36.7	$	181.3	$	43.3	$	53.7	$	97.0	$	24.3

(1) Uncollectible expense associated with customer and other accounts receivable is included in Operations and Maintenance expense on the statements of income. For the year ended December 31, 2019, uncollectible expense included in Operations and Maintenance Expense was $63.4 million for Eversource, $15.9 million for CL&P, $25.1 million for NSTAR Electric and $6.7 million for PSNH.

(2) These expected credit losses are deferred as regulatory costs on the balance sheets, as these amounts are ultimately recovered in rates. Amounts include uncollectible costs for hardship accounts and other customer receivables, including uncollectible amounts related to COVID-19 and uncollectible energy supply costs.

G. Transfer of Energy Efficiency Loans

CL&P transferred a portion of its energy efficiency customer loan portfolio to outside lenders in order to make additional loans to customers. CL&P remains the servicer of the loans and will transmit customer payments to the lenders, with a maximum amount outstanding under this program of $55 million. The amounts of the loans are included in Accounts Receivable, Net and Other Long-Term Assets, and are offset by Other Current Liabilities and Other Long-Term Liabilities on CL&P’s balance sheet. The current and long-term portions totaled $10.5 million and $8.3 million, respectively, as of December 31, 2021, and $12.9 million and $9.5 million, respectively, as of December 31, 2020.

H. Fuel, Materials, Supplies and REC Inventory

Fuel, Materials, Supplies and REC Inventory include natural gas inventory, materials and supplies purchased primarily for construction or operation and maintenance purposes, and RECs. 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. The carrying amounts of fuel, materials and supplies, and RECs, which are included in Current Assets on the balance sheets, were as follows:


	As of December 31,
	2021								2020
(Millions of Dollars)	Eversource		CL&P		NSTAR Electric		PSNH		Eversource		CL&P		NSTAR Electric		PSNH
Fuel	$	56.2	$	—	$	—	$	—	$	38.2	$	—	$	—	$	—
Materials and Supplies	148.9		60.3		55.0		25.2		151.3		57.9		62.1		22.5
RECs	62.4		—		61.7		0.7		76.1		—		71.8		4.3
Total	$	267.5	$	60.3	$	116.7	$	25.9	$	265.6	$	57.9	$	133.9	$	26.8

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, long-lived assets, equity method investments, and AROs, and in the valuation of the acquisition of CMA’s assets in 2020. The fair value measurement guidance was also applied in estimating the fair value of preferred stock, long-term debt and RRBs.

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

The 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.

Uncategorized - Investments that are measured at net asset value are not categorized within the fair value hierarchy.

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, "Investments in Unconsolidated Affiliates," Note 7, "Asset Retirement Obligations," Note 11A, "Employee Benefits – Pension Benefits and Postretirement Benefits Other Than Pension," Note 15, "Fair Value of Financial Instruments," Note 24, "Acquisition of Assets of Columbia Gas of Massachusetts," and Note 25, “Goodwill,” 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.

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, 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.

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. 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. 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)	2021		2020		2019
Eversource - Natural Gas and Fuel	$	718.6	$	464.2	$	462.1

L. 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)	2021			2020			2019
Borrowed Funds	$	18.4		$	23.7		$	25.6
Equity Funds	37.3			42.0			45.0
Total AFUDC	$	55.7		$	65.7		$	70.6
Average AFUDC Rate	4.2		%	5.0		%	5.4		%


	For the Years Ended December 31,
	2021									2020									2019
(Millions of Dollars, except percentages)	CL&P			NSTAR Electric			PSNH			CL&P			NSTAR Electric			PSNH			CL&P			NSTAR Electric			PSNH
Borrowed Funds	$	2.9		$	9.0		$	0.8		$	6.6		$	9.1		$	2.1		$	7.1		$	10.4		$	2.8
Equity Funds	7.7			20.4			1.6			13.8			21.5			4.2			13.2			19.8			3.4
Total AFUDC	$	10.6		$	29.4		$	2.4		$	20.4		$	30.6		$	6.3		$	20.3		$	30.2		$	6.2
Average AFUDC Rate	5.0		%	4.9		%	2.5		%	5.9		%	5.7		%	4.7		%	6.3		%	5.7		%	4.6		%

M. Other Income, Net

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


Eversource	For the Years Ended December 31,
(Millions of Dollars)	2021		2020		2019
Pension, SERP and PBOP Non-Service Income Components (1)	$	84.4	$	44.4	$	31.3
AFUDC Equity	37.3		42.0		45.0
Equity in Earnings of Unconsolidated Affiliates (2)	14.2		14.2		42.2
Investment (Loss)/Income	(0.2)		1.1		0.8
Interest Income	25.6		4.8		12.8
Other	—		2.1		0.7
Total Other Income, Net	$	161.3	$	108.6	$	132.8


	For the Years Ended December 31,
	2021						2020						2019
(Millions of Dollars)	CL&P		NSTAR Electric		PSNH		CL&P		NSTAR Electric		PSNH		CL&P		NSTAR Electric		PSNH
Pension, SERP and PBOP Non-Service Income Components (1)	$	15.2	$	40.2	$	10.3	$	3.8	$	29.3	$	7.0	$	0.5	$	23.5	$	4.9
AFUDC Equity	7.7		20.4		1.6		13.8		21.5		4.2		13.2		19.8		3.4
Equity in Earnings of Unconsolidated Affiliates	—		0.4		—		—		0.4		—		0.1		0.7		—
Investment Income/(Loss)	1.3		0.1		0.1		1.1		(0.8)		0.1		2.3		(0.4)		0.3
Interest Income	5.9		13.4		2.4		2.0		0.9		2.4		1.5		0.7		10.5
Other	0.1		0.3		0.2		0.1		0.7		0.1		(0.1)		0.3		0.1
Total Other Income, Net	$	30.2	$	74.8	$	14.6	$	20.8	$	52.0	$	13.8	$	17.5	$	44.6	$	19.2

(1) See Note 11A, "Employee Benefits – Pension Benefits and Postretirement Benefits Other Than Pension," for the components of net periodic benefit cost for the Pension, SERP and PBOP Plans. The non-service related components of pension, SERP and PBOP benefit costs, after capitalization or deferral, are presented as non-operating income and recorded in Other Income, Net on the statements of income.

(2) Equity in earnings includes $2.1 million and $20.4 million of pre-tax unrealized gains for the years ended December 31, 2021 and 2019, respectively, and $2.4 million of primarily realized gains for the year ended December 31, 2020, associated with an equity method investment in a renewable energy fund. Equity in earnings of unconsolidated affiliates includes an other-than-temporary impairment of $2.8 million related to a write-off of an investment within a renewable energy fund for the year ended December 31, 2020. See Note 6, "Investments in Unconsolidated Affiliates," for further information.

N. 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 recorded 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)	2021		2020		2019
Eversource	$	181.9	$	170.6	$	163.1
CL&P	158.1		149.9		141.1

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

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.

O. Supplemental Cash Flow Information


Eversource (Millions of Dollars)	As of and For the Years Ended December 31,
2021			2020			2019
Cash Paid During the Year for:
Interest, Net of Amounts Capitalized	$	568.7		$	518.0		$	532.4
Income Taxes	121.6			48.9			56.0
Non-Cash Investing Activities:
Plant Additions Included in Accounts Payable (As of)	467.9			367.2			379.4


	As of and For the Years Ended December 31,
	2021						2020						2019
(Millions of Dollars)	CL&P		NSTAR Electric		PSNH		CL&P		NSTAR Electric		PSNH		CL&P		NSTAR Electric		PSNH
Cash Paid During the Year for:
Interest, Net of Amounts Capitalized	$	161.5	$	141.6	$	56.5	$	149.0	$	129.4	$	54.5	$	144.6	$	121.9	$	56.9
Income Taxes	38.4		74.2		51.1		10.9		110.7		34.2		80.6		77.9		3.4
Non-Cash Investing Activities:
Plant Additions Included in Accounts Payable (As of)	110.6		120.0		68.7		101.8		103.2		33.3		111.3		116.4		49.9

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

The following table reconciles cash as reported on the balance sheets to the cash and restricted cash balance as reported on the statements of cash flows:


	As of December 31,
	2021								2020
(Millions of Dollars)	Eversource		CL&P		NSTAR Electric		PSNH		Eversource		CL&P		NSTAR Electric		PSNH
Cash as reported on the Balance Sheets	$	66.8	$	55.8	$	0.7	$	—	$	106.6	$	90.8	$	0.1	$	0.1
Restricted cash included in:
Special Deposits	78.2		18.7		17.4		31.4		73.6		8.7		17.2		36.8
Marketable Securities	31.3		0.3		0.1		0.5		41.2		0.3		0.1		0.6
Other Long-Term Assets	44.7		—		—		3.2		43.6		—		—		2.1
Cash and Restricted Cash as reported on the Statements of Cash Flows	$	221.0	$	74.8	$	18.2	$	35.1	$	265.0	$	99.8	$	17.4	$	39.6

Special Deposits represent cash collections related to the PSNH RRB customer charges that are held in trust, required ISO-NE cash deposits, a customer assistance fund at CL&P established under the terms of the PURA-approved October 2021 settlement agreement, and CYAPC and YAEC cash balances. Special Deposits are included in Current Assets on the balance sheets. Restricted cash included in Marketable Securities represents money market funds held in trusts to fund certain non-qualified executive benefits and restricted trusts to fund CYAPC and YAEC's spent nuclear fuel storage obligations. Restricted cash included in Other Long-Term Assets includes $41.5 million related to an Energy Relief Fund for energy efficiency and clean energy measures in the Merrimack Valley, and an additional energy efficiency program established under the terms of the EGMA 2020 settlement agreement.

P. Related Parties

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

As of both December 31, 2021 and 2020, CL&P, NSTAR Electric and PSNH had long-term receivables from Eversource Service in the amounts of $25.0 million, $5.5 million and $3.8 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, 2021 and 2020 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.

The Eversource Energy Foundation is an independent not-for-profit charitable entity and is not included in the consolidated financial statements of Eversource as the Company does not have title to, and cannot receive contributions back from, the Eversource Energy Foundation's assets. Eversource did not make any contributions to the Eversource Energy Foundation in 2021 and 2019, and made contributions of $6.4 million in 2020.

2. 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, plus a return on investment.

Management believes it is probable that each of the regulated companies will recover its respective investments in long-lived assets and the regulatory assets that have been recorded. If management were to determine that it could no longer apply the accounting guidance applicable to rate-regulated enterprises, or if management could not conclude it is probable that costs would be recovered from customers in future rates, the applicable 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:


	As of December 31,
	2021								2020
(Millions of Dollars)	Eversource		CL&P		NSTAR Electric		PSNH		Eversource		CL&P		NSTAR Electric		PSNH
Benefit Costs	$	1,481.0	$	272.4	$	395.5	$	118.9	$	2,794.2	$	632.3	$	690.0	$	267.6
Income Taxes, Net	790.7		470.5		112.6		17.5		747.1		458.9		110.4		15.2
Securitized Stranded Costs	478.9		—		—		478.9		522.1		—		—		522.1
Storm Costs, Net	1,102.7		695.6		341.3		65.8		765.6		515.1		186.4		64.1
Regulatory Tracker Mechanisms	1,050.5		333.6		376.6		85.4		850.5		246.6		332.2		95.3
Derivative Liabilities	249.2		249.2		—		—		296.3		293.1		—		—
Goodwill-related	297.8		—		255.7		—		314.7		—		270.2		—
Asset Retirement Obligations	115.0		33.6		59.8		4.1		118.4		32.1		58.6		3.9
Other Regulatory Assets	150.0		29.9		37.7		15.8		161.0		33.7		56.1		20.9
Total Regulatory Assets	5,715.8		2,084.8		1,579.2		786.4		6,569.9		2,211.8		1,703.9		989.1
Less: Current Portion	1,129.1		371.6		444.0		107.2		1,076.6		345.6		399.9		115.9
Total Long-Term Regulatory Assets	$	4,586.7	$	1,713.2	$	1,135.2	$	679.2	$	5,493.3	$	1,866.2	$	1,304.0	$	873.2

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. See Note 11A, "Employee Benefits - Pension Benefits and Postretirement Benefits Other Than Pension," for further information on regulatory benefit plan amounts recognized and amortized during the year.

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.

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 12, "Income Taxes," to the financial statements.

Securitized Stranded Costs: In 2018, a subsidiary of PSNH issued $635.7 million of securitized RRBs to finance PSNH's unrecovered remaining costs associated with the divestiture of its generation assets. Securitized regulatory assets, which are not earning an equity return, are being recovered over the amortization period of the associated RRBs. The PSNH RRBs are expected to be repaid by February 1, 2033. For further information, see Note 10, "Rate Reduction Bonds and Variable Interest Entities."

Storm Costs, Net: The storm cost deferrals relate to costs incurred for 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 for deferral and recovery with the criteria specific to each state jurisdiction and utility company. Once a storm qualifies for recovery, all qualifying expenses incurred during storm restoration efforts are deferred and recovered from customers. Costs for storms that do not meet the specific criteria are expensed as incurred. In addition to storm restoration costs, CL&P and PSNH are each allowed to recover pre-staging storm costs. Management believes all storm costs deferred were prudently incurred 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 processes. Each electric utility company either recovers a carrying charge on its deferred storm cost regulatory asset balance or the regulatory asset balance is included in rate base.

In 2021 and 2020, multiple tropical and severe storms caused extensive damage to CL&P’s electric distribution systems and customer outages, along with significant pre-staging costs. These storms resulted in deferred pre-staging and storm restoration costs at CL&P of $232 million for 2021 storms and $344 million for 2020 storms, including the catastrophic impact of Tropical Storm Isaias in August 2020, among others. Management believes that all of these storm costs were prudently incurred and meet the criteria for specific cost recovery. As part of CL&P’s October 1, 2021 settlement agreement described below, it agreed to freeze its current base distribution rates (including storm costs) until no earlier than January 1, 2024.

Of Eversource’s total deferred storm costs, $1.01 billion either has yet to be filed with the applicable regulatory commission or is pending regulatory approval (including $643 million at CL&P, $308 million at NSTAR Electric and $61 million at PSNH) as of December 31, 2021.

CL&P Tropical Storm Isaias Costs: On August 4, 2020, Tropical Storm Isaias caused catastrophic damage to our electric distribution system, which resulted in significant numbers and durations of customer outages, primarily in Connecticut. In terms of customer outages, this storm was one of the worst in CL&P’s history. PURA will investigate the prudency of costs incurred by CL&P to restore service in response to Tropical Storm Isaias. That investigation is expected to occur either in a separate proceeding not yet initiated or as part of CL&P’s next rate review proceeding. Tropical Storm Isaias resulted in deferred storm restoration costs of approximately $234 million at CL&P and $251 million at Eversource as of December 31, 2021. Although PURA found that CL&P’s performance in its preparation for and response to Tropical Storm Isaias fell below applicable performance standards in certain instances, CL&P believes it will be able to present credible evidence in a future proceeding demonstrating there is no reasonably close causal connection between the alleged sub-standard performance and the storm costs incurred. While it is possible that some amount of storm costs may be disallowed by the PURA in a future proceeding, any such amount cannot be estimated at this time. Eversource and CL&P continue to believe that these storm restoration costs associated with Tropical Storm Isaias were prudently incurred and meet the criteria for cost recovery; and as a result, management does not expect the storm cost review by the PURA to have a material impact on the financial position or results of operations of Eversource or CL&P.

NSTAR Electric Storm Threshold Filing: On December 22, 2021, the DPU approved NSTAR Electric to defer for future recovery the storm cost threshold amounts associated with six qualifying major storm events that occurred during 2020, totaling $7.2 million. The DPU approved the deferral of threshold costs that exceeded four storms (those recovered in base rates plus one additional storm) until the next rate case proceeding, at which time the DPU will determine the appropriate level of recovery of storm threshold amounts. In its January 14, 2022 distribution rate case filing, NSTAR Electric is also seeking recovery of the deferral of threshold costs for an additional seven storms in 2021. The pre-tax benefit to earnings for the deferral as a regulatory asset of threshold costs for both the 2020 and 2021 major storms was $15.6 million and was recorded in the fourth quarter of 2021.

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.

The electric and natural gas distribution companies recover, on a fully reconciling basis, the costs associated with the procurement of energy supply, electric transmission related costs from FERC-approved transmission tariffs, energy efficiency programs, low income assistance programs, certain uncollectible accounts receivable for hardship customers, restructuring and stranded costs as a result of deregulation (including securitized RRB charges), certain capital tracking mechanisms for infrastructure improvements, and additionally for the Massachusetts utilities, pension and PBOP benefits, net metering for distributed generation, and solar-related programs.

CL&P, NSTAR Electric, Yankee Gas, NSTAR Gas, EGMA and the Aquarion Water Company of Connecticut 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. Each company reconciles its annual base distribution rate recovery amount to the pre-established levels of baseline distribution delivery service revenues. 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.

CL&P Rate Adjustment Mechanisms (RAM) Filing: On July 31, 2020, PURA temporarily suspended its June 26, 2020 approval of certain delivery rate components effective July 1, 2020, and ordered CL&P to restore rates to those in effect as of June 30, 2020 in order to allow PURA time to reexamine the rates. Rates were adjusted effective August 1, 2020. On September 15, 2021, PURA issued its final decision in the 2020 RAM reconciliation filing, which required no adjustment to the GSC, BFMCC, NBFMCC, SBC, CTA, ESI and base distribution rates, but resulted in changes to the TAC and RDM rates effective October 1, 2021. As part of this decision, PURA also approved the recovery of cumulative under-recoveries associated with the NBMFCC, TAC, and RDM of $193 million effective October 1, 2021. The NBFMCC and TAC under-recoveries will be recovered over a 31-month period and the RDM under-recovery will be recovered over a 15-month period.

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.

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, 2021, there were 18 years of amortization remaining.

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 ARO 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 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, contractual obligations associated with the spent nuclear fuel storage costs of the CYAPC, YAEC and MYAPC decommissioned nuclear power facilities, water tank painting costs, and various other items.

Regulatory Costs in Long-Term Assets: Eversource's regulated companies had $252.5 million (including $114.9 million for CL&P, $85.0 million for NSTAR Electric and $3.4 million for PSNH) and $196.9 million (including $84.1 million for CL&P, $69.8 million for NSTAR Electric and $4.3 million for PSNH) of additional regulatory costs as of December 31, 2021 and 2020, 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.

As of December 31, 2021 and 2020, these regulatory costs included net incremental COVID-19 related costs deferred of $39.8 million and $24.0 million at Eversource, respectively, of which, $33.0 million and $15.8 million related to non-tracked uncollectible expense and the remainder related to facilities and fleet cleaning, sanitizing costs and supplies for personal protective equipment. Net incremental COVID-19 related costs deferred at CL&P and NSTAR Electric totaled $19.0 million and $11.2 million, respectively, as of December 31, 2021 and $4.7 million and $11.9 million, respectively, as of December 31, 2020, and primarily related to deferred non-tracked uncollectible expense.

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 is not recorded on the balance sheets. There was no equity return for CL&P as of December 31, 2021 and $0.2 million as of December 31, 2020. The equity return for PSNH was $5.0 million and $5.1 million as of December 31, 2021 and 2020, respectively. These carrying costs will be recovered from customers in future rates.

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


	As of December 31,
	2021								2020
(Millions of Dollars)	Eversource		CL&P		NSTAR Electric		PSNH		Eversource		CL&P		NSTAR Electric		PSNH
EDIT due to Tax Cuts and Jobs Act of 2017	$	2,685.2	$	996.1	$	984.5	$	359.2	$	2,778.6	$	1,010.7	$	1,044.0	$	371.5
Cost of Removal	649.6		100.1		381.0		17.2		624.8		98.4		363.6		12.9
Benefit Costs	133.5		—		107.4		—		83.6		—		72.5		—
Regulatory Tracker Mechanisms	448.4		182.0		185.1		107.0		366.5		148.9		139.7		47.8
AFUDC - Transmission	81.0		43.2		37.8		—		76.8		44.6		32.2		—
CL&P Settlement Agreement and Storm Performance Penalty	81.3		81.3		—		—		—		—		—		—
Other Regulatory Liabilities	389.7		57.1		91.5		18.2		309.9		39.5		63.2		9.8
Total Regulatory Liabilities	4,468.7		1,459.8		1,787.3		501.6		4,240.2		1,342.1		1,715.2		442.0
Less: Current Portion	602.4		266.5		228.2		120.2		389.4		137.2		164.8		58.8
Total Long-Term Regulatory Liabilities	$	3,866.3	$	1,193.3	$	1,559.1	$	381.4	$	3,850.8	$	1,204.9	$	1,550.4	$	383.2

EDIT due to Tax Cuts and Jobs Act of 2017: Pursuant to the Tax Cuts and Jobs Act of 2017, Eversource had remeasured its existing deferred federal income tax balances 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 (excess ADIT or EDIT) liabilities that will benefit our customers in future periods and were recognized as regulatory liabilities on the balance sheet. EDIT liabilities related to property, plant, and equipment are subject to IRS normalization rules and will be returned to customers using the same timing as the remaining useful lives of the underlying assets that gave rise to the ADIT liabilities. Eversource's regulated companies (except for the Connecticut water business) are in the process of refunding the EDIT liabilities to customers based on orders issued by applicable state and federal regulatory commissions.

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.

CL&P Settlement Agreement and Storm Performance Penalty: On April 28, 2021, PURA issued a final decision on CL&P’s compliance with its emergency response plan that concluded CL&P failed to comply with certain storm performance standards and was imprudent in certain instances. The $28.4 million performance penalty assessed by the PURA was recorded within current regulatory liabilities on CL&P’s balance sheet and is currently being credited to customers on electric bills beginning on September 1, 2021 over a one-year period.

On October 1, 2021, CL&P entered into a settlement agreement with the DEEP, Office of Consumer Counsel (OCC), Office of the Attorney General (AG) and the Connecticut Industrial Energy Consumers, resolving certain issues that arose in then-pending regulatory proceedings initiated by the PURA. PURA approved the settlement agreement on October 27, 2021. CL&P recorded a current regulatory liability of $75 million on the balance sheet associated with the provisions of the settlement agreement. Customer credits of $65 million were distributed based on customer sales over a two-month billing period from December 1, 2021 to January 31, 2022. CL&P also agreed to irrevocably set aside $10 million to provide bill payment assistance to certain existing non-hardship and hardship customers carrying arrearages, with the objective of disbursing the funds prior to April 30, 2022.

The balance reflected in the table above represents the remaining reserve that has not yet been issued as customer credits or paid out of the fund as of December 31, 2021. See Note 13G, “Commitments and Contingencies - CL&P Regulatory Matters,” for further information.

Other Regulatory Liabilities: Other Regulatory Liabilities primarily include the deferred portion of the non-service components of net periodic benefit expense/(income) for the Pension, SERP and PBOP Plans, EGMA’s acquired regulatory liability as a result of the 2020 DPU-approved rate settlement agreement and the CMA asset acquisition on October 9, 2020, and various other items.

FERC ROE Complaints: As of December 31, 2021, Eversource has a reserve established for the second ROE complaint period in the pending FERC ROE complaint proceedings, which was recorded as a regulatory liability and is reflected within Regulatory Tracker Mechanisms in the table above. The cumulative pre-tax reserve (excluding interest) as of December 31, 2021 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 13E, "Commitments and Contingencies – FERC ROE Complaints," for further information on developments in the pending ROE complaint proceedings.

3. 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 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)	2021		2020
Distribution - Electric	$	17,679.1	$	16,703.2
Distribution - Natural Gas	6,694.8		6,111.2
Transmission - Electric	12,882.4		11,954.0
Distribution - Water	1,900.9		1,743.1
Solar	200.9		201.5
Utility	39,358.1		36,713.0
Other (1)	1,469.5		1,269.0
Property, Plant and Equipment, Gross	40,827.6		37,982.0
Less: Accumulated Depreciation
Utility	(8,885.2)		(8,476.3)
Other	(580.1)		(477.6)
Total Accumulated Depreciation	(9,465.3)		(8,953.9)
Property, Plant and Equipment, Net	31,362.3		29,028.1
Construction Work in Progress	2,015.4		1,854.4
Total Property, Plant and Equipment, Net	$	33,377.7	$	30,882.5


	As of December 31,
	2021						2020
(Millions of Dollars)	CL&P		NSTAR Electric		PSNH		CL&P		NSTAR Electric		PSNH
Distribution - Electric	$	7,117.6	$	8,105.5	$	2,496.2	$	6,820.7	$	7,544.4	$	2,378.4
Transmission - Electric	5,859.0		5,090.5		1,934.6		5,512.0		4,701.3		1,742.4
Solar	—		200.9		—		—		201.5		—
Property, Plant and Equipment, Gross	12,976.6		13,396.9		4,430.8		12,332.7		12,447.2		4,120.8
Less: Accumulated Depreciation	(2,572.1)		(3,227.3)		(908.4)		(2,475.4)		(3,074.1)		(848.9)
Property, Plant and Equipment, Net	10,404.5		10,169.6		3,522.4		9,857.3		9,373.1		3,271.9
Construction Work in Progress	399.0		707.0		134.1		377.3		750.0		102.4
Total Property, Plant and Equipment, Net	$	10,803.5	$	10,876.6	$	3,656.5	$	10,234.6	$	10,123.1	$	3,374.3

(1)These assets are primarily comprised of computer software, hardware and equipment at Eversource Service and buildings at The Rocky River Realty Company.

On October 9, 2020, Eversource completed the CMA asset acquisition. EGMA’s net plant assets of $1.2 billion are reflected in the natural gas distribution asset category.

On July 31, 2020, Eversource sold its water system and treatment plant that supplies water to the towns of Hingham, Hull and North Cohasset to the town of Hingham, Massachusetts. Net property, plant and equipment of $63.9 million and goodwill of $23.6 million were included in determining the gain on sale. Proceeds from the sale were $110.5 million, with a pre-tax gain of $16.0 million (after-tax gain of $3.5 million) recognized within Operations and Maintenance Expense on the statement of income for the year ended December 31, 2020. The assets and liabilities associated with the sale of the business were previously reflected in the Water Distribution segment and reporting unit.

Depreciation: 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)	2021		2020		2019
Eversource	3.1	%	3.0	%	3.0	%
CL&P	2.8	%	2.8	%	2.8	%
NSTAR Electric	2.8	%	2.8	%	2.8	%
PSNH	3.1	%	2.8	%	2.8	%

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


	As of December 31, 2021
(Years)	Eversource	CL&P	NSTAR Electric	PSNH
Distribution - Electric	33.4	35.3	33.1	29.7
Distribution - Natural Gas	39.5	—	—	—
Transmission - Electric	40.2	36.5	45.1	40.8
Distribution - Water	38.5	—	—	—
Solar	24.2	—	24.2	—
Other (1)	11.2	—	—	—

(1)The estimated useful life of computer software, hardware and equipment primarily ranges from 5 to 15 years and of buildings is 40 years.

4. 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 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,
		2021						2020
(Millions of Dollars)	Fair Value Hierarchy	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:
CL&P	Level 3	$	14.7	$	(1.0)	$	13.7	$	13.7	$	(0.4)	$	13.3

Long-Term Derivative Assets:

CL&P	Level 3	46.9		(0.9)		46.0		58.7		(1.8)		56.9
Current Derivative Liabilities:
CL&P	Level 3	(73.5)		—		(73.5)		(68.8)		—		(68.8)
Other	Level 2	—		—		—		(3.3)		0.1		(3.2)
Long-Term Derivative Liabilities:
CL&P	Level 3	(235.4)		—		(235.4)		(294.5)		—		(294.5)

(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, 2021, CL&P's derivative assets were exposed to counterparty credit risk and contracted with investment grade entities.

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 capacities of these contracts as of both December 31, 2021 and 2020 were 675 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.

As of December 31, 2020, Eversource had New York Mercantile Exchange (NYMEX) financial contracts for natural gas futures in order to reduce variability associated with the price of 8.9 million MMBtu of natural gas. These contracts were classified as Level 2 in the fair value hierarchy. NSTAR Gas terminated its financial contracts swap program in April 2021.

For the years ended December 31, 2021, 2020 and 2019, there were losses of $7.1 million, $21.2 million and $20.7 million, respectively, deferred as regulatory costs, which reflect the change in fair value associated with Eversource's derivative contracts.

Fair Value Measurements of Derivative Instruments

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-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-related products, and accounting requirements. The future 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 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,
	2021								2020
CL&P	Range				Weighted Average (1)			Period Covered	Range				Weighted Average (1)			Period Covered
Capacity Prices	$2.61				$	2.61	per kW-Month	2025 - 2026	$	4.30	—	$5.30	$	4.63	per kW-Month	2024 - 2026

Forward Reserve	$	0.50	—	$1.15	$	0.82	per kW-Month	2022 - 2024	$	0.54	—	$0.90	$	0.72	per kW-Month	2021 - 2024

(1) Unobservable inputs were weighted by the relative future capacity and forward reserve prices and contractual MWs over the periods covered.

Exit price premiums of 5.0 percent through 9.3 percent, or a weighted average of 8.2 percent, are also applied to 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. The risk premium was weighted by the relative fair value of the net derivative instruments.

Significant increases or decreases in future capacity or forward reserve 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.

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.


CL&P (Millions of Dollars)	For the Years Ended December 31,
2021			2020
Derivatives, Net:
Fair Value as of Beginning of Period	$	(293.1)		$	(329.2)
Net Realized/Unrealized Losses Included in Regulatory Assets	(8.5)			(17.9)
Settlements	52.4			54.0
Fair Value as of End of Period	$	(249.2)		$	(293.1)

5. MARKETABLE SECURITIES

Eversource holds marketable securities that are primarily used to fund certain non-qualified executive benefits. The trusts that hold marketable securities 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. Equity and available-for-sale debt marketable securities are recorded at fair value, with the current portion recorded in Prepayments and Other Current Assets and the long-term portion recorded in Marketable Securities on the balance sheets.

Equity Securities: Unrealized gains and losses on equity securities held in Eversource's non-qualified executive benefit trust are recorded in Other Income, Net on the statements of income. The fair value of these equity securities as of December 31, 2021 and 2020 was $40.2 million and $40.9 million, respectively. For the years ended December 31, 2021 and 2020, there were unrealized gains of $4.4 million and $3.7 million recorded in Other Income, Net related to these equity securities, respectively.

Eversource's equity securities also include CYAPC's and YAEC's marketable securities held in spent nuclear fuel trusts, which had fair values of $214.0 million and $205.1 million as of December 31, 2021 and 2020, respectively. Unrealized gains and losses for these spent nuclear fuel trusts are subject to regulatory accounting treatment and are recorded in Marketable Securities with the corresponding offset to long-term liabilities on the balance sheets, with no impact on the statements of income.

Available-for-Sale Debt Securities: The following is a summary of the available-for-sale debt securities:


	As of December 31,
	2021								2020
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	$	214.5	$	5.1	$	(0.2)	$	219.4	$	213.1	$	11.2	$	(0.1)	$	224.2

Eversource's debt securities include CYAPC's and YAEC's marketable securities held in spent nuclear fuel trusts in the amounts of $189.9 million and $192.5 million as of December 31, 2021 and 2020, respectively.

Unrealized gains and losses on available-for-sale debt securities held in Eversource's non-qualified benefit trust are recorded in Accumulated Other Comprehensive Income, excluding amounts related to credit losses or losses on securities intended to be sold, which are recorded in Other Income, Net. There have been no significant unrealized losses and no credit losses for the years ended December 31, 2021 and 2020, and no allowance for credit losses as of December 31, 2021. Factors considered in determining whether a credit loss exists include adverse conditions specifically affecting the issuer, the payment history, ratings and rating changes of the security, and the severity of the impairment. For asset-backed debt securities, underlying collateral and expected future cash flows are also evaluated. Debt securities included in Eversource's non-qualified benefit trust portfolio are investment-grade bonds with a lower default risk based on their credit quality.

As of December 31, 2021, 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)	$	32.2	$	32.2
One to five years	60.5		61.4
Six to ten years	35.7		36.8
Greater than ten years	86.1		89.0
Total Debt Securities	$	214.5	$	219.4

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

Realized Gains and Losses: Realized gains and losses are recorded in Other Income, Net for Eversource's benefit trust and are offset in long-term liabilities for CYAPC and YAEC. Eversource utilizes the specific identification basis method for the Eversource non-qualified benefit trust, and the average cost basis method for the CYAPC and YAEC spent nuclear fuel trusts to compute the realized gains and losses on the sale of marketable securities.

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,
2021			2020
Level 1:
Mutual Funds and Equities	$	254.2		$	246.0
Money Market Funds	31.3			41.2
Total Level 1	$	285.5		$	287.2
Level 2:
U.S. Government Issued Debt Securities (Agency and Treasury)	$	81.3		$	72.9
Corporate Debt Securities	65.3			63.8
Asset-Backed Debt Securities	12.6			11.9
Municipal Bonds	12.3			24.0
Other Fixed Income Securities	16.6			10.4
Total Level 2	$	188.1		$	183.0
Total Marketable Securities	$	473.6		$	470.2

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.

6. INVESTMENTS IN UNCONSOLIDATED AFFILIATES

Investments in entities that are not consolidated are included in long-term assets on the balance sheets and earnings impacts from these equity investments are included in Other Income, Net on the statements of income. Eversource's investments included the following:


			Investment Balance as of December 31,
(Millions of Dollars)	Ownership Interest		2021		2020
Offshore Wind Business - North East Offshore	50	%	$	1,213.6	$	887.1
Natural Gas Pipeline - Algonquin Gas Transmission, LLC	15	%	121.9		125.2
Renewable Energy Investment Fund	90	%	76.5		71.6
Other	various		24.3		23.2
Total Investments in Unconsolidated Affiliates			$	1,436.3	$	1,107.1

For the years ended December 31, 2021, 2020 and 2019, Eversource had equity in earnings of unconsolidated affiliates of $14.2 million, $14.2 million, and $42.2 million, respectively. Eversource received dividends from its equity method investees of $21.6 million, $21.8 million, and $48.9 million, respectively, for the years ended December 31, 2021, 2020 and 2019.

Investments in affiliates where Eversource has the ability to exercise significant influence, but not control, over an investee are initially recognized as an equity method investment at cost. Any differences between the cost of an investment and the amount of underlying equity in net assets of an investee are considered basis differences, and are determined based upon the estimated fair values of the investee's identifiable assets and liabilities. The carrying amount of Eversource’s offshore wind investments exceeded its share of underlying equity in net assets by $300.4 million and $264.1 million, respectively, as of December 31, 2021 and 2020. As of December 31, 2021, these basis differences are primarily comprised of $168.9 million of equity method goodwill that is not being amortized, intangible assets for PPAs, and capitalized interest.

Offshore Wind Business: Eversource's offshore wind business includes a 50 percent ownership interest in North East Offshore, which holds PPAs and contracts for the Revolution Wind, South Fork Wind and Sunrise Wind projects, as well as offshore leases issued by BOEM. Eversource's offshore wind projects are being developed and constructed through a joint and equal partnership with Ørsted. This equity investment includes capital expenditures for the three projects, as well as capitalized costs related to future development, acquisition costs of offshore lease areas, and capitalized interest.

NSTAR Electric: As of December 31, 2021 and 2020, NSTAR Electric's investments included a 14.5 percent ownership interest in two companies that transmit hydro-electricity imported from the Hydro-Quebec system in Canada of $9.0 million and $8.6 million, respectively.

Impairment of Equity Method Investments: Equity method investments are assessed for impairment when conditions exist that indicate that the fair value of the investment is less than book value. If the decline in value is considered to be other-than-temporary, the investment is written down to its estimated fair value, which establishes a new cost basis in the investment. Impairment evaluations involve a significant degree of judgment and estimation, including identifying circumstances that indicate an impairment may exist and developing undiscounted future cash flows.

During the year ended December 31, 2020, Eversource recorded an other-than-temporary impairment of $2.8 million within Other Income, Net on the statement of income, related to a write-off of an investment within a renewable energy fund.

7. 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 CYAPC's and YAEC's obligation to dispose of spent nuclear fuel and high level waste, and also certain assets containing asbestos and hazardous contamination. Management has performed fair value calculations reflecting expected probabilities for settlement scenarios.

The fair value of an ARO is recorded as a long-term liability 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 is as follows:


	As of December 31,
	2021								2020
(Millions of Dollars)	Eversource		CL&P		NSTAR Electric		PSNH		Eversource		CL&P		NSTAR Electric		PSNH
Balance as of Beginning of Year	$	499.7	$	33.4	$	91.8	$	4.4	$	489.5	$	32.0	$	97.5	$	4.2
Liability Assumed Upon CMA Asset Acquisition	—		—		—		—		20.1		—		—		—
Liabilities Incurred During the Year	—		—		—		—		2.1		—		2.1		—
Liabilities Settled During the Year	(23.9)		(0.6)		—		—		(21.8)		(0.7)		(1.0)		—
Accretion	29.4		2.2		4.0		0.3		28.9		2.1		4.3		0.2
Revisions in Estimated Cash Flows	(5.1)		—		1.7		—		(19.1)		—		(11.1)		—
Balance as of End of Year	$	500.1	$	35.0	$	97.5	$	4.7	$	499.7	$	33.4	$	91.8	$	4.4

Eversource's amounts include CYAPC and YAEC's AROs of $325.9 million and $330.3 million as of December 31, 2021 and 2020, 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 and other assumptions, including discount rates. 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 ARO liability are recorded with a corresponding offset to the related regulatory asset. The assets held in the CYAPC and YAEC spent nuclear fuel trusts are restricted for settling the ARO and all other nuclear fuel storage obligations. For further information on the assets held in the spent nuclear fuel trusts, see Note 5, "Marketable Securities," to the financial statements.

8. SHORT-TERM DEBT

Short-Term Debt - Borrowing Limits: The amount of short-term borrowings that may be incurred by CL&P and NSTAR Electric 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 December 3, 2021, 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, 2023. On December 3, 2021, 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 31, 2023.

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, 2021, PSNH's short-term debt authorization under the 10 percent of net fixed plant test plus $60 million totaled $408 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, 2021, CL&P had $963.6 million of unsecured debt capacity available under this authorization.

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

Short-Term Debt - Commercial Paper Programs and Credit Agreements: Eversource parent has a $2.00 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, Yankee Gas, EGMA and Aquarion Water Company of Connecticut are parties to a five-year $2.00 billion revolving credit facility, which terminates on October 15, 2026. This revolving credit facility serves to backstop Eversource parent's $2.00 billion commercial paper program.

NSTAR Electric has a $650 million commercial paper program allowing NSTAR Electric to issue commercial paper as a form of short-term debt. NSTAR Electric is also a party to a five-year $650 million revolving credit facility, which terminates on October 15, 2026. The revolving credit facility serves to backstop NSTAR Electric's $650 million commercial paper program.

The amount of borrowings outstanding and available under the commercial paper programs were 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)	2021		2020		2021		2020		2021		2020
Eversource Parent Commercial Paper Program	$	1,343.0	$	1,054.3	$	657.0	$	945.7	0.31	%	0.25	%
NSTAR Electric Commercial Paper Program	162.5		195.0		487.5		455.0		0.14	%	0.16	%

There were no borrowings outstanding on the revolving credit facilities as of December 31, 2021 or 2020.

CL&P and PSNH have uncommitted line of credit agreements totaling $450 million and $300 million, respectively, which will expire on May 12, 2022. There are no borrowings outstanding on either the CL&P or PSNH uncommitted line of credit agreements as of December 31, 2021.

Amounts outstanding under the commercial paper programs are included in Notes Payable and classified in current liabilities on the Eversource and NSTAR Electric balance sheets, as all borrowings are outstanding for no more than 364 days at one time.

Under the credit facilities described above, Eversource and its subsidiaries, including CL&P, NSTAR Electric, PSNH, NSTAR Gas, EGMA, Yankee Gas, and Aquarion Water Company of Connecticut, must comply with certain financial and non-financial covenants, including a consolidated debt to total capitalization ratio. As of December 31, 2021 and 2020, 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.

The Company expects the future operating cash flows of Eversource, CL&P, NSTAR Electric and PSNH, along with existing borrowing availability and access to both debt and equity markets, will be sufficient to meet any working capital and future operating requirements, and capital investment forecasted opportunities.

Intercompany Borrowings: Eversource parent uses its available capital resources to provide loans to its subsidiaries to assist in meeting their short-term borrowing needs. Eversource parent records intercompany interest income from its loans to subsidiaries, which is eliminated in consolidation. Intercompany loans from Eversource parent to its subsidiaries are eliminated in consolidation on Eversource's balance sheets. As of December 31, 2021, there were intercompany loans from Eversource parent to PSNH of $110.6 million. As of December 31, 2020, there were intercompany loans from Eversource parent to PSNH of $46.3 million, and to a subsidiary of NSTAR Electric of $21.3 million. Intercompany loans from Eversource parent are included in Notes Payable to Eversource Parent and classified in current liabilities on the respective subsidiary's balance sheets.

9. LONG-TERM DEBT

Details of long-term debt outstanding are as follows:


CL&P(Millions of Dollars)	As of December 31,
2021			2020
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
5.750% 2007 Series B due 2037	150.0			150.0
6.375% 2007 Series D due 2037	100.0			100.0
2.500% 2013 Series A due 2023	400.0			400.0
4.300% 2014 Series A due 2044	475.0			475.0
4.150% 2015 Series A due 2045	350.0			350.0
3.200% 2017 Series A due 2027	500.0			500.0
4.000% 2018 Series A due 2048	800.0			800.0
0.750% 2020 Series A due 2025	400.0			400.0
2.050% 2021 Series A due 2031	425.0			—
Total First Mortgage Bonds	4,219.8			3,794.8
Pollution Control Revenue Bonds:
4.375% Fixed Rate Tax Exempt due 2028	—			120.5

Unamortized Premiums and Discounts, Net	23.1			25.9
Unamortized Debt Issuance Costs	(27.5)			(26.4)
CL&P Long-Term Debt	$	4,215.4		$	3,914.8


NSTAR Electric(Millions of Dollars)	As of December 31,
2021			2020
Debentures:
5.750% due 2036	$	200.0		$	200.0
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			700.0
3.250% due 2029	400.0			400.0
3.950% due 2030	400.0			400.0
3.100% due 2051	300.0			—
1.950% due 2031	300.0			—
Total Debentures	3,800.0			3,200.0
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
3.500% Senior Notes Series F due 2021	—			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	220.0			470.0
Less Amounts due Within One Year	(400.0)			(250.0)
Unamortized Premiums and Discounts, Net	(11.2)			(6.8)
Unamortized Debt Issuance Costs	(23.4)			(20.0)
NSTAR Electric Long-Term Debt	$	3,585.4		$	3,393.2


PSNH(Millions of Dollars)	As of December 31,
2021			2020
First Mortgage Bonds:
5.600% Series M due 2035	$	50.0		$	50.0
4.050% Series Q due 2021	—			122.0
3.200% Series R due 2021	—			160.0
3.500% Series S due 2023	325.0			325.0
3.600% Series T due 2049	300.0			300.0
2.400% Series U due 2050	150.0			150.0
2.200% Series V due 2031	350.0			—
Total First Mortgage Bonds	1,175.0			1,107.0
Less Amounts due Within One Year	—			(282.0)
Unamortized Premiums and Discounts, Net	(2.6)			(1.5)
Unamortized Debt Issuance Costs	(8.6)			(6.4)
PSNH Long-Term Debt	$	1,163.8		$	817.1


OTHER(Millions of Dollars)	As of December 31,
2021			2020
Yankee Gas - First Mortgage Bonds: 1.380% - 8.480% due 2022 - 2051	$	765.0		$	640.0
NSTAR Gas - First Mortgage Bonds: 2.250% - 7.110% due 2025 - 2051	580.0			500.0
EGMA - First Mortgage Bonds: 2.110% - 2.920% due 2031 - 2051	550.0			—
Aquarion - Senior Notes 4.000% due 2024	360.0			360.0
Aquarion - Unsecured Notes 0% - 6.430% due 2023 - 2051	394.9			335.2
Aquarion - Secured Debt 1.296% - 9.290% due 2022 - 2044	39.6			35.9
Eversource Parent - Senior Notes 0.300% - 4.250% due 2022 - 2050	6,100.0			5,550.0
Pre-1983 Spent Nuclear Fuel Obligation (CYAPC)	11.7			11.7
Fair Value Adjustment (1)	43.8			74.7
Less Fair Value Adjustment - Current Portion (1)	(17.7)			(31.0)
Less Amounts due in One Year	(775.4)			(490.2)

Unamortized Premiums and Discounts, Net	43.4			46.5
Unamortized Debt Issuance Costs	(36.3)			(32.0)
Total Other Long-Term Debt	$	8,059.0		$	7,000.8

Total Eversource Long-Term Debt	$	17,023.6		$	15,125.9

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

Availability under Long-Term Debt Issuance Authorizations: On March 31, 2021, the DPU approved NSTAR Electric's request for authorization to issue up to $1.60 billion in long-term debt through December 31, 2023. On September 10, 2021, the DPU approved EGMA’s request for authorization to issue up to $725.0 million in long-term debt through December 31, 2023. The remaining Eversource operating companies, including CL&P and PSNH, have utilized the long-term debt authorizations in place with the respective regulatory commissions.

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


(Millions of Dollars)	Issuance/(Repayment)		Issue Date or Repayment Date	Maturity Date	Use of Proceeds for Issuance/ Repayment Information
CL&P:
2.05% Series A First Mortgage Bonds	$	425.0	June 2021	July 2031	Repaid short-term debt, paid capital expenditures and working capital
4.38% Series A PCRB	(120.5)		September 2021	September 2028	Paid on par call date in advance of maturity
NSTAR Electric:
3.10% 2021 Debentures	300.0		May 2021	June 2051	Refinanced investments in eligible green expenditures, which were previously financed in 2019 and 2020
3.50% Series F Senior Notes	(250.0)		June 2021	September 2021	Paid on par call date in advance of maturity
1.95% 2021 Debentures	300.0		August 2021	August 2031	Repaid short-term debt, paid capital expenditures and working capital
PSNH:
4.05% Series Q First Mortgage Bonds	(122.0)		March 2021	June 2021	Paid on par call date in advance of maturity
3.20% Series R First Mortgage Bonds	(160.0)		June 2021	September 2021	Paid on par call date in advance of maturity
2.20% Series V First Mortgage Bonds	350.0		June 2021	June 2031	Repaid short-term debt, including short-term debt used to redeem Series R First Mortgage Bonds, paid capital expenditures and working capital
Other:
Eversource Parent 2.50% Series I Senior Notes	(450.0)		February 2021	March 2021	Paid on par call date in advance of maturity
Eversource Parent 2.55% Series S Senior Notes	350.0		March 2021	March 2031	Repaid short-term debt, including short-term debt used to redeem Series I Senior Notes
Eversource Parent 1.40% Series U Senior Notes	300.0		August 2021	August 2026	Repaid short-term debt
Eversource Parent Variable Rate Series T Senior Notes (1)	350.0		August 2021	August 2023	Repaid short-term debt
Aquarion Water Company of Connecticut 3.31% Senior Notes	100.0		April 2021	April 2051	Repaid 5.50% Notes, repaid short-term debt, paid capital expenditures and working capital
Aquarion Water Company of Connecticut 5.50% Notes	(40.0)		April 2021	April 2021	Paid at maturity
Yankee Gas 1.38% Series S First Mortgage Bonds	90.0		August 2021	August 2026	(2)
Yankee Gas 2.88% Series T First Mortgage Bonds	35.0		August 2021	August 2051	(2)
EGMA 2.11% Series A First Mortgage Bonds	310.0		September 2021	October 2031	(2)
EGMA 2.92% Series B First Mortgage Bonds	240.0		September 2021	October 2051	(2)
NSTAR Gas 2.25% Series T First Mortgage Bonds	40.0		October 2021	November 2031	(2)
NSTAR Gas 3.03% Series U First Mortgage Bonds	40.0		October 2021	November 2051	(2)

(1) On August 13, 2021, Eversource Parent issued $350 million of floating rate Series T Senior Notes with a maturity date of August 15, 2023. The notes have a coupon rate based on Compounded SOFR plus 0.25%. The notes had an interest rate of 0.30% as of December 31, 2021.

(2) The use of proceeds from these various issuances refinanced existing indebtedness, funded capital expenditures and were for general corporate purposes. The EGMA indebtedness that was refinanced included $309.4 million of long-term debt.

Long-Term Debt Provisions: The utility plant of CL&P, PSNH, Yankee Gas, NSTAR Gas, EGMA and a portion of Aquarion is subject to the lien of each company's respective first mortgage bond indenture. The Eversource parent, NSTAR Electric and a portion of Aquarion 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, NSTAR Gas and Aquarion. Under the equity requirements, NSTAR Electric's and Aquarion'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.

Certain secured and unsecured long-term debt securities are callable at redemption price or are subject to make-whole provisions.

No long-term debt defaults have occurred as of December 31, 2021.

CYAPC's 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). CYAPC has partially paid this obligation and recorded an accrual for its remaining liability 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. As of both December 31, 2021 and 2020, as a result of consolidating CYAPC, Eversource has consolidated $11.7 million, in pre-1983 spent nuclear fuel obligations to the DOE. The obligation includes accumulated interest costs of $8.7 million as of both December 31, 2021 and 2020. 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. Fees for disposal of nuclear fuel burned on or after April 7, 1983 were billed to member companies and paid to the DOE.

Long-Term Debt Maturities: Long-term debt maturities on debt outstanding for the years 2022 through 2026 and thereafter are shown below. These amounts exclude PSNH rate reduction bonds, CYAPC pre-1983 spent nuclear fuel obligation, net unamortized premiums, discounts and debt issuance costs, and other fair value adjustments as of December 31, 2021:


(Millions of Dollars)	Eversource		CL&P		NSTAR Electric		PSNH
2022	$	1,175.4	$	—	$	400.0	$	—
2023	2,008.4		400.0		80.0		325.0
2024	1,050.1		139.8		—		—
2025	1,400.2		400.0		250.0		—
2026	940.2		—		300.0		—
Thereafter	11,630.0		3,280.0		2,990.0		850.0
Total	$	18,204.3	$	4,219.8	$	4,020.0	$	1,175.0

10. RATE REDUCTION BONDS AND VARIABLE INTEREST ENTITIES

Rate Reduction Bonds: In May 2018, PSNH Funding, a wholly-owned subsidiary of PSNH, issued $635.7 million of securitized RRBs in multiple tranches with a weighted average interest rate of 3.66 percent, and final maturity dates ranging from 2026 to 2035. The RRBs are expected to be repaid by February 1, 2033. RRB payments consist of principal and interest and are paid semi-annually, beginning on February 1, 2019. The RRBs were issued pursuant to a finance order issued by the NHPUC in January 2018 to recover remaining costs resulting from the divestiture of PSNH’s generation assets.

The proceeds were used by PSNH Funding to purchase PSNH’s stranded cost asset-recovery property, including its vested property right to bill, collect and adjust a non-bypassable stranded cost recovery charge from PSNH’s retail customers. The collections are used to pay principal, interest and other costs in connection with the RRBs. The RRBs are secured by the stranded cost asset-recovery property. Cash collections from the stranded cost recovery charges and funds on deposit in trust accounts are the sole source of funds to satisfy the debt obligation. PSNH is not the owner of the RRBs, and PSNH Funding’s assets and revenues are not available to pay PSNH’s creditors. The RRBs are non-recourse senior secured obligations of PSNH Funding and are not insured or guaranteed by PSNH or Eversource Energy.

PSNH Funding was formed solely to issue RRBs to finance PSNH's unrecovered remaining costs associated with the divestiture of its generation assets. PSNH Funding is considered a VIE primarily because the equity capitalization is insufficient to support its operations. PSNH has the power to direct the significant activities of the VIE and is most closely associated with the VIE as compared to other interest holders. Therefore, PSNH is considered the primary beneficiary and consolidates PSNH Funding in its consolidated financial statements. The following tables summarize the impact of PSNH Funding on PSNH's balance sheets and income statements:


(Millions of Dollars)	As of December 31,
PSNH Balance Sheets:	2021		2020
Restricted Cash - Current Portion (included in Current Assets)	$	31.1	$	36.8
Restricted Cash - Long-Term Portion (included in Other Long-Term Assets)	3.2		2.1
Securitized Stranded Cost (included in Regulatory Assets)	478.9		522.1
Other Regulatory Liabilities (included in Regulatory Liabilities)	5.4		9.1
Accrued Interest (included in Other Current Liabilities)	7.5		8.0
Rate Reduction Bonds - Current Portion	43.2		43.2
Rate Reduction Bonds - Long-Term Portion	453.7		496.9


(Millions of Dollars) PSNH Income Statements:	For the Years Ended December 31,
2021			2020			2019
Amortization of RRB Principal (included in Amortization of Regulatory Assets, Net)	$	43.2		$	43.2		$	43.0
Interest Expense on RRB Principal (included in Interest Expense)	18.4			19.7			21.1

Estimated principal and interest payments on RRBs as of December 31, 2021, is summarized annually through 2026 and thereafter as follows:


(Millions of Dollars)			2022						2023						2024						2025						2026						Thereafter						Total
Eversource			$	43.2					$	43.2					$	43.2					$	43.2					$	43.2					$	280.9					$	496.9

Variable Interest Entities - Other: 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 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.

11. EMPLOYEE BENEFITS

A. Pension Benefits and Postretirement Benefits Other Than Pension

Eversource provides defined benefit retirement plans (Pension Plans) that cover eligible employees and are subject to the provisions of ERISA, as amended by the Pension Protection Act 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 non-qualified defined benefit retirement plans (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 (PBOP Plans) that provide life insurance and a health reimbursement arrangement created for the purpose of reimbursing retirees and dependents for health insurance premiums and certain medical expenses to eligible employees that meet certain age and service eligibility requirements. 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.

The Pension, SERP and PBOP Plans cover eligible employees, including, among others, employees of the regulated companies. Because the regulated companies recover retiree benefit costs from customers through rates, regulatory assets are recorded in lieu of recording an adjustment to Accumulated Other Comprehensive Income/(Loss) as an offset to the funded status of the Pension, SERP and PBOP Plans. Regulatory accounting is also applied to the portions of the Eversource Service retiree benefit costs that support the regulated companies, as these costs are also recovered from customers. Adjustments to the Pension, SERP 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 16, "Accumulated Other Comprehensive Income/(Loss)," to the financial statements.

Funded Status: The Pension, SERP and 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. 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 tables provide information on the plan benefit obligations, fair values of plan assets, and funded status:


	Pension and SERP
	As of December 31,
	2021								2020
(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	$	(7,045.3)	$	(1,477.3)	$	(1,517.9)	$	(748.7)	$	(6,321.7)	$	(1,331.3)	$	(1,397.3)	$	(692.6)
Service Cost	(85.8)		(23.0)		(15.8)		(8.9)		(76.2)		(21.8)		(15.4)		(8.2)
Interest Cost	(130.0)		(27.3)		(26.8)		(14.5)		(177.8)		(37.3)		(38.6)		(19.4)
Actuarial Gain/(Loss)	177.1		127.8		20.8		14.7		(658.2)		(152.3)		(139.5)		(62.1)
Benefits Paid - Pension	309.5		64.6		68.7		34.7		279.3		63.6		59.4		33.5
Benefits Paid - Lump Sum	34.7		—		15.6		—		23.4		—		13.1		—
Benefits Paid - SERP	10.1		0.3		0.2		0.4		7.3		0.3		0.2		0.4
Employee Transfers	—		4.0		6.8		1.3		—		1.5		0.2		(0.3)
Increase due to acquisition of CMA	—		—		—		—		(121.4)		—		—		—
Benefit Obligation as of End of Year	$	(6,729.7)	$	(1,330.9)	$	(1,448.4)	$	(721.0)	$	(7,045.3)	$	(1,477.3)	$	(1,517.9)	$	(748.7)
Change in Pension Plan Assets:
Fair Value of Pension Plan Assets as of Beginning of Year	$	5,409.2	$	1,043.1	$	1,345.1	$	593.7	$	4,968.6	$	986.2	$	1,288.8	$	551.6
Employer Contributions	180.0		98.9		30.0		—		109.6		23.2		0.7		19.5
Actual Return on Pension Plan Assets	1,250.5		250.4		312.0		136.9		512.3		98.8		128.3		55.8
Benefits Paid - Pension	(309.5)		(64.6)		(68.7)		(34.7)		(279.3)		(63.6)		(59.4)		(33.5)
Benefits Paid - Lump Sum	(34.7)		—		(15.6)		—		(23.4)		—		(13.1)		—
Employee Transfers	—		(4.0)		(6.8)		(1.3)		—		(1.5)		(0.2)		0.3
Increase due to acquisition of CMA	—		—		—		—		121.4		—		—		—
Fair Value of Pension Plan Assets as of End of Year	$	6,495.5	$	1,323.8	$	1,596.0	$	694.6	$	5,409.2	$	1,043.1	$	1,345.1	$	593.7
Funded Status as of December 31st	$	(234.2)	$	(7.1)	$	147.6	$	(26.4)	$	(1,636.1)	$	(434.2)	$	(172.8)	$	(155.0)

For the year ended December 31, 2021, the decrease in Eversource's pension liability was primarily attributable to an increase in the return on pension assets. While all pension asset classes performed well, the driver of the increase came from higher valuations of Eversource’s private equity investments.

Actuarial Gains and Losses: For the year ended December 31, 2021, the decrease in the benefit obligation due to actuarial gains was primarily attributable to an increase in the discount rate, which resulted in a decrease to Eversource's pension liability of $286.8 million. The decrease in the benefit obligation was partially offset by changes in the mortality assumption. For the year ended December 31, 2020, the increase in the benefit obligation due to actuarial losses was primarily attributable to a decrease in the discount rate, which resulted in an increase to Eversource's pension liability of $603.0 million, which was partially offset by changes in the mortality assumption.

The pension and SERP Plans' funded status includes the current portion of the SERP liability totaling $9.7 million and $6.8 million as of December 31, 2021 and 2020, respectively, which is included in Other Current Liabilities on the balance sheets.

As of December 31, 2021 and 2020, the accumulated benefit obligation for the Pension and SERP Plans is as follows:


(Millions of Dollars)	Eversource		CL&P		NSTAR Electric		PSNH
2021	$	6,337.3	$	1,241.1	$	1,376.1	$	670.3
2020	6,669.4		1,356.4		1,449.4		707.2


	PBOP
	As of December 31,
	2021								2020
(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	$	(993.9)	$	(178.6)	$	(260.5)	$	(109.5)	$	(899.0)	$	(172.7)	$	(258.3)	$	(93.0)
Service Cost	(13.5)		(2.3)		(2.4)		(1.2)		(10.2)		(1.7)		(2.1)		(0.9)
Interest Cost	(17.4)		(3.2)		(4.4)		(1.8)		(24.6)		(4.4)		(6.6)		(2.8)
Actuarial Gain/(Loss)	81.4		5.8		11.5		14.6		(82.8)		(8.6)		(7.4)		(19.0)
Benefits Paid	51.7		10.9		16.3		5.6		50.2		10.1		14.9		6.1
Employee Transfers	—		1.9		1.1		—		—		(1.3)		(1.0)		0.1
Impact of Acquisition of CMA	7.4		—		—		—		(27.5)		—		—		—
Benefit Obligation as of End of Year	$	(884.3)	$	(165.5)	$	(238.4)	$	(92.3)	$	(993.9)	$	(178.6)	$	(260.5)	$	(109.5)
Change in Plan Assets:
Fair Value of Plan Assets as of Beginning of Year	$	1,004.1	$	134.1	$	464.6	$	79.4	$	935.9	$	126.3	$	424.4	$	76.0
Actual Return on Plan Assets	183.2		24.1		84.2		14.2		116.5		15.7		53.3		9.3
Employer Contributions	2.3		—		—		—		1.9		—		—		—
Benefits Paid	(51.3)		(10.9)		(16.3)		(5.6)		(50.2)		(10.1)		(14.9)		(6.1)
Employee Transfers	—		(1.6)		(2.5)		—		—		2.2		1.8		0.2
Fair Value of Plan Assets as of End of Year	$	1,138.3	$	145.7	$	530.0	$	88.0	$	1,004.1	$	134.1	$	464.6	$	79.4
Funded Status as of December 31st	$	254.0	$	(19.8)	$	291.6	$	(4.3)	$	10.2	$	(44.5)	$	204.1	$	(30.1)

The Eversource PBOP funded status includes prepaid assets of $272 million and $34.7 million recorded in Other Long-Term Assets and liabilities of $18.0 million and $24.5 million included in Accrued Pension, SERP and PBOP on the balance sheets as of December 31, 2021 and 2020, respectively.

Actuarial Gains and Losses: For the year ended December 31, 2021, the decrease in the benefit obligation due to actuarial gains was primarily attributable to an increase in the discount rate, which resulted in a decrease to the Eversource PBOP liability of $29.8 million, and by changes in our retirement assumptions. For the year ended December 31, 2020, the increase in the benefit obligation due to actuarial losses was primarily attributable to a decrease in the discount rate, which resulted in an increase to the Eversource PBOP liability of $68.3 million, and by changes in our retirement assumptions.

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


	Pension and SERP							PBOP
	As of December 31,							As of December 31,
		2021			2020			2021			2020
Discount Rate		2.8%	—	3.0%	2.4%	—	2.7%	2.91%	—	2.92%	2.5%	—	2.6%
Compensation/Progression Rate		3.5%	—	4.0%	3.5%	—	4.0%	N/A

For the Eversource Service PBOP Plan, the health care cost trend rate is not applicable. For the Aquarion PBOP Plan, the health care cost trend rate for pre-65 retirees is 6.5 percent, with an ultimate rate of 5 percent in 2028, and for post-65 retirees, the health care trend rate and ultimate rate is 3.5 percent.

Expense: Eversource charges net periodic benefit plan expense/(income) for the Pension, SERP and PBOP Plans 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. The Company utilizes the spot rate methodology to estimate the discount rate for the service and interest cost components of benefit expense, which provides a relatively precise measurement by matching projected cash flows to the corresponding spot rates on the yield curve.

The components of net periodic benefit plan expense/(income) for the Pension, SERP and PBOP Plans, prior to amounts capitalized as Property, Plant and Equipment or deferred as regulatory assets/(liabilities) for future recovery or refund, are shown below. The service cost component of net periodic benefit plan expense/(income), less the capitalized portion, is included in Operations and Maintenance expense on the statements of income. The remaining components of net periodic benefit plan expense/(income), less the deferred portion, are included in Other Income, Net on the statements of income. Pension, SERP and PBOP expense reflected in the statements of cash flows for CL&P, NSTAR Electric and PSNH does not include intercompany allocations of net periodic benefit plan expense/(income), as these amounts are cash settled on a short-term basis.


	Pension and SERP								PBOP
	For the Year Ended December 31, 2021								For the Year Ended December 31, 2021
(Millions of Dollars)	Eversource		CL&P		NSTAR Electric		PSNH		Eversource		CL&P		NSTAR Electric		PSNH
Service Cost	$	85.8	$	23.0	$	15.8	$	8.9	$	13.5	$	2.3	$	2.4	$	1.2
Interest Cost	130.0		27.3		26.8		14.5		17.4		3.2		4.4		1.8
Expected Return on Plan Assets	(437.5)		(86.8)		(108.1)		(47.5)		(79.1)		(10.3)		(36.9)		(6.1)
Actuarial Loss	243.9		45.5		61.6		20.7		8.9		1.8		2.4		0.7
Prior Service Cost/(Credit)	1.4		—		0.3		—		(21.2)		1.1		(17.0)		0.4
Total Net Periodic Benefit Plan Expense/(Income)	$	23.6	$	9.0	$	(3.6)	$	(3.4)	$	(60.5)	$	(1.9)	$	(44.7)	$	(2.0)
Intercompany Expense/(Income) Allocations	N/A		$	8.0	$	8.8	$	2.7	N/A		$	(1.6)	$	(1.9)	$	(0.6)


	Pension and SERP								PBOP
	For the Year Ended December 31, 2020								For the Year Ended December 31, 2020
(Millions of Dollars)	Eversource		CL&P		NSTAR Electric		PSNH		Eversource		CL&P		NSTAR Electric		PSNH
Service Cost	$	76.2	$	21.8	$	15.4	$	8.2	$	10.2	$	1.7	$	2.1	$	0.9
Interest Cost	177.8		37.3		38.6		19.4		24.6		4.4		6.6		2.8
Expected Return on Plan Assets	(400.3)		(79.2)		(103.0)		(44.7)		(73.6)		(9.9)		(34.0)		(5.7)
Actuarial Loss	202.0		39.2		55.2		15.6		8.4		1.1		2.5		0.8
Prior Service Cost/(Credit)	1.2		—		0.3		—		(21.2)		1.1		(17.0)		0.4
Total Net Periodic Benefit Plan Expense/(Income)	$	56.9	$	19.1	$	6.5	$	(1.5)	$	(51.6)	$	(1.6)	$	(39.8)	$	(0.8)
Intercompany Expense/(Income) Allocations	N/A		$	9.1	$	8.9	$	2.9	N/A		$	(1.1)	$	(1.4)	$	(0.5)


	Pension and SERP								PBOP
	For the Year Ended December 31, 2019								For the Year Ended December 31, 2019
(Millions of Dollars)	Eversource		CL&P		NSTAR Electric		PSNH		Eversource		CL&P		NSTAR Electric		PSNH
Service Cost	$	67.7	$	18.0	$	14.6	$	7.1	$	7.8	$	1.4	$	1.7	$	0.7
Interest Cost	219.0		45.7		49.0		24.0		32.7		6.3		9.5		3.4
Expected Return on Plan Assets	(367.1)		(73.2)		(97.1)		(40.7)		(66.8)		(9.2)		(30.2)		(5.4)
Actuarial Loss	143.2		26.9		44.7		10.6		8.3		1.3		3.3		0.3
Prior Service Cost/(Credit)	0.9		—		0.3		—		(23.5)		1.1		(16.9)		0.4
Total Net Periodic Benefit Plan Expense/(Income)	$	63.7	$	17.4	$	11.5	$	1.0	$	(41.5)	$	0.9	$	(32.6)	$	(0.6)
Intercompany Expense/(Income) Allocations	N/A		$	8.5	$	8.0	$	2.3	N/A		$	(0.9)	$	(1.2)	$	(0.4)

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


	Pension and SERP									PBOP
	For the Years Ended December 31,									For the Years Ended December 31,
	2021			2020			2019			2021			2020			2019
Discount Rate	1.5%	—	3.0%	2.6%	—	3.5%	2.7%	—	3.6%	1.8%	—	3.1%	2.7%	—	3.6%	3.9%	—	4.6%
Expected Long-Term Rate of Return	8.25%			8.25%			8.25%			8.25%			8.25%			8.25%
Compensation/Progression Rate	3.5%	—	4.0%	3.5%	—	4.0%	3.5%	—	4.0%	N/A			N/A			N/A

For the Aquarion Pension and PBOP Plans, the expected long-term rate of return was 7 percent for the years ended December 31, 2021 and 2020. For the Aquarion PBOP Plan, the health care cost trend rate was a range of 3.5 percent to 6.2 percent for the year ended December 31, 2021 and 3.5 percent to 6.5 percent for the year ended December 31, 2020.

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:


	Pension and SERP								PBOP
	Regulatory Assets				OCI				Regulatory Assets				OCI
	For the Years Ended December 31,								For the Years Ended December 31,
(Millions of Dollars)	2021		2020 (1)		2021		2020		2021		2020 (1)		2021		2020
Actuarial (Gains)/Losses Arising During the Year	$	(961.7)	$	553.1	$	(28.4)	$	24.3	$	(181.5)	$	39.1	$	(4.0)	$	1.3
Actuarial Losses Reclassified as Net Periodic Benefit Expense	(231.2)		(194.3)		(12.7)		(7.7)		(8.5)		(8.0)		(0.4)		(0.4)
Prior Service Cost Arising During the Year	—		2.0		—		—		—		—		—		—
Prior Service (Cost)/Credit Reclassified as Net Periodic Benefit (Expense)/Income	(1.3)		(1.0)		(0.1)		(0.2)		21.1		21.3		0.1		(0.1)

(1) Amounts include the impact of the CMA asset acquisition beginning October 9, 2020.

The following is a summary of the remaining Regulatory Assets and Accumulated Other Comprehensive Income amounts that have not been recognized as components of net periodic benefit expense as of December 31, 2021 and 2020:


	Regulatory Assets as of December 31,				AOCI as of December 31,
(Millions of Dollars)	2021		2020		2021		2020
Pension and SERP
Actuarial Loss	$	1,427.3	$	2,620.2	$	66.3	$	107.4
Prior Service Cost	5.3		6.6		0.6		0.7
PBOP
Actuarial Loss	$	45.0	$	235.0	$	3.5	$	7.9
Prior Service (Credit)/Cost	(130.1)		(151.2)		1.0		0.9

The difference between the actual return and calculated expected return on plan assets for the Pension and PBOP Plans, as well as changes in actuarial assumptions impacting the projected benefit obligation, are recorded as unamortized actuarial gains or losses arising during the year in Regulatory Assets or Accumulated Other Comprehensive Income/(Loss). Unamortized actuarial gains or losses are amortized as a component of pension and PBOP expense over the estimated average future employee service period.

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)	2022		2023		2024		2025		2026		2027 - 2031
Pension and SERP	$	359.6	$	367.4	$	405.0	$	381.2	$	384.3	$	1,918.2
PBOP	56.4		56.2		55.9		55.3		54.3		254.6

Eversource Contributions: Based on the current status of the Pension Plans and federal pension funding requirements, there is no minimum funding requirement for our Pension Plans for 2022. Eversource currently expects to make contributions between $100 million to $175 million in 2022, most of which will be contributed by Eversource Service, however the planned contribution is discretionary and subject to change. Eversource currently estimates contributing $2.4 million to the PBOP Plans in 2022.

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 trust, 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. Management has assumed long-term rates of return of 8.25 percent for the Eversource Service Pension and PBOP Plan assets and a 7 percent long-term rate of return for the Aquarion Plans to estimate its 2022 Pension and PBOP costs.

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,
	2021				2020
	Eversource Pension Plan and PBOP Plan				Eversource Pension Plan and PBOP Plan
	Target Asset Allocation		Assumed Rate of Return		Target Asset Allocation		Assumed Rate of Return
Equity Securities:
United States	15.0	%	8.5	%	15.0	%	8.5	%
Global	10.0	%	8.75	%	10.0	%	8.75	%
Non-United States	8.0	%	8.5	%	8.0	%	8.5	%
Emerging Markets	4.0	%	10.0	%	4.0	%	10.0	%
Debt Securities:
Fixed Income	13.0	%	4.0	%	13.0	%	4.0	%
Public High Yield Fixed Income	4.0	%	6.5	%	4.0	%	6.5	%
Private Debt	13.0	%	9.0	%	15.0	%	9.0	%
Private Equity	18.0	%	12.0	%	15.0	%	12.0	%
Real Assets	15.0	%	7.5	%	16.0	%	7.5	%

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)	2021								2020
Asset Category:	Level 1		Level 2		Uncategorized		Total		Level 1		Level 2		Uncategorized		Total
Equity Securities	$	722.5	$	—	$	1,385.2	$	2,107.7	$	630.8	$	—	$	1,321.7	$	1,952.5
Fixed Income	139.6		233.8		1,689.1		2,062.5		113.6		265.6		1,402.5		1,781.7
Private Equity	—		—		1,702.7		1,702.7		22.3		—		1,175.4		1,197.7
Real Assets	218.3		—		702.8		921.1		158.4		—		580.8		739.2
Total	$	1,080.4	$	233.8	$	5,479.8	$	6,794.0	$	925.1	$	265.6	$	4,480.4	$	5,671.1
Less: 401(h) PBOP Assets (1)							(298.5)								(261.9)
Total Pension Assets							$	6,495.5							$	5,409.2


	PBOP Plan
	Fair Value Measurements as of December 31,
(Millions of Dollars)	2021								2020
Asset Category:	Level 1		Level 2		Uncategorized		Total		Level 1		Level 2		Uncategorized		Total
Equity Securities	$	191.4	$	—	$	248.3	$	439.7	$	176.5	$	—	$	217.8	$	394.3
Fixed Income	49.7		45.2		125.5		220.4		16.0		43.2		152.9		212.1
Private Equity	—		—		58.7		58.7		—		—		31.5		31.5
Real Assets	90.0		—		31.0		121.0		82.1		—		22.2		104.3
Total	$	331.1	$	45.2	$	463.5	$	839.8	$	274.6	$	43.2	$	424.4	$	742.2
Add: 401(h) PBOP Assets (1)							298.5								261.9
Total PBOP Assets							$	1,138.3							$	1,004.1

(1) 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 and corporate bonds, 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, fixed income funds, real asset funds and hedge funds are valued using the net asset value (NAV) as a practical expedient. Assets valued at NAV are uncategorized in the fair value hierarchy. 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. Private Equity investments, Fixed Income partnership funds and Real 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, or the NAV of underlying assets held in hedge funds. Equity Securities investments in United States, Global, Non-United States and Emerging Markets that are uncategorized include investments in commingled funds and hedge funds that are overlaid with equity index swaps and futures contracts. Fixed Income investments that are uncategorized include investments in commingled funds, fixed income funds that invest in a variety of opportunistic and fixed income strategies, and hedge funds that are overlaid with fixed income futures.

B. Defined Contribution Plans

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


(Millions of Dollars)	Eversource		CL&P		NSTAR Electric		PSNH
2021	$	55.5	$	7.0	$	12.2	$	4.3
2020	49.4		6.6		11.8		4.1
2019	41.6		5.5		10.3		3.5

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 to their respective employees and officers, as well as for the allocation of costs associated with shares issued 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 6,700,000 new shares for various types of awards, including RSUs and performance shares, to eligible employees, officers, and board members. As of December 31, 2021 and 2020, Eversource had 2,430,716 and 2,876,601 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 Capital Surplus, Paid In 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.

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, 2020	674,218	$	63.42
Granted	165,930	$	81.89
Shares Issued	(223,484)	$	69.03
Forfeited	(22,041)	$	83.86
Outstanding as of December 31, 2021	594,623	$	65.70

The weighted average grant-date fair value of RSUs granted for the years ended December 31, 2021, 2020 and 2019 was $81.89, $88.23 and $67.91, respectively. As of December 31, 2021 and 2020, the number and weighted average grant-date fair value of unvested RSUs was 297,270 and $83.39 per share, and 379,258 and $77.13 per share, respectively. During 2021, there were 219,560 RSUs at a weighted average grant-date fair value of $72.37 per share that vested during the year and were either paid or deferred. As of December 31, 2021, 297,353 RSUs were fully vested and deferred and an additional 282,407 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, 2020	447,805	$	69.93
Granted	286,645	$	76.08
Shares Issued	(256,914)	$	56.88
Forfeited	(13,029)	$	84.28
Outstanding as of December 31, 2021	464,507	$	80.54

The weighted average grant-date fair value of performance shares granted for the years ended December 31, 2021, 2020 and 2019 was $76.08, $75.36 and $68.33, respectively. As of December 31, 2021 and 2020, the number and weighted average grant-date fair value of unvested performance shares was 436,957 and $81.41 per share, and 404,698 and $70.85 per share, respectively. During 2021, there were 241,949 performance shares at a weighted average grant-date fair value of $57.23 per share that vested during the year and were either paid or deferred. As of December 31, 2021, 27,550 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)	2021		2020		2019
Compensation Expense	$	28.2	$	33.9	$	27.3
Future Income Tax Benefit	7.3		8.9		7.0


	For the Years Ended December 31,
	2021						2020						2019
(Millions of Dollars)	CL&P		NSTAR Electric		PSNH		CL&P		NSTAR Electric		PSNH		CL&P		NSTAR Electric		PSNH
Compensation Expense	$	8.8	$	9.0	$	3.0	$	10.9	$	11.3	$	3.6	$	9.8	$	9.7	$	3.3
Future Income Tax Benefit	2.3		2.3		0.8		2.9		3.0		1.0		2.5		2.5		0.8

As of December 31, 2021, there was $17.8 million of total unrecognized compensation expense related to nonvested share-based awards for Eversource, including $3.2 million for CL&P, $5.0 million for NSTAR Electric, and $1.1 million for PSNH. This cost is expected to be recognized ratably over a weighted-average period of 1.72 years for Eversource, CL&P, NSTAR Electric and PSNH.

An income tax rate of 26 percent was used to estimate the tax effect on total share-based payments determined under the fair-value based method for all awards. Beginning in 2019, the Company began issuing treasury shares to settle fully vested RSUs and performance shares under the Company's incentive plans.

For the years ended December 31, 2021, 2020 and 2019, excess tax benefits associated with the distribution of stock compensation awards reduced income tax expense by $4.0 million, $6.6 million, and $1.5 million, respectively, which increased cash flows from operating activities on the statements of cash flows.

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 is included in Other Current and Long-Term Liabilities on the balance sheets. The related expense, which includes the allocation of expense associated with Eversource's service company officers that support CL&P, NSTAR Electric and PSNH, is included in Operations and Maintenance Expense on the income statements. The liability and expense amounts are as follows:


Eversource (Millions of Dollars)	As of and For the Years Ended December 31,
2021			2020			2019
Actuarially-Determined Liability	$	42.8		$	45.7		$	52.0
Other Retirement Benefits Expense	2.2			3.3			2.7


	As of and For the Years Ended December 31,
	2021						2020						2019
(Millions of Dollars)	CL&P		NSTAR Electric		PSNH		CL&P		NSTAR Electric		PSNH		CL&P		NSTAR Electric		PSNH
Actuarially-Determined Liability	$	0.2	$	0.1	$	1.5	$	0.2	$	0.1	$	1.7	$	0.2	$	0.1	$	1.7
Other Retirement Benefits Expense	0.7		0.7		0.3		1.2		1.1		0.5		1.0		0.9		0.4

12. INCOME TAXES

The components of income tax expense are as follows:


Eversource (Millions of Dollars)	For the Years Ended December 31,
2021			2020			2019
Current Income Taxes:
Federal	$	21.5		$	73.6		$	56.9
State	(21.6)			19.1			10.5
Total Current	(0.1)			92.7			67.4
Deferred Income Taxes, Net:
Federal	199.7			173.5			138.4
State	147.4			83.7			71.4
Total Deferred	347.1			257.2			209.8
Investment Tax Credits, Net	(2.8)			(3.7)			(3.7)
Income Tax Expense	$	344.2		$	346.2		$	273.5


	For the Years Ended December 31,
	2021						2020						2019
(Millions of Dollars)	CL&P		NSTAR Electric		PSNH		CL&P		NSTAR Electric		PSNH		CL&P		NSTAR Electric		PSNH
Current Income Taxes:
Federal	$	15.0	$	52.3	$	43.1	$	12.0	$	53.9	$	20.6	$	68.4	$	82.6	$	22.9
State	(7.0)		6.2		10.8		(6.1)		6.9		3.8		15.4		18.2		2.2
Total Current	8.0		58.5		53.9		5.9		60.8		24.4		83.8		100.8		25.1
Deferred Income Taxes, Net:
Federal	76.3		16.3		(14.9)		101.1		33.8		(1.3)		35.2		0.1		5.8
State	47.6		41.2		0.4		43.4		38.8		8.6		18.8		27.0		10.1
Total Deferred	123.9		57.5		(14.5)		144.5		72.6		7.3		54.0		27.1		15.9
Investment Tax Credits, Net	(0.6)		(1.7)		—		(0.7)		(2.6)		—		(0.8)		(2.6)		—
Income Tax Expense	$	131.3	$	114.3	$	39.4	$	149.7	$	130.8	$	31.7	$	137.0	$	125.3	$	41.0

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,
2021				2020				2019
Income Before Income Tax Expense	$	1,572.3			$	1,558.9			$	1,190.1

Statutory Federal Income Tax Expense at 21%	330.2				327.4				249.9
Tax Effect of Differences:
Depreciation	(18.1)				(11.1)				1.9
Investment Tax Credit Amortization	(2.8)				(3.7)				(3.7)
State Income Taxes, Net of Federal Impact	54.4				44.9				24.6
Dividends on ESOP	(5.1)				(5.1)				(5.1)
Tax Asset Valuation Allowance/Reserve Adjustments	44.6				33.4				40.1
Excess Stock Benefit	(4.0)				(6.6)				(1.5)
EDIT Amortization	(69.1)				(48.7)				(37.4)
Other, Net	14.1				15.7				4.7
Income Tax Expense	$	344.2			$	346.2			$	273.5
Effective Tax Rate	21.9		%		22.2		%		23.0		%


	For the Years Ended December 31,
	2021									2020									2019
(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	$	533.0		$	590.9		$	189.8		$	607.6		$	575.8		$	179.0		$	547.8		$	557.3		$	175.0

Statutory Federal Income Tax Expense at 21%	111.9			124.1			39.9			127.6			120.9			37.6			115.0			117.0			36.8
Tax Effect of Differences:
Depreciation	(6.4)			(3.4)			(0.2)			0.4			(3.7)			(1.4)			(0.2)			(3.0)			(0.8)
Investment Tax Credit Amortization	(0.6)			(1.7)			—			(0.7)			(2.6)			—			(0.8)			(2.6)			—
State Income Taxes, Net of Federal Impact	(4.6)			37.5			8.9			(1.2)			36.0			9.8			2.5			35.7			9.8
Tax Asset Valuation Allowance/Reserve Adjustments	36.7			—			—			30.7			—			—			24.5			—			—
Excess Stock Benefit	(1.5)			(1.4)			(0.5)			(2.3)			(2.3)			(0.8)			(0.5)			(0.5)			(0.2)
EDIT Amortization	(9.8)			(43.2)			(10.5)			(9.0)			(20.4)			(15.4)			(5.8)			(22.9)			(4.0)
Other, Net	5.6			2.4			1.8			4.2			2.9			1.9			2.3			1.6			(0.6)
Income Tax Expense	$	131.3		$	114.3		$	39.4		$	149.7		$	130.8		$	31.7		$	137.0		$	125.3		$	41.0
Effective Tax Rate	24.6		%	19.3		%	20.8		%	24.6		%	22.7		%	17.7		%	25.0		%	22.5		%	23.4		%

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:


	As of December 31,
	2021								2020
(Millions of Dollars)	Eversource		CL&P		NSTAR Electric		PSNH		Eversource		CL&P		NSTAR Electric		PSNH
Deferred Tax Assets:
Employee Benefits	$	270.8	$	23.9	$	40.3	$	14.1	$	602.4	$	144.5	$	79.8	$	56.6
Derivative Liabilities	76.8		76.8		—		—		92.6		91.8		—		—
Regulatory Deferrals - Liabilities	390.7		90.9		215.4		24.3		259.8		30.2		161.8		13.4
Allowance for Uncollectible Accounts	104.1		48.8		21.5		6.2		87.5		42.3		20.9		4.6
Tax Effect - Tax Regulatory Liabilities	783.4		328.2		254.3		100.9		810.9		331.4		271.8		105.2
Net Operating Loss Carryforwards	7.5		—		—		—		12.7		—		—		—
Purchase Accounting Adjustment	67.2		—		—		—		54.5		—		—		—
Other	196.6		103.9		21.7		22.9		200.3		100.9		14.3		19.8
Total Deferred Tax Assets	1,897.1		672.5		553.2		168.4		2,120.7		741.1		548.6		199.6
Less: Valuation Allowance	61.5		44.5		—		—		48.3		33.7		—		—
Net Deferred Tax Assets	$	1,835.6	$	628.0	$	553.2	$	168.4	$	2,072.4	$	707.4	$	548.6	$	199.6
Deferred Tax Liabilities:
Accelerated Depreciation and Other Plant-Related Differences	$	4,426.0	$	1,509.5	$	1,553.7	$	482.9	$	4,153.6	$	1,438.1	$	1,489.4	$	453.8
Property Tax Accruals	88.1		40.5		33.7		6.3		88.7		39.0		37.0		5.8
Regulatory Amounts:
Regulatory Deferrals - Assets	1,260.3		438.3		337.6		198.4		1,376.7		444.8		324.4		263.4
Tax Effect - Tax Regulatory Assets	257.8		181.4		10.9		8.3		244.6		174.4		11.3		8.6
Goodwill Regulatory Asset - 1999 Merger	81.4		—		69.9		—		86.0		—		73.8		—
Derivative Assets	14.9		14.9		—		—		17.8		17.8		—		—
Other	304.2		5.5		126.9		10.5		200.3		1.6		72.6		5.6
Total Deferred Tax Liabilities	$	6,432.7	$	2,190.1	$	2,132.7	$	706.4	$	6,167.7	$	2,115.7	$	2,008.5	$	737.2

2021 Federal Legislation: On November 5, 2021, Congress passed the Infrastructure Investment and Jobs Act. The Act provided spending of more than $500 billion on roads, highways, bridges, public transit, and utilities. For water and sewer utilities, the Act restored the exclusion from a corporation’s income for contributions in aid of construction where the corporation is a water or sewer utility eliminated by the Tax Cuts and Jobs Act of 2017. Under the Act, a regulated public utility that provides water or sewage disposal services can treat money or property received from any person as a tax-free contribution to capital if it meets certain criteria for contributions made after 2020. The Act did not have a material impact on Eversource in 2021.

2020 Federal Legislation: On March 27, 2020, former President Trump signed the $2.2 trillion bipartisan Coronavirus Aid, Relief, and Economic Security (CARES) Act. Among other provisions, the CARES Act provides for loans and other benefits to small and large businesses, expanded unemployment insurance, direct payments to those with wages middle-income and below, new appropriations funding for health care and other priorities, and tax changes like deferrals of employer payroll tax liabilities coupled with an employee retention tax credit and rollbacks of Tax Cuts and Jobs Act of 2017 limitations on net operating losses and certain business interest limitation. For the years ended December 31, 2021 and 2020, we recorded a tax liability of $19.6 million and $39 million, respectively, related to the deferral of employer payroll tax liability provision. Fifty percent of the 2020 deferral of employer payroll tax liability was paid by December 31, 2021 and the remaining amount must be paid by December 31, 2022. Other than the cash flow benefit described, the CARES Act did not have a material impact.

On December 27, 2020, former President Trump signed into law H.R. 133, the “Consolidated Appropriations Act, 2021.” The House of Representatives and Senate previously passed the bill with overwhelming support. The legislation included the extension of the Investment Tax Credit (ITC) for solar at 26 percent for facilities the construction of which begins through the end of 2022, at 22 percent for facilities the construction of which begins in 2023, and postponement of the date after which solar facilities placed in service receive only a 10 percent ITC to December 31, 2025, the extension of the ITC at 30 percent (with no phase-down) to offshore wind if construction begins by December 31, 2025 (qualifying offshore wind includes facilities located in the inland navigable waters or in the coastal waters of the U.S.), and the extension and expansion of the CARES Act employee retention tax credit for the period from January 1, 2021 through June 30, 2021, including increasing the credit rate from 50 percent to 70 percent of qualified wages, and increasing the per-employee creditable wages limit from $10,000 per year to $10,000 for each quarter. These credits provide the opportunity to generate additional tax credits in the Company’s renewable energy projects when the projects become operational. The tax credit provision had no impact to Eversource in 2021 and the credits will be evaluated for significant positive developments for the Company in 2022 and forward.

Carryforwards: The following table provides 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,
	2021									2020
(Millions of Dollars)	Eversource		CL&P		NSTAR Electric		PSNH		Expiration Range	Eversource		CL&P		NSTAR Electric		PSNH		Expiration Range

State Net Operating Loss	$	138.3	$	—	$	—	$	—	2021 - 2040	$	183.4	$	—	$	—	$	—	2021 - 2040
State Tax Credit	197.7		137.0		—		—		2021 - 2026	186.6		133.4		—		—		2020 - 2025
State Charitable Contribution	23.7		—		—		—		2021 - 2025	10.2		—		—		—		2020 - 2024

In 2021, the Company increased its valuation allowance reserve for state credits by $13.0 million ($10.8 million for CL&P), net of tax, to reflect an update for expiring tax credits. In 2020, the Company increased its valuation allowance reserve for state credits by $10.3 million ($8.8 million for CL&P), net of tax, to reflect an update for expiring tax credits.

For 2021 and 2020, state credit and state loss carryforwards have been partially reserved by a valuation allowance of $61.5 million and $48.3 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, 2019	$	45.9	$	18.2
Gross Increases - Current Year	12.1		4.0
Gross Increases - Prior Year	3.4		3.3
Lapse of Statute of Limitations	(6.4)		(2.4)
Balance as of December 31, 2019	55.0		23.1
Gross Increases - Current Year	11.9		4.6
Gross Increases - Prior Year	1.4		0.7
Lapse of Statute of Limitations	(6.5)		(2.6)
Balance as of December 31, 2020	61.8		25.8
Gross Increases - Current Year	11.3		3.8
Gross Decreases - Prior Year	(0.3)		(0.6)
Lapse of Statute of Limitations	(7.0)		(2.8)
Balance as of December 31, 2021	$	65.8	$	26.2

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. There has been no interest expense or income recognized on uncertain tax positions for the years ended December 31, 2021, 2020 or 2019. The accrued interest payable was $0.1 million as of both December 31, 2021 and 2020.

Tax Positions: During 2021 and 2020, 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, 2021:


Description			Tax Years
Federal			2021
Connecticut			2018 - 2021
Massachusetts			2018 - 2021
New Hampshire			2018 - 2021

Eversource does not estimate to have an earnings impact related to unrecognized tax benefits during the next twelve months.

13. COMMITMENTS AND CONTINGENCIES

A. Environmental Matters

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 required environmental remediation. 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, 2020	$	81.0	$	11.4	$	8.0	$	7.5
Increase Due to CMA Asset Acquisition	22.9		—		—		—
Additions	8.4		4.2		0.7		—
Payments/Reductions	(9.9)		(3.3)		(4.0)		(0.4)
Balance as of December 31, 2020	102.4		12.3		4.7		7.1
Additions	23.4		4.4		—		—
Payments/Reductions	(10.4)		(2.8)		(1.4)		(0.8)
Balance as of December 31, 2021	$	115.4	$	13.9	$	3.3	$	6.3

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


	Eversource	CL&P	NSTAR Electric	PSNH
2021	61	14	11	9
2020	63	15	12	9

The increase in the reserve balance was due primarily to a change in cost estimates at an NSTAR Gas MGP site under investigation, which we now know will require additional remediation.

Included in the number of sites and reserve amounts above are former MGP sites that were operated several decades ago and manufactured natural 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 $105.6 million and $92.2 million as of December 31, 2021 and 2020, respectively, and related primarily to the natural gas business segment.

As of December 31, 2021, for 7 environmental sites (2 for CL&P) 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, 2021, $25.9 million (including $3.2 million for CL&P) has 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 $10 million ($0.6 million at CL&P) may be incurred in executing current remediation plans for these sites.

As of December 31, 2021, for 13 environmental sites (7 for CL&P and 2 for NSTAR Electric) 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, 2021, $16.1 million (including $3.9 million for CL&P and $0.2 million for NSTAR Electric) had been accrued as a liability for these sites. As of December 31, 2021, for the remaining 41 environmental sites (including 5 for CL&P, 9 for NSTAR Electric and 9 for PSNH) that are included in the Company's reserve for environmental costs, the $73.4 million accrual (including $6.8 million for CL&P, $3.1 million for NSTAR Electric and $6.3 million for PSNH) represents management's best estimate of the probable liability and no additional loss is estimable at this time.

PSNH, NSTAR Gas, EGMA 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 is allowed to defer certain environmental costs for future recovery. NSTAR Electric does 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 executed, non-cancelable, long-term contractual arrangements in effect as of December 31, 2021 are as follows:


Eversource
(Millions of Dollars)	2022		2023		2024		2025		2026		Thereafter		Total
Renewable Energy	$	755.4	$	700.7	$	696.4	$	718.7	$	714.3	$	3,571.4	$	7,156.9
Natural Gas Procurement	377.9		323.6		270.5		265.5		250.4		1,517.2		3,005.1
Purchased Power and Capacity	76.0		87.1		86.7		75.1		2.9		9.8		337.6
Peaker CfDs	26.1		38.9		39.4		36.7		29.9		63.3		234.3
Transmission Support Commitments	16.0		17.8		20.6		22.4		22.6		22.6		122.0
Total	$	1,251.4	$	1,168.1	$	1,113.6	$	1,118.4	$	1,020.1	$	5,184.3	$	10,855.9


CL&P
(Millions of Dollars)	2022		2023		2024		2025		2026		Thereafter		Total
Renewable Energy	$	586.2	$	592.1	$	592.0	$	593.9	$	591.9	$	2,752.2	$	5,708.3
Purchased Power and Capacity	72.1		83.4		83.8		72.3		0.1		—		311.7
Peaker CfDs	26.1		38.9		39.4		36.7		29.9		63.3		234.3
Transmission Support Commitments	6.3		7.0		8.1		8.8		8.9		8.9		48.0
Total	$	690.7	$	721.4	$	723.3	$	711.7	$	630.8	$	2,824.4	$	6,302.3


NSTAR Electric
(Millions of Dollars)	2022		2023		2024		2025		2026		Thereafter		Total
Renewable Energy	$	102.9	$	78.3	$	75.7	$	76.1	$	76.4	$	492.3	$	901.7
Purchased Power and Capacity	3.0		2.9		2.9		2.8		2.8		9.8		24.2
Transmission Support Commitments	6.3		7.0		8.1		8.9		8.9		8.9		48.1
Total	$	112.2	$	88.2	$	86.7	$	87.8	$	88.1	$	511.0	$	974.0


PSNH
(Millions of Dollars)	2022		2023		2024		2025		2026		Thereafter		Total
Renewable Energy	$	66.3	$	30.3	$	28.7	$	48.7	$	46.0	$	326.9	$	546.9
Purchased Power and Capacity	0.9		0.8		—		—		—		—		1.7
Transmission Support Commitments	3.4		3.8		4.4		4.7		4.8		4.8		25.9
Total	$	70.6	$	34.9	$	33.1	$	53.4	$	50.8	$	331.7	$	574.5

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 2042 for CL&P, 2041 for NSTAR Electric and 2033 for PSNH.

As required by 2018 regulation, CL&P and UI each entered into PURA-approved ten-year contracts in 2019 to purchase a combined total of approximately 9 million MWh annually from the Millstone Nuclear Power Station generation facility, which represents a combined amount of approximately 50 percent of the facility's output (approximately 40 percent by CL&P). The Millstone Nuclear Power Station has a 2,112 MW nameplate capacity. Energy deliveries and payments under these contracts began in 2019. Also as required by 2018 regulation, CL&P and UI each entered into PURA-approved eight-year contracts in 2019 to purchase a combined amount of approximately 18 percent of the Seabrook Nuclear Power Plant’s output (approximately 15 percent by CL&P) beginning January 1, 2022. The Seabrook Nuclear Power Plant has an approximate 1,250 MW nameplate capacity. The total estimated remaining future cost of the Millstone Nuclear Power Station and Seabrook Nuclear Power Plant energy purchase contracts are $3.3 billion and are reflected in the table above. CL&P sells the energy purchased under these contracts into the market and uses the proceeds from these energy sales to offset the contract costs. As the net costs under these contracts are recovered from customers in future rates, the contracts do not have an impact on the net income of CL&P. These contracts do not meet the definition of a derivative, and accordingly, the costs of these contracts are being accounted for as incurred.

Excluded from the table above are long-term commitments of NSTAR Electric pertaining to the Massachusetts Clean Energy 83D contract, for which construction was suspended prior to December 31, 2021. Should the project attain feasibility and construction recommence, the estimated costs under the contract may potentially begin in 2023 and range between $150 million and $415 million per year under a 20-year contract, totaling approximately $6.7 billion.

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, respectively, for the purchase of renewable energy and related products that are contingent on the future construction of energy facilities.

Natural Gas Procurement: 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, which extend through 2045.

Purchased Power and Capacity: These contracts include capacity CfDs of CL&P through 2026, and various IPP contracts or purchase obligations for electricity which extend through 2024 for CL&P, 2031 for NSTAR Electric and 2023 for PSNH.

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 capacities of these contracts as of both December 31, 2021 and 2020 were 675 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. 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, NSTAR Electric's or PSNH's standard/basic service contracts for the purchase of energy supply, the amounts of which vary with customers' energy needs.

Peaker CfDs: CL&P, along with UI, has three peaker CfDs for a total of approximately 500 MW of peaking capacity through 2042. CL&P has a sharing agreement with UI, 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 are recovered from, or refunded to, CL&P's customers.

Transmission Support Commitments: Along with other New England utilities, CL&P, NSTAR Electric and PSNH entered into a series of agreements in the 1980’s to support the costs of, and receive rights to use, transmission and terminal facilities that were built to import electricity from the Hydro-Québec system in Canada. CL&P, NSTAR Electric and PSNH were obligated to pay, over a 30-year period that ended in 2020, their proportionate shares of the annual operation and maintenance expenses and capital costs of those facilities. On December 18, 2020, the parties to these agreements submitted to FERC an offer of settlement and amendments to these agreements implementing the terms of an extension for an additional 20-year period ending in 2040. On May 20, 2021, FERC approved this settlement, effective January 1, 2021.

The total costs incurred under these agreements were as follows:


Eversource	For the Years Ended December 31,
(Millions of Dollars)	2021		2020		2019
Renewable Energy	$	609.2	$	584.2	$	320.8
Natural Gas Procurement	712.7		453.4		448.5
Purchased Power and Capacity	56.4		62.7		62.1
Peaker CfDs	24.3		22.7		13.0
Transmission Support Commitments	15.4		22.1		21.8


	For the Years Ended December 31,
	2021						2020						2019
(Millions of Dollars)	CL&P		NSTAR Electric		PSNH		CL&P		NSTAR Electric		PSNH		CL&P		NSTAR Electric		PSNH
Renewable Energy	$	457.1	$	84.7	$	67.4	$	426.3	$	88.8	$	69.1	$	160.6	$	89.9	$	70.3
Purchased Power and Capacity	53.1		3.0		0.3		59.3		3.1		0.3		50.4		5.1		6.6
Peaker CfDs	24.3		—		—		22.7		—		—		13.0		—		—
Transmission Support Commitments	6.1		6.0		3.3		8.7		8.7		4.7		8.6		8.6		4.6

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 power facilities and are now engaged in the long-term storage of their spent fuel. The Yankee Companies fund these costs through litigation proceeds received from the DOE and, to the extent necessary, through wholesale, FERC-approved rates charged under power purchase agreements with several New England utilities, including CL&P, NSTAR Electric and PSNH. CL&P, NSTAR Electric and PSNH, in turn recover these costs from their customers through state regulatory commission-approved retail rates. The Yankee Companies collect 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 accept delivery of, and 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 previously awarded the Yankee Companies damages for Phases I, II, III and IV of litigation resulting from the DOE's failure to meet its contractual obligations. These Phases covered damages incurred in the years 1998 through 2016, and the awarded damages have been received by the Yankee Companies with certain amounts of the damages refunded to their customers.

DOE Phase IV Damages - On May 22, 2017, each of the Yankee Companies filed a fourth set of lawsuits against the DOE in the Court of Federal Claims. The Yankee Companies sought monetary damages totaling $104.4 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). On February 21, 2019, the Yankee Companies received a partial summary judgment and partial final judgment in their favor for the undisputed amount of monetary damages of $103.2 million. The court awarded CYAPC, YAEC and MYAPC damages of $40.7 million, $28.1 million and $34.4 million, respectively. The DOE did not appeal the court's judgment and the decision became final on April 23, 2019. On June 12, 2019, each of the Yankee Companies received the damages proceeds. On June 12, 2019, the court accepted an offer of judgment in the amount of $0.5 million to settle the disputed amount of approximately $1 million in Phase IV contested damages. The Yankee Companies received the $0.5 million payment in July 2019.

In September 2019, the Yankee Companies made a required informational filing with FERC as to the use of proceeds, for which approval was received in the fourth quarter of 2019. In December 2019, YAEC and MYAPC returned proceeds of $5.4 million and $21.0 million, respectively, to its member companies, of which the Eversource utilities (CL&P, NSTAR Electric and PSNH) received a total of $2.8 million from YAEC and $5.0 million from MYAPC. The Eversource utilities refund these amounts received to their utility customers. Also, in December 2019, CYAPC paid $29.0 million to the DOE to partially settle its pre-1983 spent nuclear fuel obligation.

DOE Phase V Damages - On March 25, 2021, each of the Yankee Companies filed a fifth set of lawsuits against the DOE in the Court of Federal Claims. The Yankee Companies filed claims seeking monetary damages totaling $120.4 million for CYAPC, YAEC and MYAPC, resulting from the DOE's failure to begin accepting spent nuclear fuel for disposal covering the years from 2017 to 2020 (DOE Phase V). The DOE Phase V trial is expected to begin in the third quarter of 2023.

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. Management does not anticipate a material impact to net income or cash flows as a result of these various guarantees and indemnifications.

Guarantees issued on behalf of unconsolidated entities, including equity method offshore wind investments, for which Eversource parent is the guarantor, are recorded at fair value as a liability on the balance sheet at the inception of the guarantee. Eversource regularly reviews performance risk under these guarantee arrangements, and in the event it becomes probable that Eversource parent will be required to perform under the guarantee, the amount of probable payment will be recorded. The fair value of guarantees issued on behalf of unconsolidated entities are recorded within Other Long-Term Liabilities on the balance sheet, and was $7.3 million as of December 31, 2021.

The following table summarizes Eversource parent's exposure to guarantees and indemnifications of its subsidiaries and affiliates to external parties:


As of December 31, 2021
Company (Obligor)	Description	Maximum Exposure (in millions)		Expiration Dates
North East Offshore LLC	Construction-related purchase agreements with third-party contractors (1)	$	1,080.6	(1)
Sunrise Wind LLC	Construction-related purchase agreements with third-party contractors (2)	382.3		2026
Revolution Wind, LLC	Construction-related purchase agreements with third-party contractors (3)	150.9		2027
South Fork Wind, LLC	Construction-related purchase agreements with third-party contractors (4)	125.2		2023 - 2026
Eversource Investment LLC	Funding and indemnification obligations of North East Offshore LLC (5)	—		(5)
Sunrise Wind LLC	OREC capacity production (6)	2.2		(6)
Bay State Wind LLC	Real estate purchase	2.5		2022
South Fork Wind, LLC	Transmission interconnection	1.2		—
Various	Surety bonds (7)	54.7		2022 - 2023
Eversource Service	Lease payments for real estate	0.8		2024

(1) Eversource parent issued guarantees on behalf of its 50 percent-owned affiliate, North East Offshore LLC (NEO), under which Eversource parent agreed to guarantee 50 percent of NEO’s performance of obligations under certain purchase agreements with third-party contactors, in an aggregate amount not to exceed $1.3 billion with an expiration date in 2025. Eversource parent also issued a separate guarantee to Ørsted on behalf of NEO, under which Eversource parent agreed to guarantee 50 percent of NEO’s payment obligations under certain offshore wind project construction-related agreements with Ørsted in an aggregate amount not to exceed $62.5 million and expiring upon full performance of the guaranteed obligation. Any amounts paid under this guarantee to Ørsted will count toward, but not increase, the maximum amount of the Funding Guarantee described in Note 5, below. The guarantee expires upon the full performance of the guaranteed obligations.

(2) Eversource parent issued a guaranty on behalf of its 50 percent-owned affiliate, Sunrise Wind LLC, whereby Eversource parent will guarantee Sunrise Wind LLC's performance of certain obligations, in an aggregate amount not to exceed $420.6 million, in connection with a construction-related purchase agreement. Eversource parent’s obligations under the guarantee expire upon the earlier of (i) April 2026 and (ii) full performance of the guaranteed obligations.

(3) Eversource parent issued a guaranty on behalf of its 50 percent-owned affiliate, Revolution Wind, LLC, whereby Eversource parent will guarantee Revolution Wind, LLC's performance of certain obligations, in an aggregate amount not to exceed $158.9 million, in connection with a construction-related purchase agreement. Eversource parent’s obligations under the guarantee expire upon the earlier of (i) November 2027 and (ii) full performance of the guaranteed obligations.

(4) Eversource parent issued three guarantees on behalf of its 50 percent-owned affiliate, South Fork Wind, LLC, whereby Eversource parent will guarantee South Fork Wind, LLC's performance of certain obligations in connection with three construction-related purchase agreements. Under these guarantees, Eversource parent will guarantee South Fork Wind, LLC's performance of certain obligations, in a total aggregate amount not to exceed $137.2 million. Eversource parent’s obligations under these guarantees expire upon the earlier of (i) dates ranging from October 2023 and August 2026 and (ii) full performance of the guaranteed obligations.

(5) Eversource parent issued a guarantee (Funding Guarantee) on behalf of Eversource Investment LLC (EI), its wholly-owned subsidiary that holds a 50 percent ownership interest in NEO, under which Eversource parent agreed to guarantee certain funding obligations and certain indemnification payments of EI under the Amended and Restated Limited Liability Company Operating Agreement of NEO, in an amount not to exceed $910 million. The guaranteed obligations include payment of EI's funding obligations during the construction phase of NEO’s underlying offshore wind projects and indemnification obligations associated with third party credit support for its investment in NEO. Eversource parent’s obligations under the Funding Guarantee expire upon the full performance of the guaranteed obligations.

(6) Eversource parent issued a guarantee on behalf of its 50 percent-owned affiliate, Sunrise Wind LLC, whereby Eversource parent will guarantee Sunrise Wind LLC's performance of certain obligations, in an amount not to exceed $15.4 million, under the Offshore Wind Renewable Energy Certificate Purchase and Sale Agreement (the Agreement). The Agreement was executed on October 23, 2019, by and between the New York State Energy Research and Development Authority (NYSERDA) and Sunrise Wind LLC. The guarantee expires upon the full performance of the guaranteed obligations.

(7) 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.

Letter of Credit: On September 16, 2020, Eversource parent entered into a guarantee on behalf of EI, which holds Eversource's investments in offshore wind-related equity method investments, under which Eversource parent would guarantee EI's obligations under a letter of credit facility with a financial institution that EI may request in an aggregate amount of up to approximately $25 million. In January 2022, Eversource parent issued two letters of credit on behalf of South Fork Wind, LLC related to future decommissioning obligations of certain on-shore transmission assets totaling $4.3 million.

2022 Guarantees: In the first quarter of 2022, Eversource parent issued two additional guarantees on behalf of South Fork Wind, LLC totaling $43.4 million, whereby Eversource parent will guarantee South Fork Wind, LLC's performance of certain PPA and other contractual obligations.

E. FERC ROE Complaints

Four separate complaints were 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, filed on October 1, 2011, December 27, 2012, and July 31, 2014, respectively, 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 billed 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.

The ROE originally billed during the period October 1, 2011 (beginning of the first complaint period) 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 the incentive cap at 11.74 percent for the first complaint period. This was also effective for all prospective billings to customers beginning October 16, 2014. This FERC order was vacated on April 14, 2017 by the U.S. Court of Appeals for the D.C. Circuit (the Court).

All amounts associated with the first complaint period have been refunded, which totaled $38.9 million (pre-tax and excluding interest) at Eversource and reflected both the base ROE and incentive cap prescribed by the FERC order. The refund consisted of $22.4 million for CL&P, $13.7 million for NSTAR Electric and $2.8 million for PSNH.

Eversource has recorded a reserve of $39.1 million (pre-tax and excluding interest) for the second complaint period as of both December 31, 2021 and 2020. This 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 both December 31, 2021 and 2020.

On October 16, 2018, FERC issued an order on all four complaints describing how it intends to address the issues that were remanded by the Court. FERC proposed a new framework to determine (1) whether an existing ROE is unjust and unreasonable and, if so, (2) how to calculate a replacement ROE. Initial briefs were filed by the NETOs, Complainants and FERC Trial Staff on January 11, 2019 and reply briefs were filed on March 8, 2019. The NETOs' brief was supportive of the overall ROE methodology determined in the October 16, 2018 order provided the FERC does not change the proposed methodology or alter its implementation in a manner that has a material impact on the results.

The FERC order included illustrative calculations for the first complaint using FERC's proposed frameworks with financial data from that complaint. Those illustrative calculations indicated that for the first complaint period, for the NETOs, which FERC concludes are of average financial risk, the preliminary just and reasonable base ROE is 10.41 percent and the preliminary incentive cap on total ROE is 13.08 percent. If the results of the illustrative calculations were included in a final FERC order for each of the complaint periods, then a 10.41 percent base ROE and a 13.08 percent incentive cap would not have a significant impact on our financial statements for all of the complaint periods. These preliminary calculations are not binding and do not represent what we believe to be the most likely outcome of a final FERC order.

On November 21, 2019, FERC issued Opinion No. 569 affecting the two pending transmission ROE complaints against the Midcontinent ISO (MISO) transmission owners, in which FERC adopted a new methodology for determining base ROEs. Various parties sought rehearing. On December 23, 2019, the NETOs filed supplementary materials in the NETOs' four pending cases to respond to this new methodology because of the uncertainty of the applicability to the NETOs' cases.

On May 21, 2020, the FERC issued its order in Opinion No. 569-A on the rehearing of the MISO transmission owners' cases, in which FERC again changed its methodology for determining the MISO transmission owners' base ROEs. On November 19, 2020, the FERC issued Opinion No. 569-B denying rehearing of Opinion No. 569-A and reaffirmed the methodology previously adopted in Opinion No. 569-A. The new methodology differs significantly from the methodology proposed by FERC in its October 16, 2018 order to determine the NETOs' base ROEs in its four pending cases. FERC Opinion Nos. 569-A and 569-B are currently under appeal with the Court.

Given the significant uncertainty regarding the applicability of the FERC opinions in the MISO transmission owners' two complaint cases to the NETOs' pending four complaint cases, Eversource concluded that there is no reasonable basis for a change to the reserve or recognized ROEs for any of the complaint periods at this time. As well, Eversource cannot reasonably estimate a range of any gain or loss for any of the four complaint proceedings at this time.

Eversource, CL&P, NSTAR Electric and PSNH currently record revenues at the 10.57 percent base ROE and incentive cap at 11.74 percent established in the October 16, 2014 FERC order.

A change of 10 basis points to the base ROE used to establish the reserves would impact Eversource’s after-tax earnings by an average of approximately $3 million for each of the four 15-month complaint periods.

F. Eversource and NSTAR Electric Boston Harbor Civil Action

In 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 against 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 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. Construction of the new distribution cable was completed in August 2019 and removal of the portions of the existing cable was completed in January 2020. All issues surrounding the current permit from the United States Army Corps of Engineers are expected to be resolved and remaining restoration efforts completed, at which time such litigation is expected to be dismissed with prejudice.

G. CL&P Regulatory Matters

CL&P Tropical Storm Isaias Response Investigation: In August 2020, PURA opened a docket to investigate the preparation for and response to Tropical Storm Isaias by Connecticut utilities, including CL&P. On April 28, 2021, PURA issued a final decision on CL&P’s compliance with its emergency response plan that concluded CL&P failed to comply with certain storm performance standards and was imprudent in certain instances. Specifically, PURA concluded that CL&P did not satisfy the performance standards for managing its municipal liaison program, timely removing electrical hazards from blocked roads, communicating critical information to its customers, or meeting its obligation to secure adequate external contractor and mutual aid resources in a timely manner. Based on its findings, PURA ordered CL&P to adjust its future rates in a pending or future rate proceeding to reflect a monetary penalty in the form of a downward adjustment of 90 basis points in its allowed rate of return on equity (ROE), which is currently 9.25 percent. In its decision, PURA explained that additional monetary penalties and further enforcement orders pursuant to Connecticut statute would be considered in a separate proceeding that was initiated on May 6, 2021.

On May 6, 2021, as part of the penalty proceeding, PURA issued a notice of violation that included an assessment of $30 million, consisting of a $28.4 million civil penalty for non-compliance with storm performance standards to be provided as credits on customer bills and a $1.6 million fine for violations of accident reporting requirements to be paid to the State of Connecticut’s general fund. On July 14, 2021, PURA issued a final decision in this penalty proceeding that included an assessment of $28.6 million, maintaining the $28.4 million performance penalty and reducing the $1.6 million fine for accident reporting to $0.2 million. The $28.4 million performance penalty is currently being credited to customers on electric bills beginning on September 1, 2021 over a one-year period. The $28.4 million is the maximum statutory penalty amount under applicable Connecticut law in effect at the time of Tropical Storm Isaias, which is 2.5 percent of CL&P’s annual distribution revenues. The liability for the performance penalty was recorded as a current regulatory liability on CL&P’s balance sheet and as a reduction to Operating Revenues on the year ended December 31, 2021 statement of income. The after-tax earnings impact of this charge was $0.07 per share.

CL&P Settlement Agreement: On October 1, 2021, CL&P entered into a settlement agreement with the DEEP, Office of Consumer Counsel (OCC), Office of the Attorney General (AG) and the Connecticut Industrial Energy Consumers, resolving certain issues that arose in then-pending regulatory proceedings initiated by the PURA. PURA approved the settlement agreement on October 27, 2021. In the settlement agreement, CL&P agreed to provide a total of $65 million of customer credits, which were distributed based on customer sales over a two-month billing period from December 1, 2021 to January 31, 2022. CL&P also agreed to irrevocably set aside $10 million to provide bill payment assistance to certain existing non-hardship and hardship customers carrying arrearages, as approved by the PURA, with the objective of disbursing the funds prior to April 30, 2022. CL&P recorded a current regulatory liability of $75 million on the balance sheet associated with the provisions of the settlement agreement, with a $65 million pre-tax charge as a reduction to Operating Revenues associated with the customer credits and a $10 million charge to Operations and Maintenance expense associated with the customer assistance fund on the year ended December 31, 2021 statement of income.

In exchange for the $75 million of customer credits and assistance, PURA’s interim rate reduction docket was resolved without findings. As a result of the settlement agreement, neither the 90 basis point reduction to CL&P’s return on equity introduced in PURA’s storm-related decision issued April 28, 2021, nor the 45 basis point reduction to CL&P’s return on equity included in PURA’s decision issued September 14, 2021 in the interim rate reduction docket, will be implemented.

CL&P has also agreed to freeze its current base distribution rates, subject to the customer credits described above, until no earlier than January 1, 2024. The rate freeze applies only to base distribution rates (including storm costs) and not to other rate mechanisms such as the retail rate components, rate reconciling mechanisms, formula rates and any other adjustment mechanisms. The rate freeze also does not apply to any cost recovery mechanism outside of the base distribution rates with regard to grid-modernization initiatives or any other proceedings, either currently pending or that may be initiated during the rate freeze period, that may place additional obligations on CL&P. The approval of the settlement agreement satisfies the Connecticut statute of rate review requirements that requires electric utilities to file a distribution rate case within four years of the last rate case.

As part of the settlement agreement, CL&P agreed to withdraw with prejudice its pending appeals of PURA’s decisions dated April 28, 2021 and July 14, 2021 related to Storm Isaias and agreed to waive its right to file an appeal and seek a judicial stay of the September 14, 2021 decision in the interim rate reduction docket. The settlement agreement assures that CL&P will have the opportunity to petition for and demonstrate the prudency of the storm costs incurred to respond to customer outages associated with Storm Isaias in a future ratemaking proceeding.

The cumulative pre-tax impact of the settlement agreement and the Storm Isaias assessment imposed in PURA’s April 28, 2021 and July 14, 2021 decisions totaled $103.6 million, and the after-tax earnings impact was $86.1 million, or $0.25 per share, for the year ended December 31, 2021.

H. 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.

14. LEASES

Eversource, including CL&P, NSTAR Electric and PSNH, has entered into lease agreements as a lessee for the use of land, office space, service centers, vehicles, information technology, and equipment. These lease agreements are classified as either finance or operating leases and the liability and right-of-use asset are recognized on the balance sheet at lease commencement. Leases with an initial term of 12 months or less are not recorded on the balance sheet and are recognized as lease expense on a straight-line basis over the lease term.

Eversource determines whether or not a contract contains a lease based on whether or not it provides Eversource with the use of a specifically identified asset for a period of time, as well as both the right to direct the use of that asset and receive the significant economic benefits of the asset. Eversource has elected the practical expedient to not separate non-lease components from lease components and instead to account for both as a single lease component, with the exception of the information technology asset class where the lease and non-lease components are separated.

The provisions of Eversource, CL&P, NSTAR Electric and PSNH lease agreements contain renewal options. The renewal options range from one year to twenty years. The renewal period is included in the measurement of the lease liability if it is reasonably certain that Eversource will exercise these renewal options.

For leases entered into or modified after the January 1, 2019 implementation date, the discount rate utilized for classification and measurement purposes as of the inception date of the lease is based on each company's collateralized incremental interest rate to borrow over a comparable term for an individual lease because the rate implicit in the lease is not determinable.

CL&P and PSNH 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 recognized as a lease liability on the balance sheet and are not reflected in the future minimum lease payments table below. Expense related to these contracts is included as variable lease cost in the table below. The expense and long-term obligation for these contracts are also included in Note 13B, "Commitments and Contingencies - Long-Term Contractual Arrangements," to the financial statements.

The components of lease cost, prior to amounts capitalized, are as follows:


Eversource	For the Years Ended December 31,
(Millions of Dollars)	2021		2020		2019
Finance Lease Cost:
Amortization of Right-of-use-Assets	$	4.6	$	2.6	$	1.7
Interest on Lease Liabilities	3.9		1.4		1.2
Total Finance Lease Cost	8.5		4.0		2.9
Operating Lease Cost	12.2		11.1		11.7
Variable Lease Cost	61.0		57.8		60.5
Total Lease Cost	$	81.7	$	72.9	$	75.1


	For the Years Ended December 31,
	2021						2020						2019
(Millions of Dollars)	CL&P		NSTAR Electric		PSNH		CL&P		NSTAR Electric		PSNH		CL&P		NSTAR Electric		PSNH
Finance Lease Cost:
Amortization of Right-of-use-Assets	$	0.5	$	0.2	$	0.1	$	0.7	$	0.2	$	0.1	$	0.7	$	0.2	$	0.1
Interest on Lease Liabilities	0.1		0.6		—		0.3		0.6		—		0.6		0.6		—
Total Finance Lease Cost	0.6		0.8		0.1		1.0		0.8		0.1		1.3		0.8		0.1
Operating Lease Cost	0.3		2.3		0.1		0.6		2.1		0.1		0.5		3.4		0.1
Variable Lease Cost	16.2		—		44.8		12.2		—		45.6		13.3		—		47.2
Total Lease Cost	$	17.1	$	3.1	$	45.0	$	13.8	$	2.9	$	45.8	$	15.1	$	4.2	$	47.4

Operating lease cost, net of the capitalized portion, is included in Operations and Maintenance (or Purchased Power, Fuel and Transmission expense for transmission leases) on the statements of income. Amortization of finance lease assets is included in Depreciation on the statements of income. Interest expense on finance leases is included in Interest Expense on the statements of income.

Supplemental balance sheet information related to leases is as follows:


		As of December 31, 2021								As of December 31, 2020
(Millions of Dollars)	Balance Sheet Classification	Eversource		CL&P		NSTAR Electric		PSNH		Eversource		CL&P		NSTAR Electric		PSNH
Operating Leases:
Right-of-use-Assets, Net	Other Long-Term Assets	$	47.2	$	0.1	$	24.3	$	0.3	$	55.2	$	0.3	$	23.6	$	0.3
Operating Lease Liabilities
Current Portion	Other Current Liabilities	$	10.0	$	0.1	$	1.1	$	—	$	9.5	$	0.2	$	0.7	$	—
Long-Term	Other Long-Term Liabilities	37.2		—		23.2		0.3		45.7		0.1		22.9		0.3
Total Operating Lease Liabilities		$	47.2	$	0.1	$	24.3	$	0.3	$	55.2	$	0.3	$	23.6	$	0.3
Finance Leases:
Right-of-use-Assets, Net	Property, Plant and Equipment, Net	$	58.0	$	—	$	3.3	$	0.7	$	60.5	$	0.7	$	3.5	$	0.8
Finance Lease Liabilities
Current Portion	Other Current Liabilities	$	3.9	$	—	$	—	$	0.1	$	5.0	$	1.4	$	—	$	0.1
Long-Term	Other Long-Term Liabilities	55.4		—		4.9		0.6		57.6		—		4.8		0.7
Total Finance Lease Liabilities		$	59.3	$	—	$	4.9	$	0.7	$	62.6	$	1.4	$	4.8	$	0.8

The finance lease payments that NSTAR Electric will make over the next twelve months are entirely interest-related, due to escalating payments. As such, none of the finance lease payments over the next twelve months will reduce the finance lease liability.

Other information related to leases is as follows:


	As of December 31,
	2021								2020
	Eversource		CL&P		NSTAR Electric		PSNH		Eversource		CL&P		NSTAR Electric		PSNH
Weighted-Average Remaining Lease Term (Years):
Operating Leases	13		7		18		7		10		3		19		8
Finance Leases	16		—		20		7		17		1		21		8
Weighted-Average Discount Rate (Percentage):
Operating Leases	4.1	%	3.0	%	4.0	%	3.7	%	4.0	%	2.4	%	4.1	%	3.7	%
Finance Leases	2.7	%	—	%	2.9	%	3.5	%	2.9	%	10.5	%	2.9	%	3.5	%


(Millions of Dollars)	Eversource		CL&P		NSTAR Electric		PSNH
For the Year Ended December 31, 2021
Cash Paid for Amounts Included in the Measurement of Lease Liabilities:
Operating Cash Flows from Operating Leases	$	12.1	$	0.3	$	2.1	$	0.1
Operating Cash Flows from Finance Leases	3.4		0.1		0.6		—
Financing Cash Flows from Finance Leases	4.1		1.4		—		0.1
Supplemental Non-Cash Information on Lease Liabilities:
Right-of-use-Assets Obtained in Exchange for New Operating Lease Liabilities	2.1		—		1.9		—
Right-of-use-Assets Obtained in Exchange for New Finance Lease Liabilities	2.3		—		—		—


(Millions of Dollars)	Eversource		CL&P		NSTAR Electric		PSNH
For the Year Ended December 31, 2020
Cash Paid for Amounts Included in the Measurement of Lease Liabilities:
Operating Cash Flows from Operating Leases	$	10.9	$	0.6	$	1.8	$	0.1
Operating Cash Flows from Finance Leases	1.7		0.3		0.6		—
Financing Cash Flows from Finance Leases	2.8		1.6		—		0.1
Supplemental Non-Cash Information on Lease Liabilities:
Right-of-use-Assets Obtained in Exchange for New Operating Lease Liabilities	0.6		0.1		0.2		—
Right-of-use-Assets Obtained in Exchange for New Finance Lease Liabilities	0.7		—		0.3		—


(Millions of Dollars)	Eversource		CL&P		NSTAR Electric		PSNH
For the Year Ended December 31, 2019
Cash Paid for Amounts Included in the Measurement of Lease Liabilities:
Operating Cash Flows from Operating Leases	$	11.4	$	0.4	$	1.6	$	0.1
Operating Cash Flows from Finance Leases	1.2		0.6		0.6		—
Financing Cash Flows from Finance Leases	2.6		1.4		—		0.1
Supplemental Non-Cash Information on Lease Liabilities:
Right-of-use-Assets Obtained in Exchange for New Operating Lease Liabilities	2.9		1.0		0.1		0.2
Right-of-use-Assets Obtained in Exchange for New Finance Lease Liabilities	2.0		—		—		—

In 2020, Eversource also acquired $14.7 million of right-of-use assets in exchange for the assumption of new operating lease liabilities and $54.2 million of right-of-use assets in exchange for the assumption of new finance lease liabilities as a result of the CMA asset acquisition.

Future minimum lease payments, excluding variable costs, under long-term leases, as of December 31, 2021 are as follows:


	Operating Leases								Finance Leases
(Millions of Dollars)	Eversource		CL&P		NSTAR Electric		PSNH		Eversource		NSTAR Electric		PSNH
Year Ending December 31,
2022	$	11.1	$	0.1	$	2.1	$	0.1	$	6.0	$	0.6	$	0.1
2023	7.6		—		2.1		0.1		5.2		0.7		0.1
2024	6.1		—		2.1		—		5.3		0.7		0.1
2025	3.2		—		1.7		—		5.2		0.6		0.1
2026	2.5		—		1.7		—		4.7		0.6		0.1
Thereafter	27.8		—		25.3		0.1		56.0		12.4		0.3
Future lease payments	58.3		0.1		35.0		0.3		82.4		15.6		0.8
Less amount representing interest	11.1		—		10.7		—		23.1		10.7		0.1
Present value of future minimum lease payments	$	47.2	$	0.1	$	24.3	$	0.3	$	59.3	$	4.9	$	0.7

15. 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, Long-Term Debt and Rate Reduction Bonds: 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 and RRB 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 table below are classified as Level 2 within the fair value hierarchy. Carrying amounts and estimated fair values are as follows:


	Eversource				CL&P				NSTAR Electric				PSNH
(Millions of Dollars)	Carrying Amount		Fair Value		Carrying Amount		Fair Value		Carrying Amount		Fair Value		Carrying Amount		Fair Value
As of December 31, 2021:
Preferred Stock Not Subject to Mandatory Redemption	$	155.6	$	166.3	$	116.2	$	122.3	$	43.0	$	44.0	$	—	$	—
Long-Term Debt	18,216.7		19,636.3		4,215.4		4,848.9		3,985.4		4,453.5		1,163.8		1,220.6
Rate Reduction Bonds	496.9		543.3		—		—		—		—		496.9		543.3

As of December 31, 2020:
Preferred Stock Not Subject to Mandatory Redemption	$	155.6	$	169.1	$	116.2	$	123.4	$	43.0	$	45.7	$	—	$	—
Long-Term Debt	16,179.1		18,420.1		3,914.8		4,800.9		3,643.2		4,294.0		1,099.1		1,207.0
Rate Reduction Bonds	540.1		603.4		—		—		—		—		540.1		603.4

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.

16. ACCUMULATED OTHER COMPREHENSIVE INCOME/(LOSS)

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


	For the Year Ended December 31, 2021								For the Year Ended December 31, 2020
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 on Marketable Securities		Defined Benefit Plans		Total
Balance as of January 1st	$	(1.4)	$	1.1	$	(76.1)	$	(76.4)	$	(3.0)	$	0.7	$	(62.8)	$	(65.1)

OCI Before Reclassifications	—		(0.7)		24.1		23.4		—		0.4		(19.6)		(19.2)
Amounts Reclassified from AOCI	1.0		—		9.7		10.7		1.6		—		6.3		7.9
Net OCI	1.0		(0.7)		33.8		34.1		1.6		0.4		(13.3)		(11.3)
Balance as of December 31st	$	(0.4)	$	0.4	$	(42.3)	$	(42.3)	$	(1.4)	$	1.1	$	(76.1)	$	(76.4)

Defined benefit plan OCI amounts before reclassifications relate to actuarial gains and losses that arose during the year and were recognized in AOCI. The unamortized actuarial gains and losses and prior service costs on the defined benefit plans are amortized from AOCI into Other Income, Net over the average future employee service period, and are reflected in amounts reclassified from AOCI. The related tax effects of the defined benefit plan OCI amounts before reclassifications recognized in AOCI were net deferred tax liabilities of $8.3 million in 2021 and deferred tax assets of $6.0 million and $4.4 million in 2020 and 2019, respectively.

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


	Amounts Reclassified from AOCI
Eversource (Millions of Dollars)	For the Years Ended December 31,								Statements of Income Line Item Impacted
2021			2020			2019
Qualified Cash Flow Hedging Instruments	$	(1.7)		$	(2.5)		$	(2.5)	Interest Expense
Tax Effect	0.7			0.9			1.1		Income Tax Expense
Qualified Cash Flow Hedging Instruments, Net of Tax	$	(1.0)		$	(1.6)		$	(1.4)
Defined Benefit Plan Costs:
Amortization of Actuarial Losses	$	(13.1)		$	(8.1)		$	(5.7)	Other Income, Net (1)
Amortization of Prior Service Credit/(Cost)	—			(0.3)			(1.8)		Other Income, Net (1)
Total Defined Benefit Plan Costs	(13.1)			(8.4)			(7.5)
Tax Effect	3.4			2.1			1.9		Income Tax Expense
Defined Benefit Plan Costs, Net of Tax	$	(9.7)		$	(6.3)		$	(5.6)
Total Amounts Reclassified from AOCI, Net of Tax	$	(10.7)		$	(7.9)		$	(7.0)

(1) These amounts are included in the computation of net periodic Pension, SERP and PBOP costs. See Note 1M, "Summary of Significant Accounting Policies – Other Income, Net" and Note 11A, "Employee Benefits – Pension Benefits and Postretirement Benefits Other Than Pension," for further information.

As of December 31, 2021, it is estimated that a pre-tax amount of $0.1 million ($0.1 million for NSTAR Electric) will be reclassified from AOCI as a decrease to Net Income over the next 12 months as a result of the amortization of the interest rate swap agreements which have been settled.

17. 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 agreements. Pursuant to the joint revolving credit agreement of Eversource, CL&P, PSNH, NSTAR Gas, Yankee Gas, EGMA and Aquarion Water Company of Connecticut, 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, 2021, all companies were in compliance with such covenant and in compliance with all such provisions of the revolving credit agreements that may restrict the payment of dividends as of December 31, 2021.

The Retained Earnings balances subject to dividend restrictions were $5.01 billion for Eversource, $2.23 billion for CL&P, $2.72 billion for NSTAR Electric and $504.6 million for PSNH as of December 31, 2021.

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 NSTAR Gas, Yankee Gas, EGMA, Aquarion Water Company of Connecticut, Aquarion Water Company of Massachusetts and Aquarion Water Company of New Hampshire. Such state law restrictions do not restrict the payment of dividends from retained earnings or net income.

18. 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, 2021 and 2020	Issued as of December 31,
2021			2020
Eversource	$	5		380,000,000	357,818,402	357,818,402
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

Common Share Issuances and 2019 Forward Sale Agreement: On June 15, 2020, Eversource completed an equity offering of 6,000,000 common shares at a price per share of $86.26. Eversource used the net proceeds of this offering to fund a portion of the purchase of the assets of CMA that closed on October 9, 2020. The issuance of these common shares resulted in proceeds of $509.2 million, net of issuance costs.

In June 2019, Eversource completed an equity offering consisting of 5,980,000 common shares issued directly by the Company and 11,960,000 common shares issuable pursuant to a forward sale agreement with an investment bank. Under the forward sale agreement, 11,960,000 common shares were borrowed from third parties and sold by the underwriters. The forward sale agreement allowed Eversource, at its election and prior to May 29, 2020, to physically settle the forward sale agreement by issuing common shares in exchange for net proceeds at the then-applicable forward sale price specified by the agreement (initially, $71.48 per share) or, alternatively, to settle the forward sale agreement in whole or in part through the delivery or receipt of shares or cash. The forward sale price was subject to adjustment daily based on a floating interest rate factor and would decrease in respect of certain fixed amounts specified in the agreement, such as dividends.

Eversource issued 6,000,000 common shares under the forward sale agreement in December 2019. On March 23, 2020, Eversource physically settled a portion of the forward sale agreement by delivering 1,500,000 common shares in exchange for net proceeds of $105.7 million. Subsequently, on March 26, 2020, Eversource physically settled the remaining portion of the forward sale agreement by delivering 4,460,000 common shares in exchange for net proceeds of $314.1 million. The forward sale price used to determine the cash proceeds received by Eversource was calculated based on the initial forward sale price, as adjusted in accordance with the forward sale agreement.

The March and June 2020 common share issuances of 5,960,000 and 6,000,000, respectively, resulted in total proceeds of $929.0 million, net of issuance costs. The June and December 2019 common share issuances of 5,980,000 and 6,000,000, respectively, resulted in total proceeds of $852.3 million. These issuances were reflected in shareholders’ equity and as financing activities on the statements of cash flows.

Issuances of shares under the forward sale agreement were classified as equity transactions. Accordingly, no amounts relating to the forward sale agreement were recorded in the financial statements until settlements took place. Prior to any settlements, the only impact of the forward sale agreement to the financial statements was the inclusion of incremental shares within the calculation of diluted EPS using the treasury stock method. See Note 21, "Earnings Per Share," to the financial statements for information on the forward sale agreement’s impact on the calculation of diluted EPS.

Eversource used the net proceeds received from the direct issuance of common shares and the net proceeds received from settlement of the forward sale agreement to repay short-term debt under the commercial paper program, to partially fund the purchase of the assets of CMA, to fund capital spending and clean energy initiatives, and for general corporate purposes.

Treasury Shares: As of December 31, 2021 and 2020, there were 13,415,206 and 14,864,379 Eversource common shares held as treasury shares, respectively. As of December 31, 2021 and 2020, there were 344,403,196 and 342,954,023 Eversource common shares outstanding, respectively.

On December 1, 2021, Aquarion acquired New England Service Company (NESC), pursuant to a definitive agreement entered into on April 8, 2021. The acquisition was structured as a stock-for-stock merger and Eversource issued 462,517 treasury shares at closing for a purchase price of $38.1 million.

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

19. 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 Boards 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		2021		2020	2021	2020
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	23	$	—	$	—
Total Eversource - Noncontrolling Interest - Preferred Stock of Subsidiaries						$	155.6	$	155.6

20. 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, 2021, 2020 and 2019. 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, 2021 and 2020. On the Eversource balance sheets, Common Shareholders' Equity was fully attributable to Eversource parent and Noncontrolling Interest – Preferred Stock of Subsidiaries was fully attributable to the noncontrolling interest.

For the years ended December 31, 2021, 2020 and 2019, there was no change in ownership of the common equity of CL&P and NSTAR Electric.

21. 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 and the equity forward sale agreement, as if they were converted into outstanding common shares. The dilutive effect of unvested RSU and performance share awards, as well as the equity forward sale agreement, 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.

As described in Note 18, "Common Shares," earnings per share dilution related to the forward sale agreement was determined under the treasury stock method until settlement of the forward sale agreement. Under this method, the number of Eversource common shares used in calculating diluted EPS is deemed to be increased by the excess, if any, of the number of shares that would be issued upon physical settlement of the forward sale agreement less the number of shares that would be purchased by Eversource in the market (based on the average market price during the same reporting period) using the proceeds receivable upon settlement (based on the adjusted forward sale price at the end of that reporting period). Share dilution occurs when the average market price of Eversource's common shares is higher than the adjusted forward sale price. Eversource physically settled all remaining shares under the forward sale agreement as of March 26, 2020.

For the years ended December 31, 2021 and 2019, there were no antidilutive share awards excluded from the computation. For the year ended December 31, 2020, 39,560 antidilutive share awards were excluded from the EPS computation, as their impact would have been antidilutive. Antidilutive shares pertained to a purchase option extended to underwriters in connection with Eversource's common share issuance on June 15, 2020. See Note 18, "Common Shares," for further information.

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,
2021			2020			2019
Net Income Attributable to Common Shareholders	$	1,220.5		$	1,205.2		$	909.1
Weighted Average Common Shares Outstanding:
Basic	343,972,926			338,836,147			321,416,086
Dilutive Effect of:
Share-Based Compensation Awards and Other	658,130			738,994			762,215
Equity Forward Sale Agreement	—			271,921			763,335
Total Dilutive Effect	658,130			1,010,915			1,525,550
Diluted	344,631,056			339,847,062			322,941,636
Basic EPS	$	3.55		$	3.56		$	2.83
Diluted EPS	$	3.54		$	3.55		$	2.81

22. REVENUES

Revenue is recognized when promised goods or services (referred to as performance obligations) are transferred to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. A five-step model is used for recognizing and measuring revenue from contracts with customers, which includes identifying the contract with the customer, identifying the performance obligations promised within the contract, determining the transaction price (the amount of consideration to which the company expects to be entitled), allocating the transaction price to the performance obligations and recognizing revenue when (or as) the performance obligation is satisfied.

The following tables present operating revenues disaggregated by revenue source:


	For the Year Ended December 31, 2021
Eversource (Millions of Dollars)	Electric Distribution		Natural Gas Distribution		Electric Transmission		Water Distribution		Other		Eliminations		Total
Revenues from Contracts with Customers
Retail Tariff Sales
Residential	$	3,989.8	$	1,000.3	$	—	$	133.5	$	—	$	—	$	5,123.6
Commercial	2,486.1		497.6		—		62.8		—		(5.1)		3,041.4
Industrial	345.3		167.2		—		4.3		—		(17.1)		499.7
Total Retail Tariff Sales Revenues	6,821.2		1,665.1		—		200.6		—		(22.2)		8,664.7
Wholesale Transmission Revenues	—		—		1,751.3		—		86.6		(1,384.7)		453.2
Wholesale Market Sales Revenues	575.8		82.1		—		3.9		—		—		661.8
Other Revenues from Contracts with Customers	78.1		5.1		13.6		7.5		1,267.4		(1,257.7)		114.0
Reserve for Revenues Subject to Refund	(71.1)		—		(5.0)		(2.6)		—		—		(78.7)
Total Revenues from Contracts with Customers	7,404.0		1,752.3		1,759.9		209.4		1,354.0		(2,664.6)		9,815.0
Alternative Revenue Programs	14.7		37.0		(126.1)		1.5		—		114.6		41.7
Other Revenues	4.9		0.3		0.8		0.4		—		—		6.4
Total Operating Revenues	$	7,423.6	$	1,789.6	$	1,634.6	$	211.3	$	1,354.0	$	(2,550.0)	$	9,863.1


	For the Year Ended December 31, 2020
Eversource (Millions of Dollars)	Electric Distribution		Natural Gas Distribution		Electric Transmission		Water Distribution		Other		Eliminations		Total
Revenues from Contracts with Customers
Retail Tariff Sales
Residential	$	3,951.5	$	644.9	$	—	$	145.1	$	—	$	—	$	4,741.5
Commercial	2,353.4		361.9		—		62.4		—		(4.8)		2,772.9
Industrial	327.1		107.4		—		4.8		—		(13.7)		425.6
Total Retail Tariff Sales Revenues	6,632.0		1,114.2		—		212.3		—		(18.5)		7,940.0
Wholesale Transmission Revenues	—		—		1,557.3		—		74.2		(1,290.6)		340.9
Wholesale Market Sales Revenues	327.3		43.0		—		3.8		—		—		374.1
Other Revenues from Contracts with Customers	79.3		5.7		13.3		3.5		1,161.7		(1,152.0)		111.5
Total Revenues from Contracts with Customers	7,038.6		1,162.9		1,570.6		219.6		1,235.9		(2,461.1)		8,766.5
Alternative Revenue Programs	88.1		44.7		(35.2)		(4.7)		—		37.1		130.0
Other Revenues	5.6		1.1		0.7		0.5		—		—		7.9
Total Operating Revenues	$	7,132.3	$	1,208.7	$	1,536.1	$	215.4	$	1,235.9	$	(2,424.0)	$	8,904.4


	For the Year Ended December 31, 2019
Eversource (Millions of Dollars)	Electric Distribution		Natural Gas Distribution		Electric Transmission		Water Distribution		Other		Eliminations		Total
Revenues from Contracts with Customers
Retail Tariff Sales
Residential	$	3,723.7	$	555.1	$	—	$	132.3	$	—	$	—	$	4,411.1
Commercial	2,584.8		347.6		—		63.9		—		(4.3)		2,992.0
Industrial	331.8		96.9		—		4.5		—		(11.6)		421.6
Total Retail Tariff Sales Revenues	6,640.3		999.6		—		200.7		—		(15.9)		7,824.7
Wholesale Transmission Revenues	—		—		1,293.3		—		61.3		(1,085.2)		269.4
Wholesale Market Sales Revenues	215.7		55.4		—		4.1		—		—		275.2
Other Revenues from Contracts with Customers	56.1		9.0		13.2		4.2		967.2		(969.0)		80.7
Total Revenues from Contracts with Customers	6,912.1		1,064.0		1,306.5		209.0		1,028.5		(2,070.1)		8,450.0
Alternative Revenue Programs	45.9		(4.9)		81.8		4.6		—		(74.2)		53.2
Other Revenues	18.5		3.1		0.7		1.0		—		—		23.3
Total Operating Revenues	$	6,976.5	$	1,062.2	$	1,389.0	$	214.6	$	1,028.5	$	(2,144.3)	$	8,526.5


	For the Years Ended December 31,
	2021						2020						2019
(Millions of Dollars)	CL&P		NSTAR Electric		PSNH		CL&P		NSTAR Electric		PSNH		CL&P		NSTAR Electric		PSNH
Revenues from Contracts with Customers
Retail Tariff Sales
Residential	$	1,994.2	$	1,375.8	$	619.8	$	2,011.1	$	1,365.8	$	574.6	$	1,837.1	$	1,322.1	$	564.5
Commercial	890.6		1,265.0		332.2		878.3		1,176.8		299.9		922.9		1,349.4		314.6
Industrial	131.4		119.1		94.8		137.5		106.4		83.2		138.3		115.8		77.7
Total Retail Tariff Sales Revenues	3,016.2		2,759.9		1,046.8		3,026.9		2,649.0		957.7		2,898.3		2,787.3		956.8
Wholesale Transmission Revenues	863.3		616.3		271.7		754.8		576.5		226.0		587.1		517.3		188.9
Wholesale Market Sales Revenues	408.8		109.2		57.8		230.1		58.4		38.8		105.1		73.1		37.5
Other Revenues from Contracts with Customers	26.7		56.2		11.3		32.9		43.6		14.2		36.4		18.7		15.6
(Reserve for)/Amortization of Revenues Subject to Refund	(76.1)		—		—		—		—		4.6		—		—		1.3
Total Revenues from Contracts with Customers	4,238.9		3,541.6		1,387.6		4,044.7		3,327.5		1,241.3		3,626.9		3,396.4		1,200.1
Alternative Revenue Programs	(78.9)		(15.1)		(17.4)		(4.2)		54.5		2.6		77.5		41.6		8.6
Other Revenues	0.4		3.4		1.9		2.2		3.5		0.6		10.3		7.0		1.9
Eliminations	(523.0)		(473.5)		(194.9)		(495.2)		(444.4)		(165.4)		(482.1)		(400.4)		(144.7)
Total Operating Revenues	$	3,637.4	$	3,056.4	$	1,177.2	$	3,547.5	$	2,941.1	$	1,079.1	$	3,232.6	$	3,044.6	$	1,065.9

Retail Tariff Sales: Regulated utilities provide products and services to their regulated customers under rates, pricing, payment terms and conditions of service, regulated by each state regulatory agency. The arrangement whereby a utility provides commodity service to a customer for a price approved by the respective state regulatory commission is referred to as a tariff sale contract, and the tariff governs all aspects of the provision of regulated services by utilities. The majority of revenue for Eversource, CL&P, NSTAR Electric and PSNH is derived from regulated retail tariff sales for the sale and distribution of electricity, natural gas and water to residential, commercial and industrial retail customers.

The utility's performance obligation for the regulated tariff sales is to provide electricity, natural gas or water to the customer as demanded. The promise to provide the commodity represents a single performance obligation, as it is a promise to transfer a series of distinct goods or services that are substantially the same and that have the same pattern of transfer to the customer. Revenue is recognized over time as the customer simultaneously receives and consumes the benefits provided by the utility, and the utility satisfies its performance obligation. Revenue is recognized based on the output method as there is a directly observable output to the customer (electricity, natural gas or water units delivered to the customer and immediately consumed). Each Eversource utility is entitled to be compensated for performance completed to date (service taken by the customer) until service is terminated.

In regulated tariff sales, the transaction prices are the rates approved by the 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 included in these rates and are also used to recover, on a fully-reconciling basis, certain costs, such as the procurement of energy supply, retail transmission charges, energy efficiency program costs, net metering for distributed generation, and restructuring and stranded costs. These tracking mechanisms result in rates being changed periodically to ensure recovery of actual costs incurred and the refund of any overcollection of costs.

Customers may elect to purchase electricity from each Eversource electric utility or may contract separately with a competitive third party supplier. Revenue is not recorded for the sale of the electricity commodity to customers who have contracted separately with these suppliers, only the delivery to a customer, as the utility is acting as an agent on behalf of the third party supplier.

Wholesale Transmission Revenues: The Eversource electric transmission-owning companies (CL&P, NSTAR Electric and PSNH) each own and maintain transmission facilities that are part of an interstate power transmission grid over which electricity is transmitted throughout New England. CL&P, NSTAR Electric and PSNH, as well as most other New England utilities, are parties to a series of agreements that provide for coordinated planning and operation of the region's transmission facilities and the rules by which they acquire transmission services. 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's local rates, under our FERC-approved tariff in effect in 2021, 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 tracking mechanisms, which are retail tariff sales.

The utility's performance obligation for regulated wholesale transmission sales is to provide transmission services to the customer as demanded. The promise to provide transmission service represents a single performance obligation. The transaction prices are the transmission rate formulas as defined by the ISO-NE Tariff and are regulated and established by FERC. Wholesale transmission revenue is recognized over time as the performance obligation is completed, which occurs as transmission services are provided to customers. The revenue is recognized based on the output method. Each Eversource utility is entitled to be compensated for performance completed to date (e.g., use of the transmission system by the customer).

Wholesale Market Sales Revenues: Wholesale market sales transactions include sales of energy and energy-related products into the ISO-NE wholesale electricity market, sales of natural gas to third party marketers, and also the sale of RECs to various counterparties. ISO-NE oversees the region's wholesale electricity market and administers the transactions and terms and conditions, including payment terms, which are established in the ISO-NE tariff, between the buyers and sellers in the market. Pricing is set by the wholesale market. The wholesale transactions in the ISO-NE market occur on a day-ahead basis or a real-time basis (daily) and are, therefore, short-term. Transactions are tracked and reported by ISO-NE net by the hour, which is the net hourly position of energy sales and purchases by each market participant. The performance obligation for ISO-NE energy transactions is defined to be the net by hour transaction. Revenue is recognized when the performance obligation for these energy sales transactions is satisfied, when the sale occurs and the energy is transferred to the customer. For sales of natural gas, transportation, and natural gas pipeline capacity to third party marketers, revenue is recognized when the performance obligation is satisfied at the point in time the sale occurs and the natural gas or related product is transferred to the marketer. RECs are sold to various counterparties, and revenue is recognized when the performance obligation is satisfied upon transfer of title to the customer through the New England Power Pool Generation Information System. Wholesale transactions also include the sale of CL&P’s, NSTAR Electric’s and PSNH’s transmission rights associated with their proportionate equity ownership share in the transmission lines of the Hydro-Québec system in Canada.

Other Revenues from Contracts with Customers: Other revenues from contracts with customers primarily include property rentals that are not deemed leases. These revenues are generally recognized on a straight-line basis over time as the service is provided to the customer. Other revenues also include revenues from Eversource's service company, which is eliminated in consolidation.

(Reserve for)/Amortization of Revenues Subject to Refund: A reserve is recorded as a reduction to revenues when future refunds to customers are deemed probable. The reserve is reversed as refunds are provided to customers. Revenues subject to refund primarily relate to a PURA-approved CL&P settlement agreement with the DEEP, OCC, AG and the Connecticut Industrial Energy Consumers, which resolved certain issues that arose in then-pending regulatory proceedings initiated by the PURA. CL&P recorded a reduction to Operating Revenues of $65 million on the 2021 income statement for a reserve for customer credits associated with the provisions of the settlement agreement. The customer credits were distributed based on customer sales over a two-month billing period from December 1, 2021 to January 31, 2022. Additionally, CL&P recorded a $28.4 million reserve in 2021 for a civil penalty for non-compliance with storm performance standards that is currently being credited to customers on electric bills beginning on September 1, 2021 over a one-year period. In total, the reserve for revenues subject to refund totaled $93.4 million and was recorded as a current regulatory liability on CL&P’s balance sheet and as a reduction to Operating Revenues for the year ended December 31, 2021. The balance reflected in the table above primarily represents the remaining reserve that has not yet been issued as customer credits as of December 31, 2021. See Note 13G, “Commitments and Contingencies - CL&P Regulatory Matters,” for further information.

The Connecticut water business continues to record a regulatory liability and reduction to revenues to reflect the difference between the 35 percent federal corporate income tax rate included in base distribution rates charged to customers and the 21 percent federal corporate income tax rate currently effective. This reserve will continue until base distribution rates are updated to reflect the lower federal tax rate.

Alternative Revenue Programs: In accordance with accounting guidance for rate-regulated operations, certain of Eversource's utilities' rate making mechanisms qualify as alternative revenue programs (ARPs) if they meet specified criteria, in which case revenues may be recognized prior to billing based on allowed levels of collection in rates. Eversource's utility companies recognize revenue and record a regulatory asset or liability once the condition or event allowing for the automatic adjustment of future rates occurs. ARP revenues include both the recognition of the deferral adjustment to ARP revenues, when the regulator-specified condition or event allowing for additional billing or refund has occurred, and an equal and offsetting reversal of the ARP deferral to revenues as those amounts are reflected in the price of service in subsequent periods.

Eversource’s ARPs include the revenue decoupling mechanism, the annual reconciliation adjustment to transmission formula rates, and certain capital tracker mechanisms. Certain Eversource electric, natural gas and water companies, including CL&P and NSTAR Electric, have revenue decoupling mechanisms approved by a regulatory commission (decoupled companies). Decoupled companies’ distribution revenues are not directly based on sales volumes. The decoupled companies reconcile their annual base distribution rate recovery to pre-established levels of baseline distribution delivery service revenues, with any difference between the allowed level of distribution revenue and the actual amount realized adjusted through subsequent rates. 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. This transmission deferral reconciles billed transmission revenues to the revenue requirement for our transmission businesses.

Other Revenues: Other Revenues include certain fees charged to customers that are not considered revenue from contracts with customers. Other revenues also include lease revenues under lessor accounting guidance of $4.8 million ($0.8 million at CL&P and $3.1 million at NSTAR Electric), $4.3 million ($0.8 million at CL&P and $2.7 million at NSTAR Electric), $4.4 million, ($1.0 million at CL&P and $2.7 million at NSTAR Electric) for the years ended December 31, 2021, 2020 and 2019, respectively.

Intercompany Eliminations: Intercompany eliminations are primarily related to the Eversource electric transmission revenues that are derived from ISO-NE regional transmission charges to the distribution businesses of CL&P, NSTAR Electric and PSNH that recover the costs of the wholesale transmission business, and revenues from Eversource's service company. Intercompany revenues and expenses between the Eversource wholesale transmission businesses and the Eversource distribution businesses and from Eversource's service company are eliminated in consolidation and included in "Eliminations" in the table above.

Receivables: Receivables, Net on the balance sheet primarily includes trade receivables from retail customers and from customers related to wholesale transmission contracts, wholesale market sales, sales of RECs, and property rentals. In general, retail tariff customers and wholesale transmission customers are billed monthly and the payment terms are generally due and payable upon receipt of the bill.

Unbilled Revenues: Unbilled Revenues on the balance sheet represent estimated amounts due from retail customers for electricity, natural gas or water delivered to customers but not yet billed. The utility company has satisfied its performance obligation and the customer has received and consumed the commodity as of the balance sheet date, and therefore, the utility company records revenue for those services in the period the services were provided. Only the passage of time is required before the company is entitled to payment for the satisfaction of the performance obligation. Payment from customers is due monthly as services are rendered and amounts are billed. 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 revenue estimates reflect seasonality, weather, customer usage patterns, customer rates in effect for customer classes, and the timing of customer billing. The companies that have a decoupling mechanism record a regulatory deferral to reflect the actual allowed amount of revenue associated with their respective decoupled distribution rate design.

Practical Expedients: Eversource has elected practical expedients in the accounting guidance that allow the company to record revenue in the amount that the company has a right to invoice, if that amount corresponds directly with the value to the customer of the company's performance to date, and not to disclose related unsatisfied performance obligations. Retail and wholesale transmission tariff sales fall into this category, as these sales are recognized as revenue in the period the utility provides the service and completes the performance obligation, which is the same as the monthly amount billed to customers. There are no other material revenue streams for which Eversource has unsatisfied performance obligations.

23. SEGMENT INFORMATION

Eversource is organized into the Electric Distribution, Electric Transmission, Natural Gas Distribution and Water 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, natural gas and water 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 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.

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 other unregulated subsidiaries, which are not part of its core business, and 5) Eversource parent's equity ownership interests that are not consolidated, which primarily include the offshore wind business, a natural gas pipeline owned by Enbridge, Inc., and a renewable energy investment fund.

In the ordinary course of business, Yankee Gas, NSTAR Gas and EGMA purchase natural gas transmission services from the Enbridge, Inc. natural gas pipeline project described above. These affiliate transaction costs total $77.7 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.

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 and PBOP expense.

Eversource's segment information is as follows:


	For the Year Ended December 31, 2021
Eversource (Millions of Dollars)	Electric Distribution		Natural Gas Distribution		Electric Transmission		Water Distribution		Other		Eliminations		Total
Operating Revenues	$	7,423.6	$	1,789.6	$	1,634.6	$	211.3	$	1,354.0	$	(2,550.0)	$	9,863.1
Depreciation and Amortization	(737.8)		(142.3)		(300.3)		(46.1)		(113.1)		4.6		(1,335.0)
Other Operating Expenses	(5,970.0)		(1,345.4)		(496.2)		(101.4)		(1,170.4)		2,548.6		(6,534.8)
Operating Income	715.8		301.9		838.1		63.8		70.5		3.2		1,993.3
Interest Expense	(236.4)		(58.6)		(133.2)		(32.0)		(168.8)		46.6		(582.4)
Interest Income	20.7		4.5		2.2		—		46.0		(47.8)		25.6
Other Income, Net	78.1		17.9		19.8		3.3		1,363.9		(1,347.3)		135.7
Income Tax (Expense)/Benefit	(103.5)		(60.9)		(179.4)		1.7		(2.1)		—		(344.2)
Net Income	474.7		204.8		547.5		36.8		1,309.5		(1,345.3)		1,228.0
Net Income Attributable to Noncontrolling Interests	(4.6)		—		(2.9)		—		—		—		(7.5)
Net Income Attributable to Common Shareholders	$	470.1	$	204.8	$	544.6	$	36.8	$	1,309.5	$	(1,345.3)	$	1,220.5
Total Assets (as of)	$	25,411.2	$	7,215.9	$	12,377.8	$	2,551.1	$	22,674.7	$	(21,738.6)	$	48,492.1
Cash Flows Used for Investments in Plant	$	1,053.3	$	721.1	$	1,024.1	$	137.2	$	239.4	$	—	$	3,175.1


	For the Year Ended December 31, 2020
Eversource (Millions of Dollars)	Electric Distribution		Natural Gas Distribution		Electric Transmission		Water Distribution		Other		Eliminations		Total
Operating Revenues	$	7,132.3	$	1,208.7	$	1,536.1	$	215.4	$	1,235.9	$	(2,424.0)	$	8,904.4
Depreciation and Amortization	(657.0)		(87.9)		(278.1)		(44.2)		(93.5)		1.6		(1,159.1)
Other Operating Expenses	(5,642.3)		(913.8)		(470.0)		(86.6)		(1,071.9)		2,428.0		(5,756.6)
Operating Income	833.0		207.0		788.0		84.6		70.5		5.6		1,988.7
Interest Expense	(216.0)		(40.0)		(126.8)		(32.9)		(161.0)		38.3		(538.4)
Interest Income	3.2		0.9		4.7		—		37.8		(41.8)		4.8
Other Income, Net	58.0		3.1		23.3		2.0		1,382.9		(1,365.5)		103.8
Income Tax (Expense)/Benefit	(129.6)		(36.9)		(183.8)		(12.5)		16.6		—		(346.2)
Net Income	548.6		134.1		505.4		41.2		1,346.8		(1,363.4)		1,212.7
Net Income Attributable to Noncontrolling Interests	(4.6)		—		(2.9)		—		—		—		(7.5)
Net Income Attributable to Common Shareholders	$	544.0	$	134.1	$	502.5	$	41.2	$	1,346.8	$	(1,363.4)	$	1,205.2
Total Assets (as of)	$	24,981.9	$	6,450.5	$	11,695.0	$	2,375.2	$	22,089.4	$	(21,492.4)	$	46,099.6
Cash Flows Used for Investments in Plant	$	1,079.0	$	494.4	$	1,004.6	$	118.8	$	246.2	$	—	$	2,943.0


	For the Year Ended December 31, 2019
Eversource(Millions of Dollars)	Electric Distribution		Natural Gas Distribution		Electric Transmission		Water Distribution		Other		Eliminations		Total
Operating Revenues	$	6,976.5	$	1,062.2	$	1,389.0	$	214.6	$	1,028.5	$	(2,144.3)	$	8,526.5
Depreciation and Amortization	(651.3)		(68.3)		(253.3)		(46.9)		(63.2)		2.3		(1,080.7)
Impairment of Northern Pass Transmission	—		—		(239.6)		—		—		—		(239.6)
Other Operating Expenses	(5,525.1)		(830.8)		(411.2)		(101.0)		(891.3)		2,143.7		(5,615.7)
Operating Income	800.1		163.1		484.9		66.7		74.0		1.7		1,590.5
Interest Expense	(206.4)		(47.4)		(125.7)		(34.6)		(170.3)		51.2		(533.2)
Interest Income	13.3		0.1		1.5		—		48.7		(50.8)		12.8
Other Income, Net	46.8		1.6		29.2		0.4		945.3		(903.3)		120.0
Income Tax (Expense)/Benefit	(135.9)		(21.2)		(130.5)		2.4		11.7		—		(273.5)
Net Income	517.9		96.2		259.4		34.9		909.4		(901.2)		916.6
Net Income Attributable to Noncontrolling Interests	(4.6)		—		(2.9)		—		—		—		(7.5)
Net Income Attributable to Common Shareholders	$	513.3	$	96.2	$	256.5	$	34.9	$	909.4	$	(901.2)	$	909.1
Cash Flows Used for Investments in Plant	$	1,104.2	$	460.2	$	987.0	$	118.0	$	242.1	$	—	$	2,911.5

24. ACQUISITION OF ASSETS OF COLUMBIA GAS OF MASSACHUSETTS

On October 9, 2020, Eversource acquired certain assets and liabilities that comprised the NiSource Inc. (NiSource) natural gas distribution business in Massachusetts, which was previously doing business as CMA, pursuant to an asset purchase agreement (the Agreement) entered into on February 26, 2020 between Eversource and NiSource. The cash purchase price was $1.1 billion, plus a working capital amount of $68.6 million, as finalized in the first quarter of 2021. Eversource financed the acquisition through a combination of debt and equity issuances in a ratio that was consistent with its consolidated capital structure. The natural gas distribution assets acquired from CMA were assigned to EGMA, an indirect wholly-owned subsidiary of Eversource formed in 2020. The LNG assets acquired from CMA were assigned to Hopkinton LNG Corp.

The transaction required approval by the DPU, the Maine Public Utilities Commission, the FERC, and the Federal Communications Commission, and review under the Hart-Scott-Rodino Act.

The liabilities assumed by Eversource under the Agreement specifically excluded any liabilities (past or future) arising out of, or related to, the fires and explosions that occurred on September 13, 2018 in Lawrence, Andover and North Andover, Massachusetts related to the delivery of natural gas by CMA, including certain subsequent events, all as described and in the DPU's Order on Scope dated December 23, 2019 (D.P.U. 19-141) (the Greater Lawrence Incident or GLI). The liabilities assumed also excluded any further emergency events prior to the closing of the acquisition related to the restoration and reconstruction with respect to the GLI, including any losses arising out of, or related to, any litigation, demand, cause of action, claim, suit, investigation, proceeding, indemnification agreements or rights. Eversource did not assume any of CMA's or NiSource Inc.'s third party debt obligations or notes payable.

On October 7, 2020, the DPU approved a rate settlement agreement with Eversource, EGMA, NiSource, Bay State, the Massachusetts Attorney General's Office, the DOER and the Low-Income Weatherization and Fuel Assistance Program Network, which requested approval of the February 26, 2020 Agreement, as well as a rate stabilization plan, among other items.

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 final purchase price allocation reflects measurement period adjustments recorded in 2021 to reduce the fair values of certain regulatory and plant assets and certain liabilities acquired, resulting in a corresponding increase to Goodwill, based on new information received during the measurement period.

The allocation of the cash purchase price as of October 9, 2020 is as follows:


(Millions of Dollars)
Current Assets	$	138
Restricted Cash	57
PP&E	1,182
Goodwill	52
Other Noncurrent Assets, excluding Goodwill	131
Other Current Liabilities	(81)
Other Noncurrent Liabilities	(310)
Cash Purchase Price	$	1,169

The fair values of CMA's assets and liabilities were determined based on significant estimates and assumptions, including Level 3 inputs, that are judgmental in nature. The allocation of the total purchase price includes adjustments to reflect plant that will not earn a return and to reduce rate base to the allowed $995 million as specified in the rate settlement agreement. Eversource also recorded a $6.7 million liability for the future refund to customers for CMA's overcollection of the lower income tax rate beginning in 2018.

The excess of the purchase price over the estimated fair values of the assets acquired and liabilities assumed was recognized as goodwill. The goodwill reflects the value paid by Eversource primarily for expanding its natural gas infrastructure. The goodwill resulting from the acquisition has been assigned to the Natural Gas Distribution reporting unit.

Under the terms of the rate settlement agreement, a portion of the proceeds of the sale due to NiSource was withheld and used to establish an Energy Relief Fund comprised of two components, an Arrearage Forgiveness Fund and a fund which is restricted for energy efficiency and clean energy measures in the Merrimack Valley. As a result, Eversource funded restricted cash accounts and established a liability totaling $56.8 million on the acquisition date. By December 31, 2020, $15.4 million of the Arrearage Forgiveness Fund was credited back to customers and the remainder was paid back to NiSource. The purchase price included in investing cash outflows on the statement of cash flows of $1.11 billion reflects the payment to NiSource, excluding the restricted cash funds.

Pro Forma Financial Information: The following unaudited pro forma financial information reflects the pro forma combined results of operations of Eversource and the CMA business acquired and reflects the amortization of purchase price adjustments assuming the acquisition had taken place on January 1, 2019. 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. Pro forma net income excludes the impact of assets and liabilities not assumed by Eversource, such as amounts directly associated with the GLI incident, and non-recurring costs associated with the transaction.


	For the Years Ended December 31,
(Pro forma amounts in millions, except share amounts)	2020		2019
Operating Revenues	$	9,273	$	9,103
Net Income Attributable to Common Shareholders	1,265		909
Basic EPS	3.73		2.83
Diluted EPS	3.72		2.82

Revenues and Net Income: The impact of CMA on Eversource's accompanying consolidated statement of income included operating revenues of $154.8 million and net income attributable to common shareholders of $13.9 million for the year ended December 31, 2020.

Transactions recognized separately from the business combination: Eversource has entered into Transition Services Agreements (TSAs) with NiSource, under which NiSource is providing certain administrative functions. Eversource has recorded $21.4 million in Operating Expenses on the statement of income related to TSA costs for the year ended December 31, 2021 and $15.9 million of TSA and pre-TSA costs in Operating Expenses in 2020. In addition, Eversource recorded $2.0 million in Energy Efficiency expense related to the implementation of new energy efficiency programs as specified in the rate settlement agreement in the fourth quarter of 2020.

25. 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's reporting units for the purpose of testing goodwill are Electric Distribution, Electric Transmission, Natural Gas Distribution and Water Distribution. These reporting units are consistent with the operating segments underlying the reportable segments identified in Note 23, "Segment Information," to the financial statements.

Eversource completed the acquisition of NESC on December 1, 2021, resulting in the addition of $21.7 million of goodwill, all of which was allocated to the Water Distribution reporting unit. Eversource completed the CMA asset acquisition on October 9, 2020, resulting in the addition of $51.9 million of goodwill, which included measurement period adjustments in 2021 resulting in an additional $9.6 million of goodwill. The goodwill was allocated to the Natural Gas Distribution reporting unit. On July 31, 2020, Eversource sold its water system and treatment plant that supplies water to the towns of Hingham, Hull and North Cohasset to the town of Hingham, Massachusetts, resulting in a reduction to goodwill of $23.6 million. This goodwill was previously reflected in the Water Distribution reporting unit.

In assessing goodwill for impairment, an entity is permitted to first assess qualitatively whether it is more likely than not that goodwill impairment exists as of the annual impairment test date. A quantitative impairment test is required only if it is concluded that it is more likely than not that a reporting unit’s fair value is less than it’s carrying amount. The annual goodwill assessment included a qualitative evaluation of multiple factors that impact the fair value of the reporting units, including general, macroeconomic and market conditions, and entity-specific assumptions that affect the future cash flows of the reporting units. Key considerations include discount rates, utility sector market performance and merger transaction multiples, the Company's share price and credit ratings, analyst reports, financial performance, cost and risk factors, internal estimates and projections of future cash flows and net income, long-term strategy, the timing and outcome of rate cases, and recent regulatory and legislative proceedings.

Eversource completed its annual goodwill impairment test for the Electric Distribution, Electric Transmission, Natural Gas Distribution and Water Distribution reporting units as of October 1, 2021 and determined that no impairment existed. There were no events subsequent to October 1, 2021 that indicated impairment of goodwill.

The following table presents goodwill by reportable segment:


(Millions of Dollars)	Electric Distribution		Electric Transmission		Natural Gas Distribution		Water Distribution		Total
Balance as of January 1, 2020	$	2,544	$	577	$	399	$	907	$	4,427
Acquisition of CMA Assets	—		—		42		—		42
Sale of Hingham water system	—		—		—		(23)		(23)
Balance as of December 31, 2020	$	2,544	$	577	$	441	$	884	$	4,446
CMA Measurement Period Adjustments	—		—		10		—		10
Acquisition of NESC	—		—		—		21		21
Balance as of December 31, 2021	$	2,544	$	577	$	451	$	905	$	4,477

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